What changed in this filing

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Item 1. Financial Statements

2024-01-09 compared with 2023-08-14 · 222 added, 154 removed, 625 unchanged (38% of the section changed)

3 unchanged sentences

(in thousands, except par value per share amounts)

September 30,

2023 December 31,

ASSETS (Unaudited)

Current assets

1 unchanged sentence

Restricted cash — 5,718

Accounts receivable, net of allowance of $ 4,529 and $ 4,826 at June 30, 2023 and December 31, 2022, respectively

Accounts receivable, net of allowance of $ 4,208 and $ 4,826 at September 30, 2023 and December 31, 2022, respectively

Inventories, net 22,638 40,643

Vendor deposits 3,351 6,296

Other current assets 6,893 11,120

Other current assets (Note 8) 7,152 11,120

Total current assets 37,509 76,703

Property and equipment, net 3,237 3,962

Intangible assets, net 46,630 49,268

Operating lease right-of-use assets 2,163 3,442

5 unchanged sentences

Customer deposits 2,410 3,983

Current portion of notes payable 2,334 3,185

Current portion of notes payable (Note 6) 6,978 3,185

Current portion of operating leases 898 1,528

1 unchanged sentence

Total current liabilities 31,719 35,659

Notes payable, less current portion and debt issuance costs, net 2,591 13,040

Notes payable, less current portion and debt issuance costs, net (Note 6) — 13,040

Operating leases, less current portion 1,238 1,887

7 unchanged sentences

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

1,598 shares issued and outstanding as of June 30, 2023;

3,448 shares issued and outstanding as of September 30, 2023;

1,599 shares issued and outstanding as of December 31, 2022*

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

0 shares issued and outstanding as of June 30, 2023;

0 shares issued and outstanding as of September 30, 2023;

0 shares issued and outstanding as of December 31, 2022*

12 unchanged sentences

(in thousands, except per share amounts)

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

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

5 unchanged sentences

General and administrative 5,433 8,547 20,209 30,850

Goodwill and indefinite-lived intangibles impairment — 66,760 — 66,760

Definite-lived intangibles impairment charge — 50,694 — 50,694

Property and equipment impairment charge

— 7,336 — 7,336

Depreciation and amortization 524 2,124 1,492 6,876

8 unchanged sentences

Net loss ( 10,098 ) ( 137,245 ) ( 27,869 ) ( 170,475 )

Net income (loss) attributable to non-controlling

Net loss attributable to non-controlling

19 ( 6,742 ) ( 27 ) ( 12,516 )

29 unchanged sentences

Balance December 31, 2022 1,599 $ 15 — $ — $ 264,017 $ ( 225,114 ) $ 55 $ 18 $ 38,991

Net loss — — — — — ( 10,194 ) — ( 54 ) ( 10,248 )

— — — — — ( 8,693 ) — ( 54 ) ( 8,747 )

Equity-based compensation — — — — 110 — — 110

2 unchanged sentences

Balance March 31, 2023 1,599 15 — — 264,222 ( 233,807 ) 233 ( 36 ) 30,627

Net loss — — — — — ( 10,533 ) — 8 ( 10,525 )

— — — — — ( 9,032 ) — 8 ( 9,024 )

Equity-based compensation forfeiture, net ( 1 ) — — — ( 11 ) — — — ( 11 )

2 unchanged sentences

Balance June 30, 2023 1,598 15 — — 264,276 ( 242,839 ) 260 ( 28 ) 21,684

Net (loss) income — — — — — ( 10,117 ) — 19 ( 10,098 )

Equity-based compensation — — — — ( 70 ) — — — ( 70 )

Issuance of Class A shares - Amended Eyce APA (Note 3) — — — — 65 — — — 65

Issuance of Class A shares (Note 9) 1,850 18 — — 3,834 — — — 3,852

Other comprehensive income (loss) — — — — — — ( 22 ) — ( 22 )

Balance Balance September 30, 2023 3,448 $ 33 — $ — $ 268,105 $ ( 252,956 ) $ 238 $ ( 9 ) $ 15,411

* After giving effect to the Reverse Stock Splits - See Note 9 - Stockholders' Equity.

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

Common Stock Class B

23 unchanged sentences

Balance June 30, 2022 609 6 106 — 249,247 ( 83,000 ) 291 15,851 182,395

— — — — — ( 130,503 ) — ( 6,742 ) ( 137,245 )

Equity-based compensation ( 2 ) — — — 175 — — 10 185

Issuance of Class A shares - Amended Eyce APA (Note 3) — — — — 206 — — — 206

Issuance of Class A shares - Prefunded warrants exercise (Note 9) 49 — — — — — — — —

Exchanges of noncontrolling interest for Class A common stock 91 1 ( 91 ) — 9,747 — — ( 9,748 ) —

VIBES disposition / deconsolidation (Note 3) — — — — — — — ( 1,789 ) ( 1,789 )

Other comprehensive income (loss) — — — — — — ( 238 ) — ( 238 )

'Balance September 30, 2022

747 $ 7 15 $ — $ 259,375 $ ( 213,503 ) $ 53 $ ( 2,418 ) $ 43,514

* After giving effect to the Reverse Stock Splits - See Note 9 - Stockholders' Equity.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

(in thousands)

Six months ended June 30,

Nine months ended September 30,

Cash flows from operating activities:

