Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 08, 2023 | |
Cover [Abstract] | ||
Entity Registrant Name | LENDWAY, INC. | |
Entity Central Index Key | 0000875355 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Sep. 30, 2023 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2023 | |
Entity Common Stock Shares Outstanding | 1,745,736 | |
Entity File Number | 1-13471 | |
Entity Incorporation State Country Code | DE | |
Entity Tax Identification Number | 41-1656308 | |
Entity Address Address Line 1 | 5000 West 36th Street | |
Entity Address Address Line 2 | Suite 220 | |
Entity Address City Or Town | Minneapolis | |
Entity Address State Or Province | MN | |
Entity Address Postal Zip Code | 55416 | |
City Area Code | 763 | |
Local Phone Number | 392-6200 | |
Security 12b Title | Common Stock, $0.01 par value | |
Trading Symbol | LDWY | |
Security Exchange Name | NASDAQ | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 14,954,000 | $ 14,439,000 |
Restricted cash | 85,000 | 85,000 |
Receivable from escrow account | 200,000 | 0 |
Income tax receivable | 26,000 | 28,000 |
Prepaid expense | 123,000 | 30,000 |
Other current assets related to discontinued operations | 2,199,000 | 6,171,000 |
Total Current Assets | 17,587,000 | 20,753,000 |
Other Assets: | ||
Property and equipment, net | 41,000 | 0 |
Other, net | 10,000 | 0 |
Non-current related to discontinued operations | 0 | 215,000 |
Total Other Assets | 51,000 | 215,000 |
Total Assets | 17,638,000 | 20,968,000 |
Current Liabilities: | ||
Accounts payable | 96,000 | 138,000 |
Accrued liabilities: | ||
Compensation | 888,000 | 264,000 |
Other | 164,000 | 306,000 |
Current liabilities related to discontinued operations | 547,000 | 6,666,000 |
Total Current Liabilities | 1,695,000 | 7,374,000 |
Long-Term Liabilities: | ||
Accrued income taxes | 41,000 | 53,000 |
Non-current liabilities related to discontinued operations | 0 | 140,000 |
Total Long-Term Liabilities | 41,000 | 193,000 |
Commitments and Contingencies | 0 | 0 |
Shareholders' Equity: | ||
Common stock, par value $.01: Authorized shares - 5,714,000 Issued and outstanding shares - 1,751,000 at September 30, 2023 and 1,797,000 at December 31, 2022, respectively | 18,000 | 18,000 |
Additional paid-in capital | 16,221,000 | 16,458,000 |
Accumulated deficit | (337,000) | (3,075,000) |
Total Shareholders' Equity | 15,902,000 | 13,401,000 |
Total Liabilities and Shareholders' Equity | $ 17,638,000 | $ 20,968,000 |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
CONDENSED BALANCE SHEETS | ||
Common Stock, Par Value | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 5,714,000 | 5,714,000 |
Common Stock, Shares Issued | 1,751,000 | 1,797,000 |
Common Stock, Shares Outstanding | 1,751,000 | 1,797,000 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Operating Expenses: | ||||
Sales and marketing | $ 69,000 | $ 0 | $ 134,000 | $ 0 |
General and administrative | 1,564,000 | 488,000 | 2,849,000 | 1,663,000 |
Total Operating Expenses | 1,633,000 | 488,000 | 2,983,000 | 1,663,000 |
Operating Loss | (1,633,000) | (488,000) | (2,983,000) | (1,663,000) |
Interest income | 111,000 | 55,000 | 325,000 | 55,000 |
Loss from continuing operations before income taxes | (1,522,000) | (433,000) | (2,658,000) | (1,608,000) |
Income tax (benefit) expense | (11,000) | 1,000 | (4,000) | 5,000 |
Net loss from continuing operations | (1,511,000) | (434,000) | (2,654,000) | (1,613,000) |
(Loss) Income from discontinued operations, net of tax | (333,000) | 12,235,000 | 2,422,000 | 12,392,000 |
Gain from sale of discontinued operations, net of tax | 2,970,000 | 0 | 2,970,000 | 0 |
Net Income | $ 1,126,000 | $ 11,801,000 | $ 2,738,000 | $ 10,779,000 |
Net (loss) income per basic and diluted share: | ||||
Continuing operations | $ (0.85) | $ (0.24) | $ (1.48) | $ (0.90) |
Discontinued operations | 1.48 | 6.82 | 3.01 | 6.92 |
Basic and diluted earnings per share | $ 0.63 | $ 6.58 | $ 1.53 | $ 6.02 |
Shares used in calculation of net (loss) income per share: | ||||
Basic and diluted | 1,785,000 | 1,795,000 | 1,793,000 | 1,790,000 |
CONDENSED STATEMENTS OF SHAREHO
CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) - USD ($) | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit |
Balance, shares at Dec. 31, 2021 | 1,782,000 | |||
Balance, amount at Dec. 31, 2021 | $ 3,193,000 | $ 18,000 | $ 16,296,000 | $ (13,121,000) |
Issuance of common stock, net, shares | 4,000 | |||
Issuance of common stock, net, amount | 28,000 | $ 0 | 28,000 | 0 |
Value of stock-based compensation | 30,000 | 0 | 30,000 | 0 |
Net income | 62,000 | $ 0 | 0 | 62,000 |
Balance, shares at Mar. 31, 2022 | 1,786,000 | |||
Balance, amount at Mar. 31, 2022 | 3,313,000 | $ 18,000 | 16,354,000 | (13,059,000) |
Issuance of common stock, net, shares | 1,000 | |||
Issuance of common stock, net, amount | 11,000 | $ 0 | 11,000 | 0 |
Value of stock-based compensation | 29,000 | 0 | 29,000 | 0 |
