Lendway, Inc. Announces Fourth Quarter And Full Year 2023 Financial Results
- Lendway evolved into a specialty agriculture and finance company with a focus on agricultural investments.
- Acquired Bloomia B.V., a leading tulip producer in the US, for $47.5 million.
- Bloomia's net sales for 2023 were $45.0 million, showcasing growth.
- Lendway faced challenges in closing deals for the non-bank lending business due to resource constraints.
- Operating expenses for continuing operations were $536,000 and $3,519,000 for Q4 and full year 2023.
- Reported income from discontinued operations of $2,474,000 in 2023, down from $12,340,000 in 2022.
- Cash and cash equivalents of $16,077,000 at the end of 2023, used for the Bloomia acquisition.
- Challenges in closing deals for the non-bank lending business due to resource constraints.
- Anticipated minimal revenue and operating losses from the lending business in 2024.
- Income from discontinued operations decreased significantly from 2022 to 2023.
- Capital constraints impacting opportunities for the non-bank lending business.
Insights
The strategic shift of Lendway, Inc. towards specialty agriculture and non-bank lending is a significant pivot from its legacy in-store advertising business. The divestiture of the latter and the acquisition of Bloomia B.V. represent a substantial reallocation of resources and a potential redirection of the company's growth trajectory. The reported preliminary net sales figures for Bloomia suggest a steady revenue stream, but investors should consider the impact of the conversion from Dutch GAAP to U.S. GAAP on reported financials, which could affect comparability and perceived performance.
The commitment to a non-bank lending business, while currently constrained by capital and management resources, indicates a diversification strategy that may offer long-term benefits. However, the admission of stalled loan origination and purchase deals in 2023 casts some uncertainty on the immediate potential of this segment. The financial results, with a significant decrease in income from discontinued operations year-over-year, highlight the transitional phase of the company and the possible volatility of future earnings.
Finally, the financial position post-acquisition, with a notable reduction in cash and cash equivalents due to the Bloomia purchase, raises questions about financial leverage and liquidity. The mix of cash, borrowing and promissory notes to fund the acquisition demonstrates a leveraged buyout strategy, which could carry higher financial risk, especially if the new ventures do not generate expected returns.
The legal complexities of Lendway's transformation are noteworthy. The rebranding and reincorporation from Minnesota to Delaware likely offer strategic advantages, such as a more business-friendly legal environment and potentially favorable tax implications. The sale of the In-Store Marketing Business and the subsequent treatment of its operations as discontinued are standard practices in corporate restructuring, aimed at providing a clearer picture of continuing operations to investors.
Moreover, the acquisition of Bloomia involves a multi-faceted financing structure, including cash, debt and promissory notes. This structure suggests a nuanced negotiation with the sellers, balancing immediate cash payouts with future obligations. The legal intricacies of such agreements and the potential for contingent liabilities should be carefully assessed by stakeholders.
Investors should also be attentive to the forthcoming amendment to the initial current report on Form 8-K, which will provide more detailed financial information on Bloomia's operations. This report will be critical in evaluating the legal and financial due diligence performed during the acquisition and its alignment with Lendway's strategic objectives.
The acquisition of Bloomia positions Lendway within the specialty agriculture sector, specifically in the fresh cut tulips market. This market is niche but can be lucrative, especially if Bloomia's strategic investments in automation enhance operational efficiency and product quality. The stated increase in net sales year-over-year is a positive indicator, but the actual impact on the bottom line will depend on how well Bloomia manages costs and scales operations under Lendway's ownership.
It's also important to consider the seasonal nature of the tulip market and how that might affect sales and cash flows throughout the year. The company's ability to navigate these cycles and maintain a consistent supply to retail stores will be critical. Additionally, the agricultural sector is subject to external factors such as climate change, trade policies and consumer trends, all of which could impact Bloomia's performance.
Investors should monitor how Lendway integrates Bloomia's operations and whether it can leverage its expertise in non-bank lending to provide financing solutions within the agricultural sector, potentially creating synergies between its two primary business segments.
