lfly-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 March 31, 2022


☐			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.)
111 South Jackson Street, Suite 531 Seattle, Washington						98104
(Address of principal executive offices)						(Zip Code)

(206) 455-9504

(Registrant’s telephone number, including area code)

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

Securities registered pursuant to Section 12(g) of the Act: None

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 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. Yes ☐ No ☒

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

As of May 4, 2022, the registrant had 42,923,932 shares of common stock ($0.0001 par value) outstanding.

Table of Contents


		Page
Part I	Financial Information	2
Item 1.	Condensed Consolidated Financial Statements (unaudited)	2
	Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 (audited)	2
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021	3
	Condensed Consolidated Statements of Changes in Stockholders Equity (Deficit) for the Three Months Ended March 31, 2022 and 2021	4
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29

Part II	Other Information	30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31
Signatures		32

Cautionary Note Regarding Forward-Looking Statements

This 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,” “contemplate,” “believe,” “estimate,” “intend,” “project,” “budget,” “forecast,” “anticipate,” “plan,” “may,” “will,” “could,” “should,” “predict,” “potential,” 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:

•discuss future expectations;

•contain projections of future results of operations or financial condition; or

•state other “forward-looking” information.

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 2021 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:

•the Company’s inability to raise sufficient capital to execute its business plan;

•the size, demands and growth potential of the markets for the Company’s products and services and the Company’s ability to serve those markets;

•the degree of market acceptance and adoption of the Company’s products and services;

•the Company’s ability to attract and retain customers;

•the Company’s ability to raise financing in the future;

•the Company’s success in retaining or recruiting officers, key employees or directors;

•the impact of the regulatory environment and complexities with compliance related to such environment, including compliance with restrictions imposed by federal law; and

•factors relating to the business, operations and financial performance of the Company and its subsidiaries.

Part I - Financial Information

Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

LEAFLY HOLDINGS, INC

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)


	March 31, 2022		December 31, 2021
	(unaudited)		(audited)
ASSETS
Current assets
Cash and cash equivalents	$	35,389	$	28,565
Accounts receivable, net of allowance for doubtful accounts of $1,682 and $1,848, respectively	3,280		2,958
Deferred transaction costs	—		2,840
Prepaid expenses and other current assets	7,318		1,347
Restricted cash	37,224		130
Total current assets	83,211		35,840
Property, equipment, and software, net	1,035		313
Total assets	84,246		36,153

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable	$	2,875	$	3,048
Accrued expenses and other current liabilities	3,898		8,325
Deferred revenue	2,566		1,975
Convertible promissory notes, net	—		31,377
Forward share purchase agreements derivative liability	7,452		—
Total current liabilities	16,791		44,725

Non-current liabilities
Convertible promissory notes, net	28,461		—
Private warrants derivative liability	7,989		—
Escrow shares derivative liability	10,129		—
Shareholder earn-out rights derivative liability	35,912		—
Total non-current liabilities	82,491		—

Commitments and contingencies (Note 8)

Stockholders' deficit
Preferred stock; $0.0001 par value; 5,000 and 6,578 authorized, — and 6,140 issued and outstanding, and aggregate liquidation preference of $— and $19,436 at March 31, 2022 and December 31, 2021, respectively	—		1
Common stock; $0.0001 par value; 200,000 and 69,361 authorized at March 31, 2022 and December 31, 2021, respectively; 42,961 and 25,086 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	4		3
Additional paid-in capital	74,106		61,194
Accumulated deficit	(89,146)		(69,770)
Total stockholders' deficit	(15,036)		(8,572)
Total liabilities and stockholders' deficit	$	84,246	$	36,153

See Notes to Condensed Consolidated Financial Statements.

LEAFLY HOLDINGS, INC

CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED

(in thousands, except per share amounts)


	Three Months Ended March 31,
	2022		2021
Revenue	$	11,420	$	9,475
Cost of revenue	1,455		1,090
Gross profit	9,965		8,385
Operating expenses
Sales and marketing	7,014		3,803
Product development	3,465		3,170
General and administrative	6,931		2,506
Total operating expenses	17,410		9,479
Loss from operations	(7,445)		(1,094)
Interest (expense) income, net	(697)		1
Change in fair value of derivatives	(10,397)		—
Other expense, net	(837)		(16)
Net loss	$	(19,376)	$	(1,109)

Basic and diluted loss per share	$	(0.52)	$	(0.04)
Weighted-average basic and diluted shares outstanding	37,525		30,904

See Notes to Condensed Consolidated Financial Statements.

LEAFLY HOLDINGS, INC

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) - UNAUDITED

(in thousands)


	Preferred Stock		Common Stock			Additional Paid-In Capital	Accumulated Deficit	Total
	Shares	Amount	Shares	Amount
Balance at December 31, 2021	6,140	1	25,086	$	3	61,194	(69,770)	$	(8,572)
Net loss	—	—	—	—		—	(19,376)	(19,376)
Stock-based compensation	—	—	—	—		1,924	—	1,924
Exercise of stock options	—	—	114	—		127	—	127
Conversion of 2021 Notes into Common Stock at merger	—	—	4,128	—		33,024	—	33,024
Conversion of Preferred Stock into Common Stock at merger	(6,140)	(1)	6,140	1		—	—	—
Merger and recapitalization, net of fees	—	—	2,007	—		27,997	—	27,997
Stockholder contribution for debt issuance costs	—	—	—	—		924	—	924
Escrow shares derivative liability	—	—	1,625	—		(6,867)	—	(6,867)
Private warrants derivative liability	—	—	—

SEC Form 10-Q filed by Leafly Holdings Inc.