Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 14, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | 1847 Holdings LLC | |
Entity Central Index Key | 1,599,407 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 3,115,625 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Current Assets | ||
Cash | $ 98,418 | $ 501,422 |
Accounts receivable, net | 299,372 | 310,363 |
Inventories, net | 746,762 | 836,571 |
Prepaid expenses and other assets | 173,783 | 174,877 |
TOTAL CURRENT ASSETS | 1,318,335 | 1,823,233 |
Property and equipment, net | 5,190,686 | 6,099,219 |
Goodwill | 22,166 | 22,166 |
Intangible assets, net | 24,933 | 28,333 |
Other assets | 39,182 | 111,504 |
TOTAL ASSETS | 6,595,302 | 8,084,455 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 1,199,172 | 1,060,969 |
Line of credit | 675,000 | |
Floor plan payable | 168,242 | 168,137 |
Advances, related party | 170,559 | 179,704 |
Note payable - related party | 91,500 | |
Current portion of note payable | 150,716 | 14,247 |
Promissory note payable | 1,025,000 | |
Uncertain tax liability | 127,000 | 126,000 |
Current portion of capital lease obligation | 277,226 | 615,349 |
TOTAL CURRENT LIABILITIES | 2,184,415 | 3,864,406 |
Note payable, net of current portion | 3,503,358 | 58,020 |
Promissory note payable | 1,025,000 | |
Vesting note payable | 395,634 | |
Non-current deferred tax liability | 396,101 | 988,601 |
Accrued expenses long term | 187,197 | |
Capital lease obligation, net of current portion | 1,002,387 | 3,262,988 |
TOTAL LIABILITIES | 8,298,458 | 8,569,649 |
TOTAL 1847 HOLDINGS LLC AND SUBSIDIARIES SHAREHOLDERS' DEFICIT | ||
Allocation shares, 1,000 shares issued and outstanding | 1,000 | 1,000 |
Common Shares, 500,000,000 shares authorized, 3,115,625 shares issued and outstanding as of June 30, 2018 and December 31, 2017 | 3,115 | 3,115 |
Additional paid-in capital | 11,891 | 11,891 |
Accumulated deficit | (1,926,455) | (1,159,724) |
TOTAL SHAREHOLDERS' DEFICIT | (1,910,449) | (1,143,718) |
NONCONTROLLING INTERESTS | 207,293 | 658,524 |
TOTAL SHAREHOLDERS' DEFICIT | (1,703,156) | (485,194) |
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | $ 6,595,302 | $ 8,084,455 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares | Jun. 30, 2018 | Dec. 31, 2017 |
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 | 3,115,625 | 3,115,625 |
Common shares, outstanding | 3,115,625 | 3,115,625 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
REVENUE | ||||
Services | $ 1,005,554 | $ 955,410 | $ 1,659,628 | $ 1,305,838 |
Sales of parts and equipment | 464,042 | 627,595 | 572,613 | 939,030 |
TOTAL REVENUE | 1,469,596 | 1,583,005 | 2,232,241 | 2,244,868 |
OPERATING EXPENSES | ||||
Cost of sales | 458,303 | 810,543 | 556,591 | 1,039,433 |
Personnel costs | 550,047 | 572,394 | 985,011 | 739,372 |
Depreciation and amortization | 348,200 | 249,433 | 707,900 | 450,000 |
Fuel | 263,066 | 243,232 | 481,806 | 321,400 |
General and administrative | 375,254 | 234,595 | 910,537 | 642,768 |
TOTAL OPERATING EXPENSES | 1,994,870 | 2,110,197 | 3,641,845 | 3,192,973 |
LOSS FROM OPERATIONS | (525,274) | (527,192) | (1,409,604) | (948,105) |
OTHER INCOME (EXPENSE) | ||||
Financing costs and loss on early extinguishment of debt | (509,992) | (10,430) | (519,955) | (14,474) |
Write-off of contingent consideration | 395,634 | 395,634 | ||
Interest expense | (166,555) | (172,518) | (271,529) | (227,679) |
Gain (loss) on sale of fixed assets | 36,117 | 205,100 | (4,008) | 249,472 |
TOTAL OTHER INCOME (EXPENSE) | (244,796) | 22,152 | (399,858) | 7,319 |
NET LOSS BEFORE INCOME TAXES | (770,070) | (505,040) | (1,809,462) | (940,786) |
INCOME TAX PROVISION (BENEFIT) | (345,300) | (306,833) | (591,500) | (259,323) |
NET LOSS BEFORE NON-CONTROLLING INTERESTS | (424,770) | (198,207) | (1,217,962) | (681,463) |
Less net loss attributable to non-controlling interests | (187,184) | (158,723) | (451,231) | (269,848) |
NET LOSS ATTRIBUTABLE TO 1847 HOLDINGS SHAREHOLDERS | $ (237,586) | $ (39,484) | $ (766,731) | $ (411,615) |
Net Loss Per Common Share: Basic and diluted | $ (0.08) | $ (0.01) | $ (0.25) | $ (0.13) |
Weighted-average number of common shares outstanding: Basic and diluted | 3,115,625 | 3,115,625 | 3,115,625 | 3,115,625 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
OPERATING ACTIVITIES | ||
Net loss | $ (1,217,962) | $ (681,463) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
(Gain) loss on sale of fixed assets | 4,008 | (249,472) |
Depreciation and amortization | 707,900 | 450,000 |
Amortization of financing costs | 91,431 | 14,474 |
Loan contingency write-down | (395,634) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 10,990 | (143,626) |
Inventory | 89,809 | 475,809 |
Prepaid expenses and other assets | 73,416 | (10,986) |
Accounts payable and accrued expenses | 157,264 | 251,936 |
Uncertain tax position | (3,000) | |
Deferred tax liability and prepaid tax | (591,500) | (255,029) |
Due to related parties | (9,145) | 35,712 |
Other liabilities | (1,257) | |
Net cash provided by (used in) operating activities | (1,079,423) | (116,902) |
INVESTING ACTIVITIES | ||
Cash acquired in acquisition | 338,411 | |
Proceeds from the sale of fixed assets | 202,025 | 348,858 |
Purchase of equipment | (2,000) | (188,463) |
Net cash provided by investing activities | 200,025 | 498,806 |
FINANCING ACTIVITIES | ||
Proceeds from notes payables | 3,822,316 | |
Note payable related party | 91,500 | |
Repayment to line of credit | (675,000) | |
Payments on notes payable | (72,267) | (168,421) |
Principal payments on capital lease obligation | (2,690,155) | (44,242) |
Net cash provided by (used in) financing activities | 476,394 | (212,663) |
NET CHANGE IN CASH | (403,004) | 169,241 |
CASH | ||
Beginning of period | 501,422 | |
End of period | 98,418 | 169,241 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Interest paid | 360,664 | 109,483 |
Income taxes paid |
ORGANIZATION AND NATURE OF BUSI
ORGANIZATION AND NATURE OF BUSINESS | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS | 1847 Holdings LLC (“we,” “us,” “our” and the “Company”) was formed under the laws of the State of Delaware on January 22, 2013. We are in the business of acquiring small businesses in a variety of different industries. The Company is a limited liability company that has elected to be taxed as a partnership. The Company’s subsidiaries are corporations and are taxed as such. 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. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and are presented in US dollars. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. Consolidated Financial Statements The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, 1847 Management, 1847 Neese and 1847 Fitness. All significant intercompany balances and transactions have been eliminated in consolidation. Accounting Basis The Company uses the accrual basis of accounting and GAAP. The Company has adopted a calendar year end. Stock Splits On January 22, 2018, we completed a 1-for-5 reverse split of our outstanding common shares. As a result of this stock split, our issued and outstanding common shares decreased from 3,115,500 to 623,125 shares. On May 10, 2018, we completed a 5-for-1 stock split of our outstanding common shares. As a result of this stock split, our issued and outstanding common shares increased from 623,125 to 3,115,625 shares. Accordingly, all share and per share information has been restated to retroactively show the effect of these stock splits. Cash and Cash Equivalents The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain Statements of Operations reclassifications have been made in the presentation of our prior financial statements and accompanying notes to conform to the presentation as of and for the three and six months ended June 30, 2018. Revenue Recognition and Cost of Revenue On January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer purchase orders, including significant judgments. Our payment terms are net 30 days from acceptance of delivery. We do not incur incremental costs obtaining purchase orders from our customers, however, if we did, because all of our contracts are less than a year in duration, any contract costs incurred would be expensed rather than capitalized. Our adoption of this ASU, resulted in no change to our results of operations or our balance sheet. The revenue that we recognize arises from purchase orders we receive from our customers. Our performance obligations under the purchase orders correspond to each service delivery or sale of equipment that we make to our customer under the purchase orders; as a result, each purchase order generally contains only one performance obligation based on the service or equipment sale to be completed. Control of the delivery transfers to our customers when the customer is able to direct the use of, and obtain substantially all of the benefits from, our products, which generally occurs at the later of when the customer obtains title to the equipment or when the customer assumes risk of loss. The transfer of control generally occurs at a point of delivery. Once this occurs, we have satisfied our performance obligation and we recognize revenue. We also sell equipment by posting it on auction sites specializing in farm equipment. We post the equipment for sale on a “magazine” site for several weeks before the auction. When we decide to sell, we move the equipment to the auction site. The auctions are one day. If we accept a bid, the customer pays the bid price and arranges for pick-up of the equipment. Transaction Price We agree with our customers on the selling price of each transaction. This transaction price is generally based on the agreed upon service fee. In our contracts with customers, we allocate the entire transaction price to the service fee to the customer, which is the basis for the determination of the relative standalone selling price allocated to each performance obligation. Any sales tax, value added tax, and other tax we collect concurrently with our revenue-producing activities are excluded from revenue. If we continued to apply legacy revenue recognition guidance for the first six months of 2018, our revenues, gross margin, and net loss would not have changed. Substantially all our sales are to businesses, including farmers or municipalities and very little to individuals. Inventory Inventory consists of machinery and equipment and parts acquired for resale and is valued at the lower-of-cost-or-market with cost determined on a specific item basis. The Company periodically evaluates the value of items in inventory and provides write-downs to inventory based on its estimate of market conditions. The Company estimates obsolescence allowance of $70,000 as of June 30, 2018 and December 31, 2017. 