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

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

~~Check~~Indicate by check mark whether the ~~issuer~~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 ~~past~~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”,~~filer,” “accelerated ~~filer”,~~filer,” “smaller reporting ~~company”,~~company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 ~~December 19, 2019, 16,571,552~~May 5, 2023, the registrant had 41,048,566 shares of common stock, $0.0001 par value ~~$0.0001~~ per share, ~~were issued and~~ outstanding.

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

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

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

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

Table of Contents~~PART~~

Financial Information

Item 1. ~~Interim~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~The accompanying notes are an integral part of the unaudited condensed financial statements.~~

~~The accompanying notes are an integral part~~See Notes to Condensed Consolidated Financial Statements.

Table of ~~the unaudited condensed financial statements.~~

Contents

Table of ~~the unaudited condensed financial statements.~~Contents

~~MERIDA MERGER CORP. I~~CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT (Continued)

~~FOR THE PERIOD FROM JUNE 20, 2019 (INCEPTION) THROUGH SEPTEMBER 30, 2019~~(in thousands)

Table of ~~the unaudited condensed financial statements.~~Contents

~~(Unaudited)~~

~~Note~~NOTE 1 — Description of ~~Organization~~the Business and ~~Business Operations~~Merger

Description of the Business

Leafly Holdings, Inc. (“Leafly” or “the Company”) 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 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.

Merger with Merida

On February 4, 2022, Leafly consummated the previously announced mergers and related transactions (collectively, the “Merger”) 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”). Legacy Leafly (formerly known as Leafly Holdings, Inc.) entered into the Merger Agreement with Merida Merger Corp. I ~~(the “Company”~~(“Merida”), Merida Merger Sub, Inc., a Washington corporation (“Merger Sub I”) ~~was incorporated in Delaware on June 20, 2019. The Company was formed for~~and Merida Merger Sub II, LLC, a Washington limited liability company (“Merger Sub II” and, together with Merger Sub I, the ~~purpose~~“Merger Subs”). Merger Sub I merged with and into Legacy Leafly, with Legacy Leafly surviving as a wholly-owned subsidiary of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities (the “Business Combination”).

~~Although~~Merida, and following the Company is not limited to a particular industry or sector for purposes of consummating a Business Combination, the Company intends to focus its search on companies in the cannabis industry. The Company is an early stage and emerging growth companyinitial Merger and as ~~such,~~part of a single integrated transaction with the ~~Company is subject to all~~initial Merger, Legacy Leafly merged with and into Merger Sub II, with Merger Sub II surviving as a wholly-owned subsidiary of Merida. As a result of these Mergers, Legacy Leafly became a wholly owned subsidiary of Merida and was renamed Leafly, LLC, Merida was renamed Leafly Holdings, Inc. (“New Leafly”), and the ~~risks associated with early stage and emerging growth companies.~~

Assecurityholders of ~~September 30, 2019, the Company had not commenced any operations. All activity for the period from June 20, 2019 (inception) through September 30, 2019 relates~~Legacy Leafly became security holders of New Leafly. We sometimes refer to the ~~Company’s formation~~Mergers described above and the ~~initial public offering (“Initial Public Offering”), which is described below. The Company will not generate any operating revenues until after~~other transactions contemplated by the ~~completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.~~

The registration statements for the Company’s Initial Public Offering were declared effective on November 4, 2019. On November 7, 2019, the Company consummated the Initial Public Offering of 12,000,000 units (the “Units” and, with respect to the shares of common stock included in the Units sold, the “Public Shares”), generating gross proceeds of $120,000,000, which is described in Note 3.

Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 3,750,000 warrants (the “Private Warrants”) at a price of $1.00 per Private Warrant in a private placement to Merida Holdings, LLC and EarlyBirdCapital, Inc. (“EarlyBirdCapital”), generating gross proceeds of $3,750,000, which is described in Note 4.

~~Following the closing of the Initial Public Offering on November 7, 2019, an amount of $120,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering~~Merger Agreement and the ~~sale of the Private Warrants was placed in a trust account (the “Trust Account”)~~other agreements being entered into by Merida and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination or (ii) the distribution of the Trust Account to the Company’s stockholders, as described below.

On November 12, 2019, the underwriters notified the Company of their intention to partially exercise their over-allotment option on November 13, 2019. As such, on November 13, 2019 the Company consummated the sale of an additional 1,001,552 Units, at $10.00 per Unit, and the sale of an additional 200,311 Private Warrants, at $1.00 per Private Warrant, generating total gross proceeds of $10,215,831. A total of $10,015,520 of the net proceeds was deposited into the Trust Account, bringing the aggregate proceeds held in the Trust Account to $130,015,520.

Transaction costs amounted to $3,412,939 consisting of $2,600,311 of underwriting fees and $812,628 of other offering costs. In addition, $796,558 of cash was held outside of the Trust Account and is available for working capital purposes.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete a Business Combination having an aggregate fair market value of at least 80% of the assets held in the Trust Account (as defined below) (excluding taxes payable on income earned on the Trust Account) at the time of the agreement to enter into an initial Business Combination. The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act 1940, as amended (the “Investment Company Act”). Upon the closing of the Initial Public Offering, management has agreed that an amount equal to at least $10.00 per Unit sold in the Initial Public Offering, including the proceeds from the sale of the Private Warrants, will be held in a trust account (“Trust Account”), located in the United States and invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account, as described below.

~~MERIDA MERGER CORP. I~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2019~~

~~(Unaudited)~~

The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination in connection with a stockholder meeting called to approve the Business Combination. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations and up to $250,000 per 12-month period for working capital needs). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. The Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and a majority of the shares voted are voted in favor of the Business Combination. The Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules. The Company’s Sponsor and EarlyBirdCapital have agreed to vote their Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination and not to convert any shares in connection with a stockholder vote to approve a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction or don’t vote at all.

~~The Sponsor has agreed (a) to waive its redemption rights with respect to the Founder Shares and any Public Shares held by it~~Legacy Leafly in connection with the ~~completion of a~~Mergers as the “Business Combination” and to Merida following the Business Combination ~~(b) to waive its rights to liquidating distributions from~~as “New Leafly.”

While the ~~Trust Account with respect to~~legal acquirer in the ~~Founder Shares if the Company fails to consummate a~~ Business Combination is Merida, for financial accounting and (c) not to propose an amendment to the Amended and Restated Certificate of Incorporation that would affect a public stockholders’ ability to convert their shares in connection with a Business Combination or affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.

The Company will have until November 7, 2021 to consummate a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company, divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligationsreporting purposes under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.

In order to protect the amounts held in the Trust Account, Merida Manager III LLC, the general partner of the Sponsor, has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below $10.00 per Public Share, except as to any claims by a third party who executed a valid and enforceable agreement with the Company waiving any right, title, interest or claim of any kind they may have in or to any monies held in the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, Merida Manager III LLC will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that Merida Manager III LLC will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

~~MERIDA MERGER CORP. I~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2019~~

~~(Unaudited)~~

~~Note 2 — Summary of Significant Accounting Policies~~

~~Basis of Presentation~~

~~The accompanying unaudited condensed financial statements have been prepared in accordance with~~ accounting principles generally accepted in the United States of America (“GAAP”), Legacy Leafly is the accounting acquirer with the Merger accounted for as a “reverse recapitalization.” A reverse recapitalization does not result in a new basis of accounting, and the financial statements of the combined entity represent the continuation of the financial statements of Legacy Leafly. Under this accounting method, Merida is treated as the “acquired” company and Legacy Leafly is the accounting acquirer, with the transaction treated as a recapitalization of Legacy Leafly. Merida’s assets, liabilities and results of operations were consolidated with Legacy Leafly’s beginning on the date of the Business Combination. Except for certain derivative liabilities, the assets and liabilities of Merida were recognized at historical cost (which is consistent with carrying value) and were not material, with no goodwill or other intangible assets recorded. The derivative liabilities, which are discussed in Notes 13 and 18, were recorded at fair value. The consolidated assets, liabilities, and results of operations of Legacy Leafly became the historical financial statements, and operations prior to the closing of the Business Combination presented for comparative purposes are those of Legacy Leafly. Pre-Merger shares of common stock and preferred stock were converted to shares of common stock of the combined company using the conversion ratio of 0.3283 and for comparative purposes, the shares and net loss per share of Legacy Leafly, prior to the Merger, have been retroactively restated using the conversion ratio.

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 ~~information~~reporting and should be read in conjunction with the Company's audited consolidated financial statements for the years ended December 31, 2022 and 2021, and Management’s Discussion and Analysis of Financial Condition and Results of Operations of Leafly for the year ended December 31, 2022, each of which was filed with the SEC on March 29, 2023 (the “2022 Financial Information”).

These condensed consolidated financial statements are unaudited and, in ~~accordance with~~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 ~~instructions to Form 10-Q~~periods presented. Actual results may differ from these estimates and ~~Article 8~~assumptions. The results of ~~Regulation S-X~~operations for any interim periods are not necessarily indicative of the ~~SEC.~~results that may be expected for the entire fiscal year or any other interim period. Certain information orand footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been ~~condensed or~~ omitted ~~pursuant to~~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 Evaluation

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 ~~reporting. Accordingly,~~obligations as they dobecome 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 ~~include~~consider things beyond its control. 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. 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, Leafly management took the following actions:

•

During the fourth quarter of 2022, Leafly implemented a restructuring plan, including a reduction in force reflecting primarily one-time severance and other employee-related termination benefits incurred during the fourth quarter of 2022.

•

During the three months ended March 31, 2023, Leafly announced a second restructuring plan further seeking to reduce recurring costs and identifying cost savings based on a reduction in force reflecting primarily one-time severance and other employee-related termination benefits incurred during the first quarter of 2023.

After considering all available evidence, Leafly’s management determined that, based on the ~~information and footnotes necessary~~cost reduction measures outlined in both actions above, Leafly’s current positive working capital will be sufficient to meet its capital requirements for a ~~complete presentation~~period of ~~financial position, results of operations, or cash flows. In~~at least 12 months from the ~~opinion of management, the accompanying unaudited condensed~~date that these March 31, 2023 financial statements ~~include all adjustments, consisting~~are issued.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on the reported net loss.

Seasonality

We may experienceseasonality 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 can't be certain that these are known trends or that other trends may develop.

Table of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.Contents

The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s prospectus for its Initial Public Offering as filed with the SEC on November 5, 2019, as well as the Company’s Current Reports on Form 8-K, as filed with the SEC on November 7, 2019 and November 14, 2019. The interim results for the period from June 20, 2019 (inception) through September 30, 2019 are not necessarily indicative of the results to be expected for the period from June 30, 2019 (inception) through December 31, 2019 or for any future periods.

Emerging Growth Company Status

~~The Company~~Leafly is an ~~“emerging~~emerging growth company” (“EGC”), as defined in ~~Section 2(a) of the Securities Act, as modified by~~ the Jumpstart Our Business Startups Act ~~of 2012 (the “JOBS~~(“JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

~~Further, Section 102(b)(1) of~~. Under the JOBS Act, ~~exempts emerging growth companies from being required to comply with~~EGCs can delay adopting new or revised ~~financial~~ accounting standards issued until such time as those standards apply to private ~~companies (that is, those that have~~companies. The Company has elected to use this extended transition period. In providing this relief, the JOBS Act does not ~~had~~preclude the Company from adopting a ~~Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the~~ new or revised ~~financial~~ accounting ~~standards. The JOBS Act provides~~standard earlier than the time that ~~a company can elect~~such standard applies to ~~opt~~private companies. Leafly will continue to use this relief until the earlier of the date that it (a) is no longer an EGC or (b) affirmatively and irrevocably opts out of the extended transition period ~~and comply with~~provided in the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.JOBS Act.

