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2021, in conformity with accounting principles generally accepted in the United States of America. Basis |
for Opinion These |
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s |
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board |
(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal |
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We |
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain |
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company |
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, |
we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion |
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our |
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error |
or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding |
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant |
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits |
provide a reasonable basis for our opinion. Critical |
Audit Matters The |
critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated |
or required to be communicated to the audit committee and tha (1) related to accounts or disclosures that are material to the financial |
statements and (2) involved our especially challenging, subjective, or complex judgements. The communication of critical audit matters |
does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical matters |
below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Acquisitions |
– Refer to Note 10 to the Consolidated Financial Statements Critical |
Audit Matter Description During |
the year ended December 31, 2021, the Company completed two business acquisitions. On March 30, 2021, the Company acquired 100% of the |
outstanding capital stock of Wolo Mfg. Corp and Wolo Industrial Horn & Signal, Inc., for an aggregate purchase price of $8,344,056. |
On October 8, 2021, the Company acquired 100% of the outstanding capital stock of High Mountain Door & Trim, Inc. and Sierra Homes |
LLC, Inc. for an aggregate purchase price of $15,441,173. The Company accounted for these two acquisitions as business combinations. |
Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed at fair value as of the transaction dates. |
The Company utilized a third-party valuation specialist to assist in determining the fair value of the consideration granted and identifiable |
intangible assets acquired in each acquisition. We identified the estimation of the fair value of the consideration transferred, assets |
acquired, and liabilities assumed in these acquisitions as a critical audit matter. We |
identified the valuation of the consideration transferred, assets acquired, and liabilities assumed as a critical audit matter because |
of the significant estimates and assumptions management made to determine the fair value of certain of these assets. This required a |
high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of |
valuation methodologies applied and the assumptions used such as forecasted sales growth rates, cash flows, attrition rates, market-based |
royalty rates, and estimated discount rates. In addition, the audit effort involved the use of professionals with specialized skill and |
knowledge. F- 2 How |
the Critical Audit Matter was Addressed in the Audit Our |
audit procedures related to the followin ● We |
evaluated management’s and the valuation specialist’s identification of assets |
acquired and liabilities assumed. ● We |
obtained management’s purchase price allocation detailing fair values assigned to acquired |
tangible and intangible assets. ● We |
obtained valuation report prepared by valuation specialist engaged by management to assist |
in the purchase price allocation, including determination of fair values assigned to acquired |
intangible assets, and examined valuation methods used and qualifications of specialist. ● We |
examined the completeness and accuracy of the underlying data supporting the significant |
assumptions and estimates used in the valuation report, including historical and projected |
financial information. ● We |
evaluated the accuracy and completeness of the financial statement presentation and disclosure |
of the acquisitions. In |
addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in the evaluations of the |
valuation methodologies deployed and the reasonableness of the significant assumptions used. Going |
Concern Critical |
Audit Matter Description As |
described further in Note 2 to the consolidated financial statements, the Company has incurred losses since inception, has negative cash |
flows from operations, and has an accumulated deficit. Accordingly, the Company has determined that these factors raise substantial doubt |
about its ability to continue as a going concern. However, management believes, based on the Company’s operating plan, that current |
working capital and current and expected additional financing is sufficient to fund operations and satisfy the Company’s obligations |
as they come due for at least one year from the financial statement issuance date. We |
determined the Company’s ability to continue as a going concern is a critical audit matter due to the estimation and uncertainty |
regarding the Company’s future cash flows, available capital and the risk of bias in management’s judgments and assumptions |
in their determination. How |
the Critical Audit Matter Was Addressed in the Audit Our |
audit procedures related to the followin ● We |
performed testing procedures such as analytical procedures to identify conditions and |
events that indicate there could be substantial doubt about the entity's ability to |
continue as a going concern for a reasonable period of time. ● We |
reviewed and evaluated management's plans for dealing with adverse effect of these conditions |
and events. ● We |
inquired of Company management and reviewed company records to assess whether there are additional |
factors that contribute to the uncertainties disclosed. ● We assessed whether the Company’s determination that there is substantial doubt about its ability to continue as a going |
concern, and that such doubt was alleviated by management’s plans, was adequately disclosed. /s/ Sadler, Gibb & Associates, LLC We |
have served as the Company’s auditor since 2017. Draper, |
UT March |
31, 2022 F- 3 1847 HOLDINGS LLC CONSOLIDATED BALANCE SHEETS December 31, 2021 December 31, 2020 ASSETS Current Assets Cash $ 1,383,533 $ 976,538 Restricted |
cash - 403,811 Investments 276,429 - Accounts |
receivable, net 3,378,996 525,625 Contract |
assets 88,466 70,230 Inventories, |
net 5,427,302 2,022,754 Prepaid |
expenses and other current assets 582,048 550,964 Discontinued |
operations – current assets - 1,324,608 TOTAL |
CURRENT ASSETS 11,136,774 5,874,530 Property |
and equipment, net 1,695,311 398,503 Investments |
long-term - 276,270 Operating |
lease right-of-use assets 3,192,604 357,208 Goodwill 19,452,270 5,989,817 Intangible |
assets, net 11,443,897 3,885,467 Other assets 85,691 375 Discontinued |
operations – long-term assets - 2,457,770 TOTAL |
ASSETS $ 47,006,547 $ 19,239,940 LIABILITIES |
AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Accounts |
payable and accrued expenses $ 4,818,672 $ 2,558,559 Contract |
liabilities 2,547,903 77,403 Customer |
deposits 3,465,259 3,370,957 Current |
portion of operating lease liability 613,696 66,803 Advances, |
related party 193,762 190,192 Lines of credit - 301,081 Due to |
seller - 33,630 Note payable |
– related party - 56,900 Current |
portion of notes payable 793,174 429,183 Discontinued |
operations – current liabilities - 999,122 TOTAL |
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