3 unchanged sentences

Equity-based compensation expense 255 2,020

Goodwill and indefinite-lived intangibles impairment charge — 66,760

Definite-lived intangibles impairment charge — 50,694

Property and equipment impairment charge

Change in fair value of contingent consideration 103 ( 1,197 )

1 unchanged sentence

Gain related to indemnification asset — ( 2,018 )

(Gain) loss on disposal of fixed assets — 820

(Gain) loss on disposal of held-for-sale assets — ( 780 )

Gain related to VIBES disposition / deconsolidation (Note 3) — ( 2,062 )

Unrealized loss on equity investments — 1,214

Unrealized gain on interest rate swap contract — ( 449 )

Changes in operating assets and liabilities:

Realized (gain) loss on interest rate swap contract — ( 408 )

Amortization of deferred financing costs and debt discount 2,711 446

Other ( 17 ) ( 17 )

Changes in operating assets and liabilities, net of the effects of acquisitions:

Decrease (increase) in accounts receivable 4,697 247

5 unchanged sentences

(Decrease) increase in customer deposits ( 1,573 ) ( 3,401 )

Net cash provided by (used in) operating activities 4,656 ( 13,730 )

Net cash (used in) provided by operating activities

1,192 ( 22,488 )

Cash flows from investing activities:

Proceeds from VIBES disposition (Note 3) — 4,567

Purchases of property and equipment, net ( 633 ) ( 1,660 )

Proceeds from sale of assets held for sale — 75

Proceeds from the sale of equity investments 53 —

Purchase of intangible assets, net — —

Proceeds from sale of assets held for sale — 9,593

Net cash provided by (used in) investing activities ( 580 ) 12,500

1 unchanged sentence

Proceeds from issuance of Class A common stock, net of costs 3,852 14,064

Proceeds from (repayment of) Asset-Based Loan

( 15,000 ) 14,550

Proceeds from Secured Bridge Loan, net of costs

Debt issuance costs ( 751 ) ( 1,472 )

Repayment of loan against future accounts receivable

Proceeds from future receivables financing

Payments on Eyce and DaVinci promissory notes ( 2,539 ) ( 2,791 )

Purchase consideration paid for Eyce LLC and DaVinci acquisitions ( 300 ) ( 875 )

Repayments of Asset-Based Loan ( 9,452 ) —

Modification costs of Asset-Based Loan ( 751 ) —

Payments on Real Estate Note — ( 7,958 )

Repayment of Bridge Loan — ( 8,000 )

Proceeds from termination of interest rate swap — 145

Purchase consideration paid for Eyce and DaVinci acquisition ( 300 ) ( 875 )

Other ( 29 ) ( 128 )

Net cash provided by (used in) financing activities ( 12,133 ) 11,115

Effects of exchange rate changes on cash 205 85

Net increase (decrease) in cash ( 7,525 ) ( 3,727 )

Net cash provided by financing activities ( 10,528 ) 7,535

Effects of exchange rate changes on cash and restricted cash 183 ( 210 )

Net (decrease) in cash and restricted cash ( 9,733 ) ( 2,663 )

Cash and restricted cash, as of beginning of the period 12,176 12,857

4 unchanged sentences

(in thousands)

Reconciliation of cash and restricted cash to consolidated balance sheets

For the six months ended June 30,

Reconciliation of cash and restricted cash to condensed consolidated balance sheets

Nine months ended September 30,

Beginning of the period

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Non-cash investing and financing activities:

Issuance of Class A common stock for business acquisitions $ — $ 3,486

Non-cash purchases of property and equipment $ 133 $ 1,617

Issuance of Class A common stock for business acquisitions $ — $ 3,486

Decrease in non-controlling interest as a result of exchanges for Class A common stock $ — $ ( 10,291 )

Decrease in non-controlling interest as a result of VIBES disposition $ — $ ( 1,789 )

Transfer from contingent consideration to notes payable $ 1,150 $ —

Transfer from accrued expenses to notes payable $ 437 $ —

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

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(“Greenlane” and, collectively with the Operating Company (as defined below) and its consolidated subsidiaries, the “Company”, "we", "us", and "our") was formed as a Delaware corporation on May 2, 2018.

We are a holding company that was formed for the purpose of completing an underwritten initial public offering (“IPO”) of shares of our Class A common stock, $ 0.01 par value per share (the “Class A common stock”), in order to carry on the business of Greenlane Holdings, LLC (the “Operating Company”).

We are a holding company that was formed for the purpose of completing an underwritten initial public offering (“IPO”) of shares of our Class A common stock, $ 0.01 par value per share (“Class A common stock”), in order to carry on the business of Greenlane Holdings, LLC (the “Operating Company”).

The Operating Company was organized under the laws of the state of Delaware on September 1, 2015, and is based in Boca Raton, Florida.

19 unchanged sentences

Additionally, because a member may redeem their Common Units for shares of Class A common stock on a one -for-one basis or, at our option, for cash, the Up-C structure also provides the member with potential liquidity that holders of non-publicly traded limited liability companies are not typically afforded.

In connection with the IPO, we entered into a Tax Receivable Agreement (the “TRA”) with the Operating Company and the Operating Company’s members and a Registration Rights (the “Registration Rights Agreement”) with the Operating Company’s members.

