Greenlane Holdings, Inc.
For the period ended Dec 31, 2024. Filed Mar 21, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 21, 2025
GNLN$1.16-5.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-07-19.
0001493152-24-028387
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-21.
0001493152-25-011057
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 114 previous paragraphs and 114 current paragraphs.
60 unchanged; 30 reworded; 23 added; 22 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 6 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
Reverse Stock Splits
Current report
On June 18, 2024, the Board unanimously approved and declared advisable, and recommended that our stockholders approve at a Special Meeting that took place on July 29, 2024, the adoption of the 2024 Amendment to effect a reverse stock split of our Common Stock at any whole number between, and inclusive of, one-for-two to one-for-twenty. Approval of the Proposed 2024 Reverse Stock Split at the 2024 Special Meeting granted the Board the authority, but not the obligation, to file the 2024 Amendment to effect the Proposed 2024 Reverse Stock Split no later than August 5, 2024, with the exact ratio and timing of the Proposed 2024 Reverse Stock Split to be determined at the discretion of the Board. On July 23, 2024, the Board approved the reverse split at a ratio of one-for-11 and the Amendment has been filed with the Secretary of State of the State of Delaware, that became effective on August 5, 2024 at 12:01 AM Eastern Time, before the opening of trading on the Nasdaq. For additional information about the July 29, 2024 Special Meeting and the 2024 Reverse Stock Split, see the Company’s Definitive Proxy Statement filed with the SEC on June 28, 2024 and Form 8-K filed with the SEC on July 31, 2024.
Current report
For the year ended December 31, 2024, total net sales were approximately $13.3 million, compared to approximately $65.4 million for the year ended December 31, 2023, representing a decrease of $52.1 million, or 79.7%. The year-over-year decrease in net sales was due to a major restructuring 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, 2024 and through present, in an effort to reduce sales and marketing costs and reduce or eliminate certain administrative functions.
Current report
The decrease is related to the reduction in workforce to right-size the business and focus on profitability.
Current report
General and administrative expenses decreased by approximately $14.4 million, or 59.7%, for the year ended December 31, 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. The Company focused on reduction across the board in general and administrative expenses and drove large decreases in professional and outside services, facility expenses, outbound freight, other general and administrative, marketing, taxes and licenses, and general insurance.
Current report
Depreciation and amortization expense decreased $1.4 million, or 64.4%, for the year ended December 31, 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 report
Impairment of property and equipment
Current report
Impairment of property and equipment increased $0.2 million, for the year ended December 31, 2024, compared to the same period in 2023. The increase is related to the write-off of certain fixed assets during the year ended December 31, 2024.
Current report
Change in fair value of contingent consideration.
Current report
There was a change in fair value of contingent consideration of approximately $1.0 million for the year ended December 31, 2024 compared to the same period in 2023. The change is primarily related to reductions in earnouts related to Davinci and Eyce products.
Current report
Loss on debt extinguishment
Current report
There was an increase in loss on debt extinguishment of approximately $0.9 million for the year ended December 31, 2024, compared to the same period in 2023. The change is primarily related to the October 29, 2024 debt restructuring during the year ended December 31, 2024. For further information, see Note 6, “Debt” of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
Current report
On August 12, 2024, the Company entered into a securities purchase agreement with three different funds of a single institutional investor for aggregate gross cash proceeds of $6.5 million. In connection with the private placement, the Company will issue an aggregate of 2,363,637 units and pre-funded units. The pre-funded units will be sold at the same purchase price as the units, less the pre-funded warrant exercise price of $0.001. Each unit and pre-funded unit will consist of one share of common stock (or one pre-funded warrant) and two common warrants, each exercisable for one share of common stock at an exercise price of $2.50 per share. The common warrant will be exercisable on the initial exercise date described in the common warrant and will expire 5.0 years from such date.
Current report
On October 29, 2024, the Company entered into an Exchange Agreement with its Senior Subordinated Lender, whereby the Company agreed to exchange an aggregate of $4,617,307 of debt originally owed to Agile Capital Funding LLC and Cedar Advance LLC in a 3(a)(9) exchange for new Senior Subordinated Notes in the principal amount of $4,000,000 due one year from issuance (the “Exchange Note”), reducing outstanding indebtedness by approximately $617,000. The Exchange Note was convertible at the option of the holder at $3.17 per share. In connection with the Exchange, the Company issued an aggregate of 1,261,830 five year warrants with an exercise price of $3.04 per share (the “Exchange Warrants”). The Exchange Note was repaid out of the proceeds of the February 2025 Offering.
