Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 11, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | 1847 Holdings LLC | |
Entity Central Index Key | 1,599,407 | |
Document Type | 10-Q/A | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | true | |
Amendment Description | 1847 Holdings LLC (the Company) is filing this Amendment No. 2 on Form 10-Q/A (Amendment) to amend its Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, which was originally filed with the Securities and Exchange Commission on August 21, 2017 and was previously amended on September 1, 2017 (amended, the Form 10-Q). This Amendment is filed to restate the bargain purchase gain recorded upon the acquisition of Neese, Inc. on March 3, 2017 to incorporate the prepaid taxes, deferred taxes liabilities and an uncertain tax liability as of the acquisition date. Furthermore, the related assets and liabilities and deferred tax provision and loss attributable to non-controlling interest are adjusted as of June 30, 2017 and for the three and six months ending June 30, 2017, respectively. Except for the foregoing, no other changes are made to the Form 10-Q. The Form 10-Q, as amended by this Amendment, continues to be as of August 21, 2017 and does not reflect events occurring after August 21, 2017. | |
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 | 3,115,500 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,017 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Current Assets | ||
Accounts receivable | ||
Inventory, net | ||
Prepaid expenses and other assets | 369 | |
TOTAL CURRENT ASSETS | 369 | |
Fixed Assets, net of accumulated depreciation of $450,000 as of June 30, 2017 | ||
Financing costs, net of accumulated amortization | ||
Other assets | 6 | |
TOTAL ASSETS | 375 | |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 561,378 | |
Advances, related party | 108,878 | |
Promissory note | ||
Uncertain tax liability | ||
Current deferred tax liability | ||
Current portion of capital lease obligation | ||
TOTAL CURRENT LIABILITIES | 670,256 | |
Vesting note payable | ||
Capital lease obligation, net of current portion | ||
TOTAL LIABILITIES | 670,256 | |
SHAREHOLDERS' (DEFICIT) | ||
Allocation shares, 1,000 shares issued and outstanding | 1,000 | |
Common Shares, 500,000,000 shares authorized, 3,115,500 shares issued and outstanding as of June 30, 2017 and December 31, 2016 | 3,115 | |
Additional Paid In Capital | 11,891 | |
Accumulated (Deficit) | (685,887) | |
TOTAL SHAREHOLDERS' (DEFICIT) | (669,881) | |
NONCONTROLLING INTERESTS | ||
TOTAL EQUITY (DEFICIT) | (669,881) | |
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) | $ 375 | |
As Restated [Member] | ||
Current Assets | ||
Cash | $ 169,241 | |
Accounts receivable | 300,323 | |
Inventory, net | 562,101 | |
Prepaid expenses and other assets | 321,634 | |
TOTAL CURRENT ASSETS | 1,353,299 | |
Fixed Assets, net of accumulated depreciation of $450,000 as of June 30, 2017 | 6,539,012 | |
Financing costs, net of accumulated amortization | 191,773 | |
Other assets | 85,697 | |
TOTAL ASSETS | 8,169,781 | |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 966,627 | |
Advances, related party | 112,646 | |
Promissory note | 1,025,000 | |
Uncertain tax liability | 130,000 | |
Current deferred tax liability | 91,000 | |
Current portion of capital lease obligation | 380,569 | |
TOTAL CURRENT LIABILITIES | 2,705,842 | |
Vesting note payable | 1,875,000 | |
Non-current deferred tax liability | 1,784,323 | |
Capital lease obligation, net of current portion | 2,809,915 | |
TOTAL LIABILITIES | 9,175,080 | |
SHAREHOLDERS' (DEFICIT) | ||
Allocation shares, 1,000 shares issued and outstanding | 1,000 | |
Common Shares, 500,000,000 shares authorized, 3,115,500 shares issued and outstanding as of June 30, 2017 and December 31, 2016 | 3,115 | |
Additional Paid In Capital | 11,891 | |
Accumulated (Deficit) | (747,609) | |
TOTAL SHAREHOLDERS' (DEFICIT) | (731,603) | |
NONCONTROLLING INTERESTS | (273,696) | |
TOTAL EQUITY (DEFICIT) | (1,005,299) | |
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) | $ 8,169,781 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Current Assets | ||
Accumulated Depreciation | ||
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 | 3,115,500 | 3,115,500 |
Common shares, outstanding | 3,115,500 | 3,115,500 |
As Restated [Member] | ||
Current Assets | ||
Accumulated Depreciation | $ 200,000 | |
SHAREHOLDERS' (DEFICIT) | ||
Allocation shares, issued | 1,000 | |
Allocation shares, outstanding | 1,000 | |
Common shares, authorized | 500,000,000 | |
Common shares, issued | 3,115,500 | |
Common shares, outstanding | 3,115,500 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
REVENUES | ||||
COST OF SALES | ||||
GROSS PROFIT | ||||
General and administrative expenses | 44,614 | 83,959 | ||
TOTAL OPERATING EXPENSES | 44,614 | 83,959 | ||
NET LOSS FROM OPERATIONS | (44,614) | (83,959) | ||
OTHER INCOME (LOSS) | ||||
Financing costs | ||||
Interest expense | ||||
Gain on bargain purchase | ||||
TOTAL OTHER INCOME (LOSS) | ||||
NET INCOME (LOSS) BEFORE INCOME TAXES AND NON-CONTROLLING INTERESTS | (44,614) | (83,959) | ||
PROVISION FOR INCOME TAXES (BENEFIT) | ||||
NET INCOME (LOSS) | (44,614) | (83,959) | ||
Less net income (loss) attributable to non-controlling interests | ||||
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS SHAREHOLDERS | $ (44,614) | $ (83,959) | ||
Net Loss Per Share: Basic and diluted | $ (0.01) | $ (0.03) | ||
Weighted-average number of common shares outstanding: Basic and diluted | 3,115,500 | 3,115,500 | ||
As Restated [Member] | ||||
REVENUES | $ 1,788,106 | $ 2,449,969 | ||
COST OF SALES | 1,553,092 | 2,272,418 | ||
GROSS PROFIT | 235,014 | 177,551 | ||
General and administrative expenses | 660,919 | 804,404 | ||
TOTAL OPERATING EXPENSES | 660,919 | 804,404 | ||
NET LOSS FROM OPERATIONS | (425,905) | (626,853) | ||
OTHER INCOME (LOSS) | ||||
Financing costs | (10,430) | (14,474) | ||
Interest expense | (172,518) | (227,679) | ||
Gain on bargain purchase | 274,281 | |||
TOTAL OTHER INCOME (LOSS) | (182,948) | 32,128 | ||
NET INCOME (LOSS) BEFORE INCOME TAXES AND NON-CONTROLLING INTERESTS | (608,853) | (594,725) | ||
PROVISION FOR INCOME TAXES (BENEFIT) | (240,233) | (259,323) | ||
NET INCOME (LOSS) | (368,620) | (335,402) | ||
Less net income (loss) attributable to non-controlling interests | (208,280) | (273,696) | ||
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS SHAREHOLDERS | $ (160,340) | $ (61,706) | ||
Net Loss Per Share: Basic and diluted | $ (0.05) | $ (0.02) | ||
Weighted-average number of common shares outstanding: Basic and diluted | 3,115,500 | 3,115,500 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
OPERATING ACTIVITIES | ||
NET INCOME (LOSS) | $ (83,959) | |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Gain on acquisition | ||
Depreciation expense | ||
Amortization of financing costs | ||
Changes in operating assets and liabilities: | ||
Increase accounts receivable | ||
Decrease in inventory | ||
Increase in prepaid expenses | ||
Increase (decrease) in accounts payable and accrued expenses | 77,063 | |
Increase in uncertain tax position | ||
Decrease in deferred tax liability and prepaid tax | ||
Increase in other liabilitites | ||
Net provided by (used in) operating activities | (6,896) | |
INVESTING ACTIVITIES | ||
Cash acquired in acquisition | ||
Purchase of equipment | ||
Net cash provided by investing activities | ||
FINANCING ACTIVITIES | ||
Financings costs | ||
Principal payments on capital lease obligation | ||
Loans from (repayments to) related party | 6,566 | |
Net cash provided by (used in) financing activities | 6,566 | |
NET INCREASE (DECREASE) IN CASH | (330) | |
CASH | ||
Beginning of period | 415 | |
End of period | 85 | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Interest paid | ||
Income taxes paid | ||
As Restated [Member] | ||
OPERATING ACTIVITIES | ||
NET INCOME (LOSS) | $ (335,402) | |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Gain on acquisition | (274,281) | |
Depreciation expense | 450,000 | |
Amortization of financing costs | 14,474 | |
Changes in operating assets and liabilities: | ||
Increase accounts receivable | (143,051) | |
Decrease in inventory | 683,457 | |
Increase in prepaid expenses | (218,592) | |
Increase (decrease) in accounts payable and accrued expenses | 203,512 | |
Increase in uncertain tax position | 1,000 | |
Decrease in deferred tax liability and prepaid tax | (260,323) | |
Increase in other liabilitites | (1,257) | |
Net provided by (used in) operating activities | 119,537 | |
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) | |
Principal payments on capital lease obligation | (49,516) | |
Loans from (repayments to) related party | 3,768 | |
Net cash provided by (used in) financing activities | (199,695) | |
NET INCREASE (DECREASE) IN CASH | 169,241 | |
CASH | ||
Beginning of period | ||
End of period | 169,241 | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Interest paid | 109,483 | |
Income taxes paid |
ORGANIZATION AND NATURE OF BUSI
ORGANIZATION AND NATURE OF BUSINESS | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS | 1847 Holdings LLC (1847, we, our and our 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 three 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, PPI Management Group, LLC and Christals Management, LLC. 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 our company and its wholly-owned subsidiaries, 1847 Management and 1847 Neese. All significant intercompany balances and transactions have been eliminated in consolidation. Unaudited Interim Financial Statements The accompanying unaudited interim consolidated financial statements as of June 30, 2017, and for the three and six months ended June 30, 2017 and 2016 have been prepared in accordance with accounting principles generally accepted for interim financial statement presentation and in accordance with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statement presentation. They should be read in conjunction with the Companys annual report on Form 10-K for the year ended December 31, 2016. In the opinion of management, the financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to fairly present the financial position as of June 30, 2017 and the results of operations for the three and six months ended June 30, 2017 and 2016 and cash flows for the six months ended June 30, 2017 and 2016. The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for the full year. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation The financial statements of our 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 Our company uses the accrual basis of accounting and GAAP. Our company has adopted a calendar year end. Stock Splits On July 2, 2014, our company amended its operating agreement to increase our authorized common shares from 50,000,000 to 500,000,000 shares. On the same date, we also completed a forward stock split of our issued and outstanding common shares at a ratio of 75 for 1. As a result of this stock split, our issued and outstanding common shares were increased from 1,038,050 to 77,853,750 shares. On June 9, 2017, we completed a 1-for-25 reverse stock split of our outstanding common shares. As a result of this stock split, our issued and outstanding common shares decreased from 77,887,500 to 3,115,500 shares. Accordingly, all share and per share information has been restated to retroactively show the effect of this stock split. Cash and Cash Equivalents Our 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 our prior financial statements and accompanying notes to conform to the presentation as of and for the three and six months ended June 30, 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. Our 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). Long-Lived Assets Our 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 Our 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. 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, our 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 our 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 our 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 June 30, 2017. Comprehensive Income Our company has established standards for reporting and displaying comprehensive income, its components and accumulated balances. When applicable, our 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. Our company has not had any significant transactions that are required to be reported in other comprehensive income. Recent Accounting Pronouncements The Company has reviewed all other FASB issued ASU accounting pronouncements and interpretations thereof that have effective dates during the period reported and in future periods. The Company has carefully considered the new pronouncements that alter the previous GAAP and do not believe that any new or modified principles will have a material impact on the Companys reported financial position or operations in the near term. |
RESTATEMENT OF FINANCIAL STATEM
RESTATEMENT OF FINANCIAL STATEMENT | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 3 - RESTATEMENT OF FINANCIAL STATEMENT | We have restated our previously issued consolidated financial statements as of and for the three and six months ended June 30, 2017 to reflect the modification of uncertain tax positions and deferred tax liability for the following: (1) The Company determined the bargain purchase gain recorded upon the acquisition of Neese on March 3, 2017 excluded prepaid taxes of $103,000, deferred taxes liabilities of $2,161,646 and an uncertain tax liability of $129,000. The gain on bargain purchase was reduced by $2,161,646 from the statement of operations in the period ending June 30, 2017 and prepaid tax was increased by $103,000, the current deferred tax liability increased $91,000 and uncertain tax liability of $129,000 and non-current deferred tax liability increased $2,044,646. (2) The Company adjusted the impact on the tax expense (benefit) and prepaid taxes and tax liabilities for the three and six months ending June 30, 2017. The uncertain tax liability increased $1,000 and non-current deferred tax liability decreased $260,323 resulting in a tax benefit of $240,233 and $259,323 for the three and six months ending June 30, 2017, respectively. Furthermore, the loss attributable to non-controlling interest was decreased by $108,105 and $116,695 for the three and six months ending June 30, 2017, respectively. The following tables summarize the effect of the restatement on the specific items presented in our historical consolidated financial statements included in our previously reported on the June 30, 2017 financial statements: 1847 HOLDINGS LLC CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2017 Adjustment June 30, 2017 (As Filed) (As Restated) ASSETS Current Assets Cash $ 169,241 $ - $ 169,241 Accounts receivable, net 300,323 - 300,323 Inventory, net 562,101 - 562,101 Prepaid expenses and other assets 218,634 (1) 103,000 321,634 TOTAL CURRENT ASSETS 1,250,299 103,000 1,353,299 Fixed assets, net of accumulated depreciation of $450,000 as of June 30, 2017 6,539,012 - 6,539,012 Financing costs, net of accumulated amortization 191,773 - 191,773 Other assets 85,697 - 85,697 TOTAL ASSETS $ 8,066,781 $ 103,000 $ 8,169,781 LIABILITIES AND STOCKHOLDERS EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities 966,627 - 966,627 Advances related party 112,646 - 112,646 Promissory note 1,025,000 - 1,025,000 Uncertain tax liability - (1) 129,000 130,000 (2) 1,000 Deferred income taxes payable (1) 91,000 91,000 Current portion of lease obligations 380,569 - 380,569 TOTAL CURRENT LIABILITIES 2,484,842 221,000 2,705,842 LONG-TERM LIABILITIES Vesting note payable 1,875,000 - 1,875,000 Deferred tax payable - (1) 2,044,646 1,784,323 (2) (260,323 ) Capital lease obligation, net of current portion 2,809,915 2,809,915 TOTAL LONG-TERM LIABILITIES 4,684,915 1,784,323 6,469,238 TOTAL LIABILITIES 7,169,757 2,005,323 9,175,080 STOCKHOLDERS EQUITY Allocation shares 1,000 - 1,000 Common Stock, $0.0001 par value: 500,000,000 Authorized shares: 3,115,500 issued and outstanding shares as of June 30, 2017 and December 31, 2016 3,115 - 3,115 Additional paid in capital 11,891 11,891 Accumulated Equity (Deficit) 1,271,409 (1) (2,161,646 ) (747,609 ) (2) 142,628 TOTAL SHAREHOLDERS EQUITY 1,287,415 (2,019,018 ) (731,603 ) NONCONTROLLING INTERESTS (390,391 ) (2) 116,695 (273,696 ) TOTAL EQUITY 897,024 (1,902,323 ) (1,005,299 ) TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 8,066,781 $ 103,000 $ 8,169,781 1847 HOLDINGS LLC CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS For the three months ended June 30, 2017 As Filed Adjustment As Restated REVENUES $ 1,788,106 - $ 1,788,106 COST OF SALES 1,553,092 - 1,553,092 GROSS PROFIT 235,014 - 235,014 General and administrative expenses 660,919 - 660,919 TOTAL OPERATING EXPENSES 660,919 - 660,919 NET LOSS FROM OPERATIONS (425,905 ) - (425,905 ) OTHER INCOME/(EXPENSE) Financing costs (10,430 ) - (10,430 ) Interest expense (172,518 ) - (172,518 ) Gain on bargain purchase - - - TOTAL OTHER INCOME (EXPENSE) (182,948 ) - (182,948 ) NET LOSS BEFORE INCOME TAXES (608,853 ) - (608,853 ) INCOME TAX EXPENSE - (2) (240,233 ) (240,233 ) NET LOSS (608,853 ) (240,233 ) (368,620 ) Less net income (loss) attributable to non-controlling interest (316,385 ) (2) 108,105 (208,280 ) NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS SHAREHOLDERS $ (292,468 ) $ (132,128 ) $ (160,340 ) Basic & Diluted earnings per share $ (0.09 ) $ (0.05 ) Weighted average basis & diluted shares outstanding 3,115,500 3,115,500 1847 HOLDINGS LLC CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS For the six months ended June 30, 2017 As Filed Adjustment As Restated SALES $ 2,449,969 - $ 2,449,969 COST OF SALES 2,272,418 - 2,272,418 GROSS PROFIT 177,551 - 177,551 GENERAL & ADMINISTRATIVE EXPENSES General and administrative expenses 804,404 - 804,404 TOTAL GENERAL & ADMINISTRATIVE EXPENSES 804,404 - 804,404 NET LOSS FROM OPERATIONS (626,853 ) - (626,853 ) OTHER INCOME/(EXPENSE) Financing costs (14,474 ) - (14,474 ) Interest expense (227,679 ) - (227,679 ) Gain on bargain purchase 2,435,927 (1) (2,161,646 ) 274,281 TOTAL OTHER INCOME (EXPENSE) 2,193,774 (2,161,646 ) 32,128 NET LOSS BEFORE INCOME TAXES 1,566,921 (2,161,646 ) (594,725 ) INCOME TAX EXPENSE - (2) (259,323 ) (259,323 ) NET INCOME (LOSS) 1,566,921 (1,902,323 ) (335,402 ) Less net income (loss) attributable to non-controlling interest (390,391 ) (2) 116,695 (273,696 ) NET LOSS & COMPREHENSIVE INCOME $ 1,957,312 $ (2,019,018 ) $ (61,706 ) Basic & Diluted earnings per share $ 0.63 $ (0.02 ) Weighted average basis & diluted shares outstanding 3,115,500 3,115,500 1847 HOLDINGS LLC CONSOLIDATED STATEMENTS OF CASH FLOWS For the six months ended June 30, 2017 As Filed Adjustments As Restated OPERATING ACTIVITIES Net loss $ 1,566,921 $ (1,902,323 ) $ (335,402 ) Adjustments to reconcile net income to net cash provided by operating activities: Gain on acquisition (2,435,927 ) (1) 2,161,646 (274,281 ) Depreciation expense 450,000 - 450,000 Amortization of financing costs 14,474 - 14,474 Changes in operating assets and liabilities: Increase in accounts receivable (143,051 ) - (143,051 ) Decrease in inventory 683,457 683,457 Increase in prepaid expenses (218,592 ) - (218,592 ) Increase (decrease) in accounts payable and accrued expenses 203,512 - 203,512 Increase in other liabilities (1,257 ) - (1,257 ) Increase in uncertain tax position - (2) 1,000 1,000 Decrease in deferred tax liability - (2) (260,323 ) (260,323 ) Net cash provided by (used in) operating activities 119,537 - 119,537 INVESTING ACTIVITIES Cash acquired in acquisition 338,411 - 338,411 Purchase of equipment (89,012 ) - (89,012 ) Net cash provided by financing activities 249,399 - 249,399 FINANCING ACTIVITIES Financing costs (153,947 ) - (153,947 ) Principal payments on capital lease obligations (49,516 ) - (49,516 ) Loans from (repayments to) related parties 3,768 - 3,768 Net cash provided by financing activities (199,695 ) - (199,695 ) NET INCREASE (DECREASE) IN CASH 169,241 - 169,241 CASH Beginning of year - - - End of year $ 169,241 $ - $ 169,241 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest paid 109,483 - 109,483 Income tax paid - - - |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 4 - INVENTORIES | At June 30, 2017 and December 31, 2016 the inventory balances are composed of: 2017 2016 Machinery & Equipment $ 464,646 $ - Parts 97,455 - $ 562,101 $ - |
