EX-99.1 3 ea021680701ex99-1_1847hold.htm 1847 HOLDINGS, LLC UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

Exhibit 99.1

 

 

 

 

 

 

 

 

 

 

 

 

 

1847 HOLDINGS LLC

 

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1847 HOLDINGS LLC

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

AS OF JUNE 30, 2024

 

   1847
Holdings
LLC
  

HMDT Pro
Forma
Adjustments

(Note H-1)

  

ICU Pro
Forma
Adjustments

(Note I-1)

 
 

Other

Pro Forma
Adjustments

   Notes 

Pro Forma

Condensed

 
ASSETS                       
Current Assets                       
Cash and cash equivalents  $800,989   $(15,551)  $(196,794)  $928,263   (G-4)  $1,516,907 
Receivables, net   7,629,202    (4,425,836)   (1,248,973)   -       1,954,393 
Contract assets   66,003    -    -    -       66,003 
Inventories, net   6,730,114    (973,875)   (4,874,332)   -       881,907 
Prepaid expenses and other current assets   1,202,508    (4,565)   (39,041)   7,000,000   (G-5)   8,158,902 
Total Current Assets   16,428,816    (5,419,827)   (6,359,140)   7,928,263       12,578,112 
Property and equipment, net   1,349,771    (356,853)   (145,423)   -       847,495 
Operating lease right-of-use assets   3,304,287    (1,056,111)   (1,547,770)   -       700,406 
Long-term deposits   153,735    (29,400)   (74,800)   -       49,535 
Intangible assets, net   4,133,449    (2,053,614)   -    -       2,079,835 
Goodwill   9,051,052    (6,959,898)   -    -       2,091,154 
TOTAL ASSETS  $34,421,110   $(15,875,703)  $(8,127,133)  $7,928,263      $18,346,537 
                             
LIABILITIES AND SHAREHOLDERS’ EQUITY                            
                             
Current Liabilities                            
Accounts payable and accrued expenses  $15,423,374   $(2,866,931)  $(6,552,717)  $(1,635,479)  (G-3)  $4,062,647 
                   (305,600)  (G-2)     
Contract liabilities   2,136,106    (583,362)   -    -       1,552,744 
Due to related parties   193,762    -    -    -       193,762 
Current portion of operating lease liabilities   1,096,428    (343,050)   (301,685)   -       451,693 
Current portion of finance lease liabilities   177,030    -    -    -       177,030 
Current portion of notes payable, net   8,880,042    (172,897)   (500,000)   -       8,207,145 
Current portion of convertible notes payable, net   3,198,231    (1,236,975)   -    (1,236,975)  (G-2)   724,281 
Current portion of related party note payable   578,290    -    -    -       578,290 
Revolving line of credit   3,691,558    -    (3,691,558)   -       - 
Derivative liabilities   2,882,435    -    -    -       2,882,435 
Warrant liabilities   265,100    -    -    -       265,100 
Total Current Liabilities   38,522,356    (5,203,215)   (11,045,960)   (3,178,054)      19,095,127 
Operating lease liabilities, net of current portion   2,372,922    (776,496)   (1,303,445)   -       292,981 
Finance lease liabilities, net of current portion   515,490    -    -    -       515,490 
Notes payable, net of current portion   213,663    (199,913)   -    -       13,750 
Convertible notes payable, net of current portion   22,646,688    -    -    -       22,646,688 
Deferred tax liability, net   674,000    (302,000)   -    -       372,000 
Inter-Company   -    (1,582,455)   (1,241,228)   2,823,683   (G-1)   - 
TOTAL LIABILITIES   64,945,119    (8,064,079)   (13,590,633)   (354,371)      42,936,036 
Shareholders’ Equity                            
Series A convertible preferred shares   38,177    -    -    -       38,177 
Series D convertible preferred shares   214,000    -    -    -       214,000 
Allocation shares   1,000    -    -    -       1,000 
Common shares   614    -    -    -       614 
Distribution receivable   (2,000,000)   -    -    -       (2,000,000)
Additional paid-in capital   62,769,531)   -    -    -       62,769,531)
Accumulated deficit   (90,242,920)   (7,409,551)   5,463,500    8,282,634   (G-6)   (83,906,337)
TOTAL 1847 HOLDINGS SHAREHOLDERS’ EQUITY   (29,219,598)   (7,409,551)   5,463,500    8,282,634       (22,883,015)
NON-CONTROLLING INTERESTS   (1,304,411)   (402,073)   -    -       (1,706,484)
TOTAL SHAREHOLDERS' EQUITY   (30,524,009)   (7,811,624)   5,463,500    8,282,634       (24,589,499)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  $34,421,110   $(15,875,703)  $(8,127,133)  $7,928,263      $18,346,537 

