Greenlane Holdings Inc

Previous wording

Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Factors that might cause such a difference include those discussed in our filings with the SEC, under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Annual Report”) and in other documents that we file from time to time with the Securities and Exchange Commission (the “SEC”).

Current wording

Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Factors that might cause such a difference include those discussed in our filings with the SEC, under the heading “Risk Factors” in our Annual Report on Form 10-KA for the fiscal year ended December 31, 2023 (the “2023 Annual Report”) and in other documents that we file from time to time with the Securities and Exchange Commission (the “SEC”).

Previous wording

In April 2023, we entered into two strategic. First, we entered into a strategic partnership (the “MJ Packaging Partnership”) with A&A Global Imports d/b/a MarijuanaPackaging.com (“MJ Pack”), a provider of packaging solutions to the cannabis industry. Second, we entered into a strategic partnership with an affiliate of one of our existing vape suppliers (“Vape Partner”) to service certain key customers with vaporizer goods and services (the “Vape Partnership”). As part of the Vape Partnership, we will introduce our Vape Partner to certain key customers, assist with the promotion and the sale of certain vaporizer goods and services, and help coordinate the logistics, storage and distribution of such vaporizer products. If our Vape Partner and key customer(s) enter into a direct relationship, the customers would directly purchase vaporizer goods and services, which we currently sell them, directly from our Vape Partner and we would no longer need to purchase such vape inventory on behalf of such key customer(s). In exchange we would earn quarterly and annual commission payments from our strategic partners. While the strategic partnerships may result in a decrease in top line revenue for these packaging and vape products, these partnerships combined with some of our other restructuring initiatives should allow us to reduce our overall cost-structure and enhance our margins, thereby improving our balance sheet.

Current wording

In April 2023, we entered into two strategic partnerships. First, we entered into a strategic partnership (the “MJ Packaging Partnership”) with A&A Global Imports d/b/a MarijuanaPackaging.com (“MJ Pack”), a leading provider of packaging solutions to the cannabis industry. On August 8, 2024 the Company terminated its strategic partnership with MJ Packaging and is resuming its business as a direct provider of packaging solutions to the cannabis industry. MJ Packaging however, remains a distribution customer of the Company. Second, we entered into a strategic partnership with an affiliate of one of our existing vape suppliers (“Vape Partner”) to service certain key customers with vaporizer goods and services (the “Vape Partnership”). As part of the Vape Partnership, we will introduce our Vape Partner to certain key customers, assist with the promotion and the sale of certain vaporizer goods and services, and help coordinate the logistics, storage and distribution of such vaporizer products. If our Vape Partner and key customer(s) enter into a direct relationship, the customers would directly purchase vaporizer goods and services, which we currently sell them, directly from our Vape Partner and we would no longer need to purchase such vape inventory on behalf of such key customer(s). In exchange we would earn quarterly and annual commission payments from our strategic partner. While the strategic partnership may result in a decrease in top line revenue for these vape products, this partnership combined with some of our other restructuring initiatives should allow us to reduce our overall cost-structure and enhance our margins, thereby improving our balance sheet.

Previous wording

On May 6, 2024, the Company, Warehouse Goods and Synergy entered into an asset purchase agreement, dated May 1, 2024 (the “Asset Purchase Agreement”) pursuant to which Synergy purchased all of the intellectual property, a specified amount of inventory, and other assets related to the Eyce and DaVinci brands. In consideration for the acquisition, all parties entered into a loan modification agreement, effective May 1, 2024 (the “Loan Modification Agreement”) and an amended and restated secured promissory note, effective May 1, 2024 (the “Amended and Restated Secured Promissory Note”), an amendment to the original Eyce and Davinci Asset Purchase Agreements, a distribution agreement, the termination of a license granted by Eyce, and the termination of certain consulting and employment agreements. As part of the overall modification, the principal balance with Synergy decreased by $2.7 million from $5.1 million. Synergy acquired certain assets from the Company in exchange for the reduction in overall principal owed and as part of the transaction, the Company recognized a gain on the debt modification of $2.2 million. This amount is included in the accompanying financial statements within the statement of operations for the three and six months ended June 30, 2024 within other income (expense). At June 30, 2024, $2.5 million of such financing remained outstanding. The updated date of maturity will be through August 2024.

