# EDGAR Filing Document

**Accession Number:** 0001922858
**File Stem:** 0001437749-25-035879
**Filing Date:** 2025-11
**Character Count:** 238954
**Document Hash:** 92cdc8f526e72985045cc8e3db208baa
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001437749-25-035879.hdr.sgml**: 20251120

**ACCESSION NUMBER**: 0001437749-25-035879

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 89

**CONFORMED PERIOD OF REPORT**: 20250930

**FILED AS OF DATE**: 20251120

**DATE AS OF CHANGE**: 20251120

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** ECD Automotive Design, Inc.
- **CENTRAL INDEX KEY:** 0001922858
- **STANDARD INDUSTRIAL CLASSIFICATION:** MOTOR VEHICLES & PASSENGER CAR BODIES [3711]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 000000000
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-41497
- **FILM NUMBER:** 251504035

**BUSINESS ADDRESS:**
- **STREET 1:** 24 SHIPYARD DRIVE, SUITE 102
- **CITY:** HINGHAM
- **STATE:** MA
- **ZIP:** 02043
- **BUSINESS PHONE:** 929-528-0767

**MAIL ADDRESS:**
- **STREET 1:** 24 SHIPYARD DRIVE, SUITE 102
- **CITY:** HINGHAM
- **STATE:** MA
- **ZIP:** 02043

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** EF Hutton Acquisition Corp I
- **DATE OF NAME CHANGE:** 20220411

?xml version='1.0' encoding='ASCII'? ecda20250930_10q.htm

7,

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**UNITED STATES**

 **SECURITIES AND EXCHANGE COMMISSION**

 **Washington, D.C. 20549**

**FORM 10-Q**

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number: 001-41497

**ECD AUTOMOTIVE DESIGN, INC.**

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(Exact name of registrant as specified in its charter)

---

| | |
|:---|:---|
| **Delaware** | **86-2559175** |
| (State or other jurisdiction of<br> incorporation or organization) | (IRS Employer<br> Identification No.) |

---

**4390 Industrial Lane, Kissimmee, FL 34758**

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(Address of principal executive offices and Zip Code)

**(407) 483-4825**

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(Registrant's telephone number, including area code)

**Not Applicable**

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(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| **Common Stock** | **ECDA** | **The Nasdaq Stock Market LLC** |
| **Warrants** | **ECDAW** | **The Nasdaq Stock Market LLC** |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

---

| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| Emerging growth company | ☒ |  |  |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of November 17, 2025, the registrant had 2,497,056 shares of common stock issued and outstanding.

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| | | |
|:---|:---|:---|
| | | **Page** |
| [**<u>PART</u> <u>1</u>** <u>–</u> **<u>FINANCIAL INFORMATION</u>**](#part1) | [**<u>PART</u> <u>1</u>** <u>–</u> **<u>FINANCIAL INFORMATION</u>**](#part1) |  |
| Item 1. | [<u>Financial Statements (Unaudited)</u>](#financialstmts) | [1](#financialstmts) |
|  | [<u>Unaudited Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024</u>](#bs) | [1](#bs) |
|  | [<u>Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024</u>](#ops) | [2](#ops) |
|  | [<u>Unaudited Condensed Consolidated Statements of Changes in Stockholders</u><u>'</u> <u>Deficit for the Three and Nine Months Ended September 30, 2025 and 2024</u>](#equity) | [3](#equity) |
|  | [<u>Unaudited Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024</u>](#cf) | [5](#cf) |
|  | [<u>Notes to Unaudited Condensed Consolidated Financial Statements</u>](#notes) | [6](#notes) |
| Item 2. | [<u>Management</u><u>'</u><u>s Discussion and Analysis of Financial Condition and Results of Operations</u>](#mda) | [6](#mda) |
| Item 3. | [<u>Quantitative and Qualitative Disclosures about Market Risk</u>](#quant) | [50](#quant) |
| Item 4. | [<u>Control and Procedures</u>](#controls) | [50](#controls) |
| [<u>PART</u> <u>II</u> <u>–</u> <u>OTHER INFORMATION</u>](#part2) | [<u>PART</u> <u>II</u> <u>–</u> <u>OTHER INFORMATION</u>](#part2) | [50](#part2) |
| Item 1. | [<u>Legal Proceedings</u>](#legal) | [50](#legal) |
| Item 1A. | [<u>Risk Factors</u>](#risk) | [51](#risk) |
| Item 2.  | [<u>Unregistered Sales of Equity Securities and Use of Proceeds</u>](#unregistered) | [51](#unregistered) |
| Item 3. | [<u>Defaults Upon Senior Securities</u>](#defaults) | [51](#defaults) |
| Item 4. | [<u>Mine Safety Disclosures</u>](#mine) | [51](#mine) |
| Item 5. | [<u>Other Information</u>](#otherinfo) | [51](#otherinfo) |
| Item 6. | [<u>Exhibits</u>](#exhibits) | [52](#exhibits) |
| [<u>SIGNATURES</u>](#signatures) | [<u>SIGNATURES</u>](#signatures) | [53](#signatures) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; i

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[**Table of Contents**](#toc)

**PART I** – **FINANCIAL INFORMATION**

**Item 1. Financial Statements**

**ECD AUTOMOTIVE DESIGN, INC**

**UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| **ASSETS** |  |  |
| Current assets: |  |  |
| Cash and cash equivalents | $157682 | $1476850 |
| Accounts receivable, net | 847559 | 45022 |
| Inventories | 3789194 | 11181806 |
| Prepaid and other current assets | 1847940 | 239864 |
| Total current assets | 6642375 | 12943542 |
| Goodwill | 1291098 | 1291098 |
| Property and equipment, net | 413651 | 483878 |
| Intangible asset, net | 5250 | 12000 |
| Right-of-use assets | 4033985 | 3404983 |
| Deposit | 60200 | 60200 |
| TOTAL ASSETS | $12446559 | $18195701 |
| **LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT** |  |  |
| Current liabilities: |  |  |
| Accounts payable | $2902327 | $2494664 |
| Accrued expenses | 1333958 | 1686598 |
| Customer deposits and deferred revenue | 6893657 | 11802825 |
| Lease liability, current | 535248 | 1212000 |
| Floor plan payable | 85000 | 353612 |
| Other payables | 899075 | 1364222 |
| Total current liabilities | 12649265 | 18913921 |
| Lease liability, non-current | 3856963 | 3373571 |
| Convertible notes, net of debt discount | 9350860 | 14085932 |
| Warrant liabilities, at fair value | 28225 | 486559 |
| Conversion option, at fair value | 17 | 313191 |
| Total liabilities | 25885330 | 37173174 |
| Commitments and contingencies (Note 14) |  |  |
| Series A preferred stock, $0.0001 par value, 20,000,000 authorized shares; 375 and 162 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively | 2 | 1 |
| Stockholders' deficit: |  |  |
| Series B preferred stock, $.0001 par value, 4,000 authorized; 0 issued shares and 0 outstanding as of September 30, 2025 and December 31, 2024, respectively |  |  |
| Series C preferred stock, $0.0001 par value, 200,000 authorized shares; 591 and 0 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively |  |  |
| Common stock, $0.0001 par value, 1,000,000,000 authorized shares; 1,539,644 shares and 912,262 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively | 154 | 91 |
| Additional paid-in capital | 12906451 | 2580057 |
| Other comprehensive income | (6696) | (6696) |
| Accumulated deficit | (26338682) | (21550926) |
| Total Stockholders' Deficit | (13438773) | (18977474) |
| TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT | $12446559 | $18195701 |

---

*The accompanying notes are an integral part of these unaudited condensed consolidated financial statements*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1

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**ECD AUTOMOTIVE DESIGN, INC**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***Three Months Ended*** | ***Three Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** |
|  | ***September 30,*** | ***September 30,*** | ***September 30,*** | ***September 30,*** |
|  | ***2025*** | ***2024*** | ***2025*** | ***2024*** |
| Revenue, net | $5783182 | $6440049 | $19220445 | $19884213 |
| Cost of goods sold (exclusive of depreciation expense shown below) | 7454187 | 4432509 | 17738434 | 14296197 |
| Gross profit (loss) | (1671005) | 2007540 | 1482011 | 5588016 |
| Operating expenses: |  |  |  |  |
| Advertising and marketing expenses | 168925 | 258138 | 741307 | 886119 |
| General and administrative expenses | 3212259 | 2363570 | 10280293 | 6768386 |
| Provision for credit losses | 13028 |  | 42536 | 8033 |
| Depreciation and amortization expenses | 25856 | 27263 | 76977 | 102362 |
| Total operating expenses | 3420068 | 2648971 | 11141113 | 7764900 |
| Loss from operations | (5091073) | (641431) | (9659102) | (2176884) |
| Other income (expense) |  |  |  |  |
| Interest expense | (3082464) | (1401829) | (7044791) | (3844653) |
| Change in fair value of warrant liabilities | (27636) | (118336) | 491691 | (570381) |
| Change in fair value of conversion option liabilities | 1203 | (124752) | 362192 | (361611) |
| Gain on conversion of debt to preferred stock | 10479055 |  | 10912936 |  |
| Gain on forgiveness of payable |  | 319899 |  | 319899 |
| Foreign exchange loss | (12355) | (1534) | (21184) | (12054) |
| Resale commissions income | 39375 | 20000 | 100975 | 105100 |
| Other income (expense), net | (73250) | (306048) | (330473) | (80236) |
| Total other income (expense), net | 7323928 | (1612600) | 4471346 | (4443936) |
| Income (loss) before income taxes | 2232855 | (2254031) | (5187756) | (6620820) |
| Income tax benefit (expense) |  | (315487) | 400000 | (838055) |
| Net income (loss) | $2232855 | $(2569518) | $(4787756) | $(7458875) |
| Net income (loss) per common share, basic | $1.56 | $(3.03) | $(4.41) | $(9.15) |
| Net income (loss) per common share, diluted | $0.60 | $(3.03) | $(4.41) | $(9.15) |
| Weighted average number of common shares outstanding, basic | 1433042 | 847560 | 1084761 | 814917 |
| Weighted average number of common shares outstanding, diluted | 5322729 | 847560 | 1084761 | 814917 |
| Net income (loss) | $2232855 | $(2569518) | $(4787756) | $(7458875) |
| Foreign currency translation gain (loss) | 1665 | 482 |  | 482 |
| Comprehensive income (loss) | $2234520 | $(2569036) | $(4787756) | $(7458393) |

---

*The accompanying notes are an integral part of these unaudited condensed consolidated financial statements*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2

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[**Table of Contents**](#toc)

**ECD AUTOMOTIVE DESIGN, INC**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS**' **DEFICIT**

**THREE AND NINE MONTHS ENDED September 30, 2025 and 2024**

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  |  |  |  | ***Accumulated*** | ***Total*** |
|  |  |  | ***Preferred Stock*** | ***Preferred Stock*** | ***Common Stock*** | ***Common Stock*** | ***Additional*** |  | ***Other*** | ***Stockholders'*** |
|  | ***Series A*** |  | ***Series C*** |  |  |  | ***Paid-In*** | ***Accumulated*** | ***Income*** | ***Equity*** |
|  | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Capital*** | ***Deficit*** | ***(loss)*** | ***(Deficit)*** |
| **Balance, December 31, 2024** | 162 | $1 |  | $- | 912492 | $91 | $2580057 | $(21550926) | $(6696) | $(18977474) |
| Reversal of conversion of redeemable preferred shares | 463 | 2 |  |  | (46250) | (5) | 3 |  |  | (2) |
| Share-based compensation | *-* |  | *-* |  | *-* |  | 475550 |  |  | 475550 |
| Issuance of common shares |  |  |  |  | 18400 | 2 | 212162 |  |  | 212164 |
| Foreign currency translation adjustment | *-* |  | *-* |  | *-* |  |  |  | (3757) | (3757) |
| Net loss | *-* |  | *-* |  | *-* |  |  | (2750317) |  | (2750317) |
| **Balance, March 31, 2025** | 625 | 3 |  |  | 884642 | 88 | 3267772 | (24301243) | (10453) | (21043836) |
| Issuance of preferred stock |  |  | 100 |  |  |  | 663164 |  |  | 663164 |
| Conversion of preferred stock to common stock | (250) | (1) | (37) |  | 225762 | 23 | 730 |  |  | 753 |
| Conversion of convertible notes to common stock |  |  |  |  | 29079 | 3 | 258428 |  |  | 258431 |
| Share-based compensation | *-* |  | *-* |  | *-* |  | 1064630 |  |  | 1064630 |
| Issuance of common shares |  |  |  |  | 50075 | 5 | 194993 |  |  | 194998 |
| Foreign currency translation adjustment | *-* |  | *-* |  | *-* |  |  |  | 2092 | 2092 |
| Net loss | *-* |  | *-* |  | *-* |  |  | (4270294) |  | (4270294) |
| **Balance, June 30, 2025** | 375 | 2 | 63 |  | 1189558 | 119 | 5449717 | (28571537) | (8361) | (23130062) |
| Issuance of preferred stock | *-* |  | *28* |  | *-* |  | 939900 |  |  | 939900 |
| Conversion of convertible notes to preferred stock |  |  | 500 |  |  |  | 1922146 |  |  | 1922146 |
| Conversion of preferred stock to common stock | *-* |  | *-* |  | *-* |  |  |  |  |  |
| Conversion of convertible notes to common stock |  |  |  |  | 287722 | 29 | 2068736 |  |  | 2068765 |
| Share-based compensation | *-* |  | *-* |  | *-* |  | 369375 |  |  | 369375 |
| Reverse stock split round up |  |  |  |  | 62364 | 6 | (6) |  |  |  |
| Issuance of warrants |  |  |  |  |  |  | 2156583 |  |  | 2156583 |
| Foreign currency translation adjustment | *-* |  | *-* |  | *-* |  |  |  | 1665 | 1665 |
| Net income | *-* |  | *-* |  | *-* |  |  | 2232855 |  | 2232855 |
| **Balance, September 30, 2025** | 375 | $2 | 591 | $- | 1539644 | $154 | $12906451 | $(26338682) | $(6696) | $(13438773) |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **ECD AUTOMOTIVE DESIGN, INC**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS**' **DEFICIT**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **THREE AND Nine MONTHS ENDED September 30, 2025 and 2024**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  |  | ***Accumulated*** | ***Total*** |
|  |  |  |  |  | ***Additional*** |  | ***Other*** | ***Stockholders'*** |
|  | ***Redeemable Preferred Stock*** | ***Redeemable Preferred Stock*** | ***Common Stock*** | ***Common Stock*** | ***Paid-In*** | ***Accumulated*** | ***Income*** | ***Equity*** |
|  | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Capital*** | ***Deficit*** | ***(loss)*** | ***(Deficit)*** |
| **Balance, December 31, 2023, as restated** | 625 | $3 | 796867 | $79 | $3108 | $(10779475) | $- | $(10776288) |
| Issuance of common shares |  |  | 625 |  | 250000 |  |  | 250000 |
| Net loss | *-* |  | *-* |  | *-* | (2859862) |  | (2859862) |
| **Balance, March 31, 2024, as restated** | 625 | 3 | 797492 | 79 | 253108 | (13639337) |  | (13386150) |
| Issuance of common share |  |  | 5000 | 1 | 159148 |  |  | 159149 |
| Fair value of share based compensation | *-* |  | *-* |  | 22810 |  |  | 22810 |
| Net loss | *-* |  | *-* |  |  | (2029495) |  | (2029495) |
| **Balance, June 30, 2024, as restated** | 625 | 3 | 802492 | 80 | 435066 | (15668832) |  | (15233686) |
| Issuance of common share |  |  | 1250000 | 125 | 1249875 |  |  | 1250000 |
| Issuance of common share |  |  | 1000000 | 100 | 910341 |  |  | 910441 |
| Issuance of warrants | *-* |  | *-* |  | 89559 |  |  | 89559 |
| Stock issuance costs | *-* |  | *-* |  | (105000) |  |  | (105000) |
| Conversion of redeemable preferred shares | (463) | (2) | 46250 | 5 | (3) |  |  | (2) |
| Foreign currency translation loss | *-* |  | *-* |  |  |  | 482 | 482 |
| Net loss | *-* |  | *-* |  |  | (2569518) |  | (2569518) |
| **Balance, September 30, 2024** | 162 | $1 | 3098742 | $310 | $2579838 | $(18238350) | $482 | $(15657720) |

---

*The accompanying notes are an integral part of these unaudited condensed consolidated financial statements*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4

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[**Table of Contents**](#toc)

**ECD AUTOMOTIVE DESIGN, INC**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

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| | | |
|:---|:---|:---|
|  | ***Nine Months Ended*** | ***Nine Months Ended*** |
|  | ***September 30,*** | ***September 30,*** |
|  | ***2025*** | ***2024*** |
| Cash flows from operating activities: |  |  |
| Net (loss) income | $(4787756) | $(7458875) |
| Adjustments to reconcile net income to net cash provided by (used in) operating activities |  |  |
| Depreciation and amortization expense | 76977 | 102362 |
| Gain on FV conversion of debt to preferred stock | (10912936) |  |
| Change in fair value of warrant liabilities | (491691) | 570381 |
| Change in fair value of conversion option liabilities | (362192) | 361611 |
| Gain on forgiveness of payable |  | (319899) |
| Noncash lease expense | 442867 | 266866 |
| Income tax (benefit) expense | (400000) |  |
| Amortization of debt discount | 3008128 | 1460301 |
| Share-based compensation | 2317469 | 294459 |
| Provision for credit losses | 42536 | 8033 |
| Paid in kind interest | 3312972 |  |
| Inventory write off | 353377 |  |
| Changes in operating assets and liabilities: |  |  |
| Accounts receivable | (845073) | (25424) |
| Inventories | 7039235 | (933924) |
| Prepaid and other current assets | (626562) | (478803) |
| Deposit |  | 17486 |
| Deferred tax asset |  | 838055 |
| Accounts payable | 1582731 | 1131040 |
| Accrued expenses | (311425) | 1343424 |
| Deferred revenue | (4909168) | (4162712) |
| Other payables | (65147) | (233097) |
| Deferred tax liability |  |  |
| Lease liability | (406840) | 18728 |
| Net cash used in operating activities | (5942498) | (7199988) |
| Cash flows from investing activities: |  |  |
| Disposal of asset |  | 6718 |
| Purchase of assets |  | (23764) |
| Net cash used in investing activities |  | (17046) |
| Cash flows from financing activities: |  |  |
| Repayment of floor plan payable | (1685836) | (920000) |
| Proceeds from floor plan payable | 557458 | 1677000 |
| Proceeds from convertible note | 3372020 | 1154681 |
| Proceeds from notes payable | 3399300 |  |
| Debt issuance costs | (445227) | (382212) |
| Repayment of notes payable | (1514286) |  |
| Proceeds from sale of Series C Convertible Preferred Stock | 939900 |  |
| Issuance of common stock |  | 1145000 |
| Net cash provided by financing activities | 4623329 | 2674469 |
| Effect of translation changes on cash |  | 482 |
| Net (decrease) increase in cash and cash equivalents | (1319169) | (4542083) |
| Cash and cash equivalents, beginning of year | 1476850 | 8134211 |
| Cash and cash equivalents, end of period | $157681 | $3592128 |
| Supplemental cash flow disclosure: |  |  |
| Cash paid for interest | $209937 | $1212985 |
| Supplemental disclosure of noncash cash flow information |  |  |
| Conversion of convertible notes and interest to common stock | $2327194 | $- |
| Conversion of convertible notes and interest to preferred stock | $11284881 | $- |
| Conversion of New Loan to preferred stock | $2462805 | $- |
| Issuance of Common Stock Purchase Warrant | $2156583 | $- |
| Initial classification of warrant liabilities | $33357 | $26551 |
| Initial classification of conversion option liability | $49017 | $105981 |
| ROU assets at inception | $1071869 | $- |
| Issuance of common stock | $7 | $- |
| Assets and liabilities acquired with the business combination | $- | $1250000 |
| Conversion of redeemable preferred stock into common stock | $(5) | $5 |
| Paid in kind interest on convertible note | $- | $165223 |
| Transfer of property and equipment to inventory | $- | $325474 |

---

*The accompanying notes are an integral part of these unaudited condensed consolidated financial statements*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

**NOTE *1.* NATURE OF OPERATIONS**

ECD Automotive Design, Inc (the "Company," "ECD," "we," "us," or "our") is engaged in the production and sale of Land Rover vehicles, Jaguar E-Types, Classic Ford Mustangs, Toyota *FJ40s* and Porsche *911s.* Since the Company's commencement of operations in *2013,* it has established a facility geared towards producing the most customized Land Rovers with the highest quality of parts and the highest quality labor force building each vehicle. The Company primarily earns revenue from the sale of the customized vehicle delivered directly to the customer. Additionally, revenue is generated from providing repair or upgrade services to customers and from the sale of extended warranties.