Net income | (1,084,000) | $ 0 | 0 | (1,084,000) |
Issuance of common stock upon vesting of restricted stock units, shares | 6,000 | |||
Issuance of common stock upon vesting of restricted stock units, amount | 0 | $ 0 | 0 | 0 |
Balance, shares at Jun. 30, 2022 | 1,793,000 | |||
Balance, amount at Jun. 30, 2022 | 2,269,000 | $ 18,000 | 16,394,000 | (14,143,000) |
Value of stock-based compensation | 32,000 | 0 | 32,000 | 0 |
Net income | 11,801,000 | $ 0 | 0 | 11,801,000 |
Issuance of common stock upon vesting of restricted stock units, shares | 3,000 | |||
Issuance of common stock upon vesting of restricted stock units, amount | 0 | $ 0 | 0 | 0 |
Balance, shares at Sep. 30, 2022 | 1,796,000 | |||
Balance, amount at Sep. 30, 2022 | 14,102,000 | $ 18,000 | 16,426,000 | (2,342,000) |
Balance, shares at Dec. 31, 2022 | 1,797,000 | |||
Balance, amount at Dec. 31, 2022 | 13,401,000 | $ 18,000 | 16,458,000 | (3,075,000) |
Issuance of common stock, net, shares | 1,000 | |||
Issuance of common stock, net, amount | 8,000 | $ 0 | 8,000 | 0 |
Value of stock-based compensation | 22,000 | 0 | 22,000 | 0 |
Net income | 1,648,000 | $ 0 | 0 | 1,648,000 |
Balance, shares at Mar. 31, 2023 | 1,798,000 | |||
Balance, amount at Mar. 31, 2023 | 15,079,000 | $ 18,000 | 16,488,000 | (1,427,000) |
Value of stock-based compensation | 14,000 | 0 | 14,000 | 0 |
Net income | (36,000) | $ 0 | 0 | (36,000) |
Balance, shares at Jun. 30, 2023 | 1,798,000 | |||
Balance, amount at Jun. 30, 2023 | 15,057,000 | $ 18,000 | 16,502,000 | (1,463,000) |
Issuance of common stock, net, shares | 22,000 | |||
Issuance of common stock, net, amount | 149,000 | $ 0 | 149,000 | 0 |
Value of stock-based compensation | 7,000 | 0 | 7,000 | 0 |
Net income | 1,126,000 | $ 0 | 0 | 1,126,000 |
Issuance of common stock upon vesting of restricted stock units, shares | 6,000 | |||
Issuance of common stock upon vesting of restricted stock units, amount | 0 | $ 0 | 0 | 0 |
Repurchase of common stock, shares | (75,000) | |||
Repurchase of common stock, amount | (437,000) | $ 0 | (437,000) | 0 |
Balance, shares at Sep. 30, 2023 | 1,751,000 | |||
Balance, amount at Sep. 30, 2023 | $ 15,902,000 | $ 18,000 | $ 16,221,000 | $ (337,000) |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Operating Activities: | ||
Net loss | $ 2,738,000 | $ 10,779,000 |
Income from discontinued operations, net of tax | (2,422,000) | (12,392,000) |
Gain from sale of discontinued operations, net of tax | (2,970,000) | 0 |
Adjustments to reconcile net loss from continuing operations to net cash provided by (used in) operating activities of continuing operations: | ||
Depreciation and amortization | 3,000 | 0 |
Stock-based compensation expense | 43,000 | 91,000 |
Changes in operating assets and liabilities: | ||
Receivable from escrow account | (200,000) | 0 |
Income tax receivable | 2,000 | 4,000 |
Prepaid expenses and other | (96,000) | 64,000 |
Accounts payable | (41,000) | 85,000 |
Accrued liabilities | 630,000 | (114,000) |
Accrued income taxes | (12,000) | (659,000) |
Net cash used in operating activities of continuing operations | (2,325,000) | (2,142,000) |
Net cash provided by operating activities of discontinued operations | 1,735,000 | 12,530,000 |
Net cash (used in) provided by operating activities | (590,000) | 10,388,000 |
Investing Activities: | ||
Proceeds from sale of business | 1,581,000 | 0 |
Purchases of property and equipment | (24,000) | 0 |
Net cash provided by investing activities of continuing operations | 1,557,000 | 0 |
Net cash used in investing activities of discontinued operations | (24,000) | (25,000) |
Net cash provided by (used in) investing activities | 1,533,000 | (25,000) |
Financing Activities: | ||
Proceeds from issuance of common stock, net | 9,000 | 39,000 |
Repurchase of common stock, net | (437,000) | 0 |
Net cash (used in) provided by financing activities | (428,000) | 39,000 |
Increase in cash and cash equivalents and restricted cash | 515,000 | 10,402,000 |
Cash and cash equivalents and restricted cash at beginning of period | 14,524,000 | 3,851,000 |
Cash and cash equivalents and restricted cash at end of period | 15,039,000 | 14,253,000 |
Supplemental disclosures for cash flow information: | ||
Cash paid during the period for income taxes | 79,000 | 5,000 |
Non-cash financing activity: | ||
Purchase of property and equipment included in accounts payable | 2,000 | 0 |
Common stock issued for accrued liabilities | $ 148,000 | $ 0 |
Description of Business and Bas
Description of Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2023 | |
Description of Business and Basis of Presentation | |