 

2

 

 

1847 HOLDINGS LLC

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 2024

 

   1847
Holdings
LLC
  

HMDT Pro
Forma
Adjustments

(Note H-1)

  

ICU Pro
Forma
Adjustments

(Note I-1)

  

Other
Pro Forma
Adjustments

   Notes  Pro Forma
Condensed
 
Revenues  $30,414,856   $(15,810,081)  $(6,973,068)  $-     $7,631,707 
Operating Expenses                            
Cost of revenues   18,083,074    (9,110,445)   (4,420,530)   -       4,552,099 
Personnel   6,522,258    (2,699,643)   (1,253,954)   -       2,568,661 
Depreciation and amortization   845,930    (296,418)   (209,192)   -       340,320 
General and administrative   4,528,480    (2,158,914)   (1,210,132)   -       1,159,434 
Professional fees   4,872,222    (88,594)   (625,333)   -       4,158,295 
Impairment of goodwill and intangible assets   1,216,966    -    (1,216,966)   -       - 
Total Operating Expenses   36,068,930    (14,354,014)   (8,936,107)   -       12,778,809 
LOSS FROM OPERATIONS   (5,654,074)   (1,456,067)   1,963,039    -       (5,147,102)
Other Income (Expenses)                            
Other income (expense)   27,837    (275)   (19,953)   -       7,609 
Gain (loss) on disposal of property and equipment   (13,815)   13,815    -    -       - 
Interest expense   (2,619,489)   244,455    380,187    -       (1,994,847)
Amortization of debt discounts   (6,604,925)   52,242    683,029    -       (5,869,654)
Loss on extinguishment of debt   (1,200,750)   -    -    -       (1,200,750)
Change in fair value of warrant liability   1,759,600    -    -    -       1,759,600)
Change in fair value of derivative liabilities   (1,903,025)   -    -    -       (1,903,025)
Total Other Expenses   (10,554,567)   310,237    1,043,263    -       (9,201,067)
NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES   (16,208,641)   (1,145,830)   3,006,302    -       (14,348,169)
INCOME TAX BENEFIT (EXPENSE)   145,250    260,000    (11,250)   -       394,000 
NET INCOME (LOSS) FROM CONTINUING OPERATIONS  $(16,063,391)  $(885,830)  $2,995,052   $-      $(13,954,169)
                             
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS   (262,577)   885,830    (2,995,052)   -       (2,371,799)
Gain on disposition of subsidiary   1,060,095    -    -    9,668,724   (G-6)   10,728,819 
NET INCOME (LOSS)  $(15,265,873)  $-   $-   $9,668,724      $(5,597,149)
                             
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS FROM CONTINUING OPERATIONS   49,435    66,437    -    -       115,872 
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS FROM DISCONTINUED OPERATIONS   (59,304)   -    -    -       (59,304)
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS  $(15,275,742)  $66,437   $-   $9,668,724      $(5,540,581)
                             
NET LOSS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO 1847 HOLDINGS   (16,013,956)   (819,393)   2,995,052    -       (13,838,297)
NET LOSS FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO 1847 HOLDINGS   738,214    885,830    (2,995,052)   9,668,724       8,297,716 
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS  $(15,275,742)  $66,437   $-   $9,668,724      $(5,540,581)
                             
PREFERRED SHARE DIVIDENDS   (130,786)   -    -    -       (130,786)
DEEMED DIVIDENDS   (1,000)   -    -    -       (1,000)
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS COMMON SHAREHOLDERS  $(15,407,528)  $66,437   $-   $9,668,724      $(5,672,367)
                             
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO 1847 HOLDINGS COMMON SHAREHOLDERS                            
BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE FROM CONTINUING OPERATIONS  $(41.60)                    $(35.99)
BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE FROM DISCONTINUED OPERATIONS   1.90                      21.38 
BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE  $(39.70)                    $(14.61)
                             
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC AND DILUTED   388,136                      388,136 

