LM Funding Reports Net Income of $4.4 Million or $0.87 Per Basic Common Share for the First Quarter of 2021
14 May 2021 - 11:00PM
LM Funding America, Inc. (NASDAQ:LMFA) ("LM Funding" or
"LMFA"), a technology-based specialty finance
company, today announced its financial results for the three months
ended March 31, 2021.
Financial Highlights for the Three Month Period Ended
March 31, 2021:
- Revenues declined to $177 thousand in 2021 from $341 thousand
in Q1 2020.
- Operating loss was $1,728 thousand in 2021 compared to a loss
of $561 thousand in Q1 2020.
- Recognized a $5.7 million realized gain from a transaction with
BORQS Technologies Inc. (‘Borqs’) initially projected to net $2
million.
- Sponsor interest in LMF Acquisition Opportunities, Inc.
(‘LMAO’) resulted in recognition of a net unrealized gain on
securities of $0.6 million on the Company’s $5.7 million purchase
of LMAO’s warrants and Class B common shares.
- Net income during the quarter totaled $4.4 million, or $0.87
per basic common share.
- Cash increased to $17.8 million on March 31, 2021 from $11.5
million on December 31, 2020.
“Thus far in 2021 we continue to expand our ‘We Buy Problems’
mission. In addition to $4.4 million in net income during the
quarter, our cash position has increased to $17.8 million or $3.29
per basic common share as of March 31st,” said Bruce M. Rodgers,
Chairman and CEO of LM Funding. “Revenues from our community
association receivables business declined as we continue to develop
a digital asset technology strategy to unlock the potential of this
business. We expanded our core business of buying discounted debt
and collecting it through court proceedings with the Borqs
transaction. We entered the Borqs transaction projecting to net $2
million and we were pleased to realize a $5.7 million return. Going
forward, we will continue to look for other technology enabled
specialty finance business opportunities that can leverage our
existing platform and expertise. We also expect our SPAC
sponsorship and digital asset strategy to contribute to earnings in
the foreseeable future as our core business navigates through the
economy’s re-emergence from Covid restrictions.”
Operational Highlights for the First Quarter of 2021 to
Date:
- LM Funding is developing a digital asset technology strategy to
grow its community association receivables business both
organically and through acquisitions.
- LMFA announced plans to purchase up to $2 million in digital
assets including Bitcoin, Ether, and other digital assets.
- LM Funding sponsored LMAO and its initial public offering, with
LMAO closing a $103.5 million upsized IPO (NASDAQ: LMAOU). Net
investment in LMAO totals $6.4 million or approximately $1.17 per
share.
- LMAO is targeting a business combination in the financial
services or financial technology sectors.
- LM Funding entered into a second transaction with Borqs with
the purchase of a $5 million convertible debt and equity instrument
and has funded $1.7 million as of March 31, 2021.
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.
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 guaranties 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.
These risks and uncertainties include, without limitation,
uncertainty created by the COVID-19 pandemic, our ability to
acquire new accounts in our specialty finance business at
appropriate prices, the need for capital, our ability to hire and
retain new employees, changes in governmental regulations that
affect our ability to collected sufficient amounts on defaulted
consumer receivables, changes in the credit or capital markets,
changes in interest rates, and negative press regarding the debt
collection industry. The occurrence of any of these risks and
uncertainties could have a material adverse effect on our business,
financial condition, and results of operations.
Company
Contact:Bruce M. Rodgers, Chairman and CEOLM Funding
America, Inc.Tel (813) 222-8996investors@lmfunding.com |
LM Funding America, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
|
|
March 31,2021 |
|
|
December 31,2020 |
|
|
|
(Unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Cash |
|
$ |
17,803,015 |
|
|
$ |
11,552,943 |
|
Finance receivables: |
