OREANDA-NEWS. 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 ended March 31, 2016.

First Quarter 2016 Highlights

  • Revenue totaled $1.58 million versus $1.59 million in Q1 2015
  • Collected on 363 payoff occurrences, which was up 12% compared with 323 for Q1 2015
  • Acquired 128 accounts, which was up 52% compared with 84 for the same year-ago quarter
  • REO portfolio increased to 56 properties at quarter end from 41 at December 31, 2015
  • Added seven new full-time employees, including six direct sales people

Management Commentary
“The first quarter of 2016 was highlighted by the implementation of our strategic growth plan, including significant investments to expand our sales and marketing resources,” said Bruce Rodgers, founder and CEO of LM Funding. “In fact, at quarter-end, we had ten full-time sales and marketing professionals compared with only two at the time of our IPO last October.  

“We are already beginning to see a return on our investments, demonstrated by the 52% improvement in delinquent accounts acquired during the quarter. As such, we remain confident that our sales team will achieve its goal of acquiring 2,000 delinquent accounts by March 31, 2017.

“We also experienced an improvement in several key metrics in Q1, which we believe are long-term indicators of growth. In addition to increased revenue from our New Neighbor Guaranty product, we experienced a 12% increase in units collected, as well as an increase in rental income from our REO properties.

“Further, we added 15 properties to our REO portfolio, which totaled 56 properties at quarter-end. We are currently collecting rental income or in the process of renting out these properties. We believe our REO portfolio is a significant asset to our business given the nature of its recurring rental revenues.

“We are confident that we are well on our way to building a company that will lead the association funding solutions market in Florida, Illinois, and ultimately, across the country.”

First Quarter 2016 - Financial Results
Revenues in the first quarter of 2016 were $1.58 million compared with $1.59 million in the first quarter of 2015. The decrease was due to the change in strategy to hold REO properties for long-term rental income rather than sell them for immediate income, as was the past practice.   

Operating expenses in the first quarter of 2016 totaled $2.12 million compared with $0.99 million in the first quarter of 2015. The increase in operating expenses can primarily be attributed to adding the two founders to payroll who did not receive salaries prior to the IPO.  Also, there was an increase in staff costs and payroll which included the addition of eight new full-time employees, as well as an increase in professional fees. These fees include the service agreement with Business Law Group which was established in the fourth quarter of 2015, increased expenses incurred as a result of being a public company and expenses related to increased legal activity during the quarter.

Interest expense in the first quarter of 2016 was $140,000 compared with $194,000 in the first quarter of 2015. The decrease is attributable to the refinance of $1.8 million at 6% interest that occurred in July 2015.

Net loss in the first quarter of 2016 totaled $436,000 or $(0.13) per basic and diluted share compared with net income before taxes of $405,000 in the first quarter of 2015, driven by increased operating expenses. 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 March 31, 2016, cash totaled $7.3 million compared with $9.0 million at December 31, 2015.

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”.

 
LM FUNDING AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
    March 31, 2016   December 31, 2015
    (Unaudited)        
ASSETS                
Cash   $ 7,274,033     $ 8,997,798  
Finance receivables:                
Original product     1,361,323       1,537,101  
Special product - New Neighbor Guaranty program, net of allowance for credit losses of $125,000 and $125,000, respectively     645,809       715,534  
Deferred tax asset     2,400,664       2,162,380  
Other Assets     1,923,707       1,001,614  
Total assets   $ 13,605,536     $ 14,414,427  
LIABILITIES AND STOCKHOLDERS' EQUITY                
Notes payable                
Principal amount   $ 7,108,004     $ 7,729,605  
Less unamortized debit issuance costs     (173,318 )     (197,959 )
Long-term debt less unamortized debt issuance costs     6,934,686       7,531,646  
Other liabilities and obligations     784,678       618,315  
Total liabilities     7,719,364       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     6,339,296       6,281,322  
Accumulated deficit     (456,424 )     (20,156 )
Total stockholders’ equity     5,886,172       6,264,466  
Total liabilities and stockholders’ equity   $ 13,605,536     $ 14,414,427  
LM FUNDING AMERICA, INC. AND SUBSIDIARIES AND PREDECESSOR
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
    Three Months
Ended
March 31, 2016 		   Three Months
Ended
March 31, 2015 
Revenues        
Interest on delinquent association fees   $ 1,182,787     $ 1,271,431  
Administrative and late fees     117,535       125,476  
Recoveries in excess of cost - special product     106,505       78,214  
Underwriting and origination fees     114,921       64,539  
Rental revenue     54,988       47,973  
Total revenues     1,576,736       1,587,633  
Operating Expenses                
Staff costs and payroll     808,601       304,516  
Professional fees     567,473       253,553  
Other operating expenses     740,072       430,968  
Operating expenses     2,116,146       989,037  
Operating (loss) income     (539,410 )     598,596  
Interest expense     139,607       193,881  
(Loss) Income before income taxes     (679,017 )     404,715  
Income tax benefit     (242,749 )     -  
Net income (loss)     (436,268 )     404,715  
Net (income) attributable to non-controlling interest     -       (37,126 )
Net (income) attributable to members     -       (367,589 )
Net loss to common stockholders’   $ (436,268 )   $ -  
Loss per share attributable to the stockholders’ of LM Funding America, Inc.                
Basic     (0.13 )     -  
Diluted     (0.13 )     -  
Weighted average number of common shares outstanding                
Basic     3,300,000       -  
Diluted     3,300,000       -  
                 
LM FUNDING AMERICA, INC. AND SUBSIDIARIES AND PREDECESSOR
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
    Three Months
Ended
March 31, 2016 		   Three Months
Ended
March 31, 2015 
CASH FLOWS FROM OPERATING ACTIVITIES   $ (532,380 )   $ 693,569  
CASH FLOWS FROM INVESTING ACTIVITIES     37,701       271,956  
CASH FLOWS FROM FINANCING ACTIVITIES     (1,229,086 )     (926,610 )
NET (DECREASE) INCREASE IN CASH     (1,723,765 )     38,915  
CASH - BEGINNING OF PERIOD     8,997,798       2,027,694  
CASH - END OF PERIOD   $ 7,274,033     $ 2,066,609