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

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statements. Accounts
payable and accrued expenses at September 30, 2022 and December 31, 2021 consisted of the followin September 30, 2022 December 31, 2021 Trade accounts payable $ 2,705,828 $ 3,117,825 Credit cards payable 130,013 52,300 Accrued payroll liabilities 630,846 263,590 Accrued interest 1,045,917 711,258 Accrued dividends 644,139 242,160 Other accrued liabilities 282,152 431,539 Total accounts payable
and accrued expenses $ 5,438,895 $ 4,818,672 12 1847
HOLDINGS LLC NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER
30, 2022 (UNAUDITED) NOTE
8—LEASES Operating
Leases In
April 2022, the Company entered into a lease amendment to renew its office and warehouse space in the automotive supplies segment, located
in Deer Park, New York. The lease renewal will commence on August 1, 2022 and shall expire on July 31, 2025. Under the terms of the lease
renewal, the Company will lease the premises at the monthly rate of $ 7,518 for the first year, with scheduled annual increases. The lease
agreement contains customary events of default, representations, warranties, and covenants. The remeasurement of the ROU asset and liability
associated with this operating lease was $ 254,713 . The
following was included in our condensed consolidated balance sheet at September 30, 2022 and December 31, 2021: September 30, 2022 December 31, 2021 Operating lease right-of-use assets $ 3,037,676 $ 3,192,604 Lease liabilities, current portion 707,419 613,696 Lease liabilities, long-term 2,419,449 2,607,862 Total operating lease
liabilities $ 3,126,868 $ 3,221,558 Weighted-average remaining lease term (months) 49 59 Weighted average discount rate 4.37 % 4.29 % Rent
expense for the three and nine months ended September 30, 2022 was $ 278,823 and $ 804,544 , respectively. As
of September 30, 2022, maturities of operating lease liabilities were as follows: Year Ending
December 31, Amount 2022 – remaining $ 239,421 2023 830,221 2024 848,210 2025 803,685 2026 514,079 Thereafter 194,495 Total 3,430,111 L imputed interest ( 303,243 ) Total operating lease
liabilities $ 3,126,868 Finance
Leases On
March 28, 2022, the Company entered an equipment financing lease to purchase machinery and equipment totaling $ 316,798 , maturing in January
2028 . On
April 11, 2022, the Company entered in an equipment financing lease to purchase machinery and equipment totaling $ 11,706 , maturing in June 2027 . On
July 13, 2022, the Company entered in an equipment financing lease to purchase machinery and equipment totaling $ 240,260 , maturing in June 2028 . 13 1847
HOLDINGS LLC NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER
30, 2022 (UNAUDITED) As
of September 30, 2022, maturities of finance lease liabilities were as follows: Year Ending
December 31, Amount 2022 – remaining $ 58,482 2023 234,556 2024 218,099 2025 211,332 2026 211,332 Thereafter 238,875 Total payments 1,172,676 L amount representing
interest ( 158,003 ) Present value of minimum
finance lease payments $ 1,014,673 As
of September 30, 2022, the weighted-average remaining lease term for all finance leases is 5.20 years. NOTE
9—ACQUISITIONS On
March 30, 2021, the Company acquired 100 % of the outstanding capital stock of Wolo Mfg. Corp and Wolo Industrial Horn & Signal, Inc.
(“Wolo”) for an aggregate purchase price of $ 8,344,056 . For the three and nine months ended September 30, 2022, Wolo contributed
revenue of $ 1,489,710 and $ 5,114,755 , respectively, and net loss from continuing operations of $ 393,493 and $ 1,034,427 , respectively,
which are included in our condensed consolidated statements of operations for the three and nine months ended September 30, 2022. On
October 8, 2021, the Company acquired 100 % of the outstanding capital stock of High Mountain Door & Trim, Inc. (“High Mountain”)
and Sierra Homes, LLC (“Sierra Homes”) for an aggregate purchase price of $ 15,441,173 . For the three and nine months ended
September 30, 2022, High Mountain and Sierra Homes contributed combined revenue of $ 8,299,589 and $ 21,049,530 , respectively, and combined
net loss from continuing operations of $ 2,846,780 and $ 3,633,437 , respectively, which are included in our condensed consolidated statements
of operations for the three and nine months ended September 30, 2022. Pro
Forma Information The
following unaudited pro forma results presented below include the effects of the Wolo, High Mountain and Sierra Homes 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. Three
Months Ended September 30, Nine
Months Ended September 30, 2022 2021 2022 2021 Revenues $ 14,472,361 $ 15,328,672 $ 39,437,482 $ 39,091,277 Net income (loss) ( 4,472,622 ) 100,042 ( 5,547,498 ) 3,956,288 Net income (loss) attributable to common shareholders’ ( 13,440,062 ) ( 149,043 ) ( 14,801,040 ) 1,614,167 Earnings (loss) per share attributable to common
shareholders’: Basic $ ( 4.51 ) $ ( 0.12 ) $ ( 8.08 ) $ 1.37 Diluted $ ( 4.51 ) $ ( 0.12 ) $ ( 8.08 ) $ 0.78 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. 14 1847
HOLDINGS LLC NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER
30, 2022 (UNAUDITED) NOTE 10—RELATED
PARTIES Management
Services Agreement On
April 15, 2013, the Company and 1847 Partners LLC (the “Manager”) entered into a management services agreement, pursuant
to which the Company is required to pay the Manager a quarterly management fee equal to 0.5% of its adjusted net assets for services
performed (the “Parent Management Fee”). The amount of the Parent Management Fee with respect to any fiscal quarter is (i)
reduced by the aggregate amount of any management fees received by the Manager under any offsetting management services agreements with
respect to such fiscal quarter, (ii) reduced (or increased) by the amount of any over-paid (or under-paid) Parent Management Fees received
by (or owed to) the Manager as of the end of such fiscal quarter, and (iii) increased by the amount of any outstanding accrued and unpaid
Parent Management Fees. The Company expensed $ 0 in Parent Management Fees for the three and nine months ended September 30, 2022 and
$ 0 for the three and nine months ended September 30, 2021. Offsetting
Management Services Agreements The
Company’s subsidiary 1847 Asien Inc. (“1847 Asien”) entered into an offsetting management services agreement with the
Manager on May 28, 2020, the Company’s subsidiary 1847 Cabinet Inc. (“1847 Cabinet”) entered into an offsetting management
services agreement with the Manager on August 21, 2020 (which was amended and restated on October 8, 2021) and the Company’s subsidiary
1847 Wolo Inc. (“1847 Wolo”) entered into an offsetting management services agreement with the Manager on March 30, 2021. Pursuant to the offsetting management services agreements, 1847 Asien appointed the Manager to provide certain services to it for a quarterly
management fee equal to the greater of $75,000 or 2% of adjusted net assets (as defined in the management services agreement), 1847 Cabinet
appointed the Manager to provide certain services to it for a quarterly management fee equal to the greater of $75,000 or 2% of adjusted
net assets (as defined in the management services agreement), which was increased to $125,000 or 2% of adjusted net assets on October
8, 2021, and 1847 Wolo appointed the Manager to provide certain services to it for a quarterly management fee equal to the greater of
$75,000 or 2% of adjusted net assets (as defined in the management services agreement); provided, however, in each case that if the aggregate
amount of management fees paid or to be paid by such entities, together with all other management fees paid or to be paid to the Manager
under other offsetting management services agreements, exceeds, or is expected to exceed, 9.5% of our gross income in any fiscal year
or the Parent Management Fee in any fiscal quarter, then the management fee to be paid by such entities shall be reduced, on a pro rata
basis determined by reference to the other management fees to be paid to the Manager under other offsetting management services agreements. 1847
Asien expensed management fees of $ 75,000 and $ 225,000 for the three and nine months ended September 30, 2022, respectively, and $ 75,000 and $ 225,000 for the three and nine months ended September 30, 2021, respectively. 1847
Cabinet expensed management fees of $ 125,000 and $ 375,000 for the three and nine months ended September 30, 2022, respectively, and $ 75,000 and $ 225,000 for the three and nine months ended September 30, 2021, respectively. 1847
Wolo expensed management fees of $ 75,000 and $ 225,000 for the three and nine months ended September 30, 2022, respectively, and $ 75,000 and $ 150,000 for the three and nine months ended September 30, 2021, respectively. On
a consolidated basis, the Company expensed total management fees of $ 275,000 and $ 825,000 for the three and nine months ended September
30, 2022, respectively, and $ 225,000 and $ 600,000 for the three and nine months ended September 30, 2021, respectively. Advances From
time to time, the Company has received advances from its chief executive officer to meet short-term working capital needs. As of September
30, 2022 and December 31, 2021, a total of $ 118,834 in advances from related parties are outstanding. These advances are unsecured, bear
no interest, and do not have formal repayment terms or arrangements. As
of September 30, 2022 and December 31, 2021, the Manager has funded the Company $ 74,928 in related party advances. These advances are
unsecured, bear no interest, and do not have formal repayment terms or arrangements. 15 1847
HOLDINGS LLC NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER
30, 2022 (UNAUDITED) Building
Lease On
September 1, 2020, Kyle’s entered into an industrial lease agreement with Stephen Mallatt, Jr. and Rita Mallatt, who are officers
of Kyle’s and principal shareholders of the Company. The lease is for a term of five years, with an option for a renewal term of
five years and provides for a base rent of $ 7,000 per month for the first 12 months, which will increase to $ 7,210 for months 13-16 and
to $ 7,426 for months 37-60. In addition, Kyle’s is responsible for all taxes, insurance and certain operating costs during the
lease term. The
total rent expense under this related party leases was $ 21,777 and $ 65,330 for the three and nine months ended September 30, 2022. NOTE 11—MEZZANINE
EQUITY Series

