LM Funding America, Inc. Provides Year-End Business Update; Reports Successful Repositioning into Bitcoin Mining Strategy

Full-Year 2022 Revenue Increased by 93% and Mined 51 Bitcoins in the Fourth Quarter 2022

Approximately 2,800 Mining Machines Fully Operational Providing the Company with 280 PH/s of Mining Capacity at 2022 Year-End

Reports Working Capital of $8.3 Million and LMFA Stockholders' Equity of $49.2 Million ($3.76 per share) as of December 31, 2022

TAMPA, Fla., March 31, 2023 /PRNewswire/ -- 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 year ended December 31, 2022. 

Operational Highlights

  • Approximately 2,800 Bitcoin mining machines in operation as of December 31, 2022.
  • Placed approximately 700 machines in operation in the first quarter 2023.
  • Anticipate an additional approximately 2,300 machines installed by June 30, 2023, to bring total installed capacity to approximately 600 PH/s.

Bruce Rodgers, Chairman and CEO of LM Funding, commented, "In 2021, we made the strategic decision to transform LM Funding into a Bitcoin mining company, and subsequently took measures to reposition the Company. Late in 2021, we placed an order for approximately 5,000 Bitcoin mining machines. As we progressed through 2022, we experienced a period of transition, locating and electrifying some of our mining machines, and initiating our Bitcoin mining operations. We also opportunistically capitalized on lower hardware pricing to order an additional 665 machines in the second half of 2022, bringing the total number of assets on hand to approximately 5,660 Bitcoin mining machines at year-end 2022. The Company subsequently purchased additional XP mining machines in early January 2023.  When all 5,850 machines are fully operational, the Company anticipates total mining capacity of approximately 600 PH/s. We believe the decision to transform the Company into a Bitcoin mining company was the right one and that the results we demonstrated in the fourth quarter will accelerate as we continue to acquire, locate, electrify, and commence mining of Bitcoin on additional machines."

Richard Russell, Chief Financial Officer of LM Funding commented, "In addition to our revenue growth, our balance sheet remains solid. As of December 31, 2022, we had $4.2 million in cash, approximately 55 Bitcoins valued at $0.8 million, working capital of $8.3 million, and LMFA stockholders' equity of $49.2 million, or $3.76 per share.  As a result, we believe we are well capitalized to execute on our growth strategy, which we believe will drive significant value for our shareholders in the years to come."

Financial Highlights

  • Total revenue for the twelve months ended December 31, 2022, was approximately $1.7 million, an increase of $0.8 million, or 93% from $0.9 million for the full-year 2021. The increase was primarily due to an increase in Bitcoin mining revenue of $0.9 million that was predominately generated in the fourth quarter of 2022 in connection with the commencement of our Bitcoin mining operations in late 2022.
  • Cash of approximately $4.2 million, digital assets of $0.9 million, and working capital of $8.3 million as of December 31, 2022.
  • Total LMFA stockholders' equity of $49.2 million and net equity per share of $3.76 as of December 31, 2022. (Calculated as LMFA stockholders' equity divided by 13,091,883 shares outstanding as of December 31, 2022)

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) 671-1020
Email: LMFA@crescendo-ir.com

(tables follow)

 

LM Funding America, Inc. and Subsidiaries Consolidated Balance Sheets (unaudited)



December 31,



December 31,




2022



2021


Assets







Cash


$

4,238,006



$

32,559,185


Digital Assets



888,026




-


Finance receivables



26,802




28,193


Marketable securities



4,290




2,132,051


Short-term investments - convertible debt securities



-




539,351


Short-term investments - debt securities



-




2,027,178


Notes receivable from Seastar Medical Holding Corporation



3,807,749




-


Prepaid expenses and other assets



1,233,322




1,224,674


Income tax receivable



293,466




-


Current assets



10,491,661




38,510,632









Fixed assets, net



27,192,317




17,914


Deposits on mining equipment



525,219




15,986,700


Hosting services deposit



2,200,452




788,400


Real estate assets owned



80,057




80,057


Long-term investments - debt security



2,402,542




-


Less: Allowance for losses on debt security



(1,052,542)




