Leafly Holdings, Inc. /DE (Form: 10-Q, Received: 05/15/2025 06:09:58)

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Table of Contents

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 March 31, 2025


☐	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.)
600 First Avenue, Suite 330, PMB 88154 Seattle, Washington	98104-2246
(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: 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 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 May 5, 2025, the registrant had 3,137,380 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents

INDEX


		Page
	Cautionary Note Regarding Forward-Looking Statements	2
Part I	Financial Information
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024	3
	Consolidated Statements of Operations for the Three Months Ended March 31, 2025 and 2024	4
	Consolidated Statements of Changes in Stockholders Deficit for the Three Months Ended March 31, 2025 and 2024	5
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	38
Part II	Other Information
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 5.	Other Information	38
Item 6.	Exhibits	39

Table of Contents

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 (referred to herein as, “Leafly” or the “Company” or “we”, “our” or “us”) future financial performance, strategy, operations, operating results, financial position, estimated revenues, losses, projected costs, prospects, plans and objectives of management are forward-looking statements. Forward-looking statements may appear throughout this Quarterly Report, including in the following sections: “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (Part I, Item 2). Words and variations of words, such as “may,” “expect,” “contemplate,” “believe,” “estimate,” “project,” “budget,” “plan,” “will,” “could,” “should,” “predict,” “potential,” “can,” “likely,” “designed,” “seek” and “continue” and similar expressions are intended to identify our forward-looking statements. You should read statements that contain these words carefully because they:

•

discuss future expectations; or

•

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 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, Leafly 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 Leafly 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 December 31, 2024 (the “2024 Annual Report”) 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 Leafly in such forward-looking statements.

These examples include:

•

the substantial doubt regarding the Company’s ability to continue as a going concern because it does not currently have the ability to repay the convertible notes due in July 2025;

•

the Company’s inability to raise sufficient capital or financing in the future to execute its business plan and pay its debt and other obligations when due;

•

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 impact of worldwide economic conditions, including the resulting effect on consumer spending at local cannabis retailers and the level of advertising spending by such retailers;

•

the degree of market acceptance and adoption of the Company’s products, services and pricing changes;

•

the Company’s ability to attract and retain customers;

•

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

•

the Company’s ability to pay its debts as they become due or otherwise resolve its debts with creditors;

•

the impact of the regulatory environment and complexities with compliance related to such environment, including compliance with restrictions imposed by federal law (under which cannabis is illegal) and slower legalization efforts at the state level; and

•

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

Table of Contents

Part I - Financial Information
Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

LEAFLY HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)


	March 31, 2025			December 31, 2024
ASSETS
Current assets
Cash and cash equivalents	$	8,639		$	14,531
Accounts receivable, net of allowance for credit loss of $343 and $370, respectively		1,479			1,573
Prepaid expenses and other current assets		1,126			699
Total current assets		11,244			16,803
Property, equipment, and software, net		2,521			2,593
Restricted cash - long-term portion		242			241
Other assets		—			1
Total assets	$	14,007		$	19,638

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Convertible promissory notes, net	$	25,747		$	29,376
Accounts payable		1,175			684
Accrued expenses and other current liabilities		2,102			3,098
Deferred revenue		1,604			1,518
Total current liabilities		30,628			34,676

Non-current liabilities
Other long-term liabilities		62			71
Total non-current liabilities		62			71
Total liabilities		30,690			34,747

Commitments and contingencies (Note 10)

Stockholders' deficit
Preferred stock: $0.0001 par value; 5,000,000 and 5,000,000 authorized; 0 and 0 issued and outstanding; aggregate liquidation preference of $0 and $0 at March 31, 2025 and December 31, 2024, respectively		—			—
Common stock: $0.0001 par value; 200,000,000 and 200,000,000 authorized; 3,282,858 and 3,229,575 issued at March 31, 2025 and December 31, 2024, respectively		—			—
Treasury stock: 154,055 and 154,055 shares held at March 31, 2025 and December 31, 2024, respectively		(31,663	)		(31,663	)
Additional paid-in capital		96,706			96,499
Accumulated deficit		(81,726	)		(79,945	)
Total stockholders' deficit		(16,683	)		(15,109	)
Total liabilities and stockholders' deficit	$	14,007		$	19,638

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

LEAFLY HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)


	Three Months Ended March 31,
	2025			2024
Revenue	$	7,882		$	9,048
Cost of revenue		802			976
Gross profit		7,080			8,072
Operating expenses
Sales and marketing		2,155			2,620
Product development		2,136			2,413
General and administrative		4,030			4,787
Total operating expenses		8,321			9,820
Loss from operations		(1,241	)		(1,748	)
Interest expense, net		(547	)		(607	)
Other income (expense), net		7			(32	)
Net loss	$	(1,781	)	$	(2,387	)

Net loss per share:
Basic	$	(0.59	)	$	(1.09	)
Diluted	$	(0.59	)	$	(1.09	)

Weighted average shares outstanding:
Basic		3,031,626			2,196,161
Diluted		3,031,626			2,196,161

See Notes to Condensed Consolidated Financial Statements.

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LEAFLY HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(in thousands except share amounts)


	Three Months Ended March 31, 2025
	Preferred Stock				Common Stock					Treasury Stock						Additional Paid-In Capital			Accumulated Deficit			Total
	Shares		Amount		Shares			Amount		Shares			Amount

Balance at January 1, 2025		—	$	—		3,229,575		$	—		(154,055	)	$	(31,663	)	$	96,499		$	(79,945	)	$	(15,109	)
Net loss		—		—		—			—		—			—			—			(1,781	)		(1,781	)
Stock-based compensation		—		—		—			—		—			—			209			—			209
Issuance of common stock upon vesting of restricted stock units		—		—		59,703			—		—			—			—			—			—
Tax payments related to shares retired for vested restricted stock units		—		—		(6,420	)		—		—			—			(2	)		—			(2	)
Balance at March 31, 2025		—	$	—		3,282,858		$	—		(154,055	)	$	(31,663	)	$	96,706		$	(81,726	)	$	(16,683	)

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LEAFLY HOLDINGS, INC

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT (Continued)

(in thousands except share amounts)


	Three Months Ended March 31, 2024
	Preferred Stock				Common Stock					Treasury Stock						Additional Paid-In Capital			Accumulated Deficit			Total
	Shares		Amount		Shares			Amount		Shares			Amount

Balance at January 1, 2024		—	$	—		2,392,568		$	—		(154,055	)	$	(31,663	)	$	93,403		$	(74,198	)	$	(12,458	)
Net loss		—		—		—			—		—			—			—			(2,387	)		(2,387	)
Stock-based compensation		—		—		—			—		—			—			598			—			598
Issuance of common stock under ESPP		—		—		8,443			—		—			—			16			—			16
Issuance of common stock upon vesting of restricted stock units		—		—		63,019			—		—			—			—			—			—
Tax payments related to shares retired for vested restricted stock units		—		—		(8,474	)		—		—			—			(40	)		—			(40	)
Balance at March 31, 2024		—	$	—		2,455,556		$	—		(154,055	)	$	(31,663	)	$	93,977		$	(76,585	)	$	(14,271	)

See Notes to Condensed Consolidated Financial Statements.

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LEAFLY HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Three Months Ended March 31,
	2025			2024
Cash flows from operating activities
Net loss	$	(1,781	)	$	(2,387	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		421			329
Stock-based compensation expense		209			598
Credit loss, net of recoveries		267			496
Gain on disposition of assets		—			(2	)
Noncash amortization of debt discount		49			136
Noncash change in fair value of derivatives		(10	)		(14	)
Other		—			1
Changes in operating assets and liabilities:
Accounts receivable		(173	)		(13	)
Prepaid expenses and other current assets		(426	)		266
Accounts payable		491			(173	)
Accrued expenses and other current liabilities		(995	)		(223	)
Deferred revenue		86			113
Net cash used in operating activities		(1,862	)		(873	)

Cash flows from investing activities
Additions of property, equipment, and software		(349	)		(211	)
Proceeds from sale of property and equipment		—			2
Net cash used in investing activities		(349	)		(209	)

Cash flows from financing activities
Issuance of common stock under ESPP		—			16
Tax payments related to shares retired for vested restricted stock units		(2	)		(40	)
Repayments of related party payables		—			(90	)
Repayments of convertible notes		(3,678	)		—
Net cash used in financing activities		(3,680	)		(114	)

Net decrease in cash, cash equivalents, and restricted cash		(5,891	)		(1,196	)
Cash, cash equivalents, and restricted cash, beginning of period		14,772			15,544
Cash, cash equivalents, and restricted cash, end of period	$	8,881		$	14,348


	Three Months Ended March 31,
	2025		2024
Supplemental disclosure of non-cash financing activities:
Short-term financing of insurance payable	$	—	$	(1,399	)

See Notes to Condensed Consolidated Financial Statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

NOTE 1 — Description of the Business

Description of the Business

Leafly Holdings, Inc. (“Leafly” or “the Company”) is an 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 current events. Leafly was incorporated in the state of Delaware on June 20, 2019 and is headquartered in Seattle, Washington.