Description of Business and Basis of Presentation | 1. Description of Business and Basis of Presentation. Description of Business . As described in Note 2, 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. Basis of Presentation . The operations of the In-Store Marketing Business are presented as discontinued operations beginning with this Quarterly Report on Form 10-Q for the three months ended September 30, 2023, the period in which the sale of the In-Store Marketing Business met the criteria as discontinued operations. All prior periods presented have been restated to present the In-Store Marketing Business as discontinued operations. The condensed consolidated financial statements include the accounts of the Company, its subsidiary, Farmland Credit, Inc., a Minnesota corporation (“FCI”), and FCI’s subsidiaries, Farmland Credit FR, LLC and Farmland Credit AV, LLC. |
Sale of In-Store Marketing Busi
Sale of In-Store Marketing Business and Presentation as Discontinued Operations | 9 Months Ended |
Sep. 30, 2023 | |
Sale of In-Store Marketing Business and Presentation as Discontinued Operations | |
Sale of In-Store Marketing Business and Presentation as Discontinued Operations | 2. Sale of In-Store Marketing Business and Presentation as Discontinued Operations. On August 3, 2023, the Company completed the sale of certain assets and certain liabilities relating to the Company’s In-Store Marketing Business for a price of $3.5 million to TIMIBO LLC, an affiliate of Park Printing, Inc. (the “Buyer”), under an Asset Purchase Agreement (the “Purchase Agreement”). The Company retained accounts receivable, as well as cash, cash equivalents and marketable securities. The cash consideration for the sale was subject to a post-closing adjustment depending 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. 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. The gain on sale of the In-Store Marketing Business before income taxes was determined as follows: Sale price $ 3,500,000 Carrying value of assets sold, less liablities (247,000 ) Transaction costs not previously expensed (209,000 ) Gain on sale of In-Store Marketing Business $ 3,044,000 The Company incurred transaction-related severance and other separation benefits in connection with the termination of certain officers and employees of the discontinued operations of approximately $490,000, as well as retention award payouts totaling $343,000, of which $48,000 was included in continuing operations, and employee bonuses totaling $164,000, each of which was recorded as expense in the three months ended September 30, 2023. The results of the In-Store Marketing Business have been presented as discontinued operations and the related assets and liabilities have been classified as related to discontinued operations for all periods presented. The carrying amounts of major classes of assets and liabilities that were reclassified as related to discontinued operations on the Condensed Consolidated Balance Sheet were as follows: December 31, 2022 Current Assets: Accounts receivable $ 5,557,000 Inventories 29,000 Prepaid production costs 535,000 Other prepaid expense 50,000 Current assets related to discontinued operations $ 6,171,000 Other Assets: Property and equipment, net $ 71,000 Operating lease right-of-use assets 144,000 Non-current assets related to discontinued operations $ 215,000 Current Liabilities: Accounts payable $ 2,515,000 Sales tax 717,000 Accrued liabilities 1,003,000 Current portion of operating lease liabilities 4,000 Deferred revenue 2,427,000 Current liabilities related to discontinued operations $ 6,666,000 Long-Term Liabilities: Operating lease liabilities $ 140,000 Non-current liabilities related to discontinued operations $ 140,000 Results of discontinued operations are summarized below: Three Months Ended Nine Months Ended September 30 September 30 2023 2022 2023 2022 Net services revenues $ 1,976,000 $ 4,869,000 $ 21,018,000 $ 14,271,000 Cost of services 1,568,000 4,031,000 16,067,000 11,737,000 Gross Profit 408,000 838,000 4,951,000 2,534,000 Operating Expenses: Selling 410,000 294,000 1,135,000 926,000 Marketing 210,000 249,000 806,000 787,000 General and administrative 142,000 268,000 642,000 647,000 Total Operating Expenses 762,000 811,000 2,583,000 2,360,000 Gain from litigation settlement, net — 12,000,000 — 12,000,000 Operating Income (Loss) (354,000 ) 12,027,000 2,368,000 12,174,000 Other income 21,000 17,000 54,000 45,000 (Loss) income from discontinued operations before income taxes (333,000 ) 12,044,000 2,422,000 12,219,000 Income tax benefit — (191,000 ) — (173,000 ) (Loss) income from discontinued operations, net of tax $ (333,000 ) $ 12,235,000 $ 2,422,000 $ 12,392,000 Gain from sale of discontinued operations before income taxes 3,044,000 — 3,044,000 — Income tax expense 74,000 — 74,000 — Gain from sale of discontinued operations, net of tax $ 2,970,000 $ — $ 2,970,000 $ — The accounting policies for the discontinued In-Store Marketing Business, including for revenue recognition, are disclosed in the notes to financial statements included in the Company’s Annual Report on Form 10-K. In July 2019, the Company filed suit against News Corporation, News America Marketing FSI