AP NEWS

LM Funding Reports Third Quarter 2018 Financial Results

November 14, 2018

TAMPA, Fla., Nov. 14, 2018 (GLOBE NEWSWIRE) -- 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 third quarter ended September 30, 2018.

“In the third quarter, we took critical steps to improve our capitalization structure and balance sheet,” said Bruce Rodgers, LM Funding’s Chief Executive Officer. “We were successful in closing a $6 million financing transaction that has significantly improved our financial flexibility and allowed us to regain compliance with NASDAQ. With this additional working capital, we can focus on providing solutions to condominium and homeowner associations.”

Third Quarter 2018 Financial and Operational Highlights:

-- Operating revenues totaled $781,510 for the third quarter of 2018 as compared to $1,042,371 for the same period the year prior; -- Rental revenue, which accounted for 19.3% of total operating revenue during the quarter, totaled $151,204 as compared to $161,726 for the same period the year prior; -- Operating expenses decreased by 33.5% to $990,927 as compared to $1.5 million in the prior year period driven by a significant reduction in staff costs and payroll, professional fees, and SG&A expenses; -- During the third quarter 2018, the Company incurred $377,387 of interest expense due to the expensing of the $200,000 commitment fee associated with the $5 million equity credit line, the $77,955 expense associated with the warrants issued as part of the $500,000 bridge loan and deferred financing costs; -- Generated a net loss of $586,804 as compared to a net loss of $4.7 million for the third quarter 2017; and -- For the nine months ended September 30, 2018, the Net Cash Used by Operating activities of $305,240 was partially offset by the Net Cash Provided by Investing activities of $292,185 for a net cash outflow before Financing activities of $13,055 as compared to Net Cash Used by Operating activities of $1,718,141 which was partially offset by the Net Cash Provided by Investing activities of $627,151 for a net cash outflow of $1,090,990 before Financing activities. This activity reflects the $100,000 payment due as part of the class action settlement. Net Cash Provided by financing activities for the comparable 2018 period was $351,810 versus $574,611 of Net Cash Used in Financing activities for the comparable 2017 period. -- As of September 30, 2018, the Company had $929,149 in cash which doesn’t include the proceeds generated by the public offering.

On November 1, 2018, the Company closed an underwritten public offering that included the underwriters’ exercise of its option to purchase additional shares, which resulted in the issuance of 2,875,000 shares of its common stock (or pre-funded warrants to purchase common stock in lieu thereof) and common warrants to up to 2,875,000 shares of the Company’s common stock. At closing, LM Funding received gross proceeds from the offering of approximately $6.0 million, before deducting underwriting discounts and commissions and other expenses payable by the Company. As a result of the offering, the Company’s stockholders’ equity will exceed $2.5 million and its publicly held shares (i.e., shares not held directly or indirectly by an officer, director, or greater-than-10% of the total shares outstanding) will be approximately 1.1 million shares.

After cancelling the Stock Purchase, Registration Rights, and Purchase Agreements originally entered into on April 2, 2018, the Company repaid the $500,000 note and accrued interest on October 5, 2018 and paid the $200,000 commitment fee on November 2, 2018.

Third Quarter and Nine-Month Financial Results:For the quarter ended September 30, 2018, total operating revenues were $781,510, compared to $1,042,371 in the third quarter of 2017. This includes an approximate $11,000 decrease in rental revenue to $151,204, compared to $161,726 for the quarter ended September 30, 2017, due to the stabilization in the utilization of the Company’s rental properties. For the nine months ended September 30, 2018, total revenues were $2.6 million as compared to $3.0 million for the same period the year prior.

Operating expenses for the third quarter of 2018 decreased 33.5% to $990,927, compared to $1.5 million in the prior year period. This is primarily attributable to approximately $197,000 in reduced staffing costs, $101,000 in lower professional fees, a $29,000 decrease in collection expense and a $107,000 decline in selling, general and administrative costs as compared to the comparable period in 2017. For the nine months ended September 30, 2018, total operating expenses decreased to $2.7 million as compared to $4.6 million for the same period the year prior.

Net loss for the quarter ended September 30, 2018 was $586,804, compared to a net loss of $4.7 million for the third quarter of 2017. For the nine months ended September 30, 2018, net loss was approximately $140,482 as compared to a net loss of $5.9 million for the prior year period.

At September 30, 2018, the Company had cash and cash equivalents of $929,149, compared with $590,394 at December 31, 2017. For the nine months ended September 30, 2018, the net cash from our operating and investing activities was a net use of cash of $13,055 as compared to a net use of cash of $1,090,990 for the comparable 2017 period (see table below).

Nine Months Nine Months Ended Ended September September 30, 30, --------------------------------------------------- ------------ -------------- 2018 2017 --------------------------------------------------- ------------ -------------- Net cash used in operating activities $ (305,240 ) $ (1,715,141 ) --------------------------------------------------- - -------- - - ---------- - Net cash provided by investing activities 292,185 627,151 --------------------------------------------------- - -------- - - ---------- - Net cash provided by (used in) financing activities 351,810 (574,611 ) --------------------------------------------------- - -------- - - ---------- -

This activity reflects the $100,000 payment due as part of the class action settlement.

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. 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. The company is also involved in the business of purchasing delinquent accounts on various terms tailored to suit each Association’s financial needs, including under the company’s New Neighbor Guaranty™ program.

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 most recent Annual Report on Form 10-K and its other filings with the SEC, which are available at www.sec.gov. 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.

