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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2024

The lease receivables balances consisted of the following as of September 30, 2024 and December 31, 2023:


	September 30, 2024		December 31, 2023

Lease receivables	$	104,879,703	$	64,749,918
Allowance for doubtful accounts	(38,698,232)		(19,954,828)
Lease receivables, net	$	66,181,471	$	44,795,090

Schedule of Lease Receivables Balances Charged Off Against the Allowance


	Nine Months Ended September 30, 2024		Year Ended December 31, 2023
Beginning balance	$	19,954,828	$	13,078,800
Provision	25,373,485		42,505,647
Accounts written off	(6,630,081)		(35,629,619)
Ending balance	$	38,698,232	$	19,954,828

Schedule of Net Lease Merchandise Balances

The net lease merchandise balances consisted of the following as of September 30, 2024 and December 31, 2023:


	September 30, 2024		December 31, 2023
Lease merchandise at cost	$	48,382,621	$	49,687,498
Accumulated depreciation and impairment reserve	(24,295,611)		(20,556,058)
Lease merchandise, net	$	24,087,010	$	29,131,440

Schedule of Lessor Revenues and Fees

The breakout of lease revenues and fees, net of lessor bad debt expense, that ties to the consolidated statements of operations is shown below:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Lease billings and accruals	$	36,381,080	$	31,266,666	$	106,352,849	$	98,023,406
Provision for doubtful accounts	(8,083,009)		(10,038,122)		(25,373,485)		(32,123,950)
Gain on sale of lease receivables	15,791		(146,345)		77,225		2,803,745
Lease placement collections	50,328		-		215,384		-
Lease revenues and fees	$	28,364,190	$	21,082,199	$	81,271,973	$	68,703,201

Schedule of Conversions of Stock

The following table reflects the number of common shares issuable upon conversion or exercise.


	September 30,
	2024	2023
Series 1 Convertible Preferred Stock	225,231	225,231
Series 2 Convertible Preferred Stock	5,845,695	5,845,695
Common Stock Options	5,073,447	5,435,572
Common Stock Warrants	2,255,184	2,255,184
Performance Share Units	937,499	1,250,000
	14,337,056	15,011,682

Schedule of Computation of Basic and Diluted Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per common share for the nine months ended September 30, 2024 and 2023:


	Nine Months Ended September 30,
	2024		2023
Numerator
Net income/ (loss)	$	549,147	$	(4,587,769)
Series 2 Convertible Preferred Stock dividends	(3,337,600)		(3,034,182)
Net loss attributable to common and Series 1 Convertible Preferred Stock	(2,788,453)		(7,621,951)
Net income attributable to Series 1 Convertible Preferred Stock	-		-
Series 2 Convertible Preferred Stock dividends attributable to Series 1 Convertible Preferred Stock	-		-
Net loss attributable to common shares- Numerator for basic EPS	(2,788,453)		(7,621,951)
Effect of dilutive securities:
Series 2 Convertible Preferred Stock dividends	-		-
Net loss attributable to common shares after assumed conversions- Numerator for diluted EPS	$	(2,788,453)	$	(7,621,951)
Denominator
Weighted average of common shares outstanding- Denominator for basic EPS	21,547,702		21,740,027
Effect of dilutive securities:
Series 2 Convertible Preferred Stock	-		-
Series 1 Convertible Preferred Stock	-		-
Common stock options and performance share units	-		-
Common stock warrants	-		-
Adjusted weighted average of common shares outstanding and assumed conversions- Denominator diluted EPS	21,547,702		21,740,027
Basic EPS	$	(0.13)	$	(0.35)
Diluted EPS	$	(0.13)	$	(0.35)

The following table sets forth the computation of basic and diluted earnings per common share for the three months ended September 30, 2024 and 2023:


