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ROC

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39119

Leafly Holdings, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	84-2266022
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
113 Cherry Street, PMB 88154 Seattle, Washington	98104-2205
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (206) 455-9504

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.0001 Par Value		LFLY		The Nasdaq Stock Market LLC
Warrants, exercisable for shares of common stock at an exercise price of $11.50 per share		LFLYW		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer		☐		Accelerated filer		☐
Non-accelerated filer		☒		Smaller reporting company		☒
Emerging growth company		☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 8, 2023, the registrant had 2,177,721 shares of common stock, $0.0001 par value per share, outstanding.

 

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INDEX

 

		Page
	Cautionary Note Regarding Forward-Looking Statements	2
Part I	Financial Information
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022 (Audited)	3
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022	4
	Condensed Consolidated Statements of Changes in Stockholders Deficit for the Three and Nine Months Ended September 30, 2023 and 2022	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	44
Part II	Other Information
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 6.	Exhibits	45

 

 

 

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Cautionary Note Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of present or historical fact included in or incorporated by reference in this Quarterly Report regarding Leafly Holdings, Inc.’s (the “Company’s”) future financial performance, as well as the Company’s strategy, future operations, future operating results, financial position, estimated revenues, and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “project,” “plan,” “will,” “could,” “would,” “potential,” “strategy,” “focus,” and “continue” or similar words. These forward-looking statements include all matters that are not historical facts. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. You should read statements that contain these words carefully because they:

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report.

All forward-looking statements included herein attributable to the Company or any person acting on the Company’s behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. These cautionary statements are being made pursuant to federal securities laws with the intention of obtaining the benefits of the “safe harbor” provisions of such laws. Except to the extent required by applicable laws and regulations, the Company undertakes no obligations to update these forward-looking statements to reflect events or circumstances after the date of this Quarterly Report or to reflect the occurrence of unanticipated events.

There may be events in the future that the Company is not able to predict accurately or over which it has no control. The section in the Company’s Annual Report on Form 10-K for the year ended 2022 (“2022 Annual Report”) and in the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023 (“1Q 2023 10-Q”) and June 30, 2023 (“2Q 2023 10-Q,” collectively the “2023 10-Qs”) and in this Quarterly Report entitled “Risk Factors,” and the section of this Quarterly Report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the other cautionary language discussed in this report provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described by the Company in such forward-looking statements. These examples include:

 

Note Regarding Reverse Stock Split

 

On September 12, 2023, the Company implemented a one-for-twenty reverse split of its common stock (Note 12). To facilitate comparative analysis, all statements in this Quarterly Report regarding numbers of shares of common stock and all references to prices of a share of common stock, if referencing events or circumstances occurring prior to September 12, 2023, have been retroactively restated to reflect the effect of the reverse stock split on a pro forma basis.

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Part I - Financial Information


Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

LEAFLY HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

 

	September 30, 2023				December 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	14,469			$	24,594
Accounts receivable, net of allowance for doubtful accounts of $1,400 and $908, respectively		3,409				3,298
Prepaid expenses and other current assets		2,339				1,792
Restricted cash		—				360
Total current assets		20,217				30,044
Property, equipment, and software, net		2,541				2,285
Restricted cash - long-term portion		249				248
Other assets		55				135
Total assets	$	23,062			$	32,712
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable	$	1,609			$	1,625
Accrued expenses and other current liabilities		2,990				6,235
Deferred revenue		2,095				1,958
Total current liabilities		6,694				9,818
Non-current liabilities
Non-current portion of convertible promissory notes, net		29,272				28,863
Private warrants derivative liability		113				182
Escrow shares derivative liability		5				52
Stockholder earn-out rights derivative liability		25				204
Total non-current liabilities		29,415				29,301
Total liabilities		36,109				39,119
Commitments and contingencies (Note 8)
Stockholders' deficit
Preferred stock: $0.0001 par value; 5,000 and 5,000 authorized; 0 and 0 issued and outstanding; aggregate liquidation preference of $0 and $0 at September 30, 2023 and December 31, 2022, respectively		—				—
Common stock: $0.0001 par value; 200,000 and 200,000 authorized; 2,311 and 2,164 issued at September 30, 2023 and December 31, 2022, respectively		—				—
Treasury stock: 154 and 154 shares held at September 30, 2023 and December 31, 2022, respectively		(31,663	)			(31,663	)
Additional paid-in capital		92,359				89,956
Accumulated deficit		(73,743	)			(64,700	)
Total stockholders' deficit		(13,047	)			(6,407	)
Total liabilities and stockholders' deficit	$	23,062			$	32,712

 

See Notes to Condensed Consolidated Financial Statements.

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LEAFLY HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

 

	Three Months Ended September 30,								Nine Months Ended September 30,
	2023				2022				2023				2022
Revenue	$	10,583			$	11,781			$	32,507			$	35,251
Cost of revenue		1,163				1,515				3,747				4,411
Gross profit		9,420				10,266				28,760				30,840
Operating expenses
Sales and marketing		2,563				6,403				10,326				21,529
Product development		2,533				3,406				8,133				10,927
General and administrative		5,799				6,489				17,475				20,730
Total operating expenses		10,895				16,298				35,934				53,186
Loss from operations		(1,475	)			(6,032	)			(7,174	)			(22,346	)
Interest expense, net		(720	)			(705	)			(2,157	)			(2,119	)
Change in fair value of derivatives		14				22,264				295				36,264
Other income (expense), net		(29	)			(73	)			(7	)			(962	)
Net (loss) income	$	(2,210	)		$	15,454			$	(9,043	)		$	10,837
Net (loss) income per share:
Basic	$	(1.10	)		$	8.69			$	(4.58	)		$	6.15
Diluted	$	(1.10	)		$	5.64			$	(4.58	)		$	5.45
Weighted average shares outstanding:
Basic		2,011				1,779				1,974				1,763
Diluted		2,011				2,149				1,974				1,924

 

See Notes to Condensed Consolidated Financial Statements.

