What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-07-19 compared with 2023-03-31 · 1547 added, 1081 removed, 328 unchanged (89% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements Page

Report of Independent Registered Public Accounting Firm Marcum LLP PCAOB ID:

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Stockholders' Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of Greenlane Holdings, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Greenlane Holdings, Inc.

(the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle – Outbound Shipping and Handling Costs

As discussed in Note 2 to the financial statements, the Company has elected to retrospectively change its method of accounting for outbound shipping and handling costs effective January 1, 2021.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

to Consolidated Financial Statements

of Independent Registered Public Accounting Firm Marcum LLP PCAOB ID:

Balance Sheets

Statements of Operations and Comprehensive Loss

Statements of Stockholders’ Equity

Statements of Cash Flows

to Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Stockholders and Board of Directors of

Holdings, Inc.

on the Financial Statements

have audited the accompanying consolidated balance sheets of Greenlane Holdings, Inc.

(the “Company”) as of December 31,

2023 and 2022, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for

each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial

statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the

Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period

ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America .

accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

fully described in Note 1, the Company has incurred significant losses and needs to raise additional funds to meet its obligations and

sustain its operations.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

plans in regard to these matters are also described in Note 2.

The consolidated financial statements do not include any adjustments that

might result from the outcome of this uncertainty.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits

we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Marcum LLP

We have served as the Company’s auditor since 2021.

Costa Mesa, CA

March 31, 2023

GREENLANE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value per share amounts)

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

have served as the Company’s auditor since 2021.

HOLDINGS, INC.

BALANCE SHEETS

thousands, except par value per share amounts)

December 31, 2023

December 31, 2022

Current assets

Cash $ 6,458 $ 12,857

Restricted cash

2 unchanged sentences

Vendor deposits

Assets held for sale — 75

Other current assets (Note 8)

1 unchanged sentence

Property and equipment, net

Intangible assets, net 49,268 84,710

Goodwill — 41,860

Operating lease right-of-use assets

Other assets 5,578 4,541

Total assets $ 146,053 $ 285,827

Current liabilities

2 unchanged sentences

Customer deposits

Current portion of notes payable, including $ 0 and $ 8,000 owed to related party at December 31, 2022 and 2021, respectively

Current portion of notes payable

Current portion of operating leases

10 unchanged sentences

Preferred stock, $ 0.0001 par value, 10,000 shares authorized, none issued and outstanding

Class A common stock, $ 0.01 par value per share, 600,000 shares authorized, and 15,985 shares issued and outstanding as of December 31, 2022;

600,000 shares authorized, 4,260 shares issued and outstanding as of December 31, 2021*

Class B common stock, $ 0.0001 par value per share, 30,000 shares authorized, and 0 shares issued and outstanding as of December 31, 2022;

Class A common stock, $ 0.01 par value per share, 600,000 shares authorized, 3,726 shares issued and outstanding as of December

600,000 shares authorized, and 1,599 shares issued and outstanding as of December 31, 2022 *

Class C Common stock, $ 0.0001 par value per share, no shares authorized as of December 31, 2022;

Class B common stock, $ 0.0001 par value per share, 30,000 shares authorized, and 0 shares issued and outstanding as of December

30,000 shares authorized, and 0 shares issued and outstanding as of December 31, 2022 *

Common stock, value

Additional paid-in capital *

2 unchanged sentences

Total stockholders’ equity attributable to Greenlane Holdings, Inc.

95,358 174,528

Non-controlling interest

1 unchanged sentence

Total liabilities and stockholders’ equity

* After giving effect to the one-for-20 Reverse Stock Split effective August 9, 2022.

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

GREENLANE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share amounts)

For the year ended December 31,

Net sales $ 137,085 $ 166,060

* After giving effect

to the Reverse Stock Splits - See Note 9 - Stockholders’ Equity.

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

HOLDINGS, INC.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

thousands, except per share amounts)

For the for the year ended

Cost of sales

Gross profit 24,983 33,853

Operating expenses:

2 unchanged sentences

Goodwill and indefinite-lived intangibles impairment charge

Definite-lived intangibles impairment charge

Property and equipment impairment charge

Depreciation and amortization

1 unchanged sentence

Loss from operations

Other income (expense), net:

Other (expense) income, net:

Interest expense

1 unchanged sentence

Other expense, net

Total other income (expense), net 1,863 ( 691 )

Total other (expense) income, net

Loss before income taxes

(Benefit from) provision for income taxes ( 13 ) 10

Net loss ( 125,858 ) ( 53,423 )

Net loss attributable to non-controlling

( 10,098 ) ( 22,840 )

Provision for (benefit from) income taxes

Net loss attributable to non-controlling interest

Net loss attributable to Greenlane Holdings, Inc.

1 unchanged sentence

Net loss attributable to Class A common stock per share - basic and diluted (Note 9)*

$ ( 15.37 ) $ ( 15.85 )

Weighted-average shares of Class A common stock outstanding - basic and diluted (Note 9)*

3 unchanged sentences

Comprehensive loss

( 126,043 ) ( 52,932 )

comprehensive loss attributable to non-controlling interest

( 10,014 ) ( 22,644 )

Comprehensive loss attributable to Greenlane Holdings, Inc.

$ ( 169,778 )

*After giving effect to the one-for-20 Reverse Stock Split effective August 9, 2022.

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

GREENLANE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands)

Common Stock Class B

Common Stock Class C

Common Stock Additional

Capital* Accumulated

Deficit Accumulated

* After giving effect

to the Reverse Stock Splits - See Note 9 - Stockholders’ Equity.

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

HOLDINGS, INC.

STATEMENTS OF STOCKHOLDERS’ EQUITY

Comprehensive

Income (Loss) Non-

Interest Total

Stockholders’

Shares* Amount* Shares* Amount* Shares Amount

Balance December 31, 2020 666 $ 7 175 $ — 76,039 $ 8 $ 39,869 $ ( 24,848 ) $ 29 $ 54,192 $ 69,257

Net loss — — — — — — — ( 30,583 ) — ( 22,840 ) ( 53,423 )

Equity-based compensation 9 — — — — — 3,131 — — 2,543 5,674

Exchanges of noncontrolling interest for Class A common stock 354 4 ( 260 ) — ( 5,738 ) ( 1 ) 12,244 — — ( 12,247 ) —

Exercise of Class A common stock options and warrants 301 3 — — — — 304 — — — 307

Conversion of Class C common stock — — 1,172 — ( 70,301 ) ( 7 ) 7 — — — —

Issuance of Class A common stock and pre-funded warrants, net of costs 2,939 29 — — — — 174,574 — — — 174,603

Member distribution — — — — — — — ( 200 ) — — ( 200 )

Cancellation of Class B common stock due to forfeitures — — — — — — 8 — — ( 8 ) —

Other comprehensive income — — — — — — — — 295 196 491

Other ( 9 ) — — — — — ( 432 ) 87 — — ( 345 )

Income (Loss)

Balance December 31, 2021

Net loss — — — — — — — ( 115,760 ) — ( 10,098 ) ( 125,858 )

Equity-based compensation

9 unchanged sentences

Other comprehensive income

Other — — — — — — — ( 61 ) — — ( 61 )

Balance December 31, 2022

* After giving effect to the one-for-20 Reverse Stock Split effective August 9, 2022.

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

GREENLANE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

$ ( 225,114 )

Equity-based compensation

Issuance of Class A shares - Amended Eyce APA (Note 3)

Issuance of Class A shares (Note 9)

Issuance of Class A shares, net of costs

Other comprehensive income

Balance December 31, 2023

$ ( 257,289 )

* After giving effect

to the Reverse Stock Splits - See Note 9 - Stockholders’ Equity.

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

HOLDINGS, INC.

STATEMENTS OF CASH FLOWS

For the year ended December 31,

1 unchanged sentence

Net loss (including amounts attributable to non-controlling interest)

Adjustments to reconcile net loss to net cash used in operating activities:

$ ( 182,226 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation and amortization

1 unchanged sentence

Goodwill and indefinite lived intangibles impairment charge

Definite-lived intangibles impairment charge

Property and equipment impairment charge

Change in fair value of contingent consideration

Write-off of Eyce 2022 Contingent Payment in conjunction with the Amended Eyce APA

Change in provision for doubtful accounts 3,311 236

Change in provision for credit losses

Gain related to indemnification asset

(Gain) loss on disposal of fixed assets 1,398 109

(Gain) loss on disposal of held-for-sale assets ( 705 ) 97

Loss on disposal of fixed assets

Gain on disposal of held-for-sale assets

Gain related to VIBES disposition / deconsolidation (Note 3)

Realized and unrealized loss on equity investments 1,214 171

Realized (gain) loss on interest rate swap contract (Note 4) ( 408 ) —

Unrealized loss on equity investments

Realized gain on interest rate swap contract

Amortization of deferred financing costs and debt discount

Other ( 124 ) 63

Changes in operating assets and liabilities, net of the effects of acquisitions:

Decrease (increase) in accounts receivable 4,910 ( 1,393 )

Decrease (increase) in inventories 26,345 5,730

Decrease (increase) in vendor deposits 7,899 ( 43 )

Decrease in accounts receivable

Decrease in inventories

Decrease in vendor deposits

Decrease (increase) in other current assets

(Decrease) increase in accounts payable ( 6,459 ) ( 1,301 )

(Decrease) Increase in accrued expenses and other liabilities ( 10,944 ) ( 6,808 )

(Decrease) increase in customer deposits ( 3,941 ) 1,221

Net cash used in operating activities ( 26,426 ) ( 37,330 )

Decrease in accounts payable

Decrease in accrued expenses and other liabilities

Decrease in customer deposits

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Purchase consideration paid for acquisitions, net of cash acquired — ( 15,646 )

Proceeds from VIBES disposition (Note 3)

Purchases of property and equipment, net ( 2,784 ) ( 4,400 )

Purchase of property and equipment, net

Proceeds from sale of assets held for sale

Proceeds from sale of equity investments

Purchase of intangible assets, net — ( 320 )

Net cash provided by (used in) investing activities 12,025 ( 19,691 )

Net cash provided by investing activities

Cash flows from financing activities:

Proceeds from issuance of Class A common stock, net of costs 21,075 32,643

Proceeds from exercise of stock options and warrants — 307

Proceeds from issuance of note payable to related party, net — 7,868

Proceeds from Asset-Based Loan 14,550 —

Proceeds from issuance of Class A common stock, net of issuance costs

Proceeds from (repayment of) Asset-Based Loan

Proceeds from Secured Bridge Loan, net of costs

Debt issuance costs

Repayment of loan against future accounts receivable

Proceeds from future receivables financing

Payments on Eyce and DaVinci promissory notes

2 unchanged sentences

Proceeds from termination of interest rate swap

Purchase consideration paid for Eyce LLC acquisition ( 875 ) —

Member distributions — ( 200 )

Other ( 128 ) ( 360 )

Net cash provided by financing activities 13,930 38,963

Purchase consideration paid for Eyce and DaVinci acquisition

Net cash (used in) provided by financing activities

Effects of exchange rate changes on cash

Net (decrease) in cash and restricted cash ( 681 ) ( 17,578 )

Cash and restricted cash, as of beginning of the period 12,857 30,435

Cash and restricted cash, as of end of the period $ 12,176 $ 12,857

GREENLANE HOLDINGS, INC.

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

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(in thousands)

Reconciliation of cash and restricted cash to consolidated balance sheets

Net decrease in cash and cash equivalents

Cash and cash equivalents, as of beginning of the year

Cash and cash equivalents, as of end of year

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

HOLDINGS, INC.

STATEMENTS OF CASH FLOWS (CONTINUED)

Reconciliation

of cash and restricted cash to condensed consolidated balance sheets:

For the year ended December 31,

Beginning of the period

Cash $ 12,857 $ 30,435

Restricted cash

1 unchanged sentence

End of the period

Cash $ 6,458 $ 12,857

Restricted cash

4 unchanged sentences

Cash paid for amounts included in the measurement of lease liabilities

Lease liabilities arising from obtaining finance lease assets $ — $ 119

Non-cash investing and financing activities:

Issuance of Class A common stock for business acquisitions $ 3,486 $ 141,960

Non-cash investing activities and financing activities:

Issuance of Class A common stock, warrants, and stock options for business acquisitions

Non-cash purchases of property and equipment

Issuance of promissory notes for Eyce and DaVinci business acquisitions $ — $ 7,500

Decrease in non-controlling interest as a result of exchanges for Class A common stock

Decrease in non-controlling interest as a result of VIBES disposition

Unpaid contingent purchase consideration $ — $ 6,857

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

GREENLANE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Transfer from contingent consideration to notes payable

Transfer from accrued expenses to notes payable

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

HOLDINGS, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

BUSINESS OPERATIONS AND ORGANIZATION

Greenlane Holdings, Inc.

(“Greenlane” and, collectively with the Operating Company (as defined below) and its consolidated subsidiaries, the “Company”, "we", "us", and "our") was formed as a Delaware corporation on May 2, 2018.

We are a holding company that was formed for the purpose of completing an underwritten initial public offering (“IPO”) of shares of our Class A common stock, $ 0.01 par value per share (the “Class A common stock”), in order to carry on the business of Greenlane Holdings, LLC (the “Operating Company”).

The Operating Company was organized under the laws of the state of Delaware on September 1, 2015, and is based in Boca Raton, Florida.

Unless the context otherwise requires, references to the “Company” refer to us, and our consolidated subsidiaries, including the Operating Company.

We are the sole manager of the Operating Company and our principal asset is Common Units of the Operating Company (“Common Units”).

As the sole manager of the Operating Company, we operate and control all of the business and affairs of the Operating Company, and we conduct our business through the Operating Company and its subsidiaries.

We have a board of directors and executive officers, but no employees.

All of our assets are held and all of the employees are employed by a wholly owned subsidiary of the Operating Company.

We have the sole voting interest in, and control the management of, the Operating Company, and we have the obligation to absorb losses of, and receive benefits from, the Operating Company, that could be significant.

We determined that the Operating Company is a variable interest entity (“VIE”) and that we are the primary beneficiary of the Operating Company.

Accordingly, pursuant to the VIE accounting model, beginning in the fiscal quarter ended June 30, 2019, we consolidated the Operating Company in our consolidated financial statements and reported a non-controlling interest related to the Common Units held by the members of the Operating Company (other than the Common Units held by us) on our consolidated financial statements.

On August 31, 2021, we completed our previously announced merger with KushCo Holdings, Inc.

("KushCo") and have included the results of operations of KushCo in our consolidated statements of operations and comprehensive loss from that date forward.

As such, the KushCo financial information included in our consolidated financial statements for the year ended December 31, 2021 is for the period commencing on August 31, 2021 (the date of the closing of the merger) through December 31, 2021.

Also, KushCo financial information is included in our consolidated financial statements for the year ended December 31, 2022.

Immediately following the merger with KushCo, stockholders that held Class A common stock prior to the completion of the merger owned 51.9 % and former KushCo stockholders owned 48.1 % of the equity of the combined company on a fully diluted basis.

In connection with the merger with KushCo, the Greenlane Certificate of Incorporation was amended and restated (the “A&R Charter”) in order to (i) increase the number of authorized shares of Greenlane Class B common stock, $ 0.0001 par value per share (the “Class B Common stock”), from 10 million shares to 30 million shares in order to effect the conversion of each outstanding share of Class C common stock, $ 0.0001 par value per share (the “Class C common stock”), into one-third of one share of Class B common stock, (ii) increase the number of authorized shares of Class A common stock from 125 million shares to 600 million shares, and (iii) eliminate references to the Class C common stock.

Pursuant to the terms of an Agreement and Plan of Merger, dated as of March 31, 2021 (the "Merger Agreement") with KushCo, immediately prior to the consummation of the business combination, holders of Class C common stock received one-third of one share of Class B common stock for each share of Class C common stock held immediately prior to the closing of the merger.

For further information about the merger with KushCo, see "Note 3 - Business Acquisitions."

We merchandise premium cannabis accessories, child-resistant packaging, specialty vaporization solutions and lifestyle products in the United States, Canada and Europe, serving a diverse and expansive customer base with thousands of retail locations, including licensed cannabis dispensaries, smoke shops, and specialty retailers.

We distribute to multi-state operators ("MSOs"), licensed producers ("LPs"), other retailers and brands through wholesale operations under our Industrial Goods business segment, and to consumers through both wholesale operations as well as e-commerce activities and our retail stores under our Consumer Goods business segment.

Our corporate structure is commonly referred to as an “Up-C” structure.

The Up-C structure allows the members of the Operating Company to continue to realize tax benefits associated with owning interests in an entity that is treated as a partnership, or “pass-through” entity.

One of these benefits is that future taxable income of the Operating Company that is allocated to its members will be taxed on a flow-through basis and therefore will not be subject to corporate taxes at the Operating Company entity level.

Additionally, because the members may redeem their Common Units for shares of Class A common stock on a one -for-one basis or, at our option, for cash, the Up-C structure also provides the members with potential liquidity that holders of non-publicly traded limited liability companies are not typically afforded.

In connection with our initial public offering, we entered into a Tax Receivable Agreement (the “TRA”) with the Operating Company and the Operating Company’s members and a Registration Rights (the “Registration Rights Agreement”) with the

Operating Company’s members.The TRA provides for the payment by us to the Operating Company’s members of 85.0 % of the amount of tax benefits, if any, that we may actually realize (or in some cases, are deemed to realize) as a result of (i) the step-up in tax basis in our share of the Operating Company's assets resulting from the redemption of Common Units under the mechanism described above and (ii) certain other tax benefits attributable to payments made under the TRA.

Pursuant to the Registration Rights Agreement, we have agreed to register the resale of shares of Class A common stock that are issuable to the Operating Company’s members upon redemption or exchange of their Common Units.

The A&R Charter and the Fourth Amended and Restated Operating Agreement of the Operating Company (the “Operating Agreement”) require that (a) we at all times maintain a ratio of one Common Unit owned by us for each share of our Class A common stock issued by us (subject to certain exceptions), and (b) the Operating Company at all times maintains (i) a one -to-one ratio between the number of shares of our Class A common stock issued by us and the number of Common Units owned by us, and (ii) a one -to-one ratio between the number of shares of our Class B common stock owned by the non-founder members of the Operating Company and the number of Common Units owned by the non-founder members of the Operating Company.

As of December 31, 2022, all Common Units of the Operating Company and Class B common stock had been exchanged for Class A common stock, and we owned 100 % of the voting and economic interests in Greenlane through the holders' ownership of Class A common stock.

See "Note 9 - Stockholder's Equity."

Holdings, Inc.

(“Greenlane” and, collectively with the Operating Company (as defined below) and its consolidated subsidiaries,

the “Company”, “we”, “us”, and “our”) was formed as a Delaware corporation on May 2,

We are a holding company that was formed for the purpose of completing an underwritten initial public offering (“IPO”)

of shares of our Class A common stock, $ 0.01 par value per share (“Class A common stock”), in order to carry on the business

of Greenlane Holdings, LLC (the “Operating Company”).

The Operating Company was organized under the laws of the state of

Delaware on September 1, 2015, and is based in Boca Raton, Florida.

Unless the context otherwise requires, references to the “Company”

refer to us, and our consolidated subsidiaries, including the Operating Company.

merchandise premium cannabis accessories, child-resistant packaging, specialty vaporization solutions and lifestyle products in the United

States, Canada, Europe and Latin America, serving a diverse and expansive customer base with thousands of retail locations, licensed

cannabis dispensaries, smoke shops, multi-state operators (“MSOs”), specialty retailers, and retail consumers through both

our e-commerce platforms and our flagship Higher Standards store in New York City’s famed Chelsea Market.

We have been developing a portfolio of our own proprietary brands (the

“Greenlane Brands”) that we believe will, over time, deliver higher margins and create long-term value for our customers and

shareholders.

Our wholly-owned Greenlane Brands includes Groove – our recently launched more affordable product line and Higher

Standards – our premium smoke shop and ancillary product brand, and our award winning Vapor.com website and brand.

category exclusive licenses for the premium Marley Natural branded products, as well as the K.Haring branded products.

are the sole manager of the Operating Company and our principal asset is Common Units of the Operating Company (“Common Units”).

As the sole manager of the Operating Company, we operate and control all of the business and affairs of the Operating Company, and we

conduct our business through the Operating Company and its subsidiaries.

We have a board of directors and executive officers, but no

All of our assets are held and all of the employees are employed by wholly owned subsidiaries of the Operating Company.

have the sole voting interest in, and control the management of, the Operating Company, and we have the obligation to absorb losses of,

and receive benefits from, the Operating Company, that could be significant.

We determined that the Operating Company is a variable interest

entity (“VIE”) and that we are the primary beneficiary of the Operating Company.

Accordingly, pursuant to the VIE accounting

model, beginning in the fiscal quarter ended June 30, 2019, we consolidated the Operating Company in our consolidated financial statements

and reported a non-controlling interest related to the Common Units held by the members of the Operating Company (other than the Common

Units held by us) on our consolidated financial statements.

August 31, 2021, we completed our previously announced merger with KushCo Holdings, Inc.

(“KushCo”) and have included the

results of operations of KushCo in our consolidated statements of operations and comprehensive loss from that date forward.

In connection

with the merger with KushCo, the Greenlane Certificate of Incorporation was amended and restated (the “A&R Charter”)

in order to (i) increase the number of authorized shares of Greenlane Class B common stock, $ 0.0001 par value per share (the “Class

B Common stock”), from 10 million shares to 30 million shares in order to effect the conversion of each outstanding share of Class

C common stock, $ 0.0001 par value per share (the “Class C common stock”), into one-third of one share of Class B common stock,

(ii) increase the number of authorized shares of Class A common stock from 125 million shares to 600 million shares, and (iii) eliminate

references to the Class C common stock.

Pursuant to the terms of an Agreement and Plan of Merger, dated as of March 31, 2021 (the “Merger

Agreement”) with KushCo, immediately prior to the consummation of the business combination, holders of Class C common stock received

one-third of one share of Class B common stock for each share of Class C common stock held immediately prior to the closing of the merger.

corporate structure is commonly referred to as an “Up-C” structure.

The Up-C structure allows the Operating Company to continue

to realize tax benefits associated with owning interests in an entity that is treated as a partnership, or “pass-through”

One of these benefits is that future taxable income of the Operating Company that is allocated to its members will be taxed on

a flow-through basis and therefore will not be subject to corporate taxes at the Operating Company entity level.

Additionally, because

a member may redeem their Common Units for shares of Class A common stock on a one -for-one basis or, at our option, for cash, the Up-C

structure also provides the member with potential liquidity that holders of non-publicly traded limited liability companies are not typically

connection with the IPO, we entered into a Tax Receivable Agreement (the “TRA”) with the Operating Company and the Operating

Company’s members and a Registration Rights Agreement (the “Registration Rights Agreement”) with the Operating Company’s

The TRA provides for the payment by us to the Operating Company’s member(s) of 85.0 % of the amount of tax benefits, if

any, that we may actually realize (or in some cases, are deemed to realize) as a result of (i) the step-up in tax basis in our share

of the Operating Company’s assets resulting from the redemption of Common Units under the mechanism described above and (ii) certain

other tax benefits attributable to payments made under the TRA.

Pursuant to the Registration Rights Agreement, we have agreed to register

the resale of shares of Class A common stock that are issuable to the Operating Company’s members upon redemption or exchange of

their Common Units.

A&R Charter and the Fourth Amended and Restated Operating Agreement of the Operating Company (the “Operating Agreement”)

require that (a) we at all times maintain a ratio of one Common Unit owned by us for each share of our Class A common stock issued by

us (subject to certain exceptions), and (b) the Operating Company at all times maintains (i) a one -to-one ratio between the number of

shares of our Class A common stock issued by us and the number of Common Units owned by us, and (ii) a one -to-one ratio between the number

of shares of our Class B common stock owned by the non-founder members of the Operating Company and the number of Common Units owned

by the non-founder members of the Operating Company.

of December 31, 2022, all Common Units of the Operating Company and Class B common stock had been exchanged for Class A common stock,

and we owned 100 % of the voting and economic interests in Greenlane through the holders’ ownership of Class A common stock.

“Note 9 - Stockholder’s Equity.”

August 4, 2022, we filed a Certificate of Amendment (the

“Certificate of Amendment”) to the A&R Charter with the Secretary of State of the

State for Delaware (the “SSSD”), which effected a one-for-twenty reverse stock split (the “2022 Reverse Stock Split”)

of our issued and outstanding shares of Class A common stock and Class B common stock (collectively, the “Common Stock”)

at 5:01 PM Eastern Time on August 9, 2022.

As a result of the 2022 Reverse Stock Split, every 20 shares of Common Stock issued and outstanding

were converted into one share of Common Stock.

We paid cash in lieu of fractional shares, and accordingly, no fractional shares were

issued in connection with the 2022 Reverse Stock Split.

June 2, 2023, we filed a Certificate of Amendment to the A&R Charter with the SSSD, which effected a one-for-ten reverse stock split

(the “2023 Reverse Stock Split” and together with the 2022 Reverse Stock Split, the “Reverse Stock Splits”) of

our issued and outstanding shares of Common Stock at 5:01 PM Eastern Time on June 5, 2023.

As a result of the 2023 Reverse Stock Split,

every ten shares of common stock issued and outstanding were converted into one share of common stock.

We paid cash in lieu of fractional

shares, and accordingly, no fractional shares were issued in connection with the 2023 Reverse Stock Split.

Reverse Stock Splits did not change the par value of the Common Stock or the authorized number of shares of Common Stock.

All outstanding

options, restricted stock awards, warrants and other securities entitling their holders to purchase or otherwise receive shares of our

Common Stock have been adjusted as a result of the Reverse Stock Splits, as required by the terms of each security.

The number of shares

available to be awarded under our Amended and Restated 2019 Equity Incentive Plan have also been appropriately adjusted.

