What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-14 compared with 2023-08-14 · 85 added, 125 removed, 86 unchanged (71% of the section changed)

4 unchanged sentences

Company Overview

We are 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 (individually or collectively, the “Secured Loans”).

On April 7, 2023, we announced the launch of our non-bank lending business, through the hiring of a Senior Vice President of Lending with over 20 years of experience in credit and lending.

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

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

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

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

The primary sources of revenue from our non-bank lending business are expected to consist of:

The primary sources of revenue from our Lending Business are expected to consist of:

interest income earned on assets on the balance sheet, including but not limited to Secured Loans, net of related funding costs and interest payments, and

fee income generated from origination and servicing of Secured Loans.

We are building our strategy and long-term growth initiatives upon a few fundamental factors:

We are building our strategy and long-term growth initiatives upon these fundamental factors:

streamlined systems and processes to support the growth of our core business through connecting customers with competitive funding;

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liquidity and cost of funds from third-party funding sources.

We continue to explore other strategic options to maximize shareholder value.

During the third quarter, the Company increased its marketing activity and met with a number of prospects.

We anticipate minimal revenue and losses from continuing operations for the remainder of 2023.

We continue to explore other strategic options to maximize stockholder value.

Potential strategic alternatives that may be evaluated include, but are not limited to, an acquisition, merger, business combination, in-licensing, start-up of new business or other strategic initiatives.

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

On August 3, 2023, we completed the sale of certain assets and certain liabilities relating to our business of providing in-store advertising solutions to brands, retailers, shopper marketing agencies and brokerages (the “Legacy Business”) for a cash purchase price of $3.5 million to TIMIBO LLC, an affiliate of Park Printing, Inc.

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

We 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 us for programs that remained unexecuted as of August 3, 2023, minus (ii) the payments we made to vendors for unexecuted programs.

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

On August 3, 2023, we sold certain assets and certain liabilities relating to our former business of providing in-store advertising solutions to brands, retailers, shopper marketing agencies and brokerages (the “In-Store Marketing Business”) for a sale price of $3.5 million to TIMIBO LLC, an affiliate of Park Printing, Inc.

(the “Buyer”), under an Asset Purchase Agreement dated May 24, 2023 (the “Purchase Agreement”).

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

The cash consideration for the sale was subject to a post-closing adjustment that depended 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 final purchase adjustment for the net balance was to reduce the cash consideration by $1.5 million, 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.

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

We also incurred transaction-related severance and other separation benefits in connection with the termination of certain of our officers and employees 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.

We also incurred transaction-related severance and other separation benefits in connection with the termination of certain of our officers and employees of approximately $1,416,000, $490,000 of which was attributed to the sale of the In-Store Marketing Business, as well as retention award payouts totaling $343,000 and employee bonuses totaling $164,000, each of which were recorded as expense in the three months ended September 30, 2023.

The sum of transaction-related severance, retention awards and bonuses was $1,923,000, of which $974,000 was recorded in continuing operations and $949,000 was recorded in discontinued operations in the three months ended September 30,2023.

Business Overview

Summary of Financial Results

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

We have provided supplemental operating results on a pro forma basis below for a further description of the impact of the sale of the Legacy Business on the financial statements.

For the quarter ended June 30, 2023, we generated net sales of $6,211,000, as compared with net sales of $3,254,000 for the quarter ended June 30, 2022.

For the six months ended June 30, 2023, we generated net sales of $19,042,000, as compared with net sales of $9,402,000 in the six months ended June 30, 2022.

Net loss for the quarter ended June 30, 2023 was $36,000, as compared to a net loss of $1,084,000 for the quarter ended June 30, 2022.

Net income for the six months ended June 30, 2023 was $1,612,000, as compared to a net loss of $1,022,000 for the six months ended June 30, 2022.

Our non-bank lending business had no revenue and had incremental general and administrative expenses of $101,000 for the three months ended June 30, 2023.

