Greenlane Holdings, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements Page Reports of Independent Registered Public Accounting Firm PKF O’Connor Davies PCAOB ID: 127 F-1 Report of Independent Registered Public Accounting Firm Marcum LLP PCAOB ID: 688 F-3 Consolidated Balance Sheets F-4 Consolidated Statements of Operations and Comprehensive Loss F-5 Consolidated Statements of Stockholders’ Equity F-6 Consolidated Statements of Cash Flows F-7 Notes to Consolidated Financial Statements F-9 61 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Greenlane Holdings, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheet of Greenlane Holdings, Inc. (the “Company”) as of December 31, 2024, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 2 to the financial statements, the Company changed the composition of its segment information in 2024. We have also audited the adjustments necessary to retrospectively apply the change in the 2023 segment information as provided in Note 12. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the Company’s 2023 financial statements other than with respect to the reclassifications and, accordingly, we do not express an opinion or any other form of assurance on the 2023 financial statements as whole. Also, as discussed in Notes 2 and 12 to the financial statements, the Company adopted the provisions of Accounting Standard Update 2023-07 Segment Information in 2024 on a retrospective basis. We have also audited the adjustments necessary to retrospectively apply the change in the 2023 segment information as provided in Note 12. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the Company’s 2023 financial statements other than with respect to the adjustment and, accordingly, we do not express an opinion or any other form of assurance on the 2023 financial statements as whole. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit 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 audit, 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 audit 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 consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate. F- 1 Financial Instruments As described in Note 9 to the consolidated financial statements, during 2024, the Company issued shares of its Class A common stock and related pre-funded and common stock warrants (“Warrants”). As disclosed in Note 2 to the consolidated financial statements, the Company classifies its Warrants as equity based on evaluation of terms in the Warrant agreements including, but not limited to, cash settlement provisions and settlement in shares in accordance with Accounting Standards Codification (“ASC”) 815. Management, with the assistance of an independent valuation expert, estimates the fair value of the Warrants issued using Black Scholes models, which take into consideration the volatilities of comparable public companies. Given the determination of the warrants as equity classified financial instruments and the fair value of Warrants require management to make significant estimates and assumptions regarding the relevant valuation calculations, performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve professionals in our firm having the expertise in the valuation of financial instruments. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included: ● evaluated (1) management’s assessment and the Company’s accounting analysis as to the classification of equity instruments, (2) the identification of any derivatives included in the agreements. ● obtained the Company’s valuation calculation to gain an understanding of management’s key assumptions in determining the fair value of the warrants and assessing the source information underlying the valuation assumptions. ● with the assistance of our valuation specialists, evaluated the methodologies and assumptions used to assess the Company’s fair value of warrants, including the selection of the valuation methodology and other significant assumptions used by the Company. ● performed independent shadow calculations to test the reasonableness of the fair values for warrants concluded on by the Company’s specialist. Such calculations assessed the mathematical accuracy of the valuation model and assessed the source information underlying the valuation assumptions used in the model to determine the fair value for the warrants at inception. ● Assess the appropriateness of the disclosures in the consolidated financial statements. Going Concern Assessment As described in Note 1 to the consolidated financial statements, the Company has incurred net losses from operations for each of the two years in the period ended December 31, 2024, and net cash used in operating activities was approximately $6.8 million for the year ended December 31, 2024. The Company determined these, and other factors which include the Company closing on a definitive agreement to sell $25.0 million of shares of the Company’s Class A common stock and investor warrants in February 2025, did not raise substantial doubt as to the Company’s ability to continue as a going concern one year from the issuance date of the consolidated financial statements. In making this determination, management prepared a cash flow projection through March 2026. Management used significant assumptions in preparing the cash flow projection, which included expected revenue and cash receipts, operating costs and other obligations. The principal considerations for our determination that the evaluation of management’s going concern assessment was a critical audit matter are the significant judgment and subjectivity inherent in the Company’s future cash flow estimate and a high degree of auditor judgment in evaluating management’s forecasts for at least the next twelve months. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included: ● assessed the overall reasonableness of the Company's future cash flow projections, including performing sensitivity analysis on the significant assumptions utilized by the Company and comparison to historical trends and other information obtained during the audit ● compared actual operating results to forecasted amounts to determine the overall reasonableness of future operating cash flow projections. ● evaluated the adequacy of the Company’s financial statement disclosures /s/ PKF O’Connor Davies, LLP New York, New York March 20, 2025 We have served as the Company’s auditor since November 20, 2024. PCAOB ID No. 127 F- 2 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, before the effects of the retrospective adjustments to the disclosures for a change in the composition of reportable segments and the adoption of ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”) discussed in Notes 2 and 12 to the accompanying consolidated balance sheet of Greenlane Holdings, Inc. (the “Company”) as of December 31, 2023, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”) (the 2023 financial statements before the effects of the adjustments discussed in Notes 2 and 12 to the financial statements are not presented herein). In our opinion, the financial statements, before the effects of the retrospective adjustments to the disclosures for a change in the composition of reportable segments and adoption of ASU 2023-07 discussed in Notes 2 and 12 to the financial statements, present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. We were not engaged to audit, review, or apply any procedures to the retrospective adjustments to the disclosures for a change in the composition of reportable segments and the adoption of ASU 2023-07 discussed in Notes 2 and 12 to the financial statements, and accordingly, we do not express an opinion or any other form of assurance about whether such retrospective adjustments are appropriate and have been properly applied. Those retrospective adjustments were audited by PKF O’Connor Davies. Explanatory Paragraph – Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has a significant working capital deficiency, 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. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 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 audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit 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 audit 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 audit 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 audit 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 audit provide a reasonable basis for our opinion. /s/ Marcum LLP Marcum LLP We have served as the Company’s auditor since 2021 through November 20, 2024. Costa Mesa, CA July 18, 2024 F- 3 GREENLANE HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except par value per share amounts) December 31, 2024 December 31, 2023 ASSETS Current assets Cash $ 899 $ 463 Accounts receivable, net of allowance of $ 2,616 and $ 2,209 at December 31, 2024 and 2023, respectively 4,262 1,693 Inventories, net 14,215 20,529 Vendor deposits 3,091 3,765 Other current assets (Note 8) 1,305 3,319 Total current assets 23,772 29,769 Property and equipment, net 1,420 2,476 Operating lease right-of-use assets 1,043 1,936 Other assets 2,396 3,912 Total assets $ 28,631 $ 38,093 LIABILITIES Current liabilities Accounts payable $ 9,787 $ 12,103 Accrued expenses and other current liabilities (Note 8) 1,218 3,056 Customer deposits 2,661 2,775 Notes payable 7,674 7,283 Current portion of operating leases 926 866 Current portion of finance leases — 7 Total current liabilities 22,266 26,090 Operating leases, less current portion 83 1,010 Other liabilities — 1 Total long-term liabilities 83 1,011 Total liabilities 22,349 27,101 Commitments and contingencies (Note 7) - - STOCKHOLDERS’ EQUITY* 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, 2,267 shares issued and outstanding as of December 31, 2024; 600,000 shares authorized, and 339 shares issued and outstanding as of December 31, 2023 * 21 36 Class B common stock, $ 0.0001 par value per share, 30,000 shares authorized, and 0 shares issued and outstanding as of December 31, 2024; 30,000 shares authorized, and 0 shares issued and outstanding as of December 31, 2023 * — — Common stock, value — — Additional paid-in capital * 281,074 268,132 Accumulated deficit ( 274,929 ) ( 257,289 ) Accumulated other comprehensive income 265 245 Total stockholders’ equity attributable to Greenlane Holdings, Inc. 6,431 11,124 Non-controlling interest ( 149 ) ( 132 ) Total stockholders’ equity 6,282 10,992 Total liabilities and stockholders’ equity $ 28,631 $ 38,093 * After giving effect to the Reverse Stock Splits - See Note 9 - Stockholders’ Equity. The accompanying notes are an integral part of these consolidated financial statements. F- 4 GREENLANE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (in thousands, except per share amounts) 2024 2023 For the year ended December 31, 2024 2023 Net sales $ 13,275 $ 65,373 Cost of sales 6,993 47,547 Gross profit 6,282 17,826 Operating expenses: Salaries, benefits and payroll taxes 7,380 17,454 General and administrative 9,764 24,213 Impairment of property, plant and equipment 153 — Depreciation and amortization 800 2,243 Total operating expenses 18,097 43,910 Loss from operations ( 11,815 ) ( 26,084 ) Other (expense) income, net: Interest expense ( 5,941 ) ( 5,450 ) Change in fair value of contingent consideration 1,000 — Loss on extinguishment of debt ( 876 ) — Other expense, net ( 25 ) ( 791 ) Total other expense, net ( 5,842 ) ( 6,241 ) Loss before income taxes ( 17,657 ) ( 32,325 ) Provision for (benefit from) income taxes — — Net loss ( 17,657 ) ( 32,325 ) Less: Net loss attributable to non-controlling interest ( 17 ) ( 150 ) Net loss attributable to Greenlane Holdings, Inc. $ ( 17,640 ) $ ( 32,175 ) Net loss attributable to Class A common stock per share - basic and diluted (Note 9)* $ ( 14.56 ) $ ( 8.16 ) Weighted-average shares of Class A common stock outstanding - basic and diluted (Note 9)* 1,212 363 Other comprehensive income (loss): Foreign currency translation adjustments 20 190 Comprehensive loss ( 17,637 ) ( 32,135 ) Less: comprehensive loss attributable to non-controlling interest ( 17 ) ( 150 ) Comprehensive loss attributable to Greenlane Holdings, Inc. $ ( 17,620 ) $ ( 31,985 ) * After giving effect to the Reverse Stock Splits - See Note 9 - Stockholders’ Equity. The accompanying notes are an integral part of these consolidated financial statements. F- 5 GREENLANE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) Shares* Amount * Shares* Amount * Capital * Deficit Income (Loss) Interest Equity Class A Common Stock Class B Common Stock Additional Paid-In Accumulated Accumulated Other Comprehensive Non- Controlling Total Stockholders’ Shares* Amount* Shares* Amount* Capital* Deficit Income (Loss) Interest Equity Balance December 31, 2022 145 $ 1 — $ — $ 264,031 $ ( 225,114 ) $ 55 $ 18 $ 38,991 Net loss — — — — — ( 32,175 ) — ( 150 ) ( 32,325 ) Equity-based compensation ( 1 ) — — — 60 — — — 60 Issuance of Class A shares - Amended Eyce APA (Note 3) — — — — 225 — — — 225 Issuance of Class A shares (Note 9) 193 2 — — 3,849 — — — 3,851 Other comprehensive income — — — — — — 190 — 190 Balance December 31, 2023 339 $ 3 — $ — $ 268,165 $ ( 257,289 ) $ 245 $ ( 132 ) $ 10,992 Balance 339 $ 3 — $ — $ 268,165 $ ( 257,289 ) $ 245 $ ( 132 ) $ 10,992 Net loss — — — — — (- 17,640 ) — ( 17 ) ( 17,657 ) Equity-based compensation 17 — — — 86 — — — 86 Issuance of Class A shares 1,911 18 — — 7,451 — — — 7,469 Issuance of Class A warrants — — — — 5,372 — — — 5,372 Other comprehensive income — — — — — — 20 — 20 Balance December 31, 2024 2,267 $ 21 — $ — $ 281,074 $ ( 274,929 ) $ 265 $ ( 149 ) $ 6,282 Balance 2,267 $ 21 — $ — $ 281,074 $ ( 274,929 ) $ 265 $ ( 149 ) $ 6,282 * After giving effect to the Reverse Stock Splits - See Note 9 - Stockholders’ Equity. The accompanying notes are an integral part of these consolidated financial statements. F- 6 GREENLANE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) 2024 2023 For the year ended December 31, 2024 2023 Cash flows from operating activities: Net loss $ ( 17,657 ) $ ( 32,325 ) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization 800 2,242 Equity-based compensation expense 86 284 Change in fair value of contingent consideration ( 1,000 ) 262 Change in provision for credit losses 245 188 (Gain) loss on disposal of fixed assets 215 118 Loss on extinguishment of debt 876 Impairment of property and equipment 153 — Unrealized loss on equity investments — 629 Amortization of deferred financing costs and debt discount 4,927 2,820 Other 171 — Changes in operating assets and liabilities, net of the effects of acquisitions: (Increase) decrease in accounts receivable ( 2,814 ) 4,586 Decrease in inventories 6,315 20,113 Decrease in vendor deposits 674 2,531 Decrease in other assets 3,533 7,769 Decrease in accounts payable ( 2,319 ) ( 2,770 ) Decrease in accrued expenses and other liabilities ( 841 ) ( 7,032 ) Decrease in customer deposits ( 114 ) ( 1,208 ) Net cash used in operating activities ( 6,750 ) ( 1,793 ) Cash flows from investing activities: Purchase of property and equipment, net ( 244 ) ( 1,007 ) Proceeds from sale of equity investments — 1,037 Net cash (used in) provided by investing activities ( 244 ) 30 Cash flows from financing activities: Proceeds from issuance of Class A common stock, net of issuance costs 5,640 3,852 Proceeds from exercise of stock options and warrants, net of costs 1,827 — Repayment of Asset-Based Loan — ( 15,000 ) Proceeds from Secured Bridge Loan, net of costs — 2,090 Debt issuance costs — ( 751 ) Repayment of loan against future accounts receivable ( 939 ) ( 1,721 ) Proceeds from future receivables financing 225 3,894 Payments on Eyce and DaVinci promissory notes — ( 2,133 ) Repayments of notes payable ( 2,275 ) — Proceeds from notes payable 2,950 — Purchase consideration paid for Eyce and DaVinci acquisition — ( 350 ) Other ( 1 ) ( 21 ) Net cash (used in) provided by financing activities 7,427 ( 10,140 ) Effects of exchange rate changes on cash 3 190 Net decrease in cash and cash equivalents 436 ( 11,713 ) Cash and cash equivalents, as of beginning of the year 463 12,176 Cash and cash equivalents, as of end of year $ 899 $ 463 The accompanying notes are an integral part of these consolidated financial statements. F- 7 GREENLANE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (in thousands) Reconciliation of cash and restricted cash to condensed consolidated balance sheets: For the year ended December 31, 2024 2023 Beginning of the period Cash $ 463 $ 6,458 Restricted cash — 5,718 Total cash and restricted cash, beginning of period $ 463 $ 12,176 End of the period Cash $ 899 $ 463 Restricted cash — — Total cash and restricted cash, end of period $ 899 $ 463 Supplemental disclosures of cash flow information Cash paid during the period for interest $ 916 $ 4,495 Cash paid during the period for income taxes $ — $ — Cash paid for amounts included in the measurement of lease liabilities $ — $ 1,353 Non-cash investing activities and financing activities: Non-cash purchases of property and equipment $ — $ 133 Transfer from contingent consideration to notes payable $ — $ 1,650 Transfer from accrued expenses to notes payable $ — $ 437 Fair value of common stock warrants issued as a debt discount $ 1,699 Extinguishment of debt in connection with Synergy Asset purchase agreement $ 2,658 $ — Issuance of Class A Warrants $ 3,673 — The accompanying notes are an integral part of these consolidated financial statements. F- 8 GREENLANE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. BUSINESS OPERATIONS AND ORGANIZATION 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 (“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 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. 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 more affordable product line and Higher Standards – our premium smoke shop and ancillary product brand, and our award winning Vapor.com website and brand. We also have category exclusive licenses for the premium Marley Natural branded products, as well as the K.Haring branded products. 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 wholly owned subsidiaries 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 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. Our 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” 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 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 afforded. F- 9 In 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 members. 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. 