0001640384falseQ3--12-310001640384lmfa:LongTermInvestmentsMember2021-09-300001640384us-gaap:ShortTermInvestmentsMemberus-gaap:ConvertibleDebtSecuritiesMember2021-01-012021-12-310001640384lmfa:PurchaseAgreementsMember2022-08-312022-08-310001640384lmfa:BusinessLawGroupMember2017-01-012017-12-310001640384us-gaap:RetainedEarningsMember2022-07-012022-09-300001640384lmfa:BitcoinMember2021-01-012021-09-3000016403842021-07-012021-09-300001640384us-gaap:CommonStockMember2021-01-012021-03-310001640384lmfa:ConsultingServicesInBlockchainAndCryptoCurrencyFieldMemberlmfa:TwoVendorsMember2022-01-012022-09-300001640384us-gaap:CommonStockMember2021-03-310001640384us-gaap:NoncontrollingInterestMember2021-01-012021-03-310001640384lmfa:LongTermInvestmentsMember2022-01-012022-09-3000016403842021-06-012021-06-300001640384srt:MaximumMemberlmfa:CreditAgreementMemberlmfa:SeastarMedicalMember2022-09-090001640384us-gaap:OperatingSegmentsMemberlmfa:MiningOperationsMember2022-01-012022-09-300001640384lmfa:GeminiDollarsMember2022-07-012022-09-3000016403842021-01-012021-09-300001640384us-gaap:CommonStockMember2020-12-310001640384us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001640384lmfa:UnsecuredPromissoryNoteMemberlmfa:LMFundingAmericaIncMember2022-07-290001640384lmfa:LMFAcquisitionOpportunitiesIncMember2022-01-012022-09-300001640384lmfa:BitcoinMember2022-07-012022-09-300001640384lmfa:EtherMember2021-01-012021-09-300001640384us-gaap:WarrantMember2021-12-310001640384us-gaap:ShortTermInvestmentsMemberus-gaap:ConvertibleDebtSecuritiesMember2021-09-3000016403842020-12-310001640384lmfa:BusinessLawGroupAssociationLawMember2015-04-152015-04-150001640384srt:SubsidiariesMember2022-01-012022-09-300001640384lmfa:FurnitureComputerAndOfficeEquipmentMember2022-01-012022-09-300001640384srt:SubsidiariesMember2021-01-012021-09-300001640384us-gaap:ShortTermInvestmentsMemberlmfa:SymbiontIOMember2022-01-012022-09-300001640384lmfa:FinancingAgreementThreeMember2022-09-300001640384lmfa:FinancingAgreementThreeMember2022-01-012022-09-300001640384lmfa:TwoVendorsMemberlmfa:ConsultingServicesInBlockchainAndCryptoCurrencyFieldMember2021-11-042021-11-040001640384lmfa:PurchaseAgreementsMemberlmfa:MiningMachineMember2022-09-202022-09-200001640384us-gaap:ShortTermInvestmentsMember2021-09-300001640384lmfa:LMFundingAndIIUIncMember2022-01-012022-09-300001640384lmfa:CoreHostingAgreementMember2022-09-012022-09-300001640384us-gaap:SubsequentEventMember2022-10-282022-10-2800016403842022-11-140001640384lmfa:LongTermInvestmentsMember2022-09-300001640384us-gaap:RetainedEarningsMember2021-07-012021-09-300001640384lmfa:ConsultingServicesInBlockchainAndCryptoCurrencyFieldMemberlmfa:TwoVendorsMember2022-09-300001640384us-gaap:WarrantMember2022-01-012022-09-300001640384us-gaap:RetainedEarningsMember2021-09-300001640384us-gaap:ShortTermInvestmentsMember2022-09-300001640384lmfa:LMFundingAndIIUIncMember2021-01-012021-12-310001640384us-gaap:WarrantMember2021-01-012021-09-300001640384lmfa:ClassAAndClassBCommonSharesMemberus-gaap:IPOMember2021-01-282021-01-280001640384us-gaap:SubsequentEventMember2022-10-032022-10-030001640384us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300001640384lmfa:NewOfficeLeaseMember2022-01-012022-09-3000016403842022-06-300001640384us-gaap:CommonStockMember2021-09-300001640384us-gaap:RetainedEarningsMember2021-03-310001640384lmfa:FurnitureComputerAndOfficeEquipmentMember2021-07-012021-09-300001640384us-gaap:SubsequentEventMember2022-10-052022-10