LM FUNDING AMERICA, INC.

Previous wording

the early stage of our cryptocurrency mining business and our lack of operating history in such business;

Current wording

the early stage of our Bitcoin mining business and our lack of operating history in such business;

Previous wording

LM Funding America, Inc. (“we”, “our”, “LMFA”, or the “Company”) currently has two lines of business: our cryptocurrency mining business and our specialty finance business.

Current wording

LM Funding America, Inc. (“we”, “our”, “LMFA”, or the “Company”) currently has three distinct business operations: our Bitcoin treasury operations, Bitcoin mining business and our specialty finance business.

Previous wording

As of December 31, 2024 and 2023, we held approximately 150 and 95 Bitcoin, respectively. The carrying value of our Bitcoin as of December 31, 2024 and 2023 was approximately $14.0 million and $3.4 million, respectively, on our Consolidated Balance Sheet.

Current wording

As of December 31, 2025 and 2024, we held approximately 211 and 150 Bitcoin, respectively. This does not include 145 Bitcoin valued at $12.7 million classified as Digital assets receivable, net. The carrying value of the total Bitcoin and Digital assets receivable as of December 31, 2025 and 2024 was approximately $31.2 million and $14.0 million, respectively, on our consolidated balance sheets.

Previous wording

As of December 31, 2024, we own approximately 5,840 machines with total hashing capacity of approximately 0.634 EH/s.

Current wording

As of December 31, 2025, we own approximately 7,200 machines with total hashing capacity of approximately 0.75 EH/s as compared to approximately 5,840 machines as of December 31, 2024 with total hashing capacity of approximately 0.63 EH/s.

Previous wording

As of December 31, 2024, we own a 15 MW hosting site located in Oklahoma (the “Oklahoma site”) with 3,006 installed S19J Pro Antminer machines which have a total projected hashrate of 301 PH. As of March 15, 2025, we have 4,320 installed S19 J Pro Antminer machines at this location which have a total projected hashrate of 432 PH. We have another 719 mining machines in storage at the Oklahoma site. During fiscal year 2024, we moved 5,039 mining machines from our three hosting companies to the Oklahoma site of which approximately 2,033 were stored in containers at Oklahoma site and not plugged into power as of December 31, 2024.

Current wording

15 MW hosting site located in Calumet Oklahoma (the “Oklahoma site”) with 4,480 installed Antminer machines which have a total projected hashrate of 503 PH.

Previous wording

The table below describes the Bitcoin activity for the years ended December 31, 2024 and 2023.

Current wording

The table below describes the Company's Bitcoin activity for the years ended December 31, 2025 and 2024.

Previous wording

The Company records depreciation expense (a non-cash expense) on its miners on a straight-line basis over the miners' expected useful life. Such non-cash depreciation amounts are recorded within the Consolidated Statements of Operations and Comprehensive Loss as “Depreciation and Amortization”. Although the Company recognizes depreciation with respect to its mining assets, it does not consider depreciation in determining whether it is economical to operate its mining equipment since depreciation expense is not an avoidable operating cost, such as energy costs. The table above presents the non-cash miner depreciation expense on a “per Bitcoin” basis, calculated by dividing miner depreciation expense in our hosted facilities by the number of Bitcoin mined in the hosted facilities. On a “cost per Bitcoin” ratio, miner depreciation expense was approximately $45,300 and $11,600 for the years ended December 31, 2024, and 2023, respectively. The Company recorded accelerated depreciation on certain of its miners based on the reduction of the estimated useful life from 5 years to 4 years.

Current wording

The Company records depreciation expense (a non-cash expense) on its miners on a straight-line basis over the miners' expected useful life. Such non-cash depreciation amounts are recorded within the consolidated statements of operations as “Depreciation and Amortization”. Although the Company recognizes depreciation with respect to its mining assets, it does not consider depreciation in determining whether it is economical to operate its mining equipment since depreciation expense is not an avoidable operating cost, such as energy costs. The table above presents the non-cash miner depreciation expense on a “per Bitcoin” basis, calculated by dividing miner depreciation expense in our hosted facilities by the number of Bitcoin mined in the hosted facilities. On a “cost per Bitcoin” ratio, miner depreciation expense was approximately $94,100 and $45,300 for the years ended December 31, 2025, and 2024, respectively. The Company recorded accelerated depreciation on certain of its miners based on the reduction of the estimated useful life from five years to four years.

