Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 27, 2020 | Jun. 29, 2019 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | 1847 Holdings LLC | ||
Entity Central Index Key | 0001599407 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Current Reporting Status | Yes | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity Common Stock, Shares Outstanding | 3,165,625 | ||
Entity Public Float | $ 406,250 | ||
Entity File Number | 333-193821 | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation State Country Code | DE |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current Assets | ||
Cash | $ 238,760 | $ 333,880 |
Accounts receivable, net | 2,453,455 | 549,568 |
Vendor deposits | 294,960 | |
Inventories, net | 1,615,432 | 487,690 |
Prepaid expenses and other current assets | 1,123,486 | 145,978 |
TOTAL CURRENT ASSETS | 5,726,093 | 1,517,116 |
Property and equipment, net | 3,367,427 | 4,491,089 |
Operating lease right of use assets | 2,565,835 | |
Goodwill | 4,998,182 | 22,166 |
Intangible assets, net | 1,893,577 | 21,533 |
Deferred tax asset | 635,503 | |
Other assets | 45,375 | 375 |
TOTAL ASSETS | 19,231,992 | 6,052,279 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 4,017,630 | 1,210,984 |
Floor plan payable | 10,581 | 109,100 |
Current portion of operating lease liability | 485,773 | |
Advances, related party | 181,333 | 174,333 |
Lines of credit | 1,250,930 | |
Note payable - related party | 119,400 | 117,000 |
Notes payable - current portion | 5,367,539 | 293,641 |
Uncertain tax liability | 8,000 | |
Warrant liability | 122,344 | |
Convertible promissory note – current portion | 584,943 | |
Customer deposits | 4,164,296 | |
Current portion of financing lease liability | 358,584 | 299,157 |
TOTAL CURRENT LIABILITIES | 16,663,353 | 2,212,215 |
Non-current notes-payable | 3,262,434 | |
Operating lease liability - long term, net of current portion | 2,080,062 | |
Notes payable - long term, net of current portion | 3,256,469 | 1,025,000 |
Contingent note payable | 49,248 | |
Non-current deferred tax liability | 364,601 | |
Accrued expenses - long term, related party | 905,780 | 451,857 |
Financing lease liability, net of current portion | 275,874 | 763,239 |
TOTAL LIABILITIES | 23,230,786 | 8,079,346 |
SHAREHOLDERS' DEFICIT | ||
Allocation shares, 1,000 shares issued and outstanding | 1,000 | 1,000 |
Common Shares, 500,000,000 shares authorized, 3,165,625 and 3,115,625 shares issued and outstanding as of December 31, 2019 and 2018, respectively | 3,165 | 3,115 |
Additional paid-in capital | 442,014 | 11,891 |
Accumulated deficit | (4,402,043) | (2,155,084) |
TOTAL SHAREHOLDERS' DEFICIT | (3,955,864) | (2,139,078) |
NONCONTROLLING INTERESTS | (42,930) | 112,011 |
TOTAL SHAREHOLDERS' DEFICIT | (3,998,794) | (2,027,067) |
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | $ 19,231,992 | $ 6,052,279 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - shares | Dec. 31, 2019 | Dec. 31, 2018 |
SHAREHOLDERS' DEFICIT | ||
Allocation shares, issued | 1,000 | 1,000 |
Allocation shares, outstanding | 1,000 | 1,000 |
Common shares, authorized | 500,000,000 | 500,000,000 |
Common shares, issued | 3,165,625 | 3,115,625 |
Common shares, outstanding | 3,165,625 | 3,115,625 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
REVENUES | ||
Services | $ 4,201,414 | $ 4,631,507 |
Sales of parts and equipment | 2,178,611 | 2,702,340 |
Furniture and appliances | 34,668,113 | |
TOTAL REVENUE | 41,048,138 | 7,333,847 |
OPERATING EXPENSES | ||
Cost of sales | 30,426,194 | 2,370,757 |
Personnel costs | 5,137,946 | 2,269,059 |
Depreciation and amortization | 1,623,908 | 1,441,898 |
Fuel | 718,495 | 874,187 |
General and administrative | 6,177,588 | 1,896,541 |
TOTAL OPERATING EXPENSES | 44,084,131 | 8,852,442 |
LOSS FROM OPERATIONS | (3,035,993) | (1,518,595) |
OTHER INCOME (EXPENSE) | ||
Financing costs and loss on early extinguishment of debt | (552,561) | (536,491) |
Gain on write-down of contingency | 32,246 | 395,634 |
Interest expense | (1,206,991) | (562,629) |
Change in warrant liability | 106,900 | |
Other income (expense) | 15,010 | (129,400) |
Gain (loss) on sale of property and equipment | 57,603 | 28,408 |
TOTAL OTHER INCOME (EXPENSE) | (1,547,793) | (804,478) |
NET LOSS BEFORE INCOME TAXES | (4,583,786) | (2,323,073) |
INCOME TAX EXPENSE (BENEFIT) | (1,202,363) | (781,200) |
NET LOSS BEFORE NON-CONTROLLING INTERESTS | (3,381,423) | (1,541,873) |
NON-CONTROLLING INTEREST | (1,134,464) | (546,513) |
NET LOSS ATTRIBUTABLE TO 1847 HOLDINGS SHAREHOLDERS | $ (2,246,959) | $ (995,360) |
Net Loss Per Common Share: Basic and diluted | $ (1.07) | $ (0.50) |
Weighted-average number of common shares outstanding: Basic and diluted | 3,152,349 | 3,115,625 |
Consolidated Statement of Share
Consolidated Statement of Shareholders’ Deficit - USD ($) | Common Shares | Allocation Shares | Additional Paid-In Capital | Accumulated Deficit | Non-Controlling Interest | Total |
Balance at Dec. 31, 2017 | $ 3,115 | $ 1,000 | $ 11,891 | $ (1,159,724) | $ 658,524 | $ (485,194) |
Balance, Shares at Dec. 31, 2017 | 3,115,625 | |||||
Net loss | (995,360) | (546,513) | (1,541,873) | |||
Balance at Dec. 31, 2018 | $ 3,115 | 1,000 | 11,891 | (2,155,084) | 112,011 | (2,027,067) |
Balance, Shares at Dec. 31, 2018 | 3,115,625 | |||||
Non-controlling inaterest granted in the acquisition of Goedeker | 979,523 | 979,523 | ||||
Common shares and warrants issued in connection with convertible note payable | $ 50 | 430,123 | 430,173 | |||
Common shares and warrants issued in connection with convertible note payable, Shares | 50,000 | |||||
Net loss | (2,246,959) | (1,134,464) | (3,381,423) | |||
Balance at Dec. 31, 2019 | $ 3,165 | $ 1,000 | $ 442,014 | $ (4,402,043) | $ (42,930) | $ (3,998,794) |
Balance, Shares at Dec. 31, 2019 | 3,165,625 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
OPERATING ACTIVITIES | ||
Net loss | $ (3,381,423) | $ (1,541,873) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Gain on sale of property and equipment | (57,603) | (28,408) |
Depreciation and amortization | 1,623,908 | 1,441,898 |
Amortization of financing costs | 29,239 | |
Gain on write-down of contingency | (32,246) | (395,634) |
Write-down of assets | 129,400 | |
Loss on extinguishment of debt | 536,534 | |
Amortization of debt discounts | 605,272 | 42,506 |
Amortization of operating lease right of use assets | 358,322 | |
Change in warrant liability | (106,900) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,447,705) | (239,205) |
Vendor deposits | (294,960) | |
Inventory | 723,509 | 240,353 |
Prepaid expenses and other assets | 148,272 | (28,184) |
Accounts payable and accrued expenses | (1,012,225) | 433,739 |
Operating lease liability | (358,322) | |
Customer deposits | 1,855,989 | |
Deferred taxes and uncertain tax position | (1,008,104) | (742,000) |
Due to related parties | 7,000 | (5,370) |
Accrued expense long-term | 453,923 | |
Net cash used in operating activities | (1,923,293) | (127,005) |
INVESTING ACTIVITIES | ||
Proceeds from the sale of property and equipment | 143,711 | 320,775 |
Purchase of equipment | (191,032) | (10,807) |
Net cash provided by investing activities | (47,321) | 309,968 |
FINANCING ACTIVITIES | ||
Proceeds from short-term borrowings | 463,137 | |
Proceeds from convertible note payable | 650,000 | |
Proceeds from notes payable | 1,527,000 | 16,297 |
Repayments of notes payable | (661,259) | (75,534) |
Repayment of floor plan | (98,519) | |
Proceeds from note payable – related party | 2,400 | 117,000 |
Proceeds (repayment) from lines of credit, net | 1,339,430 | (275,000) |
Repayment of capital lease | (524,058) | |
Financing costs and early extinguishment of debt | (359,500) | (596,405) |
Net cash provided by (used in) financing activities | 1,875,494 | (350,505) |
NET CHANGE IN CASH | (95,120) | (167,542) |
CASH | ||
Beginning of period | 333,880 | 501,422 |
End of period | $ 238,760 | $ 333,880 |
Organization and Nature of Busi
Organization and Nature of Business | 12 Months Ended |
Dec. 31, 2019 | |
Organization and Nature of Business [Abstract] | |
ORGANIZATION AND NATURE OF BUSINESS | NOTE 1—ORGANIZATION AND NATURE OF BUSINESS 1847 Holdings LLC (the "Company") was formed under the laws of the State of Delaware on January 22, 2013. The Company is in the business of acquiring small businesses in a variety of different industries. On March 3, 2017, the Company's wholly-owned subsidiary 1847 Neese Inc., a Delaware corporation ("1847 Neese"), entered into a stock purchase agreement with Neese, Inc., an Iowa corporation ("Neese"), and Alan Neese and Katherine Neese, pursuant to which 1847 Neese acquired all of the issued and outstanding capital stock of Neese. As a result of this transaction, the Company owns 55% of 1847 Neese, with the remaining 45% held by the sellers. On January 10, 2019, the Company established 1847 Goedeker Inc. ("Goedeker") as a wholly-owned subsidiary in the State of Delaware in connection with the proposed acquisition of assets from Goedeker Television Co., Inc., a Missouri corporation ("Goedeker Television"), described below. On March 20, 2019, the Company established 1847 Goedeker Holdco Inc. ("1847 Goedeker") as a wholly-owned subsidiary in the State of Delaware and subsequently transferred all of its shares in Goedeker to 1847 Goedeker, such that Goedeker became a wholly-owned subsidiary of 1847 Goedeker. On January 18, 2019, Goedeker entered into an asset purchase agreement with Goedeker Television and Steve Goedeker and Mike Goedeker, pursuant to which, on April 5, 2019, Goedeker acquired substantially all of the assets of Goedeker Television used in its retail appliance and furniture business (see Note 9). As a result of this transaction, the Company owns 70% of 1847 Goedeker, with the remaining 30% held by third-parties. (See Note 17). The consolidated financial statements include the accounts of the Company and its consolidated subsidiaries, 1847 Neese, Neese, 1847 Goedeker and Goedeker. All significant intercompany balances and transactions have been eliminated in consolidation. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") and are presented in US dollars. Accounting Basis The Company uses the accrual basis of accounting and GAAP. The Company has adopted a calendar year end. Stock Splits On January 22, 2018, the Company completed a 1-for-5 reverse split of its outstanding common shares. As a result of this stock split, the Company's issued and outstanding common shares decreased from 3,115,500 to 623,125 shares. On May 10, 2018, the Company completed a 5-for-1 forward stock split of its outstanding common shares. As a result of this stock split, the Company's issued and outstanding common shares increased from 623,125 to 3,115,625 shares. Accordingly, all share and per share information has been restated to retroactively show the effect of these stock splits. Segment Reporting The Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") Topic 280, Segment Reporting The Land Management Segment will be responsible for the activities that provide professional services on waste disposal and land application services based in Grand Junction, Iowa. The Retail and Appliances Segment will be responsible for the activities in e-commerce destination for home furnishings, including appliances, furniture, bath and kitchen fixtures, décor, lighting and home goods based in St. Louis, Missouri. The Company provides general corporate services to its segments; however, these services are not considered when making operating decisions and assessing segment performance. These services are reported under "Holding Company" below and these include costs associated with executive management, financing activities and public company compliance. Cash and Cash Equivalents The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain Statements of Operations reclassifications have been made in the presentation of the Company's prior financial statements and accompanying notes to conform to the presentation as of and for the year ended December 31, 2019. The Company reclassified certain operating expense accounts in the Consolidated Statement of Operations. The reclassification had no impact on financial position, net income, or shareholder's equity. Revenue Recognition and Cost of Revenue On January 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue Recognition Land Management Segment Neese's payment terms are due on demand from acceptance of delivery. Neese does not incur incremental costs obtaining purchase orders from customers, however, if Neese did, because all of Neese's contracts are less than a year in duration, any contract costs incurred would be expensed rather than capitalized. The revenue that Neese recognizes arises from orders it receives from customers. Neese's performance obligations under the customer orders correspond to each service delivery or sale of equipment that Neese makes to customers under the purchase orders; as a result, each purchase order generally contains only one performance obligation based on the service or equipment sale to be completed. Control of the delivery transfers to customers when the customer is able to direct the use of, and obtain substantially all of the benefits from, Neese's products, which generally occurs at the later of when the customer obtains title to the equipment or when the customer assumes risk of loss. The transfer of control generally occurs at a point of delivery. Once this occurs, Neese has satisfied its performance obligation and Neese recognizes revenue. Neese also sells equipment by posting it on auction sites specializing in farm equipment. Neese posts the equipment for sale on a "magazine" site for several weeks before the auction. When Neese decides to sell, it moves the equipment to the auction site. The auctions are one day. If Neese accepts a bid, the customer pays the bid price and arranges for pick-up of the equipment. Transaction Price ‒ Neese agrees with customers on the selling price of each transaction. This transaction price is generally based on the agreed upon service fee. In Neese's contracts with customers, it allocates the entire transaction price to the service fee to the customer, which is the basis for the determination of the relative standalone selling price allocated to each performance obligation. Any sales tax, value added tax, and other tax Neese collects concurrently with revenue-producing activities are excluded from revenue. If Neese continued to apply legacy revenue recognition guidance for the year ended December 31, 2019, revenues, gross margin, and net loss would not have changed. Substantially all of Neese's sales are to businesses, including farmers or municipalities and very little to individuals. Disaggregated Revenue ‒ Neese disaggregates revenue from contracts with customers by contract type, as it believes it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Neese's revenue by contract type is as follows: Year Ended 2019 2018 Revenues Trucking $ 1,579,660 $ 2,060,992 Waste hauling and pumping 1,901,314 1,844,053 Repairs 377,004 413,210 Other 343,436 313,252 Total services 4,201,414 4,631,057 Sales of parts and equipment 2,178,611 2,702,340 Total revenue $ 6,380,025 $ 7,333,847 Performance Obligations ‒ Performance obligations for the different types of services are discussed below: ● Trucking ● Waste Hauling and pumping ● Repairs ● Sales of parts and equipment Accounts Receivable, Net ‒ Accounts receivable, net, are amounts due from customers where there is an unconditional right to consideration. Unbilled receivables of $121,989 and $139,766 are included in this balance at December 31, 2019 and 2018, respectively. The payment of consideration related to these unbilled receivables is subject only to the passage of time. Neese reviews accounts receivable on a periodic basis to determine if any receivables will potentially be uncollectible. Estimates are used to determine the amount of the allowance for doubtful accounts necessary to reduce accounts receivable to its estimated net realizable value. The estimates are based on an analysis of past due receivables, historical bad debt trends, current economic conditions, and customer specific information. After Neese has exhausted all collection efforts, the outstanding receivable balance relating to services provided is written off against the allowance. Additions to the provision for bad debt are charged to expense. Neese determined that an allowance for loss of $29,001 was required at December 31, 2019 and 2018. Retail and Appliances Segment Goedeker collects the full sales price from the customer at the time the order is placed. Goedeker does not incur incremental costs obtaining purchase orders from customers, however, if Goedeker did, because all Goedeker's contracts are less than a year in duration, any contract costs incurred would be expensed rather than capitalized. The revenue that Goedeker recognizes arises from orders it receives from customers. Goedeker's performance obligations under the customer orders correspond to each sale of merchandise that it makes to customers under the purchase orders; as a result, each purchase order generally contains only one performance obligation based on the merchandise sale to be completed. Control of the delivery transfers to customers when the customer can direct the use of, and obtain substantially all the benefits from, Goedeker's products, which generally occurs when the customer assumes the risk of loss. The transfer of control generally occurs at the point of shipment. Once this occurs, Goedeker has satisfied its performance obligation and Goedeker recognizes revenue. Revenue from the sale of long-term service warranties are recognized net of costs to sell the contracts to the third-party warranty service company. Transaction Price ‒ Goedeker agrees with customers on the selling price of each transaction. This transaction price is generally based on the agreed upon sales price. In Goedeker's contracts with customers, it allocates the entire transaction price to the sales price, which is the basis for the determination of the relative standalone selling price allocated to each performance obligation. Any sales tax, value added tax, and other tax Goedeker collects concurrently with revenue-producing activities are excluded from revenue. If Goedeker continued to apply legacy revenue recognition guidance for the three and year ended December 31, 2019, revenues, gross margin, and net loss would not have changed. Cost of revenue includes the cost of purchased merchandise plus the cost of delivering merchandise and where applicable installation, net of promotional rebates and other incentives received from vendors. Substantially all Goedeker's sales are to individual retail consumers. Disaggregated Revenue Goedeker's revenue by sales type is as follows: Year Ended 2019 2018 Appliance sales $ 29,254,413 $ - Furniture sales 4,814,931 - Other sales 598,769 - Total revenue $ 34,668,113 $ - Performance Obligations – Goedeker's performance obligations include delivery of products and, in some instances, performance of services such as installation. Revenue for the sale of merchandise is recognized upon shipment to the customer; or in some instances, upon delivery and installation of the product which typically occur simultaneously. Receivables Receivables consist of credit card transactions in the process of settlement. Vendor rebates receivable represent amounts due from manufactures from whom the Company purchases products. Rebates receivable are stated at the amount that management expects to collect from manufacturers, net of accounts payable amounts due the vendor. Rebates are calculated on product and model sales programs from specific vendors. The rebates are paid at intermittent periods either in cash or through issuance of vendor credit memos, which can be applied against vendor accounts payable. Based on the Company's assessment of the credit history with its manufacturers, it has concluded that there should be no allowance for uncollectible accounts. The Company historically collects substantially all of its outstanding rebates receivables. Uncollectible balances are expensed in the period it is determined to be uncollectible. Allowance for Credit Losses Provisions for credit losses are charged to income as losses are estimated to have occurred and in amounts sufficient to maintain an allowance for credit losses at an adequate level to provide for future losses on the Company's accounts receivable. The Company charges credit losses against the allowance and credits subsequent recoveries, if any, to the allowance. Historical loss experience and contractual delinquency of accounts receivables, and management's judgment are factors used in assessing the overall adequacy of the allowance and the resulting provision for credit losses. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in economic conditions or portfolio performance. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revisions as more information becomes available. The allowance for credit losses consists of general and specific components. The general component of the allowance estimates credit losses for groups of accounts receivable on a collective basis and relates to probable incurred losses of unimpaired accounts receivables. The Company records a general allowance for credit losses that includes forecasted future credit losses. Inventory Inventory consists of finished products acquired for resale and is valued at the lower-of-cost-or-market with cost determined on a specific item basis for the Neese and of finished products acquired for resale and is valued at the low-of-cost-or-market with cost determined on an average item basis for Goedeker. The Company periodically evaluates the value of items in inventory and provides write-downs to inventory based on its estimate of market conditions. The Company estimated an obsolescence allowance of $425,000 and $0 at December 31, 2019 and 2018, respectively. Property and Equipment Property and equipment is stated at cost. Depreciation of furniture, vehicles and equipment is calculated using the straight-line method over the estimated useful lives as follows: Useful Life Building and Improvements 4 Machinery and Equipment 3-7 Tractors 3-7 Trucks and Vehicles 3-6 Goodwill and Intangible Assets In applying the acquisition method of accounting, amounts assigned to identifiable assets and liabilities acquired were based on estimated fair values as of the date of acquisition, with the remainder recorded as goodwill. Identifiable intangible assets are initially valued at fair value using generally accepted valuation methods appropriate for the type of intangible asset. Identifiable intangible assets with definite lives are amortized over their estimated useful lives and are reviewed for impairment if indicators of impairment arise. Intangible assets with indefinite lives are tested for impairment within one year of acquisitions or annually as of December 1, and whenever indicators of impairment exist. The fair value of intangible assets are compared with their carrying values, and an impairment loss would be recognized for the amount by which a carrying amount exceeds its fair value. Acquired identifiable intangible assets are amortized over the following periods: Acquired intangible Asset Amortization Basis Expected Life (years) Customer-Related Straight-line basis 5-15 Marketing-Related Straight-line basis 5 Long-Lived Assets The Company reviews its property and equipment and any identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The test for impairment is required to be performed by management at least annually. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted operating cash flow expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. Fair Value of Financial Instruments The Company's financial instruments consist of cash and cash equivalents and amounts due to shareholders. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements. Derivative Instrument Liability The Company accounts for derivative instruments in accordance with ASC 815, Derivatives and Hedging Income Taxes Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. Stock-Based Compensation Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options. Basic Income (Loss) Per Share Basic income (loss) per share is calculated by dividing the net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. As the Company had a net loss for the year ended December 31, 2019, the following 895,565 potentially dilutive securities were excluded from diluted loss per share: 200,000 for outstanding warrants and 695,565 related to the convertible note payable and accrued interest. There are no such common share equivalents outstanding as of December 31, 2018. Going Concern Assessment Management assesses going concern uncertainty in the Company's consolidated financial statements to determine whether there is sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the consolidated financial statements are issued or available to be issued, which is referred to as the "look-forward period", as defined in GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, management will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, its ability to delay or curtail expenditures or programs and its ability to raise additional capital, if necessary, among other factors. Based on this assessment, as necessary or applicable, management makes certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent it deems probable those implementations can be achieved and management has the proper authority to execute them within the look-forward period. The Company has generated losses since its inception and has relied on cash on hand, external bank lines of credit, issuance of third party and related party debt and the sale of a note to support cashflow from operations. As of and for the year ended December 31, 2019, the Company had a net loss attributable to 1847 Holdings' shareholders of $2,246,959, and net cash used in operations of $1,923,293. For the year ended December 31, 2019, the Company incurred operating losses of $3,381,000 (before deducting losses attributable to non-controlling interests) and incurred negative cash flows from operations of $1,923,293 and negative working capital of $10,937,260. Losses from operations include approximately $673,000 of expenses incurred in connection with the acquisition of the assets of Goedeker Television on April 5, 2019. Also, management believes the Company is owed $809,000 related to a working capital adjustment, which is disputed by Goedeker Television. This matter is being pursued through a legal process (See Note 9). In addition to the estimates of funds available from operations, the Company has unpledged assets that it believes could provide for $474,000 of additional borrowings. Management has prepared estimates of operations for fiscal year 2020 and believes that sufficient funds will be generated from operations to fund its operations, and to service its debt obligations for one year from the date of the filing of the consolidated financial statements in the Company's Annual Report on Form 10-K, indicate improved operations and the Company's ability to continue operations as a going concern. The impact of COVID-19 on the Company's business has been considered in these assumptions; however, it is too early to know the full impact of COVID-19 or its timing on a return to more normal operations. Further, the recently enacted stimulus bill provides for economic assistance loans through the United States Small Business Administration. The Company is actively pursuing the possibility of obtaining such loans. The accompanying consolidated financial statements have been prepared on a going concern basis under which the Company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business. Management believes that based on relevant conditions and events that are known and reasonably knowable that its forecasts. The Company has contingency plans to reduce or defer expenses and cash outlays should operations not improve in the look forward period. Recent Accounting Pronouncements Not Yet Adopted In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment. In June 2016, the FASB issued ASU 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Recently Adopted In February 2016, the FASB issued ASU 2016-02, Leases |
Business Segments
Business Segments | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENTS | NOTE 3 – BUSINESS SEGMENTS Summarized financial information concerning the Company's reportable segments is presented below: For the Year Ended December 31, 2019 For the Year Ended December 31, 2018 Land Management Services Retail & Appliances Corporate Services Total Land Management Services Retail & Appliances Corporate Services Total Revenue Services $ 4,201,414 $ - $ - $ 4,201,414 $ 4,631,507 $ - $ - $ 4,631,507 Sales of parts and equipment 2,178,611 - - 2,178,611 2,702,340 - - 2,702,340 Furniture and appliances revenue - 34,668,113 - 34,668,113 - - - - Total Revenue 6,380,025 34,668,113 - 41,048,138 7,333,847 - - 7,333,847 Total cost of sales 1,830,067 28,596,127 - 30,426,194 2,370,757 - - 2,370,757 Total operating expenses 5,707,272 7,789,224 161,441 13,657,937 6,161,835 - 319,850 6,481,685 Loss from operations $ (1,157,314 ) $ (1,717,238 ) $ (161,441 ) $ (3,035,993 ) $ (1,198,745 ) $ - $ (319,850 ) $ (1,518,595 ) |
Receivables
Receivables | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
RECEIVABLES | NOTE 4—RECEIVABLES At December 31, 2019 and 2018, receivables consisted of the following: December 31, December 31, Credit card payments in process of settlement $ 406,838 $ - Vendor rebates receivable 1,380,369 - Trade receivables from customers 695,249 578,569 Total receivables 2,482,456 578,569 Allowance for doubtful accounts (29,001 ) (29,001 ) Accounts receivable, net $ 2,453,455 $ 549,568 |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2019 | |
Inventory, Net [Abstract] | |
INVENTORIES | NOTE 5—INVENTORIES At December 31, 2019 and 2018, the inventory balances are composed of: December 31, December 31, Machinery and Equipment $ 119,444 $ 427,551 Parts 142,443 159,685 Appliances 1,562,359 - Furniture 189,376 - Other 53,356 - Subtotal 2,066,978 587,236 Allowance for inventory obsolescence (451,546 ) (99,546 ) Inventories, net $ 1,615,432 $ 487,690 Inventory and accounts receivable are pledged to secure a loan from Burnley, SBCC and Home State Bank described and defined in the notes below. |
Deposits with Vendors
Deposits with Vendors | 12 Months Ended |
Dec. 31, 2019 | |
Deposits With Vendors [Abstract] | |
DEPOSITS WITH VENDORS | NOTE 6—DEPOSITS WITH VENDORS Deposits with vendors represent cash on deposit with one vendor arising from accumulated rebates paid by the vendor. The deposits are used by the vendor to seek to secure the Company's purchases. The deposit can be withdrawn at any time up to the amount of the Company's credit line with the vendor. Alternatively, the Company could secure their credit line with a floor plan line from a lender and withdraw all its deposits. The Company has elected to leave the deposits with the vendor on which it earns interest income. As of December 31, 2019 and 2018, deposits with vendors totaled $294,960 and $-0-, respectively. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 7—PROPERTY AND EQUIPMENT Property and equipment consist of the following at December 31, 2019 and 2018: Classification December 31, December 31, Buildings and improvements $ 5,338 $ 5,338 Equipment and machinery 3,120,498 2,943,490 Tractors 2,694,888 2,834,888 Trucks and other vehicles 1,138,304 1,147,304 Leasehold improvements 117,626 - Total 7,076,654 6,931,020 Less: Accumulated depreciation (3,709,227 ) (2,439,931 ) Property and equipment, net $ 3,367,427 $ 4,491,089 Depreciation expense for the years ended December 31, 2019 and 2018 was $1,378,952 and $1,435,098, respectively. All property and equipment are pledged to secure loans from Burnley, SBCC and Home State Bank as described and defined in the notes below. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2019 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
INTANGIBLE ASSETS | NOTE 8—INTANGIBLE ASSETS The following provides a breakdown of identifiable intangible assets as of December 31, 2019 and 2018: December 31, December 31, Customer Relationships Identifiable intangible assets, gross $ 783,000 $ 34,000 Accumulated amortization (56,023 ) (12,467 ) Customer relationship identifiable intangible assets, net 726,977 21,533 Marketing Related Identifiable intangible assets, gross 1,368,000 - Accumulated amortization (201,400 ) - Marketing related identifiable intangible assets, net 1,166,600 - Total Identifiable intangible assets, net $ 1,893,577 $ 21,533 In connection with the acquisitions of Goedeker and Neese, the Company identified intangible assets of $2,151,000 and $34,000, respectively, representing trade names and customer relationships. These assets are being amortized on a straight-line basis over their weighted average estimated useful life of 4.6 years and amortization expense amounted to $244,956 and $6,800 for the years ended December 31, 2019 and 2018, respectively. As of December 31, 2019, the estimated annual amortization expense for each of the next five fiscal years is as follows: 2020 $ 330,332 2021 330,332 2022 324,665 2023 323,532 2024 584,716 Total $ 1,893,577 |
Acquisition
Acquisition | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
ACQUISITION | NOTE 9—ACQUISITION On January 18, 2019, Goedeker entered into an asset purchase agreement with Goedeker Television and Steve Goedeker and Mike Goedeker (the "Stockholders"), pursuant to which Goedeker agreed to acquire substantially all of the assets of Goedeker Television used in its retail appliance and furniture business (the "Goedeker Business"). On April 5, 2019, Goedeker, 1847 Goedeker, and the Stockholders entered into an amendment to the asset purchase agreement and closing of the acquisition of substantially all of the assets of Goedeker Television used in the Goedeker Business was completed (the "Acquisition"). The acquisition provided an addition to the Company's objective of a diversified portfolio of acquisitions. The aggregate purchase price was $6,200,000 consisting of: (i) $1,500,000 in cash, subject to adjustment; (ii) the issuance of a promissory note in the principal amount of $4,100,000; and (iii) up to $600,000 in earn out payments (as described below). As additional consideration, 1847 Goedeker agreed to issue to each of the Stockholders a number of shares of its common stock equal to a 11.25% non-dilutable interest (22.5% total) in all of the issued and outstanding stock of 1847 Goedeker as of the closing date. The Goedeker Television is also entitled to receive the following earn out payments to the extent the Goedeker Business achieves the applicable EBITDA (as defined in the asset purchase agreement) targets: 1. An earn out payment of $200,000 if the EBITDA of the Goedeker Business for the trailing twelve (12) month period from the closing date is $2,500,000 or greater; 2. An earn out payment of $200,000 if the EBITDA of the Goedeker Business for the trailing twelve (12) month period from the first anniversary of closing date is $2,500,000 or greater; and 3. An earn out payment of $200,000 if the EBITDA of the Goedeker Business for the trailing twelve (12) month period from the second anniversary of the closing date is $2,500,000 or greater. To the extent the EBITDA of the Goedeker Business for any applicable period is less than $2,500,000 but greater than $1,500,000, Goedeker must pay a partial earn out payment to Goedeker Television in an amount equal to the product determined by multiplying (i) the EBITDA Achievement Percentage by (ii) the applicable earn out payment for such period, where the "Achievement Percentage" is the percentage determined by dividing (A) the amount of (i) the EBITDA of the Goedeker Business for the applicable period less (ii) $1,500,000, by (B) $1,000,000. For avoidance of doubt, no partial earn out payments shall be earned or paid to the extent the EBITDA of the Goedeker Business for any applicable period is equal or less than $1,500,000. To the extent Goedeker Television is entitled to all or a portion of an earn out payment, the applicable earn out payment(s) (or portion thereof) shall be paid on the date that is three (3) years from the closing date, and shall accrue interest from the date on which it is determined Goedeker Television is entitled to such earn out payment (or portion thereof) at a rate equal to five percent (5%) per annum, computed on the basis of a 360 day year for the actual number of days elapsed. The rights of Goedeker Television to receive any earn out payment are subordinate to the rights of Burnley and SBCC under separate subordination agreements that Goedeker Television entered into with them on April 5, 2019 in connection with the Acquisition (see Notes 10 and 11). The Company determined the fair value of the earnout on the date of acquisition was $81,494. Such amount was recorded as a contingent consideration liability within the accounts payable and accrued expense line item on the consolidated balance sheet and is revalued to fair value each reporting period until settled. The year 1 contingent liability of $32,246 was written-off in the year ending December 31, 2019 as the target was not met and the balance of the liability at December 31, 2019 is $49,248. The provisional fair value of the purchase consideration issued to Goedeker Television was allocated to the net tangible assets acquired. The Company accounted for the Acquisition as the purchase of a business under GAAP under the acquisition method of accounting, and the assets and liabilities acquired were recorded as of the acquisition date, at their respective fair values and consolidated with those of the Company. The fair value of the net liabilities assumed was approximately $492,601. The excess of the aggregate fair value of the net tangible assets has been allocated to goodwill. The Company is currently in the process of completing the preliminary purchase price allocation as an acquisition of certain assets. The final purchase price allocation for Goedeker will be included in the Company's financial statements in future periods. The table below shows preliminary analysis for the Goedeker asset purchase: Provisional Purchase Consideration at preliminary fair value: Note payable, net of $462,102 debt discount and $215,500 of capitalized financing costs $ 3,422,398 Contingent note payable 81,494 Non-controlling interest 979,523 Amount of consideration $ 4,483,415 Assets acquired and liabilities assumed at preliminary fair value Cash $ - Accounts receivable 456,182 Inventories 1,851,251 Working capital adjustment receivable and other assets 1,104,863 Property and equipment 216,286 Customer related intangibles 749,000 Marketing related intangibles 1,368,000 Accounts payable and accrued expenses (3,929,876 ) Customer deposits (2,308,307 ) Other liabilities - Net tangible assets acquired (liabilities assumed) $ (492,601 ) Total net assets acquired (liabilities assumed) $ (492,601 ) Consideration paid 4,483,415 Preliminary Goodwill $ 4,976,016 The following presents the pro-forma combined results of operations of the Company as if the Acquisition was completed on January 1, 2018 (before non-controlling interest). For the Years Ended 2019 2018 Revenues, net $ 53,995,037 $ 63,641,807 Net income (loss) allocable to common shareholders $ (3,189,209 ) $ 1,010,018 Net loss per share $ (1.01 ) $ 0.32 Weighted average number of shares outstanding 3,165,625 3,165,625 The unaudited pro forma results of operations are presented for information purposes only. The unaudited pro-forma results of operations are not intended to present actual results that would have been attained had the Acquisition been completed as of January 1, 2018 or to project potential operating results as of any future date or for any future periods. The revenue and net loss before non-controlling interest of Goedeker since April 5, 2019 acquisition date through December 31, 2019 included in the consolidated income statement amounted to approximately $34,668,113 and $2,878,700, respectively. The estimated useful life remaining on the property and equipment acquired is 4 to 5 years. |
Lines of Credit
Lines of Credit | 12 Months Ended |
Dec. 31, 2019 | |
Lines of Credit [Abstract] | |
LINES OF CREDIT | NOTE 10—LINES OF CREDIT Burnley Capital LLC On April 5, 2019, Goedeker, as borrower, and 1847 Goedeker entered into a loan and security agreement with Burnley Capital LLC ("Burnley") for revolving loans in an aggregate principal amount that will not exceed the lesser of (i) the borrowing base or (ii) $1,500,000 (provided that such amount may be increased to $3,000,000 in Burnley's sole discretion) minus reserves established Burnley at any time in accordance with the loan and security agreement. The "borrowing base" means an amount equal to the sum of the following: (i) the product of 85% multiplied by the liquidation value of Goedeker's inventory (net of all liquidation costs) identified in the most recent inventory appraisal by an appraiser acceptable to Burnley (ii) multiplied by Goedeker's eligible inventory (as defined in the loan and security agreement), valued at the lower of cost or market value, determined on a first-in-first-out basis. In connection with the closing of the Acquisition on April 5, 2019, Goedeker borrowed $744,000 under the loan and security agreement and issued a revolving note to Burnley in the principal amount of up to $1,500,000. There is no available borrowing base and the balance of the line of credit amounts to $571,997 as of December 31, 2019, comprised of principal of $660,497 and net of unamortized debt discount of $88,500. The revolving note matures on April 5, 2022, provided that at Burnley's sole and absolute discretion, it may agree to extend the maturity date for two successive terms of one year each. The revolving note bears interest at a per annum rate equal to the greater of (i) the LIBOR Rate (as defined in the loan and security agreement) plus 6.00% or (ii) 8.50%; provided that upon an event of default (as defined below) all loans, all past due interest and all fees shall bear interest at a per annum rate equal to the foregoing rate plus 3.00%. Goedeker shall pay interest accrued on the revolving note in arrears on the last day of each month commencing on April 30, 2019. Goedeker may at any time and from time to time prepay the revolving note in whole or in part. If at any time the outstanding principal balance on the revolving note exceeds the lesser of (i) the difference of the total loan amount minus any reserves and (ii) the borrowing base, then Goedeker shall immediately prepay the revolving note in an aggregate amount equal to such excess. In addition, in the event and on each occasion that any net proceeds (as defined in the loan and security agreement) are received by or on behalf of Goedeker or 1847 Goedeker in respect of any prepayment event following the occurrence and during the continuance of an event of default, Goedeker shall, immediately after such net proceeds are received, prepay the revolving note in an aggregate amount equal to 100% of such net proceeds. A "prepayment event" means (i) any sale, transfer, merger, liquidation or other disposition (including pursuant to a sale and leaseback transaction) of any property of Goedeker or 1847 Goedeker; (ii) a change of control (as defined in the loan and security agreement); (iii) any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property of Goedeker or 1847 Goedeker with a fair value immediately prior to such event equal to or greater than $25,000; (iv) the issuance by Goedeker of any capital stock or the receipt by Goedeker of any capital contribution; or (v) the incurrence by Goedeker or 1847 Goedeker of any indebtedness (as defined in the loan and security agreement), other than indebtedness permitted under the loan and security agreement. Under the loan and security agreement, Goedeker is required to pay a number of fees to Burnley, including the following: ● a commitment fee during the period from closing to the earlier of the maturity date or termination of Burnley's commitment to make loans under the loan and security agreement, which shall accrue at the rate of 0.50% per annum on the average daily difference of the total loan amount then in effect minus the sum of the outstanding principal balance of the revolving note, which such accrued commitment fees are due and payable in arrears on the first day of each calendar month and on the date on which Burnley's commitment to make loans under the loan and security agreement terminates, commencing on the first such date to occur after the closing date; ● an annual loan facility fee equal to 0.75% of the revolving commitment (i.e., the maximum amount that Goedeker may borrow under the revolving loan), which is fully earned on the closing date for the term of the loan (including any extension) but shall be due and payable on each anniversary of the closing date; ● a monthly collateral management fee for monitoring and servicing the revolving loan equal to $1,700 per month for the term of revolving note, which is fully earned and non-refundable as of the date of the loan and security agreement, but shall be payable monthly in arrears on the first day of each calendar month; provided that payment of the collateral management fee may be made, at the discretion of Burnley, by application of advances under the revolving loan or directly by Goedeker; and ● if the revolving loan is terminated for any reason, including by Burnley following an event of default, then Goedeker shall pay, as liquidated damages and compensation for the costs of being prepared to make funds available, an amount equal to the applicable percentage multiplied by the revolving commitment (i.e., the maximum amount that Goedeker may borrow under the revolving loan), wherein the term applicable percentage means (i) 3%, in the case of a termination on or prior to the first anniversary of the closing date, (ii) 2%, in the case of a termination after the first anniversary of the closing date but on or prior to the second anniversary thereof, and (iii) 0.5%, in the case of a termination after the second anniversary of the closing date but on or prior to the maturity date. The loan and security agreement contains customary events of default, including, among others: (i) for failure to pay principal and interest on the revolving note when due, or to pay any fees due under the loan and security agreement; (ii) if any representation, warranty or certification in the loan and security agreement or any document delivered in connection therewith is incorrect in any material respect; (iii) for failure to perform any covenant or agreement contained in the loan and security agreement or any document delivered in connection therewith; (iv) for the occurrence of any default in respect of any other indebtedness of more than $100,000; (v) for any voluntary or involuntary bankruptcy, insolvency or dissolution; (vi) for the occurrence of one or more judgments, non-interlocutory orders, decrees or arbitration awards involving in the aggregate a liability of $25,000 or more; (vii) if Goedeker or 1847 Goedeker, or officer thereof, is charged by a governmental authority, criminally indicted or convicted of a felony under any law that would reasonably be expected to lead to forfeiture of any material portion of collateral, or such entity is subject to an injunction restraining it from conducting its business; (viii) if Burnley determines that a material adverse effect (as defined in the loan and security agreement) has occurred; (ix) if a change of control (as defined in the loan and security agreement) occurs; (x) if there is any material damage to, loss, theft or destruction of property which causes, for more than thirty consecutive days beyond the coverage period of any applicable business interruption insurance, the cessation or substantial curtailment of revenue producing activities; (xi) if there is a loss, suspension or revocation of, or failure to renew any permit if it could reasonably be expected to have a material adverse effect; and (xii) for the occurrence of any default or event of default under the term loan with SBCC (as defined below), the 9% subordinated promissory note issued to Goedeker Television, the secured convertible promissory note issued to Leonite (as defined below) or any other debt that is subordinated to the revolving loan. The loan