v3.26.1
BASIS OF PRESENTATION
 12 Months Ended
Dec. 31, 2025
Accounting Policies [Abstract]  
BASIS OF PRESENTATION

 

2. BASIS OF PRESENTATION

 

These consolidated financial statements for the years ended December 31, 2025 and 2024 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). These consolidated financial statements have been prepared on an accrual basis and are based on historical costs, except for certain financial instruments measured at fair value.

 

The Company determined that more than 50% of its common shares are held by U.S. stockholders, and accordingly no longer meets the definition of a foreign private issuer under the United States securities laws. As a result, commencing with the year ended December 31, 2025, the Company is required to use forms and rules prescribed for U.S. domestic companies, including the requirement that financial statements be presented in accordance with U.S. GAAP instead of IFRS® Accounting Standards as issued by the International Accounting Standards Board (“IFRS”).

 

These consolidated financial statements have been prepared in accordance with U.S. GAAP effective for the financial year ended December 31, 2025 and 2024. The 2024 comparative figures, which were previously presented in accordance with IFRS, have been adjusted as necessary to be compliant with the Company’s policies under U.S. GAAP.

 

The transition to U.S. GAAP has been applied retrospectively to all periods presented, including comparative information for the year ended December 31, 2024, and the consolidated balance sheet as of December 31, 2024 and January 1, 2024. A summary of the impacts of the transition are described below.

 

Reconciliation of consolidated balance sheets as at January 1, 2024

 

                             
    Note     IFRS     Effect of
transition to
U.S. GAAP		     U.S. GAAP  
          $     $     $  
ASSETS                              
Current assets                              
Cash and cash equivalents           6,804,579       -       6,804,579  
Accounts receivable, net           1,642,990       -       1,642,990  
Biological assets   (B)       1,723,342       (1,723,342 )     -  
Inventory   (B)       5,021,290       (444,799 )     4,576,491  
Prepaid expenses           420,336       -       420,336  
Total current assets           15,612,537       (2,168,141 )     13,444,396  
Warrant asset           8,820,897       -       8,820,897  
Notes receivable   (A)       2,449,122       (2,192,372 )     256,750  
Property and equipment, net   (A)(C)       1,761,382       (669,459 )     1,091,923  
Right of use assets   (A)(C)       -       2,976,405       2,976,405  
Intangible assets           725,668       -       725,668  
Deferred tax asset           246,294       -       246,294  
TOTAL ASSETS           29,615,900       (2,053,567 )     27,562,333  
                               
LIABILITIES                              
Current liabilities                              
Accounts payable and accrued liabilities           1,358,962       -       1,358,962  
Current portion of lease liabilities   (C)       925,976       (925,976 )     -  
Current portion of operating lease liabilities   (A)(C)       -       925,976       925,976  
Current portion of long-term debt           780,358       -       780,358  
Current portion of consideration payable on business acquisitions           360,000       -       360,000  
Derivative liability   (D)       7,471,519       10,863       7,482,382  
Warrant liability   (D)       -       4,270,342       4,270,342  
Income tax payable           873,388       -       873,388  
Total current liabilities           11,770,203       4,281,205       16,051,408  
Lease liabilities, net of current portion   (C)       1,972,082       (1,972,082 )     -  
Operating lease liabilities, net of current portion   (A)(C)       -       1,901,645       1,901,645  
Long-term debt, net of discounts and current portion           82,346       -       82,346  
Convertible debentures   (D)       2,459,924       (1,876,795 )     583,129  
Other non-current liabilities   (F)       -       2,128,057       2,128,057  
TOTAL LIABILITIES           16,284,555       4,462,030       20,746,585  
                               
SHAREHOLDERS’ EQUITY                              
Subordinate voting common shares, convertible into multiple voting common shares, no par value; unlimited shares authorized; 249,738,980 and 222,446,113 shares issued and outstanding as at December 31, 2025 and 2024, respectively   (D)(E)       24,593,422       7,205,942       31,799,364  
Multiple voting common shares, no par value; unlimited shares authorized; nil and nil shares issued and outstanding as at December 31, 2025 and 2024, respectively           -       -       -  
Contributed surplus   (E)       8,186,297       (8,186,297 )     -  
Accumulated other comprehensive loss           (108,069 )     -       (108,069 )
Accumulated deficit   (A)(B)(C)(D)(F)       (20,353,629 )     (5,535,242 )     (25,888,871 )
Equity attributable to Grown Rogue International, Inc. shareholders           12,318,021       (6,515,597 )     5,802,424  
Non-controlling interests           1,013,324       -       1,013,324  
TOTAL SHAREHOLDERS’ EQUITY           13,331,345       (6,515,597 )     6,815,748  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY           29,615,900       (2,053,567 )     27,562,333  

