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

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general and administrative expenses for the retail and appliances segment were 17.5% and 18.3% for the six months ended June 30, 2023
and 2022, respectively. General
and administrative expenses for the retail and eyewear segment was $875,435, or 12.0% of retail and eyewear revenues, for the period
from February 9, 2023 (date of acquisition) to June 30, 2023. General
and administrative expenses for the construction segment increased by $107,339, or 4.6%, to $2,437,224 for the six months ended June
30, 2023, from $2,329,885 for the six months ended June 30, 2022. Such increase was primarily attributed to the increased revenues, offset
by decreased professional fees in the construction segment. As a percentage of construction revenue, general and administrative expenses
for the construction segment were 11.9% and 14.6% for the six months ended June 30, 2023 and 2022, respectively. General
and administrative expenses for the automotive supplies segment decreased by $56,952, or 9.1%, to $568,057 for the six months ended June
30, 2023, from $625,009 for the six months ended June 30, 2022. Such decrease was primarily attributed to the decrease in revenues, offset
by increased office expenses in the automotive supplies segment. As a percentage of automotive supplies revenue, general and administrative
expenses for the automotive supplies segment were 21.6% and 17.2% for the six months ended June 30, 2023 and 2022, respectively. General
and administrative expenses for the corporate services segment increased by $630,212, or 216.1%, to $921,783 for the six months ended
June 30, 2023, from $291,571 for the six months ended June 30, 2022. Such increase was primarily attributed to increased professional
fees, acquisition expenses, insurance expenses, and board fees in the corporate services segment. Total
other income (expense) . We had $1,351,301 in total other expense, net, for the six months ended June 30, 2023, as compared to
$1,806,115 for the six months ended June 30, 2022. Other expense, net, for the six months ended June 30, 2023, consisted of interest
expense of $4,043,130, offset by gain on bargain purchase of $2,639,861 related to the acquisition of ICU Eyewear and other income of
$51,968, while other expense, net, for the six months ended June 30, 2022 consisted interest expense of $1,838,866, offset by a gain
on disposal of property of equipment of $32,076 and other income of $675. Income
tax benefit (expense) . We had an income tax expense of $661,321 and an income tax benefit of $316,000 for the six
months ended June 30, 2023 and 2022, respectively. Net
loss . As a result of the cumulative effect of the factors described above, we had a net loss of $2,922,555 and $1,074,876 for
the six months ended June 30, 2023 and 2022, respectively. 36 Liquidity
and Capital Resources As
of June 30, 2023, we had cash and cash equivalents of $559,650. For the six months ended June 30, 2023, we incurred a loss from operations
of $909,933, cash flows used in operations of $2,547,967 and working capital deficit of $3,653,054. We have generated operating losses
since inception and have relied on cash on hand, sales of securities, external bank lines of credit, and issuance of third-party and
related party debt to support cashflow from operations, which creates substantial doubt about our ability to continue as a going concern
for a period at least one year. Management
plans to address the above as needed by, securing additional bank lines of credit, and obtaining additional financing through debt or
equity transactions. Management has implemented tight cost controls to conserve cash. The
ability of our company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in
the preceding paragraph and to eventually attain profitable operations. The accompanying condensed consolidated financial statements
do not include any adjustments that might be necessary if our company is unable to continue as a going concern. If our company is unable
to obtain adequate capital, it could be forced to cease operations. We
believe additional funds are required to execute our business plan and our strategy of acquiring additional businesses. The funds required
to execute our business plan will depend on the size, capital structure and purchase price consideration that the seller of a target
business deems acceptable in a given transaction. The amount of funds needed to execute our business plan also depends on what portion
of the purchase price of a target business the seller of that business is willing to take in the form of seller notes or our equity or
equity in one of our subsidiaries. We will seek growth as funds become available from cash flow, borrowings, additional capital raised
privately or publicly, or seller retained financing. Our
primary use of funds will be for future acquisitions, public company expenses including regular distributions to our shareholders, investments
in future acquisitions, payments to our manager pursuant to the management services agreement, potential payment of profit allocation
to our manager and potential put price to our manager in respect of the allocation shares it owns. The management fee, expenses, potential
profit allocation and potential put price are paid before distributions to shareholders and may be significant and exceed the funds we
hold, which may require us to dispose of assets or incur debt to fund such expenditures. See Item 1. “Business—Our Manager”
included in our Annual Report on Form 10-K for the year ended December 31, 2022 for more information concerning the management fee, the
profit allocation and put price. The
amount of management fee paid to our manager by us is reduced by the aggregate amount of any offsetting management fees, if any, received
by our manager from any of our businesses. As a result, the management fee paid to our manager may fluctuate from quarter to quarter.
The amount of management fee paid to our manager may represent a significant cash obligation. In this respect, the payment of the management
