LM Funding America, Inc. Reports Annual 2021 Financial Results

TAMPA, Fla., March 31, 2022 /PRNewswire/ -- LM Funding America, Inc. (NASDAQ: LMFA) ("LM Funding" or the "Company"), a technology-based specialty finance company offering unique funding solutions to community associations that is expanding into the cryptocurrency mining business, today announced its financial results for the full year ended December 31, 2021.

reposition our company into mining Bitcoin while also improving our capitalization structure and balance sheet

"In 2021, we took critical steps to reposition our company into mining Bitcoin while also improving our capitalization structure and balance sheet," said Bruce Rodgers, LM Funding's Chief Executive Officer. "We were successful in closing a $31.5 million equity offering to fund our investment in Bitcoin mining machines and infrastructure."

Full Year 2021 Highlights:

  • Generated approximately $31.5 million in net proceeds from an equity offering that is being used to fund our digital asset expansion for which we ordered 5,046 ASIC mining machines from Bitmain for approximately $31.6 million and hosting equipment from Bit5ive for approximately $3.1 million. We currently anticipate the ASIC mining machines to be delivered sometime in the 2nd quarter of 2022 subject to issues surrounding worldwide logistics impacted by COVID-19 and the war in Ukraine.
  • We also received approximately $10.2 million from warrant holders upon the exercise into common shares.
  • Operating revenues totaled approximately $0.9 million as compared to approximately $1.26 million for prior year.
  • Operating loss increased to approximately $8.4 million as compared to approximately $4.1 million for the prior year due mainly to a $3 million increase in compensation, including stock compensation expense and bonuses, an approximately $0.4 million increase in professional fees and an approximately $0.2 million reduction in the recoupment of a previous bad debt write-off associated with a related party.
  • The Company engaged in several opportunistic specialty financing solutions which contributed to net income from continuing operations of approximately $5.0 million as compared to an approximately $4.1 million loss for the prior year. This improvement in operations was due in part to:
    • An innovative troubled financing solution that resulted in the realized gain of approximately $13.8 million on the sale of securities.
    • Realized gain of approximately $0.5 million from the sale of digital assets, which included Bitcoin.
    • Unrealized gain of approximately $0.9 million for investment in LMF Acquisition Opportunities Inc. a special purpose acquisition corporation.
  • Net income attributable to LM Funding America Inc was approximately $4.8 million after deducting $0.2 million for the net income attributable to a non-controlling interest as compared to a net loss of approximately $4.0 million for the prior year.

On October 19, 2021, the Company closed an underwritten public offering that included the underwriters' exercise of its option to purchase additional shares, which resulted in the issuance of approximately 7.26 million shares of its common stock and common warrants to up to approximately 7.48 million shares of the Company's common stock. At closing, LM Funding received net proceeds from the offering of approximately $31.5 million.

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. The company offers funding to Associations by purchasing a certain portion of the associations' rights to delinquent accounts that are selected by the Associations arising from unpaid Association assessments. The company is also involved in the business of purchasing delinquent accounts on various terms tailored to suit each Association's financial needs, including under the company's New Neighbor Guaranty™ program.  The company is also entering the cryptocurrency mining business through a new 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," "estimate," "expect," "intend," "plan," and "project" and other similar words and expressions are intended to signify forward-looking statements. Forward-looking statements are not guarantees 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. 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.

Company Contact:                                                    

Bruce Rodgers, Chairman and CEO                            

LM Funding America, Inc.                                          

Tel (813) 222-8996                                                    

investors@lmfunding.com 


 

 

LM FUNDING AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS 

 




Years ended December 31,




2021



2020


Revenues









Interest on delinquent association fees


$

471,923



$

623,790


Administrative and late fees



69,369




101,993


Recoveries in excess of cost - special product



95,904




214,558


Underwriting fees and other revenues



120,176




116,430


Rental revenue



141,569




206,831


Total revenues



898,941




1,263,602


Operating expenses









Staff costs & payroll



6,477,042




3,366,034


Professional fees



2,271,808




1,799,595


Settlement costs with associations



2,000




31,885


Selling, general and administrative



417,963




351,234


Real estate management and disposal



132,283




211,288


Depreciation and amortization



11,087




16,930


Collection costs



4,459




(29,932)


Recovery of cost from related party receivable



(200,000)




(500,000)


Provision for credit losses



(10,000)




50,800


Other operating



224,678




17,778


Total operating expenses



9,331,320




5,315,612











Operating loss from continuing operations



(8,432,379)




(4,052,010)


Realized gain on securities



13,817,863




-


Unrealized loss on convertible debt security



(407,992)




-


Unrealized loss on marketable securities



(1,387,590)




-


Unrealized gain on investment and equity securities



886,543




-


Realized gain on digital assets



502,657




-


Impairment loss on digital assets



(19,945)




-


Interest income



211,427




-


Interest expense



(653)




(7,189)


Dividend income



2,113




-


Gain on forgiveness of note payable



157,250




-


Income (loss) before income taxes


$

5,329,294



$

(4,059,199)


Income tax expense



(326,178)




-


Net income (loss) from continuing operations


$

5,003,116



$

(4,059,199)


Gain from operations of discontinued operations



-




16,428


Net income (loss)



5,003,116




(4,042,771)


Less: Net income (loss) attributable to non-controlling interest



(243,898)




1,309


Net income (loss) attributable to LM Funding America Inc.


