LENDWAY, INC.

Previous wording

The following discussion should be read in conjunction with the Company’s condensed consolidated financial statements and related notes. This discussion contains forward-looking statements that involve risks and uncertainties. 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, including Part II, Item 1A, in this Quarterly Report on Form 10-Q and the “Risk Factors” described in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, our Current Reports on Form 8-K and our other SEC filings.

Current wording

The following discussion should be read in conjunction with the Company’s condensed consolidated financial statements and related notes. This discussion contains forward-looking statements that involve risks and uncertainties. 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, including Part II, Item 1A, in this Quarterly Report on Form 10-Q and the “Risk Factors” described in Part I, Item 1A, of our Annual Transition Report on Form 10-KT for the transition period ended June 30, 2025, our Current Reports on Form 8-K and our other SEC filings.

Previous wording

As previously reported, the Company’s Board of Directors has approved a change in the Company’s fiscal year end from December 31 to June 30 of each calendar year. As a result of the change, the Company intends to file a transition report on Form 10-K for the six-month transition period starting January 1, 2025 and ending June 30, 2025, which is the period between the closing of the Company’s most recent fiscal year on December 31, 2024 and the opening date of the Company’s newly selected fiscal year on July 1, 2025. During the transition period, the Company has elected to file a quarterly report on Form 10-Q for the quarter ending March 31, 2025, and then expects to file quarterly reports based on the new fiscal year beginning with the first fiscal quarter ending September 30, 2025.

Current wording

As previously reported, the Company’s Board of Directors approved a change in the Company’s fiscal year end from December 31 to June 30 of each calendar year. As a result, the three months ended September 30, 2025 represent the first quarter of fiscal year 2026.

Previous wording

On February 22, 2024 (the “Acquisition Date”), the Company acquired majority ownership in Bloomia B.V. and its subsidiaries (“Bloomia”). Bloomia produces and sells fresh-cut tulips.

Current wording

On February 22, 2024, the Company acquired majority ownership in Bloomia, which produces and sells fresh-cut tulips.

Previous wording

Bloomia operates greenhouses to hydroponically grow tulips at its United States and South Africa locations. The Company 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. Bulbs from the Southern Hemisphere are generally used from the end of August to early December, with the Northern Hemisphere bulbs used the remainder of the year.

Current wording

Bloomia operates greenhouses to hydroponically grow tulips at its United States and South Africa locations. The Company 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. Bulbs from the Southern Hemisphere are generally used from August to December, with the Northern Hemisphere bulbs used the remainder of the year.

Previous wording

In the United States, Bloomia has established business relationships with prominent retailers. A small number of mass-market retailers in the U.S. have historically accounted for more than 99% of Bloomia’s total annual sales. Bloomia aims to offer premium tulip stems, the result of sourcing larger bulbs, that have a longer shelf life than imported stems. 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.

Current wording

In the United States, Bloomia has established business relationships with prominent retailers. A small number of mass-market retailers in the U.S. have historically accounted for more than 99% of Bloomia’s total annual sales. Bloomia aims to offer premium tulip stems, the result of sourcing larger bulbs, that have a longer shelf life than imported stems. 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. Additionally, the Company pays less in tariffs importing bulbs versus fully grown stems.

Previous wording

In South Africa, Bloomia’s wholly owned subsidiary operates a greenhouse that has produced an average of approximately 3.5 million tulip stems per year over the last five years. The facility is capable of growing tulips hydroponically year-round and sells the majority of tulip stems to one retailer.

Current wording

In South Africa, Bloomia’s wholly owned subsidiary operates a greenhouse that has produced an average of approximately 3.5 million tulip stems per year over the last five years. The facility is capable of growing tulips hydroponically year-round and sells the majority of tulip stems to one large retailer.

Previous wording

The following table sets forth, for the periods indicated, certain items in our condensed consolidated statements of operations and comprehensive income (loss) as a percentage of total revenue, net.

Current wording

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

Previous wording

Sales, general and administrative. Sales, general and administrative expenses for the three months ended March 31, 2025 were $2,457,000 compared to $3,388,000 for the three months ended March 31, 2024. The decrease was primarily due to $1,542,000 of acquisition related costs in the prior year, partially offset by a full quarter of expense in fiscal year 2025 compared to fiscal year 2024.

Current wording

Sales, general and administrative. Sales, general and administrative expenses for the three months ended September 30, 2025 were $2,983,000 compared to $2,791,000 for the three months ended September 30, 2024. The increase was primarily due to the timing of payroll credits reducing general and administrative costs in the prior year and an increase in sales expenses, partially offset by executive transition costs in the prior year.

Previous wording

Income Taxes. For the three months ended March 31, 2025 and 2024, the Company recorded income tax expense of 20.2% and an income tax benefit of 18.9%, respectively, on income (loss) from continuing operations.

Current wording

Income Taxes. For the three months ended September 30, 2025 and 2024, the Company recorded income tax benefit of 17.6% and 33.5%, respectively. See Note 9 in the condensed consolidated financial statements.

