UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10−Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, ~~2021~~2022

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File ~~Number:~~No. 001-39418

1847 GOEDEKER INC.

(Exact name of registrant as specified in its charter)

Delaware		83-3713938
(State or other jurisdiction of ~~incorporation)~~incorporation or organization)		(I.R.S. Employer Identification No.)

~~3817 Millstone Parkway, St. Charles, MO~~1870 Bath Avenue, Brooklyn, NY		~~63301~~11214
(Address of principal executive offices)		(Zip ~~Code)~~code)

~~888-768-1710~~800-299-9470

(Registrant’s telephone number, including area code)

~~13850 Manchester Rd., Ballwin, MO 63011~~

(Former name, or former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	GOED	NYSE American LLC
Warrants to Purchase Common Stock	GOED WS	NYSE American LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of May ~~10, 2021,~~12, 2022, there were ~~6,111,200~~106,387,332 shares of the registrant’s common stock issued and outstanding.

1847 GOEDEKER INC.

Quarterly Report on Form 10-Q

Period Ended March 31, ~~2021~~

2022

TABLE OF CONTENTS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to us. All statements other than statements of historical facts are forward-looking statements. These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

●

the synergies that we expect to experience resulting from the Appliances Connection Acquisition (as defined below);

●

our ability to successfully integrate Appliances Connection’s business with our existing business;

●

our ability to acquire new customers and sustain and/or manage our growth;

●

the impact of the novel coronavirus (“COVID-19”) pandemic on our operations and financial condition;

●

the effect of supply chain delays and disruptions on our operations and financial condition;

●

our goals and strategies;

●

the identification of material weaknesses in our internal control over financial reporting and disclosure controls and procedures that, if not corrected, could affect the reliability of our unaudited condensed consolidated financial statements and have other adverse consequences such as a failure to meet reporting obligations;

●

our future business development, financial condition and results of operations;

●

expected changes in our revenue, costs or expenditures;

●

growth of and competition trends in our industry;

●

our expectations regarding demand for, and market acceptance of, our products;

●

our expectations regarding our relationships with investors, institutional funding partners and other parties we collaborate with;

●

fluctuations in general economic and business conditions in the markets in which we operate; and

●

relevant government policies and regulations relating to our industry.

In some cases, you can identify forward-looking statements by terms such as “may,” “could,” “will,” “should,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “project” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and elsewhere in this report. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance.

The forward-looking statements made in this report relate only to events or information as of the date on which the statements are made in this report. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

PART I

FINANCIAL INFORMATION

~~ITEM 1.~~

~~FINANCIAL STATEMENTS.~~

ITEM 1. FINANCIAL STATEMENTS.

1847 GOEDEKER INC.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

		Page
Condensed Consolidated Balance Sheets as of March 31, ~~2021 (unaudited)~~2022 (Unaudited) and December 31, ~~2020~~2021		2
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021 ~~and 2020 (As Restated) (unaudited)~~(Unaudited)		3
Condensed Consolidated Statement of Stockholders’ ~~Deficit~~Equity (Deficit) for Three Months Ended March 31, 2022 and 2021 ~~and 2020 (As Restated) (unaudited)~~(Unaudited)		4
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021 ~~and 2020 (As Restated) (unaudited)~~(Unaudited)		5
Notes to Condensed Consolidated Financial Statements ~~(unaudited)~~(Unaudited)		6

1847 GOEDEKER INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

March 31,
2021

December 31,
2020

(unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 1,309,374 $ 934,729
Restricted cash 10,094,932 8,977,187
Receivables 948,354 1,998,232
Vendor deposits 742,926 547,648
Merchandise inventory, net 5,883,484 5,147,241
Prepaid expenses and other current assets 525,960 635,084
Total Current Assets 19,505,030 18,240,121
Property and equipment, net 355,581 245,948
Operating lease right-of-use assets, net 3,404,860 1,578,235
Goodwill 4,725,689 4,725,689
Intangible assets, net 1,276,088 1,381,937
Other long-term assets 45,000 45,000
TOTAL ASSETS $ 29,312,248 $ 26,216,930

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and accrued expenses $ 12,356,822 $ 12,701,715
Customer deposits 22,269,406 21,879,210
Short term notes payable, net 3,347,763 -
Current portion of notes payable, net 668,744 663,339
Current portion of operating lease liabilities 664,043 450,712
Total Current Liabilities 39,306,778 35,694,976
Notes payable, net of current portion, net 2,358,068 2,522,030
Operating lease liabilities, net of current portion 2,803,203 1,127,523
Contingent note payable 188,170 188,170
TOTAL LIABILITIES 44,656,219 39,532,699

Stockholders’ Deficit
Preferred stock, $.0001 par value, 20,000,000 shares authorized; none issued and outstanding as of March 31, 2021 or December 31, 2020 - -
Common stock, $.0001 par value, 200,000,000 shares authorized; 6,111,200 shares issued and outstanding as of March 31, 2021 and December 31, 2020 611 611
Additional paid-in capital 14,874,341 13,409,328
Accumulated deficit (30,218,923 ) (26,725,708 )
Total Stockholders’ Deficit (15,343,971 ) (13,315,769 )
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $ 29,312,248 $ 26,216,930

	March 31,			December 31,
	2022			2021
	(Unaudited)
ASSETS

Current Assets
Cash and cash equivalents	$	25,821		$	25,724
Restricted cash		2,583			8,067
Receivables, net		26,288			24,594
Vendor deposits		18,064			12,199
Merchandise inventory, net		52,963			44,754
Prepaid expenses and other current assets		8,291			5,980

Total Current Assets		134,010			121,318

Property and equipment, net		3,688			3,554
Operating lease right-of-use assets		15,262			14,937
Goodwill		191,614			191,614
Intangible assets, net		41,658			44,212
Other long-term assets		349			349

TOTAL ASSETS	$	386,581		$	375,984

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities
Accounts payable and accrued expenses	$	83,959		$	72,592
Customer deposits		13,080			20,702
Current portion of notes payable, net		7,907			7,910
Current portion of finance lease liabilities		120			65
Current portion of operating lease liabilities		3,845			3,874
Contingent note payable		200			198

Total Current Liabilities		109,111			105,341

Notes payable, net of current portion		47,181			48,559
Finance lease liabilities, net of current portion		306			121
Operating lease liabilities, net of current portion		12,787			12,493
Deferred tax liability, net		5,652			3,867

TOTAL LIABILITIES		175,037			170,381

Stockholders’ Equity
Preferred stock, $0.0001 par value, 20,000,000 shares authorized; none issued and outstanding as of March 31, 2022 and December 31, 2021		-			-
Common stock, $0.0001 par value, 250,000,000 shares authorized; 106,387,332 shares issued and outstanding as of March 31, 2022 and December 31, 2021		11			11
Additional paid-in capital		224,667			224,648
Accumulated deficit		(13,134	)		(19,056	)

TOTAL STOCKHOLDERS’ EQUITY		211,544			205,603

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	386,581		$	375,984

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

1847 GOEDEKER INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except share and per share data)

Three Months Ended
March 31,
2021
2020
(As Restated)

Product sales, net $ 13,697,368 $ 9,677,178
Cost of goods sold 11,068,911 8,111,170
Gross profit 2,628,457 1,566,008

Operating Expenses
Personnel 1,931,324 1,311,484
Advertising 1,083,248 666,436
Bank and credit card fees 532,742 244,740
Depreciation and amortization 122,331 91,841
General and administrative 2,239,498 1,439,840
Total Operating Expenses 5,909,143 3,754,341

LOSS FROM OPERATIONS (3,280,686 ) (2,188,333 )

Other Income (Expense)
Interest income 10,096 -
Interest expense (232,831 ) (456,070 )
Other income 10,206 2,383
Total Other Income (Expense) (212,529 ) (453,687 )

NET LOSS BEFORE INCOME TAXES (3,493,215 ) (2,642,020 )

INCOME TAX BENEFIT - 435,000

NET LOSS $ (3,493,215 ) $ (2,207,020 )

LOSS PER COMMON SHARE – BASIC AND DILUTED $ (0.57 ) $ (0.44 )

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC AND DILUTED 6,111,200 5,000,000
For the Three Months
Ended March 31,
2022 2021

Product sales, net $ 152,752 $ 13,697
Cost of goods sold 116,883 11,069
Gross profit 35,869 2,628

Operating Expenses
Personnel 7,046 1,931
Advertising 4,288 1,083
Bank and credit card fees 6,167 533
Depreciation and amortization 2,734 122
General and administrative 5,567 2,240

Total Operating Expenses 25,802 5,909

INCOME (LOSS) FROM OPERATIONS 10,067 (3,281 )

Other Income (Expenses)
Interest income 41 10
Adjustment in value of contingency (2 ) -
Interest expense (936 ) (232 )
Other income 135 10

Total Other Income (Expenses) (762 ) (212 )

NET INCOME (LOSS) BEFORE INCOME TAXES 9,305 (3,493 )

INCOME TAX EXPENSE (3,383 ) -

NET INCOME (LOSS) $ 5,922 $ (3,493 )

NET INCOME (LOSS) PER COMMON SHARE – BASIC AND DILUTED $ 0.06 $ (0.57 )

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
– BASIC AND DILUTED 106,387,332 6,111,200
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

1847 GOEDEKER INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS’ DEFICIT~~
STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
(in thousands, except share and per share data)
For the Three Months Ended March 31, 2022
Common Stock Additional
Paid-in Accumulated Stockholders’
Shares Amount Capital Deficit  Equity

Balance at December 31, 2021 106,387,332 $ 11 $ 224,648 $ (19,056 ) $ 205,603
Stock-based compensation - - 19 - 19
Net income for the three months ended March 31, 2022 - - - 5,922 5,922

Balance at March 31, 2022 106,387,332 $ 11 $ 224,667 $ (13,134 ) $ 211,544
For the Three Months Ended March 31, 2021
Common Stock
Additional
Paid-in
Accumulated
Total
Stockholders’

Shares Amount Capital Deficit Deficit
Balance, January 1, 2021 6,111,200 $ 611 $ 13,409,328 $ (26,725,708 ) $ (13,315,769 )
Stock-based compensation expense - - 124,575 - 124,575
Issuance of warrants in connection with notes payable - - 1,340,438 - 1,340,438
Net loss - - - (3,493,215 ) (3,493,215 )
Balance, March 31, 2021 6,111,200 $ 611 $ 14,874,341 $ (30,218,923 ) $ (15,343,971 )
Common Stock Additional
Paid-in Accumulated Stockholders’
 Equity
Shares Amount Capital Deficit (Deficit)

Balance at December 31, 2020 6,111,200 $ 1 $ 13,409 $ (26,726 ) $ (13,316 )
Issuance of warrants with debt - - 1,340 - 1,340
Stock-based compensation - - 125 - 125
Net loss for the three months ended March 31, 2021 - - - (3,493 ) (3,493 )

Balance at March 31, 2021 6,111,200 $ 1 $ 14,874 $ (30,219 ) $ (15,344 )
~~For the Three Months Ended March 31, 2020 (As Restated)~~
Common Stock
Additional
Paid-in
Accumulated
Total
Stockholders’

Shares Amount Capital Deficit Deficit
Balance, January 1, 2020 4,750,000 $ 475 $ 1,079,179 $ (5,157,871 ) $ (4,078,217 )
Net loss - - - (2,207,020 ) (2,207,020 )
Balance, March 31, 2020 4,750,000 $ 475 $ 1,079,179 $ (7,364,891 ) $ (6,285,237 )
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

1847 GOEDEKER INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
For the Three Months
Ended March 31,
2022 2021

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) Adjustments to reconcile net income (loss) to net cash $ 5,922 $ (3,493 )
used in by operating activities:
Depreciation and amortization 2,734 128
Amortization of debt discount 185 98
Stock-based compensation 19 125
Adjustment in value of contingency 2 -
Deferred tax (liability) asset 1,785 -
Non-cash lease expense 819 127
Changes in operating assets and liabilities:
Receivables (1,694 ) 1,049
Vendor deposits (5,864 ) (195 )
Merchandise inventory (8,209 ) (736 )
Prepaid expenses and other assets (2,312 ) 109
Accounts payable and accrued expenses 11,368 (345 )
Customer deposits (7,622 ) 390
Operating lease liabilities (880 ) (65 )
Net cash used in operating activities (3,747 ) (2,808 )

