UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):  May 14, 2021

 

LM FUNDING AMERICA, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

(State or other jurisdiction of incorporation)

001-37605

(Commission File Number)

47-3844457

(IRS Employer Identification No.)

 

 

 

 

1200 West Platt Street, Suite 1000

Tampa, Florida 33606

(Address of principal executive offices, including zip code)

 

(813) 222-8996

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:  

 

□  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

□  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

□  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

□  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

Trading symbol

Name of each exchange on which registered

Common Stock par value $0.001 per share

LMFA

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company □

 

If an emerging growth company, indicate by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. □

1

 

Item 2.02   Results of Operations and Financial Condition.

 

On May 14, 2021, LM Funding America, Inc. (the “Company”) issued a press release announcing its financial results for the three months ended March 31, 2021 and 2020.

The information furnished in this Item 2.02, including Exhibit 99.1, is not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that Section. This information will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

 

Item 9.01   Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit No.

 

Description

 

 

 

 

99.1

 

Earnings Release Dated May 14, 2021

 

 

 

***

 

 

Forward-Looking Statements

 

This Current Report on Form 8-K may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements involve risks and uncertainty. Words such as “anticipate,” “estimate,” “expect,” “intend,” “plan,” and “project” and other similar words and expressions are intended to signify forward-looking statements.  Forward-looking statements are not guarantees of future results and conditions but rather are subject to various risks and uncertainties.  Such statements are based on the Company’s current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Such risks and uncertainties include the risk that the conditions for the sale of all of the Notes may not be satisfied and/or that the Company may not be able to recover its full investment and anticipated return from the Notes.  Investors are cautioned that there can be no assurance actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various risks and uncertainties.   Investors should refer to the risks detailed from time to time in the reports the Company files with the SEC, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as well as other filings on Form 10-Q and periodic filings on Form 8-K, for additional factors that could cause actual results to differ materially from those stated or implied by such forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law.

 

 

 


2

 

 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

LM Funding America, Inc.

 


 


 


By:

 

/s/  Richard Russell

Richard Russell
Chief Financial Officer


Dated:  May 14, 2021


 


 


 

 

 

3

Exhibit 99.1

 

 

LM Funding Reports Net Income of $4.4 Million or $0.87 Per Basic Common Share for the First Quarter of 2021

 

TAMPA, FL / ACCESSWIRE / May 14, 2021 / LM Funding America, Inc. (NASDAQ:LMFA) ("LM Funding" or "LMFA"), a technology-based specialty finance company, today announced its financial results for the three months ended March 31, 2021.

 

Financial Highlights for the Three Month Period Ended March 31, 2021:

 

•

Revenues declined to $177 thousand in 2021 from $341 thousand in Q1 2020.

 

•

Operating loss was $1,728 thousand in 2021 compared to a loss of $561 thousand in Q1 2020.

 

•

Recognized a $5.7 million realized gain from a transaction with BORQS Technologies Inc. (‘Borqs’) initially projected to net $2 million.

 

•

Sponsor interest in LMF Acquisition Opportunities, Inc. (‘LMAO’) resulted in recognition of a net unrealized gain on securities of $0.6 million on the Company’s $5.7 million purchase of LMAO’s warrants and Class B common shares.

 

•

Net income during the quarter totaled $4.4 million, or $0.87 per basic common share.

 

•

Cash increased to $17.8 million on March 31, 2021 from $11.5 million on December 31, 2020.

 

“Thus far in 2021 we continue to expand our ‘We Buy Problems’ mission.  In addition to $4.4 million in net income during the quarter, our cash position has increased to $17.8 million or $3.29 per basic common share as of March 31st.”  Said Bruce M. Rodgers, Chairman and CEO of LM Funding.  “Revenues from our community association receivables business declined as we continue to develop a digital asset technology strategy to unlock the potential of this business.  We expanded our core business of buying discounted debt and collecting it through court proceedings with the Borqs transaction.  We entered the Borqs transaction projecting to net $2 million and we were pleased to realize a $5.7 million return. Going forward, we will continue to look for other technology enabled specialty finance business opportunities that can leverage our existing platform and expertise.  We also expect our SPAC sponsorship and digital asset strategy to contribute to earnings in the foreseeable future as our core business navigates through the economy’s re-emergence from Covid restrictions.”  