Current report
In addition, pursuant to the terms of the Exchange Agreement, the Company agreed to issue warrants to the Holders, with an initial exercise price of $3.04, exercisable 180 days after issuance (the “Exchange Inducement Warrants”). The Exchange Inducement Warrants were issued to incentivize the holders to exercise some or all of their existing warrants originally issued on August 13, 2024 (the “Existing Warrants”) for cash, which existing warrants have an exercise price of $2.50 per share. The Exchange Inducement Warrants are initially exercisable for zero shares, but to the extent that the Holders exercise any of such Existing Warrants during the one-hundred sixty day inducement period, the Exchange Inducement Warrants will become exercisable on April 30, 2025 for 200% of the number of Existing Warrants exercised for cash during such inducement period. As part of the February 2025 Offering, the exercise price of these warrants was adjusted to $1.19 per share.
Current report
Also, pursuant to the Exchange Agreement, the Senior Subordinated Lender agreed that it will exercise its Existing Warrants for cash prior to exercising any of its outstanding pre-funded warrants, contingent on the market price of the common stock being above $2.50 per share and certain other conditions. The above agreement will terminate upon the Company receiving certain cash proceeds and prepaying at least $2,250,000 of Cobra Alternative Capital Strategies LLC (“Cobra”) Notes. The Cobra Note was repaid out of the February 2025 Offering.
Current report
On February 18, 2025, the Company entered into definitive agreements with institutional investors for the purchase and sale of approximately $25.0 million of shares of the Company’s Class A common stock (“Common Stock” and investor warrants at a price of $1.19 per Common Unit. The entire transaction was priced at the market under Nasdaq rules.
Current report
The offering consisted of the sale of Common Units (or Pre-Funded Units), each consisting of (i) one (1) share of Common Stock or one (1) Pre-Funded Warrant, (ii) one (1) Series A PIPE Common Warrant to purchase one (1) share of Common Stock per warrant at an exercise price of $1.4875 (“Series A Warrant”) and (iii) one (1) Series B PIPE Common Warrant to purchase one (1) share of Common Stock per warrant at an exercise price of $2.975 (“Series B Warrant” and together with the Series A Warrant, the “Warrants”). The initial exercise price of each Series A Warrant is $1.4875 per share of Common Stock. The Series A Warrants are exercisable following stockholder approval and expire five (5) years thereafter. The number of securities issuable under the Series A Warrant is subject to adjustment as described in more detail in the Series A Warrant. The initial exercise price of each Series B Warrant is $2.975 per share of Common Stock or pursuant to an alternative cashless exercise option. The Series B Warrants are exercisable following stockholder approval and expire two and one-half (2.5) years thereafter. The number of securities issuable under the Series B Warrant is subject to adjustment as described in the Series B Warrant.
Current report
Also, on February 18, 2025, the Company entered into an Exchange Agreement with certain holders (the “Holders”) of three tranches of warrants to purchase Common Stock previously issued by the Company in August 2024 and October 2024. Under such Exchange Agreement, such Holders agreed to exchange with the Company such existing warrants for approximately 6.1 million new warrants to purchase common stock, substantially in the form of the Series B Warrants.
Current report
Notes Payable
Current report
On June 7, 2024, the Company entered into a subscription agreement with Cobra Alternative Capital Strategies, LLC. As of December 31, 2024, the Company has been loaned $3.1 million with net cash proceeds of $2.6 million.
Current report
On October 29, 2024, the Company entered into the First Amendment to Amended and Restated Secured Promissory Note (the “Note Amendment”) with Cobra Alternative Capital Strategies LLC (“Cobra”). Pursuant to the Note Amendment, Cobra agreed to extend the Maturity Date of its senior promissory note dated May 1, 2024, which is currently due. The new Maturity Date will be October 29, 2025. In consideration for the extension, the Company (i) agreed to make such Notes convertible at the option of Cobra with a conversion price of $3.17 per share, (ii) agreed to prepay Cobra’s debt with 50% of any money raised by the Company from warrant exercise proceeds and from capital raise transactions, and (iii) issued Cobra an aggregate of 500,000 five year warrants with an exercise price of $3.04 per share which are identical to the Exchange Warrants. The Note Amendment was repaid out of the February 2025 Private Placement.
Current report
During 2024, net cash provided by financing activities of $7.4 million primarily consisted of cash proceeds of approximately $3.0 million from the issuance of debt, $5.6 million from the issuance of Class A common stock, and $1.8 million from the exercise of stock options and warrants, partially offset by approximately $3.2 million in payments on notes payable, finance lease obligations and other long-term liabilities.
