U.S. Markets close in 50 mins

LM Funding Reports Second Quarter 2019 Financial Results

TAMPA, Fla., Aug. 14, 2019 (GLOBE NEWSWIRE) -- LM Funding America, Inc. (LMFA) (“LM Funding” or the “Company”), a technology-based specialty finance and travel insurance broker company, today announced its financial results for the second quarter ended June 30, 2019.

Bruce Rodgers, LM Funding’s Chief Executive Officer, commented, “In the second quarter, we benefited from IIU’s profitability and the stable operating performance of our specialty finance business which remains impaired by the continued strength of the Florida real estate market.  Our legacy expenses such as rent, and some continued litigation, as well as expenditures related to identifying acquisition prospects contributed to our losses.  We expect to realize substantial savings from downsizing our corporate headquarters lease and resolving litigation outcomes.  We believe the additional expenses incurred methodically identifying and developing acquisition prospects will ultimately lead to improved shareholder value.”

Second Quarter Financial Results:
For the quarter ended June 30, 2019, total operating revenues were $840,021, inclusive of $181,391 generated by IIU, compared to $877,986 in the second quarter of 2018, prior to the acquisition of IIU.  The revenue decline also reflects a decrease in rental revenue from $217,904 for the quarter ended June 30, 2018 to $72,285 for the second quarter of 2019.

Operating expenses for the second quarter of 2019 were $1.2 million, compared to $733,170 the year prior.  The prior year expenses were reduced by a one-time $200,000 insurance reimbursement for professional fees. Operating expenses for the current quarter were increased by (i) IIU acquisition expenses of approximately $46,000 which includes shareholder special meeting expenses; (ii) IIU operating expenses of about $100,000, (iii) increased rent expense of $25,000 arising from the loss of a sub tenant, and (iv) expenditures related to the pursuit of strategic business combinations of about $68,000.  In July, the Company downsized its corporate headquarters which we anticipate will reduce expenses by approximately $200,000 annually.

Net losses for the quarter ended June 30, 2019 were $450,503, compared to net income of $455,240 for the second quarter of 2018.  The profit-loss difference between the two periods is largely attributable to increased expenses and a one-time $405,000 increase to income in the second quarter of 2018 resulting from settlement of the Solaris class action.

On June 30, 2019, the Company had cash and cash equivalents of $3.1 million, compared with $3.5 million on December 31, 2018.

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. The Company, through its IIU, Inc. subsidiary, also offers global medical insurance products for international travelers, specializing in policies covering high risk destination, emerging markets and foreign travelers coming to the United States.  All policies are fully underwritten with no claim risk remaining with the Company.

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 guarantees 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. The occurrence of any of these risks and uncertainties could have a material adverse effect on the company's business, financial condition, and results of operations.

Company Contact:  
Bruce Rodgers, Chairman and CEO  
LM Funding America, Inc.  
Tel (813) 222-8996  
investors@lmfunding.com
Investor Contacts:
Valter Pinto / Scott Eckstein
KCSA Strategic Communications
Tel (212) 896-1254 / (212) 896-1210
valter@kcsa.com / seckstein@kcsa.com


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

           
    June 30, 2019   December 31, 2018  
    (Unaudited)      
ASSETS          
Cash   $   3,093,733     $   3,520,753    
Finance receivables:          
Original product - net (Note 3)       329,770         425,012    
Special product - New Neighbor Guaranty program, net of allowance for credit losses of (Note 4)       157,169         237,043    
Prepaid expenses and other assets       112,767         155,420    
Due from related party (Note 5)       -          25,507    
Fixed assets, net (Note 1)       30,328         33,818    
Real estate assets owned  (Note 1)       46,533         122,604    
Operating lease - right of use assets (Note 8)       21,833         -     
Other investments (Note 1)       -          1,507,375    
Goodwill (Note 2)       5,689,586         -     
Other Assets        42,036         32,036    
Total assets   $   9,523,755     $   6,059,568    
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Note payable   $   660,793     $   42,875    
Related party convertible note payable       3,461,782        
Due from related party (Note 5)       6,888        
Operating lease liability (Note 8)       22,259         -     
Accounts payable and accrued expenses       359,160         188,354    
Tax liability       14,226         -     
Other liabilities and obligations       68,268         19,690    
Total liabilities       4,593,376         250,919    
Stockholders’ equity:          
Common stock, par value $.001; 30,000,000 shares authorized; 3,134,261  and 3,124,961 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively       3,134         3,125    
Additional paid-in capital       17,324,650         17,295,408    
Accumulated deficit       (12,397,405 )       (11,489,884 )  
Total stockholders’ equity       4,930,379         5,808,649    
Total liabilities and stockholders’ equity   $   9,523,755     $   6,059,568    
         

