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.
Released August 17, 2022