LM Funding America, Inc. Price & Performance (LMFA)

If you have any questions after the call or would like any additional information about the company, please contact Crexendo Communications at 212 671 10 [indiscernible] Before management reviews the company's operating results for the 3 months 9 months ended September 30, 2024, and its financial condition as of that date we would like to remind everyone that this conference call may contain forward looking statements. All statements other than statements of historical facts contained in the conference call including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations are forward looking statements. Forward looking statements are based largely on the company's current expectations and projections about future events and trends that it believes may affect its financial condition results of operations, [indiscernible] short term and long term business operations and objectives and financial needs These forward looking statements are subject to various risks, uncertainties and assumptions as described in the company's Form 10 ks filed with the U. S. Securities and Exchange Commission on April 1, 2024. Because of these risks, uncertainties and assumptions, the forward looking events and discussed in this conference call may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward looking statements.

You should not rely upon forward looking statements as predictions of future events. Although the company believes that the expectations reflected in the forward looking statements are reasonable, it cannot guarantee future results level of activity, performance or achievements. In addition, neither the company nor any other person assumes responsibility for the accuracy and completeness of any of these forward looking statements. The company disclaims any duty to update any of these forward looking statements. All forward looking statements attributable to the company are expressly qualified in their entirety by these cautionary statements as well as others made in this conference call. You should evaluate all forward looking statements made by the company in the context of these risks and uncertainties. In addition, today's discussion will include references to non GAAP measures. The company believes that such information provides an additional measurement and consistent performance. A reconciliation of the non GAAP measures to the most directly comparable GAAP measures is available in today's news release on our website. With that, I will now turn the call over to Ryan Duran, [indiscernible] Thanks, Ted. Morning and thanks to everyone who joined us today.

We have a lot of positive developments to share with you today as we continue to strengthen position in the bitcoin mining landscape. Following the Bitcoin mining halving earlier this year, there has been a strategic shift in our mining approach to more cost effective operations. The having event coincided with the expiration of several high cost hosting contracts providing us with opportunities to relocate our machines to more cost effective facilities. We believe these strategic decisions have positioned LM Funding for continued growth and success in our mining operations. I would now like to turn the call over to our CFO, Rick Ross for a review of the financial highlights for the Q3 of 2024. [indiscernible] Thank you, Ryan.

As of September 30, 2024, the company had approximately 3,700 Bitcoin mining machines in operation and engaged in bitcoin mining at various hosting sites. With an additional 2,200 minuteers at a 3rd party warehouse waiting to be redeployed, In total, our 5,900 minuteers provide the company with approximately 639 petahash of mining capacity. We mined 18.5 bitcoins in the Q3 of 2024 generating approximately $1,100,000 in revenue an average Bitcoin price at $61,000 As of September 30, 2024, the company held 142.3 bitcoins which are valued as of November 11, 2024 at approximately $12,400,000 assuming an $87,000 per Bitcoin price. Total revenue for the Q3 of 2024 was approximately $1,300,000 a decrease of 2,100,000 from the same period last year.

The decrease in revenues reflects the effects of April 2024 Bitcoin halving event as well as the repositioning of miners during the quarter. Operating expenses for the quarter ended September 30, 2024 decreased to $5,600,000 from $6,600,000 year over year due to a $2,000,000 decrease in digital mine costs offset in part by a $800,000 increase in depreciation and amortization Moreover, we reported that our core EBIT loss was $1,600,000 in Q3 twenty twenty 4 $600,000 in Q3 2023, However, we achieved positive core EBITDA for the 1st 9 months of 2024 as [indiscernible] due to expanded Bitcoin operations. I would now like to turn the call over to Ryan for our strategy. [indiscernible] Thanks, Rick. I would now like to focus our attention on our overall strategic shift in our mining post having Following the April having event, the company strategically pivoted away from the infrastructure light approach that we had employed pre having to a strategy of vertical integration. This strategy is centered on securing mining sites with low cost to sustainable power sources and significant expansion potential. Positioning the company and enhanced operations efficiency and growth. The timing of the strategic shift was intentional as we had aligned our hosting contract expirations to coincide with the having event, allowing us the flexibility to restructure our operations with minimal disruption.

