false Q2 --12-31 0001743745 P6M P6M P6M P6M P6M 0001743745 2024-01-01 2024-06-30 0001743745 2024-08-14 0001743745 2024-06-30 0001743745 2023-12-31 0001743745 us-gaap:CommonClassAMember 2024-06-30 0001743745 us-gaap:CommonClassAMember 2023-12-31 0001743745 us-gaap:CommonClassBMember 2024-06-30 0001743745 us-gaap:CommonClassBMember 2023-12-31 0001743745 2024-04-01 2024-06-30 0001743745 2023-04-01 2023-06-30 0001743745 2023-01-01 2023-06-30 0001743745 us-gaap:CommonStockMember us-gaap:CommonClassAMember 2023-12-31 0001743745 us-gaap:AdditionalPaidInCapitalMember 2023-12-31 0001743745 us-gaap:RetainedEarningsMember 2023-12-31 0001743745 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-12-31 0001743745 us-gaap:NoncontrollingInterestMember 2023-12-31 0001743745 us-gaap:CommonStockMember us-gaap:CommonClassAMember 2024-03-31 0001743745 us-gaap:AdditionalPaidInCapitalMember 2024-03-31 0001743745 us-gaap:RetainedEarningsMember 2024-03-31 0001743745 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2024-03-31 0001743745 us-gaap:NoncontrollingInterestMember 2024-03-31 0001743745 2024-03-31 0001743745 us-gaap:CommonStockMember us-gaap:CommonClassAMember 2022-12-31 0001743745 us-gaap:CommonStockMember us-gaap:CommonClassBMember 2022-12-31 0001743745 us-gaap:AdditionalPaidInCapitalMember 2022-12-31 0001743745 us-gaap:RetainedEarningsMember 2022-12-31 0001743745 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-12-31 0001743745 us-gaap:NoncontrollingInterestMember 2022-12-31 0001743745 2022-12-31 0001743745 us-gaap:CommonStockMember us-gaap:CommonClassAMember 2023-03-31 0001743745 us-gaap:CommonStockMember us-gaap:CommonClassBMember 2023-03-31 0001743745 us-gaap:AdditionalPaidInCapitalMember 2023-03-31 0001743745 us-gaap:RetainedEarningsMember 2023-03-31 0001743745 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-03-31 0001743745 us-gaap:NoncontrollingInterestMember 2023-03-31 0001743745 2023-03-31 0001743745 us-gaap:CommonStockMember us-gaap:CommonClassAMember 2024-01-01 2024-03-31 0001743745 us-gaap:AdditionalPaidInCapitalMember 2024-01-01 2024-03-31 0001743745 us-gaap:RetainedEarningsMember 2024-01-01 2024-03-31 0001743745 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2024-01-01 2024-03-31 0001743745 us-gaap:NoncontrollingInterestMember 2024-01-01 2024-03-31 0001743745 2024-01-01 2024-03-31 0001743745 us-gaap:CommonStockMember us-gaap:CommonClassAMember 2024-04-01 2024-06-30 0001743745 us-gaap:AdditionalPaidInCapitalMember 2024-04-01 2024-06-30 0001743745 us-gaap:RetainedEarningsMember 2024-04-01 2024-06-30 0001743745 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2024-04-01 2024-06-30 0001743745 us-gaap:NoncontrollingInterestMember 2024-04-01 2024-06-30 0001743745 us-gaap:CommonStockMember us-gaap:CommonClassAMember 2023-01-01 2023-03-31 0001743745 us-gaap:CommonStockMember us-gaap:CommonClassBMember 2023-01-01 2023-03-31 0001743745 us-gaap:AdditionalPaidInCapitalMember 2023-01-01 2023-03-31 0001743745 us-gaap:RetainedEarningsMember 2023-01-01 2023-03-31 0001743745 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-01-01 2023-03-31 0001743745 us-gaap:NoncontrollingInterestMember 2023-01-01 2023-03-31 0001743745 2023-01-01 2023-03-31 0001743745 us-gaap:CommonStockMember us-gaap:CommonClassAMember 2023-04-01 2023-06-30 0001743745 us-gaap:CommonStockMember us-gaap:CommonClassBMember 2023-04-01 2023-06-30 0001743745 us-gaap:AdditionalPaidInCapitalMember 2023-04-01 2023-06-30 0001743745 us-gaap:RetainedEarningsMember 2023-04-01 2023-06-30 0001743745 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-04-01 2023-06-30 0001743745 us-gaap:NoncontrollingInterestMember 2023-04-01 2023-06-30 0001743745 us-gaap:CommonStockMember us-gaap:CommonClassAMember 2024-06-30 0001743745 us-gaap:AdditionalPaidInCapitalMember 2024-06-30 0001743745 us-gaap:RetainedEarningsMember 2024-06-30 0001743745 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2024-06-30 0001743745 us-gaap:NoncontrollingInterestMember 2024-06-30 0001743745 us-gaap:CommonStockMember us-gaap:CommonClassAMember 2023-06-30 0001743745 us-gaap:CommonStockMember us-gaap:CommonClassBMember 2023-06-30 0001743745 us-gaap:AdditionalPaidInCapitalMember 2023-06-30 0001743745 us-gaap:RetainedEarningsMember 2023-06-30 0001743745 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-06-30 0001743745 us-gaap:NoncontrollingInterestMember 2023-06-30 0001743745 2023-06-30 0001743745 us-gaap:CommonClassBMember 2021-08-31 0001743745 us-gaap:CommonClassCMember 2024-06-30 0001743745 us-gaap:CommonClassAMember srt:MinimumMember 2021-08-31 0001743745 us-gaap:CommonClassAMember srt:MaximumMember 2024-06-30 0001743745 GNLN:GreenlaneMember us-gaap:CommonClassAMember 2022-12-31 0001743745 GNLN:ATMProgramMember us-gaap:CommonClassAMember 2021-08-31 2021-08-31 0001743745 us-gaap:CommonClassAMember GNLN:ATMProgramMember 2021-08-31 2022-12-31 0001743745 GNLN:JulyTwentyTwentyThreeOfferingMember us-gaap:CommonClassAMember GNLN:SecuritiesPurchaseAgreementMember 2023-06-29 2023-06-29 0001743745 GNLN:JulyTwentyTwentyThreeOfferingMember GNLN:PreFundedWarrantsMember srt:MaximumMember GNLN:SecuritiesPurchaseAgreementMember 2023-06-29 0001743745 GNLN:JulyTwentyTwentyThreeOfferingMember GNLN:SecuritiesPurchaseAgreementMember us-gaap:WarrantMember srt:MaximumMember 2023-06-29 0001743745 GNLN:JulyTwentyTwentyThreeOfferingMember GNLN:SecuritiesPurchaseAgreementMember 2023-06-29 2023-06-29 0001743745 GNLN:LoanAgreementMember 2022-08-09 0001743745 GNLN:LoanAgreementMember 2023-02-09 2023-02-09 0001743745 GNLN:LoanAgreementMember 2023-02-09 0001743745 GNLN:LoanAgreementMember 2023-08-07 2023-08-07 0001743745 us-gaap:InvestorMember 2023-02-16 2023-02-16 0001743745 2023-07-31 0001743745 2023-08-31 0001743745 2023-10-31 0001743745 2023-11-30 0001743745 2023-09-22 2023-09-22 0001743745 us-gaap:SecuredDebtMember 2023-09-22 0001743745 us-gaap:SecuredDebtMember 2023-09-22 2023-09-22 0001743745 us-gaap:SecuredDebtMember GNLN:LoanModificationAgreementMember 2024-05-31 0001743745 us-gaap:SecuredDebtMember GNLN:LoanAgreementMember 2024-06-30 0001743745 GNLN:SubscriptionAgreementMember 2024-06-30 0001743745 GNLN:SubscriptionAgreementMember 2024-06-07 2024-06-30 0001743745 srt:MinimumMember 2024-06-30 0001743745 srt:MaximumMember 2024-06-30 0001743745 us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember GNLN:OneCustomerMember 2024-04-01 2024-06-30 0001743745 us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember GNLN:OneCustomerMember 2024-01-01 2024-06-30 0001743745 us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember GNLN:OneCustomerMember 2023-04-01 2023-06-30 0001743745 us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember GNLN:OneCustomerMember 2023-01-01 2023-06-30 0001743745 us-gaap:CustomerConcentrationRiskMember us-gaap:AccountsReceivableMember GNLN:CustomerOneMember 2024-01-01 2024-06-30 0001743745 us-gaap:CustomerConcentrationRiskMember us-gaap:AccountsReceivableMember GNLN:CustomerOneMember 2023-01-01 2023-12-31 0001743745 GNLN:EyceLLCMember GNLN:AssetPurchaseAgreementMember 2022-04-07 0001743745 GNLN:EyceLLCMember GNLN:AssetPurchaseAgreementMember us-gaap:CommonClassAMember 2022-04-07 2022-04-07 0001743745 GNLN:EyceLLCMember GNLN:AssetPurchaseAgreementMember 2022-04-07 2022-04-07 