Use of Estimates

The preparation of ~~the~~ financial statements in conformity with GAAP requires ~~the Company’s~~ management to make estimates and assumptions that affect the reported amounts of assets and liabilities, ~~and~~ disclosure of contingent assets and liabilities, atand 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 fair value of derivative liabilities; the allowance for doubtful accounts; 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 2022 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, 2023 compared to our Annual Report on Form 10-K for the year ended December 31, 2022.

Recent Accounting Pronouncements

Accounting Pronouncements Issued But Not Yet Adopted

Management does not believe that there are any recently issued, but not yet effective, accounting standards that, if currently adopted, would have a material effect on the Company’s consolidated financial statements or related disclosures.

NOTE 3 — Cash, Cash Equivalents, and Restricted Cash

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


	March 31, 2023		December 31, 2022

Cash and cash equivalents	$	14,955	$	24,594
Restricted cash		360		360
Restricted cash - long-term portion		248		248
	$	15,563	$	25,202

The March 31, 2023 and December 31, 2022 restricted cash balances include $360 of cash maintained in escrow related to Forward Share Purchase Agreements (“FPAs”). Effective August 1, 2022, the FPA holders elected to have Leafly repurchase their remaining 3,081 shares covered by the FPAs for an aggregate repurchase price of $31,663. As a result, the shares repurchased have been removed from Leafly's outstanding shares effective as of the date of purchase and placed into treasury. The FPA holders elected to have all but $360 disbursed from the ~~financial statements~~escrow account and are able to claim the remainder any time until August 1, 2023. If unclaimed, the remaining funds in escrow will be distributed to the Company. Additional information regarding the FPAs is included in Notes 13 and 18.

NOTE 4 — Prepaid Expenses and Other Assets

Prepaid expenses and other assets consist of the following:


	March 31, 2023		December 31, 2022

Prepaid subscriptions	$	880	$	916
Prepaid insurance		3,104		533
Other prepaid assets		272		272
Other current assets		31		71
Subtotal, current portion		4,287		1,792
Prepaid expenses, long-term portion		100		135
Total	$	4,387	$	1,927

NOTE 5 — Accounts Receivable, Net

Accounts receivable, net of $3,638 and $3,298 as of March 31, 2023 and December 31, 2022, respectively, consists of amounts due from customers less an allowance for doubtful accounts.

The following table presents the allowance for doubtful accounts and the ~~reported amounts of revenues~~changes therein:


	Three Months Ended March 31,
	2023			2022

Balance, beginning of period	$	908		$	1,848
Add: provision for doubtful accounts, net of recoveries		725			(124	)
Less: write-offs		(542	)		(42	)
Balance, end of period	$	1,091		$	1,682

NOTE 6 — Property, Equipment, and ~~expenses during the reporting period.~~Software, Net

~~Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate~~Property, equipment, and software consisted of the ~~effect~~following:


	March 31, 2023			December 31, 2022

Furniture and equipment	$	707		$	740
Capitalized internal-use software		2,843			2,310
		3,550			3,050
Less: accumulated depreciation and amortization		(928	)		(765	)
	$	2,622		$	2,285

The Company recognized depreciation and amortization expense as follows:


	Three Months Ended March 31,
	2023		2022

Depreciation expense	$	23	$	52
Amortization of capitalized internal-use software		172		—
Total depreciation and amortization	$	195	$	52

Table of ~~a condition, situation or set of circumstances that existed at the date~~Contents

NOTE 7 — Accrued Expenses and Other Current Liabilities

Accrued expenses consist of the following:


	March 31, 2023		December 31, 2022

Accrued bonuses	$	466	$	1,309
Other employee-related liabilities		2,295		2,403
Accrued interest		400		1,000
Other accrued expenses 1		1,501		1,523
	$	4,662	$	6,235

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

NOTE 8 — 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, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.statements.

Leases

~~Cash and cash equivalents~~

The Company ~~considers all short-term investments~~does not have any leases with an original ~~maturity~~term longer than 12 months as of March 31, 2023. The Company has short-term arrangements with immaterial rental obligations for office space.

Nasdaq Notifications of Noncompliance

On October 28, 2022, the Company received a letter from the staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) providing notification that the Company no longer complies with the $50 million in market value of listed securities standard for continued listing on the Nasdaq Global Market under Nasdaq’s Listing Rule 5450(b)(2)(A) and that the Company also does not comply with either of the two alternative standards of Listing Rule 5450(b), the equity standard and the total assets and total revenue standard. On April 19, 2023, Nasdaq approved the Company’s application to transfer the listing of its common stock and warrants from the Nasdaq Global Market to The Nasdaq Capital Market, effective April 21, 2023. The Company complies with the net income from continuing operations listing standard of the Nasdaq Capital Market, and the transfer of the listing resolves the October 28, 2022 noncompliance notification.

On November 2, 2022, Leafly received another letter from the Staff providing notification that, for the previous 30 consecutive business days, the bid price for Leafly’s common stock had closed below the $1.00 per share minimum bid price requirement for continued listing under Nasdaq Listing Rule 5450(a)(1). The notices have no immediate effect on the listing of the Company’s common stock or warrants.

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has been provided an initial period of 180 calendar days, or until May 1, 2023, to regain compliance with the minimum bid price requirement. To regain compliance, the closing bid price of the Company’s common stock must be $1.00 per share or more for a minimum of 10 consecutive business days at any time before May 1, 2023 and we must otherwise satisfy the Nasdaq Global Market’s requirements for continued listing. The Company's failure to regain compliance during this period could result in delisting.

If the Company does not regain compliance with the minimum bid price requirement by May 1, 2023, Nasdaq would notify the Company that its securities would be subject to delisting. In the event of such a notification, the Company may appeal the Staff’s determination to delist its securities, but there can be no assurance the Staff would grant the Company’s request for continued listing.

On May 2, 2023, a letter was received from the Staff (Note 19).

NOTE 9 — Revenue and Contract Balances

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


	Three Months Ended March 31,
	2023		2022

Advertising 1	$	11,186	$	11,329
Other services 1		63		91
	$	11,249	$	11,420

Amounts for the prior period have been reclassified to conform to the current period presentation.

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


	Three Months Ended March 31,
	2023		2022

United States 1	$	10,805	$	10,526
All other countries 1		444		894
	$	11,249	$	11,420

Amounts for the prior period have been reclassified to conform to the current period presentation.

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


	Three Months Ended March 31,
	2023			2022

Arizona		20	%		18	%
California		12	%		11	%
Oregon		11	%		11	%

No other state comprised 10% or more of Leafly’s revenue during the three months ended March 31, 2023 and 2022. We have a diversified set of customers; no single customer accounted for 10% or ~~less~~more of our revenue for the three months ended March 31, 2023 or 2022.

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


	Three Months Ended March 31,
	2023		2022
Over Time 1
Retail 2	$	9,470	$	9,179
Brands 3		1,362		1,564
		10,832		10,743
Point in time 1
Brands 4		417		677
	$	11,249	$	11,420

Amounts for the prior period have been reclassified to conform to the current period presentation.

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.

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

The ~~Company did not have any cash equivalents~~following table presents the Company's deferred revenue balances and changes therein:


	Three Months Ended March 31,
	2023			2022

Balance, beginning of period	$	1,958		$	1,975
Add: net increase in current period contract liabilities		1,951			2,184
Less: revenue recognized from beginning balance		(1,729	)		(1,593	)
Balance, end of period	$	2,180		$	2,566

A majority of the deferred revenue balance as of ~~September 30, 2019.~~

~~MERIDA MERGER CORP. I~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2019~~

~~(Unaudited)~~

~~Deferred offering costs~~

Offering costs consist of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly related to the Initial Public Offering. Offering costs amounting to $3,412,939 were charged to stockholders’ equity upon the completion of the Initial Public Offering.

~~Income Taxes~~

The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences areMarch 31, 2023 is expected to be ~~recovered~~recognized in the subsequent 12-month period. No other contract assets or ~~settled.~~ liabilities are recorded on the Company’s Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022.

NOTE 10 — Income Taxes

The ~~effect on~~Company’s effective tax rate was 0% for the three months ended March 31, 2023 and 2022. 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~~assets.

The Company had net operating loss carryforwards (“NOLs”) for federal, state and ~~liabilities~~foreign income tax purposes of approximately $85,430, $60,478 and $5,801, respectively, as of December 31, 2022. The Company's state NOL will begin to expire in 2039, and all of the Company's federal NOLs will last indefinitely.

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 ~~change in tax rates is recognized in income~~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 ~~period~~amount of the NOLs that ~~included~~ the ~~enactment date. Valuation allowances~~Company may use in any one year include, but are ~~established, when necessary,~~not limited to, ~~reduce deferred tax assets~~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 ~~amount expected to be realized.~~ownership change limitations provided by the IRC Section 382 and similar state provisions.

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial ~~statements~~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 ~~September 30, 2019.~~March 31, 2023 and December 31, 2022. 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.

The ~~provision for~~Company files income ~~taxes was deemed~~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 ~~be immaterial for the period from June 20, 2019 (inception) through September 30, 2019.~~

~~Net Loss Per Common Share~~

~~Net loss per share is computed by dividing net loss~~examination by the ~~weighted~~major domestic and foreign taxing jurisdictions to which the Company is subject due to NOLs.

NOTE 11 — 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 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, paid in cash semi-annually in arrears on July 31 and January 31 of each year, and mature on January 31, 2025.

The 2022 Notes are 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 $12.50 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 ~~number~~trading price of ~~shares of~~the Company’s common stock ~~outstanding~~exceeds $18.00 for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days. The Company also has the ~~period, excluding shares of common stock~~option, on or after January 31, 2023 and prior to the 40th trading day immediately before the maturity date and subject to ~~forfeiture. Weighted average shares were reduced for~~ the ~~effect of an aggregate of 450,000 shares of common stock that were subject~~holders’ ability to forfeiture if the over-allotment option was not exercised by the underwriters (see Note 7). At September 30, 2019, the Company did not have any dilutive securities and other contracts that could, potentially, be exercisedoptionally convert, to redeem all or ~~converted into shares of common stock and then share in the earnings~~a portion of the ~~Company. As~~2022 Notes at a ~~result, diluted loss per share is~~cash redemption price equal to 100% of the ~~same as basic loss per share for~~principal amount of the ~~period presented.~~

~~Concentration~~2022 Notes, plus accrued and unpaid interest, if any. The holders of ~~Credit Risk~~

~~Financial instruments that potentially subject~~the 2022 Notes have the right to cause the Company to ~~concentrations~~repurchase for cash all or a portion of ~~credit risk consist~~the 2022 Notes held by such holder upon the occurrence of a ~~cash account~~“fundamental change” (as defined in the Note Purchase Agreement) or in connection with certain asset sales, in each case at a ~~financial institution,~~price equal to 100% of par plus accrued and unpaid interest, if any.

As of March 31, 2023, the net carrying amount of the 2022 Notes was $28,999, which ~~at times, may exceed~~includes unamortized issuance costs and debt discount of $1,001, which will be amortized over the ~~Federal Depository Insurance Coverage~~remaining 22 months. The estimated fair value of ~~$250,000. At September 30, 2019,~~ the ~~Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.~~

~~Fair Value~~convertible debt instruments was approximately $25,300 as of ~~Financial Instruments~~

March 31, 2023. The fair value of the ~~Company’s assets~~2022 Notes was measured using the Bloomberg OVCV model and ~~liabilities,~~CNVI model which ~~qualify as financial instruments under ASC 820, “Fair Value Measurements~~modifies the underlying OVCV program. These models incorporate inputs for volatility, Leafly’s stock price, time to maturity, the risk-free rate and ~~Disclosures,” approximates the carrying amounts represented~~Leafly’s credit spread, some of which are considered Level 3 inputs in the ~~accompanying~~fair value hierarchy.

