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

Rhea-AI Summary

LM Funding America, Inc. (NASDAQ:LMFA) announced updated details from their Q3 2022 financial results and business operations. They reported a working capital of $15.5 million and stockholders’ equity of $62.2 million ($4.75 per share) as of September 30, 2022. The company projects a growth in Bitcoin miners from 1,200 to approximately 2,700 by year-end. Revenue for Q3 2022 was approximately $188,000, down from $224,000 in the same quarter last year, attributed to their focus on Bitcoin mining and timing issues.

Positive

• Projected growth of Bitcoin miners from 1,200 to approximately 2,700 by year-end 2022.
• Strong balance sheet with cash of $10.2 million and working capital of $15.5 million as of September 30, 2022.
• Recent acquisition of 400 S19J Pros and 200 S19XP miners expected to come online by March 31, 2023.

Negative

• Q3 2022 revenues decreased to $188,000, down from $224,000 in Q3 2021.
• Anticipated number of operational miners reduced from over 5,000 to approximately 2,700 due to issues with third-party hosting.

TAMPA, Fla., Nov. 18, 2022 (GLOBE NEWSWIRE) -- In a release issued under the same headline earlier today by LM Funding America, Inc. (NASDAQ:LMFA), please note the Investor Conference Call date should read "November 18th, 2022" rather than "November 21, 2022" as originally stated. The corrected release follows:

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

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 today, November 18th, 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 https://www.webcaster4.com/Webcast/Page/2917/47146 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 company’s the website at https://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			$	-

FAQ

What were LMFA's Q3 2022 financial results?

LM Funding reported revenues of approximately $188,000 for Q3 2022, a decrease compared to $224,000 in Q3 2021.

How many Bitcoin miners does LMFA expect to have by year-end 2022?

LMFA expects to have approximately 2,700 miners operational by year-end 2022, up from 1,200 as of November 15, 2022.

What is LMFA's current working capital?

As of September 30, 2022, LMFA reported a working capital of $15.5 million.

What was the effect of LMFA's focus on Bitcoin mining on revenue?

The shift to Bitcoin mining contributed to a decrease in revenues for Q3 2022, totaling approximately $188,000.

When is the conference call to discuss LMFA's Q3 2022 results?

The conference call to discuss Q3 2022 results is scheduled for November 18, 2022, at 11:00 AM ET.