SCHEDULE 13D/A: Air T and Swenson Group Boost Stake in Lendway, Expand Loan Facility to $3.5 Million

Air T Inc. and the Swenson Group have increased their combined beneficial ownership in Lendway, Inc. to 39.5% and amended a delayed draw term note, raising the principal amount to $3.5 million.

Summary

• Air T Inc. and the Swenson Group collectively beneficially own 699,713 shares of Lendway, Inc. Common Stock, representing approximately 39.5% of the 1,769,599 outstanding shares as of March 21, 2025.
• The total cost for purchasing these shares was approximately $7,371,211, funded by working capital or personal funds.
• Air T Inc. holds 486,819 shares (27.5%), while Nicholas J. Swenson, through various entities and individually, controls 212,894 shares (12.0%).
• A Delayed Draw Term Note between Lendway, Inc. and Air T Inc. was amended on September 27, 2024, increasing the principal amount from $2,500,000 to $3,500,000.
• The loan bears an 8% annual interest rate and is due by August 15, 2029, or earlier under certain conditions, with funds designated for operations, growth, and transaction fees.
• The Reporting Persons state their purpose is for investment, but acknowledge a potential 'control purpose' under the Exchange Act.
• AO Partners Fund, a member of the Swenson Group, has pledged 139,444 shares of Common Stock as collateral for a bank loan.

Sentiment

Score: 6

Explanation: The filing indicates increased financial support and a deeper strategic relationship between Air T/Swenson Group and Lendway, which can be positive for Lendway's stability and growth. However, the increased debt and the explicit mention of a 'control purpose' introduce potential risks related to governance and future financial obligations.

Positives

• Increased financial support for Lendway, Inc. through an expanded $3.5 million delayed draw term note from Air T Inc., intended for operations and growth.
• The loan is senior in priority of payment to all subordinated and senior unsecured indebtedness of Lendway, Inc., providing a stronger position for Air T as a creditor.
• The ability for Lendway, Inc. to prepay the loan at any time without penalty offers financial flexibility.

Negatives

• The significant beneficial ownership by Air T Inc. and the Swenson Group, totaling 39.5%, coupled with the acknowledgment of a potential 'control purpose,' suggests a concentration of power that could impact minority shareholders.
• Lendway, Inc. is taking on additional debt, increasing its principal loan amount from $2.5 million to $3.5 million, which will incur 8% annual interest.
• The loan's maturity date can be accelerated by Air T Inc. on or after February 15, 2026, introducing a potential liquidity risk for Lendway, Inc.

Risks

• Control Purpose: The Reporting Persons acknowledge that their actions may be deemed to constitute a 'control purpose' under the Securities Exchange Act of 1934, which could imply an intent to influence or control the Issuer.
• Debt Burden: Lendway, Inc. is incurring a $3.5 million debt obligation with an 8% interest rate, which could impact its financial health and liquidity if not managed effectively.
• Loan Acceleration: Air T Inc. has the right to demand full repayment of the loan on or after February 15, 2026, potentially forcing Lendway, Inc. to seek alternative financing or face default if it cannot meet the demand.
• Pledged Shares: AO Partners Fund has pledged 139,444 shares of Common Stock as collateral for a bank loan, which could have implications for ownership stability if the loan terms are not met.

Future Outlook

The Reporting Persons may in the future acquire additional shares or dispose of some or all of their holdings. They may also engage in short selling, hedging, or similar transactions with respect to Lendway, Inc. shares. The Issuer may request further loans from Air T Inc. prior to August 15, 2026, under the amended Delayed Draw Term Note.

Management Comments

• "Air T and the Swenson Group expressly disclaim membership in a group, as Mr. Swenson does not possess voting or dispositive power over the shares of Common Stock held by Air T."
• "The Reporting Persons purchased the Common Stock for investment purposes."
• "To the extent the actions described herein may be deemed to constitute a 'control purpose' with respect to the Securities Exchange Act of 1934, as amended, and the regulations thereunder, the Reporting Persons have such a purpose."

Industry Context

This filing indicates a significant and increasing strategic investment by a diversified holding company (Air T) and its affiliated investment entities (Swenson Group) into Lendway, Inc. This suggests a potential move towards greater influence or control over Lendway, Inc., which is common in situations where a strategic investor sees value or synergy. The provision of a substantial loan facility further solidifies this relationship, acting as a direct financial lifeline and potentially aligning Lendway's operations more closely with Air T's strategic objectives.

Corporate Governance

Related Party Transactions

• An Amended and Restated Delayed Draw Term Note between Lendway, Inc. (Issuer) and Air T Inc. (a Reporting Person), increasing the principal amount to $3,500,000.
• Nicholas J. Swenson, a key Reporting Person, is the Chief Executive Officer and a director of Air T Inc., and also controls other entities within the Swenson Group, establishing a clear related-party relationship for the loan and beneficial ownership.
• AO Partners Fund, part of the Swenson Group, has pledged 139,444 shares of Common Stock as collateral for a bank loan, which is an arrangement involving a related party's assets.

Stakeholder Impact

• Shareholders: Increased concentration of ownership by Air T and the Swenson Group (39.5%) could lead to greater influence over corporate decisions, potentially impacting minority shareholder rights or strategic direction. The loan facility provides capital but also adds debt.
• Employees: The loan facility is intended to fund operations and growth, which could positively impact job security and expansion opportunities.
• Creditors: The Delayed Draw Term Note ranks senior in priority of payment to all subordinated and senior unsecured indebtedness, potentially affecting the recovery prospects of other unsecured creditors in a default scenario.

Next Steps

• Lendway, Inc. may request additional loans from Air T Inc. prior to August 15, 2026, under the terms of the Delayed Draw Term Note.
• The Reporting Persons may acquire additional shares or dispose of existing shares of Lendway, Inc. Common Stock in the future.
• The Reporting Persons may engage in short selling or hedging transactions with respect to Lendway, Inc. shares.

Key Dates

Recommendation

Keywords

Lendway Inc., Air T Inc., Schedule 13D, Beneficial Ownership, Delayed Draw Term Note, Corporate Control, Investment, SEC Filing, Shareholder Stake, Debt Financing