-050001640384lmfa:UnsecuredPromissoryNoteMember2022-07-280001640384lmfa:HostingAgreementMember2022-09-3000016403842021-01-012021-12-310001640384lmfa:BitcoinMember2022-01-012022-09-300001640384us-gaap:WarrantMember2022-01-012022-09-300001640384lmfa:OutOfPocketCollectionCostsMemberlmfa:BusinessLawGroupMember2021-07-012021-09-300001640384us-gaap:NoncontrollingInterestMember2021-04-012021-06-300001640384us-gaap:NoncontrollingInterestMember2022-01-012022-03-310001640384lmfa:CreditAgreementMemberlmfa:SeastarMedicalMember2021-12-310001640384lmfa:TwoVendorsMemberlmfa:ConsultingServicesInBlockchainAndCryptoCurrencyFieldMember2022-07-012022-09-300001640384us-gaap:RetainedEarningsMember2022-03-310001640384lmfa:DigitalAssetsBitcoinMember2021-09-300001640384lmfa:UnsecuredPromissoryNoteMember2022-01-012022-09-300001640384lmfa:BusinessLawGroupAssociationLawMember2022-02-012022-02-010001640384us-gaap:AdditionalPaidInCapitalMember2021-12-310001640384lmfa:EtherMember2021-07-012021-09-300001640384lmfa:Pod5iveContainersMemberlmfa:HostingAgreementMember2021-10-312021-10-310001640384lmfa:ClassBSharesAndWarrantsMember2021-01-012021-09-300001640384us-gaap:IPOMemberlmfa:LMFundingAmericaIncMemberus-gaap:CommonClassAMember2021-01-282021-01-280001640384lmfa:LMFASponsorLLCMember2021-01-012021-09-300001640384us-gaap:RetainedEarningsMember2022-01-012022-03-3100016403842021-10-012021-12-310001640384us-gaap:RetainedEarningsMember2020-12-3100016403842022-10-310001640384lmfa:LMFASponsorLLCMember2022-01-012022-09-300001640384us-gaap:ShortTermInvestmentsMemberus-gaap:ConvertibleDebtSecuritiesMember2022-01-012022-09-3000016403842022-01-012022-09-300001640384lmfa:MiningMachineMemberlmfa:HostingAgreementMember2022-06-212022-06-210001640384us-gaap:OtherCapitalizedPropertyPlantAndEquipmentMember2022-09-300001640384us-gaap:RetainedEarningsMember2022-06-300001640384srt:MaximumMember2022-01-012022-09-300001640384lmfa:OriginalSponsorNotesMemberlmfa:LMFundingAmericaIncMember2022-06-300001640384lmfa:GeminiDollarsMember2022-01-012022-09-300001640384us-gaap:NoncontrollingInterestMember2020-12-3100016403842022-06-212022-06-210001640384lmfa:MiningMachineMemberlmfa:HostingAgreementMember2021-12-310001640384us-gaap:EmployeeStockOptionMember2021-01-012021-09-300001640384lmfa:SpecialProductMember2022-01-012022-09-300001640384us-gaap:CorporateNonSegmentMember2022-07-012022-09-3000016403842021-12-310001640384lmfa:OriginalSponsorNotesMemberlmfa:LMFundingAmericaIncMember2022-06-300001640384lmfa:HostingAgreementMember2021-10-312021-10-310001640384us-gaap:AdditionalPaidInCapitalMember2020-12-3100016403842021-01-012021-03-310001640384srt:MaximumMemberlmfa:FurnitureComputerAndOfficeEquipmentMember2022-01-012022-09-300001640384us-gaap:OperatingSegmentsMemberlmfa:SpecialtyFinanceMember2022-07-012022-09-3000016403842022-07-012022-09-300001640384lmfa:FurnitureComputerAndOfficeEquipmentMember2022-09-300001640384us-gaap:ConvertibleDebtSecuritiesMember2021-09-300001640384lmfa:ROFRAgreementMemberlmfa:SymbiontIOMember2021-12-012021-12-010001640384srt:MinimumMemberlmfa:UnconsolidatedEntitiesMember2022-09-300001640384lmfa:MiningMachineMemberlmfa:HostingAgreementMember2022-09-300001640384lmfa:BusinessLawGroupMember2022-07-012022-09-300001640384us-gaap:NoncontrollingInterestMember2021-06-300001640384us-gaap:CommonClassAMemberlmfa:LMFASponsorLLCMember2022-01-012022-09-300001640384us-gaap:AdditionalPaidInCapitalMember2022-09-300001640384us-gaap:AdditionalPaidInCapitalMember2021-09-300