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What changed in LENDWAY, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of LENDWAY, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+190 added−156 removedSource: 10-K (2025-03-27) vs 10-K (2024-04-01)

Top changes in LENDWAY, INC.'s 2025 10-K

190 paragraphs added · 156 removed · 101 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeStep 7: Storage: Stems are stored in a cooled warehouse to prevent spoilage. Step 8: Transport: Stems are transported to retailer’s distribution centers. Step 9: Sales: Consumer sales at mass-market retailers. During 2023 Bloomia sourced bulbs to grow around 75 million stems. The Netherlands has around 1,500 bulb suppliers, who jointly export over 2.5 billion tulip bulbs each year.
Biggest changeStep 5: Growing: Bulbs are moved into the greenhouse. Step 6: Harvesting: Tulips are cut and wrapped. Step 7: Storage: Stems are stored in a cooled warehouse to prevent spoilage. Step 8: Transport: Stems are transported to retailer’s distribution centers.
As part of the name change, our common stock now trades under the symbol “LDWY” on The Nasdaq Stock Market LLC. 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.
As part of the name change, our common stock now trades under the symbol “LDWY” on The Nasdaq Stock Market LLC. The Company has evolved into a specialty agricultural (“ag”) company focused on making and managing its ag investments in the United States (“U.S.”) and internationally.
As it relates to our employees: Oversight and Management Our executive officers are tasked with leading our organization and managing employment-related matters, including recruiting, hiring, onboarding, training, compensation planning, talent management and development. We are committed to providing team members with the training and resources necessary to continually strengthen their skills both inside and outside the workplace.
As it relates to our employees: Oversight and Management Our executive officers are tasked with leading our organization and managing employment-related matters, including recruiting, hiring, onboarding, training, compensation planning, talent management and development. We are committed to providing team members with the training, continuing education and resources necessary to continually strengthen their skills both inside and outside the workplace.
Growing bulbs domestically also allows for higher margins because the freight costs for importing bulbs by sea have been substantially less than the costs associated with importing stems by air. In the Netherlands, Bloomia’s office facilitates the sourcing of bulbs, conditioning to prepare bulbs for planting, and shipping of bulbs to its United States and South Africa facilities.
Growing tulip stems domestically allows for higher margins because the freight costs for importing bulbs by sea have been substantially less than the costs associated with importing stems by air. In the Netherlands, Bloomia’s office facilitates the sourcing of bulbs, conditioning to prepare bulbs for planting, and shipping of bulbs to its United States and South Africa facilities.
All previous periods presented have been restated to present the In-Store Marketing Business as discontinued operations. See Note 2 to the Consolidated Financial Statements appearing in Part II, Item 8, of this Annual Report on Form 10-K for a further description of the impact of the sale of the In-Store Marketing Business on the consolidated financial statements.
All previous periods presented have been restated to present the In-Store Marketing Business as discontinued operations. See Note 4 to the Consolidated Financial Statements appearing in Part II, Item 8, of this Annual Report on Form 10-K for a further description of the impact of the sale of the In-Store Marketing Business on the consolidated financial statements.
Bloomia has an import permit from the USDA for shipments of tulip bulbs. For import of bulbs from the Netherlands to the U.S., Bloomia participates in a pre-clearance program with the USDA where the climate-controlled tulip bulb shipments are inspected in the Netherlands, and the containers are sealed in the Netherlands.
For import of bulbs from the Netherlands to the U.S., Bloomia participates in a pre-clearance program with the USDA where the climate-controlled tulip bulb shipments are inspected in the Netherlands, and the containers are sealed in the Netherlands.
Item 1. Business General This Annual Report on Form 10-K is being filed by the registrant, Lendway, Inc. (“Lendway,” “we,” “us,” “our” and the “Company”), a Delaware corporation. Effective August 4, 2023, we changed our name from “Insignia Systems, Inc.” and reincorporated from Minnesota to Delaware.
Item 1. Business General This Annual Report on Form 10-K is being filed by the registrant, Lendway, Inc. (“Lendway,” “we,” “us,” “our” and the “Company”), a Delaware corporation. Effective August 4, 2023, we changed our name from “Insignia Systems, Inc.” which was incorporated in Minnesota in 1990 and reincorporated from Minnesota to Delaware.
Bloomia believes it has a market share of approximately 20% of the cut tulips grown in the U.S. Barriers to entry are considered high due to the need for high volumes and efficient operations to generate significant profitability.
Of overall cut flowers sales, approximately 15% is represented by tulip stems. Bloomia believes it has a market share of approximately 20% of the cut tulips grown in the U.S. Barriers to entry are considered high due to the need for high volumes and efficient operations to generate significant profitability.
Bloomia purchases tulip bulbs, hydroponically grows tulips from the bulbs, and sells the stems to retail stores. The Company’s primary focus in the near-term will be on the Bloomia business. Our internet address is www.lendway.com.
Bloomia purchases tulip bulbs, hydroponically grows tulips from the bulbs, and sells the stems to retail stores. The Company’s primary focus in the near-term will be on the Bloomia business.
Our website is not incorporated by reference into this Annual Report on Form 10-K. Copies of reports can also be obtained free of charge by requesting them from Lendway, Inc. Our mailing address is 5000 West 36th Street, Suite 220, Minneapolis, MN 55416; telephone 763-392-6200.
Our website is not incorporated by reference into this Annual Report on Form 10-K. Copies of reports can also be obtained free of charge by requesting them from Lendway, Inc.
We focus on implementing change through workforce observation and feedback channels to recognize risk and continuously improve our processes. Our team continues to also focus on improving our educational materials for employees to be informed of the best safety practices based on OSHA guidelines and workplace observations.
Our team continues to also focus on improving our educational materials for employees to be informed of the best safety practices based on OSHA guidelines and workplace observations.
Bloomia operates from three strategically positioned locations in the United States, the Netherlands and South Africa, and also has a 30% interest in a greenhouse business in Chile. Bloomia operates greenhouses to hydroponically grow tulips at its United States and South Africa locations. Bloomia has invested in automation in its U.S. greenhouse in recent years that has increased production efficiency.
Bloomia nurtured over 95 million stems in 2024. Bloomia operates from three strategically positioned locations in the United States, the Netherlands and South Africa, and also has a 30% interest in a greenhouse business in Chile. Bloomia operates greenhouses to hydroponically grow tulips at its United States and South Africa locations.
During 2023, approximately 50% of our hourly workers were hired for seasonal support during January through the end of May. As of March 1, 2024, 54 employees were seasonal. We employ temporary foreign agricultural workers (H2A employees). We regard our relationship with our employees as favorable.
During the year ended December 31, 2024, there were 56 temporary foreign agricultural workers (H2A employees) employed throughout the year. During fiscal year 2024, approximately 40% of our hourly workers were hired for seasonal support during January through the end of May. We regard our relationship with our employees as favorable.
Under the terms of the Credit Agreement, Tulp 24.1 had an $18.0 million term loan funded. The Credit Agreement also contains a $6.0 million revolving credit facility, which may be used by Tulp 24.1 for general business purposes and working capital. The Credit Agreement contains ongoing affirmative and negative covenants that Tulp 24.1 is required to comply with.
We entered into a revolving credit and term loan agreement (the “Credit Agreement”), together with Tulp 24.1 as the borrower. Under the terms of the Credit Agreement, Tulp 24.1 had an $18,000,000 term loan funded. The Credit Agreement also contains a $6,000,000 revolving credit facility, which may be used by Tulp 24.1 for general business purposes and working capital.
Growing tulips in a greenhouse using hydroponics enables year-round production and requires less water and nutrients to grow the stems, and results in tulips that are better quality and have a longer shelf life.
Growing tulips in a greenhouse using hydroponics enables year-round production and requires less water and nutrients to grow the stems, and results in tulips that are better quality and have a longer shelf life. By sourcing tulip bulbs from both the Netherlands and the Southern Hemisphere, Bloomia is able to offer quality fresh cut tulips year-round, meeting unmet demand.
On February 22, 2024, the Company acquired Bloomia B.V. (“Bloomia”) for a price of $47.5 million financed with Company cash, a new credit facility and promissory notes payable to the sellers. Bloomia is one of the largest producers of fresh cut tulips in the United States, nurturing over 75 million stems annually.
On February 22, 2024, the Company acquired Bloomia B.V., the parent of Fresh Tulips USA LLC, for a purchase price of $47.5 million, financed with Company cash, a new credit facility, promissory notes payable to the sellers and issuing an equity interest in the new company (the “Acquisition”).
Bloomia has historically sourced tulip bulbs from producers in the Netherlands, Chile, and New Zealand, which provides for year-round supply. Bulbs from the Southern Hemisphere are generally used from the end of August to early December, with the Northern Hemisphere produced bulbs used the remainder of the year. 4 Table of Contents Bloomia has established business relationships with prominent retailers.
Bulbs from the Southern Hemisphere are generally used from the end of August to early December, with the Northern Hemisphere produced bulbs used the remainder of the year. In the United States, Bloomia has established business relationships with prominent retailers.
