EFSH, Buyers Be Aware!

Summary

• 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, 2020				December 31, 2019
		(unaudited)
ASSETS
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
LIABILITIES AND SHAREHOLDERS’ DEFICIT
CURRENT LIABILITIES
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
1847 HOLDINGS SHAREHOLDERS’ DEFICIT
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	)
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT		$	29,369,325			$	19,231,992

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!