 

Operational Highlights for the First Quarter of 2021 to Date:

 

 

•

LM Funding is developing a digital asset technology strategy to grow its community association receivables business both organically and through acquisitions.

 

•

LMFA announced plans to purchase up to $2 million in digital assets including Bitcoin, Ether, and other digital assets.

 

•

LM Funding sponsored LMAO and its initial public offering, with LMAO closing a $103.5 million upsized IPO (NASDAQ: LMAOU). Net investment in LMAO totals $6.4 million or approximately $1.17 per share.

 

•

LMAO is targeting a business combination in the financial services or financial technology sectors.

 

 

•

LM Funding entered into a second transaction with Borqs with the purchase of a $5 million convertible debt and equity instrument and has funded $1.7 million as of March 31, 2021.

 

About LM Funding America:

LM Funding America, Inc., together with its subsidiaries, is a technology-based specialty finance company that provides funding to nonprofit community associations (Associations) primarily located in the state of Florida, as well as in the states of Washington, Colorado and Illinois, by funding a certain portion of the associations' rights to delinquent accounts that are selected by the Associations arising from unpaid Association assessments.

 

Forward-Looking Statements:

This press release may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” and “project” and other similar words and expressions are intended to signify forward-looking statements. Forward-looking statements are not guaranties of future results and conditions but rather are subject to various risks and uncertainties. Some of these risks and uncertainties are identified in the company's most recent Annual Report on Form 10-K and its other filings with the SEC, which are available at www.sec.gov. These risks and uncertainties include, without limitation, uncertainty created by the COVID-19 pandemic, our ability to acquire new accounts in our specialty finance business at appropriate prices, the need for capital, our ability to hire and retain new employees, changes in governmental regulations that affect our ability to collected sufficient amounts on defaulted consumer receivables, changes in the credit or capital markets, changes in interest rates, and negative press regarding the debt collection industry.  The occurrence of any of these risks and uncertainties could have a material adverse effect on our business, financial condition, and results of operations.

 

 

Company Contact:

Bruce M. Rodgers, Chairman and CEO

LM Funding America, Inc.

Tel (813) 222-8996

investors@lmfunding.com

 

 

 

LM Funding America, Inc. and Subsidiaries Condensed Consolidated Balance Sheets

 

 

 

March 31, 2021

 

 

December 31,

2020

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Cash

 

$

17,803,015

 

 

$

11,552,943

 

Finance receivables:

 

 

 

 

 

 

 

 

Original product - net (Note 2)

 

 

101,811

 

 

 

116,017

 

Special product - New Neighbor Guaranty program, net of allowance for credit losses of (Note 3)

 

 

53,777

 

 

 

52,757

 

Prepaid expenses and other assets

 

 

212,132

 

 

 

399,124

 

Current assets

 

 

18,170,735

 

 

 

12,120,841

 

Fixed assets, net

 

 

5,617

 

 

 

6,171

 

Real estate assets owned

 

 

80,057

 

 

 

18,767

 

Operating lease - right of use assets (Note 7)

 

 

134,859

 

 

 

160,667

 

Long-term investments - debt securities (Note 9)

 

 

1,679,284

 

 

 

-

 

Long-term investments - equity securities (Note 9)

 

 

1,789,338

 

 

 

-

 

Investments in unconsolidated affiliates (Note 9)

 

 

4,569,054

 

 

 

-

 

Other assets

 

 

10,984

 

 

 

10,984

 

Long-term assets

 

 

8,269,193

 

 

 

196,589

 

Total assets

 

$

26,439,928

 

 

$

12,317,430

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Note payable (Note 5)

 

 

38,053

 

 

 

96,257

 

Accounts payable and accrued expenses

 

 

271,515

 

 

 

237,033

 

