What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-19 compared with 2024-05-21 · 204 added, 164 removed, 470 unchanged (44% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2024

Values are rounded to the nearest thousand dollar and thousand share

Current assets:

4 unchanged sentences

Prepaid expenses and other current assets

Note receivable

Other current assets related to discontinued operations

6 unchanged sentences

Long-term receivable

Note receivable

$ 106,824,000

Liabilities and Stockholders' equity

3 unchanged sentences

Accrued expenses and other current liabilities

Current portion of finance lease liabilities

Current portion of operating lease liabilities

Current portion of finance lease liabilities

Current portion of debt

2 unchanged sentences

Long-term liabilities:

Finance lease liabilities, net of current portion

Accrued income taxes

Operating lease liabilities, net of current portion

Finance lease liabilities, net of current portion

Long-term debt, net

5 unchanged sentences

Authorized shares - 5,714,000

Issued and outstanding shares - 1,743,000 at March 31, 2024 and December 31, 2023

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

Additional paid-in capital

6 unchanged sentences

Total Liabilities and Stockholders' equity

$ 106,824,000

See accompanying notes to the condensed consolidated financial statements.

3 unchanged sentences

Three Months Ended

Six Months Ended

Cost of goods sold

Sales, general and administrative expenses

Operating loss

Operating income (loss)

( 1,612,000 )

( 1,185,000 )

Foreign exchange difference, net

3 unchanged sentences

( 1,082,000 )

( 2,765,000 )

Income tax (benefit) expense

7 unchanged sentences

( 1,786,000 )

Net (loss) income including noncontrolling interest

Other comprehensive income (foreign currency translation)

Comprehensive (loss) income including noncontrolling interest

Comprehensive (loss) income attributable to noncontrolling interest

Comprehensive (loss) income attributable to Lendway, Inc.

$ ( 710,000 )

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

$ ( 1,749,000 )

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

Continuing operations

Discontinued operations

Basic and diluted earnings per share

Basic earnings per share

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

Continuing operations

Discontinued operations

Diluted earnings per share

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

Basic and diluted

See accompanying notes to the condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Accumulated Other

Total Lendway

Comprehensive

10 unchanged sentences

Issuance of noncontrolling interests in acquisition

BALANCE MARCH 31, 2024 (Unaudited)

BALANCE MARCH 31, 2024

( 1,702,000 )

Issuance of restricted stock awards

Value of stock-based compensation

Other comprehensive income

BALANCE JUNE 30, 2024

$ ( 2,447,000 )

BALANCE DECEMBER 31, 2022

2 unchanged sentences

Value of stock-based compensation

BALANCE MARCH 31, 2023 (Unaudited)

BALANCE MARCH 31, 2023

( 1,427,000 )

Issuance of common stock, net

Value of stock-based compensation

BALANCE AT JUNE 30, 2023

$ ( 1,463,000 )

See accompanying notes to the condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Operating Activities

Net (loss) income

Net income (loss)

$ ( 2,081,000 )

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

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

Depreciation and amortization

Amortization of deferred financing costs

Changes in allowance for doubtful accounts

Changes in allowance for credit losses

Stock-based compensation expense

Noncash paid in kind interest expense

Noncash operating lease expense

Deferred income tax (benefit) expense

( 1,163,000 )

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

1 unchanged sentence

( 2,037,000 )

( 3,770,000 )

Income tax receivable

Prepaid expenses and other current assets

( 1,037,000 )

( 1,084,000 )

Accounts payable

( 1,336,000 )

Accrued compensation

( 1,990,000 )

Accrued expenses and other current liabilities

Accrued income taxes

Deferred revenue

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

( 1,273,000 )

Net cash provided by operating activities of discontinued operations

Net cash provided by (used in) operating activities

8 unchanged sentences

Financing Activities

Proceeds from long-term debt

Proceeds from term loan

Proceeds from revolving debt

Repayments of long-term debt

Repayments of seller note

( 2,700,000 )

Repayments of revolving debt

( 5,065,000 )

Principal payments on finance lease liabilities

10 unchanged sentences

Cash paid for interest

Cash paid for income taxes

Noncash purchase consideration - Equity issuance of noncontrolling interest

Noncash purchase consideration - Seller notes

Non-cash investing and financing activities

Purchase of property and equipment included in accounts payable

See accompanying notes to the condensed consolidated financial statements.

