Item 1. Financial Statements
Item 1. Financial Statements
Lendway, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
Values are rounded to the nearest thousand dollars and thousand shares
March 31, 2025
December 31, 2024
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
1,308,000
$
1,759,000
Accounts receivable - net of allowances for credit losses of $ 89 and $ 137 , respectively
4,475,000
2,243,000
Inventories
11,922,000
13,370,000
Prepaid expenses and other current assets
2,101,000
1,466,000
Total current assets
19,806,000
18,838,000
Property and equipment, net
11,459,000
11,316,000
Equity-method investment
191,000
191,000
Goodwill
10,860,000
10,705,000
Intangible assets, net
25,187,000
25,568,000
Operating lease right-of-use assets
32,590,000
32,942,000
Finance lease right-of-use assets
61,000
65,000
Long-term receivable
360,000
360,000
Total assets
$
100,514,000
$
99,985,000
Liabilities and Stockholders’ equity
Current liabilities:
Accounts payable
$
4,133,000
$
3,019,000
Accrued compensation
598,000
490,000
Accrued expenses and other current liabilities
1,841,000
1,361,000
Current portion of operating lease liabilities
1,115,000
1,068,000
Current portion of finance lease liabilities
18,000
21,000
Current portion of debt
2,313,000
1,820,000
Related party note payable
3,491,000
—
Current liabilities related to discontinued operations
23,000
33,000
Total current liabilities
13,532,000
7,812,000
Long-term liabilities:
Operating lease liabilities, net of current portion
32,134,000
32,416,000
Finance lease liabilities, net of current portion
43,000
44,000
Long-term debt, net
34,665,000
36,608,000
Related party note payable
—
3,569,000
Deferred tax liabilities, net
7,572,000
7,642,000
Total Long-term liabilities
74,414,000
80,279,000
Commitments and contingencies (Note 13)
Stockholders’ equity
Common stock, par value $ 0.01 :
Authorized shares - 5,714,000
Issued and outstanding shares - 1,770,000 and 1,770,000 at March 31, 2025 and December 31, 2024, respectively
17,000
17,000
Additional paid-in capital
16,261,000
16,236,000
Accumulated other comprehensive income (loss)
9,000
( 9,000 )
Accumulated deficit
( 5,955,000 )
( 6,404,000 )
Total stockholders’ equity attributable to Lendway, Inc.
10,332,000
9,840,000
Equity from noncontrolling interest
2,236,000
2,054,000
Total Stockholders’ equity
12,568,000
11,894,000
Total Liabilities and Stockholders’ equity
$
100,514,000
$
99,985,000
See accompanying notes to the condensed consolidated financial statements.
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Lendway, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
Values are rounded to the nearest thousand dollars and thousand shares (Unaudited)
Three Months Ended
March 31,
2025
2024
Revenue, net
$
12,443,000
$
8,033,000
Cost of goods sold
8,554,000
6,289,000
Gross profit
3,889,000
1,744,000
Sales, general and administrative expenses
2,457,000
3,388,000
Operating income (loss)
1,432,000
( 1,644,000 )
Foreign exchange gain
( 335,000 )
( 45,000 )
Interest expense, net
970,000
225,000
Other expense, net
24,000
9,000
Income (loss) from continuing operations before income taxes
773,000
( 1,833,000 )
Income tax expense (benefit)
156,000
( 347,000 )
Net income (loss) from continuing operations
617,000
( 1,486,000 )
Income from discontinued operations, net of tax
10,000
72,000
Net income (loss) including noncontrolling interest
627,000
( 1,414,000 )
Less: Net income (loss) attributable to noncontrolling interest
178,000
( 251,000 )
Net income (loss) attributable to Lendway, Inc.
449,000
( 1,163,000 )
Other comprehensive income (foreign currency translation)
22,000
3,000
Less: Comprehensive income attributable to noncontrolling interest
4,000
—
Comprehensive income (loss) attributable to Lendway, Inc.