statements. Accounts

payable and accrued expenses at September 30, 2022 and December 31, 2021 consisted of the followin September 30, 2022 December 31, 2021 Trade accounts payable $ 2,705,828 $ 3,117,825 Credit cards payable 130,013 52,300 Accrued payroll liabilities 630,846 263,590 Accrued interest 1,045,917 711,258 Accrued dividends 644,139 242,160 Other accrued liabilities 282,152 431,539 Total accounts payable

and accrued expenses $ 5,438,895 $ 4,818,672 12 1847

HOLDINGS LLC NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER

30, 2022 (UNAUDITED) NOTE

8—LEASES Operating

Leases In

April 2022, the Company entered into a lease amendment to renew its office and warehouse space in the automotive supplies segment, located

in Deer Park, New York. The lease renewal will commence on August 1, 2022 and shall expire on July 31, 2025. Under the terms of the lease

renewal, the Company will lease the premises at the monthly rate of $ 7,518 for the first year, with scheduled annual increases. The lease

agreement contains customary events of default, representations, warranties, and covenants. The remeasurement of the ROU asset and liability

associated with this operating lease was $ 254,713 . The

following was included in our condensed consolidated balance sheet at September 30, 2022 and December 31, 2021: September 30, 2022 December 31, 2021 Operating lease right-of-use assets $ 3,037,676 $ 3,192,604 Lease liabilities, current portion 707,419 613,696 Lease liabilities, long-term 2,419,449 2,607,862 Total operating lease

liabilities $ 3,126,868 $ 3,221,558 Weighted-average remaining lease term (months) 49 59 Weighted average discount rate 4.37 % 4.29 % Rent

expense for the three and nine months ended September 30, 2022 was $ 278,823 and $ 804,544 , respectively. As

of September 30, 2022, maturities of operating lease liabilities were as follows: Year Ending

December 31, Amount 2022 – remaining $ 239,421 2023 830,221 2024 848,210 2025 803,685 2026 514,079 Thereafter 194,495 Total 3,430,111 L imputed interest ( 303,243 ) Total operating lease

liabilities $ 3,126,868 Finance

Leases On

March 28, 2022, the Company entered an equipment financing lease to purchase machinery and equipment totaling $ 316,798 , maturing in January

2028 . On

April 11, 2022, the Company entered in an equipment financing lease to purchase machinery and equipment totaling $ 11,706 , maturing in June 2027 . On

July 13, 2022, the Company entered in an equipment financing lease to purchase machinery and equipment totaling $ 240,260 , maturing in June 2028 . 13 1847

HOLDINGS LLC NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER

30, 2022 (UNAUDITED) As

of September 30, 2022, maturities of finance lease liabilities were as follows: Year Ending

December 31, Amount 2022 – remaining $ 58,482 2023 234,556 2024 218,099 2025 211,332 2026 211,332 Thereafter 238,875 Total payments 1,172,676 L amount representing

interest ( 158,003 ) Present value of minimum

finance lease payments $ 1,014,673 As

of September 30, 2022, the weighted-average remaining lease term for all finance leases is 5.20 years. NOTE

9—ACQUISITIONS On

March 30, 2021, the Company acquired 100 % of the outstanding capital stock of Wolo Mfg. Corp and Wolo Industrial Horn & Signal, Inc.

(“Wolo”) for an aggregate purchase price of $ 8,344,056 . For the three and nine months ended September 30, 2022, Wolo contributed

revenue of $ 1,489,710 and $ 5,114,755 , respectively, and net loss from continuing operations of $ 393,493 and $ 1,034,427 , respectively,

which are included in our condensed consolidated statements of operations for the three and nine months ended September 30, 2022. On

October 8, 2021, the Company acquired 100 % of the outstanding capital stock of High Mountain Door & Trim, Inc. (“High Mountain”)

and Sierra Homes, LLC (“Sierra Homes”) for an aggregate purchase price of $ 15,441,173 . For the three and nine months ended

September 30, 2022, High Mountain and Sierra Homes contributed combined revenue of $ 8,299,589 and $ 21,049,530 , respectively, and combined

net loss from continuing operations of $ 2,846,780 and $ 3,633,437 , respectively, which are included in our condensed consolidated statements

of operations for the three and nine months ended September 30, 2022. Pro

Forma Information The

following unaudited pro forma results presented below include the effects of the Wolo, High Mountain and Sierra Homes 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. Three

Months Ended September 30, Nine

Months Ended September 30, 2022 2021 2022 2021 Revenues $ 14,472,361 $ 15,328,672 $ 39,437,482 $ 39,091,277 Net income (loss) ( 4,472,622 ) 100,042 ( 5,547,498 ) 3,956,288 Net income (loss) attributable to common shareholders’ ( 13,440,062 ) ( 149,043 ) ( 14,801,040 ) 1,614,167 Earnings (loss) per share attributable to common

shareholders’: Basic $ ( 4.51 ) $ ( 0.12 ) $ ( 8.08 ) $ 1.37 Diluted $ ( 4.51 ) $ ( 0.12 ) $ ( 8.08 ) $ 0.78 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. 14 1847

HOLDINGS LLC NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER

30, 2022 (UNAUDITED) NOTE 10—RELATED

PARTIES Management

Services Agreement On

April 15, 2013, the Company and 1847 Partners LLC (the “Manager”) entered into a management services agreement, pursuant

to which the Company is required to pay the Manager a quarterly management fee equal to 0.5% of its adjusted net assets for services

performed (the “Parent Management Fee”). The amount of the Parent Management Fee with respect to any fiscal quarter is (i)

reduced by the aggregate amount of any management fees received by the Manager under any offsetting management services agreements with

respect to such fiscal quarter, (ii) reduced (or increased) by the amount of any over-paid (or under-paid) Parent Management Fees received

by (or owed to) the Manager as of the end of such fiscal quarter, and (iii) increased by the amount of any outstanding accrued and unpaid