Previous wording

During the year ended December 31, 2024, total revenues decreased by approximately $2.0 million to approximately $11.0 million from approximately $13.0 million in the year ended December 31, 2023.

Current wording

During the year ended December 31, 2025, total revenues decreased by approximately $2.2 million to approximately $8.8 million from approximately $11.0 million in the year ended December 31, 2024.

Previous wording

Bitcoin mining revenues decreased to approximately $10.4 million for the year ended December 31, 2024 from $12.3 million for the year ended December 31, 2023.

Current wording

Bitcoin mining revenues decreased to approximately $8.3 million for the year ended December 31, 2025 from $10.4 million for the year ended December 31, 2024.

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 twelve months ended December 31, 2024, we mined 170.6 Bitcoin with an average Bitcoin price of approximately $61 thousand as compared with 423.4 Bitcoin with an average Bitcoin price of approximately $29 thousand during the twelve months ended December 31, 2023. The decrease in Bitcoin mining revenue for the twelve months ended December 31, 2024 was attributable to the halving that occurred in April 2024 and approximately 4,000 mining machines that were off-line as we repositioned the miners to our Oklahoma site 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 twelve months ended December 31, 2025, we mined 82.3 Bitcoin with an average Bitcoin price of approximately $102 thousand as compared with 170.6 Bitcoin with an average Bitcoin price of approximately $61 thousand during the twelve months ended December 31, 2024. The decrease in Bitcoin mining revenue for the twelve months ended December 31, 2025 was attributable to the halving that occurred in April 2024 and approximately 4,000 mining machines that were off-line as we repositioned the miners to our Oklahoma site offset in part by the increase in Bitcoin prices.

Previous wording

Specialty finance revenues for the year ended December 31, 2024 was approximately $444 thousand which represents a decrease of 19.4% as compared with the approximately $550 thousand generated in the year ended December 31, 2023.

Current wording

Specialty finance revenues for the year ended December 31, 2025 was approximately $452 thousand which represents an increase of 2.0% as compared with the approximately $444 thousand generated in the year ended December 31, 2024.

Previous wording

During the year ended December 31, 2024, operating costs and expenses decreased by approximately $5.6 million, or 24.3%, to approximately $17.5 million from approximately $23.1 million for the year ended December 31, 2023 primarily due to a decrease in digital mining costs, staff costs and payroll and professional fees and an increase in fair market value gain on digital assets, offset in part by an increase in depreciation expense.

Current wording

During the year ended December 31, 2025, operating costs and expenses increased by approximately $14.2 million, or 81.1%, to approximately $31.7 million from approximately $17.5 million for the year ended December 31, 2024 primarily due to an increase in fair market value loss on digital assets, an impairment loss on mining equipment and staff costs and payroll along with depreciation expense offset in part by professional fees and mining costs of revenue.

Previous wording

Bitcoin mining costs of revenues for the year ended December 31, 2024 were approximately $7.0 million or 67% of digital mining revenues compared with approximately $9.4 million or 77% of digital mined revenues for the year ended December 31, 2023 as the Company transitioned approximately 4,000 miners from various hosting sites over a 6 month period to the recently acquired Oklahoma site resulting in no hosting costs for those idled machines. The improved direct mining cost to revenue metric was achieved as the result of lower hosting and electrical costs associated with our Oklahoma mining activity.

Current wording

Company transitioned approximately 4,000 miners from various hosting sites over a six month period to the recently acquired Oklahoma site resulting in no hosting costs for those idled machines. The improved direct mining cost to revenue metric was achieved as the result of lower hosting and electrical costs associated with our Oklahoma mining activity.

Previous wording

The net decrease of approximately $1.3 million in staff costs and payroll is due to a decrease in the non-cash stock compensation expense to $0.5 million for the year ended December 31, 2024 as compared with $2.9 million for the year ended December 31, 2023, offset in part by an increase in payroll and bonuses of approximately $1.1 million for the year ended December 31, 2024.

Current wording

The net increase of approximately $1.7 million in staff costs and payroll is due to an increase in the non-cash stock compensation expense and adding approximately nine staff at the Oklahoma and Mississippi sites. In addition, incentive pay for the year ended December 31, 2025 was greater compared to the year ended December 31, 2024.