Removed paragraphs (22)
Previous report
We manage our business in two different, but complementary, business segments. The first is the Consumer Goods segment, which focuses on serving consumers across wholesale, retail, and e-commerce operations—offering both our Greenlane Brands as well as ancillary products and accessories from select leading third-party brands, such as Storz and Bickel, Grenco Science, PAX, Arizer and more. The Consumer Goods segment forms a central part of our growth strategy, especially as it relates to scaling our own portfolio of higher-margin proprietary owned brands. In addition to our Consumer Goods segment, we have our Industrial Goods segment, which focuses on serving Cannabis Operators by providing ancillary products essential to their daily operations and growth, such as packaging and vaporization solutions, including our Greenlane Brand Pollen Gear. Refer to “Note 12— Segment Reporting” within Item 8 to this Annual Report on Form 10-K for additional information on our reportable segments.
Previous report
Reverse Stock Split
Previous report
For the year ended December 31, 2023, total net sales were approximately $65.4 million, compared to approximately $137.1 million for the year ended December 31, 2022, representing a decrease of $71.7 million, or 52.3%. The year-over-year decrease was a result of the Industrial segment transitioning to a commission revenue model versus gross revenue previously recorded for the largest vaporizer product customers and discontinuing the packaging products business. The Consumer segment sales decreased due to declining business globally, reduction in sales staff and marketing spend and the company was out of stock for high demand inventory items due to capital restrictions to invest in inventory purchases.
Previous report
General and administrative expenses decreased by approximately $16.8 million, or 40.9%, for the year ended December 31, 2023, compared to the same period in 2022. The decrease is related to a major reduction in expenses across to align with revenue
Previous report
Goodwill and Indefinite-Lived Intangibles Impairment Charge
Previous report
We incurred a goodwill and indefinite-lived intangibles impairment charge of approximately $71.4 million and a definite-lived intangibles impairment charge of approximately $50.7 million during the twelve months ended December 31, 2022, compared to no such impairment charge for the comparable period in 2023. We incurred a impairment charge of approximately $7.3 million to fixed assets related to the ERP system during the year ended December 31, 2022, compared to no such impairment charge fore the comparable year in 2023. This impairment charges were due to declining business and declining enterprise value.
Previous report
Depreciation and amortization expense decreased $5.2 million, or 69.7%, for the year ended December 31, 2023, compared to the same period in 2022. The decrease is primarily related to the intangible and fixed asset impairments recorded as of December 31, 2023, reducing amortization expense.
Previous report
Segment Operating Performance
Previous report
Following the completion of the KushCo merger in late August 2021, we reassessed our operating segments based on our new organizational structure. Based on this assessment, we determined we had two operating segments as of December 31, 2021, which are the same as our reportable segments: (1) Consumer Goods, which largely comprises Greenlane’s legacy operations across the United States, Canada, and Europe, and (2) Industrial Goods, which largely comprises KushCo’s legacy operations. These changes in operating segments align with how we manage our business as of the fourth quarter of 2023.
Previous report
The Consumer Goods segment focuses on serving consumers across wholesale, retail and e-commerce operations—through both our proprietary brands, including Eyce, DaVinci, Marley Natural, Keith Haring, and Higher Standards, as well as lifestyle products and accessories from leading brands, like Storz and Bickel, Grenco Science, and many more. The Consumer Goods segment forms a central part of our growth strategy, especially as it relates to scaling our own portfolio of higher-margin proprietary owned brands.
Previous report
The Industrial Goods segment focuses on serving the premier cannabis brands, operators, and retailers through our wholesale operations by providing ancillary products essential to their growth, such as customizable packaging and supply products, which includes our Greenlane Brand Pollen Gear and vaporization solutions offering which includes CCELL branded products.
Previous report
Our “Chief Operations Decision Marker (“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 years ended December 31, 2023 and 2022:
Previous report
Consumer Goods
Previous report
For the year ended December 31, 2023, our Consumer Goods operating segment reported net sales of approximately $28.7 million compared to approximately $48.1 million for the same period in 2022, representing a decrease of $19.4 million or 40.3%. The 2023 decline in the Consumer Goods segment is due to a major restructuring effort by the Company during fiscal year 2023 to reduce sales and marketing cost to align with revenue, sale of the Company’s minority interest in Vibes brand and a shift in strategy to focus on in-house brands that have a higher margin profile and rationalized third-party brand offering generating top line revenue with lower margins.