Current wording

On May 6, 2024, the Company, Warehouse Goods and Synergy entered into an asset purchase agreement, dated May 1, 2024 (the “Asset Purchase Agreement”) pursuant to which Synergy purchased all of the intellectual property, a specified amount of inventory, and other assets related to the Eyce and DaVinci brands. In consideration for the acquisition, all parties entered into a loan modification agreement, effective May 1, 2024 (the “Loan Modification Agreement”) and an amended and restated secured promissory note, effective May 1, 2024 (the “Amended and Restated Secured Promissory Note”), an amendment to the original Eyce and Davinci Asset Purchase Agreements, a distribution agreement, the termination of a license granted by Eyce, and the termination of certain consulting and employment agreements. As part of the overall modification, the principal balance with Synergy decreased by $2.7 million from $5.1 million. Synergy acquired certain assets from the Company in exchange for the reduction in overall principal owed and as part of the transaction, the Company recognized a gain on the debt modification of $2.2 million. This amount is included in the accompanying financial statements within the statement of operations for the three and nine months ended September 30, 2024 within other income (expense). At September 30, 2024, $2.7 million of such financing remained outstanding. As of the filing date of this statement and as a result of restructuring efforts, the maturity of this note is October 2025.

Previous wording

The following table presents operating results for the three and six months ended June 30, 2024 and 2023:

Current wording

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

Previous wording

For the three months ended June 30, 2024, net sales were approximately $2.6 million, compared to approximately $19.6 million for the same period in 2024, representing a decrease of $17.0 million, or 86.5%. The year-over-year decrease in net sales was due to a major restructuring of our Industrial Group in April of 2023, involving our packaging and industrial vaping product lines; transitioning much of this business from a gross sales to a commission structure to preserve working capital. Revenues decreased in the Consumer Brands Group due, in part, to restructuring efforts and shift in strategy to focus on in-house brands that carry a higher margin profile while rationalizing third-party brand offerings, which generated top line revenue with lower margins. Our Industrial Goods operating segment reported net sales of approximately $1.7 million compared to approximately $13.6 million for the same period in 2023, representing a decrease of $11.9 million or 87.5%. The consumer business also was affected by the inability to access capital markets on equitable terms, resulting in stock-outs and shortages of higher velocity inventory. The Company is continuing to focus on profitable revenue and as a result top line revenue has significantly been reduced. Concurrently, the Company has continued its focus on right-sizing the business during the fiscal year ended December 31, 2023 and through present, in an effort to reduce sales and marketing costs and reduce or eliminate certain administrative functions.

Current wording

For the three months ended September 30, 2024, net sales were approximately $4.0 million, compared to approximately $11.8 million for the same period in 2024, representing a decrease of $7.8 million, or 65.8%. The year-over-year decrease in net sales was due to a major restructuring of our Industrial Group in April of 2023, involving our packaging and industrial vaping product lines; transitioning much of this business from a gross sales to a commission structure to preserve working capital. Revenues decreased in the Consumer Brands Group due, in part, to restructuring efforts and shift in strategy to focus on in-house brands that carry a higher margin profile while rationalizing third-party brand offerings, which generated top line revenue with lower margins. The consumer products were affected by the inability to access capital markets on equitable terms, resulting in stock-outs and shortages of higher velocity inventory. The Company is continuing to focus on profitable revenue and as a result top line revenue has significantly been reduced. Concurrently, the Company has continued its focus on right-sizing the business during the fiscal year ended December 31, 2023 and through present, in an effort to reduce sales and marketing costs and reduce or eliminate certain administrative functions.

Previous wording

For the six months ended June 30, 2024, net sales were approximately $7.6 million, compared to approximately $43.6 million for the same period in 2024, representing a decrease of $36.0 million, or 82.6%. The year-over-year decrease in net sales was due to a major restructuring of our Industrial Group in April of 2023, involving our packaging and industrial vaping product lines; transitioning much of this business from a gross sales to a commission structure to preserve working capital. Revenues decreased in the Consumer Brands Group due, in part, to restructuring efforts and shift in strategy to focus on in-house brands that carry a higher margin profile while rationalizing third-party brand offerings, which generated top line revenue with lower margins. Our Industrial Goods operating segment reported net sales of approximately $4.4 million compared to approximately $29.7 million for the same period in 2023, representing a decrease of $25.3 million or 85.2%. The consumer business also was affected by the inability to access capital markets on equitable terms, resulting in stock-outs and shortages of higher velocity inventory. The Company is continuing to focus on profitable revenue and as a result top line revenue has significantly been reduced. Concurrently, the Company has continued its focus on right-sizing the business during the fiscal year ended December 31, 2023 and through present, in an effort to reduce sales and marketing costs and reduce or eliminate certain administrative functions.

