What changed in this filing

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Item 1. Business

2025-03-27 compared with 2024-04-01 · 36 added, 61 removed, 122 unchanged (44% of the section changed)

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(“Lendway,” “we,” “us,” “our” and the “Company”), a Delaware corporation.

Effective August 4, 2023, we changed our name from “Insignia Systems, Inc.” and reincorporated from Minnesota to Delaware.

Effective August 4, 2023, we changed our name from “Insignia Systems, Inc.” which was incorporated in Minnesota in 1990 and reincorporated from Minnesota to Delaware.

As part of the name change, our common stock now trades under the symbol “LDWY” on The Nasdaq Stock Market LLC.

The Company has evolved into a specialty agricultural (“ag”) and finance company focused on making and managing its ag investments in the United States (“U.S.”) and internationally.

The Company is the majority owner of Bloomia B.V.

and its affiliated entities, representing a significant producer of fresh cut tulips (“stems”) in the U.S.

The Company also fully owns and operates FarmlandCredit.com, a non-bank lending business that seeks to purchase existing loans and/or originate and fund new loans domestically.

During the past twelve months, the Company took three major steps in its evolution.

The Company is building a scalable non-bank lending business (“Lending Business”) to purchase existing loans or originate and fund new loans, all of which will be secured by collateral.

Initially, we intend to focus on loans secured by real estate, primarily for agricultural purposes.

We expect to expand our product offerings over time as we identify needs and opportunities in the marketplace for loans generally.

Our plan, therefore, is to build a portfolio of well-secured loans, with a portion of the credit risk being participated to third parties in most cases, to maintain a low net loss experience and to charge fully compensatory rates and fees.

On August 3, 2023, the Company completed the sale of certain assets and certain liabilities relating to the Company’s legacy business of providing in-store advertising solutions to brands, retailers, shopper marketing agencies and brokerages (the “In-Store Marketing Business”) for a price of $3.5 million, subject to escrows and a post-closing adjustment.

The Company has evolved into a specialty agricultural (“ag”) company focused on making and managing its ag investments in the United States (“U.S.”) and internationally.

The Company is the majority owner of Fresh Tulips USA LLC, Bloomia B.V., and its affiliated entities, representing a significant producer of fresh cut tulips (“stems”) in the U.S.

On February 22, 2024, the Company acquired Bloomia B.V., the parent of Fresh Tulips USA LLC, for a purchase price of $47.5 million, financed with Company cash, a new credit facility, promissory notes payable to the sellers and issuing an equity interest in the new company (the “Acquisition”).

The Acquisition was completed through Tulp 24.1, LLC, a Delaware limited liability company and Tulipa Acquisitie Holding B.V..

Tulp 24.1, LLC, Tulipa Acquisitie Holding B.V, Fresh Tulips USA LLC and Bloomia B.V.

and its affiliated entities are collectively referred to as “Bloomia.” Bloomia is one of the largest producers of fresh cut tulips in the United States, nurturing over 75 million stems annually.

Bloomia purchases tulip bulbs, hydroponically grows tulips from the bulbs, and sells the stems to retail stores.

The Company’s primary focus in the near-term will be on the Bloomia business.

The purchase of Bloomia was financed, partially with funds from the sale of the Company’s legacy business of providing in-store advertising solutions (the “In-Store Marketing Business”) for a price of $3,500,000.

The operations of the In-Store Marketing Business are presented as discontinued operations beginning with the Quarterly Report on Form 10-Q for the three months ended September 30, 2023, the quarter in which the sale of the In-Store Marketing Business met the criteria as discontinued operations.

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See Note 4 to the Consolidated Financial Statements appearing in Part II, Item 8, of this Annual Report on Form 10-K for a further description of the impact of the sale of the In-Store Marketing Business on the consolidated financial statements.

On February 22, 2024, the Company acquired Bloomia B.V.

(“Bloomia”) for a price of $47.5 million financed with Company cash, a new credit facility and promissory notes payable to the sellers.

Bloomia is one of the largest producers of fresh cut tulips in the United States, nurturing over 75 million stems annually.

Bloomia purchases tulip bulbs, hydroponically grows tulips from the bulbs, and sells the stems to retail stores.

The Company’s primary focus in the near-term will be on the Bloomia business.

The Company had previously planned to also develop a non-bank lending business via its wholly owned subsidiary, Farmland Credit, Inc.

Promptly after receiving a notice of resignation from the Company’s then-serving Chief Executive Officer in June 2024, our Board of Directors reexamined the Company’s strategic position and prospects.

Primarily because the departing Chief Executive Officer represented nearly all of the Company’s knowledge and expertise relating to the purchase of existing loans and/or origination and funding of new loans, the Company has determined to focus solely on the ag business.