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (6 ) (126 )
Net cash used in investing activities (6 ) (126 )

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable - 4,590
Repayments of notes payable (1,615 ) (164 )
Repayments of finance lease liabilities (19 ) -
Net cash (used in) provided by financing activities (1,634 ) 4,426

NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (5,387 ) 1,492
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD 33,791 9,912

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD $ 28,404 $ 11,404

Cash, cash equivalents, and restricted cash consist of the following:
End of the period
Cash and cash equivalents $ 25,821 $ 1,309
Restricted cash 2,583 10,095

$ 28,404 $ 11,404

Cash, cash equivalents, and restricted cash consist of the following:
Beginning of the period
Cash and cash equivalents $ 25,724 $ 935
Restricted cash 8,067 8,977

$ 33,791 $ 9,912

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest $ 639 $ 29
Cash paid for income taxes $ - $ -

NON-CASH INVESTING AND FINANCING ACTIVITIES
Operating lease right-of-use assets and liabilities assumed $ 1,145 $ 1,954
Financed purchases of property and equipment $ 308 $ -
Debt discount on notes payable from OID $ - $ 910
Debt discount on notes payable from warrants $ - $ 1,340

Three Months Ended
March 31,
2021
2020
(As Restated)

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (3,493,215 ) $ (2,207,020 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization 127,596 91,841
Amortization of debt discount 98,201 209,132
Stock-based compensation expense 124,575 -
Non-cash lease expense 127,397 103,145
Deferred tax assets - (435,000 )
Changes in operating assets and liabilities:
Receivables 1,049,878 290,707
Vendor deposits (195,278 ) -
Merchandise inventory (736,243 ) 310,631
Prepaid expenses and other assets 109,124 (14,687 )
Accounts payable and accrued expenses (344,893 ) 1,442,264
Customer deposits 390,196 1,270,488
Operating lease liabilities (65,011 ) (103,145 )
Net cash provided by (used in) operating activities (2,807,673 ) 958,356

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (126,115 ) -
Net cash used in investing activities (126,115 ) -

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short term notes payable 4,590,000 -
Repayment on notes payable (163,822 ) (93,750 )
Net payments on lines of credit - (681,408 )
Net cash provided by (used in) financing activities 4,426,178 (775,158 )

NET CHANGE IN CASH AND RESTRICTED CASH 1,492,390 183,198
CASH AND RESTRICTED CASH, BEGINNING OF PERIOD 9,911,916 64,470
CASH AND RESTRICTED CASH, END OF PERIOD $ 11,404,306 $ 247,668

Cash, cash equivalents, and restricted cash consist of the following:
End of period
Cash and cash equivalents $ 1,309,374 $ 247,668
Restricted cash 10,094,932 -
$ 11,404,306 $ 247,668
Cash, cash equivalents, and restricted cash consist of the following
Beginning of period
Cash and cash equivalents $ 934,729 $ 471,308
Restricted cash 8,977,187 -
$ 9,911,916 $ 471,308
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest $ 29,473 $ 92,398
Cash paid for taxes $ - $ -

NON-CASH INVESTING AND FINANCING ACTIVITIES
Debt discount, warrants on short-term note payable $ 1,340,438 -
Original issue discount on short-term note payable $ 910,000 -
Adjustment to fair value of goodwill based on final purchase price allocation $ - $ 121,736
Right of use asset acquired $ 1,954,022 -
Right of use liability assumed $ (1,954,022 ) -
~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements~~

1847 GOEDEKER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, ~~2021~~2022 AND ~~2020~~
2021
(UNAUDITED)
NOTE 1—~~ORGANIZATION AND NATURE~~BASIS OF ~~BUSINESS~~PRESENTATION
~~1847 Goedeker Inc. (the “Company”) was formed under~~In the ~~laws~~opinion of management, the State of Delaware on January 10, 2019 for the sole purpose of acquiring the business of Goedeker Television Co. Prior to the acquisition, the Company did not have any operations other than operations relating to its incorporation and organization.
On April 5, 2019, the Company acquired substantially all the assets and assumed substantially all the liabilities of Goedeker Television Co., a Missouri corporation (“Goedeker”). As a result of this transaction, the Company acquired the former business of Goedeker and continues to operate this business.
~~October 20, 2020, the Company formed Appliances Connection Inc. (“ACI”) as a wholly owned subsidiary in the State of Delaware. At December 31, 2020, ACI had no assets or liabilities.~~
The Company is a one-stop e-commerce destination for home furnishings, including appliances, furniture, home goods and related products. Since Goedeker’s founding in 1951, it has evolved from a local brick and mortar operation serving the St. Louis metro area to a large nationwide omnichannel retailer that offers one-stop shopping. While the Company still maintains its St. Louis showroom, over 95% of its sales are placed through its website at www.goedekers.com.
~~NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~
~~Basis of Presentation~~
~~The~~accompanying unaudited condensed consolidated financial statements of ~~the Company and ACI~~1847 Goedeker Inc. (the “Company,” “1847 Goedeker,” “we,” “us,” or “our”) have been prepared in accordance with accounting principles generally accepted ~~accounting principles~~ in the United States of America (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting and reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly the results of the interim periods presented. Certain information and note disclosures normally included in the audited financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The information included in the Quarterly Report on Form 10-Q should be read in conjunction with the ~~instructions to Article 8 of Regulation S-X.~~
Inaudited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the ~~opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating~~year ended December 31, 2021. Furthermore, interim results for the three months ended March 31, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the full year ending December 31, ~~2021.~~2022 or future periods.
~~These unaudited interim consolidated~~Certain reclassifications within property and equipment have been made to the prior period’s financial statements ~~should be read~~to conform to the current period financial statement presentation (see Note 6). There is no impact in ~~conjunction~~total net property and equipment, results of operations, and cash flows in all periods presented.
NOTE 2—RECENT ACCOUNTING PRONOUNCEMENTS
In June 2016, the FASB issued ASU 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years beginning after December 15, 2019. This pronouncement was amended under ASU 2019-10 to allow an extension on the ~~audited consolidated financial statements~~adoption date for entities that qualify as a small reporting company. The Company has elected this extension and ~~notes thereto contained in~~ the ~~Company’s annual report on Form 10-K~~effective date for the ~~year ended~~Company to adopt this standard will be for fiscal years beginning after December ~~31, 2020.~~
~~Principles~~15, 2022. The Company has not completed its assessment of ~~Consolidation~~
~~The~~the standard but does not expect the adoption to have a material impact on our unaudited condensed consolidated financial ~~statements include~~statements.
In October 2021, the ~~accounts~~FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU amends ASC 805 to require acquiring entities to apply ASC 606 to recognize and measure contract assets and contract liabilities in business combinations. The ASU is effective for public entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company has not completed its assessment of the ~~Company and its consolidated subsidiary, ACI. All significant intercompany balances and transactions have been eliminated in consolidation. The Company~~standard but does not expect the adoption to have a ~~majority or minority interest in any other company, either consolidated or unconsolidated.~~
~~Stock Split~~
On July 30, 2020, the Company completed a 4,750-for-1 forward stock split of its outstanding common stock. As a result of this stock split, the Company’s issued and outstanding common stock increased from 1,000 to 4,750,000 shares. Accordingly, all share and per share information has been restated to retroactively show the effect of this stock split.
~~Use of Estimates~~
~~The preparation of these~~material impact on our unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.statements.

~~1847 GOEDEKER INC.~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~MARCH 31, 2021 AND 2020~~
~~(UNAUDITED)~~
~~Cash and Cash Equivalents~~
Cash and equivalents include: (1) currency on hand, (2) demand deposits with banks or financial institutions, (3) other kinds of accounts that have the general characteristics of demand deposits, and (4) short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. The majority of payments due from financial institutions for the settlement of credit card and debit card transactions process within two business days and are, therefore, classified as cash and cash equivalents. Other payment methods that take more time to settle are classified as receivables.
At March 31, 2021, restricted cash includes approximately $3,120,000 pledged to secure a note, $100,000 to secure a vendor letter of credit and $6,874,932 withheld by credit card processors as security for the Company’s customer refund claims and credit card chargebacks. The cash pledged to secure the note payable will be released as the note is repaid, the cash pledged to secure the letter of credit will be released when the vendor offers the Company credit terms, and the cash held by credit card processors will be released at the discretion of the credit card companies.
~~Revenue Recognition and Cost of Revenue~~
The Company records revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606. Revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 also requires additional disclosure about the nature, amount, timing,has evaluated all other recent accounting pronouncements and ~~uncertainty of revenue and cash flows arising from customer purchase orders, including significant judgments.~~
The Company collects the full sales price from the customer at the time the order is placed, which is recorded as customer deposits on the accompanying consolidated balance sheet. The Company does not incur incremental costs obtaining purchase orders from customers, however, if the Company did, because all the Company’s contracts are less than a year in duration, any contract costs incurred would be expensed rather than capitalized.
~~The revenue~~determined that the ~~Company recognizes arises from orders it receives from its customers. The Company’s performance obligations under the customer orders correspond~~adoption of pronouncements applicable to each sale of merchandise that it makes to customers under the purchase orders; as a result, each purchase order generally contains only one performance obligation based on the merchandise sale to be completed.
Control of the delivery transfers to customers when the customer can direct the use of, and obtain substantially all the benefits from, the Company’s products, which generally occurs when the customer assumes the risk of loss. The risk of loss shifts to the customer at different times depending on the method of delivery. The Company delivers products to its customers in three possible ways. The first way is through a shipment of the products through a third-party carrier from the Company’s warehouse to the customer (a “Company Shipment”). The second way is through a shipment of the products through a third-party carrier from a warehouse other than the Company’s warehouse to the customer (a “Drop Shipment”) and the third way is where the Company itself delivers the products to the customer and often also installs the product (a “Local Delivery”). In the case of a Local Delivery, the Company loads the product on to its own truck and delivers and installs the product at the customer’s location. When a product is delivered through a Local Delivery, risk of loss passes to the customer at the time of installation and revenue is recognized upon installation at the customer’s location. In the case of a Company Shipment and a Drop Shipment, the delivery to the customer is made free on board, or FOB, shipping point (whether from the Company’s warehouse or a third party’s warehouse). Therefore, risk of loss and title transfers to the customer once the products are shipped (i.e., leaves the Company’s warehouse or a third-party’s warehouse). After shipment and prior to delivery, the customer is able to redirect the product to a different destination, which demonstrates the customer’s control over the product once shipped. Once the risk of loss has shifted to the customer, the Company has ~~satisfied its performance obligation and the Company recognizes revenue.~~

~~1847 GOEDEKER INC.~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~MARCH 31, 2021 AND 2020~~
~~(UNAUDITED)~~
~~The Company agrees with customers on the selling price of each transaction. This transaction price~~not had or 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, value added tax, and other tax the Company collects concurrently with revenue-producing activities are excluded from revenue.
Cost of revenue includes the cost of purchased merchandise plus the cost of shipping merchandise and where applicable installation, net of promotional rebates and other incentives received from vendors.
~~Substantially all the Company’s sales are to individual retail consumers.~~
Shipping and Handling ‒ The Company bills its customers for shipping and handling charges, which are included in net sales for the applicable period, and the corresponding shipping and handling expense is reported in cost of sales.
~~Disaggregated Revenue~~‒ The Company disaggregates revenue from contracts with customers by product type, as it believes it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
~~The Company’s disaggregated revenue by product type is as follows:~~
March 31,
2021 2020
Appliance sales $ 10,273,393 $ 7,802,104
Furniture sales 2,327,834 1,281,836
Other sales 1,096,141 593,238
Total $ 13,697,368 $ 9,677,178
The Company also sells extended warranty contracts. The Company is an agent for the warranty company and earns a commission on the warranty contracts purchased by customers; therefore, the cost of the warranty contracts is netted against warranty revenue in the accompanying consolidated statement of operations. The Company assumes no liability for repairs to products on which it has sold a warranty contract.
~~The Company experiences operational trends which are primarily holidays such as Presidents Day, Memorial Day, July 4th, Labor Day, Thanksgiving Day, and Christmas and Black Friday and Cyber Monday.~~
~~Receivables~~
~~Receivables represent rebates receivable due from manufacturers from whom the Company purchases products and amounts due from credit card processors that do~~ not settle within two days. Rebates receivable 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 receivables. Uncollectible balances are expensed in the period it is determined to be uncollectible.
~~Merchandise Inventory~~
Inventory consists of finished products acquired for resale and is valued at the lower-of-cost-or-market with cost determined on an average 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.

~~1847 GOEDEKER INC.~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~MARCH 31, 2021 AND 2020~~
~~(UNAUDITED)~~
~~Property and Equipment~~
Property and equipment is stated at the historical cost. Maintenance and repairs of property and equipment are charged to operations as incurred. Leasehold improvements are amortized over the lesser of the base term of the lease or estimated life of the leasehold improvements. Depreciation is computed using the straight-line method over estimated useful lives as follows:
~~Category~~ ~~Useful Life~~
~~(Years)~~
~~Machinery and equipment~~ 5
~~Office equipment~~ 5
~~Vehicles~~ 5
~~Goodwill~~
The Company tests its goodwill for impairment at least annually on December 31 and whenever events or circumstances change that indicate impairment may have occurred. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in the Company’s expected future cash flows; a significant adverse change in legal factors or in the business climate; unanticipated competition; and slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of goodwill and the Company’s consolidated financial results.
The Company tests goodwill by estimating fair value using a Discounted Cash Flow (“DCF”) model. The key assumptions used in the DCF model to determine the highest and best use of estimated future cash flows include revenue growth rates and profit margins based on internal forecasts, terminal value and an estimate of a market participant’s weighted-average cost of capital used to discount future cash flows to their present value. There were no impairment charges during three months ended March 31, 2021 and 2020.
~~Intangible Assets~~
As of March 31, 2021 and December 31, 2020, definite-lived intangible assets primarily consisted of tradenames and customer relationships which are being amortized over their estimated useful lives, or 5 years.
The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives.
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 valued 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 values of intangible assets are compared against their carrying values, and an impairment loss would be recognized for the amount by which a carrying amount exceeds its fair value. At March 31, 2021 and December 31, 2020, there were no impairments in intangible or the right of use (“ROU”) assets.

~~1847 GOEDEKER INC.~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~MARCH 31, 2021 AND 2020~~
~~(UNAUDITED)~~
~~Long-Lived Assets~~
The Company reviews its property and equipment and any identifiable intangibles (including ROU asset) 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 upon triggering events. 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. At March 31, 2021 and December 31, 2020, there were no impairments in long-lived assets.
~~Lease Liabilities~~
Lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected lease term at the lease commencement date. As most of the Company’s leases do not provide an implicit rate, the Company uses an estimated incremental borrowing rate (“IBR”) based on the information available at the commencement date of the respective lease to determine the present value of future payments. The determination of the IBR requires judgment and is primarily based on publicly available information for companies within the same industry and with similar credit profiles. The Company adjusts the rate for the impact of collateralization, the lease term and other specific terms included in each lease arrangement. The IBR is determined at the lease commencement and is subsequently reassessed upon a modification to the lease arrangement.
~~Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.~~
The Company reviews the ROU asset for impairment whenever events or changes in circumstances indicate that the carrying amount of the ROU asset may not be recoverable. When such events occur, the Company compares the carrying amount of the ROU asset to the undiscounted expected future cash flows related to the ROU asset. If the comparison indicates that an impairment exists, the amount of the impairment is calculated as the difference between the excess of the carrying amount over the fair value of the ROU asset. If a readily determinable market price does not exist, fair value is estimated using discounted expected cash flows attributable to the ROU asset.
~~Fair Value of Financial Instruments~~
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. Cash, restricted cash, receivables, inventory, and prepaid expenses approximate fair value, due to their short-term nature. The fair value hierarchy is defined in the following three categories:
~~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 data.~~
~~Customer Deposits~~
Customer deposits represent the amount collected from customers when an order is placed. The deposits are transferred to revenue when the order ships to the customer or returned to the Company if the order is subsequently cancelled.

~~1847 GOEDEKER INC.~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~MARCH 31, 2021 AND 2020~~
~~(UNAUDITED)~~
~~Income Taxes~~
Under the Company’s accounting policies, the Company initially recognizes a tax position in its unaudited condensed consolidated financial statements when it becomes more likely than not that the position will be sustained upon examination by the tax authorities. Such tax positions are initially and subsequently measured as the largest amount of tax positions that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authorities assuming full knowledge of the position and all relevant facts. Although the Company believes its provisions for unrecognized tax positions are reasonable, the Company can make no assurance that the final tax outcome of these matters will not be different from that which the Company has reflected in its income tax provisions and accruals. The tax law is subject to varied interpretations, and the Company has taken positions related to certain matters where the law is subject to interpretation. Such differences could have a material impact on the ~~Company’s income tax provisions and operating~~Company's consolidated financial position, results ~~in the period(s) in which the Company makes such determination.~~of operations or cash flows.
NOTE 3—LIQUIDITY AND GOING CONCERN ASSESSMENT
~~Sales Tax Liability~~
~~On June 21, 2018, the U.S. Supreme Court issued an opinion in~~ ~~South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018)~~~~, whereby the longstanding~~ ~~Quill Corp v. North Dakota~~ sales tax case was overruled, and states may now require remote sellers to collect sales tax under certain circumstances. In 2020, the Company began collecting sales tax in nearly all states that have sales tax. The Company accrued sales taxes in the states with sales tax. The Company accrued the potential liability from the effective date of a state’s adoption of the Wayfair decision up to the date the Company began collecting and filing sales taxes in the various states. At March 31, 2021 and December 31, 2020, the amount of such accrual was $5,915,910 and $5,804,100, respectively, which is included in accounts payable and accrued expenses. To date, only one state has notified the Company of a potential sales tax liability of approximately $82,000, all of which was previously accrued.
~~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 securities. For the three months ended March 31, 2021, the potentially dilutive securities were warrants for the purchase of 455,560 shares of common stock and options for the purchase of 555,000 shares of common stock. The potentially dilutive securities for the three months ended March 31, 2020 were warrants for the purchase of 250,000 shares of common stock. These potentially dilutive securities were excluded from diluted loss per share.
~~Reclassifications~~
~~Certain accounts have been reclassified to conform with classifications adopted in the period ended March 31, 2021. Such reclassifications had no effect on net earnings or financial position.~~
~~Going Concern Assessment~~
Management assesses liquidity and going concern uncertainty in the Company’s ~~unaudited~~ condensed 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 unaudited condensed 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 and timing of programs and expenditures to the extent it deems probable those implementations can be achieved and management has the proper authority to execute them within the look-forward period.

~~1847 GOEDEKER INC.~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~MARCH~~ As of March 31, ~~2021 AND 2020~~
~~(UNAUDITED)~~
~~The Company has generated significant losses since its acquisition~~2022, we had cash and ~~has relied on~~ cash ~~on hand, external bank lines~~equivalents of ~~credit, proceeds from the IPO described below, issuance~~$25.8 million and restricted cash of ~~third party and related party debt and the issuance of a note to support cashflow from operations.~~
$2.6 million. For the three months ended March 31, ~~2021,~~2022, the Company incurred operating ~~losses~~income of approximately ~~$3,280,686,~~$10.1 million, cash flows used in operations of ~~$2,807,673~~$3.7 million, and ~~negative~~ working capital of ~~$19,801,748.~~$24.9 million.

1847 GOEDEKER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022 AND 2021
(UNAUDITED)
Management has prepared estimates of operations for fiscal years ~~2021~~2022 and ~~2022~~2023 and believes that sufficient funds will be generated from operations to fund its operations, and to service its debt obligations for one year from the date of the filing of these unaudited condensed consolidated financial ~~statements in the Company’s Form 10-Q.~~
As described in Note 10 below, the Company received net proceeds of $4,590,000 from the sale of 10% OID senior secured promissory notes due December 19, 2021 and warrants on March 19, 2021. These proceeds will supplement the Company’s cash flow from operations and provide additional liquidity.
statements. The impact of COVID-19 on the Company’s business has been considered in these assumptions; however, with new COVID variants still in place it ismight be too early to know the full impact of COVID-19 or its timing on a return to more normal operations.
The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis under which the Company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business.
Management believes that based on relevant conditions and events that are known and reasonably knowable that its forecasts, for one year from the date of the filing of these unaudited condensed consolidated financial statements, indicate improved operations and the Company’s ability to continue operations as a going concern.
NOTE 4—REVENUES
The Company ~~has contingency plans~~sells a vast assortment of household appliances, including refrigerators, ranges, ovens, dishwashers, microwaves, freezers, washers and dryers. In addition to ~~reduce~~appliances, we also offer a broad assortment of products in the furniture, décor, bed & bath, lighting, outdoor living, electronics categories, fitness equipment, plumbing fixtures, air conditioners, fireplaces, fans, dehumidifiers, humidifiers, air purifiers and televisions.
Revenue is recognized to depict the transfer of goods or ~~defer expenses~~services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Each customer order generally contains only one performance obligation based on the merchandise sale to be delivered, at which time revenue is recognized.
The Company disaggregates revenue from contracts with customers by product type, as it believes it best depicts how the nature, amount, timing and uncertainty of revenue and cash ~~outlays should operations not improve in the look forward period.~~flows are affected by economic factors.
The Company’s disaggregated revenue by product type is as follows (in thousands):
For the Three Months Ended
March 31, March 31,
2022 2021

Appliance sales $ 140,975 $ 10,273
Furniture sales 4,155 2,328
Other sales 7,622 1,096

Total $ 152,752 $ 13,697

~~Recent Accounting Pronouncements~~
~~Recently Adopted~~
~~In August 2018, the FASB issued ASU 2018-15,~~ ~~Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract~~, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). ASU 2018-15 is effective for annual periods beginning after December 15, 2019, including interim periods within those annual periods. Early adoption is permitted. The Company adopted ASU 2018-15 on January 1, 2020 on a prospective basis. The adoption of this standard did not have a material impact on the Company’s unaudited condensed consolidated financial statements.
~~In August 2018, the FASB issued ASU 2018-13,~~ ~~Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement~~, which removes, modifies and adds various disclosure requirements related to fair value disclosures. Disclosures related to transfers between fair value hierarchy levels will be removed and further detail around changes in unrealized gains and losses for the period and unobservable inputs used in determining level 3 fair value measurements will be added, among other changes. ASU 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted. The Company adopted ASU 2018-13 on January 1, 2020 on a prospective basis. The adoption of this standard did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