In connection with the IPO, we entered into a Tax Receivable Agreement (the “TRA”) with the Operating Company and the Operating Company’s members and a Registration Rights Agreement (the “Registration Rights Agreement”) with the Operating

Company’s members.

The TRA provides for the payment by us to the Operating Company’s member(s) of 85.0 % of the amount of tax benefits, if any, that we may actually realize (or in some cases, are deemed to realize) as a result of (i) the step-up in tax basis in our share of the Operating Company's assets resulting from the redemption of Common Units under the mechanism described above and (ii) certain other tax benefits attributable to payments made under the TRA.

9 unchanged sentences

GAAP have been condensed or omitted pursuant to such rules and regulations.

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, 2022.

The condensed consolidated results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, or any other future annual or interim period.

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 Amendment No.

1 to our Annual Report on Form 10-K/A for the year ended December 31, 2022.

The condensed consolidated results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, or any other future annual or interim period.

In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments necessary for a fair statement of the Company's financial position and operating results.

4 unchanged sentences

Reverse Stock Splits

On August 4, 2022, we filed a Certificate of Amendment to the A&R Charter with the Secretary of State of the State of Delaware (the "SSSD"), which effected a one-for-20 reverse stock split (the “2022 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.

On August 4, 2022, we filed a Certificate of Amendment to the A&R Charter with the Secretary of State for the State of Delaware (the "SSSD"), which effected a one-for-twenty reverse stock split (the “2022 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 2022 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 2022 Reverse Stock Split.

On 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.

On June 2, 2023, we filed a Certificate of Amendment to the A&R Charter with the SSSD, which effected a one-for-ten reverse stock split (the “2023 Reverse Stock Split” and together with the 2022 Reverse Stock Split, the "Reverse Stock Splits") of our issued and outstanding shares of Common Stock at 5:01 PM Eastern Time on June 5, 2023.

As a result of the 2023 Reverse Stock Split, every ten shares of common stock issued and outstanding were converted into one share of common stock.

We paid cash in lieu of fractional shares, and accordingly, no fractional shares were issued in connection with the 2023 Reverse Stock Split.

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This presentation contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and does not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described below.

Pursuant to ASC 205-40, Presentation of Financial Statements — Going Concern (“ASC 205-40”) , management must evaluate whether there are conditions and events, considered in aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that these condensed consolidated financial statements are issued.

Pursuant to ASC 205-40, Presentation of Financial Statements — Going Concern (“ASC 205-40”) , management must evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that these condensed consolidated financial statements are issued.

In accordance with ASC 205-40, management’s analysis can only include the potential mitigating impact of management’s plans that have not been fully implemented as of the issuance date if (a) it is probable that management’s plans will be effectively implemented on a timely basis, and (b) it is probable that the plans, when implemented, will alleviate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern.

29 unchanged sentences

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 13 - Subsequent Events" for more information.

On February 16, 2023, two of our wholly owned subsidiaries, Warehouse Goods and Kim International LLC, entered into an agreement with a third-party institutional investor pursuant to which the investor purchased, for approximately $ 4.85 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.

See "Note 6 - Long Term Debt" for more information.

On February 16, 2023, two of our wholly owned subsidiaries, Warehouse Goods LLC and KIM International LLC, entered into an agreement with a third-party institutional investor pursuant to which the investor purchased, for approximately $ 4.85 million in cash, an economic participation interest, at a discount, in our rights to payment from the United States Internal Revenue Service for certain periods with respect to the employee retention credits filed by us under the Employee Retention Credit program.

Future Receivables Financings

1 unchanged sentence

The Company will make weekly payments under the Future Receivables Financings and is scheduled to repay the amounts due under the Future Receivables Financings in full in approximately six to eight months .

See "Note 13 - Subsequent Events" for more information.

See "Note 6 - Long Term Debt" for more information.

Management Initiatives

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We have reduced our workforce by approximately 49 % throughout fiscal year 2022 to reduce costs and align with our revenue projections.

The Company has incurred net losses of 20.8 million and $ 125.9 million for the six months ended June 30, 2023 and the year ended December 31, 2022, respectively.

For the six months ended June 30, 2023, cash provided by operating activities was 4.7 million, which included $ 4.85 million of cash from the ERC sale discussed above, and cash used in operating activities for the year ended December 31, 2022 was $ 26.4 million.

The Company has incurred net losses of $ 27.9 million and $ 182.2 million for the nine months ended September 30, 2023 and the year ended December 31, 2022, respectively.

For the nine months ended September 30, 2023, cash provided by operating activities was $ 1.2 million, which included $ 4.9 million of cash from the ERC sale discussed above, and cash used in operating activities for the year ended December 31, 2022 was $ 26.4 million.

The recent macroeconomic environment has caused weaker demand than contemplated under the Company's business plan, resulting in a reduction in projected revenue and cash flows for the twelve-month period included in the going concern evaluation.

16 unchanged sentences

the realizability of deferred tax assets;

the fair value of goodwill;

the fair value of contingent consideration arrangements;

the useful lives of intangible assets and property and equipment;

the useful lives property and equipment;

the calculation of our VAT taxes receivable and VAT taxes, fines, and penalties payable;

5 unchanged sentences

We manage our global business operations through our operating and reportable business segments.

As of June 30, 2023, we had two reportable operating business segments:

As of September 30, 2023, we had two reportable operating business segments:

Industrial Goods and Consumer Goods.

