What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-05-15 compared with 2024-11-14 · 536 added, 553 removed, 40 unchanged (96% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited

condensed consolidated financial statements and related notes of Greenlane Holdings, Inc.

and its consolidated subsidiaries (“Greenlane”

and, collectively with the Operating Company and its consolidated subsidiaries, the “Company”, “we”, “us”

and “our”) for the quarterly period ended September 30, 2024 included in Part I, Item 1 of this Quarterly Report on Form 10-Q,

and the audited consolidated financial statements and related notes of Greenlane Holdings, Inc.

for the year ended December 31, 2023,

which are included in our Annual Report on Form 10-K.

Regarding Forward-Looking Statements

Quarterly Report on Form 10-Q (“Form 10-Q”) contains forward-looking statements, within the meaning of the Private Securities

Litigation Reform Act of 1995, that involve risks and uncertainties.

Many of the forward-looking statements are located in Part I, Item

2 of this Form 10-Q under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that

does not directly relate to any historical or current fact.

In some cases, you can identify forward-looking statements by terminology

such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,”

“expect,” “believe,” “intend,” “may,” “will,” “should,” “could”

and similar expressions.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following discussion and

analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated

financial statements and related notes of Greenlane Holdings, Inc.

and its consolidated subsidiaries (“Greenlane” and, collectively

with the Operating Company and its consolidated subsidiaries, the “Company”, “we”, “us” and “our”)

for the quarterly period ended March 31, 2025 included in Part I, Item 1 of this Quarterly Report on Form 10-Q, and the audited consolidated

financial statements and related notes of Greenlane Holdings, Inc.

for the year ended December 31, 2024, which are included in our Annual

Report on Form 10-K.

Note Regarding Forward-Looking Statements

This Quarterly Report on Form

10-Q (“Form 10-Q”) contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act

of 1995, that involve risks and uncertainties.

Many of the forward-looking statements are located in Part I, Item 2 of this Form 10-Q

under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking

statements provide current expectations of future events based on certain assumptions and include any statement that does not directly

relate to any historical or current fact.

In some cases, you can identify forward-looking statements by terminology such as “anticipate,”

“estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,”

“believe,” “intend,” “may,” “will,” “should,” “could” and similar

Examples of forward-looking statements include, without limitation:

regarding our growth and other strategies, results of operations or liquidity;

concerning projections, predictions, expectations, estimates or forecasts as to our business, financial and operational results and

future economic performance;

regarding our industry;

of management’s goals and objectives;

regarding laws, regulations, and policies relevant to our business;

of revenue, earnings, capital structure and other financial items;

underlying statements regarding us or our business;

similar expressions concerning matters that are not historical facts.

Forward-looking

statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the

times at, or by, which such performance or results will be achieved.

Forward-looking statements are based on information available at

the time those statements are made or management’s good faith belief as of that time with respect to future events and are subject

to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by

statements regarding our growth and other strategies, results of operations or liquidity;

statements concerning projections, predictions, expectations, estimates or forecasts as to our business, financial and operational results and future economic performance;

statements regarding our industry;

statements of management’s goals and objectives;

statements regarding laws, regulations, and policies relevant to our business;

projections of revenue, earnings, capital structure and other financial items;

assumptions underlying statements regarding us or our business;

other similar expressions concerning matters that are not historical facts.

Forward-looking statements should

not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which

such performance or results will be achieved.

Forward-looking statements are based on information available at the time those statements

are made or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties

that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.

Factors that might cause such a difference include those discussed in our filings with the SEC, under the heading “Risk Factors”

in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “2024 Annual Report”) and in other documents

that we file from time to time with the Securities and Exchange Commission (the “SEC”).

Forward-looking statements involve

estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially

from any future results, performances, or achievements expressed or implied by the forward-looking statements.

These risks include, but

are not limited to, those listed below and those discussed in greater detail in Part I, Item 1A of the 2024 Annual Report under the heading

“Risk Factors.”

our strategy, outlook, and growth prospects;

general economic trends, trends in the industry, and the competitive markets in which we operate;

our ability to generate adequate cash from our existing business to support our growth;

our ability to raise capital on favorable terms, or at all, to support the continued growth of the business, including high inflation and increasing interest rates;

our dependence on, and our ability to establish and maintain business relationships with third-party suppliers and service suppliers, including vulnerability to third-party transportation risks;

our ability to accurately estimate demand for our products and maintain appropriate levels of inventory;

our ability to maintain or improve our operating margins and meet sales expectations;

our ability to adapt to changes in consumer spending and general economic conditions;

our ability to maintain consumer brand recognition and loyalty of our products;

our ability to protect our intellectual property rights and use or license certain trademarks;

our ability to successfully identify and complete strategic acquisitions and/or dispositions;

our ability to address product defects and contamination of, or damage to, our products;

our exposure to potential various claims, lawsuits, and administrative proceedings;

our and our customers’ ability to establish or maintain banking relationships;

the impact of governmental laws and regulations and the outcomes of regulatory or agency proceedings;

fluctuations in U.S.

federal, state, local, and foreign tax obligations and changes in tariffs;

any unfavorable scientific studies on the long-term health risks of vaporizers, electronic cigarettes, or cannabis and hemp-derived products, including cannabidiol (“CBD”);

failure of our information technology systems to support our current and growing business;

our ability to prevent and recover from Internet security breaches;

our sensitivity to global economic conditions and international trade issues;

the onset of an economic recession in the United States or other countries, including the impact of the ongoing wars, and their impact on the economy generally;

natural disasters, adverse weather conditions, operating hazards, environmental incidents and labor disputes;

public health crises;

the potential delisting of our Class A common stock from Nasdaq;

increased costs as a result of being a public company;

our failure to maintain adequate internal controls over financial reporting.

Additional risks and uncertainties

not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition

or operating results.

The forward-looking statements

Factors that might cause such a difference include those discussed in our filings with the SEC, under

the heading “Risk Factors” in our Annual Report on Form 10-KA for the fiscal year ended December 31, 2023 (the “2023

Annual Report”) and in other documents that we file from time to time with the Securities and Exchange Commission (the “SEC”).