2021 Notes

Legacy Leafly issued a series of convertible promissory notes in June 2021 totaling approximately $23,970. In August 2021, Legacy Leafly issued additional convertible promissory notes totaling $7,500 to Merida Capital, an affiliate of Merida. (Both note issuances are collectively referred to below as the “2021 Notes”).

The 2021 Notes bore interest at 8% annually and were considered traditional convertible debt with the entire amount recognized as a liability (with no amount allocated to equity), reduced for direct issuance costs, with initial and subsequent recognition at amortized cost in accordance with the interest method. Unless converted, the entire balance ~~sheet, primarily~~of principal and accrued but unpaid interest was due on December 3, 2022. The 2021 Notes were contingently convertible upon the occurrence of certain events, to ~~their short-term nature.~~include a qualified financing, a non-qualified financing, or in a qualified public transaction.

~~Recent Accounting Pronouncements~~

~~Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on~~On February 4, 2022, in connection with the ~~Company’s condensed financial statements.~~

~~Note 3 — Initial Public Offering~~

~~Pursuant~~Business Combination, the 2021 Notes were converted to approximately 4,128 shares of Leafly common stock at the ~~Initial Public Offering, the Company sold 13,001,552 Units at a~~conversion price of ~~$10.00~~approximately $2.63, which was 80% of the implied price per ~~Unit, inclusive of 1,001,552 Units sold to the underwriters on November 13, 2019 upon the underwriters’ election to partially exercise their over-allotment option. Each Unit consists of one~~ share of common stock in the Business Combination. Upon closing of the Business Combination, the shares of common stock then converted to shares of common stock of the combined company using the conversion ratio of 0.3283, which was used for conversion of all Leafly securities.

NOTE 12 — Stockholders’ Deficit

The Consolidated Statements of Changes in Stockholders' Deficit reflect the reverse recapitalization on February 4, 2022, as discussed in Note 1. Since Legacy Leafly was determined to be the accounting acquirer in the Business Combination, all periods presented prior to consummation of the Business Combination reflect the historical activity and ~~one-half~~balances of Legacy Leafly (other than common and preferred stock and potentially issuable shares underlying stock options and convertible promissory notes, which have been retroactively restated).

CommonStock

On February 4, 2022, the Business Combination was consummated pursuant to the Merger Agreement. Prior to the Business Combination, Legacy Leafly's capital stock consisted of Series A preferred stock and common stock. Upon the consummation of the Business Combination, all issued and outstanding shares of Series A preferred stock converted to shares of nonredeemable common stock. In connection with the settlement of the FPAs (Note 13), 25 shares of the Company’s common stock held by the Sponsor were canceled, according to an agreement between the Company and the Sponsor entered into upon execution of the FPAs.

As of March 31, 2023 Leafly's authorized capital stock consisted of:

•

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

•

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

Sponsor Shares Subject to Earn-Out Conditions

In accordance with the Merger Agreement, upon closing of the Business Combination, 1,625 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 $13.50 for 20 out of 30 consecutive trading days at any time during the two-year period following closing, and the remaining 50% will be released from escrow if and when the Company's common stock trades at or above $15.50 for 20 out of 30 consecutive trading days at any time during the three-year period following closing. In addition, all 1,625 Escrow Shares will be released upon a change in control.

We account for the Escrow Shares as derivative liabilities, remeasured to fair value on a recurring basis, with changes in fair value recorded to earnings. See Note 18 for additional information.

Treasury Stock

Effective August 1, 2022, the Company repurchased 3,081 shares of its common stock at a weighted-average price of $10.28 per share for a total of $31,663, with $31,303 paid with restricted cash held in escrow at the time and $360 remaining in accrued expenses and other current liabilities on our consolidated balance sheets at March 31, 2023 and December 31, 2022. These repurchases were in settlement of the FPAs. See Notes 3 and 13 for additional information.

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 5,429 shares of common stock (the “Rights”) if the Company achieves certain earn-out conditions prior to the third anniversary of the Business Combination. We will account for the Rights as derivative liabilities, which we will remeasure to their current fair value as of the end of each reporting period, with changes in the fair value recorded to earnings. See Note 18 for additional information.

The Rights will be earned and shares of common stock will be issued as follows:

First Tranche

Up to 2,715 shares will be issued if and when:

•

revenue for the year ended December 31, 2022 equaled or exceeded $65,000 (“first revenue target”), or

•

the date on which the volume-weighted average price of common stock for a period of at least 20 days out of 30 consecutive trading days ending on the trading day immediately prior to the date of determination is greater than or equal to $13.50 (“first target price”) during the two-year period beginning on the trading day after the closing date of the Merger (as adjusted for stock splits, reverse stock splits, stock dividends, reorganizations, recapitalizations, reclassifications, combinations, exchanges of shares or other like changes or transactions with respect to shares of common stock occurring at or after the closing of the Business Combination) (the “first target period”), or

•

a change of control occurs within the two years after the closing date of the Business Combination at the first target price or higher, or

•

a pro rata portion of 2,715 shares (50%) if the revenue during the target period meets or exceeds 90% of the first revenue target.

Second Tranche

Up to 2,715 shares will be issued if and when:

•

revenue for the year ending December 31, 2023 equals or exceeds $101,000 (“second revenue target”), or

•

the date on which the volume-weighted average price of common stock for a period of at least 20 days out of 30 consecutive trading days ending on the trading day immediately prior to the date of determination is greater than or equal to $15.50 (“second target price”) during the three-year period beginning on the trading day after the closing date of the Merger (as adjusted for stock splits, reverse stock splits, stock dividends, reorganizations, recapitalizations, reclassifications, combinations, exchanges of shares or other like changes or transactions with respect to shares of common stock occurring at or after the closing of the Business Combination) (the “second target period”), or

•

a change of control occurs within the three years after the closing date of the Business Combination at the second target price or higher, or

•

a pro rata portion of 2,715 (50%) if the revenue during the second target period meets or exceeds 90% of the second revenue target.

If the second revenue target or second target price is met in full, the respective first revenue target or first target price, as applicable, will be deemed to have been met as well if it had not been met during the first target period.

Preferred Stock

The Leafly board of directors 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 ~~warrant (“~~or more series. The Leafly board of directors 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 Leafly board of directors 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 Leafly board of directors 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, 2023 or December 31, 2022.

NOTE 13 — Warrants and Forward Share Purchase Agreements

Public ~~Warrant”~~Warrants

As of both March 31, 2023 and December 31, 2022, there were 6,501 warrants outstanding that had been included in the units issued in Merida’s initial public offering (the “Public Warrants”). Each ~~whole~~ Public Warrant entitles the holder to purchase one share of common stock at ~~a price of $11.50 per share, subject to adjustment (see Note 7).~~

~~MERIDA MERGER CORP. I~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2019~~

~~(Unaudited)~~

~~Note 4 — Private Placement~~

Simultaneously with the closing of the Initial Public Offering, Merida Holdings, LLC and EarlyBirdCapital purchased an aggregate of 3,750,000 Private Warrants at a price of $1.00 per Private Warrant for an aggregate purchase price of $3,750,000, in a private placement that occurred simultaneously with the closing of the Initial Public Offering. On November 14, 2019, in connection with the underwriters’ election to partially exercise their over-allotment option, the Company sold an additional aggregate of 200,311 Private Warrants to Merida Holdings, LLC and EarlyBirdCapital, at a price of $1.00 per Private Warrant, generating gross proceeds of $200,311. Each whole Private Warrant is exercisable to purchase one share of common stock at an exercise price of $11.50 per share. The proceeds from the Private Warrants were added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Warrants and all underlying securities will expire worthless.

~~Note 5 — Related Party Transactions~~

~~Founder Shares~~

In August 2019, the Sponsor purchased 2,875,000 shares (the “Founder Shares”) of the Company’s common stock for an aggregate price of $25,000. On November 4, 2019, the Company effected a stock dividend of 0.2 shares for each share outstanding, resulting in an aggregate of 3,450,000 Founder Shares being held by the Sponsor. All share and per-share amounts have been retroactively restated to reflect the stock dividend. The Founder Shares include an aggregate of up to 199,612 shares that remain subject to forfeiture by the Sponsor following the underwriter’s election to partially exercise its over-allotment option. These shares are subject to forfeiture to the extent that the underwriters’ do not exercise the remaining option so that the Sponsor will collectively own 20% of the Company’s issued and outstanding shares after the Initial Public Offering (assuming the Sponsor did not purchase any Public Shares in the Initial Public Offering and excluding the 120,000 shares of common stock issued to EarlyBirdCapital and its designees (the “Representative Shares”))$11.50. ~~As a result of the underwriters’ election to partially exercise their over-allotment option, 250,388 Founder Shares are no longer subject to forfeiture.~~

The Sponsor has agreed, subject to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares until, with respect to 50% of the Founder Shares, the earlier of one year after the consummation of a Business Combination and the date on which the closing price of the common stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing after a Business Combination and, with respect to the remaining 50% of the Founder Shares, until the one year after the consummation of a Business Combination, or earlier, in either case, if, subsequent to a Business Combination, the Company completes a liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.

~~Advances — Related Party~~

Subsequent to September 30, 2019, the Sponsor advanced the Company an aggregate of $162,500 to cover expenses related to the Initial Public Offering. The advances were non-interest bearing and due on demand. Advances amounting to $162,500 were repaid on November 14, 2019.

~~Promissory Note — Related Party~~

On August 6, 2019, the Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal amount of $150,000, of which $75,569 is outstanding under the Promissory Note as of September 30, 2019. The Promissory Note was non-interest bearing and payable on the earlier of (i) June 30, 2020, (ii) the consummation of the Initial Public Offering or (iii) the date on which the Company determines not to proceed with the Initial Public Offering. The borrowings outstanding under the Promissory Note of $100,569 were repaid on November 14, 2019.

~~MERIDA MERGER CORP. I~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2019~~

~~(Unaudited)~~

~~Related Party Loans~~

In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor, or certain of the Company’s officers and directors or their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be converted into warrants of the post Business Combination entity at a price of $1.00 per warrant. The warrants would be identical to the Private Warrants.

~~Administrative Support Agreement~~

The Company entered into an agreement on November 4, 2019, as amended on November 26, 2019, whereby, commencing on November 4, 2019 through the earlier of the Company’s consummation of a Business Combination and its liquidation, the Company will pay Merida Manager III LLC a total of $5,000 per month for office space, utilities and secretarial and administrative support.

~~Note 6 — Commitments~~

~~Registration Rights~~

Pursuant to a registration rights agreement entered into on November 4, 2019, the holders of the Founder Shares, Representative Shares, Private Warrants, and any warrants that may be issued in payment of Working Capital Loans (and all underlying securities) are entitled to registration rights. The holders of the majority of these securities are entitled to make up to two demands that the Company register such securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which the Founder Shares are to be released from escrow. The holders of a majority of the Representative Shares, Private Warrants or warrants issued in payment of Working Capital Loans made to the Company (or underlying securities) can elect to exercise these registration rights at any time commencing after the Company consummates a Business Combination. Notwithstanding anything to the contrary, EarlyBirdCapital may only make a demand on one occasion and only during the five-year period beginning on the effective date of the Initial Public Offering. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination; provided, however, that EarlyBirdCapital may participate in a “piggy-back” registration only during the seven-year period beginning on the effective date of the Initial Public Offering. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

~~Underwriting Agreement~~

The Company granted the underwriters a 45-day to purchase up to 1,800,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. On November 13, 2019, the underwriters partially exercised their over-allotment option to purchase an additional 1,001,552 Units at $10.00 per Unit, leaving 798,448 Units available for a purchase price of $10.00 per Unit.