0001743745 us-gaap:FairValueInputsLevel1Member 2023-12-31 0001743745 us-gaap:FairValueInputsLevel2Member 2023-12-31 0001743745 us-gaap:FairValueInputsLevel3Member 2023-12-31 0001743745 GNLN:ContingentConsiderationMember 2023-12-31 0001743745 GNLN:ContingentConsiderationMember 2024-01-01 2024-06-30 0001743745 GNLN:ContingentConsiderationMember 2024-06-30 0001743745 GNLN:ContingentConsiderationMember 2022-12-31 0001743745 GNLN:ContingentConsiderationMember 2023-01-01 2023-06-30 0001743745 GNLN:ContingentConsiderationMember 2023-06-30 0001743745 GNLN:FutureReceivablesFinancingMember 2024-06-30 0001743745 GNLN:FutureReceivablesFinancingMember 2023-12-31 0001743745 GNLN:SecuredBridgeLoanMember 2024-06-30 0001743745 GNLN:SecuredBridgeLoanMember 2023-12-31 0001743745 GNLN:FutureReceivablesFinancingMember srt:MinimumMember 2023-07-01 2023-07-31 0001743745 GNLN:FutureReceivablesFinancingMember srt:MinimumMember 2023-08-01 2023-08-31 0001743745 GNLN:FutureReceivablesFinancingMember srt:MinimumMember 2023-10-01 2023-10-31 0001743745 GNLN:FutureReceivablesFinancingMember srt:MinimumMember 2023-11-01 2023-11-30 0001743745 GNLN:FutureReceivablesFinancingMember srt:MaximumMember 2023-07-01 2023-07-31 0001743745 GNLN:FutureReceivablesFinancingMember srt:MaximumMember 2023-08-01 2023-08-31 0001743745 GNLN:FutureReceivablesFinancingMember srt:MaximumMember 2023-10-01 2023-10-31 0001743745 GNLN:FutureReceivablesFinancingMember srt:MaximumMember 2023-11-01 2023-11-30 0001743745 GNLN:FutureReceivablesFinancingMember 2023-07-01 2023-07-31 0001743745 GNLN:FutureReceivablesFinancingMember 2023-08-01 2023-08-31 0001743745 GNLN:FutureReceivablesFinancingMember 2023-10-01 2023-10-31 0001743745 GNLN:FutureReceivablesFinancingMember 2023-11-01 2023-11-30 0001743745 GNLN:SecuredBridgeLoanMember 2023-09-22 0001743745 GNLN:SecuredBridgeLoanMember 2023-09-22 2023-09-22 0001743745 us-gaap:SecuredDebtMember GNLN:LoanModificationAgreementMember 2024-05-01 2024-05-31 0001743745 us-gaap:LoansPayableMember 2024-06-30 0001743745 2022-01-01 2022-12-31 0001743745 2023-02-16 0001743745 us-gaap:SupplierConcentrationRiskMember GNLN:PurchasesBenchmarkMember GNLN:FourMajorVendorsMember 2024-04-01 2024-06-30 0001743745 us-gaap:SupplierConcentrationRiskMember GNLN:PurchasesBenchmarkMember GNLN:FourMajorVendorsMember 2024-01-01 2024-06-30 0001743745 us-gaap:SupplierConcentrationRiskMember GNLN:PurchasesBenchmarkMember GNLN:FourMajorVendorsMember 2023-04-01 2023-06-30 0001743745 us-gaap:SupplierConcentrationRiskMember GNLN:PurchasesBenchmarkMember GNLN:FourMajorVendorsMember 2023-01-01 2023-06-30 0001743745 us-gaap:RelatedPartyMember 2022-01-01 2022-12-31 0001743745 us-gaap:RelatedPartyMember 2024-06-30 0001743745 us-gaap:RelatedPartyMember 2023-12-31 0001743745 GNLN:ForeignCurrencyTranslationMember 2023-12-31 0001743745 GNLN:UnrealizedGainOrLossOnDerivativeInstrumentMember 2023-12-31 0001743745 GNLN:ForeignCurrencyTranslationMember 2024-01-01 2024-06-30 0001743745 GNLN:UnrealizedGainOrLossOnDerivativeInstrumentMember 2024-01-01 2024-06-30 0001743745 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2024-01-01 2024-06-30 0001743745 GNLN:ForeignCurrencyTranslationMember 2024-06-30 0001743745 GNLN:UnrealizedGainOrLossOnDerivativeInstrumentMember 2024-06-30 0001743745 GNLN:ForeignCurrencyTranslationMember 2022-12-31 0001743745 GNLN:UnrealizedGainOrLossOnDerivativeInstrumentMember 2022-12-31 0001743745 GNLN:ForeignCurrencyTranslationMember 2023-01-01 2023-06-30 0001743745 GNLN:UnrealizedGainOrLossOnDerivativeInstrumentMember 2023-01-01 2023-06-30 0001743745 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-01-01 2023-06-30 0001743745 GNLN:ForeignCurrencyTranslationMember 2023-06-30 0001743745 GNLN:UnrealizedGainOrLossOnDerivativeInstrumentMember 2023-06-30 0001743745 2023-06-05 2023-06-05 0001743745 GNLN:CommonClassAAndBMember 2022-12-31 0001743745 GNLN:ATMProgramMember us-gaap:CommonClassAMember 2022-04-18 2022-04-18 0001743745 us-gaap:CommonClassAMember GNLN:SecuritiesPurchaseAgreementMember 2023-06-29 2023-06-29 0001743745 GNLN:JulyTwentyTwentyThreeOfferingMember srt:MaximumMember GNLN:SecuritiesPurchaseAgreementMember 2023-06-29 0001743745 GNLN:JulyTwentyTwentyThreeOfferingMember us-gaap:WarrantMember 2023-06-29 0001743745 GNLN:JulyTwentyTwentyThreeOfferingMember us-gaap:WarrantMember 2023-06-29 0001743745 GNLN:JulyTwentyTwentyThreeOfferingMember GNLN:PreFundedWarrantsMember 2023-06-29 0001743745 GNLN:JulyTwentyTwentyThreeOfferingMember GNLN:PreFundedWarrantsMember 2023-06-29 0001743745 GNLN:JulyTwentyTwentyThreeOfferingMember GNLN:PreFundedWarrantsMember GNLN:NegotiatedAgreementsMember 2023-06-29 0001743745 GNLN:JulyTwentyTwentyThreeOfferingMember GNLN:PreFundedWarrantsMember GNLN:NegotiatedAgreementsMember 2022-06-27 0001743745 GNLN:JulyTwentyTwentyThreeOfferingMember GNLN:PreFundedWarrantsMember GNLN:NegotiatedAgreementsMember 2022-10-27 0001743745 GNLN:JulyTwentyTwentyThreeOfferingMember GNLN:PreFundedWarrantsMember GNLN:NegotiatedAgreementsMember 2023-06-29 2023-06-29 0001743745 GNLN:ATMProgramMember us-gaap:CommonClassAMember 2021-08-01 2024-06-30 0001743745 GNLN:TwoThousandNineteenEquityIncentivePlanMember us-gaap:CommonClassAMember 2022-08-04 0001743745 GNLN:TwoThousandNineteenEquityIncentivePlanMember us-gaap:CommonClassAMember 2023-06-01 2023-06-02 0001743745 us-gaap:EmployeeStockOptionMember us-gaap:CommonClassAMember 2024-04-01 2024-06-30 0001743745 us-gaap:EmployeeStockOptionMember us-gaap:CommonClassAMember 2023-04-01 2023-06-30 0001743745 us-gaap:EmployeeStockOptionMember us-gaap:CommonClassAMember 2024-01-01 2024-06-30 0001743745 us-gaap:EmployeeStockOptionMember us-gaap:CommonClassAMember 2023-01-01 2023-06-30 0001743745 us-gaap:RestrictedStockMember us-gaap:CommonClassAMember 2024-04-01 2024-06-30 0001743745 us-gaap:RestrictedStockMember us-gaap:CommonClassAMember 2023-04-01 2023-06-30 0001743745 us-gaap:RestrictedStockMember us-gaap:CommonClassAMember 2024-01-01 2024-06-30 0001743745 us-gaap:RestrictedStockMember us-gaap:CommonClassAMember 2023-01-01 2023-06-30 0001743745 GNLN:ConsumerGoodsMember 2024-04-01 2024-06-30 0001743745 GNLN:IndustrialGoodsMember 2024-04-01 2024-06-30 0001743745 GNLN:ConsumerGoodsMember 2023-04-01 2023-06-30 0001743745 GNLN:IndustrialGoodsMember 2023-04-01 2023-06-30 0001743745 GNLN:ConsumerGoodsMember 2024-01-01 2024-06-30 0001743745 GNLN:IndustrialGoodsMember 2024-01-01 2024-06-30 0001743745 GNLN:ConsumerGoodsMember 2023-01-01 2023-06-30 0001743745 GNLN:IndustrialGoodsMember 2023-01-01 2023-06-30 0001743745 GNLN:ConsumerGoodsMember 2024-06-30 0001743745 GNLN:IndustrialGoodsMember 2024-06-30 0001743745 GNLN:ConsumerGoodsMember 2023-12-31 0001743745 GNLN:IndustrialGoodsMember 2023-12-31 0001743745 us-gaap:SubsequentEventMember 2024-07-22 2024-07-23 0001743745 us-gaap:SubsequentEventMember 2024-08-07 0001743745 us-gaap:SubsequentEventMember 2024-08-06 2024-08-07 0001743745 us-gaap:SubsequentEventMember GNLN:PurchaseAgreementMember 2024-08-11 2024-08-12 0001743745 us-gaap:SubsequentEventMember GNLN:PrefundedWarrantMember 2024-08-12 0001743745 us-gaap:SubsequentEventMember us-gaap:CommonStockMember 2024-08-12 0001743745 us-gaap:SubsequentEventMember 2024-08-11 2024-08-12 iso4217:USD xbrli:shares iso4217:USD xbrli:shares GNLN:Integer xbrli:pure