001640384lmfa:SymbiontIOMember2021-12-310001640384lmfa:PurchaseAgreementsMember2022-01-012022-09-300001640384us-gaap:ShortTermInvestmentsMemberus-gaap:ConvertibleDebtSecuritiesMember2022-09-300001640384lmfa:MiningMachineMember2022-01-012022-09-300001640384lmfa:LMFASponsorLLCMember2022-07-012022-09-300001640384us-gaap:AdditionalPaidInCapitalMember2021-03-310001640384us-gaap:CorporateNonSegmentMember2022-01-012022-09-300001640384us-gaap:IPOMember2022-01-012022-09-300001640384us-gaap:SubsequentEventMember2022-10-2800016403842021-09-300001640384lmfa:OriginalProductMember2022-01-012022-09-300001640384us-gaap:WarrantMember2021-01-012021-09-300001640384lmfa:CCorporationMember2021-12-310001640384lmfa:PurchaseAgreementsMemberlmfa:MiningMachineMember2021-01-012021-12-310001640384us-gaap:CommonStockMember2022-06-300001640384us-gaap:SubsequentEventMemberlmfa:SponsorNotesMemberlmfa:LMFundingAmericaIncMember2022-10-280001640384lmfa:UptimePurchaseAgreementMemberlmfa:Pod5iveContainersMemberus-gaap:SubsequentEventMember2022-11-082022-11-080001640384lmfa:ClassBSharesAndWarrantsMember2022-01-012022-09-300001640384lmfa:ROFRAgreementMemberlmfa:SymbiontIOMember2021-12-310001640384srt:ManagementMemberlmfa:ManagementEmploymentContractMember2021-01-012021-12-310001640384lmfa:ReleaseAndTerminationAgreementMember2022-06-290001640384us-gaap:ConvertibleDebtSecuritiesMember2021-12-310001640384us-gaap:NoncontrollingInterestMember2021-12-310001640384lmfa:BusinessLawGroupMember2021-12-310001640384lmfa:ROFRAgreementMemberlmfa:SymbiontIOMember2022-01-012022-09-300001640384lmfa:LongTermInvestmentsMember2021-12-310001640384lmfa:MiningMachineMember2022-09-300001640384us-gaap:NoncontrollingInterestMember2022-04-012022-06-300001640384us-gaap:WarrantMemberus-gaap:PrivatePlacementMemberlmfa:LMFundingAmericaIncMember2021-01-282021-01-280001640384us-gaap:WarrantMember2021-01-292021-01-290001640384lmfa:UnsecuredPromissoryNoteMember2022-02-010001640384lmfa:HostingAgreementMember2022-09-022022-09-020001640384us-gaap:AdditionalPaidInCapitalMember2022-06-300001640384lmfa:CreditAgreementMemberlmfa:SeastarMedicalMember2022-09-300001640384lmfa:CommonShareConsolidationReverseStockSplitMember2022-09-300001640384lmfa:ClassBSharesAndWarrantsMemberlmfa:LMFundingAmericaIncMember2022-01-012022-09-3000016403842022-09-300001640384srt:MaximumMemberlmfa:ROFRAgreementMemberlmfa:SymbiontIOMember2021-12-010001640384lmfa:FurnitureComputerAndOfficeEquipmentMember2021-01-012021-09-300001640384lmfa:SymbiontIOMember2021-01-012021-12-310001640384us-gaap:IPOMember2021-01-282021-01-280001640384us-gaap:ConvertibleDebtSecuritiesMember2022-09-300001640384srt:SubsidiariesMember2022-07-012022-09-300001640384lmfa:DigitalAssetsBitcoinMember2022-09-300001640384us-gaap:NoncontrollingInterestMember2022-09-300001640384us-gaap:NoncontrollingInterestMember2022-03-310001640384lmfa:ReleaseAndTerminationAgreementMember2022-01-012022-09-300001640384us-gaap:ShortTermInvestmentsMember2021-12-310001640384lmfa:LongTermInvestmentsMember2021-01-012021-09-300001640384us-gaap:IPOMemberlmfa:LMFundingAmericaIncMemberus-gaap:CommonClassAMember2021-01-280001640384srt:MaximumMemberlmfa:UnconsolidatedEntitiesMember2022-09-300001640384us-gaap:ServiceMember2021-01-012021-09-3000016403842021-04-012021-06-300001640384lmfa:FinancingAgreementThreeMember2021-12-310001640384lmfa:PurchaseAgreementsMemberlmfa:MiningMachineMember2022-01-012022-09-300001640384lmfa:ClassBSharesAndWarrantsMember2022-07-012022-09-300001640384