 

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LEAFLY HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(in thousands)

 

	Three and Nine Months Ended September 30, 2023
	Preferred Stock								Common Stock								Treasury Stock								Additional Paid-In Capital				Accumulated Deficit				Total
	Shares				Amount				Shares				Amount				Shares				Amount
Balance at January 1, 2023		—			$	—				2,164			$	—				(154	)		$	(31,663	)		$	89,956			$	(64,700	)		$	(6,407	)
Net loss		—				—				—				—				—				—				—				(5,397	)			(5,397	)
Stock-based compensation		—				—				—				—				—				—				658				—				658
Exercise of stock options		—				—				—				—				—				—				—				—				—
Issuance of common stock under ESPP		—				—				14				—				—				—				120				—				120
Issuance of common stock upon vesting of restricted stock units		—				—				14				—				—				—				—				—				—
Balance at March 31, 2023		—			$	—				2,192			$	—				(154	)		$	(31,663	)		$	90,734			$	(70,097	)		$	(11,026	)
Balance at April 1, 2023		—				—				2,192				—				(154	)			(31,663	)			90,734				(70,097	)			(11,026	)
Net loss		—				—				—				—				—				—				—				(1,436	)			(1,436	)
Stock-based compensation		—				—				—				—				—				—				580				—				580
Exercise of stock options		—				—				—				—				—				—				—				—				—
Issuance of common stock under ESPP		—				—				—				—				—				—				—				—				—
Issuance of common stock upon vesting of restricted stock units		—				—				31				—				—				—				—				—				—
Balance at June 30, 2023		—			$	—				2,223			$	—				(154	)		$	(31,663	)		$	91,314			$	(71,533	)		$	(11,882	)
Balance at July 1, 2023		—				—				2,223				—				(154	)			(31,663	)			91,314				(71,533	)			(11,882	)
Net loss		—				—				—				—				—				—				—				(2,210	)			(2,210	)
Stock-based compensation		—				—				—				—				—				—				997				—				997
Reverse stock split		—				—				34				—				—				—				—				—				—
Exercise of stock options		—				—				—				—				—				—				—				—				—
Issuance of common stock under ESPP		—				—				6				—				—				—				48				—				48
Issuance of common stock upon vesting of restricted stock units		—				—				48				—				—				—				—				—				—
Balance at September 30, 2023		—			$	—				2,311			$	—				(154	)		$	(31,663	)		$	92,359			$	(73,743	)		$	(13,047	)

 

 

 

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LEAFLY HOLDINGS, INC

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT (Continued)

(in thousands)

 

	Three and Nine Months Ended September 30, 2022
	Preferred Stock								Common Stock								Treasury Stock								Additional Paid-In Capital				Accumulated Deficit				Total
	Shares				Amount				Shares				Amount				Shares				Amount
Balance at January 1, 2022		307			$	1				1,254				—				—			$	—			$	61,197			$	(69,770	)		$	(8,572	)
Net loss		—				—				—				—				—				—				—				(19,376	)			(19,376	)
Stock-based compensation		—				—				—				—				—				—				1,924				—				1,924
Exercise of stock options		—				—				6				—				—				—				127				—				127
Conversion of 2021 Notes into Common Stock upon Business Combination		—				—				207				—				—				—				33,024				—				33,024
Conversion of Preferred Stock into Common Stock upon Business Combination		(307	)			(1	)			307				—				—				—				1				—				—
Merger and recapitalization, net of fees		—				—				100				—				—				—				27,997				—				27,997
Stockholder contribution for debt issuance costs		—				—				—				—				—				—				924				—				924
Escrow shares derivative liability		—				—				81				—				—				—				(6,867	)			—				(6,867	)
Private warrants derivative liability		—				—				—				—				—				—				(3,916	)			—				(3,916	)
Forward share purchase agreement derivative liability		—				—				193				—				—				—				(14,170	)			—				(14,170	)
Stockholder earn-out rights derivative liability		—				—				—				—				—				—				(26,131	)			—				(26,131	)
Balance at March 31, 2022		—			$	—				2,148				—				—			$	—			$	74,110			$	(89,146	)		$	(15,036	)
Balance at April 1, 2022		—				—				2,148				—				—				—				74,110				(89,146	)			(15,036	)
Net income		—				—				—				—				—				—				—				14,759				14,759
Stock-based compensation		—				—				—				—				—				—				464				—				464
Exercise of stock options		—				—				1				—				—				—				30				-				30
Balance at June 30, 2022		—			$	—				2,149				—				—				—				74,604				(74,387	)			217
Balance at July 1, 2022		—				—				2,149				—				—				—				74,604				(74,387	)			217
Net income		—				—				—				—				—				—				—				15,454				15,454
Shares canceled		—				—				(1	)			—				—				—				—				—				—
Stock-based compensation		—				—				—				—				—				—				771				—				771
Exercise of stock options		—				—				—				—				—				—				1				—				1
Vesting of restricted stock units		—				—				4				—				—				—				—				—				—
Settlement of forward share purchase agreement derivative liability		—				—				—				—				—				—				(17,841	)			—				(17,841	)
Purchase of treasury stock		—				—				—				—				(154	)			(31,663	)			31,663				—				—
Balance at September 30, 2022		—			$	—				2,152				—				(154	)		$	(31,663	)		$	89,198			$	(58,933	)		$	(1,398	)

 

 

See Notes to Condensed Consolidated Financial Statements.