10 — Compensation Plans” for more information.

share and per share amounts in these consolidated financial statements and notes thereto have been retroactively adjusted for all periods

presented to give effect to the Reverse Stock Splits, including reclassifying an amount equal to the reduction in par value of Common

Stock to additional paid-in capital.

and Going Concern

to ASC 205-40, Presentation of Financial Statements — Going Concern (“ASC 205-40”), management must evaluate whether

there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue

as a going concern for one year after the date that these condensed consolidated financial statements are issued.

In accordance with

ASC 205-40, management’s analysis can only include the potential mitigating impact of management’s plans that have not been

fully implemented as of the issuance date if (a) it is probable that management’s plans will be effectively implemented on a timely

basis, and (b) it is probable that the plans, when implemented, will alleviate the relevant conditions or events that raise substantial

doubt about the Company’s ability to continue as a going concern.

primary requirements for liquidity and capital are working capital, debt service related to recent acquisitions and general corporate

Our primary sources of liquidity are our cash on hand and the cash flow that we generate from our operations, as well as proceeds

from equity issuances, such as our June 2022, October 2022, and July 2023 offerings, each as described and defined

Program and Shelf Registration Statement

used a shelf registration statement on Form S-3 (the “Shelf Registr ation Statement”) to conduct securities offerings

from time to time in order to meet our liquidity needs.

In August 2021, we filed a prospectus supplement and established an “at-the-market”

equity offering program (the “ATM Program”) that provided for the sale of shares of our Class A common stock having an aggregate

offering price of up to $50 million, from time to time.

Since the launch of the ATM program in August 2021

and through December 31, 2022, we sold shares of our Class A common stock which generated gross proceeds of approximately $ 12.7 million

and we paid fees to the sales agent of approximately $ 0.4 million.

Due to the untimely filing of certain of our Quarterly and Annual Reports

3, we are unable to issue additional shares of Class A common stock pursuant to the ATM Program or otherwise use the Shelf Registration

Statement, which will limit our liquidity options in the capital markets

Stock and Warrant Offerings.

June 27, 2022, we entered into a securities purchase agreement with an accredited investor, pursuant to which we agreed to issue and

sell an aggregate of 585,000 shares of our Class A common stock, pre-funded warrants to purchase up to 495,000 shares of our Class A

common stock (the “June 2022 Pre-Funded Warrants”) and warrants to purchase up to 1,080,000 shares of our Class A common

stock (the “June 2022 Standard Warrants” and, together with the June 2022 Pre-Funded Warrants, the “June 2022 Warrants”),

in a registered direct offering (the “June 2022 Offering”).

The June 2022 Offering generated gross proceeds of approximately

$ 5.4 million and net proceeds to the Company of approximately $ 5.0 million.

All June 2022 Pre-Funded Warrants were exercised in July

2022, for de minimis net proceeds.

October 27, 2022, we entered into securities purchase agreements with certain investors, pursuant to which we agreed to issue and sell

an aggregate of 695,555 shares of our Class A common stock, pre-funded warrants to purchase up to 137,778 shares of our Class A Common

Stock (the “October 2022 Pre-Funded Warrants”) and warrants to purchase up to 1,666,667 shares of our Class A common stock

(the “October 2022 Standard Warrants”).

The October 2022 units were offered pursuant to a Registration Statement on Form

S-1 (the “October 2022 Offering”).

The October 2022 Offering generated gross proceeds of approximately $ 7.5 million and net

proceeds to the Company of approximately $ 6.8 million.

June 29, 2023, we entered into securities purchase agreements with certain investors, pursuant to which we agreed to issue and sell an

aggregate of 560,476 shares of our Class A common stock, pre-funded warrants to purchase up to 3,487,143 shares of our Class A Common

Stock (the “July 2023 Pre-Funded Warrants”) and warrants to purchase up to 8,095,238 shares of our Class A common stock (the

“July 2023 Standard Warrants”).

The July 2023 units were offered pursuant to a Registration Statement on Form S-1 (the “July

2023 Offering”).

The July 2023 Offering generated gross proceeds of approximately $ 4.3 million and net proceeds to the Company

of approximately $ 3.8 million and closed on July 3, 2023.

August 9, 2022, we entered into an asset-based loan agreement dated as of August 8, 2022 (the “Loan Agreement”), which made

available to the Company a term loan of up to $ 15.0 million.

On February 9, 2023, we entered into Amendment No.

2 to the Loan Agreement,

in which we agreed to, among other things, voluntarily prepay approximately $ 6.6 million (inclusive of early termination fees and expenses)

under the terms provided for under the Loan Agreement and the lenders under the Loan Agreement agreed to release $ 5.7 million in funds

held in a blocked account pursuant to the terms of the Loan Agreement.

August 7, 2023, we repaid the approximately $ 4.3 million in aggregate principal amount (the “Loan Repayment”) which remained

outstanding under the terms of the Loan Agreement.

As a result of the Loan Repayment, the Company has been released from its obligations

under the Loan Agreement, in accordance with the terms of the Loan Agreement.

See “Note 6 - Long Term Debt” for more information.

February 16, 2023, two of our wholly owned subsidiaries, Warehouse Goods LLC and Kim International LLC, entered into an agreement with

a third-party institutional investor pursuant to which the investor purchased, for approximately $ 4.9 million in cash, an economic participation

interest, at a discount, in our rights to payment from the United States Internal Revenue Service for certain periods with respect to

the employee retention credits filed by us under the Employee Retention Credit program.

Future Receivables

In July, August, October, and

November 2023, the Company received an aggregate of approximately $ 3.9 million in cash pursuant to the terms of future receivables

financings (collectively, the “Future Receivables Financings”) entered into with two private lenders.

- Long Term Debt” for more information.

We have completed several initiatives to optimize our working capital

requirements.

We launched Groove, a new, innovative Greenlane Brands product line, and we also rationalized and improved our third-party

brands product offering, which enabled us to reduce inventory carrying costs and working capital requirements while increasing our offerings.

In April 2023, we entered into two

strategic partnership.

First, we entered into a strategic partnership (the “MJ Packaging Partnership”) with A&A Global Imports

d/b/a MarijuanaPackaging.com (“MJ Pack”), a leading provider of packaging solutions to the cannabis industry.

entered into a strategic partnership with an affiliate of one of our existing vape suppliers (“Vape Partner”) to service

certain key customers with vaporizer goods and services (the “Vape Partnership”).

As part of the Vape Partnership, we

will introduce our Vape Partner to certain key customers, assist with the promotion and the sale of certain vaporizer goods and

services, and help coordinate the logistics, storage and distribution of such vaporizer products.

If our Vape Partner and key

customer(s) enter into a direct relationship, the customers would directly purchase vaporizer goods and services, which we currently

sell them, directly from our Vape Partner and we would no longer need to purchase such vape inventory on behalf of such key

In exchange we would earn quarterly and annual commission payments from our strategic partners.

While the strategic

partnerships may result in a decrease in top line revenue for these packaging and vape products, these partnerships combined with

some of our other restructuring initiatives should allow us to reduce our overall cost-structure and enhance our margins, thereby

improving our balance sheet.

have successfully renegotiated supplier partnership terms and are continuing to improve working capital arrangements with suppliers.

We have made progress consolidating and streamlining our office, warehouse, and distribution operations footprint.

We have reduced our

workforce significantly to reduce costs and align with our revenue projections.

Company has incurred net losses of $ 32.3

million and $ 182.2

million for the years ended December 31, 2023 and 2022, respectively.

For the years ended December 31, 2023 and 2022, cash used in

operating activities were $ 1.8

million and $ 26.4

million, respectively.

The recent macroeconomic environment has caused weaker demand than contemplated under the Company’s business plan,

resulting in a reduction in projected revenue and cash flows for the twelve-month period included in the going concern

a result of our losses and our projected cash needs, combined with our current liquidity level, substantial doubt exists about the Company’s

ability to continue as a going concern.

The Company’s ability to continue as a going concern is contingent upon successful execution

of management’s intended plan over the next twelve months to improve the Company’s liquidity and profitability, which includes,

without limitation:

■Further reducing operating costs expense by taking additional restructuring actions to align cost with revenue to achieve

profitability.

■Increasing revenue by introducing new products and acquiring new customers.

■Execute on strategic partnerships accretive to margins and operating cash

■Seeking additional capital through the issuance of debt or equity securities.

consolidated financial statements do not include any adjustments that may result from the outcome of this going concern uncertainty.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Our audited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

of Presentation

audited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United

States of America (“U.S.

GAAP”) and with the instructions to Form 10-K and Article 8 of Regulation S-X.

Principles of Consolidation

Our consolidated financial statements include our accounts, the accounts of the Operating Company, and the accounts of the Operating Company's consolidated subsidiaries.

of Consolidation

consolidated financial statements include our accounts, the accounts of the Operating Company, and the accounts of the Operating Company’s

consolidated subsidiaries.

All significant intercompany balances and transactions have been eliminated in consolidation.

Reverse Stock Split

On August 4, 2022, we filed a Certificate of Amendment (the "Certificate of Amendment") to the A&R Charter with the Secretary of State of the State of Delaware, which effected a one-for-20 reverse stock split (the “Reverse Stock Split”) of our issued and outstanding shares of Class A common stock and Class B common stock (collectively, the "Common Stock") at 5:01 PM Eastern Time on August 9, 2022.

As a result of the Reverse Stock Split, every 20 shares of Common Stock issued and outstanding were converted into one share of Common Stock.

We paid cash in lieu of fractional shares, and accordingly, no fractional shares were issued in connection with the Reverse Stock Split.

The Reverse Stock Split did not change the par value of the Common Stock or the authorized number of shares of Common Stock.

All outstanding options, restricted stock awards, warrants and other securities entitling their holders to purchase or otherwise receive shares of our Common Stock have been adjusted as a result of the Reverse Stock Split, as required by the terms of each security.

The number of shares available to be awarded under our Amended and Restated 2019 Equity Incentive Plan have also been appropriately adjusted.

See "Note 10 — Compensation Plans" for more information.

All share and per share amounts in these consolidated financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to the Reverse Stock Split, including reclassifying an amount equal to the reduction in par value of Common Stock to additional paid-in capital.

Our primary requirements for liquidity and capital are working capital, debt service related to recent acquisitions and general corporate needs.

Our primary sources of liquidity are our cash on hand and the cash flow that we generate from our operations, as well as proceeds from equity issuances, such as our June 2022 and October 2022 offerings, and our ATM program, each as described below.

We have an effective shelf registration statement on Form S-3 (the "Shelf Registr ation Statement") and may opportunistically conduct securities offerings from time to time in order to meet our liquidity needs.

For so long as our public float is less than $75 million, our ability to utilize the Shelf Registration to raise capital is limited, as further described below.

The Shelf Registration Statement registers shares of our Class A common stock, preferred stock, $ 0.0001 par value per share (the "preferred stock"), depository shares representing our preferred stock, warrants to purchase shares of our Class A common stock, preferred stock or depository shares, and rights to purchase shares of our Class A common stock or preferred stock that may be issued by us in a maximum aggregate amount of up to $ 200 million.

In August 2021, we filed a prospectus supplement and established an "at-the-market" equity offering program (the "ATM Program") that provides for the sale of shares of our Class A common stock having an aggregate offering price of up to $ 50 million, from time to time.

Net proceeds from sales of

our shares of Class A common stock under the ATM Program are expected to be used for working capital and general corporate purposes.

However, we may be unable to access the capital markets because of current market volatility and the performance of our stock price.

On March 31, 2022, the date on which our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the "2021 Annual Report") was filed with the SEC, the Shelf Registration Statement became subject to the offering limits set forth in Instruction I.B.6 because our public float was less than $75 million.

For so long as our public float is less than $75 million, the aggregate market value of securities sold by us under the Shelf Registration Statement (including our ATM Program) pursuant to Instruction I.B.6 during any twelve consecutive months may not exceed one-third of our public float.

Since the launch of the ATM program in August 2021 and through December 31, 2022, we sold shares of our Class A common stock which generated gross proceeds of approximately $ 12.7 million and we paid fees to the sales agent of approximately $ 0.4 million.

In light of our low cash position, we have been forced to sell stock under our ATM program at prices that may not otherwise be attractive and are dilutive.

We have offered $ 2.2 million in securities pursuant to Instruction I.B.6 in the twelve calendar months preceding the date of filing of this Annual Report on Form 10-K.

Following the completion of the June 2022 Offering (as defined below) we are unable to issue additional shares of Class A common stock pursuant to the ATM Program or otherwise use the Shelf Registration Statement for a period of time due to the restrictions under Instruction I.B.6 to Form S-3, which will limit our liquidity options in the capital markets for a period of time.

On June 27, 2022, we entered into a securities purchase agreement with an accredited investor, pursuant to which we agreed to issue and sell an aggregate of 585,000 shares of our Class A common stock, pre-funded warrants to purchase up to 495,000 shares of our Class A common stock (the “June 2022 Pre-Funded Warrants”) and warrants to purchase up to 1,080,000 shares of our Class A common stock (the “June 2022 Standard Warrants” and, together with the June 2022 Pre-Funded Warrants, the “June 2022 Warrants”), in a registered direct offering (the “June 2022 Offering”).

The June 2022 Offering generated gross proceeds of approximately $ 5.4 million and net proceeds to the Company of approximately $ 5.0 million.

All June 2022 Pre-Funded Warrants were exercised in July 2022, for de minimis net proceeds.

On August 9, 2022, we entered into an asset-based loan agreement dated as of August 8, 2022 (the “Loan Agreement”), which made available to the Company a term loan of up to $ 15.0 million.

On February 9, 2023, we entered into Amendment No.

2 to the Loan Agreement, in which we agreed to, among other things, voluntarily prepay approximately $ 6.6 million (inclusive of early termination fees and expenses) under the terms provided for under the Loan Agreement and the lenders under the Loan Agreement agreed to release $ 5.7 million in funds held in a blocked account pursuant to the terms of the Loan Agreement.

On October 27, 2022, we entered into securities purchase agreements with certain investors, pursuant to which we agreed to issue and sell an aggregate of 6,955,555 shares of our Class A common stock, 1,377,780 October 2022 Pre-Funded Warrants and 16,666,670 October 2022 Standard Warrants.

The October 2022 Units were offered pursuant to a Registration Statement on Form S-1.

The October 2022 Offering generated gross proceeds of approximately $ 7.5 million and net proceeds to the Company of approximately $ 6.8 million.

On February 3, 2023, we filed a Registration Statement on Form S-1 (the "February 2023 S-1") seeking to register the public offering of up to $ 8.0 million in units, which has not yet become effective.

We can provide no assurances as to whether the February 2023 S-1 will become effective, or whether we will undertake this public offering following the filing of this Annual Report on Form 10-K.

On February 16, 2023, two of our wholly owned subsidiaries, Warehouse Goods and Kim International LLC, entered into an agreement with a third-party institutional investor pursuant to which the investor purchased, for approximately $ 4.85 million in cash, an economic participation interest, at a discount, in all of our rights to payment from the United States Internal Revenue Service with respect to the employee retention credits filed by us under the Employee Retention Credit program.

We have completed several initiatives to optimize our working capital requirements.

We launched Groove, a new, innovative Greenlane Brands product line, which is accretive to gross profit, and we also rationalized our third-party brands product offering, which enables us to reduce inventory carrying costs and working capital requirements.

We are in the process of divesting the packaging product line, which is expected to provide liquidity and allow for ongoing substantial cost reductions.

We have successfully renegotiated supplier partnership terms and are continuing to improve working capital arrangements with suppliers.

We have made progress consolidating and streamlining our office, warehouse, and distribution operations footprint.

We have reduced our workforce by approximately 49 % throughout fiscal year 2022 to reduce costs and align with our revenue projections.

We believe tha t our cash on hand and cash flow from operating activities will be sufficient to fund our working capital and capital expenditure requirements, as well as our debt repayments and other liquidity requirements associated with our existing operations, for at least the next 12 months.

Our opinions concerning liquidity are based on currently available information.

To the extent this information proves to be inaccurate, or if circumstances change, future availability of trade credit or other sources of financing may be reduced and our liquidity could be adversely affected.

Our future capital requirements and the adequacy of available funds will depend on many factors, including those described in the section titled “Risk Factors” in Item 1A of this Annual Report on Form 10-K for the year ended December 31, 2022.

Depending on the severity and direct impact of these factors on us, we may be unable to secure additional financing to meet our operating requirements on terms favorable to us, or at all.

Use of Estimates

Conformity with U.S.

GAAP requires the use of estimates and judgments that affect the reported amounts in our consolidated financial statements and accompanying notes.

These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources.

We base our estimates and judgments on historical information and on various other assumptions that we believe are reasonable under the circumstances.

GAAP requires us to make estimates and judgments in several areas.

Such areas include, but are not limited to:

GAAP requires the use of estimates and judgments that affect the reported amounts in our consolidated financial statements

and accompanying notes.

These estimates form the basis for judgments we make about the carrying values of our assets and liabilities,

which are not readily apparent from other sources.

We base our estimates and judgments on historical information and on various other

assumptions that we believe are reasonable under the circumstances.

GAAP requires us to make estimates and judgments in several

Such areas include, but are not limited to the following:

the collectability of accounts receivable;

the allowance f or slow-moving or obsolete inventory;

the allowance f or

slow-moving or obsolete inventory;

the realizability of deferred tax assets;

the fair value of goodwill;

the fair value of contingent consideration arrangements;

the useful lives of intangible assets and property and equipment;

the useful lives property and equipment;

the calculation of our VAT taxes receivable and VAT taxes, fines, and penalties payable;

our loss contingencies, including our TRA liability;

loss contingencies, including our TRA liability;

and the valuation and assumptions underlying equity-based compensation.

These estimates are based on management's knowledge about current events and expectations about actions we may undertake in the future.

Actual results could differ materially from those estimates.

In March 2020, the World Health Organization declared the novel coronavirus ("COVID-19") a global pandemic.

We expect uncertainties around our key accounting estimates to continue to evolve depending on the duration and degree of impact associated with the COVID-19 pandemic, including the possible resurgence of new strains.

Our estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in our consolidated financial statements.

Voluntary Change in Accounting Principle

During the first quarter of 2022, we made a voluntary change in accounting principle to classify outbound shipping and handling costs associated with the distribution of products to our customers as a component of "general and administrative" costs within our consolidated statements of operations and comprehensive loss.

These costs were previously recorded as a component of "cost of sales" within our consolidated statements of operations and comprehensive loss.

We made the voluntary change in accounting principle because we believe the classification of outbound shipping and handling costs within "general and administrative" costs better reflects the selling effort and enhances the comparability of our financial statements with many of our industry peers.

In accordance with U.S.

GAAP, the change has been reflected in the consolidated statements of operations and comprehensive loss through retrospective application as follows:

For the year ended December 31, 2021

(in thousands) Prior to Change Effect of Change As Adjusted

Cost of sales $ 138,381 $ ( 6,174 ) $ 132,207

Gross profit $ 27,679 $ 6,174 $ 33,853

General and administrative $ 41,700 $ 6,174 $ 47,874

Total operating expenses $ 80,401 $ 6,174 $ 86,575

Segment Reporting

We manage our global business operations through our operating and reportable business segments.

As of December 31, 2022, we had two reportable operating business segments:

These estimates

are based on management’s knowledge about current events and expectations about actions we may undertake in the future.

results could differ materially from those estimates.

manage our global business operations through our operating and reportable business segments.

As of December 31, 2023, we had two reportable

operating business segments:

Industrial Goods and Consumer Goods.

Our reportable segments have been identified based on how our chief operating decision maker ("CODM"), which is a committee comprised of our Chief Executive Officer ("CEO") and our Chief Financial and Legal Officer, manage our business, make resource allocation and operating decisions, and evaluate operating performance.

Our reportable segments have been identified based on how our chief

operating decision maker (“CODM”), which is a committee comprised of our Chief Executive Officer (“CEO”) and

our Chief Financial and Legal Officer (“CFO”), manages our business, makes resource allocation and evaluates operating decisions,

and evaluate operating performance.

See “Note 12—Segment Reporting.”

Business Combinations

Our business combinations are accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations (“ASC 805”).

Under the acquisition method, we recognize 100% of the assets we acquire and liabilities we assume, regardless of the percentage we own, at their estimated fair values as of the date of acquisition.

Any excess of the purchase price over the fair value of the net assets and other identifiable intangible assets we acquire is recorded as goodwill.

To the extent the fair value of the net assets we acquire, including other identifiable assets, exceeds the purchase price, a bargain purchase gain is recognized.

The assets we acquire, and liabilities we assume from contingencies, are recognized at fair value if we can readily determine the fair value during the measurement period.

The operating results of businesses we acquire are included in our consolidated statement of operations from the date of acquisition.

business combinations are accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations

Under the acquisition method, we recognize 100% of the assets we acquire and liabilities we assume, regardless

of the percentage we own, at their estimated fair values as of the date of acquisition.

Any excess of the purchase price over the fair

value of the net assets and other identifiable intangible assets we acquire is recorded as goodwill.

To the extent the fair value of

the net assets we acquire, including other identifiable assets, exceeds the purchase price, a bargain purchase gain is recognized.

assets we acquire, and liabilities we assume from contingencies, are recognized at fair value if we can readily determine the fair value

during the measurement period.

The operating results of businesses we acquire are included in our consolidated statement of operations

from the date of acquisition.

Acquisition-related costs are expensed as incurred.

See “Note 3— Business Acquisitions.”

Equity-Based Compensation

We account for equity-based compensation grants of equity awards to employees in accordance with ASC Topic 718, Compensation — Stock Compensation .

This standard requires us to measure compensation expense based on the estimated fair value of share-based awards on the grant date and recognize as expense over the requisite service period, which is generally the vesting period.

We estimate the fair value of stock options using the Black-Scholes model on the grant date.

The Black-Scholes model requires us to use several variables to estimate the grant-date fair value of our equity-based compensation awards including expected term, expected volatility and risk-free interest rates.

account for equity-based compensation grants of equity awards to employees in accordance with ASC Topic 718, Compensation — Stock

Compensation.

This standard requires us to measure compensation expense based on the estimated fair value of share-based awards on the

grant date and recognize as expense over the requisite service period, which is generally the vesting period.

We estimate the fair value

of stock options using the Black-Scholes model on the grant date.

The Black-Scholes model requires us to use several variables to estimate

the grant-date fair value of our equity-based compensation awards including expected term, expected volatility and risk-free interest

Our equity-based compensation costs are recognized using a graded vesting schedule.

For liability-classified awards, we record fair value adjustments up to and including the settlement date.

Changes in the fair value of our equity-based compensation liability that occur during the requisite service period are recognized as compensation cost over the vesting period.

Changes in the fair value of the equity-based compensation liability that occur after the end of the requisite service period but before settlement, are recognized as compensation cost of the period in which the change occurs.

For liability-classified awards, we record

fair value adjustments up to and including the settlement date.

Changes in the fair value of our equity-based compensation liability

that occur during the requisite service period are recognized as compensation cost over the vesting period.

Changes in the fair value

of the equity-based compensation liability that occur after the end of the requisite service period but before settlement, are recognized

as compensation cost of the period in which the change occurs.

We account for forfeitures as they occur.

See “Note 10—Compensation Plans.”

Loss Contingencies

Certain conditions may exist which may result in a loss to us, but which will only be resolved when one or more future events occur or fail to occur.

See “Note 10—Compensation

Contingencies

conditions may exist which may result in a loss to us, but which will only be resolved when one or more future events occur or fail to

Management assesses such contingent liabilities and such assessment inherently involves an exercise of judgment.

In assessing loss contingencies related to legal proceedings that are pending against us, or unasserted claims that may result in such proceedings, we evaluate the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability is estimable, the liability would be accrued in our consolidated financial statements.

If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed.

Unasserted claims that are not considered probable of being asserted and those for which an unfavorable outcome is not reasonably possible have not been disclosed.

Fair Value Measurements

We apply the provisions of ASC Topic 820, Fair Value Measurements , which defines fair value, establishes a framework for its measurement and expands disclosures about fair value measurements.

Fair value is defined as the exchange price we would receive for an asset or an exit price we would pay to transfer a liability in the principal, or most advantageous, market for our asset or liability in an orderly transaction with a market participant on the measurement date.

We determine the fair market values of our financial instruments based on the fair value hierarchy, which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

loss contingencies related to legal proceedings that are pending against us, or unasserted claims that may result in such proceedings,

we evaluate the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief

sought or expected to be sought therein.

the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability

is estimable, the liability would be accrued in our consolidated financial statements.

If the assessment indicates that a potentially

material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, the nature of the contingent

liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed.

contingencies considered remote are generally not disclosed.

Unasserted claims that are not considered probable of being asserted and

those for which an unfavorable outcome is not reasonably possible have not been disclosed.

Value Measurements

apply the provisions of ASC Topic 820, Fair Value Measurements , which defines fair value, establishes a framework for its measurement

and expands disclosures about fair value measurements.

Fair value is defined as the exchange price we would receive for an asset or an

exit price we would pay to transfer a liability in the principal, or most advantageous, market for our asset or liability in an orderly

transaction with a market participant on the measurement date.

We determine the fair market values of our financial instruments based

on the fair value hierarchy, which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when

measuring fair value.

The following three levels of inputs may be used to measure fair value:

Level 1 Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities;

quoted prices in markets that are not active;

or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts of our financial instruments, including cash, accounts receivable, accounts payable, accrued expenses and short-term debt, are carried at historical cost basis, which approximates their fair values because of their short-term nature.

The fair value of our long-term debt is the estimated amount we would have to pay to repurchase the debt, inclusive of any premium or discount attributable to the difference between the stated interest rate and market rate of interest at each balance sheet date.

As of December 31, 2022 and 2021, the carrying amount of our long-term debt approximated its fair value.

On a recurring basis, we measure and record contingent consideration using fair value measurements in the accompanying consolidated financial statements.

See “Note 4—Fair Value of Financial Instruments.”

We also own equity securities of private entities, which do not have readily determinable fair values.

We elected to measure these equity securities at cost minus impairment, if any.

