LM Funding Reports Second Quarter 2019 Financial Results
August 14 2019 - 5:30PM
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 EcksteinKCSA Strategic
Communications Tel (212) 896-1254 / (212) 896-1210valter@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.
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