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LEAFLY HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

	Nine Months Ended September 30,
	2023				2022
Cash flows from operating activities
Net (loss) income	$	(9,043	)		$	10,837
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		697				276
Stock-based compensation expense		2,235				3,159
Bad debt expense, net of recoveries		2,350				1,023
Loss on disposition of assets		63				—
Noncash amortization of debt discount		409				369
Noncash interest expense associated with convertible debt		—				243
Noncash change in fair value of derivatives		(295	)			(36,264	)
Other		(1	)			15
Changes in operating assets and liabilities:
Accounts receivable		(2,461	)			(675	)
Prepaid expenses and other current assets		(467	)			(2,222	)
Accounts payable		(16	)			173
Accrued expenses and other current liabilities		(3,246	)			(2,141	)
Deferred revenue		137				77
Net cash used in operating activities		(9,638	)			(25,130	)
Cash flows from investing activities
Additions of property, equipment, and software		(1,042	)			(2,194	)
Proceeds from sale of property and equipment		27				—
Net cash used in investing activities		(1,015	)			(2,194	)
Cash flows from financing activities
Proceeds from exercise of stock options		—				158
Proceeds from convertible promissory notes		—				29,374
Proceeds from business combination placed in escrow and restricted		—				39,032
Trust proceeds received from recapitalization at closing		—				582
Issuance of common stock under ESPP		168				—
Repurchase of common stock and settlement of forward purchase agreements		—				(31,303	)
Transaction costs associated with recapitalization		—				(10,761	)
Advances (repayments) of related party payables		1				(17	)
Net cash provided by financing activities		169				27,065
Net decrease in cash, cash equivalents, and restricted cash		(10,484	)			(259	)
Cash, cash equivalents, and restricted cash, beginning of period		25,202				28,695
Cash, cash equivalents, and restricted cash, end of period	$	14,718			$	28,436

 

	Nine Months Ended September 30,
	2023				2022
Supplemental disclosure of non-cash financing activities:
Stockholder contribution for debt issuance costs	$	—			$	924
Repurchase of common stock in other accrued expenses		—				360
Conversion of promissory notes into common stock		—				33,024
Issuance of forward share purchase agreements		—				14,170
Issuance of private warrants		—				3,916
Issuance of sponsor shares subject to earn-out conditions		—				6,867
Issuance of stockholder earn-out rights		—				26,131

 

See Notes to Condensed Consolidated Financial Statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

 

 

 

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except per share amounts)

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except per share amounts)

 

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except per share amounts)

 

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except per share amounts)

 

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except per share amounts)

 

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except per share amounts)

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except per share amounts)

 

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except per share amounts)

 

 

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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our financial statements and the notes related thereto which are included in “Part I, Item 1. Financial Statements” of this Quarterly Report on Form 10-Q. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Item 1A. Risk Factors” and elsewhere in our 2022 Annual Report and our 2023 10-Qs.

Amounts in this section are presented in thousands, except for per share numbers and percentages.

Business Overview

Leafly is a leading online cannabis discovery marketplace and resource for cannabis consumers. Leafly provides an information resource platform with a deep library of content, including detailed information about cannabis strains, retailers and cannabis products. We are a trusted destination to discover legal cannabis products and order them from licensed retailers with offerings that include subscription-based products and digital advertising. Legacy Leafly was founded in 2010 and is headquartered in Seattle with 137 total employees, including 132 in the U.S. and 5 in Canada as of September 30, 2023.

Leafly is one of the cannabis industry’s leading marketplaces for brands and retailers to reach one of the largest audiences of consumers interested in cannabis. Our platform includes educational information, strains data, and lifestyle content, enabling consumers to use Leafly’s content library to have an informed shopping experience. Leafly reduces the friction caused by fragmented regulation of cannabis across North America by offering a compliant digital marketplace that connects cannabis consumers with legal and licensed retailers and brands nearest them.

Leafly allows each shopper to tailor their journey, by selecting the store, brand, and cannabis form-factor that appeals to them. Once that shopper builds a basket and is ready to order, our non-plant-touching business model sends that order reservation to the store for payment and fulfillment. By matching stores and shoppers, we deliver value to all constituencies. We monetize our platform primarily through the sale of subscription packages, bundling e-commerce software and advertising solutions, as well as non-subscription-based advertising to retailers and brands.

Significant Events

Reverse Stock Split

On September 12, 2023, the Company implemented a one-for-twenty reverse split of its common stock (Note 12). To facilitate comparative analysis, all statements in this Quarterly Report regarding numbers of shares of common stock and all references to prices of a share of common stock, if referencing events or circumstances occurring prior to September 12, 2023, have been retroactively restated to reflect the effect of the reverse stock split on a pro forma basis.

Content Shift

During the first half of 2023, in conjunction with our reductions in staffing and cost cutting (see “Reductions in Force” below), Leafly began its transition from a news-centric platform to a marketplace platform. In this “content shift,” we changed our focus from a content-driven approach to one intended to maximize consumer demand for our retailer customers by attracting visitors who are more likely to order from our retailers. Leafly has enhanced its deal types, delivery options and created deeper search capabilities intended to drive conversion to sales back to retailers and brands. Our strategy is to focus on key and emerging retailer and brand accounts by strongly aligning our sales and marketing resources with their needs. In addition, at the end of the second quarter, we implemented select pricing increases, pass-throughs of certain costs and annual subscription agreements in select markets. As expected, we experienced and continue to experience some slowing of our revenue growth as our team was focused on process change, which will likely continue into the fourth quarter of 2023.