Parent Management Fees. The Company expensed $ 0 in Parent Management Fees for the three and nine months ended September 30, 2022 and

$ 0 for the three and nine months ended September 30, 2021. Offsetting

Management Services Agreements The

Company’s subsidiary 1847 Asien Inc. (“1847 Asien”) entered into an offsetting management services agreement with the

Manager on May 28, 2020, the Company’s subsidiary 1847 Cabinet Inc. (“1847 Cabinet”) entered into an offsetting management

services agreement with the Manager on August 21, 2020 (which was amended and restated on October 8, 2021) and the Company’s subsidiary

1847 Wolo Inc. (“1847 Wolo”) entered into an offsetting management services agreement with the Manager on March 30, 2021. Pursuant to the offsetting management services agreements, 1847 Asien appointed the Manager to provide certain services to it for a quarterly

management fee equal to the greater of $75,000 or 2% of adjusted net assets (as defined in the management services agreement), 1847 Cabinet

appointed the Manager to provide certain services to it for a quarterly management fee equal to the greater of $75,000 or 2% of adjusted

net assets (as defined in the management services agreement), which was increased to $125,000 or 2% of adjusted net assets on October

8, 2021, and 1847 Wolo appointed the Manager to provide certain services to it for a quarterly management fee equal to the greater of

$75,000 or 2% of adjusted net assets (as defined in the management services agreement); provided, however, in each case that if the aggregate

amount of management fees paid or to be paid by such entities, together with all other management fees paid or to be paid to the Manager

under other offsetting management services agreements, exceeds, or is expected to exceed, 9.5% of our gross income in any fiscal year

or the Parent Management Fee in any fiscal quarter, then the management fee to be paid by such entities shall be reduced, on a pro rata

basis determined by reference to the other management fees to be paid to the Manager under other offsetting management services agreements. 1847

Asien expensed management fees of $ 75,000 and $ 225,000 for the three and nine months ended September 30, 2022, respectively, and $ 75,000 and $ 225,000 for the three and nine months ended September 30, 2021, respectively. 1847

Cabinet expensed management fees of $ 125,000 and $ 375,000 for the three and nine months ended September 30, 2022, respectively, and $ 75,000 and $ 225,000 for the three and nine months ended September 30, 2021, respectively. 1847

Wolo expensed management fees of $ 75,000 and $ 225,000 for the three and nine months ended September 30, 2022, respectively, and $ 75,000 and $ 150,000 for the three and nine months ended September 30, 2021, respectively. On

a consolidated basis, the Company expensed total management fees of $ 275,000 and $ 825,000 for the three and nine months ended September

30, 2022, respectively, and $ 225,000 and $ 600,000 for the three and nine months ended September 30, 2021, respectively. Advances From

time to time, the Company has received advances from its chief executive officer to meet short-term working capital needs. As of September

30, 2022 and December 31, 2021, a total of $ 118,834 in advances from related parties are outstanding. These advances are unsecured, bear

no interest, and do not have formal repayment terms or arrangements. As

of September 30, 2022 and December 31, 2021, the Manager has funded the Company $ 74,928 in related party advances. These advances are

unsecured, bear no interest, and do not have formal repayment terms or arrangements. 15 1847

HOLDINGS LLC NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER

30, 2022 (UNAUDITED) Building

Lease On

September 1, 2020, Kyle’s entered into an industrial lease agreement with Stephen Mallatt, Jr. and Rita Mallatt, who are officers

of Kyle’s and principal shareholders of the Company. The lease is for a term of five years, with an option for a renewal term of

five years and provides for a base rent of $ 7,000 per month for the first 12 months, which will increase to $ 7,210 for months 13-16 and

to $ 7,426 for months 37-60. In addition, Kyle’s is responsible for all taxes, insurance and certain operating costs during the

lease term. The

total rent expense under this related party leases was $ 21,777 and $ 65,330 for the three and nine months ended September 30, 2022. NOTE 11—MEZZANINE

EQUITY Series