You are cordially invited to attend our Annual Shareholders’ Meeting, which will be held at 1200 Platt Street, Suite 100 Tampa, Florida 33606, on Monday, May 11, 2020, at 3 p.m., local time. Shareholders will be admitted beginning at 2:30 p.m.

The attached notice of annual meeting of shareholders and proxy statement cover the formal business of the annual meeting and contains a discussion of the matters to be voted upon at the annual meeting. At the annual meeting, our management will also provide a report on our operations and achievements during the past year.

Your vote is very important. Whether or not you plan to attend the meeting in person, please vote your shares by completing, signing and returning the accompanying proxy card, or by following the instructions on the card for voting by telephone or internet. If you later decide to attend the annual meeting and vote in person, you may revoke your proxy at that time.

We currently intend to hold the Annual Meeting in person. However, we are actively monitoring the coronavirus (COVID-19) situation, as we are sensitive to the public health and travel concerns our stockholders may have and the protocols that federal, state, and local governments and health officials may impose or recommend. In the event we determine it is not possible or advisable to hold the Annual Meeting in person, we will publicly announce alternative arrangements for the meeting as promptly as practicable before the meeting, which may include holding the meeting solely by means of remote communication (i.e., a virtual-only annual meeting). Please monitor our website at www.lmfunding.com for updated information. If you are planning to attend our meeting, please check the website prior to the meeting date.

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

100, Tampa, ~~Florida 33602~~FL 33606 • T (813) 222-8996 • F (813) 221-7909 • lmfunding.com

This proxy statement and the ~~Special Meeting~~form of ~~Stockholders~~proxy are delivered in connection with the solicitation by the Board of Directors of LM Funding America, Inc. (the “company,” “we,” or “us”), a Delaware corporation, ~~(the “Company,” “we,” “us”~~of proxies to be voted at our below-described Annual Meeting of Shareholders and at any adjournments or ~~“our”)~~postponements thereof.

You are invited to attend our Annual Meeting of Shareholders on Monday, May 11, 2020, beginning at 3 p.m., tolocal time. The Annual Meeting will be held at ~~the 302 Knights Run Ave,~~1200 West Platt Street, Suite ~~1000,~~100, Tampa, Florida ~~33602, on Apirl,8, 2019,~~33606. Shareholders will be admitted beginning at 2:0030 p.m. ~~Eastern Time (the “Special Meeting”).~~

~~We are calling~~Your vote is very important. Therefore, whether you plan to attend the ~~Special~~Annual Meeting ~~to request our stockholders to approve:~~

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

We are submitting 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”) with Craven House Capital North America, LLC, for approximately 32.2% of our Common Stock.

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. 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~~ the number of shares ~~that~~ you will be entitled to vote at the Special Meeting according to our records or the records of your broker or other nominee. The Board has determined that owners of record of the Company’s common stock at the close of business on February [ ], 2019 are entitled to notice of,own, please date, sign and ~~have the right to vote at, the Special Meeting.~~

~~On behalf of the Board and our employees, I would like to express my appreciation for your continued interest in the Company.~~

Notice is hereby given that a Special Meeting of the Stockholders 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:

~~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 [ ], 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 [ ], 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 1-888-XX-XXX using a touch-tone phone to transmit your voting instructions up until 10:59 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 ~~www.proxyvote.com~~ over the Internet to transmit your voting instructions and for electronic delivery of information up until 10:59 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 returningreturn the enclosed proxy card inpromptly or follow the ~~enclosed envelope. If you decide to attend~~instructions on the ~~Special Meeting, you~~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 ~~able to vote in person, even if you have previously submitted your proxy.~~

for the ~~Special~~Shareholder Meeting ~~of Stockholders~~ to be ~~held~~Held on ~~April [ ], 2019~~

This ~~notice of special meeting, the Proxy Statement~~proxy statement and the ~~form of proxy card~~2019 Annual Report to Shareholders are available at www.proxyvote.com. ~~On this site,~~

Upon your written request, we will provide you ~~will be able~~with a copy of our 2019 annual report on Form 10-K, including exhibits, free of charge. Send your request to ~~access these materials and any amendments or supplements to these materials that are required to be furnished to stockholders.~~LM Funding America, Inc., Attention: Bruce M. Rodgers, Chief Executive Officer, 1200 West Platt Street, Suite 100, Tampa, Florida 33606.

~~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, •1200 West Platt Street, Suite ~~1000,~~100, Tampa, Florida 33602, on April [ ], 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 February 15, 2019.FL 33606 • T (813) 222-8996 • F (813) 221-7909 • lmfunding.com

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?~~meeting?

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

~~If completed,~~ Annual Meeting are to ratify the ~~Note Conversion would reduce the principal amount~~ appointment 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~~outside auditors, elect two directors to the ~~Company if~~company’s Board of Directors, and to approve an amendment (in the ~~Note Conversion~~event it is ~~completed?~~

~~A. If~~deemed by the ~~Note Conversion is completed, our leverage, cash flow and liquidity will~~company’s Board of Directors to 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 12, 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 effectadvisable) to the ~~Note Conversion.~~

~~Q. What are the recommendations~~company’s Certificate of Incorporation, as amended, to effect a reverse stock split of the ~~Board?~~company’s issued and outstanding common stock at a ratio within the range of one-for-two (1:2) to one-for-ten (1:10), as determined by the Board of Directors. In addition, our management will report on our performance during 2019, discuss challenges ahead and respond to questions from shareholders.

~~A. The Board unanimously recommends that you vote~~ ~~FOR~~ ~~the approval~~When were these materials mailed?

Shareholders of ~~each of the Proposals. The reasons for this recommendation are more fully described below under the caption “Proposal No. 1 – The NASDAQ Proposal.”~~

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

~~A. Stockholders as of~~ the close of business on ~~February [ ], 2019 (the “Record Date”)~~the record date, March 16, 2020, 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.

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 or by proxy at the ~~Special Meeting and your shares~~Annual Meeting. In general, shareholders 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.

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.

~~A. Each record holder of Common Stock is~~ entitled to one vote per share on each matter voted upon. In an election for directors, however, shareholders 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 I directorships. Accordingly, since two directors are to be elected at this Annual Meeting, in electing directors, each share ~~held, provided, however, that holders~~will entitle the shareholder to two votes, one per director. Shareholders may not cumulate their votes. As of March 16, 2020, there were 3,234,263 common 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”.outstanding.

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.

~~A. There must be a quorum for the Special Meeting to be held. A quorum is the~~The presence at the ~~Special~~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 ~~Common~~the meeting.

If your shares are registered directly in your name with our transfer agent, V Stock ~~issued~~Transfer, LLC, then you are a “shareholder of record.” This Notice of Meeting and ~~outstanding~~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 (Matter 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 (Matter 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 ~~Special~~Annual Meeting. ~~Proxies~~

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 ~~voted “FOR,” “AGAINST” or “ABSTAIN” on a matter are treated as being~~ present ~~at the Special Meeting~~ for purposes of

~~establishing~~ determining a ~~quorum~~quorum. For the election of directors, abstentions are excluded entirely from the vote 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~~do not have any ~~broker~~effect on the outcome. Broker non-votes ~~which are described in more detail below, at the Special Meeting.~~

~~As of the close of business on February 12, 2019, there were 3,134,262 shares of our Common Stock outstanding and entitled to vote at the Special Meeting.~~

~~A. Generally, a broker non-vote occurs~~occur when a ~~bank,~~ broker or other nominee ~~that holds~~holding 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~~on a matter and has not received instructions from the beneficial ~~owners~~owner. Broker non-votes are included in the determination of the ~~shares.~~

Ifnumber of shares represented at 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~~Annual Meeting for purposes of determining whether a ~~proxy card for uninstructed shares that votes on routine matters but not on non-routine matters. Each of the NASDAQ Proposa, and the Adjournment Proposal~~quorum 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.present. If you do not provide ~~voting instructions,~~ your ~~bank,~~ broker or other nominee with instructions on how to vote your “street name” shares, your broker or nominee will not be permitted to vote ~~your~~them on nonroutine matters such as Matter No. 1. Shares subject to a broker non-vote will not be considered entitled to vote with respect to Matter No. 1 and will not affect the outcome of Matter No. 1.

~~A. The approval of the NASDAQ Proposal requires the affirmative vote of a majority of the~~in different ways. For example, you may own shares ~~of Common Stock present at the Special Meeting, in person or represented by proxy. Abstentions will have the same effect~~individually, 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,~~joint tenant, in ~~person~~an individual retirement account, in trust or ~~represented by proxy. Abstentions will have the same effect as a vote AGAINST the Adjournment Proposal.~~

~~The voting requirements for~~in one or more brokerage accounts. You should complete, sign and return each ~~proposal are more fully described below under the caption “The Special Meeting—Vote Required for Approval.”~~

~~A. We urge you to read this Proxy Statement carefully. Then mail your completed, dated and signed~~ proxy card inyou receive or follow 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~~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.

Q. What happens if I submit a proxy card and do not ~~respond or if I respond and fail to indicate my~~give specific 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.instructions?

If you ~~submit~~are a shareholder of record and sign and return the proxy card without indicating your ~~proxy but abstain from voting on one or more Proposals,~~instructions, your shares will be ~~counted~~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 ~~present~~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, by-laws, or Delaware General Corporate Law.

Abstentions and broker non-votes will be counted for the purpose of determining ifthe presence or absence of 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.

~~A. If the NASDAQ Proposal is not approved, the proposed Note Conversion~~but 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.