Previous report
For the year ended December 31, 2023, cost of sales decreased by $19.8 million, or 51.3%, as compared to the same period in 2022. The decrease in cost of sales was primarily due to the 40.3% decrease in Consumer Goods net sales.
Previous report
Gross margin increased to approximately 34.7% for the year ended December 31, 2023, compared to gross margin of approximately 20.0% for the same period in 2022, as the Company has shifted focus on margins versus overall topline revenues in an effort to move to a net positive operating cash flow.
Previous report
Industrial Goods
Previous report
For the year ended December 31, 2023, our Industrial Goods operating segment reported net sales of approximately $36.6 million compared to approximately $89.0 million for the same period in 2022, representing an decrease of $52.3 million or (58.8%). The year-over-year decrease was a result of the Industrial segment transitioning to a commission revenue model versus gross revenue previously recorded for the largest vaporizer product customers and discontinuing the packaging products business.
Previous report
For the year ended December 31, 2023, cost of sales decreased by $44.8 million, or 60.9%, as compared to the same period in 2022. The decrease is consistent with our overall decrease in revenues.
Previous report
Gross margin was approximately 21.4% for the year ended December 31, 2023, compared to gross margin of approximately 17.3% for the same period in 2022, representing 4.1% year over year increase.
Previous report
On June 27, 2022, we entered into a securities purchase agreement with an accredited investor, pursuant to which we agreed to issue and sell an aggregate of 58,500 shares of our Class A common stock, pre-funded warrants to purchase up to 49,500 shares of our Class A common stock (the “June 2022 Pre-Funded Warrants”) and warrants to purchase up to 108,000 shares of our Class A common stock (the “June 2022 Standard Warrants” and, together with the June 2022 Pre-Funded Warrants, the “June 2022 Warrants”), in a registered direct offering (the “June 2022 Offering”). The June 2022 Offering generated gross proceeds of approximately $5.4 million and net proceeds to the Company of approximately $5.0 million. All June 2022 Pre-Funded Warrants were exercised in July 2022, for de minimis net proceeds.
Previous report
During 2022, net cash provided by financing activities primarily consisted of (i) approximately $21.1 million of cash proceeds from the issuance of Class A common stock related to our ATM Program, the June 2022 Offering and the October 2022 Offering, (2) approximately $14.6 million of cash proceeds from our Asset-Based Loan, offset by debt issuance costs of $1.5 million, and (iii) approximately $0.9 million of cash used for contingent consideration payments, (iv) and approximately $19.4 million of cash used for repayments related to the Eyce and DaVinci promissory notes, the payoff of the Real Estate Note, and repayment of our bridge loan.
Reworded paragraphs (30)
Previous wording
We have been developing a world-class portfolio of our own proprietary brands (the “Greenlane Brands”) and carefully curated third-party products that we believe will, over time, deliver higher margins and create long-term value for our customers and shareholders. Our wholly-owned Greenlane Brands includes our recently launched more affordable product line – Groove, innovative silicone pipes and accessories and premium ancillary product brand – Higher Standards. We also have category exclusive licenses for the premium Marley Natural branded products, as well as the K.Haring Glass Collection.
Current wording
We have been developing a world-class portfolio of our own proprietary brands (the “Greenlane Brands”) and carefully curated third-party products that we believe will, over time, deliver higher margins and create long-term value for our customers and shareholders. Our wholly-owned Greenlane Brands includes our recently launched more affordable product line – Groove, innovative silicone pipes and accessories and premium ancillary product brand – Higher Standards. We also have category exclusive licenses for the premium Marley Natural branded products, as well as the K Haring Glass Collection. In 2024, we expanded our assortment to include health and safety products and entered into strategic partnerships with Safety Strips and Swabtek, offering fentanyl and Drink Spike testing products.
Previous wording
Management believes that these initiatives will significantly reduce costs, help accelerate the Company’s path to profitability, support business growth, and allow the Company to reinvest capital into its highest demand and highest potential product lines.
Current wording
Management believes that these initiatives in conjunction with the capital received in the February 2025 Private Placement will significantly reduce costs, help accelerate the Company’s path to profitability, support business growth, and allow the Company to reinvest capital into its highest demand and highest potential product lines.
Previous wording
During 2022 and 2023, the Company received capital from various sources permitting it to right-size the business and position the company for growth. Such sources are described in greater detail in the Liquidity and Capital Resources Section of this report. During 2022, the Company also monetized several non-core assets to provide necessary working capital including the sale and lease-back of its headquarters building and the sale of its interest in the Vibes brand.
