LENDWAY INC

Previous wording

The Company acquired Bloomia for $53,360,000. 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 condensed consolidated financial statements. The acquisition was funded through a combination of debt and cash on hand.

Current wording

The Company acquired Bloomia for total consideration of $53,360,000. 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 Tulp 24.1 which is reflected as noncontrolling interest within these condensed consolidated financial statements. The acquisition was funded through a combination of debt and cash on hand.

Previous wording

The Company had previously planned to also develop a non-bank lending business via its wholly owned subsidiary, Farmland Credit, Inc. (“FCI”), and FCI’s subsidiaries, Farmland Credit FR, LLC and Farmland Credit AV, LLC. Promptly after receiving a notice of resignation from the Company’s then-serving Chief Executive Officer in June 2024, our Board of Directors reexamined the Company’s strategic position and prospects. Primarily because the now departed Chief Executive Officer represented nearly all of the Company’s knowledge and expertise relating to the purchase of existing loans and/or origination and funding of new loans, the Company has determined to focus solely on the ag business. Because the non-bank lending business remained in development, this change is not expected to have a significant adverse impact on the Company’s operations or financial results.

Current wording

The Company had previously planned to also develop a non-bank lending business via its wholly owned subsidiary, Farmland Credit, Inc. (“FCI”), and FCI’s subsidiaries, Farmland Credit FR, LLC and Farmland Credit AV, LLC. Promptly after receiving a notice of resignation from the Company’s then-serving Chief Executive Officer in June 2024, our Board of Directors reexamined the Company’s strategic position and prospects. Primarily because the now departed Chief Executive Officer represented nearly all the Company’s knowledge and expertise relating to the purchase of existing loans and/or origination and funding of new loans, the Company has determined to focus solely on the ag business. Because the non-bank lending business remained in development, this change is not expected to have a significant adverse impact on the Company’s operations or financial results.

Previous wording

The following table sets forth, for the periods indicated, certain items in our Consolidated Statements of Operations as a percentage of total net sales.

Current wording

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

Previous wording

Three and Six Months Ended June 30, 2024 Compared to Three and Six Months Ended June 30, 2023

Current wording

Three and Nine Months Ended September 30, 2024 Compared to Three and Nine Months Ended September 30, 2023

Previous wording

Revenue, Net. Revenue, net for the three and six months ended June 30, 2024 was $16,780,000 and $24,813,000, respectively, all of which were from Bloomia for the period from its acquisition on February 22, 2024 (“the acquisition date”) through June 30, 2024 (the “acquisition period”). 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. The Company added two additional retail customers over the prior period.

Current wording

Revenue, Net. Revenue, net for the three and nine months ended September 30, 2024 was $6,628,000 and $31,581,000, respectively, all of which were generated from Bloomia for the period from its acquisition on February 22, 2024 (“the acquisition date”) through September 30, 2024 (the “acquisition period”). 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.

Previous wording

Gross Profit.** **Gross profit for the three months ended June 30, 2024 was $3,977,000 or 23.7.0% as a percentage of revenue. Gross margin percentage is typically higher in the first and second quarters since sales are typically higher and allow better leverage of fixed costs in costs of sales. For purchase accounting, the inventory was written up to fair value on the acquisition date. This write-up is amortized over the turnover of the inventory and the acquisition period included $162,000 of costs related to this amortization in the three months ended June 30, 2024.

Current wording

Gross Profit.** **Gross profit for the three months ended September 30, 2024 was $1,440,000 or 22% as a percentage of revenue. Gross margin percentage is typically higher in the first and second quarters since sales are typically higher and allow better leverage of fixed costs in costs of sales.

Previous wording

Gross profit for the six months ended June 30, 2024, was $5,871,000. Gross profit as a percentage of total net revenue was 23.7% for the six months ended June 30, 2024, compared. The amortization of the inventory written up to fair value was $1,522,000 for the six months ended June 30, 2024.

Current wording

Gross profit for the nine months ended September 30, 2024, was $7,091,000. Gross profit as a percentage of total net revenue was 22% for the nine months ended September 30, 2024. The amortization of the inventory written up to fair value was $1,522,000 for the nine months ended September 30, 2024.

