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

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its performance obligation and it recognizes revenue. Transaction Price ‒ The Company agrees
with customers on the selling price of each transaction. This transaction price is generally based on the agreed upon sales price. In
the Company’s contracts with customers, it allocates the entire transaction price to the sales price, which is the basis for the
determination of the relative standalone selling price allocated to each performance obligation. Any sales tax that the Company collects
concurrently with revenue-producing activities are excluded from revenue. Cost of sales includes the cost of purchased
merchandise plus freight, warehouse salaries, tariffs, and any applicable delivery charges from the vendor to the Company. Warranties vary and are typically 90 days to
consumers and manufacturing defect warranty to are available to resellers. At times, depending on the product, the Company can also offer
a warranty up to 12 months. Receivables Receivables consist of trade accounts receivable
from customer, credit card transactions in the process of settlement, and vendor rebates receivable. Vendor rebates receivable represent
amounts due from manufactures from whom the Company purchases products. Rebates receivables are stated at the amount that management
expects to collect from manufacturers, net of accounts payable amounts due the vendor. Rebates are calculated on product and model sales
programs from specific vendors. The rebates are paid at intermittent periods either in cash or through issuance of vendor credit memos,
which can be applied against vendor accounts payable. Based on the Company’s assessment of the credit history with its manufacturers,
it has concluded that there should be no allowance for uncollectible accounts. The Company historically collects substantially all of
its outstanding rebates receivable. Retainage receivables represent the amount retained by customers to ensure the quality of the
installation and is received after satisfactory completion of each installation project. Management regularly reviews aging of retainage receivables
and changes in payment trends and records an allowance when collection of amounts due are considered at risk. The allowance for doubtful
accounts amounted to $ 359,000 and $ 0 for the years ended December 31, 2021 and 2020, respectively. Uncollectible balances are expensed
in the periods they are determined to be uncollectible. F- 12 1847 HOLDINGS LLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Inventory For Asien’s, inventory mainly consists of
appliances that are acquired for resale and is valued at the average cost determined on a specific item basis. Inventory also consists
of parts that are used in service and repairs and may or may not be charged to the customer depending on warranty and contractual relationship.
Kyle’s typically orders inventory on a job-by-job basis and those jobs are put into production within hours of being received. The
inventory in production is accounted for in the contract assets and liabilities and follows the percentage completion methodology. Inventories
consisting of materials and supplies are stated at lower of costs or market. High Mountain and Innovative Cabinets’ inventory mainly
consists of doors, door frames, baseboards, crown molding, cabinetry, countertops, custom cabinets, closet shelving, and other related
products. The Company values inventory at each balance sheet date to ensure that it is carried at the lower of cost or net realizable
value with cost determined based on the average cost basis. Wolo’s inventory consists of finished goods acquired for resale and
is valued at the weighted-average cost determined on a specific item basis. The Company periodically evaluates the value of items in inventory
and provides write-downs to inventory based on its estimate of market conditions. The Company estimated an obsolescence allowance of $ 387,848 and $ 12,824 at December 31, 2021 and 2020, respectively. Property and Equipment Property and equipment is stated at historical
cost less accumulated depreciation. Depreciation of furniture, vehicles and equipment is calculated using the straight-line method over
the estimated useful lives as follows: Useful Life (Years) Building and Improvements 4 Machinery and Equipment 3 - 7 Trucks and Vehicles 3 - 6 Goodwill and Intangible Assets In applying the acquisition method of accounting,
amounts assigned to identifiable assets and liabilities acquired were based on estimated fair values as of the date of acquisition, with
the remainder recorded as goodwill. Identifiable intangible assets are initially recorded at fair value using generally accepted valuation
methods appropriate for the type of intangible asset. Identifiable intangible assets with definite lives are amortized over their estimated
useful lives and are reviewed for impairment if indicators of impairment arise. Intangible assets with indefinite lives are tested for
impairment within one year of acquisitions or annually as of December 1, and whenever indicators of impairment exist. The fair value
of intangible assets are compared with their carrying values, and an impairment loss would be recognized for the amount by which a carrying
amount exceeds its fair value. Acquired identifiable intangible assets are amortized over the following
periods: Acquired intangible Asset Amortization Basis Expected Life (years) Customer-Related Straight-line basis 5 - 15 Marketing-Related Straight-line basis 5 Long-Lived Assets The Company reviews its property and equipment
and any identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. The test for impairment is required to be performed by management at least annually. Recoverability of assets
to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted operating cash flow expected
to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount
by which the carrying amount of the asset exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the
lower of carrying amount or fair value less costs to sell. F- 13 1847 HOLDINGS LLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Fair Value of Financial Instruments The Company’s financial instruments consist
of cash and cash equivalents, certificates of deposit and amounts due to shareholders. The carrying amount of these financial instruments
approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise
disclosed in these financial statements. The fair value of a financial instrument is the
amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices.
Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability
of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of
input that is significant to the fair value measurement. The three-level hierarchy is as follows: Level 1 – Quoted market prices in active markets
for identical assets or liabilities. Level 2 – Observable market-based inputs or inputs
that are corroborated by market data. Level 3 - Unobservable inputs that are not corroborated
by market date. The Company’s held to maturity
securities are comprised of certificates of deposit. Derivative Instrument Liability The Company accounts for derivative instruments
in accordance with ASC 815, Derivatives and Hedging , which establishes accounting and reporting standards for derivative instruments
and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts, and requires recognition
of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair
value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships
designated are based on the exposures hedged. Income Taxes Income taxes are computed using the asset and
liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences
between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws.
A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. Stock-Based Compensation The Company records stock-based compensation
in accordance with ASC 718, Compensation-Stock Compensation . All transactions in which goods or services are the consideration
received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value
of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services
received as consideration are measured and recognized based on the fair value of the equity instruments issued and are recognized over
the employees required service period, which is generally the vesting period. Basic Income (Loss) Per Share Basic income (loss) per share is calculated by
dividing the net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings
per share is calculated by dividing the net income available to common shareholders by the diluted weighted average number of shares outstanding
during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially
dilutive debt or equity. As the Company had a net loss for the year ended December 31, 2021, potentially dilutive securities were included
in diluted loss per share under the treasury metho 5,200,460 for outstanding warrants, 2,257,404 for principal and accrued interest
of series A convertible preferred shares, and 10,131,076 for the principal and accrued interest of convertible notes. As the Company had
a net loss for the year ended December 31, 2020, the following 2,632,278 potentially dilutive securities were excluded from diluted loss
per sh 2,632,278 for outstanding warrants. F- 14 1847 HOLDINGS LLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Operating Leases ASC 842 requires recognition of leases on the
consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the Company’s
right to use underlying assets for the lease terms and lease liabilities represent the Company’s obligation to make lease payments
arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future
minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company
used its estimated incremental borrowing rate based on the information available at commencement date in determining the present value
of lease payments. A number of the lease agreements contain options to renew and options to terminate the leases early. The lease term
used to calculate ROU assets and lease liabilities only includes renewal and termination options that are deemed reasonably certain to
be exercised. The Company recognized lease liabilities, with
corresponding ROU assets, based on the present value of unpaid lease payments for existing operating leases longer than twelve months.
The ROU assets were adjusted per ASC 842 transition guidance for existing lease-related balances of accrued and prepaid rent, and unamortized
lease incentives provided by lessors. Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease
term and is recorded in selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes
and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable
lease payments are based occur. The Company has elected not to separate lease and non-lease components for all property leases for the
purposes of calculating ROU assets and lease liabilities. Going Concern Assessment Management assesses going concern uncertainty
in the Company’s consolidated financial statements to determine whether there is sufficient cash on hand and working capital, including
available borrowings on loans, to operate for a period of at least one year from the date the consolidated financial statements are issued
or available to be issued, which is referred to as the “look-forward period”, as defined in GAAP. As part of this assessment,
based on conditions that are known and reasonably knowable to management, management will consider various scenarios, forecasts, projections,
estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, its ability
to delay or curtail expenditures or programs and its ability to raise additional capital, if necessary, among other factors. Based on
this assessment, as necessary or applicable, management makes certain assumptions around implementing curtailments or delays in the nature