Current wording
During 2023 and 2024, the Company received capital from various sources permitting it to right-size the business and position the company for growth and in 2025 the Company received capital from a Private Placement in February. Such sources are described in greater detail in the Liquidity and Capital Resources Section of this report.
Previous wording
In April 2023, we successfully entered into two strategic partnerships which management believes will help significantly reduce our overall cost structure, enhance our margins and further support our facilities consolidation initiatives while also servicing and providing solutions to our customers. 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. As part of the MJ Packaging Partnership, we will no longer purchase additional packaging inventory and MJ Pack will become our strategic partner to continue providing and enhancing packaging solutions for our customers. As a result of the MJ Packaging Partnership, we are no longer seeking a purchaser for our packaging division. 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 and convert millions of dollars of existing inventory back into cash, thereby improving our balance sheet.
Current wording
In April 2023, we successfully entered into two strategic partnerships which management believes will help significantly reduce our overall cost structure, enhance our margins and further support our facilities consolidation initiatives while also servicing and providing solutions to our customers. 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 and convert millions of dollars of existing inventory back into cash, thereby improving our balance sheet.
Previous wording
On May 6, 2024, the Company, Warehouse Goods and Synergy Imports LLC (“Synergy”) entered into an asset purchase agreement, dated May 1, 2024 (the “Asset Purchase Agreement”) pursuant to which Synergy purchased all of the intellectual property, a specified amount of inventory, and other assets 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.
Current wording
On May 6, 2024, the Company, Warehouse Goods and Synergy Imports LLC (“Synergy”) entered into an asset purchase agreement, dated May 1, 2024 (the “Asset Purchase Agreement”) pursuant to which Synergy purchased all of the intellectual property, a specified amount of inventory, and other assets related to the Eyce and DaVinci brands. In consideration for the acquisition, all parties entered into a loan modification agreement, effective May 1, 2024 (the “Loan Modification Agreement”) and an amended and restated secured promissory note, effective May 1, 2024 (the Amended and Restated Secured Promissory Note”), an amendment to the original Eyce and Davinci Asset Purchase Agreements, a distribution agreement, the termination of a license granted by Eyce, and the termination of certain consulting and employment agreements. The Loan Modification Agreement was restructured on October 29, 2024 as part of the First Amendment to Amended and Restated Secured Promissory Note.
Previous wording
On June 24, 2022, we provided via press release an update on the progress of the PACT Act Exemption, following our successful implementation of the controls, processes and systems required by the USPS in connection with the shipment of ENDS products. We expect the ability to fulfill ENDS orders with the USPS to allow us to reduce shipping costs, decrease fulfillment times and enhance the overall customer experience for approved wholesale customers.
Current wording
On June 24, 2022, we provided via press release an update on the progress of the PACT Act Exemption, following our successful implementation of the controls, processes and systems required by the USPS in connection with the shipment of ENDS products. We currently possess the ability to fulfill ENDS orders with the USPS which allows us to reduce shipping costs, decrease fulfillment times and enhance the overall customer experience for approved wholesale customers.
Previous wording
The Reverse Stock Split did not change the par value of the Common Stock or the authorized number of shares of Common Stock. All outstanding options, restricted stock awards, warrants and other securities entitling their holders to purchase or otherwise receive shares of our Common Stock have been adjusted as a result of the Reverse Stock Split, as required by the terms of each security. The number of shares available to be awarded under our Second Amended and Restated 2019 Equity Incentive Plan have also been appropriately adjusted. See “Note 10 — Compensation Plans” for more information.
Current wording
The Reverse Stock Splits did not change the par value of the Common Stock or the authorized number of shares of Common Stock. All outstanding options, restricted stock awards, warrants and other securities entitling their holders to purchase or otherwise receive shares of our Common Stock have been adjusted as a result of the Reverse Stock Split, as required by the terms of each security. The number of shares available to be awarded under our Second Amended and Restated 2019 Equity Incentive Plan have also been appropriately adjusted. See “Note 10 — Compensation Plans” for more information.
Previous wording
As of December 31, 2022, we held all the outstanding Common Units in the Operating Company and are the sole member. As a result, in 2023, 100% of the Operating Company’s US and state income and expenses are now included in our US and state tax returns.
Current wording
As of December 31, 2022, we held all the outstanding Common Units in the Operating Company and are the sole member. As a result, beginning 2023, 100% of the Operating Company’s US and state income and expenses are included in our US and state tax returns.
