What changed in this filing

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Item 1. Financial Statements

2025-05-13 compared with 2024-11-19 · 189 added, 526 removed, 292 unchanged (71% of the section changed)

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CONDENSED CONSOLIDATED BALANCE SHEETS

Values are rounded to the nearest thousand dollar and thousand share

September 30,

Values are rounded to the nearest thousand dollars and thousand shares

March 31, 2025

December 31, 2024

Current assets:

Cash and cash equivalents

Accounts receivable, net

Receivable from escrow account

Inventories, net

Accounts receivable - net of allowances for credit losses of $ 89 and $ 137 , respectively

Prepaid expenses and other current assets

Other current assets related to discontinued operations

Total current assets

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Long-term receivable

$ 102,459,000

Liabilities and Stockholders’ equity

6 unchanged sentences

Current portion of debt

Related party note payable

Current liabilities related to discontinued operations

1 unchanged sentence

Long-term liabilities:

Accrued income taxes

Operating lease liabilities, net of current portion

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Authorized shares - 5,714,000

Issued and outstanding shares - 1,770,000 and 1,743,000 at September 30, 2024 and December 31, 2023, respectively

Issued and outstanding shares - 1,770,000 and 1,770,000 at March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital

Accumulated other comprehensive income

Accumulated other comprehensive income (loss)

Accumulated deficit

( 5,955,000 )

( 6,404,000 )

Total stockholders’ equity attributable to Lendway, Inc.

2 unchanged sentences

Total Liabilities and Stockholders’ equity

$ 102,459,000

See accompanying notes to the condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Values are rounded to the nearest thousand dollar and thousand share

Values are rounded to the nearest thousand dollars and thousand shares (Unaudited)

Three Months Ended

Nine Months Ended

September 30,

Cost of goods sold

Sales, general and administrative expenses

Operating loss

( 1,351,000 )

( 1,633,000 )

( 2,829,000 )

( 2,983,000 )

Foreign exchange difference, net

Interest expense (income), net

Other expenses, net

Loss from continuing operations before income taxes

( 2,194,000 )

( 1,522,000 )

( 4,825,000 )

( 2,658,000 )

Income tax benefit

( 1,284,000 )

Net loss from continuing operations

( 1,458,000 )

( 1,511,000 )

( 3,541,000 )

Operating income (loss)

( 1,644,000 )

Income (loss) from discontinued operations, net of tax

Gain from sale of discontinued operations, net of tax

Net (loss) income including noncontrolling interest

Foreign exchange gain

Interest expense, net

Other expense, net

Income (loss) from continuing operations before income taxes

( 1,833,000 )

Income tax expense (benefit)

Net income (loss) from continuing operations

( 1,486,000 )

Net loss attributable to noncontrolling interest

Net (loss) income attributable to Lendway, Inc.

Income from discontinued operations, net of tax

Net income (loss) including noncontrolling interest

( 1,414,000 )

Net income (loss) attributable to noncontrolling interest

Net income (loss) attributable to Lendway, Inc.

( 1,163,000 )

Other comprehensive income (foreign currency translation)

Comprehensive (loss) income including noncontrolling interest

( 1,124,000 )

( 2,756,000 )

Comprehensive loss income attributable to noncontrolling interest

Comprehensive (loss) income attributable to Lendway, Inc.

$ ( 1,124,000 )

Comprehensive income attributable to noncontrolling interest

Comprehensive income (loss) attributable to Lendway, Inc.

( 1,160,000 )

Net (loss) income per basic and diluted share attributable to Lendway, Inc.:

Net income (loss) per basic and diluted share attributable to Lendway, Inc.:

Continuing operations

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Basic and diluted earnings per share

Weighted average shares used in calculation of net (loss) income per share:

Weighted average shares used in calculation of net income (loss) per share:

Basic and diluted

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Values are rounded to the nearest thousand dollar and thousand share

Values are rounded to the nearest thousand dollars and thousand shares (Unaudited)

Total Lendway

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Stockholders’

BALANCE DECEMBER 31, 2023

(Loss) Income

BALANCE DECEMBER 31, 2024 (Audited)

( 6,404,000 )

Value of stock-based compensation

( 1,163,000 )

( 1,414,000 )

Other comprehensive income

Issuance of noncontrolling interests in acquisition

BALANCE MARCH 31, 2025

( 5,955,000 )

Issuance of restricted stock awards

Value of stock-based compensation

Other comprehensive income

BALANCE JUNE 30, 2024

$ ( 2,339,000 )

BALANCE DECEMBER 31, 2023 (Audited)

Value of stock-based compensation

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Other comprehensive income

BALANCE AT SEPTEMBER 30, 2024

$ ( 3,464,000 )

BALANCE DECEMBER 31, 2022

$ ( 3,075,000 )

Issuance of common stock, net

Value of stock-based compensation

Issuance of noncontrolling interests in acquisition

BALANCE MARCH 31, 2024

( 1,824,000 )

Value of stock-based compensation

BALANCE AT JUNE 30, 2023

( 1,463,000 )

Repurchase of common stock

Issuance of common stock, net

Issuance of common stock upon vesting of

restricted stock units

Value of stock-based compensation

BALANCE AT SEPTEMBER 30, 2023

$ ( 337,000 )

See accompanying notes to the condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Values are rounded to the nearest thousand dollar

Nine Months Ended September 30,

Values are rounded to the nearest thousand dollars (Unaudited)

Three Months Ended March 31,

Operating Activities

Net (loss) income including noncontrolling interest

$ ( 3,339,000 )

Gain from sale of discontinued operations, net of tax

Net income (loss) including noncontrolling interest

( 1,414,000 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Adjustments to reconcile net income (loss) including noncontrolling interest to net cash provided by operating activities:

Depreciation and amortization

Amortization of deferred financing costs

Changes in allowance for credit losses

Provision for credit loss

Stock-based compensation expense

1 unchanged sentence

Noncash operating lease expense

Deferred income tax benefit

( 1,542,000 )

Deferred income taxes

Other non-cash items

Increase (decrease) in cash resulting from changes in, net of acquisition:

1 unchanged sentence

( 2,248,000 )

Income tax receivable

( 1,635,000 )

Prepaid expenses and other current assets

1 unchanged sentence

Accrued compensation

( 2,100,000 )

Accrued expenses and other current liabilities

Accrued income taxes

Net cash used in operating activities of continuing operations

( 2,663,000 )

( 2,325,000 )

Net cash provided by operating activities of continuing operations

Net cash provided by operating activities of discontinued operations

Net cash used in operating activities

( 2,573,000 )

Net cash provided by operating activities

Investing Activities

Proceeds from sale of business

Purchases of property and equipment

1 unchanged sentence

( 34,178,000 )

Receipt of escrow receivable

Net cash (used in) provided by investing activities of continuing operations

( 34,682,000 )

Net cash used in investing activities of discontinued operations

Net cash (used in) provided by investing activities

Receipts of note receivable

Net cash used in investing activities

( 34,372,000 )

3 unchanged sentences

Proceeds from related party note

Proceeds from machinery financing loan

Repayments of long-term debt

Repayments of seller note

( 1,650,000 )

Repayments of related party note

Repayments of revolving debt

( 1,961,000 )

Repayments of long-term debt

Principal payments on finance lease liabilities

Payment of financing costs

Proceeds from issuances of common stock

Repurchase of common stock, net

Net cash provided by (used in) financing activities

Net cash (used in) provided by financing activities

( 2,132,000 )

Effect of exchange rate changes

9 unchanged sentences

Non-cash financing activities

Common stock issued for accrued liabilities

Purchase of property and equipment included in accounts payable

See accompanying notes to the condensed consolidated financial statements.

