10-Q

UNITEDSTATES

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, 2024


☐	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 3,397,042 shares of Common Stock, par value $0.001 per share, outstanding as of November 13, 2024.

LM FUNDING AMERICA, INC.

TABLE OF CONTENTS


		Page

PART I.	FINANCIAL INFORMATION	3

Item 1.	Financial Statements	3

	LM Funding America, Inc. and Subsidiaries Consolidated Balance Sheets as of September 30, 2024 (unaudited) and December 31, 2023	3

	LM Funding America, Inc. and Subsidiaries Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)	4

	LM Funding America, Inc. and Subsidiaries Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 (unaudited)	5

	LM Funding America, Inc. and Subsidiaries Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)	6
	Notes to Unaudited Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41

Item 4.	Controls and Procedures	41

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	43

Item 1A.	Risk Factors	43

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 3.	Defaults Upon Senior Securities	43

Item 4.	Mine Safety Disclosures	43

Item 5.	Other Information	43

Item 6.	Exhibits	44

SIGNATURES		45

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

LM Funding America, Inc. and Subsidiaries Consolidated Balance Sheets


	September 30,			December 31,
	2024 (Unaudited)			2023

Assets
Cash	$	5,913,215		$	2,401,831
Digital assets - current (Note 2)		3,983,800			3,416,256
Finance receivables		25,410			19,221
Marketable securities (Note 5)		18,844			17,860
Receivable from sale of Symbiont assets (Note 5)		200,000			200,000
Current portion of notes receivable from Tech Infrastructure JV I LLC (Note 5)		711,840			-
Prepaid expenses and other assets		416,516			4,067,212
Income tax receivable		31,187			31,187
Current assets		11,300,812			10,153,567

Fixed assets, net (Note 3)		17,311,254			24,519,610
Deposits on mining equipment (Note 4)		20,847			20,837
Notes receivable from Seastar Medical Holding Corporation (Note 5)		-			1,440,498
Notes receivable from Tech Infrastructure JV I LLC - net of current portion (Note 5)		2,269,863			-
Long-term investments - equity securities (Note 5)		8,944			156,992
Investment in Seastar Medical Holding Corporation (Note 5)		440,910			1,145,486
Digital assets - long-term (Note 2)		5,000,000			-
Operating lease - right of use assets (Note 7)		109,380			189,009
Other assets		73,857			86,798
Long-term assets		25,235,055			27,559,230
Total assets	$	36,535,867		$	37,712,797

Liabilities and stockholders' equity
Accounts payable and accrued expenses		1,400,228			2,064,909
Note payable - short-term (Note 6)		1,520,564			567,586
Due to related parties (Note 10)		64,386			22,845
Current portion of lease liability (Note 7)		109,931			110,384
Total current liabilities		3,095,109			2,765,724

Note payable - long-term (Note 6)		4,844,084			-
Lease liability - net of current portion (Note 7)		4,924			85,775
Long-term liabilities		4,849,008			85,775
Total liabilities		7,944,117			2,851,499

Stockholders' equity (Note 8)
Preferred stock, par value $.001; 150,000,000 shares authorized; no shares issued and outstanding as of September 30, 2024 and December 31, 2023		-			-
Common stock, par value $.001; 350,000,000 shares authorized; 2,956,042 shares issued and outstanding as of September 30, 2024 and 2,492,964 as of December 31, 2023		2,822			2,493
Additional paid-in capital		97,827,489			95,145,376
Accumulated deficit		(67,628,539	)		(58,961,461	)
Total LM Funding America stockholders' equity		30,201,772			36,186,408
Non-controlling interest		(1,610,022	)		(1,325,110	)
Total stockholders' equity		28,591,750			34,861,298
Total liabilities and stockholders’ equity	$	36,535,867		$	37,712,797

