10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to            .

Commission File No. 000-56243

STANDARD PREMIUM FINANCE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Florida	81-2624094
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

13590 SW 134th Avenue, Suite 214, Miami, FL 33186

(Address of principal executive offices and Zip Code)

305-232-2752

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

There were 2,905,016 shares of common stock issued and outstanding as of November 5, 2021.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties. These statements may relate to, but are not limited to, information or assumptions about us, our capital and other expenditures, dividends, financing plans, capital structure, cash flow, our potential future business acquisitions, future economic performance, operating income and management’s plans, strategies, goals and objectives for future operations and growth. These forward-looking statements generally are accompanied by words such as “intend,” “anticipate,” “believe,” “estimate,” “expect,” “should,” “seek,” “project,” “plan,” “would,” “could,” “can,” “may,” and similar terms. Any statement that is not a historical fact is a forward-looking statement. It should be understood that these forward-looking statements are necessarily estimates reflecting the best judgment of senior management, not guarantees of future performance. They are subject to a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described in Part II. “Item 1A. Risk Factors” in this Quarterly Report. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Forward-looking statements represent intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements.

Each of the terms the “Company” and “Standard Premium” as used herein refers collectively to Standard Premium Finance Holdings, Inc. and its wholly owned subsidiaries, unless otherwise stated.

STANDARD PREMIUM FINANCE HOLDINGS, INC.

TABLE OF CONTENTS

Part I – FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	27
SIGNATURES

i

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

STANDARD PREMIUM FINANCE HOLDINGS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Table of Contents

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020	2
Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2021 and 2020 (unaudited)	3
Condensed Consolidated Statement of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2021 and 2020 (unaudited)	4 – 5
Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2021 and 2020 (unaudited)	6
Notes to Condensed Consolidated Financial Statements (unaudited)	7 – 19

1

Standard Premium Finance Holdings, Inc. and Subsidiary

Condensed Consolidated Balance Sheets

September 30, 2021 (unaudited) and December 31, 2020

	September 30,		December 31,
	2021		2020
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash	$	81,411	$	477,289
Premium finance contracts and related receivable, net		48,997,156		38,999,926
Prepaid expenses and other current assets		493,751		383,908
TOTAL CURRENT ASSETS		49,572,318		39,861,123
PROPERTY AND EQUIPMENT, NET		90,189		81,547
OPERATING LEASE ASSETS		253,923		95,425
OTHER ASSETS
Cash surrender value of life insurance, net of policy loan		551,933		516,306
Deferred tax asset		385,000		260,000
TOTAL OTHER ASSETS		936,933		776,306
TOTAL ASSETS	$	50,853,363	$	40,814,401
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Line of credit, net	$	33,131,761	$	25,653,473
Drafts payable		2,274,145		1,870,965
Note payable - current portion		1,655,707		1,886,387
Note payable - stockholders and related parties - current portion		1,991,592		722,735
Payroll Protection Program loan - current portion		—		15,022
Operating lease obligation - current portion		107,182		39,344
Accrued expenses and other current liabilities		1,312,539		1,210,261
TOTAL CURRENT LIABILITIES		40,472,926		31,398,187
LONG-TERM LIABILITIES
Note payable, net of current portion		2,936,891		1,894,785
Note payable - stockholders and related parties, net of current portion		2,724,701		3,525,558
Payroll Protection Program loan, net of current portion		271,000		255,978
Operating lease obligation, net of current portion		146,741		56,081
TOTAL LONG-TERM LIABILITIES		6,079,333		5,732,402
TOTAL LIABILITIES		46,552,259		37,130,589
COMMITMENTS AND CONTINGENCIES (see Note 13)
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.001 per share; 20 million shares authorized, 600,000 shares designated as Series A - convertible, 99,000 and 99,000 issued and outstanding at September 30, 2021 and December 31, 2020, respectively		99		99
Common stock, par value $.001 per share; 100 million shares authorized, 2,905,016 and 2,905,016 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		2,905		2,905
Additional paid in capital		2,674,328		2,639,051
Retained earnings		1,623,772		1,041,757
TOTAL STOCKHOLDERS' EQUITY		4,301,104		3,683,812
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	50,853,363	$	40,814,401

See accompanying notes to the condensed consolidated unaudited financial statements.

2

Standard Premium Finance Holdings, Inc. and Subsidiary

Condensed Consolidated Statement of Operations

For the Three and Nine Months Ended September 30, 2021 and 2020 

(unaudited)

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
REVENUES
Finance charges	$	1,700,380	$	1,356,164	$	4,671,422	$	3,926,674
Late charges		266,087		193,815		722,895		644,930
Origination fees		99,581		76,851		306,462		237,105
TOTAL REVENUES		2,066,048		1,626,830		5,700,779		4,808,709
OPERATING COSTS AND EXPENSES
Interest expense		412,467		423,165		1,262,938		1,294,606
Salaries and wages		368,733		339,030		1,074,298		1,030,312
Commission expense		238,104		202,522		777,130		620,129
Bad debts		306,382		79,935		670,427		389,580
Professional fees		77,681		47,842		262,563		134,231
Postage expense		29,356		29,530		81,516		94,121
Insurance expense		36,019		34,373		131,729		117,735
Other operating expenses		220,028		142,701		604,740		498,343
TOTAL COSTS AND EXPENSES		1,688,770		1,299,098		4,865,341		4,179,057
INCOME BEFORE INCOME TAXES		377,278		327,732		835,438		629,652
PROVISION FOR INCOME TAXES		79,515		53,876		201,448		157,620
NET INCOME		297,763		273,856		633,990		472,032
PREFERRED SHARE DIVIDENDS		17,325		10,500		51,975		33,250
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	280,438	$	263,356	$	582,015	$	438,782
Net income per share attributable to common shareholders
Basic and Diluted	$	0.10	$	0.09	$	0.20	$	0.14
Weighted average common shares outstanding
Basic and Diluted		2,905,016		2,905,016		2,905,016		3,102,096

See accompanying notes to the condensed consolidated unaudited financial statements.

3

Standard Premium Finance Holdings, Inc. and Subsidiary

Condensed Consolidated Statement of Changes in Stockholders' Equity

For the Three and Nine Months Ended September 30, 2021 and 2020

(unaudited)

											Additional						Total
	Preferred Stock				Common Stock						Paid-in			Retained			Stockholders'
	Shares		Amount		Shares			Amount			Capital			Earnings			Equity
BALANCE AT DECEMBER 31, 2019		60,000	$	60		3,505,016		$	3,505		$	2,672,399		$	403,329		$	3,079,293
Debt issued to retire stock		—		—		(600,000	)		(600	)		(479,400	)		—			(480,000	)
Options issued for services												2,889						2,889
Distributions (preferred shares)															(10,500	)		(10,500	)
Net income															151,308			151,308
BALANCE AT MARCH 31, 2020 (unaudited)		60,000	$	60		2,905,016		$	2,905		$	2,195,888		$	544,137		$	2,742,990
Options issued for services		—		—		—			—			8,667						8,667
Distributions (preferred shares)															(10,500	)		(10,500	)
Series A Convertible Preferred Stock issued in exchange for note payable and cash		19,000		19								189,981						190,000
Warrants issued for services												27,200						27,200
Net income															46,868			46,868
BALANCE AT JUNE 30, 2020 (unaudited)		79,000	$	79		2,905,016		$	2,905		$	2,421,736		$	580,505		$	3,005,225
Options issued for services		—		—		—			—			8,668						8,668
Distributions (preferred shares)															(12,250	)		(12,250	)
Sale of preferred stock		20,000		20								199,980						200,000
Net income															273,856			273,856
BALANCE AT SEPTEMBER 30, 2020 (unaudited)		99,000	$	99		2,905,016		$	2,905		$	2,630,384		$	842,111		$	3,475,499

See accompanying notes to the condensed consolidated unaudited financial statements.

 4

Standard Premium Finance Holdings, Inc. and Subsidiary

Condensed Consolidated Statement of Changes in Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2021 and 2020

(unaudited)

									Additional					Total
	Preferred Stock				Common Stock				Paid-in		Retained			Stockholders'
	Shares		Amount		Shares		Amount		Capital		Earnings			Equity
BALANCE AT DECEMBER 31, 2020		99,000	$	99		2,905,016	$	2,905	$	2,639,051	$	1,041,757		$	3,683,812
Options issued for services		—		—		—		—		8,667					8,667
Distributions (preferred shares)												(17,325	)		(17,325	)
Net income												180,254			180,254
BALANCE AT MARCH 31, 2021 (unaudited)		99,000	$	99		2,905,016	$	2,905	$	2,647,718	$	1,204,686		$	3,855,408
Options issued for services		—		—		—		—		8,667					8,667
Warrants issued for services										9,275					9,275
Distributions (preferred shares)												(17,325	)		(17,325	)
Net income												155,973			155,973
BALANCE AT JUNE 30, 2021 (unaudited)		99,000	$	99		2,905,016	$	2,905	$	2,665,660	$	1,343,334		$	4,011,998
Options issued for services		—		—		—		—		8,668					8,668
Distributions (preferred shares)												(17,325	)		(17,325	)
Net income												297,763			297,763
BALANCE AT SEPTEMBER 30, 2021 (unaudited)		99,000	$	99		2,905,016	$	2,905	$	2,674,328	$	1,623,772		$	4,301,104

See accompanying notes to the condensed consolidated unaudited financial statements.

5

Standard Premium Finance Holdings, Inc. and Subsidiary

Condensed Consolidated Statement of Cash Flows

For the Nine Months Ended September 30, 2021 and 2020

(unaudited)

	For the Nine Months Ended
	September 30,
	2021			2020
CASH FLOW FROM OPERATING ACTIVITIES:
NET INCOME	$	633,990		$	472,032
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH FLOW USED IN OPERATING ACTIVITIES:
Depreciation		25,239			19,547
Amortization of right to use asset - operating lease		76,837			84,734
Bad debt expense		670,427			389,580
Amortization of loan origination fees		100,950			61,649
Options issued for services		26,002			20,224
Warrants issued for services		9,275			27,200
Changes in operating assets and liabilities:
(Increase)/Decrease in premium finance contracts		(10,667,657	)		(2,173,295	)
(Increase)/Decrease in prepaid expenses and other current assets		(109,843	)		(67,087	)
(Increase)/Decrease in deferred tax asset, net		(125,000	)		(20,000	)
Increase/(Decrease) in drafts payable		403,180			121,861
Increase/(Decrease) in accounts payable and accrued expenses		102,278			186,195
Increase/(Decrease) in operating lease liability		(76,837	)		(84,734	)
Net cash used in operating activities		(8,931,159	)		(962,094	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments made on life insurance policy		(35,627	)		(33,097	)
Purchases of property and equipment		(33,881	)		(6,386	)
Net cash used in investing activities		(69,508	)		(39,483	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable - stockholders and related parties		493,000			80,000
Repayment of notes payable - stockholders and related parties		(25,000	)		—
Proceeds from PPP Loan		—			271,000
Proceeds of line of credit, net of repayments		7,377,338			522,446
Dividends paid		(51,975	)		(33,250	)
Proceeds from sale of preferred stock		—			320,000
Proceeds from notes payable - other		866,426			150,000
Repayment of notes payable - other		(55,000	)		(300,000	)
Net cash provided by financing activities		8,604,789			1,010,196
NET CHANGE IN CASH		(395,878	)		8,619
CASH AT THE BEGINNING OF THE PERIOD		477,289			345,607
CASH AT THE END OF THE PERIOD	$	81,411		$	354,226
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes	$	359,068		$	271,284
Interest paid	$	1,275,284		$	1,210,168
NON-CASH INVESTING AND FINANCING TRANSACTION:
Debt issued to retire common stock	$	—		$	480,000
Debt exchanged for Series A Convertible Preferred Stock	$	—		$	70,000
Operating lease asset obtained in exchange for operating lease liability	$	235,335		$	—

See accompanying notes to the condensed consolidated unaudited financial statements.

6

Standard Premium Finance Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

September 30, 2021 and 2020

(unaudited)

1. Principles of Consolidation and Description of Business

Standard Premium Finance Holdings, Inc. (“SPFH” or the “Holding”) was incorporated on May 12, 2016, pursuant to the laws of the State of Florida.

Standard Premium Finance Management Corporation (“SPFMC” or the “subsidiary”) was incorporated on April 23, 1991, pursuant to the laws of the State of Florida, to engage principally in the insurance premium financing business. The Subsidiary is a licensed insurance premium finance company in Florida, Georgia, North Carolina, South Carolina, Tennessee, Texas and Arizona.

The accompanying condensed consolidated financial statements include the accounts of SPFH and its wholly-owned subsidiary SPFMC. SPFH and its subsidiary are collectively referred to as (“the Company”). All significant intercompany balances and transactions have been eliminated in consolidation.

2. Summary of Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements (unaudited), which include the accounts of Standard Premium Finance Holdings, Inc. and its wholly-owned subsidiary, have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes thereto for the year ended December 31, 2020.

In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements of Standard Premium Finance Holdings, Inc. and its wholly-owned subsidiary for the fiscal year ended December 31, 2020, have been omitted. 

Cash and Cash Equivalents

The Company considers short-term interest-bearing investments with initial maturities of three months or less to be cash equivalents. The Company has no cash equivalents at September 30, 2021 and December 31, 2020.

Revenue Recognition

Revenues are recognized when control of the promised services is transferred to the customer and in an amount that reflects the consideration the Company expects to be entitled to in exchange for these services. For the services where the Company’s performance obligation is satisfied at a point in time and for which there is no ongoing obligation, revenue is recognized upon delivery. For the services where the Company satisfies its performance obligation over time as the service is being transferred to the customer, revenue is generally recognized using the output method as the services are delivered.

Finance charges on insurance premium installment contracts are initially recorded as unearned interest and are credited to income monthly over the term of the finance agreement. For Florida, Georgia, North Carolina and Texas contracts, an initial service fee of $20 per contract and the first month’s interest are recognized as income at the inception of a contract. The same treatment is applied to the $15 initial service fee and first month’s interest in South Carolina. The initial $20 per contract fee can only be charged once to an insured in a twelve-month period. In accordance with industry practice, finance charges are recognized as income using the “Rule of 78s” method of amortizing finance charge income, which does not materially differ from the interest method of amortizing finance charge income on short term receivables. Late charges are recognized as income when charged. Unearned interest is netted against Premium Finance Contracts and Related Receivables on the balance sheet for reporting purposes.

7

Standard Premium Finance Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

September 30, 2021 and 2020

(unaudited)

2. Summary of Significant Accounting Policies (Continued) 

Premium Finance Contracts and Related Receivable

The Company finances insurance premium on policies for the transportation industry and other commercial enterprises. The term of each contract varies from 3 to 12 monthly payments. Repayment terms are structured such that the contracts will be repaid within the term of the underlying insurance policy, generally less than one year. The contracts are secured by the unearned premium of the insurance carrier which is obligated to pay the Company any unearned premium in the event the insurance policy is cancelled pursuant to a power of attorney contained in the finance contract. As of September 30, 2021 and December 31, 2020, the amount of unearned premium on open and cancelled contracts totaled $71,558,748 and $50,994,858, respectively. The annual percentage interest rates on new contracts averaged approximately 15.5% and 15.6% during nine months ended September 30, 2021 and 2020, respectively.

Allowance for Doubtful Accounts

The carrying amount of the Premium Finance Contracts (“Contracts”) is reduced by an allowance for losses that are maintained at a level which, in management’s judgment, is adequate to absorb losses inherit in the Contracts. The amount of the allowance is based upon management’s evaluation of the collectability of the Contracts, including the nature of the accounts, credit concentration, trends, and historical data, specific impaired Contracts, economic conditions, and other risks inherent in the Contracts. The allowance is increased by a provision for loan losses, which is charged to expense, and reduced by charge-offs, net of recovery.

8

Standard Premium Finance Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

September 30, 2021 and 2020

(unaudited)

2. Summary of Significant Accounting Policies (Continued)

Property and Equipment

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:

Furniture and equipment 5 - 7 years

Computer equipment and software 3 - 5 years

Leasehold improvements 10 years

Amortization of Loan Origination Costs

Amortization of loan origination costs is computed using the straight-line method over the life of the loan agreement.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include assumptions used in valuation of deferred tax assets, allowance for doubtful accounts, depreciable lives of property and equipment, and valuation of stock-based compensation.

Concentration of Credit and Financial Instrument Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and accounts receivable from customers, agents, and insurance companies. The Company maintains its cash balances at three banks. Accounts at these financial institutions are insured by the Federal Deposit Insurance Corporation up to $250,000. Uninsured balances are $199,703 and $545,748 at September 30, 2021 and December 31, 2020, respectively. The Company mitigates this risk by maintaining its cash balances at high-quality financial institutions. The following table provides a reconciliation between uninsured balances and cash per the balance sheet:

	September 30, 2021 (unaudited)			December 31, 2020
Uninsured Balance	$	199,703		$	545,748
Plus: Insured balances		250,000			250,000
Plus: Balances at other institutions that do not exceed FDIC limit		15,334			7,913
Less: Outstanding checks		(383,626	)		(326,372	)
Cash per Consolidated Balance Sheet	$	81,411		$	477,289

The Company controls its credit risk in accounts receivable through credit standards, limits on exposure, by monitoring the financial condition of insurance companies, by adhering to statutory cancellation policies, and by monitoring and pursuing collections from past due accounts. We cancel policies at the earliest permissible date allowed by the statutory cancellation regulations.

9

Standard Premium Finance Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

September 30, 2021 and 2020

(unaudited)

2. Summary of Significant Accounting Policies (Continued)

Approximately 51% and 56% of the Company’s business activity is with customers located in Florida for 2021 and 2020, respectively. Approximately 20% and 19% of the Company’s business activity is with customers located in Georgia for 2021 and 2020, respectively. Approximately 15% and 10% of the Company's business activity is with customers located in North Carolina for 2021 and 2020, respectively. There were no other significant regional, industrial or group concentrations during the nine months ended September 30, 2021 and 2020.

Cash Surrender Value of Life Insurance

The Company is the owner and beneficiary of a life insurance policy on its president. The cash surrender value relative to the policy in place at September 30, 2021 and December 31, 2020 was $551,933 and $516,306, respectively.

Fair Value of Financial Instruments

The Company’s carrying amounts of financial instruments as defined by Financial Accounting Standards Board (“FASB”) ASC 825, “Disclosures about Fair Value of Financial Instruments”, including finance contract and related receivables, prepaid expenses, drafts payable, accrued expenses and other current liabilities, approximate their fair value due to the relatively short period to maturity for these instruments. The fair value of the line of credit and long-term debt are based on current rates at which the Company could borrow funds with similar remaining maturities and the carrying value approximates fair value.

Income Taxes

The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

Uncertain tax positions are recognized only when the Company believes it is more likely than not that the tax position will be upheld on examination by the taxing authorities based on the merits of the position. The Company has no material unrecognized tax benefits and no adjustments to its consolidated financial position, results of operations or cash flows were required as of September 30, 2021.

Tax returns are open to examination by taxing authorities for three years after filing. No income tax returns are currently under examination by taxing authorities. SPFMC and SPFH recognize interest and penalties, if any, related to uncertain tax positions in income tax expense. SPFMC and SPFH did not have any accrued interest or penalties associated with uncertain tax positions as of December 31, 2020.

Earnings per Common Share

The Corporation accounts for earnings (loss) per share in accordance with FASB ASC Topic No. 260 - 10, “Earnings Per Share”, which establishes the requirements for presenting earnings per share (“EPS”). FASB ASC Topic No. 260 - 10 requires the presentation of “basic” and “diluted” EPS on the face of the statement of operations. Basic EPS amounts are calculated using the weighted-average number of common shares outstanding during each period. Diluted EPS assumes the exercise of all stock options, warrants and convertible securities having exercise prices less than the average market price of the common stock during the periods, using the treasury stock method.

10

Standard Premium Finance Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

September 30, 2021 and 2020

(unaudited)

2. Summary of Significant Accounting Policies (Continued)

For both the nine months ended September 30, 2021 and 2020, stock options to purchase 187,400 shares of common stock were outstanding as described in Note 11. 93,700 of these options vested on March 1, 2021 and the remaining 93,700 stock options vest on March 1, 2022. The stock options are anti-dilutive and not included in the calculation of diluted EPS at September 30, 2021 and 2020. For the nine months ended September 30, 2021 and 2020, stock warrants to purchase 975,000 and 800,000 shares of common stock were outstanding, respectively, as described in Note 11. Although these stock warrants vested immediately, they are not “in-the-money” and are thus anti-dilutive and not included in the calculation of diluted EPS at September 30, 2021 and 2020. The Series A Convertible Preferred Stock can be converted to common stock at 80% of the prevailing market price over the previous 30-day period at the option of the Company. A conversion prior to public trading requires the stockholders’ consent.

Leases

The Company recognizes and measures its leases in accordance with ASC Topic 842, “Leases”. The Company determines if an arrangement is a lease, or contains a lease, at inception of a contract and when the terms of an existing contract are changed. The Company recognizes a lease liability and a right of use (ROU) asset at the commencement date of the lease. The lease liability is initially and subsequently recognized based on the present value of its future lease payments calculated using the Company’s incremental borrowing rate.

3. Premium Finance Contracts, Related Receivable and Allowance for Doubtful Accounts

Premium Finance Contracts and Related Receivable represent monthly payments due on insurance premium finance contracts. The Company finances insurance policies over periods from three months to one year for businesses and consumers who make an initial down payment of, on average, 25 percent of the insurance policy amounts. The entire amount of the contract is recorded including amounts due for finance charges and services charges. These receivables are reported net of unearned interest for financial statements purposes. Amounts due from agents represent balances related to (1) an agent’s unearned commission due to a policy cancellation and (2) down payments collected by the agents on behalf of the insured, which are due to us. Receivables from insurance premium finance contracts cancelled are due from the insurance companies.

11

Standard Premium Finance Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

September 30, 2021 and 2020

(unaudited)

3. Premium Finance Contracts, Related Receivable and Allowance for Doubtful Accounts (Continued)

Premium finance contract and agents’ receivable at September 30, 2021 and December 31, 2020 are as follows:

	September 30, 2021			December 31,
Description	(unaudited)			2020
Premium finance contract and agents’ receivable at June 30, 2021 and December 31, 2020 are as follows:
Insurance premium finance contracts outstanding	$	47,416,520		$	37,499,416
Insurance premium finance contracts cancelled		3,536,552			2,627,810
Insurance Premium finance contracts gross		50,953,072			40,127,226
Amounts due from agents		898,852			891,464
Less: Unearned interest		(1,580,013	)		(1,194,422	)
Insurance premium finance contracts net		50,271,911			39,824,268
Less: Allowance for doubtful accounts		(1,274,755	)		(824,342	)
Total	$	48,997,156		$	38,999,926

The allowance for doubtful accounts at September 30, 2021 and December 31, 2020 are as follows:

	September 30, 2021 (unaudited)		December 31, 2020
Allowance for premium finance contracts	$	1,056,727	$	650,000
Allowance for amounts due from agents		218,028		174,342
Total allowance for doubtful accounts	$	1,274,755	$	824,342

Activity in the allowance for doubtful accounts for the nine months ended September 30, 2021 and the year ended December 31, 2020 are as follows:

	September 30, 2021 (unaudited)			December 31, 2020
Balance, at the beginning of the period	$	824,342		$	785,532
Current year provision		1,031,016			1,086,207
Direct write-downs charged against the allowance		(801,284	)		(1,520,947	)
Recoveries of amounts previously charged off		220,681			473,550
Balance at end of the period	$	1,274,755		$	824,342

The Company maintains its allowance at gross amounts, which includes allowances for write-offs of unearned revenues. Provisions and write-offs per the footnote table above are displayed at gross amounts, which include provisions and write-offs of unearned revenues. These write-offs are appropriately split between the principal (i.e. bad debt expense) and interest/fee (i.e. contra-revenue) portions on the income statement. The following tables show a reconciliation between the total provision per the footnote and bad debt expense on the consolidated statement of operations:

	For the three months ended September 30,
	2021 (unaudited)			2020 (unaudited)
Total Provision	$	400,000		$	254,000
Less: Contra-revenues		(93,618	)		(174,065	)
Bad Debt Expense per the Consolidated Statement of Operations	$	306,382		$	79,935

	For the nine months ended September 30,
	2021 (unaudited)			2020 (unaudited)
Total Provision	$	1,031,016		$	929,000
Less: Contra-revenues		(333,297	)		(539,420	)
Less: Current year provisions for amounts due from agents		(27,292	)		—
Bad Debt Expense per the Consolidated Statement of Operations	$	670,427		$	389,580

12

Standard Premium Finance Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

September 30, 2021 and 2020

(unaudited)

4. Property and Equipment, Net

The Company’s property and equipment consists of the following:

	September 30,
	2020 (unaudited)			December 31, 2020
Computer Software	$	26,207		$	26,207
Automobile		87,867			53,986
Furniture & Fixtures		14,273			14,273
Leasehold Improvements		116,811			116,811
Computer Equipment		59,927			59,927
Property and equipment		305,085			271,204
Accumulated depreciation		(214,896	)		(189,657	)
Property and equipment, net	$	90,189		$	81,547

The Company recorded depreciation expense of $25,239 and $19,547, respectively for the nine months ended September 30, 2021 and 2020. The Company recorded depreciation expense of $8,683 and $4,945, respectively for the three months ended September 30, 2021 and 2020.

5. Leases

The Company accounts for leases in accordance with ASC Topic 842. In March 2021, the Company renewed its office lease with Marlenko Acquisitions, LLC. The new two-year lease is identical to the previous lease and expires on February 28, 2023 with a one-year option to renew. The right-of-use asset and operating lease liability at the execution of this lease totaled $235,335. The Company used its incremental borrowing rate of 5.25% for all operating leases as of September 30, 2021 and December 31, 2020.

Supplemental balance sheet information related to leases is as follows:

		September 30,		December 31,
Operating Leases	Classification	2021		2020
		(unaudited)
Right-of-use assets	Operating lease assets	$	253,923	$	95,425
Current lease liability	Current operating lease liability		107,182		39,344
Non-current lease liability	Long-term operating lease liability		146,741		56,081
Total lease liabilities		$	253,923	$	95,425

The weighted-average remaining lease term was 2.23 years and 3.33 years as of September 30, 2021 and December 31, 2020, respectively. For the nine months ended September 30, 2021 and 2020, the total lease cost was $85,384 and $88,200, respectively. For the three months ended September 30, 2021 and 2020, the total lease cost was $28,194 and $29,400, respectively.

6. Drafts Payable

Drafts payable outstanding represent unpaid drafts that have not been disbursed by the bank as of the reporting date, on insurance premium finance contracts received by the Company prior to the reporting date. As of September 30, 2021 and December 31, 2020, the draft payable balances are $2,274,145 and $1,870,965, respectively.

13

Standard Premium Finance Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

September 30, 2021 and 2020

(unaudited)

7. Line of Credit

Relationship with Woodforest National Bank (“WNB”)

On October 5, 2018, the Company entered into an exclusive twenty-four month loan agreement with Woodforest National Bank for a revolving line of credit in the amount of $25,000,000. The Company recorded $164,396 of loan origination costs. On July 30, 2019, the Company’s line of credit was modified to $27,500,000, maturing October 5, 2020. On October 5, 2020, the Company’s line of credit was extended to a maturity date of January 5, 2021.

At December 31, 2020, the advance rate was 85% of the aggregate unpaid balance of the Company’s eligible accounts receivable. The line of credit is secured by all the Company’s assets and is personally guaranteed by our CEO and four significant stockholders of the Company. The line of credit bears interest at 30 Day Libor plus 2.75% per annum (3.75% at December 31, 2020). As of December 31, 2020, the amount of principal outstanding on the line of credit was $25,653,473 and is reported on the consolidated balance sheet net of $0 of unamortized loan origination fees. Interest expense on this line of credit for the nine months ended September 30, 2021 and 2020 totaled approximately $86,000 and $792,000, respectively. The Company recorded amortized loan origination fee for the nine months ended September 30, 2021 and 2020 of $0 and $61,649, respectively. This line of credit was fully paid off on February 3, 2021 (see below).

Relationship with First Horizon Bank (“FHB”)

On February 3, 2021, the Company entered into an exclusive twenty-four month loan agreement with First Horizon Bank for a revolving line of credit in the amount of $35,000,000, which was immediately funded for $25,974,695 to pay off the prior line of credit with WNB. On this date, the line of credit with WNB was fully repaid and terminated. The Company recorded $180,350 of loan origination costs.

At September 30, 2021, the advance rate was 85% of the aggregate unpaid balance of the Company’s eligible accounts receivable. The line of credit is secured by all the Company’s assets and is personally guaranteed by our CEO and a member of the Board of Directors of the Company. The line of credit bears interest at 30 Day Libor plus 2.85% per annum (3.35% at September 30, 2021). The terms of the Line of Credit agreement provide for a minimum interest of 3.35% when the 30-day Libor falls below 0.50%. For the nine months ended September 30, 2021, the minimum rate of 3.35% was in effect. As of September 30, 2021, the amount of principal outstanding on the line of credit was $33,211,161 and is reported on the consolidated balance sheet net of $79,400 of unamortized loan origination fees. Interest expense on this line of credit for the nine months ended September 30, 2021 totaled approximately $603,000. The Company recorded amortized loan origination fee for nine months ended September 30, 2021 of $100,950. Interest expense on this line of credit for the three months ended September 30, 2021 totaled approximately $202,000. The Company recorded amortized loan origination fee for three months ended September 30, 2021 of $37,856.

The Company’s agreements with WNB and FHB contain certain financial covenants and restrictions. Under these restrictions, all the Company’s assets are pledged to secure the line of credit, the Company must maintain certain financial ratios such as an adjusted tangible net worth ratio, interest coverage ratio and senior leverage ratio. The loan agreement also provides for certain covenants such as audited financial statements, notice of change of control, budget, permission for any new debt, copy of filings with regulatory bodies, and minimum balances. Management believes it was in compliance with the applicable debt covenants as of September 30, 2021 and December 31, 2020.

14

Standard Premium Finance Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

September 30, 2021 and 2020

(unaudited)

8. PPP Loan

On April 18, 2020, the Company entered into a $271,000 loan with its primary lender, under a program administered by the Small Business Administration (“SBA”) as part of the Paycheck Protection Program (“PPP”) approved under the “Coronavirus Aid, Relief, and Economic Security Act” (“CARES Act”) (Pub. L. No. 116-136). The loan matures in two (2) years and accrues interest at 1% from the origination of the loan. After a 6-month deferral, interest and principal payments are due monthly. The Note is subject to partial or full forgiveness, the terms of which are dictated by the SBA, the CARES Act, section 7(a)(36) of the Small Business Act, all rules and regulations promulgated thereunder including, without limitation, Interim Final Rule RIN 3245-AH34, subsequent SBA guidance, and the Code of Federal Regulations. The payment deferral period was extended until March 18, 2022. In September 2020, the Company applied for forgiveness of the PPP loan, which is still under examination by the SBA.

As of September 30, 2021 and December 31, 2020, the balance of the PPP loan is as follows:

	September 30, 2021 (unaudited)		December 31, 2020
Total PPP loan	$	271,000	$	271,000
Less current maturities		—		(15,022	)
Total	$	271,000	$	255,978

9. Note Payable – Others

At September 30, 2021 and December 31, 2020, the balances of long-term unsecured notes to unrelated parties are as follows:

	September 30,
	2021  (unaudited)			December 31, 2020
Total notes payable - Others	$	4,592,598		$	3,781,172
Less current maturities		(1,655,707	)		(1,886,387	)
Long-term maturities	$	2,936,891		$	1,894,785

These are notes payable to individuals. The notes have interest payable monthly, ranging from 6% to 8% per annum and are unsecured and subordinated. The principal is due on various dates through December 31, 2025. The notes roll-over at periods from 8 months to 4 years on maturity unless the note holder requests repayment through written instructions at least 90 days prior to the expiration date. Interest expense on these notes totaled approximately $207,000 and $201,000 during the nine months ended September 30, 2021 and 2020, respectively. Interest expense on these notes totaled approximately $77,000 and $60,000 during the three months ended September 30, 2021 and 2020, respectively. The Company received proceeds on these notes of $866,426 and $150,000 for the nine months ended September 30, 2021 and 2020, respectively. The Company repaid principal on these notes of $55,000 and $300,000 for the nine months ended September 30, 2021 and 2020, respectively. On June 30, 2020, the Company exchanged $70,000 of outstanding notes for 7,000 shares of Series A Convertible Preferred Stock.