$
467,000
$
( 1,160,000 )
Net income (loss) per basic and diluted share attributable to Lendway, Inc.:
Continuing operations
$
0.25
$
( 0.71 )
Discontinued operations
0.01
0.04
Basic and diluted earnings per share
$
0.25
$
( 0.67 )
Weighted average shares used in calculation of net income (loss) per share:
Basic and diluted
1,770,000
1,743,000
See accompanying notes to the condensed consolidated financial statements.
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Lendway, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Values are rounded to the nearest thousand dollars and thousand shares (Unaudited)
Accumulated
Additional
Other
Total Lendway
Total
Common Stock
Paid-In
Comprehensive
Accumulated
Stockholders’
Noncontrolling
Stockholders’
Shares
Amount
Capital
(Loss) Income
Deficit
Equity
Interest
Equity
BALANCE DECEMBER 31, 2024 (Audited)
1,770,000
$
17,000
$
16,236,000
$
( 9,000 )
$
( 6,404,000 )
$
9,840,000
$
2,054,000
$
11,894,000
Value of stock-based compensation
—
—
25,000
—
—
25,000
—
25,000
Net income
—
—
—
—
449,000
449,000
178,000
627,000
Other comprehensive income
—
—
—
18,000
—
18,000
4,000
22,000
BALANCE MARCH 31, 2025
1,770,000
$
17,000
$
16,261,000
$
9,000
$
( 5,955,000 )
$
10,332,000
$
2,236,000
$
12,568,000
—
BALANCE DECEMBER 31, 2023 (Audited)
1,743,000
$
17,000
$
16,176,000
$
—
$
( 661,000 )
$
15,532,000
$
—
$
15,532,000
Value of stock-based compensation
—
—
1,000
—
—
1,000
—
1,000
Net loss
—
—
—
—
( 1,163,000 )
( 1,163,000 )
( 251,000 )
( 1,414,000 )
Other comprehensive income
—
—
—
3,000
—
3,000
—
3,000
Issuance of noncontrolling interests in acquisition
—
—
—
—
—
—
2,990,000
2,990,000
BALANCE MARCH 31, 2024
1,743,000
$
17,000
$
16,177,000
$
3,000
$
( 1,824,000 )
$
14,373,000
$
2,739,000
$
17,112,000
See accompanying notes to the condensed consolidated financial statements.
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Lendway, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Values are rounded to the nearest thousand dollars (Unaudited)
Three Months Ended March 31,
2025
2024
Operating Activities
Net income (loss) including noncontrolling interest
$
627,000
$
( 1,414,000 )
Adjustments to reconcile net income (loss) including noncontrolling interest to net cash provided by operating activities:
Depreciation and amortization
835,000
300,000
Amortization of deferred financing costs
26,000
12,000
Provision for credit loss
16,000
—
Stock-based compensation expense
25,000
1,000
Noncash paid in kind interest expense
477,000
—
Noncash operating lease expense
116,000
143,000
Deferred income taxes
( 70,000 )
( 505,000 )
Other non-cash items
( 145,000 )
—
Increase (decrease) in cash resulting from changes in, net of acquisition:
Accounts receivable, net
( 2,248,000 )
( 1,635,000 )
Inventories
1,081,000
3,322,000
Prepaid expenses and other current assets
( 641,000 )
( 887,000 )
Accounts payable
1,064,000
263,000
Accrued compensation
108,000
( 645,000 )
Accrued expenses and other current liabilities
466,000
2,429,000
Net cash provided by operating activities of continuing operations
1,737,000
1,384,000
Net cash provided by operating activities of discontinued operations
—
86,000
Net cash provided by operating activities
1,737,000
1,470,000
Investing Activities
Purchases of property and equipment
( 68,000 )
( 230,000 )
Acquisition of Bloomia, net of cash acquired
—
( 34,178,000 )
Receipts of note receivable
—
36,000
Net cash used in investing activities
( 68,000 )
( 34,372,000 )
Financing Activities
Proceeds from term loan
—
18,000,000
Proceeds from revolving debt
—
6,000,000
Proceeds from related party note
250,000
—
Repayments of seller note
—
( 1,650,000 )
Repayments of related party note
( 400,000 )
—
Repayments of revolving debt
( 1,961,000 )
—
Repayments of long-term debt
( 15,000 )
—
Principal payments on finance lease liabilities
( 6,000 )
( 2,000 )
Payment of financing costs
—
( 513,000 )
Net cash (used in) provided by financing activities
( 2,132,000 )
21,835,000
Effect of exchange rate changes
12,000
3,000
Net decrease in cash and cash equivalents
( 451,000 )
( 11,064,000 )
Cash and cash equivalents, beginning of period
1,759,000
16,077,000
Cash and cash equivalents, end of period
$
1,308,000
$
5,013,000
Supplemental cash flow information
Cash paid for interest
$
341,000
$
46,000
Cash paid for income taxes
$
104,000
$
—
Noncash purchase consideration - Equity issuance of noncontrolling interest
$
—
$
2,990,000
Noncash purchase consideration - Seller notes
$
—
$
15,451,000
Non-cash financing activities
Purchase of property and equipment included in accounts payable
$
50,000
$
—
See accompanying notes to the condensed consolidated financial statements.