The Company has three wholly-owned subsidiaries, Leafly Canada Ltd., Leafly Deutschland GmbH and Leafly, LLC (“Legacy Leafly”). Legacy Leafly is the accounting predecessor of Leafly. The accompanying consolidated financial statements include the financial results of the Company and its wholly-owned subsidiaries.

On February 4, 2022, Leafly consummated a series of transactions (collectively, the “Merger”) with a public company pursuant to the Agreement and Plan of Merger dated August 9, 2021 and amended on September 8, 2021 and on January 11, 2022 (as amended, the “Merger Agreement”) with the objective of becoming a public company. The Merger and the other transactions contemplated by the Merger Agreement and the other agreements entered into Leafly in connection with the Merger are collectively referred to as the “Business Combination.”

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except share and per share amounts)

NOTE 2 — Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The interim condensed consolidated financial statements have been prepared in accordance with GAAP and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting and should be read in conjunction with the Company's audited consolidated financial statements for the years ended December 31, 2024 and 2023, and Management’s Discussion and Analysis of Financial Condition and Results of Operations of Leafly for the year ended December 31, 2024, each of which was filed with the SEC on March 31, 2025 (the “2024 Financial Information”).

These condensed consolidated financial statements are unaudited and, in management's opinion, include all adjustments, consisting of normal recurring estimates and accruals necessary for a fair presentation of our consolidated cash flows, operating results, and balance sheets for the periods presented. Actual results may differ from these estimates and assumptions. The results of operations for any interim periods are not necessarily indicative of the results that may be expected for the entire fiscal year or any other interim period. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the SEC for interim reporting. All intercompany balances and transactions have been eliminated upon consolidation.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

Under the rules of Accounting Standards Codification (“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. At March 31, 2025, the Company had $25,747 of 2022 Notes maturing on July 1, 2025 (Note 9). Based on the Company’s current liquidity position, it would not be able to repay the 2022 Notes when due. In addition, Leafly has 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. The Company has incurred operating losses since its inception and had an accumulated deficit of $81,726 and $79,945 at March 31, 2025 and December 31, 2024, respectively. These conditions, when considered in the aggregate, raise substantial doubt about Leafly’s ability to continue as a going concern within one year of the date these financial statements are issued. In response to these conditions, the Company took the following actions:

•

With the Company’s de-listing from Nasdaq, management is considering options including but not limited to taking the Company private in order to save significant costs associated with operating as a public company. To that end, in March 2025, the Company filed post-effective amendments to all of its existing registration statements on Form S-8s and its registration statement on Form S-3, removing from registration any unsold securities. In addition, the Company has determined to submit to its shareholders for approval at the Company’s annual meeting a reverse stock split, which if executed would result in a reduction in the number of the Company’s record holders to a number that would allow the Company to suspend its ongoing reporting obligations (Note 11, Note 18).

The Company’s management is closely monitoring and reducing operating expenses where it is able to, while ensuring the trajectory and viability of the business remains intact. However, the Company cannot meet its debt maturity obligations without a significant capital infusion or a lender’s commitment to refinance the debt. After considering all available evidence, Leafly’s management determined that, the combined impact of the cost reduction measures outlined above, Leafly’s current negative working capital of $19,384 as of March 31, 2025 and planned operations will not be sufficient to meet its capital

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except share and per share amounts)

requirements for a period of at least 12 months from the date that these March 31, 2025 financial statements are issued and that substantial doubt exists about Leafly’s ability to continue as a going concern.

The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Seasonality

We may experience seasonality in our business, which we believe has moderate impacts on our overall revenue. In certain years, we've seen seasonal fluctuations that coincide with either federal holidays, generally in the fourth quarter, or industry holidays and events, generally in the spring. Our industry and business history is limited and therefore we cannot be certain that these are known trends or that other trends may develop.

Use of Estimates

The preparation of financial statements 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, and reported amounts of revenue and expenses in the condensed consolidated financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates. Such estimates include those related to the allowance for credit losses; the valuation allowance for deferred income tax assets; the fair value of the convertible promissory notes; the estimate of capitalized software costs and useful life of capitalized software; and the fair value of equity issuances. Management bases its estimates on historical experience, knowledge of current events and actions it may undertake in the future that management believes to be reasonable under the circumstances. Actual results may differ from these estimates and assumptions.

Significant Accounting Policies

The unaudited interim financial statements should be read in conjunction with the Company's 2024 Financial Information, which describes the Company's significant accounting policies. There have been no material changes to the Company's significant accounting policies during the three months ended March 31, 2025 compared to the Company’s 2024 Financial Information.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09 — Income Taxes (Topic 740). This ASU expands income tax disclosures to provide information to better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. This ASU is effective for Leafly’s 2025 year-end income tax disclosures.

Accounting Pronouncements Issued But Not Yet Adopted

In 2024, the FASB issued ASU 2024-03 — Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). This ASU requires separate disclosure of additional line items within costs and expenses in the financial statements, including but not limited to: employee compensation, depreciation, intangible asset amortization, total selling expenses, etc.. This ASU is effective for annual fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, as clarified by ASU 2025-01.

In 2024, the FASB issued ASU 2024-04 — Debt—Debt with Conversion and Other Options (Subtopic 470-20) Induced Conversions of Convertible Debt Instruments. This ASU addresses how to determine whether a settlement of convertible debt (particularly, cash convertible instruments) at terms that differ from the original conversion terms should be accounted

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except share and per share amounts)

for under the induced conversion or extinguishment guidance. This ASU is effective for fiscal years beginning after December 15, 2025.

Any other recently issued accounting standards or pronouncements not disclosed above have been excluded as they are not relevant to the Company, or they are not expected to have a material impact on the consolidated financial statements.

NOTE 3 — Cash, Cash Equivalents, and Restricted Cash

Cash, cash equivalents, and restricted cash consisted of the following:


	March 31, 2025		December 31, 2024

Cash and cash equivalents	$	8,639	$	14,531
Restricted cash - long-term portion		242		241
	$	8,881	$	14,772

Restricted cash relates to collateral for general banking and credit card processing.

NOTE 4 — Accounts Receivable, Net

Accounts receivable, net of $1,479 and $1,573 as of March 31, 2025 and December 31, 2024, respectively, consisted of amounts due from customers less an allowance for credit loss. For further information about revenue and deferred revenues, see Note 8.

The following table presents the allowance for credit loss and the changes therein:


	Three Months Ended March 31,
	2025			2024

Balance, beginning of period	$	370		$	1,398
Add: provision for credit loss, net of recoveries		267			496
Less: write-offs		(294	)		(1,100	)
Balance, end of period	$	343		$	794

NOTE 5 — Prepaid Expenses and Other Assets

Prepaid expenses and other assets consisted of the following:


	March 31, 2025		December 31, 2024

Prepaid subscriptions	$	365	$	410
Prepaid insurance		604		158
Other prepaid assets		47		25
Other current assets		110		106
Subtotal, current portion		1,126		699
Prepaid expenses, long-term portion		—		1
Total	$	1,126	$	700

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except share and per share amounts)

NOTE 6 — Property, Equipment, and Software, Net

Property, equipment, and software consisted of the following:


	March 31, 2025			December 31, 2024

Furniture and equipment	$	503		$	504
Capitalized internal-use software		5,401			5,054
		5,904			5,558
Less: accumulated depreciation and amortization		(3,383	)		(2,965	)
	$	2,521		$	2,593

The Company recognized depreciation and amortization expense as follows:


	Three Months Ended March 31,
	2025		2024

Depreciation expense	$	15		16
Amortization of capitalized internal-use software		406		313
Total depreciation and amortization	$	421	$	329

During the three months ended March 31, 2024, the Company disposed of equipment with a book value of $0 for $2, resulting in a gain on disposal of $2.

NOTE 7 — Accrued Expenses and Other Current Liabilities

Accrued expenses consisted of the following:


	March 31, 2025		December 31, 2024

Other employee-related liabilities	$	799	$	908
Accrued interest		395		967
Accrued bonuses		194		499
Other accrued expenses 1		714		724
	$	2,102	$	3,098

There are no individual items within this balance that exceed 10% of the total of the table.