Bloomia’s business model (shipping bulbs for local production) lowers its carbon footprint compared to importers of cut flowers. Hydroponic farming method is free of pesticides, requires less water and has fewer diseases, and requires substantially fewer import shipments. Governmental Regulation The Company and its subsidiaries are subject to regulation by various governmental agencies.
Hydroponic farming method is free of pesticides, requires less water and has fewer diseases, and requires substantially fewer import shipments. 7 Table of Contents Governmental Regulation The Company and its subsidiaries are subject to regulation by various governmental agencies. Bloomia has an import permit from the USDA for shipments of tulip bulbs.
The large majority of Bloomia’s contracts for purchase of bulbs from growers in the Netherlands are short term; however, Bloomia has a long history with most of its suppliers. Bulb contracts obligate Bloomia only to buy an agreed upon volume of bulbs; bulb price is established through market pricing.
The Netherlands’ large-scale production of tulip bulbs has created an efficient marketplace for Bloomia to source bulbs. The large majority of Bloomia’s contracts for purchase of bulbs from growers in the Netherlands are short term; however, Bloomia has a long history with most of its suppliers.
Environmental Matters We believe our operations follow all applicable environmental regulations within the jurisdictions in which we operate. The costs and effects of compliance with these regulations have not been and are not expected to become material. Importers of cut flowers air ship stems to the U.S., while Bloomia ships bulbs via sea containers.
The costs and effects of compliance with these regulations have not been and are not expected to become material. Importers of cut flowers air ship stems to the U.S., while Bloomia ships bulbs via sea containers. Bloomia’s business model (shipping bulbs for local production) lowers its carbon footprint compared to importers of cut flowers.
Recent Acquisitions On February 22, 2024, we completed the acquisition of Bloomia B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands (“Bloomia”).
Our mailing address is 5000 West 36th Street, Suite 220, Minneapolis, MN 55416; telephone 763-392-6200. 4 Table of Contents Bloomia Acquisition On February 22, 2024, we completed the acquisition of Bloomia B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands.
Farmland Credit FR, LLC has a money broker’s license in North Dakota. Employee and Human Capital Resources As of March 1, 2024, the Company and its subsidiaries had 156 employees, of which 5 were part-time employees. None of the employees are represented by labor unions.
Employee and Human Capital Resources As of December 31, 2024, the Company and its subsidiaries had 103 employees, of which none were part-time employees. None of the employees are represented by labor unions. As of December 31, 2024, there were no seasonal employees.
Industry The estimated market for cut flowers in the United States for 2023 is approximately $8 billion, of which approximately 80% is imported and around 20% is produced within the U.S. Of overall cut flowers sales, approximately 15% is represented by tulip stems.
Of those customers, three individually represented greater than 10% of Bloomia’s revenue, accounting for 34%, 20%, and 11% of its U.S. revenue during the fiscal year 2024. Industry The estimated market for cut flowers in the United States for 2024 is approximately $8 billion, of which approximately 80% is imported and around 20% is produced within the U.S.
The Company is the majority owner of Bloomia B.V. and its affiliated entities, representing a significant producer of fresh cut tulips (“stems”) in the U.S. The Company also fully owns and operates FarmlandCredit.com, a non-bank lending business that seeks to purchase existing loans and/or originate and fund new loans domestically.
The Company is the majority owner of Fresh Tulips USA LLC, Bloomia B.V., and its affiliated entities, representing a significant producer of fresh cut tulips (“stems”) in the U.S.
Step 2: Buffer storage: Bulbs kept in cooled storage in the Netherlands. Step 3: Shipping to U.S.: Bulbs are shipped via ocean containers. Step 4: Rooting: Bulbs are prepared for growing. Step 5: Growing: Bulbs are moved into the greenhouse. Step 6: Harvesting: Tulips are cut and wrapped.
Supply Chain The supply chain steps for U.S. operations are detailed below: Step 1: Procure bulbs: Purchase bulbs from established suppliers in the Netherlands or Southern Hemisphere. Step 2: Buffer storage: Bulbs kept in cooled storage in the Netherlands. Step 3: Shipping to U.S.: Bulbs are shipped via ocean containers. Step 4: Rooting: Bulbs are prepared for growing.
The acquisition price was paid with $9.2 million of the Company’s cash, $22.8 million of proceeds from a new credit agreement, and promissory notes payable to the sellers totaling $15.5 million. We entered into a revolving credit and term loan agreement (the “Credit Agreement”), together with Tulp 24.1 as the borrower.
As a result of the acquisition, Lendway holds an 81.4% ownership interest in Tulp 24.1 and Jansen owns the remaining 18.6% ownership interest. The acquisition was paid with $9,200,000 of the Company’s cash, $22,800,000 of proceeds from a new credit agreement, and promissory notes payable to the sellers totaling $15,500,000.
Management periodically reports to the Board regarding our human capital measures and results that guide how we attract, retain, and develop a workforce to enable our business strategies. Workplace Safety and Health A vital part of our business is providing our workforce with a safe, healthy, and sustainable working environment.
Our executive team is responsible for periodically reviewing team member programs and initiatives, including healthcare and other benefits, as well as our management development and succession planning practices. Management periodically reports to the Board regarding our human capital measures and results that guide how we attract, retain, and develop a workforce to enable our business strategies.
Intellectual Property: Patents and Trademarks Bloomia holds a trademark on its name and logo. Certain employees are required to enter into nondisclosure and invention assignment agreements. Customers, vendors and other third parties also must agree to nondisclosure restrictions to prevent unauthorized disclosure of the Company’s trade secrets or other confidential or proprietary information.
Bloomia is also a member of three trade associations; providing import/export logistics support, marketing support, and support for conducting business with wholesalers. Intellectual Property: Patents and Trademarks Bloomia holds a trademark on its name and logo. Certain employees are required to enter into nondisclosure and invention assignment agreements.
Over the past five years, Bloomia has sourced from the 10 largest producers, 20 medium-sized producers, as well as from smaller producers. The Netherlands’ large-scale production of tulip bulbs has created an efficient marketplace for Bloomia to source bulbs.
The Netherlands has around 600 tulip bulb growers, who jointly export over 2.5 billion tulip bulbs each year. Over the past five years, Bloomia has sourced from the 10 largest producers, 20 medium-sized producers, as well as from smaller producers; 80% of our supply comes from 20% of our suppliers.
Its growing and production complex consists of about 8,600 square feet of greenhouse, 7,000 cubic feet of cold storage, and more than 2,400 square feet of processing space. Araucania traditionally sells to retailers located in Chile, Bolivia, and Peru. Customers Bloomia has well established customer relationships. In the U.S., Bloomia sells stems to some of the largest mass-market retailers.
Araucania traditionally sells to retailers located in Chile and Brazil. 5 Table of Contents Customers Bloomia has well established customer relationships. In the U.S., Bloomia sells stems to some of the largest mass-market retailers. During fiscal year 2024, Bloomia had approximately 25 customers in the U.S.
Bloomia was founded in the Netherlands and has grown to become a leader in the fresh cut tulip industry in the U.S. Bloomia nurtured over 75 million stems annually in 2023 and 2022.
The Credit Agreement contains ongoing affirmative and negative covenants that Tulp 24.1 is required to comply with. The Company provided an unsecured guaranty of the obligations of Tulp 24.1 under the Credit Agreement. About Bloomia Bloomia was founded in the Netherlands and has grown to become a leader in the fresh cut tulip industry in the U.S.
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”) for a price of $3.5 million, subject to escrows and a post-closing adjustment.
The purchase of Bloomia was financed, partially with funds from the sale of the Company’s legacy business of providing in-store advertising solutions (the “In-Store Marketing Business”) for a price of $3,500,000.
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During the past twelve months, the Company took three major steps in its evolution. The Company is building a scalable non-bank lending business (“Lending Business”) to purchase existing loans or originate and fund new loans, all of which will be secured by collateral. Initially, we intend to focus on loans secured by real estate, primarily for agricultural purposes.
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The Acquisition was completed through Tulp 24.1, LLC, a Delaware limited liability company and Tulipa Acquisitie Holding B.V..
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We expect to expand our product offerings over time as we identify needs and opportunities in the marketplace for loans generally.
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Tulp 24.1, LLC, Tulipa Acquisitie Holding B.V, Fresh Tulips USA LLC and Bloomia B.V. and its affiliated entities are collectively referred to as “Bloomia.” Bloomia is one of the largest producers of fresh cut tulips in the United States, nurturing over 75 million stems annually.
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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.
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The Company had previously planned to also develop a non-bank lending business via its wholly owned subsidiary, Farmland Credit, Inc. 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.
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As a result of the acquisition, Lendway holds an 81.4% ownership interest in Tulp 24.1 and Jansen owns the remaining 18.6% ownership interest. 3 Table of Contents We acquired Bloomia for $47.5 million.
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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.
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The Company provided an unsecured guaranty of the obligations of Tulp 24.1 under the Credit Agreement.
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Because the non-bank lending business remained in development, this change did not have a significant adverse impact on the Company’s operations or financial results. Our internet address is www.lendway.com.
