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prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim
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financial information and with the instructions to Form 10-Q of Regulation S-X. They do not include all information and footnotes required
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by GAAP for complete financial statements. The December 31, 2022 consolidated balance sheet data was derived from audited financial statements
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but do not include all disclosures required by GAAP. However, except as disclosed herein, there has been no material change in the information
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disclosed in the notes to the consolidated financial statements for the year ended December 31, 2022 included in the Company’s Annual
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Report on Form 10-K, as filed with the Securities and Exchange Commission on April 11, 2023. The interim unaudited condensed consolidated
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financial statements should be read in conjunction with those consolidated financial statements included in the Form 10-K. In the opinion
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of management, all adjustments considered necessary for a fair presentation of the financial statements, consisting solely of normal recurring
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adjustments, have been made. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results
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that may be expected for the year ending December 31, 2023. NOTE 2—RECENT ACCOUNTING PRONOUNCEMENTS The Company considers the applicability and impact
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of all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”). The
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Company has evaluated all recent accounting pronouncements and determined that the adoption of pronouncements applicable to the Company
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has not had or is not expected to have a material impact on the Company’s condensed consolidated financial statements. NOTE 3—LIQUIDITY AND GOING CONCERN ASSESSMENT Management assesses liquidity and going concern
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uncertainty in the Company’s condensed consolidated financial statements to determine whether there is sufficient cash on hand and
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working capital, including available borrowings on loans, to operate for a period of at least one year from the date the consolidated
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financial statements are issued or available to be issued, which is referred to as the “look-forward period”, as defined in
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GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, management will consider various
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scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash
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expenditures or programs, its ability to delay or curtail expenditures or programs and its ability to raise additional capital, if necessary,
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among other factors. Based on this assessment, as necessary or applicable, management makes certain assumptions around implementing curtailments
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or delays in the nature and timing of programs and expenditures to the extent it deems probable those implementations can be achieved
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and management has the proper authority to execute them within the look-forward period. As of March 31, 2023, the Company had cash and
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cash equivalents of $ 2,297,927 . For the three months ended March 31, 2023, the Company incurred a loss from operations of $ 77,833 (before
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deducting losses attributable to non-controlling interests), cash flows used in operations of $ 1,851,766 , and working capital deficit
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of $ 1,235,919 . The Company has generated operating losses since its inception and has relied on cash on hand, sales of securities, external
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bank lines of credit, and issuance of third-party and related party debt to support cashflow from operations, which creates substantial
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doubt about its ability to continue as a going concern for a period at least one year from the date of issuance of these condensed consolidated
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financial statements. Management plans to address the above as needed
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by, securing additional bank lines of credit and obtaining additional financing through debt or equity transactions. Management has implemented
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tight cost controls to conserve cash. The ability of the Company to continue as a going
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concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and to eventually attain
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profitable operations. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary
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if the Company is unable to continue as a going concern. If the Company is unable to obtain adequate capital, it could be forced to cease
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operations. 6 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2023 (UNAUDITED) NOTE 4—DISAGGREGATION OF REVENUES AND
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SEGMENT REPORTING The Company has four reportable segments: The Retail and Appliances Segment provides a wide
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variety of appliance products (laundry, refrigeration, cooking, dishwashers, outdoor, accessories, parts, and other appliance related
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products) and services (delivery, installation, service and repair, extended warranties, and financing). The Retail and Eyewear Segment provides a wide
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variety of eyewear products (non-prescription reading glasses, sunglasses, blue light blocking eyewear, sun readers and outdoor specialty
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sunglasses). The Construction Segment provides finished carpentry
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products and services (door frames, base boards, crown molding, cabinetry, bathroom sinks and cabinets, bookcases, built-in closets, fireplace
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mantles, windows, and custom design and build of cabinetry and countertops). The Automotive Supplies Segment provides horn
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and safety products (electric, air, truck, marine, motorcycle, and industrial equipment), and offers vehicle emergency and safety warning
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lights for cars, trucks, industrial equipment, and emergency vehicles. The Company provides general corporate services
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to its segments; however, these services are not considered when making operating decisions and assessing segment performance. These services
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are reported under “Corporate Services” below and these include costs associated with executive management, financing activities
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and public company compliance. The Company’s revenues for the three months
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ended March 31, 2023 and 2022 are disaggregated as follows: Three Months Ended March 31, 2023 Retail and Appliances Retail and Eyewear Construction Automotive Supplies Total Revenues Appliances $ 2,144,825 $ - $ - $ - $ 2,144,825 Appliance accessories, parts, and other 293,110 - - - 293,110 Eyewear - 2,792,712 - - 2,792,712 Automotive horns - - - 995,417 995,417 Automotive lighting - - - 264,749 264,749 Custom cabinets and countertops - - 2,116,182 - 2,116,182 Finished carpentry - - 6,796,543 - 6,796,543 Total Revenues $ 2,437,935 $ 2,792,712 $ 8,912,725 $ 1,260,166 $ 15,403,538 Three Months Ended March 31, 2022 Retail and Appliances Retail and Eyewear Construction Automotive Supplies Total Revenues Appliances $ 2,204,625 $ - $ - $ - $ 2,204,625 Appliance accessories, parts, and other 316,159 - - - 316,159 Eyewear - - - - - Automotive horns - - - 1,199,856 1,199,856 Automotive lighting - - - 442,135 442,135 Custom cabinets and countertops - - 4,167,801 - 4,167,801 Finished carpentry - - 3,743,302 - 3,743,302 Total Revenues $ 2,520,784 $ - $ 7,911,103 $ 1,641,991 $ 12,073,878 7 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2023 (UNAUDITED) Segment information for the three months ended
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March 31, 2023 and 2022 are as follows: Three Months Ended March 31, 2023 Retail and Appliances Retail and Eyewear Construction Automotive Supplies Corporate Services Total Revenues $ 2,437,935 $ 2,792,712 $ 8,912,725 $ 1,260,166 $ - $ 15,403,538 Operating Expenses Cost of revenues 1,813,783 1,667,442 5,375,027 710,256 - 9,566,508 Personnel 273,204 806,644 1,771,936 332,320 ( 157,911 ) 3,026,193 Depreciation and amortization 46,603 62,078 412,989 51,939 - 573,609 General and administrative 425,601 177,803 1,093,322 337,233 281,102 2,315,061 Total Operating Expenses 2,559,191 2,713,967 8,653,274 1,431,748 123,191 15,481,371 Income (loss) from operations $ ( 121,256 ) $ 78,745 $ 259,451 $ ( 171,582 ) $ ( 123,191 ) $ ( 77,833 ) Three Months Ended March 31, 2022 Retail and Appliances Retail and Eyewear Construction Automotive Supplies Corporate Services Total Revenues $ 2,520,784 $ - $ 7,911,103 $ 1,641,991 $ - $ 12,073,878 Operating Expenses Cost of revenues 1,871,450 - 4,879,591 998,089 - 7,749,130 Personnel 230,388 - 1,134,210 300,328 ( 87,226 ) 1,577,700 Depreciation and amortization 79,797 - 379,704 51,870 - 511,371 General and administrative 449,494 - 1,116,558 386,781 213,374 2,166,207 Total Operating Expenses 2,631,129 - 7,510,063 1,737,068 126,148 12,004,408 Income (loss) from operations $ ( 110,345 ) $ - $ 401,040 $ ( 95,077 ) $ ( 126,148 ) $ 69,470 NOTE 5—PROPERTY AND EQUIPMENT Property and equipment at March 31, 2023 and December
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31, 2022 consisted of the followin March 31, 2023 December 31, 2022 Equipment and machinery $ 1,403,817 $ 1,403,817 Office furniture and equipment 156,960 156,960 Transportation equipment 883,077 883,077 Displays 595,841 - Leasehold improvements 180,032 166,760 Total property and equipment 3,219,727 2,610,614 L Accumulated depreciation ( 934,325 ) ( 725,408 ) Property and equipment, net $ 2,285,402 $ 1,885,206 Depreciation expense for the three months ended
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March 31, 2023 and 2022 was $ 208,917 and $ 146,679 , respectively. NOTE 6—INTANGIBLE ASSETS Intangible assets at March 31, 2023 and December
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31, 2022 consisted of the followin March 31, 2023 December 31, 2022 Customer relationships $ 9,024,000 $ 9,024,000 Marketing-related 2,992,000 2,684,000 Technology-related 623,000 623,000 Total intangible assets 12,639,000 12,331,000 L accumulated amortization ( 2,710,563 ) ( 2,345,871 ) Intangible assets, net $ 9,928,437 $ 9,985,129 8 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2023 (UNAUDITED) Amortization expense for the three months ended
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March 31, 2023 and 2022 was $ 364,692 , respectively. Estimated amortization expense for intangible
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assets for the next five years consists of the following as of March 31, 2023: Year Ending December 31, Amount 2023 - remaining $ 1,094,076 2024 1,458,768 2025 1,325,778 2026 1,150,640 2027 909,142 Thereafter 3,990,032 Total $ 9,928,437 NOTE 7—SELECTED ACCOUNT INFORMATION Receivables Receivables at March 31, 2023 and December 31,
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2022 consisted of the followin March 31, 2023 December 31, 2022 Trade accounts receivable $ 6,953,068 $ 4,867,749 Vendor rebates receivable 3,260 460 Credit card payments in process of settlement 160,353 102,917 Retainage 724,025 603,442 Total receivables 7,840,706 5,574,568 Allowance for doubtful accounts ( 359,000 ) ( 359,000 ) Total receivables, net $ 7,481,706 $ 5,215,568 Inventories Inventories at March 31, 2023 and December 31,
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2022 consisted of the followin March 31, 2023 December 31, 2022 Appliances $ 1,972,631 $ 2,155,839 Eyewear 9,768,324 - Automotive 1,042,267 934,683 Construction 1,706,563 1,519,345 Total inventories 14,489,785 4,609,867 Less reserve for obsolescence ( 425,848 ) ( 425,848 ) Total inventories, net $ 14,033,937 $ 4,184,019 Inventory balances are composed of finished goods.
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Raw materials and work in process inventory are immaterial to the condensed consolidated financial statements. 9 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2023 (UNAUDITED) Accounts payable and accrued expenses Accounts payable and accrued expenses at March
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31, 2023 and December 31, 2022 consisted of the followin March 31, 2023 December 31, 2022 Trade accounts payable $ 8,555,914 $ 4,129,393 Credit cards payable 57,090 357,964 Accrued payroll liabilities 898,781 824,369 Accrued interest 1,891,786 1,179,875 Accrued dividends 97,568 136,052 Other accrued liabilities 965,312 114,116 Total accounts payable and accrued expenses $ 12,466,451 $ 6,741,769 NOTE 8—LEASES Operating Leases The following was included in the condensed consolidated
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balance sheets at March 31, 2023 and December 31, 2022: March 31, 2023 December 31, 2022 Operating lease right-of-use assets $ 2,668,680 $ 2,854,196 Lease liabilities, current portion 718,868 713,100 Lease liabilities, long-term 2,052,170 2,237,797 Total operating lease liabilities $ 2,771,038 $ 2,950,897 Weighted-average remaining lease term (months) 44 47 Weighted average discount rate 4.35 % 4.36 % Rent expense for the three months ended March
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31, 2023 and 2022 was $ 340,592 and $ 235,438 , respectively. As of March 31, 2023, maturities of operating
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lease liabilities were as follows: Year Ending December 31, Amount 2023 - remaining $ 617,178 2024 846,987 2025 802,413 2026 512,756 2027 228,889 Thereafter - Total 3,008,223 L imputed interest ( 237,185 ) Total operating lease liabilities $ 2,771,038 10 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2023 (UNAUDITED) Finance Leases As of March 31, 2023, maturities of financing
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lease liabilities were as follows: Year Ending December 31, Amount 2023 - remaining $ 176,013 2024 218,099 2025 211,332 2026 211,332 2027 210,042 Thereafter 28,833 Total 1,055,651 L amount representing interest ( 131,229 ) Present value of minimum lease payments $ 924,422 As of March 31, 2023, the weighted-average remaining
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lease term for all finance leases is 4.80 years. NOTE 9—BUSINESS COMBINATIONS ICU Eyewear On December 21, 2022, the Company’s newly
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formed wholly owned subsidiaries 1847 ICU Holdings Inc. (“1847 ICU”) and 1847 ICU Acquisition Sub Inc. entered into an agreement
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and plan of merger with ICU Eyewear Holdings, Inc. (“ICU Eyewear”) and San Francisco Equity Partners, as the stockholder representative,
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which was amended on February 9, 2023. On February 9, 2023, closing of the transactions
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contemplated by the agreement and plan of merger was completed. Pursuant to the agreement and plan of merger, 1847 ICU Acquisition Sub
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Inc. merged with and into ICU Eyewear, with ICU Eyewear surviving the merger as a wholly owned subsidiary of 1847 ICU. The merger consideration
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paid by 1847 ICU to the stockholders of ICU Eyewear consists of (i) $ 4,000,000 in cash, minus any unpaid debt of ICU Eyewear and certain
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transaction expenses, and (ii) 6 % subordinated promissory notes in the aggregate principal amount of $ 500,000 . The Company accounted for the acquisition using
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the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. In accordance with ASC 805, the Company
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used its best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at
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the acquisition date. Goodwill is measured as the excess of the purchase consideration over the fair value of the net tangible assets
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and identifiable assets acquired, or if the fair value of the net assets acquired exceeds the purchase consideration, a bargain purchase
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gain is recorded. The preliminary fair value of the purchase consideration
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issued to the ICU Eyewear stockholders was allocated to the net tangible assets acquired. The preliminary fair value of the net assets
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acquired was $ 7,139,861 . The preliminary fair value of the net assets acquired exceeded the purchase consideration, resulting in a bargain
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purchase gain of $ 2,639,861 . For the three months ended March 31, 2023, ICU Eyewear contributed revenue of $ 2,792,712 and net income of
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$ 2,581,437 , which are included in our condensed consolidated statements of operations for the three months ended March 31, 2023. 11 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2023 (UNAUDITED) The table below represents the estimated preliminary
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purchase price allocation to the net assets acquir Provisional purchase consideration at preliminary fair val Cash $ 4,000,000 Notes payable 500,000 Amount of consideration $ 4,500,000 Assets acquired and liabilities assumed at preliminary fair value Cash $ 329,113 Accounts receivable 1,922,052 Inventory 9,997,332 Prepaids and other current assets 79,777 Property and equipment 545,670 Other assets 74,800 Marketing related intangibles 308,000 Accounts payable and accrued expenses ( 6,116,883 ) Net tangible assets acquired $ 7,139,861 Consideration paid 4,500,000 Preliminary gain on bargain purchase $ ( 2,639,861 ) Pro Forma Information The following unaudited pro forma results presented
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below include the effects of the ICU Eyewear acquisition as if it had been consummated as of January 1, 2022, with adjustments to give
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effect to pro forma events that are directly attributable to this acquisition. Three Months Ended March 31, 2023 2022 Revenues $ 17,479,875 $ 18,561,294 Net loss 1,027,971 ( 441,479 ) Net loss attributable to common shareholders ( 904,841 ) ( 522,516 ) Loss per share attributable to common shareholde Basic $ ( 0.20 ) $ ( 0.11 ) Diluted $ ( 0.20 ) $ ( 0.11 ) These unaudited pro forma results are presented
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for informational purposes only and are not necessarily indicative of what the actual results of operations would have been if the acquisitions
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had occurred at the beginning of the period presented, nor are they indicative of future results of operations. NOTE 10—NOTES PAYABLE 6% Subordinated Promissory Notes As part of the consideration paid in the acquisition
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of ICU Eyewear, 1847 ICU issued the sellers 6 % subordinated promissory notes in the aggregate principal amount of $ 500,000 . The notes
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bear interest at the rate of 6 % per annum with all principal and accrued interest being due and payable in one lump sum on February 9,
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2024; provided that upon an event of default (as defined in the notes), such interest rate shall increase to 10 %. 1847 ICU may prepay
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all or any portion of the notes at any time prior to the maturity date without premium or penalty of any kind. The notes contain customary
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events of default, including, without limitation, in the event of (i) non-payment, (ii) a default by 1847 ICU of any of its covenants
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in the notes, the agreement and plan of merger or any other agreement entered into in connection with the agreement and plan of merger,
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or a breach of any of the representations or warranties under such documents, (iii) the insolvency or bankruptcy of 1847 ICU or ICU Eyewear
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or (iv) a change of control (as defined in the notes) of 1847 ICU or ICU Eyewear. The notes are unsecured and subordinated to all senior
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indebtedness. 12 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2023 (UNAUDITED) Revolving Line of Credit On February 9, 2023, 1847 ICU and ICU Eyewear
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entered into a loan and security agreement with Industrial Funding Group, Inc. for a revolving loan of up to $ 5,000,000 , which is evidenced
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by a secured promissory note in the principal amount of up to $ 5,000,000 . On February 9, 2023, 1847 ICU received an advance of $ 2,063,182 under the note, of which $ 1,963,182 was used to repay certain debt of ICU Eyewear in connection with the agreement and plan of merger,
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with the remaining $ 100,000 used to pay lender fees. On February 11, 2023, the Industrial Funding Group, Inc. sold and assigned the loan
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and security agreement, the note and related loan documents to GemCap Solutions, LLC. The note matures on February 9, 2025 with all
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advances bearing interest at an annual rate equal to the greater of (i) the sum of (a) the “Prime Rate” as reported in the
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“Money Rates” column of The Wall Street Journal, adjusted as and when such prime rate changes, plus (b) eight percent (8.00%),
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and (ii) fifteen percent (15.00%); provided that following and during the continuation of an event of default (as defined in the loan
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and security agreement), interest on the unpaid principal balance of the advances shall accrue at an annual rate equal to such rate plus
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