At each reporting period, we make a qualitative assessment considering impairment indicators to evaluate whether our investment is impaired.

The equity securities are adjusted to fair value when an observable price change can be identified.

1 — Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement

2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities;

quoted prices in markets

that are not active;

or other inputs that are observable or can be corroborated by observable market data for substantially the full

term of the assets or liabilities.

3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets

or liabilities.

carrying amounts of our financial instruments, including cash, accounts receivable, accounts payable, accrued expenses and short-term

debt, are carried at historical cost basis, which approximates their fair values because of their short-term nature.

The fair value of

our long-term debt is the estimated amount we would have to pay to repurchase the debt, inclusive of any premium or discount attributable

to the difference between the stated interest rate and market rate of interest at each balance sheet date.

On a recurring basis, we measure and record contingent consideration

using fair value measurements in the accompanying consolidated financial statements.

See “Note 4—Fair Value of Financial

Instruments.”

also own equity securities of private entities, which do not have readily determinable fair values.

We elected to measure these equity

securities at cost minus impairment, if any.

At each reporting period, we make a qualitative assessment considering impairment indicators

to evaluate whether our investment is impaired.

The equity securities are adjusted to fair value when an observable price change can

be identified.

See “Note 4—Fair Value of Financial Instruments.”

For purposes of reporting cash flows, we consider cash on hand, checking accounts, and savings accounts to be cash.

We also consider all highly-liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents.

We place our cash with high credit quality financial institutions, which provide insurance through the Federal Deposit Insurance Company.

At times, the balance in our accounts may exceed federally insured limits.

We perform periodic evaluations of the relative credit standing of these institutions and do not expect any losses related to such concentrations.

As of December 31, 2022, and 2021, approximately $ 0.8 million and $ 0.7 million, respectively, of our cash balances were in foreign bank accounts and uninsured.

As of December 31, 2022 and 2021, we had no cash equivalents.

Restricted Cash

Restricted cash represents principally cash reserves that are maintained pursuant to the governing agreement of the Asset-Based Loan discussed in "Note 6 - Debt."

Accounts Receivable, net

Accounts receivable represent amounts due from customers for merchandise sales and are recorded when revenue is earned and are carried at the original invoiced amount less an allowance for any potentially uncollectible amounts.

An account is considered past due when payment has not been rendered by its due date based upon the terms of the sale.

Generally, accounts receivable are due 30 days after the billing date.

We maintain an allowance for doubtful accounts to reserve for potentially uncollectible receivable amounts.

In evaluating our ability to collect outstanding receivable balances, we consider various factors including the age of the balance, the creditworthiness of the customer, the customer's current financial condition, current economic conditions, and other factors that may affect our ability to collect from customers.

purposes of reporting cash flows, we consider cash on hand, checking accounts, and savings accounts to be cash.

We also consider all

highly-liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents.

our cash with high credit quality financial institutions, which provide insurance through the Federal Deposit Insurance Company.

the balance in our accounts may exceed federally insured limits.

We perform periodic evaluations of the relative credit standing of these

institutions and do not expect any losses related to such concentrations.

As of December 31, 2023, and 2022, approximately $ 0.1 million

and $ 0.8 million, respectively, of our cash balances were in foreign bank accounts and uninsured.

As of December 31, 2023, and 2022,

we had no cash equivalents.

cash represents principally cash reserves that are maintained pursuant to the governing agreement of the Asset-Based Loan discussed in

“Note 6 - Debt.”

Receivable, net

receivable represent amounts due from customers for merchandise sales and are recorded when revenue is earned and are carried at the

original invoiced amount less an allowance for any expected credit loss.

An account is considered past due when payment has not been

rendered by its due date based upon the terms of the sale.

Generally, accounts receivable are due thirty days after the billing date.

We maintain an allowance for credit losses to reserve for potentially uncollectible receivable amounts.

In evaluating our ability to

collect outstanding receivable balances, we consider various factors including the age of the balance, the creditworthiness of the customer,

the customer’s current financial condition, current economic conditions, and other factors that may affect our ability to collect

from customers.

We write off accounts as uncollectible on a case-by-case basis.

We pledge accounts receivable as collateral for our long-term debt, see “Note 6—Debt.”

Inventories, net

Inventories consist of finished goods that we value at the lower of cost or net realizable value on a weighted average cost basis for the majority of the inventory.

We established an allowance for slow-moving or obsolete inventory based upon assumptions about future demands and market conditions.

We pledge accounts receivable as collateral for our long-term

debt, see “Note 6—Debt.”

consist of finished goods that we value at the lower of cost or net realizable value on a weighted average cost basis for the majority

of the inventory.

We established an allowance for slow-moving or obsolete inventory based upon assumptions about future demands and market

At December 31, 2023, and 2022, the reserve for obsolescence was approximately $ 9.5 million and $ 21.4 million, respectively.

We pledge inventory as collateral for our long-term debt, see “Note 6— Debt.”

Vendor Deposits

Vendor deposits represent prepayments we make to vendors for inventory purchases.

A significant number of vendors require us to prepay for inventory purchases.

Customs Bonds

The Company is required to obtain customs bonds to import goods into the United States to provide security for payment of duties, taxes and other fees incurred as a result of importing goods.

Customs bonds are included in "Other current assets" in our consolidated balance sheets, see "Note 8 - Supplemental Financial Statement Information."

Assets Held for Sale

We generally consider assets to be held for sale when (i) we commit to a plan to sell the assets, (ii) the assets are available for immediate sale in their present condition, (iii) we have initiated an active program to locate a buyer and other actions required to complete the plan to sell the assets, (iv) consummation of the planned sale transaction is probable, (v) the assets are being actively marketed for sale at a price that is reasonable in relation to their current fair value, (vi) the transaction is expected to qualify for recognition as a completed sale, within one year, and (vii) significant changes to or withdrawal of the plan is unlikely.

Following the classification of any depreciable assets within a disposal group as held for sale, we discontinue depreciating the asset and write down the asset to the lower of carrying value or fair market value less cost to sell, if needed.

Property and Equipment, net

We state property and equipment at cost or, if acquired through a business combination, fair value at the date of acquisition.

We calculate depreciation and amortization using the straight-line method over the estimated useful lives of the assets, except for our leasehold improvements, which are depreciated over the shorter of their estimated useful lives or their related lease term.

Upon the sale or retirement of assets, the cost and related accumulated depreciation are removed from our accounts and the resulting gain or loss is credited or charged to income.

deposits represent prepayments we make to vendors for inventory purchases.

A significant number of vendors require us to prepay for inventory

Company is required to obtain customs bonds to import goods into the United States to provide security for payment of duties, taxes and

other fees incurred as a result of importing goods.

Customs bonds are included in “Other current assets” in our consolidated

balance sheets, see “Note 8 - Supplemental Financial Statement Information.”

Held for Sale

generally consider assets to be held for sale when (i) we commit to a plan to sell the assets, (ii) the assets are available for immediate

sale in their present condition, (iii) we have initiated an active program to locate a buyer and other actions required to complete the

plan to sell the assets, (iv) consummation of the planned sale transaction is probable, (v) the assets are being actively marketed for

sale at a price that is reasonable in relation to their current fair value, (vi) the transaction is expected to qualify for recognition

as a completed sale, within one year, and (vii) significant changes to or withdrawal of the plan is unlikely.

Following the classification

of any depreciable assets within a disposal group as held for sale, we discontinue depreciating the asset and write down the asset to

the lower of carrying value or fair market value less cost to sell, if needed.

and Equipment, net

state property and equipment at cost or, if acquired through a business combination, fair value at the date of acquisition.

depreciation and amortization using the straight-line method over the estimated useful lives of the assets, except for our leasehold

improvements, which are depreciated over the shorter of their estimated useful lives or their related lease term.

Upon the sale or retirement

of assets, the cost and related accumulated depreciation are removed from our accounts and the resulting gain or loss is credited or

charged to income.

We expense costs for repairs and maintenance when incurred.

and equipment includes assets recorded under finance leases, see “Note 5—Leases.” We pledge property and equipment as collateral for our long-term debt, see “Note 6—Long Term Debt.”

Impairment of Long-Lived Assets

We assess the recoverability of the carrying amount of our long lived-assets, including property and equipment and finite-lived intangibles, whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.

An impairment loss would be assessed when estimated undiscounted future cash flows from the operation and disposition of the asset group are less than the carrying amount of the asset group.

Property and equipment includes assets recorded under

finance leases, see “Note 5—Leases.” We pledge property and equipment as collateral for our long-term debt, see “Note

6—Long Term Debt.”

of Long-Lived Assets

assess the recoverability of the carrying amount of our long lived-assets, including property and equipment and finite-lived intangibles,

whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.

An impairment

loss would be assessed when estimated undiscounted future cash flows from the operation and disposition of the asset group are less than

the carrying amount of the asset group.

Asset groups have identifiable cash flows and are largely independent of other asset groups.

Measurement of an impairment loss is based on the excess of the carrying amount of the asset group over its fair value.

Changes in our future operations and business lines could affect the estimated undiscounted future cash flows from the operation of certain long-lived assets, such as customer relationships, and may give rise to impairment losses in future periods.

Intangible Assets, net

Our intangible assets consist of domain names, intellectual property, distribution agreements, proprietary technology, trademarks and tradenames, customer relationships, and other rights.

We amortize intangible assets with finite lives over their estimated useful lives on a straight-line basis.

The straight-line method of amortization represents our best estimate of the distribution of the economic value of the identifiable intangible assets.

We carry intangible assets with finite lives at cost less accumulated amortization.

We assess the recoverability of finite-lived intangible assets in the same manner we do for property and equipment, as described above.

For our intangible assets not subject to amortization, we perform an annual impairment assessment during the fourth quarter of each year, or more frequently if indicators of potential impairment exist, to determine whether it is more likely than not that the carrying value of the asset may not be recoverable.

If necessary, a quantitative impairment test is performed to compare the fair value of the indefinite-lived intangible asset with its carrying value.

Impairments, if any, are based on the excess of the carrying amount over the fair value of the asset.

For additional information about intangible assets, see "Note 3—Business Acquisitions" and "Note 8—Supplemental Financial Statement Information."

Investments in Equity Securities

Our investments in equity securities without readily determinable fair value consist of ownership interests in Airgraft Inc., Sun Grown Packaging, LLC ("Sun Grown") and Vapor Dosing Technologies, Inc.

We determined that our ownership interests do not provide us with significant influence over the operations of these investments.

Accordingly, we account for our investments in these entities as equity securities.

Airgraft Inc., Sun Grown, and VIVA are private entities and their equity securities do not have a readily determinable fair value.

We elected to measure these securities under the measurement alternative election at cost minus impairment, if any, with adjustments through earnings for observable price changes in orderly transactions for the identical or similar investment of the same issuer.

in our future operations and business lines could affect the estimated undiscounted future cash flows from the operation of certain long-lived

assets, such as customer relationships, and may give rise to impairment losses in future periods.

in Equity Securities

investments in equity securities without readily determinable fair value consist of ownership interests in Airgraft Inc., Sun Grown Packaging,

LLC (“Sun Grown”) and Vapor Dosing Technologies, Inc.

We determined that our ownership interests do

not provide us with significant influence over the operations of these investments.

Accordingly, we account for our investments in these

entities as equity securities.

Airgraft Inc., Sun Grown, and VIVA are private entities and their equity securities do not have a readily

determinable fair value.

We elected to measure these securities under the measurement alternative election at cost minus impairment,

if any, with adjustments through earnings for observable price changes in orderly transactions for the identical or similar investment

of the same issuer.

Investments in equity securities are included within “Other assets” in our consolidated balance sheets.

See “Note 4—Fair Value of Financial Instruments.”

Goodwill represents the excess of the price we paid over the fair value of the net identifiable assets we acquired in business combinations.

In accordance with ASC Topic 350, Intangibles—Goodwill and Other , we review goodwill for impairment at the reporting unit level annually or, when events or circumstances dictate, more frequently.

The impairment review for goodwill consists of a qualitative assessment of whether it is more-likely-than-not that a reporting unit's fair value is less than its carrying amount, and if necessary, a quantitative goodwill impairment test.

Factors to consider when performing the qualitative assessment include general economic conditions, limitations on accessing capital, changes in forecasted operating results and fluctuations in foreign exchange rates.

If the qualitative assessment demonstrates that it is more-likely-than-not that the estimated fair value of the reporting unit exceeds its carrying value, it is not necessary to measure and record impairment loss.

We may elect to bypass the qualitative assessment and proceed directly to the quantitative assessment, for any reporting unit, in any period.

We can resume the qualitative assessment for any reporting unit in any subsequent period.

When we perform a quantitative impairment test, we use a combination of an income approach, a discounted cash flow valuation approach, and a market approach, using the guideline public company method, to determine the fair value of each reporting unit, and then compare the fair value to its carrying amount to determine the amount of impairment, if any.

If a reporting unit's fair value is less than its carrying amount, we record an impairment charge based on that difference, up to the amount of goodwill allocated to that reporting unit.

The quantitative impairment test requires the application of a number of significant assumptions, including estimated projections of future revenue growth rates, EBITDA margins, terminal value growth rates, market multiples, discount rates, and foreign currency exchange rates.

The projections of future cash flows used to assess the fair value of the reporting units are based on the internal operation plans reviewed by management.

The market multiples are based on comparable public company multiples.

The discount rates are based on the risk-free rate of interest and estimated risk premiums for the reporting units at the time the impairment analysis is prepared.

The projections of future exchange rates are based on the current exchange rates at the time the projections are prepared.

if the fair value of the reporting unit exceeds its carrying value, no further analysis or write-down of goodwill is required.

If the fair value of the reporting unit is less than the carrying value of its net assets, the implied fair value value of the reporting unit is allocated to all its underlying assets and liabilities, including both recognized and unrecognized tangible and intangible assets, based on their fair value.

If necessary, goodwill is then written down to its implied fair value.

For additional information about goodwill, see "Note 3—Business Acquisitions" and "Note 8—Supplemental Financial Statement Information."

Vendor Incentives and Rebates

Sales incentives we receive in the form of payments from vendors solely to reimburse us for acting as the vendors' agent in redeeming a sales incentive that is between our vendor and our customers and end consumers are included in net sales in the consolidated statements of operations and comprehensive loss.

We also have agreements with certain vendors to receive volume rebates which are dependent upon reaching minimum purchase thresholds.

When volume rebates can be reasonably estimated and it is probable that minimum purchase thresholds will be met, we record a portion of the rebate when or as we make progress towards the purchase threshold.

Amounts received from vendors relating to volume rebates are considered a reduction of the carrying value of our inventory and, therefore, such amounts are ultimately recorded as a reduction of cost of goods sold in the consolidated statements of operations and comprehensive loss.

Foreign Currency Translation

Our consolidated financial statements are presented in United States (U.S.) dollars.

The functional currency of one of the Operating Company’s wholly-owned, Canada-based, subsidiaries is the Canadian dollar.

The functional currency of the Operating Company’s wholly-owned, Netherlands-based subsidiary is the Euro.

Incentives and Rebates

incentives we receive in the form of payments from vendors solely to reimburse us for acting as the vendors’ agent in redeeming

a sales incentive that is between our vendor and our customers and end consumers are included in net sales in the consolidated statements

of operations and comprehensive loss.

also have agreements with certain vendors to receive volume rebates which are dependent upon reaching minimum purchase thresholds.

volume rebates can be reasonably estimated and it is probable that minimum purchase thresholds will be met, we record a portion of the

rebate when or as we make progress towards the purchase threshold.

Amounts received from vendors relating to volume rebates are considered

a reduction of the carrying value of our inventory and, therefore, such amounts are ultimately recorded as a reduction of cost of goods

sold in the consolidated statements of operations and comprehensive loss.

Currency Translation

consolidated financial statements are presented in United States (U.S.) dollars.

The functional currency of one of the Operating Company’s

wholly-owned, Canada-based, subsidiaries is the Canadian dollar.

The functional currency of the Operating Company’s wholly-owned,

Netherlands-based subsidiary is the Euro.

The assets and liabilities of these subsidiaries are translated into U.S.

dollars at current exchange rate at each balance sheet date for assets and liabilities and an appropriate average exchange rate for each applicable period within our consolidated statements of operations and comprehensive loss.

Capital accounts ar e translated at their historical exchange rates when the capital transactions occurred.

The foreign currency translation adjustments are included in accumulated other comprehensive loss, a separate component of stockholders’ deficit in our consolidated balance sheets.

Other exchange gains and losses are reported within our consolidated statements of operations and comprehensive loss.

Comprehensive (Loss) Income

Comprehensive (loss) income includes net (loss) income as currently reported by us, adjusted for other comprehensive items.

Other comprehensive items consist of foreign currency translation gains and losses and unrealized gains and losses on derivative financial instruments that qualify as hedges.

We expense advertising costs as incurred and include them in general and administrative expenses in our consolidated statements of operations and comprehensive loss.

Advertising costs were approximately $ 2.8 million and $ 4.2 million for the years ended December 31, 2022 and 2021, respectively.

We are a corporation subject to income taxes in the United States.

Certain subsidiaries of the Operating Company are taxable separately from us.

Our proportional share of the Operating Company’s subsidiaries’ provisions are included in our consolidated financial statements.

As of December 31, 2022, we hold all the outstanding Common Units in the Operating Company and are the sole member.

As a result, starting in 2023, 100% of the Operating Company’s US and state income and expenses will be included in our US and state tax returns.

Our deferred income tax assets and liabilities are computed for differences between the tax basis and financial statement amounts that will result in taxable or deductible amounts in the future.

We compute deferred balances based on enacted tax laws

and applicable rates for the periods in which the differences are expected to affect taxable income.

A valuation allowance is recognized for deferred tax assets if it is more likely than not that some portion or all of the net deferred tax assets will not be realized.

In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

If we determine we would be able to realize our deferred tax assets for which a valuation allowance had been recorded, then we would adjust the deferred tax asset valuation allowance, which would reduce our provision for income taxes.

We evaluate the tax positions taken on income tax returns that remain open and positions expected to be taken on the current year tax returns to identify uncertain tax positions.

Unrecognized tax benefits on uncertain tax positions are recorded on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the largest amount of tax benefit that is more than 50 percent likely to be realized is recognized.

Interest and penalties related to unrecognized tax benefits are recorded in income tax benefit.

dollars at current

exchange rate at each balance sheet date for assets and liabilities and an appropriate average exchange rate for each applicable period

within our consolidated statements of operations and comprehensive loss.

Capital accounts are translated at their historical exchange

rates when the capital transactions occurred.

The foreign currency translation adjustments are included in accumulated other comprehensive

loss, a separate component of stockholders’ deficit in our consolidated balance sheets.

Other exchange gains and losses are reported

within our consolidated statements of operations and comprehensive loss.

Comprehensive

(Loss) Income

Comprehensive

(loss) income includes net (loss) income as currently reported by us, adjusted for other comprehensive items.

Other comprehensive items

consist of foreign currency translation gains and losses and unrealized gains and losses on derivative financial instruments that qualify

expense advertising costs as incurred and include them in general and administrative expenses in our consolidated statements of operations

and comprehensive loss.

Advertising costs were approximately $ 1.2 million and $ 2.8 million for the years ended December 31, 2023, and

2022, respectively.

are a corporation subject to income taxes in the United States.

Certain subsidiaries of the Operating Company are taxable separately

Our proportional share of the Operating Company’s subsidiaries’ provisions are included in our consolidated financial

of December 31, 2023 and 2022, we hold all the outstanding Common Units in the Operating Company and are the sole member.

result, starting in 2023, 100% of the Operating Company’s US and state income and expenses will be included in our US and

state tax returns.

deferred income tax assets and liabilities are computed for differences between the tax basis and financial statement amounts that will

result in taxable or deductible amounts in the future.

We compute deferred balances based on enacted tax laws and applicable rates for

the periods in which the differences are expected to affect taxable income.

A valuation allowance is recognized for deferred tax assets

if it is more likely than not that some portion or all of the net deferred tax assets will not be realized.

In making such a determination,

we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected

future taxable income, tax-planning strategies, and results of recent

If we determine we would be able to realize our deferred tax assets for which a valuation allowance had been recorded, then we would

adjust the deferred tax asset valuation allowance, which would reduce our provision for income taxes.

evaluate the tax positions taken on income tax returns that remain open and positions expected to be taken on the current year tax returns

to identify uncertain tax positions.

Unrecognized tax benefits on uncertain tax positions are recorded on the basis of a two-step process

in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits

of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the largest amount of tax benefit

that is more than 50 percent likely to be realized is recognized.

Interest and penalties related to unrecognized tax benefits are recorded

in income tax benefit.

We have no uncertain tax positions that qualify for inclusion in our consolidated financial statements.

See “Note 11—Income Taxes.”

Tax Receivable Agreement (TRA)

We entered into the TRA with the Operating Company and each of the members of the Operating Company that provides for the payment by the Operating Company to the members of 85% of the amount of tax benefits, if any, that we may actually realize (or in some circumstances are deemed to realize) as a result of (i) increases in tax basis resulting from any future redemptions that are funded by us or exchanges of Common Units as described above in “Note 1—Business Operations and Organization” and (ii) certain other tax benefits attributable to payments made under the TRA.

We compute annual tax benefits by calculating the income taxes due, including such tax benefits, and the income taxes due without such benefits.

11—Income Taxes.”

Receivable Agreement (TRA)

entered into the TRA with the Operating Company and each of the members of the Operating Company that provides for the payment by the

Operating Company to the members of 85% of the amount of tax benefits, if any, that we may actually realize (or in some circumstances

are deemed to realize) as a result of (i) increases in tax basis resulting from any future redemptions that are funded by us or exchanges

of Common Units as described above in “Note 1—Business Operations and Organization” and (ii) certain other tax benefits

attributable to payments made under the TRA.

compute annual tax benefits by calculating the income taxes due, including such tax benefits, and the income taxes due without such benefits.

The Operating Company expects to benefit from the remaining 15% of any tax benefits that it may actually realize.

The TRA payments are not conditioned upon any continued ownership interest in the Operating Company.

The rights of each noncontrolling interest holder under the TRA are assignable to transferees of its interest in the Operating Company.

The timing and amount of aggregate payments due under the TRA may vary based on a number of factors, including the amount and timing of the taxable income the Operating Company generates each year and the applicable tax rate.

We periodically evaluate the realizability of the deferred tax assets resulting from the exchange of Common Units for our Class A common stock.

If the deferred tax assets are determined to be realizable, we then assess whether payment of amounts under the TRA have become probable.

The TRA payments are

not conditioned upon any continued ownership interest in the Operating Company.

The rights of each noncontrolling interest holder under

the TRA are assignable to transferees of its interest in the Operating Company.

The timing and amount of aggregate payments due under

the TRA may vary based on a number of factors, including the amount and timing of the taxable income the Operating Company generates

each year and the applicable tax rate.

periodically evaluate the realizability of the deferred tax assets resulting from the exchange of Common Units for our Class A common

If the deferred tax assets are determined to be realizable, we then assess whether payment of amounts under the TRA have become

If so, we record a TRA liability equal to 85% of such deferred tax assets.

In subsequent periods, we assess the realizability of all of deferred tax assets subject to the TRA.

If we determine that a deferred tax asset with a valuation allowance is realizable in a subsequent period, the related valuation allowance will be released and consideration of a corresponding TRA liability will be assessed.

The realizability of deferred tax assets, including those subject to the TRA, is dependent upon the generation of future taxable income during the periods in which those deferred tax assets become deductible and consideration of prudent and feasible tax-planning strategies.

The measurement of the TRA is accounted for as a contingent liability.

Therefore, once we determine that a payment to a member of the Operating Company has become probable and can be estimated, the estimated payment will be accrued.

In subsequent periods, we assess the realizability

of all of deferred tax assets subject to the TRA.

If we determine that a deferred tax asset with a valuation allowance is realizable

in a subsequent period, the related valuation allowance will be released and consideration of a corresponding TRA liability will be assessed.

The realizability of deferred tax assets, including those subject to the TRA, is dependent upon the generation of future taxable income

during the periods in which those deferred tax assets become deductible and consideration of prudent and feasible tax-planning strategies.

measurement of the TRA is accounted for as a contingent liability.

Therefore, once we determine that a payment to a member of the Operating

Company has become probable and can be estimated, the estimated payment will be accrued.

See “Note 11—Income Taxes.”

Revenue Recognition

Revenue is recognized when customers obtain control of goods and services promised by us.

Revenue is measured based on the amount of consideration that we expect to receive in exchange for those goods or services, reduced by promotional discounts and estimates for return allowances and refunds.

is recognized when customers obtain control of goods and services promised by us.

Revenue is measured based on the amount of consideration

that we expect to receive in exchange for those goods or services, reduced by promotional discounts and estimates for return allowances

Taxes collected from customers for remittance to governmental authorities are excluded from net sales.

We generate revenue primarily from the sale of finished products to customers, whereby each product unit represents a single performance obligation.

We recognize revenue from product sales when the customer has obtained control of the products, which is either at point of sale or delivery to the customer, depending upon the specific terms and conditions of the arrangement, or at the point of sale for our retail store sales.

generate revenue primarily from the sale of finished products to customers, whereby each product unit represents a single

performance obligation.

We recognize revenue from product sales when the customer has obtained control of the products, which is

either at point of sale or delivery to the customer, depending upon the specific terms and conditions of the arrangement, or at the

point of sale for our retail store sales.

We provide no warranty on products sold.

Product warranty is provided by the manufacturers.For certain product offerings such as child-resistant packaging, closed-system vaporization solutions and custom-branded retail products, we may receive a deposit from the customer (generally 25 % - 50 % of the total order cost, but the amount can vary by customer contract) when an order is placed by a customer.

We typically complete these orders within one to six months from the date of order, depending on the complexity of the customization and the size of the order, but the completion timeline can vary by product type and terms of sales with each customer.

See “Note 8—Supplemental Financial Statement Information” for a summary of changes to our customer deposits liability balance during the years ended December 31, 2022 and 2021.