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The Company acquired Farmland Credit, Inc., a Minnesota corporation (“FCI”), and FCI’s subsidiaries, Farmland Credit FR, LLC and Farmland Credit AV, LLC for a nominal amount from a related party, Air T, Inc., a member of the group that holds 38.9% of Lendway’s outstanding shares. This transaction was part of starting the non-bank lending business discussed below.
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Bloomia has invested in automation in its U.S. greenhouse in recent years that has increased production efficiency. Bloomia has historically sourced tulip bulbs from producers in the Netherlands, Chile, and New Zealand, which provides for year-round supply.
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The following summarizes the current entity structure of the Company: Segments With the February 2024 acquisition of Bloomia, we operate in two industry segments: · Specialty Ag, consisting of the Bloomia business · Non-bank Lending, consisting of the Lending Business Specialty Ag Our Specialty Ag segment consists of Bloomia’s operations.
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Step 9: Sales: Consumer sales at mass-market retailers. 6 Table of Contents During fiscal year 2024, Bloomia sourced bulbs to grow over 95 million stems, an increase of 25% over the prior year. Approximately 80% of bulbs were sourced from the Netherlands and 20% from the Southern Hemisphere.
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During 2023, Bloomia had approximately 15 customers in the U.S. Of those customers, three individually represented greater than 10% of Bloomia’s revenue, accounting for 37.7%, 16.2%, and 10.4% of its U.S. revenue during the 12 months ended December 31, 2023.
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Bulb contracts obligate Bloomia only to buy an agreed upon volume of bulbs; bulb price is established through market pricing. Due to recent poor growing conditions in the Netherlands the supply of bulbs has decreased, increasing the price per bulb.
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By sourcing tulip bulbs from both the Netherlands and the Southern Hemisphere, Bloomia is able to offer quality fresh cut tulips year-round, meeting unmet demand. 5 Table of Contents Supply Chain The supply chain steps for U.S. operations are detailed below: Step 1: Procure bulbs: Purchase bulbs from established suppliers in the Netherlands or Southern Hemisphere.
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Customers, vendors and other third parties also must agree to nondisclosure restrictions to prevent unauthorized disclosure of the Company’s trade secrets or other confidential or proprietary information. Environmental Matters We believe our operations follow all applicable environmental regulations within the jurisdictions in which we operate.
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Bloomia is also a member of three trade associations; providing import/export logistics support, marketing support, and support for conducting business with wholesalers. Non-Bank Lending Segment We are building a scalable Lending Business to purchase existing loans or originate and fund new loans, all of which will be secured by collateral (individually or collectively, “Secured Loans”).
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Workplace Safety and Health A vital part of our business is providing our workforce with a safe, healthy, and sustainable working environment. We focus on implementing change through workforce observation and feedback channels to recognize risk and continuously improve our processes.
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In April 2023, we launched 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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We expect to expand our product offerings over time as we identify needs and opportunities in the marketplace for loans generally.
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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.
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We are building our strategy and long-term growth initiatives through development of customized niche products to support identified customer needs and opportunities in the marketplace, and effective funding structures to maximize returns. Competition We face competition from other entities that originate, purchase, securitize, or provide financing for Secured Loans.
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These entities include commercial and investment banks, insurance companies, Farm Credit System institutions, and financial funds. 6 Table of Contents We plan to compete through development of niche products and effective fundings structures, while controlling overhead costs.
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The relative competitiveness and our ability to grow loan volume will be affected by many factors, including demand for the lending products we offer, availability of capital, and liquidity and cost of funds from third-party funding sources. Activity to Date The Company met with a number of prospects for loan originations and/or purchases since the start of the lending business.
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Deals were negotiated, but ultimately did not close. With the Company’s decision to allocate capital to the Bloomia acquisition, capital available for the lending business will be significantly constrained in the near term. Accordingly, we anticipate minimal revenue and operating losses from the lending business during the remainder of 2024.
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In 2023, Bloomia added to its Human Capital and Human Resources team, to take on initiatives such as employee wellness programs and continuing education. 7 Table of Contents Our executive team is responsible for periodically reviewing team member programs and initiatives, including healthcare and other benefits, as well as our management development and succession planning practices.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeJansen no longer serves in (or serves in some lesser capacity than) their current roles, or if the Company loses other members of our management team, we may not be able to successfully execute on our business strategy and our business, financial condition and results of operations, as well as the market price of its securities, could be adversely affected. 10 Table of Contents If we fail to establish and maintain effective internal control over financial reporting, then we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business and the market price of our common stock.
Biggest changeJansen no longer serves in (or serves in some lesser capacity than) his current role, or if the Company loses other members of our management team, we may not be able to successfully execute on our business strategy and our business, financial condition and results of operations, as well as the market price of its securities, could be adversely affected.
Under terms of the Credit Agreement, the Bloomia business is permitted to pay a management fee of $60,000 monthly to Lendway, but generally is not permitted to make distributions to its members, including Lendway. This may constrain cash available to Lendway for corporate expenses and expenses of the Lending Business.
Under terms of the Credit Agreement, the Bloomia business is permitted to pay a management fee of $60,000 monthly to Lendway, but generally is not permitted to make distributions to its members, including Lendway. This may constrain cash available to Lendway for corporate expenses.
If we are not able to obtain additional capital on acceptable terms, or at all, we may be forced to curtail or abandon our growth plans, which could adversely impact the Company, its business, development, financial condition, operating results or prospects. 14 Table of Contents We may be required to recognize impairment charges that could materially affect our results of operations.
If we are not able to obtain additional capital on acceptable terms, or at all, we may be forced to curtail or abandon our growth plans, which could adversely impact the Company, its business, development, financial condition, operating results or prospects. We may be required to recognize impairment charges that could materially affect our results of operations.
Because of the inherent limitations in all internal control systems, internal control over business processes and financial reporting may not prevent or detect fraud or misstatements. We are required, pursuant to Section 404 of the Sarbanes Oxley Act (SOX), to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting.
Because of the inherent limitations in all internal control systems, internal control over business processes and financial reporting may not prevent or detect fraud or misstatements. 11 Table of Contents We are required, pursuant to Section 404 of the Sarbanes Oxley Act (SOX), to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting.
We can reduce, but cannot eliminate, the impacts of adverse weather conditions because the significant majority of our tulips are grown in a hydroponic greenhouse. Tulip bulbs, like any plant, are subject to quality issues and disease, and we could have significant inventory loss or production delays resulting from low quality tulips.
We can reduce, but cannot eliminate, the impacts of adverse weather conditions because the significant majority of our tulips are grown in a hydroponic greenhouse. 13 Table of Contents Tulip bulbs, like any plant, are subject to quality issues and disease, and we could have significant inventory loss or production delays resulting from low quality tulips.
Our quarterly and annual operating results have fluctuated in the past and may vary in the future due to a wide variety of factors including: · our ability to successfully operate the acquired Bloomia business at the levels of revenue and cash flow planned; · inability to close loans; · changes in interest rates; and · the impact of other strategic activities.
Our quarterly and annual operating results have fluctuated in the past and may vary in the future due to a wide variety of factors including: ● our ability to successfully operate the acquired Bloomia business at the levels of revenue and cash flow planned; ● changes in interest rates; and ● the impact of other strategic activities.
If we are unable to raise additional funds when needed we may not be able to grow our businesses, or complete transactions related to our strategy. OPERATIONAL RISKS Restrictions in the Credit Agreement, could adversely affect the Bloomia business, financial condition, and results of operations.
If we are unable to raise additional funds when needed we may not be able to grow our businesses, or complete transactions related to our strategy. 10 Table of Contents OPERATIONAL RISKS Restrictions in the Credit Agreement could adversely affect the Bloomia business, financial condition, and results of operations.
It is possible that we may be required to record significant impairment charges in the future and, if we do so, our results of operations could be materially adversely affected. Certain significant stockholders of our company may exert a degree of control in a manner that conflicts with the interests of other stockholders.
It is possible that we may be required to record significant impairment charges in the future and, if we do so, our results of operations could be materially adversely affected. 15 Table of Contents Certain significant stockholders of our company may exert a degree of control in a manner that conflicts with the interests of other stockholders.
If we cannot demonstrate that such interests will be harmed, we may be unable to prevent our competitors from benefiting from the expertise of our former owners and our ability to remain competitive may be diminished. 8 Table of Contents RISKS RELATING TO ECONOMY AND MARKET CONDITIONS We are subject to changes in interest rates.
If we cannot demonstrate that such interests will be harmed, we may be unable to prevent our competitors from benefiting from the expertise of our former owners and our ability to remain competitive may be diminished. RISKS RELATING TO ECONOMY AND MARKET CONDITIONS We are subject to changes in interest rates.
These measures, however, may not adequately protect us from material adverse effects due to the fluctuations in the relative values of the U.S. dollar and the euro and other foreign currencies in which we transact business, and may result in a financial loss. Failure to comply with the U.S.
These measures, however, may not adequately protect us from material adverse effects due to the fluctuations in the relative values of the U.S. dollar and the euro and other foreign currencies in which we transact business, and may result in a financial loss. 12 Table of Contents Failure to comply with the U.S.