 

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Reductions in Force

In light of the current macroeconomic environment, we have taken steps to manage the business accordingly. We implemented plans to reduce operating expenses, including previously announced headcount reductions:

The restructuring plans above have been implemented and are expected to continue contributing to the cash savings of the Company. These cost reductions are not expected to have a significant impact on the scope of our business. We will focus on maximizing efficiencies across all areas, investing in projects and products that we expect will result in the highest returns. By coupling cost savings with our strategic content shift, we believe Leafly will be better situated to become profitable in future periods.

Key Metrics

In addition to the measures presented in our consolidated financial statements, our management regularly monitors certain metrics in the operation of our business:

Ending Retail Accounts

Ending retail accounts is the number of paying retailer accounts with Leafly as of the last month of the respective period. Retail accounts can include more than one retailer. This metric is helpful because it represents a portion of the volume element of our revenue and provides an indication of our market share.

Retailer Average Revenue Per Account (“ARPA”)

Retailer ARPA is calculated as monthly retail revenue, on an account basis, divided by the number of retail accounts that were active during that same month. An active account is one that had an active paying subscription with Leafly in the month. Leafly does not provide retailers with an ongoing free subscription offering but may offer a free introductory period with certain subscriptions. This metric is helpful because it represents the price element of our revenue.

Results of Operations

Key Metrics

The table below presents these measures for the respective periods:

 

	Three Months Ended September 30,
	2023				2022				Change				Change (%)
Key Operating Metrics:
Ending retail accounts1		4,466				5,637				(1,171	)			-21	%
Retailer ARPA2	$	644			$	556			$	88				16	%

 

	Nine Months Ended September 30,
	2023				2022				Change				Change (%)
Key Operating Metrics:
Ending retail accounts1		4,466				5,637				(1,171	)			-21	%
Retailer ARPA2	$	585			$	570			$	15				3	%

 

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The 21% decline in year-over-year ending retail accounts for the three and nine months ended September 30, 2023, compared to the same periods in 2022, was primarily related to customer budget constraints and Leafly’s removal of non-paying customers.

The 16% increase in ARPA for the three months ended September 30, 2023, compared to the same period in 2022 was primarily the result of the roll-out of new rate cards and churn of lower ARPA accounts. The 3% increase in ARPA for the nine months ended September 30, 2023, compared to the same period in 2022 was due largely to previously implemented pricing increases and the lower retail account base.

Revenue

We generate our revenue through the sale of online advertising and online order reservation enablement on the Leafly platform for suppliers in our Retail and Brands segments. Within our Retail segment, we monetize our multi-sided retail marketplace through monthly subscriptions that enable retailers to advertise to and acquire potential shoppers. Our solutions allow retailers, where legally permissible, to accept online orders from shoppers who visit Leafly.com or use a Leafly-powered online order reservation solution, including our iOS app. Within our Brands segment, our revenue is derived by creating custom advertising campaigns for both small and large brands that target Leafly’s broad and diverse audience and offering brands profile listings on our platform, which are sold on a monthly recurring subscription or annual basis. Advertising opportunities include on-site digital display, native placements, email, branded content, and off-site audience extension. Leafly’s advertising partners span a variety of verticals including hardware and accessories, THC-infused products, hemp, CBD, and seed.

 

	Three Months Ended September 30,
	2023				2022				Change ($)				Change (%)
Revenue:
Retail	$	9,266			$	9,042			$	224				2	%
Brands		1,317				2,739				(1,422	)			-52	%
Total revenue	$	10,583			$	11,781			$	(1,198	)			-10	%

 

	Nine Months Ended September 30,
	2023				2022				Change ($)				Change (%)
Revenue:
Retail	$	27,576			$	27,286			$	290				1	%
Brands		4,931				7,965				(3,034	)			-38	%
Total revenue	$	32,507			$	35,251			$	(2,744	)			-8	%

Retail

Retail subscriptions revenue increased $140 due to the price increase and other revenues increased $127, partially offset by a $43 decrease in digital display ads for the three months ended September 30, 2023 as compared to the same period in 2022. Digital media display ads revenue declines were due to decreased volume of display ads sold. For the three months ended September 30, 2023, the increase in retail subscription revenue as compared to the same period in 2022 was primarily due to the price increase implemented during the second quarter of 2023.

Retail subscriptions revenue decreased $380, more than offset by a $478 increase in digital display ads and other revenues of $192, driving a slight increase in retail revenue for the nine months ended September 30, 2023 as compared to the same period in 2022.

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Digital media display ads revenue growth was caused by increased volume of display ads sold. For the nine months ended September 30, 2023, the decrease in retail subscription revenue as compared to the same period in 2022 was primarily due to customer churn and marketplace dynamics which offset the favorable impact of the price increase in the third quarter.

Brands

Macro challenges, including changes in state regulatory provisions, have put overall pressure on the cannabis industry which has impacted our brand advertising business. For the three months ended September 30, 2023 as compared to the same period in 2022, Brands revenue decreased $1,422, due primarily to a direct-to-consumer marketing revenue decrease of $532, a reduction in display ads of $598 and a branded content decrease of $211.