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, 2018. Going Concern Assessment During the six months ended June 30, 2018 and all annual and interim periods thereafter, management will assess going concern uncertainty in the Company’s consolidated financial statements to determine whether there is sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the consolidated financial statements are issued or available to be issued, which is referred to as the “look-forward period”, as defined in GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, management will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, its ability to delay or curtail expenditures or programs and its ability to raise additional capital, if necessary, among other factors. Based on this assessment, as necessary or applicable, management makes certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent it deems probable those implementations can be achieved and management has the proper authority to execute them within the look-forward period. The Company has generated losses since its inception and has relied on cash on hand, external bank lines of credit and the sale of a note to support cashflow from operations. The Company attributes the 2017 losses to public company corporate overhead and losses generated by some of our subsidiary operations. As of and for the six months ended June 30, 2018, the Company had a net loss of $766,731 and negative working capital of approximately $866,080. Management believes that based on relevant conditions and events that are known and reasonably knowable that its forecasts, for one year from the date of the filing of the consolidated financial statements in this Quarterly Report on Form 10-Q, indicate improved operations and the Company’s ability to continue operations as a going concern. The Company has contingency plans to reduce or defer expenses and cash outlays should operations not improve in the look forward period. Recent Accounting Pronouncements Not Yet Adopted In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment. In February 2016, the FASB issued ASU 2016-02, Leases In June 2016, the FASB issued ASU 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Recently Adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, as a new Topic, Accounting Standards Codification (“ASC”) Topic 606, which supersedes existing accounting standards for revenue recognition and creates a single framework. Additional updates to Topic 606 issued by the FASB in 2015 and 2016 include the following: · ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which defers the effective date of the new guidance such that the new provisions will now be required for fiscal years, and interim periods within those years, beginning after December 15, 2017. · ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations, which clarifies the implementation guidance on principal versus agent considerations (reporting revenue gross versus net). · ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies the implementation guidance on identifying performance obligations and classifying licensing arrangements. · ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which clarifies the implementation guidance in a number of other areas. The underlying principle is to use a five-step analysis of transactions to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The standard permits the use of either a retrospective or modified retrospective application. ASU 2014-09 and ASU 2016-12 are effective for annual reporting periods beginning after December 15, 2017. The Company will adopt ASC 606 using the modified retrospective method for annual and interim reporting periods beginning January 1, 2018. The Company has aggregated and reviewed its contracts that are within the scope of ASC 606. Based on its evaluation, the Company does not anticipate the adoption of ASC 606 will have a material impact on its balance sheet or related consolidated statements of earnings, equity or cash flows. |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
NOTE 3 - INVENTORIES | At June 30, 2018 and December 31, 2017, the inventory balances are composed of: June 30, 2018 December 31, 2017 Machinery & Equipment $ 651,962 $ 715,483 Parts 164,800 191,088 Subtotal 816,762 906,571 Allowance for inventory obsolescence (70,000 ) (70,000 ) Inventory, net $ 746,762 $ 836,571 At June 30, 2018, $168,137 of Machinery and Equipment inventory was pledged to secure floor plan loans and $205,628 of Machinery and Equipment inventory was pledged to secure a loan from Utica Leasco. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
NOTE 4 - PROPERTY AND EQUIPMENT | Property and equipment consist of the following at June 30, 2018 and December 31, 2017: Classification June 30, 2018 December 31, 2017 Buildings and improvements $ 5,338 $ 5,338 Equipment and machinery 2,826,155 2,908,154 Tractors 2,974,888 3,129,888 Trucks and other vehicles 1,147,304 1,169,805 Total 6,953,685 7,213,185 Less: Accumulated depreciation (1,762,999 ) (1,113,966 ) Property and equipment, net $ 5,190,686 $ 6,099,219 Depreciation expense for the six months ended June 30, 2018 and 2017 was $704,500 and $450,000, respectively. All fixed assets are pledged to secure loans from Utica Leasco. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
NOTE 5 - INTANGIBLE ASSETS | The following provides a breakdown of identifiable intangible assets – Customer Relationships as of June 30, 2018 and December 31, 2017: June 30, 2018 December 31, 2017 Identifiable intangible assets, gross $ 34,000 $ 34,000 Accumulated amortization (9,067 ) (5,667 ) Identifiable intangible assets, net $ 24,933 $ 28,333 In connection with the acquisition of Neese, the Company identified intangible assets of $34,000 representing customer relationships. These assets are being amortized on a straight-line basis over their weighted average estimated useful life of 5 years and amortization expense amounted to $3,400 for the three months ended June 30, 2018. As of June 30, 2018, the estimated annual amortization expense for each of the next five fiscal years is as follows: 2018 (remainder) $ 3,400 2019 6,800 2020 6,800 2021 6,800 2022 1,133 Total $ 24,933 |
ACQUISITION
ACQUISITION | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
NOTE 6 - 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 (which was determined to have a fair value of $395,634); 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 Neese’s 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 $676,056. The cash was paid by obtaining financing from Utica Leaseco (see Note 11). The 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 the Company. The fair value of the net assets acquired was approximately $8,269,000. The excess of the aggregate fair value of the net tangible assets has been allocated to an intangible asset, value of customer accounts and the remainder to goodwill. Purchase Consideration Cash Consideration (financed by a Capital Lease–Note 11) $ 3,240,000 Add: Subsidiary stock issued as non-controlling interest (Note 14) 852,864 Add: 8% Vesting Promissory Note (Note 10) 395,634 Add: Buyer Short Term Note, at 10% (Note 10) 1,025,000 Total acquisition price $ 5,513,498 Assets acquired and liabilities assumed at fair value Cash $ 676,056 Accounts receivable 156,655 Prepaid expenses 90,238 Inventories 1,037,910 Property and equipment 6,167,104 Other assets 85,322 Accounts payable and accrued expenses (209,913 ) Uncertain tax position (129,000 ) Cash payable to seller (337,645 ) Deferred tax liability (2,079,395 ) Other liabilities Net tangible assets acquired $ 5,457,332 Identifiable intangible assets and Goodwill Intangible assets $ 34,000 Goodwill 22,166 Total Identifiable Intangible Assets and Goodwill $ 56,166 Total net assets acquired $ 5,513,498 The prior year balances have been revised to reflect the finalized purchase price allocation. The following presents the pro-forma combined results of operations of the Company with Neese as if the entities were combined on January 1, 2017 (before non-controlling interest). For the Six Months Ended June 30, 2018 2017 Revenues, net $ 2,232,000 $ 3,476,000 Net income (loss) allocable to common shareholders $ (1,218,000 ) $ (621,000 ) Net income (loss) per share $ (0.39 ) $ (0.20 ) Weighted average number of shares outstanding 3,115,625 3,115,625 The pro-forma results of operations are presented for information purposes only. The 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, 2017 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. |
LINE OF CREDIT
LINE OF CREDIT | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
NOTE 7 - LINE OF CREDIT | The Company’s subsidiary, Neese, entered into a loan and security agreement with Home State Bank governing a new revolving credit facility in a principal amount not to exceed $1,000,000 (the “Credit Facility”). The Credit Facility is available for working capital and other general business purposes. Availability of borrowings under the Credit Facility from time to time is subject to discretionary advances approved by Home State Bank. The outstanding principal balance was $675,000 at December 31, 2017. The Line of Credit bears interest at 4.85% (default rate 7.85%) and was due September 1, 2018. The line of credit was paid off with proceeds from a Home State Bank term loan closed on June 13, 2018. |
FLOOR PLAN LOANS PAYABLE
FLOOR PLAN LOANS PAYABLE | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
NOTE 8 - FLOOR PLAN LOANS PAYABLE | At June 30, 2018, $181,859 of Machinery and Equipment inventory was pledged to secure a floor plan loan from a commercial lender. The Company must remit proceeds from the sale of the secured inventory to the floor plan lender and pays a finance charge that can vary monthly at the option of the lender. The balance of the floor plan payable as of June 30, 2018 and December 31, 2017 amounted to $168,242 and $168,137, respectively. |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
NOTE 9 - NOTES PAYABLE | The notes payable at December 31, 2017 are summarized as follows: December 31, 2017 Note payable - 2018 Kenworth Tractor $ 72,267 Current portion (14,247 ) Total Non-current portion $ 58,020 This note from a commercial bank originated July 21, 2017 and is payable in 60 fixed monthly installments of $1,434 at a rate of 4.5% per annum. This note was paid off with proceeds of a term loan from Home State Bank that closed on June 13, 2018. |
TERM LOAN
TERM LOAN | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
