Registrant’s telephone number, including area code: ~~813-222-8996~~813-222-8996

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The registrant had 13,091,883 shares of Common Stock, par value $0.001 per share, outstanding as of ~~August 9,~~November 14, 2022.


	June 30, 2022			December 31, 2021			September 30, 2022			December 31, 2021
	(Unaudited)						(Unaudited)
ASSETS
Cash	$	17,046,595		$	32,559,185		$	10,175,211		$	32,559,185
Finance receivables:
Original product - net		2,520			13,993
Special product - New Neighbor Guaranty program, net of allowance for credit losses of		21,077			14,200
Finance receivables								20,709			28,193
Short-term investments - convertible debt securities (Note 7)		-			539,351			-			539,351
Marketable securities (Note 7)		37,220			2,132,051			24,220			2,132,051
Short-term investments - debt security (Note 7)		2,185,863			2,000,000
Short-term investments - debt securities (Note 7)								2,619,292			2,000,000
Prepaid expenses and other assets		1,389,562			1,251,852			1,205,719			1,251,852
Income tax receivable (Note 4)		143,822			-
Note receivable from related party (Note 7)		910,000			-			2,785,000			-
Digital assets (Note 10)		408,879			-			616,257			-
Current assets		22,145,538			38,510,632			17,446,408			38,510,632
Fixed assets, net (Note 9)		15,084,921			17,914			21,975,960			17,914
Real estate assets owned		80,057			80,057			80,057			80,057
Operating lease - right of use assets (Note 5)		313,629			59,969
Operating lease - right of use assets (Note 4)								289,468			59,969
Long-term investments - equity securities (Note 7)		516,420			1,973,413			322,246			1,973,413
Investments in unconsolidated affiliates (Note 7)		17,362,125			4,676,130			17,362,125			4,676,130
Deposits on mining equipment and hosting (Note 8)		14,466,162			16,775,100
Deposits on mining equipment and hosting services (Note 8)								10,467,721			16,775,100
Other assets		10,726			10,726			10,726			10,726
Long-term assets		47,834,040			23,593,309			50,508,303			23,593,309
Total assets	$	69,979,578		$	62,103,941		$	67,954,711		$	62,103,941

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses	$	436,479		$	463,646		$	636,369			463,646
Note payable - short-term (Note 3)		-			114,688			-			114,688
Due to related party (Note 2)		371,179			121,220
Due to related parties (Note 2)								75,615			121,220
Current portion of lease liability (Note 5)		90,030			68,002			90,004			68,002
Income tax payable (Note 4)		-			326,178			1,167,856			326,178
Total current liabilities		897,688			1,093,734			1,969,844			1,093,734
Lease liability - long-term (Note 5)		226,319			-			203,211			-
Long-term liabilities		226,319			-			203,211			-
Total liabilities		1,124,007			1,093,734			2,173,055			1,093,734

Stockholders’ equity:
Preferred stock, par value $.001; 150,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		-			-
Common stock, par value $0.001; 350,000,000 shares authorized; 13,091,883 and 13,017,943 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		13,092			13,018
Preferred stock, par value $.001; 150,000,000 shares authorized; no shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively								-			-
Common stock, par value $0.001; 350,000,000 shares authorized; 13,091,883 and 13,017,943 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively								13,092			13,018
Additional paid-in capital		81,821,510			74,525,106			85,469,749			74,525,106
Accumulated deficit		(16,660,717	)		(13,777,006	)		(23,323,573	)		(13,777,006	)
Total stockholders’ equity		65,173,885			60,761,118			62,159,268			60,761,118
Non-controlling interest		3,681,686			249,089			3,622,388			249,089
Total stockholders’ equity		68,855,571			61,010,207			65,781,656			61,010,207
Total liabilities and stockholders’ equity	$	69,979,578		$	62,103,941		$	67,954,711		$	62,103,941

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.

LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (unaudited)


	For the Three Months Ended June 30,						For the Six Months Ended June 30,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2022			2021			2022			2021			2022			2021			2022			2021
Revenues:
Interest on delinquent association fees	$	112,140		$	62,673		$	213,408		$	140,117		$	57,585		$	129,439		$	270,993		$	269,556
Administrative and late fees		19,698			16,861			36,406			31,932			14,717			14,642			51,123			46,574
Recoveries in excess of cost - special product		35,990			178,769			53,355			208,242			20,171			14,000			73,526			61,052
Underwriting and other revenues		26,125			35,494			42,916			58,197			12,362			28,784			55,278			86,981
Rental revenue		40,580			34,588			79,452			66,505			40,788			36,759			120,240			103,264
Digital mining revenues, net														42,157			-			42,157			-
Total revenues		234,533			328,385			425,537			504,993			187,780			223,624			613,317			567,427

Operating Expenses:
Operating costs and expenses:
Digital mining cost of revenues (exclusive of depreciation and amortization shown below)														38,960			-			38,960			-
Staff costs and payroll		4,296,695			246,040			8,588,892			1,548,021			4,297,540			1,874,798			12,886,432			3,422,819
Professional fees		1,031,431			360,024			1,806,251			842,967			714,730			497,942			2,520,981			1,340,909
Settlement costs with associations		-			-			160			-			-			-			160			-
Selling, general and administrative		122,271			96,015			237,191			195,784			209,328			106,895			446,519			302,679
Provision for credit losses														-			-			500			(10,000	)
Recovery of cost from related party receivable		-			(100,000	)		-			(100,000	)		-			(100,000	)		-			(200,000	)
Provision for credit losses		500			-			500			(10,000	)
Real estate management and disposal		22,414			29,478			53,895			47,768			22,558			29,878			76,453			77,646
Depreciation and amortization		2,007			3,298			5,101			4,994			38,617			4,482			43,718			9,476
Collection costs		(7,906	)		2,701			(11,726	)		4,749			5,037			(1,410	)		(6,689	)		3,339
Other operating expenses		141,009			4,069			149,393			11,614			124,405			5,801			273,798			17,415
Total operating expenses		5,608,421			641,625			10,829,657			2,545,897			5,451,175			2,418,386			16,280,832			4,964,283
Operating loss		(5,373,888	)		(313,240	)		(10,404,120	)		(2,040,904	)		(5,263,395	)		(2,194,762	)		(15,667,515	)		(4,396,856	)
Realized gain (loss) on securities		45,261			8,453,570			(349,920	)		14,125,034			-			(173,282	)		(349,920	)		13,951,752
Realized gain on convertible debt securities		287,778			-			287,778			-			-			-			287,778			-
Unrealized gain (loss) on convertible debt security		(288,320	)		2,501,600			-			2,501,600
Unrealized loss on convertible debt security														-			(2,588,916	)		-			(87,316	)
Unrealized loss on marketable securities		(24,030	)		-			(23,900	)		-			(13,000	)		(478,448	)		(36,900	)		(478,448	)
Impairment loss on digital assets		(377,707	)		-			(377,707	)		-			(26,634	)		(23,720	)		(404,341	)		(23,720	)
Unrealized gain on investment and equity securities		12,215,401			552,494			11,229,002			1,147,886
Unrealized gain (loss) on investment and equity securities														(194,174	)		(123,172	)		11,034,828			1,024,714
Digital assets other income		1,292			-			5,658			-			-			-			5,658			-
Interest income		80,975			73,884			179,345			86,939			85,602			77,956			264,947			164,895
Interest expense		-			(189	)		-			(653	)		-			(3,939	)		-			(653	)
Dividend income		1,375			-			2,750			-			1,125			738			3,875			738
Gain on forgiveness of note payable														-			-			-			157,251

Income before income taxes		6,568,137			11,268,119			548,886			15,819,902
Income (loss) before income taxes														(5,410,476	)		(5,507,545	)		(4,861,590	)		10,312,357
Income tax expense		-			(13,780	)		-			(17,264	)		(1,311,678	)		(12,619	)		(1,311,678	)		(29,883	)
Net income		6,568,137			11,254,339			548,886			15,802,638
Less: Net income attributable to non-controlling interest		(3,723,797	)		(146,857	)		(3,432,597	)		(318,723	)
Net income (loss)														(6,722,154	)		(5,520,164	)		(6,173,268	)		10,282,474
Less: Net (income) loss attributable to non-controlling interest														59,298			33,953			(3,373,299	)		(284,770	)
Net income (loss) attributable to LM Funding America Inc.	$	2,844,340		$	11,107,482		$	(2,883,711	)	$	15,483,915		$	(6,662,856	)	$	(5,486,211	)	$	(9,546,567	)	$	9,997,704

Earnings/(loss) per share:
Basic income (loss) per common share - net income (loss) - attributable to LM Funding	$	0.22		$	2.05		$	(0.22	)	$	2.96		$	(0.51	)	$	(1.01	)	$	(0.73	)	$	1.89
Diluted income (loss) per common share - net income (loss) - attributable to LM Funding	$	0.22		$	2.05		$	(0.22	)	$	2.95		$	(0.51	)	$	(1.01	)	$	(0.73	)	$	1.88
Weighted average number of common shares outstanding:
Basic		13,091,882			5,414,296			13,076,359			5,231,909			13,091,883			5,414,296			13,081,591			5,293,375
Diluted		13,091,882			5,423,162			13,076,359			5,245,656			13,091,883			5,421,606			13,081,591			5,305,418

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.

LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows


	For the Six Months Ended June 30,						For the Nine Months Ended September 30,
	2022			2021			2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	548,886		$	15,802,638
Adjustments to reconcile net income to cash used in operating activities
Net income (loss)							$	(6,173,268	)	$	10,282,474
Adjustments to reconcile net income (loss) to cash used in operating activities
Depreciation and amortization		5,101			4,994			43,718			9,476
Right to use asset non cash lease expense		47,127			49,797			71,288			75,605
Stock compensation		658,999			-			988,498			-
Stock option expense		6,637,479			-			9,956,219			-
Debt forgiveness		-			(157,251	)		-			(157,251	)
Accrued investment income		(176,438	)		(86,938	)		(259,867	)		(160,954	)
Gain on deconsolidation of affiliate		-			(43,623	)		-			(43,623	)
Unrealized gain on convertible debt security		-			(2,501,600	)
Unrealized loss on convertible debt security								-			87,316
Unrealized loss on marketable securities		23,900			-			36,900			478,448
Impairment loss on digital assts		377,707			-			404,341			23,720
Unrealized gain on investment and equity securities		(11,229,002	)		(1,147,886	)		(11,034,828	)		(1,024,714	)
Realized (gain) loss on securities		349,920			(14,125,034	)		349,920			(13,951,752	)
Realized gain on convertible note securities		(287,778	)		-			(287,778	)		-
Investment in securities		-			(15,547,454	)		-			(16,118,533	)
Proceeds from securities		2,565,893			29,672,488			2,565,893			30,070,285
Investment in convertible note receivable		-			(5,000,000	)		-			(5,000,000	)
Convertible note receivable converted into marketable security		844,882						844,882			4,231,760
Investment in marketable Securities		(844,882	)		(247,997	)		(844,882	)		(3,958,678	)
Change in assets and liabilities
Prepaid expenses and other assets		623,511			11,105			807,352			(8,326	)
Accounts payable and accrued expenses		(27,168	)		184,239			172,723			382,204
Advances from related party		249,959			142,191
Advances (repayments) to related party								(45,605	)		103,934
Mining of digital assets								(42,157	)		-
Lease liability payments		(52,440	)		(50,353	)		(75,574	)		(76,656	)
Income tax payable		(326,178	)		-
Income tax receivable		(143,822	)		-
Deferred taxes		-			17,264
Deferred taxes and taxes payable								841,678			29,883
Net cash provided by (used in) operating activities		(154,344	)		6,976,580			(1,680,547	)		5,274,618

CASH FLOWS FROM INVESTING ACTIVITIES:
Net collections of finance receivables - original product		11,473			30,831			19,049			37,549
Net collections of finance receivables - special product		(6,877	)		(454	)		(11,565	)		8,450
Payments for real estate assets owned		-			(64,857	)		-			(68,568	)
Capital expenditures		(13,235	)		(3,185	)		(15,380	)		(4,207	)
Deposits for mining equipment and hosting		(13,538,333	)		-			(16,467,402	)		(1,565,625	)
Investments in digital assets		(786,586	)		-			(978,441	)		(1,419,958	)
Loan to purchase securities		-			1,784,250			-			1,784,250
Investment in note receivable - related party		(910,000	)					(2,785,000	)		-
Investment in note receivable								(350,000	)		-
Repayment of loan to purchase securities		-			(1,784,250	)		-			(1,784,250	)
Investment in unconsolidated affiliate		-			(5,738,000	)		-			(5,738,000	)
Net cash (used in) investing activities		(15,243,558	)		(5,775,665	)
Net cash used in investing activities								(20,588,739	)		(8,750,359	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal repayments		-			(28,534	)		-			(28,534	)
Insurance financing repayments		(114,688	)		(96,257	)		(114,688	)		(134,485	)
Exercise of warrants		-			9,544,623			-			9,544,623
Net cash provided by (used in) financing activities		(114,688	)		9,419,832			(114,688	)		9,381,604
NET INCREASE (DECREASE) IN CASH		(15,512,590	)		10,620,747			(22,383,974	)		5,905,863
CASH - BEGINNING OF YEAR		32,559,185			11,552,943			32,559,185			11,552,943
CASH - END OF YEAR	$	17,046,595		$	22,173,690		$	10,175,211		$	17,458,806

SUPPLEMENTAL DISCLOSURES OF NON-CASHFLOW INFORMATION
Insurance financing							$	-		$	210,260
ROU assets and operating lease obligation recognized	$	300,787		$	-		$	300,787		$	-
Reclassification of mining equipment deposit to fixed assets, net	$	15,058,872		$	-		$	21,986,382		$	-
SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION
Cash paid for interest	$	-		$	1,892		$	-		$	1,892
Cash paid for income taxes	$	470,000		$	-		$	470,000		$	-

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


	Common Stock																	Common Stock
	Shares		Amount		Additional paid in capital			Accumulated Deficit				Non-Controlling Interest			Total Equity			Shares		Amount		Additional paid in capital			Accumulated Deficit			Non-Controlling Interest			Total Equity


Balance - December 31, 2020		3,083,760	$	3,084	$	29,996,257		$	(18,536,224	)		$	5,191		$	11,468,308			3,083,760	$	3,084	$	29,996,257		$	(18,536,224	)	$	5,191		$	11,468,308

Stock issued for warrants exercised		2,330,536		2,330		9,542,293			-				-			9,544,623			2,330,536		2,330		9,542,293			-			-			9,544,623
Net income		-		-		-			4,376,433				171,866			4,548,299			-		-		-			4,376,433			171,866			4,548,299
Balance - March 31, 2021		5,414,296	$	5,414	$	39,538,550		$	(14,159,791	)		$	177,057		$	25,561,230			5,414,296	$	5,414	$	39,538,550		$	(14,159,791	)	$	177,057		$	25,561,230

Net income		-		-		-			11,107,482				146,857			11,254,339			-		-		-			11,107,482			146,857			11,254,339
Balance - June 30, 2021		5,414,296	$	5,414	$	39,538,550		$	(3,052,309	)		$	323,914		$	36,815,569			5,414,296	$	5,414	$	39,538,550		$	(3,052,309	)	$	323,914		$	36,815,569

Net loss																			-		-		-			(5,486,211	)		(33,953	)		(5,520,164	)
Balance - September 30, 2021																			5,414,296	$	5,414	$	39,538,550		$	(8,538,520	)	$	289,961		$	31,295,405


Balance - December 31, 2021		13,017,943	$	13,018	$	74,525,106		$	(13,777,006	)	��	$	249,089		$	61,010,207			13,017,943	$	13,018	$	74,525,106		$	(13,777,006	)	$	249,089		$	61,010,207
Stock issued for services		73,940		74		(74	)		-				-			-			73,940		74		(74	)		-			-			-
Stock compensation		-		-		329,500			-				-			329,500			-		-		329,500			-			-			329,500
Stock option expense		-		-		3,318,737			-				-			3,318,737			-		-		3,318,737			-			-			3,318,737
Net loss		-		-		-			(5,728,051	)			(291,200	)		(6,019,251	)		-		-		-			(5,728,051	)		(291,200	)		(6,019,251	)
Balance - March 31, 2022		13,091,883	$	13,092	$	78,173,269		$	(19,505,057	)		$	(42,111	)	$	58,639,193			13,091,883	$	13,092	$	78,173,269		$	(19,505,057	)	$	(42,111	)	$	58,639,193

Stock compensation		-		-		329,499			-				-			329,499			-		-		329,499			-			-			329,499
Stock option expense		-		-		3,318,742			-				-			3,318,742			-		-		3,318,742			-			-			3,318,742
Net income		-		-		-			2,844,340				3,723,797			6,568,137			-		-		-			2,844,340			3,723,797			6,568,137
Balance - June 30, 2022		13,091,883	$	13,092	$	81,821,510		$	(16,660,717	)		$	3,681,686		$	68,855,571			13,091,883	$	13,092	$	81,821,510		$	(16,660,717	)	$	3,681,686		$	68,855,571

Stock compensation																			-		-		329,499			-			-			329,499
Stock option expense																			-		-		3,318,740			-			-			3,318,740
Net loss																			-		-		-			(6,662,856	)		(59,298	)		(6,722,154	)
Balance - September 30, 2022																			13,091,883	$	13,092	$	85,469,749		$	(23,323,573	)	$	3,622,388		$	65,781,656

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND ~~SIX~~NINE MONTHS ENDED ~~JUNE~~September 30, 2022

Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

LM Funding America, Inc. (“we”, “our”, “LMFA” or the “Company”) was formed as a Delaware corporation on April 20, 2015. LMFA was formed for the purpose of completing a public offering and related transactions in order to carry on the business of LM Funding, LLC and its subsidiaries (the “Predecessor”). LMFA is the sole member of LM Funding, LLC and operates and controls all of its businesses and affairs.

