arcee-ai/sec-data-full · Datasets at Hugging Face

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management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2021. In making this evaluation,
management used the framework established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company’s internal control system,
including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring.
Based on our evaluation, we determined that, as of December 31, 2021, our internal control over financial reporting was not effective
due to the following material weaknesses. ● We
did not have appropriate policies and procedures in place to evaluate the proper accounting
and disclosures of key documents and agreements. ● We
do not have adequate segregation of duties with our limited accounting personnel and rely
upon outsourced accounting services. ● We
do not have sufficient and skilled accounting personnel with an appropriate level of technical accounting knowledge and experience
in the application of GAAP commensurate with our financial reporting requirements. In
order to cure the foregoing material weakness, we have taken or plan to take the following remediation measu ● On
September 7, 2021, we hired Vernice Howard as our Chief Financial Officer. Ms. Howard has over
30 years of experience in the fields of finance and accounting and has significant GAAP
and SEC reporting experience. ● We
plan to make necessary changes by providing training to our financial team and our other
relevant personnel on the GAAP accounting guidelines applicable to financial reporting requirements. ● We
have engaged the outsourced accounting and financial reporting services of Carrollton Partners,
LLC in conjunction with the hiring of skilled
accounting personnel at the subsidiary companies to implement the policies and procedures applicable to accounting guidelines. We
intend to complete the remediation of the material weaknesses discussed above as soon as practicable but we can give no assurance that
we will be able to do so. Designing and implementing an effective disclosure controls and procedures is a continuous effort that requires
us to anticipate and react to changes in our business and the economic and regulatory environments and to devote significant resources
to maintain a financial reporting system that adequately satisfies our reporting obligations. The remedial measures that we have taken
and intend to take may not fully address the material weaknesses that we have identified, and material weaknesses in our disclosure controls
and procedures may be identified in the future. Should we discover such conditions, we intend to remediate them as soon as practicable.
We are committed to taking appropriate steps for remediation, as needed. 95 All
internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate. Changes
in Internal Controls over Financial Reporting We
regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls
and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities
as implementing new, more efficient systems, consolidating activities, and migrating processes. Except
for the matters described above, there have been no changes in our internal control over financial reporting during the fourth quarter
of fiscal year 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting. ITEM
9B. OTHER INFORMATION. We
have no information to disclose that was required to be disclosed in a report on Form 8-K during fourth quarter of fiscal year 2021 but
was not reported. ITEM
9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. Not
applicable. 96 PART
III ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. Directors
and Executive Officers The
following sets forth information about our directors and executive offi Name Age Position Ellery W. Roberts 51 Chairman, Chief Executive
Officer and President Vernice L. Howard 51 Chief Financial Officer Eric VanDam 52 Chief Operating Officer Robert D. Barry 78 Director Paul A. Froning 51 Director Ellery W. Roberts . Mr. Roberts
has been our Chairman, Chief Executive Officer and President since our inception on January 22, 2013. Mr. Roberts brings over 20 years
of private equity investing experience to us. In July 2011, Mr. Roberts formed The 1847 Companies LLC, a company that is no longer
active, where he began investing his own personal capital and capital of high net worth individuals in select transactions. Prior
to forming The 1847 Companies LLC, Mr. Roberts was the co-founder and was co-managing principal from October 2009 to June 2011 of RW Capital
Partners LLC, the recipient of a “Green Light” letter from the U.S. Small Business Administration permitting RW Capital Partners
LLC to raise capital in pursuit of the Small Business Investment Company license with the preliminary support of the Small Business Administration.
Mr. Roberts was a founding member of Parallel Investment Partners, LP (formerly SKM Growth Investors, LP), a Dallas-based private equity
fund focused on re-capitalizations, buyouts and growth capital investments in lower middle market companies throughout the United States.
Previously, Mr. Roberts served as Principal with Lazard Group LLC (LAZ), a Senior Financial Analyst at Colony Capital, Inc., and a Financial
Analyst with the Corporate Finance Division of Smith Barney Inc. (now known as Morgan Stanley Smith Barney LLC). Mr. Roberts has
also served as the chairman of the board of 1847 Goedeker (GOED) since April 2019 and has also been a director of Western Capital Resources,
