LM Funding America, Inc. Reports Financial Results and Provides Business Update for the Third Quarter of 2022
Expected to Have Approximately 2,700 Miners Mining by Year’s End, Up From 848 Machines as of September 30, 2022
Reports working capital of $15.5 million and stockholders’ equity of
$62.2 million ($4.75 per share) as of September 30, 2022
Conference Call to Be Held Today at 11:00 am ET
TAMPA, Fla., Nov. 18, 2022 (GLOBE NEWSWIRE) — LM Funding America, Inc. (NASDAQ:LMFA) (“LM Funding” or the “Company”), a cryptocurrency mining and technology-based specialty finance company, today provided a business update and reported financial results for the three months ended September 30, 2022.
Bruce Rodgers, Chairman and CEO of LM Funding, commented, “We took another step forward on the execution of our Bitcoin mining strategy, and began actively mining Bitcoin in September 2022. We currently have 1,200 miners actively mining Bitcoin as of November 15, 2022, and currently believe that number will reach approximately 2,700 by year’s end. Previously, we had anticipated having more than 5,000 miners operational by the fourth quarter of 2022, but we have experienced issues with one of our third-party hosting companies. We are now looking for alternative solutions to host approximately 2,690 miners.”
“As of November 15, 2022, we have production capacity of approximately 120 petahash. Production is expected to increase to 270 petahash by year’s end when we hope to have the approximately 2,700 miners energized. In addition, during the third quarter, we opportunistically took advantage of lower pricing on mining machines and purchased four hundred additional S19J Pros and two hundred S19XP miners, which we expect to come online between now and March 31, 2023. We will continue to identify and take advantage of opportunities to purchase additional miners at favorable prices in order to continue to maximize long-term shareholder value,” concluded Mr. Rogers.
Richard Russell, Chief Financial Officer of LM Funding, added, “Our balance sheet remains strong, and at September 30, 2022, we had $10.2 million in cash, working capital of $15.5 million and shareholders’ equity of $62.2 million. As sponsor and founding stockholder of LMF Acquisition Opportunities, Inc. (“LMAO”), a special purpose acquisition company (SPAC), we are pleased to report that the merger with SeaStar Medical successfully was consummated on October 28, 2022.”
Financial Highlights for the Three Months ended September 30, 2022
- Cash of $10.2 million and working capital of $15.5 million as of September 30, 2022
- Total stockholders’ equity of $62.2 million and net equity per share of $4.75 as of September 30, 2022 (calculated as stockholders’ equity divided by 13,091,883 shares outstanding as of September 30, 2022)
- Revenues for the quarter ended September 30, 2022, were approximately $188,000 as compared to $224,000 for the comparable quarter in 2021, due to the shift in focus to Bitcoin mining, and timing of Bitcoin mining late in the quarter, as well as the timing of association fee payoffs.
Investor Conference Call
LM Funding will host a conference call November 21, 2022, at 11:00 A.M. Eastern Time to discuss the Company’s financial results for the third quarter ended September 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 956556. A webcast of the call may be accessed at http://www.webcaster4.com/Webcast/Page/2917/47146 or on the investor relations section of the company’s website, http://ir.lmfunding.com/.
A webcast replay will be available on the investor relations section of company’s the website at http://ir.lmfunding.com/news-events/ir-calendar through November 24, 2023. A telephone replay of the call will be available approximately one hour following the call, through December 5, 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 47146.
About LM Funding America
LM Funding America, Inc., (Nasdaq: LMFA) together with its subsidiaries, is a cryptocurrency mining business that commenced Bitcoin mining operations in September 2022. The Company also operates 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.