 

 

 

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, 2024

 

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)

 

Delaware   83-0806637
State or other jurisdiction of
incorporation or organization
  (I.R.S. Employer
Identification No.)

 

1095 Broken Sound Parkway, Suite 100    
Boca Raton, FL   33487
(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 class   Trading Symbol(s)   Name of each exchange on which registered
Class A Common Stock, $0.01 par value per share   GNLN   Nasdaq Capital 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 August 14, 2024, Greenlane Holdings, Inc. had 2,910,848 shares of Class A common stock outstanding

 

 

 

 

 

 

Greenlane Holdings, Inc.

Form 10-Q

For the Quarterly Period Ended June 30, 2024

 

TABLE OF CONTENTS

 

    Page
PART I Financial Information  
Item 1. Financial Statements (Unaudited) 3
  Condensed Consolidated Balance Sheets 3
  Condensed Consolidated Statements of Operations and Comprehensive Loss 4
  Condensed Consolidated Statements of Stockholders’ Equity 5
  Condensed Consolidated Statements of Cash Flows 6
  Notes to Condensed Consolidated Financial Statements 8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 26
Item 3. Quantitative and Qualitative Disclosures About Market Risk 39
Item 4. Controls and Procedures 39
     
PART II Other Information  
Item 1. Legal Proceedings 40
Item 1A. Risk Factors 40
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds, and Issuer Purchases of Equity Securities 42
Item 5. Other Information 42
Item 6. Exhibits 42
Signatures 43

 

2

 

 

PART I

 

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

 

GREENLANE HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value per share amounts)

 

   June 30, 2024   December 31, 2023 
   (unaudited)     
ASSETS          
Current assets          
Cash  $169   $463 
Accounts receivable, net of allowance of $2,250 and $2,209 at June 30, 2024 and December 31, 2023, respectively   1,923    1,693 
Inventories, net   17,268    20,529 
Vendor deposits   3,737    3,765 
Other current assets (Note 8)   2,261    3,319 
Total current assets   25,358    29,769 
           
Property and equipment, net   2,178    2,476 
Operating lease right-of-use assets   1,499    1,936 
Other assets   3,894    3,912 
Total assets  $32,929   $38,093 
           
LIABILITIES          
Current liabilities          
Accounts payable  $15,005   $12,103 
Accrued expenses and other current liabilities (Note 8)   2,850    3,056 
Customer deposits   2,775    2,775 
Notes payable, net of debt discount   4,905    7,283 
Current portion of operating leases   886    866 
Current portion of finance leases       7 
Total current liabilities   26,421    26,090 
           
Operating leases, less current portion   554    1,010 
Other liabilities       1 
Total long-term liabilities   554    1,011 
Total liabilities   26,975    27,101 
Commitments and contingencies (Note 7)   -       
           
STOCKHOLDERS’ EQUITY          
Preferred stock, $0.0001 par value, 10,000 shares authorized, none issued and outstanding        
Class A common stock, $0.01 par value per share, 600,000 shares authorized, 529 shares issued and outstanding as of June 30, 2024; 600,000 shares authorized, 339 shares issued and outstanding as of December 31, 2023*   5    3 
Class B common stock, $0.0001 par value per share, 30,000 shares authorized, and 0 shares issued and outstanding as of June 30, 2024 and December 31, 2023*        
Additional paid-in capital*   268,249    268,165 
Accumulated deficit   (262,395)   (257,289)
Accumulated other comprehensive income   244    245 
Total stockholders’ equity attributable to Greenlane Holdings, Inc.   6,103    11,124 
Non-controlling interest   (149)   (132)
Total stockholders’ equity   5,954    10,992 
Total liabilities and stockholders’ equity  $32,929   $38,093 

 

*After giving effect to the Reverse Stock Splits - See Note 9 - Stockholders’ Equity.

 

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

 

3

 

 

GREENLANE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(in thousands, except per share amounts)

 

                     
   Three months ended June 30,   Six months ended June 30, 
   2024   2023   2024   2023 
                 
Net sales  $2,652   $19,625   $7,578   $43,584 
Cost of sales   1,641    15,051    5,055    33,491 
Gross profit   1,011    4,574    2,523    10,093 
Operating expenses:                    
Salaries, benefits and payroll taxes   1,509    5,157    4,455    10,527 
General and administrative   2,801    6,968    5,093    14,776 
Depreciation and amortization   196    477    450    968 
Total operating expenses   4,506    12,602    9,998    26,271 
Loss from operations   (3,495)   (8,028)   (7,475)   (16,178)
                     
Other income (expense), net:                    
Interest expense   (289)   (918)   (811)   (1,733)
Change in fair value of contingent consideration   1,000        1,000     
Gain on extinguishment of debt   2,166        2,166     
Other income (expense), net   (14)   (85)   (3)   134 
Total other income (expense), net   2,863    (1,003)   2,352    (1,599)
Loss before income taxes   (632)   (9,031)   (5,123)   (17,777)
Provision for (benefit from) income taxes       (7)       (6)
Net loss   (632)   (9,024)   (5,123)   (17,771)
Less: Net income (loss) attributable to non-controlling interest   (17)   8    (17)   (46)
Net loss attributable to Greenlane Holdings, Inc.  $(615)  $(9,032)  $(5,106)  $(17,725)
Net loss attributable to Class A common stock per share - basic and diluted (Note 9)*  $(1.33)  $(62.29)  $(13.69)  $(122.24)
Weighted-average shares of Class A common stock outstanding - basic and diluted (Note 9)*   462    145    373    145 
Other comprehensive income (loss):                    
Foreign currency translation adjustments   (3)   27    (1)   205 
Comprehensive loss   (635)   (8,997)   (5,124)   (17,566)
Less: Comprehensive loss attributable to non-controlling interest   (17)   (8)   (17)   (8)
Comprehensive loss attributable to Greenlane Holdings, Inc.  $(618)  $(8,989)  $(5,107)  $(17,558)

 

*After giving effect to the Reverse Stock Splits - See Note 9 - Stockholders’ Equity.