~~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.~~

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.

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

~~A. Although it is not expected, the Special Meeting may be adjourned or postponed~~counted for the purpose of ~~soliciting additional proxies. Any adjournment or postponement may~~determining the number of votes cast on a given proposal. The required vote for each of the proposal expected to be ~~made without notice, other than by an announcement made~~acted upon at the ~~Special~~Annual Meeting is described below:

Proposal No. 1 — Election of directors. Directors are elected by ~~approval~~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 no- 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 a majority of the votes cast on the matter affirmatively or negatively. As a result, abstentions 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 extent it is deemed by the Company’s Board of Directors to be advisable) to the Company’s Certificate of Incorporation, as amended, to effect a reverse stock split of the Company’s issued and outstanding common stock at a ratio within the range of one-for-two (1:2) to one-for-ten (1:10), as determined by the Board of Directors. This proposal must be approved by the affirmative vote 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.

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 a 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.

~~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.~~

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;~~

• 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.

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 [ ], 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.

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

~~Stockholders as of the close of business on February [ ], 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~~common stock 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~~vote. Abstentions 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 [ ], 2019, there were 3,134,262 shares of our Common Stock outstanding and entitled to vote at the Special Meeting~~

~~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~~broker non-votes 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.

All votes will be tabulated by the secretary 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~~company. We have ~~the same effect as a vote against the Adjournment Proposal. Brokers, banks~~engaged Broadridge Financial Solutions, Inc. to collect 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.tabulate proxy instructions.

As of the close of business on February [ ], 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.~~

~~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 10:59 p.m. Eastern Time on March [ ], 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 10:59

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.

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

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.

~~Although we do not expect this, we may adjourn or postpone the Special Meeting~~Who is paying 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.

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

~~We will bear all costs incurred in the solicitation of proxies, including the~~ preparation ~~printing~~ and mailing of the ~~Notice~~proxy materials and how will solicitations be made?

We will pay the expenses of ~~Availability and related proxy materials. In addition to solicitation~~soliciting proxies. Proxies may be solicited on our behalf by directors, officers or employees in person or 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.~~electronic transmission. We ~~may also make arrangements with~~have requested brokerage houses and other custodians, nominees and fiduciaries ~~for the forwarding of solicitation~~to forward soliciting material to ~~the~~ beneficial owners ~~of Common Stock held by such persons,~~ and ~~we may~~have agreed to reimburse those ~~brokerage houses and other custodians, nominees and fiduciaries~~institutions 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~~their out-of-pocket expenses.

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.

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 ~~investors@lmfunding.com.~~

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 were originally scheduled to expire at the annual meeting of shareholders in 2019 (Class I directors) 2020 (Class II directors) and 2021 (Class III directors). However, because we did not have an annual meeting of shareholders in 2019, the Class I directors will be elected at this Annual Meeting of Shareholders, with the Class II directors being elected at the next annual meeting of shareholders

following this Annual Meeting of Shareholders. Each of the Class I directors elected at this Annual Meeting will be elected to serve a three-year term.

~~Our common stock is listed on~~With the ~~NASDAQ Capital Market (“NASDAQ”) and we are subject to NASDAQ’s rules and regulations. The issuance of Common Stock upon conversion~~recommendation of the ~~Convertible Note may implicate certain~~nominating and governance committee, the Board of Directors has nominated the following persons to stand for election as Class I directors at this Annual Meeting of Shareholders, with terms expiring at the third annual meeting of shareholders following their election:

Each of the ~~NASDAQ listing standards requiring prior stockholder approval in order~~nominees for election as a director has consented to ~~maintain our listing on NASDAQ, including the following:~~

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.”~~

~~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.

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 asdetermining whether 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 duea quorum present at the ~~Conversion Price.~~ Annual Meeting.

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 inRECOMMENDATION OF THE BOARD

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

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.~~

As of February 12, 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 12, 2019:

~~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 January 31, 2019, the Note Conversion would result in the holders of the Note owning [ ] 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 [ ] 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 [ ] shares, upon the Note Conversion.CARD.

Set forth below is a summary of ~~Failure~~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.

Bruce M. Rodgers. Mr. Rodgers, age 56, serves as the Chairman of the Board of Directors, Chief Executive Officer and President of the company. Prior to ~~Obtain Stockholder Approval~~that, Mr. Rodgers owned Business Law Group, P.A. (“BLG”) and served as counsel to the founders of LM Funding, LLC (“LMF”). 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 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. ~~If this stockholder approval is not obtained~~Ms. Gould, age 56, co-founded LMF in January 2008, and ~~we are unable~~currently serves as Vice President—General Manager, Secretary and a director of the company. Prior 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 equityjoining LMF, Ms. Gould owned and operated a recruiting company

~~PROXY~~ ~~STATEMENT~~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.

~~conversions or other restructuring transactions, which may not be on commercially reasonable~~Directors whose present terms ~~and may negatively impact stockholders at that time. If~~continue until the ~~Company elects to seek additional capital with the issuance of new shares, it is also likely that the Company may again need to seek stockholder approval at a future special or~~next annual meeting of ~~stockholders for~~shareholders (Class II):

Douglas I. McCree. Mr. McCree, age 54, has served as a director of the ~~issuance~~company since its initial public offering in October 2015. Mr. McCree has been with First Housing Development Corporation of ~~those shares, may need~~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 ~~seek alternative means to finance the payment, or may take such other actions as~~ the Board ~~deems advisable~~of Directors many years of banking experience and ~~in the best interests~~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 82, has served as a director of the ~~Company~~company since its initial public offering in October 2015. Mr. Rodgers has been Vice President of Allied Signal, Inc. (1987-1992) and ~~its stockholders~~CEO of Baron Blakeslee, Inc. (1985-1987). Since 1995, Mr. Rodgers has served as a part-time Professor at ~~that time.~~

~~The information set forth~~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 ~~this Proposal 1, including~~China, Mexico and Brazil in negotiations regarding the ~~description~~Montreal Protocol which dealt with limiting fluorocarbon discharge. Mr. Rodgers’ civic work extends to service on the library, hospital and municipal utility boards of ~~certain terms~~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 ~~provisions~~was a University 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 exhibitsIllinois PhD candidate. He brings to our ~~Current Report on Form 8-K filed with the SEC on January 17, 2019. In addition, the form~~Board of ~~Convertible Note is included~~Directors a lifetime of management, finance and marketing experience as ~~Annex A to this Proxy Statement.~~

~~Our Board recommends a vote “FOR” Proposal 1.~~well as an academic career of study in each.

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

~~Our Board is asking our stockholders to approve an adjournment~~Martin A. Traber Mr. Traber, age 74, has served as a director of the ~~Special Meeting, if necessary,~~company since its initial public offering in October 2015.Mr. Traber is currently Chairman of Skyway Capital Markets, LLC. From 1994 until 2016, Mr. Traber was a partner of Foley & Lardner LLP, in Tampa, Florida, representing clients in securities law matters and corporate transactions. Mr. Traber is a founder of NorthStar Bank in Tampa, Florida and from 2007 to ~~solicit additional proxies if there are not sufficient votes in favor~~2011 served as a member of the ~~Proposal 1 –~~Board of Directors of that institution. Mr. Traber served on the ~~NASDAQ Proposal.~~ Board of Directors of JHS Capital Holdings, Tampa, Florida and on the Advisory Board of Platinum Bank, Tampa, Florida. From 2012 to 2013, he served on the Board of Directors of Exeter Trust Company, Portsmouth, New Hampshire. Mr. Traber holds a Bachelor of Arts and a Juris Doctor from Indiana University.

Mr. Traber brings considerable legal, financial and business experience to the Board of Directors. He has counseled and observed numerous businesses in a wide range of industries. The knowledge gained from his observations and his knowledge and experience in business transactions and securities law are considered important in monitoring the company’s performance and whe we consider and pursue business acquisitions and financial transactions. As a corporate and securities lawyer, Mr. Traber has a fundamental understanding of governance principles and business ethics. His knowledge of other businesses and industries are useful in determining management and director compensation.

~~This proposal is referred to in this Proxy Statement~~Andrew L. Graham Mr. Graham, age 62, has served as ~~the “Adjournment Proposal” or “Proposal 2.”~~

~~Approval~~a director of the ~~Adjournment Proposal requires~~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 ~~affirmative vote~~Internal Audit Committee of Hillsborough County, Florida. From 2007 to 2011, he served on the Board of Trustees of Hillsborough Community College, a ~~majority~~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 62, has served as a director of the ~~votes cast~~company since August 2018and 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 ~~matter, assuming~~University of Florida majoring in accounting and received a ~~quorum is present at~~J.D. from the ~~meeting. Because this vote is~~UniversityofFlorida. Mr. Mills will bring to the Board of Directors many years of business and financial experience from his past experience as a ~~non-routine matter under applicable rules, your bank, broker or other nominee cannot vote without instructions from you.~~founding board member and Audit Committee Chairman for Nature Coast Bank (OTCQB:NCBF), which was a publicly-held company, and his business lawpractice.

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

~~Section 16(a) of the Conversion Act requires our directors, Section 16 officers and persons who beneficially own more than 10%~~Based upon recommendations of our ~~Common~~nominating and governance committee, the Board of Directors has determined that current directors Messrs. McCree, Graham, Mills and Traber are “independent directors” meeting the independence tests set forth by NASDAQ Stock ~~to file initial reports~~Market and Rule 10A-3(b)(i) under the Securities Exchange Act of ~~ownership on Form 3 and reports of changes of ownership on Forms 4 and 5~~1934, as amended (the “Exchange Act”), including having no material relationship 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.~~

~~The following table shows, as of February [ ], 2019, beneficial ownership of our Common Stock by our directors, our named executive officers, all directors and executive officers~~company (either directly or as a ~~group~~partner, shareholder or officer of an organization that has a relationship with the company). In the case of Mr. Traber, the Board of Directors considered his previous role as a partner of Foley & Lardner LLP, which provides legal services to the company. Mr. Traber is currently Chairman of Skyway Capital Markets to which we paid a total of $15,000 and ~~all persons who were known~~$135,000 in 2018 and 2019, respectively, for a $125,000 fairness opinion for the acquisition of IIU, Inc. and a $25,000 deposit for another fairness opinion. We have determined that the fees received by the law firm amount to ~~us to be the beneficial owners of more than 5% of our outstanding shares:~~

* ~~Represents~~ less than 1% of ~~beneficial ownership.~~the firm’s total annual revenue, that the fees paid to Skyway Capital Markets was less than 1% of that firm’s total annual revenue, and also considered Mr. Traber’s personal financial substance, his other sources of income and his lack of dependence upon fees from the company.

The compensation of ~~common stock but excludes 640,000 shares of common stock issuable upon the exercise of warrants.~~

~~(2) Includes 109,562 shares of common stock but excludes 13,242 shares of common stock issuable upon the exercise of warrants held~~our non-employee directors is determined by the ~~two revocable trusts. Bruce M. Rodgers, Carollinn Gould~~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 2018 and ~~their family, including trusts~~2019, the company’s non-employee directors were not awarded any fees or ~~custodial accounts~~other compensation for service to the company, which includes attendance at Board of ~~minor children of~~Directors and committee meetings held during 2018 and 2019.

The following table sets forth information with respect to compensation earned by each of ~~Mr. Rodgers and Ms. Gould, own 100% of the outstanding membership interests of each trust.~~

(3) 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.

(4) 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.

(5) 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.

(6) 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.

(7) 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.

(8) 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.

(10) 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.

(11) 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.

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.

~~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.~~

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.

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 fordirectors (other than “named executive officers”) during 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.~~

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.

~~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.

~~(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.

~~(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.

~~(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

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.

~~(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.

~~(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

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

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

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.~~

~~(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.

~~(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

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.

~~(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

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.

~~(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).

~~(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).

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

LMF has engaged BLG on behalf of many of its Association clients to service and collect the accounts and to distribute the proceeds as required by Florida law and the provisions of the purchase agreements between LMF and the Associations. In addition, Ms. Gould entered an employment agreement to work part-time for LMF. Ms. Gould’s employment agreement with LMF permits her to also work as General Manager of BLG which pays her additional compensation of $150,000 per year.

On November 2, 2018, the Company invested cash by purchasing a Securities Purchase Agreement (the “IIU SPA”) from IIU Inc. (“IIU”), a synergistic Virginia based travel insurance brokerage company controlled by Craven House North America, LLC (“Craven”) N.A., (whose ownership excluding unexercised warrants was approximately 20% of the Company’s outstanding stock at the time of the acquisition) pursuant to which IIU issued to the Company a Senior Convertible Promissory Note (“IIU Note”) in the original principal amount of $1,500,000. The maturity date of the Note was 360 dates after the date of issuance (subject to acceleration upon an event of default). The Note carried a 3.0% interest rate, with accrued but unpaid interest being payable on the Note’s maturity date.

On January 16, 2019, the Company entered into a Stock Purchase Agreement with Craven to purchase all of outstanding capital stock of IIU as a possible synergistic effort to diversify revenue sources that are believed to be accretive to earnings. IIU provides global medical insurance products for international travelers, specializing in policies covering high-risk destinations, emerging markets and foreign travelers coming to the United States. All policies are fully underwritten with no claim risk remaining with IIU.

The Company purchased 100% of the issued and outstanding capital stock of IIU from Craven for $5,089,357 subject to adjustment as set forth in the IIU SPA. IIU was required to have a minimum net working capital of $15,000 and at least $152,000 in cash. The Company paid the Purchase Price under the IIU SPA at closing as follows:

On December 20, 2019, the Company loaned $1.5 million to Craven (“Craven Secured Promissory Note”) which had an initial maturity date of April 15, 2020 and carried an interest rate of 0.5% that is to be paid monthly. The Company subsequently extended the due date of the Craven Secured Promissory Note to August 1, 2021. The Craven Secured Promissory Note is secured by, among other things, Stock Pledge of Craven’s 640,000 Common Shares of the Company and the Assignment of the assets of Craven in favor of the Company.

On January 8, 2020, the Company entered into a Stock Purchase Agreement (“SPA”) with Craven pursuant to which the Company sold to Craven all of the issued and outstanding shares of IIU, Inc., a Virginia based travel insurance brokerage company and wholly owned subsidiary of LMFA (“IIU”), for $3,562,569. The purchase price was paid by Craven through the cancellation of the $3,461,782 Convertible Promissory Note issued by LMFA to Craven dated January 16, 2019 plus forgiveness of $100,787 of accrued interest. LMFA originally paid $4,969,200 for the purchase of IIU in January 2019, which included a negative $720,386 net fair value of assets and $5,689,586 of goodwill. LMFA estimates the sale of IIU will result in a loss of approximately $1.65 million.

One of our directors, Martin A. Traber, is a former partner at the law firm of Foley & Lardner LLP retiring in 2016. Since our inception in 2015, the firm has provided legal representation to us. During 2019, 2018 and 2017, Foley & Lardner LLP billed us approximately $58,000, $239,000 and $50,000, respectively, which represents less than 1% of Foley & Lardner’s annual fee 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 term at least as favorable to us as those that would have been realized in transactions with unaffiliated entities or individuals.

One of our directors, Martin A. Traber, is Chairman at Skyway Capital Markets which billed us $15,000 in 2018 and $110,000 in 2019 for a fairness opinion and $25,000 in 2019 for a future fairness opinion, the total of 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 term 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, 2019, all filing requirements applicable to our officers, directors and greater than 10% beneficial owners were timely complied with, except for an inadvertent late Form 4 filing made by Craven House Capital North America LLC on June 7, 2019, which pertained to a reportable transaction that occurred on May 30, 2019 and an inadvertent late Form 4 filing made by Craven House Capital North America LLC on August 28, 2019, which pertained to a reportable transaction that occurred on August 22, 2019.

We have adopted a code of ethics applicable to all employees and directors, including our Chief Executive Officer and Chief Financial Officer. We have posted the text of our code of ethics to our internet web site: www.lmfunding.com by clicking “Investors” at the top and then “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 web site 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.”

The Board of Directors held ten meetings in 2018 and eight meetings in 2019. During 2018 or 2019, no director attended less than 75% of the Board of Directors and applicable committee meetings.

Board members are encouraged, but not required to attend the Annual Meeting of the Shareholders.

We have established procedures by which shareholders may communicate with members of the Board of Directors, individually or as a group. Shareholders wishing to communicate with the Board of Directors or a specified member of the Board may send written communications addressed to: Board of Directors, LM Funding America, Inc., Attention: Bruce M. Rodgers, Chief Executive Officer, 1200 West Platt Street, Suite 100, Tampa, Florida 33606. The mailing envelope should clearly specify the intended recipient or recipients, which may be the Board of Directors as a group or an individual member of the Board. The communication should include the shareholder’s name and the number of shares owned. Communications that are

not racially, ethically or religiously offensive, commercial, pornographic, obscene, vulgar, profane, defamatory, abusive, harassing, threatening, malicious, false or frivolous in nature will be promptly forwarded to the specified members of the Board of Directors. We have also established procedures by which all interested parties (not just shareholders) may communicate directly with our non-management or independent directors as a group. Any interested party wishing to communicate with our non-management or independent directors as a group may send written communications addressed to: Board of Directors, LM Funding America, Inc., Attention: Bruce M. Rodgers, Chief Executive Officer, 1200 West Platt Street, Suite 100, Tampa, Florida 33606. The mailing envelope should clearly specify the intended recipients, which may be the non-management directors or the independent directors as a group. The envelope will be promptly forwarded for distribution to the intended recipients.

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 Nasdaq Capital Markets, we are governed by its listing standards. Accordingly, the members of the audit committee are considered to be “independent directors” pursuant to the definition contained in Rule 5605(a)(2) of the NASDAQ and the criteria for independence set forth in Rule 10A-3(b)(1) of the Securities and Exchange Commission. The Board of Directors has determined that Mr. Graham is an audit committee financial expert. The audit committee met formally four times during 2018 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 2015 Omnibus Incentive

Plan. 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 2018 or 2019 instead relying on the judgment and knowledge of its own members. The compensation committee views the determination of such compensation to be a collaborative effort and accordingly it welcomes recommendations and advice from executive officers and other directors. The compensation committee is composed of three members: Fred Mills, Douglas I. McCree and Martin A. Traber each of whom have been determined to be “independent” within the meaning of the SEC and NASDAQ regulations. 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 two times during 2018 and one time during 2019 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 is composed of three members: Douglas I. McCree, Martin A. Traber and Andrew Graham. The nominating and governance committee had no meetings in 2018 or 2019 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 shareholders. Any shareholder wishing to recommend one or more director candidates should send the recommendations before November 1st of the year preceding the next annual meeting of shareholders to LM Funding America, Inc., Attention: Bruce M. Rodgers, Chief Executive Officer, 1200 West Platt Street, Suite 100, Tampa, Florida 33606. Each recommendation should set forth the candidate’s name, age, business address, business telephone number, residence address, and principal occupation or employment and any other attributes or factors the shareholder wishes the committee to consider, as well as the shareholder’s name, address and telephone number and the class and number of shares held. The committee may require the recommended candidate to furnish additional information. Mr. Rodgers will forward recommendations of qualified candidates to the nominating and governance committee and those candidates will be given the same consideration as all other candidates.

A shareholder wishing to nominate an individual for election to the Board of Directors at the Annual Meeting of the Shareholders, rather than recommend a candidate to the nominating and governance committee, must comply with the advance notice requirements set forth in our bylaws. See “Shareholder Proposals for Presentation at the Annual Meeting” for further information.

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 2019, 2018 and 2017.

The following table sets forth the aggregate fees for services related to the years ended December 31, 2019, 2018 and 2017 provided by Malone Bailey, LLP and Skoda Minotti & Co. Certified Public Accountants, our principal accountants:

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, 2019 for filing with the Securities and Exchange Commission.

The Audit Committee of the ~~form~~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, 2020. Malone Bailey also served as the company’s independent registered public accounting firm for our 2018 fiscal year ended December 31, 2018, and our 2019 fiscal year ended December 31, 2019. 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, the 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.

You are being asked to approve an amendment (in the event it is deemed by our Board of Directors to be advisable) to our Certificate of Incorporation to effect a reverse stock split of the issued and outstanding shares of our common stock, at a ratio within the range of one-for-two (1:2) to one-for-ten (1:10), as determined by our Board of Directors (the “Reverse Stock Split Amendment”). Any reverse stock split effectuated pursuant to this authorization being sought at the Annual Meeting is referred to herein as the “Reverse Stock Split.” Consummation of the Reverse Stock Split is subject to (i) stockholder approval at the Annual Meeting and (ii) further Board of Directors discretion as to whether to implement the Reverse Stock Split and, if implemented, the determination of the ratio within the range authorized by the stockholders. Under the proposed amendment, outstanding shares of our common stock between a range of two to ten would be combined and converted into one share of common stock. Our Board of Directors believes that a Reverse Stock Split at a ratio of between (1:2) and (1:10), inclusive, as currently proposed, will be effective to increase the per share trading price of our common stock above the minimum bid price of $1.00 per share required by Nasdaq to be listed on the Nasdaq Capital Market, as further discussed below.The proposed amendment to our Certificate of Incorporation was approved by our Board of Directors on February 25, 2020, at which time the Board of Directors directed that the company seek the authorization of its stockholders to implement the Reverse Stock Split subject to the discretion of the Board of Directors.

If our stockholders approve the Reverse Stock Split, the Board of Directors may implement the Reverse Stock Split promptly if necessary to satisfy Nasdaq’s minimum bid price. However, the Board of Directors reserves the right to abandon the Reverse Stock Split at any time prior to filing the Reverse Stock Split Amendment if it determines, in its sole discretion, that this proposal is no longer in the best interests of the company and its stockholders.

If approved by our stockholders, and if implemented by the Board of Directors, the Reverse Stock Split will become effective at the time specified in the Reverse Stock Split Amendment, which would be filed with the Secretary of State of the State of Delaware. The exact ratio of the Reverse Stock Split within the one-for-two (1:2) to one-for-ten (1:10) range would be determined in the Board of Director’s discretion and publicly announced by the company.

Our common stock currently trades on the Nasdaq Capital Market under the symbol “LMFA.” The Nasdaq Marketplace Rules contain various continued listing criteria that companies must satisfy in order to remain listed on the exchange. On September 25, 2019, we received a notice from Nasdaq stating that we are not in compliance with the requirement of Nasdaq Listing Rule 5550(a)(2) for continued listing on the Nasdaq Capital Market (the “Bid Price Rule”), as a result of the closing bid price of our common stock being below $1.00 per share for 30 consecutive business days. Nasdaq Listing Rules provide that we had 180 calendar days, or until March 23, 2020, to regain compliance with the Bid Price Rule. To regain compliance, the closing bid price of our common stock has to be at least $1.00 per share for a minimum of 10 consecutive business days. We were unable to regain compliance by March 23, 2020, we may be eligible for an additional 180-day period to demonstrate compliance with the Bid Price Rule. To qualify for the additional compliance period, we will be required to meet the continued listing requirement for market value of publicly held shares set forth in Nasdaq Listing Rule 5550(a) and all other initial listing standards set forth in Nasdaq Listing Rule 5505, with the exception of the Bid Price Rule, and will need to provide written notice to Nasdaq of our intention to cure the deficiency during the second compliance period. If we do not qualify for the second compliance period or fail to regain compliance during the second 180-day period, then we expect that Nasdaq will provide notice that our common stock is subject to delisting from the Nasdaq Capital Market, at which point we would have an opportunity to appeal the delisting

determination to a Nasdaq hearings panel. Although we currently believe that we will likely not be granted a second 180-day compliance period, we currently intend to appeal any delisting determination to a Nasdaq hearings panel.

The Board of Directors’ primary objective in proposing the Reverse Stock Split is to raise the per share trading price of our common stock in the event it becomes necessary in order to maintain and/or regain compliance with the Bid Price Rule. If a delisting from Nasdaq were to occur, the company believes its common stock would be eligible to be quoted on the inter-dealer electronic quotation and trading system operated by Pink OTC Markets Inc. commonly referred to as ~~needed~~the “Pink Sheets” and now known as the OTCQB market. The common stock may also be quoted on the Over-the-Counter Bulletin Board (the “OTCBB”), an electronic quotation service maintained by the Financial Industry Regulatory Authority (“FINRA”), provided that a market maker in the common stock files the appropriate application with, and such application is cleared by, FINRA. These markets are generally considered to ~~indicate~~be less efficient than, and not as broad as, the ~~action~~Nasdaq Capital Market. If our common stock were to trade on the OTCQB or the OTCBB, selling such shares could be more difficult because smaller quantities of shares would likely be bought and sold and, transactions could be delayed. In addition, in the event our common stock is delisted, broker-dealers have certain regulatory burdens imposed upon them, which may discourage broker-dealers from effecting transactions in our shares, further limiting their liquidity. These factors could result in lower prices and larger spreads in the bid and ask prices for our common stock.

Such delisting from the Nasdaq Capital Market could also greatly impair the company’s ability to raise additional necessary capital through equity or debt financing and could significantly increase the ownership dilution to shareholders caused by the c ompany’s issuing equity in financing or other transactions. Our Board of Directors has considered the potential harm to us and our stockholders should Nasdaq delist our common stock from the Nasdaq Capital Market and believes that, if compliance were not otherwise regained, the Reverse Stock Split would help the company regain compliance with the Bid Price Rule.

Our Board of Directors is also submitting the Reverse Stock Split to stockholders for approval based on its belief that increasing the price of our common stock may make our common stock more attractive to a broader range of institutional and other investors. We have been advised that the current market price of our common stock may affect its acceptability to certain institutional investors, professional investors and other members of the investing public. If the Reverse Stock Split is approved by our stockholders, our Board of Directors may determine to approve the Reverse Stock Split in an effort to make our common stock a more attractive and cost effective investment for many investors. Accordingly, for these and other reasons discussed in this Proxy Statement, we believe that stockholder approval of the Reverse Stock Split will provide the Board of Directors with flexibility to implement the Reverse Stock Split in a manner designed to maximize the desired ~~for owned issues.~~results and anticipated benefits and is consequently in the company’s best interest. As such, assuming the Reverse Stock Split is approved by our stockholders as proposed, the Board of Directors may determine to implement the Reverse Stock Split even if doing so is not necessary in order to maintain and/or regain compliance with the Bid Price Rule.

~~All submissions~~Reducing the number of issued and outstanding shares of our common stock through the Reverse Stock Split would be intended, absent other factors, to increase the per share market price of our common stock. However, other factors, such as our financial results, market conditions and the market perception of our business may adversely affect the market price of our common stock. As a result, there can be no assurance that the Reverse Stock Split, if completed, will result in the intended benefits described above, that the market price of our common stock will increase following the Reverse Stock Split or that the market price of the common stock will not decrease in the future. Under applicable Nasdaq Listing Rules, in order to regain compliance with the Bid Price Rule and maintain our listing on the Nasdaq Capital Market, a consolidated closing bid price of $1.00 per share must be maintained for a minimum of 10 consecutive business days, and Nasdaq may, in its discretion, require us to maintain a consolidated closing bid price of at least $1.00 per share for a longer period, not to exceed 20 consecutive business days, before determining that we have regained compliance with this requirement. Accordingly, we cannot assure you that we will be able to maintain our Nasdaq listing after the Reverse Stock Split is effected or that the market price of the common stock will exceed or remain in excess of $1.00 per share for any period of time. Additionally, we cannot assure you that the market price per share of our common stock after the Reverse Stock Split will increase in proportion to the reduction in the number of the shares of common stock issued and outstanding before the Reverse Stock Split or that our Board of Directors will effect the Reverse Stock Split. Accordingly, the total market capitalization of our common stock after the Reverse Stock Split may be lower than the total market capitalization before the Reverse Stock Split. We also cannot assure you that our common stock will not be delisted from Nasdaq due to failure to meet other continued listing standards.

If the stockholders approve this proposal, the Board of Directors would effect the Reverse Stock Split only upon the Board’s determination that the Reverse Stock Split is in the best interests of the company and its stockholders at that time. Assuming the Board of Directors effects the Reverse Stock Split, the Board of Directors will set the timing for such a split and select the specific ratio within the range set forth herein. No further action on the ~~participant’s letterhead~~part of stockholders would be required to either implement or abandon the Reverse Stock Split. If stockholders approve the proposal, and ~~must have that participant’s medallion stamp. You must submit completed forms via~~ the ~~WINS application. A user guide~~Board of Directors determines to

implement the Reverse Stock Split, we would communicate to the ~~process can~~public, prior to the effective date of the Reverse Stock Split, additional details regarding the Reverse Stock Split, including the specific ratio the Board of Directors selects.

The ratio to be ~~found here:~~used in the Reverse Stock Split would be determined by the Board of Directors in its discretion and would depend on the trading price of our common stock at the time of the split among other factors. The Board of Directors is seeking approval of a reverse stock split of our common stock within the range of one-for-two (1:2) to one-for-ten (1:10) to provide maximum flexibility to achieve the purposes of the Reverse Stock Split. The table below provides estimates of the expected effects assuming implementation of the Reverse Stock Split at various ratios within the range for which authorization is sought, as to (1) the number of shares of our common stock (a) authorized, (b) issued and outstanding, (c) reserved for issuance and (d) authorized but neither issued nor reserved for issuance, and (2) the trading price of our common stock. The estimates in the table are based on the assumptions referenced in the footnotes below.

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

The proposed Reverse Stock Split would affect all of our stockholders uniformly and would not affect any stockholder’s percentage ownership interest in the Company, except to the extent that the Reverse Stock Split results in any stockholders owning a fractional share, as described below.

Effect on Options, Warrants and Shares Reserved for Issuance Under Incentive Plan

All outstanding options and warrants to purchase shares of our common stock would be adjusted proportionately as a result of the Reverse Stock Split. In addition, the number of shares available pursuant to the 2015 Plan would be adjusted proportionately as a result of the Reverse Stock Split.

If and when the Board of Directors elects to effect the Reverse Stock Split, we will not reduce the number of authorized shares of common stock in proportion to the Reverse Stock Split ratio. Therefore, upon effectiveness of the Reverse Stock Split, the number of authorized shares of common stockthat are not issued or outstanding will increase substantially because the proposed Reverse Stock Split will not reduce the number of authorized shares, while it will reduce the number of outstanding shares. The actual number of authorized shares of common stock available for issuance after giving effect to the Reverse Stock Split, if implemented, will depend on the Reverse Stock Split ratio that is ultimately determined by the Board of Directors and whether the increase of our authorized common stock described in Proposal No. 3 is approved. The issuance of such securities may result in potentially significant dilution of current stockholders’ ownership interests in the Company.

The Reverse Stock Split Amendment will not change the par value of our common stock.

Whether shares are held in street name or directly, fractional shares of common stock will not be issued to stockholders. Instead, fractional shares will be cashed out. For ~~questions~~example, if a stockholder holds 125 shares on a pre-split basis and the Reverse Stock Split ratio is 1:2, 124 of such shares would be combined and converted into 112 shares on a post-split basis and such stockholder would receive cash for one pre-split share.

The amount of cash to be paid for fractional shares will be equal to the product obtained by multiplying:

Stockholders would not be entitled to receive interest for their fractional shares. Any stockholder that holds a number of our shares that is less than the ratio used to implement the Reverse Stock Split will be completely cashed out as a result of the payment of fractional shares in lieu of any fractional share interests.

If the Reverse Stock Split proposal is approved by our stockholders at the Annual Meeting and thereafter the Board of Directors determines to implement the Reverse Stock Split, our stockholders will be notified of the ratio at which the Reverse Stock Split has been implemented. The mechanics of the Reverse Stock Split will differ depending upon whether shares held are held beneficially in street name or ~~additional forms, send requests via electronic mail to:~~

~~demandanddissent@dtcc.com~~whether they are registered directly in a stockholder’s name.

We estimate that our aggregate expenses relating to the Reverse Stock Split will not be material.

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

~~Bruce M. Rodgers~~ The Reverse Stock Split will not affect total stockholders’ equity on the Company’s balance sheet. However, because the par value of our common stock will not change, the components that make up total stockholders’ equity will change by offsetting amounts. The per share common stock net loss and net book value would be increased because there would be fewer shares of our common stock outstanding. Fractional shares cashed out will be accounted for as retired stock.

~~Chief Executive Officer~~

Certain U.S. Federal Income Tax Consequences

The following discussion summarizes certain material U.S. federal income tax consequences relating to the participation in the Reverse Stock Split by a beneficial owner of common stock that is a citizen or individual resident of the United States, a corporation organized in or under the laws of the United States or any state thereof or the District of Columbia or otherwise subject to U.S. federal income taxation on a net income basis in respect of our common stock (a “U.S. holder”). A trust may also be a U.S. holder if (1) a U.S. court is able to exercise primary supervision over administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) it has a valid election in place to be treated as a U.S. person. An estate whose income is subject to U.S. federal income taxation regardless of its source may also be a U.S. holder.

This summary does not address all of the tax consequences that may be relevant to any particular stockholder, including tax considerations that arise from rules of general application to all taxpayers or to certain classes of taxpayers or that are generally assumed to be known by stockholders. This summary also does not address the tax consequences to (i) persons that may be subject to special treatment under U.S. federal income tax law, such as banks, insurance companies, thrift institutions, regulated investment companies, real estate investment trusts, tax-exempt organizations, U.S. expatriates, persons subject to the alternative minimum tax, traders in securities that elect to mark to market and dealers in securities or currencies, (ii) persons that hold our common stock as part of a position in a “straddle” or as part of a “hedging,” “conversion” or other integrated investment transaction for federal income tax purposes, or (iii) persons that do not hold our common stock as “capital assets” (generally, property held for investment). If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our common stock, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. Partnerships that hold our common stock, and partners in such partnerships, should consult their own tax advisors regarding the U.S. federal income tax consequences of the Reverse Stock Split.

This summary is based on the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), final, temporary and proposed U.S. Treasury regulations promulgated thereunder and current administrative rulings and judicial decisions, all as in effect as of the date hereof. All of these authorities may be subject to differing interpretations or repealed, revoked or modified, possibly with retroactive effect, which could materially alter the tax consequences set forth herein.

There can be no assurance that the IRS will not take a contrary position to the tax consequences described herein or that such position will not be sustained by a court. No ruling from the IRS has been obtained with respect to the U.S. federal income tax consequences of the Reverse Stock Split.

This discussion is for general information only and is not tax advice. All stockholders should consult their own tax advisors with respect to the U.S. federal, state, local and non-U.S. tax consequences of the Reverse Stock Split.

Based on the assumption that the Reverse Stock Split will constitute a tax-free reorganization within the meaning of Section 368(a)(1)(E) of the Code (i.e., a deemed exchange of existing shares for newly-issued shares), and subject to the limitations and qualifications set forth in this discussion and the discussion below regarding the treatment of cash paid in lieu of fractional shares, the following U.S. federal income tax consequences will result from the Reverse Stock Split:


	●	A U.S. holder will not recognize gain or loss on the deemed exchange of shares pursuant to the Reverse Stock Split (except to the extent of cash received in lieu of a fractional share);
	●	The aggregate tax basis of the shares deemed received by a U.S. holder in the Reverse Stock Split will be equal to the aggregate tax basis of the shares deemed surrendered in exchange therefor, reduced by the amount of the adjusted tax basis allocated to any fractional share for which cash is received; and
	●	The holding period of the shares received by a U.S. holder in the Reverse Stock Split will include the holding period of the shares deemed surrendered therefor.

Cash Received in the Reverse Stock Split in Lieu of Fractional Shares

A stockholder who receives cash in lieu of fractional shares in the Reverse Stock Split should recognize capital gain or loss equal to the difference between the amount of the cash received in lieu of fractional shares and the portion of the stockholder’s adjusted tax basis allocable to the fractional shares unless the distribution of cash is treated as having the effect of a distribution of a dividend, in which case the gain will be treated as dividend income to the extent of our current accumulated earnings and profits as calculated for U.S. federal income tax purposes. Stockholders are urged to consult their own tax advisors to determine whether a stockholder’s receipt of cash has the effect of a distribution of a dividend.

No Appraisal Rights

Under the Delaware General Corporation Law, stockholders are not entitled to dissenters’ rights of appraisal with respect to the proposed amendment to our Certificate of Incorporation to effect the Reverse Stock Split, and we will not independently provide our stockholders with any such right.

Interests of Certain Persons in the Proposal

Our directors and executive officers have no substantial interests, directly or indirectly, in the matters set forth in this proposal except to the extent of their ownership of shares of our common stock.

RECOMMENDATION OF THE BOARD

THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION EFFECTING THE REVERSE STOCK SPLIT AND ACCORDINGLY “FOR” THE REVERSE STOCK SPLIT.

ITEM 3 ON YOUR PROXY CARD.

EXECUTIVE OFFICERS

The following table provides information with respect to our executive officers as of March 16, 2020:

Name	Age	Title
Bruce M. Rodgers	56	Chairman, Chief Executive Officer and President
Richard Russell	59	Chief Financial Officer
Ryan Duran	35	Vice President of Operations
Carollinn Gould	56	Vice-President, Secretary and Director

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 59, has served as Chief Financial Officer of the company since November 2017. Since 2016, Mr. Russell provided financial and accounting consulting services with a focus on technical and external reporting, internal auditing, mergers & acquisitions, risk management and interim CFO and controller services. Mr. Russell also served as Chief Financial Officer for Mission Health Communities from 2013 to 2016 and before that, Mr. Russell served in a variety of roles for Cott Corporation from 2007 to 2013 including Senior Director 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 and as Danka’s Director of Reporting from 2001 – 2004 Mr. Russell also holds the following positions: Chief Executive Officer and Chief Financial Officer of Omega Brands Inc. which is an inactive public shell company and Chief Financial Officer of Affinitas Life which is an emerging senior care private company. 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.

Mark J. Pajak. Mr. Pajak, age 41, served as Chief Operating Officer from his appointment on January 16, 2019 to when he resigned on January 8, 2020. Mr. Pajak primarily focused on the operations of IIU, Inc and its subsidiary Wallach & Company. Since December 2011, Mr. Pajak has served as President and Chairman of DLC Holdings Corp,(stock symbol DLC), a publicly

listed company on the TSXV. Mr. Pajak is also President and Chairman of Craven House Capital North America LLC and Chairman of Craven House Capital Plc which is an investment company listed on the London Stock exchange.

Mr. Pajak spent the early part of his professional career in property development and has extensive experience at both the corporate and operational level, most recently as a Sales and Marketing Director in the Taylor Wimpey Plc. (a property development company listed on the London Stock Exchange) group of companies from 2005 to 2010 and as a Business Development Manager from 2002 to 2005, acting in a wide ranging capacity including involvement in M&A activity in the UK and North America, bank and private debt financing and analyst and shareholder relations. Mr. Pajak studied at Oxford University where he obtained both an undergraduate degree in Biological Sciences and a post-graduate MBA.

Ryan Duran. Mr. Duran, age 35, 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.

Carollinn Gould. Ms. Gould’s background and experience is contained above in the section of the Proxy Statement entitled “Directors”.

We are aware of no arrangements as to the selection or appointment of executive officers.

EXECUTIVE COMPENSATION AND RELATED INFORMATION

SUMMARY COMPENSATION TABLE

The following table provides summary information concerning compensation for services rendered in all capacities awarded to, earned by or paid to our named executive officers during the years ended December 31, 2019, 2018 and 2017.


									Stock			Option					All Other
		Fiscal		Salary		Bonus			Awards			Awards					Compensation				Total
Name and Principal Position		Year		($)		($)			($)			($)					($)(4)				($)
Bruce Rodgers			2019	$	349,467	$		—	$		—	$	—				$	7,390			$	356,857
Chairman and CEO			2018	$	269,500	$		—	$		—	$	—				$	3,541			$	273,041
			2017		269,500			—			—		—					1,593				271,093
Richard Russell (1), (2)			2019		193,855			—			—		—					23,273				217,128
Chief Financial Officer			2018		180,000			135,000			—		26,309			(1)		20,759				362,068
			2017		9,691			—			—		5,800			(2)		1,177				16,668
Ryan Duran (3)			2019		146,923			—			—		—					22,657				169,580
Vice President of Operations			2018		132,500			—			—		8,769			(3)		19,718				160,988
			2017		101,385			108			—		—					7,062				108,556

(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								2019		$	7,390			$	—				$	7,390
								2018			3,541				—					3,541
								2017			1,593				—					1,593
Richard Russell								2019			23,273				—					23,273
								2018			20,759				—					20,759
								2017			1,177				—					1,177
Ryan Duran								2019			22,657				—					22,657
								2018			19,718				—					19,718


																									2017												7,062															—									7,062

Employment Agreements

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

Bruce M. Rodgers. On October 22, 2015, we entered into an employment agreement with Mr. Bruce M. Rodgers, our Chief Executive Officer. A cost-cutting initiative was implemented by the company on August 31, 2016. The employment agreement was subsequently amended to reduce Mr. Rodgers’ annual compensation to $269,500 but effective April 15, 2019 his employment agreement was amended to revert his annual base salary back to the amount originally set forth in the employment which was $385,000. The employment agreement states that he may be granted annual bonuses at the discretion of the Board of Directors. Mr. Rodgers is entitled to participate in all of our pension, life insurance, health insurance, disability insurance and other benefit plans on the same basis as our other employee officers participate. The term of Mr. Rodgers’ agreement is for three years and is automatically renewed each year unless terminated for “cause”, as defined in the employment agreement. He will receive the base salary and benefits due under the employment agreement for the remainder of the term if terminated “without cause”, as defined in the employment agreement, or such base salary shall be paid for the remainder of the term to his estate if his employment is terminated due to his death. Mr. Rodgers’ employment agreement contains certain non-competition covenants and confidentiality provisions.

Richard Russell. On November 29, 2017, we entered into an employment agreement with Mr. Richard Russell, our Chief Financial Officer. Mr. Russell receives a base salary of $180,000 per year, subject to possible merit increase. Effective April 15, 2019 his employment agreement was amended to increase his compensation to $200,000. In addition, Mr. Russell is eligible to receive an annual bonus and long-term incentive awards as determined by the Company’s Board of Directors and is eligible to participate in any equity incentive plan, stock option plan or similar plan adopted by the Company. The term of Mr. Russell’s agreement is for one year and is automatically renewed each year unless terminated for “cause”, as defined in the employment agreement. The agreement provides that if we terminate Mr. Russel’s employment without cause then he will be entitled to severance compensation in the amount of his base salary for the 24 month period following the date of termination. The agreement provides that Mr. Russell will only be entitled to the unpaid base salary owing to him up through and including the date of termination if he (a) is terminated due to death or disability, (b) is terminated by company for cause, or (c) he chooses to terminate his employment. Mr. Russell’s employment agreement contains certain non-competition covenants and confidentiality provisions.

On November 29, 2017, Mr. Russell received stock options to purchase 2,500 shares of our common stock under the Company’s 2015 Omnibus Incentive Plan (“Plan”) at a price equal to $125.00 per share. These stock options vest over a three-year period in equal annual installments beginning on the one-year anniversary of the grant date. Additional grants under the Plan may be made to Mr. Russell based upon an evaluation of his performance by the Company’s Board of Directors.

Ryan Duran. In March 2015 we entered into an employment agreement with Mr. Ryan Duran, our Vice President of Operations. Effective February 15, 2019, Mr. Duran’s current compensation was increased to $150,000. On January 1, 2016, Mr. Duran was awarded an option grant for 413 shares of our common stock at an exercise price of $100.00 per share. This option grant was fully vested upon issuance. Additional grants under the Plan may be made to Mr. Russell based upon an evaluation of his performance by the Company’s Board of Directors.

Outstanding Equity Awards at Fiscal Year-End

The following table provides information on exercisable and unexercisable options by the named executive officers on December 31, 2019.


	Option Awards
	Number of		Number of
	Securities		Securities
	Underlying		Underlying
	Unexercised		Unexercised			Option
	Options		Options			Exercise		Option
	(#)		(#)			Price		Expiration
Name	Exercisable		Unexercisable			($)		Date
Bruce Rodgers		—		—		$	—		—
Richard Russell		1,667		833	(1)	$	125.00	11/29/2027
Richard Russell		2,500		5,000	(2)	$	10.00	5/29/2028
Ryan Duran		413		—		$	100.00	1/2/2026
Ryan Duran		833		1,667	(2)	$	10.00	5/29/2028

(1)

The shares vest one-third on November 29^th of each year.

(2)

The shares vest one-third on May 9^th of each year. One third of the options vest on May 9, 2020 which is within 60 days of the record date.

~~A - 10~~

EQUITY COMPENSATION PLAN INFORMATION

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, 2019:

	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		19,300	$	60.51		40,700
Equity compensation plans not approved by security holders		-	$	-		-

PRINCIPAL SHAREHOLDERS

The following table sets forth information regarding the beneficial ownership of our common stock as of March 16, 2020 by:

•

each person who is known by us to beneficially own more than 5% of our outstanding common stock,

•

each of our directors and named executive officers, and

•

all directors and executive officers as agroup.

The number and percentage of shares beneficially owned are based on 3,234,163 common shares outstanding as of March 16, 2020. Information with respect to beneficial ownership has been furnished by each director, officer or beneficial owner of more than 5% of our common stock. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission, which generally require that the individual have voting or investment power with respect to the shares. In computing the number of shares beneficially owned by an individual listed below and the percentage ownership of that individual, shares underlying options, warrants and convertible securities held by each individual that are exercisable or convertible within 60 days of March 16, 2020, are deemed owned and outstanding, but are not deemed outstanding for computing the percentage ownership of any other individual. Except as otherwise indicated in the footnotes to this table, or as required by applicable community property laws, all individuals listed have sole voting and investment power for all shares shown as beneficially owned

by them. Unless otherwise indicated in the footnotes, the address for each principal shareholder is LM Funding America, Inc., 1200 West Platt Street, Suite 100, Tampa, Florida 33606.

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percentage
5% Stockholders:	5% Stockholders:		5% Stockholders:
Craven House Capital North America Inc. (1)		1,458,675		37.6	%
Hudson Bay Capital Management LP (2)		225,271		7.0	%
Heights Capital Management Inc./CVI Investments, Inc. (3)		120,798		3.7	%
Thomson Group International, LLC (4)		284,504		8.8	%
Carol Linn Gould Revocable Trust (5)		116,183		3.6	%
Bruce M. Rodgers Revocable Trust (5)		116,183		3.6	%
Mark Pajak (1)		1,458,675		37.6	%

Executive Officers and Directors
Bruce M. Rodgers (5)		878,433		27.0	%
Carollinn Gould (5)		878,433		27.0	%
Douglas I. McCree (6)		3,050	*
Joel E. Rodgers, Sr. (7)		700	*
Fred Mills (8)		2,600	*
Martin A. Traber (9)		2,600	*
Andrew L. Graham (10)		1,280	*
Richard Russell (11)		6,666	*
Ryan Duran (12)		2,080	*
All Executive Officers and Directors as a Group (9 individuals)		897,411		27.5	%


*	Represents less than 1% of beneficial ownership
(1)	Includes 648,496 shares of common stock held by Craven House Capital North America Inc. (“Craven House”) and includes 640,000 shares of common stock issuable upon the exercise of warrants held by Craven House. Mr. Pajak is the President of Craven House and has the right to cause the voting or disposition of the shares held by Craven House. Mr. Pajak resigned as an officer of the company on January 8, 2020. The 640,000 shares are pledged as collateral to the company to secure an obligation by Craven House to the company, and in connection with that stock pledge, Craven House granted a proxy to vote the shares to the company. The stockholder’s address is 107 West Federal St. PO Box 480, Middleburg, VA 20118-0480
(2)	Based solely on a Schedule 13D filed on October 11, 2019. The stockholder’s address is 777 Third Avenue, 30^th Floor, New York, NY 10017.
(3)	Based solely on a Schedule 13D filed on October 11, 2019. The stockholder’s address is 101 California Street, Suite 3250, San Francisco, California 94111.
(4)	Based solely on a Schedule 13D filed on October 11, 2019. The stockholder’s address is 50 W Mashta Dr. #3A, Key Biscayne, FL 33149.
(5)	Includes 232,366 shares beneficially owned by Bruce M. Rodgers Revocable Trust and Carol Linn Gould Revocable Trust, 4,417 shares beneficially owned by BRR Holding, LLC, 1,550 shares beneficially owned by Bruce M. Rodgers IRA, and 100 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 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 236,784 shares owned by both Trusts and BRR Holding, LLC. Also includes 640,000 shares held by Craven House as to which Mr. Rodgers has been granted a proxy in connection with the above-described stock pledge by Craven House.
(6)	Includes 2,050 shares of common stock, 500 shares of common stock issuable upon the exercise of warrants at an exercise price of $125.00 and 500 shares of common stock issuable upon the exercise of options at an exercise price of $100.00 that are currently exercisable or become exercisable within 60 days after March 29, 2020.
(7)	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 500 shares of common stock issuable upon the exercise of options at an exercise price of $100.00 that are currently exercisable or become exercisable within 60 days after March 29, 2020.
(8)	Includes 2,600 shares of common stock.


(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 500 shares of common stock issuable upon the exercise of options at an exercise price of $100.00 that are currently exercisable or become exercisable within 60 days after March 29, 2020.
(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 500 shares of common stock issuable upon the exercise of options at an exercise price of $100.00 that are currently exercisable or become exercisable within 60 days after March 29, 2020.
(11)	Includes 1,667 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 March 29, 2019, includes 5,000 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 March 29, 2020. This amount excludes 3,333 options that are not exercisable 60 days after the record date of March 29, 2020.
(12)	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 March 29, 2020. Includes 833 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 March 29, 2020. This amount excludes 833 options that are not exercisable 60 days after the record date of March 29, 2020.

OTHER MATTERS

We do not expect any other matters to be brought before the meeting. However, if any other matters are presented, it is the intention of the persons named in the proxy to vote the proxy as recommended by the Board of Directors or, if no recommendation is given, in their own discretion using their best judgment.

SHAREHOLDER PROPOSALS FOR PRESENTATION AT THE ANNUAL MEETING

Shareholder proposals intended to be considered for inclusion in next year’s proxy statement and form of proxy for presentation at the next Annual Meeting of Shareholders must comply with Securities and Exchange Commission Rule 14a-8. The deadline for submitting such proposals is December 14, 2020 (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.

Shareholders wishing to submit proposals for the next Annual Meeting outside the process of Securities and Exchange Commission 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 by February 14, 2020, 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 the notice must be delivered at least 45 days before the company sends its proxy materials to shareholders for the next Annual Meeting.

Address proposals to LM Funding America, Inc., Attention: Bruce M. Rodgers, Chief Executive Officer, 1200 West Platt Street, Suite 100, Tampa, Florida 33606. The specific requirements for submitting shareholder proposals are set forth in Article II, Section 11 of our bylaws.

DELIVERY OF PROXY MATERIALS TO HOUSEHOLDS

Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of our proxy statement and annual report to stockholders may have been sent to multiple stockholders in your household. The company will promptly deliver a separate copy of any of these documents to you if you contact us at the following address or telephone number: LM Funding America, Inc., Attention: Bruce M. Rodgers, Chief Executive Officer, 1200 West Platt Street, Suite 100, Tampa, Florida 33606, telephone: 813-222-8996. If you want to receive separate copies of the proxy statement or annual report to stockholders in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker, or other nominee record holder, or you may contact the company at the above address or telephone number.

APPENDIX A

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

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

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, and October 15, 2018.

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 Company's Certificate of Incorporation, as amended.

3. The amendment to the existing Certificate of Incorporation, as amended, being effected hereby is as follows: Article “FOURTH” of the Original Certificate shall be and is hereby amended by adding the following paragraph to the end thereof as new Article IV, Section 4:

"SECTION 4. Reverse Stock Split. Without regard to any other provision of this Certificate of Incorporation, effective at ____ [a.m./p.m.], eastern time, on___________, 20___ (the “Effective Time”), the shares of Common Stock issued and outstanding immediately prior to the Effective Time and the shares of Common Stock issued and held in the treasury of the Corporation immediately prior to the Effective Time are reclassified into a smaller number of shares such that each * (*) shares of issued Common Stock immediately prior to the Effective Time is reclassified into one (1) share of Common Stock. Notwithstanding the immediately preceding sentence, no fractional shares shall be issued and, in lieu thereof, upon surrender after the Effective Time of a certificate which formerly represented shares of Common Stock that were issued and outstanding immediately prior to the Effective Time, any person who would otherwise be entitled to a fractional share of Common Stock as a result of the reclassification, following the Effective Time, shall be entitled to receive a cash payment equal to the product of the closing sales price of the Common Stock on the Nasdaq Capital Market on ___________, 20___ and the amount of the fractional share. Each certificate that immediately prior to the Effective Time represented shares of Common Stock (“Old Certificates”), shall thereafter represent that number of shares of Common Stock into which the shares of Common Stock represented by the Old Certificate shall have been combined, subject to the treatment of fractional shares as described above."

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

5.The effective time and date of the amendment herein certified shall be ______ [a.m./p.m.], _________, 20.

*Number between two (2) and ten (10) as determined by the Board of Directors in its sole discretion.

VOTE BY INTERNET - www.proxyvote.com UsetheInternetto transmityourvotinginstructionsandfor electronicdeliveryof informationupuntil11:59P.M.EasternTimethedaybeforethecut-off dateormeeting date. Have your proxy card in hand when you access the web site and follow the instructions toobtain your records and tocreate an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS Ifyouwouldliketoreducethecosts incurredbyourcompanyinmailingproxymaterials, youcanconsenttoreceivingallfutureproxystatements, proxycardsandannualreports electronicallyviae-mailortheInternet.Tosignupforelectronicdelivery,pleasefollow theinstructionsabovetovoteusingtheInternetand,whenprompted,indicatethat you agree toreceive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Useanytouch-tonetelephonetotransmityourvotinginstructionsupuntil11:59P.M. EasternTimethedaybeforethecut-offdateormeetingdate.Haveyourproxycardin 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 toVote Processing, c/oBroadridge, 51 Mercedes Way,Edgewood, NY 11717. LM FUNDING AMERICA, INC. ~~302 Knights Run Avenue~~1200 W Platt Suite ~~1000~~100 Tampa, FL ~~33602~~33606 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 ~~VOTE BY INTERNET - www.proxyvote.com Use~~For Withhold For All All All Except The Board of Directors recommends you vote FOR the ~~Internet to transmit your voting instructions and for electronic delivery~~following: 0 0 0 1. Election of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. 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 up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. 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. NAME CONTROL # g SHARES PAGE 1 OF 2 0000000000000000 123,456,789,012.12345 THE COMPANY NAME INC. - COMMON TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: ☒ ~~THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY For Against Abstain~~ ~~☐ ☐ ☐ ☐ ☐ ☐~~Directors Nominees 01) Mr. Bruce Rodgers 02) Ms. Carollinn Gould The Board of Directors recommends you vote FOR proposals 1,2. and 3. 2. ~~1 The issuance~~To ratify the appointment of ~~shares~~Malone Bailey LP as the Company's independent auditor to audit the Company's 2019 and 2020 Financial Statements. 0 For 0 Against 0Abstain 3 To approve an amendment (in the event it is deemed by the Company's Board of ~~Common Stock in connection with~~Directors to be advisable) to the ~~Conversion and the Follow-On Conversion Offer pursuant~~Company's Certificate of Incorporation, as amended, to ~~NASDAQ Stock Market Rules 5635(b) and 5635(d) 2 The approval of an adjournment~~effect a reverse stock split of the ~~Special Meeting, if necessary or appropriate, to establish~~Company's issued and outstanding common stock at a ~~quorum or to permit further solicitation of proxies for proposal 1 if there are not sufficient votes at~~ratio within the ~~time~~range of the ~~Special Meeting cast in favor~~one-for-two (1:2) to one-for-ten (1:10), as determined by the Board of ~~one or both NOTE: Such other business as may properly come before the meeting or any adjournment thereof.~~

Directors. 0 0 0 For address change/comments, mark here. ~~(see reverse for instructions) Yes No~~ ☐0 Investor Address Line 1 Investor Address Line 2 Please indicate if you plan to attend this meeting ~~☐ ☐~~Investor Address Line 3 (see reverse for instructions) Yes No 0 0 0000446272_1 R1.0.1.18 Investor Address Line 4 Investor Address Line 5 Please sign exactly as your name(s) appear(s) hereon. When signing as John Sample attorney, executor, administrator, or other fiduciary, please give full 1234 ANYWHERE STREET 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. Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET~~ ANY CITY, ON A1A 1A1 ~~Signature [PLEASE SIGN WITHIN BOX] Date JOB # Signature (Joint Owners) Date SHARES CUSIP # SEQUENCE #~~partnership name by authorized officer.

~~Table of Contents~~

0000446272_2 R1.0.1.18 Important Notice Regarding the Availability of Proxy Materials for the ~~Special~~Annual Meeting: The Notice &and Proxy Statement isand Form 10-K are available ~~at www.proxyvote.com~~atwww.proxyvote.com LM ~~Funding America, Inc. Special~~FUNDING AMERICA, INC. Annual Meeting of Stockholders ~~April [ ], 2019, 2:~~May 11, 2020 3:00 ~~p.m. Eastern Time~~PM This proxy is solicited ~~on behalf of~~by the Board of Directors The undersigned hereby appoints Bruce MM. 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~~LMFunding America, Inc. that the undersigned is entitled to vote at the ~~Special~~Annual Meeting of Stockholders to be held at ~~2:00 p.m.~~03:00p.m., Eastern Time on ~~April [ ], 2019~~May 11, 2020 at ~~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’~~Directors' recommendations. ~~Address change/comments:~~ (If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.) Address change/comments: Continued and to be signed on reverse side


TIME:	3 p.m., local time, on Monday, May 11, 2020. Shareholders will be admitted beginning at 2:30 p.m.

PLACE:	LM Funding America, Inc. 1200 West Platt Street, Suite 100 Tampa, Florida 33606

ITEMS OF BUSINESS:	1.	To elect two Class I directors to hold office for a three-year term ending at the third annual meeting of shareholders following their election;

	2.	To ratify the appointment of Malone Bailey LP as the company’s independent auditor to audit the company’s 2020 financial statements; and
	3.	To approve an amendment (in the event it is deemed by the company’s Board of Directors to be advisable) to the company’s Certificate of Incorporation, as amended, to effect a reverse stock split of the company’s issued and outstanding common stock at a ratio within the range of one-for-two (1:2) to one-for-ten (1:10), as determined by the Board of Directors

	4.	To transact such other business that may properly come before the meeting or any adjournments or postponements thereof.

RECORD DATE	Shareholders of record on March 16, 2020 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 2019 Annual Report to Shareholders, 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.
ACCESS BY REMOTE COMMUNICATION	We currently intend to hold the Annual Meeting in person. However, we are actively monitoring the coronavirus (COVID-19) situation, as we are sensitive to the public health and travel concerns our stockholders may have and the protocols that federal, state, and local governments and health officials may impose or recommend. In the event we determine it is not possible or advisable to hold the Annual Meeting in person, we will publicly announce alternative arrangements for the meeting as promptly as practicable before the meeting, which may include holding the meeting solely by means of remote communication (i.e., a virtual-only annual meeting). Please monitor our website at www.lmfunding.com for updated information. If you are planning to attend our meeting, please check the website prior to the meeting date.


~~Table of Contents – To Be Updated~~
~~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~~
~~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	2,494	80.0%	2,494	54.0%
Craven (1)	640	20.0%	2,127	46.0%
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 (1)	225,271	7.2%
Heights Capital Management (1)	163,742	5.2%
Bruce M. Rodgers Revocable Trust (2)	109,562	3.5%
Carollinn Could Revocable Trust (2)	109,562	3.5%

Directors and Executive Officers:
Bruce M. Rodgers.(3)	224,652	7.2%
Carollinn Gould(3)	224,652	7.2%
Mark J. Pajak(4)	648,496	20.7%
Douglas I. McCree(5)	1,050	*
Joel E. Rodgers, Sr(6)	100	*
Martin A. Traber(7)	1,100	*
Andrew Graham(8)	180	*
Fred MillsI(9)	2,600	*
Richard Russell	-	*
Ryan Duran	-	*
All executive officers and directors as a group (10 persons)	878,178	28.0%
Other Beneficial Owners:


Heights Capital Management, Inc	163,742	5.2%
Hudson Bay Capital Management L.P.	225,271	7.2%

	2019		2018	2017
Audit Fees - Malone Bailey, LLP (1)	$	122,000	$ 123,000	$	85,000
Audit Fees - Skoda Minotti & Co. Certified Public Accountants (2)		-			45,000
All Other Fees (3)		8,076	24,975		12,500
Total	$	130,076	$ 156,182	$	142,500


	➢	FOR election of the following nominees for director positions:


	➢	FOR the proposal to ratify the appointment of Malone Bailey LP as the company’s independent auditor to audit the company’s 2020 financial statements;

	~~LM FUNDING AMERICA, INC.~~	Fees

	~~By:~~	~~/s/ Bruce M. Rodgers~~
		~~Name: Bruce M. Rodgers~~
		~~Title: Chief Executive Officer~~Earned or
		Paid in		Option
		Cash		Awards
Name		($)(1)		($)		Total ($)
Martin A. Traber		$	—	$	—	$	—
Andrew Graham		$	—	$	—	$	—
Fred Mills		$	—	$	—	$	—
Douglas I. McCree		$	—	$	—	$	—
Joel E. Rodgers, Sr.		$	—	$	—	$	—


	•	assisting our Board of Directors in its oversight of the quality and integrity of our accounting, auditing, and reporting practices;
	•	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 shareholders or, if applicable, at a special meeting of the shareholders;
	•	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 shareholder nominations, the criteria established by the committee for candidates for nomination for election to the board, and any other disclosures required by applicable laws, regulations, or listing standards; and
	•	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.


	Number of Shares of Common Stock Authorized	Number of Shares Issued and Outstanding	Number of Shares Reserved for Issuance	Number of Shares Authorized but Neither Issued nor Reserved for Future Issuance	Assumed Post-Reverse Stock Split Trading Price
Prior to any Reserve Stock Split	30,000,000	3,234,261	2,939,287	23,826,452	$ 0.56
After Assumed 1-for-2 Reverse Stock Split	30,000,000	1,617,131	1,469,644	26,913,226	$ 1.12
After Assumed 1-for-5 Reverse Stock Split	30,000,000	646,852	587,857	28,765,290	$ 2.80
After Assumed 1-for-10 Reverse Stock Split	30,000,000	323,426	293,929	29,382,645	$ 5.60


	•	the closing sales price of our common stock on the effective date of the Reverse Stock Split as reported on the Nasdaq Capital Market; by
	•	the amount of the fractional share.

These estimates assume a total of 3,234,261 shares of our common stock issued and outstanding immediately prior to the Reverse Stock Split, which is based on the 3,234,261 shares issued and outstanding as of March 16, 2020.

The following 2,939,287 shares of common stock are included in the Number of Shares Reserved for Issuance, based on shares reserved as of March 16, 2020: (i) warrants to purchase 120,000 shares of our common stock at a weighted average exercise price of $125.00 per share; (Ii) warrants to purchase 2,490,700 shares of our common stock at a weighted average exercise price of $2.40 per share; (iii) warrants to purchase 143,587 shares of our common stock at a weighted average exercise price of $1.84 per share; (iv) warrants to purchase 125,000 shares of our common stock at a weighted average exercise price of $2.64 per share; (v) options to purchase 10,000 shares of our common stock outstanding under the 2015 Omnibus Incentive Plan at a weighted average exercise price of $10.00 per share; (vi) options to purchase 3,790 shares of our common stock outstanding under the 2015 Omnibus Incentive Plan at a weighted average exercise price of $100.00 per share; (vii) options to purchase 5,510 shares of our common stock outstanding under the 2015 Omnibus Incentive Plan at a weighted average exercise price of $125.00 per share; (viii) an additional aggregate of 40,700 shares of our common stock reserved for future issuance under the 2015 Omnibus Incentive Plan (excluding options already issued and therefore included in the outstanding options referenced in clause (ii). All shares reserved for issuance would be proportionately reduced by the same ratio at which outstanding shares are adjusted in the event the Reverse Stock Split is effected.

These estimates do not reflect the effects of paying cash in lieu of fractional shares resulting from the Reverse Stock Split.

The Assumed Post-Reverse Stock Split Trading Price of our common stock is based on the $0.56 closing price of our common stock as reported on the Nasdaq Capital Market on March 13, 2020, and assumes that immediately after any Reverse Stock Split, the market price of our common stock would adjust proportionately to reflect the Reverse Stock Split ratio. There can be no assurances that our common stock will trade at a price proportionate to the ratio at which the Reverse Stock Split is implemented, or that our common stock will remain at any given price following implementation of the Reverse Stock Split.