TAMPA, Fla., Aug. 14, 2019 (GLOBE NEWSWIRE) -- LM Funding America, Inc. (NASDAQ: 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.