What changed in this filing

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Item 1. Financial Statements

2022-08-15 compared with 2022-05-16 · 265 added, 155 removed, 559 unchanged (43% of the section changed)

7 unchanged sentences

Cash $ 9,130 $ 12,857

Accounts receivable, net of allowance of $ 1,409 and $ 1,285 at March 31, 2022 and December 31, 2021, respectively

Accounts receivable, net of allowance of $ 2,318 and $ 1,285 at June 30, 2022 and December 31, 2021, respectively

15,550 14,690

1 unchanged sentence

Vendor deposits 11,530 18,475

Assets held for sale 8,813 75

Other current assets (Note 8) 8,026 11,658

12 unchanged sentences

11,445 11,615

Current portion of liabilities held for sale 198 —

Current portion of operating leases 2,502 3,091

1 unchanged sentence

Notes payable, less current portion and debt issuance costs, net 1,284 10,607

Long-term liabilities held for sale 7,582 —

Operating leases, less current portion 3,837 6,142

6 unchanged sentences

Class A common stock, $ 0.01 par value per share, 600,000 shares authorized;

102,600 shares issued and outstanding as of March 31, 2022;

6,079 shares issued and outstanding as of June 30, 2022;

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

Class B common stock, $ 0.0001 par value per share, 30,000 shares authorized;

21,185 shares issued and outstanding as of March 31, 2022;

1,059 shares issued and outstanding as of June 30, 2022;

1,087 shares issued and outstanding as of December 31, 2021*

Class C Common stock, $ 0.0001 par value per share, no shares authorized, issued and outstanding as of March 31, 2022 and December 31, 2021

Class C Common stock, $ 0.0001 par value per share, no shares authorized, issued and outstanding as of June 30, 2022 and December 31, 2021

Additional paid-in capital* 249,191 229,705

Accumulated deficit ( 83,000 ) ( 55,544 )

Accumulated other comprehensive income (loss) 685 324

Accumulated other comprehensive income 291 324

Total stockholders’ equity attributable to Greenlane Holdings, Inc.

3 unchanged sentences

Total liabilities and stockholders’ equity $ 264,562 $ 285,827

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

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

GREENLANE HOLDINGS, INC.

1 unchanged sentence

(in thousands, except per share amounts)

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2022 2021 2022 2021

Net sales $ 39,916 $ 34,715 $ 86,450 $ 68,724

31 unchanged sentences

$ ( 12,186 ) $ ( 2,947 ) $ ( 27,158 ) $ ( 7,185 )

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

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

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Balance March 31, 2022 5,130 52 1,059 — — — 241,256 ( 70,876 ) 685 18,133 189,250

Net loss — — — — — — — ( 12,124 ) — ( 2,357 ) ( 14,481 )

Equity-based compensation ( 4 ) — — — — — 371 — — 75 446

Issuance of Class A shares, net of costs - ATM Program 296 3 — — — — 2,221 — — — 2,224

Issuance of Class A shares, net of costs - June 2022 Offering 585 6 — — — — 5,034 — — — 5,040

Issuance of Class A shares - Amended Eyce APA (Note 3) 72 1 — — — — 309 — — — 310

Reclassification adjustment for gain included in net loss (Note 4) — — — — — — — — ( 332 ) — ( 332 )

Other comprehensive income (loss) — — — — — — — — ( 62 ) — ( 62 )

Balance June 30, 2022 6,079 $ 62 1,059 $ — — $ — $ 249,191 $ ( 83,000 ) $ 291 $ 15,851 $ 182,395

Common Stock Class B

16 unchanged sentences

Balance March 31, 2021 816 8 123 — 72,064 7 47,861 ( 29,104 ) 47 45,284 64,103

Net loss — — — — — — — ( 3,043 ) — ( 2,797 ) ( 5,840 )

Equity-based compensation ( 1 ) — — — — — 161 — — 246 407

Exchanges of noncontrolling interest for Class A common stock 30 — — — ( 1,763 ) — 983 — — ( 983 ) —

Exercise of Class A common stock options 2 — 112 — — — 112

Member distributions — — — — — — — ( 200 ) — — ( 200 )

Other comprehensive income — — — — — — — — 96 147 243

Balance June 30, 2021 847 $ 8 123 $ — 70,301 $ 7 $ 49,117 $ ( 32,347 ) $ 143 $ 41,897 $ 58,825

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

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

2 unchanged sentences

(in thousands)

Three months ended March 31,

Six months ended June 30,

Cash flows from operating activities:

3 unchanged sentences

Equity-based compensation expense 1,630 950

Change in fair value of contingent consideration 92 123

Change in provision for doubtful accounts 1,982 75

1 unchanged sentence

Unrealized loss on equity investments 556 —

Unrealized gain on interest rate swap contract ( 449 ) —

Other 14 ( 8 )

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Proceeds from sale of assets held for sale 75 675

Purchase of intangible assets, net — ( 320 )

Net cash used in investing activities ( 1,197 ) ( 3,590 )

Cash flows from financing activities:

Proceeds from issuance of Class A common stock, net of costs - ATM Program 6,801 —

Member distributions — ( 200 )

Proceeds from issuance of Class A common stock, net of costs 14,064 112

Payments on notes payable ( 1,974 ) —

Purchase consideration paid for Eyce LLC acquisition ( 875 ) —

Other ( 100 ) ( 204 )

7 unchanged sentences

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

Lease liabilities arising from obtaining operating lease right-of-use assets, net of the effect of acquisitions $ — $ 793

Non-cash investing and financing activities:

2 unchanged sentences

Issuance of promissory note for business acquisition $ — $ 2,503

Issuance of contingent consideration for acquisition $ — $ 1,828

Decrease in non-controlling interest as a result of exchanges for Class A common stock $ ( 543 ) $ ( 6,780 )

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

As such, KushCo financial information is included in our condensed consolidated financial statements for the three months ended March 31, 2022, and is excluded from the comparative period in 2021.

As such, KushCo financial information is included in our condensed consolidated financial statements for the three and six months ended June 30, 2022, and is excluded from the comparative period in 2021.

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

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

The following table sets forth the economic and voting interests of our common stock holders as of March 31, 2022:

The following table sets forth the economic and voting interests of our common stock holders as of June 30, 2022:

Class of Common Stock (ownership) Total Shares (1)*

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Total 7,137,873 7,137,873 100.0 % 100.0 % 100.0 %

(1) Represents the total number of outstanding shares for each class of common stock as of March 31, 2022.

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

(1) Represents the total number of outstanding shares for each class of common stock as of June 30, 2022.

(2) Represents the number of shares of Class A common stock that would be outstanding assuming the exchange of all outstanding shares of Class B common stock upon redemption of all related Common Units.

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As such, the information included in this Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2021.

The condensed consolidated results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022, or any other future annual or interim period.

The condensed consolidated results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022, or any other future annual or interim period.

Certain reclassifications have been made to prior year amounts or balances to conform to the presentation adopted in the current year.

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

Our principal sources of liquidity at March 31, 2022 consisted of cash on hand, future cash anticipated to be generated from operations, and our ATM Program described below.

Reverse Stock Split

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

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

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

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

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

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

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

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

Our principal sources of liquidity at June 30, 2022 consisted of cash on hand, future cash anticipated to be generated from operations, the June 2022 Offering described in Note 9, and our ATM Program described below.

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

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

In August 2021, we established an "at-the-market" equity offering program (the "ATM Program") that provides for the sale of shares of our Class A common stock having an aggregate offering price of up to $ 50 million, from time to time, through Cowen and Company, LLC ("Cowen"), as the sales agent.

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

As described in further detail in "Note 9 - Stockholders' Equity," in August 2021, we established an "at-the-market" equity offering program (the "ATM Program") that provides for the sale of shares of our Class A common stock having an aggregate offering price of up to $ 50 million, from time to time.

