424B3 1 form424b3.htm

 

Filed Pursuant to Rule 424(b)(3)

Registration No. 333-272914

 

PROXY STATEMENT PROSPECTUS

 

PROXY STATEMENT FOR A SPECIAL MEETING OF STOCKHOLDERS OF

EF HUTTON ACQUISITION CORPORATION I

 

AND PROSPECTUS FOR UP TO 25,100,000 SHARES OF COMMON STOCK,

39,000 SHARES OF SERIES A CONVERTIBLE PREFERRED STOCK,

A WARRANT TO PURCHASE 1,091,525 SHARES OF COMMON STOCK AND

A WARRANT TO PURCHASE 15,819 SHARES OF SERIES A CONVERTIBLE PREFERRED STOCK

 

Dear EF Hutton Acquisition Corporation I Stockholders:

 

You are cordially invited to attend the special meeting of the stockholders (the “EFHAC Special Meeting”) of EF Hutton Acquisition Corporation I (“EFHAC”), which will be held at 10:30 a.m., Eastern time, on December 7, 2023. The Board of Directors has determined to convene and conduct the EFHAC Special Meeting in a virtual meeting format at https://www.cstproxy.com/efhuttonspaci/sm2023 or by telephone access (listen-only): Within the U.S. and Canada: 1 800-450-7155 (toll-free), Outside of the U.S. and Canada: +1 857-999-9155 (standard rates apply) Conference ID: 1848398#. Stockholders will NOT be able to attend the EFHAC Special Meeting in person. This proxy statement/prospectus includes instructions on how to access the virtual EFHAC Special Meeting and how to listen, vote, and submit questions from home or any remote location with Internet connectivity.

 

EFHAC is a Delaware blank check company established for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business transaction with one or more businesses or entities, which we refer to as a “target business.” Holders of our common stock, par value $0.0001 per share (the “Common Stock”) will be asked to approve, among other things, the merger agreement, dated as of March 3, 2023 (the “Merger Agreement”), by and among EFHAC, Humble Imports Inc d/b/a ECD Auto Design, a Florida corporation (“ECD”), ECD Auto Design UK, Ltd., an England and Wales corporation (the “ECD UK”), EFHAC Merger Sub, Inc., a Florida corporation and wholly-owned subsidiary of EFHAC (“Merger Sub”) and Scott Wallace, as the Securityholder Representative, and the other related proposals.

 

Upon the closing (the “Closing”) of the transactions contemplated in the Merger Agreement, Merger Sub will merge with and into ECD, with ECD surviving the merger as a wholly-owned subsidiary of EFHAC. In addition, in connection with the consummation of the Business Combination (as defined below), EFHAC will be renamed “ECD Automotive Design, Inc.” or such other name designated by ECD by notice to EFHAC. The transactions contemplated under the Merger Agreement are referred to in this proxy statement/prospectus as the “Business Combination” and the combined company existing after the Business Combination is referred to in this proxy statement/prospectus as the “Combined Company.”

 

As consideration for the Merger Agreement, upon the Closing, EFHAC shall issue the ECD Securityholders 25,100,000 shares of EFHAC common stock, $0.0001 par value per share (the “Common Stock”); 39,000 shares of EFHAC’s Series A Convertible Preferred Stock (the “Series A Preferred Stock”), a warrant to purchase 1,091,525 shares of EFHAC Common Stock (“Common Shares Warrant”) and a warrant to purchase 15,819 shares of EFHAC Series A Preferred Stock (“Preferred Shares Warrant”), plus a cash payment of $2,000,000, pro rata to the ECD Initial Securityholders.

 

On June 1, 2023, EFHAC’s stockholders approved an amendment to EFHAC’s amended and restated certificate of incorporation extending the date by which EFHAC has to consummate a business combination up to nine times, each by an additional one-month, from June 13, 2023 to March 13, 2024 by depositing into the trust account (the “Trust Account”) the lesser of $80,000 and $0.04 for each outstanding share of common stock sold in EFHAC’s initial public offering (the “IPO) for each one-month extension. On June 1, 2023, EFHAC filed such amendment to EFHAC’s amended and restated certificate of incorporation with the Delaware Secretary of State. In connection with the stockholders’ vote at the Special Meeting of Stockholders held by EFHAC on June 1, 2023, 8,007,353 shares were tendered for redemption, leaving 3,492,647 Public Shares outstanding. EFHAC has extended the date by which it has to consummate a business combination until December 13, 2023. Accordingly, EFHAC has until December 13, 2023 (or March 13, 2024 in the event the period of time to complete the initial business combination is fully extended) to consummate a business combination.

 

We anticipate that upon completion of the Business Combination, assuming no redemptions of the 3,492,647 shares of Common Stock sold by EFHAC to the public in its IPO (the “Public Shares”), EFHAC’s stockholders will retain an ownership interest of approximately 14.6% in the Combined Company, the ECD Securityholders (as defined below) will own approximately 74.5% of the Combined Company, the Initial Stockholders (as defined below) will own approximately 9.4% of the Combined Company, and EF Hutton (as defined below) will own approximately 1.5% of the Combined Company. If maximum Public Shares are redeemed, EFHAC’s stockholders will retain an ownership interest of approximately 6.9% in the Combined Company, the ECD Securityholders will own approximately 81.3% of the Combined Company, the Initial Stockholders will own approximately 10.2% of the Combined Company, and EF Hutton will own approximately 1.6% of the Combined Company. The ownership percentages with respect to the Combined Company do not take into account the issuance of any additional shares of Common Stock underlying the Public Warrants, the Private Warrants, the Common Shares Warrant, the Preferred Shares Warrant, the Series A Convertible Preferred Stock, or the Senior Secured Convertible Notes, but do take into account the issuance of 1,469,688 shares of the Combined Company Common Stock pursuant to the Rights (as defined below). If the actual facts are different from these assumptions (which they are likely to be), the percentage ownership retained by the EFHAC stockholders will be different. See “Unaudited Pro Forma Condensed Combined Financial Information.”

 

As of October 31, 2023, there was approximately $37,994,289 in EFHAC’s trust account (the “Trust Account”). On November 13, 2023, the record date for the EFHAC Special Meeting of stockholders, the last sale price of EFHAC’s Public Shares was $10.50.

 

Each stockholder’s vote is very important. Whether or not you plan to participate in the virtual EFHAC Special Meeting, please submit your proxy card without delay. Stockholders may revoke proxies at any time before they are voted at the meeting. Voting by proxy will not prevent a stockholder from voting virtually at the EFHAC Special Meeting if such stockholder subsequently chooses to participate in the EFHAC Special Meeting.

 

We encourage you to read this proxy statement/prospectus carefully. In particular, you should review the matters discussed under the caption “Risk Factors” beginning on page 32.

 

EFHAC’s board of directors recommends that EFHAC stockholders vote “FOR” approval of each of the proposals.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in the Business Combination or otherwise, or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

 

This proxy statement/prospectus is dated November 13, 2023, and is first being mailed to stockholders of EFHAC on or about November 15, 2023 .

 

/s/ Benjamin Piggott  
Benjamin Piggott  
Chief Executive Officer  
EF Hutton Acquisition Corporation I  
November 13, 2023  

 

 

 

 

EF HUTTON ACQUISITION CORPORATION I

24 Shipyard Drive, Suite 102

Hingham, MA 02043

Telephone: (929) 528-0767

 

NOTICE OF SPECIAL MEETING OF

EF HUTTON ACQUISITION CORPORATION I STOCKHOLDERS

To Be Held on December 7, 2023

 

To EF Hutton Acquisition Corporation I Stockholders:

 

NOTICE IS HEREBY GIVEN, that you are cordially invited to attend a meeting of the stockholders of EF Hutton Acquisition Corporation I (“EFHAC,” “we”, “our”, or “us”), which will be held at 10:30 a.m., Eastern time, on December 7, 2023, at https://www.cstproxy.com/efhuttonspaci/sm2023 (the “EFHAC Special Meeting”). In light of COVID-19, we will hold the EFHAC Special Meeting virtually. You can participate in the virtual EFHAC Special Meeting as described in “The EFHAC Special Meeting,” as follows:

 

Meeting Date: Thursday, December 7, 2023

Meeting Time: 10:30 a.m.

 

Special Meeting-meeting webpage (information, webcast, telephone access and replay):

https://www.cstproxy.com/efhuttonspaci/sm2023

 

Telephone access (listen-only):

Within the U.S. and Canada: 1 800-450-7155 (toll-free)

Outside of the U.S. and Canada: +1 857-999-9155 (standard rates apply)

 

Conference ID: 1848398#

 

During the EFHAC Special Meeting, EFHAC’s stockholders will be asked to consider and vote upon the following proposals, which we refer to herein as the “Proposals”:

 

Proposal 1 To consider and vote upon a proposal to approve and adopt the merger agreement, dated as of March 3, 2023 (the “Merger Agreement”), by and among by and among EFHAC, Humble Imports, Inc. d/b/a ECD Auto Design, a Florida corporation (“ECD”), ECD Auto Design UK, Ltd., an England and Wales corporation (the “ECD UK”), EFHAC Merger Sub, Inc., a Florida corporation and wholly-owned subsidiary of EFHAC (“Merger Sub”) and Scott Wallace, as the Securityholder Representative, pursuant to which Merger Sub will merge with and into ECD, with ECD surviving the merger as a wholly-owned subsidiary of EFHAC (the “Business Combination”). In addition, in connection with the consummation of the Business Combination, EFHAC will be renamed “ECD Automotive Design, Inc.” or such other name designated by ECD by notice to EFHAC. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A. This proposal is referred to as the “Business Combination Proposal” or “Proposal 1.”
     
Proposal 2 To consider and vote upon a proposal to approve an amendment (the “NTA Requirement Amendment”) to the Amended and Restated Certificate of Incorporation of EFHAC, a copy of which is to be attached to this proxy statement/prospectus as Annex B, to expand the methods that EFHAC may employ to not become subject to the “penny stock” rules of the Securities and Exchange Commission, which we refer to as the “NTA Requirement Amendment Proposal” or “Proposal No. 2”;
     
Proposal 3 To consider and vote upon a proposal to approve the Second Amended and Restated Certificate of Incorporation of EFHAC, a copy of which is to be attached to this proxy statement/prospectus as Annex C (the “Amended Charter”). This proposal is referred to as the “Charter Amendment Proposal” or “Proposal 3.”
     

Proposal 4

 
To consider and vote, on a non-binding advisory basis, upon four separate governance proposals relating to material differences between EFHAC’s Current Charter and the Amended Charter to be in effect upon the completion of the Business Combination in accordance with the requirements of the U.S. Securities and Exchange Commission (the “SEC”). These proposals are referred to as the “Advisory Proposals” or “Advisory Proposals 4A-4D.”

 

  Advisory Proposal A – to increase the number of shares of common stock that the Combined Company is authorized to issue from 101,000,000 shares, consisting of 100,000,000 shares of the Common Stock and 1,000,000 shares of preferred stock to 1,020,000,000 shares, consisting of 1,000,000,000 shares of the Combined Company Common Stock and 20,000,000 shares of preferred stock;
     
  Advisory Proposal B – to change the number of classes of directors from one class to three classes with staggered terms;
     
  Advisory Proposal C – to change EFHAC’s name to “ECD Automotive Design, Inc.” or such other name designated by ECD by notice to EFHAC; and
     
  Advisory Proposal D –to remove the various provisions from the Current Charter applicable only to special purpose acquisition companies.

 

Proposal 5 To consider and vote upon a proposal to approve, for purposes of complying with Nasdaq Listing Rules 5635 (a) and (b), the issuance of more than 20% of the issued and outstanding shares of the common stock, par value $0.0001 per share, of EFHAC (the “Common Stock”) and the resulting change in control in connection with the Business Combination. This proposal is referred to as the “Nasdaq Proposal” or “Proposal 5.”
     
Proposal 6 To consider and vote upon a proposal to approve EFHAC’s 2023 Equity Incentive Plan. This proposal is referred to as the “Plan Proposal” or “Proposal 6.”

 

 

 

 

Proposal 7 To consider and vote upon a proposal to approve the adjournment of the EFHAC Special Meeting by the chairman thereof to a later date, if necessary, under certain circumstances, including for the purpose of soliciting additional proxies in favor of the foregoing proposals in the event EFHAC does not receive the requisite stockholder vote to approve the proposals. This proposal is called the “Adjournment Proposal” or “Proposal 7.”

 

The Business Combination Proposal is conditioned upon the approval of proposals 2, 3 and 5. It is important for you to note that, if our stockholders do not approve the Business Combination Proposal, EFHAC will not consummate the Business Combination. If EFHAC does not consummate the Business Combination and fails to complete an initial business combination by December 13, 2023 (or March 13, 2024, if the period of time to complete its initial business combination is fully extended in accordance with its Certificate of Incorporation), EFHAC will be required to dissolve and liquidate, unless we seek stockholder approval to amend our Certificate of Incorporation to extend the date by which the Business Combination may be consummated.

 

Approval of the Business Combination Proposal, the Advisory Proposals, the Nasdaq Proposal, the Plan Proposal and the Adjournment Proposal will each require the affirmative vote of the holders of a majority of the issued and outstanding shares of Common Stock present by virtual attendance or represented by proxy and entitled to vote at the EFHAC Special Meeting or any adjournment thereof. Approval of the NTA Requirement Amendment Proposal and the Charter Amendment Proposal will require the affirmative vote of a majority of the issued and outstanding shares of Common Stock.

 

On June 1, 2023, EFHAC’s stockholders approved an amendment to EFHAC’s amended and restated certificate of incorporation extending the date by which EFHAC has to consummate a business combination up to nine times, each by an additional one-month, from June 13, 2023 to March 13, 2024 by depositing into the Trust Account the lesser of $80,000 and $0.04 for each outstanding share of common stock sold in EFHAC’s IPO for each one-month extension. On June 1, 2023, EFHAC filed such amendment to EFHAC’s amended and restated certificate of incorporation with the Delaware Secretary of State. In connection with the stockholders’ vote at the Special Meeting of Stockholders held by EFHAC on June 1, 2023, 8,007,353 shares were tendered for redemption, leaving 3,492,647 Public Shares outstanding. EFHAC has extended the date by which it has to consummate a business combination until December 13, 2023. Accordingly, EFHAC has until December 13, 2023 (or by March 13, 2024 if the time to complete its initial business combination is extended) to consummate a business combination.

 

As of November 13, 2023, there were 6,625,147 shares of Common Stock issued and outstanding and entitled to vote. Only EFHAC stockholders who hold Common Stock of record as of the close of business on November 13, 2023 are entitled to vote at the EFHAC Special Meeting or any adjournment of the EFHAC Special Meeting. This proxy statement/prospectus is first being mailed to EFHAC stockholders on or about November 15, 2023.

 

Investing in EFHAC’s securities involves a high degree of risk. See “Risk Factors” beginning on page 32 for a discussion of information that should be considered in connection with an investment in EFHAC’s securities.

 

YOUR VOTE IS VERY IMPORTANT. PLEASE VOTE YOUR SHARES PROMPTLY.

 

Whether or not you plan to participate in the virtual EFHAC Special Meeting, please complete, date, sign and return the enclosed proxy card without delay, or submit your proxy through the internet or by telephone as promptly as possible in order to ensure your representation at the EFHAC Special Meeting no later than the time appointed for the EFHAC Special Meeting or adjourned meeting. Voting by proxy will not prevent you from voting your shares of Common Stock online if you subsequently choose to participate in the virtual EFHAC Special Meeting. Please note, however, that if your shares are held of record by a broker, bank or other agent and you wish to vote at the EFHAC Special Meeting, you must obtain a proxy issued in your name from that record. Only stockholders of record at the close of business on the record date may vote at the EFHAC Special Meeting or any adjournment or postponement thereof. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not participate in the virtual EFHAC Special Meeting, your shares will not be counted for purposes of determining whether a quorum is present at, and the number of votes voted at, the EFHAC Special Meeting.

 

You may revoke a proxy at any time before it is voted at the EFHAC Special Meeting by executing and returning a proxy card dated later than the previous one, by participating in the virtual EFHAC Special Meeting and casting your vote by hand or by ballot (as applicable) or by submitting a written revocation to Advantage Proxy, that is received by the proxy solicitor before we take the vote at the EFHAC Special Meeting. If you hold your shares through a bank or brokerage firm, you should follow the instructions of your bank or brokerage firm regarding revocation of proxies.

 

EFHAC’s board of directors recommends that EFHAC stockholders vote “FOR” approval of each of the proposals. When you consider EFHAC’s Board of Director’s recommendation of these proposals, you should keep in mind that EFHAC’s directors and officers have interests in the Business Combination that may conflict or differ from your interests as a stockholder. See the section titled “Proposal 1 - The Business Combination Proposal — Interests of Certain Persons in the Business Combination .”

 

 

 

 

If you have any questions or need assistance voting your shares, please call our proxy solicitor, Advantage Proxy, at (877) 870-8565. On behalf of the EFHAC Board of Directors, I thank you for your support and we look forward to the successful consummation of the Business Combination.

 

By Order of the Board of Directors,  
   
/s/ Benjamin Piggott  
Benjamin Piggott  
Chief Executive Officer  
EF Hutton Acquisition Corporation I  
November 13, 2023  

 

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS.

 

TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST (I) IF YOU: (A) HOLD PUBLIC SHARES, OR (B) HOLD PUBLIC SHARES THROUGH PUBLIC UNITS AND YOU SEPARATE YOUR PUBLIC UNITS INTO THE UNDERLYING PUBLIC SHARES, WARRANTS AND RIGHTS PRIOR TO EXERCISING YOUR REDEMPTION RIGHTS WITH RESPECT TO THE PUBLIC SHARES; AND (II) PRIOR TO 5:00 P.M., EASTERN TIME, ON DECEMBER 5, 2023, (A) SUBMIT A WRITTEN REQUEST TO CONTINENTAL THAT EFHAC REDEEM YOUR PUBLIC SHARES FOR CASH AND (B) DELIVER YOUR PUBLIC SHARES TO CONTINENTAL, PHYSICALLY OR ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM, IN EACH CASE, IN ACCORDANCE WITH THE PROCEDURES DESCRIBED IN THE PROXY STATEMENT/PROSPECTUS. IF THE BUSINESS COMBINATION IS NOT CONSUMMATED, THEN THE PUBLIC SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE “THE EFHAC SPECIAL MEETING — REDEMPTION RIGHTS” IN THIS PROXY STATEMENT/PROSPECTUS FOR MORE SPECIFIC INSTRUCTIONS.

 

 

 

 

TABLE OF CONTENTS

 

    Page
FREQUENTLY USED TERMS   1
SHARE CALCULATIONS AND OWNERSHIP PERCENTAGES   4
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS   5
QUESTIONS AND ANSWERS ABOUT THE PROPOSED BUSINESS COMBINATION AND THE OTHER PROPOSALS TO BE PRESENTED AT THE EFHAC SPECIAL MEETING   6
SUMMARY   18
SELECTED HISTORICAL FINANCIAL DATA OF EFHAC   27
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ECD   29
SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION   30
TRADING MARKET AND DIVIDENDS   31
RISK FACTORS   32
THE EFHAC SPECIAL MEETING   51
PROPOSAL 1 — THE BUSINESS COMBINATION PROPOSAL   56
PROPOSAL 2 — THE NTA REQUIREMENT AMENDMENT PROPOSAL   69
PROPOSAL 3 — THE CHARTER AMENDMENT PROPOSAL   71
PROPOSALS 4A – 4D — THE ADVISORY PROPOSALS   73
PROPOSAL 5 — THE NASDAQ PROPOSAL   75
PROPOSAL 6 — THE PLAN PROPOSAL   76
PROPOSAL 7 — THE ADJOURNMENT PROPOSAL   77
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES   78
EFHAC’S BUSINESS   86
INFORMATION ABOUT ECD   101
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF EFHAC   112
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF ECD   116
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION   130
COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA COMBINED PER SHARE FINANCIAL INFORMATION   141
EFHAC’S DIRECTORS AND EXECUTIVE OFFICERS   142
EXECUTIVE COMPENSATION   151
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMBINED COMPANY AFTER THE BUSINESS COMBINATION   153
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT   157
DESCRIPTION OF EFHAC’S SECURITIES   159
COMPARISON OF CORPORATE GOVERNANCE AND STOCKHOLDER RIGHTS   176
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS   179
LEGAL MATTERS   181
EXPERTS   181
DELIVERY OF DOCUMENTS TO STOCKHOLDERS   181
SUBMISSION OF STOCKHOLDER PROPOSALS   181
FUTURE STOCKHOLDER PROPOSALS   181
WHERE YOU CAN FIND MORE INFORMATION   182
INDEX TO FINANCIAL STATEMENTS   F-1
ANNEX A – MERGER AGREEMENT AND FIRST AMENDMENT TO THE MERGER AGREEMENT   A-1
ANNEX B – FORM OF AMENDMENT TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION   B-1
ANNEX C – SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION   C-1
ANNEX D – FORM OF CERTIFICATE OF DESIGNATION OF THE SERIES A CONVERTIBLE PREFERRED STOCK   D-1
ANNEX E – FORM OF WARRANT TO PURCHASE COMMON STOCK   E-1
ANNEX F – FORM OF WARRANT TO PURCHASE SERIES A CONVERTIBLE PREFERRED STOCK   F-1
ANNEX G – 2023 EQUITY INCENTIVE PLAN PROPOSAL   G-1

 

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ABOUT THIS PROXY STATEMENT/PROSPECTUS

 

This document, which forms part of a registration statement on Form S-4 filed with the U.S. Securities and Exchange Commission (the “SEC”) by EFHAC, constitutes a prospectus of EFHAC under the Securities Act, with respect to the shares of Common Stock of EFHAC to be issued to ECD’s stockholders pursuant to the Merger Agreement. This document also constitutes a proxy statement of EFHAC under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and an information statement of ECD under Section 14(c) of the Exchange Act.

 

You should rely only on the information contained in this proxy statement/prospectus in deciding how to vote on the Business Combination. Neither EFHAC nor ECD has authorized anyone to give any information or to make any representations other than those contained in this proxy statement/prospectus. Do not rely upon any information or representations made outside of this proxy statement/prospectus. The information contained in this proxy statement/prospectus may change after the date of this proxy statement/prospectus. Do not assume after the date of this proxy statement/prospectus that the information contained in this proxy statement/prospectus is still correct.

 

Information contained in this proxy statement/prospectus regarding EFHAC and its business, operations, management and other matters has been provided by EFHAC, and information contained in this proxy statement/prospectus regarding ECD and its business, operations, management and other matters has been provided by ECD.

 

This proxy statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities, or the solicitation of a proxy or consent, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. For additional information, see item “Where You Can Find More Information”.

 

MARKET AND INDUSTRY DATA

 

Certain information contained in this document relates to or is based on studies, publications, surveys and other data obtained from third-party sources and EFHAC’s and ECD’s own internal estimates and research. We believe our internal research and these third-party sources to be reliable as of the date of this proxy statement/prospectus.

 

TRADEMARKS

 

This document contains references to trademarks, trade names and service marks belonging to other entities. Solely for convenience, trademarks, trade names and service marks referred to in this proxy statement/prospectus may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by any other companies.

 

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FREQUENTLY USED TERMS

 

Unless otherwise stated in this proxy statement/prospectus, the terms, “we,” “us,” “our” or “EFHAC” refer to EF Hutton Acquisition Corporation I, a Delaware corporation. Further, in this document:

 

  “Additional Agreements” means the A&R Registration Rights Agreement, the Company Support Agreements, the Sponsor Support Agreement, the Company Lock-Up Agreements, the Parent Lock-Up Agreements, the Restrictive Covenant Agreement and the Employment Agreements.

 

  “Amended Charter” means the Second Amended & Restated Certificate of Incorporation of EFHAC to take effect upon EFHAC’s stockholders approving the Second Amended & Restated Certificate of Incorporation, in the form included as Annex C to this proxy statement/prospectus, as further described in the “Charter Amendment Proposal” and the “Advisory Proposals” sections of this proxy statement/prospectus.
     
  “Anchor Investors” means the entities that committed to invest in the IPO and in exchange for such commitment received founder shares.

 

  “A&R Registration Rights Agreement” means the Amended and Restated Registration Rights Agreement to be entered into prior to the Closing by EFHAC and certain stockholders of EFHAC.

 

  “Board” means the board of directors of EFHAC.

 

  “Business Combination” means the merger and the other transactions contemplated by the Merger Agreement.

 

  “Certificate of Incorporation” or “Current Charter” means EFHAC’s current Amended and Restated Certificate of Incorporation.

 

  “Closing” means the closing of the Business Combination.

 

  “Closing Date” means date of the consummation of the Business Combination.
     
  “Closing Cash Consideration” means the cash payment of $2,000,000 to be paid to the ECD Initial Security Holders at the Effective Time.

 

  “Closing Merger Consideration Shares” means 25,100,000 shares of the Combined Company Common Stock to be issued to ECD Securityholders at the Effective Time.

 

  “Code” means the Internal Revenue Code of 1986, as amended.

 

  “Combined Company” means EFHAC after the Business Combination, renamed “ECD Automotive Design, Inc.” or such other name designated by ECD by notice to EFHAC.

 

  “Combined Company Common Stock” means the common stock, par value $0.0001 per share, of the Combined Company.
     
  “Common Stock” means the common stock, $0.0001 par value per share, of EFHAC.

 

  “Company Support Agreements” means the agreements entered into simultaneously with the execution of the Merger Agreement pursuant to which certain stockholders of ECD agreed to vote all of the shares of ECD Stock beneficially owned by them in favor of the Business Combination.

 

  “Continental” means Continental Stock Transfer & Trust Company, EFHAC’s transfer agent.

 

  “DGCL” means the Delaware General Corporation Law.

 

  “ECD” or the “Company” means Humble Imports Inc, a Florida corporation, d/b/a ECD Auto Design.

 

  “ECD Additional Agreements” means the Company Support Agreement, the Company Lock-Up Agreement and the Restrictive Covenant Agreement.

 

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  “ECD Board” means the board of directors of ECD.

 

  “ECD Charter” means the articles of incorporation of ECD in effect prior to the Effective Time.

 

  “ECD Common Stock” means the shares of common stock of ECD.
     
 

ECD Initial Securityholders” means Emily J. Humble, as Trustee of the Emily J. Humble Revocable Trust, dated June 27, 2018, Scott Malcolm Wallace, as Trustee of the Scott Malcolm Wallace Revocable Trust, dated December 20, 2017, Thomas A. Humble, as Trustee of the Thomas A. Humble Revocable Trust, dated June 27, 2018 and Elliot J. Humble, as Trustee of the Elliot J. Humble Revocable Trust, dated December 20, 2017

 

  “ECD Securityholders” means Emily J. Humble, as Trustee of the Emily J. Humble Revocable Trust, dated June 27, 2018, Scott Malcolm Wallace, as Trustee of the Scott Malcolm Wallace Revocable Trust, dated December 20, 2017, Thomas A. Humble, as Trustee of the Thomas A. Humble Revocable Trust, dated June 27, 2018, Elliot J. Humble, as Trustee of the Elliot J. Humble Revocable Trust, dated December 20, 2017 and Defender SPV LLC.
     

 

 

“ECD UK” means ECD Auto Design UK, Ltd., an England and Wales corporation, a wholly-owned subsidiary of ECD.
     
  “Effective Time” means the time at which the Business Combination becomes effective.

 

  “EFHAC” or the “Parent” means EF Hutton Acquisition Corporation I, a Delaware corporation.

 

  “EFHAC Special Meeting” means the special meeting of the stockholders of EFHAC, which will be held at 10:30 a.m., Eastern time, on December 7, 2023.

 

  “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

  “Founder Shares” means the 2,875,000 outstanding shares of Common Stock held by the Sponsor, sold for an aggregate purchase price of $25,000.

 

  “GAAP” means accounting principles generally accepted in the United States of America.

 

  “Initial Stockholders” means the Sponsor, SHR Ventures, LLC, Kevin M. Bush, Stanley Hutton Rumbough, Paul Hodge, Jr., Thomas Wood and Anne Lee.

 

  “IPO” refers to the initial public offering of 11,500,000 Units of EFHAC consummated on September 13, 2022.

 

  “IRS” means the United States Internal Revenue Service.

 

  “Lock-Up Agreements” means the agreements entered into simultaneously with or following the execution of the Merger Agreement, pursuant to which certain ECD Securityholders agreed to certain restrictions on transfer of shares of Common Stock they will receive pursuant to the Business Combination for a period of six months after the Closing Date.

 

  “Merger Agreement” means that certain Merger Agreement, dated as of March 3, 2023, by and among EFHAC, ECD, ECD UK, Merger Sub and Scott Wallace, as the Securityholder Representative, as amended by the First Amendment to the Merger Agreement, dated October 14, 2023 and as it may be further amended or supplemented.

 

  “Merger Sub” means EFHAC Merger Sub, Inc., a Florida corporation and wholly-owned subsidiary of EFHAC.

 

  “Nasdaq” means the Nasdaq Stock Market LLC.

 

  “Note Financing” means the Senior Secured Convertible Note contemplated by the Parent Securities Purchase Agreement.

 

  “Organizational Documents” means organizational or governing documents of an applicable entity.

 

  “Parent Securities Purchase Agreement.” means the Securities Purchase Agreement, dated October 6, 2023, by and among the Parent and the Lender.

 

  “Private Units” mean the 257,500 Units issued to the Sponsor in a private placement.

 

  “Private Warrants” means the Warrants that are part of the Private Units.

 

  “Proposals” means the Proposals 1 – 7 to be voted on at the EFHAC Special Meeting.

 

2

 

 

  “Public Share” means a share of Common Stock held by EFHAC stockholders other than the Sponsor.

 

  “Public Stockholders” means holders of Public Shares.

 

  “Public Units” means the 11,500,000 Units sold by EFHAC in the IPO and upon exercise of the Over-Allotment Option.

 

  “Public Warrants” means the redeemable Warrants that are part of the Public Units.

 

  “Right” means the right included as part of the Units and the Private Units that entitle the holder to one-eighth of one share of the Combined Company Common Stock upon consummation of the Business Combination.

 

  “SEC” means the U.S. Securities and Exchange Commission.

 

  “Securities Act” means the Securities Act of 1933, as amended.

 

  “Sponsor” means EF Hutton Partners, LLC, a Delaware limited liability company.

 

  “Sponsor Support Agreement” means the agreements entered into in connection with execution of the Merger Agreement pursuant to which certain stockholders of EFHAC agreed to vote all of the shares of Common Stock beneficially owned by them in favor of the Business Combination.

 

  “Trust Account” means EFHAC’s trust account maintained by Continental as trustee.

 

  “UK” means the United Kingdom.
     
  “UK Contribution” means Emily Jayne Humble’s contribution of the ECD UK to the Company pursuant to a written agreement whereby ECD UK became a wholly-owned Subsidiary of the Company.
     
  “Units” means the units of EFHAC, each consisting of one Public Share, one Warrant and one Right.

 

  “Warrants” refer to the redeemable warrants that entitle the holder thereof to purchase one share of Common Stock at a price of $11.50 per share (subject to adjustment).

 

3

 

 

SHARE CALCULATIONS AND OWNERSHIP PERCENTAGES

 

Unless otherwise specified (including in the sections entitled “Unaudited Pro Forma Condensed Combined Financial Information” and “Beneficial Ownership of Securities”), the share calculations and ownership percentages set forth in this proxy statement/prospectus with respect to EFHAC’s stockholders following the Business Combination are for illustrative purposes only and assume the following (certain capitalized terms below are defined elsewhere in this proxy statement/prospectus):

 

  1. No public stockholders exercise their redemption rights in connection with the Closing, and the balance of the Trust Account as of the Closing is the same as its balance on June 30, 2023 of approximately $37.0 million, plus the $0.3 million deposit into the Trust Account to extend the Combination Period. Please see the section entitled “The EFHAC Special Meeting — Redemption Rights.”

 

  2. There are no transfers by the Sponsor of EFHAC securities held by the Sponsor on or prior to the Closing Date.

 

  3. No holders of Warrants exercise any of the outstanding Warrants and that, in the event of redemptions of Public Shares in connection with the Closing, for each Public Share redeemed, the one-quarter Warrant included in such redeemed Public Share is forfeited.

 

  4. There are no other issuances of equity securities of EFHAC prior to or in connection with the Closing.

 

  5. That none of the ECD Securityholders exercises dissenters rights in connection with the Business Combination.

 

  6. That for all purposes the number of outstanding shares and equity-linked securities of each of EFHAC and ECD is the same as the number of outstanding shares and equity-linked securities of EFHAC and ECD, respectively, as of June 30, 2023.

