LM Funding America, Inc. (NASDAQ:LMFA) Q4 2023 Earnings Conference Call April 1, 2024 11:00 AM ET Company Participants Ted Ayvas - Crescendo Communications, IR Bruce Rodgers - CEO Richard Russell - CFO Conference Call Participants Kevin Dede - H.C. Wainwright Operator Good morning, everyone, and welcome to the LM Funding America Fourth Quarter Business Update Conference Call. At this time, all participants are in placed on a listen-only mode and we will open the floor for your questions and comments after t ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-37605 Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES ☐ NO ☒ ...

LM Funding America, Inc. (NASDAQ:LMFA) Q3 2023 Earnings Conference Call November 15, 2023 11:00 AM ET Company Participants Bruce Rodgers - Chief Executive Officer Rick Russell - Chief Financial Officer Ted Ayvas - Investor Relations Conference Call Participants Matthew Galinko - Maxim Michael Donovan - H.C. Wainwright Operator Greetings! Welcome to the LM Funding America, Inc. Third Quarter 2023 Business Update Conference Call. At this time all participants are in a listen-only mode. A question-and-answer s ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-37605 LM FUNDING AMERICA, INC. (Exact name of Registrant as specified in its charter) Delaware 47-3844457 (State or other ju ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-37605 LM FUNDING AMERICA, INC. (Exact name of Registrant as specified in its charter) Delaware 47-3844457 (State or other jurisdiction of incorporation or organization) 1200 West Platt Street Suite 100 Tampa, FL 33606 (Address of principal executive offices) (Zip code ...

LM Funding America, Inc. (NASDAQ:LMFA) Q1 2023 Earnings Conference Call May 15, 2023 11:00 AM ET Company Participants David Waldman - IR Bruce Rodgers - CEO Richard Russell - CFO Conference Call Participants Operator Greetings, and welcome to the LM Funding America, Incorporated. First Quarter 2023 Business Update Conference Call. At this time, all participants are in a listen-only mode. And a question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conferen ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-37605 LM FUNDING AMERICA, INC. (Exact name of Registrant as specified in its charter) Delaware 47-3844457 (State or other jurisd ...

PART I [Item 1. Business](index=4&type=section&id=Item%201.%20Business) LMFA operates a cryptocurrency mining business, launched in late 2022, and a specialty finance business in Florida [Cryptocurrency Mining Business](index=4&type=section&id=Cryptocurrency%20Mining%20Business) The company commenced Bitcoin mining operations in late 2022, deploying computing power to mine Bitcoin and validate transactions - The company commenced Bitcoin mining operations in late September 2022, deploying computing power to mine Bitcoin and validate transactions on the Bitcoin network[11](index=11&type=chunk)[254](index=254&type=chunk) - As of March 27, 2023, LMFA has approximately **3,700 machines** with a hashing capacity of **0.37 EH/s**, with an additional **1,900 S19J Pro Antminer machines** in storage awaiting placement[21](index=21&type=chunk) - LMFA has entered into hosting agreements with Core Scientific Inc. (**2,978 machines energized, 0.30 EH/s**), Phoenix Industries Inc. (**228 machines energized, 0.02 EH/s**), and Longbow HostCo LLC (**500 machines energized, 0.05 EH/s**)[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) - The company recorded impairment charges of **$1.0 million** on prepaid hosting deposits due to Compute North's bankruptcy and **$3.15 million** on mining machine deposits due to non-delivery by Uptime Armory LLC, leading to legal action[25](index=25&type=chunk)[28](index=28&type=chunk) [Specialty Finance Business](index=6&type=section&id=Specialty%20Finance%20Business) The specialty finance business purchases delinquent accounts from Florida non-profit community associations and offers financial products - The specialty finance business involves purchasing delinquent accounts from non-profit community associations in Florida, typically funding an amount equal to or less than the 'Super Lien Amount'[30](index=30&type=chunk) - Under the New Neighbor Guaranty™ program, the company acquires substantially all outstanding indebtedness on delinquent units in exchange for monthly dues payments, aiming to eliminate bad debts and assist associations with budgeting[31](index=31&type=chunk) - Collection efforts are managed through proprietary software and third-party law firms, with proceeds distributed to cover funded amounts, interest, late fees, and legal costs[30](index=30&type=chunk) [Markets, Geography and Major Customers](index=6&type=section&id=Markets,%20Geography%20and%20Major%20Customers) The Bitcoin mining business operates globally, while the specialty finance business is exclusively focused on Florida - The Bitcoin mining business operates globally, with mining pool operators considered customers who compensate for processing power; hosting space is leased from other companies[33](index=33&type=chunk) - The specialty finance business is exclusively focused on the state of Florida[34](index=34&type=chunk) [Working Capital Items](index=6&type=section&id=Working%20Capital%20Items) The Bitcoin mining industry is highly competitive, dependent on specialized machines, and requires significant capital for expansion - The Bitcoin mining industry is highly competitive and dependent on specialized machines from few manufacturers, requiring large down payments and long delivery times[35](index=35&type=chunk) - Recent market conditions have improved availability and pricing for mining machines, allowing purchases on the spot-market, though this is not guaranteed long-term[36](index=36&type=chunk) - The company expects to continue increasing its computing power by acquiring more miners, with approximately **1,900 S19J Pro Antminer machines** in storage and **190 additional prepaid miners** expected in Q2 2023[37](index=37&type=chunk) [Materials and Suppliers](index=7&type=section&id=Materials%20and%20Suppliers) The company relies on Bitmain for mining machines, facing global supply chain constraints, increased shipping costs, and inflationary pressures - All mining machines purchased this year were manufactured by Bitmain, a preeminent manufacturer headquartered in China[38](index=38&type=chunk) - Global supply chains remain constrained, leading to increased shipping costs and logistical delays, with significant risk of continued impact in 2023[39](index=39&type=chunk) - Inflationary pressures are impacting all aspects of materials and suppliers, including power prices, and are likely to affect fiscal year 2023[40](index=40&type=chunk) [Environmental Issues](index=7&type=section&id=Environmental%20Issues) The company's direct operations do not cause significant pollution, and climate change legislation is not expected to materially affect its business - The company's direct operations do not result in significant pollution or hazardous emissions, and compliance costs for environmental, health, and safety requirements have not been material[42](index=42&type=chunk) - Despite increasing concerns over Bitcoin mining's energy usage, the company does not believe existing or pending climate change legislation will materially affect its business or financial position in the foreseeable future[43](index=43&type=chunk) [Competition](index=7&type=section&id=Competition) Bitcoin mining is a global, competitive activity requiring strategic advantages in energy, facilities, and technology - Bitcoin mining is a global activity, with major North American competitors including Marathon Digital Holdings, Riot Blockchain, Inc., Core Scientific, Inc., Bitfarms LTD., Iris Energy Limited, and Clean Spark[44](index=44&type=chunk) - Key competitive advantages include energy background, a combination of owned, operated, and co-located miners/facilities, strategic use of mined Bitcoin for growth, and commitment to sustainable practices[44](index=44&type=chunk) - Significant competition exists in acquiring new miners, obtaining low-cost electricity, accessing reliable power sites, and evaluating new industry technologies[44](index=44&type=chunk) [Intellectual Property](index=8&type=section&id=Intellectual%20Property) The company relies on trade secrets and other intellectual property rights for its Bitcoin mining operations, not patents - The company does not currently own any patents for its Bitcoin mining operations but relies on trade secrets, trademarks, service marks, trade names, copyrights, and other intellectual property rights[45](index=45&type=chunk) [Government Regulation](index=8&type=section&id=Government%20Regulation) Cryptocurrency mining faces increasing regulatory scrutiny at federal and state levels, with potential impacts on operations and Bitcoin adoption - Cryptocurrency mining is largely unregulated at state and federal levels but is expected to face increased regulation, with Kentucky currently offering a favorable regulatory environment for mining operations[46](index=46&type=chunk) - The U.S. announced plans for a unified federal regulatory regime for cryptocurrency in March 2022, and the SEC chair has called for additional authority to regulate digital asset trading and lending platforms[47](index=47&type=chunk)[48](index=48&type=chunk) - The failure of large exchanges like FTX in November 2022 could lead to increased regulatory scrutiny, potentially impacting Bitcoin adoption and value; the company vets custodians for compliance and liquidity[49](index=49&type=chunk) [Cybersecurity](index=8&type=section&id=Cybersecurity) The company manages mined Bitcoins in controlled wallets, with no known security breaches, but acknowledges increasing hacker appeal with growth - The company's mined Bitcoins are initially received in controlled wallets, with the majority sold for working capital from hot wallets and any remainder held in cold storage[51](index=51&type=chunk) - There have been no known security breaches or incidents related to the company's digital asset wallets or IT systems, and appropriate controls and safeguards are in place[52](index=52&type=chunk) - As the company grows, it may become a more appealing target for hackers, malware, cyber-attacks, or other security threats[51](index=51&type=chunk) [Human Capital](index=9&type=section&id=Human%20Capital) The company has 8 full-time employees and relies on consultants, with future success dependent on attracting and retaining qualified personnel - As of March 31, 2023, the company had **8 full-time employees**, all located in the United States, and relies on outside consultants, attorneys, and accountants as needed[54](index=54&type=chunk)[55](index=55&type=chunk) - Future success depends on attracting and retaining qualified personnel, who participate in equity incentive plans and receive competitive compensation[54](index=54&type=chunk) [Corporate Information](index=9&type=section&id=Corporate%20Information) LM Funding America, Inc. was incorporated in Delaware in 2015 and has organized subsidiaries for cryptocurrency mining and other ventures - LM Funding America, Inc. was incorporated in Delaware on April 20, 2015, succeeding LM Funding, LLC, which was organized in January 2008[56](index=56&type=chunk) - The company has organized several subsidiaries, including US Digital Mining and Hosting Co., LLC (2021) for cryptocurrency mining, and LMFA Financing LLC and LMFAO Sponsor LLC (2020) for other ventures[57](index=57&type=chunk) - LMFA operates two main business lines: cryptocurrency mining (Bitcoin) and specialty finance (funding non-profit community associations)[10](index=10&type=chunk)[253](index=253&type=chunk) - Bitcoin mining operations commenced in late September 2022 through its wholly-owned subsidiary, US Digital Mining and Hosting Co, LLC[11](index=11&type=chunk)[254](index=254&type=chunk) - The specialty finance business provides funding to Florida-based non-profit community associations by purchasing delinquent accounts and offering programs like New Neighbor Guaranty™[12](index=12&type=chunk)[30](index=30&type=chunk)[255](index=255&type=chunk)[256](index=256&type=chunk) [Item 1A. Risk Factors](index=10&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from volatile operating results, cryptocurrency price fluctuations, regulatory changes, and stock delisting concerns [Risks Relating to our Business – General Risks](index=12&type=section&id=Risks%20Relating%20to%20our%20Business%20--%20General%20Risks) The company faces general business risks including fluctuating operating results, acquisition challenges, and reliance on management - Quarterly operating results are subject to fluctuations from Bitcoin price, account collection timing, operating expenses, and economic conditions[70](index=70&type=chunk) - Future acquisitions may lead to management distraction, integration difficulties, dilution of equity, and increased debt or impairment charges[70](index=70&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) - The company faces risks of inadvertently being deemed an investment company under the Investment Company Act, potentially requiring asset sales or additional financing at unfavorable terms[76](index=76&type=chunk)[79](index=79&type=chunk) - Inflationary pressures are increasing overall cost structure, including power prices, and may adversely affect liquidity and financial results[84](index=84&type=chunk) - Heavy reliance on the management team, some of whom lack Bitcoin mining experience, poses a risk to strategic development and operational success[85](index=85&type=chunk)[86](index=86&type=chunk) [Risks Relating to Our Cryptocurrency Mining Business](index=16&type=section&id=Risks%20Relating%20to%20Our%20Cryptocurrency%20Mining%20Business) The cryptocurrency mining business faces high volatility from Bitcoin prices, limited operating history, hosting vendor bankruptcies, and halving events - The cryptocurrency mining business has a limited operating history, making profitability uncertain and future prospects difficult to evaluate[97](index=97&type=chunk)[98](index=98&type=chunk) - Operating results are highly volatile due to cryptocurrency market fluctuations, regulatory changes, operating expenses, system errors, and competition[99](index=99&type=chunk) - The company is directly exposed to Bitcoin's price volatility as it does not currently hedge its investment in Bitcoin[103](index=103&type=chunk)[104](index=104&type=chunk) - Bankruptcy of hosting vendors like Compute North and Core Scientific could interrupt services and negatively impact mining operations and results[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - Bitcoin halving events will reduce mining rewards, and if Bitcoin prices do not increase proportionally, revenue from mining operations will decrease[120](index=120&type=chunk)[122](index=122&type=chunk) - Failure to grow hashrate at pace with the global network could lead to inability to compete and reduced Bitcoin rewards[123](index=123&type=chunk)[124](index=124&type=chunk) - Bitcoin mining is energy-intensive, and increased electricity costs or government restrictions on power supply could negatively impact profitability and operations[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) [Risks Related to Governmental Regulation and Enforcement Operations](index=25&type=section&id=Risks%20Related%20to%20Governmental%20Regulation%20and%20Enforcement%20Operations) Cryptocurrency operations face risks from evolving regulations, potential classification as securities, and changing environmental policies - Regulatory changes could require the company to register as a money services business (MSB) or money transmitter (MT), incurring significant compliance costs or forcing operational changes[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk) - Unclear regulation by the CFTC regarding Bitcoin exchange could lead to additional compliance costs if the company becomes subject to their oversight[174](index=174&type=chunk)[176](index=176&type=chunk) - If the SEC or another regulatory body classifies Bitcoin as a security, the company would face significant registration and compliance requirements[179](index=179&type=chunk) - Changing environmental regulations and public energy policy, such as moratoriums on carbon-based Bitcoin mining, could increase costs and restrict operations[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk) - Uncertainty in U.S. federal income and state/local tax treatment of digital assets could adversely impact the business[185](index=185&type=chunk)[187](index=187&type=chunk) [Risks Related to the Specialty Finance Business](index=28&type=section&id=Risks%20Related%20to%20the%20Specialty%20Finance%20Business) The specialty finance business is vulnerable to unfavorable account purchase terms, reliance on third-party law firms, and Florida market conditions - The company may not be able to purchase Accounts at favorable prices or terms due to economic conditions, perceived need of Associations, and competitive pressures[191](index=191&type=chunk) - Dependence on third-party law firms, particularly BLGAL (**50% owned by CEO**), for collection work poses risks if agreements are terminated or performance is inadequate[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - Government regulations (e.g., Fair Debt Collection Practices Act, Dodd-Frank Act) may limit the ability to recover and enforce collection of Accounts, leading to fines or penalties[199](index=199&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk)[206](index=206&type=chunk) - All Accounts are located in Florida, making the business highly vulnerable to adverse economic conditions, real estate market fluctuations, or natural disasters in the state[212](index=212&type=chunk) - The holding period for Accounts from purchase to payoff is indeterminate, ranging from three months to over ten years, which reduces liquidity[224](index=224&type=chunk) [Risks Relating to Our Securities](index=33&type=section&id=Risks%20Relating%20to%20Our%20Securities) The company's securities face risks including potential delisting, stock price volatility, and dilution from future stock sales - The company's common shares could be delisted from the Nasdaq Capital Market if the bid price falls below **$1.00** for **30 consecutive business days**, though compliance was regained on March 1, 2023[227](index=227&type=chunk)[228](index=228&type=chunk) - Future sales of common stock by affiliates or other stockholders, including shares from equity compensation plans and warrants, could depress the stock price[230](index=230&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk) - The market price and trading volume of common stock may be volatile, potentially leading to class action lawsuits and diversion of management attention[233](index=233&type=chunk)[234](index=234&type=chunk) - The Board of Directors has the authority to issue preferred stock with rights that could adversely affect common stockholders' voting rights, liquidation preferences, and book value[236](index=236&type=chunk)[237](index=237&type=chunk) - Quarterly operating results may fluctuate due to Bitcoin price volatility, collection timing on accounts, operating expenses, and general economic conditions[70](index=70&type=chunk) - The cryptocurrency mining business is in an early stage, making profitability uncertain and evaluation difficult due to limited operating history and high market volatility[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk) - The specialty finance business is entirely focused in Florida, making it vulnerable to adverse economic or real estate conditions in the state[34](index=34&type=chunk)[212](index=212&type=chunk) - The company's common stock could be delisted from the Nasdaq Capital Market if the bid price falls below **$1.00** for **30 consecutive business days**, though compliance was regained on March 1, 2023[227](index=227&type=chunk)[228](index=228&type=chunk) [Item 1B. Unresolved Staff Comments](index=34&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments from the SEC - No unresolved staff comments[241](index=241&type=chunk) [Item 2. Properties](index=34&type=section&id=Item%202.%20Properties) The company leases approximately 5,600 square feet of office space in Tampa, Florida, for its executive and administrative offices - Executive and administrative offices are located in Tampa, Florida, leasing approximately **5,600 square feet**[242](index=242&type=chunk) - The office lease began on July 15, 2019, and, as extended, expires on July 31, 2025, with monthly rent of approximately **$8,900** plus utilities[242](index=242&type=chunk) [Item 3. Legal Proceedings](index=35&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently a party to material litigation, but ordinary course litigation can incur costs and divert management resources - The company is not currently a party to material litigation proceedings, except as detailed in Note 10 of the Consolidated Financial Statements[243](index=243&type=chunk) - Litigation, whether prosecution or defense of claims, can adversely impact the company due to costs and diversion of management resources[243](index=243&type=chunk) [Item 4. Mine Safety Disclosures](index=35&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company has no mine safety disclosures to report - No mine safety disclosures[244](index=244&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=35&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under "LMFA", with 5 holders of record as of December 31, 2022, and no issuer equity purchases - Common stock is quoted on the Nasdaq Capital Market under the symbol "LMFA"[246](index=246&type=chunk) - As of December 31, 2022, there were **5 holders of record** of the company's common stock[246](index=246&type=chunk) - No purchases of equity securities by the issuer were made[249](index=249&type=chunk) [Item 6. Reserved](index=35&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section reviews LMFA's financial condition and results, detailing revenue growth from digital mining, increased operating costs, and a net loss [Overview](index=36&type=section&id=Overview) LMFA operates two business lines: cryptocurrency mining, commenced in late 2022, and specialty finance in Florida - LMFA operates two lines of business: cryptocurrency mining (commenced late September 2022) and specialty finance[253](index=253&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk) - The cryptocurrency mining business, conducted through US Digital Mining and Hosting Co, LLC, focuses on Bitcoin mining[254](index=254&type=chunk) - The specialty finance business provides funding to non-profit community associations in Florida by purchasing delinquent accounts and offering financial products[255](index=255&type=chunk)[256](index=256&type=chunk) [COVID-19 Update](index=37&type=section&id=COVID-19%20Update) COVID-19 is not currently material to operations, but future impacts on capital raising and supply chains remain uncertain - COVID-19 is not currently material to operations, but future impacts are uncertain, potentially affecting employee attendance, productivity, and access to financing[257](index=257&type=chunk)[258](index=258&type=chunk) - Extended disruptions could limit capital raising for future growth and impact the supply of Bitcoin mining machines[258](index=258&type=chunk) [Corporate History](index=37&type=section&id=Corporate%20History) LM Funding America, Inc. was incorporated in Delaware in 2015, expanding its ventures through new subsidiaries in 2020 and 2021 - LM Funding America, Inc. was incorporated in Delaware on April 20, 2015, succeeding LM Funding, LLC (organized in January 2008)[259](index=259&type=chunk) - The company organized new subsidiaries in 2020 (LMFA Financing LLC, LMFAO Sponsor LLC) and 2021 (US Digital Mining and Hosting Co., LLC) to expand its business ventures[260](index=260&type=chunk) [Results of Operations](index=37&type=section&id=RESULTS%20OF%20OPERATIONS) Total revenues increased significantly in 2022 due to digital mining, but operating costs surged, leading to a substantial net loss Revenue Comparison (2022 vs. 2021) | Revenue Category | 2022 (approx. USD) | 2021 (approx. USD) | Change (YoY, USD) | % Change (YoY) | | :--------------------------------- | :--------------- | :--------------- | :------------- | :--------------- | | Total Revenues | $1.7 million | $0.9 million | +$0.8 million | +92.9% | | Digital Mining Revenues | $0.9 million | $0 | +$0.9 million | N/A | | Interest on Delinquent Fees | $359 thousand | $472 thousand | -$113 thousand | -23.9% | | Underwriting & Origination Fees | $96 thousand | $120 thousand | -$24 thousand | -19.6% | | Rental Revenue | $162 thousand | $142 thousand | +$20 thousand | +14.1% | Operating Costs and Expenses Comparison (2022 vs. 2021) | Expense Category | 2022 (approx. USD) | 2021 (approx. USD) | Change (YoY, USD) | % Change (YoY) | | :--------------------------------- | :--------------- | :--------------- | :------------- | :--------------- | | Total Operating Costs & Expenses | $26.4 million | $9.3 million | +$17.1 million | +183% | | Staff Costs & Payroll | $19.4 million | $6.3 million | +$13.2 million | +209.5% | | Digital Mining Cost of Revenues | $1.0 million | $0 | +$1.0 million | N/A | | Professional Fees | $3.2 million | $2.3 million | +$0.9 million | +39.1% | | Legal Fees for BLG/BLGAL | $0.8 million | $1.0 million | -$0.2 million | -20.0% | Other Income and Loss Comparison (2022 vs. 2021) | Item | 2022 (approx. USD) | 2021 (approx. USD) | Change (YoY, USD) | | :--------------------------------- | :--------------- | :--------------- | :------------- | | Realized Loss on Marketable Securities | -$0.3 million | +$13.8 million | -$14.1 million | | Impairment Loss on Digital Assets | -$0.5 million | < -$0.1 million | -$0.4 million | | Impairment Loss on Prepaid Mining Machine Deposits | -$3.15 million | $0 | -$3.15 million | | Impairment Loss on Prepaid Hosting Deposits | -$1.8 million | $0 | -$1.8 million | | Credit Loss on Debt Securities | -$1.1 million | $0 | -$1.1 million | | Unrealized Gain on Investment & Equity Securities | +$4.4 million | +$0.9 million | +$3.5 million | | Net Interest Income (Expense) | +$0.4 million | -$0.2 million | +$0.6 million | | Income Tax Expense | -$1.4 million | -$0.3 million | -$1.1 million | | Net Loss Attributable to LMFA | -$29.2 million | +$4.8 million | -$34.0 million | [Liquidity and Capital Resources](index=39&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Cash and cash equivalents significantly decreased in 2022 due to investments in mining equipment and loans, despite a positive change in investing cash flow Cash and Digital Assets (2022 vs. 2021) | Asset Category | December 31, 2022 (USD) | December 31, 2021 (USD) | Change (USD) | | :----------------------- | :------------------ | :------------------ | :------- | | Cash and Cash Equivalents | $4.2 million | $32.6 million | -$28.4 million | | Digital Assets | $0.9 million | $0 | +$0.9 million | | Marketable Securities | $4 thousand | $2.1 million | -$2.1 million | - The decrease in cash is primarily due to **$17.9 million** used for mining equipment and hosting service deposits, and **$3.8 million** in loans to Seastar Medical Holding Corporation[285](index=285&type=chunk) Cash Flow Activities (2022 vs. 2021) | Activity Type | 2022 (approx. USD) | 2021 (approx. USD) | Change (USD) | | :-------------------------- | :--------------- | :--------------- | :------- | | Net Cash Used in Operations | -$9.1 million | +$2.7 million | -$11.8 million | | Net Cash Used in Investing | -$18.9 million | -$23.2 million | +$4.3 million | | Net Cash Used in Financing | -$0.3 million | +$41.5 million | -$41.8 million | Outstanding Debt (2022 vs. 2021) | Debt Type | December 31, 2022 (USD) | December 31, 2021 (USD) | | :--------------------------------- | :------------------ | :------------------ | | Imperial PFS Financing (10-month) | $365,379 | $0 | | Imperial PFS Financing (8-month) | $110,396 | $0 | | FlatIron Capital Financing | $0 | $114,688 | | **Total Outstanding Debt** | **$475,775** | **$114,688** | | Minimum Principal Payments (2023) | $475,775 | N/A | [Critical Accounting Estimates and Policies](index=41&type=section&id=Critical%20Accounting%20Estimates%20and%20Policies) The company's financial statements rely on GAAP estimates, with long-lived assets identified as critical accounting policies - Financial statements are prepared under GAAP, requiring estimates for allowance for doubtful accounts, impairment of fixed assets, and income tax provisions[295](index=295&type=chunk) - The company considers its critical accounting policies to be those related to long-lived assets[295](index=295&type=chunk) [Off-Balance Sheet Arrangements](index=41&type=section&id=Off-Balance%20Sheet%20Arrangements) The company does not have any off-balance sheet arrangements - The company does not have any off-balance sheet arrangements[296](index=296&type=chunk) - The company operates two lines of business: cryptocurrency mining (commenced late September 2022) and specialty finance[253](index=253&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk) - Total revenues increased by **92.9%** in 2022, primarily due to the commencement of digital mining operations[261](index=261&type=chunk)[262](index=262&type=chunk) - Operating costs and expenses increased by **183%** in 2022, largely due to a **$13.2 million** increase in staff costs and payroll, including a **$14.2 million** non-cash expense for stock options[265](index=265&type=chunk) - The company reported a net loss attributable to LM Funding America, Inc. of approximately **$29.2 million** in 2022, a significant shift from a net income of **$4.8 million** in 2021[284](index=284&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable to the company - Not applicable[297](index=297&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=41&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section refers to the company's audited financial statements, notes, and the independent auditor's report included elsewhere in the Form 10-K - Financial Statements, Notes, and Report of Independent Registered Public Accounting Firm are located starting on page F-1[297](index=297&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=41&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure[298](index=298&type=chunk) [Item 9A. Controls and Procedures](index=41&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective as of December 31, 2022, due to a material weakness in segregation of accounting duties - Disclosure controls and procedures were not effective as of December 31, 2022, due to a material weakness in internal control over financial reporting[299](index=299&type=chunk)[302](index=302&type=chunk) - The material weakness identified was the lack of effective segregation of certain accounting duties and a proper multi-level review process due to the small size of the accounting staff[302](index=302&type=chunk) - Remediation actions include appointing additional qualified staff, increasing accounting staff size by **33%**, implementing additional monitoring, and expanding IT system control governance[305](index=305&type=chunk) - Despite the material weakness, management believes the consolidated financial statements fairly present the financial position, results of operations, and cash flows[303](index=303&type=chunk)[306](index=306&type=chunk) [Item 9B. Other Information](index=42&type=section&id=Item%209B.%20Other%20Information) There is no other information to report under this item - No other information[309](index=309&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=43&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[310](index=310&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=43&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the 2023 proxy statement or a Form 10-K amendment - Information is incorporated by reference from the 2023 proxy statement or a Form 10-K amendment[312](index=312&type=chunk) [Item 11. Executive Compensation](index=43&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the 2023 proxy statement or a Form 10-K amendment - Information is incorporated by reference from the 2023 proxy statement or a Form 10-K amendment[313](index=313&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=43&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership and related stockholder matters is incorporated by reference from the 2023 proxy statement or a Form 10-K amendment - Information is incorporated by reference from the 2023 proxy statement or a Form 10-K amendment[314](index=314&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=43&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the 2023 proxy statement or a Form 10-K amendment - Information is incorporated by reference from the 2023 proxy statement or a Form 10-K amendment[315](index=315&type=chunk) [Item 14. Principal Accounting Fees and Services](index=43&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the 2023 proxy statement or a Form 10-K amendment - Information is incorporated by reference from the 2023 proxy statement or a Form 10-K amendment[316](index=316&type=chunk) PART IV [Item 15. Exhibits, Financial Statement Schedules](index=43&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists the financial statements and exhibits filed as part of the report, including the Index to Consolidated Financial Statements and the Exhibit Index - Financial Statements are listed on the Index to Consolidated Financial Statements on page F-1[320](index=320&type=chunk) - Exhibits are listed on the Exhibit Index at the end of the report[318](index=318&type=chunk) [Item 16. Form 10-K Summary](index=43&type=section&id=Item%2016.%20Form%2010-K%20Summary) There is no Form 10-K Summary provided - No Form 10-K Summary[319](index=319&type=chunk) Index to Consolidated Financial Statements [Report of Independent Registered Public Accounting Firm](index=45&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) MaloneBailey LLP issued an unqualified opinion on LMFA's 2022 and 2021 consolidated financial statements, finding no critical audit matters - MaloneBailey LLP issued an unqualified opinion on the consolidated financial statements for 2022 and 2021[326](index=326&type=chunk) - The financial statements present fairly the financial position, results of operations, and cash flows in conformity with GAAP[326](index=326&type=chunk) - No critical audit matters were identified[330](index=330&type=chunk) [Consolidated Balance Sheets](index=46&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to **$53.2 million** in 2022 from **$62.1 million** in 2021, driven by reduced cash and marketable securities, offset by increased fixed assets and notes receivable Consolidated Balance Sheet Highlights (December 31, 2022 vs. 2021) | Item | December 31, 2022 (USD) | December 31, 2021 (USD) | Change (USD) | | :--------------------------------- | :------------------ | :------------------ | :------- | | Cash | $4,238,006 | $32,559,185 | -$28,321,179 | | Digital Assets | $888,026 | $0 | +$888,026 | | Marketable Securities | $4,290 | $2,132,051 | -$2,127,761 | | Fixed Assets, net | $27,192,317 | $17,914 | +$27,174,403 | | Deposits on Mining Equipment | $525,219 | $15,986,700 | -$15,461,481 | | Hosting Services Deposit | $2,200,452 | $788,400 | +$1,412,052 | | Notes Receivable from Seastar Medical | $3,807,749 | $0 | +$3,807,749 | | Total Assets | $53,189,618 | $62,103,941 | -$8,914,323 | | Total Current Liabilities | $2,212,992 | $1,093,734 | +$1,119,258 | | Total Liabilities | $2,392,389 | $1,093,734 | +$1,298,655 | | Total Stockholders' Equity | $50,797,229 | $61,010,207 | -$10,212,978 | [Consolidated Statements of Operations](index=48&type=section&id=Consolidated%20Statements%20of%20Operations) Total revenues increased to **$1.7 million** in 2022, but surging operating costs led to a **$27.9 million** net loss, a significant shift from 2021's net income Consolidated Statements of Operations Highlights (2022 vs. 2021) | Item | 2022 (USD) | 2021 (USD) | Change (USD) | | :--------------------------------- | :--------------- | :--------------- | :------------- | | Total Revenues | $1,733,951 | $898,941 | +$835,010 | | Digital Mining Revenues | $945,560 | $0 | +$945,560 | | Total Operating Costs & Expenses | $26,409,936 | $9,331,320 | +$17,078,616 | | Staff Costs & Payroll | $19,422,723 | $6,257,375 | +$13,165,348 | | Loss from Operations | -$24,675,985 | -$8,432,379 | -$16,243,606 | | Realized Gain (Loss) on Securities | -$349,920 | +$13,817,863 | -$14,167,783 | | Impairment Loss on Prepaid Mining Machine Deposits | -$3,150,000 | $0 | -$3,150,000 | | Impairment Loss on Prepaid Hosting Deposits | -$1,790,712 | $0 | -$1,790,712 | | Unrealized Gain on Investment & Equity Securities | +$4,423,985 | +$886,543 | +$3,537,442 | | Income (Loss) Before Income Taxes | -$26,445,221 | +$5,329,294 | -$31,774,515 | | Net Income (Loss) Attributable to LMFA | -$29,240,201 | +$4,759,218 | -$33,999,419 | | Basic Income (Loss) Per Common Share | -$2.23 | +$0.70 | -$2.93 | | Diluted Income (Loss) Per Common Share | -$2.23 | +$0.60 | -$2.83 | [Consolidated Statements of Changes in Stockholders' Equity](index=50&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Total stockholders' equity decreased to **$50.8 million** in 2022 from **$61.0 million** in 2021, primarily due to a net loss, partially offset by increased additional paid-in capital Consolidated Statements of Changes in Stockholders' Equity Highlights (2022 vs. 2021) | Item | December 31, 2022 (USD) | December 31, 2021 (USD) | Change (USD) | | :--------------------------------- | :------------------ | :------------------ | :------- | | Common Stock (Shares) | 13,091,883 | 13,017,943 | +73,940 | | Common Stock (Amount) | $13,092 | $13,018 | +$74 | | Additional Paid-in Capital | $92,195,341 | $74,525,106 | +$17,670,235 | | Accumulated Deficit | -$43,017,207 | -$13,777,006 | -$29,240,201 | | Total LM Funding America Stockholders' Equity | $49,191,226 | $60,761,118 | -$11,569,892 | | Non-controlling Interest | $1,606,003 | $249,089 | +$1,356,914 | | Total Stockholders' Equity | $50,797,229 | $61,010,207 | -$10,212,978 | | Stock Option Expense | $16,571,978 | $2,323,118 | +$14,248,860 | | Stock Compensation | $1,098,331 | $292,500 | +$805,831 | | Net Income (Loss) | -$29,240,201 | +$4,759,218 | -$33,999,419 | [Consolidated Statements of Cash Flows](index=51&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash decreased significantly to **$4.2 million** in 2022 from **$32.6 million** in 2021, driven by net cash used in operating and investing activities Consolidated Statements of Cash Flows Highlights (2022 vs. 2021) | Item | 2022 (USD) | 2021 (USD) | Change (USD) | | :--------------------------------- | :--------------- | :--------------- | :------- | | Net Cash (Used in) Provided by Operating Activities | -$9,136,039 | +$2,702,706 | -$11,838,745 | | Net Cash Used in Investing Activities | -$18,886,107 | -$23,179,599 | +$4,293,492 | | Net Cash Provided by (Used in) Financing Activities | -$299,033 | +$41,483,135 | -$41,782,168 | | Net Increase (Decrease) in Cash | -$28,321,179 | +$21,006,242 | -$49,327,421 | | Cash - End of Year | $4,238,006 | $32,559,185 | -$28,321,179 | - Key non-cash activities in 2022 included **$660,120** in insurance financing, **$300,787** for ROU assets and operating lease obligation, and **$26,961,095** reclassification of mining equipment deposits to fixed assets[340](index=340&type=chunk) [Note 1. Summary of Significant Accounting Policies](index=52&type=section&id=Note%201.%20Summary%20of%20Significant%20Accounting%20Policies) This note details the company's operations in cryptocurrency mining and specialty finance, outlining key accounting policies for consolidation, revenue, digital assets, and fixed assets - The company operates two lines of business: cryptocurrency mining (commenced late September 2022) and specialty finance (funding non-profit community associations)[344](index=344&type=chunk)[345](index=345&type=chunk)[346](index=346&type=chunk) - Digital assets (excluding stablecoin) are accounted for as indefinite-lived intangible assets, measured at cost net of impairment losses, with gains recognized only upon sale[375](index=375&type=chunk)[378](index=378&type=chunk)[379](index=379&type=chunk) - Revenue recognition for specialty finance uses the cash basis for original products and the cost recovery method for special products (New Neighbor Guaranty program) due to uncertainty in collectability[367](index=367&type=chunk)[370](index=370&type=chunk)[371](index=371&type=chunk) - Fixed assets, primarily mining machines, are capitalized at cost and depreciated using the straight-line method over **3 to 5 years**, commencing when ready for use[389](index=389&type=chunk) - A valuation allowance of approximately **$8.5 million** was recorded as of December 31, 2022, against deferred tax assets due to a history of operating losses[401](index=401&type=chunk) [Note 2. Digital Assets](index=59&type=section&id=Note%202.%20Digital%20Assets) This note details the company's digital asset holdings, primarily Bitcoin, which increased to **$888,026** in 2022 due to mining operations, alongside significant impairment losses Digital Assets Holdings (December 31, 2022 vs. 2021) | Digital Asset | December 31, 2022 (USD) | December 31, 2021 (USD) | | :-------------- | :------------------ | :------------------ | | Bitcoin | $888,026 | $0 | Digital Asset Activity (2022 vs. 2021) | Activity | 2022 (USD) | 2021 (USD) | | :--------------------------------- | :--------------- | :--------------- | | Purchase of Digital Assets | $988,343 | $1,419,958 | | Production of Digital Assets (Bitcoin) | $945,560 | $0 | | Impairment Loss on Mined Digital Assets | -$79,794 | $0 | | Impairment Loss on Digital Assets (Purchased) | -$467,406 | -$23,720 | | Sale of Digital Assets | -$518,931 | -$1,898,895 | | Realized Gain on Sale of Digital Assets | +$20,254 | +$502,657 | | GUSD Earned on Digital Assets | $5,658 | $3,775 | [Note 3. Marketable Securities](index=61&type=section&id=Note%203.%20Marketable%20Securities) Marketable equity securities decreased significantly to **$4,290** in 2022 from **$2.1 million** in 2021, primarily due to the sale of Borqs shares resulting in a **$350 thousand** realized loss Marketable Equity Securities (December 31, 2022 vs. 2021) | Item | December 31, 2022 (USD) | December 31, 2021 (USD) | | :--------------------------------- | :------------------ | :------------------ | | Cost | $2,976,933 | $4,766,349 | | Gross Unrealized Gain (Loss) | -$56,830 | -$1,387,590 | | Fair Value | $4,290 | $2,132,051 | | Realized Loss on Sales | -$350,000 | -$307,000 | - The company sold **8,759,094 shares of Borqs** in 2022 for approximately **$2.3 million**, resulting in a net realized loss of **$350 thousand**[420](index=420&type=chunk) [Note 4. Short-term investments](index=61&type=section&id=Note%204.%20Short-term%20investments) The company's short-term investments in Borqs convertible debt securities resulted in significant gains from warrant exercises and conversions in 2021 and 2022 - In 2021, the company purchased **$5 million** in Borqs' Senior Secured Convertible Promissory Notes, converting **$4.1 million** plus interest into **5,960,829 shares**[421](index=421&type=chunk)[422](index=422&type=chunk) - Exercise of Borqs warrants in June 2021 resulted in **5,956,544 common shares**, which were sold for **$8.5 million**, recognized as a realized gain[421](index=421&type=chunk) - In 2022, the remaining **$965,800** principal and accrued interest of Borqs convertible notes were converted into **3,863,200 common shares**, yielding a **$287,778** realized gain on conversion[424](index=424&type=chunk) - The subsequent sale of these **3,863,200 shares** in 2022 resulted in an additional realized gain of **$45 thousand**[424](index=424&type=chunk) [Note 5. Notes receivable from Seastar Medical Holding Corporation](index=62&type=section&id=Note%205.%20Notes%20receivable%20from%20Seastar%20Medical%20Holding%20Corporation) Notes receivable from SeaStar Medical Holding Corporation totaled **$3,807,749** as of December 31, 2022, including secured promissory notes and a working capital advance - As of December 31, 2022, notes receivable from Seastar Medical Holding Corporation totaled **$3,807,749**[436](index=436&type=chunk) - This includes a **$2,785,000** Amended Sponsor Note and a **$700,000** Amended LMFA Note, both bearing **7% annual interest** and secured by SMHC's assets[432](index=432&type=chunk)[433](index=433&type=chunk)[434](index=434&type=chunk) - An additional **$268,000** advance for working capital was outstanding as of December 31, 2022, which was repaid on January 18, 2023[435](index=435&type=chunk)[521](index=521&type=chunk) [Note 6. Fixed Assets, net](index=64&type=section&id=Note%206.%20Fixed%20Assets,%20net) Fixed assets, net, significantly increased to **$27.2 million** in 2022, primarily due to the acquisition of approximately **5,600 mining machines**, with **2,700** placed into service Fixed Assets, Net (December 31, 2022 vs. 2021) | Asset Category | December 31, 2022 (USD) | December 31, 2021 (USD) | | :--------------------------------- | :------------------ | :------------------ | | Mining Machines | $27,637,041 | $0 | | Furniture, Computer & Office Equipment | $216,312 | $200,930 | | Gross Fixed Assets | $27,853,353 | $200,930 | | Less: Accumulated Depreciation | -$661,036 | -$183,016 | | **Fixed Assets, Net** | **$27,192,317** | **$17,914** | | Depreciation Expense | $478,000 | $11,000 | | Loss on Disposal of Fixed Assets | $38,000 | $0 | - Approximately **5,600 mining machines** were received or in transit by December 31, 2022, with **2,700** placed into service[437](index=437&type=chunk) [Note 7. Deposit on Mining Equipment and Hosting Services](index=64&type=section&id=Note%207.%20Deposit%20on%20Mining%20Equipment%20and%20Hosting%20Services) Deposits for mining equipment decreased to **$0.5 million** in 2022, while hosting services deposits increased to **$2.2 million**, with significant impairment losses recorded for both Deposits on Mining Equipment and Hosting Services (December 31, 2022 vs. 2021) | Deposit Type | December 31, 2022 (USD) | December 31, 2021 (USD) | | :--------------------------------- | :------------------ | :------------------ | | Deposits on Mining Equipment | $525,219 | $15,986,700 | | Hosting Services Deposit | $2,200,452 | $788,400 | | Impairment Loss on Prepaid Mining Machine Deposits | -$3,150,000 | $0 | | Impairment Loss on Prepaid Hosting Deposits | -$1,790,712 | $0 | - A **$3.15 million** impairment loss was recorded on mining machine deposits due to non-performance by Uptime Armory LLC[440](index=440&type=chunk) - A **$1.8 million** impairment loss was recorded on prepaid hosting deposits due to Compute North's bankruptcy and Uptime Hosting LLC's non-performance[441](index=441&type=chunk) [Note 8. Long-term investments](index=64&type=section&id=Note%208.%20Long-term%20investments) Long-term investments include a reclassified Symbiont.IO note with a **$1.1 million** credit loss allowance, and SeaStar Medical equity investments showing a **$5.9 million** unrealized gain in 2022 Long-term Investments - Debt Securities (December 31, 2022 vs. 2021) | Item | December 31, 2022 (USD) | December 31, 2021 (USD) | | :--------------------------------- | :------------------ | :------------------ | | Symbiont.IO Note Receivable | $2,027,178 | $2,000,000 | | Accrued Interest Income | $320,000 | $27,178 | | Accrued Recovery of Legal Fees | $55,364 | $0 | | Allowance for Losses on Debt Security | -$1,052,542 | $0 | | **End of Period (Net)** | **$1,350,000** | **$2,027,178** | | Credit Loss on Debt Securities | -$1.1 million (approx.) | $0 | - The Symbiont.IO debt security was reclassified to long-term due to Symbiont's bankruptcy filing in December 2022, and a **$1.1 million** credit loss allowance was recorded[443](index=443&type=chunk)[444](index=444&type=chunk) Long-term Investments - Equity Securities (December 31, 2022 vs. 2021) | Item | December 31, 2022 (USD) | December 31, 2021 (USD) | | :--------------------------------- | :------------------ | :------------------ | | Seastar Medical Warrants | $464,778 | $1,973,413 | | Unrealized Gain (Loss) on Equity Securities (Warrants) | -$1,508,635 | -$3,764,587 | | Seastar Medical Common Stock | $10,608,750 | $0 | | Investment in Unconsolidated Affiliate (LMAO) | $0 | $4,676,130 | | Unrealized Gain on Equity Investment (Common Stock) | +$5,932,620 | +$4,651,130 | | Net Unrealized Gain on SMHC Common Stock & Warrants | +$4.4 million (approx.) | +$0.9 million (approx.) | - The company's investment in SeaStar Medical Holding Corporation (SMHC) common stock, through its **69.5% owned Sponsor**, was **$10,608,750** as of December 31, 2022, reflecting an unrealized gain of approximately **$5.9 million**[455](index=455&type=chunk)[457](index=457&type=chunk)[458](index=458&type=chunk) [Note 9. Debt and Other Financing Arrangements](index=67&type=section&id=Note%209.%20Debt%20and%20Other%20Financing%20Arrangements) Total outstanding debt increased to **$475,775** in 2022, primarily from Imperial PFS financing, following the maturity of a FlatIron Capital agreement Debt and Other Financing Arrangements (December 31, 2022 vs. 2021) | Debt Type | December 31, 2022 (USD) | December 31, 2021 (USD) | | :--------------------------------- | :------------------ | :------------------ | | Imperial PFS Financing (10-month) | $365,379 | $0 | | Imperial PFS Financing (8-month) | $110,396 | $0 | | FlatIron Capital Financing | $0 | $114,688 | | **Total Debt** | **$475,775** | **$114,688** | | Minimum Principal Payments (2023) | $475,775 | N/A | - A **$185,785** Paycheck Protection Program loan obtained in 2020 was largely forgiven (**$157,250**) in May 2021, with the remaining balance paid by September 2021[459](index=459&type=chunk)[461](index=461&type=chunk) [Note 10. Commitments and Contingencies](index=68&type=section&id=Note%2010.%20Commitments%20and%20Contingencies) The company's commitments include an extended office lease and ongoing legal proceedings, including arbitration for **$3.15 million** in non-delivered mining containers Operating Lease Liabilities (December 31, 2022 vs. 2021) | Item | December 31, 2022 (USD) | December 31, 2021 (USD) | | :--------------------------------- | :------------------ | :------------------ | | ROU Assets, net | $265,658 | $59,969 | | Current Lease Liabilities | $90,823 | $68,002 | | Long-term Lease Liabilities | $179,397 | $0 | | Total Lease Liabilities | $270,220 | $68,002 | | Weighted-average remaining lease term | 2.7 years | 0.6 years | | Weighted-average discount rate | 7.50% | 6.55% | - The office lease was extended to July 31, 2025, leading to a **$300,787** adjustment to ROU assets and lease liability[464](index=464&type=chunk)[467](index=467&type=chunk) - A stockholder claim alleging breaches of fiduciary duty was settled for **$275,000** in attorney fees and other legal costs in 2022[470](index=470&type=chunk) - The company filed a lawsuit against Uptime Armory, LLC for **$3.15 million** in damages due to non-delivery of **18 POD5ive containers**, now proceeding to confidential arbitration[471](index=471&type=chunk)[472](index=472&type=chunk) - A lawsuit was filed against Uptime Hosting LLC for the return of an **$0.8 million** prepaid hosting deposit after termination of their hosting agreement[474](index=474&type=chunk)[475](index=475&type=chunk) [Note 11. Income Taxes](index=70&type=section&id=Note%2011.%20Income%20Taxes) Despite a net loss, the company recorded a **$1.4 million** income tax expense in 2022, with an **$8.5 million** valuation allowance against deferred tax assets due to operating losses Income Tax Expense (Benefit) (2022 vs. 2021) | Item | 2022 (USD) | 2021 (USD) | | :--------------------------------- | :--------------- | :--------------- | | Total Current Tax Expense | $1,438,066 | $326,178 | | Deferred Tax Expense - Federal | -$4,181,816 | +$1,126,450 | | Deferred Tax Expense - State | -$1,041,813 | $0 | | Valuation Allowance (Expense) | +$5,223,628 | -$1,126,450 | | **Income Tax Expense** | **$1,438,066** | **$326,178** | - A valuation allowance of approximately **$8.5 million** was recorded as of December 31, 2022, against deferred tax assets, due to insufficient positive evidence to overcome recent operating losses[478](index=478&type=chunk) Deferred Tax Liabilities and Assets (December 31, 2022 vs. 2021) | Item | December 31, 2022 (USD) | December 31, 2021 (USD) | | :--------------------------------- | :------------------ | :------------------ | | Total Deferred Tax Liabilities | $605,918 | $261,323 | | Total Deferred Tax Assets | $9,076,011 | $3,507,790 | | Valuation Allowance | -$8,470,093 | -$3,246,467 | | **Net Deferred Tax Asset** | **$0** | **$0** | [Note 12. Related Party Transactions](index=71&type=section&id=Note%2012.%20Related%20Party%20Transactions) The company engages in related party transactions with BLGAL, a law firm **50% owned by its CEO**, for collection services and shared costs - The company has related party transactions with BLG Association Law, PLLC (BLGAL), a law firm **50% owned by CEO Bruce M. Rodgers**[485](index=485&type=chunk) - BLGAL provides legal services for collecting delinquent assessments, with a monthly compensation reduced from **$82,000 to $53,000** in February 2022[485](index=485&type=chunk) Payments to BLG/BLGAL (2022 vs. 2021) | Item | 2022 (approx. USD) | 2021 (approx. USD) | | :--------------------------------- | :--------------- | :--------------- | | Amounts Paid to BLG/BLGAL | $665,000 | $984,700 | | Collection Costs Incurred | $63,000 | $97,000 | | Recoveries of Collection Costs | $75,000 | $93,000 | | Office Sub-lease Charges to BLGAL | $59,600 | $59,000 | | Shared Personnel Charges to BLGAL | $172,000 | $240,000 | | Amounts Payable to BLGAL/BLG | $63,000 | $121,000 | - In 2021, the company recouped **$200,000** of a prior **$1.4 million** bad debt allowance from BLG; no amounts were recouped in 2022[490](index=490&type=chunk) [Note 13. Stockholders' Equity](index=72&type=section&id=Note%2013.%20Stockholders'%20Equity) Stockholders' equity details include a 2021 public offering, **13.1 million** common shares, **7.7 million** warrants, and **1.1 million** stock options outstanding, with a **$5.3 million** accelerated compensation expense in 2022 - In October 2021, the company raised approximately **$30 million gross proceeds** from a public offering of **6,315,780 units** (common stock and warrants), plus additional shares and warrants from an over-allotment option[492](index=492&type=chunk)[493](index=493&type=chunk) Stock Warrants Activity (2022 vs. 2021) | Item | 2022 | 2021 | | :--------------------------------- | :--------------- | :--------------- | | Warrants Outstanding at Beginning of Year | 7,702,441 | 2,718,012 | | Granted | 0 | 7,481,041 | | Exercised | 0 | 2,496,612 | | Forfeited | 25,000 | 0 | | **Warrants Outstanding at End of Year** | **7,677,441** | **7,702,441** | | Weighted Average Exercise Price | $5.00 | $5.00 | | Aggregate Intrinsic Value | $0 | $177,000 | Stock Options Activity (2022 vs. 2021) | Item | 2022 | 2021 | | :--------------------------------- | :--------------- | :--------------- | | Options Outstanding at Beginning of Year | 3,956,827 | 3,860 | | Granted | 764,435 | 3,953,067 | | Cancelled | 3,600,000 | 0 | | **Options Outstanding at End of Year** | **1,121,262** | **3,956,827** | | Weighted Average Exercise Price | $3.26 | $6.20 | | Options Exercisable at End of Year | 182,660 | 3,760 | | Compensation Expense Recognized | $16.6 million | $2.3 million | | Remaining Unrecognized Compensation Cost | $0.6 million | $16.8 million | - In November 2022, **3.6 million stock options** for the CEO and CFO were cancelled, resulting in an accelerated recognition of approximately **$5.3 million** in stock compensation expense[510](index=510&type=chunk) [Note 14. Segment Information](index=75&type=section&id=Note%2014.%20Segment%20Information) The company operates in Specialty Finance and Mining Operations segments, with the CODM assessing performance based on revenue and income from operations - The company has two reportable segments: Specialty Finance and Mining Operations, plus an 'All Other' category[373](index=373&type=chunk)[515](index=515&type=chunk) - The CODM (CEO and CFO) assesses segment performance using revenue, income from operations, and income before taxes[373](index=373&type=chunk)[514](index=514&type=chunk) Segment Performance (Year Ended December 31, 2022) | Item | Specialty Finance (USD) | Mining Operations (USD) | All Other (USD) | Total (USD) | | :--------------------------------- | :---------------- | :---------------- | :-------- | :-------- | | Revenue, net | $788,391 | $945,560 | $0 | $1,733,951 | | Operating Loss | -$1,122,872 | -$1,014,327 | -$22,538,786 | -$24,675,985 | | Loss Before Income Taxes | -$1,122,872 | -$5,993,094 | -$19,329,255 | -$26,445,221 | | Fixed Asset Additions | $1,612 | $27,683,559 | $5,304 | $27,690,475 | [Note 15. Subsequent Events](index=76&type=section&id=Note%2015.%20Subsequent%20Events) Subsequent events include new Bitcoin mining hosting agreements in early 2023 and SeaStar Medical's repayment of **$0.9 million** of its note receivable - On January 26, 2023, the company entered a hosting agreement with Phoenix Industries Inc. to host **228 Bitcoin Miner S19J Pro machines**, energized in January 2023[517](index=517&type=chunk) - On March 9, 2023, the company entered a hosting agreement with Longbow HostCo LLC to host **500 Bitcoin Miner S19J Pro machines**, energized in March 2023[518](index=518&type=chunk) - SeaStar Medical repaid **$0.9 million** of its **$3.8 million** outstanding note receivable on March 24, 2023[519](index=519&type=chunk) - SeaStar Medical repaid the **$268 thousand** working capital advance on January 18, 2023[521](index=521&type=chunk)

LM Funding America, Inc. (NASDAQ:LMFA) Q3 2022 Earnings Conference Call November 18, 2022 11:00 AM ET Company Participants David Waldman - IR Bruce Rodgers - CEO Rick Russell - CFO Conference Call Participants Matthew Galinko - Maxim Group Operator Good morning, ladies and gentlemen, and welcome to the LM Funding Third Quarter 2022 Business Updates Conference Call. At this time all participants are placed on a listen-only mode and the floor will be open for questions and comments after the presentation. It ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-37605 LM FUNDING AMERICA, INC. (Exact name of Registrant as specified in its charter) Delaware 47-3844457 (State or other ju ...