Accordingly, any of these factors may have a material adverse effect on our inventory and any future production of tulips and a corresponding adverse effect on our results of operations. 12 Table of Contents Energy and water price increases could adversely impact our profit margins. Bloomia’s hydroponic greenhouse cultivation process uses significant energy and water.
Accordingly, any of these factors may have a material adverse effect on our inventory and any future production of tulips and a corresponding adverse effect on our results of operations. Energy and water price increases could adversely impact our profit margins. Bloomia’s hydroponic greenhouse cultivation process uses significant energy and water.
Current significant holders of shares may have interests that are different than or adverse to our other stockholders. Based on public filings with the SEC, we believe that our largest stockholders and its affiliates hold approximately 38.9% of our issued and outstanding common shares.
Current significant holders of shares may have interests that are different than or adverse to our other stockholders. Based on public filings with the SEC, we believe that our largest stockholders and its affiliates hold approximately 40% of our issued and outstanding common shares.
Item 1A. Risk Factors Our business is subject to many risks. The following are significant factors known to us that could materially adversely affect our business, reputation, operating results, industry, financial position, or future financial performance. RISKS RELATING TO OUR BUSINESS AND OPERATIONS We face competition and cannot guarantee our continued ability to compete effectively.
Item 1A. Risk Factors Our business is subject to many risks. The following are significant factors known to us that could materially adversely affect our business, reputation, operating results, industry, financial position, or future financial performance. 8 Table of Contents RISKS RELATING TO OUR BUSINESS AND OPERATIONS We face competition and cannot guarantee our continued ability to compete effectively.
For example, if the euro appreciates against the U.S. dollar, then the U.S. dollar cost of our operations in the Netherlands would increase and our results of operations would be adversely affected. 11 Table of Contents From time to time, we engage in currency hedging activities.
For example, if the euro appreciates against the U.S. dollar, then the U.S. dollar cost of our operations in the Netherlands would increase and our results of operations would be adversely affected. From time to time, we engage in currency hedging activities.
If competitors succeed in diverting business from our current customers or capturing a greater share of the overall market for cut tulips or cut flowers generally, Bloomia’s revenues and related operations would be adversely affected, potentially materially. Our revenue is highly concentrated among a small number of customers. During calendar 2023, three customers accounted for approximately 64.3% of Bloomia’s revenue.
If competitors succeed in diverting business from our current customers or capturing a greater share of the overall market for cut tulips or cut flowers generally, Bloomia’s revenues and related operations would be adversely affected, potentially materially. Our revenue is highly concentrated among a small number of customers. During calendar 2024, three customers accounted for approximately 65% of Bloomia’s revenue.
Under amended Rule 144, restricted or unrestricted securities that were initially issued by a reporting or non-reporting shell company, or a company that was at any time previously a reporting or non-reporting shell company, can only be resold in reliance on Rule 144 if the following conditions are met: · The issuer of the securities that was formerly a shell company has ceased to be a shell company; · The issuer of the securities has filed all reports and material required to be filed under Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding twelve months (or shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and · At least one year has elapsed from the time the issuer filed the current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company. 15 Table of Contents We have never been classified as a “shell company” under rules promulgated under the Securities Act or the Exchange Act.
Under amended Rule 144, restricted or unrestricted securities that were initially issued by a reporting or non-reporting shell company, or a company that was at any time previously a reporting or non-reporting shell company, can only be resold in reliance on Rule 144 if the following conditions are met: ● The issuer of the securities that was formerly a shell company has ceased to be a shell company; ● The issuer of the securities has filed all reports and material required to be filed under Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding twelve months (or shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and ● At least one year has elapsed from the time the issuer filed the current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
We have been focused on the successful startup and growth of our Lending Business since before the sale of assets relating to our former In-Store Marketing Business. Following the recent acquisition of the Bloomia business we have also been focused on managing Bloomia’s operations and growth.
We were focused on the startup and growth of our non-bank lending business since before the sale of assets relating to our former In-Store Marketing Business. Following the acquisition of the Bloomia business we have been focused on managing Bloomia’s operations and growth.
Our reputation, brand, and financial condition could be adversely affected if, as a result of a significant cyber event or otherwise, our operations are disrupted or shutdown; our confidential, proprietary information is stolen or disclosed; we incur costs or are required to pay fines in connection with stolen customer, employee, or other confidential information; we must dedicate significant resources to system repairs or increase cyber security protection; or we otherwise incur significant litigation or other costs. 13 Table of Contents RISKS RELATED TO AN INVESTMENT IN OUR COMPANY Our Results of Operations Have Been and May Be Subject to Significant Fluctuations.
Our reputation, brand, and financial condition could be adversely affected if, as a result of a significant cyber event or otherwise, our operations are disrupted or shutdown; our confidential, proprietary information is stolen or disclosed; we incur costs or are required to pay fines in connection with stolen customer, employee, or other confidential information; 14 Table of Contents we must dedicate significant resources to system repairs or increase cyber security protection; or we otherwise incur significant litigation or other costs.
Our management and integration of the operations of acquired businesses requires significant efforts, including the coordination of information technologies and finance. These efforts result in additional expenses and involve significant amounts of management’s time that cannot then be dedicated to other projects.
We cannot be certain that the businesses we acquire will become profitable or remain so. Our management and integration of the operations of acquired businesses requires significant efforts, including the coordination of information technologies and finance. These efforts result in additional expenses and involve significant amounts of management’s time that cannot then be dedicated to other projects.
Factors that will affect the success of our acquisitions include: · the presence or absence of adequate internal controls and/or significant fraud in the financial systems of acquired companies, · our ability or inability to integrate information technology systems of acquired companies in a secure and reliable manner, · any decrease in customer loyalty and product orders caused by dissatisfaction with the Company’s product lines and sales and marketing practices, including price increases, · our ability to retain key employees, and · ability to generate adequate cash flow to service the debt incurred for the acquisitions. 9 Table of Contents These effects, individually or in the aggregate, could cause a deterioration of our credit and result in increased borrowing costs and interest expense.
Factors that will affect the success of our acquisitions include: ● the presence or absence of adequate internal controls and/or significant fraud in the financial systems of acquired companies, ● our ability or inability to integrate information technology systems of acquired companies in a secure and reliable manner, ● any decrease in customer loyalty and product orders caused by dissatisfaction with the Company’s product lines and sales and marketing practices, including price increases, ● our ability to retain key employees, and ● ability to generate adequate cash flow to service the debt incurred for the acquisitions.
Additionally, although we coordinate with recurring customers to plan production based on anticipated demand and projections, we may have to write down inventory or recognize a material impairment if our production significantly exceeds customer demand.
Additionally, in fiscal year 2024, a portion of our Southern Hemisphere bulbs suffered from poor temperature treatment which resulted in less stem production. Although we coordinate with recurring customers to plan production based on anticipated demand and projections, we may have to write down inventory or recognize a material impairment if our production significantly exceeds customer demand.
We may not generate enough cash or secure enough capital to execute our business plans. As we develop and grow our businesses, we may be required to finance this process through equity offerings or additional debt financings.
These effects, individually or in the aggregate, could cause a deterioration of our credit and result in increased borrowing costs and interest expense. We may not generate enough cash or secure enough capital to execute our business plans. As we develop and grow our businesses, we may be required to finance this process through equity offerings or additional debt financings.
During 2023, the sale prices of our common stock as reported by The Nasdaq Stock Market ranged from a low of $4.05 to a high of $9.67.
During fiscal year 2024, the sale prices of our common stock as reported by The Nasdaq Stock Market ranged from a low of $3.02 to a high of $6.88.
Fresh cut tulips are something of a discretionary purchase and consumers may reduce purchases of tulips in slower economic times. In the past, some of these factors have caused and may continue to cause customers to reduce spending and delay or forego purchases of our products, which has had an adverse effect on our net sales and earnings.
In the past, some of these factors have caused and may continue to cause 9 Table of Contents customers to reduce spending and delay or forego purchases of our products, which has had an adverse effect on our net sales and earnings. STRATEGIC RISKS Our company’s results are highly dependent on Bloomia’s success.
We cannot assure you that the measures we have taken to date, and actions we may take in the future, will prevent or avoid potential future material weaknesses.
We cannot assure you that the measures we have taken to date, and actions we may take in the future, will prevent or avoid potential future material weaknesses. During fiscal year 2024, the Company incurred two late filings and needed to file extensions in order to file two quarterly reports timely.
However, in the event we were to be so designated, we may have to retroactively adjust our reporting or accounting for affected periods.
We have never been classified as a “shell company” under rules promulgated under the Securities Act or the Exchange Act. However, in the event we were to be so designated, we may have to retroactively adjust our reporting or accounting for affected periods. 16 Table of Contents Item 1B.
This constraint significantly limits the capital available for the Lending Business, for which we anticipate minimal revenue and losses during the remainder of 2024. The restriction on distributions will also limit our ability to fund additional strategic acquisitions using capital we have contributed to the Bloomia business. The Company’s success depends on its key personnel.
The restriction on distributions will also limit our ability to fund additional strategic acquisitions using capital we have contributed to the Bloomia business. The Company’s success depends on its key personnel. The Company’s business results depend largely upon the continued contributions of Bloomia’s CEO Werner Jansen. If Mr.
