LM Funding America, Inc. Reports Financial Results and Provides Business Update for the Second Quarter of 2022
August 17 2022 - 8:00AM
LM Funding America, Inc. (NASDAQ:LMFA) ("LM Funding" or the
"Company"), a technology-based specialty finance company
with a primary focus on expanding into the cryptocurrency mining
business, today provided a business update and reported financial
results for the three months ended June 30, 2022.
Bruce Rodgers, Chairman and CEO of LM Funding, commented, “We
are continuing to execute on our Bitcoin mining strategy, which
began in late 2021. We have already placed 2,690 of the mining
machines that we committed to purchase last year with Compute North
and are currently on track for over 5,000 miners to be operational
by the fourth quarter, which would provide us capacity of
approximately 504 petahash. As a result of the variable pricing
structure we negotiated with our mining machine supplier, pegged to
the price of Bitcoin, we have secured over $2 million in rebate
credits. As we move forward, we plan to maintain a disciplined
approach of opportunistically purchasing and cost-effectively
operating Bitcoin mining machines in order to maximize long-term
value for shareholders.”
Richard Russell, Chief Financial Officer of LM Funding, added,
“As sponsor and founding stockholder of LMF Acquisition
Opportunities, Inc. (“LMAO”), a special purpose acquisition company
(SPAC), we continue our focus on the proposed merger with SeaStar
Medical. Based on the status of the pending merger, as of June 30,
2022, the Company recalculated the fair value of our interests in
LMAO, which included a reassessment of the risk of forfeiture, and
concluded the risk of forfeiture has decreased versus the first
quarter and the value of our retained interest has accordingly
increased. As a result, we recognized an unrealized gain on
securities of $12.2 million for the three months ended June 30,
2022.”
Financial Highlights for the Three Months ended June 30,
2022
- Cash of $17 million and working capital of $21.2 million as of
June 30, 2022
- Total stockholders’ equity of $65.2 million and net equity per
share of $4.98 as of June 30, 2022 (calculated as stockholders’
equity divided by 13,091,883 shares outstanding as of June 30,
2022)
- Revenues for the quarter ended June 30, 2022 were $235,000 as
compared to $328,000 for the comparable quarter in 2021, due to the
shift in focus to Bitcoin mining, as well as the timing of
association fee payoffs.
- Net income attributable to LMFA shareholders for the second
quarter of 2022 was $2.8 million compared to $11.1 million for the
three months ended June 30, 2021. Net income in the second quarter
of 2022, included an unrealized gain on investment and equity
securities of $12.2 million related to the Company’s interest in
LMAO, partially offset by $3.6 million of non-cash, stock-based
compensation expense. The 2021 second quarter included
an $8.5 million realized gain on securities and a $2.5 million
unrealized gain on convertible debt security, both related to the
Company’s investment in Borqs.
Investor Conference Call
LM Funding will host a conference call today at 11:00 A.M.
Eastern Time to discuss the Company’s financial results for the
second quarter ended June 30, 2022, as well as the Company’s
corporate progress and other developments.
The conference call will be available via telephone by dialing
toll-free +1 888-506-0062 for U.S. callers or +1 973-528-0011 for
international callers and entering access code 847012. A webcast of
the call may be accessed at
https://www.webcaster4.com/Webcast/Page/2917/46396 or on the
investor relations section of the company’s website,
https://ir.lmfunding.com/.
A webcast replay will be available on the investor relations
section of the company’s website at
https://ir.lmfunding.com/news-events/ir-calendar through August 17,
2023. A telephone replay of the call will be available
approximately one hour following the call, through August 31, 2022,
and can be accessed by dialing 877-481-4010 for U.S. callers or +1
919-882-2331 for international callers and entering access code
46396.
About LM Funding America
LM Funding America, Inc., together with its subsidiaries, is a
technology-based specialty finance company that provides funding to
nonprofit community associations (Associations) primarily located
in the state of Florida, as well as in the states of Washington,
Colorado and Illinois, by funding a certain portion of the
Associations' rights to delinquent accounts that are selected by
the Associations arising from unpaid Association assessments. LMFA
has also entering the cryptocurrency mining business through its
subsidiary, US Digital Mining and Hosting Co., LLC.
