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LM Funding Reports Third Quarter and Nine-Month 2016 Results

TAMPA, Fla., Nov. 14, 2016 (GLOBE NEWSWIRE) -- LM Funding America, Inc. (NASDAQ:LMFA) (NASDAQ:LMFAW), a specialty finance company offering unique funding solutions to community associations, reported results for the three and nine month periods ended September 30, 2016.

Third Quarter 2016 Summary

  • Revenue totaled $1.01 million versus $1.61 million in Q3 2015
  • Rental revenues increased 182% to $107,000 from $38,000 in Q3 2015
  • Income statement revenue per unit increased to approximately $4,640 from $4,010 in Q3 2015
  • REO portfolio increased to 72 properties at quarter end from 33 at September 30, 2015
  • Implemented cost reduction initiative, which was completed in Q4 2016. The cost-reduction measures are expected to reduce annual costs between $2.6 million and $3.0 million.

Nine Months Ended September 30, 3016 Summary

  • Revenue totaled $4.02 million versus $5.21 million in the first nine months of 2015
  • Rental revenues increased to $230,000 from $124,000 in the first nine months of 2015
  • Income statement revenue per unit increased to approximately $5,050 from $4,640 in the first nine months of 2015

Subsequent Event

  • Initiated strategies to monetize $165 million of unsecured off-balance sheet assets

Management Commentary
“Our results for the quarter were impacted by the reduction of distressed real estate transactions which were about half when compared to the third quarter of 2015,” said Bruce Rodgers, founder and CEO of LM Funding. “However, due to the unique nature of our business, we expect the current slowdown and corresponding price softening in certain Florida markets will lead to future opportunities.

“To offset the reduction in transactions, we added 10 new properties to our REO portfolio which has grown to 72 properties at quarter-end, 78% of which are generating recurring rental income. Further, we have turned our focus on collecting accounts without a mortgage, which have historically paid out approximately five times more than a typical account.

“Also during the quarter, we implemented and subsequently finalized a comprehensive cost cutting initiative, which is expected to reduce our annual costs by approximately $2.6 million to $3.0 million. Importantly, our new sales team will not be impacted by these cuts and has set the new goal of acquiring 2,000 delinquent accounts during the 12 months ending September 30, 2017.

“We continue to take action to unlock the value of our company. Recently we initiated strategies to monetize $165 million of unsecured off-balance sheet assets which we believe will generate a significant amount of capital in the future.

“We are confident that we are taking the necessary measures to build an efficient, scalable operation and plan to capitalize on the tremendous opportunity ahead of us and ultimately drive long-term shareholder value.”

Third Quarter 2016 Financial Results
Revenues in the third quarter of 2016 were $1.01 million compared with $1.43 million in the second quarter of 2016 and $1.61 million in the third quarter of 2015. The decrease in revenues was due to the decrease in payoff occurrences resulting from the slow-down in the Florida real estate market offset by an increase in average total income statement revenue per unit collected. The decrease was further offset by an increase in rental revenue from the company’s REO properties.

Operating expenses in the third quarter of 2016 were $2.34 million compared with $2.07 million in the second quarter of 2016 and $1.03 million in the third quarter of 2015. The increases versus the comparable period were due to the new service agreement with Business Law Group, an increase in legal fees related to collections, and increases in professional fees, legal fees, and payroll.

Interest expense in the third quarter of 2016 was $119,000 compared with $131,000 during the second quarter of 2016 and $163,000 in the third quarter of 2015. The decrease is attributable to the refinance of $1.8 million of debt at 6% interest that occurred in July 2015 and $7.4 million in December 2014.

Net loss in the third quarter of 2016 totaled $914,000 or $(0.28) per basic and diluted share compared with net loss of $496,000 or $(0.15) per basic and diluted share during the second quarter of 2016 and net income before taxes of $409,000 in the third quarter of 2015. In 2015, LM Funding was not publicly traded and organized as a Florida Limited Liability Company, so per share figures and any corporate income tax is not applicable for the period.

At September 30, 2016 cash and cash equivalents totaled $3.6 million compared with $5.8 million at June 30, 2016 and $9.0 million at December 31, 2015.

Nine Months Ended September 30, 2016 Financial Results
Revenues in the first nine months of 2016 were $4.02 million compared with $5.21 million in the first nine months of 2015. The decrease in revenues was due to the decrease in payoff occurrences resulting from the slow-down in the Florida real estate markets offset by an increase in average total income statement revenue per unit collected. The decrease was further offset by an increase in rental revenue from the company’s REO properties.

Operating expenses in the first nine months of 2016 totaled $6.53 million compared with $2.90 million during the nine months of 2015. The increases versus the comparable period were due to the new service agreement with Business Law Group, an increase in legal fees related to collections, and increases in professional fees, legal fees, and payroll.

Interest expense in the first nine months of 2016 was $390,000 compared with $566,000 in the first nine months of 2015. The decrease is attributable to the refinance of $1.8 million of debt at 6% interest that occurred in July 2015 and $7.4 million in December 2014.

Net loss in the first nine months of 2016 totaled $1.85 million or $(0.56) per basic and diluted share compared with net income before taxes of $1.74 million in the first nine months of 2015. In 2015, LM Funding was not publicly traded and organized as a Florida Limited Liability Company, so per share figures and any corporate income tax is not applicable for the period.