Inc. (WCRS) since May 2010. Mr. Roberts received his B.A. degree in English from Stanford University. We believe Mr. Roberts
is qualified to serve on our board of directors due to his extensive senior management experience in the industry in which we operate,
having served as founder or executive of various other management, investment and corporate advisory companies for over 15 years. Vernice
L. Howard . Ms. Howard has served as our Chief Financial Officer since September 2021. Ms. Howard has over 30 years of experience
in the fields of finance and accounting. Prior to joining us, she worked for Independent Electrical Contractors, Inc. and its affiliates
for over eleven years as Chief Financial Officer, where she was responsible for providing leadership to the organization in the areas
of finance, human resources and general facilities administration, in addition to setting policies, procedures, strategies, practices
and overseeing the organization’s assets. The foundation of Ms. Howard’s accounting and finance experience began with public
accounting for several years gaining experience in tax and auditing in the entertainment and nonprofit sectors as Chief Financial Officer
for The Cronkite Ward Company, a television production company, and Director of Finance for Community Action Group (CAG), a nonprofit
organization. Before her work with Independent Electrical Contractors, Inc., Ms. Howard’s professional background established an
emphasis in forensic accounting. Ms. Howard is a Founding Member of Chief, which is a DC based vetted network of C-level or rising VP’s
supporting and connecting exceptional women. Ms. Howard holds a Master of Business Administration in Finance from Trinity Washington
University Graduate School of Business Management and Bachelor of Science in Accounting from Duquesne University. Eric VanDam . Mr.
VanDam has served as our Chief Operating Officer since January 2022. Mr. VanDam brings 30 years
of experience leading operations from a diverse range of positions. He worked for over 20 years at companies holding a direct coaching
relationship with Toyota implementing the Toyota Production System within the furniture, automotive, and agriculture industries. In August
2018, he began his own consulting practice, VanDam Consulting, LLC. He also served as Vice President of Operations at Crenlo, LLC, a leading
manufacturer within the commercial cab and enclosure industries, from December 2018 to November 2019. Prior to that, he worked at Heritage
Home Group, LLC, a leader in designing, manufacturing, sourcing and retailing home furnishings, from May 2016 to July 2018, holding the
positions of Vice President of Business Improvement and Vice President of Contract Furniture Division. He also held multiple positions,
including, among others, General Manager of Holland Campus Operations, Executive Account Manager and Director of Operations of Greenhouse
Seating Operations, at Herman Miller, Inc., a leading global company that designs, manufactures and distributes interior furnishings,
from 2000 to 2016. Robert
D. Barry . Mr. Barry has been a member of our board of directors since January 2014. He has also served as the Chief Accounting
Officer of 1847 Goedeker since July 2021 and previously served as its Chief Financial Officer from January 2019 to July 2021. He also
served as the Controller of Neese from July 2017 until our sale of Neese in April 2021. From April 2013 until August 2016, Mr. Barry
was Chief Executive Officer and Chief Financial Officer of Pawn Plus Inc., a chain of five retail pawn stores in suburban Philadelphia
and one pawn store in northeastern Ohio. Prior to that, Mr. Barry served as Executive Vice President and Chief Financial Officer of Regional
Management Corp., a consumer loan company based in Greenville, South Carolina, from March 2007 to January 2013. Prior to joining Regional
Management Corp., Mr. Barry was the Managing Member of AccessOne Mortgage Company, LLC in Raleigh, North Carolina, from 1997 to 2007.
During this time, he also served as part-time Chief Financial Officer for Patriot State Bank, in Fuquay-Varina, North Carolina, from
March 2006 to March 2007 and Nuestro Banco, Raleigh, North Carolina, from July 2006 to March 2007. Prior to his time at AccessOne, Mr.
Barry was Executive Vice President and Chief Financial Officer for Regional Acceptance Corporation, a consumer finance company based
in Greenville, North Carolina and prior to that he was a financial institutions partner in the Raleigh, North Carolina office of KPMG
LLP. Mr. Barry is a Certified Public Accountant licensed in North Carolina and Georgia. We believe Mr. Barry is qualified to serve on
our board of directors due to his years of relevant financial and business expertise. 97 Paul
A. Froning . Mr. Froning has been a member of our board of directors since April 2013. In 2009, Mr. Froning co-founded Focus Healthcare
Partners LLC, a Chicago-based private equity investment, advisory and asset management firm targeting the senior housing and healthcare
sectors. Prior to that, from February 2008 to October 2009, Mr. Froning was a Managing Director in the private equity department of Fortress

management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2021. In making this evaluation,

management used the framework established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations

of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company’s internal control system,

including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring.