NOTE 8 — Deferred Revenue and Revenue by Type

Deferred Revenue

Contract liabilities consist of deferred revenue, which is recorded on the Consolidated Balance Sheets when the Company has received consideration, or has the right to receive consideration, in advance of transferring the performance obligations under the contract to the customer.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except share and per share amounts)

The following table presents the Company's deferred revenue balances and changes therein:


	Three Months Ended March 31,
	2025			2024

Balance, beginning of period	$	1,518		$	1,764
Add: net increase in current period contract liabilities		1,406			1,550
Less: revenue recognized from beginning balance		(1,320	)		(1,437	)
Balance, end of period	$	1,604		$	1,877

A majority of the deferred revenue balance as of March 31, 2025 is expected to be recognized in the subsequent 12-month period. No other contract assets or liabilities are recorded on the Company’s Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024.

Revenue by Type and Geography

The following table presents the Company's revenue by service type:


	Three Months Ended March 31,
	2025		2024

Advertising	$	7,683	$	8,880
Other services		199		168
	$	7,882	$	9,048

The following table presents the Company's revenue by geographic region:


	Three Months Ended March 31,
	2025		2024

United States	$	7,574	$	8,629
All other countries		308		419
	$	7,882	$	9,048

The following table presents the Company's revenue by state:


	Three Months Ended March 31,
	2025			2024

Arizona		24	%		24	%
California		11	%		11	%
Oregon		10	%		11	%

No other state comprised 10% or more of Leafly’s revenue during the three months ended March 31, 2025 and 2024. We have a diversified set of customers; no single customer accounted for 10% or more of our revenue for the three months ended March 31, 2025 or 2024.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except share and per share amounts)

The following table presents the Company's revenue by timing of recognition:


	Three Months Ended March 31,
	2025		2024
Over Time
Retail 1	$	6,946	$	7,871
Brands 2		724		843
		7,670		8,714
Point in time
Brands 3		212		334
	$	7,882	$	9,048

Revenues from subscription services and display ads.

Revenues from brand profile subscriptions and digital media (including display ads and audience extension).

Revenues from channel advertising (including direct to consumer email).

Revenues recognized over time are associated with software subscriptions, display ads and audience extension. Revenues recognized at a point in time are associated with branded content and channel advertising. There are no material variations in delivery and revenue recognition periods within the over time category.

NOTE 9 — Convertible Promissory Notes

2022 Notes

Merida entered into a $30,000 convertible note purchase agreement (the “Note Purchase Agreement”) in January 2022, which Legacy Leafly subsequently guaranteed and joined as a party to the agreement on February 4, 2022 in connection with the Business Combination (the “2022 Notes”). Accordingly, post-Business Combination, the 2022 Notes are presented as a liability on Leafly's balance sheet, net of debt issuance costs and debt discount. The Company recognized initial debt issuance costs of $714 paid in cash, and a debt discount of $924 paid in shares transferred by Merida Holdings, LLC (the “Sponsor”) to the holders of the 2022 Notes upon issuance. The 2022 Notes bear interest at 8% annually (with an effective interest rate of 9.0% for the three months ended March 31, 2025), paid in cash semi-annually in arrears on July 31 and January 31 of each year, and were scheduled to mature on January 31, 2025 until they were modified as described below.

The 2022 Notes were unsecured convertible senior notes due 2025. They are convertible at the option of the holders at any time before maturity at an initial conversion share price of $250.00 per $1,000 principal amount of 2022 Notes and per $1,000 of accrued but unpaid interest on any converted 2022 Notes. In addition, the Company may, at its election, force the conversion of the 2022 Notes on or after January 31, 2024, if the volume-weighted average trading price of the Company’s common stock exceeds $360.00 for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days. The Company also had the option (which was never exercised) on or after January 31, 2023 and prior to the 40th trading day immediately before the maturity date and subject to the holders’ ability to optionally convert, to redeem all or a portion of the 2022 Notes at a cash redemption price equal to 100% of the principal amount of the 2022 Notes, plus accrued and unpaid interest, if any. The holders of the 2022 Notes have the right to cause the Company to repurchase for cash all or a portion of the 2022 Notes held by such holder upon the occurrence of a “fundamental change” (as defined in the

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except share and per share amounts)

Note Purchase Agreement) or in connection with certain asset sales, in each case at a price equal to 100% of par plus accrued and unpaid interest, if any.

2023 and 2024 Partial Conversions

On December 19, 2023 and May 7, 2024, the Company and each of the 2022 Note holders executed notices of conversion and consent (the “Conversion Notices”) to effect a temporary and limited adjustment to the conversion price under the 2022 Notes. Pursuant to the Conversion Notices, on December 19, 2023, one holder tendered a conversion request for $300, resulting in the issuance of an aggregate of 60,265 shares of common stock and a corresponding reduction in the outstanding amount of the 2022 Notes of $300. On May 7, 2024, one holder tendered a conversion request for $275, resulting in the issuance of an aggregate of 96,813 shares of common stock and a corresponding reduction in the outstanding amount of the 2022 Notes of $275. The Company accounted for these December 19, 2023 and May 7, 2024 transactions as debt modifications and recognized the change in the fair value of the conversion feature as additional debt discount and an increase to additional paid-in capital of $24 and $18, respectively. Following such tenders and in accordance with the terms of the Conversion Notices, the Conversion Price Adjustments were terminated.

2025 Modification

On January 15, 2025, the Company entered into an amendment (the “Amendment”) to the terms of the Note Purchase Agreement, relating to the 2022 Notes. Concurrently with the Amendment, the Company entered into an amended and restated note (the “Amended and Restated Note”) for the 2022 Notes. As of January 15, 2025, the carrying value and the fair value of the debt were $29,376 and $29,400, respectively. The Amendment and the Amended and Restated Note, among other things, (i) extended the maturity date of the 2022 Notes from January 31, 2025 to July 1, 2025 and (ii) added certain financial maintenance covenants. In addition, the Company agreed to pay down 12.5% of the outstanding principal of the Notes and all accrued and unpaid interest on the Notes since the last interest payment date on July 31, 2024. Accordingly, the prepayment of $3,678 and interest payment of $1,118 occurred on January 21, 2025. In connection with the Amendment, the Company also granted the holders of the 2022 Notes a security interest in the Company’s assets as collateral to secure the Company’s obligations underlying the 2022 Notes, subject to certain exceptions and limitations.

The aforementioned new financial maintenance covenants required by the Amendment include primarily:

•

maintenance of monthly revenue equivalent to at least $30,000 on an annualized basis beginning January 1, 2025 to be certified on a monthly basis;

•

maintenance of trailing quarterly Adjusted EBITDA of greater than negative $500 beginning with the first quarter of 2025;

•

maintenance of a minimum Liquidity (defined as unrestricted cash and cash equivalents) of $4,500 at all times after the amendment effective date to be certified on a monthly basis; and

•

quarterly and annual financial statement reporting requirements.

As of the date of this Report, the Company was in compliance we these covenants.

Except as set forth above, the terms of the 2022 Notes remain the same. The Company accounted for the amendment to the 2022 Notes as a modification and expensed fees paid to third parties aggregating approximately $577.

Carrying Amount and Fair Value

As of March 31, 2025, the carrying amount of the 2022 Notes was $25,747, which reflects the partial conversions and principal reduction noted above. The estimated fair value of the convertible debt instruments was approximately $17,100 as of March 31, 2025. The fair value of the 2022 Notes at January 15, 2025 was measured using the Bloomberg OVCV model and CNVI model which modifies the underlying OVCV program. These models incorporate inputs for volatility (85%),

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except share and per share amounts)

Leafly’s stock price ($1.44 per share), time to maturity, the risk-free rate (4.3%) and Leafly’s credit spread (3.92%), some of which are considered Level 3 inputs in the fair value hierarchy. Due to the significant change in marketability of the Company’s stock upon delisting from the Nasdaq exchange on January 17, 2025, a new valuation approach was used as of March 31, 2025. The estimated fair value of the 2022 Notes at March 31, 2025 was measured using a binomial-scenario based model with two scenarios: assuming (i) 50% probability of full repayment or extension and (ii) 50% probability of default, each discounted using a risk-free rate of 4.32%.

NOTE 10 — Commitments and Contingencies

In the normal course of business, the Company may receive inquiries or become involved in legal disputes regarding various litigation matters. In the opinion of management, any potential liabilities resulting from such claims would not have a material adverse effect on the Company’s consolidated financial statements.

Leases

The Company does not have any leases with an original term longer than 12 months as of March 31, 2025. The Company has short-term arrangements with immaterial rental obligations for office space.