 

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

 

4

 

 

GREENLANE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(in thousands)

 

         8    *                     
   Class A Common Stock   Additional Paid-In   Accumulated   Accumulated Other Comprehensive   Non- Controlling   Total Stockholders’ 
   Shares*   Amount*   Capital*   Deficit   Income (Loss)   Interest   Equity 
Balance December 31, 2023   339   $3   $268,165   $(257,289)  $245   $(132)  $10,992 
Net loss               (4,491)           (4,491)
Equity-based compensation   17        86                86 
Issuance of Class A shares - (Note 9)   38    1    (1)                
Other comprehensive income                   2        2 
Balance March 31, 2024   394   $4   $268,250   $(261,780)  $247   $(132)  $6,589 
Net loss               (615)       (17)   (632)
Issuance of Class A shares - (Note 9)   135    1    (1)                
Other comprehensive income                   (3)       (3)
Balance June 30, 2024   529   $5   $268,249   $(262,395)  $244   $(149)  $5,954 

 

*After giving effect to the Reverse Stock Splits - See Note 9 - Stockholders’ Equity.

 

       *       *                     
  

Class A

Common Stock

   Class B Common Stock   Additional
Paid-In
   Accumulated    Accumulated
Other Comprehensive
   Non- Controlling   Total Stockholders’ 
   Shares*   Amount*   Shares*   Amount*   Capital*   Deficit   Income (Loss)   Interest   Equity 
Balance 12/31/2022   145   $1       $   $264,031   $(225,114)  $55   $18   $38,991 
Net loss                       (8,693)       (54)   (8,747)
Equity-based compensation                   110                110 
Issuance of Class A shares - Amended Eyce APA (Note 3)                   95                95 
Other comprehensive income                           178        178 
Balance 3/31/2023   145    1            264,236    (233,807)   233    (36)   30,627 
Net loss                       (9,032)       8    (9,024)
Equity-based compensation forfeiture, net                   (11)               (11)
Issuance of Class A shares - Amended Eyce APA (Note 3)                   65                65 
Other comprehensive income (loss)                           27        27 
Balance 6/30/2023   145   $1       $   $264,290   $(242,839)  $260   $(28)  $21,684 

 

*After giving effect to the Reverse Stock Splits - See Note 9 - Stockholders’ Equity.

 

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

 

5

 

 

GREENLANE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

 

           
   For the six months ended June 30, 
   2024   2023 
         
Cash flows from operating activities:          
Net loss (including amounts attributable to non-controlling interest)  $(5,123)  $(17,771)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   450    968 
Equity-based compensation expense   86    260 
Change in provision for doubtful accounts   41    (10)
Change in fair value of contingent consideration   (1,000)   103 
Amortization of debt discount   33     
Gain on extinguishment of debt   (2,166)    
Other       487 
Changes in operating assets and liabilities, net of the effects of acquisitions:          
Increase (decrease) in accounts receivable   (271)   3,389 
Decrease in inventories   2,770    10,803 
Decrease in vendor deposits   28    1,283 
Decrease in other current assets   1,076    4,227 
Increase in accounts payable   2,904    1,949 
Increase in accrued expenses and other liabilities   793    13 
Decrease in customer deposits       (1,045) 
Net cash (used in) provided by operating activities   (379)   4,656 
Cash flows from investing activities:          
           
Purchases of property and equipment, net   (151)   (306)
Proceeds from sale of equity investments       53 
Net cash used in investing activities   (151)   (253)
Cash flows from financing activities:          
Payments on Eyce and DaVinci promissory notes       (1,601)
Purchase consideration paid for Eyce LLC and DaVinci acquisitions        (300)
Repayments of Asset-Based Loan       (9,452)
Modification costs of Asset-Based Loan       (751)
Proceeds from notes payable   635     
Proceeds from future receivables financing   225     
Repayments of loan against future accounts receivable   (613)    
Other   (10)   (29)
Net cash provided by (used in) financing activities   237    (12,133)
Effects of exchange rate changes on cash   (1)   205 
Net decrease in cash   (294)   (7,525)
Cash and restricted cash, as of beginning of the period   463    12,176 
Cash and restricted cash, as of end of the period  $169   $4,651 

 

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

 

6

 

 

GREENLANE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(Unaudited)

(in thousands)

 

Reconciliation of cash and restricted cash to consolidated balance sheets

 

   For the six months ended June 30, 
   2024   2023 
Beginning of the period        
Cash  $463   $6,458 
Restricted cash       5,718 
Total cash and restricted cash, beginning of period  $463   $12,176 
           
End of the period          
Cash  $169   $4,651 
Restricted cash        
Total cash and restricted cash, end of period  $169   $4,651 
           
Supplemental disclosures of cash flow information          
Cash paid for interest  $778   $1,155 
Cash paid for amounts included in the measurement of lease liabilities  $   $447 
           
Non-cash financing activities:          
Non-cash purchases of property and equipment  $   $285 
Extinguishment of debt in connection with Synergy asset purchase agreement  $2,658   $ 

 

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

 

7

 

 

GREENLANE HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1. BUSINESS OPERATIONS AND ORGANIZATION

 

Organization

 

Greenlane Holdings, Inc. (“Greenlane” and, collectively with the Operating Company (as defined below) and its consolidated subsidiaries, the “Company”, “we”, “us”, and “our”) was formed as a Delaware corporation on May 2, 2018. We are a holding company that was formed for the purpose of completing an underwritten initial public offering (“IPO”) of shares of our Class A common stock, $0.01 par value per share (“Class A common stock”), in order to carry on the business of Greenlane Holdings, LLC (the “Operating Company”). The Operating Company was organized under the laws of the state of Delaware on September 1, 2015, and is based in Boca Raton, Florida. Unless the context otherwise requires, references to the “Company” refer to us, and our consolidated subsidiaries, including the Operating Company.

 

We merchandise premium cannabis accessories, child-resistant packaging, specialty vaporization solutions and lifestyle products in the United States, Canada, Europe and Latin America, serving a diverse and expansive customer base with thousands of retail locations, licensed cannabis dispensaries, smoke shops, multi-state operators (“MSOs”), specialty retailers, and retail consumers.

 

We have been developing a portfolio of our own proprietary brands (the “Greenlane Brands”) that we believe will, over time, deliver higher margins and create long-term value for our customers and shareholders. Our wholly-owned Greenlane Brands includes Groove – our more affordable product line and Higher Standards – our premium smoke shop and ancillary product brand, and our award winning Vapor.com website and brand. We also have category exclusive licenses for the premium Marley Natural branded products, as well as the K.Haring branded products.

 

We are the sole manager of the Operating Company and our principal asset is Common Units of the Operating Company (“Common Units”). As the sole manager of the Operating Company, we operate and control all of the business and affairs of the Operating Company, and we conduct our business through the Operating Company and its subsidiaries. We have a board of directors and executive officers, but no employees. All of our assets are held and all of the employees are employed by wholly owned subsidiaries of the Operating Company.

 

We have the sole voting interest in, and control the management of, the Operating Company, and we have the obligation to absorb losses of, and receive benefits from, the Operating Company, that could be significant. We determined that the Operating Company is a variable interest entity (“VIE”) and that we are the primary beneficiary of the Operating Company. Accordingly, pursuant to the VIE accounting model, beginning in the fiscal quarter ended June 30, 2019, we consolidated the Operating Company in our consolidated financial statements and reported a non-controlling interest related to the Common Units held by the members of the Operating Company (other than the Common Units held by us) on our consolidated financial statements.

 

On August 31, 2021, we completed our merger with KushCo Holdings, Inc. (“KushCo”) and have included the results of operations of KushCo in our consolidated statements of operations and comprehensive loss from that date forward. In connection with the merger with KushCo, the Greenlane Certificate of Incorporation was amended and restated (the “A&R Charter”) in order to (i) increase the number of authorized shares of Greenlane Class B common stock, $0.0001 par value per share (the “Class B Common stock”), from 10 million shares to 30 million shares in order to effect the conversion of each outstanding share of Class C common stock, $0.0001 par value per share (the “Class C common stock”), into one-third of one share of Class B common stock, (ii) increase the number of authorized shares of Class A common stock from 125 million shares to 600 million shares, and (iii) eliminate references to the Class C common stock. Pursuant to the terms of an Agreement and Plan of Merger, dated as of March 31, 2021 (the “Merger Agreement”) with KushCo, immediately prior to the consummation of the business combination, holders of Class C common stock received one-third of one share of Class B common stock for each share of Class C common stock held immediately prior to the closing of the merger.