LM Funding, LLC, a Florida limited liability company organized in January 2008 under the terms of an Operating Agreement effective January 8, 2008 as amended, had 2two members: BRR Holding, LLC and CGR 63, LLC. The members contributed their equity interest to LMFA prior to the closing of its initial public offering.

The Company created 2two subsidiaries in 2020, LMFA Financing LLC on November 21, 2020 and LMFAO Sponsor LLC on October 29, 2020. LMFAO Sponsor LLC created a majority owned subsidiary LMF Acquisition Opportunities Inc. on October 29, 2020. ~~The~~ LM Funding America Inc. organized another subsidiary, US Digital Mining and Hosting Co., LLC., on September 10, 2021. US Digital Mining and Hosting Co., LLC created a subsidiary US Digital Mining Texas, LLC on June 21, 2022.

~~We are~~The Company currently has two lines of business: a specialty finance ~~company that provides~~business and our recently commenced cryptocurrency mining business.

With respect to our specialty finance business, the Company has historically engaged in the business of providing funding to nonprofit community associations primarily located in the state of Florida. We offer incorporated nonprofit community associations, which we refer to as “Associations,” a variety of financial products customized to each Association’s financial needs. Our original product offering consists of providing funding to Associations by purchasing their rights under delinquent accounts that are selected by the Associations arising from unpaid Association assessments. Historically, we provided funding against such delinquent accounts, which we refer to as “Accounts,” in exchange for a portion of the proceeds collected by the Associations from the account debtors on the Accounts. In addition to our original product offering, we have started purchasing Accounts on varying terms tailored to suit each Association’s financial needs, including under our New Neighbor Guaranty™ program.

~~During 2020,~~On September 15, 2021, we ~~began exploring other~~announced our plan to operate in the Bitcoin mining ecosystem, and we commenced Bitcoin mining operations in late September 2022. This business operation deploys our computing power to mine Bitcoin and validate transactions on the Bitcoin network. We believe that developments in Bitcoin mining have created an opportunity for us to deploy capital and conduct large-scale mining operations in the United States. We conduct this business through a wholly owned subsidiary, US Digital Mining and Hosting Co, LLC, a Florida limited liability company (US Digital), which we formed in 2021 to develop and operate our cryptocurrency mining business.

Specialty Finance Business

In our specialty finance business, ~~opportunities that are complementary to or that can leverage our historical business.~~

~~Specialty Finance Company~~

Wewe purchase an Association’s right to receive a portion of the Association’s collected proceeds from owners that are not paying their assessments. After taking assignment of an Association’s right to receive a portion of the Association’s proceeds from the collection of delinquent assessments, we engage law firms to perform collection work on a deferred billing basis wherein the law firms receive payment upon collection from the account debtors or a predetermined contracted amount if payment from account debtors is less than legal fees and costs owed. Under this business model, we typically fund an amount equal to or less than the statutory minimum an Association could recover on a delinquent account for each Account, which we refer to as the “Super Lien Amount”. Upon collection of an Account, the law firm working on the Account, on behalf of the Association, generally distributes to us the funded amount, interest, and administrative late fees, with the law firm retaining legal fees and costs collected, and the Association retaining the balance of the collection. In connection with this line of business, we have developed proprietary software for servicing Accounts, which we believe enables law firms to service Accounts efficiently and profitably.

Under our New Neighbor Guaranty program, an Association will generally assign substantially all of its outstanding indebtedness and accruals on its delinquent units to us in exchange for payment by us of monthly dues on each delinquent unit. This simultaneously eliminates a substantial portion of the Association’s balance sheet bad debts and assists the Association to meet its budget by receiving guaranteed monthly payments on its delinquent units and relieving the Association from paying legal fees and costs to collect its bad debts. We believe that the combined features of the program enhance the value of the underlying real estate in an Association and the value of an Association’s delinquent receivables.

Because we acquire and collect on the delinquent receivables of Associations, the Account debtors are third parties about whom we have little or no information. Therefore, we cannot predict when any given Account will be paid off or how much it will yield. In assessing the risk of purchasing Accounts, we review the property values of the underlying units, the governing documents of the relevant Association, and the total number of delinquent receivables held by the Association.

Specialty Finance Products

Original Product

Our original product relies upon Florida statutory provisions that effectively protect the principal amount invested by us in each Account. In particular, Section 718.116(1), Florida Statutes, makes purchasers and sellers of a unit in an Association jointly and severally liable for all past due assessments, interest, late fees, legal fees, and costs payable to the Association. As discussed above, the Florida Statutes grants to Associations a so-called “super lien”, which is a category of lien that is given a statutorily higher priority than all other types of liens other than property tax liens. The amount of the Association’s priority over a first mortgage holder that takes title to a property through foreclosure (or deed in lieu), referred to as the Super Lien Amount, is limited to twelve months’ past due assessments or, if less, one percent ~~(1.0%~~(1.0%) of the original mortgage amount. Under our contracts with Associations for our original product, we pay Associations an amount up to the Super Lien Amount for the right to receive all collected interest and late fees on Accounts purchased from the Associations.

The Statutes specify that the rate of interest an association (or its assignor) may charge on delinquent assessments is equal to the rate set forth in the association’s declaration or bylaws. In Florida if a rate is not specified, the statutory rate is equal to ~~18%~~18% but may not exceed the maximum rate allowed by law. Similarly, the Florida Statutes also stipulate that administrative late fees cannot be charged on delinquent assessments unless so provided by the association’s declaration or bylaws and may not exceed the greater of ~~$25~~$25 or 5%5% of each delinquent assessment.

In other states in which we have offered our original product, which are currently only in Washington, Colorado and Illinois, we rely on statutes that we believe are similar to the above-described Florida statutes in relevant respects.

New Neighbor Guaranty

In addition to our original product, we also offer an additional product, the New Neighbor Guaranty, wherein an Association assigns substantially all of its outstanding indebtedness and accruals on its delinquent units to us in exchange for payments in an amount equal to the regular ongoing monthly or quarterly assessments for delinquent units when those amounts would be due to the Association. We assume both the payment and collection obligations for these assigned Accounts under this product. This simultaneously eliminates an Association’s balance sheet bad debts and assists the Association to meet its budget by receiving guaranteed assessment payments on its delinquent units and relieving the Association from paying legal fees and costs to collect its bad debts. We believe that the combined features of the product enhance the value of the underlying real estate in an Association and the value of an Association’s delinquent receivables.

Before we implement the New Neighbor Guaranty program for an Association we are typically asked to conduct a review of its accounts receivable. After we have conducted the review, we inform the Association which Accounts we are willing to purchase and the terms of such purchase. Once we implement the New Neighbor Guaranty program, we begin making scheduled payments to the Association on the Accounts as if the Association had non-delinquent residents occupying the units underlying the Accounts. Our New Neighbor Guaranty contracts typically allow us to retain all collection proceeds on each Account other than special assessments and accelerated assessment balances. Thus, the Association foregoes the potential benefit of a larger future collection in exchange for the certainty of a steady stream of immediate payments on the Account.

Cryptocurrency Mining Business

~~On September 15,~~During 2021, we announced that we plan to operate in the Bitcoin mining ecosystem. As of the date of this filing, we have not commenced Bitcoin mining operations. We aim to deploy the computing power that we will create to mine Bitcoin and validate transactions on the Bitcoin network. We believe that recent developments in Bitcoin mining have created an opportunity for us to deploy capital and conduct large-scale mining operations in the United States. We have formed a new wholly owned subsidiary, US Digital Mining and Hosting Co, LLC, a Florida limited liability company (US Digital), to develop and operate our cryptocurrency mining business.

~~We have~~ committed to purchasing an aggregate of 5,046 Bitcoin S19J Pro Antminer cryptocurrency mining machines for an aggregate purchase price of ~~$31.6~~$31.6 million (the “Mining Machines”). ~~We received 2,521Mining Machines as of June 30, 2022.~~ from Bitmain. This contract allowed for a reduction in purchase price if Bitcoin price declined prior to shipment. As such, because the price of Bitcoin has declined since we entered into the purchase contract, we have ~~been provided various credits over~~received reductions against the ~~Six Month ended June 30, 2022 as Bitcoin declined to approximately $19,000.~~total purchase price. We anticipate ~~that receiving~~we will receive the remaining Mining Machines to be delivered in batches over an estimated delivery timeframe from ~~July and continuing~~October 2022 through ~~October~~November 2022. The purchase agreements between us and Bitmain relating to the Mining Machines (the “Bitmain Purchase Agreements”) required us to pay ~~$7.9~~$7.9 million or ~~25%~~25% of the total purchase price as a non-refundable deposit for the Mining Machines within 7 days of the date of the signing of the respective Bitmain Purchase Agreements, and additional ~~35%~~35% of the batch price at least 6 months prior to shipment of such batch, and the remaining ~~40%~~40% of each batch price one month prior to the shipment of the batch. We have received 4,212 Mining Machines as of September 30, 2022 under these purchase agreements. Due to the variable nature of the contract, we have been credited an aggregate total of approximately $7.2 million toward the 40% purchase price that is normally paid upon the shipment of a batch.

On August 31, 2022, the Company committed to purchasing an additional 400 Bitcoin Miner S19J Pro machines from Bitmain for an aggregate purchase price of approximately $1.3 million. The purchase agreement provides for delivery of the machines in November 2022. As required under the contract, the Company paid the full purchase price within 7 days of the date of the signing of the agreement and the payment is not refundable. This contract is also subject to variable pricing adjustments.

Additionally, on September 20, 2022, the Company committed to purchasing 200 Bitcoin Miner S19 XP machines from Bitmain for an aggregate purchase price of approximately $1.3 million. Under the provisions of the contract, the machines are expected to be delivered in January 2023. As required under the contract, the Company paid a non-refundable deposit of $265 thousand within 7 days of the date of the signing of the agreement. An additional 30% payment of the purchase price is due 4 months prior to shipment and the remaining 50% of the purchase price is due 15 days prior to shipment. This contract is also subject to variable pricing adjustments.

During the ~~Six~~Nine Months ended ~~June~~September 30, 2022 the Company paid ~~an additional $11.2~~approximately $12.7 million to Bitmain ~~Technologies Limited~~ for deposits related to mining equipment and payments of ~~$285~~$635 thousand were made to various shipping vendors for transportation and customs costs related

to the equipment. Since the inception of our ~~contract~~contracts with Bitmain, we have paid an aggregate of approximately ~~$25.1~~$27.0 million to Bitmain and related vendors relating to the purchase of these machines through ~~June~~September 30, 2022, and expect to pay an additional ~~$1.0~~$1.0 million under the Bitmain ~~contract~~contracts through the completion of the delivery of the ~~machines as a result of variable pricing described above.~~machines.

In October 2021, we also entered into a sale and purchase agreement (the “Uptime Purchase Agreement”) with Uptime Armory LLC (“Uptime”) pursuant to which US Digital agreed to purchase, and Uptime agreed to supply to US Digital, an aggregate of 18 modified 40-foot cargo containers (“POD5ive containers”) that will be designed to hold and operate 280 S19 Pro Antminers manufactured by Bitmain. The purchase price of the POD5ive containers totals ~~$3.15~~$3.15 million, of which ~~$2.4~~$2.4 million or ~~75%~~75% was paid in 2021 as a non-refundable down payment and the remaining ~~25%~~25% was ~~due within five business days~~paid after Uptime ~~delivers~~delivered a “notice of completion” of the equipment. No containers have been delivered as of ~~June~~September 30, 2022.

On the same effective date, US Digital also entered into a hosting agreement with Uptime Hosting ~~LLC(the~~LLC (the “Hosting Agreement”) to host the Company’s 18 POD5ive containers at a secure location and provide power, maintenance and other services specified in the contract for 6 cents per kilowatt with a term of one ~~year.~~year. Under the Hosting Agreement we paid a deposit of ~~$0.8~~$0.8 million in 2021 and were required to pay an additional deposit for each container three months prior to delivery at the hosting site of ~~$44~~$44 thousand and a final deposit for each container one month prior to arrival at the hosting site of ~~$44~~$44 thousand. ~~On June 29, 2022, the Company entered into a mutual termination agreement pursuant to which the parties agreed to terminate the Hosting Agreement.~~ The deposits paid for hosting services under the Hosting Agreement are refundable. On June 29, 2022, the Company and Uptime Hosting LLC entered into a Release and Termination Agreement in which the Hosting Agreement was terminated and Uptime Hosting LLC agreed to pay the $0.8 million. The $0.8 million deposit paid for hosting services under the Hosting Agreement is included within Prepaid expenses and other assets on the consolidated balance sheet as of September 30, 2022. However, the $0.8 million deposit has not been returned, and on September 2, 2022, we filed in Florida circuit court a legal action against Uptime Hosting LLC in an action styled US Digital Mining and Hosting Co, LLC v. Uptime Hosting, LLC (Fla. 13thCir. Ct. Sept. 2, 2022) for the return of the deposit and other damages, alleging breach of contract and violation of the Florida Deceptive and Unfair Trade Practices Act. Uptime Hosting LLC has answered the complaint with affirmative defenses and counterclaims for fraudulent inducement and rescission, which we believe are without merit. The Company has not accrued a loss contingency related to this matter based on management’s assessment of the collectability of the refundable deposit.

On November 8, 2022, we filed an action in Florida circuit court against Uptime Armory, LLC and Bit5ive, LLC in a case styled US Digital Mining and Hosting Co. LLC v. Uptime Amory, LLC and Bit5ive, LLC (Fla. 11thCir. Ct., November 8, 2022). In that action, we alleged breach of contract and violation of the Florida Deceptive and Unfair Trade Practices Act and are seeking, among other things, damages of $3.15 million for non-delivery of the 18 POD5ive containers. The defendants in this action have not yet answered the complaint.

On June 21, 2022, the ~~“Company~~Company entered into a Master Agreement, dated effective as of June 20, 2022, with Compute North LLC (“Compute North”) under which Compute North has agreed to host up to 4,200 of ~~LMFA’s~~US Digital’s Bitcoin Miner S19J Pro ~~Antminer Machines (S19J)~~machines (100 TH/s) ~~(“Bitmain Miner Machines”)~~ and provide colocation, management and other services (the “Master Agreement”). The term of the Master Agreement is for 60 months, subject to earlier termination in specified circumstances. The Company paid a non-refundable co-location deposit of ~~$1,262,621~~$1.3 million on June 21, 2022 under the Master Agreement. ~~The~~Compute North filed for Chapter 11 bankruptcy on September 22, 2022. Compute North has not energized any of our 2,690 machines located at their site.

On September 6, 2022, the Company entered into hosting ~~cost~~agreement (the “Core Hosting Agreement”) with Core Scientific Inc. (“Core”) pursuant to which Core agreed to host the Company’s 1,200 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 and thereafter automatically renews for the periods indicated in the Order. As required under the ~~Master~~Core Hosting Agreement, ~~is expected to approximate $21,000 per day when all hosted~~the Company paid approximately $942 thousand as a deposit on September 2, 2022.

During September 2022, 848 mining machines ~~become fully operational.~~were placed into service and we commenced mining operations. These machines are located at one of the Core hosting locations.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of LMFA and its wholly-owned subsidiaries: LM Funding, LLC; LMF October 2010 Fund, LLC; REO Management Holdings, LLC (including all ~~100%~~100% owned subsidiary limited liability companies); LM Funding of Colorado, LLC; LM Funding of Washington, LLC; LM Funding of Illinois, LLC; US Digital Mining Hosting Co., LLC; LMF SPE #2, LLC and various single purpose limited liability corporations owned by REO Management Holdings, LLC which own various properties. It also includes LMFA Sponsor LLC (a ~~69.5%~~69.5% owned subsidiary). All significant intercompany balances have been eliminated in consolidation.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in the annual consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. The interim condensed consolidated financial statements as of ~~June~~September 30, 2022 and for the Three and ~~Six~~Nine Months ended ~~June~~September 30, 2022 and ~~June~~September 30, 2021, respectively are unaudited. In the opinion of management, the interim condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to provide a fair statement of the results for the interim periods. The accompanying consolidated balance sheet as of December 31, 2021, is derived from the audited consolidated financial statements presented in the Company’s Annual Report on Form 10-K for fiscal the year ended December 31, 2021.

Reclassifications

Certain prior period amounts on the balance sheet have been reclassified to conform to the current period presentation.

Revenue Recognition

We recognize revenue in accordance with generally accepted accounting principles as outlined in ASC 606, Revenue From Contracts with Customers, which requires that five steps be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied a performance obligation.

With respect to its cryptocurrency mining operations, the Company has entered into contracts with digital asset mining pool operators to provide computing power to the mining pools. The contracts are terminable at any time by either party and the Company’s enforceable right to compensation only begins when the Company starts providing computing power to the mining pool operator. In exchange for providing computing power, the Company is entitled to a fractional share of the fixed cryptocurrency award the mining pool operator receives (less pool fees to the mining pool operator), for successfully adding a block to the blockchain, plus a fractional share of the transaction fees attached to that blockchain. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. The transaction consideration the Company receives is noncash consideration, in the form of digital currency, which the Company measures at fair value on the date received which is not materially different than the fair value at contract inception or at the time the Company has earned the award from the mining pools.

Segment and Reporting Unit Information

Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Chief Executive Officer and Chief Financial Officer of the Company are determined to comprise the CODM, as a group. The Company has two operating segments as of September 30, 2022, which we refer to as Specialty Finance and Mining Operations. Our corporate oversight function and other components that may earn revenues that are only incidental to the activities of the Company are aggregated and included in the “All Other” category. See Note 11, “Segment Information”.

Digital Assets

When applicable, we account for all digital assets other than stablecoin as indefinite-lived intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other. We have ownership of and control over our digital assets and use third-party custodial services to secure it. ~~The digital~~Digital assets that are purchased are initially recorded at cost and digital assets that are received in exchange for services provided are recognized at fair value as of the date received (refer to Revenue Recognition policy). Digital assets are subsequently remeasured on the consolidated balance sheet at cost, net of any impairment losses incurred since acquisition. We account for

stablecoin as financial assets in accordance with ASC 310, Receivables. The stablecoin are recorded at amortized cost, which approximates their fair value.

