PWCM 8-K/A
Powercompute, Inc. (PWCM)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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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:
Securities registered pursuant to Section 12(b) of the Act:
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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. ☐
Explanatory Note
Item 1.01. Entry into a Material Definitive Agreement
On December 8, 2024, LM Funding America, Inc. (the “Company”) entered into a warrant exercise agreement (the “Warrant Exercise Agreement”) with an existing accredited investor (the “Investor”) to exercise certain outstanding warrants to purchase an aggregate of 1,736,370 shares of the Company’s common stock, $0.001 par value per share (the “Common Stock”), originally issued to the Investor on August 19, 2024, having an original exercise price of $2.98 per share (the “Existing Warrants”). The offer and resale of the shares of Common Stock underlying the Existing Warrants was registered pursuant to a registration statement on Form S-3 (File No. 333-282023).
In consideration for the immediate exercise of the Existing Warrants, the exercising holder received new unregistered warrants to purchase up to an aggregate of 3,472,740 shares of the Company’s Common Stock (the “New Warrants”).
The New Warrants have substantially the same terms as the Existing Warrants, are immediately exercisable at an exercise price of $2.95 per share (the applicable Nasdaq “Minimum Price”), and will expire five years from the date of issuance. The Company agreed to file a resale registration statement covering the resale of the shares of Common Stock issuable upon exercise of the New Warrants with the Securities and Exchange Commission (the “SEC”) as soon as reasonably practicable (and in any event within 30 calendar days) after the date of the Warrant Exercise Agreement, and to use commercially reasonable efforts to have such resale registration statement declared effective by the SEC within 60 calendar days following the date of the Warrant Exercise Agreement. The New Warrants include a beneficial ownership limitation that prevents the investor from owning more than 4.99% of the Company’s outstanding common stock at any time (which may be increased by the investor to no more than 9.99%).
The gross proceeds to the Company from the exercise of the Existing Warrants was approximately $5.1 million, prior to deducting placement agent fees and estimated offering expenses. The closing of the offering occurred on December 9, 2024. The Company intends to use the net proceeds for working capital and general corporate purposes.
Maxim Group LLC (“Maxim”) acted as the financial advisor to the Company pursuant to a letter agreement between the Company and Maxim, dated December 8, 2024. As compensation for such services, the Company agreed to pay Maxim an aggregate cash fee equal to 6.0% of the total proceeds received by the Company from the exercise of the Existing Warrants.
The foregoing descriptions of the Warrant Exercise Agreement and the New Warrants are not complete and are qualified in their entirety by reference to the full text of the form of Warrant Exercise Agreement and the form of New Warrant, copies of which are attached hereto as Exhibits 10.1 and 4.1, respectively, to this Current Report on Form 8-K and are incorporated by reference herein.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On December 6, 2024, the Company and its wholly-owned subsidiary, US Digital Mining and Hosting Oklahoma LLC, an Oklahoma limited liability company (“US Digital”), completed the previously announced acquisition (the “Acquisition”) of substantially all of the business assets of Tech Infrastructure JV I LLC, a Delaware limited liability company and joint venture affiliate of Arthur Development Group, Inc. (“Seller”), including certain contracts, mining equipment and other tangible personal property, and certain rights of the Seller relating to the assets being purchased (collectively, the “Assets”), free and clear of any liens other than certain specified liabilities of the Seller that were assumed, pursuant to that certain Asset Purchase Agreement (the “Purchase Agreement”) entered into on November 14, 2024 by and among the Company, US Digital, and Seller. The total purchase price of approximately $7.3 million was paid as follows: (i) approximately $1.1 million was paid by the Company to Seller in cash at the closing; (ii) approximately $3.7 million was credited against outstanding loans made by the Company and its affiliates to Seller; and (iii) approximately $2.5 million is currently being held in escrow in order to ensure that Seller vacates the site, including by removing all of the miners that Seller hosts for its other clients. The foregoing description of the Purchase Agreement is not complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, a copy of which was filed as Exhibit 2.1 to the Current Report on Form 8-K filed by the Company on November 18, 2024, and is, along with the description of the same contained in Item 1.01 of such Current Report on Form 8-K, incorporated herein by reference.
