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EF Hutton Acquisition I(EFHT) - 2024 Q1 - Quarterly Report
EFHTEF Hutton Acquisition I(EFHT)2024-06-27 21:15

Internal Control and Compliance - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting[74]. - Management plans to implement remediation steps to improve disclosure controls, including enhancing access to accounting literature and considering additional staff with requisite experience[75]. - There were no material changes in internal control over financial reporting from January 1, 2024, to March 31, 2024, that materially affected internal control[76]. - The company did not file its Annual Report on Form 10-K for the year ended December 31, 2023, within the required timeframe, which constitutes an event of default under the Series A Convertible Preferred Stock[97]. - The company intends to negotiate a default waiver agreement with the holder of the Series A Convertible Preferred Stock, but there are no assurances of success[97]. - The Company has experienced events of default related to the Convertible Note and Series A Convertible Preferred Stock due to failure to file required reports and restate financial statements[264]. - The Company is in discussions to negotiate a default waiver agreement with the lender under the Convertible Note and Series A Convertible Preferred Stock[264]. Financial Performance - Revenue for Q1 2024 was 8,308,039,asignificantincreaseof2078,308,039, a significant increase of 207% compared to 2,707,326 in Q1 2023[110]. - Gross profit for Q1 2024 was 2,476,939,comparedto2,476,939, compared to 304,092 in Q1 2023, reflecting a gross margin improvement[110]. - Net loss for Q1 2024 was 1,550,304,comparedtoanetlossof1,550,304, compared to a net loss of 1,122,566 in Q1 2023[110]. - The net loss for 2024 was 1,550,304,comparedtoanetlossof1,550,304, compared to a net loss of 1,122,566 in 2023, representing an increase in losses of approximately 38.3%[113]. - Cash used in operating activities for 2024 was 2,513,112,upfrom2,513,112, up from 1,109,809 in 2023, indicating a significant increase of approximately 126.5%[113]. - Operating expenses for Q1 2024 totaled 2,568,008,upfrom2,568,008, up from 1,449,035 in Q1 2023[110]. - The company reported a deferred revenue decrease of 3,612,867in2024,comparedtoanincreaseof3,612,867 in 2024, compared to an increase of 1,015,270 in 2023[113]. - The company generated revenue primarily from the sale of customized Land Rover vehicles and related services, with a focus on high-quality parts and labor[118]. Assets and Liabilities - Total current assets decreased to 16,821,064asofMarch31,2024,from16,821,064 as of March 31, 2024, from 19,967,521 at the end of 2023[108]. - Total liabilities as of March 31, 2024, were 32,875,464,downfrom32,875,464, down from 35,311,672 at the end of 2023[108]. - The accumulated deficit increased to (11,572,544)asofMarch31,2024,from(11,572,544) as of March 31, 2024, from (10,022,240) at the end of 2023[112]. - Cash and cash equivalents at the end of the period were 5,560,321,comparedto5,560,321, compared to 2,325,882 at the end of 2023, reflecting an increase of approximately 139.5%[113]. - The company had a working capital deficit of approximately 1.3millionasofMarch31,2024[121].−InventoryasofMarch31,2024,wasreportedat1.3 million as of March 31, 2024[121]. - Inventory as of March 31, 2024, was reported at 10,914,086, down from 11,799,304asofDecember31,2023,indicatingareductionofapproximately7.511,799,304 as of December 31, 2023, indicating a reduction of approximately 7.5%[150]. Shareholder Information - The company had 31,899,662 shares of common stock issued and outstanding as of March 31, 2024[105]. - The weighted average number of common shares outstanding for Q1 2024 was 31,896,640, compared to 24,000,000 in Q1 2023[110]. - The company issued 39,000 shares of Series A Convertible Preferred Stock convertible into common stock as part of a transaction closed on October 11, 2023[222]. - At March 31, 2024, there were 31,899,662 shares of common stock issued and outstanding, an increase from 31,874,662 shares at the end of 2023[221]. - The company has 11,500,000 Public Warrants and 257,500 Private Warrants outstanding as of March 31, 2024, both with an exercise price of 11.50 per share[225]. Business Operations and Strategy - The merger completed on December 12, 2023, resulted in ECD becoming a wholly-owned subsidiary of EFHAC, with the merger treated as a reverse recapitalization[114][115]. - The business combination completed on December 12, 2023, involved a total consideration of 26,500,000 shares of common stock, 25,000 shares of preferred stock, and a cash payment of 2,000,000toformersecurityholdersofHumble[182][183].−TheCompanyenteredintoanAmendedandRestatedAssetPurchaseAgreementtopurchasecertainassetsforupto2,000,000 to former security holders of Humble[182][183]. - The Company entered into an Amended and Restated Asset Purchase Agreement to purchase certain assets for up to 1.25 million, with a base price of 950,000plusadditionalamountsfornewvehiclebuilds[260].−TheCompanyplanstoissue100,000fullypaidupnon−forfeitablesharesofrestrictedcommonstockinthesecondquarterof2024[240].−TheCompanyexpectstoissue25,000sharesofrestrictedcommonstocktoaninvestorrelationsfirmifinvestorshold2.5millionormoreshareswithinsixmonthsoftheagreement[241].AccountingandReportingStandards−Thecompanyisclassifiedasanemerginggrowthcompany,allowingittodelaytheadoptionofnewaccountingstandards[131].−ThecompanyadoptedASUNo.2022−04effectiveJanuary1,2023,enhancingtransparencyaroundsupplierfinanceprograms,withnomaterialimpactonfinancialstatements[176].−ThecompanyisevaluatingtheimpactofASU2023−07onsegmentreportingdisclosures,effectiveforfiscalyearsbeginningafterDecember15,2023[178][179].−ThecompanyplanstoadoptASU2021−08onJanuary1,2024,withnoexpectedimpactonitsfinancialstatements[177].−TheCompany’sfinancialstatementsarepreparedinaccordancewithgenerallyacceptedaccountingprinciples,requiringestimatesandassumptionsthatcouldimpactreportedamounts[272].MarketingandAdvertising−AdvertisingandmarketingcostsforthethreemonthsendedMarch31,2024,were950,000 plus additional amounts for new vehicle builds[260]. - The Company plans to issue 100,000 fully paid up non-forfeitable shares of restricted common stock in the second quarter of 2024[240]. - The Company expects to issue 25,000 shares of restricted common stock to an investor relations firm if investors hold 2.5 million or more shares within six months of the agreement[241]. Accounting and Reporting Standards - The company is classified as an emerging growth company, allowing it to delay the adoption of new accounting standards[131]. - The company adopted ASU No. 2022-04 effective January 1, 2023, enhancing transparency around supplier finance programs, with no material impact on financial statements[176]. - The company is evaluating the impact of ASU 2023-07 on segment reporting disclosures, effective for fiscal years beginning after December 15, 2023[178][179]. - The company plans to adopt ASU 2021-08 on January 1, 2024, with no expected impact on its financial statements[177]. - The Company’s financial statements are prepared in accordance with generally accepted accounting principles, requiring estimates and assumptions that could impact reported amounts[272]. Marketing and Advertising - Advertising and marketing costs for the three months ended March 31, 2024, were 343,409, compared to 105,220forthesameperiodin2023,representinganincreaseofabout226105,220 for the same period in 2023, representing an increase of about 226%[155]. - A marketing services agreement was established with Outside The Box Capital Inc., involving the issuance of 100,000 shares valued at 100,000 for services rendered[267].