Conference Call
Management will hold a conference call Tuesday, November 15 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.

Date: Tuesday, November 15, 2016
Time: 10:00 a.m. Eastern time
Listen-only toll-free number: (877) 793-4355
Listen-only international number: (615) 247-0182
Conference ID: 11677651
Webcast: http://edge.media-server.com/m/p/67e9wh5j   

Please dial in 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 webcast replay of the call will be available after the call on the same day via the Investor Information section of the LM Funding website at www.lmfunding.com through January 15, 2017.

About LM Funding America
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”.

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 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.

- Tables to follow –

LM FUNDING AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
    September 30, 2016     December 31, 2015  
    (Unaudited)          
ASSETS                
Cash   $ 3,642,741     $ 8,997,798  
Finance receivables:                
Original product     1,170,836       1,537,101  
Special product - New Neighbor Guaranty program, net of allowance for credit losses of $125,000     523,662       715,534  
Deferred tax asset     3,199,476       2,162,380  
Due from related party     1,389,921       406,219  
Other Assets (Note 2):     1,149,326       595,395  
Total assets   $ 11,075,962     $ 14,414,427  
LIABILITIES AND STOCKHOLDERS' EQUITY                
Notes payable (Note 3):                
Principal amount   $ 5,878,280     $ 7,729,605  
Less unamortized debt issuance costs     (124,037 )     (197,959 )
Long-term debt less unamortized debt issuance costs     5,754,243       7,531,646  
Other liabilities and obligations     625,346       618,315  
Total liabilities     6,379,589       8,149,961  
Stockholders’ equity:                
Common stock, par value $.001; 10,000,000 shares authorized; 3,300,000 shares issued and outstanding     3,300       3,300  
Additional paid-in capital     6,559,261       6,281,322  
Accumulated deficit     (1,866,188 )     (20,156 )
Total stockholders’ equity     4,696,373       6,264,466  
Total liabilities and stockholders’ equity   $ 11,075,962     $ 14,414,427  
                 


LM FUNDING AMERICA, INC. AND SUBSIDIARIES AND PREDECESSOR
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2016     2015     2016     2015  
Revenues:                                
Interest on delinquent association fees   $ 709,090     $ 1,279,263     $ 3,010,428     $ 4,191,323  
Administrative and late fees     91,833       114,594       330,030       414,526  
Recoveries in excess of cost - special product     806       79,457       115,967       222,784  
Underwriting and origination fees     97,824       96,675       332,549       259,420  
Rental revenue     107,369       38,010       229,910       123,682  
Total revenues     1,006,922       1,607,999       4,018,884       5,211,735  
Operating Expenses:                                
Staff costs and payroll     996,515       286,952       2,649,688       898,457  
Professional fees     462,804       111,897       1,585,046       499,407  
Settlement cost with associations     231,062       260,726       603,396       517,639  
Other operating expenses     644,567       375,643       1,687,564       986,989  
Total operating expenses     2,334,948       1,035,217       6,525,694       2,902,492  
Operating (loss) income     (1,328,026 )     572,782       (2,506,810 )     2,309,243  
Interest expense     119,218       163,361       389,712       566,186  
(Loss) income before income taxes     (1,447,244 )     409,421       (2,896,522 )     1,743,057  
Income tax benefit     (533,064 )     -       (1,050,491 )     -  
Net (loss) income     (914,180 )     409,421       (1,846,031 )     1,743,057  
Net (income) attributable to non-controlling interest     -       (38,410 )     -       (123,693 )
Net (income) attributable to predecessor members     -       (371,011 )     -       (1,619,364 )
Net loss to common stockholders’   $ (914,180 )   $ -     $ (1,846,031 )   $ -  
Loss per share attributable to the stockholders’ of LM Funding America, Inc.                                
Basic     (0.28 )     -       (0.56 )     -  
Diluted     (0.28 )     -       (0.56 )     -  
Weighted average number of common shares outstanding                                
Basic     3,300,000       -       3,300,000       -  
Diluted     3,300,000       -       3,300,000       -  
                                 


LM FUNDING AMERICA, INC. AND SUBSIDIARIES AND PREDECESSOR
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
             
    Nine Months
Ended
September 30,
2016
    Nine Months
Ended
September 30,
2015
 
CASH FLOWS FROM OPERATING ACTIVITIES   $ (2,650,498 )   $ 1,727,158  
CASH FLOWS FROM INVESTING ACTIVITIES     130,468       908,775  
CASH FLOWS FROM FINANCING ACTIVITIES     (2,835,027 )     (2,556,762 )
NET (DECREASE) INCREASE IN CASH     (5,355,057 )     79,171  
CASH - BEGINNING OF PERIOD     8,997,798       2,027,694  
CASH - END OF PERIOD   $ 3,642,741     $ 2,106,865  
                 
Company Contact:
Bruce Rodgers
Chairman and CEO
LM Funding America, Inc.
Tel (813) 222-8996
investors@lmfunding.com

Investor Relations Contact:
Michael KoehlerLiolios Group, Inc.
Tel (949) 574-3860
LMFA@liolios.com 

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LM Funding America, Inc.