Executive Summary / Key Takeaways

• Niche Luxury Market Leadership: ECD Automotive Design (ECDA) commands a premium position in the $94 billion classic car restoration market, specializing in bespoke Land Rovers, Jaguars, Mustangs, and FJs with average selling prices between $300,000 and $400,000, and recent contracts up to $620,000.
• Strategic Diversification and Retail Expansion: The company is strategically expanding its product line into American muscle cars like the Ford Mustang and establishing physical retail showrooms, aiming to leverage its existing factory infrastructure and accelerate inventory conversion.
• Financial Restructuring and Liquidity Focus: Facing a "going concern" doubt and a NASDAQ delisting notice, ECDA has undertaken significant debt-for-equity exchanges, an equity raise, and secured a $500 million equity facility to deleverage its balance sheet, reduce interest obligations, and fund growth.
• Operational Efficiency and Cash Flow Target: Management is implementing "right first-time" manufacturing strategies and cost streamlining, targeting a cash flow positive state by increasing production from 8.5 to 10 units per month in the coming months.
• Innovative Bitcoin Treasury Strategy: ECDA is pioneering a Bitcoin treasury strategy, accepting cryptocurrency payments and offering incentives, aiming to engage a crypto-native customer demographic with significant purchasing power.

The Art of Restoration: Craftsmanship and Technology as a Moat

ECD Automotive Design has carved a unique niche in the luxury automotive sector, transforming classic vehicles into bespoke masterpieces that blend vintage aesthetics with modern performance. Founded in 2013, the company's core business revolves around the meticulous, hand-built restoration of iconic models such as Land Rover Defenders, Range Rover Classics, Jaguar E-Types, Ford Mustangs, and Toyota FJs. This high-touch approach positions ECDA within a discerning segment of the $94 billion global classic car ecosystem, where clients seek unparalleled personalization and quality.

The company's operational backbone is its 100,000-square-foot "Rover Dome" headquarters in Kissimmee, Florida, where 98 to 105 master-certified ASE craftsmen dedicate approximately 2,200 man-hours to each vehicle. This in-house expertise allows for the replacement of virtually every component, customizing everything from the engine and color to seating, stitching, electronics, and cosmetic finishes. This comprehensive, ground-up restoration process is a significant technological differentiator, ensuring a level of detail and quality that few can replicate.

ECDA's "right first-time strategy" is a key operational innovation, integrating quality control within the production line rather than at the end. This approach minimizes errors, maximizes efficiency, and enables more complex builds with shorter timelines, directly accelerating revenue recognition. For its new Mustang program, ECDA's exclusive partnership with Roush Performance is a critical technological advantage. This collaboration allows for the integration of Roush-engineered V8 engines (e.g., a 465-horsepower Roush 347 IR V8 for Project Ghost) and modern Roadster Shop RS Spec chassis. This combination delivers a balance of raw muscle and refined drivability, enhancing reliability and daily usability while preserving the vehicle's original identity. This contrasts with some competitors who might opt for off-the-shelf modern drivetrains or EV conversions, allowing ECDA to cater to purists seeking authentic heritage powertrains with modern performance.

Further technological enhancements include ECDA's proprietary air suspension system, high-performance Alcon (ALC) or Brembo (BRE.MI) brakes, and seamless integration of modern conveniences like Apple (AAPL) CarPlay, JBL premium audio, remote start, blind spot assist, backup cameras, digital rearview mirrors, and wireless charging. A partnership with German seat manufacturer Scheel-Mann has also improved cabin comfort, offering more legroom, better ergonomics, and luxury seating. These technological integrations are not merely features; they are foundational to ECDA's ability to command average selling prices between $300,000 and $400,000, with some contracts reaching $620,000, and to achieve gross margins "among the best in the luxury automotive sector." This technological and craftsmanship-driven moat underpins ECDA's premium pricing power and its ability to attract a clientele less vulnerable to broader economic fluctuations.

Strategic Expansion: New Frontiers and Retail Footprint

ECDA's strategic roadmap is characterized by a dual focus on product diversification and market reach expansion, all executed with a capital-light philosophy. The introduction of the Jaguar E-type in 2022 proved successful, commanding higher price points and gross margins. Building on this, the acquisition of BNMC Continuation Cars LLC assets in April 2024 and subsequent licensing agreements for Classic Toyota FJs and Ford Mustangs represent a significant expansion into American muscle cars. The successful delivery of "Project Ghost," ECDA's first in-house Mustang, in Q2 2025, validated the scalability of its model, demonstrating the ability to diversify revenue streams and expand its addressable market without incremental capital expenditures on manufacturing facilities. Management anticipates streamlining Mustang production by the second or third unit, leveraging existing expertise.