Forward-Looking StatementsThis press release
may contain forward-looking statements made pursuant to the Private
Securities Litigation Reform Act of 1995. Words such as
“anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,”
and “project” and other similar words and expressions are intended
to signify forward-looking statements. Forward-looking statements
are not guaranties of future results and conditions but rather are
subject to various risks and uncertainties. Some of these risks and
uncertainties are identified in the company's most recent Annual
Report on Form 10-K and its other filings with the SEC, which are
available at www.sec.gov. These risks and uncertainties include,
without limitation, uncertainty created by the COVID-19 pandemic,
the risks of entering into and operating in the cryptocurrency
mining business, the capacity of our bitcoin mining machines and
our related ability to purchase power at reasonable prices, the
ability to finance our planned cryptocurrency mining operations,
our ability to acquire new accounts in our specialty finance
business at appropriate prices, the need for capital, our ability
to hire and retain new employees, changes in governmental
regulations that affect our ability to collected sufficient amounts
on defaulted consumer receivables, changes in the credit or capital
markets, changes in interest rates, and negative press regarding
the debt collection industry. The occurrence of any of these risks
and uncertainties could have a material adverse effect on our
business, financial condition, and results of operations.
Contact:Crescendo Communications, LLCTel: (212) 671-1021Email:
LMFA@crescendo-ir.com
LM Funding America, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
|
|
June 30, 2022 |
|
|
December 31, 2021 |
|
|
|
(Unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Cash |
|
$ |
17,046,595 |
|
|
$ |
32,559,185 |
|
Finance receivables: |
|
|
|
|
|
|
|
|
Original product - net |
|
|
2,520 |
|
|
|
13,993 |
|
Special product - New Neighbor
Guaranty program, net of allowance for credit losses of |
|
|
21,077 |
|
|
|
14,200 |
|
Short-term investments -
convertible debt securities (Note 7) |
|
|
- |
|
|
|
539,351 |
|
Marketable securities (Note
7) |
|
|
37,220 |
|
|
|
2,132,051 |
|
Short-term investments - debt
security (Note 7) |
|
|
2,185,863 |
|
|
|
2,000,000 |
|
Prepaid expenses and other
assets |
|
|
1,389,562 |
|
|
|
1,251,852 |
|
Income tax receivable (Note
4) |
|
|
143,822 |
|
|
|
- |
|
Note receivable from related
party (Note 7) |
|
|
910,000 |
|
|
|
- |
|
Digital assets (Note 10) |
|
|
408,879 |
|
|
|
- |
|
Current assets |
|
|
22,145,538 |
|
|
|
38,510,632 |
|
Fixed assets, net (Note
9) |
|
|
15,084,921 |
|
|
|
17,914 |
|
Real estate assets owned |
|
|
80,057 |
|
|
|
80,057 |
|
Operating lease - right of use
assets (Note 5) |
|
|
313,629 |
|
|
|
59,969 |
|
Long-term investments - equity
securities (Note 7) |
|
|
516,420 |
|
|
|
1,973,413 |
|
Investments in unconsolidated
affiliates (Note 7) |
|
|