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. Reverse Stock Splits On June 2, 2023, we filed a Certificate of Amendment to the A&R Charter with the Secretary of State for the State of Delaware (“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. 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, which became effective on August 5, 2024 at 12:01 AM Eastern Time, before the opening of trading on the Nasdaq. The 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. 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 Splits, including reclassifying an amount equal to the reduction in par value of Common Stock to additional paid-in capital. Liquidity and Going Concern Pursuant 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. 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 other equity issuances. We believe that our cash on hand that includes cash raised in the February 2025 Private Placement and the cash flow that we generate from our operations 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 the next 12 months. Based on our cash on hand and working capital at December 31, 2024, we expect to have sufficient cash to fund planned operations through the second quarter of 2026. This is largely due to the Company’s Private Placement that occurred on February 19, 2025. See Note 13 for more information. F- 10 ATM Program and Shelf Registration Statement We formerly 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, that was remediated in 2024, we are unable to issue additional shares of Class A common stock pursuant to the ATM Program or otherwise use the Shelf Registration Statement and once eligible will be required to file a Form S-3. Common Stock and Warrant Offerings. On 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. See “Note 9 – Stockholders’ Equity” for further information. On August 7, 2024, the Company issued a note (the “Note”) in the principal amount of $ 3,237,269 to Cobra. The Note is due the earlier of (i)February 5, 2025; or (ii) the Company’s receipt of at least $ 3,500,000 of gross proceeds from an offering of their securities (a “Qualified Offering”) and contain a 20 % original issue discount. The Notes are convertible into common stock after maturity if not paid prior. In connection with the issuance of the Note, the Company issued the Investor warrants to purchase up to 1,618,635 shares at the Qualified Offering Price. On August 12, 2024, the Company entered into a securities purchase agreement with a single institutional investor for aggregate gross cash proceeds of $ 6.5 million. In connection with the private placement, the Company issued an aggregate of 2,363,637 units and pre-funded units. The pre-funded units were sold at the same purchase price as the units, less the pre-funded warrant exercise price of $ 0.001 . Each unit and pre-funded unit consisted of one share of common stock (or one pre-funded warrant) and two common warrants, each exercisable for one share of common stock at an exercise price of $ 2.50 per share. The common warrant will be exercisable on the initial exercise date described in the common warrant and will expire 5.0 years from such date. On October 29, 2024, the Company entered into an Exchange Agreement with its Senior Subordinated Lender, whereby the Company agreed to exchange an aggregate of $ 4,617,307 of debt originally owed to Agile Capital Funding LLC and Cedar Advance LLC in a 3(a)(9) exchange for new Senior Subordinated Notes in the principal amount of $ 4,000,000 due one year from issuance (the “Exchange Note”), reducing outstanding indebtedness by approximately $ 617,000 . The Exchange Note is convertible at the option of the holder at $ 3.17 per share. In connection with the Exchange, the Company issued an aggregate of 1,261,830 five year warrants with an exercise price of $ 3.04 per share (the “Exchange Warrants”). See Note 4 for more information. In addition, pursuant to the terms of the Exchange Agreement, the Company agreed to issue warrants to the Holders, with an initial exercise price of $ 3.04 , exercisable 180 days after issuance (the “Exchange Inducement Warrants”). The Exchange Inducement Warrants were issued to incentivize the holders to exercise some or all of their existing warrants originally issued on August 13, 2024 (the “Existing Warrants”) for cash, which existing warrants have an exercise price of $ 2.50 per share. The Exchange Inducement Warrants are initially exercisable for zero shares, but to the extent that the Holders exercise any of such Existing Warrants during the one-hundred sixty day inducement period, the Exchange Inducement Warrants will become exercisable on April 30, 2025 for 200 % of the number of Existing Warrants exercised for cash during such inducement period. Also, pursuant to the Exchange Agreement, the Senior Subordinated Lender agreed that it will exercise its Existing Warrants for cash prior to exercising any of its outstanding pre-funded warrants, contingent on the market price of the common stock being above $ 2.50 per share and certain other conditions. The above agreement will terminate upon the Company receiving certain cash proceeds and prepaying at least $ 2,250,000 of Cobra Alternative Capital Strategies LLC (“Cobra”) Notes. F- 11 On February 18, 2025, the Company entered into definitive agreements with institutional investors for the purchase and sale of approximately $ 25.0 million of shares of the Company’s Class A common stock (“Common Stock” and investor warrants at a price of $ 1.19 per Common Unit. The entire transaction has been priced at the market under Nasdaq rules. The offering consisted of the sale of Common Units (or Pre-Funded Units), each consisting of (i) one (1) share of Common Stock or one (1) Pre-Funded Warrant, (ii) one (1) Series A PIPE Common Warrant to purchase one (1) share of Common Stock per warrant at an exercise price of $ 1.4875 (“Series A Warrant”) and (iii) one (1) Series B PIPE Common Warrant to purchase one (1) share of Common Stock per warrant at an exercise price of $ 2.975 (“Series B Warrant” and together with the Series A Warrant, the “Warrants”). The initial exercise price of each Series A Warrant is $ 1.4875 per share of Common Stock. The Series A Warrants are exercisable following stockholder approval and expire five (5) years thereafter. The number of securities issuable under the Series A Warrant is subject to adjustment as described in more detail in the Series A Warrant. The initial exercise price of each Series B Warrant is $ 2.975 per share of Common Stock or pursuant to an alternative cashless exercise option. The Series B Warrants are exercisable following stockholder approval and expire two and one-half (2.5) years thereafter. The number of securities issuable under the Series B Warrant is subject to adjustment as described in the Series B Warrant. Also, on February 18, 2025, the Company entered into an Exchange Agreement with certain holders (the “Holders”) of three tranches of warrants to purchase Common Stock previously issued by the Company in August 2024 and October 2024. Under such Exchange Agreement, such Holders agreed to exchange with the Company such existing warrants for approximately 6.1 million new warrants to purchase common stock, substantially in the form of the Series B Warrants. Asset-Based Loan 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 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. ERC Sale On 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 Financing 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. At December 31, 2024, no such financing remained outstanding. See “Note 6 - Long Term Debt” for more information. Secured Bridge Loan On 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”). F- 12 Pursuant 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. Subject 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. In May 2024, the Company modified its debt agreement with Synergy to reduce the principal balance due by $ 2.7 million from $ 5.1 million as part of the Loan Modification Agreement concurrent with the Asset Purchase Agreement. Synergy acquired certain assets from the Company in exchange for the reduction in overall principal owed. During 2024 Cobra acquired the Secured Bridge Loan from the Secured Bridge Loan Lender which was restructured as part of the Note Amendment on October 29, 2024. See “Note 6 - Long Term Debt” for more information Note Payable On June 7, 2024, the Company entered into a subscription agreement with Cobra Alternative Capital Strategies, LLC (the “Subscription Agreement”). As of December 31, 2024, the Company has been loaned $ 3.1 million with net cash proceeds of $ 2.6 million pursuant to the Subscription Agreement. The note was issued with a 20 % original issue discount and is due in full on December 7, 2024 . See “Note 6 - Long Term Debt” for more information. During the year ended December 31, 2024, the Company repaid the amount in full. On August 7, 2024, the Company issued a note (the “Note”) in the principal amount of $ 3,237,269 to Cobra. The Note is due the earlier of (i)February 5, 2025; or (ii) the Company’s receipt of at least $ 3,500,000 of gross proceeds from an offering of their securities (a “Qualified Offering”) and contain a 20 % original issue discount. The Notes are convertible into common stock after maturity if not paid prior. In connection with the issuance of the Note, the Company issued the Investor warrants to purchase up to 1,618,635 shares at the Qualified Offering Price. On October 29, 2024, the Company entered into the First Amendment to Amended and Restated Secured Promissory Note (the “Note Amendment”) with Cobra. Pursuant to the Note Amendment, Cobra agreed to extend the Maturity Date of its Secured Bridge Loan and the Subscription Agreement (together the “Notes”). The new Maturity Date will be October 29, 2025 . In consideration for the extension, the Company (i) agreed to make such Notes convertible at the option of Cobra with a conversion price of $ 3.17 per share, (ii) agreed to prepay Cobra’s debt with 50 % of any money raised by the Company from warrant exercise proceeds and from capital raise transactions, and (iii) issued Cobra an aggregate of 500,000 five year warrants with an exercise price of $ 3.04 per share which are identical to the Exchange Warrants. This loan was repaid in full as part of the February 2025 Private Placement. Management Initiatives 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 our third-party brands product offering, which enables us to reduce inventory carrying costs and working capital requirements. In April 2023, we entered into two strategic partnerships. 