INSIGNIA SYSTEMS(ISIG) - 2024 Q3 - Quarterly Report

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 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 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][9] - 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] Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) 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] - 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] Condensed Consolidated Statements of Stockholders' Equity 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][17] - The introduction of a noncontrolling interest of $2.462 million at September 30, 2024, reflects the equity issued in the Bloomia acquisition[16][17] Condensed Consolidated Statements of Cash Flows 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] - 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] - 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] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. Description of Business and Basis of Presentation 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] - 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] - The In-Store Marketing Business was sold on August 3, 2023, and its operations are presented as discontinued operations in all prior periods[25] 2. Significant Accounting Policies 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] - 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][44] - 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][50] 3. Bloomia Acquisition 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][64] 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][68] - 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] 4. Sale of In-Store Marketing Business and Presentation as Discontinued Operations 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] 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] 5. Inventories 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] 6. Property and Equipment 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] 7. Equity Method Investment 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] - 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] 8. Goodwill and Other Intangible Assets 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] 9. Long-term debt, net 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][148][149] - 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] - 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] 10. Related Party Note Payable 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][94] - 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][94] 11. Leases 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] 12. Income Taxes 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][102] - Unrecognized tax benefits related to state nexus issues totaled $35,000 as of September 30, 2024[103] 13. Commitments and Contingencies 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] - 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] 14. Employee Benefit Plans 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] 15. Revision of first and second quarter 2024 unaudited results 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] - 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][123] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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][117][118] - 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] Bloomia Business 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] - The acquisition of Bloomia for $53.36 million was funded by cash, seller bridge loans, and equity issued to noncontrolling interests[121] - 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] Former Lending Business 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] - 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] Results of Operations 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][128][129] - 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][131] - 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][133] - 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][135] - 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] Non-GAAP Financial Measures 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][140] 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 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] - 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] - 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][151] - 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][159] Critical Accounting Estimates 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][162][163][164][168][173][175][176] - 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][165][166] - 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][170][172] Cautionary Statement Regarding Forward-Looking Statements 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] - 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] Item 3. Quantitative and Qualitative Disclosures about Market Risk 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] Item 4. Controls and Procedures 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] - 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] 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 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] Item 1A. Risk Factors 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] - 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][193][195] - The Company intends to exclude Bloomia from its internal control over financial reporting evaluation for one year post-acquisition, as permitted by SOX[194] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] - As of September 30, 2024, 315,792 shares remained available for repurchase under the existing authorization[196] Item 3. Defaults upon Senior Securities The Company reported no defaults upon senior securities for the period - There were no defaults upon senior securities[197] Item 4. Mine Safety Disclosures This item is not applicable to Lendway, Inc - Mine Safety Disclosures are not applicable to the Company[198] Item 5. Other Information 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] Item 6. Exhibits 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]