us-gaap:RetainedEarningsMember2022-04-012022-06-300001640384us-gaap:IPOMember2021-01-012021-09-300001640384lmfa:CommonShareConsolidationReverseStockSplitMember2021-09-300001640384us-gaap:WarrantMemberus-gaap:IPOMember2021-01-282021-01-280001640384lmfa:CCorporationMember2022-09-300001640384us-gaap:ServiceMember2021-07-012021-09-300001640384lmfa:FurnitureComputerAndOfficeEquipmentMember2022-07-012022-09-300001640384lmfa:OriginalProductMember2021-01-012021-09-300001640384lmfa:MiningMachineMemberlmfa:CoreHostingAgreementMember2022-09-062022-09-060001640384lmfa:BusinessLawGroupMember2017-01-022017-01-020001640384us-gaap:CommonStockMember2021-12-310001640384us-gaap:RetainedEarningsMember2021-01-012021-03-310001640384us-gaap:AdditionalPaidInCapitalMember2022-03-310001640384us-gaap:CommonStockMember2022-03-310001640384lmfa:SpecialProductMember2021-01-012021-09-300001640384us-gaap:OperatingSegmentsMemberlmfa:MiningOperationsMember2022-07-012022-09-300001640384us-gaap:ShortTermInvestmentsMember2021-01-012021-09-300001640384us-gaap:ShortTermInvestmentsMemberus-gaap:ConvertibleDebtSecuritiesMember2021-07-012021-09-300001640384us-gaap:NoncontrollingInterestMember2021-07-012021-09-300001640384srt:SubsidiariesMember2021-07-012021-09-300001640384us-gaap:ShortTermInvestmentsMemberus-gaap:ConvertibleDebtSecuritiesMember2022-01-012022-03-310001640384us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001640384us-gaap:SubsequentEventMember2022-10-0300016403842022-04-012022-06-300001640384us-gaap:OperatingSegmentsMemberlmfa:SpecialtyFinanceMember2021-01-012021-09-300001640384lmfa:UptimePurchaseAgreementMemberlmfa:Pod5iveContainersMember2021-10-310001640384lmfa:LMFundingAndIIUIncMember2022-09-300001640384lmfa:ROFRAgreementMemberlmfa:SymbiontIOMember2022-09-300001640384us-gaap:OperatingSegmentsMemberlmfa:SpecialtyFinanceMember2021-07-012021-09-300001640384us-gaap:RetainedEarningsMember2021-06-300001640384us-gaap:NoncontrollingInterestMember2022-07-012022-09-300001640384us-gaap:CommonStockMember2022-09-300001640384us-gaap:WarrantMember2021-09-3000016403842022-10-012022-10-310001640384lmfa:LMFundingAndIIUIncMember2021-09-300001640384us-gaap:ConvertibleDebtSecuritiesMember2021-01-012021-09-300001640384us-gaap:ConvertibleDebtSecuritiesMember2022-01-012022-09-300001640384lmfa:FurnitureComputerAndOfficeEquipmentMember2021-12-310001640384lmfa:BusinessLawGroupMember2020-01-012020-12-310001640384lmfa:SeniorConvertiblePromissoryNotesMember2022-09-300001640384us-gaap:NoncontrollingInterestMember2022-06-3000016403842021-03-310001640384us-gaap:CommonStockMember2022-01-012022-03-310001640384us-gaap:SubsequentEventMemberlmfa:SponsorNotesMemberlmfa:LMFundingAmericaIncMember2022-10-280001640384lmfa:LMFundingAmericaIncMemberus-gaap:CommonClassAMember2022-07-290001640384lmfa:OutOfPocketCollectionCostsMemberlmfa:BusinessLawGroupMember2022-07-012022-09-3000016403842022-01-012022-03-310001640384us-gaap:CorporateNonSegmentMember2021-01-012021-09-300001640384lmfa:MiningMachineMemberlmfa:CoreHostingAgreementMember2022-09-022022-09-020001640384lmfa:BusinessLawGroupMember2017-12-310001640384srt:MinimumMemberlmfa:FurnitureComputerAndOfficeEquipmentMember2022-01-012022-09-300001640384us-gaap:CommonStockMember2021-06-300001640384lmfa:BORQTechnologiesIncMember2022-01-012022-09-300001640384lmfa:BusinessLawGroupMember2021-01-012021-09-300001640384us-gaap:RetainedEarningsMember2022-09-300001640384lmfa:BorqsConvertibleNotePlusAccruedInterestMemberus-gaap:ShortTermInvestmentsMemberus-gaap:ConvertibleDebtSecuritiesMember2021-07-012021-09-300001640384lmfa:OutOfPocketCollectionCostsMemberlmfa:BusinessLawGroupMember2022-01-012022-09-300001640384lmfa:NewOfficeLeaseMember2022-01-012022-03-310001640384us-gaap:ConvertibleDebtSecuritiesMember2021-01-012021-12-310001640384lmfa:SeniorConvertiblePromissoryNotesMember2022-01-012022-09-300001640384lmfa:ClassBSharesAndWarrantsMember2021-07-012021-09-300001640384srt:MinimumMember2022-01-012022-09-300001640384us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001640384us-gaap:ServiceMember2022-01-012022-09-300001640384lmfa:BusinessLawGroupMember2021-07-012021-09-300001640384lmfa:ClassBSharesAndWarrantsMemberlmfa:LMFundingAmericaIncMember2022-09-300001640384lmfa:UptimePurchaseAgreementMemberlmfa:Pod5iveContainersMember2021-10-312021-10-3100016403842022-03-310001640384lmfa:LMFundingAndIIUIncMember2021-01-012021-09-300001640384lmfa:BitcoinMember2021-07-012021-09-300001640384us-gaap:RetainedEarningsMember2021-12-310001640384srt:MaximumMemberlmfa:SubsidiaryLimitedLiabilityMemberlmfa:REOManagementHoldingsLlcMember2022-01-012022-09-300001640384lmfa:PurchaseAgreementsMemberlmfa:MiningMachineMember2022-08-312022-08-310001640384lmfa:PurchaseAgreementsMember2021-01-012021-12-310001640384lmfa:DigitalAssetsEtherMember2021-09-300001640384us-gaap:NoncontrollingInterestMember2021-09-300001640384lmfa:BusinessLawGroupMember2021-01-012021-12-310001640384lmfa:BusinessLawGroupAssociationLawMember2022-02-010001640384us-gaap:RetainedEarningsMember2021-04-012021-06-300001640384lmfa:OutOfPocketCollectionCostsMemberlmfa:BusinessLawGroupMember2021-01-012021-09-300001640384lmfa:BusinessLawGroupMember2022-09-300001640384us-gaap:NoncontrollingInterestMember2021-03-310001640384us-gaap:CorporateNonSegmentMember2021-07-012021-09-300001640384us-gaap:EmployeeStockOptionMember2022-01-012022-09-300001640384lmfa:UnsecuredPromissoryNoteMemberlmfa:LMFundingAmericaIncMember2022-07-290001640384lmfa:BusinessLawGroupMember2022-01-012022-09-300001640384us-gaap:ShortTermInvestmentsMemberlmfa:SeastarMedicalMember2022-01-012022-09-300001640384us-gaap:ShortTermInvestmentsMemberlmfa:SymbiontIOMember2021-01-012021-12-310001640384us-gaap:WarrantMember2022-09-300001640384us-gaap:SubsequentEventMember2022-11-150001640384lmfa:LMFundingAndIIUIncMember2021-12-310001640384lmfa:SubsidiaryLimitedLiabilityMemberlmfa:LMFASponsorLLCMember2022-01-012022-09-300001640384us-gaap:WarrantMemberus-gaap:PrivatePlacementMemberlmfa:LMFundingAmericaIncMember2021-01-280001640384lmfa:LMFASponsorLLCMember2021-07-012021-09-300001640384lmfa:HostingAgreementMember2022-01-012022-09-300001640384us-gaap:ServiceMember2022-07-012022-09-300001640384us-gaap:ShortTermInvestmentsMemberus-gaap:ConvertibleDebtSecuritiesMemberlmfa:RemainingBorqsConvertibleNotePlusAccruedInterestMember2022-01-012022-09-300001640384us-gaap:ShortTermInvestmentsMember2021-07-012021-09-300001640384lmfa:PurchaseAgreementsMember2022-09-202022-09-200001640384us-gaap:AdditionalPaidInCapitalMember2021-06-300001640384us-gaap:OperatingSegmentsMemberlmfa:SpecialtyFinanceMember2022-01-012022-09-3000016403842021-06-300001640384lmfa:LMFundingAndIIUIncMember2020-12-310001640384lmfa:BORQTechnologiesIncMember2022-07-012022-09-30iso4217:USDlmfa:Unitxbrli:purelmfa:Bitcoinlmfa:Subsidiaryiso4217:USDxbrli:shareslmfa:Businesslmfa:Containerlmfa:BitcoinMachinexbrli:shareslmfa:Segmentlmfa:Machineiso4217:USDlmfa:Assessmentlmfa:Etherlmfa:Ownershipiso4217:USD