Due to related party (Note 4)

 

 

232,734

 

 

 

158,399

 

Current portion of lease liability (Note 7)

 

 

78,675

 

 

 

-

 

Total current liabilities

 

 

620,977

 

 

 

491,689

 

 

 

 

 

 

 

 

 

 

Lease liability - long-term (Note 7)

 

 

68,002

 

 

 

171,648

 

Deferred taxes (Note 6)

 

 

3,484

 

 

 

-

 

Note payable - long-term (Note 5)

 

 

186,235

 

 

 

185,785

 

Long-term liabilities

 

 

257,721

 

 

 

357,433

 

Total liabilities

 

 

878,698

 

 

 

849,122

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, par value $0.001; 30,000,000 shares authorized; 5,414,296 and 3,083,760 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

 

 

5,414

 

 

 

3,084

 

Additional paid-in capital

 

 

39,538,550

 

 

 

29,996,257

 

Accumulated deficit

 

 

(14,159,791

)

 

 

(18,536,224

)

Total stockholders’ equity

 

 

25,384,173

 

 

 

11,463,117

 

Non-controlling interest

 

 

177,057

 

 

 

5,191

 

Total stockholders’ equity

 

 

25,561,230

 

 

 

11,468,308

 

Total liabilities and stockholders’ equity

 

$

26,439,928

 

 

$

12,317,430

 

 

 

 

 

 

 

LM Funding America, Inc. and Subsidiaries Condensed Consolidated Income Statement

 

 

 

For the Three Months

Ended March 31,

 

 

 

 

2021

 

 

2020

 

Revenues:

 

 

 

 

 

 

 

 

 

Interest on delinquent association fees

 

 

$

77,444

 

 

$

219,514

 

Administrative and late fees

 

 

 

15,071

 

 

 

23,045

 

Recoveries in excess of cost - special product

 

 

 

29,473

 

 

 

22,628

 

Underwriting and other revenues

 

 

 

22,703

 

 

 

27,929

 

Rental revenue

 

 

 

31,917

 

 

 

48,080

 

Total revenues

 

 

 

176,608

 

 

 

341,196

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

Staff costs and payroll

 

 

 

1,301,981

 

 

 

316,059

 

Professional fees

 

 

 

482,943

 

 

 

506,995

 

Settlement costs with associations

 

 

 

-

 

 

 

11,920

 

Selling, general and administrative

 

 

 

99,769

 

 

 

80,223

 

Recovery of cost from related party receivable

 

 

 

(10,000

)

 

 

(100,000

)

Real estate management and disposal

 

 

 

18,290

 

 

 

85,342

 

Depreciation and amortization

 

 

 

1,696

 

 

 

5,812

 

Collection costs

 

 

 

2,048

 

 

 

(8,321

)

Other operating expenses

 

 

 

7,545

 

 

 

3,794

 

Total operating expenses

 

 

 

1,904,272

 

 

 

901,824

 

Operating loss from continuing operations

 

 

 

(1,727,664

)

 

 

(560,628

)

Realized gain on securities

 

 

 

5,671,464

 

 

 

-

 

Unrealized gain on securities

 

 

 

595,392

 

 

 

-

 

Interest income

 

 

 

13,055

 

 

 

-

 

Interest expense

 

 

 

(464

)

 

 

(6,894

)

Income (loss) from continuing operations before income taxes

 

 

 

4,551,783

 

 

 

(567,522

)

Income tax expense

 

 

 

(3,484

)

 

 

-

 

Net income (loss) from continuing operations

 

 

 

4,548,299

 

 

 

(567,522

)

Gain from operations of discontinued operations

 

 

 

-

 

 

 

16,428

 

Net gain from discontinued operations

 

 

 

-

 

 

 

16,428

 

Net income (loss)

 

 

 

4,548,299

 

 

 

(551,094

)

Less: Net income attributable to non-controlling interest

 

 

 

(171,866

)

 

 

 

 

Net income (loss) attributable to LM Funding America Inc.