L.L.C., and News America Marketing In-Store Services L.L.C. (collectively, “News America”), alleging violations of federal and state antitrust and tort laws by News America. On July 1, 2022, the Company entered into a $20 million settlement agreement with News America. The agreement resulted in net proceeds before income tax of $12,000,000 for the Company, which was recorded as a gain on litigation settlement in the discontinued operations of the In-Store Marketing Business during the three months ended September 30, 2022. For the three and nine months ended September 30, 2023, the Company recorded income tax expense on discontinued operations of $74,000 and $74,000, respectively. For the three and nine months ended September 30, 2022, the Company recorded income tax benefit from discontinued operations of $191,000 and $173,000 respectively. The income tax benefit for 2022 included a decrease of approximately $678,000 in unrecognized tax benefits related to state exposure in the third quarter of 2022, which reduced accrued income taxes and increased the current tax benefit. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Summary Of Significant Accounting Policies | 3. Summary of Significant Accounting Policies. Cash and Cash Equivalents and Restricted Cash. September 30, December 31, 2023 2022 Cash and cash equivalents $ 14,954,000 $ 14,439,000 Restricted cash 85,000 85,000 Total cash, cash equivalents and restricted cash $ 15,039,000 $ 14,524,000 Subsequent to September 30, 2023 the restriction on the cash was released back to the Company, as it was related to a lease that transferred to the Buyer of the In-Store Marketing Business. Stock-Based Compensation During the nine-month periods ended September 30, 2023 and 2022 no equity awards were issued by the Company, except those awarded to non-employee members of the Board of Directors in August 2022. In August 2022, non-employee members of the Board of Directors received restricted stock grants totaling 6,248 shares pursuant to the 2018 Equity Incentive Plan (the “2018 Plan”). The shares underlying the awards were assigned a value of $9.60 per share, which was the closing price of the Company’s common stock on the date of grant, for a total grant date value of $60,000. The shares vested on July 26, 2023. In June 2021, non-employee members of the Board of Directors received restricted stock grants totaling 5,514 shares pursuant to the 2018 Equity Incentive Plan. The shares underlying the awards were assigned a value of $8.16 per share, which was the closing price of the Company’s common stock on the date of grant, for a total grant date value of $45,000. The shares vested on June 1, 2022. The Company estimated the fair value of stock-based awards granted during the three and nine months ended September 30, 2023, under the Company’s employee stock purchase plan using the following weighted average assumptions: expected life of 1.0 year, expected volatility of 95.2%, dividend yield of 0% and risk-free interest rate of 4.7%. Due to the sale of the In-Store Marketing Business, the plan year for the Company’s employee stock purchase plan was amended to end on July 31, 2023. At July 31, 2023 participants purchased 338 shares. During the three months ended September 30, 2023, the Company issued 22,382 shares of common stock in settlement of $148,000 of total deferred fees due to two non-employee director’s departure from the Board of Directors. Total stock-based compensation expense recorded for the three and nine months ended September 30, 2023 was $7,000 and $43,000, respectively, and for the three and nine months ended September 30, 2022 was $32,000 and $91,000, respectively. Net (Loss) Income per Share . In determining diluted net income (loss) per share, whether net income from continuing operations is positive or negative controls whether dilutive shares are included in the determination. For all periods presented, net income from continuing operations is negative, a net loss. Accordingly, since including dilutive shares would dilute the loss from continuing operations, no dilutive shares are included in any of the per share calculations. Due to the net loss from continuing operations incurred during the three and nine months ended September 30, 2023 and 2022, all outstanding stock awards were considered anti-dilutive for those periods. At September 30, 2022 and 2023 options to purchase 14,086 shares of common stock with a weighted average exercise price of $14.17, were outstanding. Weighted average common shares outstanding for the three and nine months ended September 30, 2023 and 2022 were as follows: Three Months Ended Nine Months Ended September 30 September 30 2023 2022 2023 2022 Denominator for basic net income (loss) per share - weighted average shares 1,785,000 1,795,000 1,793,000 1,790,000 Effect of dilutive securities: Stock options and restricted stock units — — — — Denominator for diluted net income (loss) per share - weighted average shares 1,785,000 1,795,000 1,793,000 1,790,000 Restructuring. . |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
