Filing summary
Filing and period mismatch: The supplied filing is Lendway, Inc.’s Form 10-K for the fiscal year ended December 31, 2023, filed April 1, 2024. It is not a filing identified as Bloomia Holdings, Inc. or a 2022 Q4 report. Bloomia was acquired on February 22, 2024, after the reported year-end, so its results are not included in Lendway’s 2023 consolidated results.
Business context and reporting period
Lendway changed its name from Insignia Systems, Inc. and reincorporated in Delaware in August 2023; its stock trades as LDWY. It sold its legacy in-store marketing business on August 3, 2023, and launched a non-bank lending business in April 2023. The February 2024 Bloomia acquisition shifted the company’s near-term focus to specialty agriculture. Lendway owns 81.4% of the acquisition entity; Bloomia’s CEO owns the remaining 18.6%.
Key financial metrics
| Metric | 2023 | 2022 |
|---|---|---|
| Continuing-operations revenue | No revenue after the in-store marketing sale | No revenue reported in continuing operations |
| Discontinued-operations revenue | $21.078 million | $18.800 million |
| Discontinued-operations gross profit | $4.991 million | $3.301 million |
| Operating loss from continuing operations | $(3.519) million | $(2.442) million |
| Net loss from continuing operations | $(3.021) million | $(2.294) million |
| Net income | $2.414 million | $10.046 million |
| Cash and cash equivalents at year-end | $16.077 million | $14.439 million |
| Working capital at year-end | $15.525 million | $13.379 million |
| Cash flow from continuing operations | $(2.905) million | $(2.837) million |
| Total cash flow from operating activities | $0.518 million | $10.663 million |
At December 31, 2023, the balance sheet showed no borrowing debt; the Bloomia acquisition financing was arranged after year-end. The acquisition price was $47.5 million, funded with $9.2 million of Lendway cash, $22.8 million of credit-facility proceeds and $15.5 million of seller notes. The facility includes an $18 million funded term loan and a $6 million revolving facility. Term-loan interest is one-month Term SOFR plus 3.0%; quarterly principal installments of $450,000 begin June 30, 2024.
Bloomia’s unaudited standalone sales were approximately $45 million in 2023 and $43 million in 2022. These are not Lendway’s reported consolidated revenue for those years.
Changes versus the prior comparable period
- Net income declined to $2.414 million from $10.046 million, largely reflecting the absence of the $12 million 2022 litigation-settlement gain in discontinued operations. In 2023, Lendway recorded a $3.044 million pretax gain on the sale of the in-store marketing business.
- Continuing-operations net loss widened by $727,000, to $3.021 million. General and administrative expense rose 36.1% to $3.323 million, primarily including $926,000 of severance and separation costs related to the former CEO.
- Discontinued-operations revenue increased to $21.078 million from $18.800 million, and gross profit rose to $4.991 million from $3.301 million. These figures relate to the divested business, not Bloomia.
- Cash and cash equivalents increased $1.638 million year over year; total cash, cash equivalents and restricted cash increased $1.553 million.
Outlook, risks and unusual items
- Management expects minimal Lending Business revenue and operating losses during the remainder of 2024, citing limited available capital after the Bloomia acquisition and failure of previously negotiated loan transactions to close.
- Management said the new credit facility, cash and expected operating cash flows should support liquidity for at least 12 months, subject to meeting financial covenants. Covenants include a minimum fixed-charge coverage ratio of 1.25:1 and maximum senior cash-flow leverage limits. Bloomia generally cannot distribute cash to Lendway, though it may pay a $60,000 monthly management fee.
- Bloomia has material customer concentration: three U.S. customers accounted for 37.7%, 16.2% and 10.4% of its U.S. revenue in 2023; the filing also states that three customers represented approximately 64.3% of Bloomia revenue. The filing reports no long-term purchase commitments.
- Other significant risks include floating-rate debt, acquisition integration, access to capital, currency exposure, seasonal demand, energy and water costs, agricultural disease and bulb quality, and transportation disruptions. Bloomia wrote off $900,000 of bulb inventory in June 2023 due to quality issues.
- Bloomia’s purchase accounting was incomplete at filing; Lendway could not provide acquired asset and liability valuations or pro forma net earnings. The stated approximately $45 million of pro forma sales is not necessarily indicative of future results.
- The company reported effective disclosure controls and internal control over financial reporting as of December 31, 2023. The auditor did not attest to internal-control effectiveness; management intends to exclude Bloomia from its control assessment for one year after acquisition.
Important facts for investors to verify
- Confirm the issuer and period: this is Lendway’s 2023 Form 10-K, not a Bloomia Holdings 2022 Q4 filing.
- Review the completed purchase-price allocation, goodwill and intangible-asset valuations, and Bloomia’s post-acquisition financial results when disclosed.
- Monitor covenant compliance, debt service, cash available to the parent, and any use of the $6 million revolver.
- Assess whether Bloomia can retain its concentrated retail customers and manage bulb quality, seasonal working-capital needs and operating costs.
- Track whether the lending business can close loans and obtain funding without impairing liquidity or requiring dilutive capital raises.