Previous wording
For the year ended December 31, 2023, cost of sales decreased by $64.6 million, or 57.6%, as compared to the year ended December 31, 2022. The decrease in cost of sales is aligned with the decrease in revenue of 52.3%.
Current wording
For the year ended December 31, 2024, cost of sales decreased by $40.6 million, or 85.3%, as compared to the year ended December 31, 2023. The decrease in cost of sales is aligned with the decrease in revenue of 79.7%.
Previous wording
Gross margin increased by 5% to 27.3% for the year ended December 31, 2023, compared to gross margin of 22.3% for the same period in 2022. The increase in gross margins is related to transitioning to a commission revenue model for the majority of the vaporizer sales with 100% margin versus gross revenue with lower margins. Also contributing to the increase in margin is the Company’s continued focus on consumer in-house brands with higher margins and moving away from third-party brands with lower margins.
Current wording
Gross margin increased by 20.0% to 47.3% for the year ended December 31, 2024, compared to gross margin of 27.3% for the same period in 2023. The increase in gross margins is in part related to transitioning to a commission revenue model for the majority of the vaporizer sales with 100% margin versus gross revenue with lower margins.
Previous wording
Salaries, benefits and payroll taxes expenses decreased by approximately $13.8 million, or 44.2% , to $17.4 million for the year ended December 31, 2023, compared to $31.3 million for the same period in 2022. The decrease is related to a major restructuring effort by the company to reduce headcount and cost to align with revenue.
Current wording
Salaries, benefits and payroll taxes expenses decreased by approximately $10.1 million, or 57.7%, to $7.4 million for the year ended December 31, 2024, compared to $17.5 million for the same period in 2023.
Previous wording
Interest expense increased approximately $3.0 million during the fiscal year 2023 versus fiscal year 2022. The increase is primarily related to the exiting ABL facility which accelerated deferred interest expense as well as the promissory notes for the Eyce and DaVinci acquisition.
Current wording
Interest expense increased approximately $0.5 million during the fiscal year 2024 versus fiscal year 2023. The increase is primarily related to overall debt financing and refinancing debt on more favorable terms.
Previous wording
Other expense, net, increased by approximately $0.3 million for the year ended December 31, 2023, for slight changes to non-recurring costs during the year ended December 31, 2023.
Current wording
Other expense, net, decreased by approximately $0.8 million for the year ended December 31, 2024 compared to the same period in 2023. The change is primarily due to non-recurring costs during the year ended December 31, 2023.
Previous wording
For the year ended December 31, 2023, our United States net sales to customers in the United States were approximately $58.5 million, compared to approximately $126.3 million for the same period in 2022, representing a decrease of $67.8 million, or 53.7%. The year-over-year decrease was primarily due to an overall business decline in the Industrial and Consumer Goods segments as described above.
Current wording
For the year ended December 31, 2024, our United States net sales to customers in the United States were approximately $10,9 million, compared to approximately $58.5 million for the same period in 2023, representing a decrease of $47.6 million, or 81.4%. The year-over-year decrease was primarily due to the Company restructuring as described above.
Previous wording
For the year ended December 31, 2023, our Canadian net sales were approximately $1.3 million, compared to approximately $5.8 million for the same period in 2022, representing a decrease of $4.5 million, or 77.8%. The year-over-year decrease was primarily due to an overall business decline in the Industrial and Consumer Goods segments as described above.
Current wording
For the year ended December 31, 2024, our Canadian net sales were approximately $0.2 million, compared to approximately $1.3 million for the same period in 2023, representing a decrease of $1.1 million, or 87.9%. The year-over-year decrease was primarily due to the Company restructuring as described above.
Previous wording
For the year ended December 31, 2023, our European net sales were approximately $5.1 million, compared to approximately $4.9 million for the same period in 2022, representing an increase of $0.11 million, or 2.6%.
Current wording
For the year ended December 31, 2024, our European net sales were approximately $2.2 million, compared to approximately $5.5 million for the same period in 2023, representing a decrease of $3.3 million, or 60.0%. The year-over-year decrease was primarily due to the Company restructuring as described above.