During the six months ended June 30, 2023, cash and cash equivalents and restricted cash decreased by $3,020,000 from $14,524,000 at December 31, 2022, to $11,504,000 at June 30, 2023.

The decrease was primarily driven by an increase in accounts receivable from December 31, 2022.

We had no debt other than our lease obligations at June 30, 2023.

Working capital increased $1,652,000 from $13,379,000 at December 31, 2022 to $15,031,000 at June 30, 2023.

For the three and nine months ended September 30, 2023, continuing operations, the Lending Business, had no revenue.

During the nine months ended September 30, 2023, cash and cash equivalents and restricted cash increased by $515,000 from $14,524,000 at December 31, 2022, to $15,039,000 at September 30, 2023.

The increase was primarily driven by collections of accounts receivable from discontinuing the In-Store Marketing Business, as well as proceeds from the sale of the In-Store Marketing Business.

We had no debt at September 30, 2023.

Working capital increased $2,513,000 from $13,379,000 at December 31, 2022 to $15,892,000 at September 30, 2023.

Results of Operations

The following table sets forth, for the periods indicated, certain items in our condensed consolidated statements of operations as a percentage of total net sales.

The following table sets forth, for the periods indicated, certain items from our continuing operations in our condensed consolidated statements of operations and the percentage change year-over-year.

The Company had no revenue from continuing operations.

Three Months Ended

Six Months Ended

Cost of sales

Increase (decrease) from

Operating expenses:

Sales and marketing

General and administrative

Total operating expenses

Operating (loss) income

Operating loss

Interest income

(Loss) income before taxes

Income tax expense

Net (loss) income

Three and Six Months Ended June 30, 2023 Compared to Three and Six Months Ended June 30, 2022

Net sales for the three months ended June 30, 2023 increased 90.9% to $6,211,000 compared to $3,254,000 for the three months ended June 30, 2022.

The increase is primarily due to executing our largest display program to date.

Net sales for the six months ended June 30, 2023 increased 102.5% to $19,042,000 compared to $9,402,000 for the six months ended June 30, 2022.

For the six months ended June 30, 2023, display revenue had increased due to securing larger contracts in addition to both an increase in sales to new CPGs and an increase in sales to existing CPGs.

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

Gross Profit.

Gross profit for the three months ended June 30, 2023 increased 290.1% to $1,623,000 compared to $416,000 for the three months ended June 30, 2022.

The increase in gross profit was primarily due to increased sales.

Gross profit as a percentage of total net sales increased to 26.1% for the three months ended June 30, 2023 compared to 12.8% for the three months ended June 30, 2022.

The increase was primarily due to the impact fixed costs have on the gross profit percentage when sales increase.

Gross profit for the six months ended June 30, 2023 increased 167.9% to $4,543,000 compared to $1,696,000 for the six months ended June 30, 2022.

The increase in gross profit was primarily due to increased sales.

Gross profit as a percentage of total net sales increased to 23.9% for the six months ended June 30, 2023 compared to 18.0% for the six months ended June 30, 2022.

The increase was primarily due to the impact fixed costs have on the gross profit percentage when sales increase.

Loss from continuing operations before income taxes

Income tax (benefit) expense

Net Loss from continuing operations

$ (1,511,000 )

$ (1,077,000 )

Nine Months Ended

Increase (decrease) from

Operating expenses:

Selling expenses for the three months ended June 30, 2023 increased 24.5% to $361,000 compared to $290,000 for the three months ended June 30, 2022.

Selling expenses for the six months ended June 30, 2023 increased 14.7% to $725,000 compared to $632,000 for the six months ended June 30, 2022.

The increases for both periods was primarily due to higher commissions due to the higher sales.

Selling expenses as a percentage of total net sales decreased to 5.8% for the three months ended June 30, 2023 compared to 8.9% for the three months ended June 30, 2022.

Selling expenses as a percentage of net sales decreased to 3.8% for the six months ended June 30, 2023 compared to 6.7% for the six months ended June 30, 2022.

