arcee-ai/sec-data-full · Datasets at Hugging Face

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In accordance with ASC 805, the Company assigned fair value to the tangible and intangible assets acquired and liabilities assumed at
the acquisition date. The
fair value of the purchase consideration issued to the Wolo Sellers was allocated to the net tangible assets acquired. The fair value
of the net assets acquired was approximately $ 6,606,403 . The excess of the aggregate fair value of the net tangible assets has been allocated
to goodwill. F- 24 1847
HOLDINGS LLC NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER
31, 2022 AND 2021 The
table below shows an analysis for the Wolo Acquisiti Purchase
consideration at fair val Notes payable $ 850,000 Cash 6,550,000 Net
cash paid to Seller (post-closing) 944,056 Amount of consideration $ 8,344,056 Assets acquired and liabilities
assumed at fair value Cash $ 1,171,655 Accounts receivable 1,860,107 Inventory 1,944,929 Customer related intangibles 233,000 Marketing related intangibles 992,000 Technology related intangibles 623,000 Other current assets 218,154 Deferred tax liability ( 325,000 ) Accounts
payable and accrued expenses ( 111,442 ) Net tangible assets acquired $ 6,606,403 Total net assets acquired $ 6,606,403 Consideration paid 8,344,056 Goodwill $ 1,737,653 High
Mountain and Innovative Cabinets On
September 23, 2021, 1847 Cabinet entered into a securities purchase agreement with High Mountain, Innovative Cabinets and the H&I
Sellers, which was amended on October 6, 2021, pursuant to which 1847 Cabinet agreed to acquire all of the issued and outstanding capital
stock or other equity securities of High Mountain and Innovative Cabinets. On October 8, 2021, closing of the acquisition was completed
(the “H&I Acquisition”). The
purchase price was $ 15,441,173 (subject to adjustment), consisting of (i) $ 10,687,500 in cash (subject to adjustment) and (ii) the issuance
by 1847 Cabinet of 6 % subordinated convertible promissory notes in the amount of $ 4,753,673 consisting of an aggregate principal amount
of $ 5,880,345 , net of debt discount of $ 1,126,672 . The
Company accounted for the H&I Acquisition using the acquisition method of accounting in accordance with ASC 805. In accordance with
ASC 805, the Company assigned fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. The
fair value of the purchase consideration issued to the H&I Sellers was allocated to the net tangible assets acquired. The fair value
of the net assets acquired was approximately $ 3,716,376 . The excess of the aggregate fair value of the net tangible assets has been allocated
to goodwill. F- 25 1847
HOLDINGS LLC NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER
31, 2022 AND 2021 The
table below shows an analysis for the H&I Acquisiti Purchase
consideration at fair val Cash $ 10,687,500 Notes
payable, net of debt discount 4,753,673 Amount of consideration $ 15,441,173 Assets acquired and liabilities
assumed at fair value Cash $ 208,552 Accounts receivable 1,042,194 Inventory 1,848,729 Contract assets 367,177 Other current assets 80,771 Marketing intangible 1,610,000 Customer intangible 4,843,000 Property and equipment 610,882 Operating lease assets 831,951 Other assets - Accounts payable and accrued
expenses ( 1,207,424 ) Contract liabilities ( 3,770,081 ) Deferred tax liabilities ( 1,670,000 ) Lease liabilities ( 856,377 ) Financing leases ( 18,600 ) Loans
payable ( 204,399 ) Net tangible assets acquired $ 3,716,375 Total net assets acquired $ 3,716,375 Consideration paid 15,441,173 Preliminary goodwill $ 11,724,798 The
estimated useful life remaining on the property and equipment acquired in the Wolo and H&I acquisitions is 3 to 7 years. For
the years ended December 31, 2022 and 2021, Wolo contributed revenue of $ 6,489,088 and $ 5,716,031 , respectively, and net loss from continuing
operations of $ 1,307,085 and $ 1,476,272 , respectively, which are included in the consolidated statements of operations for the years
ended December 31, 2022 and 2021. For
the years ended December 31, 2022 and 2021, High Mountain and Innovative Cabinets contributed combined revenue of $ 25,817,012 and $ 6,766,540 ,
respectively, and combined net loss from continuing operations of $ 5,121,056 and combined net income from continuing operations $ 276,743 ,
respectively, which are included in the consolidated statements of operations for the years ended December 31, 2022 and 2021. Pro
Forma Information The
following unaudited pro forma results presented below include the effects of the Wolo and H&I acquisitions as if they had been consummated
as of January 1, 2021, with adjustments to give effect to pro forma events that are directly attributable to the acquisitions. Years
Ended December 31, 2022 2021 Revenues $ 48,929,124 $ 51,589,004 Net loss ( 10,801,913 ) ( 4,445,617 ) Net loss attributable to common shareholders ( 20,071,529 ) ( 6,540,284 ) Loss per share attributable to common shareholde Basic $ ( 8.36 ) $ ( 5.51 ) Diluted $ ( 8.36 ) $ ( 5.51 ) These
unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results
of operations would have been if the acquisitions had occurred at the beginning of the period presented, nor are they indicative of future
results of operations. F- 26 1847
HOLDINGS LLC NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER
31, 2022 AND 2021 NOTE
12 —NOTES PAYABLE Notes