Leases | 4. Leases. At September 30, 2023, the Company has a month-to-month operating lease with a related party with monthly payments of $375. As part of the sale of the in-store marketing business, the headquarters lease was assigned to the Buyer as a part of the sale of the In-Store Marketing Business, and the other significant lease was terminated. The amounts included in “Other” below relate to an office lease that was terminated effective September 30, 2023. The cost components in continuing operations of the Company’s operating leases were as follows for the three and nine month periods ended September 30, 2023 and 2022: Three months ended September 30 Nine months ended September 30 2023 2022 2023 2022 Related party lease $ 1,000 $ - $ 2,000 $ - Other 5,000 3,000 13,000 11,000 Total $ 6,000 $ 3,000 $ 15,000 $ 11,000 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Taxes | |
Income Taxes | 5. Income Taxes. For the three and nine months ended September 30, 2023, the Company recorded income tax (benefit) of $(11,000) and $(4,000), respectively, or 0.6% and 0.1% of loss from continuing operations before taxes, respectively. For the three and nine months ended September 30, 2022, the Company recorded income tax expense of $1,000 and $5,000 respectively, or (0.2)% and (0.3)% of loss from continuing operations before taxes, respectively. The income tax expense (benefit) for the three and nine months ended September 30, 2023 and 2022 is comprised of federal and state taxes. The Company reassesses its effective rate each reporting period and adjusts the annual effective rate if deemed necessary, based on projected annual income (loss). The actual tax expense attributable to from continuing operations income before taxes differs from the expected tax expense computed by applying the U.S. federal corporate income tax rate of 21% as follows: Nine months ended September 30, 2023 2022 Federal statutory rate 21.0 % 21.0 % Stock-based awards 0.0 (0.6 ) State taxes 3.5 3.6 Impact of uncertain tax positions 0.5 0.0 Valuation allowance (24.5 ) (24.6 ) Other (0.4 ) 0.3 Effective federal income tax rate 0.1 % (0.3 )% Deferred income taxes are determined based on the estimated future tax effects of differences between the financial statements and tax basis of assets and liabilities given the provisions of enacted tax laws. In providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which it operates, estimates of future taxable income and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustment to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria. As of September 30, 2023, and December 31, 2022, the Company had unrecognized tax benefits totaling $41,000 and $53,000, 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 $41,000. The Company recorded a decrease of $16,000 in unrecognized tax benefits related to state income tax exposure in the third quarter of 2023 which reduced accrued income taxes and increased income tax benefit. At December 31, 2022, the Company had Federal net operating loss (NOL) to carry forward of approximately $2,900,000. As of September 30, 2023, the Company estimates remaining Federal NOL carryforwards to be approximately $1,390,000. Federal NOL utilization is limited to 80% of estimated taxable income. The estimated NOL carry forward will be adjusted at year end for actual results. |
Stock Repurchase Plan
Stock Repurchase Plan | 9 Months Ended |
Sep. 30, 2023 | |
Stock Repurchase Plan | |
Stock Repurchase Plan | 6. Stock Repurchase Plan. On August 28, 2023, the Company’s Board of Directors authorized the repurchase of up to 400,000 shares of the Company’s common stock. The plan allows the purchases to be made in the open market or in privately negotiated transactions. The plan does not obligate the Company to repurchase any particular number of shares; and may be suspended anytime at the Company’s discretion. For the three months ended September 30, 2023 the Company repurchased 75,345 shares for $437,000. |
Legal Proceedings
Legal Proceedings | 9 Months Ended |
Sep. 30, 2023 | |
Legal Proceedings | |
Legal Proceedings | 7. Legal Proceedings. The Company is subject to various legal matters in the normal 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. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Cash And Cash Equivalents And Restricted Cash | Cash and Cash Equivalents and Restricted Cash. September 30, December 31, 2023 2022 Cash and cash equivalents $ 14,954,000 $ 14,439,000 Restricted cash 85,000 85,000 Total cash, cash equivalents and restricted cash $ 15,039,000 $ 14,524,000 Subsequent to September 30, 2023 the restriction on the cash was released back to the Company, as it was related to a lease that transferred to the Buyer of the In-Store Marketing Business. |