|
|
|
|
|
|
|
|
Original product - net (Note 2) |
|
|
101,811 |
|
|
|
116,017 |
|
Special product - New Neighbor Guaranty program, net ofallowance
for credit losses of (Note 3) |
|
|
53,777 |
|
|
|
52,757 |
|
Prepaid expenses and other
assets |
|
|
212,132 |
|
|
|
399,124 |
|
Current assets |
|
|
18,170,735 |
|
|
|
12,120,841 |
|
Fixed assets, net |
|
|
5,617 |
|
|
|
6,171 |
|
Real estate assets owned |
|
|
80,057 |
|
|
|
18,767 |
|
Operating lease - right of use
assets (Note 7) |
|
|
134,859 |
|
|
|
160,667 |
|
Long-term investments - debt
securities (Note 9) |
|
|
1,679,284 |
|
|
|
- |
|
Long-term investments - equity
securities (Note 9) |
|
|
1,789,338 |
|
|
|
- |
|
Investments in unconsolidated
affiliates (Note 9) |
|
|
4,569,054 |
|
|
|
- |
|
Other assets |
|
|
10,984 |
|
|
|
10,984 |
|
Long-term assets |
|
|
8,269,193 |
|
|
|
196,589 |
|
Total assets |
|
$ |
26,439,928 |
|
|
$ |
12,317,430 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Note payable (Note 5) |
|
|
38,053 |
|
|
|
96,257 |
|
Accounts payable and accrued
expenses |
|
|
271,515 |
|
|
|
237,033 |
|
Due to related party (Note
4) |
|
|
232,734 |
|
|
|
158,399 |
|
Current portion of lease
liability (Note 7) |
|
|
78,675 |
|
|
|
- |
|
Total current liabilities |
|
|
620,977 |
|
|
|
491,689 |
|
|
|
|
|
|
|
|
|
|
Lease liability - long-term
(Note 7) |
|
|
68,002 |
|
|
|
171,648 |
|
Deferred taxes (Note 6) |
|
|
3,484 |
|
|
|
- |
|
Note payable - long-term (Note
5) |
|
|
186,235 |
|
|
|
185,785 |
|
Long-term liabilities |
|
|
257,721 |
|
|
|
357,433 |
|
Total liabilities |
|
|
878,698 |
|
|
|
849,122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Common stock, par value $0.001; 30,000,000 sharesauthorized;
5,414,296 and 3,083,760 shares issued andoutstanding as of March
31, 2021 and December 31,2020, respectively |
|
|
5,414 |
|
|
|
3,084 |
|
Additional paid-in capital |
|
|
39,538,550 |
|
|
|
29,996,257 |
|
Accumulated deficit |
|
|
(14,159,791 |
) |
|
|
(18,536,224 |
) |
Total stockholders’ equity |
|
|
25,384,173 |
|
|
|
11,463,117 |
|
Non-controlling interest |
|
|
177,057 |
|
|
|
5,191 |
|
Total stockholders’ equity |
|
|
25,561,230 |
|
|
|
11,468,308 |
|
Total liabilities and stockholders’ equity |
|
$ |
26,439,928 |
|
|
$ |
12,317,430 |
|
LM Funding America, Inc. and Subsidiaries
Condensed Consolidated Income Statement
|
|
|
For the Three MonthsEnded March
31, |
|
|
|
|
2021 |
|
|
2020 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
Interest on delinquent association fees |
|
|
$ |
77,444 |
|
|
$ |
219,514 |
|
Administrative and late fees |
|
|
|
15,071 |
|
|
|
23,045 |
|
Recoveries in excess of cost - special product |
|
|
|
29,473 |
|
|
|
22,628 |
|
Underwriting and other revenues |
|
|
|
22,703 |
|
|
|
27,929 |
|
Rental revenue |
|
|
|
31,917 |
|
|
|
48,080 |
|
Total revenues |
|
|
|
176,608 |
|
|
|
341,196 |
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
Staff costs and payroll |
|
|
|
1,301,981 |
|
|
|
316,059 |
|
Professional fees |
|
|
|
482,943 |
|
|
|
506,995 |
|
Settlement costs with associations |
|
|
|
- |
|
|
|
11,920 |
|
Selling, general and administrative |
|
|
|
99,769 |
|
|
|
80,223 |
|
Recovery of cost from related party receivable |
|
|
|
(10,000 |
) |
|
|
(100,000 |
) |
Real estate management and disposal |
|
|
|
18,290 |
|
|
|
85,342 |
|
Depreciation and amortization |
|
|
|
1,696 |
|
|
|
5,812 |
|
Collection costs |
|
|
|
2,048 |
|
|
|
(8,321 |
) |
Other operating expenses |
|
|
|
7,545 |
|
|
|
3,794 |
|
Total operating expenses |
|
|
|
1,904,272 |
|
|
|
901,824 |
|
Operating loss from continuing operations |
|
|
|
(1,727,664 |
) |
|
|
(560,628 |
) |
Realized gain on securities |
|
|
|
5,671,464 |
|
|
|
- |
|
Unrealized gain on securities |
|
|
|
595,392 |
|
|
|
- |
|
Interest income |
|
|
|
13,055 |
|
|
|
- |
|
Interest expense |
|
|
|
(464 |
) |
|
|
(6,894 |
) |
Income
(loss) from continuing operations before income taxes |
|
|
|
4,551,783 |
|
|
|
(567,522 |
) |
Income
tax expense |
|
|
|
(3,484 |
) |
|
|
- |
|
Net
income (loss) from continuing operations |
|
|
|
4,548,299 |
|
|
|
(567,522 |
) |
Gain from operations of discontinued operations |
|
|
|
- |
|
|
|
16,428 |
|
Net gain
from discontinued operations |
|
|
|
- |
|
|
|
16,428 |
|