Forward-looking

statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to

differ materially from any future results, performances, or achievements expressed or implied by the forward-looking statements.

risks include, but are not limited to, those listed below and those discussed in greater detail in Part I, Item 1A of the 2023 Annual

Report under the heading “Risk Factors.”

potential delisting of our Class A common stock from Nasdaq;

expectations about our ability to fully execute actions and steps that would be probable of mitigating the existence of substantial

doubt regarding our ability to continue as a going concern;

strategy, outlook and growth prospects;

economic trends and trends in the industry and markets in which we operate;

dependence on, and our ability to establish and maintain business relationships with, third-party suppliers and service suppliers;

ability to access capital;

competitive environment in which we operate;

vulnerability to third-party transportation risks;

impact of governmental laws and regulations and the outcomes of regulatory or agency proceedings;

ability to accurately estimate demand for our products and maintain appropriate levels of inventory;

ability to maintain or improve our operating margins and meet sales expectations;

ability to adapt to changes in consumer spending and general economic conditions, including the current inflationary environment;

ability to use or license certain trademarks;

ability to maintain consumer brand recognition and loyalty of our products;

and our customers’ ability to establish or maintain banking relationships;

federal, state, local and foreign tax obligation and changes in tariffs;

ability to address product defects;

exposure to potential various claims, lawsuits and administrative proceedings;

contamination

of, or damage to, our products;

unfavorable scientific studies on the long-term health risks of vaporizers, electronic cigarettes, or cannabis or hemp-derived products,

including CBD;

of our information technology systems to support our current and growing business;

ability to prevent and recover from internet security breaches;

ability to generate adequate cash from our existing business to support our growth;

ability to raise capital on favorable terms, or at all, to support the continued growth of the business;

ability to protect our intellectual property rights;

dependence on continued market acceptance of our products by consumers;

sensitivity to global economic conditions and international trade issues;

ability to comply with certain environmental, health and safety regulations;

ability to successfully identify and complete strategic acquisitions;

disasters, adverse weather conditions, operating hazards, environmental incidents and labor disputes;

costs as a result of being a public company;

failure to maintain adequate internal controls over financial reporting.

risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our

business, financial condition or operating results.

forward-looking statements speak only as of the date on which they are made, and, except as required by law, we undertake no obligation

to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect

the occurrence of unanticipated events.

In addition, we cannot assess the impact of each factor on our business or the extent to which

any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Consequently, you should not place undue reliance on forward-looking statements.

in 2005, Greenlane is the premier global platform for the development and distribution of premium cannabis accessories, vape devices,

and lifestyle products.

In 2021, we completed several acquisitions along with a transformative merger with KushCo Holdings, adding a

significant industrial line of business to the Greenlane platform.

These acquisitions strengthened our leading position as a consumer

ancillary products business and significantly expanded our customer network, bringing strategic relationships with leading cannabis multi-state-operators

(“MSOs”), cannabis single-state operators (“SSOs”), and Canadian licensed-producers (“LPs”).

is a leading ancillary cannabis company, providing a wide array of consumer ancillary products and industrial ancillary products to thousands

of cannabis producers, processors, brands, and retailers (“related Cannabis Operators”), in addition to specialty retailers,

smoke shops and head shops, convenience stores, and consumers directly through our own proprietary web stores and large online marketplaces

such as Amazon.

have been developing a world-class portfolio of our own proprietary brands (the “Greenlane Brands”) and carefully curated

third-party products 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 our recently launched more affordable product line – Groove, innovative silicone pipes

and accessories and premium ancillary product brand – Higher Standards.

We also have category exclusive licenses for the premium

Marley Natural branded products, as well as the K.

Haring Glass Collection.

the end of 2021, the Company has invested significantly in technology, including its e-commerce platforms, internal ERP systems, and

B2B capabilities.

Our world-class product portfolio is offered to customers through our proprietary, owned and operated e-commerce platforms

which include Vapor.com, PuffItUp.com, HigherStandards.com, MarleyNaturalShop.com and Wholesale.Greenlane.com.

These platforms allow

us to reach customers directly with helpful resources and a seamless purchasing experience.

merchandise vaporizers, packaging, and other ancillary products in the United States, Canada, Europe and Latin America.

We distribute

products to retailers through wholesale operations and distribute products to consumers through our e-commerce platforms We operate our

own distribution centers in the United States, while also utilizing third-party logistics (“3PL”) locations in Canada.

have made tremendous progress consolidating and streamlining our warehouse and distribution operations over the last two years.

manage our business in two different, but complementary, business segments.

The first is the Consumer Goods segment, which focuses on

serving consumers across wholesale, retail, and e-commerce operations—offering both our Greenlane Brands as well as ancillary products

and accessories from select leading third-party brands, such as Storz and Bickel, Grenco Science, PAX, Arizer and more.

Goods segment forms a central part of our growth strategy, especially as it relates to scaling our own portfolio of higher-margin proprietary

owned brands.

In addition to our Consumer Goods segment, we have our Industrial Goods segment, which focuses on serving Cannabis Operators

by providing ancillary products essential to their daily operations and growth, such as packaging and vaporization solutions, including

our Greenlane Brand Pollen Gear.

Refer to “Note 12— Segment Reporting” within this Form 10-Q for additional information

on our reportable segments.

to Accelerate Path to Profitability and Capitalize the Business

today’s economic landscape, particularly within the cannabis industry, achieving profitability and preserving working capital are

At Greenlane, we are intensely focused on making our business profitable and well-capitalized for long-term sustainability.

speak only as of the date on which they are made, and, except as required by law, we undertake no obligation to update any forward-looking

statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated

In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors,

may cause actual results to differ materially from those contained in any forward-looking statements.

Consequently, you should not place

undue reliance on forward-looking statements.

Founded in 2005, Greenlane is

a premier global platform for the development and distribution of premium cannabis accessories, vape devices, and lifestyle products.

With three different mergers in 2021, Greenlane was able to strengthen its leading position as a consumer ancillary products house-of-brands

business, significantly expanding its customer network, bringing strategic relationships with leading cannabis multi-state operators (“MSOs”),

cannabis single-state operators (“SSOs”), and Canadian licensed producers (“LPs”).

Greenlane provides a wide array

of consumer ancillary products and industrial ancillary products to thousands of cannabis producers, processors, brands, and retailers

(“Cannabis Operators”).

In addition, it serves specialty retailers, smoke shops, head shops, convenience stores, and consumers

directly through its own proprietary web stores and large online marketplaces such as Amazon.

We have been developing a world-class

portfolio of both our own proprietary brands (the “Greenlane Brands”) along with close partner brands that we believe will,

over time, deliver higher margins and create long-term value for our customers and shareholders.

Our Greenlane Brands include our more

affordable product line – Groove, our premium smoke shop and ancillary product brand – Higher Standards, and our child-resistant

packaging brand - Pollen Gear.

In collaboration with our partner brands, including the innovative silicone pipes and accessories line,

Eyce, and the premium vaporizer brand, DaVinci, Greenlane is strategically positioned to serve as a comprehensive one-stop shop for all

We also have category exclusive licenses for the premium Marley Natural branded products, as well as the Keith Haring branded

The Greenlane Brands, along with

a curated set of third-party products, are offered to customers through our proprietary, owned and operated e-commerce platforms which

include Wholesale.Greenlane.com, Vapor.com, PuffItUp.com, HigherStandards.com, and MarleyNaturalShop.com.

Additionally, our presence on

popular e-commerce platforms such as Amazon, Etsy, and eBay enable us to reach customers directly, providing them with valuable resources

and a seamless purchasing experience.

We merchandise vaporizers, packaging,

and other ancillary products in the United States, Canada, Europe, and Latin America.

We distribute products to retailers through wholesale

operations and distribute products to consumers through constantly evolving e-commerce activities.

We operate our own distribution center

in the United States, while also utilizing third-party logistics (“3PL”) locations in Canada.

We made tremendous progress

consolidating and streamlining our warehouse and distribution in 2023 and 2024, including the consolidations of our warehouse in Worcester,

MA and 3PL location in Hebron, KY to our owned facility in Moreno Valley, California in 2023.

Greenlane offers a full spectrum

of products, positioning us to meet all our customers’ growing demands.

We focus on serving consumers across wholesale, retail,

and e-commerce operations—offering all of our Greenlane Brands, as well as ancillary products and accessories from select leading

third-party brands such as Storz and Bickel, Grenco Science, PAX, Cookies, and more.

Our direct to consumer channels form a central part

of our growth strategy, especially as it relates to scaling our own portfolio of higher-margin proprietary owned brands.

In addition we

serve Cannabis Operators by providing ancillary products essential to their daily operations and growth, such as packaging and vaporization

solutions, including our Greenlane Brand Pollen Gear.

We have historically experienced

only moderate seasonality in the direct to consumer side of our business, particularly during the fourth quarter.

This coincides with

Cyber Monday (the first Monday after Thanksgiving, when online retailers typically offer holiday discounts), and as our customers build

up their inventories in anticipation of the holiday season.

We also have related promotional marketing campaigns during this period.

Plan to Accelerate Path to Profitability and Capitalize

In today’s economic landscape,

particularly within the cannabis industry, achieving profitability and preserving working capital are paramount.

At Greenlane, we are

intensely focused on making our business profitable and well-capitalized for long-term sustainability.

Our key initiatives include:

Enhancements:

We remain fully committed to improving our technology, particularly our B2B and e-commerce platforms, to provide a

seamless shopping experience for our wholesale and retail customers.

Footprint Rationalization:

In 2023 and 2024, we optimized our facilities footprint by reducing warehouse and office space while increasing

operational efficiency and improving fulfillment practices.

Technology Enhancements:

We remain fully committed to improving our technology, particularly our B2B and e-commerce platforms, to provide a seamless shopping experience for our wholesale and retail customers.

Facility Footprint Rationalization:

In 2023 and 2024, we optimized our facilities footprint by reducing warehouse and office space while increasing operational efficiency and improving fulfillment practices.

The full benefit of those efforts are expected to be realized in 2024.

We have significantly reduced our headcount and associated salary expenses, focusing on maintaining a core group of key

employees as we collectively right-size the business.

Structure Optimization:

Headcount Reduction:

We have significantly reduced our headcount and associated salary expenses, focusing on maintaining a core group of key employees as we collectively right-size the business.

Cost Structure Optimization:

We continue to reduce our overall cost structure while improving margins.

In April 2023, we formed two strategic

partnerships (described below in greater detail) to increase margins and significantly reduce working capital requirements in our

Industrial Goods segment.

Similarly, our Consumer Goods segment restructured arrangements with several third-party brands in 2022

and 2023 to reduce our working capital needs.

In 2023, we implemented a new inventory management and lifecycle strategy that is focused on a quarterly turn and a regular

review of inventory to avoid future write-offs.

Force Upgrade:

We have upgraded and will continue to upgrade our sales force from a solely account management centric team to a skilled

and driven sales team to acquire new customers while maintaining excellent service with our existing customers

We launched Groove, an innovative new product line with a value-based price point and in 2024 we have begun to expand

our product offering to further enhance our assortment available to our customers.

We continue to seek opportunities for securing investment capital to leverage our platform, increase availability and

reduce stockouts of our high demand third-party brands, invest in marketing and sales, and improve our product offerings.

believes that these initiatives will significantly reduce costs, help accelerate the Company’s path to profitability, support business

growth, and allow the Company to reinvest capital into its highest demand and highest potential product lines.

2023 and 2024, the Company received capital from various sources permitting it to right-size the business and position the company for

Such sources are described in greater detail in the Liquidity and Capital Resources Section of this report.

2023 and 2024, the Company also entered into certain arrangements to reduce working capital requirements and improve its balance sheet.

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.

On August 8, 2024 the Company terminated its strategic partnership with MJ Packaging

and is resuming its business as a direct provider of packaging solutions to the cannabis industry.

MJ Packaging however,

remains a distribution customer of the Company.

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 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.

May 6, 2024, the Company, Warehouse Goods and Synergy entered into an asset purchase agreement, dated May 1, 2024 (the “Asset Purchase

In April 2023, we formed two strategic partnerships (described below in greater detail) to increase margins and significantly reduce working capital requirements in our Industrial Goods segment.

Similarly, our Consumer Goods segment restructured arrangements with several third-party brands in 2022 and 2023 to reduce our working capital needs.

Inventory Management:

In 2024, we implemented a new inventory management and lifecycle strategy that is focused on a quarterly turn and a regular review of inventory to avoid future write-offs.

Sales Force Upgrade:

We have upgraded and will continue to upgrade our sales force from a solely account management centric team to a skilled and driven sales team to acquire new customers while maintaining excellent service with our existing customers

Product Innovation:

We launched Groove, an innovative new product line with a value-based price point and in 2024 we have begun to expand our product offering to further enhance our assortment available to our customers.

Capital Investment:

We continue to seek opportunities for securing investment capital to leverage our platform, increase availability and reduce stockouts of our high demand third-party brands, invest in marketing and sales, and improve our product offerings.

Management believes that these

initiatives will significantly reduce costs, help accelerate the Company’s path to profitability, support business growth, and allow

the Company to reinvest capital into its highest demand and highest potential product lines.

During 2024 and 2025, the Company

received capital from various sources permitting it to right-size the business and position the company for growth.

Such sources are described

in greater detail in the Liquidity and Capital Resources Section of this report.

During 2024 and 2025, the Company

also entered into certain arrangements to reduce working capital requirements and improve its balance sheet.

In April 2023, we entered into

two strategic partnership.

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

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

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 partners.

While the strategic partnerships may result in a decrease in top

line revenue for these packaging and vape products, these partnerships combined with some of our other restructuring initiatives should

allow us to reduce our overall cost-structure and enhance our margins, thereby improving our balance sheet.

On May 6, 2024, the Company, Warehouse

Goods and Synergy Imports LLC (“Synergy”) entered into an asset purchase agreement, dated May 1, 2024 (the “Asset Purchase

Agreement”) pursuant to which Synergy purchased all of the intellectual property, a specified amount of inventory, and other assets

1 unchanged sentence

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

As part of the overall modification, the principal balance with Synergy decreased by $2.7 million from $5.1 million.

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 the three and nine months ended September 30, 2024 within other income (expense).

At September 30, 2024,

$2.7 million of such financing remained outstanding.

As of the filing date of this statement and as a result of restructuring

efforts, the maturity of this note is October 2025.

PACT Act Exemption

January 11, 2022, we announced via press release that the United States Postal Service (the “USPS”) had approved our application

for a business and regulatory exemption to the PACT Act (with respect to the business and regulatory exemption granted by the USPS, the

“PACT Act Exemption”), allowing us to ship vaporizers and accessories classified as electronic nicotine delivery systems

(“ENDS”) products to other compliant businesses.

With this approval, over 97% of our total annual sales became eligible for

shipment by freight, USPS and other major parcel carriers.

The PACT Act Exemption also enables us to partner with other businesses that

ship ENDS products and had their supply chains disrupted by PACT Act compliance.

June 24, 2022, we provided via press release an update on the progress of the PACT Act Exemption, following our successful implementation

of the controls, processes and systems required by the USPS in connection with the shipment of ENDS products.

We expect the ability to

fulfill ENDS orders with the USPS to allow us to reduce shipping costs, decrease fulfillment times and enhance the overall customer experience

for approved wholesale customers.

June 2, 2023, we filed a Certificate of Amendment to the A&R Charter with the SSSD, which effected 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 at 5:01 PM Eastern Time on June 5, 2023.

As a result of the 2023 Reverse Stock Split,

every 10 shares of common stock issued and outstanding were converted into one share of common stock.

We paid cash in lieu of fractional

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

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

All outstanding

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

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

The number of shares

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

10 — Compensation Plans” for more information.

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.

share and per share amounts were retroactively adjusted for all periods presented to give effect to the Reverse Stock Split.

Accounting Estimates

prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America

The preparation of these financial statements requires us to make estimates and assumptions that affect the

reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements,

and the reported amounts of revenue and expenses during the reporting period.

We evaluate our estimates and assumptions on an ongoing

We base our estimates on historical experience, outside advice from parties believed to be experts in such matters, and on various

other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments

about the carrying value of assets and liabilities that are not readily apparent from other sources.

Judgments and uncertainties affecting

the application of those policies may result in materially different amounts being reported under different conditions or using different

See “Note 2—Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements

included in Part II, Item 8 of this Form 10-K for a description the significant accounting policies and methods used in the preparation

of our consolidated financial statements.

consisting of finished products, are primarily accounted for using the weighted-average method, and are valued at the lower of cost and

net realizable value.

This valuation requires us to make judgments, based on currently available information, about the likely method

of disposition, such as through sales to customers or liquidations.

Assumptions about the future disposition of inventory are inherently

uncertain and changes in our estimates and assumptions may cause us to realize material write-downs in the future.

Taxes and TRA Liability

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

Certain subsidiaries of the Operating Company are taxable separately

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

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

As a result, in 2023,

100% of the Operating Company’s US and state income and expenses are now included in our US and state tax returns.

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

result in taxable or deductible amounts in the future.

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

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

A valuation allowance is recognized for deferred tax assets

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

In making such a determination,

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

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

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.

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.

USPS PACT Act Exemption

On January 11, 2022, we announced

via press release that the United States Postal Service (the “USPS”) had approved our application for a business and regulatory

exemption to the PACT Act (with respect to the business and regulatory exemption granted by the USPS, the “PACT Act Exemption”),

allowing us to ship vaporizers and accessories classified as electronic nicotine delivery systems (“ENDS”) products to other

compliant businesses.

With this approval, over 97% of our total annual sales became eligible for shipment by freight, USPS and other major

parcel carriers.

The PACT Act Exemption also enables us to partner with other businesses that ship ENDS products and had their supply

chains disrupted by PACT Act compliance.

On June 24, 2022, we provided

via press release an update on the progress of the PACT Act Exemption, following our successful implementation of the controls, processes

and systems required by the USPS in connection with the shipment of ENDS products.

We expect the ability to fulfill ENDS orders with the

USPS to allow us to reduce shipping costs, decrease fulfillment times and enhance the overall customer experience for approved wholesale

Critical Accounting Estimates

We prepare our consolidated financial

statements in conformity with accounting principles generally accepted in the United States of America (“U.S.

preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and

liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue

and expenses during the reporting period.

We evaluate our estimates and assumptions on an ongoing basis.

We base our estimates on historical

experience, outside advice from parties believed to be experts in such matters, and on various other assumptions that are believed to

be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and

liabilities that are not readily apparent from other sources.

Judgments and uncertainties affecting the application of those policies

may result in materially different amounts being reported under different conditions or using different assumptions.

See “Note 2—Summary

of Significant Accounting Policies” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K

for a description the significant accounting policies and methods used in the preparation of our consolidated financial statements.

Inventories, consisting of finished

products, are primarily accounted for using the weighted-average method, and are valued at the lower of cost and net realizable value.

This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as

through sales to customers or liquidations.

Assumptions about the future disposition of inventory are inherently uncertain and changes

in our estimates and assumptions may cause us to realize material write-downs in the future.

Income Taxes and TRA Liability

We are a corporation subject to

income taxes in the United States.