ACQUISITION
ACQUISITION | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 5 - ACQUISITION | On March 3, 2017, our wholly-owned subsidiary 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, 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 provisional fair value of the purchase consideration issued to the sellers of Neese was allocated to the net tangible assets acquired. We accounted for the acquisition of Neese 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 our company. The fair value of the net assets acquired was approximately $8,575,000. 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 Neeses business and is preliminary. Once we complete our 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. Provisional Purchase Consideration Amount of consideration: $ 6,140,000 Assets acquired and liabilities assumed at preliminary fair value Cash $ 338,000 Accounts receivable 157,000 Prepaid taxes 103,000 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 ) Uncertain tax position (129,000 ) Deferred tax liability (2,135,000 ) Other liabilities (28,000 ) Net tangible assets acquired $ 6,414,000 Identifiable intangible assets Intangible assets * $ - Total Identifiable Intangible Assets $ - Total net assets acquired $ 6,414,000 Consideration paid 6,140,000 Preliminary gain on bargain purchase $ 274,000 _______ *We are reviewing for potential intangible assets, which may potentially change the intangible assets. The following presents the unaudited pro-forma combined results of operations of our company with Neese as if the entities were combined on January 1, 2016. For the Six Months Ended June 30, 2017 2016 Revenues, net $ 3,615,000 $ 3,915,000 Net income (loss) allocable to common shareholders $ (293,000 ) $ 490,000 Net income (loss) per share $ (0.09 ) $ 0.16 Weighted average number of shares outstanding 3,115,500 3,115,500 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 | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 6 - PROMISSORY NOTES | Vesting Promissory Note As noted above, a portion of the purchase price for the acquisition of Neese 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 of Neese. Payment of the principal and accrued interest on the vesting promissory note is subject to vesting and a contingent consideration subject to fair market valuation adjustment at each reporting period. The vesting promissory 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 promissory 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 promissory 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 promissory 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 promissory 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 promissory note, Adjusted EBITDA means the earnings before interest, taxes, depreciation and amortization expenses, in accordance with GAAP 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, 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; and (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 properly categorized as such and shall not be expenses until such inventory is sold or consumed. The vesting promissory 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 stock purchase agreement, the vesting promissory note, or any other agreement entered into in connection with the stock 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 for the acquisition of Neese 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 of Neese. The short-term promissory 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 promissory note contains the same events of default as the vesting promissory note. |
CAPITALIZED LEASES
CAPITALIZED LEASES | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 7 - CAPITALIZED LEASES | Master Lease Agreement The cash portion of the purchase price for the acquisition of Neese was financed under a capital lease transaction for Neeses equipment with Utica Leaseco, LLC (the Lessor), 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, 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 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 $85,321.63 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 $85,321.63 for the remaining forty-seven (47) months, for a new aggregate loan amount of $4,540,116.61. 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 the Lessor an amendment fee of $2,500. 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 percent (5%) 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 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 the Lessor. 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 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 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 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, The assets and liabilities under the master lease agreement 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 $6.9 million as of June 30, 2017, net of accumulated amortization of approximately $.5 million as of June 30, 2017. Amortization of assets under capital leases is included in depreciation expense. At June 30, 2017, annual minimum future lease payments under this capital lease are as follows: For the year ending December 31, Amount 2017 (remainder of the year) $ 318,000 2018 991,537 2019 1,023,860 2020 1,023,860 2021 1,023,860 Total minimum lease payments 4,381,117 Less amount representing interest 1,190,633 Present value of minimum lease payments 3,190,484 Less current portion of minimum lease 380,569 Long-term present value of minimum lease payment $ 2,809,915 The interest rate on the capitalized lease is approximately 13.4% and is imputed based on the lower of our incremental borrowings rate at the inception of each lease or the lessors implicit rate of return. |
RELATED PARTIES
RELATED PARTIES | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 8 - RELATED PARTIES | Management Services Agreement On April 15, 2013, our company and 1847 Partners LLC (our manager), entered into a management services agreement, pursuant to which we are required to pay our manager a quarterly management fee equal to 0.5% (2.0% annualized) of our adjusted net assets for services performed. On September 15, 2013, the parties entered into an amendment to the 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, our 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, we determined the outstanding receivables are not likely to be collected and consequently wrote-off the balance of $100,000 to bad debt expense. Offsetting Management Services Agreement - 1847 Neese On March 3, 2017, 1847 Neese entered into an offsetting management services agreement with our manager. Pursuant to the offsetting management services agreement, 1847 Neese appointed our 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 our company to our manager, in each case, with respect to any fiscal year exceeds, or is expected to exceed, 9.5% of our 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 our manager by all of the subsidiaries of our 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 our company to our manager, in each case, with respect to such fiscal year, does not exceed 9.5% of our 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 our company to our 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 our company to our 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 our 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 our manager or its affiliates on behalf of 1847 Neese in connection with performing services under the offsetting management services agreement. The services provided by our 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, our company has received advances from certain of its officers and related parties to meet short-term working capital needs. As of June 30, 2017 and December 31, 2016, a total of $112,646 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 | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 9 - EQUITY | Allocation shares As of June 30, 2017 and December 31, 2016, we had authorized and outstanding 1,000 allocation shares. These allocation shares do not entitle the holder thereof to vote on any matter relating to our company other than in connection with amendments to our operating agreement and in connection with certain other corporate transactions as specified in our 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 twenty percent (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 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 our manager, which is controlled by Mr. Roberts, our chief executive officer and controlling shareholder. Common shares We have authorized 500,000,000 common shares as of June 30, 2017 and December 31, 2016 and we had 3,115,500 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 June 30, 2017, we did not issue any equity securities. Noncontrolling Interests Our company owns 55.0% of 1847 Neese. For financial interests in which our company owns a controlling financial interest, our 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 are included in the consolidated statement of income. The net loss attributable to the 45% non-controlling interest of the subsidiary amount to $390,391 for the period March 3, 2017 through June 30, 2017. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 10 - COMMITMENTS AND CONTINGENCIES | Agreement of Lease - Related Party 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 the sellers 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. 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 | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