1847 GOEDEKER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, ~~2021~~2022 AND ~~2020~~
2021
(UNAUDITED)
NOTE 5—SUPPLEMENTAL FINANCIAL STATEMENT DISCLOSURES
~~Not Yet Adopted~~
~~In June 2016, the FASB issued ASU 2016-13~~ ~~Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~ ~~which requires the measurement and recognition of expected credit losses for financial assets held~~Receivables at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years beginning after December 15, 2019. This pronouncement was amended under ASU 2019-10 to allow an extension on the adoption date for entities that qualify as a small reporting company. The Company has elected this extension and the effective date for the Company to adopt this standard will be for fiscal years beginning after December 15, 2022. The Company has not completed its assessment of the standard but does not expect the adoption to have a material impact on the Company’s financial position, results of operations, or cash flows.
~~The Company currently believes that all other issued and not yet effective accounting standards are not relevant to the Company’s unaudited condensed consolidated financial statements.~~
~~NOTE 3—RESTATEMENT OF FINANCIAL STATEMENTS~~
~~The Company restated its previously issued financial statements as for the three months ended~~ March 31, 2020 to reflect the modification of a sales tax liability. The Company determined that it should accrue a liability for potential 2020 sales taxes that might be payable to the states in which it operates as a result of the Wayfair decision (See Note 2 – Sales Tax Liability). Accordingly, the Company accrued a liability of $921,900, representing a potential liability for sales taxes and penalties of $873,200 and interest expense of $48,700.
~~The following tables summarize the effect of the restatement on the specific items presented in the Company’s previously reported financial statements:~~
~~1847 GOEDEKER INC.~~
~~STATEMENTS OF OPERATIONS~~
~~Three Months Ended March 31, 2020~~
As Filed Adjustments As Restated
Gross profit $ 1,566,008 $ - $ 1,566,008
Operating Expenses
General and administrative 566,640 873,200 1,439,840
Total Operating Expenses 2,881,141 873,200 3,754,341
LOSS FROM OPERATIONS (1,315,133 ) (873,200 ) (2,188,333 )
Total Other Income (Expense) (404,987 ) (48,700 ) (453,687 )
NET LOSS BEFORE INCOME TAXES (1,720,120 ) (921,900 ) (2,642,020 )
INCOME TAX BENEFIT (EXPENSE) 435,000 - 435,000
NET LOSS $ (1,285,120 ) $ (921,900 ) $ (2,207,020 )

LOSS PER COMMON SHARE – BASIC AND DILUTED $ (0.26 ) $ (0.44 )
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC AND DILUTED 5,000,000 5,000,000

~~1847 GOEDEKER INC.~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~MARCH 31, 2021 AND 2020~~
~~(UNAUDITED)~~
~~1847 GOEDEKER INC.~~
~~STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)~~
~~Three Months Ended March 31, 2020~~
Common Stock Additional
Paid-in Accumulated Total
Stockholders’
Shares Amount Capital Deficit Deficit
As Filed:
Balance, January 1, 2020 4,750,000 $ 475 $ 1,079,179 $ (2,068,150 ) $ (795,954 )
Net loss - - - (1,285,120 ) (1,285,120 )
Balance, March 31, 2020 4,750,000 $ 475 $ 1,079,179 $ (3,353,270 ) $ (2,081,074 )

As Restated:
Balance, January 1, 2020 4,750,000 $ 475 $ 1,079,179 $ (5,157,871 ) $ (4,078,217 )
Net loss - - - (2,207,020 ) (2,207,020 )
Balance, March 31, 2020 4,750,000 $ 475 $ 1,079,179 $ (7,364,891 ) $ (6,285,237 )
~~1847 GOEDEKER INC.~~
~~STATEMENTS OF CASH FLOWS~~
~~Three Months Ended March 31, 2020~~
As Filed Adjustments As Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,285,120 ) $ (921,900 ) $ (2,207,020 )
Accounts payable and accrued expenses 520,364 921,900 1,442,264
Net cash provided by (used in) operating activities 958,356 - 958,356
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in investing activities - - -
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash provided by (used in) financing activities (775,158 ) - (775,158 )
NET CHANGE IN CASH AND RESTRICTED CASH 183,198 - 183,198
CASH AND RESTRICTED CASH, BEGINNING OF PERIOD 64,470 - 64,470
CASH AND RESTRICTED CASH, END OF PERIOD $ 247,668 $ - $ 247,668
~~NOTE 4—RECEIVABLES~~
~~At March 31, 2021~~2022 and December 31, ~~2020, receivables~~2021, consisted of the ~~following: respectively.~~
March 31,
2021 December 31,
2020
Vendor rebates receivable $ 604,372 $ 1,337,791
Credit cards in process of collection 343,982 660,441
Total receivables $ 948,354 $ 1,998,232
following (in thousands):

March 31, December 31,
2022 2021

Trade accounts receivable $ 15,295 $ 10,694
Vendor rebates receivable 9,125 11,633
Other receivables 2,261 2,660

Total receivables 26,681 24,987
Less allowance for doubtful accounts (393 ) (393 )

Total receivables, net $ 26,288 $ 24,594
~~1847 GOEDEKER INC.~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~MARCH 31, 2021 AND 2020~~
~~(UNAUDITED)~~
~~NOTE 5—MERCHANDISE INVENTORY~~
AtInventory as March 31, ~~2021~~2022 and December 31, ~~2020, the inventory balances are composed of:~~
March 31,
2021 December 31,
2020
Appliances $ 5,985,757 $ 5,285,975
Furniture 249,008 194,852
Other 73,719 91,414
Total merchandise inventory 6,308,484 5,572,241

Allowance for inventory obsolescence (425,000 ) (425,000 )
Merchandise inventory, net $ 5,883,484 $ 5,147,241
~~NOTE 6—VENDOR DEPOSITS~~
Deposits with vendors represent cash on deposit with one vendor arising from accumulated rebates paid by the vendor. The deposits are used by the vendor to seek to secure the Company’s purchases. The deposit can be withdrawn at any time up to the amount2021, consisted of the ~~Company’s credit line with the vendor. Alternatively, the Company could secure their credit line with a floor plan line from a lender~~following (in thousands):
March 31, December 31,
2022 2021

Appliances $ 50,856 $ 41,922
Furniture 986 1,166
Other 1,964 2,439

Total merchandize inventory 53,806 45,597
Less reserve for obsolescence (843 ) (843 )

Total merchandize inventory, net $ 52,963 $ 44,754
Property and ~~withdraw all its deposits. The Company has elected to leave the deposits with the vendor on which it earns interest income.~~
Prior to obtaining an open line of credit with a major vendor, the Company paid in advance for its purchases. The vendor did not ship product to the Company until an order was complete. As a result, the vendor held Company funds. A second vendor uses the Company’s vendor deposit account as collateral. Orders from this vendor exceeded the deposit account and the Company prepaid for some orders. Vendor deposits as ofequipment at March 31, ~~2021~~2022 and December 31, ~~2020 were $742,926 and $547,648, respectively.~~
~~NOTE 7—PROPERTY AND EQUIPMENT~~
~~Property and equipment consist~~2021, consisted of the following ~~at March 31, 2021 and December 31, 2020:~~(in thousands):
March 31,
2021 December 31,
2020
Equipment $ 69,336 $ 69,336
Warehouse equipment 61,070 61,070
Furniture and fixtures 512 512
Transportation equipment 63,784 63,784
Leasehold improvements 136,931 136,931
Construction in progress 126,116 -
Total property and equipment 457,749 331,633
Accumulated depreciation (102,168 ) (85,685 )
Property and equipment, net $ 355,581 $ 245,948
~~Depreciation expense for the three months ended March 31, 2021 and 2020 was $16,483 and $10,959, respectively.~~

March 31, December 31,
2022 2021

Equipment $ 209 $ 203
Warehouse equipment 546 546
Furniture and fixtures 23 23
Transportation equipment 1,232 1,183
Financed assets 494 235
Leasehold improvements 217 217
Construction in progress 1,597 1,597

Total property and equipment 4,318 4,004
Less: accumulated depreciation (630 ) (450 )

Property and equipment, net $ 3,688 $ 3,554
~~1847 GOEDEKER INC.~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~MARCH 31, 2021 AND 2020~~
~~(UNAUDITED)~~
~~NOTE 8—INTANGIBLE ASSETS~~
The following provides a breakdown of identifiable intangible assets as of March 31, ~~2021~~2022 and December 31, ~~2020:~~2021 (in thousands):
March 31,
2021 December 31,
2020
Customer relationships $ 749,000 $ 749,000
Marketing related - tradename 1,368,000 1,368,000
Total intangible assets 2,117,000 2,117,000
Accumulated amortization (840,912 ) (735,063 )
Intangible assets, net $ 1,276,088 $ 1,381,937
March 31,
2022 December 31,
2021
Customer relationships $ 24,148 $ 24,148
Marketing related - tradename 26,935 26,935
Total intangible assets 51,083 51,083
Accumulated amortization (9,425 ) (6,871 )
Intangible assets, net $ 41,658 $ 44,212
~~In connection with the acquisition of Goedeker, the Company identified intangible assets of $2,117,000, representing trade names and customer relationships.~~ These assets are being amortized on a straight-line basis over their weighted average estimated useful life of 35.0 years. ~~Amortization expense for the three months ended~~

1847 GOEDEKER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022 AND 2021
(UNAUDITED)
At March 31, ~~2021 and 2020 was $105,849 and $80,882, respectively.~~
~~As of March 31, 2021, the~~2022, estimated annual amortization expense for each of the next five years is as ~~follows:~~follows (in thousands):
2021 (remainder of year) $ 317,547
2022 423,396
2023 423,396
2024 111,749
Total $ 1,276,088
2022 (remainder of year) $ 7,662
2023 10,217
2024 9,905
2025 9,793
2026 4,081
Total $ 41,658
~~NOTE 9—ACCOUNTS PAYABLE AND ACCRUED EXPENSES~~
~~The following is schedule of accounts~~Accounts payable and accrued expenses at March 31, ~~2021~~2022 and December 31, ~~2020:~~2021, consisted of the following (in thousands):
March 31,
2021 December 31,
2020
Trade accounts payable $ 5,267,392 $ 5,975,486
Sales tax 5,915,910 5,804,100
Accrued payroll liabilities 510,388 492,573
Accrued interest 10,000 10,000
Accrued liability for sales returns 200,000 200,000
Other accrued liabilities 453,132 219,556
Total accounts payable and accrued expenses $ 12,356,822 $ 12,701,715
March 31, December 31,
2022 2021

Trade accounts payable $ 51,660 $ 41,166
Accrued sales tax 24,812 23,628
Accrued payroll liabilities 1,707 984
Accrued interest 648 794
Accrued income taxes 1,933 334
Credit cards payable 1,447 1,004
Accrued severance 390 496
Other accrued liabilities 1,362 4,186

Total accounts payable and accrued expenses $ 83,959 $ 72,592
NOTE 6—LEASES
~~NOTE 10—NOTES PAYABLE~~
Operating Leases
~~Arvest Loan~~
On ~~August 25, 2020,~~March 15, 2022, the Company entered into a ~~promissory note~~lease agreement by and ~~security agreement with Arvest Bank~~between the Company and 8780 19th Ave LLC, a New York limited liability company and related party (the “Office Lease”), for the lease of a ~~loan~~new office building located in ~~the principal amount of $3,500,000. As of~~Brooklyn, New York. The Office Lease commenced on March 1, 2022 and shall expire on December 31, ~~2021, the outstanding balance of this loan is $3,026,812, comprised of principal of $3,119,806, net of unamortized loan costs of $92,994.~~2026. The Company ~~classified $668,744 as a current liability and~~has the ~~balance as a long-term liability.~~

~~1847 GOEDEKER INC.~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~MARCH 31, 2021 AND 2020~~
~~(UNAUDITED)~~
option to extend the term of the Office Lease for one additional term of five years. The ~~loan matures on August 25, 2025 and bears interest at 3.250% per annum; provided that, upon an event~~premises of ~~default,~~ the ~~interest rate shall increase by 6% until paid in full. Pursuant to~~Office Lease contain approximately 5,835 rentable square feet. Under the terms of the ~~loan agreement,~~Office Lease, the Company ~~is required to make~~will lease the premises at the monthly ~~payments~~rate of ~~$63,353 beginning on September 25, 2020 and until~~$22,000 for the ~~maturity date, at which time all unpaid principal and interest will be due.~~first year, with scheduled annual increases. The Company ~~may prepay the loan in full~~received a four-month rent concession so that its first rental payment shall become due on or ~~in part at any time without penalty.~~before July 1, 2022. The ~~loan~~lease agreement contains customary events of default, representations, warranties, and ~~affirmative~~covenants. The initial ROU asset and ~~negative covenants for a loan of~~liability associated with this ~~type. The loan~~operating lease is ~~secured by all financial assets credited to the Company’s securities account held by Arvest Investments, Inc.~~$1.1 million.

