LM FUNDING AMERICA INC
For the period ended Sep 30, 2024. Filed Nov 13, 2024.
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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.
Sep 30, 2024 · Filed Nov 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 2024-06-30; filed 2024-08-13.
0000950170-24-096376
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-13.
0000950170-24-126458
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 155 previous paragraphs and 163 current paragraphs.
90 unchanged; 50 reworded; 23 added; 12 removed; 3 previous and 0 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 (23)
Current report
deterioration in general economic conditions,
Current report
As of September 30, 2024 and December 31, 2023 approximately 79 Bitcoin (with an approximate fair value of $5.0 million) and nil Bitcoin were held in a custody account as collateral for the $5.0 million Liebel loan and were classified within "Digital assets - long-term" on the consolidated balance sheets.
Current report
Bitcoin mining costs decreased by $2.0 million to $0.7 million for the three months ended September 30, 2024 from $2.7 million for the three months ended September 30, 2023 due to the temporary idling of mining machines that were in transit and lower hosting costs per machine.
Current report
The Company recognized $124 thousand of interest expense for the three months ended September 30, 2024 as compared to nil for the three months ended September 30, 2023 due to an increase in secured borrowings in 2024.
Current report
During the three months ended September 30, 2024, net loss was $4.8 million as compared to net loss of $4.7 million for the three months ended September 30, 2023.
Current report
Net Loss Attributable to Common Shareholders
Current report
During three months ended September 30, 2024, net loss attributable to common shareholders was increased by $1.7 million compared to net loss attributable to LM Funding America, Inc. due to deemed dividends related to warrant repricing. During the three months ended September 30, 2024, net loss attributable to common shareholders was $6.4 million as compared to $4.4 million for the three months ended September 30, 2023.
Current report
The Nine Months Ended September 30, 2024 compared with the Nine Months Ended September 30, 2023
Current report
Digital mining cost of revenues
Current report
Professional fees
Current report
Professional fees increased by $0.4 million to $1.6 million for the nine months ended September 30, 2024 from $1.2 million for the nine months ended September 30, 2023 primarily due to $0.3 million of contract termination costs paid to a service provider.
Current report
The Company recognized $125 thousand of interest income for the nine months ended September 30, 2024 as compared to $211 thousand of interest income for the nine months ended September 30, 2023 due to the payoff of a note payable by Seastar Medical in January 2024 while issuing a new loan of $2.8 million to a different entity in 2024.
Current report
The Company recognized $232 thousand of interest expense for the nine months ended September 30, 2024 as compared to nil for the nine months ended September 30, 2023 due to an increase in secured borrowings.
Current report
During the nine months ended September 30, 2024, net loss was $9.5 million as compared to net loss of $17.5 million for the nine months ended September 30, 2023.
Current report
During the nine months ended September 30, 2024, net loss attributable to LM Funding America, Inc. was $9.3 million as compared to net loss of $14.4 million for the nine months ended September 30, 2023.
Current report
Net Loss Attributable to Common Shareholders
Current report
During nine months ended September 30, 2024, net loss attributable to common shareholders was increased by $1.7 million compared to net loss attributable to LM Funding America, Inc. due to deemed dividends related to warrant repricing. During the nine months ended September 30, 2024, net loss attributable to common shareholders was $11.0 million as compared to $14.4 million for the nine months ended September 30, 2023.
Current report
Equity Financing Transactions
Current report
On August 16, 2024, the Company and an institutional investor (the “Purchaser”) entered into a securities purchase agreement (the “Securities Purchase Agreement”), pursuant to which the Company agreed to issue to the Purchaser, (i) in a registered direct offering, 278,000 shares (the “Shares”) of the Company’s common stock and pre-funded warrants to purchase 590,185 shares of common stock (the “Pre-Funded Warrants”) with an exercise price of $0.0001 per share, and (ii) in a concurrent private placement, Series A warrants to purchase 868,185 shares of common stock (the “Series A Common Warrants”) and Series B warrants to purchase 868,185 shares of common stock (the “Series B Common Warrants” and together with the Series A Common Warrants, the “Common Warrants”), each with an exercise price of $2.98. Such registered direct offering and concurrent private placement are referred to herein as the
Current report
“Transactions.” The combined effective offering price for each Share (or pre-funded warrant in lieu thereof) and accompanying Series A Warrant and Series B Warrant in the Transaction was $2.98. The Series A Common Warrants will expire on the fifth anniversary of the Stockholder Approval Date and the Series B Common Warrants will expire on the second anniversary of the Stockholder Approval Date. The Pre-Funded Warrants will not expire and will be exercisable commencing on the date of issuance and at any time until all of the Pre-Funded Warrants are exercised in full. The Transactions closed on August 19, 2024. In connection with the Transactions, on August 16, 2024, the Company entered into a placement agency agreement with Maxim Group LLC (the “Placement Agent”), pursuant to which the Company engaged the Placement Agent as the exclusive placement agent for the Company. The Company agreed to pay the Placement Agent a cash fee equal to 7.5% of the aggregate gross proceeds raised in the Transactions and reimburse the Placement Agent for certain of its expenses in an aggregate amount up to $60,000. The Company received aggregate gross proceeds from the Transactions of approximately $2.6 million, before deducting fees to the Placement Agent of approximately $0.3 million and other estimated offering expenses payable by the Company of approximately $0.2 million.
Current report
Certain outstanding and exercisable warrants include price protection provisions requiring a reduction in the instrument's exercise price in the event that the Company subsequently issues shares at a purchase price, or warrants at an exercise price, lower than the instrument's original exercise price. As a result of the Transactions, the provision was triggered and the exercise price of 1,247,807 warrants was reduced from $30.00 to $2.88. In accordance with ASC 260, when an instrument's exercise price is reduced in accordance with a price protection provision, the issuer is required to determine the value that was transferred to the holder of the warrant as calculated by comparing the hypothetical fair value of the warrant immediately before and immediately after the exercise price reduction and record the amount as a reduction to retained earnings and increase to additional paid in capital (i.e. deemed dividend). Due to the absence of retained earnings, the Company recorded the transaction within additional paid in capital, which resulted in a nil net impact to the statements of equity. Loss attributable to common shareholders was increased by the calculated value transferred to the holder of $1.7 million in the basic and diluted EPS calculations for the three and nine months ended September 30, 2024 and nil in the basic and diluted EPS calculations for the three and nine months ended September 30, 2023. On September 25, 2024, 149,185 of the Pre-Funded Warrants were exercised for $0.0001 per share.
Current report
On August 9, 2024, the Company issued 29,674 shares of common stock pursuant to a termination agreement with a service provider which required the delivery of such shares and a cash payment of $150 thousand. The total fair value of the shares at the time of issuance was approximately $100 thousand, of which we expensed $100 thousand and nil for the three and nine months ended September 30, 2024 and 2023, respectively.
Current report
On August 6, 2024, the Company entered into a $5.0 million senior secured term loan agreement ("Senior Note") with SE & AJ Liebel Limited Partnership ("Liebel"). The Senior Note is secured by Bitcoin with a fair market value equal to no less than $5.0 million which is held as collateral in a specified custody account. The Company has also granted Liebel a first perfected security interest in substantially all the assets of the Company. Further, in connection with the Senior Note, the Company entered into an Intercreditor Agreement, dated August 6, 2024 (the “Intercreditor Agreement”), with Brown Family, pursuant to which the First Lien Obligations and the Second Lien Obligations (as each are defined in the Intercreditor Agreement) are subject to customary intercreditor arrangements. The loan bears interest at a rate of 12.0% per annum and will mature on August 6, 2026 (the “Maturity Date”). The Company will make monthly interest payments in the amount of $50,000 each month until the Maturity Date, and on such date the entire principal balance, together with accrued and unpaid interest, shall become payable.
Removed paragraphs (12)
Previous report
deterioration in economic conditions,
Previous report
Other operating costs
Previous report
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 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.
Previous 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.
Previous 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.
Previous report
The Six Months Ended June 30, 2024 compared with the Six Months Ended June 30, 2023
Previous 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.
Previous 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.
Previous report
Stockholders’ Equity
Previous report
ATM Program
Previous report
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.
Reworded paragraphs (50)
Previous 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.
Current wording
This Management’s Discussion and Analysis should be read in conjunction with the Consolidated Financial Statements and Notes for the three and nine months ended September 30, 2024, and with the Annual Report on Form 10-K for the year ended December 31, 2023.
Previous 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.
Current wording
As of each of September 30, 2024 and 2023, the Company owned approximately 5,900 machines, which translated intoour operating mining units being capable of producing over 639 petahash and 615 petahash per second (“EH/s”) of computing power as of September 30, 2024 and 2023. There were approximately 3,700 and 5,900 miners online as of September 30, 2024 and 2023, respectively. We have an additional 2,200 miners in a third-party warehouse for redeployment. We expect to continue increasing our computing power through 2025 and beyond as we expand the number of active mining machines.
Previous wording
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 wording
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.
Previous wording
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 wording
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 September 30, 2024 and December 31, 2023, respectively, the Company had nil and $117 thousand of prepaid deposits remaining with GIGA, respectively. All of the machines hosted by Giga were moved to a third-party warehouse in July 2024 and are awaiting a new hosting site.
Previous wording
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 wording
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. This contract’s energy rate is approximately $0.04 per Kilowatt.
Previous 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:
Current wording
The following is a summary of the average cost of revenues for mining each Bitcoin during the three and nine months ended September 30, 2024 and 2023:
Previous wording
(1) Average revenue of each Bitcoin mined is calculated by dividing the sum of Bitcoin mining revenue for both owned and hosted facilities by the total number of Bitcoin mined during the respective periods. See the table "Range of intraday Bitcoin prices" for information on the range of intraday Bitcoin prices for quarterly periods.
Current wording
(1) Average revenue of each Bitcoin mined is calculated by dividing the sum of Bitcoin mining revenue by the total number of Bitcoin mined during the respective periods. See the table "Range of intraday Bitcoin prices" for information on the range of intraday Bitcoin prices for quarterly periods.
Previous wording
The Company's Bitcoin unit activity during the six months ended June 30, 2024 and 2023 was as follows:
Current wording
The Company's Bitcoin unit activity during the nine months ended September 30, 2024 and 2023 was as follows:
Previous 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.
Current wording
During the three months ended September 30, 2024, total revenues decreased by $2.2 million, to $1.3 million from $3.4 million for the three months ended September 30, 2023.
Previous wording
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 wording
Digital mining revenue decreased in the three months ended September 30, 2024 by $2.2 million to $1.1 million from $3.3 million for the three months ended September 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 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.
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 September 30, 2024, we mined 18.4 Bitcoin with an average Bitcoin price of approximately $61 thousand as compared to 117.1 Bitcoin with an average Bitcoin price of approximately $28 thousand during the three months ended September 30, 2023. The decrease in Bitcoin mining revenue for the three months ended September 30, 2024 was attributable to the reduction in the number of Bitcoins mined during the period due to the temporary idling of mining machines that were in transit as well as the increased difficulty rate, which reduced our share of the global hashrate, offset in part by the increase in Bitcoin prices.
Previous 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:
Current wording
During the three months ended September 30, 2024, operating expenses decreased $0.9 million to $5.7 million from $6.6 million for the three months ended September 30, 2023. The increase in operating expenses is primarily due to the following factors:
Previous wording
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 wording
Compensation costs for three months ended September 30, 2024 increased by $0.2 million to $1.6 million from $1.3 million for the three months ended September 30, 2023 primarily due to the award of executive bonuses based on 2023 results offset in part by the reduction of stock based compensation associated with employee stock options.
Previous 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.
Current wording
Depreciation and amortization increased by $0.8 million to $2.3 million from $1.5 million for the three months ended September 30, 2024 primarily due to the change in useful life of mining machines from 5 years to 4 years.
Previous wording
Impairment loss on mined digital assets was nil and $0.2 million for the three 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 wording
Impairment loss on mined digital assets was nil and $0.4 million for the three months ended September 30, 2024 and 2023, respectively with no impairment recognized in 2024 due to the implementation of ASC 350-60 effective January 1, 2024.
Previous 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.
Current wording
Realized gain on sale of mined digital assets for the three months ended September 30, 2024 and 2023 was nil and $0.3 million, respectively.
Previous wording
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 wording
Prior to adoption of ASC Topic 350-60 - Intangibles - Goodwill and Other - 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.
Previous 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.
Current wording
The Company sold 37 Bitcoins during the three months ended September 30, 2024 and 107 Bitcoins during the three months ended September 30, 2023.
Previous 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.
Current wording
The Company recognized an unrealized loss on securities of $0.4 million for the three months ended September 30, 2024 as compared to an unrealized loss of $0.8 million for the three months ended September 30, 2023 from the revaluation of Seastar's common stock and private placement warrants.
Previous wording
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 wording
The Company recognized $98 thousand of interest income for the three months ended September 30, 2024 as compared to $40 thousand of interest income for the three months ended September 30, 2023 due to the payoff of a note payable by Seastar Medical in January 2024 while issuing a new loan of $2.8 million to a different entity in 2024.
Previous wording
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 wording
During the three months ended September 30, 2024, the Company generated a $4.8 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 for the three months ended September 30, 2024. During the three months ended September 30, 2023, the Company generated a $4.7 million net loss before income taxes and the Company increased its income tax valuation allowance by $1.4 million, which offset the Company’s incurred net income tax expense of $1.4 million, resulting in no income tax expense being recognized during the period.
Previous 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.
Current wording
The Company owns 69.5% of Sponsor. As such, there is a $0.1 million net loss for the three months ended September 30, 2024 attributable to the Non-Controlling Interest as compared to a $0.3 million net loss for the three months ended September 30, 2023.
