What changed in this filing

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Item 1. Financial Statements

2023-08-14 compared with 2023-05-11 · 237 added, 101 removed, 179 unchanged (65% of the section changed)

Financial Statements

Insignia Systems, Inc.

CONDENSED BALANCE SHEETS

Lendway, Inc.

and Subsidiaries

(formerly Insignia Systems, Inc.)

CONDENSED CONSOLIDATED BALANCE SHEETS

Current Assets:

24 unchanged sentences

Authorized shares - 5,714,000

Issued and outstanding shares - 1,798,000 at March 31, 2023 and 1,797,000 December 31, 2022

Issued and outstanding shares - 1,798,000 at June 30, 2023 and 1,797,000 at December 31, 2022, respectively

Additional paid-in capital

4 unchanged sentences

Total Liabilities and Shareholders' Equity

See accompanying notes to the condensed financial statements.

Insignia Systems, Inc.

CONDENSED STATEMENTS OF OPERATIONS

Three Months Ended March 31

See accompanying notes to condensed consolidated financial statements.

Lendway, Inc.

and Subsidiaries

(formerly Insignia Sytems, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Six Months Ended

Net services revenues

3 unchanged sentences

Total Operating Expenses

Operating Income

Other Income (Expense)

Other income (expense)

Total Other Income (Expense)

Income Before Taxes

Operating (Loss) Income

( 1,101,000 )

( 1,028,000 )

Interest income

(Loss) Income before Taxes

( 1,070,000 )

( 1,000,000 )

Income tax expense

Net income per share:

Shares used in calculation of net income per share:

See accompanying notes to the condensed financial statements.

Insignia Systems, Inc.

CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY

Net (Loss) Income

$ ( 1,084,000 )

$ ( 1,022,000 )

Net (loss) income per share:

Shares used in calculation of net (loss) income per share:

See accompanying notes to condensed consolidated financial statements.

Lendway, Inc.

and Subsidiaries

(formerly Insignia Systems, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Additional Paid-In

Balance at December 31, 2022

4 unchanged sentences

$ ( 1,427,000 )

Value of stock-based compensation

Balance at June 30, 2023

$ ( 1,463,000 )

Additional Paid-In

Balance at December 31, 2021

4 unchanged sentences

$ ( 13,059,000 )

See accompanying notes to the condensed financial statements.

Insignia Systems, Inc.

CONDENSED STATEMENTS OF CASH FLOWS

Three Months Ended March 31

Issuance of common stock, net

Value of stock-based compensation

Issuance of common stock upon vesting of restricted stock units

( 1,084,000 )

Balance at June 30, 2022

$ ( 14,143,000 )

See accompanying notes to condensed consolidated financial statements.

Lendway, Inc.

and Subsidiaries

(formerly Insignia Systems, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30

Operating Activities:

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation and amortization

Net income (loss)

$ ( 1,022,000 )

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

Changes in allowance for doubtful accounts

3 unchanged sentences

( 2,037,000 )

( 2,206,000 )

Income tax receivable

Prepaid expenses and other

( 1,084,000 )

Accounts payable

( 1,336,000 )

( 1,208,000 )

Accrued liabilities

Accured income taxes

( 1,170,000 )

Accrued income taxes

Deferred revenue

( 1,273,000 )

Net cash used in operating activities

5 unchanged sentences

Financing Activities:

Proceeds from issuance of common stock

Proceeds from issuance of common stock, net

Net cash provided by financing activities

4 unchanged sentences

Cash and cash equivalents and restricted cash at end of period

Supplemental disclosures for cash flow information:

Cash paid during the period for income taxes

Non-cash financing activity:

Purchase of property and equiment included in accounts payable

See accompanying notes to the condensed financial statements.

Insignia Systems, Inc.

Notes To Condensed Financial Statements

Summary of Significant Accounting Policies.

Purchase of property and equipment included in accounts payable

See accompanying notes to condensed consolidated financial statements.

Lendway, Inc.

and Subsidiaries

(formerly Insignia Systems, Inc.)

Notes To Condensed Consolidated Financial Statements

Description of Business and Basis of Presentation.

Description of Business .

Insignia Systems, Inc.

(the “Company”) is a leading provider of in-store solutions to consumer-packaged goods (“CPG”) manufacturers, retailers, shopper marketing agencies and brokerages.

