LM Funding America, Inc. Reports Financial Results and Provides Business Update for the Second Quarter of 2022


On track for over 5,000 miners to be operational by Q4 2022,
with total capacity of 504 petahash

Reports working capital of $21.2 million and stockholders’ equity of
$65.2 million ($4.98 per share) as of June 30, 2022

Conference call to be held Wednesday, August 17th at 11:00 AM

TAMPA, Fla., Aug. 17, 2022 (GLOBE NEWSWIRE) -- 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 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, 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, LLC
Tel: (212) 671-1021
Email: 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 Months
Ended June 30,
  For the Six Months
Ended 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 Months
Ended 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.