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2022

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

Commission file number 001-37605

 

LM FUNDING AMERICA, INC.

(Exact name of Registrant as specified in its charter)

 

 

Delaware

47-3844457

(State or other jurisdiction of

incorporation or organization)

(I.R.S. employer

identification no.)

 

 

1200 West Platt Street

Suite 100

Tampa, FL

33606

(Address of principal executive offices)

(Zip code)

Registrant’s telephone number, including area code: 813-222-8996

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class:

Trading symbol

Name of each exchange on which registered

Common Stock par value $0.001 per share

LMFA

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.:

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

The registrant had 13,091,883 shares of Common Stock, par value $0.001 per share, outstanding as of November 14, 2022.

 

 


 

LM FUNDING AMERICA, INC.

TABLE OF CONTENTS

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

3

 

 

 

Item 1.

Financial Statements

3

 

 

 

 

LM Funding America, Inc. and Subsidiaries Condensed Consolidated Balance Sheets September 30, 2022 (unaudited) and December 31, 2021

3

 

 

 

 

LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Operations
Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)

4

 

 

 

 

LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2022 and 2021 (unaudited)

5

 

 

 

 

LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)

6

 

Notes to Unaudited Condensed Consolidated Financial Statements

7

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

27

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

34

 

 

 

Item 4.

Controls and Procedures

34

 

 

 

PART II.

OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

36

 

 

 

Item 1A.

Risk Factors

36

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

39

 

 

 

Item 3.

Defaults Upon Senior Securities

40

 

 

 

Item 4

Mine Safety Disclosure

40

 

 

 

Item 5.

Other Information

40

 

 

 

Item 6.

Exhibits

41

 

 

SIGNATURES

42

 

2


 

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

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 (Note 7)

 

 

-

 

 

 

539,351

 

Marketable securities (Note 7)

 

 

24,220

 

 

 

2,132,051

 

Short-term investments - debt securities (Note 7)

 

 

2,619,292

 

 

 

2,000,000

 

Prepaid expenses and other assets

 

 

1,205,719

 

 

 

1,251,852

 

Note receivable from related party (Note 7)

 

 

2,785,000

 

 

 

-

 

Digital assets (Note 10)

 

 

616,257

 

 

 

-

 

Current assets

 

 

17,446,408

 

 

 

38,510,632

 

Fixed assets, net (Note 9)

 

 

21,975,960

 

 

 

17,914

 

Real estate assets owned

 

 

80,057

 

 

 

80,057

 

Operating lease - right of use assets (Note 4)

 

 

289,468

 

 

 

59,969

 

Long-term investments - equity securities (Note 7)

 

 

322,246

 

 

 

1,973,413

 

Investments in unconsolidated affiliates (Note 7)

 

 

17,362,125

 

 

 

4,676,130

 

Deposits on mining equipment and hosting services (Note 8)

 

 

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 (Note 3)

 

 

-

 

 

 

114,688

 

Due to related parties (Note 2)

 

 

75,615

 

 

 

121,220

 

Current portion of lease liability (Note 5)

 

 

90,004

 

 

 

68,002

 

Income tax payable (Note 4)

 

 

1,167,856

 

 

 

326,178

 

Total current liabilities

 

 

1,969,844

 

 

 

1,093,734

 

Lease liability - long-term (Note 5)

 

 

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

 

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.

3


 

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

 

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.

4


 

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

 

 

-