With this lack of diversification, for at least the near term, our cash flow and ability to service our debt is highly dependent on the performance of the Bloomia business. Risks inherent in the Bloomia business are discussed in this section. Failure to successfully manage the recently acquired Bloomia business and other future acquisitions could adversely affect our business.
Risks inherent in the Bloomia business are discussed in this section. Failure to successfully manage the recently acquired Bloomia business and other future acquisitions could adversely affect our business. As part of our strategy to develop our specialty ag strategy, we may make additional acquisitions in the future.
STRATEGIC RISKS Our company’s results are highly dependent on Bloomia’s success. Although we intend to continue to develop our non-bank lending business, we have committed a substantial portion of our capital to the acquisition and growth of Bloomia’s business.
Although we intend to continue to develop our specialty ag business, we have committed a substantial portion of our capital to the acquisition and growth of Bloomia’s business. With this lack of diversification, for at least the near term, our cash flow and ability to service our debt is highly dependent on the performance of the Bloomia business.
Removed
As part of our strategy to develop our specialty ag and finance strategy, we recently acquired Bloomia, and may make additional acquisitions in the future. We cannot be certain that the businesses we acquire will become profitable or remain so.
Added
Fresh cut tulips are something of a discretionary purchase and consumers may reduce purchases of tulips in slower economic times.
Removed
The Company’s business results depend largely upon the continued contributions of our CEO Randy Uglem, as it relates to the Lending Business, and Bloomia’s CEO Werner Jansen as it relates to the tulip business. If Mr. Uglem or Mr.
Added
If we fail to establish and maintain effective internal control over financial reporting, then we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business and the market price of our common stock.
Added
RISKS RELATED TO AN INVESTMENT IN OUR COMPANY Our results of operations have been and may be subject to significant fluctuations.
Added
Unresolved Staff Comments Smaller reporting companies are not required to provide disclosure pursuant to this Item.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Company’s internal operations are PC based and the PCs have up to date security software. Regular phishing exercises are conducted, and employee awareness training is conducted annually by our outsourced provider. Our full Board of Directors and our Audit Committee provide oversight of our risk management program, which includes cybersecurity.
Biggest changeManagement reports significant incidents or concerns to the Audit Committee. Annual internal and external vulnerability scans are completed to ensure we mitigate any risks proactively. The Company’s internal operations are PC based and the PCs have up to date security software. Regular phishing exercises are conducted, and employee awareness training is conducted annually by our outsourced provider.
However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced an undetected cybersecurity incident. 16 Table of Contents
However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced an undetected cybersecurity incident.
As of the date of this report, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition.
Management’s Role As of the date of this report, we did not identify any cybersecurity threats, including as a result of previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect, the Company, including our business strategy, results of operations, or financial condition.
Item 1C. Cybersecurity Lendway’s cyber environment at December 31, 2023 consisted primarily of outsourced information technology (“IT”) operations. The outsourced provider has a cybersecurity framework which includes multiple products implemented to ensure the security of Lendway’s environment. Annual internal and external vulnerability scans are also completed to ensure we mitigate any risks proactively.
Lendway’s cyber environment at December 31, 2024 consisted primarily of outsourced information technology (“IT”) operations. The outsourced providers have a cybersecurity framework which includes multiple products implemented to ensure the security of Lendway’s and Bloomia’s environments. Our third-party service providers alert management, specifically the CFO and CEO of Bloomia, to incidents or other concerns.
Removed
With the acquisition of Bloomia on February 22, 2024, the Company will include the IT environment of Bloomia in its cybersecurity processes and oversight at the corporate and board level. Bloomia’s cybersecurity is managed by a third party vendor.
Added
Item 1C. Cybersecurity We recognize the importance of safeguarding our business operations, sensitive data, and intellectual property from cyber threats and other technological risks. Our operations involve the use of various information technology systems, including those for production management, customer order management, and financial reporting.
Added
As such, we are exposed to a range of cyber risks, including but not limited to data breaches, ransomware attacks, unauthorized access to proprietary data, and disruptions to our operations due to system failures. We are committed to maintaining an appropriate level of cybersecurity to mitigate these risks.
Added
The Company relies on third-party service providers for services such as IT management and payroll. These third-parties are also vulnerable to cybersecurity threats. Management actively assesses its third-parties policies related to cyber risks, including obtaining System and Organization Controls (SOC) reports, when available.
Added
Our full Board of Directors and our Audit Committee provide oversight of our risk management program, which includes cybersecurity and monitoring the performance of our third-party IT providers.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Removed
Item 3. Legal Proceedings The Company is party to legal actions, proceedings, and claims in the ordinary course of business. The outcome of these matters is not expected to have a material effect on the Company’s financial position or results of operations.
Added
Item 3. Legal Proceedings A description of our legal proceedings, if any, is contained in Note 14 to the consolidated financial statements appearing in Part II, Item 8 of this Annual Report on Form 10-K, incorporated herein by reference. 17 Table of Contents Item 4. Mine Safety Disclosures Not applicable. ​ 18 Table of Contents PART II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe repurchase authorization does not obligate the Company to acquire any particular amount of its common stock or to acquire shares on any particular timetable and may be suspended or discontinued at any time at the Company’s discretion.
Biggest changeThe repurchase authorization does not obligate the Company to acquire any particular amount of its common stock or to acquire shares on any particular timetable, does not have an expiration date and may be suspended or discontinued at any time at the Company’s discretion. There was no repurchase activity for the three months ended December 31, 2024.
We may purchase shares of our common stock from time to time in open market transactions at prevailing market prices, in privately negotiated transaction, or by other means in accordance with federal securities laws. Open market repurchases may be effected pursuant to Rule 10b5-1 trading plans.
We may purchase shares of our common stock from time to time in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in accordance with federal securities laws. Open market repurchases may be effected pursuant to Rule 10b5-1 trading plans.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Holders The Company’s common stock is listed on the Nasdaq Capital Market under the symbol LDWY. As of March 27, 2024, our common stock was held by approximately 115 holders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Holders The Company’s common stock is listed on the Nasdaq Capital Market under the symbol LDWY. As of March 21, 2025, our common stock was held by approximately 122 holders of record.
Removed
Repurchase activity for the twelve months ended December 31, 2023, was as follows: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares purchased under the plans or programs Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs October 1 - 31, 2023 5,546 $ 5.09 5,546 $ 27,864 319,109 November 1 - 30, 2023 3,137 4.99 3,137 16,267 315,972 December 1 - 31, 2023 - - - - 315,972 8,683 8,683 $ 44,131 Item 6. [Reserved]
Added
As of December 31, 2024, 315,792 shares remained available for repurchase under the existing authorization. ​ ​ Item 6. [Reserved]

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. [Reserved] 18 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 18 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 23 Item 8. Financial Statements and Supplementary Data F-1 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures 24 Item 9A. Controls and Procedures 24
Biggest changeItem 6. [Reserved] ​ 19 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 19 Item 7A. Quantitative and Qualitative Disclosures About Market Risk ​ 28 Item 8. Financial Statements and Supplementary Data ​ F-1 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures ​ 29 Item 9A.
Added
Controls and Procedures ​ 29 Item 9B. Other Information ​ 30

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCautionary Statement Regarding Forward-Looking Statements Certain statements made in this Annual Report on Form 10-K, 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.
Biggest changeTherefore, the actual liability for U.S. or foreign taxes may be materially different from management’s estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities. 27 Table of Contents Cautionary Statement Regarding Forward-Looking Statements Certain statements made in this Annual Report on Form 10-K that are not statements of historical or current facts are considered “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended.
The Credit Agreement also contains other customary affirmative and negative covenants, including covenants that restrict the ability of Tulp 24.1 and its subsidiaries to incur additional indebtedness, dispose of significant assets, make distributions or pay dividends to the Company, make certain investments, including any acquisitions other than permitted acquisitions, make certain payments, enter into sale and leaseback transactions or grant liens on its assets, subject to certain limitations.
The Amended Credit Agreement also contains other customary affirmative and negative covenants, including covenants that restrict the ability of Tulp 24.1 and its subsidiaries to incur additional indebtedness, dispose of significant assets, make distributions or pay dividends to the Company, make certain investments, including any acquisitions other than permitted acquisitions, make certain payments, enter into sale and leaseback transactions or grant liens on its assets, subject to certain limitations.
The Credit Agreement contains customary events of default, the occurrence of which would permit the lenders to terminate their commitments and accelerate loans under the Credit Agreement, including failure to make payments under the credit facility, failure to comply with covenants in the Credit Agreement and other loan documents, cross default to other material indebtedness of Tulp 24.1 or any of its subsidiaries, failure of Tulp 24.1 or any of its subsidiaries to pay or discharge material judgments, bankruptcy of Tulp 24.1 or any of its subsidiaries, and change of control of the Company.