Forward-Looking Statements
This 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, uncertainty in the cryptocurrency mining business in general, problems with hosting vendors in the 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 potential need for additional capital in the future, 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, LLC
Tel: (212) 671-1021
Email: LMFA@crescendo-ir.com
LM Funding America, Inc. and Subsidiaries Condensed Consolidated Balance Sheets
| September 30, 2022 |
December 31, 2021 |
|||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Cash | $ | 10,175,211 | $ | 32,559,185 | ||||
| Finance receivables | 20,709 | 28,193 | ||||||
| Short-term investments – convertible debt securities | – | 539,351 | ||||||
| Marketable securities | 24,220 | 2,132,051 | ||||||
| Short-term investments – debt securities | 2,619,292 | 2,000,000 | ||||||
| Prepaid expenses and other assets | 1,205,719 | 1,251,852 | ||||||
| Note receivable from related party | 2,785,000 | – | ||||||
| Digital assets | 616,257 | – | ||||||
| Current assets | 17,446,408 | 38,510,632 | ||||||
| Fixed assets, net | 21,975,960 | 17,914 | ||||||
| Real estate assets owned | 80,057 | 80,057 | ||||||
| Operating lease – right of use assets | 289,468 | 59,969 | ||||||
| Long-term investments – equity securities | 322,246 | 1,973,413 | ||||||
| Investments in unconsolidated affiliates | 17,362,125 | 4,676,130 | ||||||
| Deposits on mining equipment and hosting services | 10,467,721 | 16,775,100 | ||||||
| Other assets | 10,726 | 10,726 | ||||||
| Long-term assets | 50,508,303 | 23,593,309 | ||||||
| Total assets | $ | 67,954,711 | $ | 62,103,941 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Accounts payable and accrued expenses | $ | 636,369 | 463,646 | |||||
| Note payable – short-term | – | 114,688 | ||||||
| Due to related parties | 75,615 | 121,220 | ||||||
| Current portion of lease liability | 90,004 | 68,002 | ||||||
| Income tax payable | 1,167,856 | 326,178 | ||||||
| Total current liabilities | 1,969,844 | 1,093,734 | ||||||
| Lease liability – long-term | 203,211 | – | ||||||
| Long-term liabilities | 203,211 | – | ||||||
| Total liabilities | 2,173,055 | 1,093,734 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, par value $.001; 150,000,000 shares authorized; no shares issued and outstanding as of September 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 September 30, 2022 and December 31, 2021, respectively | 13,092 | 13,018 | ||||||
| Additional paid-in capital | 85,469,749 | 74,525,106 | ||||||
| Accumulated deficit | (23,323,573 | ) | (13,777,006 | ) | ||||
| Total stockholders’ equity | 62,159,268 | 60,761,118 | ||||||
| Non-controlling interest | 3,622,388 | 249,089 | ||||||
| Total stockholders’ equity | 65,781,656 | 61,010,207 | ||||||
| Total liabilities and stockholders’ equity | $ | 67,954,711 | $ | 62,103,941 | ||||
LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (unaudited)
| For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues: | ||||||||||||||||
| Interest on delinquent association fees | $ | 57,585 | $ | 129,439 | $ | 270,993 | $ | 269,556 | ||||||||
| Administrative and late fees | 14,717 | 14,642 | 51,123 | 46,574 | ||||||||||||
| Recoveries in excess of cost – special product | 20,171 | 14,000 | 73,526 | 61,052 | ||||||||||||
| Underwriting and other revenues | 12,362 | 28,784 | 55,278 | 86,981 | ||||||||||||
| Rental revenue | 40,788 | 36,759 | 120,240 | 103,264 | ||||||||||||
| Digital mining revenues, net | 42,157 | – | 42,157 | – | ||||||||||||