Previous wording

The increase in depreciation and amortization expense of $2.8 million to $7.8 million for the twelve months ended December 31, 2024 was primarily due to the change in useful life of mining machines from 60 months to 48 months effective January 1, 2024.

Current wording

The increase in depreciation and amortization expense of $0.4 million to $8.2 million for the year ended December 31, 2025 was primarily due to the acquisition of the Mississippi site.

Previous wording

Professional fees (excluding fees paid pursuant to our service agreement with BLG and BLGAL), for the years ended December 31, 2024 and 2023 were approximately $1.5 million and $1.2 million, respectively. The $0.3 million increase was due in part to various regulatory filings, deal costs for potential acquisitions and various other matters.

Current wording

Professional fees (excluding fees paid pursuant to our service agreement with BLGAL), for the years ended December 31, 2025 and 2024 were approximately $1.1 million and $1.5 million, respectively. The $0.4 million decrease was due in part to reduced regulatory filings, deal costs for potential acquisitions and various other matters.

Previous wording

Legal fees for BLG and BLGAL for the year ended December 31, 2024 were approximately $0.5 million compared with approximately $0.6 million for the year ended December 31, 2023. See Note 11 Related Party Transactions for further discussion regarding the service agreements with BLG and BLGAL.

Current wording

Legal fees for BLGAL for the year ended December 31, 2025 were approximately $0.5 million compared with approximately $0.5 million for the year ended December 31, 2024. See Note 11 Related Party Transactions for further discussion regarding the service agreements with BLGAL.

Previous wording

The Company incurred a $1.4 million impairment and nil loss on mining equipment for the year ended December 31, 2024, respectively, primarily related to machines disposed of in April 2024.

Current wording

The Company incurred a $5.4 million impairment on mining equipment for the year ended December 31, 2025 primarily related to machines to be held and used as compared to $1.4 million impairment for the year ended December 31, 2024, primarily related to machines disposed of in April 2024.

Previous wording

The Company recognized an unrealized loss on securities of approximately $1.1 million for the year ended December 31, 2024 as compared with an unrealized loss of approximately $9.8 million for the year ended December 31, 2023 from the revaluation of Seastar Medical Holding Corporation common stock and warrants.

Current wording

The Company recognized an unrealized loss on securities of approximately $0.2 million for the year ended December 31, 2025 as compared with an unrealized loss of approximately $1.1 million for the year ended December 31, 2024 from the revaluation of Seastar Medical Holding Corporation common stock and warrants.

Previous wording

During the year ended December 31, 2024, interest income increased to approximately $0.3 million as compared with $0.2 million for the year ended December 31, 2023 due to various loans provided to the Arthur Group for the Oklahoma site before it was purchased by the Company.

Current wording

During the year ended December 31, 2025, interest income was approximately $3 thousand as compared with $307 thousand for the year ended December 31, 2024 due to various loans provided to the Arthur Group for the Oklahoma site before it was purchased by the Company in late 2024.

Previous wording

During the year ended December 31, 2024, interest expense was approximately $0.4 million as compared with nil for the year ended December 31, 2023 due to $6.5 million of new loans used for working capital and the purchase of the Oklahoma site in 2024.

Current wording

During the year ended December 31, 2025, interest expense was approximately $1.1 million as compared with $0.4 million for the year ended December 31, 2024 due to $6.5 million of new loans used for working capital and the purchase of the Oklahoma site in late 2024 and the Mississippi site in 2025.

Previous wording

During the year ended December 31, 2023, the Company generated a $18.8 million net loss before income taxes. The Company's income tax due was $0.1 million as of December 31, 2023. The Company recognized net income tax expense of $0.1 million for the year ended December 31, 2023.

Current wording

During the year ended December 31, 2025, the Company generated a $27.0 million net loss before income taxes. The Company's income tax due was nil as of December 31, 2025. The Company recognized net income tax expense of nil for the year ended December 31, 2025.