Further, in connection with the Acquisition, the Company took assignment of a Ground Lease and Use Agreement (the “Ground Lease”) which, as amended, provides for rent of $135,000 per year, subject to certain adjustments, and, among other things, provides the Company an option to purchase the land underlying the lease for a purchase price to include (i) the prepayment of rent owed
through the remainder of the term of the Ground Lease, subject to certain adjustments, and (ii) a cash payment of $25,000 (the “Lease Option”). The Lease Option will begin on the earlier of (i) December 1, 2026, or (ii) the date that certain minimum usage thresholds have been met, and will have a duration of one year unless the Ground Lease is otherwise terminated. The Ground Lease is for a term that will expire in June 2029.
The foregoing description of the Ground Lease is not complete and is qualified in its entirety by reference to the full text of the Ground Lease, including all amendments thereto, a copy of which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and which is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information in Item 1.01 above is incorporated herein by reference. The New Warrants were issued solely to an accredited investor in a private placement transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder. The New Warrants and the shares of Common Stock issuable upon the exercise thereof have not been registered under the Securities Act and may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from such registration requirements.
This report shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction.
Item 7.01 Regulation FD Disclosure.
On December 9, 2024, LMFA issued a press release announcing its entry into the Warrant Exercise Agreement and a press release announcing the closing of the Acquisition, copies of which are attached to this Current Report on Form 8-K as Exhibits 99.1 and 99.2, respectively, and incorporated herein by reference.
The disclosure in this Item 7.01 (including the exhibit) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of Section 18 of the Exchange Act, nor shall it be deemed incorporated by reference in any of the Company’s filings under the Securities Act or the Exchange Act, except to the extent, if any, expressly set forth by specific reference in such filing.
Item 8.01 Other Events.
As a result of the completion of the Acquisition, the total aggregate amount of loans made by the Company to Seller that were outstanding immediately prior to the closing of the Acquisition (with a balance of $3.8 million) were paid in full as a credit toward the purchase price of the Acquisition, and no amounts remain outstanding under such loans.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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4.1 |
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10.1 |
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99.1 |
Press Release announcing entry into Warrant Exercise Agreement issued December 9, 2024. |
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99.2 |
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Press Release announcing closing of the Acquisition issued December 9, 2024. |
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104 |
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Cover Page Interactive Data File (embedded within the inline XBRL document). |
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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.
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LM Funding America Inc |
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January 10, 2025 |
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/s/ Richard Russell |
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Richard Russell, Chief Financial Officer |
Exhibit 4.1
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
LM FUNDING AMERICA, inc.
Warrant Shares: Initial Exercise Date: _____________, 2024
Issue Date: _____________, 2024
THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, _____________________ or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on the 5-year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from LM Funding America, Inc., a Delaware corporation (the “Company”), up to ________ shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Agreement (the “Purchase Agreement”), dated December 8, 2024, among the Company and the purchasers signatory thereto.
Section 2. Exercise.
(A) = as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder,
either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. (“Bloomberg”) as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;
(B) = the Exercise Price of this Warrant, as adjusted hereunder; and
(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.
If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the holding period of the Warrant Shares being issued may be tacked on to the holding period of this Warrant. The Company agrees not to take any position contrary to this Section 2(c).
“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New
York City time) to 4:02 p.m. (New York City time)), (b) if the OTCQB Venture Market (“OTCQB”) or the OTCQX Best Market (“OTCQX”) is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (“Pink Market”) operated by the OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
e) Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after
giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder, including any member of a Section 13(d) group in accordance with the U.S. Securities and Exchange Act of 1934, as amended (the “Exchange Act”) or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any such increase or decrease in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
Section 3. Certain Adjustments.
