LM Funding America Announces Pricing of Registered Direct Offering for Aggregate Gross Proceeds of $2.6 Million

Rhea-AI Summary

LM Funding America (NASDAQ: LMFA) has announced a registered direct offering to raise approximately $2.6 million in gross proceeds. The offering includes 278,000 shares of common stock and 605,000 pre-funded warrants, along with Series A and B warrants for an additional 1,766,000 shares. The combined effective offering price is $2.93 per share or pre-funded warrant, with the same exercise price for the warrants. The offering is expected to close around August 19, 2024, subject to customary conditions. Maxim Group is acting as the sole placement agent. The funds will be used to support LM Funding's operations in cryptocurrency mining and specialty finance.

Positive

• Raising $2.6 million in gross proceeds to support company operations
• Offering includes both common stock and warrants, providing flexibility for investors
• Warrants have an exercise price equal to the offering price, potentially indicating confidence in future value

Negative

• Potential dilution of existing shareholders' ownership
• The offering price may represent a discount to the current market price, depending on market conditions
• Additional shares from warrant exercises could further dilute ownership in the future

Financial Analyst

LM Funding's $2.6 million registered direct offering is a double-edged sword for investors. While it provides immediate capital, potentially strengthening the company's balance sheet, it also signals potential cash flow issues. The $2.93 offering price and the inclusion of warrants suggest dilutive effects for existing shareholders. The involvement of a single institutional investor might indicate market interest. This funding round's small size raises questions about the company's ability to fund significant growth initiatives in the competitive cryptocurrency mining sector. Investors should closely monitor how management deploys this capital and whether it translates into tangible business improvements.

Tech Expert

LM Funding's move to raise capital through this offering reflects the capital-intensive nature of cryptocurrency mining. The industry faces challenges including high energy costs, regulatory uncertainties and volatile crypto prices. This $2.6 million injection might be insufficient for substantial infrastructure investments needed to remain competitive. The company's pivot from specialty finance to crypto mining is risky, especially given the sector's current headwinds. Investors should consider whether LM Funding has the technological expertise and scale to compete effectively in this space. The offering's structure, with multiple warrant types, suggests a complex financial strategy that may be difficult for the company to navigate successfully in the rapidly evolving crypto landscape.

Legal Expert

The structure of LM Funding's offering raises several legal and regulatory considerations. The use of both registered and private placement components demonstrates a strategy to balance regulatory compliance with flexibility. However, this approach also increases complexity and potential regulatory scrutiny. The requirement for stockholder approval for the warrants adds another layer of uncertainty. Investors should be aware that the SEC has been increasingly focused on cryptocurrency-related businesses, which could impact LM Funding's operations. The company's transition from specialty finance to crypto mining may also trigger additional regulatory requirements. Shareholders should carefully review the prospectus supplement for full disclosure of risks and terms associated with this offering.

TAMPA, Fla., Aug. 16, 2024 (GLOBE NEWSWIRE) -- LM Funding America, Inc. (NASDAQ: LMFA) (“LM Funding” or the “Company”), a cryptocurrency mining and technology-based specialty finance company, today announced that it has entered into a securities purchase agreement with a single institutional investor to purchase 278,000 shares of common stock and 605,000 pre-funded warrants in a registered direct offering, along with Series A warrants to purchase up to an aggregate of 883,000 shares of common stock and Series B warrants to purchase up to an aggregate of 883,000 shares of common stock in a concurrent private placement. The combined effective offering price for each share of common stock (or pre-funded warrant in lieu thereof) and accompanying Series A and B warrants is $2.93. The Series A and B Warrants will have an exercise price of $2.93, be exercisable beginning on the effective date of stockholder approval and, in the case of Series A warrants, will expire on the five-year anniversary from the date of stockholder approval, and in the case of Series B warrants, will expire on the two-year anniversary from the date of stockholder approval.

The gross proceeds to the Company from the registered direct offering and concurrent private placement are estimated to be approximately $2.6 million before deducting the placement agent’s fees and other estimated offering expenses payable by the Company. The offering is expected to close on or about August 19, 2024, subject to the satisfaction of customary closing conditions.

Maxim Group LLC is acting as the sole placement agent in connection with the offering.

The shares of common stock (or pre-funded warrants in lieu thereof) in the registered direct offering are being offered pursuant to a shelf registration statement on Form S-3 (File No. 333-258326), which was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on August 16, 2021. The warrants to be issued in the concurrent private placement and the shares issuable upon exercise of such warrants were offered pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Act”) under Section 4(a)(2) thereof and Regulation D promulgated thereunder and have not been registered under the Act or applicable state securities laws. A prospectus supplement relating to the shares of common stock and pre-funded warrants will be filed by the Company with the SEC. When available, copies of the prospectus supplement relating to the registered direct offering, together with the accompanying prospectus, can be obtained at the SEC's website at www.sec.gov or from Maxim Group LLC, 300 Park Avenue, New York, NY 10022, Attention: Syndicate Department, or via email at syndicate@maximgrp.com or telephone at (212) 895-3500.

This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor will there be any sales of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

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 of LM Funding America, Inc. (the “Company”) 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 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 the Company’s Bitcoin mining machines and its related ability to purchase power at reasonable prices, the ability to finance and grow its cryptocurrency mining operations, its ability to acquire new accounts in its specialty finance business at appropriate prices, the potential need for additional capital in the future, changes in governmental regulations that affect the Company’s 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 the Company’s business, financial condition, and results of operations.   Any forward-looking statements contained in this press release speak only as of its date. The Company undertakes no obligation to update any forward-looking statements contained in this press release to reflect events or circumstances occurring after its date or to reflect the occurrence of unanticipated events.

Contacts:

Crescendo Communications, LLC
Tel: (212) 671-1021
Email: LMFA@crescendo-ir.com

FAQ

What is the purpose of LM Funding America's (LMFA) recent offering?

LM Funding America (LMFA) is conducting a registered direct offering to raise approximately $2.6 million in gross proceeds to support its operations in cryptocurrency mining and specialty finance.

How many shares and warrants are being offered by LMFA in this offering?

LMFA is offering 278,000 shares of common stock, 605,000 pre-funded warrants, and additional Series A and B warrants for up to 1,766,000 shares in total.

What is the pricing of LMFA's registered direct offering announced on August 16, 2024?

The combined effective offering price for each share of common stock (or pre-funded warrant) and accompanying Series A and B warrants is $2.93.

When is the expected closing date for LMFA's recent offering?

The offering is expected to close on or about August 19, 2024, subject to the satisfaction of customary closing conditions.