EX-99.3 4 ea023107201ex99-3_1847hold.htm UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

Exhibit 99.3

 

Unaudited Pro Forma Combined Financial Information

 

The unaudited pro forma financial information presented below sets forth the financial position and results of operations of 1847 Holdings LLC (the “Company”) after giving effect to the acquisition of CMD Inc. and CMD Finish Carpentry LLC (the “CMD Companies”). The following unaudited pro forma combined financial statements were prepared in accordance with the regulations of the Securities and Exchange Commission (the “SEC”).

 

The unaudited pro forma combined balance sheet as of September 30, 2024 combines the historical balance sheet of the Company with the historical balance sheet of the CMD Companies and was prepared as if the acquisition had occurred on September 30, 2024.

 

The unaudited pro forma combined statement of operations for the nine months ended September 30, 2024 combines the historical statement of operations of the Company with the historical statement of operations of the CMD Companies and was prepared as if the acquisition had occurred on January 1, 2024.  

 

The unaudited pro forma combined statement of operations for the year ended December 31, 2023 combines the historical statement of operations of the Company with the historical statement of operations of the CMD Companies and was prepared as if the acquisition had occurred on January 1, 2023.  

 

The pro forma financial information is presented for informational purposes only and is not necessarily indicative of what the Company’s financial position would have been had the acquisition been completed on the dates indicated or what the Company’s results of operations would have been had the acquisition been completed as of the beginning of the periods indicated. In addition, the pro forma combined financial statements do not purport to project the future financial position or operating results of the Company. The pro forma combined financial statements include adjustments for events that are (1) directly attributable to the acquisition, (2) factually supportable, and (3) with respect to the statements of operations, expected to have a continuing impact on the combined results.

 

The pro forma financial information has been derived from and should be read in conjunction with (i) the unaudited condensed consolidated financial statements and related notes of the Company for the nine months ended September 30, 2024, (ii) the unaudited condensed consolidated financial statements and related notes of the CMD Companies for the nine months ended September 30, 2024, (iii) the audited consolidated financial statements and related notes of the Company for the years ended December 31, 2023 and 2022 and (iv) the audited consolidated financial statements and related notes of the CMD Companies for the years ended December 31, 2023 and 2022.

 

1

 

 

1847 HOLDINGS LLC

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

SEPTEMBER 30, 2024

 

   Historical Balances   Pro Forma      Pro Forma 
   1847 Holdings   CMD   Adjustments   Notes  Combined 
ASSETS                   
                    
Current Assets                   
Cash and cash equivalents  $1,517,191   $4,813,138   $(529,160)  (a)  $5,790,197 
              (10,972)  (c)     
Restricted cash and cash equivalents   8,700,000    -    (7,000,000)  (a)   1,700,000 
Investments   -    -    -       - 
Receivables, net   1,828,116    6,178,698    -       8,006,814 
Contract assets   57,852    1,860,806    -       1,918,658 
Inventories, net   684,895    880,809    -       1,565,704 
Prepaid expenses and other current assets   703,059    1,350    -       704,409 
Total Current Assets   13,491,113    13,734,801    (7,540,132)      19,685,782 
                        
Property and equipment, net   743,235    2,949,642    (2,443,580)  (c)   1,249,297 
Operating lease right-of-use assets   594,738    -    -       594,738 
Long-term deposits   49,535    -    -       49,535 
Intangible assets, net   2,017,091    -    -       2,017,091 
Goodwill   -    -    8,165,265   (e)   8,165,265 
TOTAL ASSETS  $16,895,712   $16,684,443   $(1,818,447)     $31,761,708 
                        
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)                       
                        
Current Liabilities                       
Accounts payable and accrued expenses  $4,957,013   $1,215,689   $(7,922)  (d)  $6,164,780 
Contract liabilities   427,894    2,305,055    -       2,732,949 
Due to related parties   193,762    -    -       193,762 
Current portion of operating lease liabilities   436,253    -    -       436,253 
Current portion of finance lease liabilities   179,489    110,172    (88,673)  (d)   200,988 
Current portion of notes payable, net   11,288,901    115,558    1,050,000   (b)   12,365,779 
              (88,680)  (c)     
Current portion of convertible notes payable, net   724,281    -    -       724,281 
Current portion of related party note payable   578,290    -    -       578,290 
Derivative liabilities   544,000    -    -       544,000 
Warrant liabilities   9,900    -    -       9,900 
Total Current Liabilities   19,339,783    3,746,474    864,725       23,950,982 
                        
Operating lease liabilities, net of current portion   198,747    -    -       198,747 
Finance lease liabilities, net of current portion   470,245    122,642    (122,642)  (d)   470,245 
Notes payable, net of current portion   9,700    3,701,960    (3,193,003)  (c)   18,657 
              (500,000)  (d)     
Convertible notes payable, net   22,790,057    -    -       22,790,057 
Deferred tax liability, net   360,000    -    -       360,000 
TOTAL LIABILITIES   43,168,532    7,571,076    (2,950,920)      47,788,688 
                        
Shareholders’ Equity (Deficit)                       
Series A convertible preferred shares   39,877    -    -       39,877 
Series C convertible preferred shares   214,900    -    -       214,900 
Series D convertible preferred shares   600,100    -    -       600,100 
Allocation shares   1,000    -    -       1,000 
Common shares   46    -    3,437   (a)   3,483 
Distribution receivable   (785,000)   -    -       (785,000)
Additional paid-in capital   62,943,899    -    10,242,403   (a)   73,186,302 
Accumulated deficit   (87,485,047)   -    -       (87,485,047)
Owners’ equity   -    9,113,367    827,131   (c)   - 
              719,237   (d)     
              (10,659,735)  (f)     
TOTAL 1847 HOLDINGS SHAREHOLDERS’ EQUITY (DEFICIT)   (24,470,225)   9,113,367    1,132,473       (14,224,385)
NON-CONTROLLING INTERESTS   (1,802,595)   -    -       (1,802,595)
TOTAL SHAREHOLDERS’ EQUITY (DEFICIT)   (26,272,820)   9,113,367    1,132,473       (16,026,980)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)  $16,895,712   $16,684,443   $(1,818,447)     $31,761,708 

 

2

 

 

1847 HOLDINGS LLC

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 2024

 

   Historical Balances   Pro Forma      Pro Forma 
   1847 Holdings   CMD   Adjustments   Notes  Combined 
                    
Revenues  $12,390,797   $23,296,729   $-      $35,687,526 
Operating Expenses                       
Cost of revenues   6,554,871    12,513,565    -       19,068,436 
Personnel   4,975,516    2,818,439    -       7,793,955 
Depreciation and amortization   507,324    223,584    (64,980)  (c)   665,928 
General and administrative   3,798,524    994,240    177,899   (c)   5,195,663 
              225,000   (h)     
Professional fees   4,435,727    71,665    -       4,507,392 
Impairment of goodwill and intangible assets   679,175    -    -       679,175 
Total Operating Expenses   20,951,137    16,621,493    337,919       37,910,549 
INCOME (LOSS) FROM OPERATIONS   (8,560,340)   6,675,236    (337,919)      (2,223,023)
Other Income (Expenses)                       
Other income (expense)   (1,277,446)   22,127    -       (1,255,319)
Interest expense   (3,135,373)   (128,308)   98,417   (c)   (3,165,264)
Amortization of debt discounts   (7,976,758)   -    -       (7,976,758)
Loss on extinguishment of debt   (2,843,451)   -    -       (2,843,451)
Change in fair value of warrant liability   1,841,000    -    -       1,841,000 
Change in fair value of derivative liabilities   1,689,410    -    -       1,689,410 
Total Other Income (Expenses)   (11,702,618)   (106,181)   98,417       (11,710,382)
NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES   (20,262,958)   6,569,055    (239,502)      (13,933,405)
INCOME TAX (EXPENSE) BENEFIT   751,000    -    -       751,000 
NET INCOME (LOSS) FROM CONTINUING OPERATIONS   (19,511,958)   6,569,055    (239,502)      (13,182,405)
Net loss from discontinued operations   (3,521,936)   -    -       (3,521,936)
Gain on disposition of subsidiary   10,083,621    -    -       10,083,621 
NET INCOME (LOSS)  $(12,950,273)  $6,569,055   $(239,502)     $(6,620,720)
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS FROM CONTINUING OPERATIONS   211,983    -    -       211,983 
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS FROM DISCONTINUED OPERATIONS   276,332    -    -       276,332 
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS  $(12,461,958)  $6,569,055   $(239,502)     $(6,132,405)
NET LOSS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO 1847 HOLDINGS   (19,299,975)   6,569,055    (239,502)      (12,970,422)
NET LOSS FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO 1847 HOLDINGS   6,838,017    -    -       6,838,017 
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS  $(12,461,958)  $6,569,055   $(239,502)     $(6,132,405)
PREFERRED SHARE DIVIDENDS   (186,697)   -    -       (186,697)
DEEMDED DIVIDENDS   (1,000)   -    -       (1,000)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS  $(12,649,655)  $6,569,055   $(239,502)     $(6,320,102)
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO 1847 HOLDINGS COMMON SHAREHOLDERS                       
BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE FROM CONTINUING OPERATIONS  $(605.64)               $(369.46)
BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE FROM DISCONTINUED OPERATIONS   212.51                 192.00 
BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE  $(393.13)               $(177.46)
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING                       
BASIC   32,177                 35,614 
DILUTED   32,177                 35,614 