~~Business Combination Marketing Agreement~~

The Company has engaged EarlyBirdCapital as an advisor in connection with a Business Combination to assist the Company in holding meetings with its stockholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities in connection with a Business Combination, assist the Company in obtaining stockholder approval for the Business Combination and assist the Company with its press releases and public filings in connection with the Business Combination. The Company will pay EarlyBirdCapital a cash fee for such services upon the consummation of a Business Combination in an amount equal to 3.5% of the gross proceeds of Initial Public Offering (exclusive of any applicable finders’ fees which might become payable); provided that up to 30% of the fee may be allocated at the Company’s sole discretion to other FINRA members that assist the Company in identifying and consummating a Business Combination.

~~MERIDA MERGER CORP. I~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2019~~

~~(Unaudited)~~

~~Note 7 — Stockholders’ Equity~~

~~Preferred Stock —~~ The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors. At September 30, 2019, there were no shares of preferred stock issued or outstanding.

~~Common Stock~~ — The Company is authorized to issue 50,000,000 shares of common stock with a par value of $0.0001 per share. At September 30, 2019, there were 3,570,000 shares of common stock issued and outstanding, of which an aggregate of up to 199,612 shares remain subject to forfeiture as a result of the underwriters’ election to partially exercise their over-allotment option, so that the Sponsor will collectively own 20% of the Company’s issued and outstanding common stock after the Initial Public Offering (assuming the Sponsor did not purchase any Public Shares in the initial Public Offering and excluding the Representative Shares).

~~Warrants~~— 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 ~~will become~~became exercisable ~~on the later of (a)~~ 30 days after the completion of athe Business ~~Combination or (b) 12 months from the closing of the Initial Public Offering.~~Combination. No warrants will 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 warrants and a current prospectus relating to such shares of common stock.

Notwithstanding the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the ~~public warrants~~Public Warrants is not effective within a specified period following the consummation of a ~~Business Combination,~~merger, warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise 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 warrants on a cashless basis. The Public Warrants will expire five years after the completion of a ~~Business Combination~~merger or earlier upon redemption or liquidation.

Once the warrants become exercisable, the Company may redeem the Public Warrants:

•

in whole and not in part;

•

at a price of $0.01 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 $18.00 per share for any 20 trading days within a 30-trading day period commencing after the warrants become 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.

	●	~~in whole and not in part;~~

	●	~~at a price of $0.01 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 $18.00 per share for any 20 trading days within a 30-trading day period commencing after the warrants become 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

As of both March 31, 2023 and December 31, 2022, there were 3,950 warrants outstanding 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, ~~underlying the Units sold in the Initial Public Offering,~~ except that the Private Warrants and the shares of common stock issuable upon the exercise of the Private Warrants ~~will~~were not be transferable, assignable or salable until after the completion of athe Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants will be exercisable for cash or on a cashless basis, at the holder’s option, and be 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 will be 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 ~~warrants~~Private Warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the ~~warrants~~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 ~~warrants. If~~Private Warrants.

We account for the Private Warrants as derivative liabilities, remeasured to fair value on a recurring basis, with changes in the fair value recorded to earnings. See Note 18 for additional information.

Forward Share Purchase Agreements

In December 2021 and January 2022, the Company ~~is unable~~entered into four separate FPAs with certain investors. The FPAs allowed the investors to ~~complete~~sell and transfer common stock held by the investors, not to exceed a ~~Business Combination within the Combination Period and~~total of 4,000 shares in aggregate, to the Company ~~liquidates the funds held~~ in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.

~~MERIDA MERGER CORP. I~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2019~~

~~(Unaudited)~~

~~In addition, if (x) the Company issues additional shares of common stock or equity-linked securities~~exchange for capital raising purposes in connection with the closing of an initial Business Combination at an issue price or effective issue price of less than $9.20 per share of common stock (with such issue price or effective issuecash. The price to be ~~determined in good faith~~paid by the ~~Company’s board~~Company was initially $10.16 per share for up to 2,600 shares and $10.01 per share for up to 1,400 shares. As required by the FPAs, $39,032 of ~~directors, and~~cash was placed into escrow upon closing of the Business Combination, to be used for the share purchases. If the FPAs were not exercised by the holders within their terms of three months post-Business Combination closing, the associated funds were to be released from escrow to the Company. We account for the FPAs as derivative liabilities, remeasured to fair value on a recurring basis, with changes in the ~~case of any such issuance~~fair value recorded to earnings.

On May 3, 2022, Leafly and the holders entered into amendments to the Sponsor, initial stockholders or their affiliates, without taking into account any Founder’s Shares held by them prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of an initial Business Combination on the date of the consummation of an initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummated an initial Business Combination (such price, the “Market Value”FPAs (the “Amended FPAs”) ~~is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of (i) the Market Value or (ii)~~. The Amended FPAs modified the price at which the applicable holder has the right, but not the obligation, to have Leafly repurchase certain shares held by the applicable holder as of the closing of the Business Combination and not later sold into the market to a price of $10.16 per share (with respect to 686 of the shares subject to the Amended FPAs) and $10.31 per share (with respect to 2,404 of the shares subject to the Amended FPAs). The Amended FPAs also modified the date by which such holders may elect to have Leafly repurchase their shares to August 1, 2022. In connection with the Amended FPAs, certain amendments were also made to the escrow agreements in respect of the escrow accounts.

During the year ended December 31, 2022, a total of $8,089 was released from the escrow accounts due to the FPA holders selling shares in the open market, which was accordingly reclassified on the Company's balance sheet from restricted cash to cash.

Effective August 1, 2022, the FPA holders elected to have Leafly repurchase their remaining 3,081 shares covered by the FPAs for an aggregate repurchase price of $31,663. As a result, the shares repurchased have been removed from Leafly's outstanding shares effective as of the date of purchase and placed into treasury. The FPA holders elected to have all but $360 disbursed from the escrow account and are able to claim the remainder any time until August 1, 2023. If unclaimed, the remaining funds in escrow will be distributed to the Company. Also, in connection with the settlement, 25 shares of the Company’s common stock held by the Sponsor were canceled, according to an agreement between the Company ~~issues~~and the ~~additional~~Sponsor entered into upon execution of the FPAs.

NOTE 14 — Equity Incentive and Other Plans

The Company currently has four equity plans: the New Leafly 2021 Equity Incentive Plan (the “2021 Plan”), the Legacy Leafly 2018 Equity Incentive Plan (the “2018 Plan”), the New Leafy Earn-Out Plan (the “Earn-Out Plan”), and the New Leafly 2021 Employee Stock Purchase Plan (the “ESPP”). Awards under the 2021 Plan 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, 2023.

Stock-Based Compensation

2021 Plan

The 2021 Plan became effective immediately upon closing of the Business Combination. Pursuant to the 2021 Plan, 4,502 shares of common stock ~~or equity-linked securities.~~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) 4,502 shares (adjusted pursuant to the terms of the 2021 Plan). Effective January 1, 2023, 4,416 shares of common stock were available for issuance under the 2021 Plan.

2022 Awards

~~Representative Shares~~

In August ~~2019,~~2022 and October 2022, the Company’s compensation committee of the board of directors and an authorized executive of the Company, ~~issued~~as applicable, granted stock options to ~~EarlyBirdCapital~~purchase an aggregate of approximately 102 shares of common stock at a weighted-average exercise price of $1.98 per share and ~~its designees~~granted an aggregate of 2,560 restricted stock units (”RSUs”) and performance stock units (”PSUs”). Of the ~~120,000 Representative Shares~~PSUs granted, 683 were market-based awards made to executives with a grant date fair value of $0.04 per share with vesting based on achievement of a $1.0 billion market cap by February 4, 2026, and 137 were performance awards made to executives with a grant date fair value of $0.81 per share with vesting based in part on achievement of a fiscal year 2022 Adjusted EBITDA target, which was achieved. Prior to such grants, no grants had been made under the 2021 Plan. Leafly’s compensation committee approved the vesting of 137 PSUs awarded in 2022, which vested based on the achievement of the Company’s 2022 Adjusted EBITDA target, on March 13, 2023.

2023 Awards

Leafly’s compensation committee approved the grant of 631 annual incentive plan RSUs on March 14, 2023, which vest over four months.

Stock Options

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. No options were granted under the 2021 Plan during the three months ended March 31, 2023 or 2022.

Stock option activity under the 2021 Plan for the three months ended March 31, 2023 was as follows:


	Number of Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Term (in years)
Outstanding at January 1, 2023		101	$	1.98	$	—		9.61
Exercised		—		—
Forfeited or expired		—		1.60
Outstanding at March 31, 2023		101	$	1.98	$	—		9.38

Vested and exercisable		27	$	1.98	$	—		9.37

As of March 31, 2023, there was $83 of total unrecognized compensation cost related to stock options granted under the 2021 Plan. That cost is expected to be recognized over a weighted-average period of 2.86 years.

Restricted Stock Units and Performance Stock Units

RSU and PSU activity under the 2021 Plan for the three months ended March 31, 2023 was as follows:


	Number of Shares			Weighted Average Grant Date Fair Value		Total Fair Value
Unvested at January 1, 2023		2,058		$	1.30
Granted		631			0.48	$	305
Vested		(359	)		0.94	$	188
Forfeited		(485	)		1.00
Unvested at March 31, 2023		1,845		$	0.89

As of March 31, 2023, there was $1,437 total unrecognized compensation cost related to unvested RSUs and $24 total unrecognized compensation cost related to market-based PSUs granted under the 2021 Plan. The total cost is expected to be recognized over a weighted-average period of 2.57 years.

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 is estimated on the date of grant using the Black-Scholes option pricing model. There were no grants made in 2023 or 2022 under the 2018 Plan.

Stock option activity under the 2018 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, 2023		3,431		$	1.60
Exercised		—			0.40
Forfeited or expired		(446	)		1.40
Outstanding at March 31, 2023 1		2,985		$	1.63	$	15		4.73

Vested and exercisable		1,777		$	1.25	$	15		4.81

Includes 1,929 and 1,056 awards 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.

As of March 31, 2023, there was: (i) $611 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 1.96 years; and (ii) $1,136 of unrecognized compensation cost related to market-based 2018 Plan option awards, which is expected to be recognized over a remaining weighted-average service period of approximately 1.05 years.

Stock-Based Compensation Expense

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


	Three Months Ended March 31,
	2023		2022

Sales and marketing	$	76	$	34
Product development		109		18
General and administrative		473		1,872
	$	658	$	1,924

2022 Option Modification

Concurrent with the closing of the Business Combination, the vesting provisions of certain stock options previously granted in 2021 under the 2018 Plan to our Chief Executive Officer to purchase 2,917 shares of common stock were modified, and a corresponding charge of $1,366 was recorded during the three months ended March 31, 2022 to general and administrative expenses and additional paid-in capital.

Earn-Out Plan

The Earn-Out Plan became effective immediately upon closing of the Business Combination. Pursuant to the Earn-Out Plan, approximately 571 shares of common stock have been reserved for issuance to employees and certain other eligible parties in the form of RSUs. These RSUs will vest if the Company achieves certain thresholds prior to the third anniversary of the Merger. No RSUs have been awarded under the Earn-Out Plan as of March 31, 2023.

Employee Stock Purchase Plan

The ESPP became effective immediately upon closing of the Business Combination. Pursuant to the ESPP, 1,126 shares of common stock are 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) 1,126 shares (as adjusted pursuant to the terms of the ESPP). Effective January 1, 2023, 1,104 shares of common stock were available for issuance under the ESPP. On March 15, 2023, Leafly’s employees purchased 289 shares for a total purchase price of $120. The Company's current offering period runs from March 16, 2023 through September 15, 2023.