Net
income (loss) |
|
|
|
4,548,299 |
|
|
|
(551,094 |
) |
Less:
Net income attributable to non-controlling interest |
|
|
|
(171,866 |
) |
|
|
|
|
Net
income (loss) attributable to LM Funding America Inc. |
|
|
$ |
4,376,433 |
|
|
$ |
(551,094 |
) |
|
|
|
|
|
|
|
|
|
|
Earnings/(loss) per share: |
|
|
|
|
|
|
|
|
|
Basic income (loss) per common share - continuingoperations |
|
|
$ |
0.87 |
|
|
$ |
(0.88 |
) |
Basic income/(loss) per common share - discontinuedoperations |
|
|
$ |
- |
|
|
$ |
0.03 |
|
Basic income (loss) per common share - net income (loss)
-attributable to LM Funding |
|
|
$ |
0.87 |
|
|
$ |
(0.85 |
) |
Diluted income (loss) per common share - continuingoperations |
|
|
$ |
0.80 |
|
|
$ |
(0.88 |
) |
Diluted earnings/(loss) per common share -
discontinuedoperations |
|
|
$ |
- |
|
|
$ |
0.03 |
|
Diluted income (loss) per common share - net income (loss)
-attributable to LM Funding |
|
|
$ |
0.80 |
|
|
$ |
(0.85 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
5,047,498 |
|
|
|
646,606 |
|
Diluted |
|
|
|
5,439,398 |
|
|
|
646,606 |
|
LM Funding America, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash
Flows(unaudited)
|
|
For the Three Months Ended March 31, |
|
|
|
2021 |
|
|
2020 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net income
(loss) |
|
$ |
4,548,299 |
|
|
$ |
(551,094 |
) |
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net
loss to cash used in operating activities |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,696 |
|
|
|
5,812 |
|
Right to use asset depreciation |
|
|
25,808 |
|
|
|
25,093 |
|
Stock compensation |
|
|
- |
|
|
|
128,847 |
|
Recovery of uncollectible related party receivables |
|
|
- |
|
|
|
(100,000 |
) |
Accrued investment income |
|
|
(12,784 |
) |
|
|
- |
|
Gain on disposal of discontinued operations |
|
|
- |
|
|
|
(16,428 |
) |
Deconsolidation of affiliate |
|
|
(43,623 |
) |
|
|
- |
|
Unrealized gain on securities |
|
|
(595,392 |
) |
|
|
- |
|
Realized gain on sale of securities |
|
|
(5,671,464 |
) |
|
|
- |
|
Change in assets and
liabilities |
|
|
|
|
|
|
|
|
Prepaid expenses and other assets |
|
|
710,163 |
|
|
|
20,436 |
|
Accounts payable and accrued expenses |
|
|
157,514 |
|
|
|
(8,102 |
) |
Advances (repayments) from related party |
|
|
200,749 |
|
|
|
197,024 |
|
Lease liability payments |
|
|
(24,971 |
) |
|
|
(22,684 |
) |
Deferred taxes |
|
|
3,484 |
|
|
|
- |
|
Net cash provided
(used in) operating activities |
|
|
(700,521 |
) |
|
|
(321,096 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net collections of finance receivables - original product |
|
|
14,206 |
|
|
|
28,035 |
|
Net collections of finance receivables - special product |
|
|
(1,020 |
) |
|
|
29,839 |
|
(Payments)/proceeds for real estate assets owned |
|
|
(62,432 |
) |
|
|
(3,026 |
) |
Net cash payment for IIU disposal |
|
|
- |
|
|
|
(246,914 |
) |
Investment in convertible note receivable |
|
|
(1,666,500 |
) |
|
|
- |
|
Investment in unconsolidated affiliate |
|
|
(5,738,000 |
) |
|
|
- |
|
Investment in securities |
|
|
(15,547,454 |
) |
|
|
- |
|
Proceeds from securities, net |
|
|
21,218,918 |
|
|
|
- |
|
Loan to purchase securities |
|
|
1,784,250 |
|
|
|
- |
|
Repayment of loan to purchase securities |
|
|
(1,784,250 |
) |
|
|
- |
|
Net cash used by
investing activities |
|
|
(1,782,282 |
) |
|
|
(192,066 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Principal repayments |
|
|
(343,687 |
) |
|
|
(34,770 |
) |
Insurance financing repayments |
|
|
(468,061 |
) |
|
|
- |
|
Exercise of warrants |
|
|
9,544,623 |
|
|
|
- |
|
Proceeds from stock subscription |
|
|
- |
|
|
|
250,000 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by
financing activities |
|
|
8,732,875 |
|
|
|
215,230 |
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN
CASH |
|
|
6,250,072 |
|
|
|
(297,932 |
) |
|
|
|
|
|
|
|
|
|
CASH - BEGINNING OF YEAR |
|
|
11,552,943 |
|
|
|
1,069,823 |
|
CASH - END OF
YEAR |
|
$ |
17,803,015 |
|
|
$ |
771,891 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASHFLOW INFORMATION |
|
|
|
|
|
|
|
|
Cash paid for taxes |
|
$ |
- |
|
|
$ |
- |
|
Cash paid for interest |
|
$ |
- |
|
|
$ |
6,894 |
|
|
|
|
|
|
|
|
|
|
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