LM Funding America, Inc. •1200 West Platt Street, Suite 100, Tampa, FL 33606 • T (813) 222-8996 • F (813) 221-7909 • lmfunding.com

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 Friday, December 10, 2021, beginning at 3:00 p.m.. The Annual Meeting will be held at 1200 West Platt Street, Suite 100, Tampa, Florida 33606. Stockholders will be admitted beginning at 2:45 p.m.

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.

This proxy statement and the 2020 Annual Report to Stockholders, as amended, are available at www.proxyvote.com

Upon your written request, we will provide you with a copy of our 2020 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

The principal purposes of the Annual Meeting are to ratify the appointment of our outside auditors; elect two directors to the company’s Board of Directors; to approve an amendment to the company’s Certificate of Incorporation, as amended, to increase the number of the company’s authorized shares of common stock, par value $0.001 per share, from 30,000,000 to 350,000,000 shares and to increase the number of the company’s authorized shares of preferred stock, par value $0.001 per share, from 5,000,000 to 150,000,000 shares; to approve the LM Funding America, Inc. 2021 Omnibus Incentive Plan; to approve, on an advisory, non-binding basis, the compensation of our named executive officers; and to approve on a non-binding advisory basis the compensation of our named executive officers every three years. In addition, our management will report on our performance during 2020, discuss challenges ahead and respond to questions from stockholders.

Stockholders of record at the close of business on the record date, October 19, 2021, 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 two Class II directorships. Accordingly, since two directors are to be elected at this Annual Meeting, in electing directors, each share will entitle the stockholder to two votes, one per director. Stockholders may not cumulate their votes. As of October 19, 2021, there were 12,677,442 common shares outstanding.

The presence at the Annual Meeting, in person or by proxy, of the holders of a majority of the shares outstanding will constitute a quorum, permitting us to conduct the business of the meeting.

If your shares are registered directly in your name with our transfer agent, V Stock 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).

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 two 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 to “WITHHOLD AUTHORITY.”

If you are a shareholder of record, then you may opt to deliver your completed proxy card in person at the Annual Meeting.

Yes. If you follow the instructions on the proxy card for voting by telephone or internet, your shares will be voted as you direct.

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 Proposal No. 1. Shares subject to a broker non-vote will not be considered entitled to vote with respect to Proposal No. 1 and will not affect the outcome of Proposal No. 1.

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.

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.

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.

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 two 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 havenoeffectonitsoutcome.Underthepluralityvotestandard,anysharesthatarenotvoted,whetherbyabstention,broker non-votes or otherwise, will not affect the election ofdirectors.

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, 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 of the amendment to the company’s Certificate of Incorporation, as amended, to increase our authorized shares of common stock, par value $0.001 per share, from 30,000,000 to 350,000,000 shares and to increase our authorized shares of preferred stock, par value $0.001 per share, from 5,000,000 to 150,000,000 shares. This proposal must be approved by the affirmative vote of the holders of a majority of the common stock outstanding and entitled to vote. Abstentions and broker non-votes will have the same effect as a vote against this proposal.

Proposal No. 4 — Approval of the LM Funding America, Inc. 2021 Omnibus Incentive Plan.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, 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. 5 — Approval, on an advisory, non-binding basis, the compensation of our named executive officers. While this proposal is advisory in nature and non-binding, the Board will review the voting results and expects to take such results into consideration when making future decisions regarding executive compensation. Abstentions and broker non-votes will be entirely excluded from the vote and will have no effect on its outcome.

Proposal No. 6 — Approval, on an advisory, non-binding basis, the compensation of our named executive officers every three years. The voting frequency option that receives the highest number of votes cast by stockholders will be deemed the frequency for the advisory vote on executive compensation that has been selected by stockholders. Abstentions and broker non-votes will be entirely excluded from the vote and will have no effect on its outcome.

All votes will be tabulated by the secretary of the company. We have engaged Broadridge Financial Solutions, Inc. to collect and tabulate proxy instructions.

Who is paying for the preparation and 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.

Two 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 2023 (Class I directors), 2021 (Class II directors) and 2022 (Class III directors). Accordingly, the Class II directors will be elected at this Annual Meeting of Stockholders. Each of the Class II directors elected at this Annual Meeting will be elected to serve a three-year term.

With the recommendation of the nominating and governance committee, the Board of Directors has nominated the following persons to stand for election as Class II directors at this Annual Meeting of Stockholders, with terms expiring at the third annual meeting of stockholders following their election:

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. Douglas I. McCree and Mr. Joel E. Rodgers as Class II directors of LM Funding America, Inc. The nominees receiving the two highest “FOR” vote totals will be elected as directors.

In the election of directors, the two highest recipients of “FOR” votes will be elected. A properly executed proxy card marked “WITHHOLD AUTHORITY” 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.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF EACH OF THE NOMINEES AS

Set forth below is a summary of the background and experience of each director nominee and director. 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, our Vice President—General Manager, Secretary, and director, have been married since 2004 and Joel E. Rodgers, Sr. is the father of Bruce M. Rodgers and the father-in-law of Carollinn Gould.

Douglas I. McCree. Mr. McCree, age 56, 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.

Joel E. Rodgers, Sr. Mr. Rodgers, age 84, has served as a director of the company since its initial public offering in October 2015. Mr. Rodgers has been Vice President of Allied Signal, Inc. (1987-1992) and CEO of Baron Blakeslee, Inc. (1985-1987). Since 1995, Mr. Rodgers has served as a part-time Professor at Nova Southeastern University teaching finance, statistics, marketing, operation, and strategy. He has published numerous articles dealing with empowerment and corporate leadership. Mr. Rodgers represented the United States State Department in China, Mexico and Brazil in negotiations regarding the Montreal Protocol, which dealt with limiting fluorocarbon discharge. Mr. Rodgers’ civic work extends to service on the library, hospital and municipal utility boards of Bowling Green, Kentucky. Mr. Rodgers holds a Doctorate of Business Administration from Nova Southeastern University, a Masters of Business Administration from University of Kentucky, a B.S. in Mechanical Engineering from University of New Mexico and was a University of Illinois PhD candidate. He brings to our Board of Directors a lifetime of management, finance and marketing experience as well as an academic career of study in each.

Directors whose present terms continue until the next annual meeting of stockholders (Class III):

Frank Silcox. Mr. Silcox, age 57, 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 (“LMF”). 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.

Andrew L. Graham. Mr. Graham, age 63, 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. Since 2011, 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 63, 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 UniversityofFlorida. Mr. Mills will bring to the Board of Directors many years of 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 lawpractice.

Directors whose present terms continue until the second annual meeting of stockholders following this Annual Meeting (Class I):

Bruce M. Rodgers. Mr. Rodgers, age 57, 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 is also Chief Executive Officer,

President and Chairman of the Board of Directors of LMF Acquisition Opportunities Inc a Nasdaq special purpose acquisition public company. 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, 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. Furthermore, his performance as Chief Executive Officer has indicated an in-depth understanding of the company’s business.

Carollinn Gould. Ms. Gould, age 58, co-founded LMF 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 LMF, 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 LMF, Ms. Gould brings to our Board of Directors an encyclopedia of knowledge regarding LMF’s growth, operation, and procedures. Since inception, Ms. Gould has controlled all bank accounts of the company and managed its internal control systems. Ms. Gould also brings public company audit experience from her duties as controller at OSI as well as a wealth of personnel management and human resources skills.

We are aware of no arrangements as to the selection and nomination of directors.

Based upon recommendations of our nominating and governance committee, the Board of Directors has determined that each of Messrs. McCree, Graham, Mills 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). The Board of Directors has determined that Joel E. Rodgers, Sr. is not independent by reason of his family relationship to our Chief Executive Officer.

The compensation of our non-employee directors is determined by the 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. During 2019, the company’s non-employee directors did not earn any fees for service to the company, which includes attendance at Board of Directors and committee meetings held during 2019. In September 2020, the Board of Directors, based on the recommendation of the compensation committee, approved a special payment for each outside director to compensate its outside directors for the company’s non-payment of certain compensation since 2015. Such special payment was approved in the amount of $15,000 for each outside director for each year from 2017 to 2020 for which no payment was made to the outside directors. This payment was made in October 2020.

The table below summarizes the compensation paid by the company to non-employee directors or earned by the non-employee directors for the fiscal year ended December 31, 2020.

(1) Bruce Rodgers, our chairman and chief executive officer, is not included in this table because he was an employee in 2020 and thus received no compensation for his services as director. The compensation received by Mr. Rodgers is set forth in the Summary Compensation Table below. Carollinn Gould was employed by LMF as its Vice President—General Manager and Secretary until September 30, 2020. Ms. Gould served as an executive officer of the company, but not a named executive officer, who did not receive any additional compensation for services provided as a director for the company’s fiscal year ended December 31, 2020. The compensation received by Ms. Gould as an employee of LMF is set forth in the section below entitled “Transactions With Related Persons.”

(2) Represents fees paid in October 2020 for the period from January 1, 2017 through December 31, 2020, $15,000 of which is attributable to the period from January 1, 2020 through December 31, 2020.

On October 27, 2021, we adopted a non-employee director compensation program that provides for annual retainer fees and equity awards for our non-employee directors. The program was adopted under the 2021 Omnibus Incentive Plan, which is described in more detail below. Under the non-employee director compensation program, each non-employee director receives an annual cash retainer of $60,000 (or $90,000 for audit committee members) payable in arrears in equal quarterly payments and pro-rated for partial years. Non-employee directors will also receive an annual stock option award to purchase a number of shares equal to $60,000 (or $90,000 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 180^th 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. The program also provides for an initial option grant on the date on which a person first becomes a director of the company for a number of shares equal to $25,000 divided by the exercise price, and it provides for the grant of an option on October 28, 2021 to each non-employee director then serving on the board of directors to purchase a number of shares equal to $60,000 ($75,000 for audit committee members) divided by the exercise price, which was $5.95 per share. Options granted under the non-employee director compensation program will be subject to accelerated vesting upon a change of control of the company (as defined in the 2021 Omnibus Plan), and the options granted on October 28, 2021 will be subject to accelerated vesting in the event that the closing price of the company’s common stock exceeds $12.00 for ten consecutive trading days. The options granted on October 28, 2021 will not be exercisable unless and until the 2021 Omnibus Plan is approved by the company’s stockholders.

LMF has engaged BLG on behalf of many of its incorporated nonprofit community association clients, or “Associations,” to service and collect the accounts and to distribute the proceeds as required by Florida law and the provisions of the purchase agreements between LMF and the Associations. In addition, Ms. Gould entered an employment agreement to work part-time for LMF, pursuant to which she received $119,431 and $132,693 for the years ended December 31, 2020 and 2019, respectively. Ms. Gould’s employment agreement with LMF permits her to also work as General Manager of BLG, which pays her additional compensation of

$300,000 per year.Ms. Gould terminated her employment with the company on September 30, 2020. Ms. Gould received a $450,000 severance payment in 2020 in connection with the termination of her employment.

Frank Silcox, a director of the company has been employed by BLG since 2021 as business development director in which he is paid $24,000 a year in cash compensation and health benefits in the amount of approximately $6,720 per year. The amount paid to Mr. Silcox by BLG in 2020 and 2019 was $0 and $0 in cash, respectively, and $0 and $0 in health benefits, respectively.

On November 2, 2018, the company purchased a Senior Convertible Promissory Note in the original principal amount of $1,500,000 (the “IIU Note”) from IIU, a Virginia based travel insurance brokerage company controlled by Craven House North America, LLC (“Craven”) N.A. At the time of the investment, Craven’s ownership in the our company, excluding unexercised warrants, was approximately 20% of our company’s outstanding stock. The maturity date of the IIU Note was 360 days after the date of issuance (subject to acceleration upon an event of default). The IIU Note carried a 3.0% interest rate, with accrued but unpaid interest being payable on the IIU Note’s maturity date.

On January 16, 2019, the company entered into a Stock Purchase Agreement with Craven (the “IIU SPA”) to purchase all of the outstanding capital stock of IIU, and such transaction closed on the same date. The purchase price paid by the company for the acquired stock under the IIU SPA consisted of (1) the company’s cancellation of all principal and interest outstanding under the IIU Note and (2) the company’s issuance of a convertible promissory note to Craven in the aggregate principal amount of $3,581,982.16 (the “Craven Convertible Note”). Also on January 16, 2019, Mark Pajak, the President and Chairman of Craven, became the Chief Operating Officer of our company.

On January 8, 2020, the company entered into a Stock Purchase Agreement (“SPA”) with Craven pursuant to which the company sold back to Craven all of the issued and outstanding shares of IIU for $3,562,569. The purchase price was paid by Craven through the cancellation of the Craven Convertible Note plus forgiveness of $100,787 of accrued interest. In connection with the transaction, Mark Pajak resigned as our company’s Chief Operating Officer.

Martin A. Traber, is a former director of the company, who resigned in January 2021. Mr. Traber serves as Chairman of Skyway Capital Markets, which billed us $135,000 in 2019 for fairness opinions, which represents less than 1% of Skyway Capital Markets’ annual revenue. These services were provided on an arm’s-length basis and paid for at fair market value. We believe that such services were performed on terms at least as favorable to us as those that would have been realized in transactions with unaffiliated entities or individuals.

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.

Section 16(a) of the Exchange Act requires our executive officers and directors, and beneficial owners of more than 10% of our common stock to file reports regarding ownership of, and transactions in, our securities with the SEC and to provide us with copies of those filings. Based solely on our review of the copies of such forms received by us we believe that during the twelve months ended December 31, 2020, all filing requirements applicable to our officers, directors and greater than 10% beneficial owners were timely complied with.

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 website: www.lmfunding.com by clicking “Investors” at the top and then “Corporate Governance” and then the appropriate “Code of Ethics”. We intend to disclose any change to or waiver from our code of ethics by posting such change or waiver to our internet website within the same section as described above.

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 www.lmfunding.com by clicking “Investors” at the top and then “Corporate Governance” and then “Corporate Governance Guidelines.”

Our Board of Directors has adopted an Insider Trading Policy which applies to all of our directors, officers and designated employees. The policy prohibits our directors, officers and designated employees from engaging in hedging transactions, short sales and transactions in publicly traded options, such as puts, calls and other derivatives, involving our equity securities.

During 2020, our Board of Directors held ten meetings. During each of 2019 and 2020, no director attended less than 75% of the Board of Directors’ and applicable committee meetings. In addition, the independent directors met in executive session periodically in 2020 and all seven directors attended either telephonically or in person the annual meeting of stockholders held on Monday, May 11, 2020..

We have not established a policy with regard to the attendance of board members at annual stockholder meetings.

We have established procedures by which stockholders may communicate with members of the Board of Directors, individually or as a group. Stockholders 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 stockholder’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 stockholders) 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.

The Board of Directors has an audit committee, a compensation committee and a nominating and governance committee.

The company has a separately-designated standing audit committee established in accordance with the Securities and Exchange Act of 1934. The audit committee’s responsibilities include the following:

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 the Nasdaq Capital Market (“NASDAQ”), we are governed by its listing standards (the “NASDAQ Rules”). Accordingly, the members of the audit committee are considered to be “independent directors” pursuant to the definition contained in NASDAQ Rule 5605(a)(2) 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. The audit committee met formally four times during 2020 and four times during 2019 and otherwise acted by unanimous written consent. 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 “Corporate Governance.”

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 not engage or rely on consultants in determining compensation paid to executive officers in 2019 and 2020, instead relying on the judgment and knowledge of its own members. The compensation committee is composed of three members: Douglas I. McCree, its chairman, Fred Mills, and Frank Silcox, each of whom has been determined to be “independent” within the meaning of the SEC and NASDAQ Rules 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. As required under NASDAQ Rule 5605(d)(1), the compensation committee assesses the adequacy of its charter on an annual basis. The compensation committee met formally one time during 2020 and otherwise acted by unanimous written consent.

A current copy of the charter is available on our website www.lmfunding.com by clicking “Investors” and then “Corporate Governance.”

The nominating and governance committee’s responsibilities include the following:

The nominating and governance committee is composed of three members: Andrew Graham, its chairman, Douglas I. McCree, and Frank Silcox. The nominating and governance committee had no meetings in 2020 but will meet prior to the submission of this proxy statement. The Board of Directors has adopted a written nominating and governance committee charter. A current copy of the charter is available on our website at www.lmfunding.com by clicking “Investors” and then “Corporate Governance.”

Each of the proposed director nominees was recommended by the nominating and governance committee to the Board of Directors.

The nominating and 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 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 governance committee has not adopted a specific policy on diversity.

The nominating and governance committee will consider director candidates recommended by stockholders. Any stockholder wishing to recommend one or more director candidates should send the recommendations before November 1st of the year preceding the next annual meeting of stockholders 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 stockholder wishes the committee to consider, as well as the stockholder’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 governance committee and those candidates will be given the same consideration as all other candidates.

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 governance committee, must comply with the advance notice requirements set forth in our Bylaws. See “Stockholder Proposals for Presentation at the Annual Meeting” for further information.

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 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.

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 committees to assist in ensuring that material risks are identified and managed appropriately. Among them are the audit committee, the compensation committee, and the nominating and governance committee. 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 governance committee regularly reviews the company’s corporate governance structure and board committee assignments. Each committee regularly reports to the Board of Directors.

Malone Bailey LLP was our principal registered public accounting firm for 2020 and 2019.

The following table sets forth the aggregate fees for services related to the years ended December 31, 2020 and 2019 provided by Malone Bailey, LLP our principal accountant:

All auditing services and non-auditing services are pre-approved by the audit committee. 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.

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 Malone Bailey 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 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 Malone Bailey LLP, the overall scope and plans for their audit. The audit committee met with representatives of Malone Bailey 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 Reports on Form 10-K for the year ended December 31, 2020 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.

The audit committee of the Board of Directors has appointed Malone Bailey LLP (“Malone Bailey”) as the company’s independent registered public accounting firm for our fiscal year ending December 31, 2021. Malone Bailey also served as the company’s independent registered public accounting firm for our 2020 fiscal year ended December 31, 2020. 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, LLP 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

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF MALONE BAILEY LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE CURRENT YEAR.

TO INCREASE THE COMPANY’S AUTHORIZED SHARES OF COMMON STOCK FROM 30,000,000 TO 350,000,000 SHARES AND TO INCREASE THE COMPANY’S AUTHORIZED SHARES OF PREFERRED STOCK FROM 5,000,000 to 150,000,000 SHARES

You are being asked to approve an amendment to our Certificate of Incorporation to increase the number of authorized shares of common stock. Our Board of Directors has approved a proposed amendment, subject to stockholder approval, to the company’s Certificate of Incorporation, as amended, that increases the number of authorized shares of common stock from 30,000,000 shares to 350,000,000 shares. An increase in the number of authorized shares will not have a dilutive effect on the value of our stockholders’ common stock; only the actual issuance of additional common stock would have such an effect.

As of October 25, 2021, we were authorized to issue up to 30,000,000 shares of our common stock, 12,677,442 shares of our common stock were issued and outstanding, and, as described in the table below, 12,876,800 shares of our common stock were reserved for issuance.

As of October 25, 2021, we were authorized to issue up to 5,000,000 shares of our preferred stock. There were no shares of our preferred stock issued and outstanding as of such date.

