Business Context and Reporting Period
Greenlane Holdings, Inc. filed this Form 8-K on May 12, 2020 under Item 8.01, Other Events. The company reported that it would delay filing its Form 10-Q for the quarter ended March 31, 2020, relying on the SEC’s March 25, 2020 COVID-19 relief order.
Greenlane is incorporated in Delaware and its Class A common stock trades on Nasdaq under the symbol GNLN. The company identified itself as an emerging growth company.
Financial Metrics and Liquidity
This filing does not provide quarterly financial statements or clear values for revenue, profit, cash flow, margins, debt, cash balances, liquidity, or other financial metrics.
The company stated that COVID-19 could adversely affect its business and its ability to raise capital, but did not quantify the effect on cash resources or financing requirements.
Material Changes Versus the Prior Comparable Period
The company reported that average daily revenues from smoke shops, vape shops, and similar independent retailers declined approximately 41% when comparing January 1 through March 14, 2020 with March 15 through May 10, 2020. The filing attributes the decline potentially to mandatory store closures and stay-at-home orders.
No comparable quarterly revenue, earnings, or balance-sheet amounts were provided.
Guidance, Outlook, Risks, and Unusual Items
- The company expected to file its delayed Form 10-Q within 20 calendar days and no later than June 29, 2020, compared with the original May 15, 2020 deadline.
- Remote work by substantially all accounting personnel and the independent registered public accounting firm disrupted the company’s accounting, internal review, access to original books and records, and review procedures.
- The COVID-19 pandemic caused significant declines in sales to independent retail customers, many of which were closed under stay-at-home orders. Some customers could permanently close.
- The company could not predict when, or whether, retail-store revenues would return to historical levels.
- Potential shutdowns or disruptions involving the company, suppliers, manufacturers, customers, or other supply-chain participants could materially and negatively affect operations.
- Sustained capital-market disruption could impair the company’s ability to raise capital.
Important Facts to Verify
- Whether the Form 10-Q was filed by June 29, 2020 and whether it reported material COVID-19-related effects.
- The company’s actual first-quarter 2020 revenue, margins, net loss, operating cash flow, cash balance, debt, and liquidity position.
- Whether the approximately 41% retail revenue decline continued, worsened, or reversed after May 10, 2020.
- The financial condition and ongoing viability of affected retail customers and key supply-chain counterparties.
- Any subsequent capital raising, liquidity measures, covenant issues, or going-concern disclosures.