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EFSH, Buyers Be Aware!

Sep. 03, 2020 2:19 PM ET
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realreturn's Blog
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  • Spinning out GOED had a huge tax implication for EFSH shareholders. Your cost basis will only be about 10% of the value that gets spun out you so you will.
  • be paying taxes on 90% of that value.
  • also, the insiders and friendly hands holders will probably want to sell the stock putting pressure on a very illiquid name.
  • I would not be surprised, speculating,  to see the CEO and others selling EFSH in the open market because they understand all of the above.

The aggregate purchase price for the Business being acquired is $6,200,000 consisting of: (i) $1,500,000 in cash (the “Cash Portion”), subject to adjustment; (II) the issuance of a promissory note in the principal amount of $4,100,000; and (III) up to $600,000 in Earn Out Payments (as defined below). As additional consideration, the Buyer agreed to issue to each of the Stockholders a number of shares of its common stock equal to 11.25% of the issued and outstanding stock of the Buyer as of the closing date (22.50% in the aggregate).

the balance sheet has $38mm in Debt and a negative net worth = zero book value.

June 30,


December 31, 2019
Current Assets
Cash $ 4,340,001 $ 238,760
Restricted cash 175,990 -
Accounts receivable, net 3,848,990 2,453,455
Vendor deposits 345,502 294,960
Inventories, net 3,587,157 1,615,432
Prepaid expenses and other current assets 1,154,862 1,123,486
TOTAL CURRENT ASSETS 13,452,502 5,726,093
Property and equipment, net 2,930,772 3,367,427
Operating lease right of use assets 2,326,865 2,565,835
Goodwill 7,083,144 4,998,182
Intangible assets, net 1,728,411 1,893,577
Deferred tax asset 1,802,256 635,503
Other assets 45,375 45,375
TOTAL ASSETS $ 29,369,325 $ 19,231,992
Accounts payable and accrued expenses $ 7,311,489 $ 4,017,630
Floor plan payable - 10,581
Current portion of operating lease liability 441,336 485,773
Advances, related party 184,678 181,333
Lines of credit 456,105 1,250,930
Note payable – related party 119,400 119,400
Notes payable – current portion 5,030,487 5,367,539
Warrant liability 2,250,000 122,344
Convertible promissory note – current portion 821,431 584,943
Factoring Agreement 410,374 -
Contract liabilities 12,431,608 4,164,296
Current portion of financing lease liability 388,023 358,584
TOTAL CURRENT LIABILITIES 29,844,931 16,663,353
Operating lease liability – long term, net of current portion 1,885,529 2,080,062
Notes payable – long term, net of current portion 4,972,230 3,256,469
Contingent note payable 49,248 49,248
Accrued expenses – long term, related party 1,132,884 905,780
Financing lease liability, net of current portion 90,021 275,874
TOTAL LIABILITIES $ 37,974,843 $ 23,230,786
Allocation shares, 1,000 shares issued and outstanding 1,000 1,000
Common Shares, 500,000,000 shares authorized, 3,780,625 and 3,165,625 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively 3,780 3,165
Additional paid-in capital 2,638,496 442,014
Accumulated deficit (9,317,042 ) (4,402,043 )
TOTAL 1847 HOLDINGS SHAREHOLDERS’ DEFICIT (6,673,766 ) (3,955,864 )
NONCONTROLLING INTERESTS (1,931,752 ) (42,930 )
TOTAL SHAREHOLDERS’ DEFICIT (8,605,518 ) (3,998,794 )

The accompanying notes are an integral part of these consolidated fin

The remaining business have very little value. A Iowa based manner hauler generating about $1mm per year in EBITDA and another retail appliance store with about the same level of EBITDA. 

Other GOED, the company has not created any value. At $6 a share for EFSH one is over paying after taxes and then the unknown of what one will get for GOED and also EFSH after the spin. Everyone will be running out the door of EFSH and GOED at the same time! 

Analyst's Disclosure: I/we have no positions in any stocks mentioned, but may initiate a short position in EFSH-OLD over the next 72 hours.

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