We determine the fair value of our digital assets that are accounted for as intangible assets in accordance with ASC 820, Fair Value Measurement, based on quoted prices on the active exchange(s) that we have determined is the principal market for such assets (Level 1 inputs). We perform an analysis each quarter to identify whether events or changes in circumstances indicate that it is more likely than not that our digital assets are impaired. If the current carrying value of a digital asset exceeds the fair value so determined, an impairment loss has occurred with respect to those digital assets in the amount equal to the difference between their carrying values and the price determined.

The impaired digital assets are written down to their fair value at the time of impairment and this new cost basis will not be adjusted upward for any subsequent increase in fair value. Gains are not recorded until realized upon sale, at which point they are presented separately from of any impairment losses.

Digital currencies earned by the Company through its mining activities are included within operating activities on the accompanying consolidated statements of cash flows.

There is currently no specific guidance under GAAP or alternative accounting framework for the accounting for digital assets recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could have an effect on the Company’s consolidated financial position and results from operations.

Fixed Assets, Net

The Company capitalizes all acquisitions of fixed assets in excess of ~~$500.~~$500. Fixed assets are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets and commences once the assets are ready for their intended use. Fixed assets are comprised of furniture, computer, office equipment and mining machines with assigned useful lives of 3 to 5 ~~years.~~years.

The Company operates in an emerging industry for which limited data is available to make estimates of the useful economic lives of mining machines. To the extent that any of the assumptions underlying management’s estimate of useful life of its mining machines are subject to revision in a future reporting period, either as a result of changes in circumstances or through the availability of greater quantities of data, then the estimated useful life could change and have a prospective impact on depreciation expense and the carrying amounts of these assets.

Impairment of Long-Lived Assets

Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment amount is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. There was 0no impairment of long-lived assets for the Three and ~~Six~~Nine Months ended ~~June~~September 30, 2022 and 2021.

Investment in Securities

Investment in Securities includes investments in common stocks, note receivables, and convertible notes receivables. Investments in securities are reported at fair value with changes in unrecognized gains or losses included in other income on the income statement. The fair value of the BORQ convertible note receivable is based on its classification as a trading security. The Symbiont ~~note~~and Seastar Medical, Inc. notes receivable isare reported at amortized costs less impairment.

Fair Value of Financial Instruments

FASB ASC 825-10, Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet.

Investments in Unconsolidated Entities

We account for investments in less than ~~50%~~50% owned and more than ~~20%~~20% owned entities using the equity method of accounting. Because we have elected the fair value option for these securities, unrealized holding gains and losses during the period are included in earnings.

Income (Loss) Per Share

Basic income (loss) per share is calculated as net income (loss) to common stockholders divided by the weighted average number of common shares outstanding during the period (as adjusted to give effect to the Reverse Stock Split).

The Company issued approximately 74 thousand shares and 2.3 million shares at various times during the ~~Six~~Nine Months ended ~~June~~September 30, 2022 and ~~June~~September 30, 2021, respectively, and has weighted averaged these new shares in calculating income (loss) per share for the relevant period.

Diluted income (loss) per share for the period equals basic loss per share as the effect of any convertible notes, stock based compensation awards or stock warrants would be anti-dilutive.

The anti-dilutive stock based compensation awards consisted of:


	As of September 30,
	2022	2021
Stock Options	3,956,827	3,860
Stock Warrants	7,677,441	391,900

Legal services for the Company associated with the collection of delinquent assessments from property owners are performed by a law firm, Business Law Group (“BLG”), which was owned solely by Bruce M. Rodgers, the Chief Executive Officer of LMFA, until and through the date of the Company’s initial public offering in 2015. Following the offering in 2015, Mr. Rodgers transferred his interest in BLG to other attorneys at the firm through a redemption of his interest in the firm, and BLG became under control of those lawyers. The law firm has historically performed collection work primarily on a deferred billing basis wherein the law firm receives payment for services rendered upon collection from the property owners or at amounts ultimately subject to negotiations with the Company.

Under the agreement, the Company paid BLG a fixed monthly fee of ~~$82,000~~$82,000 for services rendered. The Company paid BLG a minimum per unit fee of ~~$700~~$700 in any case where there is a collection event and BLG receives no payment from the property owner. This provision has been expanded to also include any unit where the Company has taken title to the unit or where the association has terminated its contract with either BLG or the Company.

On February 1, 2022, the Company consented to the assignment by BLG to the law firm BLG Association Law, PLLC (“BLGAL”) of the Services Agreement, dated April 15, 2015, previously entered into by the Company and Business Law Group, P.A. (the “Services Agreement”). The Services Agreement had set forth the terms under which Business Law Group, P.A. would act as the primary law firm used by the Company and its association clients for the servicing and collection of association accounts. The assignment of the Services Agreement was necessitated by the death of the principal attorney and owner of Business Law Group, P.A. In connection with the assignment, BLGAL agreed to amend the Services Agreement on February 1, 2022, to reduce the monthly compensation payable to the law firm from ~~$82,000~~$82,000 to ~~$53,000~~$53,000 (the “Amendment”). Bruce M. Rodgers, the chairman and CEO of the Company, is a ~~50%~~50% owner of BLGAL, and the assignment and Amendment was approved by the independent directors of the Company. A ~~$150~~$150 thousand termination fee was also paid to BLG in association with the assignment.

The Company had originally engaged BLG on behalf of many of its Association clients to service and collect the Accounts and to distribute the proceeds as required by Florida law and the provisions of the purchase agreements between LMF and the Associations. This engagement was subsequently assigned to BLGAL as described above. Ms. Gould who is one of our directors, worked as the General Manager of BLG and works as the General Manager of BLGAL .

Amounts collected from property owners and paid to BLG or BLGAL as applicable for the Three and ~~Six~~Nine Months ended ~~June~~September 30, 2022 and 2021 were approximately ~~$159,000~~$159,000 and ~~$347,000~~$506,000 for 2022 and ~~$246,000~~$246,000 and ~~$492,000~~$738,000 for 2021, respectively. As of ~~June~~September 30, 2022 and December 31, 2021, receivables from property owners for charges ultimately payable to BLGAL or BLGAL were approximately ~~$565,000~~$563,000 and ~~$677,000,~~$677,000, respectively.

Under the Services Agreement in effect during the ~~Six~~Nine Months ended ~~June~~September 30, 2022 and 2021, the Company pays all costs (lien filing fees, process and serve costs) incurred in connection with the collection of amounts due from property owners. Any recovery of these collection costs is accounted for as a reduction in expense incurred. The Company incurred expenses related to these types of costs for the Three and ~~Six~~Nine Months ended ~~June~~September 30, 2022 and 2021 in the amounts of ~~$14,000~~approximately $13,600 and ~~$34,000~~$48,000 for 2022 and ~~$28,000~~$26,000 and ~~$50,000~~$76,000 for 2021, respectively. Recoveries during the Three and ~~Six~~Nine Months ended ~~June~~September 30, 2022 and 2021, related to those costs were approximately ~~$22,000~~$9,000 and ~~$46,000~~$55,000 for 2022 and $ ~~26,000~~27,000 and ~~$46,000~~$72,000 for 2021, respectively.

The Company also shares office space and related common expenses with BLGAL (and previously BLG). All shared expenses, including rent, are charged to BLG based on an estimate of actual usage. Any expenses of BLGAL and BLG paid by the Company that have not been reimbursed or settled against other amounts are reflected as due from related parties in the accompanying consolidated balance sheets. BLGAL and BLG, as applicable were charged a total of approximately ~~$15,000~~$15,000 and ~~$30,000~~$45,000 for the

office sub-lease during the Three and ~~Six~~Nine Months ended ~~June~~September 30, 2022 and ~~$17,000~~$17,000 and ~~$34,000~~$51,000 for the Three and ~~Six~~Nine Months ended ~~June~~September 30, 2021, respectively.

In 2017, the Company assessed the collectability of the amount due from BLG and concluded that even though BLG had repaid ~~$252,771~~$252,771 during 2017, it did not have the ability to repay the remaining balance at the end of 2017 and as such took a reserve of approximately ~~$1.4~~$1.4 million for the balance due as of December 31, 2017. In 2021 and 2020, the Company subsequently recouped ~~$200,000~~$200,000 and ~~$500,000,~~$500,000, respectively, of this write-off. Additional recoveries of the reserve are not expected. ~~NaN~~No amounts were recouped in 2022.

Amounts payable to BLGAL and BLG, in aggregate as of ~~June~~September 30, 2022 and December 31, 2021 were approximately ~~$371,200~~$56,600 and ~~$121,200, respectively~~$. 121,200, respectively.

As of September 30, 2022, approximately $19,000 was payable to LMAO related to reimbursement of professional fees paid by LMAO on behalf of LMFA. This amount is included within 'Due to related parties' on the consolidated balance sheets.

Note 4. Income Taxes

Prior to the Company’s initial public offering in October 2015, the earnings of the Predecessor, which was a limited liability company taxed as a partnership, were taxable to its members. In connection with the contribution of membership interests to the Company (a C-Corporation formed in 2015), the net income or loss of the Company after the initial public offering is taxable to the Company and reflected in the accompanying consolidated financial statements.

The Company performs an evaluation of the realizability of its deferred tax assets on a quarterly basis. The Company considers all positive and negative evidence available in determining the potential of realizing deferred tax assets, including the scheduled reversal of temporary differences, recent and projected future taxable income and prudent and feasible tax planning strategies. The estimates and assumptions used by the Company in computing the income taxes reflected in the accompanying consolidated financial statements could differ from the actual results reflected in the income tax returns filed during the subsequent year. Adjustments are recorded based on filed returns when finalized or the related adjustments are identified.

During the twelve month period ended December 31, 2021, the Company generated positive pre-tax income of approximately $5.3 million. The Company had estimated under the best information at that time that it could fully utilize its carryforward net operating (“NOL”) tax losses from prior periods for 2021. However, once the 2021 tax return was finalized in October 2022, the NOLs available for use was limited under Internal Revenue Code Section 382 to $93,000 but we were able to use a $1.4 million capital loss carryforward. The usage of these NOLs will be limited to approximately $93,000 each year going forward but can be carried forward for twenty years, after which the remaining amounts can be carried forward indefinitely with offsets limited to 80% of taxable income. As such this change in estimate resulted in a tax payable of $1.3 million which is being reported in the nine month period ended September 30, 2022.

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 2022, 2020 and ~~2021,~~2019, the Company concluded there was not sufficient positive evidence to overcome this recent operating history. As a result, the Company believed that a valuation allowance was necessary based on the more-likely-than-not threshold noted above. The Company had recorded a valuation allowance of approximately ~~$4,182,000~~$3,227,000 as of ~~June~~September 30, 2022 and ~~$3,246,000~~$3,246,000 as of December 31, 2021.

1213

Significant components of the tax expense (benefit) recognized in the accompanying consolidated statements of operations for the Three and ~~Six~~Nine Months ended ~~June~~September 30, 2022 and ~~June~~September 30, 2021 are as follows:


	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Current tax benefit
Federal	$	2,499,186		$	(1,159,524	)	$	1,135,644		$	2,078,774
State		458,158			(321,397	)		176,034			348,622
Total current tax expense (benefit)		2,957,344			(1,480,921	)		1,311,678			2,427,396
Deferred tax expense		(1,153,380	)		12,619			(231,454	)		34,614
Change in tax rates		423,630			-			211,815			-
Valuation allowance		(915,916	)		1,480,921			19,639			(2,432,127	)
Income tax expense	$	1,311,678		$	12,619		$	1,311,678		$	29,883

Three Months Ended

Three Months Ended

Six Months Ended

Six Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Current tax benefit

Federal

$
(1,001,827
)

$
2,324,460

$
(1,363,542
)

$
3,238,298

State

(234,022
)

480,942

(282,124
)

670,019

Total current tax expense (benefit)

(1,235,849
)

2,805,402

(1,645,666
)

3,908,317

Deferred tax expense

1,943,058

13,781

921,926

21,995

Change in tax rates

(211,815
)

-

(211,815
)

-

Valuation allowance (expense)

(495,394
)

(2,805,403
)

935,555

(3,913,048
)
Income tax (reduction) benefit

$
-

$
13,780

$
-

$
17,264

The reconciliation of the income tax computed at the combined federal and state statutory rate of ~~24.6%~~(24.2%) and ~~25.4%~~(27.0%) for the Three and ~~Six~~Nine Months ended ~~June~~September 30, 2022 and ~~25.4%~~(0.2%) and 0.3% for the Three and ~~Six~~Nine Months ended ~~June~~September 30, 2021 to the income tax benefit is as follows:


	Three Months Ended				Three Months Ended				Nine Months Ended					Nine Months Ended
	September 30, 2022				September 30, 2021				September 30, 2022					September 30, 2021
Benefit on net loss	$	(488,094	)	9.0%	$	(1,469,827	)	26.7%	$	(1,219,660	)	25.1%		$	2,458,947		23.8%
Section 382 adjustment		2,299,884		(42.5)%		-		-		2,299,884		(47.3)%			-			-
Non deductible expenses		(7,826	)	0.1%		1,525		-		-			-		3,063			0.0	%
Valuation Allowance		(915,916	)	17.0%		1,480,921		(26.9)%		19,639		(0.4)%			(2,432,127	)	(23.5)%
Tax rate change		423,630		(7.8)%		-		-		211,815		(4.4)%			-			-
Tax benefit/effective rate	$	1,311,678		(24.2)%	$	12,619		(0.20)%	$	1,311,678		(27.0)%		$	29,883		0.3%

The significant components of the Company’s deferred tax liabilities and assets as of ~~June~~September 30, 2022 and December 31, 2021 are as follows:

During the ~~Six~~Nine Months ended ~~June~~September 30, 2022, the Company ~~offset $1.6~~generated a pre-tax loss of approximately $4.9 million which in conjunction with the change in estimate mentioned above resulted in an increase of ~~it’s~~the deferred tax ~~recovery with $0.9~~assets of approximately $2.9 million. The Company's deferred tax liabilities increased by $2.9 million ~~of its valuation allowance, $0.9~~due primarily to an unrealized gain that generated a $2.8 million deferred tax ~~asset offset~~liability. The net deferred tax assets of $3.2 million was fully reserved by an increase in ~~part by a $0.2 million tax change.~~the valuation allowance. During the ~~Six~~Nine Months ended ~~June~~September 30, 2021, the Company offset ~~$3.9~~$2.4 million of ~~it’s~~its tax expense with ~~$3.9~~$2.2 million of its valuation allowance.

The following table presents maturities of operating lease liabilities on an undiscounted basis as of ~~June~~September 30, 2022:


	Operating Leases
2022 (excluding the six months ended June 30, 2022)	$	57,263
				Operating Leases
2022 (excluding the nine months ended September 30, 2022)				$	28,344
2023		108,039			108,039
2024		113,794			113,794
2025		77,733			77,733
(less: imputed interest)		(40,480	)		(34,695	)
	$	316,349		$	293,215

Except as described below, we are not currently a party to material pending or known threatened litigation proceedings. However, we frequently become party to litigation in the ordinary course of business, including either the prosecution or defense of claims arising from contracts by and between us and client Associations. Regardless of the outcome, litigation can have an adverse impact on us because of prosecution, defense, and settlement costs, diversion of management resources and other factors.

The Company accrues for contingent obligations, including estimated legal costs, when the obligation is probable and the amount is reasonably estimable. As facts concerning contingencies become known, the Company reassesses its position and makes appropriate adjustments to the consolidated financial statements. Estimates that are particularly sensitive to future changes include those related to tax, legal, and other regulatory matters.

On March 9, 2022, legal counsel to a purported stockholder of the Company threatened to file a direct and derivative complaint alleging breaches of fiduciary duty by the Company’s officers and directors, primarily with respect to (i) the Amended and Restated Employment Agreements entered into by the Company with each of Mr. Rodgers and Mr. Russell in October 2021; (ii) the approval of actions taken at our 2021 annual meeting of stockholders in December 2021; (iii) payments made to Business Law Group, P.A. in

exchange for services provided pursuant to the Services Agreement between the Company and Business Law Group; and (iv) strategic advisory agreements entered into by us in connection with our planned cryptocurrency mining business. On May 20, 2022, the Company and the purported stockholder agreed to a settlement of the stockholder’s alleged claims under which the Company is required to seek a new independent director to replace Joel Rodgers within six months of the settlement date, engage a compensation consultant to review certain sections of the Company’s executive employment agreements within ninety days of the settlement date, make changes in response to the consultant’s recommendation within six months of the settlement date and pay the attorney fees and other related legal costs incurred by the counterparty in an amount of ~~$275,000.~~$275,000. The settlement payment is included within "Professional Fees" within our consolidated statements of operations for the ~~Three and Six~~Nine Months ended ~~June~~September 30, 2022.

In October 2021, we entered into a sale and purchase agreement (the “Uptime Purchase Agreement”) with Uptime Armory LLC (“Uptime”) pursuant to which US Digital agreed to purchase, and Uptime agreed to supply to US Digital, an aggregate of 18 modified 40-foot cargo containers (“POD5ive containers”) that will be designed to hold and operate 280 S19 Pro Antminers manufactured by Bitmain. The purchase price of the POD5ive containers totals $3.15 million, of which $2.4 million or 75% was paid in 2021 as a non-refundable down payment and the remaining 25% was paid after Uptime delivered a “notice of completion” of the equipment. No containers have been delivered as of September 30, 2022.