-


Long-term investments - debt security, net



1,350,000




-


Long-term investments - equity securities



464,778




1,973,413


Investment in Seastar Medical Holding Corporation



10,608,750




-


Investment in unconsolidated affiliate



-




4,676,130


Operating lease - right of use assets



265,658




59,969


Other assets



10,726




10,726


Long-term assets



42,697,957




23,593,309


Total assets


$

53,189,618



$

62,103,941









Liabilities and stockholders' equity







Accounts payable and accrued expenses



1,570,906




463,646


Note payable - short-term



475,775




114,688


Due to related parties



75,488




121,220


Current portion of lease liability



90,823




68,002


Income tax payable



-




326,178


Total current liabilities



2,212,992




1,093,734









Lease liability - long-term



179,397




-


Long-term liabilities



179,397




-


Total liabilities



2,392,389




1,093,734









Stockholders' equity







Preferred stock, par value $.001; 150,000,000 shares authorized; no shares issued and

outstanding as of December 31, 2022 and December 31, 2021, respectively



-




-


Common stock, par value $.001; 350,000,000 shares authorized; 13,091,883 and 13,017,943

shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively



13,092




13,018


Additional paid-in capital



92,195,341




74,525,106


Accumulated deficit



(43,017,207)




(13,777,006)


Total LM Funding America stockholders' equity



49,191,226




60,761,118


   Non-controlling interest



1,606,003




249,089


Total stockholders' equity



50,797,229




61,010,207


Total liabilities and stockholders' equity


$

53,189,618



$

62,103,941


 

LM Funding America, Inc. and Subsidiaries Consolidated Statements of Operations (unaudited)



Years ended December 31,




2022



2021


Revenues







Interest on delinquent association fees


$

359,012



$

471,923


Administrative and late fees



70,686




69,369


Recoveries in excess of cost - special product



100,470




95,904


Underwriting fees and other revenues



96,605




120,176


Rental revenue



161,618




141,569


Digital mining revenues



945,560




-


Total revenues



1,733,951




898,941


Operating costs and expenses







Digital mining cost of revenues (exclusive of depreciation and amortization shown below)



1,033,226




-


Staff costs & payroll



19,422,723




6,257,375


Professional fees



3,158,446




2,271,808


Settlement costs with associations



160




2,000


Selling, general and administrative



635,268




417,963


Provision for credit losses



(10,177)




(10,000)


Recovery of cost from related party receivable



-




(200,000)


Real estate management and disposal



110,465




132,283


Depreciation and amortization



478,020




11,087


Collection costs



(12,213)




4,459


Impairment loss on mined digital assets



79,794




-


Other operating costs



1,514,224




444,345


Total operating costs and expenses



26,409,936




9,331,320


Loss from operations



(24,675,985)




(8,432,379)


Realized gain (loss) on securities



(349,920)




13,817,863


Realized gain on convertible debt securities



287,778




-


Unrealized loss on convertible debt security



-




(407,992)


Unrealized loss on marketable securities



(56,830)




(1,387,590)


Impairment loss on purchased digital assets



(467,406)




(23,720)


Impairment loss on prepaid mining machine deposits



(3,150,000)




-


Impairment loss on prepaid hosting deposits



(1,790,712)




-


Credit loss on debt securities



(1,052,542)




-


Unrealized gain on investment and equity securities



4,423,985




886,543


Realized gain on sale of digital assets



20,254




502,657


Loss on disposal of assets



(38,054)




-


Digital assets other income



5,658




3,775


Dividend income



3,875




2,113


Interest income



399,094




211,427


Interest expense



(4,416)




(653)


Gain on forgiveness of note payable



-




157,250


Income (loss) before income taxes


$

(26,445,221)



$

5,329,294


Income tax expense



(1,438,066)




(326,178)


Net income (loss)


$

(27,883,287)



$

5,003,116


Less: Net income attributable to non-controlling interest



(1,356,914)




(243,898)


