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prior notice. Therefore, we have reduced the ownership percentage to 9.99%. (6) The |
address of Louis A. Bevilacqua is 1050 Connecticut Ave., NW, Suite 500, Washington, DC 20036. Changes |
in Control We |
do not currently have any arrangements which if consummated may result in a change of control of our company. ITEM |
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. Transactions |
with Related Persons The |
following includes a summary of transactions since the beginning of our 2020 fiscal year, or any currently proposed transaction, in which |
we were or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of |
our total assets at year-end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect |
material interest (other than compensation described under Item 11 “ Executive Compensation ” above). We believe the |
terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable |
to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions. Transactions |
with Our Manager Our Chief Executive Officer, Ellery W. Roberts, |
controls our manager. Our relationship with our manager is governed principally by the following two agreements: (1) the management services |
agreement and offsetting management services agreements relating to the management services our manager will perform for us and the businesses |
we own and the management fee to be paid to our manager in respect thereof; and (2) our operating agreement setting forth our manager’s |
rights with respect to the allocation shares it owns, including the right to receive payments of profit allocation from us and our manager’s |
right to cause us to purchase the allocation shares it owns. Our manager has also entered into an offsetting management services agreement |
with 1847 Asien, 1847 Cabinet and 1847 Wolo and we expect that our manager will enter into offsetting management services agreements and |
transaction services agreements with our future businesses directly. See Item 1 “ Business—Our Manager for detailed |
descriptions of these agreements. The |
management fee expense for our manager amounted to $981,389 and $503,022 for the years ended December 31, 2021 and 2020, respectively. |
See Item 7 “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Management Fees ” |
for more information regarding the management fees. As |
of December 31, 2021 and 2020, our manager has funded $74,927 and $71,358, respectively, in related party advances to our company. These |
advances are unsecured, bear no interest, and do not have formal repayment terms or arrangements. Our manager owns certain intellectual property |
relating to the term “1847.” Pursuant to the management services agreement, our manager has granted us a non-exclusive, royalty |
free right to use the following intellectual property in connection with our business and operations or as may be required to comply with |
applicable (i) 1847 Holdings LLC; (ii) 1847 Partners LLC; (iii) www.1847holdings.com; and (iv) www.1847partners.com. We are permitted |
to sublicense the use of this intellectual property to any of our subsidiaries to use in connection with their business or as may be required |
by law. Our company and any businesses that we acquire must cease using the intellectual property described above entirely in their businesses |
and operations within 180 days of our termination of the management services agreement. The sublicense provisions of the management services |
agreement would require our company and its businesses to change their names to remove any reference to the term “1847” or |
any reference to the intellectual property licensed to them by our manager. This also would require us to create and market a new name |
and expend funds to protect that name. 102 On |
January 3, 2018, we issued a grid promissory note to our manager in the initial principal amount of $50,000. The note provided that we |
could request additional advances from our manager up to an aggregate additional amount of $150,000. On December 7, 2020, parties amended |
and restated the note for a new principal amount of $56,900 and maturity date of December 7, 2021. Interest on the note accrued on the |
unpaid portion of the principal amount and the outstanding portion of all advances at a fixed rate of 8% per annum. The note was unsecured |
and contained customary events of default. As of December 31, 2020, our manager had advanced $56,900 of the note and it had accrued interest |
of $25,159. On October 8, 2021, the grid note was repaid in full and terminated. Transactions |
with Significant Shareholder On September 1, 2020, Kyle’s entered |
into an industrial lease agreement with the Kyle’s Sellers, Stephen Mallatt, Jr. and Rita Mallatt, who are officers of Kyle’s |
and significant shareholders of our company. See Item 2 “ Properties ” for more information regarding this lease. A portion of the purchase price for the acquisition |
of Kyle’s on September 30, 2020 was paid by the issuance of a vesting promissory note by 1847 Cabinet to the Kyle’s Sellers. |
Please see Item 7 “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity |
and Capital Resources ” for a description of this note. Other |
Transactions From |
time to time, we have received advances from Mr. Roberts to meet short-term working capital needs. As of December 31, 2021 and 2020, |
a total of $118,834 in advances are outstanding. These advances are unsecured, bear no interest, and do not have formal repayment terms |
or arrangements. Director |
Independence Our |
board of directors has determined that Paul A. Froning is independent within the meaning of the rules of the Nasdaq Stock Market. 103 ITEM |
14. PRINCIPAL ACCOUNTING FEES AND SERVICES. Independent |
Auditors’ Fees The |
following is a summary of the fees billed to us for professional services rendered for the fiscal years ended December 31, 2021 and 2020: Year |
Ended December 31, 2021 2020 Audit Fees $ 152,000 $ 118,780 Audit-Related Fees 198,350 318,402 Tax Fees - - All |
Other Fees - - TOTAL $ 350,350 $ 437,182 “Audit |
Fees” consisted of fees billed for professional services rendered by the principal accountant for the audit of our annual financial |
statements and review of the financial statements included in our Form 10-K and 10-Q or services that are normally provided by the accountant |
in connection with statutory and regulatory filings or engagements. “Audit-Related |
Fees” consisted of fees billed for assurance and related services by the principal accountant that were reasonably related to the |
performance of the audit or review of our financial statements and are not reported under the paragraph captioned “Audit Fees” |
above. “Tax |
Fees” consisted of fees billed for professional services rendered by the principal accountant for tax returns preparation. “All |
Other Fees” consisted of fees billed for products and services provided by the principal accountant, other than the services reported |
above under other captions of this Item 14. Pre-Approval |
Policies and Procedures Under |
the Sarbanes-Oxley Act of 2002, all audit and non-audit services performed by our auditors must be approved in advance by our board of |
directors to assure that such services do not impair the auditors’ independence from us. In accordance with its policies and procedures, |
our board of directors pre-approved the audit service performed by Sadler, Gibb & Associates, LLC for our financial statements as |
of and for the year ended December 31, 2021. 104 PART |
IV ITEM |
15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES. (a) List |
of Documents Filed as a Part of This Repor (1) Index |
to Financial Statements: Report |
of Independent Registered Public Accounting Firm (PCAOB ID 3627) Consolidated |
Balance Sheets as of December 31, 2021 and 2020 Consolidated |
Statements of Operations for the Years Ended December 31, 2021 and 2020 Consolidated |
Statement of Shareholders’ Deficit for the Years Ended December 31, 2021 and 2020 Consolidated |
Statements of Cash Flows for the Years Ended December 31, 2021 and 2020 Notes |
to Consolidated Financial Statements (2) Index to Financial Statement Schedul All |
schedules have been omitted because the required information is included in the financial statements or the notes thereto, or because |
it is not required. (3) Index to Exhibits: See |
exhibits listed under Part (b) below. (b) Exhibits: Exhibit No. Description 3.1 Certificate of Formation of 1847 Holdings LLC (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed on February 7, 2014) 3.2 Second Amended and Restated Operating Agreement of 1847 Holdings LLC, dated January 19, 2018 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on January 22, 2018) 3.3 Amendment No. 1 to Second Amended and Restated Operating Agreement (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on August 11, 2021) 4.1* Description of Securities of 1847 Holdings LLC 4.2 Amended and Restated Share Designation of Series A Senior Convertible Preferred Shares (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on April 1, 2021) 4.3 Amendment No. 1 to Amended and Restated Share Designation of Series A Senior Convertible Preferred Shares (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on October 5, 2021) 4.4 Share Designation of Series B Senior Convertible Preferred Shares (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on March 2, 2022) 4.5 Form of Common Share Purchase Warrant relating to 2020 private placement (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on October 7, 2020) 4.6 Form of Common Share Purchase Warrant relating to March 2021 private placement (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on April 1, 2021) 4.7 Form of Common Share Purchase Warrant relating to February 2022 private placement (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on March 2, 2022) 4.8 Warrant for Common Shares issued by 1847 Holdings LLC to Leonite Capital LLC on October 8, 2021 (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on October 13, 2021) 4.9 Warrant for Common Shares issued by 1847 Holdings LLC to Leonite Capital LLC on October 8, 2021 (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on October 13, 2021) 10.1 Form of Securities Purchase Agreement relating to February 2022 private placement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on March 2, 2022) 10.2 Management Services Agreement, dated April 15, 2013, between 1847 Holdings LLC and 1847 Partners LLC (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-1/A filed on March 14, 2014) 10.3 Amendment No. 1 to Management Services Agreement, dated September 15, 2013, between 1847 Holdings LLC and 1847 Partners LLC (incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 filed on February 7, 2014) 10.4 Management Services Agreement, dated May 28, 2020, between 1847 Asien Inc. and 1847 Partners LLC (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed June 3, 2020) 10.5 Amended and Restated Management Services Agreement, dated October 8, 2021, between 1847 Cabinet Inc. and 1847 Partners LLC (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K filed on October 13, 2021) 10.6 Management Services Agreement, dated March 30, 2021, by and between 1847 Wolo Inc. and 1847 Partners LLC (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed on April 5, 2021) 10.7 6% Amortizing Promissory Note issued by 1847 Asien Inc. to Joerg Christian Wilhelmsen and Susan Kay Wilhelmsen, as trustees of the Wilhelmsen Family Trust, U/D/T Dated May 1, 1992, on July 29, 2020 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed August 4, 2020) 10.8 Amendment No. 1 to Securities Purchase Agreement and 6% Amortizing Promissory Note, dated October 8, 2021, between 1847 Asien Inc. and Joerg Christian Wilhelmsen and Susan Kay Wilhelmsen, as Trustees of the Wilhelmsen Family Trust, U/D/T dated May 1, 1992 (incorporated by reference to Exhibit 10.18 to the Current Report on Form 8-K filed on October 13, 2021) 10.9 8% Vesting Promissory Note, dated September 30, 2020, issued by 1847 Cabinet Inc. to Stephen Mallatt, Jr. and Rita Mallatt (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on October 7, 2020) 105 10.10 Second Amended and Restated Secured Promissory Note issued by 1847 Holdings LLC to 1847 Cabinet Inc. on October 8, 2021 (incorporated by reference to Exhibit 10.10 to the Current Report on Form 8-K filed on October 13, 2021) 10.11 6% Subordinated Convertible Promissory Note issued by 1847 Cabinet Inc. to Steven J. Parkey on October 8, 2021 (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on October 13, 2021) 10.12 6% Subordinated Convertible Promissory Note issued by 1847 Cabinet Inc. to Jose D. Garcia-Rendon on October 8, 2021 (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on October 13, 2021) 10.13 Exchange Agreement, dated October 8, 2021, among 1847 Holdings LLC, Steven J. Parkey and Jose D. Garcia-Rendon (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed on October 13, 2021) 10.14 Note Purchase Agreement, dated October 8, 2021, among 1847 Holdings LLC, 1847 Asien Inc., 1847 Wolo Inc., 1847 Cabinet Inc., Asien’s Appliance, Inc., Wolo Mfg. Corp., Wolo Industrial Horn & Signal, Inc., Kyle’s Custom Wood Shop, Inc., High Mountain Door & Trim Inc., Sierra Homes, LLC, SILAC Insurance Company and Leonite Capital, LLC (incorporated by reference to Exhibit 10.11 to the Current Report on Form 8-K filed on October 13, 2021) 10.15 Secured Convertible Promissory Note issued by 1847 Holdings LLC to SILAC Insurance Company on October 8, 2021 (incorporated by reference to Exhibit 10.12 to the Current Report on Form 8-K filed on October 13, 2021) 10.16 Secured Convertible Promissory Note issued by 1847 Holdings LLC to SILAC Insurance Company on October 8, 2021 (incorporated by reference to Exhibit 10.13 to the Current Report on Form 8-K filed on October 13, 2021) 10.17 Secured Convertible Promissory Note issued by 1847 Holdings LLC to Leonite Capital LLC on October 8, 2021 (incorporated by reference to Exhibit 10.14 to the Current Report on Form 8-K filed on October 13, 2021) 10.18 Guaranty Agreement, dated October 8, 2021, among 1847 Asien Inc., 1847 Wolo Inc., 1847 Cabinet Inc., Asien’s Appliance, Inc., Wolo Mfg. Corp., Wolo Industrial Horn & Signal, Inc., Kyle’s Custom Wood Shop, Inc., High Mountain Door & Trim Inc., Sierra Homes, LLC and Leonite Capital LLC (incorporated by reference to Exhibit 10.15 to the Current Report on Form 8-K filed on October 13, 2021) 10.19 Security Agreement, dated October 8, 2021, among 1847 Holdings LLC, 1847 Asien Inc., 1847 Wolo Inc., 1847 Cabinet Inc., Asien’s Appliance, Inc., Wolo Mfg. Corp., Wolo Industrial Horn & Signal, Inc., Kyle’s Custom Wood Shop, Inc., High Mountain Door & Trim Inc., Sierra Homes, LLC and Leonite Capital, LLC (incorporated by reference to Exhibit 10.16 to the Current Report on Form 8-K filed on October 13, 2021) 10.20 