Section 4. Transfer of Warrant.
Section 5. Miscellaneous.
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(Signature Page Follows)
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
LM FUNDING AMERICA, inc.
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By:__________________________________________ Name: Title:
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NOTICE OF EXERCISE
To: LM FUNDING AMERICA, inc.
[ ] in lawful money of the United States; or
[ ] if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
_______________________________
The Warrant Shares (subject to the receipt of appropriate representations and warranties from Holder) shall be delivered to the following DWAC Account Number:
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_______________________________
_______________________________
(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
[SIGNATURE OF HOLDER]
Name of Investing Entity: ________________________________________________________________________
Signature of Authorized Signatory of Investing Entity: _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
DOCPROPERTY DOCXDOCID DMS=NetDocuments Format=<<ID>>.<<VER>> \* MERGEFORMAT 4921-7393-2549.1
Date: ____________________________________________________________________________________
EXHIBIT B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
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Dated: _______________ __, ______ |
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Holder’s Signature: |
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Holder’s Address: |
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Exhibit 10.1
December 8, 2024
Holder of Common Stock Purchase Warrants
Re: Reload Offer of Common Stock Purchase Warrants
To Whom It May Concern:
LM Funding America, Inc., a Delaware corporation (the “Company”), is pleased to offer to you the opportunity to receive new purchase warrants of the Company in consideration for the full exercise of certain purchase warrants currently held by you (the “Holder”) as set forth on Annex A hereto (the “Existing Warrants”). The common stock, par value $0.001 per share (the “Common Stock”), underlying the Existing Warrants issued on August 19, 2024 (the “Existing Warrant Shares”) have been registered for resale pursuant to the Registration Statement on Form S-3 (File No. 333-282023) (the “Registration Statement”). The Registration Statement is currently effective and, upon exercise of the Existing Warrants, will be effective for the issuance of the Existing Warrant Shares. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Existing Warrants.
In consideration for cash exercising all of the Existing Warrants held by Holder (the “Warrant Exercise”) on or before 9:00 a.m. (New York City time) on December 9, 2024 (the “Modified Exercise Price Term”), the Company hereby offers to issue to you or your designees a new Common Stock Purchase Warrant (the “New Warrants”) to purchase up to a number of shares of Common Stock equal to 200% of the number of Existing Warrant Shares issued pursuant to each Warrant Exercise that occurs solely during the Modified Exercise Price Term, which New Warrants shall be in the form set forth on Annex C hereto. The New Warrants will be exercisable at any time after the date of this letter agreement, have a term of exercise of five (5) years after the date of this letter agreement, and have an exercise price equal to $2.95 (the Nasdaq Minimum Price (as defined in the Nasdaq Listing Rule 5635(d)) at the time of exercise), and will be in the form set forth on Annex C hereto. The original New Warrant certificates will be delivered within five (5) Business Days following each Warrant Exercise pursuant to this letter agreement (or a pdf copy of such New Warrant certificates maybe delivered to you by email). Notwithstanding anything herein to the contrary, in the event the Warrant Exercise would otherwise cause the Holder to exceed the Beneficial Ownership Limitation set forth in Section 2(e) of the Existing Warrants, as amended by this letter agreement, the Company shall only issue such number of Existing Warrant Shares to the Holder that would not cause the Holder to exceed the maximum number of Existing Warrant Shares permitted thereunder with the balance to be held in abeyance until notice from the Holder that the balance (or portion thereof) may be issued in compliance with such limitations, which abeyance shall be evidenced through the Existing Warrant which shall be deemed prepaid thereafter, and exercised pursuant to a Notice of Exercise in the Existing Warrant (provided no additional exercise price shall be payable).
The Holder may accept this offer by signing this letter below, with such acceptance constituting the Holder’s deemed exercise of the number of Existing Warrants as set forth on the Holder’s signature page attached hereto for an aggregate exercise price as set forth on the Holder’s signature page hereto (the “Aggregate Exercise Price”), and delivery of the Aggregate Exercise Price in readily available funds to the Company on or before 9:00 a.m. (New York City time) on December 9, 2024.
Additionally, the Company agrees to the representations, warranties and covenants set forth on Annex A attached hereto. The Holder represents and warrants (i) that, as of the date hereof it is, and on each date on which it exercises any New Warrants it will be, an “accredited investor” as defined in Rule 501 of the
Securities Act of 1933, as amended (the “Securities Act”), and agrees that the New Warrants and the Common Stock issuable upon exercise of the New Warrants will contain restrictive legends when issued, and neither the New Warrants nor the Common Stock issuable upon exercise of the New Warrants will be registered under the Securities Act, except as provided in Annex B attached hereto, and (ii) that the New Warrants and the Common Stock issuable upon exercise of the New Warrants will be acquired for such Holder’s own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the Securities Act.
If this offer is accepted and this letter agreement is executed by Holder and delivered to the Company on or before 9:00 a.m. (New York City time) on December 9, 2024, the Company shall issue a press release disclosing all material terms of the transactions contemplated hereunder (the “Press Release”) on or before 9:30 a.m. (New York City time) on December 9, 2024. In addition, the Company shall timely file a Report on Form 8-K with the U.S. Securities and Exchange Commission disclosing all material terms of the transactions contemplated hereunder, including this letter agreement as an exhibit thereto. Upon the release of the Press Release, the Company represents to the Holder that it shall have publicly disclosed all material, non-public information delivered to the Holder by the Company or any of its officers, directors, employees or agents in connection with the transactions contemplated hereby. In addition, effective upon the release of the Press Release , the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company or any of its officers, directors, agents, employees or Affiliates on the one hand, and the Holder or any of its Affiliates on the other hand, shall terminate.
The Company represents, warrants and covenants that, upon this letter agreement being executed by Holder and delivered to the Company on or before 9:00 a.m. (New York City time) on December 9, 2024, all of the Existing Warrant Shares being exercised shall be delivered electronically through the Depository Trust Company within one (1) Trading Day of the date the Company receives the Aggregate Exercise Price (or, with respect to Common Stock that would otherwise be in excess of the Beneficial Ownership Limitation, within one (1) Business Day of the date the Company is notified by Holder that its ownership is less than the Beneficial Ownership Limitation). Except as set forth herein, the terms of the Existing Warrants, including but not limited to the obligations to deliver the Existing Warrant Shares, shall remain in effect as if the acceptance of this offer was a formal exercise notice under the Existing Warrants.
The Company and the Holder confirm that the Holder has independently participated in the negotiation of the transactions contemplated hereby with the advice of its own counsel and advisors.
The Holder acknowledges that it has had the opportunity to review the public filings made by the Company with the Commission and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the transactions contemplated hereby and the merits and risks of investing in the Company’s securities; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment.
Each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this letter agreement; provided, however, that the Company shall pay the reasonable legal fees of Pryor Cashman LLP, outside counsel for the placement agent, in an amount not to exceed $15,000 in the aggregate. The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Existing Warrant Shares.
This letter agreement shall be governed by the laws of the State of New York without regard to the principles of conflicts of law thereof.
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To accept this offer, Holder must counter execute this letter agreement and return the fully executed letter agreement to the Company at e-mail: [email protected], attention: Chief Executive Officer, on or before 9:00 am (New York City time) on December 9, 2024.
Please do not hesitate to call me if you have any questions.
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Sincerely yours, |
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LM FUNDING AMERICA, INC.