 

 

$

4,376,433

 

 

$

(551,094

)

 

 

 

 

 

 

 

 

 

 

Earnings/(loss) per share:

 

 

 

 

 

 

 

 

 

Basic income (loss) per common share - continuing operations

 

 

$

0.87

 

 

$

(0.88

)

Basic income/(loss) per common share - discontinued operations

 

 

$

-

 

 

$

0.03

 

Basic income (loss) per common share - net income (loss) - attributable to LM Funding

 

 

$

0.87

 

 

$

(0.85

)

Diluted income (loss) per common share - continuing operations

 

 

$

0.80

 

 

$

(0.88

)

Diluted earnings/(loss) per common share - discontinued operations

 

 

$

-

 

 

$

0.03

 

Diluted income (loss) per common share - net income (loss) - attributable to LM Funding

 

 

$

0.80

 

 

$

(0.85

)

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

 

 

5,047,498

 

 

 

646,606

 

Diluted

 

 

 

5,439,398

 

 

 

646,606

 

 

LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows

(unaudited)

 

 

 

For the Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income (loss)

 

$

4,548,299

 

 

$

(551,094

)

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net loss to cash used in operating activities

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1,696

 

 

 

5,812

 

Right to use asset depreciation

 

 

25,808

 

 

 

25,093

 

Stock compensation

 

 

-

 

 

 

128,847

 

Recovery of uncollectible related party receivables

 

 

-

 

 

 

(100,000

)

Accrued investment income

 

 

(12,784

)

 

 

-

 

Gain on disposal of discontinued operations

 

 

-

 

 

 

(16,428

)

Deconsolidation of  affiliate

 

 

(43,623

)

 

 

-

 

Unrealized gain on securities

 

 

(595,392

)

 

 

-

 

Realized gain on sale of securities

 

 

(5,671,464

)

 

 

-

 

Change in assets and liabilities

 

 

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

710,163

 

 

 

20,436

 

Accounts payable and accrued expenses

 

 

157,514

 

 

 

(8,102

)

Advances (repayments) from related party

 

 

200,749

 

 

 

197,024

 

Lease liability payments

 

 

(24,971

)

 

 

(22,684

)

Deferred taxes

 

 

3,484

 

 

 

-

 

Net cash provided (used in) operating activities

 

 

(700,521

)

 

 

(321,096

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Net collections of finance receivables - original product

 

 

14,206

 

 

 

28,035

 

Net collections of finance receivables - special product

 

 

(1,020

)

 

 

29,839

 

(Payments)/proceeds for real estate assets owned

 

 

(62,432

)

 

 

(3,026

)

Net cash payment for IIU disposal

 

 

-

 

 

 

(246,914

)

Investment in convertible note receivable

 

 

(1,666,500

)

 

 

-

 

Investment in unconsolidated affiliate

 

 

(5,738,000

)

 

 

-

 

Investment in securities

 

 

(15,547,454

)

 

 

-

 

Proceeds from securities, net

 

 

21,218,918

 

 

 

-

 

Loan to purchase securities

 

 

1,784,250

 

 

 

-

 

Repayment of loan to purchase securities

 

 

(1,784,250

)

 

 

-

 

Net cash used by investing activities

 

 

(1,782,282

)

 

 

(192,066

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Principal repayments

 

 

(343,687

)

 

 

(34,770

)

Insurance financing repayments

 

 

(468,061

)

 

 

-

 

Exercise of warrants

 

 

9,544,623

 

 

 

-

 

Proceeds from stock subscription

 

 

-

 

 

 

250,000

 

 

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

 

8,732,875

 

 

 

215,230

 

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH

 

 

6,250,072

 

 

 

(297,932

)

 

 

 

 

 

 

 

 

 

CASH - BEGINNING OF YEAR

 

 

11,552,943

 

 

 

1,069,823

 

CASH - END OF YEAR

 

$

17,803,015

 

 

$

771,891

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION

 

 

 

 

 

 

 

 

Cash paid for taxes

 

$

-

 

 

$

-

 

Cash paid for interest

 

$

-

 

 

$

6,894