Leafly Holdings, Inc. /DE

Item 1A. RISK FACTORS.

Risk factors that affect our business and financial results are discussed in Part I, Item 1A of our 2023 Annual Report. As of the date of this report, wother than as set forth below, we are not aware of any material changes in the risk factors disclosed in our 2023 Annual Report. You should carefully consider the risks and uncertainties described herein and in our 2023 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 2023 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.

Our failure to regain compliance with the continued listing requirements of the Nasdaq Capital Market could result in a delisting of our common stock.

On April 9, 2024, we received a notification from Nasdaqs Listing Qualifications Staff (Staff) notifying us that we no longer comply with Nasdaq Listing Rule 5550(b) (the Continued Listing Standards). On May 24, 2024, we timely submitted a proposed plan of compliance to Nasdaq showing how we intend to regain compliance with the Stockholders Equity standard, and subsequently, upon request by Nasdaq, we provided updates on our progress under the proposed plan. On October 4, 2024, the Company received a plan denial and delisting determination letter from the Staff. The Company requested a hearing before a Nasdaq Hearing Panel (Panel). Any suspension or delisting of the Companys common stock and warrants on the Capital Market has been stayed, pending the scheduled hearing and a final written decision from the Panel, and our common stock and warrants continue to trade on the Nasdaq Capital Market (the Capital Market) under the symbols LFLY and LFLYW, respectively. The Panel hearing is scheduled for December 5, 2024. If the Panel denies the Companys appeal, then the Company's common stock and warrants will be delisted from the Capital Market. There can be no assurance that the Panel will grant the Company an extension period or that the Company will ultimately meet all applicable criteria for continued listing on the Capital Market. 

If we are delisted from the Capital Market, it is unlikely we would qualify for listing on another national securities exchange in the United States and trading of our common stock and warrants may take place on an over-the-counter market established for unlisted securities, such as the OTCQX, the OTCQB or the Pink Market maintained by OTC Markets Group Inc. We cannot assure you that our common stock and/or warrants, if delisted from Nasdaq, will ever be listed on another securities exchange or quoted on an over-the counter quotation system. An investor would likely find it less convenient to sell, or to obtain accurate quotations in seeking to buy, our common stock and warrants on an over-the-counter market, and many investors would likely not buy or sell our common stock and warrants due to difficulty in accessing over-the-counter markets, policies preventing them from trading in securities not listed on a national exchange or other reasons. Accordingly, delisting from the Capital Market could make trading our securities more difficult for investors, likely leading to declines in our share price, trading volume and liquidity. Delisting from Nasdaq could also result in negative publicity and make it more difficult for us to raise additional capital. The absence of such a listing may adversely affect the acceptance of our common stock as transaction consideration or the value accorded our common stock by other parties. Further, if we are delisted, we would also incur additional costs under state blue sky laws in connection with any sales of our securities. These requirements could severely limit the market liquidity of our securities and the ability of holders to sell our securities in the secondary market. 

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If our common stock is delisted, it may come within the definition of penny stock as defined in the Exchange Act and would be covered by Rule 15g-9 of the Exchange Act. Rule 15g-9 imposes additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and accredited investors which may further limit the market liquidity of our common stock and the ability of our stockholders to sell our common stock in the secondary market. The regulations relating to penny stocks, coupled with the typically higher cost per trade to the investor of penny stocks due to factors such as broker commissions generally representing a higher percentage of the price of a penny stock than of a higher-priced stock, would further limit the ability of investors to trade in our common stock.

Furthermore, we are party to a number of agreements pursuant to which we have contractual covenants that we remain listed on the Capital Market or another national securities exchange, including pursuant to the 2022 Notes. In the event our securities are delisted from the Capital Market, we will be in breach of such covenants. Such breach, if not cured or waived by holders of such securities, could result in litigation and, with respect to the 2022 Notes, would result in an acceleration of principal amount of the 2022 Notes. Any of the foregoing would materially and adversely affect our business, financial condition and results of operations.