As we continue to build out our infrastructure we remain committed to identifying additional cost effective hosting sites. We believe these investments will drive substantial growth and create long term value for our shareholders. Positioning the company as a key player in the digital mining sector. I would now like to turn the call over to Rick Russell for a wrap up.

Thanks, Ryan. We remain fully committed to reinvesting our mining revenue and to expanding our capacity with additional state of the art miners and further enhancing our operations due to the integration of advanced software and technologies boosting the hash rate of our existing machines. Moreover, we are enthusiastic about our recent vertical integration initiatives which we anticipate will continue to lower our direct mining costs as compared to the prior year.

I would now like to open up the call for questions. Operator, can you assist us with that?

Yes, sir. Thank you. At this time, we'll be conducting our question and answer session. Thank you. Our first question is coming from Kevin Dede with H. C. Wainwright. Your line is live.

Thanks. Hi, Rick, Ryan. Thanks for having me on the call. Appreciate it. Yes, lots of questions because there weren't many details. Obviously, you were moving miners.

Can you give us an indication of what you have mining now where it is and where you think your hash rate goes by the end of the year?

Sure. So we have about 3,300 machines located at in Oklahoma. A facility that's generating that's about $0.04 per kilowatt there then another That's 800 over at a core facility in Kentucky. And that's at about $0.07 so per kilowatt We have about 22 home machines in a warehouse in Oklahoma. And we're working on being able to place those machines at a that location in Oklahoma hopefully by year end, if not the 1st January. There was during the quarter, during the quarter, we were probably at 60% capacity. Give or take. Okay.

Has that changed through the month of October?

No, it has not changed. Like I say, we hope to have entered some additional contracts to put those remaining machines by year end, if not by the 1st January.

Could you please remind me what your available power is in Oklahoma?

The total site has 15 megawatts We're only using 10.

Okay. And then when you get those 2,200 machines plugged in, then you'll be up to the full 15? 15, correct.

And are they're going into containers, if I remember correctly.

Correct.

Okay. Now there was some talk about a site in Texas Are there any details you can share about how that might be progressing?

No, that is still has some requirements for power validation. Before we if you remember that had a 12 megawatt size with 60 expansion. And we before we move forward on that, we want 60 megawatt expansion to be solidified and they're still working on that. So it's kind of wait and see on that one.

Any insight on timing Is it a 3 month process a 6 month process, I think by year end, we'll know Whether it's go or no go, how's that?

Fair enough.

Can you offer any indication on where or how you're thinking about new rig purchases? [indiscernible] It all comes back to obviously machines are consistently rolling out new models When it comes time to make that purchase, we basically look at what options are available what potential deals we could get directly through Bitmain, which we know normally do, and it comes back to payback period.

And I know we've looked at the S21 [indiscernible] Some of the older, what was it, K models look K Pros. K Pros look more enticing. Right?

So once we have the space and we start refreshing our older machines, those will be the main criteria. [indiscernible] Rick, since you're intimately more familiar with the The condo business, can you give us Just sort of a view on how you see it How you see the Florida real estate market and what you think your opportunities are?

Well, I think there are opportunities there. Given the new laws, but with the legislation coming in in the spring, some of those demands upon the condos may lessen a little bit and give them more breathing room. We think regardless the condos will need help And we're trying to work with them in that manner. I know that's not a lot, but it's kind of we'll see a lot of increase in assessments and later assessments, is that correct? [indiscernible] Yes. Special assessments are being assessed very large rate.

And we're looking to to solve that problem that's slowly rolling out as Rick indicated maybe delayed a little bit longer down the road than originally planned. But there's definitely going to be opportunity there. As associations continue to special assess and fill their reserve requirements.

