UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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
(Exact name of Registrant as specified in its charter)
|
|
|
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. employer identification no.) |
|
|
|
|
|
|
|
(Address of principal executive offices) |
(Zip code) |
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class: |
Trading symbol |
Name of each exchange on which registered |
|
|
|
The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.:
|
Large accelerated filer |
☐ |
Accelerated filer |
☐ |
|
|
|
|
|
|
|
☑ |
Smaller reporting company |
|
|
|
|
|
|
|
|
Emerging growth company |
|
|
If an emerging growth company, indicate by check mark if the 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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The registrant had
LM FUNDING AMERICA, INC.
TABLE OF CONTENTS
|
|
|
Page |
|
|
|
|
|
PART I. |
3 |
|
|
|
|
|
|
Item 1. |
3 |
|
|
|
|
|
|
|
3 |
|
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
6 |
|
|
|
|
|
|
|
7 |
|
|
|
Notes to Unaudited Condensed Consolidated Financial Statements |
8 |
|
|
|
|
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
21 |
|
|
|
|
|
Item 3. |
26 |
|
|
|
|
|
|
Item 4. |
26 |
|
|
|
|
|
|
PART II. |
28 |
|
|
|
|
|
|
Item 1. |
28 |
|
|
|
|
|
|
Item 1A. |
28 |
|
|
|
|
|
|
Item 2. |
28 |
|
|
|
|
|
|
Item 3. |
29 |
|
|
|
|
|
|
Item 5. |
29 |
|
|
|
|
|
|
Item 6. |
30 |
|
|
|
|
|
|
31 |
||
2
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
LM Funding America, Inc. and Subsidiaries Condensed Consolidated Balance Sheets
|
|
|
June 30, 2021 |
|
|
December 31, 2020 |
|
||
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
|
|
|
$ |
|
|
|
Finance receivables: |
|
|
|
|
|
|
|
|
|
Original product - net (Note 2) |
|
|
|
|
|
|
|
|
|
Special product - New Neighbor Guaranty program, net of allowance for credit losses of (Note 3) |
|
|
|
|
|
|
|
|
|
Short-term investments - convertible debt securities (Note 9) |
|
|
|
|
|
|
- |
|
|
Marketable securities |
|
|
|
|
|
|
- |
|
|
Prepaid expenses and other assets |
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
Fixed assets, net |
|
|
|
|
|
|
|
|
|
Real estate assets owned |
|
|
|
|
|
|
|
|
|
Operating lease - right of use assets (Note 7) |
|
|
|
|
|
|
|
|
|
Long-term investments - equity securities (Note 9) |
|
|
|
|
|
|
- |
|
|
Investments in unconsolidated affiliates (Note 9) |
|
|
|
|
|
|
- |
|
|
Other assets |
|
|
|
|
|
|
|
|
|
Long-term assets |
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
Note payable (Note 5) |
|
|
- |
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
|
|
|
|
|
|
|
|
Due to related party (Note 4) |
|
|
|
|
|
|
|
|
|
Current portion of lease liability (Note 7) |
|
|
|
|
|
|
- |
|
|
Total current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease liability - long-term (Note 7) |
|
|
|
|
|
|
|
|
|
Deferred taxes (Note 6) |
|
|
|
|
|
|
- |
|
|
Note payable - long-term (Note 5) |
|
|
- |
|
|
|
|
|
|
Long-term liabilities |
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
Common stock, par value $ |
|
|
|
|
|
|
|
|
|
Additional paid-in capital |
|
|
|
|
|
|
|
|
|
Accumulated deficit |
|
|
( |
) |
|
|
( |
) |
|
Total stockholders’ equity |
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
|
|
|
|
|
|
|
|
Total stockholders’ equity |
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
|
$ |
|
|
|
$ |
|
|
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.
3
LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (unaudited)
|
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on delinquent association fees |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Administrative and late fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recoveries in excess of cost - special product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting and other revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staff costs and payroll |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement costs with associations |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovery of cost from related party receivable |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Provision for credit losses |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
Real estate management and disposal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collection costs |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
Other operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss from continuing operations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Realized gain on securities |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
Unrealized gain on convertible debt security |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
Unrealized gain on investment and equity securities |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
Interest income |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Income (loss) from continuing operations before income taxes |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
Income tax expense |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
Net income (loss) from continuing operations |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
Gain from operations of discontinued operations |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Net gain from discontinued operations |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Net income (loss) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
Less: Net income attributable to non-controlling interest |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
Net income (loss) attributable to LM Funding America Inc. |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/(loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per common share - continuing operations |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
Basic income/(loss) per common share - discontinued operations |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
|
|
4
|
Basic income (loss) per common share - net income (loss) - attributable to LM Funding |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
Diluted income (loss) per common share - continuing operations |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
Diluted earnings/(loss) per common share - discontinued operations |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
|
|
|
Diluted income (loss) per common share - net income (loss) - attributable to LM Funding |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.
5
LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows
(unaudited)
|
|
|
For the Six Months Ended June 30, |
|
|||||
|
|
|
2021 |
|
|
2020 |
|
||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
|
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to cash used in operating activities |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
Right to use asset depreciation |
|
|
|
|
|
|
|
|
|
Stock compensation |
|
|
- |
|
|
|
|
|
|
Debt forgiveness |
|
|
( |
) |
|
|
- |
|
|
Recovery of uncollectible related party receivables |
|
|
- |
|
|
|
( |
) |
|
Accrued investment income |
|
|
( |
) |
|
|
- |
|
|
Gain from operations of discontinued operations |
|
|
- |
|
|
|
( |
) |
|
Deconsolidation of affiliate |
|
|
( |
) |
|
|
- |
|
|
Unrealized gain on investment and equity securities |
|
|
( |
) |
|
|
- |
|
|
Unrealized gain on convertible debt security |
|
|
( |
) |
|
|
- |
|
|
Investment in convertible note receivable |
|
|
( |
) |
|
|
- |
|
|
Realized gain on securities |
|
|
( |
) |
|
|
- |
|
|
Investment in securities |
|
|
( |
) |
|
|
- |
|
|
Proceeds from securities |
|
|
|
|
|
|
|
|
|
Investment in marketable securities |
|
|
( |
) |
|
|
- |
|
|
Change in assets and liabilities |
|
|
|
|
|
|
|
|
|
Prepaid expenses and other assets |
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
|
|
|
|
|
|
|
|
Advances (repayments) from related party |
|
|
|
|
|
|
|
|
|
Lease liability payments |
|
|
( |
) |
|
|
( |
) |
|
Deferred taxes |
|
|
|
|
|
|
- |
|
|
Net cash provided by (used in) operating activities |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net collections of finance receivables - original product |
|
|
|
|
|
|
|
|
|
Net collections of finance receivables - special product |
|
|
( |
) |
|
|
|
|
|
(Payments) for real estate assets owned |
|
|
( |
) |
|
|
( |
) |
|
Capital expenditures |
|
|
( |
) |
|
|
- |
|
|
Net cash payment for IIU disposal |
|
|
- |
|
|
|
( |
) |
|
Proceeds from investment in note receivable |
|
|
- |
|
|
|
|
|
|
Loan to purchase securities |
|
|
|
|
|
|
- |
|
|
Repayment of loan to purchase securities |
|
|
( |
) |
|
|
- |
|
|
Investment in unconsolidated affiliate |
|
|
( |
) |
|
|
- |
|
|
Net cash (used in) provided by investing activities |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Borrowings |
|
|
- |
|
|
|
|
|
|
Principal repayments |
|
|
( |
) |
|
|
- |
|
|
Insurance financing repayments |
|
|
( |
) |
|
|
( |
) |
|
Exercise of warrants |
|
|
|
|
|
|
|
|
|
Proceeds from stock subscription |
|
|
- |
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH |
|
|
|
|
|
|
|
|
|
CASH - BEGINNING OF YEAR |
|
|
|
|
|
|
|
|
|
CASH - END OF YEAR |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION |
|
|
|
|
|
|
|
|
|
Cash paid for taxes |
|
$ |
- |
|
|
$ |
- |
|
|
Cash paid for interest |
|
$ |
|
|
|
$ |
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
For the Three and Six Months Ended June 30, 2021 and 2020
(unaudited)
|
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
|
|
Shares |
|
|
Amount |
|
|
Additional paid in capital |
|
|
Accumulated Deficit |
|
|
Non-Controlling Interest |
|
|
Total Equity |
|
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
Balance - December 31, 2019 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
- |
|
|
$ |
|
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
Stock issued for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|||||||||||||||||||||||
|
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|||||||||||||||||||||||
|
Balance - March 31, 2020 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
- |
|
|
$ |
|
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
Common stock issued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|||||||||||||||||||||||
|
Warrant exercise for cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|||||||||||||||||||||||
|
Stock issued for services |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|||||||||||||||||||||||
|
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|||||||||||||||||||||||
|
Balance - June 30, 2020 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
- |
|
|
$ |
|
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||