17,362,125 |
|
|
|
4,676,130 |
|
Deposits on mining equipment
and hosting (Note 8) |
|
|
14,466,162 |
|
|
|
16,775,100 |
|
Other assets |
|
|
10,726 |
|
|
|
10,726 |
|
Long-term assets |
|
|
47,834,040 |
|
|
|
23,593,309 |
|
Total assets |
|
$ |
69,979,578 |
|
|
$ |
62,103,941 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Accounts payable and accrued
expenses |
|
$ |
436,479 |
|
|
|
463,646 |
|
Note payable - short-term
(Note 3) |
|
|
- |
|
|
|
114,688 |
|
Due to related party (Note
2) |
|
|
371,179 |
|
|
|
121,220 |
|
Current portion of lease
liability (Note 5) |
|
|
90,030 |
|
|
|
68,002 |
|
Income tax payable (Note
4) |
|
|
- |
|
|
|
326,178 |
|
Total current liabilities |
|
|
897,688 |
|
|
|
1,093,734 |
|
Lease liability - long-term
(Note 5) |
|
|
226,319 |
|
|
|
- |
|
Long-term liabilities |
|
|
226,319 |
|
|
|
- |
|
Total liabilities |
|
|
1,124,007 |
|
|
|
1,093,734 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Preferred stock, par value $.001; 150,000,000 shares authorized; no
shares issued and outstanding as of June 30, 2022 and December 31,
2021, respectively |
|
|
- |
|
|
|
- |
|
Common stock, par value $0.001; 350,000,000 shares authorized;
13,091,883 and 13,017,943 shares issued and outstanding as of June
30, 2022 and December 31, 2021, respectively |
|
|
13,092 |
|
|
|
13,018 |
|
Additional paid-in capital |
|
|
81,821,510 |
|
|
|
74,525,106 |
|
Accumulated deficit |
|
|
(16,660,717 |
) |
|
|
(13,777,006 |
) |
Total stockholders’ equity |
|
|
65,173,885 |
|
|
|
60,761,118 |
|
Non-controlling interest |
|
|
3,681,686 |
|
|
|
249,089 |
|
Total stockholders’ equity |
|
|
68,855,571 |
|
|
|
61,010,207 |
|
Total liabilities and stockholders’ equity |
|
$ |
69,979,578 |
|
|
$ |
62,103,941 |
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of
these condensed unaudited consolidated financial
statements.LM Funding America, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(unaudited)
|
|
For the Three MonthsEnded June
30, |
|
|
For the Six MonthsEnded June
30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on delinquent association fees |
|
$ |
112,140 |
|
|
$ |
62,673 |
|
|
$ |
213,408 |
|
|
$ |
140,117 |
|
Administrative and late fees |
|
|
19,698 |
|
|
|
16,861 |
|
|
|
36,406 |
|
|
|
31,932 |
|
Recoveries in excess of cost - special product |
|
|
35,990 |
|
|
|
178,769 |
|
|
|
53,355 |
|
|
|
208,242 |
|
Underwriting and other revenues |
|
|
26,125 |
|
|
|
35,494 |
|
|
|
42,916 |
|
|
|
58,197 |
|
Rental revenue |
|
|
40,580 |
|
|
|
34,588 |
|
|
|
79,452 |
|
|
|
66,505 |
|
Total revenues |
|
|
234,533 |
|
|
|
328,385 |
|
|
|
425,537 |
|
|
|
504,993 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staff costs and payroll |
|
|
4,296,695 |
|
|
|
246,040 |
|
|
|
8,588,892 |
|
|
|
1,548,021 |
|
Professional fees |
|
|
1,031,431 |
|
|
|
360,024 |
|
|
|
1,806,251 |
|
|
|
842,967 |
|
Settlement costs with associations |
|
|
- |
|
|
|
- |
|
|
|
160 |
|
|
|
- |
|
Selling, general and administrative |
|
|
122,271 |
|
|
|
96,015 |
