Investment Thesis
LM Funding America demonstrates severe financial distress with persistent operating losses (-$6.4M), negative operating cash flow (-$3.3M), and declining revenue (-19.6% YoY). Critical liquidity concerns exist with only $801.2K cash against $19.8M long-term debt and zero ability to service debt from operations (interest coverage: -11.8x).
Strengths
- Positive stockholders equity of $20.8M provides minimal asset base
- Debt-to-equity ratio of 0.95x shows moderate leverage relative to competitors in financial distress
- No insider selling activity suggests management may be conserving shares
Risks
- Negative operating margins (-305%) with persistent GAAP losses and deteriorating net income
- Severe cash burn with -$3.5M free cash flow and only $801.2K cash reserves; debt service sustainability highly questionable
- Revenue declining 19.6% YoY combined with negative operating leverage creates existential business model risk
- Current ratio of 1.13x indicates tight liquidity with limited runway before covenant violations or restructuring
- Unable to generate cash from operations to fund interest expenses, creating refinancing dependency
Key Metrics to Watch
- Operating cash flow trend and path to cash flow positive
- Cash and equivalents balance relative to quarterly burn rate
- Revenue stabilization and gross margin recovery
- Debt refinancing schedule and covenant compliance status
Financial Metrics
Revenue
2.1M
Net Income
-10.1M
EPS (Diluted)
$-0.47
Free Cash Flow
-3.5M
Total Assets
41.8M
Cash
801.2K
Profitability Ratios
Gross Margin
N/A
Operating Margin
-305.0%
Net Margin
-479.8%
ROE
-48.6%
ROA
-24.2%
FCF Margin
-165.8%
Balance Sheet & Liquidity
Current Ratio
1.13x
Quick Ratio
1.13x
Debt/Equity
0.95x
Debt/Assets
54.3%
Interest Coverage
-11.80x
Long-term Debt
19.8M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-17T07:36:47.331702 |
Data as of: 2026-03-31 |
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