Acquisitions and Business Strategy - The company has completed four acquisitions to date, focusing on small businesses with an enterprise value of less than $50 million[297]. - The company aims to acquire controlling interests in businesses with stable earnings and cash flows, facing minimal technological threats[303]. - The company is focused on organic growth opportunities and operational improvements to enhance its portfolio of businesses[302]. - The company believes its management and acquisition strategies will lead to regular distributions and increased shareholder value over time[302]. Financial Performance - Total revenues for the three months ended September 30, 2020, were $5,230,925, a significant increase from $1,412,262 for the same period in 2019[324]. - Total revenues for the nine months ended September 30, 2020 were $8,234,979, compared to $3,816,796 for the same period in 2019[347]. - Revenue from the retail and appliances segment was $3,141,313 for the three months ended September 30, 2020, with appliance sales contributing $3,138,312[326][328]. - The land management services segment generated revenues of $2,089,612, an increase of $677,350 or 48.0% compared to $1,412,262 for the same period in 2019[328]. Operating Expenses and Losses - Total operating expenses for the three months ended September 30, 2020, were $5,884,647, compared to $1,982,805 for the same period in 2019[325]. - Net loss from continuing operations was $912,567 for the three months ended September 30, 2020, compared to a loss of $196,663 for the same period in 2019[325]. - General and administrative expenses increased by $660,136 or 171.9%, reaching $1,044,076 for the three months ended September 30, 2020[337]. - Net loss attributable to company shareholders was $7,819,575, or 95.0%, for the nine months ended September 30, 2020[346]. Cash Flow and Capital Requirements - Net cash provided by operating activities from continuing operations was $571,476 for the nine months ended September 30, 2020, compared to a net cash used of $340,290 for the same period in 2019[372]. - Net cash provided by investing activities was $1,421,698 for the nine months ended September 30, 2020, significantly up from $22,674 in the same period of 2019[373]. - The company estimates that it will require between $100,000 to $250,000 in additional capital to execute its business plan, potentially rising to $5,000,000 if sellers do not accept a significant portion of the purchase price in seller notes or equity[363]. Debt and Financing - The total debt as of September 30, 2020, amounts to $7,706,296, with short-term debt of $1,432,555 and long-term debt of $6,273,741[407]. - The Company received PPP loans totaling $741,100, with $383,600 from Neese and $357,500 from Asien's, bearing an interest rate of 1.0% per annum[406]. - Neese entered into a term loan agreement with Home State Bank for $3,654,074 at an annual interest rate of 6.85%, which was amended to 5.50% with a maturity date extended to July 30, 2022[378]. - The Company has a revolving loan agreement with Arvest Bank for up to $400,000, maturing on July 10, 2021, with an interest rate of 5.25% per annum[387]. Impact of the Pandemic - The pandemic has negatively impacted business activities, with disruptions in supply chains affecting operations[311]. - Asien's remained operational during the pandemic as an essential business, but faced challenges in sourcing products due to supplier disruptions[306]. - Kyle's experienced lower-than-expected sales during the pandemic due to key customers delaying building processes[307]. - Neese's business activity was negatively affected by the pandemic, with suppliers notifying disruptions in production[308]. Revenue Recognition and Accounting Policies - The company has adopted ASU No. 2014-09 for revenue recognition, resulting in no change to its results of operations or balance sheet[412]. - The company recognizes revenue for trucking when merchandise is delivered, and for repairs upon completion of equipment serviced[424][425]. - The company does not expect the adoption of ASU 2016-13 to have a material impact on its consolidated financial position, results of operations, or cash flows[440]. Customer and Payment Terms - The company has a diverse customer base with no single client accounting for more than 5% of total revenue[416]. - Neese's payment terms are due on demand from acceptance of delivery, with no incremental costs incurred for obtaining purchase orders[417]. - Asien's collects 100% of payment for special-order models and 50% for non-special orders at the time of order placement[413].
1847 LLC(EFSH) - 2020 Q3 - Quarterly Report