its performance obligation and it recognizes revenue. Transaction Price ‒ The Company agrees

with customers on the selling price of each transaction. This transaction price is generally based on the agreed upon sales price. In

the Company’s contracts with customers, it allocates the entire transaction price to the sales price, which is the basis for the

determination of the relative standalone selling price allocated to each performance obligation. Any sales tax that the Company collects

concurrently with revenue-producing activities are excluded from revenue. Cost of sales includes the cost of purchased

merchandise plus freight, warehouse salaries, tariffs, and any applicable delivery charges from the vendor to the Company. Warranties vary and are typically 90 days to

consumers and manufacturing defect warranty to are available to resellers. At times, depending on the product, the Company can also offer

a warranty up to 12 months. Receivables Receivables consist of trade accounts receivable

from customer, credit card transactions in the process of settlement, and vendor rebates receivable. Vendor rebates receivable represent

amounts due from manufactures from whom the Company purchases products. Rebates receivables are stated at the amount that management

expects to collect from manufacturers, net of accounts payable amounts due the vendor. Rebates are calculated on product and model sales

programs from specific vendors. The rebates are paid at intermittent periods either in cash or through issuance of vendor credit memos,

which can be applied against vendor accounts payable. Based on the Company’s assessment of the credit history with its manufacturers,

it has concluded that there should be no allowance for uncollectible accounts. The Company historically collects substantially all of

its outstanding rebates receivable. Retainage receivables represent the amount retained by customers to ensure the quality of the

installation and is received after satisfactory completion of each installation project. Management regularly reviews aging of retainage receivables

and changes in payment trends and records an allowance when collection of amounts due are considered at risk. The allowance for doubtful

accounts amounted to $ 359,000 and $ 0 for the years ended December 31, 2021 and 2020, respectively. Uncollectible balances are expensed

in the periods they are determined to be uncollectible. F- 12 1847 HOLDINGS LLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Inventory For Asien’s, inventory mainly consists of

appliances that are acquired for resale and is valued at the average cost determined on a specific item basis. Inventory also consists

of parts that are used in service and repairs and may or may not be charged to the customer depending on warranty and contractual relationship.

Kyle’s typically orders inventory on a job-by-job basis and those jobs are put into production within hours of being received. The

inventory in production is accounted for in the contract assets and liabilities and follows the percentage completion methodology. Inventories

consisting of materials and supplies are stated at lower of costs or market. High Mountain and Innovative Cabinets’ inventory mainly

consists of doors, door frames, baseboards, crown molding, cabinetry, countertops, custom cabinets, closet shelving, and other related

products. The Company values inventory at each balance sheet date to ensure that it is carried at the lower of cost or net realizable

value with cost determined based on the average cost basis. Wolo’s inventory consists of finished goods acquired for resale and

is valued at the weighted-average cost determined on a specific item basis. The Company periodically evaluates the value of items in inventory

and provides write-downs to inventory based on its estimate of market conditions. The Company estimated an obsolescence allowance of $ 387,848 and $ 12,824 at December 31, 2021 and 2020, respectively. Property and Equipment Property and equipment is stated at historical

cost less accumulated depreciation. Depreciation of furniture, vehicles and equipment is calculated using the straight-line method over

the estimated useful lives as follows: Useful Life (Years) Building and Improvements 4 Machinery and Equipment 3 - 7 Trucks and Vehicles 3 - 6 Goodwill and Intangible Assets In applying the acquisition method of accounting,

amounts assigned to identifiable assets and liabilities acquired were based on estimated fair values as of the date of acquisition, with

the remainder recorded as goodwill. Identifiable intangible assets are initially recorded at fair value using generally accepted valuation

methods appropriate for the type of intangible asset. Identifiable intangible assets with definite lives are amortized over their estimated

useful lives and are reviewed for impairment if indicators of impairment arise. Intangible assets with indefinite lives are tested for

impairment within one year of acquisitions or annually as of December 1, and whenever indicators of impairment exist. The fair value

of intangible assets are compared with their carrying values, and an impairment loss would be recognized for the amount by which a carrying

amount exceeds its fair value. Acquired identifiable intangible assets are amortized over the following