Previous wording

Under ASC 740-10-30-5, Income Taxes, deferred tax assets should be reduced by a valuation allowance if, based on the weight of available evidence, it is more-likely-than-not (i.e., a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized. The Company considers all positive and negative evidence available in determining the potential realization of deferred tax assets including, primarily, the recent history of taxable earnings or losses. Based on operating losses reported by the Company during 2023, 2022, 2020, 2019 and 2018, the Company concluded there was not sufficient positive evidence to overcome this recent operating history. As a result, the Company believes that a valuation allowance continues to be necessary based on the more-likely-than-not threshold noted above. The Company recorded a valuation allowance of approximately $16.2 million and $14.1 million for the year ended December 31, 2024 and 2023, respectively.

Current wording

Under ASC 740-10-30-5, Income Taxes, deferred tax assets should be reduced by a valuation allowance if, based on the weight of available evidence, it is more-likely-than-not (i.e., a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized. The Company considers all positive and negative evidence available in determining the potential realization of deferred tax assets including, primarily, the recent history of taxable earnings or losses. Based on operating losses reported by the Company in prior years, the Company concluded there was not sufficient positive evidence to overcome this recent operating history. As a result, the Company believes that a valuation allowance continues to be necessary based on the more-likely-than-not threshold noted above. The Company recorded a valuation allowance of approximately $21.7 million and $16.2 million for the year ended December 31, 2025 and 2024, respectively.

Previous wording

The Company owns 69.5% of LMFAO Sponsor LLC (“Sponsor”). As such, approximately $0.3 million and $2.9 million of the $1.1 million and $9.8 million net unrealized loss recognized by the Sponsor’s ownership of Seastar Medical Holding Corporation (formerly LMAO) is attributed to the Non-Controlling Interest for the years ended December 31, 2024 and 2023, respectively.

Current wording

The Company owns 69.5% of LMFAO Sponsor LLC (“Sponsor”). As such, approximately $55 thousand and $0.3 million of the $0.2 million and $1.1 million net unrealized loss recognized by the Sponsor’s ownership of Seastar Medical Holding Corporation (formerly LMAO) is attributed to the Non-Controlling Interest for the years ended December 31, 2025 and 2024, respectively.

Previous wording

During the year ended December 31, 2024, the Company generated a net loss attributable to LM Funding America, Inc. of approximately $7.3 million as compared with net loss attributable to LM Funding America, Inc. of approximately $15.9 million for the year ended December 31, 2023, for the reasons mentioned above.

Current wording

During the year ended December 31, 2025, the Company generated a net loss attributable to LM Funding America, Inc. of approximately $26.9 million as compared with net loss attributable to LM Funding America, Inc. of approximately $7.3 million for the year ended December 31, 2024, for the reasons mentioned above.

Previous wording

During the year ended December 31, 2024, net loss attributable to common shareholders was $6.8 million higher than net loss attributable to LM Funding America, Inc. due to deemed dividends related to warrant repricing and warrant inducement. During the year ended December 31, 2024, net loss attributable to common shareholders was $14.1 million as compared with $15.9 million for the year ended December 31, 2023.

Current wording

During the year ended December 31, 2025 and 2024, net loss attributable to common shareholders was $1.6 million and $6.8 million higher, respectively, than net loss attributable to LM Funding America, Inc. due to deemed dividends related to warrant repricing and warrant inducement. During the year ended December 31, 2025, net loss attributable to common shareholders was $28.5 million as compared with $14.1 million for the year ended December 31, 2024.

Previous wording

As of December 31, 2024, we had $3.4 million of cash and cash equivalents and $14.0 million of digital assets (150.2 Bitcoin with average cost of approximately $93 thousand), of which $5.0 million is pledged as collateral against outstanding borrowings, compared with $2.4 million of cash and cash equivalents and $3.4 million of digital assets (95.1 Bitcoin with average cost of approximately $36 thousand) at December 31, 2023). The increase in cash for the year ended December 31, 2024 is due primarily to several equity and warrant transaction net proceeds totaling $6.9 million, net borrowings totaling $6.3 million and the receipt of $1.4 million of loan repayments from Seastar Medical Holding Corporation offset in part by the purchase of $0.5 million of digital assets and $3.6 million used towards the purchase of the Oklahoma site.