 

Our corporate structure is commonly referred to as an “Up-C” structure. The Up-C structure allows the Operating Company to continue to realize tax benefits associated with owning interests in an entity that is treated as a partnership, or “pass-through” entity. One of these benefits is that future taxable income of the Operating Company that is allocated to its members will be taxed on a flow-through basis and therefore will not be subject to corporate taxes at the Operating Company entity level. Additionally, because a member may redeem their Common Units for shares of Class A common stock on a one-for-one basis or, at our option, for cash, the Up-C structure also provides the member with potential liquidity that holders of non-publicly traded limited liability companies are not typically afforded.

 

8

 

 


In connection with the IPO, we entered into a Tax Receivable Agreement (the “TRA”) with the Operating Company and the Operating Company’s members and a Registration Rights Agreement (the “Registration Rights Agreement”) with the Operating Company’s members. The TRA provides for the payment by us to the Operating Company’s member(s) of 85.0% of the amount of tax benefits, if any, that we may actually realize (or in some cases, are deemed to realize) as a result of (i) the step-up in tax basis in our share of the Operating Company’s assets resulting from the redemption of Common Units under the mechanism described above and (ii) certain other tax benefits attributable to payments made under the TRA. Pursuant to the Registration Rights Agreement, we have agreed to register the resale of shares of Class A common stock that are issuable to the Operating Company’s members upon redemption or exchange of their Common Units.

 

The A&R Charter and the Fourth Amended and Restated Operating Agreement of the Operating Company (the “Operating Agreement”) require that (a) we at all times maintain a ratio of one Common Unit owned by us for each share of our Class A common stock issued by us (subject to certain exceptions), and (b) the Operating Company at all times maintains (i) a one-to-one ratio between the number of shares of our Class A common stock issued by us and the number of Common Units owned by us, and (ii) a one-to-one ratio between the number of shares of our Class B common stock owned by the non-founder members of the Operating Company and the number of Common Units owned by the non-founder members of the Operating Company.

 

As of December 31, 2022, all Common Units of the Operating Company and Class B common stock had been exchanged for Class A common stock, and we owned 100% of the voting and economic interests in Greenlane through the holders’ ownership of Class A common stock. See “Note 9 - Stockholder’s Equity.”

 

Reverse Stock Splits

 

On June 2, 2023, we filed a Certificate of Amendment to the A&R Charter with the Secretary of State for the State of Delaware (“SSSD”), which effected a one-for-ten reverse stock split (the “2023 Reverse Stock Split” and together with the 2022 Reverse Stock Split, the “Reverse Stock Splits”) of our issued and outstanding shares of Common Stock at 5:01 PM Eastern Time on June 5, 2023. As a result of the 2023 Reverse Stock Split, every ten shares of common stock issued and outstanding were converted into one share of common stock. We paid cash in lieu of fractional shares, and accordingly, no fractional shares were issued in connection with the 2023 Reverse Stock Split.

 

On July 23, 2024, the Board approved the reverse split at a ratio of one-for-11 and the Amendment has been filed with the Secretary of State of the State of Delaware, which became effective on August 5, 2024 at 12:01 AM Eastern Time, before the opening of trading on the Nasdaq.

 

The Reverse Stock Splits did not change the par value of the Common Stock or the authorized number of shares of Common Stock. All outstanding options, restricted stock awards, warrants and other securities entitling their holders to purchase or otherwise receive shares of our Common Stock have been adjusted as a result of the Reverse Stock Splits, as required by the terms of each security. The number of shares available to be awarded under our Amended and Restated 2019 Equity Incentive Plan have also been appropriately adjusted. See “Note 10 — Compensation Plans” for more information.

 

All share and per share amounts in these consolidated financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to the Reverse Stock Splits, including reclassifying an amount equal to the reduction in par value of Common Stock to additional paid-in capital.

 

Liquidity and Going Concern

 

Pursuant to ASC 205-40, Presentation of Financial Statements — Going Concern (“ASC 205-40”), management must evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that these condensed consolidated financial statements are issued. In accordance with ASC 205-40, management’s analysis can only include the potential mitigating impact of management’s plans that have not been fully implemented as of the issuance date if (a) it is probable that management’s plans will be effectively implemented on a timely basis, and (b) it is probable that the plans, when implemented, will alleviate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern.

 

Our primary requirements for liquidity and capital are working capital, debt service related to recent acquisitions and general corporate needs. Our primary sources of liquidity are our cash on hand and the cash flow that we generate from our operations, as well as proceeds from other equity issuances.

 

We believe that our cash on hand and the cash flow that we generate from our operations will not be sufficient to fund our working capital and capital expenditure requirements, as well as our debt repayments and other liquidity requirements associated with our existing operations, for the next 12 months. Based on our cash on hand and working capital at June 30, 2024, we may have insufficient cash to fund planned operations into the fourth quarter of 2024. This is evident from our continued efforts to raise capital and leverage external funding to fulfil our capital needs.

 

9

 

 

ATM Program and Shelf Registration Statement

 

We formerly used a shelf registration statement on Form S-3 (the “Shelf Registration Statement”) to conduct securities offerings from time to time in order to meet our liquidity needs. In August 2021, we filed a prospectus supplement and established an “at-the-market” equity offering program (the “ATM Program”) that provided for the sale of shares of our Class A common stock having an aggregate offering price of up to $50 million, from time to time.

 

Since the launch of the ATM program in August 2021 and through December 31, 2022, we sold shares of our Class A common stock which generated gross proceeds of approximately $12.7 million and we paid fees to the sales agent of approximately $0.4 million. Due to the untimely filing of certain of our Quarterly and Annual Reports 3, we are unable to issue additional shares of Class A common stock pursuant to the ATM Program or otherwise use the Shelf Registration Statement, which will limit our liquidity options in the capital markets.

 

Common Stock and Warrant Offerings.

 

On June 29, 2023, we entered into securities purchase agreements with certain investors, pursuant to which we agreed to issue and sell an aggregate of 560,476 shares of our Class A common stock, pre-funded warrants to purchase up to 3,487,143 shares of our Class A Common Stock (the “July 2023 Pre-Funded Warrants”) and warrants to purchase up to 8,095,238 shares of our Class A common stock (the “July 2023 Standard Warrants”). The July 2023 units were offered pursuant to a Registration Statement on Form S-1 (the “July 2023 Offering”). The July 2023 Offering generated gross proceeds of approximately $4.3 million and net proceeds to the Company of approximately $3.8 million and closed on July 3, 2023. See “Note 9 – Stockholders’ Equity” for further information.

 

Asset-Based Loan

 

On August 9, 2022, we entered into an asset-based loan agreement dated as of August 8, 2022 (the “Loan Agreement”), which made available to the Company a term loan of up to $15.0 million. On February 9, 2023, we entered into Amendment No. 2 to the Loan Agreement, in which we agreed to, among other things, voluntarily prepay approximately $6.6 million (inclusive of early termination fees and expenses) under the terms provided for under the Loan Agreement and the lenders under the Loan Agreement agreed to release $5.7 million in funds held in a blocked account pursuant to the terms of the Loan Agreement.

 

On August 7, 2023, we repaid the approximately $4.3 million in aggregate principal amount (the “Loan Repayment”) which remained outstanding under the terms of the Loan Agreement. As a result of the Loan Repayment, the Company has been released from its obligations under the Loan Agreement, in accordance with the terms of the Loan Agreement. See “Note 6 - Long Term Debt” for more information.

 

10

 

 

ERC Sale

 

On February 16, 2023, two of our wholly owned subsidiaries, Warehouse Goods LLC and Kim International LLC, entered into an agreement with a third-party institutional investor pursuant to which the investor purchased, for approximately $4.9 million in cash, an economic participation interest, at a discount, in our rights to payment from the United States Internal Revenue Service for certain periods with respect to the employee retention credits filed by us under the Employee Retention Credit program.

 

Future Receivables Financing

 

In July, August, October, and November 2023, the Company received an aggregate of approximately $3.9 million in cash pursuant to the terms of future receivables financings (collectively, the “Future Receivables Financings”) entered into with two private lenders. At June 30, 2024, $1.8 million of such financing remained outstanding. See “Note 6 - Long Term Debt” for more information.

 

Secured Bridge Loan

 

On September 22, 2023, the Company entered into a secured loan pursuant to a Loan and Security Agreement (the “September 2023 Loan Agreement”), dated as of September 22, 2023 with Synergy Imports, LLC (the “Secured Bridge Loan Lender”).

 

Pursuant to the September 2023 Loan Agreement, the Secured Bridge Loan Lender agreed to make available to the Company a six-month bridge loan of $2.2 million in new funds. Additionally, the Secured Bridge Loan Lender agreed to defer payments totaling $2,028,604 already owed by the Company under existing payment obligations and potentially defer up to an additional $2,655,778 which may become due pursuant to existing agreements during the term of the September 2023 Loan Agreement.