 

4

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This proxy statement/prospectus contains forward-looking statements, including statements about the parties’ ability to close the Business Combination, the anticipated benefits of the Business Combination, and the financial condition, results of operations, earnings outlook and prospects of EFHAC and/or ECD and may include statements for the period following the consummation of the Business Combination. Forward-looking statements appear in a number of places in this proxy statement/prospectus including, without limitation, in the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of ECD” and “Information about ECD.” In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.

 

The forward-looking statements are based on the current expectations of the management of EFHAC and ECD as applicable and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in “Risk Factors,” those discussed and identified in public filings made with the SEC by EFHAC and the following:

 

  ECD’s ability to meet expectations related to its products, technologies and services and its ability to attract and retain revenue-generating customers and execute on its growth plans;

 

  the inability of the parties to successfully or timely consummate the Business Combination, including the risk that any required regulatory approvals are not obtained, are delayed or are subject to unanticipated conditions that could adversely affect ECD or the expected benefits of the Business Combination, if not obtained;

 

  the failure to realize the anticipated benefits of the Business Combination;

 

  the ability of EFHAC prior to the Business Combination, and the Combined Company following the Business Combination, to maintain the listing of EFHAC’s securities on Nasdaq;

 

  costs related to the Business Combination;

 

  the failure to satisfy the conditions to the consummation of the Business Combination, including the approval of the definitive Merger Agreement by the stockholders of EFHAC;

 

  the risk of actual or alleged failure to comply with data privacy laws and regulations;

 

  the outcome of any legal proceedings that may be instituted against EFHAC or ECD related to the Business Combination;

 

  the attraction and retention of qualified directors, officers, employees and key personnel of EFHAC and ECD prior to the Business Combination, and the Combined Company following the Business Combination;

 

  the impact from future regulatory, judicial, and legislative changes in ECD’s industry;

 

  the uncertain effects of the COVID-19 pandemic; and

 

  those factors set forth in documents filed, or to be filed, with the SEC by EFHAC and ECD.

 

Should one or more of these risks or uncertainties materialize or should any of the assumptions made by the management of EFHAC and ECD prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

 

All subsequent written and oral forward-looking statements concerning the Business Combination or other matters addressed in this proxy statement/prospectus and attributable to EFHAC, ECD or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this proxy statement/prospectus. Except to the extent required by applicable law or regulation, EFHAC and ECD undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this proxy statement/prospectus or to reflect the occurrence of unanticipated events.

 

5

 

 

QUESTIONS AND ANSWERS ABOUT THE PROPOSED BUSINESS COMBINATION AND

THE OTHER PROPOSALS TO BE PRESENTED AT THE EFHAC SPECIAL MEETING

 

The following are answers to some questions that you, as a stockholder of EFHAC or ECD, may have regarding the Business Combination and the Proposals being considered at the EFHAC Special Meeting. We urge you to read carefully the remainder of this proxy statement/prospectus because the information in this section does not provide all the information that might be important to you with respect to the Business Combination and the Proposals being considered at the EFHAC Special Meeting. Additional important information is also contained in the annexes to this proxy statement/prospectus.

 

QUESTIONS AND ANSWERS ABOUT THE PROPOSED BUSINESS COMBINATION — EFHAC STOCKHOLDERS AND ECD SECURITYHOLDERS

 

Q: What will happen in the Business Combination?

 

A: At the Closing, Merger Sub will merge with and into ECD, with ECD surviving such merger as the surviving entity as a wholly-owned subsidiary of EFHAC (the “Surviving Corporation”). Upon consummation of the Business Combination, ECD will become a wholly-owned subsidiary of EFHAC. In connection with the Business Combination, the cash held in the Trust Account after giving effect to any redemption of shares by EFHAC’s public stockholders will be used to pay certain fees and expenses in connection with the Business Combination, and for working capital and general corporate purposes. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A.

 

Q: What is the consideration being paid to ECD Securityholders?

 

A: Subject to the terms of the Merger Agreement and customary adjustments set forth therein, the consideration to be delivered to ECD Securityholders in connection with the Business Combination will consist of 25,100,000 shares of EFHAC common stock, $0.0001 par value per share (the “Common Stock”) and 39,000 shares of EFHAC’s Series A Convertible Preferred Stock (the “Series A Preferred Stock”), a warrant to purchase 1,091,525 shares of EFHAC Common Stock (“Common Shares Warrant”) and a warrant to purchase 15,819 shares of EFHAC Series A Preferred Stock (“Preferred Shares Warrant”), plus a cash payment of $2,000,000, pro rata to the ECD Initial Securityholders.

 

Q: When is the Business Combination expected to occur?

 

A: Assuming the requisite regulatory and stockholder approvals are received, EFHAC expects that the Business Combination will occur as soon as possible following the EFHAC Special Meeting provided all condition precedents have been satisfied or waived.

 

Q: Are ECD’s stockholders required to approve the Merger Agreement?

 

A: Yes. We expect, pursuant to the terms of the Merger Agreement, that ECD’s stockholders will approve the Merger Agreement within five business days of the effective date of the Registration Statement on Form S-4 of which this proxy statement/prospectus is a part.

 

Q: Who will manage the Combined Company after the Business Combination?

 

A: As a condition to the consummation of the Business Combination, all of the officers and directors of EFHAC will resign. For information on the anticipated management of the Combined Company, see the section titled “Directors and Executive Officers of the Combined Company after the Business Combination” in this proxy statement/prospectus.

 

6

 

 

Q: What equity stake will current EFHAC stockholders and ECD Securityholders hold in the Combined Company immediately after the Closing?

 

A:

Upon consummation of the Business Combination (assuming, among other things, that no Public Stockholders exercise redemption rights in connection with the Closing and the other assumptions described under the section with the heading “Frequently Used Terms — Share Calculations and Ownership Percentages”), (i) EFHAC’s Public Stockholders are expected to own approximately 14.6% of the outstanding Combined Company Common Stock, (ii) the Initial Stockholders are expected to own approximately 9.4% of the outstanding Combined Company Common Stock, (iii) the ECD Securityholders are expected to own approximately 74.5% of the Combined Company Common Stock, and (iv) EF Hutton are expected to own approximately 1.5% of the Combined Company Common Stock.

 

These percentages assume, among other assumptions, that at, or in connection with, the Closing, (i) no Public Stockholders exercise their redemption rights in connection with the Business Combination and (ii) an aggregate of shares of Combined Company Common Stock are issued to the stockholders of ECD in accordance with the Business Combination Agreement. If actual facts are different from these assumptions, the percentage ownership retained by the EFHAC stockholders and ECD Securityholders in the Combined Company, and associated voting power, will be different.

 

If any of EFHAC’s Public Stockholders exercise redemption rights in connection with the Closing, the percentage of the outstanding Combined Company Common Stock held by EFHAC’s Public Stockholders will decrease and the percentages of the outstanding Combined Company Common Stock held by the Initial Stockholders and by the ECD Securityholders will increase, in each case, relative to the percentage held if none of the shares of Parent Common Stock are redeemed.

  

The following table illustrates varying ownership levels of the Combined Company immediately following the Business Combination1:

 

  

Assuming

Minimum Redemptions

   Assuming mid-point Redemptions   Assuming Maximum Redemptions 
Equity Capitalization Summary  Shares   %   Shares   %   Shares   % 
ECD Securityholders   25,100,000    74.5%   25,100,000    77.7%   25,100,000    81.3%
EFHAC Public Stockholders   4,930,147    14.6%   3,527,619    10.9%   2,125,091    6.9%
Initial Stockholders   3,164,688    9.4%   3,164,688    9.8%   3,164,688    10.2%
EF Hutton   500,000    1.5%   500,000    1.6%   500,000    1.6%
Total common stock   33,694,835    100.0%   32,292,307    100.0%   30,889,779    100.0%

 

 

1 This table does not include any equity grants that may be made in connection with or following completion of the Business Combination. Any such grants have not yet been determined as of the date hereof.
   
  All of the relative percentages above are for illustrative purposes only and are based upon certain assumptions as described in the section entitled “Frequently Used Terms — Share Calculations and Ownership Percentages” and, with respect to the determination of the “maximum redemptions,” the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements.” Should one or more of the assumptions prove incorrect, actual ownership percentages may vary materially from those described in this proxy statement/prospectus as anticipated, believed, estimated, expected or intended. See “Unaudited Pro Forma Condensed Combined Financial Information.”
   
Q: What are the possible sources and extent of dilution that holders of Public Shares who elect not to redeem their Public Shares will experience in connection with the Business Combination?
   
A:

Upon the issuance of the Combined Company Common Stock in connection with the Business Combination, the percentage ownership of the Combined Company by EFHAC’s Public Stockholders who do not redeem their Public Shares will be diluted. EFHAC Public Stockholders that do not redeem their Public Shares in connection with the Business Combination will experience further dilution upon (1) the exercise of Public Warrants that are retained after the Closing by both redeeming and non-redeeming EFHAC Public Stockholders, (2) the exercise of Private Warrants, (3) the conversion of Series A Convertible Preferred Stock, (4) the exercise of Common Shares Warrant, (5) the exercise of Preferred Shares Warrant, and (6) the conversion of the Senior Secured Convertible Notes. The percentage of the total number of outstanding shares of Common Stock that will be owned by EFHAC Public Stockholders as a group will vary based on the number of Public Shares for which the holders thereof elect to have redeemed in connection with the Business Combination.

 

The following table sets forth the ownership percentages of the Combined Company upon completion of the Business Combination assuming minimum redemptions, mid-point redemptions and maximum redemptions, including all sources of potential dilution. The ownership percentages reflected in the table are based upon the number of shares of Common Stock and ECD Common Stock outstanding as of June 30, 2023 and are subject to the following additional assumptions:

 

  exercise of all Public Warrants and Private Warrants;
     
 

exercise of all Common Shares Warrant and Preferred Shares Warrant;

     
  conversion of all Series A Convertible Preferred Stock;
     
  conversion of all Senior Secured Convertible Notes;

 

  no issuance of additional securities by EFHAC prior to Closing.

 

If any of these assumptions are not correct, these share numbers and ownership percentages will be different.

 

  

Assuming

Minimum Redemptions

   Assuming mid-point Redemptions   Assuming Maximum Redemptions 
Equity Capitalization Summary  Shares   %   Shares   %   Shares   % 
ECD Securityholders1   33,002,259    59.8%   33,002,259    61.4%   33,002,259    63.0%
EFHAC Lender2   1,819,209    

3.3

%

   

1,819,209

    

3.4

%

   

1,819,209

    

3.3

%

EFHAC Public Stockholders3   16,430,147    29.8%   15,027,619    27.9%   13,625,091    26.0%
Initial Stockholders4   3,422,188    6.2%   3,422,188    6.4%   3,422,188    6.5%
EF Hutton   500,000    0.9%   500,000    0.9%   500,000    1.2%
Total common stock   55,173,803    100.0%   53,771,275    100.0%   52,368,747    100.0%

 

 

1 Includes 3,900,000 shares of Common Stock convertible from the Series A Convertible Preferred Stock, 1,091,525 shares of Common Stock underlying the Common Shares Warrant, and 2,910,734 shares of Common Stock underlying the Preferred Shares Warrant.

2 Includes 1,819,209 shares of Common Stock convertible from the Senior Secured Convertible Notes.

3 Includes 11,500,000 shares of Common Stock underlying the Public Warrants.

4 Includes 257,500 shares of Common Stock underlying the Private Warrants.

 

7

 

 

Q. What are the effective underwriting fees under the various redemption scenarios?
   
A. EF Hutton, division of Benchmark Investments, LLC (“EF Hutton”), the representative of the underwriters in the IPO, are entitled to a deferred underwriting commission upon the closing of the Business Combination of 3.5% of the gross proceeds of the IPO or $4,025,000, which amount is not subject to change based on redemption levels. The following illustrates the effective deferred underwriting fee on a percentage basis for public shares at each redemption level identified below:

 

  

Assuming

Minimum Redemptions

  

Assuming

mid-point Redemptions

  

Assuming

Maximum Redemptions

 
Equity Capitalization Summary  Shares       Shares       Shares     
Unredeemed Public Shares   3,492,647    69.6%   2,090,119    81.8%   687,591    94.0%
Effective Underwriting Fee        11.0%        18.4%        56.0%

 

EFHAC has not received notice from any of the underwriters in the IPO of EFHAC concerning any such underwriters ceasing involvement in EFHAC’s proposed business combination transaction with ECD.

 

EF Hutton has also agreed to assist EFHAC in connection with raising capital in connection with the proposed business combination. EFHAC and EF Hutton have entered into a written investment banking agreement, pursuant to which EF Hutton shall earn and be paid a fee equal to 8% of all capital raised, expenses not to exceed $100,000 and a non-accountable expense allowance equal to 1% of capital raised. EFHAC also granted EF Hutton a right of first refusal to (i) serve as lead book-running managing underwriter, lead placement agent, lead arranger, lead financial advisor, lead structuring agent, or in any other similar capacity, on EF Hutton’s customary terms, in the event EFHAC otherwise uses (or seeks to retain or use) the services of an investment bank or similar financial advisor to pursue at any time during the term of this Agreement or within twenty-four (24) months after the expiration or termination of this Agreement, a registered, underwritten public offering of equity or debt securities, a private placement of equity securities, other financing or capital raise (including ATM offerings), a merger, acquisition of another company or business, change of control, a sale of the Company, a joint venture, a sale of all or substantially all assets, a securitization of assets, or other similar transaction (regardless of whether the Company would be considered an acquiring party, a selling party or neither in such transaction) and (ii) provide a forward purchase arrangement or similar type of equity line financing.

 

On October 14, 2023, EFHAC, EF Hutton and ECD entered into a Satisfaction and Discharge Agreement pursuant to which the parties agreed that EF Hutton’s deferred underwriting commission, in the aggregate amount of $4,025,000 and the placement fee EF Hutton is entitled to as a result of the Note Financing, in the aggregate amount of $1,370,000 in exchange for the Combined Company providing EF Hutton: (1) a cash payment in the amount of $500,000 and (2) issuing EF Hutton, or its designees, 500,000 shares of Parent Common Stock. A copy of the Satisfaction and Discharge Agreement, dated October 14, 2023, is attached hereto as Exhibit 10.22 and is incorporated herein.

 

QUESTIONS AND ANSWERS ABOUT THE PROPOSED BUSINESS COMBINATION AND THE OTHER PROPOSALS — EFHAC STOCKHOLDERS

 

Q: Why am I receiving this document?

 

A: EFHAC, Merger Sub, and ECD have agreed to the Business Combination under the terms of the Merger Agreement, which is attached to this proxy statement/prospectus as Annex A and is incorporated into this proxy statement/prospectus by reference. The Board is soliciting your proxy to vote for the Business Combination and other Proposals at the EFHAC Special Meeting because you owned Common Stock at the close of business on November 13, 2023, the “Record Date” for the EFHAC Special Meeting, and are therefore entitled to vote at the EFHAC Special Meeting. This proxy statement/prospectus summarizes the information that you need to know in order to cast your vote.

 

Q: What is being voted on?

 

A: Below are the Proposals that the EFHAC stockholders are being asked to vote on:

 

  Proposal 1 — To consider and vote upon a proposal to approve and adopt the merger agreement, by and among ECD, ECD UK, Merger Sub and Scott Wallace, as the Securityholder Representative, pursuant to which Merger Sub will merge with and into ECD, with ECD surviving the merger as a wholly-owned subsidiary of EFHAC. In addition, in connection with the consummation of the Business Combination, EFHAC will be renamed “ECD Automotive Design, Inc.” or such other name designated by ECD by notice to EFHAC. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A. This proposal is referred to as the “Business Combination Proposal.”

 

   

Proposal 2 — To consider and vote upon a proposal to approve an amendment (the “NTA Requirement Amendment”) to the Amended and Restated Certificate of Incorporation of EFHAC, a copy of which is to be attached to this proxy statement/prospectus as Annex B, to expand the methods that EFHAC may employ to not become subject to the “penny stock” rules of the SEC, which we refer to as the “NTA Requirement Amendment Proposal” or “Proposal No. 2”;

     
  Proposal 3 — To consider and vote upon a proposal to approve the Second Amended and Restated Certificate of Incorporation of EFHAC, a copy of which is to be attached to this proxy statement/prospectus as Annex C (the “Amended Charter”). This proposal is referred to as the “Charter Amendment Proposal.”

 

  Proposal 4 — To consider and vote, on a non-binding advisory basis, upon four separate governance proposals relating to material differences between EFHAC’s Current Charter and the Amended Charter to be in effect upon the completion of the Business Combination in accordance with the requirements of the SEC. These proposals are referred to as the “Advisory Proposals” or “Advisory Proposals 4A-4D.”

 

  Advisory Proposal A – to increase the number of shares of common stock that the Combined Company is authorized to issue from 101,000,000 shares, consisting of 100,000,000 shares of the Common Stock and 1,000,000 shares of preferred stock to 1,020,000,000 shares, consisting of 1,000,000,000 shares of the Combined Company Common Stock and 20,000,000 shares of preferred stock;
     
  Advisory Proposal B – to change the number of classes of directors from one class to three classes with staggered terms;
     
  Advisory Proposal C – to change EFHAC’s name to “ECD Automotive Design, Inc.” or such other name designated by ECD by notice to EFHAC; and
     
  Advisory Proposal D –to remove the various provisions from the Current Charter applicable only to special purpose acquisition companies.

 

  Proposal 5 — To consider and vote upon a proposal to approve, for purposes of complying with Nasdaq Listing Rules 5635 (a) and (b), the issuance of more than 20% of the issued and outstanding shares of the common stock, par value $0.0001 per share, of EFHAC (the “Common Stock”) and the resulting change in control in connection with the Business Combination. This proposal is referred to as the “Nasdaq Proposal.”
     
  Proposal 6 — To consider and vote upon a proposal to approve EFHAC’s 2023 Equity Incentive Plan. This proposal is referred to as the “Plan Proposal.”
     
  Proposal 7 — To consider and vote upon a proposal to approve the adjournment of the EFHAC Special Meeting by the chairman thereof to a later date, if necessary, under certain circumstances, including for the purpose of soliciting additional proxies in favor of the foregoing proposals in the event EFHAC does not receive the requisite stockholder vote to approve the proposals. This proposal is called the “Adjournment Proposal.”

 

8

 

 

Q: What vote is required to approve the Proposals?

 

A: Proposal 1 — The Business Combination Proposal requires the affirmative vote of the majority of the issued and outstanding shares of Common Stock present by virtual attendance or represented by proxy and entitled to vote at the EFHAC Special Meeting. An abstention will have the effect of a vote “AGAINST” Proposal 1. Broker non-votes will have no effect on the vote for Proposal 1.

 

Proposal 2 — The NTA Requirement Amendment Proposal requires the affirmative vote of the majority of the issued and outstanding shares of Common Stock. Abstentions and broker non-votes will have the effect of a vote “AGAINST” Proposal 2.

 

Proposal 3 — The Charter Amendment Proposal requires the affirmative vote of the majority of the issued and outstanding shares of Common Stock. Abstentions and broker non-votes will have the effect of a vote “AGAINST” Proposal 3.

 

Proposal 4 — The Advisory Proposals, being presented as four separate sub-proposals (Proposals 4A–4D), require the affirmative vote of the majority of the issued and outstanding shares of Common Stock present in person by virtual attendance or represented by proxy and entitled to vote. Abstentions will have the effect of a vote “AGAINST” Proposals 4A–4D. Broker non-votes will have no effect on the vote for Proposals 4A–4D.

 

Proposal 5 — The Nasdaq Proposal requires the affirmative vote of the majority of the issued and outstanding shares of Common Stock present by virtual attendance or represented by proxy and entitled to vote at the EFHAC Special Meeting. Abstentions will have the effect of a vote “AGAINST” Proposal 5. Broker non-votes will have no effect on the vote for Proposal 5.

 

Proposal 6 — The Plan Proposal requires the affirmative vote of the majority of the issued and outstanding shares of Common Stock present by virtual attendance or represented by proxy and entitled to vote at the EFHAC Special Meeting. Abstentions will have the effect of a vote “AGAINST” Proposal 6. Broker non-votes will have no effect on the vote for Proposal 6.

 

Proposal 7 — The Adjournment Proposal requires the affirmative vote of the majority of the issued and outstanding shares of Common Stock present by virtual attendance or represented by proxy and entitled to vote at the EFHAC Special Meeting. Abstentions will have the effect of a vote “AGAINST” Proposal 7. Broker-non votes have no effect on the vote for Proposal 7.

 

Q: Are any of the Proposals conditioned on one another?

 

A: The Business Combination Proposal is conditioned upon the approval of Proposals 2, 3 and 5. Proposals 2, 3, 4 and 5 are dependent upon approval of the Business Combination Proposal. It is important for you to note that in the event that our stockholders do not approve the Business Combination Proposal, EFHAC will not consummate the Business Combination. If EFHAC does not consummate the Business Combination and fails to complete an initial business combination by December 13, 2023 (or by March 13, 2024 if the time to complete its initial business combination has been extended in accordance with its Certificate of Incorporation), EFHAC will be required to dissolve and liquidate, unless we seek stockholder approval to amend our Certificate of Incorporation to extend the date by which the Business Combination may be consummated.

 

Q: How will the Initial Stockholders vote?

 

A: Pursuant to a letter agreement, the Initial Stockholders agreed to vote their respective shares of Common Stock acquired by them prior to the IPO and any shares of Common Stock purchased by them in the open market after the IPO in favor of the Business Combination Proposal and related proposals (“Letter Agreement”). In addition, in connection with the execution of the Merger Agreement, the Sponsor entered into the Sponsor Support Agreement with ECD pursuant to which it agreed to vote all shares of Common Stock beneficially owned by it in favor of the Business Combination Proposal. As of September 30, 2023, a total of 3,132,500 shares of Common Stock or approximately 47.28% of the outstanding shares were subject to the Letter Agreement and the Sponsor Support Agreement. As a result, only 180,074 shares of Common Stock held by the public stockholders will need to be present by virtual attendance or by proxy to satisfy the quorum requirement for the EFHAC Special Meeting. In addition, as the vote to approve the Business Combination Proposal is a majority of the then outstanding shares of Common Stock present and entitled to vote at the EFHAC Special Meeting, assuming only the minimum number of shares of Common Stock to constitute a quorum is present, no shares of Common Stock of the outstanding shares of the Common Stock held by the public stockholders must vote in favor of the Business Combination Proposal for it to be approved.

 

9

 

 

Q: How many votes do I and others have?

 

A: You are entitled to one vote for each share of Common Stock that you held as of the Record Date. As of the close of business on the Record Date, there were 6,625,147 outstanding shares of Common Stock.

 

Q: Do any of EFHAC’s directors or officers have interests that may conflict with my interests with respect to the Business Combination?

 

A: In considering the recommendation of the Board to approve the Merger Agreement, EFHAC stockholders should be aware that certain EFHAC executive officers and directors may be deemed to have interests in the Business Combination that are different from, or in addition to, those of EFHAC stockholders generally, including:

 

  The Initial Stockholders have waived their right to redeem any Public Shares in connection with a stockholder vote to approve a proposed initial business combination or sell any Public Shares to EFHAC in a tender offer in connection with a proposed initial business combination, or to receive distributions with respect to any Public Shares upon the liquidation of the Trust Account if EFHAC is unable to consummate a business combination. This waiver of redemption rights by the Initial Stockholders was made at the time that the founder shares were purchased in exchange for the purchase price of the founder shares and for no additional consideration. If EFHAC does not complete an initial business combination, such as the Business Combination, by December 13, 2023 (or by March 13, 2024 if the period of time to complete the initial business combination has been extended to the fullest extent), it will be required to dissolve and liquidate. In such event, the 2,875,000 founder shares currently held by the Initial Stockholders, which they acquired prior to the IPO, will be worthless because such holders have agreed to waive their rights to any liquidation distributions. The Initial Stockholders purchased the founder shares for an aggregate purchase price of $25,000, or less than $0.01 per share. Accordingly, the Initial Stockholders will receive a positive rate of return so long as the market price of the Common Stock is at least $0.01 per share, even if public stockholders experience a negative rate of return in the Combined Company.
     
  If EFHAC does not complete an initial business combination, such as the Business Combination, by December 13, 2023 (or by March 13, 2024 if the period of time to complete the initial business combination has been extended to the fullest extent), the common stock, warrants and the rights included as part of the 257,500 Private Units that the Sponsor purchased for a total purchase price of $2,575,000 will be worthless. Such common stock had an aggregate market value of approximately $2,762,975 based on the closing price of EFHAC common stock of $10.73 on Nasdaq as of October 31, 2023, such Private Warrants had an aggregate market value of approximately $6,437 based on the closing price of EFHAC Warrants of $0.025 on Nasdaq as of October 31, 2023, such rights had an aggregate market value of approximately $51,500 based on the closing price of EFHAC Rights of $0.20 on Nasdaq as of October 31, 2023.
     
  The Initial Stockholders, including the Sponsor and its affiliates, could benefit from the completion of a business combination that is not favorable to its public stockholders and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to public stockholders rather than liquidate. If a business combination is not completed within the Combination Period, the Initial Stockholders will lose in connection with its 2,875,000 founder shares a combined aggregate amount of approximately $30.8 million based on the closing price of the EFHAC common stock at $10.73 per share on October 31, 2023. For example, if the share price of the EFHAC common stock declined to $5.00 per share after the close of the business combination, EFHAC’s public stockholders who purchased shares in the IPO, would have a loss of $5.00 per share, while the Sponsor would have a gain of $4.99 per share because it acquired the founder shares for a nominal amount. In other words, the Initial Stockholders can earn a positive rate of return on their investment even if public stockholders experience a negative rate of return in the Combined Company.
     
  If the Business Combination is not completed, the Initial Stockholders will not have the potential ownership interest of approximately 6.2% (assuming no redemption) or 6.5% (assuming maximum redemption) in the Combined Company.
     
  In order to extend EFHAC’s time to complete a business combination by up to an additional nine months as provided in the Current Charter, the Sponsor or its affiliates or designees must deposit into the Trust Account the lesser of $80,000 and $0.04 for each outstanding share of common stock sold in EFHAC’s IPO for each one-month extension. If the Business Combination is consummated by the extended deadlines, the amount deposited in the Trust Account will be repaid. However, if the Business Combination is not consummated by the extended deadline, the amount deposited will not be repaid unless there are funds available outside the Trust Account to do so and will be included in the liquidation distribution to EFHAC stockholders.
     
  The Sponsor and EFHAC’s officers and directors and their affiliates are entitled to reimbursement of reasonable out-of-pocket expenses incurred by them related to identifying, investigating and completing an initial business combination. There is no limit on the amount of out-of-pocket expenses reimbursable by EFHAC. However, to the extent that such expenses exceeded the available proceeds not deposited in the trust account and the interest income earned on the amounts held in the trust account available), the Sponsor and EFHAC’s officers and directors and their affiliates will not receive reimbursement for any out-of-pocket expenses incurred by them unless EFHAC consummates an initial business combination. As of the date of this proxy statement/prospectus, the Sponsor and EFHAC’s officers and directors and their affiliates have not had any unpaid reimbursable expenses.
     
  The exercise of EFHAC’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination may result in a conflict of interest when determining whether such changes or waivers are appropriate and in our stockholders’ best interest.

 

These interests may influence the Board in making their recommendation that you vote in favor of the approval of the Business Combination. In addition to the foregoing, EFHAC’s Current Charter excludes the corporate opportunity doctrine, and any other analogous doctrine, from applying to directors and officers of EFHAC unless such corporate opportunity is offered to a director or officer solely in his or her capacity as a director or officer of EFHAC and such opportunity is one EFHAC is legally and contractually permitted to undertake and would otherwise be reasonable for EFHAC to pursue. The potential conflict of interest relating to the waiver of the corporate opportunities doctrine in EFHAC’s Current Charter did not impact its search for an acquisition target and EFHAC was not prevented from reviewing any opportunities as a result of such waiver.

 

Other than as described above, EFHAC’s officers and directors and their respective affiliates have no interest in, or affiliation with, ECD.

 

Q: Are there any arrangements to help ensure that EFHAC will have sufficient funds, together with the proceeds in its Trust Account, to consummate the Business Combination?

 

A: Pursuant to EFHAC’s current Certificate of Incorporation, EFHAC may not consummate the Business Combination unless it has net tangible assets of at least $5,000,001 upon consummation of the Business Combination. In the maximum redemption scenario, on a pro forma combined basis, we estimate that EFHAC’s net tangible assets would be $5.0 million. EFHAC may enter into agreements with holders of Public Shares in which the holders agree to not redeem their Public Shares so as to ensure that the net tangible assets test is satisfied. This proxy statement/prospectus, includes a proposal for the EFHAC stockholders to consider and vote upon a proposal to approve an amendment to the Amended and Restated Certificate of Incorporation of EFHAC, a copy of which is to be attached to this proxy statement/prospectus as Annex B, to expand the methods that EFHAC may employ to not become subject to the “penny stock” rules of the Securities and Exchange Commission, which we refer to as the “NTA Requirement Amendment Proposal.” If the NTA Requirement Amendment Proposal is approved, EFHAC will not be required to have at least $5,000,001 upon consummation of the Business Combination.

 

Q: When and where is the EFHAC Special Meeting?

 

A: The EFHAC Special Meeting will take place on December 7, 2023, at 10:30 a.m., Eastern Time, via live webcast at the following address: https://www.cstproxy.com/efhuttonspaci/sm2023 or by telephone access (listen-only): Within the U.S. and Canada: 1 800-450-7155 (toll-free), Outside of the U.S. and Canada: +1 857-999-9155 (standard rates apply) Conference ID: 1848398#.

 

Q: Who may vote at the EFHAC Special Meeting?

 

A: Only holders of record of Common Stock as of the close of business on November 13, 2023 may vote at the EFHAC Special Meeting of stockholders. As of November 13, there were 6,625,147 shares of Common Stock outstanding and entitled to vote. Please see “The EFHAC Special Meeting — Record Date; Who is Entitled to Vote” for further information.

 

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Q: What is the quorum requirement for the EFHAC Special Meeting?

 

A: Stockholders representing a majority of the shares of Common Stock issued and outstanding as of the Record Date and entitled to vote at the EFHAC Special Meeting must be present by virtual attendance or represented by proxy in order to hold the EFHAC Special Meeting and conduct business. This is called a quorum. Shares of Common Stock will be counted for purposes of determining if there is a quorum if the stockholder (i) is present and entitled to vote at the meeting, or (ii) has properly submitted a proxy card or voting instructions through a broker, bank or custodian. In the absence of a quorum, stockholders representing a majority of the votes present in person or represented by proxy at such meeting may adjourn the meeting until a quorum is present.

 

Q: Am I required to vote against the Business Combination Proposal in order to have my Public Shares redeemed?

 

A: No. You are not required to vote against the Business Combination Proposal in order to have the right to demand that EFHAC redeem your Public Shares for cash equal to your pro rata share of the aggregate amount then on deposit in the Trust Account (before payment of deferred underwriting commissions and including interest earned on their pro rata portion of the Trust Account, net of taxes payable). These rights to demand redemption of Public Shares for cash are sometimes referred to herein as “redemption rights.” If the Business Combination is not completed, holders of Public Shares electing to exercise their redemption rights will not be entitled to receive such payments and their shares of Common Stock will be returned to them.

 

Q: How do I exercise my redemption rights?

 

A: If you are a public stockholder and you seek to have your Public Shares redeemed, you must: (i) demand, no later than 5:00 p.m., Eastern Time on December 5, 2023 (at least two business days before the EFHAC Special Meeting), that EFHAC redeem your shares into cash; and (ii) submit your request in writing to Continental, at the address listed at the end of this section and deliver your shares to Continental physically or electronically using The Depository Trust Company’s (“DTC”) DWAC (Deposit/Withdrawal at Custodian) System at least two business days before the EFHAC Special Meeting.

 

Any corrected or changed written demand of redemption rights must be received by Continental two business days before the EFHAC Special Meeting. No demand for redemption will be honored unless the holder’s shares have been delivered (either physically or electronically) to Continental at least two business days before the EFHAC Special Meeting.

 

Holders of outstanding Units must separate the underlying securities into one Public Share, one Warrant and one Right for each Unit, prior to exercising redemption rights with respect to the Public Shares. Holders of Units who separate the underlying securities will continue to hold the remaining one Warrant and one Right.

 

Assuming that 100% or 3,492,647 Public Shares held by public stockholders were redeemed, the 11,500,000 retained outstanding Public Warrants would have had an aggregate market value of approximately $287.5 thousand on October 31, 2023 based on the closing price of the Public Warrants on the Nasdaq of $0.025 per Warrant and the 11,500,000 retained outstanding public Rights would have had an aggregate market value of approximately $2.3 million on October 31, 2023 based on the closing price of the Rights on the Nasdaq of $0.20 per Right.