The decreases for both periods was primarily due to increased sales, partially offset by an increase in commissions.

Marketing expenses for the three months ended June 30, 2023 increased 7.5% to $300,000 compared to $279,000 for the three months ended June 30, 2022.

Marketing expense for the six months ended June 30, 2023 increased 10.8% to $596,000 compared to $538,000 for the six months ended June 30, 2022.

The increases for both periods were primarily the result of increased staff and staff related expenses.

Marketing expenses as a percentage of total net sales decreased to 4.8% for the three months ended June 30, 2023 compared to 8.6% for the three months ended June 30, 2022.

Marketing expenses as a percentage of net sales decreased to 3.1% for the six months ended June 30, 2023 compared to 5.7% for the six months ended June 30, 2022.

The decreases for both periods was primarily due to increased sales, partially offset by increased staff and staff related expenses.

Sales and marketing

General and administrative

General and administrative expenses for the three months ended June 30, 2023 increased 19.1% to $1,129,000 compared to $948,000 for the three months ended June 30, 2022.

The increase was primarily due to costs incurred with the sale of the Legacy Business and other strategic alternative costs which totaled $339,000 compared to $138,000 for the three months ended June 30, 2023 and 2022, respectively.

Incremental general and administrative expenses for the non-bank lending business were $101,000 for the three months ended June 30, 2023.

General and administrative expenses for the six months ended June 30, 2023 increased 19.0% to $1,850,000 compared to $1,554,000 for the six months ended June 30, 2022.

The increase was primarily from the comparison to the reduced expense in 2022 from the Director Deferred Compensation Plan due to a reduction in our share price during the six months ended June 30, 2022, in addition to costs incurred related to the sale of the Legacy Business and other strategic alternative costs which totaled $393,000 compared to $210,000 for the three months ended June 30, 2023 and 2022, respectively.

General and administrative expenses as a percentage of total net sales decreased to 18.2% for the three months ended June 30, 2023 compared to 29.1% for the three months ended June 30, 2022 due to increased sales, partially offset by the factors described above.

General and administrative expenses as a percentage of net sales decreased to 9.8% for the six months ended June 30, 2023 compared to 16.5% for the six months ended June 30, 2022.

The decrease was due to increased sales, partially offset by the factors described above.

Total operating expenses

Operating loss

Interest income

Interest income for the three months ended June 30, 2023 was $135,000 compared to $31,000 for the three months ended June 30, 2022.

Interest income for the six months ended June 30, 2023 was $247,000 compared to $28,000 for the six months ended June 30, 2022.

Loss from continuing operations before income taxes

Income tax (benefit) expense

Net Loss from continuing operations

$ (2,654,000 )

$ (1,613,000 )

$ (1,041,000 )

Three and Nine Months Ended September 30, 2023 Compared to Three and Nine Months Ended September 30, 2022

Operating Expenses

Sales and Marketing.

Sales and marketing expenses for the three and nine months ended September 30, 2023 were $69,000 and $134,000, consisting of a portion of our CEO’s compensation, as well as website and public relations costs.

There was no comparable expense for the three and nine months ended September 30, 2022.

General and administrative.

General and administrative expenses for the three months ended September 30, 2023 increased 220.5% to $1,564,000 compared to $488,000 for the three months ended September 30, 2022.

The increase was primarily due to transaction-related severance and other separation benefits amounting to $926,000 in connection with the termination of Kristine Glancy, our previous CEO.

General and administrative expenses for the nine months ended September 30, 2023 increased 71.3% to $2,849,000 compared to $1,663,000 for the nine months ended September 30, 2022.

The increase was primarily due to transaction-related severance and other separation benefits in connection with the termination of Kristine Glancy, mentioned above, in addition to the comparison of reduced expense in 2022 from the Director Deferred Compensation Plan due to a reduction in our share price during the nine months ended September 30, 2022.

We are working with all our vendors and service providers to reduce certain expenses going forward.

