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

Rhea-AI Summary

LM Funding America (LMFA) reported a working capital of $21.2 million and stockholders’ equity of $65.2 million as of June 30, 2022. The company has placed 2,690 Bitcoin miners and aims for over 5,000 miners operational by Q4 2022, resulting in a capacity of 504 petahash. Net income for Q2 2022 was $2.8 million, down from $11.1 million year-over-year, primarily due to a strategic shift to Bitcoin mining. The company recorded an unrealized gain on securities of $12.2 million related to its SPAC interest. A conference call to discuss these results is scheduled for today.

Positive

• Targeting operational capacity of over 5,000 miners by Q4 2022.
• Secured over $2 million in rebate credits from variable pricing structure.
• Recognized an unrealized gain on securities of $12.2 million for Q2 2022.

Negative

• Net income decreased from $11.1 million in Q2 2021 to $2.8 million in Q2 2022.
• Revenues fell from $328,000 in Q2 2021 to $235,000 in Q2 2022 due to focus shift.

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 17^th 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. 

FAQ

What are the recent financial results for LMFA for Q2 2022?

LMFA reported a net income of $2.8 million and revenues of $235,000 for Q2 2022.

What is LMFA's current working capital and stockholders' equity?

As of June 30, 2022, LMFA holds a working capital of $21.2 million and stockholders' equity of $65.2 million.

When is the next conference call for LMFA?

The next conference call for LMFA is scheduled for today, August 17, 2022, at 11:00 AM.

How many Bitcoin miners has LMFA currently deployed?

LMFA has deployed 2,690 Bitcoin miners and aims to have over 5,000 operational by Q4 2022.

What is the significance of the unrealized gain reported by LMFA?

LMFA reported an unrealized gain on securities of $12.2 million for Q2 2022 related to its SPAC investment.