Current wording

For the nine months ended September 30, 2024, net sales were approximately $11.6 million, compared to approximately $55.4 million for the same period in 2024, representing a decrease of $43.8 million, or 79.0%. The year-over-year decrease in net sales was due to a major restructuring of our Industrial Group in April of 2023, involving our packaging and industrial vaping product lines; transitioning much of this business from a gross sales to a commission structure to preserve working capital. Revenues decreased in the Consumer Brands Group due, in part, to restructuring efforts and shift in strategy to focus on in-house brands that carry a higher margin profile while rationalizing third-party brand offerings, which generated top line revenue with lower margins. The consumer products were affected by the inability to access capital markets on equitable terms, resulting in stock-outs and shortages of higher velocity inventory. The Company is continuing to focus on profitable revenue and as a result top line revenue has significantly been reduced. Concurrently, the Company has continued its focus on right-sizing the business during the fiscal year ended December 31, 2023 and through present, in an effort to reduce sales and marketing costs and reduce or eliminate certain administrative functions.

Previous wording

For the three months ended June 30, 2024, cost of sales decreased by $13.4 million, or 89.1%, as compared to the same period in 2023. The decrease in the cost of sales is driven by the 86.5% decrease in revenue in addition to a decrease in damaged and obsolete inventory write-offs.

Current wording

For the three months ended September 30, 2024, cost of sales decreased by $7.7 million, or 88.3%, as compared to the same period in 2023. The decrease in the cost of sales is driven by the 65.8% decrease in revenue in addition to a decrease in damaged and obsolete inventory write-offs.

Previous wording

For the six months ended June 30, 2024, cost of sales decreased by $28.4 million, or 84.9%, as compared to the same period in 2023. The decrease in the cost of sales is driven by the 82.6% decrease in revenue in addition to a decrease in damaged and obsolete inventory write-offs.

Current wording

For the nine months ended September 30, 2024, cost of sales decreased by $36.1 million, or 85.6%, as compared to the same period in 2023. The decrease in the cost of sales is driven by the 79.0% decrease in revenue in addition to a decrease in damaged and obsolete inventory write-offs.

Previous wording

Gross margin percentage increased 14.8% to 38.1% for the three months ended June 30, 2024, compared to 23.3% for the same period in 2023.

Current wording

Gross margin percentage increased 48.4% to 75.0% for the three months ended September 30, 2024, compared to 26.5% for the same period in 2023.

Previous wording

Gross margin percentage increased 10.1% to 33.3% for the six months ended June 30, 2024, compared to 23.2% for the same period in 2023.

Current wording

Gross margin percentage increased 23.9% to 47.8% for the nine months ended September 30, 2024, compared to 23.9% for the same period in 2023.

Previous wording

Salaries, benefits and payroll taxes expenses decreased by approximately $3.6 million, or 70.7%, to $1.5 million for the three months ended June 30, 2024, compared to $5.2 million for the same period in 2023. The decrease is related to the reduction in workforce to right-size the business and focus on profitability.

Current wording

Salaries, benefits and payroll taxes expenses decreased by approximately $2.5 million, or 60.4%, to $1.6 million for the three months ended September 30, 2024, compared to $4.1 million for the same period in 2023. The decrease is related to the reduction in workforce to right-size the business and focus on profitability.

Previous wording

Salaries, benefits and payroll taxes expenses decreased by approximately $6.1 million, or 57.7%, to $4.5 million for the six months ended June 30, 2024, compared to $10.5 million for the same period in 2023. The decrease is related to the reduction in workforce to right-size the business and focus on profitability.

Current wording

Salaries, benefits and payroll taxes expenses decreased by approximately $8.5 million, or 58.4%, to $6.1 million for the nine months ended September 30, 2024, compared to $14.6 million for the same period in 2023. The decrease is related to the reduction in workforce to right-size the business and focus on profitability.

Previous wording

General and administrative expenses decreased by approximately $4.2 million, or 59.8%, for the three months ended June 30, 2024, compared to the same period in 2023. The decrease is related to major restructuring effort by the Company to reduce cost and right-size the business. Compared with the first quarter of 2023, the Company focused on reduction across the board in general and administrative expenses and saw large decreases in professional and outside services, facility expenses, outbound freight, other general and administrative, marketing, taxes and licenses, and general insurance.