Our Board of Directors is recommending the increase in authorized shares of common stock and preferred stock for future corporate needs. Our Board of Directors believes that these additional shares will provide the company with needed flexibility to issue shares in the future to take advantage of market conditions or favorable opportunities without the potential expense or delay relating to obtaining stockholder approval for a particular issuance.

Our Board of Directors believes it is in the best interest of the company to increase the number of authorized shares of common stock and preferred stock in order to give the company greater flexibility in considering and planning for future potential business needs. Having the additional authorized common shares and preferred shares available is important to our continued efforts to pursue our strategic goals. The additional shares of common stock and preferred stock will be available for issuance by our Board of Directors for various corporate purposes, including but not limited to, issuances pursuant to the company’s equity incentive plans, financings, potential strategic transactions, including mergers, acquisitions, strategic partnerships, joint ventures, divestitures, business combinations, as well as other general corporate transactions. If the authorization of an increase in our available common stock and preferred stock is postponed until the foregoing specific needs arise, the delay and expense incident to obtaining approval of the stockholders at that time could impair our ability to meet the objectives set forth above.

If this proposal is approved, the additional authorized common shares and preferred shares may be issued at the discretion of our Board of Directors without further stockholder action, except as may be required by law or the rules of the exchange or trading facility on which the company's shares trade or may trade in the future. The terms of the additional shares of common stock will be identical to those of the currently outstanding shares of common stock. The adoption of the amendment to our certificate of incorporation would not have any immediate dilutive effect on the proportionate voting power or other rights of existing stockholders. However, because holders of common stock of the company have no preemptive rights to purchase or subscribe for any unissued stock of the company, the issuance of shares of common stock or preferred stock that is convertible into shares of common stock would reduce each stockholder's proportionate interest in the company.

Increasing the availability of authorized but unissued shares of common stock and preferred stock could have an anti-takeover effect because the potential issuance of such shares could dilute certain rights of a person seeking to obtain control of the company or to change the company's management. Our Board of Directors has no present intention of using such shares in this manner. The company does not have any current plans, agreements, arrangements or understanding with respect to the planned issuance of the newly authorized shares of common stock and preferred stock.

If the proposed amendment to our certificate of incorporation, as amended, described in this proposal is approved by our stockholders, it will become effective upon the filing of a certificate of amendment, as contemplated by the proposed form of “Certificate of Amendment” attached hereto as Appendix A (the “Amendment”), to our certificate of incorporation, as amended, with the Secretary of State of the State of Delaware.

THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF OUR COMMON STOCK, $0.001 PAR VALUE PER SHARE, FROM 30,000,000 TO 350,000,000 AND TO INCREASE THE NUMBER OF THE AUTHORIZED SHARES OF OUR PREFERRED STOCK, $0.001 PER SHARE, FROM 5,000,000 TO 150,000,000.

On October 27, 2021, our Board of Directors adopted the LM Funding America, Inc. 2021 Omnibus Incentive Plan (the “Plan” or the “2021 Omnibus Plan”) and recommended that the Plan be submitted for the approval our stockholders at the Annual Meeting. If approved by our stockholders, the Plan authorizes the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code (the “Code”), to our employees and any of our parent and subsidiary corporations’ employees, and the grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to our employees, directors and consultants and any of our future subsidiary corporations’ employees and consultants.

The 2021 Omnibus Plan is intended to allow us to continue to use equity awards as part of our ongoing compensation strategy for our key employees. Awards under the Plan will support the creation of long-term value and returns for our stockholders. The purpose of the Plan is to promote the best interests of the company and our stockholders by providing key employees, consultants and non-employee directors with an opportunity to acquire our shares or receive monetary payments. The Plan is intended to promote management continuity and increased incentive and personal interest in the welfare of the company by those key employees who are primarily responsible for shaping and carrying out our long-range plans and securing our continued growth and financial success. In addition, by encouraging stock ownership by non-employee directors, we seek to attract and retain highly competent board members and to provide a further incentive to serve as a director of our company.

The 2021 Omnibus Plan became effective on October 27, 2021, provided that no options or stock appreciation rights granted under the Plan will be exercisable and no shares or restricted stock units may be granted under the Plan unless and until the Plan has been approved by the stockholders of the ompany, which approval must occur on or within twelve (12) months of the date on which the Plan became effective.

Prior to the 2021 Omnibus Plan, we maintained the LM Funding America, Inc. 2015 Omnibus Incentive Plan (the “2015 Plan”). The 2015 Plan originally authorized the grant of equity awards with respect to an aggregate of 12,000 shares of our common stock, and as of October 19, 2021, there were outstanding options under the 2015 Plan with respect to an aggregate of 3,860 shares. Accordingly, an aggregate of only approximately 8,140 shares remain available for the grant of new awards under the 2015 Plan. The Board of Directors believes that this is insufficient for our future growth and recommended that 5,000,000 shares be authorized for awards under the 2021 Omnibus Plan, subject to annual increases as described below.

Our Board of Directors believes that approval of the 2021 Omnibus Plan is essential to build and grow our business by making available a pool of equity awards that can be granted to directors, officers, and employees of our company, as the Board of Directors believes that such awards motivate high levels of performance, align the interests of our employees and stockholders by giving employees the perspective of an owner with an equity stake in the company, and provide an effective means of recognizing employee contributions to the success of the company. The Board believes that equity awards are a competitive necessity in the environment in which we operate and are essential to our future success at recruiting and retaining the highly qualified technical and other key personnel who will help the company meet its goals, as well as rewarding and encouraging current employees. The Board believes that the ability to continue to grant meaningful equity awards will be important to our future success. In setting the new amount of shares authorized under the 2021 Omnibus Plan, the Board considered, among other factors, the historical amounts of equity awards granted by the company, the potential future grants over the next several years, and the recommendations by the company’s officers.

Based solely on the closing price of our common stock as reported on the NASDAQ Capital Market on October 19, 2021, the approximate aggregate market value of the 5,000,000 shares that could potentially be initially issued under the Plan Amendment (before annual increases) is $30,500,000.

Upon the adoption of the Plan, the Board terminated the 2015 Plan, provided that the 2015 Plan will continue to govern outstanding awards previously made under such plan. Accordingly, no new awards will be granted under the 2015 Plan.

The following is a summary of certain terms and conditions of the Plan. This summary is qualified in its entirety by reference to the Plan, a copy of which is attached as Appendix B to this Proxy Statement. You are encouraged to read the full text of the 2021 Omnibus Plan.

The 2021 Omnibus Plan is administered by our Board of Directors or our compensation committee, or any other committee or subcommittee or one or more of our officers to whom authority has been delegated (collectively, the “Administrator”). The Administrator has the authority to interpret the 2021 Omnibus Plan and award agreements entered into with respect to the 2021 Omnibus Plan; to make, change and rescind rules and regulations relating to the 2021 Omnibus Plan; to make changes to, or reconcile any inconsistency in, the 2021 Omnibus Plan or any award agreement covering an award; and to take any other actions needed to administer the 2021 Omnibus Plan.

The Administrator may designate any of the following as a participant under the 2021 Omnibus Plan: any officer or employee, or individuals engaged to become an officer or employee, of our company or our affiliates; and consultants of our company or our affiliates, and our directors, including our non-employee directors. As of October 19, 2021, we had an total of fourteen employees, directors, and officers eligible to be a participant under the 2021 Omnibus Plan.

The 2021 Omnibus Plan permits the Administrator to grant stock options, stock appreciation rights (“SARs”), performance shares, performance units, shares of common stock, restricted stock, restricted stock units (“RSUs”), cash incentive awards, dividend equivalent units, or any other type of award permitted under the 2021 Omnibus Plan. The Administrator may grant any type of award

to any participant it selects, but only our employees or our subsidiaries’ employees may receive grants of incentive stock options within the meaning of Section 422 of the Code. Awards may be granted alone or in addition to, in tandem with, or (subject to the repricing prohibition described below) in substitution for any other award (or any other award granted under another plan of our company or any affiliate, including the plan of an acquired entity).

The 2021 Omnibus Plan provides that 5,000,000 shares of our common stock are initially reserved for issuance under the 2021 Omnibus Plan, all of which may be issued pursuant to the exercise of incentive stock options. The number of shares available for issuance under our 2021 Omnibus Plan will also include an annual increase on the first day of each fiscal year beginning with our 2023 fiscal year (so long as the number of authorized shares of common stock in the company’s certificate of incorporation has been increased to at least 100,000,000 shares prior to such date), equal to the lesser of:

The number of shares reserved for issuance under the 2021 Omnibus Plan will be reduced on the date of the grant of any award by the maximum number of shares, if any, with respect to which such award is granted. However, an award that may be settled solely in cash will not deplete the 2021 Omnibus Plan’s share reserve at the time the award is granted. If (a) an award expires, is canceled, or terminates without issuance of shares or is settled in cash, (b) the Administrator determines that the shares granted under an award will not be issuable because the conditions for issuance will not be satisfied, (c) shares are forfeited under an award, (d) shares are issued under any award and we reacquire them pursuant to our reserved rights upon the issuance of the shares, (e) shares are tendered or withheld in payment of the exercise price of an option or as a result of the net settlement of outstanding stock appreciation rights or (f) shares are tendered or withheld to satisfy federal, state or local tax withholding obligations, then those shares are added back to the reserve and may again be used for new awards under the 2021 Omnibus Plan. However, shares added back to the reserve pursuant to clauses (d), (e) or (f) in the preceding sentence may not be issued pursuant to incentive stock options.

The Administrator may grant stock options and determine all terms and conditions of each stock option, which include the number of stock options granted, whether a stock option is to be an incentive stock option (“ISO”) or non-qualified stock option (“NQSO”), and the grant date for the stock option. However, the exercise price per share of common stock may never be less than the fair market value of a share of common stock on the date of grant and the expiration date may not be later than 10 years after the date of grant. Stock options will be exercisable and vest at such times and be subject to such restrictions and conditions as are determined by the Administrator, including with respect to the manner of payment of the exercise price of such stock options.

The Administrator may also grant SARs, which represent the right of a participant to receive cash in an amount, or common stock with a fair market value, equal to the appreciation of the fair market value of a share of common stock during a specified period of time. The 2021 Omnibus Plan provides that the Administrator will determine all terms and conditions of each SAR, including, among other things: (a) whether the SAR is granted independently of a stock option or relates to a stock option, (b) the grant price, which may never be less than the fair market value of our common stock as determined on the date of grant, (c) a term that must be no later than 10 years after the date of grant, and (d) whether the SAR will settle in cash, common stock or a combination of the two.

The Administrator may grant awards of shares of common stock, restricted stock, RSUs, performance shares or performance units. Restricted stock means shares of common stock that are subject to a risk of forfeiture or restrictions on transfer, which may lapse upon the achievement or partial achievement of performance goals (as described below) or upon the completion of a period of service. An RSU grants the participant the right to receive cash or shares of common stock the value of which is equal to the fair market value of one share of common stock, to the extent performance goals are achieved or upon the completion of a period of service. Performance shares give the participant the right to receive shares of common stock to the extent performance goals are achieved. Performance units give the participant the right to receive cash or shares of common stock valued in relation to a unit that has a designated dollar value or the value of which is equal to the fair market value of one or more shares of common stock, to the extent performance goals are achieved.

The Administrator may grant cash incentive awards. An incentive award is the right to receive a cash payment to the extent one or more performance goals are achieved. The Administrator will determine all terms and conditions of a cash incentive award, including, but not limited to, the performance goals (described below), the performance period, the potential amount payable, and the timing of payment. While the 2021 Omnibus Plan permits cash incentive awards to be granted under the 2021 Omnibus Plan, we may also make cash incentive awards outside of the 2021 Omnibus Plan.

The Administrator will determine all terms and conditions of the awards including (a) whether performance goals must be achieved for the participant to realize any portion of the benefit provided under the award, (b) the length of the vesting or performance period and, if different, the date that payment of the benefit will be made, (c) with respect to performance units, whether to measure the value of each unit in relation to a designated dollar value or the fair market value of one or more shares of common stock, and (d) with respect to performance shares, performance units, and RSUs, whether the awards will settle in cash, in shares of common stock (including restricted stock), or in a combination of the two.

For purposes of the 2021 Omnibus Plan, the Administrator may establish objective or subjective performance goals which may apply to any performance award. Such performance goals may include, but are not limited to, one or more of the following measures with respect to our company or any one or more of our subsidiaries, affiliates, or other business units: basic earnings per common share for our company on a consolidated basis; diluted earnings per common share for our company on a consolidated basis; total stockholder return; fair market value of shares; net sales; cost of sales; gross profit; selling, general and administrative expenses; operating income; earnings before interest and the provision for income taxes (EBIT); earnings before interest, the provision for income taxes, depreciation, and amortization (EBITDA); net income; accounts receivable; return on equity; return on assets; return on invested capital; return on sales; economic value added, or other measure of profitability that considers the cost of capital employed; free cash flow; net cash provided by operating activities; net increase (decrease) in cash and cash equivalents; customer satisfaction; market share; and/or quality.. Performance goals may also relate to a participant’s individual performance. The Administrator reserves the right to adjust any performance goals or modify the manner of measuring or evaluating a performance goal.

The Administrator may grant dividend equivalent units. A dividend equivalent unit gives the participant the right to receive a payment, in cash or shares of common stock, equal to the cash dividends or other distributions that we pay with respect to a share of common stock. We determine all terms and conditions of a dividend equivalent unit award, except that dividend equivalent units may not be granted in connection with a stock option or SAR, and dividend equivalent unit awards granted in connection with another award cannot provide for payment until the date such award vests or is earned, as applicable.

The Administrator may grant to any participant shares of unrestricted stock as a replacement for other compensation to which such participant is entitled, such as in payment of director fees, in lieu of cash compensation, in exchange for cancellation of a compensation right or as a bonus.

Awards are not transferable, including to any financial institution, other than by will or the laws of descent and distribution, unless the Administrator allows a participant to (a) designate in writing a beneficiary to exercise the award or receive payment under the award after the participant’s death, (b) transfer an award to a former spouse as required by a domestic relations order incident to a divorce, or (c) transfer an award without receiving any consideration.

If (a) we are involved in a merger or other transaction in which our shares of common stock are changed or exchanged; (b) we subdivide or combine shares of common stock or declare a dividend payable in shares of common stock, other securities, or other property (other than stock purchase rights issued pursuant to a stockholder rights agreement); (c) we effect a cash dividend that exceeds 10% of the fair market value of a share of common stock or any other dividend or distribution in the form of cash or a repurchase of shares of common stock that our Board of Directors determines is special or extraordinary, or that is in connection with a recapitalization or reorganization; or (d) any other event occurs that in the Administrator’s judgment requires an adjustment to

prevent dilution or enlargement of the benefits intended to be made available under the 2021 Omnibus Plan, then the Administrator will, in a manner it deems equitable, adjust any or all of (1) the number and type of shares subject to the 2021 Omnibus Plan and which may, after the event, be made the subject of awards; (2) the number and type of shares of common stock subject to outstanding awards; (3) the grant, purchase, or exercise price with respect to any award; and (4) the performance goals of an award. In any such case, the Administrator may also provide for a cash payment to the holder of an outstanding award in exchange for the cancellation of all or a portion of the award, subject to the terms of the 2021 Omnibus Plan.

The Administrator may, in connection with any merger, consolidation, acquisition of property or stock, or reorganization, authorize the issuance or assumption of awards upon terms and conditions we deem appropriate without affecting the number of shares of common stock otherwise reserved or available under the 2021 Omnibus Plan.

Upon a change of control (as defined in the 2021 Omnibus Plan), in order to preserve a participant’s rights under an award, the Administrator in its discretion may, at the time an award is made or at any time thereafter, take one or more of the following actions: (a) provide for the acceleration of any time period, or the deemed achievement of any performance Goals, relating to the exercise or realization of the award; (b) provide for the purchase or cancellation of the award for an amount of cash or other property that could have been received upon the exercise or realization of the award had the award been currently exercisable or payable (or the cancellation of awards in exchange for no payment to the extent that no cash or other property would be received upon the exercise or realization of the award in such circumstances); (c) adjust the terms of the award in the manner determined by the Administrator to reflect the change of control; (d) cause the award to be assumed, or new right substituted therefor, by another entity; or (e) make such other provision as the Administrator may consider equitable and in the best interests of our company.

Non-employee directors will be eligible to receive all types of awards (except for incentive stock options) under our 2021 Omnibus Plan. To provide a maximum limit on the cash compensation and equity awards that can be made to our non-employee directors, the 2021 Omnibus Plan provides that in any given fiscal year, an outside director may not be granted shares under our 2021 Omnibus Plan with an aggregate grant date fair value, when added to any cash compensation received by the non-employee directors, of greater than $300,000.

Unless earlier terminated by our Board of Directors, the 2021 Omnibus Plan will terminate on, and no further awards may be granted, after the 10^th anniversary of its effective date.

Our Board of Directors or the Administrator may amend, alter, suspend, discontinue or terminate the 2021 Omnibus Plan at any time, subject to the following limitations:

Subject to the requirements of the 2021 Omnibus Plan, the Administrator may modify or amend any award or waive any restrictions or conditions applicable to any award or the exercise of the award, or amend, modify, or cancel any terms and conditions applicable to any award, in each case, by mutual agreement of the Administrator and the participant or any other person that may have an interest in the award, so long as any such action does not increase the number of shares of common stock issuable under the 2021 Omnibus Plan.

We do not need to obtain participant (or other interested party) consent for any such action (a) that is permitted pursuant to the adjustment provisions of the 2021 Omnibus Plan; (b) to the extent we deem the action necessary to comply with any applicable law or the listing requirements of any principal securities exchange or market on which our common stock is then traded; (c) to the extent we deem the action is necessary to preserve favorable accounting or tax treatment of any award for us; or (d) to the extent we determine that such action does not materially and adversely affect the value of an award or that such action is in the best interest of the affected participant or any other person as may then have an interest in the award.

The Administrator can cause a participant to forfeit any award, and require the participant to disgorge any gains attributable to the award, if the participant engages in any action constituting, as determined by the Administrator in its discretion, cause for termination, or a breach of a material company policy, any award agreement or any other agreement between the participant and us or one of our affiliates concerning noncompetition, nonsolicitation, confidentiality, trade secrets, intellectual property, nondisparagement or similar obligations.

Any awards granted under the 2021 Omnibus Plan, and any shares of common stock issued or cash paid under an award, will be subject to any recoupment or clawback policy that we adopt, or any recoupment or similar requirement otherwise made applicable by law, regulation or listing standards to us.

Except for the adjustments provided for in the 2021 Omnibus Plan, neither the Administrator nor any other person may amend the terms of outstanding stock options or SARs to reduce their exercise or grant price, cancel outstanding stock options or SARs in exchange for stock options or SARs with an exercise or grant price that is less than the exercise or grant price of the awards being cancelled, or cancel outstanding stock options or SARs with an exercise or grant price above the current fair market value of a share in exchange for cash or other securities. In addition, the Administrator may not grant a stock option or SAR with a grant date that is effective prior to the date the Administrator takes action to approve such award.