Stock-based Compensation | Stock-Based Compensation During the nine-month periods ended September 30, 2023 and 2022 no equity awards were issued by the Company, except those awarded to non-employee members of the Board of Directors in August 2022. In August 2022, non-employee members of the Board of Directors received restricted stock grants totaling 6,248 shares pursuant to the 2018 Equity Incentive Plan (the “2018 Plan”). The shares underlying the awards were assigned a value of $9.60 per share, which was the closing price of the Company’s common stock on the date of grant, for a total grant date value of $60,000. The shares vested on July 26, 2023. In June 2021, non-employee members of the Board of Directors received restricted stock grants totaling 5,514 shares pursuant to the 2018 Equity Incentive Plan. The shares underlying the awards were assigned a value of $8.16 per share, which was the closing price of the Company’s common stock on the date of grant, for a total grant date value of $45,000. The shares vested on June 1, 2022. The Company estimated the fair value of stock-based awards granted during the three and nine months ended September 30, 2023, under the Company’s employee stock purchase plan using the following weighted average assumptions: expected life of 1.0 year, expected volatility of 95.2%, dividend yield of 0% and risk-free interest rate of 4.7%. Due to the sale of the In-Store Marketing Business, the plan year for the Company’s employee stock purchase plan was amended to end on July 31, 2023. At July 31, 2023 participants purchased 338 shares. During the three months ended September 30, 2023, the Company issued 22,382 shares of common stock in settlement of $148,000 of total deferred fees due to two non-employee director’s departure from the Board of Directors. Total stock-based compensation expense recorded for the three and nine months ended September 30, 2023 was $7,000 and $43,000, respectively, and for the three and nine months ended September 30, 2022 was $32,000 and $91,000, respectively. |
Net Income (Loss) per Share | Net (Loss) Income per Share . In determining diluted net income (loss) per share, whether net income from continuing operations is positive or negative controls whether dilutive shares are included in the determination. For all periods presented, net income from continuing operations is negative, a net loss. Accordingly, since including dilutive shares would dilute the loss from continuing operations, no dilutive shares are included in any of the per share calculations. Due to the net loss from continuing operations incurred during the three and nine months ended September 30, 2023 and 2022, all outstanding stock awards were considered anti-dilutive for those periods. At September 30, 2022 and 2023 options to purchase 14,086 shares of common stock with a weighted average exercise price of $14.17, were outstanding. Weighted average common shares outstanding for the three and nine months ended September 30, 2023 and 2022 were as follows: Three Months Ended Nine Months Ended September 30 September 30 2023 2022 2023 2022 Denominator for basic net income (loss) per share - weighted average shares 1,785,000 1,795,000 1,793,000 1,790,000 Effect of dilutive securities: Stock options and restricted stock units — — — — Denominator for diluted net income (loss) per share - weighted average shares 1,785,000 1,795,000 1,793,000 1,790,000 |
Restructuring | Restructuring. . |
Sale of In-Store Marketing Bu_2
Sale of In-Store Marketing Business and Presentation as Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Sale of In-Store Marketing Business and Presentation as Discontinued Operations | |
Summary of gain on sale of buiness | Sale price $ 3,500,000 Carrying value of assets sold, less liablities (247,000 ) Transaction costs not previously expensed (209,000 ) Gain on sale of In-Store Marketing Business $ 3,044,000 |
Summary of balance sheet adjustments | December 31, 2022 Current Assets: Accounts receivable $ 5,557,000 Inventories 29,000 Prepaid production costs 535,000 Other prepaid expense 50,000 Current assets related to discontinued operations $ 6,171,000 Other Assets: Property and equipment, net $ 71,000 Operating lease right-of-use assets 144,000 Non-current assets related to discontinued operations $ 215,000 Current Liabilities: Accounts payable $ 2,515,000 Sales tax 717,000 Accrued liabilities 1,003,000 Current portion of operating lease liabilities 4,000 Deferred revenue 2,427,000 Current liabilities related to discontinued operations $ 6,666,000 Long-Term Liabilities: Operating lease liabilities $ 140,000 Non-current liabilities related to discontinued operations $ 140,000 |