The Company operates in a single reportable segment.

The Company’s leadership and employees have extensive industry knowledge with direct experience in both CPG manufacturers and retailers.

The Company provides marketing solutions to CPG manufacturers spanning from some of the largest multinationals to new and emerging brands.

The Company’s primary solutions are merchandising solutions, on-pack solutions and signage.

On April 7, 2023, Insignia announced the launch of the Company’s non-bank lending platform.

Lendway, Inc., a Delaware corporation (the “Company), is building a scalable non-bank lending business to purchase existing loans or originate and fund new loans, all of which will be secured by collateral.

On August 4, 2023, the Company changed its name from “Insignia Systems, Inc.” and reincorporated from Minnesota to Delaware.

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

As described in Note 2, on August 3, 2023, the Company completed the sale of certain assets and certain liabilities relating to the Company’s business of providing in-store advertising solutions to brands, retailers, shopper marketing agencies and brokerages (the “Legacy Business”) for a price of $3.5 million, subject to escrows and a post-closing adjustment.

Basis of Presentation .

The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with U.S.

The accompanying 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.

3 unchanged sentences

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

Results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.

Due to sales cycles within the retailers that our display and on-pack solutions execute we anticipate seasonality in sales, with those sales being relatively stronger in the first quarter of the year.

We expect the remaining quarters in 2023 to have significantly less revenue than this first quarter and also expect operating losses in the remaining quarters of the year.

The accompanying condensed balance sheet as of December 31, 2022 has been derived from the audited balance sheet as of December 31, 2022 contained in the Form 10-K.

The condensed consolidated financial statements include the accounts of the Company, its subsidiary, Farmland Credit, Inc., a Minnesota corporation (“FCI”), and FCI’s subsidiaries, Farmland Credit FR, LLC and Farmland Credit AV, LLC.

The operations of the Legacy Business will be presented as discontinued operations beginning with the Quarterly Report on Form 10-Q for the three months ended September 30, 2023, the period in which the sale of the Legacy Business met the criteria as a discontinued operation.

On August 3, 2023, the Company completed the sale of certain assets and certain liabilities relating to the Company’s Legacy Business for a price of $ 3.5 million to TIMIBO LLC, an affiliate of Park Printing, Inc.

(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 purchase price is subject to a post-closing adjustment depending on the net balance of (i) cash received by the Company for programs that remained unexecuted as of August 3, 2023, minus (ii) the payments made by the Company to vendors for unexecuted programs.

The Company received significant cash payments between July 1 and August 3, 2023 for unexecuted programs, which the Company will retain, but which will reduce the purchase price.

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 .

The Company incurred approximately $ 350,000 of transaction-related costs that had not previously been expensed.

The Company also incurred transaction-related severance and other separation benefits in connection with the termination of certain officers and employees of the Company of approximately $ 1,537,000 , as well as retention award payouts totaling $ 143,000 and employee bonuses totaling $ 164,000 , each of which will be recorded as expense in the three months ended September 30, 2023.

The operations of the Legacy Business will be presented as discontinued operations beginning with the Quarterly Report on Form 10-Q for the three months ended September 30, 2023.

The Company is presenting unaudited pro forma condensed consolidated information on a discontinued operations basis to illustrate the significant impact of the sale of the Legacy Business on the Company’s balance sheet and statement of operations.

The Company is presenting the pro forma information for the three months ended June 30, 2023, as that is the period in which the non-bank lending business began.

No impact from the sale proceeds and related costs are included in the pro forma information.

Lendway, Inc.

and Subsidiaries

(formerly Insignia Systems, Inc.)

Notes To Condensed Consolidated Financial Statements

The unaudited pro forma condensed consolidated balance sheet illustrates the impact at June 30, 2023 had discontinued operations presentation been used (unaudited).

The amounts held for sale represent the assets that will be purchased by the Buyer and liabilities which will be assumed by the Buyer:

Discontinued Operations Adjustments

Current Assets:

Cash and cash equivalents

Restricted cash

Accounts receivable, net

Income tax receivable

Prepaid production costs

Other prepaid expense

Current assets held for sale

Total Current Assets

Other Assets:

Property and equipment, net

Operating lease right-of-use assets

Non-current assets held for sale

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Accounts payable

Accrued liabilities

Current portion of operating lease liabilities

Deferred revenue

( 1,154,000 )

Current liabilities held for sale

Total Current Liabilities

Long-Term Liabilities:

Accrued income taxes

Operating lease liabilities

Non-current liabilities held for sale

Total Long-Term Liabilities

Commitments and Contingencies

Shareholders' Equity:

Total Shareholders' Equity

Total Liabilities and Shareholders' Equity

Lendway, Inc.

and Subsidiaries

(formerly Insignia Systems, Inc.)

Notes To Condensed Consolidated Financial Statements

The unaudited pro forma condensed consolidated statement of operations for the three months ended June 30, 2023 illustrates the impact for that period had discontinued operations presentation been used (unaudited).

The discontinued operations adjustments represent amounts that relate to the Legacy Business, with no allocation of general overhead to the Legacy Business:

Discontinued Operations Adjustments

Pro Forma Continuing Operations

Net services revenues

$ ( 6,211,000 )

Cost of services

( 4,588,000 )

( 1,623,000 )

Operating Expenses:

General and administrative

Total Operating Expenses

( 1,233,000 )

Operating Income (Loss)

Interest income

Income (Loss) from Operations Before Taxes

Income tax expense

Net Income (Loss) from Continuing Operations

$ ( 426,000 )

Net (Income) Loss from Discontinued Operations

$ ( 390,000 )

Net Income (Loss)

Net income (loss) per share, basic and diluted:

Continuing operations

Discontinued operations

Weighted average shares outstanding:

Basic and diluted

Lendway, Inc.

and Subsidiaries

(formerly Insignia Systems, Inc.)

Notes To Condensed Consolidated Financial Statements

Summary of Significant Accounting Policies.

Cash and Cash Equivalents and Restricted Cash.

1 unchanged sentence

Cash and cash equivalents

$ 10,595,000 $ 14,439,000

Restricted cash

85,000 85,000

Total cash, cash equivalents and restricted cash

$ 10,680,000 $ 14,524,000

Inventories .

2 unchanged sentences

Property and Equipment .

During the six months ended June 30,2023, fully depreciated property and equipment in the aggregate amount of $ 268,000 was written off.

Property and equipment consisted of the following as of the dates indicated:

1 unchanged sentence

Production tooling, machinery and equipment

$ 14,000 $ 27,000

Office furniture and fixtures

94,000 95,000

Computer equipment and software

580,000 771,000

Leasehold improvements

19,000 19,000

Construction in-progress

713,000 915,000

Accumulated depreciation and amortization

( 649,000 ) ( 844,000 )

Net Property and Equipment

$ 64,000 $ 71,000

Depreciation expense was approximately $ 14,000 and $ 16,000 in the three months ended March 31, 2023 and 2022, respectively.

Depreciation expense was approximately $ 12,000 and $ 26,000 in the three and six months ended June 30, 2023, respectively, and was $ 15,000 and $ 31,000 in the three and six months ended June 30, 2022, respectively.

Stock-Based Compensation .

4 unchanged sentences

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 three months ended March 31, 2023 and 2022, no stock options or restricted stock were issued by the Company.

The Company estimated the fair value of stock-based awards granted during the three months ended March 31, 2023, under the Company’s employee stock purchase plan using the following weighted average assumptions:

During the six-month periods ended June 30, 2023 and 2022 no equity awards were issued by the Company.

In June 2021, non-employee members of the Board of Directors received restricted stock grants totaling 5,514 shares pursuant to the 2018 Equity Incentive Plan.

The shares underlying the awards were assigned a value of $ 8.16 per share, which was the closing price of the Company’s common stock on the date of grant, for a total grant date value of $ 45,000 .

The shares vested on June 1, 2022.

The Company estimated the fair value of stock-based awards granted during the three and six months ended June 30, 2023, under the Company’s employee stock purchase plan using the following weighted average assumptions:

expected life of 1.0 year, expected volatility of 95.2 %, dividend yield of 0 % and risk-free interest rate of 4.7 %.

The Company recorded total stock-based compensation expense of $ 22,000 and $ 30,000 for the three months ended March 31, 2023 and 2022, respectively.

Net Income per Share .

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

Diluted net income per share gives effect to all dilutive potential common shares outstanding during the period.