 

Reconciliation of consolidated balance sheets as at December 31, 2024

 

                               
    Note     IFRS     Effect of
transition to
U.S. GAAP		     U.S. GAAP  
          $     $     $  
ASSETS                              
Current assets                              
Cash and cash equivalents   (A)       4,682,221       235,487       4,917,708  
Accounts receivable, net   (A)       1,596,912       (39,787 )     1,557,125  
Biological assets   (B)       1,554,622       (1,554,622 )     -  
Inventory   (A)(B)       4,769,776       1,171,775       5,941,551  
Prepaid expenses   (A)       864,009       (164,647 )     699,362  
Current portion of notes receivable   (A)       7,189,635       (7,189,635 )     -  
Total current assets           20,657,175       (7,541,429 )     13,115,746  
Other long-term assets   (A)       -       200,000       200,000  
Warrant asset           4,855,795       -       4,855,795  
Other Investments   (A)       1,810,363       (1,234,396 )     575,967  
Notes receivable   (A)       2,613,969       (1,075,958 )     1,538,011  
Property and equipment, net   (A)(C)       11,870,220       2,174,013       14,044,233  
Right of use assets   (A)(C)       -       7,591,048       7,591,048  
Intangible assets   (A)       1,257,668       1,767,525       3,025,193  
Deferred tax asset   (A)       250,620       441,485       692,105  
TOTAL ASSETS           43,315,810       2,322,288       45,638,098  
                               
LIABILITIES                              
Current liabilities                              
Accounts payable and accrued liabilities   (A)       2,107,619       583,288       2,690,907  
Current portion of lease liabilities   (A)       736,453       (736,453 )     -  
Current portion of operating lease liabilities   (A)(C)       -       1,047,763       1,047,763  
Current portion of long-term debt           227,679       1       227,680  
Convertible debentures   (D)       1,945,226       (1,281,490 )     663,736  
Current portion of consideration payable on business acquisitions           536,881       -       536,881  
Derivative liability           12,504,175       5       12,504,180  
Income tax payable   (A)       1,907,177       9,549       1,916,726  
Total current liabilities           19,965,210       (377,337 )     19,587,873  
Lease liabilities   (C)       4,475,490       (4,475,490 )     -  
Operating lease liabilities, net of current portion   (A)(C)       -       6,699,808       6,699,808  
Long-term debt, net of discounts and current portion   (A)       1,001,681       1,072,429       2,074,110  
Consideration payable on acquisitions, net of discounts and current portion           1,693,540       -       1,693,540  
Other non-current liabilities   (F)       269,883       4,737,265       5,007,148  
TOTAL LIABILITIES           27,405,804       7,656,675       35,062,479  
                               
SHAREHOLDERS’ EQUITY                              
Subordinate voting common shares, convertible into multiple voting common shares, no par value; unlimited shares authorized; 249,738,980 and 222,446,113 shares issued and outstanding as at December 31, 2025 and 2024, respectively   (D)(E)       38,499,491       13,865,837       52,365,328  
Multiple voting common shares, no par value; unlimited shares authorized; nil and nil shares issued and outstanding as at December 31, 2025 and 2024, respectively           -       -       -  
Contributed surplus   (E)       9,025,541       (9,025,541 )     -  
Accumulated other comprehensive loss           (125,930 )     -       (125,930 )
Accumulated deficit   (A)(B)(C)(D)(F)       (32,847,334 )     (10,466,426 )     (43,293,760 )
Equity attributable to Grown Rogue International, Inc. shareholders           14,551,768       (5,334,387 )     8,945,638  
Non-controlling interests   (A)       1,358,238       271,743       1,629,981  
TOTAL SHAREHOLDERS’ EQUITY           15,910,006       (5,334,387 )     10,575,619  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY           43,315,810       2,322,288       45,638,098  

 

Reconciliation of consolidated statement of net loss and comprehensive loss for the year ended December 31, 2024

 