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Lendway, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Description of Business and Basis of Presentation.
Description of Business. Lendway, Inc. (“the Company”) is a specialty agricultural (“ag”) company focused on making and managing its ag investments in the United States (“U.S.”) and internationally. On February 22, 2024, the Company, through its majority-owned U.S. subsidiary Tulp 24.1, LLC (“Tulp 24.1”), acquired Bloomia B.V. (“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. The remaining 81.4 % equity interest of Tulp 24.1 is owned by the Company and the Company is and maintains control of Tulp 24.1 as its sole managing member. Refer to Note 3 for further discussion.
Year-end. 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. The accompanying unaudited condensed consolidated financial statements of the Company include all wholly and majority owned subsidiaries of the Company. 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 unaudited condensed consolidated balance sheets. All intercompany accounts and transactions have been eliminated. These unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Securities and Exchange Commission (“SEC”) Regulation S-X and do not include all information and footnotes required by U.S. 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, 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 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.
Significant Accounting Policies. We use the same accounting policies in preparing quarterly and annual financial statements. The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period.
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Fair Value. 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.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires public companies to expand their income tax disclosures with respect to the reconciliation of the effective tax rate to the statutory rate for federal, state, and foreign income taxes and requires greater detail about significant reconciling items in the reconciliation. 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. 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.
2. Revenue and related accounts
Accounts Receivable, net. 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. The Company estimates credit losses on accounts receivable in accordance with ASC 326 Financial Instruments - Credit Losses . The Company measures the allowance for credit losses on trade receivables on a collective (pool) basis when similar risk characteristics exist. The estimate for allowance for credit losses is based on a historical loss rate for each pool. 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
$
137,000
Provision for credit loss
16,000
Write-offs
( 39,000 )
Other adjustments
( 25,000 )
Balance as of March 31, 2025
$
89,000
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.
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Revenue. The following table presents revenue disaggregated by customer, as determined by the operational nature of their industry:
Three Months Ended
Three Months Ended
March 31, 2025
March 31, 2024
Supermarket
$
10,701,000
$
7,472,000
Wholesaler
1,663,000
388,000
Other
79,000
173,000
$
12,443,000
$
8,033,000
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.
Cost of Sales. Cost of sales consists primarily of costs to procure, sort, pick, cool, and transport bulbs. Additionally, cost of sales includes labor and facility costs related to production operations. Inventories are stated at the lower of cost, as determined on the first-in, first-out method, or net realizable value.
3. Bloomia 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. (“Tulipa”), pursuant to an Agreement for the Sale and Purchase of Shares by and among Tulp 24.1, Tulipa, Botman Bloembollen B.V., W.F. Jansen (“Jansen”), and H.J. Strengers, and Lendway, as the Guarantor. Jansen will continue to serve as chief executive officer of Bloomia following the Acquisition. As a result of the Acquisition, Tulp 24.1 became the holder of 100 % of the ownership interests of Bloomia.
