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

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on early extinguishment of debt ( 320 ) Gain on forgiveness of debt 380,247 Gain on sale of assets 548,723 Interest expense ( 78,308 ) Other
income (expense) 1,200 TOTAL OTHER INCOME (EXPENSE) 851,542 NET LOSS BEFORE INCOME TAXES 240,405 INCOME TAX EXPENSE - NET INCOME BEFORE NON-CONTROLLING INTERESTS 240,405 LESS
NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS 108,182 NET INCOME ATTRIBUTABLE
TO SHAREHOLDERS $ 132,223 F- 19 1847
HOLDINGS LLC NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER
31, 2022 AND 2021 The
following information presents the major classes of line items constituting significant operating, investing and financing cash flow
activities in the unaudited consolidated statements of cash flows relating to discontinued operations for the year ended December 31,
2021: Year
Ended December 31, 2021 Cash flows from operating activities of discontinued operatio Net Income $ 240,405 Adjustments to reconcile
net loss to net cash provided by (used in) operating activities of discontinued operatio Depreciation and amortization 360,746 Amortization of financing
costs and warrant features 2,187 Amortization of operating
lease right-of-use assets 19,007 Gain on forgiveness of
PPP loans ( 380,247 ) Gain on sale of equipment ( 548,723 ) Changes in operating assets
and liabiliti Accounts receivable 10,698 Inventory ( 161,286 ) Prepaid expenses and other
assets 49,222 Accounts payable and accrued
expenses 118,980 Operating lease liability ( 19,007 ) Accrued
expense long-term 137,438 Net
cash used in operating activities from discontinued operations $ ( 170,580 ) Cash flows from investing
activities in discontinued operatio Proceeds from sale of equipment $ 675,000 Purchase of equipment ( 30,697 ) Net cash provided by
investing activities in discontinued operations $ 644,303 Cash flows from financing
activities in discontinued operatio Proceeds from note payable $ 380,385 Repayments
of notes payable ( 589,078 ) Net
cash used in financing activities in discontinued operations $ ( 208,693 ) NOTE
5—RECEIVABLES Receivables
at December 31, 2022 and 2021 consisted of the followin December 31, 2022 December 31, 2021 Trade accounts receivable $ 4,867,749 $ 2,691,702 Vendor rebates receivable 460 126,118 Credit card payments in process of settlement 102,917 116,187 Retainage 603,442 803,989 Total receivables 5,574,568 3,737,996 Allowance for doubtful
accounts ( 359,000 ) ( 359,000 ) Total receivables, net $ 5,215,568 $ 3,378,996 F- 20 1847
HOLDINGS LLC NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER
31, 2022 AND 2021 NOTE 6—INVENTORIES Inventories
at December 31, 2022 and 2021 consisted of the followin December 31, 2022 December 31, 2021 Appliances $ 2,155,839 $ 2,206,336 Automotive 934,683 2,064,834 Construction 1,519,345 1,543,980 Total inventories 4,609,867 5,815,150 Less reserve for obsolescence ( 425,848 ) ( 387,848 ) Total inventories, net $ 4,184,019 $ 5,427,302 Inventory
balances are composed of finished goods. Raw materials and work in process inventory are immaterial to the consolidated financial statements. NOTE 7—PROPERTY
AND EQUIPMENT Property
and equipment at December 31, 2022 and 2021 consisted of the followin December 31, 2022 December 31, 2021 Equipment and machinery $ 1,403,817 $ 808,592 Office furniture and equipment 156,960 105,203 Transportation equipment 883,077 864,121 Leasehold improvements 166,760 112,356 Total property and equipment 2,610,614 1,890,272 L Accumulated depreciation ( 725,408 ) ( 194,961 ) Property and equipment,
net $ 1,885,206 $ 1,695,311 Depreciation
expense for the years ended December 31, 2022 and 2021 was $ 578,344 and $ 166,412 , respectively. NOTE 8—INTANGIBLE
ASSETS Intangible
assets at December 31, 2022 and 2021 consisted of the followin December 31, 2022 December 31, 2021 Customer relationships $ 9,024,000 $ 9,024,000 Marketing-related 2,684,000 2,684,000 Technology-related 623,000 623,000 Total intangible assets 12,331,000 12,331,000 L accumulated amortization ( 2,345,871 ) ( 887,103 ) Intangible assets, net $ 9,985,129 $ 11,443,897 F- 21 1847
HOLDINGS LLC NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER
31, 2022 AND 2021 Amortization
expense for the years ended December 31, 2022 and 2021 was $ 1,458,768 and $ 742,570 , respectively. Estimated
amortization expense for intangible assets for the next five years consists of the following as of December 31, 2022: Year
Ending December 31, Amount 2023 $ 1,458,768 2024 1,458,768 2025 1,325,778 2026 1,150,640 2027 909,142 Thereafter 3,682,033 Total $ 9,985,129 NOTE 9—ACCOUNTS
PAYABLE AND ACCRUED EXPENSES Accounts
payable and accrued expenses at December 31, 2022 and 2021 consisted of the followin December 31, 2022 December 31, 2021 Trade accounts payable $ 4,129,393 $ 3,117,825 Credit cards payable 357,964 52,300 Accrued payroll liabilities 824,369 263,590 Accrued interest 1,179,875 711,258 Accrued dividends 136,052 242,160 Other accrued liabilities 114,116 431,539 Total accounts payable
and accrued expenses $ 6,741,769 $ 4,818,672 On
