EX-99.1 2 ldwy_ex991.htm PRESS RELEASE Contact: Lendway, Inc. Biz McShane, CFO (763) 392-6200 FOR IMMEDIATE RELEASE LENDWAY, INC. ANNOUNCES THIRD QUARTER 2024 FINANCIAL RESULTS MINNEAPOLIS, MN – November 19, 2024 – Lendway, Inc. (Nasdaq: LDWY) ("Lendway" or the "Company") today announced its financial results for the third quarter ended September 30, 2024 ("Q3"). Overview Third quarter fiscal year 2024 First nine months fiscal year 2024 Lendway's Co-Chief Executive Officer, Mark Jundt commented, "We deliver ...

PART I. FINANCIAL INFORMATION This section presents Lendway, Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=3&type=section&id=Item%201%2E%20Financial%20Statements) This section presents Lendway, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, income statements, equity, cash flows, and detailed notes on the Bloomia acquisition and prior period revisions [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheet Highlights | Metric | Sep 30, 2024 (Unaudited) | Dec 31, 2023 | | :-------------------------------- | :----------------------- | :----------- | | Total Assets | $102,459,000 | $16,673,000 | | Total Current Assets | $20,583,000 | $16,621,000 | | Cash and Cash Equivalents | $1,333,000 | $16,077,000 | | Inventories, net | $15,490,000 | - | | Property and Equipment, net | $11,538,000 | $35,000 | | Goodwill | $10,474,000 | - | | Intangible Assets, net | $25,950,000 | - | | Total Liabilities | $87,194,000 | $1,141,000 | | Total Current Liabilities | $9,063,000 | $1,096,000 | | Long-term Debt, net | $34,610,000 | - | | Total Stockholders' Equity | $15,265,000 | $15,532,000 | - Total assets significantly increased from **$16.673 million** at December 31, 2023, to **$102.459 million** at September 30, 2024, primarily due to the Bloomia acquisition, which introduced substantial inventories, property and equipment, goodwill, and intangible assets[7](index=7&type=chunk)[9](index=9&type=chunk) - Cash and cash equivalents decreased substantially from **$16.077 million** at December 31, 2023, to **$1.333 million** at September 30, 2024, reflecting the cash outflow for the Bloomia acquisition[7](index=7&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) This section outlines the company's financial performance, including revenues, expenses, and net income or loss over specific periods Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Highlights | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Revenue, net | $6,628,000 | $0 | $31,581,000 | $0 | | Gross profit | $1,440,000 | $0 | $7,091,000 | $0 | | Operating loss | $(1,351,000) | $(1,633,000) | $(2,829,000) | $(2,983,000) | | Net loss from continuing operations | $(1,458,000) | $(1,511,000) | $(3,541,000) | $(2,654,000) | | Income (loss) from discontinued operations, net of tax | $66,000 | $(333,000) | $202,000 | $2,422,000 | | Gain from sale of discontinued operations, net of tax | $0 | $2,970,000 | $0 | $2,970,000 | | Net (loss) income attributable to Lendway, Inc. | $(1,125,000) | $1,126,000 | $(2,803,000) | $2,738,000 | | Basic and diluted earnings per share | $(0.64) | $0.63 | $(1.58) | $1.53 | - The Company reported significant revenue of **$6.628 million** for the three months and **$31.581 million** for the nine months ended September 30, 2024, primarily from the Bloomia acquisition, compared to no revenue in the prior year periods[13](index=13&type=chunk) - Net loss attributable to Lendway, Inc. was **$(1.125 million)** for the three months and **$(2.803 million)** for the nine months ended September 30, 2024, a decrease from net income of **$1.126 million** and **$2.738 million** in the respective prior year periods, largely due to the absence of the gain from the sale of discontinued operations and increased operating expenses post-acquisition[15](index=15&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section details changes in the company's equity, including common stock, additional paid-in capital, and accumulated deficit Condensed Consolidated Statements of Stockholders' Equity Highlights | Metric | Dec 31, 2023 | Sep 30, 2024 | | :------------------------------------------ | :----------- | :----------- | | Common Stock (Shares) | 1,743,000 | 1,770,000 | | Common Stock (Amount) | $17,000 | $17,000 | | Additional Paid-In Capital | $16,176,000 | $16,212,000 | | Accumulated Other Comprehensive Income | $0 | $38,000 | | Accumulated Deficit | $(661,000) | $(3,464,000) | | Total Stockholders' Equity attributable to Lendway, Inc. | $15,532,000 | $12,803,000 | | Equity from Noncontrolling Interest | $0 | $2,462,000 | | Total Stockholders' Equity | $15,532,000 | $15,265,000 | - Total stockholders' equity attributable to Lendway, Inc. decreased from **$15.532 million** at December 31, 2023, to **$12.803 million** at September 30, 2024, primarily due to the accumulated deficit increasing from **$(0.661 million)** to **$(3.464 million)**[16](index=16&type=chunk)[17](index=17&type=chunk) - The introduction of a noncontrolling interest of **$2.462 million** at September 30, 2024, reflects the equity issued in the Bloomia acquisition[16](index=16&type=chunk)[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows Highlights | Cash Flow Activity | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(2,573,000) | $(590,000) | | Net cash (used in) provided by investing activities | $(34,682,000) | $1,533,000 | | Net cash provided by (used in) financing activities | $22,473,000 | $(428,000) | | Net decrease in cash and cash equivalents | $(14,744,000) | $515,000 | | Cash and cash equivalents, end of period | $1,333,000 | $15,039,000 | - Net cash used in operating activities increased to **$(2.573 million)** for the nine months ended September 30, 2024, from **$(0.590 million)** in the prior year, primarily due to increased operational costs post-Bloomia acquisition[19](index=19&type=chunk) - Investing activities saw a significant outflow of **$(34.682 million)** for the nine months ended September 30, 2024, driven by the Bloomia acquisition, contrasting with a net inflow of **$1.533 million** in the prior year from the sale of a business[19](index=19&type=chunk) - Financing activities provided **$22.473 million** in cash for the nine months ended September 30, 2024, mainly from new term loans and revolving debt to fund the Bloomia acquisition[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Description of Business and Basis of Presentation](index=7&type=section&id=1%2E%20Description%20of%20Business%20and%20Basis%20of%20Presentation%2E) This note describes Lendway, Inc.'s business, its strategic shift to agriculture, and the basis for financial statement presentation - Lendway, Inc. is a specialty agricultural company, which on February 22, 2024, acquired Bloomia B.V., a significant producer of fresh cut tulips in the U.S., Netherlands, and South Africa, with Bloomia's operations now the Company's primary focus[22](index=22&type=chunk) - The Company discontinued its non-bank lending business development in June 2024 following the resignation of its CEO, who held most of the expertise in that area, with this change not expected to significantly impact operations or financial results[22](index=22&type=chunk) - The In-Store Marketing Business was sold on August 3, 2023, and its operations are presented as discontinued operations in all prior periods[25](index=25&type=chunk) [2. Significant Accounting Policies](index=8&type=section&id=2%2E%20Significant%20Accounting%20Policies%2E) This note outlines the key accounting principles and estimates used in preparing the condensed consolidated financial statements - Key estimates include fair values for the Bloomia acquisition, inventory carrying value, right-of-use assets, lease liabilities, useful lives of property/equipment and intangibles, and income tax valuation[28](index=28&type=chunk) - Revenue is recognized when control of tulips is transferred to the customer, typically upon delivery, with two major customers accounting for approximately **38%** and **19%** of total revenues for the nine months ended September 30, 2024[42](index=42&type=chunk)[44](index=44&type=chunk) - The Company uses the liability method for income taxes, recognizing deferred tax assets and liabilities based on temporary differences and enacted tax rates, applying a valuation allowance when realization of deferred tax assets is not more likely than not[49](index=49&type=chunk)[50](index=50&type=chunk) [3. Bloomia Acquisition](index=12&type=section&id=3%2E%20Bloomia%20Acquisition) This note details the acquisition of Bloomia B.V., including consideration, asset allocation, and its financial impact - On February 22, 2024, Lendway acquired a majority interest (**81.4%**) in Bloomia B.V. for a total consideration of **$53.36 million**[62](index=62&type=chunk)[64](index=64&type=chunk) Bloomia Acquisition Consideration and Allocation | Item | Amount | | :---------------------------------- | :------------- | | Cash consideration | $34,919,000 | | Equity in subsidiary issued (noncontrolling interest) | $2,990,000 | | Seller bridge loans | $15,451,000 | | **Total fair value of consideration** | **$53,360,000** | | Net identifiable assets acquired | $42,886,000 | | Goodwill | $10,474,000 | | **Total consideration transferred** | **$53,360,000** | - The acquisition resulted in **$10.474 million** in goodwill, primarily attributed to growth potential, and **$26.87 million** in intangible assets, including tradenames and customer relationships[67](index=67&type=chunk)[68](index=68&type=chunk) - Bloomia contributed **$6.628 million** in revenue and a net loss of **$(0.910 million)** to the consolidated statements of operations for the three months ended September 30, 2024, and **$31.581 million** in revenue and net income of **$1.745 million** for the nine months ended September 30, 2024[69](index=69&type=chunk) [4. Sale of In-Store Marketing Business and Presentation as Discontinued Operations](index=13&type=section&id=4%2E%20Sale%20of%20In-Store%20Marketing%20Business%20and%20Presentation%20as%20Discontinued%20Operations%2E) This note describes the sale of the In-Store Marketing Business and its presentation as discontinued operations - On August 3, 2023, the Company sold its In-Store Marketing Business for **$3.5 million**, with operations presented as discontinued for all periods[71](index=71&type=chunk) Discontinued Operations Financial Summary (Nine Months Ended Sep 30, 2023) | Metric | Nine Months Ended Sep 30, 2023 | | :------------------------------------------ | :----------------------------- | | Net service revenues | $21,018,000 | | Cost of services | $16,067,000 | | Gross Profit | $4,951,000 | | Operating Income | $2,368,000 | | Income from discontinued operations | $2,422,000 | | Gain from sale of discontinued operations, net of tax | $2,970,000 | - For the nine months ended September 30, 2024, the Company recognized a **$0.202 million** benefit from discontinued operations due to a reduction in sales tax accrual[73](index=73&type=chunk) [5. Inventories](index=14&type=section&id=5%2E%20Inventories%2E) This note provides a breakdown of the company's inventory composition and valuation at the reporting date Inventories Composition (September 30, 2024) | Category | Amount | | :-------------------------- | :------------- | | Raw materials and packaging supplies | $13,686,000 | | Work-in-process | $1,486,000 | | Finished goods | $358,000 | | Total inventories | $15,530,000 | | Less: provision | $(40,000) | | **Inventories, net** | **$15,490,000** | - Raw materials, primarily tulip bulbs, constitute the largest portion of inventories, totaling **$13.686 million** at September 30, 2024[74](index=74&type=chunk) [6. Property and Equipment](index=14&type=section&id=6%2E%20Property%20and%20Equipment%2E) This note details the company's property and equipment, including categories, gross amounts, and accumulated depreciation Property and Equipment, Net (September 30, 