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 December 31, 2023, we had approximately $0.5 million of cash, of which none was restricted and $0.1 million was held in foreign bank accounts, and approximately $3.7 million of working capital, which is calculated as total current assets minus total current liabilities, as compared to approximately $6.5 million of cash, of which $0.8 million was held in foreign bank accounts, and approximately $41.0 million of working capital as of December 31, 2022. 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 from equity issuances. As of December 31, 2024, we had approximately $0.9 million of cash, of which none was restricted and $0.1 million was held in foreign bank accounts, and approximately $1.5 million of working capital, which is calculated as total current assets minus total current liabilities, as compared to approximately $0.5 million of cash, of which none was restricted and $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
We believe that our cash on hand and the cash flow that we generate from our operations will not be sufficient to fund our working capital and capital expenditure requirements, as well as our debt repayments and other liquidity requirements associated with our existing operations, for the next 12 months. Based on our cash on hand and working capital at December 31, 2023, we may have insufficient cash to fund planned operations into the third quarter of 2024. This is evident from our continued efforts to raise capital and leverage external funding to fulfill our capital needs as highlighted below.
Current wording
We believe that our cash on hand and the cash flow that we generate from our operations and financing activities from recent equity fundraisings will be sufficient to fund our working capital and capital expenditure requirements, as well as our debt repayments and other liquidity requirements associated with our existing operations, for the next 12 months. Based on our cash on hand and working capital at December 31, 2024, we expect to have sufficient cash to fund planned operations into the second quarter of 2026. This is largely due to the Company’s Private Placement that occurred on February 19, 2025. See Note 13 for more information.
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 from equity issuances, such as our June 2022, October 2022 and July 2023 Offerings, each as described and defined below.
Current wording
Our primary requirements for liquidity and capital are working capital, equity fundraising, debt service related to recent acquisitions and general corporate needs. Our primary sources of liquidity are our cash on hand and the cash flow that we generate from ourequity and debt transactions, as well as proceeds from equity issuances, such as our July 2023, August 2024, and February 2025 Offerings, each as described and defined below.
Previous wording
We formerly used a shelf registration statement on Form S-3 (the “Shelf Registration Statement”) to conduct securities offerings. In August 2021, we filed a prospectus supplement and established an “at-the-market” equity offering program (the “ATM Program”) that provided for the sale of shares of our Class A common stock having an aggregate offering price of up to $50 million, from time to time. H
Current wording
We formerly used a shelf registration statement on Form S-3 (the “Shelf Registration Statement”) to conduct securities offerings. In August 2021, we filed a prospectus supplement and established an “at-the-market” equity offering program (the “ATM Program”) that provided for the sale of shares of our Class A common stock having an aggregate offering price of up to $50 million, from time to time.
Previous wording
Since the launch of the ATM program in August 2021 and through December 31, 2022, we sold shares of our Class A common stock which generated gross proceeds of approximately $12.7 million and we paid fees to the sales agent of approximately $0.4 million. Due to the untimely filing of certain of our Quarterly and Annual Reports, we are unable to issue additional shares of Class A common stock pursuant to the ATM Program or otherwise use the Shelf Registration Statement.
Current wording
Since the launch of the ATM program in August 2021 and through December 31, 2022, we sold shares of our Class A common stock which generated gross proceeds of approximately $12.7 million and we paid fees to the sales agent of approximately $0.4 million. Due to the untimely filing of certain of our Quarterly and Annual Reports that was remediated in 2024, we are unable to issue additional shares of Class A common stock pursuant to the ATM Program or otherwise use the Shelf Registration Statement and once eligible will be required to file a new S-3 for utilization of our Shelf Registration Statement.
Previous wording
In July, August, October, and November 2023, the Company received an aggregate of approximately $3.9 million in cash pursuant to the terms of future receivables financings (collectively, the “Future Receivables Financings”) entered into with two private lenders. See “Note 6 - Long Term Debt” for more information.
Current wording
In July, August, October, and November 2023, the Company received an aggregate of approximately $3.9 million in cash pursuant to the terms of future receivables financings (collectively, the “Future Receivables Financings”) entered into with two private lenders. As of December 31, 2024, there were no outstanding balances under this agreement. See “Note 6 - Long Term Debt” for more information.
Previous wording
We have successfully renegotiated supplier partnership terms and are continuing to improve working capital arrangements with suppliers. We have made progress consolidating and streamlining our office, warehouse, and distribution operations footprint. We have reduced our workforce by approximately 49% throughout fiscal year 2023 to reduce costs and align with our revenue projections.
Current wording
We have successfully renegotiated supplier partnership terms and are continuing to improve working capital arrangements with suppliers. We have made progress consolidating and streamlining our office, warehouse, and distribution operations footprint. We have reduced our workforce by approximately 43% throughout fiscal year 2024 to reduce costs and align with our revenue projections.