Defined Contribution Plan

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


	Three Months Ended March 31,
	2023		2022

401(k) matching contributions	$	233	$	244

NOTE 15 — Related Party Transactions

In June 2021 Merida Capital, an affiliate of Merida, purchased a convertible promissory note totaling $1,000. The note was issued as part of the existing series of 2021 Notes (see Note 11) and was subject to the same interest rate, maturity, and conversion terms. This note converted to shares of Leafly common stock upon closing of the Business Combination in February 2022, along with the other 2021 Notes.

At December 31, 2022, the Company ~~accounted~~owed $10 to two members of its board of directors, which is included in accrued expenses and other current liabilities on Leafly's consolidated balance sheet and was repaid prior to March 31, 2023.

NOTE 16 — 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.

The Company considers its preferred stock to be participating securities. As of March 31, 2023 and March 31, 2022, the Company had 1,625 outstanding shares of common stock that are in escrow and subject to earn-out conditions and thus forfeiture, which do not meet the criteria for participating securities (see Note 12 for additional information). Net loss is attributed to common stockholders and participating securities based on their participation rights. Net loss is not attributed to the preferred stock as the holders of the preferred stock do not have a contractual obligation to share in any losses.

Diluted earnings per share attributable to common stockholders adjusts basic earnings per share for the ~~Representative Shares~~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 ~~an offering cost~~such, are excluded from the calculation of diluted earnings per share and disclosed separately. Because of the ~~Initial Public Offering,~~nature of the calculation, particular securities may be dilutive in some periods and anti-dilutive in other periods. The Class 1, 2, and 3 common shares presented below have been retroactively restated for all periods using the conversion ratio in connection with the Business Combination.

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


	Three Months Ended March 31,
	2023			2022

Net loss	$	(5,397	)	$	(19,376	)

Weighted average shares outstanding		38,705			37,525

Basic net loss per share	$	(0.14	)	$	(0.52	)
Diluted net loss per share	$	(0.14	)	$	(0.52	)

During 2022, the Class 1, 2, and 3 shares were outstanding from January 1, 2022 through February 3, 2022, while only one class of common stock was outstanding beginning February 4, 2022. Following are the calculations of basic and diluted net loss per share for each class of common stock (refer to ~~stockholder’s equity.~~ the tables above for the impact of common stock equivalents on common shares for the periods presented):



	Three Months Ended March 31, 2022
	Common			Class 1			Class 2			Class 3

Net loss	$	(12,013	)	$	(2,748	)	$	(4,030	)	$	(585	)
Weighted average shares outstanding		35,206			3,543			5,196			754
Common stock and common stock equivalents		35,206			3,543			5,196			754

Basic net loss per share	$	(0.34	)	$	(0.78	)	$	(0.78	)	$	(0.78	)
Diluted net loss per share	$	(0.34	)	$	(0.78	)	$	(0.78	)	$	(0.78	)

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 (with figures recast using the conversion ratio for the Business Combination, as applicable):


	Three Months Ended March 31,
	2023		2022

Shares subject to warrants		10,451		10,451
Shares subject to convertible promissory notes		2,480		2,400
Shares subject to forward purchase agreements		—		3,861
Escrow Shares		1,625		1,625
Shares subject to outstanding common stock options, RSUs and PSUs		4,853		3,681
Shares subject to stockholder earn-out rights		5,429		5,429
		24,838		27,447

See Note 11 for additional information regarding convertible promissory notes, Note 12 for additional information regarding stockholder earn-out rights, preferred stock, and Escrow Shares, Note 13 for additional information regarding warrants, and Note 14 for additional information regarding stock options, RSUs and PSUs.

NOTE 17 — Segment Reporting

Segment revenue and gross profit were as follows during the periods presented:


	Three Months Ended March 31,
	2023		2022
Revenue:
Retail	$	9,470	$	9,179
Brands		1,779		2,241
Total revenue	$	11,249	$	11,420

Gross profit:
Retail	$	8,390	$	8,139
Brands		1,513		1,826
Total gross profit	$	9,903	$	9,965

Assets are not allocated to segments for internal reporting presentations, nor are depreciation and amortization.

Geographic Areas

The Company’s operations are primarily in the U.S. and to a lesser extent, in Canada. Refer to Note 9 for revenue classified by major geographic area.

NOTE 18 — Fair Value Measurements

The Company ~~estimated~~follows the guidance in ASC 820, “Fair Value Measurement,” for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period. The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of ~~Representative~~its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities).

The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3: Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.

The Company’s financial instruments include cash equivalents, restricted cash, accounts receivable from customers, accounts payable and accrued liabilities, all of which are typically short-term in nature. The Company believes that the carrying amounts of these financial instruments reasonably approximate their fair values due to their short-term nature.

The following table presents information about the Company’s derivative liabilities that are measured at fair value on a recurring basis beginning February 4, 2022 (the date of closing of the Business Combination) when the derivative liabilities were assumed, and discloses the fair value hierarchy level of the valuation inputs the Company utilized to determine such fair value:


			Fair Value at								Change in Fair Value of Derivatives
Description	Level		March 31, 2023		December 31, 2022		March 31, 2022		February 4, 2022		Three Months Ended March 31, 2023		Three Months Ended March 31, 2022
Private Warrants derivative liability		3	$	130	$	182	$	7,989	$	3,916	$	52	$	(4,073	)
Forward share purchase agreements derivative liability 1		3		—		—		7,452		14,170		—		6,718
Escrow Shares derivative liability		3		7		52		10,129		6,868		45		(3,261	)
Stockholder earn-out rights derivative liability		3		34		204		35,912		26,131		170		(9,781	)
Total			$	171	$	438	$	61,482	$	51,085	$	267	$	(10,397	)

The forward share purchase agreements were settled effective August 1, 2022, at which time the fair value was $13,824 based on cash settlement.

Assumptions used to determine the fair values are presented in the following sections:

Private Warrants Derivative Liability

The Private Warrants were valued using a Black-Scholes model and the following Level 3 inputs:


	March 31, 2023			December 31, 2022			March 31, 2022			February 4, 2022
Exercise price	$	11.50		$	11.50		$	11.50		$	11.50
Stock price	$	0.40		$	0.65		$	8.28		$	6.53
Volatility		88.8	%		75.0	%		36.7	%		34.3	%
Term (in years)		3.84			4.09			4.85			5.00
Risk-free rate		3.7	%		4.1	%		2.4	%		1.8	%
Dividend yield		0.0	%		0.0	%		0.0	%		0.0	%

The volatility input was calculated using a weighted average of historical volatilities from select benchmark companies and the volatility of the Public Warrants. The term input represents the maximum contractual term, though the Private Warrants may be exercised earlier. The interest rate input is the U.S. Treasury constant maturity rate for the instrument that most closely matches the term input.

Forward Share Purchase Agreements Derivative Liability

The FPAs were valued using a Black-Scholes model and the following Level 3 inputs:


	March 31, 2022			February 4, 2022
Exercise price - one agreement	$	10.16		$	10.16
Exercise price - three agreements	$	10.01		$	10.01
Stock price	$	8.28		$	6.53
Volatility		72.6	%		63.9	%
Term (in years)		0.09			0.24
Risk-free rate		0.2	%		0.2	%
Dividend yield		0.0	%		0.0	%

The volatility input was calculated using a weighted average of historical volatilities from select benchmark companies. The term input represents the maximum contractual term, though the shares underlying the FPAs were in some cases sold by the holders into the open market earlier (see Note 13). The interest rate input is the U.S. Treasury constant maturity rate for the instrument that most closely matches the term input.

Escrow Shares Derivative Liability

The Escrow Shares derivative liability was calculated using a Monte Carlo simulation and the following Level 3 inputs:


	March 31, 2023			December 31, 2022			March 31, 2022			February 4, 2022
First stock price trigger	$	13.50		$	13.50		$	13.50		$	13.50
Second stock price trigger	$	15.50		$	15.50		$	15.50		$	15.50
Stock price	$	0.40		$	0.65		$	8.28		$	6.53
Volatility		87.5	%		86.0	%		63.0	%		64.0	%
Term (in years)		1.84			2.09			2.85			3.00
Risk-free rate		4.1	%		4.4	%		2.4	%		1.6	%
Dividend yield		0.0	%		0.0	%		0.0	%		0.0	%

The volatility input was calculated using a weighted average of historical volatilities from select benchmark companies. The term input represents the maximum contractual term, though the shares may be released from escrow earlier. The interest rate input is the U.S. Treasury constant maturity rate for the instrument that most closely matches the term input.

Stockholder Earn-Out Rights Derivative Liability

The stockholder earn-out rights were valued using a Monte Carlo simulation and the following Level 3 inputs:


	March 31, 2023			December 31, 2022			March 31, 2022			February 4, 2022
First stock price trigger	$	13.50		$	13.50		$	13.50		$	13.50
Second stock price trigger	$	15.50		$	15.50		$	15.50		$	15.50
First revenue trigger	$	65,000		$	65,000		$	65,000		$	65,000
Second revenue trigger	$	101,000		$	101,000		$	101,000		$	101,000
Stock price	$	0.40		$	0.65		$	8.28		$	6.53
Base year revenue assumption	$	44,000		$	48,000		$	55,500		$	55,500
Volatility		87.5	%		86.0	%		63.0	%		64.0	%
Term (in years)		1.84			2.09			2.85			3.00
Risk-free rate		4.1	%		4.4	%		2.4	%		1.6	%
Dividend yield		0.0	%		0.0	%		0.0	%		0.0	%

The revenue assumption input relates to projected revenue for fiscal year 2022 (for the periods ended March 31, 2022 and February 4, 2022) and fiscal year 2023 (for the periods ended December 31, 2022 and March 31, 2023) and represents the midpoint of revenue guidance the Company had provided in the respective period. The volatility input was calculated using a weighted average of historical volatilities from select benchmark companies. The term input represents the maximum contractual term, though the stockholder earn-out rights may vest earlier. The interest rate input is the U.S. Treasury constant maturity rate for the instrument that most closely matches the term input.

NOTE 19 — Subsequent Event

Nasdaq Notification of Noncompliance

On May 2, 2023, the Company received a letter from Nasdaq notifying it that Leafly’s common stock would be subject to delisting from Nasdaq unless the Company timely requested a hearing before a Nasdaq Hearings Panel (the “Panel”). The Panel has the discretion to grant up to an additional 180 calendar days from May 2, 2023, to give the Company time to regain compliance with the $1.00 per share minimum bid price requirement for continued listing under Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Rule”) (Note 8). On May 8, 2023, the Company timely requested a hearing before the Panel. The Request stayed any further action by Nasdaq, and while the hearings process is pending, it is expected that the Common Stock will continue to be ~~$910 based upon the price~~listed and traded on Nasdaq.

Table of the Founder Shares issued to the Sponsor. The holders of the Representative Shares have agreed not to transfer, assign or sell any such shares until the completion of a Business Combination. In addition, the holders have agreed (i) to waive their redemption rights with respect to such shares in connection with the completion of a Business Combination and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete a Business Combination within the Combination Period.

The Representative Shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the effective date of the registration statement related to the Initial Public Offering pursuant to Rule 5110(g)(1) of FINRA’s NASD Conduct Rules. Pursuant to FINRA Rule 5110(g)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective date of the registration statements related to the Initial Public Offering, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days immediately following the effective date of the registration statements related to the Initial Public Offering except to any underwriter and selected dealer participating in the Initial Public Offering and their bona fide officers or partners.

