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LM Funding America(LMFA) - 2021 Q1 - Quarterly Report
2021-05-14 13:00
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-37605 LM FUNDING AMERICA, INC. (Exact name of Registrant as specified in its charter) Delaware 47-3844457 (State or other jurisd ...
LM Funding America(LMFA) - 2020 Q4 - Annual Report
2021-03-31 20:01
PART I [Business](index=3&type=section&id=Item%201.%20Business) LM Funding America, Inc. provides funding to nonprofit community associations by purchasing delinquent accounts, primarily in Florida, through its Original Product and New Neighbor Guaranty™ program - The company's core business is providing funding to nonprofit community associations by purchasing rights to their delinquent accounts, primarily in Florida[8](index=8&type=chunk) - The "Original Product" involves funding an amount up to the statutory "Super Lien Amount", which protects the principal investment, with the company receiving collected interest and late fees upon collection[10](index=10&type=chunk)[13](index=13&type=chunk)[14](index=14&type=chunk) - The "New Neighbor Guaranty" program involves the company taking assignment of substantially all of an Association's delinquent unit debt in exchange for making guaranteed monthly payments on those units[11](index=11&type=chunk)[17](index=17&type=chunk) - In March 2020, the company entered into a Share Exchange Agreement with Hanfor, which was subsequently terminated in July 2020 due to Hanfor's failure to provide audited financial statements, leading to a dispute[19](index=19&type=chunk)[21](index=21&type=chunk) - In August 2020, the company raised approximately **$8.2 million** in net proceeds through an underwritten public offering of common stock and warrants[28](index=28&type=chunk) - In January 2021, the company sponsored a special purpose acquisition company (SPAC), LMF Acquisition Opportunities, Inc., which closed a **$103.5 million** IPO, with the company, through its subsidiary, investing **$5.7 million** in the sponsor[29](index=29&type=chunk)[30](index=30&type=chunk) - The company engaged in specialty finance transactions with Borqs Technologies, including purchasing loan receivables and Senior Secured Convertible Promissory Notes[31](index=31&type=chunk)[33](index=33&type=chunk) [Risk Factors](index=7&type=section&id=Item%201A.%20Risk%20Factors) The company faces numerous risks, including business-related fluctuations, potential unprofitability of acquisitions, COVID-19 impacts, and a legal dispute with Hanfor Owner - A potential legal dispute with Hanfor Owner over the terminated Share Exchange Agreement could materially adversely affect the business, with Hanfor demanding **$1.25 million** plus interest[45](index=45&type=chunk)[46](index=46&type=chunk) - The business is highly dependent on third-party law firms, particularly Business Law Group, P.A. (BLG), which serviced over **98%** of the company's accounts as of December 31, 2020[55](index=55&type=chunk) - All of the company's accounts are located in Florida, creating a significant concentration risk where an economic downturn or adverse market conditions in Florida could materially harm financial results[73](index=73&type=chunk) - The company has made a significant investment of **$5.7 million** in a subsidiary that sponsors a SPAC (LMF Acquisition Opportunities, Inc.) and could lose its entire investment if the SPAC fails to complete a business combination within the specified timeframe[88](index=88&type=chunk)[89](index=89&type=chunk) - The company has previously received non-compliance notices from Nasdaq regarding the minimum bid price rule, and a future delisting could impair liquidity and the ability to raise capital[90](index=90&type=chunk)[91](index=91&type=chunk) - The business model is subject to extensive government regulation, including the Fair Debt Collection Practices Act and potential oversight by the Consumer Financial Protection Bureau (CFPB), which could limit recovery efforts and increase costs[61](index=61&type=chunk)[62](index=62&type=chunk) [Unresolved Staff Comments](index=16&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - None[98](index=98&type=chunk) [Properties](index=16&type=section&id=Item%202.