Complementing product expansion is ECDA's aggressive retail strategy, launched in Q4 2024. Moving beyond exclusively online sales, the company opened its first "store within a store" in West Palm Beach, Florida, and a pop-up in Nantucket at Ten Easy Street in early 2025. These physical presences are designed to offer immersive customer engagement, allowing clients to experience vehicles firsthand. This strategy is proving effective, contributing to backlog growth, generating "ready name sales," and accelerating the conversion of inventory into cash. Management aims to open an initial four retail locations in affluent areas, with each location financially justified by as few as two vehicle sales per month, a target they expect to outperform. This approach also reduces reliance on expensive mobile outreach teams, optimizing marketing spend.

An innovative facet of ECDA's strategy is its foray into the cryptocurrency space. Following a partnership with BitPay in March 2025 to accept crypto payments, the company secured a $500 million equity facility in June 2025, earmarked for a Bitcoin treasury strategy and growth initiatives. This move positions Bitcoin as a "next-generation store of value" and aims to engage the "crypto-native customer demographic," a segment with significant purchasing power seeking real-world luxury assets. A promotional offer of a $21,000 credit for Bitcoin purchases underscores this commitment. Furthermore, ECDA has introduced "built-to-own" vehicles, custom-designed by specialists for immediate purchase, catering to clients unwilling to wait for a bespoke build. This initiative broadens the customer base and accelerates inventory turnover.

Competitive Landscape: Carving a Niche in Bespoke Luxury

ECDA operates in a highly specialized segment of the luxury automotive market, where its direct competitors include other bespoke restoration houses like Singer Vehicle Design (focused on Porsches), Icon (known for modernizing Ford Broncos and other American classics), and Ruf Automobile (specializing in high-performance Porsche modifications). While these competitors share a focus on high-end customization, ECDA differentiates itself through its deep expertise in Land Rover and Jaguar restorations, now expanding into iconic American muscle cars with a unique approach.

Compared to Singer Vehicle Design, which excels in performance-driven aesthetics for Porsches, ECDA emphasizes heritage preservation and functionality for off-road use, particularly with its Land Rover offerings. ECDA's comprehensive service ecosystem, including repair and extended warranty services, provides a more integrated after-sales experience, potentially fostering stronger long-term customer retention. While Singer might lead in broader innovation for its specific niche, ECDA's specialized knowledge in Land Rover models allows for tailored upgrades that maintain original engineering integrity.

Against Icon, which blends vintage aesthetics with modern technology for American classics, ECDA's offerings often provide more robust off-road performance and durability. ECDA's exclusive partnership with Roush Performance for its Mustang program, focusing on upgraded Small Block Ford V8s and Roadster Shop RS Spec chassis, offers a distinct value proposition compared to competitors who might use off-the-shelf modern drivetrains or EV conversions. This commitment to "authentic heritage powertrains" provides a unique selling point for a specific segment of enthusiasts.

Ruf Automobile, with its focus on performance engineering for Porsches, represents a different facet of the luxury customization market. While Ruf excels in pure performance innovation, ECDA's strength lies in its diversified service offerings and its ability to deliver a comprehensive, bespoke experience across a broader range of classic vehicles, including utility-focused Land Rovers. ECDA's "right first-time" manufacturing strategy and in-house craftsmanship also contribute to its operational execution, aiming for efficiency and quality that supports its premium pricing.

Indirect competitors include companies offering electric vehicle conversions for classic cars or online platforms for DIY restorations. ECDA mitigates these threats by offering a full-service, high-quality bespoke experience that goes beyond simple upgrades, focusing on clients who value professional craftsmanship and a complete, personalized vehicle. ECDA's retail strategy further enhances its competitive standing by offering immersive customer engagement that online channels cannot replicate, driving brand awareness and sales in key affluent markets.

Financial Performance: Navigating Growth and Headwinds

ECDA's financial performance in recent periods reflects a company in a significant growth phase, albeit one grappling with substantial operational and liquidity challenges. For the three months ended June 30, 2025, the company reported record revenue of $7.02 million, an 8.8% increase from $6.45 million in Q2 2024. However, this top-line growth was overshadowed by a notable decline in profitability. Gross profit decreased by 32.3% to $1.39 million from $2.05 million in Q2 2024, with gross margin falling to 20% from 32%. This margin compression was primarily attributed to higher shipping and customs fees, a macro-environmental headwind.

Operating expenses surged, increasing by 54.4% to $4.00 million in Q2 2025 from $2.59 million in the prior year. This rise was largely driven by higher general and administrative (G&A) costs, including increased headcount, a $353,377 inventory write-off expense in the first half of 2025, and elevated non-cash equity compensation expense. Consequently, the net loss for Q2 2025 widened significantly to $4.27 million, more than doubling from $2.03 million in Q2 2024. For the first six months of 2025, revenue remained flat year-over-year at $13.44 million, while the net loss increased to $7.02 million from $4.89 million.