~~Note 8 — Subsequent Events~~

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Other than as described in these financial statements, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

Contents

Item ~~2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Merida Merger Corp. I. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Merida Capital Partners III LP. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with ~~the~~our audited financial statements and the notes related thereto ~~contained elsewhere~~which are included in “Part I. Item 1. Financial Statements” of this Quarterly ~~Report.~~Report on Form 10-Q. Certain information contained in the discussion and analysis set forth below includes forward-looking ~~statements that involve risks and uncertainties.~~

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could causestatements. Our actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results tomay differ materially from those anticipated in ~~the~~these forward-looking statements please refer to the Risk Factors section of the Registration Statement on Form S-1 (Registration No. 333-234134) filed with the SEC. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of ~~new~~many factors, including those set forth under “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”).

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

Leafly is a leading online cannabis discovery marketplace and resource for cannabis consumers. Leafly provides an information ~~future events or otherwise.~~

resource platform with a deep library of content, including detailed information about cannabis strains, retailers and cannabis products. We are a ~~blank check company formed under~~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 194 total employees with 184 in the ~~laws~~U.S. and 10 in Canada as of March 31, 2023. The number of employees at March 31, 2023 does not reflect the impact of the ~~State of Delaware~~reduction in force that was announced on ~~June 20, 2019 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar Business Combination with~~March 16, 2023 discussed below.

Leafly is one ~~or more businesses. We intend to effectuate our Business Combination using cash from the proceeds~~ of the ~~Initial Public Offering~~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 and offers 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, 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. Through the ~~Private Warrants,~~participation on our ~~capital stock, debt~~platform, retailers and brands can reach and engage the millions of monthly average users (“MAUs”) on our platform, one of the largest cannabis-focused audiences in the world.

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

We anticipate these and other changes we made to our cost structure in 2022 and 2023 will save a total of approximately $24,000 in cash costs annually (beginning in the second quarter of 2023), now that all of the restructuring and other cost savings initiatives are fully implemented. These cost reductions are not expected to have a significant impact on the scope of our business. We will focus on maximizing efficiencies across all areas, investing in projects and products that we expect will result in the highest returns.

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

MAUs represents the total unique visitors to Leafly websites and native apps each month, which in turn represents the maximum potential unique visitors that could become customers of dispensaries or brands listed on Leafly’s platform, within a given month. Leafly’s revenue model for dispensaries and brands is based, in part, on the number of visitors it can drive to dispensary or brand listings on the platform. Providing more visitors, as represented by MAUs, may lead to increased advertising rates for both dispensaries and brands.

Users (visitors) are considered active by initiating a session on at least one webpage or app. Each month’s MAU tally represents the total number of unique visitors to Leafly during the specified month and includes both new visitors as well as those returning from the previous month. We count a unique user the first time an individual accesses one of our websites or native apps during a calendar month. If an individual accesses our websites using different web browsers within a given month, the first access by each such web browser is counted as a separate unique user. If an individual accesses more than one of our websites or native apps in a ~~Business Combination:~~single month, the first access to each website or app is counted as a separate unique user since unique users are tracked separately for each domain and native app. The unique visitors are measured using Google Analytics for our web applications and Firebase for our native applications.

Due to third-party technological limitations, user software settings, or user behavior, Google Analytics may assign a unique cookie to different instances of access by the same individual to our websites. In such instances, Google Analytics would count different instances of access by the same individual as separate unique users. Accordingly, reliance on the number of unique users counted by Google Analytics may overstate the actual number of unique users who access our websites during the period. Additionally, we cannot differentiate between a user who accesses Leafly across both the web and a native app, which could overstate the number of unique users.

~~Similarly, if~~A growing number of MAUs is indicative of our overall product health as it is the result of metrics reflecting both retention and acquisition of customers of our suppliers. While we ~~issue debt securities or otherwise incur significant indebtedness,~~consider MAUs to be a leading indicator of general product health representing the blend of new customer acquisition and the retention of returning customers, we also acknowledge that this must be paired with a deeper analysis of MAU behavioral metrics. We measure the quality of experience by looking at MAU cohorts engagement behaviors as measured by time-on-site, interaction with personalization features such as favoriting and following, and orders placed.

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

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

MAUs increased 4% for the three months ended March 31, 2023 compared to 2022, due to an increase in news and learn traffic. We continued to focus primarily on growing the number of retail partners on our platform, leading to 5% growth in year-over-year ending retail accounts. Declining pricing across some of Leafly’s advertising products in major markets contributed to a 4% decline in ARPA for the three months ended March 31, 2023 when compared to the same period in 2022.

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.

Retail revenue from digital media display ads and subscriptions revenue increased $491 and decreased $208, respectively, contributing to the overall increase in retail revenue for the three months ended March 31, 2023. Digital media display ads revenue growth was driven by increased volumes of display ads sold. For the three months ended March 31, 2023, the decrease in retail subscription revenue was primarily driven by customer churn. Our overall growth strategy contributed to a 5% increase in the number of ending retail accounts.

Ending retail account growth in 2023 reflects favorable impacts from several developing market states (typically at a lower ARPA) as well as a strategic pricing decision to attract a greater number of local retailers onto our platform. Both of these drivers contributed to a 4% decrease in ARPA for the three months ended March 31, 2023.

Macro challenges have ~~neither engaged~~put overall pressure on the cannabis industry, particularly in ~~any operations nor generated any revenues~~our brand advertising business. For the three months ended March 31, 2023, Brands revenue decreased $462, mostly in Canada, due primarily to:

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

Retail cost of revenue increased due primarily to $107 increase in business platform and merchant processing costs, for the period ended March 31, 2023, partially offset by reductions in website infrastructure costs of $37 and headcount costs of $30.

Brands cost of revenue decreased for the three months ended March 31, 2023, primarily reflecting a decrease of $100 in costs of display advertising, corresponding to decreased associated revenue, and $22 lower website infrastructure costs, as described under Retail cost of revenue above, as these costs are shared across both of our segments. Brands cost of revenue also decreased $25 for the three months ended March 31, 2023, due to reduced headcount costs.

Sales and marketing expenses declined beginning in the third quarter of 2022 as we began to implement the cost reduction activities ~~from June 20, 2019 (inception) through September 30, 2019 were organizational~~described under “Significant Events” above. We reduced advertising and marketing spending by $1,051 and employee compensation costs by $751, when comparing the three months ended March 31, 2023 to the same period in 2022. The Company reduced its sales and marketing spend in response to slowing conditions, but believes it is still positioned to respond efficiently to growth opportunities.

Product development expenses also began to slow as we implemented cost reduction activities and ~~those necessary to prepare~~reprioritized our development efforts. Professional services fees included within product development declined $359 for the ~~Initial Public Offering, described below.~~ three months ended March 31, 2023 largely related to the reduction in use of outsourced providers, partially offset by an increase in depreciation and amortization of $163. Also within product development are headcount costs generally offset by capitalized product development costs in 2022. Headcount costs prior to capitalization decreased approximately $237 for the three months ended March 31, 2023 when compared to the same period in 2022. Product development expenses are reported net of $535 and $758 of costs capitalized to internal-use software for the three months ended March 31, 2023 and 2022, respectively. See Note 6 to our consolidated financial statements within this Quarterly Report for more information.

General and administrative expenses decreased $271 for the three months ended March 31, 2023 due primarily to:

Interest expense for the three months ended March 31, 2023 was similar to that of the same period in 2022.

The change in fair value of derivatives is due to the recognition of derivatives in connection with the Business Combination and changes in their valuations, which were primarily driven by the decline in Leafly’s stock price between the two periods. See Note 18 to our consolidated financial statements within this Quarterly Report for details on the valuations and the fair value changes in the periods presented.

Other expense, net decreased for the three months ended March 31, 2023 due primarily to $874 of costs incurred in connection with the Business Combination during 2022, which were allocated upon closing of the Business Combination to newly issued derivative liabilities that are recorded at fair value on a recurring basis. See Note 1 to our consolidated financial statements within this Quarterly Report for information on allocation of these costs.

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 a key measure 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 an analytical tool, and you should not consider these in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are as follows:

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

The decrease in EBITDA loss is primarily due to the change in fair value of the derivatives for the three months ended March 31, 2023 versus the same period in 2022 as well as the result of the cost saving measures described above. See Note 18 to our consolidated financial statements within this Quarterly Report for more information regarding the fair value of derivatives. The decrease in our loss on an Adjusted EBITDA basis is primarily due to decreased operating revenues until after the completion of our Business Combination. We expect to generate non-operating income in the form of interest income on marketable securities held after the Initial Public Offering. We incur expenses as a result of ~~being~~the cost saving measures discussed above.

Cash, cash equivalents, and restricted cash totaled $15,563 and $25,202 as of March 31, 2023 and December 31, 2022, respectively. Explanations of our cash flows for the periods presented follow.

During the first quarter of 2023, the Company utilized a ~~public company (for legal, financial reporting, accounting~~total of $9,639 of cash, primarily to fund cash operating losses of approximately $3,947, to fund changes in current assets and ~~auditing compliance), as well as~~liabilities of $5,269 and for ~~due diligence expenses.~~

~~For~~capitalized software costs of $535. The changes in current assets and liabilities during the three months ended ~~September 30, 2019~~March 31, 2023 included primarily reductions in accrued expenses of $1,565 primarily related to the payment 2022 bonuses and accrued interest as well as increases in prepaid expenses and other current assets of $2,460 related to the payment of directors and officers insurance.

As compared to the three months ended March 31, 2022, cash used in operations decreased by $4,789 to $9,216 for the ~~period from June 20, 2019 (inception) through September 30, 2019, we had a~~three months ended March 31, 2023, mainly due to decreased net loss from operations. See discussion under “— Results of ~~$87~~Operations” above for more information. Cash used in investing activities decreased $253 to a use of $535 primarily due to lower software capitalization in the current year. Cash and ~~$426, which consisted~~restricted cash provided by financing decreased $58,599 over this same period to $112 for the three months ended March 31, 2023, mainly due to proceeds from the convertible promissory notes and the Merger in 2022. See Notes 1, 12, and 13 to our consolidated financial statements within this Quarterly Report for more information.

Deferred revenue is primarily related to software subscriptions and display ads. The revenue deferred at March 31, 2023 is expected to be recognized in the subsequent 12-month period. See Note 9 to our consolidated financial statements within this Quarterly Report for further discussion.

Table of ~~formation~~Contents

We are obligated to repay any convertible notes that do not ultimately convert to equity, as well as the other operating ~~costs.~~liabilities on our Consolidated Balance Sheets, such as accrued liabilities.

Leafly has incurred operating losses since its inception and had an accumulated deficit of $70,097 and $64,700 at March 31, 2023 and December 31, 2022, respectively.

Under the rules of ASC Subtopic 205-40 “Presentation of Financial Statements — Going Concern” (“ASC 205-40”), reporting companies are required to evaluate whether conditions and/or events raise substantial doubt about their ability to meet their future financial obligations as they become due within one year after the date that the financial statements are issued. This evaluation takes into account a company’s current available cash and projected cash needs over the one-year evaluation period but may not consider things beyond its control. As ~~of September 30, 2019,~~noted above, we ~~had~~have experienced revenue declines, incurred recurring operating losses, used cash ~~of $9,663. Until~~from operations, and relied on the ~~consummation~~capital raised in the Business Combination to continue ongoing operations. These conditions, when considered in the aggregate, raise substantial doubt about our ability to continue as a going concern within one year of the ~~Initial Public Offering,~~date these financial statements are issued.

After considering all available evidence, we determined that, based on both of our cost reduction measures, our current positive working capital will be sufficient to meet our capital requirements for a period of at least twelve months from the date that our March 31, 2023 financial statements are issued. We believe our restructuring plans alleviate the substantial doubt about our ability to continue as a going concern within one year of the date these financial statements are issued. Management will continue to evaluate our liquidity and capital resources.