and security agreement contains customary representations, warranties and affirmative and negative financial and other covenants for a loan of this type. The revolving note is secured by a first priority security interest in all of the assets of Goedeker and 1847 Goedeker. In connection with such security interest, on April 5, 2019, (i) 1847 Goedeker entered into a pledge agreement with Burnley, pursuant to which 1847 Goedeker pledged the shares of Goedeker held by it to Burnley, and (ii) Goedeker entered into a deposit account control agreement with Burnley, SBCC and Montgomery Bank relating to the security interest in Goedeker's bank accounts. In addition, on April 5, 2019, the Company entered into a guaranty with Burnley to guaranty the obligations under the loan and security agreement upon the occurrence of certain prohibited acts described in the guaranty. The rights of Burnley to receive payments under the revolving note are subordinate to the rights of Northpoint (as defined below) under a subordination agreement that Burnley entered into with Northpoint. At December 31, 2019, Goedeker did not meet certain loan covenants under the loan and security agreement. The agreement requires compliance with the following ratios as a percentage of earnings before interest, taxes, depreciation, and amortization for the twelve-month period ended December 31, 2019. The table below shows the required ratio and actual ratio for such period. Covenant Actual Required Ratio Total debt ratio (4.2)x 4.50x Senior debt ratio (1.5)x 1.75x Interest coverage ratio (1.1)x 1.0x In addition, Goedeker was not in compliance with a requirement with respect to the liquidity ratio, which is the ratio of cash and available borrowings to customer deposits. At December 31, 2019, the actual ratio was 0.12x compared to a requirement of 0.60x. The loan and security agreement with SBCC described below contains the same covenants and a cross default provision, whereby a default under the Burnley loan and security agreement triggers a default under the SBCC loan and security agreement. Accordingly, the Company is in technical, not payment default, on these loan and security agreements and has classified such debt as a current liability. The Company has developed plans that will return it to full compliance including a recently received proposal from a new asset-based lender. There are no cross default provisions that would require any other long-term liabilities to be classified as current. Although the 9% subordinated promissory note described below contains a cross default provision that is triggered by the acceleration of the senior debt, such cross default provision would only be triggered for a technical default like the one that occurred if the senior lender accelerated the senior debt, which has not happened. Northpoint Commercial Finance LLC On June 24, 2019, Goedeker, as borrower, entered into a loan and security agreement with Northpoint Commercial Finance LLC ("Northpoint"), which was amended on August 2, 2019, for revolving loans up to an aggregate maximum loan amount of $1,000,000 for the acquisition, financing or refinancing by Goedeker of inventory at an interest rate of LIBOR plus 7.99%. The balance of the line of credit amounts to $678,993 as of December 31, 2019 Pursuant to the loan and security agreement, Goedeker shall pay the following fees to Northpoint: (i) an audit fee for each audit conducted as determined by Northpoint, equal to the out-of-pocket expense incurred by Northpoint plus any minimum audit fee established by Northpoint; (ii) a fee for any returned payments equal to the lesser of the maximum amount permitted by law or $50; (iii) a late fee for each payment not received by the 25 th The loan and security agreement contains customary events of default, including in the event of (i) non-payment, (ii) a breach by Goedeker of any of its representations, warranties or covenants under the loan and security agreement or any other agreement entered into with Northpoint, or (iii) the bankruptcy or insolvency of Goedeker. The loan and security agreement contains customary representations, warranties and affirmative and negative financial and other covenants for a loan of this type. The Northpoint loans are secured by a security interest in all of the inventory of Goedeker that is manufactured or sold by vendors identified in the loan and security agreement. In connection with the loan and security agreement, on June 24, 2019, 1847 Goedeker entered into a guaranty in favor of Northpoint, to guaranty the obligations of Goedeker under the loan and security agreement. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 11—NOTES PAYABLE Small Business Community Capital II, L.P. On April 5, 2019, Goedeker, as borrower, and 1847 Goedeker entered into a loan and security agreement with Small Business Community Capital II, L.P. (“SBCC”) for a term loan in the principal amount of $1,500,000, pursuant to which Goedeker issued to SBCC a term note in the principal amount of up to $1,500,000 and a ten-year warrant to purchase shares of the most senior capital stock of Goedeker equal to 5.0% of the outstanding equity securities of Goedeker on a fully-diluted basis for an aggregate price equal to $100. The Company classified the warrant as a derivative liability on the balance sheet of $122,344 and subject to remeasurement on every reporting period. The balance of the note amounts to $999,201 as of December 31, 2019, comprised of principal of $1,312,500, capitalized PIK interest of $21,204, and net of unamortized debt discount of $144,625 and unamortized warrant feature of $189,879. The term note matures on April 5, 2023 and bears interest at the sum of the cash interest rate (defined as 11% per annum) plus the Paid-in-Kind (“PIK”) interest rate (defined as 2% per annum); provided that upon an event of default all principal, past due interest and all fees shall bear interest at a per annum rate equal to the cash interest rate and the PIK interest rate, in each case plus 3.00%. Interest accrued at the cash interest rate shall be due and payable in arrears on the last day of each month commencing May 31, 2019. Interest accrued at the PIK interest rate shall be automatically capitalized, compounded and added to the principal amount of the term note on each last day of each quarter unless paid in cash on or prior to the last day of each quarter; provided that (i) interest accrued pursuant to an event of default shall be payable on demand, and (ii) in the event of any repayment or prepayment, accrued interest on the principal amount repaid or prepaid (including interest accrued at the PIK interest rate and not yet added to the principal amount of term note) shall be payable on the date of such repayment or prepayment. Notwithstanding the foregoing, all interest on term note, whether accrued at the cash interest rate or the PIK interest rate, shall be due and payable in cash on the maturity date unless payment is sooner required by the loan and security agreement. Goedeker must repay to SBCC on the last business day of each March, June, September and December, commencing with the last business day of June 2019, an aggregate principal amount of the term note equal to $93,750, regardless of any prepayments made, and must pay the unpaid principal on the maturity date unless payment is sooner required by the loan and security agreement. Goedeker may prepay the term note in whole or in part from time to time; provided that if such prepayment occurs (i) prior to the first anniversary of the closing date, Goedeker shall pay SBCC an amount equal to 5.0% of such prepayment, (ii) prior to the second anniversary of the closing date and on or after the first anniversary of the closing date, Goedeker shall pay SBCC an amount equal to 3.0% of such prepayment, or (iii) prior to the third anniversary of the closing date and on or after the second anniversary of the closing date, Goedeker shall pay SBCC an amount equal to 1.0% of such prepayment, in each case as liquidated damages for damages for loss of bargain to SBCC. In addition, in the event and on each occasion that any net proceeds (as defined in the loan and security agreement) are received by or on behalf of Goedeker or 1847 Goedeker in respect of any prepayment event following the occurrence and during the continuance of an event of default, Goedeker shall, immediately after such net proceeds are received, prepay the term note in an aggregate amount equal to 100% of such net proceeds. A “prepayment event” means (i) any sale, transfer, merger, liquidation or other disposition (including pursuant to a sale and leaseback transaction) of any property of Goedeker or 1847 Goedeker; (ii) a change of control (as defined in the loan and security agreement); (iii) any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property of Goedeker or 1847 Goedeker with a fair value immediately prior to such event equal to or greater than $25,000; (iv) the issuance by Goedeker of any capital stock or the receipt by Goedeker of any capital contribution; or (v) the incurrence by Goedeker or 1847 Goedeker of any indebtedness (as defined in the loan and security agreement), other than indebtedness permitted under the loan and security agreement. The loan and security agreement with SBCC contains the same events of default as the loan and security agreement with Burnley, provided that the reference to the term loan in the cross-default provision refers instead to the revolving loan. The loan and security agreement contains customary representations, warranties and affirmative and negative financial and other covenants for a loan of this type. The term note is secured by a second priority security interest (subordinate to the revolving loan) in all of the assets of Goedeker and 1847 Goedeker. In connection with such security interest, on April 5, 2019, (i) 1847 Goedeker entered into a pledge agreement with SBCC, pursuant to which 1847 Goedeker pledged the shares of Goedeker held by it to SBCC, and (ii) Goedeker entered deposit account control agreement with Burnley, SBCC and Montgomery Bank relating to the security interest in Goedeker’s bank accounts. In addition, on April 5, 2019, the Company entered into a guaranty with SBCC to guaranty the obligations under the loan and security agreement upon the occurrence of certain prohibited acts described in the guaranty. The rights of SBCC to receive payments under the term note are subordinate to the rights of Northpoint and Burnley under separate subordination agreements that SBCC entered into with them. As noted above, the Company is in technical, not payment default, on this loan and security agreement and has classified such debt as a current liability. Home State Bank On June 13, 2018, Neese entered into a term loan agreement with Home State Bank, pursuant to which Neese issued a promissory note to Home State Bank in the principal amount of $3,654,074 with an annual interest rate of 6.85% with covenants to maintain a minimum debt coverage ratio of 1.00 to 1.25 measured at December 31, 2019. Neese did not comply with this covenant for the year ended December 31, 2019. Accordingly, because of the violation of this covenant and because the loan matures July 20, 2020, the loan is classified as a current liability in the December 31, 2019 balance sheet. Pursuant to the terms of the note, Neese will make semi-annual payments of $302,270 beginning on January 20, 2019 and continuing every six months thereafter until July 20, 2020, the maturity date; provided however, that Neese will pay the note in full immediately upon demand by Home State Bank. The balance of the note amounts to $3,299,364 as of December 31, 2019, comprised of principal of $3,309,537 and net of unamortized debt discount of $10,173. The loan agreement contains customary representations and warranties. Pursuant to the terms of the loan agreement and the note, an “event of default” includes: (i) if Neese fails to make any payment when due under the note; (ii) if Neese fails to comply with or to perform any other term, obligation, covenant or condition contained in the note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Home State Bank and Neese; (iii) if Neese defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Home State Bank’s property or Neese’s ability to repay the note or perform Neese’s obligations under the note or any of the related documents; (iv) if any warranty, representation or statement made or furnished to Home State Bank by Neese or on Neese’s behalf under the note or the related documents is false or misleading in any material respect; (v) upon the dissolution or termination of Neese’s existence as a going business, the insolvency of Neese, the appointment of a receiver for any part of Neese’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Neese, (vi) upon commencement of foreclosure or forfeiture proceedings by any creditor of Neese or by any governmental agency against any collateral securing the loan; and (vii) if a material adverse change occurs in Neese’s financial condition, or Home State Bank believes the prospect of payment or performance of the note is impaired. If any event of default occurs, all commitments and obligations of Home State Bank immediately will terminate and, at Home State Bank’s option, all indebtedness immediately will become due and payable, all without notice of any kind to Neese. Additionally, upon an event of default, the interest rate on the note will be increased by 3 percentage points. However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law. The loan is secured by inventory, accounts receivable, and certain fixed assets of Neese. The loan agreement limited the payment of interest on certain promissory notes (See Note 13) to $40,000 annually or fees to the Company’s manager. The Company continues to accrue interest and management fee at the contractual amounts. Such accruals (in excess of $40,000 in interest on the promissory notes) are shown as long-term accrued expenses in the accompanying balance sheet as of December 31, 2019. If the Company sells property, plant, and equipment securing the loan, it must remit the appraised value of the equipment to Home State Bank. During the year ended December 31, 2019, $30,500 was remitted to Home State Bank pursuant to this requirement. During the year ended December 31, 2019, Home State Bank advanced $27,000 against the term loan to pay the annual liability insurance premium. The Company adopted ASU 2015-03 by deducting $220,379 of net debt issuance costs from the term loan. Amortization of debt issuance costs totaled $32,206 for the year ended December 31, 2019, leaving an ending balance of $10,073 at year end. 9% Subordinated Promissory Note As noted above, a portion of the purchase price for the Acquisition was paid by the issuance by Goedeker to Steve Goedeker, as representative of Goedeker Television, of a 9% subordinated promissory note in the principal amount of $4,100,000. The note will accrue interest at 9% per annum, amortized on a five-year straight-line basis and payable quarterly in accordance with the amortization schedule attached thereto, and mature on April 5, 2023. The remaining balance of the note at December 31, 2019 is $3,300,444, comprised of principal of $3,930,292 and net of unamortized debt discount of $629,848. Goedeker has the right to redeem all or any portion of the note at any time prior to the maturity date without premium or penalty of any kind. The note contains customary events of default, including in the event of (i) non-payment, (ii) a default by Goedeker of any of its covenants under the asset purchase agreement or any other agreement entered into in connection with the asset purchase agreement, or a breach of any of representations or warranties under such documents, or (iii) the bankruptcy of Goedeker. The note also contains a cross default provision which provides that if there occurs with respect to the revolving loan with Burnley or the term loan with SBCC (A) a default with respect to any payment obligation thereunder that entitles the holder thereof to declare such indebtedness to be due and payable prior to its stated maturity or (B) any other default thereunder that entitles, and has caused, the holder thereof to declare such indebtedness to be due and payable prior to maturity. Since the defaults under the loans with Burnley and SBCC are not payment defaults, they fall under clause (B) above and would require Burnley or SBCC to accelerate the payment of indebtedness under their notes (which they have not done) before the cross default provisions would result in a default under this note. The rights of the holder to receive payments under the note are subordinate to the rights of Northpoint, Burnley and SBCC under separate subordination agreements that the holder entered into with them. 8% Vesting Promissory Note A portion of the purchase price for the acquisition of Neese was paid by the issuance of an 8% vesting promissory note in the principal amount of $1,875,000 (which was determined to have no fair value as of December 31, 2019 and 2018) by 1847 Neese and Neese to the sellers of Neese. Payment of the principal and accrued interest on the note was subject to vesting in the event that Neese met Adjusted EBITDA (as defined in the note) targets of $1,300,000 for the fiscal years ended December 31, 2017, 2018 and 2019 and a contingent consideration subject to fair market valuation adjustment at each reporting period. The note bore interest on the vested portion of the principal amount at the rate of eight percent (8%) per annum and was to be due and payable in full on June 30, 2020. Neese did not meet the Adjusted EBITDA target of $1,300,000 for the fiscal year ended December 31, 2017. At June 30, 2018, management made the determination that the vesting note payable had no value because it estimated that the Adjusted EBITDA target of $1,300,000 for both 2018 and 2019 would be not attained, thus eliminating the requirement for a payment under terms of the note payable. As expected, Neese did not meet the Adjusted EBITDA target for the fiscal years ended December 31, 2019. As a result, this note did not vest and no amounts are payable. 10% Promissory Note A portion of the purchase price for the acquisition of Neese was paid by the issuance of a promissory note in the principal amount of $1,025,000 by 1847 Neese and Neese to the sellers of Neese. The promissory note bears interest on the outstanding principal amount at the rate of ten percent (10%) per annum and was due and payable in full on March 3, 2018; provided, however, that the unpaid principal, and all accrued, but unpaid, interest thereon shall be prepaid if at any time, and from time to time, the cash on hand of 1847 Neese and Neese exceeds $250,000 and, then, the prepayment shall be equal to the amount of cash in excess of $200,000 until the unpaid principal and accrued, but unpaid, interest thereon is fully prepaid. The promissory note contains the same events of default as the vesting promissory note. The promissory note has not been repaid, thus the Company is in default under this note. Under terms of the term loan with Home State Bank described in Note 11, this note may not be paid until the term loan is paid in full. The payees on the note agreed to the modification of its terms by signing the loan agreement for the Home State Bank term loan. Accordingly, the loan is shown as a long-term liability as of December 31, 2019. Additionally, the term loan lender limits the payment of interest on this note to $40,000 annually. The Company continues to accrue interest at the contract rate; however, given the limitations of the term loan, all accrued interest in excess of $40,000 is included in long-term accrued expenses. |
Floor Plan Loans Payable
Floor Plan Loans Payable | 12 Months Ended |
Dec. 31, 2019 | |
Floor Plan Loans Payable [Abstract] | |
FLOOR PLAN LOANS PAYABLE | NOTE 12—FLOOR PLAN LOANS PAYABLE At December 31, 2019 and 2018, $10,581 and $109,100 of machinery and equipment inventory was pledged to secure a floor plan loan from a commercial lender. The Company must remit proceeds from the sale of the secured inventory to the floor plan lender and pays a finance charge that can vary monthly at the option of the lender. The balance of the floor plan payable as of December 31, 2019 and 2018 amounted to $10,581 and $109,100, respectively. |
Convertiable Promissory Note
Convertiable Promissory Note | 12 Months Ended |
Dec. 31, 2019 | |
Convertiable Promissory Note | |
CONVERTIBLE PROMISSORY NOTE | NOTE 13—CONVERTIBLE PROMISSORY NOTE On April 5, 2019, the Company, 1847 Goedeker and Goedeker (collectively, “1847”) entered into a securities purchase agreement with Leonite Capital LLC, a Delaware limited liability company (“Leonite”), pursuant to which 1847 issued to Leonite a secured convertible promissory note in the aggregate principal amount of $714,286. As additional consideration for the purchase of the note, (i) the Company issued to Leonite 50,000 common shares, (ii) the Company issued to Leonite a five-year warrant to purchase 200,000 common shares at an exercise price of $1.25 per share (subject to adjustment), which may be exercised on a cashless basis, and (iii) 1847 Goedeker issued to Leonite shares of common stock equal to a 7.5% non-dilutable interest in 1847 Goedeker. The note carries an original issue discount of $64,286 to cover Leonite’s legal fees, accounting fees, due diligence fees and/or other transactional costs incurred in connection with the purchase of the note. Therefore, the purchase price of the note was $650,000. Furthermore, the Company issued 50,000 shares of common stock valued at $137,500 and a debt-discount related to the warrants valued at $292,673. The company amortized $319,031 of financing costs related to the shares and warrants in the year ended December 31, 2019. The remaining net balance of the note at December 31, 2019 is $584,943, comprised of principal of $714,286 and net of unamortized original issuance discount interest of $14,451, financing costs of $38,125 and unamortized debt discount warrant feature of $76,767. The note bears interest at the rate of the greater of (i) 12% per annum and (ii) the prime rate as set forth in the Wall Street Journal on April 5, 2019 plus 6.5% guaranteed over the holding period on the unconverted principal amount, on the terms set forth in the note (the “Stated Rate”). Any amount of principal or interest on the note which is not paid by the maturity date shall bear interest at the rate at the lesser of 24% per annum or the maximum legal amount permitted by law (the “Default Interest”). Beginning on May 5, 2019 and on the same day of each and every calendar month thereafter throughout the term of the note, 1847 shall make monthly payments of interest only due under the note to Leonite at the Stated Rate as set forth above. 1847 shall pay to Leonite on an accelerated basis any outstanding principal amount of the note, along with accrued, but unpaid interest, from: (i) net proceeds of any future financings by the Company, but not its subsidiaries, whether debt or equity, or any other financing proceeds, except any transaction having a specific use of proceeds requirement that such proceeds are to be used exclusively to purchase the assets or equity of an unaffiliated business and the proceeds are used accordingly; (ii) net proceeds from any sale of assets of 1847 or any of its subsidiaries other than sales of assets in the ordinary course of business or receipt by 1847 or any of its subsidiaries of any tax credits, subject to rights of Goedeker, or other financing sources of 1847 (including its subsidiaries) existing prior to the date of the note; and (iii) net proceeds from the sale of any assets outside of the ordinary course of business or securities in any subsidiary. The note will mature 12 months from the issue date, or April 5, 2020, at which time the principal amount and all accrued and unpaid interest, if any, and other fees relating to the note, will be due and payable. Unless an event of default as set forth in the note has occurred, 1847 has the right to prepay principal amount of, and any accrued and unpaid interest on, the note at any time prior to the maturity date at 115% of the principal amount (the “Premium”), provided, however, that if the prepayment is the result of any of the occurrence of any of the transactions described in subparagraphs (i), (ii) or (iii) above then such prepayment shall be the unpaid principal amount, plus accrued and unpaid interest and other amounts due but without the Premium. The note contains customary events of default, including in the event of (i) non-payment, (ii) a breach by 1847 of its covenants under the securities purchase agreement or any other agreement entered into in connection with the securities purchase agreement, or a breach of any of representations or warranties under the note, or (iii) the bankruptcy of 1847. The note also contains a cross default provision, whereby a default by 1847 of any covenant or other term or condition contained in any of the other financial instrument issued by of 1847 to Leonite or any other third party after the passage all applicable notice and cure or grace periods that results in a material adverse effect shall, at Leonite’s option, be considered a default under the note, in which event Leonite shall be entitled to apply all rights and remedies under the terms of the note. Under the note, Leonite has the right at any time at its option to convert all or any part of the outstanding and unpaid principal amount and accrued and unpaid interest of the note into fully paid and non-assessable common shares or any shares of capital stock or other securities of the Company into which such common shares may be changed or reclassified. The number of common shares to be issued upon each conversion of the note shall be determined by dividing the conversion amount by the applicable conversion price then in effect. The conversion amount is the sum of: (i) the principal amount of the note to be converted plus (ii) at Leonite’s option, accrued and unpaid interest, plus (iii) at Leonite’s option, Default Interest, if any, plus (iv) Leonite’s expenses relating to a conversion, plus (v) at Leonite’s option, any amounts owed to Leonite. The conversion price shall be $1.00 per share (subject to adjustment as further described in the note for common share distributions and splits, certain fundamental transactions, and anti-dilution adjustments), provided that at any time after any event of default under the note, the conversion price shall immediately be equal to the lesser of (i) such conversion price less 40%; and (ii) the lowest weighted average price of the common shares during the 21 consecutive trading day period immediately preceding the trading day that 1847 receives a notice of conversion or (iii) the discount to market based on subsequent financings with other investors. Notwithstanding the foregoing, in no event shall Leonite be entitled to convert any portion of the note in excess of that portion of the note upon conversion of which the sum of (1) the number of common shares beneficially owned by Leonite and its affiliates (other than common shares which may be deemed beneficially owned through the ownership of the unconverted portion of the note or the unexercised or unconverted portion of any other security of the Company subject to a limitation on conversion or exercise analogous to the limitations contained in the note, and, if applicable, net of any shares that may be deemed to be owned by any person not affiliated with Leonite who has purchased a portion of the note from Leonite) and (2) the number of common shares issuable upon the conversion of the portion of the note with respect to which the determination of this proviso is being made, would result in beneficial ownership by Leonite and its affiliates of more than 4.99% of the outstanding common shares of the Company. Such limitations on conversion may be waived (up to a maximum of 9.99%) by Leonite upon, at its election, not less than 61 days’ prior notice to the Company, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined by Leonite, as may be specified in such notice of waiver). Concurrently with 1847 and Leonite entering into the securities purchase agreement and as security for 1847’s obligations thereunder, on April 5, 2019, the Company, 1847 Goedeker and Goedeker entered into a security and pledge agreement with Leonite, pursuant to which, in order to secure 1847’s timely payment of the note and related obligations and the timely performance of each and all of its covenants and obligations under the securities purchase agreement and related documents, 1847 unconditionally and irrevocably granted, pledged and hypothecated to Leonite a continuing security interest in and to, a lien upon, assignment of, and right of set-off against, all presently existing and hereafter acquired or arising assets. Such security interest is a first priority security interest with respect to the securities that the Company owns in 1847 Goedeker and in 1847 Neese, and a third priority security interest with respect to all other assets. The rights of Leonite to receive payments under the note are subordinate to the rights of Northpoint, Burnley and SBCC under separate subordination agreements that Leonite entered into with them. |
Financing Leases
Financing Leases | 12 Months Ended |
Dec. 31, 2019 | |
Financing Leases [Abstract] | |
FINANCING LEASES | NOTE 14—FINANCING LEASES The cash portion of the purchase price for the acquisition of Neese was financed under a capital lease transaction for Neese's equipment with Utica Leaseco, LLC ("Utica"), pursuant to a master lease agreement, dated March 3, 2017, between Utica, as lessor, and 1847 Neese and Neese, as co-lessees (collectively, the "Lessee"). Under the master lease agreement, Utica loaned an aggregate of $3,240,000 for certain of Neese's equipment listed therein, which it leases to the Lessee. The initial term of the master lease agreement was for 51 months. Under the master lease agreement, the Lessee agreed to pay a monthly rent of $53,000 for the first three (3) months, with such amount increasing to $85,322 for the remaining forty-eight (48) months. On June 14, 2017, the parties entered into a first amendment to lease documents, pursuant to which the parties agreed to, among other things, extend the term of the master lease agreement from 51 months to 57 months and amend the payments due thereunder. Under the amendment, the Lessee agreed to pay a monthly rent of $53,000 for the first ten (10) months, with such amount increasing to $85,322 for the remaining forty-seven (47) months. In connection with the extension of the term of the master lease agreement, the parties also amended the schedule of stipulated loss values and early termination payment schedule attached thereto. In connection with the amendment, the Lessee agreed to pay Utica an amendment fee of $2,500. On October 31, 2017, the parties entered into a second equipment schedule to the master lease agreement, pursuant to which Utica loaned an aggregate of $980,000 for certain of Neese's equipment listed therein. The term of the second equipment schedule is 51 months and agreed monthly payments are $25,807. If any rent is not received by Utica within five (5) calendar days of the due date, the Lessee shall pay a late charge equal to ten (10%) percent of the amount. In addition, in the event that any payment is not processed or is returned on the basis of insufficient funds, upon demand, the Lessee shall pay Utica a charge equal to five percent (5%) of the amount of such payment. The Lessee is also required to pay an annual administration fee of $5,000. Upon the expiration of the term of the master lease agreement, the Lessee is required to pay, together with all other amounts then due and payable under the master lease agreement, in cash, an end of term buyout price equal to the lesser of: (a) $162,000 (five percent (5%) of the total invoice cost (as defined in the master lease agreement)); or (b) the fair market value of the equipment, as determined by Utica. Upon the expiration of the master lease agreement, the Lessee is required to pay, together with all other amounts then due and payable under the master lease agreement, in cash, an end of term buyout price equal to the lesser of: (a) $49,000 (five percent (5%) of the total invoice cost); or (b) the fair market value of the equipment, as determined by Utica. Provided that no default under the master lease agreement has occurred and is continuing beyond any applicable grace or cure period, the Lessee has an early buy-out option with respect to all but not less than all of the equipment, upon the payment of any outstanding rental payments or other fees then due, plus an additional amount set forth in the master lease agreement, which represents the anticipated fair market value of the equipment as of the anticipated end date of the master lease agreement. In addition, the Lessee shall pay to Utica an administrative charge to be determined by Utica to cover its time and expenses incurred in connection with the exercise of the option to purchase, including, but not limited to, reasonable attorney fees and costs. Furthermore, upon the exercise by the Lessee of this option to purchase the equipment, the Lessee shall pay all sales and transfer taxes and all fees payable to any governmental authority as a result of the transfer of title of the equipment to Lessee. The early buy-out option was not available on the second equipment schedule to the master lease agreement until after December 31, 2018. In connection with the master lease agreement, the Lessee granted a security interest on all of its right, title and interest in and to: (i) the equipment, together with all related software (embedded therein or otherwise) and general intangibles, all additions, attachments, accessories and accessions thereto whether or not furnished by the supplier; (ii) all accounts, chattel paper, deposit accounts, documents, other equipment, general intangibles, instruments, inventory, investment property, letter of credit rights and any supporting obligations related to any of the foregoing; (iii) all books and records pertaining to the foregoing; (iv) all property of such Lessee held by Utica, including all property of every description, in the custody of or in transit to Utica for any purpose, including safekeeping, collection or pledge, for the account of such Lessee or as to which such Lessee may have any right or power, including but not limited to cash; and (v) to the extent not otherwise included, all insurance, substitutions, replacements, exchanges, accessions, proceeds and products of the foregoing. On February 1, 2018, Utica agreed to continue the $53,000 payments for three additional months and extend the maturity of the loan by three months. Additionally, Utica agreed to defer the February 3, 2018 payment to February 20, 2018. The Company paid one-half the normal late fee, $2,650 for the late payment. On March 2, 2018, Utica agreed to defer the March 3 payment to March 30, 2018. The Company paid a late payment fee of $5,300 for the payment deferral. On April 18, 2018, Utica, the Lessee, and Ellery W. Roberts, as guarantor under the master lease agreement, entered into a forbearance agreement relating to the non-payment of certain rent payments due under the master lease agreement for the months of March 2018 and April 2018. Pursuant to the forbearance agreement, Utica agreed to forbear from demanding payment in full and exercising its remedies under the master lease agreement until June 3, 2018. Pursuant to the forbearance agreement, the Lessee agreed to, among other things, (i) make the payments set forth in the forbearance agreement on or before the dates specified therein, totaling $173,376, (ii) be current on all rent due under Schedule 1 of the master lease agreement by June 3, 2018 and be current on all rent due under Schedule 2 of the master lease agreement by May 30, 2018, (ii) reinstate or renew and continue in effect all insurance as required under the master lease agreement at Lessee's sole cost and expense, (iv) pay a forbearance fee to Utica totaling $4,500, which shall not be due until termination of the master lease agreement and (v) execute a surrender agreement with respect to the Lessee's equipment, which will be held in escrow by Utica and not deemed effective unless and until the earlier to occur of: (a) the June 3, 2018, provided liabilities under master lease agreement remain due but unpaid; (b) such time as Utica accelerates due and unpaid liabilities pursuant to the term of the forbearance agreement and the master lease agreement; or (c) a default occurs under the forbearance agreement or the master lease agreement. A portion of the proceeds from the term loan from Home State Bank (Note 11) were applied to reduce the balance of this lease to $475,000. The lease is payable in 46 payments of $12,882 beginning July 3, 2018 and an end-of-term buyout of $38,000. As a result, the parties to the forbearance agreement agreed that the forbearance agreement is terminated and is no longer in effect. In completing the early payout, the Company incurred a loss of $405,674 plus an additional loss of $95,130 from the write-off of unamortized debt issuance costs. The loss on early extinguishment of debt arose from the buyout provisions in the lease and because the Company had delayed making the regular payment of $85,322 until May 3, 2018, rather than July 3, 2017 as contemplated in the original master lease agreement. Management chose to close the term loan because of the much lower interest rate and the loan allows the Company to make payments that match its operating cycle rather than monthly payments. If the Company sells equipment or inventory, it must remit to Utica the amount loaned against the equipment. Such payments are accumulated and applied to the balance at the end of the lease term. During the year ended December 31, 2019, $500,179 of payments and $174,784 of lien release payments were remitted to Utica. The assets and liabilities under the master lease agreement are recorded at the fair value of the assets at the time of acquisition. The Company adopted ASU 2015-03 by deducting $25,055 of net debt issuance costs from the long-term portion of the financing lease. Amortization of debt issuance costs totaled $12,060 for the year ended December 31, 2019. At December 31, 2019, annual minimum future lease payments under this Master Lease Agreement are as follows: Amount 2020 $ 490,077 2021 464,269 2022 77,335 Total minimum lease payments 1,031,681 Less amount representing interest 200,990 Present value of minimum lease payments 830,691 Less current portion of minimum lease (358,584 ) Less debt issuance costs, net (25,055 ) Less payments to Utica for release of lien (249,784 ) Less lease deposits (38,807 ) End of lease buyout payments 117,413 Long-term present value of minimum lease payment $ 275,874 The interest rate on the capitalized lease is approximately 15.5%. |
Operating Lease
Operating Lease | 12 Months Ended |
Dec. 31, 2019 | |
Operating Lease, Lease Income [Abstract] | |
OPERATING LEASE | NOTE 15—OPERATING LEASE On March 3, 2017, Neese entered into an agreement of lease with K&A Holdings, LLC, a limited liability company that is wholly-owned by officers of Neese. The agreement of lease is for a term of ten (10) years and provides for a base rent of $8,333 per month. In the event of late payment, interest shall accrue on the unpaid amount at the rate of eighteen percent (18%) per annum. The agreement of lease contains customary events of default, including if Neese shall fail to pay rent within five (5) days after the due date, or if Neese shall fail to perform any other terms, covenants or conditions under the agreement of lease, and other customary representations, warranties and covenants. Under terms of the term loan agreement with Home State Bank (Note 11), the Company may not pay salary or rent to such officers of Neese in excess of $100,000 per year beginning on the date of the term loan agreement, June 13, 2018. The Company is accruing monthly rent, but because of the limitation in the term loan, $200,000 of accrued rent is classified as a long-term accrued liability. The amount accrued for amounts included in the measurement of operating lease liabilities was $100,000 for the year ended December 31, 2019. Supplemental balance sheet information related to leases was as follows: December 31, Operating lease right-of-use lease asset $ 624,157 Accumulated amortization (59,077 ) Net balance $ 565,080 Lease liability, current portion 63,253 Lease liability, long term 501,827 Total operating lease liabilities $ 565,080 Weighted Average Remaining Lease Term - operating leases 86 months Weighted Average Discount Rate - operating leases 6.85 % Maturities of the lease liability are as follows: For the Years Ended 2020 $ 100,000 2021 100,000 2022 100,000 2023 100,000 2024 100,000 Thereafter 216,667 Total lease payments 716,667 Less imputed interest 151,587 Maturities of lease liabilities $ 565,080 Neese leased a piece of equipment on an operating lease. The lease originated in May 2014 for a five-year term with annual payments of $11,830 with a final payment in July 2019. On April 5, 2019, Goedeker entered into a lease agreement with S.H.J., L.L.C., a Missouri limited liability company and affiliate of Goedeker. The lease is for a term five (5) years and provides for a base rent of $45,000 per month. In addition, Goedeker is responsible for all taxes and insurance premiums during the lease term. In the event of late payment, interest shall accrue on the unpaid amount at the rate of eighteen percent (18%) per annum. The lease contains customary events of default, including if: (i) Goedeker shall fail to pay rent within five (5) days after the due date; (ii) any insurance required to be maintained by Goedeker pursuant to the lease shall be canceled, terminated, expire, reduced, or materially changed; (iii) Goedeker shall fail to comply with any term, provision, or covenant of the lease and shall not begin and pursue with reasonable diligence the cure of such failure within fifteen (15) days after written notice thereof to Goedeker; (iv) Goedeker shall become insolvent, make an assignment for the benefit of creditors, or file a petition under any section or chapter of the Bankruptcy Code, or under any similar law or statute of the United States of America or any State thereof; or (v) a receiver or trustee shall be appointed for the leased premises or for all or substantially all of the assets of Goedeker. Supplemental balance sheet information related to leases was as follows: December 31, Operating lease right-of-use lease asset $ 2,300,000 Accumulated amortization (299,335 ) Net balance $ 2,000,665 Lease liability, current portion 422,520 Lease liability, long term 1,578,235 Total operating lease liabilities $ 2,000,755 Weighted Average Remaining Lease Term - operating leases 51 Months Weighted Average Discount Rate - operating leases 6.5 % Maturities of the lease liability are as follows: For the Years Ended 2020 $ 540,000 2021 540,000 2022 540,000 2023 540,000 2024 135,000 Total lease payments 2,295,000 Less imputed interest (294,245 ) Maturities of lease liabilities $ 2,000,755 |
Related Parties
Related Parties | 12 Months Ended |
Dec. 31, 2019 | |
Related Parties [Abstract] | |
RELATED PARTIES | NOTE 16—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% (2.0% annualized) of its adjusted net assets for services performed. Offsetting Management Services Agreement - 1847 Neese On March 3, 2017, 1847 Neese entered into an offsetting management services agreement with the Manager. Pursuant to the offsetting management services agreement, 1847 Neese appointed the Manager to provide certain services to it for a quarterly management fee equal to $62,500 per quarter; provided, however, that: (i) pro rated payments shall be made in the first quarter and the last quarter of the term; (ii) if the aggregate amount of management fees paid or to be paid by 1847 Neese, together with all other management fees paid or to be paid by all other subsidiaries of the Company to the Manager, in each case, with respect to any fiscal year exceeds, or is expected to exceed, 9.5% of the Company's gross income with respect to such fiscal year, then the management fee to be paid by 1847 Neese for any remaining fiscal quarters in such fiscal year shall be reduced, on a pro rata basis determined by reference to the management fees to be paid to the Manager by all of the subsidiaries of the Company, until the aggregate amount of the management fee paid or to be paid by 1847 Neese, together with all other management fees paid or to be paid by all other subsidiaries of the Company to the Manager, in each case, with respect to such fiscal year, does not exceed 9.5% of the Company's gross income with respect to such fiscal year; and (iii) if the aggregate amount of the management fee paid or to be paid by 1847 Neese, together with all other management fees paid or to be paid by all other subsidiaries of the Company to the Manager, in each case, with respect to any fiscal quarter exceeds, or is expected to exceed, the aggregate amount of the management fee (before any adjustment thereto) calculated and payable under the management services agreement (the "Parent Management Fee") with respect to such fiscal quarter, then the management fee to be paid by 1847 Neese for such fiscal quarter shall be reduced, on a pro rata basis, until the aggregate amount of the management fee paid or to be paid by 1847 Neese, together with all other management fees paid or to be paid by all other subsidiaries of the Company to the Manager, in each case, with respect to such fiscal quarter, does not exceed the Parent Management Fee calculated and payable with respect to such fiscal quarter. 