lmfa-ex991

LM Funding Reports Second Quarter 2018 Financial Results and Class Action Settlement

TAMPA, FL, August 14, 2018 – LM Funding America, Inc. (NASDAQ: LMFA) (“LM Funding” or the “Company”), a technology-based specialty finance company offering unique funding solutions to community associations, today announced its financial results for the second quarter ended June 30, 2018.

“During the second quarter, we continued to see positive results from the steps we have taken to maximize our rental revenue and improve our cost structure,” said Bruce Rodgers, LM Funding’s Chief Executive Officer. “We reduced operating expenses by approximately 55% and entered into a revised settlement for the Solaris class action litigation resulting in a reversal of over $400,000 in accrued expenses which led to positive net income during the quarter and first six months as compared to a net loss for the same periods the prior year. Going forward, we will continue to leverage our proprietary technology to unlock the significant value of our receivables portfolio as we focus our marketing efforts to grow our portfolio and explore new avenues to diversify our revenue streams.”

On August 14, 2018, the Solaris court approved a revised settlement of the Solaris class action litigation. The settlement approves the Plaintiff’s Fourth Amended Complaint seeking no damages and providing only a claim for declarative and injunctive relief. Plaintiffs with existing active units being serviced by LM Funding may opt to change from the standard distribution agreement to LMF’s 50/50 distribution agreement on a prospective basis. In the settlement Agreement LM Funding will pay Plaintiff’s counsel $99,000 plus an administrative fee.

For the quarter ended June 30, 2018, total operating revenues were $877,986, compared to $977,600 in the second quarter of 2017. This includes an approximate $48,000 increase in rental revenue to $217,904, compared to $170,283 for the quarter ended June 30, 2017, due to continued improvement in the utilization of the Company’s rental properties. For the six months ended June 30, 2018, total revenues were $1.8 million as compared to $2.0 million for the same period the year prior.

Operating expenses for the second quarter of 2018 decreased 54.5% to $733,170, compared to $1.6 million in the prior year period. This is primarily attributable to approximately $197,000 in reduced staffing costs, $471,000 in lower professional fees (including a $200,00 insurance reimbursement for legal fees in 2018) and a $128,000 decline in selling, general and administrative costs as compared to the comparable period in 2017. For the six months ended June 30, 2018, total operating expenses decreased to $1.7 million as compared to $3.1 million for the same period the year prior.

Net income for the quarter ended June 30, 2018 was $455,240, compared to a net loss of $794,511 for the second quarter of 2017. For the six months ended June 30, 2018, net income was approximately $446,000 as compared to a net loss of $1.2 million.

At June 30, 2018, the Company had cash and cash equivalents of $1.2 million, compared with $590,394 at December 31, 2017. Total stockholder’s equity increased to $1.5 million for the period ended June 30, 2018 as compared to $896,983 for the period ended December 31, 2017.

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. 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.

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.

	June 30, 2018			December 31, 2017
	(Unaudited)
ASSETS
Cash	$	1,202,382		$	590,394
Finance receivables:
Original product - net		504,687			637,937
Special product - New Neighbor Guaranty program - net		268,833			339,471
Prepaid expenses and other assets		240,255			101,339
Fixed assets, net		47,839			69,505
Real estate assets owned		141,518			196,707
Other Assets		32,964			32,964
Total assets	$	2,438,478		$	1,968,317

LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable
Principal amount	$	431,297		$	39,028
Accounts payable and accrued expenses		303,066			477,953
Due to related party		71,289			-
Accrued loss litigation settlement		100,000			505,000
Other liabilities and obligations		27,076			49,353
Total liabilities		932,728			1,071,334
Stockholders’ equity:
Common stock, par value $.001; 10,000,000 shares authorized; 6,253,189 shares issued and outstanding		6,253			6,253
Additional paid-in capital		12,070,900			11,908,455
Accumulated deficit		(10,571,403	)		(11,017,725	)
Total stockholders’ equity		1,505,750			896,983
Total liabilities and stockholders’ equity	$	2,438,478		$	1,968,317

LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Operations
(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Revenues:
Interest on delinquent association fees	$	564,593		$	602,944		$	1,115,455		$	1,294,592
Administrative and late fees		50,301			75,889			118,629			153,924
Recoveries in excess of cost - special product		(8,437	)		63,434			59,100			84,373
Underwriting and other revenues		53,625			65,050			108,186			133,779
Rental revenue		217,904			170,283			440,349			334,888
Total revenues		877,986			977,600			1,841,719			2,001,556

Operating Expenses:
Staff costs and payroll		298,651			495,955			700,934			1,009,176
Professional fees		121,577			593,037			456,684			1,105,687
Settlement costs with associations		11,403			90,596			27,115			156,081
Selling, general and administrative		79,667			207,175			152,215			451,852
Provision for credit losses		-			-			581			-
Real estate management and disposal		162,578			139,815			281,940			269,935
Depreciation and amortization		22,156			30,752			44,311			46,190
Collection costs		29,560			50,402			30,162			98,496
Other operating expenses		7,578			3,743			11,879			6,815
Total operating expenses		733,170			1,611,475			1,705,821			3,144,232
Operating income (loss)		144,816			(633,875	)		135,898			(1,142,676	)
Interest expense		(94,576	)		126,024			(94,576	)		252,636
Gain (loss) on litigation		405,000			(505,000	)		405,000	)		(505,000	)
Income (loss) before income taxes		455,240			(1,264,899	)		446,322			(1,900,312	)
Income tax expense (benefit)		-			(470,388	)		-			(702,900	)
Net income (loss)	$	455,240		$	(794,511	)	$	446,322		$	(1,197,412	)

Net income (loss) per share:
Basic	$	0.07		$	(0.24	)	$	0.07		$	(0.36	)
Diluted		0.07			(0.24	)		0.07			(0.36	)
Weighted average number of common shares outstanding:
Basic		6,253,189			3,300,000			6,253,189			3,300,000
Diluted		6,253,189			3,300,000			6,253,189			3,300,000

LM Funding America, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows
(unaudited)

	Six Months ended June 30,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	446,322		$	(1,197,412	)

Adjustments to reconcile net loss to cash used in operating activities
Depreciation and amortization		44,311			45,178
Amortization of debt discount		75,638			-
Stock compensation		7,769			21,442
Amortization of debt issuance costs		5,705			49,281
(Gain) loss on litigation		(405,000	)		505,000

Change in assets and liabilities
Prepaid expenses and other assets		(51,901	)		(90,847	)
Accounts payable		(41,379	)		(3,867	)
Accrued expenses		(133,508	)		(36,282	)
Advances (repayments) to related party		71,289			(25,441	)
Other liabilities		(22,277	)		20,972
Deferred taxes		-			(702,900	)
Net cash used in operating activities		(3,031	)		(1,414,876	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Net collections of finance receivables - original product		133,250			47,135
Net collections of finance receivables - special product		70,635			115,349
Capital expenditures		-			(3,255	)
Proceeds for real estate assets owned		32,544			187,297
Net cash provided by investing activities		236,429			346,526

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowing		500,000			-
Principal repayments		(39,028	)		(379,000	)
Debt issue costs		(82,382	)		-
Net cash provided by (used in) financing activities		378,590			(379,000	)

NET INCREASE (DECREASE) IN CASH		611,988			(1,447,350	)
CASH - BEGINNING OF YEAR		590,394			2,268,180

CASH - END OF YEAR	$	1,202,382		$	820,830

SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION
Cash paid for interest	$	-		$	221,359
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Debt discount on issuance of warrants		154,676		$	-
Insurance financing		87,012			-

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.