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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 September 30, 2019
OR
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from          to         
001-38875
(Commission file number)
Greenlane Holdings, Inc.
(Exact name of registrant as specified in its charter)
Delaware83-0806637
State or other jurisdiction of
incorporation or organization
(I.R.S. Employer
Identification No.)

1095 Broken Sound Parkway,Suite 300
Boca Raton, FL33487
(Address of principal executive offices)(Zip Code)
(877) 292-7660
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.01 par value per shareGNLNNasdaq Global Market
Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities 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 during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes   No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller 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 November 12, 2019, Greenlane Holdings, Inc. had 9,997,776 shares of Class A common stock outstanding, 5,988,485 shares of Class B common stock outstanding and 77,791,218 shares of Class C common stock outstanding.




TABLE OF CONTENTS
51
53




PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS


GREENLANE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except per share amounts)
September 30,
2019
December 31,
2018
ASSETS
Current assets
Cash$52,540  $7,341  
Accounts receivable, net of allowance of $655 and $657 at September 30, 2019 and December 31, 2018, respectively
7,591  8,218  
Inventories, net47,086  29,502  
Vendor deposits10,395  7,917  
Other current assets4,635  4,127  
Total current assets122,247  57,105  
Property and equipment, net12,830  11,641  
Intangible assets, net6,501  3,662  
Goodwill11,259  5,446  
Operating lease right-of-use assets2,280    
Other assets2,105  167  
Total assets$157,222  $78,021  
LIABILITIES
Current liabilities
Accounts payable$11,569  $20,226  
Accrued expenses and other current liabilities9,696  9,945  
Current portion of notes payable175  168  
Current portion of operating leases684    
Current portion of finance leases115  95  
Total current liabilities22,239  30,434  
Convertible notes  40,200  
Notes payable, less current portion and debt issuance costs, net8,059  8,176  
Operating leases, less current portion1,816    
Finance leases, less current portion223  237  
Other liabilities2,322    
Total long-term liabilities12,420  48,613  
Total liabilities34,659  79,047  
Commitments and contingencies (Note 8)
REDEEMABLE CLASS B UNITS  10,033  
STOCKHOLDERS’ EQUITY/MEMBERS’ DEFICIT
Members’ deficit  (10,773) 
Preferred stock, $0.0001 par value, 10,000 shares authorized, none issued and outstanding as of September 30, 2019
    
Class A common stock, $0.01 par value per share, 125,000 shares authorized; 9,998 shares issued and outstanding as of September 30, 2019
100    
Class B common stock, $0.0001 par value per share, 10,000 shares authorized; 5,988 shares issued and outstanding as of September 30, 2019
1    
Class C Common stock, $0.0001 par value per share, 100,000 shares authorized; 77,791 shares issued and outstanding as of September 30, 2019
8    
Additional paid-in capital32,129    
Accumulated deficit(6,741)   
Accumulated other comprehensive loss(133) (286) 
Total stockholders’ equity attributable to Greenlane Holdings, Inc./members’ deficit
25,364  (11,059) 
Non-controlling interest97,199    
Total stockholders’ equity/members’ deficit122,563  (11,059) 
Total liabilities, redeemable Class B units and stockholders’ equity/members’ deficit$157,222  $78,021  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1


GREENLANE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(Unaudited)
(in thousands, except per share amounts)
For the three months ended
September 30,
For the nine months ended
September 30,
2019201820192018
Net sales$44,886  $43,561  $147,770  $127,379  
Cost of sales38,448  34,695  123,194  101,048  
Gross profit6,438  8,866  24,576  26,331  
Operating expenses:
Salaries, benefits and payroll taxes6,562  3,882  21,673  10,439  
General and administrative4,751  4,247  15,549  11,868  
Depreciation and amortization650  402  1,980  1,013  
Total operating expenses11,963  8,531  39,202  23,320  
(Loss) income from operations(5,525) 335  (14,626) 3,011  
Other income (expense), net:
Change in fair value of convertible notes    (12,063)   
Interest expense(119) (136) (862) (296) 
Other income (expense), net7,746  (141) 8,670  18  
Total other income (expense), net7,627  (277) (4,255) (278) 
Income (loss) before income taxes2,102  58  (18,881) 2,733  
Provision for income taxes11,063  193  10,966  342  
Net (loss) income(8,961) (135) (29,847) 2,391  
Less: Net loss attributable to non-controlling
interest
(2,563)   (4,016)   
Net (loss) income attributable to Greenlane Holdings,
Inc.
$(6,398) $(135) $(25,831) $2,391  
Net loss attributable to Class A common stock per share - basic and diluted (1)
$(0.64) $(0.67) 
Weighted-average shares of Class A common stock outstanding - basic and diluted (1)
9,998  9,998  
Other comprehensive (loss) income:
Foreign currency translation adjustments(13) 13  38  (20) 
Unrealized loss on derivative instrument(310)   (310)   
Comprehensive (loss) income
(9,284) (122) (30,119) 2,371  
Less: comprehensive loss attributable to non-controlling interest
(2,809)   (4,238)   
Comprehensive (loss) income attributable to Greenlane Holdings, Inc.
$(6,475) $(122) $(25,881) $2,371  
(1)Basic and diluted net loss per Class A common stock is presented only for the period after the Company’s organizational transactions. See Note 1 for a description of the organizational transactions. See Note 3 for the calculation of net loss per share.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2


