text
stringlengths 0
1.95M
|
|---|
of 2,189,835 units, at a price of $ 1.90 per unit, for aggregate gross proceeds of $ 4,160,684 . On October 26, 2020, the Company sold an |
additional 442,443 units for an aggregate purchase price of $ 840,640 . Each unit consists of one (1) series A senior convertible preferred |
share and a three-year warrant to purchase one (1) common share at an exercise price of $ 2.50 per common share (subject to adjustment), |
which may be exercised on a cashless basis under certain circumstances. In accordance with ASC 470, if debt or stock is issued with detachable |
warrants and/or stock, the guidance in ASC 470 requires that the proceeds be allocated to the instruments based on their relative fair |
values. The Company applied this guidance and recorded a deemed dividend of $ 2,874,478 as a result of a beneficial conversion feature. |
As the Company does not have any retained earnings this deemed dividend was netting against additional paid-in capital and the net accounting |
effect was none. On March 26, 2021, the Company sold an aggregate |
of 1,818,182 units, at a price of $ 1.65 per unit, for aggregate gross proceeds of $ 3,000,000 . Each unit consists of one (1) series A senior |
convertible preferred share and a three-year warrant to purchase one (1) common share at an exercise price of $ 2.50 per common share (subject |
to adjustment), which may be exercised on a cashless basis under certain circumstances. The Company ASC 740 and recorded a deemed dividend |
of $ 1,527,086 as a result of a beneficial conversion feature. As the Company does not have any retained earnings this deemed dividend |
was netting against additional paid-in capital and the net accounting effect was none. F- 43 1847 HOLDINGS LLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 In the year ended December 31, 2021, the Company |
accrued dividends attributable to the series A senior convertible preferred shares in the amount of $ 128,319 and paid $ 1,032,806 including |
prior year accrued dividends of $ 176,949 . On October 12, 2021, |
the Company redeemed 2,632,278 series A senior convertible preferred shares for a total redemption price, including dividends through |
such date, of $ 6,395,645 . As a result, there are 1,818,182 series A senior convertible preferred shares outstanding as of December 31, |
2021. Common Shares The Company is authorized to issue 500,000,000 common shares as of December 31, 2021 and 2020. As of December 31, 2021 and 2020, the Company had 4,842,851 and 4,444,013 common shares |
issued and outstanding, respectively. The common shares entitle the holder thereof to one vote per share on all matters coming before |
the shareholders of the Company for a vote. On May 4, 2020, the Company issued 100,000 common |
shares to Leonite upon conversion of $ 100,000 of the outstanding balance of the secured convertible promissory note resulting is a loss |
on conversion of debt of $ 175,000 (see Note 12). On May 28, 2020, the Company issued 415,000 common |
shares, having a fair value of $ 1,037,500 , to the Asien’s Seller in connection with the Asien’s Acquisition (see Note 10). On June 4, 2020, the Company issued 100,000 common |
shares to a service provider for services provided to the Company. The fair market value of the services amounted to $ 245,000 . On March 26, 2021, the Company issued an aggregate |
of 398,838 common shares to the holders of the series A senior convertible preferred shares issued on September 30, 2020 and October 26, |
2020. As noted above, the purchase price for the units issued to such holders was $ 1.90 per unit. As noted above, on March 26, 2021, the |
Company issued additional units at a purchase price of $ 1.65 per unit. In exchange for the consent of the holders of the Company’s |
outstanding series A senior convertible preferred shares to the issuance of these additional units at a lower purchase price than such |
holders paid for their shares, the Company issued 398,838 common shares to such holders. Warrants Number of Common Share Warrants Weighted average exercise price Weighted average life (years) Intrinsic value of Warrants Outstanding, January 1, 2021 2,632,278 $ 2.50 2.76 $ - Granted 2,568,182 2.26 3.58 - Exercised - - - - Canceled - - - - Outstanding, December 31, 2021 5,200,460 $ 2.38 2.36 $ 512,500 Exercisable, December 31, 2021 5,200,460 $ 2.38 2.36 $ 512,500 On March 26, 2021, the Company sold an aggregate |