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subsidiary Tulp 24.1, LLC (“Tulp 24.1”), acquired Bloomia B.V.

Subsequent to the purchase of Bloomia, the Company’s primary operations will be that of Bloomia.

Bloomia is a significant producer of fresh-cut tulips in the U.S.

with a presence in the Netherlands and South Africa.

Subsequent to the purchase of Bloomia, the Company’s primary operations have been those of Bloomia.

As part of consideration for the business combination, the Company issued units of Tulp 24.1 to the continuing CEO of Bloomia, which amounted to 18.6 % and is presented as noncontrolling interest in these unaudited condensed consolidated financial statements.

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Refer to Note 3 for further discussion.

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

(“FCI”), and FCI’s subsidiaries, Farmland Credit FR, LLC and Farmland Credit AV, LLC.

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 is not expected to have a significant adverse impact on the Company’s operations or financial results.

The Company’s Board of Directors has approved a change in the Company’s fiscal year end from December 31 to June 30 of each calendar year.

As a result of the change, the Company intends to file a transition report on Form 10-K for the six-month transition period starting January 1, 2025 and ending June 30, 2025, which is the period between the closing of the Company’s most recent fiscal year on December 31, 2024 and the opening date of the Company’s newly selected fiscal year on July 1, 2025.

During the transition period, the Company has elected to file a quarterly report on Form 10-Q for the quarter ending March 31, 2025, and then expects to file quarterly reports based on the new fiscal year beginning with the first fiscal quarter ending September 30, 2025.

Basis of Presentation.

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The operations of Bloomia are included since the date of acquisition.

Entities for which the Company owns an interest, does not consolidate, but exercises significant influence, are accounted for under the equity method of accounting and are included in equity method investments within the condensed consolidated balance sheets.

All intercompany accounts and transactions have been eliminated.

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GAAP for complete financial statements.

However, except as described herein, there has been no material change in the information disclosed in the notes to financial statements included in the Company’s consolidated financial statements as of and for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 1, 2024 (the Form 10-K).

In the opinion of management, all adjustments (consisting of normal recurring accruals and other-than-normal adjustments as disclosed in Note 15 herein) considered necessary for a fair statement have been included.

The accompanying condensed consolidated balance sheet as of December 31, 2023 has been derived from the audited balance sheet as of December 31, 2023 contained in the Form 10-K;

however, certain prior period amounts have been reclassified to conform to current period classification.

Reclassifications had no material effect on prior year net income, net income (loss) per share, or stockholders’ equity.

The condensed consolidated results of operations and comprehensive income (loss) for the three and nine months ended September 30, 2024 are not necessarily indicative of results to be expected for the full fiscal year ending December 31, 2024, nor for any other future annual or interim period.

The tulip sales business tends to be seasonal with first and second quarter being the strongest sales season.

However, except as described herein, there has been no material change in the information disclosed in the notes to financial statements included in the Company’s consolidated financial statements as of and for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 27, 2025 (the Form 10-K).

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included.

The condensed consolidated results of operations and comprehensive income (loss) for the three months ended March 31, 2025 are not necessarily indicative of results to be expected for the fiscal year ending June 30, 2025, nor for any other future annual or interim period.

The tulip sales business tends to be seasonal, with the first and second calendar quarters being the strongest sales season.

Accounts receivable and inventory balances are at their lowest levels in June and July following the strong sales season.

Inventory balances peak in the first quarter ahead of the primary selling season.

Inventory balances peak in the first calendar quarter ahead of the primary selling season.

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 (the “In-Store Marketing Business”).

The operations of the In-Store Marketing Business are presented as discontinued operations.

All prior periods presented have been restated to present the In-Store Marketing Business as discontinued operations.

Significant Accounting Policies.

We use the same accounting policies in preparing quarterly and annual financial statements.

The carrying amounts of certain financial instruments, which include cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and other financial working capital items approximate their fair values at March 31, 2025 and December 31, 2024 due to their short-term nature and management’s belief that their carrying amounts approximate the amount for which the assets could be sold or the liabilities could be settled.

The carrying amount of debt approximates fair value due to the debt’s variable market interest rate.

Recently Issued Accounting Pronouncements.

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Additionally, the amendment requires disaggregated information pertaining to taxes paid, net of refunds received, for federal, state, and foreign income taxes.

ASU 2023 - 09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued and allows for either a prospective or retrospective approach on adoption.

The Company will not early adopt and is currently assessing the impact of ASU 2023 - 09 on its consolidated financial statements and related disclosures.

Significant Accounting Policies.

Use of Estimates.

The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.

The key estimates made by management include the determination of fair values in conjunction with the acquisition of our majority interest in Bloomia, and the carrying value of inventories, right-of-use assets and lease liabilities, useful lives for property and equipment and intangible assets, and valuation of income taxes.

Actual results could differ from these estimates.

Foreign Currency Transactions.

The revenues of the Company and most of its subsidiaries are generated in U.S.

In addition, most of the costs of the Company and most of its subsidiaries are incurred in U.S.

The Company’s management has established that the U.S.

dollar is the primary currency of the economic environment in which the Company and most of its subsidiaries operate.

Thus, the functional currency of the Company and most of its subsidiaries is the U.S.

Transactions and balances that are denominated in currencies that differ from the functional currencies have been remeasured into U.S.

dollars in accordance with principles set forth in Accounting Standards Codification (“ASC”) 830, Foreign Currency Matters .

At each balance sheet date, monetary items denominated in foreign currencies are translated at exchange rates in effect at the balance sheet date, while income and expenses are translated at average exchange rates for the periods presented.

All exchange gains and losses from the remeasurement mentioned above are reflected in the condensed consolidated statements of operations as foreign exchange expenses or income, as appropriate.

For subsidiaries whose functional currency has been determined to be other than the U.S.

dollar, assets and liabilities are translated at year-end exchange rates, and condensed consolidated statements of operations items are translated at average exchange rates prevailing during the year, and equity is translated at blended historical rates.

Resulting translation differences are recorded as a separate component of accumulated other comprehensive income (loss) in stockholders’ equity.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024.

The Company will adopt ASU 2023-09 for fiscal year ending June 30, 2025 on the Form 10-K and is currently assessing the impact of ASU 2023-09 on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures.

The amendments in this update require disaggregated disclosure of income statement expenses for public business entities.

The ASU does not change the expense captions an entity presents on the face of the statement of operations;

rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements.

The amendments in ASU 2024-03 are effective for annual periods beginning after December 15, 2026 and should be applied retrospectively.

The Company is evaluating the impacts of the amendments on its condensed consolidated financial statements and the accompanying notes to the financial statements.

Recently Adopted Accounting Pronouncements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) .

The Company adopted ASU 2023-07 as of January 1, 2024.

The Company determined it had one segment that is reviewed by the Chief Operating Decision Maker (CODM) due to the Company having only one product, tulips, with over 95 % of sales derived in the U.S.

The CODM consists of the Company’s executive team, including the CEOs, CFO and the CEO of Bloomia.

Revenue and related accounts

Accounts Receivable, net.

Accounts receivable are presented in the balance sheets at their outstanding balances net of the allowance for credit losses.

Accounts receivable are presented in the condensed consolidated balance sheets at their outstanding balances net of the allowance for credit losses.

These receivables are generally trade receivables due in one year or less or expected to be billed and collected within one year.

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The estimate for allowance for credit losses is based on a historical loss rate for each pool.

Management considers qualitative factors such as change in economic factors, regulatory matters, and industry trends to determine if an allowance should be further adjusted.