The Company also consolidates, ECD Auto Design UK LTD ("ECD UK"), a private limited company incorporated on *July 16, 2021* in England and Wales. ECD UK was formed for the purpose of procuring parts overseas for the Company. ECD UK is a consolidated variable interest entity ("VIE") for which the company is the primary beneficiary. The Company is the primary beneficiary of ECD UK as it has both the power to direct the most significant activities impacting on its economic performance and the obligation to absorb losses or receive benefits significant to them.

In *April 2024,* the Company acquired certain assets of BNMC Continuation Cars LLC ("BNMC"). The assets and the ongoing performance of BNMC are now included in the consolidated results of operations of ECD.

**NOTE *2.* GOING CONCERN**

As of *September 30, 2025*, the Company had cash and cash equivalents of $157,682 and a working capital deficit of $6,006,891.

The Company's primary source of operating funds since inception has been from cash receipts from sales, proceeds from loans payable and equity issuances.

Management's assessment of the Company's ability to continue as a going concern involves making a judgment, at a particular point in time, about inherently uncertain future outcomes of events or conditions. Any judgment about the future is based on information available at the time at which the judgment is made. Subsequent events *may* result in outcomes that are inconsistent with judgments that were reasonable at the time they were made.

The Company's future capital requirements will depend on many factors, including the Company's revenue growth rate. The Company will need to raise additional financing through loans or through equity raises. The Company cannot provide any assurance that the new financing will be available to it on commercially acceptable terms, if at all. If the Company is unable to raise additional capital, the Company's business, results of operations and financial condition would be materially and adversely affected.

As a result of the above, in connection with the Company's assessment of going concern considerations in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") *205*-*40, Going Concern* ("ASC *205"*), Management has determined that the Company's liquidity condition raises substantial doubt about the Company's ability to continue as a going concern within *one* year after the date these unaudited condensed consolidated financial statements are issued. These unaudited condensed consolidated financial statements do *not* include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

**NOTE *3.* SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

***Basis of Presentation***

The accompanying unaudited condensed consolidated financial statements include the accounts of ECD and ECD Auto Design UK Ltd. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S GAAP", or "GAAP"), expressed in U.S. dollars. In the opinion of management, all adjustments necessary for a fair presentation of such unaudited condensed consolidated financial statements have been included. All such adjustments consisted of all normal recurring items, including the elimination of all intercompany transactions and balances. References to GAAP issued by the FASB in these accompanying notes to the unaudited condensed consolidated financial statements are to the FASB Accounting Standards Codification ("ASC").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *6*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form *10*-Q and Article *10* of Regulation S-*X.* Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These operating results are *not* necessarily indicative of the results that *may* be expected for the year ending *December 31, 2025*.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended *December 31, 2024* included in the *2024* Form *10*-K/A, filed with the SEC on *August 29, 2025.*

***Out-of-Period Adjustments***

During the *three* months ended *September 30, 2025,* the Company recorded out-of-period adjustments to correct errors that resulted in the understatement of right-of-use ("ROU") assets, inventory, lease liabilities and net income (loss) in previously issued financial statements for the year ended *December 31, 2024* and the quarters ended *March 31, 2025* and *June 30, 2025.* These errors related to (i) the omission of the West Palm Beach lease from lease accounting under ASC *842* "*Leases*" ("ASC *842"*) and (ii) the failure to expense certain work-in-process or completed inventory at the time related revenue was recognized.

On *November 14, 2024,* the Company entered into an agreement with Member Hubs Palm Beach, LLC ("One Drivers Club" or "ODC") to use a portion of ODC's facility in West Palm Beach, Florida for annual base rent of $225,000 over a *five*-year term. Certain contractual milestones, including the commencement of rental payments in *December 2024,* did *not* occur as anticipated, and the lease was *not* evaluated under ASC *842* at inception. Upon receipt of invoices in *September 2025,* management reviewed the agreement and determined that it met the definition of a lease requiring ROU asset and lease liability recognition. The omission resulted in understated ROU assets, lease liabilities and net loss of:

● *December 31, 2024:* $1,056,104, $1,057,665 and $1,561, respectively;

● *March 31, 2025:* $1,008,441, $1,014,686 and $4,684, respectively; and

● *June 30, 2025: $960,220,* $1,027,398 and $60,934 for the *three* months ended and $65,617 for the *six* months ended, respectively.

The Company recorded out-of-period adjustments in the *third* quarter of *2025* increasing ROU assets and lease liabilities by $960,220 and $1,027,398, respectively, and recognized $67,178 in general and administrative expense in the unaudited condensed consolidated statements of operations for the *three* and *nine* months ended *September 30, 2025.*

During a *third*-quarter review of inventory, the Company identified inventory related to transactions completed and recognized as revenue in prior periods. The Company determined that $352,960 of inventory related to revenue recognized in the *first* quarter of *2025* and $155,229 related to revenue recognized in the *second* quarter of *2025.* As a result, $508,189 was recorded in cost of goods sold in the unaudited condensed consolidated statements of operations for the *three* and *nine* months ended *September 30, 2025.*

The impact of the combined out-of-period adjustments recorded in the *third* quarter of *2025* was an increase in total assets and total liabilities at *September 30, 2025* by $804,991 and $1,027,398, respectively, and a decrease in net income for the *three* months ended and an increase in net loss in the unaudited condensed consolidated statements of operations for the *nine* months ended *September 30, 2025* by $575,366. Management evaluated the impact of these errors, both quantitatively and qualitatively, and determined that they were *not* material to the financial statements for the year ended *December 31, 2024* or the quarters ended *March 31, 2025, June 30, 2025,* or the current reporting period.

***Emerging Growth Company Status***

The Company is an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is *no* longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these financial statements *may not* be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

***Use of Estimates***

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates include assumptions used in revenue recognition, useful life of assets, and allowance for credit losses.

***Segment Information***

Operating segments are defined as components of an enterprise for which separate discrete financial information is evaluated regularly by the Company's Chief Executive Officer ("CEO"), who is the Chief Operating Decision Maker ("CODM"), in deciding how to allocate resources and assess performance. The CODM reviews financial information presented on a consolidated basis for the purposes of allocating resources and evaluating financial performance. Accordingly, the Company operates and manages its business as *one* operating segment and one reportable segment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *7*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

***Cash and Cash Equivalents***

The Company considers all highly liquid investments acquired with an original maturity of *three* months or less at the date of purchase to be cash equivalents. Cash equivalents are stated at cost, which approximates market value, because of the short maturity of these ins

***Credit Risk***

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, *may* exceed the Federal Deposit Insurance Corporation Coverage limit of *$250,000.* As of *September 30, 2025* and *December 31, 2024*, the Company has *not* experienced losses on these accounts and management believes the Company is *not* exposed to significant risks on such accounts.

***Revenue Recognition***

Revenue is recognized when the Company transfers title of promised goods or provides services to the customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. In determining the appropriate amount of revenue to be recognized as the Company fulfils its obligations under the agreement, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the *five*-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

*No one* customer exceeded *10%* of revenue for the *three* and *nine* months ended *September 30, 2025* and *2024*.

***Product Revenue*** – ***Builds***

The Company generates revenue through the sales of rebuilt or upgraded Land Rover Defender, Range Rover Classics, Land Rover Series, Jaguar E-Types, and Mustang vehicles directly to customers. There is a single performance obligation in all of the Company's contracts, which is the Company's promise to transfer the Company's product to customers based on the transfer of title or shipping terms in the arrangement. The entire transaction revenue is allocated to this performance obligation.

Upon execution of the contract, the Company bills its customers the total consideration of the contract. The Company receives from 25% to 50% of the total consideration of the contract from its customers as acceptance of contract, including any upgrades, which are initially recorded in customer deposits in deferred revenue, and are recognized as net revenue when the products are shipped or titled based on terms in the arrangement.

***Warranty and Other Revenue***

The Company also generates revenue through the sale of extended warranties to customers. The customers agree to the terms and conditions at the time of purchase, which represents the customer arrangements. The period covered by the extended warranty is usually two years. The Company has elected to apply the optional exemption provided in ASC *606 Revenue from Contracts with Customers* ("ASC *606"*) and, therefore, is *not* required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period.

The Company generates revenue through providing repair services to customers. The Company agrees with the customer on consideration for the service to be provided. There is a single performance obligation, which is the Company's promise to perform the retrofit or to execute the agreed upon repair work on the vehicle. The entire transaction price is allocated to this single performance obligation. Service revenue is recognized when the repair work is completed, and the customer receives the vehicle.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *8*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

***Product Limited Warranty***

Consistent with industry practice, the Company generally offers customers a limited warranty for work performed on the vehicle under the build/sales contract. The customers do *not* have a contractual right of return. The Company only offers a limited warranty for the work performed on the vehicle under the contract. If a customer disputes any work performed, the Company will attempt to remedy the work, however, it shall *not* be required to discount the transaction price. The Company considered this an assurance-type warranty and *not* a separate performance obligation.

***Warranty Reserve***

The Company provides for the estimated cost of product warranties at the time revenue is recognized. While the Company engages in product quality programs and processes, including quality control test and driving vehicles, the warranty obligation is affected by historical warranty costs per vehicle. Should actual costs differ from the Company's estimates, revisions to increase or decrease the estimated warranty liability *may* be required.

***Other Revenue Policies***

Sales, value add, and other taxes collected on behalf of *third* parties are excluded from revenue.

Applying the practical expedient in ASC *606,* the Company does *not* assess whether a contract has a significant financing component if the expectation at contract inception is that the period between payment by the customer and the transfer of the promised products to the customer will be *one* year or less, which is the case with substantially all customers.

Applying the practical expedient in ASC *606,* the Company accounts for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. The Company records the related costs as part of the cost of goods sold.

***Disaggregation of Revenue***

The following table summarizes the Company's net revenues disaggregated by product category:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***Three Months Ended*** | ***Three Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** |
|  | ***September 30,*** | ***September 30,*** | ***September 30,*** | ***September 30,*** |
|  | ***2025*** | ***2024*** | ***2025*** | ***2024*** |
| Builds | $5529530 | $6363107 | $18848114 | $19609927 |
| Warranty and other | 253652 | 76942 | 372331 | 274286 |
| Total revenues, net | $5783182 | $6440049 | $19220445 | $19884213 |

---

*Deferred revenue, customer deposits and remaining performance obligation:*

---

| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Beginning balance, January 1 | $11802825 | $16190861 |
| Additional deposits received | 11802052 | 19476465 |
| Revenue recognized during the year at a point-in-time | (16711220) | (23864501) |
| Ending balance | $6893657 | $11802825 |

---

As of *September 30, 2025* and *December 31, 2024*, the Company had customer deposits in the amount of $6,893,657 and $8,130,324, respectively and deferred revenue of $0 and $3,672,501, respectively. The customer deposits and deferred revenue are typically recognized in revenue at a point in time within the next *twelve* months as the custom build vehicles are delivered and title has been transferred to customers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *9*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

***Accounts Receivable and Allowance for Credit Losses***

Accounts receivable are recorded at the original invoice amount less an allowance for uncollectible accounts that management believes will be adequate to absorb estimated losses on existing balances. Management estimates the allowance based on current expected credit losses and prior bad debt experience. Accounts receivable balances are written off against the allowance upon management's determination that such accounts are uncollectible. Recoveries of accounts receivable previously written off are recorded when received. Management believes that credit risks on accounts receivable will *not* be material to the financial position of the Company or results of operations. The Company had trade accounts receivable of $907,501 as of *September 30, 2025* and a recorded allowance for credit losses of $59,942, resulting in a net trade accounts receivable balance of $847,559. The Company had trade accounts receivable of $47,428 as of *December 31, 2024* and a recorded allowance for credit losses of $2,406, resulting in a net trade accounts receivable balance of $45,022.

As of *September 30, 2025*, amounts due from five customers exceeded *10%* of accounts receivable individually and totaled approximately 78% of accounts receivable in the aggregate. As of *December 31, 2024*, amounts due from one customer exceeded *10%* of accounts receivable individually and totaled approximately 84% of accounts receivable in the aggregate.

***Inventories***

Work in progress, work in progress – shipping and consumables, and work in progress – labor costs reported in inventories are carried at the lower of cost or net realizable value. Cost is determined on the basis of the direct and indirect costs that are directly attributable. The measurement of inventories is generally based on the weighted average method. Finished goods inventory is comprised of vehicles for which the build is completed but title has *not* been legally transferred, or in some cases, the vehicle has *not* been delivered. The measurement of finished goods inventories is the total cost of the materials, shipping and consumables, and labor attributed to the build of each specific completed vehicle. Overhead costs are allocated to inventory based on the rate of inventory turned for the period. As of *September 30, 2025* and *December 31, 2024*, inventory was $3,789,194 and $11,181,806, respectively. The Company periodically reviews inventories on hand and current market conditions to determine if the cost of work in progress and finished goods inventories exceed current market prices and impairs the cost basis of the inventory accordingly. Any associated impairment would be charged as a standalone expense on the condensed consolidated statements of operations. Obsolete inventory or inventory in excess of management's estimated usage requirement is written down to its net realizable value if those amounts are determined to be less than cost. Any associated write-downs or write-offs of inventory would be charged to cost of sales.

***Property and Equipment***

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the asset's estimated useful life of 5 to 15 years. Expenditures for maintenance and repairs are expensed as incurred. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition is reflected in earnings.

***Long-Lived Assets***

The Company follows a "primary asset" approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset *may not* be recoverable. The carrying amount of a long-lived asset is *not* recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of the assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. No impairments were recognized for the *three* and *nine* months ended *September 30, 2025* and *2024*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *10*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

***Income taxes***

The Company follows the asset and liability method of accounting for income taxes under ASC Topic *740,* Income Taxes ("ASC *740"*). Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company records deferred tax assets to the extent management believes that it is more likely than *not* that these assets will be realized in the future. Future realization of deferred income tax assets (meaning, items that *may* provide tax deductions in future periods) requires evidence that there will be sufficient taxable income in those future periods, or within any carryback periods available under tax law. The Company evaluates the realizability of its deferred tax assets on a quarterly basis. The majority of the Company's deferred tax assets are comprised of income tax carryforwards, including federal and state net operating loss carryforwards ("NOLs") and non-deductible interest expense carryforwards. At *September 30, 2025,* the Company has available NOLs for both federal and state income tax purposes of $13,994,808, and for foreign income tax purposes of $1,117,809, which *may* be used to offset future taxable income, subject to limitations. Some of these carryforwards are subject to annual usage limitations and expiration, while other state NOLs and a portion of federal NOLs do *not* expire.

While the Company remains in a financial reporting loss position based on a cumulative pre-tax loss for the *nine* months ended *September 30, 2025*, the determination of the valuation allowance is based on its evaluation of the periods over which future taxable items are expected to be utilized to offset tax loss and deduction carryforward items in those future periods. That is, future forecasts of our taxable income are *not* considered in the evaluation of realizability of its deferred tax assets. Therefore, changes in its deferred tax asset valuation allowances will primarily be affected by changes in the estimates of the time periods over which those future taxable items will occur.

ASC *740* prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than *not* to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. Management has evaluated the Company's tax positions, including its previous status as a pass-through entity for federal and state tax purposes, and has determined that the Company has taken *no* uncertain tax positions that require adjustment to the unaudited condensed consolidated financial statements. The Company's reserve related to uncertain tax positions was *zero* as of *September 30, 2025* and *December 31, 2024*. Management has evaluated the Company's tax positions, including its previous status as a pass-through entity for federal and state tax purposes, and has determined that the Company has taken *no* uncertain tax positions that require adjustment to the unaudited condensed consolidated financial statements. There were no unrecognized tax benefits and *no* amounts accrued for interest and penalties as of *September 30, 2025* and *December 31, 2024*. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The open tax years for the tax returns generally include 2021 through *2024* for state and federal reporting purposes.

***Foreign Currency Gains and Losses***

Foreign currency transaction gains and losses are included on determining net income (loss). The Company purchases certain materials and equipment from foreign companies and these transactions are generally denominated in the vendors' local currency. The Company recorded $12,355 and $21,184 of foreign currency transaction losses for the *three* and *nine* months ended *September 30, 2025* respectively. The Company recorded $1,534 and $12,054 of foreign currency transaction gains for the *three* and *nine* months ended *September 30, 2024,* respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *11*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

***Earnings (Loss) Per Share***

The Company accounts for net earnings (loss) per share in accordance with ASC subtopic *260, Earnings Per Share* ("ASC *260"*), which requires presentation of basic and diluted earnings per share ("EPS") on the face of the statement of operations for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS. Basic net earnings (loss) per share is computed by dividing net earnings (loss) by the weighted average number of shares of common stock outstanding during each period. It excludes the dilutive effects of any potentially issuable common shares. Diluted net earnings (loss) per share is calculated by including any potentially dilutive share issuances in the denominator.

***Leases***

The Company determines if an arrangement is a lease at inception. Operating lease right-of-use asset ("ROU asset") and short-term and long-term lease liability are included on the face of the unaudited condensed balance sheets.

ROU asset represents the right to use an underlying asset for the lease term and lease liability represents the Company's obligation to make lease payments arising from the lease. Operating lease ROU asset and liability are recognized at commencement date based on the present value of lease payments over the lease term. As the Company's lease does *not* provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date over the respective lease term in determining the present value of lease payments. The Company's lease terms *may* include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. For lease agreements with terms less than *12* months, the Company has elected the short-term lease measurement and recognition exemption, and it recognizes such lease payments on a straight-line basis over the lease term.

***Fair Value of Financial Instruments***

The Company calculates the fair value of its assets and liabilities which qualify as financial instruments and includes this additional information in the notes to the unaudited condensed consolidated financial statements when the fair value is different than the carrying value of these financial instruments. The estimated fair value of cash, accounts receivable, accounts payable and accrued expenses, and other payables approximate their carrying amounts due to the relatively short maturity of these instruments. The carrying value of lease liability also approximates fair value since the recognition of the instrument reflects a market rate of interest. *None* of these instruments are held for trading purposes.

***Fair Value Measurements***

Fair value is defined as the price that would be received for the sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. ASC *820, Fair Value Measurement* ("ASC *820"*) establishes a *three*-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level *1* measurements) and the lowest priority to unobservable inputs (Level *3* measurements). These tiers include:

● Level *1,* defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;

● Level *2,* defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are *not* active; and

● Level *3,* defined as unobservable inputs in which little or *no* market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which *one* or more significant inputs or significant value drivers are unobservable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *12*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.

***Warrants***

The Company determines the accounting classification of warrants it issues as either liability or equity classified by *first* assessing whether the warrants meet liability classification in accordance with ASC *480, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity* ("ASC *480"*), then in accordance with ASC *815, Derivatives and Hedging* ("ASC *815"*). Under ASC *480,* warrants are considered liability classified if the warrants are mandatorily redeemable, obligate the Company to settle the warrants or the underlying shares by paying cash or other assets, or warrants that must or *may* require settlement by issuing a variable number of shares. If warrants do *not* meet liability classification under ASC *480,* the Company assesses the requirements under ASC *815,* which states that contracts that require or *may* require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature. If the warrants do *not* require liability classification under ASC *815,* and in order to conclude equity classification, the Company also assesses whether the warrants are indexed to its Common Stock and whether the warrants are classified as equity under ASC *815* or other applicable GAAP. After all relevant assessments, the Company concludes whether the warrants are classified as liability or equity. Liability classified warrants require fair value accounting at issuance and subsequent to initial issuance with all changes in fair value after the issuance date recorded in the statements of operations. Equity classified warrants only require fair value accounting at issuance with *no* changes recognized subsequent to the issuance date.

***Convertible Notes Payable***

When the Company issues convertible debt, it *first* evaluates the balance sheet classification of the convertible instrument in its entirety to determine (*1*) whether the instrument should be classified as a liability under ASC *480,* and (*2*) whether the conversion feature should be accounted for separately from the host instrument. A conversion feature of a convertible debt instrument would be separated from the convertible instrument and classified as a derivative liability if the conversion feature, were it a standalone instrument, meets the definition of a "derivative" in ASC *815.* When a conversion feature meets the definition of an embedded derivative, it would be separated from the host instrument and classified as a derivative liability carried on the unaudited condensed consolidated balance sheet at fair value, with any changes in its fair value recognized currently in the unaudited condensed consolidated statements of operations. See Note *10* "Debt" for further information.