The Acquisition has been accounted for in accordance with ASC Topic 805, “Business Combinations,” using the acquisition method of accounting. Under the acquisition method of accounting, the total purchase price was allocated to the net identifiable tangible and intangible assets of Bloomia acquired, based on their fair values at the date of the acquisition.
The Acquisition was funded through a combination of debt and cash on hand. 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. Following the noncontrolling equity issued, the Company owns 81.4 % of Tulp 24.1 and the CEO of Bloomia owns the remaining 18.6 %. Refer to Note 8 for further discussion on the debt used to finance the Acquisition.
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The allocation of the purchase price to assets acquired and liabilities assumed is as follows:
Fair value of purchase consideration
Cash consideration
$
34,919,000
Equity in subsidiary issued (noncontrolling interest)
2,990,000
Seller bridge loans
15,451,000
Total fair value of consideration
$
53,360,000
Fair value of assets acquired and liabilities assumed:
Cash and cash equivalents
$
741,000
Accounts receivable
3,430,000
Inventories
12,493,000
Prepaid and other
2,359,000
Property and equipment
11,349,000
Intangible assets
26,870,000
Equity method investment
167,000
Finance lease - right of use assets
22,000
Operating lease - right of use assets
34,289,000
Other assets
358,000
Total assets acquired
92,078,000
Accounts payable
1,730,000
Accrued expenses
2,843,000
Finance lease liabilities - current
13,000
Operating lease liabilities - current
945,000
Finance lease liabilities - long-term
9,000
Operating lease liabilities - long-term
33,344,000
Deferred tax liabilities
10,722,000
Total liabilities assumed
49,606,000
Net identifiable assets acquired
42,472,000
Goodwill
10,888,000
Total consideration transferred
$
53,360,000
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
March 31, 2024
Revenue, net
$
14,173,000
Net income attributable to Lendway
2,377,000
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.
4. Sale of In-Store Marketing Business and Presentation as Discontinued Operations.
On August 3, 2023, the Company completed the sale of certain assets and certain liabilities relating to the Company’s In-Store Marketing Business for a price of $ 3,500,000 to TIMIBO LLC, an affiliate of Park Printing, Inc. (the “Buyer”) under an Asset Purchase Agreement (the “Purchase Agreement”). 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.
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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 Liabilities:
Accrued sales tax
$
17,000
$
24,000
Other accrued liabilities
6,000
9,000
Current liabilities related to discontinued operations
$
23,000
$
33,000
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.
5. Inventories.
Inventories consisted of the following at:
March 31, 2025
December 31, 2024
Finished goods
$
974,000
$
165,000
Work-in-process
4,285,000
2,235,000
Raw materials and packaging supplies
6,663,000
10,970,000
Inventories
$
11,922,000
$
13,370,000
6. Property and Equipment.
Property and equipment, net consisted of the following at:
March 31, 2025
December 31, 2024
Machinery and equipment
$
11,730,000
$
11,129,000
Leasehold improvements
351,000
344,000
Bushes
489,000
489,000
Vehicles
401,000
396,000
Furniture and fixtures
206,000
204,000
Construction in progress
240,000
240,000
Property and equipment, gross
13,417,000
12,802,000
Less: accumulated depreciation
( 1,958,000 )
( 1,486,000 )
Property and equipment, net
$
11,459,000
$
11,316,000
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.
7. Goodwill and Other Intangible Assets.
The following table summarizes the changes in goodwill:
Balance as of December 31, 2024
$
10,705,000
Measurement period adjustment
145,000
Other - Foreign currency translation
10,000
Balance as of March 31, 2025
$
10,860,000
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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:
Carrying
Useful Life
Accumulated
Net Carrying
Amount
(Years)