At September 30, 2024, the Company’s allowance for credit losses is immaterial.

Raw materials consist primarily of tulip bulbs, including freight and packaging supplies.

Work-in-process consists of tulip stems and bulbs that have rooted.

Inventories are stated at the lower of cost, as determined on the first-in, first-out method, or net realizable value.

Finished goods and work-in-process include the inventory costs of raw materials, direct labor and normal manufacturing overhead.

Abnormal amounts of spoilage are expensed as incurred and not included in overhead.

Property and Equipment, Net.

Property and equipment, net are stated at historical cost, less accumulated depreciation and amortization.

Bushes refer to peony plants, which accumulate planting and development costs that are capitalized into their basis until they become commercially productive, at which point the asset begins depreciating, and future maintenance costs are expensed as incurred.

Planting costs consist primarily of the costs to purchase and plant nursery stock.

Development costs consist of cultivation, pruning, irrigation, labor, spraying and fertilization, and interest costs during the development period.

Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets.

Amortization of leasehold improvements is computed using the straight-line method over the shorter of the remaining lease term (including renewals that are reasonably certain to occur) or the estimated useful lives of the improvements.

The estimated useful lives of property and equipment are as follows:

Estimated Useful Life

Machinery and equipment

Leasehold improvements

Furniture and fixtures

Long-Lived Assets Impairment Testing .

Long-lived assets, which include property, plant, and equipment, finite-lived intangible assets subject to amortization, and right-of-use assets, are assessed for impairment whenever events or changes in circumstances such as asset utilization, physical change, legal factors or other matters indicate the carrying value of those assets may not be recoverable from future undiscounted cash flows.

The impairment test involves comparing the carrying amount of each individual asset-group to the forecasted undiscounted future cash flows generated by that asset group.

These assumptions require significant judgment, and actual results may differ from assumed and estimated amounts.

In the event the carrying amount of the asset exceeds the gross undiscounted future cash flows generated by that asset and the carrying amount is not considered recoverable, an impairment exists.

An impairment loss is measured as the excess of an individual asset group’s carrying amount over its fair value and is recognized in the statement of operations in the period that the impairment occurs.

The reasonableness of the useful lives of the asset and other long-lived assets is regularly evaluated.

During the three and nine months ended September 30, 2024, and 2023, no impairment losses were identified.

Goodwill and Indefinite-lived Assets .

Goodwill results from business combinations and represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets.

Annually, or if conditions indicate an additional review is necessary, the Company assesses qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount and if it is necessary to perform the quantitative goodwill impairment test.

The Company has one reporting unit.

If the Company performs the quantitative test, it compares the carrying value of the reporting unit to an estimate of the reporting unit’s fair value to identify potential impairment.

The fair value of each reporting unit is estimated using a discounted cash flow model.

Where available, and as appropriate, comparable market multiples are also used to corroborate the results of the discounted cash flow models.

In determining the estimated future cash flow, the Company considers and applies certain estimates and judgments, including current and market projected future levels of income based on management’s plans, business trends, prospects and economic conditions and market-participant considerations.

If the estimated fair value of the reporting to unit is less than the carrying value, a goodwill impairment loss is recorded for the difference, up the amount of the total goodwill.

During the three and nine months ended September 30, 2024, no impairment losses were identified.

Further, the Company recognized a trade name associated with the Bloomia acquisition that was determined to be an indefinite-lived intangible asset.

Annually, or if conditions indicate an additional review is necessary, we test indefinite-lived trade names for impairment.

We have the option to first assess qualitative factors to determine whether the fair value of a trade name is “more likely than not” less than its carrying value.

If it is more likely than not that an impairment has occurred, we then perform the quantitative impairment test.

If we perform the quantitative test, the carrying value of the asset is compared to an estimate of its fair value to identify impairment.

The fair value is determined by the relief from royalty method, which requires significant judgment.

Actual results may differ from assumed and estimated amounts utilized in the analysis.

If we conclude an impairment exists, the asset’s carrying value will be written down to its fair value.

During the three and nine months ended September 30, 2024, no impairment losses were identified.

Equity-Method Investments.

Investments are accounted for using the equity method of accounting if the investment gives us the ability to exercise significant influence, but not control, over the investee.

Under the equity method of accounting, the Company records its investments in equity-method investees in the consolidated balance sheets as equity-method investments and its share of investees’ earnings or losses together with other-than-temporary impairments in value, basis differences between the carrying amount and our ownership interest in the underlying net assets of the investee, and any gain or loss from the sale of an equity method investment as gain or loss on sale of equity investment in net income of unconsolidated investments in the consolidated statements of operations.

The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired.

If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period.

Investments in equity-method investments and joint ventures of immaterial entities are estimated based upon the overall performance of the entity where financial results are not available on a timely basis.

FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” (ASC 820) establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The standard describes three levels of inputs that may be used to measure fair value:

Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities;

quoted prices in markets that are not active;

or other inputs that are observable or can be corroborated by observable market data.

Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The carrying amounts of certain financial instruments, which include cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and other financial working capital items approximate their fair values at September 30, 2024 and December 31, 2023 due to their short-term nature and management’s belief that their carrying amounts approximate the amount for which the assets could be sold or the liabilities could be settled.

The carrying amount of debt approximates fair value due to the debt’s variable market interest rate.

Revenue Recognition.

The Company accounts for revenue in accordance with FASB Topic 606, “Revenue from Contracts with Customers,” (ASC 606), using the following steps:

Identify the contract or contracts, with a customer;

Identify the performance obligations in the contract;

Determine the transaction price;

Allocate the transaction price to performance obligations in the contract;

Recognize revenue when or as the Company satisfies a performance obligation.

The Company recognizes revenue when obligations under the terms of a contract with its customer are satisfied;

this occurs with the transfer of control of its tulips.

Revenue is measured as the amount of consideration expected to be received in exchange for transferring products.

Revenue from product sales is governed primarily by customer pricing and related purchase orders (“contracts”) which specify shipping terms and the transaction price.

Contracts are at standalone pricing.

The performance obligation in these contracts is determined by each of the individual purchase orders and the respective stated quantities, with revenue being recognized at a point in time when obligations under the terms of the agreement are satisfied.

This generally occurs with the transfer of control of tulips to the customer and the product is delivered.

The Company expenses the incremental costs of obtaining a contract, if the amortization period is one year or less.

These costs are included in sales and marketing expense in the condensed consolidated statements of operations.

Management considers qualitative factors such as changes in economic factors, regulatory matters, and industry trends to determine if an allowance should be further adjusted.

The provision for credit losses is included in selling, general, and administrative expenses on the condensed consolidated statements of operations and comprehensive income (loss).

Balance as of December 31, 2024

Provision for credit loss

Other adjustments

Balance as of March 31, 2025

Prepaid Expenses.

The Company records a prepaid expense when it has paid for a good or service that it has not yet incurred.

As of March 31, 2025 and December 31, 2024, the Company had paid $ 1,412,000 and $ 1,012,000 , respectively, for bulbs to be received in calendar year 2025.

The following table presents revenue disaggregated by customer, as determined by the operational nature of their industry:

Three Months Ended

Nine Months Ended

September 30, 2024

During the nine months ended September 30, 2024, the Company had two customers that account for 10% or more of the total revenues.

These two customers accounted for approximately 38% and 19% of revenues, respectively, for the nine months ended September 30, 2024.

As of September 30, 2024, approximately $ 0.9 million was due from these two customers.

Three Months Ended

March 31, 2025

March 31, 2024

During the three months ended March 31, 2025 and 2024, the Company had four and three customers that accounted for 10% or more of the total revenues, respectively.

