8-K
Lm Funding America, Inc. (LMFA)
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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| Date of Report (Date of earliest event reported): May 15, 2023 |
|---|
LM FUNDING AMERICA, INC.
(Exact name of Registrant as Specified in Its Charter)
| Delaware | 001-37605 | 47-3844457 |
|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission File Number) | (IRS Employer<br>Identification No.) |
| 1200 West Platt Street<br><br>Suite 100 | ||
| Tampa, Florida | 33606 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
| Registrant’s Telephone Number, Including Area Code: 813 222-8996 | ||
| --- |
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br>Symbol(s) | 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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
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. ☐
Item 2.02 Results of Operations and Financial Condition.
On May 15, 2023, LM Funding America, Inc. (the “Company”) issued a press release announcing its financial results for the Three Months ended March 31, 2023 and 2022.
The information furnished in this Item 2.02, including Exhibit 99.1, is not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that Section. This information will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.
Item 9.01 Financial Statements and Exhibits.
| Exhibit<br><br>Number | Description |
|---|---|
| 99.1 | Financial Results Press Release dated May 15, 2023 |
| 104 | Cover Page Interactive Data File, formatted in Inline Extensible Business Reporting Language (iXBRL) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| LM Funding America, Inc. | |||
|---|---|---|---|
| Date: | May 15, 2023 | By: | /s/ Richard Russell |
| Richard Russell, CFO |
EX-99.1
Exhibit 99.1
LM Funding America, Inc. Achieves Over 1,100% Year-Over-Year Revenue Growth to $2.1 Million for the First Quarter of 2023
Mined 91.7 Bitcoins in the First Quarter of 2023 at an Average Market Revenue Value of $22,800 per Bitcoin
Reports Working Capital of $4.6 Million and LM Funding Stockholders’ Equity of
$44.0 Million ($3.36 per share) as of March 31, 2023
Conference Call to Be Held Today at 11:00 am ET
TAMPA, FL, May 15, 2023—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 quarter ended March 31, 2023.
Operational Highlights
• Approximately 3,700 Bitcoin mining machines in operation as of March 31, 2023.
• Approximately 5,000 Bitcoin mining machines operating today providing approximately 520 PH/s of mining capacity after adding 1,300 machines in April, 2023.
• Signed an agreement with GIGA Energy May 8, 2023, adding 1,080 additional machines for an approximate total of 627 PH/s by May 31, 2023.
Bruce Rodgers, Chairman and CEO of LM Funding, commented, “We are pleased with the strides LM Funding has taken during the first quarter of 2023 as we continue to steadily transition our Company towards Bitcoin mining. We started the year with approximately 2,700 fully operational mining machines and added approximately 2,300 more during the first four months of 2023, bringing our total to approximately 5,000 machines, with a mining capacity of around 520 PH/s, actively mining Bitcoin today. Throughout the quarter, we mined nearly 91.7 Bitcoins at an average value of about $22,800 per Bitcoin, compared to the current price of Bitcoin, which has been ranging between $27,000 and $30,000 over the past two months.”
“We continue to strategically acquire additional mining machines, and since the conclusion of the first quarter, have acquired 101 S19 XP machines through a Bitmain raffle, costing $0.3 million. Our goal is to continue to acquire and energize more energy efficient mining machines in the forthcoming quarters as we approach the next Bitcoin halving, anticipated to occur sometime in 2024.”
Richard Russell, Chief Financial Officer of LM Funding commented, “In addition to our revenue growth, our balance sheet remains solid. As of March 31, 2023, we had $3.4 million in cash, approximately 84 Bitcoins valued at $1.8 million or $21,400 per Bitcoin, working capital of $4.6 million, and LM Funding stockholders’ equity of $44.0 million, or $3.36 per
share. In light of our strong capital position, we have confidence in our ability to deliver on our growth strategy, which we believe will generate significant value for our shareholders in the long term.”
Financial Highlights
• Total revenue for the quarter ended March 31, 2023, was approximately $2.3 million, an increase of $2.1 million, or more than 1,100%, from $0.2 million for the 2022 first quarter. The increase was primarily due to digital mining revenue of $2.1 million in connection with the commencement of our Bitcoin mining operations in September 2022 compared to no digital mining revenue in the same quarter last year.