For the nine months ended September 30, 2023 as compared to the same period in 2022, Brands revenue decreased $3,034, due primarily to direct-to-consumer marketing revenue decrease of $1,094, a reduction in display ads of $1,091 and a branded content decrease of $609.

The Company’s current systems do not allow us to precisely quantify changes in Brands revenue attributable to price and volume. The information we have from our existing systems, combined with our knowledge of changes in list prices, informs the discussion of Brands volume and pricing that follows. We believe Brands revenue declined due to decreased volume and reduced advertising spend per ad from our clients.

Cost of Revenue

	Three Months Ended September 30,
	2023				2022				Change ($)				Change (%)
Cost of sales: 1
Retail	$	1,032			$	1,126			$	(94	)			-8	%
Brands		131				389				(258	)			-66	%
Total cost of sales	$	1,163			$	1,515			$	(352	)			-23	%

 

	Nine Months Ended September 30,
	2023				2022				Change ($)				Change (%)
Cost of sales: 1
Retail	$	3,202			$	3,311			$	(109	)			-3	%
Brands		545				1,100				(555	)			-50	%
Total cost of sales	$	3,747			$	4,411			$	(664	)			-15	%

 

Retail

Retail cost of sales reductions were driven by increased efficiency and lower platform costs as described below.

For the three months ended September 30, 2023 as compared to the same period in 2022, retail cost of revenue decreased $94 due to a reduction in labor allocation costs of $75 and a decrease in business platform and merchant processing costs of $44, partially offset by increased website infrastructure costs of $25.

For the nine months ended September 30, 2023 as compared to the same period in 2022, retail cost of revenue decreased $109 due to decreased website infrastructure costs of $12 and labor allocation costs of $185, partially offset by an $88 increase in business platform and merchant processing costs.

 

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Brands

Brands cost of sales reductions were a consequence of declining revenues and, to a lesser extent, increased efficiency as described below.

Brands cost of revenue decreased $258 for the three months ended September 30, 2023 as compared to the same period in 2022, of which $179 corresponds to decreased associated revenue. Brands cost of revenue also decreased $79 for the three months ended September 30, 2023 as compared to the same period in 2022, due to reduced labor allocation costs.

Brands cost of revenue decreased $555 for the nine months ended September 30, 2023 as compared to the same period in 2022, of which $408 corresponds to decreased associated revenue. Brands cost of revenue also decreased $147 for the nine months ended September 30, 2023 as compared to the same period in 2022, due to reduced labor allocation costs.

Operating Expenses

As described below, operating expenses declined significantly overall as a result of the two reductions in force and cost reduction activities discussed above.

 

	Three Months Ended September 30,
	2023				2022				Change ($)				Change (%)
Operating expenses:
Sales and marketing	$	2,563			$	6,403			$	(3,840	)			-60	%
Product development		2,533				3,406				(873	)			-26	%
General and administrative		5,799				6,489				(690	)			-11	%
Total operating expenses	$	10,895			$	16,298			$	(5,403	)			-33	%

 

	Nine Months Ended September 30,
	2023				2022				Change ($)				Change (%)
Operating expenses:
Sales and marketing	$	10,326			$	21,529			$	(11,203	)			-52	%
Product development		8,133				10,927				(2,794	)			-26	%
General and administrative		17,475				20,730				(3,255	)			-16	%
Total operating expenses	$	35,934			$	53,186			$	(17,252	)			-32	%

 

Sales and Marketing

Sales and marketing expenses decreased $3,840 for the three months ended September 30, 2023 as compared to the same period in 2022 due to:

Sales and marketing expenses decreased $11,203 for the nine months ended September 30, 2023 as compared to the same period in 2022 due to:

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Product Development

Product development expenses decreased $873 for the three months ended September 30, 2023 as compared to the same period in 2022 due to:

Product development expenses decreased $2,794 for the nine months ended September 30, 2023 as compared to the same period in 2022 due to:

General and Administrative

General and administrative expenses decreased $690 for the three months ended September 30, 2023 as compared to the same period in 2022 due to:

General and administrative expenses decreased $3,255 for the nine months ended September 30, 2023 as compared to the same period in 2022 due to:

Other Income and Expense

	Three Months Ended September 30,
	2023				2022				Change ($)				Change (%) 1
Other income (expense):
Interest expense, net	$	(720	)		$	(705	)		$	(15	)			2	%
Change in fair value of derivatives		14				22,264				(22,250	)		nm
Other expense, net		(29	)			(73	)			44			nm
Total other income (expense)	$	(735	)		$	21,486			$	(22,221	)		nm

 

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	Nine Months Ended September 30,
	2023				2022				Change ($)				Change (%) 1
Other income (expense):
Interest expense, net	$	(2,157	)		$	(2,119	)		$	(38	)			2	%
Change in fair value of derivatives		295				36,264				(35,969	)		nm
Other expense, net		(7	)			(962	)			955			nm
Total other income (expense)	$	(1,869	)		$	33,183			$	(35,052	)		nm

 

Interest expense for the three and nine months ended September 30, 2023 was similar to that of the same period in 2022.

The change in fair value of derivatives for the three and nine months ended September 30, 2023 as compared to the same periods in 2022 was due to the recognition of derivatives in connection with the Business Combination and changes in their valuations, which were primarily driven by the decline in Leafly’s stock price during the 2022 periods. See Note 18 to our consolidated financial statements within this Quarterly Report for details on the valuations and the fair value changes in the periods presented.

Other expense, net decreased for the nine months ended September 30, 2023 as compared to the same period in 2022 was due primarily to $874 of costs incurred in connection with the Business Combination during 2022, which were allocated upon closing of the Business Combination to newly issued derivative liabilities that are recorded at fair value on a recurring basis.

