lmfa-10q_20220630.htm

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.:

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 August 9, 2022.

	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 $0.001; 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

	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 assts		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.

	Common Stock
	Shares		Amount		Additional paid in capital		Accumulated Deficit			Non-Controlling Interest		Total Equity


Balance - December 31, 2020		3,083,760	$	3,084	$	29,996,257	$	(18,536,224	)	$	5,191	$	11,468,308

Stock issued for warrants exercised		2,330,536		2,330		9,542,293		-			-		9,544,623
Net income		-		-		-		4,376,433			171,866		4,548,299
Balance - March 31, 2021		5,414,296	$	5,414	$	39,538,550	$	(14,159,791	)	$	177,057	$	25,561,230

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)

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

		Page

PART I.	FINANCIAL INFORMATION	3

Item 1.	Financial Statements

	LM Funding America, Inc. and Subsidiaries Condensed Consolidated Balance Sheets June 30, 2022 (unaudited) and December 31, 2021	3

	LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Operations Three and Six Months Ended June 30, 2022 and 2021 (unaudited)	4

	LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows Six Months Ended June 30, 2022 and 2021 (unaudited)	5

	LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 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	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	30

PART II.	OTHER INFORMATION	32

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3.	Defaults Upon Senior Securities	33

Item 5.	Other Information	33

Item 6.	Exhibits	34

SIGNATURES		35


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


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

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☑	Smaller reporting company	☑

		Emerging growth company	☐