5 unchanged sentences

Lendway, Inc.

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

(“the Company”) is 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.

6 unchanged sentences

Refer to Note 3 for further discussion.

The Company has retained its non-bank lending business via its wholly owned subsidiary, Farmland Credit, Inc.

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

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

As part of its non-bank lending business, the Company operates FarmlandCredit.com, a non-bank lending business that seeks to purchase existing loans and/or originate and fund new loans domestically.

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

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

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

Basis of Presentation.

11 unchanged sentences

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

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

The tulip sales business tends to be seasonal with spring being the strongest sales 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 to brands, retailers, shopper marketing agencies and brokerages (the “In-Store Marketing Business”).

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

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

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

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

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

1 unchanged sentence

Recently Issued Accounting Pronouncements.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023 - 07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

ASU 2023 - 07 requires enhanced disclosures about significant segment expenses, includes enhanced interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

ASU 2023-07 is to be applied retrospectively to all prior periods presented in the financial statements.

The Company will not early adopt, and is currently assessing the impact of ASU 2023-07 on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740):

29 unchanged sentences

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

At March 31, 2024, the Company had an allowance for doubtful accounts of approximately $ 29,000 .

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

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

22 unchanged sentences

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

During the three months ended March 31, 2024 and 2023, no impairment losses were identified.

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

Goodwill and Indefinite-lived Assets .

1 unchanged sentence

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

The Company has one reporting unit.

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

3 unchanged sentences

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

During the three months ended March 31, 2024, no impairment losses were identified.

During the three and six months ended June 30, 2024, no impairment losses were identified.

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

6 unchanged sentences

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

During the three months ended March 31, 2024, no impairment losses were identified.

During the three and six months ended June 30, 2024, no impairment losses were identified.

Equity-Method Investments.

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

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

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

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

1 unchanged sentence

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

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

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

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

4 unchanged sentences

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

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

The carrying 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 June 30, 2024 and December 31, 2023 due to their short-term nature and management’s belief that their carrying amounts approximate the amount for which the assets could be sold or the liabilities could be settled.

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

14 unchanged sentences

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

These costs are included in sales and marketing expense in the Condensed Consolidated Statement of Operations.

These costs are included in sales and marketing expense in the Condensed Consolidated Statements of Operations.

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

Period ended March 31

For the period ended March 31, 2024, the Company had three customers that account for 10% or more of the total revenues.

These three customers accounted for approximately 47%, 13%, and 11%, respectively for the period ended March 31, 2024.

As of March 31, 2024, approximately $ 3.2 million was due from these three customers.

Three Months Ended

Six Months Ended

June 30, 2024

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

These two customers accounted for approximately 47% and 17% of revenues, respectively, for the six months ended June 30, 2024.

As of June 30, 2024, approximately $ 1.4 million was due from these two customers.

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

4 unchanged sentences

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

The costs of out-bound freight are included in the cost of goods sold in the Condensed Consolidated Statement of Operations and Comprehensive Income (Loss).

For the period ended March 31, 2024, the costs of out-bound freight were approximately $ 546,000 .

The costs of outbound freight are included in the cost of goods sold in the Condensed Consolidated Statement of Operations and Comprehensive Income (Loss).

For the three and six months ended June 30, 2024, the costs of out-bound freight were approximately $ 905,000 and $ 1,451,000 , respectively.

Advertising Costs.

1 unchanged sentence

These costs are included within sales, general and administrative expenses in the Condensed Consolidated Statement of Operations and Comprehensive Income (Loss).

Total advertising expense was approximately $ 2,000 for the period ended March 31, 2024.

Total advertising expense was approximately $ 7,000 and $ 9,000 for the three and six months ended June 30, 2024, respectively.

Interest expense.

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

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

Income Taxes .

17 unchanged sentences

Stock-Based Compensation .

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

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

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

2 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, 2024 and 2023, no stock options or restricted stock were issued by the Company.

The Company recorded total stock-based compensation expense of $ 1,000 and $ 22,000 for the three months ended March 31, 2024 and 2023, respectively.

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

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

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

The Company recorded total stock-based compensation expense of $ 14,000 and $ 36,000 for the six months ended June 30, 2024 and 2023, respectively.

Net Income (Loss) per Share.

2 unchanged sentences

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

During the period 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 any of the per share calculations.

For the period ended 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.

At March 31, 2023 options to purchase 9,175 shares of common stock with a weighted average exercise price of $ 13.95 and 6,248 restricted stock units were outstanding and were determined to be antidilutive.

Weighted average common shares outstanding for the three months ended March 31, 2024 and 2023 were as follows:

Three months ended March 31

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

For the period ended June 30, 2024, no options were outstanding.

At June 30, 2023 options to purchase 14,000 shares of common stock with a weighted average exercise price of $ 11.74 were outstanding and determined to be antidilutive.

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

Three Months Ended

Six Months Ended

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

Effect of dilutive securities:

Stock options, restricted stock and restricted stock units

Stock options and restricted stock units

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

51 unchanged sentences

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

Revenue, net and net income for Bloomia since the date of acquisition included in the condensed consolidated statement of operations for three months ended March 31, 2024 were approximately $ 8,033,000 and $ 1,091,000 , respectively.

Revenue, net and net income for Bloomia since the date of acquisition included in the condensed consolidated statement of operations were approximately $ 16,780,000 and $ 1,599,000 for three months ended June 30, 2024, respectively, and $ 24,813,000 and $ 2,690,000 for the six months ended June 30, 2024, respectively.

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

1 unchanged sentence

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

In accordance with ASC 250-10, the Company is unable to provide unaudited pro forma information for revenue and net earnings for the three months ended March 31, 2023 due to lack of available information during the period prior to ownership.

Unaudited pro forma information for the three months ended March 31, 2024 is as follows:

In accordance with ASC 250-10, the Company is unable to provide unaudited pro forma information for revenue and net earnings for the three and six months ended June 30, 2023 due to lack of available information during the period prior to ownership.

Unaudited pro forma information for the three and six months ended June 30, 2024 is as follows:

Three Months Ended

Six Months Ended

June 30, 2024

The Company incurred approximately $ 1,542,000 of acquisition-related costs that were expensed during the three months ended March 31, 2024.

6 unchanged sentences

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.

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.

Under the Purchase Agreement, $ 200,000 was escrowed for a twelve-month period for any future claims, as defined in the Purchase Agreement, by the Buyer against the Company and is included in Accounts receivable, net on the Consolidated Balance Sheets The results of the In-Store Marketing Business have been presented as discontinued operations and the related assets and liabilities have been classified as related to discontinued operations, for all periods presented.

The carrying amounts of major classes of assets and liabilities that were reclassified as related to discontinued operations on the Consolidated Balance Sheets were as follows:

June 30, 2024

December 31, 2023

Current Assets:

3 unchanged sentences

Accounts payable

Accrued liabilities

Accrued sales tax

Other accrued liabilities

Current liabilities related to discontinued operations

Results of discontinued operations are summarized below:

Three Months Ended March 31

Net services revenues

Three Months Ended

Six Months Ended

June 30, 2023

Net service revenues

Cost of services

2 unchanged sentences

Total Operating Expenses

Operating Income

Operating (Loss) Income

Income from discontinued operations before income taxes

1 unchanged sentence

Income from discontinued operations, net of tax

The Company collected the remaining accounts receivable from the discontinued operation in April 2024.

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

Inventories at March 31, 2024 consisted of the following:

For the three and six months ended June 30, 2024, the Company recognized approximately $ 64,000 and $ 136,000 , respectively, of benefit in sales, general and administrative expense of discontinued operations from the reduction in the accrual for sales tax due to the expiration of the statute of limitations.

For the three and six months ended June 30, 2024, the Company generated $ 292,000 of cash from discontinued operations.

Inventories at June 30, 2024 consisted of the following:

June 30, 2024

Finished goods

1 unchanged sentence

Raw Materials and packaging supplies

Total inventories

Property and Equipment.

Property and equipment at March 31, 2024 consisted of the following:

Property and equipment at June 30, 2024 consisted of the following:

Machinery and equipment

3 unchanged sentences

accumulated depreciation

( 1,017,000 )

Property and equipment, net

At March 31, 2024, property and equipment, net of $ 819,000 were located outside of the U.S.

Depreciation and amortization expense of property and equipment was $ 142,000 for the three months ended March 31, 2024, of which $ 122,000 and $ 20,000 were recorded within cost of sales and sales, general and administrative expenses, respectively.

As of March 31, 2023, total property and equipment, net was $ 35,000 and depreciation for the three months ended March 31, 2023 was $14,000 which was recorded in sales, general and administrative expenses.

At June 30, 2024, property and equipment, net of $ 758,000 were located outside of the U.S.

Depreciation expense was $ 424,000 and $ 569,000 for the three and six months ended June 30, 2024.

Depreciation of $ 378,000 and $ 46,000 were recorded within cost of sales and sales, general and administrative expenses, respectively, for the three months ended June 30, 2024.

Depreciation of $ 500,000 and $ 66,000 were recorded within cost of sales and sales, general and administrative expenses, respectively, for the six months ended June 30, 2024.

Depreciation expense for the three and six months ended June 30, 2023 was $ 12,000 and $ 26,000 , respectively, which was recorded in sales, general and administrative expenses.

Equity Method Investment.

1 unchanged sentence

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

At March 31, 2024, the Company had a 30% equity interest in Araucania with a carrying amount of approximately $ 167,000 .

For the period ended March 31, 2024, the equity in net income of Araucania was approximately $nil.

As of March 31, 2024, the Company had a note receivable from Araucanía with a balance of $ 165,000 which is included in Prepaid expenses and other current assets in the accompanying condensed consolidated balance sheet.

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

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

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

As of June 30, 2024, the Company had a note receivable from Araucanía with a balance of $ 165,000 which is included in Prepaid expenses and other current assets in the accompanying condensed consolidated balance sheet.

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

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

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

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

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

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

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

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

At March 31, 2024, the balance of the loan was $ 700,000 .

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

At June 30, 2024, the balance of the loan was $ 250,000 .

Goodwill and Other Intangible Assets.

2 unchanged sentences

Goodwill resulting from the Bloomia Acquisition

Balance as of March 31, 2024

Other intangible assets and related amortization are as follows at March 31, 2024:

Cross Carrying Amount

Useful Life (Years)

Accumulated Amortization

Net Carrying Amount

Measurement period adjustment

Balance as of June 30, 2024

During the three and six months ended June 30, 2024, the Company recorded a measurement period adjustment which increased goodwill by $ 50,000 .

This measurement period adjustment resulted from a remeasurement of acquired payroll taxes payable.

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

Cross Carrying

Customer relationships

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

The weighted average remaining amortization period for intangible assets as of March 31, 2024 approximately 11.9 years.

For the three and six months ended June 30, 2024 amortization of intangible assets expensed to operations was $ 381,000 and $ 539,000 , respectively.

The weighted average remaining amortization period for intangible assets as of June 30, 2024 is approximately 11.6 years.

Remaining estimated aggregate annual amortization expense is as follows:

June 30, 2024

Remainder of 2024

The components of debt at March 31, 2024 consisted of the following:

The components of debt at June 30, 2024 consisted of the following:

June 30, 2024

Credit Agreement - term loan

Credit Agreement - revolving credit facility

Notes payable

Credit Agreement - revolving credit facility

Paid in kind interest

unamortized debt issuance costs

$ ( 355,000 )

Less current maturities

3 unchanged sentences

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

Borrowings under the Credit Agreement bear interest at a rate per annum equal to Term SOFR for an interest period of one month plus 3.0%.

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

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

1 unchanged sentence

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

Commencing with the fiscal quarter ending on March 31, 2024, the Credit Agreement will require the Borrower and its subsidiaries to maintain (a) a minimum fixed charge coverage ratio of not less than 1.25 to 1.00 and (b) a maximum senior cash flow leverage ratio of 3.0 to 1.0 until September 30, 2024, stepping down to 2.00 to 1.00 on December 31, 2027, until the maturity date of the Credit Agreement.

As of March 31, 2024, the Company was in compliance with these financial covenants.