Amortization
Amount
Tradename
$
8,570,000
Indefinite
$
—
$
8,570,000
Customer relationships
18,300,000
12
1,683,000
16,617,000
$
26,870,000
$
1,683,000
$
25,187,000
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
$
381,000
2026
1,525,000
2027
1,525,000
2028
1,525,000
2029
1,525,000
Thereafter
10,136,000
Total
$
16,617,000
8. Long-term debt, net.
The components of debt consisted of the following at:
March 31, 2025
December 31, 2024
Credit Agreement - term loan
$
16,650,000
$
16,650,000
Notes payable
12,750,000
12,750,000
Credit Agreement - revolving credit facility
6,000,000
7,961,000
Paid in-kind interest (PIK)
1,735,000
1,331,000
Machinery financing loans
228,000
141,000
$
37,363,000
$
38,833,000
Less: unamortized debt issuance costs
( 292,000 )
( 312,000 )
Total debt
$
37,071,000
$
38,521,000
PIK included in accrued expenses and other current liabilities
( 93,000 )
( 93,000 )
Less current maturities
( 2,313,000 )
( 1,820,000 )
Long-term debt, net of current maturities
$
34,665,000
$
36,608,000
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. 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 until March 31, 2025. 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. 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.
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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. 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”). Interest that is payable “in-kind” is added to the aggregate principal amount on the applicable interest payment date. Additionally, the Company entered into short-term notes payable with the sellers. 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
$
915,000
2026
1,864,000
2027
1,856,000
2028
1,824,000
2029
30,861,000
Thereafter
43,000
$
37,363,000
9. Related Party Note Payable
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. Air T Inc. 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. 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.
10. Leases.
The Company is party to leasing contracts in which the Company is the lessee. These lease contracts are classified as either operating or finance leases. The Company’s lease contracts include land, buildings, and equipment. Remaining lease terms range from 1 to 15 years with various term extension options available . 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.
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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 were as follows at:
March 31, 2025
December 31, 2024
Weighted average remaining lease term (years)
Finance leases
4.1
4.2
Operating leases
13.6
13.9
Weighted average discount rate applied
Finance leases
5.5
%
5.5
%
Operating leases
8.2
%
8.2
%
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
Three Months Ended
March 31, 2025
March 31, 2024
Operating lease expense:
Operating lease cost
$
1,056,000
$
449,000
Short-term variable lease cost
91,000
86,000
Finance lease expense:
Finance lease cost - amortization
7,000
1,000
Finance lease cost - interest
1,000
—
Total lease expense
$
1,155,000
$
536,000
Supplemental cash flow information related to leases where the Company is the lessee is as follows:
Three Months Ended
Three Months Ended
March 31, 2025
March 31, 2024
Operating cash flows from operating leases
$
940,000
$
306,000
Operating cash flows from finance leases
1,000
—
Financing cash flows from finance leases
6,000
1,000
Leased assets obtained in exchange for operating lease liabilities
—
34,289,000
Leased assets obtained in exchange for finance lease liabilities
—
22,000
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
Finance Leases
Remainder of 2025
$
941,000
$
7,000
2026
3,798,000
17,000
2027
3,872,000
14,000
2028
3,877,000
14,000
2029
3,799,000
14,000
Thereafter
39,995,000
2,000
Total lease payments
56,282,000
68,000
Less discount to present value
( 23,033,000 )
( 7,000 )
Lease liability balance
$
33,249,000
$
61,000
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11. Income Taxes.
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 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.
12. 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 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
March 31,
2025
2024
Denominator for basic net income (loss) per share - weighted average shares
1,770,000
1,743,000
Effect of dilutive securities:
Stock options and restricted stock units
—
—
Denominator for diluted net income (loss) per share - weighted average shares
1,770,000
1,743,000
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13. Commitments and Contingencies.
Litigation. 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 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. On July 1, 2023 the Company entered into an obligation with a third-party to purchase 25 % of their annual production of tulip bulbs through 2028 for $ 1,650,000 annually, totaling $ 8,000,000 over the duration of the agreement. In addition, the Company entered into a separate agreement with the same party to supply tulips to that party over a three-year period for a total of $ 360,000 . The Company will be paid in three sums of $ 120,000 beginning on March 1, 2026, with the final payment to be received on March 1, 2028.
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.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.