***Stock-based compensation***

The Company accounts for its stock-based compensation awards in accordance with ASC *718, Compensation-Stock Compensation* ("ASC *718"*). ASC *718* requires all stock-based payments to employees and non-employees including grants of stock options, to be recognized as expense in the statements of operations based on their grant date fair values.

The Company periodically issues common stock and common stock options to employees and consultants for various services.

***Redeemable Preferred Stock***

Accounting for convertible or redeemable equity instruments in the Company's own equity requires an evaluation of the hybrid security to determine if liability classification is required under ASC *480.* Liability classification is required for freestanding financial instruments that are *not* debt in legal form and are: (*1*) subject to an unconditional obligation requiring the issuer to redeem the instrument by transferring assets (i.e. mandatorily redeemable), (*2*) instruments other than equity shares that embody an obligation of the issuer to repurchase its equity shares, or (*3*) certain types of instruments that obligate the issuer to issue a variable number of equity shares. Securities that do *not* meet the scoping criteria to be classified as a liability under ASC *480* are subject to redeemable equity guidance, which prescribes securities that *may* be subject to redemption upon an event *not* solely within the control of the issuer to be classified outside permanent equity (i.e., classified in temporary equity). Securities classified in temporary equity are initially measured at the proceeds received, net of issuance costs and excluding the fair value of bifurcated embedded derivatives (if any). Subsequent measurement of the carrying value is *not* required unless the instrument is probable of becoming redeemable or is currently redeemable. When the instruments are currently redeemable or probable of becoming redeemable, the Company will recognize changes in the redemption value immediately as they occur and adjust the carrying value of the security to equal the then current maximum redemption value at the end of each reporting period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *13*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

***New Accounting Pronouncements***

*Recent Accounting Pronouncements*

In *December 2023,* the FASB issued ASU *2023*-*09,* "*Income Taxes (Topic *740*): Improvements to Income Tax Disclosures*," which requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. The standard will be effective for public companies for fiscal years beginning after *December 15, 2024.* Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its unaudited condensed consolidated financial statements.

In *November 2024,* the FASB issued ASU *2024*-*03,* "*Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic *220*-*40*): Disaggregation of Income Statement Expenses*" ("ASU *2024*-*03"*). The standard requires additional disclosure of certain costs and expenses within the notes to the financial statements. The provisions of the standard are effective for annual reporting periods beginning after *December 15, 2026,* and interim reporting periods beginning after *December 15, 2027,* with early adoption permitted. This accounting standards update *may* be applied either prospectively or retrospectively. The Company is currently evaluating the impact of this accounting standard update on its unaudited condensed consolidated financial statements.

All other new accounting pronouncements that have been issued, but *not* yet effective are currently being evaluated and at this time are *not* expected to have a material impact on our unaudited condensed consolidated financial statements.

**NOTE *4.* INVENTORIES**

Inventories consisted of the following:

---

| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Inventory – work in progress | $2836887 | $4480440 |
| Inventory – work in progress shipping and consumables | 141994 | 640675 |
| Inventory – work in progress labor | 250678 | 699087 |
| Resale inventory | 360000 | 931990 |
| Finished Goods |  | 3832907 |
| Overhead allocated to inventory | 199635 | 596707 |
|  | $3789194 | $11181806 |

---

**NOTE *5.* PREPAIDS AND OTHER CURRENT ASSETS**

Prepaid and other current assets consisted of the following:

---

| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Prepaid expenses | $458274 | $213914 |
| Prepaid legal fees | 914931 |  |
| Prepaid insurance | 457937 | 3970 |
| VAT receivable | 14130 | 21980 |
| Other receivable | 2668 |  |
|  | $1847940 | $239864 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *14*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

On *September 24, 2025,* the Company, entered into an agreement (the "Agreement") with Loeb & Loeb LLP ("Loeb"), its securities counsel, to secure and pay legal fees up to $2,090,000 owed to Loeb. Pursuant to the Agreement the Company issued and delivered to Loeb a common stock purchase warrant (the "Common Stock Purchase Warrant") to acquire 550,000 shares of the Company's common stock, par value $0.0001 per share (the "Warrant Shares") at an exercise price of $0.01 per share. Prepaid legal fees of $914,931 at *September 30, 2025* are the excess of the fair value of the Common Stock Purchase Warrant less the liability owed to Loeb at grant date. Future services provided by Loeb will be amortized against the prepayment as incurred. (See Note *14* Stockholders' Equity.)

**NOTE *6.* PROPERTY AND EQUIPMENT**

Property and equipment consisted of the following:

---

| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Computer equipment | $12740 | $12740 |
| Office furniture | 36163 | 36163 |
| Manufacturing equipment | 659974 | 659974 |
| Vehicles | 61360 | 61360 |
| Building improvements | 3092 | 3092 |
|  | 773329 | 773329 |
| Less: accumulated depreciation | (359678) | (289451) |
|  | $413651 | $483878 |

---

Depreciation expense related to the Company's property and equipment was $23,606 and $25,013 for the *three* months ended *September 30, 2025* and *2024*, respectively, and $70,227 and $98,612 for the *nine* months ended *September 30, 2025* and *2024*, respectively, which were included in the accompanying unaudited condensed consolidated statements of operations.

**NOTE *7.* LEASES**

On *August 11, 2021,* the Company entered into a lease agreement, whereby the Company agreed to lease office space in Kissimmee, Florida expiring *November 30, 2033.* The lease commencement date was *not* identified until *July 15, 2022* when the Company entered into the First Amendment to the original lease agreement, pursuant to which the commencement date would be *July 1, 2022.* The Company will owe monthly rental payments ranging from $6,512 to $50,039 over the term of the lease. The Company initially recorded right-to-use asset and lease liability of $3,889,565 using the Company's incremental borrowing rate of 6.3% at *December 31, 2022.*

The Company also has a five-year lease in the UK for office space expiring *December 16, 2026.* The Company will owe monthly rental payments ranging from $3,092 to $3,401 over the term of the lease. The Company initially recorded right-to-use asset and lease liability of $161,057 using the Company's incremental borrowing rate of 6.3% at *December 31, 2022.*

On *March 23, 2023,* the Company entered into a lease agreement, whereby the Company agreed to lease warehouse space in Kissimmee, Florida expiring *March 31, 2026.* The Company will owe monthly rental payments ranging from $5,844 to $6,171 over the term of the lease. The Company recorded right-to-use asset and lease liability of $196,796 using the Company's incremental borrowing rate of 6.3% at *December 31, 2022.*

Pursuant to the agreement with One Drivers Club on *November 14, 2024,* the Company is entitled to use a portion of the One Drivers Club facility in West Palm Beach, Florida for a base rent of $225,000 per annum, payable monthly, subject to 4% annual increases for each subsequent year, for a term of five years. The Company recorded right-to-use asset and lease liability of $1,071,869 using the Company's incremental borrowing rate of 5.18%. (See Note *15* - Commitments and Contingencies).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *15*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

The Company's commercial properties are subject to Common Area Maintenance ("CAM") charges, which represent the tenant's pro-rata share of the operating expenses incurred by the landlord in the operation of the buildings. These expenses include, but are *not* limited to, property taxes, insurance premiums, utilities for common areas, maintenance and service agreements and supplies and materials used in the operation and maintenance of the property, cost of repairs and enhancements to common areas, owner's association fees, and cost of capital improvements or modifications only if the capital improvements reduce operating costs. The Company's share of the CAM is paid by the Company as additional rent based on the landlord's written estimate of the CAM for the following year. Within *150* days following the end of each calendar year the landlord provides a statement to the Company reconciling the estimated CAM expenses for the year to the actual costs incurred. The Company does *not* include CAM charges in the calculation of their right-of-use assets or lease liabilities.

Quantitative information regarding the Company's leases is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***Three Months Ended*** | ***Three Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** |
|  | ***September 30,*** | ***September 30,*** | ***September 30,*** | ***September 30,*** |
|  | ***2025*** | ***2024*** | ***2025*** | ***2024*** |
| <u>Lease expenses</u> |  |  |  |  |
| Operating lease expenses | $353390 | $150278 | $653946 | $450834 |
| Variable and other lease costs | 5061 | 5021 | 13140 | 39748 |
| Total lease cost | $358451 | $155299 | $667086 | $490582 |

---

Cash paid for operating leases was $617,988 and $417,065 for the *nine* months ended *September 30, 2025*, and *2024*, respectively.

For operating lease assets and liabilities, the weighted average remaining lease term was *7.19* years and 8.59 years as of *September 30, 2025*, and *December 31, 2024*, respectively. The weighted average discount rate used in the valuation over the remaining lease terms was 6.3% as of *September 30, 2025*, and *December 31, 2024*, respectively.

Maturity analysis under the lease agreement is as follows:

---

| | |
|:---|:---|
|  | ***Total*** |
| 2025 (excluding nine months ended September 30, 2025) | $201940 |
| 2026 | 770500 |
| 2027 | 736489 |
| 2028 | 762823 |
| 2029 and beyond | 3006581 |
|  | 5478333 |
| Less: present value discount | (1086122) |
| Lease liability | $4392211 |

---

**NOTE *8.* ACCRUED EXPENSES**

Accrued expenses consisted of the following:

---

| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Accrued interest | $- | $578456 |
| Consulting and professional fees | 92448 | 37789 |
| Franchise tax | 28200 | 33176 |
| Warranty reserve | 627066 | 529129 |
| Accrued payroll | 225623 | 417977 |
| Accrued insurance | 323071 |  |
| Other | 37550 | 90071 |
|  | $1333958 | $1686598 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *16*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

Accrued interest at *December 31, 2024* of $578,456 relates primarily to interest on the *December 2023* Convertible Note and the *August 2024* Convertible Note. Pursuant to the *January 2025* SPA, the Lender agreed for the interest on the Convertible Notes to be added to the principal balance of the Convertible Note, see Note *10* - Debt.

**NOTE *9.* OTHER PAYABLES**

Other payables consisted of the following:

---

| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| PPG payable | $27642 | $61676 |
| Income tax payable | 715559 | 1115559 |
| Accrued board compensation | 100000 | 150000 |
| Other | 55874 | 36987 |
|  | $899075 | $1364222 |

---

**NOTE *10.* DEBT**

The table below summarizes the outstanding debt as of *September 30, 2025* and *December 31, 2024*:

---

| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Principal value of Convertible Notes <sup>(1)</sup> | $10311113 | $17836864 |
| Floor plan payable | 85000 | 353612 |
| Total | 10396113 | 18190476 |
| Debt discount and issuance costs, net of amortization (2) | (960253) | (3750932) |
| Less: current portion | (85000) | (353612) |
| Total debt - long term | $9350860 | $14085932 |

---

(*1*) Includes $6,569,277, $1,997,560, $879,965 and $864,311 of principal for the *December 2023, January 2025, June 2025* and *July 2025* Convertible Notes at *September 30, 2025,* respectively. Includes $16,644,699 and $1,192,165of principal for the *December 2023* and *August 2024* Convertible Notes at *December 31, 2024,* respectively.

(*2*) Includes $700,997, $114,684, $61,885 and $82,687 of debt discount and issuance costs for the *December 2023, January 2025, June 2025* and *July 2025* Convertible Notes at *September 30, 2025,* respectively. Includes $3,419,065 and $331,867of debt discount and issuance costs for the *December 2023* and *August 2024* Convertible Notes at *December 31, 2024,* respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *17*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

***Securities Purchase Agreement***

On *October 6, 2023* the Company entered into a Securities Purchase Agreement (the "SPA") with an institutional Lender (the "Lender") pursuant to which the Company issued to the Lender a senior secured convertible note (the *"December 2023* Convertible Note") in exchange for a loan in the principal amount of $15,819,209. The *December 2023* Convertible Note shall accrue interest at an annual rate equal to the Prime Interest rate plus 5% per annum which is payable quarterly in cash, or upon the Company's option, in securities of the Company provided certain conditions are met at the increased interest rate of the Prime Interest rate plus 8% per annum. The Company is required to pay a late charge of 12% per annum ("Late Charges") on any amount of principal or other amounts that are *not* paid when due. The *December 2023* Convertible Note is convertible into shares of the Company's common stock, par value $0.0001 per share at the option of the Lender at a conversion price of $400.00 per share, subject to a *one*-time downward adjustment on the effective date of the registration statement providing for the resale of the common stock issuable upon conversion of the *December 2023* Convertible Note to a conversion price equal to the prior *5*-day volume weighted average price, subject to a floor of $240.00. The conversion price is subject to a downward adjustment if the Company issues equity in the future at a price less than $400.00, except for equity issued in connection with certain strategic acquisitions. The conversion price is also subject to a downward adjustment if the Company fails to satisfy certain performance conditions set forth in the *December 2023* Convertible Note. Upon the Lender's conversion, the conversion amount shall be equal to 115% of the principal amount to be converted under the *December 2023* Convertible Note plus any accrued and unpaid interest and accrued and unpaid Late Charges on such principal and interest, if any (the "Conversion Rate"). Lender's ability to convert the *December 2023* Convertible Note into shares of common stock is subject to a 4.99% blocker, such that Lender cannot convert the *December 2023* Convertible Note into shares of common stock to the extent it will make the Lender a beneficial owner of more than 4.99% of the common stock. The Company has the option to prepay the *December 2023* Convertible Note, upon *thirty* (*30*) business days written notice, by paying the product of the 20% redemption premium multiplied by the greater of (i) the conversion amount to be redeemed and (ii) the product of (*x*) the Conversion Rate with respect to the conversion amount to be redeemed multiplied by (y) the greatest closing sale price of the Company's common stock on any trading day immediately preceding such notice of redemption and the date the Company makes the entire payment required.

The Company reviewed the conversion upon event of default feature under ASC *815* and determined that the conversion upon event of default feature is considered an embedded derivative that should be bifurcated from the host instrument requiring fair value accounting at issuance with all changes in fair value after the issuance date recorded in the unaudited condensed statement of operations (See Note *15*).

The *December 2023* Convertible Note has a maturity date of *December 12, 2026* and will rank senior to all outstanding and future indebtedness of the Company and its subsidiaries. The *December 2023* Convertible Notes are secured by a *first* priority perfected security interest in all the existing and future assets of the Company and its direct and indirect subsidiaries, including a pledge of all of the capital stock of each of the subsidiaries. The *December 2023* Convertible Note also provides that the Company and its subsidiaries execute a guaranty (the "Guaranty") to guarantee the obligations under the *December 2023* Convertible Note and the Security Agreement, that all insider stockholders of the common stock shall execute a lock-up agreement (the "Lock-Up Agreement") restricting their sale of the common stock until *six* months after the registration statement registering the shares of common stock underlying the *December 2023* Convertible Note is declared effective and a joinder agreement (the "Joinder Agreement") pursuant to which the Company and its Subsidiaries agree and consent to be parties to the Security Agreement.

On *August 9, 2024,* the Company entered into a SPA with the Lender pursuant to which the Company issued to the Lender a senior secured convertible note (the *"August 2024* Convertible Note") in exchange for a loan in the principal amount of $1,154,681. The *August 2024* Convertible Note has the same terms and conditions as the *December 2023* Convertible Note.

On *January 8, 2025,* the Company entered into a SPA (the *"January 2025* SPA") with the Lender pursuant to which the Lender agreed to waive the pre-existing events of default that occurred under the *August* Note and the Company Preferred Stock and the Company agreed to execute and deliver to the Lender a senior secured convertible note (the *"January 2025* Note"), in exchange for a loan in the principal amount of $1,724,100. The *January 2025* Convertible Note has the same terms and conditions as the *December 2023* Convertible Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *18*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

Certain events of default under the *December 2023* Convertible Note and the Series A Convertible Preferred Stock have occurred based on the following: the Company's failure to have its resale registration statement on Form S-*1* declared effective by the SEC within *sixty* (*60*) days of *December 12, 2023,* the financial statements of the Company's subsidiary for the years ended *December 31, 2022* and *2021* and the quarterly periods ended *March 31, 2023, June 30, 2023,* and *September 30, 2023* were required to be restated, the fact that the Company did *not* file its Annual Report on Form *10*-K for the year ended *December 31, 2023 (*the "Form *10*-K") within *two* (*2*) trading days of the filing due date of the Form *10*-K and the Company did *not* file its Quarterly Report on Form *10*-Q for the quarterly period ended *March 31, 2023 (*the "Form *10*-Q") within *two* (*2*) trading days of the filing due date of the Form *10*-Q. The *December 2023* Convertible Note and the Series A Convertible Preferred Stock each provide for certain remedies based upon the occurrence of an event of default. As a result of the default the Lender under the *December 2023* Convertible Note who is also the holder of the Series A Convertible Preferred Stock calculated default interest on the *December 2023* Convertible Note of an additional 8% of the principal balance outstanding for *seventeen* (*17*) days in *May 2024* and an additional 8% of the principal balance outstanding for *thirty* (*30*) days in *June 2024 (*the "Default Interest"). The total Default Interest calculated for the *three* months ended *June 30, 2024* was $165,233 in the aggregate. The Lender has agreed to treat the Default Interest as paid-in-kind interest ("PIK interest") and the accrued Default Interest was added to the principal balance of the Convertible note on *July 1, 2024.* In addition, under the terms of the *December 2023* Convertible Note and the *August 2024* Convertible Note, the Company has accrued default interest from the period from the date the Company failed to have its resale registration statement on Form S-*1* declared effective by the SEC in *February 2024* through *September 30, 2024,* excluding the period for which the Lender calculated the Default Interest, in the amount of $660,292 (the "Additional Default Interest"). Pursuant to the execution of the *August 2024* Convertible Note, the Lender agreed to waive the pre-existing events of default that occurred under the *December 2023* Convertible Note and as a result, the Company recognized a gain on forgiveness of payable of $319,900 in the unaudited condensed consolidated statements of operations for the *three* and *nine* months ended *September 30, 2024.*

On *June 5, 2025,* the Company entered into a SPA (the *"June 2025* SPA") with the Lender for a series of senior secured convertible note up to $21,972,275 and pursuant to which the Company executed and delivered to the Lender a senior secured convertible note, dated *June 5, 2025 (*the *"June 2025* Convertible Note"), in exchange for a loan in the original principal amount of $823,960. The *June 2025* Convertible Note has the same terms and conditions as the *December 2023* Convertible Note.

On *July 7, 2025,* the Company executed and delivered to the Lender a senior secured convertible note, dated *July 7, 2025 (*the *"July 2025* Convertible Note"), in exchange for a loan in the original principal amount of $823,960. The *July 2025* Convertible Note has the same terms and conditions as the *December 2023* Convertible Note.

During the *three* months ended *September 30, 2025*, the Lender converted *December 2023* Convertible Notes with principal amount of $2,050,000 and interest payable of $18,763 into 287,722 shares of Common Stock. During the *three* months ended *June 30, 2025,* the Lender converted *December 2023* Convertible Notes with principal amount of $250,000 and interest payable of $8,431into 29,079 shares of Common Stock

The *December 2023* Convertible Note includes an original issue discount of $2,119,209 and debt issuance costs of $3,088,883. The *August 2024* Convertible Note includes an original issue discount of $154,681 and debt issuance costs of $95,000. The *January 2025* Convertible Note includes an original issue discount of $154,681 and debt issuance costs of $35,000. The *June 2025* Convertible Note includes original issue discount of $73,960 and debt issuance costs of $15,000. The *July 2025* Convertible Note includes original issue discount of $73,960 and debt issuance costs of $25,000. For the *three* and *nine* months ended *September 30, 2025,* the Company recorded $1,884,966 and $2,980,444 of interest expense of the debt discount and debt issuance costs relating to the Convertible Notes, in the unaudited condensed consolidated statement of operations. As of *September 30, 2025* and *December 31, 2024*, accrued interest on the *December 2023* Convertible Note, the *August 2024* Convertible Note, the *January 2025* Convertible Note and the *June 2025* Convertible Note, including the Additional Default Interest, was $0 and $569,419, respectively, as included with accrued expenses on the accompanying unaudited condensed consolidated balance sheets. See Note *8.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *19*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

***Exchange Agreement***

On *May 14, 2025,* the Company entered into an Amendment and Exchange Agreement (the "Exchange Agreement") with the Lender pursuant to which the Company shall authorize *one* or more issuances of a new series B convertible preferred stock of the Company, $0.0001 par value (see Note *11*- Preferred Stock). The Exchange Agreement provides that the Holder shall have the option exchange some or all of the amounts outstanding under the *December 2023* Convertible Note, *August 2024* Convertible Note and/or the *January 2025* Convertible Note (collectively the "Convertible Notes"). At the initial closing the Lender has determined to convert $1,284,881, which is the principal amount plus all accrued interest due under the *August 2024* Convertible Note, into 100 shares of Series B Preferred Stock. See Note *12* - Preferred Stock for further discussion of the conversion.

***Exchange of Convertible Notes to Preferred Series C Equity***

In connection with the Second Exchange Agreement (as defined in Note *12* - Preferred Stock), on *August 4, 2025,* the Lender provided the Company with notice to exchange $10,000,000 of principal from the *December 2023* Convertible Note into 375 shares of Series C Preferred Stock (the *"August 4, 2025* Exchange Notice"), which is a partial exchange of the *December 2023* Convertible Note. On *August 7, 2025,* the Company issued to the Lender 375 shares of the Series C Preferred Stock.

***Floor Plan Payable***

On *May 15, 2024,* the Company entered into a loan agreement for up to $1.5 million ("Floor Plan Financing") with an institutional lender. The Floor Plan Financing represents financing arrangements to facilitate the Company's purchase of used and trade in vehicles. All Floor Plan Financing are collateralized by the inventory purchased. These payables become due when the Company sells the vehicle. The interest rate is prime rate plus 3%. Interest on outstanding floor plan payable balances are due and payable on the *15*<sup>th</sup> of each month. This loan was fully repaid in the *third* quarter of *2025.*

During *May* and *June 2025,* the Company entered into *three* loan agreements for $385,000 (*"2025* Floor Plan Financings", collectively with the Floor Plan Financing, the "Floor Plan Financings") with another institutional lender. The *2025* Floor Plan Financings represent financing arrangements to facilitate the Company's purchase of used and trade in vehicles. All *2025* Floor Plan Financings are collateralized by the inventory purchased. These payables become due when the Company sells the vehicle. The interest rate is 24.99%. Interest on outstanding *2025* Floor Plan Financings payable balances are due and payable monthly.

The outstanding balances on Floor Plan Financings as of *September 30, 2025* and *December 31, 2024*, was $85,000 and $1,212,000. Interest expense on the Floor Plan Financings for the *three* and *nine* months ended *September 30, 2025* was $29,603 and $60,925, respectively, and $27,058 and $37,859 for the *three* and *nine* months ended *September 30, 2024*, respectively.

***Business Loan and Security Agreement***

On *February 20, 2025,* the Company entered into a Business Loan and Security Agreement with Agile Lending, LLC (the "Lending Lender") pursuant to which the Company received a term loan from the Lending Lender in the principal amount of $1,575,000 (the "Agile Loan") which included an administrative agent fee of $75,000.

On *April 4, 2025,* the Company entered into a new business loan and security agreement with an effective date of *April 4, 2025 (*the "New Loan Agreement") by and among an investor (the "New Lender"), a collateral agent (the "Collateral Agent"), the Company and its subsidiary, Humble Imports Inc., pursuant to which the Company received a term loan from the New Lender in the principal amount of $1,824,300 (the "New Loan"). The New Loan agreement stipulates the Loan is to be repaid through *sixty-nine* (69) equal weekly payments of principal and interest in the aggregate amount of $35,693 per week commencing on *April 15, 2025* and ending *August 4, 2026 (*the "Term"). During the Term, the New Loan will accrue interest in the aggregate amount of $638,505 unless, in the event of default, the New Loan will accrue interest at a fixed per annum rate equal to the rate that is otherwise applicable plus 5% (the "Default Rate"). The New Loan included an administrative expense fee of $40,000 and a lender's legal fee of $35,000, which sum was netted out of the New Loan. The New Loan is secured by all properties, rights and assets of the Company.

The net proceeds of the New Loan were used to pay off the Agile Loan in the discounted amount of $1,749,300, including principal and interest. Accordingly, the Agile Loan is paid off and satisfied.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *20*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

***Third Amendment and Exchange Agreement***

On *July 7, 2025,* the Company and New Lender entered into the Third Amendment and Exchange Agreement (the "Third Exchange Agreement"). Pursuant to the Third Exchange Agreement, on *July 7, 2025,* the Lender converted the $2,462,805 outstanding under the New Loan Agreement into 125 shares of the Company's Series C Preferred Stock, and such shares of Common Stock issuable pursuant to the terms of the Series C Preferred Stock, including, without limitation, upon conversion or otherwise, in reliance on the exemption from registration provided by Section *3*(a)(*9*) of the Securities Act. See Note *12* for further discussion of the conversion.

The table below presents the disaggregation of interest expense for the *three* and *nine* months ended *September 30, 2025*:

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| | | |
|:---|:---|:---|
|  | ***Three months ended*** | ***Nine months ended*** |
|  | ***September 30,*** | ***September 30,*** |
|  | ***2025*** | ***2025*** |
| Contractual interest expense | $1169571 | $3926363 |
| Debt discount and issuance cost amortization | 1912893 | 3118428 |
| Total | $3082464 | $7044791 |

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**NOTE *11.* WARRANT LIABILITIES**

As part of the *December 2023* Convertible Note (see Note *10* - Debt), the Company issued warrants to Defender SPV, LLC where each whole warrant entitles the holder to purchase one share of the Company's common stock at an exercise price of $460.00 per share (the *"December 2023* Common Share Warrants"). Simultaneously on *December 12, 2023,* with the issuance of the Series A Preferred Stock, the Company issued warrants (the "Preferred Shares Warrants") where each warrant allows the holder to purchase one share of the Company's Series A Preferred Stock at $703.20 per share. The Preferred Shares Warrants expired on *June 12, 2025,* on the *18* month anniversary of the date of issue. As part of the *January 2025* SPA, the Company issued a warrant dated *January 13, 2025* to purchase 9,960 shares of the Company's common stock at an exercise price of *$460.00* per share (the "*January 2025* Common Share Warrants" and collectively, with the *December 2023* Common Share Warrants, the "Common Share Warrants").

The Common Share warrants expire on the *seventh* anniversary of the issuance date provided that (*x*) if the Holder fails to acquire at least $14 million in aggregate principal amount of Senior Secured Convertible Notes at or prior to the Business Combination Closing, or (y) if a Holder Optional Redemption occurs prior to the time of consummation of the Business Combination, the Common Share Warrant would automatically terminate and be null and void. At any time after the *tenth* (*10*<sup>th</sup>) Business Day prior to the Maturity Date, any Holder *may* require the Company to redeem (a "Maturity Redemption") all or any number of Preferred Shares held by such Holder at a purchase price equal to 100% of the Conversion Amount of such Preferred Shares.

The Common Share Warrants and the Preferred Share Warrants are recognized as derivative liabilities. Accordingly, the Company recognized the warrant instruments as liabilities at fair value as of the issuance date with the offsetting entry to debt discount. The carrying value of the instruments are adjusted to fair value through other income (expense) on the unaudited condensed consolidated statement of operations at each reporting period until they are exercised or expire. As of *September 30, 2025* and *December 31, 2024*, the fair value of the Common Share Warrants and the Preferred Share Warrants liabilities are presented within warrant liabilities on the consolidated balance sheet.

As of *September 30, 2025*, there were 37,249 Common Share Warrants and 0 Preferred Share Warrants outstanding. As of *December 31, 2024*, there were 27,289 Common Share Warrants and 396 Preferred Share Warrants outstanding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *21*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

**NOTE *12.* PREFERRED STOCK**

***Series B and C Convertible Preferred Stock***

At *September 30, 2025*, there were 0 shares of B Preferred Stock and 591 shares of Series C Preferred Stock issued and outstanding.

During the *nine* months ended *September 30, 2025,* 37 shares of Series C Preferred Stock were converted into 163,262 shares of Common Stock.

***Exchange Agreement***

On *May 14, 2025,* the Company entered into the Exchange Agreement with the Lender pursuant to which the Company shall authorize one or more series of a new series B convertible preferred stock of the Company, $0.0001 par value, the terms of which are set forth in a certificate of designation for such series of preferred stock designated as Series B-*1* Convertible Preferred Stock, $0.0001 par value (the "Series B Preferred Stock"), which Series B Preferred Stock shall be convertible into shares of Common Stock. The Exchange Agreement provides that the Holder shall have the option to exchange some or all of the amounts outstanding under the Convertible Notes. At the initial closing the Lender determined to convert $1,284,881, which is the principal amount plus all accrued interest due under the *August 2024* Convertible Note, into 100 shares of Series B Preferred Stock, and such shares of Common Stock issuable pursuant to the terms of the Series B Preferred Stock, including, without limitation, upon conversion or otherwise, in reliance on the exemption from registration provided by Section *3*(a)(*9*) of the Securities Act of *1933,* as amended (the "Securities Act").

In connection with the Amendment and Exchange Agreement, the Series B Preferred Stock shares were valued at $851,000 as of *May 14, 2025* as part of the conversion from notes payable to preferred stock. The fair value of the Series B Preferred Stock was estimated using a market approach based on the underlying common stock price as of the agreement date and accounted for as an extinguishment of debt. The following terms were used as part of the exchange: conversion rate of 575 common shares per preferred share, convertible at 115% of the stated value of $40,000 per preferred share. The gain on the conversion of fair value of the Series B Preferred Stock was $433,881 for the *nine* months ended *September 30, 2025*, and is reported with Other (income) expense in our unaudited condensed consolidated statements of operations.

***Second Exchange Agreement***

On *June 20, 2025,* the Company entered into a Second Amendment and Exchange Agreement (the "Second Exchange Agreement") with the Lender pursuant to which the Company shall authorize one or more series of a new series C convertible preferred stock of the Company, the terms of which are set forth in a certificate of designation for such series of preferred stock designated as Series C Preferred Stock, $0.0001 par value (the "Series C Preferred Stock"), which Series C Preferred Stock shall be convertible into shares of Common Stock. The Second Exchange Agreement provides that the Holder shall have the option to exchange (a) some or all of the amounts outstanding under the Convertible Notes, and (b) the 100 shares of Series B Preferred Stock. At the initial closing the Lender determined to convert the 100 shares of Series B Preferred Stock received in the Amendment and Exchange Agreement, into 100 shares of Series C Preferred Stock, and such shares of Common Stock issuable pursuant to the terms of the Series C Preferred Stock, including, without limitation, upon conversion or otherwise, in reliance on the exemption from registration provided by Section *3*(a)(*9*) of the Securities Act.

The Second Exchange Agreement provides further that the Lender *may* require the Company to participate in *one* or more additional exchanges to exchange the amounts outstanding under the remaining Convertible Notes into Series C Preferred Stock and such shares of Common Stock issuable pursuant to the terms of Series C Preferred Stock, including, without limitation, upon conversion of the shares of Series C Preferred Stock held by the Lender or otherwise, in reliance on the exemption from registration provided by Section *3*(a)(*9*) of the Securities Act.

***Third Exchange Agreement***

On *July 7, 2025,* the Company and Lender entered into the Third Amendment and Exchange Agreement (the "Third Exchange Agreement"). Pursuant to the Third Exchange Agreement, on *July 7, 2025,* the Lender converted the $2,462,805 under the Loan Agreement into 125 shares of the Company's Series C Preferred Stock, and such shares of Common Stock issuable pursuant to the terms of the Series C Preferred Stock, including, without limitation, upon conversion or otherwise, in reliance on the exemption from registration provided by Section *3*(a)(*9*) of the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *22*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

In connection with the Third Exchange Agreement, the Series C Preferred Stock shares were valued at $759,000 as of *July 7, 2025* as part of the conversion from notes payable to preferred stock. The fair value of the Series C Preferred Stock was estimated using a market approach based on the underlying common stock price as of the agreement date and accounted for as an extinguishment of debt. The following terms were used as part of the exchange: conversion rate of 575 common shares per preferred share, convertible at 115% of the stated value of $40,000 per preferred share. The gain on the conversion of fair value of the Series C Preferred Stock was $1,703,805 for the *three* months ended *September 30, 2025*, and is reported with Other (income) expense in our unaudited condensed consolidated statements of operations.

***Exchange of Convertible Notes to Preferred Series C Equity***

On *August 7, 2025,* the Lender exchanged $10,000,000 principal from the *December 2023* Convertible Note into *375* shares of Series C Preferred Stock.

As part of the conversion, the Series C Preferred Stock shares were valued at $1,224,750 as of *August 7, 2025.* The fair value of the Series C Preferred Stock was estimated using a market approach based on the underlying common stock price as of the agreement date and accounted for as an extinguishment of debt. The following terms were used as part of the exchange: conversion rate of 575 common shares per preferred share, conversion price of $80 and stated value of $1,000 per preferred share. The gain on the conversion of fair value of the Series C Preferred Stock was $8,775,250 for the *three* months ended *September 30, 2025*, and is reported with other (income) expense in our unaudited condensed consolidated statements of operations.

***Securities Purchase Agreement***

On *August 13, 2025,* the Company entered into a SPA by and between the Company and the Holder. Pursuant to the SPA the Holder purchased, and the Company sold 28 shares of the Company's Series C Convertible Preferred Stock, and the shares of Common Stock issuable pursuant to the terms of the Certificate of Designations, including, without limitation, upon conversion or otherwise of the Initial Preferred Shares, collectively, the "Initial Conversion Shares") for a discounted purchase price of $999,900 or approximately $36,000 for each $40,000 of Stated Value (as defined in the Certificate of Designations). This transaction incurred professional fees of $60,000.

The SPA provides further that the Holder *may* require the Company to participate in *one* or more Additional Closings for purchase by the Holder, and the sale by the Company, of up to the aggregate number of shares of Series C Preferred Stock, which aggregate number for all Buyers shall *not* exceed 625 shares of Series C Preferred Stock (collectively, the "Additional Preferred Shares", and together with the Initial Preferred Shares, the "Preferred Shares", and the shares of Common Stock issuable pursuant to the terms of the Certificate of Designations, including, without limitation, upon conversion or otherwise of the Additional Preferred Shares, collectively, the "Additional Conversion Shares", and together with the Initial Conversion Shares, the "Conversion Shares").

***Dividends***

Unless converted or redeemed, the holder of Series C Preferred Stock shall receive an annual dividend at a rate of 5% per annum payable in arrears on a quarterly basis commencing on *October 1, 2025 (*each a "Dividend Date"). Dividends shall be payable to each holder of Series C Preferred Stock by increasing the stated value of each such share of Series C Preferred Stock on a dollar-for-dollar basis, or at the option of the Company to pay such dividends in cash.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *23*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

***Conversion Rights***

At any time after issuance, the Series C Preferred Stock are convertible, in whole or in part, at the holder's option, into shares of the Company's common stock, par value $0.0001 per share at the conversion price of $80.00 per share (the "Conversion Price"), subject to proportional adjustment upon the occurrence of any stock split, stock dividend, stock combination and/or similar transactions. Upon the Lender's conversion of the Series C Preferred Stock, the shares underlying the Series B Preferred Stock shall be equal to the number of shares of Series C Preferred Stock to be converted at a 15% premium to the stated value thereof plus any accrued and unpaid dividends, and accrued and unpaid late charges on such dividends, if any (the "Conversion Rate").

Alternate Optional Conversion. From and after the occurrence of a triggering event, each holder *may* alternatively elect to convert the Series C Preferred Stock into shares of our Common Stock at the "Alternate Conversion Price", which is equal to the lowest of:

● The Conversion Price then in effect; and

● the greater of:

○ The floor price then in effect; and

○ 85% of the lowest volume weighted average price of our Common Stock during the *10* consecutive trading days immediately prior to the date on which we received written notice of such conversion from such holder.

The floor price is equal to $4.00. The conversion price is also subject to a downward adjustment if the Company fails to satisfy certain performance conditions set forth in the Second Exchange Agreement.

***Series A Preferred Stock***

At *September 30, 2025*, there were 375 shares of Series A Preferred Stock issued and outstanding. During the *nine* months ended *September 30, 2025,* 250 shares of Series A Preferred Stock were converted into 25,000 shares of Common Stock.

At *December 31, 2024*, there were 162 shares of Series A Preferred Stock issued and outstanding. On *August 30, 2024,* the holder of 463 shares of Series A Preferred Stock converted such shares for 46,250 shares of common stock. In *January 2025,* the conversion of such preferred shares was reversed by the Company's transfer agent and the holder was issued 463 shares of Series A Convertible Preferred Stock. The Series A Preferred Stock shall rank senior to all shares of Common Stock, and to all other classes or series of capital stock with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company.

***Dividend Rights***

From and after the *first* date of issuance of any initial shares of Series A Preferred Stock (the "Initial Issuance Date") and prior to the date of the initial exercise of the Preferred Warrants (the "Initial Preferred Warrant Exercise Date"), unless a triggering event has occurred and is continuing, holders of Series A Convertible Preferred Stock shall *not* be entitled to dividends. From and after the Initial Preferred Warrant Exercise Date, dividends on the Series A Convertible Preferred Stock shall commence accruing and shall be computed on the basis of a *360*-day year and *twelve 30*-day months and shall be payable in arrears for on the *first* trading day of each fiscal quarter (each, an "Dividend Date"). Dividends shall be payable on each Dividend Date, to each record holder of Series A Convertible Preferred Stock on the applicable Dividend Date, in shares of Common Stock ("Dividend Shares") so long as there has been *no* Equity Conditions Failure; provided however, that the Company *may,* at its option following notice to each holder, pay dividend on any Dividend Date in cash ("Cash Dividend") or in a combination of Cash Dividend and Dividend Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *24*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

***Liquidation Preference***

In the event of a liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the stockholders of Series A Preferred Stock shall be entitled to receive in cash out of the assets of the Company, whether from capital or from earnings available for distribution to its stockholders (the "Liquidation Funds"), before any amount shall be paid to the holders of any of shares of junior stock, but pari passu with any parity stock then outstanding, an amount per share of Series A Preferred Stock equal to the sum of (i) the Black Scholes Value (as defined in the Common Warrants) with respect to the outstanding portion of all Common Warrants held by such holder (without regard to any limitations on the exercise thereof) as of the date of such event and (ii) the greater of (A) *125%* of the Conversion Amount (as defined below) of such Series A Convertible Preferred Stock on the date of such payment and (B) the amount per share such holder would receive if such holder converted such Series A Preferred Stock into Common Stock immediately prior to the date of such payment, provided that if the Liquidation Funds are insufficient to pay the full amount due to the holders and holders of shares of parity stock, then each holder and each holder of parity stock shall receive a percentage of the Liquidation Funds equal to the full amount of Liquidation Funds payable to such holder and such holder of parity stock as a liquidation preference, in accordance with their respective certificate of designations (or equivalent), as a percentage of the full amount of Liquidation Funds payable to all holders of Series A Convertible Preferred Stock and all holders of shares of parity stock.

***Conversion and Redemption Rights***

At any time after the Business Combination, each stockholder shall be entitled to convert any portion of the outstanding Series A Preferred Stock held by such stockholder into validly issued, fully paid and non-assessable shares of Common Stock. The number of shares of Common Stock issuable upon conversion of any Series A Convertible Preferred Stock shall be determined by dividing (i) the Conversion Amount (as defined in the Certificate of Designation) of such Series A Preferred Stock by (y) $10.00 (subject to adjustments). A stockholder's ability to convert Series A Preferred Stock into shares of Common Stock is subject to a 4.99% blocker, such that a stockholder cannot convert Series A Preferred Stock into shares of Common Stock to the extent it will make the stockholder a beneficial owner of more than 4.99% of the Common Stock.

The stockholders of Series A Preferred Stock have redemption rights upon the occurrence of a Triggering Event (as defined in the Certificate of Designation). The Company has the right to redeem all or any part of Series A Convertible Preferred Stock then outstanding.

***Voting and Other Preferred Rights***

Holders of Preferred Stock shall have *no* voting rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *25*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

**NOTE *13.* Earnings Per Share**

The following table is the basic and diluted earnings (loss) per share computation.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | ***Three Months Ended*** | ***Three Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** |
|  | ***September 30,*** | ***September 30,*** | ***September 30,*** | ***September 30,*** |
|  | ***2025*** | ***2024*** | ***2025*** | ***2024*** |
| Numerator: |  |  |  |  |
| Net income (loss) for basic earnings per share | $2232855 | $(2569518) | $(4787756) | $(7458875) |
| **Adjustments to net income (loss) available to shareholders** |  |  |  |  |
| Interest expense | 958957 |  |  |  |
| Adjusted net income (loss) for diluted earnings per share | $3191812 | $(2569518) | $(4787756) | $(7458875) |
| Denominator: |  |  |  |  |
| Weighted average shares used to compute basic EPS | 1433042 | 847560 | 1084761 | 814917 |
| Dilutive effect of: |  |  |  |  |
| Convertible debt | 3637255 |  |  |  |
| Series A Preferred Stock | 37500 |  |  |  |
| Series C Preferred Stock | 214932 |  |  |  |
| Weighted average shares used to compute diluted EPS | 5322729 | 847560 | 1084761 | 814917 |
| Basic earnings (loss) per share | $1.56 | $(3.03) | $(4.41) | $(9.15) |
| Diluted earnings (loss) per share | $0.60 | $(3.03) | $(4.41) | $(9.15) |
| ***Anti-dilutive securities excluded from shares outstanding:*** |  |  |  |  |
| Convertible debt |  | 489203 | 3637255 | 489203 |
| Warrants | 331187 | 339036 | 331187 | 339036 |
| Series A Preferred Stock |  | 16200 | 37500 | 16200 |
| Series C Preferred Stock |  |  | 214932 |  |
| Total | 331187 | 844439 | 4220874 | 844439 |

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**NOTE *14.* STOCKHOLDERS**' **EQUITY**

***Reverse Stock Split***

On *July 22, 2025,* the Board approved a *1*-for-40 reverse stock split of the Company's Common Stock (the "Reverse Stock Split"), which was effected *September 18, 2025.* The Reverse Stock Split is intended to increase the per share trading price of ECD's common stock to satisfy the *$1.00* minimum bid price requirement for continued listing on The Nasdaq Capital Market ("Nasdaq") (Rule *550*(a)(*1*)). As a result of the Reverse Stock Split, every forty pre-split shares of common stock outstanding was automatically reclassified and combined into *one* share of common stock. The Reverse Stock Split has been applied retrospectively to all share and per share numbers in the unaudited consolidated financial statements for all periods presented, including number of shares outstanding, weighted average shares used in computing basic and diluted earnings (loss) per share, share-based payment awards (number of shares and exercise prices), and conversion of preferred or other convertible securities. There was *no* change to the dollar amounts of common stock, additional paid-in capital, retained earnings, or other equity accounts, except as required for share counts. The Company's Common Stock was rounded up by 62,364 shares in respect of fractional shares resulting from the Reverse Stock Split.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *26*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

***Common stock***

During the *three* months ended *September 30, 2025*, the Lender converted *December 2023* Convertible Notes with principal amount of $2,050,000 and interest payable of $18,763 into 287,722 shares of Common Stock. During the *three* months ended *June 30, 2025,* the Lender converted *December 2023* Convertible Notes with principal amount of $250,000 and interest payable of $8,431into 29,079 shares of Common Stock.

During the *nine* months ended *September 30, 2025,* 250 Series A Preferred Stock were converted into 25,000 shares of Common Stock. During the *nine* months ended *September 30, 2025,* 37 Series C Preferred Stock were converted into 163,262 shares of Common Stock.

On *February 21, 2025,* pursuant to the Advisor consulting agreement, as defined below, the Company issued 5,900 shares of common stock.

On *January 13, 2025,* pursuant to the *January 2025* SPA, the Company issued 12,500 shares of common stock.

***Warrants***

On *September 24, 2025,* the Company, entered into an agreement (the "Agreement") with Loeb, its securities counsel, to secure and pay legal fees to Loeb of up to $2,090,000 (the "Fees"). Pursuant to the Agreement the Company issued and delivered to Loeb a Common Stock Purchase Warrant to acquire 550,000 shares of the Company's common stock, par value $0.0001 per share (the "Warrant Shares") at an exercise price of $0.01 per share. The number of warrants was calculated based upon the price of $3.80, which was the closing price of the Company's common stock on *September 23, 2025.* Pursuant to the Agreement, the Fees shall be reduced dollar for dollar by the net proceeds Loeb realizes from the sale of the Warrant Shares. The Common Stock Purchase Warrants are exercisable for a period of three years and the Company provided Loeb will certain registration rights with respect to the Warrant Shares. The Common Stock Purchase Warrant provides that the Company shall *not* effect any exercise and Loeb shall *not* have the right to exercise any portion of this Common Stock Purchase Warrant, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, Loeb (together with the Loeb's Affiliates, and any other Persons acting as a group together with the Loeb or any of the Loeb's Affiliates), would beneficially own in excess of 4.99%.

Under ASC *718*-*10* Compensation - Stock Compensation and ASC *505*-*50* Equity Based Payments to Non-employees, equity instruments issued to non-employees for services are measured at grant-date fair value and classified as equity if they are indexed to the Company's own stock and settled in shares. The Common Stock Purchase Warrant was measured on *September 24, 2025* at a fair value of $2,156,583 using a Black-Scholes option pricing model using the following assumptions: stock price of $3.93, exercise price of $0.01, expected term of 3 years, risk-free rate of 3.59%, dividend yield of 0% and volatility of 108%. The difference of $66,583 between the fair value at grant date and the total service value of $2,090,000 was recognized as legal expense in the unaudited consolidated condensed income statements for the *three* and *nine* months ended *September, 2025.*

As part of the Company's initial public offering ("IPO"), warrants were issued to *third*-party investors where each whole warrant entitles the holder to purchase one share of the Company's common stock at an exercise price of $460.00 per share (the "Public Warrants"). Simultaneously with the closing of the IPO, a private sale of warrants was completed where each warrant allows the holder to purchase one share of the Company's common stock at $460.00 per share.

As of *September 30, 2025* and *December 31, 2024*, there were 287,500 Public Warrants and 6,438 Private Warrants outstanding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *27*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

The Public Warrants and the Private Warrants expire on *December 12, 2026* or earlier upon redemption or liquidation and became exercisable, on the filing of the effective registration statement under the Securities Act, on *November 4, 2025,* covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement) and registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder.

The Public Warrants are exercisable effective *November 4, 2025.* The Company *may* redeem the outstanding Public Warrants:

● in whole and *not* in part;

● at a price of $0.40 per warrant;

● upon *not* less than *30* days' prior written notice of redemption to each warrant holder; and

● if, and only if, the last reported sale price of the Class A ordinary shares for any *20* trading days within a *30*-trading day period ending *three* business days before the Company sends the notice of redemption to the warrant holders (the "Reference Value") equals or exceeds $18.00 per share.

The Company accounts for the 293,938 warrants issued in connection with the IPO in accordance with the guidance contained in ASC *815.* Such guidance provides that the warrants described above are *not* precluded from equity classification. Equity-classified contracts are initially measured at fair value (or allocated value). Subsequent changes in fair value are *not* recognized as long as the contracts continue to be classified in equity.

In connection with the *December 2023* Convertible Note the Company issued 27,289 common share warrants and 396 preferred share warrants, in connection with the *August 2024* Convertible Note the Company issued 1,992 common share warrants and in connection with the *January 2025* Convertible Note the Company issued 9,960 common share warrants to ATW (the "ATW warrants"). The ATW warrants expire on the *seventh* anniversary of the issuance date and are exercisable on any day after the initial date on which either (i) the shares of Common Stock are registered under the *1934* Act or (ii) any publicly traded common equity (or equivalent security) of anfy Successor Entity are issued in exchange for the Common Stock in the applicable Business Combination or other similar transaction (the "Public Company Date"). The Company accounts for the ATW warrants as a liability and the warrants are measured at fair value with subsequent changes in fair value recorded in earnings in accordance with the guidance contained in ASC *815.*

On *August 8, 2024,* the Company entered into a subscription agreement with Second Investor pursuant to which the Company issued 2,500 warrants (the "Duncan Warrants"). The Duncan Warrants have a termination date of *August 8, 2026,* and are exercisable at any time on or after the issue date. The Company accounts for the Duncan Warrants in accordance with the guidance contained in ASC *815.* Such guidance provides that the warrants are *not* precluded from equity classification. Equity-classified contracts are initially measured at fair value (or allocated value). Subsequent changes in fair value are *not* recognized as long as the contracts continue to be classified in equity.

***Share-based Compensation***

The Company has adopted the Equity Incentive Plan, which plan was approved by stockholders at the Special Meeting. The purposes of the Plan is to promote the interests of the Company and the stockholders of Company by providing (i) executive officers and other employees of the Company and its Subsidiaries (as defined below), (ii) certain consultants and advisors who perform services for the Company and its Subsidiaries and (iii) non-employee members of the Board with appropriate incentives and rewards to encourage them to enter into and continue in the employ and service of the Company and to acquire a proprietary interest in the long-term success of the Company, as well as to reward the performance of these individuals in fulfilling their personal responsibilities for long-range and annual achievements. Eligible individuals under the Plan *may* receive awards of Options, Stock Appreciation Rights, Restricted Stock or Restricted Stock Units, Performance Awards and Other Stock-Based Awards.

The maximum number of shares reserved for the grant of awards under the Plan shall be 375,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *28*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

The authority to manage the operation of and administer the Plan shall be vested in a committee (the "Committee"), which shall have all the powers vested in it by the terms of the Plan, including exclusive authority to select the participants to the Plan; to make awards; to determine the type, size, terms and timing of the awards (which need *not* be uniform); to accelerate the vesting of awards granted pursuant to the Plan, including upon the occurrence of a change of control of the Company; to prescribe the form of the award agreement; to modify, amend or adjust the terms and conditions of any award; to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable; to interpret the terms and provisions of the Plan and any award issued pursuant to the Plan. The Committee shall be selected by the Board of Directors and shall consist solely of non-employee directors within the meaning of Rule *16b*-*3* that are outside directors within the meaning of Code Section *162*(m).

Grants *may* be made under the Plan through the *tenth* (*10th*) anniversary of the date it is adopted by the Board and approved by the Committee. Awards outstanding as of the date of termination of the Plan shall *not* be affected or impaired by the termination of the Plan.

During the *three* months ended *September 30, 2025,* 187,500 shares were granted under the Equity Incentive Plan of which 50% vested immediately and the other 50% will vest over 3 years from *October 1, 2025.*

Each of its *four* non-employee directors received a *one*-time grant of stock options to purchase up to 375 shares of Common Stock, exercisable at a purchase price which shall be equal to 110% of the price per share of the Common Stock at the Closing Date. In addition, in the *first* quarter of *2024* the Company entered into a consulting agreement whereby it issued 2,500 fully paid up non-forfeitable shares of restricted common stock. The shares were issued in the *three* months ended *June 30, 2024.* All shares of Company restricted common stock will be subject to a *12*-month lock-up period from the time of issuance.

In *February 2024,* the Company entered into a *one*-year consulting agreement (the "Agreement") with an investor relations firm for the purposes of developing, implementing and maintaining an ongoing stock market support system for the Company with the general objective of expanding awareness in the Company. In connection with this agreement, the Company has committed to pay $14,500 per month for the *first four* months of service and $12,500 per month thereafter. The Company also issued 2,500 shares of restricted common stock on *May 9, 2024.* All shares of Company restricted Company common stock will be subject to a *12*-month lock up from the time of issuance.

In *January 2025,* pursuant to the employment agreement for the Company's prior Chief Financial Officer the Company recognized stock-based compensation for 2,500 shares of the Company's common stock, valued at the market price of the Company's common stock on *January 2, 2025* of $37.60 per share, or $94,000. The share-based compensation is recorded in general and administrative expenses and in additional paid-in-capital in the accompanying unaudited condensed consolidated statements of changes in stockholders' deficit.

In *February 2025,* the Company entered into a *thirteen* month consulting agreement (the "Second Agreement") with an advisory firm (the "Advisors") for business advisory services. In connection with this agreement, the Company recognized stock-based compensation and issued 5,900 shares of the Company's common stock, valued at the market price of the Company's common stock on *February 25, 2025* of $35.56 per share, or $212,164.

In *March 2025,* the Company entered into a *one* month consulting agreement (the "Third Agreement") with the Advisors for business advisory services. In connection with this agreement, the Company recognized stock-based compensation for 3,750 shares of the Company's common stock, valued at the market price of the Company's common stock on *March 28, 2025* of $23.48 per share, or $88,050. The share-based compensation is recorded in general and administrative expenses and in additional paid-in-capital in the accompanying unaudited condensed consolidated statements of changes in stockholders' deficit. These shares were issued in *May 2025.*

On *March 31, 2025,* the Company entered into an amended consulting agreement. Pursuant to the terms of the amendment, the Company issued 12,500 bonus shares of Company common stock to replace cash payments for the consulting fees in the aggregate of $30,000 for the months of *January* through *March 2025* and a $250,000 cash bonus, for a total value of $293,500. The cash bonus and the share-based compensation is recorded in general and administrative expenses and in addition paid-in-capital in the accompanying unaudited condensed consolidated statements of changes in stockholders' deficit. These shares were issued in *May 2025.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *29*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

Pursuant to the compensation plan for the Company's non-employee directors, the non-employee directors will receive a payment of $12,500 per each quarterly meeting. For the *nine* months ended *September 30, 2025* and *2024*, the Company recognized $75,000 and $100,000, respectively, of stock-based compensation. The accrued stock issuance is presented as a share issuance liability in the accompanying unaudited condensed consolidated balance sheet. The Company issued 3,750 shares of common stock related to the *2024* non-employee directors' compensation in *May 2025.*

***Agreement with One Drivers Club***

On *November 14, 2024,* ECD entered into a Strategic Partnership Agreement (the "ODC Agreement") and a Usage Agreement (the "Usage Agreement") with ODC to launch ECD's *first* retail showroom in West Palm Beach, Florida. As part of the Usage Agreement, the Company has agreed that ODC, at the Company's expense, shall complete the interior build-out ("Build-Out") of the ODC Premises in accordance with the plans and subject to the terms set forth in the Usage Agreement. Upon the completion of the demolition of the ODC premises in connection the Build-Out, the Company issued One Drivers Club 18,125 unrestricted shares of ECD capital stock (the "ODC Shares") in the *second* quarter of *2025.* (See Note *14* - Commitments and Contingencies).

***The Equity Purchase Facility Agreement***

On *June 20, 2025,* the Company and an unrelated *third* party accredited investor (the "Investor") entered into an equity purchase facility agreement (the "EPFA"). Pursuant to the EPFA, the Company has the right to issue and sell to the Investor, from time to time as provided therein, and the Investor must purchase from the Company, up to an aggregate of $500 million (the "Commitment Amount") in newly issued shares (the "Advance Shares") of the Company's common stock, par value $0.0001 per share (the "Common Stock"), subject to the satisfaction or waiver of certain conditions.

**NOTE *15.* COMMITMENTS AND CONTINGENCIES**

From time to time in the ordinary course of business, the Company *may* be subject to various claims, charges, and litigation. At *September 30, 2025*, the Company did *not* have any pending claims, charges or litigation that were expected to have a material adverse impact on its financial position, results of operations or cash flows.

***Agreement with One Drivers Club***

On *November 14, 2024,* the Company entered into the ODC Agreement and a Usage Agreement with One Drivers Club to launch ECD's *first* retail showroom. One Drivers Club is the premier destination for automotive enthusiasts who view their vehicles as *not* just machines, but drivers of their lifestyles. With facilities located in Bedford, NY, Chicago, IL, West Palm Beach, FL, and Seattle WA, One Drivers Club redefines luxury car care through unparalleled concierge storage and full-service collection management. Beyond exceptional car care, One Drivers Club is a community-a place where like-minded drivers connect over shared passions and Members celebrate the art and prestige of driving, collecting, and owning remarkable vehicles. The ODC Agreement, entitles the Company to use a portion of One Drivers Club's facility in West Palm Beach, Florida (the "ODC Premises") for the operation of an ECD showroom for ECD vehicles and sale of ECD vehicles, subject to the terms of the Usage Agreement. Pursuant to the ODC Agreement, One Drivers Club grants to the Company a non-exclusive, royalty-free, fully paid up, non-transferable and terminable right and license to use the marks designated by One Drivers Club, and the Company grants to One Drivers Club, a non-exclusive, royalty-free, fully paid up, non-transferable and terminable right and license to use the marks designated by ECD, for the limited purpose of the operation of the ECD showroom and for the limited purpose of the operation of the ECD showroom and advertisement of ECD and the ECD Automobiles.

Pursuant to the Usage Agreement and amendment dated *May 7, 2025, (*i) the Company shall pay One Drivers Club base rent of $225,000 per annum payable monthly, subject to 4% annual increases for each subsequent year for use of the ODC Premises; (ii) for a term of *five* (5) years; (iii) One Drivers Club, at the Company's cost and expense, shall complete the interior build-out ("Build-Out") of the ODC Premises in accordance with the plans and subject to the terms set forth in the Usage Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *30*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

***Relationship with Ten Easy Street***

On *December 12, 2024,* ECD signed a contract with Ten Easy Street of Nantucket ("TES"), a concept showroom, showhouse and gathering space, to expand ECD's retail presence and showcase its *one*-of-*one* vehicles as part of their curated creative lifestyle brands, furnishings and social opportunities.

TES has agreed to showcase the Company's custom vehicles in the designated parking spots located at TES from *April 1, 2025* to *December 31, 2025 (*the "Showcase Term"). The Company will pay TES $75,000 for the Showcase Term. TES will also promote the Company's vehicles on all marketing channels during the Showcase Term and the Company will provide TES with an affiliate link that corresponds to the vehicles shown on TES's platform. TES will receive $5,000 for all sales made through the affiliate link.

**NOTE *16.* Employee Benefit Plan**

The Company offers a *401*(k) plan which permits eligible employees to contribute portions of their compensation to an investment trust. The Company makes contributions to the plan totaling 3% of employees' gross salaries and such contributions vest immediately. The *401*(k) plan provides several investment options, for which the employee has sole investment discretion. The Company's cost for the *401*(k) plan was $59,112 and $170,352 for the *three* and *nine* months ended *September 30, 2025,* respectively. The Company's cost for the *401*(k) plan was $53,842 and $140,991 for the *three* and *nine* months ended *September 30, 2024,* respectively.

**NOTE *17.* FAIR VALUE MEASUREMENTS**

The Company accounts for certain assets and liabilities at fair value and classifies these assets and liabilities within the fair value hierarchy (Level *1,* Level *2,* or Level *3*).

Assets and liabilities subject to fair value measurements are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***As of September 30, 2025*** | ***As of September 30, 2025*** | ***As of September 30, 2025*** | ***As of September 30, 2025*** |
|  | ***Level 1*** | ***Level 2*** | ***Level 3*** | ***Total*** |
| Liabilities |  |  |  |  |
| Warrant liabilities – Common Share Warrants | $- | $- | $28224 | $28224 |
| Derivative Liability |  |  | 18 | 18 |
| Total liabilities | $**-** | $**-** | $**28242** | $**28242** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Liabilities |  |  |  |  |
| Warrant liabilities – Common Share Warrants | $- | $- | $486495 | $486495 |
| Warrant liabilities – Preferred Share Warrants |  |  | 64 | 64 |
| Derivative Liability |  |  | 313191 | 313191 |
| Total liabilities | $**-** | $**-** | $**799750** | $**799750** |

---

The Common Share Warrants and the Preferred Share Warrants were valued using a Black-Scholes option pricing model utilizing assumptions related to the contractual terms of the instruments, estimated volatility of the price of the Common Stock and current interest rates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *31*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

The following table provides quantitative information regarding Level *3* fair value measurements for Common Share Warrants as of *September 30, 2025*:

---

| | | |
|:---|:---|:---|
|  | ***December 2023*** | ***January 2025*** |
|  | ***Common Share*** | ***Common Share*** |
|  | ***Warrants*** | ***Warrants*** |
|  | ***September 30,*** | ***September 30,*** |
|  | ***2025*** | ***2025*** |
| Exercise price | $460.00 | $460.00 |
| Share price | $3.85 | $3.85 |
| Volatility | 108.67% | 108.67% |
| Expected life | 5.20 | 6.28 |
| Risk-free rate | 3.68% | 3.68% |
| Dividend yield |  |  |

---

The following table provides quantitative information regarding Level *3* fair value measurements for initial value of the Common Share Warrants as of *January 13, 2025.*

---

| | |
|:---|:---|
|  | ***Common*** |
|  | ***Share*** |
|  | ***Warrants*** |
|  | ***January 13, 2025*** |
| Exercise price | $460.00 |
| Share price | $39.60 |
| Volatility | 106.26% |
| Expected life | 1.91 |
| Risk-free rate | 2.06% |
| Dividend yield |  |

---

The following table presents a summary of the changes in the fair value of the Private Warrants and Representative's Warrants, a Level *3* liability, measured on a recurring basis.

