Greenlane(US:GNLN)2025-11-14 21:11Financial Performance - For the three months ended September 30, 2025, net sales decreased to $737,000 from $4,038,000 in the same period of 2024, representing an 81.8% decline[162]. - Gross profit for the three months ended September 30, 2025, was a loss of $5,103,000 compared to a profit of $3,027,000 in 2024, indicating a significant deterioration in profitability[162]. - The total net sales for the nine months ended September 30, 2025, were $2,994,000, down from $11,616,000 in 2024, reflecting a 74.2% decrease[162]. - As of September 30, 2025, accounts receivable decreased to $4,138,000 from $4,262,000 as of December 31, 2024, showing a slight decline[162]. - For the three months ended September 30, 2025, the net loss attributable to Class A common stockholders was $8.93 million, resulting in a basic and diluted net loss per share of $6.44[142]. Liquidity and Capital Management - The Company aims to improve liquidity and profitability through cost reduction, new product introductions, and customer acquisition[36]. - The Company raised $6.5 million through a securities purchase agreement on August 12, 2024, issuing 3,152 units consisting of common stock and warrants[38]. - A note of $3,237,269 was issued on August 7, 2024, with a 20% original issue discount, convertible into common stock after maturity[37]. - The Company entered into definitive agreements for a $25.0 million offering of Class A common stock on February 18, 2025[40]. - The Company received approximately $24.3 million in cash and $19.0 million in USDT and USDC from a private placement closed on October 23, 2025[163]. - The Company plans to use the majority of the proceeds from the private placement to acquire BERA and establish digital asset treasury operations, with $3.0 million allocated for legacy operations[164]. Inventory Management - As of September 30, 2025, total gross inventory was approximately $23.0 million, with reserves of approximately $17.0 million, resulting in a net carrying value of approximately $6.0 million[66]. - The Company recorded a $5.0 million increase to its reserve for slow-moving and obsolete inventory during the three months ended September 30, 2025[66]. - A 10 percentage point reduction in expected recovery rates would increase the reserve by approximately $0.6 million based on balances as of September 30, 2025[66]. - An Inventory Monetization Project was initiated to accelerate the disposition of aged inventory after September 30, 2025[171]. Debt Management - An Exchange Agreement on October 29, 2024, reduced outstanding debt by approximately $617,000, with new Senior Subordinated Notes of $4,000,000 issued[39]. - The Exchange Note of $4.0 million was paid off in full during the nine months ended September 30, 2025[94]. - The Company extinguished the Secured Bridge Loan, resulting in a gain of $2.1 million recorded in the consolidated statement of operations for the year ended December 31, 2024[102]. - The principal balance with Synergy decreased from $5.1 million to $2.7 million as part of the debt modification[102]. - The Company utilized $4.0 million from the 2025 Offering proceeds to pay off a Note in full during the nine months ended September 30, 2025[99]. Operational Focus - Management is focusing on cost controls and monetizing legacy assets to minimize losses and working capital needs[54]. - New distribution agreements were established in Q2 2025 to enhance the vaporizer product category[57]. - The Company has successfully renegotiated vendor and supplier partnership terms to improve working capital arrangements[59]. - The Company continues to run operations related to the EU subsidiary purchase agreement, but sales were not material for the three and nine months ended September 30, 2025[80]. - The Board began evaluating strategic alternatives for the legacy distribution business after September 30, 2025[170]. Legal and Compliance - The Company is currently involved in various legal proceedings but does not believe any will have a material adverse effect on its business[105]. Stock and Equity - Class A common stock has voting and economic interests, with all Class B shares converted to Class A as of December 2022[129]. - A one-for-750 reverse stock split was completed on June 25, 2025, converting every 750 shares into one share of Common Stock[130]. - The weighted average shares of Class A common stock outstanding for the three months ended September 30, 2025, were 1,386,551[142]. - As of September 30, 2025, the company had 31,552 warrants to purchase common stock excluded from the diluted net loss per share calculation due to anti-dilution effects[147]. - The Company recognized no equity-based compensation expense for the nine months ended September 30, 2025, compared to $86,000 in 2024[149]. Taxation - The operating company's tax status changed from a partnership to a disregarded entity effective December 31, 2022, impacting tax reporting starting in 2023[151]. - As of September 30, 2025, the company established a full valuation allowance against deferred tax assets, reflecting a carrying balance of $0[152]. Digital Asset Strategy - The Company established a digital-asset treasury and expects to begin holding crypto assets in the fourth quarter of 2025[166]. - The Company incurred costs related to evaluating digital-asset alternatives and transitioning to a crypto-treasury operating model during the three and nine months ended September 30, 2025[76]. - The Company is exposed to market risk from changes in the fair value of BERA and other digital assets acquired after quarter end, with no crypto assets held as of September 30, 2025[274].