 

Subject to certain exceptions, the Company agreed to pledge all of its assets, with the exception of deposit accounts and accounts receivable, as collateral. Additionally, the Company agreed to transfer one US patent and two related foreign patents and a related trademark in exchange for an exclusive license back of such assets in the area of smoking products and accessories in connection with the September 2023 Loan Agreement.

 

In May 2024, the Company modified its debt agreement with Synergy to reduce the principal balance due by $2.7 million from $5.1 million as part of the Loan Modification Agreement concurrent with the Asset Purchase Agreement. Synergy acquired certain assets from the Company in exchange for the reduction in overall principal owed. At June 30, 2024, $2.5 million of such financing remained outstanding. See “Note 6 - Long Term Debt” for more information.

 

Note Payable

 

On June 7, 2024, the Company entered into a subscription agreement with Cobra Alternative Capital Strategies, LLC. As of June 30, 2024, the Company has been loaned $793,700 with net cash proceeds of $634,960. The note was issued with a 20% original issue discount and is due in full on December 7, 2024. See “Note 6 - Long Term Debt” for more information.

 

Management Initiatives

 

We have completed several initiatives to optimize our working capital requirements due to our inability to access capital markets on equitable terms and stock-outs and shortages of higher velocity inventory. In the fourth quarter of 2022, we launched Groove, a new, innovative Greenlane Brands product line, and we also rationalized and improved our third-party brands product offering, which enabled us to reduce inventory carrying costs and working capital requirements while increasing our offerings.

 

In April 2023, we entered into two strategic partnership. First, we entered into a strategic partnership (the “MJ Packaging Partnership”) with A&A Global Imports d/b/a MarijuanaPackaging.com (“MJ Pack”), a leading provider of packaging solutions to the cannabis industry. Second, we entered into a strategic partnership with an affiliate of one of our existing vape suppliers (“Vape Partner”) to service certain key customers with vaporizer goods and services (the “Vape Partnership”). As part of the Vape Partnership, we will introduce our Vape Partner to certain key customers, assist with the promotion and the sale of certain vaporizer goods and services, and help coordinate the logistics, storage and distribution of such vaporizer products. If our Vape Partner and key customer(s) enter into a direct relationship, the customers would directly purchase vaporizer goods and services, which we currently sell them, directly from our Vape Partner and we would no longer need to purchase such vape inventory on behalf of such key customer(s). In exchange we would earn quarterly and annual commission payments from our strategic partners. While the strategic partnerships may result in a decrease in top line revenue for these packaging and vape products, these partnerships combined with some of our other restructuring initiatives should allow us to reduce our overall cost-structure and enhance our margins, thereby improving our balance sheet.

 

We have successfully renegotiated many of our vendor and supplier partnership terms and are continuing to improve working capital arrangements with our vendors and suppliers. We have made progress consolidating and streamlining our office, warehouse, and distribution operations footprint. We have reduced our workforce significantly to reduce costs and align with our revenue projections.

 

The Company has incurred net losses of $5.1 million and $17.8 million for the six months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024 and 2023, cash (used in) provided by operating activities were $(0.4) million and $4.7 million, respectively. The recent macroeconomic environment has caused weaker demand than contemplated under the Company’s business plan, resulting in a reduction in projected revenue and cash flows for the twelve-month period included in the going concern evaluation.

 

11

 

 

As a result of our losses and our projected cash needs, combined with our current liquidity level, substantial doubt exists about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is contingent upon successful execution of management’s intended plan over the next twelve months to improve the Company’s liquidity and profitability, which includes, without limitation:

 

 Further reducing operating costs expense by taking additional restructuring actions to align cost with revenue to achieve profitability.
   
 Increasing revenue by introducing new products, acquiring new customers, and enhancing our sales force
   
 Execute on strategic partnerships accretive to margins and operating cash
   
 Seeking additional capital through the issuance of debt or equity securities.

 

The unaudited condensed consolidated financial statements do not include any adjustments that may result from the outcome of this going concern uncertainty. For a more complete description of our initiatives, see the Management Discussion and Analysis.

 

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2023. The condensed consolidated results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024, or any other future annual or interim period. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments necessary for a fair statement of the Company’s financial position and operating results. Certain reclassifications have been made to prior year amounts or balances to conform to the presentation adopted in the current year.

 

Principles of Consolidation

 

Our condensed consolidated financial statements include our accounts, the accounts of the Operating Company, and the accounts of the Operating Company’s consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

 

12

 

 

Use of Estimates

 

Conformity with U.S. GAAP requires the use of estimates and judgments that affect the reported amounts in our consolidated financial statements and accompanying notes. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical information and on various other assumptions that we believe are reasonable under the circumstances. U.S. GAAP requires us to make estimates and judgments in several areas. Such areas include, but are not limited to the following: the collectability of accounts receivable; the allowance for slow-moving or obsolete inventory; the realizability of deferred tax assets; the fair value of contingent consideration arrangements; the useful lives property and equipment; the calculation of our VAT taxes receivable and VAT taxes, fines, and penalties payable; our loss contingencies, including our TRA liability; and the valuation and assumptions underlying equity-based compensation. These estimates are based on management’s knowledge about current events and expectations about actions we may undertake in the future. The actual results could differ materially from those estimates.

 

Segment Reporting

 

We manage our global business operations through our operating and reportable business segments. As of June 30, 2024, we had two reportable operating business segments: Consumer Goods and Industrial Goods. Our reportable segments have been identified based on how our chief operating decision maker (“CODM”), which is a committee comprised of our Chief Executive Officer (“CEO”) and our Chief Financial and Legal Officer (“CFO”), manages our business, makes resource allocation and operating decisions, and evaluates operating performance. See “Note 12—Segment Reporting.”

 

Revenue Recognition

 

Revenue is recognized when customers obtain control of goods and services promised by us. Revenue is measured based on the amount of consideration that we expect to receive in exchange for those goods or services, reduced by promotional discounts and estimates for return allowances and refunds. Taxes collected from customers for remittance to governmental authorities are excluded from net sales.

 

We generate revenue primarily from the sale of finished products to customers, whereby each product unit represents a single performance obligation. We recognize revenue from product sales when the customer has obtained control of the products, which is either at point of sale or delivery to the customer, depending upon the specific terms and conditions of the arrangement, or at the point of sale for our retail store sales. We provide no warranty on products sold. Product warranty is provided by the manufacturers. For certain product offerings such as child-resistant packaging, closed-system vaporization solutions and custom-branded retail products, we may receive a deposit from the customer (generally 25% - 50% of the total order cost, but the amount can vary by customer contract) when an order is placed by a customer. We typically complete these orders within one to six months from the date of order, depending on the complexity of the customization and the size of the order, but the completion timeline can vary by product type and terms of sales with each customer. See “Note 8—Supplemental Financial Statement Information” for a summary of changes to our customer deposits liability balance during the six months ended June 30, 2024 and the year ended December 31, 2023.

 

We estimate product returns based on historical experience and record them as a refund liability that reduces the net sales for the period. We analyse actual historical returns, current economic trends and changes in order volume when evaluating the adequacy of our sales returns allowance in any reporting period. Our liability for returns, which is included within “Accrued expenses and other current liabilities” in our consolidated balance sheet, was approximately $0.1 million December 31, 2023. There were no liabilities related to refunds as of June 30, 2024.

 

We elected to account for shipping and handling expenses that occur after the customer has obtained control of products as a fulfillment activity in cost of sales. Shipping and handling fees charged to customers are included in net sales upon completion of our performance obligations. We apply the practical expedient provided for by the applicable revenue recognition guidance by not adjusting the transaction price for significant financing components for periods less than one year. We also apply the practical expedient provided by the applicable revenue recognition guidance based upon which we generally expense sales commissions when incurred because the amortization period is one year or less. Sales commissions are recorded within “Salaries, benefits and payroll tax expenses” in the consolidated statements of operations and comprehensive loss.

 

The Company transitioned to a commission revenue model for the majority of the sales for the Industrial segment. The company operates as a sales agent servicing vape customers and receives a commission for these services. The company was previously working directly with these customers and recognizing gross revenue versus straight commission revenue. The Company recognizes this fee on a periodic basis when the products have been shipped for the end consumer. In working with their partner, the Company is not responsible for fulfilling a promise to provide the specified goods, does not establish the pricing with its partners customers, and does not have control over the goods that will be shipped. As such, the Company is an agent and recognizes its revenue on a net basis for its service. The partner company pays Greenlane a negotiated percentage-based fee on a quarterly basis.

