lmfa-ex991_22.htm

Tampa, Fla. – March 30, 2016 – ~~LM Funding America, Inc.~~ (NASDAQ:LMFA) (NASDAQ:LMFAW), a specialty finance company offering unique funding solutions to community associations, reported results for the three months and full year ended December 31, 2015.

“The strong fourth quarter marked our second consecutive profitable quarter as a reporting company,” said Bruce Rodgers, founder and CEO of LM Funding, “and market demand for our unique association funding solutions continues to grow in the new year.

“The capital contributed by our October 2015 IPO provided the much-needed resources to fully capitalize on this major market opportunity. We also have behind us a number of large, one-time expenses that contributed to the capital constraints that challenged our growth in 2015. As such, we think a great indicator of our performance in our IPO year is our cash flow from operations.

“The additional capital resources have supported our recent ~~expansion into Illinois~~ as the fourth state where we operate. The head of our new Chicago office possesses long-standing relationships with the local association community, which presents a tremendous opportunity to provide these associations our easy, cost-effective way to collect their unpaid assessments.”

“Building out our sales teams in other states also represents a key growth driver, so we have added five additional commission-based sales reps in Florida. Our sales teams have set a collective goal to acquire 2,000 delinquent accounts over the next 12 months, which would compare to the 361 we acquired in all of 2015. We expect to maintain profitable growth in the first half of the year, but given our typical multi-month sales cycle, we expect to see more meaningful results from our expanded sales staff and new influx in capital during the second half of the year.”

Revenues in the fourth quarter of 2015 were $1.77 million compared with $1.82 million in the fourth quarter of 2014. The decrease was due to the decline in collections of the company’s original product, offset by an increase in collections related to the New Neighbor Guaranty product and rental income from REO properties.

Operating expenses in the fourth quarter of 2015 totaled $1.61 million compared with $1.03 million in the fourth quarter of 2014. The change was due to the increase in business activity and expenses related to the IPO and the recognition of estimated credit loss reserve, which was partially offset by a new favorable agreement with partner law firms that lowered expenses.

Interest expense in the fourth quarter of 2015 was $151,000 compared with $225,000 in the fourth quarter of 2014. The decrease is attributable to the refinance of $7.4 million at 8% interest that occurred in December 2014.

Net income in the fourth quarter of 2015 totaled $159,000 compared with $572,000 in the fourth quarter of 2014. The decrease was driven by an increase in costs associated with settlement costs and a one-time provision for credit losses, offset by a decrease in collection costs.

Cash flow from operations, which management believes gives a more accurate representation of their performance as it excludes one-time charges, totaled $523,000 for the fourth quarter of 2015 compared with $517,000 in the fourth quarter of 2014.

At December 31, 2015, cash totaled $9.0 million compared with $2.0 million at December 31, 2014, the increase driven by $9.7 million of net proceeds from the October 2015 IPO.

Revenues in 2015 totaled $6.96 million compared with $7.65 million in 2014. The decrease was due to the decline in collections of the company’s original product, offset by an increase in collections related to the New Neighbor Guaranty product and rental income from REO properties.

Operating expenses in 2015 totaled $4.52 million compared with $4.12 million in the prior year. The change was due to the increase in business activity and expenses related to the IPO and the recognition of estimated credit loss reserve, which was partially offset by a new, favorable agreement with partner law firms which lowered expenses.

Interest expense in 2015 totaled $717,000 compared with $985,000 in 2014. The decrease is attributable to the refinance of $7.4 million at 8% interest that occurred in December 2014.

Cash flow from operations totaled $2.25 million for 2015 compared with $2.42 million in 2014.

Management will hold a conference call today at 10:00 a.m. Eastern time to discuss these results, followed by a question and answer period.

Interested parties can listen to the live presentation by dialing the listen-only number below or by clicking the webcast link available on the Investors section of the company's website at ~~www.lmfunding.com~~.

Please call the conference telephone number 10 minutes before the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios at 949-574-3860.

A replay of the call will be available by telephone after 8:00 p.m. Eastern time today and via the Investors section of the LM Funding website at ~~www.lmfunding.com~~ through May 30, 2016.

LM Funding America, Inc., together with its subsidiaries, is a 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. It is also involved in the business of purchasing delinquent accounts on various terms tailored to suit each Association’s financial needs, including under its New Neighbor Guaranty™ program. The company was founded in 2008 and is based in Tampa, Florida. The company's common shares and warrants trade on the NASDAQ Capital Market under the symbols "LMFA" and "LMFAW”.

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 filings with the SEC. 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.

