0001493152-26-023857
SEC filingGreenlane's Q1 FY2026 results reflect a sharp revenue decline and a deep net loss, driven by legacy business wind-down and a non-cash fair value loss on digital assets.
Revenue for Q1 FY2026 was $448.0K, a decrease of 69.5% compared to $1.5M in the prior-year quarter. The decline was primarily driven by lower legacy wholesale and distribution sales volume and the Company's transition to a reduced-scale, asset-light operating model. Gross profit decreased 69.9% to $217.0K, with gross margin remaining relatively stable at 48.4%. The year-over-year decrease in gross profit was attributable to lower sales volume and reduced inventory availability, partially offset by staking revenue generated from the Digital Asset Segment.
Operating income was a loss of $5.6M, compared to a loss of $3.5M in the prior-year period, an increase of 60.3%. The increase was primarily attributable to stock-based compensation expense related to employee equity awards granted in October 2025, partially offset by lower headcount and reduced legacy operating activity. Net income was a loss of $18.4M, compared to a loss of $3.9M in the prior-year period, a deterioration of 374.8%. The significant increase in net loss was driven by a non-cash fair value loss on BERA digital assets, as the Company shifted its primary capital allocation focus from wholesale and distribution operations to a digital asset treasury strategy centered on BERA.
Net cash used in operating activities was $4.8M, compared to $3.4M in the prior-year period, reflecting higher operating losses. Capital expenditures were $16.0K, consistent with the prior year, resulting in negative free cash flow of $4.8M. The Company's near-term focus is maintaining liquidity, executing its digital asset treasury strategy, and aligning operating costs against its current business model. Management applies judgment in determining the principal market for digital assets and evaluates the reliability of pricing sources, including volume, accessibility, and consistency across exchanges.
The decrease in working capital was primarily attributable to cash used in operations and purchases of digital assets during the quarter. The Company has implemented a treasury policy that sets guidelines for digital asset diversification, liquidity, and risk management, overseen by the Board's Digital Asset Committee. Fiscal year 2025 represented a significant strategic transition for the Company, as it shifted its primary capital allocation focus from wholesale and distribution operations to a digital asset treasury strategy centered on BERA.
Management's near-term priorities are maintaining liquidity, executing the BERA treasury strategy, and aligning operating costs with the current business model. The Company expects elevated legal and advisory costs to normalize in future periods. Greenlane regained Nasdaq compliance in April 2026 after a reverse stock split and delisting appeal. The BERA strategy involves capital deployment, network participation through staking, governance, and selective DeFi yield activities. While the Company has no substantial doubt about its ability to continue as a going concern, the success of the strategy hinges on the continued development and adoption of the Berachain ecosystem, which remains uncertain. Investors should monitor BERA price trends, staking revenue stability, and the pace of legacy business runoff.