Powercompute, Inc PRE 14A, filed Aug 25, 2025
Powercompute, Inc. (PWCM)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant |
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Filed by a Party other than the Registrant |
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to §240.14a-12
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
No fee required.
Fee paid previously with preliminary materials.
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11
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NOTICE OF ANNUAL MEETING
AND PROXY STATEMENT
[], 2025
You are cordially invited to attend our Annual Meeting of Stockholders, which will be held at 1200 West Platt Street, Suite 100 Tampa, Florida 33606, on [], [], 2025, at [], local time. Stockholders will be admitted beginning at [].
The attached notice of Annual Meeting of Stockholders and proxy statement cover the formal business of the Annual Meeting and contains a discussion of the matters to be voted upon at the Annual Meeting.
Your vote is very important. Whether or not you plan to attend the meeting in person, please vote your shares by completing, signing and returning the accompanying proxy card, or by following the instructions on the card for voting by telephone or internet. If you later decide to attend the Annual Meeting and vote in person, you may revoke your proxy at that time.
On behalf of the Board of Directors and management, I would like to thank you for choosing to invest in LM Funding America, Inc. and look forward to your participation at our Annual Meeting.
Bruce M. Rodgers, Esq.
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Chairman of the Board Chief Executive Officer |
LM Funding America, Inc. •1200 West Platt Street, Suite 100, Tampa, FL 33606 • T (813) 222-8996 • F (813) 221-7909 • lmfunding.com
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF LM FUNDING AMERICA, INC.:
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[], local time, on [], [], 2025. Stockholders will be admitted beginning at [] |
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PLACE: |
LM Funding America, Inc. 1200 West Platt Street, Suite 100 Tampa, Florida 33606 |
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ITEMS OF BUSINESS: |
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To elect three Class III directors to hold office for a three-year term ending at the third annual meeting of stockholders following their election; |
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To ratify the appointment of MaloneBailey, LLP as the company’s independent auditor to audit the company’s 2025 financial statements;
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To approve, in accordance with Nasdaq Listing Rule 5635(d), the issuance of more than 19.99% of our outstanding common stock issuable upon the exercise of investor warrants that were issued in two financing transactions in August 2025; and
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To transact such other business that may properly come before the meeting or any adjournments or postponements thereof. |
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RECORD DATE |
Stockholders of record on August 19, 2025, are entitled to notice of the Annual Meeting and are entitled to vote at the Annual Meeting in person or by proxy. |
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ANNUAL REPORT |
Our 2024 Annual Report to Stockholders, as amended, which is not a part of this proxy statement, is enclosed. |
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PROXY VOTING
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It is important that your shares be represented at the Annual Meeting and voted in accordance with your instructions. Please indicate your instructions by promptly signing and dating the enclosed proxy card and mailing it in the enclosed postage paid, pre-addressed envelope or by following the instructions on the proxy card for telephone or internet voting. |
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By Order of the Board of Directors,
Bruce M. Rodgers, Esq. |
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Chairman of the Board Chief Executive Officer |
LM Funding America, Inc. •1200 West Platt Street, Suite 100, Tampa, FL 33606 • T (813) 222-8996 • F (813) 221-7909 • lmfunding.com
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON [], 2025
TO THE STOCKHOLDERS OF LM FUNDING AMERICA, INC.: |
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[], 2025 |
This proxy statement and the form of proxy are delivered in connection with the solicitation by the Board of Directors of LM Funding America, Inc. (the “company,” “we,” “us,” or “our”), a Delaware corporation, of proxies to be voted at our below-described Annual Meeting of Stockholders and at any adjournments or postponements thereof.
You are invited to attend our Annual Meeting of Stockholders on [], [], 2025, beginning at []. The Annual Meeting will be held at 1200 West Platt Street, Suite 100, Tampa, Florida 33606. Stockholders will be admitted beginning at [].
Your vote is very important. Therefore, whether you plan to attend the Annual Meeting or not and regardless of the number of shares you own, please date, sign and return the enclosed proxy card promptly or follow the instructions on the card for voting by telephone or internet.
At the meeting, the use of cameras, audio or video recording equipment, communications devices or similar equipment will be prohibited.
Important Notice Regarding the Availability of Proxy Materials
for the Shareholder Meeting to be Held on [], 2025:
This proxy statement and the 2024 Annual Report to Stockholders, as amended, are available at www.proxydocs.com/LMFA.
Upon your written request, we will provide you with a copy of our 2024 Annual Report on Form 10-K, as amended, including exhibits, free of charge. Send your request to LM Funding America, Inc., Attention: Bruce M. Rodgers, Chief Executive Officer, 1200 West Platt Street, Suite 100, Tampa, Florida 33606.
LM Funding America, Inc. •1200 West Platt Street, Suite 100, Tampa, FL 33606 • T (813) 222-8996 • F (813) 221-7909 • lmfunding.com
ABOUT THE ANNUAL MEETING
What is the purpose of the meeting?
The principal purposes of the Annual Meeting are to (i) elect three Class III directors to the company’s Board of Directors; (ii) ratify the appointment of our outside auditors; and (iii) approve, in accordance with Nasdaq Listing Rule 5635(d), the issuance of more than 19.99% of our outstanding common stock issuable upon the exercise of investor warrants that were issued in two financing transactions in August 2025.
When were these materials mailed?
We expect to begin mailing this proxy statement on or about [●], 2025.
Who is entitled to vote?
Stockholders of record at the close of business on the record date, August 19, 2025, are entitled to vote in person or by proxy at the Annual Meeting. In general, stockholders are entitled to one vote per share on each matter voted upon. In an election for directors, however, stockholders are entitled to vote the number of shares they own for as many director candidates as there are directors to be elected. The Board of Directors has determined that the Board of Directors should include three Class III directorships. Accordingly, since three directors are to be elected at this Annual Meeting, in electing directors, each share will entitle the stockholder to three votes, one per director. Stockholders may not cumulate their votes. As of August 19, 2025, there were 15,198,388 shares of common stock outstanding.
What constitutes a quorum?
The presence at the Annual Meeting, in person or by proxy, of the holders of 33-1/3% of the shares outstanding will constitute a quorum, permitting us to conduct the business of the meeting.
What is the difference between a shareholder of record and a beneficial owner?
If your shares are registered directly in your name with our transfer agent, Vstock Transfer, LLC, then you are a “shareholder of record.” This Notice of Meeting and proxy statement has been provided directly to you by LM Funding America, Inc. You may vote by ballot at the meeting or vote by proxy. To vote by proxy, sign, date and return the enclosed proxy card or follow the instructions on the proxy card for voting by telephone or internet.
If your shares are held for you in a brokerage, bank or other institutional account (that is, held in “street name”), then you are not a shareholder of record. Rather, the institution is the shareholder of record and you are the “beneficial owner” of the shares. The accompanying Notice of Meeting and this proxy statement have been forwarded to you by that institution. If you complete and properly sign the accompanying proxy card and return it in the enclosed envelope, or follow the instructions on the proxy card for voting by telephone or internet, the institution will cause your shares to be voted in accordance with your instructions. If you are a beneficial owner of shares and wish to vote in person at the Annual Meeting, then you must obtain a proxy, executed in your favor, from the holder of record (the institution).
How do I vote?
By Ballot at the Meeting. If you are a shareholder of record and attend the Annual Meeting, you may vote in person by ballot at the Annual Meeting. To vote by ballot, you must register and confirm your shareholder status at the meeting. If the shareholder of record is a corporation, partnership, limited liability company or other entity of which you are an officer or other authorized person, then you should bring evidence of your authority to vote the shares on behalf of the entity. If your shares are held for you in a brokerage, bank or other institutional account (that is, in “street name”), you must obtain a proxy, executed in your favor, from that institution (the holder of record) to vote your beneficially-owned shares by ballot at the Annual Meeting. In the election of directors (Proposal No. 1), each share held by a shareholder of record will be entitled to three votes—one for each director to be elected.
By Proxy. If you complete, sign and return the accompanying proxy card or follow the instructions on the proxy card for voting by telephone or internet, then your shares will be voted as you direct. In the election of directors (Proposal No. 1), your options with respect to each director are to direct a vote “FOR” or “WITHHOLD”.
If you are a shareholder of record, then you may opt to deliver your completed proxy card in person at the Annual Meeting.
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Can I vote by telephone or internet?
Yes. If you follow the instructions on the proxy card for voting by telephone or internet, your shares will be voted as you direct.
How Abstentions and Broker Non-Votes Are Treated
Abstentions will be counted as shares that are present for purposes of determining a quorum. For the election of directors, abstentions are excluded entirely from the vote and do not have any effect on the outcome. Broker non-votes occur when a broker or other nominee holding shares for a beneficial owner does not have discretionary voting power on a matter and has not received instructions from the beneficial owner. Broker non-votes are included in the determination of the number of shares represented at the Annual Meeting for purposes of determining whether a quorum is present. If you do not provide your broker or other nominee with instructions on how to vote your “street name” shares, your broker or nominee will not be permitted to vote them on nonroutine matters such as Proposals No. 1 and No. 3. Shares subject to a broker non-vote will not be considered entitled to vote with respect to Proposals No. 1 and No. 3. In tabulating the voting results for each of these proposals, shares that constitute broker non-votes are not considered cast or entitled to vote and will not affect the outcome of such proposals. Because Proposal No. 2 is a routine matter upon which brokers have discretionary authority to vote, we do not expect broker non-votes to exist with respect to such proposal.
What does it mean if I receive more than one proxy card?
You will receive separate proxy cards when you own shares in different ways. For example, you may own shares individually, as a joint tenant, in an individual retirement account, in trust or in one or more brokerage accounts. You should complete, sign and return each proxy card you receive or follow the telephone or internet instructions on each card. The instructions on each proxy card may differ. Be sure to follow the instructions on each card.
Can I change my vote or instruction?
Yes. You may follow the instructions on the proxy card to change your votes or instructions any time before midnight the day before the meeting. In addition, if you are a shareholder of record, you may revoke your proxy any time before your shares are voted by filing with the secretary of the company a written notice of revocation or submitting a duly executed proxy bearing a later date. If you file a notice of revocation, you may then vote (or abstain from voting) your shares in person at the Annual Meeting. If you submit a later dated proxy, then your shares will be voted in accordance with that later dated proxy. No such notice of revocation or later dated proxy, however, will be effective unless received by us at or before the Annual Meeting and before your shares have been voted. Unless the proxy is revoked, the shares represented thereby will be voted at the Annual Meeting or any adjournment thereof as indicated on the proxy card. Sending in a proxy does not affect your right to vote in person if you attend the meeting, although attendance at the meeting will not by itself revoke a previously granted proxy.
If I submit a proxy card, how will my shares be voted?
Your shares will be voted as you instruct on the proxy card.
What happens if I submit a proxy card and do not give specific voting instructions?
If you are a shareholder of record and sign and return the proxy card without indicating your instructions, your shares will be voted in accordance with the recommendations of the Board of Directors. With respect to any other matter that properly comes before the meeting, the proxy holders will vote as recommended by the Board of Directors or, if no recommendation is given, at their own discretion. As of the date this proxy statement went to print, we did not know of any other matters to be raised at the Annual Meeting.
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What are the Board of Directors’ recommendations?