Previous wording

Income from Discontinued Operations, Net of Tax. For the three months ended March 31, 2025 and 2024, income from discontinued operations of $10,000 and $72,000, respectively, is a result of the reduction in the accrual for sales tax due to the expiration of the statute of limitations.

Current wording

Income from Discontinued Operations, Net of Tax. For the three months ended September 30, 2024, income from discontinued operations of $66,000 is a result of the reduction in the accrual for sales tax due to the expiration of the statute of limitations. The Company does not expect income or loss from discontinued operations in fiscal year 2026.

Previous wording

Net income (loss) attributable to noncontrolling interest. The 18.6% noncontrolling interest in Tulp 24.1’s income was $178,000 for the three months ended March 31, 2025 compared to a loss of $251,000 for the three months ended March 31, 2024. The improvement is primarily due to the increase in gross margin and decrease in general and administrative expenses, partially offset by the increase in interest expense.

Current wording

Net loss attributable to noncontrolling interest. The 18.6% noncontrolling interest in Tulp 24.1’s loss was $511,000 for the three months ended September 30, 2025 compared to a loss of $267,000 for the three months ended September 30, 2024. The increase is primarily due to the higher operating loss.

Previous wording

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. This non-GAAP financial measure is not a substitute for, or as an alternative to, and should be considered in conjunction with, the respective GAAP financial measures. The non-GAAP financial measure presented may differ from similarly named measures used by other companies. 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 of income from discontinued operations that we do not consider part of our core operating results when assessing our performance. 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 consistently; (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.

Current wording

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. This non-GAAP financial measure is not a substitute for, or as an alternative to, and should be considered in conjunction with, the respective GAAP financial measures. The non-GAAP financial measure presented may differ from similarly named measures used by other companies. 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 of income from discontinued operations that we do not consider part of our core operating results when assessing our performance. 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 consistently; (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 Amended Credit Agreement.

Previous wording

Included below is a reconciliation of EBITDA to net income (loss) from continuing operations, the most directly comparable GAAP measure.

Current wording

Included below is a reconciliation of EBITDA to net loss from continuing operations, the most directly comparable GAAP measure.

Previous wording

The Company has financed its operations with proceeds from sales of its tulips, credit draws, and, to a lesser extent, the sale of its legacy business. The Company’s liquidity varied during the period. The majority of cash is collected in the first half of the calendar year, and the majority of payments, primarily to purchase tulip bulbs, occur in the second half of the calendar year. At March 31, 2025, the Company’s working capital (defined as current assets less current liabilities) was $6,274,000 compared to $11,026,000 at December 31, 2024. The decrease is due to sales providing cash to partially pay down debt. In the quarter, the Company repaid approximately $2,000,000 towards its revolving credit line and $150,000, net of the related party note.

Current wording

The Company has financed its operations with proceeds from sales of its tulips and credit draws. The Company’s liquidity varies during the year. The majority of cash is collected in the first half of the calendar year, and the majority of payments, primarily to purchase tulip bulbs, occur in the second half of the calendar year. At September 30, 2025, the Company’s working capital (defined as current assets less current liabilities) was $11,264,000 compared to $1,098,000 at June 30, 2025. The increase is due to the Company purchasing approximately $11,000,000 Dutch tulip bulbs in the quarter, of which $4,000,000 was financed through long-term notes. This increase is offset by lower accounts receivable due to lower sales due to seasonality.

Previous wording

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.

Current wording

On September 15, 2025, the Company, as parent guarantor, entered into a Second Amendment to the existing Credit Agreement dated February 20, 2024 and previously amended on October 16, 2024. Under the Credit Agreement, as amended (the “Credit Agreement”), among other things, the revolving facility capacity was temporarily increased from $6,000,000 to $10,000,000 and the definition of eligible inventory will continue to include inventory in the Netherlands, in each case until April 30, 2026. Additionally, the senior cash flow leverage ratio covenant levels were further revised. Commencing September 30, 2025, the interest rate for all loans under the facility will be based on a term SOFR rate for an interest period selected by the Company plus an applicable margin, with a range from 3.00% to 4.00% based on the Company’s cash flow leverage ratio. 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 and make distributions or pay dividends to the Company. 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 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. The Company expects to be in compliance with these financial covenants for at least the next twelve months.

Previous wording

The term loan is repaid in quarterly installments of $450,000, which began in June 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 March 2025 installment was paid on April 1, 2025 and is included in the current portion of long-term debt on the condensed consolidated balance sheet.

Current wording

The term loan is repaid in quarterly installments of $450,000, which began in June 2024. The remaining outstanding balance will be repaid in full after five years. The scheduled maturity of the revolving facility is February 20, 2029.

Previous wording

The obligations under the Amended 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 Amended Credit Agreement.

Current wording

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 also provided an unsecured guaranty of the obligations of Tulp 24.1.

Previous wording

As part of the financing of the Acquisition, Tulp 24.1 entered into notes payable with the sellers. 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.