Current wording

As of December 31, 2025, we had $1.4 million of cash and cash equivalents and $18.5 million of digital assets (211.4 Bitcoin with average cost of approximately $88 thousand), of which $7.7 million is pledged as collateral against outstanding borrowings, compared with $3.4 million of cash and cash equivalents and $14.0 million of digital assets (150.2 Bitcoin with average cost of approximately $93 thousand) at December 31, 2024). This does not include 145 Bitcoins valued at $12.7 million classified as Digital assets receivable as of December 31, 2025.

Previous wording

The Company received $6.9 million in net proceeds from equity financing transactions during the year ended December 31, 2024 compared with nil for the year ended December 31, 2023.

Current wording

The Company received $27.3 million in net proceeds from equity financing transactions during the year ended December 31, 2025 compared with $6.9 million for the year ended December 31, 2024.

Previous wording

Net cash used in operations was approximately $11.9 million during the year ended December 31, 2024 compared with net cash used in operations of $3.4 million during the year ended December 31, 2023. Bitcoin received from mining operations of approximately $10.4 million for 2024 and $12.3 million for 2023 is not considered a cash generative activity for cashflow purposes. Due to ASC 350-60, proceeds from sale of digital assets (primarily Bitcoin) of approximately $8.3 million are reported in 2024 as a net cash provided by investing activity. However, such sales totaling approximately $10.9 million are reported in 2023 as net cash provided from operating activities.

Current wording

Net cash used in operations was approximately $14.0 million during the year ended December 31, 2025 compared with net cash used in operations of $11.9 million during the year ended December 31, 2024. Bitcoin received from mining operations of approximately $8.3 million for 2025 and $10.4 million for 2024 is not considered a cash generative activity for cashflow purposes.

Previous wording

Net cash provided by investing activities was $0.4 million during the year ended December 31, 2024 as compared with net cash provided by investing activities of $2.3 million during the year ended December 31, 2023. During the year ended December 31, 2024, the Company invested $1.7 million in mining equipment, received $1.4 million from a notes receivable for Seastar Medical Holding Corporation and acquired a mining site for approximately $7.4 million, of which $3.6 million was paid in cash and $3.8 million was credited against outstanding loans, including accrued interest, made by the Company and its affiliates to Seller. During the year ended December 31, 2023, the Company invested $1.6 million in deposits for mining equipment but received $2.7 million from a notes receivable for Seastar Medical Holding Corporation and $1.8 million from the sale of Symbiont assets.

Current wording

Net cash used in investing activities was $19.5 million during the year ended December 31, 2025 as compared with net cash provided by investing activities of $0.4 million during the year ended December 31, 2024. During the year ended December 31, 2025, the Company invested $2.2 million in mining equipment, purchased Bitcoin for $22.8 million and acquired a mining site for approximately $4.2 million. During the year ended December 31, 2024, the Company invested $1.7 million in mining equipment, received $1.4 million from a notes receivable for Seastar Medical Holding Corporation and acquired a mining site for approximately $7.4 million, of which $3.6 million was paid in cash and $3.8 million was credited against outstanding loans, including accrued interest, made by the Company and its affiliates to Seller.

Previous wording

Net cash from financing activities was $12.5 million during the year ended December 31, 2024 as compared with net cash used in financing activities of $0.7 million for the year ended December 31, 2023. During 2024, the Company received net proceeds from borrowings of $6.3 million for working capital and acquisition purposes and raised $6.9 million in net proceeds from equity offerings.

Current wording

Net cash provided by financing activities was $31.6 million during the year ended December 31, 2025 as compared with net cash provided by financing activities of $12.5 million for the year ended December 31, 2024. During the year ended December 31, 2025 the Company received net proceeds from equity offerings of $27.3 million and proceeds of borrowings of $13.0 million used primarily for Bitcoin purchases and acquisition purposes, offset by stock repurchases of $8.0 million. During the year ended December 31, 2024, the Company received net proceeds from borrowings of $6.3 million for working capital and acquisition purposes and raised $6.9 million in net proceeds from equity offerings and the exercise of warrants.

Previous wording

During the years ended December 31, 2024 and 2023 the Company paid $709 thousand and $624 thousand in principal and financing repayments, respectively.

Current wording

During the years ended December 31, 2025 and 2024 the Company paid $734 thousand and $709 thousand in principal and financing repayments, respectively.

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. There are no critical accounting estimates for the year ended December 31, 2024.

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. There are no critical accounting estimates for the year ended December 31, 2025 or 2024.