payable at December 31, 2022 and 2021 consisted of the followin December 31, 2022 December 31, 2021 6% Subordinated Amortizing Promissory
Notes $ 465,805 $ 581,963 Loans on vehicles 230,235 396,351 Subtotal 696,040 943,923 Current portion of notes
payable ( 551,210 ) ( 692,522 ) Long-term notes payable $ 144,830 $ 251,401 Promissory
Notes On
July 29, 2020, 1847 Asien entered into a securities purchase agreement with the Asien’s Seller, pursuant to which the Asien’s
Seller sold 103,750 common shares to 1847 Asien a purchase price of $ 10.00 per share. As consideration, 1847 Asien issued to the Asien’s
Seller a two-year 6% amortizing promissory note in the aggregate principal amount of $1,037,500. On October 8, 2021, 1847 Asien and the
Asien’s Seller entered into amendment no. 1 to securities purchase agreement to amend certain terms of the securities purchase
agreement and the 6% amortizing promissory note. Pursuant to the amendment, the repayment terms of the 6% amortizing promissory note
were revised so that one-half (50%) of the outstanding principal amount ($518,750) and all accrued interest thereon shall be amortized
on a two-year straight-line basis and payable quarterly in accordance with the amortization schedule set forth on Exhibit A to the amendment,
except for the payments that were initially scheduled on January 1, 2022 and April 1, 2022, which were paid from the proceeds of the
senior convertible promissory notes described below, and the second-half (50%) of the outstanding principal amount ($518,750) and all
accrued, but unpaid interest thereon shall be paid on the second anniversary of the date of the 6% amortizing promissory note, along
with any other unpaid principal or accrued interest thereon. On October 20, 2022, the parties entered into a letter agreement pursuant
to which the parties agreed to extend the maturity date of the note to February 28, 2023 and revised the repayment terms so that the
outstanding principal amount and all accrued interest thereon shall be payable monthly, beginning on November 30, 2022. As additional
consideration for entering into the letter agreement, 1847 Asien also agreed to pay the Asien’s Seller $ 87,707 as an amendment
fee. The note is unsecured and contains customary events of default. The remaining principal and accrued interest balance of the note
at December 31, 2022 was $ 465,805 and $ 94,456 , respectively. On
March 30, 2021, a portion of the purchase price for the acquisition of Wolo was paid by the issuance of a 6 % secured promissory note
in the principal amount of $ 850,000 by 1847 Wolo to the Wolo Sellers. Interest on the outstanding principal amount was payable quarterly
at the rate of six percent ( 6 %) per annum. On October 8, 2021, the promissory note was repaid in full. On
March 30, 2021, 1847 Wolo and Wolo entered into a credit agreement with Sterling National Bank for revolving loans in the principal amount
of $1,000,000 and a term loan in the principal amount of $3,550,000. On October 8, 2021, the revolving loan and the term loan were repaid
in full. On
July 8, 2022, the Company entered into a securities purchase agreement with Mast Hill Fund, L.P., pursuant to which the Company issued
to it a promissory note in the principal amount of $600,000 and a five-year warrant for the purchase of 100,000 common shares at an exercise
price of $6.00 per share (subject to adjustment), which such exercise price was adjusted to $4.20 following the adjustments (see Note
17), which may be exercised on a cashless basis if the market price of the Company’s common shares is greater than the exercise
price, for total net proceeds of $499,600. Additionally, the Company issued a three-year warrant to J.H. Darbie & Co (the broker)
for the purchase of 3,600 common shares at an exercise price of $7.50 (subject to adjustment), which such exercise price was adjusted
to $4.20 following the adjustments, which may be exercised on a cashless basis if the market price of the Company’s common shares
is greater than the exercise price. Accordingly, a portion of the proceeds were allocated to the warrants based on its relative fair
value using the Geometric Brownian Motion Stock Path Monte Carlo Simulation. On August 10, 2022, the promissory note was repaid in full. F- 27 1847
HOLDINGS LLC NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER
31, 2022 AND 2021 Vehicle
Loans Asien’s
has entered into seven retail installment sale contracts pursuant to which it agreed to finance its delivery trucks at rates ranging
from 3.74 % to 8.72 % with an aggregate remaining principal amount of $ 93,140 as of December 31, 2022. Kyle’s
has entered into two retail installment sale contracts pursuant to which it agreed to finance its delivery trucks at rates ranging from 5.90 % to 6.54 % with an aggregate remaining principal amount of $ 50,950 as of December 31, 2022. High
Mountain has entered into twelve retail installment sale contracts pursuant to which it agreed to finance delivery trucks and equipment
at rates ranging from 3.74 % to 6.34 % with an aggregate remaining principal amount of $ 71,723 as of December 31, 2022. Innovative
Cabinets has entered into two retail installment sale contracts pursuant to which it agreed to finance delivery trucks and equipment
at rates of 3.74 % with an aggregate remaining principal amount of $ 14,422 as of December 31, 2022. Following
is a summary of payments due on notes payable for the succeeding five yea Year