Current wording

General and administrative expenses decreased by approximately $3.7 million, or 67.4%, for the three months ended September 30, 2024, compared to the same period in 2023. The decrease is related to major restructuring effort by the Company to reduce cost and right-size the business. Compared with the first quarter of 2023, the Company focused on reduction across the board in general and administrative expenses and saw large decreases in professional and outside services, facility expenses, outbound freight, other general and administrative, marketing, taxes and licenses, and general insurance.

Previous wording

General and administrative expenses decreased by approximately $9.7 million, or 65.5%, for the six months ended June 30, 2024, compared to the same period in 2023. The decrease is related to major restructuring effort by the Company to reduce cost and right-size the business. Compared with the first quarter of 2023, the Company focused on reduction across the board in general and administrative expenses and saw large decreases in professional and outside services, facility expenses, outbound freight, other general and administrative, marketing, taxes and licenses, and general insurance.

Current wording

General and administrative expenses decreased by approximately $13.3 million, or 66.0%, for the nine months ended September 30, 2024, compared to the same period in 2023. The decrease is related to major restructuring effort by the Company to reduce cost and right-size the business. Compared with the first quarter of 2023, the Company focused on reduction across the board in general and administrative expenses and saw large decreases in professional and outside services, facility expenses, outbound freight, other general and administrative, marketing, taxes and licenses, and general insurance.

Previous wording

Depreciation and amortization expense decreased $0.3 million, or 58.9%, for the three months ended June 30, 2024, compared to the same period in 2023. The decrease is related to a major restructuring effort to reduce cost and right-size the business resulting in the sale and disposal of assets related to reducing our warehousing and office footprint.

Current wording

Depreciation and amortization expense decreased $0.3 million, or 64.7%, for the three months ended September 30, 2024, compared to the same period in 2023. The decrease is related to a major restructuring effort to reduce cost and right-size the business resulting in the sale and disposal of assets related to reducing our warehousing and office footprint.

Previous wording

Depreciation and amortization expense decreased $0.5 million, or 53.5%, for the six months ended June 30, 2024, compared to the same period in 2023. The decrease is related to a major restructuring effort to reduce cost and right-size the business resulting in the sale and disposal of assets related to reducing our warehousing and office footprint.

Current wording

Depreciation and amortization expense decreased $0.9 million, or 57.4%, for the nine months ended September 30, 2024, compared to the same period in 2023. The decrease is related to a major restructuring effort to reduce cost and right-size the business resulting in the sale and disposal of assets related to reducing our warehousing and office footprint.

Previous wording

Interest expense decreased approximately $0.6 million for the three months ended June 30, 2024 compared to the same period in 2023. The decrease is primarily related to reduction in overall debt financing and refinancing debt for more favorable terms.

Current wording

Interest expense decreased approximately $0.2 million for the three months ended September 30, 2024 compared to the same period in 2023. The decrease is primarily related to reduction in overall debt financing and refinancing debt for more favorable terms.

Previous wording

Interest expense decreased approximately $0.9 million for the six months ended June 30, 2024 compared to the same period in 2023. The decrease is primarily related to reduction in overall debt financing and refinancing debt for more favorable terms.

Current wording

Interest expense decreased approximately $1.1 million for the nine months ended September 30, 2024 compared to the same period in 2023. The decrease is primarily related to reduction in overall debt financing and refinancing debt for more favorable terms.

Previous wording

There was a change in fair value of contingent consideration of approximately $1.0 million for the three and six months ended June 30, 2024 compared to the same periods in 2023. The change is primarily related to known reductions in earnouts related to Davinci and Eyce products.

Current wording

There was a change in fair value of contingent consideration of approximately $1.0 million for the nine months ended September 30, 2024 compared to the same period in 2023. The change is primarily related to known reductions in earnouts related to Davinci and Eyce products.