Upon the closing of the ~~Initial Public Offering, we consummated~~Business Combination, Leafly issued the ~~sale of 3,750,000 Private Warrants~~2022 Notes, which provided incremental funding for our operations. Note 11 to ~~Merida Holdings, LLC and EarlyBirdCapital at a price of $1.00 per warrant, generating gross proceeds of $3,750,000.~~our consolidated financial statements within this Quarterly Report provides additional information regarding the 2022 Notes.

On November 13, 2019, as a result of the underwriters’ election to partially exercise their over-allotment option, the Company consummated the sale of an additional 1,001,552 Units, at $10.00 per Unit, and the sale of an additional 200,311 Private Warrants, at a price of $1.00 per Private Warrant, generating total gross proceeds of $10,215,831.

Following the Initial Public Offering, the partial exercise of the over-allotment option and the sale of the Private Warrants, a total of $130,015,520 was placed in the Trust Account and we had $796,558 of cash held outside of the Trust Account, after payment of costs related to the Initial Public Offering, and available for working capital purposes. We ~~incurred $3,412,939 in transaction costs, including $2,600,311 of underwriting fees and $812,628 of other costs.~~

We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less income taxes payable), to complete our Business Combination. To the extentbelieve that our capital resources are sufficient to fund our operations for at least the following 12 months.

On October 28, 2022, we received a notice from the Nasdaq staff informing us that Leafly was not in compliance with the $50 million minimum market value requirement for continued listing on the Nasdaq Global Market (“Global Market”) and that we had until April 26, 2023 to regain compliance. On April 19, 2023, Nasdaq approved the Company’s application to transfer the listing of its common stock and warrants from the Global Market to The Nasdaq Capital Market (“Capital Market”), effective April 21, 2023. The Company complies with the net income from continuing operations listing standard of the Capital Market, and the transfer of the listing resolves the October 28, 2022 noncompliance notification.

On November 2, 2022, we received another letter from the Nasdaq staff informing us that Leafly was not in compliance with the Nasdaq’s $1.00 minimum bid price requirement (“Bid Price Rule”) and that we had until May 1, 2023 to regain compliance. To regain compliance, the closing bid price of Leafly’s common stock must have been $1.00 or ~~debt~~more per share for a minimum of ten consecutive business days at any time before May 1, 2023. We were unable to regain compliance with

the Bid Price Rule by May 1, 2023, and on May 2, 2023, we received a letter from Nasdaq notifying us that our common stock would be subject to delisting from Nasdaq unless we timely requested a hearing before a Nasdaq Hearings Panel (the "Panel"). The Panel has the discretion to grant up to an additional 180 calendar days from May 2, 2023, to give us time to regain compliance with the Bid Price Rule. On May 8, 2023, we timely requested a hearing before the Panel and will present a detailed action plan to comply with the Bid Price Rule by effecting a reverse stock split, if necessary, and request a further extension of time (the “Request”). We understand that the Panel routinely grants additional time for a company to cure a bid price deficiency when the compliance plan demonstrates, like we expect our plan will, that the company will cure a bid price issue through a reverse stock split within 180-days of a delisting notice. The Request stayed any further action by Nasdaq, and while the hearings process is ~~used, in whole or in~~pending, it is expected that the Common Stock will continue to be listed and traded on Nasdaq.

As part ~~as consideration~~of the Company’s plan to ~~complete our Business Combination,~~regain compliance with the ~~remaining proceeds held~~Bid Price Rule within 180 days of May 2, 2023, the Company intends to seek stockholder approval of an amendment to the Company’s Second Amended and Restated Certificate of Incorporation to effect a reverse stock split (the “Reverse Split Proposal”) at the upcoming Annual Meeting of stockholders. The Company expects to file preliminary proxy materials on May 15, 2023, with respect to the Annual Meeting of stockholders, including the approval of the Reverse Split Proposal.

The Company believes it is taking prudent steps to be successful in the ~~Trust Account~~Panel hearing and with its Reverse Split Proposal and that it will ultimately be successful in regaining compliance with the Bid Price Rule. However, there can be no assurances that any of these efforts will be ~~used as working capital~~successful, and if the Company is unable to ~~finance~~regain compliance with the ~~operations of~~Bid Price Rule, the ~~target business or businesses, make other acquisitions and pursue our growth strategies.~~

We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.

In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor, or certain of our officers and directors or their affiliates may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we would repay such loaned amounts. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust AccountCommon Stock would be ~~used for such repayment. Up~~subject to ~~$1,500,000~~delisting from Nasdaq. See “Risk Factors — Our shares of ~~such loans may be convertible into warrants identical to the Private Warrants, at a price of $1.00 per warrant at the option of the lender.~~

~~We do not believe~~common stock are listed on Nasdaq, but we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our public shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Business Combination. If we are unable to complete our Business Combination because we do not have sufficient funds available to us,cannot guarantee that we will be ~~forced~~able to ~~cease operations and liquidate~~satisfy the ~~Trust Account. In addition, following our Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.~~applicable listing standards going forward.”

We did not have any off-balance sheet arrangements as of ~~September 30, 2019.~~March 31, 2023.

WeOther than our 2022 Notes (see Note 11 to our consolidated financial statements), we do not have any long-term debt, ~~capital lease obligations, operating~~ lease obligations or other long-term ~~liabilities, other than an agreement to pay an affiliate~~liabilities. We have entered into several multi-year licensing and administration agreements in the ordinary course of business, the ~~Sponsor a monthly fee~~cost of ~~$5,000 for office space, utilities and secretarial~~which are reflected within general and administrative ~~support to the Company. We began incurring these fees on November 4, 2019 and will continue to incur these fees monthly until the earlier~~expense within our statements of ~~the completion of the Business Combination and the Company’s liquidation.~~operations as costs are incurred.

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

We believe there have ~~not identified any~~been no material changes to the items that we disclosed as our critical accounting ~~policies.~~estimates under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our 2022 Annual Report.

~~Management does not believe that any~~Reference is made to Note 2 for information about recently issued ~~but not yet effective,~~ accounting ~~pronouncements, if currently adopted, would have a material effect on our condensed financial statements.~~pronouncements.

Item 3. ~~Quantitative~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Leafly is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and ~~Qualitative Disclosures About Market Risk~~

~~As of September 30, 2019, we were~~is not ~~subject~~required to ~~any~~provide the information otherwise required with respect to market ~~or interest rate~~ risk. Following the consummation of our Initial Public Offering, the net proceeds of our Initial Public Offering, including amounts in the Trust Account, have been invested in U.S. government treasury bills, notes or bonds with a maturity of 180 days or less or in certain money market funds that invest solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.

~~Disclosure~~
The term “disclosure controls and procedures,” as defined in Rules 13a-15 and 15d-15 under the Exchange Act refers to controls and procedures that are designed to ensure that information required to be disclosed by ~~us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified~~a company in the ~~SEC’s rules and forms, and~~reports that ~~such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer~~it files or ~~persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.~~

Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended September 30, 2019, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures were effective at a reasonable assurance level and, accordingly, provided reasonable assurance that the information required to be disclosed by us in reports filedsubmits 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 ~~was~~have been no ~~change~~changes in our internal control over financial reporting (as defined in Rules 13a-15(d) and 15d-15(f) under the Exchange Act) that ~~occurred during the fiscal quarter of 2019 covered by this Quarterly Report on Form 10-Q that has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial ~~reporting.~~reporting during the three months ended March 31, 2023.

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

Risk factors that affect our business and financial results are discussed in Part I, Item 1A of ~~Equity Securities and Use of Proceeds.~~

~~In August 2019, the Sponsor purchased 2,875,000 Founder Shares~~our 2022 Annual Report. As of the ~~Company for an aggregate~~date of this report, other than as set forth below, we are not aware of any material changes in our risk factors from the risk factors disclosed in our 2022 Annual Report. You should carefully consider the risks and uncertainties described herein and in our 2022 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 2022 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 shares of common stock are listed on Nasdaq, but we cannot guarantee that we will be able to satisfy the applicable listing standards going forward.

Nasdaq requires listed companies to comply with certain standards to remain listed. On November 2, 2022, Leafly received a letter from the Nasdaq staff indicating that, based on the closing bid price of ~~$25,000. On November 4, 2019, we effected~~Leafly’s common stock for 30 consecutive business days, Leafly no longer met the requirement to maintain a stock dividend of 0.2 shares for each outstanding share, resulting in our initial stockholders holding an aggregate of 3,450,000 founder shares. The foregoing issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

On November 7, 2019, we consummated the Initial Public Offering of 12,000,000 Units. On November 13, 2019, we sold an additional 1,001,552 Units pursuant to the underwriters’ election to partially exercise their over-allotment option. The Units sold in the Initial Public Offering were sold at an offering price of $10.00 per unit, generating total gross proceeds of $130,015,520. EarlyBirdCapital, Inc. acted as sole book-running manager of the Initial Public Offering. The securities in the offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-234134). The Securities and Exchange Commission declared the registration statement effective on November 4, 2019.

~~Simultaneous with the consummation of the Initial Public Offering, we consummated the private placement of an aggregate of 3,950,311 Private Warrants to the Sponsor and EarlyBirdCapital at a~~minimum bid price of $1.00 per ~~Private Warrant, generating total proceeds~~share under Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Rule”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), Leafly was provided 180 calendar days, or until May 1, 2023, to regain compliance with the Bid Price Rule. To regain compliance, the closing bid price of ~~$3,950,311.~~Leafly’s common stock must have been $1.00 or more per share for a minimum of ten consecutive business days at any time before May 1, 2023.

Leafly was unable to regain compliance with the Bid Price Rule by May 1, 2023 and was not eligible under the applicable Nasdaq listing rules for a second 180 calendar day compliance period. Accordingly, on May 2, 2023, we received a letter from Nasdaq notifying it that Leafly’s common stock would be subject to delisting from Nasdaq, unless we timely requested a hearing before the Panel. The ~~issuance was made pursuant~~Panel has the discretion to grant Leafly up to an additional 180 calendar days from May 2, 2023, to regain compliance with the Bid Price Rule.

On May 8, 2023, we timely requested a hearing before the Panel and will present a detailed action plan to comply with the Bid Price Rule by effecting a reverse stock split, if necessary, and request a further extension of time (the "Request"). We understand that the Panel routinely grants additional time for a company to cure a bid price deficiency when the compliance plan demonstrates, like we expect our plan will, that the company will cure a bid price issue through a reverse stock split within 180-days of a delisting notice. The Request stayed any further action by Nasdaq, and while the hearings process is pending, it is expected that our common stock will continue to be listed and traded on Nasdaq.

As part of our plan to regain compliance with the Bid Price Rule within 180 days of May 2, 2023, Leafly intends to seek stockholder approval of an amendment to its Second Amended and Restated Certificate of Incorporation to effect a reverse stock split (the "Reverse Split Proposal") at the upcoming Annual Meeting of stockholders. Leafly expects to file preliminary proxy materials on May 15, 2023, with respect to the ~~exemption from registration contained in Section 4(a)(2)~~Annual Meeting of stockholders, including the approval of the ~~Securities Act.~~

~~The Private Warrants~~Reverse Split Proposal. We believe we are ~~identical~~taking prudent steps to ~~the warrants underlying the Units sold~~be successful in the ~~Initial Public Offering, except~~Panel hearing and with our Reverse Split Proposal and that we will ultimately be successful in regaining compliance with the ~~Private Warrants~~Bid Price Rule.