The Credit Agreement requires the Borrower and its subsidiaries to maintain (a) a minimum fixed charge coverage ratio of not less than 1.25 to 1.00 and (b) a maximum senior cash flow leverage ratio of 3.0 to 1.0 until September 30, 2024, stepping down to 2.00 to 1.00 on December 31, 2027, until the maturity date of the Credit Agreement.

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

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

9 unchanged sentences

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

The short-term notes payable for $ 2,700,000 had a term of nine calendar weeks after the closing date.

The short-term notes payable bear interest at 8 %.

These notes had an outstanding balance of $ 1,050,000 at March 31, 2024, and were paid in full after the end of the quarter during April 2024.

As of March 31, 2024, there was $ 375,000 of unamortized debt issuance costs related to the term loan, net of amortization of $ 10,000 which has been presented as a direct deduction from long-term debt in the accompanying consolidated balance sheet.

As of March 31, 2024, there was $ 126,000 of deferred financing costs related to the revolving credit facility, net of amortization of $ 3,000 , which has been presented within prepaid expenses and other current assets in the accompanying consolidated balance sheet.

The Company incurred $ 212,000 of interest expense on the term loans and revolving facility and incurred $ 125,000 on the seller notes which are included in other (income) expenses, net on the condensed consolidated statements of operations and comprehensive income (loss).

The combined aggregate amount of maturities for each of the five years following March 31, 2024, are as follows:

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

As of June 30, 2024, there was $ 355,000 of debt issuance costs related to the term loan, net of amortization of $ 30,000 which has been presented as a direct deduction from long-term debt in the accompanying consolidated balance sheet.

As of June 30, 2024, there was $ 119,000 of deferred financing costs related to the revolving credit facility, net of amortization of $ 9,000 , which has been presented within prepaid expenses and other current assets in the accompanying consolidated balance sheet.

The Company incurred $ 464,000 of interest expense on the term loans and revolving facility and incurred non-cash paid-in-kind interest of $ 536,000 on the seller notes which are included in interest expense (income), net on the condensed consolidated statements of operations and comprehensive income (loss).

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

Remainder of 2024

6 unchanged sentences

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 balances for operating and finance leases where the Company is the lessee are presented as follows within the condensed consolidated balance sheets:

Operating lease:

Operating lease right-of-use assets, net

Current portion of operating lease obligations

Operating lease obligations, net of current portion

Total operating lease liabilities

Finance lease:

Finance lease right-of-use assets, net

Current portion of finance lease obligations

Finance lease obligations, net of current portion

Total finance lease liabilities

The Company is party to an operating lease agreement with Horti-Group for land and greenhouses in King George, Virginia, United States.

The lease commenced on July 1, 2021 and, including a renewal option the Company expects to exercise, ends on December 31, 2038.

The Company recognized the following related party balances in the condensed consolidated balance sheets:

Operating lease right-of-use assets, net

Current portion of operating lease obligations

Operating lease obligations, net of current portion

Total operating lease liabilities

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

Three Months Ended

Operating lease expense:

Operating lease cost

Short-term and variable lease cost

Finance lease expense:

Amortization of leased assets

Total lease expense

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

5 unchanged sentences

Operating leases

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 June 30, 2024

Six months ended June 30, 2024

Operating lease expense:

Operating lease cost

$ 1,055,000 $ 1,504,000

Short-term and variable lease cost

258,000 344,000

Finance lease expense:

Finance lease cost - depreciation

Total lease expense

$ 1,316,000 $ 1,851,000

Three months ended June 30, 2023

Six months ended June 30, 2023

Operating lease expense:

Operating lease cost

Short-term and variable lease cost

Total lease expense

Lease expense from discontinued operations

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

Three Months Ended

Operating cash outflows from operating leases

Financing cash outflows from finance leases

Leased assets obtained in excha nge for operating lease liabilities

Three months ended June 30, 2024

Six months ended June 30, 2024

Operating cash flows from operating leases

Financing cash flows from finance leases

Leased assets obtained in exchange for operating lease liabilities

Leased assets obtained in exchange for finance lease liabilities

As of March 31, 2024, the maturities of the operating and finance lease liabilities are as follows:

Operating cash flows from operating leases during the three and six months ended June 30, 2023 were $ 0 and $ 10,000 , respectively.