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

Since the launch of the ATM program in August 2021 and through March 31, 2022, we sold 13,535,970 shares of our Class A common stock under the ATM Program, which generated gross proceeds of approximately $ 10.4 million and paid fees to the sales agent of approximately $ 0.3 million.

Since the launch of the ATM program in August 2021 and through June 30, 2022, we sold 972,624 shares of our Class A common stock under the ATM Program, which generated gross proceeds of approximately $ 12.7 million and paid fees to the sales agent of approximately $ 0.4 million.

In connection with the filing of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “2021 Annual Report”) with the SEC on March 31, 2022, the ATM Program became subject to the offering limits set forth in General Instruction I.B.6 of Form S-3 ("Instruction I.B.6") because our public float was less than $75 million.

The ATM Program was subsequently amended on April 18, 2022 to reflect the Instruction I.B.6 limitations.

For so long as our public float is less than $75 million, the aggregate market value of the shares of Class A common stock sold by us pursuant to Instruction I.B.6 during any twelve consecutive months may not exceed one-third of our public float.

In December 2021, we entered into the Bridge Loan with Aaron LoCascio, our co-founder, former Chief Executive Officer and President, and a current director of the Company, in which Mr.

LoCascio provided us with a loan in the principal amount of $ 8.0 million.

Accrued interest at a rate of 15.0 % is due monthly, and principal amount is due in full in June 2022.

The Bridge Loan is secured by a continuing security interest in all of our assets and properties whether then or thereafter existing or required, including our inventory and receivables (as defined under the Universal Commercial Code) and includes negative covenants restricting our ability to incur further indebtedness and engage in certain asset dispositions until the earlier of June 30, 2022 or the Bridge Loan has been fully repaid.

We are in the process of securing an asset backed loan to assist us with working capital needs.

However, we can provide no assurances as to the timing of our entry into this loan or that we will enter into it at all.

We believe that our cash on hand, combined with our ability to access the capital markets, will be sufficient to fund our working capital and capital expenditure requirements, as well as our debt repayments and other liquidity requirements associated with our existing operations, for at least the next 12 months.

Also as described in further detail in "Note 9 - Stockholders' Equity," on June 27, 2022, we entered into a securities purchase agreement with an accredited investor, pursuant to which we agreed to issue and sell an aggregate of 585,000 shares of our Class A common stock, pre-funded warrants to purchase up to 495,000 shares of our Class A common stock (the “June 2022 Pre-Funded Warrants”) and warrants to purchase up to 1,080,000 shares of our Class A common stock (the “June 2022 Standard Warrants” and, together with the June 2022 Pre-Funded Warrants, the “June 2022 Warrants”), in a registered direct offering (the “June 2022 Offering”).

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

Following the completion of the June 2022 Offering, we are unable to issue additional shares of Class A common stock pursuant to the ATM Program or otherwise use the Shelf Registration Statement for a period of time due to the requirements of Section 5635 of the rules of the Nasdaq Stock Market LLC (the "Nasdaq Exchange Cap"), which requires that stockholder approval be obtained before listed companies issue in excess of 20% of their outstanding common stock in certain transactions, which will limit our liquidity options in the capital markets.

As described in "Note 6 - Debt," in December 2021, we entered into a Secured Promissory Note (the "December 2021 Note") which was subsequently amended on June 30, 2022 (the “First Amendment”) and on July 14, 2022 (the "Second Amendment" and together with the December 2021 Note and the First Amendment, the "Bridge Loan"), with Aaron LoCascio, the Company’s former President and co-founder and a member of the Board, which provided for a loan of $ 8.0 million originally maturing on June 30, 2022.

On July 14, 2022, we repaid $ 4.0 million of the aggregate principal amount due under the Bridge Loan, and on July 19, 2022, we repaid the remaining balance on the Bridge Loan in full.

As a result, all obligations under the Bridge Loan have been satisfied.

We are in the process of establishing a payment plan (the “Payment Plan”) for the repayment of approximately $ 6.0 million in liabilities due to a third-party vendor (the “Vendor”) relating to previously purchased inventory.

In connection with our ongoing discussions with the Vendor, on July 18, 2022, we paid $ 1.0 million of the approximate $ 6.0 million balance due to the Vendor in cash and, during the period of July 26, 2022 through July 31, 2022, we returned approximately $ 1.3 million in inventory to the Vendor, which was accepted by the Vendor and will be credited against the remaining outstanding balance owed by us to the Vendor once the Vendor has confirmed the value of the returned inventory.

Currently, we expect to owe the Vendor approximately $ 3.5 million in remaining liabilities pending the Vendor’s confirmation of the value of the inventory returned to it.

We expect to enter into the Payment Plan to repay the remainder of the amount due to the Vendor in the amount of $ 200,000 in cash each week until the remainder of the liabilities due to the Vendor are repaid in full.

However, we can provide no assurances as to the timing of our entry into the Payment Plan, the final terms of the Payment Plan or that we will enter into the Payment Plan at all.

As described in "Note 13 - Subsequent Events," on July 19, 2022, Warehouse Goods LLC ("Warehouse Goods"), a wholly owned subsidiary of the Company, entered into a Membership Interest Purchase Agreement and supporting documents (collectively, the “Sale Agreement”), to sell the Company’s 50 % stake in VIBES Holdings LLC for total consideration of $ 5.3 million in cash.

Also as described in "Note 13 - Subsequent Events," on August 9, 2022, we entered into an asset-based loan agreement dated as of August 8, 2022 (the “Loan Agreement”), which makes available to the Company a term loan of up to $ 15.0 million.

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

Use of Estimates

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

For the three months ended March 31, 2021

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

For the three months ended June 30, 2021 For the six months ended June 30, 2021

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

Cost of sales $ 26,944 $ ( 1,282 ) $ 25,662 $ 53,640 $ ( 2,524 ) $ 51,116

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(1) Industrial Goods, which largely comprises KushCo's legacy operations across the United States and Canada, and (2) Consumer Goods, which largely comprises Greenlane's legacy operations across the United States, Canada, and Europe.

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

Our reportable segments have been identified based on how our chief operating decision maker ("CODM"), manages our business, makes resource allocation and operating decisions, and evaluates operating performance.

Our CODM is our Chief Executive Officer ("CEO").

These changes in operating segments align with how we manage our business beginning with the fourth quarter of 2021.

2 unchanged sentences

Revenue Recognition

Revenue under bill-and-hold arrangements was $ 0 and $ 0.2 million for the three months ended March 31, 2022 and 2021, respectively.

Revenue under bill-and-hold arrangements was $ 0 for the three and six months ended June 30, 2022, respectively, and $ 0.1 and $ 0.3 million for the three and six months ended June 30, 2021, respectively.

Storage fees charged to customers for bill-and-hold arrangements are recognized as invoiced.

Such fees were not significant for the three months ended March 31, 2022 and 2021.

Our liability for returns, which is included within "Accrued expenses and other current liabilities" in our condensed consolidated balance sheets, was approximately $ 0.9 million and $ 1.0 million as of March 31, 2022 and December 31, 2021.

The recoverable cost of merchandise estimated to be returned by customers, which is included within "Other current assets" in our condensed consolidated balance sheets, was approximately $ 0.2 million as of March 31, 2022 and December 31, 2021, respectively.

For the three months ended March 31, 2022, one customer represented approximately 16 % of our net sales.

No single customer represented more than 10% of our net sales for the three months ended March 31, 2021.

As of March 31, 2022, three customers represented approximately 17 %, 10 %, and 10 % of accounts receivable, respectively.

Such fees were not significant for the three and six months ended June 30, 2022 and 2021.

Our liability for returns, which is included within "Accrued expenses and other current liabilities" in our condensed consolidated balance sheets, was approximately $ 1.0 million as of June 30, 2022 and December 31, 2021, respectively.