The following is a general summary of the federal income tax consequences under current U.S. tax law to the company and to participants in the 2021 Omnibus Plan who are individual citizens or residents of the United States for federal income tax purposes (“U.S. Participants”) of stock options, stock appreciation rights, performance shares, performance units, restricted stock, restricted stock units, shares of our common stock, dividend equivalent units, or incentive cash awards. It does not purport to cover all of the special rules including special rules relating to limitations on the ability of the company to deduct the amounts for federal income tax purposes of certain compensation, special rules relating to deferred compensation, golden parachutes, participants subject to Section 16(b) of the Exchange Act or the exercise of a stock option with previously acquired shares of the company’s common stock. For purposes of this summary, it is assumed that U.S. Participants will hold their shares of the company’s common stock received under the 2021 Omnibus Plan as capital assets within the meaning of Section 1221 of the Code. In addition, this summary does not address the non-U.S. state or local income or other tax consequences, or any U.S. federal non-income tax consequences, inherent in the acquisition, ownership, vesting, exercise, termination or disposition of an award under the 2021 Omnibus Plan, or shares of the company’s common stock issued pursuant thereto. All participants are urged to consult with their own tax advisors concerning the tax consequences to them of an award under the 2021 Omnibus Plan or shares of the company’s common stock issued thereto pursuant to the 2021 Omnibus Plan.

A U.S. Participant does not recognize taxable income upon the grant of a NQSO or an ISO. Upon the exercise of a NQSO, the U.S. Participant recognizes ordinary income in an amount equal to the excess, if any, of the fair market value of the shares acquired on the date of exercise over the exercise price paid therefor under the NQSO, and the company will generally be entitled to a deduction for such amount at that time. If the U.S. Participant later sells shares acquired pursuant to the exercise of a NQSO, the U.S. Participant recognizes long-term or short-term capital gain or loss, depending on the period for which the shares were held. Long-term capital gain is generally subject to more favorable tax treatment than ordinary income or short-term capital gain. Upon the exercise of an ISO, the U.S. Participant does not recognize taxable income. If the U.S. Participant disposes of the shares acquired pursuant to the exercise of an ISO more than two years after the date of grant and more than one year after the transfer of the shares to the U.S. Participant, the U.S. Participant recognizes long-term capital gain or loss and the company will not be entitled to a deduction. However, if the U.S. Participant disposes of such shares prior to the end of the required holding period, all or a portion of the gain is treated as ordinary income and the company is generally entitled to deduct such amount. In addition to the tax consequences described above, a U.S. Participant may be subject to the alternative minimum tax, which is payable to the extent it exceeds the U.S. Participant’s regular tax. For this purpose, upon the exercise of an ISO, the excess of the fair market value of the shares over the exercise price paid therefor under the ISO is a preference item for alternative minimum taxable income determination purposes. In

addition, the U.S. Participant’s basis in such shares is increased by such excess for purposes of computing the gain or loss on the disposition of the shares for alternative minimum tax purposes.

A U.S. Participant does not recognize taxable income upon the grant of an SAR. The U.S. Participant has ordinary compensation income upon exercise of the SAR equal to the increase in the value of the underlying shares, and the company will generally be entitled to a deduction for such amount.

A U.S. Participant does not recognize taxable income upon the receipt of a performance share award until the shares are received. At such time, the U.S. Participant recognizes ordinary compensation income equal to the excess, if any, of the fair market value of the shares over any amount thereby paid for the shares, and the company will generally be entitled to deduct such amount at such time.

A U.S. Participant does not recognize taxable income upon the receipt of a performance unit award, restricted stock unit award or dividend equivalent right award until a cash payment is received. At such time, the U.S. Participant recognizes ordinary compensation income equal to the amount of cash received, and the company will generally be entitled to deduct such amount at such time.

A U.S. Participant who receives a grant of restricted stock generally recognizes ordinary compensation income equal to the excess, if any, of the fair market value of such shares of stock at the time the restriction lapses over any amount paid timely for the shares. Alternatively, the U.S. Participant may elect to be taxed on the fair market value of such shares at the time of grant. The company thereby will generally be entitled to a deduction at the same time and in the same amount as the income required to be included by the U.S. Participant.

A U.S. Participant who receives an award of restricted stock units generally will recognize ordinary income on the market value of unrestricted shares of our common stock on the date that such shares are transferred to the participant or settled in cash, as the case may be, under the award (reduced by any amount paid by the participant for such restricted stock unit), and the capital gain/loss holding period for such shares will also commence on such date.

The table below sets forth awards that the Committee approved under the 2021 Omnibus Incentive Plan, with the option grant awards not being exercisable until stockholder approval of such Plan and the share grants being contingent on stockholder approval of the Plan. If the 2021 Omnibus Incentive Plan is not approved by our stockholders at the Annual Meeting, then the awards set forth in the table below will be null and void.

(1) Represents options to purchase common stock of the company with an exercise price of $5.95 per share that will vest as follows: 1/3 on the first anniversary of the grant date with the remainder vesting monthly in 24 equal amounts, subject to accelerated vesting upon a change in control of our company or upon the closing price of our common stock exceeding $12.00 for ten consecutive days. The options were granted on October 28, 2021 but are not exercisable unless and until the company’s stockholders approve the Plan.

(2) Represents options to purchase common stock of the company with an exercise price of $5.95 per share vesting in two equal tranches on the date that is six months following the grant date and on the anniversary of the grant date, subject to accelerated vesting upon a change in control of our company or upon the closing price of our common stock exceeding $12.00 for ten consecutive days. The options were granted on October 28, 2021 but are not exercisable unless and until the company’s stockholders approve the Plan.

(3) Represents vested shares issuable under employment agreements contingent on stockholder approval of Plan.

(4) Carollinn Gould was employed by the company as its Vice President—General Manager and Secretary until September 30, 2020 and was one of our named executive officers until September 2020.

Except as set forth in the table above, the company currently cannot determine the awards that may be granted under the 2021 Omnibus Incentive Plan in the future to eligible participants. The Administrator will make future awards under the 2021 Omnibus Incentive Plan in its discretion from time to time, and the benefits received will depend on the fair market value of the company’s common stock at various future dates and the extent to which performance goals set by the Administrator are met.

The table below sets forth information with respect to shares of common stock that may be issued under our 2015 Omnibus Incentive Plan, as of December 31, 2020:

THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE APPROVAL THE 2021 OMNIBUS INCENTIVE PLAN

We view executive compensation as an important matter both to us and to our stockholders. As required by Section 14A of the Exchange Act, we are asking stockholders to vote, on a non-binding, advisory basis, on a resolution approving the compensation of our named executive officers as disclosed in the section of this proxy statement entitled “Executive Compensation and Related Information” that follows. This advisory vote on the compensation of our named executive officers allows our stockholders to express their views on our executive compensation programs.

The Board of Directors would like the support of the company’s stockholders for the compensation of our named executive officers as disclosed in this proxy statement. Accordingly, for the reasons discussed above, the Board of Directors recommends that stockholders vote in favor of the following resolution:

“RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the named executive officers as disclosed pursuant to Item 402 of Regulation S-K, including the compensation tables and narrative discussion contained in this proxy statement.”

This advisory vote on the compensation of our named executive officers is not binding on the company, the Board of Directors or the compensation committee of the Board of Directors. However, the Board of Directors and the compensation committee of the Board of Directors will review and consider the outcome of this advisory vote when making future compensation decisions for our named executive officers.

THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE APPROVAL ON A NON-BINDING, ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.

ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

The ompany’s stockholders are entitled to vote at the Annual Meeting regarding whether the stockholder vote to approve the compensation of the named executive officers (as described in proposal 5 of this proxy statement) should occur every one, two or three years. Under the rules issued by the SEC, stockholders shall also have the option to abstain from voting on the matter. The stockholder vote on the frequency of the stockholder vote to approve executive compensation is an advisory vote only, and it is not binding on the company or our Board of Directors.

Although the vote is non-binding, our compensation committee and Board of Directors value the opinions of our stockholders and will consider the outcome of the vote when determining the frequency of the stockholder vote on executive compensation.

The Board of Directors has determined that a stockholder advisory vote on executive compensation every three years is the best approach for the company based on a number of considerations, including the following:

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THREE YEARS.

The following table provides information with respect to our executive officers as of October 31, 2021:

Bruce M. Rodgers. Mr. Rodgers background and experience is contained above in the section of the Proxy Statement entitled “Directors.”

Richard Russell Mr. Russell, age 60, has served as Chief Financial Officer of the company since November 2017. Since 2016, he has provided financial and ~~Notice~~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 ~~Special Meeting~~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 Reporting and Internal Controls for Quality Distribution a previously listed publicly held company traded on the Nasdaq Stock Exchange (“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 also serves as Chief Financial Officer and as a director of LMF Acquisition Opportunities Inc., which is a publicly traded special purpose acquisition company that has been trading on the Nasdaq since January 2021. Mr. Russell also serve on a part-time basis as Chief Financial Officer of Generation Income properties Inc. (“GIPR”), which is a publicly traded real estate company traded on the OTCQB market, since December 2019. 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. (“TDNT”), a publicly held consumer products company traded on the OTCQB market. 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.

Ryan Duran. Mr. Duran, age 37, currently serves as Vice President of Operations of the company 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.

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, 2020, 2019 and 2018.

Certain executives’ compensation and other arrangements are set forth in employment agreements. These employment agreements are described below.

Bruce M. Rodgers. On September 30, 2020, the company and Bruce Rodgers entered into an Amended and Restated Employment Agreement under which Mr. Rodgers was appointed to continue to serve as the Chief Executive Officer of the company. The agreement provided for a reduction of Mr. Rodgers’ annual base salary by $154,000 to a base salary of $231,000 in return for a cash payment of $539,000. The agreement also provided that Mr. Rodgers may be granted annual bonuses at the discretion of the Board of Directors and provided for a one-time merit bonus of $315,000, which was paid on September 30, 2020. In addition, commencing on January 1, 2021, and on the first day of each subsequent calendar quarter for the remainder of the term of employment, Mr. Rodgers was entitled under the employment agreement to receive a grant of restricted common stock of the company with a grant date fair value equal to $48,125 under the company’s 2015 Omnibus Incentive Plan (the “2015 Plan”), with each grant vesting in four quarterly equal installments over a one year period. However, Mr. Rodgers did not receive any such grants because of an insufficient number of shares available under the 2015 Plan. Under Mr. Rodgers’ employment agreement, Mr. Rodgers was also 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 agreement also provided for a $1,500,000 lump-

sum bonus upon any change of control (as defined in the agreement) during the term of the agreement, and all unvested restricted shares were to vest upon a change of control. The term of the Mr. Rodgers’ employment agreement was for three years and was to be automatically renewed each year unless terminated for “cause”, as defined in the agreement. Mr. Rodgers was entitled to receive the base salary due under his employment for a period of 36 months after termination, if 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. Mr. Rodgers’ employment agreement contained certain non-competition covenants and confidentiality provisions.

In October 2021, Mr. Rodgers’ employment agreement was amended and restated to increase his base salary to $750,000. The restated employment agreement deletes the quarterly grants of restricted common stock of the company with a grant date fair value equal to $48,125, as they were never paid, and instead provides for a grant of 48,662 shares of the company’s common stock to be paid if and after the company’s stockholders approve the 2021 Omnibus Incentive Plan. An amount of shares equal to the taxes payable by Mr. Rodgers with respect to the grant will be withheld to satisfy such taxes. The restated employment agreement provides for a lump-sum transaction bonus upon any change of control (as defined in the amended employment agreement) of 2% of the value of the transaction, provided that if the change of control transaction is not one in which the company is acquired, Mr. Rodgers will receive a cash transaction bonus equal to $15.0 million. The terms of the restated employment agreement are otherwise materially same as Mr. Rodgers’ September 30, 2020 employment agreement.

Richard Russell. On September 30, 2020, the company and Richard Russell entered into an Amended and Restated Employment Agreement under which Mr. Russell was appointed to continue to serve as the company’s Chief Financial Officer. The agreement provided for a reduction of Mr. Russell’s annual base salary by $80,000 to a base salary of $120,000 in return for a cash payment of $280,000. The agreement also provided that Mr. Russell may be granted annual bonuses at the discretion of the Board of Directors and provided for a one-time merit bonus of $315,000, which was paid on September 30, 2020. In addition, commencing on January 1, 2021, and on the first day of each subsequent calendar quarter for the remainder of the term of his employment, Mr. Russell was entitled under such agreement to receive a grant of restricted common stock of the company with a grant date fair value equal to $25,000 under the 2015 Plan, with each grant vesting in four quarterly equal installments over a one year period. However, Mr. Russell did not receive any such grants because of an insufficient number of shares available under the 2015 Plan. Under the agreement, Mr. Russell was also 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. Mr. Russell’s employment agreement also provided for a $500,000 lump-sum bonus upon any change of control (as defined in the agreement) during the term of the agreement, and all unvested restricted shares will vest upon a change of control. The term of Mr. Russell’s employment agreement was for three years and was to be automatically renewed each year unless terminated for “cause,” as defined in the agreement. Mr. Russell was entitled to receive the base salary due under his employment agreement for a period of 24 months after termination if 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. Mr. Russell’s employment agreement contains certain non-competition covenants and confidentiality provisions.

In October 2021, Mr. Russell’s employment agreement was amended and restated to increase his base salary to $500,000. The restated employment agreement deletes the quarterly grants of restricted common stock of the company with a grant date fair value equal to $25,000, as they were never paid, and instead provides for a grant of 25,279 shares of the company’s common stock to be paid if and after the company’s stockholders approve the 2021 Omnibus Incentive Plan. An amount of shares equal to the taxes payable by Mr. Russell with respect to the grant will be withheld to satisfy such taxes. The amendment provides for a lump-sum transaction bonus upon any change of control (as defined in the amended employment agreement) of 2% of the value of the transaction, provided that if the change of control transaction is not one in which the company is acquired, Mr. Russell will receive a cash transaction bonus equal to $10.0 million. The terms of the restated employment agreement are otherwise materially same as Mr. Russell’s September 30, 2020 employment agreement.

Ryan Duran. On October 27, 2021, the company and Ryan Duran entered into an Employment Agreement under which Mr. Duran will serve as the Executive Vice President of Operations of the company. Mr. Duran’s employment agreement provides for an 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 term of Mr. Duran’s employment agreement is 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.

The following table provides information on exercisable and unexercisable options held by the named executive officers on December 31, 2020.

~~It is my pleasure to invite you to~~The following table sets forth information regarding the ~~Special Meeting~~beneficial ownership of ~~Stockholders~~our common stock as of LM Funding America, Inc., a Delaware corporation (the “Company,” “we,” “us” or “our”), to be held at the Company’s office at 302 Knights Run Ave, Suite 1000, Tampa, Florida 33602, on April 8, 2019, at 2:00 p.m. Eastern Time (the “Special Meeting”).

~~We are calling the Special Meeting to request our stockholders to approve:~~October 19, 2021 by:

The ~~Note Conversion~~number and percentage of shares beneficially owned are based on 12,677,442 common shares outstanding as of October 19, 2021. 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 ~~conditioned on, among other things, approval~~determined in accordance with the rules of the ~~NASDAQ Proposal.~~

~~We are submitting~~Securities and Exchange Commission, which generally require that the Proposals to our stockholders to reduce our debt and thereby improve our liquidity and financial flexibility and to better position the Company for growth. We intend to accomplish this through the conversion of the $3,581,982 Senior Convertible Promissory Note (the “Note Conversion”)individual have voting or investment power with ~~Craven House Capital North America, LLC, for approximately 32.2% of our Common Stock after giving effect~~respect to the ~~Note Conversion.~~

Our board of directors (the “Board”) considered the effects that the Note Conversion is expected to have on our Company and unanimously determined that the substantial debt reduction, cash interest expense savings and decreased leverage contemplated by the Note Conversion is critical to unlocking stockholder value in the Company. We believe that to enhance stockholder value over the long term, we will need to deploy capital to maintain and grow strategic focus. To do that, we must reduce our debt and put ourselves in a position to access additional capital.

If we are unable to complete the proposed Note Conversion, and thereby substantially reduce our debt, we would need to pursue alternative strategies, which may include equity issuances, asset sales, alternative debt for equity conversions or other debt reduction or restructuring transactions.shares. In ~~our Board’s view, none of these alternatives are as likely to result in a significant reduction of leverage and preserve value for existing stockholders, as the Note Conversion.~~

Our Board unanimously believes that the NASDAQ Proposal and the Adjournment Proposal are each in the best interests of the Company and its stockholders and, therefore, recommends that you vote “FOR” each of the Proposals.

~~Details of the business to be conducted at the Special Meeting are provided in the attached Notice of Special Meeting and Proxy Statement.~~

~~You received these materials with a proxy card that indicates~~computing the number of shares beneficially owned by an individual listed below and the percentage ownership of that ~~you will~~individual, shares underlying options, warrants and convertible securities held by each individual that are exercisable or convertible within 60 days of October 19, 2021, 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 below, the address for each principal stockholder is LM Funding America, Inc., 1200 West Platt Street, Suite 100, Tampa, Florida 33606.

We do not expect any other matters to be ~~entitled~~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.

Stockholder proposals intended to be considered for inclusion in next year’s proxy statement and form of proxy for presentation at the ~~Special Meeting according to our records or the records~~next annual meeting of ~~your broker or other nominee. The Board has determined that owners of record~~stockholders must comply with Rule 14a-8 of the ~~Company’s common stock at~~Exchange Act. The deadline for submitting such proposals is July 18, 2022 (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.

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 ~~February 25, 2019~~the 120th day (August 12, 2022) and no later than the close of business on the 90th day (September 11, 2022) prior to the first anniversary of the 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 ~~entitled~~set forth in Article II, Section 11 of our bylaws.

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 proxy statement and annual report to ~~notice~~stockholders may have been sent to multiple stockholders in your household. The company will promptly deliver a separate copy of ~~and have the right~~any of these documents to ~~vote~~you if you contact us at the ~~Special Meeting.~~

~~On behalf~~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 ~~Board~~proxy statement or annual report to stockholders in the future, or if you are receiving multiple copies and ~~our employees, I~~ would like to ~~express my appreciation for~~receive only one copy per household, you should contact your ~~continued interest in~~bank, broker, or other nominee record holder, or you may contact the ~~Company.~~

~~By Order of~~company at the ~~Board of Directors,~~above address or telephone number.

CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION OF
LM FUNDING AMERICA, INC.

LM Funding America, ~~Inc~~Inc., a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), hereby certifies that:

~~302 Knights Run Ave~~1. The name of the Corporation is LM Funding America, Inc. The date of filing of the Corporation's original Certificate of Incorporation with the Secretary of State of the State of Delaware was April 20, 2015, as amended on August 7, 2015, September 5, 2018, October 15, 2018, and May 5, 2021.

~~Suite 1000~~2. This Certificate of Amendment to the Certificate of Incorporation was duly authorized and adopted by the Corporation's Board of Directors and stockholders in accordance with Sections 228 and 242 of the General Corporation Law of the State of Delaware and amends the provisions of the Corporation’s Certificate of Incorporation, as amended.

~~Tampa, Florida 33602~~3. The amendment to the existing Certificate of Incorporation, as amended, being effected hereby is as follows: Delete Section 1 of Article IV in its entirety and substitute in its place the following:

~~April 8, 2019~~“SECTION 1. The aggregate number of shares of all classes of capital stock which the Corporate shall have the authority to issue is five hundred million (500,000,000) shares, consisting of one hundred fifty million (150,000,000) shares of preferred stock, par value $0.001 per share (“Preferred Stock”) and three hundred fifty million (350,000,000) shares of common stock, par value $0.001 per share (“Common Stock”).”

~~2:00 p.m. Eastern Time~~4. The amendment of the Certificate of Incorporation herein certified has been duly adopted and authorized by the Corporation’s Board of Directors and stockholders in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

5. Except as specifically set forth herein, the remainder of the Certificate of Incorporation will not be amended, modified or otherwise altered.

~~Notice is hereby given that a Special Meeting~~Executed effective as of ~~the Stockholders~~this ___ day of ~~LM Funding America, Inc.~~__, a Delaware corporation (the “Company,” “we,” “us” or “our”), will be held at the Company’s principal executive offices held at the 302 Knights Run Ave, Suite 1000, Tampa, Florida 33602, on April 8, 2019, at 2:00 p.m. Eastern Time (the “Special Meeting”), for the following purposes:2021

i)such Person or any of such Person’s Affiliates has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person’s Affiliates until such tendered securities are accepted for purchase;

ii)such Person or any of such Person’s Affiliates, directly or indirectly, has the right to vote or dispose of or has “beneficial ownership” of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Act), including pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security under this clause (ii) as a result of an agreement, arrangement or understanding to vote such security if the agreement, arrangement or understanding: (A) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations under the Act and (B) is not also then reportable on a Schedule l3D under the Act (or any comparable or successor report); or

iii)are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person’s Affiliates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in clause (ii) above) or disposing of any voting securities of the Company.

(ii)the following individuals cease for any reason to constitute a majority of the number of directors of the Company then serving: (A) individuals who, on the Effective Date, constituted the Board and (B) any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Act) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the Effective Date, or whose appointment, election or nomination for election was previously so approved (collectively the “Continuing Directors”); provided, however, that individuals who are appointed to the Board pursuant to or in accordance with the terms of an agreement relating to a merger, consolidation, or share exchange involving the Company (or any direct or indirect Subsidiary of the Company) shall not be Continuing Directors for purposes of this Agreement until after such individuals are first nominated for election by a vote of at least two-thirds (2/3) of the then Continuing Directors and are thereafter elected as directors by the shareholders of the Company at a meeting of shareholders held following consummation of such merger, consolidation, or share exchange; and, provided further, that in the event the failure of any

such persons appointed to the Board to be Continuing Directors results in a Change of Control, the subsequent qualification of such persons as Continuing Directors shall not alter the fact that a Change of Control occurred; or

(iii)the consummation of a merger, consolidation or share exchange of the Company with any other corporation or the issuance of voting securities of the Company in connection with a merger, consolidation or share exchange of the Company (or any direct or indirect Subsidiary of the Company), in each case, which requires approval of the shareholders of the Company, other than (A) a merger, consolidation or share exchange which would result in the voting securities of the Company outstanding immediately prior to such merger, consolidation or share exchange continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least fifty percent (50%) of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger, consolidation or share exchange, or (B) a merger, consolidation or share exchange effected to implement a recapitalization of the Company (or similar transaction) in which no Person (other than an Excluded Person) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates after the Effective Date, pursuant to express authorization by the Board that refers to this exception) representing twenty percent (20%) or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding voting securities; or

(iv)the consummation of a plan of complete liquidation or dissolution of the Company or a sale or disposition by the Company of all or substantially all of the Company’s assets (in one transaction or a series of related transactions within any period of twenty-four (24) consecutive months), in each case, which requires approval of the shareholders of the Company, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity at least seventy-five percent (75%) of the combined voting power of the voting securities of which are owned by Persons in substantially the same proportions as their ownership of the Company immediately prior to such sale.

Notwithstanding the foregoing, no “Change of Control” shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to own, directly or indirectly, in the same proportions as their ownership in the Company, an entity that owns all or substantially all of the assets or voting securities of the Company immediately following such transaction or series of transactions.

Notwithstanding the foregoing, if an Award is considered deferred compensation subject to the provisions of Code Section 409A, and if a payment under such Award is triggered upon a “Change of Control,” then the foregoing definition shall be deemed amended as necessary to comply with Code Section 409A.

hh)“Stock” means the common stock, par value $0.001 per share, of the Company.

ii)“Stock Appreciation Right” or “SAR” means the right to receive a cash payment, and/or Shares with a Fair Market Value, equal to the appreciation of the Fair Market Value of a Share during a specified period of time.

Without limitation, in the event of any reorganization, merger, consolidation, combination or other similar corporate transaction or event, whether or not constituting a Change of Control (other than any such transaction in which the Company is the

continuing corporation and in which the outstanding Stock is not being converted into or exchanged for different securities, cash or other property, or any combination thereof), the Administrator may substitute, on an equitable basis as the Administrator determines, for each Share then subject to an Award and the Shares subject to this Plan (if the Plan will continue in effect), the number and kind of shares of stock, other securities, cash or other property to which holders of Stock are or will be entitled in respect of each Share pursuant to the transaction.

Notwithstanding the foregoing, for purposes of an Award that constitutes “nonqualified deferred compensation” subject to Code Section 409A, if a Participant’s termination of employment or service triggers the payment of such nonqualified deferred compensation under such Award, then the Participant will be deemed to have terminated employment or service upon his or her “separation from service” within the meaning of Code Section 409A. Notwithstanding any other provision in this Plan or an Award to the contrary, if any Participant is a “specified employee” within the meaning of Code Section 409A as of the date of his or her “separation from service” within the meaning of Code Section 409A, then, to the extent required to avoid the imposition of additional taxes under Code Section 409A, any payment of nonqualified deferred compensation made to the Participant on account of such separation from service shall not be made before a date that is six (6) months after the date of the separation from service.

~~Our Board of Directors unanimously recommends that stockholders vote “FOR” each of the Proposals.~~

Only stockholders of record at the close of business on February 25, 2019 are entitled to notice of and to vote at the Special Meeting. For specific voting information, see “General Information” beginning on page 1 of the enclosed Proxy Statement. A list of stockholders will be available commencing February 28, 2019, and may be inspected at our offices during normal business hours before the Special Meeting. The list of stockholders will also be available for review at the Special Meeting. If there are not sufficient votes for a quorum or to approve the items of business at the time of the Special Meeting, the Special Meeting may be adjourned or postponed to permit further solicitation of proxies.

Whether or not you attend the Special Meeting, it is important that your shares be represented and voted at the meeting. Therefore, I urge you to promptly vote and submit your proxy. You may vote by telephone, Internet or mail. To vote by telephone, call 1-800-690-6903 using a touch-tone phone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the Special Meeting date. Please have your proxy card in hand when you call and then follow the instructions. To vote electronically, access

LM FUNDING AMERICA, INC.

1200 W PLATT, SUITE 100

TAMPA, FL 33606

VOTE BY INTERNET - www.proxyvote.com~~over~~

Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the Special Meeting date. Please have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. You may vote by mail by signing, dating and returning the enclosed proxy card in the enclosed envelope. If you decide to attend the Special Meeting, you will be able to vote in person, even if you have previously submitted your proxy.

~~By Order of the Board of Directors,~~

~~Bruce Rodgers~~

~~Chairman, Chief Executive Officer and President~~

~~March 5, 2019~~

~~Tampa, Florida~~

~~Important Notice Regarding the Availability of Proxy Materials~~

~~for the Special Meeting of Stockholders to be held~~ on ~~April 8, 2019~~

~~This notice of special meeting, the Proxy Statement and the form of proxy card are available at~~ ~~www.proxydocs.com/lmfa~~. ~~On this site, you will be able to access these materials and any amendments or supplements to these materials that are required to be furnished to stockholders.~~

~~PROXY~~ ~~STATEMENT~~

~~LM FUNDING AMERICA, INC. PROXY STATEMENT~~

~~Special Meeting of Stockholders - April 8, 2019~~

These proxy materials are being furnished to you in connection with the solicitation of proxies by the Board of Directors (the “Board” or “Board of Directors”) of LM Funding America, Inc., a Delaware corporation (the “Company,” “LM Funding,” “we,” “us” or “our”), for use at a special meeting of stockholders and any adjournments or postponements of the meeting (the “Special Meeting”). The Special Meeting will be held at the Company’s principal executive offices, 302 Knights Run Ave, Suite 1000, Tampa, Florida 33602, on April 8, 2019, at 2:00 p.m. Eastern Time. The Notice of Special Meeting, this Proxy Statement and the enclosed proxy card are being mailed to stockholders beginning on or about March 5, 2019.

~~GENERAL INFORMATION~~

~~Q. Why am I receiving these proxy materials?~~

~~On January 16, 2019, we issued a Senior Convertible Promissory Note~~ ~~in the aggregate principal amount of $3,581,982.16~~ (the “Convertible Note”) to Craven House Capital North America LLC (“Craven”) that allows for the conversion of the aggregate principal amount and accrued interest of the Convertible Note (the “Note Conversion”) for shares of common stock, par value $0.001 per share, of the Company (“Common Stock”). The terms of the Convertible Note are more fully described below under “Proposal No. 1 – The NASDAQ Proposal.”

The Note Conversion requires stockholder approval of the issuance of shares of Common Stock under NASDAQ Stock Market Rules 5635(b) and 5635(d) (the “NASDAQ Proposal”). The Note Conversion is expected to occur following stockholder approval of the NASDAQ Proposal.

The Note Conversion is being pursued to reduce our debt, leverage and cash interest expense, and increase our financial flexibility. The Convertible Note is due on January 10, 2020 and we are required to pay aggregate interest of $107,500. On the completion of the Note Conversion, the Company will have significantly reduced its interest expense as a result of the elimination of the Convertible Note, and we intend to use cash that we would have used to repay the Convertible Note balance to increase our working capital and to make strategic investments.

To permit us to complete the Note Conversion, we are providing these proxy materials in connection with the solicitation by our Board of proxies to be voted at the Special Meeting on the NASDAQ Proposal. If the NASDAQ Proposal is approved by our stockholders, we will complete the Note Conversion.,.

~~Q. What is the purpose of the Note Conversion, and why is it important?~~

~~A. The Note Conversion is conditioned on, among other things, the approval of the NASDAQ Proposal.~~

If completed, the Note Conversion would reduce the principal amount of our long-term debt by approximately $3.6 million. Moreover, we can reallocate the $3.6 million needed to satisfy the Convertible Note toward working capital and strategic investments.

~~A de-levered balance sheet may also allow us access to additional capital that could be used to grow the enterprise or otherwise enhance stockholder value through mergers or acquisitions.~~

If we are unable to complete the proposed Note Conversion and substantially reduce our debt, we will need to pursue alternative strategies, which may include equity issuances, asset sales, alternative debt for equity conversions or other debt reduction or restructuring transactions. Each of these alternatives involves uncertainties, potential delays and execution risks. In such an event, we expect that the end result could be more dilutive or less value-enhancing to existing stockholders than the Note Conversion, either of which could adversely affect our growth.

~~Q. What will happen to the Company if the Note Conversion is completed?~~

A. If the Note Conversion is completed, our leverage, cash flow and liquidity will be improved, which we believe will provide us with additional liquidity for working capital and to make additional strategic investments.

If the Note Conversion is consummated, as of February 25, 2019, 1,486,300 new shares of Common Stock would be issued to Craven, which would represent approximately 32.2% of our total outstanding Common Stock on such date after giving effect to the Note Conversion.

~~Q. What are the recommendations of the Board?~~

~~A. The Board unanimously recommends that you vote~~ ~~FOR~~ ~~the approval of each of the Proposals. The reasons for this recommendation are more fully described below under the caption “Proposal No. 1 – The NASDAQ Proposal.”~~

~~PROXY~~ ~~STATEMENT~~

~~Q. When and where is the Special Meeting?~~

~~A. The Special Meeting will be held at 302 Knights Run Ave, Suite 1000, Tampa, Florida 33602, on April 8, 2019, at 2:00 p.m. Eastern Time.~~

~~Q. Who can attend and vote at the Special Meeting?~~

A. Stockholders as of the close of business on February 25, 2019 (the “Record Date”) are entitled to attend and vote at the Special Meeting. We will make available at our executive offices an alphabetical list of stockholders entitled to vote at the Special Meeting for examination by any stockholder during ordinary business hours beginning 10 days before the Special Meeting.

~~Q. How do I vote my shares?~~

~~If your shares are held in your name, you may vote your shares or submit a proxy to have your shares voted by one of the following methods:~~

•

~~By Internet. You may submit a proxy electronically by the Internet at~~ ~~www.proxyvote.com~~. Please have your proxy card, which includes your personal control number, on hand when you log onto the website. Internet voting will close and no longer be available as of 11:59 p.m. Eastern Time on April 7, 2019.

•

~~By Telephone~~. You may submit a proxy by telephone using the toll-free number listed on the proxy card. Please have your proxy card in hand when you call. Telephone voting will close and no longer be available as of 11:59 p.m. Eastern Time on April 7, 2019.

•

~~By Mai~~l~~. If you request paper copies of the proxy materials by mail, you may submit a proxy by signing, dating and returning your proxy card in the pre-addressed envelope provided.~~

•

~~In Person. You may vote in person at the Special Meeting by completing a ballot; however, attending the meeting without completing a ballot will not count as a vote.~~

If you vote by granting a proxy, the proxy holders will vote the shares according to your instructions. If you submit a proxy without giving specific voting instructions, the proxy holders will vote those shares as recommended by our Board. If you plan to vote in person at the Special Meeting and your shares are held in your name, please bring proof of identification. Even if you currently plan to attend the Special Meeting, we recommend that you also submit your proxy as described above so that your vote will be counted if you later decide not to attend the Special Meeting.

If your shares are held in “street name” by your broker, bank or other nominee, you will receive instructions from your broker, bank or other nominee that you must follow for your shares to be voted. We expect Internet and telephone voting to be offered to street name stockholders. You also may vote in person at the Special Meeting if you obtain a legal proxy from your broker, bank or other nominee. Please consult the voting instruction form or other information sent to you by your broker, bank or other nominee to determine how to obtain a legal proxy in order to vote in person at the Special Meeting. If you plan to vote in person at the Special Meeting and you have obtained a legal proxy from your broker, bank or other nominee, please bring proof of identification. If your shares are held in street name in a brokerage account or by a bank or other nominee, you must provide your broker with instructions on how to vote your shares for your shares to be voted on Proposals 1 and 2. If you do not instruct your broker on how to vote these proposals, your shares will not be voted on these matters.

~~Q. What are my voting choices?~~

A. You may vote “FOR” or “AGAINST” or you may “ABSTAIN” from voting on any proposal to be voted on at the Special Meeting. Your shares will be voted as you specifically instruct. If you sign your proxy or voting instruction card without giving specific instructions, your shares will be voted according to the recommendations of our Board and in the discretion of the proxy holders on any other matters that properly come before the meeting.

~~Q. How many shares can I vote?~~

A. Each record holder of Common Stock is entitled to one vote for each share held, provided, however, that holders of shares of our Common Stock issued upon conversion of the Convertible Note prior to stockholder approval of Proposal 1 - the NASDAQ Proposal will not be permitted to vote such shares with respect to “Proposal 1 - the NASDAQ Proposal”.

~~Q. Can I change or revoke my vote?~~

A. Yes. Even if you submitted a proxy by telephone or by the Internet or if you signed the proxy card in the form accompanying this Proxy Statement, you may revoke your proxy and change your vote. You can revoke your proxy any time before it is exercised by giving written notice to the Corporate Secretary specifying such revocation. You also may revoke your proxy by a later-dated proxy by telephone or by the Internet or by timely delivery of a valid, later-dated proxy by mail or by voting by ballot at the Special Meeting. Your attendance at the Special Meeting in itself will not automatically revoke a previously submitted proxy. However, if you hold your shares through a broker, bank or nominee and have instructed your broker, bank or nominee how to vote your shares, you must follow directions received from the broker, bank or nominee to change your vote or to vote at the Special Meeting.

~~Q. What constitutes a Quorum?~~

A. There must be a quorum for the Special Meeting to be held. A quorum is the presence at the Special Meeting, in person or by proxy, of the holders of a majority of the shares of Common Stock issued and outstanding and entitled to vote at the Special Meeting. Proxies that are voted “FOR,” “AGAINST” or “ABSTAIN” on a matter are treated as being present at the Special Meeting for purposes of

~~PROXY~~ ~~STATEMENT~~

~~establishing a quorum and also treated as shares “represented and voting” at the Special Meeting regarding that matter.~~

~~Since there are no routine matters being voted on at the Special Meeting, we will not have any broker non-votes, which are described in more detail below, at the Special Meeting.~~

~~As of the close of business on February 25, 2019, there were 3,134,262 shares of our Common Stock outstanding and entitled to vote at the Special Meeting.~~

~~Q. What is a broker non-vote?~~

A. Generally, a broker non-vote occurs when a bank, broker or other nominee that holds shares in “street name” for customers is precluded from exercising voting discretion on a particular proposal because (1) the beneficial owner has not instructed the bank, broker or other nominee how to vote, and (2) the bank, broker or other nominee lacks discretionary voting power to vote the shares. A bank, broker or other nominee does not have discretionary voting power for the approval of “non-routine” matters without specific voting instructions from the beneficial owners of the shares.

If the proposals to be acted on at any meeting include both routine and non-routine matters, the banker, broker or other nominee may turn in a proxy card for uninstructed shares that votes on routine matters but not on non-routine matters. Each of the NASDAQ Proposals and the Adjournment Proposal is considered a non-routine matter. As a result, banks, brokers and other nominees are not allowed to vote on these matters unless they have received voting instructions from the beneficial owner of the shares. Your bank, broker or other nominee will send you instructions on how you can instruct them to vote on the Proposals. If you do not provide voting instructions, your bank, broker or other nominee will not vote your shares on the Proposals.

~~Q. How many votes are needed to approve each of the Proposals?~~

A. The approval of the NASDAQ Proposal requires the affirmative vote of a majority of the shares of Common Stock present at the Special Meeting, in person or represented by proxy. Abstentions will have the same effect as a vote AGAINST the NASDAQ Proposal. The approval of the Adjournment Proposal requires the affirmative vote of a majority of the shares of Common Stock present at the Special Meeting, in person or represented by proxy. Abstentions will have the same effect as a vote AGAINST the Adjournment Proposal.

~~The voting requirements for each proposal are more fully described below under the caption “The Special Meeting—Vote Required for Approval.”~~

~~Q. What do I need to do now?~~

A. We urge you to read this Proxy Statement carefully. Then mail your completed, dated and signed proxy card in the enclosed return envelope as soon as possible so that your shares can be voted at the Special Meeting. Holders of record also may vote by telephone or Internet by following the instructions on the proxy card.

~~Q. What happens if I do not respond or if I respond and fail to indicate my voting preference or if I abstain from voting?~~

A. If you fail to sign, date and return your proxy card or fail to vote by telephone or Internet as provided on your proxy card, your shares will not be counted toward establishing a quorum for the Special Meeting.

~~If you submit your proxy but abstain from voting on one or more Proposals, your shares will be counted as present at the meeting for the purpose of determining if a quorum exists.~~

If your shares are held in street name and you do not provide voting instructions to your broker as described above, your broker does not have the discretionary authority to vote your shares regarding the Proposals.

~~Q. What will happen if the NASDAQ Proposal is not approved?~~

A. If the NASDAQ Proposal is not approved, the proposed Note Conversion will not be completed. If we are unable to complete the proposed Note Conversion and thereby substantially reduce our debt, we will need to pursue alternative strategies, which may include equity issuances, asset sales, alternative debt for equity conversions or other debt reduction or restructuring transactions, with each alternative potentially resulting in significantly less value to existing stockholders.

~~Q. Am I entitled to appraisal rights?~~

~~A. No. You will have no right under Delaware law to seek appraisal of your shares of our Common Stock in connection with the proposals.~~

~~Q. Can I vote on other matters?~~

A. We do not expect any other matter to come before the meeting. If any other matter is properly presented at the Special Meeting, the signed proxy gives the individuals named as proxies authority to vote the shares on that matter at their discretion.

~~Q. Can I obtain an electronic copy of the proxy material?~~

~~A. Yes, this Proxy Statement, the accompanying notice of Special Meeting and the proxy card are available on the Internet at~~

~~www.proxyvote.com~~

~~PROXY~~ ~~STATEMENT~~

~~Q. What happens if the Special Meeting is adjourned or postponed?~~

A. Although it is not expected, the Special Meeting may be adjourned or postponed for the purpose of soliciting additional proxies. Any adjournment or postponement may be made without notice, other than by an announcement made at the Special Meeting, by approval of the holders of a majority of the outstanding shares of our Common Stock present in person or represented by proxy at the Special Meeting, whether or not a quorum exists. Any adjournment or postponement of the Special Meeting for the purpose of soliciting additional proxies will allow stockholders who have already sent in their proxies to revoke them at any time before their use.

~~Q. Who is soliciting my proxy, and what are the costs?~~

A. We will bear all costs incurred in the solicitation of proxies, including the preparation, printing and mailing of the Notice of Availability and related proxy materials. In addition to solicitation by mail, our directors, officers and employees may solicit proxies personally or by telephone, email, facsimile or other means. These directors, officers and employees will not be additionally compensated but may be reimbursed for reasonable out-of-pocket expenses in connection with such solicitation. We may also make arrangements with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of Common Stock held by such persons, and we may reimburse those brokerage houses and other custodians, nominees and fiduciaries for reasonable expenses incurred in connection therewith. To assist in the solicitation of proxies, we may engage a proxy solicitation firm for a fee of approximately $10,000, plus out-of-pocket expenses.

If you have any questions about this Proxy Statement or the Special Meeting, please contact Investor Relations at LM Funding America, Inc., 302 Knights Run Avenue, Suite 1000, Tampa, Florida 33602, or by telephone at (813) 222-8996 or our website ~~www.proxydocs.com/lmfa~~.

~~Q. Who can help answer my other questions?~~

~~A. If your shares are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you also should call that broker or other nominee for additional information.~~

~~CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS~~

Certain statements contained in or incorporated by reference into this Proxy Statement, or filings with the Securities and Conversion Commission (the “SEC”) and our public releases contain forward looking statements intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Conversion Act of 1934, as amended (the “Conversion Act”). These forward-looking statements include information concerning the anticipated benefits of the Acquisition Transaction (as defined below) and the Note Conversion, , future financial results, , and also include those statements accompanied by or that otherwise include the words “will,” “may,” “could,” “believes,” “expects,” “anticipates,” “intends,” “estimates,” “projects,” “predicts,” “target,” “goal,” “plans,” “objective,” “potential,” “should,” or similar expressions or variations on such expressions that convey the uncertainty of future events or outcomes. For such statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, including Section 27A of the Securities Act and Section 21E of the Conversion Act. We have based these forward-looking statements on our current expectations and assumptions about future events. These statements are based on certain assumptions and analyses made by us because of our experience and our perception of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate under the circumstances. Although we believe that the expectations reflected in these forward- looking statements are reasonable, we can give no assurance that these expectations will prove to be correct. We undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

These forward-looking statements involve risk and uncertainties. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, the following risk and uncertainties:

~~• the inability to complete the Note Conversion due to the failure to obtain approval of our stockholders of the NASDAQ Proposal ;~~

~~• our ability to recognize the anticipated benefits of the Note Conversion or otherwise address our near term liquidity needs;~~

~~• costs related to the Note Conversion ;~~

• other factors discussed in “Risk Factors” and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018, our Annual Report on Form 10-K for the year ended December ~~31, 2017, and in our other public filings, or press releases.~~

Any of these factors and other factors in this Proxy Statement or any documents incorporated by reference could cause our actual results to differ materially from the results implied by these or any other forward-looking statements made by us. Although we believe our plans, intentions and expectations reflected in the forward-looking statements we make are reasonable, we can give no assurance that we will achieve these plans, intentions or expectations. Our assumptions about future events may prove to be inaccurate. We caution you that the forward-looking statements contained in this Proxy Statement are not guarantees of future performance, and we cannot assure you that those statements will be realized or the forward-looking events and circumstances will occur. All forward-looking statements speak only as of the date of this Proxy Statement.

We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise, except as required by law. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

~~PROXY~~ ~~STATEMENT~~

~~THE SPECIAL MEETING~~

~~Time, Place and Purpose of the Special Meeting~~

This Proxy Statement is being furnished to our stockholders for the solicitation of proxies by our Board for use at our Special Meeting to be held at 302 Knights Run Avenue, Suite 1000, Tampa, FL 33602, on April 8, 2019, at 2:00 p.m. Eastern Time, and at any adjournments or postponements of the meeting:

~~The Special Meeting is being called to request approval by our stockholders of:~~

~~• the issuance of shares of Common Stock in connection with the Note Conversion under NASDAQ Stock Market Rules 5635(b) and 5635(d);and~~

• the adjournment of the Special Meeting, if necessary or appropriate, to establish a quorum or to permit further solicitation of proxies if there are not sufficient votes at the time of the Special Meeting cast in favor of one or both of the Transaction Proposals.

~~Recommendation of the Board of Directors~~

~~Our Board unanimously recommends that you vote “FOR” the NASDAQ Proposal, and “FOR” the Adjournment Proposal, if necessary or appropriate.~~

~~Record Date and Quorum~~

~~Stockholders as of the close of business on February 25, 2019 are entitled to attend and vote at the Special Meeting.~~

There must be a quorum for the Special Meeting to be held. A quorum is the presence at the Special Meeting, in person or by proxy, of the holders of a majority of the shares of Common Stock issued and outstanding and entitled to vote at the Special Meeting. Proxies that are voted “FOR,” “AGAINST” or “ABSTAIN” on a matter are treated as being present at the Special Meeting for purposes of establishing a quorum and also treated as shares “represented and voting” at the Special Meeting with respect to such matter.

~~Any abstentions will be counted in determining whether a quorum is present at the Special Meeting.~~

~~As of the close of business on February 25, 2019, there were 3,134,262 shares of our Common Stock outstanding and entitled to vote at the Special Meeting~~

~~Vote Required for Approval~~

The approval of the NASDAQ Proposal requires the affirmative vote of a majority of the shares of Common Stock present at the Special Meeting, in person or represented by proxy. Abstentions will have the same effect as a vote against the NASDAQ Proposal. Brokers, banks and other financial institutions cannot vote your stock on your behalf for this proposal if you have not provided instructions on your voting instruction form; for your vote to be counted, you must submit your voting instructions to your broker or custodian. Broker non-votes will not be counted as present and are not entitled to vote on this proposal.

The approval of the Adjournment Proposal requires the affirmative vote of a majority of the shares of Common Stock present at the Special Meeting, in person or represented by proxy. Abstentions will have the same effect as a vote against the Adjournment Proposal. Brokers, banks and other financial institutions cannot vote your stock on your behalf for this proposal if you have not provided instructions on your voting instruction form; for your vote to be counted, you must submit your voting instructions to your broker or custodian. Broker non-votes will not be counted as present and are not entitled to vote on this proposal.

~~Shares Held by Company Directors and Executive Officers~~

As of the close of business on February 25, 2019, the Record Date, the Company’s directors and executive officers held and are entitled to vote, in the aggregate, 878,178 shares of Common Stock, representing approximately 28.0% of the total number of shares of Common Stock outstanding as of the Record Date.

~~The directors and executive officers of the Company intend to vote their shares “FOR” the Transaction Proposals and “FOR” the Adjournment Proposal, if necessary or appropriate, to solicit additional proxies.~~

~~Voting of Proxies~~

~~If your shares are held in your name, you may vote your shares or submit a proxy to have your shares voted by one of the following methods:~~

• ~~By Internet. You may submit a proxy electronically by the Internet at~~ ~~www.proxyvote.com~~. Please have your Notice of Availability or proxy card, which includes your personal control number, on hand when you log onto the website. Internet voting will no longer be available as of 11:59 p.m. Eastern Time on April 7, 2019.

• ~~By Telephone~~. You may submit a proxy by telephone using the toll-free number listed on the proxy card or your Notice of Availability. Please have your proxy card or Notice of Availability in hand when you call. Telephone voting will no longer be available as of 11:59

~~p.m. Eastern Time on April 7, 2019.~~

•

~~By Mail. If you request paper copies of the proxy materials by mail, you may submit a proxy by signing, dating and returning your proxy card in the pre-addressed envelope provided.~~

•

~~In Person. You may vote in person at the special meeting by completing a ballot; however, attending the meeting without completing a~~

~~PROXY~~ ~~STATEMENT~~

~~ballot will not count as a vote.~~

~~Revocability of Proxies~~

~~You have the right to change or revoke your proxy at any time before the vote taken at the special meeting by:~~

~~attending the Special Meeting and voting in person;~~

~~properly submitting a later-dated proxy either by mail, the Internet or telephone; or~~

~~delivering a written notice to our Corporate Secretary before the vote at the Special Meeting.~~

Please note that if you hold your shares in “street name” through a broker, bank or other nominee and you have instructed your broker, bank or other nominee to vote your shares, the above-described options for changing your vote do not apply, and instead you must follow the instructions received from your broker, bank or other nominee to change your vote.

~~Adjournments and Postponements~~

Although we do not expect this, we may adjourn or postpone the Special Meeting for the purpose of soliciting additional proxies. Any adjournment or postponement may be made without notice, other than by an announcement made at the Special Meeting, by the Chairman of the meeting, or by approval of the holders of a majority of the outstanding shares of our Common Stock present in person or represented by proxy at the Special Meeting, whether or not a quorum exists. Any adjournment or postponement of the Special Meeting to solicit additional proxies will allow stockholders who already have sent in their proxies to revoke them at any time before their use.

~~Rights of Dissenting Stockholders~~

~~Stockholders have no right under Delaware law to seek appraisal of their Common Stock in connection with the Proposals.~~

~~Solicitation of Proxies; Payment of Solicitation Expenses~~

We will bear all costs incurred in the solicitation of proxies, including the preparation, printing and mailing of the Notice of Availability and related proxy materials. In addition to solicitation by mail, our directors, officers and employees may solicit proxies personally or by telephone, email, facsimile or other means. These directors, officers and employees will not be additionally compensated but may be reimbursed for reasonable out-of-pocket expenses in connection with such solicitation. We may also make arrangements with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of Common Stock held by such persons, and we may reimburse those brokerage houses and other custodians, nominees and fiduciaries for reasonable expenses incurred in connection therewith. To assist in the solicitation of proxies, we may enage a proxy solicitation firm which we expect would cost us approximately $10,000, plus out-of-pocket expenses.

~~Other Matters~~

The Board knows of no other matters to be brought before the Special Meeting. If any other matters are properly brought before the Special Meeting, the persons appointed in the accompanying proxy intend to vote the shares represented by the proxy in accordance with their best judgment on such matters, under applicable laws.

~~Questions and Additional Information~~

If you have more questions about the Proposals or Conversion Transaction, need assistance in submitting your proxy or voting your shares or need additional copies of this Proxy Statement or the enclosed proxy card, you should contact us in writing at: LM Funding America, Inc. Attention: Investor Relations 302 Knights Run Avenue, Tampa, Florida 33602 (813) 222-8996 or through our website: ~~investors@lmfunding.com or www.proxydocs.com/lmfa.~~

~~PROXY~~ ~~STATEMENT~~

~~PROPOSAL NO. 1 -~~ ~~THE NASDAQ PROPOSAL~~

~~General Description of Proposal~~

Our common stock is listed on the NASDAQ Capital Market (“NASDAQ”) and we are subject to NASDAQ’s rules and regulations. The issuance of Common Stock upon conversion of the Convertible Note may implicate certain of the NASDAQ listing standards requiring prior stockholder approval in order to maintain our listing on NASDAQ, including the following:

NASDAQ Listing Rule 5635(b) requires stockholder approval when any issuance or potential issuance will result in a "change of control" of the issuer (which may be deemed to occur if after a transaction a single investor or affiliated investor group acquires, or has the right to acquire, as little as 20% of the common stock (or securities convertible into or exercisable for common stock) or voting power of an issuer and such ownership would be the largest ownership position of the issuer). Stockholders should note that a "change of control" as described under Rule 5635(b) applies only with respect to the application of such rule, and does not constitute a "change of control" for purposes of Delaware law, our organizational documents, or any other purpose.

NASDAQ Listing Rule 5635(d) requires stockholder approval prior to the issuance of securities in connection with a transaction other than a public offering involving: (1) the sale, issuance or potential issuance by the Company of Common Stock (or securities convertible into or exercisable for Common Stock) at a price less than the greater of book or market value of the Common Stock, which, together with sales by officers, directors or substantial stockholders of the Company, equals 20% or more of the Common Stock or 20% or more of the voting power outstanding before the issuance; or (2) the sale, issuance or potential issuance by the Company 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 less than the greater of book or market value of the Common Stock.

The stockholders of the Company are being asked to approve the issuance of the Company’s Common Stock issuable upon conversion of the Convertible Note for purposes of NASDAQ Listing Rules 5635(b) and 5635(d). Our Board of Directors believes that the Note Conversion is in the best interest of stockholders because it will enable us to reduce our debt and thereby improve our liquidity and financial flexibility and to better position the Company for growth.

~~This proposal is referred to in this Proxy Statement as the “NASDAQ Proposal” or “Proposal 1.”~~

~~Background~~

~~In early 2018, the Company completed a restructuring of its operations and generated positive net income for the six months ended June 30,~~ ~~2018. As part of its effort to further stabilize operations, on November 1, 2018, the Company closed an u~~nderwritten public offering of 2,500,000 shares of its Common Stock (or pre-funded warrants to purchase Common Stock in lieu thereof) and common warrants to purchase up to 2,500,000 shares of the Company’s Common Stock pursuant to which the Company received gross proceeds of approximately $6.0 million. During the marketing of its underwritten offering, the management of the Company met the representatives of Craven, who invested in the offering.

On January 16, 2019, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Craven and IIU, Inc., a Virginia corporation (“IIU”), pursuant to which the Company purchased all of the issued and outstanding capital stock of IIU (the “Acquired Shares” and such sale and purchase of the Acquired Shares, the “Acquisition Transaction”). The purchase price paid by the Company for the Acquired Shares consisted of (1) the Company’s cancellation of all principal and interest outstanding under Craven’s promissory note in the aggregate principal amount of $1,500,000, dated November 3, 2018, payable to the Company and (2) the Company’s issuance of the Convertible Note. Under the terms of the Convertible Note and applicable NASDAQ Listing Rules, the approval of our stockholders is required for the conversion of the Convertible Note into shares of our Common Stock. See “- Necessity of Stockholder Approval” below.

~~Description of the Convertible Note~~

The Company issued the Convertible Note on January 16, 2019, as partial consideration for the Acquisition Transaction. The Convertible Note bears interest at 3% per annum, with principal and accrued interest payable at maturity 360 days after the closing of the Acquisition Transaction, unless converted earlier pursuant to the terms of the Convertible Note. The Convertible Note is secured by all of the assets of the Company. The Convertible Note cannot be prepaid by the Company prior to maturity or conversion. On the maturity date, if the Company has obtained the stockholder approval described in this Proposal 1, the holder of the Convertible Note will have the right, but not the obligation, to convert the outstanding principal balance of the Convertible Note and accrued interest then due into shares of Common Stock at a conversion price of $2.41 per share, subject to adjustment for stock dividends, stock splits and similar events (the “Conversion Price’). In addition, from and after such stockholder approval and so long as there is no event of default under the Convertible Note, the Company may effect the conversion of all, but not less than all, of the outstanding principal balance of the Convertible Note and accrued interest then due at the Conversion Price.

The obligations under the Convertible Note may be accelerated upon the occurrence of specified events of default including (a) the Company’s failure to pay any amount payable under the Convertible Note on the date due and payable; (b) the occurrence of an event of default under, redemption of or acceleration prior to maturity of indebtedness of the Company exceeding $100,000, in the aggregate, or notice from a lender of a financial covenant default under any of the Company’s loan documents that is not cured within 20 business days; (c) commencement of certain specified dissolution, liquidation, insolvency, bankruptcy, reorganization, or similar cases or actions by or against the Company or any of its subsidiaries, in specified circumstances unless, if instituted against the Company or any subsidiary by a third party, it is not dismissed within 30 days; (d) the entry of a final judgment for the payment of money against the Company or any of its subsidiaries in

~~PROXY~~ ~~STATEMENT~~

excess of $50,000, unless covered by insurance or an indemnity the proceeds of which are received within 30 days; (e) the Company’s or any subsidiary’s failure to pay when due, subject to any applicable grace period, indebtedness exceeding $25,000; (f) the Company’s failure to perform or observe any material representation, warranty, covenant or other term of condition in the Convertible Note, Purchase Agreement or related documents, subject to a five-day cure period; (g) the occurrence of a change in control (as defined in the Convertible Note) and (h) the Company’s issuance, offer, sale, grant of any option or right to purchase, or other disposition (or any announcement in connection with any of the foregoing) of any equity security or any equity-linked or related security, or any convertible securities, without the prior written consent of the holder of the Convertible Note, except to the extent allowed under any existing agreements of the Company.

As long as the Convertible Note is outstanding, the Company may not enter into a Fundamental Transaction (as defined in the Convertible Note) unless the holder of the Convertible Note approves the Fundamental Transaction and the successor entity assumes in writing all of the obligations of the Company under the Convertible Note, the Purchase Agreement and any other documents entered into by the parties in connection with the Acquisition Transaction in form and substance satisfactory to the holder of the Convertible Note.

~~Craven has informed the Company that it currently intends to convert the Convertible Note immediately following approval of this Proposal 1, if it is approved.~~

~~Number of Shares Potentially Issuable~~

As of February 25, 2019, 3,134,262 shares of our common stock were issued and outstanding. The following table shows the pro forma impact of the Note Conversion at the Conversion Price on the ownership of our Common Stock (in thousands) as of February 25, 2019:

Before Note Conversion
Pro Forma for the Note Conversion

No. of Shares
Percentage of Common
No. of Shares
Percentage of Common
Existing non-Craven Holders of Common Stock
2,486
79.3%
2,486
53.8%
Craven (1)
648
20.7%
2,135
46.2%
Total
3,134
100.0%
4,621
100.0%

~~(1) Assumes conversion is conducted at a ratio of $2.41 per share.~~

~~Necessity of Stockholder Approval~~

~~As a result of being listed for trading on NASDAQ, issuances of the Company’s Common Stock are subject to the NASDAQ Listing Rules, including Nasdaq Listing Rules 5635(b) and (d).~~

NASDAQ Listing Rule 5635(b) requires stockholder approval before the issuance of securities when the issuance or potential issuance of securities will result in a change of control of the Company. NASDAQ defines a change of control as occurring when, as a result of an issuance, an investor or a group would own, or have the right to acquire, 20% or more of the outstanding shares of common stock or voting power of a company, and such ownership or voting power would be the largest ownership position. As of February 25, 2019, the Note Conversion would result in the holders of the Note owning 2,134,796 shares of our Common Stock, which would exceed 20% of our Common Stock as of such date.

In addition, NASDAQ Listing Rule 5635(d) requires stockholder approval in connection with a transaction other than a public offering involving the sale or issuance by the issuer of common stock (or securities convertible into 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 greater of book or market value of the stock on the date we enter into a binding agreement for the issuance of such securities. Accordingly, the Convertible Note may not be converted into in excess of 623,718 shares of our Common Stock, which represents approximately 19.9% of the Common Stock outstanding immediately prior to the issuance of the Convertible Note. On January 16, 2019, the conversion of $3,581,982 principal amount of the Note at the Conversion Price would result in the issuance of 1,486,300 shares of Common Stock, which is more than 19.9% of our Common Stock outstanding immediately before the closing of the Acquisition Transaction and the issuance of the Convertible Note at a discount to the book value of our Common Stock on the date of the Convertible Note.

Accordingly, we are requesting in this Proposal 1 that our stockholders approve, in accordance with NASDAQ Marketplace Rules 5635(b) and (d), the issuance of shares of Common Stock exceeding 19.9% of the number of shares outstanding on January 16, 2019 or 623,718 shares, upon the Note Conversion.

~~Consequences of Failure to Obtain Stockholder Approval~~

If this stockholder approval is not obtained and we are unable to consummate the Note Conversion, the Company will be required to seek additional capital to repay the Convertible Note in cash, which may include equity issuances, assets sales, alternative debt for equity conversions or other restructuring transactions, which may not be on commercially reasonable terms and may negatively impact stockholders at that time. If the Company elects to seek additional capital with the issuance of new shares, it is also likely that the Company may again

~~PROXY~~ ~~STATEMENT~~

need to seek stockholder approval at a future special or annual meeting of stockholders for the issuance of those shares, may need to seek alternative means to finance the payment, or may take such other actions as the Board deems advisable and in the best interests of the Company and its stockholders at that time.

The information set forth in this Proposal 1, including the description of certain terms and provisions of the Convertible Note, is qualified in its entirety by reference to the actual terms of the agreements entered into in connection with the Acquisition Transaction (including, but not limited to, the Purchase Agreement and the Convertible Note), which are included as exhibits to our Current Report on Form 8-K filed with the SEC on January 17, 2019. In addition, the form of Convertible Note is included as Annex A to this Proxy Statement.

~~Recommendation~~

~~Our Board recommends a vote “FOR” Proposal 1.~~

~~PROPOSAL NO. 2 - ADJOURNMENT PROPOSAL~~

Our Board is asking our stockholders to approve an adjournment of the Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the Proposal 1 – the NASDAQ Proposal.

~~This proposal is referred to in this Proxy Statement as the “Adjournment Proposal” or “Proposal 2.”~~

Approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast on the matter, assuming a quorum is present at the meeting. Because this vote is a non-routine matter under applicable rules, your bank, broker or other nominee cannot vote without instructions from you.

~~Recommendation~~

~~Our Board recommends a vote “FOR” Proposal 2.~~

~~STOCK OWNERSHIP MATTERS~~

~~Section 16(a) Beneficial Ownership Reporting Compliance~~

Section 16(a) of the Conversion Act requires our directors, Section 16 officers and persons who beneficially own more than 10% of our Common Stock to file initial reports of ownership on Form 3 and reports of changes of ownership on Forms 4 and 5 with the SEC. These Section 16 officers, directors and 10% beneficial owners are also required to furnish us with copies of all Section 16(a) forms that they file. Specific due dates for these reports have been established by regulation, and we are required to report in this Proxy Statement any failure to file by these dates in 2019.

~~Based solely on our review of reports and written representations that no other reports were required, we believe that all required reports were filed timely.~~

~~PROXY~~ ~~STATEMENT~~

~~Security Ownership of Management and Certain Beneficial Owners~~

The following table shows, as of February 25, 2019, beneficial ownership of our Common Stock by our directors, our named executive officers, all directors and executive officers as a group and all persons who were known to us to be the beneficial owners of more than 5% of our outstanding shares:

Name
Number of Shares of Common Stock Owned(1)

Percent(2)
5% Stockholders:

Craven House Capital North America LLC (1)
648,496
20.7%
Hudson Bay Capital Management LP (2)
-
*
Heights Capital Management (3)
-
*
Bruce M. Rodgers Revocable Trust (4)
109,562
3.5%
Carollinn Could Revocable Trust (4)
109,562
3.5%

Directors and Executive Officers:

Bruce M. Rodgers.(5)
224,652
7.2%
Carollinn Gould(5)
224,652
7.2%
Mark J. Pajak(6)
648,496
20.7%
Douglas I. McCree(7)
1,050
*
Joel E. Rodgers, Sr(8)
100
*
Martin A. Traber(9)
1,100
*
Andrew Graham(10)
180
*
Fred Mills(11)
2,600
*
Richard Russell (12)
-
*
Ryan Duran (13)
-
*
All executive officers and directors as a group (10 persons)
878,178
28.0%
Other Beneficial Owners:

Heights Capital Management, Inc (2)
-
*
Hudson Bay Capital Management L.P. (3)
-
*

* ~~Represents less than 1% of beneficial ownership.~~

~~(1) Includes 648,496 shares of common stock but excludes 640,000 shares of common stock issuable upon the exercise of warrants.~~

~~(2) Excludes 225,271 shares of common stock issuable upon the exercise of warrants.~~

~~(3) Excludes 120,798 shares of common stock issuable upon the exercise of warrants.~~

(4) Includes 109,562 shares of common stock but excludes 13,242 shares of common stock issuable upon the exercise of warrants 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.

(5) Includes 219,124 shares beneficially owned by Bruce M. Rodgers Revocable Trust and Carol Linn Gould Revocable Trust, 4,267 shares beneficially owned by BRR Holding, LLC, 1,160 shares beneficially owned by Bruce M. Rodgers IRA, and 100 shares beneficially owned by Carollinn Gould IRA, which does not include 13,242 shares in the case of Bruce M. Rodgers Revocable Trust and Carol Linn Gould Revocable Trust, 150 shares in the case of BRR Holding, LLC and 390 shares in the case of Bruce M. Rodgers IRA are issuable upon the exercise of warrants to purchase shares of common stock. 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 therefore Mr. Rodgers and Ms. Gould may be deemed to have shared voting and investment power for all 2,367,840 shares owned by both Trusts and BRR Holding, LLC.

(6) Includes 648,496 shares of common stock owned by Craven House Capital North America LLC but excludes 640,000 shares of common stock issuable upon the exercise of warrants at an exercise price of $2.41.

(7) Includes 1,050 shares of common stock, 500 shares of common stock issuable upon the exercise of warrants at an exercise price of $125.00 and 333 shares of common stock issuable upon the exercise of options at an exercise price of $10.00 that are currently exercisable or become exercisable within 60 days after the record date of April 28, 2017. This amount excludes 167 options that are not exercisable 60 days after the record date of April 28, 2017.

(8) Includes 100 shares of common stock, 100 shares of common stock issuable upon the exercise of warrants at an exercise price of $125.00, and 333 shares of common stock issuable upon the exercise of options at an exercise price of $10.00 that are currently exercisable or become exercisable within 60 days after the record date of April 28, 2017. This amount excludes 167 options that are not exercisable 60 days after the record date of April 28, 2017.

(9) Includes 1,100 shares of common stock, 1,000 shares of common stock issuable upon the exercise of warrants at an exercise price of $125.00, and 333 shares of common stock issuable upon the exercise of options at an exercise price of $10.00 that are currently exercisable or become exercisable within 60 days after the record date of April 28, 2017. This amount excludes 167 options that are not exercisable 60 days after the record date of April 28, 2017.

(10) Includes 180 shares of common stock, 600 shares of common stock issuable upon the exercise of warrants at an exercise price of $125.00, and 333 shares of common stock issuable upon the exercise of options at an exercise price of $10.00 that are currently exercisable or become exercisable within 60 days after the record date of April 28, 2017. This amount excludes 167 options that are not exercisable 60 days after the record date of April 28, 2017.

~~(11) Includes 2,600 shares of common stock.~~

(12) Includes 833 shares of common stock issuable upon the exercise of options at an exercise price of $125.00 that are currently exercisable or become exercisable within 60 days after the record date of April. This amount excludes 9,167 options that are not exercisable 60 days after the record date of April 28, 2017.

(13) Includes 413 shares of common stock issuable upon the exercise of options at an exercise price of $125.00 that are currently exercisable or become exercisable within 60 days after the record date of April.

~~PROXY~~ ~~STATEMENT~~

~~OTHER MATTERS~~

Our Board does not know of any other matters that are to be presented for action at the Special Meeting. However, if any other matters properly come before the Special Meeting or any adjournment(s) thereof, it is intended that the enclosed proxy will be voted in accordance with the judgment of the persons voting the proxy.

~~ADDITIONAL INFORMATION ABOUT US~~

If you would like to receive further information about LM Funding America, Inc., please visit our website at www.lmfunding.com. The “Investors” section of our website contains management presentations, financial information, stock quotes and links to our filings with the SEC.

A copy of our annual report on Form 10-K for the fiscal year ended December 31, 2017, and our quarterly report on Form 10- Q for the quarterly period ended September 30, 2018, including the financial statements, but not including exhibits, will be provided at no charge to each person to whom this Proxy Statement is delivered on the written request of such person addressed to LM Funding America, Inc., Attn: Investor Relations, 302 Knights Run Avenue, Suite 1000, Tampa, Florida 33602, or by contacting Investor Relations at (813) 222-8996 or through our website at ~~www.lmfunding.com or www.proxydocs.com/lmfa.~~

You may read without charge, and copy at prescribed rates, all or any portion of the Proxy Statement or any reports, statements or other information in the files at the public reference facilities of the SEC’s principal office at Room 1580, 100 F Street, N.E., Washington, D.C., 20549. You can request copies of these documents on payment of a duplicating fee by writing to the SEC. You may call the SEC at 1-800-SEC-0330 for further information on the operation of its public reference rooms. Our filings are also available on the Internet website maintained by the SEC at ~~www.sec.gov~~.

In this Proxy Statement, we state that information and documents are available on our website. These references are merely intended to suggest where our stockholders may obtain additional information. The materials and other information presented on our website are not incorporated in and should not otherwise be considered part of this Proxy Statement.

~~INCORPORATION BY REFERENCE~~

We are incorporating by reference specified documents that we file with the SEC, which means that incorporated documents are considered part of this Proxy Statement. We are disclosing important information to you by referring you to those documents and information we subsequently file with the SEC will automatically update and supersede information contained in this Proxy Statement and in our other filings with the SEC. This document incorporates by reference the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed on April 17, 2018, and the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2018, filed on November 14, 2018.

~~Annex A~~

~~SENIOR SECURED CONVERTIBLE NOTE~~

NEITHER THIS NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THIS NOTE MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE SECURITIES ACT. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTION 13 HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(ii) OF THIS NOTE.

~~LM FUNDING AMERICA, INC.~~

~~Senior Convertible Promissory Note~~

~~Issuance Date: January 16, 2019Original Principal Amount: U.S. $3,581,982.16~~

~~FOR VALUE RECEIVED, LM FUNDING AMERICA, INC., a corporation incorporated and existing under the laws of Delaware (the “Company”), hereby promises to pay to the order of Craven House Capital North America LLC, a Florida limited liability company or its registered assigns (“Holder”) the amount set out above as the Original Principal Amount (as reduced pursuant to the terms hereof, the “Principal”) when due, whether upon the Maturity Date (as defined below), acceleration, or otherwise (in each case in accordance with the terms hereof) and to pay interest (“Interest~~”) on any outstanding Principal (as defined below) (as such interest on any outstanding Principal may be reduced pursuant to the terms hereof) at the applicable Interest Rate (as defined below) from the date set out above as the Issuance Date (the “~~IssuanceDate~~”) until the same becomes due and payable, whether upon the Maturity Date or acceleration, or otherwise (in each case in accordance with the terms hereof). This Senior Secured Convertible Promissory Note (this “~~Note”, including all Notes issued in exchange, transfer or replacement hereof, collectively, the “Notes~~”) is issued pursuant to the Purchase Agreement (as defined below) on the Closing Date (as defined below). Certain capitalized terms used herein are defined in Section 24. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed thereto in the Purchase Agreement.

1.~~PAYMENTS OF INTEREST AND PRINCIPAL; PREPAYMENT~~.

~~(a)~~On the Maturity Date and unless this Note is earlier converted pursuant to Section 3 hereof, the Company shall pay to the Holder an amount in cash representing all outstanding Principal, accrued and unpaid Interest and accrued and unpaid Late Charges (as defined in Section 19(c)) on such Principal and Interest).

~~(b)~~The Company may not prepay all or any portion of the outstanding Principal, accrued and unpaid Interest and accrued and unpaid Late Charges other than in accordance with this Note or as agreed to in writing by the Holder.

2.~~INTEREST; INTEREST RATE~~.

~~(a)~~Interest on this Note shall commence accruing on the Issuance Date, shall accrue daily at the Interest Rate on the outstanding Principal amount from time to time, shall be computed on the basis of a 360-day year and twelve 30-day months and shall be payable in cash to the Holder on the Maturity Date unless earlier converted pursuant to Section 3.

~~(b)~~From and after the occurrence and during the continuance of any Event of Default, the Interest Rate shall automatically be increased to twelve percent (12.0%) per annum. In the event that such Event of Default is subsequently cured, the adjustment referred to in the preceding sentence shall cease to be effective as of the date of such cure; provided that the Interest as calculated and unpaid at such increased rate during the continuance of such Event of Default shall continue to apply to the extent relating to the days after the occurrence of such Event of Default through and including the date of such cure of such Event of Default.

3.~~CONVERSION~~.

~~(a)Conversion Right~~. From and after a Stockholder Approval, the Holder shall have the right at any time on or before the Maturity Date, to convert all or any part of the outstanding and unpaid Principal and accrued and unpaid Interest of this Note into fully paid and non-assessable Common Shares (“~~Conversion Shares”) at the Conversion Price (a “Conversion”). Any amounts owed to the Holder pursuant to Section 3(c)(vii) hereof shall be paid in cash. The term “Conversion Price~~” means, with respect to any Conversion of this Note, $2.41 for each Common Share, subject to adjustment as set forth below. For the avoidance of doubt, Common Shares shall be deemed to include any shares of capital stock or other securities of the Company into which such Common Shares shall hereafter be changed or reclassified. In addition, from and after a Stockholder Approval and so long as no Event of Default has occurred and is continuing, the Company shall have the right to effect a Conversion all, but not less than all, of this Note (a “~~Company Conversion”).~~

~~(b)Authorization of Conversion Shares~~. The Company covenants that during the period the conversion right exists, the Company will reserve from its authorized and unissued Common Shares a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Shares upon the full conversion of this Note. The Company is required at all times to have authorized and reserved the number of Common Shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Note in effect from time to time) (the “~~Reserved Amount~~”). The Reserved Amount shall be increased from time to time in accordance with the Company’s obligations hereunder. The Company represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Company shall issue any securities or make any change to its capital structure which would change the number of Common Shares into which this Note shall be convertible at the then current Conversion Price, the Company shall at the same time make

~~A - 1~~

proper provision so that thereafter there shall be a sufficient number of Common Shares authorized and reserved, free from preemptive rights, for conversion of this Note. The Company agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for Common Shares in accordance with the terms and conditions of this Note.

~~(c)Method of Conversion~~.

~~(i)Mechanics of Conversion~~. Subject to Section 3(b), this Note may be converted by the Holder in whole or in part (or by the Company in whole) at any time on or after the Company has received shareholder approval for the Conversion, by (A) submitting to the other party a notice of conversion (the “~~Notice of Conversion”) (by facsimile, e-mail or other reasonable means of communication dispatched on the date of Conversion (the “Conversion Date”) prior to 5:00 p.m., New York, New York time) and surrendering this Note at the principal office of the Company.~~

~~(ii)Surrender of Note Upon Conversion~~. Notwithstanding anything to the contrary set forth herein, upon Conversion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless the entire unpaid principal amount of this Note is so converted. The Holder and the Company shall maintain records showing the principal amount so converted and the dates of such Conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such records of the Company shall, ~~prima facie,~~ be controlling and determinative in the absence of manifest error. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount stated on the face hereof.

~~(iii)Payment of Taxes~~. The Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of Common Shares or other securities or property on conversion of this Note in a name other than that of the Holder (or in street name), and the Company shall not be required to issue or deliver any such units or other securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such units are to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Company the amount of any such tax or shall have established to the satisfaction of the Company that such tax has been paid.

~~(iv)Delivery of Common Shares Upon Conversion~~. Upon receipt by the Company from the Holder, or receipt by Holder from the Company, of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 3, the Company shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Shares issuable upon such conversion within two (2) Business Days after such receipt (the “~~Deadline”) (and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof.~~

~~(v)Obligation of Company to Deliver Common Shares~~. Upon receipt by the Company or Holder of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Shares issuable upon such conversion, the outstanding Principal and the amount of accrued and unpaid Interest on this Note shall be reduced to reflect such Conversion, and, unless the Company defaults on its obligations under this Section 3, all rights with respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Shares or other securities, cash or other assets, as herein provided, on such Conversion. If a Notice of Conversion is delivered as provided herein, the Company’s obligation to issue and deliver the certificates for Common Shares shall be absolute and unconditional irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Company to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Company, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice of Conversion is received by the Company before 5:00 p.m., New York, New York time, on such date.

~~(vi)Failure to Deliver Common Shares Prior to Deadline~~. Without in any way limiting the Holder’s right to pursue other remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Shares issuable upon conversion of this Note is not delivered by the Deadline the Company shall pay to the Holder $1,000 per day in cash, for each day beyond the Deadline that the Company fails to deliver such Common Shares. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Company by the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common Shares in accordance with the terms of this Note. The Company agrees that the right to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly, the parties acknowledge that the liquidated damages provision contained in this Section 3(c)(vi) are justified.

~~(d)Status as Shareholders~~. Upon submission of a Notice of Conversion by the Holder or the Company, (i) the Common Shares covered thereby shall be deemed converted into Common Shares and (ii) the Holder’s rights as a holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such Common Shares and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Company to comply with the terms of this Note. Notwithstanding the foregoing, if the Holder has not received certificates for all Common Shares prior to the tenth (10th) Business Day after the expiration of the Deadline with respect to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common Shares by so notifying the Company) the Holder shall regain the rights of a holder of this Note with respect to such unconverted portions of this Note and the Company shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the Holder shall retain all of its rights and remedies.

4.~~RIGHTS UPON EVENT OF DEFAULT~~.

~~(a)Event of Default. Each of the following events shall constitute an “Event of Default~~”:

~~(i)~~the Company’s or any of its subsidiary’s failure to pay to the Holder any amount of Principal, Interest, Late Charges or other amounts when and as due under this Note or any other Transaction Document (as defined in the Note Purchase

~~A - 2~~

Agreement) or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby, except, in the case of a failure to pay Interest and Late Charges when and as due, in which case only if such failure remains uncured for a period of at least five (5) Business Days;

~~(ii)~~the occurrence of any default under, redemption of or acceleration prior to maturity of an aggregate of any Indebtedness of the Company or any of its Subsidiaries in excess of $100,000, or the occurrence or existence of any event of default for which the Company has received a notice from the lender under any outstanding loan or credit facility in connection with a breach of a financial covenant set forth in the governing agreement of such loan or credit facility which has not been cured within twenty (20) Business Days;

~~(iii)~~bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not be dismissed within thirty (30) days of their initiation;

~~(iv)~~the commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree, order, judgment or other similar document in respect of the Company or any Subsidiary in an involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal, state or foreign law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts, or the occurrence of any other similar federal, state or foreign proceeding, or the admission by it in writing of its inability to pay its debts generally as they become due, the taking of corporate action by the Company or any Subsidiary in furtherance of any such action or the taking of any action by any Person to commence a Uniform Commercial Code foreclosure sale or any other similar action under federal, state or foreign law;

~~(v)~~the entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of a voluntary or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt or insolvent, or approving as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition of or in respect of the Company or any Subsidiary under any applicable federal, state or foreign law or (iii) a decree, order, judgment or other similar document appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree, order, judgment or other similar document or any such other decree, order, judgment or other similar document unstayed and in effect for a period of thirty (30) consecutive days;

~~(vi)~~a final judgment or judgments for the payment of money aggregating in excess of $50,000 are rendered against the Company and/or any of its Subsidiaries and which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $50,000 amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance of such judgment;

~~(vii)~~the Company and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay, when due, or within any applicable grace period, any payment with respect to any Indebtedness in excess of $25,000 due to any third party (other than, with respect to unsecured Indebtedness only, payments contested by the Company and/or such Subsidiary (as the case may be) in good faith by proper proceedings and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP) or is otherwise in breach or violation of any agreement for monies owed or owing in an amount in excess of $25,000, which breach or violation permits the other party thereto to declare a default or otherwise accelerate amounts due thereunder, or (ii) suffer to exist any other circumstance or event that would, with or without the passage of time or the giving of notice, result in a default or event of default under any material agreement binding the Company or any Subsidiary, which default or event of default would or is likely to have a material adverse effect on the business, assets, operations (including results thereof), liabilities, properties, condition (including financial condition) or prospects of the Company or any of its Subsidiaries, taken as a whole; provided, however, that in the case of foregoing clauses (i) and (ii), only if such failure, circumstance, or breach remains uncured for a period of five (5) consecutive Business Days after receipt of written notice of such breach;

~~(viii)~~other than as specifically set forth in another clause of this Section 4(a), the Company or any Subsidiary breaches any material representation, warranty, covenant or other term or condition of any Transaction Document, except, in the case of a breach of a covenant or other term or condition that is curable, only if such breach remains uncured for a period of five (5) consecutive Business Days after receipt of written notice of such breach;

~~(ix)~~the Company’s issuance, offer, sale, grant of any option or right to purchase, or other disposition (or any announcement in connection with any of the foregoing) of any equity security or any equity-linked or related security (including, without limitation, any “equity security” (as that term is defined under Rule 405 promulgated under the Securities Act)), or any Convertible Securities, without the prior written consent of the Holder, except to the extent allowed under any existing agreements of the Company. “~~Convertible Securities~~” means any capital stock, note, debenture, preferred stock or other security of the Company or any of its Subsidiaries that is, or may become, at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any capital stock, note, debenture or other security of the Company (including, without limitation, Common Shares) or any of its Subsidiaries; or

~~(x)any Change of Control occurs.~~

~~(b)Remedies Upon Event of Default. Upon the occurrence of an Event of Default with respect to this Note, Holder~~

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may, at Holder’s option, declare the full amount of this Note immediately due and payable without notice or demand. In the event of the occurrence of an Event of Default and in addition to all other rights and obligations set forth herein, the Company shall be responsible for reasonable attorneys’ fees, and legal and other expenses for the collection thereof. In addition, the Company hereby waives presentment, demand for payment, notice of dishonor, and all other notices or demands in connection with the delivery, acceptance, performance, default or endorsement of this Note.

5.~~RIGHTS UPON FUNDAMENTAL TRANSACTION~~. The Company shall not enter into or be party to a Fundamental Transaction unless the Holder approves the Fundamental Transaction and the Successor Entity assumes in writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of this Section 5 pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental Transaction, including agreements to deliver to each holder of the Note, in exchange for such Note, a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Note, including, without limitation, having a principal amount and interest rate equal to the principal amounts then outstanding and the interest rates of the Note held by such holder, and having similar ranking to the Note, and satisfactory to the Holder. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. Notwithstanding the foregoing, the Holder may elect, at its sole option, by delivery of written notice to the Company to waive this Section 5 to permit the Fundamental Transaction without the assumption of this Note. The provisions of this Section 5 shall apply similarly and equally to successive Fundamental Transactions.

6.~~SECURITY INTEREST.~~ ~~This Note is secured by a security interest in all of the assets of the Company.~~

7.~~NONCIRCUMVENTION~~. The Company hereby covenants and agrees that the Company will not, by amendment of its articles of incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the rights of the Holder of this Note.

8.~~CERTAIN ADJUSTMENTS~~. ~~The Conversion Price and number of Conversion Shares issuable upon conversion of this Note are subject to adjustment from time to time as set forth in this Section 8.~~

~~(a)~~ ~~Common Share Dividends and Splits~~. If the Company, at any time while this Note is outstanding, (i) pays a dividend on its Common Shares or otherwise makes a distribution on any class of capital stock that is payable in Common Shares, (ii) subdivides its outstanding Common Shares into a larger number of units, (iii) combines its outstanding Common Shares into a smaller number of units, or (iv) otherwise conducts a corporate action or transaction to change the number of outstanding Common Shares, including any reorganization, recapitalization, or other transaction similar to (i) through (iii), then in each such case the Conversion Price shall be multiplied by a fraction, the numerator of which shall be the number of Common Shares outstanding immediately before such event and the denominator of which shall be the number of Common Shares outstanding immediately after such event. Any adjustment made pursuant to this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution or the effective date of such subdivision or combination, as applicable.

~~(b)Subsequent Rights Offerings~~. If the Company, at any time while this Note is outstanding, shall issue rights, options or warrants to all holders of the Common Shares entitling them to subscribe for or purchase Common Shares (the “~~Purchase Rights~~”), then, upon any conversion of this Note, the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights that the Holder could have acquired if the Holder had held the number of Conversion Shares issued upon such conversion of this Note immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of the Common Shares are to be determined for the grant, issue or sale of such Purchase Rights.

~~(c)Pro Rata Distributions~~. If the Company, at any time while this Note is outstanding, shall distribute to all holders of Common Shares evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security other than Common Shares (a “~~Distribution~~”), then, upon any conversion of this Note, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of Conversion Shares issued upon such conversion of this Note immediately before the date on which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of Common Shares are to be determined for the participation in such Distribution.

~~(d)Fundamental Transactions~~. If, at any time while this Note is outstanding (i) the Company effects any Fundamental Transaction in accordance with Section 5 herein, then the Holder shall have the right thereafter to receive, upon the Conversion, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the Conversion Shares then issuable upon conversion in full of this Note without regard to any limitations on exercise contained herein (the “~~Alternate Consideration”);~~ ~~provided~~, ~~however~~, that such limitations on exercise shall continue to apply upon the occurrence of such Fundamental Transaction. The provisions of this paragraph (b) shall similarly apply to subsequent transactions analogous to a Fundamental Transaction.

~~(e)Calculations. All calculations under this Section 8 shall be made to the nearest cent or the nearest 1/100~~^th of a unit, as applicable. The number of Common Shares outstanding at any given time shall not include units owned or held by or for the account of the Company, and the sale or issuance of any such units shall be considered an issue or sale of Common Shares.

9.~~VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law and as expressly provided in this Note.~~

~~10.COVENANTS. Until the Note has been redeemed, paid, converted or otherwise satisfied in accordance with its terms:~~

~~(a)Rank. All payments due under the Note shall be rank senior in payment to all other unsecured and subsequently secured Indebtedness of the Company and its Subsidiaries.~~

~~A - 4~~

~~(b)Additional Capital~~. The Company shall not, without Holder’s consent, raise additional capital from a third party, including through the sale and issuance of any securities of the Company or any additional Indebtedness of the Company other than in the ordinary course of business consistent with past practice.

~~(c)Fundamental Transactions. The Company shall not, without the Holder’s consent, enter into a Fundamental Transaction.~~

~~(d)Restricted Payments~~. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness, whether by way of payment in respect of principal of (or premium, if any) or interest on, such Indebtedness if at the time such payment is due or is otherwise made or, after giving effect to such payment, (i) an event constituting an Event of Default has occurred and is continuing or (ii) an event that with the passage of time and without being cured would constitute an Event of Default has occurred and is continuing.

~~(e)Restricted Issuances~~. The Company shall (i) only incur additional Indebtedness after the Closing Date in accordance with Section 10(a) or (b), above, and (ii) not issue any other securities that would cause a breach or default under this Note.

~~(f)Restriction on Redemption and Cash Dividends~~. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital stock (other than any obligations to do so outstanding as of the Issuance Date).

~~(g)Restriction on Transfer of Assets~~. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, sell, lease, license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any material assets or rights of the Company or any Subsidiary owned or hereafter acquired whether in a single transaction or a series of related transactions, other than (i) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or rights by the Company and its Subsidiaries in the ordinary course of business and (ii) sales of inventory in the ordinary course of business. Notwithstanding the foregoing, this provision shall not apply to any transactions pursuant to a binding agreement existing on the date hereof.

~~(h)Change in Nature of Business~~. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, engage in any material line of business substantially different from those lines of business conducted by the Company and each of its Subsidiaries on the Issuance Date or any business substantially related or incidental thereto. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify its or their corporate structure or purpose.

~~(i)Preservation of Existence, Etc.~~ The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary.

~~(j)Maintenance of Properties, Etc.~~ The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties which are necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear and tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions of all leases to which it is a party as lessee or under which it occupies property, so as to prevent any material loss or forfeiture thereof or thereunder.

~~(k)Maintenance of Intellectual Property~~. The Company will, and will cause each of its Subsidiaries to, take all reasonable action necessary or advisable to maintain all of the Intellectual Property Rights of the Company and/or any of its Subsidiaries that are necessary or material to the conduct of its business in full force and effect.

~~(l)Maintenance of Insurance~~. The Company shall maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent and business interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business, in such amounts and covering such risks as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated.

~~(m)Material Transactions with Affiliates~~. Without the consent of Holder, the Company shall not, nor shall it permit any of its Subsidiaries to, enter into, renew, extend or be a party to, any material transaction or series of related material transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any affiliate except in the ordinary course of business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable arm’s length transaction with a Person that is not an affiliate thereto.

~~11.PARTICIPATION. The Holder, as the holder of this Note, shall not be entitled to any dividends paid or distributions made to the holders of Common Shares.~~

~~12.AMENDING THE TERMS OF THIS NOTE. The prior written consent of the Holder shall be required for any change or amendment to this Note.~~

~~13.TRANSFER~~. This Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company, subject only to the provisions of Section 14(a) below and Section 5 of the Purchase Agreement.

~~14.REISSUANCE OF THIS NOTE~~.

~~(a)Transfer~~. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 14(d)), registered as the Holder

~~A - 5~~

may request, representing the outstanding Principal being transferred by the Holder and, if less than the entire outstanding Principal is being transferred, a new Note (in accordance with Section 14(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this Section 14(a), following redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note.

~~(b)Lost, Stolen or Mutilated Note~~. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 14(d)) representing the outstanding Principal.

~~(c)Note Exchangeable for Different Denominations~~. This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Note or Notes (in accordance with Section 14(d) and in principal amounts of at least $1,000) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.

~~(d)Issuance of New Notes~~. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding (or in the case of a new Note being issued pursuant to Section 14(a) or Section 14(c), the Principal designated by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges on the Principal and Interest of this Note, from the Issuance Date.

~~15.REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF~~. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Note.

~~16.PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS~~. If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements. The Company expressly acknowledges and agrees that no amounts due under this Note shall be affected, or limited, by the fact that the purchase price paid for this Note was less than the original Principal amount hereof.

~~17.CONSTRUCTION; HEADINGS~~. This Note shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note. Each and every reference to unit prices, Common Shares and any other numbers in this Note that relate to the Common Shares shall be automatically adjusted for stock splits, stock dividends, stock combinations and other similar transactions that occur with respect to the Common Shares after the date of this Note. Terms used in this Note but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to in writing by the Holder.

~~18.FAILURE OR INDULGENCE NOT WAIVER~~. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.

~~19.NOTICES; CURRENCY; PAYMENTS~~.

~~(a)Notices~~. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with Section 9(f) of the Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefore.

~~(b)Currency. All dollar amounts referred to in this Note are in United States Dollars (“U.S. Dollars”), and all amounts owing under this Note shall be paid in U.S. Dollars.~~

~~(c)Payments~~. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise expressly set forth herein, such payment shall be made in lawful money of the United States of America by a certified check drawn on the account of the Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing, provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available funds by providing

~~A - 6~~

the Company with prior written notice setting out such request and the Holder’s wire transfer instructions. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day. Any amount of Principal or other amounts due under the Transaction Documents which is not paid when due (solely to the extent such amount is not then accruing interest at the Default Rate) shall result in a late charge being incurred and payable by the Company in an amount equal to simple interest on such amount at the rate of twelve percent (12.0%) per annum from the date such amount was due until the same is paid in full (“~~Late Charge”).~~

~~20.CANCELLATION~~. After all Principal, accrued Interest, Late Charges and other amounts at any time owed on this Note have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.

~~21.WAIVER OF NOTICE~~. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Purchase Agreement.

~~22.GOVERNING LAW; VENUE~~. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of Florida, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Florida or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Florida. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Hillsborough County, Florida, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Note. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

~~23.MAXIMUM PAYMENTS~~. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.

~~24.CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:~~

~~(a)~~“~~Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.~~

~~(b)~~“~~Change of Control~~” means any Fundamental Transaction other than (i) any merger of the Company or any of its, direct or indirect, wholly-owned Subsidiaries with or into Holder or any affiliate of Holder, (ii) any reorganization, recapitalization or reclassification of the Common Shares in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of the voting power of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification, or (iii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company or any of its Subsidiaries.

~~(e)~~“~~Closing Date” is the date the Company initially issued the Note.~~

~~(c)~~“~~Common Shares~~” means (i) shares of the Company’s common stock, US$0.0001 par value per share, and (ii) any capital stock into which such common shares shall have been changed or any share capital resulting from a reclassification of such common shares.

~~(d)~~“~~Fundamental Transaction~~” means that (i) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related transactions, (1) consolidate or merge with or into (whether or not the Company or any of its Subsidiaries is the surviving corporation) any other Person, or (2) sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its respective properties or assets to any other Person, or (3) allow any other Person to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of Voting Stock of the Company held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (4) consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other Person whereby such other Person acquires more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of Voting Stock of the Company held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination), or (ii) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Voting Stock of the Company. Fundamental Transaction shall not mean any transaction involving the Company and any one or more of its affiliates, Subsidiaries, or any of their respective officers or directors or the affiliates of officers or directors of the Company, and it shall not mean the transactions contemplated by the Purchase Agreement and this Note.

~~A - 7~~

~~(i)~~“~~GAAP” means United States generally accepted accounting principles, consistently applied.~~

~~(j)~~“~~Indebtedness” shall have the meaning set forth in the Purchase Agreement.~~

~~(k)~~“~~InterestRate” means three percent (3%) per annum, simple interest, as may be adjusted from time to time in accordance with Section 2(b).~~

~~(l)~~“~~MaturityDate~~” shall mean 360 days from the Closing Date; provided, however, the Maturity Date may be extended at the option of the Holder (i) in the event that, and for so long as, an Event of Default shall have occurred and be continuing or any event shall have occurred and be continuing that with the passage of time and the failure to cure would result in an Event of Default or (ii) through the date that is twenty (20) Business Days after the consummation of a Fundamental Transaction in the event that a Fundamental Transaction is publicly announced or a Fundamental Transaction Notice is delivered prior to the Maturity Date.

~~(m)~~“~~Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person.~~

~~(n)~~“~~Person~~” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.

~~(o)~~“~~Purchase Agreement” means that certain Purchase Agreement, dated as of the Closing Date, by and between the Company and the Holder pursuant to which the Company issued this Note, as may be amended from time to time.~~

~~(r)~~“~~Purchase Agreement~~” means that certain Stock Purchase Agreement, dated as of the Closing Date, by and between the Company and the Holder pursuant to which the Company issued this Note, as may be amended from time to time.

~~(s)~~“~~Stockholder Approval~~” shall mean such approvals by the Company’s stockholders of the transactions contemplated by the Purchase Agreement and this Note as shall be required by Nasdaq Listing Rule 5635 (or any successor rule or provision).

~~(t)~~“~~Subsidiaries” means subsidiaries of the Company.~~

~~(u)~~“~~Successor Entity~~” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered into.

~~(v)~~“~~Voting Stock~~” of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers, trustees or other similar governing body of such Person (irrespective of whether or not at the time capital stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

[~~signature page follows~~]

~~A - 8~~

~~IN WITNESS WHEREOF, the Company has caused this Senior Convertible Promissory Note to be duly executed as of the Issuance Date set out above.~~

	~~LM FUNDING AMERICA, INC.~~

	~~By:~~	~~/s/ Bruce M. Rodgers~~
		~~Name: Bruce M. Rodgers~~
		~~Title: Chief Executive Officer~~

~~A -~~ 9,

~~Instructions:~~

~~Please complete the form below as needed to indicate the action desired for owned issues.~~

All submissions must be on the participant’s letterhead and must have that participant’s medallion stamp. You must submit completed forms via the WINS application. A user guide to the process can be found here:

~~http://www.dtcc.com/~/media/Files/Downloads/Settlement-Asset-Services/Issuer%20Services/WINS-User-Guide-Demand-and~~- ~~Dissents.pd~~f

~~For questions or additional forms, send requests via electronic mail to:~~

~~demandanddissent@dtcc.com~~

~~By:/s/ Bruce M. Rodgers~~

~~Bruce M. Rodgers~~

~~Chief Executive Officer~~

~~A - 10~~

entitled to vote at the Special Meeting of Stockholders to be held at 2:00 p.m., Eastern Time on April [ ], 2019 at 302 Knights Run Avenue, Suite 1000 Tampa, FL 33602, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations. Address change/comments: (If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side

~~LM FUNDING AMERICA, INC.~~

~~312 KNIGHTS RUN AVE., SUITE 1000~~

~~TAMPA, FL 33602~~

~~VOTE BY INTERNET- www.proxyvote.com~~

~~Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on 04/07/2019.~~ 2021. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS

If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.

VOTE BY PHONE - 1-800-690-6903

Use any touch-tone telephone to transmit your voting ~~instructions. Vote by~~instructions up until 11:59 ~~P.M. ET~~p.m. Eastern Time on ~~04/07/2019.~~December 9, 2021. Have your proxy card in hand when you call and then follow the instructions.

VOTE BY MAIL

Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

KEEP THIS PORTION FOR YOUR RECORDS

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

D62530-P63649

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

DETACH AND RETURN THIS PORTION ONLY

LM FUNDING AMERICA, INC.

For Withhold

For All

To withhold authority to vote for any individual

The Board of Directors recommends you vote FOR the following:

All

Except

nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below.


1.	To elect two Class II directors to hold office for a three-year
	term ending at the third annual meeting of stockholders
	following their election;
	Nominees:
	01) Douglas I. McCree	The Board of Directors recommends you vote 3 Years Year	2 Years	1	Abstain
	02) Mr. Joel E. Rodgers	3 years on the following proposal:

The Board of Directors recommends you vote FOR

proposals 2 through 5.

For Against Abstain

To conduct an advisory vote on the frequency of future advisory votes on the compensation of our named executive officers; and

2.To ratify the appointment of Malone Bailey LP as the

company's independent auditor to audit the company's

2021 financial statements;

To approve an amendment to the company's Certificate of Incorporation, as amended, to increase the number of the company's authorized shares of common stock, par value $0.001 per share, from 30,000,000 to 350,000,000 shares and to increase the number of the company's authorized shares of preferred stock, par value $0.001 per share, from 5,000,000 to 150,000,000 shares;

4.To approve the LM Funding America, Inc. 2021 Omnibus

Incentive Plan;

5.To conduct an advisory vote on the compensation of

our named executive officers as disclosed in the proxy

statement;

NOTE: Such other business as may properly come before the meeting or any adjournment thereof.

Yes No

Please indicate if you plan to attend this meeting

Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor,

administrator, or other fiduciary, please give full title as such. Joint owners should each sign

personally. All holders must sign. If a corporation or partnership, please sign in full corporate or

partnership name by authorized officer.

Signature [PLEASE SIGN WITHIN BOX]DateSignature (Joint Owners)Date

TO~~VOTE~~,~~MAR~~K~~BLOCK~~S~~BELO~~WIN ~~BLU~~EOR~~BLAC~~KINKAS~~FOLLOWS:~~Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:

~~THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.~~

The Notice and Proxy Statement and Form 10-K are available at ~~KEE~~www.proxyvote.comP~~THI~~S ~~PORTIO~~NFOR~~YOU~~R~~RECORDS DETAC~~HAND~~RETUR~~N ~~THI~~S ~~PORTIO~~N~~ONLY~~

~~The Board of Directors recommends you vote FOR~~

~~proposals 1 and 2.ForAgainst Abstain~~

Approve the issuance of shares of the Company's common stock upon conversion of the Senior Convertible Promissory Note dated January 16, 2019 pursuant to NASDAQ Listing Rules 5635(b) and 5635(d) (the "NASDAQ Proposal")

The approval of an adjournment of the Special Meeting, if necessary or appropriate, to establish a quorum or to permit further solicitation of proxies for proposal 1 if there are not sufficient votes at the Special Meeting cast in favor of one or both.

~~NOTE:~~ ~~Such other business as may properly come before the meeting or any adjournment thereof.~~

☐☐☐

~~For address change/comments, mark here.~~D62531-P63649

☐

~~(see reverse for instructions)Yes~~No

~~Please indicate if you plan to attend this meeting~~☐☐

Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.

~~0000401325_1 R1.0.1.18~~

~~Signatur~~e~~[PLEAS~~E ~~SIG~~N~~WITHI~~N~~BOX]~~

~~Date~~

~~Signatur~~e ~~(Join~~t ~~Owners)~~

~~Date~~

~~A - 11~~

~~0000401325_2 R1.0.1.18~~

~~ImportantNotice Regardingthe Availabilityof Proxy Materials for the SpecialMeeting:~~

~~The Notice & Proxy Statementis available at~~ ~~www.proxyvote.com~~

LM FUNDING AMERICA, INC.

~~Special~~Annual Meeting of Stockholders

~~April 8, 2019 2:~~December 10, 2021 3:00 PM

This proxy is solicited by the Board of Directors

The undersigned hereby appoints Bruce M. Rodgers and ~~Richard Russell,~~Carollinn Gould, or either of them, as proxies, each with the power to appoint ~~his~~his/her substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of LM Funding America, Inc. that the undersigned is entitled to vote at the ~~Special~~Annual Meeting of Stockholders to be held at ~~02:~~3:00 p.m., Eastern Time on ~~April 8, 2019~~December 10, 2021 at ~~the 302 Knights Run Avenue~~1200 W Platt Street, Suite ~~1000~~100, Tampa, FL ~~33602,~~33606, and any adjournment or postponement thereof.

This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations.

~~(If~~ you ~~note~~d any ~~Addres~~s ~~Change~~s ~~and/o~~r ~~Comment~~s ~~above~~, ~~pleas~~e ~~mar~~k ~~correspondin~~g box on the ~~revers~~e ~~side.)~~

Continued and to be signed on reverse side


TIME:	3:00 p.m., local time, on Friday, December 10, 2021. Stockholders will be admitted beginning at 2:45 p.m.

PLACE:	LM Funding America, Inc. 1200 West Platt Street, Suite 100 Tampa, Florida 33606
ITEMS OF BUSINESS:	1.	To elect two Class II directors to hold office for a three-year term ending at the third annual meeting of stockholders following their election;

	2.	To ratify the appointment of Malone Bailey LP as the company’s independent auditor to audit the company’s 2021 financial statements; and
	3.	To approve an amendment to the company’s Certificate of Incorporation, as amended, to increase the number of the company’s authorized shares of common stock, par value $0.001 per share, from 30,000,000 to 350,000,000 shares and to increase the number of the company’s authorized shares of preferred stock, par value $0.001 per share, from 5,000,000 to 150,000,000 shares;

	4.	To approve the LM Funding America, Inc. 2021 Omnibus Incentive Plan;
	5. 6.	To conduct an advisory vote on the compensation of our named executive officers as disclosed in this proxy statement; To conduct an advisory vote on the frequency of future advisory votes on the compensation of our named executive officers; and
	7.	To transact such other business that may properly come before the meeting or any adjournments or postponements thereof.

RECORD DATE	Stockholders of record on October 19, 2021, are entitled to notice of the Annual Meeting and are entitled to vote at the Annual Meeting in person or by proxy.

ANNUAL REPORT	Our 2020 Annual Report to Stockholders, as amended, which is not a part of this proxy statement is enclosed.

PROXY VOTING	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.


	➢	FOR the proposal to ratify the appointment of Malone Bailey LP as the company’s independent auditor to audit the company’s 2021 financial statements;
	➢	FOR the proposal to approve an amendment to the company’s Certificate of Incorporation, as amended, to increase our authorized shares of common stock, par value $0.001 per share, from 30,000,000 to 350,000,000 sharesand to increase our authorized shares of preferred stock, par value $0.001 per share, from 5,000,000 to 150,000,000 shares.
	➢	FOR the proposal to approve the LM Funding America, Inc. 2021 Omnibus Incentive Plan.
	➢	FOR the proposal to approve, on an advisory, non-binding basis, the compensation of our named executive officers.
	➢ ➢	FOR the proposal to approve, on an advisory, non-binding basis, the compensation of our named executive officers every three years. FOR the authority to transact such other business as may properly come before the stockholders at the Annual Meeting.

	2020		2019
Audit Fees (1)	$	124,400	122,000
Audit Related Fees		-	-
Tax Fees		-	-
All Other Fees (2)		33,575	8,076
Total	$	157,975	130,076


Shares Reserved for Issuance Upon Exercise of Options Previously Granted Under our 2015 Omnibus Incentive Plan	3,860
Shares Reserved for Future Issuance Under our 2015 Omnibus Incentive Plan	5,000,000
Shares Reserved for Issuance Upon Exercise of Outstanding Warrants	7,872,940
TOTAL SHARES OF COMMON STOCK RESERVED FOR ISSUANCE AS OF OCTOBER 25, 2021	12,876,800]

	Equity Compensation Plan Information
	(a)		(b)		(c)
Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders		3,860	$	273.40		8,140
Equity compensation plans not approved by security holders		-	$	-		-


	➢	FOR election of the following nominees for director positions:

		Fees
		Earned or
		Paid in		Option
		Cash		Awards
Name⁽¹⁾		($)(2)		($)		Total ($)
Martin A. Traber*	2020	$	60,000	$	—	$	60,000
Andrew Graham	2020	$	60,000	$	—	$	60,000
Fred Mills	2020	$	45,000	$	—	$	45,000
Douglas I. McCree	2020	$	60,000	$	—	$	60,000
Joel E. Rodgers, Sr.	2020	$	60,000	$	—	$	60,000
Frank Silcox	2020	$	—	$	—	$	—


	•	overseeing the work of our internal accounting and auditing processes;
	•	discussing with management our processes to manage business and financial risk;
	•	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;
	•	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;
	•	reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures; and
	•	conducting an appropriate review and approval of all related party transactions for potential conflict of interest situations on an ongoing basis.


	•	establishing criteria for selection of potential directors, taking into account all factors it considers appropriate;
	•	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 stockholders or, if applicable, at a special meeting of the stockholders;
	•	recommending members of the board to serve on the committees of the board;
	•	evaluating and ensuring the independence of each member of each committee of the board required to be composed of independent directors;
	•	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;
	•	developing and recommending to the board a code of conduct for our company’s directors, officers, and employees;
	•	ensuring that we make all appropriate disclosures regarding the process for nominating candidates for election to the board, including any process for stockholder 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
	•	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.

Name	Age	Title
Bruce M. Rodgers	57	Chairman, Chief Executive Officer and President
Richard Russell	60	Chief Financial Officer
Ryan Duran	37	Vice President of Operations


								Stock			Option				All Other
		Fiscal		Salary		Bonus		Awards		Awards				Compensation			Total
Name and Principal Position		Year		($)		($)		($)		($)				($)(4)			($)
Bruce Rodgers			2020	$	362,500	$	854,000	$	—	$		—		$		8,757	$	1,225,257
Chairman and CEO			2019	$	349,467	$	—	$	—	$		—		$		7,390	$	356,857
			2018	$	269,500	$	—	$	—	$		—		$		3,541	$	273,041
Richard Russell (1), (2)			2020		188,322		595,000		—			—				27,112		810,434
Chief Financial Officer			2019		193,855		—		—			—				23,273		217,128
			2018		180,000		135,000		—			26,309	(1)			20,759		362,068
Ryan Duran (3)			2020		155,769		20,000		—			—				26,618		202,387
Vice President of Operations			2019		146,923		—		—			—				22,657		169,580
			2018		132,500		—		—			8,769	(3)			19,718		160,988

(1)	(1)Includes an option to purchase 7,500 shares of common stock granted to Mr. Russell on May 29, 2018. The option has an exercise price of $10.00 per share and expires on May 29, 2028. The option vests fully in three equal annual installments on May 29, 2019, November 29, 2020 and November 29, 2021. (2)Includes an option to purchase 2,500 shares of common stock granted to Mr. Russell on November 29, 2017. The option has an exercise price of $125.00 per share and expires on November 29, 2027. The option vests fully in three equal annual installments on November 29, 2018, November 29, 2019 and November 29, 2020. (3)Includes an option to purchase 2,500 shares of common stock granted to Mr. Duran on May 29, 2018. The option has an exercise price of $10.00 per share and expires on May 29, 2028. The option vests fully in three equal annual installments on May 29, 2019, November 29, 2020 and November 29, 2021. (4)These amounts consist of: health insurance premiums paid by the company in excess of non-executive contribution and auto allowance.


			Health
			Insurance		Auto
			Premiums		Allowance
Name	Year		($)		($)		Total ($)
Bruce Rodgers		2020	$	8,757	$	—	$	7,390
		2019	$	7,390	$	—	$	7,390
		2018		3,541		—		3,541
Richard Russell		2020		27,112		—		23,273
		2019		23,273		—		23,273
		2018		20,759		—		20,759
Ryan Duran		2020		26,618		—		22,657
		2019		22,657		—		22,657
		2018		19,718		—		19,718


		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 (1)	—		—		$ —				—		—		—		—
Richard Russell (1)	500		—(1)		500.00		11/29/2027		—		—		—		—
Richard Russell	1,500		—		50.00		5/29/2028		—		—		—		—
Ryan Duran	83		—		500.00		1/2/2026		—		—		—		—
Ryan Duran	500		—(1)		50.00		5/29/2028		—		—		—		—

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percentage
5% Stockholders:	5% Stockholders:		5% Stockholders:
Bayfield Equity Partners, Ltd (9)		1,050,000		8.3%
10 Market Street Nassau Bahamas N-3901
Eva Pacific Pty Ltd (9)		1,050,000		8.3%
Level 33, 264 George Street Sydney NSW 2000, Australia
AGN Holdings Ltd (9)		1,023,000		8.1%
2^nd Floor College House 17 King Edwards Road, Ruislip London HA4 7AE, England
Mint Capital Advisors Ltd. (10)		1,040,000		8.2%
Western Road Nassau, The Bahamas
Caravel CAD Fund Ltd. (11)		900,000		7.09%
Unit 7, Building Old Fort Bay Town Centre Nassau, New Providence, The Bahamas

Executive Officers and Directors
Bruce M. Rodgers (1)		44,930		*
Carollinn Gould (1)		44,930		*
Douglas I. McCree (2)		510	*
Joel E. Rodgers, Sr. (3)		120	*
Fred Mills (4)		520	*
Frank Silcox (5)		140	*
Andrew L. Graham (6)		100	*
Richard Russell (7)		2,000	*
Ryan Duran (8)		583	*
All Executive Officers and Directors as a Group (9 individuals)		48,939		*


*	Represents less than 1% of beneficial ownership

(1)	Includes 43,825 shares beneficially owned by Bruce M. Rodgers Revocable Trust and Carol Linn Gould Revocable Trust, 853 shares beneficially owned by BRR Holding, LLC, 232 shares beneficially owned by Bruce M. Rodgers IRA, and 20 shares beneficially owned by Carollinn Gould IRA, of which 13,242 shares in the case of Bruce M. Rodgers Revocable Trust and Carol Linn Gould Revocable Trust, 150 shares in the case of BRR Holding, LLC. 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 therefore Mr. Rodgers and Ms. Gould may be deemed to have shared voting and investment power for all 44,930 shares owned by both Trusts and BRR Holding, LLC. This amount does not include 1,810,084 shares of common stock issuable upon the exercise of options at an exercise price of $5.95.00 that are currently unexercisable or don’t become exercisable within 60 days after October 19, 2021.
(2)	Includes 410 shares of common stock, and 100 shares of common stock issuable upon the exercise of options at an exercise price of $500.00 that are currently exercisable. This amount does not include 12,605 shares of common stock issuable upon the exercise of options at an exercise price of $5.95.00 that are currently unexercisable or don’t become exercisable within 60 days after October 19, 2021.
(3)	Includes 20 shares of common stock, and 100 shares of common stock issuable upon the exercise of options at an exercise price of $500.00 that are currently exercisable. This amount does not include 10,084 shares of common stock issuable upon the exercise of options at an exercise price of $5.95.00 that are currently unexercisable or don’t become exercisable within 60 days after October 19, 2021.
(4)	Includes 520 shares of common stock. This amount does not include 12,605 shares of common stock issuable upon the exercise of options at an exercise price of $5.95.00 that are currently unexercisable or don’t become exercisable within 60 days after October 19, 2021.
(5)	Includes 140 shares of common stock. This amount does not include 10,084 shares of common stock issuable upon the exercise of options at an exercise price of $5.95.00 that are currently unexercisable or don’t become exercisable within 60 days after October 19, 2021


(6)	Includes 100 shares of common stock, and 100 shares of common stock issuable upon the exercise of options at an exercise price of $500.00 that are currently exercisable. This amount does not include 12,605 shares of common stock issuable upon the exercise of options at an exercise price of $5.95.00 that are currently unexercisable or don’t become exercisable within 60 days after October 19, 2021
(7)	Includes 500 shares of common stock issuable upon the exercise of options at an exercise price of $500 that are currently exercisable or become exercisable within 60 days after November 10, 2021, includes 1,500 shares of common stock issuable upon the exercise of options at an exercise price of $50.00 that are currently exercisable or become exercisable within 60 days after October 19, 2021. This does not include 1,800,000 shares of common stock issuable upon the exercise of options at an exercise price of $5.95.00 that are currently unexercisable or don’t become exercisable within 60 days after October 19, 2021.
(8)	Includes 83 shares of common stock issuable upon the exercise of options at an exercise price of $500.00 that are currently exercisable or become exercisable within 60 days after November 10, 2021. Includes 500 shares of common stock issuable upon the exercise of options at an exercise price of $50.00 that are currently exercisable or become exercisable within 60 days after October 19, 2021. This does not include 175,000 shares of common stock issuable upon the exercise of options at an exercise price of $5.95.00 that are currently unexercisable or don’t become exercisable within 60 days after October 19, 2021.
(9)		Based on information reported on Schedule 13Ds filed on October 29, 2021.
(10)		Based on information reported on a Schedule 13G filed on November 3, 2021.
(11)		Based on information reported on a Schedule 13G filed on October 26, 2021.


~~Table of Contents~~
~~General Information~~	1
~~The Special Meeting~~	5
~~Time, Place and Purpose of the Special Meeting~~	5
~~Recommendation of the Board of Directors~~	5
~~Record Date and Quorum~~	5
~~Vote Required for Approva~~l	5
~~Shares Held by Company Directors and Executive Officers~~	5
~~Voting of Proxies~~	5
~~Revocability of Proxies~~	6
~~Adjournments and Postponements~~	6
~~Rights of Dissenting Stockholders~~	6
~~Solicitation of Proxies; Payment of Solicitation Expenses~~	6
~~Other Matters~~	6
~~Questions and Additional Information~~	6
~~Proposal 1 – THE NASDAQ PROPOSAL~~	7
~~Recommendation~~	9
~~Proposal 2 – ADJOURNMENT PROPOSAL~~	9
~~Recommendation~~	9
~~Stock Ownership Matters~~	9
~~Section 16(a) Beneficial Ownership Reporting Compliance~~	9
~~Security Ownership of Management and Certain Beneficial Owners~~	10
~~Other Matters~~	11
~~Additional Information About Us~~	11
~~Incorporation by Reference~~	11
~~Annex A – Senior Secured Convertible Note~~	~~A-1~~


	Before Note Conversion		Pro Forma for the Note Conversion
	No. of Shares	Percentage of Common	No. of Shares	Percentage of Common
Existing non-Craven Holders of Common Stock	2,486	79.3%	2,486	53.8%
Craven (1)	648	20.7%	2,135	46.2%
Total	3,134	100.0%	4,621	100.0%


Name	Number of Shares of Common Stock Owned(1)	Percent(2)
5% Stockholders:
Craven House Capital North America LLC (1)	648,496	20.7%
Hudson Bay Capital Management LP (2)	-	*
Heights Capital Management (3)	-	*
Bruce M. Rodgers Revocable Trust (4)	109,562	3.5%
Carollinn Could Revocable Trust (4)	109,562	3.5%

Directors and Executive Officers:
Bruce M. Rodgers.(5)	224,652	7.2%
Carollinn Gould(5)	224,652	7.2%
Mark J. Pajak(6)	648,496	20.7%
Douglas I. McCree(7)	1,050	*
Joel E. Rodgers, Sr(8)	100	*
Martin A. Traber(9)	1,100	*
Andrew Graham(10)	180	*
Fred Mills(11)	2,600	*
Richard Russell (12)	-	*
Ryan Duran (13)	-	*
All executive officers and directors as a group (10 persons)	878,178	28.0%
Other Beneficial Owners:
Heights Capital Management, Inc (2)	-	*
Hudson Bay Capital Management L.P. (3)	-	*