15

Standard Premium Finance Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

September 30, 2021 and 2020

(unaudited)

10. Note Payable – Stockholders and Related Parties

At September 30, 2021 and December 31, 2020, the balances of long-term notes payable to stockholders and related parties are as follows:

	September 30,
	2021  (unaudited)			December 31, 2020
Total notes payable - Related parties		4,716,293			4,248,293
Less current maturities		(1,991,592	)		(722,735	)
Long-term maturities	$	2,724,701		$	3,525,558

These are notes payable to stockholders and related parties. The notes have interest payable monthly ranging from 6% to 8% per annum and are unsecured and subordinated. The principal is due on various dates through August 31, 2025. The notes roll-over at periods from 8 months to 4 years on maturity unless the note holder requests repayment through written instructions at least 90 days prior to the expiration date. Interest expense on these notes totaled approximately $270,000 and $238,000 during the nine months ended September 30, 2021 and 2020, respectively. Interest expense on these notes totaled approximately $88,000 and $86,000 during the three months ended September 30, 2021 and 2020, respectively. The Company received proceeds on these notes of $493,000 and $80,000 for the nine months ended September 30, 2021 and 2020, respectively. The Company repaid principal on these notes of $25,000 and $0 for the nine months ended September 30, 2021 and 2020, respectively.

On March 30, 2020, the Company repurchased and retired 600,000 shares of common stock from a significant shareholder. The Company issued a $480,000 note payable in exchange for these shares, which is due four years from the repurchase date bearing 8% interest. The Company retains the right to prepay the note at any time with no prepayment penalty.

11. Equity

Preferred Stock

As of September 30, 2021, the Company was authorized to issue 20 million shares of preferred stock with a par value of $0.001 per share, of which 600,000 shares had been designated as Series A convertible and 99,000 shares had been issued and are outstanding.

In the event of any liquidation, dissolution or winding up of the Company, the holders of preferred stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Company to the holders of common stock, an amount equal to $10 for each share of preferred stock, plus all unpaid dividends that have been accrued, accumulated or declared. The Company may redeem the preferred stock from the holders at any time following the second anniversary of the closing of the original purchase of the preferred stock. The Company shall also have the right to convert any or all of the preferred stock into common stock at a 20% discount to the market price of common shares with written approval of the stockholder.

16

Standard Premium Finance Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

September 30, 2021 and 2020

(unaudited)

11. Equity (Continued)

Holders of preferred stock are entitled to receive preferential cumulative dividends, only if declared by the board of directors, at a rate of 7% per annum per share of the liquidation preference amount of $10 per share. During the nine months ended September 30, 2021 and 2020, the Board of Directors has declared and paid dividends on the preferred stock of $51,975 and $33,250, respectively. During the three months ended September 30, 2021 and 2020, the Board of Directors has declared and paid dividends on the preferred stock of $17,325 and $12,500, respectively. As of September 30, 2021 and December 31, 2020, preferred dividends are in arrears by $17,325 and $17,325, respectively.

December 31, 2019 dividends in arrears were declared and paid in January 2020. March 31, 2020 dividends in arrears were declared and paid in April 2020. June 30, 2020 dividends in arrears were declared and paid in July 2020. September 30, 2020 dividends in arrears were declared and paid in October 2020. December 31, 2020 dividends in arrears were declared and paid in January 2021. March 31, 2021 dividends in arrears were declared and paid in April 2021. June 30, 2021 dividends in arrears were declared and paid in July 2021. September 30, 2021 dividends in arrears were declared and paid in October 2021.

Common Stock

As of both September 30, 2021 and December 31, 2020, the Company was authorized to issue 100 million shares of common stock with a par value of $0.001 per share, of which 2,905,016 shares were issued and outstanding.

On March 30, 2020, the Company repurchased and retired 600,000 shares of common stock from a significant shareholder. The Company issued a $480,000 note payable in exchange for these shares, which is due four years from the repurchase date bearing 8% interest. The Company retains the right to prepay the note at any time with no prepayment penalty.

Stock Options

In 2019, the Company’s Board of Directors approved the creation of the 2019 Equity Incentive Plan (the “2019 Plan”). The 2019 Plan provides for the issuance of incentive stock options to designated employees, certain key advisors and non-employee members of the Board of Directors with the opportunity to receive grant awards to acquire, in the aggregate, up to 300,000 shares of the Corporation’s common stock.

A summary of information regarding the stock options outstanding is as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Outstanding at December 31, 2020		187,400	$	0.80
Issued		—		—
Exercised		—		—
Outstanding at September 30, 2021		187,400	$	0.80		10.4 years
Exercisable at September 30, 2021		93,700

The above outstanding options were granted on March 1, 2020, to designated Officers and employees. Half of the options vested on March 1, 2021 and the other half will vest on March 1, 2022. During the nine months ended September 30, 2021 and 2020, the Company recognized $26,002 and $20,224, respectively, of stock option expense. During the three months ended September 30, 2021 and 2020, the Company recognized $8,668 and $8,668, respectively, of stock option expense.

17

Standard Premium Finance Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

September 30, 2021 and 2020

(unaudited)

11. Equity (Continued)

Stock Warrants

On April 1, 2020, the Company issued 800,000 of previously authorized warrants for the purchase of common stock that are split into two classes of warrants. The 400,000 Class W4 warrants are issued at $.001 Par Value and exercisable at a strike price of $4 for a period of five (5) years. The 400,000 Class W12 warrants are issued at $.001 Par Value and are exercisable at a strike price of $12 for a period of five (5) years. On June 11, 2021, the Company issued 175,000 of previously authorized warrants for the purchase of common stock. The 175,000 Class W4A warrants are issued at $.001 Par Value and exercisable at a strike price of $4 for a period of five (5) years. A summary of information regarding the stock options outstanding is as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Outstanding at December 31, 2020		800,000	$	8.00
Issued		175,000		4.00
Exercised		—		—
Outstanding at September 30, 2021		975,000	$	7.28		3.71 years
Exercisable at September 30, 2021		975,000

During the nine months ended September 30, 2021 and 2020, the Company recognized $9,275 and $27,200, respectively, of stock warrant expense. During the three months ended September 30, 2021 and 2020, the Company recognized $0 and $0, respectively, of stock warrant expense.

12. Related Party Transactions

The Company has engaged in transactions with related parties primarily shareholders, officers and directors and their relatives that involve financing activities and services to the Company. The following discussion summarizes its activities with related parties.

Office lease

The Company entered a three-year lease for its office space in Miami, FL with an entity that is controlled by our CEO and related parties. The Company leases approximately 3,000 square feet of office space. Rent of $7,451 is paid monthly. The lease contract expires in February 2024.

Line of credit

As discussed in Note 7, the Company secured its primary financing in part through the assistance of our CEO and two significant shareholders who guaranteed the loan to the financial institution. The current line of credit with First Horizon Bank was initiated at $35,000,000. In October 2021, the line of credit was increased to $45,000,000.

Notes payable

As discussed in Note 10, the Company has been advanced funds by its shareholders. As of September 30, 2021 and December 31, 2020, the amounts advanced were $4,716,293 and $4,248,293, respectively.

Common Stock

As discussed in Note 11, on March 30, 2020, the Company repurchased and retired 600,000 shares of common stock from a significant shareholder. The Company issued a $480,000 note payable in exchange for these shares, which is due four years from the repurchase date bearing 8% interest. The Company retains the right to prepay the note at any time with no prepayment penalty.

18

Standard Premium Finance Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

September 30, 2021 and 2020

(unaudited)

12. Related Party Transactions (Continued)

Stock Options

As discussed in Note 11, on March 1, 2020, the Company issued 187,400 stock options, of which 167,400 stock options were issued to officers and directors under the terms of the 2019 Equity Incentive Plan. The impact on earnings from this transaction is a total of $69,338, which is being amortized over 24 months at a rate of $2,889 per month. This transaction also increases additional paid in capital over the same period at the same rate.

Stock Warrants

As discussed in Note 11, on April 1, 2020, the Company issued 800,000 stock warrants, of which 800,000 stock warrants were issued to officers, directors, and a related party. On June 11, 2021, the Company issued 175,000 stock warrants, of which 175,000 were issued to officers, directors, and a related party.

13. Commitments and Contingencies

From time-to-time, we may be involved in litigation or be subject to claims arising out of our operations or content appearing on our websites in the normal course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on our company because of defense and settlement costs, diversion of management resources and other factors.

14. Subsequent Events

In October 2021, the Board of Directors declared and paid dividends on the Series A convertible preferred stock of $17,325.

In October 2021, the Company increased its line of credit with First Horizon Bank from $35,000,000 to $45,000,000. The Company recorded $25,771 of loan origination costs.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

We are an insurance premium financing company, specializing primarily in commercial policies. We make it efficient for companies to access financing for insurance premiums. Enabled by our network of marketing representatives and relationships with insurance agents, we provide a value-driven, customer-focused lending service.

We have offered premium financing since 1991 through our wholly owned subsidiary, Standard Premium Finance Management Corporation. We are generally targeting premium financing loans from $1,000 to $15,000, with repayment terms ranging from 6 to 10 months, although we may offer larger loans in cases we deem appropriate. Qualified customers may have multiple financings with us concurrently, which we believe provides opportunities for repeat business, as well as increased value to our customers.

We originate loans primarily in Florida, although we operate in several states. Over the past three years, the Company has expanded its operations, and currently is financing insurance premiums in Florida, Georgia, South Carolina, North Carolina, Texas, Tennessee and Arizona. We intend to continue to expand our market into new states as part of our organic growth trend. Loans are originated primarily through a network of insurance agents solicited by our in-house sales team and marketing representatives.

We generate the majority of our revenue through interest income and the associated fees earned from our loan products. We earn interest based on the “rule of 78” and earn other associated fees as applicable to each loan. These fees include, but are not limited to, a one-time finance charge, late fees, and NSF fees. Our company charges interest to its customers solely by the Rule of 78. Charging interest per the Rule of 78 is the industry standard among premium finance loans. The Rule of 78 is a method to calculate the amount of principal and interest paid by each payment on a loan with equal monthly payments. The Rule of 78 is a permissible method of calculating interest in the states in which we operate. The Rule of 78 recognizes greater amounts of interest income during the first months of the loan, while decreasing interest income during the final months of the loan. Whenever a loan is repaid prior to full maturity, the Rule of 78 methodology is applied and the borrower is refunded accordingly.

We rely on a diversified set of funding sources for the loans we make to our customers. Our primary source of financing has historically been a line of credit at a financial institution collateralized by our loan receivables and our other assets. We receive additional funding from unsecured subordinate noteholders that pays monthly interest to the investors. We have also used proceeds from operating cash flow to fund loans in the past and continue to finance a portion of our outstanding loans with these funds. See Liquidity and Capital Resources for additional information regarding our financing strategy.

The Company’s main source of funding is its line of credit, which represented approximately 65% ($33,131,761) of its capital as of September 30, 2021. This line of credit was placed with a new lender, First Horizon Bank, on February 3, 2021. As of September 30, 2021, the Company’s subordinated notes payable represented approximately 18% ($9,308,891) of the Company’s capital, operating liabilities provide approximately 8% ($3,840,607) of the Company’s capital, preferred equity provides approximately 2% ($990,000) of the Company’s capital, the PPP loan represents approximately 1% ($271,000) of the Company’s capital, and equity in retained earnings and common paid-in capital represents the remaining 6% ($3,311,104) of the Company’s capital structure.

20

Key Financial and Operating Metrics

We regularly monitor a series of metrics in order to measure our current performance and project our future performance. These metrics aid us in developing and refining our growth strategies and making strategic decisions.

	As of or for the Three Months Ended September 30,
	2021 (unaudited)			2020 (unaudited)
Gross Revenue	$	2,066,048		$	1,626,830
Originations	$	28,575,140		$	22,405,923
Interest Earned Rate		15.36	%		15.68	%
Cost of Funds Rate		2.95	%		3.52	%
Reserve Ratio		2.15	%		1.57	%
Provision Rate		1.07	%		0.36	%
Return on Assets		2.24	%		2.48	%
Return on Equity		35.43	%		44.82	%

	As of or for the Nine Months Ended September 30,
	2021 (unaudited)			2020 (unaudited)
Gross Revenue	$	5,700,779		$	4,808,709
Originations	$	84,421,186		$	69,394,892
Interest Earned Rate		15.47	%		15.61	%
Cost of Funds Rate		3.21	%		3.28	%
Reserve Ratio		2.15	%		1.57	%
Provision Rate		0.79	%		0.56	%
Return on Assets		1.69	%		1.42	%
Return on Equity		25.85	%		23.57	%

Gross Revenue

Gross Revenue represents the sum of interest and finance income, associated fees and other revenue.

Originations

Originations represent the total principal amount of Loans made during the period.

Interest Earned Rate

The Interest Earned Rate is the average annual percentage interest rate earned on new loans.

Cost of Funds Rate

Cost of Funds Rate is calculated as interest expense divided by average debt outstanding for the period, net of the interest related tax benefit.

Reserve Ratio

Reserve Ratio is our allowance for credit losses at the end of the period divided by the total amount of principal outstanding on Loans at the end of the period. It excludes net deferred origination costs and associated fees.

Provision Rate

Provision Rate equals the provision for credit losses for the period divided by originations for the period. Because we reserve for probable credit losses inherent in the portfolio upon origination, this rate is significantly impacted by the expectation of credit losses for the period’s originations volume. This rate is also impacted by changes in loss expectations for contract receivables originated prior to the commencement of the period.

21

Return on Assets

Return on Assets is calculated as annualized net income (loss) attributable to common stockholders for the period divided by average total assets for the period.

Return on Equity

Return on Equity is calculated as annualized net income (loss) attributable to common stockholders for the period divided by average stockholders’ equity attributable to common stockholders for the period.

RESULTS of OPERATIONS

Results of Operations for the Three Months ended September 30, 2021 Compared to the Three Months ended September 30. 2020

Revenue

Revenue increased by 27.0% overall or $439,218 to $2,066,048 for the three months ended September 30, 2021 from $1,626,830 for the three months ended September 30, 2020. The increase in revenue was due to a 25.4% or $344,216 increase in finance charges, a 37.3% or $72,272 increase in revenue from late charges, and a 29.6% or $22,730 increase in revenue from origination charges. Revenue from finance charges comprised 82.3% and 83.4% of overall revenue for the three months ended September 30, 2021 and 2020, respectively.

During the three months ended September 30, 2021 compared to the three months ended September 30, 2020, the company financed an additional $6,169,217 in new loan originations. This increase was due largely to increased marketing efforts throughout our established states. In conjunction with the increased amounts financed, the Company also increased the quantity of loan originations by 1,351 new loans for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020. The quantity of loan originations is directly correlated to the origination charge revenue, as the Company immediately recognizes an origination fee on substantially all new loans.

Under the terms of the line of credit agreement, the loan receivables and our other assets provide the collateral for the loan. As the receivables increase, driven by new sales, the company has greater borrowing power, giving it the opportunity generate additional sales. Throughout 2020, the Company experienced a constraint on loan originations as it pushed near the limit of its previous $27,500,000 line of credit. In February 2021, the Company executed a $35,000,000 line of credit with a new lender, terminating the previous line of credit. The additional availability on our line of credit was an essential driver to our increased originations during the three months ended September 30, 2021 as compared to the three months ended September 30, 2020. In October 2021, the Company further increased its borrowing power on its line of credit to $45,000,000, an increase of $10,000,000. See Future Cash Requirements for the Company’s strategy regarding its line of credit.

Expense

Expenses increased by 30.0% or $389,672 to $1,688,770 for the three months ended September 30, 2021 from $1,299,098 for the three months ended September 30, 2020.

The increase in expenses was primarily due to increases in the following categories:

·  $226,447 increase in bad debt expense as a result of maintaining the allowance for doubtful accounts in line with the balance in premium finance contracts receivable from increased new loan originations. The Company experienced substantial growth in its loan portfolio in 2021 and increased its reserves accordingly with the size of the loan portfolio.

·  $77,327 increase in other operating expenses primarily related to increased marketing efforts in line with the tapering of the COVID-19 pandemic. The Company noted a $13,633 increase in convention expense and a $9,582 increase in business travel during the three months ended September 30, 2021 as compared to the three months ended September 30, 2020. The Company also increased its profit-sharing contributions by $15,000 for the benefit of its employees during the three months ended September 30, 2021 as compared to the three months ended September 30, 2020.

· $35,582 increase in commission expense as a result of an increase in loan originations. Commission expense is correlated with the dollar amount and quantity of loan originations. Since the Company experienced an increase in originations during the three months ended September 30, 2021 as compared to the three months ended September 30, 2020, a related increase in commissions is expected.

22

Income before Taxes

Income before taxes increased by $49,546, or 15.1%, to $377,278 for the three months ended September 30, 2021 from $327,732 for the three months ended September 30, 2020. This increase was attributable to the net increases and decreases as discussed above.

Income Tax Provision

Income tax provision increased $25,639 to $79,515 for the three months ended September 30, 2021 from $53,876 for the three months ended September 30, 2020. This increase was primarily attributable to the increase in income partially offset by an increase in deferred tax assets related to allowances on receivables.

Net Income

Net Income increased by $23,907, or 8.7%, to $297,763 for the three months ended September 30, 2021 from $273,856 for the three months ended September 30, 2020. This increase was attributable to the $49,546 increase in income before taxes related to increased business activity, partially offset by the $25,639 increase in the provision for income taxes related to increased taxable income.

Results of Operations for the Nine Months ended September 30, 2021 Compared to the Nine Months ended September 30, 2020

Revenue

Revenue increased by 18.6% overall or $892,070 to $5,700,779 for the nine months ended September 30, 2021 from $4,808,709 for the nine months ended September 30, 2020. The increase in revenue was primarily due to a 19.0% or $744,748 increase in finance charges, a 12.1% or $77,965 increase in revenue from late charges, and a 29.3% or $69,357 increase in revenue from origination charges. Revenue from finance charges comprised 81.9% and 81.7% of overall revenue for the nine months ended September 30, 2021 and 2020, respectively.

During the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, the company financed an additional $15,026,294 in new loan originations. This increase was due largely to increased marketing efforts throughout our established states. In conjunction with the increased amounts financed, the Company also increased the quantity of loan originations by 3,978 new loans for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020. The quantity of loan originations is directly correlated to the origination charge revenue, as the Company immediately recognizes an origination fee on substantially all new loans.

Under the terms of the line of credit agreement, the loan receivables and our other assets provide the collateral for the loan. As the receivables increase, driven by new sales, the company has greater borrowing power, giving it the opportunity generate additional sales. Throughout 2020, the Company experienced a constraint on loan originations as it pushed near the limit of its previous $27,500,000 line of credit. In February 2021, the Company executed a $35,000,000 line of credit with a new lender, terminating the previous line of credit. The additional availability on our line of credit was an essential driver to our increased originations during the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020. In October 2021, the Company further increased its borrowing power on its line of credit to $45,000,000, an increase of $10,000,000. See Future Cash Requirements for the Company’s strategy regarding its line of credit.

Expense

Expenses increased by 16.4% or $686,284 to $4,865,341 for the nine months ended September 30, 2021 from $4,179,057 for the nine months ended September 30, 2020.

The increase in expenses was primarily due to increases in the following categories:

·  $280,847 increase in bad debt expense as a result of maintaining the allowance for doubtful accounts in line with the balance in premium contracts receivable from increased new loan originations. The Company experienced substantial growth in its loan portfolio in 2021 and increased its reserves accordingly with the size of the loan portfolio.

·  $157,001 increase in commission expense as a result of an increase in loan originations. Commission expense is correlated with the dollar amount and quantity of loan originations. Since the Company experienced an increase in originations during the nine months ended September 30, 2021 as compared to September 30, 2020, a related increase in commissions is expected.  

·  $128,332 increase in professional fees primarily because of legal and audit fees related to closing the new line of credit with First Horizon Bank as well as financial statement audit and review fees incurred.

· $106,397 increase in other operating expenses primarily related to increased marketing efforts in line with the tapering of the COVID-19 pandemic. The Company noted a $26,318 increase in other taxes, a $25,633 increase in convention expense and a $11,757 increase in business travel during the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020. The Company also increased its profit-sharing contributions by $22,500 for the benefit of its employees during the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020

23

The increases in expenses was primarily offset by a decrease in the following category:

·  $31,668 decrease in interest expense as a result of a reduction in the line of credit interest rate. Despite the increase in borrowings on the line of credit of $5,724,094, an increase of 20.9%, at September 30, 2021 as compared to September 30, 2020, interest expense decreased by 2.4% for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020. This is the result of a significant reduction in the 30-day LIBOR rate used in calculating the Company’s interest on the line of credit during the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020, thus greatly reducing the cost of funds. Furthermore, the Company’s new line of credit with First Horizon Bank has a lower minimum rate, which the Company has benefited from during 2021. See Liquidity and Capital Resources for more information on the new line of credit.

Income before Taxes

Income before taxes increased by $205,786, or 32.7%, to $835,438 for the nine months ended September 30, 2021 from $629,652 for the nine months ended September 30, 2020. This increase was attributable to the net increases and decreases as discussed above.

Income Tax Provision

Income tax provision increased $43,828 to $201,448 for the nine months ended September 30, 2021 from $157,620 for the nine months ended September 30, 2020. This increase was primarily attributable to the increase in taxable income.

Net Income

Net Income increased by $161,958, or 34.3%, to $633,990 for the nine months ended September 30, 2021 from $472,032 for the nine months ended September 30, 2020. This increase was attributable to the $205,786 increase in income before taxes related to increased business activity, partially offset by the $43,828 increase in the provision for income taxes related to increased taxable income.

Comparison of Cash Flows for the Nine Months Ended September 30, 2021 and September 30, 2020

Cash Flows from Operating Activities

We used $8,931,159 of cash in our operating activities in 2021 compared to $962,094 used in our operating activities in 2020. The increase in cash used of $7,969,065 was primarily due to a $8,436,819 increase of cash used to support working capital components partially offset by a $467,754 increase of net income as adjusted for noncash items.

The $8,436,819 increase of cash used to support working capital components was primarily due to a $8,494,362 decrease in the change in premium finance contracts, a $105,000 decrease in the change in deferred tax assets, and a $83,917 decrease in the change in accounts payable and accrued expenses, partially offset by a $281,319 increase in the change in drafts payable. These are natural fluctuations in operating accounts that occur during the normal course of business. The Company expects net cash outflows from operations during periods of growth. As discussed in the Revenues section, although the Company was able to continue to grow in 2020, the Company was effectively constrained by the limit of its previous line of credit agreement. During 2021, the Company has utilized its increased availability on its line of credit leading to the large increase in premium finance contracts receivable.

The $467,754 increase of cash from net earnings as adjusted by noncash items resulted primarily from an $161,958 increase in net income and a $280,847 increase in bad debt expense. As the Company grew its receivables portfolio in 2021, bad debt expense increased to adjust the allowance accordingly.

Cash Flows from Investing Activities

We used $69,508 of cash in our investing activities in 2021 compared to $39,483 of cash used in 2020. The increase in cash used of $30,025 is primarily due to purchases of property and equipment of $27,495. In 2021, the Company purchased a new vehicle used by a marketing representative to service the Florida market, which is being depreciated over five years.

24

Cash Flows from Financing Activities

We received $8,604,789 of cash provided by our financing activities in 2021 compared to $1,010,196 provided by financing activities in 2020. The increase in funds provided of $7,594,593 is due primarily to an increase in proceeds from the line of credit, net of repayments, of $6,854,892, an increase in proceeds of notes payable – others of $716,426, and an increase in proceeds from notes payable – related parties of $413,000, and a decrease in repayments of notes payable – other of $245,000. These were partially offset by a decrease in proceeds from the sale of preferred stock of $320,000 and a decrease in proceeds from the PPP loan of $271,000. As discussed in the Revenues and Liquidity and Capital Resources sections, in 2020, the Company was limited in the amounts it could draw from its line of credit, due to reaching maximum availability throughout the year. In 2021, the Company utilized its increased line of credit to finance its increased premium finance contracts receivable. In conjunction with the new line of credit, the Company was required to increase its subordinated debt, which accounts for the increases in proceeds from notes payable – related parties and notes payable – others.

LIQUIDITY and CAPITAL RESOURCES as of September 30, 2021

We had $81,411 cash and a working capital surplus of $9,099,392 at September 30, 2021. A significant working capital surplus is generally expected through the normal course of business due primarily to the difference between the balance in loan receivables and the related line of credit liability. As discussed in the Revenues section, the Company’s line of credit is currently the primary source of operating funds. In February 2021, the Company entered into a contract with a new lender, First Horizon Bank, for a two-year $35,000,000 line of credit. The terms of the new line of credit are generally more favorable than the previous line of credit, including an interest rate based on the 30-day LIBOR rate plus 2.85% with a minimum rate of 3.35%. The previous, terminated line of credit had an interest rate based on the 30-day LIBOR rate plus 2.75% with a minimum rate of 3.75%. The Company believes that the interest rate will be based on the minimum rate for the entire term of the line of credit, which will lead to savings on interest expense over the term of the deal, though the Company cannot guarantee the minimum rate will be employed for the term of the loan. In October 2021, the Company executed a loan amendment with First Horizon Bank to increase its line of credit to $45,000,000, an increase of $10,000,000. Based on our estimates and taking into account the risks and uncertainties of our plans, we believe that we will have adequate liquidity to finance and operate our business and repay our obligations as they become due for at least the next 12 months.

During the nine months ended September 30, 2021, the Company raised an additional $493,000 in subordinated notes payable – related parties and $866,426 in subordinated notes payable – others. A requirement of the new line of credit was an increase in our subordinated debt to provide additional collateral to the bank. The Company utilizes its inflows from subordinated debt as a financing source before drawing additionally from the line of credit.

In April 2020, the Company received a $271,000 loan through the PPP program with the Small Business Administration. The Company proudly applied 100% of the proceeds of the loan to its main purpose of keeping their staff employed at the same level as before the COVID-19 pandemic. The Company maintained the same level of employment throughout 2020 and 2021 with support from the PPP loan. As the Company used the proceeds of the loan on forgivable expenses, i.e. company payroll, the Company expects the loan to be fully forgiven. The Company applied for loan forgiveness in September 2020 and awaits a response from the SBA and the Company’s bank, which facilitated the loan.

Future Cash Requirements

As the Company anticipates its growth patterns to continue, the larger line of credit is paramount to fueling this growth. By securing its larger line of credit, the Company can expect to satisfy the cash requirements anticipated by its future growth. Coinciding with these goals, in February 2021, the Company entered into a contract with a new lender for a two-year $35,000,000 line of credit. Furthermore, in October 2021, the Company executed a loan amendment with this lender to increase its line of credit to $45,000,000, an increase of $10,000,000.

Uses of Liquidity and Capital Resources

We require cash to fund our operating expenses and working capital requirements, including costs associated with our premium finance loans, capital expenditures, debt repayments, acquisitions (if any), pursuing market expansion, supporting sales and marketing activities, and other general corporate purposes. While we believe we have sufficient liquidity and capital resources to fund our operations and repay our debt, we may elect to pursue additional financing activities such as refinancing or expanding existing debt or pursuing other debt or equity offerings to provide flexibility with our cash management and provide capital for potential acquisitions.

Off-balance Sheet Arrangements

None.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not required.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2021. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at September 30, 2021 at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2021 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

The Company becomes involved in various legal proceedings and claims in the normal course of business. In management’s opinion, the ultimate resolution of these matters will not have a material effect on our financial position or results of operations.

Item 1A. Risk Factors.

Our operations and financial results are subject to various risks and uncertainties, including those described in the Part I. “Item 1A. Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission (“SEC”) on March 31, 2021 (“2020 Form 10-K”), which could adversely affect our business, financial condition, results of operations and cash flows. During the nine months ended September 30, 2021, there have been no material changes in our risk factors from those disclosed in our 2020 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit Index

Exhibit Number	Description
2.1	Agreement of Share Exchange dated as of March 22, 2017 by and between Registrant, Standard Premium Finance Management Corporation and the shareholders of Standard Premium Finance Management Corporation. (Incorporated by reference to Exhibit 2.1 to Registrant's Registration Statement on Form 10 filed on January 19, 2021)
3.1	Articles of Incorporation of Registrant filed May 12, 2016. (Incorporated by reference to Exhibit 3.1 to Registrant's Registration Statement on Form 10 filed on January 19, 2021)
3.2	Articles of Amendment to Registrant’s Articles of Incorporation filed May 31, 2016. (Incorporated by reference to Exhibit 3.2 to Registrant's Registration Statement on Form 10 filed on January 19, 2021)
3.3	Articles of Amendment to Articles of Incorporation filed May 17, 2017. (Incorporated by reference to Exhibit 3.3 to Registrant's Registration Statement on Form 10 filed on January 19, 2021)
3.4	By-laws of Registrant. (Incorporated by reference to Exhibit 3.4 to Registrant's Registration Statement on Form 10 filed on January 19, 2021)
4.1	Description of Securities. (Incorporated by reference to Exhibit 4.1 to Registrant's Form 10-K filed on March 30, 2021)
10.1*	2019 Equity Incentive Plan. (Incorporated by reference to Exhibit 10.1 to Registrant's Registration Statement on Form 10 filed on January 19, 2021)
10.2*	Form of Employee Incentive Stock Option Award Agreement. (Incorporated by reference to Exhibit 10.2 to Registrant's Registration Statement on Form 10 filed on January 19, 2021)
10.3(a)*	Form of Warrant to Purchase Common Stock. $4.00 (Incorporated by reference to Exhibit 10.3(a) to Registrant's Registration Statement on Form 10 filed on January 19, 2021)
10.3(b)*	Form of Warrant to Purchase Common Stock. $12.00 (Incorporated by reference to Exhibit 10.3(b) to Registrant's Registration Statement on Form 10 filed on January 19, 2021)
10.4*	Schedule of Warrants to Purchase Common Stock issued on April 1, 2020. (Incorporated by reference to Exhibit 10.4 to Registrant's Registration Statement on Form 10 filed on January 19, 2021)
10.5*	Consulting Agreement dated August 1, 2016 between Registrant and Bayshore Corporate Finance, LLC.  (Incorporated by reference to Exhibit 10.5 to Amendment No. 1 to Registrant's Registration Statement on Form 10 filed on March 2, 2021)

27

10.6	Lease Agreement dated March 1, 2018 between Registrant and Marlenko Acquisitions, LLC. (Incorporated by reference to Exhibit 10.6 to Registrant's Registration Statement on Form 10 filed on January 19, 2021)
10.7*	Schedule of Employee Incentive Stock Options issued on March 1, 2020. (Incorporated by reference to Exhibit 10.7 to Registrant's Registration Statement on Form 10 filed on January 19, 2021)
10.8	Credit and Guaranty Agreement dated October 5, 2018 between Standard Premium Finance Management Corporation and Woodforest National Bank. (Incorporated by reference to Exhibit 10.8 to Registrant's Registration Statement on Form 10 filed on January 19, 2021)
10.9	Loan Agreement dated February 3, 2021 among Standard Premium Finance Management Corporation and First Horizon Bank. (Incorporated by reference to Exhibit 10.9 to Amendment No. 1 to Registrant's Registration Statement on Form 10 filed on March 2, 2021)
10.10	First Amendment to Loan Agreement dated October 5, 2021 among Standard Premium Finance Management Corporation and First Horizon Bank. (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed October 5, 2021)
14.1	Code of Ethics. (Incorporated by reference to Exhibit 14.1 to Registrant's Form 10-K filed on March 30, 2021)
21	Subsidiaries of the Registrant. (Incorporated by reference to Exhibit 21 to Registrant's Registration Statement on Form 10 filed on January 19, 2021)
31.1	Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer.
31.2	Rule 13a-14(a) / 15d-14(a) Certification of Principal Financial Officer.
32.1	Section 1350 Certifications of Principal Executive Officer and Principal Financial Officer.
101.INS	Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
104	Cover page formatted as Inline XBRL and contained in Exhibit 101

_______________

* Indicates a management contract or compensatory plan or arrangement.

28

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 8, 2021

STANDARD PREMIUM FINANCE HOLDINGS, INC.
By:	/s/ William Koppelmann
	William Koppelmann
	Chairman, President and Chief Executive Officer (Principal Executive Officer)
By:	/s/ Brian Krogol
	Brian Krogol
	Chief Financial Officer (Principal Financial Officer)

29

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, William Koppelmann, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Standard Premium Finance Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2021

By:	/s/ William Koppelmann
	William Koppelmann
	Principal Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Brian Krogol, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Standard Premium Finance Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2021

By:	/s/ Brian Krogol
	Brian Krogol
	Principal Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, William Koppelmann, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Standard Premium Finance Holdings, Inc. on Form 10-Q for the fiscal quarter ended September 30, 2021 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of Standard Premium Finance Holdings, Inc.

November 8, 2021

By:	/s/ William Koppelmann
	William Koppelmann
	Principal Executive Officer

I, Brian Krogol, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Standard Premium Finance Holdings, Inc. on Form 10-Q for the fiscal quarter ended September 30, 2021 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of Standard Premium Finance Holdings, Inc.

November 8, 2021

By:	/s/ Brian Krogol
	Brian Krogol
	Principal Financial Officer

XML

Cover - shares	9 Months Ended
	Sep. 30, 2021	Nov. 05, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2021
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2021
Current Fiscal Year End Date	--12-31
Entity File Number	000-56243
Entity Registrant Name	STANDARD PREMIUM FINANCE HOLDINGS, INC.
Entity Central Index Key	0001807893
Entity Tax Identification Number	81-2624094
Entity Incorporation, State or Country Code	FL
Entity Address, Address Line One	13590 SW 134th Avenue
Entity Address, Address Line Two	Suite 214
Entity Address, City or Town	Miami
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33186
City Area Code	305
Local Phone Number	232-2752
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		2,905,016

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
CURRENT ASSETS
Cash	$ 81,411	$ 477,289
Premium finance contracts and related receivable, net	48,997,156	38,999,926
Prepaid expenses and other current assets	493,751	383,908
TOTAL CURRENT ASSETS	49,572,318	39,861,123
PROPERTY AND EQUIPMENT, NET	90,189	81,547
OPERATING LEASE ASSETS	253,923	95,425
OTHER ASSETS
Cash surrender value of life insurance, net of policy loan	551,933	516,306
Deferred tax asset	385,000	260,000
TOTAL OTHER ASSETS	936,933	776,306
TOTAL ASSETS	50,853,363	40,814,401
CURRENT LIABILITIES
Line of credit, net	33,131,761	25,653,473
Drafts payable	2,274,145	1,870,965
Note payable - current portion	1,655,707	1,886,387
Note payable - stockholders and related parties - current portion	1,991,592	722,735
Payroll Protection Program loan - current portion		15,022
Operating lease obligation - current portion	107,182	39,344
Accrued expenses and other current liabilities	1,312,539	1,210,261
TOTAL CURRENT LIABILITIES	40,472,926	31,398,187
LONG-TERM LIABILITIES
Note payable, net of current portion	2,936,891	1,894,785
Note payable - stockholders and related parties, net of current portion	2,724,701	3,525,558
Payroll Protection Program loan, net of current portion	271,000	255,978
Operating lease obligation, net of current portion	146,741	56,081
TOTAL LONG-TERM LIABILITIES	6,079,333	5,732,402
TOTAL LIABILITIES	46,552,259	37,130,589
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.001 per share; 20 million shares authorized, 600,000 shares designated as Series A - convertible, 99,000 and 99,000 issued and outstanding at September 30, 2021 and December 31, 2020, respectively	99	99
Common stock, par value $.001 per share; 100 million shares authorized, 2,905,016 and 2,905,016 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	2,905	2,905
Additional paid in capital	2,674,328	2,639,051
Retained earnings	1,623,772	1,041,757
TOTAL STOCKHOLDERS' EQUITY	4,301,104	3,683,812
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 50,853,363	$ 40,814,401

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	20,000,000	20,000,000
Designated shares	600,000	600,000
Preferred stock, shares issued	99,000	99,000
Preferred stock, shares outstanding	99,000	99,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	2,905,016	2,905,016
Common stock, shares outstanding	2,905,016	2,905,016

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Condensed Consolidated Statement of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
REVENUES
TOTAL REVENUES	$ 2,066,048	$ 1,626,830	$ 5,700,779	$ 4,808,709
OPERATING COSTS AND EXPENSES
Interest expense	412,467	423,165	1,262,938	1,294,606
Salaries and wages	368,733	339,030	1,074,298	1,030,312
Commission expense	238,104	202,522	777,130	620,129
Bad debts	306,382	79,935	670,427	389,580
Professional fees	77,681	47,842	262,563	134,231
Postage expense	29,356	29,530	81,516	94,121
Insurance expense	36,019	34,373	131,729	117,735
Other operating expenses	220,028	142,701	604,740	498,343
TOTAL COSTS AND EXPENSES	1,688,770	1,299,098	4,865,341	4,179,057
INCOME BEFORE INCOME TAXES	377,278	327,732	835,438	629,652
PROVISION FOR INCOME TAXES	79,515	53,876	201,448	157,620
NET INCOME	297,763	273,856	633,990	472,032
PREFERRED SHARE DIVIDENDS	17,325	10,500	51,975	33,250
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$ 280,438	$ 263,356	$ 582,015	$ 438,782
Net income per share attributable to common shareholders
Basic and Diluted	$ 0.10	$ 0.09	$ 0.20	$ 0.14
Weighted average common shares outstanding
Basic and Diluted	2,905,016	2,905,016	2,905,016	3,102,096
Finance Charge [Member]
REVENUES
TOTAL REVENUES	$ 1,700,380	$ 1,356,164	$ 4,671,422	$ 3,926,674
Late Charges [Member]
REVENUES
TOTAL REVENUES	266,087	193,815	722,895	644,930
Origination Fees [Member]
REVENUES
TOTAL REVENUES	$ 99,581	$ 76,851	$ 306,462	$ 237,105

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Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - USD ($)	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Dec. 31, 2019	$ 60	$ 3,505	$ 2,672,399	$ 403,329	$ 3,079,293
Balance at beginning, shares at Dec. 31, 2019	60,000	3,505,016
Debt issued to retire stock		$ (600)	(479,400)		(480,000)
Debt issued to retire stock, Shares		(600,000)
Options issued for services			2,889		2,889
Distributions (preferred shares)				(10,500)	(10,500)
Net income				151,308	151,308
Ending balance, value at Mar. 31, 2020	$ 60	$ 2,905	2,195,888	544,137	2,742,990
Balance at ending, shares at Mar. 31, 2020	60,000	2,905,016
Options issued for services			8,667		8,667
Distributions (preferred shares)				(10,500)	(10,500)
Series A Convertible Preferred Stock issued in exchange for note payable and cash	$ 19		189,981		190,000
Series A Convertible Preferred Stock issued in exchange for note payable and cash, shares	19,000
Warrants issued for services			27,200		27,200
Net income				46,868	46,868
Ending balance, value at Jun. 30, 2020	$ 79	$ 2,905	2,421,736	580,505	3,005,225
Balance at ending, shares at Jun. 30, 2020	79,000	2,905,016
Options issued for services			8,668		8,668
Distributions (preferred shares)				(12,250)	(12,250)
Sale of preferred stock	$ 20		199,980		200,000
Sale of preferred stock, Shares	20,000
Net income				273,856	273,856
Ending balance, value at Sep. 30, 2020	$ 99	$ 2,905	2,630,384	842,111	3,475,499
Balance at ending, shares at Sep. 30, 2020	99,000	2,905,016
Beginning balance, value at Dec. 31, 2020	$ 99	$ 2,905	2,639,051	1,041,757	3,683,812
Balance at beginning, shares at Dec. 31, 2020	99,000	2,905,016
Options issued for services			8,667		8,667
Distributions (preferred shares)				(17,325)	(17,325)
Net income				180,254	180,254
Ending balance, value at Mar. 31, 2021	$ 99	$ 2,905	2,647,718	1,204,686	3,855,408
Balance at ending, shares at Mar. 31, 2021	99,000	2,905,016
Options issued for services			8,667		8,667
Distributions (preferred shares)				(17,325)	(17,325)
Warrants issued for services			9,275		9,275
Net income				155,973	155,973
Ending balance, value at Jun. 30, 2021	$ 99	$ 2,905	2,665,660	1,343,334	4,011,998
Balance at ending, shares at Jun. 30, 2021	99,000	2,905,016
Options issued for services			8,668		8,668
Distributions (preferred shares)				(17,325)	(17,325)
Net income				297,763	297,763
Ending balance, value at Sep. 30, 2021	$ 99	$ 2,905	$ 2,674,328	$ 1,623,772	$ 4,301,104
Balance at ending, shares at Sep. 30, 2021	99,000	2,905,016

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Condensed Consolidated Statement of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
CASH FLOW FROM OPERATING ACTIVITIES:
NET INCOME	$ 633,990	$ 472,032
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH FLOW USED IN OPERATING ACTIVITIES:
Depreciation	25,239	19,547
Amortization of right to use asset - operating lease	76,837	84,734
Bad debt expense	670,427	389,580
Amortization of loan origination fees	100,950	61,649
Options issued for services	26,002	20,224
Warrants issued for services	9,275	27,200
Changes in operating assets and liabilities:
(Increase)/Decrease in premium finance contracts	(10,667,657)	(2,173,295)
(Increase)/Decrease in prepaid expenses and other current assets	(109,843)	(67,087)
(Increase)/Decrease in deferred tax asset, net	(125,000)	(20,000)
Increase/(Decrease) in drafts payable	403,180	121,861
Increase/(Decrease) in accounts payable and accrued expenses	102,278	186,195
Increase/(Decrease) in operating lease liability	(76,837)	(84,734)
Net cash used in operating activities	(8,931,159)	(962,094)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments made on life insurance policy	(35,627)	(33,097)
Purchases of property and equipment	(33,881)	(6,386)
Net cash used in investing activities	(69,508)	(39,483)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable - stockholders and related parties	493,000	80,000
Repayment of notes payable - stockholders and related parties	(25,000)
Proceeds from PPP Loan		271,000
Proceeds of line of credit, net of repayments	7,377,338	522,446
Dividends paid	(51,975)	(33,250)
Proceeds from sale of preferred stock		320,000
Proceeds from notes payable - other	866,426	150,000
Repayment of notes payable - other	(55,000)	(300,000)
Net cash provided by financing activities	8,604,789	1,010,196
NET CHANGE IN CASH	(395,878)	8,619
CASH AT THE BEGINNING OF THE PERIOD	477,289	345,607
CASH AT THE END OF THE PERIOD	81,411	354,226
Cash paid during the period for:
Income taxes	359,068	271,284
Interest paid	1,275,284	1,210,168
NON-CASH INVESTING AND FINANCING TRANSACTION:
Debt issued to retire common stock		480,000
Debt exchanged for Series A Convertible Preferred Stock		70,000
Operating lease asset obtained in exchange for operating lease liability	$ 235,335

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Principles of Consolidation and Description of Business

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Principles of Consolidation and Description of Business

1. Principles of Consolidation and Description of Business

Standard Premium Finance Holdings, Inc. (“SPFH” or the “Holding”) was incorporated on May 12, 2016, pursuant to the laws of the State of Florida.

Standard Premium Finance Management Corporation (“SPFMC” or the “subsidiary”) was incorporated on April 23, 1991, pursuant to the laws of the State of Florida, to engage principally in the insurance premium financing business. The Subsidiary is a licensed insurance premium finance company in Florida, Georgia, North Carolina, South Carolina, Tennessee, Texas and Arizona.

The accompanying condensed consolidated financial statements include the accounts of SPFH and its wholly-owned subsidiary SPFMC. SPFH and its subsidiary are collectively referred to as (“the Company”). All significant intercompany balances and transactions have been eliminated in consolidation.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements (unaudited), which include the accounts of Standard Premium Finance Holdings, Inc. and its wholly-owned subsidiary, have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes thereto for the year ended December 31, 2020.

In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements of Standard Premium Finance Holdings, Inc. and its wholly-owned subsidiary for the fiscal year ended December 31, 2020, have been omitted. 

Cash and Cash Equivalents

The Company considers short-term interest-bearing investments with initial maturities of three months or less to be cash equivalents. The Company has no cash equivalents at September 30, 2021 and December 31, 2020.

Revenue Recognition

Revenues are recognized when control of the promised services is transferred to the customer and in an amount that reflects the consideration the Company expects to be entitled to in exchange for these services. For the services where the Company’s performance obligation is satisfied at a point in time and for which there is no ongoing obligation, revenue is recognized upon delivery. For the services where the Company satisfies its performance obligation over time as the service is being transferred to the customer, revenue is generally recognized using the output method as the services are delivered.

Finance charges on insurance premium installment contracts are initially recorded as unearned interest and are credited to income monthly over the term of the finance agreement. For Florida, Georgia, North Carolina and Texas contracts, an initial service fee of $20 per contract and the first month’s interest are recognized as income at the inception of a contract. The same treatment is applied to the $15 initial service fee and first month’s interest in South Carolina. The initial $20 per contract fee can only be charged once to an insured in a twelve-month period. In accordance with industry practice, finance charges are recognized as income using the “Rule of 78s” method of amortizing finance charge income, which does not materially differ from the interest method of amortizing finance charge income on short term receivables. Late charges are recognized as income when charged. Unearned interest is netted against Premium Finance Contracts and Related Receivables on the balance sheet for reporting purposes.

Premium Finance Contracts and Related Receivable

The Company finances insurance premium on policies for the transportation industry and other commercial enterprises. The term of each contract varies from 3 to 12 monthly payments. Repayment terms are structured such that the contracts will be repaid within the term of the underlying insurance policy, generally less than one year. The contracts are secured by the unearned premium of the insurance carrier which is obligated to pay the Company any unearned premium in the event the insurance policy is cancelled pursuant to a power of attorney contained in the finance contract. As of September 30, 2021 and December 31, 2020, the amount of unearned premium on open and cancelled contracts totaled $71,558,748 and $50,994,858, respectively. The annual percentage interest rates on new contracts averaged approximately 15.5% and 15.6% during nine months ended September 30, 2021 and 2020, respectively.

Allowance for Doubtful Accounts

The carrying amount of the Premium Finance Contracts (“Contracts”) is reduced by an allowance for losses that are maintained at a level which, in management’s judgment, is adequate to absorb losses inherit in the Contracts. The amount of the allowance is based upon management’s evaluation of the collectability of the Contracts, including the nature of the accounts, credit concentration, trends, and historical data, specific impaired Contracts, economic conditions, and other risks inherent in the Contracts. The allowance is increased by a provision for loan losses, which is charged to expense, and reduced by charge-offs, net of recovery.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:

Furniture and equipment 5 - 7 years

Computer equipment and software 3 - 5 years

Leasehold improvements 10 years

Amortization of Loan Origination Costs

Amortization of loan origination costs is computed using the straight-line method over the life of the loan agreement.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include assumptions used in valuation of deferred tax assets, allowance for doubtful accounts, depreciable lives of property and equipment, and valuation of stock-based compensation.

Concentration of Credit and Financial Instrument Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and accounts receivable from customers, agents, and insurance companies. The Company maintains its cash balances at three banks. Accounts at these financial institutions are insured by the Federal Deposit Insurance Corporation up to $250,000. Uninsured balances are $199,703 and $545,748 at September 30, 2021 and December 31, 2020, respectively. The Company mitigates this risk by maintaining its cash balances at high-quality financial institutions. The following table provides a reconciliation between uninsured balances and cash per the balance sheet:

	September 30, 2021 (unaudited)			December 31, 2020
Uninsured Balance	$	199,703		$	545,748
Plus: Insured balances		250,000			250,000
Plus: Balances at other institutions that do not exceed FDIC limit		15,334			7,913
Less: Outstanding checks		(383,626	)		(326,372	)
Cash per Consolidated Balance Sheet	$	81,411		$	477,289

The Company controls its credit risk in accounts receivable through credit standards, limits on exposure, by monitoring the financial condition of insurance companies, by adhering to statutory cancellation policies, and by monitoring and pursuing collections from past due accounts. We cancel policies at the earliest permissible date allowed by the statutory cancellation regulations.

Approximately 51% and 56% of the Company’s business activity is with customers located in Florida for 2021 and 2020, respectively. Approximately 20% and 19% of the Company’s business activity is with customers located in Georgia for 2021 and 2020, respectively. Approximately 15% and 10% of the Company's business activity is with customers located in North Carolina for 2021 and 2020, respectively. There were no other significant regional, industrial or group concentrations during the nine months ended September 30, 2021 and 2020.

Cash Surrender Value of Life Insurance

The Company is the owner and beneficiary of a life insurance policy on its president. The cash surrender value relative to the policy in place at September 30, 2021 and December 31, 2020 was $551,933 and $516,306, respectively.

Fair Value of Financial Instruments

The Company’s carrying amounts of financial instruments as defined by Financial Accounting Standards Board (“FASB”) ASC 825, “Disclosures about Fair Value of Financial Instruments”, including finance contract and related receivables, prepaid expenses, drafts payable, accrued expenses and other current liabilities, approximate their fair value due to the relatively short period to maturity for these instruments. The fair value of the line of credit and long-term debt are based on current rates at which the Company could borrow funds with similar remaining maturities and the carrying value approximates fair value.

Income Taxes

The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

Uncertain tax positions are recognized only when the Company believes it is more likely than not that the tax position will be upheld on examination by the taxing authorities based on the merits of the position. The Company has no material unrecognized tax benefits and no adjustments to its consolidated financial position, results of operations or cash flows were required as of September 30, 2021.

Tax returns are open to examination by taxing authorities for three years after filing. No income tax returns are currently under examination by taxing authorities. SPFMC and SPFH recognize interest and penalties, if any, related to uncertain tax positions in income tax expense. SPFMC and SPFH did not have any accrued interest or penalties associated with uncertain tax positions as of December 31, 2020.

Earnings per Common Share

The Corporation accounts for earnings (loss) per share in accordance with FASB ASC Topic No. 260 - 10, “Earnings Per Share”, which establishes the requirements for presenting earnings per share (“EPS”). FASB ASC Topic No. 260 - 10 requires the presentation of “basic” and “diluted” EPS on the face of the statement of operations. Basic EPS amounts are calculated using the weighted-average number of common shares outstanding during each period. Diluted EPS assumes the exercise of all stock options, warrants and convertible securities having exercise prices less than the average market price of the common stock during the periods, using the treasury stock method.

For both the nine months ended September 30, 2021 and 2020, stock options to purchase 187,400 shares of common stock were outstanding as described in Note 11. 93,700 of these options vested on March 1, 2021 and the remaining 93,700 stock options vest on March 1, 2022. The stock options are anti-dilutive and not included in the calculation of diluted EPS at September 30, 2021 and 2020. For the nine months ended September 30, 2021 and 2020, stock warrants to purchase 975,000 and 800,000 shares of common stock were outstanding, respectively, as described in Note 11. Although these stock warrants vested immediately, they are not “in-the-money” and are thus anti-dilutive and not included in the calculation of diluted EPS at September 30, 2021 and 2020. The Series A Convertible Preferred Stock can be converted to common stock at 80% of the prevailing market price over the previous 30-day period at the option of the Company. A conversion prior to public trading requires the stockholders’ consent.

Leases

The Company recognizes and measures its leases in accordance with ASC Topic 842, “Leases”. The Company determines if an arrangement is a lease, or contains a lease, at inception of a contract and when the terms of an existing contract are changed. The Company recognizes a lease liability and a right of use (ROU) asset at the commencement date of the lease. The lease liability is initially and subsequently recognized based on the present value of its future lease payments calculated using the Company’s incremental borrowing rate.

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Premium Finance Contracts, Related Receivable and Allowance for Doubtful Accounts

9 Months Ended

Sep. 30, 2021

Premium Finance Contracts Related Receivable And Allowance For Doubtful Accounts

Premium Finance Contracts, Related Receivable and Allowance for Doubtful Accounts

3. Premium Finance Contracts, Related Receivable and Allowance for Doubtful Accounts

Premium Finance Contracts and Related Receivable represent monthly payments due on insurance premium finance contracts. The Company finances insurance policies over periods from three months to one year for businesses and consumers who make an initial down payment of, on average, 25 percent of the insurance policy amounts. The entire amount of the contract is recorded including amounts due for finance charges and services charges. These receivables are reported net of unearned interest for financial statements purposes. Amounts due from agents represent balances related to (1) an agent’s unearned commission due to a policy cancellation and (2) down payments collected by the agents on behalf of the insured, which are due to us. Receivables from insurance premium finance contracts cancelled are due from the insurance companies.

Premium finance contract and agents’ receivable at September 30, 2021 and December 31, 2020 are as follows:

	September 30, 2021			December 31,
Description	(unaudited)			2020
Premium finance contract and agents’ receivable at June 30, 2021 and December 31, 2020 are as follows:
Insurance premium finance contracts outstanding	$	47,416,520		$	37,499,416
Insurance premium finance contracts cancelled		3,536,552			2,627,810
Insurance Premium finance contracts gross		50,953,072			40,127,226
Amounts due from agents		898,852			891,464
Less: Unearned interest		(1,580,013	)		(1,194,422	)
Insurance premium finance contracts net		50,271,911			39,824,268
Less: Allowance for doubtful accounts		(1,274,755	)		(824,342	)
Total	$	48,997,156		$	38,999,926

The allowance for doubtful accounts at September 30, 2021 and December 31, 2020 are as follows:

	September 30, 2021 (unaudited)		December 31, 2020
Allowance for premium finance contracts	$	1,056,727	$	650,000
Allowance for amounts due from agents		218,028		174,342
Total allowance for doubtful accounts	$	1,274,755	$	824,342

Activity in the allowance for doubtful accounts for the nine months ended September 30, 2021 and the year ended December 31, 2020 are as follows:

	September 30, 2021 (unaudited)			December 31, 2020
Balance, at the beginning of the period	$	824,342		$	785,532
Current year provision		1,031,016			1,086,207
Direct write-downs charged against the allowance		(801,284	)		(1,520,947	)
Recoveries of amounts previously charged off		220,681			473,550
Balance at end of the period	$	1,274,755		$	824,342

The Company maintains its allowance at gross amounts, which includes allowances for write-offs of unearned revenues. Provisions and write-offs per the footnote table above are displayed at gross amounts, which include provisions and write-offs of unearned revenues. These write-offs are appropriately split between the principal (i.e. bad debt expense) and interest/fee (i.e. contra-revenue) portions on the income statement. The following tables show a reconciliation between the total provision per the footnote and bad debt expense on the consolidated statement of operations:

	For the three months ended September 30,
	2021 (unaudited)			2020 (unaudited)
Total Provision	$	400,000		$	254,000
Less: Contra-revenues		(93,618	)		(174,065	)
Bad Debt Expense per the Consolidated Statement of Operations	$	306,382		$	79,935

	For the nine months ended September 30,
	2021 (unaudited)			2020 (unaudited)
Total Provision	$	1,031,016		$	929,000
Less: Contra-revenues		(333,297	)		(539,420	)
Less: Current year provisions for amounts due from agents		(27,292	)		—
Bad Debt Expense per the Consolidated Statement of Operations	$	670,427		$	389,580

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Property and Equipment, Net

9 Months Ended

Sep. 30, 2021

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

4. Property and Equipment, Net

The Company’s property and equipment consists of the following:

	September 30,
	2020 (unaudited)			December 31, 2020
Computer Software	$	26,207		$	26,207
Automobile		87,867			53,986
Furniture & Fixtures		14,273			14,273
Leasehold Improvements		116,811			116,811
Computer Equipment		59,927			59,927
Property and equipment		305,085			271,204
Accumulated depreciation		(214,896	)		(189,657	)
Property and equipment, net	$	90,189		$	81,547

The Company recorded depreciation expense of $25,239 and $19,547, respectively for the nine months ended September 30, 2021 and 2020. The Company recorded depreciation expense of $8,683 and $4,945, respectively for the three months ended September 30, 2021 and 2020.

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Leases

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Leases

5. Leases

The Company accounts for leases in accordance with ASC Topic 842. In March 2021, the Company renewed its office lease with Marlenko Acquisitions, LLC. The new two-year lease is identical to the previous lease and expires on February 28, 2023 with a one-year option to renew. The right-of-use asset and operating lease liability at the execution of this lease totaled $235,335. The Company used its incremental borrowing rate of 5.25% for all operating leases as of September 30, 2021 and December 31, 2020.

Supplemental balance sheet information related to leases is as follows:

		September 30,		December 31,
Operating Leases	Classification	2021		2020
		(unaudited)
Right-of-use assets	Operating lease assets	$	253,923	$	95,425
Current lease liability	Current operating lease liability		107,182		39,344
Non-current lease liability	Long-term operating lease liability		146,741		56,081
Total lease liabilities		$	253,923	$	95,425

The weighted-average remaining lease term was 2.23 years and 3.33 years as of September 30, 2021 and December 31, 2020, respectively. For the nine months ended September 30, 2021 and 2020, the total lease cost was $85,384 and $88,200, respectively. For the three months ended September 30, 2021 and 2020, the total lease cost was $28,194 and $29,400, respectively.

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Drafts Payable

9 Months Ended

Sep. 30, 2021

Drafts Payable

Drafts Payable

6. Drafts Payable

Drafts payable outstanding represent unpaid drafts that have not been disbursed by the bank as of the reporting date, on insurance premium finance contracts received by the Company prior to the reporting date. As of September 30, 2021 and December 31, 2020, the draft payable balances are $2,274,145 and $1,870,965, respectively.

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Line of Credit

9 Months Ended

Sep. 30, 2021

Line Of Credit

Line of Credit

7. Line of Credit

Relationship with Woodforest National Bank (“WNB”)

On October 5, 2018, the Company entered into an exclusive twenty-four month loan agreement with Woodforest National Bank for a revolving line of credit in the amount of $25,000,000. The Company recorded $164,396 of loan origination costs. On July 30, 2019, the Company’s line of credit was modified to $27,500,000, maturing October 5, 2020. On October 5, 2020, the Company’s line of credit was extended to a maturity date of January 5, 2021.

At December 31, 2020, the advance rate was 85% of the aggregate unpaid balance of the Company’s eligible accounts receivable. The line of credit is secured by all the Company’s assets and is personally guaranteed by our CEO and four significant stockholders of the Company. The line of credit bears interest at 30 Day Libor plus 2.75% per annum (3.75% at December 31, 2020). As of December 31, 2020, the amount of principal outstanding on the line of credit was $25,653,473 and is reported on the consolidated balance sheet net of $0 of unamortized loan origination fees. Interest expense on this line of credit for the nine months ended September 30, 2021 and 2020 totaled approximately $86,000 and $792,000, respectively. The Company recorded amortized loan origination fee for the nine months ended September 30, 2021 and 2020 of $0 and $61,649, respectively. This line of credit was fully paid off on February 3, 2021 (see below).

Relationship with First Horizon Bank (“FHB”)

On February 3, 2021, the Company entered into an exclusive twenty-four month loan agreement with First Horizon Bank for a revolving line of credit in the amount of $35,000,000, which was immediately funded for $25,974,695 to pay off the prior line of credit with WNB. On this date, the line of credit with WNB was fully repaid and terminated. The Company recorded $180,350 of loan origination costs.

At September 30, 2021, the advance rate was 85% of the aggregate unpaid balance of the Company’s eligible accounts receivable. The line of credit is secured by all the Company’s assets and is personally guaranteed by our CEO and a member of the Board of Directors of the Company. The line of credit bears interest at 30 Day Libor plus 2.85% per annum (3.35% at September 30, 2021). The terms of the Line of Credit agreement provide for a minimum interest of 3.35% when the 30-day Libor falls below 0.50%. For the nine months ended September 30, 2021, the minimum rate of 3.35% was in effect. As of September 30, 2021, the amount of principal outstanding on the line of credit was $33,211,161 and is reported on the consolidated balance sheet net of $79,400 of unamortized loan origination fees. Interest expense on this line of credit for the nine months ended September 30, 2021 totaled approximately $603,000. The Company recorded amortized loan origination fee for nine months ended September 30, 2021 of $100,950. Interest expense on this line of credit for the three months ended September 30, 2021 totaled approximately $202,000. The Company recorded amortized loan origination fee for three months ended September 30, 2021 of $37,856.

The Company’s agreements with WNB and FHB contain certain financial covenants and restrictions. Under these restrictions, all the Company’s assets are pledged to secure the line of credit, the Company must maintain certain financial ratios such as an adjusted tangible net worth ratio, interest coverage ratio and senior leverage ratio. The loan agreement also provides for certain covenants such as audited financial statements, notice of change of control, budget, permission for any new debt, copy of filings with regulatory bodies, and minimum balances. Management believes it was in compliance with the applicable debt covenants as of September 30, 2021 and December 31, 2020.

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PPP Loan

9 Months Ended

Sep. 30, 2021

Ppp Loan

PPP Loan

8. PPP Loan

On April 18, 2020, the Company entered into a $271,000 loan with its primary lender, under a program administered by the Small Business Administration (“SBA”) as part of the Paycheck Protection Program (“PPP”) approved under the “Coronavirus Aid, Relief, and Economic Security Act” (“CARES Act”) (Pub. L. No. 116-136). The loan matures in two (2) years and accrues interest at 1% from the origination of the loan. After a 6-month deferral, interest and principal payments are due monthly. The Note is subject to partial or full forgiveness, the terms of which are dictated by the SBA, the CARES Act, section 7(a)(36) of the Small Business Act, all rules and regulations promulgated thereunder including, without limitation, Interim Final Rule RIN 3245-AH34, subsequent SBA guidance, and the Code of Federal Regulations. The payment deferral period was extended until March 18, 2022. In September 2020, the Company applied for forgiveness of the PPP loan, which is still under examination by the SBA.

As of September 30, 2021 and December 31, 2020, the balance of the PPP loan is as follows:

	September 30, 2021 (unaudited)		December 31, 2020
Total PPP loan	$	271,000	$	271,000
Less current maturities		—		(15,022	)
Total	$	271,000	$	255,978

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Note Payable – Others

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Note Payable – Others

9. Note Payable – Others

At September 30, 2021 and December 31, 2020, the balances of long-term unsecured notes to unrelated parties are as follows:

	September 30,
	2021  (unaudited)			December 31, 2020
Total notes payable - Others	$	4,592,598		$	3,781,172
Less current maturities		(1,655,707	)		(1,886,387	)
Long-term maturities	$	2,936,891		$	1,894,785

These are notes payable to individuals. The notes have interest payable monthly, ranging from 6% to 8% per annum and are unsecured and subordinated. The principal is due on various dates through December 31, 2025. The notes roll-over at periods from 8 months to 4 years on maturity unless the note holder requests repayment through written instructions at least 90 days prior to the expiration date. Interest expense on these notes totaled approximately $207,000 and $201,000 during the nine months ended September 30, 2021 and 2020, respectively. Interest expense on these notes totaled approximately $77,000 and $60,000 during the three months ended September 30, 2021 and 2020, respectively. The Company received proceeds on these notes of $866,426 and $150,000 for the nine months ended September 30, 2021 and 2020, respectively. The Company repaid principal on these notes of $55,000 and $300,000 for the nine months ended September 30, 2021 and 2020, respectively. On June 30, 2020, the Company exchanged $70,000 of outstanding notes for 7,000 shares of Series A Convertible Preferred Stock.

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Note Payable – Stockholders and Related Parties

9 Months Ended

Sep. 30, 2021

Note Payable Stockholders And Related Parties

Note Payable – Stockholders and Related Parties

10. Note Payable – Stockholders and Related Parties

At September 30, 2021 and December 31, 2020, the balances of long-term notes payable to stockholders and related parties are as follows:

	September 30,
	2021  (unaudited)			December 31, 2020
Total notes payable - Related parties		4,716,293			4,248,293
Less current maturities		(1,991,592	)		(722,735	)
Long-term maturities	$	2,724,701		$	3,525,558

These are notes payable to stockholders and related parties. The notes have interest payable monthly ranging from 6% to 8% per annum and are unsecured and subordinated. The principal is due on various dates through August 31, 2025. The notes roll-over at periods from 8 months to 4 years on maturity unless the note holder requests repayment through written instructions at least 90 days prior to the expiration date. Interest expense on these notes totaled approximately $270,000 and $238,000 during the nine months ended September 30, 2021 and 2020, respectively. Interest expense on these notes totaled approximately $88,000 and $86,000 during the three months ended September 30, 2021 and 2020, respectively. The Company received proceeds on these notes of $493,000 and $80,000 for the nine months ended September 30, 2021 and 2020, respectively. The Company repaid principal on these notes of $25,000 and $0 for the nine months ended September 30, 2021 and 2020, respectively.

On March 30, 2020, the Company repurchased and retired 600,000 shares of common stock from a significant shareholder. The Company issued a $480,000 note payable in exchange for these shares, which is due four years from the repurchase date bearing 8% interest. The Company retains the right to prepay the note at any time with no prepayment penalty.

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Equity

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

Equity

11. Equity

Preferred Stock

As of September 30, 2021, the Company was authorized to issue 20 million shares of preferred stock with a par value of $0.001 per share, of which 600,000 shares had been designated as Series A convertible and 99,000 shares had been issued and are outstanding.

In the event of any liquidation, dissolution or winding up of the Company, the holders of preferred stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Company to the holders of common stock, an amount equal to $10 for each share of preferred stock, plus all unpaid dividends that have been accrued, accumulated or declared. The Company may redeem the preferred stock from the holders at any time following the second anniversary of the closing of the original purchase of the preferred stock. The Company shall also have the right to convert any or all of the preferred stock into common stock at a 20% discount to the market price of common shares with written approval of the stockholder.

Holders of preferred stock are entitled to receive preferential cumulative dividends, only if declared by the board of directors, at a rate of 7% per annum per share of the liquidation preference amount of $10 per share. During the nine months ended September 30, 2021 and 2020, the Board of Directors has declared and paid dividends on the preferred stock of $51,975 and $33,250, respectively. During the three months ended September 30, 2021 and 2020, the Board of Directors has declared and paid dividends on the preferred stock of $17,325 and $12,500, respectively. As of September 30, 2021 and December 31, 2020, preferred dividends are in arrears by $17,325 and $17,325, respectively.

December 31, 2019 dividends in arrears were declared and paid in January 2020. March 31, 2020 dividends in arrears were declared and paid in April 2020. June 30, 2020 dividends in arrears were declared and paid in July 2020. September 30, 2020 dividends in arrears were declared and paid in October 2020. December 31, 2020 dividends in arrears were declared and paid in January 2021. March 31, 2021 dividends in arrears were declared and paid in April 2021. June 30, 2021 dividends in arrears were declared and paid in July 2021. September 30, 2021 dividends in arrears were declared and paid in October 2021.

Common Stock

As of both September 30, 2021 and December 31, 2020, the Company was authorized to issue 100 million shares of common stock with a par value of $0.001 per share, of which 2,905,016 shares were issued and outstanding.

On March 30, 2020, the Company repurchased and retired 600,000 shares of common stock from a significant shareholder. The Company issued a $480,000 note payable in exchange for these shares, which is due four years from the repurchase date bearing 8% interest. The Company retains the right to prepay the note at any time with no prepayment penalty.

Stock Options

In 2019, the Company’s Board of Directors approved the creation of the 2019 Equity Incentive Plan (the “2019 Plan”). The 2019 Plan provides for the issuance of incentive stock options to designated employees, certain key advisors and non-employee members of the Board of Directors with the opportunity to receive grant awards to acquire, in the aggregate, up to 300,000 shares of the Corporation’s common stock.

A summary of information regarding the stock options outstanding is as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Outstanding at December 31, 2020		187,400	$	0.80
Issued		—		—
Exercised		—		—
Outstanding at September 30, 2021		187,400	$	0.80		10.4 years
Exercisable at September 30, 2021		93,700

The above outstanding options were granted on March 1, 2020, to designated Officers and employees. Half of the options vested on March 1, 2021 and the other half will vest on March 1, 2022. During the nine months ended September 30, 2021 and 2020, the Company recognized $26,002 and $20,224, respectively, of stock option expense. During the three months ended September 30, 2021 and 2020, the Company recognized $8,668 and $8,668, respectively, of stock option expense.

Stock Warrants

On April 1, 2020, the Company issued 800,000 of previously authorized warrants for the purchase of common stock that are split into two classes of warrants. The 400,000 Class W4 warrants are issued at $.001 Par Value and exercisable at a strike price of $4 for a period of five (5) years. The 400,000 Class W12 warrants are issued at $.001 Par Value and are exercisable at a strike price of $12 for a period of five (5) years. On June 11, 2021, the Company issued 175,000 of previously authorized warrants for the purchase of common stock. The 175,000 Class W4A warrants are issued at $.001 Par Value and exercisable at a strike price of $4 for a period of five (5) years. A summary of information regarding the stock options outstanding is as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Outstanding at December 31, 2020		800,000	$	8.00
Issued		175,000		4.00
Exercised		—		—
Outstanding at September 30, 2021		975,000	$	7.28		3.71 years
Exercisable at September 30, 2021		975,000

During the nine months ended September 30, 2021 and 2020, the Company recognized $9,275 and $27,200, respectively, of stock warrant expense. During the three months ended September 30, 2021 and 2020, the Company recognized $0 and $0, respectively, of stock warrant expense.

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Related Party Transactions

9 Months Ended

Sep. 30, 2021

Related Party Transactions [Abstract]

Related Party Transactions

12. Related Party Transactions

The Company has engaged in transactions with related parties primarily shareholders, officers and directors and their relatives that involve financing activities and services to the Company. The following discussion summarizes its activities with related parties.

Office lease

The Company entered a three-year lease for its office space in Miami, FL with an entity that is controlled by our CEO and related parties. The Company leases approximately 3,000 square feet of office space. Rent of $7,451 is paid monthly. The lease contract expires in February 2024.

Line of credit

As discussed in Note 7, the Company secured its primary financing in part through the assistance of our CEO and two significant shareholders who guaranteed the loan to the financial institution. The current line of credit with First Horizon Bank was initiated at $35,000,000. In October 2021, the line of credit was increased to $45,000,000.

Notes payable

As discussed in Note 10, the Company has been advanced funds by its shareholders. As of September 30, 2021 and December 31, 2020, the amounts advanced were $4,716,293 and $4,248,293, respectively.

Common Stock

As discussed in Note 11, on March 30, 2020, the Company repurchased and retired 600,000 shares of common stock from a significant shareholder. The Company issued a $480,000 note payable in exchange for these shares, which is due four years from the repurchase date bearing 8% interest. The Company retains the right to prepay the note at any time with no prepayment penalty.

Stock Options

As discussed in Note 11, on March 1, 2020, the Company issued 187,400 stock options, of which 167,400 stock options were issued to officers and directors under the terms of the 2019 Equity Incentive Plan. The impact on earnings from this transaction is a total of $69,338, which is being amortized over 24 months at a rate of $2,889 per month. This transaction also increases additional paid in capital over the same period at the same rate.

Stock Warrants

As discussed in Note 11, on April 1, 2020, the Company issued 800,000 stock warrants, of which 800,000 stock warrants were issued to officers, directors, and a related party. On June 11, 2021, the Company issued 175,000 stock warrants, of which 175,000 were issued to officers, directors, and a related party.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

13. Commitments and Contingencies

From time-to-time, we may be involved in litigation or be subject to claims arising out of our operations or content appearing on our websites in the normal course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on our company because of defense and settlement costs, diversion of management resources and other factors.

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Subsequent Events

9 Months Ended

Sep. 30, 2021

Subsequent Events [Abstract]

Subsequent Events

14. Subsequent Events

In October 2021, the Board of Directors declared and paid dividends on the Series A convertible preferred stock of $17,325.

In October 2021, the Company increased its line of credit with First Horizon Bank from $35,000,000 to $45,000,000. The Company recorded $25,771 of loan origination costs.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The condensed consolidated financial statements (unaudited), which include the accounts of Standard Premium Finance Holdings, Inc. and its wholly-owned subsidiary, have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes thereto for the year ended December 31, 2020.

In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements of Standard Premium Finance Holdings, Inc. and its wholly-owned subsidiary for the fiscal year ended December 31, 2020, have been omitted. 

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers short-term interest-bearing investments with initial maturities of three months or less to be cash equivalents. The Company has no cash equivalents at September 30, 2021 and December 31, 2020.

Revenue Recognition

Revenue Recognition

Revenues are recognized when control of the promised services is transferred to the customer and in an amount that reflects the consideration the Company expects to be entitled to in exchange for these services. For the services where the Company’s performance obligation is satisfied at a point in time and for which there is no ongoing obligation, revenue is recognized upon delivery. For the services where the Company satisfies its performance obligation over time as the service is being transferred to the customer, revenue is generally recognized using the output method as the services are delivered.

Finance charges on insurance premium installment contracts are initially recorded as unearned interest and are credited to income monthly over the term of the finance agreement. For Florida, Georgia, North Carolina and Texas contracts, an initial service fee of $20 per contract and the first month’s interest are recognized as income at the inception of a contract. The same treatment is applied to the $15 initial service fee and first month’s interest in South Carolina. The initial $20 per contract fee can only be charged once to an insured in a twelve-month period. In accordance with industry practice, finance charges are recognized as income using the “Rule of 78s” method of amortizing finance charge income, which does not materially differ from the interest method of amortizing finance charge income on short term receivables. Late charges are recognized as income when charged. Unearned interest is netted against Premium Finance Contracts and Related Receivables on the balance sheet for reporting purposes.

Premium Finance Contracts and Related Receivable

Premium Finance Contracts and Related Receivable

The Company finances insurance premium on policies for the transportation industry and other commercial enterprises. The term of each contract varies from 3 to 12 monthly payments. Repayment terms are structured such that the contracts will be repaid within the term of the underlying insurance policy, generally less than one year. The contracts are secured by the unearned premium of the insurance carrier which is obligated to pay the Company any unearned premium in the event the insurance policy is cancelled pursuant to a power of attorney contained in the finance contract. As of September 30, 2021 and December 31, 2020, the amount of unearned premium on open and cancelled contracts totaled $71,558,748 and $50,994,858, respectively. The annual percentage interest rates on new contracts averaged approximately 15.5% and 15.6% during nine months ended September 30, 2021 and 2020, respectively.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

The carrying amount of the Premium Finance Contracts (“Contracts”) is reduced by an allowance for losses that are maintained at a level which, in management’s judgment, is adequate to absorb losses inherit in the Contracts. The amount of the allowance is based upon management’s evaluation of the collectability of the Contracts, including the nature of the accounts, credit concentration, trends, and historical data, specific impaired Contracts, economic conditions, and other risks inherent in the Contracts. The allowance is increased by a provision for loan losses, which is charged to expense, and reduced by charge-offs, net of recovery.

Property and Equipment

Property and Equipment

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:

Furniture and equipment 5 - 7 years

Computer equipment and software 3 - 5 years

Leasehold improvements 10 years

Amortization of Loan Origination Costs

Amortization of Loan Origination Costs

Amortization of loan origination costs is computed using the straight-line method over the life of the loan agreement.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include assumptions used in valuation of deferred tax assets, allowance for doubtful accounts, depreciable lives of property and equipment, and valuation of stock-based compensation.

Concentration of Credit and Financial Instrument Risk

Concentration of Credit and Financial Instrument Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and accounts receivable from customers, agents, and insurance companies. The Company maintains its cash balances at three banks. Accounts at these financial institutions are insured by the Federal Deposit Insurance Corporation up to $250,000. Uninsured balances are $199,703 and $545,748 at September 30, 2021 and December 31, 2020, respectively. The Company mitigates this risk by maintaining its cash balances at high-quality financial institutions. The following table provides a reconciliation between uninsured balances and cash per the balance sheet:

	September 30, 2021 (unaudited)			December 31, 2020
Uninsured Balance	$	199,703		$	545,748
Plus: Insured balances		250,000			250,000
Plus: Balances at other institutions that do not exceed FDIC limit		15,334			7,913
Less: Outstanding checks		(383,626	)		(326,372	)
Cash per Consolidated Balance Sheet	$	81,411		$	477,289

The Company controls its credit risk in accounts receivable through credit standards, limits on exposure, by monitoring the financial condition of insurance companies, by adhering to statutory cancellation policies, and by monitoring and pursuing collections from past due accounts. We cancel policies at the earliest permissible date allowed by the statutory cancellation regulations.

Approximately 51% and 56% of the Company’s business activity is with customers located in Florida for 2021 and 2020, respectively. Approximately 20% and 19% of the Company’s business activity is with customers located in Georgia for 2021 and 2020, respectively. Approximately 15% and 10% of the Company's business activity is with customers located in North Carolina for 2021 and 2020, respectively. There were no other significant regional, industrial or group concentrations during the nine months ended September 30, 2021 and 2020.

Cash Surrender Value of Life Insurance

Cash Surrender Value of Life Insurance

The Company is the owner and beneficiary of a life insurance policy on its president. The cash surrender value relative to the policy in place at September 30, 2021 and December 31, 2020 was $551,933 and $516,306, respectively.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company’s carrying amounts of financial instruments as defined by Financial Accounting Standards Board (“FASB”) ASC 825, “Disclosures about Fair Value of Financial Instruments”, including finance contract and related receivables, prepaid expenses, drafts payable, accrued expenses and other current liabilities, approximate their fair value due to the relatively short period to maturity for these instruments. The fair value of the line of credit and long-term debt are based on current rates at which the Company could borrow funds with similar remaining maturities and the carrying value approximates fair value.

Income Taxes

Income Taxes

The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

Uncertain tax positions are recognized only when the Company believes it is more likely than not that the tax position will be upheld on examination by the taxing authorities based on the merits of the position. The Company has no material unrecognized tax benefits and no adjustments to its consolidated financial position, results of operations or cash flows were required as of September 30, 2021.

Tax returns are open to examination by taxing authorities for three years after filing. No income tax returns are currently under examination by taxing authorities. SPFMC and SPFH recognize interest and penalties, if any, related to uncertain tax positions in income tax expense. SPFMC and SPFH did not have any accrued interest or penalties associated with uncertain tax positions as of December 31, 2020.

Earnings per Common Share

Earnings per Common Share

The Corporation accounts for earnings (loss) per share in accordance with FASB ASC Topic No. 260 - 10, “Earnings Per Share”, which establishes the requirements for presenting earnings per share (“EPS”). FASB ASC Topic No. 260 - 10 requires the presentation of “basic” and “diluted” EPS on the face of the statement of operations. Basic EPS amounts are calculated using the weighted-average number of common shares outstanding during each period. Diluted EPS assumes the exercise of all stock options, warrants and convertible securities having exercise prices less than the average market price of the common stock during the periods, using the treasury stock method.

For both the nine months ended September 30, 2021 and 2020, stock options to purchase 187,400 shares of common stock were outstanding as described in Note 11. 93,700 of these options vested on March 1, 2021 and the remaining 93,700 stock options vest on March 1, 2022. The stock options are anti-dilutive and not included in the calculation of diluted EPS at September 30, 2021 and 2020. For the nine months ended September 30, 2021 and 2020, stock warrants to purchase 975,000 and 800,000 shares of common stock were outstanding, respectively, as described in Note 11. Although these stock warrants vested immediately, they are not “in-the-money” and are thus anti-dilutive and not included in the calculation of diluted EPS at September 30, 2021 and 2020. The Series A Convertible Preferred Stock can be converted to common stock at 80% of the prevailing market price over the previous 30-day period at the option of the Company. A conversion prior to public trading requires the stockholders’ consent.

Leases

Leases

The Company recognizes and measures its leases in accordance with ASC Topic 842, “Leases”. The Company determines if an arrangement is a lease, or contains a lease, at inception of a contract and when the terms of an existing contract are changed. The Company recognizes a lease liability and a right of use (ROU) asset at the commencement date of the lease. The lease liability is initially and subsequently recognized based on the present value of its future lease payments calculated using the Company’s incremental borrowing rate.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Schedule of reconciliation between uninsured balances and cash per the balance sheet

	September 30, 2021 (unaudited)			December 31, 2020
Uninsured Balance	$	199,703		$	545,748
Plus: Insured balances		250,000			250,000
Plus: Balances at other institutions that do not exceed FDIC limit		15,334			7,913
Less: Outstanding checks		(383,626	)		(326,372	)
Cash per Consolidated Balance Sheet	$	81,411		$	477,289

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Premium Finance Contracts, Related Receivable and Allowance for Doubtful Accounts (Tables)

9 Months Ended

Sep. 30, 2021

Premium Finance Contracts Related Receivable And Allowance For Doubtful Accounts

Schedule of premium finance contract and agents’ receivable

	September 30, 2021			December 31,
Description	(unaudited)			2020
Premium finance contract and agents’ receivable at June 30, 2021 and December 31, 2020 are as follows:
Insurance premium finance contracts outstanding	$	47,416,520		$	37,499,416
Insurance premium finance contracts cancelled		3,536,552			2,627,810
Insurance Premium finance contracts gross		50,953,072			40,127,226
Amounts due from agents		898,852			891,464
Less: Unearned interest		(1,580,013	)		(1,194,422	)
Insurance premium finance contracts net		50,271,911			39,824,268
Less: Allowance for doubtful accounts		(1,274,755	)		(824,342	)
Total	$	48,997,156		$	38,999,926

Schedule of allowance for doubtful accounts

	September 30, 2021 (unaudited)		December 31, 2020
Allowance for premium finance contracts	$	1,056,727	$	650,000
Allowance for amounts due from agents		218,028		174,342
Total allowance for doubtful accounts	$	1,274,755	$	824,342

Activity in the allowance for doubtful accounts

	September 30, 2021 (unaudited)			December 31, 2020
Balance, at the beginning of the period	$	824,342		$	785,532
Current year provision		1,031,016			1,086,207
Direct write-downs charged against the allowance		(801,284	)		(1,520,947	)
Recoveries of amounts previously charged off		220,681			473,550
Balance at end of the period	$	1,274,755		$	824,342

Schedule of footnote and bad debt expense

	For the three months ended September 30,
	2021 (unaudited)			2020 (unaudited)
Total Provision	$	400,000		$	254,000
Less: Contra-revenues		(93,618	)		(174,065	)
Bad Debt Expense per the Consolidated Statement of Operations	$	306,382		$	79,935

	For the nine months ended September 30,
	2021 (unaudited)			2020 (unaudited)
Total Provision	$	1,031,016		$	929,000
Less: Contra-revenues		(333,297	)		(539,420	)
Less: Current year provisions for amounts due from agents		(27,292	)		—
Bad Debt Expense per the Consolidated Statement of Operations	$	670,427		$	389,580

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Property and Equipment, Net (Tables)

9 Months Ended

Sep. 30, 2021

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

	September 30,
	2020 (unaudited)			December 31, 2020
Computer Software	$	26,207		$	26,207
Automobile		87,867			53,986
Furniture & Fixtures		14,273			14,273
Leasehold Improvements		116,811			116,811
Computer Equipment		59,927			59,927
Property and equipment		305,085			271,204
Accumulated depreciation		(214,896	)		(189,657	)
Property and equipment, net	$	90,189		$	81,547

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Leases (Tables)

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Supplemental balance sheet information related to leases

		September 30,		December 31,
Operating Leases	Classification	2021		2020
		(unaudited)
Right-of-use assets	Operating lease assets	$	253,923	$	95,425
Current lease liability	Current operating lease liability		107,182		39,344
Non-current lease liability	Long-term operating lease liability		146,741		56,081
Total lease liabilities		$	253,923	$	95,425

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PPP Loan (Tables)

9 Months Ended

Sep. 30, 2021

Ppp Loan

Schedule of PPP loan

	September 30, 2021 (unaudited)		December 31, 2020
Total PPP loan	$	271,000	$	271,000
Less current maturities		—		(15,022	)
Total	$	271,000	$	255,978

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Note Payable – Others (Tables)

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Note Payable - Others

	September 30,
	2021  (unaudited)			December 31, 2020
Total notes payable - Others	$	4,592,598		$	3,781,172
Less current maturities		(1,655,707	)		(1,886,387	)
Long-term maturities	$	2,936,891		$	1,894,785

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Note Payable – Stockholders and Related Parties (Tables)

9 Months Ended

Sep. 30, 2021

Note Payable Stockholders And Related Parties

Schedule of long-term notes payable to stockholders and related parties

	September 30,
	2021  (unaudited)			December 31, 2020
Total notes payable - Related parties		4,716,293			4,248,293
Less current maturities		(1,991,592	)		(722,735	)
Long-term maturities	$	2,724,701		$	3,525,558

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Equity (Tables)

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

Schedule of stock options outstanding

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Outstanding at December 31, 2020		187,400	$	0.80
Issued		—		—
Exercised		—		—
Outstanding at September 30, 2021		187,400	$	0.80		10.4 years
Exercisable at September 30, 2021		93,700

Schedule of stock warrants

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Outstanding at December 31, 2020		800,000	$	8.00
Issued		175,000		4.00
Exercised		—		—
Outstanding at September 30, 2021		975,000	$	7.28		3.71 years
Exercisable at September 30, 2021		975,000

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Summary of Significant Accounting Policies (Details) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Accounting Policies [Abstract]
Uninsured Balance	$ 199,703	$ 545,748
Plus: Insured balances	250,000	250,000
Plus: Balances at other institutions that do not exceed FDIC limit	15,334	7,913
Less: Outstanding checks	(383,626)	(326,372)
Cash per Consolidated Balance Sheet	$ 81,411	$ 477,289

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Summary of Significant Accounting Policies (Details Narrative) - USD ($)			9 Months Ended
	Mar. 01, 2022	Mar. 01, 2021	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020	Dec. 30, 2020
Property, Plant and Equipment [Line Items]
Cash equivalents			$ 0		$ 0
Unearned premium			$ 71,558,748		50,994,858
Interest Rate			15.50%	15.60%
FDIC insured amount			$ 250,000
Uninsured balances			199,703		545,748
Cash Surrender Value of Life Insurance			551,933		$ 516,306
Unrecognized tax benefits			$ 0			$ 0
Options outstanding			187,400	187,400	187,400
Option vested	93,700	93,700
Warrants Outstanding			975,000	800,000	800,000
FLORIDA
Property, Plant and Equipment [Line Items]
Concentration Risk, Percentage			51.00%	56.00%
GEORGIA
Property, Plant and Equipment [Line Items]
Concentration Risk, Percentage			20.00%	19.00%
NORTH CAROLINA
Property, Plant and Equipment [Line Items]
Concentration Risk, Percentage			15.00%	10.00%
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment estimated useful lives			10 years
Minimum [Member] | Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment estimated useful lives			5 years
Minimum [Member] | Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment estimated useful lives			3 years
Maximum [Member] | Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment estimated useful lives			7 years
Maximum [Member] | Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment estimated useful lives			5 years

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Premium Finance Contracts, Related Receivable and Allowance for Doubtful Accounts (Details) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Premium Finance Contracts Related Receivable And Allowance For Doubtful Accounts
Insurance premium finance contracts outstanding	$ 47,416,520	$ 37,499,416
Insurance premium finance contracts cancelled	3,536,552	2,627,810
Insurance Premium finance contracts gross	50,953,072	40,127,226
Amounts due from agents	898,852	891,464
Less: Unearned interest	1,580,013	1,194,422
Insurance premium finance contracts net	50,271,911	39,824,268
Less: Allowance for doubtful accounts	(1,274,755)	(824,342)
Total	$ 48,997,156	$ 38,999,926

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Premium Finance Contracts, Related Receivable and Allowance for Doubtful Accounts (Details 1) - USD ($)	Sep. 30, 2021	Dec. 31, 2020	Dec. 31, 2019
Premium Finance Contracts Related Receivable And Allowance For Doubtful Accounts
Allowance for premium finance contracts	$ 1,056,727	$ 650,000
Allowance for amounts due from agents	218,028	174,342
Total allowance for doubtful accounts	$ 1,274,755	$ 824,342	$ 785,532

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Premium Finance Contracts, Related Receivable and Allowance for Doubtful Accounts (Details 2) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2021	Dec. 31, 2020
Premium Finance Contracts Related Receivable And Allowance For Doubtful Accounts
Balance, at the beginning of the period	$ 824,342	$ 785,532
Current year provision	1,031,016	1,086,207
Direct write-downs charged against the allowance	(801,284)	(1,520,947)
Recoveries of amounts previously charged off	220,681	473,550
Balance at end of the period	$ 1,274,755	$ 824,342

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Premium Finance Contracts, Related Receivable and Allowance for Doubtful Accounts (Details 3) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Premium Finance Contracts Related Receivable And Allowance For Doubtful Accounts
Total Provision	$ 400,000	$ 254,000	$ 1,031,016	$ 929,000
Less: Contra-revenues	(93,618)	(174,065)	(333,297)	(539,420)
Less: Current year provisions for amounts due from agents			(27,292)	0
Bad Debt Expense per the Consolidated Statement of Operations	$ 306,382	$ 79,935	$ 670,427	$ 389,580

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Property and Equipment, Net (Details) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 305,085	$ 271,204
Accumulated depreciation	(214,896)	(189,657)
Property and equipment, net	90,189	81,547
Computer Software [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	26,207	26,207
Automobiles [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	87,867	53,986
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	14,273	14,273
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	116,811	116,811
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 59,927	$ 59,927

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Property and Equipment, Net (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 8,683	$ 4,945	$ 25,239	$ 19,547

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Leases (Details) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Leases [Abstract]
Operating lease assets	$ 253,923	$ 95,425
Current operating lease liability	107,182	39,344
Long-term operating lease liability	146,741	56,081
Total lease liabilities	$ 253,923	$ 95,425

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Leases (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Leases [Abstract]
Borrowing rate	5.25%		5.25%
Weighted-average remaining lease term	2 years 2 months 23 days		2 years 2 months 23 days		3 years 3 months 29 days
Total lease cost	$ 28,194	$ 29,400	$ 85,384	$ 88,200

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Drafts Payable (Details Narrative) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Drafts Payable
Drafts Payable	$ 2,274,145	$ 1,870,965

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Line of Credit (Details Narrative) - Loan Agreement [Member] - USD ($)			3 Months Ended	9 Months Ended		12 Months Ended
	Feb. 03, 2021	Oct. 05, 2018	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020	Jul. 31, 2019
Woodforest National Bank [Member]
Offsetting Assets [Line Items]
Revolving line of credit		$ 25,000,000
Payments of Loan Costs		$ 164,396
Line of credit modified							$ 27,500,000
Maturity date		Jan. 05, 2021
Interest Rate Description				30 Day Libor plus 2.75% per annum
Interest rate						3.75%
Long-term Line of Credit						$ 25,653,473
Unamortized Loan Origination Fees						$ 0
Interest expense				$ 86,000	$ 792,000
Amortized loan origination fee				$ 0	$ 61,649
First Horizon Bank [Member]
Offsetting Assets [Line Items]
Revolving line of credit	$ 35,000,000
Payments of Loan Costs	180,350
Interest Rate Description						30 Day Libor plus 2.85% per annum
Interest rate				3.35%
Long-term Line of Credit			$ 33,211,161	$ 33,211,161
Unamortized Loan Origination Fees			79,400	79,400
Interest expense			202,000	603,000
Amortized loan origination fee			$ 37,856	$ 100,950
W N B [Member]
Offsetting Assets [Line Items]
Revolving line of credit	$ 25,974,695

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PPP Loan (Details) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Ppp Loan
Total PPP loan	$ 271,000	$ 271,000
Less current maturities		(15,022)
Total	$ 271,000	$ 255,978

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PPP Loan (Details Narrative) - Small Business Administration [Member]	1 Months Ended
	Apr. 18, 2020 USD ($)
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 271,000
Debt Instrument, Term	2 years
Interest Rate	1.00%

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Note Payable - Others (Details) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Debt Disclosure [Abstract]
Total notes payable - Others	$ 4,592,598	$ 3,781,172
Less current maturities	(1,655,707)	(1,886,387)
Long-term maturities	$ 2,936,891	$ 1,894,785

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Note Payable – Others (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Debt Instrument [Line Items]
Interest expense	$ 77,000	$ 60,000	$ 207,000	$ 201,000
Proceeds from notes payable			866,426	150,000
Repayments of other notes payable			55,000	$ 300,000
Stock issued in exchnge of debt			$ 70,000
Stock issued in exchnge of debt shares			7,000
Minimum [Member]
Debt Instrument [Line Items]
Interest rate			6.00%
Maximum [Member]
Debt Instrument [Line Items]
Interest rate			8.00%

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Note Payable - Stockholders and Related Parties (Details) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Note Payable Stockholders And Related Parties
Total notes payable - Related parties	$ 4,716,293	$ 4,248,293
Less current maturities	(1,991,592)	(722,735)
Long-term maturities	$ 2,724,701	$ 3,525,558

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Note Payable – Stockholders and Related Parties (Details Narrative) - USD ($)	3 Months Ended			9 Months Ended
	Sep. 30, 2021	Mar. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Interest expense	$ 88,000		$ 86,000	$ 270,000	$ 238,000
Proceeds from Notes Payable				493,000	80,000
Repayments of Notes Payable				$ 25,000	$ 0
Shareholder [Member]
Interest rate		8.00%
Stock Repurchased and Retired During Period, Shares		600,000
Stock Repurchased and Retired During Period, Value		$ 480,000
Minimum [Member]
Interest rate				6.00%
Maximum [Member]
Interest rate				8.00%

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Equity (Details)	9 Months Ended
	Sep. 30, 2021 $ / shares shares
Equity [Abstract]
Number of share outstanding, Beginning	187,400
Weighted Average Exercise Price Outstanding, Beginning | $ / shares	$ 0.80
Number of shares, Issued
Weighted Average Exercise Price Issued | $ / shares
Number of shares, Exercised
Weighted Average Exercise Price, Options exercised | $ / shares
Number of share outstanding, Ending	187,400
Weighted Average Exercise Price Outstanding, Ending | $ / shares	$ 0.80
Weighted Average Remaining Contractual Term	10 years 4 months 24 days
Number of shares, Exercisable	93,700

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Equity (Details 1)	9 Months Ended
	Sep. 30, 2021 $ / shares shares
Equity [Abstract]
Balance at beginning	800,000
Weighted Average Exercise Price, Beginning | $ / shares	$ 8.00
Warrants Issued	175,000
Weighted Average Exercise Price issued | $ / shares	$ 4.00
Warrants exercised
Weighted Average Exercise Price exercised | $ / shares
Balance at ending	975,000
Weighted Average Exercise Price, Ending | $ / shares	$ 7.28
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms	3 years 8 months 15 days
Exercisable	975,000

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Equity (Details Narrative) - USD ($)				3 Months Ended			9 Months Ended
	Jun. 11, 2020	Apr. 02, 2020	Apr. 02, 2020	Sep. 30, 2021	Mar. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Defined Benefit Plan Disclosure [Line Items]
Preferred Stock, Shares Authorized				20,000,000			20,000,000		20,000,000
Preferred Stock, Par or Stated Value Per Share				$ 0.001			$ 0.001		$ 0.001
Designated Shares				600,000			600,000		600,000
Preferred Stock, Shares Outstanding				99,000			99,000		99,000
Preferred Stock, Liquidation Preference Per Share				$ 10			$ 10
Dividends				$ 17,325		$ 12,500	$ 51,975	$ 33,250
Dividends payable				$ 17,325			$ 17,325		$ 17,325
Common Stock, Shares Authorized				100,000,000			100,000,000		100,000,000
Common Stock, Par or Stated Value Per Share				$ 0.001			$ 0.001		$ 0.001
Common Stock, Shares, Outstanding				2,905,016			2,905,016		2,905,016
Stock or Unit Option Plan Expense				$ 8,668		8,668	$ 26,002	20,224
Warrants Issued							175,000
Stock warrant expense				$ 0		$ 0	$ 9,275	$ 27,200
Warrant [Member]
Defined Benefit Plan Disclosure [Line Items]
Warrants Issued			800,000
Class W 4 Warranst [Member]
Defined Benefit Plan Disclosure [Line Items]
Warrants Issued		400,000
Warrant issued price		$ 0.001
Strike price		$ 4
Warrant term		5 years	5 years
Class W 12 Warrant [Member]
Defined Benefit Plan Disclosure [Line Items]
Warrants Issued			400,000
Warrant issued price			$ 0.001
Strike price			$ 12
Warrant term		5 years	5 years
Class W 4 A Warrant [Member]
Defined Benefit Plan Disclosure [Line Items]
Warrants Issued	175,000
Warrant issued price	$ 0.001
Strike price	$ 4
Warrant term	5 years
Shareholder [Member]
Defined Benefit Plan Disclosure [Line Items]
Stock Repurchased and Retired During Period, Shares					600,000
Stock Repurchased and Retired During Period, Value					$ 480,000
Interest rate					8.00%

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Related Party Transactions (Details Narrative) - USD ($)				3 Months Ended	9 Months Ended
	Jun. 11, 2020	Apr. 02, 2020	Mar. 01, 2020	Mar. 30, 2021	Sep. 30, 2021	Oct. 31, 2021	Feb. 03, 2021	Dec. 31, 2020
Related Party Transaction [Line Items]
Rent					$ 7,451
Notes Payable					$ 4,716,293			$ 4,248,293
Warrant [Member]
Related Party Transaction [Line Items]
Stock Warrants Issued	175,000	800,000
N 2019 Equity Incentive Plan [Member] | Equity Option [Member]
Related Party Transaction [Line Items]
Stock options issued			187,400
Impact On Future Earnings Description			The impact on earnings from this transaction is a total of $69,338, which is being amortized over 24 months at a rate of $2,889 per month.
Shareholder [Member]
Related Party Transaction [Line Items]
Stock Repurchased and Retired During Period, Shares				600,000
Stock Repurchased and Retired During Period, Value				$ 480,000
Interest Rate				8.00%
Officers And Directors [Member] | Warrant [Member]
Related Party Transaction [Line Items]
Stock Warrants Issued	175,000	800,000
Officers And Directors [Member] | N 2019 Equity Incentive Plan [Member] | Equity Option [Member]
Related Party Transaction [Line Items]
Stock options issued			167,400
Loan Agreement [Member] | First Horizon Bank [Member]
Related Party Transaction [Line Items]
Long-term line of credit							$ 35,000,000
Subsequent Event [Member] | Loan Agreement [Member] | First Horizon Bank [Member]
Related Party Transaction [Line Items]
Long-term line of credit						$ 35,000,000
Line of credit increased						$ 45,000,000

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Subsequent Events (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended		9 Months Ended
	Oct. 31, 2021	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Feb. 03, 2021
Subsequent Event [Line Items]
Dividends		$ 17,325	$ 12,500	$ 51,975	$ 33,250
Loan Agreement [Member] | First Horizon Bank [Member]
Subsequent Event [Line Items]
Long-term Line of Credit, Noncurrent						$ 35,000,000
Subsequent Event [Member] | Loan Agreement [Member] | First Horizon Bank [Member]
Subsequent Event [Line Items]
Long-term Line of Credit, Noncurrent	$ 35,000,000
Line of credit increased	45,000,000
Loan origination costs	25,771
Series A Convertible Preferred Stock [Member]
Subsequent Event [Line Items]
Dividends	$ 17,325