What changed in this filing

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Item 1A. Risk Factors

2024-07-25 compared with 2024-01-09 · 89 added, 42 removed, 2 unchanged (98% of the section changed)

There have been no material changes from the risk factors disclosed in Amendment No.

1 to the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2022, filed with the SEC on January 5, 2024, except as set forth below.

There is substantial doubt about our ability to continue as a going concern through the next 12 months from the date of the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

The Company has incurred net losses of $27.8 million and $158.0 million for the nine months ended September 30, 2023 and the prior year comparable period, respectively.

For the nine months ended September 30, 2023, cash used by operating activities was $1.2 million, and cash used in operating activities for the year ended December 31, 2022 was $26.4 million.

Based on our cash on hand and working capital at September 30, 2023, we may have insufficient cash to fund planned operations into the first quarter of 2024.

As 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 over the next 12 months.

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 evaluation.

Our 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 our liquidity and profitability, which includes, without limitation:

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

▪ 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 equity securities or obtaining debt financing.

There can be no assurance that any such measures will be successful.

If we are not successful in improving our liquidity position and the profitability of our operations, we may need to consider all strategic alternatives, including seeking additional debt or equity capital, reducing or delaying our business activities and strategic initiatives, or selling assets, other strategic transactions and/or other measures, including receivership or, to the extent available, bankruptcy protection.

In addition, the perception that we may not be able to continue as a going concern may cause vendors and customers to choose not to do business with us due to concerns about our ability to meet our contractual obligations.

If we seek additional financing to

fund our operations and there remains substantial doubt about our ability to continue as a going concern, our financing sources may be unwilling to provide additional funding to us on commercially reasonable terms or at all.

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

have been no material changes from the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December

31, 2023, filed with the SEC on July 24, 2024, except as set forth below.

is substantial doubt about our ability to continue as a going concern through the next 12 months from the date of the condensed consolidated

financial statements in this Quarterly Report on Form 10-Q.

Company has incurred net losses of $4.5 million and $8.7 million for the three months ended March 31, 2024 and the prior year comparable

period, respectively.

For the three months ended March 31, 2024, used in operating activities was $0.1 million, and cash used in

operating activities for the year ended December 31, 2023 was $1.8 million.

Based on our cash on hand and working capital at March 31,

2024, we may have insufficient cash to fund planned operations into the third quarter of 2024 .

As 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 over the next 12 months.

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

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 our liquidity and profitability, which includes, without limitation:

Further reducing

operating costs expense by taking additional restructuring actions to align cost with revenue

revenue by introducing new products and acquiring new customers.

on strategic partnerships accretive to margins and operating cash

additional capital through the issuance of equity securities or obtaining debt financing.

can be no assurance that any such measures will be successful.

If we are not successful in improving our liquidity position and the profitability

of our operations, we may need to consider all strategic alternatives, including seeking additional debt or equity capital, reducing

or delaying our business activities and strategic initiatives, or selling assets, other strategic transactions and/or other measures,

including receivership or, to the extent available, bankruptcy protection.

In addition, the perception that we may not be able to continue

as a going concern may cause vendors and customers to choose not to do business with us due to concerns about our ability to meet our

contractual obligations.

If we seek additional financing to fund our operations and there remains substantial doubt about our ability

to continue as a going concern, our financing sources may be unwilling to provide additional funding to us on commercially reasonable

terms or at all.

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

concern uncertainty.

Such adjustments could be material.

We have failed, and may continue to fail, to meet the listing standards of Nasdaq, and as a result our Class A common stock may become delisted, which could have a material adverse effect on the liquidity of our Class A common stock.

If we fail to continue to satisfy the continued listing requirements of Nasdaq, Nasdaq will take steps to delist our Class A common stock.

Such a delisting would likely have a negative effect on the price of our Class A common stock and would impair your ability to sell or purchase our Class A common stock when you wish to do so, as well as adversely affect our ability to issue additional securities and obtain additional financing in the future.

On August 3, 2023, we received a letter from Nasdaq notifying us that we were no longer in compliance with Nasdaq Listing Rule 5450(b)(1)(C) because the market value of our publicly held shares of Class A common stock had fallen below the $5.0 million minimum required for continued listing on the Nasdaq Global Market for a period of at least 30 consecutive business days.

In accordance with Nasdaq Listing Rule 5810(c)(3)(D), we have a grace period of 180 calendar days, until January 30, 2024, to regain compliance with Nasdaq Listing Rule 5450(b)(1)(C).

Compliance can be achieved by meeting the $5.0 million minimum requirement for market value of publicly held shares for a minimum of 10 consecutive business days during the 180-day compliance period.

If we do not regain compliance with Nasdaq Listing Rule 5450(b)(1)(C) by the end of the 180-day grace period, Nasdaq will notify us that the Class A common stock is subject to delisting.

In the event that we receive a notice of delisting, Nasdaq rules permit us to appeal the delisting determination to a Nasdaq Hearings Panel.

Alternatively, we may apply to transfer the listing of the Class A common stock to The Nasdaq Capital Market if we satisfy the continued listing criteria for that market.

On August 21, 2023, we received a deficiency letter from Nasdaq notifying us that, for the last 30 consecutive business days, the closing bid price for our Class A common stock had been below the minimum $1.00 per share required for continued listing on The Nasdaq Global Market pursuant to Nasdaq Listing Rule 5450(a)(1).

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have been given 180 calendar days, or until February 20, 2024, to regain compliance with Rule 5450(a)(1).

If we do not regain compliance with Rule 5450(a)(1) by February 20, 2024, we may be afforded a second 180 calendar day period to regain compliance.

To qualify, we would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, except for the minimum bid price requirement.

In addition, we would be required to notify Nasdaq of our intent to cure the deficiency during the second compliance period.

There are many factors that may adversely affect our minimum bid price.

Many of these factors are outside of our control.

As a result, we may not be able to sustain compliance with Rule 5550(a)(2) in the long term.

On November 22, 2023, we received a written notice from Nasdaq indicating that we were not in compliance with Nasdaq’s continued listing standards because we did not timely file our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.

We had 60 calendar days (or until January 22, 2024) to submit a plan to regain compliance.

We regained compliance with this continued listing standard by filing this Quarterly Report with the Securities and Exchange Commission.

Any potential delisting of our Class A common stock from Nasdaq would likely result in decreased liquidity and increased volatility for our Class A common stock and would adversely affect our ability to raise additional capital or to enter into strategic transactions, in addition to adversely impacting the perception of our financial condition and could cause reputational harm to investors and parties conducting business with us.

Any potential delisting of our Class A common stock from Nasdaq would also make it more difficult for our stockholders to sell our Class A common stock.

In the event of a delisting, we would take actions to restore our compliance with Nasdaq Marketplace Rules, but we can provide no assurances that the listing of our Class A common stock would be restored, that our Class A common stock will remain above the Nasdaq minimum bid price requirement or that we otherwise will remain in compliance with the Nasdaq Marketplace Rules.

have failed, and may continue to fail, to meet the listing standards of Nasdaq, and as a result our Class A common stock may become delisted,

which could have a material adverse effect on the liquidity of our Class A common stock.

we fail to continue to satisfy the continued listing requirements of Nasdaq, such as the corporate governance or public float requirements,

or the minimum closing bid price requirement, Nasdaq will take steps to de-list our Class A common stock.

As a result of several factors,

including but not limited to our financial performance, market sentiment about the cannabis industry, volatility in the financial markets

generally due to the tightening of monetary policy by the Board of Governors of the United States Federal Reserve Bank (the “Federal

Reserve”) and other geopolitical events, events such as the ongoing wars around the world, the per share price of our Class A common

stock has declined below the minimum bid price threshold required for continued listing.

Such a de-listing would likely have a negative

effect on the price of our Class A common stock and would impair your ability to sell or purchase our Class A common stock when you wish

to do so, as well as adversely affect our ability to issue additional securities and obtain additional financing in the future.

August 21, 2023, we received a letter from the staff of Nasdaq indicating that we were not in compliance with Nasdaq Listing Rule 5450(a)(1)

because the closing bid price per share for our Class A common stock had closed below $1.00 for the previous 30 consecutive business

days (the “Minimum Bid Price Requirement”).

We were given 180 days, or until February 20, 2024 to regain compliance with

the Minimum Bid Price Requirement.

We also filed an application to transfer the listing of our Class A common stock from the Nasdaq Global

Market to the Nasdaq Capital Market, which transfer was approved and occurred on February 9, 2024.

As a result of the transfer, we became

eligible to request an additional an additional 180-day compliance period.

February 21, 2024, Nasdaq notified us in writing that while we had not regained compliance with the Minimum Bid Price Requirement, we

were eligible for an additional 180-day compliance period, or until August 19, 2024, to regain compliance with the Minimum Bid Price

Nasdaq’s determination was based on us having met the continued listing requirement for market value of publicly held

shares and all other applicable requirements for initial listing on The Nasdaq Capital Market, with the exception of the Minimum Bid

Price Requirement, and on our written notice to Nasdaq of our intention to cure the deficiency during the second compliance period by

effecting a reverse stock split, if necessary.

we do not regain compliance during the second 180-day period, then Nasdaq will notify us of its determination to delist our Class A common

stock, at which point we would have an opportunity to appeal the delisting determination to a hearings panel.

We would remain listed

on Nasdaq pending the hearings panel’s decision.

There can be no assurance that, if we do appeal the delisting determination by

Nasdaq to the hearings panel, that such appeal would be successful.

January 24, 2024, Gina Collins gave notice of her resignation from our Board of Directors and from each committee of the Board, effective

Collins was an independent director, and as a result of her resignation, we no longer comply with the majority independent

board requirement of Nasdaq as set forth in Nasdaq Listing Rule 5605(b)(1) because independent directors do not comprise a majority of

the Board of Directors, and Nasdaq’s audit committee requirements as set forth in Nasdaq Listing Rule 5605(c)(2)(A) because the

Audit Committee of the Board of Directors is not comprised of at least three independent directors.

January 29, 2024, in accordance with Nasdaq Listing Rules, we notified Nasdaq of Ms.

Collins’ resignation and the resulting non-compliance.

On January 30, 2024, we received a notice from Nasdaq acknowledging the fact that we do not meet the requirements of such rules.

In accordance

with Nasdaq Listing Rules 5605(b)(1)(A) and 5605(c)(4), to regain compliance with the Nasdaq Listing Rules, we have until the earlier

of our next annual stockholders meeting or January 24, 2025.

April 18, 2024, we received a notice from Nasdaq stating that because we had not yet filed our Annual Report on Form 10-K for the fiscal

year ended December 31, 2023, we were no longer in compliance with Nasdaq Listing Rule 5250(c)(1).

Nasdaq Listing Rule 5250(c)(1) requires

listed companies to timely file all required periodic financial reports with the Securities and Exchange Commission.

May 21, 2024, we received a notice from Nasdaq stating that because we had not yet filed our Quarterly Report on Form 10-Q for the fiscal

quarter ended March 31, 2024, we were no longer in compliance with Nasdaq Listing Rule 5250(c)(1).

Company had 60 calendar days from April 18, 2024, or until June 17, 2024, to regain compliance

by filing the Form 10-K and the Form 10-Q or to submit to Nasdaq a plan to regain compliance with the Nasdaq Listing Rules.

We timely submitted the plan to regain compliance to Nasdaq and Nasdaq granted us additional time to file the Form 10K and 10Q and with

this filing will have filed both the 10K and 10Q within the additional time period granted.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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-Q

Item 1A. Risk Factors