Financial Performance - Net revenues for the three months ended September 30, 2025, were $5,783,182, a decrease from $6,440,049 for the same period in 2024, representing a decline of approximately 10.2%[200] - Net income for the three months ended September 30, 2025, was $2,232,855, compared to a net loss of $2,569,518 for the same period in 2024[200] - The company had net revenues of $19,220,445 for the nine months ended September 30, 2025, down from $19,884,213 for the same period in 2024, indicating a decrease of about 3.3%[200] - Revenue for the three months ended September 30, 2025, decreased by $656,867, or 10%, compared to the same period in 2024, primarily due to a decrease in build revenue[238] - Revenue for the nine months ended September 30, 2025, decreased by $663,768 (3%) to $19,220,445 compared to $19,884,213 in the same period of 2024[246] - Gross profit fell by $4,106,005 (73%) to $1,482,011 due to increased costs of materials, shipping, customs fees, and labor[248] - Adjusted EBITDA for the three months ended September 30, 2025, was $(4,656,467), a decrease of $4,200,774 compared to the same period in 2024[235] Expenses and Costs - Cost of goods sold increased by $3,021,678, or 68%, for the three months ended September 30, 2025, leading to a gross loss of $1,671,005[238] - Operating expenses rose by $771,097, or 29%, driven mainly by increased general and administrative costs and a provision for credit losses[241] - Operating expenses increased by $3,376,213 (43%) to $11,141,113, primarily driven by a 52% rise in general and administrative expenses[249] - Interest expense increased by $1,680,635, or 120%, for the three months ended September 30, 2025, due to additional debt taken out[243] - Interest expense rose by $3,200,138 (83%) to $7,044,791 due to additional debt and early repayment of the Agile Loan[251] Financing Activities - 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[204] - The December 2023 Convertible Note has a maturity date of December 12, 2026, and is secured by a first priority perfected security interest in all existing and future assets of the company[205] - The company received a term loan of $1,575,000 under a Business Loan and Security Agreement on February 20, 2025[216] - A new business loan agreement was entered into on April 4, 2025, providing a term loan of $1,824,300, to be repaid in 69 equal weekly payments of $35,693[218] - The net proceeds from the new loan were used to pay off the Agile Loan in the discounted amount of $1,749,300, including principal and interest[219] - Financing activities provided cash of $4,623,329, primarily from proceeds of Convertible Notes and Series C Preferred Stock[264] Liquidity and Going Concern - Cash and cash equivalents were $157,682 as of September 30, 2025, indicating liquidity challenges[257] - Net cash used in operating activities was $5,942,498 for the nine months ended September 30, 2025, compared to $7,199,988 in 2024[262] - The company faces substantial doubt about its ability to continue as a going concern within one year due to liquidity concerns[260] Operational Developments - The company operates a logistics center in the UK to source and transport over-25-year-old vehicles for restoration[203] - The company employs 95 individuals at its headquarters, known as the "RoverDome," located in Kissimmee, FL[203] - The company plans to relocate quality and warranty services to a new facility in 2025, which will also serve as a warranty, used vehicle sales, and service center[228] - The company has opened new marketing channels in 2025, including retail locations in West Palm Beach, FL, and Nantucket, MA[229] - The company increased production by approximately 20% in 2023 and added an additional 10,000 sq. ft. of space in the second half of 2024 to accommodate storage needs[227] Other Income and Gains - Total other income, net increased by $8,936,528 for the three months ended September 30, 2025, primarily due to a gain on the fair value conversion of Notes Payable to Series C Preferred Stock[242] - Total other income increased by $8,915,282, primarily from gains on the fair value of conversion of Notes Payable to Series B and C Preferred Stock[250] Customer and Inventory Information - As of September 30, 2025, customer deposits amounted to $6,893,657, with no deferred revenue for vehicles completed but not titled[254] - Inventories are measured at the lower of cost or net realizable value, with finished goods inventory including completed vehicles not yet delivered[278] Accounting and Reporting - The Company provides for estimated warranty costs at the time revenue is recognized, influenced by historical warranty costs per vehicle[275] - Sales and other taxes collected on behalf of third parties are excluded from revenue, with contracts typically having a payment period of one year or less[276] - Shipping and handling costs related to customer contracts are recorded as part of the cost of goods[277] - The estimated fair value of cash, accounts receivable, and accounts payable approximates their carrying amounts due to short maturities[279] - The Company assesses warrants for liability or equity classification based on specific accounting standards, impacting how changes in fair value are recorded[280] - Convertible debt instruments are evaluated for liability classification and whether conversion features should be accounted for separately[281] - Redeemable equity instruments are classified based on whether they are subject to unconditional obligations for redemption, affecting their measurement[282] - The Company is not required to provide market risk disclosures as a smaller reporting company[283]
EF Hutton Acquisition I(EFHT) - 2025 Q3 - Quarterly Report