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

Year ending December 31,

Operating Leases

Finance Leases

remainder of 2024

Total minimum lease payments

imputed interest

Total Lease Payments

Less discount to PV

( 25,086,000 )

present value of lease liabilities

current portion

Long-term portion of lease liabilities

Liability balance

Income Taxes.

For the three months ended March 31, 2024, the Company recorded an income tax benefit of 20.6 % on loss from continuing operations.

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 ( 22.7 )%.

For the three months ended March 31, 2023, the Company recorded an income tax expense of 0.2% on loss from continuing operations before income taxes.

For the three and six months ended June 30, 2024, the Company recorded an income tax benefit of 24.5 % and 29.4 %, respectively on loss from continuing operations.

The rates differ from the federal statutory rate of 21 % due to state taxes of 4.7 %, valuation allowance change of 24.2 % and nondeductible transaction costs and other permanent items of ( 20.5 )%.

For the three and six months ended June 30, 2023, the Company recorded an income tax expense of 12.5 % and 0.4 % on loss from continuing operations before income taxes.

The rate differs from the federal statutory rate of 21 % due to state taxes of 3.8 %, valuation allowance change of ( 24.2 )% and other permanent items of ( 0.2 )%.

For the three months ended March 31, 2024, the Company recorded an income tax benefit of $ 347,000 on the loss from continuing operations before income taxes.

For the three and six months ended June 30, 2024, the Company recorded an income tax benefit of $ 201,000 and $ 548,000 on the loss from continuing operations before income taxes.

The overall benefit of $ 548,000 includes a $ 451,000 benefit for the reversal of the valuation allowance on federal deferred tax assets.

During the quarter the Company established deferred tax liabilities related to the acquisition in the majority ownership of Bloomia.

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

As of June 30, 2024, and December 31, 2023, the Company had unrecognized tax benefits totaling $ 43,000 , 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 $43,000.

3 unchanged sentences

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

As of March 31, 2024, the Company was not involved in any material claims or legal actions which, in the opinion of management, the ultimate disposition would have a material adverse effect on the Company’s consolidated financial position, results of operations, or liquidity.

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

Purchase Obligation.

3 unchanged sentences

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

As of March 31, 2024, Bloomia had committed to purchase machinery up to a total amount of $ 458,000 .

Employee Benefit Plans .

The Company sponsors a Retirement Profit Sharing and Savings Plan under Section 401(k) of the Internal Revenue Code.

The plan allows employees of Lendway, Inc.

to defer up to 50 % of their wages, subject to Federal limitations, on a pre-tax basis through contributions to the plan.

During the three months ended March 31, 2024 and 2023, the Company’s expense from continuing operations for matching contributions was $ 3,000 and $ 3,000 , respectively.

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

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

The Company makes contributions on behalf of all Dutch employees of which $ 8,000 were made and expensed for the period ended March 31, 2024.

Segment Data.

With the Bloomia Acquisition that was completed on February 22, 2024, the Company has two operating and reportable segments:

Bloomia and Lending, both of which are described in note 1.

The Company's remaining activities are presented as “Corporate“.

The Company's Corporate activities consist of corporate transaction expenses, certain corporate fees and expenses, interest expense, and management compensation.

The following table presents summarized financial information concerning the Company’s reportable business segments and Other activities:

Three months ended March 31, 2024

Income (loss) from continuing operations before income taxes

( 2,449,000 )

( 1,683,000 )

$ 102,981,000

$ 106,824,000

The Company makes contributions on behalf of all Dutch employees of which $ 22,000 and $ 30,000 were made and expensed for the three and six months ended June 30, 2024, respectively.

Subsequent Events.

On August 15, 2024, we 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 $ 2.5 million to fund the Company’s operations.

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

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

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

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.

Additionally, our current director and Co-Chief Executive Officer, Mark R.

Jundt serves as General Counsel and Corporate Secretary of Air T, current director and Co-Chief Executive Officer, Daniel C.

Philp serves as Senior Vice President of Corporate development at Air T, and current director Nicholas J.

Swenson serves as President and Chief Executive Officer of Air T and is himself a member of the stockholder group.

The entry into the Note was approved in advance by the Audit Committee of our Board of Directors in accordance with our Related Person Transaction Approval Policy and by a vote of solely independent directors who have no relationship with Air T.

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