So [indiscernible] The past 9 months seem to be fairly consistent for you folks. I'm wondering if there's any indication that your potentially involved in more deals helping the associations manage these assessments.

Has that [indiscernible] the tenure of business changed, I guess, is sort of the root of the question.

Not really. Because requirements are not quite as urgent as they have to be, right? [indiscernible] I mean, I would like to have it pick up more, but we're we're willing to take the opportunity to expand that if it comes about. [indiscernible] We can only push it so far.

So would it be fair to assume then Rick that the emphasis now was on expanding the vertical integration aspect of your [indiscernible] And it's kind of a wait and see really on how legislation changes the profile of the condo business.

Yes, that's fair. I mean, we're Ryan and his group are searching for additional sites, right, in that $0.04 power and we've got some good leads on those.

In addition to what we have already.

And we think we can get funding to help acquire those sites do loans and then use equity rates to help put machines in there.

Last question for me.

Have you looked at sort of the M and A side of things with pre established privately held mining companies that might be hitting a roadblock given the hash price was so low for so long?

We've talked to a few firms in those situations. Nothing has come about And we do get introduced to other people who know such firms and we're open to discussions, but it depends on their situation. And willingness to trade, right? Absolutely. All right. Well, thanks for your candor, Rick. I appreciate it. Thank you.

Thank you. Once again, ladies and gentlemen, if you do have any questions or comments, Our next question coming from Matthew Galinko with Maxim Group. Your line is live.

Hey, thanks for taking my question. I wanted to look back at Oklahoma [indiscernible] What is the power rate you're currently paying? And [indiscernible] recall it might have been something that you've [indiscernible] maybe 9 months or can you just refresh me on what the power rate is and how long you have it locked in for? [indiscernible] we're roughly in the $0.04 range. It floats with cost of power each month, but we have projections and expectations. It's going to be anywhere from $3,800,000 to [indiscernible] So that's why we continue to to say the $0.04 number, it's right in that range. Changing for better or for worse. That is our expectation. For the foreseeable future.

Got it. And do you have expansion past the I think you mentioned 5 megawatts as the target in Oklahoma, but you've is there capacity on-site to To add to the site or do you have more expansion beyond the 5 Oklahoma that's [indiscernible] Yes. That site can be expanded. With some substation expansion.

Additional 60 megawatts, right? Yes. It would take 9 months once you put this expansion [indiscernible] [indiscernible] And we're looking heavily at that since the price of electricity is reasonable for us. Got you. I mean, I guess last question for me in terms of decisioning, if I think you mentioned earlier in the call that You might know by the end of the year whether you can get the expansion in Texas or not. So if that The Texas expansion doesn't come your way [indiscernible] [indiscernible] be your primary direction for the machines currently or Yes. We will look at prime Oklahoma and then also we're looking at a few other sites out there to take advantage of. Okay. So sorry, just to to put a finer point on that, if you have about a 9 month lead time to get infrastructure in place to expand Oklahoma behind beyond the 15 do you think you'd move more quickly on a another site sort of wait the 9 months for expansion or just how do you think about timing? Yes. We would do dual prong that we would definitely look hard at ready to go sites right now or something that could be pop up in 3 months, call it that.

While also exploring the 60 megawatt expansion also.

Got it. Thank you.

Thank you. As we have no further questions on the lines at this time, I'd like to turn it over to management for any closing remarks.

Thank you.

We are thrilled to see Bitcoin recently reach an all time high above $92,000 a milestone that we believe strongly validates our long term strategy of mining and holding big This recent surge reinforces our confidence in Bitcoin's upward trajectory as we anticipate the price moving toward our projected target of over $100,000 in 2025. With the current initiatives providing cost effective locations to power existing machines, We are extremely excited about what the future holds for LM Funding and its shareholders. We are grateful for the ongoing support from our shareholders and look forward to updating you on our future [indiscernible] Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your lines at this time and have a wonderful day. And we thank you for your participation.