NOTE 10 - TERM LOAN | On June 13, 2018, Neese entered into a term loan agreement with Home State Bank, pursuant to which Neese issued a promissory note to Home State Bank in the principal amount of $3,654,074 with an annual interest rate of 6.85%. Pursuant to the terms of the note, Neese will make semi-annual payments of $302,270 beginning on January 20, 2019 and continuing every six months thereafter until July 20, 2020, the maturity date; provided however, that Neese will pay the note in full immediately upon demand by Home State Bank. Proceeds of the loan were used to pay the Home State Bank line of credit (see Note 7), the Home State Bank note payable (see Note 9), and reduce the balance of the Utica capitalized lease (see Note 12) The amount applied to the principal amount of the lease and lease buyout amount was $2,780,052, which amount was net of lien release fees of $124,650 and lease deposit of $72,322. The remaining balance of the lease is $475,000. The transaction resulted in an early extinguishment of debt loss of $500,804 including a $95,130 write-off of unamortized debt issuance costs. The loan agreement contains customary representations and warranties. Pursuant to the terms of the loan agreement and the note, an “Event of Default” includes: (i) if Neese fails to make any payment when due under the note; (ii) if Neese fails to comply with or to perform any other term, obligation, covenant or condition contained in the note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Home State Bank and Neese; (iii) if Neese defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Home State Bank’s property or Neese’s ability to repay the note or perform Neese’s obligations under the note or any of the related documents; (iv) if any warranty, representation or statement made or furnished to Home State Bank by Neese or on Neese’s behalf under the note or the related documents is false or misleading in any material respect; (v) upon the dissolution or termination of Neese’s existence as a going business, the insolvency of Neese, the appointment of a receiver for any part of Neese’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Neese, (vi) upon commencement of foreclosure or forfeiture proceedings by any creditor of Neese or by any governmental agency against any collateral securing the loan; and (vii) if a material adverse change occurs in Neese’s financial condition, or Home State Bank believes the prospect of payment or performance of the note is impaired. If any Event of Default occurs, all commitments and obligations of Home State Bank immediately will terminate and, at Home State Bank’s option, all indebtedness immediately will become due and payable, all without notice of any kind to Neese. Additionally, upon an Event of Default, the interest rate on the note will be increased by 3 percentage points. However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law. The loan is secured by inventory, accounts receivable, and certain fixed assets of Neese. The loan agreement limited the payment of interest on the promissory notes (See Note 11) to $40,000 annually or fees to our manager. We continue to accrue interest and management fee at the contractual amounts. Such accruals (in excess of $40,000 in interest on the promissory notes) are shown as long-term accrued expenses in the accompanying balance sheet as of June 30, 2018. Following is a summary of payments due on the loan for the succeeding five years: Amount 2019 $ 333,982 2020 3,320,092 Total payments 3,654,074 Less current portion of principal payments (333,982 ) Long-term portion of principal payments $ 3,320,092 |
PROMISSORY NOTES
PROMISSORY NOTES | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
NOTE 11 - PROMISSORY NOTES | 8% Vesting Promissory Note As noted above in Note 6, 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 (which was determined to have no fair value as of June 30, 2018 and a fair value of $395,634 as of December 31, 2017) 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. For the year ended December 31, 2017, Adjusted EBITDA was $788,958, below the threshold amount of $1,300,000, therefore no portion of the note vested in fiscal year 2017. · 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 arm’s-length commercial transaction, and inventory items shall be properly categorized as such and shall not be expenses until such inventory is sold or consumed. At June 30, 2018, management made the determination that the vesting note payable had no value because it estimated that the EBITDA threshold of $1,300,000 for both 2018 and 2019 would be not attained, thus eliminating the requirement for a payment under terms of the note payable. 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. Under terms of the term loan described in Note 10, this note may not be paid until the term loan is paid in full. 10% Short-Term Promissory Note As noted above in Note 6, 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. The short-term promissory note has not been repaid, so we are in default under this note. Under terms of the term loan described in Note 10, this note may not be paid until the term loan is paid in full. Additionally, the payees on the note agreed to the modification of its terms by signing the loan agreement for the Home State Bank term loan. Accordingly, the loan is shown as a long-term liability as of June 30, 2018. Additionally, the term loan lender limits the payment of interest on this note to $40,000 annually. The Company continues to accrue interest at the contract rate; however, given the limitations of the term loan, all accrued interest in excess of $40,000 is included in long-term accrued expenses. |
CAPITALIZED LEASES
CAPITALIZED LEASES | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
NOTE 12 - CAPITALIZED LEASES | The cash portion of the purchase price for the acquisition of Neese (Note 6) was financed under a capital lease transaction for Neese’s equipment with Utica Leaseco, LLC (the “Lessor” or “Utica”), pursuant to a Master Lease Agreement, dated March 3, 2017, between Utica, as lessor, and 1847 Neese and Neese, as co-lessees (collectively, the “Lessee”). Under the Master Lease Agreement, the Lessor loaned an aggregate of $3,240,000 for certain of Neese’s 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 $85,322 for the remaining forty-eight (48) months. On June 14, 2017, the parties entered into a first amendment to lease documents, pursuant to which the parties agreed to, among other things, extend the term of the Master Lease Agreement from 51 months to 57 months and amend the payments due thereunder. Under the amendment, the Lessee agreed to pay a monthly rent of $53,000 for the first ten (10) months, with such amount increasing to $85,322 for the remaining forty-seven (47) months. In connection with the extension of the term of the Master Lease Agreement, the parties also amended the schedule of stipulated loss values and early termination payment schedule attached thereto. In connection with the amendment, the Lessee agreed to pay the Lessor an amendment fee of $2,500. On October 31, 2017, the Company entered into an amendment of the March 3, 2017 Master Lease Agreement with Utica. The proceeds from the amendment were $980,000, which the Company used to purchase new equipment for use in its business and for one tractor for resale included in inventory. The term of the second master lease agreement was for 51 months with payments of $25,807 per month. On February 1, 2018, Utica agreed to continue the $53,000 payments for three additional months and extend the maturity of the loan by three months. Additionally, Utica agreed to defer the February 3, 2018 payment to February 20, 2018. The Company paid one-half the normal late fee, $2,650 for the late payment. On March 2, 2018, Utica agreed to defer the March 3 payment to March 30, 2018. The Company will pay a late payment fee of $5,300 for the payment deferral. 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 $5,000. Upon the expiration of the term of the Master Lease Agreement, the Lessee is required to pay, together with all other amounts then due and payable under the Master Lease Agreement, in cash, an end of term buyout price equal to the lesser of: (a) $162,000 (five percent (5%) of the Total Invoice Cost (as defined in the Master Lease Agreement)); or (b) the fair market value of the Equipment, as determined by the Lessor. Upon the expiration of the Amendment to the Master Lease Agreement, the Lessee is required to pay, together with all other amounts then due and payable under the Master Lease Agreement, in cash, an end of term buyout price equal to the lesser of: (a) $49,000 (five percent (5%) of the Total Invoice Cost (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 or the Amendment 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 and the Amendment, 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. The early buy-out option is not available on the Amendment to the Master Lease Agreement until after June 30, 2018. In connection with the Master Lease Agreement and the Amendment thereto, the Lessee granted a security interest on all of its right, title and interest in and to: (i) the Equipment, together with all related software (embedded therein or otherwise) and general intangibles, all additions, attachments, accessories and accessions thereto whether or not furnished by the supplier; (ii) all accounts, chattel paper, deposit accounts, documents, other equipment, general intangibles, instruments, inventory, investment property, letter of credit rights and any supporting obligations related to any of the foregoing; (iii) all books and records pertaining to the foregoing; (iv) all property of such Lessee held by the Lessor, including all property of every description, in the custody of or in transit to the Lessor for any purpose, including safekeeping, collection or pledge, for the account of such Lessee or as to which such Lessee may have any right or power, including but not limited to cash; and (v) to the extent not otherwise included, all insurance, substitutions, replacements, exchanges, accessions, proceeds and products of the foregoing. On April 18, 2018, the Lessor, the Lessee, and Ellery W. Roberts, as guarantor under the Master Lease Agreement, entered into a forbearance agreement relating to the non-payment of certain rent payments due under the Master Lease Agreement for the months of March 2018 and April 2018 (the “Forbearance Agreement”). Pursuant to the Forbearance Agreement, the Lessor agreed to forbear from demanding payment in full and exercising its remedies under the Master Lease Agreement until June 3, 2018. Pursuant to the Forbearance