In October 2021, US Digital also entered into the Hosting Agreement to host the Company’s 18 POD5ive containers at a secure location and provide power, maintenance and other services specified in the contract for 6 cents per kilowatt with a term of one year. Under the Hosting Agreement we paid a deposit of $0.8 million in 2021 and were required to pay an additional deposit for each container three months prior to delivery at the hosting site of $44 thousand and a final deposit for each container one month prior to arrival at the hosting site of $44 thousand. The deposits paid for hosting services under the Hosting Agreement are refundable. On June 29, 2022, the Company and Uptime Hosting LLC entered into a Release and Termination Agreement in which the Hosting Agreement was terminated and Uptime Hosting LLC agreed to pay the $0.8 million. The $0.8 million deposit paid for hosting services under the Hosting Agreement is included within Prepaid expenses and other assets on the consolidated balance sheet as of September 30, 2022. However, the $0.8 million deposit has not been returned, and on September 2, 2022, we filed in Florida circuit court a legal action against Uptime Hosting LLC in an action styled US Digital Mining and Hosting Co, LLC v. Uptime Hosting, LLC (Fla. 13th Cir. Ct. Sept. 2, 2022) for the return of the deposit and other damages, alleging breach of contract and violation of the Florida Deceptive and Unfair Trade Practices Act. Uptime Hosting LLC has answered the complaint with affirmative defenses and counterclaims for fraudulent inducement and rescission, which we believe are without merit. The Company has not accrued a loss contingency related to this matter based on management’s assessment of the collectability of the refundable deposit.

Note 6. Stockholders’ Equity

Stock Options

The 2015 Omnibus Incentive Plan provides for the issuance of stock options, stock appreciation rights, performance shares,

performance units, restricted stock, restricted stock units, shares of our common stock, dividend equivalent units, incentive cash

awards or other awards based on our common stock. Awards may be granted alone or in addition to, in tandem with, or (subject to the

2015 Omnibus Incentive Plan’s prohibitions on repricing) in substitution for any other award (or any other award granted under

another plan of ours or of any of our affiliates).

The following is a summary of the stock option plan activity during the ~~Six~~Nine Months ended ~~June~~September 30, 2022 and 2021:


	2022				2021				2022						2021
	Number of		Weighted Average		Number of		Weighted Average		Number of			Weighted Average			Number of			Weighted Average
	Options		Exercise Price		Options		Exercise Price		Options			Exercise Price			Options			Exercise Price
Options Outstanding at Beginning of the year		3,956,827	$	6.22		3,860	$	302.55			3,956,827	$	6.22				3,860	$	302.55
Granted		-		-		-		-		-			-			-			-
Exercised		-		-		-		-		-			-			-			-
Adjustment		-		-		-		-		-			-			-			-
Forfeited		-		-		-		-		-			-			-			-

Options Outstanding at June 30,		3,956,827	$	6.22		3,860	$	302.55
Options Outstanding at September 30,											3,956,827	$	6.22				3,860	$	302.55

Options Exercisable at June 30,		37,794	$	34.60		3,860	$	302.55
Options Exercisable at September 30,											37,794	$		34.60			3,860	$	302.55

Stock compensation expense recognized for the Three and ~~Six~~Nine Months ended ~~June~~September 30, 2022 was approximately $ ~~3.3~~3.6 million and ~~$6.6~~$10.9 million, respectively, and ~~$nil~~$nil for the Three and ~~Six~~Nine Months ended ~~June~~September 30, 2021. There was ~~$10.2~~$6.9 million of unrecognized compensation cost associated with unvested stock options as of ~~June~~September 30, 2022.

The aggregate intrinsic value of the outstanding common stock options as of each of ~~June~~September 30, 2022 and December 31, 2021 was approximately $0$0 and ~~$0,~~$0, respectively.

Stock Issuance

In the year ended December 31, 2021, the Company issued 73,940 shares to management as part of their employment contracts of which ~~$229,500~~$229,500 was expensed. The shares were physically issued in February 2022.

The Company issued 200,000 shares on November 4, 2021 pursuant to an agreement that is for one year with two vendors who provide consulting in the blockchain and crypto currency field. The total fair value of the stock at the time of issuance was approximately ~~$1,318,000~~$1,318,000 of which we expensed approximately ~~$329,500~~$329,500 and approximately ~~$659,000~~$988,500 during the Three and ~~Six~~Nine Months ended ~~June~~September 30, 2022, respectively.

Warrants

The following is a summary of the warrant activity during the ~~Six~~Nine Months ended ~~June~~September 30, 2022 and 2021:


	2022				2021
	Number of		Weighted Average		Number of		Weighted Average
	Warrants		Exercise Price		Warrants		Exercise Price
Warrants outstanding at beginning of the year		7,702,441	$	5.00		2,718,012	$	4.20

Granted		-		-		-		-
Exercised		-		-		(2,326,112)		4.08
Terminated		(25,000)		4.50		-		-

Warrants outstanding and exercisable at September 30,		7,677,441	$	5.00		391,900	$	4.35

2022

2021

Number of

Weighted Average

Number of

Weighted Average

Warrants

Exercise Price

Warrants

Exercise Price

Warrants outstanding at beginning of the year

7,702,441

$
5.00

2,718,012

$
4.20

Granted

-

-

-

-

Exercised

-

-

(2,326,112)

4.08

Terminated

(25,000)

4.50

-

-

Warrants outstanding and exercisable at June 30,

7,677,441

$
5.00

391,900

$
4.35

~~During the Six Months ended June 30, 2022, 25,000 warrants expired.~~ During the ~~Six~~Nine Months ended ~~June~~September 30, 2022, 25,000 warrants expired. During the Nine Months ended September 30, 2021, the Company received approximately ~~$9.5~~$9.5 million upon the exercise by warrant holders of warrants for approximately 2.3 million ~~shares~~.shares. There was also a cashless warrant exercise for approximately 129,800 shares on January 29, 2021. The aggregate intrinsic value of the outstanding common stock warrants as of ~~June~~September 30, 2022 and December 31, 2021 was approximately $0$0 and ~~$177,000~~$177,000, respectively.

Note 7. Investments

Short-term Investments – convertible debt securities

The Company entered into an agreement with BORQS Technologies Inc. (“Borqs”) (Nasdaq: BRQS) in February 2021 under which the Company agreed to purchase Senior Secured Convertible Promissory Notes (“Notes”) of Borqs up to an aggregate principal amount of $5$5 million. The Company’s purchase of the Notes was a part of a larger transaction in which an aggregate of ~~$20~~$20 million in Notes were sold by Borqs in a private transaction to several institutional and individual investors, including the Company. The Notes become due in February 2023, have an annual interest rate of 8%8%, are convertible into ordinary shares of Borqs at a ~~10%~~10% discount from the market price, and have ~~90%~~90% warrant coverage (with the warrants exercisable at ~~110%~~110% of the conversion price. The Company received 2,922,078 warrants which had a nominal value on the grant date. One-third of the Notes ($~~1,666,667)~~1,666,667) were funded by the Company at the execution of definitive agreements for the transaction, and two-thirds of the Notes ($~~3,333,333)~~3,333,333) were purchased and funded upon the satisfaction of certain conditions, including effectiveness of a registration statement that was deemed effective on May 3, 2021 and the Company completed this funding on May 6, 2021. In June 2021, the Company exercised a cashless exercise of the Borqs warrants and received 5,956,544 common shares of Borqs. The Company subsequently sold those Borqs common shares in June 2021 and recognized ~~$8.5~~$8.5 million in proceeds, all of which was recognized as a realized gain on securities in 2021.

During the three months ended September 30, 2021, the Company converted $4,100,000 of the Borqs convertible note plus accrued interest of $131,760 into 5,960,829 shares. As of ~~June~~September 30, 2021 the Company considered the fair value of the ~~Borqs~~Borq convertible note to be equal to the fair value of the stock on ~~June~~September 30, 2021 or ~~$1.45~~$0.592 per share times the number of shares that it could be converted into based on a conversion price of ~~$0.972~~$0.6534 or ~~5,233,475~~1,422,091 shares ~~with an aggregate~~which had a fair value of ~~$7,588,538. As of June 30, 2021, the~~$841,878. The re-measurement resulted in an unrealized ~~gain~~loss of ~~$2,501,600 which is~~$87,316 included within “Unrealized ~~gain~~loss on convertible debt security” ~~in the consolidated statements of operations~~ for the Three and ~~Six Months~~Nine months ended ~~June~~September 30, 2021.

~~During the year ended December 31, 2021, the Company converted $4,100,000 of the outstanding principal under the Notes plus accrued interest of $131,760 into 5,960,829 shares of Borqs.~~ The Company classified the 5,960,829 shares as marketable securities and subsequently sold ~~1,064,935~~587,530 shares in the ~~year~~nine months ending ~~December 31,~~

September 30, 2021 and ~~classified~~477,405 shares were sold during the ~~remaining shares as marketable securities.~~ fourth quarter of 2021.

The remaining 4,895,894 shares were sold during the first quarter of 2022 which resulted in a realized loss of ~~$395~~$395 thousand which is reflected in ‘Realized gain on securities’ in the consolidated statements of operations within the ~~Six~~Nine Months ended ~~June~~September 30, 2022. The remaining principal amount of the Notes plus accrued interest through the date of conversion ($~~965,096)~~965,096) was converted into common shares of Borqs at a conversion price of $0.25 per share or 3,863,200 shares. A gain of ~~$287,778~~$287,778 was recognized on the conversion of the convertible debt to common shares and is included within “Realized gain on convertible debt securities” in the consolidated statements of operations for the ~~Three and Six~~Nine Months ended ~~June~~September 30, 2022. Subsequent to the conversion, the 3,863,200 shares were sold which resulted in a realized gain of ~~$45~~$45 thousand which is included within ~~‘Realized~~‘Realized gain on securities’ in the consolidated statements of operations for the ~~Three and Six~~Nine Months ended ~~June~~September 30, ~~2022~~.2022.

Short-term investments in convertible debt securities consist of the following:


	June 30, 2022			December 31, 2021		June 30, 2021		September 30, 2022			December 31, 2021		September 30, 2021

Convertible note	$	-		$	539,351	$	7,588,538	$	-		$	539,351	$	841,878
End of period	$	-		$	539,351	$	7,588,538	$	-		$	539,351	$	841,878


	June 30, 2022					June 30, 2021		September 30, 2022					September 30, 2021

Beginning of year	$	539,351				$	-	$	539,351				$	-
Investment in convertible debt security		-					5,000,000		-					5,000,000
Accrued interest income on debt security		17,753					86,938
Unrealized gain on convertible debt security		-					2,501,600
Accrued interest income on convertible debt security									17,753					160,954
Unrealized loss on convertible debt security									-					(87,316	)
Convertible debt and interest converted into marketable shares		(844,882	)						(844,882	)				(4,231,760	)
Realized gain on conversion into marketable shares		287,778							287,778					-
End of period	$	-				$	7,588,538	$	-				$	841,878

In December 2020, the Company entered into a Loan Agreement (the “Investor Loan Agreement”) with a private investor (“Investor”) pursuant to which the Investor agreed to provide consulting services and make one or more non-recourse loans to the Company in a principal amount of up to the purchase price of the Borqs loan receivables purchased by the Company. The Investor Loan Agreement

does not provide a fixed rate of interest, and the Company and Investor agreed to split the net proceeds from the Company sales of the settlement shares, with the Company receiving one-third of the net proceeds after a return of Investor’s principal and the Investor receiving return of principal plus two-thirds of the net proceeds thereafter.

As part of that transaction in which funding began in January 2021 ~~and in which transactions occurred during the Six Months ended June 30, 2021,~~ the Company recognized a ~~$5.7~~$5.7 million gain on the Borqs loan receivables loan transaction in which we acquired ~~$18.2~~$18.2 million of Borqs debt for ~~$15.5~~$15.5 million and converted the debt into Borqs common stock and subsequently sold such shares for ~~$32.6~~$32.6 million, provided ~~$11.3~~$11.3 million to the Investor and realized a ~~$5.7~~$5.7 million gain. That transaction was completed by ~~June~~September 30, 2021.

Note Receivable – related party

On February 1, 2022, LMAO issued an unsecured promissory note to LMFAO Sponsor LLC, pursuant to which LMAO may borrow up to an aggregate principal amount of ~~$500,000~~$500,000 to be used for a portion of LMAO’s expenses. On July 28, 2022 (effective as of June 30, 2022), the aggregate principal limit was increased to ~~$1,750,000.~~$1,750,000. The loan iswas non-interest bearing, unsecured and due at the earlier of the 24 month anniversary of LMAO’s initial public offering or the closing of its initial business combination.

As of ~~June~~September 30, 2022, LMAO had drawn down ~~$910,000~~$1,750,000 under the promissory note with LMFAO Sponsor LLC to pay for offering expenses.

On July 29, 2022, LMAO issued a press release announcing that its board of directors elected to extend the date by which LMAO has to consummate a business combination from July 29, 2022 to October 29, 2022 (the “Extension”), as permitted under LMAO’s Amended and Restated Certificate of Incorporation. In connection with the Extension, LMFAO Sponsor deposited an aggregate of $1,035,000 (representing $0.10 per public share of LMAO) into LMAO’s trust account on July 29, 2022. This deposit was made in respect of a non-interest bearing loan to LMAO (the “Extension Loan”).

In connection with the closing of the LMAO Business Combination, on October 28, 2022, Sponsor and Seastar Medical Holding Corporation amended, restated, and consolidated (i) the original Promissory Note, dated July 29, 2022, issued by LMAO to Sponsor in the principal amount of $1,035,000 and (ii) the original Amended and Restated Promissory Note, effective June 30, 2022, issued by LMAO to Sponsor in the principal amount of $1,750,000 (collectively, the “Original Sponsor Notes”), by entering into one consolidated amended and restated promissory note with an aggregate principal amount of $2,785,000 (the “Amended Sponsor Note”).
The amendment extends the maturity date of the Original Sponsor Notes to October 30, 2023. Refer to Note 11.

Short-term investments – debt securities

~~Short-term investments held to maturity in debt securities consist of the following:~~

The Company entered into a secured promissory note and loan agreement with Symbiont.IO, Inc. (“Symbiont”) on December 1, 2021 under which the Company agreed to lend Symbiont an aggregate principal amount of up to ~~$3 million.~~$3 million, of which $2 million was drawn. The outstanding principal amount under the note will bear interest at a rate of ~~16%~~16% per annum. The outstanding principal, plus any accrued and unpaid interest, becomes due and payable on December 1, 2022. The Symbiont note is secured by a first priority perfected security interest in the assets of Symbiont. Concurrently with the execution of the Symbiont note, the Company and Symbiont entered into a First Refusal

and Purchase Option Agreement, dated December 1, 2021 (the “ROFR Agreement”), to provide the Company with certain rights relating to the potential purchase of the capital stock or assets of Symbiont. Pursuant to the terms of the ROFR Agreement, in the event that Symbiont expects to accept a third-party offer that would result in a sale of Symbiont, then the Company will have the first right and option to purchase, upon the same terms and conditions as the third-party offer, the assets or capital stock of Symbiont, subject to certain terms and exclusions as described in the ROFR Agreement. The Company’s rights under the ROFR Agreement are assignable to third parties. The ROFR Agreement will expire on December 1, ~~2022.~~2022. Upon the occurrence of any event of default, the Company may, under its sole and absolute discretion, elect to convert the total outstanding principal and accrued but unpaid interest into shares of common stock of Symbiont at a conversion price per share equal to ~~$3.0642~~$3.0642 (subject to adjustment for any stock splits, reverse stock splits and similar changes in the capital stock of Symbiont). As of ~~June~~September 30, 2022 and December 31, 2021, there was ~~$185,863~~$267 thousand and ~~$27,178~~$27 thousand of accrued interest on the Symbiont loan included in Short-term investments – debt securities.

As part of a $2$2 million loan to Symbiont in December 2021, the Company received 700,000 warrants. Each warrant is immediately exercisable at a purchase price of ~~$3.0642~~$3.0642 per share of Common Stock, subject to adjustment in certain circumstances, and will expire on December 1, ~~2026.~~2026. The Company determined the warrants to have a nominal value at inception and as of ~~June~~September 30, 2022 due to lack of marketability.

On September 9, 2022, the Company entered into a Credit Agreement with SeaStar Medical pursuant to which the Company agreed to make advances to SeaStar Medical of up to $700,000 for general corporate purposes at an interest rate equal to 15% per annum. All advances made to SeaStar Medical under the Credit Agreement and accrued interest are due and payable to LMFA on the maturity date. The maturity date of the loan is the earlier of (a) October 25, 2022, (b) the consummation of the Business Combination with LMAO, and (c) the termination of the Merger Agreement with LMAO. As of September 30, 2022, SeaStar Medical has borrowed

$350,000 under the Credit Agreement. As of September 30, 2022 and December 31, 2021, there was $3 thousand and nil of accrued interest on the Seastar Medical loan included in Short-term investments – debt securities.

	June 30, 2022		December 31, 2021		June 30, 2021
Symbiont.IO Note Receivable	$	2,185,863	$	2,027,178	$	-
							September 30, 2022		December 31, 2021		September 30, 2021
Symbiont.IO note receivable							$	2,266,521	$	2,027,178	$	-
Seastar Medical note receivable							$	352,771	$	-	$	-
End of period	$	2,185,863	$	2,027,178	$	-	$	2,619,292	$	2,027,178	$	-


	June 30, 2022				June 30, 2021		September 30, 2022				September 30, 2021
Beginning of year	$	2,027,178			$	-	$	2,027,178			$	-
Accrued interest income on debt security		158,685				-
Investement in Seastar Medical note receivable								350,000				-
Accrued interest income on debt securities								242,114				-
Unrealized loss		-				-		-				-
End of period	$	2,185,863			$	-	$	2,619,292			$	-

Our marketable equity securities are publicly traded stocks measured at fair value using quoted prices for identical assets in active markets and classified as Level 1 within the fair value hierarchy. Marketable equity securities as of ~~June~~September 30, 2022 and December 31, 2021 are as follows:

	Cost		Cost of Shares Sold			Gross Unrealized Gain (Loss)			Fair Value
											Cost		Cost of Shares Sold			Gross Unrealized Gain (Loss)			Fair Value
Marketable equity securities, June 30, 2022	$	2,976,933	$	(2,915,813	)	$	(23,900	)	$	37,220

Marketable equity securities, September 30, 2022											$	2,976,933	$	(2,915,813	)	$	(36,900	)	$	24,220

Marketable equity securities, December 31, 2021		4,766,349	$	(1,246,708	)		(1,387,590	)		2,132,051	$	4,766,349	$	(1,246,708	)	$	(1,387,590	)	$	2,132,051

During the Three and ~~Six~~Nine Months ended ~~June~~September 30, 2022, the Company sold ~~3,863,200~~0 shares and 8,759,094 shares, respectively, of Borqs shares for approximately ~~$890 thousand~~nil and ~~$2,318 thousand,~~$2.3 million, respectively. The Company realized a net gain (loss) of ~~$45~~nil and ($350) thousand ~~and ($350) thousand~~related to the sale of securities for the Three and ~~Six~~Nine Months ended ~~June~~September 30, 2022, respectively. The net gain (loss) is included within "Realized gain (loss) on securities" within our consolidated statements of operations.