Interest Income.

Interest income for the three months ended September 30, 2023 was $111,000 compared to $55,000 for the three months ended September 30, 2022.

Interest income for the nine months ended September 30, 2023 was $325,000 compared to $55,000 for the nine months ended September 30, 2022.

Interest income in 2023 increased over 2022 primarily due to higher invested balances, which included the net proceeds from litigation of $12 million received in July 2022 and the higher interest rates available on investment in short-term treasury bills and interest-bearing savings.

Income 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 comprises federal and state income taxes.

The primary differences between the Company’s June 30, 2023 and 2022 effective tax rates and the statutory federal rate are nondeductible stock-based compensation, nondeductible meals and entertainment, as well as changes in the Company’s valuation allowance against its deferred tax assets.

For the three and nine months ended September 30, 2023 the Company recorded income tax (benefit) of $(11,000) and $(4,000) respectively, or 0.6% and 0.1% of loss from continuing operations before income before taxes, respectively.

For the three and nine months ended September 30, 2022 the Company recorded income tax expense of $1,000 and $5,000 respectively, or (0.2)% and (0.3)% of loss from continuing operations before income before taxes, respectively.

The income tax expense (benefit) for the three and nine months ended September 30, 2023 and 2022 comprises federal and state income taxes.

The primary differences between the Company’s September 30, 2023 and 2022 effective tax rates and the statutory federal rate are state income taxes and changes in the Company’s valuation allowance against its deferred tax assets.

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

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

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.

As of September 30, 2023, and December 31, 2022, the Company had unrecognized tax benefits totaling $41,000 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 $41,000.

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

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

As of September 30, 2023, the Company estimates remaining Federal NOL carryforwards to be approximately $1,390,000.

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

The estimated NOL carry forward will be adjusted at year end for actual results.

Net (Loss) Income.

For the reasons stated above, net loss for the three months ended June 30, 2023 was $36,000 and net income for the six months ended June 30, 2023 was $1,612,000, compared to net loss of $1,084,000 and $1,022,000, respectively, for the three and six months ending June 30, 2022.

As we seek to grow our non-bank lending business, we anticipate minimal revenue and to have losses from continuing operations for the remainder of the year.

Supplemental Operating Results on a Pro Forma Basis

Results of Operations

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, and prior period results of operations will also be presented on a discontinued operations basis.

The Company is presenting unaudited pro forma condensed consolidated information to illustrate the significant impact had discontinued operations presentation been used in prior periods.

With discontinued operations presentation, the continuing operations relate to the non-bank lending business.

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, along with a comparison to the three months ended June 30, 2022 on the same basis.

No impact from the sale proceeds and related costs, which occurred August 3, 2023 is included in the pro forma information.

The following table sets forth certain pro forma condensed consolidated statement of operations data for continuing operations for the three months ended June 30, 2023 and 2022.

The continuing operations had no net sales or cost of sales;

or selling and marketing expenses.

General and administrative

Operating loss from continuing operations

Interest income

Loss before taxes from continuing operations

* See Note 2 to the condensed consolidated financial statements appearing in Part 1, Item 1, of this Quarterly Report on Form 10-Q for additional detail.

Discussion of Results of Operations on Pro-Forma Basis

Operating Expenses

The amount of each type of operating expense for the three months ended June 30, 2023 and 2022, as well as the percentage change between such periods, were as follows:

General and administrative

General and administrative expenses increased by 28.9% in the three months ended June 30, 2023 as compared to the prior year comparable period.

This increase was due primarily to incremental expenses for the non-bank lending business of $101,000 in the three months ended June 30, 2023.

Interest Income

Interest income for the three months ended June 30, 2023 and 2022, as well as the percentage change in interest income between those periods, was as follows:

Interest income

Interest income for the three months ended June 30, 2023 was $135,000 compared to $31,000 for the three months ended June 30, 2022.