fee will reduce the amount of cash available for distribution to shareholders. Our
manager, as holder of 100% of our allocation shares, is entitled to receive a twenty percent (20%) profit allocation as a form of preferred
equity distribution, subject to an annual hurdle rate of eight percent (8%), as follows. Upon the sale of a subsidiary, our manager will
be paid a profit allocation if the sum of (i) the excess of the gain on the sale of such subsidiary over a high-water mark plus (ii)
the subsidiary’s net income since its acquisition by us exceeds the 8% hurdle rate. The 8% hurdle rate is the product of (i) a
2% rate per quarter, multiplied by (ii) the number of quarters such subsidiary was held by us, multiplied by (iii) the subsidiary’s
average share (determined based on gross assets, generally) of our consolidated net equity (determined according to U.S. generally accepted
accounting principles, or GAAP, with certain adjustments). In certain circumstances, after a subsidiary has been held for at least 5
years, our manager may also trigger a profit allocation with respect to such subsidiary (determined based solely on the subsidiary’s
net income since its acquisition). The amount of profit allocation may represent a significant cash payment and is senior in right to
payments of distributions to our shareholders. Therefore, the amount of profit allocation paid, when paid, will reduce the amount of
cash available to us for our operating and investing activities, including future acquisitions. See Item 1. “Business—Our
Manager—Our Manager as an Equity Holder—Manager’s Profit Allocation” included in our Annual Report on Form 10-K
for the year ended December 31, 2022 for more information on the calculation of the profit allocation. 37 Our
operating agreement also contains a supplemental put provision, which gives our manager the right, subject to certain conditions, to
cause us to purchase the allocation shares then owned by our manager upon termination of the management services agreement. The amount
of put price under the supplemental put provision is determined by assuming all of our subsidiaries are sold at that time for their fair
market value and then calculating the amount of profit allocation would be payable in such a case. If the management services agreement
is terminated for any reason other than our manager’s resignation, the payment to our manager could be as much as twice the amount
of such hypothetical profit allocation. As is the case with profit allocation, the calculation of the put price is complex and based
on many factors that cannot be predicted with any certainty at this time. See Item 1. “Business—Our Manager—Our Manager
as an Equity Holder—Supplemental Put Provision” included in our Annual Report on Form 10-K for the year ended December 31,
2022 for more information on the calculation of the put price. The put price obligation, if our manager exercises its put right, will
represent a significant cash payment and is senior in right to payments of distributions to our shareholders. Therefore, the amount of
put price will reduce the amount of cash available to us for our operating and investing activities, including future acquisitions. Summary
of Cash Flow The
following table provides detailed information about our net cash flow for the period indicat Six
months Ended June 30, 2023 2022 Net cash used in operating activities $ (2,547,967 ) $ (615,446 ) Net cash used in investing activities (3,896,074 ) (157,830 ) Net cash provided by
financing activities 5,924,336 716,479 Net change in cash and cash equivalents (519,705 ) (56,797 ) Cash and cash equivalents
at beginning of period 1,079,355 1,383,533 Cash and cash equivalents
at end of period $ 559,650 $ 1,326,736 Net
cash used in operating activities was $2,547,967 for the six months ended June 30, 2023, as compared to $615,446 for the six months ended
June 30, 2022. The increase in the net cash used in operating activities was primarily a result of the net loss during the period, gain
on bargain purchase of $2,639,861 related to the acquisition of ICU Eyewear, and increased receivables. Net
cash used in investing activities was $3,896,074 for the six months ended June 30, 2023, as compared to $157,830 for the six months ended
June 30, 2022. The increase in the net cash used in investing activities was primarily a result of the cash paid for the acquisition
of ICU Eyewear. Net
cash provided by financing activities was $5,924,336 for the six months ended June 30, 2023, as compared to $716,479 for the six months
ended June 30, 2022. The increase in the net cash provided by investing activities was primarily a result of the proceeds from the private
placements and revolving loan described below. Debt Revolving
Loan On
February 9, 2023, 1847 ICU and ICU Eyewear entered into a loan and security agreement, or the loan agreement, with Industrial Funding
Group, Inc. for a revolving loan of up to $5,000,000, which is evidenced by a secured promissory note in the principal amount of
up to $5,000,000. On February 9, 2023, we 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 merger agreement, with the remaining $100,000 used to pay lender fees. On February 11, 2023,
the Industrial Funding Group, Inc. sold and assigned the loan agreement, the note and related loan documents to GemCap Solutions, LLC.
The remaining principal balance of the note at June 30, 2023 is $1,815,003 and an accrued interest balance of $26,944. The
note matures on February 9, 2025 with all advances bearing interest at an annual rate equal to the greater of (i) the sum of (a) the

general and administrative expenses for the retail and appliances segment were 17.5% and 18.3% for the six months ended June 30, 2023

and 2022, respectively. General

and administrative expenses for the retail and eyewear segment was $875,435, or 12.0% of retail and eyewear revenues, for the period

from February 9, 2023 (date of acquisition) to June 30, 2023. General

and administrative expenses for the construction segment increased by $107,339, or 4.6%, to $2,437,224 for the six months ended June

30, 2023, from $2,329,885 for the six months ended June 30, 2022. Such increase was primarily attributed to the increased revenues, offset

by decreased professional fees in the construction segment. As a percentage of construction revenue, general and administrative expenses

for the construction segment were 11.9% and 14.6% for the six months ended June 30, 2023 and 2022, respectively. General

and administrative expenses for the automotive supplies segment decreased by $56,952, or 9.1%, to $568,057 for the six months ended June

30, 2023, from $625,009 for the six months ended June 30, 2022. Such decrease was primarily attributed to the decrease in revenues, offset

by increased office expenses in the automotive supplies segment. As a percentage of automotive supplies revenue, general and administrative

expenses for the automotive supplies segment were 21.6% and 17.2% for the six months ended June 30, 2023 and 2022, respectively. General

and administrative expenses for the corporate services segment increased by $630,212, or 216.1%, to $921,783 for the six months ended

June 30, 2023, from $291,571 for the six months ended June 30, 2022. Such increase was primarily attributed to increased professional

fees, acquisition expenses, insurance expenses, and board fees in the corporate services segment. Total

other income (expense) . We had $1,351,301 in total other expense, net, for the six months ended June 30, 2023, as compared to

$1,806,115 for the six months ended June 30, 2022. Other expense, net, for the six months ended June 30, 2023, consisted of interest

expense of $4,043,130, offset by gain on bargain purchase of $2,639,861 related to the acquisition of ICU Eyewear and other income of

$51,968, while other expense, net, for the six months ended June 30, 2022 consisted interest expense of $1,838,866, offset by a gain

on disposal of property of equipment of $32,076 and other income of $675. Income

tax benefit (expense) . We had an income tax expense of $661,321 and an income tax benefit of $316,000 for the six

months ended June 30, 2023 and 2022, respectively. Net

loss . As a result of the cumulative effect of the factors described above, we had a net loss of $2,922,555 and $1,074,876 for

the six months ended June 30, 2023 and 2022, respectively. 36 Liquidity

and Capital Resources As

of June 30, 2023, we had cash and cash equivalents of $559,650. For the six months ended June 30, 2023, we incurred a loss from operations

of $909,933, cash flows used in operations of $2,547,967 and working capital deficit of $3,653,054. We have generated operating losses

since inception and have relied on cash on hand, sales of securities, external bank lines of credit, and issuance of third-party and

related party debt to support cashflow from operations, which creates substantial doubt about our ability to continue as a going concern

for a period at least one year. Management

plans to address the above as needed by, securing additional bank lines of credit, and obtaining additional financing through debt or

equity transactions. Management has implemented tight cost controls to conserve cash. The

ability of our company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in

the preceding paragraph and to eventually attain profitable operations. The accompanying condensed consolidated financial statements

do not include any adjustments that might be necessary if our company is unable to continue as a going concern. If our company is unable

to obtain adequate capital, it could be forced to cease operations. We

believe additional funds are required to execute our business plan and our strategy of acquiring additional businesses. The funds required

to execute our business plan will depend on the size, capital structure and purchase price consideration that the seller of a target

business deems acceptable in a given transaction. The amount of funds needed to execute our business plan also depends on what portion

of the purchase price of a target business the seller of that business is willing to take in the form of seller notes or our equity or

equity in one of our subsidiaries. We will seek growth as funds become available from cash flow, borrowings, additional capital raised

privately or publicly, or seller retained financing. Our

primary use of funds will be for future acquisitions, public company expenses including regular distributions to our shareholders, investments

in future acquisitions, payments to our manager pursuant to the management services agreement, potential payment of profit allocation

to our manager and potential put price to our manager in respect of the allocation shares it owns. The management fee, expenses, potential

profit allocation and potential put price are paid before distributions to shareholders and may be significant and exceed the funds we

hold, which may require us to dispose of assets or incur debt to fund such expenditures. See Item 1. “Business—Our Manager”

included in our Annual Report on Form 10-K for the year ended December 31, 2022 for more information concerning the management fee, the

profit allocation and put price. The

amount of management fee paid to our manager by us is reduced by the aggregate amount of any offsetting management fees, if any, received

by our manager from any of our businesses. As a result, the management fee paid to our manager may fluctuate from quarter to quarter.