We estimate product returns based on historical experience and record them as a refund liability that reduces the net sales for the period.

We analyze actual historical returns, current economic trends and changes in order volume when evaluating the adequacy of our sales returns allowance in any reporting period.

Our liability for returns, which is included within “Accrued expenses and other current liabilities” in our consolidated balance sheets, was approximately $ 0.3 million and $ 1.0 million as of December 31, 2022 and 2021, respectively.

We elected to account for shipping and handling expenses that occur after the customer has obtained control of products as a fulfillment activity in cost of sales.

Shipping and handling fees charged to customers are included in net sales upon completion of our performance obligations.

We apply the practical expedient provided for by the applicable revenue recognition guidance by not adjusting the transaction price for significant financing components for periods less than one year.

We also apply the practical expedient provided by the applicable revenue recognition guidance based upon which we generally expense sales commissions when incurred because the amortization period is one year or less.

Sales commissions are recorded within “Salaries, benefits and payroll tax expenses” in the consolidated statements of operations and comprehensive loss.

One customer represented approximately 22 % of our net sales for the year ended December 31, 2022.

No customer represented more than 10% of our net sales for the year ended December 31, 2021.

As of December 31, 2022, the Company has a concentration of credit risk with its accounts receivable balance as three customers represented approximately 31 %, 17 % and 15 % of accounts receivable, respectively.

As of December 31, 2021, the Company has a concentration of credit risk with its accounts receivable balance as two customers represented approximately 13 % and 11 % of accounts receivable, respectively.

Value Added Taxes

During the third quarter of 2020, as part of a global tax strategy review, we determined that our European subsidiaries based in the Netherlands, which we acquired on September 30, 2019, had historically collected and remitted value added tax (“VAT”) payments, which related to direct-to-consumer sales to other European Union (“EU”) member states, directly to the Dutch tax authorities.

In connection with our subsidiaries' payment of VAT to Dutch tax authorities rather than other EU member states, we may become subject to civil or criminal enforcement actions in certain EU jurisdictions, which could result in penalties.

We performed an analysis of the VAT overpayments to the Dutch tax authorities, which we expected to be refunded to us, and VAT payable to other EU member states, including potential fines and penalties.

Based on this analysis, we recorded VAT payable of approximately $ 0.4 million and $ 2.5 million relating to this matter within "Accrued expenses and other current liabilities” in our consolidated balance sheet as of December 31, 2022 and 2021, respectively.

Pursuant to the purchase and sale agreement by which we acquired our European subsidiaries, the sellers are required to indemnify us against certain specified matters and losses, including any and all liabilities, claims, penalties and costs incurred or sustained by us in connection with non-compliance with tax laws in relation to activities of the sellers.

The indemnity (or indemnification receivable) is limited to an amount equal to the purchase price under the purchase and sale agreement.

During the year ended December 31, 2022 and 2021, we recognized a gain of approximately $ 2.0 million and $ 1.7 million, respectively, within "general and administrative expenses" in our consolidated statements of operations and comprehensive loss, which represented the partial reversal of a charge previously recognized based on the difference between the VAT payable and the VAT receivable and indemnification asset, as the indemnification asset became probable of recovery based on the reduction in our previously estimated VAT liability for penalties and interest based on our voluntary disclosure to, and ongoing settlement with, the relevant tax authorities in the EU member states.

Management intends to pursue recovery of all additional losses from the sellers to the full extent of the indemnification provisions of the purchase and sale agreement, however, the collectability of such additional indemnification amounts may be subject to litigation and may be affected by the credit risk of indemnifying parties, and are therefore subject to significant uncertainties as to the amount and timing of recovery.

As noted above, we have voluntarily disclosed VAT owed to several relevant tax authorities in the EU member states, and believe in doing so we will reduce our liability for penalties and interest.

Nonetheless, we may incur expenses in future periods related to such matters, including litigation costs and other expenses to defend our position.

The outcome of such matters is inherently unpredictable and subject to significant uncertainties.

Refer to "Note 7—Commitments and Contingencies" for additional discussion regarding our contingencies.

Net Loss Per Share

Basic net loss per share of Class A common stock is computed by dividing net loss attributable to Greenlane by the weighted-average number of shares of Class A common stock outstanding during the period.

Diluted net loss per share of Class A common stock is computed by dividing net loss attributable to Greenlane by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive elements.

Product warranty is provided by the

manufacturers.

For certain product offerings such as child-resistant packaging, closed-system vaporization solutions and

custom-branded retail products, we may receive a deposit from the customer (generally 25 %

of the total order cost, but the amount can vary by customer contract) when an order is placed by a customer.

We typically complete

these orders within one to six months from the date of order, depending on the complexity of the customization and the size of the

order, but the completion timeline can vary by product type and terms of sales with each customer.

8—Supplemental Financial Statement Information” for a summary of changes to our customer deposits liability balance

during the years ended December 31, 2023 and 2022.

estimate product returns based on historical experience and record them as a refund liability that reduces the net sales for the period.

We analyze actual historical returns, current economic trends and changes in order volume when evaluating the adequacy of our sales returns

allowance in any reporting period.

Our liability for returns, which is included within “Accrued expenses and other current liabilities”

in our consolidated balance sheets, was approximately $ 0.1 million and $ 0.3 million as of December 31, 2023 and 2022, respectively.

elected to account for shipping and handling expenses that occur after the customer has obtained control of products as a fulfillment

activity in cost of sales.

Shipping and handling fees charged to customers are included in net sales upon completion of our performance

We apply the practical expedient provided for by the applicable revenue recognition guidance by not adjusting the transaction

price for significant financing components for periods less than one year.

We also apply the practical expedient provided by the applicable

revenue recognition guidance based upon which we generally expense sales commissions when incurred because the amortization period is

one year or less.

Sales commissions are recorded within “Salaries, benefits and payroll tax expenses” in the consolidated

statements of operations and comprehensive loss.

The Company transitioned to a commission revenue model for the majority of the sales for the Industrial segment.

The company operates as a sales agent servicing vape customers and receives a commission for these services.

The company was previously

working directly with these customers and recognizing gross revenue versus straight commission revenue.

The Company recognizes this

fee on a periodic basis when the products have been shipped for the end consumer.

In working with their partner, the Company is not responsible

for fulfilling a promise to provide the specified goods, does not establish the pricing with its partners customers, and does not have

control over the goods that will be shipped.

As such, the Company is an agent and recognizes its revenue on a net basis for its service.

The partner company pays Greenlane a negotiated percentage-based fee on a quarterly basis.

customer represented approximately 21 %

of our net sales for the years

ended December 31, 2023 and 2022, respectively .

As of December 31, 2023 the Company has a concentration of credit risk with its accounts receivable balance as one customer represented

approximately 11 %

of accounts receivable .

As of December 31, 2022, the Company had three customers who individually represented approximately 31 % ,

of accounts receivable,

respectively.

the third quarter of 2020, as part of a global tax strategy review, we determined that our European subsidiaries based in the Netherlands,

which we acquired on September 30, 2019, had historically collected and remitted value added tax (“VAT”) payments, which

related to direct-to-consumer sales to other European Union (“EU”) member states, directly to the Dutch tax authorities.

In connection with our subsidiaries’ payment of VAT to Dutch tax authorities rather than other EU member states, we may become

subject to civil or criminal enforcement actions in certain EU jurisdictions, which could result in penalties.

performed an analysis of the VAT overpayments to the Dutch tax authorities, which we expected to be refunded to us, and VAT payable to

other EU member states, including potential fines and penalties.

Based on this analysis, we recorded VAT payable of approximately $ 0.4

million and $ 0.4 million relating to this matter within “Accrued expenses and other current liabilities” in our consolidated

balance sheet as of December 31, 2023 and 2022, respectively.

to the purchase and sale agreement by which we acquired our European subsidiaries, the sellers are required to indemnify us against certain

specified matters and losses, including any and all liabilities, claims, penalties and costs incurred or sustained by us in connection

with non-compliance with tax laws in relation to activities of the sellers.

The indemnity (or indemnification receivable) is limited

to an amount equal to the purchase price under the purchase and sale agreement.

During the year ended December 31, 2022, we recognized

a gain of approximately $ 2.0 million, respectively, within “general and administrative expenses” in our consolidated statements

of operations and comprehensive loss, which represented the partial reversal of a charge previously recognized based on the difference

between the VAT payable and the VAT receivable and indemnification asset, as the indemnification asset became probable of recovery based

on the reduction in our previously estimated VAT liability for penalties and interest based on our voluntary disclosure to, and ongoing

settlement with, the relevant tax authorities in the EU member states.

noted above, we have voluntarily disclosed VAT owed to several relevant tax authorities in the EU member states, and believe in doing

so we will reduce our liability for penalties and interest.

Nonetheless, we may incur expenses in future periods related to such matters,

including litigation costs and other expenses to defend our position.

The outcome of such matters is inherently unpredictable and subject

to significant uncertainties.

Refer to “Note 7—Commitments and Contingencies” for additional discussion regarding our

contingencies.

Loss Per Share

net loss per share of Class A common stock is computed by dividing net loss attributable to Greenlane by the weighted-average number

of shares of Class A common stock outstanding during the period.

Diluted net loss per share of Class A common stock is computed by dividing

net loss attributable to Greenlane by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect

to potentially dilutive elements.

See “Note 9—Stockholders’ Equity - Net Loss Per Share.”

Recently Issued Accounting Guidance Not Yet Adopted

In June 2016, the FASB issued ASU No.

Issued Accounting Guidance

June 2016, the FASB issued ASU No.

2016-13, Financial Instruments - Credit Losses .

The standard requires the use of an “expected loss” model on certain types of financial instruments.

The standard also amends the impairment model for available-for-sale securities and requires estimated credit losses to be recorded as allowances rather than as reductions to the amortized cost of the securities.

This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2022 for filers that are eligible to be smaller reporting companies under the SEC's definition.

The standard requires the use of an “expected

loss” model on certain types of financial instruments.

The standard also amends the impairment model for available-for-sale securities

and requires estimated credit losses to be recorded as allowances rather than as reductions to the amortized cost of the securities.

This standard was effective for fiscal years, and interim periods within those years, beginning after December 15, 2022 for filers that

are eligible to be smaller reporting companies under the SEC’s definition, with early adoption permitted.

We adopted this standard

beginning January 1, 2023.

Adoption of this standard did not have a material impact on our consolidated financial statements.

October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities

from Contracts with Customers , which requires that an acquirer recognize and measure contract assets and contract liabilities acquired

in a business combination in accordance with Topic 606, as if it had originated the contracts.

Prior to this ASU, an acquirer generally

recognizes contract assets acquired and contract liabilities assumed that arose from contracts with customers at fair value on the acquisition

The ASU was effective for fiscal years beginning after December 15, 2022, with early adoption permitted.

The ASU is to be applied

prospectively to business combinations occurring on or after the effective date of the amendment (or if adopted early as of an interim

period, as of the beginning of the fiscal year that includes the interim period of early application).

We adopted this new standard beginning

January 1, 2023.

Adoption of this standard did not impact our consolidated financial statements, as we did not complete any transactions

to which this standard was applicable during the current reporting period.

Issued Accounting Guidance Not Yet Adopted

June 2022, the FASB issued ASU No.

2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ,

which clarifies that a contractual sale restriction prohibiting the sale of an equity security is a characteristic of the reporting entity

holding the equity security and is not included in the equity security’s unit of account.

This standard is effective for fiscal

years beginning after December 15, 2023, with early adoption permitted.

The Company is currently evaluating the impact of adopting the

November 2023, the FASB issued ASU No.

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which

improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The amendments

in this update require public companies to disclose on an annual and interim basis, significant segment expenses that are regularly provided

to the chief operating decision maker (CODM) and require that a public entity disclose, on an annual and interim basis, an amount for

other segment items by reportable segment and a description of its composition.

In addition, the amendment requires that a public entity

provide all annual disclosures about a reportable segment’s profit or loss and assets currently required in interim periods and

require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s)

of segment profit or loss in assessing segment performance and deciding how to allocate resources.

Early adoption is permitted.

We do not believe the adoption of this new guidance will have a material impact on our consolidated financial statements and disclosures.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, as if it had originated the contracts.

Prior to this ASU, an acquirer generally recognizes contract assets acquired and contract liabilities assumed that arose from contracts with customers at fair value on the acquisition date.

The ASU is effective for fiscal years beginning after December 15, 2022, with early adoption permitted.

The ASU is to be applied prospectively to business combinations occurring on or after the effective date of the amendment (or if adopted early as of an interim period, as of the beginning of the fiscal year that includes the interim period of early application).

We do not believe the adoption of this new guidance will have a material impact on our consolidated financial statements and disclosures.

BUSINESS ACQUISITIONS

On March 2, 2021, we acquired substantially all the assets of Eyce LLC (“Eyce”), a designer and manufacturer of silicone pipes, bubblers, rigs, and other smoking and vaporization-related accessories and merchandise.

We acquired Eyce to take advantage of expected synergies, which include increased margins from the direct integration of one of our top-selling product lines into our offerings of Greenlane Brand products (as defined below) and the enlistment of key talent in Eyce’s founding owners.

We accounted for the Eyce acquisition as a business combination under the acquisition method under ASC Topic 805, Business Combinations .

Eyce has been consolidated in our consolidated financial statements commencing on March 2, 2021, the date of acquisition.

The purchase price for the Eyce acquisition was allocated based on estimates of the fair value of net assets acquired at the acquisition date, with the excess allocated to goodwill.

The total purchase consideration for the Eyce acquisition consisted of the following:

(in thousands) Purchase Consideration

Class A common stock 2,005

Promissory note 2,503

Contingent consideration – payable in cash 914

Contingent consideration – payable in Class A common stock 914

Total purchase consideration $ 8,739

During the year ended December 31, 2021, we recognized approximately $ 0.3 million in Eyce acquisition-related costs, which were included within "general and administrative" expenses in our consolidated statement of operations and comprehensive loss.

The Eyce contingent consideration arrangement required us to make contingent payments based on the achievement of certain revenue and EBITDA performance targets for the year ended December 31, 2021 (the “2021 Contingent Payment”), as well as the year ending December 31, 2022 (the “2022 Contingent Payment”), as set forth in the acquisition agreement.

We estimated the fair value of the contingent consideration by using a Monte Carlo simulation th at included significant unobservable inputs such as the risk-free rate, risk -adjusted discount rate, the volatility of the underlying financial metrics and projected financial forecast of the acquired business over the earn-out period.

The 2021 Contingent Payment was earned as of December 31, 2021, and the related liability of $ 1.8 million was included within “Accrued expenses and other current liabilities” on our consolidated balance sheet.

As partial consideration for Eyce’s attainment of the financial benchmarks related to the 2021 Contingent Payment, we issued 39,776 shares of our Class A common stock on January 14, 2022 to Eyce and certain of its affiliates.

See “Note 4—Fair Value of Financial Instruments” for additional details related to the Eyce contingent consideration arrangement.

As a result of additional information obtained about facts and circumstances that existed as of the acquisition date, we calculated an adjustment to the purchase price related to the estimated fair value of contingent consideration issued, and recorded a measurement period adjustment during the second quarter of 2021.

The following table summarizes the purchase price allocation and the estimated fair value of the net assets acquired at the date of acquisition.

(in thousands) Estimated Fair Value

as of Acquisition Date

(as previously reported) Measurement Period Adjustments Estimated Fair Value as of Acquisition Date

(as adjusted)

Inventory $ 92 $ — $ 92

Developed technology 1,738 — 1,738

Trade name 1,294 — 1,294

Customer relationships 165 — 165

Goodwill 4,840 610 5,450

Total purchase consideration $ 8,129 $ 610 $ 8,739

Goodwill generated from the Eyce acquisition was primarily related to the value we placed on expected business synergies.

For additional information about goodwill, see "Note 8—Supplemental Financial Statement Information.

Amended Eyce APA

On April 7, 2022, we entered into an amendment to that certain Asset Purchase Agreement dated March 2, 2021 (the “Amended Eyce APA”), by and between Eyce and Warehouse Goods to accelerate the issuance of shares of Class A common stock issuable to Eyce under the agreement upon the attainment of certain EBITDA and revenue benchmarks (the “Amended 2022 Contingent Payment”), in an amount equal to $ 0.9 million.

We issued 71,721 shares of Class A common stock to Eyce under the Amended 2022 Contingent Payment, which vest ratably in seven quarterly tranches starting on July 1, 2022, such that on January 1, 2024 (the “Vesting Date”), all shares issued to Eyce under the Amended 2022 Contingent Payment will have vested.

The shares of Class A common stock issued under the Amended 2022 Contingent Payment are subject to certain forfeiture restrictions tied to the continued employment of certain Eyce personnel with the Company through the Vesting Date.

The Amended Eyce APA also provided for the payment of $ 0.9 million in cash in four equal installments on April 1, 2023, July 1, 2023, October 1, 2023 and January 1, 2024, contingent on the achievement of certain deliverables outlined in the Amended Eyce APA and the continued employment of certain Eyce personnel.

The transaction was accounted for separately from acquisition accounting for the Eyce business combination.

Specifically, we recorded a gain of approximately $ 0.3 million, respectively, within "other income (expense), net" in our consolidated statement of operations and comprehensive income for the year ended December 31, 2022 to write-off the balance of the Eyce 2022 Contingent Payment.

Also, we recorded approximately $ 1.3 million in compensation expense related to the Amended 2022 Contingent Payment within "salaries, benefits and payroll taxes" in our consolidated statement of operations and comprehensive income for the year ended December 31, 2022.

Merger with KushCo

On August 31, 2021, we completed our previously announced merger with KushCo pursuant to the terms of the Merger Agreement dated as of March, 31, 2021.

Greenlane’s merger with KushCo created a leading ancillary cannabis products and services company.

The combined company serves a broad range of customers, which includes many of the leading MSOs and LPs, the top smoke shops in the United States, and millions of consumers globally.

Pursuant to the Merger Agreement, Merger Sub Gotham 1, LLC, our wholly owned subsidiary (“Merger Sub 1”), merged with KushCo (the “Initial Surviving Corporation”) (“Merger 1”) and then the Initial Surviving Corporation was merged with and into Merger Sub Gotham 2, LLC, our wholly owned subsidiary (“Merger Sub 2”), with Merger Sub 2 as the surviving limited liability company and a wholly owned subsidiary of Greenlane (“Merger 2,” and together with Merger 1, the “Mergers”).

At the effective time of the Mergers, each KushCo stockholder received 0.3016 shares of Class A common stock (excluding the effect of the Reverse Stock Split), as determined pursuant to the exchange ratio formula set forth in the Merger Agreement (the “Exchange Ratio”), for each share of KushCo’s common stock, $ 0.001 par value per share (“KushCo common stock”), issued and outstanding immediately prior to the effective time of the Mergers, with cash paid for any fractional shares that a KushCo stockholder would have otherwise been entitled to receive.

Immediately following the Mergers, stockholders that held Greenlane common stock prior to the completion of the Mergers owned 51.9 % and former KushCo stockholders owned 48.1 % of the equity of the combined company on a fully diluted basis.

Pursuant to the Merger Agreement, immediately prior to the consummation of the Mergers, holders of Class C common stock received one-third of one share of Class B common stock for each share of Class C common stock held immediately prior to the

closing of the Mergers, and Greenlane adopted the A&R Charter, which eliminated Class C common stock as a class of Greenlane’s capital stock.

Treatment of KushCo Equity Awards

At the effective time of the Mergers, options to purchase shares of KushCo common stock (“KushCo options”) were treated as follows:

• Each KushCo option that was outstanding immediately prior to the Merger 1 effective time, whether or not then vested or exercisable (but after taking into account any acceleration or vesting as provided under the KushCo equity plan covering such option), was converted into an option to purchase, on the same terms and conditions that applied to such KushCo option immediately prior to the Merger 1 effective time, (A) that number of shares of Class A common stock, rounded down to the nearest whole share, determined by multiplying (1) the total number of KushCo shares subject to such KushCo option immediately prior to the Merger 1 effective time by (2) the Exchange Ratio, (B) at a per-share exercise price, rounded up to the nearest whole cent, determined by dividing (1) the exercise price per share covered by such KushCo option immediately prior to the Merger 1 effective time by (2) the Exchange Ratio;

• Greenlane assumed the sponsorship of the KushCo Holdings, Inc.

2016 Stock Incentive Plan covering such KushCo options (the “KushCo Equity Plan”), and all references to KushCo therein were deemed references to Greenlane and all references to shares of KushCo common stock therein were deemed references to Class A common stock;

• Each KushCo restricted stock unit (a “KushCo RSU”) that was then held and remained outstanding immediately prior to the Merger 1 effective time accelerated and became vested in full in accordance with the terms of the KushCo equity plan covering such KushCo RSUs and each such KushCo RSU was immediately settled and treated in the same manner as shares of KushCo common stock in the Mergers.

Effect of Merger 1 on KushCo Warrants

Additionally, each warrant to purchase one or more shares of KushCo common stock (a “KushCo Warrant”), whether exercisable or not, was converted into a warrant to purchase Class A common stock.

Greenlane assumed each such KushCo Warrant in accordance with its terms (the “Assumed Warrants”).

With respect to the Assumed Warrants:

(i) the Assumed Warrants are exercisable solely for shares of Class A common stock;

(ii) the number of shares of Class A common stock subject to such Assumed Warrants is equal to the number of shares of KushCo common stock subject to such Assumed Warrants as of immediately prior to the effective time of Merger 1 multiplied by the Exchange Ratio, rounded up to the nearest whole share;

and (iii) the per share exercise price under each such Assumed Warrant was adjusted by dividing the per share exercise price under such Assumed Warrant by the Exchange Ratio and rounding up to the nearest cent.

Estimated Purchase Consideration and Purchase Price Allocation

We accounted for the KushCo acquisition as a business combination under the acquisition method under ASC Topic 805, Business Combinations .

KushCo has been consolidated in our consolidated financial statements commencing on August 31, 2021, the date of acquisition.

We allocated the purchase price to the net identifiable tangible and intangible assets acquired and liabilities assumed based on their preliminary estimated fair values as of the date of acquisition.

The excess of the purchase price over the estimated fair value of the net assets and liabilities was allocated to goodwill.

We determined the preliminary estimated fair values after review and consideration of relevant information as of the acquisition date, including discounted cash flows, quoted market prices and estimates made by management.

The fair values assigned to tangible and intangible assets acquired and liabilities assumed were based on management's estimates and assumptions.

The total estimated purchase consideration for the KushCo acquisition consisted of the following:

(in thousands) Purchase Consideration

Class A common stock (1) $ 123,491

Estimated fair value of assumed warrants 8,423

Estimated fair value of replaced equity awards 4,759

Greenlane cash payments on behalf of KushCo (2) 12,183

Total purchase consideration $ 148,856

(1) Based on approximately 2.4 million shares of Greenlane Class A common stock issued, multiplied by the closing price per share of Greenlane Class A common stock on Nasdaq on August 31, 2021, the acquisition date, of $ 50.8 .

(2) Represents cash paid by Greenlane on the acquisition date to extinguish certain debt and other liabilities of KushCo, which were not legally assumed by Greenlane.

The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date based on the preliminary purchase price allocation (in thousands):

(in thousands) Estimated Fair Value

as of Acquisition Date

(as previously reported) Measurement Period Adjustments Estimated Fair Value as of Acquisition Date

(as adjusted)

Assets acquired

Cash $ 2,302 $ — $ 2,302

Accounts receivable 7,110 — 7,110

Inventories 35,112 — 35,112

Vendor deposits 7,011 — 7,011

Other current assets 8,111 — 8,111

Property and equipment 6,200 — 6,200

Operating lease right-of-use assets 7,581 — 7,581

Other assets 2,896 — 2,896

Intangible assets – customer relationships 39,500 — 39,500

Intangible assets – trademarks 29,500 — 29,500

Intangible assets – proprietary design library 3,100 — 3,100

Goodwill 24,314 19 24,333

Total estimated assets acquired 172,737 19 172,756

Liabilities assumed

Accounts payable 5,876 5,876

Accrued expenses and other current liabilities 6,496 19 6,515

Customer deposits 3,934 3,934

Operating lease liabilities 7,575 7,575

Total estimated liabilities assumed 23,881 19 23,900

Total estimated purchase price and consideration transferred in the merger $ 148,856 $ — $ 148,856

Goodwill generated from the KushCo acquisition was primarily related to the value we placed on expected business synergies.

For additional information about goodwill, see "Note 8—Supplemental Financial Statement Information.

During the year ended December 31, 2021, we recognized transaction costs of approximately $ 7.8 million in connection with the Mergers, consisting primarily of advisory, legal, valuation and accounting fees, which were recorded in “general and administrative expenses” in the accompanying consolidated statement of operations and comprehensive loss.

On November 29, 2021, we acquired substantially all the assets of Organicix, LLC (d/b/a and hereinafter referred to as “DaVinci”), a leading developer and manufacturer of premium portable vaporizers.

We acquired DaVinci to take advantage of expected synergies, which include increased margins and significant enhancement of our offerings of Greenlane Brands products (as defined below) the enlistment of key talent in DaVinci's founders.

We accounted for the DaVinci acquisition as a business combination under the acquisition method under ASC Topic 805, Business Combinations .

DaVinci has been consolidated in our consolidated financial statements commencing on November 29, 2021, the date of acquisition.

We allocated the purchase price to the net identifiable tangible and intangible assets acquired and liabilities assumed based on their preliminary estimated fair values as of the date of acquisition.

The excess of the purchase price over the estimated fair value of the net assets and liabilities was allocated to goodwill.

The fair values assigned to tangible and intangible assets acquired and liabilities assumed were based on management's estimates and assumptions.

The total purchase consideration for the DaVinci acquisition consisted of the following:

(in thousands) Purchase Consideration

Class A common stock 3,282

Promissory note 5,000

2021 DaVinci Contingent Payment – payable in Class A common stock 2,610

Product Launch Contingent Payment – payable in cash 1,169

Product Launch Contingent Payment – payable in Class A common stock 1,062

Total purchase consideration $ 16,485

During the year ended December 31, 2021, we recognized approximately $ 0.3 million in DaVinci acquisition-related costs, which were included within “general and administrative” expenses in our consolidated statement of operations and comprehensive loss.

