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LM Funding Reports Net Income of $11.1 Million or $2.05 Per Basic Common Share for the Second Quarter of 2021

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TAMPA, Fla., Aug. 16, 2021 (GLOBE NEWSWIRE) -- LM Funding America, Inc. (NASDAQ:LMFA) ("LM Funding" or "LMFA"), a technology-based specialty finance company, today announced its financial results for the three and six months ended June 30, 2021.

Financial Highlights for the Three and Six Month Period Ended June 30, 2021:

  • Net income attributable to LM Funding for the three and six-month periods ended June 30, 2021 totaled $11.1 million or $2.05 per basic and diluted share and $15.5 million or $2.96 per basic and $2.95 per diluted share, respectively.

  • Cash increased to $22.2 million or approximately $4.09 per basic and diluted share on June 30, 2021 as compared to $11.6 million on December 31, 2020.

  • Working capital as of June 30, 2021 was $29.7 million or $5.49 per basic and diluted share.

  • As of August 6, 2021, there were 5,414,296 common shares outstanding.

“We continue to operate under the tagline 'We Buy Problems,'” Bruce M. Rodgers, Chairman and CEO of LM Funding said. “In the first two quarters, we originated, structured, and monetized our problem-buying business operations to generate $2.96 in net income per basic and diluted share. As our balance sheet has grown our opportunities to buy problems has increased. With a stronger balance sheet, we could also take larger participations in the deals we put together. Although we originated, structured, and executed the two BRQS transactions and recognized $14.1 million in gains this year, we only participated in less than one-third of the principal investment required in these deals and outsourced the balance to third parties. So we plan to continue to combine our team’s strengths and our balance sheet with $5.49 per share of working capital to buy problems and solve them profitably.”

Operational Highlights for the First Six Months of 2021 to Date:

  • LMFA announced plans to develop accounting practices and controls for operating with digital assets and has announced plans to purchase up to $2 million in Bitcoin and Ether.

  • LM Funding is developing a digital asset technology strategy to grow its community association receivables business both organically and through acquisitions.

  • LM Funding sponsored a special acquisition company, or SPAC, and closed a $103.5 million upsized IPO (NASDAQ: LMAO). Net investment by LMFA in LMAO totals $6.4 million or approximately $1.17 per LMFA share.

  • LMAO is targeting a business combination in the financial services or financial technology sectors

About LM Funding America:
LM Funding America, Inc., together with its subsidiaries, is a technology-based specialty finance company that provides funding to nonprofit community associations (Associations) primarily located in the state of Florida, as well as in the states of Washington, Colorado and Illinois, by funding a certain portion of the associations' rights to delinquent accounts that are selected by the Associations arising from unpaid Association assessments.

Forward-Looking Statements:

This press release may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” and “project” and other similar words and expressions are intended to signify forward-looking statements. Forward-looking statements are not guaranties of future results and conditions but rather are subject to various risks and uncertainties. Some of these risks and uncertainties are identified in the company's most recent Annual Report on Form 10-K and its other filings with the SEC, which are available at www.sec.gov. These risks and uncertainties include, without limitation, uncertainty created by the COVID-19 pandemic, our ability to acquire new accounts in our specialty finance business at appropriate prices, the need for capital, our ability to hire and retain new employees, changes in governmental regulations that affect our ability to collected sufficient amounts on defaulted consumer receivables, changes in the credit or capital markets, changes in interest rates, and negative press regarding the debt collection industry. The occurrence of any of these risks and uncertainties could have a material adverse effect on our business, financial condition, and results of operations.

Company Contact:
Bruce M. Rodgers, Chairman and CEO
LM Funding America, Inc.
Tel (813) 222-8996
investors@lmfunding.com

LM Funding America, Inc. and Subsidiaries Condensed Consolidated Balance Sheets

June 30, 2021

December 31,
2020

(Unaudited)

ASSETS

Cash

$

22,173,690

$

11,552,943

Finance receivables:

Original product - net (Note 2)

85,186

116,017

Special product - New Neighbor Guaranty program, net of allowance for credit losses of (Note 3)

53,211

52,757

Short-term investments - convertible debt securities (Note 9)

7,588,538

-

Marketable securities

248,100

-

Prepaid expenses and other assets

157,195

399,124

Current assets

30,305,920

12,120,841

Fixed assets, net

7,929

6,171

Real estate assets owned

80,057

18,767

Operating lease - right of use assets (Note 7)

110,870

160,667

Long-term investments - equity securities (Note 9)

2,295,200

-

Investments in unconsolidated affiliates (Note 9)

4,615,583

-

Other assets

10,984

10,984

Long-term assets

7,120,623

196,589

Total assets

$

37,426,543

$

12,317,430

LIABILITIES AND STOCKHOLDERS' EQUITY

Note payable (Note 5)

-

96,257

Accounts payable and accrued expenses

298,239

237,033

Due to related party (Note 4)

174,176

158,399

Current portion of lease liability (Note 7)

108,611

-

Total current liabilities

581,026

491,689

Lease liability - long-term (Note 7)

12,684

171,648

Deferred taxes (Note 6)

17,264

-

Note payable - long-term (Note 5)

-

185,785

Long-term liabilities

29,948

357,433

Total liabilities

610,974

849,122

Stockholders’ equity:

Common stock, par value $0.001; 30,000,000 shares authorized; 5,414,296 and 3,083,760 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

5,414

3,084

Additional paid-in capital

39,538,550

29,996,257

Accumulated deficit

(3,052,309

)

(18,536,224

)

Total stockholders’ equity

36,491,655

11,463,117

Non-controlling interest

323,914

5,191

Total stockholders’ equity

36,815,569

11,468,308

Total liabilities and stockholders’ equity

$

37,426,543

$

12,317,430

LM Funding America, Inc. and Subsidiaries Condensed Consolidated Income Statement

For the Three Months
Ended June 30,

For the Six Months
Ended June 30,

2021

2020

2021

2020

Revenues:

Interest on delinquent association fees

$

62,673

$

170,174

$

140,117

$

389,688

Administrative and late fees

16,861

35,423

31,932

58,468

Recoveries in excess of cost - special product

178,769

62,362

208,242

84,990

Underwriting and other revenues

35,494

41,235

58,197

69,164

Rental revenue

34,588

33,344

66,505

81,424

Total revenues

328,385

342,538

504,993

683,734

Operating Expenses:

Staff costs and payroll

246,040

312,493

1,548,021

628,552

Professional fees

360,024

479,581

842,967

986,576

Settlement costs with associations

-

-

-

11,920

Selling, general and administrative

96,015

74,728

195,784

154,951

Recovery of cost from related party receivable

(100,000

)

(100,000

)

(100,000

)

(200,000

)

Provision for credit losses

-

-

(10,000

)

-

Real estate management and disposal

29,478

14,108

47,768

99,450

Depreciation and amortization

3,298

7,954

4,994

13,766

Collection costs

2,701

(20,934

)

4,749

(29,255

)

Other operating expenses

4,069

6,844

11,614

10,638

Total operating expenses

641,625

774,774

2,545,897

1,676,598

Operating loss from continuing operations

(313,240

)

(432,236

)

(2,040,904

)

(992,864

)

Realized gain on securities

8,453,570

-

14,125,034

-

Unrealized gain on convertible debt security

2,501,600

-

2,501,600

-

Unrealized gain on investment and equity securities

552,494

-

1,147,886

-

Interest income

73,884

-

86,939

-

Interest expense

(189

)

(5,732

)

(653

)

(12,626

)

Income (loss) from continuing operations before income taxes

11,268,119

(437,968

)

15,819,902

(1,005,490

)

Income tax expense

(13,780

)

-

(17,264

)

-

Net income (loss) from continuing operations

11,254,339

(437,968

)

15,802,638

(1,005,490

)

Gain from operations of discontinued operations

-

-

-

16,428

Net gain from discontinued operations

-

-

-

16,428

Net income (loss)

11,254,339

(437,968

)

15,802,638

(989,062

)

Less: Net income attributable to non-controlling interest

(146,857

)

-

(318,723

)

-

Net income (loss) attributable to LM Funding America Inc.

$

11,107,482

$

(437,968

)

$

15,483,915

$

(989,062

)

Earnings/(loss) per share:

Basic income (loss) per common share - continuing operations

$

2.05

$

(0.56

)

$

2.96

$

(1.41

)

Basic income/(loss) per common share - discontinued operations

$

-

$

-

$

-

$

0.02

Basic income (loss) per common share - net income (loss) - attributable to LM Funding

$

2.05

$

(0.56

)

$

2.96

$

(1.38

)

Diluted income (loss) per common share - continuing operations

$

2.05

$

(0.56

)

$

2.95

$

(1.41

)

Diluted earnings/(loss) per common share - discontinued operations

$

-

$

-

$

-

$

0.02

Diluted income (loss) per common share - net income (loss) - attributable to LM Funding

$

2.05

$

(0.56

)

$

2.95

$

(1.38

)

Weighted average number of common shares outstanding:

Basic

5,414,296

783,433

5,231,909

715,020

Diluted

5,423,162

783,433

5,245,656

715,020

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

For the Six Months
Ended June 30,

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$

15,802,638

$

(989,062

)

Adjustments to reconcile net loss to cash used in operating activities

Depreciation and amortization

4,994

11,727

Right to use asset depreciation

49,797

51,229

Stock compensation

-

132,244

Debt forgiveness

(157,251

)

-

Recovery of uncollectible related party receivables

-

(200,000

)

Accrued investment income

(86,938

)

-

Gain from operations of discontinued operations

-

(16,426

)

Deconsolidation of affiliate

(43,623

)

-

Unrealized gain on investment and equity securities

(1,147,886

)

-

Unrealized gain on convertible debt security

(2,501,600

)

-

Investment in convertible note receivable

(5,000,000

)

-

Realized gain on securities

(14,125,034

)

-

Investment in securities

(15,547,454

)

-

Proceeds from securities

29,672,488

49,828

Investment in marketable securities

(247,997

)

-

Change in assets and liabilities

Prepaid expenses and other assets

11,105

49,059

Accounts payable and accrued expenses

184,239

21,858

Advances (repayments) from related party

142,191

496,546

Lease liability payments

(50,353

)

(45,742

)

Deferred taxes

17,264

-

Net cash provided by (used in) operating activities

6,976,580

(438,739

)

CASH FLOWS FROM INVESTING ACTIVITIES:

Net collections of finance receivables - original product

30,831

61,590

Net collections of finance receivables - special product

(454

)

32,076

(Payments) for real estate assets owned

(64,857

)

(2,055

)

Capital expenditures

(3,185

)

-

Net cash payment for IIU disposal

-

(246,914

)

Proceeds from investment in note receivable

-

1,500,000

Loan to purchase securities

1,784,250

-

Repayment of loan to purchase securities

(1,784,250

)

-

Investment in unconsolidated affiliate

(5,738,000

)

-

Net cash (used in) provided by investing activities

(5,775,665

)

1,344,697

CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings

-

185,785

Principal repayments

(28,534

)

-

Insurance financing repayments

(96,257

)

(69,540

)

Exercise of warrants

9,544,623

2,946,480

Proceeds from stock subscription

-

1,250,000

Net cash provided by financing activities

9,419,832

4,312,725

NET INCREASE IN CASH

10,620,747

5,218,683

CASH - BEGINNING OF YEAR

11,552,943

1,069,823

CASH - END OF YEAR

$

22,173,690

$

6,288,506

SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION

Cash paid for taxes

$

-

$

-

Cash paid for interest

$

1,892

$

12,626