of 1,818,182 units, at a price of $ 1.65 per unit, for aggregate gross proceeds of $ 3,000,000 . Each unit consists of one (1) series A senior |
convertible preferred share and a three-year warrant to purchase one (1) common share at an exercise price of $ 2.50 per common share (subject |
to adjustment). Accordingly, a portion of the proceeds were allocated to the warrant based on its relative fair value using the Geometric |
Brownian Motion Stock Path Monte Carlo Simulation. The assumptions used in the model were as follows: (i) dividend yield of 0 %; (ii) expected |
volatility of 62.52 - 63.25 %; (iii) weighted average risk-free interest rate of 0.16 %; (iv) expected life of three years ; (v) estimated |
fair value of the common shares of $ 2.60 -$ 5.25 per share; and (vi) various probability assumptions related to redemption, calls and price |
resets. The ultimate amount allocated to the warrants was $ 1,472,914 , which was recorded as additional paid in capital. The warrants allow the holder to purchase one |
(1) common share at an exercise price of $ 2.50 per common share (subject to adjustment including upon any future equity offering with |
a lower exercise price), which may be exercised on a cashless basis under certain circumstances. Upon a reduction to the exercise price |
of such warrants, the number of warrant shares shall increase such that the aggregate exercise price will remain the same. The warrants |
have a term of three years and are callable by the Company after one year if the 30-day average stock price is in excess of $5 and the |
trading volume in the Company’s shares exceed 100,000 shares a day over such period. The Company can also redeem the warrants during |
the term for $0.50 a warrant in the first year; $1.00 a warrant in the second year; and $1.50 a warrant in the third year. F- 44 1847 HOLDINGS LLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 On October |
8, 2021, the Company issued to Leonite a five-year warrant for the purchase of 250,000 common shares with an exercise price of $ 0.01 per |
share and a five-year warrant for the purchase of 500,000 common shares with an exercise price of $ 2.50 per share. The exercise price |
is subject to standard adjustments, including upon any future equity offering with a lower exercise price . Upon a reduction to the exercise price of such warrants, the number of warrant shares shall increase such that the aggregate exercise |
price will remain the same. The warrants may be exercised on a cashless basis under certain circumstances and contain certain beneficial |
ownership limitations. Options Number of Options Weighted Average Exercise Price Weighted Average Contractual Term in Years Outstanding at January 1, 2020 - $ - - Granted 90,000 2.50 5.0 Exercised 77,500 2.50 - Forfeited - - - Cancelled ( 12,500 ) 2.50 - Expired - - - Outstanding at December 31, 2020 - $ - - Exercisable at December 31, 2020 - $ - - On May 11, 2020, the Company granted options to |
directors Paul A. Froning and Robert D. Barry to purchase 60,000 and 30,000 common shares, respectively, each at an exercise price of |
$2.50 per share. The options vested immediately on the date of grant and terminate on May 11, 2025. On September 29, 2020, Mr. Barry exercised |
the options cashless and on September 30, 2020, Mr. Froning exercised the options for proceeds of $150,000. NOTE 17—COMMITMENTS AND CONTINGENCIES Future Financing Leases Kyle’s has entered into three financing |
lease agreements for expansion equipment. The equipment has been installed and expected to be in service in the second quarter of 2022. |
These agreements have terms of six years beginning at the time of installation and no payment have been made on the lease agreement as |
of December 31, 2021 and the expected future minimum lease payments under the leases are $ 630,816 . Office Lease An office space has been leased on a month-by-month |
basis. NOTE 18—INCOME TAXES As of December 31, 2021 and 2020, the Company |
had net operating loss carry forwards of approximately $ 438,209 and $ 347,000 , respectively, that may be available to reduce future years’ |
taxable income in varying amounts through 2041. The provision for Federal income tax consists |
