EF Hutton Acquisition I(EFHT) - 2024 Q2 - Quarterly Report

Financial Performance - Revenue for the six months ended June 30, 2024, was $17.2 million, a significant increase from$6.6 million in the same period of 2023, representing a growth of approximately 160%[123] - The company reported a net loss of $2.5 million for the six months ended June 30, 2024, compared to a net loss of$1.1 million for the same period in 2023[123] - Adjusted EBITDA increased by $0.4 million for the three months ended June 30, 2024, compared to the same period in 2023, driven by an increase in average selling price per vehicle of$46,604[142] - Net revenues for the three months ended June 30, 2024, reached $8,872,003, a 129.4$3,867,903 in the same period of 2023[156] - For the six months ended June 30, 2024, net revenue increased by 161.3% to $17,180,042, with vehicle builds contributing 94.3$5,294,237, a 245.4% increase compared to the same period in 2023, with a gross profit margin of 30.8%[169] Operating Expenses - Total operating expenses increased by 116.4% to $2,699,789 for the three months ended June 30, 2024, compared to$1,247,313 in the same period of 2023[156] - Operating expenses for the six months ended June 30, 2024, totaled $5,267,797, reflecting a 95.4$1,166,938, attributed to public company costs, including higher salaries and professional fees[160] - General and administrative expenses increased by $2,027,376 for the six months ended June 30, 2024, compared to the same period in 2023, primarily due to public company costs[172] - Selling and marketing expenses increased by$407,684 for the six months ended June 30, 2024, due to higher advertising and promotional activities[171] Debt and Financing - The company entered into a Securities Purchase Agreement on October 6, 2023, issuing a senior secured convertible note for a principal amount of $15,819,209, with an interest rate of Prime + 5$2,119,209 and debt issuance costs of $3,088,883[131] - Interest expense increased by$1,151,548 for the three months ended June 30, 2024, due to accrued interest on the Convertible Note[163] - Interest expense increased by $2,122,325 for the six months ended June 30, 2024, primarily due to accrued interest and amortization of debt issuance costs[174] - The Company issued a Senior Secured Convertible Note with an aggregate principal amount of$15,819,209 on December 12, 2023, which is subject to certain events of default[209] Asset Acquisition and Investments - The company agreed to purchase assets from BNMC Continuation Cars LLC for up to $1.25 million, including a trademark, with a base price of$950,000 plus potential additional payments for new vehicle builds[132] - The Company entered into a securities purchase agreement on August 9, 2024, agreeing to a loan of $1,154,681 and will receive$1,000,000 in proceeds from the August Note[217] - The aggregate purchase price for the A&R Asset Purchase Agreement was fixed at $1,250,000, payable through the issuance of 1,250,000 shares valued at$1.00 per share[224] Production and Operations - The company operates from a 100,000-square-foot facility in Kissimmee, FL, employing 89 staff, including 72 craftsmen and technicians[125] - The company entered into a lease agreement for a 100,000 sq. ft. manufacturing facility in Kissimmee, Florida, enhancing production efficiency and planning to increase production capacity by 20% in 2023[138] - The company is planning to add a third production area focused on iconic American vehicles in 2024[139] - Vehicle builds accounted for 90.0% of total revenue for the three months ended June 30, 2024, compared to 98.9% in the same period of 2023, with a revenue increase of $4,164,874[157] Market Expansion and Strategy - The company plans to leverage the assets from the acquisition of Bran New Muscle Car (BNMC) to produce Mustangs, resulting in 6 Mustang contracts[139] - The company plans to expand into international markets, including Europe, Canada, and the United Arab Emirates, as part of its growth strategy[140] Cash Flow and Liquidity - Cash and cash equivalents stood at$5,660,684 as of June 30, 2024, with a primary source of operating funds from cash receipts and loan proceeds[178] - Net cash used in operating activities was $3,722,837 for the six months ended June 30, 2024, primarily due to a decrease in deferred revenue and an increase in prepaid and other current assets[180] - Financing activities provided cash of$1,296,000 for the six months ended June 30, 2024, primarily related to proceeds net of repayments of floor loans[184] Challenges and Risks - The company has faced challenges due to global supply chain disruptions and price increases in materials, impacting operations during the COVID-19 pandemic[136] - The company has experienced varying levels of inflation impacting product and labor costs but did not have a material impact on operations for the six months ended June 30, 2024[185] Customer Obligations - As of June 30, 2024, the company had customer deposits amounting to $7,120,378 and$8,373,028 of contract consideration allocated to a performance obligation not yet completed[175]