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

Our proportional share

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

As of December 31, 2022, we held

all the outstanding Common Units in the Operating Company and are the sole member.

As a result, in 2023, 100% of the Operating Company’s

US and state income and expenses are now 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

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

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

addition to tax expenses, we may incur expenses related to our operations and may be required to make payments under the Tax Receivable

Agreement (the “TRA”), which could be significant.

Pursuant to the Greenlane Operating Agreement, Greenlane Holdings, LLC

will generally make pro rata tax distributions to its members in an amount sufficient to fund all or part of their tax obligations with

respect to the taxable income of Greenlane Holdings, LLC that is allocated to them and possibly in excess of such amount.

Accounting Pronouncements

“Note 2—Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements included in Part

II, Item 8 of our Form 10-K filed on July 19, 2024.

of Operations

following table presents operating results for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended

September 30,

Nine Months Ended

September 30,

% of Net sales

In addition to tax expenses, we

may incur expenses related to our operations and may be required to make payments under the Tax Receivable Agreement (the “TRA”),

which could be significant.

Pursuant to the Greenlane Operating Agreement, Greenlane Holdings, LLC will generally make pro rata tax distributions

to its members in an amount sufficient to fund all or part of their tax obligations with respect to the taxable income of Greenlane Holdings,

LLC that is allocated to them and possibly in excess of such amount.

Legal Contingencies

In the ordinary course of business,

we are involved in legal proceedings involving a variety of matters.

Certain of these matters include speculative claims for substantial

or indeterminate amounts of damages.

We evaluate the associated developments on a regular basis and accrue a liability when we believe

that it is both probable that a loss has been incurred and the amount can be reasonably estimated.

If we determine there is a reasonable

possibility that we may incur a loss and the loss or range of loss can be estimated, we disclose the possible loss in the accompanying

notes to the consolidated financial statements to the extent material.

We review the developments in

our contingencies that could affect the amount of the provisions that have been previously recorded, and the matters and related reasonably

possible losses disclosed.

We make adjustments to our provisions and changes to our disclosures accordingly to reflect the impact of negotiations,

settlements, rulings, advice of legal counsel, and updated information.

Significant judgment is required to determine both the probability

of loss and the estimated amount of loss.

The outcome of these matters is

inherently uncertain.

Therefore, if one or more legal proceedings were resolved against us for amounts in excess of management’s

expectations, our results of operations and financial condition, including in a particular reporting period in which any such outcome

becomes probable and estimable, could be materially adversely affected.

See “Note 7—Commitments and Contingencies” of

the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for additional information regarding these

contingencies.

Recent Accounting Pronouncements

See “Note 2—Summary

of Significant Accounting Policies” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of our Form 10-K

filed on March 21, 2025.

Results of Operations

The following table presents operating results for

the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

% of Net sales

8 unchanged sentences

Interest expense

Change in fair value of contingent consideration

Gain on extinguishment of debt

Other income (expense), net

Other income, net

Total other expense, net

1 unchanged sentence

Provision for (benefit from) income taxes

Net income (loss) attributable to non-controlling interest

Net loss attributable to non-controlling interest

Net loss attributable to Greenlane Holdings, Inc.

Results of Operations

the three months ended September 30, 2024, net sales were approximately

$4.0 million, compared to approximately $11.8 million for the same period in 2024, representing a decrease of $7.8 million, or 65.8%.

The year-over-year decrease in net sales was due to a major restructuring of our Industrial Group in April of 2023, involving our packaging

and industrial vaping product lines;

transitioning much of this business from a gross sales to a commission structure to preserve working

Revenues decreased in the Consumer Brands Group due, in part, to restructuring efforts and shift in strategy to focus on in-house

brands that carry a higher margin profile while rationalizing third-party brand offerings, which generated top line revenue with lower

The consumer products were affected by the inability to access capital markets on equitable terms, resulting in stock-outs and

shortages of higher velocity inventory.

The Company is continuing to focus on profitable revenue and as a result top line revenue has

significantly been reduced.

Concurrently, the Company has continued its focus on right-sizing the business during the fiscal year ended

December 31, 2023 and through present, in an effort to reduce sales and marketing costs and reduce or eliminate certain administrative

the nine months ended September 30, 2024, net sales were approximately $11.6 million, compared to approximately $55.4 million for the

same period in 2024, representing a decrease of $43.8 million, or 79.0%.

The year-over-year decrease in net sales was due to a major

restructuring of our Industrial Group in April of 2023, involving our packaging and industrial vaping product lines;

transitioning much

of this business from a gross sales to a commission structure to preserve working capital.

Revenues decreased in the Consumer Brands

Group due, in part, to restructuring efforts and shift in strategy to focus on in-house brands that carry a higher margin profile while

rationalizing third-party brand offerings, which generated top line revenue with lower margins.

The consumer products were affected by

the inability to access capital markets on equitable terms, resulting in stock-outs and shortages of higher velocity inventory.

is continuing to focus on profitable revenue and as a result top line revenue has significantly been reduced.

Concurrently, the Company

has continued its focus on right-sizing the business during the fiscal year ended December 31, 2023 and through present, in an effort

to reduce sales and marketing costs and reduce or eliminate certain administrative functions.

of Sales and Gross Margin

the three months ended September 30, 2024, cost of sales decreased by $7.7

million, or 88.3%, as compared to the same period in 2023.

The decrease in the cost of sales is driven by the 65.8% decrease in revenue

in addition to a decrease in damaged and obsolete inventory write-offs.

For the nine months ended September

30, 2024, cost of sales decreased by $36.1 million, or 85.6%, as compared to the same period in 2023.

The decrease in the cost of sales

is driven by the 79.0% decrease in revenue in addition to a decrease in damaged and obsolete inventory write-offs.

margin percentage increased 48.4% to 75.0% for the three months ended September

30, 2024, compared to 26.5% for the same period in 2023.

margin percentage increased 23.9% to 47.8% for the nine months ended September

30, 2024, compared to 23.9% for the same period in 2023.

Benefits and Payroll Taxes

benefits and payroll taxes expenses decreased by approximately $2.5 million,

or 60.4%, to $1.6 million for the three months ended September 30, 2024, compared to $4.1 million for the same period in 2023.

is related to the reduction in workforce to right-size the business and focus on profitability.

benefits and payroll taxes expenses decreased by approximately $8.5 million,

or 58.4%, to $6.1 million for the nine months ended September 30, 2024, compared to $14.6 million for the same period in 2023.

is related to the reduction in workforce to right-size the business and focus on profitability.

we continue to closely monitor the evolving business landscape, we remain focused on identifying cost-saving opportunities while delivering

on our strategy to recruit, train, promote and retain the most talented and success-driven personnel in the industry.

and Administrative Expenses

and administrative expenses decreased by approximately $3.7 million, or 67.4%, for the three months ended September 30, 2024, compared to

the same period in 2023.