Previous wording
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 wording
During the three months ended September 30, 2024, net loss attributable to LM Funding America, Inc. was $4.7 million as compared to net loss of $4.4 million for the three months ended September 30, 2023.
Previous wording
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 wording
During the nine months ended September 30, 2024, total revenues increased by $0.1 million, to $9.0 million from $8.9 million for the nine months ended September 30, 2023.
Previous 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.
Current wording
Digital mining revenue increased in the nine months ended September 30, 2024 by $0.3 million to $8.6 million from $8.3 million for the nine months ended September 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 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 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 nine months ended September 30, 2024, we mined 148.9 Bitcoin with an average Bitcoin price of approximately $58 thousand as compared to 315.4 Bitcoin with an average Bitcoin price of approximately $26 thousand during the nine months ended September 30, 2023. The increase in Bitcoin mining revenue for the nine months ended September 30, 2024 was attributable to the increase in Bitcoin prices offset in part by the temporary idling of mining machines that were in transit as well as the increased difficulty rate, which reduced our share of the global hashrate.
Previous 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.
Current wording
Specialty finance revenue decreased in the nine months ended September 30, 2024 by $190 thousand to $396 thousand from $586 thousand for the nine months ended September 30, 2023.
Previous wording
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 wording
During the nine months ended September 30, 2024, operating expenses increased $0.5 million to $17.7 million from $17.2 million for the nine months ended September 30, 2023. The increase in operating expenses is primarily due to the following factors:
Previous 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.
Current wording
Bitcoin mining costs decreased by $1.0 million to $5.8 million for the nine months ended September 30, 2024 from $6.7 million for the nine months ended September 30, 2023 due to the temporary idling of mining machines that were in transit and lower hosting costs per machine.
Previous wording
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 wording
Compensation costs for nine months ended September 30, 2024 decreased by $1.1 million to $3.6 million from $4.7 million for the nine months ended September 30, 2023 primarily due to the reduction of stock based compensation associated with employee stock options offset in part by the award of executive bonuses based on 2023 results.
Previous wording
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 wording
Depreciation and amortization increased by $3.6 million to $7.1 million for the nine months ended September 30, 2024 from $3.5 million for the nine months ended September 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.
Previous wording
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 wording
The gain on fair value of Bitcoin, net for the nine months ended September 30, 2024 and 2023 was $3.1 million and nil, respectively. 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 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 September 30, 2024. The fair value of Bitcoin was approximately $63 thousand per Bitcoin at September 30, 2024 and $42 thousand per Bitcoin at December 31, 2023.
Previous wording
The Company incurred a $1.2 million impairment loss on mining equipment related to machines disposed of in April 2024.
Current wording
The Company incurred a $1.2 million impairment and nil loss on mining equipment for the nine months ended September 30, 2024 and 2023, respectively, related to machines disposed of in April 2024.
Previous wording
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 wording
Impairment loss on mined digital assets was nil and $0.8 million for the nine months ended September 30, 2024 and 2023, respectively with no impairment recognized in 2024 due to the implementation of ASC 350-60 effective January 1, 2024.
Previous wording
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 wording
Realized gain on sale of mined digital assets for the nine months ended September 30, 2024 and 2023 was nil and $1.3 million respectively.
Previous wording
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 wording
The Company sold 101.5 Bitcoins during the nine months ended September 30, 2024 and 282.0 Bitcoins during the nine months ended September 30, 2023.
Previous wording
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 wording
The Company recognized an unrealized loss on securities of $0.9 million for the nine months ended September 30, 2024 as compared to an unrealized loss of $10.3 million for the nine months ended September 30, 2023 from the revaluation of Seastar's common stock and private placement warrants.
Previous 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.
Current wording
The Company recognized $4 thousand on the sale of Bitmain coupons received from the purchase of Bitcoin mining equipment for the nine months ended September 30, 2024 compared to $0.6 million for the nine months ended September 30, 2023.
Previous wording
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 wording
The Company recognized a reversal of a valuation allowance of nil and $1.0 million for the nine months ended September 30, 2024 and 2023, respectively, from the revaluation of the Symbiont note receivable and subsequent acquisition of the Symbiont assets. The Company also recognized an impairment loss of nil and $0.8 million for the nine months ended September 30, 2024 and 2023, respectively, related to impairment of Symbiont Assets.
Previous 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.
Current wording
During the nine months ended September 30, 2024, the Company generated a $9.5 million net loss before income taxes and the Company increased its income tax valuation allowance by $2.4 million, which offset the Company’s incurred net income tax benefit of $2.4 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 nine months ended September 30, 2024. During the nine months ended September 30, 2023, the Company generated a $17.5 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.
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Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
Loss (gain) on fair value of Bitcoin, net
Previous report — wording carried 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.