Non-GAAP Financial Measures

Earnings Before Interest, Taxes and Depreciation and Amortization (EBITDA) and Adjusted EBITDA

To provide investors with additional information regarding our financial results, we have disclosed EBITDA and Adjusted EBITDA, both of which are non-GAAP financial measures that we calculate as net (loss) income before interest, taxes and depreciation and amortization expense in the case of EBITDA and further adjusted to exclude non-cash, unusual and/or infrequent costs in the case of Adjusted EBITDA. Below we have provided a reconciliation of net (loss) income (the most directly comparable GAAP financial measure) to EBITDA and from EBITDA to Adjusted EBITDA.

We present EBITDA and Adjusted EBITDA because these metrics are key measures used by our management to evaluate our operating performance, generate future operating plans, and make strategic decisions regarding the allocation of investment capacity. Accordingly, we believe that EBITDA and Adjusted EBITDA provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management.

EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider these in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are as follows:

Because of these limitations, you should consider EBITDA and Adjusted EBITDA alongside other financial performance measures, including net (loss) income and our other GAAP results.

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A reconciliation of net (loss) income to non-GAAP EBITDA and Adjusted EBITDA follows:

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
Net (loss) income		$	(2,210	)		$	15,454			$	(9,043	)		$	10,837
Interest expense, net			720				705				2,157				2,119
Depreciation and amortization expense			276				127				697				276
EBITDA			(1,214	)			16,286				(6,189	)			13,232
Stock-based compensation			997				771				2,235				3,159
Transaction expenses allocated    to derivatives and reverse stock split			55				—				55				874
Severance costs			—				—				754				—
Change in fair value of derivatives			(14	)			(22,264	)			(295	)			(36,264	)
Adjusted EBITDA		$	(176	)		$	(5,207	)		$	(3,440	)		$	(18,999	)

 

The decrease in EBITDA for the three and nine months ended September 30, 2023 versus the same periods in 2022 is primarily due to the change in fair value of derivatives in 2022 as a result of the decline in Leafly’s stock price. See Note 18 to our consolidated financial statements within this Quarterly Report for more information regarding the fair value of derivatives. The increase in Adjusted EBITDA for the three and nine months ended September 30, 2023 versus the same periods in 2022 reflects the cost savings resulting from Leafly’s reductions in force and cost cutting measures described above.

Financial Condition

Cash, Cash Equivalents, and Restricted Cash

Cash, cash equivalents, and restricted cash totaled $14,718 and $25,202 as of September 30, 2023 and December 31, 2022, respectively. Explanations of our cash flows for the periods presented follow.

Cash Flows

Nine Months Ended September 30, 2023

During the nine months ended September 30, 2023, the Company utilized a total of $10,484 of cash to fund: cash operating losses of approximately $3,585; changes in current assets and liabilities of $6,053; and investing activities (primarily capitalized software costs) of $1,015. The changes in current assets and liabilities during the nine months ended September 30, 2023 included reductions in accrued expenses of $3,246 primarily related to the payment of 2022 bonuses and accrued interest as well as the change in accounts receivable of $2,461, and the change in prepaid expenses and other current assets of $467 related to the payment of directors and officers insurance. Of the $10,484 of cash used in the nine months ended September 30, 2023, only $845 was expended during the second and third quarters, reflecting our concerted efforts to become cash flow positive.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

As compared to the nine months ended September 30, 2022, cash used in operations decreased by $15,492 to $9,638 for the nine months ended September 30, 2023, mainly due to decreased net loss from operations as a result of the reductions in force and the cost cutting measures employed in 2022 and 2023. See discussions under “— Significant Events” and “— Results of Operations” above for more information. Cash used in investing activities decreased $1,179 to $1,015 primarily due to lower software capitalization in the current year. Cash and restricted cash provided by financing decreased $26,896 over this same period to $169 for the nine months ended September 30, 2023, primarily due to proceeds from the convertible promissory notes and the closing of the Business Combination in 2022. See Notes 1, 12, and 13 to our consolidated financial statements within this Quarterly Report for more information.

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Deferred Revenue

Deferred revenue is primarily related to software subscriptions and display ads. The revenue deferred at September 30, 2023 is expected to be recognized in the near term. See Note 9 to our consolidated financial statements within this Quarterly Report for further discussion.

Contractual Obligations and Other Planned Uses of Capital

We are obligated to repay the operating liabilities on our Consolidated Balance Sheets, such as accrued liabilities. In addition, we are obligated to pay any convertible notes when they come due on January 31, 2025 that do not ultimately convert to equity. See Note 11 to our consolidated financial statements within this Quarterly Report for more information.

Liquidity and Capital Resources

We primarily fund our operations and capital expenditures through cash flows generated by operations and our cash, cash equivalents and restricted cash on hand. Our principal liquidity needs in the “near-term” (within the next twelve months) include the direct costs associated with revenues earned, operating expenses, payment of interest on the 2022 Notes and tax payments. The 2022 Notes bear interest at 8% annually, paid in cash semi-annually in arrears on July 31 and January 31 of each year, and mature on January 31, 2025.