The DaVinci contingent consideration arrangement included:

(1) the 2021 Contingent Payment, which was based on the achievement of certain financial benchmarks measured during the period January 1, 2021 and December 31, 2021, and was payable in shares of our Class A common stock, and (2) Product Launch Contingent Payments, which are payable in cash and shares of our Class A common stock.

The 2021 DaVinci Contingent Payment was earned as of December 31, 2021, based upon which the we issued 151,515 shares of Class A Common Stock on February 25, 2022 to DaVinci and certain of its affiliates.

The estimated fair value of the 2021 DaVinci Contingent Payment as of the acquisition date reflected a discount for lack of marketability, as the Class A common stock issued to the sellers has a restriction period.

We estimated the fair value of the Product Launch Contingent Payments using a form of the scenario-based method, which includes significant unobservable inputs such management’s identification of probability-weighted outcomes and a risk-adjusted discount rate over the earn-out period.

The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date based on the preliminary purchase price allocation (in thousands):

(in thousands) Estimated Fair Value as of Acquisition Date

Assets acquired

Accounts receivable $ 94

Inventories 1,444

Vendor deposits 132

Property and equipment 112

Intangible assets – customer relationships 1,362

Intangible assets – tradenames 2,316

Intangible assets – developed technology 2,195

Goodwill 9,052

Total estimated assets acquired 16,707

Liabilities assumed

Accounts payable 59

Accrued expenses and other current liabilities 123

Customer deposits 40

Total estimated liabilities assumed 222

Total estimated purchase price and consideration transferred $ 16,485

Goodwill generated from the DaVinci acquisition was primarily related to the value we placed on expected business synergies.

For additional information about goodwill, see "Note 8—Supplemental Financial Statement Information.

Supplemental Unaudited Pro Forma Financial Information

The following table presents pro forma results for the year ended December 31, 2021 as if our acquisition of Eyce and DaVinci, along with the closing of the merger with KushCo, had occurred on January 1, 2020, and Eyce, DaVinci, and KushCo’s results had been included in our consolidated results beginning on that date (in thousands):

For the year ended December 31, 2021

Net sales $ 248,691

Cost of sales 221,710

Gross profit 26,981

Net loss $ ( 102,685 )

The pro forma amounts have been calculated after applying our accounting policies to the financial statements of Eyce and KushCo and adjusting the combined results of Greenlane, Eyce, DaVinci and KushCo (a) to remove Eyce and DaVinci product sales to us and to remove the cost incurred by us related to products purchased from Eyce and DaVinci prior to the acquisition, and (b) to reflect the increased amortization expense that would have been charged assuming intangible assets identified in the acquisitions of Eyce, DaVinci, and KushCo had been recorded on January 1, 2020.

The impact of the Eyce and DaVinci acquisition and the KushCo merger on the actual results reported by us in subsequent periods may differ significantly from that reflected in this pro forma information for a number of reasons, including but not limited to, non-achievement of the expected synergies from these combinations and changes in the regulatory environment.

As a result, the pro forma information is not necessarily indicative of what our financial condition or results of operations would have been had the acquisitions been completed on the applicable date of this pro forma financial information.

In addition, the pro forma financial information does not purport to project our future financial condition and results of operations.

On July 19, 2022, Warehouse Goods entered into the Sale Agreement with Portofino to sell the Company’s 50 % stake in VIBES Holdings LLC for total consideration of $ 4.6 million in cash.

The transactions contemplated by the Sale Agreement were completed on July 19, 2022, immediately following the signing of the Sale Agreement.

In conjunction with and as a result of the disposition of and deconsolidation of our interest in VIBES Holdings LLC, we recorded a gain of $ 2.0 million for the year ended December 31, 2022, which is included as an offset in "general and administrative expenses" in our consolidated statements of operations and comprehensive loss, as well as a reduction to non-controlling interest on our consolidated balance sheet as of December 31, 2022 of $ 1.8 million.

In conjunction with the Sale Agreement, we returned inventory to VIBES with a carrying value of approximately $ 2.4 million.

is currently evaluating the impact of ASU 2023-07 on its consolidated financial statements and related disclosures.

This amendment will

go into effect for the fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December

December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740) :

To Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures.

The amendments in this

Update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily

related to the rate reconciliation and income taxes paid information.

amendments in this Update require that entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2)

provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is

equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax

In addition, public business entities are required to provide certain qualitative disclosure about the rate reconciliation.

amendments in this Update require that all entities disclose on an annual basis the amount of income taxes paid (net of refunds received)

disaggregated (1) by federal (national), state, and foreign taxes and (2) by individual jurisdictions in which income taxes paid (net

of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received).

Update also includes certain other amendments to improve the effectiveness of income tax disclosures, such as requiring that all entities

disclose the following information:

(or loss) from continuing operations before income tax expense (or benefit) disaggregated

between domestic and foreign.

tax expense (or benefit) from continuing operations disaggregated by federal (national),

state, and foreign.

amendments in this ASU require a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components

of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments.

Early adoption

is permitted.

The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements and related disclosures.

This amendment will go into effect for annual periods beginning after December 15, 2024.

BUSINESS ACQUISITIONS AND DISPOSITIONS

April 7, 2022, we entered into an amendment to that certain Asset Purchase Agreement dated March 2, 2021 (the “Amended Eyce APA”),

by and between Eyce and Warehouse Goods to accelerate the issuance of shares of Class A common stock issuable to Eyce under the agreement

upon the attainment of certain EBITDA and revenue benchmarks (the “Amended 2022 Contingent Payment”), in an amount equal

to $ 0.9 million.

We issued 71,721 shares of Class A common stock to Eyce under the Amended 2022 Contingent Payment, which vest ratably

in seven quarterly tranches starting on July 1, 2022, such that on January 1, 2024 (the “Vesting Date”), all shares issued

to Eyce under the Amended 2022 Contingent Payment will have vested.

The shares of Class A common stock issued under the Amended 2022

Contingent Payment are subject to certain forfeiture restrictions tied to the continued employment of certain Eyce personnel with the

Company through the Vesting Date.

Amended Eyce APA also provided for the payment of $ 0.9 million in cash in four equal installments on April 1, 2023, July 1, 2023, October

1, 2023 and January 1, 2024, contingent on the achievement of certain deliverables outlined in the Amended Eyce APA and the continued

employment of certain Eyce personnel.

transaction was accounted for separately from acquisition accounting for the Eyce business combination.

Specifically, we recorded a gain

of approximately $ 0.3 million, respectively, within “other income (expense), net” in our consolidated statement of operations

and comprehensive income for the year ended December 31, 2022 to write-off the balance of the Eyce 2022 Contingent Payment.

recorded approximately $ 1.3 million in compensation expense related to the Amended 2022 Contingent Payment within “salaries, benefits

and payroll taxes” in our consolidated statement of operations and comprehensive income for the year ended December 31, 2022.

April 2, 2023 and July 1, 2023 payments were paid timely, the remaining payments which were not paid timely have rolled into the Synergy

Imports, LLC Bridge Loan and is included in the additionally deferred amounts under that Loan.

July 19, 2022, Warehouse Goods entered into the Sale Agreement with Portofino to sell the Company’s 50 % stake in VIBES Holdings

LLC for total consideration of $ 4.6 million in cash.

The transactions contemplated by the Sale Agreement were completed on July 19, 2022,

immediately following the signing of the Sale Agreement.

In conjunction with and as a result of the disposition of and deconsolidation

of our interest in VIBES Holdings LLC, we recorded a gain of $ 2.0 million for the year ended December 31, 2022, which is included as

an offset in “general and administrative expenses” in our consolidated statements of operations and comprehensive loss, as

well as a reduction to non-controlling interest on our consolidated balance sheet as of December 31, 2022 of $ 1.8 million.

conjunction with the Sale Agreement, we returned inventory to VIBES with a carrying value of approximately $ 2.4 million.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

The carrying amounts for certain of our financial instruments, including cash, accounts receivable, accounts payable and certain accrued expenses and other assets and liabilities, approximate fair value due to the short-term nature of these instruments.

As of December 31, 2022, we had contingent consideration that is required to be measured at fair value on a recurring basis.

As of December 31, 2021, our equity securities that were required to be measured at fair value on a recurring basis consisted of investments in XS Financial Inc.

and High Tide Inc.

We had determined that our ownership did not provide us with significant influence over the operations of these entities.

Accordingly, we accounted for our investment in these entities as equity securities, and we recorded changes in the fair value of these investments in "other income (expense), net" in our consolidated statements of operations and comprehensive loss.

During the year ended 2022, we sold our interests in XS Financial Inc.

and High Tide Inc.

for total proceeds of approximately 0.6 million.

Our financial instruments measured at fair value on a recurring basis were as follows at the dates indicated:

Balance Sheet Caption Fair Value at December 31, 2022

(in thousands) Level 1 Level 2 Level 3 Total

Contingent consideration - current Accrued expenses and other current liabilities $ — $ — $ 2,738 $ 2,738

and Liabilities that are Measured at Fair Value on a Recurring Basis

carrying amounts for certain of our financial instruments, including cash, accounts receivable, accounts payable and certain accrued

expenses and other assets and liabilities, approximate fair value due to the short-term nature of these instruments.

of December 31, 2023 and 2022, we had contingent consideration that is required to be measured at fair value on a recurring basis.

OF FAIR VALUE, LIABILITIES MEASURED ON RECURRING BASIS

financial instruments measured at fair value on a recurring basis were as follows at the dates indicated:

Balance Sheet

Fair Value at December 31, 2023

(in thousands)

Contingent consideration - current

Accrued expenses and other current liabilities

Total Liabilities

Balance Sheet Caption Fair Value at December 31, 2021

(in thousands) Level 1 Level 2 Level 3 Total

Equity securities Other assets $ 1,919 $ — $ — $ 1,919

Total Assets $ 1,919 $ — $ — $ 1,919

Interest rate swap contract Other liabilities $ — $ 288 $ — $ 288

Contingent consideration – current Accrued expenses and other current liabilities — — 5,641 5,641

Contingent consideration – long-term Other long-term liabilities — — 1,216 1,216

Balance Sheet

Fair Value at December 31, 2022

(in thousands)

Contingent consideration - current

Accrued expenses and other current liabilities

Total Liabilities

There were no transfers between Level 1 and Level 2 and no transfers to or from Level 3 of the fair value hierarchy during the years ended December 31, 2022 and 2021.

Derivative Instrument and Hedging Activity

On July 11, 2019, we entered into an interest rate swap contract to manage our risk associated with the interest rate fluctuations on the Company’s floating rate Real Estate Note described in “ Note 6 - Debt.

were no transfers between Level 1 and Level 2 and no transfers to or from Level 3 of the fair value hierarchy during the years ended

December 31, 2023 and 2022.

Instrument and Hedging Activity

July 11, 2019, we entered into an interest rate swap contract to manage our risk associated with the interest rate fluctuations on the

Company’s floating rate Real Estate Note described in “ Note

” The counterparty to this instrument was a reputable financial institution.

Our interest rate swap contract was designated as a cash flow hedge at the inception date, and was previously reflected at its fair value in our consolidated balance sheets.

The fair value of our interest rate swap liability was determined based on the present value of expected future cash flows.

Since our interest rate swap value was based on the LIBOR forward curve and credit default swap rates, which were observable at commonly quoted intervals for the full term of the swap, it was considered a Level 2 measurement.

Beginning with the second quarter of 2022, we discontinued hedge accounting for the interest rate swap contract.

During the year ended December 31, 2022, we recorded a gain of approximately $ 0.1 million based on the change in fair value of the interest rate swap contract within “ interest expense ” in our consolidated statement of income and comprehensive loss.

During the second quarter of 2022, we also reclassified the related accumulated other comprehensive income balance of $ 0.3 million to "interest expense" in our consolidated statement of income and comprehensive loss.

Refer to “ Note 8 - Supplemental Financial Information ” for further details on the components of accumulated other comprehensive income (loss) for the year ended December 31, 2022 and 2021, respectively.

The unrealized loss on the derivative instrument prior to the discontinuation of hedge accounting was included within “ Other comprehensive income (loss) ” in our consolidated statement of operations and comprehensive loss.

There was no measure of hedge ineffectiveness and no reclassifications from other comprehensive loss into interest expense for the year ended December 31, 2022 and 2021, respectively.

Our interest rate swap contract was designated as a cash flow hedge at the inception date, and was previously reflected at its fair value

in our consolidated balance sheets.

The fair value of our interest rate swap liability was determined based on the present value of expected

future cash flows.

Since our interest rate swap value was based on the LIBOR forward curve and credit default swap rates, which were

observable at commonly quoted intervals for the full term of the swap, it was considered a Level 2 measurement.

with the second quarter of 2022, we discontinued hedge accounting for the interest rate swap contract.

During the year ended December

31, 2022, we recorded a gain of approximately $ 0.1 million based on the change in fair value of the interest rate swap contract within

expense ” in our consolidated statement of income and comprehensive loss.

second quarter of 2022, we also reclassified the related accumulated other comprehensive income balance of $ 0.3 million to “interest

expense” in our consolidated statement of income and comprehensive loss.

Refer to “ Note

8 - Supplemental Financial Information ” for further details on the components of accumulated

other comprehensive income (loss) for the year ended December 31, 2022, respectively.

unrealized loss on the derivative instrument prior to the discontinuation of hedge accounting was included within “ Other

comprehensive income (loss) ” in our consolidated statement of operations and comprehensive

There was no measure of hedge ineffectiveness and no reclassifications from other comprehensive loss into interest expense for

the year ended December 31, 2022, respectively.

In August 2022, we terminated the interest swap contract.

Consideration

period we revalue our contingent consideration obligations associated with business acquisitions to their fair value.

The estimate of

the fair value of contingent consideration is determined by applying a risk-neutral framework using a Monte Carlo Simulation, which includes

inputs not observable in the market, such as the risk-free rate, risk-adjusted discount rate, the volatility of the underlying financial

metrics and projected financial forecast of the acquired business over the earn-out period, and therefore represents a Level 3 measurement.

Significant increases or decreases in these inputs could result in a significantly lower or higher fair value measurement of the contingent

consideration liability.

Changes in the fair value of contingent consideration are included within “Other income (expense), net”

in our consolidated statements of operations and comprehensive loss.

reconciliation of our liabilities that are measured and recorded at fair value on a recurring basis using significant unobservable inputs

(Level 3) for the years ended December 31, 2023 and 2022 is as follows:

OF FAIR VALUE, LIABILITIES MEASURED ON RECURRING BASIS, UNOBSERVABLE INPUT RECONCILIATION

(in thousands)

Contingent Consideration

Each period we revalue our contingent consideration obligations associated with business acquisitions to their fair value.

The estimate of the fair value of contingent consideration is determined by applying a risk-neutral framework using a Monte Carlo Simulation, which includes inputs not observable in the market, such as the risk-free rate, risk-adjusted discount rate, the volatility of the underlying financial metrics and projected financial forecast of the acquired business over the earn-out period, and therefore represents a Level 3 measurement.

Significant increases or decreases in these inputs could result in a significantly lower or higher fair value measurement of the contingent consideration liability.

Changes in the fair value of contingent consideration are included within “Other income (expense), net” in our consolidated statements of operations and comprehensive loss.

A reconciliation of our liabilities that are measured and recorded at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2022 and 2021 is as follows:

(in thousands) Contingent Consideration

Balance at December 31, 2020 $ —

Contingent consideration issued for Eyce acquisition 1,828

Contingent consideration issued for DaVinci acquisition 4,840

Loss from fair value adjustments included in results of operations 189

Balance at December 31, 2021 6,857

Balance, December 31, 2021

Eyce 2021 Contingent Payment settlement in Class A common stock

3 unchanged sentences

Loss from fair value adjustments included in results of operations

Balance at December 31, 2022 $ 2,738

Equity Securities Without a Readily Determinable Fair Value

Our investment in equity securities without readily determinable fair value consist of ownership interests in Airgraft Inc., Sun Grown Packaging, LLC (“Sun Grown”) and Vapor Dosing Technologies, Inc.

We determined that our ownership interests do not provide us with significant influence over the operations of these investments.

Balance, December 31, 2022

Cash payments for earn contingent consideration

Transfer to notes payable

Loss from fair value adjustments included in results of operations

Balance, December 31, 2023

Securities Without a Readily Determinable Fair Value

investment in equity securities without readily determinable fair value consist of ownership interests in Airgraft Inc., Sun Grown Packaging,

LLC (“Sun Grown”) and VIVA.

We determined that our ownership interests do not provide us with significant influence over

the operations of these investments.

Accordingly, we account for our investments in these entities as equity securities.

Airgraft Inc., Sun Grown, and VIVA are private entities and their equity securities do not have a readily determinable fair value.

We elected to measure these security under the measurement alternative election at cost minus impairment, if any, with adjustments through earnings for observable price changes in orderly transactions for the identical or similar investment of the same issuer.

We acquired our investments in Sun Grown and VIVA as part of our merger with KushCo, which we completed in August 2021.

We did not identify any fair value adjustments related to these equity securities during the years ended December 31, 2022 and 2021.

As of December 31, 2022 and 2021, the carrying value of our investment in equity securities without a readily determinable fair value was approximately $ 2.5 million, respectively, included within “Other assets” in our consolidated balance sheets.

The carrying value included a fair value adjustment of $ 1.5 million based on an observable price change recognized during the year ended December 31, 2019.

Greenlane as a Lessee

As of December 31, 2022, we had facilities financed under operating leases consisting of warehouses, offices, and a retail store, with lease term expirations between 2023 and 2027.

Lease terms are generally three to seven years for warehouses, office space and our retail store location.

Inc., Sun Grown, and VIVA are private entities and their equity securities do not have a readily determinable fair value.

to measure these security under the measurement alternative election at cost minus impairment, if any, with adjustments through earnings

for observable price changes in orderly transactions for the identical or similar investment of the same issuer.

We acquired our investments

in Sun Grown and VIVA as part of our merger with KushCo, which we completed in August 2021.

We did not identify any fair value adjustments

related to these equity securities during the years ended December 31, 2023 and 2022.

of December 31, 2023 and 2022, the carrying value of our investment in equity securities without a readily determinable fair value was

approximately $ 1.9 million, included within “Other assets” in our consolidated balance sheets.

The carrying value included

a fair value adjustment of $ 1.5 million based on an observable price change recognized during the year ended December 31, 2019.

of December 31, 2023, we had facilities financed under operating leases consisting of warehouses, offices, and a retail store, with lease

term expirations between 2023 and 2027.

Lease terms are generally three to seven years for warehouses, office space and our retail store

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

During the year ended December 31, 2022, we took steps to reduce our operational footprint and we continue to optimize our distribution network, transitioning to a more streamlined network with fewer, centrally-located, highly automated facilities.

We successfully transferred, subleased or terminated our office leases for our Cypress, CA, Hermosa Beach, CA, France and China locations.

We also successfully transferred, subleased or terminated our retail leases for our Amsterdam, Netherlands location, Barcelona, Spain, and Malibu, California locations.

On November 3, 2022, we entered into that certain Lease Termination Agreement, dated as of October 31, 2022 solely for reference purposes (the "Lease Termination Agreement"), by and between us and Warland Investments Company (the "Landlord"), which provided for the termination of our lease at 6261 Katella Avenue in Cypress, California (collectively, the "Lease Termination").

Pursuant to the terms of the Lease Termination Agreement, we agreed to pay a fee of approximately $ 0.5 million as an early termination fee in consideration for the Landlord agreeing to terminate all of our remaining obligations under the Cypress lease.

We expect the Lease Termination to result in approximately $ 1.7 million in savings, although we can provide no assurances as to the total amount of savings ultimately realized from the Lease Termination.

The following table provides details of our future minimum lease payments under our operating lease liabilities recorded in our consolidated balance sheet as of December 31, 2022.

The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.

(in thousands) Operating Leases

the year ended December 31, 2022, we took steps to reduce our operational footprint and we continue to optimize our distribution network,

transitioning to a more streamlined network with fewer, centrally-located, highly automated facilities.

We successfully transferred,

subleased or terminated our office leases for our Cypress, CA, Hermosa Beach, CA, France and China locations.

We also successfully transferred,

subleased or terminated our retail leases for our Amsterdam, Netherlands, Barcelona, Spain, and Malibu, California locations.

November 3, 2022, we entered into that certain Lease Termination Agreement, dated as of October 31, 2022 solely for reference purposes

(the “Lease Termination Agreement”), by and between us and Warland Investments Company (the “Landlord”), which

provided for the termination of our lease at 6261 Katella Avenue in Cypress, California (collectively, the “Lease Termination”).

Pursuant to the terms of the Lease Termination Agreement, we agreed to pay a fee of approximately $ 0.5 million as an early termination

fee in consideration for the Landlord agreeing to terminate all of our remaining obligations under the Cypress lease.

following table provides details of our future minimum lease payments under operating lease liabilities recorded in our consolidated

balance sheet as of December 31, 2023.

The table below does not include commitments that are contingent on events or other factors that

are currently uncertain or unknown.

OF LESSEE OPERATING LEASE LIABILITY MATURITY

(in thousands)

Operating Leases

2028 and thereafter

Total minimum lease payments

3 unchanged sentences

Long-term portion

Rent expense under operating leases was approximately $ 3.6 million and $ 1.6 million for the years ended December 31, 2022 and 2021, respectively.

The following expenses related to our operating leases were included in “general and administrative expenses” within our consolidated statements of operations and comprehensive loss for the years ended December 31, 2022 and 2021:

expense under operating leases was approximately $ 1.4 million and $ 3.6 million for the years ended December 31, 2023 and 2022, respectively.

following expenses related to our operating leases were included in “general and administrative expenses” within our consolidated

statements of operations and comprehensive loss:

OF LEASE COST

(in thousands)

For the year ended December 31,

3 unchanged sentences

Total lease cost

The table below presents operating lease-related terms and discount rates as of December 31, 2022:

Operating Leases

Weighted average remaining lease terms 2.5 years

table below presents the terms and discount rates of the Company’s operating leases as of December 31:

Weighted average remaining lease terms

Weighted average discount rate

Greenlane as a Lessor

The following table represents the maturity analysis of undiscounted cash flows related to lease payments, which we expect to receive from our existing operating lease agreements related to our sublease in California:

(in thousands) Rental Income

2024 and thereafter —

Our debt balance, excluding operating lease liabilities, consisted of the following amounts at the dates indicated:

debt balance, excluding operating lease liabilities and finance lease liabilities, consisted of the following amounts at the dates indicated:

(in thousands)

As of December 31,

(in thousands)

Real Estate Note $ — $ 7,958

Bridge Loan — 8,000

Line of Credit 15,000 —

Asset-Based Loan

DaVinci Promissory Note

Eyce Promissory Note

18,185 22,550

Future Receivables Financing

Secured Bridge Loan

Long-term debt, gross

Total long term debt

Less unamortized debt issuance costs

Less current portion of debt

Debt, net, excluding operating leases $ 13,040 $ 10,607

Real Estate Note

On October 1, 2018, one of the Operating Company’s wholly-owned subsidiaries financed the purchase of a building, which served as our corporate headquarters, through a real estate term note (the “Real Estate Note”) in the principal amount of $ 8.5 million.

Debt, net, excluding operating and finance leases and liabilities

December 2021, we entered into a Secured Promissory Note with Aaron LoCascio, our co-founder, former Chief Executive Officer and President,

and a current director of the Company, in which Mr.

LoCascio provided us with a bridge loan in the principal amount of $ 8.0 million (the

“December 2021 Note”).

The December 2021 Note accrued interest at a rate of 15.0 % is due monthly, and the principal amount

was originally due in full on June 30, 2022.

We incurred $ 0.3 million of debt issuance costs related to the December 2021 Note, which

were recorded as a direct deduction from the carrying amount of the December 2021 Note, and which were amortized over the term of the

December 2021 Note through interest expense.

The December 2021 Note was secured by a continuing security interest in all of our assets

and properties whether then or thereafter existing or required, including our inventory and receivables (as defined under the Universal

Commercial Code) and included negative covenants restricting our ability to incur further indebtedness and engage in certain asset dispositions

until the earlier of the maturity date or the December 2021 Note being fully repaid.

June 30, 2022, we entered into the First Amendment to the December 2021 Note (the “First Amendment”), which extended the

maturity date of the December 2021 Note to July 14, 2022.

On July 14, 2022, we entered into the Second Amendment to the December 2021

Note (the “Second Amendment” and together with the December 2021 Note, the “Bridge Loan”), which provided for

the extension of the maturity date of the Bridge Loan from July 14, 2022 to July 19, 2022.

In connection with the entry into the Second

Amendment, we repaid $ 4.0 million of the aggregate principal amount due under the Bridge Loan on July 14, 2022, with the remainder due

On July 19, 2022, we repaid the remaining balance on the Bridge Loan in full, and, as a result, all obligations under the

Bridge Loan have been satisfied.

October 1, 2018, one of the Operating Company’s wholly-owned subsidiaries financed the purchase of a building, which served as

our corporate headquarters, through a real estate term note (the “Real Estate Note”) in the principal amount of $ 8.5 million.

Our obligations under the Real Estate Note were secured by a mortgage on the property.

On August 8, 2022, we entered into a note, mortgage and loan modification agreement (the “Real Estate Note Amendment”), which amended the maturity date of the Real Estate Note to reflect a maturity date of December 1, 2022, whereupon all principal and accrued interest were to become due and payable, in full.

In September 2022, 1095 Broken Sound consummated the previously disclosed transactions contemplated by that certain Purchase and Sale Agreement, dated as of August 16, 2022, by and between 1095 Broken Sound and the HQ Purchaser whereby 1095 Broken Sound agreed to sell a certain parcel of real estate including the our headquarters building to the HQ Purchaser for total proceeds of $ 9.6 million in cash.