During the three months ended March 31, 2025, these four customers accounted for approximately 17 %, 17 %, 13 %, and 11 % of revenues, respectively.

During the three months ended March 31, 2024, these three customers accounted for approximately 47 %, 13 %, and 11 % of revenues, respectively.

As of March 31, 2025, three of these customers also accounted for approximately 18 %, 17 %, and 15 % of accounts receivable, net, while one different customer accounted for approximately 12 % of accounts receivable, net, as of March 31, 2025.

As of December 31, 2024, three customers accounted for approximately 22 %, 18 %, and 13 % of accounts receivable, net.

The loss of a major customer could adversely affect the Company’s operating results and financial condition.

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Additionally, cost of sales includes labor and facility costs related to production operations.

Shipping and Handling.

The Company’s shipping and handling costs include costs incurred with third-party carriers to transport products to customers.

The costs of outbound freight are included in the cost of goods sold in the condensed consolidated statements of operations and comprehensive income (loss).

For the three and nine months ended September 30, 2024, the costs of out-bound freight were approximately $ 421,000 and $ 1,872,000 , respectively.

Advertising Costs.

The Company expenses advertising costs as incurred.

These costs are included within sales, general and administrative expenses in the condensed consolidated statement of operations and comprehensive income (loss).

Total advertising expense was approximately $ 18,000 and $ 27,000 for the three and nine months ended September 30, 2024, respectively.

Interest expense.

For debt with variable rate interest , interest expense is recorded based on a weighted average effective interest rate method.

The significant assumptions used in the weighted average estimate are the future debt balance and the length of time the debt will be outstanding.

Paid in kind interest is not paid in cash and included in the long-term debt, net in the unaudited condensed consolidated balance sheets.

Financing costs incurred as part of the acquisition of Bloomia are amortized and expense in interest expense in the unaudited condensed consolidated statements of operations.

Income Taxes .

The Company uses the liability method to account for income taxes as prescribed by ASC 740.

Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences reverse.

Deferred tax expense (benefit) is the result of changes in deferred tax assets and liabilities.

Deferred income tax assets and liabilities are adjusted to recognize the effects of changes in tax laws or enacted tax rates in the period during which they are signed into law.

In determining the Company’s ability to realize its deferred tax assets, the Company considers any available tax planning strategies that could be implemented.

Under ASC 740, a valuation allowance is required when it is more likely than not that all or some portion of the deferred tax assets will not be realized due to the inability to generate sufficient future taxable income of the correct character.

Failure to achieve previously forecasted taxable income could affect the ultimate realization of deferred tax assets and could negatively impact the Company’s effective tax rate on future earnings.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

The tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

Interest income or expense/penalties attributable to the overpayment or underpayment, respectively, of income taxes is recognized as an element of our provision for income taxes.

As a multinational corporation, we are subject to taxation in many jurisdictions, and the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in various taxing jurisdictions.

If we ultimately determine that the payment of these liabilities will be unnecessary, the liability will be reversed, and we will recognize a tax benefit during the period in which it is determined the liability no longer applies.

Conversely, the Company records additional tax charges in a period in which it is determined that a recorded tax liability is less than the ultimate assessment is expected to be.

The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty.

Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings.

Therefore, the actual liability for U.S.

or foreign taxes may be materially different from management’s estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities.

Stock-Based Compensation .

The Company measures and recognizes compensation expense for all stock-based awards at fair value at grant date.

Restricted stock units and awards are valued at the closing market price of the Company’s stock on the date of the grant.

The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options.

The determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as by assumptions regarding several complex and subjective variables.

These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.

During the nine months ended September 30, 2024, the Company issued 27,000 shares of restricted stock under the 2018 Equity Incentive Plan.

The shares underlying the awards were assigned a grant date fair value of $5.64 per share, based on the stock price on the date of grant, and are scheduled to vest over three years.

During the nine months ended September 30, 2023, no stock options or restricted stock were issued by the Company.

The Company recorded total stock-based compensation expense of $ 36,000 and $ 43,000 for the nine months ended September 30, 2024 and 2023, respectively.

Net Income (Loss) per Share.

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average shares outstanding and excludes any dilutive effects of stock options and restricted stock units and awards.

Diluted net income (loss) per share gives effect to all diluted potential common shares outstanding during the year.

In determining diluted net income (loss) per share, the Company considers whether the result of the incremental shares would be antidilutive.

During the three and nine month period ended September 30, 2024, the Company was in a net loss position and the result of the potentially dilutive securities was determined to be antidilutive and therefore, no incremental shares are included in any of the per share calculations.

At September 30, 2024, no options were outstanding.

At September 30, 2023, options to purchase 14,086 shares of common stock with a weighted average exercise price of $ 14.17 were outstanding and determined to be antidilutive.

Weighted average common shares outstanding for the three and nine months ended September 30, 2024, and 2023 were as follows:

Three Months Ended

Nine Months Ended

September 30,

Denominator for basic net income (loss) per share - weighted average shares

Effect of dilutive securities:

Stock options and restricted stock units

Denominator for diluted net income (loss) per share - weighted average shares

Inventories are stated at the lower of cost, as determined on the first-in, first-out method, or net realizable value.

Bloomia Acquisition

On February 22, 2024, the Company completed the acquisition of a majority interest in Bloomia and its subsidiaries (the “Acquisition”).

On February 22, 2024, the Company completed the acquisition of a majority interest in Fresh Tulips USA LLC and Bloomia and its subsidiaries (the “Acquisition”).

The Acquisition was completed by the Company through its wholly owned subsidiaries, Tulp 24.1 and Tulipa Acquisitie Holding B.V.

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The Acquisition was funded through a combination of debt and cash on hand.

The total consideration transferred for the Bloomia acquisition was $ 53,360,000 .

The total consideration transferred for the Acquisition was $ 53,360,000 .

Consideration comprised of $ 34,919,000 of cash paid, $ 15,451,000 of seller bridge loans in lieu of cash, and $ 2,990,000 of equity issued of Tulp 24.1, which is reflected as noncontrolling interest within these condensed consolidated financial statements.

1 unchanged sentence

Refer to Note 8 for further discussion on the debt used to finance the Acquisition.

Provisional fair value measurements were made for acquired assets and liabilities, and adjustments to those measurements may be made in subsequent periods as information necessary to complete the fair value analysis is obtained.

The fair value measurements associated with working capital and the allocation of certain intangible assets are preliminary as of the date these financial statements are available to be issued.

We expect to finalize the valuation and complete the purchase price allocation as soon as practicable, but no later than one year from the acquisition date.

The preliminary allocation of the purchase price to assets acquired and liabilities assumed is as follows:

The allocation of the purchase price to assets acquired and liabilities assumed is as follows:

Fair value of purchase consideration

23 unchanged sentences

Total consideration transferred

The goodwill recognized is primarily attributable to the growth potential of the Company and is not deductible for tax purposes.

The fair value of customer relationships was estimated using a discounted present value income approach.

Under the income approach, an intangible asset’s fair value is equal to the present value of future economic benefits to be derived from ownership of the asset.

Indications of value are developed by discounting future net cash flows to their present value at market-based rates of return.

The fair value of the trade names was estimated using an income approach, specifically known as the relief from royalty method.

The relief from royalty method is based on the hypothetical royalty stream that would be received if the Company were to license the trade name and was based on expected revenues.

The useful life of the customer relationships was determined considering the period of expected cash flows used to measure the fair value of the intangible assets adjusted as appropriate for the entity-specific factors including legal, regulatory, contractual, competitive, economic or other factors that may limit the useful life of the customer relationships.

The issued equity of the subsidiary, now reflected as noncontrolling interest was valued considering the total value of the acquired company and comparing that to the rollover value of the shares being converted.

Revenue, net and net loss before taxes for Bloomia since the date of acquisition included in the condensed consolidated statements of operations were approximately $ 6,628,000 and $ 910,000 , respectively for three months ended September 30, 2024.

Revenue, net and net income before taxes for Bloomia since the date of acquisition included in the condensed consolidated statements of operations were approximately $ 31,581,000 and $ 1,745,000 for the nine months ended September 30, 2024, respectively.

Unaudited pro forma information has been prepared as if the acquisition had taken place on January 1, 2023.

The unaudited pro forma information is not necessarily indicative of the results that we would have achieved had the transaction actually taken place on January 1, 2023, and the unaudited pro forma information does not purport to be indicative of future financial operating results.

The unaudited pro forma condensed consolidated financial information does not reflect any operating efficiencies and cost savings that may be realized from the integration of the acquisitions.

In accordance with ASC 270-10, the Company is unable to provide unaudited pro forma information for revenue and net earnings for the three and nine months ended September 30, 2023 due to lack of available information during the period prior to ownership.

Unaudited pro forma information for the three and nine months ended September 30, 2024, excluding the impact of debt and intangible asset amortization, is as follows:

Unaudited pro forma information for the three months ended March 31, 2024, excluding the impact of debt and intangible asset amortization, is as follows:

Three Months Ended

Nine Months Ended

September 30, 2024

Net loss attributable to Lendway

( 1,125,000 )

( 2,552,000 )

The Company incurred approximately $ 1,542,000 of acquisition-related costs that were expensed during the three months ended March 31, 2024 and an additional $ 542,000 in integrations costs that were expensed in the nine months ended September 30, 2024.

These costs are included in sales, general and administrative expenses in the condensed consolidated statements of operations.

March 31, 2024

Net income attributable to Lendway

The Company incurred approximately $ 24,000 and $ 1,542,000 of acquisition-related costs during the three months ended March 31, 2025 and 2024, respectively.

Sale of In-Store Marketing Business and Presentation as Discontinued Operations.

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(the “Buyer”) under an Asset Purchase Agreement (the “Purchase Agreement”).

The Company retained accounts receivable, as well as cash, cash equivalents and marketable securities.

The cash consideration for the sale was subject to a post-closing adjustment.

The final purchase adjustment for the net balance was to reduce the cash consideration by $ 1,500,000 , with the Company retaining an equal amount of cash that had been received for unexecuted programs.

Under the Purchase Agreement, $ 200,000 was escrowed for a twelve-month period for any future claims, as defined in the Purchase Agreement, by the Buyer against the Company and is included in Accounts receivable, net on the condensed consolidated balance sheets.

The results of the In-Store Marketing Business have been presented as discontinued operations and the related assets and liabilities have been classified as related to discontinued operations for all periods presented.

The carrying amounts of major classes of assets and liabilities that were reclassified as related to discontinued operations on the condensed consolidated balance sheets were as follows:

September 30, 2024

The carrying amounts of major classes of liabilities that were reclassified as related to discontinued operations on the condensed consolidated balance sheets were as follows:

March 31, 2025

December 31, 2024

Current Assets:

Accounts receivable, net

Current assets related to discontinued operations

Current Liabilities:

Accounts payable

Accrued sales tax

1 unchanged sentence

Current liabilities related to discontinued operations

Three Months Ended

Nine Months Ended

September 30, 2023

Net service revenues

Cost of services

Operating Expenses:

General and administrative

Total Operating Expenses

Operating (Loss) Income

$ ( 354,000 )

(Loss) Income from discontinued operations

$ ( 333,000 )

Gain from sale of discontinued operations before income taxes

Income tax expense

Gain from the sale of discontinued operations, net of tax

Results of discontinued operations are summarized below:

For the three and nine months ended September 30, 2024, the Company recognized approximately $ 66,000 and $ 202,000 , respectively, of benefit in sales, general and administrative expense of discontinued operations from the reduction in the accrual for sales tax due to the expiration of the statute of limitations.

For the nine months ended September 30, 2024, the Company generated $ 292,000 of cash from discontinued operations.

For the three months ended March 31, 2025 and 2024, the Company recognized approximately $ 10,000 and $ 72,000 , respectively, of benefit in sales, general and administrative expense of discontinued operations from the reduction in the accrual for sales tax due to the expiration of the statute of limitations.

Inventories consisted of the following at:

September 30, 2024

March 31, 2025

December 31, 2024

Finished goods

1 unchanged sentence

Raw materials and packaging supplies

Total inventories

Inventories, net

Property and Equipment.

Property and equipment, net consisted of the following at:

September 30, 2024

March 31, 2025

December 31, 2024

Machinery and equipment

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Furniture and fixtures

Construction in progress

Property and equipment, gross

1 unchanged sentence

( 1,958,000 )

( 1,486,000 )

Property and equipment, net

At September 30, 2024, property and equipment, net of $ 925,000 were located outside of the U.S.

Included in machinery and equipment is $ 55,000 of equipment funded by a financing lease.

The financing lease is included in financing leases on the condensed consolidated balance sheet.

Also included in machinery and equipment is $ 100,000 of spare parts that are not currently in use and not being depreciated.

Depreciation expense was $ 436,000 and $ 1,002,000 for the three and nine months ended September 30, 2024.

Depreciation of $ 408,000 and $ 28,000 were recorded within cost of sales and sales, general and administrative expenses, respectively, for the three months ended September 30, 2024.

Depreciation of $ 908,000 and $ 94,000 were recorded within cost of sales and sales, general and administrative expenses, respectively, for the nine months ended September 30, 2024.

Depreciation expense for the three and nine months ended September 30, 2023 was $ 10,000 and $ 36,000 , respectively, which was recorded in sales, general and administrative expenses.

Equity Method Investment.

Araucanía Flowers SA (“Araucania”) is based in Chile and serves as a marketing arm for the Company to export its crops to Latin-America countries.

Araucanía has two other shareholders that hold 70% of its aggregate issued and outstanding shares.

At September 30, 2024, the Company had a 30% equity interest in Araucania with a carrying amount of approximately $ 167,000 .

For the period ended September 30, 2024, the equity in net income of Araucania was approximately $nil.

As of September 30, 2024, the Company had a note receivable from Araucanía with a balance of $ 369,000 which is included in long-term receivable in the accompanying condensed consolidated balance sheet.

Bloomia had a 50% ownership interest in Horti-Group USA LLC (“Horti-Group”).

Horti-Group operates a 45-acre facility near Washington D.C.

that Bloomia utilizes to grow and distribute its tulips to North American customers.

On February 9, 2023, Bloomia sold its interest in Horti-Group to V-Maxx for a sale price of $ 2,500,000 .

The sale price was seller-financed via the issuance of an interest-free loan from Fresh Tulips to V-Maxx with an original principal amount $ 2,500,000 .

The loan to V-Maxx is to be repaid in 17 monthly installments of $150,000 for the first 16 months and $100,000 for the last month, with the first payment on April 1, 2023, and the last payment on August 1, 2024.

The Company does not receive cash from V-Maxx, instead the $ 150,000 per month is applied to the rent owed to Horti-Group and is reflected in Noncash operating lease expense as an add back to net loss in the condensed consolidated statement of cash flows.

At September 30, 2024, the balance of the loan was zero.

Depreciation expense was $ 447,000 and $ 142,000 for the three months ended March 31, 2025 and 2024, respectively.

Depreciation of $ 427,000 and $ 20,000 was recorded within cost of sales and sales, general and administrative expenses, respectively, for the three months ended March 31, 2025.

Depreciation of $ 122,000 and $ 20,000 was recorded within cost of sales and sales, general and administrative expenses, respectively, for the three months ended March 31, 2024.

Goodwill and Other Intangible Assets.

The following table summarizes the changes in goodwill:

Balance as of January 1, 2024

Goodwill resulting from the Bloomia Acquisition

Balance as of December 31, 2024

Measurement period adjustment

Balance as of September 30, 2024

During the nine months ended September 30, 2024, the Company recorded a measurement period adjustment which increased goodwill by $ 352,000 .

This measurement period adjustment resulted from a remeasurement of acquired payroll taxes payable, other accruals, inventory and property and equipment.

Other intangible assets and related amortization are as follows at September 30, 2024:

Other - Foreign currency translation

Balance as of March 31, 2025

During the three months ended March 31, 2025, the Company recorded a measurement period adjustment which increased goodwill by $ 145,000 .

Other intangible assets and related amortization are as follows at March 31, 2025:

Customer relationships

For the three and nine months ended September 30, 2024, amortization of intangible assets expensed to operations was $ 381,000 and $ 920,000 , respectively.

The weighted average remaining amortization period for intangible assets as of September 30, 2024 is approximately 11.4 years.

Remaining estimated aggregate annual amortization expense is as follows at:

September 30, 2024

For the three months ended March 31, 2025 and 2024, amortization of intangible assets expensed to operations was $ 381,000 and $ 158,000 , respectively.

The weighted average remaining amortization period for intangible assets as of March 31, 2025 is approximately 10.9 years.

Remaining estimated annual amortization expense is as follows for the years ended June 30:

Remainder of 2025

Long-term d ebt, net.

Long-term debt, net.

The components of debt consisted of the following at:

September 30, 2024

March 31, 2025

December 31, 2024

Credit Agreement - term loan

2 unchanged sentences

Paid in-kind interest (PIK)

Machinery financing loan (1)

Machinery financing loans

unamortized debt issuance costs

2 unchanged sentences

( 2,313,000 )

( 1,820,000 )

Long-term debt, net of current maturities

In the three months ended September 30, 2024, the Company entered into a financing arrangement to finance the purchase of machinery.

This transaction represented a failed sale leaseback with the associated equipment recorded in property and equipment, net and the proceeds received recorded as debt on the Company’s condensed consolidated balance sheet.

To finance the Bloomia acquisition, the Company entered into a revolving credit and term loan agreement (the “Credit Agreement”), with Tulp 24.1 as the borrower (the “Borrower”) for a $ 18,000,000 term loan and a $ 6,000,000 revolving credit facility.

On October 16, 2024, the Company amended the credit agreement (Amended Credit Agreement) to, among other things, temporarily increase the borrowing capacity under the revolving credit facility to $ 8,000,000 .

To finance the Acquisition, the Company entered into a revolving credit and term loan agreement (the “Credit Agreement”), with Tulp 24.1 as the borrower (the “Borrower”) for a $ 18,000,000 term loan and a $ 6,000,000 revolving credit facility.

The revolving credit facility may be used by the Company for general business purposes and working capital, subject to availability under a borrowing base consisting of 80 % of eligible accounts receivable and generally 50 % of eligible inventory.

Borrowings under the Amended Credit Agreement bear interest at a rate per annum equal to Term (Secured Overnight Financing Rate) SOFR for an interest period of one month plus 3.0%.

In addition to paying interest on the outstanding principal under the Amended Credit Agreement, the Borrower is required to pay a commitment fee of 0.50% on the unutilized commitments under the revolving credit facility.

The obligations under the Amended Credit Agreement are secured by substantially all of the personal property of the Borrower and its subsidiaries.

The Company provided an unsecured guaranty of the obligations of the Borrower under the Amended Credit Agreement.

The Amended Credit Agreement requires the Borrower and its subsidiaries to maintain (a) a minimum fixed charge coverage ratio of not less than 1.25 to 1.00 and (b) a maximum senior cash flow leverage ratio of 3.75 to 1.0 until September 30, 2024, stepping down to 2.00 to 1.00 on December 31, 2027, until the maturity date of the Amended Credit Agreement.

As of September 30, 2024, the Company was in compliance with these financial covenants.

The Amended Credit Agreement contains other customary affirmative and negative covenants, including covenants that restrict the ability of the Borrower and its subsidiaries to incur additional indebtedness, dispose of significant assets, make distributions or pay dividends, make certain investments, including any acquisitions other than permitted acquisitions, make certain payments, enter into sale and leaseback transactions or grant liens on its assets, subject to certain limitations.

The Amended Credit Agreement also contains customary events of default, the occurrence of which would permit the lenders to terminate their commitments and accelerate loans under the Amended Credit Agreement, including failure to make payments under the credit facility, failure to comply with covenants in the Amended Credit Agreement and other loan documents, cross default to other material indebtedness of the Borrower or any of its subsidiaries, failure of the Borrower or any of its subsidiaries to pay or discharge material judgments, bankruptcy of the Borrower or any of its subsidiaries, and change of control of the Company.

The term loan is scheduled to be repaid in quarterly installments of $ 450,000 , commencing on June 30, 2024 with a scheduled maturity date of February 20, 2029 .

The term loan is subject to additional principal payments under the annual 50% of excess cash flow provision (waived if total net cash flow leverage is less than 2.0x as of fiscal year-end).

The scheduled maturity date of the revolving credit facility is February 20, 2029.

As part of the financing of the Bloomia acquisition, the Company entered into notes payable with the sellers.

The Credit Agreement requires Bloomia , among other things.

to maintain a maximum senior cash flow leverage ratio of 3.75 to 1.0 as of March 31, 2025.

Due to the shift in the Easter holiday from March 2024 to April 2025, the holiday sales were excluded from the ratio calculation as of March 31, 2025, and the Company was in breach.

The lender waived the breach as of March 31, 2025, with no financial impact.

As part of the financing of the Acquisition, the Company entered into notes payable with the sellers.

Notes payable for $ 12,750,000 have a term of five years with a scheduled maturity date of March 24, 2029.

The notes payable are subject to additional principal payments based on “excess cash flow” (“excess cash flow” has the same definition as “excess cash flow” used to determine additional principal payments for the term loan under the Credit Agreement).

The notes payable initially bear interest at 8 % per annum for the first year that increase annually by 2 percentage points.

The notes payable are subject to additional principal payments based on excess cash flow.

The notes payable initially bear interest at 8 % per annum for the first year that increases annually by 2 percentage points.

Interest on loans made under the notes payable is payable “in kind” (“PIK”).

1 unchanged sentence

Additionally, the Company entered into short-term notes payable with the sellers.

The short-term notes payable of $ 2,700,000 was paid in full as of June 30, 2024.

As of September 30, 2024, there was $ 334,000 of debt issuance costs related to the term loan, net of amortization of $ 51,000 which has been presented as a direct deduction from long-term debt in the accompanying condensed consolidated balance sheet.

As of September 30, 2024, there was $ 113,000 of deferred financing costs related to the revolving credit facility, net of amortization of $ 15,000 , which has been presented within prepaid expenses and other current assets in the accompanying condensed consolidated balance sheet.

The Company incurred $ 419,000 and $ 883,000 of interest expense on the term loans and revolving facility in the three and nine months ended September 30, 2024, respectively.

The Company incurred non-cash paid-in-kind interest of $ 392,000 and $ 928,000 on the seller notes facility in the three and nine months ended September 30, 2024, respectively.

Term loan, revolving credit facility and paid-in-kind interest are included in interest expense (income), net on the condensed consolidated statements of operations and comprehensive income (loss).

The combined aggregate maturities for each of the five years following September 30, 2024 are as follows:

The short-term notes payable of $ 2,700,000 were paid in full as of June 30, 2024.

As of March 31, 2025 and December 31, 2024, there were $ 385,000 of debt issuance costs related to the term loan, net of amortization of $ 93,000 and $ 73,000 , respectively, which have been presented as a direct deduction from long-term debt in the accompanying condensed consolidated balance sheet.

As of March 31, 2025 and December 31, 2024, there were $ 128,000 of deferred financing costs related to the revolving credit facility, net of amortization of $ 28,000 and $ 22,000 , respectively, which have been presented within prepaid expenses and other current assets in the accompanying condensed consolidated balance sheet.

The Company incurred $ 446,000 and $ 212,000 of interest expense on the term loans and revolving facility in the three months ended March 31, 2025 and 2024, respectively.

In addition, the Company incurred non-cash paid-in-kind interest of $ 404,000 and $ 125,000 on the seller notes facility in the three months ended March 31, 2025 and 2024, respectively.

Term loan, revolving credit facility and paid-in-kind interest are included in interest expense, net on the condensed consolidated statements of operations and comprehensive income (loss).

The combined aggregate maturities for the fiscal years following March 31, 2025 are as follows:

Remainder of 2025

The September 2024 installment of the term loan was paid in October 2024 and is included in the current portion of long-term debt on the condensed consolidated balance sheet.

Related Party Note Payable

On August 15, 2024, the Company entered into an unsecured Delayed Draw Term Note (the “Note”) with Air T Inc.

On August 15, 2024, and as amended on September 27, 2024 and January 15, 2025, the Company entered into an unsecured Delayed Draw Term Note (the “Note”) with Air T Inc.

(Air T) pursuant to which Air T has agreed to advance from time to time until August 15, 2026, but not on a revolving basis, up to $ 3.75 million to fund the Company’s operations.

The Note remains scheduled to mature, and all principal and accrued but unpaid interest will become due on August 15, 2029, subject to Air T’s right to demand payment on or after February 15, 2026.

beneficially owns greater than 10 % of our outstanding Common Stock and is a member of a group of stockholders that collectively owns approximately 40 % of our outstanding common stock.

As of September 30, 2024, the Company had $ 2,000,000 outstanding under the Note and had incurred $ 8,000 of interest.

Amounts outstanding under the Note bear interest at a fixed rate of 8.0 %, which may be increased by 3.0 % upon certain events of default.

The entire principal amount outstanding on the Loans, together with accrued and unpaid interest thereon as set forth below, shall be due and payable in full on the earlier of (i) August 15, 2029 , (ii) Borrower’s receipt of a written demand by the Lender delivered on or after February 15, 2026, and (iii) such earlier date as all principal owing hereunder becomes due and payable by acceleration or otherwise (the “ Maturity Date ”).

The Borrower may prepay any Loan outstanding hereunder, together with accrued and unpaid interest on such Loan, at any time without prepayment or penalty.

On September 27, 2024, we entered into an Amended and Restated Delayed Draw Term Note (the “ Amended Note ”) with Air T pursuant to which Air T has agreed to advance up to an additional $ 1.0 million from time to time until August 15, 2026, but not on a revolving basis.

The Amended Note provides for total borrowing of up to $ 3.5 million to fund the Company’s operations.

As previously disclosed, amounts outstanding under the Amended Note bear interest at a fixed rate of 8.0 %, which may be increased by 3.0 % upon certain events of default.

The Amended Note remains scheduled to mature and all principal and accrued but unpaid interest will become due on August 15, 2029, subject to Air T’s right to demand payment on or after February 15, 2026.

No closing or origination fees will be paid to the Air T.

Amounts outstanding under the Note bear interest at a fixed rate of 8.0 %, which may be increased by 3.0 % upon certain events of default, and the interest accrued and deferred until the maturity date.

As of March 31, 2025 and December 31, 2024, the Company had $ 3,350,000 and $ 3,500,000 , respectively, principal outstanding under the Note.

Interest expense incurred during the three months ended March 31, 2025 and 2024 was $ 73,000 and $ 0 , respectively, which is included in noncash paid in-kind interest expense on the condensed consolidated statement of cash flows.

The Note is included total current liabilities on the condensed consolidated balance sheet as of March 31, 2025.

The Company is party to leasing contracts in which the Company is the lessee.

3 unchanged sentences

The Company includes optional extension periods and early termination options in its lease term if it is reasonably likely that the Company will exercise an option to extend or terminate early.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term, at the later of the commencement date or business combination date.

Operating lease Right of Use (“ROU”) assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term, at the later of the commencement date or business combination date.

Because most of the Company’s leases do not provide an implicit rate of return, the discount rate is based on the collateralized borrowing rate of the Company, on a portfolio basis.

The weighted average remaining lease term and weighted average discount rate is as follows at:

September 30, 2024

The weighted average remaining lease term and weighted average discount rate were as follows at:

March 31, 2025

December 31, 2024

Weighted average remaining lease term (years)

5 unchanged sentences

The components of lease expense from continuing operations are as follows within our condensed consolidated statements of operations and comprehensive income (loss):

Three Months Ended September 30, 2024

Nine Months Ended

September 2024

Three Months Ended

March 31, 2025

March 31, 2024

Operating lease expense:

2 unchanged sentences

Finance lease expense:

Finance lease cost - depreciation

Total lease expense

In the Form 10-Q for the second quarter, management incorrectly disclosed the short-term variable lease expense for the six months ended June 30, 2024.

Management corrected the disclosure above.

There was no impact on the condensed consolidated statement of operations in either period.

Three Months Ended

Nine Months Ended

September 30, 2023

September 2023

Operating lease expense:

Related party lease

Finance lease cost - amortization

Finance lease cost - interest

Total lease expense

Lease expense from discontinued operations

Supplemental cash flow information related to leases where the Company is the lessee is as follows:

Three Months Ended

Nine Months Ended

September 30, 2024

September 2024

Three Months Ended

March 31, 2025

March 31, 2024

Operating cash flows from operating leases

Operating cash flows from finance leases

Financing cash flows from finance leases

Leased assets obtained in exchanged for operating lease liabilities

Leased assets obtained in exchange for operating lease liabilities

Leased assets obtained in exchange for finance lease liabilities

As of September 30, 2024, the maturities of the operating and finance lease liabilities are as follows:

Year ending December 31,

As of March 31, 2025, the maturities of the operating and finance lease liabilities for the fiscal years following March 31, 2025 are as follows:

Operating Leases

2 unchanged sentences

Total lease payments

Less discount to PV

Less discount to present value

( 23,033,000 )

Liability balance

Lease liability balance

Income Taxes.

For the three and nine months ended September 30, 2024, the Company recorded an income tax benefit of 33.5 % and 26.6 %, respectively on loss from continuing operations.

The rates differ from the federal statutory rate of 21 % due to state taxes of 4.7 %, valuation allowance change of 9.3 % and nondeductible transaction costs and other permanent items of ( 8.4 )%.

For the three and nine months ended September 30, 2023, the Company recorded an income tax expense of 0.6 % and 0.1 % on loss from continuing operations before income taxes.

The rate differs from the federal statutory rate of 21 % due to state taxes of 3.5 %, valuation allowance change of ( 24.5 )% and other permanent items of 0.1 %.