Based on our evaluation, we determined that, as of December 31, 2021, our internal control over financial reporting was not effective

due to the following material weaknesses. ● We

did not have appropriate policies and procedures in place to evaluate the proper accounting

and disclosures of key documents and agreements. ● We

do not have adequate segregation of duties with our limited accounting personnel and rely

upon outsourced accounting services. ● We

do not have sufficient and skilled accounting personnel with an appropriate level of technical accounting knowledge and experience

in the application of GAAP commensurate with our financial reporting requirements. In

order to cure the foregoing material weakness, we have taken or plan to take the following remediation measu ● On

September 7, 2021, we hired Vernice Howard as our Chief Financial Officer. Ms. Howard has over

30 years of experience in the fields of finance and accounting and has significant GAAP

and SEC reporting experience. ● We

plan to make necessary changes by providing training to our financial team and our other

relevant personnel on the GAAP accounting guidelines applicable to financial reporting requirements. ● We

have engaged the outsourced accounting and financial reporting services of Carrollton Partners,

LLC in conjunction with the hiring of skilled

accounting personnel at the subsidiary companies to implement the policies and procedures applicable to accounting guidelines. We

intend to complete the remediation of the material weaknesses discussed above as soon as practicable but we can give no assurance that

we will be able to do so. Designing and implementing an effective disclosure controls and procedures is a continuous effort that requires

us to anticipate and react to changes in our business and the economic and regulatory environments and to devote significant resources

to maintain a financial reporting system that adequately satisfies our reporting obligations. The remedial measures that we have taken

and intend to take may not fully address the material weaknesses that we have identified, and material weaknesses in our disclosure controls

and procedures may be identified in the future. Should we discover such conditions, we intend to remediate them as soon as practicable.

We are committed to taking appropriate steps for remediation, as needed. 95 All

internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective

can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation

of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that

the degree of compliance with the policies or procedures may deteriorate. Changes

in Internal Controls over Financial Reporting We

regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls

and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities

as implementing new, more efficient systems, consolidating activities, and migrating processes. Except

for the matters described above, there have been no changes in our internal control over financial reporting during the fourth quarter

of fiscal year 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial

reporting. ITEM

9B. OTHER INFORMATION. We

have no information to disclose that was required to be disclosed in a report on Form 8-K during fourth quarter of fiscal year 2021 but

was not reported. ITEM

9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. Not

applicable. 96 PART

III ITEM

10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. Directors

and Executive Officers The

following sets forth information about our directors and executive offi Name Age Position Ellery W. Roberts 51 Chairman, Chief Executive

Officer and President Vernice L. Howard 51 Chief Financial Officer Eric VanDam 52 Chief Operating Officer Robert D. Barry 78 Director Paul A. Froning 51 Director Ellery W. Roberts . Mr. Roberts

has been our Chairman, Chief Executive Officer and President since our inception on January 22, 2013. Mr. Roberts brings over 20 years

of private equity investing experience to us. In July 2011, Mr. Roberts formed The 1847 Companies LLC, a company that is no longer

active, where he began investing his own personal capital and capital of high net worth individuals in select transactions. Prior

to forming The 1847 Companies LLC, Mr. Roberts was the co-founder and was co-managing principal from October 2009 to June 2011 of RW Capital

Partners LLC, the recipient of a “Green Light” letter from the U.S. Small Business Administration permitting RW Capital Partners

LLC to raise capital in pursuit of the Small Business Investment Company license with the preliminary support of the Small Business Administration.

Mr. Roberts was a founding member of Parallel Investment Partners, LP (formerly SKM Growth Investors, LP), a Dallas-based private equity

fund focused on re-capitalizations, buyouts and growth capital investments in lower middle market companies throughout the United States.

