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Press release content from Globe Newswire. The AP news staff was not involved in its creation.
PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.

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

August 16, 2021 GMT

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.

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“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

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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