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By: |
Name: |
Title: |
Accepted and Agreed to:
Name of Holder:_________________________________
Signature of Authorized Signatory of Holder:
Name of Authorized Signatory: ___________
Title of Authorized Signatory: _______________________________________________
Existing Warrant Shares:
Number of Existing Warrants being exercised contemporaneously with signing this letter:
Aggregate Exercise Price of the Existing Warrants being exercised contemporaneously with signing this letter: $
New Warrant Shares: ______________
New Warrant Purchase Price: $__________________
Beneficial Ownership Limitation New Warrant: 4.99%
Address for Delivery of New Warrant: _________________________________________
DTC Instructions:
The Existing Warrant Shares shall be delivered to the following DWAC Account Number:
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ANNEX A
Existing Warrants
Transaction/Warrant Date |
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Shares |
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Strike Price |
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Series A Warrant, issued on 8-19-2024 |
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868,185 |
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$2.98 |
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Series B Warrant, issued on 8-19-2024 |
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868,185 |
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$2.98 |
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ANNEX B
Representations, Warranties and Covenants
Representations, Warranties and Covenants of the Company. The Company hereby makes the following representations and warranties to the Holder and agrees to the following covenants:
(a) Registration Statement. The Existing Warrant Shares are registered for resale on the Registration Statements and the Company knows of no reason why such Registration Statements shall not remain effective for the foreseeable future.
(b) Authorization; Enforcement. The Company will have the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this letter agreement and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this letter agreement by the Company and the consummation by the Company of the transactions contemplated hereby will be duly authorized by all necessary action on the part of the Company and no further action is required by the Company, its board of directors or its shareholders in connection therewith. This letter agreement has been duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(c) No Conflicts. The execution, delivery and performance of this letter agreement by the Company and the consummation by the Company of the transactions contemplated hereby do not and will not: (i) conflict with or violate any provision of the Company’s Memorandum of Association, Articles of Association or other organizational or charter documents; or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any lien upon any of the properties or assets of the Company in connection with, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement, credit facility, debt or other material instrument (evidencing Company debt or otherwise) or other material understanding to which such Company is a party or by which any property or asset of the Company is bound or affected, other than for which a waiver has been obtained by the Company; or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected, except in the case of each of clauses (ii) and (iii), such as would not have or reasonably be expected to result in (x) a material adverse effect on the legality, validity or enforceability of this Agreement, (y) a material adverse effect on the results of operations, assets, business or condition (financial or otherwise) of the Company and its subsidiaries, taken as a whole, or (z) a material adverse effect on the Company's ability to perform in any material respect on a timely basis its obligations under this Agreement.
(d) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the transactions contemplated by this agreement, other than: (i) the filings required pursuant to this agreement, (ii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the New Warrants and the listing of the underlying shares for trading thereon in the time and manner required thereby, and
(iii) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).
(e) Offering Generally. The transactions contemplated under this letter agreement, comply with all rules of the Trading Market. No registration under the Securities Act is required for the offer and sale of the New Warrants by the Company as contemplated hereby. Neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the offering of the New Warrants to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.
(f) Issuance of the New Warrants. The issuance of the New Warrants is duly authorized and, upon and subject to the undersigned’s execution of this letter agreement and delivery to the Company on or before 9:00 a.m. (New York City time) on December 9, 2024, will be duly and validly issued, fully paid and nonassessable, free and clear of all liens imposed by the Company, and the Common Stock issuable upon exercise of the New Warrant (the “New Warrant Shares”), when issued in accordance with the terms of the New Warrant, will be validly issued, fully paid and nonassessable, free and clear of all liens imposed by the Company. The Company has reserved or will promptly reserve from its duly authorized capital stock a number of shares of Common Stock for issuance of the New Warrant Shares in full.
(g) Legends and Transfer Restrictions.
(i) The New Warrant and New Warrant Shares may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of New Warrant or New Warrant Shares other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of the undersigned or in connection with a pledge, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred New Warrant and New Warrant Shares under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this letter agreement.
(ii) The undersigned agrees to the imprinting, so long as is required by this Section (g), of a legend on any of the New Warrant and New Warrant Shares in the following form:
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The Company acknowledges and agrees that the undersigned may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the New Warrant to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this letter agreement and, if required under the terms of such arrangement, the undersigned may transfer pledged or secured New Warrant to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At the undersigned’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of New Warrant may reasonably request in connection with a pledge or transfer of the New Warrant or New Warrant Shares.
(iii) Certificates evidencing the New Warrant Shares shall not contain any legend (including the legend set forth in Section (g)(ii) hereof), (i) while a registration statement covering the resale of such security is effective under the Securities Act, (ii) following any sale of such New Warrant Shares pursuant to Rule 144, (iii) if such New Warrant Shares are eligible for sale under Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such New Warrant Shares and without volume or manner-of-sale restrictions, or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to its transfer agent (if required by the transfer agent) and the undersigned (if requested by the undersigned) in connection with the permitted removal of the legend hereunder. If all or any portion of a New Warrant is exercised at a time when there is an effective registration statement to cover the resale of the New Warrant Shares, or if such New Warrant Shares may be sold under Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such New Warrant Shares and without volume or manner-of-sale restrictions or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) then such New Warrant Shares shall be issued free of all legends. The Company agrees that following such time as such legend is no longer required under this Section (g), it will, no later than the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined below) following the delivery by the undersigned to the Company or the Transfer Agent of a certificate representing Warrant Shares, as applicable, issued with a restrictive legend (such date, the “Legend Removal Date”), deliver or cause to be delivered to the undersigned a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the transfer agent that enlarge the restrictions on transfer set forth in this Section (g). Certificates for New Warrant Shares subject to legend removal hereunder shall be transmitted by the transfer agent to the undersigned by crediting the account of the undersigned’s prime broker with the Depository Trust Company System as directed by the undersigned. “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of a certificate representing Warrant Shares issued with a restrictive legend.
(iv) In addition to such undersigned’s other available remedies, the Company shall pay to the undersigned, in cash, (i) as partial liquidated damages and not as a penalty, for each $1,000 of New Warrant Shares (based on the VWAP of the Common Stock on the date such Securities are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to Section (g)(iii), $10 per Trading Day (increasing to $20 per Trading Day five (5) Trading Days after such damages have begun to accrue) for each Trading Day after the Legend Removal Date
until such certificate is delivered without a legend and (ii) if the Company fails to (a) issue and deliver (or cause to be delivered) to the undersigned by the Legend Removal Date a certificate representing the Securities so delivered to the Company by such undersigned that is free from all restrictive and other legends and (b) if after the Legend Removal Date such undersigned purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by such undersigned of all or any portion of the number of Common Stock, or a sale of a number of shares of Common Stock equal to all or any portion of the number of shares of Common Stock that such undersigned anticipated receiving from the Company without any restrictive legend, then, an amount equal to the excess of such undersigned’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the Common Stock so purchased (including brokerage commissions and other out-of-pocket expenses, if any) (the “Buy-In Price”) over the product of (A) such number of New Warrant Shares that the Company was required to deliver to such undersigned by the Legend Removal Date multiplied by (B) the lowest closing sale price of the Common Stock on any Trading Day during the period commencing on the date of the delivery by such undersigned to the Company of the applicable New Warrant Shares (as the case may be) and ending on the date of such delivery and payment under this clause (ii).
(i) Listing of Common Stock. The Company shall apply to list or quote all of the New Warrant Shares on the Nasdaq Capital Market and use its commercially reasonable efforts to promptly secure the listing of all of the New Warrant Shares on the Nasdaq Capital Market.