~~Maturities of the debt are as follows:~~
For the years ended December 31,
2021 (remainder of year) $ 499,517
2022 685,222
2023 707,826
2024 731,177
2025 496,064
Total $ 3,119,806
Less: Loan costs (92,994 )
Total $ 3,026,812
~~The Company repaid this loan on May 10, 2021. See Note 15.~~
~~10% OID Senior Promissory Notes~~
On March 19, 2021, the Company entered into a securities purchase agreement with two institutional investors, pursuant to which the Company issued to each investor (i) a 10% OID senior secured promissory note in the principal amount of $2,750,000 and (ii) a four-year warrant to purchase 200,000 shares of the Company’s common stock at an exercise price of $12.00, subject to adjustments, which may be exercised on a cashless basis, for a purchase price of $2,500,000 each, or $5,000,000 in the aggregate, the relative fair value of which is $1,340,438 and was recorded as debt discount. After deducting a placement fee and other expenses, the Company received net proceeds of $4,590,000. As of March 31, 2021, the outstanding balance of the notes is $3,347,763, comprised of principal of $5,500,000, net of unamortized loan costs of $2,152,237. Loan costs consist of unamortized original issue discount of $870,291 and unamortized warrant value of $1,281,946. The original issue discount and warrant expense are amortized as interest expense. See also Note 13.
The notes bear interest at a rate of 10% per annum and mature on December 19, 2021. The notes may be prepaid by the Company in whole or in part at any time or from time to time without penalty or premium upon at least five (5) days prior written notice, which notice period may be waived by the holder. In addition, if the Company issues and sells shares of its equity securities to investors on or before the maturity date in an equity financing with total gross proceeds of not less than $10,000,000 (excluding the conversion of the notes or other convertible securities issued for capital raising purposes), then the Company must repay the then-outstanding principal amount of the notes and any accrued but unpaid interest.
The notes are secured by a first priority security interest in all of the Company’s assets and contain customary events of default. Upon, and during the continuance of, an event of default, the notes are convertible, in whole or in part, at the option of the holder into shares of common stock at a conversion price equal to $12.00, or if lower, 80% of the lowest volume weighted average price for the twenty (20) consecutive trading days prior to the applicable conversion date, but in no event less than $9.00. The conversion price will be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the common stock. In addition, if the Company sells or grants any common stock or securities convertible into or exchangeable for common stock or grants any right to reprice such securities at an effective price per share that is lower than the then conversion price, the conversion price shall be reduced to such price, subject to certain exceptions. See Note 13 for additional terms of the warrants.

1847 GOEDEKER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022 AND 2021
(UNAUDITED)
The following was included in our unaudited condensed consolidated balance sheet at March 31, 2022 and December 31, 2021 ~~AND 2020~~
~~(UNAUDITED)~~(in thousands):
March 31, December 31,
2022 2021

Operating lease right-of-use assets $ 15,262 $ 14,937

Lease liabilities, current portion 3,844 3,874
Lease liabilities, long-term 12,787 12,493

Total operating lease liabilities $ 16,631 $ 16,367

Weighted-average remaining lease term (months) 73 77

Weighted average discount rate 3.90 % 4.00 %
Operating lease expense was $1.0 million and $0.2 million for the three months ended March 31, 2022 and December 31, 2021, respectively.
As of March 31, 2022, maturities of operating lease liabilities were as follows, in thousands:
Years Ending December 31, Amount
2022 – remaining $ 3,314
2023 4,446
2024 2,086
2025 1,776
2026 1,827
Thereafter 7,544

Total 20,993
Less: imputed interest (4,362 )

Total operating lease liabilities $ 16,631
Finance Leases
During the period ending March 31, 2022, the Company entered in an equipment financing lease to purchase eight forklifts totaling $0.3 million, maturing in February 2026.
At March 31, 2022, the outstanding balance of our finance leases is $0.4 million.
NOTE ~~11—OPERATING LEASES~~7—RELATED PARTIES
Management Services Agreement
On April 5, 2019, the Company entered into a lease agreement with S.H.J., L.L.C., a Missouri limited liability company and affiliate of the Company at that time. The lease is for a term five (5) years and provides for a base rent of $45,000 per month. In addition, the Company is responsible for all taxes and insurance premiums during the lease term. In the event of late payment, interest shall accrue on the unpaid amount at the rate of eighteen percent (18%) per annum. The lease contains customary events of default.
On January 13, 2021, the Company entered into a lease agreement with Westgate 200, LLC for a new premises in St. Charles, Missouri. The lease is for a term of 63 months with two (2) options to renew for additional five (5) year periods and provides for a base rent of $4.35 per square foot per year with 2.5% annual increases and a three-month abatement, resulting in a base rent during the first year of $20,977 per month, increasing to a base rent during the fifth year of $23,147 per month. The Company must also pay its 29% pro rata portion of the property taxes, operating expenses and insurance costs and is also responsible to pay for the utilities used on the premises. The lease contains customary events of default.
On March 31, 2021, the Company amended the lease agreement with Westgate 200, LLC that increased the space available to the Company. The amendment increased the Company’s share of the pro rata portion property taxes, operating expenses and insurance costs from 29% to 43.4%. The initial term of the lease is extended by one year to April 30, 2027. Monthly rent payments remain at $20,977 until September 30, 2021 and increase to $31,465 per month until April 30, 2022 and then increases at approximately 2.5% per month every year. In connection with the new leases, the Company recorded a Right of Use asset and liability of $1,954,022 representing the present value of future lease payments.
~~During the three months ended March 31, 2021, the Company accrued rent expense of $62,386. During the three months ended March 31, 2020, the Company paid and expensed rent payments of $135,000.~~
~~Supplemental balance sheet information related to leases at March 31, 2021 was as follows:~~
Operating lease right-of-use assets $ 3,404,861

Lease liabilities, current portion $ 664,043
Lease liabilities, long-term 2,803,203
Total operating lease liabilities $ 3,467,246

Weighted average remaining lease term (months) 57

Weighted average discount rate 5.9 %
~~Maturities of the lease liabilities for each of the next five years is as follows:~~
2021 (remainder of year) $ 604,279
2022 923,945
2023 933,493
2024 538,041
2025 413,168
Thereafter 565,936
Total lease payments $ 3,978,862
Less imputed interest (511,616 )
Total lease liability $ 3,467,246

~~1847 GOEDEKER INC.~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~MARCH 31, 2021 AND 2020~~
~~(UNAUDITED)~~
~~NOTE 12—RELATED PARTIES~~
~~On April 5, 2019, the Company entered into an offsetting~~ management services agreement with 1847 Partners LLC (the “Manager”), a company owned and controlled by ~~Ellery W. Roberts,~~ the Company’s chairman and aprior significant ~~stockholder. This agreement~~stockholder, which was amended ~~on April 21, 2020 with the amendment becoming~~ effective ~~at the closing of IPO~~ on August 4, 2020.
Pursuant to the offsetting management services agreement, as amended, the Company appointed the Manager to provide certain services to it for a quarterly management fee equal to $62,500; provided, however, that ~~(i) pro-rated payments shall be made~~under certain circumstances specified in the ~~first quarter and~~management services agreement, the last quarter of the term, (ii) if the aggregate amount of management fees paid or to be paid by the Company, together with all other management fees paid or to be paid by all other subsidiaries of 1847 Holdings to the Manager, in each case, with respect to any fiscal year exceeds, or is expected to exceed, 9.5% of 1847 Holdings’ gross income with respect to such fiscal year, then the managementquarterly fee ~~to be paid by the Company for any remaining fiscal quarters in such fiscal year shall~~may be reduced ~~on a pro rata basis determined by reference to the management~~if similar fees ~~to be paid~~payable to the Manager by ~~all~~subsidiaries of the ~~subsidiaries of~~Company’s former parent company, 1847 Holdings until the aggregate amount of the management fee paid or to be paid by the Company, together with all other management fees paid or to be paid by all other subsidiaries of 1847 Holdings to the Manager, in each case, with respect to such fiscal year, does notLLC, exceed 9.5% of 1847 Holdings’ gross income with respect to such fiscal year, and (iii) if the aggregate amount the management fee paid or to be paid by the Company, together with all other management fees paid or to be paid by all other subsidiaries of 1847 Holdings to the Manager, in each case, with respect to any fiscal quarter exceeds, or is expected to exceed, the aggregate amount of the parent management fee (as defined in the offsetting management services agreement) with respect to such fiscal quarter, then the management fee to be paid by the Company for such fiscal quarter shall be reduced, on a pro rata basis, until the aggregate amount of the management fee paid or to be paid by the Company, together with all other management fees paid or to be paid by all other subsidiaries of 1847 Holdings to the Manager, in each case, with respect to such fiscal quarter, does not exceed the parent management fee calculated and payable with respect to such fiscal quarter.threshold amount.

1847 GOEDEKER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022 AND 2021
(UNAUDITED)
The Company shall also reimburse the Manager for all costs and expenses of the Company which are specifically approved by the board of directors of the Company, including all out-of-pocket costs and expenses, that are actually incurred by the Manager or its affiliates on behalf of ~~Goedeker~~the Company in connection with performing services under the ~~offsetting~~ management services agreement. The Company did not pay any expenses for the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021.
The Company expensed ~~$62,500 in~~ management fees of $0.1 million for the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021.
DMI
The Company is a member of DMI, an appliance purchasing cooperative. DMI purchases consumer electronics and appliances at wholesale prices from various vendors, and then makes such products available to its members, including the Company, who sell such products to end consumers. DMI’s purchasing group arrangement provides its members, including the Company, with leverage and purchasing power with appliance vendors, and increases the Company’s ability to compete with competitors, including big box appliance and electronics retailers. The Company owns an approximate 5% interest in DMI. Additionally, the Company’s Chief Executive Officer, and director, is on the board of DMI. As such, DMI is deemed to be a related party.
During the three months ended March 31, 2022, total purchases from DMI, net of holdbacks, were $73.4 million, deposits at DMI totaled $18.1 million and the vendor rebate due from DMI was $3.1 million.
Lease Agreements
The Company has lease agreements with 1870 Bath Ave. LLC, 812 5th Ave Realty LLC, 54 Glen Cove Realty, LLC, and 8780 19th Ave LLC respectively. Each of these entities is owned by the Company’s Chief Executive Officer and Chief Operating Officer. In addition, the Company has a sublease agreement with DMI. The total rent expense under these related party leases was $0.5 million for the three months ended March 31, 2022.
NOTE ~~13—STOCKHOLDERS’ DEFICIT~~8—STOCKHOLDERS' EQUITY
As of March 31, ~~2021,~~2022, the Company was authorized to issue ~~200,000,000~~250,000,000 shares of common stock, $0.0001 par value per share, and 20,000,000 shares of “blank check” preferred stock, 0.0001 par value per share. On December 17 2021, the board of directors approved an increase to the number of shares of common stock that the Company is authorized to issue from 200,000,000 to 250,000,000 shares. Such increase was approved by the Company’s stockholders effective as of December 21, 2021. See Note 12, “Commitments and Contingencies” for additional discussion of the Share Increase Proposal (as defined below). To date, the Company has not designated or issued any shares of preferred stock.
Stock Options
~~Common Stock~~
~~As of March 31, 2021 and December 31, 2020,~~Below is a table summarizing the ~~Company had 6,111,200 shares of common~~changes in stock ~~issued and outstanding. Each share entitles the holder thereof to one vote per share on all matters coming before the stockholders of the Company for a vote.~~
~~The Company did not issue any shares of common stock~~options outstanding during the three months ended March 31, ~~2021 and 2020.~~2022:
Weighted
-Average
Options Exercise
Price