                             
    Note     IFRS     Effect of
transition to
U.S. GAAP		     U.S. GAAP  
          $     $     $  
Revenue                              
Product sales   (A)       25,029,634       334,559       25,364,193  
Service revenue   (A)       1,987,631       (729,500 )     1,258,131  
Total revenue           27,017,265       (394,941 )     26,622,324  
Cost of goods sold                              
Cost of finished cannabis inventory sold   (A)(B)       (12,827,041 )     (345,636 )     (13,172,677 )
Costs of service revenue           (206,669 )     -       (206,669 )
Total cost of goods sold           (13,033,710 )     (345,636 )     (13,379,346 )
Gross profit, excluding fair value items           13,983,555       (740,577 )     13,242,978  
Realized fair value loss amounts in inventory sold   (B)       (3,358,862 )     3,358,862     -  
Unrealized fair value gain amounts on growth of biological assets   (B)       2,816,943       (2,816,943 )     -  
Gross profit           13,441,636       (198,658 )     13,242,978  
Operating expenses                              
Amortization   (A)(D)       939,727       53,652       993,379  
General and administration   (A)(G)       10,075,360       505,434       10,580,794  
Share-based compensation   (E)       1,306,607       302,216       1,608,823  
Total operating expenses           12,321,694       861,302       13,182,996  
Income from operations           1,119,942       (1,059,960 )     59,982  
Other income (expense)                              
Interest expense   (A)(C)(D)       (379,161 )     301,648       (77,513 )
Accretion expense   (A)(C)       (2,042,556 )     206,116       (1,836,440 )
Other income   (A)       1,938,713       (848,064 )     1,090,649  
Interest income   (A)       -       350,656       350,656  
Gain on extinguishment of notes receivable           156,165       (156,165 )     -  
Unrealized gain (loss) on derivative liability   (D)       (12,768,905 )     5,014,503       (7,754,402 )
Realized loss on derivative liability   (D)       -       (5,049,209 )     (5,049,209 )
Unrealized gain on warrant asset           3,094,413       -       3,094,413  
Realized loss on warrant liability   (D)       -       (1,741,710 )     (1,741,710 )
Loss on equity investment in associate   (A)       (169,637 )     (81,593 )     (251,230 )
Loss on disposal of property, plant and equipment   (G)       50,057       (50,057 )     -  
Total other income (expense), net           (10,120,911 )     (2,053,875 )     (12,174,786 )
Loss before income tax expense           (9,000,969 )     (3,113,835 )     (12,114,804 )
Income tax expense   (A)(F)       (1,695,825 )     (2,168,722 )     (3,864,547 )
Net loss           (10,696,794 )     (5,282,557 )     (15,979,351 )
Other comprehensive loss                              
Currency translation adjustment           (17,861 )     -       (17,861 )
Total comprehensive loss           (10,714,655 )     (5,282,557 )     (15,997,212 )
                               
Net loss for the period attributable to:                              
Shareholders           (11,303,642 )     (4,702,737 )     (16,006,379 )
Non-controlling interest   (A)       606,848       (579,820 )     27,028  
Net loss           (10,696,794 )     (5,282,557 )     (15,979,351 )
                               
Comprehensive income (loss) for the period attributable to:                              
Shareholders           (11,321,503 )     (4,702,737 )     (16,024,240 )
Non-controlling interest   (A)       606,848       (579,820 )     27,028  
Total comprehensive income (loss)           (10,714,655 )     (5,282,557 )     (15,997,212 )

 

 

Reconciliation of statement of cash flows for the year ended December 31, 2024

                             
    Note     IFRS    

Effect of

transition to
U.S. GAAP

     U.S. GAAP  
          $     $     $  
Operating activities                              
Net income (loss)           (10,696,794 )     (5,282,557 )     (15,979,351 )
Adjustments for non-cash items in net loss:                   -          
Depreciation of property and equipment   (A)       939,727       53,652       993,379  
Depreciation of property and equipment included in costs of finished cannabis inventory sold   (A)(C)       1,980,597       (1,544,550 )     436,047  
Lease costs included in costs of finished cannabis inventory sold   (A)(C)       -       328,957       328,957  
Unrealized fair value gain amounts on growth of biological assets   (B)       (2,816,943 )     2,816,943       -  
Realized fair value loss amounts in inventory sold   (B)       3,358,862       (3,358,862 )     -  
Share-based compensation   (E)       1,306,607       302,216       1,608,823  
Accretion expense   (D)       2,042,556       (206,116 )     1,836,440  
Unrealized (gain) loss on derivative liability   (D)       12,768,905       (5,014,503 )     7,754,402  
Realized loss on derivative liability   (D)               5,049,209       5,049,209  
Unrealized (gain) loss on warrant asset           (3,094,414 )     1       (3,094,413 )
Realized loss on warrant liability   (D)               1,741,710       1,741,710  
Loss on equity investment in associate   (A)       169,637       81,593       251,230  
Loss on disposal of property and equipment           (50,057 )     -       (50,057 )
Gain on extinguishment of notes receivable   (A)       (156,165 )     156,165       -  
Deferred income taxes   (A)       (4,326 )     (107,872 )     (112,198 )
Currency translation loss           (17,861 )     17,861       -  
            5,730,331       (4,966,153 )     764,178  
Changes in non-cash working capital   (A)       1,394,111       456,691       1,850,802  
Net cash provided by operating activities           7,124,442       (4,509,462 )     2,614,980  
                               
