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

TAMPA, Fla., Nov. 18, 2022 (GLOBE NEWSWIRE) — 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 November 21, 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: [email protected]


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     $  

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