lmfa-ex991

LM Funding Reports Net Income of $11.1 Million or $2.05 Per Basic Common Share for the Second Quarter of 2021

TAMPA, FL / August 16, 2021 / LM Funding America, Inc. (NASDAQ:LMFA) ("LM Funding" or "LMFA"), a technology-based specialty finance company, today announced its financial results for the three and six months ended June 30, 2021.

“We continue to operate under the tagline “We Buy Problems”. Bruce M. Rodgers, Chairman and CEO of LM Funding said. “In the first two quarters, we originated, structured, and monetized our problem-buying business operations to generate $2.96 in net income per basic and diluted share. As our balance sheet has grown our opportunities to buy problems has increased. With a stronger balance sheet, we could also take larger participations in the deals we put together. Although we originated, structured, and executed the two BRQS transactions and recognized $14.1 million in gains this year, we only participated in less than one-third of the principal investment required in these deals and outsourced the balance to third parties. So we plan to continue to combine our team’s strengths and our balance sheet with $5.49 per share of working capital to buy problems and solve them profitably.”

• LMFA announced plans to develop accounting practices and controls for operating with digital assets and has announced plans to purchase up to $2 million in Bitcoin and Ether.

• LM Funding is developing a digital asset technology strategy to grow its community association receivables business both organically and through acquisitions.

• LM Funding sponsored a special acquisition company, or SPAC, and closed a $103.5 million upsized IPO (NASDAQ: LMAO). Net investment by LMFA in LMAO totals $6.4 million or approximately $1.17 per LMFA share.

• LMAO is targeting a business combination in the financial services or financial technology sectors

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.

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.

	June 30, 2021			December 31, 2020
	(Unaudited)
ASSETS
Cash	$	22,173,690		$	11,552,943
Finance receivables:
Original product - net (Note 2)		85,186			116,017
Special product - New Neighbor Guaranty program, net of allowance for credit losses of (Note 3)		53,211			52,757
Short-term investments - convertible debt securities (Note 9)		7,588,538			-
Marketable securities		248,100			-
Prepaid expenses and other assets		157,195			399,124
Current assets		30,305,920			12,120,841
Fixed assets, net		7,929			6,171
Real estate assets owned		80,057			18,767
Operating lease - right of use assets (Note 7)		110,870			160,667
Long-term investments - equity securities (Note 9)		2,295,200			-
Investments in unconsolidated affiliates (Note 9)		4,615,583			-
Other assets		10,984			10,984
Long-term assets		7,120,623			196,589
Total assets	$	37,426,543		$	12,317,430

LIABILITIES AND STOCKHOLDERS' EQUITY
Note payable (Note 5)		-			96,257
Accounts payable and accrued expenses		298,239			237,033
Due to related party (Note 4)		174,176			158,399
Current portion of lease liability (Note 7)		108,611			-
Total current liabilities		581,026			491,689

Lease liability - long-term (Note 7)		12,684			171,648
Deferred taxes (Note 6)		17,264			-
Note payable - long-term (Note 5)		-			185,785
Long-term liabilities		29,948			357,433
Total liabilities		610,974			849,122


Stockholders’ equity:
Common stock, par value $0.001; 30,000,000 shares authorized; 5,414,296 and 3,083,760 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		5,414			3,084
Additional paid-in capital		39,538,550			29,996,257
Accumulated deficit		(3,052,309	)		(18,536,224	)
Total stockholders’ equity		36,491,655			11,463,117
Non-controlling interest		323,914			5,191
Total stockholders’ equity		36,815,569			11,468,308
Total liabilities and stockholders’ equity	$	37,426,543		$	12,317,430

LM Funding America, Inc. and Subsidiaries Condensed Consolidated Income Statement

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2021			2020			2021			2020
Revenues:
Interest on delinquent association fees	$	62,673		$	170,174		$	140,117		$	389,688
Administrative and late fees		16,861			35,423			31,932			58,468
Recoveries in excess of cost - special product		178,769			62,362			208,242			84,990
Underwriting and other revenues		35,494			41,235			58,197			69,164
Rental revenue		34,588			33,344			66,505			81,424
Total revenues		328,385			342,538			504,993			683,734