Current wording

As part of the financing of the acquisition, Tulp 24.1 entered into notes payable with the sellers. 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.

Previous wording

On August 15, 2024, and as amended on September 27, 2024 and January 15, 2025, the Company entered into an unsecured Delayed Draw Term Note (the “Note”) with Air T Inc. (Air T) pursuant to which Air T has agreed to advance from time to time until August 15, 2026, but not on a revolving basis, up to $3.75 million to fund the Company’s operations. The Note remains scheduled to mature, and all principal and accrued but unpaid interest will become due on August 15, 2029, subject to Air T’s right to demand payment on or after February 15, 2026. Amounts outstanding under the Note bear interest at a fixed rate of 8.0%, which may be increased by 3.0% upon certain events of default, and is accrued and deferred until maturity.

Current wording

On August 15, 2024, and as amended on September 27, 2024 and January 15, 2025, the Company entered into an unsecured Delayed Draw Term Note (the “2024 Note”) with Air T pursuant to which Air T has agreed to advance from time to time until August 15, 2026, but not on a revolving basis, up to $3,750,000 to fund the Company’s operations. The 2024 Note remains scheduled to mature, and all principal and accrued but unpaid interest will become due on August 15, 2029, subject to Air T’s right to demand payment on or after February 15, 2026. Amounts outstanding under the 2024 Note bear interest at a fixed rate of 8.0%, which may be increased by 3.0% upon certain events of default, and is accrued and deferred until maturity. As of September 30, 2025, the balance due under this note was $2,150,000.

Previous wording

Air T beneficially owns greater than 10% of our outstanding Common Stock and is a member of a group of stockholders that collectively owns approximately 40% of our outstanding common stock. Additionally, our current director and Co-Chief Executive Officer, Mark R. Jundt, serves as General Counsel and Corporate Secretary of Air T, current director and Co-Chief Executive Officer, Daniel C. Philp, serves as Senior Vice President of Corporate development at Air T, and current director Nicholas J. Swenson serves as President and Chief Executive Officer of Air T and is himself a member of the stockholder group. The entry into the Note was approved in advance by the Audit Committee of our Board of Directors in accordance with our Related Person Transaction Approval Policy and by a vote of solely independent directors who have no relationship with Air T.

Current wording

Kohler is the Chief Investment Officer and Portfolio Manager of BCCM Advisors, LLC, which, according to a Schedule 13G filed with the SEC on October 15, 2025, beneficially owned approximately 8.9% of our outstanding Common Stock as of September 23, 2025. Air T beneficially owns greater than 10% of our outstanding Common Stock and is a member of a group of stockholders that collectively owns approximately 40% of our outstanding common stock. Additionally, our current director and Co-Chief Executive Officer, Mark R. Jundt, serves as General Counsel and Corporate Secretary of Air T, current director and Co-Chief Executive Officer, Daniel C. Philp, serves as Senior Vice President of Corporate development at Air T, and current director Nicholas J. Swenson serves as President and Chief Executive Officer of Air T and is himself a member of the stockholder group. The entry into the 2024 Note and 2025 Notes were approved in advance by the Audit Committee of our Board of Directors in accordance with our Related Person Transaction Approval Policy and by a vote of solely independent directors who have no relationship with Air T.

Previous wording

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 debt service requirements, capital expenditures and working capital for at least the next 12 months.

Current wording

The Company expects that cash from operations combined with funds available under the Credit Facility, the 2024 Note and the 2025 Notes will provide sufficient credit availability to support its ongoing operations, fund its debt service requirements, capital expenditures and working capital for at least the next 12 months.

Previous wording

A discussion of our critical accounting estimates is contained in our annual report on Form 10-K for the year ended December 31, 2024. There have been no changes to our critical accounting estimates from those disclosed on our Form 10-K for the year ended December 31, 2024.

Current wording

A discussion of our critical accounting estimates is contained in our Transition Report on Form 10-KT for the transition period ended June 30, 2025. There have been no changes to our critical accounting estimates from those disclosed on our Form 10-KT for the transition period ended June 30, 2025.

Previous wording

Certain statements made in this report 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. 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. 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. Readers are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the date the statement was made. These statements are subject to the risks and uncertainties that could cause actual results to differ materially and adversely from the 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.

Current wording

Certain statements made in this report 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. 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. 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 business. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. These statements are subject to the risks and uncertainties that could cause actual results to differ materially and adversely from the 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.

Previous wording

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 our Annual Report on Form 10-K, this and subsequent 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. 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.

Current wording

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 compete, (2) concentration of revenue among a small number of customers, (3) dependency on Dutch tulip bulbs, (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) our ability to generate enough cash or secure enough capital to execute our business plans, (10) our ability to obtain seasonal workers, (11) other economic, international, business, market, financial, competitive and/or regulatory factors affecting the Company’s businesses generally; (12) exchange rate fluctuations; (13) tariffs; 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 this report and additional risks, if any, identified in our Transition Report on Form 10-KT, this and subsequent 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. 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.