Options to purchase approximately 14,000 shares of common stock with a weighted average exercise price of $ 11.95 , were outstanding at March 31, 2023 and were not included in the computation of common stock equivalents for the three months ended March 31, 2023 because their exercise prices were higher than the average fair market value of the common stock during the reporting period.

Options to purchase approximately 14,000 shares of common stock with a weighted average exercise price of $ 12.60 , were outstanding at March 31, 2022 and were not included in the computation of common stock equivalents for the three months ended March 31, 2022 because their exercise prices were higher than the average fair market value of the common stock during the reporting period.

Weighted average common shares outstanding for the three months ended March 31, 2023 and 2022 were as follows:

Three months ended March 31

Denominator for basic net income per share - weighted average shares

1,798,000 1,786,000

Lendway, Inc.

and Subsidiaries

(formerly Insignia Systems, Inc.)

Notes To Condensed Consolidated Financial Statements

Total stock-based compensation expense recorded for the three and six months ended June 30, 2023 was $ 14,000 and $ 36,000 , respectively, and for the three and six months ended June 30, 2022 was $ 29,000 and $ 59,000 , respectively.

Net (Loss) Income per Share .

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

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

Due to the net loss incurred during the three months ended June 30, 2023 all outstanding stock awards were anti-dilutive for that periods.

For the six months ended June 30, 2023 options to purchase approximately 14,000 shares of common stock with a weighted average exercise price of $ 11.74 were outstanding and were not included in the computation of common stock equivalents for the six months ended June 30, 2023 because their exercise prices were higher than the average fair market value of the common stock during the reporting period.

Due to the net loss incurred during the three and six months ended June 30, 2022 all outstanding stock awards were anti-dilutive for those periods.

As of June 30, 2022, the Company had 14,086 options and 3,396 restricted units outstanding.

Weighted average common shares outstanding for the three and six months ended June 30, 2023 and 2022 were as follows:

Three Months Ended

Six Months Ended

Denominator for basic net loss per share - weighted average shares

Effect of dilutive securities:

Stock options, restricted stock and restricted stock units

Denominator for diluted net income per share - weighted average shares

1,802,000 1,794,000

Stock options and restricted stock units

Denominator for diluted net loss per share - weighted average shares

Revenue Recognition.

8 unchanged sentences

The following is a description of the Company’s performance obligations included in its primary revenue streams and the timing or method of revenue recognition for each:

Lendway, Inc.

and Subsidiaries

(formerly Insignia Systems, Inc.)

Notes To Condensed Consolidated Financial Statements

Display, On-Pack, and Non-POPS Signage Solutions .

The Company supplies CPG manufacturers with retailer approved promotional services, such as display, on-pack, and signage solutions.

These services are more customized than POPS, consisting of variable durations and variable specifications.

The Legacy Business supplied CPG manufacturers with retailer approved promotional services, such as display, on-pack, and signage solutions.

These services were more customized than POPS, consisting of variable durations and variable specifications.

Due to the variable nature of these services, revenue recognition is primarily at a point-in-time recognition.

POPS Signage Solution Services.

The Company provides a service of displaying promotional signs in close proximity to the CPG manufacturer’s product in participating stores, which the Company maintains in two-to-four-week cycle increments.

Each of the individual activities under the Company’s services, including production activities, are inputs to an integrated sign display service.

The Legacy Business provided a service of displaying promotional signs in close proximity to the CPG manufacturer’s product in participating stores, which the Company maintained in two-to-four-week cycle increments.

Each of the individual activities under the Legacy Business’ services, including production activities, are inputs to an integrated sign display service.

Customers receive and consume the benefits from the promotional displays over the duration of the contracted display cycle.

Additionally, the display of the signs does not have an alternative use to the Company and the Company has an enforceable right to payment for services performed to date.

As a result, the Company recognizes the transaction price for service performance obligations as revenue over time.

Given the nature of the Company’s performance obligations is to provide a display service over the duration of a specified period or periods, the Company recognizes revenue on a straight-line basis over the display service period as it best reflects the timing of transfer of its sign solutions.

Additionally, the display of the signs does not have an alternative use to the Company and the Company had an enforceable right to payment for services performed through the closing of the sale of the Legacy Business.

As a result, the Company has recognized the transaction price for service performance obligations as revenue over time.

Given the nature of the Legacy Business’ performance obligations is to provide a display service over the duration of a specified period or periods, the Company recognizes revenue on a straight-line basis over the display service period as it best reflects the timing of transfer of its sign solutions.

Disaggregation of Revenue

In the following table, revenue is disaggregated by timing of revenue recognition.

Three months ended March 31

Three months ended June 30

Six months ended June 30

Timing of revenue recognition:

2 unchanged sentences

Contract Costs

Sales commissions paid to internal or external sales representatives are eligible for capitalization because they are incremental costs that would not have been incurred without entering into a specific sales arrangement and are recoverable through the expected margin on the transaction.

Sales commissions that were paid to internal or external sales representatives are eligible for capitalization as they are incremental costs that would not have been incurred without entering into a specific sales arrangement and are recoverable through the expected margin on the transaction.

The Company is applying the practical expedient in Accounting Standards Codification 340-40-25-4 that allows the incremental costs of obtaining a contract to be recorded as an expense when incurred when the amortization period of the asset that would have otherwise been recognized is one year or less.

7 unchanged sentences

Cash received in advance and not recognized as revenue

Balance at March 31, 2023

Balance at June 30, 2023

Lendway, Inc.

and Subsidiaries

(formerly Insignia Systems, Inc.)

Notes To Condensed Consolidated Financial Statements

Transaction Price Allocated to Remaining Performance Obligations

1 unchanged sentence

This practical expedient is being applied to arrangements for certain incomplete services and unshipped custom signage materials.

Among our contracts with an expected duration of greater than one year, we anticipate that revenue of $ 30,000 related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2023 will be recognized during the remainder of fiscal 2023.

As of March 31, 2023, the Company leases space under a non-cancelable operating lease for its corporate headquarters, which has been renewed through December 31, 2026.

Contracts that had an expected duration of greater than one year were insignificant at June 30, 2023.

As of June 30, 2023, the Company leased space under a non-cancelable operating lease for its corporate headquarters, which had been renewed through December 31, 2026.

The Company also had a lease for warehouse space which expired March 31, 2023.

The warehouse lease has been extended on a month-to-month basis effective April 1, 2023.

The corporate headquarters lease has escalating lease payment terms but does not contain a contingent rent provision.

The leases for both the Company’s corporate headquarters and its warehouse include both lease (e.g., fixed payments including rent, taxes, and insurance costs) and non-lease components which are accounted for as a single lease component as the Company has elected the practical expedient to group lease and non-lease components for all leases.

The headquarters lease required the Company to provide a letter of credit, which is supported by $ 85,000 reflected as restricted cash on the balance sheet.

In December 2022, the Company decided to exercise the lease renewal option for its corporate headquarters, extending the lease term through December 31, 2026.

The warehouse lease was extended on a month-to-month basis effective April 1, 2023.

The corporate headquarters lease had escalating lease payment terms but did not contain a contingent rent provision.

The leases for both the Company’s corporate headquarters and its warehouse included both lease (e.g., fixed payments including rent, taxes, and insurance costs) and non-lease components which are accounted for as a single lease component as the Company has elected the practical expedient to group lease and non-lease components for all leases.

The headquarters lease required the Company to provide a letter of credit, which was supported by $ 85,000 reflected as restricted cash on the consolidated balance sheet.

The Company used its incremental borrowing rate of approximately 7.0 % in determining the present value of the extended lease payments.

The cost components of the Company’s operating leases were as follows for the periods ended March 31, 2023 and 2022:

Three months ended March 31, 2023

The cost components of the Company’s operating leases were as follows for the three and six month periods ended June 30, 2023 and 2022:

Three months ended June 30, 2023

Six months ended June 30, 2023

Operating lease cost

Variable lease cost

Three months ended March 31, 2022

Short-term lease cost

Three months ended June 30, 2022

Six months ended June 30, 2022

Operating lease cost

1 unchanged sentence

Variable lease costs consist primarily of taxes, insurance, and common area or other maintenance costs which are paid based on actual costs incurred by the lessor.

Maturities of the Company’s lease liabilities for its corporate headquarters and its warehouse operating leases are as follows as of March 31, 2023:

Maturities of the Company’s lease liabilities for its corporate headquarters operating lease are as follows as of June 30, 2023:

Total lease payments

Present value of lease liabilities

The remaining lease term as of March 31, 2023 for the Company’s corporate headquarters lease was 3.75 years.

The cash outflows for operating leases for the three months ended March 31, 2023 and March 31, 2022 were $ 10,000 and $ 21,000 , respectively.

Lendway, Inc.

and Subsidiaries

(formerly Insignia Systems, Inc.)

Notes To Condensed Consolidated Financial Statements

The remaining lease terms as of June 30, 2023 for the Company’s corporate headquarters lease was 3.5 years.

The cash outflows for operating leases were $ 0 and $ 10,000 for the three and six months ended June 30, 2022, respectively, and were $ 20,000 and $ 41,000 for the three and six months ended June 30, 2022, respectively.

Subsequent to June 30, 2023, the headquarters lease was assigned to the Buyer as a part of the sale of the Legacy Business.

Income Taxes.

For the three months ended March 31, 2023, the Company recorded income tax expense of $ 3,000 , or 0.2 % of income before taxes.

For the three months ended March 31, 2022, the Company recorded income tax expense of $ 8,000 , or 11.4 % of income before taxes.

The income tax expense for the three months ended March 31, 2023 and 2022 is comprised of federal and state taxes.

For the three and six months ended June 30, 2023, the Company recorded income tax expense of $ 4,000 and $ 7,000 , respectively, or 12.5 % and 0.4 % of loss (income) before taxes, respectively.

For the three and six months ended June 30, 2022, the Company recorded income tax expense of $ 14,000 and $ 22,000 , respectively, or 1.3 % and 2.2 % of loss before taxes, respectively.

The income tax expense for the three and six months ended June 30, 2023 and 2022 is comprised of federal and state taxes.

The Company reassesses its effective rate each reporting period and adjusts the annual effective rate if deemed necessary, based on projected annual taxable income (loss).

1 unchanged sentence

federal corporate income tax rate of 21.0 % as follows:

Three months ended March 31,

Six months ended June 30,

Federal statutory rate

7 unchanged sentences

Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria.

As of March 31, 2023, and December 31, 2022, the Company had unrecognized tax benefits totaling $ 54,000 and $ 53,000 , respectively, including interest, which relates to state nexus issues.

As of June 30, 2023, and December 31, 2022, the Company had unrecognized tax benefits totaling $ 55,000 and $ 53,000 , respectively, including interest, which relates to state nexus issues.

The amount of the unrecognized tax benefits, if recognized, that would affect the effective income tax rates of future periods is $ 55,000 .

At December 31, 2022, the Company had Federal net operating loss (NOL) to carry forward of approximately $ 2,900,000 .

As of March 31, 2023, the Company estimates remaining Federal NOL carryforwards to be approximately $ 1,200,000 .

As of June 30, 2023, the Company estimates remaining Federal NOL carryforwards to be approximately $ 1,300,000 .

Federal NOL utilization is limited to 80% of estimated taxable income.

1 unchanged sentence

Concentrations.

During the three months ended March 31, 2023, three customers accounted for 20 %, 17 % and 13 %, respectively, of the Company’s total net sales.

During the three months ended March 31, 2022, three customers accounted for 27 %, 23 % and 11 %, respectively, of the Company’s total net sales.

At March 31, 2023, two customers accounted for 47 % and 19 %, respectively, of the Company’s total accounts receivable.

During the six months ended June 30, 2023, two customers accounted for 27 % and 18 %, respectively of the Legacy Business’ total net sales.

During the six months ended June 30, 2022, three customers accounted for 22 %, 15 % and 10 %, respectively of the Legacy Business’ total net sales.

At June 30, 2023, one customer represented 70 % of the Legacy Business’ total accounts receivable.

At December 31, 2022, three customers represented 20 %, 19 % and 11 %, respectively, of the Company’s total accounts receivable.

Lendway, Inc.

and Subsidiaries

(formerly Insignia Systems, Inc.)

Notes To Condensed Consolidated Financial Statements

Legal Proceedings.

7 unchanged sentences

The agreement resulted in net proceeds before income tax of $ 12,000,000 for the Company, which was recorded as a gain on litigation settlement in operations during the three months ended September 30, 2022.

Subsequent Event.

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that there have been no events that have occurred that would require adjustments to our disclosures in the condensed consolidated financial statements except for the events described in Note 2 related to the sale of the Legacy Business and the incurring of severance and other separation benefits.

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