In accordance with ASC 805, the Company assigned fair value to the tangible and intangible assets acquired and liabilities assumed at

the acquisition date. The

fair value of the purchase consideration issued to the Wolo Sellers was allocated to the net tangible assets acquired. The fair value

of the net assets acquired was approximately $ 6,606,403 . The excess of the aggregate fair value of the net tangible assets has been allocated

to goodwill. F- 24 1847

HOLDINGS LLC NOTES

TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER

31, 2022 AND 2021 The

table below shows an analysis for the Wolo Acquisiti Purchase

consideration at fair val Notes payable $ 850,000 Cash 6,550,000 Net

cash paid to Seller (post-closing) 944,056 Amount of consideration $ 8,344,056 Assets acquired and liabilities

assumed at fair value Cash $ 1,171,655 Accounts receivable 1,860,107 Inventory 1,944,929 Customer related intangibles 233,000 Marketing related intangibles 992,000 Technology related intangibles 623,000 Other current assets 218,154 Deferred tax liability ( 325,000 ) Accounts

payable and accrued expenses ( 111,442 ) Net tangible assets acquired $ 6,606,403 Total net assets acquired $ 6,606,403 Consideration paid 8,344,056 Goodwill $ 1,737,653 High

Mountain and Innovative Cabinets On

September 23, 2021, 1847 Cabinet entered into a securities purchase agreement with High Mountain, Innovative Cabinets and the H&I

Sellers, which was amended on October 6, 2021, pursuant to which 1847 Cabinet agreed to acquire all of the issued and outstanding capital

stock or other equity securities of High Mountain and Innovative Cabinets. On October 8, 2021, closing of the acquisition was completed

(the “H&I Acquisition”). The

purchase price was $ 15,441,173 (subject to adjustment), consisting of (i) $ 10,687,500 in cash (subject to adjustment) and (ii) the issuance

by 1847 Cabinet of 6 % subordinated convertible promissory notes in the amount of $ 4,753,673 consisting of an aggregate principal amount

of $ 5,880,345 , net of debt discount of $ 1,126,672 . The

Company accounted for the H&I Acquisition using the acquisition method of accounting in accordance with ASC 805. In accordance with

