lmfa-10q_20210930.htm

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. Yes ☑ No ☐

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). Yes ☑ No ☐

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.:

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 ☐ No ☑

The registrant had 12,804,619 shares of Common Stock, par value $0.001 per share, outstanding as of November 9, 2021.

	September 30, 2021			December 31, 2020
	(Unaudited)
ASSETS
Cash	$	17,458,806		$	11,552,943
Finance receivables:
Original product - net (Note 2)		78,468			116,017
Special product - New Neighbor Guaranty program, net of allowance for credit losses of (Note 3)		44,307			52,757
Short-term investments - convertible debt securities (Note 9)		841,878			-
Marketable securities (Note 9)		3,480,230			-
Prepaid expenses and other assets		386,926			399,124
Digital assets, net (Note 9)		1,396,238			-
Current assets		23,686,853			12,120,841
Fixed assets, net		8,180			6,171
Real estate assets owned		80,057			18,767
Operating lease - right of use assets (Note 7)		85,062			160,667
Long-term investments - equity securities (Note 9)		2,111,584			-
Investments in unconsolidated affiliates (Note 9)		4,676,130			-
Deposit on mining equipment (Note 7)		1,565,625			-
Other assets		10,946			10,984
Long-term assets		8,537,584			196,589
Total assets	$	32,224,437		$	12,317,430

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses		496,206			237,033
Due to related party (Note 4)		135,919			158,399
Current portion of lease liability (Note 7)		93,340			-
Note payable - short-term (Note 5)		172,032			96,257
Total current liabilities		897,497			491,689

Lease liability - long-term (Note 7)		1,652			171,648
Deferred taxes (Note 6)		29,883			-
Note payable - long-term (Note 5)		-			185,785
Long-term liabilities		31,535			357,433
Total liabilities		929,032			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 September 30, 2021 and December 31, 2020, respectively		5,414			3,084
Additional paid-in capital		39,538,550			29,996,257
Accumulated deficit		(8,538,520	)		(18,536,224	)
Total stockholders’ equity		31,005,444			11,463,117
Non-controlling interest		289,961			5,191
Total stockholders’ equity		31,295,405			11,468,308
Total liabilities and stockholders’ equity	$	32,224,437		$	12,317,430

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.

LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (unaudited)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2021			2020			2021			2020
Revenues:
Interest on delinquent association fees	$	129,439		$	105,592		$	269,556		$	495,280
Administrative and late fees		14,642			19,929			46,574			78,397
Recoveries in excess of cost - special product		14,000			37,127			61,052			122,117
Underwriting and other revenues		28,784			27,651			86,981			96,815
Rental revenue		36,759			62,185			103,264			143,609
Total revenues		223,624			252,484			567,427			936,218

Operating Expenses:
Staff costs and payroll		1,874,798			2,522,481			3,422,819			3,151,033
Professional fees		497,942			385,705			1,340,909			1,372,281
Settlement costs with associations		-			17,934			-			29,854
Selling, general and administrative		106,895			96,483			302,679			251,434
Recovery of cost from related party receivable		(100,000	)		(100,000	)		(200,000	)		(300,000	)
Provision for credit losses		-			30,000			(10,000	)		30,000
Real estate management and disposal		29,878			53,432			77,646			152,882
Depreciation and amortization		4,482			(3,383	)		9,476			10,383
Collection costs		(1,410	)		771			3,339			(28,484	)
Other operating expenses		5,801			3,120			17,415			13,758
Total operating expenses		2,418,386			3,006,543			4,964,283			4,683,141
Operating loss from continuing operations		(2,194,762	)		(2,754,059	)		(4,396,856	)		(3,746,923	)
Realized gain (loss) on securities		(173,282	)		-			13,951,752			-
Unrealized loss on convertible debt security		(2,588,916	)		-			(87,316	)		-
Unrealized loss on marketable securities		(478,448	)		-			(478,448	)		-
Unrealized gain (loss) on investment and equity securities		(123,172	)		-			1,024,714			-
Impairment loss on digital assets		(23,720	)		-			(23,720	)		-
Interest income		77,956			-			164,895			-
Interest expense		(3,939	)		2,300			(653	)		(10,326	)
Dividend income		738			-			738			-
Gain on forgiveness of note payable		-			-			157,251			-
Income (loss) from continuing operations before income taxes		(5,507,545	)		(2,751,759	)		10,312,357			(3,757,249	)
Income tax expense		(12,619	)		-			(29,883	)		-
Net income (loss) from continuing operations		(5,520,164	)		(2,751,759	)		10,282,474			(3,757,249	)
Gain from operations of discontinued operations		-			-			-			16,428
Net gain from discontinued operations		-			-			-			16,428
Net income (loss)		(5,520,164	)		(2,751,759	)		10,282,474			(3,740,821	)
Less: Net income (loss) attributable to non-controlling interest		33,953			-			(284,770	)		-
Net income (loss) attributable to LM Funding America Inc.	$	(5,486,211	)	$	(2,751,759	)	$	9,997,704		$	(3,740,821	)

Earnings/(loss) per share:
Basic income (loss) per common share - continuing operations	$	(1.01	)	$	(1.41	)	$	1.89		$	(3.32	)
Basic income/(loss) per common share - discontinued operations	$	-		$	-		$	-		$	0.02
Basic income (loss) per common share - net income (loss) - attributable to LM Funding	$	(1.01	)	$	(1.41	)	$	1.89		$	(3.30	)
Diluted income (loss) per common share - continuing operations	$	(1.01	)	$	(1.41	)	$	1.88		$	(3.32	)
Diluted earnings/(loss) per common share - discontinued operations	$	-		$	-		$	-		$	0.02
Diluted income (loss) per common share - net income (loss) - attributable to LM Funding	$	(1.01	)	$	(1.41	)	$	1.88		$	(3.30	)
Weighted average number of common shares outstanding:
Basic		5,414,296			1,958,107			5,293,375			1,132,407
Diluted		5,421,606			1,958,107			5,305,418			1,132,407

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.

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

	For the Nine Months Ended September 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	10,282,474		$	(3,740,821	)
Adjustments to reconcile net loss to cash used in operating activities
Depreciation and amortization		9,476			5,919
Right to use asset depreciation		75,605			74,890
Stock compensation		-			135,679
Gain on forgiveness of note payable		(157,251	)		-
Recovery of uncollectible related party receivables		-			(300,000	)
Accrued investment income		(160,954	)		-
Reserve for Accounts					30,000
Gain from operations of discontinued operations		-			(16,428	)
Loss on deconsolidation of affiliate		(43,623	)		-
Impairment loss on digital assets		23,720			-
Unrealized loss on convertible debt security		87,316			-
Unrealized loss on marketable securities		478,448			-
Unrealized gain on investment and equity securities		(1,024,714	)		-
Realized gain on securities		(13,951,752	)		-
Proceeds from securities		30,070,285			-
Investment in convertible note receivable converted into marketable security		(16,118,533	)		-
Investment in convertible note receivable		(5,000,000	)		-
Convertible debt and interest converted into marketable securities		4,231,760			-
Investments in marketable security		(3,958,678	)		-
Change in assets and liabilities
Prepaid expenses and other assets		(8,326	)		120,598
Accounts payable and accrued expenses		382,204			272,976
Advances (repayments) from related party		103,934			689,457
Lease liability payments		(76,656	)		(69,669	)
Deferred taxes		29,883			-
Net cash provided by (used in) operating activities		5,274,618			(2,797,399	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Net collections of finance receivables - original product		37,549			74,117
Net collections of finance receivables - special product		8,450			33,328
(Payments) for real estate assets owned		(68,568	)		(3,920	)
Capital expenditures		(4,207	)		(1,286	)
Deposit for mining equipment		(1,565,625	)		-
Net cash payment for IIU disposal		-			(246,914	)
Proceeds from investment in note receivable		-			1,500,000
Investment in digital assets		(1,419,958	)		-
Loan to purchase securities		1,784,250			-
Repayment of loan to purchase securities		(1,784,250	)		-
Investment in unconsolidated affiliate		(5,738,000	)		-
Net cash (used in) provided by investing activities		(8,750,359	)		1,355,325

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings		-			185,785
Principal repayments		(28,534	)		-
Insurance financing repayments		(134,485	)		(108,043	)
Exercise of warrants		9,544,623			3,081,480
Proceeds from stock subscription		-			9,447,535
Net cash provided by financing activities		9,381,604			12,606,757
NET INCREASE IN CASH		5,905,863			11,164,683
CASH - BEGINNING OF YEAR		11,552,943			1,069,823
CASH - END OF YEAR	$	17,458,806		$	12,234,506

SUPPLEMENTAL DISCLOSURES OF NON-CASHFLOW INFORMATION
Insurance financing	$	210,260		$	192,514
SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION
Cash paid for interest	$	1,892		$	10,326

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Delaware	47-3844457
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

1200 West Platt Street Suite 100 Tampa, FL	33606
(Address of principal executive offices)	(Zip code)

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

		Page

PART I.	FINANCIAL INFORMATION	3

Item 1.	Financial Statements	3

	LM Funding America, Inc. and Subsidiaries Condensed Consolidated Balance Sheets September 30, 2021 (unaudited) and December 31, 2020	3

	LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Operations Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)	4

	LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows Nine Months Ended September 30, 2021 and 2020 (unaudited)	5

	LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures

PART II.	OTHER INFORMATION	31

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 3.	Defaults Upon Senior Securities	35

Item 5.	Other Information	35

Item 6.	Exhibits	36

SIGNATURES		37

	Common Stock
	Shares		Amount		Additional paid in capital		Accumulated Deficit			Non-Controlling Interest		Total Equity


Balance - December 31, 2019		626,852	$	627	$	17,329,060	$	(14,494,762	)	$	-	$	2,834,925

Stock issued for services		37,200		37		128,810		-			-		128,847
Net loss		-		-


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☑	Smaller reporting company	☑

		Emerging growth company	☐