To the extent existing sources of liquidity are not sufficient to fund future activities, meet our payment obligations under the 2022 Notes or pursue strategic opportunities, we may need to raise additional funds, which we may seek to do through equity or debt financings, or seek to refinance the 2022 Notes. Any additional equity financing may be dilutive to stockholders. Debt financing, if available, may involve agreements that include equity conversion rights, covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, expending capital, or pursuing certain business opportunities. There can be no assurance that, if needed, we will be able to obtain additional or adequate financing or to refinance or restructure our indebtedness on terms favorable to us, if at all. See, Part I, Item 1A Risk Factors in our 2022 Annual Report under the headings “— We may need to raise additional capital, which may not be available on favorable terms, if at all, causing dilution to our stockholders, restricting our operations or adversely affecting our ability to operate our business.” and “— Risks Relating to our Indebtedness”.

Going Concern Assessment

Leafly has incurred operating losses since its inception and had an accumulated deficit of $73,743 and $64,700 at September 30, 2023 and December 31, 2022, respectively.

Under the rules of ASC Subtopic 205-40 “Presentation of Financial Statements — Going Concern” (“ASC 205-40”), reporting companies are required to evaluate whether conditions and/or events raise substantial doubt about their ability to meet their future financial obligations as they become due within one year after the date that the financial statements are issued. This evaluation takes into account a company’s current available cash and projected cash needs over the one-year evaluation period but may not consider things beyond its control. As noted above, we have experienced revenue declines, incurred recurring operating losses, used cash from operations, and relied on the capital raised in the Business Combination to continue ongoing operations. These conditions, when considered in the aggregate, raise substantial doubt about our ability to continue as a going concern within one year of the date the financial statements included in this Quarterly Report are issued.

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The restructuring plans above have been implemented and are expected to continue contributing to the cash savings of the Company. We are closely monitoring and reducing operating expenses where we are able to, while ensuring the trajectory and viability of the business remains intact. After considering all available evidence, we determined that, based on both of our cost reduction measures, our current positive working capital of $13,523 as of September 30, 2023 will be sufficient to meet our capital requirements for a period of at least twelve months from the date that our September 30, 2023 financial statements are issued. We believe our restructuring plans alleviate the substantial doubt about our ability to continue as a going concern within one year of the date these financial statements are issued. Management will continue to evaluate our liquidity and capital resources.

Upon the closing of the Business Combination, Leafly issued the 2022 Notes, which provided incremental funding for our operations. Note 11 to our consolidated financial statements within this Quarterly Report provides additional information regarding the 2022 Notes.

We believe that our capital resources are sufficient to fund our operations for at least the following 12 months.

Nasdaq Notifications of Noncompliance

On November 2, 2022, we received a letter from the Staff of Nasdaq indicating that the Company did not meet the Nasdaq’s Bid Price Requirement and that we had until May 1, 2023 to regain compliance. On May 2, 2023, as a result of the Company failing to regain compliance with the Bid Price Requirement, we received a letter from Nasdaq notifying us that the Company’s common stock would be subject to delisting from Nasdaq unless we timely requested a hearing before the Panel and submitted a plan of compliance. We submitted a plan and on May 23, 2023, the Panel approved it, giving us until October 30, 2023 to regain compliance with the Bid Price Requirement. On September 29, 2023, we received formal notice from Nasdaq (“Compliance Notice”) confirming that the Company regained compliance with the Bid Price Requirement, will continue to be listed and traded on the Nasdaq Capital Market and the listing matter was closed. As of the date of the Compliance Notice, we met the net income from continuing operations listing standards applicable to companies listed on the Nasdaq Capital Market, as set forth in Nasdaq Listing Rules 5550(a) and 5550(b)(3) (Note 8). However, we can give no assurance that we will be able to satisfy the applicable Nasdaq listing standards in the future. See Part II, Item 1A Risk Factors in this Quarterly Report under the heading“— Our shares of common stock are listed on Nasdaq, but we cannot guarantee that we will be able to satisfy the applicable listing standards going forward.”

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of September 30, 2023.

Contractual Obligations

Other than our 2022 Notes (see Note 11 to our consolidated financial statements), we do not have any long-term debt, lease obligations or other long-term liabilities. We have entered into several multi-year licensing and administration agreements in the ordinary course of business, the cost of which are reflected within general and administrative expense within our statements of operations as costs are incurred.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates.

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We believe there have been no material changes to the items that we disclosed as our critical accounting estimates under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our 2022 Annual Report.
 

Recently Issued and Adopted Accounting Pronouncements

Reference is made to Note 2 for information about recently issued accounting pronouncements.
 

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Leafly is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information otherwise required with respect to market risk.
 

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Because there are inherent limitations in all control systems, a control system, no matter how well conceived and operated, can provide only reasonable, as opposed to absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, at the reasonable assurance level, as of the end of the period covered by this Quarterly Report.



Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the three months ended September 30, 2023.

 

 

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Part II - Other Information

 

Item 1. LEGAL PROCEEDINGS.

We are involved in legal and administrative proceedings and litigation arising in the ordinary course of business. We believe that the potential liability, if any, in excess of amounts already accrued from all proceedings, claims and litigation will not have a material effect on our financial position, cash flows or results of operations when resolved in a future period. There have been no material developments to the legal proceedings reported in the 2022 Annual Report.

Item 1A. RISK FACTORS.

Risk factors that affect our business and financial results are discussed in Part I, Item 1A of our 2022 Annual Report and in Part II, Item 1A of our Q1 and Q2 2023 10-Qs. As of the date of this report, other than as set forth below, we are not aware of any material changes in the risk factors disclosed in our 2022 Annual Report or in our Q1 and Q2 2023 10-Qs. You should carefully consider the risks and uncertainties described herein and in our 2022 Annual Report and Q1 and Q2 2023 10-Qs, which have the potential to affect our business, financial condition, results of operations, cash flows or prospects in a material and adverse manner. The risks described herein and in our 2022 Annual Report and Q1 and Q2 2023 10-Qs are not the only risks we face, as there are additional risks and uncertainties not currently known to us or that we currently deem to be immaterial which may in the future adversely affect our business, financial condition and/or operating results.