 

One customer represented approximately 9% and 19% of net sales for the three and six months ended June 30, 2024. For the three and six months ended June 30, 2023, one customer represented approximately 38% and 32% of net sales. As of June 30, 2024 and December 31, 2023, the Company has a concentration of credit risk with its accounts receivable balance as one customer represented approximately 22% and 11%, respectively, of accounts receivable.

 

13

 

 

Value Added Taxes

 

During the third quarter of 2020, as part of a global tax strategy review, we determined that our European subsidiaries based in the Netherlands, which we acquired on September 30, 2019, had historically collected and remitted value added tax (“VAT”) payments, which related to direct-to-consumer sales to other European Union (“EU”) member states, directly to the Dutch tax authorities. In connection with our subsidiaries’ payment of VAT to Dutch tax authorities rather than other EU member states, we may become subject to civil or criminal enforcement actions in certain EU jurisdictions, which could result in penalties.

 

We performed an analysis of the VAT overpayments to the Dutch tax authorities, which we expected to be refunded to us, and VAT payable to other EU member states, including potential fines and penalties. Based on this analysis, we recorded VAT payable of approximately $0.6 and $0.4 million, respectively, relating to this matter within “Accrued expenses and other current liabilities” in our condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023.

 

Pursuant to the purchase and sale agreement by which we acquired our European subsidiaries, the sellers are required to indemnify us against certain specified matters and losses, including any and all liabilities, claims, penalties and costs incurred or sustained by us in connection with non-compliance with tax laws in relation to activities of the sellers. The indemnity (or indemnification receivable) is limited to an amount equal to the purchase price under the purchase and sale agreement.

 

As noted above, we have voluntarily disclosed VAT owed to several relevant tax authorities in the EU member states and believe in doing so we will reduce our liability for penalties and interest. Nonetheless, we may incur expenses in future periods related to such matters, including litigation costs and other expenses to defend our position. The outcome of such matters is inherently unpredictable and subject to significant uncertainties. Refer to “Note 7—Commitments and Contingencies” for additional discussion regarding our contingencies.

 

Out-of-Period Adjustment

 

During the three months ended June 30, 2024, the Company recorded an out-of-period adjustment as a result of an offsetting intercompany entry to general and administrative expenses during the current period, as opposed to the three months ended March 31, 2024. The adjustment resulted in an additional net loss due to increased general administrative expenses reflected in the current period consolidated condensed statement of operations of approximately $0.9 million with no net impact to the year-to-date financial statements as of and for the six months ended June 30, 2024. The Company evaluated the quantitative and qualitative aspects of this out of period adjustment and determined that the adjustment did not have a material impact to any previously reported quarterly or annual financial statements.

 

Recently Issued Accounting Guidance Not Yet Adopted

 

In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies that a contractual sale restriction prohibiting the sale of an equity security is a characteristic of the reporting entity holding the equity security and is not included in the equity security’s unit of account. This standard is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company is currently evaluating the impact of adopting the standard.

 

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this update require public companies to disclose on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. In addition, the amendment requires that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required in interim periods and require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-07 on its consolidated financial statements and related disclosures. This amendment will go into effect for the fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

 

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements To Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this Update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

 

14

 

 

The amendments in this Update require that entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate). In addition, public business entities are required to provide certain qualitative disclosure about the rate reconciliation.

 

The amendments in this Update require that all entities disclose on an annual basis the amount of income taxes paid (net of refunds received) disaggregated (1) by federal (national), state, and foreign taxes and (2) by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received).

 

This Update also includes certain other amendments to improve the effectiveness of income tax disclosures, such as requiring that all entities disclose the following information:

 

  1. Income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign.
     
  2. Income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign.

 

The amendments in this ASU require a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements and related disclosures. This amendment will go into effect for annual periods beginning after December 15, 2024.

 

NOTE 3. BUSINESS ACQUISITIONS AND DISPOSITIONS

 

Amended Eyce APA

 

On April 7, 2022, we entered into an amendment to that certain Asset Purchase Agreement dated March 2, 2021 (the “Amended Eyce APA”), by and between Eyce and Warehouse Goods to accelerate the issuance of shares of Class A common stock issuable to Eyce under the agreement upon the attainment of certain EBITDA and revenue benchmarks (the “Amended 2022 Contingent Payment”), in an amount equal to $0.9 million. We issued 7,172 shares of Class A common stock to Eyce under the Amended 2022 Contingent Payment, which vest ratably in seven quarterly tranches starting on July 1, 2022, such that on January 1, 2024 (the “Vesting Date”), all shares issued to Eyce under the Amended 2022 Contingent Payment will have vested. The shares of Class A common stock issued under the Amended 2022 Contingent Payment are subject to certain forfeiture restrictions tied to the continued employment of certain Eyce personnel with the Company through the Vesting Date.

 

The Amended Eyce APA also provided for the payment of $0.9 million in cash in four equal installments on April 1, 2023, July 1, 2023, October 1, 2023 and January 1, 2024, contingent on the achievement of certain deliverables outlined in the Amended Eyce APA and the continued employment of certain Eyce personnel. The transaction was accounted for separately from acquisition accounting for the Eyce business combination. The April 2, 2023 and July 1, 2023 payments were paid timely, the remaining payments, if not paid timely will roll into the Synergy Imports, LLC Bridge Loan and included in the potential additionally deferred amounts under that Loan.

 

NOTE 4. FAIR VALUE OF FINANCIAL INSTRUMENTS

 

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

 

The carrying amounts for certain of our financial instruments, including cash, accounts receivable, accounts payable and certain accrued expenses and other assets and liabilities, approximate fair value due to the short-term nature of these instruments.

 

As of December 31, 2023, we had contingent consideration that is required to be measured at fair value on a recurring basis.

 

Our financial instruments measured at fair value on a recurring basis were as follows at the dates indicated:

 

                    
  

Condensed Consolidated

Balance Sheet Caption

 

Fair Value at

December 31, 2023

 
(in thousands)     Level 1   Level 2   Level 3   Total 
Liabilities:                       
Contingent consideration - current  Accrued expenses and other current liabilities  $   $    1,000    1,000 
Total Liabilities     $   $   $1,000   $1,000 

 

There were no transfers between Level 1 and Level 2 and no transfers to or from Level 3 of the fair value hierarchy during the three and six months ended June 30, 2024 and 2023, respectively.

 

15

 

 

Contingent Consideration

 

Each period we revalue our contingent consideration obligations associated with business acquisitions to their fair value. We estimate the fair value of the Product Launch Contingent Payments using a form of the scenario-based method, which includes significant unobservable inputs such as management’s identification of probability-weighted outcomes and a risk-adjusted discount rate over the earn-out period. Significant increases or decreases in these inputs could result in a significantly lower or higher fair value measurement of the contingent consideration liability. Changes in the fair value of contingent consideration are included within “Other income (expense), net” in our condensed consolidated statements of operations and comprehensive loss.

 

A reconciliation of our liabilities that are measured and recorded at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows:

 

(in thousands)  Six Months Ended
June 30, 2024
 
Balance at December 31, 2023  $1,000 
Cash payments for earned contingent consideration    
Transfer to notes payable    
Gain from fair value adjustments included in results of operations   (1,000)
Balance June 30, 2024  $ 

 

(in thousands)  Six Months Ended
June 30, 2023
 
Balance at December 31, 2022  $2,738 
Cash payments for earned contingent consideration   (300)
Loss (gain) from fair value adjustments included in results of operations   103 
Balance at June 30, 2023  $2,541 

 

Equity Securities Without a Readily Determinable Fair Value

 

Our investment in equity securities without readily determinable fair value consist of ownership interests in Airgraft Inc., Sun Grown Packaging, LLC (“Sun Grown”) and Vapor Dosing Technologies, Inc. (“VIVA”). We determined that our ownership interests do not provide us with significant influence over the operations of these investments. Accordingly, we account for our investments in these entities as equity securities.

 

16

 

 

Airgraft Inc., Sun Grown, and VIVA are private entities and their equity securities do not have a readily determinable fair value. We elected to measure these securities under the measurement alternative election at cost minus impairment, if any, with adjustments through earnings for observable price changes in orderly transactions for the identical or similar investment of the same issuer. We acquired our investments in Sun Grown and VIVA as part of our merger with KushCo, which we completed in August 2021. We did not identify any fair value adjustments related to these equity securities during the three and six months ended June 30, 2024 and 2023, respectively.