Nasdaq Notifications of Noncompliance

On April 9, 2024, the Company received a letter from the Staff (the “Notice”) notifying the Company that it no longer complies with Nasdaq's requirements contained in Nasdaq Listing Rule 5550 for companies traded on the Nasdaq Capital Market (the “Capital Market”). Nasdaq Listing Rule 5550 requires a company listed on the Capital Market to continuously meet at least one of the following requirements set forth in Nasdaq Listing Rule 5550(b) (the “Continued Listing Standards”):


Continued Listing Standard		Requirement

“Stockholders’ Equity”		Minimum $2.5 million

“Market Value of Listed Securities”		Minimum $35 million

“Net Income”		Minimum $500 thousand from continuing operations – most recent fiscal year or in two of three of last three fiscal years

As confirmed by the Notice, the Company did not meet (and does not currently meet) any of the Continued Listing Standards depicted above. On January 15, 2025, the Company received written notification (the “Delisting Notice”) from Nasdaq that the Nasdaq Hearing Panel (“Panel”) has determined to delist the Company’s common stock and warrants and suspend trading of the securities at the open of trading on January 17, 2025. In connection with the Panel’s decision, the Company filed a Form 25 on March 12, 2025 with the SEC in accordance with Nasdaq Listing Rule 5830 and Rule 12d2-2 promulgated under the Securities Exchange Act of 1934, as amended.

As a result of the suspension in trading and expected delisting, the Company’s common stock and warrants began trading publicly on the OTC Pink Open Market under its existing symbols “LFLY” and “LFLYW,” respectively effective January 17, 2025. In March 2025, the Company filed post-effective amendments to all of its existing registration statements on Form S-8s and its registration statement on Form S-3, removing from registration any unsold securities. In addition, the Company has determined to submit to its shareholders for approval at the Company’s annual meeting a reverse stock split (Note 18),

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except share and per share amounts)

which if executed would result in a reduction in the number of the Company’s record holders to a number that would allow the Company to suspend its ongoing reporting obligations.

The Company is party to a number of agreements pursuant to which it has contractual covenants related to ongoing registration and information requirements. With Leafly’s securities being delisted from the Capital Market and terminating its shelf registration statement on Form S-3, the Company may become out of compliance with certain covenants under these agreements. Such breach, if not cured or waived by holders of such securities, could result in litigation and, with respect to the 2022 Notes, could result in an acceleration of principal amount of the 2022 Notes. Any of the foregoing would materially and adversely affect the Company’s business, financial condition and results of operations.

NOTE 11 — Stockholders’ Deficit

Common Stock

Authorized Shares

As of March 31, 2025 and December 31, 2024, Leafly's authorized capital stock consisted of:

•

200,000,000 shares of Leafly common stock, $0.0001 par value per share; and

•

5,000,000 shares of Leafly preferred stock, $0.0001 par value per share. See Note 18.

Withdrawal of Registration Statements

On March 12, 2025, the Company filed post-effective amendments to all of its existing registration statements on Form S-8s and its registration statement on Form S-3, removing from registration any unsold securities. This is a prerequisite, among others, to the Company’s ability to suspend its ongoing reporting obligations.

Sponsor Shares Subject to Earn-Out Conditions (Escrow Shares)

In accordance with the Merger Agreement, upon closing of the Business Combination, 81,260 of the shares of the Company’s common stock held by the Sponsor were placed in escrow and subjected to earn-out conditions (“Escrow Shares”). Of these Escrow Shares, 50% will be released from escrow if and when the Company's common stock trades at or above $270.00 for 20 out of 30 consecutive trading days at any time during the two-year period following closing of the Business Combination, and the remaining 50% will be released from escrow if and when the Company's common stock trades at or above $310.00 for 20 out of 30 consecutive trading days at any time during the three-year period following closing of the Business Combination. In addition, all 81,260 Escrow Shares would have been released upon a change in control. The three-year period following the closing of the Business Combination ended on February 4, 2025, and none of the earnout conditions were met. Through the end the three-year period, we accounted for the Escrow Shares as derivative liabilities, remeasured to fair value on a recurring basis, with changes in fair value recorded to earnings.

ATM Offering

On June 27, 2024, the Company entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with The Benchmark Company, LLC (the “Agent”) pursuant to which the Company could sell (the “ATM Offering”), at its option, up to an aggregate of $2,519 in shares of Leafly common stock through the Agent. The ATM Offering, was made pursuant to a shelf registration statement by methods deemed to be “at the market,” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. The Company agreed to pay the Agent a commission in cash equal to 3% of the gross proceeds from the sale of shares in the ATM Offering. The offering of Shares pursuant to the Equity Distribution Agreement terminated upon the termination of the Equity Distribution Agreement as permitted therein when Leafly became delisted

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except share and per share amounts)

from the Capital Market (Note 10). The Company agreed to reimburse the Agent for the fees and disbursements of its counsel, payable upon execution of the Equity Distribution Agreement, in an amount not to exceed $50 in connection with the establishment of this at-the-market offering program, in addition to certain ongoing fees of its legal counsel. During the three and nine months ended September 30, 2024, the Company sold 470,000 shares of common stock at an average price of $2.42 per share and raised gross proceeds totaling $1,137 under the ATM Offering including commissions of $34. In addition, during the three and nine months ended September 30, 2024, the Company incurred $195 of costs in connection with launching its ATM Offering. No subsequent transactions were made under the ATM offering.

Treasury Stock

Effective August 1, 2022, the Company repurchased 154,055 shares of its common stock at a weighted-average price of $205.60 per share for a total of $31,663. These repurchases were in settlement of the forward purchase agreements issued in the Business Combination.

Stockholder Earn-Out Rights

Leafly stockholders, as of immediately prior to the closing of the Business Combination, were granted upon closing of the Business Combination, contingent rights to receive up to 271,454 shares of common stock (the “Rights”) if the Company achieves certain earn-out conditions prior to the third anniversary of the Business Combination on February 4, 2025. None of the conditions were achieved. The Company accounted for the Rights as derivative liabilities, which were remeasured to their fair value as of the end of each reporting period, with changes in the fair value recorded to earnings.

Preferred Stock

The Board is authorized, subject to limitations prescribed by the law of the State of Delaware, to issue Leafly preferred stock from time to time in one or more series. The Board is authorized to establish the number of shares to be included in each such series and to fix the voting rights, if any, designations, powers, preferences and relative, participating, optional, special and other rights, if any, and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. The Board is able, without stockholder approval, to issue Leafly preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the Leafly common stock and could have anti-takeover effects. The ability of the Board to issue Leafly preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change of control of Leafly or the removal of existing management. Leafly did not have any issued and outstanding shares of preferred stock as of March 31, 2025 or December 31, 2024.

NOTE 12 — Warrants

Warrants

Public Warrants

At each of March 31, 2025 and December 31, 2024, there were 7,105,772 warrants outstanding to purchase an aggregate of 355,288 shares of common stock that had been included in the units issued in Merida’s initial public offering (the “Public Warrants”). Each Public Warrant entitles the holder to purchase 0.05 shares of common stock at an exercise price of $230.00 per whole share. Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants became exercisable 30 days after the closing of the Business Combination. The Public Warrants may not be exercisable for cash unless the Company has an effective and current registration statement covering the shares of common stock issuable upon exercise of the Public Warrants and a current prospectus relating to such shares of common stock.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except share and per share amounts)

Notwithstanding the foregoing, during any period when the Company shall have failed to maintain an effective registration statement, warrant holders may exercise their Public Warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their Public Warrants on a cashless basis. The Public Warrants will expire five years after the Closing of the Business Combination (February 4, 2027) or earlier upon redemption or liquidation.

The Company may redeem the Public Warrants:

•

in whole and not in part;

•

at a price of $0.20 per warrant;

•

upon not less than 30 days’ prior written notice of redemption;

•

if, and only if, the reported last sale price of the Company’s common stock equals or exceeds $360.00 per share for any 20 trading days within a 30-trading day period commencing after the warrants became exercisable and ending on the third business day prior to the notice of redemption to the warrant holders; and

•

if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying the warrants.

If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.

Private Warrants

At each of March 31, 2025 and December 31, 2024, there were 3,345,215 warrants outstanding to purchase an aggregate of 167,260 shares of common stock that Merida had sold to the Sponsor and EarlyBirdCapital in a private placement that took place simultaneously with Merida’s initial public offering (the “Private Warrants”). The Private Warrants are identical to the Public Warrants, except that the Private Warrants and the shares of common stock issuable upon the exercise of the Private Warrants were not transferable, assignable or salable until after the closing of the Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants are exercisable for cash or on a cashless basis, at the holder’s option, and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants are redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. The exercise price and number of shares of common stock issuable upon exercise of the Private Warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the Private Warrants will not be adjusted for issuance of common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Private Warrants.