MINNEAPOLIS, MN / ACCESSWIRE / April 1, 2024 / Lendway, Inc. (NASDAQ:LDWY) ("Lendway" or "Company") today announced financial results for the fourth quarter ("Q4") and the full year ended December 31, 2023 as well as an update on its transformation into a specialty agriculture ("ag") and non-bank lending business ("lending business").
Strategic Business Operations Update
The Company has strategically evolved over the past 12 months into a specialty agricultural and finance company with an operational focus on its agricultural investments. These developments include:
- April 2023: The Company launched its lending business through the hiring of Randy Uglem, as Senior Vice President of Lending with over 20 years of experience in credit and lending. The Company is building a scalable non-bank lending business (the "Lending Business") to purchase existing loans or originate and fund new loans, all of which will be secured by collateral.
- August 2023: The Company completed the sale of certain assets and certain liabilities relating to the Company's legacy business of providing in-store advertising solutions to brands, retailers, shopper marketing agencies and brokerages (the "In-Store Marketing Business"). The operations of the In-Store Marketing Business are presented as discontinued operations. All prior periods presented have been restated to present the In-Store Marketing Business as discontinued operations. Additionally, the Company changed its name from "Insignia Systems, Inc." and reincorporated from Minnesota to Delaware. As part of the name change, the Company's common stock trades under the symbol "LDWY" on The Nasdaq Stock Market LLC.
- February 2024: The Company became a majority owner of Bloomia B.V. and its affiliated entities ("Bloomia"), representing one of the largest producers of fresh cut tulips in the United States.
Lendway CEO Randy Uglem, said: "Overall, we are pleased with the significant strides in our journey to evolve into a dynamic specialty ag and finance enterprise. The addition of Bloomia to the Lendway family marks a pivotal moment in our growth trajectory, and we are fully committed to ensuring a seamless transition. In the short term, our top priority remains the successful integration of Bloomia. Our unwavering focus on delivering value to our stockholders remains."
Specialty Ag Business Update
As previously announced, Lendway acquired a majority ownership interest in Bloomia B.V. (www.bloomia.com), one of the largest producers of fresh cut tulips in the United States for a purchase price of
We are in the process of converting Bloomia's historical financials from Dutch Generally Accepted Accounting Principles (GAAP) to U.S. GAAP, and preparing pro forma financial statements. These financial statements and pro forma financial statements will be included in an amendment to our initial current report on Form 8-K that is due to be filed by early May.
Based on preliminary unaudited information, net sales of Bloomia for the twelve months ended December 31, 2023 and 2022 were approximately
Bloomia CEO, Werner Jansen, said: "The first calendar quarter in 2024 has kicked off with robust momentum. Our strategic investments in automation have yielded tangible results and underscore the value of our commitment to technological advancement and operational efficiency. Our consistent pursuit of excellence has transformed our operations, enhancing the quality, productivity, and efficiency of operations. With a solid foundation in place and a team committed to excellence, we are poised to drive continued success for Bloomia."
Non-Bank Lending Business Update
We remain committed to building a scalable non-bank lending business. We met with a number of prospects for loan originations and/or purchases in 2023. Deals were negotiated, but ultimately did not close. The decision to allocate capital to the Bloomia acquisition and operations, however, constrains capital and management resources available for growing the non-bank lending business in the near term.
Financial Results
The operations of the in-store marketing business that was sold in August 2023 is presented as discontinued operations. Operating expenses for continuing operations, which consisted of the lending business, were
As a result of the Company's decision to capitalize on the opportunity to acquire the Bloomia business and support its operations, we anticipate that capital available for lending 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.
We reported income from discontinued operations, net of tax, of
At December 31, 2023, Lendway had cash and cash equivalents of
About Lendway, Inc.
Lendway, Inc (Nasdaq: LDWY) is a specialty ag and finance company focused on making and managing its ag investments in the U.S. and internationally. The Company 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 also the majority owner of Bloomia, one of the largest producers of fresh cut tulips in the United States. For additional information, contact (800) 874-4648, or visit our website at www.lendway.com. Investor inquiries can be submitted to info@lendway.com.
