SCHEDULE: Intracoastal Capital Discloses 2.7% Stake in LM Funding America

Intracoastal Capital LLC and its principals, Mitchell P. Kopin and Daniel B. Asher, reported a 2.7% beneficial ownership in LM Funding America, Inc. as of August 25, 2025.

Summary

• Reporting persons Mitchell P. Kopin, Daniel B. Asher, and Intracoastal Capital LLC collectively hold beneficial ownership in LM Funding America, Inc.
• As of August 25, 2025, the reporting persons beneficially owned 405,440 shares of Common Stock, representing 2.7% of the class.
• This ownership includes 375,440 shares directly held by Intracoastal and 30,000 shares issuable upon exercise of Intracoastal Warrant 3.
• The calculation of beneficial ownership excludes shares from Intracoastal Warrant 1 (375,440 shares) and Intracoastal Warrant 2 (454,433 shares) due to conditions requiring stockholder approval and blocker provisions limiting ownership to 9.99%.
• Immediately following the Securities Purchase Agreement (SPA) on August 18, 2025, the reporting persons were deemed to beneficially own 829,873 shares, or approximately 8.2% of the Common Stock, before the full closing of the SPA transaction.
• A significant issuance of 5,231,681 shares of Common Stock occurred at the closing of the SPA transaction, which diluted the percentage ownership of the reporting persons.

Sentiment

Score: 4

Explanation: The filing indicates a passive investment by a group, which is generally neutral. However, the significant dilution observed between the initial SPA execution and the filing date, reducing the reported stake from 8.2% to 2.7%, suggests a negative impact on existing shareholders. The investment itself is a positive, but the dilution is a strong negative.

Positives

• Intracoastal Capital LLC and its principals have taken a significant, albeit passive, stake in LM Funding America, Inc., indicating a level of confidence in the company.

Negatives

• The percentage of beneficial ownership decreased from an initial 8.2% (post-SPA execution) to 2.7% (post-SPA closing) due to a substantial issuance of 5,231,681 shares, indicating significant dilution for existing shareholders.

Risks

• Potential for further dilution from the exercise of Intracoastal Warrant 1 (375,440 shares) and Intracoastal Warrant 2 (454,433 shares) once stockholder approval is obtained and blocker provisions are not triggered.
• The existence of blocker provisions (9.99% and 4.99%) on warrants limits the immediate exercisability and full beneficial ownership, potentially impacting the reporting persons' ability to increase their stake quickly.

Future Outlook

The filing does not provide explicit forward-looking statements or guidance from the company or the reporting persons beyond the conditions for warrant exercisability.

Industry Context

This filing represents a passive investment disclosure by an investment firm in a publicly traded company. Such disclosures are routine for significant equity stakes and do not inherently indicate broader industry trends, though the underlying Securities Purchase Agreement transaction might be more relevant for industry context.

Comparison to Industry Standards

• The 2.7% stake is below the 5% threshold that typically triggers more active investor scrutiny or potential for board representation, aligning with a passive investment strategy.
• The use of blocker provisions in warrants (e.g., 9.99% and 4.99% limits) is a common mechanism in investment agreements to prevent triggering certain regulatory or corporate governance thresholds without prior approval or intent to control.

Stakeholder Impact

• Shareholders: Existing shareholders experienced significant dilution due to the issuance of 5,231,681 shares at the SPA closing, reducing the percentage ownership of the reporting persons from 8.2% to 2.7%.
• LM Funding America, Inc.: The company likely received capital from the Securities Purchase Agreement, which could support its operations or strategic initiatives.

Next Steps

• Stockholder approval is required for the issuance of shares upon exercise of Intracoastal Warrant 1 and Intracoastal Warrant 2.

Key Dates

Recommendation

While a new institutional investor taking a stake can be seen as a positive, the significant dilution that occurred between the initial agreement and the filing date is a concern for existing shareholders. The passive nature of the 13G filing and the blocker provisions on warrants suggest no immediate intent to influence control, making it a neutral to slightly negative event for the stock price in the short term due to dilution. A 'hold' recommendation reflects waiting for more information on how the capital raised will be utilized and its impact on future performance, especially given the dilution.

Keywords

LM Funding America, Intracoastal Capital, Schedule 13G, Beneficial Ownership, Common Stock, Mitchell P. Kopin, Daniel B. Asher, Equity Stake, SEC Filing, Warrants, Dilution