Summary of operations adjustments | Three Months Ended Nine Months Ended September 30 September 30 2023 2022 2023 2022 Net services revenues $ 1,976,000 $ 4,869,000 $ 21,018,000 $ 14,271,000 Cost of services 1,568,000 4,031,000 16,067,000 11,737,000 Gross Profit 408,000 838,000 4,951,000 2,534,000 Operating Expenses: Selling 410,000 294,000 1,135,000 926,000 Marketing 210,000 249,000 806,000 787,000 General and administrative 142,000 268,000 642,000 647,000 Total Operating Expenses 762,000 811,000 2,583,000 2,360,000 Gain from litigation settlement, net — 12,000,000 — 12,000,000 Operating Income (Loss) (354,000 ) 12,027,000 2,368,000 12,174,000 Other income 21,000 17,000 54,000 45,000 (Loss) income from discontinued operations before income taxes (333,000 ) 12,044,000 2,422,000 12,219,000 Income tax benefit — (191,000 ) — (173,000 ) (Loss) income from discontinued operations, net of tax $ (333,000 ) $ 12,235,000 $ 2,422,000 $ 12,392,000 Gain from sale of discontinued operations before income taxes 3,044,000 — 3,044,000 — Income tax expense 74,000 — 74,000 — Gain from sale of discontinued operations, net of tax $ 2,970,000 $ — $ 2,970,000 $ — |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Schdule of Cash And Cash Equivalents And Restricted Cash | September 30, December 31, 2023 2022 Cash and cash equivalents $ 14,954,000 $ 14,439,000 Restricted cash 85,000 85,000 Total cash, cash equivalents and restricted cash $ 15,039,000 $ 14,524,000 |
Schdule of Weighted Average Common Shares Outstanding | Three Months Ended Nine Months Ended September 30 September 30 2023 2022 2023 2022 Denominator for basic net income (loss) per share - weighted average shares 1,785,000 1,795,000 1,793,000 1,790,000 Effect of dilutive securities: Stock options and restricted stock units — — — — Denominator for diluted net income (loss) per share - weighted average shares 1,785,000 1,795,000 1,793,000 1,790,000 |
Lease (Tables)
Lease (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
Cost components of operating leases | Three months ended September 30 Nine months ended September 30 2023 2022 2023 2022 Related party lease $ 1,000 $ - $ 2,000 $ - Other 5,000 3,000 13,000 11,000 Total $ 6,000 $ 3,000 $ 15,000 $ 11,000 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Income Taxes | |
Schedule Of Reconciliation of effective federal income tax rate | Nine months ended September 30, 2023 2022 Federal statutory rate 21.0 % 21.0 % Stock-based awards 0.0 (0.6 ) State taxes 3.5 3.6 Impact of uncertain tax positions 0.5 0.0 Valuation allowance (24.5 ) (24.6 ) Other (0.4 ) 0.3 Effective federal income tax rate 0.1 % (0.3 )% |
Sale of In-Store Marketing Bu_3
Sale of In-Store Marketing Business and Presentation as Discontinued Operations (Details) | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Sale of In-Store Marketing Business and Presentation as Discontinued Operations | |
Sale price | $ 3,500,000 |
Carrying value of assets sold, Less liabilities | (247,000) |
Transaction cost not previously expensed | (209,000) |
Gain on sale of in-store marketing business | $ 3,044,000 |
Sale of In-Store Marketing Bu_4
Sale of In-Store Marketing Business and Presentation as Discontinued Operations (Details 1) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Sale of In-Store Marketing Business and Presentation as Discontinued Operations | ||
Accounts receivable | $ 5,557,000 | |
Inventories | 29,000 | |
Prepaid production costs | 535,000 | |
Other prepaid expense | 50,000 | |
Current assets related to discountinued operation | $ 2,199,000 | 6,171,000 |
Property and equipment, net | 71,000 | |
Operating lease right-of-use assets | 144,000 | |
Non-Current assets related to discontinued opration | 0 | 215,000 |
Accounts payable | 2,515,000 | |
Sales tax | 717,000 | |
Accrued liabilities | 1,003,000 | |
Current portion of operating lease liabilities | 4,000 | |
Deferred revenue | 2,427,000 | |
Current liabilities related to discontinued operation | 547,000 | 6,666,000 |
Operating lease liabilities | 140,000 | |
Total Long-Term Liabilities | $ 0 | $ 140,000 |
Sale of In-Store Marketing Bu_5
Sale of In-Store Marketing Business and Presentation as Discontinued Operations (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Sale of In-Store Marketing Business and Presentation as Discontinued Operations | ||||
Net services revenues | $ 1,976,000 | $ 4,869,000 | $ 21,018,000 | $ 14,271,000 |
Cost of services | 1,568,000 | 4,031,000 | 16,067,000 | 11,737,000 |
Gross Profit | 408,000 | 838,000 | 4,951,000 | 2,534,000 |
Selling | 410,000 | 294,000 | 1,135,000 | 926,000 |
Marketing | 210,000 | 249,000 | 806,000 | 787,000 |
General and administrative | 142,000 | 268,000 | 642,000 | 647,000 |
Total Operating Expenses | 762,000 | 811,000 | 2,583,000 | 2,360,000 |
Gain from litigation settlement, net | 0 | 12,000,000 | 0 | 12,000,000 |
Operating Income | (354,000) | 12,027,000 | 2,368,000 | 12,174,000 |
Other income | 21,000 | 17,000 | 54,000 | 45,000 |
(Loss) income from discontinued operations before income taxes | (333,000) | 12,044,000 | 2,422,000 | 12,219,000 |
Income tax expense | 0 | (191,000) | 0 | (173,000) |