• Net loss attributable to LM Funding shareholders for the first quarter ended March 31, 2023, was approximately $5.4 million, which included a $5.8 million non-cash, unrealized loss on investment and equity securities, compared to a net loss of approximately $5.8 million for the first quarter of 2022, which included a $1.0 million unrealized loss on investment and equity securities.
• Core EBITDA loss for the quarter ended March 31, 2023, improved to a loss of $(0.3 million), compared to Core EBITDA loss of $(1.7 million) in the 2022 comparable quarter, primarily due to our successful digital strategy. Core EBITDA is a non-GAAP financial measure, and a reconciliation of Core EBITDA to net loss is set forth below in this press release.
• Cash of approximately $3.4 million, digital assets of $1.8 million, and working capital of $4.6 million as of March 31, 2023.
• Total LM Funding stockholders’ equity of $44.0 million and net equity per share of $3.36 as of March 31, 2023. (Calculated as LMFA stockholders’ equity divided by 13,091,883 shares outstanding as of March 31, 2023)
Investor Conference Call
LM Funding will host a conference call today, May 15, 2023, at 11:00 A.M. Eastern Time to discuss the Company’s financial results for the first quarter ended March 31, 2023, as well as the Company’s corporate progress and other developments.
The conference call will be available via telephone by dialing toll-free +1 877-545-0523 for U.S. callers or +1 973-528-0016 for international callers and entering access code 621273. A webcast of the call may be accessed at https://www.webcaster4.com/Webcast/Page/2917/48367 or on the investor relations section of the Company’s website, https://ir.lmfunding.com/.
A webcast replay will be available on the investor relations section of the Company’s website athttps://www.lmfunding.com/investors/news-events/ir-calendar through May 15, 2024. A telephone replay of the call will be available approximately one hour following the call, through May 29, 2023, and can be accessed by dialing 877-481-4010 for U.S. callers or +1 919-882-2331 for international callers and entering access code 48367.
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, | |||||
|---|---|---|---|---|---|
| 2022 | |||||
| Assets | |||||
| Cash | 3,428,906 | $ | 4,238,006 | ||
| Digital Assets (Note 2) | 1,751,914 | 888,026 | |||
| Finance receivables | 22,107 | 26,802 | |||
| Marketable securities (Note 5) | 10,080 | 4,290 | |||
| Notes receivable from Seastar Medical Holding Corporation (Note 5) | - | 3,807,749 | |||
| Prepaid expenses and other assets | 1,196,849 | 1,233,322 | |||
| Income tax receivable | 293,466 | 293,466 | |||
| Current assets | 6,703,322 | 10,491,661 | |||
| Fixed assets, net (Note 3) | 26,708,914 | 27,192,317 | |||
| Deposits on mining equipment (Note 4) | 1,357,341 | 525,219 | |||
| Hosting services deposit (Note 4) | 2,200,452 | 2,200,452 | |||
| Real estate assets owned | 80,057 | 80,057 | |||
| Long-term investments - debt security (Note 5) | 2,402,542 | 2,402,542 | |||
| Less: Allowance for losses on debt security (Note 5) | (1,052,542 | ) | (1,052,542 | ) | |
| Long-term investments - debt security, net (Note 5) | 1,350,000 | 1,350,000 | |||
| Long-term investments - equity securities (Note 5) | 437,924 | 464,778 | |||
| Investment in Seastar Medical Holding Corporation (Note 5) | 4,812,750 | 10,608,750 | |||
| Notes receivable from Seastar Medical Holding Corporation (Note 5) | 2,216,649 | - | |||
| Operating lease - right of use assets (Note 8) | 264,321 | 265,658 | |||
| Other assets | 10,726 | 10,726 | |||
| Long-term assets | 39,439,134 | 42,697,957 | |||
| Total assets | 46,142,456 | $ | 53,189,618 | ||
| Liabilities and stockholders' equity | |||||
| Accounts payable and accrued expenses | 1,682,392 | 1,570,906 | |||
| Note payable - short-term (Note 6) | 298,382 | 475,775 | |||
| Due to related parties (Note 7) | 62,829 | 75,488 | |||
| Current portion of lease liability (Note 8) | 99,569 | 90,823 | |||
| Total current liabilities | 2,143,172 | 2,212,992 | |||
| Lease liability - net of current portion (Note 8) | 170,295 | 179,397 | |||
| Long-term liabilities | 170,295 | 179,397 | |||
| Total liabilities | 2,313,467 | 2,392,389 | |||
| Stockholders' equity (Note 9) | |||||
| Preferred stock, par value .001; 150,000,000 shares authorized; no shares issued and outstanding as of March 31, 2023 and December 31, 2022 | - | - | |||
| Common stock, par value .001; 350,000,000 shares authorized; 13,091,883 shares issued and outstanding as of March 31, 2023 and December 31, 2022 | 13,092 | 13,092 | |||
| Additional paid-in capital | 92,389,697 | 92,195,341 | |||
| Accumulated deficit | (48,403,539 | ) | (43,017,207 | ) | |
| Total LM Funding America stockholders' equity | 43,999,250 | 49,191,226 | |||
| Non-controlling interest | (170,261 | ) | 1,606,003 | ||
| Total stockholders' equity | 43,828,989 | 50,797,229 | |||
| Total liabilities and stockholders’ equity | 46,142,456 | $ | 53,189,618 |
All values are in US Dollars.