Cautionary Statement Regarding Forward-Looking Statements
Statements in this press release 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 words "anticipate," "continue," "ensure," "expect," "plan," "remain," "seek," "will" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these or any forward-looking statements, which speak only as of the date of this press release. Statements made in this press release regarding, for instance, the short- and long-term benefits of the Bloomia acquisition, potential growth, allocations of capital resources among our businesses, and timing of future financial reporting, are forward-looking statements. These forward-looking statements are based on current information, which we have assessed and which by its nature is dynamic and subject to rapid and even abrupt changes. 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. Forward-looking statements involve known and unknown risks, uncertainties and other factors, including those set forth in our Annual Report on Form 10-K for the year ended December 31, 2023 and additional risks, identified in 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 Lendway's filings with the SEC. Lendway assumes no responsibility to update the forward-looking statements contained in this press release or the reasons why actual results would differ from those anticipated in any such forward-looking statement, other than as required by law.
Contact:
Lendway, Inc.
Randy Uglem, CEO
(763) 392-6200
| Lendway, Inc. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) | ||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing | $ | 62,000 | $ | - | $ | 196,000 | $ | - | ||||||||
General and administrative | 474,000 | 779,000 | 3,323,000 | 2,442,000 | ||||||||||||
Operating loss | (536,000 | ) | (779,000 | ) | (3,519,000 | ) | (2,442,000 | ) | ||||||||
Interest income | 193,000 | 99,000 | 518,000 | 154,000 | ||||||||||||
Loss from continuing operations before income taxes | (343,000 | ) | (680,000 | ) | (3,001,000 | ) | (2,288,000 | ) | ||||||||
Income tax expense | 24,000 | 1,000 | 20,000 | 6,000 | ||||||||||||
Net Loss from continuing operations | (367,000 | ) | (681,000 | ) | (3,021,000 | ) | (2,294,000 | ) | ||||||||
Income (loss) from discontinued operations, net of tax | 52,000 | (52,000 | ) | 2,474,000 | 12,340,000 | |||||||||||
Gain (loss) from sale of discontinued operations, net of tax | (9,000 | ) | - | 2,961,000 | - | |||||||||||
Net (loss) income | $ | (324,000 | ) | $ | (733,000 | ) | $ | 2,414,000 | $ | 10,046,000 | ||||||
Net (loss) income per basic and diluted share: | ||||||||||||||||
Continuing operations | $ | (0.21 | ) | $ | (0.38 | ) | $ | (1.70 | ) | $ | (1.28 | ) | ||||
Discontinued operations | 0.02 | (0.03 | ) | 3.06 | 6.89 | |||||||||||
Basic and diluted earnings per share | $ | (0.19 | ) | $ | (0.41 | ) | $ | 1.36 | $ | 5.61 | ||||||
Shares used in calculation of net (loss) income per share: | ||||||||||||||||
Basic and diluted | 1,744,000 | 1,797,000 | 1,781,000 | 1,791,000 | ||||||||||||
| SELECTED BALANCE SHEET DATA | |||||||
| December 31, | December 31, | ||||||
| 2023 | 2022 | ||||||
| Cash and cash equivalents and restricted cash | $ | 16,077,000 | $ | 14.524.000 | |||
Working capital | 15,525,000 | 13,379,000 | |||||
Total assets | 16,673,000 | 20,968,000 | |||||
Total liabilities | 1,141,000 | 7,567,000 | |||||
Stockholders' equity | 15,532,000 | 13,401,000 | |||||
Working capital represents current assets less current liabilities. | |||||||
SOURCE: Lendway, Inc.
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FAQ
What is Lendway, Inc.'s (LDWY) focus after transforming its business operations?
How much did Lendway pay to acquire Bloomia B.V.?
What were Bloomia's net sales for the twelve months ended December 31, 2023?
Why did Lendway face challenges in closing deals for the non-bank lending business?
What were the operating expenses for continuing operations in Q4 2023?
How did Lendway's income from discontinued operations change from 2022 to 2023?
What was the cash and cash equivalents balance at the end of 2023?