Agreement, the Lessee agreed to, among other things, (i) make the payments set forth in the Forbearance Agreement on or before the dates specified therein, totaling $173,376, (ii) be current on all rent due under Schedule 1 of the Master Lease Agreement by June 3, 2018 and be current on all rent due under Schedule 2 of the Master Lease Agreement by May 30, 2018, (ii) reinstate or renew and continue in effect all insurance as required under the Master Lease Agreement at Lessee’s sole cost and expense, (iv) pay a forbearance fee to Lessor totaling $4,500, which shall not be due until termination of the Master Lease Agreement and (v) execute a surrender agreement with respect to the Lessee’s equipment, which will be held in escrow by Lessor and not deemed effective unless and until the earlier to occur of: (a) the June 3, 2018, provided liabilities under Master Lease Agreement remain due but unpaid; (b) such time as Lessor accelerates due and unpaid liabilities pursuant to the term of the Forbearance Agreement and the Master Lease Agreement; or (c) a default occurs under the Forbearance Agreement or the Master Lease Agreement. A portion of the proceeds from the term loan (Note 10) were applied to reduce the balance of this lease to $475,000. The lease is payable in 46 payments of $12,882 beginning July 3, 2018 and an end-of-term buyout of $38,000. As a result, the parties to the Forbearance Agreement agreed that the Forbearance Agreement is terminated and is no longer in effect. In completing the early payout, the Company incurred a loss of $405,674 plus an additional loss of $95,130 from the write-off of unamortized debt issuance costs. The loss on early extinguishment of debt arose from the buyout provisions in the lease and because the Company had delayed making the regular payment of $85,322 until May 3, 2018, rather than July 3, 2017 as contemplated in the original lease agreement. Management chose to close the term loan because of the much lower interest rate and the loan allows the Company to make payments that match its operating cycle rather than monthly payments. If the Company sells equipment, it must remit to Utica the amount loaned against the equipment. Such payments are accumulated and applied to the balance at the end of the lease term. During the three months ended June 30, 2018, $86,625 of payments were remitted to Utica. The assets and liabilities under the master lease agreement are recorded at the fair value of the assets at the time of acquisition. The Company adopted ASU 2015-03 by deducting $200,365 of net debt issuance costs from the long-term portion of the capital lease. Amortization of debt issuance costs totaled $9,967 for the three months ended June 30, 2018. At June 30, 2018, annual minimum future lease payments under this Master Lease Agreement and Amendment are as follows: Amount 2018 (remainder of year) $ 257,942 2019 464,269 2020 464,269 2021 464,269 2022 77,336 Total minimum lease payments 1,728,085 Less amount representing interest (454,270 ) Present value of minimum lease payments 1,273,815 Less current portion of minimum lease (277,226 ) Less debt issuance costs, net (81,213 ) Less payments to Lessor for release of lien End of lease buyout payments 87,011 Long-term present value of minimum lease payment $ 1,002,387 The interest rate on the capitalized lease is approximately 15.3%. |
LEASE
LEASE | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
NOTE 13 - LEASE | The Company leases a piece of equipment on an operating lease. The lease originated in May 2014 for a five year term with annual payments of $11,830. Following is a summary of remaining lease payments: Amount 2018 (remainder of year) $ 5,915 2019 11,830 Total remaining payments $ 17,745 |
RELATED PARTIES
RELATED PARTIES | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
NOTE 14 - RELATED PARTIES | Management Services Agreement On April 15, 2013, the 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 does not apply to Neese or 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. 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 the 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 the Company, until the aggregate amount of the management fee paid or to be paid by 1847 Neese, together with all other management fees paid or to be paid by all other subsidiaries of the Company to 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 the 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 the 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 Neese’s day-to-day business and operations, including, but not limited to, recruiting and hiring of personnel, administration of personnel and personnel benefits, development of administrative policies and procedures, establishment and management of banking services, managing and arranging for the maintaining of liability insurance, arranging for equipment rental, maintenance of all necessary permits and licenses, acquisition of any additional licenses and permits that become necessary, participation in risk management policies and procedures; and overseeing and consulting with respect to 1847 Neese’s business and operational strategies, the implementation of such strategies and the evaluation of such strategies, including, but not limited to, strategies with respect to capital expenditure and expansion programs, acquisitions or dispositions and product or service lines. The Company expensed $125,000 and $81,944 in management fee for the six months ended June 30, 2018 and 2017, respectively. Under terms of the term loan from Home State Bank, no fees may be paid to our manager without permission of the bank, which the manager does not expect to be granted within the forthcoming year. Accordingly, $75,808 due the manager is classified as a long-term accrued liability. Advances From time to time, the Company has received advances from certain of its officers to meet short-term working capital needs. As of June 30, 2018 and December 31, 2017, a total of $118,833 advances from related parties are outstanding, respectively. These advances are unsecured, bear no interest, and do not have formal repayment terms or arrangements. As of June 30, 2018 and December 31, 2017, our manager has funded the Company $51,726 and $60,870 in related party advances, respectively. These advances are unsecured, bear no interest, and do not have formal repayment terms or arrangements. Promissory Note On January 3, 2018, we issued a grid promissory note to our manager in the initial principal amount of $50,000. The note provides that we may from time to time request additional advances from our manager up to an aggregate additional amount of $100,000, which will be added to the note if our manager, in its sole discretion, so provides. Interest shall accrue on the unpaid portion of the principal amount and the unpaid portion of all advances outstanding at a fixed rate of 8% per annum, and along with the outstanding portion of the principal amount and the outstanding portion of all advances, shall be payable in one lump sum due on the maturity date, which is the first anniversary of the date of the note. If all or a portion of the principal amount or any advance under the note, or any interest payable thereon is not paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate of 12% per annum. In the event we complete a financing involving at least $500,000, we must, contemporaneously with the closing of such financing transaction, repay the entire outstanding principal and accrued and unpaid interest on the note. The note is unsecured and contains customary events of default. As of June 30, 2018, our manager has advanced $91,500 of the promissory note and we have accrued interest of $2,946. 1847 Management On October 3, 2017, our board of directors determined to discontinue our management consulting business operated by 1847 Management in order to devote more time and resources to Neese and future acquisitions. Building Lease We lease a building from officers of Neese (See Note 16). |
SHAREHOLDERS DEFICIT
SHAREHOLDERS DEFICIT | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
NOTE 15 - SHAREHOLDERS DEFICIT | Allocation Shares As of June 30, 2018 and December 31, 2017, 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 the 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 the Company, which are a separate class of limited liability company interests that, together with the common shares, will comprise all of the classes of equity interests of the Company. Our manager received the allocation shares with its initial capitalization of the 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, 2018 and December 31, 2017 and we had 3,115,625 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 the Company for a vote. On January 22, 2018, we completed a 1-for-5 reverse split of our outstanding common shares. As a result of this stock split, our issued and outstanding common shares decreased from 3,115,500 to 623,125 shares. On May 10, 2018, we completed a 5-for-1 stock split of our outstanding common shares. As a result of this stock split, our issued and outstanding common shares increased from 623,125 to 3,115,625 shares. Accordingly, all share and per share information has been restated to retroactively show the effect of this stock split. During the period ended June 30, 2018, we did not issue any equity securities. Noncontrolling Interests Our Company owns 55.0% of 1847 Neese. For financial interests in which the Company owns a controlling financial interest, the Company applies the provisions of ASC 810, which are applicable to reporting the equity and net income or loss attributable to noncontrolling interests. The results of 1847 Neese are included in the consolidated statement of income. The net loss attributable to the 45% non-controlling interest of the subsidiary amount to $451,231 for the six months ended June 30, 2018 and $269,848 for the period March 3, 2017 through June 30, 2017. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
NOTE 16 - 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 officers of Neese. The agreement of lease is for a term of ten (10) years and provides for a base rent of $8,333 per month. In the event of late payment, interest shall accrue on the unpaid amount at the rate of eighteen percent (18%) per annum. The agreement of lease contains customary events of default, including if Neese shall fail to pay rent within five (5) days after the due date, or if Neese shall fail to perform any other terms, covenants or conditions under the agreement of lease, and other customary representations, warranties and covenants. Future minimum lease payments are approximately as follows: Operating Leases 2018 (remainder of the year) $ 50,000 2019 100,000 2020 100,000 2021 100,000 2022 100,000 thereafter 441,667 Total minimum lease payments $ 891,667 Under terms of the term loan agreement (Note 10), the Company may not pay salary or rent to such officers of Neese in excess of $100.000 per year beginning on the date of the term loan agreement, June 13. 2018. The Company is accruing monthly rent, but because of the limitation in the term loan, $12,786 of accrued rent is classified as a long-term accrued liability. 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. |