1847 Neese shall also reimburse the Manager for all costs and expenses of 1847 Neese which are specifically approved by the board of directors of 1847 Neese, including all out-of-pocket costs and expenses, that are actually incurred by the Manager or its affiliates on behalf of 1847 Neese in connection with performing services under the offsetting management services agreement. The services provided by the Manager include: conducting general and administrative supervision and oversight of 1847 Neese's day-to-day business and operations, including, but not limited to, recruiting and hiring of personnel, administration of personnel and personnel benefits, development of administrative policies and procedures, establishment and management of banking services, managing and arranging for the maintaining of liability insurance, arranging for equipment rental, maintenance of all necessary permits and licenses, acquisition of any additional licenses and permits that become necessary, participation in risk management policies and procedures; and overseeing and consulting with respect to 1847 Neese's business and operational strategies, the implementation of such strategies and the evaluation of such strategies, including, but not limited to, strategies with respect to capital expenditure and expansion programs, acquisitions or dispositions and product or service lines. The Company expensed $250,000 and $250,000 in management fees for the years ended December 31, 2019 and 2018, respectively. Under terms of the term loan from Home State Bank, no fees may be paid to the Manager without permission of the bank, which the Manager does not expect to be granted within the forthcoming year. Accordingly, $450,808 due the Manager is classified as an accrued liability as of December 31, 2019. Offsetting Management Services Agreement - Goedeker On April 5, 2019, Goedeker entered into an offsetting management services agreement with the Manager. Pursuant to the offsetting management services agreement, Goedeker appointed the Manager to provide certain services to it for a quarterly management fee equal to the greater of $62,500 or 2% of adjusted net assets (as defined in the management services agreement); provided, however, that (i) pro rated payments shall be made in the first quarter and the last quarter of the term, (ii) if the aggregate amount of management fees paid or to be paid by Goedeker, together with all other management fees paid or to be paid by all other subsidiaries of the Company to the Manager, in each case, with respect to any fiscal year exceeds, or is expected to exceed, 9.5% of the Company's gross income with respect to such fiscal year, then the management fee to be paid by Goedeker for any remaining fiscal quarters in such fiscal year shall be reduced, on a pro rata basis determined by reference to the management fees to be paid to the Manager by all of the subsidiaries of the Company, until the aggregate amount of the management fee paid or to be paid by Goedeker, together with all other management fees paid or to be paid by all other subsidiaries of the Company to the Manager, in each case, with respect to such fiscal year, does not exceed 9.5% of the Company's gross income with respect to such fiscal year, and (iii) if the aggregate amount the management fee paid or to be paid by Goedeker, together with all other management fees paid or to be paid by all other subsidiaries of the Company to the Manager, in each case, with respect to any fiscal quarter exceeds, or is expected to exceed, the aggregate amount of the Parent Management Fee with respect to such fiscal quarter, then the management fee to be paid by Goedeker for such fiscal quarter shall be reduced, on a pro rata basis, until the aggregate amount of the management fee paid or to be paid by Goedeker, together with all other management fees paid or to be paid by all other subsidiaries of the Company to the Manager, in each case, with respect to such fiscal quarter, does not exceed the Parent Management Fee calculated and payable with respect to such fiscal quarter. Goedeker shall also reimburse the Manager for all costs and expenses of Goedeker which are specifically approved by the board of directors of Goedeker, including all out-of-pocket costs and expenses, that are actually incurred by the Manager or its affiliates on behalf of Goedeker in connection with performing services under the offsetting management services agreement. The services provided by the Manager include: conducting general and administrative supervision and oversight of Goedeker's day-to-day business and operations, including, but not limited to, recruiting and hiring of personnel, administration of personnel and personnel benefits, development of administrative policies and procedures, establishment and management of banking services, managing and arranging for the maintaining of liability insurance, arranging for equipment rental, maintenance of all necessary permits and licenses, acquisition of any additional licenses and permits that become necessary, participation in risk management policies and procedures; and overseeing and consulting with respect to Goedeker's business and operational strategies, the implementation of such strategies and the evaluation of such strategies, including, but not limited to, strategies with respect to capital expenditure and expansion programs, acquisitions or dispositions and product or service lines. The Company expensed $183,790 in management fees for the year ended December 31, 2019. Payment of the management fee is subordinated to the payment of interest on the 9% subordinated promissory note (see Note 13), such that no payment of the management fee may be made if Goedeker is in default under the note with regard to interest payments and, for the avoidance of doubt, such payment of the management fee will be contingent on Goedeker being in good standing on all associated loan covenants. In addition, during the period that that any amounts are owed under the 9% subordinated promissory note or the earn out payments, the annual management fee shall be capped at $250,000. The rights of the Manager to receive payments under the offsetting management services agreement are also subordinate to the rights of Burnley and SBCC under separate subordination agreements that the Manager entered into with Burnley and SBCC on April 5, 2019. Accordingly, $63,653 due the Manager is classified as an accrued liability as of December 31, 2019. Advances From time to time, the Company has received advances from its chief executive officer to meet short-term working capital needs. As of December 31, 2019 and 2018, a total of $181,333 and $174,333 advances from related parties are outstanding, respectively. These advances are unsecured, bear no interest, and do not have formal repayment terms or arrangements. As of December 31, 2019 and 2018, the Manager has funded the Company $62,499 and $55,500 in related party advances, respectively. These advances are unsecured, bear no interest, and do not have formal repayment terms or arrangements. Grid Promissory Note On January 3, 2018, the Company issued a grid promissory note to the Manager in the initial principal amount of $50,000. The note provides that the Company may from time to time request additional advances from the Manager up to an aggregate additional amount of $100,000, which will be added to the note if the Manager, in its sole discretion, so provides. Interest shall accrue on the unpaid portion of the principal amount and the unpaid portion of all advances outstanding at a fixed rate of 8% per annum, and along with the outstanding portion of the principal amount and the outstanding portion of all advances, shall be payable in one lump sum due on the maturity date, which is the first anniversary of the date of the note. The maturity date of the grid promissory note was extended until January 3, 2021. If all or a portion of the principal amount or any advance under the note, or any interest payable thereon is not paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate of 12% per annum. In the event the Company completes a financing involving at least $500,000, the Company must, contemporaneously with the closing of such financing transaction, repay the entire outstanding principal and accrued and unpaid interest on the note. The note is unsecured and contains customary events of default. As of December 31, 2019 and 2018, the Manager has advanced $119,400 and $117,000 of the promissory note and the Company has accrued interest of $17,115 and $7,549, respectively. Building Lease On March 3, 2017, Neese entered into an agreement of lease with K&A Holdings, LLC, a limited liability company that is wholly-owned by officers of Neese. See Note 15 for details regarding this lease. |
Shareholders' Deficit
Shareholders' Deficit | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
SHAREHOLDERS' DEFICIT | NOTE 17—SHAREHOLDERS’ DEFICIT Allocation Shares As of and December 31, 2019 and 2018, the Company had authorized and outstanding 1,000 allocation shares. These allocation shares do not entitle the holder thereof to vote on any matter relating to the Company other than in connection with amendments to the Company’s operating agreement and in connection with certain other corporate transactions as specified in the operating agreement. The Manager owns 100% of the allocation shares of the Company, which are a separate class of limited liability company interests that, together with the common shares, will comprise all of the classes of equity interests of the Company. The Manager received the allocation shares with its initial capitalization of the Company. The allocation shares generally will entitle the Manager to receive a twenty percent (20%) profit allocation as a form of incentive designed to align the interests of the Manager with those of the Company’s shareholders. Profit allocation has two components: an equity-based component and a distribution-based component. The equity-based component will be paid when the market for the Company’s shares appreciates, subject to certain conditions and adjustments. The distribution-based component will be paid when the distributions the Company pays to shareholders exceed an annual hurdle rate of eight percent (8.0%), subject to certain conditions and adjustments. While the equity-based component and distribution-based component are interrelated in certain respects, each component may independently result in a payment of profit allocation if the relevant conditions to payment are satisfied. The 1,000 allocation shares are issued and outstanding and held by the Manager, which is controlled by Mr. Roberts, the Company’s chief executive officer and controlling shareholder. Common Shares The Company is authorized to issue 500,000,000 common shares as of December 31, 2019 and 2018. As of December 31, 2019 and 2018, the Company had 3,165,625 and 3,115,625 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 January 22, 2018, the Company completed a 1-for-5 reverse split of its outstanding common shares. As a result of this stock split, the issued and outstanding common shares decreased from 3,115,500 to 623,125 shares. On May 10, 2018, the Company completed a 5-for-1 forward stock split of its outstanding common shares by way of a share dividend. As a result of this stock split, the issued and outstanding common shares increased from 623,125 to 3,115,625 shares. All share and per share information has been restated to retroactively show the effect of these stock splits. On April 5, 2019, the Company, issued 50,000 common shares to Leonite pursuant to the securities purchase agreement (see Note 13). Except in connection with the share dividend on May 10, 2018 and issuance on April 5, 2019, the Company did not issue any equity securities in the years ended December 31, 2019 and 2018. Warrants On April 5, 2019, the Company issued a warrant to purchase 200,000 common shares to Leonite pursuant to the securities purchase agreement (see Note 13). The warrant has a term of five years, an exercise price of $1.25 per share (subject to adjustment), and may be exercised on a cashless basis. Accordingly, a portion of the proceeds was allocated to the warrant based on its relative fair value using the Black Scholes option-pricing model. The assumptions used in the Black-Scholes model are as follows: (i) dividend yield of 0%; (ii) expected volatility of 140.3%, (iii) weighted average risk-free interest rate of 2.31%, (iv) expected life of five years, and (v) estimated fair value of the common shares of $2.75 per share in the amount of $292,673. The Company amortized $ 215,906 of debt discount in the year ended December 31, 2019 and the unamortized balance at year end is $76,767. The warrant also contains an ownership limitation. The Company shall not effect any exercise of the warrant, and Leonite shall not have the right to exercise any portion of the warrant, to the extent that after giving effect to issuance of common shares upon exercise the warrant, Leonite, together with its affiliates, and any other persons acting as a group together with Leonite or any of its affiliates, would beneficially own in excess of 4.99% of the number of common shares outstanding immediately after giving effect to the issuance of common shares issuable upon exercise of the warrant. Upon no fewer than 61 days’ prior notice to the Company, Leonite may increase or decrease such beneficial ownership limitation provisions and any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company. Noncontrolling Interests The Company owns 55.0% of 1847 Neese and 70% of 1847 Goedeker. For financial interests in which the Company owns a controlling financial interest, the Company applies the provisions of ASC 810, which are applicable to reporting the equity and net income or loss attributable to noncontrolling interests. The results of 1847 Neese and 1847 Goedeker are included in the consolidated statement of income. The net loss attributable to the 45% non-controlling interest of 1847 Neese amounted to $456,419 and $546,513 for the years ended December 31, 2019 and 2018, respectively. The net loss attributable to the 30% non-controlling interest of 1847 Goedeker amounted to $863,610 for the period from April 5, 2019 (acquisition) to December 31, 2019. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 18—COMMITMENTS AND CONTINGENCIES An office space has been leased on a month-by-month basis. The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
INCOME TAXES | NOTE 19—INCOME TAXES As of December 31, 2019 and 2018, the Company had net operating loss carry forwards of approximately $2,297,000 and $1,135,000, respectively, that may be available to reduce future years' taxable income in varying amounts through 2037. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. The provision for Federal income tax consists of the following: The cumulative tax effect at the expected rate of 26.3% and 34.7% of significant items comprising the Company's net deferred tax amount is as follows: Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards incurred prior to 2018 for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future years. The components for the provision of income taxes include: December 31, December 31, Current Federal and State $ 16,500 $ (85,000 ) Deferred Federal and State (1,218,900 ) (697,000 ) Total (benefit) provision for income taxes $ (1,202,400 ) $ (782,000 ) A reconciliation of the statutory US Federal income tax rate to the Company's effective income tax rate is as follows: December 31, December 31, Federal tax 21.0 % 21.0 % State tax 5.5 % 8.1 % Gain on bargain purchase 0.0 % 5.8 % Permanent items (0.2 )% (2.2 )% Rate change from TCJA 0.0 % 4.3 % Other 0.0 % (2.3 )% Effective income tax rate 26.3 % 34.7 % On December 22, 2017 the Tax Cuts and Jobs Act ("TCJA") was signed into law. Pursuant to Staff Accounting Bulletin No 118, a reasonable estimate of the specific income tax effects for the TCJA can be determined and the Company is reporting these provisional amounts. Accordingly, the Company may revise these estimates in the upcoming year. The TCJA reduces the corporate income tax rate from 34% to 21% effective January 1, 2018. All deferred income tax assets and liabilities, including NOL's have been measured using the new rate under the TCJA and are reflected in the valuation of these assets as of December 31, 2019 and 2018. 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 major components of deferred tax assets and liabilities are as follows: December 31, December 31, Deferred tax assets Receivables $ 8,000 $ 8,000 Related party accruals 156,000 58,000 Inventory obsolescence 115,000 29,000 Sales return reserve 51,000 - Business interest limitation 343,000 - Other 8,000 7,000 Loss carryforward 624,000 473,000 Total deferred tax assets $ 1,305,000 $ 575,000 Deferred tax liabilities Fixed assets $ (652,000 ) $ (940,000 ) Intangibles (18,000 ) - Total deferred tax liabilities $ (670,000 ) $ (940,000 ) - Total net deferred income tax assets (liabilities) $ 635,000 $ (365,000 ) The Company has recorded activity related to the gross unrecognized tax benefits (excluding interest and penalties) as follows: December 31, December 31, Gross unrecognized tax benefit at the beginning of the year $ - $ 126,000 Increase in tax positions to the current year - - Adjustment to acquisition purchase price - (120,000 ) Decreases due to lapses in applicable statutes of limitations - (6,000 ) Total (benefit) provision for income taxes $ - $ - The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. At December 31, 2019 and 2018, accrued interest and penalties were $0 and $0, respectively. The tax years ended December 31, 2015 through December 31, 2019 are considered to be open under statute and therefore may be subject to examination by the Internal Revenue Service and various state jurisdictions. Neese's 2016 federal and state income tax returns were filed showing a refund due of $129,000. The sellers received and retained the refunds related to a year prior to the acquisition on Neese by 1847 Neese. In preparation of the 2017 return, the Company learned that the 2016 return was in error and no refund should have been paid to the sellers. Thus, the funds received by the sellers should have been remitted to the Company. The Company in discussion with the sellers agreed to treat the amount of the tax refund as additional consideration for the purchase of Neese. Accordingly, the Company charged $129,000 to extinguishment of debt for the year ended December 31, 2018. The Company is a partnership for federal income taxes; however, its subsidiaries are C corporations. The Company owns less than 80% of the subsidiaries and thus it cannot file consolidated federal income tax returns. Following is a summary of prepaid and deferred tax assets and liabilities for December 31, 2019 and 2018. As of December 31, 2019 2018 Prepaid income taxes (accrued tax liability) $ (24,000 ) $ 173,000 Deferred tax asset (liability) $ 635,000 $ (365,000 ) Years Ended 2019 2018 Income tax benefit $ 1,202,000 $ 781,000 |
Supplemental Disclosures of Cas
Supplemental Disclosures of Cash Flow Information | 12 Months Ended |
Dec. 31, 2019 | |
Supplemental Cash Flow Information [Abstract] | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | NOTE 20—SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Supplemental disclosures of cash flow information for the years ended December 31, 2019 and 2018 were as follows: For the Year Ended 2019 2018 Interest paid $ 706,784 $ 811,854 Income tax paid - - Business Combinations: Current Assets $ 3,412,296 $ - Property and equipment 216,286 - Intangibles 2,117,000 - Goodwill 4,976,016 - Assumed liabilities (6,238,183 ) - 9% Subordinated Promissory Note, net of debt discount of $1,277,602 (3,422,398 ) - Contingent note payable (81,494 ) Non-controlling interest (979,523 ) - Cash acquired in acquisition of Goedeker $ - $ - Financing: Term Loan $ 1,500,000 $ - Debt discount financing costs (178,000 ) - Warrant feature upon issuance of term loan (229,244 ) - Term loan, net $ 1,092,756 $ - Line of Credit $ 754,682 $ - Debt discount on line of credit (128,682 ) - Issuance of common shares on promissory note (137,500 ) - Line of Credit, net $ 488,500 $ - Convertible Promissory Note $ 714,286 $ - Convertible Promissory Note original issue and debt discount (79,286 ) - Warrants issued in conjunction with convertible promissory note (292,673 ) - Convertible Promissory Note, net $ (342,327 ) $ - Warrant liability 229,244 - Additional Paid-in Capital – common shares and warrants issued $ 430,173 $ - Operating lease, ROU assets and liabilities $ 2,924,157 $ - |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 21—SUBSEQUENT EVENTS In accordance with SFAS 165 (ASC 855-10), the Company has analyzed its operations subsequent to December 31, 2019 to the date these financial statements were issued and has determined that it does not have any material subsequent events to disclose in these financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and are presented in US dollars. |
Accounting Basis | Accounting Basis The Company uses the accrual basis of accounting and GAAP. The Company has adopted a calendar year end. |
Stock Splits | Stock Splits On January 22, 2018, the Company completed a 1-for-5 reverse split of its outstanding common shares. As a result of this stock split, the Company’s issued and outstanding common shares decreased from 3,115,500 to 623,125 shares. On May 10, 2018, the Company completed a 5-for-1 forward stock split of its outstanding common shares. As a result of this stock split, the Company’s issued and outstanding common shares increased from 623,125 to 3,115,625 shares. Accordingly, all share and per share information has been restated to retroactively show the effect of these stock splits. |
Segment Reporting | Segment Reporting The Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 280, Segment Reporting The Land Management Segment will be responsible for the activities that provide professional services on waste disposal and land application services based in Grand Junction, Iowa. The Retail and Appliances Segment will be responsible for the activities in e-commerce destination for home furnishings, including appliances, furniture, bath and kitchen fixtures, décor, lighting and home goods based in St. Louis, Missouri. The Company provides general corporate services to its segments; however, these services are not considered when making operating decisions and assessing segment performance. These services are reported under “Holding Company” below and these include costs associated with executive management, financing activities and public company compliance. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Reclassifications | Reclassifications Certain Statements of Operations reclassifications have been made in the presentation of the Company’s prior financial statements and accompanying notes to conform to the presentation as of and for the year ended December 31, 2019. The Company reclassified certain operating expense accounts in the Consolidated Statement of Operations. The reclassification had no impact on financial position, net income, or shareholder’s equity. |
Revenue Recognition and Cost of Revenue | Revenue Recognition and Cost of Revenue On January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue Recognition Land Management Segment Neese’s payment terms are due on demand from acceptance of delivery. Neese does not incur incremental costs obtaining purchase orders from customers, however, if Neese did, because all of Neese’s contracts are less than a year in duration, any contract costs incurred would be expensed rather than capitalized. The revenue that Neese recognizes arises from orders it receives from customers. Neese’s performance obligations under the customer orders correspond to each service delivery or sale of equipment that Neese makes to customers under the purchase orders; as a result, each purchase order generally contains only one performance obligation based on the service or equipment sale to be completed. Control of the delivery transfers to customers when the customer is able to direct the use of, and obtain substantially all of the benefits from, Neese’s products, which generally occurs at the later of when the customer obtains title to the equipment or when the customer assumes risk of loss. The transfer of control generally occurs at a point of delivery. Once this occurs, Neese has satisfied its performance obligation and Neese recognizes revenue. Neese also sells equipment by posting it on auction sites specializing in farm equipment. Neese posts the equipment for sale on a “magazine” site for several weeks before the auction. When Neese decides to sell, it moves the equipment to the auction site. The auctions are one day. If Neese accepts a bid, the customer pays the bid price and arranges for pick-up of the equipment. Transaction Price ‒ Neese agrees with customers on the selling price of each transaction. This transaction price is generally based on the agreed upon service fee. In Neese’s contracts with customers, it allocates the entire transaction price to the service fee to the customer, which is the basis for the determination of the relative standalone selling price allocated to each performance obligation. Any sales tax, value added tax, and other tax Neese collects concurrently with revenue-producing activities are excluded from revenue. If Neese continued to apply legacy revenue recognition guidance for the year ended December 31, 2019, revenues, gross margin, and net loss would not have changed. Substantially all of Neese’s sales are to businesses, including farmers or municipalities and very little to individuals. Disaggregated Revenue ‒ Neese disaggregates revenue from contracts with customers by contract type, as it believes it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Neese’s revenue by contract type is as follows: Year Ended 2019 2018 Revenues Trucking $ 1,579,660 $ 2,060,992 Waste hauling and pumping 1,901,314 1,844,053 Repairs 377,004 413,210 Other 343,436 313,252 Total services 4,201,414 4,631,057 Sales of parts and equipment 2,178,611 2,702,340 Total revenue $ 6,380,025 $ 7,333,847 Performance Obligations ‒ Performance obligations for the different types of services are discussed below: ● Trucking ● Waste Hauling and pumping ● Repairs ● Sales of parts and equipment Accounts Receivable, Net ‒ Accounts receivable, net, are amounts due from customers where there is an unconditional right to consideration. Unbilled receivables of $121,989 and $139,766 are included in this balance at December 31, 2019 and 2018, respectively. The payment of consideration related to these unbilled receivables is subject only to the passage of time. Neese reviews accounts receivable on a periodic basis to determine if any receivables will potentially be uncollectible. Estimates are used to determine the amount of the allowance for doubtful accounts necessary to reduce accounts receivable to its estimated net realizable value. The estimates are based on an analysis of past due receivables, historical bad debt trends, current economic conditions, and customer specific information. After Neese has exhausted all collection efforts, the outstanding receivable balance relating to services provided is written off against the allowance. Additions to the provision for bad debt are charged to expense. Neese determined that an allowance for loss of $29,001 was required at December 31, 2019 and 2018. Retail and Appliances Segment Goedeker collects the full sales price from the customer at the time the order is placed. Goedeker does not incur incremental costs obtaining purchase orders from customers, however, if Goedeker did, because all Goedeker’s contracts are less than a year in duration, any contract costs incurred would be expensed rather than capitalized. The revenue that Goedeker recognizes arises from orders it receives from customers. Goedeker’s performance obligations under the customer orders correspond to each sale of merchandise that it makes to customers under the purchase orders; as a result, each purchase order generally contains only one performance obligation based on the merchandise sale to be completed. Control of the delivery transfers to customers when the customer can direct the use of, and obtain substantially all the benefits from, Goedeker’s products, which generally occurs when the customer assumes the risk of loss. The transfer of control generally occurs at the point of shipment. Once this occurs, Goedeker has satisfied its performance obligation and Goedeker recognizes revenue. Revenue from the sale of long-term service warranties are recognized net of costs to sell the contracts to the third-party warranty service company. Transaction Price ‒ Goedeker agrees with customers on the selling price of each transaction. This transaction price is generally based on the agreed upon sales price. In Goedeker’s contracts with customers, it allocates the entire transaction price to the sales price, which is the basis for the determination of the relative standalone selling price allocated to each performance obligation. Any sales tax, value added tax, and other tax Goedeker collects concurrently with revenue-producing activities are excluded from revenue. If Goedeker continued to apply legacy revenue recognition guidance for the three and year ended December 31, 2019, revenues, gross margin, and net loss would not have changed. Cost of revenue includes the cost of purchased merchandise plus the cost of delivering merchandise and where applicable installation, net of promotional rebates and other incentives received from vendors. Substantially all Goedeker’s sales are to individual retail consumers. Disaggregated Revenue Goedeker’s revenue by sales type is as follows: Year Ended 2019 2018 Appliance sales $ 29,254,413 $ - Furniture sales 4,814,931 - Other sales 598,769 - Total revenue $ 34,668,113 $ - Performance Obligations – Goedeker’s performance obligations include delivery of products and, in some instances, performance of services such as installation. Revenue for the sale of merchandise is recognized upon shipment to the customer; or in some instances, upon delivery and installation of the product which typically occur simultaneously. |
Receivables | Receivables Receivables consist of credit card transactions in the process of settlement. Vendor rebates receivable represent amounts due from manufactures from whom the Company purchases products. Rebates receivable are stated at the amount that management expects to collect from manufacturers, net of accounts payable amounts due the vendor. Rebates are calculated on product and model sales programs from specific vendors. The rebates are paid at intermittent periods either in cash or through issuance of vendor credit memos, which can be applied against vendor accounts payable. Based on the Company’s assessment of the credit history with its manufacturers, it has concluded that there should be no allowance for uncollectible accounts. The Company historically collects substantially all of its outstanding rebates receivables. Uncollectible balances are expensed in the period it is determined to be uncollectible. |
Allowance for credit losses | Allowance for Credit Losses Provisions for credit losses are charged to income as losses are estimated to have occurred and in amounts sufficient to maintain an allowance for credit losses at an adequate level to provide for future losses on the Company’s accounts receivable. The Company charges credit losses against the allowance and credits subsequent recoveries, if any, to the allowance. Historical loss experience and contractual delinquency of accounts receivables, and management’s judgment are factors used in assessing the overall adequacy of the allowance and the resulting provision for credit losses. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in economic conditions or portfolio performance. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revisions as more information becomes available. The allowance for credit losses consists of general and specific components. The general component of the allowance estimates credit losses for groups of accounts receivable on a collective basis and relates to probable incurred losses of unimpaired accounts receivables. The Company records a general allowance for credit losses that includes forecasted future credit losses. |
Inventory | Inventory Inventory consists of finished products acquired for resale and is valued at the lower-of-cost-or-market with cost determined on a specific item basis for the Neese and of finished products acquired for resale and is valued at the low-of-cost-or-market with cost determined on an average item basis for Goedeker. The Company periodically evaluates the value of items in inventory and provides write-downs to inventory based on its estimate of market conditions. The Company estimated an obsolescence allowance of $425,000 and $0 at December 31, 2019 and 2018, respectively. |
Property and Equipment | Property and Equipment Property and equipment is stated at cost. Depreciation of furniture, vehicles and equipment is calculated using the straight-line method over the estimated useful lives as follows: Useful Life Building and Improvements 4 Machinery and Equipment 3-7 Tractors 3-7 Trucks and Vehicles 3-6 |
Goodwill and Intangible Assets | Goodwill and Intangible Assets In applying the acquisition method of accounting, amounts assigned to identifiable assets and liabilities acquired were based on estimated fair values as of the date of acquisition, with the remainder recorded as goodwill. Identifiable intangible assets are initially valued at fair value using generally accepted valuation methods appropriate for the type of intangible asset. Identifiable intangible assets with definite lives are amortized over their estimated useful lives and are reviewed for impairment if indicators of impairment arise. Intangible assets with indefinite lives are tested for impairment within one year of acquisitions or annually as of December 1, and whenever indicators of impairment exist. The fair value of intangible assets are compared with their carrying values, and an impairment loss would be recognized for the amount by which a carrying amount exceeds its fair value. Acquired identifiable intangible assets are amortized over the following periods: Acquired intangible Asset Amortization Basis Expected Life (years) Customer-Related Straight-line basis 5-15 Marketing-Related Straight-line basis 5 |
Long-Lived Assets | Long-Lived Assets The Company reviews its property and equipment and any identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The test for impairment is required to be performed by management at least annually. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted operating cash flow expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments consist of cash and cash equivalents and amounts due to shareholders. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements. |
Derivative Instrument Liability | Derivative Instrument Liability The Company accounts for derivative instruments in accordance with ASC 815, Derivatives and Hedging |
Income Taxes | Income Taxes Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options. |
Basic Income (Loss) Per Share | Basic Income (Loss) Per Share Basic income (loss) per share is calculated by dividing the net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. As the Company had a net loss for the year ended December 31, 2019, the following 895,565 potentially dilutive securities were excluded from diluted loss per share: 200,000 for outstanding warrants and 695,565 related to the convertible note payable and accrued interest. There are no such common share equivalents outstanding as of December 31, 2018. |
Going Concern Assessment | Going Concern Assessment Management assesses going concern uncertainty in the Company's consolidated financial statements to determine whether there is sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the consolidated financial statements are issued or available to be issued, which is referred to as the "look-forward period", as defined in GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, management will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, its ability to delay or curtail expenditures or programs and its ability to raise additional capital, if necessary, among other factors. Based on this assessment, as necessary or applicable, management makes certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent it deems probable those implementations can be achieved and management has the proper authority to execute them within the look-forward period. The Company has generated losses since its inception and has relied on cash on hand, external bank lines of credit, issuance of third party and related party debt and the sale of a note to support cashflow from operations. As of and for the year ended December 31, 2019, the Company had a net loss attributable to 1847 Holdings' shareholders of $2,246,959, and net cash used in operations of $1,923,293. For the year ended December 31, 2019, the Company incurred operating losses of $3,381,000 (before deducting losses attributable to non-controlling interests) and incurred negative cash flows from operations of $1,923,293 and negative working capital of $10,937,260. Losses from operations include approximately $673,000 of expenses incurred in connection with the acquisition of the assets of Goedeker Television on April 5, 2019. Also, management believes the Company is owed $809,000 related to a working capital adjustment, which is disputed by Goedeker Television. This matter is being pursued through a legal process (See Note 9). In addition to the estimates of funds available from operations, the Company has unpledged assets that it believes could provide for $474,000 of additional borrowings. Management has prepared estimates of operations for fiscal year 2020 and believes that sufficient funds will be generated from operations to fund its operations, and to service its debt obligations for one year from the date of the filing of the consolidated financial statements in the Company's Annual Report on Form 10-K, indicate improved operations and the Company's ability to continue operations as a going concern. The impact of COVID-19 on the Company's business has been considered in these assumptions; however, it is too early to know the full impact of COVID-19 or its timing on a return to more normal operations. Further, the recently enacted stimulus bill provides for economic assistance loans through the United States Small Business Administration. The Company is actively pursuing the possibility of obtaining such loans. The accompanying consolidated financial statements have been prepared on a going concern basis under which the Company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business. Management believes that based on relevant conditions and events that are known and reasonably knowable that its forecasts. The Company has contingency plans to reduce or defer expenses and cash outlays should operations not improve in the look forward period. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Not Yet Adopted In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment. In June 2016, the FASB issued ASU 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Recently Adopted In February 2016, the FASB issued ASU 2016-02, Leases |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Schedule of property and equipment useful lives | Useful Life Building and Improvements 4 Machinery and Equipment 3-7 Tractors 3-7 Trucks and Vehicles 3-6 |
Schedule of identifiable intangible assets | Acquired intangible Asset Amortization Basis Expected Life (years) Customer-Related Straight-line basis 5-15 Marketing-Related Straight-line basis 5 |
Goedeker [Member] | |
Schedule of disaggregated revenue | Year Ended 2019 2018 Appliance sales $ 29,254,413 $ - Furniture sales 4,814,931 - Other sales 598,769 - Total revenue $ 34,668,113 $ - |
Neese [Member] | |
Schedule of disaggregated revenue | Year Ended 2019 2018 Revenues Trucking $ 1,579,660 $ 2,060,992 Waste hauling and pumping 1,901,314 1,844,053 Repairs 377,004 413,210 Other 343,436 313,252 Total services 4,201,414 4,631,057 Sales of parts and equipment 2,178,611 2,702,340 Total revenue $ 6,380,025 $ 7,333,847 |
Business Segments (Tables)
Business Segments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Business Segments | For the Year Ended December 31, 2019 For the Year Ended December 31, 2018 Land Management Services Retail & Appliances Corporate Services Total Land Management Services Retail & Appliances Corporate Services Total Revenue Services $ 4,201,414 $ - $ - $ 4,201,414 $ 4,631,507 $ - $ - $ 4,631,507 Sales of parts and equipment 2,178,611 - - 2,178,611 2,702,340 - - 2,702,340 Furniture and appliances revenue - 34,668,113 - 34,668,113 - - - - Total Revenue 6,380,025 34,668,113 - 41,048,138 7,333,847 - - 7,333,847 Total cost of sales 1,830,067 28,596,127 - 30,426,194 2,370,757 - - 2,370,757 Total operating expenses 5,707,272 7,789,224 161,441 13,657,937 6,161,835 - 319,850 6,481,685 Loss from operations $ (1,157,314 ) $ (1,717,238 ) $ (161,441 ) $ (3,035,993 ) $ (1,198,745 ) $ - $ (319,850 ) $ (1,518,595 ) |
Receivables (Tables)
Receivables (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Schedule of receivables | December 31, December 31, Credit card payments in process of settlement $ 406,838 $ - Vendor rebates receivable 1,380,369 - Trade receivables from customers 695,249 578,569 Total receivables 2,482,456 578,569 Allowance for doubtful accounts (29,001 ) (29,001 ) Accounts receivable, net $ 2,453,455 $ 549,568 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventory, Net [Abstract] | |
Schedule of Inventory | December 31, December 31, Machinery and Equipment $ 119,444 $ 427,551 Parts 142,443 159,685 Appliances 1,562,359 - Furniture 189,376 - Other 53,356 - Subtotal 2,066,978 587,236 Allowance for inventory obsolescence (451,546 ) (99,546 ) Inventories, net $ 1,615,432 $ 487,690 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Classification December 31, December 31, Buildings and improvements $ 5,338 $ 5,338 Equipment and machinery 3,120,498 2,943,490 Tractors 2,694,888 2,834,888 Trucks and other vehicles 1,138,304 1,147,304 Leasehold improvements 117,626 - Total 7,076,654 6,931,020 Less: Accumulated depreciation (3,709,227 ) (2,439,931 ) Property and equipment, net $ 3,367,427 $ 4,491,089 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
Schedule of intangible assets | December 31, December 31, Customer Relationships Identifiable intangible assets, gross $ 783,000 $ 34,000 Accumulated amortization (56,023 ) (12,467 ) Customer relationship identifiable intangible assets, net 726,977 21,533 Marketing Related Identifiable intangible assets, gross 1,368,000 - Accumulated amortization (201,400 ) - Marketing related identifiable intangible assets, net 1,166,600 - Total Identifiable intangible assets, net $ 1,893,577 $ 21,533 |
Schedule of annual amortization expense | 2020 $ 330,332 2021 330,332 2022 324,665 2023 323,532 2024 584,716 Total $ 1,893,577 |
Acquisition (Tables)
Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Schedule of preliminary analysis for the Goedeker asset purchase | Provisional Purchase Consideration at preliminary fair value: Note payable, net of $462,102 debt discount and $215,500 of capitalized financing costs $ 3,422,398 Contingent note payable 81,494 Non-controlling interest 979,523 Amount of consideration $ 4,483,415 Assets acquired and liabilities assumed at preliminary fair value Cash $ - Accounts receivable 456,182 Inventories 1,851,251 Working capital adjustment receivable and other assets 1,104,863 Property and equipment 216,286 Customer related intangibles 749,000 Marketing related intangibles 1,368,000 Accounts payable and accrued expenses (3,929,876 ) Customer deposits (2,308,307 ) Other liabilities - Net tangible assets acquired (liabilities assumed) $ (492,601 ) Total net assets acquired (liabilities assumed) $ (492,601 ) Consideration paid 4,483,415 Preliminary Goodwill $ 4,976,016 For the Years Ended 2019 2018 Revenues, net $ 53,995,037 $ 63,641,807 Net income (loss) allocable to common shareholders $ (3,189,209 ) $ 1,010,018 Net loss per share $ (1.01 ) $ 0.32 Weighted average number of shares outstanding 3,165,625 3,165,625 |
Lines of Credit (Tables)
Lines of Credit (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Lines of Credit [Abstract] | |
Schedule of percentage of earnings before interest, taxes, depreciation, and amortization | Covenant Actual Required Ratio Total debt ratio (4.2)x 4.50x Senior debt ratio (1.5)x 1.75x Interest coverage ratio (1.1)x 1.0x |
Financing Leases (Tables)
Financing Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Financing Leases [Abstract] | |
Schedule of annual minimum future lease payment | Amount 2020 $ 490,077 2021 464,269 2022 77,335 Total minimum lease payments 1,031,681 Less amount representing interest 200,990 Present value of minimum lease payments 830,691 Less current portion of minimum lease (358,584 ) Less debt issuance costs, net (25,055 ) Less payments to Utica for release of lien (249,784 ) Less lease deposits (38,807 ) End of lease buyout payments 117,413 Long-term present value of minimum lease payment $ 275,874 |
Operating Lease (Tables)
Operating Lease (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Operating Lease, Lease Income [Abstract] | |
Schedule of supplemental balance sheet information | December 31, Operating lease right-of-use lease asset $ 624,157 Accumulated amortization (59,077 ) Net balance $ 565,080 Lease liability, current portion 63,253 Lease liability, long term 501,827 Total operating lease liabilities $ 565,080 Weighted Average Remaining Lease Term - operating leases 86 months Weighted Average Discount Rate - operating leases 6.85 % |
Schedule of maturities of the lease liability | For the Years Ended 2020 $ 100,000 2021 100,000 2022 100,000 2023 100,000 2024 100,000 Thereafter 216,667 Total lease payments 716,667 Less imputed interest 151,587 Maturities of lease liabilities $ 565,080 For the Years Ended 2020 $ 540,000 2021 540,000 2022 540,000 2023 540,000 2024 135,000 Total lease payments 2,295,000 Less imputed interest (294,245 ) Maturities of lease liabilities $ 2,000,755 |
Supplemental balance sheet information related to leases | December 31, Operating lease right-of-use lease asset $ 2,300,000 Accumulated amortization (299,335 ) Net balance $ 2,000,665 Lease liability, current portion 422,520 Lease liability, long term 1,578,235 Total operating lease liabilities $ 2,000,755 Weighted Average Remaining Lease Term - operating leases 51 Months Weighted Average Discount Rate - operating leases 6.5 % |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Schedule of components for the provision of income taxes | December 31, December 31, Current Federal and State $ 16,500 $ (85,000 ) Deferred Federal and State (1,218,900 ) (697,000 ) Total (benefit) provision for income taxes $ (1,202,400 ) $ (782,000 |
Schedule of reconciliation of the statutory US Federal income tax rate to the company’s effective income tax rate | December 31, December 31, Federal tax 21.0 % 21.0 % State tax 5.5 % 8.1 % Gain on bargain purchase 0.0 % 5.8 % Permanent items (0.2 )% (2.2 )% Rate change from TCJA 0.0 % 4.3 % Other 0.0 % (2.3 )% Effective income tax rate 26.3 % 34.7 % |
Schedule of major components of deferred tax assets and liabilities | December 31, December 31, Deferred tax assets Receivables $ 8,000 $ 8,000 Related party accruals 156,000 58,000 Inventory obsolescence 115,000 29,000 Sales return reserve 51,000 - Business interest limitation 343,000 - Other 8,000 7,000 Loss carryforward 624,000 473,000 Total deferred tax assets $ 1,305,000 $ 575,000 Deferred tax liabilities Fixed assets $ (652,000 ) $ (940,000 ) Intangibles (18,000 ) - Total deferred tax liabilities $ (670,000 ) $ (940,000 ) - Total net deferred income tax assets (liabilities) $ 635,000 $ (365,000 ) |
Schedule of activity related to the gross unrecognized tax benefits (excluding interest and penalties) | December 31, December 31, Gross unrecognized tax benefit at the beginning of the year $ - $ 126,000 Increase in tax positions to the current year - - Adjustment to acquisition purchase price - (120,000 ) Decreases due to lapses in applicable statutes of limitations - (6,000 ) Total (benefit) provision for income taxes $ - $ - |
Schedule of prepaid and deferred tax assets and liabilities | As of December 31, 2019 2018 Prepaid income taxes (accrued tax liability) $ (24,000 ) $ 173,000 Deferred tax asset (liability) $ 635,000 $ (365,000 ) Years Ended 2019 2018 Income tax benefit $ 1,202,000 $ 781,000 |
Supplemental Disclosures of C_2
Supplemental Disclosures of Cash Flow Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental disclosures of cash flow information | For the Year Ended 2019 2018 Interest paid $ 706,784 $ 811,854 Income tax paid - - Business Combinations: Current Assets $ 3,412,296 $ - Property and equipment 216,286 - Intangibles 2,117,000 - Goodwill 4,976,016 - Assumed liabilities (6,238,183 ) - 9% Subordinated Promissory Note, net of debt discount of $1,277,602 (3,422,398 ) - Contingent note payable (81,494 ) Non-controlling interest (979,523 ) - Cash acquired in acquisition of Goedeker $ - $ - Financing: Term Loan $ 1,500,000 $ - Debt discount financing costs (178,000 ) - Warrant feature upon issuance of term loan (229,244 ) - Term loan, net $ 1,092,756 $ - Line of Credit $ 754,682 $ - Debt discount on line of credit (128,682 ) - Issuance of common shares on promissory note (137,500 ) - Line of Credit, net $ 488,500 $ - Convertible Promissory Note $ 714,286 $ - Convertible Promissory Note original issue and debt discount (79,286 ) - Warrants issued in conjunction with convertible promissory note (292,673 ) - Convertible Promissory Note, net $ (342,327 ) $ - Warrant liability 229,244 - Additional Paid-in Capital – common shares and warrants issued $ 430,173 $ - Operating lease, ROU assets and liabilities $ 2,924,157 $ - |
Organization and Nature of Bu_2
Organization and Nature of Business (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Organization and Nature of Business (Textual) | |
State of incorporation | Delaware |
Date of Incorporation | Jan. 22, 2013 |
Goedeker Television [Member] | |
Organization and Nature of Business (Textual) | |
Acquired interest, description | The Company owns 70% of 1847 Goedeker, with the remaining 30% held by third-parties. |
1847 Neese [Member] | |
Organization and Nature of Business (Textual) | |
Acquired interest, description | The Company owns 55% of 1847 Neese, with the remaining 45% held by the sellers. |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Total services | $ 4,201,414 | $ 4,631,507 |
Sales of parts and equipment | 2,178,611 | 2,702,340 |
Total revenue | 6,380,025 | 7,333,847 |
Trucking [Member] | ||
Total services | 1,579,660 | 2,060,992 |
Waste hauling and pumping [Member] | ||
Total services | 1,901,314 | 1,844,053 |
Repairs [Member] | ||
Total services | 377,004 | 413,210 |
Other [Member] | ||
Total services | $ 343,436 | $ 313,252 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Appliance sales | $ 29,254,413 | |
Furniture sales | 4,814,931 | |
Other sales | 598,769 | |
Total revenue | $ 34,668,113 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) | 12 Months Ended |
Dec. 31, 2019 | |
Building and Improvements [Member] | |
Estimated useful lives of property and equipment | 4 years |
Machinery and Equipment [Member] | Minimum [Member] | |
Estimated useful lives of property and equipment | 3 years |
Machinery and Equipment [Member] | Maximum [Member] | |
Estimated useful lives of property and equipment | 7 years |
Tractors [Member] | Minimum [Member] | |
Estimated useful lives of property and equipment | 3 years |
Tractors [Member] | Maximum [Member] | |
Estimated useful lives of property and equipment | 7 years |
Trucks and Vehicles [Member] | Minimum [Member] | |
Estimated useful lives of property and equipment | 3 years |
Trucks and Vehicles [Member] | Maximum [Member] | |
Estimated useful lives of property and equipment | 6 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details 3) | 12 Months Ended |
Dec. 31, 2019 | |
Expected Life (years) | 4 years 7 months 6 days |
Customer-Related | |
Amortization Basis | Straight-line basis |
Customer-Related | Minimum [Member] | |
Expected Life (years) | 5 years |
Customer-Related | Maximum [Member] | |
Expected Life (years) | 15 years |
Marketing-Related | |
Amortization Basis | Straight-line basis |
Expected Life (years) | 5 years |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details Textual) | May 10, 2018 | Jan. 22, 2018 | Jun. 30, 2019Segment | Dec. 31, 2019USD ($)shares | Dec. 31, 2018USD ($) | Apr. 05, 2019USD ($) |
Summary of Significant Accounting Policies (Textual) | ||||||
Stock Split | 5-for-1 | 1-for-5 | ||||
Increase/Decrease in issued and outstanding common shares | 623,125 to 3,115,625 shares | 3,115,500 to 623,125 shares | ||||
Estimated obsolescence allowance | $ 425,000 | $ 0 | ||||
Working capital | 10,937,260 | $ 809,000 | ||||
Unbilled receivables | 121,989 | 139,766 | ||||
Allowance for loss | $ 29,001 | 29,001 | ||||
Potentially dilutive securities | shares | 895,565 | |||||
Net cash used in operating activities | $ (1,923,293) | (127,005) | ||||
Net loss attributable to 1847 Holdings shareholders | (2,246,959) | $ (995,360) | ||||
Number of segment | Segment | 2 | |||||
Incurred operating losses | 3,381,000 | |||||
Losses from operations | $ 673,000 | |||||
Additional borrowings | $ 474,000 | |||||
Secured Convertible Promissory Note [Member] | ||||||
Summary of Significant Accounting Policies (Textual) | ||||||
Potentially dilutive securities | shares | 200,000 | |||||
Net cash used in operating activities | $ 1,923,293 | |||||
Warrant [Member] | ||||||
Summary of Significant Accounting Policies (Textual) | ||||||
Potentially dilutive securities | shares | 695,565 |
Business Segments (Details)
Business Segments (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue | ||
Services | $ 4,201,414 | $ 4,631,507 |
Sales of parts and equipment | 2,178,611 | 2,702,340 |
Furniture and appliances revenue | 34,668,113 | |
Total Revenue | 41,048,138 | 7,333,847 |
Total cost of sales | 30,426,194 | 2,370,757 |
Total operating expenses | 13,657,937 | 6,481,685 |
Loss from operations | (3,035,993) | (1,518,595) |
Land Management Services [Member] | ||
Revenue | ||
Services | 4,201,414 | 4,631,507 |
Sales of parts and equipment | 2,178,611 | 2,702,340 |
Furniture and appliances revenue | ||
Total Revenue | 6,380,025 | 7,333,847 |
Total cost of sales | 1,830,067 | 2,370,757 |
Total operating expenses | 5,707,272 | 6,161,835 |
Loss from operations | (1,157,314) | (1,198,745) |
Retail & Appliances [Member] | ||
Revenue | ||
Services | ||
Sales of parts and equipment | ||
Furniture and appliances revenue | 34,668,113 | |
Total Revenue | 34,668,113 | |
Total cost of sales | 28,596,127 | |
Total operating expenses | 7,789,224 | |
Loss from operations | (1,717,238) | |
Corporate Services [Member] | ||
Revenue | ||
Services | ||
Sales of parts and equipment | ||
Furniture and appliances revenue | ||
Total Revenue | ||
Total cost of sales | ||
Total operating expenses | 161,441 | 319,850 |
Loss from operations | $ (161,441) | $ (319,850) |
Receivables (Details)
Receivables (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Receivables [Abstract] | ||
Credit card payments in process of settlement | $ 406,838 | |
Vendor rebates receivable | 1,380,369 | |
Trade receivables from customers | 695,249 | 578,569 |
Total receivables | 2,482,456 | 578,569 |
Allowance for doubtful accounts | (29,001) | (29,001) |
Accounts receivable, net | $ 2,453,455 | $ 549,568 |
Inventories (Details)
Inventories (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Subtotal | $ 2,066,978 | $ 587,236 |
Allowance for inventory obsolescence | (451,546) | (99,546) |
Inventories, net | 1,615,432 | 487,690 |
Machinery and Equipment [Member] | ||
Subtotal | 119,444 | 427,551 |
Parts [Member] | ||
Subtotal | 142,443 | 159,685 |
Appliances [Member] | ||
Subtotal | 1,562,359 | |
Furniture [Member] | ||
Subtotal | 189,376 | |
Other [Member] | ||
Subtotal | $ 53,356 |
Deposits with Vendors (Details)
Deposits with Vendors (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Deposits With Vendors [Abstract] | ||
Vendor deposits | $ 294,960 | $ 0 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Total | $ 216,286 | |
Less: Accumulated depreciation | (3,709,227) | (2,439,931) |
Property and equipment, net | 3,367,427 | 4,491,089 |
Buildings and improvements [Member] | ||
Total | 5,338 | 5,338 |
Equipment and machinery [Member] | ||
Total | 3,120,498 | 2,943,490 |
Tractors [Member] | ||
Total | 2,694,888 | 2,834,888 |
Trucks and other vehicles [Member] | ||
Total | 1,138,304 | 1,147,304 |
Leasehold improvements [Member] | ||
Total | $ 117,626 |
Property and Equipment (Detai_2
Property and Equipment (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property and Equipment (Textual) | ||
Depreciation expense | $ 1,378,952 | $ 1,435,098 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Identifiable intangible assets, net | $ 1,893,577 | $ 21,533 |
Customer Relationships [Member] | ||
Identifiable intangible assets, gross | 783,000 | 34,000 |
Accumulated amortization | (56,023) | (12,467) |
Identifiable intangible assets, net | 726,977 | 21,533 |
Marketing Related [Member] | ||
Identifiable intangible assets, gross | 1,368,000 | |
Accumulated amortization | (201,400) | |
Identifiable intangible assets, net | $ 1,166,600 |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Finite-Lived Intangible Assets, Net [Abstract] | ||
2020 | $ 330,332 | |
2021 | 330,332 | |
2022 | 324,665 | |
2023 | 323,532 | |
2024 | 584,716 | |
Total | $ 1,893,577 | $ 21,533 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Intangible Assets (Textual) | ||
Weighted average estimated useful life | 4 years 7 months 6 days | |
Customer Relationships [Member] | ||
Intangible Assets (Textual) | ||
Identifiable intangible assets | $ 783,000 | $ 34,000 |
Amortization expense | 56,023 | 12,467 |
Customer Relationships [Member] | Goedeker and Neese [Member] | ||
Intangible Assets (Textual) | ||
Identifiable intangible assets | 2,151,000 | 34,000 |
Amortization expense | $ 244,956 | $ 6,800 |
Acquisition (Details)
Acquisition (Details) - Goedeker [Member] | Dec. 31, 2019USD ($) |
Provisional Purchase Consideration at preliminary fair value: | |
Note payable, net of $462,102 debt discount and $215,500 of capitalized financing costs | $ 3,422,398 |
Contingent note payable | 81,494 |
Non-controlling interest | 979,523 |
Amount of consideration | 4,483,415 |
Assets acquired and liabilities assumed at preliminary fair value | |
Cash | |
Accounts receivable | 456,182 |
Inventories | 1,851,251 |
Working capital adjustment receivable and other assets | 1,104,863 |
Property and equipment | 216,286 |
Customer related intangibles | 749,000 |
Marketing related intangibles | 1,368,000 |
Accounts payable and accrued expenses | (3,929,876) |
Customer deposits | (2,308,307) |
Other liabilities | |
Net tangible assets acquired (liabilities assumed) | (492,601) |
Total net assets acquired (liabilities assumed) | (492,601) |
Consideration paid | 4,483,415 |
Preliminary goodwill | $ 4,976,016 |
Acquisition (Details 1)
Acquisition (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Net loss per share | $ (1.07) | $ (0.50) |
Weighted average number of shares outstanding | 3,152,349 | 3,115,625 |
Business Acquisitions [Member] | ||
Revenues, net | $ 53,995,037 | $ 63,641,807 |
Net income (loss) allocable to common shareholders | $ (3,189,209) | $ 1,010,018 |
Net loss per share | $ (1.01) | $ 0.32 |
Weighted average number of shares outstanding | 3,165,625 | 3,165,625 |
Acquisition (Details Textual)
Acquisition (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Acquisition (Textual) | ||
Business acquisition purchase price payable in promissory note | $ 8,000 | |
Revenue | 41,048,138 | 7,333,847 |
Net loss | (3,381,423) | (1,541,873) |
Capitalized financing costs | 605,272 | 42,506 |
Net of debt discount | 10,073 | |
Write-off contingent liability | 32,246 | 395,634 |
Contingent note payable | $ 49,248 | |
Maximum [Member] | Property, Plant and Equipment [Member] | ||
Acquisition (Textual) | ||
Estimated useful life | 5 years | |
Minimum [Member] | Property, Plant and Equipment [Member] | ||
Acquisition (Textual) | ||
Estimated useful life | 4 years | |
Goedeker Television [Member] | April 5, 2019 [Member] | ||
Acquisition (Textual) | ||
Business acquisition purchase price payable earn out payments | $ 81,494 | |
Additional consideration description | Television is entitled to all or a portion of an earn out payment, the applicable earn out payment(s) (or portion thereof) shall be paid on the date that is three (3) years from the closing date, and shall accrue interest from the date on which it is determined Goedeker Television is entitled to such earn out payment (or portion thereof) at a rate equal to five percent (5%) per annum, computed on the basis of a 360 day year for the actual number of days elapsed. | |
Business acquisition purchase price in cash description | Goedeker Business for any applicable period is less than $2,500,000 but greater than $1,500,000, Goedeker must pay a partial earn out payment to Goedeker Television in an amount equal to the product determined by multiplying (i) the EBITDA Achievement Percentage by (ii) the applicable earn out payment for such period, where the "Achievement Percentage" is the percentage determined by dividing (A) the amount of (i) the EBITDA of the Goedeker Business for the applicable period less (ii) $1,500,000, by (B) $1,000,000. For avoidance of doubt, no partial earn out payments shall be earned or paid to the extent the EBITDA of the Goedeker Business for any applicable period is equal or less than $1,500,000. | |
Earn out payments description | Goedeker Television is also entitled to receive the following earn out payments to the extent the Goedeker Business achieves the applicable EBITDA (as defined in the asset purchase agreement) targets: 1. An earn out payment of $200,000 if the EBITDA of the Goedeker Business for the trailing twelve (12) month period from the closing date is $2,500,000 or greater; 2. An earn out payment of $200,000 if the EBITDA of the Goedeker Business for the trailing twelve (12) month period from the first anniversary of closing date is $2,500,000 or greater; and 3. An earn out payment of $200,000 if the EBITDA of the Goedeker Business for the trailing twelve (12) month period from the second anniversary of the closing date is $2,500,000 or greater. | |
Net liabilities assumed | $ 492,601 | |
Capitalized financing costs | 215,500 | |
Goedeker [Member] | April 5, 2019 [Member] | ||
Acquisition (Textual) | ||
Business acquisition purchase price | 6,200,000 | |
Business acquisition purchase price payable in promissory note | 4,100,000 | |
Business acquisition purchase price in cash | 1,500,000 | |
Business acquisition purchase price payable earn out payments | $ 600,000 | |
Additional consideration description | 1847 Goedeker agreed to issue to each of the Stockholders a number of shares of its common stock equal to a 11.25% non-dilutable interest (22.5% total) in all of the issued and outstanding stock of 1847 Goedeker as of the closing date. | |
Business acquisition purchase price in cash description | The report issued by that CPA firm determined that the sellers owed Goedeker $809,000, which to date the seller has not paid. The $809,000 is included in other assets in the accompanying balance sheet as of December 31, 2019. | |
Revenue | $ 34,668,113 | |
Net loss | 2,878,700 | |
Net of debt discount | $ 462,102 |
Lines of Credit (Details)
Lines of Credit (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Total debt ratio [Member] | |
Actual Ratio | (4.2) |
Required Ratio | 4.50 |
Senior debt ratio [Member] | |
Actual Ratio | (1.5) |
Required Ratio | 1.75 |
Interest coverage ratio [Member] | |
Actual Ratio | (1.1) |
Required Ratio | 1 |
Lines of Credit (Details Textua
Lines of Credit (Details Textual) | Apr. 05, 2019 | Jun. 24, 2019USD ($) | Dec. 31, 2019USD ($) |
Lines of Credit (Textual) | |||
Line of credit facility interest description | Fair value immediately prior to such event equal to or greater than $25,000. | ||
Subordinated promissory note percentage | 100.00% | ||
Loan and security agreement, other description | (i) non-payment, (ii) a breach by Goedeker of any of its representations, warranties or covenants under the loan and security agreement or any other agreement entered into with Northpoint, or (iii) the bankruptcy or insolvency of Goedeker. | (i) for failure to pay principal and interest on the revolving note when due, or to pay any fees due under the loan and security agreement; (ii) if any representation, warranty or certification in the loan and security agreement or any document delivered in connection therewith is incorrect in any material respect; (iii) for failure to perform any covenant or agreement contained in the loan and security agreement or any document delivered in connection therewith; (iv) for the occurrence of any default in respect of any other indebtedness of more than $100,000; (v) for any voluntary or involuntary bankruptcy, insolvency or dissolution; (vi) for the occurrence of one or more judgments, non-interlocutory orders, decrees or arbitration awards involving in the aggregate a liability of $25,000 or more; (vii) if Goedeker or 1847 Goedeker, or officer thereof, is charged by a governmental authority, criminally indicted or convicted of a felony under any law that would reasonably be expected to lead to forfeiture of any material portion of collateral, or such entity is subject to an injunction restraining it from conducting its business; (viii) if Burnley determines that a material adverse effect (as defined in the loan and security agreement) has occurred; (ix) if a change of control (as defined in the loan and security agreement) occurs; (x) if there is any material damage to, loss, theft or destruction of property which causes, for more than thirty consecutive days beyond the coverage period of any applicable business interruption insurance, the cessation or substantial curtailment of revenue producing activities; (xi) if there is a loss, suspension or revocation of, or failure to renew any permit if it could reasonably be expected to have a material adverse effect; and (xii) for the occurrence of any default or event of default under the term loan with SBCC (as defined below), the 9% subordinated promissory note issued to Goedeker Television, the secured convertible promissory note issued to Leonite (as defined below) or any other debt that is subordinated to the revolving loan | |
Liquidity Ratio [Member] | |||
Lines of Credit (Textual) | |||
Actual ratio | 0.12 | ||
Required ratio | 0.60 | ||
Burnley [Member] | |||
Lines of Credit (Textual) | |||
Line of credit principal amount | $ 660,497 | ||
Line of credit facility interest description | The revolving note bears interest at a per annum rate equal to the greater of (i) the LIBOR Rate (as defined in the loan and security agreement) plus 6.00% or (ii) 8.50%; provided that upon an event of default (as defined below) all loans, all past due interest and all fees shall bear interest at a per annum rate equal to the foregoing rate plus 3.00%. | ||
Line of credit outstanding | 571,997 | ||
Note due date | Apr. 5, 2022 | ||
Unamortized debt discount | $ 88,500 | ||
Loan and security agreement, description | Under the loan and security agreement, Goedeker is required to pay a number of fees to Burnley, including the following: ● a commitment fee during the period from closing to the earlier of the maturity date or termination of Burnley’s commitment to make loans under the loan and security agreement, which shall accrue at the rate of 0.50% per annum on the average daily difference of the total loan amount then in effect minus the sum of the outstanding principal balance of the revolving note, which such accrued commitment fees are due and payable in arrears on the first day of each calendar month and on the date on which Burnley’s commitment to make loans under the loan and security agreement terminates, commencing on the first such date to occur after the closing date; ● an annual loan facility fee equal to 0.75% of the revolving commitment (i.e., the maximum amount that Goedeker may borrow under the revolving loan), which is fully earned on the closing date for the term of the loan (including any extension) but shall be due and payable on each anniversary of the closing date; ● a monthly collateral management fee for monitoring and servicing the revolving loan equal to $1,700 per month for the term of revolving note, which is fully earned and non-refundable as of the date of the loan and security agreement, but shall be payable monthly in arrears on the first day of each calendar month; provided that payment of the collateral management fee may be made, at the discretion of Burnley, by application of advances under the revolving loan or directly by Goedeker; and ● if the revolving loan is terminated for any reason, including by Burnley following an event of default, then Goedeker shall pay, as liquidated damages and compensation for the costs of being prepared to make funds available, an amount equal to the applicable percentage multiplied by the revolving commitment (i.e., the maximum amount that Goedeker may borrow under the revolving loan), wherein the term applicable percentage means (i) 3%, in the case of a termination on or prior to the first anniversary of the closing date, (ii) 2%, in the case of a termination after the first anniversary of the closing date but on or prior to the second anniversary thereof, and (iii) 0.5%, in the case of a termination after the second anniversary of the closing date but on or prior to the maturity date. | ||
Subordinated promissory note percentage | 9.00% | ||
Burnley [Member] | April 5, 2019 [Member] | |||
Lines of Credit (Textual) | |||
Loan and security agreement, description | (i) the borrowing base or (ii) $1,500,000 (provided that such amount may be increased to $3,000,000 in Burnley’s sole discretion) minus reserves established Burnley at any time in accordance with the loan and security agreement. The “borrowing base” means an amount equal to the sum of the following: (i) the product of 85% multiplied by the liquidation value of Goedeker’s inventory (net of all liquidation costs) identified in the most recent inventory appraisal by an appraiser acceptable to Burnley (ii) multiplied by Goedeker’s eligible inventory (as defined in the loan and security agreement), valued at the lower of cost or market value, determined on a first-in-first-out basis. | ||
Burnley [Member] | April 5, 2019 [Member] | Maximum [Member] | |||
Lines of Credit (Textual) | |||
Issuance of revolving note | $ 1,500,000 | ||
Goedeker [Member] | |||
Lines of Credit (Textual) | |||
Unamortized debt discount | 14,451 | ||
Goedeker [Member] | April 5, 2019 [Member] | |||
Lines of Credit (Textual) | |||
Borrowed amount | 744,000 | ||
Northpoint Commercial Finance LLC [Member] | |||
Lines of Credit (Textual) | |||
Line of credit outstanding | $ 1,000,000 | $ 678,993 | |
Interest rate | 7.99% | ||
Loan and security agreement, description | (i) an audit fee for each audit conducted as determined by Northpoint, equal to the out-of-pocket expense incurred by Northpoint plus any minimum audit fee established by Northpoint; (ii) a fee for any returned payments equal to the lesser of the maximum amount permitted by law or $50; (iii) a late fee for each payment not received by the 25th day of a calendar month, and each month thereafter until such payment is paid, equal to the greater of 5% of the amount past due or $25; (iv) a billing fee equal to $250 for any month for which Goedeker requests a paper billing statement; (v) a live check fee equal to $50 for each check that Goedeker sends to Northpoint for payment of obligations under the loan and security agreement; (vi) processing fees to be determined by Northpoint; and (vii) any additional fees that Northpoint may implement from time to time. |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | Jun. 13, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Term Loans (Textual) | |||
Uncertain tax liability | $ 8,000 | ||
Debt issuance costs, net | 10,073 | ||
Amortization of debt issuance costs | 29,239 | ||
Note payable amount | 584,943 | ||
PIK [Member] | |||
Term Loans (Textual) | |||
capitalized interest | $ 21,204 | ||
Leonite [Member] | April 5, 2019 [Member] | |||
Term Loans (Textual) | |||
Warrant term | 5 years | ||
SBCC [Member] | April 5, 2019 [Member] | |||
Term Loans (Textual) | |||
Term loan principal amount | $ 1,500,000 | ||
Warrant term | 10 years | ||
Debt instrument, interest rate description | Interest at the sum of the cash interest rate (defined as 11% per annum) plus the Paid-in-Kind (“PIK”) interest rate (defined as 2% per annum); provided that upon an event of default all principal, past due interest and all fees shall bear interest at a per annum rate equal to the cash interest rate and the PIK interest rate, in each case plus 3.00%. | ||
Debt instrument, periodic payment | $ 93,750 | ||
Debt instrument, maturity date range, end | Apr. 5, 2023 | ||
Note payable amount | $ 999,201 | ||
Notes payable principal amount | 1,312,500 | ||
Unamortized debt discount | 144,625 | ||
Debt instrument unamortized warrants | $ 189,879 | ||
Fully-diluted basis an aggregate price | $ 100 | ||
Loan prepayment event, description | (i) prior to the first anniversary of the closing date, Goedeker shall pay SBCC an amount equal to 5.0% of such prepayment, (ii) prior to the second anniversary of the closing date and on or after the first anniversary of the closing date, Goedeker shall pay SBCC an amount equal to 3.0% of such prepayment, or (iii) prior to the third anniversary of the closing date and on or after the second anniversary of the closing date, Goedeker shall pay SBCC an amount equal to 1.0% of such prepayment, in each case as liquidated damages for damages for loss of bargain to SBCC. In addition, in the event and on each occasion that any net proceeds (as defined in the loan and security agreement) are received by or on behalf of Goedeker or 1847 Goedeker in respect of any prepayment event following the occurrence and during the continuance of an event of default, Goedeker shall, immediately after such net proceeds are received, prepay the term note in an aggregate amount equal to 100% of such net proceeds. A “prepayment event” means (i) any sale, transfer, merger, liquidation or other disposition (including pursuant to a sale and leaseback transaction) of any property of Goedeker or 1847 Goedeker; (ii) a change of control (as defined in the loan and security agreement); (iii) any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property of Goedeker or 1847 Goedeker with a fair value immediately prior to such event equal to or greater than $25,000; (iv) the issuance by Goedeker of any capital stock or the receipt by Goedeker of any capital contribution; or (v) the incurrence by Goedeker or 1847 Goedeker of any indebtedness (as defined in the loan and security agreement), other than indebtedness permitted under the loan and security agreement. | ||
Neese [Member] | Banking [Member] | |||
Term Loans (Textual) | |||
Debt instrument, periodic payment, principal | $ 3,654,074 | ||
Debt instrument, interest rate | 6.85% | ||
Debt instrument, periodic payment | $ 302,270 | ||
Debt instrument, maturity date range, start | Jan. 20, 2019 | ||
Debt instrument, maturity date range, end | Jul. 20, 2020 | ||
Debt instrument, maturity date, description | Beginning on January 20, 2019 and continuing every six months thereafter until July 20, 2020, the maturity date; provided however, that Neese will pay the note in full immediately upon demand by Home State Bank. | ||
Debt instrument, lease buyout amount | $ 3,299,364 | ||
Debt instrument, remaining balance of lease | 3,309,537 | ||
Interest payment of promissory notes | 40,000 | ||
Repayment of secured loan | 30,500 | ||
Amortization of debt issuance costs | 32,206 | ||
Unamortized debt discount | 10,173 | ||
Debt coverage ratio, description | Annual interest rate of 6.85% with covenants to maintain a minimum debt coverage ratio of 1.00 to 1.25 measured at December 31, 2019. | ||
Neese [Member] | Banking [Member] | Term Loan [Member] | |||
Term Loans (Textual) | |||
Repayment of secured loan | $ 27,000 |
Notes Payables (Details 1)
Notes Payables (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Common stock shares issued | 3,165,625 | 3,115,625 |
Common stock shares issued, value | $ 3,165 | $ 3,115 |
Promissory notes current portion | 584,943 | |
Unamortized debt discount | $ 76,767 | |
Interest rate | 8.00% | |
Promissory note payable | $ 714,286 | |
Interest on the promissory notes | $ 40,000 | |
Minimum [Member] | ||
EBITDA threshold | $ 1,300,000 | |
April 5, 2019 [Member] | Leonite [Member] | ||
Common stock shares issued | 50,000 | |
Shares issuable upon warrants exercised | 200,000 | |
Fiscal Year 2017 [Member] | ||
Adjusted EBITDA target for vesting of promissory note | $ 1,300,000 | |
Fiscal Year 2018 [Member] | ||
Adjusted EBITDA target for vesting of promissory note | 1,300,000 | |
Fiscal Year 2019 [Member] | ||
Adjusted EBITDA target for vesting of promissory note | $ 1,300,000 | |
Description of vesting promissory note | At June 30, 2018, management made the determination that the vesting note payable had no value because it estimated that the Adjusted EBITDA target of $1,300,000 for both 2018 and 2019 would be not attained, thus eliminating the requirement for a payment under terms of the note payable. As expected, Neese did not meet the Adjusted EBITDA target for the fiscal years ended December 31, 2019. As a result, this note did not vest and no amounts are payable. | |
Goedeker [Member] | April 5, 2019 [Member] | 9% Subordinated Promissory Note [Member] | ||
Term loan principal amount | $ 4,100,000 | |
Promissory notes current portion | 3,300,444 | |
Promissory notes | 3,930,292 | |
Unamortized debt discount | $ 629,848 | |
Interest rate | 9.00% | |
Maturity Date | Apr. 5, 2023 | |
SBCC [Member] | April 5, 2019 [Member] | ||
Term loan principal amount | $ 1,500,000 | |
Promissory notes current portion | 999,201 | |
Promissory notes | $ 1,312,500 | |
SBCC [Member] | April 5, 2019 [Member] | Secured Convertible Promissory Note [Member] | ||
Common stock shares issued | 50,000 | |
Debt discount | $ 292,673 | |
SBCC [Member] | May 5, 2019 [Member] | Secured Convertible Promissory Note [Member] | ||
Note maturity rate | 115.00% | |
Conversion price per share | $ 1 | |
Debt conversion, description | (1) the number of common shares beneficially owned by Leonite and its affiliates (other than common shares which may be deemed beneficially owned through the ownership of the unconverted portion of the note or the unexercised or unconverted portion of any other security of the Company subject to a limitation on conversion or exercise analogous to the limitations contained in the note, and, if applicable, net of any shares that may be deemed to be owned by any person not affiliated with Leonite who has purchased a portion of the note from Leonite) and (2) the number of common shares issuable upon the conversion of the portion of the note with respect to which the determination of this proviso is being made, would result in beneficial ownership by Leonite and its affiliates of more than 4.99% of the outstanding common shares of the Company. Such limitations on conversion may be waived (up to a maximum of 9.99%) by Leonite upon, at its election, not less than 61 days' prior notice to the Company, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined by Leonite, as may be specified in such notice of waiver). | |
Leonite [Member] | April 5, 2019 [Member] | Secured Convertible Promissory Note [Member] | ||
Debt conversion, description | The conversion price shall be $1.00 per share (subject to adjustment as further described in the note for common share distributions and splits, certain fundamental transactions, and anti-dilution adjustments), provided that at any time after any event of default under the note, the conversion price shall immediately be equal to the lesser of (i) such conversion price less 40%; and (ii) the lowest weighted average price of the common shares during the 21 consecutive trading day period immediately preceding the trading day that 1847 receives a notice of conversion or (iii) the discount to market based on subsequent financings with other investors. | |
Neese Acquisition [Member] | 10% Promissory Note [Member] | ||
Description for prepayment of the promissory note and accrued interest | The Company continues to accrue interest at the contract rate; however, given the limitations of the term loan, all accrued interest in excess of $40,000 is included in long-term accrued expenses. | |
1847 Neese [Member] | Neese Acquisition [Member] | 8% Vesting Promissory Note [Member] | ||
Business acquisition vesting promissory note | $ 1,875,000 | |
Interest rate | 8.00% | |
Maturity Date | Jun. 30, 2020 | |
1847 Neese [Member] | Neese Acquisition [Member] | 10% Promissory Note [Member] | ||
Interest rate | 10.00% | |
Promissory note payable | $ 1,025,000 | |
Description for prepayment of the promissory note and accrued interest | That the unpaid principal, and all accrued, but unpaid, interest thereon shall be prepaid if at any time, and from time to time, the cash on hand of 1847 Neese and Neese exceeds $250,000 and, then, the prepayment shall be equal to the amount of cash in excess of $200,000 until the unpaid principal and accrued, but unpaid, interest thereon is fully prepaid. | |
Cash balance to prepay outstanding promissory note and accrued interest | $ 250,000 | |
Prepayment of short term debt in excess of cash balance, amount | 200,000 | |
Interest on the promissory notes | $ 40,000 |
Floor Plan Loans Payable (Detai
Floor Plan Loans Payable (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Floor plan loans payable | $ 10,581 | $ 109,100 |
Floor Plan Loans [Member] | ||
Machinery and Equipment inventory pledged to secure a loan | 10,581 | 109,100 |
Floor plan loans payable | $ 10,581 | $ 109,100 |
Convertiable Promissory Note (D
Convertiable Promissory Note (Details) - USD ($) | Apr. 05, 2019 | Dec. 31, 2019 |
Note bears interest at rate, description | (2) the number of common shares issuable upon the conversion of the portion of the note with respect to which the determination of this proviso is being made, would result in beneficial ownership by Leonite and its affiliates of more than 4.99% of the outstanding common shares of the Company. Such limitations on conversion may be waived (up to a maximum of 9.99%) by Leonite upon, at its election, not less than 61 days’ prior notice to the Company, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined by Leonite, as may be specified in such notice of waiver). | |
Debt conversion, description | (i) the principal amount of the note to be converted plus (ii) at Leonite’s option, accrued and unpaid interest, plus (iii) at Leonite’s option, Default Interest, if any, plus (iv) Leonite’s expenses relating to a conversion, plus (v) at Leonite’s option, any amounts owed to Leonite. The conversion price shall be $1.00 per share (subject to adjustment as further described in the note for common share distributions and splits, certain fundamental transactions, and anti-dilution adjustments), provided that at any time after any event of default under the note, the conversion price shall immediately be equal to the lesser of (i) such conversion price less 40%; and (ii) the lowest weighted average price of the common shares during the 21 consecutive trading day period immediately preceding the trading day that 1847 receives a notice of conversion or (iii) the discount to market based on subsequent financings with other investors. | |
Goedeker [Member] | ||
Aggregate principal amount | $ 714,286 | |
Additional purchase of note, description | (i) the Company issued to Leonite 50,000 common shares, (ii) the Company issued to Leonite a five-year warrant to purchase 200,000 common shares at an exercise price of $1.25 per share (subject to adjustment), which may be exercised on a cashless basis, and (iii) 1847 Goedeker issued to Leonite shares of common stock equal to a 7.5% non-dilutable interest in 1847 Goedeker. | |
Remaining net balance | $ 584,943 | |
Comprised of principal value | 714,286 | |
Unamortized original issuance discount interest | $ 14,451 | |
Fiinancing costs | 38,125 | |
Warrant feature | 76,767 | |
Original issue discount | $ 64,286 | |
Purchase price description | Therefore, the purchase price of the note was $650,000. Furthermore, the Company issued 50,000 shares of common stock valued at $137,500 and a debt-discount related to the warrants valued at $292,673. The company amortized $319,031 of financing costs related to the shares and warrants in the year ended December 31, 2019. | |
Note bears interest at rate, description | (i) 12% per annum and (ii) the prime rate as set forth in the Wall Street Journal on April 5, 2019 plus 6.5% guaranteed over the holding period on the unconverted principal amount, on the terms set forth in the note (the “Stated Rate”). Any amount of principal or interest on the note which is not paid by the maturity date shall bear interest at the rate at the lesser of 24% per annum or the maximum legal amount permitted by law (the “Default Interest”). |
Financing Leases (Details)
Financing Leases (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
For the year ending December 31, | ||
2020 | $ 490,077 | |
2021 | 464,269 | |
2022 | 77,335 | |
Total minimum lease payments | 1,031,681 | |
Less amount representing interest | 200,990 | |
Present value of minimum lease payments | 830,691 | |
Less current portion of minimum lease | (358,584) | $ (299,157) |
Less debt issuance costs, net | (25,055) | |
Less payments to Utica for release of lien | (249,784) | |
Less lease deposits | (38,807) | |
End of lease buyout payments | 117,413 | |
Long-term present value of minimum lease payment | $ 275,874 |
Financing Leases (Details Textu
Financing Leases (Details Textual) | Feb. 01, 2018USD ($) | Jun. 14, 2017USD ($) | Mar. 03, 2017USD ($) | Mar. 02, 2018USD ($) | Oct. 31, 2017USD ($) | Dec. 31, 2019USD ($)Payments | Dec. 31, 2018USD ($) | Apr. 18, 2018USD ($) |
Amortization of debt issuance costs | $ 29,239 | |||||||
Number of payments | Payments | 46 | |||||||
Forbearance amount | $ 173,376 | |||||||
Forbearance fee | $ 4,500 | |||||||
Current balance of the term loan | 475,000 | |||||||
Lease payable beginning | 12,882 | |||||||
Lease payable ending | 38,000 | |||||||
Early payout loss | 405,674 | |||||||
Loss from the write-off of unamortized debt issuance costs | 95,130 | |||||||
Delayed payment | $ 85,322 | |||||||
Master Lease Agreement [Member] | ||||||||
Lease term, description | If any rent is not received by Utica within five (5) calendar days of the due date, the Lessee shall pay a late charge equal to ten (10%) percent of the amount. In addition, in the event that any payment is not processed or is returned on the basis of insufficient funds, upon demand, the Lessee shall pay Utica a charge equal to five percent (5%) of the amount of such payment. The Lessee is also required to pay an annual administration fee of $5,000. | |||||||
Administration fee | $ 5,000 | |||||||
Leases payable description under lease agreement | (a) $162,000 (five percent (5%) of the total invoice cost (as defined in the master lease agreement)); or (b) the fair market value of the equipment, as determined by Utica. Upon the expiration of the master lease agreement, the Lessee is required to pay, together with all other amounts then due and payable under the master lease agreement, in cash, an end of term buyout price equal to the lesser of: (a) $49,000 (five percent (5%) of the total invoice cost); or (b) the fair market value of the equipment, as determined by Utica. | |||||||
Interest rate, capitalized lease | 15.50% | |||||||
Debt issuance costs | $ 25,055 | |||||||
Amortization of debt issuance costs | 12,060 | |||||||
Capital lease term | 51 months | |||||||
Lease rent monthly | $ 53,000 | |||||||
Number of months | 3 months | |||||||
Increased monthly rent | $ 85,322 | |||||||
Number of months for increased rent | 48 months | |||||||
Net lien release payment | 500,179 | |||||||
Payments of lease agreement | $ 174,784 | |||||||
Master Lease Agreement [Member] | Utica [Member] | ||||||||
Proceeds from capital lease | $ 980,000 | |||||||
Capital lease term | 51 months | |||||||
Lease rent monthly | $ 53,000 | $ 25,807 | ||||||
Number of months | 3 months | |||||||
Late payment fee | $ 2,650 | $ 5,300 | ||||||
Master Lease Agreement [Member] | First amendment lease documentst [Member] | ||||||||
Administration fee | $ 2,500 | |||||||
Capital lease term | 57 months | |||||||
Lease rent monthly | $ 53,000 | |||||||
Number of months | 10 months | |||||||
Increased monthly rent | $ 85,322 | |||||||
Number of months for increased rent | 47 months | |||||||
Master Lease Agreement [Member] | Utica Leaseco, LLC [Member] | Equipment [Member] | ||||||||
Proceeds from capital lease | $ 3,240,000 |
Operating Lease (Details)
Operating Lease (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Operating Lease, Lease Income [Abstract] | ||
Operating lease right-of-use lease asset | $ 624,157 | $ 2,300,000 |
Accumulated amortization | (59,077) | (299,335) |
Net balance | 565,080 | 2,000,665 |
Lease liability, current portion | 63,253 | 422,520 |
Lease liability, long term | 501,827 | 1,578,235 |
Total operating lease liabilities | $ 565,080 | $ 2,000,755 |
Weighted Average Remaining Lease Term - operating leases | 86 years | 51 years |
Weighted Average Discount Rate - operating leases | 6.85% | 6.50% |
Operating Lease (Details 1)
Operating Lease (Details 1) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Operating Lease, Lease Income [Abstract] | ||
2020 | $ 100,000 | $ 540,000 |
2021 | 100,000 | 540,000 |
2022 | 100,000 | 540,000 |
2023 | 100,000 | 540,000 |
2024 | 100,000 | 135,000 |
Thereafter | 216,667 | |
Total lease payments | 716,667 | 2,295,000 |
Less imputed interest | 151,587 | (294,245) |
Maturities of lease liabilities | $ 565,080 | $ 2,000,755 |
Operating Lease (Details Textua
Operating Lease (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Jun. 13, 2018 | |
Annual payments for lease payments | $ 716,667 | $ 2,295,000 | |
Lease term | 10 years | ||
Interest rate on unpaid amount | 18.00% | ||
Operating lease base rent | $ 8,333 | ||
Long-term accrued liability | 200,000 | ||
Operating lease liabilities | $ 100,000 | ||
Salary or rent not payable | $ 100,000 | ||
April 5, 2019 [Member] | |||
Lease term | 5 years | ||
Operating lease base rent | $ 45,000 | ||
May 2014 [Member] | |||
Annual payments for lease payments | $ 11,830 | ||
Lease term | 5 years |
Related Parties (Details)
Related Parties (Details) - USD ($) | Jan. 03, 2018 | Mar. 03, 2017 | Apr. 15, 2013 | Dec. 31, 2019 | Dec. 31, 2018 |
Advances, related party | $ 181,333 | $ 174,333 | |||
Management fee | 183,790 | ||||
Long term accrued liability | 450,808 | ||||
Note payable - related party | 119,400 | 117,000 | |||
Accrued interest | $ 117,000 | 7,549 | |||
Lease term | 10 years | ||||
Manager [Member] | |||||
Advances, related party | $ 62,499 | $ 55,500 | |||
Officer [Member] | |||||
Advances, related party | $ 179,565 | ||||
Management Services Agreement [Member] | |||||
Description of management fee | Quarterly management fee equal to 0.5% (2.0% annualized) of its adjusted net assets for services performed. | ||||
Description of gross income | Expected to exceed, 9.5% of the Company's gross income with respect to such fiscal year | ||||
Offsetting Management Services Agreement [Member] | |||||
Management consulting fee, quarterly | $ 62,500 | ||||
Promissory Note [Member] | |||||
Management fee | $ 100,000 | ||||
Initial principal amount | $ 50,000 | ||||
Additional advances, description | The note provides that the Company may from time to time request additional advances from the Manager up to an aggregate additional amount of $100,000, which will be added to the note if the Manager, in its sole discretion, so provides. | ||||
Fixed annual interest rate | 8.00% | ||||
Interest rate | 12.00% | ||||
Repayment, description | In the event the Company completes a financing involving at least $500,000, the Company must, contemporaneously with the closing of such financing transaction, repay the entire outstanding principal and accrued and unpaid interest on the note. | ||||
May 2014 [Member] | |||||
Lease term | 5 years | ||||
April 5, 2019 [Member] | |||||
Lease term | 5 years | ||||
April 5, 2019 [Member] | Manager [Member] | |||||
Description of management fee | Quarterly management fee equal to the greater of $62,500 or 2% of adjusted net assets | ||||
Management consulting fee, quarterly | $ 62,500 | ||||
Long term accrued liability | 63,653 | ||||
Maximum [Member] | Officer [Member] | |||||
Management fee | 250,000 | ||||
Maximum [Member] | April 5, 2019 [Member] | |||||
Management fee | $ 250,000 | ||||
Goedeker Television [Member] | April 5, 2019 [Member] | |||||
Interest rate | 9.00% |
Shareholders' Deficit (Details)
Shareholders' Deficit (Details) - USD ($) | May 10, 2018 | Jan. 22, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Shareholders' Deficit (Textual) | ||||
Common shares,authorized | 500,000,000 | 500,000,000 | ||
Common shares, issued | 3,165,625 | 3,115,625 | ||
Common shares, outstanding | 3,165,625 | 3,115,625 | ||
Common shares, voting rights | one vote | |||
Ownership of allocation shares by manager | 100.00% | |||
Allocation of profit | 20.00% | |||
Interest rate | 8.00% | |||
Net loss attributable to non-controlling interests | $ 456,419 | $ 546,513 | ||
Allocation shares, authorized | 1,000 | 1,000 | ||
Allocation shares, outstanding | 1,000 | 1,000 | ||
Reverse stock split, description | 1-for-5 | |||
Increase/Decrease in issued and outstanding common shares | 623,125 to 3,115,625 shares | 3,115,500 to 623,125 shares | ||
Forward stock split, description | 5-for-1 | |||
Unamortized debt discount | $ 76,767 | |||
Amortized debt discount | $ 215,906 | |||
1847 Holdco [Member] | ||||
Shareholders' Deficit (Textual) | ||||
Noncontrolling interest, ownership percentage | 45.00% | |||
April 5, 2019 [Member] | Leonite [Member] | ||||
Shareholders' Deficit (Textual) | ||||
Common shares, issued | 50,000 | |||
Noncontrolling interest, ownership percentage | 4.99% | |||
Shares issuable upon warrants exercised | 200,000 | |||
Warrant exercise price | $ 1.25 | |||
Estimated fair value | $ 2.75 | |||
Leonite [Member] | April 5, 2019 [Member] | ||||
Shareholders' Deficit (Textual) | ||||
Warrant term | 5 years | |||
Dividend yield | 0.00% | |||
Expected volatility | 140.30% | |||
Weighted average risk-free interest rate | 2.31% | |||
Expected life | 5 years | |||
Noncontrolling Interest | 1847 Holdco [Member] | ||||
Shareholders' Deficit (Textual) | ||||
Noncontrolling interest, ownership percentage | 30.00% | |||
Noncontrolling Interest | 1847 Neese [Member] | ||||
Shareholders' Deficit (Textual) | ||||
Acquisition interest acquired | 55.00% | |||
Noncontrolling Interest | 1847 Holdco [Member] | ||||
Shareholders' Deficit (Textual) | ||||
Acquisition interest acquired | 70.00% | |||
Net loss attributable to non-controlling interests | $ 863,510 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Taxes Details [Abstract] | ||
Current Federal and State | $ 16,500 | $ (85,000) |
Deferred Federal and State | (1,218,900) | (697,000) |
Total (benefit) provision for income taxes | $ (1,202,363) | $ (781,200) |
Income Taxes (Details 1)
Income Taxes (Details 1) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Taxes Details [Abstract] | ||
Federal tax | 21.00% | 21.00% |
State tax | 5.50% | 8.10% |
Gain on bargain purchase | 0.00% | 5.80% |
Permanent items | (0.20%) | (2.20%) |
Rate change from TCJA | 0.00% | 4.30% |
Other | 0.00% | (2.30%) |
Effective income tax rate | 26.30% | 34.70% |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets | ||
Receivables | $ 8,000 | $ 8,000 |
Related party accruals | 156,000 | 58,000 |
Inventory obsolesce | 115,000 | 29,000 |
Sales return reserve | 51,000 | |
Business interest limitation | 343,000 | |
Other | 8,000 | 7,000 |
Loss carryforward | 624,000 | 473,000 |
Total deferred tax assets | 1,305,000 | 575,000 |
Deferred tax liabilities | ||
Fixed assets | (652,000) | (940,000) |
Intangibles | (18,000) | |
Total deferred tax liabilities | (670,000) | (940,000) |
Total net deferred income tax liabilities | $ 635,000 | $ (365,000) |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Taxes Details [Abstract] | ||
Gross unrecognized tax benefit at the beginning of the year | $ 126,000 | |
Increase in tax positions to the current year | ||
Adjustment to acquisition purchase price | (120,000) | |
Decreases due to lapses in applicable statutes of limitations | (6,000) | |
Total (benefit) provision for income taxes |
Income Taxes (Details 4)
Income Taxes (Details 4) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Taxes Details [Abstract] | ||
Prepaid income taxes/(accrued tax liability) | $ (24,000) | $ 173,000 |
Deferred tax asset/(liability) | 635,000 | (365,000) |
Income tax benefit | $ 1,202,000 | $ 781,000 |
Income Taxes (Detail Textual)
Income Taxes (Detail Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes (Textual) | |||
Net operating loss carry forwards | $ 2,297,000 | $ 1,135,000 | |
Net operating loss carry forwards, expiration date | 2037 | ||
Cumulative tax effect description | The cumulative tax effect at the expected rate of 26.3% and 34.7% of significant items | ||
Reduces the corporate income tax rate description | The TCJA reduces the corporate income tax rate from 34% to 21% effective January 1, 2018. | ||
Accrued interest and penalties | $ 0 | 0 | |
Uncertain tax position | 129,000 | $ 126,000 | |
Extinguishment of debt | $ 129,000 |
Supplemental Disclosures of C_3
Supplemental Disclosures of Cash Flow Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Supplemental Cash Flow Information [Abstract] | ||
Interest paid | $ 706,784 | $ 811,854 |
Income tax paid | ||
Business Combinations: | ||
Current Assets | 5,726,093 | 1,517,116 |
Property and equipment | 216,286 | |
Intangibles | 2,117,000 | |
Goodwill | 4,998,182 | 22,166 |
Assumed liabilities | 23,230,786 | 8,079,346 |
9% Subordinated Promissory Note, net of debt discount of $1,277,602 | (3,422,398) | |
Contingent note payable | (81,494) | |
Non-controlling interest | (979,523) | |
Cash acquired in acquisition of Goedeker | ||
Financing: | ||
Term Loan | 1,500,000 | |
Debt discount financing costs | (178,000) | |
Warrant feature upon issuance of term loan | (229,244) | |
Term loan, net | 1,092,756 | |
Line of Credit | 754,682 | |
Debt discount on line of credit | (128,682) | |
Issuance of common shares on promissory note | (137,500) | |
Line of Credit, net | 488,500 | |
Convertible Promissory Note | 714,286 | |
Convertible Promissory Note original issue and debt discount | (79,286) | |
Warrants issued in conjunction with convertible promissory note | (292,673) | |
Convertible Promissory Note, net | (342,327) | |
Warrant liability | 122,344 | |
Additional Paid-in Capital – common shares and warrants issued | 442,014 | 11,891 |
Operating lease, ROU assets and liabilities | $ 2,924,157 |