The decrease is related to major restructuring effort by the Company to reduce cost and right-size the business.

Compared with the first quarter of 2023, the Company focused on reduction across the board in general and administrative expenses and

saw large decreases in professional and outside services, facility expenses, outbound freight, other general and administrative, marketing,

taxes and licenses, and general insurance.

and administrative expenses decreased by approximately $13.3 million, or 66.0%, for the nine months ended September 30, 2024, compared to the

same period in 2023.

The decrease is related to major restructuring effort by the Company to reduce cost and right-size the business.

Compared with the first quarter of 2023, the Company focused on reduction across the board in general and administrative expenses and

saw large decreases in professional and outside services, facility expenses, outbound freight, other general and administrative, marketing,

Consolidated Results of Operations

For the three months ended March

31, 2025, net sales were approximately $1.5 million, compared to approximately $4.9 million for the same period in 2024, representing

a decrease of $3.5 million, or 70.2%.

The year-over-year decrease in net sales was due to a major restructuring of our Industrial Group

in April of 2023, involving our packaging and industrial vaping product lines;

transitioning much of this business from a gross sales

to a commission structure to preserve working capital.

Revenues decreased in the Consumer Brands Group due, in part, to restructuring

efforts and shift in strategy to focus on in-house brands that carry a higher margin profile while rationalizing third-party brand offerings,

which generated top line revenue with lower margins.

The Company is continuing to focus on profitable revenue and as a result top line

revenue has significantly been reduced.

Concurrently, the Company has continued its focus on right-sizing the business during the fiscal

year ended December 31, 2024 and through present, in an effort to reduce sales and marketing costs and reduce or eliminate certain administrative

Cost of Sales and Gross Margin

For the three

months ended March 31, 2025, cost of sales decreased by $2.7 million, or 78.1%, as compared to the same period in 2024.

was is driven by the 70.2% decrease in revenue in addition to a decrease in damaged and obsolete inventory write-offs.

Gross margins

increased by 18.4% to 49.1% for the three months ended March 31, 2025, compared to 30.7% for the same period in 2024.

in gross margins is in part related to transitioning to a commission revenue model for the majority of the vaporizer sales with 100%

margin versus gross revenue with lower margins.

Salaries, Benefits and Payroll Taxes

Salaries, benefits and payroll

taxes expenses were approximately $1.3 million for the three months ended March 31, 2025, compared to $2.9 million for the same period

The decrease is related to the reduction in workforce to right-size the business and focus on profitability.

As we continue to closely monitor

the evolving business landscape, we remain focused on identifying cost-saving opportunities while delivering on our strategy to recruit,

train, promote and retain the most talented and success-driven personnel in the industry.

General and Administrative Expenses

General and administrative expenses

were approximately $2.8 million for the three months ended March 31, 2025, compared to $2.3 million for the same period in 2024.

is related increases in professional and outside services, facility expenses, outbound freight, other general and administrative, marketing,

taxes and licenses, and general insurance.

and Amortization Expense

and amortization expense decreased $0.3 million, or 64.7%, for the three months ended September 30, 2024, compared to the same period in 2023.

The decrease is related to a major restructuring effort to reduce cost and right-size the business resulting in the sale and disposal

of assets related to reducing our warehousing and office footprint.

and amortization expense decreased $0.9 million, or 57.4%, for the nine months ended September 30, 2024, compared to the same period in 2023.

Depreciation and Amortization Expense

Depreciation and amortization

expense were approximately $0.1 million for the three months ended March 31, 2025, compared to $0.3 million for the same period in 2024.

The decrease is related to a major restructuring effort to reduce cost and right-size the business resulting in the sale and disposal

of assets related to reducing our warehousing and office footprint.

Income (Expense), Net

expense decreased approximately $0.2 million for the three months ended

September 30, 2024 compared to the same period in 2023.

The decrease is primarily related to reduction in overall debt financing and refinancing

debt for more favorable terms.

expense decreased approximately $1.1 million for the nine months ended September

30, 2024 compared to the same period in 2023.

The decrease is primarily related to reduction in overall debt financing and refinancing

debt for more favorable terms.

in fair value of contingent consideration

was a change in fair value of contingent consideration of approximately

$1.0 million for the nine months ended September 30, 2024 compared to the same period in 2023.

The change is primarily related to known

reductions in earnouts related to Davinci and Eyce products.

on debt extinguishment

was an increase in gain on debt extinguishment of approximately $2.2 million

for the nine months ended September 30, 2024, compared to the same period in 2023.

The change is primarily related to a difference in

the reduction in overall debt modification with Synergy, offset by the carrying value of the Davinci and Eyce assets acquired by Synergy.

For further information, see Note 6, “Debt” of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1

of this Form 10-Q.

for (Benefit from) Income Taxes

the three and nine months ended September 30, 2024 and 2023, respectively, the effective tax rate differed from the U.S.

federal statutory

tax rate of 21% primarily due to the Operating Company’s pass-through structure for U.S.

income tax purposes (through December

31, 2022), the relative mix in earnings and losses in the U.S.

versus foreign tax jurisdictions, and the valuation allowance against

the deferred tax asset.

Capital Resources and Going Concern

Other Income (Expense), Net

Interest expense

Interest expense decreased approximately

$0.1 million for the three months ended March 31, 2025 compared to the same period in 2024.

The decrease is primarily related to reduction

in overall debt as all of the Company’s debt was paid off in February 2025.

Provision for (Benefit from) Income Taxes

For the three months ended March

31, 2025 and 2024, respectively, the effective tax rate differed from the U.S.

federal statutory tax rate of 21% primarily due to the

Operating Company’s pass-through structure for U.S.

income tax purposes (through December 31, 2022), the relative mix in earnings

and losses in the U.S.

versus foreign tax jurisdictions, and the valuation allowance against the deferred tax asset.

Liquidity, Capital Resources and Going Concern

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

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

other equity issuances.