Previous wording

There was an increase in gain on debt extinguishment of approximately $2.2 million for the three and six months ended June 30, 2024, compared to the same periods in 2023. The change is primarily related to a difference in the reduction in overall debt modification with Synergy, offset by the carrying value of the Davinci and Eyce assets acquired by Synergy. For further information, see Note 6, “Debt” of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Current wording

There was an increase in gain on debt extinguishment of approximately $2.2 million for the nine months ended September 30, 2024, compared to the same period in 2023. The change is primarily related to a difference in the reduction in overall debt modification with Synergy, offset by the carrying value of the Davinci and Eyce assets acquired by Synergy. For further information, see Note 6, “Debt” of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Previous wording

For the three and six months ended June 30, 2024 and 2023, respectively, the effective tax rate differed from the U.S. federal statutory tax rate of 21% primarily due to the Operating Company’s pass-through structure for U.S. income tax purposes (through December 31, 2022), the relative mix in earnings and losses in the U.S. versus foreign tax jurisdictions, and the valuation allowance against the deferred tax asset.

Current wording

For the three and nine months ended September 30, 2024 and 2023, respectively, the effective tax rate differed from the U.S. federal statutory tax rate of 21% primarily due to the Operating Company’s pass-through structure for U.S. income tax purposes (through December 31, 2022), the relative mix in earnings and losses in the U.S. versus foreign tax jurisdictions, and the valuation allowance against the deferred tax asset.

Previous wording

Our primary requirements for liquidity and capital are working capital, debt service related to recent acquisitions and general corporate needs. Our primary sources of liquidity are our cash on hand and the cash flow that we generate from our operations, as well as proceeds other equity issuances. As of June 30, 2024, we had approximately $0.2 million of cash, of which none was restricted and $0.1 million was held in foreign bank accounts, and approximately $1.1 million of negative working capital, which is calculated as total current assets minus total current liabilities, as compared to approximately $0.5 million of cash, of which $0.1 million was held in foreign bank accounts, and approximately $3.7 million of working capital as of December 31, 2023. The repatriation of cash balances from our foreign subsidiaries could have adverse tax impacts or be subject to capital controls; however, these balances are generally available to fund the ordinary business operations of our foreign subsidiaries without legal or other restrictions.

Current wording

Our primary requirements for liquidity and capital are working capital, debt service related to recent acquisitions and general corporate needs. Our primary sources of liquidity are our cash on hand and the cash flow that we generate from our operations, as well as proceeds other equity issuances. As of September 30, 2024, we had approximately $2.3 million of cash, of which none was restricted and $0.1 million was held in foreign bank accounts, and approximately $2.5 million of negative working capital, which is calculated as total current assets minus total current liabilities, as compared to approximately $0.5 million of cash, of which $0.1 million was held in foreign bank accounts, and approximately $3.7 million of working capital as of December 31, 2023. The repatriation of cash balances from our foreign subsidiaries could have adverse tax impacts or be subject to capital controls; however, these balances are generally available to fund the ordinary business operations of our foreign subsidiaries without legal or other restrictions.

Previous wording

On June 7, 2024, the Company entered into a subscription agreement with Cobra Alternative Capital Strategies, LLC. As of June 30, 2024, the Company has been loaned $793,700 with net cash proceeds of $634,960. The note was issued with a 20% original issue discount and is due in full on December 7, 2024. See “Note 6 - Long Term Debt” for more information.

Current wording

On June 7, 2024, the Company entered into a subscription agreement with Cobra Alternative Capital Strategies, LLC. As of September 30, 2024, the Company has been loaned $3.1 million with net cash proceeds of $2.6 million with a remaining balance of $1.0 million. The note was issued with a 20% original issue discount and is due in full on December 7, 2024. See “Note 6 - Long Term Debt” for more information.

Previous wording

In April 2023, we entered into two strategic partnership. First, we entered into a strategic partnership (the “MJ Packaging Partnership”) with A&A Global Imports d/b/a MarijuanaPackaging.com (“MJ Pack”), a leading provider of packaging solutions to the cannabis industry. Second, we entered into a strategic partnership with an affiliate of one of our existing vape suppliers (“Vape Partner”) to service certain key customers with vaporizer goods and services (the “Vape Partnership”). As part of the Vape Partnership, we will introduce our Vape Partner to certain key customers, assist with the promotion and the sale of certain vaporizer goods and services, and help coordinate the logistics, storage and distribution of such vaporizer products. If our Vape Partner and key customer(s) enter into a direct relationship, the customers would directly purchase vaporizer goods and services, which we currently sell them, directly from our Vape Partner and we would no longer need to purchase such vape inventory on behalf of such key customer(s). In exchange we would earn quarterly and annual commission payments from our strategic partners. While the strategic partnerships may result in a decrease in top line revenue for these packaging and vape products, these partnerships combined with some of our other restructuring initiatives should allow us to reduce our overall cost-structure and enhance our margins, thereby improving our balance sheet.

