Annual report pursuant to Section 13 and 15(d)

SEGMENT REPORTING

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SEGMENT REPORTING
 12 Months Ended
Dec. 31, 2023
Segment Reporting [Abstract]  
SEGMENT REPORTING

NOTE 12. SEGMENT REPORTING

 

We define our segments as those operations whose results are regularly reviewed by our CODM to analyze performance and allocate resources. Therefore, segment information is prepared on the same basis that management reviews financial information for operational decision-making purposes. Our CODM is a committee comprised of our CEO and our CFO.

 

We determined we had two operating segments as of December 31, 2023, which are the same as our reportable segments: (1) Consumer Goods, and (2) Industrial Goods. These operating segments align with how we manage our business as of the fourth quarter of 2023. The accounting policies of the reportable segments are the same as those described in “Note 2 - Summary of Significant Accounting Policies.”

 

The Consumer Goods segment focuses on serving consumers across wholesale, retail and e-commerce operations—through both our proprietary Greenlane Brands, including Eyce, DaVinci, Groove, Marley Natural, Keith Haring, and Higher Standards, as well as lifestyle products and accessories from leading brands, such as Storz and Bickel, PAX, and many more. The Consumer Goods segment forms a central part of our growth strategy, especially as it relates to scaling our own portfolio of higher-margin Greenlane Brands.

 

The Industrial Goods segment focuses on serving the premier brands, operators, and retailers through our wholesale operations by providing ancillary products essential to their growth, such as customizable packaging and supply products, which includes our vaporization solutions offering including CCELL branded products.

 

 

Our CODM allocates resources to and assesses the performance of our two operating segments based on the operating segments’ net sales and gross profit. The following table sets forth information by reportable segment for the years ended December 31, 2023 and 2022. There were no material intersegment sales during the years ended December 31, 2023 and 2022.

 

(in thousands)   Consumer Goods     Industrial Goods     Total     Consumer Goods     Industrial Goods     Total  
    For the Year Ended December 31, 2023     For the Year Ended December 31, 2022  
(in thousands)   Consumer Goods     Industrial Goods     Total     Consumer Goods     Industrial Goods     Total  
Net sales   $ 28,737     $ 36,636     $ 65,373     $ 48,134     $ 88,951     $ 137,085  
Cost of sales     18,754       28,793       47,547       38,531       73,571       112,102  
Gross profit   $ 9,983     $ 7,843     $ 17,826     $ 9,603     $ 15,380     $ 24,983  

 

The following table sets forth specific asset categories which are reviewed by our CODM in the evaluation of operating segments:

 

(in thousands)   Consumer Goods     Industrial Goods     Total     Consumer Goods     Industrial Goods     Total  
    As of December 31, 2023     As of December 31, 2022  
(in thousands)   Consumer Goods     Industrial Goods     Total     Consumer Goods     Industrial Goods     Total  
Accounts receivable, net   $ 642     $ 1,051     $ 1,693     $ 967     $ 5,501     $ 6,468  
Inventories, net   $ 8,881     $ 11,648     $ 20,529     $ 19,259     $ 21,384     $ 40,643  
Vendor deposits   $ 1,958     $ 1,807     $ 3,765     $ 3,269     $ 3,027     $ 6,296  

 

The following table sets forth our net sales by major product category:

 

(in thousands)   2023     2022  
    For the year ended December 31,  
(in thousands)   2023     2022  
Industrial Vape Products   $ 26,803     $ 53,664  
Other Industrial Products     8,733       35,287  
Consumer Products - Greenlane Brands     5,072       15,063  
Consumer Products - 3rd Party Brands     24,765       33,071  
Total net sales   $ 65,373     $ 137,085  

 

The following table sets forth net sales disaggregated by geography:

 

(in thousands)   2023     2022  
    For the year ended December 31,  
(in thousands)   2023     2022  
United States   $ 58,539     $ 126,333  
Canada     1,291       5,810  
Europe     5,543       4,942  
Total net sales   $ 65,373     $ 137,085  

 

The following table sets forth our long-lived assets by geographic area, which consist of property and equipment, net, and operating lease right-of-use assets:

 

(in thousands)   2023     2022  
    As of December 31,  
(in thousands)   2023     2022  
United States   $ 4,255     $ 7,077  
Canada     4       48  
Europe     153       279  
Total long-lived assets   $ 4,412     $ 7,404  

 

See “Note 8—Supplemental Financial Statement Information” for goodwill by reportable segment.