(Loss) income from discontinued operations, net of tax | (333,000) | 12,235,000 | 2,422,000 | 12,392,000 |
Gain from sale of discountinued operation before income taxs | 3,044,000 | 0 | 3,044,000 | 0 |
Income tax expense | 74,000 | 0 | 74,000 | 0 |
Gain from sale of discountinued operation, net of tax | $ 2,970,000 | $ 0 | $ 2,970,000 | $ 0 |
Sale of In-Store Marketing Bu_6
Sale of In-Store Marketing Business and Presentation as Discontinued Operations (Detail Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Aug. 03, 2023 | Jul. 01, 2022 | |
Cash consideration | $ 1,500,000 | |||||
Escrowed amount | 200,000 | |||||
Market price of business | $ 3,500,000 | |||||
Tax benefit from discontinued operations | $ 191,000 | $ 173,000 | ||||
Addition in continuing operations and employee bonuses | $ 48,000 | |||||
Employees bonuses | 164,000 | |||||
Retention payout | 343,000 | |||||
Other benefits | 490,000 | |||||
Income tax expense | $ 74,000 | $ 0 | $ 74,000 | 0 | ||
Decrease in income ax benefit | 678,000 | |||||
News America | ||||||
Note payble | $ 20,000,000 | |||||
Proceed from notes payble | $ 12,000,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Summary of Significant Accounting Policies | ||
Cash and cash equivalents | $ 14,954,000 | $ 14,439,000 |
Restricted cash | 85,000 | 85,000 |
Total cash, cash equivalents and retricted cash | $ 15,039,000 | $ 14,524,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Summary of Significant Accounting Policies | ||||
Denominator for basic net loss per share - weighted average shares | 1,785,000 | 1,795,000 | 1,793,000 | 1,790,000 |
Effect of dilutive securities: stock options, restricted stock and restricted stock units | 0 | 0 | 0 | 0 |
Denominator for diluted net loss per share - weighted average shares | 1,785,000 | 1,795,000 | 1,793,000 | 1,790,000 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details Narratives) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jul. 31, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
General and administrative | $ 1,564,000 | $ 488,000 | $ 2,849,000 | $ 1,663,000 | ||
Accured compensation | 888,000 | 888,000 | $ 264,000 | |||
Stock-based Compensation Expense | 7,000 | $ 32,000 | $ 43,000 | $ 91,000 | ||
Weighted average exercise price | $ 14.17 | $ 14.17 | ||||
Options to purchase | 14,086 | 14,086 | ||||
Expected life | 1 year | |||||
Expected volatility | 95.20% | |||||
Divdend Rate | 0% | |||||
Risk-free interest rate | 4.70% | |||||
Board of Directors | ||||||
Deferred fees due | $ 148,000 | $ 148,000 | ||||
Stock issued during period | 22,382 | |||||
CEO, Kristine A. Glancy | ||||||
General and administrative | 926,000 | |||||
Accured compensation | $ 650,000 | $ 650,000 | ||||
2018 Equity Incentive Plan | June 2021 | ||||||
Exercise price | $ 8.16 | $ 8.16 | ||||
Grant date fair value Shares of common stock | $ 45,000 | $ 45,000 | ||||
Restricted stock grants totaling | 5,514 | 5,514 | ||||
2018 Equity Incentive Plan | August 2022 | ||||||
Exercise price | $ 9.60 | $ 9.60 | ||||
Grant date fair value Shares of common stock | $ 60,000 | $ 60,000 | ||||
Restricted stock grants totaling | 6,248 | 6,248 | ||||
Employee stock purchase plan | ||||||
Shares purchased | 338 |
Leases (Details)
Leases (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Leases | ||||
Related party lease | $ 1,000 | $ 0 | $ 2,000 | $ 0 |
Other | 5,000 | 3,000 | 13,000 | 11,000 |
Total | $ 6,000 | $ 3,000 | $ 15,000 | $ 11,000 |
Leases (Details Narrative)
Leases (Details Narrative) | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Leases | |
Monthly payments of lease | $ 375 |
Income Taxes (Details)
Income Taxes (Details) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Income Taxes | ||
Federal statutory rate | 21% | 21% |
Stock based awards | 0% | (0.60%) |
State taxes | 3.50% | 3.60% |
Impact of uncertain tax positions | 0.50% | 0% |
Valuation allowance | (24.50%) | (24.60%) |
Other | (0.40%) | 0.30% |
Effective federal income tax rate | 0.10% | (0.30%) |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Income Taxes | |||||
Income Tax Benefit (expense) | $ (11,000) | $ 1,000 | $ (4,000) | $ 5,000 | |
Income Tax Rate, Percentage | 0.60% | (0.20%) | 0.10% | (0.30%) | |
Unrecognized Tax Benefits | $ 41,000 | $ 41,000 | $ 53,000 | ||
Decrease in unrecognized tax benefits | 16,000 | ||||
Unrecognized Tax Benefits Effective Income Tax Rates Of Future Periods | 41,000 | ||||
Net operating loss to carry forward | $ 1,390,000 | $ 1,390,000 | $ 2,900,000 | ||
Federal statutory rate | 21% | 21% |
Stock Repurchase Plan (Details
Stock Repurchase Plan (Details Narrative) - USD ($) | 3 Months Ended | |
Sep. 30, 2023 | Aug. 28, 2023 | |
Stock repurchesd during period, value | $ 437,000 | |
Board of Directors | Stock Repurchase Plan | ||
Repurchase limit | 400,000 | |
Stock repurchesd during period, shares | 75,345 | |
Stock repurchesd during period, value | $ 437,000 |