As of September 30, 2024, we had approximately $2.3 million of cash, of which none was restricted and $0.1 million

was held in foreign bank accounts, and approximately $2.5 million of negative working capital, which is calculated as total current assets

minus total current liabilities, as compared to approximately $0.5 million of cash, of which $0.1 million was held in foreign bank accounts,

and approximately $3.7 million of working capital as of December 31, 2023.

The repatriation of cash balances from our foreign subsidiaries

could have adverse tax impacts or be subject to capital controls;

however, these balances are generally available to fund the ordinary

business operations of our foreign subsidiaries without legal or other restrictions.

believe that our cash on hand and the cash flow that we generate from our operations will not 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 September 30, 2024, we may have insufficient cash to fund planned

operations into the fourth quarter of 2024.

This is evident from our continued efforts to raise capital and leverage external funding

to fulfil our capital needs as highlighted below.

Program and Shelf Registration Statement

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

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.

from equity issuances.

As of March 31, 2025, we had approximately $8.5 million of cash, of which none was restricted and $0.1 million

was held in foreign bank accounts, and approximately $1 8.6 million of working capital, which is calculated as total current assets minus

total current liabilities, as compared to approximately $0.9 million of cash, of which none was restricted and $0.1 million was held in

foreign bank accounts, and approximately $1.5 million of working capital as of December 31, 2024.

The repatriation of cash balances from

our foreign subsidiaries could have adverse tax impacts or be subject to capital controls;

however, these balances are generally available

to fund the ordinary business operations of our foreign subsidiaries without legal or other restrictions.

believe that our cash on hand and the cash flow that we generate from our operations and financing activities from recent equity fundraisings

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 March 31,

2025, we expect to have sufficient cash to fund planned operations into the second quarter of 2026.

This is largely due to the Company’s

Private Placement that occurred on February 19, 2025.

primary requirements for liquidity and capital are working capital, equity fundraising, 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 equity and

debt transactions, as well as proceeds from equity issuances, such as our July 2023, August 2024, and February 2025 Offerings, each as

described and defined below.

ATM Program and Shelf Registration

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

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

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, we are unable to issue additional shares of Class A common stock pursuant to the

ATM Program or otherwise use the Shelf Registration Statement.

Stock and Warrant Offerings

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

aggregate of 50,952 shares of our Class A common stock, pre-funded warrants to purchase up to 317,013 shares of our Class A Common Stock

(the “July 2023 Pre-Funded Warrants”) and warrants to purchase up to 735,931 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

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

$3.8 million and closed on July 3, 2023.

August 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 will issue an aggregate of 2,363,637 units and pre-funded

The pre-funded units will be sold at the same purchase price as the units, less the pre-funded warrant exercise price of $0.00001.

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.

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

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

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

2 to the Loan Agreement,

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

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

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

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

outstanding under the terms of the Loan Agreement.

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

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

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

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

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

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

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

Receivables Financings

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.

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

June 7, 2024, the Company entered into a subscription agreement with Cobra Alternative Capital Strategies, LLC.

As of September 30, 2024,

the Company has been loaned $3.1 million with net cash proceeds of $2.6 million with a remaining balance of $1.0 million.

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.

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 new S-3

for utilization of our Shelf Registration Statement.

Common Stock and Warrant Offerings

August 12, 2024, the Company entered into a securities purchase agreement with three different funds of a single institutional investor

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 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 was 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

The Exchange Note was repaid out of the proceeds of the February 2025 Offering.

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.

As part of the February 2025 Offering, the exercise price of these warrants was adjusted

to $1.19 per share.

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.

The Cobra Note was repaid out of the February 2025

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.

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 (“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

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.

Notes Payable

On June 7, 2024, the Company entered

into a subscription agreement with Cobra Alternative Capital Strategies, LLC.

As of December 31, 2024, the Company has been loaned $3.1

million with net cash proceeds of $2.6 million.

On October 29, 2024, the Company

entered into the First Amendment to Amended and Restated Secured Promissory Note (the “Note Amendment”) with Cobra Alternative

Capital Strategies LLC (“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 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

The Note Amendment was repaid out of the February 2025 Private Placement.

Management Initiatives

have completed several initiatives to optimize our working capital requirements.

2 unchanged sentences

working capital requirements.

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 provider of packaging

solutions to the cannabis industry.

On August 8, 2024 the Company terminated its strategic partnership with MJ Packaging and is

resuming its business as a direct provider of packaging solutions to the cannabis industry.

MJ Packaging however, remains a

distribution customer of the Company.

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 partners.

While the strategic partnership may result in a decrease in top line revenue for these 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.

April 2023, we entered into two strategic.

First, we entered into a strategic partnership (the “MJ Packaging Partnership”)

with A&A Global Imports d/b/a MarijuanaPackaging.com (“MJ Pack”), a 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 partners.

While the strategic partnerships may result in a decrease in

top line revenue for these packaging and vape products, these partnerships combined with some of our other restructuring initiatives should

allow us to reduce our overall cost-structure and enhance our margins, thereby improving our balance sheet

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

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

We have reduced our

workforce by approximately 49% throughout fiscal year 2023 to reduce costs and align with our revenue projections.

have incurred net losses of $8.9 million and $27.8 million for the nine

months ended September 30, 2024 and 2023, respectively.

For the nine months ended September 30, 2024, cash used in operating activities

was $5.2 million and cash used in operating activities for the year ended December 31, 2023 was $1.8 million.

The recent macroeconomic

environment has caused weaker demand than contemplated under our business plan, resulting in a reduction in projected revenue and cash

flows for the twelve-month period included in the going concern evaluation.

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

ability to continue as a going concern.

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

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

without limitation:

reducing operating costs expense by taking additional restructuring actions to align cost with revenue to achieve profitability.

revenue by introducing new products and acquiring new customers.

on strategic partnerships accretive to margins and operating cash

additional capital through the issuance of debt or equity securities.

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

We have reduced our workforce

by approximately 43% throughout fiscal year 2024 to reduce costs and align with our revenue projections.

We have incurred net losses of

$2.6 million and $4.5 million for the three months ended March 31, 2025 and 2024, respectively.

For the three months ended March 31, 2025,

cash used in operating activities was $3.4 million and cash used in operating activities

for the three months ended March 31, 2024 was $0.1 million.

The recent macroeconomic environment has caused weaker demand than contemplated

under our business plan, resulting in a reduction in projected revenue and cash flows for the twelve-month period included in the going

concern evaluation.

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.

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.

opinions concerning liquidity are based on currently available information.

