EEIQ — financial distress indicators
Financial-health summary
EEIQ's reported numbers place it in the 'Weak' financial-health band (distress score 65/100). The main indicators are market-implied default probability >20%, losses in each of the last 3 years and operations consume cash. Independently, the Ohlson accounting model puts its 1-year failure probability at 77% and the market-implied (Merton) default probability is 33.3%. In its favour: cash on hand covers all debt (net-cash balance sheet).
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Merton distance-to-default 0.43 σ → PD 33%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Net income negative in 3 of 3 fiscal years.
Persistent losses erode equity and the capacity to absorb shocks.
Operating cash flow negative in 3 of the last 3 years.
A business that cannot fund itself from operations depends on external capital to survive.
O-score 1.23 → model probability 77%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Share count up +78% in a year.
Survival financing: repeated equity raises at depressed prices.
Cash covers ~18 months of free-cash-flow burn.
Funding needs within two years make the company dependent on capital-market access.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Cash on hand covers all debt (net-cash balance sheet).
- Strong current ratio (1.91).
- High insider/promoter ownership (40%) aligns management with survival.
📰 Recent news scan
- EpicQuest Education Announces New AI Tutorial PlatformYahoo Finance · 2026-07-21
- EpicQuest Education Announces First Half Fiscal Year 2026 Financial ResultsYahoo Finance · 2026-06-25
- Presenting on Emerging Growth Conference 93 Day 2 on June 11; Register to live streamYahoo Finance · 2026-06-10
- EpicQuest Education to Present at the Emerging Growth ConferenceYahoo Finance · 2026-06-04
- EpicQuest Education Chairman & CEO Letter to ShareholdersYahoo Finance · 2026-05-13
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do EEIQ's financial-health indicators show?
As of 2026-10-08, EEIQ's public financial data places it in the 'Weak' band with a distress score of 65/100, driven by market-implied default probability >20%, losses in each of the last 3 years and operations consume cash. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is EEIQ's financial distress score?
65/100 ('Weak'). Ohlson O-score 1.23 (model 1-year failure probability 77%). Merton distance-to-default 0.43 σ (model default probability 33.3%).
What works in EEIQ's favour?
Cash on hand covers all debt (net-cash balance sheet). Strong current ratio (1.91). High insider/promoter ownership (40%) aligns management with survival.
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
Other Unclassified companies with distress indicators
- CNEY (CNEY)Very weak 100/100
- EPOW (EPOW)Very weak 100/100
- GIBO (GIBO)Very weak 100/100
- GNS (GNS)Very weak 100/100
- HKPD (HKPD)Very weak 100/100
- HUBC (HUBC)Very weak 100/100
Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.