On the Closing Date, the Company used a portion of the proceeds from the HQ Transaction to repay the remainder of the Real Estate Note in full.

August 8, 2022, we entered into a note, mortgage and loan modification agreement (the “Real Estate Note Amendment”), which

amended the maturity date of the Real Estate Note to reflect a maturity date of December 1, 2022, whereupon all principal and accrued

interest were to become due and payable, in full.

September 2022, 1095 Broken Sound consummated the previously disclosed transactions contemplated by that certain Purchase and Sale Agreement,

dated as of August 16, 2022, by and between 1095 Broken Sound and ACS 1095 LLC (“the HQ Purchaser”) whereby 1095 Broken Sound

agreed to sell a certain parcel of real estate including the our headquarters building to the HQ Purchaser for total proceeds of $ 9.6

million in cash.

On the Closing Date, the Company used a portion of the proceeds from the HQ Transaction to repay the remainder of the

Real Estate Note in full.

There was no remaining balance related to the Real Estate Note on our consolidated balance sheet as of December

Eyce Promissory Note

In March 2021, one of the Operating Company's wholly-owned subsidiaries financed the acquisition of Eyce through the issuance of an unsecured promissory note (the “Eyce Promissory Note”) in the principal amount of $ 2.5 million.

31, 2023 or 2022.

August 9, 2022, we entered into an asset-based loan pursuant to that certain Loan and Security Agreement (the “Asset-Based Loan

Agreement”), dated as of August 8, 2022, by and among the Company, certain subsidiaries of the Company (the “Guarantors”),

the parties thereto from time to time as lenders (the “Lenders”), and WhiteHawk Capital Partners LP, as the agent for the

Lenders (the “Asset Based Loan” or “Line of Credit”).

to the Asset-Based Loan Agreement, the Lenders agreed to make available to us a term loan of up to $ 15.0 million on the terms and conditions

set forth therein and the other Financing Agreements (as defined therein).

As of December 31, 2022, of the total term loan amount, $ 5.7

million was located in a blocked account, which was classified as “restricted cash” on our consolidated balance sheet, and

which released the funds when permitted by the borrowing base certificate.

Subject to certain exceptions described in the Asset-Based

Loan Agreement, the Company and the Guarantors agreed to pledge all of their assets as collateral.

The maturity date of the Asset-Based

Loan is the third anniversary of the Closing Date (the “Maturity Date”).

incurred $ 1.5 million of debt issuance costs related to the Asset-Based Loan, as well as an original issue discount of $ 0.5 million,

which were recorded as a direct deduction from the carrying amount of the Asset-Based Loan, and which were amortized through interest

expense over the term of the Asset-Based Loan.

The Asset-Based Loan contained customary covenants and restrictions, including, without

limitation, covenants that required us to comply with applicable laws, restrictions on our ability to incur additional indebtedness,

and various customary remedies for the lender following an event of default, including the acceleration of repayment of outstanding amounts

under the Asset-Based Loan and execution upon the collateral securing obligations under the Asset-Based Loan.

Asset-Based Loan accrued interest at the prime rate plus 8.0 %, and interest payments were due monthly.

Based on the original terms, beginning

with the fiscal quarter ending September 30, 2023, and for each fiscal quarter thereafter until the Maturity Date, quarterly payments

of $ 0.3 million would be due, with a final payment of all remaining outstanding principal and accrued interest due on the Maturity Date.

February 9, 2023, we entered into Amendment No.

2 to the Asset-Based Loan Agreement, pursuant to which we agreed to, among other things,

to voluntarily prepay approximately $ 6.6 million (inclusive of early termination fees and expenses) under the terms provided for under

the Asset-Based Loan Agreement and the lenders under the Asset-Based Loan Agreement agreed to release $ 5.7 million in funds held in a

blocked account pursuant to the terms of the Asset-Based Loan Agreement.

Amendment No.2 to the Asset-Based Loan Agreement also provided

that we would make additional prepayments upon the occurrence of certain specified asset sales by the Company.

August 7, 2023, we repaid the approximately $ 4.3 million in aggregate principal amount (the “Loan Repayment”) which remained

outstanding under the terms of the Asset-Based Loan Agreement.

As a result of the Loan Repayment, the Company has been released from

its obligations under the Asset-Based Loan Agreement, in accordance with the terms of the Asset-Based Loan Agreement.

Promissory Note

November 2021, one of the Operating Company’s wholly-owned subsidiaries financed the acquisition of DaVinci through the issuance

of an unsecured promissory note (the “DaVinci Promissory Note”) in the principal amount of $ 5.0 million.

Principal payments

plus accrued interest at a rate of 4.0 % were due quarterly through October 2023.

Promissory Note

March 2021, one of the Operating Company’s wholly-owned subsidiaries financed a portion of the consideration of the acquisition

of Eyce through the issuance of an unsecured promissory note (the “Eyce Promissory Note”) in the principal amount of $ 2.5

Principal payments plus accrued interest at a rate of 4.5 % are due quarterly through April 2023.

DaVinci Promissory Note

In November 2021, one of the Operating Company's wholly-owned subsidiaries financed the acquisition of DaVinci through the issuance of an unsecured promissory note (the “DaVinci Promissory Note”) in the principal amount of $ 5.0 million.

Principal payments plus accrued interest at a rate of 4.0 % are due quarterly through October 2023.

In December 2021, we entered into a Secured Promissory Note with Aaron LoCascio, our co-founder, former Chief Executive Officer and President, and a current director of the Company, in which Mr.

LoCascio provided us with a bridge loan in the principal amount of $ 8.0 million (the “December 2021 Note”).

The December 2021 Note accrued interest at a rate of 15.0 % is due monthly, and the principal amount was due in full on June 30, 2022.

We incurred $ 0.3 million of debt issuance costs related to the December 2021 Note, which were recorded as a direct deduction from the carrying amount of the December 2021 Note, and which were amortized over the term of the December 2021 Note through interest expense.

The December 2021 Note was secured by a continuing security interest in all of our assets and properties whether then or thereafter existing or required, including our inventory and receivables (as defined under the Universal Commercial Code) and included negative covenants restricting our ability to incur further indebtedness and engage in certain asset dispositions until the earlier of the maturity date or the December 2021 Note being fully repaid.

On June 30, 2022, we entered into the First Amendment to the December 2021 Note (the “First Amendment”), which extended the maturity date of the December 2021 Note to July 14, 2022.

On July 14, 2022, we entered into the Second Amendment to the December 2021 Note (the “Second Amendment” and together with the December 2021 Note, the “Bridge Loan”), which provided for the extension of the maturity date of the Bridge Loan from July 14, 2022 to July 19, 2022.

In connection with the entry into the Second Amendment, we repaid $ 4.0 million of the aggregate principal amount due under the Bridge Loan on July

14, 2022, with the remainder due at maturity.

On July 19, 2022, we repaid the remaining balance on the Bridge Loan in full, and, as a result, all obligations under the Bridge Loan have been satisfied.

Asset-Based Loan

On August 9, 2022, we entered into an asset-based loan pursuant to that certain Loan and Security Agreement, dated as of August 8, 2022 (the “Loan Agreement”), by and among the Company, certain subsidiaries of the Company (the “Guarantors”), the parties thereto from time to time as lenders (the “Lenders”), and WhiteHawk Capital Partners LP, as the agent for the Lenders.

Pursuant to the Loan Agreement, the Lenders agreed to make available to us a term loan of up to $ 15.0 million on the terms and conditions set forth therein and the other Financing Agreements (as defined therein).

As of December 31, 2022, of the total term loan amount, $ 5.7 million is located in a blocked account, which is classified as “restricted cash” on our consolidated balance sheet, and which will release the funds when permitted by the borrowing base certificate.

Subject to certain exceptions described in the Loan Agreement, the Company and the Guarantors agreed to pledge all of their assets as collateral.

The maturity date of the Asset-Based Loan is the third anniversary of the Closing Date (the “Maturity Date”).

We incurred $ 1.5 million of debt issuance costs related to the Asset-Based Loan, as well as an original issue discount of $ 0.5 million, which were recorded as a direct deduction from the carrying amount of the Asset-Based Loan, and which are amortized over the term of the Asset-Based Loan through interest expense.

The Asset-Based Loan contains customary covenants and restrictions, including, without limitation, covenants that require us to comply with laws, restrictions on our ability to incur additional indebtedness, and various customary remedies for the lender following an event of default, including the acceleration of repayment of outstanding amounts under the Asset-Based Loan and execution upon the collateral securing obligations under the Asset-Based Loan.

As of December 31, 2022, we were in compliance with the Asset-Based Loan covenants.

The Asset-Based Loan accrues interest at the prime rate plus 8.0 %, and interest payments are due monthly.

Based on the original terms, beginning with the fiscal quarter ending September 30, 2023, and for each fiscal quarter thereafter until the Maturity Date, quarterly payments of $ 0.3 million are due, with a final payment of all remaining outstanding principal and accrued interest due on the Maturity Date.

On February 9, 2023, we entered into Amendment No.

2 to the Loan Agreement, in which we agreed to, among other things, voluntarily prepay approximately $ 6.6 million (inclusive of early termination fees and expenses) under the terms provided for under the Loan Agreement and the lenders under the Loan Agreement agreed to release 5.7 million in funds held in a blocked account pursuant to the terms of the Loan Agreement.

Amendment No.2 to the Loan Agreement also provides that we will make additional prepayments upon the occurrence of certain specified asset sales by the Company.

Future Minimum Principal Payments

The following table summarizes future scheduled minimum principal payments of debt at December 2022.

Future debt principal payments are presented based upon the stated maturity dates in the respective debt agreement.

As of December 31, 2023, the

Eyce Promissory Note was repaid in full, and there was no remaining balance on our condensed consolidated balance sheet.

Receivables Financings

July 31, 2023 and August 3, 2023, the Company received an aggregate of approximately $ 3.0 million in cash pursuant to the terms of future

receivables financings (collectively, the “Future Receivables Financings”) entered into with two private lenders.

will make weekly payments under the Future Receivables Financings and is scheduled to repay the amounts due under the Future Receivables

Financings in full in approximately six to eight months .

The total amount to be repaid under the initial Future Receivables Financings

was approximately $ 4.5 million.

In connection with the Future Receivables Financings, the Company granted the lenders security interests

in Company’s accounts receivable equal to the amounts due thereunder, and in connection with any event of default, the lenders

may file financing statements evidencing the security interests.

September 22, 2023, the Company entered into a secured loan pursuant to a Loan and Security Agreement (the “September 2023 Loan

Agreement”), dated as of September 22, 2023 with Synergy Imports, LLC (the “Secured Bridge Loan Lender”).

to the September 2023 Loan Agreement, the Secured Bridge Loan Lender agreed to make available to the Company a six -month bridge loan

of $ 2.2 million in new funds.

Additionally, the Secured Bridge Loan Lender agreed to defer payments totaling $ 2,028,604 already owed

by the Company under existing payment obligations and potentially defer up to an additional $ 2,655,778 which may become due pursuant

to existing agreements during the term of the September 2023 Loan Agreement.

to certain exceptions, the Company agreed to pledge all of its assets, with the exception of deposit accounts and accounts receivable,

as collateral.

Additionally, the Company agreed to transfer one US patent and two related foreign patents and a related trademark in

exchange for an exclusive license back of such assets in the area of smoking products and accessories in connection with the September

2023 Loan Agreement.

Minimum Principal Payments

following table summarizes future scheduled minimum principal payments of debt at December 31, 2023.

Future debt principal payments are

presented based upon the stated maturity dates in the respective debt agreement.

OF MATURITIES OF LONG-TERM DEBT

(in thousands)

Year Ending December 31,

(in thousands) 2023 2024 2025 2026 2027 Total

Real Estate Note $ — $ — $ — $ — $ — $ —

Bridge Loan — — — — — —

Asset Based Line of Credit — 1,250 13,750 — — 15,000

(in thousands)

Asset-Based Loan

DaVinci Promissory Note

Eyce Promissory Note

Total $ 3,185 $ 1,250 $ 13,750 $ — $ — $ 18,185

Future Receivables Financing

Secured Bridge Loan

COMMITMENTS AND CONTINGENCIES

Legal Proceedings

In the ordinary course of business, we are involved in various legal proceedings involving a variety of matters.

We do not believe there are any pending legal proceedings that will have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows.

the ordinary course of business, we are involved in various legal proceedings involving a variety of matters.

We do not believe there

are any pending legal proceedings that will have a material adverse effect on our business, consolidated financial position, results

of operations, or cash flows.

However, the outcome of such legal matters is inherently unpredictable and subject to significant uncertainties.

We have not taken any reserves for litigation for the year ended December 31, 2023.

Other Contingencies

We are potentially subject to claims related to various non-income taxes (such as sales, value added, consumption, and similar taxes) from various tax authorities, including in jurisdictions in which we already collect and remit such taxes.

If the relevant taxing authorities were successfully to pursue these claims, we could be subject to significant additional tax liabilities.

See “Note 5—Leases” for details of our future minimum lease payments under operating lease liabilities.

See “Note 11—Incomes Taxes” for information regarding income tax contingencies.

Contingencies

are potentially subject to claims related to various non-income taxes (such as sales, value added, consumption, and similar taxes) from

various tax authorities, including in jurisdictions in which we already collect and remit such taxes.

If the relevant taxing authorities

were successfully to pursue these claims, we could be subject to significant additional tax liabilities.]

“Note 5—Leases” for details of our future minimum lease payments under operating lease liabilities.

11—Incomes Taxes” for information regarding income tax contingencies.

SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION

Other Current Assets

The following table summarizes the composition of other current assets as of the dates indicated:

of December 31, 2022, we had recorded an Employee Retention Credit (“ERC”) receivable of $ 4.9 million within “Other

current assets” on our consolidated balance sheets, and a corresponding amount was included in “Other income (expense), net”

in our consolidated statement of operations and comprehensive loss for the year ended December 31, 2022.

On February 16, 2023, two of

Greenlane Holdings, Inc.’s subsidiaries, Warehouse Goods LLC and Kim International LLC (collectively, the “Company”),

entered into an agreement with a third-party institutional investor pursuant to which the investor purchased, for approximately $ 4.9

million in cash, an economic participation interest, at a discount, in all of the Company’s rights to payment from the United States

Internal Revenue Service with respect to the employee retention credits filed by the Company under the ERC program.

and Equipment, net

following is a summary of our property and equipment, at costs less accumulated depreciation and amortization :

OF PROPERTY PLANT AND EQUIPMENT LESS DEPRECIATION AND AMORTIZATION

As of December 31,

(in thousands)

Other current assets:

Employee retention credit (ERC) receivable $ 4,854 $ —

VAT refund receivable (Note 2) $ 143 $ 143

Prepaid expenses 1,293 2,726

Indemnification receivable, net 736 122

Customs bonds 1,378 4,550

Other 2,716 4,118

$ 11,120 $ 11,658

As of December 31, 2022, we had recorded an ERC receivable of $ 4.9 million within "Other current assets" on our consolidated balance sheets, and a corresponding amount was included in "Other income (expense), net" in our consolidated statement of operations and comprehensive loss for the year ended December 31, 2022.

On February 16, 2023, two of Greenlane Holdings, Inc.’s subsidiaries, Warehouse Goods LLC and Kim International LLC (collectively, the “Company”), entered into an agreement with a third-party institutional investor pursuant to which the investor purchased, for approximately $ 4.9 million in cash, an economic participation interest, at a discount, in all of the Company’s rights to payment from the United States Internal Revenue Service with respect to the employee retention credits filed by the Company under the Employee Retention Credit (“ERC”) program.

Property and Equipment, Net

The following is a summary of our property and equipment, at costs less accumulated depreciation and amortization:

As of December 31,

(in thousands) Estimated useful life 2022 2021

Furniture, equipment and software 3 - 7 years

$ 15,360 $ 8,478

Personal property 5 years 1,130

Leasehold improvements Lesser of lease term or 5 years

Building 39 years 8,128

Land improvements 15 years 601

Estimated useful life

Furniture, equipment and software

Personal property

Leasehold improvements

Lesser of lease term or 5 years

Land improvements

Work in process

16,143 25,461

Property and equipment, gross

accumulated depreciation

Property and equipment, net

Depreciation expense for property and equipment for the years ended December 31, 2022 and 2021 was approximately $ 3.3 million and $ 2.1 million, respectively.

Intangible Assets, Net

Identified intangible assets consisted of the following at the dates indicated below:

As of December 31, 2022

(in thousands) Gross carrying

amount Accumulated

amortization Impairment Charge Carrying value Estimated useful life

Design libraries $ 8,710 $ ( 1,227 ) $ — $ 7,483 7 - 15 years

Trademarks and tradenames 6,915 ( 3,461 ) — 3,454 5 - 15 years

Customer relationships 43,628 ( 5,762 ) — 37,866 5 - 15 years

Other intangibles 753 ( 288 ) — 465 5 - 15 years

Total finite-lived intangibles 60,006 ( 10,738 ) — 49,268

Trademarks 29,500 — ( 29,500 ) — Indefinite

Total indefinite-lived intangibles 29,500 — ( 29,500 ) —

Total intangible assets, net $ 89,506 $ ( 10,738 ) $ ( 29,500 ) $ 49,268

expense for property and equipment for the years ended December 31, 2023 and 2022 was approximately $ 2.2 million and $ 3.3 million, respectively.

intangible assets consisted of the following at the dates indicated below:

OF IDENTIFIED INTANGIBLE ASSETS

As of December 31, 2022

(in thousands) Gross carrying

amount Accumulated

amortization Impairment Charge Carrying value Estimated useful life

Design libraries $ 8,710 $ ( 573 ) $ — $ 8,137 15 years

Trademarks and tradenames 7,055 ( 2,144 ) — 4,911 5 - 15 years

Customer relationships 43,628 ( 2,359 ) — 41,269 5 - 15 years

Other intangibles 1,086 ( 193 ) — 893 5 - 15 years

Gross carrying amount

Accumulated amortization

Impairment Charge

Carrying value

Estimated useful life

(in thousands)

Design libraries

Trademarks and tradenames

Customer relationships

Other intangibles

Total finite-lived intangibles

Trademarks 29,500 — — 29,500 Indefinite

Total indefinite-lived intangibles

Total intangible assets, net $ 89,979 $ ( 5,269 ) $ — $ 84,710

We evaluate goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter of each year and at interim dates if indicators of impairment exist.

Due to declines in the Company's stock price as well as changes to our estimates and assumptions of the expected future cash flows, management concluded that a triggering event occurred in the third quarter of 2022, based upon which we recorded an impairment charge related to our indefinite-lived intangible assets of $ 24.9 million.

During the fourth quarter of 2022, we further concluded that the remaining $ 4.6 million balance of indefinite-lived intangibles was impaired.

Based upon these assessments, we recorded a total impairment charge related to indefinite-lived intangibles of $ 29.5 million for the year ended December 31, 2022.

evaluated goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter of each year and at interim

dates if indicators of impairment exist.

Due to declines in the Company’s stock price as well as changes to our estimates and assumptions

of the expected future cash flows, management concluded that a triggering event occurred in the third quarter of 2022, based upon which

we recorded an impairment charge related to our indefinite-lived intangible assets of $ 24.9 million.

During the fourth quarter of 2022,

we further concluded that the remaining $ 4.6 million balance of indefinite-lived intangibles was impaired.

Based upon these assessments,

we recorded a total impairment charge related to indefinite-lived intangibles of $ 29.5 million for the year ended December 31, 2022.

We also recorded an impairment charge related to our goodwill balance, as described further below.

We did not acquire any additional intangible assets during the year ended December 31, 2022.

The weighted-average amortization period for intangible assets we acquired during the year ended December 31, 2021 was approximately 11.6 years.

Amortization expense for intangible assets was approximately $ 5.8 million and $ 2.6 million for the years ended December 31, 2022 and 2021, respectively.

Total estimated amortization expense for our intangible assets for the years 2023 through 2027 is as follows:

(in thousands) Amortization Expense

We evaluate goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter of each year and at interim dates if indicators of impairment exist.

Goodwill is assessed for impairment at the reporting unit level.

declines in the Company's stock price as well as changes to our estimates and assumptions of the expected future cash flows of our Consumer Goods and Industrial Goods reporting units, management concluded that a triggering event occurred in the third quarter of 2022, requiring a quantitative impairment test of our goodwill for both of our reporting units.

Based on this assessment, we concluded that the fair value of each of our two reporting units was below their respective carrying value.

The table below presents changes in the carrying amount of goodwill by reportable segment for the year ended December 31, 2022:

(in thousands) Industrial Goods Consumer Goods Total

Balance at December 31, 2021 $ 24,332 $ 17,528 $ 41,860

Goodwill impairment charge ( 24,332 ) $ ( 17,528 ) $ ( 41,860 )

Balance at December 31, 2022 $ — $ — $ —

Accrued Expenses and Other Current Liabilities

The following table summarizes the composition of accrued expenses and other current liabilities as of the dates indicated:

did not acquire any additional intangible assets during the years ended December 31, 2023 and 2022.

expense for intangible assets was approximately $ 0 million and $ 4.4 million for the years ended December 31, 2023 and 2022, respectively.

evaluated goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter of each year and at interim

dates if indicators of impairment exist.

Goodwill was assessed for impairment at the reporting unit level.

Due to declines in the Company’s

stock price as well as changes to our estimates and assumptions of the expected future cash flows of our Consumer Goods and Industrial

Goods reporting units, management concluded that a triggering event occurred in the third quarter of 2022, requiring a quantitative impairment

test of our goodwill for both of our reporting units.

Based on this assessment, we concluded that the fair value of each of our two reporting

units was below their respective carrying value, and goodwill was fully impaired for both reporting units during the year ended December

Current Assets

following table summarizes the composition of other current assets as of the dates indicated:

OF OTHER CURRENT ASSETS

As of December 31,

(in thousands)

Other current assets:

Employee retention credit (ERC) receivable

VAT refund receivable (Note 2)

Prepaid expenses

Indemnification receivable, net

Customs bonds

Other current assets

Expenses and Other Current Liabilities

following table summarizes the composition of accrued expenses and other current liabilities as of the dates indicated:

OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

As of December 31,

(in thousands)

Accrued expenses and other current liabilities:

VAT payable $ 2,809 $ 4,393

VAT payable (including amounts related to VAT matter described in Note 2)

Contingent consideration

Accrued employee compensation

Accrued professional fees 818 1,700

Refund liability 329 1,481

Amended Eyce APA

Accrued expenses

Refund liability (including accounts receivable credit balances)

Accrued construction in progress (ERP)

Sales tax payable

Accrued third-party logistics fees — 421

Other 628 3,342

$ 11,882 $ 25,128

Accrued expenses and

other current liabilities

certain product offerings, we may receive a deposit from the customer (generally 25 % - 50 % of the total order cost, but the amount can

vary by customer contract), when an order is placed by a customer.

We typically complete orders related to customer deposits within one

to six months from the date of order, depending on the complexity of the customization and the size of the order, but the order completion

timeline can vary by product type and terms of sale with each customer.

Changes in our customer deposits liability balance during the

year ended December 31, 2023 and 2022, respectively, were as follows:

OF CHANGES IN CUSTOMER DEPOSIT LIABILITY

(in thousands)

Customer Deposits

For certain product offerings such as child-resistant packaging, closed-system vaporization solutions and custom-branded retail products, we may receive a deposit from the customer (generally 25 % - 50 % of the total order cost, but the amount can vary by customer contract), when an order is placed by a customer.

We typically complete orders related to customer deposits within one to six months from the date of order, depending on the complexity of the customization and the size of the order, but the order completion timeline can vary by product type and terms of sale with each customer.

Changes in our customer deposits liability balance during the year ended December 31, 2022 and 2021, respectively, were as follows:

(in thousands) Customer Deposits

Balance as of December 31, 2021

Customer deposits assumed as part of the KushCo and DaVinci acquisitions (Note 3 - Business Acquisitions) 3,974

Increases due to deposits received, net of other adjustments

2 unchanged sentences

Increases due to deposits received, net of other adjustments

Customer Overpayments

Revenue recognized

Balance as of December 31, 2023

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive income (loss) for the periods presented were as follows:

(in thousands) Foreign Currency Translation Unrealized Gain or (Loss) on Derivative Instrument Total

Other Comprehensive Income (Loss)

components of accumulated other comprehensive income (loss) for the periods presented were as follows:

OF COMPONENTS OF ACCUMULATED COMPREHENSIVE INCOME LOSS

(in thousands)

Foreign Currency Translation

Unrealized Gain or (Loss) on Derivative Instrument

Balance at December 31, 2021

Other comprehensive income (loss)

Reclassification adjustment for (gain) loss included in net loss (Note 4)

Other comprehensive (income) loss attributable to non-controlling interest

1 unchanged sentence

Other comprehensive income (loss)

Reclassification adjustment for (gain) loss included in net loss (Note 4) — ( 332 ) ( 332 )

Other comprehensive (income) loss attributable to non-controlling interest

Balance at December 31, 2023

Supplier Concentration

Our four largest vendors accounted for an aggregate of approximately 57.4 % and 51.8 % of our total purchases for the years ended December 31, 2022 and 2021, respectively.

We expect to maintain our relationships with these vendors.

Related Party Transactions

Nicholas Kovacevich, our Chief Corporate Development Officer owns capital stock of Unrivaled Brands Inc.

(“Unrivaled”) and serves on the Unrivaled board of directors.

Net sales to Unrivaled totaled approximately $ 0.4 million and $ 0.1 million for the years ended December 31, 2022 and 2021, respectively.

Total gross accounts receivable due from Unrivaled were approximately $ 0.4 million as of December 31, 2022 and 2021, respectively.

On February 8, 2023, we filed a lawsuit against Unrivaled in Superior Court of California, Orange County, seeking to compel the repayment of Unrivaled's open balance due to us.

We can provide no assurances that we will be successful in this lawsuit, or that the amounts due to us, or any portion thereof, will be recovered.

Adam Schoenfeld, co-founder and a former director of the Company, has a significant ownership interest in one of our customers, Universal Growing.

Net sales to Universal Growing were less than approximately $ 0.1 million for the year ended December 31, 2022, and approximately $ 0.2 million for the year ended December 31, 2021.

Total gross accounts receivable due from Universal Growing as of December 31, 2021 and 2022 were de minimis.

In December 2021, we entered into a Secured Promissory Note with Aaron LoCascio, our co-founder, former Chief Executive Officer and President, and a current director of the Company, with respect to the $ 8.0 million Bridge Loan.

On June 30, 2022, we entered into the First Amendment to the Secured Promissory Note, which provided for the extension of the maturity date of the Secured Promissory Note from June 30, 2022 to July 14, 2022.

On July 19, 2022, we fully repaid the Bridge Loan and as a result, all obligations under the Bridge Loan have been satisfied.

On July 19, 2022, Warehouse Goods entered into a Membership Interest Purchase Agreement and supporting documents (collectively, the “Sale Agreement”) with Portofino Partners LLC (“Portofino”) to sell the Company’s 50 % stake in VIBES Holdings LLC for total consideration of $ 4.6 million in cash.

The transactions contemplated by the Sale Agreement were completed on July 19, 2022, immediately following the signing of the Sale Agreement.

Concentration

four largest vendors accounted for an aggregate of approximately 25.3 % and 57.4 % of our total purchases for the years ended December

31, 2023 and 2022, respectively We expect to maintain our relationships with these vendors.

Party Transactions

Kovacevich, our former Chief Corporate Development Officer owns capital stock of Blum Holdings Inc.

(“Blum”) and serves

on the Blum board of directors.

Net sales to Blum totaled approximately $ 0.4

million for the ended December 31, 2022.

Total accounts receivable due from Blum were approximately $ 0.4

million as of December 31, 2023 and 2022, respectively.

On February 8, 2023, we filed a lawsuit against Blum in Superior Court

of California, Orange County, seeking to compel the repayment of Blum’s open balance due to us.

As of the date of these

financial statements were available to be issued, there has been a judgement received in favor of the Company.

individuals who were employees of the Company at the time are principals in Synergy Imports, LLC the Lender on the Secured Bridge Loan

taken out on September 22, 2023, however, none are executive officers or directors of the Company.

Schoenfeld, co-founder and a former director of the Company, has a significant ownership interest in one of our customers, Universal

Net sales to Universal Growing were approximately less than $ 0.1 million for the year ended December 31, 2022.

Total gross accounts

receivable due from Universal Growing as of December 31, 2023 and 2022 were de minimis.

December 2021, we entered into a Secured Promissory Note with Aaron LoCascio, our co-founder, former Chief Executive Officer and President,

and a current director of the Company, with respect to the $ 8.0 million Bridge Loan.

On June 30, 2022, we entered into the First Amendment

to the Secured Promissory Note, which provided for the extension of the maturity date of the Secured Promissory Note from June 30, 2022

to July 14, 2022.

On July 19, 2022, we fully repaid the Bridge Loan and as a result, all obligations under the Bridge Loan have been

July 19, 2022, Warehouse Goods entered into a Membership Interest Purchase Agreement and supporting documents (collectively, the “Sale

Agreement”) with Portofino Partners LLC (“Portofino”) to sell the Company’s 50 % stake in VIBES Holdings LLC for

total consideration of $ 4.6 million in cash.

The transactions contemplated by the Sale Agreement were completed on July 19, 2022, immediately

following the signing of the Sale Agreement.

Portofino is an entity partially controlled by Adam Schoenfeld.

The Sale Agreement was approved by the affirmative vote of a majority of the disinterested members of the Board and the audit committee of the Board in accordance with the Company’s related party transactions policy.

Renah Persofsky, a current director of the Company, is a member of the board of directors of Tilray Brands, Inc.

Net sales to Tilray totaled approximately $ 2.2 million for the year ended December 31, 2022.

Persofsky's indirect interest in this transaction related solely to being a director of Tilray, pursuant to Item 404 of SEC Regulation S-K, Ms.

Persofsky's indirect interest in this transaction is deemed not material because it arises solely because she is a director of Tilray.

The Sale Agreement was approved

by the affirmative vote of a majority of the disinterested members of the Board and the audit committee of the Board in accordance with

the Company’s related party transactions policy.

In addition, $ 2.4 million was transferred to Portofino.

Persofsky, a director of the Company, is a member of the board of directors of Tilray Brands, Inc.

to Tilray totaled approximately $ 2.2 million, for the year ended December 31, 2022, respectively.

STOCKHOLDERS’ EQUITY

Shares of our Class A common stock have both voting interests and economic interests (i.e., the right to receive distributions or dividends, whether cash or stock, and proceeds upon dissolution, winding up or liquidation).

Our Class A common stock entitles the record holder thereof to one vote on all matters on which stockholders generally are entitled to vote, and except as otherwise required in the A&R Charter, the holders of Common Stock will vote together as a single class on all matters (or, if any holders of our preferred stock are entitled to vote together with the holders of Common Stock, as a single class with such holders of preferred stock).

Effective August 9, 2022, we completed a one-for-20 reverse stock split (the “Reverse Stock Split”) of our issued and outstanding shares of Class A common stock and Class B common stock (collectively, the "Common Stock"), as further described in "Note 2 - Summary of Significant Accounting Policies." As a result of the Reverse Stock Split, every 20 shares of Common Stock issued and outstanding were converted into one share of Common Stock.

We paid cash in lieu of fractional shares, and accordingly, no fractional shares were issued in connection with the Reverse Stock Split.

The Reverse Stock Split did not change the par value of the Common Stock or the authorized number of shares of Common Stock.

All share and per share amounts in these unaudited condensed consolidated financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to the Reverse Stock Split, including reclassifying an amount equal to the reduction in par value of Common Stock to additional paid-in capital.

Non-Controlling Interest

As discussed in “Note 1—Business Operations and Organization,” we consolidate the financial results of the Operating Company in our consolidated financial statements and report a non-controlling interest related to the Common Units held by non-controlling interest holders.

As of December 31, 2022, all Common Units of the Operating Company and Class B common stock had been exchanged for Class A common stock, and we owned 100.0 % of the economic interests in the Operating Company.

The non-controlling interest in the accompanying consolidated statements of operations and comprehensive loss represents the portion of the net loss attributable to the economic interest in the Operating Company previously held by the non-controlling holders of Common Units calculated based on the weighted average non-controlling interests’ ownership during the periods presented.

At-the-Market Equity Offering

In August 2021, we established an "at-the-market" equity offering program (the "ATM Program") that provides for the sale of shares of our Class A common stock having an aggregate offering price of up to $ 50 million, from time to time, through Cowen and Company, LLC ("Cowen"), as the sales agent.

Net proceeds from sales of our shares of Class A common stock under the ATM Program are expected to be used for working capital and general corporate purposes.

Sales of our Class A common stock under the ATM Program may be made by means of transactions that are deemed to be an "at the market offering" as defined in Rule 415(a)(4) under the Securities Act, including sales made directly on the Nasdaq Global Market or sales made to or through a market maker or through an electronic communications network.

We are under no obligation to offer and sell shares of our Class A common stock under the ATM Program.

Shares of our Class A common stock will be issued pursuant to our effective shelf registration statement on Form S-3 (File No.

333-257654), and a prospectus supplement relating to the Class A common stock that was filed with the Securities and Exchange Commission on April 18, 2022.

Pursuant to Instruction I.B.6, in no event will the Company sell Class A common stock through the ATM Program with a value exceeding more than one-third of the Company’s “public float” (the market value of the Company’s Class A common stock and any other equity securities that it issues in the future that are held by non-affiliates) in any twelve-month period so long as the Company’s public float remains below $75.0 million.

of our Class A common stock have both voting interests and economic interests (i.e., the right to receive distributions or dividends,

whether cash or stock, and proceeds upon dissolution, winding up or liquidation), while shares of our Class B common stock have voting

interests but no economic interests.

Each share of our Class A common stock and Class B common stock entitles the record holder thereof

to one vote on all matters on which stockholders generally are entitled to vote, and except as otherwise required in the A&R Charter,

the holders of Common Stock will vote together as a single class on all matters (or, if any holders of our preferred stock are entitled

to vote together with the holders of Common Stock, as a single class with such holders of preferred stock).

August 9, 2022, we completed a one-for-twenty reverse stock split (the “2022 Reverse Stock Split”) of our issued and outstanding

shares of Class A common stock and Class B common stock (collectively, the “Common Stock”), as further described in “Note

2 - Summary of Significant Accounting Policies.” As a result of the 2022 Reverse Stock Split, every 20 shares of Common Stock issued

and outstanding were converted into one share of Common Stock.

We paid cash in lieu of fractional shares, and accordingly, no fractional

shares were issued in connection with the 2022 Reverse Stock Split.

June 5, 2023, we completed a one-for-10 reverse stock split (the “2023 Reverse Stock Split” and together with the 2022 Reverse

Stock Split, the “Reverse Stock Splits”) of our issued and outstanding shares of Common Stock, as further described in “Note

2 - Summary of Significant Accounting Policies.” As a result of the 2023 Reverse Stock Split, every 10 shares of Common Stock issued

and outstanding were converted into one share of Common Stock.

We paid cash in lieu of fractional shares, and accordingly, no fractional

shares were issued in connection with the 2023 Reverse Stock Split.

Reverse Stock Splits did not change the par value of the Common Stock or the authorized number of shares of Common Stock.

All share and

per share amounts in these unaudited condensed consolidated financial statements and notes thereto have been retroactively adjusted for

all periods presented to give effect to the Reverse Stock Split, including reclassifying an amount equal to the reduction in par value

of Common Stock to additional paid-in capital.

Non-Controlling

discussed in “Note 1—Business Operations and Organization,” we consolidate the financial results of the Operating Company

in our consolidated financial statements and report a non-controlling interest related to the Common Units held by non-controlling interest

As of December 31, 2022, all Common Units of the Operating Company and Class B common stock had been exchanged for Class A common

stock, and we owned 100.0 % of the economic interests in the Operating Company.

The non-controlling interest in the accompanying consolidated

statements of operations and comprehensive loss represents the portion of the net loss attributable to the economic interest in the Operating

Company previously held by the non-controlling holders of Common Units calculated based on the weighted average non-controlling interests’

ownership during the periods presented.

At-the-Market

Equity Offering

In August 2021, we established an “at-the-market”

equity offering program (the “ATM Program”) that provided for the sale of shares of our Class A common stock having an aggregate

offering price of up to $50 million, from time to time, through Cowen and Company, LLC (“Cowen”), as the sales agent.

Sales of our Class A common stock under the ATM Program

were made by means of transactions that are deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the

Securities Act, including sales made directly on the Nasdaq Capital Market or sales made to or through a market maker or through an electronic

communications network.

Shares of our Class A common stock were issued pursuant

to our shelf registration statement on Form S-3 (File No.

333-257654), and a prospectus supplement relating to the Class A common stock

that was filed with the Securities and Exchange Commission on April 18, 2022.

On April 18, 2022, we entered into Amendment No.

1 (the “Amendment”) to the sales agreement dated August 2, 2022 with Cowen.

The purpose of the Amendment was to add the limitations imposed on the ATM Program by Instruction I.B.6 to the sales agreement.

At the time of our entry into the Amendment, approximately $ 37.3 million in shares remained available for issuance under the ATM Program.

Following the completion of the June 2022 Offering we are unable to issue additional shares of Class A common stock pursuant to the ATM Program or otherwise use the Shelf Registration Statement for a period of time due to the restrictions under Instruction I.B.6 to Form S-3, which will limit our liquidity options in the capital markets.

The table below summarizes sales of our Class A common stock under the ATM program:

($ in thousands) Year Ended

December 31, 2022 August 2021 (Inception) through

(the “ATM Amendment”) to the sales agreement dated August 2, 2022 with Cowen.

The purpose of the Amendment was to add the

limitations imposed on the ATM Program by Instruction I.B.6 to the sales agreement.

At the time of our entry into the ATM Amendment, approximately

$37.3 million in shares remained available for issuance under the ATM Program.

Due to the untimely filing of certain of our Quarterly

and Annual Reports, we are unable to issue additional shares of Class A common stock pursuant to the ATM Program or otherwise use the

Shelf Registration Statement, which will limit our liquidity options in the capital markets.

table below summarizes sales of our Class A common stock under the ATM program:

SUMMARIZES SALES OF OUR CLASS A COMMON STOCK

($ in thousands)

August 2021 (Inception) through

December 31, 2023

1 unchanged sentence

Gross proceeds

Net proceeds $ 9,024 $ 12,303

Fees paid to sales agent

*After giving effect to the one-for-20 Reverse Stock Split effective August 9, 2022.

Common Stock and Warrant Offerings

August 2021 Offering

On August 9, 2021, we entered into securities purchase agreements with certain accredited investors, pursuant to which we agreed to issue and sell an aggregate of 210,000 shares of our Class A common stock, pre-funded warrants to purchase up to 296,329 shares of our Class A common stock (the “August 2021 Pre-Funded Warrants”) and warrants to purchase up to 303,797 shares of our Class A common stock (the “August 2021 Standard Warrants” and, together with the August 2021 Pre-Funded Warrants, the “August 2021 Warrants”), in a registered direct offering (the “August 2021 Offering”).

The shares of Class A common stock and August 2021 Warrants were sold in Units (the “August 2021 Units”), with each unit consisting of one share of Class A common stock or an August 2021 Pre-Funded Warrant and an August 2021 Standard Warrant to purchase 0.6 of a share of our Class A common stock.

The Units were offered pursuant to our existing shelf registration statement on Form S-3.

The August 2021 Standard Warrants were immediately exercisable at an exercise price equal to $ 71.00 per share of Class A common stock.

The August 2021 Standard Warrants are exercisable for five years from the date of issuance.

Each August 2021 Pre-Funded Warrant was exercisable with no expiration date for one Share of Class A common stock at an exercise price of $ 0.20 .

The August 2021 Offering generated gross proceeds of approximately $ 31.9 million and net proceeds to the Company of approximately $ 29.9 million.

All August 2021 Pre-Funded Warrants were exercised in August and September 2021, based upon which we issued an additional 296,329 shares of our Class A common stock, for net proceeds of approximately $ 0.1 million.

June 2022 Offering

The shares of Class A common stock and June 2022 Warrants were sold in Units (the “June 2022 Units”), with each unit consisting of one share of Class A common stock or a June 2022 Pre-Funded Warrant and a June 2022 Standard Warrant to purchase one share of our Class A common stock.

The June 2022 Units were offered pursuant to the Shelf Registration Statement.

The June 2022 Standard Warrants are exercisable six months from the date of issuance at an exercise price equal to $ 5.00 per share of Class A common stock for a period of five years .

Each June 2022 Pre-Funded Warrant was exercisable six months from the date of issuance (as modified by the June 2022 Pre-Funded Warrant Waiver discussed below) with no expiration date for one share of Class A common stock at an exercise price of $ 0.002 .

The June 2022 Offering generated gross proceeds of approximately $ 5.4 million and net proceeds to the Company of approximately $ 5.0 million.

On July 27, 2022, pursuant to Section 9 of the June 2022 Pre-Funded Warrants, we waived the Initial Exercise Date (as defined in the June 2022 Pre-Funded Warrants and permitted the June 2022 Pre-Funded Warrants to be exercisable immediately to reflect the businss understanding between us and the investors in the June 2022 Offering with respect to the exerciseabilty of the June 2022 Pre-Funded Warrants (the "June 2022 Pre-Funded Warrant Waiver").

All June 2022 Pre-Funded Warrants were exercised in July 2022, based upon which we issued an additional 495,000 shares of our Class A common stock, for de minimis net proceeds.

October 2022 Offering

The October 2022 Units each consisted of one share of Class A common stock or a October 2022 Pre-Funded Warrant and two October 2022 Standard Warrants to purchase one share of our Class A common stock.

The October 2022 Units were offered pursuant to the S-1 Registration Statement.

The October 2022 Standard Warrants are exercisable immediately at an exercise price equal to $ 0.90 per share of Class A common stock for a period of seven years .

Each October 2022 Pre-Funded Warrant is exercisable immediately with no expiration date for one share of Class A common stock at an exercise price of $ 0.0001 .

The October 2022 Offering generated gross proceeds of approximately $ 7.5 million and net proceeds to the Company of approximately $ 6.8 million.

All October 2022 Pre-Funded Warrants were exercised in November 2022, based upon which we issued an additional 1,377,780 shares of our Class A common stock, for de minimis net proceeds.

February 2023 Offering

We can provide no assurances as to whether the February 2023 S-1 will become effective, or whether we will undertake this public offering following the filing of this Annual Report on Form 10-K.

Class C Common Stock Conversion

On August 31, 2021, we completed our merger with KushCo.

Pursuant to the Merger Agreement, immediately prior to the consummation of the Mergers, holders of Class C common stock, $ 0.0001 par value per share, received one-third of one share of Class B common stock, for each share of Class C common stock held, and Greenlane adopted the A&R Charter which eliminated Class C common stock as a class of Greenlane’s capital stock.

Net Loss Per Share

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share of our Class A common stock is as follows (in thousands, except per share amounts):

* After giving effect to the

Reverse Stock Splits.

Stock and Warrant Offerings

2022 Offering

June 27, 2022, we entered into a securities purchase agreement with an accredited investor, pursuant to which we agreed to issue and

sell an aggregate of 585,000 shares of our Class A common stock, pre-funded warrants to purchase up to 495,000 shares of our Class A

common stock (the “June 2022 Pre-Funded Warrants”) and warrants to purchase up to 1,080,000 shares of our Class A common

stock (the “June 2022 Standard Warrants” and, together with the June 2022 Pre-Funded Warrants, the “June 2022 Warrants”),

in a registered direct offering (the “June 2022 Offering”).

The shares of Class A common stock and June 2022 Warrants were

sold in Units (the “June 2022 Units”), with each unit consisting of one share of Class A common stock or a June 2022 Pre-Funded

Warrant and a June 2022 Standard Warrant to purchase one share of our Class A common stock.

The June 2022 Units were offered pursuant

to the Shelf Registration Statement.

The June 2022 Standard Warrants are exercisable six months from the date of issuance at an exercise

price equal to $ 5.00 per share of Class A common stock for a period of five years .

Each June 2022 Pre-Funded Warrant was exercisable

immediately with no expiration date for one share of Class A common stock at an exercise price of $ 0.002 .

The June 2022 Offering generated

gross proceeds of approximately $ 5.4 million and net proceeds to the Company of approximately $ 5.0 million.

June 2022 Pre-Funded Warrants were exercised in July 2022, based upon which we issued an additional 495,000 shares of our Class A common

stock, for de minimis net proceeds.

2022 Offering

October 27, 2022, we entered into securities purchase agreements with certain investors, pursuant to which we agreed to issue and sell

an aggregate of 695,555 shares of our Class A common stock, pre-funded warrants to purchase up to 137,778 shares of our Class A common

stock (the “October 2022 Pre-Funded Warrants”) and warrants to purchase up to 1,666,667 shares of our Class A common stock

(the “October 2022 Standard Warrants”).

The October 2022 units each consisted of one share of Class A common stock or a October

2022 Pre-Funded Warrant and two October 2022 Standard Warrants to purchase one share of our Class A common stock.

The October 2022 units

were offered pursuant to the S-1 Registration Statement.

The October 2022 Standard Warrants are exercisable immediately at an exercise

price equal to $ 0.90 per share of Class A common stock for a period of seven years .

Each October 2022 Pre-Funded Warrant is exercisable

immediately with no expiration date for one share of Class A common stock at an exercise price of $ 0.0001 .

The October 2022 Offering

generated gross proceeds of approximately $ 7.5 million and net proceeds to the Company of approximately $ 6.8 million.

October 2022 Pre-Funded Warrants were exercised in November 2022, based upon which we issued an additional 137,778 shares of our Class

A common stock, for de minimis net proceeds.

2023 Offering

June 29, 2023, we entered into securities purchase agreements with certain investors, pursuant to which we agreed to issue and sell an

aggregate of 560,476 shares of our Class A common stock, pre-funded warrants to purchase up to 3,487,143 shares of our Class A common

stock (the “July 2023 Pre-Funded Warrants”) and warrants to purchase up to 8,095,238 shares of our Class A common stock (the

“July 2023 Standard Warrants”).

The July 2023 units each consisted of one share of Class A common stock or a July 2023 Pre-Funded

Warrant and two July 2023 Standard Warrants to purchase one share of our Class A common stock.

The July 2023 units were offered pursuant

to an effective Registration Statement on Form S-1.

The July 2023 Standard Warrants are exercisable immediately at an exercise price

equal to $ 1.05 per share of Class A common stock for a period of five years .

Each July 2023 Pre-Funded Warrant is exercisable immediately

with no expiration date for one share of Class A common stock at an exercise price of $ 0.0001 .

The July 2023 Offering generated gross

proceeds of approximately $ 4.3 million and net proceeds to the Company of approximately $ 3.9 million.

of the date of this Annual Report on Form 10-K, all

July 2023 Pre-Funded Warrants have been exercised, based upon which we issued an additional 1,911,000

shares of our Class A common stock subsequent to year end, for de minimis net proceeds.

connection with the July 2023 Offering, the Company entered into privately negotiated agreements with holders participating in the offering

to amend existing outstanding warrants to purchase up to 1,344,367 shares of Class A common stock that were previously issued in connection

with the June 2022 and October 2022 Offerings at exercise prices per share of $ 50.00 and $ 9.00 , respectively, and expire on December

29, 2027 and November 1, 2029, respectively (collectively, the “Prior Warrants”), effective upon the closing of the July

2023 Offering to reduce the exercise price of the Prior Warrants to $ 1.05 , the exercise price of the warrants to purchase shares of Class

A common stock offered in the July 2023 Offering.

All other terms of the Prior Warrants remained unchanged.

Loss Per Share

net loss per share of Class A common stock is computed by dividing net loss attributable to Greenlane by the weighted-average number

of shares of Class A common stock outstanding during the period.

Diluted net loss per share of Class A common stock is computed by dividing

net loss attributable to Greenlane by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect

to potentially dilutive elements.

reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share of our Class A common

stock is as follows (in thousands, except per share amounts):

OF EARNINGS PER SHARE BASIC AND DILUTED

For the year ended December 31,

(in thousands, except per share data)

Net loss $ ( 125,858 ) $ ( 53,423 )

$ ( 182,226 )

Net loss attributable to non-controlling interests

Deemed Dividend on “October 2022 Standard Warrants”

Net loss attributable to Class A common stockholders

$ ( 169,509 )

Weighted average shares of Class A common stock outstanding *

Net loss per share of Class A common stock - basic and diluted*

*After giving effect to the one-for-20 Reverse Stock Split effective August 9, 2022.

The June 2022 Pre-Funded Warrants and the October 2022 Pre-Funded Warrants were included in the weighted-average in the computation of basic net loss per share of Class A common stock for the year ended December 31, 2022 and 2021, respectively, beginning with their issuance date, as their stated exercise price of $ 0.002 was non-substantive and their exercise was virtually assured.

For the year ended December 31, 2022 and 2021, respectively, shares of Class B common stock, shares of Class C common stock and stock options and warrants to purchase Class A common stock were excluded from the weighted-average in the computation of diluted net loss per share of Class A common stock because the effect would have been anti-dilutive.

Shares of our Class B common stock and Class C common stock do not share in our earnings or losses and are therefore not participating securities.

As such, separate calculations of basic and diluted net loss per share for each of our Class B common stock and Class C common stock under the two-class method have not been presented.

giving effect to the Reverse Stock Splits.

July 2023 Pre-Funded Warrants were included in the weighted-average in the computation of basic net loss per share of Class A common

stock for the year ended December 31, 2023, beginning with their issuance date, as their stated exercise price of $ 0.001 was non-substantive

and their exercise was virtually assured.

June 29, 2023 in connection with the July 2023 Offering, the Company entered into agreements with holders participating in the offering

to amend existing outstanding warrants to purchase up to 1,344,367 shares of Class A common stock that were previously issued in November

2022 at an exercise price per share of $ 9.00 .

The warrants expire on November 1, 2029.

In connection with the amendment, the exercise

price of the warrants was reduced to $ 1.05 .

The impact of the amendment resulted in a deemed dividend in the amount of $ 0.4 million.

The deemed dividend was calculated by the change in fair value.

the years ended December 31, 2023 and 2022, respectively, shares of Class B common stock and stock options and warrants to purchase Class

A common stock were excluded from the weighted-average in the computation of diluted net loss per share of Class A common stock because

the effect would have been anti-dilutive.

of our Class B common stock do not share in our earnings or losses and are therefore not participating securities.

As such, separate

calculations of basic and diluted net loss per share for each of our Class B common stock under the two-class method have not been presented

for the years ended December 31, 2023 and 2022, all Common Units of the Operating Company and Class B common stock had been exchanged

for Class A common stock, and we owned 100.0 % of the economic interests in the Operating Company as of December 31, 2023 and 2022.

COMPENSATION PLANS

Amended and Restated 2019 Equity Incentive Plan

In April 2019, we adopted the 2019 Equity Incentive Plan (the “2019 Plan”).

Excluding the effect of the one-for-20 Reverse Stock Split, we previously registered 5,000,000 shares of Class A common stock that are or may become issuable under the 2019 Plan as stock options and other equity-based awards to employees, directors and executive officers.

In August 2021, we adopted, and our shareholders approved, the Amended and Restated 2019 Equity Incentive Plan (the "Amended 2019 Plan"), which amends and restates the 2019 Plan in its entirety.

Excluding the effect of the one-for-20 Reverse Stock Split, the Amended 2019 Plan, among other things, increases the number of shares of Class A common stock available for issuance under the 2019 Plan by 2,860,367 .