	Three Months Ended September 30,
	2024		2023
Numerator
Net income	$	2,366,384	$	940,101
Series 2 Convertible Preferred Stock dividends	(1,176,402)		(1,069,456)
Net income/ (loss) attributable to common and Series 1 Convertible Preferred Stock	1,189,982		(129,355)
Net income attributable to Series 1 Convertible Preferred Stock	(24,435)		-
Series 2 Convertible Preferred Stock dividends attributable to Series 1 Convertible Preferred Stock	12,147		-
Net income/ (loss) attributable to common shares- Numerator for basic EPS	1,177,694		(129,355)
Effect of dilutive securities:
Series 2 Convertible Preferred Stock dividends	-		-
Net income/ (loss) attributable to common shares after assumed conversions – Numerator for diluted EPS	$	1,177,694	$	(129,355)
Denominator
Weighted average of common shares outstanding- Denominator for basic EPS	21,586,935		21,716,852
Effect of dilutive securities
Series 2 Convertible Preferred Stock	-		-
Series 1 Convertible Preferred Stock	225,231		-
Common stock options and performance share units	419,622		-
Common stock warrants	-		-
Adjusted weighted average of common shares outstanding and assumed conversions- Denominator for diluted EPS	22,231,788		21,716,852
Basic EPS	$	0.05	$	(0.01)
Diluted EPS	$	0.05	$	(0.01)

Schedule of Financial Instruments Measured at Fair Value on a Recurring Basis

The Company’s financial instruments that are measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 is as follows:


	Fair Value Measurement Using						Carrying Amount		Unpaid Principal Balance
Financial instruments – As of September 30, 2024 (1)	Level 1		Level 2		Level 3		Carrying Amount		Unpaid Principal Balance
Loan receivables at fair value	$	-	$	-	$	47,116,140	$	47,116,140	$	85,301,661


	Fair Value Measurement Using						Carrying Amount		Unpaid Principal Balance
Financial instruments – As of December 31, 2023 (1)	Level 1		Level 2		Level 3		Carrying Amount		Unpaid Principal Balance
Loan receivables at fair value	$	-	$	-	$	35,794,290	$	35,794,290	$	48,076,705

(1)For cash, lease receivable, and accounts payable the carrying amount is a reasonable estimate of fair value due to their short-term nature. The carrying value of loans payable under the Credit Agreement, the carrying value of loans payable under the Basepoint Credit Agreement, and the carrying value of promissory notes to related parties approximates fair value based upon their interest rates, which approximate current market interest rates.

Schedule of Fair Value Assets Measured on Recurring Basis, Unobservable Input Reconciliation

For Level 3 assets carried at fair value measured on a recurring basis using significant unobservable inputs, the following table presents a reconciliation of the beginning and ending balances for the nine months ended September 30, 2024 and the year ended December 31, 2023:


	Nine Months Ended September 30, 2024		Year Ended December 31, 2023
Beginning balance	$	35,794,290	$	32,932,504
Purchases of loan participation	1,058,998		389,949
Obligation of loan participation	-		(12,931)
Loan originations	39,193,233		57,554,746
Interest and fees(1)	8,527,443		14,801,188
Collections	(47,564,200)		(80,089,020)
Net charge off (1)	(2,833,156)		(11,041,155)
Net change in fair value(1)	12,939,532		21,259,009
Ending balance	$	47,116,140	$	35,794,290

(1)Included in loan revenues and fees, net of changes in fair value in the condensed consolidated statements of operations

Schedule of Quantitative Information About the Inputs Used in Fair Value Measurement

For Level 3 assets carried at fair value measured on a recurring basis using significant unobservable inputs, the following table presents quantitative information about the inputs used in the fair value measurement as of September 30, 2024 and December 31, 2023:


	September 30, 2024						December 31, 2023
	Minimum		Maximum		Weighted Average(2)		Minimum		Maximum		Weighted Average
Estimated losses(1)	0	%	93.9	%	60.6	%	0	%	92.5	%	28.9	%
Servicing costs	-		-		4.1	%	-		-		4.7	%
Discount rate	-		-		20.3	%	-		-		20.1	%

(1)Figure disclosed as a percentage of outstanding principal balance.

(2)Unobservable inputs were weighted by outstanding principal balance, which are grouped by origination channel.

Schedule of Concerning Loan Receivables at Fair Value

Other relevant data as of September 30, 2024 and December 31, 2023 concerning loan receivables at fair value are as follows:


	September 30, 2024		December 31, 2023
Aggregate fair value of loan receivables that are 90 days or more past due	$	39,728,088	$	27,828,083
Unpaid principal balance of loan receivables that are 90 days or more past due	$	77,354,984	$	29,304,704
Aggregate fair value of loan receivables in non-accrual status	$	39,906,943	$	27,764,926