Previous wording

Sales, general and administrative. Sales, general and administrative expenses for the three months ended June 30, 2024 was $4,095,000 compared to $557,000 for the three months ended June 30, 2023. The increase was primarily due the acquisition of Bloomia, including $652,000 of integration costs in the period.

Current wording

Sales, general and administrative. Sales, general and administrative expenses for the three months ended September 30, 2024 were $2,791,000 compared to $1,633,000 for the three months ended September 30, 2023. The increase was primarily due to the acquisition of Bloomia.

Previous wording

Sales, general and administrative expenses for the six months ended June 30, 2024, was $7,483,000 compared to $1,185,000 for the six months ended June 30, 2023. The increases for both periods was primarily due to the acquisition of Bloomia, including one-time acquisition related costs.

Current wording

Sales, general and administrative expenses for the nine months ended September 30, 2024, were $9,920,000 compared to $2,983,000 for the nine months ended September 30, 2023. The increases were primarily due to the acquisition of Bloomia, including one-time acquisition-related costs.

Previous wording

Interest Expense and Income. Interest expense for the three months ended June 30, 2024, was $984,000 compared to interest income of $135,000 for the three months ended June 30, 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. The Company has not hedged the risk of its interest expense if the Term SOFR reference rate increases.

Current wording

Interest Expense and Income. Interest expense for the three months ended September 30, 2024, was $800,000 compared to interest income of $111,000 for the three months ended September 30, 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. 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.

Previous wording

Interest expense for the six months ended June 30, 2024, was $1,209,000 compared to interest income of $238,000 for the three months ended June 30, 2023. The increase is due to the interest on the debt associated with the acquisition of Bloomia.

Current wording

Interest expense for the nine months ended September 30, 2024, was $1,989,000 compared to interest income of $325,000 for the nine months ended September 30, 2023. The increase is due to the interest on the debt associated with the acquisition of Bloomia and less short-term investments in the current year.

Previous wording

Income Taxes. For the three and six months ended June 30, 2024, the Company recorded an income tax benefit of 24.5% and 29.4%, respectively, on loss from continuing operations. The rate differs from the federal statutory rate of 21% due to state taxes of 4.7%, valuation allowance change of 24.2% and nondeductible transaction costs and other permanent items of (20.5)%. For the three and six months ended June 30, 2023, the Company recorded an income tax expense of 12.5% and 040%, respectively, on loss from continuing operations before income taxes. The rate differs from the federal statutory rate of 21% due to state taxes of 3.8%, valuation allowance change of (24.2)% and other permanent items of (0.2)%.

Current wording

Income Taxes. For the three and nine months ended September 30, 2024, the Company recorded an income tax benefit of 33.5% and 26.6%, respectively, on loss from continuing operations. The rate differs from the federal statutory rate of 21.0% due to state taxes of 4.7%, valuation allowance change of 9.3% and nondeductible transaction costs and other permanent items of (8.4)%. For the three and nine months ended September 30, 2023, the Company recorded an income tax expense of 0.6% and 0.1%, respectively, on loss from continuing operations before income taxes. The rate differs from the federal statutory rate of 21.0% due to state taxes of 3.5%, valuation allowance change of (24.5)%. and other permanent items of 0.1%.

Previous wording

For the three and six months ended June 30, 2024, the Company recorded an income tax benefit of 201,000 and $548,000, respectively, on the loss from continuing operations before income taxes and equity in net income of equity investment. The overall benefit of $548,000 includes a $451,000 benefit for the reversal of the valuation allowance on federal deferred tax assets. During the 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.

Current wording

For the three and nine months ended September 30, 2024, the Company recorded an income tax benefit of $736,000 and $1,284,000, respectively, on the loss from continuing operations before income taxes and equity in net income of equity investment. The overall benefit of $1,284,000 includes a $451,000 benefit for the reversal of the valuation allowance on federal deferred tax assets. 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.

Previous wording

As of June 30, 2024, and December 31, 2023, the Company had unrecognized tax benefits totaling $43,000, including interest, which relates to state nexus issues. The amount of the unrecognized tax benefits, if recognized, that would affect the effective income tax rates of future periods is $43,000.

Current wording

As of September 30, 2024, and December 31, 2023, the Company had unrecognized tax benefits totaling $35,000 and $43,000, respectively, including interest, which relates to state nexus issues. The amount of the unrecognized tax benefits, if recognized, that would affect the effective income tax rates of future periods is $35,000.