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. Second, we 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 customer(s). In exchange we would earn quarterly and annual commission payments from our strategic partner. While the strategic partnership may result in a decrease in top line revenue for these packaging and vape products, this partnership 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. We have successfully renegotiated many of our vendor and supplier partnership terms and are continuing to improve working capital arrangements with our vendors and 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. The Company has incurred net losses of $ 17.7 million and $ 32.3 million for the years ended December 31, 2024 and 2023, respectively. For the years ended December 31, 2024 and 2023, cash used in operating activities were $ 6.7 million and $ 1.8 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 evaluation. We believe that our cash on hand and the cash flow that we generate from our operations 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 the next 12 months. Moving forward, 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. The consolidated financial statements do not include any adjustments that may result from the outcome of this going concern uncertainty. For a more complete description of our initiatives, see the Management Discussion and Analysis. F- 13 NOTE 2. 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. 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. All significant intercompany balances and transactions have been eliminated in consolidation. 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. U.S. GAAP requires us to make estimates and judgments in several areas. Such areas include, but are not limited to the following: the collectability of accounts receivable; the allowance for slow-moving or obsolete inventory; the realizability of deferred tax assets; the fair value of contingent consideration arrangements; 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; and the valuation and assumptions underlying equity-based compensation and warrants. These estimates are based on management’s knowledge about current events and expectations about actions we may undertake in the future. The actual results could differ materially from those estimates. Segment Reporting We manage our global business operations through our operating and reportable business segments. As of December 31, 2024, we determined that we have one reportable operating business segment. Our reportable segment has 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 operating decisions, and evaluates operating performance. 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. 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. 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. We account for forfeitures as they occur. See “Note 10—Compensation Plans.” F- 14 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. 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. 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. 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. See “Note 4—Fair Value of Financial Instruments.” Cash 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, 2024, and 2023, approximately $ 0.1 million and $ 0.1 million, respectively, of our cash balances were in foreign bank accounts and uninsured. As of December 31, 2024, and 2023, we had no cash equivalents. F- 15 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 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. At December 31, 2024, and 2023, the reserve for obsolescence was approximately $ 9.0 million and $ 9.5 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. We expense costs for repairs and maintenance when incurred. 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—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. 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. Debt Modifications and Extinguishments When the Company modifies or extinguishes debt, it first evaluates whether the modification qualifies as a troubled debt restructuring (TDR) under ASC Topic 470-60, which requires debt modifications to be evaluated if (1) the borrower is experiencing financial difficulty, and (2) the lender grants the borrower a concession. If a TDR is determined not to have occurred, the Company evaluates the modification in accordance with ASC Topic 470-50-40, which requires modification to debt instruments to be evaluated to assess whether the modifications are considered “substantial modifications”. A substantial modification of terms is accounted for as an extinguishment. If there is a conversion feature within the debt instrument, the Company evaluates whether the conversion feature should be bifurcated under ASC 815 as a derivative. If the Company believes the embedded conversion feature has no fair value on the date of issuance (measurement date) and the embedded conversion feature has no beneficial conversion feature, the embedded conversion feature does not meet the criteria in ASC 470-50-40-10 or 470-20-25 and the issuance of the convertible debt is considered a modification, and not an extinguishment that would require the recognition of a gain or loss. If the Company determines the change in fair value of the derivative meets the criteria for substantial modification under ASC 470 it will treat the modification as extinguishment and recognize a loss from debt extinguishment. Investment in Equity Securities Our investment in equity securities without readily determinable fair value consist of ownership interests in Airgraft Inc. We determined that our ownership interest does not provide us with significant influence over the operations of this investments. Accordingly, we account for our investment in this entity as equity securities. Airgraft Inc. is a private entity and their equity securities do not have a readily determinable fair value. We elected to measure these equity 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.” F- 16 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. 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 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 as hedges. Advertising 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 $ 0.5 million and $ 1.2 million for the years ended December 31, 2024, and 2023, respectively. Income Taxes 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, 2024 and 2023, 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. We have no uncertain tax positions that qualify for inclusion in our consolidated financial statements. See “Note 11—Income Taxes.” F- 17 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. 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. 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. See “Note 11—Income Taxes.” Revenue Recognition Revenues from the sale of our merchandise are recognized at a point in time when control of merchandise is transferred to the customer. Revenue is measured based on the amount of consideration expected to be received in exchange for those goods or services, reduced by promotional discounts and estimates for return allowances and refunds. Taxes collected from customers for remittance to governmental authorities are excluded from net sales. Revenue is generated primarily from the sale of finished products to customers, whereby each product unit represents a single performance obligation. Revenue is recognized 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 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, 2024 and 2023. Product returns are estimated based on historical experience and recorded as a refund liability that reduces the net sales for the period. Actual historical returns, current economic trends and changes in order volume are analyzed when evaluating the adequacy of sales returns allowances in any reporting period. Liability for returns, which is included within “Accrued expenses and other current liabilities” in the consolidated balance sheets, was approximately $ 0.1 million and $ 0.1 million as of December 31, 2024 and 2023, respectively. There were no liabilities related to refunds as of December 31, 2024. 