LM Funding America, Inc. and Subsidiaries Consolidated Statements of Operations (unaudited)
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| Revenues: | ||||||
| Digital mining revenues | $ | 2,090,851 | $ | - | ||
| Specialty finance revenue | 182,836 | 152,132 | ||||
| Rental revenue | 39,831 | 38,872 | ||||
| Total revenues | 2,313,518 | 191,004 | ||||
| Operating costs and expenses: | ||||||
| Digital mining cost of revenues (exclusive of depreciation and amortization shown below) | 1,667,673 | - | ||||
| Staff costs & payroll | 932,835 | 4,292,197 | ||||
| Professional fees | 572,356 | 774,820 | ||||
| Settlement costs with associations | - | 160 | ||||
| Selling, general and administrative | 239,464 | 114,920 | ||||
| Real estate management and disposal | 31,803 | 31,481 | ||||
| Depreciation and amortization | 801,873 | 3,094 | ||||
| Collection costs | 9,808 | (3,820 | ) | |||
| Impairment loss on mined digital assets | 199,554 | - | ||||
| Realized gain on sale of mined digital assets | (424,333 | ) | - | |||
| Other operating costs | 251,911 | 8,384 | ||||
| Total operating costs and expenses | 4,282,944 | 5,221,236 | ||||
| Operating loss | (1,969,426 | ) | (5,030,232 | ) | ||
| Realized loss on securities | - | (395,181 | ) | |||
| Unrealized gain on convertible debt security | - | 288,320 | ||||
| Unrealized gain on marketable securities | 5,790 | 130 | ||||
| Impairment loss on prepaid mining machine deposits | (36,691 | ) | - | |||
| Unrealized loss on investment and equity securities | (5,822,854 | ) | (986,399 | ) | ||
| Realized gain on sale of purchased digital assets | 1,917 | - | ||||
| Digital assets other income | - | 4,366 | ||||
| Other income - coupon sales | 603,591 | - | ||||
| Dividend income | - | 1,375 | ||||
| Interest income | 55,077 | 98,370 | ||||
| Loss before income taxes | $ | (7,162,596 | ) | $ | (6,019,251 | ) |
| Income tax expense | - | - | ||||
| Net loss | $ | (7,162,596 | ) | $ | (6,019,251 | ) |
| Less: Net loss attributable to non-controlling interest | 1,776,264 | 291,200 | ||||
| Net loss attributable to LM Funding America Inc. | $ | (5,386,332 | ) | $ | (5,728,051 | ) |
| Basic loss per common share | $ | (0.41 | ) | $ | (0.44 | ) |
| Diluted loss per common share | $ | (0.41 | ) | $ | (0.44 | ) |
| Weighted average number of common shares outstanding | ||||||
| Basic | 13,091,883 | 13,060,736 | ||||
| Diluted | 13,091,883 | 13,060,736 |
LM Funding America, Inc. and Subsidiaries Consolidated Statements of Cash Flows (unaudited)
| Three Months ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
| Net loss | $ | (7,162,596 | ) | $ | (6,019,251 | ) |
| Adjustments to reconcile net loss to cash used in operating activities | ||||||
| Depreciation and amortization | 801,873 | 3,094 | ||||
| Noncash lease expense | 23,224 | 23,343 | ||||
| Stock compensation | - | 329,500 | ||||
| Stock option expense | 194,356 | 3,318,737 | ||||
| Accrued investment income | (53,734 | ) | (96,657 | ) | ||
| Digital assets other income | - | (4,366 | ) | |||
| Impairment loss on digital assets | 199,554 | - | ||||
| Impairment loss on prepaid mining machine deposits | 36,691 | - | ||||
| Unrealized gain on convertible debt security | - | (288,320 | ) | |||
| Unrealized gain on marketable securities | (5,790 | ) | (130 | ) | ||
| Unrealized loss on investment and equity securities | 5,822,854 | 986,399 | ||||
| Realized loss on securities | - | 395,181 | ||||
| Realized gain on sale of digital assets | (426,250 | ) | - | |||