Previous wording

***Income from Discontinued Operations, Net of Tax.***For the three and six months ended June 30, 2024, income from discontinued operations is a result of the reduction in the accrual for sales tax due the expiration of the statute of limitations. Income from discontinued operations, net of tax, three and six months ended June 30, 2023, reflects the legacy In-store Marketing Business results of operations. Information on the sale of the In-Store Marketing Business and statement of operations details of the discontinued operations are included in Note 4 to the Consolidated Financial Statements.

Current wording

***Income from Discontinued Operations, Net of Tax.***For the three and nine months ended September 30, 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. Income from discontinued operations, net of tax, for the three and nine months ended September 30, 2023 reflects results from operations from the legacy In-store Marketing Business and the $2,970,000 gain from the sale of that business. Information on the sale of the In-Store Marketing Business and statement of operations details of the discontinued operations are included in Note 4 to the condensed consolidated financial statements.

Previous wording

Noncontrolling interest. The 18.6% noncontrolling interest in Tulp 24.1’s loss for the acquisition period was $70,000 and $293,000 for the three and six months ended June 30, 2024, respectively.

Current wording

Noncontrolling interest. The 18.6% noncontrolling interest in Tulp 24.1’s loss for the acquisition period was $267,000 and $536,000 for the three and nine months ended September 30, 2024, respectively.

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, respective GAAP financial measures. The non-GAAP financial measure presented may differ from similarly named measures used by other companies.

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, 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 from net loss 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 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.

Previous wording

Included below is a reconciliations of EBITDA to net 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 the sale of its legacy business and sales of its products, in addition to a significant payment resulting from the settlement of litigation. 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 June 30, 2024, the Company’s working capital (defined as current assets less current liabilities) was $5,817,000 compared to $15,525,000 at December 31, 2023. During the six months ended June 30, 2024, cash and cash equivalents decreased $14,358,000 from $16,077,000 at December 31, 2023 to $1,719,000 at June 30, 2024.

Current wording

The Company has financed its operations with proceeds from the sale of its legacy business and sales of its products, in addition to a significant payment resulting from the settlement of litigation. 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 September 30, 2024, the Company’s working capital (defined as current assets less current liabilities) was $11,520,000 compared to $15,525,000 at December 31, 2023. During the nine months ended September 30, 2024, cash and cash equivalents decreased $14,744,000 from $16,077,000 at December 31, 2023 to $1,333,000 at September 30, 2024.

Previous wording

Operating Activities. Net cash provided by operating activities during the six months ended June 30, 2024 was $4,573,000, of which $292,000 was provided by accounts receivable related to discontinued operations collected in the year. Cash from operations is greatest in the first half of the year due to the seasonality of the Bloomia business. The Company used $1,700,000 in cash in the period to purchase tulips bulbs.

Current wording

Operating Activities of Continuing Operations. Net cash used in operating activities during the nine months ended September 30, 2024 was $2,663,000. Cash from operations is greatest in the first half of the year due to the seasonality of the Bloomia business. The Company used approximately $11,000,000 in cash in the period to purchase tulips bulbs.

Previous wording

Investing Activities. Net cash used in investing activities during the six months ended June 30, 2024 was $34,243,000, 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 paid for purchases of property and equipment.

Current wording

Investing Activities of Continuing Operations. Net cash used in investing activities during the nine months ended September 30, 2024 was $34,682,000, 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.

Previous wording

Financing Activities. Net cash provided by financing activities during the six months ended June 30, 2024 was $15,268,000, which primarily related to proceeds received from issuance of the Credit Agreement used to fund the acquisition of a majority interest in Bloomia.

Current wording

Financing Activities. Net cash provided by financing activities during the nine months ended September 30, 2024 was $22,473,000, which primarily related to proceeds received from issuance of the Credit Agreement used to fund the acquisition of a majority interest in Bloomia.

Previous wording

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 $18.0 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 Company expects that the 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.

Current wording

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 $18.0 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. On October 16, 2024, the Company amended the credit agreement (Amended Credit Agreement) to, among other things, temporarily increase the borrowing capacity under the revolving credit facility to $8,000,000.

Previous wording

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.

Current wording

Borrowings under the Amended 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.

Previous wording

The term loans are scheduled to 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.

Current wording

The term loans are scheduled to 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 September 2024 installment was paid in October 2024 and is included in the current portion of long-term debt on the condensed consolidated balance sheet.

Previous 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 provided an unsecured guaranty of the obligations of Tulp 24.1 under the Credit Agreement.

Current 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.

Previous wording

The 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 3.0 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 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.

Current wording

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. 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.

Previous wording

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.

Current 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.

Previous wording

After the end of the quarter, on August 15, 2024, we entered into an unsecured Delayed Draw Term Note (the “Note”) with Air T Inc. (“Air T”) pursuant to which Air T has agreed to advance from time to time until August 15, 2026, but not on a revolving basis, up to $2.5 million to fund the Company’s operations. Amounts outstanding under the Note will bear interest at a fixed rate of 8.0%, which may be increased by 3.0% upon certain events of default. The entire principal amount outstanding on the Loans, together with accrued and unpaid interest thereon as set forth below, shall be due and payable in full on the earlier of (i) August 15, 2029, (ii) Borrow’s receipt of a written demand by the Lender delivered on or after February 15, 2026, and (iii) such earlier date as all principal owing hereunder becomes due and payable by acceleration or otherwise (the “Maturity Date”). The borrower may prepay any Loan outstanding hereunder, together with accrued and unpaid interest on such Loan, at any time without prepayment or penalty.

Current wording

On August 15, 2024, we entered into an unsecured Delayed Draw Term Note (the “Note”) with Air T Inc. (“Air T”) pursuant to which Air T has agreed to advance from time to time until August 15, 2026, but not on a revolving basis, up to $2.5 million to fund the Company’s operations. Amounts outstanding under the Note will bear interest at a fixed rate of 8.0%, which may be increased by 3.0% upon certain events of default. The entire principal amount outstanding on the Loans, together with accrued and unpaid interest thereon as set forth below, shall be due and payable in full on the earlier of (i) August 15, 2029, (ii) Borrow’s receipt of a written demand by the Lender delivered on or after February 15, 2026, and (iii) such earlier date as all principal owing hereunder becomes due and payable by acceleration or otherwise (the “Maturity Date”). The borrower may prepay any Loan outstanding hereunder, together with accrued and unpaid interest on such Loan, at any time without prepayment or penalty. The Company borrowed $2,000,000 under the note in September 2024.

Previous wording

The Company expects that cash from operations combined with funds available under the 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.

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

Previous wording

We test goodwill for impairment by either performing a qualitative evaluation or a quantitative test, whereby a goodwill impairment loss will be measured as the excess of a reporting unit’s carrying amount over its fair value. The qualitative evaluation is an assessment of factors, including reporting unit specific operating results and cost factors, as well as industry, market and general economic conditions, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. We may elect to bypass this qualitative assessment and perform the quantitative test in accordance with ASC 350,Intangibles - Goodwill and Other. Fair values under the quantitative test are estimated using a combination of discounted projected future earnings or cash flow methods and multiples of earnings in estimating fair value. The estimate of the reporting unit’s fair value is determined by weighting a discounted cash flow model and a market-related model using current industry information that involve significant unobservable inputs (Level 3 inputs). In determining the estimated future cash flow, we consider and apply certain estimates and judgments, including current and projected future levels of income based on management’s plans, business trends, prospects and market and economic conditions and market-participant considerations. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts.

Current wording

We test goodwill for impairment by either performing a qualitative evaluation or a quantitative test, whereby a goodwill impairment loss will be measured as the excess of a reporting unit’s carrying amount over its fair value. The qualitative evaluation is an assessment of factors, including reporting unit specific operating results and cost factors, as well as industry, market and general economic conditions, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. We may elect to bypass this qualitative assessment and perform the quantitative test in accordance with ASC 350,Intangibles - Goodwill and Other. Fair values under the quantitative test are estimated using a combination of discounted projected future earnings or cash flow methods and multiples of earnings in estimating fair value. The estimate of the reporting unit’s fair value is determined by weighing a discounted cash flow model and a market-related model using current industry information that involve significant unobservable inputs (Level 3 inputs). In determining the estimated future cash flow, we consider and apply certain estimates and judgments, including current and projected future levels of income based on management’s plans, business trends, prospects and market and economic conditions, and market-participant considerations. These assumptions require significant judgment, and actual results may differ from assumed and estimated amounts.