ECD Automotive Design, Inc. has identified material misstatements in the financial statements of Humble Imports, Inc., a company it acquired on December 12, 2023. The misstatements relate to the timing of revenue recognition under ASC 606, with the company's management concluding that revenue should be recognized upon transfer of title or delivery to the customer, rather than upon completion of a vehicle build. This change affects revenue, deferred revenue, accounts receivable, cost of goods sold, and inventory. Additional errors were found in work-in-process labor costs, warranty reserve, overhead allocation, and lease accounting. These errors were deemed material by the Audit Committee on April 13, 2024, and it was determined that Humble's financial statements for the year ended December 31, 2022, and the nine...Show More

ECD Automotive Design, Inc. has identified material misstatements in the financial statements of Humble Imports, Inc., a company it acquired on December 12, 2023. The misstatements relate to the timing of revenue recognition under ASC 606, with the company's management concluding that revenue should be recognized upon transfer of title or delivery to the customer, rather than upon completion of a vehicle build. This change affects revenue, deferred revenue, accounts receivable, cost of goods sold, and inventory. Additional errors were found in work-in-process labor costs, warranty reserve, overhead allocation, and lease accounting. These errors were deemed material by the Audit Committee on April 13, 2024, and it was determined that Humble's financial statements for the year ended December 31, 2022, and the nine months ended September 30, 2023, should not be relied upon and need to be restated. The company's internal controls were found to be ineffective due to a material weakness, and remediation plans are being implemented. ECD Automotive Design is working to finalize its financial close process and aims to complete its 2023 Annual Report on Form 10-K, which will include the restated financial statements, as soon as possible.