Greenlane(GNLN) - 2025 Q2 - Quarterly Report

PART I. Financial Information Item 1. Financial Statements (Unaudited) Presents Greenlane Holdings, Inc.'s unaudited condensed consolidated financial statements, highlighting increased cash and equity despite declining net sales and rising net losses Condensed Consolidated Balance Sheets Balance Sheet Summary (in thousands) | Asset/Liability Category | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | Cash | $5,724 | $899 | | Accounts receivable, net | $3,795 | $4,262 | | Inventories, net | $14,352 | $14,215 | | Total current assets | $28,117 | $23,772 | | Total assets | $31,777 | $28,631 | | Accounts payable | $8,710 | $9,787 | | Current portion of notes payable | $— | $7,674 | | Total current liabilities | $11,826 | $22,266 | | Total liabilities | $11,831 | $22,349 | | Total stockholders' equity | $19,946 | $6,282 | Condensed Consolidated Statements of Operations and Comprehensive Loss Statements of Operations (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net sales | $788 | $2,652 | $2,257 | $7,578 | | Cost of sales | $786 | $1,641 | $1,534 | $5,055 | | Gross profit | $2 | $1,011 | $723 | $2,523 | | Total operating expenses | $3,258 | $4,506 | $7,455 | $9,998 | | Loss from operations | $(3,256) | $(3,495) | $(6,732) | $(7,475) | | Total other income (expense), net | $41 | $2,863 | $(350) | $2,352 | | Net loss | $(3,215) | $(632) | $(7,082) | $(5,123) | | Net loss attributable to Greenlane Holdings, Inc. | $(3,215) | $(615) | $(7,082) | $(5,106) | | Net loss per share - basic and diluted | $(3.18) | $(997.50) | $(13.92) | $(10,267.50) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' Equity Changes (in thousands) | Item | Balance Dec 31, 2024 | Net Loss (Q1 2025) | Issuance of Shares/Warrants | Exercise of Warrants | Net Loss (Q2 2025) | Balance June 30, 2025 | | :-------------------------- | :------------------- | :----------------- | :-------------------------- | :------------------- | :----------------- | :-------------------- | | Additional Paid-In Capital | $281,095 | — | $20,730 | — | $3 | $301,841 | | Accumulated Deficit | $(274,929) | $(3,867) | — | — | $(3,215) | $(282,011) | | Total Stockholders' Equity | $6,282 | $(3,867) | $20,730 | $0 | $(3,215) | $19,946 | - The Company's Class A common stock shares outstanding increased significantly from 3,023 at December 31, 2024, to 1,386,551 at June 30, 2025, primarily due to the exercise of pre-funded warrants and issuance of Class A shares and warrants[8][14] Condensed Consolidated Statements of Cash Flows Cash Flow Summary (in thousands) | Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(7,895) | $(379) | | Net cash used in investing activities | $(68) | $(151) | | Net cash provided by financing activities | $12,788 | $237 | | Net increase (decrease) in cash | $4,825 | $(294) | | Cash as of end of the period | $5,724 | $169 | - The significant increase in cash provided by financing activities in 2025 was primarily due to $20.7 million in proceeds from the February 2025 private placement, offset by $8.0 million in debt payments[18][253] Notes to Condensed Consolidated Financial Statements NOTE 1. Business Operations and Organization - Greenlane Holdings, Inc. operates as a holding company for Greenlane Holdings, LLC, merchandising cannabis accessories, vaporization solutions, and lifestyle products globally, and has developed proprietary brands like Groove and Higher Standards, while holding licenses for Marley Natural and K.Haring products[23][24][25] - The Company effected a one-for-seven hundred and fifty reverse stock split on June 25, 2025, retroactively adjusting all share and per share amounts[32][34] - Despite incurring net losses and significant cash usage in operating activities, management believes current cash on hand, including proceeds from the February 2025 Private Placement, will be sufficient for the next 12 months, contingent on executing a plan to reduce costs, increase revenue, form strategic partnerships, and seek additional capital[36][37][38][39] - In February 2025, the Company completed a private placement raising approximately $25.0 million through the sale of Class A common stock and investor warrants, which was crucial for its liquidity[43][44] - Management initiatives include strategic marketing partnerships (Mainstem, Cannabis Creative Group), exclusive distribution agreements (Green Gruff, Greentank, ALD Group Limited), sales team restructuring, renegotiating vendor terms, and consolidating operational and digital footprints to improve efficiency and reduce costs[57][58][59][60][61][62] NOTE 2. Summary of Significant Accounting Policies - The Company's unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP and SEC rules for interim reporting, with certain information condensed or omitted[63] - As of June 30, 2025, the Company manages its global business operations through one reportable operating business segment[66] - Revenue is recognized when customers obtain control of goods, measured by expected consideration, and reduced by discounts and return allowances, with the Company transitioning its Industrial segment from a commission revenue model back to recognizing gross revenue[67][71] - Two customers accounted for approximately 30% and 18% of net sales for the three and six months ended June 30, 2025, respectively, indicating significant customer concentration[72] NOTE 3. Business Acquisitions and Dispositions - The sale of EU subsidiaries Shavita B.V. and ARI Logistics B.V. in May 2024 is currently in dispute due to unmet consideration and monetary obligations from the purchasers, leading the Company to continue operations and pursue claims[76] NOTE 4. Fair Value of Financial Instruments - The Company's investment in equity securities without readily determinable fair value, specifically Airgraft Inc., was approximately $1.9 million as of June 30, 2025, and December 31, 2024, with no fair value adjustments recorded during the periods[78][79] NOTE 5. Leases Operating Lease Commitments (in thousands) | Period | Operating Leases | | :---------------------- | :--------------- | | Remainder of 2025 | $483 | | 2026 | $81 | | Total minimum lease payments | $564 | | Present value of minimum lease payments | $553 | | Long-term portion | $5 | Operating Lease Expenses (in thousands) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------- | :--------------------------- | :--------------------------- | | Operating lease cost | $736 | $457 | | Total lease cost | $736 | $457 | NOTE 6. Debt Debt Balance (in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :---------- | :------------ | :---------------- | | Note Payable | $— | $3,674 | | Exchange Note | $— | $4,000 | | Total Debt | $— | $7,674 | - All outstanding debt, including the Exchange Note and Note Payable to Cobra, was fully repaid during the six months ended June 30, 2025, primarily using proceeds from the February 2025 Private Placement[90][95] - In 2024, the Company recorded a gain on extinguishment of $2.1 million related to the modification of the Secured Bridge Loan with Synergy, where Synergy acquired certain assets in exchange for debt reduction[98] NOTE 7. Commitments and Contingencies - The Company is involved in several legal proceedings, including an arbitration demand for $320 thousand in unpaid legal invoices, multiple purchaser class action antitrust lawsuits regarding Ccell products, a breach of contract suit for $297 thousand, and a Civil Investigation Demand concerning a $1.9 million PPP loan under the False Claims Act[102][103][104][105][106][107][108][109] - No reserves for litigation have been taken for the three and six months ended June 30, 2025 and 2024, as the outcomes are inherently unpredictable[110] NOTE 8. Supplemental Financial Statement Information Property and Equipment, net (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Furniture, equipment and software | $8,595 | $8,595 | | Leasehold improvements | $33 | $33 | | Work in process | $88 | $20 | | Less: accumulated depreciation | $(7,535) | $(7,228) | | Property and equipment, net | $1,181 | $1,420 | Other Current Assets (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | VAT refund receivable | $61 | $43 | | Prepaid expenses | $199 | $301 | | Non-inventory deposits | $952 | $952 | | Customs bonds | $500 | $— | | Total | $1,719 | $1,305 | Accrued Expenses and Other Current Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Accrued employee compensation | $223 | $1,052 | | Accrued professional fees | $704 | $166 | | Other accrued expenses | $175 | $— | | Total | $1,102 | $1,218 | Customer Deposits (in thousands) | Item | Amount | | :------------------------------------ | :----- | | Balance as of December 31, 2024 | $2,661 | | Customer adjustments | $(1,063) | | Revenue recognized | $132 | | Balance as of June 30, 2025 | $1,466 | - The four largest vendors accounted for approximately 38.6% of total purchases for the three months ended June 30, 2025, and 57.4% for the six months ended June 30, 2025, indicating significant supplier concentration[119] NOTE 9. Stockholders' Equity - The Company completed a one-for-750 reverse stock split on June 25, 2025, which retroactively adjusted all share and per share amounts in the financial statements[124][125] - In February 2025, the Company consummated a private placement of approximately $25.0 million of Class A common stock and investor warrants, significantly impacting additional paid-in capital[130] - During the three months ended June 30, 2025, investors exercised 1,353,658 Series B warrants and 21,777 additional pre-funded warrants, with no cash collected as they were pre-funded[133] Potentially Dilutive Securities Excluded from EPS Calculation (in common stock equivalent shares) | Security Type | As of June 30, 2025 | As of