The Board of Directors recommends votes:
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FOR election of the following nominees for director positions: Andrew L. Graham Frederick Mills Frank Silcox |
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FOR the proposal to ratify the appointment of MaloneBailey, LLP as the company’s independent auditor to audit the company’s 2025 financial statements; |
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FOR the proposal to approve, in accordance with Nasdaq Listing Rule 5635(d), the issuance of more than 19.99% of our outstanding common stock issuable upon the exercise of investor warrants that were issued in two financing transactions in August 2025; and |
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FOR the authority to transact such other business as may properly come before the stockholders at the Annual Meeting or any adjournments or postponements thereof. |
What vote is required to approve each item?
The vote required to approve each matter to be voted on at the Annual Meeting is described below. We do not anticipate other matters coming to a vote at the Annual Meeting. Should any other matter be brought to a vote, the matter will be approved by the affirmative vote of the majority of the outstanding shares present in person or by proxy at the Annual Meeting and entitled to vote on the subject matter at a meeting at which a quorum is present unless a greater number of affirmative votes is required for approval of that matter under our Certificate of Incorporation, bylaws, or the Delaware General Corporation Law.
Under the Delaware General Corporation Law, an abstaining vote is considered present and entitled to vote and, therefore, is included for purposes of determining whether a quorum is present at the Annual Meeting. Pursuant to our bylaws, abstentions are not considered to be ‘‘votes cast’’ for the election of directors in Proposal No. 1 and will not affect the outcome of the election of directors. Abstentions are considered both present and “entitled to vote” on a matter. Accordingly, an abstention counts as a vote “against” any proposal where the voting standard is “a majority of the shares present and entitled to vote” or “a majority of the outstanding shares.”
A broker ‘‘non-vote’’ occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner. Under the Delaware General Corporation Law, a broker ‘‘non-vote’’ is not deemed to be a ‘‘vote cast’’ and, therefore, will not affect the outcome of the election of directors. While a broker ‘‘non-vote’’ is considered present for purposes of determining whether a quorum is present at the Annual Meeting, it is not considered ‘‘entitled to vote’’ and, therefore, not included in the tabulation of the voting results on matters requiring approval of the holders of a majority of the shares present in person or represented by proxy and entitled to vote. When the voting standard is approval of “a majority of the outstanding shares,” broker non-votes have the same effect as a vote “against” the proposal.
The required vote for each of the proposals expected to be acted upon at the Annual Meeting is summarized below:
Proposal No. 1 — Election of directors. Directors are elected by a plurality, with the three nominees obtaining the most votes being elected. Because there is no minimum vote required, abstentions and broker non-votes will be entirely excluded from the vote and will have no effect on its outcome. Under the plurality vote standard, any shares that are not voted, whether by abstention, broker non-votes or otherwise, will not affect the election of directors.
Proposal No. 2 — Ratification of independent registered public accounting firm. This proposal must be approved by the affirmative vote of the majority of shares present in person or represented by proxy at the Annual Meeting and entitled to vote thereon, assuming a quorum is present. Abstentions count as a vote “against” the proposal and broker non-votes will be entirely excluded from the vote and will have no effect on its outcome.
Proposal No. 3 — Approval, in accordance with Nasdaq Listing Rule 5635(d), of the issuance of more than 19.99% of our outstanding common stock issuable upon the exercise of investor warrants that were issued in two financing transactions in August 2025. This proposal must be approved by the affirmative vote of the majority of shares present in person or represented by proxy at the Annual Meeting and entitled to vote thereon, assuming a quorum is present. Abstentions count as a vote “against” the proposal and broker non-votes will be entirely excluded from the vote and will have no effect on its outcome.
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How will votes be counted?
All votes will be tabulated by the secretary of the company. We have engaged Mediant, a BetaNXT Business, to collect and tabulate proxy instructions.
Who is paying for the mailing of the proxy materials and how will solicitations be made?
We will pay the expenses of soliciting proxies. Proxies may be solicited on our behalf by directors, officers or employees in person or by mail, telephone, facsimile or electronic transmission. We have requested brokerage houses and other custodians, nominees and fiduciaries to forward soliciting material to beneficial owners and have agreed to reimburse those institutions for their out-of-pocket expenses.
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PROPOSAL 1
ELECTION OF DIRECTORS
Three directors are to be elected at the Annual Meeting. In accordance with the company’s Certificate of Incorporation, the Board of Directors is divided into three classes. Class I and Class II each consists of two directors, and Class III consists of three directors. All directors within a class have the same three-year terms of office. The class terms expire at successive annual meetings so that each year a class of directors is elected. The current terms of director classes are scheduled to expire at the annual meeting of stockholders in 2025 (Class III directors), 2026 (Class I directors), and 2027 (Class II directors). Accordingly, the Class III directors will be elected at this Annual Meeting. Each of the Class III directors elected at this Annual Meeting will be elected to serve a three-year term.
With the recommendation of the Nominating and Corporate Governance committee, the Board of Directors has nominated the following persons to stand for election as Class III directors at this Annual Meeting of Stockholders, with terms expiring at the third annual meeting of stockholders following their election:
Mr. Andrew L. Graham
Mr. Frederick Mills
Mr. Frank Silcox
Each of the nominees for election as a director has consented to serve if elected. If, as a result of circumstances not now known or foreseen, one or more of the nominees should be unavailable or unwilling to serve as a director, proxies may be voted for the election of such other persons as the Board of Directors may select. The Board of Directors has no reason to believe that any of the nominees will be unable or unwilling to serve.
The persons named in the enclosed proxy card intend, unless otherwise directed, to vote such proxy “FOR” the election of Mr. Andrew L. Graham, Mr. Frederick Mills and Mr. Frank Silcox as Class III directors of LM Funding America, Inc. The nominees receiving the three highest “FOR” vote totals will be elected as directors.
In the election of directors, the three highest recipients of “FOR” votes will be elected. A properly executed proxy card marked “WITHHOLD” with respect to the election of one or more director nominees will not be voted with respect to the director or directors indicated, even though it will be counted for purposes of determining whether there is a quorum present at the Annual Meeting.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF EACH OF THE NOMINEES AS
DIRECTORS OF THE COMPANY
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DIRECTORS
Set forth below is a summary of the background and experience of each director nominee and director as of the date of this proxy statement. There is no family relationship among any of the directors and/or executive officers of the company except as follows: Mr. Bruce M. Rodgers, our Chairman, Chief Executive Officer and President, and Ms. Carollinn Gould a director, have been married since 2004.
Directors Standing for Election (Class III)
Andrew L. Graham. Mr. Graham, age 67, has served as a director of the company since its initial public offering in October 2015. Since June 2008, Mr. Graham has served as Vice President, General Counsel and Secretary of HCI Group, Inc. (NYSE:HCI). From 1999 to 2007, Mr. Graham served in various capacities, including as General Counsel, for Trinsic, Inc. (previously named Z-Tel Technologies, Inc.), a publicly-held provider of communications services headquartered in Tampa, Florida. From 2011 to 2016, Mr. Graham has served on the Internal Audit Committee of Hillsborough County, Florida. From 2007 to 2011, he served on the Board of Trustees of Hillsborough Community College, a state institution serving over 45,000 students annually.
Mr. Graham holds a Bachelor of Science, major in Accounting, from Florida State University and a Juris Doctor, as well as a Master of Laws (L.L.M.) in Taxation, from the University of Florida College of Law. Mr. Graham was licensed in Florida as a Certified Public Accountant from 1982 to 2001. As a Certified Public Accountant, he audited, reviewed and compiled financial statements and prepared tax returns. Mr. Graham’s experience serving as general counsel to publicly-held companies brings to our Board of Directors a comprehensive understanding of public company operations, financial reporting, disclosure and corporate governance, as well a perspective regarding potential acquisitions. With his accounting education and experience, he also brings a sophisticated understanding of accounting principles, auditing standards, internal accounting control and financial presentation and analysis.
Frederick Mills. Mr. Mills age 67, has served as a director of the company since August 2018 and has been a partner with the law firm Morrison & Mills, PA since 1989, a Tampa, Florida law firm that focuses on business law. Mr. Mills is also a founder and board member of Apex Labs, Inc. (toxicology lab in Tampa, FL). Mr. Mills serves on numerous professional and civic boards. He received a B.S. from the University of Florida majoring in accounting and received a J.D. from the University of Florida. We believe that Mr. Mills brings to the Board of Directors many years of valuable business and financial experience from his past experience as a founding board member and Audit Committee Chairman for Nature Coast Bank (OTCQB:NCBF), which was a publicly-held company, and his business law practice.
Frank Silcox. Mr. Silcox, age 61, has served as a director of the company since January 2021. Mr. Silcox has been a Managing Director of Osprey Capital since March 2015. From 2008 until 2015, Mr. Silcox was co-founder and a managing member of LM Funding, LLC, a wholly-owned subsidiary of the company. Mr. Silcox has owned FS Ventures since 2003, which makes a variety of investments in real estate ventures. Mr. Silcox holds a Bachelor of Science from the University of Tampa.
Mr. Silcox brings considerable legal, financial and business experience to the Board of Directors. He has counseled and observed numerous businesses in a wide range of industries. The knowledge gained from his observations and his knowledge and experience in business transactions are considered important in monitoring the company’s performance and when we consider and pursue business acquisitions and financial transactions. His knowledge of other businesses and industries are useful in determining management and director compensation.
Director Continuing in Office
Directors whose present terms continue until the next annual meeting of stockholders to be held in 2026 (Class I):
Bruce M. Rodgers. Mr. Rodgers, age 61, serves as the Chairman of the Board of Directors, Chief Executive Officer and President of the company. Prior to that, Mr. Rodgers owned Business Law Group, P.A. (“BLG”) and served as counsel to the founders of LM Funding, LLC, the company’s predecessor and wholly-owned subsidiary. Mr. Rodgers was instrumental in developing the company’s business model prior to inception. Mr. Rodgers transferred his interest in BLG to attorneys within the firm by means of redemption of such interest in BLG prior to the company going public in 2015. Mr. Rodgers served from 2021 to 2024 as a member of the Board of Directors of SeaStar Medical Holding Corporation (Nasdaq: ICU), a medical technology Company developing a platform therapy to reduce the consequences of hyperinflammation on vital organs. Mr. Rodgers is a former business transactions attorney and was an associate of Macfarlane, Ferguson, & McMullen, P.A. from 1991 to 1995 and a partner from 1995-1998 and was an equity partner of Foley & Lardner LLP from 1998 to 2003. Originally from Bowling Green, Kentucky, Mr. Rodgers holds an engineering degree from Vanderbilt University (1985) and a Juris Doctor, with honors, from the University of Florida (1991). Mr. Rodgers also served as an officer in the United States Navy from 1985-1989 rising to the rank of Lieutenant, Surface Warfare Officer. Mr. Rodgers is a member of the Florida Bar and holds an AV-Preeminent rating from Martindale Hubbell.
Mr. Rodgers brings to the Board of Directors considerable experience in business, management and law, and because of those experiences and his education, we believe that he possesses analytical and legal skills which are considered of importance to the operations of the Company, the oversight of its performance and the evaluation of its future growth opportunities.