The Amended Credit Agreement contains customary events of default, the occurrence of which would permit the lenders to terminate their commitments and accelerate loans under the Amended Credit Agreement, including failure to make payments under the credit facility, failure to comply with covenants in the Amended Credit Agreement and other loan documents, cross default to other material indebtedness of Tulp 24.1 or any of its subsidiaries, failure of Tulp 24.1 or any of its subsidiaries to pay or discharge material judgments, bankruptcy of Tulp 24.1 or any of its subsidiaries, and change of control of the Company.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the financial statements and the related notes included in this Annual Report on Form 10-K. This report contains forward-looking statements that involve risks and uncertainties.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the Company’s consolidated financial statements and related notes included in this Annual Report on Form 10-K. This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties.
Bloomia purchases tulip bulbs, hydroponically grows tulips from the bulbs, and sells the stems to retail stores. Bloomia is a leading producer of fresh cut tulips in the United States, nurturing over 75 million stems annually. Net sales (unaudited) of Bloomia for the twelve months ended December 31, 2023 and 2022 were approximately $45 million and $43 million, respectively.
Bloomia purchases tulip bulbs, hydroponically grows tulips from the bulbs, and sells the stems to retail stores. Bloomia is a leading producer of fresh cut tulips in the United States, nurturing over 75 million stems annually. Net sales (unaudited) of Bloomia for the twelve months ended December 31, 2024 and 2023 were approximately $40,000,000 and $45,000,000, respectively.
Factors that could cause our estimates and assumptions as to future performance, and our actual results, to differ materially include the following: (1) our ability to integrate and continue to successfully operate the newly acquired Bloomia business, (2) our ability to compete, (3) concentration of Bloomia’s historical revenue among a small number of customers, (4) changes in interest rates, (5) ability to comply with the requirements of the Credit Agreement, (6) the limited history of our Lending Business, (7) the substantial risk of loss associated with lending generally, (8) market conditions that may restrict or delay appropriate or desirable opportunities, (9) our ability to develop and maintain necessary processes and controls relating to our businesses (10) reliance on one or a small number of employees in each of our businesses, (11) potential adverse classifications of our Company if we are unsuccessful in executing our business plans, (12) other economic, business, market, financial, competitive and/or regulatory factors affecting the Company’s businesses generally; (13) our ability to attract and retain highly qualified managerial, operational and sales personnel; and (14) the availability of additional capital on desirable terms, if at all.
Factors that could cause our estimates and assumptions as to future performance, and our actual results, to differ materially include the following: (1) our ability to integrate and continue to successfully operate the newly acquired Bloomia business, (2) our ability to compete, (3) concentration of Bloomia’s historical revenue among a small number of customers, (4) changes in interest rates, (5) ability to comply with the requirements of the Credit Agreement and operate within its restrictions, (6) economic and market conditions that may restrict or delay appropriate or desirable opportunities, (7) our ability to develop and maintain necessary processes and controls relating to our businesses (8) reliance on one or a small number of employees, (9) potential adverse classifications of our Company if we are unsuccessful in executing our business plans, (10) other economic, international, business, market, financial, competitive and/or regulatory factors affecting the Company’s businesses generally; (11) our ability to attract and retain highly qualified managerial, operational and sales personnel; and (12) the availability of additional capital on desirable terms, if at all.
Forward-looking statements involve known and unknown risks, uncertainties and other factors, including those set forth in this report and additional risks, if any, identified in this Form 10-K, our Quarterly Reports on Form 10-Q, and our Current Reports on Form 8-K filed with the SEC. Such forward-looking statements should be read in conjunction with the Company’s filings with the SEC.
Forward-looking statements involve known and unknown risks, uncertainties and other factors, including those set forth in this report and additional risks, if any, identified in this Annual Report on Form 10-K, and subsequent Quarterly Reports on Form 10-Q, and our Current Reports on Form 8-K filed with the SEC.
Interest is at 8% per annum. 22 Table of Contents Critical Accounting Estimates Our discussion of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.
Critical Accounting Estimates Our discussion of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.
The Company expects that the new credit facility will provide sufficient credit availability to support its ongoing operations, fund its new debt service requirements, capital expenditures and working capital for at least the next 12 months.
The Company expects that cash from operations combined with funds available under the Amended Credit Facility and the Note will provide sufficient credit availability to support its ongoing operations, fund its new debt service requirements, capital expenditures and working capital for at least the next 12 months.
Critical accounting estimates are those estimates made in accordance with GAAP which involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations. On an ongoing basis, we evaluate our estimates and assumptions, including those related to income taxes.
Critical accounting estimates are those estimates made in accordance with GAAP which involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations.
Lendway assumes no responsibility to update the forward-looking statements contained in this report or the reasons why actual results would differ from those anticipated in any such forward-looking statement, other than as required by law.
Such forward-looking statements should be read in conjunction with the Company’s filings with the SEC. The Company assumes no responsibility to update the forward- looking statements contained in this report or the reasons why actual results would differ from those anticipated in any such forward-looking statement, other than as required by law.
Commencing with the fiscal quarter ending on March 31, 2024, the Credit Agreement will require Tulp 24.1 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, and stepping down to 2.00 to 1.00 on December 31, 2027, until the maturity date of the Credit Agreement.
The Amended Credit Agreement requires Tulp 24.1 and its subsidiaries to maintain (a) a minimum fixed charge coverage ratio of not less than 1.25 to 1.00 and (b) a maximum senior cash flow leverage ratio of 3.75 to 1.0 until March 31, 2025, and stepping down to 2.00 to 1.00 on December 31, 2027, until the maturity date of the Amended Credit Agreement.
Information on the sale of the In-Store Marketing Business and statement of operations details of the discontinued operations are included in Note 2 to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.
Information on the sale of the In-Store Marketing Business and statement of operations and comprehensive income (loss) details of the discontinued operations are included in Note 4 to the consolidated financial statements appearing in Part II, Item 8 of this Annual Report on Form 10-K. Noncontrolling interest .
Forward-looking statements include statements expressing the intent, belief or current expectations of the Company and members of our management team regarding, for instance: (i) our belief that our cash balance, cash generated by operations and borrowings available under our Credit Agreement, will provide adequate liquidity and capital resources for at least the next twelve months, and (ii) regarding the potential for growth and other opportunities for our businesses.
Forward-looking statements include statements expressing the intent, belief or current expectations of the Company and members of our management team regarding, for instance: (i) our belief that our cash balance, cash generated by operations and borrowings available under our Credit Agreement, will provide adequate liquidity and capital resources for at least the next twelve months, (ii) regarding the potential for growth and other opportunities for our business and (iii) the nature and timing of the Company’s intended financial reporting during its transition to a fiscal year ending June 30.
Under the terms of the Credit Agreement, Tulp 24.1 had an $18.0 million term loan funded. The Credit Agreement also contains a $6.0 million revolving credit facility, which may be used by Tulp 24.1 for general business purposes and working capital.
To finance the Bloomia acquisition, the Company entered into the Credit Agreement, together with Tulp 24.1 as the borrower. Under the terms of the Credit Agreement, Tulp 24.1 had an $18,000,000 term loan funded. The Credit Agreement also contains a $6,000,000 revolving credit facility, which may be used by Tulp 24.1 for general business purposes and working capital.
Promissory Notes As part of the financing of the Bloomia acquisition, Tulp 24.1 entered into notes payable with the sellers. Notes payable for $12.8 million have a term of five years, subject to requiring principal payments based on “excess cash flow” as defined. Interest is at 8% per annum in the first year and increases annually by 2 percentage points.
Notes payable for $12,750,000 have a term of five years, subject to requiring principal payments based on “excess cash flow” as defined. Interest is at 8% per annum in the first year and increases annually by 2 percentage points. Notes payable for $2,700,000 were paid in full as of June 30, 2024.
If we are unable to raise additional funds when needed we may not be able to grow our businesses, or complete transactions related to the strategy. Credit Agreement To finance the Bloomia acquisition, the Company entered into the Credit Agreement, together with Tulp 24.1 as the borrower.
If we are unable to raise additional funds when needed, we may not be able to grow our businesses or complete transactions related to the strategy.
Our actual results could differ materially from those in such forward-looking statements as a result of many factors, including those discussed in “Cautionary Statement Regarding Forward-Looking Statements” and elsewhere in this report. 18 Table of Contents Overview The Company has evolved into a specialty agricultural and finance company focused on making and managing its agricultural investments in the United States and internationally.
Our actual results could differ materially from those in such forward-looking statements as a result of many factors, including those discussed in “Cautionary Statement Regarding Forward-Looking Statements” and elsewhere, in this report.
The credit facility described below contains ongoing financial covenants that the Company is required to meet. 21 Table of Contents As the Company grows its businesses, we may be required to obtain additional capital through equity offerings or additional debt financings.
As the Company grows its businesses, we may be required to obtain additional capital through equity offerings or additional debt financings.
Bloomia was founded in the Netherlands and is now strategically positioned in the United States, Netherlands, South Africa and Chile. Bloomia has relationships with prominent U.S. mass market retailers. The Company acquired Bloomia for $47.5 million. The acquisition resulted in significantly leveraging the Company’s balance sheet.