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. F- 18 The Company transitioned to a commission revenue model for the majority of the sales of industrial vaporizers and packaging products. 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. Two customers represented approximately 32 % our net sales for the year ended December 31, 2024. One customer represented approximately 21 % of our net sales for the year ended December 31, 2023 . As of December 31, 2024 the Company had no customers make up more than 5 % of its accounts receivable balance. 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. 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 relating to this matter within “Accrued expenses and other current liabilities” in our consolidated balance sheet as of December 31, 2024 and 2023, 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 the Company 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. 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. See “Note 9—Stockholders’ Equity - Net Loss Per Share.” Recently Adopted Accounting Guidance In 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. Adoption of this standard did not have a material impact on our consolidated financial statements. In November 2023, the FASB issued Accounting Standards Update 2023-07 – Segment Reporting – Improvements to Reportable Segment Disclosures (“ASU 2023-07”). We adopted Accounting Standards Update No. 2023-07, which enhances disclosures required for operating segments. ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. Refer to Note 12 in the Notes to the Consolidated Financial Statements. F- 19 Recently Issued Accounting Guidance Not Yet Adopted In December 2023, the FASB issued Accounting Standards Update 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”) , amending existing income tax disclosure guidance, primarily requiring more detailed disclosure for income taxes paid and the effective tax rate reconciliation. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted and can be applied on either a prospective or retrospective basis. We are currently evaluating the effect of adopting ASU 2023-09 on our income tax disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures, (Subtopic 220-40) (“ASU 2024-03”). ASU 2024-03 improves disclosures regarding the types of expenses included in commonly presented expense captions, including disaggregating the amounts of employee compensation, depreciation and amortization included within each income statement expense caption. This standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of the standard on its consolidated financial statements and disclosures. NOTE 3. BUSINESS ACQUISITIONS AND DISPOSITIONS EU Subsidiary Purchase Agreement 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 December 31, 2024, the close of the transaction is in dispute as there was pending consideration obligations due to be transferred to the Company not met, as well as other monetary obligations of the purchasers that remain unsatisfied. As a result the Company did not record a sale of the business under ASC 805. Business Combinations . The Company intends to vigorously pursue its claims against Shavita and the purchaser group. As of December 31, 2024, the Company continues to run the operations. ARI Logistics, B.V. and Shavita B.V. represented 16.7 % of the Company’s total net sales in 2024. F- 20 NOTE 4. 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, 2023, we had contingent consideration that is required to be measured at fair value on a recurring basis. SCHEDULE OF FAIR VALUE, LIABILITIES MEASURED ON RECURRING BASIS Our financial instruments measured at fair value on a recurring basis were as follows at the dates indicated: (in thousands) Caption Level 1 Level 2 Level 3 Total Consolidated Balance Sheet Fair Value at December 31, 2023 (in thousands) Caption Level 1 Level 2 Level 3 Total Liabilities: Contingent consideration - current Accrued expenses and other current liabilities $ — $ — $ 1,000 $ 1,000 Total Liabilities $ — $ — $ 1,000 $ 1,000 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, 2024 and 2023. 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 Product Launch Contingent Payments using a form of the scenario-based method, which includes significant unobservable inputs such as management’s identification of probability-weighted outcomes and a risk-adjusted discount rate over the earn-out period. 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. F- 21 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, 2024 and 2023 is as follows: SCHEDULE OF FAIR VALUE, LIABILITIES MEASURED ON RECURRING BASIS UNOBSERVABLE INPUT RECONCILIATION (in thousands) Contingent Consideration Balance, December 31, 2022 $ 2,738 Cash payments for earn contingent consideration ( 350 ) Transfer to notes payable ( 1,650 ) Loss from fair value adjustments included in results of operations 262 Balance, December 31, 2023 $ 1,000 Gain from fair value adjustments included in results of operations ( 1,000 ) Balance, December 31, 2024 $ — Equity Securities Without a Readily Determinable Fair Value Our investment in equity securities without readily determinable fair value consists of ownership interest in Airgraft Inc. We determined that our ownership interests do not provide the Company with significant influence over the operations of this investment. Accordingly, we account for our investment in this entity as equity securities. Airgraft Inc. is a private entity and their equity securities do not have a readily determinable fair value. We elected to measure these equity 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. We did not identify any fair value adjustments related to these equity securities during the years ended December 31, 2024 and 2023. As of December 31, 2024 and 2023, 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. NOTE 5. LEASES Greenlane as a Lessee As of December 31, 2024, we had facilities financed under operating leases consisting of a warehouses and offices, with lease term expirations in 2026. Lease terms are generally three to seven years for warehouses and office space. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. F- 22 The following table provides details of our future minimum lease payments under operating lease liabilities recorded in our consolidated balance sheet as of December 31, 2024. The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown. SCHEDULE OF LESSEE OPERATING LEASE LIABILITY MATURITY (in thousands) Operating Leases 2025 $ 942 2026 81 2027 — 2028 — 2029 and thereafter — Total minimum lease payments $ 1,023 Less: imputed interest 14 Present value of minimum lease payments 1,009 Less: current portion 926 Long-term portion $ 83 Rent expense under operating leases was approximately $ 1.4 million and $ 2.1 million for the years ended December 31, 2024 and 2023, 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: SCHEDULE OF LEASE COST (in thousands) 2024 2023 For the year ended December 31, (in thousands) 2024 2023 Operating lease cost $ 912 $ 1,613 Variable lease cost 440 461 Total lease cost $ 1,352 $ 2,074 The table below presents the terms and discount rates of the Company’s operating leases as of December 31, 2024: 2024 2023 Weighted average remaining lease terms 1.0 years 1.9 years Weighted average discount rate 2.3 % 2.2 % NOTE 6. DEBT Our debt balance, excluding operating lease liabilities and finance lease liabilities, consisted of the following amounts at the dates indicated: SCHEDULE OF DEBT (in thousands) 2024 2023 As of December 31, (in thousands) 2024 2023 Future Receivables Financing — 2,174 Secured Bridge Loan — 5,109 Secured Bridge Loan 2 3,674 — Secured Bridge Loan 3 4,000 — Loan 4,000 — Total long term debt 7,674 7,283 Less unamortized debt issuance costs — — Less current portion of debt ( 7,674 ) ( 7,283 ) Debt, net, excluding operating and finance leases and liabilities $ — $ — F- 23 Future Receivables Financings 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 the “Future Receivables Financings”). During the year ended December 31, 2024, the Company’s financings were in a series of transactions refinanced as they were not able to make the proscribed monthly payments for the repayment of cash advances. As such the refinancings and the payment schedule was restructured and the total balance increased to $ 4.6 million which included deferred financing fees of approximately $ 2.8 million. During the year ended December 31, 2024, the Future Receivables Financings were purchased by the Senior Subordinated Lender and paid down to $ 0 during the October 29, 2024 restructuring. On October 29, 2024, the Company entered into an Exchange Agreement with its Senior Subordinated Lender, whereby the Company agreed to exchange an aggregate of $ 4,617,307 of debt originally owed to Agile Capital Funding LLC and Cedar Advance LLC in a 3(a)(9) exchange for new Senior Subordinated Notes in the principal amount of $ 4,000,000 due one year from issuance (the “Exchange Note”), reducing outstanding indebtedness by approximately $ 617,000 . The Exchange Note is convertible at the option of the holder at $ 3.17 per share. In connection with the Exchange, the Company issued an aggregate of 1,261,830 five year warrants with an exercise price of $ 3.04 per share (the “Exchange Warrants”). The