ASC 805, the Company assigned fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. The

fair value of the purchase consideration issued to the H&I Sellers was allocated to the net tangible assets acquired. The fair value

of the net assets acquired was approximately $ 3,716,376 . The excess of the aggregate fair value of the net tangible assets has been allocated

to goodwill. F- 25 1847

HOLDINGS LLC NOTES

TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER

31, 2022 AND 2021 The

table below shows an analysis for the H&I Acquisiti Purchase

consideration at fair val Cash $ 10,687,500 Notes

payable, net of debt discount 4,753,673 Amount of consideration $ 15,441,173 Assets acquired and liabilities

assumed at fair value Cash $ 208,552 Accounts receivable 1,042,194 Inventory 1,848,729 Contract assets 367,177 Other current assets 80,771 Marketing intangible 1,610,000 Customer intangible 4,843,000 Property and equipment 610,882 Operating lease assets 831,951 Other assets - Accounts payable and accrued

expenses ( 1,207,424 ) Contract liabilities ( 3,770,081 ) Deferred tax liabilities ( 1,670,000 ) Lease liabilities ( 856,377 ) Financing leases ( 18,600 ) Loans

payable ( 204,399 ) Net tangible assets acquired $ 3,716,375 Total net assets acquired $ 3,716,375 Consideration paid 15,441,173 Preliminary goodwill $ 11,724,798 The

estimated useful life remaining on the property and equipment acquired in the Wolo and H&I acquisitions is 3 to 7 years. For

the years ended December 31, 2022 and 2021, Wolo contributed revenue of $ 6,489,088 and $ 5,716,031 , respectively, and net loss from continuing

operations of $ 1,307,085 and $ 1,476,272 , respectively, which are included in the consolidated statements of operations for the years

ended December 31, 2022 and 2021. For

the years ended December 31, 2022 and 2021, High Mountain and Innovative Cabinets contributed combined revenue of $ 25,817,012 and $ 6,766,540 ,

respectively, and combined net loss from continuing operations of $ 5,121,056 and combined net income from continuing operations $ 276,743 ,

respectively, which are included in the consolidated statements of operations for the years ended December 31, 2022 and 2021. Pro

Forma Information The

following unaudited pro forma results presented below include the effects of the Wolo and H&I acquisitions as if they had been consummated

as of January 1, 2021, with adjustments to give effect to pro forma events that are directly attributable to the acquisitions. Years

Ended December 31, 2022 2021 Revenues $ 48,929,124 $ 51,589,004 Net loss ( 10,801,913 ) ( 4,445,617 ) Net loss attributable to common shareholders ( 20,071,529 ) ( 6,540,284 ) Loss per share attributable to common shareholde Basic $ ( 8.36 ) $ ( 5.51 ) Diluted $ ( 8.36 ) $ ( 5.51 ) These

unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results

of operations would have been if the acquisitions had occurred at the beginning of the period presented, nor are they indicative of future

results of operations. F- 26 1847

HOLDINGS LLC NOTES

TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER

31, 2022 AND 2021 NOTE

12 —NOTES PAYABLE Notes

payable at December 31, 2022 and 2021 consisted of the followin December 31, 2022 December 31, 2021 6% Subordinated Amortizing Promissory

Notes $ 465,805 $ 581,963 Loans on vehicles 230,235 396,351 Subtotal 696,040 943,923 Current portion of notes

payable ( 551,210 ) ( 692,522 ) Long-term notes payable $ 144,830 $ 251,401 Promissory

Notes On

July 29, 2020, 1847 Asien entered into a securities purchase agreement with the Asien’s Seller, pursuant to which the Asien’s

Seller sold 103,750 common shares to 1847 Asien a purchase price of $ 10.00 per share. As consideration, 1847 Asien issued to the Asien’s

Seller a two-year 6% amortizing promissory note in the aggregate principal amount of $1,037,500. On October 8, 2021, 1847 Asien and the