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Carollinn Gould. Ms. Gould, age 62, co-founded LM Funding, LLC in January 2008, and currently serves as a director of the Company. From January 2008 to September 30, 2020, Mrs. Gould served as Vice President General Manager, Secretary. Prior to joining LM Funding, LLC, Ms. Gould owned and operated a recruiting company specializing in the placement of financial services personnel. Prior to that, Ms. Gould worked at Outback Steakhouse (“OSI”) where she opened the first restaurant in 1989 and finished her career at OSI in 2006 as shared services controller for over 1,000 restaurants. Ms. Gould holds a Bachelor’s Degree in Business Management from Nova Southeastern University.
As a co-founder of LM Funding, LLC, Ms. Gould brings to our Board of Directors an encyclopedia of knowledge regarding the Company’s business, operation, and procedures. Ms. Gould also brings public company audit experience from her prior service as controller at OSI as well as a wealth of personnel management and human resources skills.
Directors whose present terms continue until the annual meeting of stockholders to be held in 2027 (Class II)
Douglas I. McCree. Mr. McCree, age 60, has served as a director of the company since its initial public offering in October 2015. Mr. McCree has been with First Housing Development Corporation of Florida (“First Housing”) since 2000 and has served as its Chief Executive Officer since 2004. From 1987 through 2000, Mr. McCree held various positions with Bank of America, N.A. including Senior Vice President Affordable Housing Lending. Mr. McCree serves on numerous professional and civic boards. He received a B.S. from Vanderbilt University majoring in economics. Mr. McCree brings to the Board of Directors many years of banking experience and a strong perspective on public company operational requirements from his experience as Chief Executive Officer of First Housing.
Martin A. Traber. Mr. Traber, age 79, has served as a director of the company since his appointment on April 29, 2024. Mr. Traber previously served as one of our directors from October 2015 until January 2021. Beginning in January 2021, Mr. Traber served as a director of LMF Acquisition Opportunities, Inc., which was an indirect, wholly-owned subsidiary of the company, until its merger with Seastar Medical Holding Corporation in October 2022. He currently serves as a director of Mad Mobile, Inc., a global leader in point-of-sale modernization and technology solutions for the retail and restaurant industries, a position he has held since March 2019. Since February 2017, Mr. Traber has served as Chairman of Skyway Capital Markets, LLC a Tampa, Florida-based investment banking firm. Also, from 1994 until 2016, Mr. Traber was a partner of Foley & Lardner LLP, in Tampa, Florida, representing clients in securities law matters and corporate transactions. Mr. Traber was a founder of NorthStar Bank in Tampa, Florida and from 2007 to 2011 served as a member of the Board of Directors of that institution. From 2012 to 2013, he served on the Board of Directors of Exeter Trust Company in Portsmouth, New Hampshire. Mr. Traber holds a Bachelor of Arts and a Juris Doctor from Indiana University.
Mr. Traber brings considerable legal, financial and business experience to the Board of Directors. He has counseled and observed numerous businesses in a wide range of industries. The knowledge gained from his observations and his knowledge and experience in business transactions and securities law are considered important in monitoring the company’s performance and when we consider and pursue business acquisitions and financial transactions. As a corporate and securities lawyer, Mr. Traber has a fundamental understanding of governance principles and business ethics. His knowledge of other businesses and industries are useful in determining management and director compensation.
Arrangements as to Selection and Nomination of Directors
We are aware of no arrangements as to the selection and nomination of directors.
Independent Directors
Based upon recommendations of our Nominating and Corporate Governance committee, the Board of Directors has determined that each of Messrs. Graham, McCree, Mills, Traber, and Silcox are “independent directors” meeting the independence tests set forth in the rules of the NASDAQ Stock Market and Rule 10A-3(b)(i) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including having no material relationship with the company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company).
DIRECTOR COMPENSATION
The compensation of our non-employee directors is determined by our board of directors, which solicits a recommendation from the Compensation Committee. Directors who are employees of the company do not receive any additional compensation for their service as directors.
On November 18, 2022, our Board of Directors adopted the LM Funding America, Inc, Non-Employee Director Compensation Program (the “Director Program”). Pursuant to the Director Program, each non-employee director of the Company will receive an annual cash retainer of $66,000 (or $99,000 for Audit Committee members) payable in arrears in equal quarterly payments, pro-rated for partial years. Non-employee directors will also receive an annual stock option award to purchase a number of shares
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equal to $66,000 (or $99,000 for Audit Committee members) divided by the option exercise price (which will be equal to the fair market value of the Company’s common stock on the date of grant), which annual awards will vest one-half on the 180th day after the grant date and one-half on the first anniversary of the grant date. The annual option award will be granted on the day of the Company’s annual stockholder meeting each year. For fiscal year 2024, our Board of Directors waived their right to receive such annual option awards that would have otherwise have been made upon initial election or appointment to our Board of Directors (or on such later date as is determined by the Board of Directors), non-employee directors will also automatically receive stock options to purchase shares under the Company’s equity incentive plan equal to $25,000 divided by the exercise price of the option, with such exercise price being equal to the grant date fair value of the Company’s common stock.
The following table sets forth information with respect to compensation earned by each of our directors (other than those also serving as a “named executive officer”) during the year ended December 31, 2024 and 2023.
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Awards ($) |
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Carollinn Gould |
2024 |
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$ |
66,000 |
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$ |
— |
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66,000 |
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2023 |
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66,000 |
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— |
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66,000 |
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Andrew Graham |
2024 |
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$ |
99,000 |
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$ |
— |
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$ |
99,000 |
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2023 |
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$ |
99,000 |
|
|
$ |
— |
|
|
$ |
99,000 |
|
Fred Mills |
2024 |
|
$ |
99,000 |
|
|
$ |
— |
|
|
$ |
99,000 |
|
|
2023 |
|
$ |
99,000 |
|
|
$ |
— |
|
|
$ |
99,000 |
|
Douglas I. McCree |
2024 |
|
$ |
99,000 |
|
|
$ |
— |
|
|
$ |
99,000 |
|
|
2023 |
|
$ |
99,000 |
|
|
$ |
— |
|
|
$ |
99,000 |
|
Frank Silcox |
2024 |
|
$ |
66,000 |
|
|
$ |
— |
|
|
$ |
66,000 |
|
|
2023 |
|
$ |
66,000 |
|
|
$ |
— |
|
|
$ |
66,000 |
|
Todd Zhang* |
2024 |
|
$ |
21,083 |
|
|
$ |
— |
|
|
$ |
21,083 |
|
|
2023 |
|
$ |
66,000 |
|
|
$ |
— |
|
|
$ |
66,000 |
|
Martin Traber** |
2024 |
|
$ |
61,416 |
|
|
$ |
— |
|
|
$ |
61,416 |
|
|
2023 |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
(1) Represents compensation for the period from January 1, 2024 through December 31, 2024 and January 1, 2023 through December 31, 2023.
* Mr. Zhang was appointed to the Board of Directors in December 2022 and resigned effective April 25, 2024.
**Mr. Traber was appointed to the Board of Directors on April 29, 2024 and, as such, did not receive any compensation during fiscal 2023. Mr. Traber waived his right to receive stock options under the Director Program upon his appointment to the Board of Directors.
EXECUTIVE OFFICERS
The following table provides information with respect to our executive officers as of [], 2025:
Name |
|
Age |
|
Title |
Bruce M. Rodgers |
|
61 |
|
Chairman, Chief Executive Officer and President |
Richard Russell |
|
64 |
|
Chief Financial Officer |
Ryan Duran |
|
40 |
|
Vice President of Operations |
|
|
|
|
|
Bruce M. Rodgers. Mr. Rodgers background and experience is contained above in the section of this Proxy Statement entitled “Directors.”
Richard Russell. Mr. Russell, age 64, has served as Chief Financial Officer of the company since November 2017. Prior, since 2016, he provided financial and accounting consulting services with a focus on technical and external reporting, internal auditing, mergers & acquisitions, risk management, and CFO and controller services. Mr. Russell also served as Chief Financial Officer for Mission Health Communities from 2013 to 2016 and, before that, Mr. Russell served in a variety of roles for Cott Corporation from 2007 to 2013, including Senior Director of Finance, Senior Director of Internal Auditing, and Assistant Corporate Controller. Mr. Russell’s extensive professional experience with public companies includes his position as Director of Financial
8
Reporting and Internal Controls for Quality Distribution a previously listed publicly held company traded on the Nasdaq Stock Market under the symbol “QLTY” and as Danka’s Director of Reporting from 2001 to 2004 a previously listed publicly held office imaging company traded on both the London Stock Exchange and the Nasdaq Stock Exchange (“DANKY”). Mr. Russell served from 2021 to 2024 as a director of SeaStar Medical Holding Corporation (Nasdaq: ICU), a medical technology company developing a platform therapy to reduce the consequences of hyperinflammation on vital organs. Mr. Russell also previously served on a part-time basis as Chief Financial Officer of Generation Income Properties Inc., which is a publicly traded REIT traded on the Nasdaq Market, under the symbol "GIPR" from December 2019 to February 2022. Mr. Russell earned his Bachelor of Science in accounting and a Master’s in tax accounting from the University of Alabama, a Bachelor of Arts in international studies from the University of South Florida, and a Master’s in business administration from the University of Tampa. On March 1, 2020, Mr. Russell was appointed to the board of directors for Trident Brands Inc., a publicly held consumer products company traded on the OTC market under the symbol “TDNT”. Mr. Russell was also Chairman of the Hillsborough County Internal Audit Committee and had been a member of the Committee from September 2016 to April 2021. He was reappointed to the Committee in October 2021 until April 2024.
Ryan Duran. Mr. Duran, age 40, currently serves as Vice President of Operations of the Company and President of US Digital Mining and Hosting Co and joined the Company in March 2015. Prior to joining the Company, Mr. Duran served as Operations Manager of Business Law Group, since 2008. Mr. Duran holds a bachelor’s degree in real estate and finance from Florida State University.
We are aware of no arrangements as to the selection or appointment of executive officers.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
SUMMARY COMPENSATION TABLE
The following table provides summary information concerning compensation for services rendered in all capacities awarded to, earned by or paid to our named executive officers during the years ended December 31, 2024 and 2023. The table does not include compensation for 2024 or 2023 for a named executive officer if such officer was not employed by the Company in 2024 or 2023.
|
Fiscal |
|
|
|
|
|
Stock |
|
Option |
|
All Other |
|
|
||||||
Name and Principal Position |
Year |
|
Salary ($) |
|
Bonus ($) |
|
Awards ($) |
|
Awards ($) |
|
Compensation ($)(1) |
|
Total |
||||||
Bruce Rodgers |
2024 |
|
$ |
825,000 |
|
$ |
473,750 |
|
$ |
- |
|
$ |
- |
|
$ |
26,561 |
|
$ |
1,305,311 |
Chairman, CEO and President |
2023 |
|
$ |
825,000 |
|
$ |
- |
|
$ |
488,345 |
|
$ |
356,503 |
|
$ |
24,860 |
|
$ |
1,694,708 |
Richard Russell |
2024 |
|
$ |
550,000 |
|
$ |
275,000 |
|
$ |
- |
|
$ |
- |
|
$ |
53,238 |
|
$ |
878,238 |
Chief Financial Officer |
2023 |
|
$ |
550,000 |
|
$ |
- |
|
$ |
488,345 |
|
$ |
356,503 |
|
$ |
48,467 |
|
$ |
1,443,315 |
Ryan Duran |
2024 |
|
$ |
196,346 |
|
$ |
93,000 |
|
$ |
- |
|
$ |
- |
|
$ |
51,012 |
|
$ |
340,358 |
Vice President of Operations and President of US Digital mining and Hosting Co. |
2023 |
|
$ |
192,500 |
|
$ |
- |
|
$ |
122,086 |
|
$ |
89,126 |
|
$ |
40,217 |
|
$ |
443,929 |
(1) These amounts consist of health insurance premiums and dental & vision insurance premiums paid by the Company in excess of non-executive contribution and 401K Company match.
Employment Agreements
Certain executives’ compensation and other arrangements are set forth in employment agreements. These employment agreements are described below.
Bruce M. Rodgers.
In October 2021, Mr. Rodgers entered into an amended and restated employment agreement with the Company (the “Restated Rodgers Agreement”) which provides for an initial annual base salary of $750,000. The Restated Rodgers Agreement provided for a grant of 48,662 shares of the Company’s common stock that were paid in February 2022, with an amount of shares equal to the taxes payable by Mr. Rodgers with respect to the grant having been withheld to satisfy such taxes. The Restated Rodgers Agreement originally provided for certain bonuses upon a change of control of the Company (as defined in the Restated Rodgers Agreement), but as stated below, such change-of-control provisions were eliminated in November 2022. Pursuant to the Restated Rodgers Agreement, Mr. Rodgers was also originally entitled to receive his applicable base salary for a period of 36 months after termination if such termination were “without cause” or if he terminated his own employment for a “good reason event,” as those terms are defined in the Restated Rodgers Agreement, in addition to any accrued bonus as of the termination date and the accelerated vesting of any unvested options. However, such severance provisions were eliminated and replaced in November 2022, as described below. The Restated Rodgers Agreement also contains certain non-competition covenants and confidentiality provisions.
On November 16, 2022, the Restated Rodgers Agreement was amended and modified (the “Rodgers Amendment”) by deleting provisions in the Restated Rodgers Agreement that granted Mr. Rodgers certain bonuses upon a change of control of the Company.
9
Further, the Rodgers Amendment modifies the severance provisions of the Restated Rodgers Agreement to provide that, upon the termination of Mr. Rodgers by the Company without cause (or upon termination by him of his own employment upon a “good reason event,” as defined in the Restated Rodgers Agreement), he will be entitled to receive, in addition to any accrued salary and bonus, the sum of two years of his salary plus the average bonus paid for the preceding three years, which sum will be paid over a period of two years, as well as reimbursements for premium payments paid or payable by Mr. Rodgers for continuing healthcare coverage for up to 24 months following his termination.
Richard Russell.
In October 2021, Mr. Russell entered into an amended and restated employment agreement with the Company (the “Restated Russell Agreement”) which provides for an initial annual base salary of $500,000. The Restated Russell Agreement provided for a grant of 25,279 shares of the Company’s common stock that were paid in February 2022, with an amount of shares equal to the taxes payable by Mr. Russell with respect to the grant having been withheld to satisfy such taxes. The Restated Russell Agreement originally provided for certain bonuses upon a change of control of the Company (as defined in the Restated Russell Agreement), but as stated below, such change-of-control provisions were eliminated in November 2022. Pursuant to the Restated Russell Agreement, Mr. Russell was also originally entitled to receive his applicable base salary for a period of 36 months after termination if such termination were “without cause” or if he terminated his own employment for a “good reason event,” as those terms are defined in the Restated Russell Agreement, in addition to any accrued bonus as of the termination date and the accelerated vesting of any unvested options. However, such severance provisions were eliminated and replaced in November 2022, as described below. The Restated Russell Agreement also contains certain non-competition covenants and confidentiality provisions.
On November 16, 2022, the Restated Russell Agreement was amended and modified (the “Russell Amendment”) by deleting provisions in the Restated Russell Agreement that granted Mr. Russell certain bonuses upon a change of control of the Company. Further, the Russell Amendment modifies the severance provisions of the Restated Russell Agreement to provide that, upon the termination of Mr. Russell by the Company without cause (or upon termination by him of his own employment upon a “good reason event,” as defined in the Restated Russell Agreement), he will be entitled to receive, in addition to any accrued salary and bonus, the sum of two years of his salary plus the average bonus paid for the preceding three years, which sum will be paid over a period of two years, as well as reimbursements for premium payments paid or payable by Mr. Russell for continuing healthcare coverage for up to 24 months following his termination.
Ryan Duran.
On October 27, 2021, the Company and Ryan Duran entered into an employment agreement under which Mr. Duran serves as the Vice-President of Operations and President of US Digital Mining and Hosting Co of the Company. Mr. Duran’s employment agreement provides for an initial annual base salary of $175,000, and it provides that Mr. Duran may be granted annual bonuses at the discretion of the Board of Directors and may participate in the Company’s equity incentive plans on the same terms as other senior executives. The agreement provides that Mr. Duran is entitled to participate in all of the Company’s pension, life insurance, health insurance, disability insurance and other benefit plans on the same basis as the Company’s other employee officers participate. The initial term of Mr. Duran’s employment agreement was through September 30, 2023 and is automatically renewed each year unless notice of non-renewal is provided by the Company or Mr. Duran at least 30 days prior to the renewal date. Mr. Duran will be entitled to a lump sum severance payment of three times his base salary if he is terminated “without cause” (including a non-renewal of the agreement by the Company) or he terminates his own employment for a “good reason event,” as those terms are defined in the agreement, in addition to any accrued bonus as of the termination date and the accelerated vesting of any unvested options and other equity awards. Mr. Duran’s employment agreement contains certain non-competition covenants and confidentiality provisions.
Outstanding Equity Awards at Fiscal Year-End
The following table provides information on exercisable and unexercisable options and unvested stock awards held by the named executive officers on December 31, 2024.
10
|
Number of Securities Underlying Unexercised Options (#) Exercisable |
Number of Securities Underlying Unexercised Options (#) Unexercisable |
Option Exercise Price ($) |
Option Expiration Date |
Number of Shares of Units That Have Not Vested |
Market value of shares of units of stock that have not vested ($) |
Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested |
Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested |
|
Bruce Rodgers |
83,333 |
83,333 |
4.51 |
4/20/33 |
- |
- |
- |
- |
|
Richard Russell |
83,333 |
83,333 |
4.51 |
4/20/33 |
|
|
|
|
|
Richard Russell |
83 |
- |
3,750 |
11/29/2027 |
- |
- |
- |
- |
|
Richard Russell |
83 |
- |
300 |
5/29/2028 |
|
|
|
|
|
Richard Russell |
20,833 |
20,833 |
4.51 |
4/20/33 |
- |
- |
- |
- |
|
Ryan Duran |
29,167 |
- |
35.70 |
10/28/2031 |
- |
- |
- |
- |
|
Ryan Duran |
14 |
- |
3,000 |
1/4/2026 |
- |
- |
- |
- |
|
Ryan Duran |
83 |
- |
300 |
5/29/2028 |
- |
- |
- |
- |
|
Ryan Duran |
20,833 |
20,833 |
4.51 |
4/20/33 |
- |
- |
- |
- |
|
Indemnification Agreements
We have entered into indemnification agreements with each of our directors and executive officers. These agreements, among other things, require us to indemnify each director and executive officer to the fullest extent permitted by Delaware law, including indemnification expenses such as attorneys’ fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action or proceeding by or in right of us, arising out of the person’s services as a director or executive officer. The form of indemnification agreement was filed as an exhibit to the Registration Statement on Form S-1 filed on June 25, 2015.
Pay Versus Performance
The following table sets forth the compensation information of our principal executive officer (the “PEO”), and the average compensation information of our other named executive officers (“Non-PEO NEOs”), both as reported in the Summary Compensation Table in this proxy statement and with certain adjustments to reflect the “compensation actually paid” (“CAP”, as calculated in accordance with the Securities and Exchange Commission (the “SEC”)) to such individuals, and certain measures of the company’s financial performance, for each of fiscal years 2024, 2023, and 2022.
Year |
Summary Compensation Table Total for PEO ($) (1) |
Compensation Actually Paid to PEO ($) (2) (3) |
Average Summary Compensation Table Total for Non-PEO NEOs ($) (1) |
Average Compensation Actually Paid to Non-PEO NEOs ($) (2) (3) |
Value of Initial Fixed $100 Investment Based on the Total Shareholder Return of the Company ($) |
Net (Loss) Income ($ in thousands) |
2024 |
( |
|||||
2023 |
( |
|||||
2022 |
( |
(1) The PEO for each of the years presented is
11
(2) The amounts shown as CAP have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually realized or received by the company’s NEO. These amounts reflect total compensation as set forth in the Summary Compensation Table for each year, adjusted as described in footnote 3, below.
12
PEO |
|||
Year |
2022 |
2023 |
2024 |
SCT Total Compensation ($) |
|
|
|
Less: Stock and Option Award Values Reported in SCT for the Covered Year ($) |
- |
( |
- |
Plus: Fair Value for Stock and Option Awards Granted in the Covered Year that are Outstanding and Unvested at End of Year ($) |
- |
|
- |
Change in Fair Value of Outstanding Unvested Stock and Option Awards from Prior Years ($) |
- |
- |
- |
Fair Value as of Vesting Date for Awards Granted that Vested in Same Year ($) |
- |
|
- |
Change in Fair Value of Stock and Option Awards from Prior years that Vested in the Covered Year ($) |
( |
- |
( |
Less: Fair Value of Stock and Option Awards Forfeited during the covered Year ($) |
- |
- |
- |
Less: Aggregate Change in Actuarial Present Value of Accumulated Benefit Under Pension Plans ($) |
- |
- |
- |
Plus: Aggregate Service Cost and Prior Service Cost for Pension Plans ($) |
- |
- |
- |
Compensation Actually Paid ($) |
|
|
|
Non-PEO |
|||
Year |
2022 |
2023 |
2024 |
SCT Total Compensation ($) |
|
|
|
Less: Stock and Option Award Values Reported in SCT for the Covered Year ($) |
- |
( |
- |
Plus: Fair Value for Stock and Option Awards Granted in the Covered Year that are Outstanding and Unvested at End of Year ($) |
- |
|
- |
Change in Fair Value of Outstanding Unvested Stock and Option Awards from Prior Years ($) |
- |
- |
- |
Fair Value as of Vesting Date for Awards Granted that Vested in Same Year ($) |
- |
|
- |
Change in Fair Value of Stock and Option Awards from Prior years that Vested in the Covered Year ($) |
( |
- |
( |
Less: Fair Value of Stock and Option Awards Forfeited during the covered Year ($) |
- |
- |
- |
Less: Aggregate Change in Actuarial Present Value of Accumulated Benefit Under Pension Plans ($ |
- |
- |
- |
Plus: Aggregate Service Cost and Prior Service Cost for Pension Plans ($) |
- |
- |
- |
Compensation Actually Paid ($) |
|
|
|
13
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Loss
The following chart sets forth the relationship between CAP to our PEO, the average CAP to our Non-PEO NEOs, and net loss attributable to the company over the three most recently completed fiscal years:
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Total Shareholder Return (“TSR”)
The following chart sets forth the relationship between CAP to our PEO, the average CAP to our Non-PEO NEOs, and the company’s cumulative TSR over the three most recently completed fiscal years:
TRANSACTIONS WITH RELATED PERSONS
Association Collection and Distribution Services
Prior to February 1, 2022, the Company engaged BLG on behalf of many of its Association clients to service and collect the accounts and to distribute the proceeds as required by Florida law and the provisions of the purchase agreements between the Company and the Associations. On February 1, 2022, the Company consented to the assignment by BLG to the law firm BLG Association Law, PLLC (“BLGAL”), of the Services Agreement, dated April 15, 2015, previously entered into by and between the Company and BLG (the “Services Agreement”). One of our directors, Ms. Gould, served as the General Manager of BLG and also
14
currently serves as the General Manager of BLGAL. Initially, the Company paid BLG a fixed monthly fee of $82,000 per month for services rendered. On February 1, 2022, the Services Agreement was amended to reduce the monthly compensation payable under the Services Agreement to $53,000, and on March 28, 2024, the Services Agreement was amended to further reduce the monthly compensation payable under the Services Agreement to $43,000. Further, a termination fee of $150,000 was paid to BLG in connection with the assignment of the Services Agreement.
ADVERSE INTERESTS
We are not aware of any material proceedings in which an executive officer or director is a party adverse to the company or has a material interest adverse to the company.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
To our knowledge, none of our current directors or executive officers has, during the past ten years:
Except as set forth above and in our discussion above in “Adverse Interests,” none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.
DELINQUENT SECTION 16(A) REPORTS
Section 16(a) of Exchange Act requires the company’s directors and officers, and persons who own more than 10% of a registered class of the company’s equity securities, to file initial reports of ownership and reports of changes in ownership with the SEC. Such persons also are required to furnish the company with copies of all Section 16(a) reports they file.
Based solely on its review of the copies of such reports received by it with respect to fiscal year 2024 or written representations from certain reporting persons, the Company believes that all filing requirements applicable to its directors and officers and persons who own more than 10% of a registered class of the Company’s equity securities have been complied with, on a timely basis, for fiscal year 2024, with the exception of one late Form 4 (reporting one transaction) filed on November 25, 2024, on behalf of Ryan Duran.
CODE OF ETHICS
We have adopted a code of ethics applicable to all employees and directors, including our Chief Executive Officer and Chief Financial Officer. We have posted the text of our code of ethics to our internet web site: www.lmfunding.com by clicking “Investors” at the top and then “Governance.” We intend to disclose any change to or waiver from our code of ethics by posting such change or waiver to our internet web site within the same section as described above. We will satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding any material amendment to our code of ethics, and any waiver from a provision of our code of ethics that
15
applies to all employees, including our Chief Executive Officer and Chief Financial Officer, Controller or any person performing similar functions, by posting such information on our website at the internet website address set forth above.
CORPORATE GOVERNANCE GUIDELINES
We have adopted Corporate Governance Guidelines to promote effective governance of the company. A current copy of our Corporate Governance Guidelines is available on our website ir.lmfunding.com by clicking “Investors” at the top, hovering over “Governance”, and then clicking “Governance Documents”.
ANTI-HEDGING POLICIES
We have
MEETINGS OF THE BOARD OF DIRECTORS
During 2024, our Board of Directors held eight meetings. All directors attended at least 75% of the meetings of the Board of Directors and the committees on which they served during 2024. In addition, the independent directors met in executive session periodically in 2024. We have not established a policy with regard to the attendance of board members at annual stockholder meetings.
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
We have established procedures by which shareholders may communicate with members of the Board of Directors, individually or as a group. Shareholders wishing to communicate with the Board of Directors or a specified member of the Board may send written communications addressed to: Board of Directors, LM Funding America, Inc., Attention: Bruce M. Rodgers, Chief Executive Officer, 1200 West Platt Street, Suite 100, Tampa, Florida 33606. The mailing envelope should clearly specify the intended recipient or recipients, which may be the Board of Directors as a group or an individual member of the Board. The communication should include the shareholder’s name and the number of shares owned. Communications that are not racially, ethically or religiously offensive, commercial, pornographic, obscene, vulgar, profane, defamatory, abusive, harassing, threatening, malicious, false or frivolous in nature will be promptly forwarded to the specified members of the Board of Directors. We have also established procedures by which all interested parties (not just shareholders) may communicate directly with our non-management or independent directors as a group. Any interested party wishing to communicate with our non-management or independent directors as a group may send written communications addressed to: Board of Directors, LM Funding America, Inc., Attention: Bruce M. Rodgers, Chief Executive Officer, 1200 West Platt Street, Suite 100, Tampa, Florida 33606. The mailing envelope should clearly specify the intended recipients, which may be the non-management directors or the independent directors as a group. The envelope will be promptly forwarded for distribution to the intended recipients.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance committee.
Audit Committee
The Company has a separately-designated standing Audit Committee established in accordance with the Exchange Act. The Audit Committee’s responsibilities include the following:
|
|
1) assisting our Board of Directors in its oversight of the quality and integrity of our accounting, auditing, and reporting practices; |
|
|
2) overseeing the work of our internal accounting and auditing processes; |
|
|
3) discussing with management our processes to manage business and financial risk; |
16
|
|
4) making appointment, compensation, and retention decisions regarding, and overseeing the independent registered public accounting firm engaged to prepare or issue audit reports on our financial statements; |
|
|
5) establishing and reviewing the adequacy of procedures for the receipt, retention and treatment of complaints received by our Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters; |
|
|
6) reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures; and |
|
|
7) conducting an appropriate review and approval of all related party transactions for potential conflict of interest situations on an ongoing basis. |
The Audit Committee is composed of three members: Andrew Graham, its chairman, Fred Mills and Douglas I. McCree. Since our common shares are listed on Nasdaq Capital Market, we are governed by its listing standards. Accordingly, the members of the Audit Committee are all “independent directors” pursuant to the definition contained in Rule 5605(a)(2) of the NASDAQ and the criteria for independence set forth in Rule 10A-3(b)(1) of the Exchange Act. The Board of Directors has determined that Mr. Graham is an Audit Committee financial expert within the meaning of applicable SEC rules. The Audit Committee met formally four times during 2024. The Board of Directors has adopted a written Audit Committee Charter.
A current copy of the charter is available on our website www.lmfunding.com by clicking “Investors” and then “Governance.”
Compensation Committee
The Compensation Committee’s responsibilities include the following:
The Compensation Committee has the authority to determine the compensation of the named executive officers, except the Chief Executive Officer. The Compensation Committee makes recommendations to the Board of Directors for non-employee directors and the Chief Executive Officer compensation and equity awards under the Company’s equity plans. At least annually, the Compensation Committee considers the results of the Company’s operations and its financial position and makes compensation determinations. The Compensation Committee did engage consultants in determining compensation paid to executives in 2023 and 2024 but did not engage or rely on consultants in determining compensation paid to executive officers in 2022 and 2021, instead relying on the judgment and knowledge of its own members.
The Compensation Committee is composed of three members: Douglas I. McCree, its chairman, Martin Traber, and Frank Silcox, each of whom have been determined to be “independent” within the meaning of the SEC and NASDAQ regulations and is a “non-employee director” as defined in Section 16b-3 of the Exchange Act. The Board of Directors has adopted a formal Compensation Committee charter. The Compensation Committee met formally fourteen times in 2024.
A current copy of the charter is available on our website www.lmfunding.com by clicking “Investors” and then “Governance.”
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee’s responsibilities include the following:
|
(1) establishing criteria for selection of potential directors, taking into account all factors it considers appropriate; |
|
(2) identifying and selecting individuals believed to be qualified as candidates to serve on the board and recommending to the board candidates to stand for election as directors at the annual meeting of shareholders or, if applicable, at a special meeting of the shareholders; |
17
|
(3) evaluating and ensuring the independence of each member of each committee of the board required to be composed of independent directors; |
|
(4) developing and recommending to the board a set of corporate governance principles appropriate for our Company and consistent with the applicable laws, regulations, and listing requirements; |
|
(5) developing and recommending to the board a code of conduct for our Company’s directors, officers, and employees; |
|
(6) ensuring that the company makes all appropriate disclosures regarding the process for nominating candidates for election to the board, including any process for shareholder nominations, the criteria established by the committee for candidates for nomination for election to the board, and any other disclosures required by applicable laws, regulations, or listing standards; and |
|
(7) reporting regularly to the board (i) regarding meetings of the committee, (ii) with respect to such other matters as are relevant to the committee’s discharge of its responsibilities, and (iii) with respect to such recommendations as the committee may deem appropriate. |
The Nominating and corporate governance Committee is composed of three members: Fred Mills, its chairman, Frank Silcox, and Martin Traber. The Nominating and Corporate Governance Committee had six meetings in 2024. The Board of Directors has adopted a written Nominating and Corporate Governance Committee Charter.
A current copy of the charter is available on our website www.lmfunding.comby clicking “Investors” and then “Governance.”
The Nominating and Corporate Governance Committee identifies director candidates in numerous ways. Generally, the candidates are known to and recommended by members of the Board of Directors or management. In evaluating director candidates, the Nominating and Corporate Governance Committee considers a variety of attributes, criteria and factors, including experience, skills, expertise, diversity, personal and professional integrity, character, temperament, business judgment, time availability, dedication and conflicts of interest. At a minimum, director candidates must be at least 18 years of age and have such business, financial, technological or legal experience or education to enable them to make informed decisions on behalf of the Company. The Nominating and Corporate Governance Committee has not adopted a specific policy on diversity.
The Nominating and Corporate Governance Committee will consider director candidates recommended by shareholders. Any shareholder wishing to recommend one or more director candidates should send the recommendations before November 1st of the year preceding the next annual meeting of shareholders to LM Funding America, Inc., Attention: Bruce M. Rodgers, Chief Executive Officer, 1200 West Platt Street, Suite 100, Tampa, Florida 33606. Each recommendation should set forth the candidate’s name, age, business address, business telephone number, residence address, and principal occupation or employment and any other attributes or factors the shareholder wishes the committee to consider, as well as the shareholder’s name, address and telephone number and the class and number of shares held. The committee may require the recommended candidate to furnish additional information. Mr. Rodgers will forward recommendations of qualified candidates to the Nominating and Corporate Governance committee and those candidates will be given the same consideration as all other candidates. A shareholder wishing to nominate an individual for election to the Board of Directors at an annual meeting of the shareholders, rather than recommend a candidate to the Nominating and Corporate Governance committee, must comply with the advance notice requirements set forth in our bylaws.
A stockholder wishing to nominate an individual for election to the Board of Directors at the Annual Meeting of the Stockholders, rather than recommend a candidate to the Nominating and Corporate Governance committee, must comply with the advance notice requirements set forth in our bylaws. See “Shareholder Proposals for Presentation at the Annual Meeting” for further information.
Board of Directors Leadership Structure
Our business and affairs are managed under the direction of the Board of Directors. Under our current leadership structure, Bruce M. Rodgers serves as Chairman of the Board of Directors, Chief Executive Officer and President. Mr. Rodgers’ role includes providing continuous feedback on the direction and performance of the Company, serving as chairman of regular meetings of the Board of Directors, setting the agenda for the meetings of the Board of Directors and leading the Board of Directors in anticipating and responding to changes in our business. Mr. Rodgers plays a significant role also in formulating and executing the Company’s strategic plans, financing activity and investment decisions. We believe board oversight and planning is a collaborative effort among the directors, each of whom has unique skills, experience and education, and this structure facilitates collaboration and communication among the directors and management and makes the best use of their respective skills. The Board of Directors periodically reviews the
18
board leadership structure to evaluate whether the structure remains appropriate for the Company and may determine to alter this leadership structure anytime based on then existing circumstances.
Board of Directors’ Role in Risk Oversight
The Board of Directors plays a significant role in monitoring risks to the Company. Where major risks are involved, the Board of Directors takes a direct role in reviewing those matters. The Board of Directors also approves any strategic initiatives and any large or unusual investment or other such expenditure of the Company’s resources. The Board of Directors has established the above-described committees to assist in ensuring that material risks are identified and managed appropriately. The Board of Directors and its committees regularly review material operational, financial, compensation and compliance risks with executive management. The Audit Committee is responsible for assisting the Board of Directors in its oversight of the quality and integrity of our accounting, auditing, and reporting practices and discussing with management our processes to manage business and financial risk. The Compensation Committee considers risk in connection with its design of our compensation programs for our executives. The Nominating and Corporate Governance Committee regularly reviews the Company’s corporate governance structure and board committee assignments. Each committee regularly reports to the Board of Directors.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
MaloneBailey, LLP was our principal registered public accounting firm for 2024 and 2023.
AUDIT FEES
The following table sets forth the aggregate fees for services related to the years ended December 31, 2024 and 2023 provided by MaloneBailey, LLP, our principal accountants:
Fee Category |
|
2024 |
|
|
2023 |
|
Audit Fees - MaloneBailey, LLP (1) |
|
$ |
486,820 |
|
$ |
373,375 |
Audit-Related Fees (2) |
|
|
- |
|
|
- |
Tax Fees |
|
|
- |
|
|
- |
All Other Fees |
|
|
- |
|
|
- |
Total |
|
$ |
486,820 |
|
$ |
373,375 |
(1)Audit Fees relate to services rendered for the audits of our annual financial statements, for the review of our quarterly financial statements, and for services that are normally provided by the auditor in connection with statutory and regulatory filings or engagements.
(2)Audit-Related Fees consist of fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under "Audit Fees".
MaloneBailey, LLP Houston, TX (PCAOB ID No. 206)
PRE-APPROVAL POLICIES
The Audit Committee pre-approved 100% of all auditing services and non-auditing services. The Audit Committee has delegated this authority to the chairman of the Audit Committee for situations when pre-approval by the full Audit Committee is inconvenient. Any decisions by the chairman of the Audit Committee must be disclosed at the next Audit Committee meeting.
AUDIT COMMITTEE REPORT
The Audit Committee oversees the financial reporting processes of LM Funding America, Inc. on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in the Annual Report with management and discussed with management the quality, in addition to the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
The Audit Committee reviewed with representatives of MaloneBailey, LLP, the company’s independent registered public accounting firm responsible for auditing the company’s financial statements and expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States of America, their judgments as to the quality, not just the acceptability, of the company’s accounting principles. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed under auditing standards adopted by the Public Company Accounting Oversight Board. The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding
19
the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with the independent accountant the independent accountant’s independence.
The Audit Committee discussed with representatives of MaloneBailey, LLP, the overall scope and plans for their audit. The Audit Committee met with representatives of MaloneBailey, LLP, with and without management present, to discuss the results of their examinations, their evaluations of the company’s internal controls, and the overall quality of the company’s financial reporting.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors the inclusion of the audited financial statements in the company’s Annual Report on Form 10-K for the year ended December 31, 2024 for filing with the Securities and Exchange Commission.
This report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such acts.
AUDIT COMMITTEE
Andrew L. Graham, Chairman
Frederick Mills
Douglas I. McCree
20
PROPOSAL 2
RATIFICATION OF MALONEBAILEY, LLP
The Audit Committee of the Board of Directors has appointed MaloneBailey, LLP (“Malone Bailey”) as the company’s independent registered public accounting firm for our fiscal year ending December 31, 2025. Malone Bailey also served as the company’s independent registered public accounting firm for our fiscal year ended December 31, 2024. The Board of Directors concurs with the appointment and is submitting the appointment of Malone Bailey as our independent registered public accounting firm for stockholder ratification at the Annual Meeting.
Our bylaws do not require that the stockholders ratify the appointment of Malone Bailey as our independent registered public accounting firm. We are seeking ratification because we believe it is a sound corporate governance practice. If the stockholders do not ratify the appointment, our Audit Committee will reconsider whether to retain Malone Bailey, but may retain Malone Bailey in any event. Even if the appointment is ratified, the Audit Committee, in its discretion, may change the appointment at any time during the year if it determines that a change would be in the best interests of the company and its stockholders.
We expect that representatives of Malone Bailey will be either physically present or available via phone at the Annual Meeting. They will be given the opportunity to make a statement if they desire to do so, and they will be available to respond to appropriate questions after the meeting.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF MALONEBAILEY, LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE CURRENT YEAR.
21
PROPOSAL 3
APPROVAL, IN ACCORDANCE WITH NASDAQ LISTING RULE 5635(d),
OF THE ISSUANCE OF MORE THAN 19.99% OF OUR OUTSTANDING COMMON STOCK
ISSUABLE UPON THE EXERCISE OF INVESTOR WARRANTS THAT WERE ISSUED
IN TWO FINANCING TRANSACTIONS IN AUGUST 2025.
General
We are asking stockholders to approve the issuance of more than 19.99% of our outstanding common stock issuable upon the exercise of warrants issued pursuant to that certain (i) securities purchase agreement (the “Securities Purchase Agreement”), entered into on August 18, 2025 with institutional investors (the “Purchasers”), and (ii) securities purchase agreement (the “SPA”, and together with the Securities Purchase Agreement, the “Purchase Agreements”), entered into on August 18, 2025 with institutional investors (the “RD Purchasers”).
Description of Transactions
PIPE Offering
On August 18, 2025, we entered into the Securities Purchase Agreement with the Purchasers, pursuant to which we agreed to issue to the Purchasers, in a private placement (the “PIPE Offering”), (i) 4,322,265 shares (the “Shares”) of our common stock, par value $0.001 per share, and (ii) 4,322,265 warrants to purchase shares of our common stock at an exercise price of $2.41 per share (the “Common Warrants”). The combined purchase price for each Share and Common Warrant in the PIPE Offering was $2.41. The PIPE Offering closed on August 18, 2025.
The Securities Purchase Agreement provides that, subject to certain exceptions, until 45 days after the later of the effective date of stockholder approval for the issuance of shares of our common stock issuable upon exercise of the Common Warrants and the effectiveness of the registration statement, neither us nor any of our subsidiaries will issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of our common stock or common stock equivalents. The Securities Purchase Agreement further provides, subject to certain exceptions, including an at-the-market offering with the placement agent, until six months after the later of the Stockholder Approval Date (as defined below) and the effectiveness of the registration statement, neither us nor any of our subsidiaries will enter into a variable rate transaction (as defined in the Securities Purchase Agreement). The Securities Purchase Agreement also provides that the investors in the PIPE Offering have a right of participation in future equity or equity linked offerings by us for two years following the closing date.
In connection with the entry into the Securities Purchase Agreement, we entered into a registration rights agreement (the “Registration Rights Agreement”) with the Purchasers pursuant to which we agreed to file a registration statement to register the resale of the Shares and the shares of our common stock issuable upon exercise of the Common Warrants no later than 15 calendar days following the date of the Securities Purchase Agreement and to use best efforts to cause such registration statement to become effective within 30 calendar days following the date of the Securities Purchase Agreement, or in the case of a full review by the SEC, 75 days following the date of the Securities Purchase Agreement, and to maintain such effectiveness until no Purchaser owns any Shares or Common Warrants. The Registration Rights Agreement contains customary representations, warranties and agreements made by us and customary penalties for failure to timely have the registration statement timely filed or declared effective.
We received aggregate gross proceeds from the PIPE Offering of approximately $10.4 million, before deducting fees to Maxim Group LLC (the Placement Agent”) and other estimated offering expenses payable by us. In connection with the PIPE Offering, on August 18, 2025, we entered into a placement agency agreement (the “Placement Agency Agreement”) with the Placement Agent, pursuant to which we engaged the Placement Agent as the exclusive placement agent for us. We will pay the Placement Agent a cash fee equal to 5.5% of the aggregate gross proceeds raised in the PIPE Offering, will reimburse the Placement Agent for certain of its expenses in an aggregate amount up to $100,000 and will issue to the Placement Agent 216,113 shares of our common stock.
Registered Direct Offering and Concurrent Private Placement
On August 18, 2025, following the closing of the PIPE Offering, we entered into the SPA with the RD Purchasers, pursuant to which we agreed to issue to the RD Purchasers (the “Offering”, and together with the PIPE Offering, the “Offerings”), (i) 5,231,681 shares (the “RD Shares”) of our common stock and, in a concurrent private placement, (ii) 5,231,681 warrants to purchase shares of our common stock at an exercise price of $2.41 per share (the “Placement Common Warrants”, and together with the “Common Warrants”, the “Investor Warrants”). The combined purchase price for each RD Share and Placement Common Warrant in the Offering was $2.41. The Offering closed on August 19, 2025.
22
We previously filed a registration statement on Form S-3 (File No. 333-281528) with the SEC, which was deemed effective on November 21, 2024 (the “Registration Statement”). The RD Shares were offered by us pursuant to the Registration Statement and that certain prospectus supplement dated August 18, 2025, filed by us with the SEC under the Securities Act on August 19, 2025.
In connection with the Offering, on August 18, 2025, we entered into a placement agency agreement (the “RD Placement Agency Agreement”, and together with the Placement Agency Agreement, the “Placement Agency Agreements”) with the Placement Agent, pursuant to which we engaged the Placement Agent as the exclusive placement agent for us. We will pay the Placement Agent a cash fee equal to 5.5% of the aggregate gross proceeds raised in the Offering, will reimburse the Placement Agent for certain of its expenses in an aggregate amount up to $35,000 and will issue to the Placement Agent 261,584 shares of our common stock.
We will receive aggregate gross proceeds from the Offering of approximately $12.6 million, before deducting fees to the Placement Agent and other estimated offering expenses payable by us.
For further information regarding these agreements and each of the PIPE Offering and the Offering, please refer to our Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on August 18, 2025, as amended. The discussion herein relating to the Placement Agency Agreements, the Purchase Agreements, the Registration Rights Agreement, the Common Warrants and the Placement Common Warrants is qualified in its entirety by reference to the transaction documents filed as exhibits to such Current Report on Form 8-K.
Description of Warrants
The following is a brief summary of certain terms and provisions of the Common Warrants and Placement Common Warrants being sold in the Offerings, and is subject in all respects to the provisions contained in the Common Warrants and Placement Common Warrants, respectively.
Exercisability. The Common Warrants and Placement Common Warrants will be exercisable on the date (the “Stockholder Approval Date”) on which the stockholders of the Company approve the issuance of all of the Common Warrants and Placement Common Warrants and the shares of common stock issuable upon the exercise of the Common Warrants and Placement Common Warrants (the “Stockholder Approval”). We are required to hold an annual or special meeting of stockholders following the date of closing of the Offerings for the purpose of obtaining Stockholder Approval. The Common Warrants and Placement Common Warrants will be exercisable until the third anniversary of the Stockholder Approval Date. The Common Warrants and Placement Common Warrants will be exercisable, at the option of the holder, in whole or part, by delivering to us a duly executed exercise notice and by payment in full in immediately available funds for the number of shares of our common stock purchased upon such exercise. If, at the time of exercise a registration statement registering the issuance of the shares of common stock underlying the Common Warrants or Placement Common Warrants under the Securities Act is not effective or available, the holder may, in its sole discretion, elect to exercise the Common Warrants or Placement Common Warrants through a cashless exercise, in which the holder would receive upon such exercise the net number of shares of common stock determined according to the formula set forth in the Common Warrants.
Exercise Limitation. A holder will not have the right to exercise any portion of the Common Warrants or Placement Common Warrants if the holder would beneficially own in excess of 4.99% (or, at the election of the holder, 9.99%) of the outstanding common stock immediately after exercise, except that upon notice from the holder to us, the holder may increase or decrease the beneficial ownership limitation up to 9.99% of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Common Warrants and Placement Comon Warrants, provided that any increase in such beneficial ownership limitation shall not be effective until 61 days following notice from the holder to us.
Exercise Price; Adjustments. The Common Warrants and Placement Common Warrants each have an initial exercise price of $2.41 per share, subject to adjustment, but in no event will the exercise price be reduced below $0.481 per share (the “Floor Price”). The exercise price and the number of shares of common stock issuable upon exercise are subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting shares of our common stock. Further, if we sell, enter into an agreement to sell, or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of any shares of common stock or common stock equivalents, at an effective price per share less than the exercise price then in effect, then the exercise price of the Common Warrants and Placement Common Warrants will be reduced to such price, provided that the adjusted Exercise Price shall not be less than the Floor Price. In addition, if we grant, issue or sell certain securities pro rata to the record holders of our common stock, other than certain exempt issuances, or if we declare or make any dividend or other distribution of our assets, including cash, stock or other property to the holders of our common stock, then the holders of the Common Warrants and Placement Common Warrants will be entitled to participate in such transactions to the same extent such holder would have participated in such transaction if it held the number of shares of common stock issuable upon exercise of the Common
23
Warrants or Placement Common Warrants, as applicable, without regard to any limits on exercise contained in the Common Warrants or Placement Common Warrants.
Exercise Price Reset Adjustment; Anti-Dilution. The Common Warrants include a one-time “reset” feature in which the exercise price of the Common Warrants will be reduced in the event that (x) the lowest volume weighted average price (“VWAP”) of our common stock during (1) the period commencing five trading days immediately preceding the Stockholder Approval Date and ending five consecutive trading days immediately after the Stockholder Approval Date or (2) the period commencing five consecutive trading days immediately preceding the Effective Date (as defined in the Securities Purchase Agreement) and ending five consecutive trading days immediately after such date is less than the exercise price then in effect, and/or (y) the lowest VWAP of our common stock during the period commencing five consecutive trading days immediately after the consummation of an offering of our securities within ten trading days of the closing date in which the Common Warrants were issued, is less than the exercise price then in effect, then, in each case, the exercise price will be reduced, if lower, to the lowest VWAP of our common stock during the specified pre‑ and post‑event trading day measurement periods. In the event of any such reset, the number of shares issuable upon exercise of the warrants will increase proportionately so that the total exercise price payable upon full exercise remains the same as immediately prior to the adjustment. In the event that the exercise price of the Common Warrants is reduced to the Floor Price pursuant to the “reset” provision, up to an additional 17,333,985 shares of common stock may become issuable upon exercise of the Common Warrants. As a result of the foregoing reset features, as of September [●], 2025, the number of shares issuable pursuant to the Common Warrants has increased to an aggregate of [●] shares, and the exercise price per share of the Common Warrants has decreased to $[●] per share.
The Placement Common Warrants also contain a substantially similar one-time “reset feature”, provided that the exercise price of the Placement Common Warrants will be reduced in the event that (x) the lowest VWAP of our common stock during (1) the period commencing five trading days immediately preceding the Stockholder Approval Date and ending five consecutive trading days immediately after the Stockholder Approval Date or (2) the period commencing five consecutive trading days immediately preceding the Effective Date (as defined in the Securities Purchase Agreement) and ending five consecutive trading days immediately after such date is less than the exercise price then in effect, and/or (y) the lowest VWAP of our common stock during the period commencing on and including the date of the announcement of the Offering and ending five consecutive trading days after the closing date in which the Placement Common Warrants were issued, is less than the exercise price then in effect. In the event that the exercise price of the Placement Common Warrants is reduced to the Floor Price pursuant to the “reset” provision, up to an additional 20,981,102 shares of common stock may become issuable upon exercise of the Placement Common Warrants. As a result of the foregoing reset features, as of September [●], 2025, the number of shares issuable pursuant to the Placement Common Warrants has increased to an aggregate of [●] shares, and the exercise price per share of the Placement Common Warrants has decreased to $[●] per share.
Transferability. Subject to applicable laws, the Common Warrants and Placement Common Warrants may be offered for sale, sold, transferred or assigned without our consent.
Exchange Listing. There is no established trading market for the Common Warrants and Placement Common Warrants, and we do not expect a market to develop. In addition, we do not intend to apply for the listing of the Common Warrants or Placement Common Warrants on any national securities exchange or other trading market. Without an active trading market, the liquidity of the Common Warrants and Placement Comon Warrants will be limited.
Fundamental Transactions. If a fundamental transaction (as defined in each of the Common Warrants and Placement Common Warrants) occurs, then the successor entity will succeed to, and be substituted for us, and may exercise every right and power that we may exercise and will assume all of our obligations under the Common Warrants and Placement Common Warrants, respectively, with the same effect as if such successor entity had been named in the Common Warrant or Placement Common Warrant itself. Following such fundamental transaction, the holders of the Common Warrants and Placement Common Warrants will be entitled to receive upon exercise of the Common Warrants or Placement Common Warrants the kind and amount of securities, cash or other property that the holders would have received had they exercised the Common Warrants or Placement Common Warrants immediately prior to such fundamental transaction without regard to any limits on exercise contained in the Common Warrants or placement Common Warrants.
Rights as a Stockholder. Except as otherwise provided in the Common Warrants and Placement Common Warrants or by virtue of such holder’s ownership of shares of our common stock, the holder of a Common Warrant or Placement Common Warrant does not have the rights or privileges of a holder of shares of our common stock, including any voting rights, until the holder exercises the Common Warrant or Placement Common Warrant, as applicable.
24
Reasons for the Warrant Approval Proposal
A vote in favor of this proposal is a vote "for" approval of the issuance of the shares of our common stock that may be issuable upon the exercise of the Investor Warrants. The aggregate number of shares of our common stock issuable upon the exercise of such warrants may exceed 19.99% of the outstanding shares of our common stock (determined as of the date of, and without regard for, the issuance of Investor Warrants).
Nasdaq Listing Rule 5635(d) requires stockholder approval in connection with a transaction other than a public offering involving the sale, issuance, or potential issuance by the issuer of common stock (or securities convertible into or exercisable for common stock) equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for a price that is less than the lower of (i) the company’s Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the signing of the binding agreement, or (ii) the average of the company’s Nasdaq Official Closing Price (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement (the “Minimum Price”). Pursuant to Nasdaq rules, the presence of any provision that could cause the conversion or exercise price of a convertible security to be reduced to below the Minimum Price immediately before the entering into of the binding agreement will cause the transaction to be viewed as a discounted issuance.
Because the total aggregate number of shares of our common stock issuable upon exercise of the Investor Warrants is more than 19.99% of our outstanding shares of our common stock, we are asking stockholders to approve of such issuance pursuant to Nasdaq Listing Rule 5635(d).
Effect of the Proposal
If stockholders do not approve this proposal, then the Investor Warrants will not become exercisable. Failure to obtain such approval may discourage future investors from engaging in future financings with us. If these consequences occur, we may have difficulty finding alternative sources of capital to fund our operations in the future on terms favorable to us or at all. We can provide no assurance that we would be successful in raising funds pursuant to additional equity or debt financings or that such funds could be raised at prices that would not create substantial dilution for our existing stockholders.
Certain Risks Associated with the Proposal
The issuance of shares of common stock upon exercise of the Investor Warrants will have a dilutive effect on current stockholders. The percentage ownership of the Company held by current stockholders will decline as a result of the issuance of the shares of our common stock underlying the Investor Warrants. This means also that our current stockholders will own a smaller percent interest in us as a result of the exercise of the Investor Warrants and therefore have less ability to influence significant corporate decisions requiring stockholder approval. Dilution of equity interests could also cause prevailing market prices for our common stock to decline. As of September [●], 2025, and after giving effect to the “reset” adjustment through such date, if the Investor Warrants are exercised in full for cash, a total of [●] shares of our common stock will be issuable to the holders of the Investor Warrants, and this dilutive effect may be material to current stockholders of the Company.
There may be future sales of our common stock, which could adversely affect the market price of our common stock. The exercise of any warrants, and other issuances of our common stock could have an adverse effect on the market price of the shares of our common stock. Sales of a substantial number of shares of our common stock or the perception that such sales might occur could materially adversely affect the market price of the shares of our common stock.
Provisions of the Investor Warrants could discourage an acquisition of us by a third party. Certain provisions of the Investor could make it more difficult or expensive for a third party to acquire us. The Investor provide that, in the event of certain transactions constituting fundamental transactions, holders of such warrants will have the right, at their option, to receive from us or a successor entity the kind and amount of securities, cash or other property that such holder would have received had they exercised the Investor Warrants immediately prior to the fundamental transaction. These and other provisions of the Investor Warrants could prevent or deter a third party from acquiring us even where the acquisition could be beneficial to the holders of our common stock.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE APPROVAL, IN ACCORDANCE WITH NASDAQ LISTING RULE 5635(d), OF THE ISSUANCE
OF MORE THAN 19.99% OF OUR OUTSTANDING COMMON STOCK
ISSUABLE UPON THE EXERCISE OF THE INVESTOR WARRANTS.
25
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information regarding the beneficial ownership of our common stock as of August 19, 2025 by:
The number and percentage of shares beneficially owned are based on 15,198,388 common shares outstanding as of August 19, 2025. Information with respect to beneficial ownership has been furnished by each director, officer or beneficial owner of more than 5% of our common stock. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission, which generally require that the individual have voting or investment power with respect to the shares. In computing the number of shares beneficially owned by an individual listed below and the percentage ownership of that individual, shares underlying options, warrants and convertible securities held by each individual that are exercisable or convertible within 60 days of August 19, 2025, are deemed owned and outstanding, but are not deemed outstanding for computing the percentage ownership of any other individual. Except as otherwise indicated in the footnotes to this table, or as required by applicable community property laws, all individuals listed have sole voting and investment power for all shares shown as beneficially owned by them. Unless otherwise indicated in the footnotes, the address for each principal shareholder is LM Funding America, Inc., 1200 West Platt Street, Suite 100, Tampa, Florida 33606.
Name of Beneficial Owner |
Amount and Nature of Beneficial Ownership |
|
Percentage |
|
||
5% Stockholders: |
5% Stockholders: |
|
5% Stockholders: |
|
||
Hexstone Capital LLC (10) 3052 Filmore St., Suite 303 San Franciso CA, 9123 |
|
1,410,790 |
|
9.3% |
|
|
|
|
|
|
|
|
|
Armistice Capital, LLC (11) 510 Madison Avenue, 7th Floor New York, New York 10022 |
|
[•] |
|
|
[•] |
|
|
|
|
|
|
|
|
|
||||||
Executive Officers and Directors |
|
|
|
|
|
|
Bruce M. Rodgers (1) |
|
1,134,411 |
|
|
7.00% |
|
Carollinn Gould (2) |
|
35,885 |
|
|
* |
|
Andrew L. Graham (3) |
|
47,387 |
|
|
* |
|
Douglas I. McCree (4) |
|
30,986 |
|
* |
|
|
Fred Mills (5) |
|
30,154 |
|
* |
|
|
Frank Silcox (6) |
|
20,349 |
|
* |
|
|
Martin Traber (7) |
|
5,037 |
|
* |
|
|
Richard Russell (8) |
|
1,123,379 |
|
6.93% |
|
|
Ryan Duran (9) |
|
83,749 |
|
* |
|
|
All Executive Officers and Directors as a Group (9 individuals) |
|
2,511,337 |
|
|
15.03% |
|
* |
Represents less than 1% of beneficial ownership |
(1)
|
Includes 108,334 shares of common stock; 166,667 shares of common stock issuable upon the exercise of options held by Mr. Rodgers; 843,833 shares issuable upon the exercise of warrants held by BRRR, LLC, an entity over which Mr. Rodgers and Mr. Russell each have beneficial ownership; 15,415 shares and 20,325 shares issuable upon the exercise of options held by CGR LLC which is owned 50% by Bruce M. Rodgers Revocable Trust and 50% by Carol Linn Gould Revocable Trust, 138 shares beneficially owned by BRR Holding, LLC, 20 shares beneficially owned by Bruce M. Rodgers IRA, and 7 shares beneficially owned by Carollinn Gould IRA. Bruce M. Rodgers is the sole Trustee of the Bruce M. Rodgers Revocable Trust and Carollinn Gould is the sole Trustee of the Carol Linn Gould Revocable Trust. Bruce M. Rodgers, Carollinn Gould and their family, including trusts or custodial accounts of minor children of each of Mr. Rodgers and Ms. Gould owns 100% of the outstanding membership interests of BRR Holding, LLC and CGR LLC, and therefore Mr. Rodgers and Ms. Gould may be deemed to have shared voting and investment power for all 15,553 shares and 20,325 shares issuable upon the exercise of options held by both Trusts, CGR and BRR Holding, LLC. |
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(2) |
Includes 15,553 shares of common stock held by the two revocable trusts. Bruce M. Rodgers, Carollinn Gould and their family, including trusts or custodial accounts of minor children of each of Mr. Rodgers and Ms. Gould, own 100% of the outstanding membership interests of each trust, 1,681 shares of common stock issuable upon the exercise of options at an exercise price of $35.70 that are currently exercisable and 18,644 shares of common stock issuable upon the exercise of options at an exercise price of $3.54 that are currently exercisable. |
(3) |
Includes 17,303 shares of common stock, and 17 shares of common stock issuable upon the exercise of options at an exercise price of $625.00 that are currently exercisable, 2,101 shares of common stock issuable upon the exercise of options at an exercise price of $35.70 that are currently exercisable and 27,966 shares of common stock issuable upon the exercise of options at an exercise price of $3.54 that are currently exercisable. |
(4) |
Includes 902 shares of common stock and, 2,101 shares of common stock issuable upon the exercise of options at an exercise price of $35.70 that are currently exercisable and 27,966 shares of common stock issuable upon the exercise of options at an exercise price of $3.54 that are currently exercisable. |
(5) |
Includes 87 shares of common stock and 2,101 shares of common stock issuable upon the exercise of options at an exercise price of $35.70 that are currently exercisable and 27,966 shares of common stock issuable upon the exercise of options at an exercise price of $3.54 that are currently exercisable. |
(6) |
Includes 24 shares of common stock and 1,681 shares of common stock issuable upon the exercise of options at an exercise price of $35.70 that are currently exercisable and 18,644 shares of common stock issuable upon the exercise of options at an exercise price of $3.54 that are currently exercisable. |
(7) |
Includes 5,037 shares of common stock |
(8) |
Includes 108,334 shares of common stock; 166,667 shares of common stock issuable upon the exercise of options held by Mr. Russell; 843,833 shares issuable upon the exercise of warrants held by BRRR, LLC, an entity over which Mr. Rodgers and Mr. Russell each have beneficial ownership. Includes 83 shares of common stock issuable upon the exercise of options at an exercise price of $3,750.00 that are currently exercisable or become exercisable within 60 days after August 19, 2025, includes 250 shares of common stock issuable upon the exercise of options at an exercise price of $300.00 that are currently exercisable. |
(9) |
Includes 14 shares of common stock issuable upon the exercise of options at an exercise price of $3,000.00 that are currently exercisable or become exercisable within 60 days after August 19, 2025. Includes 83 shares of common stock issuable upon the exercise of options at an exercise price of $300.00 that are currently exercisable. Includes 29,167 shares of common stock issuable upon the exercise of options at an exercise price of $35.70 that are currently exercisable or become exercisable within 60 days after August 19, 2025. Includes 41,667 shares of common stock issuable upon the exercise of options at an exercise price of $4.51 that are currently exercisable. |
(10) |
Based on Schedule 13G filed on August 20, 2025. Includes 1,410,790 shares of common stock held directly by Hexstone Capital LLC (“Hexstone”) but excludes 1,410,790 warrants to purchase shares of common stock that are not currently exercisable. Hexstone has the power to dispose of and the power to vote the shares of common stock reported, which power may be exercised by its managing member, Mr. Brendan O’Neil, and as such, Mr. O’Neil may be deemed to beneficially own the securities reported by Hexstone.
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(11) |
Excludes [•] warrants to purchase shares of common stock that are not currently exercisable. Armistice Capital, LLC ("Armistice Capital") is the investment manager of Armistice Capital Master Fund Ltd. (the "Master Fund"), the direct holder of the shares, and pursuant to an Investment Management Agreement, Armistice Capital exercises voting and investment power over the securities of the company held by the Master Fund and thus may be deemed to beneficially own the securities of the company held by the Master Fund. Steven Boyd, as the managing member of Armistice Capital, may be deemed to beneficially own the securities of the Company held by the Master Fund. The Master Fund specifically disclaims beneficial ownership of the securities of the Company directly held by it by virtue of its inability to vote or dispose of such securities as a result of its Investment Management Agreement with Armistice Capital.
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OTHER MATTERS
We do not expect any other matters to be brought before the meeting. However, if any other matters are presented, it is the intention of the persons named in the proxy to vote the proxy as recommended by the Board of Directors or, if no recommendation is given, in their own discretion using their best judgment.
SHAREHOLDER PROPOSALS FOR PRESENTATION AT THE ANNUAL MEETING
Stockholder proposals intended to be considered for inclusion in next year’s proxy statement and form of proxy for presentation at the next annual meeting of stockholders must comply with Rule 14a-8 of the Exchange Act. The deadline for submitting such proposals is [] (120 days before the date of this year’s mailing without regard to the year), unless the date of the next annual meeting is more than 30 days before or after the one-year anniversary date of this Annual Meeting, in which case proposals must be submitted a reasonable time before we print our proxy materials for the next annual meeting.
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Stockholders wishing to submit proposals for the next annual meeting outside the process of Rule 14a-8 must comply with the advance notice and other provisions of Article II, Section 11 of our bylaws. To be timely, notice of the proposal must be received by the company no earlier than the close of business on the 120th day ([]) and no later than the close of business on the 90th day ([]) prior to the first anniversary of this year’s Annual Meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 30 days after such anniversary date, notice by the stockholder to be timely must be so delivered no earlier than the close of business on the 120th day prior to the date of such annual meeting and not later than the close of business on the later of the 90th day prior to the date of such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, the 10th day following the day on which public announcement of the date of such meeting is first made by the company
Address proposals to LM Funding America, Inc., Attention: Bruce M. Rodgers, Chief Executive Officer, 1200 West Platt Street, Suite 100, Tampa, Florida 33606. The specific requirements for submitting shareholder proposals are set forth in Article II, Section 11 of our bylaws.
DELIVERY OF PROXY MATERIALS TO HOUSEHOLDS
Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of our notice or proxy statement and annual report to stockholders may have been sent to multiple stockholders in your household. The company will promptly deliver a separate copy of any of these documents to you if you contact us at the following address or telephone number: LM Funding America, Inc., Attention: Bruce M. Rodgers, Chief Executive Officer, 1200 West Platt Street, Suite 100, Tampa, Florida 33606, telephone: 813-222-8996. If you want to receive separate copies of the notice, proxy statement or annual report to stockholders in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker, or other nominee record holder, or you may contact the company at the above address or telephone number.
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Logo P.O. BOX 8016, CARY, NC 27512-9903 Your vote matters! Have your ballot ready and please use one of the methods below for easy voting: Your control number Have the 12 digit control number located in the box above available when you access the website and follow the instructions. LM Funding America, Inc. Annual Meeting of Stockholders For Stockholders of record as of August 19, 2025 Tuesday, October 14, 2025 [ * ], Local Time 1200 West Platt Street, Suite 100 Tampa, Florida 33606 Internet: www.proxypush.com/LMFA Cast your vote online Have your Proxy Card ready Follow the simple instructions to record your vote Phone: 1-866-785-4025 Use any touch-tone telephone Have your Proxy Card ready Follow the simple recorded instructions Mail: Mark, sign and date your Proxy Card Fold and return your Proxy Card in the postage-paid envelope provided YOUR VOTE IS IMPORTANT! PLEASE VOTE BY: [ * ], Local Time, October 14, 2025. This proxy is being solicited on behalf of the Board of Directors The undersigned hereby appoints Bruce Rodgers and Richard Russell (the "Named Proxies"), and each or either of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the shares of capital stock of LM Funding America, Inc. which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORS RECOMMENDATION. This proxy, when properly executed, will be voted in the manner directed herein. In their discretion, the Named Proxies are authorized to vote upon such other matters that may properly come before the meeting or any adjournment or postponement thereof. You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return this card. PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE Copyright © 2025 BetaNXT, Inc. or its affiliates. All Rights Reserved
Logo LM Funding America, Inc. Annual Meeting of Stockholders Please make your marks like this: THE BOARD OF DIRECTORS RECOMMENDS A VOTE: FOR ON PROPOSALS 1, 2 AND 3 PROPOSAL YOUR VOTE BOARD OF DIRECTORS RECOMMENDS 1. To elect three Class III directors to hold office for a three-year term ending at the third annual meeting of stockholders following their election; 1.01 Andrew L. Graham FOR WITHHOLD FOR 1.02 Frederick Mills FOR 1.03 Frank Silcox FOR 2. To ratify the appointment of MaloneBailey, LLP as the company's independent auditor to audit the company's 2025 financial statements; FOR AGAINST ABSTAIN FOR 3. To approve, in accordance with Nasdaq Listing Rule 5635(d), the issuance of more than 19.99% of our outstanding common stock issuable upon the exercise of investor warrants that were issued in two financing transactions in August 2025; and FOR 4. To transact such other business that may properly come before the meeting or any adjournments or postponements thereof. Check here if you would like to attend the meeting in person. Authorized Signatures - Must be completed for your instructions to be executed. Please sign exactly as your name(s) appears on your account. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy/Vote Form. Signature (and Title if applicable) Date Signature (if held jointly) Date