---

| | | | |
|:---|:---|:---|:---|
|  | ***Common*** | ***Preferred*** |  |
|  | ***Share*** | ***Share*** | ***Warrant*** |
|  | ***Warrants*** | ***Warrants*** | ***Liability*** |
| Fair value as of December 31, 2024 | $486495 | $64 | $486559 |
| Initial Measurement, January 13, 2025 | 33357 |  | 33357 |
| Change in fair value | (491628) | (64) | (491692) |
| Fair value as of September 30, 2025 | $28224 | $- | $28224 |

---

The conversion upon the event of default derivative liability of the Convertible Promissory Note was valued using a Black Scholes option pricing model terms related to the terms of the Convertible Promissory Note (see Note *10*), estimated volatility of the price of the Common Stock and current interest rates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *32*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

The following table provides quantitative information regarding Level *3* fair value measurements for the conversion upon the event of default derivative liability as of *September 30, 2025*:

---

| | |
|:---|:---|
|  | ***September 30,*** |
|  | ***2025*** |
| Exercise price | $400.00 |
| Share price | $3.85 |
| Volatility | 108.67% |
| Expected life | 1.20 |
| Risk-free rate | 3.68% |
| Dividend yield |  |

---

The following table presents a summary of the changes in the fair value of the conversion upon the event of default derivative liability, a Level *3* liability, measured on a recurring basis.

---

| | |
|:---|:---|
|  | ***Derivative*** |
|  | ***liability*** |
| Fair value as of December 31, 2024 | $313191 |
| Initial measurement, January 13, 2025 | 49017 |
| Change in fair value | (362191) |
| Fair value as of September 30, 2025 | $17 |

---

**NOTE *18.* RELATED PARTY TRANSACTIONS**

**Related Party Policy**

ECD's Code of Ethics requires it to avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of interests, except under guidelines approved by the Board (or the audit committee). The Code of Ethics defines related party transactions as transactions in which (i) the aggregate amount involved will or *may* be expected to exceed $120,000 in any calendar year, (ii) ECD or any of ECD's subsidiaries is a participant, and (iii) any (A) executive officer, director or nominee for election as a director, (B) greater than 5% beneficial owner of shares of Common Stock, or (C) immediate family member, of the persons referred to in clauses (A) and (B), has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). A conflict of interest situation can arise when a person takes actions or has interests that *may* make it difficult to perform his or her work objectively and effectively. Conflicts of interest *may* also arise if a person, or a member of his or her family, receives improper personal benefits as a result of his or her position.

ECD's audit committee, pursuant to its written charter, is responsible for reviewing and approving related party transactions to the extent that ECD enters into such transactions. All ongoing and future transactions between ECD and any of ECD's officers and directors or their respective affiliates will be on terms believed by ECD to be *no* less favorable to ECD than are available from unaffiliated *third* parties. Such transactions will require prior approval by ECD's audit committee and a majority of ECD's uninterested "independent" directors, or the members of the Board who do *not* have an interest in the transaction, in either case who had access, at ECD's expense, to ECD's attorneys or independent legal counsel. We will *not* enter into any such transaction unless ECD's audit committee and a majority of ECD's disinterested "independent" directors determine that the terms of such transaction are *no* less favorable to ECD than those that would be available to ECD with respect to such a transaction from unaffiliated *third* parties. Additionally, ECD requires each of ECD's directors and executive officers to complete a directors' and officers' questionnaire that elicits information about related party transactions.

These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *33*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

***Certain Transactions of ECD***

Beginning on *January 5, 2021,* ECD entered into a verbal agreement with Overland Auto Transport Inc d/b/a Luxury Automotive Transport, Inc. ("TransportCo"), a company which is 100% owned by Ashley Humble, Thomas Humble's father, and has ECD as its only customer. Thomas Humble, an officer of ECD, and Elliot Humble, an officer of ECD, are both directors of TransportCo, however they receive *no* compensation for their services to TransportCo. TransportCo assists ECD with the intermediation of transportation services for ECD's products, by locating providers of and booking the required services. TransportCo offers ECD competitive pricing for its services. On *September 27, 2023,* we entered into a written agreement with TransportCo (the "TransportCo Agreement") covering the services TransportCo provides to ECD and the compensation paid for such services. As of *September 30, 2025,* and *December 31, 2024,* accounts payable included $4,475 and $0, respectively, due to TransportCo.

Prior to ceasing in the *second* quarter of *2025,* British Food Stop sold breakfast and lunch to employees via a food truck on site. The owners of British Food Stop were the parents of Emily Humble, the Company's President, Secretary, and Director. As of *September 30, 2025*, and *December 31, 2024*, the Company had no amounts outstanding under this agreement included in accounts payable in the accompanying unaudited condensed consolidated balance sheet.

On *August 15, 2025,* the Board appointed Victoria Hay as the Chief Financial Officer and principal financial officer of the Company. Since *March 2025,* the Company has engaged Flexible Consulting, LLC, where Mrs. Hay is President and which she co-owns, to provide accounting and finance services relating to the Company's quarterly and monthly financial reporting. Flexible Consulting is considered to be a related party as of *August 15, 2025.* Accounts payable included $195,910 due to Flexible Consulting, LLC at *September 30, 2025*.

The following table shows the Company's expenses incurred with related parties and the relationship:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***Three Months Ended*** | ***Three Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** |
|  | ***September 30,*** | ***September 30,*** | ***September 30,*** | ***September 30,*** |
|  | ***2025*** | ***2024*** | ***2025*** | ***2024*** |
| Luxury Automotive Transport, Inc. | $5475 | $25092 | $20500 | $82384 |
| British Food Stop |  | 14023 | 7939 | 38578 |
| Flexible Consulting, LLC (from August 15, 2025) | 133910 |  | 133910 |  |
| Total expenses, net | $139385 | $39115 | $162349 | $120962 |

---

**NOTE *19.* SEGMENTS**

ASC Topic *280,* "Segment Reporting," establishes standards for companies to report in their financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise that engage in business activities from which it *may* recognize revenues and incur expenses, and for which separate financial information is available that is regularly evaluated by the Company's chief operating decision maker, or group, in deciding how to allocate resources and assess performance.

The Company's chief operating decision maker ("CODM") has been identified as the Chief Executive Officer who reviews the assets, liabilities, operating results, and financial metrics for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that there is only one reportable segment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *34*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

The CODM assesses performance for the single segment and decides how to allocate resources based on net income or loss that also is reported on the statement of operations as net income or loss. The measure of segment assets and liabilities is reported on the balance sheets as total assets and total liabilities. When evaluating the Company's performance and making key decisions regarding resource allocation, the CODM reviews several key metrics included in net income or loss, total assets and total liabilities, which include the following:

---

| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Inventory | $3789194 | $11181806 |
| Deferred revenue | $6893657 | $11802825 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***Three Months Ended*** | ***Three Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** |
|  | ***September 30,*** | ***September 30,*** | ***September 30,*** | ***September 30,*** |
|  | ***2025*** | ***2024*** | ***2025*** | ***2024*** |
| Revenue, net | $5783182 | $6440049 | $19220445 | $19884213 |
| Less: Cost of goods sold | $7454187 | $4432509 | $17738434 | $14296197 |
| Gross Profit | $(1671005) | $2007540 | $1482011 | $5588016 |

---

**NOTE *20.* SUBSEQUENT EVENTS**

Subsequent events have been evaluated through *November 19, 2025*, which represents the date the financial statements were available to be issued, and *no* events, other than discussed below have occurred through that date that would impact the financial statements.

***First Additional Closing***

On *August 13, 2025, (*"the Company"), entered into a securities purchase agreement (the "SPA") by and between the Company and an accredited investor (the "Holder").

The SPA provided that the Holder *may* require the Company to participate in *one* or more Additional Closings for purchase by the Holder, and the sale by the Company, of up to the aggregate number of shares of Series C Preferred Stock, which aggregate number for all Buyers shall *not* exceed 25,000 shares of Series C Preferred Stock (collectively, the "Additional Preferred Shares", and together with the Initial Preferred Shares, the "Preferred Shares", and the shares of Common Stock issuable pursuant to the terms of the Certificate of Designations, including, without limitation, upon conversion or otherwise of the Additional Preferred Shares, collectively, the "Additional Conversion Shares", and together with the Initial Conversion Shares, the "Conversion Shares").

On *October 24, 2025,* the Holder delivered notice to the Company, pursuant to which the Holder elected to participate in an additional closing under the SPA (the "First Additional Closing"). At the First Additional Closing, the Company will sell to the Holder and the Holder will purchase from the Company, 1,111 shares of Series C Preferred Stock with a Stated Value (as defined in the Certificate of Designations) of $1,111,000 for a discounted purchase price of $999,900. The First Additional Closing occurred on *October 28, 2025.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *35*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ECD AUTOMOTIVE DESIGN, INC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT

***Registration Statement***

On *November 3, 2025,* the registration statement (the "Registration Statement") on Form S-*1* filed by the "Company became effective. In addition to registering shares held by certain selling securityholders for resale, and the securities underlying the Company's private warrants and publicly traded warrants, the Registration Statement also registered up to $300,000,000 worth of shares of the Company's common stock, par value $0.0001 per share for sale under the EPFA, dated *June 20, 2025.* Accordingly, the Company commenced sales of Common Stock under the EPFA on *November 4, 2025.*

Prior to entering into the EPFA, the Company adopted a new Bitcoin treasury strategy, to acquire Bitcoin as a treasury reserve asset. The Company plans to use the net proceeds from the EPFA to acquire Bitcoin as a treasury reserve asset, to raise capital for growth and for general corporate purposes.

***Amendment to Warrants issued to pay legal fees***

On *September 30, 2025,* the Company received an email from Nasdaq notifying the Company that, the warrant the Company issued to pay outstanding legal fees on *September 24, 2025 (*the "Warrant") violated Nasdaq Rule *5635*(d) (the "Rule"). The Company amended the Warrant as of *October 1, 2025* to make the Warrant compliant with the Rule. The Company was in violation of the Rule upon issuance of the Warrant and that the Company regained compliance with the Rule when it entered into the amendment of the Warrant.

***Departure of Officers***

On *November 11, 2025,* the Company entered into separation agreements with Emily Humble, the Company's Chief Product Officer, and Thomas Humble, the Company's Chief Experience Officer, pursuant to which their employment with the Company terminated on that date (collectively the "Separation Agreements"). Under the terms of the Separation Agreements, the Company will pay each executive their regular base salary through the termination date and reimburse eligible business expenses in accordance with Company policy. Each executive is also entitled to severance benefits consisting of (i) *six* monthly cash installments totaling $172,000, (ii) monthly issuances of the Company's unregistered common stock valued at *$32,000* per month for *six* months beginning in *May 2026,* and (iii) payment of COBRA premiums for up to *six* months following termination if elected. The Company reported that the separations were for personal reasons and *not* the result of any disagreement with the Company. Emily Humble will continue to serve as a member of the Company's Board of Directors.

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**Item 2. Management**'**s Discussion and Analysis of Financial Condition and Results of Operations**

References to the "Company," "our," "us" or "we" refer to ECD Automotive Design, Inc. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q (this "Quarterly Report") and the Annual Report on Form 10-K and Risk Factors contained therein. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

**Cautionary Note Regarding Forward-Looking Statements**

*This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the* "*Securities Act*"*), and Section 21E of the Securities Exchange Act of 1934, as amended (the* "*Exchange Act*"*). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as* "*may,*" "*should,*" "*could,*" "*would,*" "*expect,*" "*plan,*" "*anticipate,*" "*believe,*" "*estimate,*" *and* "*continue,*" *or the negative of such terms or other similar expressions. Such statements include, but are not limited to, possible business combinations and the financing thereof, and related matters, as well as all other statements other than statements of historical fact included in this Form 10-Q. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.*

**Business Overview and Strategy**

ECD is an award winning, custom-car builder with a focus on British classic vehicles. We provide clients a one-of-a kind immersive luxury automotive design experience for each of its unique custom builds, where customers may design every aspect of the vehicle. In sequence, our highly trained technicians, master-certified ASE craftsmen, hand-built, from the ground up, in 2,200 man-hours, a completely restored vehicle, replacing substantially its every single component– customizing the engine, the color, the seating, the stitching, the electronics and the cosmetic finishes. All elements of the process are completed in-house. We primarily earn our revenue from the sale of the customized vehicle directly to the customer, as well as by providing repair or upgrade services to customers, and from the sale of extended warranties. Occasionally we earn commissions on resale of used vehicles. Our revenues, net, were $5,783,182 and $6,440,049 for the three months ended September 30, 2025 and 2024, respectively. Our revenues, net, were $19,220,445 and $19,884,213 for the nine months ended September 30, 2025 and 2024, respectively. We had net income and loss of $2,232,855 and $2,569,518, and net loss of $4,787,756 and $7,458,875 for the three and nine months ended September 30, 2025 and 2024, respectively.

The Company's business is subject to retail industry trends and conditions and the sales of new and used vehicles. Worldwide economic conditions impact consumer spending and if the global macroeconomic environment deteriorates, this could have a negative effect on the Company's revenues and earnings.

Although we believe that our product is geared towards a certain customer base that is not as vulnerable to the global economic conditions, there are certain levels of volatility related to domestic and international markets, increased competition by manufacturers, technological advancements, customer acceptance, discretionary consumer spending and general economic conditions. All of our products are subject to price fluctuations in materials and labor costs, which could affect the carrying value of inventories and gross margins in the future.

Our headquarters, known as the "Rover Dome," is a 100,000-square-foot facility located in Kissimmee, FL, where as of September 30, 2025, there were 95 employees located. ECD, by means of ECD UK, operates a logistics center in the United Kingdom where its professionals work to source and transport over-25-year-old vehicles back to the United States for restoration.

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***Securities Purchase Agreement***

On October 6, 2023, the Company entered into a Securities Purchase Agreement (the "SPA") with an institutional Lender (the "Lender") pursuant to which the Company issued to the Lender a senior secured convertible note (the "December 2023 Convertible Note") in exchange for a loan in the principal amount of $15,819,209. The December 2023 Convertible Note shall accrue interest at an annual rate equal to the Prime Interest rate plus 5% per annum which is payable quarterly in cash, or upon the Company's option, in securities of the Company provided certain conditions are met at the increased interest rate of the Prime Interest rate plus 8% per annum. The Company is required to pay a late charge of 12% per annum ("Late Charges") on any amount of principal or other amounts that are not paid when due. The December 2023 Convertible Note is convertible into shares of the Company's common stock, par value $0.0001 per share at the option of the Lender at a conversion price of $400.00 per share, subject to a one-time downward adjustment on the effective date of the registration statement providing for the resale of the common stock issuable upon conversion of the December 2023 Convertible Note to a conversion price equal to the prior 5-day volume weighted average price, subject to a floor of $240.00. The conversion price is subject to a downward adjustment if the Company issues equity in the future at a price less than $400.00, except for equity issued in connection with certain strategic acquisitions. The conversion price is also subject to a downward adjustment if the Company fails to satisfy certain performance conditions set forth in the December 2023 Convertible Note. Upon the Lender's conversion, the conversion amount shall be equal to 115% of the principal amount to be converted under the December 2023 Convertible Note plus any accrued and unpaid interest and accrued and unpaid Late Charges on such principal and interest, if any (the "Conversion Rate"). Lender's ability to convert the December 2023 Convertible Note into shares of common stock is subject to a 4.99% blocker, such that Lender cannot convert the December 2023 Convertible Note into shares of common stock to the extent it will make the Lender a beneficial owner of more than 4.99% of the common stock. The Company has the option to prepay the December 2023 Convertible Note, upon thirty (30) business day written notice, by paying the product of the 20% redemption premium multiplied by the greater of (i) the conversion amount to be redeemed and (ii) the product of (x) the Conversion Rate with respect to the conversion amount to be redeemed multiplied by (y) the greatest closing sale price of the Company's common stock on any trading day immediately preceding such notice of redemption and the date the Company makes the entire payment required.

The December 2023 Convertible Note has a maturity date of December 12, 2026, and will rank senior to all outstanding and future indebtedness of the Company and its subsidiaries. The December 2023 Convertible Notes are secured by a first priority perfected security interest in all the existing and future assets of the Company and its direct and indirect subsidiaries, including a pledge of all of the capital stock of each of the subsidiaries. The December 2023 Convertible Note also provides that the Company and its subsidiaries execute a guaranty (the "Guaranty") to guaranty the obligations under the December 2023 Convertible Note and the Security Agreement, that all insider stockholders of the common stock shall execute a lock-up agreement (the "Lock-Up Agreement") restricting their sale of the common stock until six months after the registration statement registering the shares of common stock underlying the December 2023 Convertible Note is declared effective and a joinder agreement (the "Joinder Agreement") pursuant to which the Company and its Subsidiaries agree and consent to be parties to the Security Agreement.

***Additional Financings from Defender SPV LLC***

On August 9, 2024, the Company entered into a SPA with the Lender pursuant to which the Company issued to the Lender a senior secured convertible note (the "August 2024 Convertible Note") in exchange for a loan in the principal amount of $1,154,681. The August 2024 Convertible Note has the same terms and conditions as the December 2023 Convertible Note.

On January 8, 2025, the Company entered into a SPA (the "January 2025 SPA") with the Lender pursuant to which the Lender agreed to waive the pre-existing events of default that occurred under the August Note and the Company Preferred Stock and the Company agreed to execute and deliver to the Lender a senior secured convertible note (the "January 2025 Note"), in exchange for a loan in the principal amount of $1,724,100. The January 2025 Convertible Note has the same terms and conditions as the December 2023 Convertible Note.

The January 2025 SPA also provides that in connection with the January 2025 Note, the Company will also issue to the Lender at no additional cost 12,500 shares of Common Stock and a warrant, dated January 13, 2025, to purchase 9,960 shares of Common Stock at an exercise price of $460.00 per share (the "Common Share Warrant").

On June 5, 2025, the Company entered into a SPA (the "June 2025 SPA") with the Lender for a series of senior secured convertible note up to $21,972,275.38 and pursuant to which the Company executed and delivered to the Lender a senior secured convertible note, dated June 5, 2025 (the "June 2025 Convertible Note"), in exchange for a loan in the original principal amount of $823,960.33.

On July 7, 2025, the Company executed and delivered to the Lender a senior secured convertible note, dated July 7, 2025 (the "July 2025 Convertible Note"), in exchange for a loan in the original principal amount of $823,960. The July 2025 Convertible Note has the same terms and conditions as the terms of the June 2025 Convertible Note.

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***Exchange Agreement***

On May 14, 2025, the Company entered into an Amendment and Exchange Agreement (the "Exchange Agreement") with an institutional investor (the "Lender") pursuant to which the Company shall authorize one or more series of a new series B convertible preferred stock of the Company, $0.0001 par value (see Note 12, Preferred Stock). The Exchange Agreement provides that the Holder shall have the option exchange some or all of the amounts outstanding under the December 2023 Convertible Note, August 2024 Convertible Note and/or the January 2025 Convertible Note (collectively the "Convertible Notes"). At the initial closing the Lender has determined to convert $1,284,881. which is the principal amount plus all accrued interest due under the August 2024 Convertible Note, into 100 shares of Series B Preferred Stock. The foregoing summary of the Exchange Agreement is not purport to be complete and is qualified in its entirety by reference to the Exchange Agreement a form of which is attached hereto as Exhibit 10.11 and is incorporated herein by reference.

***Second Exchange Agreement***

On June 20, 2025, the Company entered into a Second Amendment and Exchange Agreement (the "Second Exchange Agreement") with the Lender pursuant to which the Company shall authorize one or more series of a new series C convertible preferred stock of the Company, the terms of which are set forth in a certificate of designation for such series of preferred stock designated as Series C Convertible Preferred Stock, $0.0001 par value (the "Series C Preferred Stock"), which Series C Preferred Stock shall be convertible into shares of Common Stock. The Second Exchange Agreement provides that the Holder shall have the option to exchange (a) some or all of the amounts outstanding under the Convertible Notes, and (b) the 100 shares of Series B Preferred Stock. At the initial closing the Lender determined to convert the 100 shares of Series B Preferred Stock, into 100 shares of Series C Preferred Stock, and such shares of Common Stock issuable pursuant to the terms of the Series C Preferred Stock, including, without limitation, upon conversion or otherwise, in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act.

The Second Exchange Agreement provides further that, subject to the terms and conditions set forth in this Second Exchange Agreement, the Lender may require the Company to participate in one or more Additional Exchanges to exchange such portion of the amounts outstanding under the remaining Convertible Notes as set forth in such applicable closing notice related to such exchange into such aggregate number of shares of such new series of Series C Preferred Stock as set forth in such additional closing notice related to such exchange, and such shares of Common Stock issuable pursuant to the terms of Series C Preferred Stock, including, without limitation, upon conversion of the shares of Series C Preferred Stock held by the Lender or otherwise, in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act.

In connection with the Second Exchange Agreement, the Board of Directors of the Company has approved and authorized the filing with the Secretary of State of the State of Delaware a Certificate of Designations, Preferences and Rights of Series C Convertible Preferred Stock of ECD Automotive Design, Inc. (the "Series C Certificate") to authorize the Series C Preferred Stock as required by the Second Exchange Agreement.