 

If a holder exercises his/her/its redemption rights with respect to all of the holder’s Public Shares, then such holder will be exchanging his/her/its Public Shares for cash and will no longer own shares of the Combined Company other than shares received in connection with the Rights. Such a holder will be entitled to receive cash for his/her/its Public Shares only if such holder properly demands redemption and delivers his/her/its Public Shares (either physically or electronically) to Continental in accordance with the procedures and time limits described herein. Please see the section titled “The EFHAC Special Meeting — Redemption Rights” for the procedures to be followed if you wish to redeem your Public Shares for cash.

 

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EFHAC stockholders may seek to have their Public Shares redeemed regardless of whether they vote for or against the Business Combination and whether or not they are holders of Common Stock as of the Record Date. Any public stockholder who holds shares of Common Stock on or before December 5, 2023 (two business days before the EFHAC Special Meeting) will have the right to demand that his, her or its shares be redeemed for a pro rata share of the aggregate amount then on deposit in the Trust Account, less any taxes then due but not yet paid, at the consummation of the Business Combination.

 

The actual per share redemption price will be equal to the aggregate amount then on deposit in the Trust Account (before payment of deferred underwriting commissions and including interest earned on their pro rata portion of the Trust Account, net of taxes payable), divided by the number of shares of Common Stock underlying the EFHAC Units sold in the IPO. Public stockholders who redeem their Public Shares for their share of the Trust Account still have the right to continue to hold any Warrants and Rights they hold outside of such Public Shares. Please see the section titled “The EFHAC Special Meeting — Redemption Rights” for the procedures to be followed if you wish to redeem your shares of Common Stock for cash.

 

Q: What are the U.S. federal income tax consequences of exercising my redemption rights?

 

A: In the event that a U.S. Holder (as defined in “Material U.S. Federal Income Tax Consequences”) elects to redeem its Common Stock for cash, the treatment of the transaction for U.S. federal income tax purposes will depend on whether the redemption qualifies as a sale or exchange of the Common Stock under Section 302 of the Code or is treated as a distribution under Section 301 of the Code. Whether the redemption qualifies as a sale or exchange or is treated as a distribution will depend on the facts and circumstances of each particular U.S. Holder at the time such U.S. Holder exercises his, her, or its redemption rights. If the redemption qualifies as a sale or exchange of the Common Stock, the U.S. Holder will be treated as recognizing capital gain or loss equal to the difference between the amount realized on the redemption and such U.S. Holder’s adjusted tax basis in the Common Stock surrendered in such redemption transaction. Any such capital gain or loss generally will be long-term capital gain or loss if the U.S. Holder’s holding period for the Common Stock redeemed exceeds one year. The deductibility of capital losses is subject to limitations. See “Material U.S. Federal Income Tax Consequences — Material U.S. Federal Income Tax Consequences of Exercising Redemption Rights” for a more detailed discussion of the U.S. federal income tax consequences of a U.S. Holder electing to redeem its Common Stock for cash.

 

Q: What do I need to do now?

 

A: We urge you to read carefully and consider the information contained in this proxy statement/prospectus, including the annexes, and to consider how the Business Combination will affect you as a stockholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

 

Q: How can I vote?

 

A: If you are a stockholder of record, you may vote online at the virtual EFHAC Special Meeting or vote by proxy using the enclosed proxy card, the Internet or telephone. Whether or not you plan to participate in the EFHAC Special Meeting, we urge you to vote by proxy to ensure your vote is counted. Even if you have already voted by proxy, you may still attend the virtual EFHAC Special Meeting and vote online, if you choose.

 

To vote online at the virtual EFHAC Special Meeting, follow the instructions below under “How may I participate in the virtual EFHAC Special Meeting?”

 

To vote using the proxy card, please complete, sign and date the proxy card and return it in the prepaid envelope. If you return your signed proxy card before the EFHAC Special Meeting, we will vote your shares as you direct.

 

To vote via the telephone, you can vote by calling the telephone number on your proxy card. Please have your proxy card handy when you call. Easy-to-follow voice prompts will allow you to vote your shares and confirm that your instructions have been properly recorded.

 

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To vote via the Internet, please go to https://www.cstproxy.com/efhuttonspaci/sm2023 and follow the instructions. Please have your proxy card handy when you go to the website. As with telephone voting, you can confirm that your instructions have been properly recorded.

 

Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day until 11:59 p.m. Eastern Time on December 6, 2023. After that, telephone and Internet voting will be closed, and if you want to vote your shares, you will either need to ensure that your proxy card is received before the date of the EFHAC Special Meeting or attend the virtual EFHAC Special Meeting to vote your shares online.

 

If your shares are registered in the name of your broker, bank or other agent, you are the “beneficial owner” of those shares and those shares are considered as held in “street name.” If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, you should have received a proxy card and voting instructions with these proxy materials from that organization rather than directly from us. Simply complete and mail the proxy card to ensure that your vote is counted. You may be eligible to vote your shares electronically over the Internet or by telephone. A large number of banks and brokerage firms offer Internet and telephone voting. If your bank or brokerage firm does not offer Internet or telephone voting information, please complete and return your proxy card in the self-addressed, postage-paid envelope provided.

 

If you plan to vote at the virtual EFHAC Special Meeting, you will need to contact Continental at the phone number or email below to receive a control number and you must obtain a legal proxy from your broker, bank or other nominee reflecting the number of shares of Common Stock you held as of the Record Date, your name and email address. You must contact Continental for specific instructions on how to receive the control number. Please allow up to 48 hours prior to the EFHAC Special Meeting for processing your control number.

 

After obtaining a valid legal proxy from your broker, bank or other agent, to then register to attend the EFHAC Special Meeting, you must submit proof of your legal proxy reflecting the number of your shares along with your name and email address to Continental. Requests for registration should be directed to Continental at: https://www.cstproxy.com/efhuttonspaci/sm2023.

 

You will receive a confirmation of your registration by email after we receive your registration materials. We encourage you to access the EFHAC Special Meeting prior to the start time leaving ample time for the check in.

 

Q: How may I participate in the virtual EFHAC Special Meeting?

 

A. If you are a stockholder of record as of the Record Date for the EFHAC Special Meeting, you should receive a proxy card from Continental, containing instructions on how to attend the virtual EFHAC Special Meeting including the URL address, along with your control number. You will need your control number for access. If you do not have your control number, contact Advantage Proxy, our proxy solicitor at (877) 870-8565 or (206) 870-8565 or by E-mail: ksmith@advantageproxy or Continental at https://www.cstproxy.com/efhuttonspaci/sm2023.

 

You can pre-register to attend the virtual EFHAC Special Meeting by going to https://www.cstproxy.com/efhuttonspaci/sm2023, enter the control number found on your proxy card you previously received, as well as your name and email address. Once you pre-register you can vote. At the start of the EFHAC Special Meeting you will need to re-log into https://www.cstproxy.com/efhuttonspaci/sm2023 using your control number.

 

If your shares are held in street name, and you would like to join and not vote, Continental will issue you a guest control number. Either way, you must contact Continental for specific instructions on how to receive the control number. Please allow up to 48 hours prior to the EFHAC Special Meeting for processing your control number.

 

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Q: Who can help answer any other questions I might have about the virtual EFHAC Special Meeting?

 

A. If you have any questions concerning the virtual EFHAC Special Meeting (including accessing the meeting by virtual means) or need help voting your shares of Common Stock, please contact Advantage Proxy, our proxy solicitor, at (877) 870-8565 or (206) 870-8565 or by E-mail: ksmith@advantageproxy or Continental at https://www.cstproxy.com/efhuttonspaci/sm2023.

 

The Notice of EFHAC Special Meeting, proxy statement/prospectus and form of Proxy Card are available at: https://www.cstproxy.com/efhuttonspaci/sm2023.

 

Q: If my shares are held in “street name” by my bank, brokerage firm or nominee, will they automatically vote my shares for me?

 

A: No. If you are a beneficial owner and you do not provide voting instructions to your broker, bank or other holder of record holding shares for you, your shares will not be voted with respect to any Proposal for which your broker does not have discretionary authority to vote. If a Proposal is determined to be discretionary, your broker, bank or other holder of record is permitted to vote on the Proposal without receiving voting instructions from you. If a Proposal is determined to be non-discretionary, your broker, bank or other holder of record is not permitted to vote on the Proposal without receiving voting instructions from you. A “broker non-vote” occurs when a bank, broker or other holder of record holding shares for a beneficial owner does not vote on a non-discretionary proposal because the holder of record has not received voting instructions from the beneficial owner.

 

Each of the Proposals to be presented at the EFHAC Special Meeting is a non-discretionary proposal. Accordingly, if you are a beneficial owner and you do not provide voting instructions to your broker, bank or other holder of record holding shares for you, your shares will not be voted with respect to any of the Proposals. A broker non-vote would have the same effect as a vote against the NTA Requirement Amendment Proposal or the Charter Amendment Proposal and will have no effect on the Business Combination Proposal.

 

Q: What if I abstain from voting or fail to instruct my bank, brokerage firm or nominee?

 

A: EFHAC will count a properly executed proxy marked “ABSTAIN” with respect to a particular proposal as present for the purposes of determining whether a quorum is present at the EFHAC Special Meeting. For purposes of approval, an abstention on any proposals will have the same effect as a vote “AGAINST” such proposal.

 

Q: If I am not going to attend the EFHAC Special Meeting, should I return my proxy card instead?

 

A. Yes. Whether you plan to attend the EFHAC Special Meeting virtually or not, please read the enclosed proxy statement/prospectus carefully, and vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

 

Q: How can I submit a proxy?

 

A. You may submit a proxy by (a) visiting https://www.cstproxy.com/efhuttonspaci/sm2023 and following the on screen instructions (have your proxy card available when you access the webpage) or (b) submitting your proxy card by mail by using the enclosed self-addressed, stamped envelope.

 

Q: Can I change my vote after I have mailed my proxy card?

 

A: Yes. You may change your vote at any time before your proxy is voted at the EFHAC Special Meeting. You may revoke your proxy by executing and returning a proxy card dated later than the previous one, or by attending the virtual EFHAC Special Meeting in person and casting your vote or by voting again by the telephone or Internet voting options described below, or by submitting a written revocation stating that you would like to revoke your proxy that our proxy solicitor receives prior to the EFHAC Special Meeting. If you hold your shares of Common Stock through a bank, brokerage firm or nominee, you should follow the instructions of your bank, brokerage firm or nominee regarding the revocation of voting instructions. If you are a record holder, you should send any notice of revocation or your completed new proxy card, as the case may be, to:

 

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Advantage Proxy, Inc.

P.O. Box 10904

Yakima, WA 98909

Toll Free Telephone: (877) 870-8565

Main Telephone: (206) 870-8565

E-mail: ksmith@advantageproxy

 

Unless revoked, a proxy will be voted at the virtual EFHAC Special Meeting in accordance with the stockholder’s indicated instructions. In the absence of instructions, proxies will be voted FOR each of the Proposals.

 

Q: What will happen if I return my proxy card without indicating how to vote?

 

A: If you sign and return your proxy card without indicating how to vote on any particular proposal, the shares of Common Stock represented by your proxy will be voted in favor of each proposal. Proxy cards that are returned without a signature will not be counted as present at the EFHAC Special Meeting and cannot be voted.

 

Q: Should I send in my share certificates now to have my shares of Common Stock redeemed?

 

A: EFHAC stockholders who intend to have their Public Shares redeemed should send their certificates to Continental at least two business days before the EFHAC Special Meeting. Please see “The EFHAC Special Meeting — Redemption Rights” for the procedures to be followed if you wish to redeem your Public Shares for cash.

 

Q: Who will solicit the proxies and pay the cost of soliciting proxies for the EFHAC Special Meeting?

 

A: EFHAC will pay the cost of soliciting proxies for the EFHAC Special Meeting. EFHAC has engaged Advantage Proxy to assist in the solicitation of proxies for the EFHAC Special Meeting. EFHAC has agreed to pay Advantage Proxy a fee of $12,500, plus disbursements, and will reimburse Advantage Proxy for its reasonable out-of-pocket expenses and indemnify Advantage Proxy and its affiliates against certain claims, liabilities, losses, damages, and expenses. EFHAC will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of Common Stock for their expenses in forwarding soliciting materials to beneficial owners of the Common Stock and in obtaining voting instructions from those owners. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

 

Q: What happens if I sell my shares before the EFHAC Special Meeting?

 

A: The Record Date for the EFHAC Special Meeting is earlier than the date of the EFHAC Special Meeting, as well as the date that the Business Combination is expected to be consummated. If you transfer your shares of Common Stock after the Record Date, but before the EFHAC Special Meeting, unless the transferee obtains from you a proxy to vote those shares, you would retain your right to vote at the EFHAC Special Meeting, but will transfer ownership of the shares and will not hold an interest in EFHAC after the Business Combination is consummated.

 

Q: Are there risks associated with the Business Combination that I should consider in deciding how to vote?

 

A: Yes. There are a number of risks related to the Business Combination and other transactions contemplated by the Merger Agreement that are discussed in this proxy statement/prospectus. Please read with particular care the detailed description of the risks described in “Risk Factors” beginning on page 32 of this proxy statement/prospectus.

 

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Q: May I seek statutory appraisal rights or dissenter rights with respect to my EFHAC shares?

 

A: No. Appraisal rights are not available to holders of shares of Common Stock in connection with the proposed Business Combination. For additional information, see the section titled “Proposal 1 – The Business Combination Proposal — Appraisal and Dissenters’ Rights.”

 

Q: What happens if the Business Combination is not consummated?

 

A: On June 1, 2023, EFHAC’s stockholders approved an amendment to EFHAC’s amended and restated certificate of incorporation extending the date by which EFHAC has to consummate a business combination up to nine times, each by an additional one-month, from June 13, 2023 to March 13, 2024 by depositing into the Trust Account the lesser of $80,000 and $0.04 for each outstanding share of common stock sold in EFHAC’s IPO for each one-month extension. On June 1, 2023, EFHAC filed such amendment to EFHAC’s amended and restated certificate of incorporation with the Delaware Secretary of State. EFHAC has extended the date by which it has to consummate a business combination for two additional months. If EFHAC does not consummate the Business Combination by December 13, 2023 (or by March 13, 2024 if the time to complete its initial business combination has been extended in accordance with its Certificate of Incorporation), then pursuant to Article VI its current Amended and Restated Certificate of Incorporation, EFHAC’s officers must take all actions necessary in accordance with the Delaware General Corporation Law (the “DGCL”) to dissolve and liquidate EFHAC as soon as reasonably possible. Following dissolution, EFHAC will no longer exist as a company. In any liquidation, the funds held in the Trust Account, plus any interest earned thereon (net of taxes payable), together with any remaining out-of-trust net assets, will be distributed pro-rata to holders of shares of Common Stock who acquired such shares in the IPO or in the aftermarket. The estimated consideration that each share of Common Stock would be paid at liquidation would be approximately $10.87 per share for stockholders based on amounts on deposit in the Trust Account as of October 31, 2023, subject to reduction for the payment of taxes. The closing price of the Common Stock on Nasdaq as of November 13, 2023 was $10.50. The Initial Stockholders waived the right to any liquidation distribution with respect to any shares of Common Stock held by them at the time that the founder shares were purchased for no additional consideration.

 

Q: What happens to the funds deposited in the Trust Account following the Business Combination?

 

A: Following the Closing, holders of Public Shares exercising redemption rights will receive their per share redemption price out of the funds in the Trust Account. The balance of the funds will be released to the Combined Company to pay expenses associated with the Business Combination and to fund working capital needs of the Combined Company. As of October 31, 2023, there was approximately $37,994,289 in the Trust Account. EFHAC estimates that approximately $10.87 per outstanding Public Share will be paid to the public stockholders exercising their redemption rights, subject to reduction for the payment of taxes.

 

Q: Who can help answer my questions?

 

A: If you have questions about the Proposals to be presented at the EFHAC Special Meeting or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card, you should contact EFHAC’s proxy solicitor at:

 

Advantage Proxy, Inc.

P.O. Box 10904

Yakima, WA 98909

Toll Free Telephone: (877) 870-8565

Main Telephone: (206) 870-8565

E-mail: ksmith@advantageproxy

 

You may also obtain additional information about EFHAC from documents filed with the SEC by following the instructions in the section titled “Where You Can Find More Information.”

 

QUESTIONS AND ANSWERS ABOUT THE PROPOSED BUSINESS COMBINATION — ECD SECURITY HOLDERS

 

Q: Why am I receiving this document?

 

A: EFHAC, Merger Sub, and ECD have agreed to the Business Combination under the terms of the Merger Agreement, which is attached to this proxy statement/prospectus as Annex A and is incorporated into this proxy statement/prospectus by reference. While approval of the Merger Agreement by ECD’s stockholders is required, holders of ECD Preferred Stock have sufficient voting power to approve, and have approved, the Merger Agreement. This document constitutes an information statement of ECD with respect to the Merger Agreement and the Business Combination as required by Section 14(c) of the Exchange Act. In addition, the Merger Agreement provides that shares of ECD Common Stock and Preferred Stock, and the ECD Warrants that are not redeemed for cash, will be converted into the right to receive Common Stock. This constitutes an offer by EFHAC of the shares of Common Stock that will be issued in the Business Combination in exchange for the outstanding shares of ECD Common Stock and ECD Preferred Stock and the ECD Warrants outstanding as of the Effective Time, and this document is a prospectus of EFHAC with respect to EFHAC’s offer and issuance of such shares of Common Stock. As a security holder of ECD, you are being offered such shares of Common Stock in connection with the Business Combination, and that is also why you are receiving this proxy statement/prospectus.

 

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Q: What do I need to do now? Do I need to vote?

 

A: A majority of Common Stock held by the ECD Securityholders have already approved the Merger Agreement, and the other ECD Securityholders are not being asked to vote on the Merger Agreement, the Business Combination, or any other matter. Therefore, there is nothing you need to do now, but we do suggest that you read carefully and consider the information contained in this proxy statement/prospectus, including the annexes, to understand how the Business Combination will affect you.
   
Q: Why did the ECD Board agree to the Business Combination?

 

A: ECD requires additional capital to expand its business and otherwise carry out its current business plan. The Business Combination will provide ECD with an immediate source of additional capital as well as increased access to the U.S. capital markets as a result of the anticipated listing of the Combined Company Common Stock on Nasdaq.

 

Q: Is the Business Combination Expected to be Taxable to ECD Securityholders?

 

A: The material U.S. federal income tax considerations that may be relevant to ECD Securityholders in respect of the Business Combination are discussed in more detail in the section titled “Material U.S. Federal Income Tax Consequences —U.S. Federal Income Tax Consequences of the Business Combination to U.S. Holders of ECD Common Stock”. The discussion of the U.S. federal income tax consequences contained in this proxy statement/consent solicitation statement/prospectus is intended to provide only a general discussion and is not a complete analysis or description of all of the U.S. federal income tax considerations that are applicable to you in respect of the Business Combination, nor does it address any tax considerations arising under U.S. state or local or non-U.S. tax laws.

 

Q: What happens if the Business Combination is not consummated?

 

A: If EFHAC and ECD do not complete the Business Combination, ECD will remain an independent company and you, as the ECD Securityholders, will continue to own all of the shares of ECD Common Stock that you currently own.

 

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SUMMARY

 

This summary highlights selected information from this proxy statement/prospectus but may not contain all of the information that may be important to you. Accordingly, EFHAC encourages you to read carefully this entire proxy statement, including the Merger Agreement attached as Annex A. Please read these documents carefully as they are the legal documents that govern the Business Combination and your rights in the Business Combination.

 

Unless otherwise specified, all share calculations assume no exercise of the redemption rights by EFHAC’s stockholders.

 

The Parties to the Business Combination

 

EF Hutton Acquisition Corporation I

 

EF Hutton Acquisition Corporation I is a blank check company incorporated as a Delaware corporation on March 3, 2021. EFHAC was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities.

 

EFHAC’s principal executive offices are located at 24 Shipyard Drive, Suite 102, Hingham, MA 02043 and its telephone number is (929) 528-0767.

 

EFHAC Merger Sub, Inc.

 

EFHAC Merger Sub, Inc. is a Florida corporation formed on February 28, 2023, as a wholly-owned subsidiary of EFHAC for the sole purpose of effecting the Business Combination.

 

Merger Sub’s principal executive offices are located at 24 Shipyard Drive, Suite 102, Hingham, MA 02043 and its telephone number is (929) 528-0767.

 

Humble Imports Inc.

 

Humble Imports Inc, d/b/a ECD Auto Design (“ECD” or the “Company”), is a Florida corporation formed on March 6, 2013.

 

ECD is a creator of restored luxury vehicles. ECD’s work focuses on the highest quality customer experience and its vehicles aim to combine classic English beauty with modern performance. Each vehicle produced by ECD is fully bespoke, a one-off that is designed by the client through an immersive luxury design experience and hand-built from the ground up in 2,200 hours by craftsmen who are master-certified by the National Institute for Automotive Service Excellence (the “ASE”). With the client at the center of the design process, designers work with the client and then configure each build, from the engine, the color, the seating, the stitching, the electronics and the cosmetic finishes. ECD’s headquarters, known as the “Rover Dome,” is a 100,000-square-foot facility located in Kissimmee, FL that is home to 65 employees, including 60 talented craftsmen and technicians, who combined hold 61 certifications by the ASE, and 5 master level certifications.

 

In July 2021, two of our founders, Emily Humble and Thomas Humble, opened ECD UK, an affiliated entity of ECD. ECD UK acts as our UK logistic center, and it sources vehicles that meet our standards and specific budget. ECD UK purchases such vehicles and ships them to ECD’s facility in Florida. ECD UK also assists in sourcing rare, obsolete or special parts required in ECD’s build process. We fund, on a monthly basis, the costs of those vehicles and parts, as well as ECD UK’s operating expenses, including rent and payroll. ECD UK currently has four (4) full-time employees and one (1) sub-contractor in the UK. Our affiliation with ECD UK enables us to control our process from the sourcing of the base vehicles to the delivery of the customized product to the customer. On June 7, 2023, we consummated the UK Contribution through a Stock Purchase Agreement, dated June 7, 2023 (the “UK SPA”), by and between Emily Jayne Humble, ECD Auto Design UK, Ltd. and Humble Imports Inc. d/b/a ECD Auto Design. Pursuant to the UK SPA, ECD acquired 100% of the ordinary shares issued by ECD UK, and now ECD UK is a wholly owned subsidiary of ECD. A copy of the UK SPA is attached as Exhibit 10.14 hereto and is incorporated herein by reference.

 

ECD’s principal executive offices are located at 4930 Industrial Lane, Kissimmee, FL 34758, and its telephone number is (407) 483-4825.

 

The Merger Agreement

 

On March 3, 2023, EF Hutton Acquisition Corporation I (the “EFHAC” or the “Parent”) entered into a Merger Agreement with ECD, ECD UK, and Merger Sub and Scott Wallace, as the Securityholder Representative, pursuant to which Merger Sub will merge with and into the Company with the Company as the surviving corporation and becoming a wholly-owned subsidiary of Parent (the “Merger”). In connection with the Merger, the Parent will change its name to “ECD Automotive Design, Inc.” or such other name designated by the Company by notice to Parent. The Board of Directors of the Registrant (the “Board”) has unanimously (i) approved and declared advisable the Merger Agreement, the Merger and the other transactions contemplated thereby, and (ii) resolved to recommend approval of the Merger Agreement and related matters by the stockholders of EFHAC. On October 14, 2023, the Parent, the Company, ECD UK, Merger Sub and Scott Wallace, as the Securityholder Representative entered into an amendment to the Merger Agreement. A copy of the Merger Agreement and the First Amendment to the Merger Agreement, dated as of October 14, 2023 is filed as Exhibit 2.1 hereto and is incorporated herein by reference.

 

Company Securities

 

Merger Consideration. At the closing of the Merger, the Parent will issue (a) 25.1 million shares of its common stock, par value $0.0001 per share (the “Parent Common Stock”), (b) 39,000 shares of EFHAC Series A Convertible Preferred Stock, (c) a warrant to purchase 1,091,525 shares of EFHAC Common Stock (“Common Shares Warrant”) and (d) a warrant to purchase 15,819 shares of EFHAC Series A Preferred Stock (“Preferred Shares Warrant”) to the ECD Securityholders, as further described in the Merger Agreement. Parent will also pay the ECD Initial Securityholders a cash payment of $2,000,000 as consideration for the Merger.

 

Note Financing

 

Parent and the Company shall use commercially reasonable efforts to close the Note Financing in connection with the Business Combination.

 

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Representations and Warranties

 

The Merger Agreement contains customary representations and warranties of the parties thereto with respect to, among other things, (i) entity organization, good standing and qualification, (ii) capital structure, (iii) authorization to enter into the Merger Agreement, (iv) compliance with laws and permits, (v) taxes, (vi) financial statements and internal control over financial reporting, (vii) real and personal property, (viii) material contracts, (ix) environmental matters, (x) absence of changes, (xi) employee matters, (xii) litigation, and (xiii) brokers and finders.

 

Covenants

 

The Merger Agreement includes customary covenants of the parties with respect to operation of their respective businesses prior to consummation of the Merger and efforts to satisfy conditions to consummation of the Merger. The Merger Agreement also contains additional covenants of the parties, including, among others, covenants providing for the Registrant and the Company to use reasonable best efforts to cooperate in the preparation of the Registration Statement and Proxy Statement (as each such term is defined in the Merger Agreement) required to be filed in connection with the Merger and to obtain all requisite approvals of their respective stockholders including, in the case of the Registrant, approvals of the restated certificate of incorporation, the post-closing board of directors and the share issuance under Nasdaq rules. The Registrant has also agreed to include in the Proxy Statement the recommendation of its board that stockholders approve all of the proposals to be presented at the special meeting.

 

Exclusivity

 

Each of the Registrant and the Company has agreed that from the date of the Merger Agreement to the earlier of the closing of the Merger and the termination of the Merger Agreement, neither the Company nor the Parent will: (i) encourage, solicit, initiate, engage or participate in negotiations with any party concerning any alternative transaction, (ii) take any other action intended or designed to facilitate the efforts of any person relating to a possible alternative transaction or (iii) approve, recommend or enter into any alternative transaction or any contract or agreement related to any alternative transaction.

 

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Conditions to Closing

 

The consummation of the Merger is conditioned upon customary closing conditions including: (i) no authority having enacted, issued, promulgated, enforced or entered any law or order which is then in effect that makes the transactions contemplated by the Merger Agreement illegal or otherwise prohibits consummation of such transactions; (ii) no legal action having been commenced or asserted in writing (and not orally) by any authority to enjoin or otherwise materially restrict the consummation of the Closing; (iii) the approval of the Merger Agreement by the requisite vote of the stockholders of the Company; (iv) each of the Required Parent Proposals (as defined in the Merger Agreement) having been approved at Parent’s stockholder meeting; (v) the combined company’s initial listing application filed with Nasdaq in connection with the Merger having been approved; (vi) the Form S-4 filed by the Registrant relating to the Merger Agreement and the Merger will have been declared effective and no stop order suspending the effectiveness of the Form S-4 will have been issued by the SEC that remains in effect and no proceeding seeking such a stop order will have been initiated by the SEC and not withdrawn; (vii) the Parent Closing Cash shall equal or exceed $65,000,000, (viii) each party having performed or complied with the provisions of the Merger Agreement applicable to it, subject to agreed-upon standards; (ix) the truth and accuracy of each party’s representations and warranties included in the Merger Agreement, subject to agreed-upon standards; (x) the absence of any material adverse effect with respect to a party to the Merger Agreement; (xi) the receipt of a certificate, dated as of the Closing, signed by the respective Chief Executive Officer certifying the compliance with various closing conditions; (xii) the execution by the relevant party or parties of all ancillary documents; (xiii) the Company will have delivered to Parent a duly executed certificate conforming to the requirements of Sections 1.897-2(h)(1)(i) and 1.1445-2(c)(3)(i) of the United States Treasury regulations, and a notice to be delivered to the United States Internal Revenue Service as required under Section 1.897-2(h)(2) of the United States Treasury regulations, each dated no more than 30 days prior to the Closing Date and in form and substance reasonable acceptable to Parent; (xiv) no more than 5% of the issued and outstanding shares of Company Capital Stock having exercised dissenters’ rights of appraisal; (xv) the Company having provided each Company Consent set forth on Schedule 4.8 of the Merger Agreement; (xvi) the Company having delivered to Parent the financial statements required to be included in the Parent’s SEC Documents and the 2022 Audited Financial Statements prior to June 30, 2023; (xvii) each Company Securityholder listed on Schedule 7.4(a) of the Merger Agreement will have entered into a Company Lock-Up Agreement with respect to such Company Securityholder’s Merger Consideration Shares (as defined in the Merger Agreement); (xviii) the UK Contribution has been completed in accordance with the terms set forth in this Agreement; (xviii) the Amended Parent Charter will have been filed with the Delaware Secretary of State and become effective; (xix) the Company will have received a certificate, dated as of the Closing Date, from the Secretary of each of Parent and Merger Sub certifying certain matters; (xx) Parent will have received a certificate from the Company’s Secretary, dated as of the Closing Date certifying to certain matters; (xxi) each of Parent, Sponsor or other stockholder of Parent, as applicable, will have executed and delivered to the Company a copy of each Additional Agreement to which Parent, Sponsor or such other stockholder of Parent, as applicable, is a party; (xxii) the receipt by the Company of the resignations of the Registrant’s directors; and (xxiii) the post-Effective Time Parent Board of Directors and Company Board of Directors being in compliance with the size and composition requirements of the Merger Agreement.

 

Termination

 

The Merger Agreement may be terminated at any time prior to the Closing as follows: (i) by the Parent or the Company, in the event that (a) the Closing of the transactions has not occurred by November 13, 2023 (such date, the “Outside Closing Date”); (ii) if any authority has issued an order or enacted a law, having the effect of making the transactions contemplated by the Merger Agreement illegal or otherwise permanently restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated by the Merger Agreement, which order or law is final and non-appealable; provided that, the actions of the party seeking to terminate was not a substantial cause of, or substantially resulted in, such action by such authority; (iii) by mutual written consent of the parties; (iv) by either the Parent or the Company if the other has breached any representation, warranty, agreement or covenant contained in the Merger Agreement such that the conditions to Closing cannot be satisfied and such breach cannot be cured by the earlier of 30 days following receipt of written notice of such breach and the Outside Closing Date; and (v) by the Registrant, if: (a) at any time after the Company Stockholder Written Consent Deadline (as defined in the Merger Agreement) the Company has not received the Company Stockholder Approval.

 

Certain Related Agreements

 

Company Support Agreement

 

Concurrent with the execution of the Merger Agreement, certain stockholders of the Company entered into a Company Stockholder Support Agreement with the Registrant and the Company in which each such stockholder agreed to vote their shares of Company Capital Stock in favor of the Merger Agreement and the transactions contemplated thereby. Stockholders also agreed to waive any rights of appraisal, dissenter’s rights, and any similar rights under applicable law and not to sell or otherwise transfer any of their shares of Company Capital Stock unless the buyer, assignee, or transferee thereof executes a joinder agreement to the Company Stockholder Support Agreement.

 

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Parent Support Agreement

 

Concurrent with the execution of the Merger Agreement, EF Hutton Partners, LLC (the “Sponsor”) and the pre-IPO investors in the Parent, entered into a Parent Stockholder Support Agreement with the Company and the Registrant in which the Sponsor and the pre-IPO investors in the Parent agreed to (i) not transfer any shares or redeem any shares of Parent Common Stock held by it unless the buyer, assignee, or transferee thereof executes a joinder agreement to the Parent Stockholder Support Agreement and (ii) to vote in favor of the adoption of the Merger Agreement and the other proposals to be presented at the special meeting of stockholders at which the Merger Agreement and related proposals are considered.

 

Additional Agreements to be Executed prior to Closing

 

Company Lock-up Agreement

 

The Merger Agreement provides that the Registrant, the Company and certain Company stockholders will enter into a lock-up agreement (the “Company Lock-Up Agreement”), pursuant to which such Company stockholders will agree, subject to certain customary exceptions, not to (i) sell, offer to sell, contract or agree to sell, pledge or otherwise dispose of, directly or indirectly, any shares of Parent Common Stock they receive in the Merger (the “Company Lock-Up Shares”), (ii) enter into a transaction that would have the same effect, (iii) enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Company Lock-Up Shares, (iv) publicly disclose the intention to effect any transaction specified in clause (i) or (iii), or (v) engage in any short sales with respect to any security of Parent, until the date that is six months after the date on which the Effective Time occurs.