Company Contact: Investor Contacts: Bruce Rodgers, Chairman and CEO Valter Pinto / Scott Eckstein LM Funding America, Inc. KCSA Strategic Communications Tel (813) 222-8996 Tel (212) 896-1254 / (212) 896-1210 investors@lmfunding.com valter@kcsa.com / seckstein@kcsa.com

LM Funding America, Inc. and Subsidiaries Condensed Consolidated Balance Sheets

September 30, December 31, 2018 2017 ------------- ------------- (Unaudited) ASSETS Cash $ 929,149 $ 590,394 Finance receivables: Original product - net 465,004 637,937 Special product - New Neighbor Guaranty program - net 263,835 339,471 Prepaid expenses and other assets 233,967 101,339 Fixed assets, net 42,813 69,505 Real estate assets owned 124,586 196,707 Other Assets 32,036 32,964 - ----------- - ----------- Total assets $ 2,091,390 $ 1,968,317 - ----------- - ----------- LIABILITIES AND STOCKHOLDERS’ EQUITY Notes payable Principal amount, net $ 569,610 $ 39,028 Accounts payable and accrued expenses 520,373 477,953 Due to related party 46,010 - Accrued loss litigation settlement - 505,000 Other liabilities and obligations 27,950 49,353 - ----------- - ----------- Total liabilities 1,163,943 1,071,334 - ----------- - ----------- Stockholders’ equity: Common stock, par value $.001; 30,000,000 shares authorized; 625,318 shares 625 625 issued and outstanding Additional paid-in capital 12,085,029 11,914,083 Accumulated deficit (11,158,207 ) (11,017,725 ) - ----------- - ----------- Total stockholders’ equity 927,447 896,983 - ----------- - ----------- Total liabilities and stockholders’ equity $ 2,091,390 $ 1,968,317 - ----------- - -----------

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

Three Months Ended Nine Months Ended September 30, September 30, -------------------------- --------------------------- 2018 2017 2018 2017 ---------- ------------ ----------- ------------ Revenues: Interest on delinquent association fees $ 459,505 $ 593,613 $ 1,574,960 $ 1,888,205 Administrative and late fees 59,517 64,959 178,146 218,883 Recoveries in excess of cost - special product 31,446 134,787 90,546 219,160 Underwriting and other revenues 79,838 87,286 188,024 221,065 Rental revenue 151,204 161,726 591,553 496,614 - -------- - ---------- - --------- - ---------- Total revenues 781,510 1,042,371 2,623,229 3,043,927 - -------- - ---------- - --------- - ---------- Operating Expenses: Staff costs and payroll 273,400 470,056 974,334 1,479,232 Professional fees 432,265 533,591 888,949 1,639,278 Settlement costs with associations 11,731 101,175 38,846 257,256 Selling, general and administrative 71,864 178,615 224,079 630,466 Provision for credit losses - - 581 - Real estate management and disposal 178,372 144,992 460,312 414,928 Depreciation and amortization 10,884 18,825 55,195 65,015 Collection costs 8,797 37,994 38,959 136,489 Other operating expenses 3,614 4,153 15,493 10,969 - -------- - ---------- - --------- - ---------- Total operating expenses 990,927 1,489,401 2,696,748 4,633,633 - -------- - ---------- - --------- - ---------- Operating loss (209,417 ) (447,030 ) (73,519 ) (1,589,706 ) Other income (loss) Interest expense (377,387 ) (122,406 ) (471,963 ) (375,042 ) Gain (loss) on litigation - - 405,000 (505,000 ) - -------- - ---------- - --------- - ---------- Loss before income taxes (586,804 ) (569,436 ) (140,482 ) (2,469,748 ) Income tax expense - 4,134,436 - 3,431,536 - -------- - ---------- - --------- - ---------- Net Loss $ (586,804 ) $ (4,703,872 ) $ (140,482 ) $ (5,901,284 ) - -------- - ---------- - --------- - ---------- Net loss per share: Basic $ (0.94 ) $ (14.25 ) $ (0.22 ) $ (17.88 ) Diluted (0.94 ) (14.25 ) (0.22 ) (17.88 ) Weighted average number of common shares outstanding: Basic 625,318 330,000 625,318 330,000 Diluted 625,318 330,000 625,318 330,000

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

Nine Months ended September 30, -------------------------- 2018 2017 ---------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (140,482 ) $ (5,901,284 ) Adjustments to reconcile net loss to cash used in operating activities Depreciation and amortization 55,195 64,003 Amortization of debt discount 154,676 - Stock compensation 16,270 21,799 Amortization of debt issuance costs 291,760 73,922 (Gain) loss on litigation (405,000 ) 505,000 Change in assets and liabilities Prepaid expenses and other assets (44,686 ) 14,571 Accounts payable (41,408 ) 5,050 Accrued expenses (216,172 ) 20,355 Advances (repayments) to related party 46,010 94 Other liabilities (21,403 ) 46,813 Deferred taxes - 3,431,536 - -------- - ---------- Net cash used in operating activities (305,240 ) (1,718,141 ) - -------- - ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Net collections of finance receivables - original product 172,933 152,810 Net collections of finance receivables - special product 75,633 157,812 Capital expenditures - (4,468 ) Proceeds for real estate assets owned 43,619 320,997 - -------- - ---------- Net cash provided by investing activities 292,185 627,151 - -------- - ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowing 500,000 - Principal repayments (56,430 ) (574,611 ) Debt issue costs (91,760 ) - - -------- - ---------- Net cash provided by (used in) financing activities 351,810 (574,611 ) - -------- - ---------- NET INCREASE (DECREASE) IN CASH 338,755 (1,665,601 ) CASH - BEGINNING OF YEAR 590,394 2,268,180 - -------- - ---------- CASH - END OF YEAR $ 929,149 $ 602,579 - -------- - ---------- SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION Cash paid for interest $ - $ 313,042 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.

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