Previous wording
We have incurred net losses of $32.3 million and $182.2 million for the years ended December 31, 2023 and 2022, respectively. For the year ended December 31, 2023, cash used in operating activities was $1.8 million 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 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 $17.7 million and $32.3 million for the years ended December 31, 2024 and 2023, respectively. For the year ended December 31, 2024, cash used in operating activities was $6.8 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 for the twelve-month period included in the going concern evaluation.
Previous wording
As a result of our losses and our projected cash needs, combined with our current liquidity level, substantial doubt exists about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is contingent upon successful execution of management’s intended plan over the next twelve months to improve the Company’s liquidity and profitability, which includes, without limitation:
Current wording
We believe that our cash on hand that includes cash raised in the February 2025 Private Placement and the cash flow that we generate from our operations will be sufficient to fund our working capital and capital expenditure requirements, as well as our debt repayments and other liquidity requirements associated with our existing operations, for the next 12 months. The Company’s ability to continue as a going concern is contingent upon successful execution of management’s intended plan over the next twelve months to improve the Company’s liquidity and profitability, which includes, without limitation:
Previous wording
During 2022, net cash used in operating activities of approximately $26.4 million was a result of a net loss of $182.2 million offset by non-cash adjustments to net loss of $140.6 million, including an impairment charge related to goodwill and indefinite-lived intangibles of $71.4 million, and a $15.2 million increase in cash provided by working capital primarily driven by decreases in our accrued expenses and accounts payable, and decreases in inventories offset by higher other current assets..
Current wording
During 2024, net cash used in operating activities of approximately $6.8 million was a result of a net loss of $17.7 million offset by non-cash adjustments to net loss of $6.4 million and a $4.4 million increase in working capital driven by decreases in inventories of $6.3 million and decreases in other current assets of $3.5 million reduced by an increase in accounts receivable of $2.8 million, decrease in accrued expenses of $0.8 million and a decrease in accounts payable of $2.3 million.
Previous wording
Net Cash (Used in) Provided by Financing Activities
Current wording
Net Cash (Used In) Provided by Investing Activities
Previous wording
Net Cash Provided by Investing Activities
Current wording
During 2024, net cash provided by investing activities of approximately $0.2 million consisted primarily of capital expenditures.
Previous wording
During 2023, net cash provided by investing activities of (i) approximately $0.1 million from $1.1 million of cash proceeds from the sale of certain equity securities investments, offset by approximately $1.0 million of cash used for capital expenditures, including development costs for our new enterprise resource planning system.
Current wording
During 2023, net cash provided by investing activities of approximately $0.1 million from $1.1 million of cash proceeds from the sale of certain equity securities investments, offset by approximately $1.0 million of cash used for capital expenditures, including development costs for our new enterprise resource planning system.
Previous wording
During 2023, net cash used in financing activities primarily consisted of (i) approximately $3.9 million of cash proceeds from the issuance of Class A common stock related to our July 2023 Offering, (ii) approximately $3.9 million of cash proceeds from our future receivables financing, (iii) $2.1 million of cash proceeds from a secured bridge loan, offset by (iv) approximately $0.3 million of cash used for contingent consideration payments, (v) and approximately $2.1 million of cash used for repayments related to the Eyce and DaVinci promissory notes, and (vi) the $15.0 million payoff of asset based lending loans.
Current wording
During 2023, net cash used in financing activities primarily consisted of approximately $3.9 million of cash proceeds from the issuance of Class A common stock related to our July 2023 Offering, approximately $3.9 million of cash proceeds from our future receivables financing, $2.1 million of cash proceeds from a secured bridge loan, offset by approximately $0.3 million of cash used for contingent consideration payments, and approximately $2.1 million of cash used for repayments related to the Eyce and DaVinci promissory notes, and the $15.0 million payoff of asset based lending loans.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Net Cash Provided by (Used in) Financing Activities
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
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 were offered pursuant to a Registration Statement on Form S-1 (the “October 2022 Offering”). The October 2022 Offering generated gross proceeds of approximately $7.5 million and net proceeds to the Company of approximately $6.8 million.
Previous report — wording carried elsewhere
During 2022, net cash provided by investing activities of (i) approximately $12.0 million of cash proceeds from the sale of our assets held for sale, (ii) approximately $4.6 million of cash proceeds from the disposition of our interests in VIBES, and (iii) approximately $0.6 million of cash proceeds from the sale of certain equity securities investments, offset by approximately $2.8 million of cash used for capital expenditures, including development costs for our new enterprise resource planning system.