Because the non-bank lending business remained in development, this change did not have a significant adverse impact on the Company’s operations or financial results.

Our internet address is www.lendway.com.

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telephone 763-392-6200.

Recent Acquisitions

On February 22, 2024, we completed the acquisition of Bloomia B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands (“Bloomia”).

Bloomia Acquisition

The Acquisition was completed through Tulp 24.1, LLC, a Delaware limited liability company ( “Tulp 24.1”) and Tulipa Acquisitie Holding B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands and a wholly owned subsidiary of Tulp 24.1 ( “Tulipa”, together with Tulp 24.1, the “Purchasers”), pursuant to an Agreement for the Sale and Purchase of Shares (the “Purchase Agreement”) by and among Tulp 24.1, Tulipa, Botman Bloembollen B.V.

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As a result of the acquisition, Lendway holds an 81.4% ownership interest in Tulp 24.1 and Jansen owns the remaining 18.6% ownership interest.

We acquired Bloomia for $47.5 million.

The acquisition price was paid with $9.2 million of the Company’s cash, $22.8 million of proceeds from a new credit agreement, and promissory notes payable to the sellers totaling $15.5 million.

The acquisition was paid with $9,200,000 of the Company’s cash, $22,800,000 of proceeds from a new credit agreement, and promissory notes payable to the sellers totaling $15,500,000.

We entered into a revolving credit and term loan agreement (the “Credit Agreement”), together with Tulp 24.1 as the borrower.

Under the terms of the Credit Agreement, Tulp 24.1 had an $18.0 million term loan funded.

The Credit Agreement also contains a $6.0 million revolving credit facility, which may be used by Tulp 24.1 for general business purposes and working capital.

Under the terms of the Credit Agreement, Tulp 24.1 had an $18,000,000 term loan funded.

The Credit Agreement also contains a $6,000,000 revolving credit facility, which may be used by Tulp 24.1 for general business purposes and working capital.

The Credit Agreement contains ongoing affirmative and negative covenants that Tulp 24.1 is required to comply with.

The Company provided an unsecured guaranty of the obligations of Tulp 24.1 under the Credit Agreement.

The Company acquired Farmland Credit, Inc., a Minnesota corporation (“FCI”), and FCI’s subsidiaries, Farmland Credit FR, LLC and Farmland Credit AV, LLC for a nominal amount from a related party, Air T, Inc., a member of the group that holds 38.9% of Lendway’s outstanding shares.

This transaction was part of starting the non-bank lending business discussed below.

The following summarizes the current entity structure of the Company:

With the February 2024 acquisition of Bloomia, we operate in two industry segments:

Specialty Ag, consisting of the Bloomia business

Non-bank Lending, consisting of the Lending Business

Our Specialty Ag segment consists of Bloomia’s operations.

About Bloomia

Bloomia was founded in the Netherlands and has grown to become a leader in the fresh cut tulip industry in the U.S.

Bloomia nurtured over 75 million stems annually in 2023 and 2022.

Bloomia nurtured over 95 million stems in 2024.

Bloomia operates from three strategically positioned locations in the United States, the Netherlands and South Africa, and also has a 30% interest in a greenhouse business in Chile.

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Bulbs from the Southern Hemisphere are generally used from the end of August to early December, with the Northern Hemisphere produced bulbs used the remainder of the year.

Bloomia has established business relationships with prominent retailers.

In the United States, Bloomia has established business relationships with prominent retailers.

A small number of mass-market retailers in the U.S.

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Bloomia aims to offer premium tulip stems, the result of sourcing larger bulbs, that have a longer shelf life than imported stems.

Growing bulbs domestically also allows for higher margins because the freight costs for importing bulbs by sea have been substantially less than the costs associated with importing stems by air.

Growing tulip stems domestically allows for higher margins because the freight costs for importing bulbs by sea have been substantially less than the costs associated with importing stems by air.

In the Netherlands, Bloomia’s office facilitates the sourcing of bulbs, conditioning to prepare bulbs for planting, and shipping of bulbs to its United States and South Africa facilities.

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The operation grows tulips hydroponically year-round.

Its growing and production complex consists of about 8,600 square feet of greenhouse, 7,000 cubic feet of cold storage, and more than 2,400 square feet of processing space.

Araucania traditionally sells to retailers located in Chile, Bolivia, and Peru.

Araucania traditionally sells to retailers located in Chile and Brazil.

Bloomia has well established customer relationships.

In the U.S., Bloomia sells stems to some of the largest mass-market retailers.

During 2023, Bloomia had approximately 15 customers in the U.S.