| Proceeds from securities | - | 1,428,050 | ||||
| Change in operating assets and liabilities: | ||||||
| Prepaid expenses and other assets | 36,473 | 280,208 | ||||
| Advances (repayments) to related party | (12,659 | ) | 252,580 | |||
| Accounts payable and accrued expenses | 111,486 | (136,430 | ) | |||
| Stablecoin | - | (500,000 | ) | |||
| Mining of digital assets | (2,090,851 | ) | - | |||
| Proceeds from sale of digital assets | 1,455,141 | - | ||||
| Lease liability payments | (22,243 | ) | (30,242 | ) | ||
| Deferred taxes and taxes payable | - | (326,178 | ) | |||
| Income taxes receivable | - | (143,822 | ) | |||
| Net cash used in operating activities | (1,092,471 | ) | (528,304 | ) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
| Net collections of finance receivables - original product | - | (6,550 | ) | |||
| Net collections of finance receivables - special product | 4,695 | (1,948 | ) | |||
| Capital expenditures | (263,596 | ) | - | |||
| Investment in note receivable | - | (310,000 | ) | |||
| Collection of note receivable | 1,644,834 | |||||
| Investment in digital assets | (35,157 | ) | - | |||
| Proceeds from sale of purchased digital assets | 33,675 | - | ||||
| Deposits for mining equipment | (923,687 | ) | (7,118,572 | ) | ||
| Net cash provided by (used in) investing activities | 460,764 | (7,437,070 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
| Insurance financing repayments | (178,620 | ) | (57,344 | ) | ||
| Insurance financing | 1,227 | - | ||||
| Net cash used in financing activities | (177,393 | ) | (57,344 | ) | ||
| NET DECREASE IN CASH | (809,100 | ) | (8,022,718 | ) | ||
| CASH - BEGINNING OF YEAR | 4,238,006 | 32,559,185 | ||||
| CASH - END OF YEAR | $ | 3,428,906 | $ | 24,536,467 | ||
| SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||
| ROU assets and operating lease obligation recognized | $ | 21,887 | $ | 300,787 | ||
| Reclassification of mining equipment deposit to fixed assets, net | $ | 54,874 | $ | - | ||
| SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION | ||||||
| Cash paid for taxes | $ | - | $ | 470,000 |
NON-GAAP FINANCIAL INFORMATION
Our reported results are presented in accordance with U.S. generally accepted accounting principles (“GAAP”). We also disclose Earnings before Interest, Tax, Depreciation and Amortization ("EBITDA") and Core Earnings before Interest, Tax, Depreciation and Amortization ("Core EBITDA") which adjusts for unrealized loss on investment and equity securities, unrealized gain on convertible debt securities and stock compensation expense and option expense, all of which are non-GAAP financial measures. We believe these non-GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of Bitcoin miners.
The following tables reconcile net loss, which we believe is the most comparable GAAP measure, to EBITDA and Core EBITDA:
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| Net loss | $ | (7,162,596 | ) | $ | (6,019,251 | ) |
| Income tax expense | - | - | ||||
| Interest expense | - | - | ||||
| Depreciation and amortization | 801,873 | 3,094 | ||||
| Loss before interest, taxes & depreciation | $ | (6,360,723 | ) | $ | (6,016,157 | ) |
| Unrealized loss on investment and equity securities | 5,822,854 | 986,399 | ||||
| Unrealized gain on convertible debt securities | - | (288,320 | ) | |||
| Stock compensation and option expense | 194,356 | 3,648,237 | ||||
| Core loss before interest, taxes & depreciation | $ | (343,513 | ) | $ | (1,669,841 | ) |