| Goodwill and Acquisition |
Note 2. Goodwill and Acquisition
On January 16, 2019 , the Company, acquired 100% of the share capital of IIU, Inc and its wholly-owned subsidiary Wallach and Company, health insurance broker, (for the initial consideration of $5,089,357 which was paid with a forgiven note to Craven House Capital North American LLC (“Craven”) of $1,507,375 plus a convertible senior note for $3,581,982. Net cash received in the business acquisition was $51,327. The note was subsequently reduced by $120,200 for the closing cash and net working capital adjustment.
The following table summarizes the approximate consideration paid and the amounts of the identified assets acquired and liabilities assumed at the acquisition date:
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|
|
January 16, 2019
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|
|
|
Total adjusted purchase price
|
|
$
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4,969,200
|
|
|
|
|
|
|
|
|
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|
Recognized preliminary amounts of identifiable assets acquired and (liabilities assumed), at fair value:
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|
|
|
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|
Cash
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|
|
51,300
|
|
|
|
Prepaid and other current assets
|
|
|
5,200
|
|
|
|
Profit on purchased policies
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|
|
14,600
|
|
|
|
Property, plant and equipment
|
|
|
17,100
|
|
|
|
Accounts payable
|
|
|
(5,100
|
)
|
|
|
Accrued expenses and other liabilities
|
|
|
(62,686
|
)
|
|
|
Income taxes
|
|
|
(28,500
|
)
|
|
|
Deferred revenue
|
|
|
(9,300
|
)
|
|
|
Debt
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|
|
(703,000
|
)
|
|
|
Preliminary estimate of the fair value of assets and liabilities assumed
|
|
|
(720,386
|
)
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|
|
|
|
|
|
|
|
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Goodwill
|
|
$
|
5,689,586
|
|
|
The accompanying unaudited pro forma statements of operations presents the accounts of LM Funding and IIU for the six- months ended June 30, 2019 and June 30, 2018, assuming the acquisition occurred on January 1, 2018:
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|
|
|
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|
|
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For the Three Months Ended June 30,
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For the Six Months Ended June 30,
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|
|
|
2019
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|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
840,021
|
|
|
|
1,077,981
|
|
|
|
1,617,288
|
|
|
|
2,182,073
|
|
|
Net commission revenue
|
|
|
840,021
|
|
|
|
1,077,981
|
|
|
|
1,617,288
|
|
|
|
2,182,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Operating Expenses:
|
|
|
1,227,838
|
|
|
|
867,977
|
|
|
|
2,452,886
|
|
|
|
1,981,074
|
|
|
Operating income (loss)
|
|
|
(387,817
|
)
|
|
|
210,004
|
|
|
|
(835,598
|
)
|
|
|
200,999
|
|
|
Investment income
|
|
|
-
|
|
|
|
(110,335
|
)
|
|
|
|
|
|
|
(32,668
|
)
|
|
Gain on litigation
|
|
|
-
|
|
|
|
(405,000
|
)
|
|
|
-
|
|
|
|
(405,000
|
)
|
|
Interest expense
|
|
|
62,686
|
|
|
|
94,576
|
|
|
|
70,473
|
|
|
|
94,576
|
|
|
Income (loss) before income taxes
|
|
|
(450,503
|
)
|
|
|
630,763
|
|
|
|
(906,071
|
)
|
|
|
544,091
|
|
|
Income tax benefit
|
|
|
-
|
|
|
|
-
|
|
|
|
(14,226
|
)
|
|
|
-
|
|
|
Net income (loss)
|
|
$
|
(450,503
|
)
|
|
$
|
630,763
|
|
|
$
|
(891,845
|
)
|
|
$
|
544,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.14
|
)
|
|
$
|
1.01
|
|
|
$
|
(0.28
|
)
|
|
$
|
0.87
|
|
|
Diluted
|
|
|
(0.14
|
)
|
|
|
1.01
|
|
|
|
(0.28
|
)
|
|
|
0.87
|
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
3,134,261
|
|
|
|
625,319
|
|
|
|
3,133,106
|
|
|
|
625,319
|
|
|
Diluted
|
|
|
3,134,261
|
|
|
|
625,319
|
|
|
|
3,133,106
|
|
|
|
625,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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IIU generated $280,159 of net commission revenue from January 16, 2019 to June 30, 2019 and $178,023 of operating expenses plus $16,778 of interest expense.
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