gnln-20200630

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

(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 300

Boca Raton,

33487

(Address of principal executive offices)

(Zip Code)

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 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 August 4, 2020, Greenlane Holdings, Inc. had 12,752,785 shares of Class A common stock outstanding, 3,590,909 shares of Class B common stock outstanding and 77,341,218 shares of Class C common stock outstanding.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

GREENLANE HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value per share amounts)


	June 30, 2020		December 31, 2019
Assets	(Unaudited)
Current assets
Cash	$	41,831	$	47,773
Accounts receivable, net of allowance of $1,123 and $936 at June 30, 2020 and December 31, 2019, respectively	6,402		8,091
Inventories, net	38,727		43,060
Vendor deposits	11,186		11,120
Other current assets	2,430		4,924
Total current assets	100,576		114,968

Property and equipment, net	13,765		13,165
Intangible assets, net	5,801		6,301
Goodwill	2,974		11,982
Operating lease right-of-use assets	3,714		4,695
Other assets	2,065		2,091
Total assets	$	128,895	$	153,202

Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	11,554	$	11,310
Accrued expenses and other current liabilities	7,236		10,600
Customer deposits	3,044		3,152
Current portion of operating leases	792		1,084
Current portion of finance leases	110		116
Total current liabilities	22,736		26,262

Notes payable, less current portion and debt issuance costs, net	7,926		8,018
Operating leases, less current portion	3,206		3,844
Finance leases, less current portion	126		194
Other liabilities	1,064		620
Total long-term liabilities	12,322		12,676
Total liabilities	35,058		38,938

Commitments and contingencies (Note 6)

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, 125,000 shares authorized; 12,603 shares issued and outstanding as of June 30, 2020; 9,999 shares issued and 9,812 shares outstanding as of December 31, 2019	126		98
Class B common stock, $0.0001 par value per share, 10,000 shares authorized; 3,724 and 5,975 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively	1		1
Class C Common stock, $0.0001 par value per share, 100,000 shares authorized; 77,791 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively	8		8
Additional paid-in capital	38,501		32,108
Accumulated deficit	(16,239)		(9,727)
Accumulated other comprehensive loss	(240)		(72)
Total stockholders’ equity attributable to Greenlane Holdings, Inc.	22,157		22,416
Non-controlling interest	71,680		91,848
Total stockholders’ equity	93,837		114,264
Total liabilities and stockholders’ equity	$	128,895	$	153,202

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

GREENLANE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share amounts)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Net sales	$	32,400	$	52,986	$	66,268	$	102,884
Cost of sales	25,583		43,835		52,122		84,746
Gross profit	6,817		9,151		14,146		18,138
Operating expenses:
Salaries, benefits and payroll taxes	6,121		7,029		12,735		15,111
General and administrative	6,426		5,413		15,085		10,797
Goodwill impairment charge	—		—		8,996		—
Depreciation and amortization	650		645		1,360		1,330
Total operating expenses	13,197		13,087		38,176		27,238
Loss from operations	(6,380)		(3,936)		(24,030)		(9,100)
Other income (expense), net:
Change in fair value of convertible notes	—		—		—		(12,063)
Interest expense	(110)		(140)		(220)		(742)
Other income, net	186		748		1,126		924
Total other income (expense), net	76		608		906		(11,881)
Loss before income taxes	(6,304)		(3,328)		(23,124)		(20,981)
Provision for (benefit from) income taxes	8		(108)		(73)		(97)
Net loss	(6,312)		(3,220)		(23,051)		(20,884)
Less: Net loss attributable to non-controlling interest	(4,261)		(1,453)		(16,539)		(1,453)
Net loss attributable to Greenlane Holdings, Inc.	$	(2,051)	$	(1,767)	$	(6,512)	$	(19,431)

Net loss attributable to Class A common stock per share - basic and diluted (Note 8)	$	(0.18)	$	(0.03)	$	(0.60)	$	(0.03)
Weighted-average shares of Class A common stock outstanding - basic and diluted (Note 8)	11,380		9,998		10,921		9,998

Other comprehensive (loss) income:
Foreign currency translation adjustments	471		23		(156)		51
Unrealized loss on derivative instrument	(66)		—		(559)		—
Comprehensive loss	(5,907)		(3,197)		(23,766)		(20,833)
Less: Comprehensive loss attributable to non-controlling interest	(3,955)		(1,429)		(17,086)		(1,429)
Comprehensive loss attributable to Greenlane Holdings, Inc.	$	(1,952)	$	(1,768)	$	(6,680)	$	(19,404)

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

GREENLANE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY


	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
	Shares	Amount		Shares	Amount		Shares	Amount
Balance, December 31, 2019	9,812	$	98	5,975	$	1	77,791	$	8	$	32,108	$	(9,727)	$	(72)	$	91,848	$	114,264
Net loss	—	—		—	—		—	—		—		(4,461)		—		(12,278)		(16,739)
Equity-based compensation	—	—		—	—		—	—		64		—		—		206		270
Issuance of Class A common stock for the acquisition of Conscious Wholesale	480	5		—	—		—	—		1,496		—		—		—		1,501
Cancellation of Class B common stock due to equity-based compensation award forfeitures	—	—		(105)	—		—	—		223		—		—		(223)		—
Joint venture consolidation	—	—		—	—		—	—		—		—		—		189		189
Other comprehensive loss	—	—		—	—		—	—		—		—		(267)		(853)		(1,120)
Balance, March 31, 2020	10,292	103		5,870	1		77,791	8		33,891		(14,188)		(339)		78,889		98,365
Net loss	—	—		—	—		—	—		—		(2,051)		—		(4,261)		(6,312)
Equity-based compensation	—	—		—	—		—	—		220		—		—		672		892
Issuance of Class A common stock for the acquisition of Conscious Wholesale	171	2		—	—		—	—		485		—		—		—		487
Cancellation of Class B common stock due to equity-based compensation award forfeitures	—	—		(6)	—		—	—		9		—		—		(9)		—
Exchanges of non-controlling interest for Class A common stock	2,140	21		(2,140)	—		—	—		3,896		—		—		(3,917)		—
Other comprehensive income	—	—		—	—		—	—		—		—		99		306		405
Balance, June 30, 2020	12,603	$	126	3,724	$	1	77,791	$	8	$	38,501	$	(16,239)	$	(240)	$	71,680	$	93,837

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

GREENLANE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY


	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
						Shares		Amount	Shares		Amount	Shares		Amount






Balance, December 31, 2018	$	10,033	$	(10,773)	—	$	—	—	$	—	—	$	—	$	—	$	—	$	(286)	$	—	$	(11,059)
Activity prior to the initial public offering and related organizational transactions (Note 1):
Issuance of redeemable Class B units, net of issuance costs	6,514		—		—	—		—	—		—	—		—		—		—		—		—
Redemption of Class A and Class B units	(416)		(2,602)		—	—		—	—		—	—		—		—		—		—		(2,602)
Equity-based compensation	2,304		191		—	—		—	—		—	—		—		—		—		—		191
Net loss	(3,045)		(14,619)		—	—		—	—		—	—		—		—		—		—		(14,619)
Member distributions	—		(21)		—	—		—	—		—	—		—		—		—		—		(21)
Other comprehensive income	—		—		—	—		—	—		—	—		—		—		28		—		28
Balance, March 31, 2019	15,390		(27,824)		—	—		—	—		—	—		—		—		(258)		—		(28,082)
Net loss	(246)		(1,179)		—	—		—	—		—	—		—		—		—		—		(1,179)
Equity-based compensation	113		137		—	—		—	—		—	—		—		—		—		—		137
Member distributions	(76)		(801)		—	—		—	—		—	—		—		—		—		—		(801)
Other comprehensive income	—		—		—	—		—	—		—	—		—		—		(8)		—		(8)
Effects of the initial public offering and related organizational transactions (Note 1):
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 overallotment 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 (Note 1):
Net loss	—		—		—	—		—	—		—	—		—		(343)		—		(1,453)		(1,796)
Equity-based compensation	—		—		—	—		—	—		—	—		709		—		—		1,122		1,831
Other comprehensive income	—		—