periods: Acquired intangible Asset Amortization Basis Expected Life (years) Customer-Related Straight-line basis 5 - 15 Marketing-Related Straight-line basis 5 Long-Lived Assets The Company reviews its property and equipment

and any identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset

may not be recoverable. The test for impairment is required to be performed by management at least annually. Recoverability of assets

to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted operating cash flow expected

to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount

by which the carrying amount of the asset exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the

lower of carrying amount or fair value less costs to sell. F- 13 1847 HOLDINGS LLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Fair Value of Financial Instruments The Company’s financial instruments consist

of cash and cash equivalents, certificates of deposit and amounts due to shareholders. The carrying amount of these financial instruments

approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise

disclosed in these financial statements. The fair value of a financial instrument is the

amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market

participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices.

Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability

of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of

input that is significant to the fair value measurement. The three-level hierarchy is as follows: Level 1 – Quoted market prices in active markets

for identical assets or liabilities. Level 2 – Observable market-based inputs or inputs

that are corroborated by market data. Level 3 - Unobservable inputs that are not corroborated

by market date. The Company’s held to maturity

securities are comprised of certificates of deposit. Derivative Instrument Liability The Company accounts for derivative instruments

in accordance with ASC 815, Derivatives and Hedging , which establishes accounting and reporting standards for derivative instruments

and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts, and requires recognition

of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair

value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships

designated are based on the exposures hedged. Income Taxes Income taxes are computed using the asset and

liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences

between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws.

A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. Stock-Based Compensation The Company records stock-based compensation

in accordance with ASC 718, Compensation-Stock Compensation . All transactions in which goods or services are the consideration

received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value

of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services

received as consideration are measured and recognized based on the fair value of the equity instruments issued and are recognized over

the employees required service period, which is generally the vesting period. Basic Income (Loss) Per Share Basic income (loss) per share is calculated by

dividing the net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings

per share is calculated by dividing the net income available to common shareholders by the diluted weighted average number of shares outstanding

during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially

dilutive debt or equity. As the Company had a net loss for the year ended December 31, 2021, potentially dilutive securities were included

in diluted loss per share under the treasury metho 5,200,460 for outstanding warrants, 2,257,404 for principal and accrued interest

of series A convertible preferred shares, and 10,131,076 for the principal and accrued interest of convertible notes. As the Company had

a net loss for the year ended December 31, 2020, the following 2,632,278 potentially dilutive securities were excluded from diluted loss

per sh 2,632,278 for outstanding warrants. F- 14 1847 HOLDINGS LLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Operating Leases ASC 842 requires recognition of leases on the

consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the Company’s

right to use underlying assets for the lease terms and lease liabilities represent the Company’s obligation to make lease payments

arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future

minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company

used its estimated incremental borrowing rate based on the information available at commencement date in determining the present value

of lease payments. A number of the lease agreements contain options to renew and options to terminate the leases early. The lease term

used to calculate ROU assets and lease liabilities only includes renewal and termination options that are deemed reasonably certain to

be exercised. The Company recognized lease liabilities, with

corresponding ROU assets, based on the present value of unpaid lease payments for existing operating leases longer than twelve months.

The ROU assets were adjusted per ASC 842 transition guidance for existing lease-related balances of accrued and prepaid rent, and unamortized

lease incentives provided by lessors. Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease

term and is recorded in selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes

and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable

lease payments are based occur. The Company has elected not to separate lease and non-lease components for all property leases for the

purposes of calculating ROU assets and lease liabilities. Going Concern Assessment Management assesses going concern uncertainty

in the Company’s consolidated financial statements to determine whether there is sufficient cash on hand and working capital, including

available borrowings on loans, to operate for a period of at least one year from the date the consolidated financial statements are issued

or available to be issued, which is referred to as the “look-forward period”, as defined in GAAP. As part of this assessment,

based on conditions that are known and reasonably knowable to management, management will consider various scenarios, forecasts, projections,

estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, its ability

to delay or curtail expenditures or programs and its ability to raise additional capital, if necessary, among other factors. Based on

this assessment, as necessary or applicable, management makes certain assumptions around implementing curtailments or delays in the nature