REVISION OF FINANCIAL STATEMENT
REVISION OF FINANCIAL STATEMENTS | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
NOTE 17 - REVISION OF FINANCIAL STATEMENTS | The Company has revised the 2017 financial statements as originally presented in its Form 10-Q/A filed on October 6, 2017. The changes and explanation of such are as follows: As of June 30, 2017: Originally Reported Adjustment As Revised Balance sheet: Prepaids $ 321,634 $ (220,452 ) (a) $ 101,182 Fixed assets 6,539,012 (732,831 ) (b) 5,806,181 Financing costs 191,773 (191,773 ) (c) - Intangibles - 34,000 (d) 34,000 Goodwill - 22,166 (d) 22,166 Accrued expense 966,627 55,342 (e) 1,021,969 Related party payable 112,646 31,944 (f) 144,590 Uncertain tax liability 130,000 (4,000 ) (a) 126,000 Deferred income taxes payable 1,875,323 (50,957 ) (a) 1,824,366 Note payable long term 1,875,000 (1,479,366 ) (g) 395,634 Capital lease – long term portion 2,809,915 (148,673 ) (c) 2,661,242 Non-controlling interest (273,696 ) 856,712 (h) 583,016 Retained earnings $ (747,609 ) $ (349,908 ) (i) $ (1,097,517 ) For the Six Months Ended June 30, 2017: Originally As Adjustment Revised Reported Statements of operations: Revenues $ 2,449,969 $ (205,100 ) (j) $ 2,244,869 Cost of operations 3,076,822 116,151 (j) 3,192,973 Gain on acquisition 274,281 (274,281 ) (k) - Gain on sale of assets - 249,472 (j) 249,472 Non-controlling interest (273,696 ) 3,848 (h) (269,848 ) Net income (loss) attributable to 1847 Holdings Shareholders $ (61,706 ) $ (349,908 ) (f) $ (411,615 ) For the Three Months Ended June 30, 2017: Originally As Adjustment Revised Reported Statements of operations: Revenues $ 1,788,106 $ (205,100 ) (j) $ 1,583,006 Cost of operations 2,214,011 (103,813 ) (f)(j) 2,110,198 Gain on sale of assets - 205,100 (j) 205,100 Tax expense (benefit) (240,233 ) (66,600 ) (a) (306,833 ) Non-controlling interest (208,280 ) 49,557 (h) (158,723 ) Net income (loss) attributable to 1847 Holdings Shareholders $ (160,340 ) $ 120,856 (f) $ (39,484 ) Notes: The primarily revisions relate to the revisions to the beginning purchase price accounting of the acquisition of Neese on March 3, 2017 (“Neese Acquisition Revision”). (a) Reflects tax effect of the impact an adjustment of the Neese Acquisition Revision. (b) Fixed assets were revised based upon the Neese Acquisition Revision. (c) Financing costs were adjusted based on the Neese Acquisition Revision and the remaining balance was netted against the Capital Lease balance outstanding. (d) Goodwill and Intangible was established in the Net Acquisition Revision. (e) Certain accrued expenses adjusted upon the Net Acquisition Revision. (f) Reflects adjusted to the related party payable for $81,944 of management fees to our manager, net of $50,000 of accrued costs. (g) Modification of the vesting note payables in conjunction with the Neese Acquisition Revision. (h) Represents the establishment of non-controlling interest based upon the Net Acquisition Revision and the effect of above changes to non-controlling interest in the statements of operations. (i) Reflects revision from original presentation to reflect equity effects related to noted balance sheet and statement of operations restatements. (j) Reflects a reclassification of sale proceeds and costs of sales related to fixed asset sales recorded in other income (expense). (k) Reflects the elimination of the gain of purchase option upon the Neese Acquisition Revision. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
NOTE 18 - SUBSEQUENT EVENTS | In accordance with SFAS 165 (ASC 855-10), the Company has analyzed its operations subsequent to June 30, 2018 to the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Summary Of Significant Accounting Policies | |
Basis of Presentation | The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and are presented in US dollars. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. |
Consolidated Financial Statements | The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, 1847 Management, 1847 Neese and 1847 Fitness. All significant intercompany balances and transactions have been eliminated in consolidation. |
Accounting Basis | The Company uses the accrual basis of accounting and GAAP. The Company has adopted a calendar year end. |
Stock Splits | On January 22, 2018, we completed a 1-for-5 reverse split of our outstanding common shares. As a result of this stock split, our issued and outstanding common shares decreased from 3,115,500 to 623,125 shares. On May 10, 2018, we completed a 5-for-1 stock split of our outstanding common shares. As a result of this stock split, our issued and outstanding common shares increased from 623,125 to 3,115,625 shares. Accordingly, all share and per share information has been restated to retroactively show the effect of these stock splits. |
Cash and Cash Equivalents | The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. |
Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Reclassifications | Certain Statements of Operations reclassifications have been made in the presentation of our prior financial statements and accompanying notes to conform to the presentation as of and for the three and six months ended June 30, 2018. |
Revenue Recognition and Cost of Revenue | On January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer purchase orders, including significant judgments. Our payment terms are net 30 days from acceptance of delivery. We do not incur incremental costs obtaining purchase orders from our customers, however, if we did, because all of our contracts are less than a year in duration, any contract costs incurred would be expensed rather than capitalized. Our adoption of this ASU, resulted in no change to our results of operations or our balance sheet. The revenue that we recognize arises from purchase orders we receive from our customers. Our performance obligations under the purchase orders correspond to each service delivery or sale of equipment that we make to our customer under the purchase orders; as a result, each purchase order generally contains only one performance obligation based on the service or equipment sale to be completed. Control of the delivery transfers to our customers when the customer is able to direct the use of, and obtain substantially all of the benefits from, our products, which generally occurs at the later of when the customer obtains title to the equipment or when the customer assumes risk of loss. The transfer of control generally occurs at a point of delivery. Once this occurs, we have satisfied our performance obligation and we recognize revenue. We also sell equipment by posting it on auction sites specializing in farm equipment. We post the equipment for sale on a “magazine” site for several weeks before the auction. When we decide to sell, we move the equipment to the auction site. The auctions are one day. If we accept a bid, the customer pays the bid price and arranges for pick-up of the equipment. |
Transaction Price | We agree with our customers on the selling price of each transaction. This transaction price is generally based on the agreed upon service fee. In our contracts with customers, we allocate the entire transaction price to the service fee to the customer, which is the basis for the determination of the relative standalone selling price allocated to each performance obligation. Any sales tax, value added tax, and other tax we collect concurrently with our revenue-producing activities are excluded from revenue. If we continued to apply legacy revenue recognition guidance for the first six months of 2018, our revenues, gross margin, and net loss would not have changed. Substantially all our sales are to businesses, including farmers or municipalities and very little to individuals. |
Inventory | Inventory consists of machinery and equipment and parts acquired for resale and is valued at the lower-of-cost-or-market with cost determined on a specific item basis. The Company periodically evaluates the value of items in inventory and provides write-downs to inventory based on its estimate of market conditions. The Company estimates obsolescence allowance of $70,000 as of June 30, 2018 and December 31, 2017. |
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, 2018. |
Going Concern Assessment | During the six months ended June 30, 2018 and all annual and interim periods thereafter, management will assess going concern uncertainty in the Company’s consolidated financial statements to determine whether there is sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the consolidated financial statements are issued or available to be issued, which is referred to as the “look-forward period”, as defined in GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, management will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, its ability to delay or curtail expenditures or programs and its ability to raise additional capital, if necessary, among other factors. Based on this assessment, as necessary or applicable, management makes certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent it deems probable those implementations can be achieved and management has the proper authority to execute them within the look-forward period. The Company has generated losses since its inception and has relied on cash on hand, external bank lines of credit and the sale of a note to support cashflow from operations. The Company attributes the 2017 losses to public company corporate overhead and losses generated by some of our subsidiary operations. As of and for the six months ended June 30, 2018, the Company had a net loss of $766,731 and negative working capital of approximately $866,080. Management believes that based on relevant conditions and events that are known and reasonably knowable that its forecasts, for one year from the date of the filing of the consolidated financial statements in this Quarterly Report on Form 10-Q, indicate improved operations and the Company’s ability to continue operations as a going concern. The Company has contingency plans to reduce or defer expenses and cash outlays should operations not improve in the look forward period. |
Recent Accounting Pronouncements | Not Yet Adopted In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment. In February 2016, the FASB issued ASU 2016-02, Leases In June 2016, the FASB issued ASU 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Recently Adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, as a new Topic, Accounting Standards Codification (“ASC”) Topic 606, which supersedes existing accounting standards for revenue recognition and creates a single framework. Additional updates to Topic 606 issued by the FASB in 2015 and 2016 include the following: · ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which defers the effective date of the new guidance such that the new provisions will now be required for fiscal years, and interim periods within those years, beginning after December 15, 2017. · ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations, which clarifies the implementation guidance on principal versus agent considerations (reporting revenue gross versus net). · ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies the implementation guidance on identifying performance obligations and classifying licensing arrangements. · ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which clarifies the implementation guidance in a number of other areas. The underlying principle is to use a five-step analysis of transactions to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The standard permits the use of either a retrospective or modified retrospective application. ASU 2014-09 and ASU 2016-12 are effective for annual reporting periods beginning after December 15, 2017. The Company will adopt ASC 606 using the modified retrospective method for annual and interim reporting periods beginning January 1, 2018. The Company has aggregated and reviewed its contracts that are within the scope of ASC 606. Based on its evaluation, the Company does not anticipate the adoption of ASC 606 will have a material impact on its balance sheet or related consolidated statements of earnings, equity or cash flows. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Inventories | |
Schedule of Inventory | At June 30, 2018 and December 31, 2017, the inventory balances are composed of: June 30, 2018 December 31, 2017 Machinery & Equipment $ 651,962 $ 715,483 Parts 164,800 191,088 Subtotal 816,762 906,571 Allowance for inventory obsolescence (70,000 ) (70,000 ) Inventory, net $ 746,762 $ 836,571 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property And Equipment | |
Schedule of property and equipment | Property and equipment consist of the following at June 30, 2018 and December 31, 2017: Classification June 30, 2018 December 31, 2017 Buildings and improvements $ 5,338 $ 5,338 Equipment and machinery 2,826,155 2,908,154 Tractors 2,974,888 3,129,888 Trucks and other vehicles 1,147,304 1,169,805 Total 6,953,685 7,213,185 Less: Accumulated depreciation (1,762,999 ) (1,113,966 ) Property and equipment, net $ 5,190,686 $ 6,099,219 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Intangible Assets | |
Intangible assets | The following provides a breakdown of identifiable intangible assets – Customer Relationships as of June 30, 2018 and December 31, 2017: June 30, 2018 December 31, 2017 Identifiable intangible assets, gross $ 34,000 $ 34,000 Accumulated amortization (9,067 ) (5,667 ) Identifiable intangible assets, net $ 24,933 $ 28,333 |
Estimated annual amortization expense | As of June 30, 2018, the estimated annual amortization expense for each of the next five fiscal years is as follows: 2018 (remainder) $ 3,400 2019 6,800 2020 6,800 2021 6,800 2022 1,133 Total $ 24,933 |
ACQUISITION (Tables)
ACQUISITION (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Acquisition | |
Schedule of Business Acquisitions by Acquisition, Contingent Consideration | Purchase Consideration Cash Consideration (financed by a Capital Lease–Note 11) $ 3,240,000 Add: Subsidiary stock issued as non-controlling interest (Note 14) 852,864 Add: 8% Vesting Promissory Note (Note 10) 395,634 Add: Buyer Short Term Note, at 10% (Note 10) 1,025,000 Total acquisition price $ 5,513,498 Assets acquired and liabilities assumed at fair value Cash $ 676,056 Accounts receivable 156,655 Prepaid expenses 90,238 Inventories 1,037,910 Property and equipment 6,167,104 Other assets 85,322 Accounts payable and accrued expenses (209,913 ) Uncertain tax position (129,000 ) Cash payable to seller (337,645 ) Deferred tax liability (2,079,395 ) Other liabilities Net tangible assets acquired $ 5,457,332 Identifiable intangible assets and Goodwill Intangible assets $ 34,000 Goodwill 22,166 Total Identifiable Intangible Assets and Goodwill $ 56,166 Total net assets acquired $ 5,513,498 |
Business acquisition pro forma information | The following presents the pro-forma combined results of operations of the Company with Neese as if the entities were combined on January 1, 2017 (before non-controlling interest). For the Six Months Ended June 30, 2018 2017 Revenues, net $ 2,232,000 $ 3,476,000 Net income (loss) allocable to common shareholders $ (1,218,000 ) $ (621,000 ) Net income (loss) per share $ (0.39 ) $ (0.20 ) Weighted average number of shares outstanding 3,115,625 3,115,625 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Notes Payable | |
Notes payable | The notes payable at December 31, 2017 are summarized as follows: December 31, 2017 Note payable - 2018 Kenworth Tractor $ 72,267 Current portion (14,247 ) Total Non-current portion $ 58,020 |
TERM LOAN (Tables)
TERM LOAN (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Term Loan | |
Schedule of future lease payments | Following is a summary of payments due on the loan for the succeeding five years: Amount 2019 $ 333,982 2020 3,320,092 Total payments 3,654,074 Less current portion of principal payments (333,982 ) Long-term portion of principal payments $ 3,320,092 |
CAPITALIZED LEASES (Tables)
CAPITALIZED LEASES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Capitalized Leases | |
Schedule of Future Minimum Lease Payments for Capital Leases | At June 30, 2018, annual minimum future lease payments under this Master Lease Agreement and Amendment are as follows: Amount 2018 (remainder of year) $ 257,942 2019 464,269 2020 464,269 2021 464,269 2022 77,336 Total minimum lease payments 1,728,085 Less amount representing interest (454,270 ) Present value of minimum lease payments 1,273,815 Less current portion of minimum lease (277,226 ) Less debt issuance costs, net (81,213 ) Less payments to Lessor for release of lien End of lease buyout payments 87,011 Long-term present value of minimum lease payment $ 1,002,387 |
LEASE (Tables)
LEASE (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Lease | |
Operating lease | Following is a summary of remaining lease payments: Amount 2018 (remainder of year) $ 5,915 2019 11,830 Total remaining payments $ 17,745 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Commitments And Contingencies | |
Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum lease payments are approximately as follows: Operating Leases 2018 (remainder of the year) $ 50,000 2019 100,000 2020 100,000 2021 100,000 2022 100,000 thereafter 441,667 Total minimum lease payments $ 891,667 |
REVISION OF FINANCIAL STATEME34
REVISION OF FINANCIAL STATEMENTS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Revision Of Financial Statements | |
Financial statements as originally presented | As of June 30, 2017: Originally Reported Adjustment As Revised Balance sheet: Prepaids $ 321,634 $ (220,452 ) (a) $ 101,182 Fixed assets 6,539,012 (732,831 ) (b) 5,806,181 Financing costs 191,773 (191,773 ) (c) - Intangibles - 34,000 (d) 34,000 Goodwill - 22,166 (d) 22,166 Accrued expense 966,627 55,342 (e) 1,021,969 Related party payable 112,646 31,944 (f) 144,590 Uncertain tax liability 130,000 (4,000 ) (a) 126,000 Deferred income taxes payable 1,875,323 (50,957 ) (a) 1,824,366 Note payable long term 1,875,000 (1,479,366 ) (g) 395,634 Capital lease – long term portion 2,809,915 (148,673 ) (c) 2,661,242 Non-controlling interest (273,696 ) 856,712 (h) 583,016 Retained earnings $ (747,609 ) $ (349,908 ) (i) $ (1,097,517 ) For the Six Months Ended June 30, 2017: Originally As Adjustment Revised Reported Statements of operations: Revenues $ 2,449,969 $ (205,100 ) (j) $ 2,244,869 Cost of operations 3,076,822 116,151 (j) 3,192,973 Gain on acquisition 274,281 (274,281 ) (k) - Gain on sale of assets - 249,472 (j) 249,472 Non-controlling interest (273,696 ) 3,848 (h) (269,848 ) Net income (loss) attributable to 1847 Holdings Shareholders $ (61,706 ) $ (349,908 ) (f) $ (411,615 ) For the Three Months Ended June 30, 2017: Originally As Adjustment Revised Reported Statements of operations: Revenues $ 1,788,106 $ (205,100 ) (j) $ 1,583,006 Cost of operations 2,214,011 (103,813 ) (f)(j) 2,110,198 Gain on sale of assets - 205,100 (j) 205,100 Tax expense (benefit) (240,233 ) (66,600 ) (a) (306,833 ) Non-controlling interest (208,280 ) 49,557 (h) (158,723 ) Net income (loss) attributable to 1847 Holdings Shareholders $ (160,340 ) $ 120,856 (f) $ (39,484 ) |
ORGANIZATION AND NATURE OF BU35
ORGANIZATION AND NATURE OF BUSINESS (Details Narrative) | 6 Months Ended | |
Jun. 30, 2018 | Sep. 30, 2013 | |
State of incorporation | Delaware | |
Date of Incorporation | Jan. 22, 2013 | |
Firm One [Member] | ||
Business acquisition percentage | 50.00% | |
Firm Two [Member] | ||
Business acquisition percentage | 50.00% |
SUMMARY OF SIGNIFICANT ACCOUN36
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | May 10, 2018 | Jan. 22, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Disclosure Summary Of Significant Accounting Policies Details Narrative Abstract | |||||||
Stock Split | 5-for-1 | 1-for-5 | |||||
Increase/Decrease in issued and outstanding common shares | 623,125 to 3,115,625 shares | 3,115,500 to 623,125 shares | |||||
Obsolescence allowance | $ 70,000 | $ 70,000 | $ 70,000 | ||||
Net loss | (237,586) | $ (39,484) | (766,731) | $ (411,615) | |||
Working capital deficit | $ (866,080) | $ (866,080) |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Subtotal | $ 816,762 | $ 906,571 |
Allowance for inventory obsolescence | (70,000) | (70,000) |
Inventory, net | 746,762 | 836,571 |
Machinery & Equipment [Member] | ||
Subtotal | 651,962 | 715,483 |
Parts [Member] | ||
Subtotal | $ 164,800 | $ 191,088 |
INVENTORIES (Details Narrative)
INVENTORIES (Details Narrative) - Utica Leasco [Member] | Jun. 30, 2018USD ($) |
Machinery and equipment inventory pledged to secure a loan | $ 205,628 |
Floor Plan Loans [Member] | |
Machinery and equipment inventory pledged to secure a loan | $ 168,137 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Total | $ 6,953,685 | $ 7,213,185 |
Less: Accumulated depreciation | (1,762,999) | (1,113,966) |
Property and equipment, net | 5,190,686 | 6,099,219 |
Buildings and improvements [Member] | ||
Total | 5,338 | 5,338 |
Machinery & Equipment [Member] | ||
Total | 2,826,155 | 2,908,154 |
Tractors [Member] | ||
Total | 2,974,888 | 3,129,888 |
Trucks and other vehicles [Member] | ||
Total | $ 1,147,304 | $ 1,169,805 |
PROPERTY AND EQUIPMENT (Detai40
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Disclosure Property And Equipment Details Narrative Abstract | ||
Depreciation expense | $ 704,500 | $ 450,000 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Identifiable intangible assets, net | $ 24,933 | $ 28,333 |
Customer Relationships [Member] | ||
Identifiable intangible assets, gross | 34,000 | 34,000 |
Accumulated amortization | (9,067) | (5,667) |
Identifiable intangible assets, net | $ 24,933 | $ 28,333 |
INTANGIBLE ASSETS (Details 1)
INTANGIBLE ASSETS (Details 1) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Disclosure Intangible Assets Details 1Abstract | ||
2018 (remainder) | $ 3,400 | |
2,019 | 6,800 | |
2,020 | 6,800 | |
2,021 | 6,800 | |
2,022 | 1,133 | |
Total | $ 24,933 | $ 28,333 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Weighted average estimated useful life | 5 years | |
Amortization expense | $ 3,400 | |
Customer Relationships [Member] | ||
Identifiable intangible assets | $ 34,000 | $ 34,000 |
ACQUISITION (Details)
ACQUISITION (Details) | Jun. 30, 2018USD ($) |
Purchase Consideration | |
Cash Consideration (financed by a Capital Lease - Note 11) | $ 3,240,000 |
Add: Subsidiary stock issued as non-controlling interest (Note 14) | 852,864 |
Add: 8% Vesting Promissory Note (Note 10) | 395,634 |
Add: Buyer Short Term Note, at 10% (Note 10) | 1,025,000 |
Total acquisition price | 5,513,498 |
Assets acquired and liabilities assumed at fair value | |
Cash | 676,056 |
Accounts receivable | 156,655 |
Prepaid expenses | 90,238 |
Inventories | 1,037,910 |
Property and equipment | 6,167,104 |
Other assets | 85,322 |
Accounts payable and accrued expenses | (209,913) |
Uncertain tax position | (129,000) |
Cash payable to seller | (337,645) |
Deferred tax liability | (2,079,395) |
Other liabilities | |
Net tangible assets acquired | 5,457,332 |
Identifiable intangible assets and Goodwill | |
Intangible assets | 34,000 |
Goodwill | 22,166 |
Total Identifiable Intangible Assets and Goodwill | 56,166 |
Total net assets acquired | $ 5,513,498 |
ACQUISITION (Details 1)
ACQUISITION (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Net income (loss) per share | $ (0.08) | $ (0.01) | $ (0.25) | $ (0.13) |
Weighted average number of shares outstanding | 3,115,625 | 3,115,625 | 3,115,625 | 3,115,625 |
Business Acquisitions [Member] | ||||
Revenues, net | $ 2,232,000 | $ 3,476,000 | ||
Net income (loss) allocable to common shareholders | $ (1,218,000) | $ (621,000) | ||
Net income (loss) per share | $ (0.39) | $ (0.20) | ||
Weighted average number of shares outstanding | 3,115,625 | 3,115,625 |
ACQUISITION (Details Narrative)
ACQUISITION (Details Narrative) - USD ($) | Mar. 03, 2017 | Jun. 30, 2018 | Dec. 31, 2017 |
Promissory note payable | $ 1,025,000 | ||
Minimum [Member] | |||
Business acquisition cash balance, closing | $ 200,000 | ||
Minimum [Member] | Property and equipment [Member] | |||
Estimated useful life | 1 year | ||
Maximum [Member] | Property and equipment [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; | ||
Business acquisition vesting promissory note | $ 1,875,000 | ||
Business acquisition fair value | 395,634 | ||
Promissory note payable | 1,025,000 | ||
Business acquisition cash balance, closing | 676,056 | ||
Business acquisition fair value of net assets acquired | $ 8,269,000 |
LINE OF CREDIT (Details Narrati
LINE OF CREDIT (Details Narrative) - Home State Bank [Member] | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Line of credit facility bears interest | 4.85% |
Line of credit outstanding | $ 675,000 |
Note due date | Sep. 1, 2018 |
Line of credit, description | The Companys subsidiary, Neese, entered into a loan and security agreement with Home State Bank, an Iowa state chartered bank (Home State Bank), governing a new revolving credit facility in a principal amount not to exceed $1,000,000 (the Credit Facility). |
line of credit facility maximum borrowing capacity | $ 1,000,000 |
FLOOR PLAN LOANS PAYABLE (Detai
FLOOR PLAN LOANS PAYABLE (Details Narrative) - USD ($) | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Floor plan payable | $ 168,242 | $ 168,137 | $ 168,137 |
Lender [Member] | Floor Plan Loans [Member] | |||
Machinery and Equipment inventory pledged to secure a loan | $ 181,859 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Current Portion | $ (150,716) | $ (14,247) |
Total Non-current portion | $ 3,503,358 | 58,020 |
2018 Kenworth Tractor [Member] | ||
Notes payable | $ 72,267 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) | 1 Months Ended |
Jul. 21, 2017USD ($)Number | |
Disclosure Notes Payable Details Narrative Abstract | |
Secured promissory note interest rate | 4.50% |
Principal and interest debt repayment monthly installments | $ | $ 1,434 |
Number of installments | Number | 60 |
Maturity date | Jun. 13, 2018 |
TERM LOAN (Details)
TERM LOAN (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
For the year ending June 30, | ||
Less current portion of principal payments | $ (150,716) | $ (14,247) |
Long-term portion of principal payments | 3,503,358 | $ 58,020 |
Promissory Notes [Member] | ||
For the year ending June 30, | ||
2,019 | 333,982 | |
2,020 | 3,320,092 | |
Total payments | 3,654,074 | |
Less current portion of principal payments | (333,982) | |
Long-term portion of principal payments | $ 3,320,092 |
TERM LOAN (Details Narrative)
TERM LOAN (Details Narrative) - USD ($) | Jun. 13, 2018 | Jun. 30, 2018 |
Payment of interest on promissory notes | $ 40,000 | |
Loan Agreement [Member] | Home State Bank [Member] | ||
Principal amount | $ 3,654,074 | |
Interest rate | 6.85% | |
Semi-annual payment term | Pursuant to the terms of the note, Neese will make semi-annual payments of $302,270 beginning on January 20, 2019 and continuing every six months thereafter until July 20, 2020, the maturity date; provided however, that Neese will pay the note in full immediately upon demand by Home State Bank. | |
Lease and lease buyout amount | $ 2,780,052 | |
Net of lien release fees | 124,650 | |
Lease deposit | 72,322 | |
Remaining outstanding balance of lease | 475,000 | |
Gain loss on extinguishment of debt | 500,804 | |
Write-off of debt issuance costs | $ 95,130 |
PROMISSORY NOTES (Details Narra
PROMISSORY NOTES (Details Narrative) - USD ($) | Mar. 03, 2017 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Interest rate | 8.00% | |||
Promissory note payable | $ 1,025,000 | |||
Interest on the promissory notes | $ 40,000 | |||
Fiscal Year 2017 [Member] | ||||
Adjusted EBITDA target for vesting of promissory note | $ 788,958 | |||
Threshold amount promissory note | $ 1,300,000 | |||
Description of vesting promissory note | 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. For the year ended December 31, 2017, Adjusted EBITDA was $788,958, below the threshold amount of $1,300,000, therefore no portion of the note vested in fiscal year 2017. | |||
Fiscal Year 2018 [Member] | ||||
Description of vesting promissory note | 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 [Member] | ||||
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 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. | |||
Minimum [Member] | ||||
EBITDA threshold | $ 1,300,000 | |||
1847 Neese Corporation [Member] | Neese Acquisition [Member] | ||||
Business acquisition vesting promissory note | $ 1,875,000 | |||
Business acquisition fair value | 395,634 | |||
Promissory note payable | $ 1,025,000 | |||
1847 Neese Corporation [Member] | Neese Acquisition [Member] | Short-Term Promissory Note [Member] | ||||
Interest rate | 10.00% | |||
Promissory note payable | $ 1,025,000 | |||
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. | |||
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 | |||
1847 Neese Corporation [Member] | Neese Acquisition [Member] | Vesting Promissory Note [Member] | ||||
Business acquisition vesting promissory note | 1,875,000 | |||
Business acquisition fair value | $ 395,634 | |||
Interest rate | 8.00% | |||
Maturity Date | Jun. 30, 2020 |
CAPITALIZED LEASES (Details)
CAPITALIZED LEASES (Details) | Jun. 30, 2018USD ($) |
Disclosure Capitalized Leases Details Abstract | |
2018 (remainder of year) | $ 257,942 |
2,019 | 464,269 |
2,020 | 464,269 |
2,021 | 464,269 |
2,022 | 77,336 |
Total minimum lease payments | 1,728,085 |
Less amount representing interest | (454,270) |
Present value of minimum lease payments | 1,273,815 |
Less current portion of minimum lease | (277,226) |
Less debt issuance costs, net | (81,213) |
Less payments to Lessor for release of lien | |
End of lease buyout payments | 87,011 |
Long-term present value of minimum lease payment | $ 1,002,387 |
CAPITALIZED LEASES (Details Nar
CAPITALIZED LEASES (Details Narrative) | Feb. 01, 2018USD ($)Number | Jun. 14, 2017USD ($) | Mar. 03, 2017USD ($) | Mar. 02, 2018USD ($) | Jun. 30, 2018USD ($)Number | Jun. 30, 2017USD ($) | Oct. 31, 2017USD ($) | Apr. 18, 2018USD ($) |
Amortization of debt issuance costs | $ 91,431 | $ 14,474 | ||||||
Number of payments | Number | 46 | |||||||
Forbearance amount | $ 173,376 | |||||||
Forbearance fee | $ 4,500 | |||||||
proceeds from the term loan | 475,000 | |||||||
Lease payable beginning | 12,882 | |||||||
Lease payable ending | 38,000 | |||||||
Early payout loss | 405,674 | |||||||
Loss from the write-off of unamortized debt issuance costs | 95,130 | |||||||
Delayed payment | $ 85,322 | |||||||
Master Lease Agreement [Member] | ||||||||
Lease term, Description | If any rent is not received by 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 | $ 5,000 | |||||||
Leases payable description under lease agreement | 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. Upon the expiration of the Amendment to the Master Lease Agreement, the Lessee is required to pay, together with all other amounts then due and payable under the Master Lease Agreement, in cash, an end of term buyout price equal to the lesser of: (a) $49,000 (five percent (5%) of the Total Invoice Cost (as defined in the Master Lease Agreement)); or (b) the fair market value of the Equipment, as determined by the Lessor | |||||||
Interest rate, capitalized lease | 15.30% | |||||||
Debt issuance costs | $ 200,365 | |||||||
Amortization of debt issuance costs | 9,967 | |||||||
Capital lease term | 51 months | |||||||
Lease rent monthly | $ 53,000 | |||||||
Number of months | 3 months | |||||||
Increased monthly rent | $ 85,322 | |||||||
Number of months for increased rent | 48 months | |||||||
Payments made to related party against loan taken for equipment | $ 86,625 | |||||||
Master Lease Agreement [Member] | Utica Leaseco, LLC [Member] | Equipment [Member] | ||||||||
Proceeds from capital lease | $ 3,240,000 | |||||||
Master Lease Agreement [Member] | Utica [Member] | ||||||||
Proceeds from capital lease | $ 980,000 | |||||||
Capital lease term | 51 months | |||||||
Lease rent monthly | $ 53,000 | $ 25,807 | ||||||
Number of months | 3 months | |||||||
Number of payments | Number | 3 | |||||||
Late payment fee | $ 2,650 | $ 5,300 | ||||||
Master Lease Agreement [Member] | First amendment lease documentst [Member] | ||||||||
Administration fee | $ 2,500 | |||||||
Capital lease term | 57 months | |||||||
Lease rent monthly | $ 53,000 | |||||||
Number of months | 10 months | |||||||
Increased monthly rent | $ 85,322 | |||||||
Number of months for increased rent | 47 months |
LEASE (Details)
LEASE (Details) - May 2014 [Member] | Jun. 30, 2018USD ($) |
2018 (remainder of year) | $ 5,915 |
2,019 | 11,830 |
Total remaining payments | $ 17,745 |
LEASE (Details Narrative)
LEASE (Details Narrative) - May 2014 [Member] | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Minimum lease payments | $ 11,830 |
Lease term | 5 years |
RELATED PARTIES (Details Narrat
RELATED PARTIES (Details Narrative) - USD ($) | Jan. 03, 2018 | Mar. 03, 2017 | Apr. 15, 2013 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Sep. 15, 2013 |
Management fee | $ 125,000 | $ 81,944 | |||||
Long term accrued liability | 75,808 | ||||||
Note payable - related party | 91,500 | ||||||
Accrued interest | 2,946 | ||||||
Officer [Member] | |||||||
Advances from related party | 118,833 | 118,833 | |||||
Manager [Member] | |||||||
Advances from related party | $ 51,726 | $ 60,870 | |||||
Offsetting Management Services Agreement [Member] | |||||||
Management consulting fee, quarterly | $ 62,500 | ||||||
Management Services Agreement [Member] | |||||||
Description of management fee | Quarterly management fee equal to 0.5% (2.0% annualized) of our adjusted net assets for services performed. | ||||||
Management consulting fee, quarterly | $ 43,750 | ||||||
Description of gross income | expected to exceed, 9.5% of our gross income with respect to such fiscal year | ||||||
Promissory Note [Member] | |||||||
Initial principal amount | $ 50,000 | ||||||
Additional advances, description | The note provides that we may from time to time request additional advances from our manager up to an aggregate additional amount of $100,000, which will be added to the note if our manager, in its sole discretion, so provides. | ||||||
Fixed annual interest rate | 8.00% | ||||||
Interest rate | 12.00% | ||||||
Repayment, description | In the event we complete a financing involving at least $500,000, we must, contemporaneously with the closing of such financing transaction, repay the entire outstanding principal and accrued and unpaid interest on the note. |
SHAREHOLDERS' DEFICIT (Details
SHAREHOLDERS' DEFICIT (Details Narrative) - USD ($) | May 10, 2018 | Jan. 22, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
Common shares,authorized | 500,000,000 | 500,000,000 | |||
Common shares, issued | 3,115,625 | 3,115,625 | |||
Common shares, outstanding | 3,115,625 | 3,115,625 | |||
Common shares, voting rights | one vote | ||||
Ownership of allocation shares by manager | 100.00% | ||||
Allocation of profit | 20.00% | ||||
Interest rate | 8.00% | ||||
Noncontrolling interest, ownership percentage | 45.00% | ||||
Net loss attributable subsidiary | $ 207,293 | $ 658,524 | |||
Reverse stock split, description | 5-for-1 | 1-for-5 | |||
Increase/Decrease in issued and outstanding common shares | 623,125 to 3,115,625 shares | 3,115,500 to 623,125 shares | |||
Noncontrolling Interest [Member] | |||||
Acquisition interest acquired | 55.00% | ||||
Net loss attributable subsidiary | $ 451,231 | $ 269,848 |
COMMITMENTS AND CONTINGENCIES60
COMMITMENTS AND CONTINGENCIES (Details) - Operating Lease [Member] | Jun. 30, 2018USD ($) |
Period Ending June 30, | |
2018 (remainder of the year) | $ 50,000 |
2,019 | 100,000 |
2,020 | 100,000 |
2,021 | 100,000 |
2,022 | 100,000 |
thereafter | 441,667 |
Total minimum lease payments | $ 891,667 |
COMMITMENTS AND CONTINGENCIES61
COMMITMENTS AND CONTINGENCIES (Details Narrative) | 6 Months Ended |
Jun. 30, 2018USD ($) | |
K&A Holdings, LLC [Member] | |
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 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. |
Loan Agreement [Member] | |
Loan agreement term, Description | the Company may not pay salary or rent to such officers of Neese in excess of $100.000 per year beginning on the date of the term loan agreement, June 13. 2018. |
Accrued rent | $ 12,786 |
REVISION OF FINANCIAL STATEME62
REVISION OF FINANCIAL STATEMENTS (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | |
Balance sheet: | ||||
Goodwill | $ 22,166 | $ 22,166 | ||
Capital lease – long term portion | 1,002,387 | |||
Non-controlling interest | 207,293 | 658,524 | ||
Retained earnings | $ (1,926,455) | $ (1,159,724) | ||
Originally Reported [Member] | ||||
Balance sheet: | ||||
Prepaids | $ 321,634 | |||
Fixed assets | 6,539,012 | |||
Financing costs | 191,773 | |||
Intangibles | ||||
Goodwill | ||||
Accrued expense | 966,627 | |||
Related party payable | 112,646 | |||
Uncertain tax liability | 130,000 | |||
Deferred income taxes payable | 1,875,323 | |||
Note payable long term | 1,875,000 | |||
Capital lease – long term portion | 2,809,915 | |||
Non-controlling interest | (273,696) | |||
Retained earnings | (747,593) | |||
Adjustment [Member] | ||||
Balance sheet: | ||||
Prepaids | [1] | (220,452) | ||
Fixed assets | [2] | (732,831) | ||
Financing costs | [3] | (191,773) | ||
Intangibles | [4] | 34,000 | ||
Goodwill | [4] | 22,166 | ||
Accrued expense | [5] | 55,342 | ||
Related party payable | [6] | 31,944 | ||
Uncertain tax liability | [1] | (4,000) | ||
Deferred income taxes payable | [1] | (50,957) | ||
Note payable long term | [7] | (1,479,366) | ||
Capital lease – long term portion | [3] | (148,673) | ||
Non-controlling interest | [8] | 856,712 | ||
Retained earnings | [9] | (349,908) | ||
As Revised [Member] | ||||
Balance sheet: | ||||
Prepaids | 101,182 | |||
Fixed assets | 5,806,181 | |||
Financing costs | ||||
Intangibles | 34,000 | |||
Goodwill | 22,166 | |||
Accrued expense | 1,021,969 | |||
Related party payable | 144,590 | |||
Uncertain tax liability | 126,000 | |||
Deferred income taxes payable | 1,824,366 | |||
Note payable long term | 395,634 | |||
Capital lease – long term portion | 2,661,242 | |||
Non-controlling interest | 583,016 | |||
Retained earnings | $ (1,097,517) | |||
[1] | (a) Reflects tax effect of the impact an adjustment of the Neese Acquisition Revision. | |||
[2] | (b) Fixed assets were revised based upon the Neese Acquisition Revision. | |||
[3] | (c) Financing costs were adjusted based on the Neese Acquisition Revision and the remaining balance was netted against the Capital Lease balance outstanding. | |||
[4] | (d) Goodwill and Intangible was established in the Net Acquisition Revision. | |||
[5] | (e) Certain accrued expenses adjusted upon the Net Acquisition Revision. | |||
[6] | (f) Reflects adjusted to the related party payable for $81,944 of management fees to 1847 Partners, net of $50,000 of accrued costs. | |||
[7] | (g) Modification of the vesting note payables in conjunction with the Neese Acquisition Revision. | |||
[8] | (h) Represents the establishment of non-controlling interest based upon the Net Acquisition Revision and the effect of above changes to non-controlling interest in the statements of operations. | |||
[9] | (i) Reflects revision from original presentation to reflect equity effects related to noted balance sheet and statement of operations restatements. |
REVISION OF FINANCIAL STATEME63
REVISION OF FINANCIAL STATEMENTS (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | ||||
Statements of operations: | |||||||
Revenues | $ 1,469,596 | $ 1,583,005 | $ 2,232,241 | $ 2,244,868 | |||
Cost of operations | 458,303 | 810,543 | 556,591 | 1,039,433 | |||
Gain on sale of assets | $ 36,117 | 205,100 | $ (4,008) | 249,472 | |||
Originally Adjustment [Member] | |||||||
Statements of operations: | |||||||
Revenues | 1,788,106 | 2,449,969 | |||||
Cost of operations | 2,214,011 | 3,076,822 | |||||
Gain on acquisition | 274,281 | ||||||
Gain on sale of assets | (240,233) | ||||||
Non-controlling interest | (208,280) | (273,696) | |||||
Net income (loss) attributable to 1847 Holdings Shareholders | (160,340) | (61,706) | |||||
Revised [Member] | |||||||
Statements of operations: | |||||||
Revenues | [1] | (205,100) | (205,100) | ||||
Cost of operations | [1] | (103,813) | [2] | 116,151 | |||
Gain on acquisition | 205,100 | [1] | (274,281) | [3] | |||
Gain on sale of assets | (66,600) | [4] | 249,472 | [1] | |||
Non-controlling interest | [5] | 49,557 | 3,848 | ||||
Net income (loss) attributable to 1847 Holdings Shareholders | [2] | 120,856 | (349,908) | ||||
As Reported [Member] | |||||||
Statements of operations: | |||||||
Revenues | 1,583,006 | 2,244,869 | |||||
Cost of operations | 2,110,198 | 3,192,973 | |||||
Gain on acquisition | 205,100 | ||||||
Gain on sale of assets | (306,833) | 249,472 | |||||
Non-controlling interest | (158,723) | (269,848) | |||||
Net income (loss) attributable to 1847 Holdings Shareholders | $ (39,484) | $ (411,615) | |||||
[1] | (j) Reflects a reclassification of sale proceeds and costs of sales related to fixed asset sales recorded in other income (expense). | ||||||
[2] | (f) Reflects adjusted to the related party payable for $81,944 of management fees to 1847 Partners, net of $50,000 of accrued costs. | ||||||
[3] | (k) Reflects the elimination of the gain of purchase option upon the Neese Acquisition Revision. | ||||||
[4] | (a) Reflects tax effect of the impact an adjustment of the Neese Acquisition Revision. | ||||||
[5] | (h) Represents the establishment of non-controlling interest based upon the Net Acquisition Revision and the effect of above changes to non-controlling interest in the statements of operations. |
REVISION OF FINANCIAL STATEME64
REVISION OF FINANCIAL STATEMENTS (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Management fee | $ 125,000 | $ 81,944 |
Related Party Payable [Member] | ||
Management fee | 81,944 | |
Accrued costs | $ 50,000 |