For the three and six months ended June 30, 2022, one customer represented approximately 21 % and 19 % of our net sales.

No single customer represented more than 3 % of our net sales for the three and six months ended June 30, 2021.

As of June 30, 2022, two customers represented approximately 23 %, and 12 % of accounts receivable, respectively.

As of December 31, 2021, two customers represented approximately 13 % and 11 % of accounts receivable, respectively.

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

Based on this analysis, we recorded VAT payable of approximately $ 1.0 million and $ 2.5 million relating to this matter within "Accrued expenses and other current liabilities" in our condensed consolidated balance sheet as of March 31, 2022 and December 31, 2021, respectively.

Based on this analysis, we recorded VAT payable of approximately $ 0.9 million and $ 2.5 million relating to this matter within "Accrued expenses and other current liabilities" in our condensed consolidated balance sheet as of June 30, 2022 and December 31, 2021, respectively.

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

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

During the three months ended March 31, 2022, we recognized a gain of approximately $ 1.8 million within "general and administrative expenses" in our condensed consolidated statements of operations and comprehensive loss, which represented the partial reversal of a charge previously recognized based on the difference between the VAT payable and the VAT receivable and indemnification asset, as the indemnification asset became probable of recovery based on the reduction in our previously estimated VAT liability for penalties and interest based on our voluntary disclosure to, and ongoing settlement with, the relevant tax authorities in the EU member states.

During the three and six months ended June 30, 2022, we recognized a gain of approximately $ 0 and $ 1.8 million, respectively, within "general and administrative expenses" in our condensed consolidated statements of operations and comprehensive loss, which represented the partial reversal of a charge previously recognized based on the difference between the VAT payable and the VAT receivable and indemnification asset, as the indemnification asset became probable of recovery based on the reduction in our previously estimated VAT liability for penalties and interest based on our voluntary disclosure to, and ongoing settlement with, the relevant tax authorities in the EU member states.

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

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On November 29, 2021, we acquired substantially all the assets of Organicix, LLC (d/b/a and hereinafter referred to as “DaVinci”), a leading developer and manufacturer of premium portable vaporizers.

The following table presents pro forma results for the three months ended March 31, 2022 and 2021 as if our acquisition of Eyce and DaVinci, along with the closing of the merger with KushCo, had occurred on January 1, 2021, and Eyce, DaVinci, and KushCo's results had been included in our consolidated results beginning on that date (in thousands):

For the three months ended March 31,

The following table presents pro forma results for the three and six months ended June 30, 2022 and 2021 as if our acquisition of Eyce and DaVinci, along with the closing of the merger with KushCo, had occurred on January 1, 2021, and Eyce, DaVinci, and KushCo's results had been included in our consolidated results beginning on that date (in thousands):

For the three months ended June 30, For the six months ended June 30,

2022 2021 2022 2021

(unaudited) (unaudited)

Net sales $ 39,916 $ 67,292 $ 86,450 $ 130,085

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In addition, the pro forma financial information does not purport to project our future financial condition and results of operations.

Amended Eyce APA

On April 7, 2022, we entered into an amendment to that certain Asset Purchase Agreement, dated March 2, 2021 (the “Amended Eyce APA”), by and between Eyce and Warehouse Goods to accelerate the issuance of shares of Class A common stock issuable to Eyce under the agreement upon the attainment of certain EBITDA and revenue benchmarks (the “Amended 2022 Contingent Payment”), in an amount equal to $ 0.9 million.

We issued 71,721 shares of Class A common stock to Eyce under the Amended 2022 Contingent Payment, which vest ratably in seven quarterly tranches starting on July 1, 2022, such that on January 1, 2024 (the “Vesting Date”), all shares issued to Eyce under the Amended 2022 Contingent Payment will have vested.

The shares of Class A common stock issued under the Amended 2022 Contingent Payment are subject to certain forfeiture restrictions tied to the continued employment of certain Eyce personnel with the Company through the Vesting Date.

The Amended Eyce APA also provided for the payment of $ 0.9 million in cash in four equal installments on April 1, 2023, July 1, 2023, October 1, 2023 and January 1, 2024, contingent on the achievement of certain deliverables outlined in the Amended Eyce APA and the continued employment of certain Eyce personnel.

The transaction was accounted for separately from acquisition accounting for the Eyce business combination.

Specifically, we recorded a gain of approximately $ 0.3 million within "other income (expense), net" in our condensed consolidated statement of operations and comprehensive income for the three and six months ended June 30, 2022 to write-off the balance of the Eyce 2022 Contingent Payment.

Also, we recorded approximately $ 0.5 million in compensation expense related to the Amended 2022 Contingent Payment within "salaries, benefits and payroll taxes" in our condensed consolidated statement of operations and comprehensive income for the three and six months ended June 30, 2022.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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The carrying amounts for certain of our financial instruments, including cash, accounts receivable, accounts payable and certain accrued expenses and other assets and liabilities, approximate fair value due to the short-term nature of these instruments.

As of March 31, 2022, we had equity securities, an interest rate swap contract and contingent consideration that are required to be measured at fair value on a recurring basis.

As of June 30, 2022, we had equity securities, an interest rate swap contract and contingent consideration that are required to be measured at fair value on a recurring basis.

Our equity securities that are required to be measured at fair value on a recurring basis consist of investments in XS Financial Inc.

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Condensed Consolidated

Balance Sheet Caption Fair Value at March 31, 2022

Balance Sheet Caption Fair Value at June 30, 2022

(in thousands) Level 1 Level 2 Level 3 Total

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The estimated fair values of our financial instruments have been determined using available market information and what we believe to be appropriate valuation methodologies.

There were no transfers between Level 1 and Level 2 and no transfers to or from Level 3 of the fair value hierarchy during the three months ended March 31, 2022 and 2021, respectively.

There were no transfers between Level 1 and Level 2 and no transfers to or from Level 3 of the fair value hierarchy during the three and six months ended June 30, 2022 and 2021, respectively.

Derivative Instrument and Hedging Activity

On July 11, 2019, we entered into an interest rate swap contract to manage our risk associated with the interest rate fluctuations on the Company's floating rate Real Estate Note described in Note 6.

On July 11, 2019, we entered into an interest rate swap contract to manage our risk associated with the interest rate fluctuations on the Company's floating rate Real Estate Note described in "Note 6 - Debt."

The counterparty to this instrument is a reputable financial institution.

The interest rate swap contract is entered into for periods consistent with the related underlying exposure and does not constitute a position independent of this exposure.

Our interest rate swap contract was designated as a cash flow hedge at the inception date, and is reflected at its fair value in our condensed consolidated balance sheets.

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Since our interest rate swap value is based on the LIBOR forward curve and credit default swap rates, which are observable at commonly quoted intervals for the full term of the swap, it is considered a Level 2 measurement.

Details of the outstanding swap contract as of March 31, 2022 are as follows:

Details of the outstanding swap contract as of June 30, 2022 are as follows:

Swap Maturity Notional Value

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October 1, 2025 $ 7,864 2.0775 % One-Month LIBOR Monthly

We performed an initial qualitative assessment of hedge effectiveness using the hypothetical derivative method in the period in which the hedging transaction was entered, as the critical terms of the hypothetical derivative and the hedging instrument were the same.

On a quarterly basis, we perform a qualitative analysis for quarterly prospective and retrospective assessments of hedge effectiveness.

The unrealized loss on the derivative instrument is included within "Other comprehensive income (loss)" in our condensed consolidated statement of operations and comprehensive loss.

There was no measure of hedge ineffectiveness and no reclassifications from other comprehensive loss into interest expense for the three months ended March 31, 2022 and 2021.

Our obligations under the Real Estate Note are secured by a mortgage on our corporate headquarters building.