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

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


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Revenues:
Digital mining revenues	$	1,127,455		$	3,283,473		$	8,618,436		$	8,342,646
Specialty finance revenue		97,558			101,535			303,222			474,544
Rental revenue		30,460			34,500			92,766			111,486
Total revenues		1,255,473			3,419,508			9,014,424			8,928,676
Operating costs and expenses:
Digital mining cost of revenues (exclusive of depreciation and amortization shown below)		730,716			2,708,473			5,742,773			6,737,971
Staff costs and payroll		1,567,984			1,340,665			3,648,898			4,736,940
Depreciation and amortization		2,349,634			1,516,873			7,115,404			3,487,866
Gain on fair value of Bitcoin, net		(104,744	)		-			(3,096,774	)		-
Impairment loss on mining equipment		-			-			1,188,058			-
Impairment loss on mined digital assets		-			383,497			-			822,650
Realized gain on sale of mined digital assets		-			(261,191	)		-			(1,331,982	)
Professional fees		628,686			419,173			1,622,914			1,228,503
Selling, general and administrative		209,088			201,151			582,675			683,174
Real estate management and disposal		31,144			26,453			89,430			127,611
Collection costs		15,054			8,098			36,396			17,533
Settlement costs with associations		-			-			-			10,000
Loss on disposal of assets		12,449			-			54,506
Other operating costs		229,784			246,735			667,401			704,589
Total operating costs and expenses		5,669,795			6,589,927			17,651,681			17,224,855
Operating loss		(4,414,322	)		(3,170,419	)		(8,637,257	)		(8,296,179	)
Unrealized gain (loss) on marketable securities		(3,296	)		2,058			984			6,436
Impairment loss on prepaid machine deposits		(12,941	)		-			(12,941	)		(36,691	)
Unrealized loss on investment and equity securities		(346,866	)		(778,078	)		(852,624	)		(10,317,613	)
Impairment loss on Symbiont assets		-			(750,678	)		-			(750,678	)
Gain on fair value of purchased Bitcoin, net		-			-			57,926			-
Realized gain on securities					1,788						1,788
Realized gain on sale of purchased digital assets		-			-			-			1,917
Credit loss on Seastar Medical Holding Corporation notes receivable		-			(22,344	)		-			(22,344	)
Gain on adjustment of note receivable allowance		-			-			-			1,052,543
Other income - coupon sales		-			10,160			4,490			639,472
Other income - financing revenue		-			-			-			37,660
Interest expense		(124,035	)		-			(231,754	)		-
Interest income		98,343			39,657			124,696			210,881
Loss before income taxes		(4,803,117	)		(4,667,856	)		(9,546,480	)		(17,472,808	)
Income tax expense		-			-			-			-
Net loss	$	(4,803,117	)	$	(4,667,856	)	$	(9,546,480	)	$	(17,472,808	)
Less: loss attributable to non-controlling interest		105,043			250,880			265,296			3,120,321
Net loss attributable to LM Funding America Inc.	$	(4,698,074	)	$	(4,416,976	)	$	(9,281,184	)	$	(14,352,487	)
Less: deemed dividends (Note 8)		(1,704,305	)		-			(1,704,305	)		-
Net loss attributable to common shareholders	$	(6,402,379	)	$	(4,416,976	)	$	(10,985,489	)	$	(14,352,487	)


Basic loss per common share (Note 1)	$	(2.41	)	$	(1.97	)	$	(4.35	)	$	(6.51	)
Diluted loss per common share (Note 1)	$	(2.41	)	$	(1.97	)	$	(4.35	)	$	(6.51	)

Weighted average number of common shares outstanding
Basic		2,659,974			2,246,745			2,525,160			2,206,187
Diluted		2,659,974			2,246,745			2,525,160			2,206,187

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

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

(unaudited)


	Nine Months Ended September 30,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(9,546,480	)	$	(17,472,808	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		7,115,404			3,487,866
Noncash lease expense		79,629			70,545
Stock compensation		76,322			917,057
Stock option expense		332,415			1,611,795
Professional fees paid in common shares		100,001			-
Accrued investment income		(123,076	)		(130,990	)
Digital assets other income		(4,490	)		-
Gain on fair value of Bitcoin, net		(3,154,700	)		-
Impairment loss on mining machines		1,188,058			-
Impairment loss on digital assets		-			822,650
Impairment loss on hosting deposits		12,941			36,691
Impairment loss on Symbiont assets		-			750,678
Unrealized gain on marketable securities		(984	)		(6,436	)
Realized gain on securities		-			(1,788	)
Unrealized loss on investment and equity securities		852,624			10,317,613
Loss on disposal of fixed assets		54,506			-
Proceeds from securities		-			554,036
Realized gain on sale of digital assets		-			(1,333,899	)
Credit loss on Seastar Medical Holding Corporation notes receivable		-			22,344
Reversal of allowance loss on debt security		-			(1,052,543	)
Investments in marketable securities		-			(739,616	)
Change in operating assets and liabilities:
Prepaid expenses and other assets		3,650,696			(123,221	)
Hosting deposits		-			(54,691	)
Advances (repayments) to related party		41,541			(31,090	)
Accounts payable and accrued expenses		(664,681	)		682,405
Mining of digital assets		(8,618,436	)		(8,352,805	)
Proceeds from sale of digital assets		-			7,487,058
Lease liability payments		(81,304	)		(70,563	)
Net cash used in operating activities		(8,690,014	)		(2,609,712	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net collections of finance receivables - original product		(4,618	)		(8,765	)
Net collections of finance receivables - special product		(1,571	)		14,009
Capital expenditures		(1,228,428	)		(1,913,303	)
Proceeds from sale of fixed assets		78,806			-
Investment in Tech Infrastructure JV I LLC note receivable		(2,867,195	)		-
Investment in note receivable		-			(100,000	)
Collection of notes receivable		1,449,066			1,761,727
Investment in digital assets		-			(35,157	)
Proceeds from sale of digital assets		6,821,185			43,678
Proceeds from the sale of tether		3,003			-
Symbiont asset acquisition		-			(402,359	)
Distribution to members		(19,616	)		-
Net cash from (used in) investing activities		4,230,632			(640,170	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings		6,344,084			-
Insurance financing repayments		(547,022	)		(499,453	)
Insurance financing		-			86,886
Exercise of options		25,000			-
Proceeds from equity offering		2,333,112			-
Issue costs for equity offering		(184,408	)		(106,550	)
Net cash from (used in) financing activities		7,970,766			(519,117	)
NET DECREASE IN CASH		3,511,384			(3,768,999	)
CASH - BEGINNING OF PERIOD		2,401,831			4,238,006
CASH - END OF PERIOD	$	5,913,215			469,007

SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES

ROU assets and operating lease obligation recognized	$	-		$	21,887
Reclassification of mining equipment deposit to fixed assets, net	$	-		$	1,177,226
Change in accounting principle (see Note 1)	$	614,106		$	-
SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION
Cash paid for taxes	$	-		$	-
Cash paid for interest	$	222,697		$	-

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

LM Funding America, Inc. and Subsidiaries Consolidated Statements of Changes in Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2024 and 2023

(unaudited)


	Common Stock
	Shares		Amount		Additional paid-in capital		Accumulated Deficit			Non-Controlling Interest			Total Equity
Balance - December 31, 2022		2,232,964	$	2,233	$	92,206,200	$	(43,017,207	)	$	1,606,003		$	50,797,229
Stock option expense		-		-		194,356		-			-			194,356
Net loss		-		-		-		(5,386,332	)		(1,776,264	)		(7,162,596	)
Balance - March 31, 2023		2,232,964	$	2,233	$	92,400,556	$	(48,403,539	)	$	(170,261	)	$	43,828,989
Stock option expense		-		-		1,147,739		-			-			1,147,739
Issuance of restricted stock		260,000		260		564,670		-			-			564,930
Net loss		-		-		-		(4,549,179	)		(1,093,177	)		(5,642,356	)
Balance - June 30, 2023		2,492,964	$	2,493	$	94,112,965	$	(52,952,718	)	$	(1,263,438	)	$	39,899,302
Stock option expense		-		-		269,700		-			-			269,700
Issuance of restricted stock		-		-		352,127		-			-			352,127
Net loss		-		-		-		(4,416,976	)		(250,880	)		(4,667,856	)
Balance - September 30, 2023		2,492,964	$	2,493	$	94,734,792	$	(57,369,694	)	$	(1,514,318	)	$	35,853,273


Balance - December 31, 2023		2,492,964	$	2,493	$	95,145,376	$	(58,961,461	)	$	(1,325,110	)	$	34,861,298
Stock option expense		-		-		110,804		-			-			110,804
Stock compensation		-		-		71,047		-			-			71,047
Cumulative effect of change in accounting principle (See Note 1)		-		-		-		614,106			-			614,106
Net income		-		-		-		1,489,745			414,221			1,903,966
Balance - March 31, 2024		2,492,964	$	2,493	$	95,327,227	$	(56,857,610	)	$	(910,889	)	$	37,561,221
Stock option expense		-		-		110,805		-			-			110,805
Stock compensation		-		-		5,275		-			-			5,275
Member distributions		-		-		-		-			(19,616	)		(19,616	)
Net loss		-		-		-		(6,072,855	)		(574,474	)		(6,647,329	)
Balance - June 30, 2024		2,492,964	$	2,493	$	95,443,307	$	(62,930,465	)	$	(1,504,979	)	$	31,010,356
Stock issued for option exercise		6,219		6		24,994		-			-			25,000
Stock issued for services		29,674		30		99,971		-			-			100,001
Warrant exercise		149,185		15		-		-			-			15
Shares issued for cash in public offering, net		278,000		278		2,148,411		-			-			2,148,689
Stock option expense		-		-		110,806		-			-			110,806
Net loss		-		-		-		(4,698,074	)		(105,043	)		(4,803,117	)
Balance - September 30, 2024		2,956,042	$	2,822	$	97,827,489	$	(67,628,539	)	$	(1,610,022	)	$	28,591,750