LM Funding America, Inc. Reports Financial Results and Provides Business Update for the Second Quarter of 2022
08/17/2022 - 08:00 AM
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, t he 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.
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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 $0.00 1; 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.