July 26, 2022, the Company entered into a conversion agreement with Bevilacqua PLLC, pursuant to which it agreed to convert $ 1,197,280 of the accounts payable owed to it into 285,067 common shares of the Company at a conversion price of $ 4.20 per share. As a result, the
Company recognized a loss on extinguishment of debt of $ 456,109 . F- 22 1847
HOLDINGS LLC NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER
31, 2022 AND 2021 NOTE 10—LEASES Operating
Leases On
June 9, 2021, Kyle’s entered into an additional industrial lease agreement with a third party. The lease commenced on January 1,
2022 and is for a term of 62 months, with an option for a renewal term of five years, and provides for a base rent of $3,336 for months
3-4 (with no payments for the first two months), with gradual increases to $7,508 for final year. In addition, Kyle’s is responsible
for its proportionate share of all taxes, insurance and certain operating costs during the lease term. The lease agreement contains customary
events of default, representations, warranties and covenants. The lease increased the operating lease right to use asset and corresponding
operating lease liability by $ 361,158 . On
October 29, 2021, High Mountain entered into a new lease agreement with a third party. The term of the lease commenced on June 1, 2022
(upon the completion of improvements) and is for a period of 61 months. The base rent is $29,400 for months 2-13 (with no payments for
the first month), with gradual increases to $34,394 for months 50-61. In addition, High Mountain is responsible for its proportionate
share of all taxes, insurance and certain operating costs during the lease term. The lease agreement contains customary events of default,
representations, warranties and covenants. The lease increased the operating lease right to use asset and corresponding operating lease
liability by $ 1,718,183 . In
April 2022, Wolo 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 commenced on August 1, 2022 and shall expire on July 31, 2025. Under the terms of the lease renewal,
Wolo 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 the consolidated balance sheets at December 31, 2022 and 2021: December 31, 2022 December 31, 2021 Operating lease right-of-use assets $ 2,854,196 $ 3,192,604 Lease liabilities, current portion 713,100 613,696 Lease liabilities, long-term 2,237,797 2,607,862 Total operating lease
liabilities $ 2,950,897 $ 3,221,558 Weighted-average remaining lease term (months) 47 59 Weighted average discount rate 4.36 % 4.29 % Rent
expense for the years ended December 31, 2022 and 2021 was $ 1,054,936 and $ 448,510 , respectively. As
of December 31, 2022, maturities of operating lease liabilities were as follows: Year
Ending December 31, Amount 2023 $ 829,045 2024 846,987 2025 802,413 2026 512,756 2027 228,889 Thereafter - Total 3,220,090 L imputed interest ( 269,193 ) Total operating lease
liabilities $ 2,950,897 F- 23 1847
HOLDINGS LLC NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER
31, 2022 AND 2021 Financing
Leases On
May 6, 2021, Kyle’s entered in an equipment financing lease to purchase equipment for $ 276,896 , which matures in December 2027 .
The balance payable was $ 229,080 as of December 31, 2022. On
October 12, 2021, Kyle’s entered in an equipment financing lease to purchase equipment for $ 245,376 , which matures in December
2027 . The balance payable was $ 203,169 as of December 31, 2022. On
March 28, 2022, Kyle’s entered an equipment financing lease to purchase machinery and equipment for $ 316,798 , which matures in January 2028 . The balance payable was $ 274,527 as of December 31, 2022. On
April 11, 2022, Kyle’s entered in an equipment financing lease to purchase machinery and equipment for $ 11,706 , which matures in June 2027 . The balance payable was $ 10,237 as of December 31, 2022. On
July 13, 2022, Kyle’s entered in an equipment financing lease to purchase machinery and equipment for $ 240,260 , which matures in June 2028 . The balance payable was $ 223,179 as of December 31, 2022. As
of December 31, 2022, maturities of financing lease liabilities were as follows: Year
Ending December 31, Amount 2023 $ 234,556 2024 218,099 2025 211,332 2026 211,332 2027 210,042 Thereafter 28,833 Total 1,114,194 L amount representing
interest ( 144,328 ) Present value of minimum
lease payments $ 969,866 NOTE 11—BUSINESS
COMBINATIONS Wolo On
December 22, 2020, the Company 1847 Wolo entered into a stock purchase agreement with Wolo and the Wolo Sellers, pursuant to which 1847
Wolo agreed to acquire all of the issued and outstanding capital stock of Wolo. On
March 30, 2021, the Company, 1847 Wolo, Wolo and the Wolo Sellers entered into amendment No. 1 to the stock purchase agreement and closing
of the acquisition of all of the issued and outstanding capital stock of Wolo was completed (the “Wolo Acquisition”). The
aggregate purchase price was $ 8,344,056 , consisting of (i) $ 6,550,000 in cash, (ii) a 6 % secured promissory note in the aggregate principal
amount of $ 850,000 and (iii) cash paid to seller, net of working capital adjustment, of $ 944,056 . The
Company accounted for the Wolo Acquisition using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations .

on early extinguishment of debt ( 320 ) Gain on forgiveness of debt 380,247 Gain on sale of assets 548,723 Interest expense ( 78,308 ) Other

income (expense) 1,200 TOTAL OTHER INCOME (EXPENSE) 851,542 NET LOSS BEFORE INCOME TAXES 240,405 INCOME TAX EXPENSE - NET INCOME BEFORE NON-CONTROLLING INTERESTS 240,405 LESS

NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS 108,182 NET INCOME ATTRIBUTABLE

TO SHAREHOLDERS $ 132,223 F- 19 1847

HOLDINGS LLC NOTES

TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER

31, 2022 AND 2021 The

following information presents the major classes of line items constituting significant operating, investing and financing cash flow

activities in the unaudited consolidated statements of cash flows relating to discontinued operations for the year ended December 31,

2021: Year

Ended December 31, 2021 Cash flows from operating activities of discontinued operatio Net Income $ 240,405 Adjustments to reconcile

net loss to net cash provided by (used in) operating activities of discontinued operatio Depreciation and amortization 360,746 Amortization of financing

costs and warrant features 2,187 Amortization of operating

lease right-of-use assets 19,007 Gain on forgiveness of

PPP loans ( 380,247 ) Gain on sale of equipment ( 548,723 ) Changes in operating assets

and liabiliti Accounts receivable 10,698 Inventory ( 161,286 ) Prepaid expenses and other

assets 49,222 Accounts payable and accrued

expenses 118,980 Operating lease liability ( 19,007 ) Accrued

expense long-term 137,438 Net

cash used in operating activities from discontinued operations $ ( 170,580 ) Cash flows from investing

activities in discontinued operatio Proceeds from sale of equipment $ 675,000 Purchase of equipment ( 30,697 ) Net cash provided by

investing activities in discontinued operations $ 644,303 Cash flows from financing

activities in discontinued operatio Proceeds from note payable $ 380,385 Repayments

of notes payable ( 589,078 ) Net

cash used in financing activities in discontinued operations $ ( 208,693 ) NOTE

5—RECEIVABLES Receivables

at December 31, 2022 and 2021 consisted of the followin December 31, 2022 December 31, 2021 Trade accounts receivable $ 4,867,749 $ 2,691,702 Vendor rebates receivable 460 126,118 Credit card payments in process of settlement 102,917 116,187 Retainage 603,442 803,989 Total receivables 5,574,568 3,737,996 Allowance for doubtful

accounts ( 359,000 ) ( 359,000 ) Total receivables, net $ 5,215,568 $ 3,378,996 F- 20 1847

HOLDINGS LLC NOTES

TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER

31, 2022 AND 2021 NOTE 6—INVENTORIES Inventories

at December 31, 2022 and 2021 consisted of the followin December 31, 2022 December 31, 2021 Appliances $ 2,155,839 $ 2,206,336 Automotive 934,683 2,064,834 Construction 1,519,345 1,543,980 Total inventories 4,609,867 5,815,150 Less reserve for obsolescence ( 425,848 ) ( 387,848 ) Total inventories, net $ 4,184,019 $ 5,427,302 Inventory

balances are composed of finished goods. Raw materials and work in process inventory are immaterial to the consolidated financial statements. NOTE 7—PROPERTY

AND EQUIPMENT Property

and equipment at December 31, 2022 and 2021 consisted of the followin December 31, 2022 December 31, 2021 Equipment and machinery $ 1,403,817 $ 808,592 Office furniture and equipment 156,960 105,203 Transportation equipment 883,077 864,121 Leasehold improvements 166,760 112,356 Total property and equipment 2,610,614 1,890,272 L Accumulated depreciation ( 725,408 ) ( 194,961 ) Property and equipment,

net $ 1,885,206 $ 1,695,311 Depreciation

expense for the years ended December 31, 2022 and 2021 was $ 578,344 and $ 166,412 , respectively. NOTE 8—INTANGIBLE

ASSETS Intangible

assets at December 31, 2022 and 2021 consisted of the followin December 31, 2022 December 31, 2021 Customer relationships $ 9,024,000 $ 9,024,000 Marketing-related 2,684,000 2,684,000 Technology-related 623,000 623,000 Total intangible assets 12,331,000 12,331,000 L accumulated amortization ( 2,345,871 ) ( 887,103 ) Intangible assets, net $ 9,985,129 $ 11,443,897 F- 21 1847

HOLDINGS LLC NOTES

TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER

31, 2022 AND 2021 Amortization

expense for the years ended December 31, 2022 and 2021 was $ 1,458,768 and $ 742,570 , respectively. Estimated

amortization expense for intangible assets for the next five years consists of the following as of December 31, 2022: Year

Ending December 31, Amount 2023 $ 1,458,768 2024 1,458,768 2025 1,325,778 2026 1,150,640 2027 909,142 Thereafter 3,682,033 Total $ 9,985,129 NOTE 9—ACCOUNTS

PAYABLE AND ACCRUED EXPENSES Accounts

payable and accrued expenses at December 31, 2022 and 2021 consisted of the followin December 31, 2022 December 31, 2021 Trade accounts payable $ 4,129,393 $ 3,117,825 Credit cards payable 357,964 52,300 Accrued payroll liabilities 824,369 263,590 Accrued interest 1,179,875 711,258 Accrued dividends 136,052 242,160 Other accrued liabilities 114,116 431,539 Total accounts payable

and accrued expenses $ 6,741,769 $ 4,818,672 On

July 26, 2022, the Company entered into a conversion agreement with Bevilacqua PLLC, pursuant to which it agreed to convert $ 1,197,280 of the accounts payable owed to it into 285,067 common shares of the Company at a conversion price of $ 4.20 per share. As a result, the

Company recognized a loss on extinguishment of debt of $ 456,109 . F- 22 1847

HOLDINGS LLC NOTES

TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER

31, 2022 AND 2021 NOTE 10—LEASES Operating

Leases On

June 9, 2021, Kyle’s entered into an additional industrial lease agreement with a third party. The lease commenced on January 1,

2022 and is for a term of 62 months, with an option for a renewal term of five years, and provides for a base rent of $3,336 for months