Outstanding at December 31, 2021 312,960 $ 6.17

Granted - -
Exercised - -
Forfeited (132,960 ) 9.00

Outstanding at March 31, 2022 180,000 $ 4.08

Exercisable at March 31, 2022 30,000 $ 9.00

1847 GOEDEKER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, ~~2021~~2022 AND ~~2020~~
2021
(UNAUDITED)
~~Equity Incentive Plan~~
Effective as of July 30, 2020, the Company established the 1847 Goedeker Inc. 2020 Equity Incentive Plan (the “Plan”). The Plan was approved by the Company’s board of directors and stockholders on April 21, 2020. The Plan is administered by compensation committee of the board of directors. The Plan permits the grant of restricted stock, stock options and other forms of incentive compensation to the Company’s officers, employees, directors and consultants. As of March 31, 2021, the maximum number of shares of common stock that may be issued pursuant to awards granted under the Plan was 555,000 shares and there were 555,000 shares granted. See also Note 15.
During the year ended December 31, 2020, the Company issued options for the purchase of 555,000 shares of common stock with a total value of $1,848,056. The Company recorded stock option expense of $124,575 for the three months ended March 31, ~~2021. The remaining~~2022, 132,960 stock options were forfeited, as a result of employee terminations.
Stock-based compensation expense of ~~$1,324,573 will be recognized over the remaining vesting period of forty months.~~
~~The following table presents activity relating to stock options for~~$0.02 million and $0.1 million was recorded during the three months ended March 31, ~~2021:~~
Shares
Weighted
Average
Exercise
Price
Weighted
Average
Contractual
Term in
Years
Outstanding at January 1, 2021 555,000 $ 9.00 9
Granted - - -
Exercised - - -
Forfeited / Cancelled / Expired - - -
Outstanding at March 31, 2021 555,000 $ 9.00 8.75

Exercisable at March 31, 2021 65,790 $ 9.00 8.75
2022 and 2021, respectively. As of March 31, ~~2021, vested~~2022, the remaining unrecognized compensation cost related to non-vested stock options is $0.3 million and is expected to be recognized over 3.33 years. The outstanding stock options ~~had no~~have a weighted average remaining contractual life of 7.79 years and a total intrinsic value ~~as the exercise price is greater than the estimated fair value~~ of ~~the underlying common stock.~~$nil.
~~The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period.~~
Warrants
~~On August 4, 2020,~~Below is a table summarizing the ~~Company issued~~changes in warrants for the purchase of 55,560 shares of common stock to affiliates of the representative in the IPO. These warrants are exercisable at any time and from time to time, in whole or in part, beginning on January 26, 2021 until July 30, 2025, at a per share exercise price equal to $11.25.
On March 19, 2021, the Company issued four-year warrants to purchase an aggregate of 400,000 shares of common stock to two investors at an exercise price of $12.00, subject to adjustments, which may be exercised on a cashless basis (See Note 10).

~~1847 GOEDEKER INC.~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~MARCH 31, 2021 AND 2020~~
~~(UNAUDITED)~~
~~The following table presents activity relating to the warrants for~~outstanding during the three months ended March 31, ~~2021:~~2022:
Shares Weighted
Average
Exercise
Price Weighted
Average
Contractual
Term in
Years
Outstanding at January 1, 2021 55,560 $ 11.25 4.5
Granted 400,000 12.00 4.0
Exercised - - -
Cancelled / Expired - - -
Outstanding at March 31, 2021 455,560 $ 11.91 4.1
Weighted-
Average
Warrants Exercise
Price

Outstanding at December 31, 2021 92,514,423 $ 2.30

Granted - -
Exercised - -
Forfeited - -

Outstanding at March 31, 2022 92,514,423 $ 2.30

Exercisable at March 31, 2022 92,514,423 $ 2.30
~~The Company recognizes stock issuance expense for the warrants on a straight-line basis over the vesting period~~As of ~~the warrants. The following assumptions were used to calculate warrant expense for the three months ended~~ March 31, ~~2021:~~
~~Volatility~~ ~~74.2~~ %
~~Risk-free interest rate~~ ~~0.615~~ %
~~Dividend yield~~ ~~0.0~~ %
~~Term~~ ~~4.0 years~~
~~NOTE 14—COMMITMENTS AND CONTINGENCIES~~
~~On January 18, 2019,~~2022, the ~~Company entered into an asset purchase agreement with Goedeker, Steve Goedeker~~outstanding warrants have a weighted average remaining contractual life of 4.17 years and ~~Mike Goedeker, pursuant to which on April 5, 2019 the Company acquired substantially all of the assets of Goedeker used in its retail appliance and furniture business (the “Goedeker Business”).~~
Pursuant to the asset purchase agreement, Goedeker entitled to receive an earn out payment of $200,000 if the EBITDA (as defined in the asset purchase agreement) of the Goedeker Business for the trailing twelve (12) month period from April 5, 2022 is $2,500,000 or greater, and may be entitled to receive a partial earn out payment if the EBITDA of the Goedeker Business is less than $2,500,000 but greater than $1,500,000. The Company expects to meet this target and adjusted the contingent note payable in the condensed consolidated balance sheet to the presenttotal intrinsic value of ~~the amount due.~~$nil.
NOTE 9—BUSINESS COMBINATIONS
Appliances Connection
~~NOTE 15—SUBSEQUENT EVENTS~~
In accordance with ASC 855-10, the Company has analyzed its operations subsequent to March 31, 2021 to the date these unaudited condensed consolidated financial statements were issued and has determined that it does not have any material subsequent events to disclose in these unaudited condensed consolidated financial statements, except as set forth below.
~~Amendment to Securities Purchase Agreement~~
On October 20, 2020, the Company entered into a securities purchase agreement, which was amended on December 8, 2020 and April 6, 2021 (as amended, the “AC Purchase Agreement”), with ACI, ~~and 1 Stop Electronics Center, Inc., Gold Coast~~ Appliances ~~Inc., Superior Deals Inc., Joe’s Appliances LLC and YF Logistics LLC (collectively, “Appliances Connection”)~~Connection and the sellers ~~set forth on Exhibit A thereto,~~(the “Sellers”), pursuant to which ACI agreed to acquire all of the issued and outstanding capital stock or other equity securities of Appliances Connection ~~for an~~from the Sellers (the “Appliances Connection Acquisition”). The Appliances Connection Acquisition was completed on June 2, 2021.
The aggregate purchase price ~~of $210,000,000, subject to adjustment,~~was $224.7 million, consisting of (i) ~~$168,000,000~~$180.0 million in cash, (ii) ~~2,333,333~~5,895,973 shares of the Company’s common stock ~~having~~valued at $12.3 million, and (iii) $32.4 million as a ~~stated~~result of the post-closing net working capital adjustment provision. The Company recorded $0.9 million in acquisition related expenses.
The Company accounted for the Appliances Connection Acquisition using the acquisition method of accounting in accordance with ASC Topic 805, “Business Combinations”. In accordance with ASC 805, the Company assigned fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date.
We are amortizing the customer relationship and tradename intangible assets acquired over 5 years. Goodwill and intangibles recognized for this transaction are not deductible for tax purposes.

1847 GOEDEKER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022 AND 2021
(UNAUDITED)
Appliance Gallery
On July 6, 2021, AC Gallery entered into an asset purchase agreement, which was amended on July 21, 2021 and July 29, 2021 (as amended, the “AG Purchase Agreement”), with Appliance Gallery, pursuant to which AC Gallery agreed to acquire substantially all the assets and assumed substantially all the liabilities of Appliance Gallery (the “AC Gallery Acquisition”). The AC Gallery Acquisition was completed on July 29, 2021.
Pursuant to the AG Purchase Agreement, the purchase price paid at closing was $1.4 million.
The Company accounted for the Gallery Acquisition using the acquisition method of accounting in accordance with ASC Topic 805, “Business Combinations”. In accordance with ASC 805, the Company assigned fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date.
Goodwill recognized for this transaction is deductible for tax purposes.
Pro Forma Information
The following unaudited pro forma results presented below (in thousands) include the effects of the Appliances Connection and AC Gallery Acquisitions as if they had been consummated as of January 1, 2021, with adjustments to give effect to pro forma events that are directly attributable to the acquisitions.
Three Months
Ended
March 31, Three Months
Ended
March 31,
2022 2021

Net sales $ 152,752 $ 123,711
Net income 5,922 10,899
Earnings (loss) per share:
Basic and Diluted $ 0.06 $ 1.78
These unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations would have been if the acquisitions had occurred at the beginning of the period presented, nor are they indicative of future results of operations. The amortization of the identified intangible assets acquired in the Appliances Connection Acquisition included in 2021 Net income was $2.5 million.
NOTE 10—NOTES PAYABLE
M&T Credit Facilities
On June 2, 2021, the Company and ACI, as borrowers, entered into a credit and guaranty agreement (the “M&T Credit Agreement”) with Appliances Connection and certain other subsidiaries of the Company party thereto from time to time as guarantors, the financial institutions party thereto from time to time (“M&T Lenders”), and Manufacturers and Traders Trust Company, as sole lead arranger, sole book runner, administrative agent and collateral agent (“M&T”), pursuant to which the M&T Lenders have agreed to make available to the Company and ACI senior secured credit facilities in the aggregate initial amount of $70.0 million, including (i) a $60.0 million term loan (the “M&T Term Loan”) and (ii) a $10.0 million revolving credit facility (the “M&T Revolving Loan”), which revolving credit facility includes a $2.0 million swingline subfacility (the “M&T Swing Line Loan” and together with the M&T Term Loan and the M&T Revolving Loan, the “M&T Loans”) and a $2.0 million letter of credit subfacility, in each case, on the terms and conditions contained in the M&T Credit Agreement. On June 2, 2021, the Company borrowed the entire amount of the M&T Term Loan and issued term loan notes to the M&T Lenders in the aggregate principal amount of $60.0 million. As of March 31, 2022, the Company has not borrowed any amounts under the M&T Revolving Loan. As of March 31, 2022, the carrying value of the M&T Term Loan was $53.9 million, comprised of principal of $57 million, net of unamortized loan costs of $3.1 million. The Company classified $7.5 million as a current liability and the balance as a long-term liability.

1847 GOEDEKER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022 AND 2021
(UNAUDITED)
Each of the M&T Loans matures on June 2, 2026. The M&T Loans will bear interest on the unpaid principal amount thereof as follows: (i) if it is a M&T Loan bearing interest at a rate determined by the Base Rate (as defined in the M&T Credit Agreement), then at the Base Rate plus the Applicable Margin (as defined in the M&T Credit Agreement) for such M&T Loan; (ii) if it is a M&T Loan bearing interest at a rate determined by the LIBOR Rate (as defined in the M&T Credit Agreement), then at the LIBOR Rate plus the Applicable Margin for such M&T Loan; and (iii) if it is a M&T Swing Line Loan, then at the rate applicable to M&T Loans bearing interest at a rate determined by the Base Rate. The M&T Term Loan initially bears interest at the LIBOR Rate plus Applicable Margin (3.9%), with an initial interest period of six months. The Company may elect to continue or convert the existing interest rate benchmark for the M&T Term Loan from LIBOR Rate to Base Rate, and may elect the interest rate benchmark for future M&T Revolving Loans as either LIBOR Rate or Base Rate (and, with respect to any M&T Loan made at the LIBOR Rate, may also select the interest period applicable to any such M&T Loan), by notifying M&T and M&T Lenders from time to time in accordance with the provisions of the M&T Credit Agreement. Notwithstanding the foregoing, following an event of default, the M&T Loans will bear interest at a rate that is ~~equal~~2% per annum higher than the interest rate then in effect for the applicable M&T Loan.
The Company must repay the principal amount of the M&T Term Loan in quarterly installments of $1.5 million each, payable on the last business day of each March, June, September and December, commencing on September 30, 2021. The remaining unpaid principal amount of the M&T Term Loan must be repaid on the maturity date, unless payment is sooner required by the M&T Credit Agreement. Mandatory repayments of amounts borrowed under the M&T Revolving Loan facility are required only if the amount borrowed at any time exceeds the commitment amount. Amounts borrowed under M&T Revolving Loans may be repaid and reborrowed at any time until the maturity date.
The Company may voluntarily prepay the M&T Loans from time to ~~$21,000,000,~~time in accordance with the provisions of the M&T Credit Agreement, and ~~(iii)~~will be required to prepay the M&T Loans under certain limited circumstances as set forth in the M&T Credit Agreement, including upon receipt of cash proceeds in connection with certain specified asset sales, receipt of insurance or condemnation proceeds or other cash proceeds received other than in the ordinary course of business or upon receipt of cash proceeds from the incurrence of indebtedness that is not permitted under the M&T Credit Agreement, all as more specifically set forth in the M&T Credit Agreement.
Under the M&T Credit Agreement, the Company is required to pay certain fees to M&T, including a commitment fee of up to 0.5% per annum with respect to the unused portion of the M&T Lenders’ revolving loan commitments, determined as set forth in the M&T Credit Agreement, and certain fees in connection with the issuance of any letters of credit under the M&T Credit Agreement.
The M&T Credit Agreement contains customary representations, warranties, affirmative and negative financial and other covenants, including leverage ratio and fixed charge coverage ratios, and events of default for loans of this type. The M&T Loans are guaranteed by the Guarantors (as defined in the M&T Credit Agreement) and are secured by a first priority security interest in substantially all of the assets of the Company, ACI and the guarantors.
Maturities of the M&T Term Loan are as follows:
For the years ended December 31,
2022 (remainder of year) $ 4,500
2023 6,000
2024 6,000
2025 6,000
Thereafter 33,000
Total 55,500
Less: Loan costs (3,501 )
Total $ 51,999
Amount classified as a current liability $ 6,000
Amount classified as long-term liability $ 45,999
M&T Loan was paid in full on May 9, 2022 (see Note 13, “Subsequent Events”).

