LM Funding Reports Fourth Quarter and Full Year 2018 Financial Results
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.
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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.
Released April 16, 2019