2024) | Category | Amount | | :-------------------------- | :------------- | | Machinery and equipment | $11,284,000 | | Vehicles | $576,000 | | Bushes | $489,000 | | Furniture and fixtures | $220,000 | | Leasehold improvements | $113,000 | | Property and equipment, gross | $12,682,000 | | Less: accumulated depreciation | $(1,144,000) | | **Property and equipment, net** | **$11,538,000** | - Depreciation expense for the nine months ended September 30, 2024, was **$1.002 million**, significantly higher than **$36,000** in the prior year, reflecting the assets acquired with Bloomia[77](index=77&type=chunk) [7. Equity Method Investment](index=15&type=section&id=7%2E%20Equity%20Method%20Investment%2E) This note describes the company's equity method investment in Araucanía Flowers SA and other related transactions - The Company holds a **30%** equity interest in Araucanía Flowers SA, a Chilean marketing arm, with a carrying amount of approximately **$167,000** as of September 30, 2024[78](index=78&type=chunk) - Bloomia previously held a **50%** ownership in Horti-Group USA LLC, which was sold on February 9, 2023, with the seller-financed loan for this sale fully repaid by September 30, 2024, with monthly payments applied to rent owed to Horti-Group[79](index=79&type=chunk) [8. Goodwill and Other Intangible Assets](index=15&type=section&id=8%2E%20Goodwill%20and%20Other%20Intangible%20Assets%2E) This note details the company's goodwill and other intangible assets, including their carrying amounts and amortization Goodwill Changes (January 1, 2024 to September 30, 2024) | Item | Amount | | :---------------------------------- | :------------- | | Balance as of January 1, 2024 | $0 | | Goodwill resulting from the Bloomia Acquisition | $10,122,000 | | Measurement period adjustment | $352,000 | | **Balance as of September 30, 2024** | **$10,474,000** | Other Intangible Assets (September 30, 2024) | Asset | Carrying Amount | Useful Life (Years) | Accumulated Amortization | Net Carrying Amount | | :-------------------- | :-------------- | :------------------ | :----------------------- | :------------------ | | Tradename | $8,570,000 | Indefinite | $0 | $8,570,000 | | Customer relationships | $18,300,000 | 12 | $920,000 | $17,380,000 | | **Total** | **$26,870,000** | | **$920,000** | **$25,950,000** | - Amortization expense for intangible assets was **$0.920 million** for the nine months ended September 30, 2024, with a weighted average remaining amortization period of **11.4 years**[83](index=83&type=chunk) [9. Long-term debt, net](index=16&type=section&id=9%2E%20Long-term%20debt%2C%20net%2E) This note provides a breakdown of the company's long-term debt, including term loans, notes payable, and revolving credit facilities Long-term Debt Components (September 30, 2024) | Debt Type | Amount | | :-------------------------------- | :------------- | | Credit Agreement - term loan | $17,550,000 | | Notes payable | $12,750,000 | | Credit Agreement - revolving credit facility | $5,991,000 | | Paid in kind interest (PIK) | $928,000 | | Machinery financing loan | $156,000 | | **Total debt** | **$37,375,000** | | Less: unamortized debt issuance costs | $(334,000) | | Less current maturities | $(2,271,000) | | **Long term debt, net of current maturities** | **$34,610,000** | - The Company entered into a Credit Agreement for an **$18 million** term loan and a **$6 million** revolving credit facility (temporarily increased to **$8 million** in October 2024) to finance the Bloomia acquisition, with borrowings bearing interest at Term SOFR plus **3.0%**[88](index=88&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) - Notes payable of **$12.75 million** were issued to sellers as part of the Bloomia acquisition, with a five-year term and initial **8%** PIK interest, increasing annually by **2 percentage points**[89](index=89&type=chunk) - The Company incurred **$0.883 million** in interest expense on term loans and revolving facility, and **$0.928 million** in non-cash paid-in-kind interest on seller notes for the nine months ended September 30, 2024[91](index=91&type=chunk) [10. Related Party Note Payable](index=17&type=section&id=10%2E%20Related%20Party%20Note%20Payable) This note describes the unsecured delayed draw term note with Air T Inc., a related party, for operational funding - On August 15, 2024, the Company entered into an unsecured Delayed Draw Term Note with Air T Inc. (a greater than **10%** beneficial owner) for up to **$2.5 million**, later amended to **$3.5 million**, to fund operations, with **$2 million** outstanding as of September 30, 2024[93](index=93&type=chunk)[94](index=94&type=chunk) - The note bears a fixed interest rate of **8.0%** and matures on August 15, 2029, with Air T having the right to demand payment after February 15, 2026[93](index=93&type=chunk)[94](index=94&type=chunk) [11. Leases](index=17&type=section&id=11%2E%20Leases%2E) This note details the company's lease arrangements, including finance and operating leases, terms, and discount rates Lease Terms and Discount Rates (September 30, 2024) | Lease Type | Weighted Average Remaining Lease Term (Years) | Weighted Average Discount Rate Applied | | :---------------- | :------------------------------------------ | :----------------------------------- | | Finance leases | 4.31 | 5.40% | | Operating leases | 14.11 | 8.22% | Total Lease Expense from Continuing Operations | Period | Total Lease Expense | | :-------------------------------- | :-------------------- | | Three Months Ended Sep 30, 2024 | $1,136,000 | | Nine Months Ended Sep 30, 2024 | $2,853,000 | | Three Months Ended Sep 30, 2023 | $6,000 | | Nine Months Ended Sep 30, 2023 | $15,000 | - Leased assets obtained in exchange for operating lease liabilities totaled **$34.289 million** for the nine months ended September 30, 2024, reflecting significant new lease commitments[98](index=98&type=chunk) [12. Income Taxes](index=19&type=section&id=12%2E%20Income%20Taxes%2E) This note explains the company's income tax provisions, including deferred tax assets, liabilities, and effective tax rates - For the nine months ended September 30, 2024, the Company recorded an income tax benefit of **$1.284 million** on loss from continuing operations, with an effective tax rate of **26.6%**, including a **$0.451 million** benefit from the reversal of the valuation allowance on federal deferred tax assets due to deferred tax liabilities established from the Bloomia acquisition[101](index=101&type=chunk)[102](index=102&type=chunk) - Unrecognized tax benefits related to state nexus issues totaled **$35,000** as of September 30, 2024[103](index=103&type=chunk) [13. Commitments and Contingencies](index=19&type=section&id=13%2E%20Commitments%20and%20Contingencies%2E) This note outlines the company's significant contractual commitments and potential legal contingencies - The Company has a purchase obligation to buy **25%** of a third-party's annual tulip bulb production through 2028 for **$1.65 million** annually, totaling **$8 million** over the agreement's duration[106](index=106&type=chunk) - As of September 30, 2024, management believes there are no material claims or legal actions that would have a material adverse effect on the Company's financial position, results of operations, or liquidity[105](index=105&type=chunk) [14. Employee Benefit Plans](index=19&type=section&id=14%2E%20Employee%20Benefit%20Plans%2E) This note describes the company's employee benefit plans, including contributions to defined contribution pension plans - The Company participates in defined contribution pension plans for its Dutch employees, contributing and expensing **$51,000** for the nine months ended September 30, 2024[109](index=109&type=chunk) [15. Revision of first and second quarter 2024 unaudited results](index=19&type=section&id=15%2E%20Revision%20of%20first%20and%20second%20quarter%202024%20unaudited%20results%3A) This note explains the revisions made to previously reported unaudited financial results for the first and second quarters of 2024 - The Company identified and revised certain immaterial misstatements in its Q1 and Q2 2024 unaudited consolidated financial statements to facilitate period comparisons[111](index=111&type=chunk) - Revisions included adjustments for unrecorded non-cash rent expense in Q1, timing issues for revenue and cost of goods sold in Q2, an overstated inventory balance in Q2, and over-accrued selling, general, and administrative expenses in Q2[112](index=112&type=chunk)[123](index=123&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Lendway, Inc.'s financial condition and operations, focusing on the strategic shift to agriculture post-Bloomia acquisition, financial performance, liquidity, capital resources, and critical accounting estimates [Company Overview](index=21&type=section&id=Company%20Overview) This section provides an overview of Lendway, Inc.'s strategic transformation into a specialty agricultural company - Lendway, Inc. has transitioned to a specialty agricultural company, focusing on its investment in Bloomia B.V., a fresh-cut tulip producer, after selling its In-Store Marketing Business in August 2023[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) - The Company ceased development of its non-bank lending business in June 2024 due to the departure of its CEO, who possessed critical expertise in this area, and a strategic decision to reallocate capital to the ag business[119](index=119&type=chunk) [Bloomia Business](index=21&type=section&id=Bloomia%20Business) This section describes Bloomia B.V.'s operations as a leading fresh-cut tulip producer and its seasonal business nature - Bloomia is a leading U.S. producer of fresh-cut tulips, growing over **75 million** stems annually, with operations in the United States, Netherlands, South Africa, and Chile, and strong relationships with mass market retailers[120](index=120&type=chunk) - The acquisition of Bloomia for **$53.36 million** was funded by cash, seller bridge loans, and equity issued to noncontrolling interests[121](index=121&type=chunk) - The tulip sales business is seasonal, with the first and second calendar quarters being the strongest sales periods, leading to lowest accounts receivable and inventory balances in summer and peak inventory prior to spring[122](index=122&type=chunk) [Former Lending Business](index=22&type=section&id=Former%20Lending%20Business) This section details the discontinuation of the company's non-bank lending business due to a strategic shift and CEO departure - The Company's non-bank lending business, previously under development, was discontinued after the CEO's resignation in June 2024, as his expertise was central to the venture[124](index=124&type=chunk) - This strategic shift is not anticipated to have a significant adverse impact on the Company's operations or financial results, as the lending business was still in its development phase[124](index=124&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenue, expenses, and net income or loss for the reporting periods Key Financial Performance Metrics (Continuing Operations) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Revenue, net | $6,628,000 | $0 | $31,581,000 | $0 | | Gross profit | $1,440,000 | $0 | $7,091,000 | $0 | | Gross profit as a percent of sales | 22% | NA | 22% | NA | | Sales, general and administrative expenses | $2,791,000 | $1,633,000 | $9,920,000 | $2,983,000 | | Operating loss | $(1,351,000) | $(1,633,000) | $(2,829,000) | $(2,983,000) | | Interest expense (income), net | $800,000 | $(111,000) | $1,989,000 | $(325,000) | | Net loss from continuing operations | $(1,458,000) | $(1,511,000) | $(3,541,000) | $(2,654,000) | | Net (loss) income attributable to Lendway, Inc. | $(1,125,000) | $1,126,000 | $(2,803,000) | $2,738,000 | - Revenue for the three and nine months ended September 30, 2024, was **$6.628 million** and **$31.581 million**, respectively, entirely