However, there can be no assurances that any of these efforts will be successful, and if we are ~~not transferable, assignable or salable until after~~unable to regain compliance with the ~~completion of a Business Combination,~~Bid Price Rule, our common stock and warrants would be subject to ~~certain limited exceptions.~~

~~Of the gross proceeds received~~delisting from Nasdaq. Delisting from the ~~Initial Public Offering,~~Nasdaq Capital Market could make trading our common stock more difficult for investors, potentially leading to declines in

our share price and liquidity. In addition, without a Nasdaq market listing, stockholders may have a difficult time getting a quote for the ~~partial exercise~~sale or purchase of our stock, the sale or purchase of our stock would likely be made more difficult and the trading volume of our stock could decline. Delisting from Nasdaq could also result in negative publicity and make it more difficult for us to raise additional capital. The absence of such a listing may adversely affect the acceptance of our common stock as transaction consideration or the value accorded our common stock by other parties. Further, if we are delisted, we would also incur additional costs under state blue sky laws in connection with any sales of our securities. These requirements could severely limit the market liquidity of our common stock and the ability of our stockholders to sell our common stock in the secondary market. We cannot assure you that our common stock, if delisted from Nasdaq, will be listed on another securities exchange or quoted on an over-the counter quotation system. If our common stock is delisted, it may come within the definition of “penny stock” as defined in the Exchange Act and would be covered by Rule 15g-9 of the ~~over-allotment option~~Exchange Act. That Rule imposes additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and ~~the sale of the Private Warrants, $130,015,520 was placed in the Trust Account.~~accredited investors.

~~We paid a total of $3,412,939 in underwriting discounts and commissions and $812,628 for other costs and expenses related to the Initial Public Offering.~~

~~For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Form 10-Q.~~

The following documents are included as exhibits ~~are filed as part of, or incorporated by reference into,~~to this Quarterly Report on Form ~~10-Q.~~10-Q:

Pursuant to the requirements of ~~the~~Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly ~~authorized.~~authorized, on May 12, 2023.

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
~~Units, each consisting of one share of common stock and one-half of one redeemable warrant~~ Common Stock, $0.0001 Par Value	~~MCMJU~~ LFLY	The Nasdaq Stock Market LLC
~~Common stock, par value $0.0001 per share~~	~~MCMJ~~	~~The Nasdaq Stock Market LLC~~
~~Redeemable warrants,~~Warrants, exercisable for shares of common stock at an exercise price of $11.50 per share	~~MCMJW~~	LFLYW	The Nasdaq Stock Market LLC

	~~Page~~
~~Part I. Financial Information~~	1	Page
	Cautionary Note Regarding Forward-Looking Statements	2
~~Item 1.~~Part I	Financial ~~Statements~~Information	1
Item 1.	Condensed ~~Balance Sheet~~Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 (Audited)	3
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and 2022	2 4
	Condensed ~~Statement~~Consolidated Statements of Changes in ~~Stockholders’ Equity~~Stockholders Deficit for the Three Months Ended March 31, 2023 and 2022	3 5
	Condensed ~~Statement~~Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022	4 7
	Notes to ~~Unaudited~~ Condensed Consolidated Financial Statements	5 8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13 29
Item 3.	Quantitative and Qualitative Disclosures ~~Regarding~~About Market Risk	15 39
Item 4.	Controls and Procedures	15 40
Part II	Other Information
~~Part II. Other Information~~ Item 1.	16 Legal Proceedings	40
Item 1A.	Risk Factors	40
~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	16
Item 6.	Exhibits	17

~~Part III. Signatures~~		18 41


	March 31, 2023			December 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	14,955		$	24,594
Accounts receivable, net of allowance for doubtful accounts of $1,091 and $908, respectively		3,638			3,298
Prepaid expenses and other current assets		4,287			1,792
Restricted cash		360			360
Total current assets		23,240			30,044
Property, equipment, and software, net		2,622			2,285
Restricted cash - long-term portion		248			248
Other assets		100			135
Total assets	$	26,210		$	32,712

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable	$	1,224		$	1,625
Accrued expenses and other current liabilities		4,662			6,235
Deferred revenue		2,180			1,958
Total current liabilities		8,066			9,818

Non-current liabilities
Non-current portion of convertible promissory notes, net		28,999			28,863
Private warrants derivative liability		130			182
Escrow shares derivative liability		7			52
Stockholder earn-out rights derivative liability		34			204
Total non-current liabilities		29,170			29,301
Total liabilities		37,236			39,119

Commitments and contingencies (Note 8)

Stockholders' deficit
Preferred stock: $0.0001 par value; 5,000 and 5,000 authorized; 0 and 0 issued and outstanding; aggregate liquidation preference of $0 and $0 at March 31, 2023 and December 31, 2022, respectively		—			—
Common stock: $0.0001 par value; 200,000 and 200,000 authorized; 43,849 and 43,275 issued at March 31, 2023 and December 31, 2022, respectively		4			4
Treasury stock: 3,081 and 3,081 shares held at March 31, 2023 and December 31, 2022, respectively		(31,663	)		(31,663	)
Additional paid-in capital		90,730			89,952
Accumulated deficit		(70,097	)		(64,700	)
Total stockholders' deficit		(11,026	)		(6,407	)
Total liabilities and stockholders' deficit	$	26,210		$	32,712

ASSETS
Current assets
Cash	$	9,663
Other receivable		10
Total Current Assets		9,673

Deferred offering costs		96,380
Total Assets	$	106,053

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accrued offering costs	$	5,000
Promissory note – related party		75,569
Total Current Liabilities		80,569

Commitments

Stockholders’ Equity
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding		—
Common stock, $0.0001 par value; 50,000,000 shares authorized; 3,570,000 shares issued and outstanding⁽¹⁾		357
Additional paid-in capital		25,553
Accumulated deficit		(426	)
Total Stockholders’ Equity		25,484
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	106,053


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


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


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

	Three Months Ended September 30, 2019			For the Period from June 20, 2019 (Inception) Through September 30, 2019
	(unaudited)			(unaudited)

Formation and operating costs	$	87		$	426
Net Loss	$	(87	)	$	(426	)

Weighted average shares outstanding, basic and diluted⁽¹⁾		3,120,000			3,120,000

Basic and diluted net loss per common share	$	(0.00	)	$	(0.00	)


	Three Months Ended March 31, 2023
	Preferred Stock				Common Stock				Treasury Stock						Additional Paid-In Capital		Accumulated Deficit			Total
	Shares		Amount		Shares		Amount		Shares			Amount

Balance at January 1, 2023		—	$	—		43,275	$	4		(3,081	)	$	(31,663	)	$	89,952	$	(64,700	)	$	(6,407	)
Net loss		—		—		—		—		—			—			—		(5,397	)		(5,397	)
Stock-based compensation		—		—		—		—		—			—			658		—			658
Issuance of common stock under ESPP		—		—		289		—		—			—			120		—			120
Issuance of common stock upon vesting of restricted stock units		—		—		285		—		—			—			—		—			—
Balance at March 31, 2023		—	$	—		43,849	$	4		(3,081	)	$	(31,663	)	$	90,730	$	(70,097	)	$	(11,026	)

	Common Stock				Additional Paid		Accumulated			Total Stockholders’
	Shares		Amount		in Capital		Deficit			Equity
Balance – June 20, 2019 (inception)		—	$	—	$	—	$	—		$	—

Issuance of common stock to Sponsor⁽¹⁾		3,450,000		345		24,655		—			25,000

Issuance of Representative Shares		120,000		12		898		—			910

Net loss		—		—		—		(339	)		(339	)

Balance – June 30, 2019		3,570,000		357		25,553		(339	)		25,571

Net loss		—		—		—		(87	)		(87	)

Balance – September 30, 2019		3,570,000	$	357	$	25,553	$	(426	)	$	25,484

Cash Flows from Operating Activities:
Net loss	$	(426	)
Net cash used in operating activities		(426	)

Cash Flows from Financing Activities:
Proceeds from promissory note – related party		75,569
Payment of offering costs		(65,480	)
Net cash provided by financing activities		10,089

Net Change in Cash		9,663
Cash – Beginning of period		—
Cash – End of period	$	9,663

Non-Cash investing and financing activities:
Issuance of Representative Shares	$	910
Deferred offering costs included in accrued offering costs	$	5,000
Deferred offering costs paid directly by Sponsor from proceeds from issuance of common stock to Sponsor	$	25,000

	●	~~may significantly reduce the equity interest of our stockholders;~~

	●	~~may subordinate the rights of holders of shares of common stock if we issue shares of preferred stock with rights senior to those afforded to our shares of common stock;~~

	●	will likely cause a change in control if a substantial number of our shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and most likely will also result in the resignation or removal of our present officers and directors; and

	●	~~may adversely affect prevailing market prices for our securities.~~

	●	~~default and foreclosure on our assets if our operating revenues after a business combination are insufficient to pay our debt obligations;~~

	●	acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contains covenants that required the maintenance of certain financial ratios or reserves and we breach any such covenant without a waiver or renegotiation of that covenant;

	●	~~our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and~~

	●	~~our inability to obtain additional financing, if necessary, if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding.~~

~~No.~~		~~Description of Exhibit~~
~~1.1~~		~~Underwriting Agreement between the Company and EarlyBirdCapital, Inc., as representative of the underwriters.~~⁽¹⁾
~~1.2~~		~~Business Combination and Marketing Agreement between the Company and EarlyBirdCapital, Inc.~~⁽¹⁾
~~3.1~~		~~Amended and Restated Certificate of Incorporation.~~⁽¹⁾
~~4.1~~		~~Warrant Agreement between Continental Stock Transfer & Trust Company and the Company.~~⁽¹⁾
~~10.1~~		~~Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Company.~~ ⁽¹⁾
~~10.2~~		~~Stock Escrow Agreement between the Company, Continental Stock Transfer & Trust Company and the Company’s Initial Stockholder.~~ ⁽¹⁾
~~10.3~~		~~Registration Rights Agreement between the Company and the Company’s Initial Stockholder.~~⁽¹⁾
~~10.4~~		~~Administrative Services Agreement between the Company and Merida Manager III LLC.~~⁽¹⁾
31*		~~Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
32*		~~Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
101.INS*		~~XBRL Instance Document~~
101.SCH*		~~XBRL Taxonomy Extension Schema Document~~
101.CAL*		~~XBRL Taxonomy Extension Calculation Linkbase Document~~
101.DEF*		~~XBRL Taxonomy Extension Definition Linkbase Document~~
101.LAB*		~~XBRL Taxonomy Extension Labels Linkbase Document~~
101.PRE*		~~XBRL Taxonomy Extension Presentation Linkbase Document~~


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

31.1	*	Certification of Chief Executive Officer of Leafly pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	*	Certification of Chief Financial Officer of Leafly pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	*	Certifications of Chief Executive Officer and Chief Financial Officer of Leafly pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS	***	Inline XBRL Instance Document

101.SCH	****	Inline XBRL Taxonomy Extension Schema Document

101.CAL	****	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB	****	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE	****	Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF	****	Inline XBRL Taxonomy Extension Definition Linkbase Document

104	***	Cover Page Interactive Data File


*	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
+	Management contract or compensation plan or arrangement.

	~~Merida Merger Corp. I~~
			Leafly Holdings, Inc.
~~Date: December 19, 2019~~	~~By:~~	~~/s/ Peter Lee~~
	~~Name:~~ By:	~~Peter Lee~~ /s/ Yoko Miyashita
	~~Title:~~	~~President and~~ Yoko Miyashita
		Chief Executive Officer

	By:	/s/ Suresh Krishnaswamy
		Suresh Krishnaswamy
		Chief Financial Officer
		~~(Principal Executive Officer and~~ ~~Principal Financial and Accounting Officer)~~

Table of ContentsPART

Table of ContentsPART