 

Sponsor Lock-up Agreement

 

The Merger Agreement provides that the Registrant, the Company and the Sponsor will enter into a sponsor lock-up agreement (the “Sponsor Lock-Up Agreement”), pursuant to which the Sponsor will not (i) offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of Parent Common Stock held by them at the Effective Time (such shares, together with any securities convertible into or exchangeable for or representing the rights to receive shares of Parent Common Stock as of the Effective Time, the “Sponsor Lock-Up Shares”), (ii) enter into a transaction that would have the same effect, (iii) enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Sponsor Lock-up Shares, (iv) publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, or (v) engage in any short sales with respect to any security of the Parent, until the date that is six months after the date on which the Effective Time occurs.

 

Restrictive Covenant Agreement

 

Prior to Closing, Parent, the Company, and each of the Company Stockholders will enter into a restrictive covenant agreement (the “Restrictive Covenant Agreement”), pursuant to which the Company Stockholder acknowledges and agrees to certain non-compete and non-solicitation covenants for the benefit of the Company and the surviving company after the Merger.

 

Amended and Restated Registration Rights Agreement

 

Prior to Closing, Parent, the Company, certain holders of Company Common Stock, certain shareholders of Parent Common Stock, and the holders of the private units of Parent will enter into an amended and restated registration rights agreement (the “Amended and Restated Registration Rights Agreement”) pursuant to which, among other things, Parent will provide the above holders with certain rights relating to the registration for resale of the Parent Common Stock that they will receive at Closing.

 

Management Post-Closing

 

Effective as of the Closing, the Combined Company’s Board of Directors will consist of seven (7) directors as follows: Benjamin Piggott, Thomas Wood, Scott Wallace, Thomas Humble, and Emily Humble (collectively, the “Core Directors’), and Robert Machinist and Patrick Lavelle, four (4) of whom shall qualify as “Independent Directors” under Nasdaq Rule 5605(a)(2 ).

 

See “Directors and Executive Officers of the Combined Company After the Business Combination — Directors and Executive Officers” for additional information.

 

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Voting Securities

 

As of the Record Date, there were 6,625,147 shares of Common Stock issued and outstanding. Only EFHAC stockholders who hold shares of Common Stock of record as of the close of business on November 13, 2023 are entitled to vote at the EFHAC Special Meeting or any adjournment thereof. Approval of the Business Combination Proposal, the Nasdaq Proposal, the Plan Proposal and the Adjournment Proposal will each require the affirmative vote of the holders of a majority of the issued and outstanding shares of Common Stock present in person by virtual attendance or represented by proxy and entitled to vote at the EFHAC Special Meeting or any adjournment thereof. Approval of the NTA Requirement Amendment Proposal and the Charter Amendment Proposal will require the affirmative vote of a majority of the issued and outstanding shares of Common Stock.

 

Attending the EFHAC Special Meeting either by virtual attendance or by submitting your proxy and abstaining from voting will have no effect with respect to the Business Combination Proposal, the Nasdaq Proposal, the Plan Proposal and the Adjournment Proposal and will have the same effect as voting against the NTA Requirement Amendment Proposal and the Charter Amendment Proposal and, assuming that a quorum is present, broker non-votes will have no effect on the Proposals, other than the NTA Requirement Amendment Proposal and the Charter Amendment Proposal, for which it will have the same effect as voting against the Proposals.

 

With respect to the Business Combination, pursuant to the Letter Agreement and the Sponsor Support Agreement, the Initial Stockholders, holding 3,132,500 shares (or 47.28% of the outstanding shares) of Common Stock, have agreed to vote its shares of Common Stock in favor of each of the Proposals. As a result, only 180,074 shares of Common Stock held by the public stockholders will need to be present by virtual attendance or by proxy to satisfy the quorum requirement for the meeting. In addition, as the vote to approve the Business Combination Proposal is a majority of the votes cast at a meeting at which a quorum is present, assuming only the minimum number of shares of Common Stock to constitute a quorum is present, no shares of Common Stock held by the public stockholders must vote in favor of the Business Combination Proposal for it to be approved.

 

Redemption Rights

 

Pursuant to EFHAC’s Certificate of Incorporation, holders of Public Shares may elect to have their shares redeemed for cash at the applicable redemption price per share equal to the quotient obtained by dividing (i) the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest (before deductions for taxes payable), by (ii) the total number of then-outstanding Public Shares. As of October 31, 2023, this would have amounted to approximately $10.87 per share, subject to reduction for the payment of taxes.

 

You will be entitled to receive cash for any Public Shares you elect to be redeemed only if you:

 

  (i) (a) hold Public Shares, or

 

  (b) hold Public Shares through Units and you elect to separate your Units into the underlying Public Shares, Warrants, and Rights prior to exercising your redemption rights with respect to the Public Shares; and

 

  (ii) prior to 5:00 p.m., Eastern Time, on December 5, 2023, (a) submit a written request to Continental that EFHAC redeem your Public Shares for cash and (b) deliver your Public Shares to Continental, physically or electronically through DTC.

 

Holders of outstanding Units must separate the underlying Public Shares prior to exercising redemption rights with respect to the Public Shares. If the Units are registered in a holder’s own name, the holder must deliver the certificate for his/her/its Units to Continental, with written instructions to separate the Units into their individual component parts. This must be completed far enough in advance to permit the mailing of the certificates back to the holder so that the holder may then exercise his, her or its redemption rights upon the separation of the Public Shares from the Units.

 

If a holder exercises his/her/its redemption rights, then such holder will be exchanging his/her/its Public Shares for cash and will no longer own shares of the Combined Company other than any shares received in connection with the Rights. Such a holder will be entitled to receive cash for his/her/its Public Shares only if such holder properly demands redemption and delivers his/her/its Public Shares (either physically or electronically) to Continental in accordance with the procedures described herein. Please see the section titled “The EFHAC Special Meeting — Redemption Rights” for the procedures to be followed if you wish to redeem your Public Shares for cash.

 

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Ownership of the Post-Business Combination Company After the Closing

 

We anticipate that upon completion of the Business Combination, assuming no redemptions of the 3,492,647 Public Shares, EFHAC’s stockholders will retain an ownership interest of approximately 14.6% in the Combined Company, the ECD Securityholders will own approximately 74.5% of the Combined Company, the Initial Stockholders will own approximately 9.4% of the Combined Company, and EF Hutton will own approximately 1.5% of the Combined Company. If maximum Public Shares are redeemed, EFHAC’s stockholders will retain an ownership interest of approximately 6.9% in the Combined Company, the ECD Securityholders will own approximately 81.3% of the Combined Company, the Initial Stockholders will own approximately 10.2% of the Combined Company, and EF Hutton will own approximately 1.6% of the Combined Company. The ownership percentages with respect to the Combined Company do not take into account the issuance of any additional shares of Common Stock underlying the Public Warrants, the Private Warrants, the Common Shares Warrant, the Preferred Shares Warrant, the Series A Convertible Preferred Stock, or the Senior Secured Convertible Notes, but do take into account the issuance of 1,469,688 shares of the Combined Company Common Stock pursuant to the Rights. If the actual facts are different from these assumptions (which they are likely to be), these ownership percentages will be different. See “Unaudited Pro Forma Condensed Combined Financial Information.”

 

The following summarizes the pro forma ownership of the Common Stock as of June 30, 2023, including Common Stock underlying Units, following the Business Combination under both the no redemption and maximum redemption scenarios:

 

  

Scenario 1

Assuming Minimum
Redemptions

  

Scenario 2

Assuming Maximum
Redemptions

 
Equity Capitalization Summary  Shares   %   Shares   % 
ECD Securityholders   25,100,000    74.5%   25,100,000    81.3%
EFHAC Public Stockholders   4,930,147    14.6%   2,125,091    6.9%
Initial Stockholders   3,164,688    9.4%   3,164,688    10.2%
EF Hutton   500,000    1.5%   500,000    1.6%
Total common stock   33,694,835    100.0%   30,889,779    100.0%

 

All of the relative percentages above are for illustrative purposes only and are based upon certain assumptions as described in the section entitled “Share Calculations and Ownership Percentages” and, with respect to the determination of the “maximum redemptions,” the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements.” Should one or more of the assumptions prove incorrect, actual ownership percentages may vary materially from those described in this proxy statement/prospectus as anticipated, believed, estimated, expected or intended. See “Unaudited Pro Forma Condensed Combined Financial Information.”

 

The following chart illustrates the ownership structure of the Combined Company immediately following the Business Combination. The equity interests shown below were calculated based on the assumptions that (i) no EFHAC stockholder exercises its redemption rights, (ii) none of the parties below purchase EFHAC common stock in the open market, and (iii) there are no other issuances of equity by EFHAC prior to or in connection with the consummation of the Business Combination. Notwithstanding the foregoing, the ownership percentages set forth below do not take into account the exercise of any EFHAC Warrants.

 

 

Interests of Certain Persons in the Business Combination

 

When you consider the recommendation of the Board in favor of adoption of the Business Combination Proposal and other Proposals, you should keep in mind that EFHAC’s directors and officers have interests in the Business Combination that are different from, or in addition to, your interests as a stockholder, including:

 

  The Initial Stockholders have waived their right to redeem any Public Shares in connection with a stockholder vote to approve a proposed initial business combination or sell any Public Shares to EFHAC in a tender offer in connection with a proposed initial business combination, or to receive distributions with respect to any Public Shares upon the liquidation of the Trust Account if EFHAC is unable to consummate a business combination. This waiver of redemption rights by the Initial Stockholders was made at the time that the founder shares were purchased in exchange for the purchase price of the founder shares and for no additional consideration. If EFHAC does not complete an initial business combination, such as the Business Combination, by December 13, 2023 (or by March 13, 2024 if the time to complete its initial business combination has been extended in accordance with its Certificate of Incorporation), it will be required to dissolve and liquidate. In such event, the 2,875,000 founder shares currently held by the Initial Stockholders and the Anchor Investors, which they acquired prior to the IPO, will be worthless because such holders have agreed to waive their rights to any liquidation distributions. The Initial Stockholders purchased the founder shares for an aggregate purchase price of $25,000, or less than $0.01 per share. Accordingly, the Initial Stockholders will receive a positive rate of return so long as the market price of the Common Stock is at least $0.01 per share, even if public stockholders experience a negative rate of return in the Combined Company.

 

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  If EFHAC does not complete an initial business combination, such as the Business Combination, by December 13, 2023 (or by March 13, 2024 if the period of time to complete the initial business combination has been extended), the common stock, warrants and the rights included as part of the 257,500 Private Units that the Sponsor purchased for a total purchase price of $2,575,000 will be worthless. Such common stock had an aggregate market value of approximately $2,762,975 based on the closing price of EFHAC common stock of $10.73 on Nasdaq as of October 31, 2023, such Private Warrants had an aggregate market value of approximately $6,437 based on the closing price of EFHAC Warrants of $0.025 on Nasdaq as of October 31, 2023, such rights had an aggregate market value of approximately $51,500 based on the closing price of EFHAC Rights of $0.20 on Nasdaq as of October 31, 2023.
     
  The Initial Stockholders, including the Sponsor and its affiliates, could benefit from the completion of a business combination that is not favorable to its public stockholders and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to public stockholders rather than liquidate. If a business combination is not completed within the Combination Period, the Initial Stockholders will lose a in connection with its 2,875,000 founder shares a combined aggregate amount of approximately $30.8 million based on the closing price of the EFHAC common stock at $10.73 per share on October 31, 2023. For example, if the share price of the EFHAC common stock declined to $5.00 per share after the close of the business combination, EFHAC’s public stockholders who purchased shares in the IPO, would have a loss of $5.00 per share, while the Sponsor would have a gain of $4.99 per share because it acquired the founder shares for a nominal amount. In other words, the Initial Stockholders can earn a positive rate of return on their investment even if public stockholders experience a negative rate of return in the Combined Company.
     
  If the Business Combination is not completed, the Initial Stockholders will not have the potential ownership interest of approximately 6.2% (assuming no redemption) or 6.5% (assuming maximum redemption) in the Combined Company.
     
  In order to extend EFHAC’s time to complete a business combination by up to an additional nine months as provided in the Current Charter, the Sponsor or its affiliates or designees must deposit into the Trust Account the lesser of $80,000 and $0.04 for each outstanding share of common stock sold in EFHAC’s IPO for each one-month extension. If the Business Combination is consummated by the extended deadlines, the amount deposited in the Trust Account will be repaid. However, if the Business Combination is not consummated by the extended deadline, the amount deposited will not be repaid unless there are funds available outside the Trust Account to do so and will be included in the liquidation distribution to EFHAC stockholders.
     
  The Sponsor and EFHAC’s officers and directors and their affiliates are entitled to reimbursement of reasonable out-of-pocket expenses incurred by them related to identifying, investigating and completing an initial business combination. There is no limit on the amount of out-of-pocket expenses reimbursable by EFHAC. However, to the extent that such expenses exceeded the available proceeds not deposited in the trust account and the interest income earned on the amounts held in the trust account available ), the Sponsor and EFHAC’s officers and directors and their affiliates will not receive reimbursement for any out-of-pocket expenses incurred by them unless EFHAC consummates an initial business combination. As of the date of this proxy statement/prospectus, the Sponsor and EFHAC’s officers and directors and their affiliates have not had any unpaid reimbursable expenses.
     
  The exercise of EFHAC’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination may result in a conflict of interest when determining whether such changes or waivers are appropriate and in our stockholders’ best interest.
     
  The Initial Stockholders will not receive any additional securities pursuant to an anti-dilution adjustment based upon EFHAC’s additional financing activities.

 

These interests may influence the Board in making their recommendation that you vote in favor of the approval of the Business Combination. In addition to the foregoing, EFHAC’s Current Charter excludes the corporate opportunity doctrine, and any other analogous doctrine, from applying to directors and officers of EFHAC unless such corporate opportunity is offered to a director or officer solely in his or her capacity as a director or officer of EFHAC and such opportunity is one EFHAC is legally and contractually permitted to undertake and would otherwise be reasonable for EFHAC to pursue. The potential conflict of interest relating to the waiver of the corporate opportunities doctrine in EFHAC’s Current Charter did not impact its search for an acquisition target and EFHAC was not prevented from reviewing any opportunities as a result of such waiver.

 

Other than as described above, EFHAC’s officers and directors and their respective affiliates have no interest in, or affiliation with, ECD.

 

ECD’s directors and officers also have interests in the Business Combination that are in addition to and apart from their interests as stockholders of ECD. The ECD Board was aware of these interests and considered them in approving the Merger Agreement and the Business Combination. These interests consist of the following:

 

Certain trade and real estate lease obligations of ECD have been guaranteed by the ECD Securityholders, although ECD will make commercially reasonable efforts to remove these guaranties after the Closing.

 

Family members of the ECD Securityholders are employees of ECD.

 

Certain ECD’s directors and officers are also the Company Stockholders, as defined in the Merger Agreement, and shall receive consideration in cash and in Parent Common Stock, as defined below.

 

Certain ECD’s directors and officers may be appointed to be directors and officers of the Combined Company.

 

See “Proposal 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination” for additional information.

 

Accounting Treatment

 

The Business Combination will be accounted for as a “reverse recapitalization,” with no goodwill or other intangible assets recorded, in accordance with GAAP. A reverse recapitalization does not result in a new basis of accounting, and the financial statements of the combined entity represent the continuation of the financial statements of ECD in many respects.

 

Under this method of accounting, EFHAC will be treated as the “acquired” company for financial reporting purposes. For accounting purposes, ECD will be deemed to be the accounting acquirer in the transaction and, consequently, the transaction will be treated as a recapitalization of ECD (i.e. a capital transaction involving the issuance of stock by EFHAC for the stock of ECD). Accordingly, the consolidated assets, liabilities and results of operations of ECD will become the historical financial statements of the Combined Company, and EFHAC’s assets, liabilities and results of operations will be consolidated with ECD’s beginning on the acquisition date. Operations of EFHAC prior to the Business Combination will be presented as those of ECD in future reports. The net assets of ECD will be recognized at carrying value, with no goodwill or other intangible assets recorded.

 

24

 

 

Recommendations of the Board and Reasons for the Business Combination

 

After careful consideration of the terms and conditions of the Merger Agreement, the Board has determined that Business Combination and the transactions contemplated thereby are fair to, and in the best interests of, EFHAC and its stockholders. In reaching its decision with respect to the Business Combination and the transactions contemplated thereby, the Board reviewed various industry and financial data and the evaluation of materials provided by ECD. The Board did not obtain a fairness opinion on which to base its assessment. The Board recommends that EFHAC stockholders vote:

 

  FOR the Business Combination Proposal;
     
  FOR the NTA Requirement Amendment Proposal
     
  FOR the Charter Amendment Proposal;
     
  FOR the Advisory Proposals;
     
  FOR the Nasdaq Proposal;
     
  FOR the Plan Proposal; and
     
  FOR the Adjournment Proposal.

 

SUMMARY RISK FACTORS

 

In evaluating the Business Combination and the Proposals to be considered and voted on at the EFHAC Special Meeting, you should carefully review and consider the risk factors set forth under the section entitled “Risk Factors” beginning on page 32 of this proxy statement/prospectus. Some of these risks related to are summarized below. References in the summary below to “ECD” generally refer to ECD in the present tense or the Combined Company from and after the Business Combination.

 

The following summarizes certain principal factors that make an investment in the Combined Company speculative or risky, all of which are more fully described in the “Risk Factors” section below. This summary should be read in conjunction with the “Risk Factors” section and should not be relied upon as an exhaustive summary of the material risks facing EFHAC’s, ECD’s and/or the Combined Company’s business.

 

Risks Related to ECD

 

  ECD has a limited operating history with a history of losses and expects to incur significant expenses for the near term.
     
  If we fail to manage our growth effectively, our business could be harmed.
     
  ECD’s business strategy may not be successfully implemented, which could negatively impact its financial results and stock price.
     
  ECD’s vehicles are highly customized and may not perform in a manner consistent with every customer’s expectations.
     
  ECD’s business is highly dependent on the price, availability and quality of base vehicles.
     
  ECD’s ability to predict future demand for its vehicles and inventory is limited, which limits the accuracy of ECD’s financial forecasts.
     
  ECD does not have a diversified range of operations or portfolio of investments, and ECD’s business is highly specific to the customization and restoration of Land Rover Series, Land Rover Defenders, Range Rover Classics and Jaguar car models.
     
  ECD’s business is highly specialized and dependent on a continuing demand for high-end, luxury customer passenger vehicles.

 

25

 

 

  ECD may fail to adequately obtain, maintain, enforce and protect ECD’s intellectual property and may not be able to prevent third parties from unauthorized use of ECD’s intellectual property and proprietary technology.
     
  ECD’s business depends on the success of its marketing strategies.
     
  ECD’s success is dependent on the continued leadership and experience of ECD Securityholders, and the loss of their services may have a material and adverse effect on ECD’s operations and financial condition.
     
  We may lose or fail to attract and retain key management personnel and salaried employees.
     
  The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business, particularly after we are no longer an “emerging growth company.”
     
  ECD may incur material losses and costs as a result of warranty claims and product liability and intellectual property infringement actions that may be brought against ECD.
     
  ECD’s business could be adversely affected by computer malware, viruses, ransomware, hacking, phishing attacks and security threats, including cybersecurity threats and related disruptions, which could result in security and privacy breaches and interruption in service.

 

Risks Related to ECD’s Business and Industry

 

  The luxury automotive industry has significant barriers to entry that ECD must continue to overcome to manufacture and sell custom luxury vehicles at scale.
     
  The custom, luxury automotive market is highly competitive and ECD may not be successful in competing in this industry.
     
  ECD operates in a regulatory environment that is evolving and uncertain. ECD may not be able to respond quickly enough to changes in regulations, technology and technological risks, and to develop ECD’s intellectual property into commercially viable products.

 

  The custom, luxury automotive market is highly competitive and ECD may not be successful in competing in this industry.
     
  The luxury automotive industry has significant barriers to entry that ECD must continue to overcome to manufacture and sell custom luxury vehicles at scale.
     
  ECD may not be able to respond quickly enough to changes in technology and technological risks, and to develop ECD’s intellectual property into commercially viable products.

 

26

 

 

Risks Related to ECD’s and EFHAC’s Business

 

  Failure to comply with applicable anti-corruption legislation and other governmental laws and regulations could result in fines, criminal penalties and materially adversely affect its business, financial condition and results of operations.

 

  The continuation or worsening of the COVID-19 pandemic, or other similar public health developments, could have an adverse effect on business, results of operations, and financial condition.

 

  EFHAC will be forced to liquidate the Trust Account if it cannot consummate a business combination by December 13, 2023 (or up to March 13, 2024 if the time to complete the initial business combination is extended in accordance with its Certificate of Incorporation). In the event of a liquidation, EFHAC’s public stockholders will receive $10.00 per share and the Warrants and Rights will expire worthless.

 

Risks Related to EFHAC’s Business and the Business Combination

 

  You must tender your Public Shares in order to validly seek redemption at the EFHAC Special Meeting of stockholders.

 

  If third parties bring claims against EFHAC, the proceeds held in trust could be reduced and the per-share Public Share liquidation price received by EFHAC’s stockholders may be less than $10.00.

 

  Any distributions received by EFHAC stockholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, EFHAC was unable to pay its debts as they fell due in the ordinary course of business.

 

  If EFHAC’s due diligence investigation of ECD was inadequate, then stockholders of EFHAC following the Business Combination could lose some or all of their investment.

 

Risks Related to the Combined Company Common Stock

 

  The market price of the Combined Company Common Stock is likely to be highly volatile, and you may lose some or all of your investment.

 

  Volatility in the Combined Company’s share price could subject the Combined Company to securities class action litigation.

 

SOURCES AND USES OF FUNDS FOR THE BUSINESS COMBINATION

 

Currently, EFHAC may not consummate the Business Combination unless it has net tangible assets of at least $5,000,001 upon consummation of the Business Combination. In the maximum redemption scenario, on a pro forma combined basis, we estimate that EFHAC’s net tangible assets would be $5.0 million. EFHAC may enter into agreements with holders of Public Shares in which the holders agree to not redeem their Public Shares so as to ensure that the net tangible assets test is satisfied. However, in Proposal 2, the stockholders are being asked to consider and vote upon a proposal to approve an amendment (the “NTA Requirement Amendment”) to the Amended and Restated Certificate of Incorporation of EFHAC to expand the methods that EFHAC may employ to not become subject to the “penny stock” rules of the Securities and Exchange Commission, and thus removing the requirement that EFHAC must have net tangible assets of at least $5,000,001 to consummate the Business Combination.

 

As of October 31, 2023, we had marketable securities held in the Trust Account of $37,994,289 (including interest income), consisting primarily of U.S. Treasury securities. Interest income on the balance in the trust account may be used by us to pay taxes.

 

We intend to use substantially all of the funds raised in the PIPE Financing and the funds held in the Trust Account, including any amounts representing interest earned on the trust account (less income taxes payable), to complete the Business Combination and fund the business of ECD. At the time of this filing, there is no commitment for the proposed PIPE Financing. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

 

As of June 30, 2023, we had cash held outside the Trust Account of $3,163. We intend to use the funds held outside the Trust Account primarily to fund working capital to consummate the Business Combination.

 

To finance transaction costs in connection with the Business Combination, or in connection with additional deposits into the Trust Account to extend the time available to us to consummate the Business Combination, the Sponsor or an affiliate of the Sponsor or certain of EFHAC’s officers and directors may, but are not obligated to, loan EFHAC funds on a non-interest-bearing basis as may be required. If EFHAC completes the Business Combination, EFHAC will repay such loaned amounts out of the proceeds of the PIPE Financing or funds remaining in the Trust Account. Otherwise, such loans would be repaid only out of funds held outside the Trust Account. In the event that the Business Combination does not close, EFHAC may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account would be used to repay such loaned amounts. Up to $5,475,000 of such loans may be convertible into private units, at a price of $10.00 per unit at the option of the lender, upon consummation of the Business Combination.

 

SELECTED HISTORICAL FINANCIAL DATA OF EFHAC

 

EFHAC’s statement of operations data for the three and six months ended June 30, 2023 and 2022 and balance sheet data as of June 30, 2023 are derived from EFHAC’s unaudited consolidated financial statements included elsewhere in this proxy statement/prospectus. EFHAC’s statement of operations data for the year ended December 31, 2022 and the period from March 3, 2021 (inception) through December 31, 2021 and balance sheet data as of December 31, 2022 and 2021 are derived from EFHAC’s audited financial statements included elsewhere in this proxy statement/prospectus.

 

The historical results of EFHAC included below and elsewhere in this proxy statement/prospectus are not necessarily indicative of the future performance of EFHAC. You should read the following selected financial data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of EFHAC” and the financial statements and the related notes appearing elsewhere in this proxy statement/prospectus.

  

27

 

 

  

For the three months ended

June 30,

  

For the six months ended

June 30,

 
Statement of Operations Data:  2023   2022   2023   2022 
Formation and operating costs  $868,080   $1,179   $2,201,235   $1,847 
Compensation expense       (62,500)       (62,500)
Interest earned on marketable securities held in Trust Account   1,148,125        2,392,256     
Income (loss) before provision for income taxes   280,045    (63,679)   191,021    (64,347)
Provision for income taxes   (230,607)       (481,374)    
Net income (loss)   49,438    (63,679)   (290,353)   (64,347)
Weighted average common stock outstanding, redeemable common stock   8,948,206        10,217,054     
Basic and diluted net loss per share, redeemable common stock  $0.00   $   $(0.02)  $ 
Weighted average common stock outstanding, non-redeemable common stock   3,132,500    2,500,000    3,132,500    2,500,000 
Basic and diluted net loss per share, non-redeemable common stock  $0.00   $(0.03)  $(0.02)  $(0.03)

 

Statement of Operations Data:  Year Ended
December 31, 2022
   Period from
March 3, 2021
(inception) through
December 31, 2021
 
Formation and operating costs  $258,337   $490 
Interest earned on marketable securities held in Trust Account   1,104,670     
Stock-based compensation   (62,500)    
Income (loss) before provision for income taxes   783,833    (490)
Provision for income taxes   (206,393)    
Net income (loss)   577,440    (490)
Weighted average common stock outstanding, redeemable common stock   3,434,247     
Basic and diluted net income (loss) per share, redeemable common stock  $0.09   $ 
Weighted average common stock outstanding, non-redeemable common stock   2,951,897    2,500,000 
Basic and diluted net income (loss) per share, non-redeemable common stock  $0.09   $(0.00)

 

Balance Sheet Data:  As of
June 30,
2023
   As of
December 31,
2022
   As of
December 31,
2021
 
Marketable securities held in Trust Account  $37,022,036   $117,254,670   $ 
Total assets   37,173,812    117,994,995    79,510 
Total liabilities   7,498,947    4,706,295    55,000 
Common stock subject to possible redemption   36,207,414    116,826,168     
Total stockholders’ (deficit) equity  $(6,532,549)  $(3,537,468)  $24,510 

 

28

 

 

SELECTED HISTORICAL FINANCIAL INFORMATION OF ECD

 

The following tables summarize selected historical financial information of ECD. Selected historical financial information from the statements of operations, balance sheets, and statements of cash flows as of and for the years ended December 31, 2022 and 2021 was derived from ECD’s audited financial statements included elsewhere in this proxy statement/information statement/prospectus, and as of and for the three and six months ended June 30, 2023 and 2022 was derived from ECD’s reviewed financial statements included elsewhere in this proxy statement/information statement/prospectus.

 

ECD’s historical results are not necessarily indicative of the results that may be expected in the future. The following selected historical financial information should be read in conjunction with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of ECD” and ECD’s financial statements and accompanying notes included elsewhere in this proxy statement/prospectus. The selected historical financial information included in this section is not intended to replace ECD’s financial statements and accompanying notes. As explained elsewhere in this proxy statement/prospectus, the selected historical financial information contained in this section relates to ECD, prior to and without giving pro forma effect to the impact of the Business Combination and, as a result, the results reflected in this section may not be indicative of the results of ECD going forward. For further information regarding the estimated pro forma effect of the Business Combination, see the section titled “Unaudited Pro Forma Condensed Combined Financial Information” included elsewhere in this proxy statement/prospectus.

 

   For the three months ended
June 30,
   For the six months ended
June 30,
 
   2023   2022   2023   2022 
Statement of Operations Data:                    
Revenue  $4,913,235   $3,666,323   $9,446,216   $7,395,725 
Cost of goods sold   3,185,488    2,968,684    6,197,039    5,743,586 
Gross Profit   1,727,747    697,639    3,249,177    1,652,139 
Sales and marketing expenses   105,183    70,712    206,788    148,646 
General and administrative expenses   1,214,429    902,084    2,636,617    1,845,701 
Depreciation expenses   22,472    22,971    53,994    43,890 
Total operating expenses   1,342,084    995,767    2,897,399    2,038,237 
Income (loss) from Operations   385,663    (298,128)   351,778    (386,098)
Interest income (expense), net   10,773        20,650    141 
Commission income   44,000    277,500    44,000    392,659 
Other income, Net   29,396    328    41,896    1,740 
Total other income, net   84,169    277,828    106,546    394,540 
Net Income (loss)  $409,832   $(20,300)  $458,324   $8,442 
Per share information attributable to ECD                    
Net income (loss) per common share, basic and diluted  $4,698   $(203)  $4,583   $84 
Weighted average number of common shares outstanding, basic and diluted   100    100    100    100 

 

   For the year ended
December 31,
 
   2022   2021 
Statement of Operations Data:          
Revenue  $14,989,963   $11,519,396 
Cost of goods sold   11,217,298    8,963,801 
Gross Profit   3,772,665    2,555,595 
Sales and marketing expenses   299,388    242,192 
General and administrative expenses   3,743,144    3,093,614 
Depreciation expenses   72,303    64,846 
Total operating expenses   4,114,835    3,400,652 
Loss from Operations   (342,170)   (845,057)
Interest income (expense), net   (10,333)   207 
Loss on sale of asset   (56,454)    
ERTC credit       247,607 
Commission income   539,659    497,098 
Gain on forgiveness of PPP Loan       970,507 
Other income, Net   30,032    12,551 
Total other income, net   502,904    1,727,970 
Net Income  $160,734   $882,913 
Per share information attributable to ECD          
Net income per common share, basic and diluted  $1,607.34   $8,829.13 
Weighted average number of common shares outstanding, basic and diluted   100    100 

 

   As of
June 30,
   As of
December 31,
 
   2023   2022   2021 
Balance Sheet Data:               
Cash and cash equivalents  $2,278,071   $3,514,882   $2,808,643 
Total assets   13,172,433    12,441,212    7,303,768 
Total liabilities   15,809,737    15,446,692    10,191,819 
Total stockholders’ deficit   (2,692,304)   (3,005,479)   (2,888,052)

 

  

For the six months ended

June 30,

  

For the year ended

December 31,

 
   2023   2022   2022   2021 
Statements of Cash Flows Data:                    
Net cash (used in) provided by operating activities  $(1,077,944)  $1,049,420   $1,494,130   $(20,746)
Net cash used in investing activities   (13,718)   (363,405)   (509,730)   (61,845)
Net cash (used in) provided by financing activities   (145,149)   (175,076)   (278,161)   661,629 

 

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SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

The following summary unaudited pro forma condensed combined financial information (the “Summary Pro Forma Information”) gives effect to the transactions contemplated by the Business Combination and related transactions. The Business Combination will be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, although EFHAC will acquire all of the outstanding equity interests of ECD in the Business Combination, EFHAC will be treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination will be reflected as the equivalent of ECD issuing shares for the net assets of EFHAC, followed by a recapitalization whereby no goodwill or other intangible assets are recorded. Operations prior to the Business Combination will be those of ECD. The summary unaudited pro forma condensed combined balance sheet data as of June 30, 2023 gives effect to the Business Combination and related transactions as if they had occurred on June 30, 2023. The summary unaudited pro forma condensed combined statements of operations data for the six months ended June 30, 2023 and for the year ended December 31, 2022 give effect to the Business Combination and related transactions as if they had occurred on January 1, 2022, the beginning of the earliest periods presented.

 

The Summary Pro Forma Information has been derived from, should be read in conjunction with, the more detailed unaudited pro forma condensed combined financial information included in the section titled “Unaudited Pro Forma Condensed Combined Financial Information” in this proxy statement/prospectus and the accompanying notes thereto. The unaudited pro forma condensed combined financial information is based upon, and should be read in conjunction with, the historical financial statements and related notes of EFHAC and ECD for the applicable periods included in this proxy statement/prospectus. The Summary Pro Forma Information has been presented for informational purposes only and is not necessarily indicative of what the post-Business Combination company’s financial position or results of operations actually would have been had the Business Combination and related transactions been completed as of the dates indicated. In addition, the Summary Pro Forma Information does not purport to project the future financial position or operating results of the post-Business Combination company following the reverse recapitalization.

 

The unaudited pro forma condensed combined financial information has been prepared using the assumptions below with respect to the potential redemption for cash of EFHAC Public Shares:

 

  Assuming Minimum Redemptions: This presentation assumes that no Public Stockholders will exercise redemption rights with respect to the Public Shares for a pro rata share of the funds in the Trust Account.
     
  Assuming Maximum Redemptions: This presentation assumes that 2,805,056 Public Shares are redeemed for aggregate redemption payments of $29.3 million, assuming a $10.46 per share redemption price. As all of the EFHAC Insiders waived their redemption rights, only redemptions by Public Stockholders are reflected in this presentation. This scenario includes all adjustments contained in the “no redemption” scenario and presents additional adjustments to reflect the effect of the maximum redemptions. The “maximum redemption scenario” represents the maximum number of Public Shares that may be redeemed with EFHAC’s net tangible assets above $5,000,001 after giving effect to the redemptions.

 

   Scenario 1 Assuming Minimum
Redemptions
   Scenario 2 Assuming Maximum
Redemptions
 
   (in thousands, except share and per share data) 
Summary Unaudited Pro Forma Condensed Combined Statement of Operations Data for the six months ended June 30, 2023        
Net loss  $(3,873)  $(3,873)
Weighted average shares outstanding – basic and diluted   33,694,835    30,889,779 
Basic and diluted net loss per share  $(0.11)  $(0.13)

 

   Scenario 1 Assuming Minimum
Redemptions
   Scenario 2 Assuming Maximum
Redemptions
 
   (in thousands, except share and per share data) 
Summary Unaudited Pro Forma Condensed Combined Statement of Operations Data for the year ended December 31, 2022        
Net loss  $(4,464)  $(4,464)
Weighted average shares outstanding – basic and diluted   33,694,835    30,889,779 
Basic and diluted net loss per share  $(0.13)  $(0.14)

 

   Scenario 1 Assuming Minimum
Redemptions
   Scenario 2 Assuming Maximum
Redemptions
 
   (in thousands) 
Summary Unaudited Pro Forma Condensed Combined Balance Sheet Data as of June 30, 2023          
Total assets  $59,538   $30,202 
Total liabilities   29,645    29,645 
Total stockholders’ equity   $29,893   $

557

 

 

30

 

 

TRADING MARKET AND DIVIDENDS

 

EFHAC

 

Units, Public Shares, Warrants and Rights

 

The Units, Public Shares and Warrants are each quoted on Nasdaq, under the symbols “EFHTU,” “EFHT,” “EFHT,” and “EFHT,” respectively. Each of EFHAC’s Units consists of one Public Share, one Warrant and one Right. Each Warrant entitles the holder thereof to purchase one share of Common Stock at a price of $11.50 per share and each Right entitles the holder to one-eighth of one share of Common Stock upon completion of a business combination. The Units, Public Shares, Warrants and Rights commenced trading on Nasdaq separately on or about December 8, 2022. On January 18, 2023, each of EFHAC’s issued and outstanding Units were separated into one Public Share, one Warrant and one Right, accordingly after January 18, 2023, no Units are outstanding.

 

EFHAC’s Dividend Policy

 

EFHAC has not paid any cash dividends on the Common Stock to date and does not intend to pay cash dividends prior to the completion of a business combination. The payment of cash dividends in the future will be dependent upon EFHAC’s revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of a business combination. Further, if we incur any indebtedness, EFHAC’s ability to declare dividends may be limited by restrictive covenants EFHAC may agree to in connection therewith. The payment of any dividends subsequent to the Business Combination will be within the discretion of the Combined Company’s Board of Directors. It is the present intention of the Board to retain all earnings, if any, for use in its business operations and, accordingly, the Board does not anticipate declaring any dividends in the foreseeable future.

 

Combined Company

 

Dividend Policy

 

Following completion of the Business Combination, the Combined Company’s Board of Directors will consider whether or not to institute a dividend policy. It is presently intended that the Combined Company retain its earnings for use in business operations and, accordingly, we do not anticipate the Combined Company’s Board of Directors declaring any dividends in the foreseeable future.

 

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RISK FACTORS

 

You should consider carefully the following risk factors, as well as the other information set forth in this proxy statement/prospectus, before making a decision on the Business Combination. Risks related to ECD, including risks related to ECD’s business, financial position and capital requirements, development, regulatory approval and commercialization, dependence on third parties, intellectual property and taxation, will continue to be applicable to the Combined Company after the Closing of the Business Combination.

 

Risks Related to ECD

 

ECD has a limited operating history with a history of losses, and expects to incur significant expenses for the near term.

 

ECD has a limited operating history. ECD’s business is difficult to evaluate due to its relatively brief operating history, and its prospects will be dependent on its ability to meet a number of challenges. Because ECD has a limited operating history, you may not be able to evaluate its prospects accurately. ECD’s ability to create, design, develop, manufacture, and deliver automobiles of high quality on schedule and on a large scale is unproven, which may make it more difficult for ECD to forecast and plan for its capital requirements.

 

If we fail to manage our growth effectively, our business could be harmed.

 

ECD’s operations are subject to all the risks inherent with growing business enterprises. The Business Combination is expected to significantly increase ECD’s visibility in the luxury automotive market, which may result in an increased demand for ECD’s products. To manage ECD’s growth effectively, ECD must continue to be able to launch new products and increase its production capacity to meet changing consumer preferences and ECD’s customers’ demand in a timely and cost-effective manner. These efforts may require substantial financial expenditures, commitments of resources, developments of our processes, and other investments and innovations. As we grow, we may not be able to execute those efforts as quickly as other more efficient organizations may. If ECD does not successfully manage our growth, we may not be able to timely fulfil orders, which could have a material adverse effect on ECD’s business, prospects, results of operations and financial condition.

 

ECD’s business strategy may not be successfully implemented, which could negatively impact its financial results and stock price.

 

The success of ECD’s strategy depends on several factors, including its ability to introduce new products and services that meet customer needs and preferences, expand into new markets and geographies, attract and retain qualified personnel, manage ECD’s expenses and costs, implement new vehicle production lines and increase the capacity of existing ones, and respond to changes in market conditions, industry trends, and customer demand. However, there can be no assurance that ECD will be able to effectively execute its strategy, which could adversely affect its business, financial condition, and results of operations. Any delays, cost overruns, or other issues associated with implementing the strategy could negatively impact ECD’s financial results and its ability to attract and retain investors.

 

Moreover, ECD may face competition from other businesses that are better positioned to implement similar strategies, which could make it more difficult for ECD to achieve its objectives. As a result, there is a risk that ECD’s strategy may not be successfully implemented, which could materially and adversely affect its business, financial condition, and results of operations.

 

ECD’s vehicles are highly customized and may not perform in a manner consistent with customers’ expectations.

 

ECD customizes its vehicles based on significant input from each of its customers. Customizations include several aspects of the vehicle’s performance and aesthetics, and involve the work of highly skilled mechanics and automotive designers. As a result, every vehicle that ECD develops is unique, and is usually not available for customers to “test drive” prior to taking delivery, as would be customary in ready-made luxury vehicles dealerships. Customers’ eventual dissatisfaction may be based on performance, aesthetics, or other features of the vehicle. While most customers usually only communicate such dissatisfaction to ECD directly, if a customer discloses, and/or publicizes their experience and subjective opinions on social media and other public platforms, it could negatively affect ECD’s reputation and have a material adverse effect on ECD’s business and prospects.

 

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ECD’s business is highly dependent on the price, availability and quality of base vehicles.

 

ECD’s business depends on its ability to successfully purchase used automobiles. All vehicles used by ECD were originally built and sold by an unaffiliated third-party manufacturer. Additionally, all vehicles that ECD purchases have been previously used by unaffiliated third-party consumers. ECD has a process to assess the quality of the base vehicles it purchases, including accident background checks; however, our safety protocol and quality inspection processes may be insufficient to identify all defects of the vehicles and compromise the quality standards of our products, which could have a negative impact in our customers’ satisfaction and, consequently, in our results of operations. Furthermore, ECD does not control the price fluctuation, product availability, or original quality of those vehicles. As a result, the price, availability, and quality of such automobiles can fluctuate significantly. Such fluctuations may lengthen ECD’s delivery timelines and may increase ECD’s cost of locating, purchasing, importing, deconstructing, and retrofitting the vehicles, any of which could have a material and adverse effect on ECD’s business, prospects, results of operations and financial condition.

 

ECD’s ability to predict future demand for its vehicles and inventory is limited, which limits the accuracy of ECD’s financial forecasts.

 

ECD operates a just-in-time manufacturing model, which requires it to maintain certain inventory to serve as input to its processes. ECD currently keeps in inventory more than two thirds of the manufacturing parts to be used in each of its processes. ECD’s ability to predict demand for its vehicles, including demand for particular body styles, models or trim levels, is limited. The demand for ECD’s vehicles can vary significantly as a result of factors outside of ECD’s control (such as, for example, general economic conditions, the popularity of Land Rover or Jaguar base models and unforeseen cancellation of customers’ orders). Further, delays beyond expected wait times could also impact users’ decisions on whether to ultimately complete a purchase of an ECD vehicle. ECD routinely provides estimated delivery times to ECD’s prospective customers, but such delivery times may vary considerably, depending on the availability of materials and labor needed to complete the project. Due to ECD’s limited ability to predict demand for ECD’s vehicles, ECD may be unable to accurately forecast its future revenues, expenses and inventory requirements.

 

Currently, ECD has no historical basis for making projections about the demand for certain of its vehicles or the ability of its supply chain contractors to develop, manufacture, and deliver the material ECD needs to operate. If ECD fails to manage its inventory effectively and accurately predict its manufacturing requirements, it could incur additional costs associated with excess inventory or inadequate inventory, which could affect the production process and delivery of its vehicles and adversely affect ECD’s business, prospects, results of operations and financial condition.

 

ECD does not have a diversified range of operations or portfolio of investments, and ECD’s business is highly specific to the customization and restoration of Land Rover Series, Land Rover Defenders, Range Rover Classics and Jaguar car models.

 

ECD has no plans to own any assets or have any activities not associated with custom vehicle restoration. Thus, ECD is not, and will not be in the foreseeable future, diversified as to the type of assets it owns and manages. The effects on cash available for distribution to shareholders resulting from a downturn in the automobile industry will be more pronounced than if ECD had diversified its business and investments.

 

ECD currently depends on revenues from a limited number of vehicle models and manufacturers and expects this to continue for the foreseeable future. ECD currently only customizes Land Rover Series, Range Rover Classics, Land Rover Defenders and Jaguar E-Types and some occasional other models from the same car manufacturer. ECD does not have expertise in any other car manufacturers or models. ECD’s business is entirely dependent upon the availability of vehicles with respect to which ECD has design and manufacturing know-how and expertise. Should any of these models become unavailable, cost-prohibitive, or subject to a manufacturer or government recall requirement, this will significantly limit the services that ECD can provide, which will in turn materially and adversely affect ECD’s business, prospects, results of operations and financial condition.

 

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ECD’s ability to create, design, develop, manufacture, and deliver automobiles of high quality on schedule and on a large scale is unproven.

 

ECD has only recently started to operate in the Energized Electric Vehicle (EV) industry. Its ability to create, design, develop, manufacture, and deliver automobiles of high quality on schedule and on a large scale is unproven, which may make it more difficult for ECD to forecast and plan for its capital requirements.

 

ECD estimates that approximately a sixth of its vehicles are EV and that this proportion will gradually increase. Any increase in the cost, or reduced availability, of EV propulsion systems used by ECD may lead to higher production costs for ECD’s EVs and could jeopardize its ability to successfully deliver on its EV strategy, which may adversely affect its business and results of operations.

 

ECD’s business is highly specialized and dependent on a continuing demand for high-end, luxury customer passenger vehicles.

 

ECD’s vehicles are highly customized and are referred to in the industry as “exotic” cars, with a relatively high base model price. For many of its consumers, vehicles purchased from ECD are not the consumers’ primary source of transportation. ECD’s future growth is dependent on the continuing consumer demand for high-end custom passenger vehicles, the prospects of which are subject to many uncertainties, including the global economy, unforeseeable health crises, and/or other force majeure events. Any change in the economic climate could result in consumers curbing their spending, and it is likely that luxury items, such as ECD’s vehicles, would be among the items first affected by any such reduced spending, which would in turn adversely affect ECD’s business, prospects, results of operations and financial condition.

 

ECD may fail to adequately obtain, maintain, enforce and protect ECD’s intellectual property and may not be able to prevent third parties from unauthorized use of ECD’s intellectual property and proprietary technology.

 

ECD’s methods and processes in building its vehicles are highly proprietary and specific to its business. However, regulatory protection (such as, for example, patent or trademark registration with the United States Patent and Trademark Office and copyright registration with the United States Copyright Office) for such processes is largely unavailable. ECD establishes and protects its intellectual property and proprietary technology through a combination of licensing agreements, third-party nondisclosure and confidentiality agreements and other contractual provisions. Despite ECD’s efforts to obtain and protect intellectual property rights, there can be no assurance that these protections will be available or adequate in all cases to prevent ECD’s competitors, or other third parties, from copying, reverse engineering or otherwise obtaining and using ECD’s technology or products. Failure to adequately obtain, maintain, enforce and protect ECD’s intellectual property could result in its competitors offering identical or similar products, potentially resulting in the loss of ECD’s competitive advantage and adversely affect ECD’s business.

 

ECD’s business depends on the success of its marketing strategies.

 

ECD plans to enhance its brand recognition, improve its brand reputation, and grow its client base by substantial investments in marketing and business development activities. However, ECD cannot guarantee that its marketing strategies or spending will have their anticipated effect or generate revenue. ECD faces a number of challenges in the sale and marketing of its vehicles, including, without limitation:

 

ECD competes with other luxury automotive manufacturers for consumer spending;

 

demand in the luxury automobile industry is highly volatile;

 

ECD may not be able to keep up with consumer demand, thereby resulting in unreasonably lengthy delivery timeframes of its customer vehicles;

 

the final delivered aesthetic, performance, and quality of ECD’s vehicles may vary from estimates and may not meet customer’s expectations;

 

ECD’s brand image could be harmed due to negative publicity affecting its suppliers, vendors, and the vehicle makes or models that ECD customizes; and

 

it is expensive to establish a strong brand, and ECD may not succeed in establishing, maintaining, and strengthening the ECD brand in a cost-efficient manner, or at all.

 

ECD may not succeed in continuing to maintain and strengthen its reputation and brand, and ECD’s reputation and brand could be harmed by negative publicity with respect to us, our directors, officers, employees, shareholders, business partners, or the automotive industry in general. If ECD is unable to efficiently enhance its brand and market its vehicles, this may have a material and adverse effect on ECD’s business, prospects, financial condition, and operating results.

 

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ECD’s success is dependent on the continued leadership and experience of ECD Initial Securityholders, and the loss of their services may have a material and adverse effect on ECD’s operations and financial condition.

 

ECD’s success is dependent to a large degree principally on the personal efforts, experience, and abilities of the ECD Initial Securityholders. The ECD Initial Securityholders are responsible for all operational, strategic, financial, and legal decisions of ECD. See item “Directors and Executive Officers of the Combined Company After the Business Combination” for additional information about each of the ECD Initial Securityholders’ roles and contributions to ECD. The loss of any of the ECD Initial Securityholders’ services may have a material adverse effect on ECD’s business, prospects, results of operations and financial condition, and there can be no assurance that ECD would be able to attract qualified replacement personnel. ECD does not anticipate purchasing any “key man” insurance on any of the ECD Initial Securityholders. In the event that any ECD Initial Securityholder dies or becomes incapacitated, ECD will not only have to compensate for the loss of their talent and experience, but will also have to incur the cost of having to find a replacement for their services (such as by means of recruiting agencies) and will have to negotiate a new compensation structure for the replacement personnel, whose compensation could be significantly higher than that previously paid to such ECD Initial Securityholder. In addition to the potentially substantial cost of having to find replacement personnel, the loss of any ECD Initial Securityholder as a service provider to ECD could divert management’s attention from operations, which could have a material adverse effect on ECD’s business, financial condition and operating results.

 

ECD may lose or fail to attract and retain key management personnel and salaried employees.

 

An important aspect of ECD’s competitiveness is its ability to attract and retain key salaried employees and management personnel, such as ECD’s mechanics. ECD’s ability to do so is influenced by a variety of factors, including the compensation we pay and the competitiveness of our overall compensation package. ECD may not be as successful as competitors at recruiting, assimilating and retaining highly skilled personnel. The loss of the services of any member of senior management or a key salaried employee could have an adverse effect on ECD’s business.

 

The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business, particularly after we are no longer an “emerging growth company.”

 

As a public company, we are subject to the reporting requirements of the Exchange Act and the requirements of the Sarbanes-Oxley Act. These requirements may place a strain on our systems and resources. The process of becoming, and operating as, a public company may also distract our management from focusing on our business and strategic priorities. Further, we may not be able to issue debt or equity on terms acceptable to us and we may not be able to attract and retain employees as desired.

 

We may also not fully realize the anticipated benefits of the Business Combination and of being a public company, or the realization of such benefits may be delayed, if any of the risks identified in this “Risk Factors” section, or other events, were to occur.

 

Furthermore, as an “emerging growth company” as defined in the JOBS Act, we are permitted to, and intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. When these exemptions cease to apply, we expect to incur additional expenses and devote increased management effort towards ensuring compliance with them. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of such costs.

 

ECD may incur losses and costs because of warranty claims and product liability and intellectual property infringement actions that may be brought against ECD.

 

ECD faces an inherent business risk of exposure to warranty claims and product liability in the event that ECD’s customized vehicles fail to perform as expected and, in the case of product liability, such failure of ECD’s vehicles results in bodily injury and/or property damage. The customization of vehicles is a complex and precise process. ECD’s customers specify quality, performance and reliability standards. If any flaws in ECD’s customized vehicles were to occur, ECD could experience a rate of failure in our products that could result in significant delays in shipment and re-work or repair and replacement costs. Although ECD engages in extensive product quality programs and processes, these may not be sufficient to avoid failures, which could cause ECD to:

 

  lose net revenue;
     
  incur increased costs such as warranty expense and costs associated with customer support;
     
  experience delays, cancellations or rescheduling of orders for ECD’s vehicles;
     
  experience increased returns or discounts; or
     
  damage ECD’s reputation,

 

all of which could negatively affect our financial condition and results of operations.

 

Warranty reserves will include the ECD management team’s best estimate of the projected costs to repair or to replace items under warranty. Such estimates are inherently uncertain, particularly in light of ECD’s limited operating history and the limited field data available to it. Despite having historically accurately estimated our reserves for expenses related to our warranty programs, changes to such estimates based on real-world observations may cause material changes to ECD’s warranty reserves in the future. If ECD’s reserves become inadequate to cover future maintenance requirements on its vehicles, its business, prospects, financial condition and results of operations could be materially and adversely affected. ECD may become subject to significant and unexpected expenses as well as claims from ECD’s customers. There can be no assurances that then-existing reserves will be sufficient to cover all claims.

 

ECD’s business could be adversely affected by computer malware, viruses, ransomware, hacking, phishing attacks and security threats, including cybersecurity threats and related disruptions, which could result in security and privacy breaches and interruption in service.

 

ECD depends on digital technologies, including information systems, infrastructure and cloud applications and services, including those of third parties with which ECD may deal. Computer malware, viruses, physical or electronic break-ins and similar disruptions could lead to interruption and delays in ECD’s services and operations and loss, misuse or theft of data. Computer malware, viruses, ransomware, hacking and phishing attacks against online networks have become more prevalent and may occur on ECD’s systems in the future. Sophisticated and deliberate cyberattacks to, or security breaches in, ECD’s systems or infrastructure, or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of ECD’s assets, proprietary information and sensitive or confidential data. As an early-stage company without significant investments in data security protection, ECD may not be sufficiently protected against such occurrences. ECD may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents. Insurance may not be sufficient to cover significant expenses and losses related to cyber-attacks. Efforts to prevent cyber attackers from entering computer systems are expensive to implement, and ECD may not be able to cause the implementation or enforcement of such preventions with respect to its third-party vendors. ECD’s chief executive officer, under the direction of the Board, is primarily responsible for monitoring and addressing risks and threats related to information technology and cyber security. ECD uses third-party service providers, such as GoDaddy Mediatemple, Inc., d/b/a Sucuri, and Omni Springs, LLC, to provide ECD with services related to monitoring its website, e-mail, spam protections, among others, also take steps to protect the security and integrity of ECD’s information technology systems and ECD’s and its customers’ information. However, there can be no assurance that such systems and measures will not be compromised due to intentional misconduct, as well as by software bugs, human error, or technical malfunctions. Though it is difficult to determine what, if any, harm may directly result from any specific interruption or attack, any failure to maintain performance, reliability, security and availability of systems and technical infrastructure may, in addition to other losses, harm ECD’s reputation, brand and ability to attract customers.

 

Risks Related to ECD’s Business and Industry

 

The luxury automotive industry has significant barriers to entry that ECD must continue to overcome to manufacture and sell custom luxury vehicles at scale.

 

The luxury automotive industry has significant barriers to entry, including large capital requirements, investment costs of designing, manufacturing, and distributing vehicles, the need for specialized design and development expertise, regulatory requirements, establishing a brand name and image, a lack of consistency relating to customer preferences with respect to their custom vehicles; long lead times to bring refurbished vehicles to market from the concept and design stage; the need for specialized design and development expertise; and the need to establish sales and service locations.

 

If ECD is not able to efficiently overcome these barriers, there may be an adverse effect on the business, prospects, results of operations and financial condition of ECD, and ECD may be unable to grow or scale its business.

 

The custom, luxury automotive market is highly competitive and ECD may not be successful in competing in this industry.

 

The custom, luxury automotive industry is extremely competitive in multiple aspects, including with respect to price, quality and customer recognition. Our current and potential competitors may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale, servicing, and support of their products. In addition, some of our competitors have longer operating histories, larger and more established sales forces, broader customer and industry relationships and other resources than we do. Our competitors may be in a stronger position to respond quickly to new technologies and may be able to design, develop, market and sell their products more effectively than we do.

 

ECD may not be able to successfully implement new technologies or adapt its products and services in a timely manner, inability which could adversely affect ECD’s competitive advantage and its ability to build and maintain brand recognition and attract and retain customers.

 

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ECD operates in a regulatory environment that is evolving and uncertain. ECD may not be able to respond quickly enough to changes in regulations, technology and technological risks, and to develop ECD’s intellectual property into commercially viable products.

 

To date there is limited regulation on mass retrofitting of vehicles. As such, new laws and regulations could be adopted in the United States and abroad. Further, existing laws and regulations may be interpreted in new ways that could impact ECD’s operations and attribute additional restrictions and regulatory requirements to its business and operations. The addition cost and time needed to provide information to authorities and to comply with such regulations could negatively impact ECD’s business.

 

Changes in legislative, regulatory or industry requirements or in competitive technologies may render certain of ECD’s products obsolete or less attractive. ECD’s ability to anticipate changes in technology and regulatory standards and to successfully develop and introduce new and enhanced products on a timely basis are significant factors affecting ECD’s ability to remain competitive and to maintain or increase ECD’s revenues. ECD cannot assure that certain of our products will not become obsolete or that ECD will be able to achieve the technological advances that may be necessary for ECD to remain competitive and maintain or increase ECD’s revenues in the future. ECD is also subject to the risks generally associated with the introduction and application of new products, including lack of market acceptance, delays in product development or production and failure of products to operate properly. The pace of ECD’s development and introduction of new and improved products depends on ECD’s ability to implement successfully improved technological innovations in design, engineering, manufacturing and internal management (such as a computerized cash collection and data processing system, certain computer hardware, and operating and accounting software), all of which require extensive capital investment. Any limits to capital expenditure could reduce ECD’s ability to develop and implement improved technological innovations, which may materially reduce demand for ECD’s products and adversely affect ECD’s business.

 

Risks Related to Financing Our Business

 

ECD may require additional financing after the Business Combination.

 

ECD’s business and industry is highly capital-intensive. ECD projects that it will continue to incur significant operating costs, including for production ramp up, raw material procurement, general and administrative expenses to scale operations, and sales, marketing, and distribution expenses as it builds its brand and markets its vehicles. ECD will also incur additional costs associated with operating as a public company following the Business Combination.

 

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In connection with the Business Combination, EFHAC, with the assistance of ECD, will use commercially reasonable efforts to close the Note Financing. The net proceeds from the Note Financing and from the Business Combination may not be sufficient to meet all of the capital needs of ECD in the long-term. As a result, ECD may need to raise additional funds by means of equity financing or debt financing to implement its business strategy (“Additional Financing”) and, if such Additional Financing is obtained, the interests of ECD’s shareholders may be subordinated and/or diluted, as applicable. Any future debt financing may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Those restrictions could adversely impact ECD’s ability to conduct its operations and execute its business plan. To the extent that ECD raises additional capital through the sale of equity or convertible debt securities, investors’ ownership interests in ECD will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect investors’ rights as a common shareholder. At this time, ECD does not have any firm commitment for an Additional Financing and there can be no assurance that any Additional Financing will be available or on terms and conditions acceptable to ECD. The inability to obtain Additional Financing may have a material adverse effect on ECD’s business, prospects, results of operations and financial condition.

 

General Risk Factors Applicable to ECD

 

General economic conditions may materially and adversely affect ECD’s business.

 

The ECD’s success is dependent on the disposable income of its customers. A worldwide or national economic downturn could have a significant impact on ECD’s business. ECD’s revenues derive primarily from restoring and customizing luxury vehicles, which are discretionary purchases. From this perspective, a deterioration in general economic conditions or decreases in consumer confidence in the economy could result in a decline in sales if, as a result, customers reduce their discretionary spending.

 

Inflationary pressures and persistently high prices and uncertain availability of inputs used by ECD and ECD’s suppliers, or instability in logistics and related costs, could negatively impact ECD’s profitability.

 

Increases in prices, including because of inflation and rising interest rates, for inputs that ECD and ECD’s suppliers use in manufacturing products, systems, components and parts, or increases in logistics and related costs, have led in the past and may lead in the future to higher production costs for parts, components and vehicles.

 

Geopolitical risks, fluctuations in supply and demand, fluctuations in interest rates, any weakening of the U.S. dollar in comparison with other currencies, and other economic and political factors have created and may continue to create pricing pressure for ECD’s inputs. These inflationary pressures could, in turn, negatively impact ECD’s profitability because we may not be able to pass all of those costs on to our customers or require our suppliers to absorb such costs.

 

Rising interest rates and the recent shutdowns and acquisitions of several banking institutions could cause additional instability in capital markets, making it more difficult for ECD to secure access to capital it needs to continue to grow its operations.

 

The U.S. economy recently experienced a steady rise in interest rates that the U.S. Federal Reserve has been imposing in an effort to curb rising inflation. In addition to these rising interest rates having contributed to a slow-down in mortgage and housing markets and a general decrease in the availability of capital, most recently, the U.S. has witnessed the collapse of several national banks. This has resulted in extreme volatility in the U.S. financial markets. Continued volatility and the effects of the collapse of these banks could limit ECD’s access to capital when ECD needs it. Because of ECD’s desire to scale and grow rapidly following the Business Combination, any disruptions or delays to ECD’s access to capital, or a material increase in its cost, may have a material adverse effect in ECD’s plans to scale its production and increase brand awareness. ECD cannot accurately predict the future impact that the recent economic events may have on ECD’s business, prospects, financial condition, and results of operations.

 

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ECD’s business is highly dependent on international and single-source component suppliers, and any changes in governmental regulations and international trade relations conditions may materially and adversely affect ECD’s business.

 

ECD’s business relies heavily on a limited number of suppliers for the materials and services necessary for its operations. This concentration of suppliers creates a significant risk for ECD, as any disruption in its supply chain could lead to delays, increased costs, or a failure to meet customer demand.

 

If ECD were to lose one or more of these suppliers, it may not be able to find a suitable replacement in a timely manner, which could lead to a disruption in ECD’s operations and a decline in its financial performance. Furthermore, ECD’s reliance on a limited number of suppliers may limit its ability to negotiate favorable terms, including pricing and delivery schedules. If ECD’s suppliers were to increase their prices, ECD may not be able to pass on these increased costs to its customers, which could negatively impact ECD’s profitability. As a result, any significant disruption or loss of a key supplier could have a material adverse effect on ECD’s business, financial condition, and results of operations. ECD may need to seek alternative sources of supply or develop in-house capabilities to mitigate this risk, which could be costly and time-consuming.

 

ECD’s reliance on successfully importing automobiles could subject ECD to risks, including risk relating to international relations, import and export laws and regulations, inventory availability, and others. Typical components that ECD purchases include base vehicles and vehicle parts. ECD uses all of these components in every project that it completes, depending on its customer’s specifications. ECD imports its base vehicles and certain components from the United Kingdom to its Kissimmee, Florida, U.S. headquarters. Changes in U.S. and U.K. trade policy; changes to customs requirements or procedures (e.g., inspections) or new or higher tariffs on certain foreign goods, such as steel and certain vehicle parts; new or evolving non-tariff barriers or domestic preference procurement requirements; enforcement of, changes to, withdrawals from or impediments to implementing free trade agreements; changes in foreign currency exchange rates and interest rates; impact of changes to and compliance with U.S. and foreign countries’ export controls, economic sanctions and other similar measures; liabilities resulting from U.S. and foreign laws and regulations, including, but not limited to, those related to the Foreign Corrupt Practices Act and certain other anti-corruption laws, all may result in increased costs for goods imported into the U.S. and have a material adverse effect on ECD’s financial condition or results of operations.

 

Pandemics, epidemics, disease outbreaks and other public health crises, such as the COVID-19 pandemic, have disrupted our business and operations, and future public health crises could materially adversely impact our business, financial condition, liquidity and results of operations.

 

Pandemics, epidemics or disease outbreaks in the U.S. or globally, including the COVID-19 pandemic, have disrupted, and may in the future disrupt, our business, which could materially affect our results of operations, financial condition, liquidity and future expectations. Any such events may adversely impact our global supply chain and global manufacturing operations and cause us to again suspend our operations. In particular, we could experience among other things: (1) global supply disruptions; (2) labor disruptions; (3) an inability to manufacture; (4) an inability to sell to our customers; (5) a decline in design studio traffic and customer demand during and following the pandemic; (6) lower than expected pricing on vehicles sold; and (7) an impaired ability to access credit and the capital markets. Any new pandemic or other public health crises, or future public health crises, could have a material impact on our business, financial condition and results of operations going forward.

 

Risks Related to Ownership of the Combined Company Common Stock

 

The market price and trading volume of the Combined Company Common Stock may be volatile and could decline significantly following the Business Combination.

 

The stock markets, including Nasdaq on which the shares of the Combined Company Common Stock to be issued in the Merger are expected to be traded, have from time to time experienced significant price and volume fluctuations. Even if an active, liquid, and orderly trading market develops and is sustained for the Combined Company Common Stock following the Business Combination, the market prices of shares of the Combined Company Common Stock may be volatile and could decline significantly. In addition, the trading volumes in shares of the Combined Company Common Stock may fluctuate and cause significant price variations to occur. If the market prices of the Combined Company Common Stock decline significantly, you may be unable to resell your shares of the Combined Company Common Stock at or above the market price of the shares of the Combined Company Common Stock as of the date immediately following the consummation of the Business Combination. There can be no assurance that the market prices of shares of the Combined Company Common Stock will not fluctuate widely or decline significantly in the future in response to a number of factors, including, among others, the following:

 

  the realization of any of the risk factors presented in this proxy statement/prospectus;

 

  actual or anticipated differences in our estimates, or in the estimates of analysts, for the Combined Company’s revenues, results of operations, cash flows, level of indebtedness, liquidity, or financial condition;

 

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  actual or anticipated variations in our quarterly operating results;

 

  announcements by the Combined Company or its competitors of significant business developments;

 

  the Combined Company’s ability to obtain adequate working capital financing;

 

  loss of any strategic relationships;

 

  actions by the Combined Company’s stockholders (including transactions in shares of the Combined Company Common Stock);

 

  changes in applicable laws or regulations, court rulings, enforcement, and legal actions;

 

  sale of shares of the Combined Company Common Stock or other securities in the future;

 

  changes in market valuations of similar companies and general market conditions in our industry;

 

  publication (or lack of publication) of research reports about the Combined Company;

 

  the trading volume of shares of the Combined Company Common Stock;

 

  additions or departures of key management personnel;

 

  speculation in the press or investment community;

 

  continuing increases in market interest rates, which may increase the Combined Company’s cost of capital;

 

  changes in our industry;

 

  actual, potential, or perceived control, accounting, or reporting problems;

 

  changes in accounting principles, policies, and guidelines;

 

  other events or factors, including but not limited to those resulting from infectious diseases, health epidemics and pandemics (including but not limited to the ongoing COVID-19 pandemic) natural disasters, war, acts of terrorism, or responses to these events;

 

  Our ability to execute the Combined Company’s business plan; and

 

  general economic and market conditions.

 

In addition, the securities markets have periodically experienced extreme price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of the Combined Company Common Stock. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted against that company. If the Combined Company were involved in any similar litigation it could incur substantial costs and its management’s attention and resources could be diverted from running the business and implementing its business plan.

 

The Combined Company will issue shares of the Combined Company Common Stock as consideration in the Business Combination and may issue additional shares of the Combined Company Common Stock or other equity or convertible debt securities without approval of the holders of the Combined Company Common Stock, which would dilute then-existing ownership interests and may depress the market price of the Combined Company Common Stock.

 

We anticipate that, following the Business Combination, (i) former ECD Securityholders will own approximately 75.4% of the outstanding shares of the Combined Company Common Stock, (ii) former EFHAC stockholders will own approximately 24% of the outstanding shares of the Combined Company Common Stock, and (iii) the Representative will own 1.5% of the outstanding shares of the Combined Company Common Stock. These percentages assume a October 31, 2023 Closing Date, and that none of the Public Shares are redeemed. If the facts differ from these assumptions, these percentages will differ.

 

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The Combined Company may continue to require capital investment to support its business and may issue additional shares of the Combined Company Common Stock or other equity or convertible debt securities of equal or senior rank in the future without approval of its stockholders in certain of circumstances.

 

The Combined Company’s issuance of additional shares of the Combined Company Common Stock or other equity or convertible debt securities would have the following effects: (i) the Combined Company’s existing stockholders’ proportionate ownership interest in the Combined Company would decrease; (ii) the amount of cash available per share, including for payment of dividends in the future, may decrease; (iii) the relative voting power of each previously outstanding shares of the Combined Company Common Stock may be diminished; and (iv) the market price of the Combined Company Common Stock may decline.

 

There will be material differences between your current rights as a holder of ECD Common Stock and the rights you will have as a holder of the Combined Company Common Stock, some of which may adversely affect you.

 

Upon completion of the Business Combination, ECD Securityholders will no longer be stockholders of ECD but will be stockholders of the Combined Company. There will be material differences between the current rights of ECD Securityholders and the rights that you will have as a holder of the shares of the Combined Company Common Stock, some of which may adversely affect you. For a more detailed discussion of the differences in the rights of ECD Securityholders and the Combined Company stockholders, see the section of this proxy statement/prospectus titled “Comparison of Corporate Governance and Stockholder Rights.”

 

If securities or industry analysts do not publish research, publish inaccurate or unfavorable research, or cease publishing research about the Combined Company, its share price and trading volume could decline significantly.

 

The trading market for the Combined Company Common Stock will depend, in part, on the research and reports that securities or industry analysts publish about the Combined Company or its business. the Combined Company may be unable to sustain coverage by well-regarded securities and industry analysts. If either no or only a limited number of securities or industry analysts maintain coverage of the Combined Company, or if these securities or industry analysts are not widely respected within the general investment community, the demand for the Combined Company Common Stock could decrease, which might cause its share price and trading volume to decline significantly. In the event that the Combined Company obtains securities or industry analyst coverage or, if one or more of the analysts who cover the Combined Company downgrade their assessment of the Combined Company or publish inaccurate or unfavorable research about the Combined Company’s business, the market price and liquidity for the Combined Company Common Stock could be negatively impacted.

 

We may be subject to the Excise Tax included in the Inflation Reduction Act of 2022 in connection with redemptions of our Common Stock after December 31, 2022.

 

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, which, among other things, imposes a 1% excise tax on any publicly traded domestic corporation that repurchases its stock after December 31, 2022 (the “Excise Tax”). The Excise Tax is imposed on the fair market value of the repurchased stock, with certain exceptions. Because we are a Delaware corporation and because our securities trade on Nasdaq, we are a “covered corporation” within the meaning of the Inflation Reduction Act. While not free from doubt, absent any further guidance from the U.S. Department of the Treasury (the “Treasury”), who has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the Excise Tax, the Excise Tax may apply to any redemptions of our Common Stock after December 31, 2022, including redemptions in connection with the Business Combination, unless an exemption is available. Generally, issuances of securities by us in connection with our initial Business Combination transaction (including any PIPE transaction at the time of our initial Business Combination), as well as any other issuances of securities not in connection with our initial Business Combination, would be expected to reduce the amount of the Excise Tax in connection with redemptions occurring in the same calendar year. In addition, the Excise Tax would be payable by us, and not by the redeeming holder. Further, based on recently issued interim guidance from the IRS and Treasury, subject to certain exceptions, the Excise Tax should not apply in the event of EFHAC’s liquidation.

 

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Future resales of shares of the Combined Company Common Stock issued to ECD Securityholders and other significant stockholders may cause the market price of the Combined Company Common Stock to drop significantly, even if the Combined Company’s business is doing well.

 

Pursuant to the Merger Agreement, immediately after Closing the ECD Securityholders will hold approximately 74.5% of the outstanding shares of the Combined Company Common Stock, approximately 4.3% of which will be eligible for sale immediately after the consummation of the Business Combination. These percentages assume a October 31, 2023 Closing Date, and the no redemption scenario. If the actual facts differ from these assumptions, these percentages will differ. Pursuant to the Company Lock-Up Agreement and the Sponsor Lock-Up Agreement, certain the Combined Company stockholders will be restricted, subject to certain exceptions, from selling any of the Combined Company Common Stock that they receive in or hold at the Effective Time, which restrictions will expire and therefore additional the Combined Company Ordinary Shares will be eligible for resale six months after the Effective Time. See “Proposal 1 – The Business Combination Proposal — Certain Related Agreements.”

 

Subject to the Company Lock-Up Agreements, the ECD Securityholders that are a party thereto (which are ECD’s three executive officers and directors) may sell the Combined Company Common Stock pursuant to Rule 144 under the Securities Act (“Rule 144”), if available. In these cases, the resales must meet the criteria and conform to the requirements of that rule, including, because EFHAC is currently a shell company, waiting until one year after the Combined Company’s filing with the SEC of Form 10-type information reflecting the Business Combination.

 

Upon expiration of the Lock-Up Periods, and upon effectiveness of the registration statement that the Combined Company files pursuant to the A&R Registration Rights Agreement or upon satisfaction of the requirements of Rule 144, certain former EFHAC stockholders and certain other significant stockholders of the Combined Company may sell large amounts of the Combined Company Common Stock in the open market or in privately-negotiated transactions, which could have the effect of increasing the volatility in the Combined Company’s share price or putting significant downward pressure on the price of the Combined Company Common Stock.

 

We do not expect that the Combined Company will pay dividends in the foreseeable future after the Merger.

 

We expect that the Combined Company will retain most, if not all, of its available funds and any future earnings after the Merger to fund its operations and the development and growth of its business. As a result, we do not expect that the Combined Company will pay any cash dividends on the Combined Company Common Stock in the foreseeable future.

 

Following completion of the Business Combination, the Combined Company’s board of directors will have complete discretion as to whether to distribute dividends. Even if the board of directors decides to declare and pay dividends, the timing, amount, and form of such dividends, if any, will depend on the future results of operations and cash flow, capital requirements and surplus, the amount of distributions, if any, received by the Combined Company from its subsidiaries, the Combined Company’s financial condition, contractual restrictions, and other factors deemed relevant by the board of directors. There is no guarantee that the shares of the Combined Company Common Stock will appreciate in value after the Business Combination or that the trading price of the shares will not decline. Holders of the Combined Company Common Stock should not rely on an investment in shares of the Combined Company Common Stock as a source for any future dividend income.

 

The existence of indemnification rights to the Combined Company’s directors, officers, and employees may result in substantial expenditures by the Combined Company and may discourage lawsuits against its directors, officers, and employees.

 

The Amended Charter and EFHAC’s bylaws, which will become the bylaws of the Combined Company, contain indemnification provisions for its directors, officers, and employees. Such indemnification obligations could result in the Combined Company incurring substantial expenditures to cover the cost of settlement or damage awards against its directors, executive officers, and employees, which it may be unable to recoup. These provisions and resultant costs may also discourage the Combined Company from bringing a lawsuit against its directors and executive officers for breaches of their fiduciary duties and may similarly discourage the filing of derivative litigation by its stockholders against its directors and officers even though such actions, if successful, might otherwise benefit the Combined Company and its stockholders.

 

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If the Combined Company fails to develop or maintain an effective system of internal control over financial reporting, it may not be able to accurately report its financial results or prevent financial fraud. As a result, current and potential stockholders could lose confidence in its financial reporting.

 

ECD is, and the Combined Company may be, subject to the risk that its independent registered public accounting firm could communicate to its board of directors that it has deficiencies in its internal control structure that they consider to be “significant deficiencies.” A “significant deficiency” is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is more than a remote likelihood that a material misstatement of the entity’s financial statements will not be prevented or detected by the entity’s internal controls.

 

Effective internal control is necessary to provide reliable financial reports and effectively prevent fraud. If the Combined Company cannot provide reliable financial reports or prevent fraud, it could be subject to regulatory action or other litigation and its operating results could be harmed.

 

ECD’s, and thereby the Combined Company’s, intended business, operations, and accounting are expected to be substantially more complex than ECD’s has been to date. It may be time consuming, difficult, and costly for the Combined Company to develop and implement the internal control and reporting procedures required by the Exchange Act. the Combined Company may need to hire additional financial reporting, internal control, and other finance personnel in order to develop and implement appropriate internal control and reporting procedures. If the Combined Company is unable to comply with the internal control over financial reporting requirements of the Exchange Act, then it may not be able to obtain the required independent accountant certifications, which may preclude it from keeping its filings current with the SEC.

 

Further, a material weakness in the effectiveness of internal control over financial reporting could result in an increased chance of fraud and the loss of customers, reduce the Combined Company’s ability to obtain financing, and require additional expenditures to comply with these requirements, each of which could have a material adverse effect on its business, results of operations, and financial condition.

 

If the Combined Company is unable to implement and maintain effective internal control over financial reporting, including as applicable standards governing internal control are modified, supplemented, or amended from time to time, the Combined Company may not be able to ensure that it can conclude on an ongoing basis that it has effective internal control over financial reporting. Failure to achieve and maintain effective internal control over financial reporting could cause the Combined Company to face regulatory action and cause investors to lose confidence in its reported financial information, either of which could adversely affect the value of the Combined Company Common Stock.

 

Risks Related to EFHAC’s Business and the Business Combination

 

EFHAC will be forced to liquidate the Trust Account if it cannot consummate an initial business combination by the date that is nine months from the closing of the IPO, or June 13, 2023 (unless extended to as late as March 13, 2024, in accordance with the Certificate of Incorporation). In the event of a liquidation, EFHAC’s public stockholders will receive approximately $10.87 per Public Share, subject to reduction for the payment of taxes, and the Warrant and the Right included in each Unit will expire worthless.

 

On June 1, 2023, EFHAC’s stockholders approved an amendment to EFHAC’s amended and restated certificate of incorporation extending the date by which EFHAC has to consummate a business combination up to nine times, each by an additional one-month, from June 13, 2023 to March 13, 2024 by depositing into the Trust Account the lesser of $80,000 and $0.04 for each outstanding share of common stock sold in EFHAC’s IPO for each one-month extension. On June 1, 2023, EFHAC filed such amendment to EFHAC’s amended and restated certificate of incorporation with the Delaware Secretary of State. EFHAC has extended the date by which EFHAC has to consummate a business combination until December 13, 2023. If EFHAC is unable to complete a business combination by December 13, 2023 (unless extended to as late as March 13, 2024), and is forced to liquidate, the per-share liquidation distribution will be approximately $10.87 per Public Share, subject to reduction for the payment of taxes. Furthermore, any Warrants and Rights will expire worthless.

 

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The Merger Agreement includes a note financing condition as a condition to the consummation of the Business Combination, which may make it more difficult for EFHAC to complete the Business Combination as contemplated.

 

The obligation of ECD to consummate the Business Combination pursuant to the Merger Agreement is subject to a condition that EFHAC close a senior secured convertible note (the “Note”) through a private placement for an aggregate amount equal to or greater than $15,819,209 (the “Note Financing”). On October 6, 2023, EFHAC executed a securities purchase agreement that contemplates the Note closing immediately before the Closing of the Business Combination. The Closing of the Note is a condition to the Closing of the Business Combination. A copy of the Securities Purchase Agreement, dated October 6, 2023, is attached hereto as Exhibit 10.21 and is incorporated herein by reference.

 

The closing of the Note Facility condition is for the sole benefit of ECD and can be waived by ECD, in its sole discretion; however, there can be no assurances that ECD will waive the Note Facility condition, or any other condition to Closing described elsewhere in this proxy statement/prospectus.

 

If such terms are waived and the Business Combination is consummated, the cash held by EFHAC after the Closing may not be sufficient to fully carry out ECD’s business plan. The additional exercise of redemption rights with respect to a large number of EFHAC’s public stockholders may make EFHAC unable to take such actions as may be desirable in order to optimize its capital structure after the Closing and it may not be able to raise additional financing necessary to fund its expenses and liabilities after the Closing. Any such event in the future may negatively impact the analysis regarding EFHAC’s ability to continue as a going concern at such time. If these terms are not met, and are not or cannot be waived under the terms of the Merger Agreement, then the Merger Agreement could terminate and the proposed Business Combination may not be consummated.

 

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You must tender your Public Shares to validly seek redemption at the EFHAC Special Meeting of stockholders.

 

In connection with tendering your Public Shares for redemption, you must elect either to physically tender your share certificates to Continental or to deliver your Public Shares to Continental electronically using DTC’s DWAC (Deposit/Withdrawal At Custodian) System, in each case at least two business days before the EFHAC Special Meeting. The requirement for physical or electronic delivery ensures that a redeeming holder’s election to redeem is irrevocable once the Business Combination is consummated. Any failure to observe these procedures will result in your loss of redemption rights in connection with the vote on the Business Combination.

 

EFHAC may redeem your unexpired EFHAC Public Warrants prior to their exercise at a time that is disadvantageous to you, thereby making your Public Warrants worthless.

 

EFHAC will have the ability to redeem outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of EFHAC common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third business day prior to the notice of redemption to warrant holders, and there is a current registration statement in effect with respect to the EFHAC common stock underlying the Public Warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption. Redemption of the outstanding Public Warrants could force you (i) to exercise your Public Warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your Public Warrants at the then-current market price when you might otherwise wish to hold your Public Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding Public Warrants are called for redemption, is likely to be substantially less than the market value of your Public Warrants. None of the Private Warrants will be redeemable by the post-combination company so long as they are held by their initial purchasers or their permitted transferees.

 

In the event EFHAC determined to redeem Public Warrants, holders of redeemable Public Warrants will be notified of such redemption as described in the warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and EFHAC, dated September 8, 2022 (the “Warrant Agreement”). Specifically, in the event EFHAC elects to redeem all of the Public Warrants that are subject to redemption, EFHAC will fix a date for the redemption (the “Redemption Date”). Notice of redemption shall be mailed by first class mail, postage prepaid, by EFHAC not less than 30 days prior to the date fixed for redemption to the registered holders of the Public Warrants to be redeemed at their last addresses as they appear on the warrant register. Any notice mailed in the aforesaid manner will be conclusively presumed to have been duly given, whether or not the registered holder received such notice. In addition, beneficial owners of the redeemable Public Warrants will be notified of such redemption via posting of the redemption notice to DTC.

 

As of the date of this proxy statement/prospectus, trading prices of EFHAC common stock have not exceeded the threshold that would allow EFHAC to redeem Public Warrants.

 

If third parties bring claims against EFHAC, the proceeds held in trust could be reduced and the per Public Share liquidation price received by EFHAC’s public stockholders may be less than $10.00.

 

EFHAC’s placing of funds in trust may not protect those funds from third party claims against EFHAC. Although EFHAC has received from many of the vendors, service providers (other than its independent accountants) and prospective target businesses with which it does business executed agreements waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of EFHAC’s public stockholders, they may still seek recourse against the Trust Account. Additionally, a court may not uphold the validity of such agreements. Accordingly, the proceeds held in trust could be subject to claims which could take priority over those of EFHAC’s public stockholders. If EFHAC liquidates the Trust Account before the completion of a business combination and distributes the proceeds held therein to its public stockholders, the Sponsor has contractually agreed that it will be liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us, but only if such a vendor or prospective target business does not execute such a waiver. However, EFHAC cannot assure you that they will be able to meet such obligation. Therefore, the per-share distribution from the Trust Account for our stockholders may be less than $10.00 per Public Share due to such claims.

 

Additionally, if EFHAC is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in EFHAC’s bankruptcy estate and subject to the claims of third parties with priority over the claims of its stockholders. To the extent any bankruptcy claims deplete the Trust Account, EFHAC may not be able to return $10.00 to our public stockholders.

 

Any distributions received by EFHAC stockholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, EFHAC was unable to pay its debts as they fell due in the ordinary course of business.

 

EFHAC’s Certificate of Incorporation provides that it will continue in existence only until December 13, 2023 (unless extended to as late as March 13, 2024 in accordance with the Certificate of Incorporation). If EFHAC is unable to consummate a transaction within the required time period, upon notice from EFHAC, the trustee of the Trust Account will distribute the amount in its Trust Account to its public stockholders. Concurrently, EFHAC shall pay, or reserve for payment, from funds not held in trust, its liabilities and obligations, although EFHAC cannot assure you that there will be sufficient funds for such purpose.

 

We expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of the approximately $3,163 of proceeds held outside the Trust Account as of June 30, 2023, although we cannot assure you that there will be sufficient funds for such purpose. We will depend on sufficient interest being earned on the proceeds held in the Trust Account to pay any tax obligations we may owe or for working capital purposes.

 

However, we may not properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly, third parties may seek to recover from our stockholders amounts owed to them by us.

 

If, after we distribute the proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. In addition, our Board may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public stockholders from the Trust Account prior to addressing the claims of creditors.

 

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If EFHAC’s due diligence investigation of ECD was inadequate, then stockholders of EFHAC following the Business Combination could lose some or all of their investment.

 

Even though EFHAC conducted a thorough due diligence investigation of ECD, it cannot be sure that this diligence uncovered all material issues that may be present inside ECD or its business, or that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of ECD and its business and outside of its control will not later arise.

 

Because the post-combination company will be a publicly traded company by virtue of a merger as opposed to an underwritten initial public offering, the process does not use the services of one or more underwriters, which could result in less diligence being conducted.

 

In an underwritten initial public offering, underwriters typically conduct due diligence on the company being taken public in order to establish a due diligence defense against liability claims under federal securities laws. Because EFHAC is already a publicly traded company, an underwriter has not been engaged. While the Sponsor may have an inherent conflict of interest because its shares of Common Stock and Warrants will be worthless if EFHAC does not complete a business combination, management and the board of directors of the acquirer, as well as private investors, undertake a certain level of due diligence. However, this due diligence is not necessarily the same level of due diligence undertaken by an underwriter in a traditional initial public offering. If such investigation had occurred, certain information in this proxy statement/prospectus may have been presented in a different manner or additional information may have been presented at the request of such underwriter.

 

Stockholder litigation and regulatory inquiries and investigations are expensive and could harm EFHAC’s operating results and could divert management attention.

 

In the past, securities class action litigation and/or stockholder derivative litigation and inquiries or investigations by regulatory authorities have often followed certain significant business transactions, such as the sale of a company or announcement of any other strategic transaction, such as the Business Combination. Any stockholder litigation and/or regulatory investigations against EFHAC, whether or not resolved in EFHAC’s favor, could result in substantial costs and divert EFHAC’s management’s attention from other business concerns, which could adversely affect EFHAC’s business and cash resources and the ultimate value EFHAC’s stockholders receive as a result of the Business Combination.

 

EFHAC’s Current Charter includes a requirement that it must have net tangible assets of at least $5,000,001 upon consummation of the Business Combination and this requirement may not be satisfied in the maximum redemption scenario, which may make us unable to consummate the Business Combination.

 

EFHAC’s Current Charter provides that it must have net tangible assets upon consummation of an initial business combination. As more fully described in the section of this proxy statement/prospectus titled “Unaudited Pro Forma Condensed Combined Financial Information” in the Maximum Redemption Scenario, this requirement may not be satisfied and the Business Combination will not be completed. If EFHAC does not consummate the Business Combination and fails to complete an initial business combination by December 13, 2023 (unless such date has been extended as described herein), EFHAC will be required to dissolve and liquidate, unless EFHAC obtains stockholder approval to amend the Current Charter to extend the date by which it must consummate an initial business combination. This proxy statement/prospectus, includes a proposal for the EFHAC stockholders to consider and vote upon a proposal to approve an amendment to the Amended and Restated Certificate of Incorporation of EFHAC, a copy of which is to be attached to this proxy statement/prospectus as Annex B, to expand the methods that EFHAC may employ to not become subject to the “penny stock” rules of the Securities and Exchange Commission, which we refer to as the “NTA Requirement Amendment Proposal.” If the NTA Requirement Amendment Proposal is approved, EFHAC will not be required to have at least $5,000,001 upon consummation of the Business Combination.

 

The Initial Stockholders who own shares of Common Stock and Private Units will not participate in liquidation distributions and, therefore, they may have a conflict of interest in determining whether the Business Combination is appropriate.

 

As of the Record Date, the Initial Stockholders owned an aggregate of 2,875,000 shares of Common Stock and 257,500 Private Units. They have waived their right to redeem any founder shares in connection with a stockholder vote to approve a proposed initial business combination or sell any founder shares to EFHAC in a tender offer in connection with a proposed initial business combination, or to receive distributions with respect to any founder shares upon the liquidation of the Trust Account if EFHAC is unable to consummate a business combination. Based on a market price of $10.65 per share of Common Stock on October 13, 2023, the value of the Private Units was approximately $2.7 million. The Private Units (including underlying securities) and Founder Shares acquired prior to the IPO will be worthless if EFHAC does not consummate a business combination. Consequently, our directors’ discretion in identifying and selecting ECD as a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of the Business Combination are appropriate and in EFHAC’s public stockholders’ best interest.

 

EFHAC is requiring stockholders who wish to redeem their Public Shares in connection with a proposed business combination to comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline for exercising their rights.

 

EFHAC is requiring stockholders who wish to redeem their Public Shares to either tender their certificates to Continental or to deliver their Public Shares to Continental electronically using the DTC’s DWAC (Deposit/Withdrawal At Custodian) System at least two business days before the EFHAC Special Meeting. In order to obtain a physical certificate, a stockholder’s broker and/or clearing broker, DTC and Continental will need to act to facilitate this request. It is EFHAC’s understanding that stockholders should generally allot at least two weeks to obtain physical certificates from Continental. However, because EFHAC does not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical certificate. While EFHAC has been advised that it takes a short time to deliver Public Shares through the DWAC System, EFHAC cannot assure you of this fact. Accordingly, if it takes longer than EFHAC anticipates for stockholders to deliver their Public Shares, stockholders who wish to redeem may be unable to meet the deadline for exercising their redemption rights and thus may be unable to redeem their Public Shares.

 

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EFHAC will require its public stockholders who wish to redeem their Public Shares in connection with the Business Combination to comply with specific requirements for redemption described above, such redeeming stockholders may be unable to sell their securities when they wish to in the event that the Business Combination is not consummated.

 

If EFHAC requires public stockholders who wish to redeem their Public Shares in connection with the proposed Business Combination to comply with specific requirements for redemption as described above and the Business Combination is not consummated, EFHAC will promptly return such certificates to its public stockholders. Accordingly, investors who attempted to redeem their Public Shares in such a circumstance will be unable to sell their securities after the failed acquisition until EFHAC has returned their securities to them. The market price of Public Shares may decline during this time and you may not be able to sell your securities when you wish to, even while other stockholders that did not seek redemption may be able to sell their securities.

 

If EFHAC’s security holders exercise their registration rights with respect to their securities, it may have an adverse effect on the market price of EFHAC’s securities.

 

The Initial Stockholders are entitled to make a demand that it register the resale of their founder shares at any time commencing three months prior to the date on which their shares may be released from escrow. Additionally, the holders of the Private Units are entitled to demand that EFHAC register the resale of the Private Units and any other Units EFHAC issues to them (and the underlying securities) commencing at any time after EFHAC consummates an initial business combination. If such persons exercise their registration rights with respect to all of their securities, then there will be an additional 3,164,688 shares of Common Stock and 257,500 Warrants (and underlying securities) eligible for trading in the public market. The presence of these additional shares of Common Stock and Warrants (and underlying securities) trading in the public market may have an adverse effect on the market price of EFHAC’s securities.

 

EFHAC will not obtain an opinion from an unaffiliated third party as to the fairness of the Business Combination to its stockholders.

 

The Board deemed the fairness opinion to be unnecessary based on the valuation of the ECD relative to the comparable companies, which included Ferrari, Porsche, Aston Martin, LVMH, Hermes, Moncler and Richemont. EFHAC is not required to obtain an opinion from an unaffiliated third party that the price it is paying in the Business Combination is fair to its public stockholders from a financial point of view. EFHAC’s public stockholders therefore, must rely solely on the judgment of the Board in determining the fairness of the Business Combination

 

If the Business Combination’s benefits do not meet the expectations of financial or industry analysts, the market price of EFHAC’s securities may decline.

 

The market price of EFHAC’s securities may decline as a result of the Business Combination if:

 

  EFHAC does not achieve the perceived benefits of the acquisition as rapidly as, or to the extent anticipated by, financial or industry analysts; or

 

  The effect of the Business Combination on the financial statements is not consistent with the expectations of financial or industry analysts.

 

Accordingly, investors may experience a loss as a result of decreasing stock prices.

 

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EFHAC’s directors and officers may have certain conflicts in determining to recommend the acquisition of ECD, since certain of their interests, and certain interests of their affiliates and associates, are different from, or in addition to, your interests as a stockholder.

 

EFHAC’s management and directors have interests in and arising from the Business Combination that are different from, or in addition to, your interests as a stockholder, which could result in a real or perceived conflict of interest. These interests include the fact that certain of the shares of Common Stock and Private Units (including the underlying securities) owned by EFHAC’s management and directors, or their affiliates and associates, would become worthless if the Business Combination Proposal is not approved and EFHAC otherwise fails to consummate a business combination prior to December 13, 2023 (unless such date has been extended as described herein). See “Proposal 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination” beginning on page 66 for additional information.

 

EFHAC and ECD have incurred and expect to incur significant costs associated with the Business Combination. Whether or not they complete the Business Combination, the incurrence of these costs will reduce the amount of cash available to be used for other corporate purposes by EFHAC if the Business Combination is completed or by EFHAC if the Business Combination is not completed.

 

EFHAC and ECD have incurred and expect to incur significant costs associated with the Business Combination. Whether or not the Business Combination is completed, EFHAC expects to incur approximately $2.0 million in expenses (excluding the deferred underwriting commissions of $4.0 million and the placement agent fee of $1.4 million to be settled with $0.5 million cash and 0.5 million shares of EFHAC common stock pursuant to the Satisfaction and Discharge Agreement entered into by EFHAC and EF Hutton on October 14, 2023). These expenses will reduce the amount of cash available to be used for other corporate purposes by EFHAC if the Business Combination is completed or by EFHAC if the Business Combination is not completed.

 

EFHAC has incurred and will incur significant transaction costs in connection with transactions contemplated by the Merger Agreement.

 

EFHAC has incurred and will incur significant transaction costs in connection with the Business Combination. If the Business Combination is not consummated, EFHAC may not have sufficient funds to seek an alternative business combination and may be forced to liquidate and dissolve.

 

EFHAC may not be able to complete an initial business combination with a U.S. target company since such initial business combination may be subject to U.S. foreign investment regulations and review by a U.S. government entity such as the Committee on Foreign Investment in the United States (“CFIUS”), or ultimately prohibited.

 

ECD UK is a company incorporated in the UK, with operations in the UK, and is a wholly-owned subsidiary of ECD. Certain of ECD’s directors are citizens of countries other than the United States. While EFHAC believes that the nature of EFHAC’s business, and the nature of the businesses of ECD, should not make the transaction subject to U.S. foreign regulations or review by a U.S. government entity, it is possible that the Business Combination may be subject to a CFIUS review, the scope of which was expanded by the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”), to include certain non-passive, non-controlling investments in sensitive U.S. businesses and certain acquisitions of real estate even with no underlying U.S. business. FIRRMA, and subsequent implementing regulations that are now in force, also subjects certain categories of investments to mandatory filings. If an initial business combination falls within CFIUS’s jurisdiction, EFHAC may determine that it is required to make a mandatory filing or that it will submit a voluntary notice to CFIUS, or to proceed with the initial business combination without notifying CFIUS and risk CFIUS intervention, before or after closing of the initial business combination. CFIUS may decide to block or delay the in initial business combination, impose conditions to mitigate national security concerns with respect to such initial business combination or order the combined company to divest all or a portion of a U.S. business of the combined company without first obtaining CFIUS clearance, which may limit the attractiveness of or prevent EFHAC from pursuing certain initial business combination opportunities that EFHAC believes would otherwise be beneficial to EFHAC and its stockholders. As a result, the pool of potential targets with which EFHAC could complete an initial business combination may be limited and EFHAC may be adversely affected in terms of competing with other special purpose acquisition companies which do not have similar foreign ownership issues.

 

Moreover, the process of government review, whether by the CFIUS or otherwise, could be lengthy and EFHAC has limited time to complete its initial business combination. If EFHAC cannot complete its initial business combination within the Combination Period because the review process drags on beyond such timeframe, or because our initial business combination is ultimately prohibited by CFIUS or another U.S. government entity, EFHAC may be required to liquidate. This will also cause you to lose the investment opportunity in a target company and the chance of realizing future gains on your investment through any price appreciation in the combined company. In addition, the Warrants will expire worthless.

 

The unaudited pro forma condensed combined financial information included in this proxy statement/prospectus may not be indicative of what the Combined Company’s actual financial position or results of operations would have been.

 

The unaudited pro forma condensed combined financial information in this proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what Combined Company’s actual financial position or results of operations would have been had the Business Combination been completed on the dates indicated. See the section titled “Unaudited Pro Forma Condensed Combined Financial Information” for more information.

 

A significant number of EFHAC common stock were redeemed in June 2023. The reduced liquidity and number of round-lot holders of EFHAC’s public shares may make it more difficult for EFHAC to meet Nasdaq’s listing requirements and to consummate the Business Combination, and as a result, EFHAC common stock may have low liquidity following the Business Combination.

 

On June 1, 2023, EFHAC’s stockholders approved an amendment to EFHAC’s amended and restated certificate of incorporation extending the date by which EFHAC has to consummate a business combination up to nine times, each by an additional one-month, from June 13, 2023 to March 13, 2024, by depositing into the Trust Account the lesser of $80,000 and $0.04 for each outstanding share of common stock sold in EFHAC’s IPO for each one-month extension. On June 1, 2023, EFHAC filed such amendment to EFHAC’s amended and restated certificate of incorporation with the Delaware Secretary of State. In connection with the stockholders’ vote at the Special Meeting of Stockholders held by EFHAC on June 1, 2023, 8,007,353 shares were tendered for redemption, leaving 3,492,647 Public Shares outstanding. Approximately $82.5 million was withdrawn from the Trust Account to pay for the redemption in June 2023, leaving approximately $35.9 million in the Trust Account as of June 1, 2023.

 

Reduction in EFHAC’s available public float will likely also reduce the trading volume and liquidity of EFHAC’s securities and increase the volatility of EFHAC’s securities. With a significantly smaller number of stockholders, trading in the shares of the Combined Company may be limited and your ability to sell your shares in the market could be adversely affected. The Combined Company intends to apply to list its shares on the Nasdaq, and Nasdaq may not list the common stock on its exchange, which could limit investors’ ability to make transactions in EFHAC’s securities and subject EFHAC to additional trading restrictions.

 

Furthermore, additional shares may be redeemed in connection with the closing of the Business Combination, further reducing the Combined Company’s public float and number of stockholders, again increasing the likelihood that EFHAC is unable to meet Nasdaq listing requirements and close the Business Combination.

 

In the event that a significant number of Public Shares are redeemed, the Common Stock may become less liquid following the Business Combination.

 

If a significant number of Public Shares are redeemed, EFHAC may be left with a significantly smaller number of stockholders. As a result, trading in the shares of the Combined Company may be limited and your ability to sell your shares in the market could be adversely affected. The Combined Company intends to apply to list its shares on Nasdaq, and Nasdaq may not list the Common Stock, which could limit investors’ ability to make transactions in EFHAC’s securities and subject EFHAC to additional trading restrictions.

 

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The Combined Company will be required to meet the initial listing requirements to be listed on Nasdaq. However, the Combined Company may be unable to maintain the listing of its securities in the future.

 

In connection with the special meeting of stockholders held by EFHAC on June 1, 2023 where the stockholders approved certain proposal extending the date by which EFHAC has to consummate a business combination up to nine times, each by an additional one-month, from June 13, 2023 to March 13, 2024 by depositing into the Trust Account the lesser of $80,000 and $0.04 for each outstanding share of common stock sold in EFHAC’s IPO for each one-month extension. On June 1, 2023, EFHAC filed such amendment to EFHAC’s amended and restated certificate of incorporation with the Delaware Secretary of State. In connection with the stockholders’ vote at the Special Meeting of Stockholders held by EFHAC on June 1, 2023, 8,007,353 shares were tendered for redemption, leaving 3,492,647 Public Shares outstanding. Approximately $82.5 million was withdrawn from the Trust Account to pay for the redemption in June 2023, leaving approximately $35.9 million in the Trust Account as of June 1, 2023. As a result of the redemptions, EFHAC now has less liquidity and fewer round-lot holders of EFHAC’s public shares, which may make it more difficult to meet Nasdaq listing requirements. If the Combined Company fails to meet the continued listing requirements and Nasdaq delists its securities, EFHAC could face significant material adverse consequences, including:

 

  a limited availability of market quotations for its securities;

 

  a limited amount of news and analyst coverage for the Combined Company; and

 

  a decreased ability to issue additional securities or obtain additional financing in the future

 

EFHAC may waive one or more of the conditions to the Business Combination without resoliciting stockholder approval for the Business Combination.

 

EFHAC may agree to waive, in whole or in part, some of the conditions to its obligations to complete the Business Combination, to the extent permitted by applicable laws. The Board will evaluate the materiality of any waiver to determine whether amendment of this proxy statement/prospectus and of proxies is warranted. In some instances, if the Board determines that a waiver is not sufficiently material to warrant resolicitation of stockholders, EFHAC has the discretion to complete the Business Combination without seeking further stockholder approval. For example, it is a condition to EFHAC’s obligations to close the Business Combination that there be no applicable law and no injunction or other order restraining or imposing any condition on the consummation of the Business Combination, however, if the Board determines that any such order or injunction is not material to the business of ECD, then the Board may elect to waive that condition without stockholder approval and close the Business Combination.

 

EFHAC’s stockholders will experience immediate dilution as a consequence of the issuance of Common Stock as consideration in the Business Combination. Having a minority share position may reduce the influence that EFHAC’s current stockholders have on the management of EFHAC.

 

We anticipate that upon completion of the Business Combination, assuming no redemptions of the 3,492,647 Public Shares, EFHAC’s stockholders will retain an ownership interest of approximately 14.6% in the Combined Company, the ECD Securityholders will own approximately 74.5% of the Combined Company, the Initial Stockholders will own approximately 9.4% of the Combined Company, and EF Hutton will own approximately 1.5% of the Combined Company. If maximum Public Shares are redeemed, EFHAC’s stockholders will retain an ownership interest of approximately 6.9% in the Combined Company, the ECD Securityholders will own approximately 81.3% of the Combined Company, the Initial Stockholders will own approximately 10.2% of the Combined Company, and EF Hutton will own approximately 1.6% of the Combined Company. The ownership percentages with respect to the Combined Company do not take into account the issuance of any additional shares of Common Stock underlying the Public Warrants, the Private Warrants, the Common Shares Warrant, the Preferred Shares Warrant, the Series A Convertible Preferred Stock, or the Senior Secured Convertible Notes, but do take into account the issuance of 1,469,688 shares of the Combined Company Common Stock pursuant to the Rights. If the actual facts are different from these assumptions (which they are likely to be), the percentage ownership retained by the EFHAC stockholders will be different. See “Unaudited Pro Forma Condensed Combined Financial Information.”

 

Risks Related to the Combined Company Common Stock and the Securities Market

 

The Combined Company’s stock price may fluctuate significantly.

 

The market price of the Combined Company Common Stock may fluctuate widely, depending on many factors, some of which may be beyond our control, including:

 

  actual or anticipated fluctuations in our results of operations due to factors related to its business;

 

  success or failure of its business strategies;

 

  competition and industry capacity;

 

  changes in interest rates and other factors that affect earnings and cash flow;

 

  its level of indebtedness, its ability to make payments on or service its indebtedness and its ability to obtain financing as needed;

 

  its ability to retain and recruit qualified personnel;

 

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  its quarterly or annual earnings, or those of other companies in its industry;

 

  announcements by us or its competitors of significant acquisitions or dispositions;

 

  changes in accounting standards, policies, guidance, interpretations or principles;

 

  the failure of securities analysts to cover, or positively cover, the Combined Company Common Stock after the Business Combination;

 

  changes in earnings estimates by securities analysts or its ability to meet those estimates;

 

  the operating and stock price performance of other comparable companies;

 

  investor perception of the company and its industry;

 

  overall market fluctuations unrelated to its operating performance;

 

  results from any material litigation or government investigation;

 

  changes in laws and regulations (including tax laws and regulations) affecting its business;

 

  changes in capital gains taxes and taxes on dividends affecting stockholders; and

 

  general economic conditions and other external factors.

 

Low trading volume for the Combined Company Common Stock, which may occur if an active trading market does not develop, among other reasons, would amplify the effect of the above factors on stock price volatility.

 

Should the market price of our shares drop significantly, stockholders may institute securities class action lawsuits against us. A lawsuit against the Combined Company could cause the Combined Company to incur substantial costs and could divert the time and attention of its management and other resources.

 

An active, liquid trading market for the Combined Company Common Stock may not develop, which may limit your ability to sell your shares.

 

An active trading market for shares of the Combined Company Common Stock may never develop or be sustained following the consummation of the Business Combination. A public trading market having the desirable characteristics of depth, liquidity and orderliness depends upon the existence of willing buyers and sellers at any given time, such existence being dependent upon the individual decisions of buyers and sellers over which neither the Combined Company nor any market maker has control. The failure of an active and liquid trading market to develop and continue would likely have a material adverse effect on the value of the Combined Company Common Stock. An inactive market may also impair the Combined Company’s ability to raise capital to continue to fund operations by issuing shares and may impair the Combined Company’s ability to acquire other companies or technologies by using the Combined Company’s shares as consideration.

 

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As an “emerging growth company” (as defined in the JOBS Act), we will have different disclosure and other requirements than U.S. domestic registrants and non-emerging growth companies.

 

The JOBS Act contains provisions that, among other things, relax certain reporting requirements for emerging growth companies. Under this Act, as an emerging growth company, we will not be subject to the same disclosure and financial reporting requirements as non-emerging growth companies. For example, as an emerging growth company we are permitted to, and intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. Also, we will not have to comply with future audit rules promulgated by the U.S. Public Company Accounting Oversight Board, or “PCAOB,” (unless the SEC determines otherwise) and our auditors will not need to attest to our internal controls under Section 404(b) of the Sarbanes-Oxley Act. We may follow these reporting exemptions until we are no longer an emerging growth company. As a result, our shareholders may not have access to certain information that they deem important. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our IPO, (b) in which we have total annual revenues of at least US$1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our equity securities that is held by non-affiliates exceeds US$700.0 million as of the prior June 30, and (2) the date on which we have issued more than US$1.0 billion in non-convertible debt during the prior three-year period. Accordingly, the information about us available to you will not be the same as, and may be more limited than, the information available to shareholders of a non-emerging growth company. We could be an “emerging growth company” for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our Units held by non-affiliates exceeds $700 million as of any June 30 (the end of our second fiscal quarter) before that time, in which case we would no longer be an “emerging growth company” as of the following December 31 (our fiscal year end). We cannot predict if investors will find our shares or units less attractive because we may rely on these exemptions. If some investors find our shares or units less attractive as a result, there may be a less active trading market for our shares or units and their prices may be more volatile.

 

Risks Related to U.S. and International Taxation Generally and in Connection with the Business Combination

 

Changes in tax laws or exposure to additional income tax liabilities could affect ECD’s future profitability.

 

Factors that could materially affect ECD’s future effective tax rates include but are not limited to:

 

  changes in tax laws or the regulatory environment;

 

  changes in accounting and tax standards or practices;

 

  changes in the composition of operating income by tax jurisdiction; and

 

  ECD’s operating results before taxes.

 

Because ECD does not have a long history of operating at its present scale and it has significant expansion plans, ECD’s effective tax rate may fluctuate in the future. Future effective tax rates could be affected by operating losses in jurisdictions where no tax benefit can be recorded under GAAP, changes in the composition of earnings in countries with differing tax rates, changes in deferred tax assets and liabilities, or changes in tax laws.

 

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), was signed into law making significant changes to the Code. In particular, sweeping changes were made to the U.S. taxation of foreign operations. Changes include, but are not limited to, a permanent reduction to the corporate income tax rate, limiting interest deductions, adopting elements of a territorial tax system, assessing a repatriation tax or “toll-charge” on undistributed earnings and profits of U.S.-owned foreign corporations, and introducing certain anti-base erosion provisions, including a new minimum tax on global intangible low-taxed income and base erosion and anti-abuse tax. The new legislation had no effect on ECD’s 2018, 2019, 2020 or 2021 provision for income taxes because the Company incurred losses in the U.S. in these years, and the management set up a full valuation allowance against its U.S. federal and states deferred tax assets.

 

In addition to the impact of the Tax Act on ECD’s federal taxes, the Tax Act may impact its taxation in other jurisdictions, including with respect to state income taxes. State legislatures have not had sufficient time to respond to the Tax Act. Accordingly, there is uncertainty as to how the laws will apply in the various state jurisdictions. Additionally, other foreign governing bodies may enact changes to their tax laws that could result in changes to ECD’s global tax position and materially adversely affect its business, results of operations and financial condition. Additionally, the IRS and several foreign tax authorities have increasingly focused attention on intercompany transfer pricing with respect to sales of products and technologies and the use of intangibles. Tax authorities could disagree with ECD’s future intercompany charges, cross-jurisdictional transfer pricing or other matters and assess additional taxes. If ECD does not prevail in any such disagreements, its profitability may be affected.

 

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If the Business Combination does not qualify as a tax-free reorganization under Section 368(a) of the Code, holders of ECD Common Stock may incur a substantially greater U.S. federal income tax liability as a result of the Business Combination.

 

EFHAC and ECD intend for the Business Combination to be treated for U.S. federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code. However, neither EFHAC nor ECD has requested, or intends to request, an opinion of tax counsel or a ruling from the IRS, with respect to the tax consequences of the Business Combination and there can be no assurance that the companies’ position would be sustained by a court if challenged by the IRS. Accordingly, if the IRS or a court determines that the Business Combination does not qualify as a reorganization under Section 368(a) of the Code and is therefore fully taxable for U.S. federal income tax purposes, holders of ECD Common Stock generally would recognize taxable gain or loss on their receipt of the Combined Company Common Stock in connection with the Business Combination. For a more complete discussion of U.S. federal income tax consequences of the Business Combination, see the section titled “Material U.S. Federal Income Tax Consequences — Tax Consequences of the Business Combination to U.S. Holders of ECD Common Stock.” 

 

THE EFHAC SPECIAL MEETING

 

General

 

EFHAC is furnishing this proxy statement/prospectus to the EFHAC stockholders as part of the solicitation of proxies by the Board for use at the EFHAC Special Meeting of EFHAC stockholders to be held on December 7, 2023 and at any adjournment or postponement thereof. This proxy statement/prospectus is first being furnished to our stockholders on or about November 15, 2023 in connection with the vote on the Proposals. This proxy statement/prospectus provides you with the information you need to know to be able to vote or instruct your vote to be cast at the EFHAC Special Meeting.

 

Date, Time and Place

 

The EFHAC Special Meeting will be held virtually at 10:30 a.m., Eastern Time, on December 7, 2023 and conducted exclusively via live webcast at https://www.cstproxy.com/efhuttonspaci/sm2023, or such other date, time and place to which such meeting may be adjourned or postponed, for the purposes set forth in the accompanying notice. There will not be a physical location for the EFHAC Special Meeting, and you will not be able to attend the meeting in person. We are pleased to utilize the virtual stockholder meeting technology to provide ready access and cost savings for our stockholders and EFHAC. The virtual meeting format allows attendance from any location in the world. You will be able to attend, vote your shares, view the list of stockholders entitled to vote at the EFHAC Special Meeting and submit questions during the EFHAC Special Meeting via a live webcast available at https://www.cstproxy.com/efhuttonspaci/sm2023.

 

Virtual EFHAC Special Meeting Registration

 

To register for the virtual meeting, please follow these instructions as applicable to the nature of your ownership of the Common Stock.

 

If your shares are registered in your name with Continental and you wish to attend the online-only virtual meeting, go to https://www.cstproxy.com/efhuttonspaci/sm2023, enter the control number you received on your proxy card and click on the “Click here” to preregister for the online meeting link at the top of the page. Just prior to the start of the meeting you will need to log back into the meeting site using your control number. Pre-registration is recommended but is not required in order to participate in the virtual EFHAC Special Meeting.

 

Beneficial stockholders who wish to participate in the online-only virtual meeting must obtain a legal proxy by contacting their account representative at the bank, broker, or other nominee that holds their shares and go to https://www.cstproxy.com/efhuttonspaci/sm2023, enter the control number you received on your proxy card and click on the “Click here” to preregister for the online meeting link at the top of the page. Just prior to the start of the meeting you will need to log back into the meeting site using your control number. Pre-registration is recommended but is not required in order to participate in the virtual EFHAC Special Meeting.

 

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Accessing the Virtual EFHAC Special Meeting Webcast

 

You will need your control number for access. If you do not have your control number, contact Advantage Proxy, our proxy solicitor at (877) 870-8565 or (206) 870-8565 or by E-mail: ksmith@advantageproxy or Continental at https://www.cstproxy.com/efhuttonspaci/sm2023. Beneficial investors who hold shares through a bank, broker or other intermediary, will need to contact them and obtain a legal proxy. Once you have your legal proxy, contact Continental at https://www.cstproxy.com/efhuttonspaci/sm2023.

 

Record Date; Who is Entitled to Vote

 

EFHAC has fixed the close of business on November 13, 2023, as the record date for determining those EFHAC stockholders entitled to notice of and to vote at the EFHAC Special Meeting. As of the close of business on November 13, 2023, there were 6,625,147 shares of Common Stock issued and outstanding and entitled to vote, of which 3,492,647 are Public Shares, 2,875,000 are founder shares held by the Initial Stockholders, and 257,500 are private shares underlying Private Units. Each holder of shares of Common Stock is entitled to one vote per share on each proposal. If your shares are held in “street name,” you should contact your broker, bank or other nominee to ensure that shares held beneficially by you are voted in accordance with your instructions.

 

In connection with the IPO, we entered into certain letter agreements pursuant to which the Initial Stockholders agreed to vote any shares of Common Stock owned by them in favor of our initial business combination. The Initial Stockholders also entered into the Letter Agreement, pursuant to which they are obligated to, among other things, vote in favor of the Business Combination Proposal and the other proposals. As of the date of this proxy statement, the Initial Stockholders hold approximately 47.28% of the outstanding Common Stock.

 

Quorum and Required Vote for Stockholder Proposals

 

A quorum of EFHAC stockholders is necessary to hold a valid meeting. A quorum will be present at the EFHAC Special Meeting if a majority of the shares of Common Stock issued and outstanding is present by virtual attendance or represented by proxy and entitled to vote at the EFHAC Special Meeting. Abstentions by virtual attendance and by proxy will count as present for the purposes of establishing a quorum but broker non-votes will not.

 

Approval of the Business Combination Proposal, the Nasdaq Proposal, the Plan Proposal and the Adjournment Proposal will each require the affirmative vote of the holders of a majority of the issued and outstanding shares of Common Stock present by virtual attendance or represented by proxy and entitled to vote at the EFHAC Special Meeting or any adjournment thereof. Approval of the NTA Requirement Amendment Proposal and the Charter Amendment Proposal will require the approval of a majority of the issued and outstanding shares of Common Stock. Attending the EFHAC Special Meeting either by virtual attendance or represented by proxy and abstaining from voting and a broker non-vote will have the same effect as voting against the NTA Requirement Amendment Proposal and the Charter Amendment Proposal.

 

Along with the approval of the NTA Requirement Amendment Proposal, the Charter Amendment Proposal, the Nasdaq Proposal, the Plan Proposal and the approval of the Business Combination Proposal are conditions to the consummation of the Business Combination. If the Business Combination Proposal is not approved, the Business Combination will not take place. Approval of this Business Combination Proposal is also a condition to Proposal 2, Proposals 3, Proposals 4A – 4D, Proposal 5 and Proposal 6. If the NTA Requirement Amendment Proposal, Charter Amendment Proposal or the Nasdaq Proposal are not approved, unless waived, this Business Combination Proposal will have no effect (even if approved by the requisite vote of our stockholders at the EFHAC Special Meeting of any adjournment or postponement thereof) and the Business Combination will not occur.

 

Voting Your Shares

 

Each share of Common Stock that you own in your name entitles you to one vote on each proposal to be presented to stockholders at the EFHAC Special Meeting. Your proxy card shows the number of shares of Common Stock that you own.

 

There are two ways to ensure that your shares of Common Stock are voted at the EFHAC Special Meeting:

 

  You can vote your shares by signing, dating and returning the enclosed proxy card in the pre-paid postage envelope provided. If you submit your proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted, as recommended by the Board. The Board recommends voting “FOR” each of the Proposals. If you hold your shares of Common Stock in “street name,” which means your shares are held of record by a broker, bank or other nominee, you should follow the instructions provided to you by your broker, bank or nominee to ensure that the votes related to the shares you beneficially own are properly represented and voted at the EFHAC Special Meeting.

 

  You can participate in the virtual EFHAC Special Meeting and vote during the EFHAC Special Meeting even if you have previously voted by submitting a proxy as described above. However, if your shares are held in the name of your broker, bank or another nominee, you must get a proxy from the broker, bank or other nominee. That is the only way EFHAC can be sure that the broker, bank or nominee has not already voted your shares.

 

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IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF THE BUSINESS COMBINATION PROPOSAL (AS WELL AS THE OTHER PROPOSALS).

 

Revoking Your Proxy

 

If you give a proxy, you may revoke it at any time before it is exercised by doing any one of the following:

 

  you may send another proxy card with a later date;

 

  if you are a record holder, you may notify our proxy solicitor, Advantage Proxy, in writing before the EFHAC Special Meeting that you have revoked your proxy; or

 

  you may participate in the virtual EFHAC Special Meeting, revoke your proxy, and vote during the virtual EFHAC Special Meeting, as indicated above.

 

Who Can Answer Your Questions About Voting Your Shares

 

If you have any questions about how to vote or direct a vote in respect of your shares of Common Stock, you may contact Advantage Proxy, our proxy solicitor as follows:

 

Advantage Proxy, Inc.

P.O. Box 10904

Yakima, WA 98909

Toll Free Telephone: (877) 870-8565

Main Telephone: (206) 870-8565

E-mail: ksmith@advantageproxy

 

No Additional Matters May Be Presented at the EFHAC Special Meeting

 

The EFHAC Special Meeting has been called only to consider the approval of the Business Combination Proposal, the NTA Requirement Amendment Proposal, the Charter Amendment Proposal, the Advisory Proposals, the Nasdaq Proposal, the Plan Proposal and the Adjournment Proposal. Under our Certificate of Incorporation, other than procedural matters incident to the conduct of the EFHAC Special Meeting, no other matters may be considered at the EFHAC Special Meeting if they are not included in the notice of the EFHAC Special Meeting.

 

Approval of the Business Combination Proposal, the Nasdaq Proposal, the Plan Proposal and the Adjournment Proposal will each require the affirmative vote of the holders of a majority of the issued and outstanding shares of Common Stock present by virtual attendance or represented by proxy and entitled to vote at the EFHAC Special Meeting or any adjournment thereof.

 

Redemption Rights

 

Pursuant to our Certificate of Incorporation, a holder of Public Shares may demand that EFHAC redeem such Public Shares for cash in connection with a business combination. You may not elect to redeem your Public Shares prior to the completion of a business combination.

 

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If you are a public stockholder and you seek to have your shares redeemed, you must submit your request in writing that we redeem your Public Shares for cash no later than 5:00 p.m., Eastern Time on December 5, 2023 (at least two business days before the EFHAC Special Meeting). The request must be signed by the applicable stockholder in order to validly request redemption. A stockholder is not required to submit a proxy card or vote in order to validly exercise redemption rights. The request must identify the holder of the Public Shares to be redeemed and must be sent to Continental Stock Transfer & Trust Company at the following address:

 

Continental Stock Transfer & Trust Company

 

1 State Street, 30th floor
New York, NY 10004

Attn: Mark Zimkind

E-mail: spacredemptions@continentalstock.com

 

You must tender the Public Shares for which you are electing redemption at least two business days before the EFHAC Special Meeting by either:

 

  Delivering certificates representing the Public Shares to Continental, or

 

  Delivering the Public Shares electronically through the DWAC system.

 

Any corrected or changed written demand of redemption rights must be received by Continental at least two business days before the EFHAC Special Meeting. No demand for redemption will be honored unless the holder’s shares have been delivered (either physically or electronically) to Continental at least two business days prior to the vote at the EFHAC Special Meeting.

 

Public stockholders may seek to have their Public Shares redeemed regardless of whether they vote for or against the Business Combination and whether or not they are holders of Public Shares as of the Record Date. Any public stockholder who holds Public Shares of EFHAC on or before December 5, 2023 (at least two business days before the EFHAC Special Meeting) will have the right to demand that his, her or its Public Shares be redeemed for a pro rata share of the aggregate amount then on deposit in the Trust Account, less any taxes then due but not yet paid, at the consummation of the Business Combination.

 

In connection with tendering your shares for redemption, you must elect either to physically tender your certificates to Continental or deliver your Public Shares to Continental electronically using DTC’s DWAC (Deposit/Withdrawal At Custodian) System, in each case, at least two business days before the EFHAC Special Meeting.

 

If you wish to tender through the DWAC system, please contact your broker and request delivery of your Public Shares through the DWAC system. Delivering Public Shares physically may take significantly longer. In order to obtain a physical certificate, a stockholder’s broker and/or clearing broker, DTC, and Continental will need to act together to facilitate this request. It is EFHAC’s understanding that stockholders should generally allot at least two weeks to obtain physical certificates from Continental. EFHAC does not have any control over this process or over the brokers or DTC, and it may take longer than two weeks to obtain a physical certificate. Stockholders who request physical certificates and wish to redeem may be unable to meet the deadline for tendering their Public Shares before exercising their redemption rights and thus will be unable to redeem their Public Shares.

 

In the event that a stockholder tenders his/her/its Public Shares and decides prior to the consummation of the Business Combination that it does not want to redeem his/her/its Public Shares, the stockholder may withdraw the tender. In the event that a stockholder tenders Public Shares and the Business Combination is not completed, these Public Shares will not be redeemed for cash and the physical certificates representing these Public Shares will be returned to the stockholder promptly following the determination that the Business Combination will not be consummated. EFHAC anticipates that a stockholder who tenders Public Shares for redemption in connection with the vote to approve the Business Combination would receive payment of the redemption price for such Public Shares soon after the completion of the Business Combination.

 

If properly demanded by EFHAC’s public stockholders, EFHAC will redeem each Public Share into a pro rata portion of the funds available in the Trust Account, calculated as of two business days prior to the anticipated consummation of the Business Combination. As of October 31, 2023, this would amount to approximately $10.87 per Public Share, subject to reduction for the payment of taxes. If you exercise your redemption rights, you will be exchanging your Public Shares for cash and will no longer own the Public Shares.

 

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Assuming maximum redemptions, the value of outstanding Public Warrants was approximately $287,500 based on the closing price of the warrants of $0.025 on The Nasdaq Capital Market as of October 31, 2023. The potential for the issuance of a substantial number of additional common stock upon exercise of these warrants could make the post-Business Combination company less attractive to investors. Any such issuance will increase the number of issued and outstanding shares of common stock and reduce the value of the outstanding common stock. Therefore, the outstanding warrants could have the effect of depressing the share price of EFHAC’s common stock.

 

Notwithstanding the foregoing, a holder of the Public Shares, together with any affiliate of his or her or any other person with whom he or she is acting in concert or as a “group” (as defined in Section 13(d)-(3) of the Exchange Act) will be restricted from seeking redemption rights with respect to more than 20% of the Public Shares.

 

If too many public stockholders exercise their redemption rights, we may not be able to meet certain closing conditions, and as a result, would not be able to proceed with the Business Combination. EFHAC may enter into agreements with holders of Public Shares in which the holders agree to not redeem their Public Shares so as to ensure that the net tangible assets test is satisfied. In addition, the Sponsor or one of its affiliates may purchase Public Shares in the open market or in privately negotiated transactions for the purpose preventing such shares from being redeemed. In such circumstances, the Sponsor or its affiliates will not purchase any Public Shares at a price higher than the price offered through the redemption process. EFHAC represents that:

 

(i) any Public Shares purchased by the Sponsor or its affiliates will not be voted in favor of approving the Business Combination transaction;

 

(ii) the Sponsor and its affiliates will not possess any redemption rights with respect to the Public Shares purchased or, if they possess redemption rights, they waive such rights; and

 

(iii) EFHAC will disclose in a Form 8-K, prior to the Special Meeting, the following:

 

(a) the amount of Public Shares purchased outside of the redemption offer by the Sponsor or its affiliates, along with the purchase price;

 

(b) the purpose of the purchases by the Sponsor or its affiliates;

 

(c) the impact, if any, of the purchases by the Sponsor or its affiliates on the likelihood that the Business Combination will be approved;

 

(d) the identities of security holders who sold to the Sponsor or its affiliates (if not purchased on the open market) or the nature of such security holders (e.g., 5% security holders); and

 

(e) the number of Public Shares for which EFHAC has received redemption requests in connection with the approval of the Business Combination

 

Proxies and Proxy Solicitation Costs

 

EFHAC is soliciting proxies on behalf of the Board. This solicitation is being made by mail but also may be made by telephone or in person. EFHAC and its directors, officers and employees may also solicit proxies in person, by telephone or by other electronic means. Any solicitation made and information provided in such a solicitation will be consistent with the written proxy statement/prospectus and proxy card. EFHAC will bear the cost of solicitation. Advantage Proxy, a proxy solicitation firm that EFHAC has engaged to assist it in soliciting proxies, will be paid a fixed fee of approximately $12,500 and be reimbursed out-of-pocket expenses.

 

EFHAC will ask banks, brokers and other institutions, nominees and fiduciaries to forward its proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. EFHAC will reimburse them for their reasonable expenses.

 

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PROPOSAL 1 — THE BUSINESS COMBINATION PROPOSAL

 

EFHAC is asking its stockholders to adopt the Merger Agreement and approve the Business Combination. EFHAC stockholders should read carefully this proxy statement/prospectus in its entirety, including the subsection below titled “The Merger Agreement,” for more detailed information concerning the Business Combination and the terms and conditions of the Merger Agreement. We also urge EFHAC stockholders to read carefully the Merger Agreement in its entirety before voting on this proposal. A copy of the Merger Agreement is attached as Annex A to this proxy statement/prospectus.

 

The Merger Agreement

 

On March 3, 2023, the Parent entered into the Merger Agreement with the Company, ECD UK, Merger Sub and Scott Wallace, as the Securityholder Representative, pursuant to which Merger Sub will merge with and into the Company with the Company as the surviving corporation and becoming a wholly-owned subsidiary of Parent. In connection with the Merger, the Parent will change its name to “ECD Automotive Design, Inc.” or such other name designated by the Company by notice to Parent. The Board has unanimously (i) approved and declared advisable the Merger Agreement, the Merger and the other transactions contemplated thereby, and (ii) resolved to recommend approval of the Merger Agreement and related matters by the stockholders of the Registrant. On October 14, 2023, the Parent, the Company, ECD UK, Merger Sub and Scott Wallace, as the Securityholder Representative entered into an amendment to the Merger Agreement. A copy of the Merger Agreement and the First Amendment to the Merger Agreement, dated as of October 14, 2023 is filed as Exhibit 2.1 hereto and is incorporated herein by reference.

 

Company Securities

 

Merger Consideration. At the closing of the Merger, the Parent will issue 25.1 million shares of its common stock, par value $0.0001 per share (the “Parent Common Stock”) to the ECD Securityholders, as further described in the Merger Agreement. Parent will also pay the ECD Initial Securityholders a cash payment of $2,000,000 as consideration for the Merger.

 

PIPE

 

Parent and the Company shall use commercially reasonable efforts to close the Note Financing.

 

Representations and Warranties

 

The Merger Agreement contains customary representations and warranties of the parties thereto with respect to, among other things, (i) entity organization, good standing and qualification, (ii) capital structure, (iii) authorization to enter into the Merger Agreement, (iv) compliance with laws and permits, (v) taxes, (vi) financial statements and internal control over financial reporting, (vii) real and personal property, (viii) material contracts, (ix) environmental matters, (x) absence of changes, (xi) employee matters, (xii) litigation, and (xiii) brokers and finders.

 

Covenants

 

The Merger Agreement includes customary covenants of the parties with respect to operation of their respective businesses prior to consummation of the Merger and efforts to satisfy conditions to consummation of the Merger. The Merger Agreement also contains additional covenants of the parties, including, among others, covenants providing for the Registrant and the Company to use reasonable best efforts to cooperate in the preparation of the Registration Statement and Proxy Statement (as each such term is defined in the Merger Agreement) required to be filed in connection with the Merger and to obtain all requisite approvals of their respective stockholders including, in the case of the Registrant, approvals of the restated certificate of incorporation, the post-closing board of directors and the share issuance under Nasdaq rules. The Registrant has also agreed to include in the Proxy Statement the recommendation of its board that stockholders approve all of the proposals to be presented at the special meeting.

 

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Exclusivity

 

Each of the Registrant and the Company has agreed that from the date of the Merger Agreement to the earlier of the closing of the Merger and the termination of the Merger Agreement, neither the Company nor the Parent will: (i) encourage, solicit, initiate, engage or participate in negotiations with any party concerning any alternative transaction, (ii) take any other action intended or designed to facilitate the efforts of any person relating to a possible alternative transaction or (iii) approve, recommend or enter into any alternative transaction or any contract or agreement related to any alternative transaction.

 

Conditions to Closing

 

The consummation of the Merger is conditioned upon customary closing conditions including: (i) no authority having enacted, issued, promulgated, enforced or entered any law or order which is then in effect that makes the transactions contemplated by the Merger Agreement illegal or otherwise prohibits consummation of such transactions; (ii) no legal action having been commenced or asserted in writing (and not orally) by any authority to enjoin or otherwise materially restrict the consummation of the Closing; (iii) the approval of the Merger Agreement by the requisite vote of the stockholders of the Company; (iv) each of the Required Parent Proposals (as defined in the Merger Agreement) having been approved at Parent’s stockholder meeting; (v) the combined company’s initial listing application filed with Nasdaq in connection with the Merger having been approved; (vi) the Form S-4 filed by the Registrant relating to the Merger Agreement and the Merger will have been declared effective and no stop order suspending the effectiveness of the Form S-4 will have been issued by the SEC that remains in effect and no proceeding seeking such a stop order will have been initiated by the SEC and not withdrawn; (vii) the Parent Closing Cash shall equal or exceed $65,000,000, (viii) each party having performed or complied with the provisions of the Merger Agreement applicable to it, subject to agreed upon standards; (ix) the truth and accuracy of each party’s representations and warranties included in the Merger Agreement, subject to agreed-upon standards; (x) the absence of any material adverse effect with respect to a party to the Merger Agreement; (xi) the receipt of a certificate, dated as of the Closing, signed by the respective Chief Executive Officer certifying the compliance with various closing conditions; (xii) the execution by the relevant party or parties of all ancillary documents; (xiii) the Company will have delivered to Parent a duly executed certificate conforming to the requirements of Sections 1.897-2(h)(1)(i) and 1.1445-2(c)(3)(i) of the United States Treasury regulations, and a notice to be delivered to the United States Internal Revenue Service as required under Section 1.897-2(h)(2) of the United States Treasury regulations, each dated no more than 30 days prior to the Closing Date and in form and substance reasonable acceptable to Parent; (xiv) no more than 5% of the issued and outstanding shares of Company Capital Stock having exercised dissenters’ rights of appraisal; (xv) the Company having provided each Company Consent set forth on Schedule 4.8 of the Merger Agreement; (xvi) the Company having delivered to Parent the financial statements required to be included in the Parent’s SEC Documents and the 2022 Audited Financial Statements prior to June 30, 2023; (xvii) each Company Stockholder, as defined in the Merger Agreement and listed on Schedule 7.4(a) of the Merger Agreement will have entered into a Company Lock-Up Agreement with respect to such Company Stockholder’s Merger Consideration Shares (as defined in the Merger Agreement); (xviii) the UK Contribution has been completed in accordance with the terms set forth in this Agreement; (xviii) the Amended Parent Charter will have been filed with the Delaware Secretary of State and become effective; (xix) the Company will have received a certificate, dated as of the Closing Date, from the Secretary of each of Parent and Merger Sub certifying certain matters; (xx) Parent will have received a certificate from the Company’s Secretary, dated as of the Closing Date certifying to certain matters; (xxi) each of Parent, Sponsor or other stockholder of Parent, as applicable, will have executed and delivered to the Company a copy of each Additional Agreement to which Parent, Sponsor or such other stockholder of Parent, as applicable, is a party; (xxii) the receipt by the Company of the resignations of the Registrant’s directors; and (xxiii) the post-Effective Time Parent Board of Directors and Company Board of Directors being in compliance with the size and composition requirements of the Merger Agreement.