of the followin The cumulative tax effect at the expected rate |
of (3.4)% and (4.8)% of significant items comprising the Company’s net deferred tax amount is as follows: The components for the provision of income taxes |
inclu December 31, 2021 December 31, 2020 Current Federal and State $ 143,000 $ - Deferred Federal and State 75,300 83,900 Total (benefit) provision for income taxes $ 218,300 $ ( 83,900 ) F- 45 1847 HOLDINGS LLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 A reconciliation of the statutory US Federal income |
tax rate to the Company’s effective income tax rate is as follows: December 31, 2021 December 31, 2020 Federal tax 21.0 % 21.0 % State tax 1.7 % 4.1 % Discontinued operations 0.0 % ( 5.4 )% Permanent items ( 5.0 )% ( 1.6 )% Measurement Period Adjustment ( 16.9 )% 0.0 % Valuation Allowance 2.3 % ( 22.6 )% Other ( 6.5 )% ( 0.3 )% Effective income tax rate ( 3.4 )% ( 4.8 )% Deferred income taxes reflect the net tax effect |
of temporary differences between amounts recorded for financial reporting purposes and amounts used for tax purposes. The Company has |
a net cumulative current deferred tax asset of $ 242,000 and a net cumulative long-term deferred tax liability of ($ 2,312,000 ). The major |
components of deferred tax assets and liabilities are as follows: December 31, 2021 December 31, 2020 Deferred tax assets Inventory obsolescence $ 107,000 $ 4,000 Sales return reserve - 48,000 Business interest limitation 481,000 20,000 Lease liability 712,000 95,000 Other 135,000 55,000 Loss carryforward 153,000 94,000 Valuation Allowance - ( 132,000 ) Total deferred tax assets $ 1,588,000 $ 184,000 Deferred tax liabilities Fixed assets $ ( 230,000 ) $ ( 89,000 ) Right of Use Assets ( 706,000 ) ( 95,000 ) Intangibles ( 2,722,000 ) - Total deferred tax liabilities $ ( 3,658,000 ) $ ( 184,000 ) Total net deferred income tax assets (liabilities) $ ( 2,070,000 ) $ - The Company recognizes interest and penalties |
accrued related to unrecognized tax benefits in income tax expense. At December 31, 2011 and 2020, the Company does not believe that a |
liability for uncertain tax provisions exists, and therefore, accrued interest and penalties were $ 0 and $ 0 , respectively. The tax years |
ended December 31, 2016 through December 31, 2021 are considered to be open under statute and therefore may be subject to examination |
by the Internal Revenue Service and various state jurisdictions. The Company is a partnership for federal income |
taxes; however, its subsidiaries are C corporations. The Company will file consolidated returns whenever possible. Following is a summary |
of prepaid and deferred tax assets and liabilities for December 31, 2021 and 2020. As of December 31, 2021 2020 Prepaid income taxes (accrued tax liability) $ ( 175,000 ) $ 21,000 Deferred tax asset (liability) $ ( 2,070,000 ) $ - Years Ended December 31, 2021 2020 Income tax (benefit)/expense $ 218,000 $ ( 84,000 ) F- 46 1847 HOLDINGS LLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 NOTE 19—SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Supplemental disclosures of cash flow information |
for the years ended December 31, 2021 and 2020 were as follows: Years Ended December 31, 2021 2020 Interest paid $ 176,204 $ 415,451 Income tax paid $ 50,000 $ - Business combinatio Net assets in acquisition of H&I $ 3,716,375 $ - Wolo business combination $ 6,606,403 $ - Kyle’s business combination $ - $ 3,516,530 Asien’s business combination $ - $ 1,182,925 Financin Due to seller (net cash paid to seller after closing) $ 977,685 $ 4,622,792 Notes payable sellers $ 6,730,345 $ - Line of credit, net of debt discount $ - $ 568,597 Finance purchases of property and equipment $ 688,978 $ Convertible Promissory Note $ - $ 1,353,979 Common Shares $ - $ 1,115 Accrued common share dividends $ 242,160 $ - Deemed Dividend related to issuance of preferred shares $ 1,527,086 $ 3,051,478 1847 Goedeker Spin-Off Dividend $ - $ 283,257 Distribution – Allocation shares $ - $ 5,985,500 Additional Paid in Capital – common shares and warrants issued $ 757,792 $ 4,711,385 Operating lease, ROU assets and liabilities $ 2,184,477 $ 373,916 NOTE 20—SUBSEQUENT EVENTS In accordance with ASC 855-10, the Company has |
analyzed its operations subsequent to December 31, 2021 to the date these financial statements were issued, and has determined that, except |