NOTE 11 - SUBSEQUENT EVENTS | In accordance with SFAS 165 (ASC 855-10), our company has analyzed its operations subsequent to June 30, 2017 to the date these financial statements were issued, and has determined that, except as set forth below, it does not have any material subsequent events to disclose in these financial statements. Stock Purchase Agreement 1847 Fitness On July 7, 2017, 1847 Fitness, Inc. (1847 Fitness), a newly-formed subsidiary of our company, entered into a stock purchase agreement with Central Florida Health Clubs, LLC d/b/a Golds Gym Orlando, a Florida limited liability company, CLFL, LLC d/b/a Golds Gym Clermont, a Florida limited liability company, MTDR LLC d/b/a Golds Gym Mt. Dora, a Florida limited liability company, SCFL, LLC d/b/a Golds Gym St. Cloud, a Florida limited liability company (collectively, the Companies), and the sellers set forth in Exhibit A to the a stock purchase agreement, pursuant to which 1847 Fitness will acquire all of the issued and outstanding equity interests in the Companies for an aggregate purchase price of: (i) $14,000,000 in cash (subject to adjustment as described below); (ii) the Gross-Up Amount (as defined below); (iii) 135 shares of the common stock, $0.001 par value, of 1847 Fitness (the Shares), constituting 13.5% of the capital stock of 1847 Fitness; and (iv) the issuance of promissory notes in the aggregate principal amount of $1,000,000, in the form and upon such terms as are mutually agreed upon by the parties before the closing date. The Gross-Up Amount means the amount the cash portion of the purchase price will be increased, up to a maximum of $238,000, if, subsequent to the date of the stock purchase agreement and prior to the closing date, any seller who receives Shares determines that he or it will incur a federal tax liability resulting from the receipt of Shares as a portion of the purchase price. The cash portion of the purchase price is subject to a post-closing working capital adjustment provision. Under this provision, the cash portion of the purchase price will be adjusted upward if the working capital reflected in the final certified balance sheet of the Companies as of a date on or about the closing date exceeds the working capital reflected in the preliminary balance sheet of the Companies. The cash portion of the purchase price will be adjusted downward if the working capital reflected in the final certified balance sheet of the Companies as of a date on or about the closing date is less than the working capital reflected in the preliminary balance sheet of the Companies. In each case, the working capital adjustment will be calculated in accordance with the working capital details specified in the stock purchase agreement. The stock purchase agreement contains customary representations, warranties and covenants, including a covenant that the sellers will not compete with the business of Companies for a period of three (3) years following closing. The stock purchase agreement also contains mutual indemnification for breaches of representations or warranties and failure to perform covenants or obligations contained in the stock purchase agreement. In the case of the indemnification provided by the sellers with respect to breaches of certain non-fundamental representations and warranties, the sellers will only become liable for indemnified losses if the amount exceeds $150,000, whereupon they will be liable for all losses relating back to the first dollar. Furthermore, the liability of the sellers for breaches of certain non-fundamental representations and warranties shall not exceed the purchase price payable under the stock purchase agreement. The closing of the stock purchase agreement is subject to customary closing conditions, including, without limitation: (1) the completion of business, accounting and legal due diligence investigations; the receipt of all authorizations, consents and approvals of all governmental authorities or agencies; (2) the receipt of any required consents of any third parties; the release of any security interests; and (3) delivery of all documents required for the transfer of shares of the Companies to 1847 Fitness. Stock Purchase Agreement 1847 Wood On July 17, 2017, 1847 Wood, Inc., or 1847 Wood, a newly-formed subsidiary of our company, entered into a stock purchase agreement with Wood Air Conditioning, Inc., or WAC, a Texas corporation, and To The Top, Inc., a Texas corporation, pursuant to which 1847 Wood agreed to acquire all of the issued and outstanding equity interests in WAC for an aggregate purchase price of $6,532,140 consisting of: (i) $5,250,000 in cash (subject to adjustment as described below); and (ii) the issuance of a promissory note in the aggregate principal amount of $1,282,140, in the form and upon such terms as are mutually agreed upon by the parties before the closing date. The purchase price is subject to a post-closing working capital adjustment provision. Under this provision, the cash portion of the purchase price will be adjusted upward if the working capital reflected in the final certified balance sheet of WAC as of closing date prepared by 1847 Wood exceeds the working capital reflected in the preliminary balance sheet of WAC that that was prepared by the Seller. If the working capital reflected in the final certified balance sheet of WAC as of the closing date is less than the working capital reflected in the preliminary balance sheet of WAC, the promissory note will be offset by such excess amount. If WACs earnings before (i) interest expense, (ii) tax expense, (iii) depreciation and amortization expense, and (iv) stock based compensation expense for the full twelve calendar months immediately prior to the closing is equal to or greater than $1,224,776, or equal to or less than $2,041,294, there will be no adjustment to the purchase price. If such amount is determined to be less than $1,224,776, then 1847 Wood may terminate the stock purchase agreement, and if such amount is determined to be greater than $2,041,294, then the Seller may terminate the stock purchase agreement, in each case by written notice within 10 days after such determination. The stock purchase agreement contains customary representations, warranties and covenants, including a covenant that the Seller will not compete with the business WAC for a period beginning on the closing date and ending upon the earlier to occur of (i) three years, and (ii) the date of the 1847 Woods monetary default under the promissory note (after the expiration of any notice and cure period). The stock purchase agreement also contains mutual indemnification for breaches of representations or warranties and failure to perform covenants or obligations contained in the stock purchase agreement. In the case of the indemnification provided by the Seller with respect to breaches of certain non-fundamental representations and warranties, the Seller will only become liable for indemnified losses if the amount exceeds $100,000, provided, however, that any losses payable by the Seller to 1847 Wood shall first be offset against the promissory note prior to the Seller having any obligation to make any payments to 1847 Wood. Furthermore, the liability of the Seller for breaches of certain non-fundamental representations and warranties shall not exceed the purchase price payable under the stock purchase agreement. The closing of the stock purchase agreement will be subject to customary closing conditions, including, without limitation, the completion of business, accounting and legal due diligence investigations; 1847 Wood obtaining the financing it requires to complete the acquisition, the receipt of all authorizations, consents and approvals of all governmental authorities or agencies; the receipt of any required consents of any third parties; the release of any security interests; and delivery of all documents required for the transfer of shares of WAC to 1847 Wood. |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Summary Of Significant Accounting Policies Policies | |
Basis of Presentation | The financial statements of our 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 | Our company uses the accrual basis of accounting and GAAP. Our company has adopted a calendar year end. |
Stock Split | On July 2, 2014, our company amended its operating agreement to increase our authorized common shares from 50,000,000 to 500,000,000 shares. On the same date, we also completed a forward stock split of our issued and outstanding common shares at a ratio of 75 for 1. As a result of this stock split, our issued and outstanding common shares were increased from 1,038,050 to 77,853,750 shares. On June 9, 2017, we completed a 1-for-25 reverse stock split of our outstanding common shares. As a result of this stock split, our issued and outstanding common shares decreased from 77,887,500 to 3,115,500 shares. Accordingly, all share and per share information has been restated to retroactively show the effect of this stock split. |
Cash and Cash Equivalents | Our 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 our prior financial statements and accompanying notes to conform to the presentation as of and for the three and six months ended June 30, 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. Our 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). |
Long-Lived Assets | Our 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 | Our 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. |
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, our 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 our 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 our 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 June 30, 2017. |
Comprehensive Income | Our company has established standards for reporting and displaying comprehensive income, its components and accumulated balances. When applicable, our 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. Our company has not had any significant transactions that are required to be reported in other comprehensive income. |
Recent Accounting Pronouncements | The Company has reviewed all other FASB issued ASU accounting pronouncements and interpretations thereof that have effective dates during the period reported and in future periods. The Company has carefully considered the new pronouncements that alter the previous GAAP and do not believe that any new or modified principles will have a material impact on the Companys reported financial position or operations in the near term. |
RESTATEMENT OF FINANCIAL STAT18