|
|
|
237,191 |
|
|
|
195,784 |
|
Recovery of cost from related party receivable |
|
|
- |
|
|
|
(100,000 |
) |
|
|
- |
|
|
|
(100,000 |
) |
Provision for credit losses |
|
|
500 |
|
|
|
- |
|
|
|
500 |
|
|
|
(10,000 |
) |
Real estate management and disposal |
|
|
22,414 |
|
|
|
29,478 |
|
|
|
53,895 |
|
|
|
47,768 |
|
Depreciation and amortization |
|
|
2,007 |
|
|
|
3,298 |
|
|
|
5,101 |
|
|
|
4,994 |
|
Collection costs |
|
|
(7,906 |
) |
|
|
2,701 |
|
|
|
(11,726 |
) |
|
|
4,749 |
|
Other operating expenses |
|
|
141,009 |
|
|
|
4,069 |
|
|
|
149,393 |
|
|
|
11,614 |
|
Total operating expenses |
|
|
5,608,421 |
|
|
|
641,625 |
|
|
|
10,829,657 |
|
|
|
2,545,897 |
|
Operating loss |
|
|
(5,373,888 |
) |
|
|
(313,240 |
) |
|
|
(10,404,120 |
) |
|
|
(2,040,904 |
) |
Realized gain (loss) on securities |
|
|
45,261 |
|
|
|
8,453,570 |
|
|
|
(349,920 |
) |
|
|
14,125,034 |
|
Realized gain on convertible debt securities |
|
|
287,778 |
|
|
|
- |
|
|
|
287,778 |
|
|
|
- |
|
Unrealized gain (loss) on convertible debt security |
|
|
(288,320 |
) |
|
|
2,501,600 |
|
|
|
- |
|
|
|
2,501,600 |
|
Unrealized loss on marketable securities |
|
|
(24,030 |
) |
|
|
- |
|
|
|
(23,900 |
) |
|
|
- |
|
Impairment loss on digital assets |
|
|
(377,707 |
) |
|
|
- |
|
|
|
(377,707 |
) |
|
|
- |
|
Unrealized gain on investment and equity securities |
|
|
12,215,401 |
|
|
|
552,494 |
|
|
|
11,229,002 |
|
|
|
1,147,886 |
|
Digital assets other income |
|
|
1,292 |
|
|
|
- |
|
|
|
5,658 |
|
|
|
- |
|
Interest income |
|
|
80,975 |
|
|
|
73,884 |
|
|
|
179,345 |
|
|
|
86,939 |
|
Interest expense |
|
|
- |
|
|
|
(189 |
) |
|
|
- |
|
|
|
(653 |
) |
Dividend income |
|
|
1,375 |
|
|
|
- |
|
|
|
2,750 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
6,568,137 |
|
|
|
11,268,119 |
|
|
|
548,886 |
|
|
|
15,819,902 |
|
Income tax expense |
|
|
- |
|
|
|
(13,780 |
) |
|
|
- |
|
|
|
(17,264 |
) |
Net income |
|
|
6,568,137 |
|
|
|
11,254,339 |
|
|
|
548,886 |
|
|
|
15,802,638 |
|
Less: Net income attributable
to non-controlling interest |
|
|
(3,723,797 |
) |
|
|
(146,857 |
) |
|
|
(3,432,597 |
) |
|
|
(318,723 |
) |
Net income (loss) attributable
to LM Funding America Inc. |
|
$ |
2,844,340 |
|
|
$ |
11,107,482 |
|
|
$ |
(2,883,711 |
) |
|
$ |
15,483,915 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/(loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per common share - net income (loss) -
attributable to LM Funding |
|
$ |
0.22 |
|
|
$ |
2.05 |
|
|
$ |
(0.22 |
) |
|
$ |
2.96 |
|
Diluted income (loss) per common share - net income (loss) -
attributable to LM Funding |
|
$ |
0.22 |
|
|
$ |
2.05 |
|
|
$ |
(0.22 |
) |
|
$ |
2.95 |
|
Weighted average number of
common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
13,091,882 |
|
|
|
5,414,296 |
|
|
|
13,076,359 |
|
|
|
5,231,909 |
|
Diluted |
|
|
13,091,882 |
|
|
|
5,423,162 |
|
|
|
13,076,359 |
|
|
|
5,245,656 |
|
The accompanying notes are an integral part of
these condensed unaudited consolidated financial statements.