In connection with LMF Acquisition Opportunities Inc (“LMAO”) initial public offering in January 2021, the Company’s affiliate LMFA Sponsor LLC purchased an aggregate 5,738,000 private placement warrants from LMAO (“Private Placement Warrants”) at a price of ~~$1.00~~$1.00 per whole warrant. Each Private Placement Warrant is exercisable for one share of LMAO’s Class A common stock at a price of ~~$11.50~~$11.50 per share, and as such meets the definition of a derivative as outlined within ASC 815, Derivatives and Hedging. The Private Placement Warrants are recorded at fair value and are classified in long-term "Investments" on the consolidated balance sheet. The fair value of the Private Placement Warrants is classified as level 3 in the fair value hierarchy as the calculation is dependent upon company specific adjustments to the observable trading price of LMAO’s public warrants for lack of marketability and related risk of

forfeiture should no business combination occur. Subsequent changes in fair value will be recorded in the income statement during the period of the change. As of ~~June~~September 30, 2022 and 2021, our re-measurement resulted in an unrealized loss of approximately ~~$433,000~~$194 thousand and $~~1,457,000~~1,651 thousand for the Three and ~~Six~~Nine Months ended ~~June~~September 30, 2022 and approximately ~~$506,000~~$184 thousand unrealized ~~gain~~

loss and $~~3,443,000~~3,626 thousand unrealized loss for the Three and ~~Six~~Nine Months ended ~~June~~September 30, 2021. The unrealized loss is included within "Unrealized gain (loss) on investment and equity securities" within our consolidated statements of operations.

Long-term investments ~~as of~~ consist of the following:

June 30, 2022

December 31, 2021

June 30, 2021

LMF Acquisition Opportunities Inc. warrants
$
516,420

$
1,973,413

$
2,295,200

End of period
$
516,420

$
1,973,413

$
2,295,200

June 30, 2022

June 30, 2021

Beginning of year
$
1,973,413

$
-

Investments in affiliate

-

5,738,000

Unrealized loss on investment in affiliate

(1,456,993
)

(3,442,800
)

End of period
$
516,420

$
2,295,200


	September 30, 2022			December 31, 2021		September 30, 2021

LMF Acquisition Opportunities Inc. warrants	$	322,246		$	1,973,413	$	2,111,584
End of period	$	322,246		$	1,973,413	$	2,111,584


	September 30, 2022					September 30, 2021

Beginning of year	$	1,973,413				$	-
Investments in affiliate		-					5,738,000
Unrealized gain (loss) on investment in affiliate		(1,651,167	)				(3,626,416	)
End of period	$	322,246				$	2,111,584

Investment in Unconsolidated Affiliates

LMF Acquisition Opportunities Inc.

The Company is the sponsor of LMF Acquisition Opportunities, Inc. (“LMAO”), a special purpose acquisition company that completed an initial public offering in January 2021. Prior to LMAO’s initial public offering, LMFA Sponsor LLC (“Sponsor”), a ~~70%~~70% owned subsidiary of the Company, organized and initially capitalized LMAO by a ~~$25,000~~$25,000 purchase of Class B shares par value ~~$0.0001~~$0.0001 per share, of LMAO. At the time of the initial public offering of LMAO, Sponsor purchased Private Placement Warrants that allow it to purchase 5,738,000 shares of Class A common stock at an exercise price of ~~$11.50.~~$11.50. The Class B shares and Private Placement Warrants were issued to and are held by Sponsor. The shares of Class B common stock of LMAO held by Sponsor will automatically convert into shares of LMAO’s Class A common stock on a one-for-one basis at the time of LMAO’s initial business combination and are subject to certain transfer restrictions.

The registration statement for LMAO’s initial public offering (the “LMAO IPO”) was declared effective on January 25, 2021 and on January 28, 2021, LMAO consummated the LMAO IPO with the sale of 10,350,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public Shares”), at ~~$10.00~~$10.00 per Unit, generating gross proceeds of ~~$103,500,000.~~$103,500,000. The Units trade on the NASDAQ Capital Market under the ticker symbol “LMAOU”. After the securities comprising the units began separate trading on March 18, 2021, the shares of Class A common stock and warrants were listed on NASDAQ under the symbols “LMAO” and “LMAOW,” respectively. Simultaneously with the closing of the LMAO IPO, LMAO consummated the sale of the Private Placement Warrants at a price of ~~$1.00~~$1.00 per Private Placement Warrant in a private placement to Sponsor generating gross proceeds of ~~$5,738,000.~~$5,738,000.

As a result of the LMAO IPO, we ceased having a controlling financial interest in LMAO as of January 28, 2021. Additionally, as our retained investment in LMAO qualifies for equity-method accounting, we were required to remeasure our retained interest in LMAO at fair value and include any resulting adjustments as part of a gain or loss recognized on deconsolidation. The fair value calculation related to our retained interest in LMAO is dependent upon company-specific adjustments applied to the observable trading price of LMAO’s Class A common stock.

The Company’s investment in LMAO is held through a ~~69.5%~~69.5% equity interest in Sponsor. The LMAO IPO closed on January 28, 2021 and proceeds from LMAO’s IPO totaled ~~$103.5~~$103.5 million. If LMAO does not complete a business combination within 18 months from the closing of LMAO’s IPO, the proceeds from the sale of the Private Placement Warrants (after LMAO IPO transaction costs) will be used to fund the redemption of the shares sold in the LMAO IPO (subject to the requirements of applicable law), and the private warrants will expire without value. The Sponsor holds approximately ~~20%~~20% of the total common shares (Class A and Class B) in LMAO along with the 5,738,000 Private Placement Warrants. The Sponsor is managed by the Company. The Company has determined that as a result of the LMAO IPO, we ceased having a controlling financial interest in LMAO as of January 25, 2021. The

Company, therefore, accounts for its interest in LMAO under the equity method of accounting. Additionally, as our retained investment in LMAO qualifies for equity-method accounting, we were required to remeasure our retained interest at fair value and include any resulting adjustments as part of a gain or loss recognized on deconsolidation. The fair value calculation related to our retained interest in LMAO is dependent upon company-specific adjustments applied to both the observable trading price of LMAO’s Class A common stock and the related risk of forfeiture should LMAO not consummate a business combination.

On April 21, 2022, ~~LMF Acquisition Opportunities, Inc. (“~~LMAO”) entered into an Agreement and Plan of Merger with LMF Merger Sub, Inc., a Delaware corporation and direct, wholly owned subsidiary of LMAO, and SeaStar Medical, Inc., a Delaware corporation.

~~As of June 30, 2022 due~~Due to the progression of the pending merger with SeaStar Medical, Inc. the Company recalculated the fair value of our interest in LMAO which included a reassessment of the risk of forfeiture. Based on the work performed, we concluded that the risk of forfeiture has decreased and the value of our retained interest has increased. As a result of the remeasurement of our retained interest in LMAO, we recognized an unrealized gain on securities of ~~$12.7~~$12.7 million and ~~$4.6~~$4.6 million for the ~~Six~~Nine Months ended ~~June~~September 30, 2022 and 2021, within "Unrealized gain (loss) on investment and equity securities" within our consolidated statements of operations.


	June 30, 2022		December 31, 2021		June 30, 2021		September 30, 2022		December 31, 2021		September 30, 2021

LMF Acquisition Opportunities Inc. common stock	$	17,362,125	$	4,676,130	$	4,615,583	$	17,362,125	$	4,676,130	$	4,676,130
End of period	$	17,362,125	$	4,676,130	$	4,615,583	$	17,362,125	$	4,676,130	$	4,676,130


	June 30, 2022				June 30, 2021		September 30, 2022				September 30, 2021

Beginning of year	$	4,676,130			$	25,000	$	4,676,130			$	25,000
Unrealized gain on investment in affiliate		12,685,995				4,590,583		12,685,995				4,651,130
End of period	$	17,362,125			$	4,615,583	$	17,362,125			$	4,676,130

The net unrealized gain (loss) on securities from the Company’s investment in LMAO’s Class B shares and warrants totaled ~~$12.2~~a ($194) thousand loss and $11.0 million ~~and $11.2 million,~~gain, respectively for the Three and ~~Six~~Nine Months ended ~~June~~September 30, 2022 and ~~$0.5~~($123) thousand loss and $1.0 million ~~and $1.1 million~~gain for the Three and ~~Six~~Nine Months ended ~~June~~September 30, 2021.

Note 11. Segment Information

The Company applies ASC 280, Segment Reporting, in determining its reportable segments. The Company has two reportable segments: Specialty Finance and Mining Operations. The guidance requires that segment disclosures present the measure(s) used by the CODM to decide how to allocate resources and for purposes of assessing such segments’ performance. The Company’s CODM uses revenue, income from operations and income before taxes of our reporting segments to assess the performance of the business of our reportable operating segments.

No operating segments have been aggregated to form the reportable segments. The corporate oversight function, and other components that may earn revenues that are only incidental to the activities of the Company are aggregated and included in the “All Other”

category.

The Specialty Finance segment generates revenue from providing funding to nonprofit community associations. The Mining Operations segment generates revenue from the Bitcoin the Company earns through its mining activities.


	Three Months Ended September 30, 2022
	Specialty Finance			Mining Operations			All Other			Total

Revenue, net	$	145,623		$	42,157		$	-		$	187,780
Depreciation and Amortization		1,191			36,697			729			38,617
Operating Income (loss)		(290,899	)		(122,005	)		(4,850,491	)		(5,263,395	)
Unrealized loss on marketable securities		-			-			(13,000	)		(13,000	)
Impairment loss on digital assets		-			(870	)		(25,764	)		(26,634	)
Unrealized loss on investment and equity securities		-			-			(194,174	)		(194,174	)
Interest income		-			-			85,602			85,602
Dividend income		-			-			1,125			1,125
Income (loss) before income taxes		(290,899	)		(122,875	)		(4,996,702	)		(5,410,476	)
Fixed Asset Additions		1,612			3,354,895			-			3,356,507


	Nine Months Ended September 30, 2022
	Specialty Finance			Mining Operations			All Other			Total

Revenue, net	$	571,160		$	42,157		$	-		$	613,317
Depreciation and Amortization		4,746			36,697			2,275			43,718
Operating income (loss)		(926,114	)		(161,418	)		(14,579,983	)		(15,667,515	)
Realized loss on securities		-			-			(349,920	)		(349,920	)
Realized gain on convertible debt securities		-			-			287,778			287,778
Unrealized loss on marketable securities		-			-			(36,900	)		(36,900	)
Impairment loss on digital assets		-			(870	)		(403,471	)		(404,341	)
Unrealized gain on investment and equity securities		-			-			11,034,828			11,034,828
Digital assets other income		-			-			5,658			5,658
Interest income		-			-			264,947			264,947
Dividend income		-			-			3,875			3,875
Income (loss) before income taxes		(926,114	)		(162,288	)		(3,773,188	)		(4,861,590	)
Fixed Asset Additions		1,612			21,994,846			6,916			22,003,374


	Three Months Ended September 30, 2021
	Specialty Finance			Mining Operations		All Other			Total

Revenue, net	$	223,624		$	-	$	-		$	223,624
Depreciation and Amortization		4,308			-		174			4,482
Operating Income (loss)		(132,774	)		-		(2,061,988	)		(2,194,762	)
Realized loss on securities		-			-		(173,282	)		(173,282	)
Unrealized loss on convertible debt security		-			-		(2,588,916	)		(2,588,916	)
Unrealized loss on marketable securities		-			-		(478,448	)		(478,448	)
Impairment loss on digital assets		-			-		(23,720	)		(23,720	)
Unrealized loss on investment and equity securities		-			-		(123,172	)		(123,172	)
Interest expense		-			-		(3,939	)		(3,939	)
Interest income		-			-		77,956			77,956
Dividend income		-			-		738			738
Income (loss) before income taxes		(132,774	)		-		(5,374,771	)		(5,507,545	)
Fixed Asset Additions		1,022			-		-			1,022


	Nine Months Ended September 30, 2021
	Specialty Finance			Mining Operations		All Other			Total

Revenue, net	$	567,427		$	-	$	-		$	567,427
Depreciation and Amortization		9,264			-		212			9,476
Operating Income (loss)		(555,807	)		-		(3,841,049	)		(4,396,856	)
Realized gain (loss) on securities		-			-		13,951,752			13,951,752
Unrealized gain (loss) on convertible debt security		-			-		(87,316	)		(87,316	)
Unrealized loss on marketable securities		-			-		(478,448	)		(478,448	)
Impairment loss on digital assets		-			-		(23,720	)		(23,720	)
Unrealized gain on investment and equity securities		-			-		1,024,714			1,024,714
Interest income		-			-		164,895			164,895
Dividend income		-			-		738			738
Forgiveness of Debt							157,251			157,251
Income (loss) before income taxes		(555,807	)		-		10,868,164			10,312,357
Fixed Asset Additions		2,118			-		2,089			4,207

This Management’s Discussion and Analysis should be read in conjunction with the Condensed Consolidated Financial Statements and Notes for the ~~Six~~Nine Months ended ~~June~~September 30, 2022, and with the Annual Report on Form 10-K for the year ended December 31, 2021

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs, and plans and objectives of management for future operations, are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expects,” “intends,” “plans,” “projects,” “estimates,” “anticipates,” “believes,” or the negative thereof or any variation thereon or similar terminology or expressions.

We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are not guarantees and are subject to known and unknown risks, uncertainties, and assumptions about us that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. Important factors which could materially affect our results and our future performance include, without limitation:

Except as required by law, we assume no duty to update or revise any forward-looking statements.

LM Funding America, Inc. (“we”, “our”, “LMFA” or the “Company”) iscurrently has two lines of business: a specialty finance ~~company that provides~~business and our recently commenced cryptocurrency mining business.

product offering consists of providing funding to Associations by purchasing their rights under delinquent accounts that are selected by the Associations arising from unpaid Association assessments. Historically, we provided funding against such delinquent accounts, which we refer to as “Accounts,” in exchange for a portion of the proceeds collected by the Associations from the account debtors on the Accounts. In addition to our original product offering, we have started purchasing Accounts on varying terms tailored to suit each Association’s financial needs, including under our New Neighbor Guaranty™ program.

On September 15, 2021, we announced our plan to operate in the Bitcoin mining ecosystem, and we commenced Bitcoin mining operations in September 2022. This business operation deploys our computing power to mine Bitcoin and validate transactions on the Bitcoin network. We believe that developments in Bitcoin mining have created an opportunity for us to deploy capital and conduct large-scale mining operations in the United States. We conduct this business through a wholly owned subsidiary, US Digital Mining and Hosting Co, LLC, a Florida limited liability company (US Digital), which we formed in 2021 to develop and operate our cryptocurrency mining business.

WeIn our specialty finance business, we purchase an Association’s right to receive a portion of the Association’s collected proceeds from owners that are not paying their assessments. After taking assignment of an Association’s right to receive a portion of the Association’s proceeds from the collection of delinquent assessments, we engage law firms to perform collection work on a deferred billing basis wherein the law firms receive payment upon collection from the account debtors or a predetermined contracted amount if payment from account debtors is less than legal fees and costs owed. Under this business model, we typically fund an amount equal to or less than the statutory minimum an Association could recover on a delinquent account for each Account, which we refer to as the “Super Lien Amount”. Upon collection of an Account, the law firm working on the Account, on behalf of the Association, generally distributes to us the funded amount, interest, and administrative late fees, with the law firm retaining legal fees and costs collected, and the Association retaining the balance of the collection. In connection with this line of business, we have developed proprietary software for servicing Accounts, which we believe enables law firms to service Accounts efficiently and profitably.

During 2021, we announced that we plan to operate in the Bitcoin mining ecosystem. As of the date of this filing, we have not commenced operations. We aim to deploy the computing power that we will create to mine Bitcoin and validate transactions on the Bitcoin network. We believe that recent developments in Bitcoin mining have created an opportunity for us to deploy capital and conduct large-scale mining operations in the United States. We have formed a new wholly owned subsidiary, US Digital Mining and Hosting Co, LLC, a Florida limited liability company (US Digital), to develop and operate our cryptocurrency mining business.

~~We have~~ committed to purchasing an aggregate of 5,046 Bitcoin S19J Pro Antminer cryptocurrency mining machines for an aggregate purchase price of $31.6 million (the “Mining Machines”). from Bitmain. This contract allowed for a reduction in purchase price if Bitcoin price declined prior to shipment. WeAs such, because the price of Bitcoin has declined since we entered into the purchase contract, we have received ~~approximately 2,521 Mining Machines as of June 30, 2022.~~ reductions against the total purchase price. We anticipate we will receive the remaining Mining Machines to be delivered in batches over an estimated delivery timeframe from ~~July~~October 2022 ~~and continuing~~ through ~~October~~November 2022. The purchase agreements between us and Bitmain relating to the Mining Machines (the “Bitmain Purchase ~~Agreements~~Agreements”) required us to pay $7.9 million or 25% of the total purchase price as a non-refundable deposit for the Mining Machines within 7 days of the date of the

signing of the respective Bitmain Purchase Agreements, anand additional 35% of the batch price at least 6 months prior to shipment of such batch, and the remaining 40% of each batch price one month prior to the shipment of the batch. We have received 4,212 Mining Machines as of September 30, 2022 under these purchase agreements. Due to the variable nature of the contract, we have been credited an aggregate total of approximately $7.2 million toward the 40% purchase price that is normally paid upon the shipment of a batch.