Our shares of common stock are listed on Nasdaq, but we cannot guarantee that we will be able to satisfy the applicable listing standards going forward.

Nasdaq requires listed companies to comply with certain standards to remain listed. While we believe we currently comply with applicable Nasdaq listing standards, we recently were out of compliance and would have been subject to delisting if we were unable to cure the deficiencies. On October 28, 2022, the Company received a letter from the Staff of Nasdaq providing notification that the Company no longer complied with the $50 million in market value of listed securities standard for continued listing on the Nasdaq Global Market under Nasdaq Listing Rule 5450(b)(2)(A) and that the Company also did not comply with either of the two alternative standards of Listing Rule 5450(b), the equity standard and the total assets and total revenue standard. On April 19, 2023, Nasdaq approved the Company’s application to transfer the listing of its common stock and warrants from the Nasdaq Global Market to the Nasdaq Capital Market, effective April 21, 2023, on the basis that the Company complied with the net income standard for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(3). The transfer of the listing resolved the October 28, 2022 noncompliance notification.

On November 2, 2022, the Company received a letter from the Staff of Nasdaq indicating that it did not meet the requirement to maintain a minimum bid price of $1 per share, as required by the Bid Price Requirement and that it had until May 1, 2023 to regain compliance. On May 2, 2023, as a result of the Company not regaining compliance with the Bid Price Requirement, the Company received a letter from Nasdaq notifying it that the Company’s common stock would be subject to delisting from Nasdaq unless the Company timely requested a hearing before the Panel and submitted a plan of compliance. On May 23, 2023, the Panel approved the Company’s plan of compliance, giving the Company until October 30, 2023 to regain compliance with the Bid Price Requirement. On September 12, 2023, the Company implemented a one-for-twenty reverse split of its common stock (Note 12), and on September 29, 2023, the Company received the Compliance Notice from Nasdaq confirming that the Company regained compliance with the Bid Price Requirement, will continue to be listed and traded on the Nasdaq Capital Market, and the listing matter was closed.

As of the date of the Compliance Notice, we met the net income from continuing operations listing standards applicable to companies listed on the Nasdaq Capital Market, as set forth in Nasdaq Listing Rules 5550(a) and 5550(b)(3). However, we can give no assurance that we will be able to satisfy the applicable Nasdaq listing standards in the future. If we are delisted from the Nasdaq Capital Market, we may not qualify for listing on another national securities exchange. Accordingly, delisting from the Nasdaq Capital Market could make trading our common stock more difficult for investors, potentially leading to declines in our share price and liquidity. In addition, without a Nasdaq market listing, stockholders may have a difficult time getting a quote for the sale or purchase of our stock, the sale or purchase of our stock would likely be made more difficult and the trading volume of our stock could decline.

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Delisting from Nasdaq could also result in negative publicity and make it more difficult for us to raise additional capital. The absence of such a listing may adversely affect the acceptance of our common stock as transaction consideration or the value accorded our common stock by other parties. Further, if we are delisted, we would also incur additional costs under state blue sky laws in connection with any sales of our securities. These requirements could severely limit the market liquidity of our common stock and the ability of our stockholders to sell our common stock in the secondary market. We cannot assure you that our common stock and/or warrants, if delisted from Nasdaq, will be listed on another securities exchange or quoted on an over-the counter quotation system. If our common stock is delisted, it may come within the definition of “penny stock” as defined in the Exchange Act and would be covered by Rule 15g-9 of the Exchange Act. That Rule imposes additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and accredited investors which may further limit the market liquidity of our common stock and the ability of our stockholders to sell our common stock in the secondary market.

Item 6. EXHIBITS.

The following documents are included as exhibits to this Quarterly Report on Form 10-Q:

 

				Incorporated by Reference
Exhibit Number		Exhibit Description		Form		Period Ending		Exhibit		Filing Date
3.1		Certificate of Amendment		8.K		09/08/23		3.1		09/11/23
10.1	+	Form of Executive Severance Agreement		8-K		07/28/23		10.1		07/28/23
10.2	* +	Form of Amended and Restated 2022 PSU Award Agreement
31.1	*	Certification of Chief Executive Officer of Leafly pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	*	Certification of Chief Financial Officer of Leafly pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	#	Certifications of Chief Executive Officer and Chief Financial Officer of Leafly pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	***	Inline XBRL Instance Document
101.SCH	****	Inline XBRL Taxonomy Extension Schema Document
101.CAL	****	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	****	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	****	Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	****	Inline XBRL Taxonomy Extension Definition Linkbase Document
104	***	Cover Page Interactive Data File

 

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*	Filed herewith.
***	The XBRL Instance Document and Cover Page Interactive Data File do not appear in the Interactive Data File because their XBRL tags are embedded within the Inline XBRL document.
****	Submitted electronically herewith.
#	In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibit 32 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act except to the extent that the registrant specifically incorporates it by reference.
+	Management contract or compensation plan or arrangement.

 

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SIGNATURES

Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 13, 2023.

 

	Leafly Holdings, Inc.
	By:	/s/ Yoko Miyashita
		Yoko Miyashita
		Chief Executive Officer
	By:	/s/ Suresh Krishnaswamy
		Suresh Krishnaswamy
		Chief Financial Officer

 

 

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