LM Funding America, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash
Flows(unaudited)
|
|
For the Six MonthsEnded June
30, |
|
|
|
2022 |
|
|
2021 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net
income |
|
$ |
548,886 |
|
|
$ |
15,802,638 |
|
Adjustments to reconcile net
income to cash used in operating activities |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
5,101 |
|
|
|
4,994 |
|
Right to use asset non cash lease expense |
|
|
47,127 |
|
|
|
49,797 |
|
Stock compensation |
|
|
658,999 |
|
|
|
- |
|
Stock option expense |
|
|
6,637,479 |
|
|
|
- |
|
Debt forgiveness |
|
|
- |
|
|
|
(157,251 |
) |
Accrued investment income |
|
|
(176,438 |
) |
|
|
(86,938 |
) |
Gain on deconsolidation of affiliate |
|
|
- |
|
|
|
(43,623 |
) |
Unrealized gain on convertible debt security |
|
|
- |
|
|
|
(2,501,600 |
) |
Unrealized loss on marketable securities |
|
|
23,900 |
|
|
|
- |
|
Impairment loss on digital assets |
|
|
377,707 |
|
|
|
- |
|
Unrealized gain on investment and equity securities |
|
|
(11,229,002 |
) |
|
|
(1,147,886 |
) |
Realized (gain) loss on securities |
|
|
349,920 |
|
|
|
(14,125,034 |
) |
Realized gain on convertible note securities |
|
|
(287,778 |
) |
|
|
- |
|
Investment in securities |
|
|
- |
|
|
|
(15,547,454 |
) |
Proceeds from securities |
|
|
2,565,893 |
|
|
|
29,672,488 |
|
Investment in convertible note receivable |
|
|
- |
|
|
|
(5,000,000 |
) |
Convertible note receivable converted into marketable security |
|
|
844,882 |
|
|
|
|
|
Investment in marketable Securities |
|
|
(844,882 |
) |
|
|
(247,997 |
) |
Change in assets and
liabilities |
|
|
|
|
|
|
|
|
Prepaid expenses and other assets |
|
|
623,511 |
|
|
|
11,105 |
|
Accounts payable and accrued expenses |
|
|
(27,168 |
) |
|
|
184,239 |
|
Advances from related party |
|
|
249,959 |
|
|
|
142,191 |
|
Lease liability payments |
|
|
(52,440 |
) |
|
|
(50,353 |
) |
Income tax payable |
|
|
(326,178 |
) |
|
|
- |
|
Income tax receivable |
|
|
(143,822 |
) |
|
|
- |
|
Deferred taxes |
|
|
- |
|
|
|
17,264 |
|
Net cash provided by
(used in) operating activities |
|
|
(154,344 |
) |
|
|
6,976,580 |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net collections of finance receivables - original product |
|
|
11,473 |
|
|
|
30,831 |
|
Net collections of finance receivables - special product |
|
|
(6,877 |
) |
|
|
(454 |
) |
Payments for real estate assets owned |
|
|
- |
|
|
|
(64,857 |
) |
Capital expenditures |
|
|
(13,235 |
) |
|
|
(3,185 |
) |
Deposits for mining equipment and hosting |
|
|
(13,538,333 |
) |
|
|
- |
|
Investments in digital assets |
|
|
(786,586 |
) |
|
|
- |
|
Loan to purchase securities |
|
|
- |
|
|
|
1,784,250 |
|
Investment in note receivable - related party |
|
|
(910,000 |
) |
|
|
|
|
Repayment of loan to purchase securities |
|
|
- |
|
|
|
(1,784,250 |
) |
Investment in unconsolidated affiliate |
|
|
- |
|
|
|
(5,738,000 |
) |
Net cash (used in)
investing activities |
|
|
(15,243,558 |
) |
|
|
(5,775,665 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Principal repayments |
|
|
- |
|
|
|
(28,534 |
) |
Insurance financing repayments |
|
|
(114,688 |
) |
|
|
(96,257 |
) |
Exercise of warrants |
|
|
- |
|
|
|
9,544,623 |
|
Net cash provided by
(used in) financing activities |
|
|
(114,688 |
) |
|
|
9,419,832 |
|
NET INCREASE (DECREASE) IN
CASH |
|
|
(15,512,590 |
) |
|
|
10,620,747 |
|
CASH - BEGINNING OF YEAR |
|
|
32,559,185 |
|
|
|
11,552,943 |
|
CASH - END OF
YEAR |
|
$ |
17,046,595 |
|
|
$ |
22,173,690 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF NON-CASHFLOW INFORMATION |
|
|
|
|
|
|
|
|
ROU assets and operating lease obligation recognized |
|
$ |
300,787 |
|
|
$ |
- |
|
Reclassification of mining equipment deposit to fixed assets,
net |
|
$ |
15,058,872 |
|
|
$ |
- |
|
SUPPLEMENTAL
DISCLOSURES OF CASHFLOW INFORMATION |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
- |
|
|
$ |
1,892 |
|
Cash paid for income taxes |
|
$ |
470,000 |
|
|
$ |
- |
|
The accompanying notes are an integral part of
these unaudited condensed consolidated financial
statements.
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