During the ~~Six~~Nine Months ended ~~June~~September 30, 2022 the Company paid ~~an additional $11.2~~approximately $12.7 million to Bitmain ~~Technologies Limited~~ for deposits related to mining equipment ~~expect to pay an additional $1.0 million under the Bitmain contract through the completion of the delivery of the machines as a result of variable pricing described above~~ and payments of ~~$285~~$635 thousand were made to various shipping vendors for transportation and customs costs related to the equipment. Since the inception of our contracts with Bitmain, we have paid an aggregate of approximately $27.0 million to Bitmain and related vendors relating to the purchase of these machines through September 30, 2022, and expect to pay an additional $1.0 million under the Bitmain contracts through the completion of the delivery of the machines.

In October 2021, we also entered into a sale and purchase agreement (the “Uptime Purchase Agreement”) with Uptime Armory LLC (“Uptime”) pursuant to which US Digital agreed to purchase, and Uptime agreed to supply to US Digital, an aggregate of 18 modified 40-foot cargo containers (“POD5ive containers”) that will be designed to hold and operate 280 S19 Pro Antminers manufactured by ~~Seller.~~Bitmain. The purchase price of the POD5ive containers totals $3.15 million, of which $2.4 million or 75% was paid in 2021 as a non-refundable down payment and the remaining 25% ~~is due within five business days~~was paid after Uptime ~~delivers~~delivered a “notice of completion” of the equipment. ~~None of the~~No containers have been delivered as of ~~June~~September 30, 2022.

On the same effective date, US Digital also entered into a hosting agreement with Uptime Hosting LLC (the “Hosting Agreement”) to host the Company’s 18 POD5ive containers at a secure location and provide power, maintenance and other services specified in the contract for 6 cents per kilowatt with a term of one year. Under the Hosting Agreement we paid a deposit of $0.8 million in 2021 and ~~will~~were required to pay an additional deposit for each container three months prior to delivery at the hosting site of $44 thousand and a final deposit

for each container one month prior to arrival at the hosting site of $44 thousand. ~~On June 29, 2022 the Company entered into a mutual termination agreement pursuant to which the parties agreed to terminate the Hosting Agreement.~~The deposits paid for hosting services under the ~~agreement~~Hosting Agreement are refundable. On June 29, 2022, the Company and Uptime Hosting LLC entered into a Release and Termination Agreement in which the Hosting Agreement was terminated and Uptime Hosting LLC agreed to pay the $0.8 million. The $0.8 million deposit paid for hosting services under the Hosting Agreement is included within Prepaid expenses and other assets on the consolidated balance sheet as of September 30, 2022. However, the $0.8 million deposit has not been returned, and on September 2, 2022, we filed in Florida circuit court a legal action against Uptime Hosting LLC in an action styled US Digital Mining and Hosting Co, LLC v. Uptime Hosting, LLC (Fla. 13thCir. Ct. Sept. 2, 2022) for the return of the deposit and other damages, alleging breach of contract and violation of the Florida Deceptive and Unfair Trade Practices Act. Uptime Hosting LLC has answered the complaint with affirmative defenses and counterclaims for fraudulent inducement and rescission, which we believe are without merit. The Company has not accrued a loss contingency related to this matter based on management’s assessment of the collectability of the refundable deposit.

On November 8, 2022, we filed an action in Florida circuit court against Uptime Armory, LLC and Bit5ive, LLC in a case styled US Digital Mining and Hosting Co. LLC v. Uptime Amory, LLC and Bit5ive, LLC (Fla. 11th Cir. Ct., November 8, 2022). In that action, we alleged breach of contract and violation of the Florida Deceptive and Unfair Trade Practices Act and are seeking, among other things, damages of $3.15 million for non-delivery of the 18 POD5ive containers. The defendants in this action have not yet answered the complaint.

On June 21, 2022, the ~~“Company~~Company entered into a Master Agreement, dated effective as of June 20, 2022, with Compute North LLC (“Compute North”) under which Compute North has agreed to host up to 4,200 of ~~LMFA’s~~US Digital’s Bitcoin Miner S19J Pro ~~Antminer Machines (S19J)~~machines (100 TH/s) ~~(“Bitmain Miner Machines”)~~ and provide colocation, management and other services (the “Master Agreement”). The term of the Master Agreement is for 60 months, subject to earlier termination in specified circumstances. The Company paid a ~~$1.3 million~~ non-refundable co-location deposit of $1.3 million on June 21, 2022 under the Master Agreement. ~~The~~Compute North filed for Chapter 11 bankruptcy on September 22, 2022. Compute North has not energized any of our 2,690 machines located at their site.

for the periods indicated in the Order. As required under the ~~Master~~Core Hosting Agreement, ~~is expected to be~~the Company paid approximately ~~$21,000 per day when all hosted machines become fully operational.~~$942 thousand as a deposit on September 2, 2022.

~~The Company classifies deposit payments within Deposits on mining equipment and hosting in the consolidated balance sheet. As~~During September 2022, 848 mining machines were placed into service and we commenced mining operations. These machines are ~~received, the respective cost~~located at one of the ~~mining machines plus the related shipping and customs fees are reclassified from Deposits on mining equipment and~~Core hosting to Fixed assets, net in the consolidated balance sheet. Refer to Note 9. As of June 30, 2022 and December 31, 2021, the Company has a total of approximately $14.5 and $16.8 million, respectively, classified as Deposits on mining equipment and hosting and approximately $15.1 million and $0, respectively, classified as Fixed assets, net in the consolidated balance sheet under these payment arrangements.locations.

Although COVID-19 is currently not material to our results of operations, there is uncertainty relating to the potential future impact on our business. While our employees currently have the ability and are encouraged to work remotely, such measures have and may continue to have an impact on employee attendance or productivity, which, along with the possibility of employees’ illness, may adversely affect our operations. In addition to encouraging employees to work remotely, the Company has increased sanitation of its offices, provided hand gel and masks to its employees and has closed the offices during identified periods of high contagion.

The extent to which COVID-19 impacts our operations, or our ability to obtain financing should we require it, will depend on future developments which are uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 re-emerge and the actions taken by governments and private businesses to contain COVID-19 to treat its impact, among others. If the disruptions posed by COVID-19 continue for an extended period of time, financial markets may not be available to the Company for raising capital in order to fund future growth. Should the Company not be able to obtain financing when required, in the amounts necessary or under terms which are economically feasible, we may be required to reduce planned future growth and/or the scope of our operations.

The Company was originally organized in January 2008 as a Florida limited liability company under the name LM Funding, LLC. Prior to our initial public offering in 2015, all of our business was conducted through LM Funding, LLC and its subsidiaries. Immediately prior to our initial public offering in October 2015, the members of the LM Funding, LLC contributed all of their membership interests to LM Funding America, Inc., a Delaware corporation incorporated on April 20, 2015 (“LMFA”), in exchange for shares of the common stock of LMFA. Immediately after such contribution and exchange, the former members of LM Funding, LLC became the holders of 100% of the issued and outstanding common stock of LMFA, thereby making LM Funding, LLC a wholly-owned subsidiary of LMFA.

The Company organized two new subsidiaries in 2020: LMFA Financing LLC, a Florida limited liability company, on November 21, 2020, and LMFAO Sponsor LLC, a Florida limited liability company, on October 29, 2020. LMFAO Sponsor LLC organized a subsidiary, LMF Acquisition Opportunities Inc., on October 29, 2020. LM Funding America Inc. organized a subsidiary, US Digital Mining and Hosting Co., ~~LLC~~.LLC., on September 10, 2021.

The Three Months Ended ~~June~~September 30, 2022 compared with the Three Months Ended ~~June~~September 30, 2021

During the Three Months ended ~~June~~September 30, 2022, total revenues decreased by ~~$94~~$36 thousand, to ~~$234~~$188 thousand from ~~$328~~$224 thousand in the Three Months ended ~~June~~September 30, 2021.

Interest on delinquent association fees decreased by $71 thousand to $58 thousand for the Three Months ended September 30, 2022 from $129 thousand Three Months ended September 30, 2021. Underwriting and origination fees for the Three Months ended ~~June~~September 30, 2022 ~~increased $49 thousand due to the increase in payoff occurrences per unit to $3,128 per unit in 2022 from $3,060 per unit in 2021 even as the number of payoffs~~ decreased ~~to 62 payoff occurrences as compared to 96 payoff occurrences for the Three Months ended June 30, 2021.“Payoffs” consist of recovery of the~~

entire legally collectible portion, or a settlement thereof, of our principal investment, accrued interest, and late fees owed to us from the proceeds of the Accounts collected by the Associations in accordance with our contracts with Associations.

~~We saw an increase in rental revenue in the Three Months ended June 30, 2022 of $6~~$17 thousand to ~~$41~~$12 thousand from ~~$35~~$29 thousand for the Three Months ended ~~June~~September 30, 2021. Rental revenues increased in the Three Months ended September 30, 2022 by $4 thousand to $41 thousand from $37 thousand for the Three Months ended September 30, 2021.

Digital mining revenues increased to $42 thousand for the Three Months ended September 30, 2022 from nil for the Three Months ended September 30, 2021, due to the commencement of our digital mining operations in late September 2022.

During the Three Months ended ~~June~~September 30, 2022, operating expenses increased approximately ~~$4,967 thousand,~~$3.0 million, to ~~$5,608 thousand~~$5.5 million from approximately ~~$642 thousand~~$2.4 million for the Three Months ended ~~June~~September 30, 2021. The increase in operating expenses can be attributed to various factors, including ~~$3,648 thousand~~$3.6 million increase in stock compensation, ~~$671~~$217 thousand increase in professional fees, $102 thousand increase in selling, general and administrative expense and other operating expense increase of ~~$137 thousand.~~$119 thousand, offset in part by a decrease in staff costs and payroll of $1.2 million. The increase in depreciation and amortization expense of $34 thousand and digital mining cost of revenues of $39 thousand is related to the commencement of mining operations in late September. The cost of mining includes the cost of hosting site.

Professional fees, excluding fees from the BLG service agreement, for the Three Months ended ~~June~~September 30, 2022 were approximately ~~$872~~$556 thousand compared with approximately ~~$114~~$252 thousand for the Three Months ended ~~June~~September 30, 2021, due primarily to ordinary legal fees and ~~costs associated with the settlement of a shareholder legal claim.~~consulting fees related to our digital mining operations. In the ordinary course of our specialty finance business, we are involved in numerous legal proceedings and expenses associated with acquisitions and corporate initiatives. We regularly initiate collection lawsuits, using our network of ~~third party~~third-party law firms, against debtors. In addition, debtors occasionally initiate litigation against us. This included a settlement expense of $275 thousand during the Three Months ended June 30, 2022 related to the settlement of a legal claim. See Note 5 Commitments and Contingencies for discussion of the claim.

Legal fees to BLG for the Three Months ended ~~June~~September 30, 2022 were $159 thousand compared to $246 thousand for the Three Months ended ~~June~~September 30, 2021. This decrease is primarily due ~~in part~~ to the lower service fee charge from BLG. See Note 2. Due to Related Party for further discussion regarding the service agreements with BLG.

~~During the Three Months ended June 30, 2021, the Company classified the $5 million Borqs convertible note as a trading security which is subject to fair value remeasurement each quarter.~~

Unrealized gain (loss) on investment and equity securities - the ~~Borqs $5 million convertible note, the Company received warrants that became registered on May 3, 2021.~~ The Company exercised a cashless exercise of the Borqs warrants and received 5,956,544 common shares in Borqs. The Company subsequently sold those warrants and recognized $8.5 million in proceeds, all of which was recognized as gain in the Three Months ended June 30, 2021. ~~The Company recognized an unrealized gain of $2.5 million for the Three Months ended June 30, 2021 from the revaluation of the Borqs convertible debt securities.~~

During the year ended December 31, 2021, the Company converted $4.1 million of the $5 million notes plus accrued interest into 5,960,829 shares of Borqs. The Company sold 1,064,935 shares in the year ending December 31, 2021 and classified the remaining 4,895,894 shares as marketable securities which were sold during the first quarter of 2022. The remaining principal amount of the Notes plus accrued interest through the date of conversion was converted into common shares of Borqs.

During the Three Months ended June 30, 2022 a realized gain of $288 thousand was recognized on the conversion of the convertible debt to common shares. On the conversion of the debt security, the unrealized gain of $288 thousand previously recognized in the prior quarter was reversed. Subsequent to the conversion, the 3,863,200 shares were sold which resulted in a realized gain of $45 thousand within the Three Months ended June 30, 2022.

~~The~~ Company’s investment in LMAO changed due to the LMAO IPO on January 28, 2021. This resulted in LMAO’s deconsolidation from the Company and any changes in fair value will be recorded in the income statement during the period of the change. The Company recognized an unrealized ~~gain~~loss on securities of ~~$12.2 million~~$194 thousand for the Three Months ended ~~June~~September 30, 2022 as compared to a unrealized ~~gain~~loss of ~~$0.6 million~~$123 thousand for the Three Months ended ~~June~~September 30, 2021 from the revaluation of LMAO’s Class B common stock and Private Placement Warrants. ~~The change was driven primarily by~~

Unrealized gain (loss) on marketable securities - the ~~impact~~company incurred an unrealized loss on marketable securities of ~~LMAO’s pending merger with Seastar Medical, Inc.~~$13 thousand for the Three Months ended September 30, 2022 as compared to an unrealized loss on securities of $478 thousand for the ~~valuation~~Three Months ended September 30, 2021.

Impairment of ~~LMAO’s common shares.~~digital assets - the company incurred an impairment of digital assets of $27 thousand for the Three Months ended September 30, 2022 as compared to $24 thousand for the Three Months ended September 30, 2021.

During the Three Months ended June 30, 2022, the Company purchased and received an aggregate of 21.5 Bitcoin for approximately $787 thousand. These digital assets are recorded at cost, net of any impairment losses incurred since acquisition. During the Three months ended June 30, 2022, a $378,000 impairment loss on such digital assets was recorded.

~~During the Three Months ended June~~September 30, 2022, the Company generated net interest income of ~~$81~~$86 thousand as compared to $74 thousand of interest income for the Three Months ended ~~June~~September 30, 2021 due to ~~interest bearing~~differences in the rates of return and the amount of outstanding interest-bearing investments.

During the Three Months ended ~~June~~September 30, 2022, the Company generated a ~~$6.6~~$5.4 million net ~~income~~loss before income ~~taxes and~~taxes. However, due to a change in estimate from the ~~Company released $0.5 million~~twelve months ended December 31, 2021 that resulted in a limitation on the use of its net operating loss carryforwards, the Company's income tax ~~valuation allowance,~~due was $1.3 million. The Company recognized ~~a $0.2 million benefit for change in tax rate and~~ a net income tax ~~benefit~~expense of ~~$1.2~~$1.3 million ~~which offset a recognized $1.9 million deferred income tax expense. This net activity resulted in no recognized income tax expense~~ for the Three Months ended ~~June~~September 30, 2022. The Company recognized ~~$14~~$12.6 thousand of income tax expense for the Three Months ended ~~June~~September 30, 2021.

During the Three Months ended ~~June~~September 30, 2022, net ~~income~~loss was ~~$6.6~~approximately ($6.7) million as compared to net ~~income~~loss of ~~$11.3~~($5.5) million for the Three Months ended ~~June~~September 30, 2021.

The Company owns 69.5% of Sponsor. As such, there is ~~$3.7 million~~($59) thousand net ~~income~~loss for the Three Months ended ~~June~~September 30, 2022 attributable to the Non-Controlling Interest as compared to ~~$147~~($34) thousand ~~income~~net loss for the ~~Six~~Three Months ended ~~June~~September 30, 2021.

During the Three Months ended ~~June~~September 30, 2022, net ~~income~~loss was ~~$2.8~~approximately ($6.7) million as compared to net ~~income~~loss of ~~$11.1~~approximately ($5.5) million for the Three Months ended ~~June~~September 30, 2021.

The ~~Six~~Nine Months Ended ~~June~~September 30, 2022 compared with the ~~Six~~Nine Months Ended ~~June~~September 30, 2021

During the ~~Six~~Nine Months ended ~~June~~September 30, 2022, total revenues ~~decreased~~increased by ~~$80~~$46 thousand, to ~~$425~~$613 thousand from ~~$505~~$567 thousand in the ~~Six~~Nine Months ended ~~June~~September 30, 2021.

Interest on delinquent association fees increased by $1 thousand to $271 thousand for the ~~Six~~Nine Months ended ~~June~~September 30, 2022 from $270 thousand for the Nine Months ended September 30, 2021. Underwriting and origination fees for the Nine Months ended September 30, 2022 decreased $32 thousand to $55 thousand from $87 thousand for the Nine Months ended September 30, 2021. Rental revenues increased ~~$73~~in the Nine Months ended September 30, 2022 by $17 thousand to $120 thousand from $103 thousand for the Nine Months ended September 30, 2021.

Digital mining revenues increased to $42 thousand for the Nine Months ended September 30, 2022 from nil for the Nine Months ended September 30, 2021, due to the ~~increase~~commencement of our digital mining operations in ~~payoff occurences per unit to $3,009 per unit in 2022 to $2,463 per unit in 2021 even as~~late September 2022.

During the ~~number of payoffs decreased to 115 payoff occurrences as compared to 178 payoff occurrences for the Six~~Nine Months ended June 30, 2021. “Payoffs” consist of recovery of the entire legally collectible portion, or a settlement thereof, of our principal investment, accrued interest, and late fees owed to us from the proceeds of the Accounts collected by the Associations in accordance with our contracts with Associations.