***Reversal of Series A Convertible Preferred Stock Conversion***

In January 2025 the conversion of the 463 shares of Series A Convertible Preferred Stock into 46,250 shares of common stock was reversed by the Company's transfer agent due to the terms of the agreement that a stockholder's ability to convert Series A Convertible Preferred Stock into shares of Common Stock is subject to a 4.99% blocker, that precluded the stockholder from converting its Series A Convertible Preferred Stock into shares of Common Stock to the extent it will made the stockholder a beneficial owner of more than 4.99% of the Common Stock.

***Business Loan and Security Agreement***

On February 20, 2025, the Company entered into a Business Loan and Security Agreement with Agile Lending, LLC (the "Lending Lender") pursuant to which the Company received a term loan from the Lending Lender in the principal amount of $1,575,000 (the "Agile Loan"). The principal amount of the Agile Loan included an administrative agent fee of $75,000.

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On April 4, 2025, the Company entered into a new business loan and security agreement with an effective date of April 4, 2025 (the "New Loan Agreement") by and among an investor (the "New Lender"), a collateral agent (the "Collateral Agent"), the Company and its subsidiary, Humble Imports Inc., pursuant to which the Company received a term loan from the New Lender in the principal amount of $1,824,300 (the "New Loan"). The New Loan agreement stipulates the Loan should be repaid through sixty-nine (69) equal weekly payments of principal and interest in the aggregate amount of $35,693 per week commencing on April 15, 2025 and ending August 4, 2026 (the "Term"). During the Term, the New Loan will accrue interest in the aggregate amount of $638,505 unless, in the event of default, the New Loan will accrue interest at a fixed per annum rate equal to the rate that is otherwise applicable plus 5% (the "Default Rate"). The New Loan included an administrative expense fee of $40,000 and a lender's legal fee of $35,000, which sum was netted out of the New Loan. The New Loan is secured by all properties, rights and assets of the Company and Collateral Agent is designated as the collateral agent under the New Loan Agreement. The New Loan Agreement contains customary representations and warranties and affirmative and negative covenants. Among other things, these covenants restrict the Company's ability to incur certain types or amounts of indebtedness, incur liens on certain assets, dispose of material assets, enter into certain restrictive agreements, or engage in certain transactions with affiliates. Additionally, the New Loan Agreement contains customary default provisions including, but not limited to, failure to pay interest or principal when due. To evidence the New Loan, the Company executed a secured promissory note, the form of which is an exhibit to the New Loan Agreement.

The net proceeds of the New Loan were used to pay off the Agile Loan in the discounted amount of $1,749,300, including principal and interest. Accordingly, the Agile Loan is paid off and satisfied.

***Third Amendment and Exchange Agreement***

On July 7, 2025, the Company and Lender entered into the Third Amendment and Exchange Agreement (the "Third Exchange Agreement"). Pursuant to the Third Exchange Agreement, on July 7, 2025, the Lender converted the $2,462,805 under the New Loan Agreement into 125 shares of the Company's Series C Preferred Stock, and such shares of Common Stock issuable pursuant to the terms of the Series C Preferred Stock, including, without limitation, upon conversion or otherwise, in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act.

***Consulting Agreement***

On February 20, 2025, the Company entered into a consulting agreement ("Consulting Agreement") with an advisor (the "Advisor") for business advisory services, guidance on growth strategies, and networking with its contacts on a non-exclusive basis for general business purposes. Pursuant to the consulting agreement, the Company issued 5,900 shares of the Company's common stock to the Advisor on the Effective Date.

***Equity Purchase Facility Agreement***

On June 20, 2025, the Company also entered into an Equity Purchase Facility Agreement ("EPFA") with an unrelated accredited investor, allowing the Company, at its discretion, to sell up to $500 million of its common stock over time, subject to terms and conditions. In connection with the EPFA the Company issued 2,500 shares of common stock as a commitment fee (the "Commitment Shares") to the investor.

*Securities Purchase Agreement* 

On August 13, 2025, the Company entered into a SPA by and between the Company and the Holder. Pursuant to the SPA the Holder purchased, and the Company sold 28 shares of the Company's Series C Convertible Preferred Stock, and the shares of Common Stock issuable pursuant to the terms of the Certificate of Designations, including, without limitation, upon conversion or otherwise of the Initial Preferred Shares, collectively, the "Initial Conversion Shares") for a discounted purchase price of $999,900.

**Key Factors Affecting Results of Operations**

We have set out below a discussion of the key factors that have affected our financial performance and that are expected to impact our performance going forward. These factors present significant opportunities for us but also pose risks and challenges, including those discussed below and under the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024.

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***Supply Chain Management***

We continue to explore opportunities to reduce our costs, improve efficiencies, and increase our margins. As a result of these efforts, in July 2021, two shareholders of the Company opened ECD UK. ECD UK was formed to facilitate procuring parts and vehicles overseas for the Company.

We continue to focus on cash flow and anticipate having sufficient resources to operate during 2025.

***Manufacturing Facility Expansion***

On August 11, 2021, we entered into a lease agreement, whereby the Company agreed to lease 100,000 sq. ft. of manufacturing, warehouse, and office space in Kissimmee, Florida, for a term of 125 months following the lease commencement date. The new state-of-the art facility allows for production efficiencies, enables us to scale our productions, and positions us for extensive growth. We increased our production by approximately 20% in 2023 utilizing one shift. We added an additional 10,000 sq. ft. space in the second half of 2024 to accommodate the storage of delivery ready vehicles as well as base vehicles shipped from ECD UK.

***Our Growth Plans***

We introduced Jaguar E-type in 2022, which we sell at a higher price point and with a higher gross margin as compared to our traditional Land Rover Defender, Range Rover and Land Rover Series models. In April 2024, we purchase the assets of Brand New Muscle Car (BNMC). We plan to leverage the assets of the production of Mustangs in 2024 and 2025. The asset purchase resulted in 6 Mustang contracts. We currently use a third of our production floor for quality control and warranty services. We plan to relocate our quality and warranty services in 2025 to a new facility that will function as a warranty, used vehicles sales, and service center, and to add a third production area that will focus on iconic American vehicles. We expect our margins to further improve as we increase scale, resulting in lower component costs and improved absorption of our fixed manufacturing overhead.

We have opened new marketing channels in 2025. This includes retail locations in West Palm Beach, FL and Nantucket, MA.

**Key Business Metrics**

We use certain key metrics and financial measures not prepared in accordance with GAAP to evaluate and manage our business.

***Adjusted EBITDA***

We define adjusted EBITDA, a non-GAAP financial measure, as earnings (loss) before interest expense, income tax expense (benefit), non-recurring fees, equity compensation, other (income) expenses, foreign exchange gains and losses, and depreciation and amortization, as adjusted to exclude transaction expenses. We utilize adjusted EBITDA as an internal performance measure in the management of our operations because we believe the exclusion of these non-cash and non-recurring charges allow for a more relevant comparison of our results of operations to other companies in our industry. Adjusted EBITDA should not be viewed as a substitute for net loss calculated in accordance with GAAP, and other companies may define adjusted EBITDA differently.

In addition to our financial results determined in accordance with U.S. generally accepted accounting principles ("U.S. GAAP" or "GAAP"), we believe EBITDA, as a non-GAAP measure, is useful in evaluating our operating performance. EBITDA, as used in this Quarterly Report on Form 10-Q, is a non-GAAP financial measure that is presented as supplemental disclosures and should not be construed as an alternative to net loss or any other GAAP measure as an indicator of operating performance.

We present EBITDA because it is used by management to assess our financial performance, excluding certain expenses that management believes do not reflect the ongoing operating performance of the business. Management uses EBITDA to supplement GAAP measures of performance when evaluating our business strategies, making budgeting decisions and comparing performance against peer companies.

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The following table provides a reconciliation of net income (loss) to adjusted EBITDA to net loss for the periods presented:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Nine Months Ended** | **Nine Months Ended** |
|  | **September 30,** | **September 30,** | **September 30,** | **September 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Net income (loss) | $2232855 | $(2569518) | $(4787756) | $(7458875) |
| Excluding: |  |  |  |  |
| Interest expense | 3082464 | 1401829 | 7044791 | 3844653 |
| Income tax (benefit) expense |  | 315487 | (400000) | 838055 |
| Equity compensation expense | 369375 | 37500 | 1909555 | 294459 |
| Non-recurring professional fees\* |  | 108476 |  | 547854 |
| Gain on FV conversion of debt to preferred stock | (10479055) |  | (10912936) |  |
| Other (income) expense, net | 73250 | 286048 | 330473 | (24864) |
| Change in FV of warrant liabilities | 27636 | 118336 | (491691) | 570381 |
| Change in FV of conversion option liabilities | (1203) | 124752 | (362192) | 361611 |
| Gain on forgiveness of payable |  | (319899) |  | (319899) |
| Foreign exchange loss | 12355 | 1534 | 21184 | 12054 |
| Depreciation | 25856 | 27263 | 76977 | 102362 |
| Adjusted EBITDA | $(4656467) | $(455693) | $(7571595) | $(1232209) |

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\* The Company has included non-recurring professional fees as a component of adjusted EBITDA as these expenses were incurred in connection with the restatements of the 2022, 2023 and first half 2024 financial statements, the suspension of BF Borgers CPA PC as the Company's previous independent registered public accounting firm and related matters.

Adjusted EBITDA increased $4,200,774 and $6,339,386 for the three and nine months ended September 30, 2025 as compared to same periods ended September 30, 2024.

**Components of Results of Operations**

We manage our business globally within one operating segment, which is consistent with how our management reviews our business, makes investment and resource allocation decisions, and assesses operating performance.

**Results of Operations**

To provide readers with meaningful comparisons, the following analysis provides comparisons of the financial results for the three months ended September 30, 2025 and 2024. We analyze and explain the differences between periods in the specific line items of the Unaudited Condensed consolidated Statements of Operations and Comprehensive (Loss) Income.

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<u>**Three Months Ended September 30, 2025 Compared to the Three Months Ended September 30, 2024**</u>

The following table sets forth our results of operations for the periods presented:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the three months ended** | **For the three months ended** |  |  |
|  | **September 30,** | **September 30,** | **Variance** | **Variance** |
|  | **2025** | **2024** | **($)** | **()%** |
| Revenue, net | $5783182 | $6440049 | $(656867) | (10)% |
| Cost of goods sold | 7454187 | 4432509 | 3021678 | 68% |
| Gross (loss) profit | (1671005) | 2007540 | $(3678545) | (183)% |
| Operating expenses: |  |  |  |  |
| Sales and marketing expenses | 168925 | 258138 | (89213) | (35)% |
| General and administrative expenses | 3212259 | 2363570 | 848689 | 36% |
| Provision for credit losses | 13028 |  | 13028 | 0% |
| Depreciation and amortization expenses | 25856 | 27263 | (1407) | (5)% |
| Total operating expenses | 3420068 | 2648971 | 771097 | 29% |
| Loss from operations | (5091073) | (641431) | (4449642) | 694% |
| Other income (expense): |  |  |  |  |
| Interest expense | (3082464) | (1401829) | (1680635) | 120% |
| Change in fair value of warrant liabilities | (27636) | (118336) | 90700 | (77)% |
| Change in fair value of conversion option | 1203 | (124752) | 125955 | (101)% |
| Gain on forgiveness of payable |  | 319899 | (319899) | (100)% |
| Gain on FV conversion of debt to preferred stock | 10479055 |  | 10479055 | 0% |
| Resale commissions income | (12355) | (1534) | (10821) | 705% |
| Foreign exchange loss | 39375 | 20000 | 19375 | 97% |
| Other income (expense), net | (73250) | (306048) | 232798 | (76)% |
| Total other income (loss) | 7323928 | (1612600) | 8936528 | (554)% |
| Income (loss) before income taxes | 2232855 | (2254031) | 4486886 | (199)% |
| Income tax expense |  | (315487) | 315487 | (100)% |
| **Net income (loss)** | $2232855 | $(2569518) | $4802373 | (187)% |

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***Revenue***

Revenue decreased $656,867 for the three months ended September 30, 2025, as compared to the same period ended September 30, 2024 driven by a decrease in build revenue partially offset by an increase in CTC sales.

***Gross Profit***

Gross profit decreased by $3,678,545 for the three months ended September 30, 2025 as compared to the same period ended September 30, 2024 driven by an increase in the cost of materials for builds, shipping and customs fees and labor associated with builds.

***Operating Expense***

The Company experienced an overall increase in operating expenses of $771,097 for the three months ended September 30, 2025, as compared to the same period ended September 30, 2024 primarily driven by an increase in general and administrative costs and a provision for credit losses booked in the three months ended September 30, 2025partially offset by a decrease in advertising and marketing expenses.

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***Other Expense, Net***

For the three months ended September 30, 2025, total other income, net increased $8,936,528, as compared to the same period ended September 30, 2024, driven primarily by the gain on fair value conversion of Notes Payable to Series C Preferred Stock.

For the three months ended September 30, 2025, interest expense increased $1,680,635 as compared to the same period ended September 30, 2024 driven primarily by additional debt taken out in the nine months ended September 30, 2025 and the amortization of debt discount relating to the conversion of the Convertible Notes to Common Stock.

A loss and gain in fair value of warrant liabilities and conversion option liabilities of $27,636 and $1,203, respectively, was reported for the three months ended September 30, 2025, compared to a loss of $118,336 and $124,752, respectively, for the same period ended September 30, 2024.

A gain on forgiveness of payable of $319,899 was reported for the three months ended September 30, 2024 attributable to a default waiver granted from the Lender relating to the December 2023 Convertible Note.

For the three months ended September 30, 2025 other expense of $73,250was driven primarily by a loss on sale of trade vehicles. For the three months ended September 30, 2024, other expense of $306,048 was driven by the loss of sale of resale vehicles.

<u>**Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024**</u>

The following table sets forth our results of operations for the periods presented:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the nine months ended** | **For the nine months ended** |  |  |
|  | **September 30,** | **September 30,** | **Variance** | **Variance** |
|  | **2025** | **2024** | **($)** | **()%** |
| Revenue, net | $19220445 | $19884213 | $(663768) | (3)% |
| Cost of goods sold | 17738434 | 14296197 | 3442237 | 24% |
| Gross profit | 1482011 | 5588016 | $(4106005) | (73)% |
| Operating expenses: |  |  |  |  |
| Sales and marketing expenses | 741307 | 886119 | (144812) | (16)% |
| General and administrative expenses | 10280293 | 6768386 | 3511907 | 52% |
| Provision for credit losses | 42536 | 8033 | 34503 | 430% |
| Depreciation and amortization expenses | 76977 | 102362 | (25385) | (25)% |
| Total operating expenses | 11141113 | 7764900 | 3376213 | 43% |
| Loss from operations | (9659102) | (2176884) | (7482218) | 344% |
| Other income (expense): |  |  |  |  |
| Interest expense | (7044791) | (3844653) | (3200138) | 83% |
| Change in fair value of warrant liabilities | 491691 | (570381) | 1062072 | (186)% |
| Change in fair value of conversion option | 362192 | (361611) | 723803 | (200)% |
| Gain on FV conversion of debt to preferred stock | 10912936 |  | 10912936 | 0% |
| Gain on forgiveness of payable |  | 319899 | (319899) | (100)% |
| Resale commissions income | (21184) | (12054) | (9130) | 76% |
| Foreign exchange loss | 100975 | 105100 | (4125) | (4)% |
| Other income (expense), net | (330473) | (80236) | (250237) | 312% |
| Total other income (loss) | 4471346 | (4443936) | 8915282 | (201)% |
| Loss before income taxes | (5187756) | (6620820) | 1433064 | (22)% |
| Income tax benefit (expense) | 400000 | (838055) | 1238055 | (148)% |
| **Net loss** | $(4787756) | $(7458875) | $2671119 | (36)% |

---

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***Revenue*** 

Revenue decreased $663,768 for the nine months ended September 30, 2025, as compared to the same period ended September 30, 2024 primarily due to a decrease in build revenue.

***Gross Profit***

Gross profit decreased by $4,106,005 during the nine months ended September 30, 2025, compared to the same period ended September 30, 2024 due to an increase in the cost of materials for builds, shipping and customs fees and labor associated with builds.

***Operating Expenses*** 

Operating expenses increased by $3,376,213 for the nine months ended September 30, 2025, as compared to the same period ended September 30, 2024 primarily driven by an increase in general and administrative expenses due to increased headcount and equity compensation expense. This was partially offset by a decrease in sales and marketing expenses.

***Other Expense, Net***

For the nine months ended September 30, 2025, total other income, net increased $8,915,282, as compared to the same period ended September 30, 2024 primarily driven by the gains on fair value of conversion of Notes Payable to Series B and C Preferred Stock.

For the nine months ended September 30, 2025, interest expense increased $3,200,138, as compared to the same period ended September 30, 2024 due to additional debt taken out in the second half of 2024 and the nine months ended September 30, 2025, the early repayment of the Agile Loan in April 2025 and the amortization of debt discount relating to the conversion of the Convertible Notes to Common Stock.

For the nine months ended September 30, 2025, the gain in fair value on warrant and conversion option liabilities was $491,691 and $362,192, respectively. For the nine months ended September 30, 2024, the loss on fair value of warrant and conversion option liabilities was $570,381 and $361,611, respectively.

A gain on forgiveness of payable of $319,899 was reported for the nine months ended September 30, 2024 attributable to a default waiver granted from the Lender relating to the December 2023 Convertible Note.

For the nine months ended September 30, 2025, other expense was $330,473 relating mainly to the loss on sale of trade in vehicles. For the nine months ended September 30, 2024, other expense was $80,236 comprising mainly the loss on sale of resale vehicles.

**Liquidity and Capital Resources**

<u>Uses and Availability of Funds</u>

Our primary sources of funds are customer deposits, collections of deferred revenue, and proceeds from loan payable. The Company relies on customer deposits to fund working capital requirements. Upon execution of the contract, the Company bills its customers the total consideration of the contract. The Company receives from 25% to 50% of the total consideration of the contract, except for upgrades, from its customers as acceptance of contract, which are initially recorded in customer deposits, and are recognized as net revenue when the products are titled or delivered. As of September 30, 2025, the Company had customer deposits in the amount of $6,893,657 and deferred revenue for vehicles that were completed, but title had not been transferred to the customer as of September 30, 2025 of $0.

Our primary uses of funds are inventory purchases, manufacturing costs, compensation and related expenses, advertising and marketing, legal and other regulatory expenses, general administrative costs, and capital expenditures. Our capital requirements will depend on many factors, including our revenue growth rate, the timing and amount of cash received from customers, the expansion of sales and marketing activities and the timing and extent of spending to support development efforts.

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**<u>Financial Condition</u>**

We are subject to credit risks, particularly if any of the deferred revenue represents a limited number of customers. If we are unable to collect our deferred revenue as it becomes due, it could adversely affect our liquidity and working capital position.

Generally, we have been able to collect our deferred revenue in the ordinary course of business. We hold vehicles as collateral to secure payment from customers. We do not have trade credit insurance for any of our customers to mitigate accounts receivable risk.

As of September 30, 2025, we had cash and cash equivalents of $157,682. The Company's primary source of operating funds since inception has been from cash receipts from sales and proceeds from loans payable.

Management's assessment of the Company's ability to continue as a going concern involves making a judgment, at a particular point in time, about inherently uncertain future outcomes of events or conditions. Any judgment about the future is based on information available at the time at which the judgment is made. Subsequent events may result in outcomes that are inconsistent with judgments that were reasonable at the time they were made.

The Company's future capital requirements will depend on many factors, including the Company's revenue growth rate. The Company will need to raise additional financing through loans or through equity raises. The Company cannot provide any assurance that the new financing will be available to it on commercially acceptable terms, if at all. If the Company is unable to raise additional capital, the Company's business, results of operations and financial condition would be materially and adversely affected.

As a result of the above, in connection with the Company's assessment of going concern considerations in accordance with ASC 205-40, *Going Concern* ("ASC 205"), Management has determined that the Company's liquidity condition raises substantial doubt about the Company's ability to continue as a going concern within one year after the date these unaudited condensed consolidated financial statements are available to be issued. These unaudited condensed consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

**<u>Cash Flows</u>**

*Cash flows for the nine months ended September 30, 2025 and 2024*

The following table summarizes our cash flow activity for the periods presented:

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** |
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Cash Provided By (Used In): |  |  |
| Operating Activities | $(5942498) | $(7199988) |
| Investing Activities |  | (17046) |
| Financing Activities | 4623329 | 2674469 |
| Effect of translation changes on cash |  | 482 |
| Net decrease in cash and cash equivalents | $(1319169) | $(4542083) |

---

**Net cash used in operating activities**

Operating activities used cash of $5,942,498 for the nine months ended September 30, 2025 of which $1,457,749 was used to fund working capital.