The Company accounts for the Private Warrants as derivative liabilities, remeasured to fair value on a recurring basis, with changes in the fair value recorded to earnings.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except share and per share amounts)

NOTE 13 — Equity Incentive and Other Plans

The Company currently has three equity plans: the New Leafly 2021 Equity Incentive Plan (the “2021 Plan”), the Legacy Leafly 2018 Equity Incentive Plan (the “2018 Plan”), and the New Leafy Earn-Out Plan (the “Earn-Out Plan”). The Company previously had a New Leafly 2021 Employee Stock Purchase Plan (the “ESPP”), which was terminated effective February 1, 2025. Upon termination, all contributions made during the purchase period ended March 15, 2025 were returned to the respective participants. Activity under the 2021 Plan and the ESPP are detailed below. There were no options or other equity awards granted under the 2018 Plan or the Earn-Out Plan during the three months ended March 31, 2025 or the year ended December 31, 2024. On March 12, 2025, the Company filed post-effective amendments to all of its existing registration statements on Form S-8s and its registration statement on Form S-3, deregistering any unsold securities.

Stock-Based Compensation

2021 Plan

The 2021 Plan became effective immediately upon closing of the Business Combination. Pursuant to the 2021 Plan, 225,125 shares of common stock were initially reserved for issuance. During the term of the 2021 Plan, the number of shares of common stock thereunder automatically increases on each January 1, commencing on January 1, 2023, and ending on (and including) January 1, 2031, by the lesser of (i) 10% of the fully diluted shares of common stock as of the last day of the preceding fiscal year and (ii) 225,125 shares (adjusted pursuant to the terms of the 2021 Plan). Effective January 1, 2025, 270,436 shares of common stock were available for issuance under the 2021 Plan.

2024 Awards

•

During the first quarter of 2024, Leafly awarded a total of 187,024 RSUs, of which 176,168 vested quarterly in 25% increments over one year and 10,856 RSUs are scheduled to vest 50% after one year and 12.5% quarterly thereafter, to Leafly executives and other employees.

•

During the second quarter of 2024, Leafly awarded a total of 24,250 RSUs, of which 22,500 were awarded to the Company’s Board members and are scheduled to vest on June 1, 2025 and the remainder vested immediately.

Stock Options

No options were granted under the 2021 Plan during the three months ended March 31, 2025 or the year ended December 31, 2024.

Stock option activity under the 2021 Plan for the periods presented was as follows:


	Number of Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Term (in years)
Outstanding at January 1, 2025		24	$	39.60	$	—		7.63
Outstanding at March 31, 2025		24		39.60	$	—		7.39

Vested and exercisable		20	$	39.60	$	—		7.39

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except share and per share amounts)

As of March 31, 2025, there was no unrecognized compensation cost related to stock options granted under the 2021 Plan.

Restricted Stock Units and Performance Stock Units

RSU and PSU activity under the 2021 Plan for the periods presented was as follows:


	Number of Shares			Weighted Average Grant Date Fair Value		Total Fair Value
Unvested at January 1, 2025		111,183		$	6.70
Vested		(59,698	)		5.22	$	16
Forfeited		(542	)		6.20
Unvested at March 31, 2025		50,943		$	8.43

As of March 31, 2025, there was $302 total unrecognized compensation cost related to unvested RSUs and $1 total unrecognized compensation cost related to PSUs granted under the 2021 Plan, a majority of which relates to performance-based awards. The total cost is expected to be recognized over a remaining weighted-average remaining period of 1.00 year.

2018 Plan

The 2018 Plan became effective on April 17, 2018. The 2018 Plan terminated upon closing of the Business Combination in 2022, but then-outstanding options under the 2018 Plan remain outstanding pursuant to their terms, with adjustments to the number of shares and exercise prices to reflect the terms of the Business Combination.

The fair value of each stock option award to employees was estimated on the date of grant using the Black-Scholes option pricing model. No grants were made under the 2018 Plan during the three months ended March 31, 2025 or the year ended December 31, 2024.

Stock option activity under the 2018 Plan for the periods presented was as follows:


	Number of Shares1			Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Term (in years)
Outstanding at January 1, 2025		114,923		$	33.93	$	—	3.61
Forfeited or expired		(485	)		21.92
Outstanding at March 31, 2025		114,438		$	33.99	$	—		3.35

Vested and exercisable		72,908		$	29.85	$	—		4.68

Includes 61,635 and 52,803 awards as of March 31, 2025 and 62,120 and 52,803 awards as of December 31, 2024 accounted for as service-based and market-based options, respectively, that are vested, that the Company currently deems probable of vesting, or in the case of market-based options, that the Company is expensing so long as the respective service conditions are met. The market-based options will vest only if the price of the Company's common stock reaches a $1 billion market capitalization target for any 20 days during a 30-day period on or before February 4, 2026, the fourth anniversary of the closing of the Business Combination.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except share and per share amounts)

As of March 31, 2025, there was: (i) $58 of unrecognized compensation cost related to service-based 2018 Plan option awards, which is expected to be recognized over a remaining weighted-average service period of approximately 0.47 years.

Stock-Based Compensation Expense

The following table presents the classification of stock-based compensation expense under the 2021 Plan, the 2018 Plan and the ESPP:


	Three Months Ended March 31,
	2025		2024

Sales and marketing	$	24	$	43
Product development		51		94
General and administrative		134		461
	$	209	$	598

Employee Stock Purchase Plan

The ESPP became effective immediately upon closing of the Business Combination. Pursuant to the ESPP, 56,281 shares of common stock were initially reserved for issuance. During the term of the ESPP, the number of shares of common stock thereunder automatically increases on each January 1, commencing on January 1, 2023 and ending on (and including) January 1, 2031, by the lesser of (i) 2.5% of the fully diluted shares of common stock as of the last day of the preceding fiscal year and (ii) 56,281 shares (as adjusted pursuant to the terms of the ESPP). Effective January 1, 2025, 77,637 shares of common stock were available for issuance under the ESPP and remained available when the plan was terminated effective February 1, 2025.

•

On March 15, 2024, eligible employees purchased 8,443 shares for a total purchase price of $16.

•

On September 15, 2024, eligible employees purchased 5,231 shares for a total purchase price of $8.

•

Effective February 1, 2025, the Company terminated the ESPP and resolved to return to the respective participants all contributions made during the purchase period ending March 15, 2025. No new purchase periods under the ESPP will commence as of the date of termination.

Stock-based compensation expense related the ESPP was as follows for the periods presented:


	Three Months Ended March 31,
	2025		2024

ESPP expense (included in stock-based compensation)	$	1	$	10

Earn-Out Plan

The Earn-Out Plan became effective immediately upon closing of the Business Combination. Pursuant to the Earn-Out Plan, approximately 28,546 shares of common stock were reserved for issuance to employees and certain other eligible parties in the form of RSUs. These RSUs would have vested if the Company achieved certain thresholds prior to the third anniversary of the Business Combination on February 4, 2025, which did not occur. No RSUs have been awarded under the Earn-Out Plan as of March 31, 2025.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except share and per share amounts)

Defined Contribution Plan

The Company recognized expense from matching contributions to the Company-sponsored defined contribution retirement (401k) plan as follows for the periods presented:


	Three Months Ended March 31,
	2025		2024

401(k) matching contributions	$	124	$	141

NOTE 14 — Related Party Transactions

Effective September 1, 2023, the Company entered into a consulting agreement with Peter Lee, at that time a member of the Company’s Board of Directors and currently President and Chief Operating Officer and a Board Member, at a rate of $30 per month for an initial term of two months, extendable for a second term of two months, for a total maximum term of four months. Under the agreement, Mr. Lee was providing the Company with certain consultancy services related to the Company’s business strategies. During the year ended December 31, 2023, Mr. Lee earned $120 under the agreement and, at December 31, 2023, the Company owed $90 to Mr. Lee, which was included in accrued expenses and other current liabilities on Leafly’s consolidated balance sheet at December 31, 2023 and was repaid during the year ended December 31, 2024.

NOTE 15 — Segment Reporting

The Company accounts for its segments under ASC 280. The Company generates revenue through the sale of online advertising and online order reservation enablement on the Leafly platform for suppliers in its two segments: Retail and Brands. Within the Retail segment, the Company sells monthly subscriptions that enable retailers to advertise to and acquire potential shoppers. Within the Brands segment, revenue is derived by creating custom advertising campaigns for brands that target Leafly’s audience and by offering brands profile listings on the Leafly platform, which are sold on a monthly recurring subscription or annual basis.

