Commitments and Contingencies

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

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 September 30, 2024. The Company has short-term arrangements with immaterial rental obligations for office space.

Nasdaq Notifications of Noncompliance

From January 1, 2024 until March 25, 2024, Leafly was out of compliance with Nasdaq Listing Rule 5605(c)(2)(A) (the “Audit Committee Rule”), which requires our Board of Directors’ (the “Board”) Audit Committee to be composed of at least three independent members. On January 3, 2024, we received a letter from the Nasdaq’s Listing Qualifications Staff (the “Staff”) confirming Leafly’s noncompliance with the Audit Committee Rule and providing Leafly with a cure period to regain compliance (i) until the earlier of Leafly’s next annual meeting of stockholders or January 2, 2025; or (ii) if the next annual meeting of stockholders is held before July 1, 2024, no later than July 1, 2024. On March 25, 2024, the Board appointed two new independent directors, Jeffrey Monat and Andres Nannetti, to the Board and to the Board's Audit Committee. As a result, on April 1, 2024, the Company received written notice from the Staff confirming that the Company regained compliance with the Audit Committee Rule and this matter is now closed.

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 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 does not currently meet any of the Continued Listing Standards. The Notice had no immediate effect on the listing of the Company's common stock or warrants, and its common stock and warrants will continue to trade on the Capital Market under the symbols “LFLY” and “LFLYW,” respectively. As set forth in the Notice, within 45 calendar days from the date of the Notice, the Company had the right to submit to Nasdaq a plan to regain compliance with Nasdaq's Stockholders' Equity and/or Market Value of Listed Securities standards, and the Staff may grant an extension of up to 180 calendar days from the date of the Notice to evidence compliance. As provided in Nasdaq Listing Rule 5810(c)(2)(D), the Staff will not accept a compliance plan for deficiencies in net income from continuing operations since compliance requires stated levels of net income during completed fiscal years and therefore it can only be demonstrated through audited financial statements. On May 24, 2024, the Company submitted a proposed plan of compliance to Nasdaq showing how it intends to regain compliance with the Stockholders’ Equity standard, and subsequently, upon request by Nasdaq, the Company provided updates on its 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 Company’s common stock and warrants on the Capital Market has been stayed, pending the scheduled hearing and a final written decision from the Panel. The Panel hearing is scheduled for December 5, 2024. If the Panel denies the Company’s 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.

The Company is party to a number of agreements pursuant to which it has contractual covenants that it remains listed on the Capital Market or another national securities exchange, including pursuant to the 2022 Notes. In the event Leafly’s securities are delisted from the Capital Market, the Company 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 the Company’s business, financial condition and results of operations.