 

As of June 30, 2024 and December 31, 2023, the carrying value of our investment in equity securities without a readily determinable fair value was approximately $1.9 million, respectively, included within “Other assets” in our condensed consolidated balance sheets.

 

NOTE 5. LEASES

 

Greenlane as a Lessee

 

As of June 30, 2024, we had facilities financed under operating leases consisting of warehouses and offices with lease term expirations between 2023 and 2027. Lease terms are generally three to seven years for warehouses and office space. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

 

The following table provides details of our future minimum lease payments under operating lease liabilities recorded in our condensed consolidated balance sheet as of June 30, 2024. The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.

 

 

(in thousands)  Operating Leases 
Remainder of 2024  $457 
2025   942 
2026   81 
2027    
2028 and thereafter    
Total minimum lease payments  $1,480 
Less: imputed interest   40 
Present value of minimum lease payments  $1,440 
Less: current portion   886 
Long-term portion  $554 

 

Rent expense under operating leases was approximately $0.3 million and $0.5 million for the three and six months ended June 30, 2024, respectively, and approximately $0.6 million and $1.2 million for the three and six months ended June 30, 2023, respectively.

 

The following expenses related to our operating leases were included in “general and administrative” expenses within our condensed consolidated statements of operations and comprehensive loss:

 

           
   For the six months ended June 30, 
(in thousands)  2024   2023 
Operating lease cost   457    1,041 
Variable lease cost       143 
Total lease cost  $457   $1,184 

 

The table below presents lease-related terms and discount rates as of June 30, 2024:

 

   Operating Leases 
Weighted average remaining lease terms   1.6 years   
Weighted average discount rate   2.1%

 

17

 

 

NOTE 6. DEBT

 

Our debt balance, excluding operating lease liabilities and finance lease liabilities, consisted of the following amounts at the dates indicated:

 

(in thousands) 

June 30, 2024

  

December 31, 2023

 
   As of 
(in thousands) 

June 30, 2024

  

December 31, 2023

 
Future Receivables Financing  $1,786   $2,174 
Note payable   794     
Secured Bridge Loan   2,451    5,109 
 Total long term debt   5,031    7,283 
Less unamortized debt issuance costs   (126)    
Less current portion of debt   (4,905)   (7,283)
Debt, net, excluding operating and finance leases and liabilities  $   $ 

 

Future Receivables Financings

 

In July, August, October, and November 2023, the Company received an aggregate of approximately $3.9 million in cash pursuant to the terms of future receivables financings (collectively, the “Future Receivables Financings”) entered into with two private lenders. The Company will make weekly payments under the Future Receivables Financings and is scheduled to repay the amounts due under the Future Receivables Financings in full in approximately six to eight months. The total amount to be repaid under the initial Future Receivables Financings was approximately $4.5 million. In connection with the Future Receivables Financings, the Company granted the lenders security interests in Company’s accounts receivable equal to the amounts due thereunder, and in connection with any event of default, the lenders may file financing statements evidencing the security interests.

 

Note Payable

 

On June 7, 2024, the Company entered into a subscription agreement for a note payable with Cobra Alternative Capital Strategies, LLC. As of June 30, 2024, the Company had been loaned $793,700 with net cash proceeds of $634,960. The note was issued with a 20% original issue discount and is due in full on December 7, 2024. Upon default, the note can be converted at a variable price equal to 30% discount to the average daily volume weighted average price (“VWAP”) for the 20 trading days preceding the date of conversion. As of June 30, 2024, the note is not considered convertible.

 

Secured Bridge Loan

 

On September 22, 2023, the Company entered into a secured loan pursuant to a Loan and Security Agreement (the “September 2023 Loan Agreement”), dated as of September 22, 2023 with Synergy Imports, LLC (the “Secured Bridge Loan Lender” or “Synergy”).

 

Pursuant to the September 2023 Loan Agreement, the Secured Bridge Loan Lender agreed to make available to the Company a six-month bridge loan of $2.2 million in new funds. Additionally, the Secured Bridge Loan Lender agreed to defer payments totaling $2,028,604 already owed by the Company under existing payment obligations and potentially defer up to an additional $2,655,778 which may become due pursuant to existing agreements during the term of the September 2023 Loan Agreement.

 

Subject to certain exceptions, the Company agreed to pledge all of its assets, with the exception of deposit accounts and accounts receivable, as collateral. Additionally, the Company agreed to transfer one US patent and two related foreign patents and a related trademark in exchange for an exclusive license back of such assets in the area of smoking products and accessories in connection with the September 2023 Loan Agreement.

 

On May 6, 2024, the Company, Warehouse Goods and Synergy entered into an asset purchase agreement, dated May 1, 2024 (the “Asset Purchase Agreement”) pursuant to which Synergy purchased all of the intellectual property, a specified amount of inventory, and other assets related to the Eyce and DaVinci brands. In consideration for the acquisition, all parties entered into a loan modification agreement, effective May 1, 2024 (the “Loan Modification Agreement”) and an amended and restated secured promissory note, effective May 1, 2024 (the “Amended and Restated Secured Promissory Note”), an amendment to the original Eyce and Davinci Asset Purchase Agreements, a distribution agreement, the termination of a license granted by Eyce, and the termination of certain consulting and employment agreements. As part of the overall modification, the principal balance with Synergy decreased by $2.7 million from $5.1 million. Synergy acquired certain assets from the Company in exchange for the reduction in overall principal owed and as part of the transaction, the Company recognized a gain on the debt modification of $2.2 million. This amount is included in the accompanying financial statements within the statement of operations for the three and six months ended June 30, 2024 within other income (expense). At June 30, 2024, $2.5 million of such financing remained outstanding. The updated date of maturity will be through August 2024.

 

Future Minimum Principal Payments

 

The following table summarizes future scheduled minimum principal payments of debt at June 30, 2024. Future debt principal payments are presented based upon the stated maturity dates in the respective debt agreement.

 

(in thousands)  Remainder 2024   2025   2026   2027   2028   Total 
   Year Ending December 31, 
(in thousands)  Remainder 2024   2025   2026   2027   2028   Total 
Future Receivables Financing  $1,786   $   $   $   $   $1,786 
Note payable   794                    794 
Secured Bridge Loan   2,451                    2,451 
Total  $5,031   $   $   $   $   $5,031 

 

18

 

 

NOTE 7. COMMITMENTS AND CONTINGENCIES

 

Legal Proceedings

 

In the ordinary course of business, we are involved in various legal proceedings involving a variety of matters. We do not believe there are any pending legal proceedings that will have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows. However, the outcome of such legal matters is inherently unpredictable and subject to significant uncertainties. We have not taken any reserves for litigation for the six months ended June 30, 2024 and 2023, respectively.

 

Other Contingencies

 

We are potentially subject to claims related to various non-income taxes (such as sales, value added, consumption, and similar taxes) from various tax authorities, including in jurisdictions in which we already collect and remit such taxes. If the relevant taxing authorities were successfully to pursue these claims, we could be subject to significant additional tax liabilities.

 

See “Note 5—Leases” for details of our future minimum lease payments under operating lease liabilities. See “Note 11—Incomes Taxes” for information regarding income tax contingencies.

 

NOTE 8. SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION

 

ERC Sale

 

As of December 31, 2022, we had recorded an Employee Retention Credit (“ERC”) receivable of $4.9 million within “Other current assets” on our consolidated balance sheets, and a corresponding amount was included in “Other income (expense), net” in our consolidated statement of operations and comprehensive loss for the year ended December 31, 2022. On February 16, 2023, two of Greenlane Holdings, Inc.’s subsidiaries, Warehouse Goods LLC and KIM International LLC (collectively, the “Company”), entered into an agreement with a third-party institutional investor pursuant to which the investor purchased, for approximately $4.9 million in cash, an economic participation interest, at a discount, in all of the Company’s rights to payment from the United States Internal Revenue Service with respect to the employee retention credits filed by the Company under the ERC program.

 

Other Current Assets

 

The following table summarizes the composition of other current assets as of the dates indicated:

 

(in thousands)  June 30, 2024   December 31, 2023 
   As of 
(in thousands)  June 30, 2024   December 31, 2023 
Other current assets:          
VAT refund receivable (Note 2)  $217   $78 
Prepaid expenses   102    1,207 
Indemnification receivable, net   7    7 
Customs bonds