RESTATEMENT OF FINANCIAL STATEMENT (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Restatement Of Financial Statement Tables | |
CONDENSED CONSOLIDATED BALANCE SHEETS | June 30, 2017 Adjustment June 30, 2017 (As Filed) (As Restated) ASSETS Current Assets Cash $ 169,241 $ - $ 169,241 Accounts receivable, net 300,323 - 300,323 Inventory, net 562,101 - 562,101 Prepaid expenses and other assets 218,634 (1) 103,000 321,634 TOTAL CURRENT ASSETS 1,250,299 103,000 1,353,299 Fixed assets, net of accumulated depreciation of $450,000 as of June 30, 2017 6,539,012 - 6,539,012 Financing costs, net of accumulated amortization 191,773 - 191,773 Other assets 85,697 - 85,697 TOTAL ASSETS $ 8,066,781 $ 103,000 $ 8,169,781 LIABILITIES AND STOCKHOLDERS EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities 966,627 - 966,627 Advances related party 112,646 - 112,646 Promissory note 1,025,000 - 1,025,000 Uncertain tax liability - (1) 129,000 130,000 (2) 1,000 Deferred income taxes payable (1) 91,000 91,000 Current portion of lease obligations 380,569 - 380,569 TOTAL CURRENT LIABILITIES 2,484,842 221,000 2,705,842 LONG-TERM LIABILITIES Vesting note payable 1,875,000 - 1,875,000 Deferred tax payable - (1) 2,044,646 1,784,323 (2) (260,323 ) Capital lease obligation, net of current portion 2,809,915 2,809,915 TOTAL LONG-TERM LIABILITIES 4,684,915 1,784,323 6,469,238 TOTAL LIABILITIES 7,169,757 2,005,323 9,175,080 STOCKHOLDERS EQUITY Allocation shares 1,000 - 1,000 Common Stock, $0.0001 par value: 500,000,000 Authorized shares: 3,115,500 issued and outstanding shares as of June 30, 2017 and December 31, 2016 3,115 - 3,115 Additional paid in capital 11,891 11,891 Accumulated Equity (Deficit) 1,271,409 (1) (2,161,646 ) (747,609 ) (2) 142,628 TOTAL SHAREHOLDERS EQUITY 1,287,415 (2,019,018 ) (731,603 ) NONCONTROLLING INTERESTS (390,391 ) (2) 116,695 (273,696 ) TOTAL EQUITY 897,024 (1,902,323 ) (1,005,299 ) TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 8,066,781 $ 103,000 $ 8,169,781 |
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | For the three months ended June 30, 2017 As Filed Adjustment As Restated REVENUES $ 1,788,106 - $ 1,788,106 COST OF SALES 1,553,092 - 1,553,092 GROSS PROFIT 235,014 - 235,014 General and administrative expenses 660,919 - 660,919 TOTAL OPERATING EXPENSES 660,919 - 660,919 NET LOSS FROM OPERATIONS (425,905 ) - (425,905 ) OTHER INCOME/(EXPENSE) Financing costs (10,430 ) - (10,430 ) Interest expense (172,518 ) - (172,518 ) Gain on bargain purchase - - - TOTAL OTHER INCOME (EXPENSE) (182,948 ) - (182,948 ) NET LOSS BEFORE INCOME TAXES (608,853 ) - (608,853 ) INCOME TAX EXPENSE - (2) (240,233 ) (240,233 ) NET LOSS (608,853 ) (240,233 ) (368,620 ) Less net income (loss) attributable to non-controlling interest (316,385 ) (2) 108,105 (208,280 ) NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS SHAREHOLDERS $ (292,468 ) $ (132,128 ) $ (160,340 ) Basic & Diluted earnings per share $ (0.09 ) $ (0.05 ) Weighted average basis & diluted shares outstanding 3,115,500 3,115,500 |
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS | For the six months ended June 30, 2017 As Filed Adjustment As Restated SALES $ 2,449,969 - $ 2,449,969 COST OF SALES 2,272,418 - 2,272,418 GROSS PROFIT 177,551 - 177,551 GENERAL & ADMINISTRATIVE EXPENSES General and administrative expenses 804,404 - 804,404 TOTAL GENERAL & ADMINISTRATIVE EXPENSES 804,404 - 804,404 NET LOSS FROM OPERATIONS (626,853 ) - (626,853 ) OTHER INCOME/(EXPENSE) Financing costs (14,474 ) - (14,474 ) Interest expense (227,679 ) - (227,679 ) Gain on bargain purchase 2,435,927 (1) (2,161,646 ) 274,281 TOTAL OTHER INCOME (EXPENSE) 2,193,774 (2,161,646 ) 32,128 NET LOSS BEFORE INCOME TAXES 1,566,921 (2,161,646 ) (594,725 ) INCOME TAX EXPENSE - (2) (259,323 ) (259,323 ) NET INCOME (LOSS) 1,566,921 (1,902,323 ) (335,402 ) Less net income (loss) attributable to non-controlling interest (390,391 ) (2) 116,695 (273,696 ) NET LOSS & COMPREHENSIVE INCOME $ 1,957,312 $ (2,019,018 ) $ (61,706 ) Basic & Diluted earnings per share $ 0.63 $ (0.02 ) Weighted average basis & diluted shares outstanding 3,115,500 3,115,500 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | For the six months ended June 30, 2017 As Filed Adjustments As Restated OPERATING ACTIVITIES Net loss $ 1,566,921 $ (1,902,323 ) $ (335,402 ) Adjustments to reconcile net income to net cash provided by operating activities: Gain on acquisition (2,435,927 ) (1) 2,161,646 (274,281 ) Depreciation expense 450,000 - 450,000 Amortization of financing costs 14,474 - 14,474 Changes in operating assets and liabilities: Increase in accounts receivable (143,051 ) - (143,051 ) Decrease in inventory 683,457 683,457 Increase in prepaid expenses (218,592 ) - (218,592 ) Increase (decrease) in accounts payable and accrued expenses 203,512 - 203,512 Increase in other liabilities (1,257 ) - (1,257 ) Increase in uncertain tax position - (2) 1,000 1,000 Decrease in deferred tax liability - (2) (260,323 ) (260,323 ) Net cash provided by (used in) operating activities 119,537 - 119,537 INVESTING ACTIVITIES Cash acquired in acquisition 338,411 - 338,411 Purchase of equipment (89,012 ) - (89,012 ) Net cash provided by financing activities 249,399 - 249,399 FINANCING ACTIVITIES Financing costs (153,947 ) - (153,947 ) Principal payments on capital lease obligations (49,516 ) - (49,516 ) Loans from (repayments to) related parties 3,768 - 3,768 Net cash provided by financing activities (199,695 ) - (199,695 ) NET INCREASE (DECREASE) IN CASH 169,241 - 169,241 CASH Beginning of year - - - End of year $ 169,241 $ - $ 169,241 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest paid 109,483 - 109,483 Income tax paid - - - |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Inventories Tables | |
Schedule of Inventory | 2017 2016 Machinery & Equipment $ 464,646 $ - Parts 97,455 - $ 562,101 $ - |
ACQUISITION (Tables)
ACQUISITION (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Acquisition Tables | |
Schedule of Business Acquisitions by Acquisition, Contingent Consideration | Provisional Purchase Consideration Amount of consideration: $ 6,140,000 Assets acquired and liabilities assumed at preliminary fair value Cash $ 338,000 Accounts receivable 157,000 Prepaid taxes 103,000 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 ) Uncertain tax position (129,000 ) Deferred tax liability (2,135,000 ) Other liabilities (28,000 ) Net tangible assets acquired $ 6,414,000 Identifiable intangible assets Intangible assets * $ - Total Identifiable Intangible Assets $ - Total net assets acquired $ 6,414,000 Consideration paid 6,140,000 Preliminary gain on bargain purchase $ 274,000 |
Business acquisition pro forma information | For the Six Months Ended June 30, 2017 2016 Revenues, net $ 3,615,000 $ 3,915,000 Net income (loss) allocable to common shareholders $ (293,000 ) $ 490,000 Net income (loss) per share $ (0.09 ) $ 0.16 Weighted average number of shares outstanding 3,115,500 3,115,500 |
CAPITALIZED LEASES (Tables)
CAPITALIZED LEASES (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Capitalized Leases Tables | |
Schedule of Future Minimum Lease Payments for Capital Leases | For the year ending December 31, Amount 2017 (remainder of the year) $ 318,000 2018 991,537 2019 1,023,860 2020 1,023,860 2021 1,023,860 Total minimum lease payments 4,381,117 Less amount representing interest 1,190,633 Present value of minimum lease payments 3,190,484 Less current portion of minimum lease 380,569 Long-term present value of minimum lease payment $ 2,809,915 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 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 | 6 Months Ended | |
Sep. 15, 2013 | Jun. 30, 2017 | Dec. 31, 2016 | |
State of incorporation | Delaware | ||
Date of Incorporation | Jan. 22, 2013 | ||
Business acquisition short term promissory note | |||
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 | Jun. 09, 2017 | Jul. 02, 2014 | Jun. 30, 2017 | Dec. 31, 2016 |
Summary Of Significant Accounting Policies Details Narrative | ||||
Stock Split | 1 for 25 | 75 for 1 | ||
Common shares, authorized | 50,000,000 | 500,000,000 | 500,000,000 | |
Common shares, issued | 77,887,500 | 1,038,050 | 3,115,500 | 3,115,500 |
Common shares, outstanding | 77,887,500 | 1,038,050 | 3,115,500 | 3,115,500 |
RESTATEMENT OF FINANCIAL STAT25
RESTATEMENT OF FINANCIAL STATEMENT (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 | |
Current Assets | |||
Accounts receivable, net | |||
Inventory, net | |||
Prepaid expenses and other assets | 369 | ||
TOTAL CURRENT ASSETS | 369 | ||
Fixed assets, net of accumulated depreciation of $450,000 as of June 30, 2017 | |||
Financing costs, net of accumulated amortization | |||
Other assets | 6 | ||
TOTAL ASSETS | 375 | ||
CURRENT LIABILITIES | |||
Accounts payable and accrued liabilities | 561,378 | ||
Advances related party | 108,878 | ||
Promissory note | |||
Current portion of lease obligations | |||
TOTAL CURRENT LIABILITIES | 670,256 | ||
LONG-TERM LIABILITIES | |||
Vesting note payable | |||
Capital lease obligation, net of current portion | |||
TOTAL LIABILITIES | 670,256 | ||
STOCKHOLDERS’ EQUITY | |||
Allocation shares | 1,000 | ||
Common Stock, $0.0001 par value: 500,000,000 Authorized shares: 3,115,500 issued and outstanding shares as of June 30, 2017 and December 31, 2016 | 3,115 | ||
Additional paid in capital | 11,891 | ||
Accumulated Equity (Deficit) | (685,887) | ||
TOTAL SHAREHOLDERS’ EQUITY | (669,881) | ||
NONCONTROLLING INTERESTS | |||
TOTAL EQUITY | (669,881) | ||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 375 | ||
As Filed [Member] | |||
Current Assets | |||
Cash | $ 169,241 | ||
Accounts receivable, net | 300,323 | ||
Inventory, net | 562,101 | ||
Prepaid expenses and other assets | 218,634 | ||
TOTAL CURRENT ASSETS | 1,250,299 | ||
Fixed assets, net of accumulated depreciation of $450,000 as of June 30, 2017 | 6,539,012 | ||
Financing costs, net of accumulated amortization | 191,773 | ||
Other assets | 85,697 | ||
TOTAL ASSETS | 8,066,781 | ||
CURRENT LIABILITIES | |||
Accounts payable and accrued liabilities | 966,627 | ||
Advances related party | 112,646 | ||
Promissory note | 1,025,000 | ||
Uncertain tax liability increased | |||
Deferred income taxes payable | |||
Current portion of lease obligations | 380,569 | ||
TOTAL CURRENT LIABILITIES | 2,484,842 | ||
LONG-TERM LIABILITIES | |||
Vesting note payable | 1,875,000 | ||
Deferred tax payable | |||
Capital lease obligation, net of current portion | 2,809,915 | ||
TOTAL LONG-TERM LIABILITIES | 4,684,915 | ||
TOTAL LIABILITIES | 7,169,757 | ||
STOCKHOLDERS’ EQUITY | |||
Allocation shares | 1,000 | ||
Common Stock, $0.0001 par value: 500,000,000 Authorized shares: 3,115,500 issued and outstanding shares as of June 30, 2017 and December 31, 2016 | 3,115 | ||
Additional paid in capital | 11,891 | ||
Accumulated Equity (Deficit) | 1,271,409 | ||
TOTAL SHAREHOLDERS’ EQUITY | 1,287,415 | ||
NONCONTROLLING INTERESTS | (390,391) | ||
TOTAL EQUITY | 897,024 | ||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 8,066,781 | ||
Adjustment [Member] | |||
Current Assets | |||
Cash | |||
Accounts receivable, net | |||
Inventory, net | |||
Prepaid expenses and other assets | [1] | 103,000 | |
TOTAL CURRENT ASSETS | 103,000 | ||
Fixed assets, net of accumulated depreciation of $450,000 as of June 30, 2017 | |||
Financing costs, net of accumulated amortization | |||
Other assets | |||
TOTAL ASSETS | 103,000 | ||
CURRENT LIABILITIES | |||
Accounts payable and accrued liabilities | |||
Advances related party | |||
Promissory note | |||
Uncertain tax liability | [1] | 129,000 | |
Uncertain tax liability increased | [2] | 1,000 | |
Deferred income taxes payable | [1] | 91,000 | |
Current portion of lease obligations | |||
TOTAL CURRENT LIABILITIES | 221,000 | ||
LONG-TERM LIABILITIES | |||
Vesting note payable | |||
Deferred tax payable | [1] | 2,044,646 | |
TOTAL LONG-TERM LIABILITIES | 1,784,323 | ||
TOTAL LIABILITIES | 2,005,323 | ||
STOCKHOLDERS’ EQUITY | |||
Allocation shares | |||
Common Stock, $0.0001 par value: 500,000,000 Authorized shares: 3,115,500 issued and outstanding shares as of June 30, 2017 and December 31, 2016 | |||
Accumulated Equity (Deficit) | [1] | (2,161,646) | |
TOTAL SHAREHOLDERS’ EQUITY | (2,019,018) | ||
NONCONTROLLING INTERESTS | [2] | 116,695 | |
TOTAL EQUITY | (1,902,323) | ||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 103,000 | ||
Adjustment One [Member] | |||
LONG-TERM LIABILITIES | |||
Deferred tax payable | [2] | (260,323) | |
STOCKHOLDERS’ EQUITY | |||
Accumulated Equity (Deficit) | [2] | 142,628 | |
As Restated [Member] | |||
Current Assets | |||
Cash | 169,241 | ||
Accounts receivable, net | 300,323 | ||
Inventory, net | 562,101 | ||
Prepaid expenses and other assets | 321,634 | ||
TOTAL CURRENT ASSETS | 1,353,299 | ||
Fixed assets, net of accumulated depreciation of $450,000 as of June 30, 2017 | 6,539,012 | ||
Financing costs, net of accumulated amortization | 191,773 | ||
Other assets | 85,697 | ||
TOTAL ASSETS | 8,169,781 | ||
CURRENT LIABILITIES | |||
Accounts payable and accrued liabilities | 966,627 | ||
Advances related party | 112,646 | ||
Promissory note | 1,025,000 | ||
Uncertain tax liability | 130,000 | ||
Deferred income taxes payable | 91,000 | ||
Current portion of lease obligations | 380,569 | ||
TOTAL CURRENT LIABILITIES | 2,705,842 | ||
LONG-TERM LIABILITIES | |||
Vesting note payable | 1,875,000 | ||
Deferred tax payable | 1,784,323 | ||
Capital lease obligation, net of current portion | 2,809,915 | ||
TOTAL LONG-TERM LIABILITIES | 6,469,238 | ||
TOTAL LIABILITIES | 9,175,080 | ||
STOCKHOLDERS’ EQUITY | |||
Allocation shares | 1,000 | ||
Common Stock, $0.0001 par value: 500,000,000 Authorized shares: 3,115,500 issued and outstanding shares as of June 30, 2017 and December 31, 2016 | 3,115 | ||
Additional paid in capital | 11,891 | ||
Accumulated Equity (Deficit) | (747,609) | ||
TOTAL SHAREHOLDERS’ EQUITY | (731,603) | ||
NONCONTROLLING INTERESTS | (273,696) | ||
TOTAL EQUITY | (1,005,299) | ||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 8,169,781 | ||
[1] | The Company determined the bargain purchase gain recorded upon the acquisition of Neese on March 3, 2017 excluded prepaid taxes of $103,000, deferred taxes liabilities of $2,161,646 and an uncertain tax liability of $129,000. The gain on bargain purchase was reduced by $2,161,646 from the statement of operations in the period ending June 30, 2017 and prepaid tax was increased by $103,000, the current deferred tax liability increased $91,000 and uncertain tax liability of $129,000 and non-current deferred tax liability increased $2,044,646. | ||
[2] | The Company adjusted the impact on the tax expense (benefit) and prepaid taxes and tax liabilities for the three and six months ending June 30, 2017. The uncertain tax liability increased $1,000 and non-current deferred tax liability decreased $472,038 resulting in a tax benefit of $364,948 and $384,038 for the three and six months ending June 30, 2017, respectively. Furthermore, the loss attributable to non-controlling interest was decreased by $164,227 and $172,817 for the three and six months ending June 30, 2017, respectively. |
RESTATEMENT OF FINANCIAL STAT26
RESTATEMENT OF FINANCIAL STATEMENT (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |||
STATEMENT OF OPERATIONS | ||||||
REVENUES | ||||||
COST OF SALES | ||||||
GROSS PROFIT | ||||||
General and administrative expenses | 44,614 | 83,959 | ||||
TOTAL OPERATING EXPENSES | 44,614 | 83,959 | ||||
NET LOSS FROM OPERATIONS | (44,614) | (83,959) | ||||
OTHER INCOME/(EXPENSE) | ||||||
Financing costs | ||||||
Interest expense | ||||||
Gain on bargain purchase | ||||||
TOTAL OTHER INCOME (EXPENSE) | ||||||
NET LOSS BEFORE INCOME TAXES | (44,614) | (83,959) | ||||
INCOME TAX EXPENSE | ||||||
NET LOSS | (44,614) | (83,959) | ||||
Less net income (loss) attributable to non-controlling interest | ||||||
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS SHAREHOLDERS | $ (44,614) | $ (83,959) | ||||
Basic & Diluted earnings per share | $ (0.01) | $ (0.03) | ||||
Weighted average basis & diluted shares outstanding | 3,115,500 | 3,115,500 | ||||
As Filed [Member] | ||||||
STATEMENT OF OPERATIONS | ||||||
REVENUES | $ 1,788,106 | |||||
COST OF SALES | 1,553,092 | $ 2,272,418 | ||||
GROSS PROFIT | 235,014 | 177,551 | ||||
General and administrative expenses | 660,919 | 804,404 | ||||
TOTAL OPERATING EXPENSES | 660,919 | |||||
NET LOSS FROM OPERATIONS | (425,905) | (626,853) | ||||
OTHER INCOME/(EXPENSE) | ||||||
Financing costs | (10,430) | 14,474 | ||||
Interest expense | (172,518) | (227,679) | ||||
Gain on bargain purchase | (2,435,927) | |||||
TOTAL OTHER INCOME (EXPENSE) | (182,948) | 2,193,774 | ||||
NET LOSS BEFORE INCOME TAXES | (608,853) | 1,566,921 | ||||
INCOME TAX EXPENSE | ||||||
NET LOSS | (608,853) | 1,566,921 | ||||
Less net income (loss) attributable to non-controlling interest | (316,385) | $ (390,391) | ||||
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS SHAREHOLDERS | $ (292,468) | |||||
Basic & Diluted earnings per share | $ (0.09) | $ 0.63 | ||||
Weighted average basis & diluted shares outstanding | 3,115,500 | 3,115,500 | ||||
Adjustment [Member] | ||||||
STATEMENT OF OPERATIONS | ||||||
REVENUES | ||||||
COST OF SALES | ||||||
GROSS PROFIT | ||||||
General and administrative expenses | ||||||
TOTAL OPERATING EXPENSES | ||||||
NET LOSS FROM OPERATIONS | ||||||
OTHER INCOME/(EXPENSE) | ||||||
Financing costs | ||||||
Interest expense | ||||||
Gain on bargain purchase | 2,161,646 | [1] | ||||
TOTAL OTHER INCOME (EXPENSE) | (2,161,646) | |||||
NET LOSS BEFORE INCOME TAXES | (2,161,646) | |||||
INCOME TAX EXPENSE | [2] | (240,233) | (259,323) | |||
NET LOSS | (240,233) | (1,902,323) | ||||
Less net income (loss) attributable to non-controlling interest | [2] | 108,105 | 116,695 | |||
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS SHAREHOLDERS | (132,128) | |||||
As Restated [Member] | ||||||
STATEMENT OF OPERATIONS | ||||||
REVENUES | 1,788,106 | 2,449,969 | ||||
COST OF SALES | 1,553,092 | 2,272,418 | ||||
GROSS PROFIT | 235,014 | 177,551 | ||||
General and administrative expenses | 660,919 | 804,404 | ||||
TOTAL OPERATING EXPENSES | 660,919 | 804,404 | ||||
NET LOSS FROM OPERATIONS | (425,905) | (626,853) | ||||
OTHER INCOME/(EXPENSE) | ||||||
Financing costs | 10,430 | 14,474 | ||||
Interest expense | 172,518 | 227,679 | ||||
Gain on bargain purchase | 274,281 | |||||
TOTAL OTHER INCOME (EXPENSE) | (182,948) | 32,128 | ||||
NET LOSS BEFORE INCOME TAXES | (608,853) | (594,725) | ||||
INCOME TAX EXPENSE | 240,233 | 259,323 | ||||
NET LOSS | (368,620) | (335,402) | ||||
Less net income (loss) attributable to non-controlling interest | (208,280) | (273,696) | ||||
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS SHAREHOLDERS | $ (160,340) | $ (61,706) | ||||
Basic & Diluted earnings per share | $ (0.05) | $ (0.02) | ||||
Weighted average basis & diluted shares outstanding | 3,115,500 | 3,115,500 | ||||
[1] | The Company determined the bargain purchase gain recorded upon the acquisition of Neese on March 3, 2017 excluded prepaid taxes of $103,000, deferred taxes liabilities of $2,161,646 and an uncertain tax liability of $129,000. The gain on bargain purchase was reduced by $2,161,646 from the statement of operations in the period ending June 30, 2017 and prepaid tax was increased by $103,000, the current deferred tax liability increased $91,000 and uncertain tax liability of $129,000 and non-current deferred tax liability increased $2,044,646. | |||||
[2] | The Company adjusted the impact on the tax expense (benefit) and prepaid taxes and tax liabilities for the three and six months ending June 30, 2017. The uncertain tax liability increased $1,000 and non-current deferred tax liability decreased $472,038 resulting in a tax benefit of $364,948 and $384,038 for the three and six months ending June 30, 2017, respectively. Furthermore, the loss attributable to non-controlling interest was decreased by $164,227 and $172,817 for the three and six months ending June 30, 2017, respectively. |
RESTATEMENT OF FINANCIAL STAT27
RESTATEMENT OF FINANCIAL STATEMENT (Details 2) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |||
STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS | ||||||
COST OF SALES | ||||||
GROSS PROFIT | ||||||
