Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Acquisition

v3.19.3
Goodwill and Acquisition
9 Months Ended
Sep. 30, 2019
Business Combinations [Abstract]  
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:

 

 

January 16, 2019

 

 

Total adjusted purchase price

$

4,969,200

 

 

Recognized preliminary amounts of identifiable assets acquired and (liabilities assumed), at fair value:

 

 

 

 

Cash

 

51,300

 

 

Prepaid and other current assets

 

5,200

 

 

Profit on purchased policies

 

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

 

(703,000

)

 

Preliminary estimate of the fair value of assets and liabilities assumed

 

(720,386

)

 

 

 

 

 

 

Goodwill

$

5,689,586

 

 

 

The accompanying unaudited pro forma statements of operations presents the accounts of LM Funding and IIU for the nine- months ended September 30, 2019 and September 30, 2018, assuming the acquisition occurred on January 1, 2018:

 

 

 

For the Three Months

Ended September 30,

 

 

For the Nine Months

Ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenues:

 

 

773,748

 

 

 

960,319

 

 

 

2,391,036

 

 

 

3,142,392

 

Net commission revenue

 

 

773,748

 

 

 

960,319

 

 

 

2,391,036

 

 

 

3,142,392

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

1,020,211

 

 

 

1,089,936

 

 

 

3,473,097

 

 

 

3,071,010

 

Operating income (loss)

 

 

(246,463

)

 

 

(129,617

)

 

 

(1,082,061

)

 

 

71,382

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on disposal of assets

 

 

(6,421

)

 

 

-

 

 

 

(6,421

)

 

 

-

 

Gain on litigation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(405,000

)

Investment income

 

 

-

 

 

 

(1,019

)

 

 

-

 

 

 

(33,687

)

Interest expense

 

 

39,605

 

 

 

388,982

 

 

 

110,078

 

 

 

483,558

 

Income (loss) before income taxes

 

 

(279,647

)

 

 

(517,580

)

 

 

(1,185,718

)

 

 

26,511

 

Income tax benefit

 

 

-

 

 

 

-

 

 

 

(14,226

)

 

 

-

 

Net income (loss)

 

$

(279,647

)

 

$

(517,580

)

 

$

(1,171,492

)

 

$

26,511

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.09

)

 

$

(0.83

)

 

$

(0.37

)

 

$

0.04

 

Diluted

 

 

(0.09

)

 

 

(0.83

)

 

 

(0.37

)

 

 

0.04

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

3,134,160

 

 

 

625,318

 

 

 

3,133,495

 

 

 

625,318

 

Diluted

 

 

3,134,160

 

 

 

625,318

 

 

 

3,133,495

 

 

 

625,318

 

 

IIU generated $501,244 of net commission revenue from January 16, 2019 to September 30, 2019 and $276,606 of operating expenses plus $33,282 of interest expense.