As discussed in "Note 8 - Supplemental Financial Information," our corporate headquarters building is classified within "assets held for sale" on our condensed consolidated balance sheet as of June 30, 2022.

The current and long-term portions of the Real Estate Note are included within "current portion of liabilities held for sale" and "long-term liabilities held for sale," respectively, on our condensed consolidated balance sheet as of June 30, 2022.

Beginning with the second quarter of 2022, we discontinued hedge accounting for the interest rate swap contract.

During the three and six months ended June 30, 2022, we recorded a gain of approximately $ 0.1 million based on the change in fair value of the interest rate swap contract within "interest expense" in our condensed consolidated statement of income and comprehensive loss.

During the three and six months ended June 30, 2022, we also reclassified the related accumulated other comprehensive income balance of $ 0.3 million from to "interest expense" in our condensed consolidated statement of income and comprehensive loss.

Refer to "Note 8 - Supplemental Financial Information" for further details on the components of accumulated other comprehensive income (loss) for the six months ended June 30, 2022 and 2021, respectively.

The unrealized loss on the derivative instrument prior to the discontinuation of hedge accounting was included within "Other comprehensive income (loss)" in our condensed consolidated statement of operations and comprehensive loss.

There was no measure of hedge ineffectiveness and no reclassifications from other comprehensive loss into interest expense for the three and six months ended June 30, 2021.

As discussed further in "Note 13 - Subsequent Events", in August 2022, we terminated the interest swap contract.

Contingent Consideration

Each period we revalue our contingent consideration obligations associated with business acquisitions to their fair value.

The estimate of the fair value of contingent consideration is determined by applying a risk-neutral framework using a Monte Carlo Simulation, which includes inputs not observable in the market, such as the risk-free rate, risk-adjusted discount rate, the volatility of the underlying financial metrics and projected financial forecast of the acquired business over the earn-out period, and therefore represents a Level 3 measurement.

The estimate of the fair value of contingent consideration is determined by applying a risk-neutral framework using a Monte Carlo

Simulation, which includes inputs not observable in the market, such as the risk-free rate, risk-adjusted discount rate, the volatility of the underlying financial metrics and projected financial forecast of the acquired business over the earn-out period, and therefore represents a Level 3 measurement.

Significant increases or decreases in these inputs could result in a significantly lower or higher fair value measurement of the contingent consideration liability.

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A reconciliation of our liabilities that are measured and recorded at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows:

(in thousands) Three months ended

March 31, 2022

(in thousands) Six Months Ended

June 30, 2022

Balance at December 31, 2021 $ 6,857

Eyce 2021 Contingent Payment settlement in Class A common stock ( 875 )

Eyce 2021 Contingent Payment settlement in cash ( 875 )

DaVinci 2021 Contingent Payment settlement in Class A common stock ( 2,611 )

Gain from fair value adjustments included in results of operations ( 5 )

Balance March 31, 2022 $ 3,366

(in thousands) Three months ended

March 31, 2021

Write-off of Eyce 2022 Contingent Payment in conjunction with the Amended Eyce APA ( 267 )

Loss from fair value adjustments included in results of operations 359

Balance June 30, 2022 $ 2,588

(in thousands) Six Months Ended

June 30, 2021

Balance at December 31, 2020 $ —

Contingent consideration issued for Eyce acquisition 1,828

Balance at March 31, 2021 $ 1,218

Loss from fair value adjustments included in results of operations $ 123

Balance at June 30, 2021 $ 1,951

Equity Securities Without a Readily Determinable Fair Value

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We acquired our investments in Sun Grown and VIVA as part of our merger with KushCo, which we completed in August 2021.

We did not identify any fair value adjustments related to these equity securities during the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022 and December 31, 2021, the carrying value of our investment in equity securities without a readily determinable fair value was approximately $ 2.5 million, respectively, included within "Other assets" in our condensed consolidated balance sheets.

We did not identify any fair value adjustments related to these equity securities during the three and six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022 and December 31, 2021, the carrying value of our investment in equity securities without a readily determinable fair value was approximately $ 2.5 million, respectively, included within "Other assets" in our condensed consolidated balance sheets.

The carrying value included a fair value adjustment of $ 1.5 million based on an observable price change recognized during the year ended December 31, 2019.

Greenlane as a Lessee

As of March 31, 2022, we had facilities financed under operating leases consisting of warehouses, offices, and retail stores, with lease term expirations between 2022 and 2027.

As of June 30, 2022, we had facilities financed under operating leases consisting of warehouses, offices, and retail stores, with lease term expirations between 2022 and 2027.

Lease terms are generally three to seven years for warehouses, office space and retail store locations.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The following table provides details of our future minimum lease payments under finance and operating lease liabilities recorded in our condensed consolidated balance sheet as of March 31, 2022.

The table below does not include commitments

that are contingent on events or other factors that are currently uncertain or unknown.

The following table provides details of our future minimum lease payments under finance and operating lease liabilities recorded in our condensed consolidated balance sheet as of June 30, 2022.

The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.

(in thousands) Operating Leases

Thereafter 29

Total minimum lease payments 6,605

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Long-term portion $ 3,837

Rent expense under operating leases was approximately $ 0.8 million and $ 0.3 million for three months ended March 31, 2022 and 2021, respectively.

Rent expense under operating leases was approximately $ 0.7 million and $ 1.4 million for three and six months ended June 30, 2022, respectively, and approximately $ 0.3 million and $ 0.6 million for the three and six months ended June 30, 2021, respectively.

The following expenses related to our operating leases were included in "general and administrative" expenses within our condensed consolidated statements of operations and comprehensive loss:

For the three months ended

For the six months ended

(in thousands) 2022 2021

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Total lease cost $ 1,453 $ 289

The table below presents lease-related terms and discount rates as of March 31, 2022:

March 31, 2022

The table below presents lease-related terms and discount rates as of June 30, 2022:

June 30, 2022

Weighted average remaining lease terms

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Greenlane as a Lessor

We have five operating leases for office space leased to third-party tenants in our corporate headquarters building in Boca Raton, Florida and one sublease in California.

For the three months ended March 31, 2022 and 2021, respectively, we recorded approximately $ 0.3 million and $ 0.2 million in rental income related to these operating leases, which we included within “Other income, net” in our condensed consolidated statements of operations and comprehensive loss.

The following table represents the maturity analysis of undiscounted cash flows related to lease payments, which we expect to receive from our existing operating lease agreements with tenants:

We have four operating leases for office space leased to third-party tenants in our corporate headquarters building in Boca Raton, Florida, which is included in assets held for sale as of June 30, 2022, and one sublease in California.

The following table represents the maturity analysis of undiscounted cash flows related to lease payments, which we expect to receive from our existing operating lease agreements related to our sublease in California:

Rental Income (in thousands)

Total $ 1,190

Remainder of 2022 $ 289

2024 and thereafter —

Our debt balance, excluding operating lease liabilities and finance lease liabilities, consisted of the following amounts at the dates indicated:

(in thousands) March 31, 2022 December 31, 2021

(in thousands) June 30, 2022 December 31, 2021

Real Estate Note $ 7,848 $ 7,958

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Less current portion of debt ( 11,445 ) ( 11,615 )

Debt, net, excluding operating leases and finance leases $ 9,633 $ 10,607

Less current portion of liabilities held for sale ( 198 ) —

Less long-term liabilities held for sale ( 7,582 ) —

Debt, net, excluding operating and finance leases and liabilities held for sale $ 1,284 $ 10,607

Real Estate Note

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The Real Estate Note contains customary covenants and restrictions, including, without limitation, covenants that require us to comply with laws, restrictions on our ability to incur additional indebtedness, and various customary remedies for the lender following an event of default, including the acceleration of repayment of outstanding amounts under the Real Estate Note and execution upon the collateral securing obligations under the Real Estate Note.