Company evaluated the Exchange Agreement under ASC 470-50, Debt – Modifications and Extinguishment. As a result, the Company determined that the Exchange Agreement should be accounted for as an extinguishment and the Company recorded the Exchange Agreement debt instrument at fair value which included the consideration in common stock warrants transferred. The resulting loss on extinguishment of $ 2.0 million is included in loss on extinguishment of debt in the accompanying consolidated statement of operations for the year ended December 31, 2024. As noted above, the Company issued 1,261,830 common stock warrants which were deemed to classified as equity as the warrants were exercisable for a fixed price of $ 3.04 and for a fixed number of shares with no potential for cash redemption. The Company determines the value of the warrants using an appropriate valuation method, including a Black-Scholes. As part of the debt extinguishment the 1,261,830 Exchange Warrants were valued at $ 2.6 million using the Black-Scholes model. Note Payable On June 7, 2024, the Company entered into a subscription agreement for a note payable with Cobra Alternative Capital Strategies, LLC (“Cobra”). On August 7, 2024, the Company issued a note (the “Note”) in the principal amount of $ 3,237,269 to Cobra. The Note is due the earlier of (i)February 5, 2025; or (ii) the Company’s receipt of at least $ 3,500,000 of gross proceeds from an offering of their securities (a “Qualified Offering”) and contain a 20 % original issue discount. The Notes are convertible into common stock after maturity if not paid prior. In connection with the issuance of the Note, the Company issued the Investor warrants to purchase up to 1,618,635 shares at the Qualified Offering Price . On October 29, 2024, the Company entered into the First Amendment to Amended and Restated Secured Promissory Note (the “Note Amendment”) with Cobra. Pursuant to the Note Amendment, Cobra agreed to extend the Maturity Date of its senior promissory note dated May 1, 2024, which is currently due. The new Maturity Date will be October 29, 2025 . In consideration for the extinguishment of the Secured Bridge Loan, Cobra paid off the $ 2.7 million balance owed to Synergy as part of the Secured Bridge Loan. In exchange for paying off the Secured Bridge Loan, the Company (i) agreed to make the Cobra Notes convertible at the option of Cobra with a conversion price of $ 3.17 per share, (ii) agreed to prepay Cobra’s debt with 50 % of any money raised by the Company from warrant exercise proceeds and from capital raise transactions, and (iii) issued Cobra an aggregate of 500,000 five year warrants with an exercise price of $ 3.04 per share which are identical to the Exchange Warrants. The Exchange common stock warrants which were deemed to classified as equity as the warrants were exercisable for a fixed price of $ 3.04 and for a fixed number of shares with no potential for cash redemption. The Company determines the value of the warrants using an appropriate valuation method, including a Black-Scholes. As part of the debt extinguishment the 500,000 Exchange Warrants were valued at $ 1.0 million using the Black-Scholes model. F- 24 Secured Bridge Loan On 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” or “Synergy”). Pursuant 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. Subject 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. On May 6, 2024, the Company, Warehouse Goods and 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 Company evaluated the extinguishment of the Secured Bridge Loan under ASC 470-50, Debt – Modifications and Extinguishment. As a result, the Company determined that the Secured Bridge Loan should be accounted for as an extinguishment and the Company recorded the resulting gain on extinguishment of $ 2.1 million in the accompanying consolidated statement of operations for the year ended December 31, 2024 As part of the overall modification, the principal balance with Synergy decreased to $ 2.7 million from $ 5.1 million. Synergy acquired certain assets from the Company in exchange for the reduction in overall principal owed and as part of the transaction, the Company recognized a gain on the debt modification of $ 2.2 million. This amount is included in the accompanying financial statements within the statement of operations for year ended December 31, 2024 within other income (expense). The Secured Bridge Loan balance of $ 2.7 million was paid in full by Cobra as part of the October 29, 2024 First Amendment to Amended and Restated Secured Promissory Note. The First Amendment to Amended and Restated Secured Promissory Note was repaid in full in February 2025 with proceeds from the Private Placement. The Company evaluated the extinguishment of the Secured Bridge Loan under ASC 470-50, Debt – Modifications and Extinguishment. As a result, the Company determined that the Secured Bridge Loan should be accounted for as an extinguishment and the Company recorded the Cobra debt instrument at fair value which included the consideration in common stock warrants transferred. The resulting loss on extinguishment recorded of $ 1.0 million is included in loss on extinguishment of debt in the accompanying consolidated statement of operations for the year ended December 31, 2024. As noted above, the company issued 500,000 common stock warrants which were deemed to classified as equity as the warrants were exercisable for a fixed price of $ 3.04 and for a fixed number of shares with no potential for cash redemption. The Company determines the value of the warrants using an appropriate valuation method, including a Black-Scholes. As part of the debt extinguishment the 500,000 Exchange Warrants were valued at $ 1.0 million using the Black-Scholes model. Future Minimum Principal Payments The following table summarizes future scheduled minimum principal payments of debt at December 31, 2024. Future debt principal payments are presented based upon the stated maturity dates in the respective debt agreement. SCHEDULE OF MATURITIES OF LONG-TERM DEBT (in thousands) 2025 2026 2027 2028 2029 Total Bridge Loan 2 3,674 — — — — 3,674 Bridge Loan 3 4,000 — — — — 4,000 Total $ 7,674 $ — $ — $ — $ — $ 7,674 NOTE 7. 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. However, the outcome of such legal matters is inherently unpredictable and subject to significant uncertainties. On November 13, 2024, Pryor Cashman made a demand for arbitration for unpaid legal invoices in the amount of $ 320,511.48 . The Company intends to dispute these claims in arbitration as it contends the services were not authorized or rendered and expects the case to be resolved at a significant discount (Arbitration, S.D. N.Y.). On February 11, 2025, Earth’s Healing, Inc. (Case No. 25-Cv-1428 (N.D. Cal.)) brought a purchaser class action antitrust action against four U.S. Distributors of Ccell products, including Greenlane Holdings. Inc. The Company believes the case is baseless and without merit, and the Company is jointly defending the case with the other named defendants. On December 17, 2024, Crossmark, Inc. brought a breach of contract suit against our subsidiary, Warehouse Goods, LLC, in the amount of $ 297,181.90 . The Company intends to defend this breach of contract suit vigorously (Case No. 502024CA011856XXXAM B AI). On February 25, 2025, the Company received a Civil Investigation Demand regarding an investigation to determine whether there is or has been a violation of 31 U.S.C. 372 the False Claims Act concerning allegations of false claims submitted to federal programs for approval, payment, and subsequent forgiveness of a Kim International LLC (a subsidiary of Kushco which the Company acquired in 2021) 2020 Federal Payment Protection Program (“PPP) loan of approximately $ 1.9 million dollars. At this stage, it is only a request for information which the Company has provided. The False Claims Act allows for the DOJ to recoup any PPP loans as well as potential treble damages for any violation. At this time, the Company can not assess the likely outcome of the investigation. On December 16, 2024, S.K et al brought a consumer class action antitrust action against four U.S. distributions of Ccell products, including Greenlane Holdings, Inc., alleging antitrust violations. The Company believes the case is baseless and without merit and is currently jointly defending these claims with the other named defendants in the case. On November 15, 2024, Vaporous Technologies, Inc. brought a suit for liquidated damages in the amount of $ 664,289.43 under the September 2020 Manufacturing Agreement by Vaporous against Warehouse Goods. LLC. The Company believes they have strong defenses against this suit. F- 25 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. NOTE 8. SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION Property and Equipment, net The following is a summary of our property and equipment, at costs less accumulated depreciation and amortization: SCHEDULE OF PROPERTY PLANT AND EQUIPMENT LESS DEPRECIATION AND AMORTIZATION (in thousands) Estimated useful life 2024 2023 As of December 31, (in thousands) Estimated useful life 2024 2023 Furniture, equipment and software 3 - 7 years $ 8,595 $ 8,570 Personal property 5 years — — Leasehold improvements Lesser of lease term or 5 years 33 51 Building 39 years — — Land — — Land improvements 15 years — — Work in process 20 411 Property and equipment, gross 8,648 9,032 Less: accumulated depreciation 7,228 6,556 Property and equipment, net $ 1,420 $ 2,476 Depreciation expense for property and equipment for the years ended December 31, 2024 and 2023 was approximately $ 0.8 million and $ 2.2 million, respectively. F- 26 Intangible Assets, Net As of December 31, 2024 and 2023, all indefinite-lived intangibles were written off. We did not acquire any additional intangible assets during the years ended December 31, 2024 and 2023. There was no amortization expense for intangible assets for the years ended December 31, 2024 and 2023, respectively. Goodwill We 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. There were no goodwill impairments during the years ended December 31, 2024 and 2023. Other Current Assets The following table summarizes the composition of other current assets as of the dates indicated: SCHEDULE OF OTHER CURRENT ASSETS (in thousands) 2024 2023 As of December 31, (in thousands) 2024 2023 Other current assets: VAT refund receivable (Note 2) $ 43 $ 78 Prepaid expenses 301 1,207 Indemnification receivable, net 7 7 Customs bonds 952 1,229 Other 2 798 Other current assets $ 1,305 $ 3,319 F- 27 Accrued Expenses and Other Current Liabilities The following table summarizes the composition of accrued expenses and other current liabilities as of the dates indicated: SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (in thousands) 2024 2023 As of December 31, (in thousands) 2024 2023 Accrued expenses and other current liabilities: VAT payable (including amounts related to VAT matter described in Note 2) $ — $ 313 Contingent consideration — 1,000 Accrued employee compensation 1,052 861 Accrued expenses 166 499 Refund liability (including accounts receivable credit balances) — 68 Sales tax payable — 315 Accrued expenses and other current liabilities $ 1,218 $ 3,056 Customer Deposits For certain customized 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, 2024 and 2023, respectively, were as follows: SCHEDULE OF CHANGES IN CUSTOMER DEPOSIT LIABILITY (in thousands) Customer Deposits Balance as of December 31, 2022 $ 3,983 Increases due to deposits received, net of other adjustments 4,191 Customer Overpayments 220 ) Revenue recognized ( 5,619 ) Balance as of December 31, 2023 $ 2,775 Increases due to deposits received, net of other adjustments — Customer Overpayments — Revenue recognized ( 114 ) Balance as of December 31, 2024 $ 2,661 Accumulated Other Comprehensive Income (Loss) The components of accumulated other comprehensive income (loss) for the periods presented were as follows: SCHEDULE OF COMPONENTS OF ACCUMULATED COMPREHENSIVE INCOME LOSS (in thousands) Foreign Currency Translation Unrealized Gain or (Loss) on Derivative Instrument Total Balance at December 31, 2022 $ 55 $ — $ 55 Other comprehensive income (loss) 190 — 190 ) Less: Other comprehensive (income) loss attributable to non-controlling interest — — — Balance at December 31, 2023 $ 245 $ — $ 245 Other comprehensive income (loss) 20 — 20 Less: Other comprehensive (income) loss attributable to non-controlling interest — — — Balance at December 31, 2024 $ 265 $ — $ 265 Supplier Concentration Our four largest vendors accounted for an aggregate of approximately 61.3 % and 25.3 % of our total purchases for the years ended December 31, 2024 and 2023, respectively We expect to maintain our relationships with these vendors. F- 28 Related Party Transactions Renah Persofsky, a Greenlane Director, is also a Principal Owner of Green Gruff USA Inc, (“Green Gruff”). As of December 31, 2024, there have been no transactions between the Company and Green Gruff. Nicholas Kovacevich, our former Chief Corporate Development Officer owns capital stock of Blum Holdings Inc. (“Blum”) and serves on the Blum board of directors. Total accounts receivable due from Blum were approximately $ 0.4 million as of December 31, 2024 and 2023, 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. Three 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. NOTE 9. 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), 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). Effective 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. On 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. The 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. F- 29 Common Stock and Warrant Offerings July 2023 Offering On 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. As 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. In 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. August 2024 Private Placement On August 12, 2024, the Company entered into a securities purchase agreement with a single institutional investor pursuant to which we agreed to issue and sell an aggregate of 58,000 shares of our Class A common stock, pre-funded warrants to purchase up to 2,305,637 shares of our Class A common stock (the “August 2024 Pre-Funded Warrants”) and warrants to purchase up to 4,727,274 shares of our Class A common stock (the “August 2024 Standard Warrants”). for aggregate gross cash proceeds of $ 6.5 million. In connection with the private placement, the Company will issue an aggregate of 2,363,637 units and pre-funded units. The pre-funded units will be sold at the same purchase price as the units, less the pre-funded warrant exercise price of $ 0.001 . Each unit and pre-funded unit will consist of one share of common stock (or one pre-funded warrant) and two common warrants, each exercisable for one share of common stock at an exercise price of $ 2.50 per share. The common warrant will be exercisable on the initial exercise date described in the common warrant and will expire 5.0 years from such date. October 2024 Private Placement On October 29, 2024, the Company entered into an Exchange Agreement with its Senior Subordinated Lender and with Cobra. In connection with the Exchange, the Company issued an aggregate of 1,761,830 five year warrants with an exercise price of $ 3.04 per share (the “Exchange Warrants”). The Exchange Warrants which were deemed to classified as equity as the warrants were exercisable for a fixed price of $ 3.04 and for a fixed number of shares with no potential for cash redemption. The Company determines the value of the warrants using an appropriate valuation method, including a Black-Scholes. As part of the debt extinguishments the 1,761,830 Exchange Warrants were valued at $ 3.7 million using the Black-Scholes model. Warrant activity for the years ending December 31, 2024 and 2023 is as follows: Schedule of Warrant activity Number of Warrants Weighted Average Exercise Price Balance, December 31, 2022 166,131 $ 638.58 Issued 1,052,951 8.07 Expired - - Exercised ( 444,983 ) 3.32 Balance, December 31, 2023 774,099 110.40 Issued 10,413,376 1.71 Expired or rescinded - - Exercised ( 1,424,384 ) 0.25 Balance, December 31, 2024 9,763,091 $ 8.75 As of December 31, 2024, outstanding warrants have a weighted average remaining life of 3.32 years. Fair Value of Warrants issued: The following ranges of assumptions were used in calculations of the Black-Scholes option pricing models for warrants issued in the years ended December 31, 2024 and December 31, 2023: Schedule of Black-Scholes Option Pricing Models for Warrants Issued 2024 2023 Stock price $ 3.68 - $ 4.05 $ 38.50 - $ 5.50 Risk-free interest rate 3.79 % - 4.395 % 3.30 % - 4.72 % Expected term (in years) 5.8 to 6.0 5.0 to 6.0 Expected share price volatility 79.85 % 81.11 % to 95.32 % Expected dividend yield 0.0 % - 0.0 % 0.0 % - 0.0 % 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. F- 30 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): SCHEDULE OF EARNINGS PER SHARE BASIC AND DILUTED (in thousands, except per share data) 2024 2023 For the year ended December 31, (in thousands, except per share data) 2024 2023 Numerator: Net loss $ ( 17,657 ) $ ( 32,325 ) Less: Net loss attributable to non-controlling interests 17 150 Plus: Deemed Dividend on “October 2022 Standard Warrants” — ( 388 ) Net loss attributable to Class A common stockholders $ ( 17,640 ) $ ( 32,563 ) Denominator: Weighted average shares of Class A common stock outstanding * 1,212 3,993 Net loss per share of Class A common stock - basic and diluted* $ ( 14.56 ) $ ( 8.16 ) * After giving effect to the Reverse Stock Splits. The 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 years ended December 31, 2024 and 2023, beginning with their issuance date, as their stated exercise price of $ 0.001 was non-substantive and their exercise was virtually assured. The August 2024 Pre-Funded Warrants were included in the weighted-average in the computation of basic net loss per share of Class A commons stock for the year ended December 31, 2024, beginning with their issuance date, as their stated exercise price of $ 0.001 was non-substantive and their exercise was virtually assured. On 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. For the years ended December 31, 2024 and 2023, 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. Shares 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, 2024 and 2023, all Common Units of the Operating Company and Class B common stock had been exchanged for Class A common stock, and we owned. The following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because their inclusion would be anti-dilutive (in common stock equivalent shares): Schedule of Outstanding Potentially Dilutive Securities 9,763,091 774,099 For the year ended December 31, 2024 December 31, 2023 Stock options to purchase common stock 334 360 Warrants to purchase common stock 9,763,091 774,099 Antidilutive Securities, value 9,763,425 774,459 NOTE 10. COMPENSATION PLANS Amended and Restated 2019 Equity Incentive Plan In 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 10,000 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 June 2, 2023, the Company’s stockholders approved a third amendment and restatement of the 2019 Plan (the “Third Amended Plan”). 