June 30, 2024 | | :-------------------------- | :------------------ | :------------------ | | Stock options | 5 | 5 | | Warrants | 31,552 | 1,032 | | Total | 31,557 | 1,037 | NOTE 10. Compensation Plans - The total number of Class A common stock shares authorized for issuance under the Amended and Restated 2019 Equity Incentive Plan is 10,000 shares, after giving effect to the reverse stock splits[143] Equity-Based Compensation Expense (in thousands) | Expense Type | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | | Stock options - Class A common stock | $— | $— | | Restricted shares - Class A common stock | $— | $86 | | Total equity-based compensation expense | $— | $86 | NOTE 11. Income Taxes - Effective December 31, 2022, the Operating Company became wholly owned by Greenlane, converting its tax status to a disregarded entity, meaning 100% of its U.S. income and expenses are now included in Greenlane's U.S. and state tax returns[150] - The Company has established a full valuation allowance against its deferred tax assets, resulting in a carrying balance of $0 as of June 30, 2025, and December 31, 2024, due to uncertainty regarding the realization of net operating loss benefits[151] - The Tax Receivable Agreement (TRA) liability was none as of June 30, 2025, and December 31, 2024, because the amount or timing of payments to noncontrolling interest holders is no longer probable or reasonably estimable due to the full valuation allowance on deferred tax assets[155] NOTE 12. Segment Reporting - As of June 30, 2025, Greenlane Holdings, Inc. operates as a single reportable operating segment, aligning with how management reviews financial information and allocates resources[158] Net Sales by Geography (in thousands) | Geography | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | United States | $788 | $1,364 | $2,257 | $5,214 | | Canada | $— | $70 | $— | $157 | | Europe | $— | $1,218 | $— | $2,207 | | Total net sales | $788 | $2,652 | $2,257 | $7,578 | Long-Lived Assets by Geographic Area (in thousands) | Geography | June 30, 2025 | December 31, 2024 | | :---------- | :------------ | :---------------- | | United States | $1,768 | $2,459 | | Canada | $— | $4 | | Europe | $— | $— | | Total long-lived assets | $1,768 | $2,463 | Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------ | :---------------- | :--------- | :--------- | | Cash | $5,724 | $899 | $4,825 | 536.7% | | Total Current Assets | $28,117 | $23,772 | $4,345 | 18.3% | | Total Assets | $31,777 | $28,631 | $3,146 | 11.0% | | Total Current Liabilities | $11,826 | $22,266 | $(10,440) | (46.9)% | | Total Liabilities | $11,831 | $22,349 | $(10,518) | (47.1)% | | Total Stockholders' Equity | $19,946 | $6,282 | $13,664 | 217.5% | Condensed Consolidated Statements of Operations Highlights (in thousands, except EPS) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Net Sales | $788 | $2,652 | $(1,864) | (70.3)% | | Gross Profit | $2 | $1,011 | $(1,009) | (99.8)% | | Loss from Operations | $(3,256) | $(3,495) | $239 | 6.8% | | Net Loss | $(3,215) | $(632) | $(2,583) | (408.7)% | | Net Loss per Share (Basic & Diluted) | $(3.18) | $(997.50) | $994.32 | 99.7% | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Net Sales | $2,257 | $7,578 | $(5,321) | (70.2)% | | Gross Profit | $723 | $2,523 | $(1,800) | (71.3)% | | Loss from Operations | $(6,732) | $(7,475) | $743 | 9.9% | | Net Loss | $(7,082) | $(5,123) | $(1,959) | (38.2)% | | Net Loss per Share (Basic & Diluted) | $(13.92) | $(10,267.50) | $10,253.58 | 99.9% | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Net Cash Used in Operating Activities | $(7,895) | $(379) | $(7,516) | (1983.1)% | | Net Cash Used in Investing Activities | $(68) | $(151) | $83 | 55.0% | | Net Cash Provided by Financing Activities | $12,788 | $237 | $12,551 | 5295.8% | | Net Increase (Decrease) in Cash | $4,825 | $(294) | $5,119 | (1741.8)% | | Cash at End of Period | $5,724 | $169 | $5,555 | 3286.9% | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition and operations, noting significant declines in net sales and gross profit, increased net losses, and ongoing profitability initiatives - Greenlane is a global platform for cannabis accessories, vape devices, and lifestyle products, serving a diverse customer base including multi-state operators (MSOs), single-state operators (SSOs), Canadian licensed producers (LPs), specialty retailers, and direct consumers through various e-commerce platforms[170][172][174] - The Company's plan to accelerate profitability includes technology enhancements, facility footprint rationalization, headcount reduction, improved inventory management, sales force upgrades, product innovation, and securing additional capital investment[176][178] - The United States Postal Service (USPS) approved Greenlane's PACT Act Exemption, allowing it to ship vaporizers and accessories classified as electronic nicotine delivery