Financial Performance - ECD's net revenue for the year ended December 31, 2023, was $15.1 million, a 22.8% increase from $12.3 million in 2022[282]. - The company reported a net loss of $1.6 million for 2023, compared to a net loss of $1.5 million in 2022[282]. - Net revenues for the year ended December 31, 2023, were $15,123,596, an increase of $2,779,851 or 22.5% compared to $12,343,745 in 2022[323]. - Gross profit for the year ended December 31, 2023, was $4,249,238, representing a significant increase of $2,554,361 or 150.7% from $1,694,877 in 2022[323]. - Adjusted EBITDA for the year ended December 31, 2023, was $1,094,498, an increase of $2.4 million compared to a loss of $1,329,582 in 2022, primarily driven by improved gross margins[304]. - The net loss for the year ended December 31, 2023, was $1,602,013, a 9.8% increase from a net loss of $1,459,050 in 2022[323]. - Total operating expenses for the year ended December 31, 2023, were $5,884,778, an increase of $2,227,947 or 60.9% compared to $3,656,831 in 2022[331]. - General and administrative expenses rose by $1,955,090 to $5,240,230 in 2023, driven by growth and costs associated with being a public company[333]. - Interest expense surged to $653,429 in 2023 from $19,000 in 2022, reflecting a significant increase of 3339.1%[323]. - Warranty revenue increased by 891.1% to $118,886 in 2023, compared to $11,995 in 2022[325]. - Total other income (loss) for the year ended December 31, 2023, was $(481,917), a decrease of 195.8% compared to an income of $502,904 in 2022[335]. Production and Operations - ECD's production increased by approximately 20% in 2023 utilizing one shift[299]. - Vehicle builds accounted for 98.7% of total revenue in 2023, up from 97.8% in 2022, with a revenue increase of $2,857,667 attributed to higher production efficiency[325]. - The average selling price per vehicle increased by $24,697, contributing over 60% to the gross profit increase[304]. - ECD plans to expand its manufacturing facility by adding 10,000 sq. ft. in the second half of 2024 to accommodate storage needs[299]. - The company introduced the Jaguar E-type in 2022, which has a higher price point and gross margin compared to traditional models[300]. Financial Position and Liquidity - Cash and cash equivalents as of December 31, 2023, were $8,134,211, with a working capital of $198,824, compared to a working capital deficit of $5,333,679 in 2022[344]. - Financing activities provided cash of $10,182,107 for the year ended December 31, 2023, primarily from proceeds of the Convertible Note[347]. - Operating activities used cash of $5,007,963 for the year ended December 31, 2023, primarily due to increases in inventory and debt issuance costs[345]. - The company has determined that its sources of liquidity will be sufficient to meet financing requirements for the next twelve months[343]. - Future lease obligations total $5,435,283, with the largest obligation of $557,703 due in 2024[350]. Corporate Developments - The merger with EF Hutton Acquisition Corporation I was completed on December 12, 2023, resulting in the company changing its name to ECD Automotive Design, Inc.[286]. - The company entered into a Securities Purchase Agreement on October 6, 2023, issuing a senior secured convertible note for $15,819,209[289]. - 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[377]. - ECD plans to open new marketing channels in 2024, including outreach events and expanding its presence in international markets[301]. Tax and Deferred Assets - The Company has no deferred tax asset valuation allowance as of December 31, 2023, indicating a lack of expected future taxable income to offset tax loss carryforwards[373]. - The Company recognized a deferred tax asset resulting in deferred tax income of $515,444 for the year ended December 31, 2023[337]. - The Company evaluates the realizability of deferred tax assets quarterly, considering various factors including historical taxable income and potential tax planning strategies[372]. - The Company has determined that its sources of liquidity will be sufficient to meet financing requirements for the next twelve months[343]. - As of December 31, 2023, the Company's reserve related to uncertain tax positions was zero, reflecting no adjustments needed in the consolidated financial statements[370]. Challenges and Risks - The Company reported a cumulative pre-tax loss for the three-year period ended December 31, 2023, indicating ongoing financial challenges[373]. - The Company plans to negotiate a default waiver agreement with the lender of the Convertible Note, which could significantly impact its financial position if not successful[377]. - Resale commission income decreased by 84.0% from $539,659 in 2022 to $86,370 in 2023 as the company focused on increasing capacity in building new vehicles[336]. - For the year ended December 31, 2023, depreciation expense increased by $84,659 due to additional depreciation related to the new Kissimmee facility[334]. - The fair value of financial instruments approximates their carrying amounts due to the short maturity of these instruments[374].
EF Hutton Acquisition I(EFHT) - 2023 Q4 - Annual Report