%20Properties) The company's principal executive and administrative offices are located in Tampa, Florida, where they lease approximately 5,600 square feet of office space under a lease agreement expiring on July 31, 2022 - The company leases approximately **5,600 square feet** of office space in Tampa, Florida, for about **$8,100 per month**, with the lease expiring in July 2022[99](index=99&type=chunk) [Legal Proceedings](index=16&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently a party to any material litigation, with the exception of a potential dispute with Hanfor Owner, and frequently engages in litigation as a normal part of its business operations for collecting on accounts - The company is not currently a party to material litigation other than a potential dispute with Hanfor Owner over a terminated agreement[100](index=100&type=chunk) - The company frequently becomes a party to litigation in the ordinary course of business, including prosecuting or defending claims related to its contracts with client Associations[100](index=100&type=chunk)[101](index=101&type=chunk) [Mine Safety Disclosures](index=17&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's business - None[102](index=102&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=18&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock is traded on the Nasdaq Capital Market under the ticker symbol "LMFA", with 3 holders of record as of December 31, 2020, and no recent sales of unregistered securities or purchases of its own equity securities - The company's common stock is quoted on the Nasdaq Capital Market under the symbol "LMFA"[104](index=104&type=chunk) - As of December 31, 2020, there were **3 holders** of record of the common stock[104](index=104&type=chunk) [Selected Financial Data](index=18&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable for a smaller reporting company - Not applicable[108](index=108&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) For the year ended December 31, 2020, total revenues decreased by **47%** to **$1.3 million** from **$2.4 million** in 2019, operating expenses remained relatively flat at **$5.3 million**, and the company reported a net loss of **$4.0 million** compared to **$3.0 million** in 2019, with cash and cash equivalents increasing significantly to **$11.6 million** from **$1.1 million** due to capital raises that alleviated going concern doubts [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Comparing 2020 to 2019, total revenues fell by **$1.1 million (47%)** to **$1.3 million** due to fewer account payoffs and reduced rental revenue, while operating expenses decreased slightly by **$0.1 million** to **$5.3 million** due to offsetting effects of goodwill impairment and increased staff costs, widening the net loss from continuing operations to **$4.1 million** in 2020 from **$3.0 million** in 2019 Comparison of Operations (2020 vs. 2019) | Financial Metric | 2020 | 2019 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $1.3 million | $2.4 million | -$1.1 million | -47% | | Operating Expenses | $5.3 million | $5.4 million | -$0.1 million | -1.0% | | Net Loss from Continuing Operations | $4.1 million | $3.0 million | -$1.1 million | -36.7% | | Net Loss | $4.0 million | $3.0 million | -$1.0 million | -33.3% | - The decrease in revenue was primarily due to a **30%** decrease in account payoffs (351 in 2020 vs. 502 in 2019) and a lower average revenue collected per unit[146](index=146&type=chunk) - Operating expenses in 2020 included a **$2.1 million** increase in staff costs due to severance (**$450k**), bonuses (**$630k**), and a contract buyout (**$819k**), which was offset by a **$1.65 million** goodwill impairment that occurred in 2019, making the net change minimal[148](index=148&type=chunk)[149](index=149&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2020, the company had **$11.6 million** in cash, a substantial increase from **$1.1 million** at year-end 2019, primarily driven by **$12.6 million** in net cash from financing activities, including **$8.2 million** net proceeds from a public offering and **$3.1 million** from warrant exercises, while total debt decreased significantly from **$4.1 million** to **$282,042** due to the forgiveness of a **$3.5 million** related-party convertible note Cash and Cash Equivalents | Date | Cash and Cash Equivalents | | :--- | :--- | | December 31, 2020 | $11.6 million | | December 31, 2019 | $1.1 million | Cash Flow Summary (Year Ended Dec 31) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net Cash Used in Operations | ($3.5 million) | ($1.2 million) | | Net Cash Used in Investing | ($1.5 million) | ($1.1 million) | | Net Cash Provided by (Used in) Financing | $12.6 million | ($0.2 million) | - The company raised approximately **$12.6 million** from financing activities in 2020, including **$8.2 million** from a public offering, **$1.3 million** from a stock subscription, and **$3.1 million** from warrant exercises[163](index=163&type=chunk) Outstanding Debt | Date | Total Debt | | :--- | :--- | | December 31, 2020 | $282,042 | | December 31, 2019 | $4,149,578 | [Liquidity Outlook](index=27&type=section&id=Liquidity%20Outlook) Despite a history of significant operating losses, management believes the substantial doubt about the company's ability to continue as a going concern has been alleviated by raising approximately **$14.0 million** in capital during 2020, resulting in a cash balance of **$11.6 million** at year-end, deemed sufficient for at least 12 months - The company raised approximately **$14.0 million** in 2020 through various financing activities, including warrant exercises and a public offering[170](index=170&type=chunk) - With **$11.6 million** in cash as of December 31, 2020, management believes the previously reported going concern issue has been alleviated and that it has sufficient liquidity for the next 12 months[170](index=170&type=chunk)[171](index=171&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable for a smaller reporting company - Not applicable[174](index=174&type=chunk) [Financial Statements and Supplementary Data](index=27&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section indicates that the company's Financial Statements, Notes, and the Report of Independent Registered Public Accounting Firm are located starting on page F-1 of the Annual Report on Form 10-K - The Financial Statements required by this item begin on page F-1 of the report[174](index=174&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=28&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports that there have been no changes in or disagreements with its accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure - None[175](index=175&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that as of December 31, 2020, the company's disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting, specifically a lack of effective segregation of certain accounting duties because of the small size of the accounting staff, though management believes the financial statements are fairly presented - Management concluded that disclosure controls and procedures were not effective as of December 31, 2020[176](index=176&type=chunk) - A material weakness was identified in internal control over financial reporting: the company did not effectively segregate certain accounting duties due to the small size of its accounting staff[179](index=179&type=chunk) - As a smaller reporting company, the management's report on internal control was not subject to attestation by the independent registered public accounting firm[180](index=180&type=chunk) [Other Information](index=29&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[183](index=183&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=29&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The information required for this item, concerning directors, executive officers, and corporate governance, will be provided in the company's definitive proxy statement for its 2021 annual meeting of stockholders and is incorporated by reference - Information is incorporated by reference from the definitive proxy statement for the 2021 annual meeting of stockholders[184](index=184&type=chunk) [Executive Compensation](index=29&type=section&id=Item%2011.%20Executive%20Compensation) The information required for this item, concerning executive compensation, will be provided in the company's definitive proxy statement for its 2021 annual meeting of stockholders and is incorporated by reference - Information is incorporated by reference from the definitive proxy statement for the 2021 annual meeting of stockholders[185](index=185&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=29&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) The information required for this item, concerning security ownership, will be provided in the company's definitive proxy statement for its 2021 annual meeting of stockholders and is incorporated by reference - Information is incorporated by reference from the definitive proxy statement for the 2021 annual meeting of stockholders[186](index=186&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=29&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The information required for this item, concerning related party transactions and director independence, will be provided in the company's definitive proxy statement for its 2021 annual meeting of stockholders and is incorporated by reference - Information is incorporated by reference from the definitive proxy statement for the 2021 annual meeting of stockholders[187](index=187&type=chunk) [Principal Accounting Fees and Services](index=29&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) The information required for this item, concerning accounting fees and services, will be provided in the company's definitive proxy statement for its 2021 annual meeting of stockholders and is incorporated by reference - Information is incorporated by reference from the definitive proxy statement for the 2021 annual meeting of stockholders[188](index=188&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=29&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the