systems (ENDS) products to other compliant businesses, which is expected to reduce shipping costs and improve fulfillment times[179][180] Consolidated Results of Operations (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Net sales | $788 | $2,652 | $(1,864) | (70)% | | Gross profit | $2 | $1,011 | $(1,009) | (100)% | | Salaries, benefits and payroll taxes | $1,119 | $1,509 | $(390) | (26)% | | General and administrative | $1,938 | $2,801 | $(863) | (31)% | | Loss from operations | $(3,256) | $(3,495) | $239 | (7)% | | Interest expense | $— | $(289) | $(289) | (100)% | | Net loss | $(3,215) | $(632) | $(2,583) | (409)% | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Net sales | $2,257 | $7,578 | $(5,321) | (70)% | | Gross profit | $723 | $2,523 | $(1,800) | (71)% | | Salaries, benefits and payroll taxes | $2,386 | $4,455 | $(2,069) | (46)% | | General and administrative | $4,762 | $5,093 | $(331) | (7)% | | Loss from operations | $(6,732) | $(7,475) | $743 | 10% | | Interest expense | $(391) | $(811) | $420 | 52% | | Net loss | $(7,082) | $(5,123) | $(1,959) | (38)% | - The Company's cash balance increased to $5.7 million as of June 30, 2025, from $0.9 million at December 31, 2024, and working capital increased to $16.3 million from $1.5 million, largely due to the $25.0 million February 2025 Private Placement[221][222] Item 3. Quantitative and Qualitative Disclosures About Market Risk Quantitative and qualitative disclosures regarding market risk are not required for the Company - The Company is not required to provide quantitative and qualitative disclosures about market risk[257] Item 4. Controls and Procedures Disclosure controls and procedures were ineffective due to un-remediated material weaknesses, with ongoing remediation efforts and ERP system adaptation - As of June 30, 2025, the Company's disclosure controls and procedures were not effective due to un-remediated material weaknesses in internal control over financial reporting, as described in its Annual Report on Form 10-K for the year ended December 31, 2024[259] - Remediation efforts are actively underway, including enhancing company-wide risk assessment, improving control documentation, implementing additional review procedures, improving segregation of duties, and providing training to control owners[261] - The Company completed a multi-year implementation of a new ERP system in 2023, which is expected to lead to ongoing changes in internal control over financial reporting as processes and procedures are adapted[264] PART II. Other Information Item 1. Legal Proceedings Refers to Note 7 for details on material pending legal proceedings, including various lawsuits and investigations - For a description of material pending legal proceedings, refer to Note 7 of the Notes to Condensed Consolidated Financial Statements[267] Item 1A. Risk Factors Updates risk factors, highlighting significant losses, going concern uncertainty, potential Nasdaq delisting, and adverse impacts from tariffs and trade disputes - The Company has incurred net losses of $7.1 million and $5.1 million for the six months ended June 30, 2025 and 2024, respectively, and anticipates continued significant losses, raising substantial doubt about its ability to continue as a going concern[269] - The Company's ability to continue as a going concern is contingent upon successful execution of management's plan to improve liquidity and profitability, including reducing operating costs, increasing revenue, executing strategic partnerships, and seeking additional capital[269][270] - Greenlane received a delisting notification from Nasdaq on May 5, 2025, but demonstrated compliance with the Bid Price Rule by July 29, 2025, though it remains under a one-year Discretionary Panel Monitor due to its history of compliance issues[272][273] - New tariffs, including a 145% tariff on substantially all products of Chinese origin (some temporarily paused at 30%), and the evolving trade policy dispute between the U.S. and China, may adversely affect demand for the Company's products and its costs[274] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds, and Issuer Purchases of Equity Securities No unregistered sales of equity securities or issuer purchases of equity securities occurred during the period - There were no unregistered sales of equity securities or issuer purchases of equity securities during the period[275] Item 5. Other Information No other information is reported in this section - No other information is reported in this section[276] Item 6. Exhibits Lists exhibits filed with Form 10-Q, including agreements, certifications, and XBRL financial statements - The exhibits include forms of warrants, securities purchase agreements, loan and security agreements, asset purchase agreements, loan modification agreements, certifications of executive officers, and Inline XBRL formatted financial statements[278]