Investing activities                              
Purchase of property and equipment   (A)       (1,739,014 )     (2,343,140 )     (4,082,154 )
Acquisition of Golden Harvests LLC   (A)       (529,998 )     529,998       -  
Acquisition of Canopy Management, LLC           (271,438 )     -       (271,438 )
Dividend issued from Golden Harvests, LLC to minority owner           (530,000 )     -       (530,000 )
Advance of notes receivable   (A)       (7,898,136 )     6,350,458       (1,547,678 )
Repayment of notes receivable   (A)       484,160       (217,743 )     266,417  
Investment in ABCO Garden State, LLC           (1,980,000 )     -       (1,980,000 )
Cash acquired on investment in ABCO Garden State, LLC   (A)       -       2,815       2,815  
Repayment of bridge note   (A)       266,417       (266,417 )     -  
Advance on purchase of remaining Rogue EBC, LLC equity interest   (A)       -       (827,197 )     (827,197 )
Net cash used in investing activities           (12,198,009 )     3,228,774       (8,969,235 )
                               
Financing activities                              
Proceeds from exercise of stock options           359,958       -       359,958  
Proceeds from exercise of warrants           4,657,460       (47,883 )     4,609,577  
Proceeds from long-term debt   (A)       -       450,000       450,000  
Debt issuance costs           (126,914 )     -       (126,914 )
Repayment of long-term debt           (1,230,093 )     88,656       (1,141,437 )
Payment of interest on convertible debentures           (521,953 )     68,514       (453,439 )
Proceeds from sale of units of subsidiary           787,500       -       787,500  
Payment of lease liability   (C)       (974,749 )     974,749       -  
Net cash provided by financing activities           2,951,209       1,534,036       4,485,245  
                               
Effect of foreign exchange on cash and cash equivalents           -       (17,861 )     (17,861 )
                               
Change in cash and cash equivalents   (A)       (2,122,358 )     235,487       (1,886,871 )
Cash and cash equivalents, beginning of year           6,804,579       -       6,804,579  
Cash and cash equivalents, ending of year           4,682,221       235,487       4,917,708  

 

Notes to the reconciliations

 

A. Under IFRS, the Company consolidated its investment in Rogue EBC, LLC and accounted for its investment in ABCO Garden State, LLC under the equity method. Upon transition to U.S. GAAP, the Company determined that Rogue EBC, LLC should be accounted for as an equity method investment (Note 8), while ABCO Garden State, LLC should be consolidated (Note 4). Accordingly, the U.S. GAAP adjustments reflect (i) the deconsolidation of Rogue EBC, LLC, including the derecognition of its assets, liabilities, revenue, expenses, and cash flows, and the recognition of an equity method investment and the Company’s share of loss from equity method investees, and (2) the consolidation of ABCO Garden State, LLC, including the recognition of its assets, liabilities, revenue, expenses, and cash flows, the elimination of intercompany balances and derecognition of the previously recognized equity method investment and related equity losses.

 

B. Under IFRS, the Company measured its biological assets at fair value less costs to sell, with gains and losses arising from changes in fair value recognized in earnings. Upon transition to U.S. GAAP, biological assets are not recognized separately and are instead accounted for at historical cost as inventory. Accordingly, the adjustment reflects the elimination of biological assets measured at fair value and the recognition of the related costs within inventories, with subsequent recognition through cost of goods sold as the inventory is sold.

 

C. Under IFRS, the Company applied a single lease accounting model whereby substantially all leases were recognized on the balance sheet as right-if-use assets with corresponding lease liabilities, with lease expense generally recognized on a straight-line basis. Upon transition to U.S. GAAP, the Company classified its leases as either operating of finance leases. Accordingly, the adjustments reflect the reclassification of certain leases from a single IFRS model to operating lease classification under U.S. GAAP, including related changes to the recognition and presentation of lease expense, accumulated amortization, interest expense, and cash flow classifications.

 

D. Under IFRS, the Company was not required to value the warrants associated with the convertible debentures. Upon transition to U.S. GAAP the Company (i) on issuance, recognized the warrants as a derivative liability which reduced the initial carrying value of the convertible debentures and (ii) on exercise, derecognized the warrant liability resulting in an increase in additional paid in capital.