GREENLANE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CLASS B UNITS AND STOCKHOLDERS’ EQUITY / MEMBERS’ DEFICIT
(Unaudited)
(in thousands)
Redeemable
Class B
Units
Members’
Deficit
Class A
Common Stock
Class B
Common Stock
Class C
Common Stock
Additional
Paid-In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Non-
Controlling
Interest
Total
Stockholders’
Equity /
Members’
Deficit
SharesAmountSharesAmountSharesAmount
Balance, December 31, 2018$10,033  $(10,773) —  $—  —  $—  —  $—  $—  $—  $(286) $—  $(11,059) 
Activity prior to the initial public offering and related organizational transactions:
Issuance of redeemable Class B units, net of issuance costs6,514  —  —  —  —  —  —  —  —  —  —  —  —  
Redemption of Class A and Class B membership units(416) (2,602) —  —  —  —  —  —  —  —  —  —  (2,602) 
Equity-based compensation2,304  191  —  —  —  —  —  —  —  —  —  —  191  
Net loss(3,045) (14,619) —  —  —  —  —  —  —  —  —  —  (14,619) 
Member distributions—  (21) —  —  —  —  —  —  —  —  —  —  (21) 
Other comprehensive income—  —  —  —  —  —  —  —  —  —  28  —  28  
Balance, March 31, 201915,390  (27,824) —  —  —  —  —  —  —  —  (258) —  (28,082) 
Net loss prior to the organizational transactions(246) (1,179) —  —  —  —  —  —  —  —  —  —  (1,179) 
Equity-based compensation recognized prior to the organizational transactions113  137  —  —  —  —  —  —  —  —  —  —  137  
Member distributions(76) (801) —  —  —  —  —  —  —  —  —  —  (801) 
Other comprehensive loss—  —  —  —  —  —  —  —  —  —  (8) —  (8) 
Effects of the initial public offering and related organizational transactions:
Effects of the organizational transactions(15,181) 29,667  —  —  —  —  —  —  (114,094) —  203  99,404  15,180  
Issuance of Class A common stock in the IPO, net of underwriting discount—  —  5,250  53  —  —  —  —  82,950  —  —  —  83,003  
Issuance of Class A common stock to convertible notes holders—  —  3,548  35  —  —  —  —  60,277  —  —  —  60,312  
Issuance of Class A common to stock selling stockholders—  —  750  8  (106) —  (1,935) —  (7) —  —  —  1  
Issuance of Class A common stock to underwriter upon exercise of over-allotment option—  —  450  4  (63) —  (1,161) —  (4) —  —  —    
Issuance of Class B common stock—  —  —  —  6,157  1  —  —  (1) —  —  —  —  
Issuance of Class C common stock—  —  —  —  —  —  80,887  8  (8) —  —  —  —  
Capitalization of initial public offering costs—  —  —  —  —  —  —  —  (3,523) —  —  —  (3,523) 
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis—  —  —  —  —  —  —  —  5,173  —  —  —  5,173  
Joint venture consolidation—  —  —  —  —  —  —  —  —  —  —  60  60  
Activity subsequent to the initial public offering and related organizational transactions:
Net loss—  —  —  —  —  —  —  —  —  (343) —  (1,453) (1,796) 
Equity-based compensation—  —  —  —  —  —  —  —  709  —  —  1,122  1,831  
Other comprehensive income—  —  —  —  —  —  —  —  —  —  7  24  31  
Balance June 30, 2019—  —  9,998  100  5,988  1  77,791  8  31,472  (343) (56) 99,157  130,339  
Net loss—  —  —  —  —  —  —  —  —  (6,398) —  (2,563) (8,961) 
Equity-based compensation—  —  —  —  —  —  —  —  360  —  —  1,148  1,508  
Other comprehensive loss—  —  —  —  —  —  —  —  —  —  (77) (246) (323) 
Reclassification of effects of the organizational transactions—  —  —  —  —  —  —  —  297  —  —  (297) —  
Balance September 30, 2019$—  $—  9,998  $100  5,988  $1  77,791  $8  $32,129  $(6,741) $(133) $97,199  $122,563  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3


Redeemable
Class B
Units
Members’
Equity /
Deficit
Class A
Common Stock
Class B
Common Stock
Class B
Common Stock
Additional
Paid-In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Non-
Controlling
Interest
Total
Stockholders’
Equity /
Members’
Deficit
SharesAmountSharesAmountSharesAmount
Balance, December 31, 2017$  $9,605  —  $—  —  $—  —  $—  $—  $—  $(209) $—  $9,396  
Issuance of redeemable Class B units8,890  —  —  —  —  —  —  —  —  —  —  —  —  
Net income77  2,222  —  —  —  —  —  —  —  —  —  —  2,222  
Member distributions—  (1,007) —  —  —  —  —  —  —  —  —  —  (1,007) 
Other comprehensive loss—  —  —  —  —  —  —  —  —  —  (20) —  (20) 
Balance, March 31, 20188,967  10,820  —  —  —  —  —  —  —  —  (229) —  10,591  
Net income23  207  —  —  —  —  —  —  —  —  —  —  207  
Other comprehensive loss—  —  —  —  —  —  —  —  —  —  (13) —  (13) 
Balance, June 30, 20188,990  11,027  —  —  —  —  —  —  —  —  (242) —  10,785  
Net loss(13) (122) —  —  —  —  —  —  —  —  —  —  (122) 
Other comprehensive income—  —  —  —  —  —  —  —  —  —  13  —  13  
Balance, September 30, 2018$8,977  $10,905  —  $—  —  $—  —  $—  $—  $—  $(229)