Bloomia was founded in the Netherlands and is now strategically positioned in the United States, Netherlands, South Africa and Chile. Bloomia has relationships with prominent U.S. mass market retailers and has grown its customer base year over year. The Company acquired Bloomia for total consideration of $53,360,000.
For the year ended December 31, 2023, the Company recorded a gain from the sale of discontinued operations before tax of $3,044,000 from the sale of its In-Store Marketing Business.
Income from discontinued operations, net of tax, for the year ended December 31, 2023 reflects results from operations from the legacy In-store Marketing Business and the $2,961,000 gain from the sale of that business.
The obligations under the Credit Agreement are secured by substantially all of the personal property assets of Tulp 24.1 and its subsidiaries. The Company provided an unsecured guaranty of the obligations of Tulp 24.1 under the Credit Agreement.
The Company provided an unsecured guaranty of the obligations of Tulp 24.1 under the Amended Credit Agreement.
For the year ended December 31, 2023, the Company recorded income tax expense on continuing operations of $20,000, compared to income tax expense on continuing operations of $6,000 for the year ended December 31, 2022. The effective tax rate on continuing operations was (0.7)% and (0.3)% for the years ended December 31, 2023 and 2022, respectively.
For the year ended December 31, 2024, the Company recorded an income tax benefit of $2,329,000, with a corresponding effective tax rate of 25.2%, on loss from continuing operations. For the year ended December 31, 2023, the Company recorded income tax expense of $20,000, with a corresponding effective tax rate of (0.7)%, on loss from continuing operations.
We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results of our analysis form the basis for making assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources.
The results of our analysis form the basis for making assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and the impact of such differences may be material to our financial statements.
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%. In addition to paying interest on the outstanding principal under the Credit Agreement, Tulp 24.1 is required to pay a commitment fee of 0.50% on the unutilized commitments under the revolving credit facility.
In addition to paying interest on the outstanding principal under the Credit Agreement, Tulp 24.1 is required to pay a commitment fee of 0.50% on the unutilized commitments under the revolving credit facility. 23 Table of Contents The term loans are scheduled to be repaid in quarterly installments of $450,000, commencing on June 30, 2024.
The words “anticipate,” “believe,” “could,” “estimate,” “expect,” “future,” “intend,” “likely,” “may,” “plan,” “project,” “will” and similar expressions identify 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,” “intend,” “likely,” “may,” “plan,” “project,” “will” and similar expressions identify forward-looking statements.
Net cash used in financing activities during the year ended December 31, 2023 was $473,000, 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. On February 22, 2024, the Company acquired majority ownership in Bloomia for $47.5 million.
Net cash provided by financing activities during the year ended December 31, 2024 was $24,882,000, which primarily related to proceeds received from issuance of the Credit Agreement used to fund the acquisition of a majority interest in Bloomia. On February 22, 2024, the Company acquired majority ownership in Bloomia for a total purchase price of $53,360,000.
With the Company’s decision to allocate capital to the Bloomia acquisition, capital available for the lending business will be significantly constrained in the near term.
The Company met with a number of prospects for loan originations and/or purchases and deals were negotiated, but none reached execution. With the Company’s decision to allocate capital to the Bloomia acquisition, significantly less capital was available for the lending business in the near-term.
On December 31, 2023, working capital (current assets less current liabilities) was $15,525,000, compared to $13,379,000 at December 31, 2022. During the year ended December 31, 2023, cash, cash equivalents and restricted cash increased $1,553,000 from $14,524,000 at December 31, 2022, to $16,077,000 at December 31, 2023. Operating Activities.
During the year ended December 31, 2024, cash and cash equivalents decreased $14,318,000 from $16,077,000 at December 31, 2023 to $1,759,000 at December 31, 2024. Operating Activities of Continuing Operations . Net cash used in operating activities during the year ended December 31, 2024 was $4,120,000.
The term loans will be repaid in quarterly installments of $450,000, commencing on June 30, 2024. The remaining outstanding balance will be repaid in full after five years. The scheduled maturity of the revolving facility is February 20, 2029.
The remaining outstanding balance will be repaid in full after five years. The scheduled maturity of the revolving facility is February 20, 2029. The obligations under the Amended Credit Agreement are secured by substantially all of the personal property assets of Tulp 24.1 and its subsidiaries.
All prior periods presented have been restated to present the In-Store Marketing Business as discontinued operations. Related to change in strategy of the Company, on August 4, 2023, we changed our name from “Insignia Systems, Inc.” and reincorporated from Minnesota to Delaware.
All prior periods presented have been restated to also present the In-Store Marketing Business as discontinued operations. In April 2023, the Company began the development of a non-bank lending business, through the hiring of a Senior Vice President of Lending, who later became our Chief Executive Officer.
As part of the name change, our common stock now trades under the symbol “LDWY” on The Nasdaq Stock Market LLC. Bloomia Business On February 22, 2024, the Company acquired majority ownership in Bloomia B.V. and its subsidiaries (“Bloomia”). Bloomia produces and sells fresh cut tulips.
Company Overview The Company is a specialty agricultural company focused on making and managing its agricultural investments in the United States and internationally. 19 Table of Contents On February 22, 2024, the Company acquired majority ownership in Bloomia. Bloomia produces and sells fresh cut tulips.
Removed
During the past twelve months, the Company took three major steps in this evolution. In April 2023, the Company launched its lending business, through the hiring of a Senior Vice President of Lending with over 20 years of experience in credit and lending.
Added
Consideration was comprised of $34,919,000 of cash paid, $15,451,000 of seller bridge loans in lieu of cash, and $2,990,000 of equity issued of Bloomia which is reflected as noncontrolling interest within these consolidated financial statements. The acquisition was funded through a combination of debt and cash on hand.
Removed
The Company is seeking to build 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 3, 2023, the Company completed the sale of its In-Store Marketing Business. The operations of the In-Store Marketing Business are presented as discontinued operations.
Added
The tulip sales business tends to be seasonal with spring being the strongest sales season. Accounts receivable and inventory balances are at their lowest levels in the summer following the strong spring sales season. Inventory balances peak prior to the spring season.
Removed
The acquisition price was paid with $9.2 million of the Company’s cash, $22.8 million of proceeds from a new credit facility, and notes payable of $15.5 million to the sellers. The new credit facility contains financial covenants that the Company is required to meet. See description of the credit facility below.
Added
Former Businesses In August 2023, the Company completed the sale of its In-Store Marketing Business for gross proceeds of $3,500,000 (See Note 4 in the consolidated financial statements appearing in Part II, Item 8 of this Annual Report on Form 10-K). The operations of the In-Store Marketing Business are presented as discontinued operations.
Removed
Non-Bank Lending Business While the Company’s primary near-term focus will be on the Bloomia business, the Company plans to continue 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”).
Added
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.
Removed
In April 2023, we launched our Lending Business, through the hiring of Randy Uglem as Senior Vice President of Lending, now CEO, 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.
Added
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.
Removed
We expect to expand our product offerings over time as we identify needs and opportunities in the marketplace for loans generally.
Added
Because the non-bank lending business remained in development, this change did not have a significant impact on the Company’s operations or financial results. 20 Table of Contents Results of Operations The following table sets forth, for the periods indicated, certain items in our consolidated statements of operations as a percentage of total net revenue. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ Increase (decrease) from 2023 to 2024 ​ 2024 2023 Amount Percent Revenue, net ​ $ 37,773,000 ​ $ — ​ $ 37,773,000 ​ — % Cost of goods sold ​ 31,264,000 ​ — ​ 31,264,000 ​ — ​ Gross profit ​ 6,509,000 ​ — ​ 6,509,000 ​ — ​ Gross profit as a percent of revenue ​ 17.2 % NA ​ ​ ​ ​ ​ Sales, general and administrative expenses ​ 13,226,000 ​ 3,519,000 ​ 9,707,000 ​ 276 ​ Operating loss ​ (6,717,000) ​ (3,519,000) ​ (3,198,000) ​ 91 ​ Operating loss as a percent of revenue ​ (17.8) % NA ​ ​ ​ ​ ​ Foreign exchange difference, net ​ (400,000) ​ — ​ (400,000) ​ — ​ Interest expense (income), net ​ 2,969,000 ​ (518,000) ​ 3,487,000 ​ NA ​ Other income, net ​ (56,000) ​ — ​ (56,000) ​ — ​ Loss from continuing operations before income taxes ​ (9,230,000) ​ (3,001,000) ​ (6,229,000) ​ 208 ​ Income tax (benefit) expense ​ (2,329,000) ​ 20,000 ​ (2,349,000) ​ NA ​ Net loss from continuing operations ​ (6,901,000) ​ (3,021,000) ​ (3,880,000) ​ 128 ​ Income from discontinued operations, net of tax ​ 224,000 ​ 5,435,000 ​ (5,211,000) ​ (96) ​ Net (loss) income including noncontrolling interest ​ (6,677,000) ​ 2,414,000 ​ (9,091,000) ​ (377) ​ Less: Net loss attributable to noncontrolling interest ​ (934,000) ​ — ​ (934,000) ​ — ​ Net (loss) income attributable to Lendway, Inc. ​ $ (5,743,000) ​ $ 2,414,000 ​ $ (8,157,000) ​ (338) % ​ Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Revenue, Net.