Current wording

In April 2023, we entered into two strategic partnerships. First, we entered into a strategic partnership (the “MJ Packaging Partnership”) with A&A Global Imports d/b/a MarijuanaPackaging.com (“MJ Pack”), a provider of packaging solutions to the cannabis industry. On August 8, 2024 the Company terminated its strategic partnership with MJ Packaging and is resuming its business as a direct provider of packaging solutions to the cannabis industry. MJ Packaging however, remains a distribution customer of the Company. Second, we entered into a strategic partnership with an affiliate of one of our existing vape suppliers (“Vape Partner”) to service certain key customers with vaporizer goods and services (the “Vape Partnership”). As part of the Vape Partnership, we will introduce our Vape Partner to certain key customers, assist with the promotion and the sale of certain vaporizer goods and services, and help coordinate the logistics, storage and distribution of such vaporizer products. If our Vape Partner and key customer(s) enter into a direct relationship, the customers would directly purchase vaporizer goods and services, which we currently sell them, directly from our Vape Partner and we would no longer need to purchase such vape inventory on behalf of such key customer(s). In exchange we would earn quarterly and annual commission payments from our strategic partners. While the strategic partnership may result in a decrease in top line revenue for these vape products, this partnership combined with some of our other restructuring initiatives should allow us to reduce our overall cost-structure and enhance our margins, thereby improving our balance sheet.

Previous wording

We have incurred net losses of $5.1 million and $17.8 million for the six months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024, cash used in operating activities was $0.4 million and cash used in operating activities for the year ended December 31, 2023 was $1.8 million. The recent macroeconomic environment has caused weaker demand than contemplated under our business plan, resulting in a reduction in projected revenue and cash flows for the twelve-month period included in the going concern evaluation.

Current wording

We have incurred net losses of $8.9 million and $27.8 million for the nine months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024, cash used in operating activities was $5.2 million and cash used in operating activities for the year ended December 31, 2023 was $1.8 million. The recent macroeconomic environment has caused weaker demand than contemplated under our business plan, resulting in a reduction in projected revenue and cash flows for the twelve-month period included in the going concern evaluation.

Previous wording

During the six months ended June 30, 2024, net cash used in operating activities of approximately $0.4 million consisted of (i) net loss of $5.1 million, offset by non-cash adjustments to net loss of approximately $2.6 million, and (ii) a $7.3 million increase in working capital primarily driven by increases in accounts payable, accrued expenses of approximately $3.7 million and decreases in inventories and other current assets of approximately $3.8 million.

Current wording

During the nine months ended September 30, 2024, net cash used in operating activities of $5.2 million consisted of a net loss of $8.8 million, offset partially by non-cash adjustments to the net loss of $1.0 million and a $1.2 million decrease in working capital driven by decreases in inventories of $4.2 million and decreases in accrued expenses of $0.5 million reduced by a decrease in customer deposits of $1.5 million and an increase in accounts receivable of $0.7 million.

Previous wording

During the six months ended June 30, 2024, net cash used in investing activities of approximately $0.2 million consisted primarily of capital expenditures.

Current wording

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

Previous wording

During the six months ended June 30, 2023, net cash used in investing activities of approximately $0.3 million largely consisted of capital expenditures, including development costs for our new enterprise resource planning (“ERP”) system.

Current wording

During the nine months ended September 30, 2023, net cash provided by investing activities of approximately $0.6 million , offset by cash used for development costs for our new enterprise resource planning (ERP) system of $0.6 million.

Previous wording

During the six months ended June 30, 2024, net provided by financing activities of approximately $0.2 million primarily consisted of approximately $0.6 million in payments on loans against future accounts receivable, approximately $0.2 million in proceeds from future receivables financing, and approximately $0.6 million in proceeds from notes payable.

Current wording

During the nine months ended September 30, 2024, net cash provided by financing activities of approximately $7.2 million primarily consisted of approximately $0.9 million in payments on loans against future accounts receivable, approximately $0.2 million in proceeds from future receivables financing, approximately $2.1 million in proceeds from notes payable, $3.0 in repayments on notes payable, and $5.6 million in net proceeds from the issuance of common stock.