3-4 (with no payments for the first two months), with gradual increases to $7,508 for final year. In addition, Kyle’s is responsible

for its proportionate share of all taxes, insurance and certain operating costs during the lease term. The lease agreement contains customary

events of default, representations, warranties and covenants. The lease increased the operating lease right to use asset and corresponding

operating lease liability by $ 361,158 . On

October 29, 2021, High Mountain entered into a new lease agreement with a third party. The term of the lease commenced on June 1, 2022

(upon the completion of improvements) and is for a period of 61 months. The base rent is $29,400 for months 2-13 (with no payments for

the first month), with gradual increases to $34,394 for months 50-61. In addition, High Mountain is responsible for its proportionate

share of all taxes, insurance and certain operating costs during the lease term. The lease agreement contains customary events of default,

representations, warranties and covenants. The lease increased the operating lease right to use asset and corresponding operating lease

liability by $ 1,718,183 . In

April 2022, Wolo 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 commenced on August 1, 2022 and shall expire on July 31, 2025. Under the terms of the lease renewal,

Wolo 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 the consolidated balance sheets at December 31, 2022 and 2021: December 31, 2022 December 31, 2021 Operating lease right-of-use assets $ 2,854,196 $ 3,192,604 Lease liabilities, current portion 713,100 613,696 Lease liabilities, long-term 2,237,797 2,607,862 Total operating lease

liabilities $ 2,950,897 $ 3,221,558 Weighted-average remaining lease term (months) 47 59 Weighted average discount rate 4.36 % 4.29 % Rent

expense for the years ended December 31, 2022 and 2021 was $ 1,054,936 and $ 448,510 , respectively. As

of December 31, 2022, maturities of operating lease liabilities were as follows: Year

Ending December 31, Amount 2023 $ 829,045 2024 846,987 2025 802,413 2026 512,756 2027 228,889 Thereafter - Total 3,220,090 L imputed interest ( 269,193 ) Total operating lease

liabilities $ 2,950,897 F- 23 1847

HOLDINGS LLC NOTES

TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER

31, 2022 AND 2021 Financing

Leases On

May 6, 2021, Kyle’s entered in an equipment financing lease to purchase equipment for $ 276,896 , which matures in December 2027 .

The balance payable was $ 229,080 as of December 31, 2022. On

October 12, 2021, Kyle’s entered in an equipment financing lease to purchase equipment for $ 245,376 , which matures in December

2027 . The balance payable was $ 203,169 as of December 31, 2022. On

March 28, 2022, Kyle’s entered an equipment financing lease to purchase machinery and equipment for $ 316,798 , which matures in January 2028 . The balance payable was $ 274,527 as of December 31, 2022. On

April 11, 2022, Kyle’s entered in an equipment financing lease to purchase machinery and equipment for $ 11,706 , which matures in June 2027 . The balance payable was $ 10,237 as of December 31, 2022. On

July 13, 2022, Kyle’s entered in an equipment financing lease to purchase machinery and equipment for $ 240,260 , which matures in June 2028 . The balance payable was $ 223,179 as of December 31, 2022. As

of December 31, 2022, maturities of financing lease liabilities were as follows: Year

Ending December 31, Amount 2023 $ 234,556 2024 218,099 2025 211,332 2026 211,332 2027 210,042 Thereafter 28,833 Total 1,114,194 L amount representing

interest ( 144,328 ) Present value of minimum

lease payments $ 969,866 NOTE 11—BUSINESS

COMBINATIONS Wolo On

December 22, 2020, the Company 1847 Wolo entered into a stock purchase agreement with Wolo and the Wolo Sellers, pursuant to which 1847

Wolo agreed to acquire all of the issued and outstanding capital stock of Wolo. On

March 30, 2021, the Company, 1847 Wolo, Wolo and the Wolo Sellers entered into amendment No. 1 to the stock purchase agreement and closing

of the acquisition of all of the issued and outstanding capital stock of Wolo was completed (the “Wolo Acquisition”). The

aggregate purchase price was $ 8,344,056 , consisting of (i) $ 6,550,000 in cash, (ii) a 6 % secured promissory note in the aggregate principal

amount of $ 850,000 and (iii) cash paid to seller, net of working capital adjustment, of $ 944,056 . The

Company accounted for the Wolo Acquisition using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations .