Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 22, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | 1847 Holdings LLC | |
Entity Central Index Key | 1,599,407 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 77,887,500 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,017 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEET - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash | $ 277,826 | |
Accounts receivable | 315,571 | |
Inventory | 882,922 | |
Prepaid expenses and other assets | 207,888 | 369 |
TOTAL CURRENT ASSETS | 1,684,207 | 369 |
Fixed Assets, net of accumulated depreciation of $200,000 as of March 31, 2017 | 6,789,012 | |
Other assets | 85,691 | |
Financing costs, net of accumulated amortization | 202,203 | |
Investments | 6 | 6 |
TOTAL ASSETS | 8,761,119 | 375 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 978,854 | 561,378 |
Advances, related party | 110,266 | 108,878 |
Promissory Note | 1,025,000 | |
Short term note - promissory | 625,000 | |
Capital lease - current | 595,347 | |
Other liabilities | 26,107 | |
TOTAL CURRENT LIABILITIES | 3,360,574 | 670,256 |
Note payable - Long term | 1,250,000 | |
Capital lease - long term | 2,644,653 | |
TOTAL LIABILITIES | 7,255,227 | 670,256 |
SHAREHOLDERS' (DEFICIT) | ||
Allocation shares, 1,000 shares issued and outstanding | 1,000 | 1,000 |
Common Shares, 500,000,000 shares authorized, 77,887,500 shares issued and outstanding as of March 31, 2017 and December 31, 2016 | 7 | 7 |
Additional Paid In Capital | 14,999 | 14,999 |
Accumulated (Deficit) | 1,563,892 | (685,887) |
TOTAL SHAREHOLDERS' (DEFICIT) | 1,579,898 | (669,881) |
NONCONTROLLING INTERESTS | (74,006) | |
TOTAL EQUITY | 1,505,892 | (669,881) |
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) | $ 8,761,119 | $ 375 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 | Jul. 02, 2014 |
Current Assets | |||
Accumulated Depreciation | $ 200,000 | ||
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 | 50,000,000 |
Common shares, issued | 77,887,500 | 77,887,500 | 1,038,050 |
Common shares, outstanding | 77,887,500 | 77,887,500 | 1,038,050 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF INCOME (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Condensed Consolidated Statement Of Income | ||
REVENUES | $ 661,863 | |
COST OF SALES | 519,326 | |
GROSS PROFIT | 142,537 | |
OPERATING EXPENSES | ||
General and administrative | 343,485 | 39,345 |
TOTAL OPERATING EXPENSES | 343,485 | 39,345 |
NET LOSS FROM OPERATIONS | (200,948) | (39,345) |
OTHER INCOME (LOSS) | ||
Financing costs | (4,044) | |
Interest expense | (55,161) | |
Gain on acquisition | 2,435,927 | |
TOTAL OTHER INCOME | 2,376,722 | |
NET GAIN (LOSS) FROM OPERATIONS | 2,175,774 | (39,345) |
PROVISION FOR INCOME TAXES | ||
NET INCOME (LOSS) BEFORE TAXES | 2,175,774 | (39,345) |
Less net income (loss) attributable to non-controlling interests | (74,006) | |
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS SHAREHOLDERS | $ 2,249,780 | $ (39,345) |
Net Loss Per Share: Basic and diluted | $ 0.03 | $ 0 |
Weighted-average number of common shares outstanding: Basic and diluted | 77,887,500 | 77,887,500 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
OPERATING ACTIVITIES | ||
Net income (loss) | $ 2,175,774 | $ (39,345) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Gain on acquisition | (2,435,927) | |
Depreciation expense | 200,000 | |
Amortization of financing costs | 4,044 | |
Changes in operating assets and liabilities: | ||
Increase accounts receivable | (158,299) | |
Decrease in inventory | 362,637 | |
Increase in prepaid expenses | (207,846) | |
Increase (decrease) in accounts payable and accrued expenses | 242,419 | |
Increase in other liabilitites | (1,816) | 43,797 |
Net cash provided by operating activities | 180,986 | 4,452 |
INVESTING ACTIVITIES | ||
Cash acquired in acquisition | 338,411 | |
Purchase of equipment | (89,012) | |
Net cash provided by investing activities | 249,399 | |
FINANCING ACTIVITIES | ||
Financings costs | (153,947) | |
Loans from (repayments to) related party | 1,388 | (4,500) |
Net cash (used) in financing activities | (152,559) | (4,500) |
NET INCREASE (DECREASE) IN CASH | 277,826 | (48) |
CASH | ||
Beginning of period | 415 | |
End of period | 277,826 | 367 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Interest paid | ||
Income taxes paid |
ORGANIZATION AND NATURE OF BUSI
ORGANIZATION AND NATURE OF BUSINESS | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS | 1847 Holdings LLC (1847, we, our and the Company) was formed under the laws of the State of Delaware on January 22, 2013. We are in the business of acquiring small to medium size businesses in a variety of different industries. To date, we have consummated two acquisitions. In September 2013, our wholly-owned subsidiary 1847 Management Services, Inc. (1847 Management) acquired a 50% interest in each of two consulting firms previously controlled by our Chief Executive Officer. On March 3, 2017, our wholly-owned subsidiary 1847 Neese Inc. (1847 Neese) entered into a stock purchase agreement with Neese, Inc. (Neese), and Alan Neese and Katherine Neese, pursuant to which 1847 Neese acquired all of the issued and outstanding capital stock of Neese for an aggregate purchase price of (i) $2,225,000 in cash (subject to certain adjustments), (ii) 450 shares of the common stock of 1847 Neese, constituting 45% of its capital stock, (iii) the issuance of a vesting promissory note in the principal amount of $1,875,000, and (iv) the issuance of a short term promissory note in the principal amount of $1,025,000. The cash portion of the purchase price would have been adjusted upward if Neeses final certified balance sheet, as of a date on or about the closing date did not reflect a cash balance of at least $200,000. The cash balance on the closing date of March 3, 2017 amounted to approximately $338,000. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, 1847 Management and 1847 Neese. All significant intercompany balances and transactions have been eliminated in consolidation. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
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 and are presented in US dollars. Accounting Basis The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (GAAP). The Company has adopted a calendar year end. Stock Split On July 2, 2014, the Company amended its Operating Agreement to effect a stock split of its outstanding and authorized shares of common shares at a ratio of 75 for 1 (the Stock Split). As a result of the Stock Split, the Companys authorized shares of common stock were increased from 50,000,000 to 500,000,000 shares. On July 2, 2014, the Companys issued and outstanding shares of common stock were increased from 1,038,050 to 77,853,750 shares, all with a par value of $0.001. Accordingly, all share and per share information has been restated to retroactively show the effect of the Stock Split. 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 accounting principles generally accepted in the United States of America 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 Income reclassifications have been made in the presentation of our prior financial statements and accompanying notes to conform to the presentation as of and for the three months ended March 31, 2017. Revenue Recognition Revenue will be recognized when it is realized or realizable and earned. Specifically, revenue will be recognized when all of the following criteria are met: (1) Persuasive evidence of an arrangement exists; (2) Service has occurred, customer acceptance has been achieved; (3) Our selling price to the buyer is fixed and determinable; and (4) Collection is reasonably assured. The Company recognizes revenue when services have been provided and collection is reasonably assured. Inventory Inventory consists of finished product acquired for resale and is valued at the lower-of-cost-or-market with cost determined on a specific item basis. 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 (three to ten years), and leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the lease term (which is three to five years). Goodwill Goodwill represents the excess of cost over the fair value of net assets acquired using purchase accounting and is not amortized. 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 Companys financial instruments consist of cash and cash equivalents and amounts due to shareholder. 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. 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 Companys 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 Companys 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. There are no such common share equivalents outstanding as of December 31, 2016. Comprehensive Income The Company has established standards for reporting and display of comprehensive income, its components and accumulated balances. When applicable, the Company would disclose this information on its Statement of Shareholders Equity. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. The Company has not had any significant transactions that are required to be reported in other comprehensive income. Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (FASB), issued ASU-2016-02, "Leases (Topic 842)." The guidance requires that a lessee recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right of use asset representing its right to use the underlying asset for the lease term. For finance leases: the right-of-use asset and a lease liability will be initially measured at the present value of the lease payments, in the statement of financial position; interest on the lease liability will be recognized separately from amortization of the right-of-use asset in the statement of comprehensive income; and repayments of the principal portion of the lease liability will be classified within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows. For operating leases: the right-of-use asset and a lease liability will be initially measured at the present value of the lease payments, in the statement of financial position; a single lease cost will be recognized, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; and all cash payments will be classified within operating activities in the statement of cash flows. Under Topic 842 the accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The amendments in Topic 842 are effective for the Company beginning January 1, 2019, including interim periods within that fiscal year. We are currently evaluating the impact of adopting the new guidance of the consolidated financial statements. In January 2016, the FASB issued Accounting Standards Update ("ASU") 2016-01, "Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which amends the guidance in U.S. generally accepted accounting principles on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and are to be adopted by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adopting this standard. In November 2015, the FASB issued ASU 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes," which simplifies the presentation of deferred income taxes by requiring that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. This ASU is effective for financial statements issued for annual periods beginning after December 16, 2016, and interim periods within those annual periods. The adoption of this standard will not have any impact on the Company's financial position, results of operations and disclosures. The FASB has issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern. ASU 2014-15 is intended to define managements responsibility to evaluate whether there is substantial doubt about an organizations ability to continue as a going concern and to provide related footnote disclosures. Under Generally Accepted Accounting Principles (GAAP), financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting is critical to financial reporting because it established the fundamental basis for measuring and classifying assets and liabilities. Currently, GAAP lacks guidance about managements responsibility to evaluate whether there is substantial doubt the organizations ability to continue as a going concern or to provide footnote disclosures. The ASU provides guidance to an organizations management, with principles and definition that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The amendments in this update are effective for the annual period ending after December 31, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company has the adopted the methodologies prescribed by this ASU by the date required and there is no material impact on the Companys consolidated financial statements. |
GOING CONCERN
GOING CONCERN | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 3 - GOING CONCERN | The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principle, which contemplate continuation of the Company as a going concern. The Company currently has limited working capital, and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time. Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company intends to position itself so that it may be able to raise additional funds through the capital markets. In light of managements efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern. |
INVENTORIES
INVENTORIES | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 4 - INVENTORIES | At March 31, 2017 and December 31, 2016 the inventory balances are composed of: 2017 2016 Machinery & Equipment $ 778,511 $ - Parts 104,411 $ 882,922 $ - |
INVESTMENTS
INVESTMENTS | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 5 - INVESTMENTS | On September 15, 2013, 1847 Management Services, Inc., the Company's wholly owned subsidiary, acquired a 50% interest in each of PPI Management Group, LLC and Christals Management LLC from our Chief Executive Officer and controlling shareholder, Ellery W. Roberts. In connection with the acquisition of such equity interests from Mr. Roberts, we issued to Mr. Roberts 65,625,000 of our common shares pursuant to a securities purchase agreement. |
ACQUISITION
ACQUISITION | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 6 - ACQUISITION | On March 3, 2017, our wholly-owned subsidiary 1847 Neese Inc., or 1847 Neese, entered into a stock purchase agreement with Neese, and Alan Neese and Katherine Neese, pursuant to which 1847 Neese acquired all of the issued and outstanding capital stock of Neese, which we refer to as the Neese acquisition, for an aggregate purchase price of (i) $2,225,000 in cash (subject to certain adjustments), (ii) 450 shares of the common stock of 1847 Neese, constituting 45% of its capital stock, which we refer to as the purchase price shares, (iii) the issuance of a vesting promissory note in the principal amount of $1,875,000, and (iv) the issuance of a short term promissory note in the principal amount of $1,025,000. The preliminary fair value of the purchase consideration issued to the sellers of Neese was allocated to the net tangible assets acquired. The Company accounted for the 1847 Neese acquisition as the purchase of a business under GAAP under the acquisition method of accounting, 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 assets acquired was approximately $6.0 million. The excess of the aggregate fair value of the net tangible assets has been treated as a gain on bargain purchase in accordance with ASC 805. The purchase price allocation was based, in part, on managements knowledge of Neese's business. and is preliminary. Once the Company completes its analysis to finalize the purchase price allocation, which includes finalizing the valuation report from a third-party appraiser and a review of potential intangible assets, it is reasonably possible that, there could be significant changes to the preliminary values below. Purchase Consideration Amount of consideration: $ 6,140,000 Assets acquired and liabilities assumed at preliminary fair value Cash $ 338,000 Accounts receivable 157,000 Inventories 1,246,000 Financing costs 52,000 Property and equipment 6,900,000 Other assets 85,000 Accounts payable and accrued expenses (175,000 ) Other liabilities (28,000 ) Net tangible assets acquired $ 8,575,000 Identifiable intangible assets Intangible assets * $ - Total Identifiable Intangible Assets $ - Total net assets acquired $ 8,575,000 Consideration paid 6,140,000 Preliminary gain on bargain purchase $ 2,435,000 __________ * The Company is reviewing for potential intangible assets which may potentially change the intangible assets. The following presents the unaudited pro-forma combined results of operations of the Company with 1847 Neese as if the entities were combined on January 1, 2016. For the Three Months Ended March 31, 2017 2016 Revenues, net $ 1,827,000 $ 1,874,000 Net income (loss) allocable to common shareholders $ 2,388,000 $ 462,000 Net income (loss) per share $ 0.03 $ 0.01 Weighted average number of shares outstanding 77,887,500 77,887,500 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 acquisitions been completed as of January 1, 2016 or to project potential operating results as of any future date or for any future periods. The estimated useful life remaining on the property and equipment acquired is 1 to 10 years. |
PROMISSORY NOTES
PROMISSORY NOTES | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 7 - PROMISSORY NOTES | Vesting Promissory Note A portion of the purchase price under the Purchase Agreement was paid by the issuance of a vesting promissory note in the principal amount of $1,875,000 by 1847 Neese and Neese to the sellers (the Vesting Note). Payment of the principal and accrued interest on the Vesting Note is subject to vesting. The Vesting Note bears interest on the vested portion of the principal amount at the rate of eight percent (8%) per annum and is due and payable in full on June 30, 2020 (the Maturity Date). The principal of the Vesting Note vests in accordance with the following formula: · Fiscal Year 2017 If Adjusted EBITDA for the fiscal year ending December 31, 2017, exceeds an Adjusted EBITDA target of $1,300,000 (the Adjusted EBITDA Target), then a portion of the principal amount of the Vesting Note that is equal to sixty percent (60%) of such excess shall vest. Interest shall be payable on such vested portion of principal from January 1, 2017 through the Maturity Date. · Fiscal Year 2018 - If Adjusted EBITDA for the fiscal year ending December 31, 2018, exceeds the Adjusted EBITDA Target, then a portion of the principal amount of the Vesting Note that is equal to sixty percent (60%) of such excess shall vest. Interest shall be payable on such vested portion of principal from January 1, 2018 through the Maturity Date. · Fiscal Year 2019 - If Adjusted EBITDA for the fiscal year ending December 31, 2019, exceeds the Adjusted EBITDA Target, then a portion of the principal amount of the Vesting Note that is equal to sixty percent (60%) of such excess shall vest. Interest shall be payable on such vested portion of principal from January 1, 2019 through the Maturity Date. For purposes of the Vesting Note, Adjusted EBITDA means the earnings before interest, taxes, depreciation and amortization expenses, in accordance with generally accepted accounting principles applied on a basis consistent with the accounting policies, practices and procedures used to prepare the financial statements of Neese as of the closing date (GAAP), plus to the extent deducted in calculating such net income, (i) all expenses related to the transactions contemplated hereby and/or potential or completed future financings or acquisitions, including legal, accounting, due diligence and investment banking fees and expenses, (ii) all management fees, allocations or corporate overhead (including executive compensation) or other administrative costs that arise from the ownership of Neese by 1847 Neese including allocations of supervisory, centralized or other parent-level expense items, (iii) one-time extraordinary expenses or losses, (iv) any reserves or adjustments to reserves which are not consistent with GAAP. Additionally, for purposes of calculating Adjusted EBITDA, the purchase and sales prices of goods and services sold by or purchased by Neese to or from 1847 Neese, its subsidiaries or affiliates shall be adjusted to reflect the amounts that Neese would have realized or paid if dealing with an independent third party in an arms-length commercial transaction, and inventory items shall be property categorized as such and shall not be expenses until such inventory is sold or consumed. The Vesting Note contains customary events of default, including in the event of (i) non-payment, (ii) a default by 1847 Neese or Neese of any of their covenants under the Purchase Agreement, the Vesting Note, or any other agreement entered into in connection with the Purchase Agreement, or a breach of any of their representations or warranties under such documents, or (iii) the bankruptcy of 1847 Neese or Neese. Short Term Promissory Note As noted above, a portion of the purchase price under the Purchase Price was paid by the issuance of a short-term promissory note in the principal amount of $1,025,000 by 1847 Neese and Neese to the sellers (the Short Term Note). The Short Term Note bears interest on the outstanding principal amount at the rate of ten percent (10%) per annum and is 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 Short Term Note contains the same events of default as the Vesting Note. |
CAPITALIZED LEASES
CAPITALIZED LEASES | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 8 - CAPITALIZED LEASES | Master Lease Agreement The cash portion of the purchase price was financed under a capital lease transaction for Neeses equipment with Utica Leaseco, LLC (the Lessor), pursuant to a Master Lease Agreement (the Master Lease), dated March 3, 2017, between Utica, as lessor, and 1847 Neese and Neese, as co-lessees (collectively, the Lessee). Under the Master Lease, the Lessor loaned an aggregate of $3,240,000 for certain of Neeses equipment listed therein (the Equipment), which it leases to the Lessee. The term of the Master Lease is for 51 months. The Lessee is required to pay a monthly rent of $53,000 for the first three months, with such amount increasing to $85,322 for the remaining 48 months. If any rent is not received by the Lessor 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 the Lessor a charge equal to five (5%) percent of the amount of such payment. The Lessee is also required to pay an annual administration fee of $3,000. Upon the expiration of the term of the Master Lease, the Lessee is required to pay, together with all other amounts then due and payable under the Master Lease, in cash, an end of term buyout price equal to the lesser of (a) $162,000 (five (5%) percent of the Total Invoice Cost (as defined in the Master Lease)) or (b) the fair market value of the Equipment, as determined by the Lessor. Provided that no default under the Master Lease 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, which represents the anticipated fair market value of the Equipment as of the anticipated end date of the Master Lease. In addition, the Lessee shall pay to the Lessor an administrative charge to be determined by the Lessor 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. In connection with the Master Lease, 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 the Lessor, including all property of every description, in the custody of or in transit to the Lessor 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. The Company has equipment under a capital lease expiring in June 2021. The assets and liabilities under the capital lease are recorded at the lower of the present value of the minimum lease payments or the fair value of the assets. The assets, with costs of approximately $6,900,000 as of March 31, 2017, net of accumulated amortization of approximately $200,000 as of March 31, 2017. Amortization of assets under capital leases is included in depreciation expense. At December 31, 2016, annual minimum future lease payments under this capital lease are as follows: For the year ending December 31, Amount 2017 $ 767,895 2018 1,023,860 2019 1,023,860 2020 1,023,860 2021 511,923 Total minimum lease payments 4,351,398 Less amount representing interest 1,111,398 Present value of minimum lease payments 3,240,000 Less current portion of minimum lease 595,347 Long-term present value of minimum lease payment $ 2,824,653 The interest rate on the capitalized lease is approximately 14.4% and is imputed based on the lower of the Companys incremental borrowings rate at the inception of each lease or the lessors implicit rate of return. |
RELATED PARTIES
RELATED PARTIES | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 9 - RELATED PARTIES | Management Services Agreement The company and our manager have entered into a management services agreement on April 15, 2013, pursuant to which we are required to pay our manager a quarterly management fee equal to 0.5% (2.0% annualized) of our companys adjusted net assets for services performed. On September 15, 2013, we entered into an amendment to our management services agreement that provides that in lieu of paying a quarterly management fee under the management services agreement based upon the adjusted net assets of our management consulting business, we will pay our manager a flat quarterly fee equal to $43,750. This amendment only applies to our management consulting business and will not apply to any businesses that we acquire in the future. As of October 1, 2015, the manager agreed to suspend the flat quarterly management fee in the management consulting business due to the uncertainty of the underlying management services. In the year ended December 31, 2016, the Company determined the outstanding receivables are not likely to be collected and consequently wrote-off the balance of $100,000 to bad debt expense. Management Services Agreement - 1847 Neese On March 3, 2017 (the Commencement Date), 1847 Neese entered into a Management Services Agreement (the Offsetting MSA) with the Companys manager, 1847 Partners LLC (the Manager). The MSA is an Offsetting Management Services Agreement as defined in that certain Management Services Agreement, dated April 15, 2013, between the Company and the Manager (the MSA). Pursuant to the Offsetting MSA, 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 Companys 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 Companys gross income with respect to such fiscal year, and (iv) if the aggregate amount 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 MSA (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 MSA. The services provided by the Manager include: conducting general and administrative supervision and oversight of 1847 Neeses 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 Neeses 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. Advances From time to time, the Company has received advances from certain of its officers and related parties to meet short-term working capital needs. As of March 31, 2017 and December 31, 2016, a total of $110,266 and $108,878 advances from related parties are outstanding. These advances are unsecured, bear no interest, and do not have formal repayment terms or arrangements. |
EQUITY
EQUITY | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 10 - EQUITY | Allocation shares As of March 31, 2017 and December 31, 2016, 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 Companys operating agreement and in connection with certain other corporate transactions as specified in the Companys operating agreement. Our manager owns 100% of the allocation shares of our 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 our company. Our manager received the allocation shares with its initial capitalization of our company. The allocation shares generally will entitle our manager to receive a 20% profit allocation as a form of incentive designed to align the interests of our manager with those of our 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 our shares appreciates, subject to certain conditions and adjustments. The distribution-based component will be paid when the distributions we pay to our shareholders exceed an annual hurdle rate of 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 our manager, which is controlled by Mr. Roberts, our chief executive officer and controlling shareholder. Common shares The Company has authorized 500,000,000 common shares as of March 31, 2017 and December 31, 2016 and the Company had 77,887,500 common shares issued and outstanding. The common shares entitle the holder thereof to one vote per share on all matters coming before the shareholders of our company for a vote. During the period ended March 31, 2017, the Company did not issue any equity securities. Noncontrolling Interests The Company owns 55.0% of 1847 Neese, Inc. 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. On March 3, 2017, the Company acquired a 55% interest in 1847 Neese, Inc. The results of 1847 Neese, Inc. are included in the consolidated statement of income. The net loss attributable to the 45% non-controlling interest of the subsidiary amount to $74,006 for the three months ended March 31, 2017. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 11 - COMMITMENTS AND CONTINGENCIES | Agreement of Lease - Related Party Pursuant to the Purchase Agreement, on March 3, 2017, Neese entered into an Agreement of Lease (the Lease) with K&H Holdings, LLC, a limited liability company that is wholly-owned by the sellers of Neese. The 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 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 Lease, and other customary representations, warranties and covenants. Future minimum lease payments are approximately as follows: Year Ending December 31, Operating Leases 2017 $ 75,000 2018 100,000 2019 100,000 2020 100,000 2021 100,000 thereafter 525,000 Total minimum lease payments $ 1,000,000 Corporate office 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. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 12 - SUBSEQUENT EVENTS | In accordance with SFAS 165 (ASC 855-10) the Company has analyzed its operations subsequent to March 31, 2017 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 ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Summary Of Significant Accounting Policies 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 and are presented in US dollars. |
Accounting Basis | The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (GAAP). The Company has adopted a calendar year end. |
Stock Split | On July 2, 2014, the Company amended its Operating Agreement to effect a stock split of its outstanding and authorized shares of common shares at a ratio of 75 for 1 (the Stock Split). As a result of the Stock Split, the Companys authorized shares of common stock were increased from 50,000,000 to 500,000,000 shares. On July 2, 2014, the Companys issued and outstanding shares of common stock were increased from 1,038,050 to 77,853,750 shares, all with a par value of $0.001. Accordingly, all share and per share information has been restated to retroactively show the effect of the Stock Split. |
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 accounting principles generally accepted in the United States of America 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 Income reclassifications have been made in the presentation of our prior financial statements and accompanying notes to conform to the presentation as of and for the three months ended March 31, 2017. |
Revenue Recognition | Revenue will be recognized when it is realized or realizable and earned. Specifically, revenue will be recognized when all of the following criteria are met: (1) Persuasive evidence of an arrangement exists; (2) Service has occurred, customer acceptance has been achieved; (3) Our selling price to the buyer is fixed and determinable; and (4) Collection is reasonably assured. The Company recognizes revenue when services have been provided and collection is reasonably assured. |
Inventory | Inventory consists of finished product acquired for resale and is valued at the lower-of-cost-or-market with cost determined on a specific item basis. |
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 (three to ten years), and leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the lease term (which is three to five years). |
Goodwill | Goodwill represents the excess of cost over the fair value of net assets acquired using purchase accounting and is not amortized. |
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 Companys financial instruments consist of cash and cash equivalents and amounts due to shareholder. 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. |
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 Companys 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 Companys 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. There are no such common share equivalents outstanding as of December 31, 2016. |
Comprehensive Income | The Company has established standards for reporting and display of comprehensive income, its components and accumulated balances. When applicable, the Company would disclose this information on its Statement of Shareholders Equity. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. The Company has not had any significant transactions that are required to be reported in other comprehensive income. |
Recent Accounting Pronouncements | In February 2016, the Financial Accounting Standards Board (FASB), issued ASU-2016-02, "Leases (Topic 842)." The guidance requires that a lessee recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right of use asset representing its right to use the underlying asset for the lease term. For finance leases: the right-of-use asset and a lease liability will be initially measured at the present value of the lease payments, in the statement of financial position; interest on the lease liability will be recognized separately from amortization of the right-of-use asset in the statement of comprehensive income; and repayments of the principal portion of the lease liability will be classified within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows. For operating leases: the right-of-use asset and a lease liability will be initially measured at the present value of the lease payments, in the statement of financial position; a single lease cost will be recognized, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; and all cash payments will be classified within operating activities in the statement of cash flows. Under Topic 842 the accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The amendments in Topic 842 are effective for the Company beginning January 1, 2019, including interim periods within that fiscal year. We are currently evaluating the impact of adopting the new guidance of the consolidated financial statements. In January 2016, the FASB issued Accounting Standards Update ("ASU") 2016-01, "Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which amends the guidance in U.S. generally accepted accounting principles on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and are to be adopted by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adopting this standard. In November 2015, the FASB issued ASU 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes," which simplifies the presentation of deferred income taxes by requiring that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. This ASU is effective for financial statements issued for annual periods beginning after December 16, 2016, and interim periods within those annual periods. The adoption of this standard will not have any impact on the Company's financial position, results of operations and disclosures. The FASB has issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern. ASU 2014-15 is intended to define managements responsibility to evaluate whether there is substantial doubt about an organizations ability to continue as a going concern and to provide related footnote disclosures. Under Generally Accepted Accounting Principles (GAAP), financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting is critical to financial reporting because it established the fundamental basis for measuring and classifying assets and liabilities. Currently, GAAP lacks guidance about managements responsibility to evaluate whether there is substantial doubt the organizations ability to continue as a going concern or to provide footnote disclosures. The ASU provides guidance to an organizations management, with principles and definition that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The amendments in this update are effective for the annual period ending after December 31, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company has the adopted the methodologies prescribed by this ASU by the date required and there is no material impact on the Companys consolidated financial statements. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Inventories Tables | |
Schedule of Inventory | 2017 2016 Machinery & Equipment $ 778,511 $ - Parts 104,411 $ 882,922 $ - |
ACQUISITION (Tables)
ACQUISITION (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Acquisition Tables | |
Schedule of Business Acquisitions by Acquisition, Contingent Consideration | Purchase Consideration Amount of consideration: $ 6,140,000 Assets acquired and liabilities assumed at preliminary fair value Cash $ 338,000 Accounts receivable 157,000 Inventories 1,246,000 Financing costs 52,000 Property and equipment 6,900,000 Other assets 85,000 Accounts payable and accrued expenses (175,000 ) Other liabilities (28,000 ) Net tangible assets acquired $ 8,575,000 Identifiable intangible assets Intangible assets * $ - Total Identifiable Intangible Assets $ - Total net assets acquired $ 8,575,000 Consideration paid 6,140,000 Preliminary gain on bargain purchase $ 2,435,000 |
Business acquisition pro forma information | For the Three Months Ended March 31, 2017 2016 Revenues, net $ 1,827,000 $ 1,874,000 Net income (loss) allocable to common shareholders $ 2,388,000 $ 462,000 Net income (loss) per share $ 0.03 $ 0.01 Weighted average number of shares outstanding 77,887,500 77,887,500 |
CAPITALIZED LEASES (Tables)
CAPITALIZED LEASES (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Capitalized Leases Tables | |
Schedule of Future Minimum Lease Payments for Capital Leases | For the year ending December 31, Amount 2017 $ 767,895 2018 1,023,860 2019 1,023,860 2020 1,023,860 2021 511,923 Total minimum lease payments 4,351,398 Less amount representing interest 1,111,398 Present value of minimum lease payments 3,240,000 Less current portion of minimum lease 595,347 Long-term present value of minimum lease payment $ 2,824,653 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Commitments And Contingencies Tables | |
Schedule of Future Minimum Rental Payments for Operating Leases | Year Ending December 31, Operating Leases 2017 $ 75,000 2018 100,000 2019 100,000 2020 100,000 2021 100,000 thereafter 525,000 Total minimum lease payments $ 1,000,000 |
ORGANIZATION AND NATURE OF BU23
ORGANIZATION AND NATURE OF BUSINESS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |
Sep. 15, 2013 | Mar. 31, 2017 | Dec. 31, 2016 | |
State of incorporation | Delaware | ||
Date of Incorporation | Jan. 22, 2013 | ||
Business acquisition short term promissory note | $ 625,000 | ||
Minimum [Member] | |||
Business acquisition cash balance | 200,000 | ||
1847 Neese Corporation [Member] | Neese Acquisition [Member] | |||
Business acquisition purchase price | $ 2,225,000 | ||
Business acquisition equity interest issued or issuable | 450 shares of the common stock of 1847 Neese, constituting 45% of its capital stock, which we refer to as the purchase price shares | ||
Business acquisition vesting promissory note | $ 1,875,000 | ||
Business acquisition short term promissory note | 1,025,000 | ||
Business acquisition cash balance | $ 338,000 | ||
PPI Management Group, LLC [Member] | |||
Acquired interest in two consulting firms | 50.00% | ||
Christals Management LLC [Member] | |||
Acquired interest in two consulting firms | 50.00% |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - $ / shares | Jul. 02, 2014 | Mar. 31, 2017 | Dec. 31, 2016 |
Summary Of Significant Accounting Policies Details Narrative | |||
Stock Split | 75 for 1 | ||
Common shares, authorized | 50,000,000 | 500,000,000 | 500,000,000 |
Common shares, issued | 1,038,050 | 77,887,500 | 77,887,500 |
Common shares, outstanding | 1,038,050 | 77,887,500 | 77,887,500 |
Common shares, par value | $ 0.001 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Total | $ 882,922 | |
Machinery and Equipment [Member] | ||
Total | 778,511 | |
Parts [Member] | ||
Total | $ 104,411 |
INVESTMENTS (Details Narrative)
INVESTMENTS (Details Narrative) - shares | 1 Months Ended | |||
Sep. 15, 2013 | Mar. 31, 2017 | Dec. 31, 2016 | Jul. 02, 2014 | |
Common shares, issued | 77,887,500 | 77,887,500 | 1,038,050 | |
PPI Management Group, LLC [Member] | ||||
Acquired interest in two consulting firms | 50.00% | |||
Christals Management LLC [Member] | ||||
Acquired interest in two consulting firms | 50.00% | |||
Mr. Roberts [Member] | ||||
Common shares, issued | 65,625,000 |
ACQUISITION (Details)
ACQUISITION (Details) | 3 Months Ended | |
Mar. 31, 2017USD ($) | ||
Purchase Consideration | ||
Amount of consideration: | $ 6,140,000 | |
Assets acquired and liabilities assumed at preliminary fair value | ||
Cash | 338,000 | |
Accounts receivable | 157,000 | |
Inventories | 1,246,000 | |
Financing costs | 52,000 | |
Property and equipment | 6,900,000 | |
Other assets | 85,000 | |
Accounts payable and accrued expenses | (175,000) | |
Other liabilities | (28,000) | |
Net tangible assets acquired | 8,575,000 | |
Identifiable intangible assets | ||
Intangible assets * | [1] | |
Total Identifiable Intangible Assets | ||
Total net assets acquired | 8,575,000 | |
Consideration paid | 6,140,000 | |
Preliminary gain on bargain purchase | $ 2,435,000 | |
[1] | The Company is reviewing for potential intangible assets which may potentially change the intangible assets. |
ACQUISITION (Details 1)
ACQUISITION (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Net income (loss) per share | $ 0.03 | $ 0 |
Weighted average number of shares outstanding | 77,887,500 | 77,887,500 |
Business Acquisitions [Member] | ||
Revenues, net | $ 1,827,000 | $ 1,874,000 |
Net income (loss) allocable to common shareholders | $ 2,388,000 | $ 462,000 |
Net income (loss) per share | $ 0.03 | $ 0.01 |
Weighted average number of shares outstanding | 77,887,500 | 77,887,500 |
ACQUISITION (Details Narrative)
ACQUISITION (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Business acquisition short term promissory note | $ 625,000 | |
Minimum [Member] | ||
Business acquisition cash balance, closing | $ 200,000 | |
Estimated useful life | 1 year | |
Maximum [Member] | ||
Estimated useful life | 10 years | |
1847 Neese Corporation [Member] | Neese Acquisition [Member] | ||
Business acquisition purchase price | $ 2,225,000 | |
Business acquisition equity interest issued or issuable | 450 shares of the common stock of 1847 Neese, constituting 45% of its capital stock, which we refer to as the purchase price shares | |
Business acquisition vesting promissory note | $ 1,875,000 | |
Business acquisition short term promissory note | 1,025,000 | |
Business acquisition cash balance, closing | 338,000 | |
Business acquisition fair value of net assets acquired | $ 6,000,000 |
PROMISSORY NOTES (Details Narra
PROMISSORY NOTES (Details Narrative) - USD ($) | Mar. 03, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2020 | Mar. 31, 2017 | Dec. 31, 2016 |
Interest rate | 8.00% | ||||||
Business acquisition short term promissory note | $ 625,000 | ||||||
Subsequent Event [Member] | |||||||
Interest rate | 10.00% | ||||||
Adjusted EBITDA target for vesting of promissory note | $ 1,300,000 | ||||||
Description of vesting promissory note | Fiscal Year 2019 - If Adjusted EBITDA for the fiscal year ending December 31, 2019, exceeds the Adjusted EBITDA Target, then a portion of the principal amount of the Vesting Note that is equal to sixty percent (60%) of such excess shall vest. Interest shall be payable on such vested portion of principal from January 1, 2019 through the Maturity Date. | Fiscal Year 2018 - If Adjusted EBITDA for the fiscal year ending December 31, 2018, exceeds the Adjusted EBITDA Target, then a portion of the principal amount of the Vesting Note that is equal to sixty percent (60%) of such excess shall vest. Interest shall be payable on such vested portion of principal from January 1, 2018 through the Maturity Date. | Fiscal Year 2017 If Adjusted EBITDA for the fiscal year ending December 31, 2017, exceeds an Adjusted EBITDA target of $1,300,000 (the Adjusted EBITDA Target), then a portion of the principal amount of the Vesting Note that is equal to sixty percent (60%) of such excess shall vest. Interest shall be payable on such vested portion of principal from January 1, 2017 through the Maturity Date. | ||||
Subsequent Event [Member] | Promissory Note [Member] | |||||||
Interest rate | 8.00% | ||||||
1847 Neese Corporation [Member] | Neese Acquisition [Member] | |||||||
Business acquisition vesting promissory note | 1,875,000 | ||||||
Business acquisition short term promissory note | $ 1,025,000 | ||||||
1847 Neese Corporation [Member] | Neese Acquisition [Member] | Subsequent Event [Member] | |||||||
Description for prepayment of the promissory note and accrued interest | 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 Short Term Note contains the same events of default as the Vesting Note. | ||||||
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 |
CAPITALIZED LEASES (Details)
CAPITALIZED LEASES (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
For the year ending December 31, | ||
2,017 | $ 767,895 | |
2,018 | 1,023,860 | |
2,019 | 1,023,860 | |
2,020 | 1,023,860 | |
2,021 | 511,923 | |
Total minimum lease payments | 4,351,398 | |
Less amount representing interest | 1,111,398 | |
Present value of minimum lease payments | 3,240,000 | |
Less current portion of minimum lease | 595,347 | |
Long-term present value of minimum lease payment | $ 2,824,653 |
CAPITALIZED LEASES (Details Nar
CAPITALIZED LEASES (Details Narrative) | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Aggregate value of minimum lease payments | $ 3,240,000 |
Accumulated amortization | 200,000 |
Capital lease assets | $ 6,900,000 |
Capital lease expiration | Jun. 30, 2021 |
Master Lease Agreement [Member] | |
Lease agreement date | Mar. 3, 2017 |
Aggregate value of minimum lease payments | $ 3,240,000 |
Lease term | 51 months |
Lease rent (Monthly) | $ 53,000 |
Increasing lease rent (Monthly) | $ 85,322 |
Lease term, Description | If any rent is not received by the Lessor within five (5) calendar days of the due date, the Lessee shall pay a late charge equal to ten (10%) percent of the amount |
Administration fee | $ 3,000 |
Capital lease agreement, term | the Lessee is required to pay, together with all other amounts then due and payable under the Master Lease, in cash, an end of term buyout price equal to the lesser of (a) $162,000 (five (5%) percent of the Total Invoice Cost (as defined in the Master Lease)) or (b) the fair market value of the Equipment, as determined by the Lessor. |
RELATED PARTIES (Details Narrat
RELATED PARTIES (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Apr. 15, 2013 | Dec. 31, 2016 | Mar. 31, 2017 | Mar. 03, 2017 | |
Bad debt expense | $ 100,000 | |||
Advances, related party | $ 108,878 | $ 110,266 | ||
Management Services Agreement [Member] | ||||
Description of management fee | quarterly management fee equal to 0.5% (2.0% annualized) of our company's adjusted net assets for services performed | |||
Management consulting fee, quarterly | $ 43,750 | $ 62,500 |
EQUITY (Details Narrative)
EQUITY (Details Narrative) - USD ($) | 2 Months Ended | 3 Months Ended | ||
Mar. 03, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Jul. 02, 2014 | |
Allocation shares, issued | 1,000 | 1,000 | ||
Allocation shares, outstanding | 1,000 | 1,000 | ||
Common shares,authorized | 500,000,000 | 500,000,000 | 50,000,000 | |
Common shares, issued | 77,887,500 | 77,887,500 | 1,038,050 | |
Common shares, outstanding | 77,887,500 | 77,887,500 | 1,038,050 | |
Ownership of allocation shares by manager | 100.00% | |||
Allocation of profit | 20.00% | |||
Interest rate | 8.00% | |||
Noncontrolling interest, ownership percentage | 45.00% | |||
Acquisition interest acquired | 55.00% | |||
Non-controlling interest of subsidiary amount | $ 74,006 | |||
Chief Executive Officer [Member] | ||||
Allocation shares, issued | 1,000 | |||
Allocation shares, outstanding | 1,000 |
COMMITMENTS AND CONTINGENCIES35
COMMITMENTS AND CONTINGENCIES (Details) | Mar. 31, 2017USD ($) |
Year Ending December 31, | |
2,017 | $ 75,000 |
2,018 | 100,000 |
2,019 | 100,000 |
2,020 | 100,000 |
2,021 | 100,000 |
thereafter | 525,000 |
Total minimum lease payments | $ 1,000,000 |
COMMITMENTS AND CONTINGENCIES36
COMMITMENTS AND CONTINGENCIES (Details Narrative) - Agreement of Lease - Related Party [Member] | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Lease agreement date | Mar. 3, 2017 |
Lease term | 10 years |
Lease rent (Monthly) | $ 8,333 |
Lease term, Description | 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 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 Lease |