 

3

 

 

1847 HOLDINGS LLC

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2023

 

   1847
Holdings
LLC
  

Asien’s Pro
Forma
Adjustments

(Note A-1)

  

HMDT Pro
Forma
Adjustments

(Note H-1)

  

ICU Pro
Forma
Adjustments

(Note I-1)

   Other Pro
Forma
Adjustments
   Notes  Pro Forma
Condensed
 
Revenues  $68,681,818   $(8,961,248)  $(30,076,338)  $(15,454,097)  $-     $14,190,135 
Operating Expenses                       -         
Cost of revenues   45,139,169    (7,083,662)   (18,679,372)   (11,738,639)   -       7,637,496 
Personnel   13,593,090    (1,052,118)   (4,757,201)   (2,793,210)   -       4,990,561 
Depreciation and amortization   2,240,680    (151,362)   (555,361)   (371,662)   -       1,162,295 
General and administrative   9,743,565    (1,538,954)   (3,755,111)   (1,542,980)   -       2,906,520 
Professional fees   3,252,409    (185,935)   (164,674)   (157,797)   -       2,744,003 
Impairment of goodwill and intangible assets   14,648,048    (1,484,229)   (2,707,732)   -    -       10,456,087 
Total Operating Expenses   88,616,961    (11,496,260)   (30,619,451)   (16,604,288)   -       29,896,962 
LOSS FROM OPERATIONS   (19,935,143)   2,535,012    543,113    1,150,191    -       (15,706,827)
Other Income (Expenses)                       -         
Other income (expense)   (213,391)   (4,674)   (35)   230,711    -       12,611 
Gain (loss) on disposal of property and equipment   18,026    -    (18,026)   -    -       - 
Interest expense   (11,442,802)   312,605    1,200,226    1,069,546    -       (8,860,425)
Change in fair value of warrant liability   (27,900)   -    -    -    -       (27,900)
Change in fair value of derivative liabilities   385,138    -    -    -    -       385,138 
Total Other Expenses   (11,280,929)   307,931    1,182,165    1,300,257    -       (8,490,576)
NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES   (31,216,072)   2,842,943    1,725,278    2,450,448    -       (24,197,403)
INCOME TAX BENEFIT (EXPENSE)   (391,855)   (37,145)   620,000    18,000    -       209,000 
NET INCOME (LOSS) FROM CONTINUING OPERATIONS  $(31,607,927)  $2,805,798   $2,345,278   $2,468,448   $-      $(23,988,403)
                                  
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS   -    (2,805,798)   (2,345,278)   (2,468,448)   -       (7,619,524)
Gain on disposition of subsidiary   -    -    -    -    10,557,307   (G-6)   10,557,307 
NET INCOME (LOSS)  $(31,607,927)  $-   $-   $-   $10,557,307      $(21,050,620)
                                  
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS FROM CONTINUING OPERATIONS   1,602,779    (140,290)   (175,896)   -    -       1,286,593 
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS FROM DISCONTINUED OPERATIONS   -    140,290    175,896    -    -       316,186 
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS  $(30,005,148)  $-   $-   $-   $10,557,307      $(19,447,841)
                                  
NET LOSS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO 1847 HOLDINGS   (30,005,148)   2,665,508    2,169,382    2,468,448    -       (22,701,810)
NET LOSS FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO 1847 HOLDINGS   -    (2,665,508)   (2,169,382)   (2,468,448)   10,557,307       3,253,969 
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS  $(30,005,148)  $-   $-   $-   $10,557,307      $(19,447,841)
                                  
PREFERRED SHARE DIVIDENDS   (512,967)   -    -    -    -       (512,967)
DEEMED DIVIDENDS   (2,398,000)   -    -    -    -       (2,398,000)
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS COMMON SHAREHOLDERS  $(32,916,115)  $-   $-   $-   $10,557,307      $(22,358,808)
                                  
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO 1847 HOLDINGS COMMON SHAREHOLDERS                                 
BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE FROM CONTINUING OPERATIONS  $(328.82)                         $(255.86)
BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE FROM DISCONTINUED OPERATIONS  $-                          $32.51 
BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE  $(328.82)                         $(223.35)
                                  
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC AND DILUTED   100,105                           100,105 

 

4

 

 

1847 HOLDINGS LLC

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

 

NOTE 1 – DESCRIPTION OF THE TRANSACTIONS

 

Sale of High Mountain Door & Trim Inc.

 

On September 30, 2024, 1847 Holdings LLC (the “Company”) entered into an asset purchase agreement (the “Purchase Agreement”) with BFS Group LLC (the “Buyer”), and the Company’s majority owned subsidiary High Mountain Door & Trim Inc. (“HMDT”), pursuant to which the Company agreed to sell substantially all of the assets of HMDT to the Buyer (the “HMDT Disposition”). The closing of the HMDT Disposition was completed on September 30, 2024.

 

Pursuant to the terms of the Purchase Agreement, the Buyer acquired HMDT for an aggregate cash only purchase price of $17,000,000, subject to certain pre-closing and post-closing adjustments (the “Purchase Price”). At closing, the Purchase Price was subject to a working capital adjustment and was also reduced by the amount of outstanding indebtedness repaid at closing (as more particularly described below) or assumed by the Buyer, as well as certain transaction expenses. Additionally, the Purchase Price was reduced by $1,700,000, which may be used for certain post-closing payments (the “Holdback Amount”).

 

The Purchase Price is also subject to a post-closing adjustment. Under this provision, HMDT delivered to the Buyer an estimated closing statement forth the estimated closing date payment amount, which included, among other things, HMDT’s estimate of the net working capital of HMDT and its business (the “Net Working Capital”) as of the closing date, calculated in accordance with the Purchase Agreement. Within 90 to 120 days following the closing date, the Buyer must deliver to HMDT a final closing statement setting forth its determination of the actual closing date payment amount, including, among other things, the Buyer’s determination of the Net Working Capital as of the closing date (the “Final Net Working Capital Calculation”). If the actual closing date payment amount exceeds the estimated closing date payment amount, the Buyer must, within ten business days, pay to HMDT an amount of cash that is equal to such excess. If the estimated closing date payment amount exceeds the actual closing date payment amount, HMDT must, within ten business days, pay to the Buyer an amount in cash equal to such excess. If HMDT fails to make such payment, the Buyer will have the right to recover such amount from the Holdback Amount.

 

Under the Purchase Agreement, the Buyer must use commercially reasonable efforts in the ordinary course of business to collect accounts receivable in a manner no less rigorous than the collection efforts used in Buyer’s own business operations, but is entitled to compensation for any uncollected accounts from the Holdback Amount. In addition, the Purchase Agreement provides that the Buyer must use commercially reasonable efforts in the ordinary course of business to finish and sell any special order or custom inventory that was included in the final net working capital, but is entitled to compensation, on the one-year anniversary of the closing, for any unsold special order or custom inventory from the Holdback Amount.

 

Original Issue Discount Promissory Note

 

On June 28, 2024, the Company’s subsidiary, 1847 Cabinet Inc., a Delaware corporation (“1847 Cabinet”), issued an original issue discount promissory note to Breadcrumbs Capital LLC with a principal amount of up to $2,472,000 (the “Breadcrumbs Note”), which is secured by a lien on all the assets of 1847 Cabinet and its subsidiaries, including the assets of HMDT. In connection with the HMDT Disposition and the release of the lien on HMDT’s assets in connection therewith, $1,102,038 of the Purchase Price was used to pay down the Breadcrumbs Note.

 

Secured Convertible Promissory Notes

 

On October 8, 2021, the Company issued two secured convertible promissory notes in the principal amount of $16,900,000 and $7,860,000 to SILAC Insurance Company (“SILAC”) and a secured convertible promissory note in the principal amount of $100,000 to Leonite Capital LLC (“Leonite”). Thereafter, (i) on September 1, 2023, SILAC entered into a securities purchase agreement with Altimir Partners LP (“Altimir”), pursuant to which Altimir agreed to purchase the secured convertible promissory note in the principal amount of $16,900,000, $765,306.12 of which was then acquired by Leonite, and (ii) on December 1, 2023, SILAC entered into a securities purchase agreement with Beaman Special Opportunities Partners, LP (“Beaman”), pursuant to which Beaman purchased that the secured convertible promissory note in the principal amount of $7,860,000. All of the foregoing notes were secured by all of the assets of HMDT. In connection with the HMDT Disposition and the release of the lien on HMDT’s assets in connection therewith, $5,815,767.91 of the Purchase Price was paid to Altimir and $2,819,710.83 of the Purchase Price was paid to Beaman.

 

5

 

 

1847 HOLDINGS LLC

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

 

6% Subordinated Convertible Promissory Notes

 

On October 8, 2021, 1847 Cabinet issued 6% subordinated convertible promissory notes in the aggregate principal amount of $5,880,345 to Steven J. Parkey and Jose D. Garcia-Rendon. In connection with the HMDT Disposition, $3,207,057.94 of the Purchase Price was used to repay the remaining principal and interest of the notes in full.

 

ICU Eyewear Foreclosure Sale

 

The Company is a limited guarantor of an Amended and Restated Credit and Security Agreement (the “Loan Agreement”) that was entered into on September 11, 2023, between AB Lending SPV I LLC d/b/a Mountain Ridge Capital (the “ICU Lender”), and the Company’s subsidiaries ICU Eyewear, Inc. (“ICU Eyewear”), ICU Eyewear Holdings, Inc., and 1847 ICU Holdings Inc. (the “ICU Parties”). Pursuant to the Loan Agreement, the ICU Lender had a security interest in all the assets of ICU Eyewear. ICU Eyewear was in default under the Loan Agreement and, with the approval of the other ICU Parties, consented to a foreclosure by the ICU Lender and private sale of substantially all of its assets in an Article 9 sale process, pursuant to Section 9-610 of the Uniform Commercial Code as in effect in the State of New York and Section 9-610 of the Uniform Commercial Code as in effect in the State of California (the “ICU Asset Sale”). On August 5, 2024, ICU Eyecare Solutions Inc. (“ICU Solutions”), an entity that is not affiliated with the Company, was the successful bidder of the ICU Asset Sale with a cash bid of $4,250,000. Pursuant to an agreement dated August 5, 2024 and in consideration for such purchase price, the ICU Lender having foreclosed on its security interest in all of the assets of ICU Eyewear then conveyed all of its rights, title, and interest in all of such assets to ICU Solutions.

 

Asien’s Assignment for the Benefit of Creditors

 

On February 26, 2024, Asien’s Appliance, Inc. (“Asien’s”), a wholly owned subsidiary of the Company’s subsidiary 1847 Asien Inc. (“1847 Asien”), entered into a general assignment (the “Assignment Agreement”), for the benefit of its creditors, with SG Service Co., LLC (the “Assignee”). Pursuant to the Assignment Agreement, Asien’s transferred ownership of all or substantially all of its right, title, and interest in, as well as custody and control of, its assets to the Assignee in trust (the “Asien’s Assignment,” and together with the HMDT Disposition and the ICU Asset Sale, the “Dispositions”). 

 

NOTE 2 – BASIS OF PRO FORMA PRESENTATION

 

The unaudited pro forma consolidated balance sheet as of June 30, 2024 was prepared as if the Dispositions had occurred on June 30, 2024, the unaudited pro forma consolidated statement of operations for the six months ended June 30, 2024 was prepared as if the Dispositions had occurred on January 1, 2024 and the unaudited pro forma consolidated statement of operations for the year ended December 31, 2023 was prepared as if the Dispositions had occurred on January 1, 2023.

 

The unaudited pro forma consolidated financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or the consolidated financial position of the Company would have been had the Dispositions occurred on the dates assumed, nor are the necessarily indicative of future consolidated results of operations or financial position.

 

NOTE 3 – PRO FORMA ADJUSTMENTS

 

The pro forma adjustments included in the unaudited pro forma consolidated financial statements are as follows:

 

(A-1) Reflects the Asien’s Assignment.
   
(H-1) Reflects the HMDT Disposition (including HMDT indebtedness repayments from proceeds).
   
(I-1) Reflects the ICU Asset Sale.
   
(G-1) Reflects the amounts due to the Company from subsidiaries (previously eliminated at consolidation) that were forgiven by the Company upon the Dispositions.
   
(G-2) Reflects the amounts due to the former sellers of HMDT paid from closing proceeds.
   
(G-3) Reflects the amounts of accrued interest due from the Company under the secured convertible promissory notes described above for accrued interest.
   
(G-4) Reflects the net proceeds received in the HMDT Disposition.
   
(G-5) Reflects the amounts held in reserves/escrow for working capital holdback.
   
(G-6) Reflects the preliminary net gain on the Dispositions.

 

 

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