As of March 31, 2022, we were in compliance with the Real Estate Note covenants.

Our Real Estate Note is subject to an interest rate swap contract, see “Note 4—Fair Value of Financial Instruments.”

One-month LIBOR is expected to be discontinued and replaced after June 2023 and the credit facility has a maturity date beyond that time.

There can be no assurances as to what the alternative base rate will be once one-month LIBOR is discontinued, and we can provide no assurances whether that base rate will be more or less favorable than LIBOR.

We intend to monitor the developments with respect to the phasing out of one-month LIBOR and work with our lenders to ensure that any transition away from one-month LIBOR will have minimal impact on our financial condition but can provide no assurances regarding the impact of LIBOR discontinuation.

As of June 30, 2022, we were in compliance with the Real Estate Note covenants.

Eyce Promissory Note

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In December 2021, we entered into a Secured Promissory Note with Aaron LoCascio, our co-founder, former Chief Executive Officer and President, and a current director of the Company, in which Mr.

LoCascio provided us with a bridge loan in the principal amount of $ 8.0 million (the “Bridge Loan”).

The Bridge Loan accrues interest at a rate of 15.0 % is due monthly, and the principal amount is due in full in June 2022.

We incurred $ 0.3 million of debt issuance costs related to the Bridge Loan, which are recorded as a direct deduction from the carrying amount of the Bridge Loan, and which will continue to be amortized over the term of the Bridge Loan through interest expense.

LoCascio provided us with a bridge loan in the principal amount of $ 8.0 million (the “December 2021 Note”).

The December 2021 Note accrued interest at a rate of 15.0 % is due monthly, and the principal amount was originally due in full on June 30, 2022.

We incurred $ 0.3 million of debt issuance costs related to the December 2021 Note, which were recorded as a direct deduction from the carrying amount of the December 2021 Note, and which were amortized over the term of the December 2021 Note through interest expense.

The December 2021 Note was secured by a continuing security interest in all of our assets and properties whether then or thereafter existing or required, including our inventory and receivables (as defined under the Universal Commercial Code) and included negative covenants restricting our ability to incur further indebtedness and engage in certain asset dispositions until the earlier of the maturity date or the December 2021 Note being fully repaid.

On June 30, 2022, we entered into the First Amendment to the December 2021 Note (the "First Amendment"), which extended the maturity date of the December 2021 Note to July 14, 2022.

On July 14, 2022, we entered into the Second Amendment to the December 2021 Note (the “Second Amendment” and together with the December 2021 Note, the "Bridge Loan"), which provided for the extension of the maturity date of the Bridge Loan from July 14, 2022 to July 19, 2022.

In connection with the

entry into the Second Amendment, we repaid $ 4.0 million of the aggregate principal amount due under the Bridge Loan on July 14, 2022, with the remainder due at maturity.

On July 19, 2022, we repaid the remaining balance on the Bridge Loan in full, and, as a result, all obligations under the Bridge Loan have been satisfied.

COMMITMENTS AND CONTINGENCIES

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However, the outcome of such legal matters is inherently unpredictable and subject to significant uncertainties.

We have not taken any reserves for litigation for the year ended December 31, 2021.

Other Commitments and Contingencies

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If the relevant taxing authorities were successfully to pursue these claims, we could be subject to significant additional tax liabilities.

See "Note 5—Leases" for details of our future minimum lease payments under operating lease liabilities.

See "Note 11—Incomes Taxes" for information regarding income tax contingencies.

SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION

Assets Held for Sale

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

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

Our assets held for sale recorded on our condensed consolidated balance sheet as of June 30, 2022 are comprised of our corporate headquarters building located in Boca Raton, Florida, along with the related land, land improvements and property and equipment.

We are actively seeking a buyer for these assets and expect to complete the sale within one year from June 30, 2022.

The current and long-term portion of the related Real Estate Note, with represents the mortgage on the corporate headquarters building, is classified within "current portion of liabilities held for sale" and "long-term portion of liabilities held for sale" on our condensed consolidated balance sheet as of June 30, 2022, as described further in Note 6.

We recognized no impairment charges during the three and six months ended June 30, 2022 or 2021.

Accrued Expenses and Other Current Liabilities

The following table summarizes the composition of accrued expenses and other current liabilities as of the dates indicated:

(in thousands) March 31, 2022 December 31, 2021

(in thousands) June 30, 2022 December 31, 2021

VAT payable (including amounts related to VAT matter described in Note 2) $ 3,129 $ 4,393

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

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

Changes in our customer deposits liability balance during the three months ended March 31, 2022 were as follows:

We typically complete orders related to customer deposits within one to six months from the date of order, depending on the complexity of the customization and the size of the order, but the

order completion timeline can vary by product type and terms of sale with each customer.

Changes in our customer deposits liability balance during the six months ended June 30, 2022 were as follows:

(in thousands) Customer Deposits

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Revenue recognized ( 10,785 )

Balance as of March 31, 2022 $ 6,838

We typically complete orders related to customer deposits within six weeks to three months from the date of order, depending on the complexity of the customization and the size of the order.

Balance as of June 30, 2022 $ 5,163

Accumulated Other Comprehensive Income (Loss)

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Other comprehensive income (loss) 26 358 384

Reclassification adjustment for (gain) loss included in net loss (Note 4) — ( 332 ) ( 332 )

Other comprehensive (income) loss attributable to non-controlling interest ( 17 ) ( 68 ) ( 85 )

Balance at March 31, 2022 $ 353 $ 332 $ 685

Balance at June 30, 2022 $ 291 $ — $ 291

(in thousands) Foreign Currency Translation Unrealized Gain or (Loss) on Derivative Instrument Total

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Other comprehensive (income) loss attributable to non-controlling interest ( 48 ) ( 130 ) ( 178 )

Balance at March 31, 2021 $ 127 $ ( 80 ) $ 47

Balance at June 30, 2021 $ 223 $ ( 80 ) $ 143

Supplier Concentration

Our four largest vendors accounted for an aggregate of approximately 44.6 % and 42.9 % of our total net sales and 67.0 % and 35.5 % of our total purchases for the three months ended March 31, 2022 and 2021, respectively.

Our four largest vendors accounted for an aggregate of approximately 64.1 % and 53.6 % of our total net sales and 83.3 % and 74.0 % of our total purchases for the three and six months ended June 30, 2022, respectively, and an aggregate of approximately 37.7 % and 38.8 % of our total net sales and 46.8 % and 44.4 %.

of our total purchases for the three and six months ended June 30, 2021, respectively.

We expect to maintain our relationships with these vendors.

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(“Unrivaled”) and serve on the Unrivaled board of directors.

Net sales to Unrivaled for the three months ended March 31, 2022 and 2021 totaled $ 0.2 million and $ 0 , respectively.

Total accounts receivable due from Unrivaled were $ 0.6 million and $ 0.4 million as of March 31, 2022 and December 31, 2021, respectively.

Net sales to Unrivaled totaled approximately $ 0 and $ 0.7 million for the three and six months ended June 30, 2022, respectively, and $ 0 both for the three and six months ended June 30, 2021.

Total accounts receivable due from Unrivaled were approximately $ 0.5 million and $ 0.4 million as of June 30, 2022 and December 31, 2021, respectively.

Adam Schoenfeld, co-founder and a current director of the Company, has a significant ownership interest in one of our customers, Universal Growing.

Net sales to Universal Growing for the three months ended March 31, 2022 and 2021 totaled approximately $ 0.1 million, respectively.

Total accounts receivable due from Universal Growing as of March 31, 2022 and December 31, 2021 were de minimis.

Net sales to Universal Growing totaled approximately $ 0.0 million and $ 0.2 million for the three and six months ended June 30, 2022, respectively, and $ 0.2 million and $ 0.3 million for the three and six months ended June 30, 2021, respectively.