The amount of management fee paid to our manager may represent a significant cash obligation. In this respect, the payment of the management

fee will reduce the amount of cash available for distribution to shareholders. Our

manager, as holder of 100% of our allocation shares, is entitled to receive a twenty percent (20%) profit allocation as a form of preferred

equity distribution, subject to an annual hurdle rate of eight percent (8%), as follows. Upon the sale of a subsidiary, our manager will

be paid a profit allocation if the sum of (i) the excess of the gain on the sale of such subsidiary over a high-water mark plus (ii)

the subsidiary’s net income since its acquisition by us exceeds the 8% hurdle rate. The 8% hurdle rate is the product of (i) a

2% rate per quarter, multiplied by (ii) the number of quarters such subsidiary was held by us, multiplied by (iii) the subsidiary’s

average share (determined based on gross assets, generally) of our consolidated net equity (determined according to U.S. generally accepted

accounting principles, or GAAP, with certain adjustments). In certain circumstances, after a subsidiary has been held for at least 5

years, our manager may also trigger a profit allocation with respect to such subsidiary (determined based solely on the subsidiary’s

net income since its acquisition). The amount of profit allocation may represent a significant cash payment and is senior in right to

payments of distributions to our shareholders. Therefore, the amount of profit allocation paid, when paid, will reduce the amount of

cash available to us for our operating and investing activities, including future acquisitions. See Item 1. “Business—Our

Manager—Our Manager as an Equity Holder—Manager’s Profit Allocation” included in our Annual Report on Form 10-K

for the year ended December 31, 2022 for more information on the calculation of the profit allocation. 37 Our

operating agreement also contains a supplemental put provision, which gives our manager the right, subject to certain conditions, to

cause us to purchase the allocation shares then owned by our manager upon termination of the management services agreement. The amount

of put price under the supplemental put provision is determined by assuming all of our subsidiaries are sold at that time for their fair

market value and then calculating the amount of profit allocation would be payable in such a case. If the management services agreement

is terminated for any reason other than our manager’s resignation, the payment to our manager could be as much as twice the amount

of such hypothetical profit allocation. As is the case with profit allocation, the calculation of the put price is complex and based

on many factors that cannot be predicted with any certainty at this time. See Item 1. “Business—Our Manager—Our Manager

as an Equity Holder—Supplemental Put Provision” included in our Annual Report on Form 10-K for the year ended December 31,

2022 for more information on the calculation of the put price. The put price obligation, if our manager exercises its put right, will

represent a significant cash payment and is senior in right to payments of distributions to our shareholders. Therefore, the amount of

put price will reduce the amount of cash available to us for our operating and investing activities, including future acquisitions. Summary

of Cash Flow The

following table provides detailed information about our net cash flow for the period indicat Six

months Ended June 30, 2023 2022 Net cash used in operating activities $ (2,547,967 ) $ (615,446 ) Net cash used in investing activities (3,896,074 ) (157,830 ) Net cash provided by

financing activities 5,924,336 716,479 Net change in cash and cash equivalents (519,705 ) (56,797 ) Cash and cash equivalents

at beginning of period 1,079,355 1,383,533 Cash and cash equivalents

at end of period $ 559,650 $ 1,326,736 Net

cash used in operating activities was $2,547,967 for the six months ended June 30, 2023, as compared to $615,446 for the six months ended

June 30, 2022. The increase in the net cash used in operating activities was primarily a result of the net loss during the period, gain

on bargain purchase of $2,639,861 related to the acquisition of ICU Eyewear, and increased receivables. Net

cash used in investing activities was $3,896,074 for the six months ended June 30, 2023, as compared to $157,830 for the six months ended

June 30, 2022. The increase in the net cash used in investing activities was primarily a result of the cash paid for the acquisition

of ICU Eyewear. Net

cash provided by financing activities was $5,924,336 for the six months ended June 30, 2023, as compared to $716,479 for the six months

ended June 30, 2022. The increase in the net cash provided by investing activities was primarily a result of the proceeds from the private

placements and revolving loan described below. Debt Revolving

Loan On

February 9, 2023, 1847 ICU and ICU Eyewear entered into a loan and security agreement, or the loan agreement, with Industrial Funding

Group, Inc. for a revolving loan of up to $5,000,000, which is evidenced by a secured promissory note in the principal amount of

up to $5,000,000. On February 9, 2023, we 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 merger agreement, with the remaining $100,000 used to pay lender fees. On February 11, 2023,

the Industrial Funding Group, Inc. sold and assigned the loan agreement, the note and related loan documents to GemCap Solutions, LLC.

The remaining principal balance of the note at June 30, 2023 is $1,815,003 and an accrued interest balance of $26,944. The

note matures on February 9, 2025 with all advances bearing interest at an annual rate equal to the greater of (i) the sum of (a) the