Operating Expenses:
Staff costs and payroll		246,040			312,493			1,548,021			628,552
Professional fees		360,024			479,581			842,967			986,576
Settlement costs with associations		-			-			-			11,920
Selling, general and administrative		96,015			74,728			195,784			154,951
Recovery of cost from related party receivable		(100,000	)		(100,000	)		(100,000	)		(200,000	)
Provision for credit losses		-			-			(10,000	)		-
Real estate management and disposal		29,478			14,108			47,768			99,450
Depreciation and amortization		3,298			7,954			4,994			13,766
Collection costs		2,701			(20,934	)		4,749			(29,255	)
Other operating expenses		4,069			6,844			11,614			10,638
Total operating expenses		641,625			774,774			2,545,897			1,676,598
Operating loss from continuing operations		(313,240	)		(432,236	)		(2,040,904	)		(992,864	)
Realized gain on securities		8,453,570			-			14,125,034			-
Unrealized gain on convertible debt security		2,501,600			-			2,501,600			-
Unrealized gain on investment and equity securities		552,494			-			1,147,886			-
Interest income		73,884			-			86,939			-
Interest expense		(189	)		(5,732	)		(653	)		(12,626	)
Income (loss) from continuing operations before income taxes		11,268,119			(437,968	)		15,819,902			(1,005,490	)
Income tax expense		(13,780	)		-			(17,264	)		-
Net income (loss) from continuing operations		11,254,339			(437,968	)		15,802,638			(1,005,490	)
Gain from operations of discontinued operations		-			-			-			16,428
Net gain from discontinued operations		-			-			-			16,428
Net income (loss)		11,254,339			(437,968	)		15,802,638			(989,062	)
Less: Net income attributable to non-controlling interest		(146,857	)		-			(318,723	)		-
Net income (loss) attributable to LM Funding America Inc.	$	11,107,482		$	(437,968	)	$	15,483,915		$	(989,062	)

Earnings/(loss) per share:
Basic income (loss) per common share - continuing operations	$	2.05		$	(0.56	)	$	2.96		$	(1.41	)
Basic income/(loss) per common share - discontinued operations	$	-		$	-		$	-		$	0.02
Basic income (loss) per common share - net income (loss) - attributable to LM Funding	$	2.05		$	(0.56	)	$	2.96		$	(1.38	)

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

	For the Six Months Ended June 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	15,802,638		$	(989,062	)

Adjustments to reconcile net loss to cash used in operating activities
Depreciation and amortization		4,994			11,727
Right to use asset depreciation		49,797			51,229
Stock compensation		-			132,244
Debt forgiveness		(157,251	)		-
Recovery of uncollectible related party receivables		-			(200,000	)
Accrued investment income		(86,938	)		-
Gain from operations of discontinued operations		-			(16,426	)
Deconsolidation of affiliate		(43,623	)		-
Unrealized gain on investment and equity securities		(1,147,886	)		-
Unrealized gain on convertible debt security		(2,501,600	)		-
Investment in convertible note receivable		(5,000,000	)		-
Realized gain on securities		(14,125,034	)		-
Investment in securities		(15,547,454	)		-
Proceeds from securities		29,672,488			49,828
Investment in marketable securities		(247,997	)		-
Change in assets and liabilities
Prepaid expenses and other assets		11,105			49,059
Accounts payable and accrued expenses		184,239			21,858
Advances (repayments) from related party		142,191			496,546
Lease liability payments		(50,353	)		(45,742	)
Deferred taxes		17,264			-
Net cash provided by (used in) operating activities		6,976,580			(438,739	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Net collections of finance receivables - original product		30,831			61,590
Net collections of finance receivables - special product		(454	)		32,076
(Payments) for real estate assets owned		(64,857	)		(2,055	)
Capital expenditures		(3,185	)		-
Net cash payment for IIU disposal		-			(246,914	)
Proceeds from investment in note receivable		-			1,500,000
Loan to purchase securities		1,784,250			-
Repayment of loan to purchase securities		(1,784,250	)		-
Investment in unconsolidated affiliate		(5,738,000	)		-
Net cash (used in) provided by investing activities		(5,775,665	)		1,344,697

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings		-			185,785
Principal repayments		(28,534	)		-
Insurance financing repayments		(96,257	)		(69,540	)
Exercise of warrants		9,544,623			2,946,480
Proceeds from stock subscription		-			1,250,000
Net cash provided by financing activities		9,419,832			4,312,725
NET INCREASE IN CASH		10,620,747			5,218,683
CASH - BEGINNING OF YEAR		11,552,943			1,069,823
CASH - END OF YEAR	$	22,173,690		$	6,288,506

SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION
Cash paid for taxes	$	-		$	-
Cash paid for interest	$	1,892		$	12,626

Diluted income (loss) per common share - continuing operations	$	2.05	$	(0.56	)	$	2.95	$	(1.41	)
Diluted earnings/(loss) per common share - discontinued operations	$	-	$	-		$	-	$	0.02
Diluted income (loss) per common share - net income (loss) - attributable to LM Funding	$	2.05	$	(0.56	)	$	2.95	$	(1.38	)

Weighted average number of common shares outstanding:
Basic		5,414,296		783,433			5,231,909		715,020
Diluted		5,423,162		783,433			5,245,656		715,020