The Company’s Chief Operating Decision Maker (“CODM”) is the Executive Leadership Team which includes primarily Leafly’s Chief Executive Officer, President and Chief Operating Officer and Chief Financial Officer. The CODM uses operating expenses to measure performance of its Retail and Brands segments. The determination of these two segments is consistent with the financial information regularly provided to the Company’s CODM. The Company’s CODM reviews and evaluates the gross profit for purposes of assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods. The Company does not allocate indirect costs to its segments and therefore only reports segment information for revenue and costs of sales. Assets are not allocated to segments for internal reporting

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except share and per share amounts)

presentations, nor are depreciation and amortization. Segment revenue, cost of sales and gross profit were as follows during the periods presented:


	Three Months Ended March 31,
	2025		2024
Revenue:
Retail	$	6,946	$	7,871
Brands		936		1,177
Total revenue	$	7,882	$	9,048

Retail Cost of Sales:
Merchant Processing fees	$	163	$	181
Business platform		66		195
Website infrastructure		210		207
Labor allocation		232		259
		671		842
Brands Cost of Sales:
Merchant Processing fees		22		27
Website infrastructure		28		31
Labor allocation		31		39
Other		50		37
		131		134
Total cost of sales	$	802	$	976

Gross profit:
Retail	$	6,275	$	7,029
Brands		805		1,043
Total gross profit	$	7,080	$	8,072

Geographic Areas

The Company’s operations are primarily in the U.S. and to a lesser extent, in Canada. Refer to Note 8 for revenue classified by major geographic area.

NOTE 16 — Income Taxes

The Company’s effective tax rate was 0% for the three months ended March 31, 2025 and 2024. The effective tax rate was lower than the U.S. federal statutory rate of 21% due to the Company’s full valuation allowance recorded against its deferred tax assets.

The Company had net operating loss carryforwards (“NOLs”) for federal, state and foreign income tax purposes of approximately $86,683, $64,892 and $6,289, respectively, as of December 31, 2024. The Company's state NOL will begin to expire in 2030, all of the Company's federal NOLs will last indefinitely and the Company’s foreign NOL will begin to expire in 2037.

The Internal Revenue Code of 1986, as amended (the “Code”), imposes restrictions on the utilization of NOLs in the event of an “ownership change” of a corporation. Accordingly, a company’s ability to use NOLs may be limited as prescribed under Code Section 382 (“IRC Section 382”). Events which may cause limitations in the amount of the NOLs that the

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except share and per share amounts)

Company may use in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. Utilization of the federal and state NOLs may be subject to substantial annual limitation due to the ownership change limitations provided by the IRC Section 382 and similar state provisions. The annual limitation may result in the expiration of the net operating loss before utilization. The Company has not performed an IRC Section 382 study as of December 31, 2024 due to its full valuation allowance.

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2025 and December 31, 2024. The Company is currently not aware of any issues under review that could result in significant payments, accruals, or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

Under the Tax Cuts and Jobs Act of 2017, research and development costs are no longer fully deductible and are required to be capitalized and amortized for U.S. tax purposes effective January 1, 2022. The mandatory capitalization requirement increases our gross deferred tax assets, which are fully offset by the valuation allowance.

The Company files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. Management believes all the income tax returns filed since inception remain open to examination by the major domestic and foreign taxing jurisdictions to which the Company is subject due to NOLs.

NOTE 17 — Net Loss Per Share

Basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities. Under the two-class method, basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Shares repurchased and held in treasury by the Company are removed from the weighted-average number of shares of common stock outstanding as of the date of repurchase.

As of March 31, 2025 and 2024, the Company had 0 and 81,260, respectively, outstanding shares of common stock that were [in escrow] and subject to earn-out conditions and thus forfeiture, which do not meet the criteria for participating securities (see Note 11 for additional information). Net loss is attributed to common stockholders and participating securities based on their participation rights.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except share and per share amounts)

Diluted earnings per share attributable to common stockholders adjusts basic earnings per share for the potentially dilutive impact of non-participating shares of common stock that are subject to forfeiture, stock options, preferred stock, convertible notes, and other securities outstanding. Certain securities are antidilutive and as such, are excluded from the calculation of diluted earnings per share and disclosed separately. Because of the nature of the calculation, particular securities may be dilutive in some periods and anti-dilutive in other periods.

The following table presents the computation of basic and diluted net loss per share attributable to common stockholders, as a group, for the periods presented:


	Three Months Ended March 31,
	2025			2024

Total undistributed loss	$	(1,781	)	$	(2,387	)

Common stock and common stock equivalents		3,031,626			2,196,161


Basic net loss per share	$	(0.59	)	$	(1.09	)
Diluted net loss per share	$	(0.59	)	$	(1.09	)

The following shares of common stock subject to certain instruments were excluded from the computation of diluted net income per share attributable to common stockholders for the periods presented as their effect would have been antidilutive:


	Three Months Ended March 31,
	2025		2024

Shares subject to warrants		522,549		522,549
Shares subject to convertible promissory notes		108,607		121,550
Shares subject to ESPP		2,504		5,087
Escrow Shares		31,601		81,260
Shares subject to outstanding common stock options, RSUs and PSUs		187,134		321,552
Shares subject to stockholder earn-out rights		105,565		271,454
		957,960		1,323,452

See Note 9 for additional information regarding convertible promissory notes, Note 11 for additional information regarding stockholder earn-out rights, preferred stock, and Escrow Shares, Note 12 for additional information regarding warrants, and Note 13 for additional information regarding stock options, RSUs and PSUs.

NOTE 18 — Subsequent Events

Series A Preferred Stock

On April 1, 2025, the Company entered into a Subscription Agreement (the “Subscription Agreement”) with Yoko Miyashita (“Purchaser”), the Chief Executive Officer of the Company, pursuant to which the Company agreed to issue and sell one share of the Company’s newly designated Series A Preferred Stock, par value $0.0001 per share (the “Series A Preferred”), to the Purchaser for a purchase price of $100.00. The Series A Preferred has no voting rights except for the right to cast 100,000,000 votes, together with the common stock as a single class, with respect to the reverse stock split proposal discussed

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued

(in thousands, except share and per share amounts)

below and such 100,000,000 votes must be cast in the same proportion as shares of common stock of the Company are voted (excluding any shares of Common Stock that are not voted, whether due to abstentions, broker non-votes or otherwise) on such proposal;

The share of Series A Preferred is not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of the Company and is not entitled to receive dividends. The outstanding share of Series A Preferred will be redeemed in whole, but not in part, for a redemption price of $100.00 automatically immediately following the approval by the stockholders of the Company of a reverse stock split proposal.

Reverse Stock Split Proposal

On May 9, 2025, the Company filed a definitive proxy statement submitting to its stockholders for approval at its annual meeting, an amendment (the “Amendment”) to Leafly’s Second Amended and Restated Certificate of Incorporation, as amended, to effect (i) a reverse stock split (the “Reverse Stock Split”) of Leafly’s common stock issued and outstanding or held in treasury at a ratio of between 1 for 200 and 1 for 500, with the final ratio to be set in the discretion of the Board of Directors, without further stockholder approval, and (ii), contemporaneously with the Reverse Stock Split, a reduction to the number of shares of authorized common stock from 200,000,000,000 to 5,000,000 and authorized preferred stock from 5,000,000 to 1,000,000 (the “Authorized Share Reduction”). If the Reverse Stock Split is approved and implemented, it is intended to reduce the number of the Company’s record holders to a number that would permit the Company to suspend its reporting obligations under the Securities Exchange Act of 1934, as amended. Any fractional shares resulting from the reverse stock split will be redeemed by the Company for cash in the amount of $0.28 per pre-split share. On May 9, 2025, there were 432 holders of record of Leafly common stock and 3,137,382 outstanding shares.

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Item 2. 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 2024 Annual Report. See “Cautionary Note Regarding Forward-Looking Statements” above for more information about forward-looking statements in this Quarterly Report on Form 10-Q.

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 107 total employees, including 105 in the U.S. and 2 in Canada as of March 31, 2025 as compared to 122 total employees at March 31, 2024.

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.

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. We believe this metric is helpful for investors because it represents a portion of the volume element of our revenue and provides an indication of our market share. Management believes this metric offers useful information in understanding consumer behavior, trends in our business, and our overall operating results.

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. We believe this metric is helpful for investors because it represents the price element of our revenue. Management believes

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this metric offers useful information in understanding consumer behavior, trends in our business, and our overall operating results.