 

E. Under IFRS, share-based payments were presented as contributed surplus. Upon transition to U.S. GAAP, a reclassification adjustment has been made to present the amount as additional paid-in capital.

 

F. Under IFRS, the Company recognized and measured income taxes in accordance with IAS 12, Income Taxes, including the recognition of deferred tax assets and liabilities based on temporary differences. Upon transition to U.S. GAAP, income taxes were accounted for under ASC 740, Income taxes, which resulted in differences in the recognition, measurement, and presentation of certain deferred tax assets and liabilities. Accordingly, the adjustment reflects the remeasurement of deferred income taxes based on U.S. GAA P requirements, including changes in enacted tax rates, valuation allowances, uncertain tax positions, and the classification and presentation of deferred tax balances.

 

G. Upon transition to U.S. GAAP, the Company reclassified losses on the disposal of property, plant and equipment to general and administrative expenses to align with U.S. GAAP presentation requirements.

 

2.1 Functional and presentation currency

 

The Company’s reporting currency is the United States Dollar (“USD”). The Company’s functional currency is the Canadian Dollar (“CAD”), and the functional currency of its subsidiaries is the USD. The assets and liabilities of the Company are expressed in USD using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognized in other comprehensive income (loss) and reported as currency translation reserve in shareholders’ equity.

 

2.2 Use of estimates

 

The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of certain assets, liabilities, revenue, and expenses as well as the related disclosures. The Company must often make estimates about effects of matters that are inherently uncertain and will likely change in subsequent periods. Actual results could differ materially from those estimates.

 

Areas requiring a significant degree of estimation and judgment relate to the assessment of transactions as business combinations or asset acquisitions, estimates used in valuation and costing of inventory, impairment of long-lived assets and indefinite lived intangible assets, fair value measurements, the recoverability and measurement of deferred tax assets and liabilities, share-based compensation, fair value of derivative assets and liabilities, and consolidation of entities in which the Company holds less than a majority of voting rights.

 

2.3 Basis of consolidation

 

The consolidated financial statements incorporate the accounts of the Company and all the entities in which the Company has a controlling voting interest or when we are deemed to be the primary beneficiary of a variable interest entity. All consolidated entities were under common control during the entirety of the periods for which their respective results of operations were included in the consolidated statements from the date of acquisition. All intercompany balances and transactions are eliminated upon consolidation.

 

A summary of the Company’s subsidiaries included in these consolidated financial statements as at December 31, 2025 is as follows:

 

                           
Entity     Defined term     Location     Purpose     Percentage
held		  
Grown Rogue Unlimited, LLC     “GR Unlimited”     Oregon     U.S. Holding Company       100 %
Grown Rogue Gardens, LLC     “GR Gardens”     Oregon     Operating Entity (Cultivation)       100 %
GRU Properties, LLC     “GRU Properties”     Oregon     Property Management       100 %
GRIP, LLC     “GRIP”     Oregon     Marketing/Branding       100 %
Grown Rogue Distribution, LLC     “GR Distribution”     Oregon     Operating Entity (Distribution)       100 %
Rogue EBC, LLC     “Rogue EBC”     Illinois     Operating Entity (Cultivation)       70 %*
Cannequality, LLC     “Cannequality”     Illinois     Licensing Company       70 %*
Canopy Management, LLC     “Canopy”     Michigan     Holding Company       100 %**
Golden Harvests LLC     “Golden Harvests”     Michigan     Operating Entity (Cultivation)       80 %
Grown Rogue Retail Ventures, LLC     “GR Retail”     Delaware     Holding Company       100 %
Grown Rogue West New York, LLC     “West NY”     New Jersey     Holding Company (Retail)       44 %***
ABCO Garden State, LLC     “ABCO”     New Jersey     Operating Entity (Cultivation)       70 %

 

 
* The Company does not have the unilateral ability to direct activities of Rogue EBC and therefore the investment constitutes a joint venture in accordance with ASC 323, Investments – Equity Method and Joint Ventures, and has been accounted for using the equity method (Note 8). Cannequality is wholly owned by Rogue EBC, in which Cannequality is the legal entity that holds the acquired cannabis license for Rogue EBC’s joint arrangement operations. When regulatory milestones are achieved, the Company plans to dissolve Cannequality. Cannequality remains inactive.
** Canopy was dissolved in the second quarter of 2025 after regulatory milestones were achieved resulting in GR Unlimited directly holding an 80% ownership interest in Golden Harvests.
*** The Company has the unilateral ability to direct the activities of West NY and therefore the Company consolidates West NY in accordance with ASC 810, Consolidation.

 

All subsidiaries of the Company were incorporated in the United States of America and have USD as their functional currency.