 

Termination

 

The Merger Agreement may be terminated at any time prior to the Closing as follows: (i) by the Parent or the Company, in the event that (a) the Closing of the transactions has not occurred by November 13, 2023 (such date, the “Outside Closing Date”); (ii) if any authority has issued an order or enacted a law, having the effect of making the transactions contemplated by the Merger Agreement illegal or otherwise permanently restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated by the Merger Agreement, which order or law is final and non-appealable; provided that, the actions of the party seeking to terminate was not a substantial cause of, or substantially resulted in, such action by such authority; (iii) by mutual written consent of the parties; (iv) by either the Parent or the Company if the other has breached any representation, warranty, agreement or covenant contained in the Merger Agreement such that the conditions to Closing cannot be satisfied and such breach cannot be cured by the earlier of 30 days following receipt of written notice of such breach and the Outside Closing Date; and (v) by the Registrant, if: (a) at any time after the Company Stockholder Written Consent Deadline (as defined in the Merger Agreement) the Company has not received the Company Stockholder Approval.

 

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Certain Related Agreements

 

Company Support Agreement

 

Concurrent with the execution of the Merger Agreement, certain stockholders of the Company entered into a Company Stockholder Support Agreement with the Registrant and the Company in which each such stockholder agreed to vote their shares of Company Capital Stock in favor of the Merger Agreement and the transactions contemplated thereby. Stockholders also agreed to waive any rights of appraisal, dissenter’s rights, and any similar rights under applicable law and not to sell or otherwise transfer any of their shares of Company Capital Stock unless the buyer, assignee, or transferee thereof executes a joinder agreement to the Company Stockholder Support Agreement.

 

Parent Support Agreement

 

Concurrent with the execution of the Merger Agreement, EF Hutton Partners, LLC (the “Sponsor”) and the pre-IPO investors in the Parent, entered into a Parent Stockholder Support Agreement with the Company and the Registrant in which the Sponsor and the pre-IPO investors in the Parent agreed to (i) not transfer any shares or redeem any shares of Parent Common Stock held by it unless the buyer, assignee, or transferee thereof executes a joinder agreement to the Parent Stockholder Support Agreement and (ii) to vote in favor of the adoption of the Merger Agreement and the other proposals to be presented at the special meeting of stockholders at which the Merger Agreement and related proposals are considered.

 

Additional Agreements to be Executed prior to Closing

 

Company Lock-up Agreement

 

The Merger Agreement provides that the Registrant, the Company and certain Company stockholders will enter into a lock-up agreement (the “Company Lock-Up Agreement”), pursuant to which such Company stockholders will agree, subject to certain customary exceptions, not to (i) sell, offer to sell, contract or agree to sell, pledge or otherwise dispose of, directly or indirectly, any shares of Parent Common Stock they receive in the Merger (the “Company Lock-Up Shares”), (ii) enter into a transaction that would have the same effect, (iii) enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Company Lock-Up Shares, (iv) publicly disclose the intention to effect any transaction specified in clause (i) or (iii), or (v) engage in any short sales with respect to any security of Parent, until the date that is six months after the date on which the Effective Time occurs.

 

Sponsor Lock-up Agreement

 

The Merger Agreement provides that the Registrant, the Company and the Sponsor will enter into a sponsor lock-up agreement (the “Sponsor Lock-Up Agreement”), pursuant to which the Sponsor will not (i) offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of Parent Common Stock held by them at the Effective Time (such shares, together with any securities convertible into or exchangeable for or representing the rights to receive shares of Parent Common Stock as of the Effective Time, the “Sponsor Lock-Up Shares”), (ii) enter into a transaction that would have the same effect, (iii) enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Sponsor Lock-up Shares, (iv) publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, or (v) engage in any short sales with respect to any security of the Parent, until the date that is six months after the date on which the Effective Time occurs.

 

Restrictive Covenant Agreement

 

Prior to Closing, Parent, the Company, and each of the Company Stockholders will enter into a restrictive covenant agreement (the “Restrictive Covenant Agreement”), pursuant to which the Company Stockholder acknowledges and agrees to certain non-compete and non-solicitation covenants for the benefit of the Company and the surviving company after the Merger. A copy of the Restrictive Covenant Agreement is filed as Exhibit 10.5 hereto and is incorporated herein by reference.

 

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Amended and Restated Registration Rights Agreement

 

Prior to Closing, Parent, the Company, certain holders of Company Common Stock, certain shareholders of Parent Common Stock, and the holders of the private units of Parent will enter into an amended and restated registration rights agreement (the “Amended and Restated Registration Rights Agreement”) pursuant to which, among other things, Parent will provide the above holders with certain rights relating to the registration for resale of the Parent Common Stock that they will receive at Closing.

 

Background of the Business Combination

 

The following is a discussion of EFHAC’s formation, the background of EFHAC’s previous attempts at a business combination, its negotiations with and evaluation of ECD, the Merger Agreement and related matters, as well as ECD’s attempts to have the ECD Common Stock listed on Nasdaq and its ultimate decision to enter into the Merger Agreement.

 

Since EFHAC’s initial public offering on September 13, 2022, the EFHAC officers and EFHAC board members have conducted outreach to thirty-seven high quality targets, the vast majority of which fit within the consumer-focused end market that was outlined in EFHAC’s Prospectus. This outreach resulted in conversations with the management teams of twenty-four different businesses and the negotiation and extension of six non-binding letters of intent. EFHAC did not have any discussions relating to a business combination with any target company prior to the consummation of EFHAC’s IPO.

 

On September 14, 2022 the VP of Strategy of Target A, unsolicited, e-mailed Ben Piggott. Ben Piggott replied to the email on September 15, 2022 and a call took place later that same day. At the end of the call, both sides had sufficient interest to continue the conversation and agreed to sign an NDA. On September 15, 2022, EFHAC signed a non-disclosure agreement with Target A. Target A is engaged in the natural food business. We engaged in dialog with Target A’s CEO, CIO and VP of Strategy, on five separate occasions and spent extensive time in Target A’s data room before submitting a non-binding letter of intent on October 5, 2022. Terms of the non-binding letter of intent were negotiated for an ongoing basis through November 29, 2022, at which point EFHAC abandoned the processes with Target A since EFHAC and Target A could not agree on valuation.

 

On October 5, 2022 Ben Piggott and Paul Hodge had an introduction call with the founder and CEO of Target B. Target B is engaged in the retail coffee business. EFHAC and Target B signed a non-disclosure agreement on October 13, 2022 at which point access to Target B’s data-room was granted. Both Ben Piggott and Kevin Bush reviewed the data-room in detail and subsequently had a follow up call with a member of Target B’s board to discuss EFHAC’s findings. On October 17, 2022, EFHAC submitted a non-binding letter of intent and had a subsequent call with the three co-founders of Target B to discuss the terms on the following day. EFHAC and Target B agreed to meet in Boston, MA on October 26, 2022 to further discuss the terms of the non-binding letter of intent as well as the mechanics of the de-SPAC process. Attendees included four founders of Target B as well as EFHAC representatives Ben Piggott, Kevin Bush and David Boral. Follow up conversations happened over the phone through the end of the year. On January 5, 2023, the company informed EFHAC that they had decided to remain private for another year and the process with Target B was abandoned.

 

On September 27, 2022 Ben Piggott was contacted by a lower middle market investment bank representing an owner / operator of Target C, who was looking to sell their business. Target C is engaged in the outdoor recreation business. At this time, EFHAC was given a comprehensive investor presentation as well as access to Target C’s data-room. EFHAC spent the subsequent month analyzing the data-room and on October 24, 2022 delivered a non-binding letter of intent to the banker to share with Target C. A follow up call was conducted on October 25, 2022. Email correspondence around the mechanics of the non-binding letter of intent took place from October 30, 2022 – November 9, 2022. Thereafter, Target C informed us they were looking to do an all-cash transaction and EFHAC abandoned the proposed transaction with Target C.

 

On October 3, 2022 Ben Piggott had an introductory call with a sell side advisor to preview an opportunity with Target D. Target D is engaged in the second-hand luxury watch business. The advisor granted EFHAC access to the data room on October 27, 2022, which was reviewed extensively by EFHAC management over the next three days. On October 31, 2022, EFHAC submitted a non-binding letter of intent to Target D. Following the submission of the non-binding letter of intent, a call with the sell side advisor as well as Target D’s CEO and CFO took place, where the terms of the non-binding letter of intent were discussed at length as well as the underlying mechanics of the de-SPAC process. On November 21, 2022 EFHAC informed Target D that EFHAC had decided to consummate a business combination with another target.

 

On November 4, 2022, Ben Piggott had an introductory call with the managing director at a family office that oversaw their investment in Target E. Target E is engaged in the oil field service business. Piggott and the MD spoke at length about Target E and reviewed a comprehensive investor diligence deck. A non-binding letter of intent was submitted to the family office on the same day. Target E never executed the non-binding letter of intent with EFHAC and negotiations with Target E came to a halt. In February 2023, we learned that Target E announced plans to merge with another SPAC.

 

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On September 13, 2022 at approximately 11:00am eastern time, Ben Piggott reached out to Thomas Humble to see if ECD would be interested in having an introductory call with EFHAC. At approximately 3:00pm eastern time, a call with the four founders of ECD, Tom Humble, Emily Humble, Elliot Humble and Scott Wallace took place. During the call the parties discussed at a high level the mechanics of going public via a SPAC as well as a detailed history of ECD’s business coupled with its outlook for future growth and opportunities to deploy capital. On September 21, 2022, Ben Piggott visited ECD’s headquarters and production facility in Kissimmee FL, at which time an NDA was executed. The founders provided a tour of the factory floor, walked through each step of the design and build process and spoke at length about how they could best utilize a growth capital injection into the business. Following Ben Piggott’s trip, ECD shared historical financials with EFHAC on September 27, 2022. A follow up call with Ben Piggott and the founders of ECD was conducted on September 30, 2022 to discuss forward projections for the business as well as a framework around valuation.

 

On October 4, 2022, Ben Piggott introduced Calabrese Consulting to the founders of ECD as well as their external accounting provider to help them better understand the steps that needed to be taken to have their financial statements audited in compliance with PCAOB standards. Another call between Mr. Piggott and the ECD founders took place on October 11, 2022 to further talk through a valuation framework for ECD. On October 26, 2022 EFHAC submitted a non-binding letter of intent addressed to Tom Humble, which was subsequently signed by both parties the following day. EFHAC used an initial valuation frame work that revolved around 2024 ev/sales multiples for best of breed, publicly traded high end automobile companies, as well as luxury goods manufacturers that has approximated 5-6x. ECD founders expressed a desire to take $15M of cash consideration in conjunction with the transaction given they have been reinvesting into the business over the past decade. EFHAC and ECD founders also discussed the capital needs of the business, to accelerate the organic growth rate, which revolved around an investment in working capital, principally inventory, the sanctioning of a third production line, the build out of the company’s first Driver’s Club, a continued scaling of in-house paint capabilities, and two Dynos to improve end-of-project testing. Taking into account the cash consideration for the founders, the growth capital projects for the business and the expenses associated with the transaction, the parties arrived at a $225M pre-money valuation, coupled with a $65M PIPE financing to provide capital in the event of significant redemptions from the Trust Account. EFHAC also explained to the founders of ECD that they would be subject to a six-month lock-up from selling their shares as well as black-out windows.

 

On October 28, 2022, a call took place with the goal of working with Calabrese to get the financials and footnotes for calendar 2021 and 2022 to be public company ready as well as identifying an auditor for ECD to complete the PCAOB audit. Over the next five weeks Calabrese worked with ECD to prepare for the PCAOB audit and on December 8, 2022 a kick off call with BF Borgers Certified Public Accountants P.C. (“BF Borgers”) took place; on December 14, 2022 BF Borgers sent representatives to ECD headquarters to oversee a physical count of the inventory. During that period of time, EFHAC and ECD remained in close contact. On November 9, 2022, Ben Piggott, Tom Humble, Scott Wallace and Elliot Humble had an update call to discuss the progress that Calabrese was making, how the business was performing. During that call, EFHAC continued to talk about the pre-money valuation of ECD at $225M and remained aligned on both sides at this number. Throughout the month of November, Ben Piggott and Tom Humble exchanged emails regularly as both parties began assembling industry data for the investor presentation as well as more granular details as it pertained to ECD’s backlog.

 

On November 30, 2022, both Ben Piggott and Tom Wood, an EFHAC Board member, had dinner with Scott Wallace, Tom Humble and Elliot Humble in Kissimmee, FL and toured the factory the following day (December 1, 2022). During the meeting on December 1, 2022 ECD updated EFHAC on how the audit was progressing and both sides began to strategize about possible expansion opportunities. On December 9, 2022 ECD Founders and external accounting firm led by Dalia Cantor, EFHAC, Calabrese Consulting and BF Borgers had an all hands call to discuss timing of the PCAOB audit, now that the physical inventory count had been completed; BF Borgers provided a timeline for the end of February 2023. Between December 22 and December 27, 2022, both EFHAC and ECD as well as their respective attorneys had calls concerning the proposed business combination transaction and worked towards the execution of a clean version of the previous LOI which stated explicitly the minimum cash requirement of $15M for the founders, which would come from the proceeds of the $65M PIPE or funds left in the Trust Account, coupled with 21,000,000 shares of EFHT going to the founders.

 

In early January 2023, EFHAC provided ECD a due diligence request in connection with the Business Combination. Beginning on January 10, 2023, there has been a regularly scheduled all hands call every Tuesday at 4:30pm eastern time which includes EFHAC, EF Hutton, division of Benchmark Investments, LLC (“EF Hutton”), EFHAC’s financial advisor, ECD management team Scott Wallace, Tom Humble and Elliot Humble, Sheffield Lowman & Wilson P.A. (“SLW”), ECD’s counsel, Loeb & Loeb LLC (L&L), EFHAC’s counsel, Hogan & Lovells, EF Hutton’s counsel, Calabrese Consulting and BF Borgers CPA. On January 11, 2023, a data room was established and ECD commended to upload documents responsive to EFHAC’s due diligence requests.

 

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The exchanging of drafts of the Merger Agreement began on January 31, 2023, when EFHAC and L&L shared the first draft with ECD and SLW reflecting the provisions in the term sheet along with customary representations and warranties, covenants and closing conditions. On February 10, 2023, ECD and SLW shared a response draft of the Merger Agreement with EFHAC and L&L, where inter alia, proposing questions and/or changes to (1) cash merger consideration, (2) share allocation among selling shareholders, (3) board composition the post Business Combination company, (4) timing of ECD executive employment agreements execution, (5) certain representations and warranties, and (6) ECD’s ability to incur indebtedness following the execution of the Merger Agreement.

 

On February 22, 2023, EFHAC and L&L shared a response draft with ECD and SLW, where inter alia, clarified the payment of the cash merger consideration and revised certain of the representations and warranties to be provided by ECD and agreed that the ECD executive did not need to enter into employment agreements with management before the execution of the Merger Agreement.

 

EFHAC and L&L also provided ECD and SLW drafts of the ancillary agreements to the Merger Agreement, specifically, the restrictive covenant agreement, the support agreements, the lockup agreements and the amended and restated registration rights agreement. During this time EFHAC, L&L, ECD and SLW have several calls discussing the terms of the Merger Agreement and the ancillary agreements. ECD and SLW provided EFHAC and L&L a draft of the ECD disclosure schedules to the Merger Agreement.

 

On February 24, 2023, ECD and SLW shared a response draft of the Merger Agreement with EFHAC and L&L, where inter alia, they excluded oral contracts from the definition of contracts, revised the definition of parent closing cash, failed to provide the steps to the UK Contribution by deleting reference to Schedule III and deleted the requirement for SLW to provide a tax opinion.

 

L&L and SLW had calls discussing the Merger Agreement and the ECD disclosure schedules as well as the terms and conditions of the ancillary documents. The parties also exchanged revised drafts of the ancillary documents and the disclosure schedules. On February 28, 2023, EFHAC formed a Florida corporation to serve as the Merger Sub under the Merger Agreement.

 

On March 1, 2023, EFHAC and L&L shared a response draft with ECD and SLW, where inter alia, included oral contracts in the definition of contracts, revised the definition of parent closing cash that includes the payment of the $15,000,000 cash consideration to the selling ECD shareholders and shall be calculated without the deduction of closing expenses, that the parties would cooperate on the UK Contribution and ECD will have to engage counsel to provide a tax opinion.

 

On March 2, 2023 and March 3, 2023, EFHAC, L&L, ECD and SLW had numerous telephone calls and resolved all open items with respect to the ancillary documents, the disclosure schedules and the Merger Agreement.

 

On March 3, 2023, EFHAC and ECD executed the Merger Agreement. On March 6, 2023, a press release was issued announcing the transaction in the morning, and EFHAC filed in the afternoon a current report on Form 8-K attaching the Merger Agreement, ancillary documents and the press release.

 

Thereafter the parties worked together to prepare a proxy statement/prospectus on Form F-4 in connection with the Business Combination contemplated by the Merger Agreement. The parties also worked on seeking institutional and accredited investor to participate in a proposed PIPE transaction in EFHAC to close simultaneously with the closing of the Business Combination. In connection with the proposed PIPE Financing EFHAC engaged EF Hutton as an investment banker to assist EFHAC in securing the PIPE Financing.

 

The PIPE market was challenging, and the parties were not able, despite diligent efforts, to secure any commitments for a private investment in EFHAC’s common stock. Due to the parties inability to secure commitments for a traditional PIPE transaction, the parties searched for alternative financing structures. EFHAC started to look for and negotiate debt financing in the form of a convertible note.

 

In or about July 2023, EFHAC was introduced to the ATW Group by EF Hutton in connection with a possible convertible note financing. After about a month of negotiations, the parties signed a term sheet for a $21,500,000 convertible note financing. Following the signing of the term sheet the parties worked on preparing definitive transaction documents to evidence the convertible note financing. After several weeks one of the two investor parties to the term sheet dropped out. EFHAC continued to negotiate with the remaining party.

 

On October 6, 2023, EFHAC and Defender SPV LLC (the “Lender”) executed a Securities Purchase Agreement (the “SPA”) pursuant to which EFHAC agreed to execute and deliver to the Lender a senior secured convertible note (the “Note”), a copy of which is an exhibit to the SPA, in exchange for a loan in the principal amount of $15,819,209. The Note shall accrue interest at an annual rate equal to the Prime Interest rate plus 5% per annum which is payable monthly in cash or, upon EFHAC’s option, in securities of EFHAC provided certain conditions are met at the increased interest rate of the Prime Interest rate plus 8% per annum. EFHAC 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 Note is convertible into shares of EFHAC’s common stock, par value $0.0001 per share (“Common Stock”) at the option of the Lender at a conversion price of $10.00 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 Note to a conversion price equal to the prior 5-day volume weighted average price, subject to a floor of $6.00. The conversion price is subject to a downward adjustment if EFHAC issues equity in the future at a price less than $10.00, except for equity issued in connection with certain strategic acquisitions. The conversion price is also subject to a downward adjustment if EFHAC fails to satisfy certain performance conditions set forth in the Note. Upon the Lender’s conversion of the Note, the conversion amount shall be equal to 115% of the principal amount to be converted under the 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 Note into shares of Common Stock is subject to a 4.99% blocker, such that Lender cannot convert the 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. EFHAC has the option to prepay the 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 our Common Stock on any trading day immediately preceding such notice of redemption and the date EFHAC makes the entire payment required. Based on the terms of the Note, EFHAC will receive net proceeds under the Note in an amount of $13,700,000, before payment of expenses.

 

The SPA provides further that EFHAC shall execute and deliver to the Lender a security agreement, providing the Lender a security interest in all of EFHAC’s current assets and to be acquired assets (the “Security Agreement”), a copy of which is an exhibit to the SPA. EFHAC shall also execute and deliver to the Lender a registration rights agreement to provide the Lender with certain registration rights in connection with the shares Common Stock into which the Note is convertible (the “Registration Rights Agreement”), a copy of which is an exhibit to the SPA. Moreover the SPA provides that (a) ECD and ECD UK shall execute a guaranty (the “Guaranty”), a copy of which is an exhibit to the SPA, to guaranty the obligations under the SPA, the Note and the Security Agreement, (b) all insider holders of the Common Stock shall execute a lock-up agreement (the “Lock-Up Agreement”), a copy of which is an exhibit to the SPA, restricting their sale of the Common Stock until six (6) months after the registration statement registering the shares of Common Stock underlying the Note is declared effective, and (c) a joinder agreement (the “Joinder Agreement”), a copy of which is an exhibit to the SPA, pursuant to which ECD and ECD UK agree and consent to be parties to the SPA.

 

The foregoing summary of the SPA, the Note, the Security Agreement, the Registration Rights Agreement, the Guaranty, the Lock-Up Agreement and the Joinder Agreement does not purport to be complete and is qualified in its entirety by reference to the actual agreements which are filed herewith as Exhibit 10.21 and are incorporated herein by reference.

 

On October 14, 2023, the parties executed the First Amendment to the Merger Agreement (the “Amendment”). The Amendment provides, among other things, that in exchange for 100% of the outstanding equity of ECD, EFHAC will issue the ECD Securityholders 25,100,000 shares of the Combined Company; 39,000 shares of the Company’s to be designated Series A Convertible Preferred Stock plus a cash payment of $2,000,000 pro rata to the ECD Initial Securityholders. Additionally, all outstanding common stock warrants and preferred stock warrants shall be converted into the Company’s common stock warrants and preferred stock warrants, respectively.

 

EFHAC’s Board of Directors’ Reasons for the Approval of the Business Combination

 

On March 6, 2023, the EFHAC Board (i) approved the Merger Agreement, the related transaction agreements and the transactions contemplated thereby, (ii) determined that the Business Combination is fair to and in the best interests of EFHAC and its stockholders, and (iii) recommended that EFHAC’s stockholders approve and adopt the Business Combination.

 

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In evaluating the Business Combination and making these determinations and this recommendation, the EFHAC Board consulted with EFHAC’s management and advisors and considered a number of factors. The EFHAC Board and the EFHAC management considered the general criteria and guidelines that EFHAC believed would be important in evaluating prospective target businesses as described in the prospectus for EFHAC’s Initial Public Offering. The EFHAC Board also considered that EFHAC could enter into a business combination with a target business that does not meet those criteria and guidelines. In the prospectus for its Initial Public Offering, EFHAC stated that it intended to seek to acquire one or more businesses that EFHAC believes (i) has a leading, growing or niche market position in an attractive underlying consumer focused industry; (ii) has achieved or has the potential for significant long-term revenue or earnings growth through a combination of organic growth, synergistic add-on acquisitions, new product markets and geographies, increased production capacity, expense reduction and increased operating leverage; (iii) possesses significant competitive advantages via operational expertise, supply chain know how and logistics; (iv) has proven products that have demonstrated commercial success and pricing that reflects a Veblen good demand profile; (v) would benefit from the leadership and strategic vision of EFHAC’s team; and (vi) would benefit from being a publicly owned company and can effectively utilize the broader access to capital markets to help achieve ECD’s business strategy and capital structure needs.

 

In considering the Business Combination, the EFHAC Board determined that the Business Combination was an attractive business opportunity that generally met these criteria and guidelines taken as a whole, although not weighted or in any order of significance. From the time that EFHAC initially made contact with ECD in September 2022, the EFHAC Board has reviewed various industry trade publications, studied a range of both public and private automobile companies, relied on EFHAC’s Chairman and CEO to conduct site visits to ECD’s production facility in Kissimmee, FL and reviewed due diligence items provided by the target over a span of five months leading up to the signing of the Merger Agreement.

 

The EFHAC Board considered the following factors related to ECD and the Business Combination:

 

A history of operational excellence, capital efficiency and sustained double digit organic revenue growth driven by both units and average selling price. Since its founding in 2013, ECD has been essentially self-funded and has delivered annual revenue growth and average selling price growth of 26% and 19%, respectively. Unit growth has been driven by underlying growth in the category, coupled with the addition of new models and expanded manufacturing capacity. Average selling price growth has been driven by like-for-like price increases as well as an ever-increasing mix of premium priced upgrades and modifications.

 

Attractive margin profile with the opportunity for expansion in the future. ECD delivered a 25.2% gross margin in 2022, which was on par with other luxury car manufacturers such as Aston Martin, BMW, Mercedes and Porsche who came in at 32.6%, 18.4%, 21.8% and 28.0% respectively and well ahead of the mass market automobile industry average of 17.3% (see Bloomberg and S&P CapIQ Pro as of 3/3/2022). As ECD continues to focus on driving premium priced upgrades, leverages the fixed overhead costs of its factory and captures better pricing from vendors with scale, its gross margins have the opportunity to further improve.

 

An attractive and growing category with barriers to scale given skilled mechanical expertise and supply chain complexity. The global luxury automobile industry is an enormous market worth an estimated $580B. Ultra-luxury cars are one of the fastest growing segments in the automobile industry and are expected to increase at a 9-14% compound annual growth rate (“CAGR”) through 2031 (see McKinsey & Company’s “Five Trends Shaping Tomorrow’s Luxury-Car Market” July 8, 2022). ECD has built barriers to scale with its ability to source competitively priced donor vehicles in the United Kingdom, through an affiliated entity that will become its wholly-owned subsidiary. This should ensure a stable supply of mission critical parts allowing for optimal manufacturing efficiencies and the ability to meet demand. ECD has extensive mechanical expertise, having delivered over 500 vehicles since inception in 2013, and has a built a staff of automotive technicians with a combined 61 Automotive Service Excellence Certifications.

 

Unlike traditional automobiles, exotic classic cars as a category, has appreciated in value over time. Vehicles such as the Land Rover Defender and the Jaguar E-Type have appreciated in value, as they are viewed through the same lens as other collectibles such as art, wine, watches and luxury handbags.

 

Founder-Led management team with a track record of success. Following the Business Combination, we anticipate that the founder led team of Tom Humble, Scott Wallace, Emily Humble and Elliot Humble will continue to own approximately 61% of the combined entity and, stock holdings will be subject to lockup agreements to ensure a proper alignment with public shareholders. Furthermore, all four founders will continue in their current respective roles as operators on the executive team.

 

Opportunities to fund internal projects with short payback periods as well as accelerate working capital velocity with enhanced purchasing power. Over the course of our due diligence we identified several million dollars’ worth of capital projects with rapid paybacks that will help streamline ECD’s manufacturing process, shorten lead times and enhance working capital velocity, thus driving improved return on invested capital metrics. These projects include (i) an investment of $200,000 for two dynamometers, or Dynos, to improve end-of-project testing, which is expected to contribute to the Company saving $120,000 per year in its expenses for drivers and expedite shipping by 10 days, resulting in an expected payback period of 20 months; (ii) a $300,000 investment to buy-back press trucks, equal to 24 press pieces per year, which would eliminate ECD’s expenses with Google Ads of $25,000 per month, resulting in an expected payback period of 12 months; (iii) the acquisition of an emerging EV company for the estimated purchase price of $3 million, which would contribute to the Company saving $35,000 per drive train, resulting in an expected payback period of two (2) years; (iv) the acquisition of a new computer numerical control (CNC) and 3D printer for $400,000, which would contribute to the Company saving $2,000 per truck, resulting in an expected payback period of 14 months; and (v) the investment of $500,000 to establish regional drivers’ clubs to enhance brand service and generate revenue by means of service, storage, events, collaboration deals, detailing and shipping, which would generate an expected income of $300,000 per year, resulting in an expected payback period of two (2) years.

 

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Compelling customer demographics – catering to ultra-high end luxury buyers. ECD products are sold to customers that are characterized as wealthy, have large amounts of discretionary income and tend to be less sensitive to underlying economic cyclicality. ECD is currently sold out across both production lines through June 2024.

 

Opportunities to consolidate a highly fragmented industry using a public currency. The restoration and modification market for exotic classic cars can be characterized as highly fragmented. While there are industry participants that excel in certain makes and models, there is an opportunity to take a portfolio approach to the market, gaining further scale to drive purchasing power across vendors, cross sell to existing clients and leverage public company overhead costs.
   
 Concerns considered by the Board. the Board considered the following key concerns regarding the proposed business combination with ECD: (i) ECD was on the smaller side of businesses that typically go public, (ii) a lack of prior public company experience amongst the senior leadership group, (iii) ECD has a complex and disparate supply chain that spans two continents and the regulations on importing antique cars into the United States are lengthy. Furthermore, the ECD has consistently reinvested all of its cash flow back into the business and thus has not produced a material amount of free cash flow since its inception.

 

Attractive Pre-Money Valuation of $225 million. The EFHAC Board arrived at its’ $225 million pre money estimate of fair value using both a multiple of revenues framework as well as a discounted cash flow analysis. ECD shared its projections with EFHAC on December 20, 2022. ECD is projecting 2024 revenue of $44.4M and net income of $9.1 million. This is based on the sale of 84 Land Rover Defenders and 24 Jaguar E-Types across three production lines, at an average selling price of $300K per vehicle, as well as $1 million of resale commissions.

 

   

ECD management provided EFHT with the following forecast through 2026. Key assumptions include the following:

 

The company is currently in the process of going from one production line in 2022 to two production lines in 2023.

 

The North Line (which is the first line), manufacturers antique Land Rover Defenders and Range Rovers and is capable of rolling one unit off of the line approximately every four days, which implies underlying capacity of sixty units per year assuming a single shift and no over time. The average selling price of the units coming off of the North Line is expected to be $265,000 and management expects this to increase by $10,000 per year through 2026. This is being driven by pricing power and additional upgrade features offered to clients and is in line with the company’s historical trend.

 

In 2023, ECD opened up the South Line, which is dedicated to the restoration and modification of Jaguar E-Types. This is a new product for the company so the underlying productivity is not on par with the North Line, however the company expects it to get there by the end of 2023, at which point it will be operating at a similar cadence of sixty units per year. The Jaguar E-Type commands a higher price point than the Land Rover Defender. Management is forecasting an average selling price of $300,000 across ten units in 2023 and then increasing to $330,000, $350,000 and $365,000 in 2024, 2025 and 2026 respectively. The North Line will have a positive impact on the underlying gross margin profile of the business as it commands a higher price point and lower overall bill of materials.

 

In early 2024, ECD anticipates bringing on the East Line, which at scale will also be capable of manufacturing sixty units per year. The company anticipates manufacturing twenty-four units in 2024 at an average selling price of $290,000 and increasing by $5,000 annually through 2026. The company is forecasting that the East Line will hit sixty units per year by 2025.

 

ECD ended 2022 with a gross margin of 25.2%. Management is forecasting gross margin expansion through 2026, which is driven by increased average selling prices for antique Land Rovers, the positive impact of the Jaguar E-Type to the overall mix, greater labor efficiencies driven through scale, purchasing power for key materials as the business continues to scale and overhead absorption. The company is forecasting gross margins come in at 28%, 31%, 32% and 33% in 2023, 2024, 2025 and 2026 respectively. In the first quarter of 2023, ECD delivered a gross margin of 33.6%, which gives both ECD management and EFHT confidence in the company’s ability to hit their longer-term target of 35-40%.

 

The table below outlines the production plan and margin expansion opportunity outlined above.

 

   Year Ending December 31,           
   2023    2024    2025    2026    Total   % of Income   Notes
North Line  $16,695,000   $16,500,000   $17,100,000   $17,700,000   $67,995,000    37%   
South Line  $3,000,000   $19,800,000   $21,000,000   $21,900,000   $65,700,000