Investment Thesis
ECD Automotive Design is in critical financial distress with negative stockholders' equity of -$13.4M, indicating the company is technically insolvent. The company experienced a catastrophic 407% revenue decline YoY while burning cash at $5.9M annually, with no clear path to profitability given negative operating margins of -50.3% and minimal liquidity reserves of only $157.7K.
Strengths
- Gross margin of 7.7% suggests some ability to generate revenue above direct costs
- No capital expenditure requirements indicate low reinvestment needs
- Minimal insider selling activity over last 90 days suggests management may not be abandoning ship
Risks
- Negative stockholders' equity of -$13.4M represents technical insolvency and existential bankruptcy risk
- Severe revenue collapse of 407% YoY indicates loss of major contracts or market rejection
- Critical liquidity crisis with cash balance of only $157.7K against negative operating cash flow of -$5.9M, providing less than 11 days of runway
- Current ratio of 0.53x indicates inability to cover short-term obligations
- Negative interest coverage of -2.5x shows inability to service debt from operations
- Operating losses of -$9.7M on minimal revenue signal fundamental business model failure
Key Metrics to Watch
- Cash balance depletion rate and runway to insolvency
- Revenue stabilization and ability to achieve positive gross profit in absolute terms
- Debt restructuring or covenant violation announcements
- Operating cash flow path to positive territory
- Management changes or strategic alternatives announcements
Financial Metrics
Revenue
19.2M
Net Income
-4.8M
EPS (Diluted)
$-4.41
Free Cash Flow
-5.9M
Total Assets
12.4M
Cash
157.7K
Profitability Ratios
Gross Margin
7.7%
Operating Margin
-50.3%
Net Margin
-24.9%
ROE
N/A
ROA
-38.5%
FCF Margin
-30.9%
Balance Sheet & Liquidity
Current Ratio
0.53x
Quick Ratio
0.23x
Debt/Equity
N/A
Debt/Assets
208.0%
Interest Coverage
-2.46x
Long-term Debt
9.4M
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: 2026-03-24T00:30:11.507680 |
Data as of: 2025-09-30 |
Powered by Claude AI