Operating activities used cash of $7,199,988 for the nine months ended September 30, 2024 of which $2,485,227 was used to fund working capital.

**Net cash used in investing activities**

No cash was used for investing activities for the nine months ended September 30, 2025.

Investing activities used cash of $17,046 for the nine months ended September 30, 2024, related to purchase of warehouse equipment.

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**Net cash provided by financing activities**

Financing activities provided cash of $4,623,329 for the nine months ended September 30, 2025, primarily related to proceeds from the January, June and July 2025 Convertible Notes and the notes payable received in April 2025 and proceeds from the sale of Series C Preferred Stock, partially offset by the repayment of the Agile Loan and repayments on the Floor Loan.

Financing activities provided cash of $2,674,469 for the nine months ended September 30, 2024 primarily related to proceeds, net of repayments, of the Floor plan loan, the issuance of common shares and proceeds from the August 2024 Convertible Note.

We regularly review our cash funding requirements and attempt to meet those requirements through a combination of cash on hand, cash provided by operations, available borrowings and possible future public or private debt and/or equity offerings. At times, we evaluate possible acquisitions of, or investments in, businesses that are complementary to ours, which transactions may require the use of cash. We may require additional funds in the future to support our working capital requirements, or for other purposes, and may seek to raise such additional funds through the sale of public or private equity and/or debt financings, as well as from other sources. No assurance can be given that additional financing will be available in the future or that if available, such financing will be obtainable on terms favorable when required.

**Critical Accounting Policies and Estimates**

***General***

Management's discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which are prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make certain estimates, judgments, and assumptions that we believe are reasonable based upon the information available. These estimates and assumptions can be subjective and complex and may affect the reported amounts of assets and liabilities, revenues, and expenses reported in those financial statements. As a result, actual results could differ from such estimates and assumptions.

While our significant accounting policies are described in more detail in Note 3 to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements.

***Revenue Recognition***

Revenue is recognized when the Company transfers title of promised goods or provides services to the customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under the agreement, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

***Product Revenue* – *Builds***

The Company generates revenue through the sales of vehicles directly to customers. The Company considers the build/sales contracts to be the contracts with the customer. There is a single performance obligation in all of the Company's contracts, which is to build a vehicle based on customer specifications, transfer title or delivery of product under the terms in the arrangement. Product revenue is recognized when the product build is completed and title has been transferred, or product is delivered. The Company concluded that this was the appropriate time to record revenue based on the following criteria, (1) ECD has a right to full payment for the product. (2) The customer has legal title to the product and (3) The customer has the significant risks and rewards of ownership of the asset. There are certain build contacts, "owner donor vehicles" where title remains with the customer for the entire project. Under these contracts, revenue is recognized at a point in time when the truck is delivered back to the customer.

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Upon execution of the contract, the Company bills its customers the total consideration of the contract. The Company receives approximately 25% to 50% of the total consideration of the contract from its customers as acceptance of contract, which is initially recorded as deferred revenue. Upon completion of the build the remaining 50%-75% is billed and initially recorded as deferred revenue, and recognized as net revenue when the product build is completed, and title is legally transferred.

***Warranty and Other Revenue***

The Company generates revenue through the sale of extended warranties to customers. The customers agree to the terms and conditions at the time of purchase, which represents the customer arrangements. The period covered by the extended warranty is usually one year. The Company has elected to apply the optional exemption provided in ASC 606 and therefore, is not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period.

The Company also generates revenue through providing repair services to customers. The Company agrees with the customer on a budget. There is a single performance obligation, which is the Company's promise to perform the retrofit or repair work on the vehicle. The entire transaction price is allocated to this single performance obligation. Service revenue is recognized when the repair work is completed, and the customer receives the vehicle.

***Product Limited Warranty***

Consistent with industry practice, the Company generally offers customers a limited warranty for work performed on the vehicle under the builds/sales contract. The customers do not have a contractual right of return. The Company only offers a limited warranty for the work performed on the vehicle under the contract. If a customer disputes any work performed, the Company will attempt to remedy the work however, it shall not be required to discount the transaction price. The Company considered this an assurance-type warranty and not a separate performance obligation.

***Warranty Reserve***

The Company provides for the estimated cost of product warranties at the time revenue is recognized. While the Company engages in product quality programs and processes, including quality control test driving vehicles, the warranty obligation is affected by historical warranty costs per vehicle. Should actual costs differ from the Company's estimates, revisions to increase or decrease the estimated warranty liability may be required.

***Other Revenue Policies***

Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue.

Applying the practical expedient in ASC 606, the Company does not assess whether a contract has a significant financing component if the expectation at contract inception is that the period between payment by the customer and the transfer of the promised products to the customer will be one year or less, which is the case with substantially all customers.

Applying the practical expedient in ASC 606, the Company accounts for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. The Company records the related costs as part of the cost of goods.

***Inventories***

Work in progress – shipping and consumables, and work in progress – labor costs reported in inventories are carried at a lower of cost or net realizable value. Cost is determined on the basis of the direct and indirect costs that are directly attributable to the product. The measurement of inventories is generally based on the weighted average method. Cost is determined on the basis of the direct and indirect costs that are directly attributable. The measurement of work in progress inventories is generally based on the weighted average method. Finished goods inventory is comprised of vehicles for which the build is completed but title has not been legally transferred, or, in some cases, the vehicle has not been delivered. The measurement of finished goods inventories is the total cost of the materials, shipping and consumables, and labor attributed to the build of each specific completed vehicle. Overhead costs are allocated to inventory based on the rate of inventory turned for the period.

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***Fair Value of Financial Instruments***

The Company calculates the fair value of its assets and liabilities which qualify as financial instruments and includes this additional information in the notes to the unaudited condensed consolidated financial statements when the fair value is different than the carrying value of these financial instruments. The estimated fair value of cash, accounts receivable, accounts payable and accrued expenses, and loan payable approximate their carrying amounts due to the relatively short maturity of these instruments. The carrying value of lease liability also approximates fair value since the instrument bears market rates of interest. None of these instruments are held for trading purposes.

***Warrants***

The Company determines the accounting classification of warrants it issues as either liability or equity classified by first assessing whether the warrants meet liability classification in accordance with ASC 480, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity ("ASC 480"), then in accordance with ASC 815 ("ASC 815"), Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock. Under ASC 480, warrants are considered liability classified if the warrants are mandatorily redeemable, obligate the Company to settle the warrants or the underlying shares by paying cash or other assets, or warrants that must or may require settlement by issuing variable number of shares. If warrants do not meet liability classification under ASC 480, the Company assesses the requirements under ASC 815, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature. If the warrants do not require liability classification under ASC 815, and in order to conclude equity classification, the Company also assesses whether the warrants are indexed to its Common Stock and whether the warrants are classified as equity under ASC 815 or other applicable GAAP. After all relevant assessments, the Company concludes whether the warrants are classified as liability or equity. Liability classified warrants require fair value accounting at issuance and subsequent to initial issuance with all changes in fair value after the issuance date recorded in the unaudited condensed consolidated statements of operations. Equity classified warrants only require fair value accounting at issuance with no changes recognized subsequent to the issuance date.

***Convertible Notes Payable***

When the Company issues convertible debt, it first evaluates the balance sheet classification of the convertible instrument in its entirety to determine (1) whether the instrument should be classified as a liability under ASC 480, Distinguishing Liabilities from Equity, and (2) whether the conversion feature should be accounted for separately from the host instrument. A conversion feature of a convertible debt instrument would be separated from the convertible instrument and classified as a derivative liability if the conversion feature, were it a standalone instrument, meets the definition of a "derivative" in ASC 815, Derivatives and Hedging. When a conversion feature meets the definition of an embedded derivative, it would be separated from the host instrument and classified as a derivative liability carried on the consolidated balance sheet at fair value, with any changes in its fair value recognized currently in the unaudited condensed consolidated statements of operations.

***Redeemable Preferred Stock***

Accounting for convertible or redeemable equity instruments in the Company's own equity requires an evaluation of the hybrid security to determine if liability classification is required under ASC 480-10. Liability classification is required for freestanding financial instruments that are not debt in legal form and are: (1) subject to an unconditional obligation requiring the issuer to redeem the instrument by transferring assets (i.e. mandatorily redeemable), (2) instruments other than equity shares that embody an obligation of the issuer to repurchase its equity shares, or (3) certain types of instruments that obligate the issuer to issue a variable number of equity shares. Securities that do not meet the scoping criteria to be classified as a liability under ASC 480 are subject to redeemable equity guidance, which prescribes securities that may be subject to redemption upon an event not solely within the control of the issuer to be classified outside permanent equity (i.e., classified in temporary equity). Securities classified in temporary equity are initially measured at the proceeds received, net of issuance costs and excluding the fair value of bifurcated embedded derivatives (if any). Subsequent measurement of the carrying value is not required unless the instrument is probable of becoming redeemable or is currently redeemable. When the instruments are currently redeemable or probable of becoming redeemable, the Company will recognize changes in the redemption value immediately as they occur and adjust the carrying value of the security to equal the then current maximum redemption value at the end of each reporting period.

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**Item 3. Quantitative and Qualitative Disclosures about Market Risk**

As a smaller reporting company, we are not required to provide the information required by this Item.

**Item 4. Controls and Procedures**

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

***Evaluation of Disclosure Controls and Procedures***

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2025. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective, due solely to the material weakness in our internal control over financial reporting, including the application of accounting policies for revenue recognition and inventory and technical accounting areas. As a result, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with GAAP. Accordingly, management believes that the financial statements included in this Quarterly Report on Form 10-Q present fairly in all material respects our financial position, results of operations and cash flows for the period presented.

Management has begun to design and implement remediation steps to improve our disclosure controls and procedures and our internal control over financial reporting. Specifically, we are expanding and improving our review process for complex transactions. We are further improving this process by enhancing access to accounting literature, identification of third-party professionals with whom to consult regarding complex accounting applications, and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals.

***Changes in Internal Control Over Financial Reporting***

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period from January 1, 2025 through September 30, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

**PART II - OTHER INFORMATION**

**Item 1. Legal Proceedings.**

We are not party to any material legal proceedings. From time to time, we may be involved in legal proceedings or subject to claims incident to the ordinary course of business. The outcome of litigation is inherently uncertain, and there can be no assurances that favorable outcomes will be obtained. In addition, regardless of the outcome, such proceedings or claims can have an adverse impact on us, which may be material because of defense and settlement costs, diversion of resources and other factors.

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**Item 1A. Risk Factors.**

The risks described under the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024 could materially and adversely affect our business, financial condition, results of operations, cash flows, future prospects, and the trading price of our Class A Common Stock. The risks and uncertainties described therein are not the only ones we face. Additional risks and uncertainties that we are unaware of or that we currently deem immaterial may also become important factors that adversely affect our business.

You should carefully read and consider such risks, together with all of the other information in our Annual Report on Form 10-K for the year ended December 31, 2024, in this Quarterly Report on Form 10-Q (including the disclosures in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in our unaudited condensed consolidated financial statements and related notes), and in the other documents that we file with the SEC.

There have been no material changes from the risk factors previously disclosed under the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024.

**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.**

(a) During the quarter ended September 30, 2025, there were no unregistered sales of our securities that were not reported in a Current Report on Form 8-K.

(b) Not applicable.

(c) None.

**Item 3. Defaults Upon Senior Securities.**

None.

**Item 4. Mine Safety Disclosures.**

Not Applicable.

**Item *5.* Other Information.**

None

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**Item 6. Exhibits.**

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

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| | |
|:---|:---|
| **No** | **Description of Exhibit** |
| 10.1 | [<u>Form of Securities Purchase Agreement, dated as of January 8, 2025 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 14, 2025).</u>](http://www.sec.gov/Archives/edgar/data/1922858/000121390025003462/ea022758901ex10-1_ecdauto.htm) |
| 10.2 | [<u>Form of Senior Secured Convertible Note, dated as of January 13, 2025 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 14, 2025).</u>](http://www.sec.gov/Archives/edgar/data/1922858/000121390025003462/ea022758901ex10-2_ecdauto.htm) |
| 10.3 | [<u>Form of Common Share Warrant, dated as of January 13, 2025 (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 14, 2025).</u>](http://www.sec.gov/Archives/edgar/data/1922858/000121390025003462/ea022758901ex10-3_ecdauto.htm) |
| 10.4 | [<u>Form of Registration Rights Agreement, dated January 13, 2025 (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 14, 2025).</u>](http://www.sec.gov/Archives/edgar/data/1922858/000121390025003462/ea022758901ex10-4_ecdauto.htm) |
| 10.5 | [<u>Form of Business Loan and Security Agreement, dated February 20, 2025, by and among Agile Capital Funding, LLC, Agile Lending, LLC, ECD Automotive Design Inc. and Humble Imports Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 28, 2025).</u>](http://www.sec.gov/Archives/edgar/data/1922858/000121390025018856/ea023220601ex10-1_ecdauto.htm) |
| 10.6 | [<u>Form of Consulting Agreement, dated February 20, 2025, by and among Agile Capital Funding, LLC, ECD Automotive Design Inc. and Hudson Growth Ventures LLC (incorporated by reference to Exhibit 10.24 to the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on March 25, 2025).</u>](http://www.sec.gov/Archives/edgar/data/1922858/000101376225002245/ea023407801ex10-24_ecdauto.htm) |
| 10.7 | [<u>Form of Business Loan and Security Agreement, dated April 4, 2025, by and among Defender SPV LLC, ECD Automotive Design Inc. and Humble Imports Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with/ the Securities and Exchange Commission on April 11, 2025).</u>](http://www.sec.gov/Archives/edgar/data/1922858/000121390025031173/ea023793401ex10-1_ecdauto.htm) |
| 10.8 | [<u>Amendment dated May 7, 2025 to the Usage Agreement, dated as of November 14, 2024 by and between Humble Imports Inc d/b/a E.C.D. Automotive Design and Member Hubs Palm Beach, LLC (incorporated by reference to Exhibit 10.8 to the Quarterly Report on Form 10-Q/ filed with the Securities and Exchange Commission on May 21, 2025).</u>](http://www.sec.gov/Archives/edgar/data/1922858/000121390025046180/ea024266101ex10-8_ecdauto.htm) |
| 10.10 | [<u>Form of Amendment and Exchange Agreement, dated as of May 14, 2025 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 15, 2025).</u>](http://www.sec.gov/Archives/edgar/data/1922858/000121390025043751/ea024235101ex10-1_ecd.htm) |
| 10.11 | [<u>Form of Securities Purchase Agreement, dated as of June 5, 2025 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on June 11, 2025).</u>](http://www.sec.gov/Archives/edgar/data/1922858/000121390025053525/ea024540001ex10-1_ecd.htm) |
| 10.12 | [<u>Form of Senior Secured Convertible Note, dated as of June 5, 2025 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on June 11, 2025).</u>](http://www.sec.gov/Archives/edgar/data/1922858/000121390025053525/ea024540001ex10-2_ecd.htm) |
| 10.13 | [<u>Form of Second Amendment and Exchange Agreement, dated as of June 20, 2025 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on June 23, 2025).</u>](http://www.sec.gov/Archives/edgar/data/1922858/000121390025056429/ea024631901ex10-1_ecdauto.htm) |
| 10.14 | [<u>Form of Third Amendment and Exchange Agreement, dated as of July 7, 2025 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 7, 2025).</u>](http://www.sec.gov/Archives/edgar/data/1922858/000121390025061673/ea024824701ex10-1_ecdauto.htm)  |
| 10.15 | [<u>Form of Securities Purchase Agreement, dated August 13, 2025 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on August 14, 2025).</u>](http://www.sec.gov/Archives/edgar/data/1922858/000121390025075915/ea025316001ex10-1_ecdauto.htm) |
| 10.16\* | [<u>Form of Consulting Agreement, dated March 28, 2025, by and among Agile Capital Funding, LLC, ECD Automotive Design Inc. and Hudson Growth Ventures LLC.</u>](http://www.sec.gov/Archives/edgar/data/1922858/000121390025064413/ea024892201ex10-53_ecdauto.htm) |
| 10.17\* | [<u>2</u><u><sup>nd</sup></u> <u>Amendment to Consulting Agreement, dated March 31, 2025, by and between ECD Automotive Design, Inc., as the company and DJD Holdings LLC f/k/a BNMC Films LLC, as the contractor.</u>](http://www.sec.gov/Archives/edgar/data/1922858/000121390025064413/ea024892201ex10-54_ecdauto.htm) |
| 10.18# | [<u>Equity Purchase Facility Agreement, dated as of June 20, 2025, by and among ECD Automotive Design Inc. and ECDA Bitcoin Treasury Strategy LLC.</u>](http://www.sec.gov/Archives/edgar/data/1922858/000121390025072755/ea025191801ex10-63_ecdauto.htm) |
| 10.19# | [Agreement, dated September 24, 2025, between ECD Automotive Design, Inc. and Loeb & Loeb LLP (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on September 29, 2025).](http://www.sec.gov/Archives/edgar/data/1922858/000121390025092676/ea025913101ex10-1_ecdauto.htm) |
| 10.20# | [Common Stock Purchase Warrant, dated September 24, 2025 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on September 29, 2025).](http://www.sec.gov/Archives/edgar/data/1922858/000121390025092676/ea025913101ex10-2_ecdauto.htm) |
| 31.1\* | [<u>Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15(d)-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</u>](ex_859181.htm) |
| 31.2\* | [<u>Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15(d)-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</u>](ex_859182.htm) |
| 32.1\*\* | [<u>Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</u>](ex_859183.htm) |
| 32.2\*\* | [<u>Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</u>](ex_859184.htm) |
| 101.INS\* | Inline XBRL Instance Document |
| 101.SCH\* | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL\* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF\* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB\* | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE\* | Inline XBRL Extension Presentation Linkbase Document |
| 104\* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |

---

# Previously filed

\* Filed herewith.

\*\* Furnished herewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 52

------

[**Table of Contents**](#toc)

**SIGNATURES**

Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | |
|:---|:---|:---|
| Date: November 19, 2025 | | |
|  | **ECD Automotive Design, Inc.** | **ECD Automotive Design, Inc.** |
|  | /s/ Scott Wallace | /s/ Scott Wallace |
|  | Name:  | Scott Wallace |
|  | Title: | Chief Executive Officer |
|  |  | *(Principal Executive Officer)* |
|  | /s/ Victoria Hay | /s/ Victoria Hay |
|  | Name: | Victoria Hay |
|  | Title: | Chief Financial Officer |
|  |  | *(Principal Financial and Accounting Officer)* |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 53

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO**

**EXCHANGE ACT RULES 13a-14(a) and 15d-14(a), AS ADOPTED PURSUANT TO**

**SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Scott Wallace, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this quarterly report on Form 10-Q of ECD Automotive Design, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| Date: November 19, 2025 | /s/ Scott Wallace |
|  | Scott Wallace |
|  | Chief Executive Officer<br> *(Principal Executive Officer)* |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO**

**EXCHANGE ACT RULES 13a-14(a) and 15d-14(a), AS ADOPTED PURSUANT TO**

**SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Victoria Hay, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this quarterly report on Form 10-Q of ECD Automotive Design, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| Date: November 19, 2025 | /s/ Victoria Hay |
|  | Victoria Hay |
|  | Chief Financial Officer<br> *(Principal Financial and Accounting Officer)* |

---

## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED**

**PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with this Quarterly Report of ECD Automotive Design, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned Scott Wallace, Chief Executive Officer (Principal Executive Officer) of the Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| Date: November 19, 2025 | /s/ Scott Wallace |
|  | Scott Wallace |
|  | Chief Executive Officer<br> *(Principal Executive Officer)* |

---

A signed original of this written statement required by Section 906 has been provided to ECD Automotive Design, Inc. and will be retained by ECD Automotive Design, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

The forgoing certification is being furnished to the Securities and Exchange Commission pursuant to § 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

## Exhibit 32.2

**Exhibit 32.2**

**CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED**

**PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with this Quarterly Report of ECD Automotive Design, Inc. (the " Company") on Form 10-Q for the period ended September 30, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned Victoria Hay, Chief Financial Officer (Principal Financial and Accounting Officer) of the Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| Date: November 19, 2025 | /s/ Victoria Hay |
|  | Victoria Hay |
|  | Chief Financial Officer<br> *(Principal Financial and Accounting Officer)* |

---

A signed original of this written statement required by Section 906 has been provided to ECD Automotive Design, Inc. and will be retained by ECD Automotive Design, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

The forgoing certification is being furnished to the Securities and Exchange Commission pursuant to § 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.