1847 GOEDEKER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022 AND 2021
(UNAUDITED)
NOTE 11—EARNINGS (LOSS) PER SHARE
The computation of weighted average shares outstanding and the basic and diluted earnings (loss) per common share for the following periods consisted of the following (in thousands, except per share amounts):
March 31, March 31,
2022 2021
Basic and Diluted Earnings (Loss) Per Share

Net income (loss) $ 5,922 $ (3,493 )
Weighted average common shares outstanding 106,387,332 6,111,200

Basic and diluted earnings (loss) per share $ 0.06 $ (0.57 )
For the three months ended March 31, 2022, there were 92,694,423 potential common share equivalents from stock options and warrants excluded from the diluted EPS calculations as their effect is anti-dilutive.
For the three months ended March 31, 2021, there were 1,010,560, potential common share equivalents from stock options and warrants excluded from the diluted EPS calculations as their effect is anti-dilutive.
NOTE 12—COMMITMENTS AND CONTINGENCIES
Legal Proceedings
At the Company’s annual meeting on December 21, 2021, the stockholders were asked to approve an amendment to the Company’s Amended and Restated Certificate of Incorporation, dated July 30, 2020 (the “Certificate of Incorporation”), increasing the number of authorized shares of the Company’s common stock, ~~that is equal~~par value $0.0001 per share (“Common Stock” and such proposal, the “Share Increase Proposal”) by 50,000,000 shares of Common Stock. As reported in a Form 8-K filing on December 28, 2021, the Share Increase Proposal was adopted and a Certificate of Amendment to ~~(A) $21,000,000 divided by (B)~~ the ~~average~~Certificate of Incorporation setting forth the amendment adopted pursuant to the Share Increase Proposal (the “Certificate of Amendment”) was filed with the Secretary of State of the ~~closing price~~State of Delaware (the “Delaware Secretary of State”). To date, none of these newly authorized shares has actually been issued.
Three purported beneficial owners of Common Stock subsequently expressed concerns about a statement in the Company’s proxy statement related to the Share Increase Proposal, specifically questioning, in light of the ~~Company’s common stock (as reported on~~proxy statement, the ~~NYSE American)~~ability of brokerage firms and other custodians to vote shares of Common Stock held by them for the ~~20 trading days immediately preceding~~benefit of their customers in the ~~3rd trading day prior~~absence of instructions from the beneficial owners. Based on an examination of the situation performed following receipt of these demands, the Company believes that the vote at the annual meeting was properly tabulated and that the proposed amendment was properly adopted in accordance with Delaware law. In light of the demands, however, and to ensure against any future question as to the ~~closing date~~validity of these newly authorized shares, the Company elected to seek validation of its Certificate of Amendment through a Petition to the Court of Chancery of the ~~transaction.~~State of Delaware (the “Court of Chancery”) pursuant to Section 205 of the Delaware General Corporation Law (the “205 Petition”). The action, styled In re 1847 Goedeker Inc., C.A. 2022-0219-SG, seeks entry by the Court of Chancery of an order validating and declaring effective the Certificate of Amendment, and validating the additional shares of Common Stock authorized under the Share Increase Proposal.

1847 GOEDEKER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, ~~2021~~2022 AND ~~2020~~
2021
(UNAUDITED)
Shortly before the 205 Petition was filed, one of the purported stockholders who had submitted a demand related to adoption of the Share Increase Proposal also has filed a Class Action Complaint in the Court of Chancery against the Company and its Board of Directors. That lawsuit, captioned Scot T. Boden v. 1847 Goedeker Inc., et al., C.A. No. 2022-0196-SG (the “Boden Action”), asserts two claims for relief. The first is against the Company for alleged violation of the Delaware General Corporation Law Section 225(b) for improper tabulation of the stockholder vote on the Share Increase Proposal. The second asserts that the Company’s directors breached their fiduciary duties by incorrectly tabulating the stockholder vote, and by causing a purportedly invalid amendment to our Certificate of Incorporation to be filed with the Delaware Secretary of State. The Boden Action has been consolidated with the 205 Petition; and for reasons set out in the 205 Petition, the Company and its directors believe the Boden Action to be without merit and intend to defend the claims. Mr. Boden and a second purported stockholder, Robert Corwin, have both filed briefs opposing the 205 Petition. Under a scheduling order issued by the Court of Chancery on May 6, 2022, the Company intends to file a reply brief in further support of the 205 Petition by May 20, 2022. The Court of Chancery has scheduled a hearing on the matter for May 27, 2022. The Company cannot predict the outcome of these proceedings, or the timing of any decision from the Court.
NOTE 13—SUBSEQUENT EVENTS
On ~~April 6, 2021,~~May 9, 2022, the ~~parties~~Company and ACI (together, the “Borrowers”) and certain subsidiaries of the Borrowers, as guarantors, entered into ~~an amendment to~~a Credit Agreement (the “New Credit Agreement”) by and among the ~~securities purchase agreement,~~Borrowers, the guarantors, each of the lenders identified therein (the “Lenders”) and Bank of America, N.A., as administrative agent, swingline lender and letter of credit issuer (the “Agent”), pursuant to which ~~(i)~~ the ~~outside date (as defined~~Lenders have agreed to make available to the Borrowers senior secured credit facilities in the ~~securities purchase agreement)~~aggregate initial amount of $140,000,000, including (i) a $100,000,000 term loan (the “New Term Loan”) and (ii) a $40,000,000 revolving credit facility (the “New Revolving Loan”), which revolving credit facility includes a $2,000,000 swingline subfacility (the “New Swing Line Loan” and together with the New Term Loan and the New Revolving Loan, the “New Loans”) and a $2,000,000 letter of credit subfacility, in each case, on the terms and conditions contained in the New Credit Agreement. The New Loans may from time to time be further evidenced by ~~which~~separate promissory notes issued by the ~~closing~~Borrowers. On May 9, 2022, the Company borrowed the entire amount of the securities purchase agreement must be completed was changed to June 30, 2021, (ii) the definition of net working capital set forth in the securities purchase agreement was revised to clarify that the accrued liabilities for potential sales tax will not be included in such calculation, and (iii) the condition to closing the transaction contemplated by the securities purchase agreement relating to a lease for the Gold Coast location was deleted, because such lease has sinceNew Term Loan, but no New Revolving Loans have been ~~terminated.~~
~~Amendment to Equity Incentive Plan Increase~~
On April 9, 2021, the board of directors approved an amendment to the Plan to increase the number of shares of common Stock reserved for issuance under the Plan from 555,000 to 1,000,000 shares. Such increase was approved by the Company’s stockholders effectivemade as of May ~~13, 2021.~~16, 2022.
~~Repayment~~The proceeds of ~~Note~~
the New Term Loan were applied, among other uses, to prepay the obligations in full under the Borrowers’ existing M&T Credit Agreement. On May 9, 2022, in connection with prepayment of the obligations under the M&T Credit Agreement, the M&T Credit Agreement was terminated.
NOTE 14—SUPPLIER CONCENTRATION
Significant customers and suppliers are those that account for greater than 10 ~~2021,~~percent of the Company’s revenues and purchases.
For the three months ended March 31, 2022, the Company ~~repaid~~purchased 77% of finished goods from DMI.
The Company believes there are numerous other suppliers that could be substituted should the ~~Arvest loan (see Note 10) by transferring principal and accrued interest from the restricted cash account.~~supplier become unavailable or non-competitive.

~~ITEM 2.~~ ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.~~
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Except as otherwise indicated by the context and for the purposes of this Quarterly Report on Form 10-Q, the terms “Company,” “we,” “us,” or “our” refer to 1847 Goedeker Inc., a Delaware corporation, and its consolidated subsidiaries, including but not limited to, 1 Stop Electronics Center, Inc., a New York corporation (“1 Stop”), Gold Coast Appliances, Inc., a New York corporation (“Gold Coast”), Superior Deals Inc., a New York corporation (“Superior Deals”), Joe’s Appliances LLC, a New York limited liability company (“Joe’s Appliances”), and YF Logistics LLC, a New Jersey limited liability company (“YF Logistics” and together with 1 Stop, Gold Coast, Superior Deals, and Joe’s Appliances, “Appliances Connection”), Appliances Connection Inc. (“ACI”) and AC Gallery Inc., a Delaware corporation (“AC Gallery”). The following ~~management’s~~ discussion and analysis ofsummarizes the significant factors affecting our operating results, financial condition, liquidity and ~~results~~cash flows as of ~~operations provides information that management believes is relevant to an assessment~~ and ~~understanding of our plans and financial condition~~. for the periods presented below. The following ~~financial information is derived from our consolidated financial statements~~discussion and analysis should be read in conjunction with ~~such~~our unaudited condensed consolidated financial statements and the related notes thereto ~~set forth~~included elsewhere ~~herein.~~
~~Special Note Regarding Forward Looking Statements~~
~~This report~~in this report. The discussion contains forward-looking statements that are based on ~~our management’s~~the beliefs ~~and~~of management, as well as assumptions made by, and on information currently available to, us. All statements other than statements of historical facts are forward-looking statements. These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actualmanagement. Actual results ~~levels of activity, performance or achievements to be~~could differ materially ~~different~~ from ~~any future results, levels of activity, performance or achievements expressed~~those discussed in or implied by ~~these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:~~
● ~~the impact of the coronavirus pandemic on our operations and financial condition;~~
● ~~our goals and strategies;~~
● ~~our future business development, financial condition and results of operations;~~
● ~~expected changes in our revenue, costs or expenditures;~~
● ~~growth of and competition trends in our industry;~~
● ~~our expectations regarding demand for, and market acceptance of, our products;~~
● ~~our expectations regarding our relationships with investors, institutional funding partners and other parties we collaborate with;~~
● ~~fluctuations in general economic and business conditions in the markets in which we operate; and~~
● ~~relevant government policies and regulations relating to our industry.~~
~~In some cases, you can identify~~ forward-looking statements ~~by terms such~~ as “may,” “could,” “will,” “should,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “project” or “continue” ora result of various factors, including those discussed below and elsewhere in this report, particularly in the ~~negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known~~section “Cautionary Statement Regarding Forward-Looking Statements” and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Item 1A “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 under the heading Item 1A “Risk Factors.”
Overview
The following discussion and ~~elsewhere~~analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes thereto, which are included in Part I, Item 1 of this report. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement isForm 10-Q.
We operate a ~~guarantee of future performance.~~
The forward-looking statements made in this report relate only to events or information as of the date on which the statements are made in this report. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