During fiscal year 2024, Bloomia had approximately 25 customers in the U.S.

Of those customers, three individually represented greater than 10% of Bloomia’s revenue, accounting for 34%, 20%, and 11% of its U.S.

revenue during the 12 months ended December 31, 2023.

revenue during the fiscal year 2024.

The estimated market for cut flowers in the United States for 2024 is approximately $8 billion, of which approximately 80% is imported and around 20% is produced within the U.S.

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Consumer sales at mass-market retailers.

During 2023 Bloomia sourced bulbs to grow around 75 million stems.

The Netherlands has around 1,500 bulb suppliers, who jointly export over 2.5 billion tulip bulbs each year.

During fiscal year 2024, Bloomia sourced bulbs to grow over 95 million stems, an increase of 25% over the prior year.

Approximately 80% of bulbs were sourced from the Netherlands and 20% from the Southern Hemisphere.

The Netherlands has around 600 tulip bulb growers, who jointly export over 2.5 billion tulip bulbs each year.

Over the past five years, Bloomia has sourced from the 10 largest producers, 20 medium-sized producers, as well as from smaller producers;

80% of our supply comes from 20% of our suppliers.

The Netherlands’ large-scale production of tulip bulbs has created an efficient marketplace for Bloomia to source bulbs.

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bulb price is established through market pricing.

Due to recent poor growing conditions in the Netherlands the supply of bulbs has decreased, increasing the price per bulb.

To help facilitate year-round growing, Bloomia has routinely sourced bulbs from Chile and more recently began sourcing bulbs from New Zealand.

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providing import/export logistics support, marketing support, and support for conducting business with wholesalers.

Non-Bank Lending Segment

We are building a scalable Lending Business to purchase existing loans or originate and fund new loans, all of which will be secured by collateral (individually or collectively, “Secured Loans”).

In April 2023, we launched our Lending Business, through the hiring of a Senior Vice President of Lending with over 20 years of experience in credit and lending.

Initially, we intend to focus on loans secured by real estate, primarily for agricultural purposes.

We expect to expand our product offerings over time as we identify needs and opportunities in the marketplace for loans generally.

We are building our strategy and long-term growth initiatives through development of customized niche products to support identified customer needs and opportunities in the marketplace, and effective funding structures to maximize returns.

We face competition from other entities that originate, purchase, securitize, or provide financing for Secured Loans.

These entities include commercial and investment banks, insurance companies, Farm Credit System institutions, and financial funds.

We plan to compete through development of niche products and effective fundings structures, while controlling overhead costs.

The relative competitiveness and our ability to grow loan volume will be affected by many factors, including demand for the lending products we offer, availability of capital, and liquidity and cost of funds from third-party funding sources.

Activity to Date

The Company met with a number of prospects for loan originations and/or purchases since the start of the lending business.

Deals were negotiated, but ultimately did not close.

With the Company’s decision to allocate capital to the Bloomia acquisition, capital available for the lending business will be significantly constrained in the near term.

Accordingly, we anticipate minimal revenue and operating losses from the lending business during the remainder of 2024.

Intellectual Property:

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The European Union regulations may impact aspects of the growing of tulip bulbs in the Netherlands.

Farmland Credit FR, LLC has a money broker’s license in North Dakota.

Employee and Human Capital Resources

As of March 1, 2024, the Company and its subsidiaries had 156 employees, of which 5 were part-time employees.

As of December 31, 2024, the Company and its subsidiaries had 103 employees, of which none were part-time employees.

None of the employees are represented by labor unions.

During 2023, approximately 50% of our hourly workers were hired for seasonal support during January through the end of May.

As of March 1, 2024, 54 employees were seasonal.

We employ temporary foreign agricultural workers (H2A employees).

As of December 31, 2024, there were no seasonal employees.

During the year ended December 31, 2024, there were 56 temporary foreign agricultural workers (H2A employees) employed throughout the year.

During fiscal year 2024, approximately 40% of our hourly workers were hired for seasonal support during January through the end of May.

We regard our relationship with our employees as favorable.

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Our executive officers are tasked with leading our organization and managing employment-related matters, including recruiting, hiring, onboarding, training, compensation planning, talent management and development.

We are committed to providing team members with the training and resources necessary to continually strengthen their skills both inside and outside the workplace.

In 2023, Bloomia added to its Human Capital and Human Resources team, to take on initiatives such as employee wellness programs and continuing education.

We are committed to providing team members with the training, continuing education and resources necessary to continually strengthen their skills both inside and outside the workplace.

Our executive team is responsible for periodically reviewing team member programs and initiatives, including healthcare and other benefits, as well as our management development and succession planning practices.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business