Removed
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.
Added
Revenue, net for the year ended December 31, 2024 was $37,773,000, all of which were generated from Bloomia for the period from its acquisition on February 22, 2024 (“the acquisition date”) through December 31, 2024 (the “acquisition period”).
Removed
We are building our strategy and long-term growth initiatives through development of customized niche products to support identified customer needs and opportunities in the marketplace, and effective funding structures to maximize returns. The Company met with a number of prospects for loan originations and/or purchases since the start of the lending business. Deals were negotiated, but ultimately did not close.
Added
The first and second calendar quarters are normally the strongest sales quarters for Bloomia with the first calendar quarter benefiting from Valentine’s Day, Easter season and the start of the Spring season. Revenue in fiscal year 2023 is included in discontinued operations. Gross Profit.
Removed
Accordingly, we anticipate minimal revenue and operating losses from the lending business during the remainder of 2024. 19 Table of Contents Sale of In-Store Marketing Business On August 3, 2023, we completed the sale of our former In-Store Marketing Business for a sale price of $3.5 million to TIMIBO LLC, an affiliate of Park Printing, Inc.
Added
Gross profit for the year ended December 31, 2024 was $6,509,000 or 17.2% as a percentage of revenue. Cost of goods sold includes rent for the facilities production facility and depreciation related to production. The one-time amortization charge related to inventory written up to fair value upon acquisition was $1,522,000 for the year ended December 31, 2024.
Removed
(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.
Added
Gross margin percentage has historically been higher in the first and second quarters since sales are typically higher and allow better leverage of fixed costs in costs of goods sold. Gross profit for the year ended December 31, 2023, was zero as revenue and costs are included in discontinued operations. Operating Expenses Sales, general and administrative.
Removed
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.
Added
Sales, general and administrative expenses for the year ended December 31, 2024 were $13,226,000 compared to $3,519,000 for the year ended December 31, 2023. The increase was primarily due to the acquisition of Bloomia. Fiscal year 2024 includes $1,542,000 of acquisition costs and $1,335,000 of integration related costs. 21 Table of Contents Interest Expense and Income.
Removed
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.
Added
Interest expense, net, for the year ended December 31, 2024, was $2,969,000 compared to interest income of $518,000 for the year ended December 31, 2023. In connection with the Bloomia acquisition, the Company began incurring interest expenses starting February 21, 2024. The Company did not have debt in the prior year.
Removed
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.
Added
The Company has not hedged the risk of its interest expense. If the Term SOFR reference rate increases, the Company’s interest expense on its term loan and revolving credit facility will increase. Income Taxes.
Removed
The sum of transaction-related severance, retention awards and bonuses were $1,923,000, of which $974,000 was recorded in continuing operations and $949,000 was recorded in discontinued operations in 2023. Results of Operations The following table sets forth, for the periods indicated, certain items from our continuing operations in our consolidated statements of operations and the percentage change year-over-year.
Added
During the first quarter of 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.
Removed
The Company had no revenue from continuing operations subsequent to the sale of the In-Store Marketing Business.
Added
See Note 13 to the consolidated financial statements appearing in Part II, Item 8 of this Annual Report on Form 10-K. Income from Discontinued Operations, Net of Tax. For the year ended December 31, 2024, income from discontinued operations is a result of the reduction in the accrual for sales tax due to the expiration of the statute of limitations.
Removed
Year Ended December 31, Increase (decrease) from 2022 to 2023 2023 2022 Amount Percent Operating expenses: Sales and marketing $ 196,000 $ - $ 196,000 100.0 % General and administrative 3,323,000 2,442,000 881,000 36.1 % Total operating expenses 3,519,000 2,442,000 1,077,000 44.1 % Operating loss (3,519,000 ) (2,442,000 ) (1,077,000 ) 44.1 % Interest income 518,000 154,000 364,000 236.4 % Loss from continuing operations before income taxes (3,001,000 ) (2,288,000 ) (713,000 ) 31.2 % Income tax expense 20,000 6,000 14,000 233.3 % Net loss from continuing operations (3,021,000 ) (2,294,000 ) (727,000 ) 31.7 % Income from discontinued operations, net of tax 2,474,000 12,340,000 (9,866,000 ) -80.0 % Gain from sale of discontinued operations, net of tax 2,961,000 - 2,961,000 100.0 % Net income $ 2,414,000 $ 10,046,000 $ (7,632,000 ) -76.0 % Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Operating Expenses Sales and Marketing.
Added
The 18.6% noncontrolling interest in Tulp 24.1’s loss for the acquisition period was $934,000 for the year ended December 31, 2024. Non-GAAP Financial Measures This report includes EBITDA which is a “non-GAAP financial measure.” EBITDA is defined as net income before interest expense, provision for income taxes, and depreciation and amortization expense.
Removed
Sales and marketing expenses for the year ended December 31, 2023 were $196,000, consisting of a portion of our CEO’s compensation, as well as travel and entertainment, website and public relations costs. There was no comparable expense for the year ended December 31, 2022. General and Administrative.
Added
This non-GAAP financial measure, which is not calculated or presented in accordance with U.S. generally accepted accounting principles (“GAAP”), has been provided as information supplemental and in addition to the financial measures presented in accordance with GAAP.
Removed
General and administrative expenses for the year ended December 31, 2023 increased 36.1% to $3,323,000, compared to $2,442,000 for the year ended December 31, 2022.
Added
This non-GAAP financial measure is not a substitute for, or as an alternative to, and should be considered in conjunction with, respective GAAP financial measures. The non-GAAP financial measure presented may differ from similarly named measures used by other companies.
Removed
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, 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 year ended December 31, 2022. Interest Income.
Added
We believe this non-GAAP financial measure will be useful to permit investors to evaluate the business consistent with how management evaluates the business. Our EBITDA excludes amounts from net loss from discontinued operations that we do not consider part of our core operating results when assessing our performance.
Removed
Interest income for the year ended December 31, 2023 was $518,000 compared to interest income of $154,000 for the year ended December 31, 2022. Interest income in 2023 increased over 2022 primarily due to higher invested balances in short-term treasury bills and interest-bearing savings, and the higher interest rates available on the investments.
Added
Management has used EBITDA (a) to evaluate our historical and prospective financial performance and trends as well as our performance relative to competitors and peers; (b) to measure operational profitability on a consistent basis; (c) in presentations to the members of our Board of Directors; and (d) to evaluate compliance with covenants and restricted activities under the terms of our Credit Agreement. 22 Table of Contents Included below is a reconciliation of EBITDA to net loss from continuing operations, the most directly comparable GAAP measure. ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2024 2023 Net loss from continuing operations ​ $ (6,901,000) ​ $ (3,021,000) Interest expense (income), net ​ 2,969,000 ​ (518,000) Income tax (benefit) expense ​ (2,329,000) ​ 20,000 Depreciation and amortization ​ 2,641,000 ​ 7,000 EBITDA ​ $ (3,620,000) ​ $ (3,512,000) ​ Liquidity and Capital Resources ​ The Company has financed its operations with proceeds from the sale of its In-Store Marketing Business and sales of its products, in addition to a significant payment resulting from the settlement of litigation.
Removed
The higher invested balances were primarily due to the net proceeds from litigation of $12 million received in July 2022, proceeds related to the sale of the In-Store Marketing Business, and collection of accounts receivable. 20 Table of Contents Income Taxes.
Added
To aid in funding the Bloomia acquisition, Tulp 24.1 entered a Credit Agreement that provided an $18,000,000 term loan and a revolver with borrowings of up to $6,000,000. At December 31, 2024, the Company’s working capital (defined as current assets less current liabilities) was $11,026,000 compared to $15,525,000 at December 31, 2023.
Removed
The primary differences between the Company’s 2023 and 2022 effective tax rates and the statutory federal rates include state taxes and an increase in the Company’s valuation allowance against its deferred assets.
Added
Cash from operations is greatest in the first half of the year due to the seasonality of the Bloomia business. The Company used approximately $12,200,000 in cash in the period to purchase tulip bulbs. Investing Activities of Continuing Operations .
Removed
The effective tax rate fluctuates between periods based on the level of permanent differences and other discrete items relative to the level of pre-tax income or loss for the period. Net Loss from Continuing Operations.
Added
Net cash used in investing activities during the year ended December 31, 2024 was $35,148,000, which primarily related to the purchase price and other expenses resulting from the acquisition of Bloomia. Net cash used in investing activities also includes cash received from a note receivable, partially offset by cash paid for purchases of property and equipment. Financing Activities .
Removed
For the reasons stated above, net loss from continuing operations for the year ended December 31, 2023 was $3,021,000, compared to loss of $2,294,000 for the year ended December 31, 2022. Income from Discontinued Operations, Net of Tax and Gain from Sale of Discontinued Operations, Net of Tax.
Added
Consideration comprised of $34,919,000 of cash paid, $15,451,000 of seller bridge loans in lieu of cash, and $2,990,000 of equity issued of Tulp 24.1 which is reflected as noncontrolling interest within these consolidated financial statements. The acquisition was funded through a combination of debt and cash on hand.

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