What changed in this filing

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Item 1A. Risk Factors

2025-03-21 compared with 2024-07-19 · 315 added, 323 removed, 1579 unchanged (29% of the section changed)

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Both domestic and international markets

experienced significant inflationary pressures in 2022 and inflation rates in the U.S.

are currently expected to continue at elevated

levels for the near-term.

In addition, the Federal Reserve has raised, and is expected to continue to raise, interest rates in response

to concerns about inflation, which, coupled with reduced government spending and volatility in financial markets, may have the effect

of further increasing economic uncertainty and heightening these risks.

Interest rate increases or other government actions taken to

reduce inflation could also result in an economic recession.

experienced significant inflationary pressures in 2023 and 2024 and inflation rates in the U.S.

are currently expected to continue at

elevated levels for the near-term.

In addition, the Federal Reserve has raised, and is expected to continue to raise, interest rates

in response to concerns about inflation, which, coupled with reduced government spending and volatility in financial markets, may have

the effect of further increasing economic uncertainty and heightening these risks.

Interest rate increases or other government actions

taken to reduce inflation could also result in an economic recession.

material decline in the economic conditions affecting consumers, which results in a reduction in disposable income for the average consumer,

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on our business, results of operations and financial condition.

ability to fund our capital requirements will depend on many factors, and if we are unsuccessful in increasing sales and generating positive

cash flows we may have to further reduce our costs by curtailing future operations to continue as a business.

ability to fund our capital requirements out of our available cash and cash generated from our operations in the future will depend on

many factors, but largely on our ability to (i) increase sales of our products, (ii) raise capital on favorable terms, and (iii) generate

positive cash flow and/or profits from our operations.

If we are not successful in generating needed funds from operations or in equity

or debt capital raising transactions, we may need to further reduce our costs, which measures could include selling or consolidating

certain operations or assets, and delaying, canceling or scaling back product development and marketing programs.

In addition, our low cash balance and negative cash flow may cause an inability

to pay our vendors on time, purchase all the inventory we need, and meet various other obligations going forward.

Also, if we are not

successful in generating funds from operations or from capital-raising transactions, substantial doubt may be raised about our status

as a going concern.

we are required to seek additional financing sources, they may not be available to us on attractive terms if at all and could restrict

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to limited access to the debt markets, we have been required to issue equity at prices that are dilutive to stockholders.

We may be forced to continue to seek equity capital at dilutive prices through other means if other financing is not available to us to fund our working capital needs.

In the past, because of the nature of our industry,

we have had difficulties establishing relationships with certain financial institutions and may continue to face such difficulties.

a result, indebtedness or other forms of financing may not be available to us on attractive terms or at all.

Furthermore, we may have

to seek financing from non-traditional sources such as private equity and hedge funds, which may require us to give up significant governance

or other rights or agree to economic and other terms that are not favorable.

We may be forced

to continue to seek equity capital at dilutive prices through other means if other financing is not available to us to fund our working

capital needs.

In the past, because of the nature of our industry, we have had difficulties establishing relationships with certain financial

institutions and may continue to face such difficulties.

As a result, indebtedness or other forms of financing may not be available to

us on attractive terms or at all.

Furthermore, we may have to seek financing from non-traditional sources such as private equity and

hedge funds, which may require us to give up significant governance or other rights or agree to economic and other terms that are not

addition, future financing agreements we may enter into in the future may contain customary negative covenants and other financial and

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us to satisfy minimum financial coverage ratios, minimum net worth requirements, maximum leverage ratios, or other financial covenants.

We had cash available

as of December 31, 2023 of $0.5 million.

In addition, our revenue for the year ended December 31, 2023 was down from prior years and

has declined in recent quarters.

If we are unable to access additional liquidity through successful execution of our cost cutting strategic

initiatives and revenue goals, we may have significant cash constraints, which would have a material adverse impact on our business,

results of operations and ability to pay our debts as they come due.

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.

had cash available as of December 31, 2024, of $0.9 million.

In addition, our revenue for the year ended December 31, 2024, was down

from prior years and has declined in recent quarters.

If we are unable to access additional liquidity through successful execution of

our cost cutting strategic initiatives and revenue goals, we may have significant cash constraints, which would have a material adverse

impact on our business, results of operations and ability to pay our debts as they come due.

We have failed in the past, and fail in the

future to meet the listing standards of Nasdaq, and as a result our Class A common stock could 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.

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)

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As a result of the transfer, we became

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

eligible to request 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

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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

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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.

with Nasdaq Listing Rules 5605(b)(1)(A) and 5605(c)(4), to regain compliance with the Nasdaq Listing Rules .

With the resignation

Snyder, we were notified on July 26, 2024 that we had regained compliance with the Independent Director Rule.

We regained compliance

with the requirement that the Audit Committee of the Board of Directors be comprised of three independent directors on December 31, 2024

with the addition of Mr.

Howe to the Audit Committee.

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

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

We were notified by Nasdaq that we

had regained compliance on July 26, 2024.

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).

were notified by Nasdaq that we had regained compliance on July 26, 2024.

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.

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

June 26, 2024, we were notified by Nasdaq that a filing extension was granted through July 31, 2024, for our Annual Report on Form 10-K

and Quarterly Report on Form 10-Q.

July 26, 2024, we received a notification by Nasdaq that we had regained compliance with the Independent Director Rule, and due to

the filing of our Annual Report on Form 10-K and Quarterly Report on Form 10-Q was back in compliance with the Nasdaq Filing

August 26, 2024, we received a notice from Nasdaq stating that we had met the minimum bid requirements as of August 23, 2024, and were

back in compliance with Nasdaq minimum bid requirements.

narrow margins may magnify the impact of variations in operating costs and of adverse or unforeseen events on operating results.

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products comprise a significant portion of our product portfolio.

Many of these products have only recently been introduced to the

market and are at an early stage of development.

These products represent core components of a niche market that is evolving

rapidly, is characterized by a number of market participants and is subject to regulatory oversight and a potentially fluctuating

regulatory framework.

Rapid growth in the use of, and interest in, vaporizer products is recent, and may not continue on a lasting

The demand and market acceptance for these products is subject to a high level of uncertainty, including, but not limited to,

changes in governmental regulation, developments in product technology, perceived safety and efficacy of our products, perceived

advantages of competing products and sale and use of materials that can be vaporized, including in the expanding legal state

cannabis markets.

Therefore, we are subject to many of the business risks associated with a new enterprise in a niche market.

Continued technical evolution, market uncertainty, evolving regulation and the resulting risk of failure of our new and existing

product offerings in this market could have a material adverse effect on our ability to build and maintain market share and on our

business, results of operations and financial condition.

Further, there can be no assurance that we will be able to continue to

compete effectively in this marketplace.

Many of these products have only recently been introduced to the market

and are at an early stage of development.

These products represent core components of a niche market that is evolving rapidly, is characterized

by a number of market participants and is subject to regulatory oversight and a potentially fluctuating regulatory framework.

in the use of, and interest in, vaporizer products is recent and may not continue on a lasting basis.

The demand and market acceptance

for these products is subject to a high level of uncertainty, including, but not limited to, changes in governmental regulation, developments

in product technology, perceived safety and efficacy of our products, perceived advantages of competing products and sale and use of

materials that can be vaporized, including in the expanding legal state cannabis markets.

Therefore, we are subject to many of the business

risks associated with a new enterprise in a niche market.

Continued technical evolution, market uncertainty, evolving regulation and

the resulting risk of failure of our new and existing product offerings in this market could have a material adverse effect on our ability

to build and maintain market share and on our business, results of operations and financial condition.

Further, there can be no assurance

that we will be able to continue to compete effectively in this marketplace.

depend on third-party suppliers for our products and may experience supply shortages which could have a material adverse effect on our

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financial condition.

significant percentage of our revenue is dependent on sales of products from a relatively small number of key suppliers, and a decline

in sales of products from these suppliers could materially harm our business.

A significant percentage of our revenue is dependent on sales of products, primarily vaporizers and related components,

that we purchase from a small number of key suppliers, including CCELL, Storz & Bickel, Grenco Science and Davinci.

For example, products

manufactured by CCELL represented approximately 41.5% and 39.1% of our net sales in the years ended December 31, 2023 and 2022, respectively,

and products manufactured by Storz & Bickel represented approximately 5.5% of our net sales in both years ended December 31, 2023

Products manufactured by PAX represented approximately 3.6% and 3.3% of our net sales in the years ended December 31, 2023 and

2022, respectively, and products manufactured by Davinci represented approximately 7.5% and 4.0% of our net sales in the years ended December

31, 2023 and 2022, respectively.

A decline in sales of any of our key suppliers’ products, whether due to decreases in supply of,

or demand for, their products, termination of our agreements with them, regulatory actions or otherwise, could have a material adverse

impact on our sales and earnings and adversely affect our business.

is uncertainty related to the regulation of vaporization products and certain other consumption accessories.

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cannabis and other material, including electronic cigarettes, rolling papers and glassware, in light of the potential for dual use with

Through amendments to the FFDCA, the Tobacco Control Act established, by statute, that the FDA has oversight over

specific types of tobacco products (cigarettes, cigarette tobacco, roll-your-own (“RYO”) tobacco, and smokeless tobacco) and

granted the FDA the authority to “deem” other types of tobacco products as subject to the statutory requirements.

to establishing authority, defining key terminology, and setting adulteration and misbranding standards, the Tobacco Control Act established

FDA’s authority over tobacco products in a number of areas such as:

amendments to the FFDCA, the Tobacco Control Act established, by statute, that the FDA has oversight over specific types of tobacco products

(cigarettes, cigarette tobacco, roll-your-own (“RYO”) tobacco, and smokeless tobacco) and granted the FDA the authority to

“deem” other types of tobacco products as subject to the statutory requirements.

In addition to establishing authority, defining

key terminology, and setting adulteration and misbranding standards, the Tobacco Control Act established FDA’s authority over tobacco

products in a number of areas such as:

submission of health information to the FDA;

registration with

premarket authorization requirements;

registration with the FDA;

premarket authorization

requirements;

good manufacturing practice requirements;

tobacco product standards;

notification, recall,

corrections, and removals;

records and reports;

notification, recall, corrections, and removals;

marketing considerations and restrictions;

post-market surveillance and studies;

and warnings;

and recordkeeping and tracking.

Although the vast majority of our vaporizer products are not subject to these regulations

because they are not intended for use with tobacco or nicotine, changes in law, regulation, or policy that subject a greater portion of

our products to these regulations could occur.

labeling and warnings;

and recordkeeping

and tracking.

Although the vast majority of our vaporizer products are not subject to these regulations because they are not intended

for use with tobacco or nicotine, changes in law, regulation, or policy that subject a greater portion of our products to these regulations

a final rule effective August 8, 2016 (“Deeming Rule”), the FDA deemed all products that meet the Tobacco Control Act’s

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are marketed unlawfully.

Deemed new tobacco products include, among other things:

products such as electronic cigarettes, electronic cigars,

electronic hookahs, vape pens, certain vaporizers and e-liquids and their components or parts (such as tanks, coils and batteries) (“ENDS”).

The FDA’s interpretation of components and parts of a tobacco product includes any assembly of materials intended or reasonably

expected to be used with or for the human consumption of a tobacco product.

new tobacco products include, among other things:

products such as electronic cigarettes, electronic cigars, electronic hookahs, vape

pens, certain vaporizers and e-liquids and their components or parts (such as tanks, coils and batteries) (“ENDS”).

interpretation of components and parts of a tobacco product includes any assembly of materials intended or reasonably expected to be

used with or for the human consumption of a tobacco product.

In a 2017 decision of the D.C.

Circuit court, the court upheld

the FDA’s authority to regulate ENDS even though they do not actually contain tobacco, and even if the products could be used with

nicotine-free e-liquids.

The Tobacco Control Act and FDA’s implementation of regulations require regulatory approvals before certain

products may be sold and restrict the way tobacco product manufacturers, retailers, and distributors can advertise and promote tobacco

products, including a prohibition against free samples or the use of vending machines, requirements for presentation of warning information,

and age verification of purchasers.

Circuit court, the court upheld the FDA’s

authority to regulate ENDS even though they do not actually contain tobacco, and even if the products could be used with nicotine-free

Tobacco Control Act and FDA’s implementation of regulations require regulatory approvals before certain products may be sold and

restrict the way tobacco product manufacturers, retailers, and distributors can advertise and promote tobacco products, including a prohibition

against free samples or the use of vending machines, requirements for presentation of warning information, and age verification of purchasers.

tobacco products are also subject to the other requirements of the Tobacco Control Act, such as that they not be adulterated or misbranded.

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a material adverse effect on our business, results of operations, and financial condition.

Europe, several countries’ laws implementing the European Union Tobacco Products Directive (“TPD”) impose strict regulations

on the approval, sale, and advertising of e-cigarettes.

While we do not sell or market any material amount of products that we believe

fall within the definition of e-cigarettes in Europe, if vaporization products we sell are found to fall

within the scope of laws implementing the TPD, we would be unable to continue selling those products

in certain countries, which may have a material adverse effect on our business, results of operations, and financial condition.

may be unable to identify or contract with new suppliers in the event of a disruption to our supply.

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Changes in our customer mix may

result from geographic expansion or contractions, mergers and acquisitions among our customer base, legislative, regulatory or

enforcement priority changes affecting the products we distribute, selling activities within current geographic markets and targeted

selling activities to new customer sectors.

For example, our merger with Kushco has shifted our customer mix to include a greater

concentration of customers who engage in the cultivation, processing, and/or sale of cannabis.

Changes in our product mix may result

from marketing activities to existing customers, the needs of existing and prospective customers and from regulatory and legislative

Changes in our competition mix may result from new competitors entering into our business segment or existing

competitors growing their operations.

If customer demand for lower-margin products increases and demand for higher-margin products

decreases, our business, results of operations and financial condition may suffer.

result from geographic expansion or contractions, mergers and acquisitions among our customer base, legislative, regulatory or enforcement

priority changes affecting the products we distribute, selling activities within current geographic markets and targeted selling activities

to new customer sectors.

For example, our merger with Kushco has shifted our customer mix to include a greater concentration of customers

who engage in the cultivation, processing, and/or sale of cannabis.

Changes in our product mix may result from marketing activities to

existing customers, the needs of existing and prospective customers and from regulatory and legislative changes.

Changes in our competition

mix may result from new competitors entering into our business segment or existing competitors growing their operations.

demand for lower-margin products increases and demand for higher-margin products decreases, our business, results of operations and financial

condition may suffer.

a material portion of our revenues are derived from sales to consumers indirectly through third-party retailers who operate traditional

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may not be able to establish sustainable relationships with large retailers or regional or national chains.

connection with efforts to enter new sales channels, including large retailers and chains, we may not be able to develop these

relationships or continue to maintain relationships with these large retailers or national chains.

Our inability to develop and

sustain relationships with large retailers and chains may impede our ability to develop brand and product recognition and increase

sales volume and, ultimately, require us to continue to rely on local and more fragmented sales channels, which may have a material

adverse effect on our business, results of operations and financial condition.

In addition, if we are unable to develop or maintain

relationships with large retailers and national chains and such large retailers or chains take market share from the smaller local

and more fragmented sales channels, our business, results of operations and financial condition will be adversely

connection with efforts to enter new sales channels, including large retailers and chains, we may not be able to develop these relationships

or continue to maintain relationships with these large retailers or national chains.

Our inability to develop and sustain relationships

with large retailers and chains may impede our ability to develop brand and product recognition and increase sales volume and, ultimately,

require us to continue to rely on local and more fragmented sales channels, which may have a material adverse effect on our business,

results of operations and financial condition.

In addition, if we are unable to develop or maintain relationships with large retailers

and national chains and such large retailers or chains take market share from the smaller local and more fragmented sales channels, our

business, results of operations and financial condition will be adversely impacted.

products face intense media attention and public pressure.

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and enacted in numerous jurisdictions.

As discussed under the heading “Regulatory Developments” above, there has been increasing activity on the

state, provincial and local levels with respect to scrutiny of vaporizer products.

State and local governmental bodies across the United

States have indicated that vaporization products and certain other consumption accessories may become subject to new laws and regulations

at the state and local levels.

For example, in January 2015, the California Department of Health declared electronic cigarettes and certain

other vaporizer products a health threat that should be strictly regulated like tobacco products.

Further, many states and cities have

enacted regulations that require retailers to obtain a tobacco retail license in order to sell electronic cigarettes and vaporizer products.

Many states, provinces and some cities have passed laws restricting the sale of electronic cigarettes and certain other vaporizer products.

In March 2023, new federal legislation granted the FDA regulatory authority over synthetic nicotine, making all synthetic nicotine products

without a marketing order from the FDA illegal as of July 13th, 2022.

discussed under the heading “Regulatory Developments” above, there has been increasing activity on the state, provincial

and local levels with respect to scrutiny of vaporizer products.

State and local governmental bodies across the United States have indicated

that vaporization products and certain other consumption accessories may become subject to new laws and regulations at the state and

local levels.

For example, in January 2015, the California Department of Health declared electronic cigarettes and certain other vaporizer

products a health threat that should be strictly regulated like tobacco products.

Further, many states and cities have enacted regulations

that require retailers to obtain a tobacco retail license in order to sell electronic cigarettes and vaporizer products.

provinces and some cities have passed laws restricting the sale of electronic cigarettes and certain other vaporizer products.

2023, new federal legislation granted the FDA regulatory authority over synthetic nicotine, making all synthetic nicotine products without

a marketing order from the FDA illegal as of July 13th, 2022.

If one or more states or provinces from which we generate or anticipate

generating significant sales of vaporizer products bring actions that prevent us from selling certain or all of our vaporizer products,

we would be required to cease sales and distribution of certain products to those states, which could have a material adverse effect on

our business, results of operations and financial condition.

Additionally, if one or more states or provinces from which we generate or

anticipate generating significant sales of vaporizer products bring actions that require us to obtain certain licenses, approvals or permits,

and if we are not able to obtain the necessary licenses, approvals or permits for financial reasons or otherwise and/or any such license,

approval or permit is determined to be overly burdensome to us, then we may be required to cease sales and distribution of our products

to those states, which could have a material adverse effect on our business, results of operations and financial condition.

we would be required to cease sales and distribution of certain products to those states, which could have a material adverse effect

on our business, results of operations and financial condition.

Additionally, if one or more states or provinces from which we generate

or anticipate generating significant sales of vaporizer products bring actions that require us to obtain certain licenses, approvals

or permits, and if we are not able to obtain the necessary licenses, approvals or permits for financial reasons or otherwise and/or any

such license, approval or permit is determined to be overly burdensome to us, then we may be required to cease sales and distribution

of our products to those states, which could have a material adverse effect on our business, results of operations and financial condition.

states, provinces and cities have already restricted the use of electronic cigarettes and vaporizer products in smoke free venues.

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Wayfair, Inc.

et al , or Wayfair, that online

sellers can be required to collect sales and use tax despite not having a physical presence in the buyer’s state.

In response to

Wayfair, or otherwise, states or local governments may adopt, or begin to enforce, laws requiring us to calculate, collect, and remit

taxes on sales in their jurisdictions.

A successful assertion by one or more states requiring us to collect taxes where we presently

do not do so, or to collect more taxes in a jurisdiction in which we currently do collect some taxes, could result in substantial tax

liabilities, including taxes on past sales, as well as penalties and interest.

The imposition by state governments or local governments

of sales tax collection obligations on out-of-state sellers could also create additional administrative burdens for us, put us at a competitive

disadvantage if they do not impose similar obligations on our competitors and decrease our future sales, which could have a material

adverse impact on our business, financial condition and results of operations.

et al , or Wayfair, that online sellers

can be required to collect sales and use tax despite not having a physical presence in the buyer’s state.

In response to Wayfair,

or otherwise, states or local governments may adopt, or begin to enforce, laws requiring us to calculate, collect, and remit taxes on

sales in their jurisdictions.

A successful assertion by one or more states requiring us to collect taxes where we presently do not do

so, or to collect more taxes in a jurisdiction in which we currently do collect some taxes, could result in substantial tax liabilities,

including taxes on past sales, as well as penalties and interest.

The imposition by state governments or local governments of sales tax

collection obligations on out-of-state sellers could also create additional administrative burdens for us, put us at a competitive disadvantage

if they do not impose similar obligations on our competitors and decrease our future sales, which could have a material adverse impact

on our business, financial condition and results of operations.

may become involved in regulatory or agency proceedings, investigations, prosecutions, and audits.

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planned operating expenditures each quarter are based on sales forecasts for the quarter.

If our sales do not meet expectations in

any given quarter, our operating results for that quarter may be materially adversely affected.

We believe that period-to-period

comparisons of our operating results are not necessarily a good indication of our future performance.

In addition, our results in

any quarterly period are not necessarily indicative of results to be expected for a full fiscal year.

In future quarters, our

operating results may be below the expectations of public market analysts or investors and, as a result, the market price of our

Class A common stock could be materially adversely affected.

If our sales do not meet expectations in any

given quarter, our operating results for that quarter may be materially adversely affected.

We believe that period-to-period comparisons

of our operating results are not necessarily a good indication of our future performance.

In addition, our results in any quarterly period

are not necessarily indicative of results to be expected for a full fiscal year.

In future quarters, our operating results may be below

the expectations of public market analysts or investors and, as a result, the market price of our Class A common stock could be materially

adversely affected.

defects could increase our expenses, damage our reputation or expose us to liability.

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We face the following risks with respect to our insurance coverage:

may not be able to continue to obtain insurance on commercially reasonable terms;

may incur losses from interruption of our business that exceed our insurance coverage;

may be faced with types of liabilities that will not be covered adequately or at all by our insurance;

insurance carriers may not be able to meet their obligations under the policies;

dollar amount of any liabilities may exceed our policy limits.

we may not be able to continue to obtain insurance on commercially reasonable terms;

we may incur losses from interruption of our business that exceed our insurance coverage;

we may be faced with types of liabilities that will not be covered adequately or at all by our insurance;

our insurance carriers may not be able to meet their obligations under the policies;

the dollar amount of any liabilities may exceed our policy limits.

a partially uninsured claim, if successful and of significant size, could have a material adverse effect on us.

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on information technology means a significant disruption could affect our communications and operations.

increasingly rely on information technology systems for our internal communications, controls, reporting and relations with

customers, vendors and suppliers, and information technology is becoming a significantly important tool for our sales staff.

marketing and distribution strategy is dependent upon our ability to closely monitor consumer and market trends on a highly

specified level, for which we are reliant on our sophisticated data tracking systems, which are susceptible to disruption or

In addition, our reliance on information technology exposes us to cyber-security risks, which could have a material adverse

effect on our ability to compete.

Security and privacy breaches may expose us to liability and cause us to lose customers, or may

disrupt our relationships and ongoing transactions with other entities with whom we contract throughout our supply chain.

failure of our information systems to function as intended, or the penetration by outside parties intent on disrupting business

processes, could result in significant costs, loss of revenue, assets or personal or other sensitive data and reputational

increasingly rely on information technology systems for our internal communications, controls, reporting and relations with customers,

vendors and suppliers, and information technology is becoming a significantly important tool for our sales staff.

Our marketing and distribution

strategy is dependent upon our ability to closely monitor consumer and market trends on a highly specified level, for which we are reliant

on our sophisticated data tracking systems, which are susceptible to disruption or failure.

In addition, our reliance on information

technology exposes us to cyber-security risks, which could have a material adverse effect on our ability to compete.

Security and privacy

breaches may expose us to liability and cause us to lose customers, or may disrupt our relationships and ongoing transactions with other

entities with whom we contract throughout our supply chain.

The failure of our information systems to function as intended, or the penetration

by outside parties intent on disrupting business processes, could result in significant costs, loss of revenue, assets or personal or

other sensitive data and reputational harm.

security poses a risk to our e-commerce sales.

present, we generate a portion of our sales through e-commerce sales on our own websites.

We manage our websites and e-commerce platform internally and, as a result, any compromise of our security or misappropriation

of proprietary information could have a material adverse effect on our business, results of operations and financial condition.

on encryption and authentication technology licensed from third parties to provide the security and authentication necessary to effect

secure Internet transmission of confidential information, such as credit and other proprietary information.

Advances in computer capabilities,

new discoveries in the field of cryptography or other events or developments may result in a compromise or breach of the technology used

by us to protect client transaction data.

Anyone who is able to circumvent our security measures could misappropriate proprietary information

or cause material interruptions in our operations.

We may be required to expend significant capital and other resources to protect against

security breaches or to minimize problems caused by security breaches.

To the extent that our activities or the activities of others

involve the storage and transmission of proprietary information, security breaches could damage our reputation and expose us to a risk

of loss and/or litigation.

Our security measures may not prevent security breaches.

Our failure to prevent these security breaches may

result in consumer distrust and may adversely affect our business, results of operations and financial condition.

We manage our websites and e-commerce platform

internally and, as a result, any compromise of our security or misappropriation of proprietary information could have a material adverse

effect on our business, results of operations and financial condition.

We rely on encryption and authentication technology licensed from

third parties to provide the security and authentication necessary to effect secure Internet transmission of confidential information,

such as credit and other proprietary information.

Advances in computer capabilities, new discoveries in the field of cryptography or

other events or developments may result in a compromise or breach of the technology used by us to protect client transaction data.

who is able to circumvent our security measures could misappropriate proprietary information or cause material interruptions in our operations.

We may be required to expend significant capital and other resources to protect against security breaches or to minimize problems caused

by security breaches.

To the extent that our activities or the activities of others involve the storage and transmission of proprietary

information, security breaches could damage our reputation and expose us to a risk of loss and/or litigation.

Our security measures may

not prevent security breaches.

Our failure to prevent these security breaches may result in consumer distrust and may adversely affect

our business, results of operations and financial condition.

and privacy breaches may expose us to liability and cause us to lose customers.

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the methodologies of internet search engines are modified, traffic to our websites and corresponding consumer origination volumes could

depend in part on various internet search engines, including Google ® and others to direct a significant amount of traffic

to our websites.

Our ability to maintain the number of visitors directed to our websites by search engines through which we distribute

our content is not entirely within our control.

Our competitors’ search engine optimization (“SEO”) efforts may result

in their websites receiving a higher search result page ranking than ours, or Internet search engines could revise their methodologies,

which could adversely affect the placement of our search result page ranking.

If search engine companies modify their search algorithms

in ways that are detrimental to our consumer growth or in ways that make it harder for our customers to access or use our websites, or

if our competitors’ SEO efforts are more successful than ours, our consumer engagement and number of consumers could decline.

depend in part on various internet search engines, including Google® and others to direct a significant amount of traffic to our

Our ability to maintain the number of visitors directed to our websites by search engines through which we distribute our content

is not entirely within our control.

Our competitors’ search engine optimization (“SEO”) efforts may result in their

websites receiving a higher search result page ranking than ours, or Internet search engines could revise their methodologies, which

could adversely affect the placement of our search result page ranking.

If search engine companies modify their search algorithms in

ways that are detrimental to our consumer growth or in ways that make it harder for our customers to access or use our websites, or if

our competitors’ SEO efforts are more successful than ours, our consumer engagement and number of consumers could decline.

reduction in the number of consumers directed to our websites could negatively affect our ability to earn revenue.

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Thus, we bear certain foreign exchange rate risk for certain of our inventory purchases.

In addition, we recently expanded our footprint

in Canada and Europe, and as part of our strategy, we may undertake further international expansion.

As a result, in the future, we may

be more sensitive to the risks of exchange rate fluctuations, which may have a material adverse effect on our business, results of operations

and financial condition.

In addition, and as part of our strategy, we

may undertake further international expansion.

As a result, in the future, we may be more sensitive to the risks of exchange rate fluctuations,

which may have a material adverse effect on our business, results of operations and financial condition.

are conflicts of interest among certain of our executive officers and our stockholders.

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million and $0.0 million in products and supplies to Blum Holdings, Inc.

(“Blum”) in the years ended December 31,

(“Blum”) in the years ended December 31, 2024 and

2023, respectively.

Total gross accounts receivable due from Blum were approximately $0.4 million and $0.4 million as of December 31,

2024 and 2023, respectively.

Total gross accounts receivable due from Blum were approximately $0.4 million and $0.4 million as of

December 31, 2023 and 2022, respectively.

Nicholas Kovacevich, our former Chief Corporate Development Officer, and a member of our Board

until January 6, 2023 is an investor in Blum and a member of its board of directors.

we are not aware of any conflict that has arisen or any transaction that has not been conducted on an arm’s length basis to

date, during the year, Mr.

Kovacevich may have had conflicting fiduciary duties between us, Blum and his own personal financial

interests, for which he must recuse himself from certain of our decision-making processes.

Nicholas Kovacevich, our former Chief Corporate Development Officer, and a member of our Board until January

6, 2023 is an investor in Blum and a member of its board of directors.

we are not aware of any conflict that has arisen or any transaction that has not been conducted on an arm’s length basis to date,

during the year, Mr.

Kovacevich may have had conflicting fiduciary duties between us, Blum and his own personal financial interests,

for which he must recuse himself from certain of our decision-making processes.

do not allow a conflicted shareholder, director or executive officer to vote on matters wherein a conflict may be perceived.

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and financial condition could be adversely affected.

tariffs and the evolving trade policy dispute between the United States and China may adversely affect our business.

tariffs and the evolving trade policy dispute between the United States, China and other nations may adversely affect our business.

2018, the United States imposed significant tariffs on steel and aluminum imports from a number of countries, including China.

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which we participate.

Many of the products we sell, including without limitation, certain vaporizer products, aluminum grinders,

paper products and plastic products, are subject to the 25 percent tariff and such tariff, along with resultant price increases, may

negatively impact our pricing and customer demand for these products.

A “trade war” between the United States and China

or other governmental action related to tariffs or international trade agreements or policies has the potential to adversely impact

demand for our products, our costs, customers, suppliers and/or the United States economy or certain sectors thereof and, thus, to

adversely impact our businesses and results of operations.

Many of the products we sell, including without limitation, certain vaporizer products, aluminum grinders, paper

products and plastic products, are subject to the 25 percent tariff and such tariff, along with resultant price increases, may negatively

impact our pricing and customer demand for these products.

A “trade war” between the United States, China and other nations

or other governmental action related to tariffs or international trade agreements or policies has the potential to adversely impact demand

for our products, our costs, customers, suppliers and/or the United States economy or certain sectors thereof and, thus, to adversely

impact our businesses and results of operations.

failure to comply with certain environmental, health and safety regulations could materially and adversely affect our business.

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as a defendant in lawsuits asserting claims for large amounts of damages, which in turn could lead to significant liabilities.

We are subject to risks associated with public

health crises, such as pandemics and epidemics, , which may have a material adverse effect on our business.

The nature and extent of future

impacts are highly uncertain and unpredictable.

We are subject to risks associated

with public health crises, such as pandemics and epidemics and the emergence of new viruses may result in new governmental lockdowns,

quarantine requirements or other restrictions to slow the spread of the virus.

In addition, any such measures could also impact the global

economy more broadly, for example by leading to further economic slowdowns.

If we or any of the third parties with whom we engage, including

the suppliers, manufacturers and other third parties in our global supply chain, were to experience shutdowns or other significant business

disruptions, our ability to conduct our business in the manner presently planned could be materially and negatively impacted.

The scope and duration of any

future public health crisis, the pace at which government restrictions are imposed and lifted, the scope of additional actions taken to

mitigate the spread of disease, global vaccination and booster rates, the speed and extent to which global markets and utilization rates

for our products fully recover from the disruptions caused by such a public health crisis, and the impact of these factors on our business,

financial condition and results of operations, will depend on future developments that are highly uncertain and cannot be predicted with

To the extent a new

pandemic or other public health crises adversely affect our operations and global economic conditions more generally, it may also have

the effect of heightening many of the other risks described herein.

are subject to risks associated with public health crises, such as pandemics and epidemics, which may have a material adverse effect

on our business.

The nature and extent of future impacts are highly uncertain and unpredictable.

are subject to risks associated with public health crises, such as pandemics and epidemics and the emergence of new viruses may result

in new governmental lockdowns, quarantine requirements or other restrictions to slow the spread of the virus.

In addition, any such measures

could also impact the global economy more broadly, for example by leading to further economic slowdowns.

If we or any of the third parties

with whom we engage, including the suppliers, manufacturers and other third parties in our global supply chain, were to experience shutdowns

or other significant business disruptions, our ability to conduct our business in the manner presently planned could be materially and

negatively impacted.

scope and duration of any future public health crisis, the pace at which government restrictions are imposed and lifted, the scope of

additional actions taken to mitigate the spread of disease, global vaccination and booster rates, the speed and extent to which global

markets and utilization rates for our products fully recover from the disruptions caused by such a public health crisis, and the impact

of these factors on our business, financial condition and results of operations, will depend on future developments that are highly uncertain

and cannot be predicted with confidence.

the extent a new pandemic or other public health crises adversely affect our operations and global economic conditions more generally,

it may also have the effect of heightening many of the other risks described herein.

Related to Our Organizational Structure

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claims as a stockholder will be structurally subordinated to all existing and future liabilities and obligations of the Operating Company.

Therefore, in the event of our bankruptcy, liquidation or reorganization, our assets and those of the Operating Company and its subsidiaries

Therefore, in the event of a bankruptcy, liquidation or reorganization, our assets and those of the Operating Company and its subsidiaries

will be available to satisfy the claims of our stockholders only after all of our and Greenlane Holdings, LLC’s and its subsidiaries’

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Operating Company is treated as a partnership for U.S.

federal income tax purposes and, as such, is not subject to any entity-level

federal income tax purposes and, as such, is not subject to any entity-level U.S.

federal income tax.

Instead, taxable income is allocated to holders of Common Units.

As of December 31, 2023 and 2022, we hold

all of the outstanding Common Units.

As of December 31, 2024 and 2023, we hold all of

the outstanding Common Units.

Accordingly, we will incur income taxes on any net taxable income of the Operating Company.

Under the terms of the Fourth Amended and Restated Agreement of the Operating Company (the “Operating Agreement”), the

Operating Company is obligated to make tax distributions to holders of Common Units.

In addition to tax expenses, we will also incur

expenses related to our operations which we expect could be significant.

We intend, as its manager and sole member, to cause the

Operating Company to make cash distributions to us in an amount sufficient to (i) fund our tax obligations in respect of taxable

income allocated to us and (ii) cover our operating expenses.

However, the Operating Company’s ability to make such

distributions may be subject to various limitations and restrictions, such as restrictions on distributions that would either

violate any contract or agreement to which the Operating Company is then a party, including debt agreements, or any applicable law,

or that would have the effect of rendering the Operating Company insolvent.

If we do not have sufficient funds to pay tax or other

liabilities or to fund our operations, we may have to borrow funds, which could materially adversely affect our liquidity and

financial condition and subject us to various restrictions imposed by any such lenders.

Under the terms

of the Fourth Amended and Restated Agreement of the Operating Company (the “Operating Agreement”), the Operating Company

is obligated to make tax distributions to holders of Common Units.

In addition to tax expenses, we will also incur expenses related to

our operations which we expect could be significant.

We intend, as its manager and sole member, to cause the Operating Company to make

cash distributions to us in an amount sufficient to (i) fund our tax obligations in respect of taxable income allocated to us and (ii)

cover our operating expenses.

However, the Operating Company’s ability to make such distributions may be subject to various limitations

and restrictions, such as restrictions on distributions that would either violate any contract or agreement to which the Operating Company

is then a party, including debt agreements, or any applicable law, or that would have the effect of rendering the Operating Company insolvent.

If we do not have sufficient funds to pay tax or other liabilities or to fund our operations, we may have to borrow funds, which could

materially adversely affect our liquidity and financial condition and subject us to various restrictions imposed by any such lenders.

Tax Receivable Agreement (the “TRA”) may require us to make cash payments to the members of the Operating Company in respect

of certain tax benefits to which we may become entitled.

the TRA we entered into with the Operating Company and its members, we are required to make cash payments to the members of the

Operating Partnership equal to 85% of the tax benefits, if any, that we actually realize, or in certain circumstances are deemed to

realize, as a result of (i) the increases in the tax basis of assets of the Operating Company resulting from any redemptions or

exchanges of Common Units from the members and (ii) certain other tax benefits related to our making payments under the TRA.

Although we held all of the outstanding Common Units as of December 31, 2023 and 2022, payments under the TRA are not conditioned on

any member’s continued ownership of Common Units or our Class A common stock.

the TRA we entered into with the Operating Company and its members, we are required to make cash payments to the members of the Operating

Partnership equal to 85% of the tax benefits, if any, that we actually realize, or in certain circumstances are deemed to realize, as

a result of (i) the increases in the tax basis of assets of the Operating Company resulting from any redemptions or exchanges of Common

Units from the members and (ii) certain other tax benefits related to our making payments under the TRA.

Although we held all of the

outstanding Common Units as of December 31, 2024 and 2023, payments under the TRA are not conditioned on any member’s continued

ownership of Common Units or our Class A common stock.

actual amount and timing of any payments under the TRA will vary depending upon a number of factors, including the amount of gain recognized

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The issuance of any shares of Class A common stock will dilute the proportionate ownership and voting power of existing security holders.

securities issuances could result in significant dilution to our stockholders and impair the market price of our common stock.

Future issuances

of shares of our common stock could depress the market price of our common stock and result in dilution to existing holders of our common

Also, to the extent outstanding options and warrants to purchase our shares of our common stock are exercised or options or other

equity-based awards are issued or become vested, there will be further dilution.

The amount of dilution could be substantial depending

upon the size of the issuances or exercises.

Furthermore, we may issue additional equity securities that could have rights senior to those

of our common stock.

sales and issuances of our Class A common stock have and may continue to occur, or may be anticipated, which have and could continue

to cause our stock price to decline.

The market price of shares of our Class A common stock could decline further

as a result of substantial sales of our Class A common stock, issuances of Class A common stock at prices that are dilutive to stockholders,

a large number of shares of our Class A common stock becoming available for sale or the perception in the market that holders of a large

number of shares intend to sell their shares.

Additionally, we expect that we will seek to raise additional capital from time to time

in the future, which may involve the issuance of additional shares of our Class A common stock, or securities convertible into shares

of our Class A common stock in subsequent public or private offerings at dilutive prices if debt is not available to us to fund our working

capital needs.

market price of shares of our Class A common stock could decline further as a result of substantial sales of our Class A common stock,

issuances of Class A common stock at prices that are dilutive to stockholders, a large number of shares of our Class A common stock becoming

available for sale or the perception in the market that holders of a large number of shares intend to sell their shares.

Additionally,

we expect that we will seek to raise additional capital from time to time in the future, which may involve the issuance of additional

shares of our Class A common stock, or securities convertible into shares of our Class A common stock in subsequent public or private

offerings at dilutive prices if debt is not available to us to fund our working capital needs.

cannot predict the effect, if any, that these sales, or anticipation of such sales, will have on the market price of our common stock

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requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage

our business, particularly after we are no longer an “emerging growth company.”

our business, particularly now that we are no longer an “emerging growth company.”

a public company, we are required to comply with various regulatory and reporting requirements, including those required by the SEC.

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qualified executive officers.

an “emerging growth company” as defined in the JOBS Act, we may take advantage of certain temporary exemptions from various

reporting requirements, including, but not limited to, not being required to comply with the auditor attestation requirements of Section

404(b) of SOX and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

these exemptions cease to apply, we expect to incur additional expenses and devote increased management effort toward ensuring compliance

We will remain an “emerging growth company” for up to five years, although we may cease to be an “emerging

growth company” earlier under certain circumstances.

We cannot predict or estimate the amount of additional costs we may incur

as a result of becoming a public company or the timing of such costs.

we are no longer an “emerging growth company” as defined in the JOBS Act, we must now comply with various reporting

requirements.

With these new requirements, we expect to incur additional expenses and devote increased management effort toward

ensuring compliance with them.

We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a

public company or the timing of such costs.

a public reporting company, we are subject to rules and regulations established from time to time by the SEC regarding our internal control

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through testing, that these controls are operating effectively.

As previously disclosed, in 2020, we began a multi-year implementation

of a new ERP system, which we completed in 2023.

The ERP system serves as our existing core financial system.

Concurrently, in 2023, the

re-design of the user access roles and permissions in the new ERP system were completed, and new controls were put into place.

we expect that the previously reported material weaknesses related to ineffective user access controls will be considered remediated in

we are an “emerging growth company” under the JOBS Act, our independent registered public accounting firm is not be required

to attest to the effectiveness of our internal control over financial reporting for so long as we are an emerging growth company.

independent registered public accounting firm will be engaged to provide an attestation report on the effectiveness of our internal control

over financial reporting at such time as we cease to be an ‘‘emerging growth company,’’ as defined in the JOBS

previously disclosed, in 2020, we began a multi-year implementation of a new ERP system, which we completed in 2023.

The ERP system serves

as our existing core financial system.

Concurrently, in 2023, the re-design of the user access roles and permissions in the new ERP system

were completed, and new controls were put into place.

These previously reported material weaknesses related to ineffective user access

controls were not yet remediated as of 12/31/2024.

have not paid dividends in the past and have no current plans to pay dividends in the future, and any return on investment may be limited

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No shares of Class B common stock or preferred stock are outstanding.

June 18, 2024, the Board unanimously approved and declared advisable, and recommended that our stockholders approve at a Special Meeting

that took place on July 29, 2024, the adoption of the 2024 Amendment to effect a reverse stock split of our Common Stock at any whole

number between, and inclusive of, one-for-two to one-for-twenty.

Approval of the Proposed 2024 Reverse Stock Split at the 2024 Special

Meeting granted the Board the authority, but not the obligation, to file the 2024 Amendment to effect the Proposed 2024 Reverse Stock

Split no later than August 5, 2024, with the exact ratio and timing of the Proposed 2024 Reverse Stock Split to be determined at the

discretion of the Board.

On July 23, 2024, the Board approved the reverse split at a ratio of one-for-11 and the Amendment has been filed

with the Secretary of State of the State of Delaware, that became effective on August 5, 2024 at 12:01 AM Eastern Time, before the opening

of trading on the Nasdaq.

For additional information about the July 29, 2024 Special Meeting and the 2024 Reverse Stock Split, see the

Company’s Definitive Proxy Statement filed with the SEC on June 28, 2024 and Form 8-K filed with the SEC on July 31, 2024.

respect to authorized but unissued and unreserved shares, we could also use such shares to oppose a hostile takeover attempt or delay

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shares and thwart a takeover attempt;

notice requirements applicable to stockholders for matters to be brought before a meeting of stockholders and requirements as to

the form and content of a stockholder’s notice;

on the transfer of our outstanding shares of Class B common stock;

supermajority stockholder vote requirement for amending certain provisions of our amended and restated certificate of incorporation

and amended and restated bylaws;

inability of our stockholders to act by written consent;

requirement that the authorized number of directors may be changed only by resolution of the Board;

all vacancies, including newly created directorships, to be filled by the affirmative vote of a majority of directors then in office,

even if less than a quorum, except as otherwise required by law;

the forum for certain litigation against us to Delaware;

the persons that can call special meetings of our stockholders to our Board or the chairperson of our Board.

advance notice requirements

applicable to stockholders for matters to be brought before a meeting of stockholders and requirements as to the form and content

of a stockholder’s notice;

restrictions on the transfer

of our outstanding shares of Class B common stock;

a supermajority stockholder

vote requirement for amending certain provisions of our amended and restated certificate of incorporation and amended and restated

the inability of our stockholders

to act by written consent;

a requirement that the

authorized number of directors may be changed only by resolution of the Board;

allowing all vacancies,

including newly created directorships, to be filled by the affirmative vote of a majority of directors then in office, even if less

than a quorum, except as otherwise required by law;

limiting the forum for

certain litigation against us to Delaware;

limiting the persons that

can call special meetings of our stockholders to our Board or the chairperson of our Board.

provisions might discourage, delay or prevent a change in control of our company or a change in our Board.

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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 1A. Risk Factors