Previously, Mr. Roberts served as Principal with Lazard Group LLC (LAZ), a Senior Financial Analyst at Colony Capital, Inc., and a Financial

Analyst with the Corporate Finance Division of Smith Barney Inc. (now known as Morgan Stanley Smith Barney LLC). Mr. Roberts has

also served as the chairman of the board of 1847 Goedeker (GOED) since April 2019 and has also been a director of Western Capital Resources,

Inc. (WCRS) since May 2010. Mr. Roberts received his B.A. degree in English from Stanford University. We believe Mr. Roberts

is qualified to serve on our board of directors due to his extensive senior management experience in the industry in which we operate,

having served as founder or executive of various other management, investment and corporate advisory companies for over 15 years. Vernice

L. Howard . Ms. Howard has served as our Chief Financial Officer since September 2021. Ms. Howard has over 30 years of experience

in the fields of finance and accounting. Prior to joining us, she worked for Independent Electrical Contractors, Inc. and its affiliates

for over eleven years as Chief Financial Officer, where she was responsible for providing leadership to the organization in the areas

of finance, human resources and general facilities administration, in addition to setting policies, procedures, strategies, practices

and overseeing the organization’s assets. The foundation of Ms. Howard’s accounting and finance experience began with public

accounting for several years gaining experience in tax and auditing in the entertainment and nonprofit sectors as Chief Financial Officer

for The Cronkite Ward Company, a television production company, and Director of Finance for Community Action Group (CAG), a nonprofit

organization. Before her work with Independent Electrical Contractors, Inc., Ms. Howard’s professional background established an

emphasis in forensic accounting. Ms. Howard is a Founding Member of Chief, which is a DC based vetted network of C-level or rising VP’s

supporting and connecting exceptional women. Ms. Howard holds a Master of Business Administration in Finance from Trinity Washington

University Graduate School of Business Management and Bachelor of Science in Accounting from Duquesne University. Eric VanDam . Mr.

VanDam has served as our Chief Operating Officer since January 2022. Mr. VanDam brings 30 years

of experience leading operations from a diverse range of positions. He worked for over 20 years at companies holding a direct coaching

relationship with Toyota implementing the Toyota Production System within the furniture, automotive, and agriculture industries. In August

2018, he began his own consulting practice, VanDam Consulting, LLC. He also served as Vice President of Operations at Crenlo, LLC, a leading

manufacturer within the commercial cab and enclosure industries, from December 2018 to November 2019. Prior to that, he worked at Heritage

Home Group, LLC, a leader in designing, manufacturing, sourcing and retailing home furnishings, from May 2016 to July 2018, holding the

positions of Vice President of Business Improvement and Vice President of Contract Furniture Division. He also held multiple positions,

including, among others, General Manager of Holland Campus Operations, Executive Account Manager and Director of Operations of Greenhouse

Seating Operations, at Herman Miller, Inc., a leading global company that designs, manufactures and distributes interior furnishings,

from 2000 to 2016. Robert

D. Barry . Mr. Barry has been a member of our board of directors since January 2014. He has also served as the Chief Accounting

Officer of 1847 Goedeker since July 2021 and previously served as its Chief Financial Officer from January 2019 to July 2021. He also

served as the Controller of Neese from July 2017 until our sale of Neese in April 2021. From April 2013 until August 2016, Mr. Barry

was Chief Executive Officer and Chief Financial Officer of Pawn Plus Inc., a chain of five retail pawn stores in suburban Philadelphia

and one pawn store in northeastern Ohio. Prior to that, Mr. Barry served as Executive Vice President and Chief Financial Officer of Regional

Management Corp., a consumer loan company based in Greenville, South Carolina, from March 2007 to January 2013. Prior to joining Regional

Management Corp., Mr. Barry was the Managing Member of AccessOne Mortgage Company, LLC in Raleigh, North Carolina, from 1997 to 2007.

During this time, he also served as part-time Chief Financial Officer for Patriot State Bank, in Fuquay-Varina, North Carolina, from

March 2006 to March 2007 and Nuestro Banco, Raleigh, North Carolina, from July 2006 to March 2007. Prior to his time at AccessOne, Mr.

Barry was Executive Vice President and Chief Financial Officer for Regional Acceptance Corporation, a consumer finance company based

in Greenville, North Carolina and prior to that he was a financial institutions partner in the Raleigh, North Carolina office of KPMG

LLP. Mr. Barry is a Certified Public Accountant licensed in North Carolina and Georgia. We believe Mr. Barry is qualified to serve on

our board of directors due to his years of relevant financial and business expertise. 97 Paul

A. Froning . Mr. Froning has been a member of our board of directors since April 2013. In 2009, Mr. Froning co-founded Focus Healthcare

Partners LLC, a Chicago-based private equity investment, advisory and asset management firm targeting the senior housing and healthcare

sectors. Prior to that, from February 2008 to October 2009, Mr. Froning was a Managing Director in the private equity department of Fortress