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 19,078 shares to an aggregate of 29,078 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. F- 31 Equity-Based Compensation Expense Equity-based 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: SCHEDULE OF EQUITY BASED COMPENSATION EXPENSE (in thousands) 2024 2023 For the year ended December 31, (in thousands) 2024 2023 Stock options - Class A common stock $ — $ 36 Restricted shares - Class A common stock 86 37 Total equity-based compensation expense $ 86 $ 73 There were no options granted during the years ended December 31, 2024 and 2023. As of December 31, 2024, there was no remaining unrecognized compensation expense. NOTE 11. INCOME TAXES 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. federal and most applicable state and local income tax purposes. 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 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 addition 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 U.S. 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: SCHEDULE OF INCOME BEFORE INCOME TAX, DOMESTIC AND FOREIGN (in thousands) 2024 2023 For the year ended December 31, (in thousands) 2024 2023 United States $ ( 15,563 ) $ ( 30,325 ) Foreign $ ( 2,094 ) $ ( 2,000 ) Total $ ( 17,657 ) $ ( 32,325 ) Income Tax Expense The income tax (benefit) expense for the years ended December 31, 2024 and 2023 consisted of the following: SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (BENEFIT) (in thousands) Federal Foreign State Total Federal Foreign State Total For the year ended December 31, 2024 For the year ended December 31, 2023 (in thousands) Federal Foreign State Total Federal Foreign State Total Current tax (benefit) expense Current year $ — $ — $ — $ — $ — $ — $ — $ — ) Total current year — — — — — — — — ) Deferred tax (benefit) expense Current year ( 3,325 ) ( 277 ) ( 998 ) ( 4,600 ) ( 5,991 ) ( 500 ) ( 1,798 ) ( 8,289 ) Change in valuation allowance 3,325 277 998 4,600 5,743 500 1,219 7,462 Change in tax rate — — — — — — 780 780 ) Tax conversion of Operating Company — — — — — — — — Up-C consolidation — — — — — — — — ) KushCo merger or true ups — — — — 248 — ( 201 ) 47 Total deferred tax (benefit) expense — — — — — — — — Income tax (benefit) expense $ — $ — $ — $ — $ — $ — $ — $ — ) F- 32 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: SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION (in thousands) 2024 2023 For the year ended December 31, (in thousands) 2024 2023 Expected federal income tax (benefit) expense at statutory rate $ ( 3,331 ) $ ( 6,788 ) State tax expense, net of federal benefit ( 840 ) ( 1,605 ) Loss attributable to non-controlling interests — 4 Change in valuation allowance 4,171 7,462 Change in tax rates Prior year true-ups — 227 Other, net — 700 Income tax (benefit) expense $ — $ — Deferred Tax Assets and Liabilities The components of deferred tax assets and liabilities were as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES (in thousands) 2024 2023 As of December 31, (in thousands) 2024 2023 Deferred tax assets: Goodwill and other intangible assets $ 35,225 $ 36,018 Fixed assets 394 943 Inventory 2,364 2,854 Allowance for doubtful accounts 688 833 Operating lease liability 265 164 Equity-based compensation 2,598 2,576 Business interest carryforward 8,710 6,897 Net operating loss carryforwards 74,609 67,667 Other 130 411 Total deferred tax assets 124,983 118,363 Valuation allowance ( 124,709 ) ( 118,262 ) Net deferred tax assets ( 274 ) 101 Deferred tax liability: Right of use assets ( 274 ) ( 101 ) Total deferred tax liabilities ( 274 ) ( 101 ) Net deferred tax assets and liabilities $ — $ — We had approximately $ 268.5 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 $ 263.5 of State net operating loss carryforwards that begin expiring in 2038, $ 14.9 million of Dutch 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 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, 2024 we had 26.3 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. F- 33 During the years ended December 31, 2024 and 2023, 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, 2024 and 2023, 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, 2024 and 2023, 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 2019 – 2023. As of the date these financial statements were issued, there were not any ongoing income tax audits. 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. 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. 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, 2024 and 2023. 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, 2024 and 2023, we did not make any payments, inclusive of interest, to members of the Operating Company pursuant to the TRA. NOTE 12. 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. Our CODM is a committee comprised of our CEO and our CFO. We determined we had one operating segment as of December 31, 2024. This operating segment aligns with how we manage our business as of the fourth quarter of 2024. The accounting policies of the reportable segments are the same as those described in “Note 2 - Summary of Significant Accounting Policies.” F- 34 Our CODM assesses the performance of our one operating segment 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, 2024 and 2023 SCHEDULE OF SEGMENT REPORTING INFORMATION, BY SEGMENT (in thousands) 2024 2023 For the year ended December 31, (in thousands) 2024 2023 Net sales $ 13,275 $ 65,373 Cost of sales 6,993 47,547 Gross profit $ 6,282 $ 17,826 The following table sets forth specific asset categories which are reviewed by our CODM in the evaluation of operating segments: (in thousands) 2024 2023 For the year ended December 31, (in thousands) 2024 2023 Accounts receivable, net $ 4,262 $ 1,693 Inventories $ 14,215 $ 20,529 Vendor deposits $ 3,091 $ 3,765 The following table sets forth net sales disaggregated by geography: SCHEDULE OF NET SALES DISAGGREGATED BY GEOGRAPHY (in thousands) 2024 2023 For the year ended December 31, (in thousands) 2024 2023 United States $ 10,900 $ 58,539 Canada 157 1,291 Europe 2,218 5,543 Total net sales $ 13,275 $ 65,373 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: SCHEDULE OF LONG-LIVED ASSETS BY GEOGRAPHIC AREA (in thousands) 2024 2023 As of December 31, (in thousands) 2024 2023 United States $ 2,459 $ 4,255 Canada 4 4 Europe - 153 Total long-lived assets $ 2,463 $ 4,412 See “Note 8—Supplemental Financial Statement Information” for goodwill by reportable segment. NOTE 13. SUBSEQUENT EVENTS On February 19, 2025, Greenlane Holdings, Inc. (the “Company”) consummated a private placement (the “Private Placement”) pursuant to a securities purchase agreement (“Purchase Agreement”) with institutional investors (the “Purchasers”) for the purchase and sale of approximately $ 25.0 million of shares of the Company’s Class A common stock (the “Common Stock”) and investor warrants at a price of $ 1.19 per Common Unit. The entire transaction was priced at the market under Nasdaq rules. The offering consisted of the sale of Common Units (or Pre-Funded Units), each consisting of (i) one ( 1 ) share of Common Stock or one ( 1 ) Pre-Funded Warrant, (ii) one ( 1 ) Series A PIPE Common Warrant to purchase one ( 1 ) share of Common Stock per warrant at an exercise price of $ 1.4875 (the “Series A Warrant”) and (iii) one ( 1 ) Series B PIPE Common Warrant to purchase one ( 1 ) share of Common Stock per warrant at an exercise price of $ 2.975 (the “Series B Warrant” and together with the Series A Warrant, the “Warrants”). The initial exercise price of each Series A Warrant is $ 1.4875 per share of Common Stock. The Series A Warrants are exercisable following stockholder approval and expire five ( 5 ) years thereafter. The number of securities issuable under the Series A Warrant is subject to adjustment as described in more detail in the Series A Warrant. The initial exercise price of each Series B Warrant is $ 2.975 per share of Common Stock or pursuant to an alternative cashless exercise option. The Series B Warrants are exercisable following stockholder approval and expire two and one-half ( 2.5 ) years thereafter. The number of securities issuable under the Series B Warrant is subject to adjustment as described in the Series B Warrant. In connection with the Private Placement, the Company entered into a registration rights agreement with the Purchasers on February 18, 2025 (the “Registration Rights Agreement”), pursuant to which the Company is required to file a registration statement covering the resale of the Securities within 30 calendar days of the closing of the offering. F- 35 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.