To the extent this information proves to be inaccurate, or

if circumstances change, future availability of trade credit or other sources of financing may be reduced and our liquidity could be

adversely affected.

Our future capital requirements and the adequacy of available funds will depend on many factors, including those

described in the section titled “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31,

Depending on the severity and direct impact of these factors on us, we may be unable to secure additional financing to meet our

operating requirements on terms favorable to us, or at all.

of September 30, 2024, we did not have any off-balance sheet arrangements that are reasonably likely to have a material current or future

effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources.

following summary of cash flows for the periods indicated has been derived from our condensed consolidated financial statements included

elsewhere in this Quarterly Report on Form 10-Q:

Nine Months Ended

September 30,

if circumstances change, future availability of trade credit or other sources of financing may be reduced and our liquidity could be adversely

Our future capital requirements and the adequacy of available funds will depend on many factors, including those described in

the section titled “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 .

Depending on the severity and direct impact of these factors on us, we may be unable to secure additional financing to meet our operating

requirements on terms favorable to us, or at all.

of March 31, 2025 , we did not have any off-balance sheet arrangements that are reasonably

likely to have a material current or future effect on our financial condition, results of operations, liquidity, capital expenditures,

or capital resources.

The following summary of cash

flows for the periods indicated has been derived from our condensed consolidated financial statements included elsewhere in this Quarterly

Report on Form 10-Q:

Three Months Ended March 31,

(in thousands)

Net cash (used in) provided by operating activities

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by (used in) financing activities

Cash (Used in) Provided by Operating Activities

the nine months ended September 30, 2024, net cash used in operating activities of $5.2 million consisted of a net loss of $8.8 million,

offset partially by non-cash adjustments to the net loss of $1.0 million and a $1.2 million decrease in working capital driven by decreases

in inventories of $4.2 million and decreases in accrued expenses of $0.5 million reduced by a decrease in customer deposits of $1.5 million

and an increase in accounts receivable of $0.7 million.

the nine months ended September 30, 2023, net cash “provided” by operating activities of approximately $1.2 million consisted

of a net loss of $27.9 million offset by non-cash adjustments to net loss of approximately $4.4 million and a $24.7 million increase

in working capital driven by an $18 million decrease in inventory, a $4.7 million decrease in accounts receivable, and a $4.0 million

decrease in other assets reduced by a $3.1 million decrease in accounts payable.

Cash Used in Investing Activities

the nine months ended September 30, 2024, net cash used in investing activities of approximately $0.2 million consisted primarily of capital

expenditures.

During the nine months ended September 30, 2023, net cash provided

by investing activities of approximately $0.6 million , offset by cash used for development costs for our new enterprise resource planning

(ERP) system of $0.6 million.

Cash Provided bv (Used in) Financing Activities

the nine months ended September 30, 2024, net cash provided by financing

activities of approximately $7.2 million primarily consisted of approximately $0.9 million in payments on loans against future accounts

receivable, approximately $0.2 million in proceeds from future receivables financing, approximately $2.1 million in proceeds from notes

payable, $3.0 in repayments on notes payable, and $5.6 million in net proceeds from the issuance of common stock.

the nine months ended September 30, 2023, net cash provided by financing activities of approximately $10.5 million primarily consisted

of cash proceeds of approximately $3.9 million from the issuance of Class A common stock through our ATM Program and the June 2022 Offering,

offset primarily by approximately $2.5 million in payments on notes payable, finance lease obligations and other long-term liabilities,

and approximately $0.3 million in payments of contingent consideration related to the Eyce LLC acquisition.

Cybersecurity

Management and Strategy

recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information

systems and protect the confidentiality, integrity, and availability of our data.

Material Risks & Integrated Overall Risk Management

have strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture

of cybersecurity risk management.

This integration ensures that cybersecurity considerations are an integral part of our decision-making

processes at every level.

Our management team continuously evaluates and addresses cybersecurity risks in alignment with our business

objectives and operational needs.

Third-party Risk

we are aware of the risks associated with third-party service providers, we have implemented stringent processes to oversee and manage

We conduct thorough security assessments of all third-party providers before engagement and maintain ongoing monitoring

to ensure compliance with our cybersecurity standards.

The monitoring includes annual assessments of the SOC reports of our providers

and implementing complementary controls.

This approach is designed to mitigate risks related to data breaches or other security incidents

originating from third-parties.

from Cybersecurity Threats

have not encountered cybersecurity challenges that have materially impaired our operations or financial standing.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Net Cash (Used in) Provided by Operating Activities

During the three months ended

March 31, 2025, net cash used in operating activities of approximately $3.4 million consisted of (i) net loss of $3.9 million, offset

by non-cash adjustments to net loss of approximately $0.4 million, and (ii) a $0.1 million increase in working capital primarily driven

by increases in accounts receivable, inventory and accrued expenses of approximately $0.2 million and decreases in customer and

vendor deposits of approximately $0.3 million.

During the three months ended

March 31, 2024, net cash used in operating activities of approximately $0.1 million consisted of (i) net loss of $4.5 million, offset

by non-cash adjustments to net loss of approximately $0.3 million, and (ii) a $4.1 million increase in working capital primarily driven

by increases in accounts payable, accrued expenses of approximately $1.7 million and decreases in inventories and other current assets

of approximately $1.6 million.

Net Cash Used in Investing Activities

During the three months ended

March 31, 2025, net cash used in investing activities of approximately $16,000 consisted primarily of capital expenditures.

During the three months ended

March 31, 2024, net cash used in investing activities of approximately $0.2 million consisted primarily of capital expenditures.

Net Cash Used in Financing Activities

During the three

months ended March 31, 2025, net cash provided financing activities of approximately $11.1 million primarily consisted of

approximately $19.0 million in proceeds from our February 2025 private placement offset by $8.0 million in payments on our debt.

During the three months ended

March 31, 2024, net cash used in financing activities of approximately $0.1 million primarily consisted of approximately $0.3 million

in payments on loans against future accounts receivable and approximately $0.2 million in proceeds from future receivables financing.

Critical Accounting Policies and Estimates

See Note 2, “Summary of

Significant Accounting Policies” of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q

and Part II, Item 7, “Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December

31, 2024 for descriptions of the significant accounting policies and methods used in the preparation of our Condensed Consolidated Financial

There have been no material changes to the Company’s critical accounting estimates since the Form 10-K for the year

ended December 31, 2024.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

Not required.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis