On August 16, 2024, LM Funding America, Inc. (the “Company”) and an institutional investor (the “Purchaser”) entered into a securities purchase agreement (the “Securities Purchase Agreement”), pursuant to which the Company agreed to issue to the Purchaser, (i) in a registered direct offering, 278,000 shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (“Common Stock”), and pre-funded warrants to purchase 590,185 shares of Common Stock (the “Pre-Funded Warrants”) with an exercise price of $0.0001 per share, and (ii) in a concurrent private placement, Series A warrants to purchase 868,185 shares of Common Stock (the “Series A Common Warrants”) and Series B warrants to purchase 868,185 shares of Common Stock (the “Series B Common Warrants” and together with the Series A Common Warrants, the “Common Warrants”), each with an exercise price of $2.98. Such registered direct offering and concurrent private placement are referred to herein as the “Transactions.” The combined effective offering price for each Share (or pre-funded warrant in lieu thereof) and accompanying Series A Warrant and Series B Warrant in the Transaction was $2.98. The Transactions closed on August 19, 2024.
The Company received aggregate gross proceeds from the Transactions of approximately $2.6 million, before deducting fees to the Placement Agent (as defined below) and other estimated offering expenses payable by the Company. The Company currently plans to use the net proceeds from the Transactions for general corporate purposes, including working capital, development and/or acquisition of hosting sites, and funding the purchase of additional Bitcoin mining machines.
The Company filed a registration statement on Form S-3 (File No. 333-258326) with the Securities and Exchange Commission (the “Commission”) on July 30, 2021, which was deemed effective on August 16, 2021 (the “Registration Statement”). Pursuant to Rule 415(a)(5) under the Securities Act of 1933, as amended (the “Securities Act”), the Company intends to continue to offer and sell the unsold Securities under the Registration Statement until the earlier of (i) the date on which the registration statement filed with the Commission on August 13, 2024, is declared effective by the Commission, and (ii) February 12, 2025, which is 180 days after the third-year anniversary of the effective date of the Registration Statement. The Shares and Pre-Funded Warrants were offered by the Company pursuant to the Registration Statement and that certain prospectus supplement dated August 16, 2024, filed by the Company with the Commission under the Securities Act on August 19, 2024.
The Common Warrants and the shares of Common Stock issuable upon exercise of the Common Warrants (the “Common Warrant Shares”) were issued in a concurrent private placement and have not been registered under the Securities Act, and are instead being offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act and/or Rule 506(b) promulgated thereunder. The Common Warrants will be exercisable commencing on the effective date of stockholder approval for the issuance of the shares of Common Stock issuable upon exercise of the Common Warrants (the “Stockholder Approval Date”). The Series A Common Warrants will expire on the fifth anniversary of the Stockholder Approval Date and the Series B Common Warrants will expire on the second anniversary of the Stockholder Approval Date. The Pre-Funded Warrants will not expire and will be exercisable commencing on the date of issuance and at any time until all of the Pre-Funded Warrants are exercised in full. If, at the time of exercise a registration statement registering the issuance of the shares of Common Stock underlying the Common Warrants under the Securities Act is not effective or available, the holder may, in its sole discretion, elect to exercise the 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. Further, if the Company sells, enters into an agreement to sell, or grants any option to purchase, or sells or grants any right to reprice, or otherwise disposes 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 will be reduced to such price.
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