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8-K - 8-K - LM FUNDING AMERICA, INC.lmfa-8k_20160330.htm

Exhibit 99.1

FOR IMMEDIATE RELEASE

 

LM Funding Reports Fourth Quarter and Full Year 2015 Results

 

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.

 

Fourth Quarter 2015 Highlights

 

·

Revenue totaled $1.77 million versus $1.82 million in Q4 2014

 

·

Cash flow from operations was $523,000 versus $517,000 in Q4 2014

 

·

Average collection per delinquent unit increased to $4,677 from $4,558 in Q4 2014

 

·

Raised $9.7 million of net proceeds in October 2015 IPO

 

Full Year 2015 Highlights

 

·

Revenue totaled $6.96 million versus $7.65 million in 2014

 

·

Cash flow from operations was $2.25 million versus $2.42 million in 2014

 

·

Average collection per delinquent unit increased to $4,573 from $4,526 in 2014

 

Management Commentary

“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.”

 

 


 

Fourth Quarter 2015 - Financial Results

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.

 

Full Year 2015 - Financial Results

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.

 

Net income in 2015 totaled $1.87 million compared with $2.55 million in 2014.

 

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

 

2

 


 

Conference Call

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.

 

Date: Wednesday, March 30, 2016

Time: 10:00 a.m. Eastern time

Listen-only toll-free number: (877) 546-2778

Listen-only international number: (281) 973-6268

Conference ID: 77042628

Webcast: http://edge.media-server.com/m/p/9xb2u6st

 

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.

 

Toll-free replay number: (855) 859-2056

International replay number: (404) 537-3406

Conference ID: 77042628

 

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.  

 

3

 


 

Company Contact:

Bruce Rodgers

Chairman and CEO

LM Funding America, Inc.

Tel (813) 222-8996

investors@lmfunding.com

 

Investor Relations Contact:

Michael Koehler

Liolios Group, Inc.

Tel (949) 574-3860

LMFA@liolios.com

 

- Tables to Follow -

 


4

 


 

LM Funding America, Inc.

Consolidated Balance Sheet

 

 

 

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

 

 

5

 


 

LM Funding America, Inc.

Consolidated Statements of Income

(Unaudited)

 

 

 

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

 

 

 

 

 

6

 


 

LM Funding America, Inc.

Consolidated Statements of Cash Flow

(Unaudited)

 

 

 

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

 

 

###

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