GENERAL & ADMINISTRATIVE EXPENSES | ||||||
General and administrative expenses | 44,614 | 83,959 | ||||
TOTAL GENERAL & ADMINISTRATIVE EXPENSES | 44,614 | 83,959 | ||||
NET LOSS FROM OPERATIONS | (44,614) | (83,959) | ||||
OTHER INCOME/(EXPENSE) | ||||||
Financing costs | ||||||
Interest expense | ||||||
Gain on bargain purchase | ||||||
TOTAL OTHER INCOME (EXPENSE) | ||||||
NET LOSS BEFORE INCOME TAXES | (44,614) | (83,959) | ||||
INCOME TAX EXPENSE | ||||||
NET INCOME (LOSS) | (44,614) | (83,959) | ||||
Less net income (loss) attributable to non-controlling interest | ||||||
Basic & Diluted earnings per share | $ (0.01) | $ (0.03) | ||||
Weighted average basis & diluted shares outstanding | 3,115,500 | 3,115,500 | ||||
As Restated [Member] | ||||||
STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS | ||||||
SALES | $ 2,449,969 | |||||
COST OF SALES | $ 1,553,092 | 2,272,418 | ||||
GROSS PROFIT | 235,014 | 177,551 | ||||
GENERAL & ADMINISTRATIVE EXPENSES | ||||||
General and administrative expenses | 660,919 | 804,404 | ||||
TOTAL GENERAL & ADMINISTRATIVE EXPENSES | 660,919 | 804,404 | ||||
NET LOSS FROM OPERATIONS | (425,905) | (626,853) | ||||
OTHER INCOME/(EXPENSE) | ||||||
Financing costs | (10,430) | (14,474) | ||||
Interest expense | 172,518 | 227,679 | ||||
Gain on bargain purchase | 274,281 | |||||
TOTAL OTHER INCOME (EXPENSE) | (182,948) | 32,128 | ||||
NET LOSS BEFORE INCOME TAXES | (608,853) | (594,725) | ||||
INCOME TAX EXPENSE | 240,233 | 259,323 | ||||
NET INCOME (LOSS) | (368,620) | (335,402) | ||||
Less net income (loss) attributable to non-controlling interest | $ (208,280) | (273,696) | ||||
NET LOSS & COMPREHENSIVE INCOME | $ (61,706) | |||||
Basic & Diluted earnings per share | $ (0.05) | $ (0.02) | ||||
Weighted average basis & diluted shares outstanding | 3,115,500 | 3,115,500 | ||||
As Filed [Member] | ||||||
STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS | ||||||
SALES | $ 2,449,969 | |||||
COST OF SALES | $ 1,553,092 | 2,272,418 | ||||
GROSS PROFIT | 235,014 | 177,551 | ||||
GENERAL & ADMINISTRATIVE EXPENSES | ||||||
General and administrative expenses | 660,919 | 804,404 | ||||
TOTAL GENERAL & ADMINISTRATIVE EXPENSES | 660,919 | 804,404 | ||||
NET LOSS FROM OPERATIONS | (425,905) | (626,853) | ||||
OTHER INCOME/(EXPENSE) | ||||||
Financing costs | 10,430 | (14,474) | ||||
Interest expense | (172,518) | (227,679) | ||||
Gain on bargain purchase | (2,435,927) | |||||
TOTAL OTHER INCOME (EXPENSE) | (182,948) | 2,193,774 | ||||
NET LOSS BEFORE INCOME TAXES | (608,853) | 1,566,921 | ||||
INCOME TAX EXPENSE | ||||||
NET INCOME (LOSS) | (608,853) | 1,566,921 | ||||
Less net income (loss) attributable to non-controlling interest | $ (316,385) | (390,391) | ||||
NET LOSS & COMPREHENSIVE INCOME | $ 1,957,312 | |||||
Basic & Diluted earnings per share | $ (0.09) | $ 0.63 | ||||
Weighted average basis & diluted shares outstanding | 3,115,500 | 3,115,500 | ||||
Adjustment [Member] | ||||||
STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS | ||||||
SALES | ||||||
COST OF SALES | ||||||
GROSS PROFIT | ||||||
GENERAL & ADMINISTRATIVE EXPENSES | ||||||
General and administrative expenses | ||||||
TOTAL GENERAL & ADMINISTRATIVE EXPENSES | ||||||
NET LOSS FROM OPERATIONS | ||||||
OTHER INCOME/(EXPENSE) | ||||||
Financing costs | ||||||
Interest expense | ||||||
Gain on bargain purchase | 2,161,646 | [1] | ||||
TOTAL OTHER INCOME (EXPENSE) | (2,161,646) | |||||
NET LOSS BEFORE INCOME TAXES | (2,161,646) | |||||
INCOME TAX EXPENSE | [2] | (240,233) | (259,323) | |||
NET INCOME (LOSS) | (240,233) | (1,902,323) | ||||
Less net income (loss) attributable to non-controlling interest | [2] | $ 108,105 | 116,695 | |||
NET LOSS & COMPREHENSIVE INCOME | $ (2,019,018) | |||||
[1] | The Company determined the bargain purchase gain recorded upon the acquisition of Neese on March 3, 2017 excluded prepaid taxes of $103,000, deferred taxes liabilities of $2,161,646 and an uncertain tax liability of $129,000. The gain on bargain purchase was reduced by $2,161,646 from the statement of operations in the period ending June 30, 2017 and prepaid tax was increased by $103,000, the current deferred tax liability increased $91,000 and uncertain tax liability of $129,000 and non-current deferred tax liability increased $2,044,646. | |||||
[2] | The Company adjusted the impact on the tax expense (benefit) and prepaid taxes and tax liabilities for the three and six months ending June 30, 2017. The uncertain tax liability increased $1,000 and non-current deferred tax liability decreased $472,038 resulting in a tax benefit of $364,948 and $384,038 for the three and six months ending June 30, 2017, respectively. Furthermore, the loss attributable to non-controlling interest was decreased by $164,227 and $172,817 for the three and six months ending June 30, 2017, respectively. |
RESTATEMENT OF FINANCIAL STAT28
RESTATEMENT OF FINANCIAL STATEMENT (Details 3) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |||
OPERATING ACTIVITIES | ||||||
NET LOSS | $ (44,614) | $ (83,959) | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Gain on acquisition | ||||||
Depreciation expense | ||||||
Amortization of financing costs | ||||||
Changes in operating assets and liabilities: | ||||||
Increase in accounts receivable | ||||||
Decrease in inventory | ||||||
Increase in prepaid expenses | ||||||
Increase (decrease) in accounts payable and accrued expenses | 77,063 | |||||
Increase in other liabilities | ||||||
Increase in uncertain tax position | ||||||
Net cash provided by (used in) operating activities | (6,896) | |||||
INVESTING ACTIVITIES | ||||||
Cash acquired in acquisition | ||||||
Purchase of equipment | ||||||
Net cash provided by Investing activities | ||||||
FINANCING ACTIVITIES | ||||||
Financing costs | ||||||
Principal payments on capital lease obligations | ||||||
Loans from (repayments to) related parties | 6,566 | |||||
Net cash provided by financing activities | 6,566 | |||||
NET INCREASE (DECREASE) IN CASH | (330) | |||||
CASH | ||||||
Beginning of period | 415 | |||||
End of period | $ 85 | 85 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||
Interest paid | ||||||
Income tax paid | ||||||
As Filed [Member] | ||||||
OPERATING ACTIVITIES | ||||||
NET LOSS | $ (608,853) | $ 1,566,921 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Gain on acquisition | (2,435,927) | |||||
Depreciation expense | 450,000 | |||||
Amortization of financing costs | (10,430) | 14,474 | ||||
Changes in operating assets and liabilities: | ||||||
Increase in accounts receivable | (143,051) | |||||
Decrease in inventory | 683,457 | |||||
Increase in prepaid expenses | (218,592) | |||||
Increase (decrease) in accounts payable and accrued expenses | 203,512 | |||||
Increase in other liabilities | (1,257) | |||||
Increase in uncertain tax position | ||||||
Decrease in deferred tax liability | ||||||
Net cash provided by (used in) operating activities | 119,537 | |||||
INVESTING ACTIVITIES | ||||||
Cash acquired in acquisition | 338,411 | |||||
Purchase of equipment | (89,012) | |||||
Net cash provided by Investing activities | 249,399 | |||||
FINANCING ACTIVITIES | ||||||
Financing costs | (153,947) | |||||
Principal payments on capital lease obligations | (49,516) | |||||
Loans from (repayments to) related parties | 3,768 | |||||
Net cash provided by financing activities | (199,695) | |||||
NET INCREASE (DECREASE) IN CASH | 169,241 | |||||
CASH | ||||||
Beginning of period | ||||||
End of period | 169,241 | 169,241 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||
Interest paid | 109,483 | |||||
Income tax paid | ||||||
Adjustment [Member] | ||||||
OPERATING ACTIVITIES | ||||||
NET LOSS | (240,233) | (1,902,323) | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Gain on acquisition | 2,161,646 | [1] | ||||
Depreciation expense | ||||||
Amortization of financing costs | ||||||
Changes in operating assets and liabilities: | ||||||
Increase in accounts receivable | ||||||
Increase in prepaid expenses | ||||||
Increase (decrease) in accounts payable and accrued expenses | ||||||
Increase in other liabilities | ||||||
Increase in uncertain tax position | [2] | 1,000 | ||||
Decrease in deferred tax liability | [2] | (260,323) | ||||
Net cash provided by (used in) operating activities | ||||||
INVESTING ACTIVITIES | ||||||
Cash acquired in acquisition | ||||||
Purchase of equipment | ||||||
Net cash provided by Investing activities | ||||||
FINANCING ACTIVITIES | ||||||
Financing costs | ||||||
Principal payments on capital lease obligations | ||||||
Loans from (repayments to) related parties | ||||||
Net cash provided by financing activities | ||||||
NET INCREASE (DECREASE) IN CASH | ||||||
CASH | ||||||
Beginning of period | ||||||
End of period | ||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||
Interest paid | ||||||
Income tax paid | ||||||
As Restated [Member] | ||||||
OPERATING ACTIVITIES | ||||||
NET LOSS | (368,620) | (335,402) | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Gain on acquisition | 274,281 | |||||
Depreciation expense | 450,000 | |||||
Amortization of financing costs | 10,430 | 14,474 | ||||
Changes in operating assets and liabilities: | ||||||
Increase in accounts receivable | (143,051) | |||||
Decrease in inventory | 683,457 | |||||
Increase in prepaid expenses | (218,592) | |||||
Increase (decrease) in accounts payable and accrued expenses | 203,512 | |||||
Increase in other liabilities | (1,257) | |||||
Increase in uncertain tax position | 1,000 | |||||
Decrease in deferred tax liability | (260,323) | |||||
Net cash provided by (used in) operating activities | 119,537 | |||||
INVESTING ACTIVITIES | ||||||
Cash acquired in acquisition | 338,411 | |||||
Purchase of equipment | 89,012 | |||||
Net cash provided by Investing activities | 249,399 | |||||
FINANCING ACTIVITIES | ||||||
Financing costs | 153,947 | |||||
Principal payments on capital lease obligations | 49,516 | |||||
Loans from (repayments to) related parties | 3,768 | |||||
Net cash provided by financing activities | (199,695) | |||||
NET INCREASE (DECREASE) IN CASH | 169,241 | |||||
CASH | ||||||
Beginning of period | ||||||
End of period | $ 169,241 | 169,241 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||
Interest paid | 109,483 | |||||
Income tax paid | ||||||
[1] | The Company determined the bargain purchase gain recorded upon the acquisition of Neese on March 3, 2017 excluded prepaid taxes of $103,000, deferred taxes liabilities of $2,161,646 and an uncertain tax liability of $129,000. The gain on bargain purchase was reduced by $2,161,646 from the statement of operations in the period ending June 30, 2017 and prepaid tax was increased by $103,000, the current deferred tax liability increased $91,000 and uncertain tax liability of $129,000 and non-current deferred tax liability increased $2,044,646. | |||||
[2] | The Company adjusted the impact on the tax expense (benefit) and prepaid taxes and tax liabilities for the three and six months ending June 30, 2017. The uncertain tax liability increased $1,000 and non-current deferred tax liability decreased $472,038 resulting in a tax benefit of $364,948 and $384,038 for the three and six months ending June 30, 2017, respectively. Furthermore, the loss attributable to non-controlling interest was decreased by $164,227 and $172,817 for the three and six months ending June 30, 2017, respectively. |
RESTATEMENT OF FINANCIAL STAT29
RESTATEMENT OF FINANCIAL STATEMENT (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Mar. 03, 2017 | |||
Prepaid taxes | $ 103,000 | $ 103,000 | |||||
Gain on bargain purchase | |||||||
Increased in deferred tax liability , Non-current | 260,323 | ||||||
Adjustment [Member] | |||||||
Uncertain tax liability | [1] | 129,000 | 129,000 | ||||
Gain on bargain purchase | 2,161,646 | [1] | |||||
Increased in prepaid taxes | 103,000 | ||||||
Increased in deferred tax liability , current | 91,000 | ||||||
Increased in deferred tax liability , Non-current | 2,044,646 | ||||||
Increased in uncertain tax liability | [2] | 1,000 | 1,000 | ||||
Income tax benefit | 240,233 | 259,323 | |||||
Decreased in loss attributable to non-controlling interest | $ 108,105 | $ 116,695 | |||||
Neese [Member] | |||||||
Prepaid taxes | $ 103,000 | ||||||
Deferred taxes liabilities | 2,161,646 | ||||||
Uncertain tax liability | $ 129,000 | ||||||
[1] | The Company determined the bargain purchase gain recorded upon the acquisition of Neese on March 3, 2017 excluded prepaid taxes of $103,000, deferred taxes liabilities of $2,161,646 and an uncertain tax liability of $129,000. The gain on bargain purchase was reduced by $2,161,646 from the statement of operations in the period ending June 30, 2017 and prepaid tax was increased by $103,000, the current deferred tax liability increased $91,000 and uncertain tax liability of $129,000 and non-current deferred tax liability increased $2,044,646. | ||||||
[2] | The Company adjusted the impact on the tax expense (benefit) and prepaid taxes and tax liabilities for the three and six months ending June 30, 2017. The uncertain tax liability increased $1,000 and non-current deferred tax liability decreased $472,038 resulting in a tax benefit of $364,948 and $384,038 for the three and six months ending June 30, 2017, respectively. Furthermore, the loss attributable to non-controlling interest was decreased by $164,227 and $172,817 for the three and six months ending June 30, 2017, respectively. |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Total | ||
Machinery and Equipment [Member] | ||
Total | $ 464,646 | |
Parts [Member] | ||
Total | $ 97,455 |
ACQUISITION (Details)
ACQUISITION (Details) | 6 Months Ended | |
Jun. 30, 2017USD ($) | ||
Provisional Purchase Consideration | ||
Amount of consideration: | $ 6,140,000 | |
Assets acquired and liabilities assumed at preliminary fair value | ||
Cash | 338,000 | |
Accounts receivable | 157,000 | |
Prepaid taxes | 103,000 | |
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) | |
Uncertain tax position | (129,000) | |
Deferred tax liability | (2,135,000) | |
Other liabilities | (28,000) | |
Net tangible assets acquired | 6,414,000 | |
Identifiable intangible assets | ||
Intangible assets * | [1] | |
Total Identifiable Intangible Assets | ||
Total net assets acquired | 6,414,000 | |
Consideration paid | 6,140,000 | |
Preliminary gain on bargain purchase | $ 274,000 | |
[1] | We are reviewing for potential intangible assets, which may potentially change the intangible assets. |
ACQUISITION (Details 1)
ACQUISITION (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Net income (loss) per share | $ (0.01) | $ (0.03) | |
Weighted average number of shares outstanding | 3,115,500 | 3,115,500 | |
Business Acquisitions [Member] | |||
Revenues, net | $ 3,615,000 | $ 3,915,000 | |
Net income (loss) allocable to common shareholders | $ (293,000) | $ 490,000 | |
Net income (loss) per share | $ (0.09) | $ 0.16 | |
Weighted average number of shares outstanding | 3,115,500 | 3,115,500 |
ACQUISITION (Details Narrative)
ACQUISITION (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Business acquisition short term promissory note | ||
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 | $ 8,575,000 |
PROMISSORY NOTES (Details Narra
PROMISSORY NOTES (Details Narrative) - USD ($) | Mar. 03, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2020 | Jun. 30, 2017 | Dec. 31, 2016 |
Interest rate | 8.00% | ||||||
Business acquisition short term promissory note | |||||||
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 promissory note contains the same events of default as the vesting promissory 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 ($) | Jun. 30, 2017 | Dec. 31, 2016 |
For the year ending December 31, | ||
2017 (remainder of the year) | $ 318,000 | |
2,018 | 991,537 | |
2,019 | 1,023,860 | |
2,020 | 1,023,860 | |
2,021 | 1,023,860 | |
Total minimum lease payments | 4,381,117 | |
Less amount representing interest | 1,190,633 | |
Present value of minimum lease payments | 3,190,484 | |
Less current portion of minimum lease | ||
Long-term present value of minimum lease payment | $ 2,809,915 |
CAPITALIZED LEASES (Details Nar
CAPITALIZED LEASES (Details Narrative) - USD ($) | Jun. 14, 2017 | Jun. 30, 2017 |
Aggregate value of minimum lease payments | $ 3,190,484 | |
Accumulated amortization | 450,000 | |
Capital lease assets | $ 6,900,000 | |
Interest rate,capitalized lease | 13.40% | |
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 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 the Lessor. | |
Master Lease Agreement [Member] | first amendment lease documentst [Member] | ||
Lease rent (Monthly) | $ 53,000 | |
Increasing lease rent (Monthly) | 85,322 | |
Administration fee | 2,500 | |
Aggregate loan | $ 4,540,117 | |
Master Lease Agreement [Member] | first amendment lease documentst [Member] | Minimum [Member] | ||
Lease term | 51 months | |
Master Lease Agreement [Member] | first amendment lease documentst [Member] | Maximum [Member] | ||
Lease term | 57 months |
RELATED PARTIES (Details Narrat
RELATED PARTIES (Details Narrative) - USD ($) | Mar. 03, 2017 | Apr. 15, 2013 | Dec. 31, 2016 | Jun. 30, 2017 |
Bad debt expense | $ 100,000 | |||
Advances, related party | $ 108,878 | $ 112,646 | ||
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 | $ 62,500 | $ 43,750 | ||
Description of gross income | expected to exceed, 9.5% of our gross income with respect to such fiscal year |
EQUITY (Details Narrative)
EQUITY (Details Narrative) - USD ($) | 2 Months Ended | 6 Months Ended | ||||
Mar. 03, 2017 | Jun. 30, 2017 | Jun. 09, 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 | 3,115,500 | 77,887,500 | 3,115,500 | 1,038,050 | ||
Common shares, outstanding | 3,115,500 | 77,887,500 | 3,115,500 | 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 | $ 390,391 | |||||
Chief Executive Officer [Member] | ||||||
Allocation shares, issued | 1,000 | |||||
Allocation shares, outstanding | 1,000 |
COMMITMENTS AND CONTINGENCIES39
COMMITMENTS AND CONTINGENCIES (Details) | Jun. 30, 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 CONTINGENCIES40
COMMITMENTS AND CONTINGENCIES (Details Narrative) - Agreement of Lease - Related Party [Member] | 6 Months Ended |
Jun. 30, 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 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - USD ($) | Jul. 07, 2017 | Jul. 17, 2017 |
Stock Purchase Agreement - 1847 Fitness [Member] | ||
Common stock, par value | $ 0.001 | |
Capital Stock Purchased,Percentage | 13.50% | |
Stock Purchase Agreement - 1847 Fitness [Member] | Promissory note [Member] | ||
Additional paid in capital principal amount | $ 1,000,000 | |
Stock Purchase Agreement - 1847 Fitness [Member] | Promissory note [Member] | Maximum [Member] | ||
Aggregate purchase price | 238,000 | |
Stock Purchase Agreement - 1847 Fitness [Member] | ||
Aggregate purchase price | $ 14,000,000 | |
Capital Stock, Shares Purchased | 135 | |
Indemnification payable, amount | $ 150,000 | |
Wood Air Conditioning, Inc WAC [Member] | Stock Purchase Agreement - 1847 Fitness [Member] | ||
Aggregate purchase price | $ 6,532,140 | |
Description of stock purchase agreement | If such amount is determined to be less than $1,224,776, then 1847 Wood may terminate the stock purchase agreement, and if such amount is determined to be greater than $2,041,294, then the Seller may terminate the stock purchase agreement, in each case by written notice within 10 days after such determination. | |
Indemnification payable, amount | $ 100,000 | |
Wood Air Conditioning, Inc WAC [Member] | Stock Purchase Agreement - 1847 Fitness [Member] | Cash [Member] | ||
Aggregate purchase price | 5,250,000 | |
Wood Air Conditioning, Inc WAC [Member] | Stock Purchase Agreement - 1847 Fitness [Member] | Maximum [Member] | ||
Earning before Interest expense, Tax expense,Depreciation and amortization expense and Stock based compensation expense | 2,041,294 | |
Wood Air Conditioning, Inc WAC [Member] | Stock Purchase Agreement - 1847 Fitness [Member] | Minimum [Member] | ||
Earning before Interest expense, Tax expense,Depreciation and amortization expense and Stock based compensation expense | 1,224,776 | |
Wood Air Conditioning, Inc WAC [Member] | Stock Purchase Agreement - 1847 Fitness [Member] | Promissory note [Member] | ||
Aggregate purchase price | $ 1,282,140 |