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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