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Greenlane(GNLN) - 2024 Q3 - Quarterly Report
GNLNGreenlane(GNLN)2024-11-14 22:30

Revenue Recognition - The company recognized revenue primarily from the sale of finished products, with revenue measured based on expected consideration, reduced by promotional discounts and return allowances [60]. - The company transitioned to a commission revenue model for the Industrial segment, recognizing revenue on a net basis for services provided to vape customers [64]. - The company estimates product returns based on historical experience and current economic trends, impacting the sales returns allowance [62]. Customer Concentration and Sales - The company reported a concentration of credit risk with accounts receivable, with one customer representing approximately 15% and 31% of accounts receivable as of September 30, 2024, and December 31, 2023, respectively [65]. - Two customers accounted for approximately 36% and 27% of net sales for the three months ended September 30, 2024 [65]. - Customer deposits decreased from 2,775,000asofDecember31,2023,to2,775,000 as of December 31, 2023, to 1,255,000 as of September 30, 2024, reflecting a decline of 54.7% due to revenue recognition of 1,520,000[109].LiabilitiesandContingencies−AsofSeptember30,2024,thecompany′sliabilityforproductreturnswasapproximately1,520,000 [109]. Liabilities and Contingencies - As of September 30, 2024, the company's liability for product returns was approximately 0.1 million, with no liabilities related to refunds [62]. - The company had contingent consideration liabilities measured at fair value of 1.5millionasofDecember31,2023[81].−Thecompanyintendstopursueclaimsagainstpurchasersofitssubsidiary,ShavitaB.V.,duetounmetmonetaryobligations[79].FinancialPositionandDebt−Thecompany′sdebtbalanceasofSeptember30,2024,totaled1.5 million as of December 31, 2023 [81]. - The company intends to pursue claims against purchasers of its subsidiary, Shavita B.V., due to unmet monetary obligations [79]. Financial Position and Debt - The company's debt balance as of September 30, 2024, totaled 8.626 million, which includes Future Receivables Financing of 4.617millionandasecuredbridgeloanof4.617 million and a secured bridge loan of 2.656 million [93][101]. - The company received approximately 3.9millionincashfromFutureReceivablesFinancingin2023,withatotalrepaymentamountofapproximately3.9 million in cash from Future Receivables Financing in 2023, with a total repayment amount of approximately 4.5 million scheduled [94]. - On October 29, 2024, the Company entered into an Exchange Agreement to exchange 4,617,307ofdebtfornewSeniorSubordinatedNotesof4,617,307 of debt for new Senior Subordinated Notes of 4,000,000, reducing outstanding indebtedness by approximately 617,000[143].OperatingLeases−ThetotalminimumleasepaymentsunderoperatingleasesrecordedasofSeptember30,2024,amountedto617,000 [143]. Operating Leases - The total minimum lease payments under operating leases recorded as of September 30, 2024, amounted to 1.253 million [90]. - Rent expense under operating leases was approximately 0.3millionforthethreemonthsendedSeptember30,2024,comparedto0.3 million for the three months ended September 30, 2024, compared to 0.4 million for the same period in 2023 [90]. - The weighted average remaining lease term for operating leases was 1.3 years as of September 30, 2024 [92]. Equity and Stock - The company completed a reverse stock split at a ratio of one-for-11 effective August 5, 2024, which did not change the par value of the common stock [115][116]. - The ATM Program established in August 2021 has generated gross proceeds of 12,684,000fromthesaleofClassAcommonstock,withnetproceedsamountingto12,684,000 from the sale of Class A common stock, with net proceeds amounting to 12,303,000 [122]. - In the July 2023 Offering, the company generated gross proceeds of approximately 4.3millionandnetproceedsofapproximately4.3 million and net proceeds of approximately 3.8 million from the issuance of Class A common stock and warrants [123]. Income and Loss - For the three months ended September 30, 2024, the net loss attributable to Class A common stockholders was (3,757)thousand,comparedto(3,757) thousand, compared to (10,467) thousand for the same period in 2023, representing a 64% improvement [128]. - The net loss per share of Class A common stock for the three months ended September 30, 2024, was (2.28),significantlybetterthan(2.28), significantly better than (20.89) for the same period in 2023 [128]. - The total equity-based compensation expense for the nine months ended September 30, 2024, was 86thousand,comparedto86 thousand, compared to 31 thousand for the same period in 2023 [133]. Tax and Compliance - The Company established a full valuation allowance against its deferred tax assets, resulting in a carrying balance of 0asofSeptember30,2024[137].−TheCompanyhasnotrecognizedanyunrecognizedtaxbenefitsforthethreeandninemonthsendedSeptember30,2024,and2023,withnoongoingincometaxauditsasofthedateofthefinancialstatements[138].−TheCompanydidnotmakeanypaymentstomembersoftheOperatingCompanypursuanttotheTaxReceivableAgreementduringthethreeandninemonthsendedSeptember30,2024,and2023[142].LegalMatters−ThecompanyhasfiledalawsuitagainstBlumHoldingsInc.forapproximately0 as of September 30, 2024 [137]. - The Company has not recognized any unrecognized tax benefits for the three and nine months ended September 30, 2024, and 2023, with no ongoing income tax audits as of the date of the financial statements [138]. - The Company did not make any payments to members of the Operating Company pursuant to the Tax Receivable Agreement during the three and nine months ended September 30, 2024, and 2023 [142]. Legal Matters - The company has filed a lawsuit against Blum Holdings Inc. for approximately 0.4 million, with a judgment received in favor of the company [112]. - The company had not taken any reserves for litigation for the nine months ended September 30, 2024, and 2023, indicating no material adverse effects expected from ongoing legal proceedings [102]. Other Financial Metrics - The total other current assets as of September 30, 2024, amounted to 2.279million,adecreasefrom2.279 million, a decrease from 3.319 million as of December 31, 2023 [106]. - As of September 30, 2024, accrued expenses and other current liabilities totaled 2,525,000,adecreasefrom2,525,000, a decrease from 3,056,000 as of December 31, 2023, representing a reduction of approximately 17.4% [107]. - The accumulated other comprehensive income increased from 245,000asofDecember31,2023,to245,000 as of December 31, 2023, to 248,000 as of September 30, 2024, indicating a slight improvement [110].