| Total revenues | 187,780 | 223,624 | 613,317 | 567,427 | ||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Digital mining cost of revenues (exclusive of depreciation and amortization shown below) |
38,960 | – | 38,960 | – | ||||||||||||
| Staff costs and payroll | 4,297,540 | 1,874,798 | 12,886,432 | 3,422,819 | ||||||||||||
| Professional fees | 714,730 | 497,942 | 2,520,981 | 1,340,909 | ||||||||||||
| Settlement costs with associations | – | – | 160 | – | ||||||||||||
| Selling, general and administrative | 209,328 | 106,895 | 446,519 | 302,679 | ||||||||||||
| Provision for credit losses | – | – | 500 | (10,000 | ) | |||||||||||
| Recovery of cost from related party receivable | – | (100,000 | ) | – | (200,000 | ) | ||||||||||
| Real estate management and disposal | 22,558 | 29,878 | 76,453 | 77,646 | ||||||||||||
| Depreciation and amortization | 38,617 | 4,482 | 43,718 | 9,476 | ||||||||||||
| Collection costs | 5,037 | (1,410 | ) | (6,689 | ) | 3,339 | ||||||||||
| Other operating expenses | 124,405 | 5,801 | 273,798 | 17,415 | ||||||||||||
| Total operating expenses | 5,451,175 | 2,418,386 | 16,280,832 | 4,964,283 | ||||||||||||
| Operating loss | (5,263,395 | ) | (2,194,762 | ) | (15,667,515 | ) | (4,396,856 | ) | ||||||||
| Realized gain (loss) on securities | – | (173,282 | ) | (349,920 | ) | 13,951,752 | ||||||||||
| Realized gain on convertible debt securities | – | – | 287,778 | – | ||||||||||||
| Unrealized loss on convertible debt security | – | (2,588,916 | ) | – | (87,316 | ) | ||||||||||
| Unrealized loss on marketable securities | (13,000 | ) | (478,448 | ) | (36,900 | ) | (478,448 | ) | ||||||||
| Impairment loss on digital assets | (26,634 | ) | (23,720 | ) | (404,341 | ) | (23,720 | ) | ||||||||
| Unrealized gain (loss) on investment and equity securities | (194,174 | ) | (123,172 | ) | 11,034,828 | 1,024,714 | ||||||||||
| Digital assets other income | – | – | 5,658 | – | ||||||||||||
| Interest income | 85,602 | 77,956 | 264,947 | 164,895 | ||||||||||||
| Interest expense | – | (3,939 | ) | – | (653 | ) | ||||||||||
| Dividend income | 1,125 | 738 | 3,875 | 738 | ||||||||||||
| Gain on forgiveness of note payable | – | – | – | 157,251 | ||||||||||||
| Income (loss) before income taxes | (5,410,476 | ) | (5,507,545 | ) | (4,861,590 | ) | 10,312,357 | |||||||||
| Income tax expense | (1,311,678 | ) | (12,619 | ) | (1,311,678 | ) | (29,883 | ) | ||||||||
| Net income (loss) | (6,722,154 | ) | (5,520,164 | ) | (6,173,268 | ) | 10,282,474 | |||||||||
| Less: Net (income) loss attributable to non-controlling interest | 59,298 | 33,953 | (3,373,299 | ) | (284,770 | ) | ||||||||||
| Net income (loss) attributable to LM Funding America Inc. | $ | (6,662,856 | ) | $ | (5,486,211 | ) | $ | (9,546,567 | ) | $ | 9,997,704 | |||||
| Earnings/(loss) per share: | ||||||||||||||||
| Basic income (loss) per common share – net income (loss) – attributable to LM Funding | $ | (0.51 | ) | $ | (1.01 | ) | $ | (0.73 | ) | $ | 1.89 | |||||
| Diluted income (loss) per common share – net income (loss) – attributable to LM Funding | $ | (0.51 | ) | $ | (1.01 | ) | $ | (0.73 | ) | $ | 1.88 | |||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | 13,091,883 | 5,414,296 | 13,081,591 | 5,293,375 | ||||||||||||
| Diluted | 13,091,883 | 5,421,606 | 13,081,591 | 5,305,418 | ||||||||||||
LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows
(unaudited)
| For the Nine Months Ended September 30, |
||||||||
| 2022 | 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | (6,173,268 | ) | $ | 10,282,474 | |||
| Adjustments to reconcile net income (loss) to cash used in operating activities | ||||||||