Asien’s Seller entered into amendment no. 1 to securities purchase agreement to amend certain terms of the securities purchase

agreement and the 6% amortizing promissory note. Pursuant to the amendment, the repayment terms of the 6% amortizing promissory note

were revised so that one-half (50%) of the outstanding principal amount ($518,750) and all accrued interest thereon shall be amortized

on a two-year straight-line basis and payable quarterly in accordance with the amortization schedule set forth on Exhibit A to the amendment,

except for the payments that were initially scheduled on January 1, 2022 and April 1, 2022, which were paid from the proceeds of the

senior convertible promissory notes described below, and the second-half (50%) of the outstanding principal amount ($518,750) and all

accrued, but unpaid interest thereon shall be paid on the second anniversary of the date of the 6% amortizing promissory note, along

with any other unpaid principal or accrued interest thereon. On October 20, 2022, the parties entered into a letter agreement pursuant

to which the parties agreed to extend the maturity date of the note to February 28, 2023 and revised the repayment terms so that the

outstanding principal amount and all accrued interest thereon shall be payable monthly, beginning on November 30, 2022. As additional

consideration for entering into the letter agreement, 1847 Asien also agreed to pay the Asien’s Seller $ 87,707 as an amendment

fee. The note is unsecured and contains customary events of default. The remaining principal and accrued interest balance of the note

at December 31, 2022 was $ 465,805 and $ 94,456 , respectively. On

March 30, 2021, a portion of the purchase price for the acquisition of Wolo was paid by the issuance of a 6 % secured promissory note

in the principal amount of $ 850,000 by 1847 Wolo to the Wolo Sellers. Interest on the outstanding principal amount was payable quarterly

at the rate of six percent ( 6 %) per annum. On October 8, 2021, the promissory note was repaid in full. On

March 30, 2021, 1847 Wolo and Wolo entered into a credit agreement with Sterling National Bank for revolving loans in the principal amount

of $1,000,000 and a term loan in the principal amount of $3,550,000. On October 8, 2021, the revolving loan and the term loan were repaid

in full. On

July 8, 2022, the Company entered into a securities purchase agreement with Mast Hill Fund, L.P., pursuant to which the Company issued

to it a promissory note in the principal amount of $600,000 and a five-year warrant for the purchase of 100,000 common shares at an exercise

price of $6.00 per share (subject to adjustment), which such exercise price was adjusted to $4.20 following the adjustments (see Note

17), which may be exercised on a cashless basis if the market price of the Company’s common shares is greater than the exercise

price, for total net proceeds of $499,600. Additionally, the Company issued a three-year warrant to J.H. Darbie & Co (the broker)

for the purchase of 3,600 common shares at an exercise price of $7.50 (subject to adjustment), which such exercise price was adjusted

to $4.20 following the adjustments, which may be exercised on a cashless basis if the market price of the Company’s common shares

is greater than the exercise price. Accordingly, a portion of the proceeds were allocated to the warrants based on its relative fair

value using the Geometric Brownian Motion Stock Path Monte Carlo Simulation. On August 10, 2022, the promissory note was repaid in full. F- 27 1847

HOLDINGS LLC NOTES

TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER

31, 2022 AND 2021 Vehicle

Loans Asien’s

has entered into seven retail installment sale contracts pursuant to which it agreed to finance its delivery trucks at rates ranging

from 3.74 % to 8.72 % with an aggregate remaining principal amount of $ 93,140 as of December 31, 2022. Kyle’s

has entered into two retail installment sale contracts pursuant to which it agreed to finance its delivery trucks at rates ranging from 5.90 % to 6.54 % with an aggregate remaining principal amount of $ 50,950 as of December 31, 2022. High

Mountain has entered into twelve retail installment sale contracts pursuant to which it agreed to finance delivery trucks and equipment

at rates ranging from 3.74 % to 6.34 % with an aggregate remaining principal amount of $ 71,723 as of December 31, 2022. Innovative

Cabinets has entered into two retail installment sale contracts pursuant to which it agreed to finance delivery trucks and equipment

at rates of 3.74 % with an aggregate remaining principal amount of $ 14,422 as of December 31, 2022. Following

is a summary of payments due on notes payable for the succeeding five yea Year