Pro Forma Loss Before Income Taxes

Pro forma loss before income taxes for the three months ended June 30, 2023 and 2022, as well as the percentage change in loss before between those periods, were as follows:

Loss before income taxes

As we seek to grow our non-bank lending business, we anticipate minimal revenue and to have losses from continuing operations for the remainder of the year.

We also expect to incur reduced general and administrative expenses in the near term as a result of lower headcount and the reduced administrative requirements associated with the current scale of our non-bank lending business.

Net Loss from Continuing Operations.

For the reasons stated above, net loss from continuing operations for the three months ended September 30, 2023 was $1,511,000 and net loss from continuing operations for the nine months ended September 30, 2023 was $2,654,000, compared to net loss from continuing operations of $434,000 and $1,613,000, respectively, for the three and nine months ending September 30, 2022.

As we seek to grow our Lending Business, we anticipate minimal revenue and losses from continuing operations for the remainder of the year.

Liquidity and Capital Resources

We have historically financed our operations with proceeds from stock sales and sales of its services and products, subject to occasional supplemental proceeds from the settlement of litigation.

At June 30, 2023, working capital (current assets less current liabilities) was $15,031,000, compared to $13,379,000 at December 31, 2022.

During the six months ended June 30, 2023, cash and cash equivalents and restricted cash decreased $3,020,000 from $14,524,000 at December 31, 2022 to $11,504,000 at June 30, 2023.

We have historically financed our operations with proceeds from stock sales and sales of our services and products, subject to occasional supplemental proceeds from the settlement of litigation.

The sale of the In-Store Marketing Business on August 3, 2023 generated approximately $1.6 million of cash, directly from the buyer.

At September 30, 2023, working capital (current assets less current liabilities) was $15,892,000, compared to $13,379,000 at December 31, 2022.

During the nine months ended September 30, 2023, cash and cash equivalents and restricted cash increased $515,000 from $14,524,000 at December 31, 2022 to $15,039,000 at September 30, 2023.

Operating Activities .

Net cash used by operating activities during the six months ended June 30, 2023, was $3,009,000.

Net income of $1,612,000, plus non-cash adjustments of $73,000, less changes in operating assets and liabilities of $4,694,000, resulted in the $3,009,000 of cash used in operating activities.

The non-cash adjustments consisted of depreciation expense, changes in allowance for doubtful accounts and stock-based compensation expense.

The largest component of the change in operating assets and liabilities was accounts receivable, which increased $2,037,000 from December 31, 2022.

The increase was a result of increased net sales in the six months ended June 30, 2023.

In the normal course of business, our accounts receivable, accounts payable, accrued liabilities, deferred revenue and prepaid production costs will fluctuate depending on the level of revenues and related business activity, as well as billing arrangements with customers and payment terms with retailers.

Net cash used in continuing operating activities during the nine months ended September 30, 2023, was $2,325,000.

Net income of $2,738,000, less income from discontinued operations of $2,422,000, less the gain from the sale of discontinued operations of $2,970,000, plus non-cash adjustments of $46,000, plus changes in operating assets and liabilities of $283,000, resulted in the $2,325,000 of cash used in operating activities.

The non-cash adjustments consisted of depreciation expense and stock-based compensation expense.

The largest component of the change in operating assets and liabilities was accrued liabilities, which increased $630,000 from December 31, 2022.

The increase was primarily due to the $650,000 of severance related payments that remains to be paid to the Company’s prior CEO, Ms.

Investing Activities .

Net cash used in investing activities during the six months ended June 30, 2023 was $19,000, which related to purchases of property and equipment.

Net cash provided by investing activities from continuing operations during the nine months ended September 30, 2023 was $1,557,000, which was due to the proceeds from the sale of our In-Store Marketing Business.

Financing Activities .

Net cash provided by financing activities during the six months ended June 30, 2023 was $8,000, which related to proceeds received from issuance of common stock under the employee stock purchase plan and exercised stock options.

