LM Funding America, Inc. Reports Annual 2021 Financial Results
TAMPA, Fla., March 31, 2022 /PRNewswire/ -- LM Funding America, Inc. (NASDAQ: LMFA) ("LM Funding" or the "Company"), a technology-based specialty finance company offering unique funding solutions to community associations that is expanding into the cryptocurrency mining business, today announced its financial results for the full year ended December 31, 2021.
"In 2021, we took critical steps to reposition our company into mining Bitcoin while also improving our capitalization structure and balance sheet," said Bruce Rodgers, LM Funding's Chief Executive Officer. "We were successful in closing a $31.5 million equity offering to fund our investment in Bitcoin mining machines and infrastructure."
Full Year 2021 Highlights:
- Generated approximately $31.5 million in net proceeds from an equity offering that is being used to fund our digital asset expansion for which we ordered 5,046 ASIC mining machines from Bitmain for approximately $31.6 million and hosting equipment from Bit5ive for approximately $3.1 million. We currently anticipate the ASIC mining machines to be delivered sometime in the 2nd quarter of 2022 subject to issues surrounding worldwide logistics impacted by COVID-19 and the war in Ukraine.
- We also received approximately $10.2 million from warrant holders upon the exercise into common shares.
- Operating revenues totaled approximately $0.9 million as compared to approximately $1.26 million for prior year.
- Operating loss increased to approximately $8.4 million as compared to approximately $4.1 million for the prior year due mainly to a $3 million increase in compensation, including stock compensation expense and bonuses, an approximately $0.4 million increase in professional fees and an approximately $0.2 million reduction in the recoupment of a previous bad debt write-off associated with a related party.
- The Company engaged in several opportunistic specialty financing solutions which contributed to net income from continuing operations of approximately $5.0 million as compared to an approximately $4.1 million loss for the prior year. This improvement in operations was due in part to:
- An innovative troubled financing solution that resulted in the realized gain of approximately $13.8 million on the sale of securities.
- Realized gain of approximately $0.5 million from the sale of digital assets, which included Bitcoin.
- Unrealized gain of approximately $0.9 million for investment in LMF Acquisition Opportunities Inc. a special purpose acquisition corporation.
- Net income attributable to LM Funding America Inc was approximately $4.8 million after deducting $0.2 million for the net income attributable to a non-controlling interest as compared to a net loss of approximately $4.0 million for the prior year.
On October 19, 2021, the Company closed an underwritten public offering that included the underwriters' exercise of its option to purchase additional shares, which resulted in the issuance of approximately 7.26 million shares of its common stock and common warrants to up to approximately 7.48 million shares of the Company's common stock. At closing, LM Funding received net proceeds from the offering of approximately $31.5 million.
About LM Funding America:
LM Funding America, Inc., together with its subsidiaries, is 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. The company offers funding to Associations by purchasing a certain portion of the associations' rights to delinquent accounts that are selected by the Associations arising from unpaid Association assessments. The company is also involved in the business of purchasing delinquent accounts on various terms tailored to suit each Association's financial needs, including under the company's New Neighbor Guaranty™ program. The company is also entering the cryptocurrency mining business through a new subsidiary, US Digital Mining and Hosting Co., LLC.
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," "estimate," "expect," "intend," "plan," and "project" and other similar words and expressions are intended to signify forward-looking statements. Forward-looking statements are not guarantees 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. 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.
Company Contact: Bruce Rodgers, Chairman and CEO LM Funding America, Inc. Tel (813) 222-8996 |
LM FUNDING AMERICA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||
Years ended December 31, |
||||||||
2021 |
2020 |
|||||||
Revenues |
||||||||
Interest on delinquent association fees |
$ |
471,923 |
$ |
623,790 |
||||
Administrative and late fees |
69,369 |
101,993 |
||||||
Recoveries in excess of cost - special product |
95,904 |
214,558 |
||||||
Underwriting fees and other revenues |
120,176 |
116,430 |
||||||
Rental revenue |
141,569 |
206,831 |
||||||
Total revenues |
898,941 |
1,263,602 |
||||||
Operating expenses |
||||||||
Staff costs & payroll |
6,477,042 |
3,366,034 |
||||||
Professional fees |
2,271,808 |
1,799,595 |
||||||
Settlement costs with associations |
2,000 |
31,885 |
||||||
Selling, general and administrative |
417,963 |
351,234 |
||||||
Real estate management and disposal |
132,283 |
211,288 |
||||||
Depreciation and amortization |
11,087 |
16,930 |
||||||
Collection costs |
4,459 |
(29,932) |
||||||
Recovery of cost from related party receivable |
(200,000) |
(500,000) |
||||||
Provision for credit losses |
(10,000) |
50,800 |
||||||
Other operating |
224,678 |
17,778 |
||||||
Total operating expenses |
9,331,320 |
5,315,612 |
||||||
Operating loss from continuing operations |
(8,432,379) |
(4,052,010) |
||||||
Realized gain on securities |
13,817,863 |
- |
||||||
Unrealized loss on convertible debt security |
(407,992) |
- |
||||||
Unrealized loss on marketable securities |
(1,387,590) |
- |
||||||
Unrealized gain on investment and equity securities |
886,543 |
- |
||||||
Realized gain on digital assets |
502,657 |
- |
||||||
Impairment loss on digital assets |
(19,945) |
- |
||||||
Interest income |
211,427 |
- |
||||||
Interest expense |
(653) |
(7,189) |
||||||
Dividend income |
2,113 |
- |
||||||
Gain on forgiveness of note payable |
157,250 |
- |
||||||
Income (loss) before income taxes |
$ |
5,329,294 |
$ |
(4,059,199) |
||||
Income tax expense |
(326,178) |
- |
||||||
Net income (loss) from continuing operations |
$ |
5,003,116 |
$ |
(4,059,199) |
||||
Gain from operations of discontinued operations |
- |
16,428 |
||||||
Net income (loss) |
5,003,116 |
(4,042,771) |
||||||
Less: Net income (loss) attributable to non-controlling interest |
(243,898) |
1,309 |
||||||
Net income (loss) attributable to LM Funding America Inc. |
$ |
4,759,218 |
$ |
(4,041,462) |
||||
Basic income (loss) per common share continuing operations |
$ |
0.70 |
$ |
(2.50) |
||||
Basic earnings (loss) per common share discontinuing operations |
- |
0.01 |
||||||
Basic income (loss) per common share |
$ |
0.70 |
$ |
(2.49) |
||||
Diluted income (loss) per common share continuing operations |
$ |
0.60 |
$ |
(2.50) |
||||
Diluted earnings (loss) per common share discontinuing operations |
- |
0.01 |
||||||
Diluted income (loss) per common share |
$ |
0.60 |
$ |
(2.49) |
||||
Weighted average number of common shares outstanding |
||||||||
Basic |
6,828,704 |
1,622,911 |
||||||
Diluted |
7,927,255 |
1,622,911 |
||||||
LM FUNDING AMERICA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
|
||||||||
December 31, |
December 31, |
|||||||
2021 |
2020 |
|||||||
Assets |
||||||||
Cash |
$ |
32,559,185 |
$ |
11,552,943 |
||||
Finance receivables: |
||||||||
Original product (Note 2) |
13,993 |
116,017 |
||||||
Special product - New Neighbor Guaranty program, net of allowance for credit losses of (Note 3) |
14,200 |
52,757 |
||||||
Short-term investments - convertible debt securities (Note 5) |
539,351 |
- |
||||||
Marketable securities (Note 5) |
2,132,051 |
- |
||||||
Short-term investments - note receivable (Note 5) |
2,000,000 |
- |
||||||
Prepaid expenses and other assets |
1,251,852 |
399,124 |
||||||
Current assets |
38,510,632 |
12,120,841 |
||||||
Fixed assets, net |
17,914 |
6,171 |
||||||
Real estate assets owned (Note 6) |
80,057 |
18,767 |
||||||
Operating lease - right of use assets (Note 9) |
59,969 |
160,667 |
||||||
Long-term investments - equity securities in affiliates (Note 5) |
1,973,413 |
- |
||||||
Investments in unconsolidated affiliates (Note 5) |
4,676,130 |
- |
||||||
Deposit on mining equipment (Note 7) |
16,775,100 |
- |
||||||
Other assets |
10,726 |
10,984 |
||||||
Long-term assets |
23,593,309 |
196,589 |
||||||
Total assets |
$ |
62,103,941 |
$ |
12,317,430 |
||||
Liabilities and stockholders' equity |
||||||||
Note payable (Note 8) |
114,688 |
96,257 |
||||||
Accounts payable and accrued expenses |
463,646 |
237,033 |
||||||
Due to related party payable (Note 12) |
121,220 |
158,399 |
||||||
Income tax payable (Note 10) |
326,178 |
- |
||||||
Current portion of lease liability (Note 9) |
68,002 |
103,646 |
||||||
Current liabilities |
1,093,734 |
595,335 |
||||||
Notes payable - long-term (Note 8) |
- |
185,785 |
||||||
Lease liability - long-term (Note 9) |
- |
68,002 |
||||||
Long-term liabilities |
- |
253,787 |
||||||
Total liabilities |
1,093,734 |
849,122 |
||||||
Stockholders' equity (Note 11) |
||||||||
Preferred stock, par value $.001; 150,000,000 shares authorized; no shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively |
- |
- |
||||||
Common stock, par value $.001; 350,000,000 shares authorized; 13,017,943 and 3,083,760 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively. |
13,018 |
3,083 |
||||||
Additional paid-in capital |
74,525,106 |
29,996,258 |
||||||
Accumulated deficit |
(13,777,006) |
(18,536,224) |
||||||
Total LM Funding America stockholders' equity |
60,761,118 |
11,463,117 |
||||||
Non-controlling interest |
249,089 |
5,191 |
||||||
Total stockholders' equity |
61,010,207 |
11,468,308 |
||||||
Total liabilities and stockholders' equity |
$ |
62,103,941 |
$ |
12,317,430 |
||||
LM FUNDING AMERICA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
Years ended December 31, |
||||||||
2021 |
2020 |
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net income (loss) |
5,003,116 |
(4,042,771) |
||||||
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities |
||||||||
Depreciation and amortization |
$ |
1,383 |
$ |
11,143 |
||||
Right to use asset expense |
100,698 |
99,593 |
||||||
Stock compensation |
219,667 |
125,450 |
||||||
Stock option expense |
2,323,118 |
14,939 |
||||||
Stock compensation - employees |
292,500 |
— |
||||||
Accrued investment income |
(74,520) |
— |
||||||
Recovery of reserve from related party receivable |
— |
(300,000) |
||||||
Reserve for units |
— |
30,000 |
||||||
Debt forgiveness |
(157,250) |
— |
||||||
Gain on deconsolidation of affiliate |
(43,623) |
— |
||||||
Impairment loss on digital assets |
19,945 |
— |
||||||
Unrealized loss on convertible debt security |
407,992 |
— |
||||||
Unrealized loss on marketable securities |
1,387,590 |
— |
||||||
Unrealized gain on investment and equity securities |
(886,543) |
— |
||||||
Realized gain on securities |
(13,817,863) |
— |
||||||
Realized gain on sale of digital assets |
(502,657) |
— |
||||||
Proceeds from securities |
30,400,433 |
— |
||||||
Investment in convertible note receivable converted into marketable security |
(16,582,571) |
— |
||||||
Investment in convertible note receivable |
(5,000,000) |
— |
||||||
Convertible debt and interest converted into marketable securities |
4,231,758 |
— |
||||||
Investments in marketable security |
(3,651,400) |
— |
||||||
Gain on sale of fixed assets |
— |
(16,428) |
||||||
Change in operating assets and liabilities: |
||||||||
Prepaid expenses and other assets |
(845,853) |
(61,303) |
||||||
Advances (repayments) to related party |
89,235 |
583,444 |
||||||
Accounts payable and accrued expenses |
349,644 |
126,950 |
||||||
Lease liability payments |
(103,646) |
(94,235) |
||||||
Deferred taxes and taxes payable |
326,178 |
— |
||||||
Net cash provided by (used in) operating activities |
3,487,331 |
(3,523,218) |
||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Net collections of finance receivables - original product |
102,024 |
127,694 |
||||||
Net collections of finance receivables - special product |
38,557 |
76,515 |
||||||
Cash paid to purchase fixed assets |
(14,411) |
(1,286) |
||||||
Net cash payment for IIU disposal |
— |
(246,914) |
||||||
Investment in note receivable |
(2,000,000) |
— |
||||||
Investment in digital assets |
(1,419,958) |
— |
||||||
Proceeds from sale of digital assets |
1,902,670 |
— |
||||||
Loan to purchase securities |
1,784,250 |
— |
||||||
Repayment of loan to purchase securities |
(1,784,250) |
— |
||||||
Deposit for mining equipment |
(16,775,100) |
— |
||||||
Investment in unconsolidated affiliate |
(5,738,000) |
— |
||||||
Proceeds from investment in note receivable |
— |
1,500,000 |
||||||
(Payments)/proceeds for real estate assets owned |
(60,006) |
(5,423) |
||||||
Net cash provided by (cash used) in investing activities |
(23,964,224) |
1,450,586 |
||||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Proceeds from borrowings |
— |
185,785 |
||||||
Loan principal and insurance financing repayments |
(220,363) |
(165,798) |
||||||
Exercise of warrants |
10,247,124 |
3,081,730 |
||||||
Proceeds from stock subscription |
31,456,374 |
9,447,535 |
||||||
Investment in subsidiary |
— |
6,500 |
||||||
Net cash provided by financing activities |
41,483,135 |
12,555,752 |
||||||
NET INCREASE IN CASH |
21,006,242 |
10,483,120 |
||||||
CASH - BEGINNING OF YEAR |
11,552,943 |
1,069,823 |
||||||
CASH - END OF YEAR |
$ |
32,559,185 |
$ |
11,552,943 |
||||
SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION |
||||||||
Cash paid for interest |
$ |
1,892 |
$ |
7,189 |
||||
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES |
||||||||
Insurance financing |
210,260 |
192,514 |
||||||
SOURCE LM Funding America
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