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CST: 24/05/2019 00:32:30   

LM Funding Reports Fourth Quarter and Full Year 2018 Financial Results

37 Days ago

TAMPA, Fla., April 16, 2019 (GLOBE NEWSWIRE) -- LM Funding America, Inc. (NASDAQ: LMFA) (“LM Funding” or the “Company”), a technology-based specialty finance company, today announced its financial results for the fourth quarter and full year ended December 31, 2018.

“2018 was a transformational year for LM Funding. We took important steps to position our company for future growth by achieving several significant milestones including improving our capitalization structure, strengthening our balance sheet and completing an accretive acquisition,” said Bruce Rodgers, LM Funding’s Chief Executive Officer. “In 2018, we made a strategic decision to adapt our business model and leverage our core expertise in financial services which led to the IIU acquisition. IIU provides LM Funding with a complementary revenue stream, a profitable and scalable business model, a larger geographic footprint, strong management and compelling growth opportunities. We are evaluating similar investment opportunities while continuing to provide financing solutions to condominium and homeowner associations.”

Fourth Quarter 2018 Financial and Operational Highlights:

  • Operating revenues totaled $766,308 for the fourth quarter of 2018 as compared to $1.3 million for the same period the year prior;
  • Rental revenue, which accounted for 15.3% of total operating revenue during the quarter, totaled $117,497 as compared to $240,877 for the same period the year prior;
  • Operating expenses decreased by 66.2% to $1.1 million as compared to $3.2 million the year prior, driven by a significant reduction in staff costs and payroll, professional fees, and SG&A expenses;
  • Reported a net loss of $331,677 as compared to $2.1 million for the fourth quarter 2017;
  • In November 2018, the Company completed an underwritten public offering and received net proceeds of $5.2 million;
  • Subsequent to year end, the Company completed the accretive acquisition of IIU, Inc. (“IIU”), a global medical insurance product company; and
  • IIU’s former Chief Executive Officer, Mark Pajak, joined LM Funding as Chief Operating Officer.

Full Year 2018 Highlights:

  • Operating revenues totaled $3.4 million as compared to $4.4 million for the prior year;
  • Operating expenses decreased by 51.8% to $3.8 million as compared to $7.9 million the previous year driven by a significant reduction in staff costs and payroll, professional fees, SG&A expenses and the non-recurrence of a $1.4 million write off of a related party receivable;
  • In 2018, the Company settled its class action litigation and adjusted the $505,000 class action accrual incurred during the full year 2017 to $100,000, with the $405,000 change reflected as other income;
  • Generated a net loss of $0.5 million as compared to a net loss of $8.6 million for the full year 2017;
  • As of December 31, 2018, the Company had $3.5 million in cash; and
  • Stockholders’ equity increased to $5.8 million as of December 31, 2018, compared to stockholders’ equity of $896,983 as of December 31, 2017.

Fourth Quarter and Full Year Financial Results:
For the quarter ended December 31, 2018, total operating revenues were $766,308, compared to $1.3 million in the fourth quarter of 2017. This includes rental revenue of $117,497, compared to $240,877 for the quarter ended December 31, 2017, due to the stabilization in the utilization of the Company’s rental properties. For the twelve months ended December 31, 2018, total revenues were $3.4 million as compared to $4.4 million for the prior year.

Operating expenses for the fourth quarter of 2018 decreased by 66.2% to $1.1 million, compared to $3.2 million the year prior. During the year ended December 31, 2018, operating expenses decreased $4.1 million, or 51.8%, to $3.8 million from $7.9 million for the year ended December 31, 2017, primarily attributable to reduced staffing costs and payroll, professional fees, SG&A expenses and the non-recurrence of a $1.4 million write-off of a related party receivable.

Net loss for the quarter ended December 31, 2018 was $331,677, compared to a net loss of $2.1 million for the fourth quarter of 2017. For the year ended December 31, 2018, net loss was $0.5 million, compared to a net loss of $8.6 million for the year ended December 31, 2017.

At December 31, 2018, the Company had cash and cash equivalents of $3.5 million, compared with $0.6 million at December 31, 2017. Total stockholder’s equity increased to $5.8 million for the period ended December 31, 2018, as compared to $896,983 for the period ended December 31, 2017.

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. The company offers funding to Associations by purchasing a certain portion of the associations' rights to delinquent accounts that are selected by the Associations arising from unpaid Association assessments. The company is also involved in the business of purchasing delinquent accounts on various terms tailored to suit each Association's financial needs, including under the company’s New Neighbor Guaranty™ program.

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,” “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

    December 31,     December 31,  
    2018     2017  
ASSETS                
Cash   $ 3,520,753     $ 590,394  
Finance receivables:                
Original product     425,012       637,937  
Special product - New Neighbor Guaranty program, net     237,043       339,471  
Due from related party     25,507       -  
Prepaid expenses and other assets     155,420       101,339  
Fixed assets, net     33,818       69,505  
Real estate assets owned     122,604       196,707  
Other assets     32,036       32,964  
Other investments     1,507,375       -  
Deferred tax asset     -       -  
Total assets   $ 6,059,568     $ 1,968,317  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Notes payable                
Principal amount     42,875       39,028  
Less unamortized debt issuance costs     -       -  
Total notes payable less unamortized debt issuance costs     42,875       39,028  
Accounts payable and accrued expenses     188,354       477,953  
Accrued loss litigation settlement     -       505,000  
Accrued interest payable     -       -  
Deferred tax liability     -       -  
Other liabilities and obligations     19,690       49,353  
Total liabilities     250,919       1,071,334  
                 
Stockholders' equity                
Common stock, par value $.001; 30,000,000 shares authorized as of December 31, 2018 and 10,000,000 shares authorized as of December 31, 2017; 3,124,961 and 625,318 shares issued and outstanding as of December 31, 2018 and December 31, 2017, respectively     3,125       625  
Additional paid-in capital     17,295,408       11,914,083  
Accumulated deficit     (11,489,884 )     (11,017,725 )
Total stockholders' equity     5,808,649       896,983  
Total liabilities and stockholders’ equity   $ 6,059,568     $ 1,968,317  


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

    Years ended December 31,
    2018     2017  
Revenues                
Interest on delinquent association fees   $ 2,084,287     $ 2,935,517  
Administrative and late fees     230,756       259,653  
Recoveries in excess of cost - special product     118,540       172,884  
Underwriting fees and other revenues     246,904       286,435  
Rental revenue     709,050       737,490  
      Total revenues     3,389,537       4,391,979  
                 
Operating expenses              
Staff costs & payroll     1,374,129       1,887,830  
Professional fees     1,331,482       2,459,888  
Settlement costs with associations     40,027       269,576  
Selling, general and administrative     323,030       810,281  
Real estate management and disposal     627,384       551,708  
Depreciation and amortization     68,263       95,447  
Collection costs     19,025       228,763  
Bad debt allowance - related party     -       1,408,589  
Provision for credit losses     581       141,286  
Other operating     17,964       10,364  
     Total operating expenses     3,801,885       7,863,732  
                 
Operating loss     (412,348 )     (3,471,753 )
               
(Gain) Loss on litigation     (405,000 )     505,000  
Loss on settlement of debt exchange     -       604,779  
Interest expense     464,811       614,111  
   Total other expenses     59,811       1,723,890  
               
Loss before income taxes     (472,159 )     (5,195,643 )
               
Income tax (reduction) benefit     -       3,431,536  
               
   Net loss to common stockholders   $ (472,159 )   $ (8,627,179 )
               
Loss per share attributable to the stockholders of LM Funding America, Inc.              
Basic   $ (0.47 )   $ (25.68 )
Diluted   $ (0.47 )   $ (25.68 )
Weighted average number of common shares outstanding              
Basic     996,710       335,997  
Diluted     996,710       335,997  


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

    Years ended December 31,  
    2018     2017  
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net loss     (472,159 )     (8,627,179 )
                 
Adjustments to reconcile net loss to cash used in operating activities                
Depreciation   $ 68,263     $ 95,447  
Warrants issued with debt amortization     154,676        
Stock compensation     24,770       29,065  
Amortization of debt issuance costs     291,760       99,396  
Interest settled with common shares             180,585  
Reserve for uncollectible related party receivables             1,408,589  
Credit loss reserves, net             88,571  
Loss settlement of debt             604,779  
(Gain) loss on litigation     (405,000 )     505,000  
Write-off of deferred tax asset, net             3,431,536  
 Interest income     (7,375 )        
Change in operating assets and liabilities:                
Increase in prepaid expenses and other assets     31,517       147,491  
Advances (repayments) to related party     (25,507 )     252,771  
Decrease in accounts payable and accrued expenses     (389,599 )     (15,735 )
Decrease in other liabilities and obligations     (29,663 )     (10,814 )
                 
Net cash used in operating activities     (758,317 )     (1,810,498 )
CASH FLOWS FROM INVESTING ACTIVITIES:                
Net collections of finance receivables - original product     212,925       256,610  
Net collections of finance receivables - special product     102,428       152,126  
Capital expenditures           (8,673 )
Investment in note receivable     (1,500,000 )        
Payments for real estate assets owned     41,527       491,677  
Net cash provided by investing activities     (1,143,120 )     891,740  
CASH FLOWS FROM FINANCING ACTIVITIES:                
Issuance of common stock, net of issuance cost     5,206,273        
Proceeds from borrowings     500,000        
Debt issuance costs     (291,760 )      
Principal repayments     (580,823 )     (759,028 )
Purchase of fractional common shares     (1,894 )      
Net cash used in financing activities     4,831,796       (759,028 )
NET DECREASE IN CASH     2,930,359       (1,677,786 )
CASH - BEGINNING OF YEAR     590,394       2,268,180  
CASH - END OF YEAR   $ 3,520,753     $ 590,394  
                 
SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION                
Cash paid for interest     29,401       334,962  
Cash paid for income taxes            
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:                
Debt discount on issuance of warrants     154,676        
Insurance financing     84,670       78,056  
   

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

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