For the three and nine months ended September 30, 2024, the Company recorded an income tax benefit of $ 736,000 and $ 1,284,000 on the loss from continuing operations before income taxes.

The overall benefit of $ 1,284,000 includes a $ 451,000 benefit for the reversal of the valuation allowance on federal deferred tax assets.

For the three months ended March 31, 2025, the Company recorded income tax expense of 20.2 % on income from continuing operations.

For the three months ended March 31, 2024, the Company recorded an income tax benefit of 18.9 % on loss from continuing operations.

For the three months ended March 31, 2025, the rate differs from the federal statutory rate of 21 % due to state taxes of 7.3 %, adjustments from prior year of ( 3.9 )%, and other permanent items of ( 4.2 )%.

For the three months ended March 31, 2024, the rate differs from the federal statutory rate of 21 % due to state taxes of 4.7 %, valuation allowance change of 17.6 %, and nondeductible transaction costs and other permanent items of ( 24.4 )%.

For the three months ended March 31, 2025 and 2024, the Company recorded income tax expense of $ 156,000 and an income tax benefit of $ 347,000 on the income (loss) from continuing operations before income taxes, respectively.

During the three months ended March 31, 2024, the Company established deferred tax liabilities related to the Acquisition in the majority ownership of Bloomia.

The Company anticipates that the deferred tax liabilities will result in future taxable income that will allow for the realization of the federal deferred tax assets.

As of September 30, 2024, and December 31, 2023, the Company had unrecognized tax benefits totaling $ 35,000 and $ 42,000 , respectively, including interest, which relates to state nexus issues.

As of March 31, 2025, and December 31, 2024, the Company has recorded a liability of $ 35,000 for uncertain tax position taken on tax returns in previous years.

The amount of the unrecognized tax benefits, if recognized, that would affect the effective income tax rates of future periods is $ 35,000 .

As of March 31, 2025, the Company has recorded an income tax receivable of $ 105,000 included in prepaids and other current assets on the condensed consolidated balance sheet.

Net Income (Loss) per Share.

Diluted net income (loss) per share gives effect to all diluted potential common shares outstanding during the year.

In determining diluted net income (loss) per share, the Company considers whether the result of the incremental shares would be antidilutive.

During the three months ended March 31, 2025, the Company did not have potentially dilutive securities.

During the three months ended March 31, 2024, the Company was in a net loss position and the result of the potentially dilutive securities was determined to be antidilutive and therefore, no incremental shares are included in the per share calculation.

At March 31, 2025, no options were outstanding.

At March 31, 2024, options to purchase 1,463 shares of common stock with a weighted average exercise price of $ 15.54 were outstanding and determined to be antidilutive.

Weighted average common shares outstanding for the three months ended March 31, 2025 and 2024 were as follows:

Three Months Ended

Denominator for basic net income (loss) per share - weighted average shares

Effect of dilutive securities:

Stock options and restricted stock units

Denominator for diluted net income (loss) per share - weighted average shares

Commitments and Contingencies.

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated.

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated.

Legal costs incurred in connection with loss contingencies are expensed as incurred.

In the ordinary course of the business, the Company is subject to periodic legal or administrative proceedings.

As of September 30, 2024, the Company was not involved in any material claims or legal actions which, in the opinion of management, the ultimate disposition would have a material adverse effect on the Company’s condensed consolidated financial position, results of operations, or liquidity.

As of March 31, 2025, the Company was not involved in any material claims or legal actions which, in the opinion of management, the ultimate disposition would have a material adverse effect on the Company’s condensed consolidated financial position, results of operations, or liquidity.

Purchase Obligation.

3 unchanged sentences

Other than this obligation, the Company has not had any material service or supply agreements that obligate the Company to make payments to vendors for an extended period of time.

Employee Benefit Plans .

For all Dutch employees, the Company participates in defined contribution pension plans with an independent insurance company.

Defined contributions are expensed in the year in which the related employee services are rendered.

The Company makes contributions on behalf of all Dutch employees of which $ 21,000 and $ 51,000 were made and expensed for the three and nine months ended September 30, 2024, respectively.

Revision of first and second quarter 2024 unaudited results:

During the third quarter ended September 30, 2024, the Company identified certain misstatements in the first and second quarter consolidated financial statements.

The Company assessed the applicable guidance issued by the Securities and Exchange Commission (SEC) and the Financial Accounting Standards Board (FASB) and concluded these misstatements were not material, individually or in the aggregate, to the Company’s unaudited condensed consolidated financial statements for the aforementioned interim periods.

However, to facilitate comparisons among periods, the Company has decided to revise its previously issued first and second quarter unaudited condensed consolidated financial information.

The following tables present the impact of the errors on the previously reported condensed consolidated financial statements:

Three Months Ended March 31, 2024

As Previously Reported

Cost of goods sold (1)

Loss from continuing operations before income taxes

( 1,683,000 )

( 1,833,000 )

Net loss from continuing operations

( 1,336,000 )

( 1,486,000 )

Net (loss) income including noncontrolling interest

( 1,264,000 )

( 1,414,000 )

Net (loss) income attributable to Lendway, Inc.

( 1,041,000 )

( 1,163,000 )

Net (loss) income attributable to noncontrolling interest

Comprehensive (loss) income attributable to Lendway, Inc.

( 1,038,000 )

( 1,160,000 )

Net (loss) income per basic and diluted share attributable to Lendway, Inc.

Note receivable

$ ( 150,000 )

Three Months Ended June 30, 2024

As Previously Reported

Cost of goods sold (3)

Selling, general and administrative expenses (4)

Loss from continuing operations before income taxes

( 1,082,000 )

Net loss from continuing operations

Net (loss) income including noncontrolling interest

Net (loss) income attributable to Lendway, Inc.

Net (loss) income attributable to noncontrolling interest

Comprehensive (loss) income including noncontrolling interest

Comprehensive (loss) income attributable to Lendway, Inc.

Net (loss) income per basic and diluted share attributable to Lendway, Inc.

Accounts receivable, net

Inventories, net

Accrued expenses and other current liabilities

Note receivable (5)

Six Months Ended June 30, 2024

As Previously Reported

Cost of goods sold (3)

Selling, general and administrative expenses (4)

Loss from continuing operations before income taxes

( 2,765,000 )

( 2,632,000 )

Net loss from continuing operations

( 2,217,000 )

( 2,084,000 )

Net (loss) income including noncontrolling interest

( 2,081,000 )

( 1,948,000 )

Net (loss) income attributable to Lendway, Inc.

( 1,786,000 )

( 1,678,000 )

Net (loss) income attributable to noncontrolling interest

Comprehensive (loss) income including noncontrolling interest

( 1,740,000 )

( 1,607,000 )

Comprehensive (loss) income attributable to Lendway, Inc.

( 1,749,000 )

( 1,641,000 )

Net (loss) income per basic and diluted share attributable to Lendway, Inc.

The Company did not record non-cash rent expense for the month of March 2024.

This adjustment impacts the three months ended March 31, 2024 and the six months ended June 30, 2024.

The Company identified a timing issue whereby product received by the customer before June 30, 2024 was recorded in July 2024, resulting in an understatement of revenue and cost of good sold in the three and six months ended June 30, 2024.

Based on an inventory count performed in the third quarter of 2024, management noted the inventory balance at June 30, 2024 was overstated, which results in cost of goods sold being understated.

Management over accrued for certain expenses resulting in an overstatement of selling, general and administrative costs in the three and six months ended June 30, 2024.

Rent expense was properly stated in the three months ended June 30, 2024, but the note was overstated as of June 30, 2024 due to non-cash rent not being recorded in March 2024.

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-Q

Item 1. Financial Statements