from Bloomia post-acquisition, with gross profit margins at **22%**[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) - Sales, general and administrative expenses increased significantly to **$2.791 million** (three months) and **$9.920 million** (nine months) in 2024, primarily due to the Bloomia acquisition and related one-time costs[130](index=130&type=chunk)[131](index=131&type=chunk) - Interest expense surged to **$0.800 million** (three months) and **$1.989 million** (nine months) in 2024, compared to interest income in 2023, due to debt incurred for the Bloomia acquisition[132](index=132&type=chunk)[133](index=133&type=chunk) - The Company recorded an income tax benefit of **$0.736 million** (three months) and **$1.284 million** (nine months) in 2024, driven by deferred tax liabilities from the Bloomia acquisition enabling the realization of federal deferred tax assets[134](index=134&type=chunk)[135](index=135&type=chunk) - Income from discontinued operations for the nine months ended September 30, 2024, was **$0.202 million**, resulting from a reduction in sales tax accrual, contrasting with **$5.392 million** in 2023 which included the gain from the sale of the In-Store Marketing Business[137](index=137&type=chunk) [Non-GAAP Financial Measures](index=23&type=section&id=Non-GAAP%20Financial%20Measures) This section presents and reconciles non-GAAP financial measures like EBITDA to evaluate operational performance - EBITDA is presented as a non-GAAP financial measure to evaluate financial performance, measure operational profitability, and assess compliance with credit agreement covenants[139](index=139&type=chunk)[140](index=140&type=chunk) EBITDA Reconciliation to Net Loss from Continuing Operations | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net loss from continuing operations | $(1,458,000) | $(1,511,000) | $(3,541,000) | $(2,654,000) | | Interest expense (income), net | $800,000 | $(111,000) | $1,989,000 | $(325,000) | | Income tax benefit | $(736,000) | $(11,000) | $(1,284,000) | $(4,000) | | Depreciation and amortization | $820,000 | $10,000 | $1,928,000 | $36,000 | | **EBITDA** | **$(574,000)** | **$(1,623,000)** | **$(908,000)** | **$(2,947,000)** | [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, working capital, debt financing, and ability to meet its financial obligations - Working capital decreased from **$15.525 million** at December 31, 2023, to **$11.520 million** at September 30, 2024, while cash and cash equivalents decreased by **$14.744 million** to **$1.333 million**[143](index=143&type=chunk) - The Bloomia acquisition was funded by **$34.919 million** cash, **$15.451 million** seller bridge loans, and **$2.990 million** in equity issued to noncontrolling interest[147](index=147&type=chunk) - The Company secured an **$18 million** term loan and a **$6 million** revolving credit facility (increased to **$8 million** in October 2024) to finance the Bloomia acquisition, with the term loan repayable in quarterly installments of **$0.450 million**[148](index=148&type=chunk)[151](index=151&type=chunk) - The Company expects current cash, credit facility, and related party note to provide sufficient liquidity for the next **12 months** and was in compliance with financial covenants as of September 30, 2024[155](index=155&type=chunk)[159](index=159&type=chunk) [Critical Accounting Estimates](index=25&type=section&id=Critical%20Accounting%20Estimates) This section highlights the significant judgments and estimates used in the company's financial reporting - Critical accounting estimates include business combinations (fair value of acquired assets/liabilities, goodwill), inventory valuation, impairment testing for goodwill and long-lived assets, interest expense for variable rate debt, and income taxes (deferred taxes, valuation allowances, uncertain tax positions)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[168](index=168&type=chunk)[173](index=173&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - Fair value measurements for business combinations involve significant judgment and estimates, including future cash flows, discount rates, and royalty rates, with allocations subject to adjustment during the measurement period[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk) - Goodwill and indefinite-lived intangible assets are tested for impairment annually or when conditions indicate, using qualitative or quantitative assessments involving discounted cash flow models and market multiples[169](index=169&type=chunk)[170](index=170&type=chunk)[172](index=172&type=chunk) [Cautionary Statement Regarding Forward-Looking Statements](index=27&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) This section warns about the inherent risks and uncertainties associated with forward-looking statements in the report - The report contains forward-looking statements regarding liquidity, capital resources, and business growth, which are subject to known and unknown risks and uncertainties[180](index=180&type=chunk) - Key risk factors include the ability to integrate Bloomia, competition, customer concentration, interest rate changes, compliance with debt covenants, reliance on key personnel, and the availability of additional capital[181](index=181&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=28&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Lendway, Inc. is exempt from providing quantitative and qualitative disclosures about market risk - The Company is exempt from providing market risk disclosures as it qualifies as a smaller reporting company[183](index=183&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204%2E%20Controls%20and%20Procedures) This section details the evaluation of Lendway, Inc.'s disclosure controls and procedures, confirming their effectiveness and addressing material changes in internal control over financial reporting due to the Bloomia acquisition - Management, including the principal executive and financial officers, concluded that the Company's disclosure controls and procedures were effective as of September 30, 2024[185](index=185&type=chunk) - The Bloomia acquisition represents a material change in internal control over financial reporting, with ongoing integration efforts to incorporate controls into the acquired subsidiaries and augment company-wide controls[186](index=186&type=chunk) PART II. OTHER INFORMATION This section provides additional information not included in the financial statements, covering legal, risk, equity, and control matters [Item 1. Legal Proceedings](index=28&type=section&id=Item%201%2E%20Legal%20Proceedings) This section refers to Note 12 for legal proceedings, noting management's belief that no material claims or actions adversely affect the Company - Legal proceedings information is incorporated by reference from Note 12 of the condensed consolidated financial statements[189](index=189&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A%2E%20Risk%20Factors) This section updates risk factors, emphasizing reliance on key personnel and challenges in maintaining effective internal control over financial reporting post-Bloomia acquisition - The Company's success is highly dependent on its key personnel, specifically Bloomia's CEO, Werner Jansen, and the loss of such personnel could adversely affect business and financial results[191](index=191&type=chunk) - Challenges in establishing and maintaining effective internal control over financial reporting, exacerbated by the Bloomia acquisition and limited employee resources, pose a risk to financial reporting accuracy and market price of common stock[192](index=192&type=chunk)[193](index=193&type=chunk)[195](index=195&type=chunk) - The Company intends to exclude Bloomia from its internal control over financial reporting evaluation for one year post-acquisition, as permitted by SOX[194](index=194&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no share repurchase activity for the three months ended September 30, 2024, with 315,792 shares remaining authorized - No share repurchase activity occurred for the three months ended September 30, 2024[196](index=196&type=chunk) - As of September 30, 2024, **315,792 shares** remained available for repurchase under the existing authorization[196](index=196&type=chunk) [Item 3. Defaults upon Senior Securities](index=29&type=section&id=Item%203%2E%20Defaults%20upon%20Senior%20Securities) The Company reported no defaults upon senior securities for the period - There were no defaults upon senior securities[197](index=197&type=chunk) [Item 4. Mine Safety Disclosures](index=29&type=section&id=Item%204%2E%20Mine%20Safety%20Disclosures) This item is not applicable to Lendway, Inc - Mine Safety Disclosures are not applicable to the Company[198](index=198&type=chunk) [Item 5. Other Information](index=29&type=section&id=Item%205%2E%20Other%20Information) No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended September 30, 2024 - No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended September 30, 2024[199](index=199&type=chunk) [Item 6. Exhibits](index=30&type=section&id=Item%206%2E%20Exhibits) This section lists exhibits filed as part of the Form 10-Q, including key agreements, corporate documents, certifications, and XBRL data - Exhibits include the Asset Purchase Agreement, Agreement for the Sale and Purchase of Shares, Certificate of Incorporation, Bylaws, Section 302 and 1350 Certifications, and XBRL formatted financial statements[201](index=201&type=chunk)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q Delaware 41-1656308 for the quarterly period ended June 30, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from ___________ to ____________ Commission File Number: 1-13471 LENDWAY, INC. (Exact name of registrant as specified in its charter) (State or other juri ...

Financial Performance - The Company reported net revenue of $8,033,000 for the three months ended March 31, 2024, all from the Bloomia segment, marking a significant increase from $0 in the same period of 2023[113]. - The Company recorded a net loss from continuing operations of $1,336,000 for the three months ended March 31, 2024, compared to a loss of $528,000 for the same period in 2023[126]. - For the three months ended March 31, 2024, the company reported no revenue and a net loss of $2,449,000 from continuing operations before income taxes[141]. - Adjusted EBITDA from continuing operations for the three months ended March 31, 2024 was $1,745,000, reflecting the impact of acquisition-related costs[115]. Acquisition Details - The Bloomia acquisition was completed for a total purchase price of $53,360,000, funded through a combination of debt and cash on hand[109]. - The total purchase price for the Bloomia acquisition was $53,360,000, funded through cash, seller bridge loans, and equity issued[146]. - The company financed the Bloomia acquisition with an $18,000,000 term loan and a revolving credit facility of up to $6,000,000, resulting in a working capital decrease from $15,483,000 at December 31, 2023 to $11,148,000 at March 31, 2024[142]. - The company has an indefinite-lived intangible asset for the trade name valued at $8,570,000 from the Bloomia acquisition[166]. - Bloomia generated an income before taxes of $1,091,000 during the acquisition period, despite incurring significant acquisition-related expenses[113]. Expenses and Cash Flow - Sales, general and administrative expenses surged by 439% to $3,388,000 for the three months ended March 31, 2024, primarily due to one-time acquisition-related costs[121]. - The company used $34,372,000 in investing activities primarily for the Bloomia acquisition, which included cash paid and other related expenses[144]. - Financing activities generated $21,835,000, mainly from proceeds of the Credit Agreement to fund the Bloomia acquisition[145]. - The Company’s cash and cash equivalents decreased by $11,064,000 from $16,077,000 at December 31, 2023, to $5,013,000 at March 31, 2024[116]. - Net cash provided by operating activities was $1,470,000, with a significant contribution from changes in operating assets and liabilities amounting to $2,697,000[143]. Lending Business - The Lending Business reported no revenue and a net loss of $325,000 for the three months ended March 31, 2024, with capital available for this segment expected to be constrained in the near term[112]. - The Company anticipates minimal revenue and operating losses from the Lending Business during the remainder of 2024 due to capital allocation towards the Bloomia acquisition[112]. - The company acknowledges the substantial risk of loss associated with its lending business and the limited history of this segment[173]. Compliance and Financial Outlook - As of March 31, 2024, the company was in compliance with financial covenants under the Credit Agreement and expects to maintain compliance for at least the next twelve months[152]. - The company anticipates that the new credit facility will support ongoing operations and capital expenditures for at least the next 12 months[146]. - The company anticipates that its cash balance, cash generated by operations, and borrowings available under its Credit Agreement will provide adequate liquidity and capital resources for at least the next twelve months[172]. Risks and Market Conditions - The company faces risks related to the integration and operation of the newly acquired Bloomia business, which has a historical revenue concentration among a small number of customers[173]. - Market conditions may restrict or delay desirable opportunities for the company, impacting future performance[173]. - The company is subject to various economic, business, market, financial, competitive, and regulatory factors that could adversely affect its operations[173]. - Changes in interest rates and compliance with the Credit Agreement are critical factors that could impact the company's financial performance[173]. - Forward-looking statements made by the company are subject to known and unknown risks and uncertainties that could cause actual results to differ materially[172]. - The company does not assume responsibility to update forward-looking statements except as required by law[173]. - The company does not provide quantitative disclosures about market risk as it qualifies as a smaller reporting company[174]. - The company emphasizes the importance of attracting and retaining highly qualified managerial, operational, and sales personnel to ensure business success[173].

PART I. [Business Overview](index=2&type=section&id=Item%201.%20Business) Lendway transformed into a specialty agricultural and finance company through strategic divestitures, reincorporation, and the acquisition of Bloomia B.V. - Company name changed from "Insignia Systems, Inc." to "Lendway, Inc." and reincorporated from Minnesota to Delaware, with common stock now trading under 'LDWY' on Nasdaq[11](index=11&type=chunk) - Completed the sale of the In-Store Marketing Business on August 3, 2023, for **$3.5 million**, with operations presented as discontinued[14](index=14&type=chunk)[15](index=15&type=chunk) - Acquired Bloomia B.V. on February 22, 2024, for **$47.5 million**, making Lendway the majority owner (81.4%) of a leading U.S. fresh-cut tulip producer[16](index=16&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk) - Launched a non-bank lending business, FarmlandCredit.com, focused on agricultural real estate loans, with plans to expand product offerings[13](index=13&type=chunk)[21](index=21&type=chunk) [General](index=2&type=section&id=General) Lendway, Inc. has strategically reincorporated, changed its name, divested its legacy business, and acquired a significant agricultural asset. - Lendway, Inc. (formerly Insignia Systems, Inc.) reincorporated from Minnesota to Delaware and changed its Nasdaq ticker to 'LDWY' on August 4, 2023[11](index=11&type=chunk) - The company has transitioned to a specialty agricultural and finance company, focusing on ag investments and non-bank lending[12](index=12&type=chunk)[13](index=13&type=chunk) - Sold the legacy In-Store Marketing Business on August 3, 2023, for **$3.5 million**, with these operations now reported as discontinued[14](index=14&type=chunk)[15](index=15&type=chunk) - Acquired Bloomia B.V. on February 22, 2024, for **$47.5 million**, making it a significant producer of fresh-cut tulips in the U.S. and a primary near-term focus[16](index=16&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk) [Segments](index=3&type=section&id=Segments) The company operates in two segments: Specialty Ag (Bloomia) and Non-bank Lending, with Bloomia being a major fresh-cut tulip producer. - The Company operates in two industry segments: Specialty Ag (Bloomia business) and Non-bank Lending (Lending Business)[24](index=24&type=chunk)[28](index=28&type=chunk) - Bloomia, a leader in fresh-cut tulips, nurtured over **75 million stems annually** in 2023 and 2022, operating from the U.S., Netherlands, and South Africa, with a minority interest in Chile[24](index=24&type=chunk)[25](index=25&type=chunk)[27](index=27&type=chunk)[29](index=29&type=chunk) - Bloomia's U.S. sales are highly concentrated, with three customers accounting for **37.7%**, **16.2%**, and **10.4%** of its U.S. revenue in 2023[30](index=30&type=chunk) - The non-bank lending business, launched in April 2023, aims to build a portfolio of well-secured loans, initially focusing on agricultural real estate, with a portion of credit risk participated to third parties[45](index=45&type=chunk)[46](index=46&type=chunk) - Capital for the lending business will be significantly constrained in the near term due to the Bloomia acquisition, anticipating minimal revenue and operating losses in 2024[50](index=50&type=chunk) [Intellectual Property: Patents and Trademarks](index=5&type=section&id=Intellectual%20Property:%20Patents%20and%20Trademarks) Bloomia protects its brand and trade secrets through trademarks and confidentiality agreements. - Bloomia holds a trademark on its name and logo, and the company uses nondisclosure and invention assignment agreements to protect trade secrets[51](index=51&type=chunk) [Environmental Matters](index=5&type=section&id=Environmental%20Matters) The company's operations comply with environmental regulations, with Bloomia's hydroponic model offering a lower carbon footprint. - The company believes its operations comply with environmental regulations, and compliance costs are not expected to be material[52](index=52&type=chunk) - Bloomia's business model of shipping bulbs via sea containers for local hydroponic production has a lower carbon footprint compared to air-shipping cut flowers, and uses less water and no pesticides[53](index=53&type=chunk) [Governmental Regulation](index=5&type=section&id=Governmental%20Regulation) Bloomia holds a USDA import permit and participates in a pre-clearance program, while Farmland Credit FR, LLC holds a money broker's license. - Bloomia holds a USDA import permit for tulip bulbs and participates in a pre-clearance program for expedited U.S. customs processing[54](index=54&type=chunk) - Farmland Credit FR, LLC holds a money broker's license in North Dakota[54](index=54&type=chunk) [Employee and Human Capital Resources](index=5&type=section&id=Employee%20and%20Human%20Capital%20Resources) As of March 1, 2024, the company had 156 employees and 54 seasonal workers, focusing on recruitment, retention, training, and a safe workplace. - As of March 1, 2024, the Company and its subsidiaries had **156 employees** (5 part-time), with **54 seasonal workers**, none represented by labor unions[55](index=55&type=chunk) - Human capital objectives include identifying, recruiting, retaining, incenting, and integrating employees, with a focus on training, wellness programs, and continuous workplace improvement[56](index=56&type=chunk)[57](index=57&type=chunk) - The company prioritizes a safe, healthy, and sustainable working environment, implementing changes based on workforce feedback and OSHA guidelines[58](index=58&type=chunk) [Risk Factors](index=6&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks from intense competition, customer concentration, economic volatility, acquisition integration challenges, operational constraints, and cybersecurity threats. - Bloomia faces strong competition from both local and foreign cut tulip producers, with competition based on price, quality, and fulfillment capabilities[60](index=60&type=chunk) - Three customers accounted for approximately **64.3%** of Bloomia's revenue in 2023, posing a significant concentration risk due to the absence of long-term purchase commitments[61](index=61&type=chunk) - The company's financial results are highly dependent on Bloomia's success, with a substantial portion of capital committed to its acquisition and growth, leading to a lack of diversification[65](index=65&type=chunk) - The Credit Agreement for the Bloomia acquisition imposes covenants that restrict Tulp 24.1's ability to incur additional debt, dispose of assets, or make distributions to Lendway, potentially limiting capital for the Lending Business and future acquisitions[69](index=69&type=chunk)[70](index=70&type=chunk)[72](index=72&type=chunk) - Bloomia's international operations expose the company to risks such as foreign currency fluctuations, adverse tax consequences, and compliance with complex foreign laws[79](index=79&type=chunk)[80](index=80&type=chunk) - The agricultural nature of Bloomia's business carries inherent risks like insects, plant diseases, and quality issues, as evidenced by a **$900,000** tulip bulb inventory write-off in June 2023 due to quality standards not being met[84](index=84&type=chunk)[85](index=85&type=chunk) [RISKS RELATING TO OUR BUSINESS AND OPERATIONS](index=6&type=section&id=RISKS%20RELATING%20TO%20OUR%20BUSINESS%20AND%20OPERATIONS) The company faces significant business and operational risks including intense competition, high customer concentration, and challenges in enforcing non-compete agreements. - Bloomia faces direct and indirect competition from other cut tulip growers and the broader cut floral industry, impacting revenue and operations[60](index=60&type=chunk) - Three customers accounted for approximately **64.3%** of Bloomia's 2023 revenue, and the absence of long-term purchase commitments creates a risk of significant revenue decrease if these customers reduce or cease purchases[61](index=61&type=chunk) - The company may struggle to enforce non-compete agreements with former Bloomia owners, potentially allowing competitors to benefit from their expertise[62](index=62&type=chunk) [RISKS RELATING TO ECONOMY AND MARKET CONDITIONS](index=6&type=section&id=RISKS%20RELATING%20TO%20ECONOMY%20AND%20MARKET%20CONDITIONS) Economic and market conditions, including floating interest rates and reduced consumer spending, pose risks to the company's financial performance. - The majority of the company's debt carries floating interest rates (Term SOFR + 3.0%), making it vulnerable to interest rate fluctuations that could increase interest expense and reduce financing ability[63](index=63&type=chunk) - Adverse economic conditions (e.g., recession, inflation, reduced consumer spending) in the U.S. and international markets could negatively impact net sales and earnings, as fresh-cut tulips are a discretionary purchase[64](index=64&type=chunk) [STRATEGIC RISKS](index=6&type=section&id=STRATEGIC%20RISKS) The company's strategic risks include high dependence on Bloomia's success, acquisition integration challenges, and potential difficulties in raising additional capital. - The company's cash flow and debt servicing ability are highly dependent on Bloomia's performance due to substantial capital commitment to its acquisition and growth, leading to a lack of diversification[65](index=65&type=chunk) - Failure to successfully manage the Bloomia acquisition and future acquisitions could adversely affect the business due to integration challenges, potential fraud, decreased customer loyalty, and inability to generate adequate cash flow for debt service[66](index=66&type=chunk)[78](index=78&type=chunk) - The company may need to raise additional capital through equity or debt, which could dilute existing stockholders, impose restrictive covenants, or be unavailable on reasonable terms, hindering growth plans[68](index=68&type=chunk) [OPERATIONAL RISKS](index=7&type=section&id=OPERATIONAL%20RISKS) Operational risks include credit agreement restrictions, reliance on key personnel, internal control weaknesses, international complexities, and inherent agricultural business risks. - The Credit Agreement for the Bloomia acquisition contains covenants that restrict Tulp 24.1's ability to incur additional debt, dispose of assets, make distributions to Lendway, or make certain investments, potentially limiting capital for the Lending Business and future acquisitions[69](index=69&type=chunk)[70](index=70&type=chunk)[72](index=72&type=chunk) - The company's success is highly dependent on key personnel, specifically CEO Randy Uglem for the Lending Business and Bloomia's CEO Werner Jansen for the tulip business; their loss could adversely affect business strategy and financial performance[73](index=73&type=chunk) - Failure to establish and maintain effective internal control over financial reporting, especially with the Bloomia acquisition, could lead to inaccurate financial reporting, decline in stock price, and regulatory sanctions[74](index=74&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk) - Bloomia's international operations in South Africa, Chile, and the Netherlands expose the company to risks such as foreign currency fluctuations, adverse tax consequences, and compliance with complex foreign laws[79](index=79&type=chunk)[80](index=80&type=chunk) - The agricultural business is subject to inherent risks like insects, plant diseases, and quality issues, as demonstrated by a **$900,000** tulip bulb inventory write-off in June 2023 due to quality standards not being met[84](index=84&type=chunk)[85](index=85&type=chunk) - Significant increases in energy and water costs, critical for Bloomia's hydroponic greenhouse cultivation, could adversely impact profit margins if not passed on to customers or mitigated[89](index=89&type=chunk) - Disruptions to the transportation network (e.g., ocean ports, truck availability) could impair the timely receipt of tulip bulbs and distribution of stems, negatively affecting operations and results[90](index=90&type=chunk) [TECHNOLOGY AND CYBERSECURITY RISKS](index=9&type=section&id=TECHNOLOGY%20AND%20CYBERSECURITY%20RISKS) Reliance on management information systems means system failures or cyber-attacks could disrupt business, decrease sales, and increase costs. - Reliance on management information systems for inventory, distribution, and other functions means system failures or interruptions (e.g., cyber-attacks, natural disasters) could disrupt business, decrease sales, and increase costs[91](index=91&type=chunk) [RISKS RELATED TO AN INVESTMENT IN OUR COMPANY](index=9&type=section&id=RISKS%20RELATED%20TO%20AN%20INVESTMENT%20IN%20OUR%20COMPANY) Investment risks include significant fluctuations in operating results and stock price, potential stockholder dilution from capital raises, and control exerted by significant stockholders. - Quarterly and annual operating results are subject to significant fluctuations due to factors like Bloomia's performance, loan closing rates, interest rate changes, and strategic activities, which could adversely affect stock price[92](index=92&type=chunk)[97](index=97&type=chunk) - The company's stock price has fluctuated significantly (low of **$4.05** to high of **$9.67** in 2023) due to operating results, market acceptance, and general market volatility[93](index=93&type=chunk) - Raising additional capital for growth may result in stockholder dilution or unfavorable terms, and such funds may not be available when needed, potentially forcing curtailment of growth plans[94](index=94&type=chunk) - Significant stockholders, holding approximately **38.9%** of outstanding shares, may exert control over matters requiring stockholder approval, potentially delaying or preventing changes of control or management[96](index=96&type=chunk)[98](index=98&type=chunk) - The company could be deemed a 'shell company' after the August 2023 asset sale, which could restrict stockholders' reliance on certain rules (e.g., Rule 144) for reselling securities[99](index=99&type=chunk)[100](index=100&type=chunk) [Unresolved Staff Comments](index=10&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) As a smaller reporting company, Lendway is exempt from disclosing unresolved staff comments. - Smaller reporting companies are not required to provide disclosure pursuant to this Item[102](index=102&type=chunk) [Cybersecurity](index=10&type=section&id=Item%201C.%20Cybersecurity) Lendway manages cybersecurity through outsourced IT, a comprehensive framework, and Board oversight, with Bloomia's integration underway and no material threats identified. - Lendway's cyber environment is primarily outsourced, utilizing a cybersecurity framework with multiple products, annual vulnerability scans, and employee awareness training[103](index=103&type=chunk) - The Board of Directors and Audit Committee provide oversight of the cybersecurity risk management program, receiving updates on IT general controls and cybersecurity[104](index=104&type=chunk) - Bloomia's IT environment, managed by a third-party vendor, will be included in the company's cybersecurity processes and oversight post-acquisition[105](index=105&type=chunk) - As of the report date, no cybersecurity threats were identified that materially affected or are reasonably likely to materially affect the business, though risks cannot be entirely eliminated[106](index=106&type=chunk) [Properties](index=10&type=section&id=Item%202.%20Properties) The company leases its corporate headquarters, a 360,000 sq ft greenhouse in Virginia, a 107,000 sq ft facility in the Netherlands, and operates a 21,000 sq ft greenhouse in South Africa. - The Company leases **1,700 square feet** for its corporate headquarters in Minneapolis, Minnesota, through September 30, 2025[109](index=109&type=chunk) - Fresh Tulips USA, LLC leases a **360,000 square foot** greenhouse facility in King George, Virginia, through 2028[109](index=109&type=chunk) - Bloomia leases a **107,000 square foot** office and warehouse space in the Netherlands through 2027 and operates a **21,000 square foot** greenhouse in South Africa through 2028[109](index=109&type=chunk) [Legal Proceedings](index=11&type=section&id=Item%203.%20Legal%20Proceedings) Routine legal proceedings are not expected to materially impact the company's financial position or operational results. - The Company is party to legal actions, proceedings, and claims in the ordinary course of business[112](index=112&type=chunk) - The outcome of these matters is not expected to have a material effect on the Company's financial position or results of operations[112](index=112&type=chunk) [Mine Safety Disclosures](index=11&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations. - Not applicable[113](index=113&type=chunk) PART II. [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=11&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Lendway's common stock trades on Nasdaq under 'LDWY', with 115 record holders, no regular dividends, and a recent stock repurchase program. - The Company's common stock is listed on the Nasdaq Capital Market under the symbol LDWY[115](index=115&type=chunk) - As of March 27, 2024, there were approximately **115 holders of record** for the common stock[116](index=116&type=chunk) - The Company has not historically paid dividends, other than two one-time special dividends in 2011 and 2016[117](index=117&type=chunk) - On August 28, 2023, the Board approved a stock repurchase authorization for up to **400,000 shares**[118](index=118&type=chunk) Issuer Purchases of Equity Securities | Period | Total shares purchased | Average price paid per share ($) | Approximate dollar value of shares purchased ($) | | :--- | :--- | :--- | :--- | | October 1 - 31, 2023 | 5,546 | $5.09 | $27,864 | | November 1 - 30, 2023 | 3,137 | $4.99 | $16,267 | | December 1 - 31, 2023 | - | - | - | | **Total** | **8,683** | | **$44,131** | [Reserved](index=11&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information. [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=11&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Lendway transformed into specialty agriculture and finance, reporting a **$3.021 million** net loss from continuing operations in 2023 and leveraging its balance sheet for the Bloomia acquisition. - Lendway has evolved into a specialty agricultural and finance company, marked by the launch of its lending business in April 2023, the sale of its In-Store Marketing Business in August 2023, and the acquisition of Bloomia B.V. in February 2024[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) - The Bloomia acquisition for **$47.5 million** was financed with **$9.2 million** cash, **$22.8 million** from a new credit facility, and **$15.5 million** in promissory notes, significantly leveraging the company's balance sheet[126](index=126&type=chunk) - The non-bank lending business will be significantly capital-constrained in the near term due to the Bloomia acquisition, anticipating minimal revenue and operating losses for the remainder of 2024[129](index=129&type=chunk) Consolidated Statements of Operations (Continuing Operations) | Item | Year Ended Dec 31, 2023 ($) | Year Ended Dec 31, 2022 ($) | Increase (decrease) from 2022 to 2023 (Amount) ($) | Increase (decrease) from 2022 to 2023 (Percent) (%) | | :--------------------------------------- | :---------------------- | :---------------------- | :--------------------------------------------- | :--------------------------------------------- | | Sales and marketing | $196,000 | $- | $196,000 | 100.0% | | General and administrative | $3,323,000 | $2,442,000 | $881,000 | 36.1% | | Total operating expenses | $3,519,000 | $2,442,000 | $1,077,000 | 44.1% | | Operating loss | $(3,519,000) | $(2,442,000) | $(1,077,000) | 44.1% | | Interest income | $518,000 | $154,000 | $364,000 | 236.4% | | Loss from continuing operations before income taxes | $(3,001,000) | $(2,288,000) | $(713,000) | 31.2% | | Income tax expense | $20,000 | $6,000 | $14,000 | 233.3% | | Net loss from continuing operations | $(3,021,000) | $(2,294,000) | $(727,000) | 31.7% | | Income from discontinued operations, net of tax | $2,474,000 | $12,340,000 | $(9,866,000) | -80.0% | | Gain from sale of discontinued operations, net of tax | $2,961,000 | $- | $2,961,000 | 100.0% | | Net income | $2,414,000 | $10,046,000 | $(7,632,000) | -76.0% | - Working capital increased to **$15,525,000** at December 31, 2023, from **$13,379,000** at December 31, 2022. Cash, cash equivalents, and restricted cash increased by **$1,553,000** to **$16,077,000**[140](index=140&type=chunk) - The new credit facility includes an **$18.0 million** term loan and a **$6.0 million** revolving credit facility, bearing interest at Term SOFR + 3.0%, with quarterly term loan repayments of **$450,000** starting June 30, 2024[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk) [Overview](index=11&type=section&id=Overview) Lendway has transformed into a specialty agricultural and finance company, reincorporating and divesting its legacy business. - Lendway has transitioned into a specialty agricultural and finance company, launching a non-bank lending business in April 2023 and selling its In-Store Marketing Business in August 2023[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) - The company changed its name from Insignia Systems, Inc. to Lendway, Inc. and reincorporated to Delaware on August 4, 2023, with its common stock now trading under 'LDWY'[123](index=123&type=chunk) [Bloomia Business](index=11&type=section&id=Bloomia%20Business) Lendway acquired majority ownership in Bloomia B.V., a leading fresh-cut tulip producer, for **$47.5 million**, significantly leveraging the balance sheet. - On February 22, 2024, Lendway acquired majority ownership in Bloomia B.V., a leading U.S. producer of fresh-cut tulips, nurturing over **75 million stems annually**[124](index=124&type=chunk) - Bloomia's unaudited net sales were approximately **$45 million** in 2023 and **$43 million** in 2022[124](index=124&type=chunk)[125](index=125&type=chunk) - The **$47.5 million** acquisition was financed with **$9.2 million** cash, **$22.8 million** from a new credit facility, and **$15.5 million** in promissory notes, significantly leveraging the company's balance sheet[126](index=126&type=chunk) [Non-Bank Lending Business](index=12&type=section&id=Non-Bank%20Lending%20Business) The non-bank lending business aims to build a portfolio of well-secured agricultural real estate loans but faces near-term capital constraints. - The company plans to continue building a scalable non-bank lending business, initially focusing on loans secured by agricultural real estate, with a strategy to develop niche products and effective funding structures[127](index=127&type=chunk)[128](index=128&type=chunk) - Capital for the lending business will be significantly constrained in the near term due to the Bloomia acquisition, leading to anticipated minimal revenue and operating losses for the remainder of 2024[129](index=129&type=chunk) [Sale of In-Store Marketing Business](index=12&type=section&id=Sale%20of%20In-Store%20Marketing%20Business) The In-Store Marketing Business was sold for **$3.5 million** in August 2023, incurring significant severance and separation benefits. - The In-Store Marketing Business was sold on August 3, 2023, for **$3.5 million**, with a post-closing adjustment reducing cash consideration by **$1.5 million**[130](index=130&type=chunk) - Transaction-related severance and separation benefits totaled approximately **$1,416,000**, with **$490,000** attributed to the discontinued In-Store Marketing Business[131](index=131&type=chunk) [Results of Operations](index=12&type=section&id=Results%20of%20Operations) The company reported a net loss from continuing operations of **$3.021 million** in 2023, an increase from **$2.294 million** in 2022, primarily due to higher operating expenses. Consolidated Statements of Operations (Continuing Operations) | Item | Year Ended Dec 31, 2023 ($) | Year Ended Dec 31, 2022 ($) | Increase (decrease) from 2022 to 2023 (Amount) ($) | Increase (decrease) from 2022 to 2023 (Percent) (%) | | :--------------------------------------- | :---------------------- | :---------------------- | :--------------------------------------------- | :--------------------------------------------- | | Sales and marketing | $196,000 | $- | $196,000 | 100.0% | | General and administrative | $3,323,000 | $2,442,000 | $881,000 | 36.1% | | Total operating expenses | $3,519,000 | $2,442,000 | $1,077,000 | 44.1% | | Operating loss | $(3,519,000) | $(2,442,000) | $(1,077,000) | 44.1% | | Interest income | $518,000 | $154,000 | $364,000 | 236.4% | | Loss from continuing operations before income taxes | $(3,001,000) | $(2,288,000) | $(713,000) | 31.2% | | Income tax expense | $20,000 | $6,000 | $14,000 | 233.3% | | Net loss from continuing operations | $(3,021,000) | $(2,294,000) | $(727,000) | 31.7% | | Income from discontinued operations, net of tax | $2,474,000 | $12,340,000 | $(9,866,000) | -80.0% | | Gain from sale of discontinued operations, net of tax | $2,961,000 | $- | $2,961,000 | 100.0% | | Net income | $2,414,000 | $10,046,000 | $(7,632,000) | -76.0% | - General and administrative expenses increased by **36.1%** to **$3,323,000** in 2023, primarily due to **$926,000** in severance benefits for the previous CEO[135](index=135&type=chunk) - Interest income significantly increased by **236.4%** to **$518,000** in 2023, driven by higher invested balances in short-term treasury bills and interest-bearing savings, and higher interest rates[136](index=136&type=chunk) - Net loss from continuing operations increased to **$3,021,000** in 2023 from **$2,294,000** in 2022[138](index=138&type=chunk) - Income from discontinued operations, net of tax, decreased significantly from **$12,340,000** in 2022 (including a **$12 million** litigation settlement gain) to **$2,474,000** in 2023, which also included a **$2,961,000** gain from the sale of discontinued operations[139](index=139&type=chunk) [Liquidity and Capital Resources](index=13&type=section&id=Liquidity%20and%20Capital%20Resources) Working capital and cash increased in 2023, but the Bloomia acquisition significantly leveraged the balance sheet, with future growth requiring additional capital. - Working capital increased to **$15,525,000** at December 31, 2023, from **$13,379,000** at December 31, 2022[140](index=140&type=chunk) - Cash, cash equivalents, and restricted cash increased by **$1,553,000** to **$16,077,000** at December 31, 2023[140](index=140&type=chunk) - Net cash used in continuing operating activities was **$2,905,000** in 2023, while net cash provided by investing activities from continuing operations was **$1,532,000**, primarily from the sale of the In-Store Marketing Business[141](index=141&type=chunk)[142](index=142&type=chunk) - The Bloomia acquisition in February 2024 was financed with **$9.2 million** cash, **$22.8 million** from a new credit facility, and **$15.5 million** in notes payable, with the credit facility expected to provide sufficient liquidity for the next 12 months[144](index=144&type=chunk) - Future growth may require additional capital, which could dilute stockholders or involve restrictive debt covenants, and availability is uncertain[145](index=145&type=chunk) [Credit Agreement](index=13&type=section&id=Credit%20Agreement) The Credit Agreement provides an **$18.0 million** term loan and a **$6.0 million** revolving credit facility for Bloomia, with floating interest rates and financial covenants. - The Credit Agreement, entered into with Tulp 24.1 as borrower, includes an **$18.0 million** term loan and a **$6.0 million** revolving credit facility for Bloomia's acquisition and working capital[146](index=146&type=chunk) - Borrowings bear interest at Term SOFR for one month plus **3.0%**, with a **0.50%** commitment fee on unutilized revolving credit[147](index=147&type=chunk) - Term loans will be repaid in quarterly installments of **$450,000** starting June 30, 2024, with the remaining balance due after five years; the revolving facility matures February 20, 2029[148](index=148&type=chunk) - The agreement includes financial covenants (minimum fixed charge coverage ratio, maximum senior cash flow leverage ratio) and customary affirmative/negative covenants restricting Tulp 24.1's ability to incur debt, dispose of assets, or make distributions[149](index=149&type=chunk) [Notes Payable to Sellers](index=14&type=section&id=Notes%20Payable%20to%20Sellers) As part of the Bloomia acquisition, Tulp 24.1 issued **$12.8 million** and **$2.7 million** in notes payable to sellers, both bearing **8%** interest initially. - As part of the Bloomia acquisition financing, Tulp 24.1 issued two sets of notes payable to sellers: **$12.8 million** with a five-year term (principal payments based on excess cash flow) and **$2.7 million** with a nine-week term[151](index=151&type=chunk) - Both notes bear interest at **8%** per annum in the first year, with the **$12.8 million** note's interest increasing annually by **2 percentage points**[151](index=151&type=chunk) [Critical Accounting Estimates](index=14&type=section&id=Critical%20Accounting%20Estimates) Income Taxes is the primary critical accounting estimate, requiring significant judgment in determining deferred taxes, valuation allowances, and uncertain tax positions. - The primary critical accounting estimate is Income Taxes, involving significant judgment in determining deferred income taxes, valuation allowances, and uncertain tax positions based on future taxable income forecasts and tax regulations[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) [Cautionary Statement Regarding Forward-Looking Statements](index=14&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) The report contains forward-looking statements subject to known and unknown risks, including integration challenges, competition, and capital availability. - The report contains forward-looking statements about future performance, liquidity, capital resources, and growth opportunities, which are subject to known and unknown risks and uncertainties[155](index=155&type=chunk) - Factors that could cause actual results to differ materially include the ability to integrate Bloomia, competition, customer concentration, interest rate changes, compliance with credit agreements, and capital availability[156](index=156&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=14&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Lendway is not required to provide market risk disclosures. - Smaller reporting companies are not required to provide disclosure pursuant to this Item[157](index=157&type=chunk) [Financial Statements and Supplementary Data](index=14&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents consolidated financial statements for 2023 and 2022, detailing balance sheets, operations, equity, cash flows, and notes on accounting policies and subsequent events. Consolidated Balance Sheets (Key Figures) | As of December 31 | 2023 ($) | 2022 ($) | | :------------------------ | :----------- | :----------- | | Total Current Assets | $16,621,000 | $20,753,000 | | Total Assets | $16,673,000 | $20,968,000 | | Total Current Liabilities | $1,096,000 | $7,374,000 | | Total Liabilities | $1,141,000 | $7,567,000 | | Total Stockholders' Equity | $15,532,000 | $13,401,000 | Consolidated Statements of Operations (Key Figures) | Years Ended December 31 | 2023 ($) | 2022 ($) | | :--------------------------------------- | :----------- | :----------- | | Net loss from continuing operations | $(3,021,000) | $(2,294,000) | | Income from discontinued operations, net of tax | $2,474,000 | $12,340,000 | | Gain from sale of discontinued operations, net of tax | $2,961,000 | $- | | Net Income | $2,414,000 | $10,046,000 | | Basic and diluted earnings per share | $1.36 | $5.61 | Consolidated Statements of Cash Flows (Key Figures) | Years Ended December 31 | 2023 ($) | 2022 ($) | | :--------------------------------------- | :----------- | :----------- | | Net cash provided by operating activities | $518,000 | $10,663,000 | | Net cash provided by (used in) investing activities | $1,508,000 | $(29,000) | | Net cash (used in) provided by financing activities | $(473,000) | $39,000 | | Increase in cash, cash equivalents and restricted cash | $1,553,000 | $10,673,000 | | Cash, cash equivalents and restricted cash at end of period | $16,077,000 | $14,524,000 | - The Bloomia acquisition on February 22, 2024, for **$47.5 million**, was financed with **$9.2 million** cash, **$22.8 million** from a new credit facility, and **$15.5 million** in notes payable. The preliminary acquisition valuation is incomplete[232](index=232&type=chunk)[233](index=233&type=chunk) [Report of Independent Registered Public Accounting Firm (PCAOB ID 542)](index=16&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20(PCAOB%20ID%20542)) This section contains the report from the independent registered public accounting firm, PCAOB ID 542. [Report of Independent Registered Public Accounting Firm (PCAOB ID 23)](index=17&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20(PCAOB%20ID%2023)) This section contains the report from the independent registered public accounting firm, PCAOB ID 23. [Consolidated Balance Sheets as of December 31, 2023 and 2022](index=17&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20December%2031,%202023%20and%202022) This section presents the company's consolidated balance sheets for December 31, 2023, and 2022. Consolidated Balance Sheets | As of December 31 | 2023 ($) | 2022 ($) | | :--------------------------------------- | :----------- | :----------- | | **ASSETS** | | | | Cash and cash equivalents | $16,077,000 | $14,439,000 | | Restricted cash | — | $85,000 | | Receivable from escrow account | $200,000 | — | | Income tax receivable | $14,000 | $28,000 | | Prepaid expense | $38,000 | $30,000 | | Other current assets related to discontinued operations | $292,000 | $6,171,000 | | **Total Current Assets** | **$16,621,000** | **$20,753,000** | | Property and equipment, net | $35,000 | — | | Operating lease right-of-use assets | $7,000 | — | | Other, net | $10,000 | — | | Non-current assets related to discontinued operations | — | $215,000 | | **Total Other Assets** | **$52,000** | **$215,000** | | **Total Assets** | **$16,673,000** | **$20,968,000** | | **LIABILITIES AND STOCKHOLDER'S' EQUITY** | | | | Accounts payable | $32,000 | $138,000 | | Accrued liabilities: Compensation | $635,000 | $264,000 | | Accrued liabilities: Other | $168,000 | $306,000 | | Current portion of operating lease liabilities | $4,000 | — | | Current liabilities related to discontinued operations | $257,000 | $6,666,000 | | **Total Current Liabilities** | **$1,096,000** | **$7,374,000** | | Accrued income taxes | $42,000 | $53,000 | | Operating lease liabilities | $3,000 | — | | Non-current liabilities related to discontinued operations | — | $140,000 | | **Total Long-Term Liabilities** | **$45,000** | **$193,000** | | Common stock, par value $.01 | $17,000 | $18,000 | | Additional paid-in capital | $16,176,000 | $16,458,000 | | Accumulated deficit | $(661,000) | $(3,075,000) | | **Total Stockholders' Equity** | **$15,532,000** | **$13,401,000** | | **Total Liabilities and Stockholders' Equity** | **$16,673,000** | **$20,968,000** | [Consolidated Statements of Operations for the years ended December 31, 2023 and 2022](index=18&type=section&id=Consolidated%20Statements%20of%20Operations%20for%20the%20years%20ended%20December%2031,%202023%20and%202022) This section presents the company's consolidated statements of operations for the years ended December 31, 2023, and 2022. Consolidated Statements of Operations | Years Ended December 31 | 2023 ($) | 2022 ($) | | :--------------------------------------- | :----------- | :----------- | | Sales and marketing | $196,000 | $- | | General and administrative | $3,323,000 | $2,442,000 | | **Total Operating Expenses** | **$3,519,000** | **$2,442,000** | | **Operating Loss** | **$(3,519,000)** | **$(2,442,000)** | | Interest income | $518,000 | $154,000 | | Loss from continuing operations before income taxes | $(3,001,000) | $(2,288,000) | | Income tax expense | $20,000 | $6,000 | | **Net loss from continuing operations** | **$(3,021,000)** | **$(2,294,000)** | | Income from discontinued operations, net of tax | $2,474,000 | $12,340,000 | | Gain from sale of discontinued operations, net of tax | $2,961,000 | $- | | **Net Income** | **$2,414,000** | **$10,046,000** | | Net income (loss) per basic and diluted share: Continuing operations | $(1.70) | $(1.28) | | Net income (loss) per basic and diluted share: Discontinued operations | $3.06 | $6.89 | | **Basic and diluted earnings per share** | **$1.36** | **$5.61** | | Shares used in calculation of net income (loss) per share: Basic and diluted | 1,781,000 | 1,791,000 | [Consolidated Statements of Stockholders' Equity for the years ended December 31, 2023 and 2022](index=19&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity%20for%20the%20years%20ended%20December%2031,%202023%20and%202022) This section presents the company's consolidated statements of stockholders' equity for the years ended December 31, 2023, and 2022. Consolidated Statements of Stockholders' Equity | | Common Stock Shares | Common Stock Amount ($) | Additional Paid-In Capital ($) | Accumulated Deficit ($) | Total ($) | | :--------------------------------------- | :-------------------- | :------------------ | :------------------------- | :-------------------- | :------------ | | Balance at January 1, 2022 | 1,782,000 | $18,000 | $16,296,000 | $(13,121,000) | $3,193,000 | | Issuance of common stock, net | 6,000 | — | $39,000 | — | $39,000 | | Issuance of common stock upon vesting of restricted stock units | 9,000 | — | — | — | — | | Value of stock-based compensation | — | — | $123,000 | — | $123,000 | | Net income | — | — | — | $10,046,000 | $10,046,000 | | Balance at December 31, 2022 | 1,797,000 | $18,000 | $16,458,000 | $(3,075,000) | $13,401,000 | | Repurchase of common stock | (84,000) | $(1,000) | $(481,000) | — | $(482,000) | | Issuance of common stock, net | 24,000 | — | $155,000 | — | $155,000 | | Issuance of common stock upon vesting of restricted stock units | 6,000 | — | — | — | — | | Value of stock-based compensation | — | — | $44,000 | — | $44,000 | | Net income | — | — | — | $2,414,000 | $2,414,000 | | Balance at December 31, 2023 | 1,743,000 | $17,000 | $16,176,000 | $(661,000) | $15,532,000 | [Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022](index=19&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20years%20ended%20December%2031,%202023%20and%202022) This section presents the company's consolidated statements of cash flows for the years ended December 31, 2023, and 2022. Consolidated Statements of Cash Flows | Years Ended December 31 | 2023 ($) | 2022 ($) | | :--------------------------------------- | :----------- | :----------- | | **Operating Activities:** | | | | Net income | $2,414,000 | $10,046,000 | | Income from discontinued operations, net of tax | $(2,474,000) | $(12,340,000) | | Gain from sale of discontinued operations, net of tax | $(2,961,000) | - | | Net loss from continuing operations | $(3,021,000) | $(2,294,000) | | Net cash used in operating activities of continuing operations | $(2,905,000) | $(2,837,000) | | Net cash provided by operating activities of discontinued operations | $3,423,000 | $13,500,000 | | **Net cash provided by operating activities** | **$518,000** | **$10,663,000** | | **Investing Activities:** | | | | Proceeds from sale of business | $1,581,000 | - | | Purchase of other long-term assets | $(10,000) | - | | Purchases of property and equipment | $(39,000) | - | | Net cash provided by investing activities of continuing operations | $1,532,000 | - | | Net cash used in investing activities of discontinued operations | $(24,000) | $(29,000) | | **Net cash provided by (used in) investing activities** | **$1,508,000** | **$(29,000)** | | **Financing Activities:** | | | | Proceeds from issuance of common stock, net | $9,000 | $39,000 | | Repurchase of common stock, net | $(482,000) | - | | **Net cash (used in) provided by financing activities** | **$(473,000)** | **$39,000** | | **Increase in cash, cash equivalents and restricted cash** | **$1,553,000** | **$10,673,000** | | Cash, cash equivalents and restricted cash at beginning of period | $14,524,000 | $3,851,000 | | **Cash, cash equivalents and restricted cash at end of period** | **$16,077,000** | **$14,524,000** | [Notes to Consolidated Financial Statements](index=20&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed notes explaining the significant accounting policies and financial statement items. [1. Summary of Significant Accounting Policies.](index=20&type=section&id=1.%20Summary%20of%20Significant%20Accounting%20Policies.) This section outlines the company's significant accounting policies, including its business evolution, discontinued operations, cash management, and income tax methods. - The Company's business has evolved into a specialty agricultural and finance company, with a focus on its agricultural investments and a non-bank lending business[181](index=181&type=chunk) - The In-Store Marketing Business was sold on August 3, 2023, and its operations are presented as discontinued operations in all periods[182](index=182&type=chunk) - On February 22, 2024, the Company acquired majority ownership in Bloomia B.V., a producer of fresh-cut tulip stems[183](index=183&type=chunk) - Cash and cash equivalents, totaling **$16,077,000** in 2023, are primarily held in interest-bearing investments like U.S. Treasury bills and money market accounts[184](index=184&type=chunk)[185](index=185&type=chunk) - The company uses the liability method for income taxes, providing for deferred taxes based on temporary differences and reducing them by a valuation allowance when realization is unlikely[193](index=193&type=chunk) - Stock-based compensation expense is measured at fair value, with restricted stock units and awards valued at the closing market price on the grant date[194](index=194&type=chunk) [2. Sale of In-Store Marketing Business and Presentation as Discontinued Operations.](index=21&type=section&id=2.%20Sale%20of%20In-Store%20Marketing%20Business%20and%20Presentation%20as%20Discontinued%20Operations.) The In-Store Marketing Business was sold for **$3.5 million** in August 2023, resulting in a gain on sale and reporting its operations as discontinued. - The In-Store Marketing Business was sold on August 3, 2023, for a gross price of **$3.5 million**, resulting in a gain on sale of **$3,044,000** before income taxes[200](index=200&type=chunk)[201](index=201&type=chunk) - Transaction-related severance and separation benefits for discontinued operations amounted to approximately **$490,000** in 2023[203](index=203&type=chunk) Results of Discontinued Operations | Years Ended December 31 | 2023 ($) | 2022 ($) | | :--------------------------------------- | :----------- | :----------- | | Net services revenues | $21,078,000 | $18,800,000 | | Gross Profit | $4,991,000 | $3,301,000 | | Operating Income | $2,371,000 | $12,048,000 | | Income from discontinued operations, net of tax | $2,474,000 | $12,340,000 | | Gain from sale of discontinued operations, net of tax | $2,961,000 | $- | - The 2022 income from discontinued operations included a **$12,000,000** gain from a litigation settlement with News America[206](index=206&type=chunk) [3. Leases.](index=23&type=section&id=3.%20Leases.) As of December 31, 2023, the company leased its corporate headquarters, with total lease payments of **$8,000** over the remaining term. - As of December 31, 2023, the Company leased its corporate headquarters under a non-cancelable operating lease with monthly payments of **$375** through September 30, 2025[208](index=208&type=chunk) Maturities of Lease Liabilities (as of Dec 31, 2023) | Year | Amount ($) | | :--- | :------- | | 2024 | $5,000 | | 2025 | $3,000 | | **Total lease payments** | **$8,000** | | Less: Interest | $(1,000) | | **Present value of lease liabilities** | **$7,000** | - The Company used an incremental borrowing rate of approximately **6.0%** to determine the present value of lease payments[210](index=210&type=chunk) [4. Commitments and Contingencies.](index=23&type=section&id=4.%20Commitments%20and%20Contingencies.) The company is subject to routine legal matters, with outcomes not expected to materially affect its financial position or results. - The Company is subject to various legal matters in the normal course of business, with outcomes not expected to materially affect financial position or results[212](index=212&type=chunk) [5. Stockholders' Equity.](index=23&type=section&id=5.