At our 2022 Annual Meeting of Stockholders on August 4, 2022, stockholders approved the Second Amended and Restated 2019 Equity Incentive Plan (the "Second Amended 2019 Plan") which, among other things, increased the number of shares of Class A common stock authorized for issuance under the Amended 2019 Plan by 785,000 shares.

The Second Amended 2019 Plan provides eligible participants with compensation opportunities in the form of cash and equity incentive awards.

The Second Amended 2019 Plan is designed to enhance our ability to attract, retain and motivate our employees, directors, and executive officers, and incentivizes them to increase our long-term growth and equity value in alignment with the interests of our stockholders.

On August 31, 2021, we completed our merger with KushCo pursuant to the Merger Agreement dated as of March, 31, 2021.

See "Note 3 - Business Acquisitions" for additional details.

At the effective time of the Mergers, options to purchase shares of Class A common stock (the “Greenlane options”) and shares of Greenlane restricted stock were treated as follows:

• Each unvested Greenlane option, other than Greenlane options held by non-employee directors of Greenlane, accelerated and became vested in full;

• Each Greenlane option held by non-employee directors of Greenlane, whether vested or unvested, remained outstanding (and unvested, as applicable) in accordance with the terms of Greenlane’s equity plan covering each such option;

• Each unvested share of Greenlane restricted stock and each unvested common unit of the Operating Company, other than Greenlane restricted stock or Greenlane restricted common units held by non-employee directors of Greenlane, accelerated and became vested in full in accordance with the terms of Greenlane’s equity plan covering each such award;

• Each unvested share of Greenlane restricted stock or Greenlane restricted common units of Greenlane held by non-employee directors of Greenlane, whether vested or unvested, remained outstanding (and unvested, as applicable) in accordance with the terms of Greenlane’s equity plan covering each such award.

The Greenlane equity awards vesting acceleration was accounted for as a modification under ASC Topic 718, Compensation - Stock Compensation .

KushCo Equity Plan

As described in "Note 3 - Business Acquisitions," in connection with the completion of our merger with KushCo, we assumed the sponsorship of the KushCo Equity Plan.

We do not intend to make future grants under the KushCo Equity Plan.

Equity-Based Compensation Expense

Equity-based compensation expense is included within "salaries, benefits and payroll taxes" in our consolidated statement of operations and comprehensive loss.

and Restated 2019 Equity Incentive Plan

April 2019, we adopted the 2019 Equity Incentive Plan (the “2019 Plan”).

In August 2021, we adopted, and our

shareholders approved, the Amended and Restated 2019 Equity Incentive Plan (the “Amended 2019 Plan”), which amends and

restates the 2019 Plan in its entirety.

At our 2022 Annual Meeting of Stockholders on August 4, 2022, stockholders approved the

Second Amended and Restated 2019 Equity Incentive Plan (the “Second Amended 2019 Plan”) which, among other things,

increased the number of shares of Class A common stock authorized for issuance under the Amended 2019 Plan.

Following the effect of

the Reverse Stock Splits, the total number of shares of Class A common stock authorized for issuance is 110,000

shares as of December 31, 2023.

Second Amended 2019 Plan provides eligible participants with compensation opportunities in the form of cash and equity incentive awards.

The Second Amended 2019 Plan is designed to enhance our ability to attract, retain and motivate our employees, directors, and executive

officers, and incentivizes them to increase our long-term growth and equity value in alignment with the interests of our stockholders.

June 2, 2023, the Company’s stockholders approved a third amendment and restatement of the 2019 Plan (the “Third Amended

The Third Amended Plan, among other things, increases the number of shares of Class A common stock authorized for issuance

under the Second Amended 2019 Plan by 209,862 shares to an aggregate of 319,862 shares.

As of the date of this Annual Report on Form

10-K, we have not filed a Registration Statement on Form S-8 with the Securities and Exchange Commission to register the additional shares

authorized under the Third Amended Plan.

Compensation Expense

compensation expense is included within “salaries, benefits and payroll taxes” in our consolidated statements of operations

and comprehensive loss.

We recognized equity-based compensation expense as follows:

OF EQUITY BASED COMPENSATION EXPENSE

For the year ended December 31,

3 unchanged sentences

Restricted stock units (RSUs) - Class A common stock

Common units of the Operating Company — 449

Total equity-based compensation expense

During the year ended December 31, 2022, we granted an aggregate of 129,106 options to our directors and certain employees.

The stock options were granted with exercise prices ranging from $ 2.52 per share to $ 20.00 per share, and vesting periods ranging from three months to four years .

During the year ended December 31, 2021, we granted an aggregate of 83,817 options to our directors and certain employees.

The stock options were granted with exercise prices ranging from $ 20.00 per share to $ 124.00 per share, and vesting periods ranging from six months to four years .

Total remaining unrecognized compensation expense as of December 31, 2022 was as follows:

Remaining Unrecognized Compensation Expense

December 31, 2022 Weighted Average Period over which Remaining Unrecognized Compensation Expense is Expected to be Recognized

(in thousands) (in years)

the year ended December 31, 2022, we granted an aggregate of 129,106 options to our directors and certain employees.

The stock options

were granted with exercise prices ranging from $ 2.52 per share to $ 20.00 per share, and vesting periods ranging from three months to

There were no options granted during the year ended December 31, 2023.

remaining unrecognized compensation expense as of December 31, 2023 was as follows:

OF EQUITY BASED UNRECOGNIZED COMPENSATION EXPENSE

Remaining Unrecognized Compensation Expense December 31, 2023

Weighted Average Period over which Remaining Unrecognized Compensation Expense is Expected to be Recognized

(in thousands)

Stock options - Class A common stock

1 unchanged sentence

Total remaining unrecognized compensation expense

The fair value of the stock option awards granted during the years ended December 31, 2022 and 2021 was determined on the grant date using the Black-Scholes valuation model based on the following ranges of weighted-average assumptions:

For the year ended December 31,

fair value of the stock option awards granted during the year ended December 31, 2022 was determined on the grant date using the Black-Scholes

valuation model based on the following ranges of weighted-average assumptions:

OF STOCK OPTION AWARD GRANT DATE VALUATION MODEL

Expected volatility (1)

100 % - 100 %

100 % - 107 %

Expected dividend yield (2)

1 unchanged sentence

5.88 - 6.05 years

5.25 - 6.25 years

Risk-free interest rate (4)

1.62 % - 3.31 %

0.78 % - 1.37 %

(1) Expected volatility is based on the historical volatility of a selected peer group over a period equivalent to the expected term.

(2) We assumed a dividend yield of zero as management has no plans to declare dividends in the foreseeable future.

(3) Expected term represents the estimated period of time until an award is exercised and was determined using the simplified method.

(4) The risk-free rate is an interpolation of yields on U.S.

(1) Expected volatility

is based on the historical volatility of a selected peer group over a period equivalent to the expected term.

(2) We assumed a dividend

yield of zero as management has no plans to declare dividends in the foreseeable future.

(3) Expected term represents

the estimated period of time until an award is exercised and was determined using the simplified method.

(4) The risk-free rate

is an interpolation of yields on U.S.

Treasury securities with maturities equivalent to the expected term.

A summary of stock option activity for the years ended December 31, 2022 and 2021 is as follows:

summary of stock option activity for the years ended December 31, 2023 and 2022 is as follows:

OF STOCK OPTION ACTIVITY

Stock Options

Number of Options Weighted-Average

Number of Options

Weighted-Average

Exercise Price

Outstanding as of December 31, 2021

Granted 239,466 62.80

Exercised ( 5,053 ) 48.00

Forfeited ( 37,165 ) 86.00

Outstanding as of December 31, 2022

Granted 129,106 9.34

Exercised — —

Forfeited ( 167,201 ) 17.59

Outstanding as of December 31, 2023

The weighted-average grant date fair value of options granted for the years ended December 31, 2022 and 2021 was $ 9.34 and $ 62.80 , respectively.

The total fair value of stock options vested during the years ended December 31, 2022 and 2021 was approximately $ 2.1 million and $ 1.5 million, respectively.

Common Units of the Operating Company Granted as Equity-Based Compensation

In connection with the closing of the IPO in April 2019, we consummated certain organizational transactions with the Operating Company, as described in further detail in "Note 1—Business Operations and Organization," among which, the Operating Company reclassified unvested Class B membership interests and profits interests which had been granted as equity-based compensation into Common Units of the Operating Company.

The following table provides a summary of the unvested Common Units outstanding and related transactions:

Subject to Vesting

Unvested Common Units as of December 31, 2020 203,904

Vested ( 198,758 )

Forfeited ( 5,146 )

Unvested Common Units as of December 31, 2021 —

Our 401(k) Plan is a deferred salary arrangement under Section 401(k) of the Internal Revenue Code.

Under the 401(k) Plan, participating U.S.

weighted-average grant date fair value of options granted for the year ended December 31, 2022 was $ 9.34 .

The total fair value of stock

options vested during the years ended December 31, 2023 and 2022 was approximately $ 0.1 million and $ 2.1 million, respectively.

401(k) Plan is a deferred salary arrangement under Section 401(k) of the Internal Revenue Code.

Under the 401(k) Plan, participating

employees may defer a portion of their pre-tax earnings, up to the U.S.

Internal Revenue Service annual contribution limit ($20,500 for calendar year 2022).

Participants are eligible to receive a matching contribution from us of 100 % of the first 3 % and 50 % of the next 2 % of contributions.

Matching contributions, other than safe-harbor contributions, vest 33 % per year and are 100% vested after three years of service.

Internal Revenue Service annual contribution limit ($23,000

for calendar year 2023).

Participants are eligible to receive a matching contribution from us of 100% of the first 3% and 50% of the

next 2% of contributions.

Matching contributions, other than safe-harbor contributions, vest 33% per year and are 100% vested after three

years of service.

Safe-harbor matching contributions are 100% vested as of the date of the contribution .

As a result of the IPO and the related transactions completed in April 2019, we owned a portion of the Common Units of the Operating Company, which is treated as a partnership for U.S.

a result of the IPO and the related transactions completed in April 2019, we owned a portion of the Common Units of the Operating Company,

which is treated as a partnership for U.S.

federal and most applicable state and local income tax purposes.

As a partnership, the Operating Company is generally not subject to U.S.

As a partnership, the Operating

Company was generally not subject to U.S.

federal and certain state and local income taxes.

Any taxable income or loss generated by the Operating Company is passed through to and included in the taxable income or loss of its members, including Greenlane, on a pro-rata basis, in accordance with the terms of the Operating Agreement.

The Operating Company is also subject to taxes in foreign jurisdictions.

Any taxable income or loss generated by the

Operating Company was passed through to and included in the taxable income or loss of its members, including Greenlane, on a pro-rata

basis, in accordance with the terms of the Operating Agreement.

The Operating Company was also subject to taxes in foreign jurisdictions.

We are a corporation subject to U.S.

federal income taxes, in additional to state and local income taxes, based on our share of the Operating Company’s pass-through taxable income.

Effective on December 31, 2022, the Operating Company became wholly owned by us.

As a result, the Operating Company’s tax status was converted from a partnership to a disregarded entity.

Starting in 2023, 100% of the Operating Company’s US income and expenses will be included in our US and state tax returns.

The Company's United States and foreign operations components of income (loss) from continuing operations before income taxes are as follows:

federal income taxes, in addition to state and local income taxes, based on our share of the Operating

Company’s pass-through taxable income.

on December 31, 2022, the Operating Company became wholly owned by us.

As a result, the Operating Company’s tax status was converted

from a partnership to a disregarded entity.

Starting in 2023, 100% of the Operating Company’s U.S.

income and expenses will be

included in our US and state tax returns.

Company’s United States and foreign operations components of income (loss) from continuing operations before income taxes are as

SCHEDULE OF INCOME BEFORE INCOME TAX, DOMESTIC AND FOREIGN

For the year ended December 31,

1 unchanged sentence

United States

Foreign $ ( 8,116 ) $ ( 2,304 )

Total $ ( 125,871 ) $ ( 53,413 )

Income Tax Expense

The income tax (benefit) expense for the years ended December 31, 2022 and 2021 consisted of the following:

For the year ended December 31, 2022 For the year ended December 31, 2021

(in thousands) Federal Foreign State Total Federal Foreign State Total

$ ( 172,997 )

$ ( 182,239 )

income tax (benefit) expense for the years ended December 31, 2023 and 2022 consisted of the following:

SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (BENEFIT)

(in thousands)

For the year ended December 31, 2023

For the year ended December 31, 2022

(in thousands)

Current tax (benefit) expense

Current year $ — $ ( 13 ) $ — $ ( 13 ) $ — $ ( 10 ) $ 20 $ 10

Total current year

Deferred tax (benefit) expense

Current year ( 20,552 ) ( 2,029 ) ( 6,816 ) ( 29,397 ) ( 6,624 ) ( 636 ) ( 2,211 ) ( 9,471 )

Change in valuation allowance

2 unchanged sentences

Up-C consolidation

KushCo merger 1,643 — ( 393 ) 1,250 ( 17,999 ) — ( 7,504 ) ( 25,503 )

KushCo merger or true ups

Total deferred tax (benefit) expense

Income tax (benefit) expense

A reconciliation of the income tax (benefit) expense computed at the U.S.

federal statutory income tax rate to the income tax expense recognized is as follows:

reconciliation of the income tax (benefit) expense computed at the U.S.

federal statutory income tax rate to the income tax expense recognized

is as follows:

SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION

For the year ended December 31,

7 unchanged sentences

KushCo merger

Other, net 443 27

Change in tax rates

Prior year true-ups

Income tax (benefit) expense

Deferred Tax Assets and Liabilities

The components of deferred tax assets and liabilities were as follows:

Tax Assets and Liabilities

components of deferred tax assets and liabilities were as follows:

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

As of December 31,

2 unchanged sentences

Goodwill and other intangible assets

Inventory 5,858 —

Allowance for doubtful accounts

3 unchanged sentences

Net operating loss carryforwards

Other 576 4,351

Total deferred tax assets

2 unchanged sentences

Deferred tax liability:

Fixed assets ( 227 ) —

Right of use assets

2 unchanged sentences

Net deferred tax assets and liabilities

We had approximately $ 196.1 million of Federal net operating loss carryforwards, of which approximately $ 9.8 million expire in 2038, and the remainder are not subject to expiration.

Their utilization is limited to 80% of our future taxable income.

We also had approximately $ 197.9 million of State net operating loss carryforwards that begin expiring in 2038 and $ 15.5 million of Dutch and Canadian net operating loss carryforwards that begin expiring in 2026.

Their utilization is limited to our future taxable income.

We have not completed our evaluation of NOL utilization limitations under Internal Revenue Code, as amended (the “Code”) Section 382, change in ownership rules.

Due to the fact that there is a full valuation allowance and losses being generated in the current year, any limitation based on the code would not have a material impact on the net deferred tax asset balance.

In addition, the deduction for business interest is limited to 30 percent of taxable income (the “Section 163(j) limitation”).

The interest that is not deductible due this limitation is carried forward to subsequent years and subject to the next years Section 163(j) limitation.

At December 31, 2022 we had $ 20.3 million of business interest carryforwards, which includes $ 17.6 million from the KushCo merger.

The utilization of the business interest carryforward from the KushCo merger may be further limited by the application of the Section 382 rules.

During the years ended December 31, 2022 and 2021, respectively, management performed an assessment of the realizability of our deferred tax assets based upon which management determined that it is not more likely than not that the results of operations will generate sufficient taxable income to realize portions of the net operating loss benefits.

Consequently, we established a full valuation allowance against our deferred tax assets and reflected a carrying balance of $ 0 as of December 31, 2022 and 2021, respectively.

In the event that management determines that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, an adjustment to the valuation allowance will be made, which would reduce the provision for income taxes.

We do not record U.S.

income taxes on the undistributed earnings of our foreign subsidiaries, except for the Canadian subsidiary, based upon our intention to permanently reinvest undistributed earnings into working capital and further expansion of existing operations outside the United States.

In the event we are required to repatriate funds from outside of the United States, such repatriation would be subject to local laws, customs, and tax consequences.

Uncertain Tax Positions

For the year ended December 31, 2022, we did not have any unrecognized tax benefits as a result of tax positions taken during a prior period or during the current period.

had approximately $ 240.2

million of Federal net operating loss carryforwards, of which approximately $ 9.8

million expire in 2038, and the remainder are not subject to expiration.

Their utilization is limited to 80% of our future taxable

We also had approximately $ 235.0

of State net operating loss carryforwards that begin expiring in 2038, $ 14.9

million of Dutch net operating loss carryforwards that begin expiring in 2029, and $ 0.2

million Canadian net operating loss carryforwards that begin expiring in 2026.

Their utilization is limited to our future taxable

We have not completed our evaluation of NOL utilization limitations under Internal Revenue Code, as amended (the

“Code”) Section 382, change in ownership rules.

Due to the fact that there is a full valuation allowance and losses

being generated in the current year, any limitation based on the code would not have a material impact on the net deferred tax asset

In addition, the deduction for business interest is limited to 30 percent of taxable income (the “Section 163(j)

limitation”).

The interest that is not deductible due this limitation is carried forward to subsequent years and subject to

the next years Section 163(j) limitation.

At December 31, 2023 we had $ 26.2

million of business interest carryforwards, which includes $ 17.6

million from the KushCo merger.

The utilization of the business interest carryforward from the KushCo merger may be further limited

by the application of the Section 382 rules.

the years ended December 31, 2023 and 2022, respectively, management performed an assessment of the realizability of our deferred tax

assets based upon which management determined that it is not more likely than not that the results of operations will generate sufficient

taxable income to realize portions of the net operating loss benefits.

Consequently, we established a full valuation allowance against

our deferred tax assets and reflected a carrying balance of $ 0 as of December 31, 2023 and 2022, respectively.

In the event that management

determines that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, an adjustment

to the valuation allowance will be made, which would reduce the provision for income taxes.

do not record U.S.

income taxes on the undistributed earnings of our foreign subsidiaries, except for the Canadian subsidiary, based

upon our intention to permanently reinvest undistributed earnings into working capital and further expansion of existing operations outside

the United States.

In the event we are required to repatriate funds from outside of the United States, such repatriation would be subject

to local laws, customs, and tax consequences.

Tax Positions

the year ended December 31, 2023 and 2022, we did no t have any unrecognized tax benefits as a result of tax positions taken during a

prior period or during the current period.

No interest or penalties have been recorded as a result of tax uncertainties.

The Company is subject to audit examination for federal and state purposes for the years 2018 – 2021.

Tax Receivable Agreement (TRA)

We entered into the TRA with the Operating Company and each of the members that provides for the payment by the Operating Company to the members of 85 % of the amount of tax benefits, if any, that we may actually realize (or in some circumstances are deemed to realize) as a result of (i) increases in tax basis resulting from any future redemptions of Common Units as described in “Note 1—Business Operations and Organization” and (ii) certain other tax benefits attributable to payments made under the TRA.

The annual tax benefits are computed by calculating the income taxes due, including such tax benefits, and the income taxes due without such benefits.

is subject to audit examination for federal and state purposes for the years 2019 – 2023.

As of the date these financial statements were issued, there were not any ongoing income tax audits.

Receivable Agreement (TRA)

entered into the TRA with the Operating Company and each of the members that provides for the payment by the Operating Company to the

members of 85 % of the amount of tax benefits, if any, that we may actually realize (or in some circumstances are deemed to realize) as

a result of (i) increases in tax basis resulting from any future redemptions of Common Units as described in “Note 1—Business

Operations and Organization” and (ii) certain other tax benefits attributable to payments made under the TRA.

annual tax benefits are computed by calculating the income taxes due, including such tax benefits, and the income taxes due without such

The Operating Company expects to benefit from the remaining 15 % of any tax benefits that it may actually realize.

The TRA payments are not conditioned upon any continued ownership interest in the Operating Company.

The rights of each noncontrolling interest holder under the TRA are assignable to transferees of its interest in the Operating Company.

As noted above, we evaluated the realizability of the deferred tax assets resulting from the IPO and the related transactions completed in April 2019 and established a full valuation allowance against those benefits.

As a result, we determined that the amount or timing of payments to noncontrolling interest holders under the TRA are no longer probable or reasonably estimable.

Based on this assessment, our TRA liability was $ 0 as of December 31, 2022 and 2021.

If utilization of the deferred tax assets subject to the TRA becomes more likely than not in the future, we will record a liability related to the TRA, which would be recognized as expense within our consolidated statements of operations and comprehensive (loss) income.

During the years ended December 31, 2022 and 2021, we did not make any payments, inclusive of interest, to members of the Operating Company pursuant to the TRA.

The TRA payments

are not conditioned upon any continued ownership interest in the Operating Company.

The rights of each noncontrolling interest holder

under the TRA are assignable to transferees of its interest in the Operating Company.

The timing and amount of aggregate payments due

under the TRA may vary based on a number of factors, including the amount and timing of the taxable income the Operating Company generates

each year and the applicable tax rate.

noted above, we evaluated the realizability of the deferred tax assets resulting from the IPO and the related transactions completed

in April 2019 and established a full valuation allowance against those benefits.

As a result, we determined that the amount or timing

of payments to noncontrolling interest holders under the TRA are no longer probable or reasonably estimable.

Based on this assessment,

our TRA liability was $ 0 as of December 31, 2023 and 2022.

utilization of the deferred tax assets subject to the TRA becomes more likely than not in the future, we will record a liability related

to the TRA, which would be recognized as expense within our consolidated statements of operations and comprehensive (loss) income.

the years ended December 31, 2023 and 2022, we did not make any payments, inclusive of interest, to members of the Operating Company

pursuant to the TRA.

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.

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

Our CODM is a committee comprised of our CEO and our CFO.

We determined we had two operating segments as of December 31, 2022, which are the same as our reportable segments:

(1) Consumer Goods, and (2) Industrial Goods.

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, like 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 accounting

policies of the reportable segments are the same as those described in “Note 2 - Summary of Significant Accounting Policies.”

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.

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.

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, 2022 and 2021.

For the year ended December 31, 2022 For the year ended December 31, 2021

(in thousands) Consumer Goods Industrial Goods Total Consumer Goods Industrial Goods Total

Net sales $ 48,134 $ 88,951 $ 137,085 $ 110,105 $ 55,955 $ 166,060

were no material intersegment sales during the years ended December 31, 2023 and 2022.

SCHEDULE OF SEGMENT REPORTING INFORMATION, BY SEGMENT

(in thousands)

Consumer Goods

Industrial Goods

Consumer Goods

Industrial Goods

For the Year Ended December 31, 2023

For the Year Ended December 31, 2022

(in thousands)

Consumer Goods

Industrial Goods

Consumer Goods

Industrial Goods

Cost of sales

Gross profit $ 9,603 $ 15,380 $ 24,983 $ 22,544 $ 11,309 $ 33,853

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

As of December 31, 2022 As of December 31, 2021

(in thousands) Consumer Goods Industrial Goods Total Consumer Goods Industrial Goods Total

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

Consumer Goods

Industrial Goods

As of December 31, 2023

As of December 31, 2022

(in thousands)

Consumer Goods

Industrial Goods

Consumer Goods

Industrial Goods

Accounts receivable, net

1 unchanged sentence

Vendor deposits

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

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

OF NET SALES BY MAJOR PRODUCT CATEGORY

(in thousands)

For the year ended December 31,

5 unchanged sentences

Total net sales

The following table sets forth net sales disaggregated by geography:

following table sets forth net sales disaggregated by geography:

OF NET SALES DISAGGREGATED BY GEOGRAPHY

(in thousands)

For the year ended December 31,

1 unchanged sentence

United States

Canada 5,810 9,717

Europe 4,942 10,337

Total net sales

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:

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:

SCHEDULE OF LONG-LIVED ASSETS BY GEOGRAPHIC AREA

(in thousands)

As of December 31,

1 unchanged sentence

United States

Canada 48 122

Europe 279 671

Total long-lived assets

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

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

SUBSEQUENT EVENTS

Asset-Based Loan Amendment

On February 9, 2023, we entered into Amendment No.

2 to the Loan Agreement, in which we agreed to, among other things, voluntarily prepay approximately $ 6.6 million (inclusive of early termination fees and expenses) under the terms provided for under the Loan Agreement and the lenders under the Loan Agreement agreed to release 5.7 million in funds held in a blocked account pursuant to the terms of the Loan Agreement.

Amendment No.2 to the Loan Agreement also provides that we will make additional prepayments upon the occurrence of certain specified asset sales by the Company.

cash, an economic participation interest, at a discount, in all of the Company’s rights to payment from the United States Internal Revenue Service with respect to the employee retention credits filed by the Company under the Employee Retention Credit (“ERC”) program.

May 6, 2024, the Company, Warehouse Goods and Synergy Imports LLC (“Synergy”) entered into an asset purchase agreement, dated

May 1, 2024 (the “Asset Purchase Agreement”) pursuant to which Synergy purchased all of the intellectual property, a specified

amount of inventory, and other assets related to the Eyce and DaVinci brands.

In consideration for the acquisition, all parties entered

into a loan modification agreement, effective May 1, 2024 (the “Loan Modification Agreement”) and an amended and restated

secured promissory note, effective May 1, 2024 (the Amended and Restated Secured Promissory Note”), an amendment to the original

Eyce and Davinci Asset Purchase Agreements, a distribution agreement, the termination of a license granted by Eyce, and the termination

of certain consulting and employment agreements.

The updated date of maturity will be through July 2024.

January 1, 2024 through July 18, 2024, the Company issued 1,911,000 shares of Class A common shares in connection with the exercise of

the remaining penny warrants as discussed in Note 9 of these consolidated financial statements.

January 16, 2024, the Company issued 184,000 shares of Class A common shares in connection with a consulting agreement which had a market

value of approximately $ 88,000 on the date of issuance.

In May 2024, the Company entered into an

agreement with a group of individuals to sell 100 %

equity interests of one of the Company’s wholly-owned subsidiaries, Shavita B.V.

and substantially all of the assets of ARI

Logistics B.V.

As of the date that these financial statements were available to be issued, the transaction was not officially closed

as there was pending consideration to be transferred to the Company.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data