$

4,759,218



$

(4,041,462)











Basic income (loss) per common share continuing operations


$

0.70



$

(2.50)


Basic earnings (loss) per common share discontinuing operations



-




0.01


Basic income (loss) per common share


$

0.70



$

(2.49)











Diluted income (loss) per common share continuing operations


$

0.60



$

(2.50)


Diluted earnings (loss) per common share discontinuing operations



-




0.01


Diluted income (loss) per common share


$

0.60



$

(2.49)


Weighted average number of common shares outstanding









Basic



6,828,704




1,622,911


Diluted



7,927,255




1,622,911


 

 

LM FUNDING AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS 

 









December 31,



December 31,




2021



2020


Assets









Cash


$

32,559,185



$

11,552,943


Finance receivables:









Original product (Note 2)



13,993




116,017


Special product - New Neighbor Guaranty program, net of allowance for credit losses of (Note 3)



14,200




52,757


Short-term investments - convertible debt securities (Note 5)



539,351




-


Marketable securities (Note 5)



2,132,051




-


Short-term investments - note receivable (Note 5)



2,000,000




-


Prepaid expenses and other assets



1,251,852




399,124


Current assets



38,510,632




12,120,841











Fixed assets, net



17,914




6,171


Real estate assets owned (Note 6)



80,057




18,767


Operating lease - right of use assets (Note 9)



59,969




160,667


Long-term investments - equity securities in affiliates (Note 5)



1,973,413




-


Investments in unconsolidated affiliates (Note 5)



4,676,130




-


Deposit on mining equipment (Note 7)



16,775,100




-


Other assets



10,726




10,984


Long-term assets



23,593,309




196,589











Total assets


$

62,103,941



$

12,317,430











Liabilities and stockholders' equity









Note payable (Note 8)



114,688




96,257


Accounts payable and accrued expenses



463,646




237,033


Due to related party payable (Note 12)



121,220




158,399


Income tax payable (Note 10)



326,178




-


Current portion of lease liability (Note 9)



68,002




103,646


Current liabilities



1,093,734




595,335











Notes payable - long-term (Note 8)



-




185,785


Lease liability - long-term (Note 9)



-




68,002


Long-term liabilities



-




253,787


Total liabilities



1,093,734




849,122











Stockholders' equity (Note 11)









Preferred stock, par value $.001; 150,000,000 shares authorized; no shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively



-




-


Common stock, par value $.001; 350,000,000 shares authorized; 13,017,943 and 3,083,760 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively.



13,018




3,083


Additional paid-in capital



74,525,106




29,996,258


Accumulated deficit



(13,777,006)




(18,536,224)


Total LM Funding America stockholders' equity



60,761,118




11,463,117


Non-controlling interest



249,089




5,191


Total stockholders' equity



61,010,207




11,468,308


Total liabilities and stockholders' equity


$

62,103,941



$

12,317,430


 

 

LM FUNDING AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS 

 



Years ended December 31,




2021



2020


CASH FLOWS FROM OPERATING ACTIVITIES:









Net income (loss)



5,003,116




(4,042,771)


Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities









Depreciation and amortization


$

1,383



$

11,143


Right to use asset expense



100,698




99,593


Stock compensation



219,667




125,450


Stock option expense



2,323,118




14,939


Stock compensation - employees



292,500





Accrued investment income



(74,520)





Recovery of reserve from related party receivable






(300,000)


Reserve for units






30,000


Debt forgiveness



(157,250)





Gain on deconsolidation of  affiliate



(43,623)





Impairment loss on digital assets



19,945





Unrealized loss on convertible debt security



407,992





Unrealized loss on marketable securities



1,387,590





Unrealized gain on investment and equity securities



(886,543)





Realized gain on securities



(13,817,863)





Realized gain on sale of digital assets



(502,657)





Proceeds from securities



30,400,433





Investment in convertible note receivable converted into marketable security



(16,582,571)





Investment in convertible note receivable



(5,000,000)





Convertible debt and interest converted into marketable securities



4,231,758





Investments in marketable security



(3,651,400)





Gain on sale of fixed assets






(16,428)


Change in operating assets and liabilities:









Prepaid expenses and other assets



(845,853)




(61,303)


Advances (repayments) to related party



89,235




583,444


Accounts payable and accrued expenses



349,644




126,950


Lease liability payments



(103,646)




(94,235)


Deferred taxes and taxes payable



326,178





Net cash provided by (used in) operating activities



3,487,331




(3,523,218)


CASH FLOWS FROM INVESTING ACTIVITIES:









Net collections of finance receivables - original product



102,024




127,694


Net collections of finance receivables - special product



38,557




76,515


Cash paid to purchase fixed assets



(14,411)




(1,286)


Net cash payment for IIU disposal






(246,914)


Investment in note receivable



(2,000,000)





Investment in digital assets



(1,419,958)





Proceeds from sale of digital assets



1,902,670





Loan to purchase securities



1,784,250





Repayment of loan to purchase securities



(1,784,250)





Deposit for mining equipment



(16,775,100)





Investment in unconsolidated affiliate



(5,738,000)





Proceeds from investment in note receivable






1,500,000


(Payments)/proceeds for real estate assets owned



(60,006)




(5,423)


Net cash provided by (cash used) in investing activities



(23,964,224)




1,450,586


CASH FLOWS FROM FINANCING ACTIVITIES:









Proceeds from borrowings






185,785


Loan principal and insurance financing repayments



(220,363)




(165,798)


Exercise of warrants



10,247,124




3,081,730


Proceeds from stock subscription



31,456,374




9,447,535


Investment in subsidiary






6,500


Net cash provided by financing activities



41,483,135




12,555,752


NET INCREASE IN CASH



21,006,242




10,483,120


CASH - BEGINNING OF YEAR



11,552,943




1,069,823


CASH - END OF YEAR


$

32,559,185



$

11,552,943











SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION









Cash paid for interest


$

1,892



$

7,189


SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES









Insurance financing



210,260




192,514


 

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SOURCE LM Funding America