Looking at the full year 2024, ECDA demonstrated robust growth, with annual revenue increasing by 29% to a record $25.2 million from $19.5 million in 2023. Gross profit also grew by 30% to $5.9 million, maintaining a gross profit margin of 23.4%. However, the year concluded with a net loss of $10.8 million, significantly higher than the $1.2 million loss in 2023. This was partly due to a non-cash $1.1 million write-down of labor overhead allocation and raw materials in Q4 2024, and $700,000 in one-time costs associated with financial statement restatements. A delay in vehicle title transfers at year-end 2024 also pushed $11.80 million in deferred revenue, representing 12 completed vehicles, into H1 2025.

Liquidity and Capital Structure: A Path to Stability

ECDA's liquidity position presents a significant challenge. As of June 30, 2025, the company held only $0.60 million in cash and cash equivalents, coupled with a working capital deficit of $6.80 million. This has led management to express "substantial doubt about the Company's ability to continue as a going concern within one year." Operating activities consumed $4.24 million in cash during the first six months of 2025, including $1.21 million for working capital.

In response to these liquidity pressures and a NASDAQ delisting notice received on August 6, 2025, ECDA has initiated aggressive financial restructuring. The company has executed several debt-for-equity exchanges, converting $1.28 million of convertible notes into 4,000 shares of Series B Preferred Stock in Q2 2025, resulting in a $433,881 gain. Subsequent to the quarter, an additional $2.46 million in debt was converted into 5,000 shares of Series C Preferred Stock in July 2025, and a further $10 million principal from convertible notes was exchanged for 15,000 shares of Series C Preferred Stock in August 2025. These actions are designed to substantially deleverage the balance sheet and reduce cash interest obligations.

Further bolstering its capital structure, ECDA completed a private placement in August 2025, raising $999,900 through the sale of 1,111 shares of Series C Convertible Preferred Stock. Critically, the company secured a $500 million equity facility (EPFA) in June 2025, providing flexibility to draw capital for growth initiatives, general corporate purposes, and its Bitcoin treasury strategy. Financing activities provided $3.37 million in cash during H1 2025, primarily from new convertible notes and notes payable, partially offset by loan repayments. The appointment of Victoria Hay as CFO in August 2025 signals a renewed focus on financial compliance, funding, and internal controls.

Outlook and Risks: The Road Ahead

Management's outlook centers on achieving cash flow positive operations and regaining NASDAQ compliance. A key operational target is to increase vehicle production from the current 8.5 units per month to approximately 10 units per month, which is identified as the "crossover point" for generating positive operating cash flow. This is expected to be achieved in the "next few months," supported by a growing backlog and the rollout of new retail locations. Gross margins are anticipated to "revert back to historical levels" in 2025, as the impact of the Q4 2024 inventory write-down fades and efforts to mitigate higher shipping and customs fees take hold. The retail strategy is expected to be a significant driver, with each location projected to be financially justified by just two vehicle sales per month.

The company is actively addressing its internal control weaknesses, particularly in revenue recognition and inventory accounting, by expanding review processes, enhancing access to accounting literature, and considering additional experienced staff. These remediation steps, alongside cost-streamlining initiatives, are expected to have a positive financial and regulatory impact in the second half of 2025. The recent debt-for-equity conversions and equity raise are crucial steps towards strengthening the balance sheet, reducing cash interest obligations, and accelerating the path to positive cash flow, all vital for regaining and maintaining NASDAQ compliance.

However, significant risks persist. The "going concern" doubt remains a primary concern, highlighting the urgent need for successful execution of financial and operational strategies. The company's reliance on additional financing, whether through loans or equity, carries no assurance of availability on commercially acceptable terms. While ECDA believes its customer base is less vulnerable to macroeconomic conditions, the broader retail industry trends, consumer discretionary spending, and price fluctuations in materials and labor costs could still impact performance. The ongoing challenges with tariffs, shipping, and customs fees, though being actively managed through adjustments to upgrade pricing, could continue to pressure gross margins. The effectiveness of the Bitcoin treasury strategy in attracting new customers and providing a stable reserve asset is also an evolving factor to monitor.

Conclusion

ECDA stands at a pivotal juncture, a luxury automotive artisan striving for financial stability amidst ambitious growth. Its core strength lies in its unparalleled craftsmanship and technological integration, enabling bespoke vehicle restorations that command premium prices and high gross margins. The strategic expansion into American muscle cars and a physical retail footprint, coupled with an innovative Bitcoin treasury strategy, represents a forward-looking approach to diversify revenue and engage new customer demographics.

While the company faces considerable financial headwinds, including a "going concern" doubt and NASDAQ compliance challenges, management has demonstrated a proactive stance through aggressive debt restructuring, equity raises, and a clear roadmap to operational efficiency and positive cash flow. The successful execution of these initiatives, particularly achieving the 10-unit-per-month production target and realizing the benefits of its retail and Bitcoin strategies, will be critical in transforming its bespoke vision into sustained shareholder value. ECDA's journey is a compelling narrative of a niche leader leveraging its unique advantages to rebuild its financial foundation and accelerate growth in a dynamic luxury market.