2 unchanged sentences

Revenue Recognition

Our liability for returns, which is included within "Accrued expenses and other current liabilities" in our condensed consolidated balance sheets, was approximately $ 0.1 million and $ 0.3 million as of June 30, 2023 and December 31, 2022, respectively.

For the three and six months ended June 30, 2023, one customer represented approximately 38 % and 32 % of our net sales.

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

As of June 30, 2023, two customers represented approximately 16 % and 16 % of accounts receivable, respectively.

The Company transitioned to a commission revenue model for the majority of the sales for the Industrial segment.

The company operates as a Sales Agent servicing vape customers and receives a commission for these services.

The company was previously working directly with these customers and recognizing gross revenue versus straight commission revenue.

For the three and nine months ended September 30, 2023, one customer represented approximately 13 % and 28 % of our net sales.

No single customer represented more than 24 % of our net sales for the three and nine months ended September 30, 2022.

As of September 30, 2023, one customer represented approximately 30 % of accounts receivable.

As of December 31, 2022, the Company had three customers who individually represented approximately 31 %, 17 % and 15 % of accounts receivable, respectively.

Value Added Taxes

During the third quarter of 2020, as part of a global tax strategy review, we determined that our European subsidiaries based in the Netherlands, which we acquired on September 30, 2019, had historically collected and remitted value added tax (“VAT”) payments, which related to direct-to-consumer sales to other European Union (“EU”) member states, directly to the Dutch tax

In connection with our subsidiaries' payment of VAT to Dutch tax authorities rather than other EU member states, we may become subject to civil or criminal enforcement actions in certain EU jurisdictions, which could result in penalties.

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

Based on this analysis, we recorded VAT payable of approximately $ 0.4 million relating to this matter within "Accrued expenses and other current liabilities” in our condensed consolidated balance sheet as of June 30, 2023 and December 31, 2022.

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.

5 unchanged sentences

Refer to "Note 7—Commitments and Contingencies" for additional discussion regarding our contingencies.

Recently Adopted Accounting Guidance

Recently Issued Accounting Guidance

In June 2016, the FASB issued ASU No.

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The Company is currently evaluating the impact of adopting the standard.

BUSINESS ACQUISITIONS

BUSINESS ACQUISITIONS AND DISPOSITIONS

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 7,172 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.

We issued 7,172 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.

1 unchanged sentence

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

The April 2, 2023 and July 1, 2023 payments were paid timely, the remaining payments, if not paid timely will roll into the Synergy Imports, LLC Bridge Loan and included in the potential additionally deferred amounts under that Loan..

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 $ 4.6 million in cash.

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

In conjunction with and as a result of the disposition of and deconsolidation of our interest in VIBES Holdings LLC, we recorded a gain of $ 2.0 million for the three months ended September 30, 2022, which is included as an offset in "general and administrative expenses" in our condensed consolidated statements of operations and comprehensive loss, as well as a reduction to non-controlling interest on our condensed consolidated balance sheet as of September 30, 2022 of $ 1.8 million.

In conjunction with the Sale Agreement, we retuned inventory to VIBES with a carrying value of approximately $ 2.4 million.

FAIR VALUE OF FINANCIAL INSTRUMENTS

1 unchanged sentence

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 June 30, 2023 and December 31, 2022, we had contingent consideration that is required to be measured at fair value on a recurring basis.

As of September 30, 2023 and December 31, 2022, we had contingent consideration that is required to be measured at fair value on a recurring basis.

Our financial instruments measured at fair value on a recurring basis were as follows at the dates indicated:

Condensed Consolidated

Balance Sheet Caption Fair Value at June 30, 2023

Balance Sheet Caption Fair Value at September 30, 2023

(in thousands) Level 1 Level 2 Level 3 Total

1 unchanged sentence

Total Liabilities $ — $ — $ 1,500 $ 1,500

Condensed Consolidated

Balance Sheet Caption Fair Value at December 31, 2022

2 unchanged sentences

Total Liabilities $ — $ — $ 2,738 $ 2,738

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, 2023 and 2022, 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 nine months ended September 30, 2023 and 2022, respectively.

Derivative Instrument and Hedging Activity

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During the second quarter of 2022, we also reclassified the related accumulated other comprehensive income balance of $ 0.3 million 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 three and six months ended June 30, 2023 and 2022, respectively.

Refer to “Note 8 — Supplemental Financial Information” for further details on the components of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2023 and 2022, 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.

measure of hedge ineffectiveness and no reclassifications from other comprehensive loss into interest expense for the three months ended June 30, 2022.

There was no measure of hedge ineffectiveness and no reclassifications from other comprehensive loss into interest expense for the three months ended September 30, 2022.

In August 2022, we terminated the interest swap contract.

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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) Six Months Ended

June 30, 2023

(in thousands) Nine Months Ended

September 30, 2023

Balance at December 31, 2022 $ 2,738

Cash payments for earned contingent consideration ( 350 )

Transfer to notes payable

Loss (gain) from fair value adjustments included in results of operations 262

Balance at June 30, 2023 $ 2,541

(in thousands) Six Months Ended

June 30, 2022

Balance September 30, 2023 $ 1,500

(in thousands) Nine Months Ended

September 30, 2022

Balance at December 31, 2021 $ 6,857

3 unchanged sentences

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

Gain from fair value adjustments included in results of operations ( 929 )

Balance at September 30, 2022 $ 1,300

Equity Securities Without a Readily Determinable Fair Value

5 unchanged sentences

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 and six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023 and December 31, 2022, 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 due to an observable price change recognized during the year ended December 31, 2019.

We did not identify any fair value adjustments related to these equity securities during the three and nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023 and December 31, 2022, the carrying value of our investment in equity securities without a readily determinable fair value was approximately $ 2.5 million and $ 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 June 30, 2023, we had facilities financed under operating leases consisting of warehouses, offices, and retail stores, with lease term expirations between 2023 and 2027.

Lease terms are generally three to seven years for warehouses, office space and

retail store locations.

As of September 30, 2023, we had facilities financed under operating leases consisting of warehouses, offices, and retail stores, with lease term expirations between 2023 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 June 30, 2023.

The following table provides details of our future minimum lease payments under operating lease liabilities recorded in our condensed consolidated balance sheet as of September 30, 2023.

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

7 unchanged sentences

Long-term portion $ 1,238

Rent expense under operating leases was approximately $ 0.6 million and $ 1.2 million for three and six months ended June 30, 2023, respectively, and approximately $ 0.7 million and $ 1.4 million for the three and six months ended June 30, 2022, respectively.

Rent expense under operating leases was approximat ely $ 0.4 million and $ 1.5 million for three and nine months ended September 30, 2023, respectively, and approximately $ 0.6 million and $ 2.1 million for the three and nine months ended September 30, 2022, 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 six months ended

For the nine months ended

September 30,

(in thousands) 2023 2022

Operating lease cost

$ 1,041 $ 1,406

Variable lease cost

Total lease cost $ 1,935 $ 2,816

The table below presents lease-related terms and discount rates as of June 30, 2023:

The table below presents lease-related terms and discount rates as of September 30, 2023:

Operating Leases

1 unchanged sentence

Weighted average discount rate 2.3 %

Greenlane as a Lessor

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)

Remainder of 2023 $ 96,000

2024 and thereafter —

Total $ 96,000

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

(in thousands) June 30, 2023 December 31, 2022

Line of Credit $ 5,548 $ 15,000

(in thousands) September 30, 2023 December 31, 2022

Asset-Based Loan $ — $ 15,000

DaVinci Promissory Note 653 2,538

Eyce Promissory Note — 647

Future Receivables Financings

Secured Bridge Loan 4,175 —

Less unamortized debt issuance costs — ( 1,960 )

Less current portion of debt ( 6,978 ) ( 3,185 )

Debt, net, excluding operating and finance leases $ 2,591 $ 13,040

Real Estate Note

On October 1, 2018, one of the Operating Company’s wholly-owned subsidiaries financed the purchase of a building, which served as our corporate headquarters, through a real estate term note (the “Real Estate Note”) in the principal amount of $ 8.5 million.

Our obligations under the Real Estate Note were secured by a mortgage on the property.

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 to reflect a maturity date of December 1, 2022, whereupon all principal and accrued interest were to become due and payable, in full.

In September 2022, one of the Operating Company's wholly-owned subsidiaries, 1095 Broken Sound Pkwy LLC ("1095 Broken Sound"), consummated the previously disclosed transactions contemplated by that certain Purchase and Sale Agreement, dated as of August 16, 2022, by and between 1095 Broken Sound and a third-party (the "HQ Purchaser") whereby 1095 Broken Sound agreed to sell a certain parcel of real estate including our headquarters building to the purchaser of our former headquarters for total proceeds of $ 9.6 million in cash.

On the closing date, the Company used a portion of the proceeds from the transaction to repay the remainder of the Real Estate Note in full.

There was no remaining balance related to the Real Estate Note on our consolidated balance sheet as of June 30, 2023 or December 31, 2022.

Eyce Promissory Note

In March 2021, one of the Operating Company's wholly-owned subsidiaries financed a portion of the consideration of the acquisition of Eyce through the issuance of an unsecured promissory note (the "Eyce Promissory Note") in the principal amount of $ 2.5 million.

Principal payments plus accrued interest at a rate of 4.5 % are due quarterly through April 2023.

As of June 30, 2023, the Eyce Promissory Note was repaid in full, and there was no remaining balance on our condensed consolidated balance sheet.

DaVinci Promissory Note

In November 2021, one of the Operating Company's wholly-owned subsidiaries financed the acquisition of DaVinci through the issuance of an unsecured promissory note (the "DaVinci Promissory Note") in the principal amount of $ 5.0 million.

Principal payments plus accrued interest at a rate of 4.0 % are due quarterly through October 2023.

Debt, net, excluding operating and finance leases and liabilities $ — $ 13,040

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 “December 2021 Note”).

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

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 Uniform 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.

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.

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.

Real Estate Note

Our obligations under the Real Estate Note were secured by a mortgage on the property.

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 to reflect a maturity date of December 1, 2022, whereupon all principal and accrued interest were to become due and payable, in full.

In September 2022, 1095 Broken Sound consummated the previously disclosed transactions contemplated by that certain Purchase and Sale Agreement, dated as of August 16, 2022, by and between 1095 Broken Sound and ACS 1095 LLC ("the HQ Purchaser") whereby 1095 Broken Sound agreed to sell a certain parcel of real estate including the our headquarters building to the HQ Purchaser for total proceeds of $ 9.6 million in cash.

On the Closing Date, the Company used a portion of the proceeds from the HQ Transaction to repay the remainder of the Real Estate Note in full.

There was no remaining balance related to the Real Estate Note on our consolidated balance sheet as of September 30, 2023 or December 31, 2022.

Asset-Based Loan

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Pursuant to the Loan Agreement, the Lenders agreed to make available to us 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).

As of December 31, 2022, of the total term loan amount, $ 5.7 million was located in a blocked account, which was classified as “restricted cash” on our condensed consolidated balance sheet, and which released the funds when permitted by the borrowing base certificate.

As of December 31, 2022, of the total term

loan amount, $ 5.7 million was located in a blocked account, which was classified as “restricted cash” on our condensed consolidated balance sheet, and which released 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.

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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 13 - Subsequent Events" for more information.

As of June 30, 2023, we were in compliance with the Loan Agreement covenants.

DaVinci Promissory Note

Principal payments plus accrued interest at a rate of 4.0 % are due quarterly through October 2023.

Eyce Promissory Note

Principal payments plus accrued interest at a rate of 4.5 % are due quarterly through April 2023.

As of September 30, 2023, the Eyce Promissory Note was repaid in full, and there was no remaining balance on our condensed consolidated balance sheet.

Future Receivables Financings

On July 31, 2023 and August 3, 2023, the Company received an aggregate of approximately $ 3.0 million in cash pursuant to the terms of future receivables financings (collectively, the “Future Receivables Financings”) entered into with two private lenders.

The total amount to be repaid under the initial Future Receivables Financings was approximately $ 4.5 million.

In connection with the Future Receivables Financings, the Company granted the lenders security interests in Company's accounts receivable equal to the amounts due thereunder, and in connection with any event of default, the lenders may file financing statements evidencing the security interests.

Secured Bridge Loan

On September 22, 2023, Greenlane Holdings, Inc.

(the “Company”) entered into a secured loan pursuant to a Loan and Security Agreement, dated as of September 22, 2023 (the “Loan Agreement”) with Synergy Imports, LLC (the "Lender").

Pursuant to the Loan Agreement, the Lender agreed to make available to the Company a six-month bridge loan of $ 2.2 million in new funds.

Additionally, the Lender agreed to defer payments totaling $ 2,028,603.59 already owed by the Company under existing payment obligations and potentially defer up to an additional $ 2,655,777.63 which may become due pursuant to existing agreements during the term of the Loan Agreement.

Subject to certain exceptions, the Company agreed to pledge all of its assets, with the exception of deposit accounts and accounts receivable, as collateral.

Additionally, the Company agreed to transfer one US patent and two related foreign patents

and a related trademark in exchange for an exclusive license back of such assets in the area of smoking products and accessories in connection with the loan.

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 three and six months ended June 30, 2023 and 2022, respectively.

We have not taken any reserves for litigation for the three and nine months ended September 30, 2023 and 2022, respectively.

Other Contingencies

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On February 16, 2023, two of Greenlane Holdings, Inc.’s subsidiaries, Warehouse Goods LLC and KIM International LLC (collectively, the “Company”), 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 all of the Company’s rights to payment from the United States Internal Revenue Service with respect to the employee retention credits filed by the Company under the ERC program.

Other Current Assets

The following table summarizes the composition of other current assets as of the dates indicated:

(in thousands) September 30, 2023 December 31, 2022

Other current assets:

Employee retention credit (ERC) receivable $ — $ 4,854

VAT refund receivable (Note 2) 1,878 143

Prepaid expenses 2,757 1,293

Indemnification receivable, net 7 736

Customs bonds 1,200 1,378

Other 1,310 2,716

$ 7,152 $ 11,120

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) June 30, 2023 December 31, 2022

(in thousands) September 30, 2023 December 31, 2022

Accrued expenses and other current liabilities:

VAT payable (including amounts related to VAT matter described in Note 2) $ 3,663 $ 2,809

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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, 2023 were as follows:

Changes in our customer deposits liability balance during the nine months ended September 30, 2023 were as follows:

(in thousands) Customer Deposits

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Revenue recognized ( 5,708 )

Balance as of June 30, 2023 $ 2,938

Balance as of September 30, 2023 $ 2,410

Accumulated Other Comprehensive Income (Loss)

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Other comprehensive (income) loss attributable to non-controlling interest — — —

Balance at June 30, 2023 $ 260 $ — $ 260

Balance at September 30, 2023 $ 238 $ — $ 238

(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 ( 17 ) ( 68 ) ( 85 )

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

Balance at September 30, 2022 $ 53 $ — $ 53

Supplier Concentration

Our four largest vendors accounted for an aggregate of approximately 89.9 % and 82.2 % of our total purchases for the three and six months ended June 30, 2023, respectively, and an aggregate of approximately 83.3 % and 74.0 %.

of our total purchases for the three and six months ended June 30, 2022, respectively.

Our four largest vendors accounted for an aggregate of approximately 64.2 % and 74.7 % of our total purchases for the three and nine months ended September 30, 2023, respectively, and an aggregate of approximately 66.9 % and 72.6 % of our total purchases for the three and nine months ended September 30, 2022, respectively.

We expect to maintain our relationships with these vendors.

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

Net sales to Unrivaled for the three and six months ended June 30, 2023 and 2022 were $ 0 and approximately $ 0.2 million, respectively.

Total accounts receivable due from Unrivaled were $ 0.4 million as of June 30, 2023 and December 31, 2022, respectively.

Net sales to Unrivaled totaled approximately $ 0 for both the three and nine months ended September 30, 2023, respectively, and $ 0 and $ 0.4 million for the three and nine months ended September 30, 2022, respectively.

Total accounts receivable due from Unrivaled were approximately $ 0.4 million as of September 30, 2023 and December 31, 2022, respectively.

On February 8, 2023, we filed a lawsuit against Unrivaled in Superior Court of California, Orange County, seeking to compel the repayment of Unrivaled's open balance due to us.

We can provide no assurances that we will be successful in this lawsuit, or that the amounts due to us, or any portion thereof, will be recovered.

Three individuals who were employees of the Company at the time are principals in Synergy Imports, LLC the Lender on the Secured Bridge Loan taken out on September 22, 2023, however, none are executive officers or directors of the Company.

STOCKHOLDERS’ EQUITY

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($ in thousands) August 2021 (Inception) through

June 30, 2023

September 30, 2023

Class A shares sold* 97,262

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October 2022 Offering

shares of our Class A common stock (the "October 2022 Pre-Funded Warrants") and warrants to purchase up to 1,666,667 shares of our Class A common stock (the "October 2022 Standard Warrants").

On October 27, 2022, we entered into securities purchase agreements with certain investors, pursuant to which we agreed to issue and sell an aggregate of 695,555 shares of our Class A common stock, pre-funded warrants to purchase up to 137,778 shares of our Class A common stock (the "October 2022 Pre-Funded Warrants") and warrants to purchase up to 1,666,667 shares of our Class A common stock (the "October 2022 Standard Warrants").

The October 2022 units each consisted of one share of Class A common stock or a October 2022 Pre-Funded Warrant and two October 2022 Standard Warrants to purchase one share of our Class A common stock.

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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 June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

(in thousands, except per share data) 2023 2022 2023 2022

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Net loss attributable to non-controlling interests 19 ( 6,742 ) ( 27 ) ( 12,516 )

Deemed Dividend on "October 2022 Standard Warrants"

$ ( 388 ) $ — $ ( 388 ) $ —

Net loss attributable to Class A common stockholders $ ( 10,505 ) $ ( 130,503 ) $ ( 28,230 ) $ ( 157,959 )

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*After giving effect to the Reverse Stock Splits.

The June 2022 Pre-Funded Warrants, October 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, respectively, beginning with their issuance date, as their stated exercise price of $ 0.001 was non-substantive and their exercise was virtually assured.

For the three and six months ended June 30, 2023 and 2022, respectively, shares of Class B common stock and stock options and warrants to purchase Class A common stock were excluded from the weighted-average in the computation of diluted net loss per share of Class A common stock because the effect would have been anti-dilutive.

The June 2022 Pre-Funded Warrants, October 2022 Pre-Funded Warrants, July 2023 Pre-Funded Warrants were included in the weighted-average in the computation of basic net loss per share of Class A common stock for the three and nine months ended September 30, 2023, respectively, beginning with their issuance date, as their stated exercise price of $ 0.001 was non-substantive and their exercise was virtually assured.

On June 29, 2023 in connection with the July 2023 Offering, the Company entered into agreements with holders participating in the offering to amend existing outstanding warrants to purchase up to 1,344,367 shares of Class A common stock that were previously issued in November 2022 at an exercise price per share of $ 9.00 .

The warrants expire on November 1, 2029.

In connection with the amendment, the exercise price of the warrants was reduced to $ 1.05 .

The impact of the amendment resulted in a deemed dividend in the amount of $ 0.4 million.

The deemed dividend was calculated by the change in fair value.

For the three and nine months ended September 30, 2023 and 2022, respectively, shares of Class B common stock and stock op tions and warrants to purchase Class A common stock were excluded from the weighted-average in the computation of diluted net loss per share of Class A common stock because the effect would have been anti-dilutive.

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

As such, separate calculations of basic and diluted net loss per share for each of our Class B common stock under the two-class method have not been presented for the three and six months ended 2022, respectively.

As such, separate calculations of basic and diluted net loss per share for each of our Class B common stock under the two-class method have not been presented for the three and nine months ended September 30, 2022, respectively.

As of December 31, 2022, all Common Units of the Operating Company and Class B common stock had been exchanged for Class A common stock, and we owned 100.0 % of the economic interests in the Operating Company.

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For the three months ended

June 30, For the six months ended

September 30, For the nine months ended

September 30,

(in thousands) 2023 2022 2023 2022

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Total equity-based compensation expense $ ( 69 ) $ 187 $ 31 $ 1,491

Total remaining unrecognized compensation expense as of June 30, 2023 was as follows:

Total remaining unrecognized compensation expense as of September 30, 2023 was as follows:

Remaining Unrecognized Compensation Expense

June 30, 2023 Weighted Average Period over which Remaining Unrecognized Compensation Expense is Expected to be Recognized

September 30, 2023 Weighted Average Period over which Remaining Unrecognized Compensation Expense is Expected to be Recognized

(in thousands) (in years)

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federal and certain state and local income taxes.

Any taxable income or loss generated by the Operating Company was passed through to and included in the taxable income or

loss of its members, including Greenlane, on a pro-rata basis, in accordance with the terms of the Operating Agreement.

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

The Operating Company was also subject to taxes in foreign jurisdictions.

We are a corporation subject to U.S.

federal income taxes, in additional to state and local income taxes, based on our share of the Operating Company’s pass-through taxable income.

federal income taxes, in addition to state and local income taxes, based on our share of the Operating Company’s pass-through taxable income.

Effective on December 31, 2022, the Operating Company became wholly owned by us.

As a result, the Operating Company’s tax status was converted from a partnership to a disregarded entity.

Starting in 2023, 100% of the Operating Company’s US income and expenses will be included in our US and state tax returns.

During the three and six months ended June 30, 2023 and 2022, respectively, management performed an assessment of the realizability of our deferred tax assets based upon which management determined that it is not more likely than not that the results of operations will generate sufficient taxable income to realize portions of the net operating loss benefits.

Consequently, we established a full valuation allowance against our deferred tax assets and reflected a carrying balance of $ 0 as of June 30, 2023 and December 31, 2022, 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.

Starting in 2023, 100% of the Operating Company’s U.S.

income and expenses will be included in our US and state tax returns.

During the three and nine months ended September 30, 2023 and 2022, respectively, management performed an assessment of the realizability of our deferred tax assets based upon which management determined that it is not more likely than not that the results of operations will generate sufficient taxable income to realize portions of the net operating loss benefits.

Consequently, we established a full valuation allowance against our deferred tax assets and reflected a carrying balance of $ 0 as of September 30, 2023 and December 31, 2022, respectively.

Uncertain Tax Positions

For the three and six months ended June 30, 2023 and 2022, respectively, we did no t have any unrecognized tax benefits as a result of tax positions taken during a prior period or during the current period.

For the three and nine months ended September 30, 2023 and 2022, respectively, we did no t have any unrecognized tax benefits as a result of tax positions taken during a prior period or during the current period.

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

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Tax Receivable Agreement (TRA)

We entered into the TRA with the Operating Company and each of the members that provides for the payment by the Operating Company to the members of 85 % of the amount of tax benefits, if any, that we may actually realize (or in some circumstances are deemed to realize) as a result of (i) increases in tax basis resulting from any future redemptions of Common Units as described in “Note 1—Business Operations and Organization” and (ii) certain other tax benefits attributable to payments made under the TRA.

We entered into the TRA with the Operating Company and each of the members (other than Greenlane Holdings, Inc.) that provides for the payment by the Operating Company to the members of 85 % of the amount of tax benefits, if any, that we may actually realize (or in some circumstances are deemed to realize) as a result of (i) increases in tax basis resulting from any future redemptions of Common Units as described in “Note 1—Business Operations and Organization” and (ii) certain other tax benefits attributable to payments made under the TRA.

The annual tax benefits are computed by calculating the income taxes due, including such tax benefits, and the income taxes due without such benefits.

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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 June 30, 2023 and December 31, 2022, respectively.

Based on this assessment, our TRA liability was $ 0 as of September 30, 2023 and December 31, 2022.

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 and six months ended June 30, 2023 and 2022, respectively, we did not make any payments, inclusive of interest, to members of the Operating Company pursuant to the TRA.

During the three and nine months ended September 30, 2023 and 2022, 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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Our CODM is a committee comprised of our CEO and our CFO.

We determined we had two operating segments as of June 30, 2023, which are the same as our reportable segments:

We determined we had two operating segments as of September 30, 2023, which are the same as our reportable segments:

(1) Consumer Goods and (2) Industrial Goods.

These operating segments align with how we manage our business as of the second quarter of 2023.

These operating segments align with how we manage our business as of the third quarter of 2023.

The accounting policies of the reportable segments are the same as those described in "Note 2 - Summary of Significant Accounting Policies."

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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 and six months ended June 30, 2023 and 2022, respectively.

There were no material intersegment sales during the three and six months ended June 30, 2023 and 2022, respectively.

The following table sets forth information by reportable segment for the three and nine months ended September 30, 2023 and 2022, respectively.

There were no material intersegment sales during the three and nine months ended September 30, 2023 and 2022, respectively.

For the three months ended

June 30, 2023 For the three months ended

June 30, 2022

September 30, 2023 For the three months ended

September 30, 2022

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

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Gross profit $ 1,791 $ 1,338 $ 3,129 $ 628 $ 4,341 $ 4,969

For the six months ended

June 30, 2023 For the six months ended

June 30, 2022

For the nine months ended

September 30, 2023 For the nine months ended

September 30, 2022

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

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

As of June 30, 2023 As of December 31, 2022

As of September 30, 2023 As of December 31, 2022

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

2 unchanged sentences

Vendor deposits $ 2,205 $ 1,146 $ 3,351 $ 3,269 $ 3,027 $ 6,296

SUBSEQUENT EVENTS

Asset-Based Loan Repayment

On August 7, 2023, we repaid the approximately $ 4.3 million in aggregate principal amount (the “Loan Repayment”) which remained outstanding under the terms of the Loan Agreement.

As a result of the Loan Repayment, the Company has been released from its obligations under the Loan Agreement, in accordance with the terms of the Loan Agreement.

Future Receivables Financings

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