(j) Resale Registration Statement. As soon as practicable (and in any event within thirty (30) calendar days of the date of this letter agreement), the Company shall file a registration statement on Form S-3 providing for the resale by the Holder of the New Warrant Shares issued and issuable upon exercise of the New Warrants; provided that each Holder shall have furnished in writing to the Company such other information regarding itself, the securities held by it and the intended method of disposition of the securities held by it, as shall be reasonably required to effect the registration of such registrable securities. The Company shall use commercially reasonable efforts to cause such registration to become effective on or prior to the 60th calendar day after the date of this letter agreement and to keep such registration statement effective at all times until the earlier of (i) Holder not owning any New Warrants or New Warrant Shares issuable upon exercise thereof and (ii) the New Warrant Shares becoming eligible for resale without volume or manner-of-sale restrictions and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144 as set forth in a written opinion letter to such effect, addressed, delivered and acceptable to the Transfer Agent and reasonably acceptable to Holder, assuming that such securities and any securities issuable upon exercise, conversion or exchange of which, or as a dividend upon which, such securities were issued or are issuable, were at no time held by any affiliate of the Company, as reasonably determined by the Company, upon the advice of counsel to the Company.
(k) Subsequent Equity Sales.
(1) From the date hereof until sixty (60) days after the date of this letter agreement, neither the Company nor any subsidiary shall (i) issue, enter into any agreement to issue, or announce the issuance or proposed issuance of any Common Stock or Common Stock Equivalents, or (ii) file or amend any registration statement or prospectus, other than as necessary to register or maintain the registration of the Securities governed by this letter agreement.
(2) From the date hereof until six (6) months after the Closing Date, the Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents (or a combination of units thereof) involving a Variable Rate
Transaction. Common Stock Equivalents” means any securities of the Company or its Subsidiaries which entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock. “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock, but excluding in each case described in clauses (A) and (B), such formulations reflecting customary adjustment provisions (such as share splits, share combinations, share dividends and similar customary adjustments, or customary “full ratchet” or “weighted-average” price-based anti-dilution adjustments) or (ii) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity line of credit or an “at-the-market offering”, whereby the Company may issue securities at a future determined price, regardless of whether shares pursuant to such agreement have actually been issued and regardless of whether such agreement is subsequently canceled. Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages. Notwithstanding the foregoing, after sixty (60) days following the Closing Date, the Company shall be permitted to enter into and effect sales under an “at-the-market” offering facility with the Placement Agent. For clarity, if the Company in any manner issues or sells or enters into any agreement to issue or sell, any Common Stock or Common Stock Equivalents at a fixed price (and in the case of options or convertible securities, the exercise price or conversion price is also set at a fixed price), which may include customary adjustments for share splits, share combinations, share dividends and similar customary adjustments, or customary “full ratchet” or “weighted-average” price-based anti-dilution adjustments) any such securities shall not be deemed to involve a Variable Rate Transaction for any purpose hereunder.
(3) Notwithstanding the foregoing, this paragraph shall not apply in respect of an Exempt Issuance (as defined in that certain Securities Purchase Agreement, dated as of August 16, 2024, between the Company and the Holder) , except that no Variable Rate Transaction shall be an Exempt Issuance.
ANNEX C
Form of New Warrant
[see attached]
Exhibit 99.1
LM Funding America Enters Into Warrant Exercise Transaction for Gross Proceeds of $5.1 Million
TAMPA, FL, December 9, 2024 -- LM Funding America, Inc. (NASDAQ: LMFA) (“LM Funding” or the “Company”), a cryptocurrency mining and technology-based specialty finance company, announced today that it has entered into a warrant exercise agreement with a single institutional investor that is an existing holder of its common stock warrants wherein the investor agreed to exercise 1,736,370 outstanding common stock warrants (the “Existing Warrants”) to purchase an aggregate of 1,736,370 shares of common stock for cash at the exercise price of $2.98 per share. The Existing Warrants were previously issued in a private placement which closed in August 2024. In consideration for the immediate exercise of the Existing Warrants, the exercising holder received new unregistered common stock warrants (the “New Warrants”) to purchase an aggregate of 3,472,740 shares of common stock. The New Warrants will have an exercise price of $2.95 per share and will be immediately exercisable for a period of five years from the issuance date.
The gross proceeds of the exercise of the Existing Warrants to the Company, before deducting estimated expenses and fees, are expected to be approximately $5.1 million.
Maxim Group LLC is acting as warrant inducement agent and financial advisor in connection with the transaction.
The New Warrants described above were offered in a private placement pursuant to an applicable exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), and, along with the shares of common stock issuable upon their exercise, have not been registered under the Securities Act, and may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from such registration requirements. The securities were offered only to accredited investors. The Company has agreed to file a registration statement with the SEC covering the resale of the shares of common stock issuable upon exercise of the New Warrants.
This press release shall not constitute an offer to sell or a solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor will there be any sales of these securities in any jurisdiction in which such offer, solicitation or sale, would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
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 of LM Funding America, Inc. (the “Company”) 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 risks of associated with 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 the Company’s Bitcoin mining machines and its related ability to purchase power at reasonable prices, the ability of the Company to finance and grow its cryptocurrency mining operations, its ability to acquire new accounts in its specialty finance business at appropriate prices, the potential need for additional capital in the future, changes in governmental regulations that affect the Company’s 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 the Company’s business, financial condition, and results of operations. Any forward-looking statements contained in this press release speak only as of its date. The Company undertakes no obligation to update any forward-looking statements contained in this press release to reflect events or circumstances occurring after its date or to reflect the occurrence of unanticipated events.
Contacts:
Crescendo Communications, LLC
Tel: (212) 671-1021
Email: [email protected]
Exhibit 99.2
LM Funding America, Inc. Closes Purchase of 15MW Mining Site
Tampa, FL, December 9, 2024 – LM Funding America, Inc. (NASDAQ: LMFA) (“LM Funding” or the “Company”), a cryptocurrency mining and technology-based specialty finance company, today announced the acquisition of the business assets of a 15 MW mining site in Oklahoma from Tech Infrastructure JV I LLC (“JV”), a joint venture majority-owned by Arthur Inc., for $7.3 million.
“We are thrilled to have acquired this site with 60MW of mining potential through a series of financings to the JV,” said Bruce M. Rodgers, Chairman and CEO of LM Funding. “The financing terms allowed us to operate approximately 2,880 S19J Pros using $0.04/kwh power at the site since June 2024.This transaction is in furtherance of our previously disclosed transition from an “infrastructure light” mining model with minimal infrastructure investments to a vertically integrated mining model. We now may be able to potentially expand our mining operations at this site by an additional 60MW with power at this price or better.”
LM Funding initially financed the JV’s site development with loans and accrued interest totaling $3.8 million. At closing of the acquisition of the assets of the site, LM Funding applied this credit to the purchase price and paid approximately $1 million in cash to the JV. LM Funding escrowed an additional $2.5 million of the purchase price to ensure the continuing obligations of the JV under the purchase agreement, including the January 10, 2025, exit of a third-party miner using 5MW at the site. The land on which the mining facility is located is leased from a third-party under a 5-year ground lease, and as a part of the transaction, the Company acquired an option to purchase the underlying land from the third-party landlord. LM Funding expects to utilize the full 15MW of $0.04 power for its current mining fleet.
“We have enjoyed working with our counterparties on this transaction and were able to monitor the site's development as a tenant and secured creditor,” said Ryan Duran, President of LM Funding’s US Digital Mining & Hosting Co. subsidiary. “The company plans to continue collaboration with the existing management team at the site to maintain operational efficiency.”
“With the recently announced $5.1 million warrant exercise, the Company will be able to utilize these funds to purchase more efficient miners for this site and acquire other mining sites,” said Richard Russell, CFO of LM Funding.
In Q1 2025, LM Funding is expected to have 562 petahash combined mining capacity at the Oklahoma site, which is in addition to a hosted site with Core Scientific in Kentucky.
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 the risk that the expected benefits from the above-described acquisition to the Company will not be realized or will not be realized within the expected time periods, the risks of 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 collect sufficient amounts on defaulted consumer receivables, changes in the credit or capital markets, changes in interest rates, negative press regarding the debt collection industry, and the risk of pandemics such as the COVID-10 pandemic. 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) 671-1021
Email: [email protected]om