Total accounts receivable due from Universal Growing as of June 30, 2022 and December 31, 2021 were de minimis.

In December 2021, we entered into a Secured Promissory Note with Aaron LoCascio, our co-founder, former Chief Executive Officer and President, and a current director of the Company, with respect to the $ 8.0 million Bridge Loan described under Note 6 above.

On June 30, 2022, we entered into the First Amendment to the Secured Promissory Note, which provided for the extension of the maturity date of the Secured Promissory Note from June 30, 2022 to July 14, 2022.

On July 19, 2022, we fully repaid the Bridge Loan and as a result, all obligations under the Bridge Loan have been satisfied.

On July 19, 2022, Warehouse Goods entered into the Sale Agreement with Portofino to sell the Company’s 50 % stake in VIBES Holdings LLC for total consideration of $ 5.3 million in cash.

The transactions contemplated by the Sale Agreement were completed on July 19, 2022, immediately following the signing of the Sale Agreement.

Portofino is an entity partially

controlled by Adam Schoenfeld.

The Sale Agreement was approved by the affirmative vote of a majority of the disinterested members of the Board and the audit committee of the Board in accordance with the Company’s related party transactions policy.

STOCKHOLDERS’ EQUITY

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Each share of our Class A common stock and Class B common stock entitles the record holder thereof to one vote on all matters on which stockholders generally are entitled to vote, and except as otherwise required in the A&R Charter, the holders of Common Stock will vote together as a single class on all matters (or, if any holders of our preferred stock are entitled to vote together with the holders of Common Stock, as a single class with such holders of preferred stock).

Class A Common Stock Repurchase Program

In November 2019, our Board of Directors approved a stock repurchase program authorizing up to $ 5.0 million in repurchases of our outstanding shares of Class A common stock.

Under the program, we may repurchase shares in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended.

We may periodically repurchase shares in open market transactions, directly or indirectly, in block purchases and in privately negotiated transactions or otherwise.

The timing, pricing, and amount of any repurchases under the share repurchase program will be determined by management at its discretion based on a variety of factors, including, but not limited to, trading volume and market price of our Class A common stock, corporate considerations, our working capital and investment requirements, general market and economic conditions, and legal requirements.

The share repurchase program does not obligate us to repurchase any common stock and may be modified, discontinued, or suspended at any time.

Shares of Class A common stock repurchased

under the program are subsequently retired.

There were no share repurchases under the program during the three months ended March 31, 2022 or 2021, respectively.

Effective August 9, 2022, we completed a one-for-20 reverse stock split (the “Reverse Stock Split”) of our issued and outstanding shares of Class A common stock and Class B common stock (collectively, the "Common Stock"), as further described in "Note 2 - Summary of Significant Accounting Policies." As a result of the Reverse Stock Split, every 20 shares of Common Stock issued and outstanding were converted into one share of Common Stock.

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

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

Non-Controlling Interest

As discussed in “Note 1—Business Operations and Organization,” we consolidate the financial results of the Operating Company in our condensed consolidated financial statements and report a non-controlling interest related to the Common Units held by non-controlling interest holders.

As of March 31, 2022, we owned 82.9 % of the economic interests in the Operating Company, with the remaining 17.1 % of the economic interests owned by non-controlling interest holders.

As of June 30, 2022, we owned 85.2 % of the economic interests in the Operating Company, with the remaining 14.8 % of the economic interests owned by non-controlling interest holders.

The non-controlling interest in the accompanying condensed consolidated statements of operations and comprehensive loss represents the portion of the net loss attributable to the economic interest in the Operating Company held by the non-controlling holders of Common Units calculated based on the weighted average non-controlling interests’ ownership during the periods presented.

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1 (the “Amendment”) to the sales agreement dated August 2, 2022 with Cowen.

The purpose of the Amendment is to add the limitations imposed on the ATM Program by General Instruction I.B.6 of Form S-3 (“Instruction I.B.6”) to the sales agreement.

The purpose of the Amendment was to add the limitations imposed on the ATM Program by General Instruction I.B.6 of Form S-3 (“Instruction I.B.6”) to the sales agreement.

At the time of our entry into the Amendment, approximately $ 38.7 million in shares remained available for issuance under the ATM Program.

During the three months ended March 31, 2022, we sold 11,134,715 shares of our Class A common stock under the ATM Program, which generated gross proceeds of approximately $ 7.0 million and paid fees to the sales agent of approximately $ 0.2 million.

Common Stock and Warrant Offering

On August 9, 2021, we entered into securities purchase agreements with certain accredited investors, pursuant to which we agreed to issue and sell an aggregate of 4,200,000 shares of our Class A common stock, pre-funded warrants to purchase up to 5,926,583 shares of our Class A common stock (the “Pre-Funded Warrants”) and warrants to purchase up to 6,075,950 shares of our Class A common stock (the “Standard Warrants” and, together with the Pre-Funded Warrants, the “Warrants”), in a registered direct offering (the “Offering”).

The shares of Class A common stock and Warrants were sold in Units (the “Units”), with each unit consisting of one share of Class A common stock or a Pre-Funded Warrant and a Standard Warrant to purchase 0.6 of a share of our Class A common stock.

Following the completion of the June 2022 Offering we are unable to issue additional shares of Class A common stock pursuant to the ATM Program or otherwise use the Shelf Registration Statement for a period of time due to the Nasdaq Exchange Cap restrictions, which will limit our liquidity options in the capital markets.

The table below summarizes sales of our Class A common stock under the ATM program:

($ in thousands) Three Months Ended

June 30, 2022 Six Months Ended

June 30, 2022 August 2021 (Inception) through

June 30, 2022

Class A shares sold* 295,826 852,562 972,624

Gross proceeds $ 2,292 $ 9,303 $ 12,684

Fees paid to sales agent $ 69 $ 279 $ 381

Net proceeds $ 2,223 $ 9,024 $ 12,303

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

Common Stock and Warrant Offerings

August 2021 Offering

On August 9, 2021, we entered into securities purchase agreements with certain accredited investors, pursuant to which we agreed to issue and sell an aggregate of 210,000 shares of our Class A common stock, pre-funded warrants to purchase up to 296,329 shares of our Class A common stock (the “August 2021 Pre-Funded Warrants”) and warrants to purchase up to 303,797 shares of our Class A common stock (the “August 2021 Standard Warrants” and, together with the August 2021 Pre-Funded Warrants, the “August 2021 Warrants”), in a registered direct offering (the “August 2021 Offering”).

The shares of Class A common stock and August 2021 Warrants were sold in Units (the “August 2021 Units”), with each unit consisting of one share of Class A common stock or an August 2021 Pre-Funded Warrant and an August 2021 Standard Warrant to purchase 0.6 of a share of our Class A common stock.

The Units were offered pursuant to our existing shelf registration statement on Form S-3.

Subject to certain ownership limitations, the Standard Warrants were immediately exercisable at an exercise price equal to $ 3.55 per share of Class A common stock.

The Standard Warrants are exercisable for five years from the date of issuance.

Each Pre-Funded Warrant was exercisable with no expiration date for one Share of Class A common stock at an exercise price of $ 0.01 .

The Offering generated gross proceeds of approximately $ 31.9 million and net proceeds to the Company of approximately $ 29.9 million.

All Pre-Funded Warrants were exercised in August and September 2021, based upon which we issued an additional 5,926,583 shares of our Class A common stock, for net proceeds of approximately $ 0.1 million.

The August 2021 Standard Warrants were immediately exercisable at an exercise price equal to $ 71.00 per share of Class A common stock.

The August 2021 Standard Warrants are exercisable for five years from the date of issuance.

Each August 2021 Pre-Funded Warrant was exercisable with no expiration date for one Share of Class A common stock at an exercise price of $ 0.20 .

The August 2021 Offering generated gross proceeds of approximately $ 31.9 million and net proceeds to the Company of approximately $ 29.9 million.

All August 2021 Pre-Funded Warrants were exercised in August and September 2021, based upon which we issued an additional 296,329 shares of our Class A common stock, for net proceeds of approximately $ 0.1 million.

June 2022 Offering

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

The shares of Class A common stock and June 2022 Warrants were sold in Units (the “June 2022 Units”), with each unit consisting of one share of Class A common stock or a June 2022 Pre-Funded Warrant and a June 2022 Standard Warrant to purchase one share of our Class A common stock.

The June 2022 Units were offered pursuant to the Shelf Registration Statement.

The June 2022 Standard Warrants are exercisable six months from the date of issuance at an exercise price equal to $ 5.00 per share of Class A common stock for a period of five years .

Each June 2022 Pre-Funded Warrant is exercisable immediately with no expiration date for one share of Class A common stock at an exercise price of $ 0.002 .

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

All June 2022 Pre-Funded Warrants were exercised in July 2022, based upon which we issued an additional 495,000 shares of our Class A common stock, for de minimis net proceeds.

Class C Common Stock Conversion

On August 31, 2021, we completed our merger with KushCo.

Pursuant to the Merger Agreement, immediately prior to the consummation of the Mergers, holders of Class C common stock, $ 0.0001 par value per share, received one-third of one share

of Class B common stock, for each share of Class C common stock held, and Greenlane adopted the A&R Charter which eliminated Class C common stock as a class of Greenlane’s capital stock.

Pursuant to the Merger Agreement, immediately prior to the consummation of the Mergers, holders of Class C common stock, $ 0.0001 par value per share, received one-third of one share of Class B common stock, for each share of Class C common stock held, and Greenlane adopted the A&R Charter which eliminated Class C common stock as a class of Greenlane’s capital stock.

Net Loss Per Share

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

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

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share of our Class A common stock is as follows (in thousands, except per share amounts):

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

(in thousands, except per share data) 2022 2021 2022 2021

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Net loss per share of Class A common stock - basic and diluted* $ ( 2.27 ) $ ( 3.23 ) $ ( 5.57 ) $ ( 9.07 )

For the three months ended March 31, 2022 and 2021, shares of Class B common stock, shares of Class C common stock and stock options and warrants to purchase Class A common stock were excluded from the weighted-average in the computation of diluted net loss per share of Class A common stock because the effect would have been anti-dilutive.

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

The June 2022 Pre-Funded Warrants were included in the weighted-average in the computation of basic net loss per share of Class A common stock for the three and six months ended June 30, 2022 and 2021, respectively, beginning with their issuance date, as their stated exercise price of $ 0.002 was non-substantive and their exercise was virtually assured.

For the three and six months ended June 30, 2022 and 2021, respectively, shares of Class B common stock, shares of Class C common stock and stock options and warrants to purchase Class A common stock were excluded from the weighted-average in the computation of diluted net loss per share of Class A common stock because the effect would have been anti-dilutive.

Shares of our Class B common stock and Class C common stock do not share in our earnings or losses and are therefore not participating securities.

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In April 2019, we adopted the 2019 Equity Incentive Plan (the “2019 Plan”).

We previously registered 5,000,000 shares of Class A common stock that are or may become issuable under the 2019 Plan as stock options and other equity-based awards to employees, directors and executive officers.

Excluding the effect of the one-for-20 Reverse Stock Split, we previously registered 5,000,000 shares of Class A common stock that are or may become issuable under the 2019 Plan as stock options and other equity-based awards to employees, directors and executive officers.

In August 2021, we adopted, and our shareholders approved, the Amended and Restated 2019 Equity Incentive Plan (the "Amended 2019 Plan"), which amends and restates the 2019 Plan in its entirety.

The Amended 2019 Plan, among other things, increases the number of shares of Class A common stock available for issuance under the 2019 Plan by 2,860,367 .

The Amended 2019 Plan provides eligible participants with compensation opportunities in the form of cash and equity incentive awards.

The 2019 Plan is designed to enhance our ability to attract, retain and motivate our employees, directors, and executive officers, and incentivizes them to increase our long-term growth and equity value in alignment with the interests of our stockholders.

Excluding the effect of the one-for-20 Reverse Stock Split, the Amended 2019 Plan, among other things, increases the number of shares of Class A common stock available for issuance under the 2019 Plan by 2,860,367 .

At our 2022 Annual Meeting of Stockholders on August 4, 2022, stockholders approved the Second Amended and Restated 2019 Equity Incentive Plan (the "Second Amended 2019 Plan") which, among other things, increased the number of shares of Class A common stock authorized for issuance under the Amended 2019 Plan by 785,000 shares.

The Second Amended 2019 Plan provides eligible participants with compensation opportunities in the form of cash and equity incentive awards.

The Second Amended 2019 Plan is designed to enhance our ability to attract, retain and motivate our employees, directors, and executive officers, and incentivizes them to increase our long-term growth and equity value in alignment with the interests of our stockholders.

KushCo Equity Plan

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Rule 10b5-1 Trading Plans

During the three months ended March 31, 2022, Section 16 officer Adam Schoenfeld had an equity trading plan in place in accordance with Rule 10b5-1(c)(1) under the Exchange Act.

An equity trading plan is a written document that preestablishes the amounts, prices and dates (or formula for determining the amounts, prices and dates) of future purchases or sales of our Class A common stock, including shares acquired under our equity plans.

During the three and six months ended June 30, 2022, Section 16 officer Adam Schoenfeld had an equity trading plan in place in accordance with Rule 10b5-1(c)(1) under the Exchange Act.

An equity trading plan is a written document that pre-establishes the amounts, prices and dates (or formula for determining the amounts, prices and dates) of future purchases or sales of our Class A common stock, including shares acquired under our equity plans.

Equity-Based Compensation Expense

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For the three months ended

June 30, For the six months ended

(in thousands) 2022 2021 2022 2021

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Total equity-based compensation expense $ 431 $ 421 $ 1,304 $ 951

Total remaining unrecognized compensation expense as of March 31, 2022 was as follows:

Total remaining unrecognized compensation expense as of June 30, 2022 was as follows:

Remaining Unrecognized Compensation Expense

March 31, 2022 Weighted Average Period over which Remaining Unrecognized Compensation Expense is Expected to be Recognized

June 30, 2022 Weighted Average Period over which Remaining Unrecognized Compensation Expense is Expected to be Recognized

(in thousands) (in years)

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Restricted shares - Class A common stock 617 1.6

Restricted stock units (RSUs) - Class A common stock 25 2.9

Total remaining unrecognized compensation expense $ 1,421

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As a partnership, the Operating Company is generally not subject to U.S.

federal and certain state and local income taxes.

federal and certain state and local income taxes, however, certain states in which the Operating Company does business impose state composite and/or withholding income taxes.

Any taxable income or loss generated by the Operating Company is passed through to and included in the taxable income or loss of its members, including Greenlane, on a pro-rata basis, in accordance with the terms of the Operating Agreement.

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The Company has evaluated the impact of the Consolidated Appropriation Act and determined that its impact is not material to the Company’s financial statements.

As of March 31, 2022 and December 31, 2021, management performed an assessment of the realizability of our deferred tax assets based upon which management determined that it is not more likely than not that the results of operations will generate sufficient taxable income to realize portions of the net operating loss benefits.

Consequently, we established a full valuation allowance against our deferred tax assets, and reflected a carrying balance of $ 0 as of March 31, 2022 and December 31, 2021, respectively.

As of June 30, 2022 and December 31, 2021, management performed an assessment of the realizability of our deferred tax assets based upon which management determined that it is not more likely than not that the results of operations will generate sufficient taxable income to realize portions of the net operating loss benefits.

Consequently, we established a full valuation allowance against our deferred tax assets, and reflected a carrying balance of $ 0 as of June 30, 2022 and December 31, 2021, respectively.

In the event that management determines that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, an adjustment to the valuation allowance will be made, which would reduce the provision for income taxes.

The provision for and benefit from income taxes for the three months ended March 31, 2022 and 2021, respectively, relates to taxes in foreign jurisdictions, including Canada and the Netherlands.

For the three months ended March 31, 2022 and 2021, the effective tax rate differed from the U.S.

The provision for and benefit from income taxes for the three and six months ended June 30, 2022 and 2021, respectively, relates to taxes in foreign jurisdictions, including Canada and the Netherlands.

For the three and six months ended June 30, 2022 and 2021, 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.

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

We do not record U.S.

income taxes on the undistributed earnings of our foreign subsidiaries, except for the Canadian subsidiary, based upon our intention to permanently reinvest undistributed earnings to ensure sufficient working capital and further expansion of existing operations outside the United States.

Excerpt for the Canadian subsidiary, we do not record U.S.

income taxes on the undistributed earnings of our foreign subsidiaries, based upon our intention to permanently reinvest undistributed earnings to ensure sufficient working capital and

further expansion of existing operations outside the United States.

In the event we are required to repatriate funds from outside of the United States, such repatriation would be subject to local laws, customs, and tax consequences.

Uncertain Tax Positions

For the three months ended March 31, 2022 and 2021, we did not have any unrecognized tax benefits as a result of tax positions taken during a prior period or during the current period.

For the three and six months ended June 30, 2022 and 2021, respectively, we did not have any unrecognized tax benefits as a result of tax positions taken during a prior period or during the current period.

No interest or penalties have been recorded as a result of tax uncertainties.

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As a result, we determined that the amount or timing of payments to noncontrolling interest holders under the TRA are no longer probable or reasonably estimable.

Based on this assessment, our TRA liability was $ 0 as of March 31, 2022 and December 31, 2021.

Based on this assessment, our TRA liability was $ 0 as of June 30, 2022 and December 31, 2021.

If utilization of the deferred tax assets subject to the TRA becomes more likely than not in the future, we will record a liability related to the TRA, which would be recognized as expense within our condensed consolidated statements of operations and comprehensive (loss) income.

During the three months ended March 31, 2022 and 2021, we did not make any payments, inclusive of interest, to members of the Operating Company pursuant to the TRA.

During the three and six months ended June 30, 2022 and 2021, respectively, we did not make any payments, inclusive of interest, to members of the Operating Company pursuant to the TRA.

SEGMENT REPORTING

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Therefore, segment information is prepared on the same basis that management reviews financial information for operational decision-making purposes.

Our CODM is a committee comprised of our CEO and our CFO.

Our CODM is our CEO.

Following the completion of the KushCo merger in late August 2021, we reassessed our operating segments based on our new organizational structure.

Based on this assessment, we determined we had the following two operating segments as of March 31, 2022 and December 31, 2021, which are the same as our reportable segments:

Based on this assessment, we determined we had the following two operating segments as of June 30, 2022 and December 31, 2021, which are the same as our reportable segments:

(1) Consumer Goods, which largely comprises Greenlane's legacy operations across the United States, Canada, and Europe, and (2) Industrial Goods, which largely comprises KushCo's legacy operations across the United States and Canada.

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The Consumer Goods segment forms a central part of our growth strategy, especially as it relates to scaling our own portfolio of higher-margin Greenlane Brands.

The Industrial Goods segment focuses on serving the premier brands, operators, and retailers through our wholesale operations by providing ancillary products essential to their growth, such as customizable packaging and supply products and vaporization solutions offering which includes CCELL branded products.

The Industrial Goods segment focuses on serving the premier MSOs, operators, and retailers through our wholesale operations by providing ancillary products essential to their growth, such as customizable packaging and supply products and vaporization solutions offering which includes CCELL branded products.

Our CODM allocates resources to and assesses the performance of our two operating segments based on the operating segments' net sales and gross profit.

The following table sets forth information by reportable segment for the three months ended March 31, 2022 and 2021, respectively.

There were no material intersegment sales during the three months ended March 31, 2022 and 2021, respectively.

The following table sets forth information by reportable segment for the three and six

months ended June 30, 2022 and 2021, respectively.

There were no material intersegment sales during the three and six months ended June 30, 2022 and 2021, respectively.

For the three months ended

March 31, 2022 For the three months ended

March 31, 2021

June 30, 2022 For the three months ended

June 30, 2021

(in thousands) Consumer Goods Industrial Goods Total Consumer Goods Industrial Goods Total

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Gross profit $ 3,064 $ 5,035 $ 8,099 $ 7,345 $ 1,708 $ 9,053

For the six months ended

June 30, 2022 For the six months ended

June 30, 2021

(in thousands) Consumer Goods Industrial Goods Total Consumer Goods Industrial Goods Total

Net sales $ 33,053 $ 53,397 $ 86,450 $ 60,508 $ 8,216 $ 68,724

Cost of sales 27,167 45,216 72,383 45,552 5,564 51,116

Gross profit $ 5,886 $ 8,181 $ 14,067 $ 14,956 $ 2,652 $ 17,608

The following table sets forth specific asset categories which are reviewed by our CODM in the evaluation of operating segments:

As of March 31, 2022 As of December 31, 2021

As of June 30, 2022 As of December 31, 2021

(in thousands) Consumer Goods Industrial Goods Total Consumer Goods Industrial Goods Total

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SUBSEQUENT EVENTS

Entry into Amended Eyce Asset Purchase Agreement

On April 7, 2022, the Company entered into an amendment to that certain Asset Purchase Agreement, dated March 2, 2021 (the “Amended Eyce APA”), by and between Eyce and Warehouse Goods LLC, a wholly owned subsidiary of the Company, to accelerate the issuance of shares of Class A common stock issuable to Eyce under the agreement upon the attainment of certain EBITDA and revenue benchmarks (the “Amended 2022 Contingent Payment”).

The shares of Class A common stock issuable to Eyce under the Amended 2022 Contingent Payment will vest ratably in seven tranches starting on July 1, 2022, such that on January 1, 2024 (the “Vesting Date”), all shares issuable to Eyce under the Amended 2022 Contingent Payment will have been issued to Eyce.

The shares of Class A common stock issuable under the Amended 2022 Contingent Payment are subject to certain forfeiture restrictions tied to the continued employment of Eyce personnel with the Company through the Vesting Date.

On July 19, 2022, Warehouse Goods entered into the Sale Agreement with Portofino to sell the Company’s 50 % stake in VIBES Holdings LLC for total consideration of $ 5.3 million in cash.

The transactions contemplated by the Sale Agreement were completed on July 19, 2022, immediately following the signing of the Sale Agreement.

Entry into Asset-Backed Term Loan

On August 9, 2022, we entered into the Loan Agreement, by and among the Company, the Guarantors, the Lenders and WhiteHawk.

As described in the Loan Agreement, the Lenders agreed to make available to the Company a term loan of up to $ 15.0 million on the terms and conditions set forth therein and the other Financing Agreements (as defined therein).

Of the total term loan amount, $ 1.0 million is currently located in a blocked account, which will release the funds when permitted by the borrowing base certificate.

Subject to certain exceptions described in the Loan Agreement, the Company and the Guarantors agreed to pledge all of their assets as collateral.

Real Estate Note Amendment

On August 8, 2022, we entered into a note, mortgage and loan modification agreement (the "Real Estate Note Amendment"), which amended the maturity date of the Real Estate Note (discussed in Note 6) to reflect a maturity date of December 1, 2022, whereupon all principal and accrued interest will be due and payable, in full.

We expect to utilize a portion of the proceeds from the sale of the assets held for sale described in Note 8 for the repayment of the Real Estate Note.

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 1. Financial Statements