	December 31,			December 31,
	2015			2014
Assets
Cash	$	8,997,798		$	2,027,694
Finance receivables:
Original product		1,537,101			2,430,456
Special product - New Neighbor Guaranty program, net of allowance for credit losses of $125,000 and $0, respectively		715,534			1,042,805
Due from related party		406,219			463,900
Prepaid expenses and other assets		151,362			310,688
Debt issue costs, net		197,959			290,688
Fixed assets, net		158,692			162,396
Real estate assets owned		285,341			42,731
Deferred tax asset		2,162,380			—
Total assets	$	14,612,386		$	6,771,358

Liabilities and stockholders' equity/members' deficit
Notes Payable	$	7,729,605		$	7,431,938
Accounts payable and accrued expenses		466,783			344,721
Deferred revenue - origination fees		51,740			61,966
Deferred tax liability		41,803			—
Other liabilities and obligations		57,989			65,910
Total liabilities		8,347,920			7,904,535

Members' deficit (see note 9)		—			(1,144,212	)
Stockholders' equity
Common stock, par value $.001; 10,000,000 shares authorized; 3,300,000 shares issued and outstanding		3,300			—
Additional paid-in capital		6,281,322			—
Accumulated deficit		(20,156	)		—
Noncontrolling interest		—			11,035
Total stockholders' equity/(members' deficit)		6,264,466			(1,133,177	)
Total liabilities and stockholders’ equity/(members' deficit)	$	14,612,386		$	6,771,358

	Quarters ended December 31,						Years ended December 31,
	2015			2014			2015			2014
Revenues
Interest on delinquent association fees	$	1,397,373		$	1,472,107		$	5,588,697		$	6,432,878
Administrative and late fees		129,541			147,272			544,067			709,846
Recoveries in excess of cost - special product		122,899			61,072			345,686			136,655
Underwriting and origination fees		67,736			111,296			302,154			243,366
Rental revenue		54,785			31,289			180,157			126,644
Total revenues		1,772,334			1,823,036			6,960,761			7,649,389

Operating Expenses
Staff Costs & Payroll		389,884			329,109			1,288,342			1,301,137
Professional fees		319,935			124,948			819,343			565,537
Settlement costs with associations		287,541			54,245			805,180			373,422
Selling, general and administrative		193,695			182,207			686,721			716,503
Real estate management and disposal		61,080			55,966			270,574			190,743
Depreciation and amortization		111,501			73,580			247,646			152,668
Collection costs		92,209			190,494			206,998			715,547
Provision for credit losses		125,000			—			125,000			—
Other operating		27,437			16,359			68,565			102,476
Operating expenses		1,608,282			1,026,908			4,518,369			4,118,033

Operating Income		164,052			796,128			2,442,392			3,531,356

Interest expense		151,118			224,523			717,305			985,023

Income before income taxes		12,934			571,605			1,725,087			2,546,333

Income tax benefit		(146,555	)	—				146,555			—

Net income		159,489			571,605			1,871,642			2,546,333

Net income (loss) attributable to non-controlling interest		(16,172	)		(36,015	)		(139,865	)		(163,869	)

Net income (loss) attributable to predecessor members		163,473			535,590			(1,751,933	)		(2,382,464	)

Net income (loss) to common stockholders	$	(20,156	)	$	—		$	(20,156	)	$	—

Income (loss) per share attributable to the stockholders of LM Funding America, Inc.
Basic							$	(0.01	)		—
Diluted							$	(0.01	)		—
Weighted average number of common shares outstanding
Basic								3,300,000			—
Diluted								3,306,038			—

	Quarters ended December 31,						Years ended December 31,
	2015			2014			2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest on delinquent association fees	$	1,397,374		$	1,540,108		$	5,588,697		$	6,432,878
Administrative and late fees		129,541			147,272			544,067			709,846
Recoveries in excess of cost - special product		122,902			(4,688	)		345,686			136,655
Underwriting and origination fees		42,876			24,880			291,928			183,621
Rental revenue		56,475			(124,534	)		180,157			126,644
Staff costs and payroll		(389,885	)		(329,109	)		(1,288,342	)		(1,301,137	)
Other operating expenses		(685,084	)		(361,783	)		(2,694,649	)		(2,785,306	)
Interest paid		(151,117	)		(374,611	)		(717,305	)		(1,080,631	)
Net cash provided by operating activities		523,082			517,535			2,250,239			2,422,570
CASH FLOWS FROM INVESTING ACTIVITIES:					—
Net collections (funding) of finance receivables - original product		63,002			386,754			893,355			1,327,507
Net collections (funding) of finance receivables - special product		224,099			(137,216	)		327,271			(73,436	)
Capital expenditures		(17,412	)		(84,297	)		(43,761	)		(146,325	)
Proceeds / (payments) for real estate assets owned		(244,209	)		(22,500	)		(242,610	)		(22,500	)
Net cash provided by investing activities		25,480			142,741			934,255			1,085,246
CASH FLOWS FROM FINANCING ACTIVITIES:					—
Proceeds from borrowings		112,600			7,431,938			2,172,626			7,431,938
Principal repayments		(648,052	)		(6,754,447	)		(1,874,959	)		(8,252,849	)
Redemption of membership interest		—			—			(1,960,010	)		—
Distributions		(2,351,000	)		(429,688	)		(3,904,459	)		(979,163	)
Return of capital to non-controlling interest		—			(51,892	)		(36,015	)		(154,550	)
Advances (repayments) to related party		(206,872	)		72,436			57,681			21,090
Proceeds from initial public stock offering, net (See Note 9)		9,688,196			—			9,688,196			—
Purchase of non-controlling interest		(250,000	)		—			(250,000	)		—
Debt issue costs		(2,500	)		(311,438	)		(107,450	)		(311,438	)
Net cash provided by (used in) financing activities		6,342,372			(43,091	)		3,785,610			(2,244,972	)
NET INCREASE IN CASH		6,890,934			617,185			6,970,104			1,262,844

CASH - BEGINNING OF YEAR								2,027,694			764,850
CASH - END OF YEAR							$	8,997,798		$	2,027,694