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


$

(29,240,201)



$

4,759,218









Basic income (loss) per common share


$

(2.23)



$

0.70









Diluted income (loss) per common share


$

(2.23)



$

0.60


Weighted average number of common shares outstanding







Basic



13,084,185




6,828,704


Diluted



13,084,185




7,927,255


 

LM Funding America, Inc. and Subsidiaries Consolidated Statements of Cash Flows (unaudited)

(unaudited)



Years ended December 31,




2022



2021


CASH FLOWS FROM OPERATING ACTIVITIES:







Net income (loss)


$

(27,883,287)



$

5,003,116


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







Depreciation and amortization



478,020




1,383


Noncash lease expense



95,098




100,698


Stock compensation



1,098,331




219,667


Stock option expense



16,571,978




2,323,118


Stock compensation - employees



-




292,500


Accrued investment income



(392,412)




(74,520)


Accrued recovery of legal fees



(55,364)




-


Debt forgiveness



-




(157,250)


Gain on deconsolidation of  affiliate



-




(43,623)


Impairment loss on digital assets



547,200




23,720


Impairment loss on mining machine deposits



3,150,000




-


Impairment loss on hosting deposits



1,790,712




-


Loss on disposal of fixed assets



38,054




-


Unrealized loss on convertible debt security



-




407,992


Unrealized loss on marketable securities



56,830




1,387,590


Unrealized gain on investment and equity securities



(4,423,985)




(886,543)


Allowance for loss on debt security



1,052,542




-


Realized loss (gain) on securities



349,920




(13,817,863)


Realized gain on sale of digital assets



(20,254)




(502,657)


Realized gain on convertible note securities



(287,778)




-


Proceeds from securities



2,565,893




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



844,882




4,231,758


Investments in marketable security



(844,882)




(3,651,400)


Change in operating assets and liabilities:







Prepaid expenses and other assets



651,471




(845,853)


Advances (repayments) to related party



(45,732)




89,235


Accounts payable and accrued expenses



393,261




349,644


Deposits for hosting fees



(3,202,764)




(788,400)


Mining of digital assets



(945,560)




-


Lease liability payments



(98,569)




(103,646)


Deferred taxes and taxes payable



(326,178)




326,178


Income taxes receivable



(293,466)




-


Net cash (used in) provided by operating activities



(9,136,039)




2,702,706


CASH FLOWS FROM INVESTING ACTIVITIES:







Net collections of finance receivables - original product



13,993




102,024


Net collections of finance receivables - special product



(12,602)




38,557


Capital expenditures



(15,382)




(14,411)


Investment in note receivable



-




(2,000,000)


Investment in note receivable - Seastar Medical Holding Corporation



(3,753,090)




-


Investment in digital assets



(988,343)




(1,419,958)


Proceeds from sale of digital assets



518,931




1,898,895


Loan to purchase securities



-




1,784,250


Repayment of loan to purchase securities



-




(1,784,250)


Deposits for mining equipment



(14,649,614)




(15,986,700)


Investment in unconsolidated affiliate



-




(5,738,000)


Payments for real estate assets owned



-




(60,006)


Net cash used in investing activities



(18,886,107)




(23,179,599)


CASH FLOWS FROM FINANCING ACTIVITIES:







Loan principal and insurance financing repayments



(299,033)




(220,363)


Exercise of warrants



-




10,247,124


Proceeds from stock subscription



-




31,456,374


Net cash provided by (used in) financing activities



(299,033)




41,483,135


NET INCREASE (DECREASE) IN CASH



(28,321,179)




21,006,242


CASH - BEGINNING OF YEAR



32,559,185




11,552,943


CASH - END OF YEAR


$

4,238,006



$

32,559,185









SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES







Insurance financing


$

660,120



$

210,260


ROU assets and operating lease obligation recognized



300,787




-


Reclassification of mining equipment deposit to fixed assets, net



26,961,095




-


SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION







Cash paid for interest


$

-



$

1,892


Cash paid for taxes



2,057,710




-


 

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SOURCE LM Funding America