documents filed as part of the report, including the financial statements (located at F-1) and an index of all exhibits filed with or incorporated by reference into the report - This item lists the financial statements and exhibits filed as part of the Form 10-K[190](index=190&type=chunk) [Form 10-K Summary](index=29&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no summary for this item - None[191](index=191&type=chunk) Financial Statements [Report of Independent Registered Public Accounting Firm](index=31&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The independent auditor, MaloneBailey, LLP, issued an unqualified opinion on the consolidated financial statements for the years ended December 31, 2020, and 2019, concluding that they are presented fairly in conformity with U.S. GAAP, with no critical audit matters identified - The auditor, MaloneBailey, LLP, issued an unqualified opinion on the financial statements for the years ended December 31, 2020 and 2019[196](index=196&type=chunk) - The financial statements are deemed to present fairly, in all material respects, the financial position and results of operations in conformity with U.S. GAAP[196](index=196&type=chunk) - The auditor identified no critical audit matters[200](index=200&type=chunk) [Consolidated Financial Statements](index=32&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show a significant increase in total assets to **$12.3 million** in 2020 from **$7.6 million** in 2019, primarily due to a rise in cash from **$0.8 million** to **$11.6 million**, while total liabilities decreased from **$4.8 million** to **$0.8 million** due to a **$3.5 million** related-party note forgiveness, and total stockholders' equity grew from **$2.8 million** to **$11.5 million**, with a net loss of **$4.0 million** on revenues of **$1.3 million** in 2020 compared to a net loss of **$3.0 million** on revenues of **$2.4 million** in 2019 Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $11,553 | $823 | | Total Current Assets | $12,121 | $1,773 | | Total Assets | $12,317 | $7,641 | | **Liabilities & Equity** | | | | Total Current Liabilities | $492 | $4,116 | | Total Liabilities | $849 | $4,806 | | Total Stockholders' Equity | $11,468 | $2,835 | | Total Liabilities & Equity | $12,317 | $7,641 | Consolidated Statement of Operations Data (in thousands) | | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | | :--- | :--- | :--- | | Total Revenues | $1,264 | $2,386 | | Total Operating Expenses | $5,316 | $5,369 | | Operating Loss | ($4,052) | ($2,983) | | Net Loss | ($4,043) | ($3,005) | | Basic & Diluted Loss Per Share | ($0.50) | ($0.96) | [Notes to Consolidated Financial Statements](index=37&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial figures, including the disposal of the IIU subsidiary in January 2020, the termination of the Hanfor share exchange agreement, and subsequent capital raises that alleviated previous going-concern doubts, with revenue recognized on a cash or cost-recovery basis, and subsequent events including the Borqs transaction yielding **$5.7 million** and the sponsorship of a SPAC - On January 8, 2020, the company sold its subsidiary IIU, Inc. back to Craven House Capital, which is now treated as a discontinued operation, with the purchase price paid via cancellation of a **~$3.5 million** convertible note owed to Craven[215](index=215&type=chunk)[222](index=222&type=chunk)[348](index=348&type=chunk) - The company's legal services for collections are primarily performed by Business Law Group (BLG), a related party, with approximately **$1.0 million** paid to BLG in 2020[335](index=335&type=chunk)[337](index=337&type=chunk) - The company raised significant capital in 2020, including **~$8.2 million** from a public offering and **~$3.1 million** from warrant exercises, which increased cash to **$11.6 million** and alleviated prior 'going concern' issues[233](index=233&type=chunk)[321](index=321&type=chunk)[353](index=353&type=chunk) - Subsequent to year-end, the company completed its transaction with Borqs, realizing approximately **$5.7 million** in proceeds, and also loaned **$5.7 million** to its subsidiary to sponsor the LMF Acquisition Opportunities Inc. SPAC[357](index=357&type=chunk)[358](index=358&type=chunk) Stock Warrant Activity (2020) | | Number of Warrants | Weighted Avg. Exercise Price | | :--- | :--- | :--- | | Beginning Balance | 3,959,287 | $5.45 | | Granted | 11,200,000 | $0.90 | | Exercised | 1,377,700 | $2.24 | | Forfeited/Adjusted | (191,528) | - | | Ending Balance | 13,590,059 | $0.84 |
LM Funding America(LMFA) - 2020 Q3 - Quarterly Report
2020-11-16 21:21
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-37605 LM FUNDING AMERICA, INC. (Exact name of Registrant as specified in its charter) Delaware 47-3844457 (State or other ju ...
LM Funding America(LMFA) - 2020 Q2 - Quarterly Report
2020-08-07 23:52
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-37605 LM FUNDING AMERICA, INC. (Exact name of Registrant as specified in its charter) Delaware 47-3844457 (State or other jurisdi ...
LM Funding America(LMFA) - 2020 Q1 - Quarterly Report
2020-05-18 21:01
FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 For the quarterly period ended March 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-37605 (Exact name of Registrant as specified in its charter) Delaware 47-3844457 (State or other jurisdiction of incorporation o ...
LM Funding America(LMFA) - 2019 Q4 - Annual Report
2020-04-14 13:25
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-37605 LM FUNDING AMERICA, INC. (Exact name of Registrant as specified in its Charter) Delaware 47-3844457 (State or other jurisdictio ...
LM Funding America(LMFA) - 2019 Q3 - Quarterly Report
2019-11-14 21:45
PART I. FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's financials show increased assets from an acquisition, a widening net loss, and substantial doubt about its going concern status [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew due to goodwill from the IIU acquisition, while liabilities surged and stockholders' equity declined Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | Sep 30, 2019 | Dec 31, 2018 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$9,608,174** | **$6,059,568** | **+58.6%** | | Goodwill | $5,689,586 | $0 | N/A | | Cash | $2,826,408 | $3,520,753 | -19.7% | | **Total Liabilities** | **$4,954,007** | **$250,919** | **+1874.4%** | | Related party convertible note payable | $3,461,782 | $0 | N/A | | **Total Stockholders' Equity** | **$4,654,167** | **$5,808,649** | **-19.9%** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenues decreased while operating expenses rose significantly, leading to a substantial increase in the company's net loss Statements of Operations Summary (Unaudited) | Metric | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | **$2,376,468** | **$2,623,229** | **-9.4%** | | Net Commission Revenue | $501,244 | $0 | N/A | | Interest on delinquent association fees | $1,226,464 | $1,574,960 | -22.1% | | **Total Operating Expenses** | **$3,459,979** | **$2,696,748** | **+28.3%** | | Professional fees | $1,538,043 | $888,949 | +73.0% | | **Net Loss** | **$(1,187,168)** | **$(140,482)** | **+745.1%** | | **Loss Per Share (Basic)** | **$(0.38)** | **$(0.22)** | **+72.7%** | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operations increased significantly due to a larger net loss, resulting in a net decrease in cash for the period Cash Flow Summary (Unaudited) | Cash Flow Activity | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(908,435) | $(459,916) | | Net cash provided by investing activities | $326,919 | $292,185 | | Net cash provided by (used in) financing activities | $(112,829) | $351,810 | | **Net Decrease in Cash** | **$(694,345)** | **$184,079** | | **Cash - End of Period** | **$2,826,408** | **$774,473** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the IIU acquisition, related party transactions, increased debt, and management's doubt about the company's ability to continue as a going concern - The company operates a diversified business with two main segments: **Specialty Finance** and **Specialty Health Insurance**[18](index=18&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk) - On January 16, 2019, the company acquired 100% of IIU, Inc for approximately **$4.97 million**, paid via a canceled note and a **$3.46 million convertible promissory note**[44](index=44&type=chunk)[45](index=45&type=chunk)[75](index=75&type=chunk) - The company has experienced significant operating losses, with cumulative losses of approximately **$12.7 million**, raising **substantial doubt about its ability to continue as a going concern**[94](index=94&type=chunk) - Legal services are primarily performed by a related party, Business Law Group (BLG), for a fixed monthly fee of **$82,000**[84](index=84&type=chunk)[86](index=86&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses decreased revenue, increased expenses driven by the IIU acquisition, a wider net loss, and strained liquidity [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Nine-month revenues fell while operating expenses surged due to acquisition costs, significantly increasing the net loss compared to the prior year Three-Month Performance Comparison (Q3 2019 vs Q3 2018) | Metric | Q3 2019 | Q3 2018 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $773.7k | $781.5k | -1.0% | | Operating Expenses | $1,020k | $991k | +3.0% | | Net Loss | $(280k) | $(587k) | -52.3% | Nine-Month Performance Comparison (YTD 2019 vs YTD 2018) | Metric | YTD 2019 | YTD 2018 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $2,376k | $2,623k | -9.4% | | Operating Expenses | $3,460k | $2,697k | +28.3% | | Net Loss | $(1,187k) | $(140k) | +747.9% | - The acquisition of IIU, Inc contributed **$501,000 in net commission revenue** and **$276,000 in operating expenses** during the first nine months of 2019[126](index=126&type=chunk)[127](index=127&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) The company's cash position decreased while total debt increased dramatically due to a large convertible note maturing in January 2020 - Cash and cash equivalents decreased to **$2.83 million** as of September 30, 2019, from $3.52 million at December 31, 2018[133](index=133&type=chunk) - Net cash used in operations for the nine months ended September 30, 2019, was **$908,435**[134](index=134&type=chunk) - Total principal debt increased to **$4.2 million**, including a **$3.46 million senior secured convertible note** that matures in January 2020[136](index=136&type=chunk)[137](index=137&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is not required to provide disclosures under this item as a smaller reporting company - As a smaller reporting company, LM Funding is **not required to provide disclosures** about market risk[140](index=140&type=chunk) [Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were not effective due to a material weakness in the segregation of accounting duties - Management concluded that **disclosure controls and procedures were not effective** as of September 30, 2019[142](index=142&type=chunk) - A **material weakness** was identified due to the company's failure to effectively segregate certain accounting duties[142](index=142&type=chunk) - Despite the material weakness, management believes the consolidated financial statements are **fairly presented in all material respects**[143](index=143&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) The company is not party to any material litigation but engages in legal actions as part of its ordinary course of business - The company is not a party to any material litigation proceedings but frequently becomes party to litigation in the **ordinary course of business**[147](index=147&type=chunk) [Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) No material changes have been made to the risk factors previously disclosed in the company's Annual Report on Form 10-K - **No material changes** have occurred from the risk factors previously disclosed in the Annual Report Form 10-K for the fiscal year ended December 31, 2018[149](index=149&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity and details the use of $9.0 million from its 2015 initial public offering - As of September 30, 2019, the company has used **$9.0 million** of the **$9.6 million** net proceeds from its 2015 IPO[154](index=154&type=chunk) - Use of IPO proceeds included debt repayment (**$3.11 million**), interest payments (**$0.89 million**), and various investments[154](index=154&type=chunk) [Other Items](index=27&type=section&id=Item%203%2C%204%2C%205.%20Other%20Items) The company reports no defaults upon senior securities, mine safety disclosures, or other required information - The company reported **"None"** for Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information)[156](index=156&type=chunk) [Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists the required CEO and CFO certifications and XBRL interactive data files filed with the report - Exhibits filed with the report include **certifications from the Principal Executive Officer and Principal Financial Officer**, as well as XBRL data files[158](index=158&type=chunk)
LM Funding America(LMFA) - 2019 Q2 - Quarterly Report
2019-08-14 21:23
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 Commission file number 001-37605 LM FUNDING AMERICA, INC. (Exact name of Registrant as specified in its charter) Delaware 47-3844457 (State or other jurisdi ...
LM Funding America(LMFA) - 2019 Q1 - Quarterly Report
2019-05-15 21:06
[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited financial statements and management's analysis for the quarter ended March 31, 2019 [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The financial statements for Q1 2019 reflect significant changes due to the IIU acquisition, including increased assets and liabilities, and a widened net loss [Condensed Consolidated Balance Sheets](index=3&type=section&id=LM%20Funding%20America%2C%20Inc.%20and%20Subsidiaries%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a substantial increase in total assets and liabilities, primarily driven by the IIU, Inc. acquisition and related financing - Total assets increased significantly to **$10.1 million** as of March 31, 2019, from **$6.1 million** at December 31, 2018, primarily due to the recognition of **$5.8 million** in Goodwill from the acquisition of IIU, Inc[7](index=7&type=chunk) - Total liabilities rose to **$4.8 million** from **$251 thousand**, mainly driven by a new **$3.6 million** related party convertible note payable and a new **$701 thousand** note payable, both related to the IIU acquisition[7](index=7&type=chunk) Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2019 ($) | December 31, 2018 ($) | | :--- | :--- | :--- | | **Assets** | | | | Cash | $3,378,783 | $3,520,753 | | Goodwill | $5,809,786 | $0 | | **Total Assets** | **$10,138,179** | **$6,059,568** | | **Liabilities** | | | | Note payable | $700,876 | $42,875 | | Related party convertible note payable | $3,581,982 | $0 | | **Total Liabilities** | **$4,760,728** | **$250,919** | | **Total Stockholders' Equity** | **$5,377,451** | **$5,808,649** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=LM%20Funding%20America%2C%20Inc.%20and%20Subsidiaries%20Condensed%20Consolidated%20Statements%20of%20Operations) The statements of operations reveal decreased revenues and increased operating expenses, leading to a significantly larger net loss for the quarter - Total revenues for Q1 2019 decreased to **$762,699** from **$963,733** in Q1 2018, primarily due to lower interest on delinquent association fees and reduced rental revenue, partially offset by **$98,768** in new net commission revenue from the recently acquired IIU, Inc[8](index=8&type=chunk) - Operating expenses increased to **$1.21 million** in Q1 2019 from **$972,651** in Q1 2018, largely due to a significant rise in professional fees[8](index=8&type=chunk) Q1 2019 vs. Q1 2018 Performance (Unaudited) | Metric | Q1 2019 ($) | Q1 2018 ($) | | :--- | :--- | :--- | | Total Revenues | $762,699 | $963,733 | | Total Operating Expenses | $1,211,930 | $972,651 | | Operating Loss | ($449,231) | ($8,918) | | Net Loss | ($457,018) | ($8,918) | | Basic & Diluted Loss Per Share | ($0.15) | ($0.01) | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=LM%20Funding%20America%2C%20Inc.%20and%20Subsidiaries%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flow statements indicate increased cash used in operations and a slight decrease in overall cash and cash equivalents for the period - Net cash used in operating activities increased to **$269,864** in Q1 2019 from **$136,526** in Q1 2018, primarily due to a larger net loss[9](index=9&type=chunk) - Net cash provided by investing activities was **$146,252** in Q1 2019, compared to **$64,457** in Q1 2018, driven by **$51,327** in net cash received from the IIU business acquisition and higher proceeds from the sale of real estate assets[9](index=9&type=chunk) - The company's cash position decreased by **$141,970** during the quarter, ending at **$3,378,783** as of March 31, 2019[9](index=9&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=LM%20Funding%20America%2C%20Inc.%20and%20Subsidiaries%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity decreased primarily due to the net loss incurred during the quarter, partially offset by warrant exercises - Total stockholders' equity decreased from **$5.81 million** at the end of 2018 to **$5.38 million** as of March 31, 2019[10](index=10&type=chunk) - The decrease in equity was primarily driven by the net loss of **$457,018** for the quarter, which was slightly offset by **$22,320** from the exercise of warrants and **$3,500** in stock option expense[10](index=10&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's business segments, the IIU acquisition, goodwill recognition, and management's going concern assessment - The company operates as a diversified business with two main segments: a specialty finance company providing funding to community associations, and a specialty health insurance broker (IIU, Inc.) acquired on January 16, 2019[13](index=13&type=chunk)[15](index=15&type=chunk)[16](index=16&type=chunk) - On January 16, 2019, the company acquired **100%** of IIU, Inc. for a total purchase price of **$5,089,400**, including the cancellation of a **$1.5 million** note and the issuance of a **$3.58 million** convertible promissory note to the seller, Craven House North America, LLC[41](index=41&type=chunk)[42](index=42&type=chunk)[70](index=70&type=chunk) - The acquisition of IIU, Inc. resulted in the recognition of **$5,809,786** in goodwill on the balance sheet[44](index=44&type=chunk)[71](index=71&type=chunk) - Despite significant operating losses over the past three years, management believes it has sufficient cash to mitigate substantial doubt about its ability to continue as a going concern for the next 12 months[87](index=87&type=chunk)[89](index=89&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Q1 2019 revenue decline, increased operating expenses, widened net loss, and the impact of the IIU acquisition on liquidity - Total revenues decreased by **20.9%** in Q1 2019 compared to Q1 2018; while payoff events increased from **81** to **135**, average revenue per unit (excluding rental) decreased sharply from **$9,152** to **$3,824**[109](index=109&type=chunk)[110](index=110&type=chunk) - Operating expenses rose by **24.6%**, driven by a **$268,000** increase in professional fees primarily related to the IIU acquisition, which also added **$76,000** in operating expenses not present in the prior year[112](index=112&type=chunk) - The net loss for Q1 2019 was **$457,000**, a significant increase from the **$9,000** loss in Q1 2018, attributed to increased costs from the IIU purchase and reduced revenue[116](index=116&type=chunk) - As of March 31, 2019, the company had cash of **$3.4 million**, with total principal indebtedness dramatically increasing to **$4.3 million** from **$43,000** at year-end 2018, mainly due to financing the IIU acquisition[117](index=117&type=chunk)[120](index=120&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company, as a smaller reporting entity, is exempt from providing specific market risk disclosures - The company is a smaller reporting company and is not required to provide disclosures regarding market risk[123](index=123&type=chunk) [Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective due to a material weakness in accounting duty segregation, with plans to address it - Management concluded that disclosure controls and procedures were **not effective** as of March 31, 2019[127](index=127&type=chunk) - A material weakness was identified due to the company's inability to effectively segregate certain accounting duties, a result of its small accounting staff[127](index=127&type=chunk)[128](index=128&type=chunk) - Despite the material weakness, management believes the consolidated financial statements in the report are fairly presented in all material respects[128](index=128&type=chunk) - No changes were made to the internal control over financial reporting during the quarter that materially affected, or are likely to materially affect, these controls[130](index=130&type=chunk) [PART II. OTHER INFORMATION](index=24&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, and other disclosures relevant to the company's operations [Legal Proceedings](index=24&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course litigation but is not a party to any other material legal proceedings - The company is frequently involved in litigation as part of its ordinary course of business, but is not currently a party to any material litigation proceedings outside of this scope[132](index=132&type=chunk) [Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the previously disclosed risk factors from the 2018 Annual Report on Form 10-K were reported - No material changes from the risk factors disclosed in the Annual Report Form 10-K for the year ended December 31, 2018, were reported[134](index=134&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=24&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity sales occurred, and the company updated on the use of $9.0 million from its 2015 IPO proceeds - There were no unregistered sales of securities during the period[135](index=135&type=chunk) - From the **$9.6 million** net proceeds of its 2015 IPO, the company has used **$9.0 million** as of March 31, 2019, for purposes including debt repayment (**$3.11 million**), interest payments (**$0.89 million**), and funding its business operations[138](index=138&type=chunk)[139](index=139&type=chunk) [Defaults Upon Senior Securities](index=25&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults on any senior securities during the period - None[141](index=141&type=chunk) [Mine Safety Disclosures](index=25&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This disclosure item is not applicable to the company's operations - None[142](index=142&type=chunk) [Other Information](index=25&type=section&id=Item%205.%20Other%20Information) No additional information was reported under this item for the period - None[143](index=143&type=chunk) [Exhibits](index=25&type=section&id=Item%206.%20Exhibits) This section lists all documents filed as exhibits, including officer certifications and XBRL data files - Lists exhibits filed with the report, such as CEO/CFO certifications (31.1, 31.2, 32.1) and XBRL interactive data files[143](index=143&type=chunk)[148](index=148&type=chunk)
LM Funding America(LMFA) - 2018 Q4 - Annual Report
2019-04-16 21:05
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO (I.R.S. Employer Identification No.) Registrant's telephone number, including area code: (813) 222-8996 Title of each Class Name of each exchange on which regis ...