as set forth below, it does not have any material subsequent events to disclose in these financial statements. Unit Offering On February 24, 2022, the Company entered into |
securities purchase agreements with several accredited investors, pursuant to which the Company sold an aggregate of 320,333 units, at |
a price of $ 3.00 per unit, to such investors for aggregate gross proceeds of $ 961,000 . On March 24, 2022, the Company entered into securities |
purchase agreements with additional accredited investors, pursuant to which the Company sold an additional 106,666 units to such investors |
for aggregate gross proceeds of $ 320,000 . Each unit consists of (i) one series B senior convertible preferred share and (ii) a three-year |
warrant to purchase one common share at an exercise price of $ 3.00 , subject to adjustments. Pursuant to the securities purchase agreements, |
the Company is required file a registration statement with the Securities and Exchange Commission (the “SEC”) under the Securities |
Act of 1933, as amended, covering the resale of all shares issuable upon conversion of the series B senior convertible preferred shares |
and exercise of the warrants with thirty (30) days after the closing and use its commercially reasonable efforts to have the registration |
statement declared effective by the SEC as soon as practicable, but in no event later than (i) ninety (90) days after the closing |
in the event that the SEC does not review the registration statement, or (ii) one hundred fifty (150) days after the closing in the |
event that the SEC reviews the registration statement (but in any event, no later than two (2) business days from the SEC indicating that |
it has no further comments on the registration statement). F- 47 1847 HOLDINGS LLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 In addition to registration rights described above, |
the securities purchase agreements provide several other covenants in favor of the investors, including information rights for significant |
shareholders, most favored nations provisions, and other covenants customary for similar transactions. The securities purchase agreements |
also contain customary representations, warranties closing conditions and indemnities. Series B Senior Convertible Preferred Shares The terms of the series B senior convertible preferred |
shares are governed by a share designation, dated February 17, 2022 (the “Share Designation”). Pursuant to the Share Designation, |
the Company designated 583,334 of its preferred shares as series B senior convertible preferred shares. Following is a summary of the |
material terms of the series B senior convertible preferred sh ● Dividend Rights . Holders of series B senior convertible preferred shares are entitled to dividends |
at a rate per annum of 14.0% of the stated value ($3.00 per share, subject to adjustment). Dividends shall accrue from day to day, whether |
or not declared, and shall be cumulative. Dividends shall be payable quarterly in arrears on each dividend payment date in cash or common |
shares at the Company’s discretion. Dividends payable in common shares shall be calculated based on a price equal to eighty percent |
(80%) of the VWAP for the common shares the Company’s principal trading market during the five (5) trading days immediately prior |
to the applicable dividend payment date; provided, however, that if the common shares are not registered, and rulemaking regarding the |
Rule 144 holding period referred to below is effective on the payment date, the dividends payable in common shares shall be calculated |
based upon the fixed price of $2.70; provided further, that the Company may only elect to pay dividends in common shares based upon such |
fixed price if the VWAP for the five (5) trading days immediately prior to the applicable dividend payment date is $2.70 or higher. ● Liquidation Rights . Subject to the rights of the Company’s creditors and the holders of any |
senior securities or parity securities (in each case, as defined in the Share Designation), upon any liquidation of the Company or its |
subsidiaries, before any payment or distribution of the assets of the Company (whether capital or surplus) shall be made to or set apart |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.