~~We saw an increase in rental revenue in the Six Months ended June 30, 2022 of $13 thousand to $79 thousand from $66 thousand for the Six Months ended June 30, 2021.~~

~~During the Six Months ended June~~September 30, 2022, operating expenses increased approximately ~~$8,284~~$11,317 thousand, to ~~$10,830~~$16,281 thousand from ~~$2,546~~$4,964 thousand for the ~~Six~~Nine Months ended ~~June~~September 30, 2021. The increase in operating expenses can be attributed to various factors, including ~~$7,296~~$10,945 thousand increase in stock compensation, ~~$963~~$1,180 thousand increase in professional fees and other operating expense increase of ~~$138~~$256 thousand offset in part by a ~~$256~~$1,481 thousand decrease in compensation ~~costs.~~costs excluding stock-based compensation.

Professional fees, excluding fees from the BLG service agreement, for the ~~Six~~Nine Months ended ~~June~~September 30, 2022 were approximately ~~$1,309~~$1,865 thousand compared with approximately ~~$351~~$603 thousand for the ~~Six~~Nine Months ended ~~June~~September 30, 2021 due primarily to ordinary legal fees and costs associated with the settlement of a shareholder legal ~~claim.~~claim and consulting costs related to our digital mining business. In the ordinary course of our specialty finance business, we are involved in numerous legal proceedings and expenses associated with acquisitions and corporate initiatives. We regularly initiate collection lawsuits, using our network of third party law firms, against debtors. In addition, debtors occasionally initiate litigation against us. This included an expense of $275 thousand during the ~~Six~~Nine Months ended ~~June~~September 30, 2022 related to the settlement of a legal claim. See Note 5 Commitments and Contingencies for discussion of the claim.

Legal fees for BLG for the ~~Six~~Nine Months ended ~~June~~September 30, 2022 were ~~$497~~$656 thousand compared to ~~$492~~$738 thousand for the ~~Six~~Nine Months ended ~~June~~September 30, 2021. Legal fees for the ~~Six~~Nine Months ended ~~June~~September 30, 2022 include a $150 thousand termination fee offset by a reduction in the service fee. See Note 2. Due to Related Party for further discussion regarding the service agreements with BLG.

~~The Company classified~~Realized loss on marketable securities - the ~~$5 million Borqs convertible note as a trading security and as such is fair valued each quarter.~~ ~~The Company recognized a realized gain of $0.3 million for the Six Months ended June 30, 2022 on the conversion of the convertible debt to common shares.~~

~~The~~ Company recognized a $350 thousand realized loss on marketable securities for the ~~Six~~Nine Months ended ~~June~~September 30, 2022 as compared to a ~~$14,125~~$13,952 thousand gain for the ~~Six~~Nine Months ended ~~June~~September 30, ~~2021.~~

~~As part of its purchase of the~~2021, which was primarily due to a $5.7 million gain on a transaction with Borqs ~~$5 million convertible note,~~in which the Company ~~received warrants that became registered on May 3, 2021.~~ ~~The Company exercised~~acquired debt of Borqs and converted the debt into Borqs common stock and subsequently sold such shares at a ~~cashless~~gain and an $8.5 million gain related to the exercise of ~~the~~ Borqs warrants ~~and received 5,956,544~~for common shares in ~~Borqs. The Company~~Borqs which were subsequently ~~sold those warrants and recognized $8.5 million in proceeds, all~~sold.

Realized gain on convertible debt securities - the company incurred a realized gain on convertible debt securities of ~~which was recognized as gain in~~$288 thousand for the ~~Three~~Nine Months ended ~~June~~September 30, ~~2021.~~ ~~The Company recognized an unrealized gain of $2.5 million~~2022 as compared to nil for the ~~Six~~Nine Months ended ~~June~~September 30, ~~2021 from the revaluation of the Borqs convertible debt securities.~~2021.

Unrealized gain (loss) on investment and equity securities - The Company’s investment in LMAO changed due to the LMAO IPO on January 28, 2021. This resulted in LMAO’s deconsolidation from the Company and any changes in fair value will be recorded in the income statement during the period of the change. The Company recognized an unrealized gain on securities of ~~$11.2~~$11.0 million for the ~~Six~~Nine Months ended ~~June~~September 30, 2022 as compared to a unrealized gain of ~~$1.1~~$1.0 million for the ~~Six~~Nine Months ended ~~June~~September 30, 2021 from the revaluation of LMAO’s Class B common stock and Private Placement Warrants. The change was driven primarily by the impact of LMAO’s pending merger with Seastar Medical, Inc. on the valuation of LMAO’s common shares.

~~During~~Unrealized gain (loss) on marketable securities - the ~~Six~~company incurred an unrealized loss on marketable securities of $37 thousand for the Nine Months ended ~~June~~September 30, 2022 as compared to an unrealized loss on securities of $478 thousand for the Nine Months ended September 30, 2021.

Impairment of digital assets - during the Nine Months ended September 30, 2022, the Company purchased and received an aggregate of ~~21.5~~31 Bitcoin for approximately ~~$787~~$978 thousand and also received approximately 2.2 Bitcoin, in exchange for digital mining services provided which were valued at approximately $42 thousand. ~~These digital assets are recorded at cost, net of any impairment losses incurred since acquisition.~~ During the ~~Six months~~Nine Months ended ~~June~~September 30, 2022, ~~a $378,000~~we recorded approximately $404 thousand of impairment losses on such digital assets ~~was recorded.~~as compared to an impairment loss of $24 thousand for the Nine Months ended September 30, 2021.

During the ~~Six~~Nine Months ended ~~June~~September 30, 2022, the Company earned net interest income of ~~$179~~$265 thousand as compared to ~~$87~~$164 thousand of interest income for the ~~Six~~Nine Months ended ~~June~~September 30, 2021 due to ~~interest bearing~~differences in the rates of return and the amount of outstanding interest-bearing investments.

During the ~~Six~~Nine Months ended ~~June~~September 30, 2022, the Company generated a ~~$0.5~~$4.9 million net ~~income~~loss before income ~~taxes and~~taxes. However, due to a change in estimate from the twelve months ended December 31, 2021 that resulted in a limitation on the use of its net operating loss carryforwards, the Company's income tax due was $1.3 million. The Company ~~increased its tax valuation allowance by $0.9 million and~~ recognized ~~a $0.9 million of deferred tax expense which offset a $0.2 million tax rate change and~~ a net income tax ~~benefit~~expense of ~~$1.6 million. This net activity resulted in no recognized income tax expense~~$1.3 million for the ~~Six~~Nine Months ended ~~June~~September 30, 2022. The Company recognized ~~$17.3~~$29.9 thousand of income tax expense for the ~~Six~~Nine Months ended ~~June~~September 30, 2021.

During the ~~Six~~Nine Months ended ~~June~~September 30, 2022, the net ~~income~~loss was ~~$0.5~~($6.2) million as compared to net income of ~~$15.8~~$10.3 million for the ~~Six~~Nine Months ended ~~June~~September 30, 2021.

The Company owns 69.5% of Sponsor. As such, there is ~~$3,433~~$3,373 thousand net income for the ~~Six~~Nine Months ended ~~June~~September 30, 2022 attributable to the Non-Controlling Interest as compared to ~~$319~~$285 thousand net income for the ~~Six~~Nine Months ended ~~June~~September 30, 2021.

During the ~~Six~~Nine Months ended ~~June~~September 30, 2022, the net loss was ~~$2.9~~approximately ($9.5) million as compared to net income of ~~$15.5~~$10.0 million for the ~~Six~~Nine Months ended ~~June~~September 30, 2021.

As of ~~June~~September 30, 2022, we had cash and cash equivalents of ~~$17.0~~$10.2 million compared with $32.6 million at December 31, 2021. The Company also had ~~$37~~$24 thousand of marketable securities as of ~~June~~September 30, 2022 compared with $2.1 million at December 31, 2021.

Net cash used by operations was ~~$0.2~~$1.7 million during the ~~Six~~Nine Months ended ~~June~~September 30, 2022 compared with net cash provided by operations of ~~$7.0~~$5.3 million during the ~~Six~~Nine Months ended ~~June~~September 30, 2021. This change in cash provided by operating activities was primarily driven by a ~~$5.7~~$14.0 million realized gain on securities from the Borqs Note transactions during the ~~Six~~Nine Months ended ~~June~~September 30, 2021.

For the ~~Six~~Nine Months ended ~~June~~September 30, 2022 net cash used in investing activities was ~~$15.2~~$20.6 million as compared to net cash used in investing activities of ~~$5.8~~$8.8 million for the ~~Six~~Nine Months ended ~~June~~September 30, 2021. ~~The~~During the Nine Months ended September 30, 2022, the Company invested ~~$12.7~~$16.5 million in deposits for mining equipment, ~~$787~~$978 thousand for digital assets, $350 thousand for a note receivable and ~~$910 thousand~~$2.8 million in related party notes receivable ~~during the Six Months ended June 30, 2022~~ as compared to ~~the~~$1.6 million in deposits for mining equipment, an investment of $1.4 million for digital assets and an investment of $5.7 million in LMF Acquisition Opportunities Inc (a special purpose acquisition corporation) during the ~~Six~~Nine Months ended ~~June~~September 30, 2021. The Company reclassified approximately ~~$15.1~~$22.0 million from Deposits on mining equipment and hosting services to Fixed assets, net in the consolidated balance sheet due to the receipt of ~~2,521~~4,212 mining machines during the ~~Six~~Nine Months ended ~~June~~September 30, 2022.

Net cash used in financing activities was $0.1 million for the ~~Six~~Nine Months ended ~~June~~September 30, 2022 compared to $9.4 million provided by financing activities for the ~~Six~~Nine Months ended ~~June~~September 30, 2021. At ~~June~~September 30, 2022, the Company paid $115 thousand in repayments of debt. During the ~~Six~~Nine Months ended ~~June~~September 30, 2021 the Company received $9.5 million from the exercise of warrants and paid ~~$125~~$163 thousand in repayments of debt.

During the ~~Six~~Nine Months ended ~~June~~September 30, 2021, holders of our warrants exercised such warrants for approximately 2.3 million shares of common stock for an aggregate of $9.5 million.

Debt of the Company consisted of the following at ~~June~~September 30, 2022 and December 31, 2021:

As a smaller reporting company, we are not required to make disclosures under this item.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Management, with the participation of our Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures as of ~~June~~September 30, 2022. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were not effective as of ~~June~~September 30, 2022 due to the following material weakness in internal control over financial reporting that existed as of December 31, 2021 and that continued to exist through ~~June~~September 30, 2022:

The Company did not effectively segregate certain accounting duties nor have a proper multi-level review process due to the small size of its accounting staff.

A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. Notwithstanding the determination that there was a material weakness as identified in this Quarterly Report, we believe that our consolidated financial statements contained in this Quarterly Report fairly present our financial position, results of operations and cash flows for the years covered hereby in all material respects.

We expect to be dependent upon our Chief Financial Officer who is knowledgeable and experienced in the application of U.S. Generally Accepted Accounting Principles to maintain our disclosure controls and procedures and the preparation of our financial statements for the foreseeable future. We plan on increasing the size of our accounting staff at the appropriate time for our business and its size to ameliorate our concern that we do not effectively segregate certain accounting duties, which we believe would resolve the material weakness in disclosure controls and procedures, but there can be no assurances as to the timing of any such action or that we will be able to do so.

Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively. To date, the remediation actions include the following:

While these actions and planned actions are subject to ongoing management evaluation and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period, we are committed to continuous improvement and will continue to diligently review our internal control over financial reporting.

Other than remediation actions related to the material weaknesses in our internal controls described above, there has been no change in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended ~~June~~September 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Legal Proceedings are set forth under Note 5 "Commitments and Contingencies" included in Part I, Item 1 of this Quarterly Report on Form 10-Q and are incorporated herein by reference.

There have been no material changes from the risk factors previously disclosed in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, except as follows:

We will be exposed to risks and potential unexpected costs related to disruptions or other failures in the supply chain for cryptocurrency hardware and difficulties in obtaining new hardware.

Manufacture, assembly and delivery of certain components and products for mining operations could be complex and long processes, in the course of which various problems could arise, including disruptions or delays in the supply chain, product quality control issues, as well other external factors, over which we have no control.

Our mining operations can only be successful and ultimately profitable if the costs associated with Bitcoin mining, including hardware costs, are lower than the price of Bitcoin itself. In the course of the normal operation of our cryptocurrency mining facilities, our miners and other critical equipment and materials related to datacenter construction and maintenance, such as containers, switch gears, transformers and cables, will experience ordinary wear and tear and may also face more significant malfunctions caused by a number of extraneous factors beyond our control. Declines in the condition of our miners and other hardware will require us, over time, to repair or replace those miners. Additionally, as the technology evolves, we may be required to acquire newer models of miners to remain competitive in the market. Any upgrading process may require substantial capital investment, and we may face challenges in doing so on a timely and cost-effective basis.

Our mining business will be subject to limitations inherent within the supply chain of certain of our components, including competitive, governmental, and legal limitations, and other events. For example, we expect that we will significantly rely on foreign imports to obtain certain equipment and materials. Any global trade disruption, introductions of tariffs, trade barriers and bilateral trade frictions, together with any potential downturns in the global economy resulting therefrom, could adversely affect our necessary supply chains. Our third-party manufacturers, suppliers and subcontractors may also experience disruptions by worker absenteeism, quarantines, restrictions on employees’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures, or other travel or health-related restrictions, such as those that were triggered by the COVID-19 pandemic, for example. Depending on the magnitude of such effects on our supply chain, shipments of parts for our miners, or any new miners that we order, may be delayed or may be more expensive than anticipated.

Furthermore, the global supply chain for cryptocurrency miners is currently heavily dependent on China. In September 2021, China declared all transactions in and mining of cryptocurrencies, including Bitcoin, illegal. China has also in the past limited the shipment of products in and out of its borders, which could negatively impact our ability to receive mining equipment from China-based suppliers. Further, Chinese-origin merchandise is currently subject to an additional duty rate of 25% ad valorem. Should it be determined that cryptocurrency mining equipment purchased from and delivered by Bitmain under the Bitmain Service Agreements are of Chinese origin, we may be required to pay the additional ad valorem duty, penalties and interest in order to receive such equipment. Should additional disruptions to the China-based global supply chain for cryptocurrency hardware occur, we may not be able to obtain adequate equipment from the supplier on a timely basis or the cost to obtain such equipment may be greater than anticipated. Such events could have a material adverse effect on our business, prospects, financial condition, and operating results.

Bankruptcy of our hosting vendors, including the recent bankruptcy filing by Compute North or the possibility of bankruptcy by Core Scientific, could lead to interruption of service and could adversely affect our business and results of operations.

We have entered into several agreements for colocation, management and other services with vendors (“hosting vendors”) whereby our mining machines are installed, operated and maintained at third-party locations. In the event that any of our hosting vendors declare bankruptcy, the hosting vendors may be unable to fulfill all or some of their obligations under the contract, may operate at a reduced capacity or may be unable to continue operating their facilities entirely. Any disruption in the hosting vendors ability to operate, or any reduction or change in the services available to be provided to us by the hosting vendor, could negatively impact our ability to mine and receive revenue. In the event that the hosting company is unable to continue operations or is unable to provide services at the level necessary to support our business for a prolonged period we may find it necessary to relocate our mining machines to another facility. Relocation costs could be material and we may be unable to recover damages from the hosting vendor for such costs incurred, which would negatively impact our results of operations.

In September 2022, Compute North filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas. As of September 30, 2022, Compute North’s facilities has not provided any power to our 2,690 miners, and our overall future hosting capacity with Compute North, pursuant to signed Order Forms, is for approximately 4,200 machines. The Company is reviewing its relationship with Compute North and communicating with Compute North regarding this matter. However, there can be no assurance that Compute North’s bankruptcy proceeds will not negatively impact the Company’s existing and planned mining operations.

Because our miners are designed specifically to mine Bitcoin and may not be readily adaptable to mining other cryptocurrencies, a sustained decline in Bitocin’s value could adversely affect our business and results of operations.

We have invested substantial capital in acquiring miners using ASIC chips designed specifically to mine Bitcoin and other cryptocurrencies using the SHA-256 algorithm as efficiently and as rapidly as possible on our assumption that we will be able to use them to mine Bitcoin and generate revenue from our operations. Therefore, our Mining operations focus exclusively on mining Bitcoin, and our Mining revenue is based on the value of Bitcoin we mine. Accordingly, if the value of Bitcoin declines and fails to recover, for example, because of the development and acceptance of competing blockchain platforms or technologies, including competing cryptocurrencies which our miners may not be able to mine, the revenue we generate from our mining operations will likewise decline. Moreover, because our miners use these highly specialized ASIC chips, we may not be able to successfully repurpose them in a timely manner, if at all, if we decide to switch to mining a different cryptocurrency (or to another purpose altogether) following a sustained decline in Bitcoin’s value or if Bitcoin is replaced by another cryptocurrency not using the SHA-256 algorithm. This would result in a material adverse effect on our business and could potentially impact our ability to continue as a going concern.

Our reliance primarily on a single model of miner may subject our operations to increased risk of design flaws.

The performance and reliability of our miners and our technology is critical to our reputation and our operations. Because we currently only use Bitmain Antminer type miners, if there are issues with those machines, such as a design flaw in the ASIC chips they employ, our entire system could be affected. Any system error or failure may significantly delay response times or even cause our system to fail. Any disruption in our ability to continue mining could result in lower yields and harm our reputation and business. Any exploitable weakness, flaw, or error common to Bitmain miners could affect all our miners; therefore, if a defect or other flaw exists and is exploited, our entire miner fleet could be adversely impacted. Any interruption, delay or system failure could result in financial losses, a decrease in the trading price of our common stock and damage to our reputation.

We may not be able to realize the benefits of forks.

The Bitcoin blockchain is subject to modification based on a consensus of the users on its network. When a significant minority of users on the network agree to a modification that is not compatible with the prior network protocol, a “fork” of the network results, with one prong running the pre-modified protocol and the other running the modified protocol. The effect of such a fork would be the existence of two “versions” of the blockchain running in parallel that are not interchangeable, which requires exchange-type transaction to convert between the two forks. Additionally, it may be unclear following a fork which of the two protocols represents the original and which is the new protocol. Different metrics adopted by industry participants to determine which is the original asset include: referring to the wishes of the core developers of a cryptocurrency; determining based on the blockchain with the greatest amount of hash rate contributed by miners or validators; or by reference to the “length” of blockchain (i.e., the time between the first transaction recorded in the blockchain’s distributed ledger, and the date of the most recent transaction). Accordingly, we may not be able to realize the economic benefit of a fork, either immediately or ever, which could adversely affect an investment in our securities.

Bitcoins and other digital assets we mine or hold for our own account may be subject to loss, theft or restriction on access.

The loss or destruction of private keys required to access our bitcoins may be irreversible. Our loss of access to our private keys or our experience of a data loss relating to our bitcoins could adversely affect an investment in us.

Bitcoins may only be controlled by the possessor of both the unique public and private keys relating to the local or online digital

wallet in which they are held. We publish the public key relating to digital wallets in use when we verify the receipt or transfers of bitcoins to and from our wallets and disseminate such information into the network on an anonymous basis, but we safeguard the private keys relating to such digital wallets. Digital asset exchanges, such as Gemini, where we hold our bitcoin, engage in similar practices. To the extent such private keys are lost, destroyed or otherwise compromised, we will be unable to access our bitcoins and such private keys may not be capable of being restored by any network. Any loss of private keys relating to digital wallets used to store our bitcoins whether by us or digital asset exchanges where we hold our bitcoin, could have a material adverse effect on our business, prospects or operations and potentially the value of any bitcoin we mine or otherwise acquire or hold for our own account.

If we fail to grow our hash rate, we may be unable to compete, and our results of operations could suffer.

Generally, a Bitcoin miner’s chance of solving a block on the Bitcoin blockchain and earning a Bitcoin reward is a function of the miner’s hash rate (i.e., the amount of computing power devoted to supporting the Bitcoin blockchain), relative to the global network hash rate. As demand for Bitcoin has increased, the global network hash rate has increased, and as more adoption of Bitcoin occurs, we expect the demand for Bitcoin will increase, drawing more mining companies into the industry and further increasing the global network hash rate. As new and more powerful miners are deployed, the global network hash rate will continue to increase, meaning a miner’s chance of earning Bitcoin rewards will decline unless it deploys additional hash rate at pace with the industry. Accordingly, to compete in this highly competitive industry, we believe we will need to continue to acquire new miners, both to replace those lost to ordinary wear-and-tear and other damage, and to increase our hash rate to keep up with a growing global network hash rate.

We plan to grow our hash rate by acquiring newer, more effective and energy-efficient miners. These new miners are highly specialized servers that are very difficult to produce at scale. As a result, there are limited producers capable of producing large numbers of sufficiently effective miners, and, as demand for new miners has increased in response to increased Bitcoin prices, we have observed the price of these new miners has increased. If we can’t acquire sufficient numbers of new miners or access sufficient capital to fund our acquisitions, our results of operations and financial condition, which could adversely affect investments in our securities.

Bitcoin is subject to halving, and our mining operations may generate less revenue as a result.

Halving is a process designed to control the overall supply and reduce the risk of inflation in cryptocurrencies using a Proof-of-Work consensus algorithm. At a predetermined block, the mining reward is cut in half, hence the term “halving”. While Bitcoin prices have historically increased around these halving events, there is no guarantee that the price change will be favorable or would compensate for the reduction in mining rewards. If a corresponding and proportionate increase in the price of the Bitcoin does not follow future halving events, the revenue we earn from our Mining operations would see a decrease, which could have a material adverse effect on our results of operations and financial condition.

Transaction fees may decrease demand for Bitcoin and prevent expansion.

As the number of Bitcoins currency rewards awarded for solving a block in a blockchain has decreased, transaction fees have increasingly been used to incentivize miners to continue to contribute to the Bitcoin network. However, high Bitcoin transaction fees may slow the adoption of Bitcoin as a means of payment, which may decrease demand for Bitcoin and future prices of Bitcoin may suffer as a result. If Bitcoin prices are not sufficiently high, our Mining revenue may not exceed our associated costs, and our results of operations and financial condition may suffer. Further, because the price of shares of our common stock may be linked to the price of Bitcoin, if demand for Bitcoin decreases, causing future Bitcoin prices to decrease, the market price of our securities may be materially and adversely affected, limiting our ability to raise additional capital to fund our strategic growth plans.

Cryptocurrencies face significant scaling obstacles that can lead to high fees or slow transaction settlement times.

Cryptocurrencies face significant scaling obstacles that can lead to high fees or slow transaction settlement times, and attempts to increase the volume of transactions may not be effective. Scaling cryptocurrencies is essential to the widespread acceptance of cryptocurrencies as a means of payment, including Bitcoin. Many cryptocurrency networks face significant scaling challenges. For example, cryptocurrencies are limited with respect to how many transactions can occur per second. Participants in the cryptocurrency

ecosystem debate potential approaches to increasing the average number of transactions per second that the network can handle and have implemented mechanisms or are researching ways to increase scale, such as increasing the allowable sizes of blocks, and therefore the number of transactions per block, and sharding (a horizontal partition of data in a database or search engine), which would not require every single transaction to be included in every single miner’s or validator’s block. However, there is no guarantee that any of the mechanisms in place or being explored for increasing the scale of settlement of cryptocurrency transactions will be effective.

If adoption of Bitcoin (and cryptocurrencies, generally) as a means of payment does not occur on the schedule or scale we anticipate, the demand for Bitcoin may stagnate or decrease, which could adversely affect future Bitcoin prices, and our results of operations and financial condition, which could have a material adverse effect on the market price for our securities.

Our reliance on a third-party mining pool service provider for our mining revenue payouts may adversely affect an investment in us.

We currently rely on open access mining pools that support cryptocurrencies including bitcoin, to receive our mining rewards and fees from the network. Our pools have the sole discretion to modify the terms of our agreement at any time, and, therefore, our future rights and relationship with our pools may change. In general, mining pools allow miners to combine their computing and processing power, increasing their chances of solving a block and getting paid by the bitcoin network. The rewards, distributed proportionally to our contribution to the pool’s overall mining power, are distributed by the pool operator. Should our pools’ operator systems suffer downtime due to a cyber-attack, software malfunction or other similar issues, it will negatively impact our ability to mine and receive revenue. Furthermore, while we receive daily reports from our pools detailing the total processing power provided to the pools and the proportion of that total processing power, we provided to determine the distribution of rewards to us, we are dependent on the accuracy of our pool’s record keeping. Therefore, we have little means of recourse against our pools’ operators if we determine the proportion of the reward paid out to us by the mining pool operator is incorrect, other than leaving the pools. If we are unable to consistently obtain accurate proportionate rewards from our pools, we may experience reduced rewards for our efforts, which would have an adverse effect on our business and operations.

We may not have adequate sources of recovery if our digital assets are lost, stolen or destroyed.

We rely on Gemini to facilitate the custody of our bitcoins. If our bitcoins are lost, stolen or destroyed under circumstances rendering a party, including Gemini, liable to us, the responsible party may not have the financial resources sufficient to satisfy our claim. For example, as to a particular event of loss, the only source of recovery for us might be limited, to the extent identifiable, to other responsible third parties (e.g., a thief or terrorist), any of which may not have the financial resources (including liability insurance coverage) to satisfy a valid claim of ours. Gemini maintains certain commercial crime and specie insurance for digital assets they custody which insures against the theft of digital assets that results from a direct security breach or hack of Gemini's systems, a fraudulent transfer initiated by Gemini, or theft by a Gemini employee.

Bitcoins held by us are not subject to FDIC or SIPC protections.

We do not hold our bitcoins with a banking institution or a member of the Federal Deposit Insurance Corporation (“FDIC”) or the Securities Investor Protection Corporation (“SIPC”), and, therefore, our bitcoins are not subject to the protections enjoyed by depositors with FDIC or SIPC member institutions. As a result, we may suffer a loss with respect to our bitcoins that is not covered by insurance, and we may not be able to recover any of our carried value in these bitcoins if they are lost or stolen or suffer significant and sustained reduction in conversion spot price. If we are not otherwise able to recover damages from a malicious actor in connection with these losses, our business and results of operations may suffer, which may have a material negative impact on our stock price.

33On November 9, 2022, the Company’s Board of Directors approved and adopted an amendment to the Company’s Restated By-Laws (the “Amendment”) to reduce the number of shares that are required to be present at a meeting of the Company’s stockholders for purposes of establishing a quorum. Prior to the Amendment, the presence (in person or by proxy) of a majority of the shares outstanding was required to establish a quorum for the transaction of business. Now, as approved in the Amendment, a quorum is established by one-third of the stock issued and outstanding and entitled to vote. A copy of the Amendment is attached as Exhibit 3.1 to this Quarterly Report on Form 10-Q, and the Restated By-Laws of the Company incorporating such amendment is attached as Exhibit 3.2 to this Quarterly Report on Form 10-Q.

The following documents are filed as a part of this report or are incorporated herein by reference.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized:


Delaware	47-3844457
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

1200 West Platt Street Suite 100 Tampa, FL	33606
(Address of principal executive offices)	(Zip code)


Title of each class:	Trading symbol	Name of each exchange on which registered
Common Stock par value $0.001 per share	LMFA	The Nasdaq Stock Market LLC


		Page

PART I.	FINANCIAL INFORMATION	3

Item 1.	Financial Statements	3

	LM Funding America, Inc. and Subsidiaries Condensed Consolidated Balance Sheets ~~June~~ September 30, 2022 (unaudited) and December 31, 2021	3

	LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Operations Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2022 and 2021 (unaudited)	4

	LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows ~~Six~~Nine Months Ended ~~June~~September 30, 2022 and 2021 (unaudited)	5

	LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2022 and 2021 (unaudited)	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2427

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3034

Item 4.	Controls and Procedures	3034

PART II.	OTHER INFORMATION	32

Item 1.	Legal Proceedings	3236

Item 1A.	Risk Factors	3236

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3239

Item 3.	Defaults Upon Senior Securities	40

Item 4	Mine Safety Disclosure	3340

Item 5.	Other Information	3340

Item 6.	Exhibits	3441

SIGNATURES		3542


	As of September 30, 2022			As of December 31, 2021
Deferred tax liabilities:
Right to Use asset	$	73,366		$	-
State income taxes		62,950			-
Subsidiary		203,213			-
Loss from partnership		14,985			-
Collection costs		65,098			-
Unrealized gain on securities		2,787,425			-
Deferred vendor stock compensation		-			261,323
Total deferred tax liabilities		3,207,037			261,323
Deferred tax assets:
Loss carryforwards		2,078,549			2,101,401
Step up in basis at contribution to C-Corp		437,712			461,078
Stock option expense		3,237,074			669,959
Step up in basis - purchase of non-controlling interest		41,819			42,529
Allowance for credit losses		1,770			16,539
Right to Use assets		74,315			-
Digital asset impairment loss		107,535			-
Unrealized loss on securities		455,091			216,284
Total deferred tax asset		6,433,865			3,507,790
Valuation allowance		(3,226,828	)		(3,246,467	)
Net deferred tax asset (liability)	$	-		$	-

	As of June 30, 2022			As of December 31, 2021
Deferred tax liabilities:
Right to Use asset	$	(79,489	)	$	-
Deferred vendor stock compensation		(111,349	)		(261,323	)
Total deferred tax liabilities		(190,838	)		(261,323	)
Deferred tax assets:
Loss carryforwards		3,884,170			2,101,401
Step up in basis at contribution to C-Corp		465,781			461,078
Stock option expense		2,395,939			669,959
Step up in basis - purchase of non-controlling interest		42,981			42,529
Allowance for credit losses		17,618			16,539
Right to Use assets		80,178			-
Digital asset impairment loss		95,730			-
Unrealized loss on securities		(2,609,537	)		216,284
Total deferred tax asset		4,372,860			3,507,790
Valuation allowance		(4,182,022	)		(3,246,467	)
Net deferred tax asset (liability)	$	-		$	-


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☑	Smaller reporting company	☑

		Emerging growth company	☐

	As of June 30,
	2022	2021
Stock Options	3,956,827	3,860
Stock Warrants	7,677,441	391,900

	June 30, 2022		December 31, 2021

Financing agreement with FlatIron capital that was unsecured. Down payment of $36,255 was required upfront and equal installment payments of $19,114 were made over a 10 month period. The note matured on May 1, 2022. Annualized interest was 3.95%	$	-	$	114,688

	$	-	$	114,688

	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Current tax benefit
Federal	$	(1,001,827	)	$	2,324,460		$	(1,363,542	)	$	3,238,298
State		(234,022	)		480,942			(282,124	)		670,019
Total current tax expense (benefit)		(1,235,849	)		2,805,402			(1,645,666	)		3,908,317
Deferred tax expense		1,943,058			13,781			921,926			21,995
Change in tax rates		(211,815	)		-			(211,815	)		-
Valuation allowance (expense)		(495,394	)		(2,805,403	)		935,555			(3,913,048	)
Income tax (reduction) benefit	$	-		$	13,780		$	-		$	17,264


	Balance Sheet Line Item	June 30, 2022			December 31, 2021			Balance Sheet Line Item	September 30, 2022			December 31, 2021
Assets
ROU assets	Right of use asset, net	$	313,629		$	59,969		Right of use asset, net	$	289,468		$	59,969
Total lease assets		$	313,629		$	59,969			$	289,468		$	59,969

Liabilities
Current lease liabilities	Lease liability	$	90,030		$	68,002		Lease liability	$	90,004		$	68,002
Long-term lease liabilities	Lease liability		226,319			-		Lease liability		203,211			-
Total lease liabilities		$	316,349		$	68,002			$	293,215		$	68,002

Weighted-average remaining lease term (in years)			3.13			0.60				2.9			0.6
Weighted-average discount rate			7.49	%		6.55	%			7.50	%		6.55	%


	For the Nine Months Ended September 30,
	2022			2021
Operating cash flow information
Cash paid for amounts included in the measurement of lease liabilities	$	(75,574	)	$	(76,656	)
Non-cashflow information
ROU assets and operating lease obligation recognized	$	300,787		$	-

	Six Months Ended June 30, 2022			Six Months Ended June 30, 2021
Operating cash flow information
Cash paid for amounts included in the measurement of lease liabilities	$	(52,440	)	$	(50,353	)
Non-cashflow information
ROU assets and operating lease obligation recognized	$	300,787		$	-


	Useful Life (Years)	June 30, 2022			December 31, 2021			Useful Life (Years)	September 30, 2022			December 31, 2021
Mining machines	5	$	15,058,872			-		5	$	21,986,382			-
Furniture, computer and office equipment	3-5		213,022			199,786		3-5		216,312			199,786
Gross fixed assets			15,271,894			199,786				22,202,694			199,786
Less: accumulated depreciation			(186,973	)		(181,872	)			(226,734	)		(181,872	)
Fixed assets, net		$	15,084,921		$	17,914			$	21,975,960		$	17,914


EXHIBIT NUMBER	DESCRIPTION


3.1*	Amendment to Restated By-Laws of LM Funding America, Inc.(effective as of November 9, 2022)
~~3.2~~ 3.2*	Restated By-Laws of LM Funding America, Inc. ~~(incorporated by reference to Exhibit 3.2 to Form 8-K/A filed on December 14, 2021~~(effective as of November 9, 2022)
4.1	Certificate of Incorporation of LM Funding America, Inc., as amended (incorporated by reference to Exhibit 4.1 to Form S-8 filed on January 24, 2022)
10.1	~~Master Agreement~~Amended and Restated Promissory Note, dated ~~as of June 20,~~July 28, 2022, ~~between US Digital Mining Texas and Compute North~~issued by LMF Acquisition Opportunities, Inc. to LMFAO Sponsor, LLC (incorporated by reference to Exhibit 10.1 to Form 8-K filed on ~~June 27, 2022~~August 3, 2022))
10.2	~~Order~~Sale and Purchase Agreement, dated August 31, 2022, between LM Funding America, Inc. and BITMAIN Technologies Limited (incorporated by reference to Exhibit 10.1 to Form ~~dated~~8-K filed on September 8, 2022)
10.3	Master Services Agreement, entered into September 6, 2022 but effective as of ~~June 20,~~August 29, 2022, between USCore Scientific, Inc. and U.S. Digital Mining ~~Texas~~ and ~~Compute North LLC~~ ~~(incorporated~~Hosting Co, LLC(incorporated by reference to Exhibit 10.2 to Form 8-K filed on ~~June 27,~~September 8, 2022)
10.4	Consolidated Amended and Restated Promissory Note, dated October 28, 2022, issued by SeaStar Medical Holding Corporation to LMFAO Sponsor, LLC (incorporated by reference to Exhibit 10.1 to Form 8-K filed on November 3, 2022)
10.5	Amended and Restated Promissory Note, dated October 28, 2022, issued by SeaStar Medical, Inc. to LM Funding America, Inc. (incorporated by referent to Exhibit 10.2 to Form 8-K filed on November 3, 2022)
10.6	Security Agreement, dated October 28, 2022, among SeaStar Medical Holding Corporation, SeaStar Medical, Inc., and LMFAO Sponsor, LLC (incorporated by reference to Exhibit 10.3 to Form 8-K filed on November 3, 2022)
10.7	Security Agreement, dated October 28, 2022, among SeaStar Medical, Inc., SeaStar Medical, Inc., and LM Funding America, Inc. (incorporated by reference to Exhibit 10.4 to Form 8-K filed on November 3, 2022)
31.1*	Rule 13a – 14(a) Certification of the Principal Executive Officer

31.2*		Rule 13a – 14(a) Certification of the Principal Financial Officer

32.1*		Written Statement of the Principal Executive Officer and Principal Financial Officer, Pursuant to 18 U.S.C. § 1350




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	LM FUNDING AMERICA, INC.

Date: ~~August~~November 17, 2022	By:	/s/ Bruce M. Rodgers
		Bruce M. Rodgers
		Chief Executive Officer and Chairman of the Board
		(Principal Executive Officer)

Date: ~~August~~November 17, 2022	By:	/s/ Richard Russell
		Richard Russell
		Chief Financial Officer
		(Principal Accounting Officer)