Results of Operations

Key Metrics

The table below presents these measures for the respective periods:


	Three Months Ended March 31,
	2025		2024		Change			Change (%)
Key Operating Metrics:
Ending retail accounts1		3,362		3,840		(478	)		-12	%
Retailer ARPA2	$	684	$	677	$	7			1	%

Represents the amount outstanding on the last day of the month of the respective period.

Calculated as a simple average of monthly retailer ARPA for the period presented.

There was a 12% decline in year-over-year ending retail accounts for each of the three months ended March 31, 2025, compared to the same period in 2024 primarily related to customer budget constraints and Leafly’s ongoing removal of non-paying customers from the platform. In addition, sequentially, ending retail accounts declined 3% from 3,480 at December 31, 2024.

The 1% increase in ARPA for the three months ended March 31, 2025, compared to the same period in 2024 was primarily the result of the removal of lower ARPA accounts from the platform. Sequentially, ARPA decreased 1% from $692 at December 31, 2024 due to the addition of new accounts at lower ARPA.

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 March 31,
	2025		2024		Change ($)			Change (%)
Revenue:
Retail	$	6,946	$	7,871	$	(925	)		-12	%
Brands		936		1,177		(241	)		-20	%
Total revenue	$	7,882	$	9,048	$	(1,166	)		-13	%

Retail

Retail revenues decreased $925 for the three months ended March 31, 2025 as compared to the same period in 2024 primarily due to a $375 decrease in subscriptions revenue, a $569 decrease in digital display ads, offset by an increase in other revenues

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of $19 for the three months ended March 31, 2025 as compared to the same period in 2024. The net 12% decrease was driven by the reduction in ending retail accounts discussed above.

Brands

For the three months ended March 31, 2025 as compared to the same period in 2024, Brands revenue decreased $241, due to a reduction in display ads of $135, a branded content decrease of $134 and a direct-to-consumer marketing revenue decrease of $17. These increases were partially offset by an increase in other revenues of $45. The 20% decrease in brands revenue was driven primarily by reduced spend by our brand customers due primarily to changes in the macro environment and customer budget constraints.

Cost of Revenue


	Three Months Ended March 31,
	2025		2024		Change ($)			Change (%)
Cost of sales: 1
Retail	$	671	$	842	$	(171	)		-20	%
Brands		131		134		(3	)		-2	%
Total cost of sales	$	802	$	976	$	(174	)		-18	%

Prior period amounts have been revised to reflect the current period presentation.

Retail

Retail cost of sales reductions were driven by increased efficiency and lower platform costs, driving an improvement in gross margin to 90.3% from 89.3% for the three and three months ended March 31, 2025 as compared to the same period in 2024 as described below.

For the three months ended March 31, 2025 as compared to the same period in 2024, retail cost of revenue decreased $171 due to decreased business platform and merchant processing costs of $147, increased website infrastructure costs of $3 and decreased labor allocation costs of $27.

Brands

Brands cost of sales reductions were a consequence of declining revenues as described below with a slight decline in gross margin to 86.0% from 88.6% during the three and three months ended March 31, 2025 as compared to the same period in 2024.

Brands cost of revenue decreased $3 for the three months ended March 31, 2025 as compared to the same period in 2024, of which $8 was due to reduced labor allocation costs for the three months ended March 31, 2025 as compared to the same period in 2024. An increase in costs of $5 relates to decreased efficiency.

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Operating Expenses

As described below, operating expenses declined significantly overall as a result of the cost savings efforts and reduction in headcount during 2024 and early 2025.


	Three Months Ended March 31,
	2025		2024		Change ($)			Change (%)
Operating expenses:
Sales and marketing	$	2,155	$	2,620	$	(465	)		-18	%
Product development		2,136		2,413		(277	)		-11	%
General and administrative		4,030		4,787		(757	)		-16	%
Total operating expenses	$	8,321	$	9,820	$	(1,499	)		-15	%

Sales and Marketing

Sales and marketing expenses decreased $465 for the three months ended March 31, 2025 as compared to the same period in 2024 due to a $341 decrease in compensation costs and a $124 reduction in other costs.

Product Development

Product development expenses decreased $277 for the three months ended March 31, 2025 as compared to the same period in 2024 due to a $392 decrease in compensation costs (or $254 excluding capitalized costs), which were partially offset by an $88 increase in depreciation expense primarily related to capitalized internal use software and a $27 increase in other costs. Product development expenses are reported net of $349 and $211 of costs capitalized to internal-use software for the three months ended March 31, 2025 and 2024.

General and Administrative

General and administrative expenses decreased $757 for the three months ended March 31, 2025 as compared to the same period in 2024 due to a $229 decrease in bad debts expense due to recoveries in the current year period, a $569 decrease in compensation costs, $197 reduction in insurance expense, and a $248 decline in other costs. These reductions were partially offset by a $486 increase in legal and professional fees associated with the debt modification and other transaction related expenses.

Legal and professional services expenses include $615 for the three months ended March 31, 2025, respectively, related to the debt modification and advisors for strategic alternatives as discussed below under Liquidity and Capital Resources — Going Concern.

Other Income and Expense


	Three Months Ended March 31,
	2025			2024			Change ($)		Change (%) 1
Other income (expense):
Interest expense, net	$	(547	)	$	(607	)	$	60		-10	%
Other income (expense), net		7			(32	)		39		-122	%
Total other income (expense)	$	(540	)	$	(639	)	$	99		-15	%

Interest expense, net decreased by $60 for three months ended March 31, 2025 compared to the same period in 2024 primarily due to the partial prepayment of the 2022 Notes (Note 9).

Other income increased by $39 for three months ended March 31, 2025 as compared to the same period in 2024 primarily related to a decrease in unrealized gains on foreign currency remeasurements.

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Net Loss

Net loss was $1,781 for the three months ended March 31, 2025, compared to net loss of $2,387 for the three months ended March 31, 2024. The reduction in net loss were primarily due to the realization of cost savings from the cost cutting measures employed in 2024.

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 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 (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:

•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and both EBITDA and Adjusted EBITDA do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

•

EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; and

•

EBITDA and Adjusted EBITDA do not reflect interest or tax payments that may represent a reduction in cash available to us.

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

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


	Three Months Ended March 31,
	2025			2024
Net loss	$	(1,781	)	$	(2,387	)
Interest expense, net		547			607
Depreciation and amortization expense		421			329
EBITDA		(813	)		(1,451	)
Stock-based compensation		209			598
Transaction related expenses - debt modification, strategic alternatives		663			—
Change in fair value of derivatives		(10	)		(14	)
Adjusted EBITDA	$	49		$	(867	)

The favorable change in EBITDA and Adjusted EBITDA for the three months ended March 31, 2025 versus the same period in 2024 is primarily due to cost savings resulting from Leafly’s cost cutting measures described above.

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Financial Condition

Cash, Cash Equivalents, and Restricted Cash

Cash, cash equivalents, and restricted cash totaled $8,881 and $14,772 as of March 31, 2025 and December 31, 2024, respectively. Explanations of our cash flows for the periods presented follow.

Cash Flows

Three Months Ended March 31, 2025

During the three months ended March 31, 2025, we utilized a total of $5,891 of cash to fund cash operating losses of approximately $845, changes in current assets and liabilities of $1,017, investing activities comprised of capitalized software costs of $349, and financing activities of $3,680 which was primarily the partial repayment of the 2022 Notes. The changes in current assets and liabilities during the three months ended March 31, 2025 included primarily the reduction of accrued expenses and other current liabilities of $995 primarily related to accrued interest on the 2022 Notes, transaction related costs and 2024 bonuses paid in 2025.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

As compared to the three months ended March 31, 2024, cash used in operations increased by $989 to $1,862 for the three months ended March 31, 2025, mainly due to increased payments of accrued expenses in 2025 related to accrued interest on the 2022 Notes, transaction related costs and 2024 bonuses paid in 2025. Cash used in investing activities increased $140 to $349 for the three months ended March 31, 2025 due to higher software capitalization in the current year period. Cash and restricted cash used by financing activities increased $3,566 from the 2024 period to $3,680 for the three months ended March 31, 2025, which was primarily the partial repayment of the 2022 Notes in 2025.

Deferred Revenue

Deferred revenue is primarily related to software subscriptions and display ads. The revenue deferred at March 31, 2025 is expected to be recognized in the near term. See Note 8 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 2022 Notes when they come due on July 1, 2025 that do not ultimately convert to equity. See Note 9 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 principal and 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 July 1, 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 2024

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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.” In addition, the delisting of our securities will limit our ability to raise additional equity financing, and we no longer have access to our ATM Program. See Section 1A. Risk Factors – “Our failure to regain compliance with the continued listing requirements of the Nasdaq Capital Market has resulted in a delisting of our Common Stock and Warrants.”