 

3

 

 

1847 HOLDINGS LLC

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2023

 

   Historical Balances   Pro Forma      Pro Forma  
   1847 Holdings   CMD   Adjustments   Notes  Combined 
                    
Revenues  $14,190,135   $27,097,696   $-     $41,287,831 
Operating Expenses                       
Cost of revenues   7,637,496    16,289,200    -       23,926,696 
Personnel   4,990,561    3,226,398    -       8,216,959 
Depreciation and amortization   1,162,295    267,107    (86,640)  (c)   1,342,762 
General and administrative   3,272,333    1,300,843    249,092   (c)   5,122,268 
              300,000   (h)     
Professional fees   2,378,190    40,328    -       2,418,518 
Impairment of goodwill and intangible assets   10,456,087    -    -       10,456,087 
Total Operating Expenses   29,896,962    21,123,876    462,452       51,483,290 
INCOME (LOSS) FROM OPERATIONS   (15,706,827)   5,973,820    (462,452)      (10,195,459)
Other Income (Expenses)                       
Other income (expense)   12,611    (9,463)   -       3,148 
Interest expense   (4,628,194)   (207,671)   124,302   (c)   (4,711,563)
Amortization of debt discounts   (4,232,231)   -    -       (4,232,231)
Gain (loss) on disposal of property and equipment   -    34,867    -       34,867 
Change in fair value of warrant liability   (27,900)   -    -       (27,900)
Change in fair value of derivative liabilities   385,138    -    -       385,138 
Total Other Income (Expenses)   (8,490,576)   (182,267)   124,302       (8,548,541)
NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES   (24,197,403)   5,791,553    (338,150)      (18,744,000)
INCOME TAX (EXPENSE) BENEFIT   209,000    -    -       209,000 
NET INCOME (LOSS) FROM CONTINUING OPERATIONS   (23,988,403)   5,791,553    (338,150)      (18,535,000)
Net loss from discontinued operations   (7,619,524)   -    -       (7,619,524)
NET INCOME (LOSS)  $(31,607,927)  $5,791,553   $(338,150)     $(26,154,524)
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS FROM CONTINUING OPERATIONS   1,286,593    -    -       1,286,593 
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS FROM DISCONTINUED OPERATIONS   316,186    -    -       316,186 
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS  $(30,005,148)  $5,791,553   $(338,150)     $(24,551,745)
NET LOSS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO 1847 HOLDINGS   (22,701,810)   5,791,553    (338,150)      (17,248,407)
NET LOSS FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO 1847 HOLDINGS   (7,303,338)   -    -       (7,303,338)
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS  $(30,005,148)  $5,791,553   $(338,150)     $(24,551,745)
PREFERRED SHARE DIVIDENDS   (512,967)   -    -       (512,967)
DEEMDED DIVIDENDS   (2,398,000)   -    -       (2,398,000)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS  $(32,916,115)  $5,791,553   $(338,150)     $(27,462,712)
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO 1847 HOLDINGS COMMON SHAREHOLDERS                       
BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE FROM CONTINUING OPERATIONS  $(3,837.70)               $(1,993.81)
BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE FROM DISCONTINUED OPERATIONS   (1,094.30)                (722.32)
BASIC f DILUTED EARNINGS (LOSS) PER COMMON SHARE  $(4,931.99)               $(2,716.12)
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING                       
BASIC   6,674                 10,111 
DILUTED   6,674                 10,111 

 

4

 

 

PRO FORMA ADJUSTMENTS

 

The following is a summary of pro forma adjustments reflected in the unaudited pro forma combined financial information based on preliminary estimates, which may change as additional information is obtained: 

 

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

 

(a)Reflects the cash consideration for the acquisition of CMD and the sources of those funds, including $10.25 million in net proceeds raised from a private equity offering.

 

(b)Reflects the issuance of a promissory note to the seller of CMD as part of the consideration for the acquisition.

 

(c)Reflects the removal of previously consolidated VIEs, as these entities no longer qualify as VIEs following the acquisition of CMD.

 

(d)Reflects the removal of debt paid off by the Seller in connection with the acquisition of CMD.

 

(e)Reflects the preliminary goodwill recognized based on the fair value of net assets acquired in the acquisition of CMD.

 

(f)Reflects the elimination of the remaining historical equity accounts of CMD upon acquisition.

 

(g)Reflects non-recurring transaction costs incurred related to the acquisition.

 

(h)Reflects the recurring management fees to the Manager.

 

 

5