Cash and cash equivalents plus restricted cash at June 30, 2023 were $11.5 million.

Net cash used in financing activities during the nine months ended September 30, 2023 was $428,000, which related to cash used for the repurchase of common stock, partially offset by proceeds from the issuance of shares per the Director Deferred Compensation Plan for two former non-employee directors.

Cash and cash equivalents plus restricted cash at September 30, 2023 were $15.0 million.

The Company believes that based upon current business conditions and plans, its cash and cash equivalents balances will be sufficient for its cash requirements for at least the next 12 months.

As the Company grows its non-bank lending business, we may be required to finance this process through equity offerings or debt financings.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our shareholders will be diluted, and the terms of those securities may include liquidation or other preferences that adversely affect the rights of our shareholders.

On August 28, 2023, the Company’s Board of Directors authorized the repurchase of up to 400,000 shares of the Company’s common stock.

The plan allows the purchases to be made in the open market or in privately negotiated transactions.

The plan does not obligate the Company to repurchase any particular number of shares and may be suspended anytime at the Company’s discretion.

In the three months ended September 30, 2023, the Company repurchased 75,345 shares at a total cost of $437,000.

As the Company grows its Lending Business, we may be required to finance this process through equity offerings or debt financings.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of those securities may include liquidation or other preferences that adversely affect the rights of our stockholders.

Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

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and worldwide.

If we are unable to raise additional funds when needed we may not be able to grow our non-bank lending business, or complete transactions related to the strategic alternatives process.

If we are unable to raise additional funds when needed we may not be able to grow our Lending Business, or complete transactions related to the strategic alternatives process.

Critical Accounting Estimates

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Cautionary Statement Regarding Forward-Looking Statements

Certain statements made in this Quarterly Report on Form 10-Q, in the Company’s other SEC filings, in press releases and in oral statements to shareholders and securities analysts that are not statements of historical or current facts are “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance of the Company to be materially different from the results or performance expressed or implied by such forward-looking statements.

Certain statements made in this Quarterly Report on Form 10-Q, in the Company’s other SEC filings, in press releases and in oral statements to stockholders and securities analysts that are not statements of historical or current facts are “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance of the Company to be materially different from the results or performance expressed or implied by such forward-looking statements.

The words “anticipate,” “believe,” “could,” “estimate,” “expect,” “future,” “likely,” “may,” “plan,” “project,” “will” and similar expressions identify forward-looking statements.

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(i) our belief that our cash balance and cash generated by operations will provide adequate liquidity and capital resources for at least the next twelve months;

(ii) that we expect fluctuations in accounts receivable and payable, accrued liabilities, revenue deferrals and prepaid production costs.

and (ii) our belief that we will reduce certain expenses going forward.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.

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Forward-looking statements involve known and unknown risks, uncertainties and other factors, including:

(1) the availability of strategic alternatives on acceptable terms, if at all, (2) the limited history of our new non-bank lending business, (3) the substantial risk of loss associated with lending generally, (4) market conditions that may restrict or delay appropriate or desirable non-bank lending opportunities, (5) our ability to develop and maintain necessary processes and controls relating to our non-bank lending business (6) reliance on one or a small number of employees, (7) potential adverse classifications of our Company if we are unsuccessful in executing our business plan, (8) other economic, business, market, financial, competitive and/or regulatory factors affecting the Company’s business generally;

(1) the availability of strategic alternatives on acceptable terms, if at all, (2) the limited history of our Lending Business, (3) the substantial risk of loss associated with lending generally, (4) market conditions that may restrict or delay appropriate or desirable Lending Business opportunities, (5) our ability to develop and maintain necessary processes and controls relating to our Lending Business (6) reliance on one or a small number of employees, (7) potential adverse classifications of our Company if we are unsuccessful in executing our business plan, (8) other economic, business, market, financial, competitive and/or regulatory factors affecting the Company’s business generally;

and (9) our ability to attract and retain highly qualified managerial, operational and sales personnel.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis