LM FUNDING AMERICA INC
For the period ended Jun 30, 2024. Filed Aug 13, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 13, 2024
PWCM$0.53+13.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0000950170-24-060568
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0000950170-24-096376
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 117 previous paragraphs and 155 current paragraphs.
78 unchanged; 33 reworded; 32 added; 6 removed; 0 previous and 12 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (32)
Current report
The Company currently uses three companies to host its miners: Core Scientific Inc. ("Core"), Giga Energy Inc ("GIGA") and Tech Infrastructure JV I LLC ("Tech Infrastructure").
Current report
On September 5, 2022, the Company, through its wholly-owned subsidiary US Digital, entered into a hosting agreement (the “Core Hosting Agreement”) with Core pursuant to which Core, under various additional orders, agreed to host approximately 3,000 of the Company's Bitcoin miner machines at a secure location and provide power, maintenance and other services specified in the contract with a term of one year, with automatic renewals unless either party notifies the other party in writing not less than ninety (90) calendar days before such renewal of its desire for the order not to renew unless terminated sooner pursuant to the terms of the Core Hosting Agreement. The Company entered into a number of amendments in 2023 and 2024 that resulted in Core hosting a total of approximately 4,870 miners. The amended Hosting Agreement results in the terms of the hosting arrangement expiring with respect to approximately 4,000 miners on May 31, 2024 while allowing the terms of the hosting arrangement to continue with respect to approximately 800 miners through December 31, 2024. Approximately 4,000 miners were shipped from Core in June and July 2024 to a third-party warehouse in Oklahoma with 3,000 miners being placed into service in late July 2024.
Current report
As required under the Core Hosting Agreement, the Company paid a $2.2 million deposit as of December 31, 2023. Under the terms of the amended Hosting Agreement, the deposit related to the 4,000 miners that were removed was applied to our invoices. As of June 30, 2024 and December 31, 2023, the Company had nil and $2.1 million of the prepaid deposit remaining with Core, respectively. In December 2022, Core filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas. Core's bankruptcy filing has not negatively impacted our mining ability at their sites as of the date of this filing.
Current report
On May 5, 2023, the Company entered into a hosting agreement (the “GIGA Hosting Agreement”) with GIGA, pursuant to which GIGA agreed to host 1,080 of the Company's Bitcoin Miner S19J Pro machines at a secure location and provide power, maintenance and other services specified in the contract with a term of one year. On April 12, 2024, the Company amended the contract to allow for an extension of the contract with a 60 day termination notice. As required under the GIGA Hosting Agreement, the Company paid $173 thousand as a pre-payment in May 2023 and paid a refundable deposit of $173 thousand in August 2023. As of June 30, 2024 and December 31, 2023, respectively, the Company had approximately $88 thousand and $117 thousand of prepaid deposits remaining with GIGA, respectively. All of the miner machines hosted with GIGA were moved in July to a third-party warehouse awaiting a new hosting site.
Current report
On May 6, 2024, the Company entered into a hosting agreement (the “Arthur Hosting Agreement”) with Tech Infrastructure pursuant to which Tech Infrastructure agreed to host approximately 3,000 of the Company's Bitcoin Miner S19J Pro machines at a secure location and provide power, maintenance and other services specified in the contract with a term of nine months. On July 17, 2024, the Company amended the contract to allow for an extension of the contract of one month.
Current report
Digital mining revenue decreased in the three months ended June 30, 2024 by $0.1 million to $2.9 million from $3.0 million for the three months ended June 30, 2023.
Current report
Compensation costs for three months ended June 30, 2024 decreased by $1.6 million to $0.8 million from $2.5 million for the three months ended June 30, 2023 primarily due to the reduction of stock based compensation associated with employee stock options.
Current report
June 30, 2024 as compared to $0.8 million for the three months ended June 30, 2023 primarily due to the amortization of deferred financing costs associated with the ATM program.
Current report
Net Loss
Current report
During the three months ended June 30, 2024, net loss was $6.7 million as compared to net loss of $5.6 million for the three months ended June 30, 2023.
Current report
During the three months ended June 30, 2024, net loss was $6.1 million as compared to net loss of $4.5 million for the three months ended June 30, 2023.
Current report
The Six Months Ended June 30, 2024 compared with the Six Months Ended June 30, 2023
Current report
Revenues
Current report
During the six months ended June 30, 2024, total revenues increased by $2.2 million, to $7.8 million from $5.5 million for the six months ended June 30, 2023.
Current report
Specialty finance revenue decreased in the six months ended June 30, 2024 by $167 thousand to $205 thousand from $373 thousand for the six months ended June 30, 2023.
Current report
Operating Expenses
Current report
During the six months ended June 30, 2024, operating expenses increased $1.3 million to $12.0 million from $10.6 million for the six months ended June 30, 2023. The increase in operating expenses is primarily due to the following factors:
Current report
Staff costs and payroll
Current report
Compensation costs for six months ended June 30, 2024 decreased by $1.3 million to $2.1 million from $3.4 million for the six months ended June 30, 2023 primarily due to the reduction of stock based compensation associated with employee stock options.
Current report
Depreciation and amortization
Current report
Depreciation and amortization increased by $2.8 million to $4.8 million for the six months ended June 30, 2024 from $2.0 million for the six months ended June 30, 2023 primarily due to the increased number of Bitcoin mining machines placed into service earning Bitcoins as well as the change in useful life of mining machines from 5 years to 4 years.
Current report
Loss (gain) on fair value of Bitcoin, net
Current report
Realized gain on sale of mined digital assets for the six months ended June 30, 2024 and 2023 was nil and $1.1 million respectively.
Current report
The Company sold 65.0 Bitcoins during the six months ended June 30, 2024 and 175.9 Bitcoins during the six months ended June 30, 2023.
Current report
Other Income (Expense)
Current report
The Company recognized a reversal of a valuation allowance of nil and $1.1 million for the six months ended June 30, 2024 and 2023, respectively, from the revaluation of the Symbiont note receivable and subsequent acquisition of the Symbiont assets.
Current report
The Company recognized $26 thousand of interest income for the six months ended June 30, 2024 as compared to $171 thousand of interest income for the six months ended June 30, 2023 due to the payoff of a note payable by Seastar Medical in January 2024.
Current report
Income Tax Expense
Current report
Net Loss
Current report
During the six months ended June 30, 2024, net loss was $4.7 million as compared to net loss of $12.8 million for the six months ended June 30, 2023.
Current report
During the six months ended June 30, 2024, net loss was $4.6 million as compared to net loss of $9.9 million for the six months ended June 30, 2023.
Current report
On May 13, 2024, the Company entered into a $1.5 million secured loan ("Secured Note") with Brown Family Enterprises LLC which paysten percent (10%) interest per annum, simple interest on a monthly basis until the Secured Note is paid in full. The note matures on May 14, 2025. The Company granted to the holders of the Secured Note a secured interest in substantially all of the Company's assets and interests.
Removed paragraphs (6)
Previous report
The Company currently uses two companies to host its miners. Core Scientific hosts approximately 4,870 miners under a Hosting Agreement, pursuant to which approximately 4,400 miners will no longer be hosted by Core on May 31,2024, while the terms of the hosting arrangement with respect to continue for approximately 800 miners will continue through December 31, 2024. Giga Energy Inc ("GIGA") hosts approximately 1,080 machines on a contract that expires on May 31, 2024 but will continue on a month to month basis with a 60 day termination notice.
Previous report
Compensation costs for three months ended March 31, 2024 increased by $310 thousand to $1.2 million primarily due to merit and inflationary pay increases.
Previous report
We grant stock-based awards to certain employees as a significant portion of our payroll-related costs. Stock-based compensation, which is a non-cash expense, was $182 thousand for the three months ended March 31, 2024, versus $194 thousand for the three months ended March 31, 2023.
Previous report
Net Income (Loss)
Previous report
During the three months ended March 31, 2024, net income was $1.9 million as compared to net loss of $7.2 million for the three months ended March 31, 2023.
Previous report
During the three months ended March 31, 2024, net income was $1.5 million as compared to net loss of $5.4 million for the three months ended March 31, 2023.
Reworded paragraphs (33)
Previous wording
This Management’s Discussion and Analysis should be read in conjunction with the Consolidated Financial Statements and Notes for the three months ended March 31, 2024, and with the Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
This Management’s Discussion and Analysis should be read in conjunction with the Consolidated Financial Statements and Notes for the three and six months ended June 30, 2024, and with the Annual Report on Form 10-K for the year ended December 31, 2023.
Previous wording
As of March 31, 2024 and 2023, the Company had approximately 5,900 and 3,700 machines installed, respectively which translated intoour operating mining units were capable of producing over 615 petahash and 360 petahash, respectively per second (“EH/s”) of computing power. We expect to continue increasing our computing power through 2024 and beyond as we expand the number of active mining machines.
Current wording
As of June 30, 2024 and 2023, the Company owned approximately 5,900 and 5,900 machines, respectively, which translated intoour operating mining units being capable of producing over 639 petahash and 615 petahash per second (“EH/s”) of computing power, respectively. There were approximately 1,878 and 5,200 miners online as of June 30, 2024 and 2023, respectively. We had an additional 3,000 miners go online in late July 2024 while moving approximately 1,000 miners from a GIGA hosting site in July 2024 to a third-party warehouse for redeployment. We expect to continue increasing our computing power through 2024 and beyond as we expand the number of active mining machines.
Previous wording
The following is a summary of the average cost of revenues for mining each Bitcoin during the three months ended March 31, 2024 and 2023:
Current wording
The following is a summary of the average cost of revenues for mining each Bitcoin during the three and six months ended June 30, 2024 and 2023:
Previous wording
The Company's Bitcoin unit activity during the three months ended March 31, 2024 and 2023 was as follows:
Current wording
The Company's Bitcoin unit activity during the six months ended June 30, 2024 and 2023 was as follows:
Previous wording
During the three months ended March 31, 2024, total revenues increased by $2.4 million, to $4.7 million from $2.3 million for the three months ended March 31, 2023.
Current wording
During the three months ended June 30, 2024, total revenues decreased by $0.2 million, to $3.0 million from $3.2 million for the three months ended June 30, 2023.
Previous wording
Bitcoin mining revenues are determined by two main drivers: quantity of Bitcoin mined and the price of Bitcoin on the date the Bitcoin is mined. During the three months ended March 31, 2024, we mined 86.4 Bitcoin with an average Bitcoin price of $53 thousand as compared to 91.7 Bitcoin with an average Bitcoin price of $23 thousand during the three months ended March 31, 2023. The increase in Bitcoin mining revenue for the three months ended March 31, 2024 was attributable to the increase in Bitcoin prices offset in part by the reduction in the number of Bitcoins mined during the period due to the increased difficulty rate which reduced our share of the global hashrate.
Current wording
Bitcoin mining revenues are determined by two main drivers: quantity of Bitcoin mined and the price of Bitcoin on the date the Bitcoin is mined. During the three months ended June 30, 2024, we mined 44.1 Bitcoin with an average Bitcoin price of approximately $66 thousand as compared to 106.5 Bitcoin with an average Bitcoin price of approximately $28 thousand during the three months ended June 30, 2023. The decrease in Bitcoin mining revenue for the three months ended June 30, 2024 was attributable to the reduction in the number of Bitcoins mined during the period due to the increased difficulty rate, which reduced our share of the global hashrate, offset in part by the increase in Bitcoin prices.
Previous wording
Specialty finance revenue decreased in the three months ended March 31, 2024 by $66 thousand to $116 thousand from $183 thousand for the three months ended March 31, 2023.
Current wording
Specialty finance revenue decreased in the three months ended June 30, 2024 by $101 thousand to $89 thousand from $190 thousand for the three months ended June 30, 2023.
Previous wording
During the three months ended March 31, 2024, operating expenses decreased approximately $0.1 million to $4.2 million from $4.3 million for the three months ended March 31, 2023. The decrease in operating expenses is primarily due to the following factors:
Current wording
During the three months ended June 30, 2024, operating expenses increased $1.4 million to $7.8 million from $6.4 million for the three months ended June 30, 2023. The increase in operating expenses is primarily due to the following factors:
Previous wording
Depreciation and amortization increased by $1.6 million to $2.4 million for the three months ended March 31, 2024 due to the increased number of Bitcoin mining machines placed into service earning Bitcoins as stated above.
Current wording
Depreciation and amortization increased by $1.2 million to $2.3 million for the three months ended June 30, 2024 primarily due to the increased number of Bitcoin mining machines placed into service earning Bitcoins as well as the change in useful life of mining machines from 5 years to 4 years.
Previous wording
Gain on fair value of Bitcoin, net
Current wording
Loss (gain) on fair value of Bitcoin, net
Previous wording
The gain on fair value of Bitcoin, net for the three months ended March 31, 2024 was $4.3 million. As discussed in Notes 2 and Note 5 above, the Company adopted the amendments per ASC 350-60 as of January 1, 2024, accordingly, we measured crypto assets within the scope of ASC Topic 350-60 - Intangibles - Goodwill and Other - Crypto Assets at fair value in accordance with ASC Topic 820 - Fair Value Measurement and included the gains and losses from remeasurement in net income. The gain pertains to the change in Bitcoin's fair value from January 1, 2024, through March 31, 2024. The fair value of Bitcoin was approximately $71 thousand per Bitcoin at March 31, 2024 and $43 thousand per Bitcoin at December 31, 2023.
Current wording
The loss on fair value of Bitcoin, net for the three months ended June 30, 2024 was $1.3 million. As discussed in Note 2 above, the Company adopted the amendments per ASC 350-60 as of January 1, 2024, accordingly, we measured crypto assets within the scope of ASC Topic 350-60 - Intangibles - Goodwill and Other - Crypto Assets at fair value in accordance with ASC Topic 820 - Fair Value Measurement and included the gains and losses from remeasurement in net income. The loss pertains to the change in Bitcoin's fair value from April 1, 2024, through June 30, 2024. The fair value of Bitcoin was approximately $62 thousand per Bitcoin at June 30, 2024 and $71 thousand per Bitcoin at March 31, 2024.
Previous wording
Realized gain on sale of mined digital assets for the three months ended March 31, 2024 and 2023 was nil and $0.5 million respectively.
Current wording
Realized gain on sale of mined digital assets for the three months ended June 30, 2024 and 2023 was nil and $0.6 million, respectively.
Previous wording
The Company sold 18.0 Bitcoins during the three months ended March 31, 2024 and 64.9 Bitcoins during the three months ended March 31, 2023.
Current wording
The Company sold 47 Bitcoins during the three months ended June 30, 2024 and 111 Bitcoins during the three months ended June 30, 2023.
Previous wording
The Company's other operating costs which includes professional fees, selling, general and administrative costs, real estate management costs, collections costs and other operating costs decreased by approximately $175 thousand or 16% to $0.9 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.
Current wording
The Company's other operating costs which includes professional fees, selling, general and administrative costs, real estate management costs, collections costs and other operating costs increased by $0.2 million to $1.0 million for the three months ended
Previous wording
The Company recognized an unrealized gain on securities of $1.4 million for the three months ended March 31, 2024 as compared to an unrealized loss of $5.8 million for the three months ended March 31, 2023 from the revaluation of Seastar's common stock and private placement warrants.
Current wording
The Company recognized an unrealized loss on securities of $1.9 million for the three months ended June 30, 2024 as compared to an unrealized loss of $3.7 million for the three months ended June 30, 2023 from the revaluation of Seastar's common stock and private placement warrants.
Previous wording
Net (Income) Loss Attributable to Non-Controlling Interest
Current wording
Net Loss Attributable to Non-Controlling Interest
Previous wording
The Company owns 69.5% of Sponsor. As such, there is a $0.4 million net gain for the three months ended March 31, 2024 attributable to the Non-Controlling Interest as compared to a $1.8 million net loss for the three months ended March 31, 2023.
Current wording
The Company owns 69.5% of Sponsor. As such, there is a $0.6 million net gain for the three months ended June 30, 2024 attributable to the Non-Controlling Interest as compared to a $1.1 million net gain for the three months ended June 30, 2023.
Previous wording
Net Income (Loss) Attributable to LM Funding America, Inc.
Current wording
Net Loss Attributable to LM Funding America, Inc.
Previous wording
Digital mining revenue increased in the three months ended March 31, 2024 by $2.5 million to $4.6 million from $2.1 million for the three months ended March 31, 2023.
Current wording
Digital mining revenue increased in the six months ended June 30, 2024 by $2.4 million to $7.5 million from $5.1 million for the six months ended June 30, 2023.
Previous wording
Bitcoin mining costs increased by $1.0 million to $2.7 million due to the increased number of Bitcoin mining machines earning Bitcoins, as described above.
Current wording
Bitcoin mining costs increased by $1.0 million to $5.0 million for the six months ended June 30, 2024 from $4.0 million for the six months ended June 30, 2023 due to the increased number of Bitcoin mining machines that were active during the period.
Previous wording
The Company incurred a $1.2 million impairment on mining equipment related to machines disposed of in April 2024.
Current wording
The Company incurred a $1.2 million impairment loss on mining equipment related to machines disposed of in April 2024.
Previous wording
The Company recognized $4 thousand on the sale of Bitmain coupons received from the purchase of Bitcoin mining equipment for the three months ended March 31, 2024 compared to $0.6 million for the three months ended March 31, 2023.
Current wording
The Company recognized $4 thousand on the sale of Bitmain coupons received from the purchase of Bitcoin mining equipment for the six months ended June 30, 2024 compared to $0.6 million for the six months ended June 30, 2023.
Previous wording
During the three months ended March 31, 2024, the Company generated a $1.9 million net income before income taxes and the Company decreased its income tax valuation allowance by $0.6 million, which offset the Company’s incurred net income tax expense of $0.6 million which resulted in no income tax expense being recognized during this period. This net activity resulted in no recognized income tax expense for the three months ended March 31, 2024. During the three months ended March 31, 2023, the Company generated a $7.2 million net loss before income taxes and the Company increased its income tax valuation allowance by $2.1 million, which offset the Company’s incurred net income tax expense of $2.1 million, resulting in no income tax expense being recognized during the period.
Current wording
During the six months ended June 30, 2024, the Company generated a $4.7 million net loss before income taxes and the Company increased its income tax valuation allowance by $1.2 million, which offset the Company’s incurred net income tax benefit of $1.2 million which resulted in no income tax expense being recognized during this period. This net activity resulted in no recognized income tax expense for the six months ended June 30, 2024. During the six months ended June 30, 2023, the Company generated a $12.8 million net loss before income taxes and the Company increased its income tax valuation allowance by $3.4 million, which offset the Company’s incurred net income tax expense of $3.4 million, resulting in no income tax expense being recognized during the period.
Previous wording
Our primary sources of liquidity are our cash and cash equivalents, Bitcoin generated from our digital mining operations, and cash from our note receivables. At March 31, 2024, we had cash, cash equivalents and Bitcoin of $12.5 million compared to cash, cash equivalents and Bitcoin of $5.8 million at December 31, 2023. As of March 31, 2024, we had working capital of $12.7 million reflecting an increase of $5.3 million since December 31, 2023. In addition, we have access to equity financing through our At-the-Market offering facility. Refer to Note 8 - Stockholders' Equity. Cash management continues to be a top priority. We expect to incur negative operating cash flows as we work to increase our digital mining revenue and maintain operational efficiencies.
Current wording
Our primary sources of liquidity are our cash and cash equivalents, Bitcoin generated from our digital mining operations, proceeds from borrowings and cash from our note receivables. At June 30, 2024, we had cash, cash equivalents and Bitcoin of $10.2 million compared to cash, cash equivalents and Bitcoin of $5.8 million at December 31, 2023. As of June 30, 2024, we had working capital of $8.4 million reflecting an increase of $1.0 million since December 31, 2023. We have access to equity financing through our At-the-Market offering facility. Refer to Note 8 - Stockholders' Equity. Cash management continues to be a top priority. We expect to incur negative operating cash flows as we work to increase our digital mining revenue and maintain operational efficiencies.
Previous wording
The Company's cash flow summary for the three months ended March 31, 2024 and 2023 are as follows:
Current wording
The Company's cash flow summary for the six months ended June 30, 2024 and 2023 are as follows:
Previous wording
The Company has digital mining hosting contracts that expire between May 2024 and December 2024. These contracts currently require total monthly payments of approximately $800 thousand to $900 thousand monthly.
Current wording
The Company has digital mining hosting contracts that expire between December 2024 and April 2025. These contracts currently require total monthly payments of approximately $200 thousand to $500 thousand monthly.
Previous wording
Net cash used in operations was $3.0 million during the three months ended March 31, 2024 compared with net cash used in operations of $1.1 million during the three months ended March 31, 2023. This change in cash used in operating activities was primarily driven by the difference between Bitcoin mining revenue received in noncash consideration (i.e. Bitcoin) which was $4.6 million and $2.1 million for the three months ended March 31, 2024 and 2023, respectively.
Current wording
Net cash used in operations was $6.0 million during the six months ended June 30, 2024 compared with net cash used in operations of $1.5 million during the six months ended June 30, 2023. This change in cash used in operating activities was primarily driven by the classification of $4.5 million in Bitcoin proceeds from mining (i.e. Bitcoin) as investing activities during the six months ended June 30, 2024 due to the adoption of ASU 350-60 as compared to the classification of mining revenues as operating activities for the six months ended June 30, 2023. The mining of Bitcoin is considered a non cash item for operating purposes which totaled $7.5 million and $5.1 million for the six months ended June 30, 2024 and 2023, respectively.
Previous wording
For the three months ended March 31, 2024 net cash provided by investing activities was $1.6 million as compared to net cash provided by investing activities of $0.5 million for the three months ended March 31, 2023. For the three months ended March 31, 2024, the Company received net payments of approximately $1.4 million from SeaStar Medical related to the payment of outstanding notes receivable, received proceeds of $1.3 million from the sale of digital assets while investing $1.1 million for capital expenditures including Bitcoin mining equipment. For the three months ended March 31, 2023 the Company received $1.6 million from SeaStar Medical related to the payment of outstanding notes receivable while investing $1.2 million for Bitcoin mining equipment.
Current wording
For the six months ended June 30, 2024 net cash provided by investing activities was $2.7 million as compared to net cash used in investing activities of $0.5 million for the six months ended June 30, 2023. For the six months ended June 30, 2024, the Company received net payments of approximately $1.4 million from SeaStar Medical related to the payment of outstanding notes receivable, and received proceeds of $4.5 million from the sale of digital assets while investing $1.2 million for capital expenditures including Bitcoin mining equipment which was offset in part by a $2.1 million investment in the Tech Infrastructure JV I LLC note receivable. For the six months ended June 30, 2023 the Company received $1.7 million from SeaStar Medical related to the payment of outstanding notes receivable while investing $1.7 million for Bitcoin mining equipment.
Previous wording
Net cash used in financing activities was $0.2 million for the three months ended March 31, 2024 compared to $0.2 million used in financing activities for the three months ended March 31, 2023. During the three months ended March 31, 2024 and 2023, the Company repaid debt of $0.2 million and $0.2 million, respectively.
Current wording
Net cash provided by financing activities was $1.0 million for the six months ended June 30, 2024 compared to $0.5 million used in financing activities for the six months ended June 30, 2023. During the six months ended June 30, 2024 and 2023, the Company received proceeds from borrowings of $1.5 million and nil, respectively.
Previous wording
The Company had no cash infusion from equity financing transactions during the three months ended March 31, 2024 or 2023.
Current wording
The Company had no cash infusion from equity financing transactions during the six months ended June 30, 2024 or 2023.
Previous wording
On June 26, 2023, the Company entered into an Equity Distribution Agreement (the “Distribution Agreement”) with Maxim Group LLC (the “Agent”), pursuant to which the Company may, from time to time, at the Company's discretion, offer and sell shares of the Company’s common stock, having an aggregate offering price of up to $2.7 million, through the Agent, acting as sales agent. The shares to be sold under the Distribution Agreement, if any, will be issued and sold pursuant to the Company’s shelf registration statement which was filed with the SEC on July 30, 2021, and was declared effective on August 16, 2021. A prospectus supplement related to the Company’s at the market offering ("ATM") program with the Agent under the Distribution Agreement was filed with the SEC on June 26, 2023. The ATM program is expected to remain in effect until June 26, 2024. As of March 31, 2024, no sales have been made under the ATM program, and an aggregate gross sales limit of $2.7 million remains available for issuance under the ATM program. Approximately $138 thousand of legal and professional fees incurred related to the establishment of the ATM program were deferred and recorded within "Prepaid expenses and other assets" on the Consolidated Balance Sheets and will be amortized ratably as stock is issued under the program.
Current wording
On June 26, 2023, the Company entered into an Equity Distribution Agreement (the “Distribution Agreement”) with Maxim Group LLC (the “Agent”), pursuant to which the Company may, from time to time, at the Company's discretion, offer and sell shares of the Company’s common stock, having an aggregate offering price of up to $4.7 million (the “Shares”), through the Agent, acting as sales agent. The Shares to be sold under the Distribution Agreement, if any, will be issued and sold pursuant to the Company’s shelf registration statement which was filed with the Securities and Exchange Commission (“SEC”) on July 30, 2021 (the “Registration Statement”) and was declared effective on August 16, 2021. A prospectus supplement related to the Company’s at the market offering ("ATM") program with the Agent under the Distribution Agreement was filed with the SEC on June 26, 2023. The ATM program was expected to remain in effect until August 15, 2024. As of June 30, 2024, no sales have been made under the ATM program, and an aggregate gross sales limit of $4.2 million remains available for issuance under the ATM program. Approximately $119 thousand of legal and professional fees incurred related to the establishment of the ATM program were deferred and recorded within "Prepaid expenses and other assets" on the consolidated balance sheets. These deferred costs were expensed in June 2024 due to the nonuse of the ATM.
Previous wording
Our financial statements are prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of the consolidated financial statements in conformity with GAAP requires our management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure or inclusion of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period. Our critical accounting policies include revenue recognition, digital assets, and policies related to long-lived assets. We consider our critical accounting estimates to be those related to long-lived asset impairment assessments.
Current wording
Our financial statements are prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of the consolidated financial statements in conformity with GAAP requires our management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure or inclusion of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period.
Previous wording
There have been no material changes to our critical accounting policies and estimates as compared to those disclosed in our Form 10-K. For a description of our critical accounting policies and estimates, see Part I, Item 1, Note 1, "Summary of Significant Accounting Policies" in our notes to the consolidated financial statements in this Quarterly Report on Form 10-Q.
Current wording
There have been no material changes to our critical accounting policies and estimates as compared to those disclosed in our Annual Report on Form 10-K. For a description of our critical accounting policies and estimates, see Part I, Item 1, Note 1, "Summary of Significant Accounting Policies" in our notes to the consolidated financial statements in this Quarterly Report on Form 10-Q.
Rearranged current paragraphs (12)
Current report — wording carried from elsewhere
During the three months ended June 30, 2024, the Company generated a $6.7 million net loss before income taxes and the Company increased its income tax valuation allowance by $2.2 million, which offset the Company’s incurred net income tax benefit of $2.2 million which resulted in no income tax expense being recognized for the three months ended June 30, 2024. During the three months ended June 30, 2023, the Company generated a $5.6 million net loss before income taxes and the Company increased its income tax valuation allowance by $1.3 million, which offset the Company’s incurred net income tax expense of $1.3 million, resulting in no income tax expense being recognized during the period.
Current report — wording carried from elsewhere
Bitcoin mining revenues are determined by two main drivers: quantity of Bitcoin mined and the price of Bitcoin on the date the Bitcoin is mined. During the six months ended June 30, 2024, we mined 130.5 Bitcoin with an average Bitcoin price of approximately $57 thousand as compared to 198.3 Bitcoin with an average Bitcoin price of approximately $26 thousand during the six months ended June 30, 2023. The increase in Bitcoin mining revenue for the six months ended June 30, 2024 was attributable to the increase in Bitcoin prices offset in part by the reduction in the number of Bitcoins mined during the period due to the increased difficulty rate, which reduced our share of the global hashrate.
Current report — wording carried from elsewhere
The gain on fair value of Bitcoin, net for the six months ended June 30, 2024 was $3.0 million. As discussed in Note 2 above, the Company adopted the amendments per ASC 350-60 as of January 1, 2024, accordingly, we measured crypto assets within the scope of ASC Topic 350-60 - Intangibles - Goodwill and Other - Crypto Assets at fair value in accordance with ASC Topic 820 - Fair Value Measurement and included the gains and losses from remeasurement in net income. The gain pertains to the change in Bitcoin's fair value from January 1, 2024, through June 30, 2024. The fair value of Bitcoin was approximately $62 thousand per Bitcoin at June 30, 2024 and $42 thousand per Bitcoin at December 31, 2023.
Current report — wording carried from elsewhere
Impairment loss on mined digital assets
Current report — wording carried from elsewhere
Impairment loss on mined digital assets was nil and $0.4 million for the six months ended June 30, 2024 and 2023, respectively with no impairment recognized in 2024 due to the implementation of ASC 350-60 effective January 1, 2024.
Current report — wording carried from elsewhere
Realized gain on sale of mined digital assets
Current report — wording carried from elsewhere
Prior to adoption of ASC 350-60 - Crypto Assets, Bitcoin was classified as indefinite-lived intangible assets and were measured at cost less impairment. Additionally, in the previous guidance, subsequent increases in Bitcoin prices are not allowed to be recorded (unrealized gains) unless the Bitcoin is sold, at which point the gain is recognized. Accordingly, gains (losses) recognized on fair value of Bitcoin in fiscal year 2024 are not comparable to fiscal year 2023.
Current report — wording carried from elsewhere
The Company recognized an unrealized loss on securities of $0.5 million for the six months ended June 30, 2024 as compared to an unrealized loss of $9.6 million for the six months ended June 30, 2023 from the revaluation of Seastar's common stock and private placement warrants.
Current report — wording carried from elsewhere
Net Loss Attributable to Non-Controlling Interest
Current report — wording carried from elsewhere
The Company owns 69.5% of Sponsor. As such, there is a $0.2 million net loss for the six months ended June 30, 2024 attributable to the Non-Controlling Interest as compared to a $2.9 million net loss for the six months ended June 30, 2023.
Current report — wording carried from elsewhere
Net Loss Attributable to LM Funding America, Inc.
Current report — wording carried from elsewhere
Our critical accounting policies include revenue recognition, digital assets, and policies related to long-lived assets. We consider our critical accounting estimates to be those related to long-lived asset impairment assessments.