Intellectual Property Security Agreement, dated October 8, 2021, among Wolo Mfg. Corp., Wolo Industrial Horn & Signal, Inc. and Leonite Capital, LLC (incorporated by reference to Exhibit 10.17 to the Current Report on Form 8-K filed on October 13, 2021) 10.21 Residential Lease Agreement, dated August 5, 2020, between Redwood Gospel Missions and Asien’s Appliance, Inc. (incorporated by reference to Exhibit 10.20 to Amendment No. 1 to Registration Statement on Form S-1/A field on January 31, 2021) 10.22 Industrial Lease, dated September 1, 2020, between Kyle’s Custom Wood Shop, Inc. and Stephen Mallatt, Jr. and Rita Mallatt (incorporated by reference to Exhibit 10.47 to the Annual Report on Form 10-K filed on April 15, 2021) 10.23 Standard Lease Agreement, dated June 9, 2021, between Emerald Town, LLC and Kyle’s Custom Wood Shop, Inc. (incorporated by reference to Exhibit 10.22 to Amendment No. 1 to Registration Statement on Form S-1/A field on January 31, 2021) 106 10.24 Lease, dated December 1, 2017, between Sage Partnership and High Mountain Door & Trim Inc. (incorporated by reference to Exhibit 10.23 to Amendment No. 1 to Registration Statement on Form S-1/A field on January 31, 2021) 10.25 Lease, dated October 29, 2021, between WL-MCK SRI Owner LLC and High Mountain Door & Trim Inc. (incorporated by reference to Exhibit 10.24 to Amendment No. 1 to Registration Statement on Form S-1/A field on January 31, 2021) 10.26 Lease, dated January 20, 2020, between Simon Levi Company, Ltd. and Sierra Homes, LLC (incorporated by reference to Exhibit 10.25 to Amendment No. 1 to Registration Statement on Form S-1/A field on January 31, 2021) 10.27 Lease, dated December 7, 2020, between SW Commerce Reno, LLC and Sierra Homes, LLC (incorporated by reference to Exhibit 10.26 to Amendment No. 1 to Registration Statement on Form S-1/A field on January 31, 2021) 10.28 Agreement of Lease, dated October 4, 1978, between PKI Reality LLC and Wolo Mfg. Corp., as amended (incorporated by reference to Exhibit 10.27 to Amendment No. 1 to Registration Statement on Form S-1/A field on January 31, 2021) 10.29† Separation Agreement and Release, dated September 5, 2021, between Jay Amond and 1847 Holdings LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on September 10, 2021) 10.30† Employment Offer Letter, dated September 7, 2021, between Vernice L. Howard and 1847 Holdings LLC (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on September 10, 2021) 10.32†* Letter Agreement Regarding the Assignment, Assumption and Amendment of Employment Agreement, dated March 23, 2022, among 1847 Holdings LLC, 1847 HQ Inc. and Vernice L. Howard 10.33† Employment Offer Letter, dated January 10, 2022, between 1847 Holdings LLC and Eric VanDam (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on January 14, 2022) 10.34†* Letter Agreement Regarding the Assignment, Assumption and Amendment of Employment Agreement, dated March 30, 2022, among 1847 Holdings LLC, 1847 HQ Inc. and Eric VanDam 14.1 Code |
of Ethics and Business Conduct (incorporated by reference to Exhibit 14.1 to the Annual Report on Form 10-K filed on April 15, |
2015) 21.1 List of Subsidiaries of the registrant (incorporated by reference to Exhibit 21.1 to Amendment No. 1 to Registration Statement on Form S-1/A field on January 31, 2021) 31.1* Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certifications of Principal Financial and Accounting Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certifications of Principal Executive Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2* Certifications of Principal Financial and Accounting Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS Inline XBRL Instance |
Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) * Filed |
herewith † Executive |
compensation plan or arrangement ITEM |
16. FORM 10-K SUMMARY. None. 107 FINANCIAL |
STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID 3627 ) F-2 Consolidated Balance Sheets as of December 31, 2021 and 2020 F-4 Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020 F-5 Consolidated Statements of Shareholders’ Equity (Deficit) for the Years Ended December 31, 2021 and 2020 F-6 Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020 F-7 Notes to Consolidated Financial Statements F-8 F- 1 REPORT |
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To |
the Board of Directors and Shareholders of 1847 Holdings LLC: Opinion |
on the Financial Statements We |
have audited the accompanying consolidated balance sheets of 1847 Holdings LLC (“the Company”) as of December 31, 2021 and |
2020, the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the years in the two-year |
period ended December 31, 2021 and the related notes (collectively referred to as the “financial statements”). In our opinion, |
the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December |
31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, |
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