 The accompanying notes are an integral part of these unaudited condensed 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,
      2019       2018       2019       2018  
Revenues:                
Interest on delinquent association fees   $   463,738     $   564,593     $   878,013     $   1,115,455  
Administrative and late fees       43,314         50,301         82,807         118,629  
Recoveries in excess of cost - special product       4,502         (8,437 )       26,272         59,100  
Underwriting and other revenues       74,791         53,625         115,515         108,186  
Net commission revenue       181,391         -         280,159         -  
Rental revenue       72,285         217,904         219,954         440,349  
Total revenues       840,021         877,986         1,602,720         1,841,719  
                 
Operating Expenses:                
Staff costs and payroll       375,677         298,651         664,075         700,934  
Professional fees       547,823         121,577         1,150,535         456,684  
Settlement costs with associations       38,286         11,403         40,178         27,115  
Selling, general and administrative       126,362         79,667         237,633         152,215  
Provision for credit losses       (7,375 )       -         (7,375 )       581  
Real estate management and disposal       100,306         162,578         297,434         281,940  
Depreciation and amortization       20,782         22,156         39,902         44,311  
Collection costs       9,786         29,560         (13,301 )       30,162  
Other operating expenses       16,191         7,578         30,687         11,879  
Total operating expenses       1,227,838         733,170         2,439,768         1,705,821  
Operating income (loss)       (387,817 )       144,816         (837,048 )       135,898  
Interest expense       62,686         94,576         70,473         94,576  
Gain on litigation       -         (405,000 )       -         (405,000 )
Income (loss) before income taxes       (450,503 )       455,240         (907,521 )       446,322  
Income tax benefit       -         -         -         -  
Net income (loss)   $   (450,503 )   $   455,240     $   (907,521 )   $   446,322  
                 
Income (loss) per share:                
Basic   $   (0.14 )   $   0.73     $   (0.29 )   $   0.71  
Diluted       (0.14 )       0.73         (0.29 )       0.71  
Weighted average number of common shares outstanding:                
Basic       3,134,261         625,319         3,133,106         625,319  
Diluted       3,134,261         625,319         3,133,106         625,319  

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

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

    For the Six Months ended June 30,
      2019       2018  
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income (loss)   $    (907,521 )   $    446,322  
         
 Adjustments to reconcile net loss to cash used in operating activities         
 Depreciation and amortization        32,550         44,311  
 Right to use asset depreciation        4,852         -   
 Stock compensation        6,931         7,769  
 Amortization of debt discount        -          75,638  
 Amortization of debt issuance costs        -          5,705  
 Gain on litigation        -          (405,000 )
         
 Change in assets and liabilities         
 Prepaid expenses and other assets        52,389         (51,901 )
 Accounts payable and accrued expenses        89,329         (174,887 )
Advances (repayments) to related party       32,395         71,289  
 Other liabilities        48,578         (22,277 )
Lease liability payments       (4,426 )       -   
 Deferred taxes        (14,200 )       -   
Net cash used in operating activities       (659,123 )       (3,031 )
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Net collections of finance receivables - original product       95,242         133,250  
Net collections of finance receivables - special product       79,874         70,635  
Net cash received from business acquisition       51,327         -   
Proceeds for real estate assets owned       64,101         32,544  
         
Net cash provided by investing activities       290,544         236,429  
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from borrowing       -          500,000  
Principal repayments       (80,761 )       (39,028 )
Exercise of warrants       22,320         -   
Debt issue costs       -          (82,382 )
Net cash provided by (used in) financing activities       (58,441 )       378,590  
         
NET INCREASE (DECREASE) IN CASH       (427,020 )       611,988  
         
CASH - BEGINNING OF YEAR       3,520,753         590,394  
CASH - END OF YEAR   $    3,093,733     $    1,202,382  
         
SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION        
Cash paid for interest   $   16,743     $   -   
SUPPLEMENTAL DISCLOSURES OF NON-CASHFLOW INFORMATION        
Non Cash - insurance financing       -          87,012  
Non Cash - debt discount - warrants       -          154,676  
ROU asset obligation recognized   $   26,685     $   -   

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