Going Concern

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.

We have $25,747 of 2022 Notes maturing on July 1, 2025 and based on our current liquidity position would not be able to repay the 2022 Notes when due. Note 9 to our consolidated financial statements within this Quarterly Report provides additional information regarding the 2022 Notes. In addition, 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. We have incurred operating losses since our inception and had an accumulated deficit of $81,726 and $79,945 at March 31, 2025 and December 31, 2024, respectively. 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. In response to these conditions, we took the following actions:

•

With the Company’s de-listing from Nasdaq, management is considering options including but not limited to taking the Company private in order to save significant costs associated with operating as a public company. To that end, the Company filed post-effective amendments to all of its existing registration statements on Form S-8s and its registration statement on Form S-3, removing from registration any unsold securities. In addition, the Company has determined to submit to its shareholders for approval at the Company’s annual meeting a reverse stock split, which if executed would result in a reduction in the number of the Company’s record holders to a number that would allow the Company to suspend its ongoing reporting obligations (Note 11, Note 18).

We are closely monitoring and reducing operating expenses where we are able to, while intending to ensure the trajectory and viability of the business remains intact. However, we cannot meet our debt maturity obligations without a significant capital infusion or a lender’s commitment to refinance our debt. After considering all available evidence, Leafly determined that the combined impact of our cost reduction measures outlined in both actions above and planned operations will be not sufficient to meet our capital requirements for a period of at least twelve months from the date that our March 31, 2025 financial statements are issued. We believe substantial doubt exists 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.

We believe that our capital resources are not sufficient to fund our operations for at least the following 12 months, because we do not currently have the ability to repay our 2022 Notes due in July 2025.

Noncompliance with Nasdaq Continued Listing Standards

On April 9, 2024, we received the Notice from the Staff notifying us that we no longer complied with Nasdaq's requirements contained in Nasdaq Listing Rule 5550 for companies traded on the Capital Market. Nasdaq Listing Rule 5550 requires a company listed on the Capital Market to continuously meet at least one of the Continued Listing Standards set forth in Nasdaq Listing Rule 5550(b), as follows:

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Continued Listing Standard		Requirement

“Stockholders’ Equity”		Minimum $2.5 million

“Market Value of Listed Securities”		Minimum $35 million

“Net Income”		Minimum $500 thousand from continuing operations – most recent fiscal year or in two of three of last three fiscal years

As confirmed by the Notice, we did not meet (and do not currently meet) any of the Continued Listing Standards depicted above. On January 15, 2025, the Company received written notification (the “Delisting Notice”) from Nasdaq that the Nasdaq Hearing Panel (“Panel”) has determined to delist the Company’s common stock and warrants and suspend trading of the securities at the open of trading on January 17, 2025. In connection with the Panel’s decision, the Company filed a Form 25 on March 12, 2025 with the SEC in accordance with Rule 12d2-2 promulgated under the Securities Exchange Act of 1934, as amended.

As a result of the suspension in trading and expected delisting, Leafly’s common stock and warrants began trading publicly on the OTC Pink Open Market under its existing symbols “LFLY” and “LFLYW,” respectively effective January 17, 2025. In March 2025, we filed post-effective amendments to all of our existing registration statements on Form S-8s and our registration statement on Form S-3, removing from registration any unsold securities. In addition, we have determined to submit to our shareholders for approval at the Leafly’s 2025 annual meeting a reverse stock split (Note 18), which if executed would result in a reduction in the number of our record holders to a number that would allow us to suspend our ongoing reporting obligations.

Deregistration and Suspension of Reporting Obligations

As discussed above, on March 12 and 13, 2025, the Company filed post-effective amendments to its Registration Statements on Form S-3 and S-8 to terminate such registration statements and withdraw from registration any unsold securities, which is a prerequisite, among others, to the Company’s ability to suspend its ongoing reporting obligations. The Company has subsequently also filed preliminary proxy materials with the SEC including a proposal to the Company’s stockholders at the Company’s Annual Meeting to executed a reverse stock split, in order to reduce the Company’s number of record holders of its common stock to fewer than 300, thereby allowing the Company to “go private.” If approved, we would suspend our reporting obligations by filing a Certificate of Termination of Registration (SEC Form 15) with the SEC under the Exchange Act as soon as possible after consummation of the Transaction so that we would no longer be required to file annual, quarterly or current reports or comply with the SEC’s proxy rules. Suspending our reporting obligations may limit our ability to raise additional equity financing.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of March 31, 2025.

Contractual Obligations

Other than our 2022 Notes (see Note 9 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

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liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates.

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 2024 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 March 31, 2025.

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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. In addition, based upon information available to us and our review of lawsuits and claims filed or pending against us to date, we believe there are no material pending legal proceedings to which we or any of our subsidiaries is a party or of which any of our or our subsidiaries’ property is the subject.

Item 1A. RISK FACTORS.

Risk factors that affect our business and financial results are discussed in Part I, Item 1A of our 2024 Annual Report. 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 2024 Annual Report, except to note that the risk factor that discuss that the Company is considering taking actions in order for the Company to terminate the registration of its securities under the Exchange Act and suspend its public reporting obligations have been increased by the Company taking further definitive actions towards such goal, as discussed elsewhere in this Quarterly Report. You should carefully consider the risks and uncertainties described herein and in our 2024 Annual Report, 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 2024 Annual Report 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.

Item 5. OTHER INFORMATION.

During the three months ended March 31, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

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Item 6. EXHIBITS.

The following documents are included as exhibits to this Quarterly Report:


			Incorporated by Reference
Exhibit Number		Exhibit Description	Form	Period Ending	Exhibit	Filing Date


3.1		Second Amended and Restated Certificate of Incorporation of Leafly Holdings, Inc., dated February 4, 2022	10-K	12/31/21	3.1	3/31/22

3.2		Certificate of Amendment to Second Amended and Restated Certificate of Incorporation of Leafly Holdings, Inc.	8-K	9/8/23	3.1	9/11/23

3.3		Certification of Designation of Series a Preferred Stock, dated April 1, 2025.	8-K	4/1/25	3.1	4/7/25

3.4		Amended and Restated Bylaws of Leafly Holdings, Inc., dated February 4, 2022.	8-K	2/4/22	3.2	2/10/22

3.5		Amendment to the Amended and Restated Bylaws	8-K	4/1/25	3.1	4/7/25

10.1		Subscription Agreement, dated April 1, 2025, by and between Leafly Holdings, Inc. and Yoko Miyashita.	8-K	4/1/25	10.1	4/7/25

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 with Embedded Linkbases Document

104	***	Cover Page Interactive Data File


*	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.

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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 May 14, 2025.


	Leafly Holdings, Inc.

	By:	/s/ Yoko Miyashita
		Yoko Miyashita
		Chief Executive Officer

	By:	/s/ Suresh Krishnaswamy
		Suresh Krishnaswamy
		Chief Financial Officer

Exhibit 31.1

CERTIFICATION 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

I, Yoko Miyashita, certify that:

I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 of Leafly Holdings, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: May 14, 2025	By:	/s/ Yoko Miyashita
		Yoko Miyashita
		Chief Executive Officer (Principal Executive Officer)

Exhibit 31.2

CERTIFICATION 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

I, Suresh Krishnaswamy, certify that:

I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 of Leafly Holdings, Inc.;

(a)

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: May 14, 2025	By:	/s/ Suresh Krishnaswamy
		Suresh Krishnaswamy
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

Exhibit 32.1

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Yoko Miyashita, the Chief Executive Officer of Leafly Holdings, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of Leafly Holdings, Inc. for the quarter ended March 31, 2025, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Leafly Holdings, Inc.


Date: May 14, 2025	By:	/s/ Yoko Miyashita
		Yoko Miyashita
		Chief Executive Officer (Principal Executive Officer)

I, Suresh Krishnaswamy, the Chief Financial Officer of Leafly Holdings, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of Leafly Holdings, Inc. for the quarter ended March 31, 2025, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Leafly Holdings, Inc.


Date: May 14, 2025	By:	/s/ Suresh Krishnaswamy
		Suresh Krishnaswamy
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

This certification accompanies the Quarterly Report on Form 10-Q of Leafly Holdings, Inc. for the quarter ended March 31, 2025, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Leafly Holdings, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of such Quarterly Report on Form 10-Q), irrespective of any general incorporation language contained in such filing.