| Depreciation and amortization | 43,718 | 9,476 | ||||||
| Right to use asset non cash lease expense | 71,288 | 75,605 | ||||||
| Stock compensation | 988,498 | – | ||||||
| Stock option expense | 9,956,219 | – | ||||||
| Debt forgiveness | – | (157,251 | ) | |||||
| Accrued investment income | (259,867 | ) | (160,954 | ) | ||||
| Gain on deconsolidation of affiliate | – | (43,623 | ) | |||||
| Unrealized loss on convertible debt security | – | 87,316 | ||||||
| Unrealized loss on marketable securities | 36,900 | 478,448 | ||||||
| Impairment loss on digital assts | 404,341 | 23,720 | ||||||
| Unrealized gain on investment and equity securities | (11,034,828 | ) | (1,024,714 | ) | ||||
| Realized (gain) loss on securities | 349,920 | (13,951,752 | ) | |||||
| Realized gain on convertible note securities | (287,778 | ) | – | |||||
| Investment in securities | – | (16,118,533 | ) | |||||
| Proceeds from securities | 2,565,893 | 30,070,285 | ||||||
| Investment in convertible note receivable | – | (5,000,000 | ) | |||||
| Convertible note receivable converted into marketable security | 844,882 | 4,231,760 | ||||||
| Investment in marketable Securities | (844,882 | ) | (3,958,678 | ) | ||||
| Change in assets and liabilities | ||||||||
| Prepaid expenses and other assets | 807,352 | (8,326 | ) | |||||
| Accounts payable and accrued expenses | 172,723 | 382,204 | ||||||
| Advances (repayments) to related party | (45,605 | ) | 103,934 | |||||
| Mining of digital assets | (42,157 | ) | – | |||||
| Lease liability payments | (75,574 | ) | (76,656 | ) | ||||
| Deferred taxes and taxes payable | 841,678 | 29,883 | ||||||
| Net cash provided by (used in) operating activities | (1,680,547 | ) | 5,274,618 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Net collections of finance receivables – original product | 19,049 | 37,549 | ||||||
| Net collections of finance receivables – special product | (11,565 | ) | 8,450 | |||||
| Payments for real estate assets owned | – | (68,568 | ) | |||||
| Capital expenditures | (15,380 | ) | (4,207 | ) | ||||
| Deposits for mining equipment and hosting | (16,467,402 | ) | (1,565,625 | ) | ||||
| Investments in digital assets | (978,441 | ) | (1,419,958 | ) | ||||
| Loan to purchase securities | – | 1,784,250 | ||||||
| Investment in note receivable – related party | (2,785,000 | ) | – | |||||
| Investment in note receivable | (350,000 | ) | – | |||||
| Repayment of loan to purchase securities | – | (1,784,250 | ) | |||||
| Investment in unconsolidated affiliate | – | (5,738,000 | ) | |||||
| Net cash used in investing activities | (20,588,739 | ) | (8,750,359 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Principal repayments | – | (28,534 | ) | |||||
| Insurance financing repayments | (114,688 | ) | (134,485 | ) | ||||
| Exercise of warrants | – | 9,544,623 | ||||||
| Net cash provided by (used in) financing activities | (114,688 | ) | 9,381,604 | |||||
| NET INCREASE (DECREASE) IN CASH | (22,383,974 | ) | 5,905,863 | |||||
| CASH – BEGINNING OF YEAR | 32,559,185 | 11,552,943 | ||||||
| CASH – END OF YEAR | $ | 10,175,211 | $ | 17,458,806 | ||||
| SUPPLEMENTAL DISCLOSURES OF NON-CASHFLOW INFORMATION | ||||||||
| Insurance financing | $ | – | $ | 210,260 | ||||
| ROU assets and operating lease obligation recognized | $ | 300,787 | $ | – | ||||
| Reclassification of mining equipment deposit to fixed assets, net | $ | 21,986,382 | $ | – | ||||
| SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION | ||||||||
| Cash paid for interest | $ | – | $ | 1,892 | ||||
| Cash paid for income taxes | $ | 470,000 | $ | – | ||||