%20Stockholders%27%20Equity.) Stock-based compensation expense was **$39,000** in 2023, with 1,463 stock options outstanding and an Employee Stock Purchase Plan in place. - Stock-based compensation expense recognized in continuing operations was **$39,000** in 2023 and **$91,000** in 2022[214](index=214&type=chunk) - The Company uses the Black-Scholes option pricing model for fair value estimation, with a **0% dividend yield** and varying expected volatility (**95%** in 2023, **169%** in 2022)[214](index=214&type=chunk) - As of December 31, 2023, **1,463 stock options** with a weighted average exercise price of **$15.54** were outstanding, expiring in May 2024, with no intrinsic value[218](index=218&type=chunk) - The Employee Stock Purchase Plan (ESPP) allows employees to purchase common stock at **85%** of market value; **338 shares** were purchased in 2023[223](index=223&type=chunk) - The Company intends to retain earnings for business strategy but may consider special dividends in the future[224](index=224&type=chunk) [6. Income Taxes.](index=24&type=section&id=6.%20Income%20Taxes.) Income tax expense from continuing operations was **$20,000** in 2023, with Federal and state NOL carryforwards and a valuation allowance. Income Tax Expense from Continuing Operations | Year Ended December 31 | 2023 ($) | 2022 ($) | | :----------------------- | :----------- | :----------- | | Current taxes - Federal | $- | $- | | Current taxes - State | $20,000 | $6,000 | | **Income tax expense** | **$20,000** | **$6,000** | Effective Federal Income Tax Rate Reconciliation | Year Ended December 31 | 2023 (%) | 2022 (%) | | :----------------------- | :----- | :----- | | Federal statutory rate | 21.0% | 21.0% | | Stock-based awards | (0.5)% | (0.7)% | | State benefit | 3.1% | 2.7% | | Valuation allowance | (24.6)% | (24.6)% | | Other | 0.3% | 1.3% | | **Effective federal income tax rate** | **(0.7)%** | **(0.3)%** | - As of December 31, 2023, the Company had Federal pre-tax net operating loss (NOL) carryforwards of approximately **$1,607,000** and state NOLs of approximately **$2,914,000**[226](index=226&type=chunk) - The valuation allowance decreased by **$530,000** in 2023 and **$1,970,000** in 2022, primarily due to the utilization of NOLs against taxable income[227](index=227&type=chunk) - A liability for uncertain tax positions of **$42,000** was recorded as of December 31, 2023, a decrease from **$53,000** in 2022[228](index=228&type=chunk)[230](index=230&type=chunk) [7. Employee Benefit Plans.](index=25&type=section&id=7.%20Employee%20Benefit%20Plans.) The company sponsors a 401(k) plan, with matching contributions expense of **$13,000** in 2023 for continuing operations. - The Company sponsors a 401(k) Retirement Profit Sharing and Savings Plan, with matching contributions expense of **$13,000** in 2023 and **$8,000** in 2022 for continuing operations[230](index=230&type=chunk) [8. Stock Repurchases.](index=25&type=section&id=8.%20Stock%20Repurchases.) The Board authorized the repurchase of up to **400,000 shares** in August 2023, with **84,028 shares** repurchased for **$482,000** during 2023. - On August 23, 2023, the Board authorized the repurchase of up to **400,000 shares** of common stock[231](index=231&type=chunk) - During 2023, the Company repurchased **84,028 shares** for **$482,000**[231](index=231&type=chunk) [9. Subsequent Events](index=25&type=section&id=9.%20Subsequent%20Events) On February 22, 2024, the company acquired Bloomia B.V. for **$47.5 million**, financed by cash, a new credit facility, and notes payable. - On February 22, 2024, the Company acquired majority ownership in Bloomia B.V. for **$47.5 million**, financed by **$9.2 million** cash, **$22.8 million** from a new credit facility, and **$15.5 million** in notes payable[232](index=232&type=chunk) - The acquisition will be accounted for as a business combination, but the preliminary valuation is incomplete, so pro forma net earnings cannot be provided yet[233](index=233&type=chunk)[234](index=234&type=chunk) - The new Credit Agreement includes an **$18.0 million** term loan and a **$6.0 million** revolving credit facility, bearing interest at Term SOFR + **3.0%**, with quarterly term loan repayments starting June 30, 2024[235](index=235&type=chunk)[236](index=236&type=chunk)[237](index=237&type=chunk) - Notes payable to sellers for **$12.8 million** have a five-year term with interest at **8%** (increasing annually), and **$2.7 million** notes have a nine-week term at **8%** interest[240](index=240&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosures](index=26&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures) Lendway dismissed Baker Tilly US, LLP and appointed Boulay PLLP as its independent auditor, with no reported disagreements on accounting matters. - On November 20, 2023, Baker Tilly US, LLP was dismissed as the independent registered public accounting firm[242](index=242&type=chunk) - Boulay PLLP was appointed as the new independent registered public accounting firm on November 20, 2023, for the fiscal year ending December 31, 2023[242](index=242&type=chunk) - There were no disagreements on accounting principles, financial statement disclosure, or auditing scope/procedure with Baker Tilly, nor any 'reportable event' as defined in Regulation S-K[243](index=243&type=chunk) [Controls and Procedures](index=26&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023, with no material changes. - As of December 31, 2023, the Company's principal executive officer and principal accounting officer concluded that disclosure controls and procedures were effective[244](index=244&type=chunk) - Management believes its internal control over financial reporting was effective as of December 31, 2023, based on the COSO 2013 Internal Control – Integrated Framework[245](index=245&type=chunk) - Control systems have inherent limitations, meaning they can only provide reasonable assurance and may not prevent or detect all fraud or misstatements[246](index=246&type=chunk) - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[247](index=247&type=chunk) - As a smaller reporting company, an attestation report from the external auditor on the effectiveness of internal control over financial reporting is not required[248](index=248&type=chunk) [Other Information](index=27&type=section&id=Item%209B.%20Other%20Information) No other information is required to be disclosed under this item. - None[249](index=249&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=27&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company. - Not applicable[250](index=250&type=chunk) PART III. [Directors, Executive Officers and Corporate Governance](index=27&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) This section incorporates information on directors, executive officers, and corporate governance from the Proxy Statement, detailing key leadership roles and the Code of Ethics. - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2024 Annual Meeting of Stockholders Proxy Statement[251](index=251&type=chunk) Executive Officers | Name | Age | Position | | :---------------- | :-- | :------------------------------------ | | Randy D. Uglem | 46 | President, Chief Executive Officer and Secretary | | Zackery A. Weber | 44 | Vice President of Finance | | Werner F. Jansen | 33 | Chief Executive Officer of Bloomia B.V. | - Randy D. Uglem has served as President and CEO since August 2023, with over twenty years of experience in credit and lending[252](index=252&type=chunk) - Werner F. Jansen has served as CEO of Bloomia B.V. since June 2022, bringing extensive experience in the cut flower industry[254](index=254&type=chunk) - The company has a Code of Ethics applicable to senior financial management, available on its website[256](index=256&type=chunk) [Executive Compensation](index=28&type=section&id=Item%2011.%20Executive%20Compensation) Executive and non-employee director compensation information is incorporated by reference from the Proxy Statement. - Information on executive compensation and compensation of non-employee directors is incorporated by reference from the Proxy Statement[258](index=258&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=28&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Equity compensation plan details and security ownership information are incorporated by reference from the Proxy Statement. - Information on equity compensation plan information and security ownership of certain beneficial owners and management is incorporated by reference from the Proxy Statement[259](index=259&type=chunk) [Certain Relationships and Related Transactions and Director Independence](index=28&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) Information on certain relationships, related-party transactions, and director independence is incorporated by reference from the Proxy Statement. - Information regarding certain relationships and related-party transactions, as well as director independence, is incorporated by reference from the Proxy Statement[260](index=260&type=chunk) [Principal Accountant Fees and Services](index=28&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Principal accountant fees and services information is incorporated by reference from the Proxy Statement. - Information on principal accounting fees and services is incorporated by reference from the Proxy Statement[261](index=261&type=chunk) PART IV. [Exhibits and Financial Statement Schedules](index=28&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits and financial statement schedules filed with the Form 10-K, including key agreements and financial statements. - The section includes a list of financial statements incorporated in Item 8, such as Consolidated Balance Sheets, Statements of Operations, Stockholders' Equity, Cash Flows, and Notes to Consolidated Financial Statements[262](index=262&type=chunk) - A comprehensive list of exhibits is provided, including the Asset Purchase Agreement, Agreement for the Sale and Purchase of Shares (Bloomia), Certificate of Incorporation, Bylaws, various employment and retention agreements, stock and incentive plans, and the Credit Agreement[263](index=263&type=chunk)[267](index=267&type=chunk) - Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K, but copies can be furnished to the SEC upon request[268](index=268&type=chunk) [Form 10-K Summary](index=30&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K summary is provided under this item. - None[269](index=269&type=chunk) [SIGNATURES](index=30&type=section&id=SIGNATURES) The Form 10-K is signed by the President and CEO, Vice President of Finance, and directors (via attorney-in-fact) as of April 1, 2024. - The report is signed by Randy D. Uglem, President and Chief Executive Officer, and Zackery A. Weber, Vice President of Finance, on April 1, 2024[272](index=272&type=chunk) - Randy D. Uglem also signed on behalf of the listed directors pursuant to Powers of Attorney[272](index=272&type=chunk)[273](index=273&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended September 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from ___________ to ____________ Commission File Number: 1-13471 LENDWAY, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of inc ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 _______________________________ FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from ___________ to ____________ Commission File Number: 1-13471 LENDWAY, INC. (Exact name of registrant as specified in its charter) (State o ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended March 31, 2023 or INSIGNIA SYSTEMS INC/MN (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Minnesota 41-1656308 (I.R.S. Employer Identification No.) 212 Third Avenue N, Suite 356, Minneapolis, MN 55401 (Address of principal executive offic ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 Commission File Number 001-13471 INSIGNIA SYSTEMS INC/MN (Exact name of registrant as specified in its charter) Minnesota 41-1656308 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) 212 Third Avenue N, Suite 356, Minneapolis, MN 55401 (Address of princi ...