Item 7.01 Regulation FD Disclosure.
As disclosed in a Current Report on Form 8-K filed on December 21, 2020, on
December 14, 2020, LM Funding America, Inc. ("LMFA"), through a wholly owned
subsidiary, entered into a Master Loan Receivables Purchase and Assignment
Agreement (the "Purchase Agreement") under which LMFA agreed to purchase up to
$18 million of loan receivables of Borqs Technologies, Inc. (NASDAQ: BRQS), a
British Virgin Islands company ("Borqs"), from Borqs' senior lenders, Partners
for Growth IV, L.P. and Partners for Growth V. L.P. As a part of the
transaction, LMFA entered into a Settlement Agreement, dated December 14, 2020
(the "Settlement Agreement"), with Borqs pursuant to which Borqs was obligated
to issue shares of Borqs common stock to LMFA (the "Settlement Shares"), in one
or more tranches, in settlement of the loan receivables acquired by LMFA under
the Purchase Agreement.
In a separate transaction and also as previously disclosed, on December 16,
2020, LMFA and Esousa Holdings, LLC, a private investor (the "Investor") entered
into a Loan Agreement (the "Loan Agreement") pursuant to which the Investor
agreed to provide consulting services and make one or more non-recourse loans to
LMFA in a principal amount of up to the purchase price of the Borqs loan
receivables purchased by LMFA. The Loan Agreement does not provide a fixed rate
of interest, and LMFA and Investor agreed to split the net proceeds from LMFA's
sales of the Settlement Shares, with LMFA receiving one-third of the net
proceeds after a return of Investor's principal and the Investor receiving
return of principal plus two-thirds of the net proceeds thereafter.
On February 16, 2021, LMFA announced that, as of February 11, 2021, it had
completed its obligations under the Purchase Agreement by purchasing
approximately $18.2 million of aggregate debt (including principal, accrued
interest and fees) from Partners for Growth IV, L.P. and Partners for Growth V,
L.P. during the period from January 7, 2021 to February 10, 2021, at a discount
for approximately $15.5 million. Under the Settlement Agreement, LFMA received
approximately 22.7 million shares from Borqs. The Company sold those shares for
approximately $32.6 million, of which approximately $5.7 million was received by
LMFA after fulfilling its obligations to the Investor under the Loan Agreement.
A copy of the press release, dated February 16, 2021, announcing the completion
of obligations under the above contracts is attached as Exhibit 99.1.
The information under Item 7.01 and in Exhibit 99.1 to this Current Report on
Form 8-K shall not be deemed to be "filed" for purposes of Section 18 of the
Securities and Exchange Act of 1934, or otherwise subject to the liabilities
thereof, nor shall it be deemed to be incorporated by reference in any filing
under the Securities and Exchange Act of 1934 or under the Securities Act of
1933, except to the extent specifically provided in any such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit
Number Description
99.1 Press release issued February 16, 2021
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Forward-Looking Statements
This Current Report on Form 8-K may contain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. These
statements involve risks and uncertainty. Words such as "anticipate,"
"estimate," "expect," "intend," "plan," and "project" and other similar words
and expressions are intended to signify forward-looking statements.
Forward-looking statements are not guarantees of future results and conditions
but rather are subject to various risks and uncertainties. Such statements are
based on the Company's current expectations and are subject to a number of risks
and uncertainties that could cause actual results to differ materially from
those described in the forward-looking statements. Investors are cautioned that
there can be no assurance actual results or business conditions will not differ
materially from those projected or suggested in such forward-looking statements
as a result of various risks and uncertainties. Investors should refer to the
risks detailed from time to time in the reports the Company files with the SEC,
including the Company's Annual Report on Form 10-K for the year ended December
31, 2019, as well as other filings on Form 10-Q and periodic filings on Form
8-K, for additional factors that could cause actual results to differ materially
from those stated or implied by such forward-looking statements. The Company
disclaims any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events, or otherwise,
unless required by law.
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