~~Overview~~
~~1847 Goedeker Inc. (“we,” “us,” “our” or the “Company”) is a one-stop e-commerce~~content-driven and technology-enabled shopping destination for ~~home furnishings, including~~ appliances, furniture and home ~~goods~~goods. With warehouse fulfillment centers in the Northeast and ~~related products. Since our founding~~Midwest, as well as showrooms in ~~1951, we have evolved from a local brick and mortar operation serving the~~Brooklyn, New York, St. Louis, ~~metro area to a large nationwide omnichannel retailer that offers~~Missouri and Largo, Florida, we offer one-stop shopping for national and global brands. We carry many household name-brands, including Bosch, Cafe, Frigidaire Pro, Whirlpool, LG, and Samsung, and also carry many major luxury appliance brands such as Miele, Thermador, La Cornue, Dacor, Ilve, Jenn-Air and Viking, among others. We also sell furniture, fitness equipment, plumbing fixtures, televisions, outdoor appliances, and patio furniture, as well as commercial appliances for builder and business clients.
Recent Developments
New Credit Agreement
On May 9, 2022, we entered into a Credit Agreement (the “New Credit Agreement”) by and among the ~~leading brands. While we still maintain our St. Louis showroom, over 95%~~Company and ACI, as borrowers, certain of our ~~sales are placed through our website at www.goedekers.com. We offer over 141,000 stock-keeping units organized~~subsidiaries as guarantors, each of the lenders identified therein (the “Lenders”) and Bank of America, N.A., as administrative agent, swingline lender and letter of credit issuer (the “Agent”), pursuant to which the Lenders have agreed to make available to us senior secured credit facilities in the aggregate initial amount of $140,000,000, including (i) a $100,000,000 term loan (the “New Term Loan”) and (ii) a $40,000,000 revolving credit facility (the “New Revolving Loan”), which revolving credit facility includes a $2,000,000 swingline subfacility (the “New Swing Line Loan” and together with the New Term Loan and the New Revolving Loan, the “New Loans”) and a $2,000,000 letter of credit subfacility, in each case, on the terms and conditions contained in the New Credit Agreement. The New Loans may from time to time be further evidenced by ~~category and product features, providing visitors~~separate promissory notes issued by the borrowers. On May 9, 2022, we borrowed the entire amount of the New Term Loan, but no New Revolving Loans have been made as of May 16, 2022.
The proceeds of the New Term Loan were applied, among other uses, to prepay the ~~site an easy to navigate shopping experience.~~obligations in full under the Company’s existing M&T Credit Agreement (as defined below). On May 9, 2022, in connection with prepayment of the obligations under the M&T Credit Agreement, the M&T Credit Agreement was terminated.

Through our e-commerce business model, we offer an online marketplace for consumers looking for variety, style, service and value when shopping for nearly any home product needed. We are focused on bringing our customers an experience that is at the forefront of shopping online for the home. New Headquarters
We have ~~built a large online selection of appliances, furniture, home goods and related products. We are able to offer this vast selection of products because~~transitioned our ~~model requires minimal inventory in relation~~corporate headquarters to our ~~sales. We specialize~~office space and showroom in Brooklyn, New York. On March 15, 2022, we entered into a lease agreement with 8780 19 Ave LLC, a related party, for additional office space in Brooklyn to expand our headquarter office, currently located in the ~~home category~~adjacent building, as we continue scaling our business and ~~this has enabled us~~consolidating our corporate functions in Brooklyn. The lease expires on December 31, 2026, with an option to ~~build~~extend for an additional five years thereafter.
Share Repurchase Plan
On December 17, 2021, we approved a ~~shopping experience and logistics infrastructure that is tailored~~new share repurchase program under which we may repurchase up to ~~the unique characteristics~~$25.0 million of our ~~market.~~outstanding shares of common stock in the open market, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our decision to repurchase shares, as well as the timing of such repurchases, will depend on a variety of factors that include ongoing assessments of our capital needs, obtaining requisite senior lender consent, market conditions and the price of our common stock, and other corporate considerations, as determined by our management. The repurchase program may be suspended or discontinued at any time. As of March 31, 2022, no shares have been repurchased.

~~Recent Developments~~
Ongoing Impact of Coronavirus Pandemic
~~In late 2019, a novel strain~~We are continuing to closely monitor the impact of ~~coronavirus, or~~the COVID-19 was reported to have surfaced in Wuhan, China. The virus has since spread to over 150 countries and every state in the United States. On March 11, 2020, the World Health Organization declared the outbreak a pandemic ~~and on March 13, 2020, the United States declared a national emergency.~~
Most states and cities, including in markets in which we operate, reacted by instituting quarantines, restrictions on travel, “stay at home” rules, social distancing measures and restrictions on the types of businesses that could continue to operate, as well as guidance in response to the pandemic and the need to contain it. Pursuant to restrictions in Missouri, our showroom was closed from April through June of 2020, but our call center and warehouse continued to operate. Since over 95% of our sales are completed online and our call center and warehouse and distribution operations continued to operate, the restrictions put in place have not had a materially negative impact on our ~~operations. However, the~~business, results of operations and financial results. The situation surrounding the COVID-19 pandemic remains fluid and wethe full extent of the impact of the COVID-19 pandemic on our business will depend on certain developments including the duration and severity of the pandemic, the emergence of new variants that may continue to prolong the pandemic, the amount of time it will take for normal economic activity to resume, future government actions that may be ~~required to close or limit service offerings in~~taken, the impact on consumer activity and behaviors and the effect on our ~~retail facility or warehouse in response to guidance from applicable government~~customers, employees, suppliers, partners and ~~public~~stockholders, all of which are uncertain and cannot be predicted. Our focus remains on promoting the health, ~~officials, which could adversely affect~~safety and financial security of our ~~operations~~employees and ~~revenues.~~
~~In addition, we~~serving our customers. We are dependent upon suppliers to provide us with all of the products that we sell. ~~The~~While the home industry has fared much better during the COVID-19 pandemic than other sectors of the economy, the pandemic has negatively impacted and may continue to negatively impact suppliers, manufacturers and ~~manufacturers of certain~~the overall supply chain of our products. As a result, we have faced and may continue to face delays or difficulty sourcing certain products, which could negatively affect our business and financial results. Even if we are able to find alternate sources for such products, they may cost more, which could adversely impact our profitability and financial condition.
The global deterioration in economic conditions, which may have an adverse impact on discretionary consumer spending, could also impact our business. For instance, consumer spending may be negatively impacted by general macroeconomic conditions, including a rise in unemployment, increased inflation, and decreased consumer confidence resulting from the ~~pandemic.~~pandemic and other economic conditions. Changing consumer behaviors as a result of the pandemic may also have a material impact on our revenue.
~~Furthermore,~~As the ~~spread of~~ COVID-19 ~~has adversely impacted global economic activity~~pandemic remains dynamic and ~~has contributed~~subject to ~~significant volatility~~rapid and negative pressure in financial markets. The pandemic has resulted, and may continue to result, in a significant disruption of global financial markets, which may reduce our ability to access capital in the future, which could negatively affect our liquidity.
We have taken steps to take care of our employees, including providing the ability for employees to work remotely and implementing strategies to support appropriate social distancing techniques for those employees who are not able to work remotely. We have also taken precautions with regard to employee, facility and office hygiene as well as implementing significant travel restrictions. We are also assessing our business continuity plans for all business units in the context of the pandemic. This is a rapidly evolving situation, andpossibly material change, we will continue to actively monitor the COVID-19 situation and mitigate developments affecting our workforce, our suppliers, our customers, and the public at large to the extent we are able to do so. We have and will continue to carefully review all rules, regulations, and orders and responding accordingly.

~~If the current pace of the pandemic does not continue to slow and the spread of COVID-19 is not contained,~~may take further actions that alter our business operations ~~could~~as may be ~~further delayed~~required by federal, state, local or ~~interrupted.~~foreign authorities, or that we determine are in the best interests of our customers, employees, suppliers, partners, stockholders and communities. We ~~expect that government and health authorities may announce new or extend existing restrictions, which could require us to make further adjustments to our operations in order to comply~~cannot predict with any ~~such restrictions. We may also experience limitations in employee resources. In addition, our operations could be disrupted if any of our employees were suspected of having~~certainty whether and to what degree the disruption caused by the COVID-19 which could require quarantine of some or all such employees or closure of our facilities for disinfection. The duration of any business disruption cannot be reasonably estimated at this time but may materially affect our ability to operate our business and result in additional costs.
The extent to which the pandemic may impact our results will depend on future developments, which are highly uncertain and cannot be predicted as of the date of this prospectus, including new information that may emerge concerning the severity of the pandemic and ~~steps taken~~reactions thereto will continue, and we expect to ~~contain the pandemic or treat its impact, among others. Nevertheless, the pandemic~~face difficulty in accurately forecasting our financial condition and ~~the current financial, economic and capital markets environment, and future developments~~operational results. See also Item 1A “Risk Factors” in the ~~global supply chain and other areas present material uncertainty and risk with respect to our performance, financial condition, results of operations and cash flows.~~
~~Amendment to Securities Purchase Agreement~~
~~On October 20, 2020, we entered into a securities purchase agreement, which was amended~~Company’s Annual Report on December 8, 2020, with our wholly owned subsidiary, Appliances Connection Inc. (“ACI”) and 1 Stop Electronics Center, Inc., Gold Coast Appliances, Inc., Superior Deals Inc., Joe’s Appliances LLC and YF Logistics LLC (collectively, “Appliances Connection”) and the sellers set forth on Exhibit A thereto, pursuant to which ACI agreed to acquire all of the issued and outstanding capital stock or other equity securities of Appliances Connection for an aggregate purchase price of $210,000,000, subject to adjustment, consisting of (i) $168,000,000 in cash, (ii) 2,333,333 shares of our common stock having a stated value that is equal to $21,000,000, and (iii) a number of shares of our common stock that is equal to (A) $21,000,000 divided by (B) the average of the closing price of our common stock (as reported on the NYSE American)Form 10-K for the ~~20 trading days immediately preceding the 3rd trading day prior to the closing date of the transaction.~~
~~On April 6,~~year ended December 31, 2021 the parties entered into an amendment to the securities purchase agreement, pursuant to which (i) the outside date (as defined in the securities purchase agreement) by which the closing of the securities purchase agreement must be completed was changed to June 30, 2021, (ii) the definition of net working capital set forth in the securities purchase agreement was revised to clarify that the accrued liabilities for ~~potential sales tax will not be included in such calculation,~~more information.
Trends and (iii) the condition to closing the transaction contemplated by the securities purchase agreement relating to a lease for the Gold Coast location was deleted, because such lease has since been terminated.
~~Repayment of Note~~
~~On May 10, 2021, we repaid the term loan from Arvest Bank described below by transferring principal and accrued interest from the restricted cash account.~~
Principal Factors Affecting Our Financial Performance
Our operating results are primarily affected by the following factors:
● our ability to acquire new customers or retain existing ~~customers;~~customers, including those shopping online as a result of COVID-19;
● our ability to offer competitive product pricing;
● our ability to broaden product offerings;
● industry demand and competition; ~~and~~
● market conditions and our market ~~position.~~position; and
● our ability to successfully integrate the operations of Appliances Connection with our business.

~~Key Financial Operating Metrics~~
Three Months Ended
March 31,
2021 2020
Site Sessions (in millions) 2.5 1.4
Order History (in millions) $ 30.7 $ 15.4
~~A site session occurs when a person visits our website. An order occurs when a customer has visited our website~~Notably, due to the COVID-19 pandemic and ~~ordered one or more items and has paid for them. An order is paid for by our customer when the order is placed and booked as revenue by us when the order is shipped.~~
Total revenues and total orders for any given month may not be equal for two primary reasons: (1) normal customer cancellations and (2) the time required to ship an order and recognize revenue. When there are noassociated supply chain ~~issues, the time~~crisis, our freight costs have increased materially as a proportion of sales, putting downward pressure on our gross margins. While our historical freight costs as a percentage of sales decreased from order to shipping is between 20 and 25 days. Thus, an order made after the 10th of the current month will become revenue in the succeeding month, distorting the comparison between a months’ orders and its sales. COVID-19 significantly increased the time between order and shipment, which increased customer.
~~Our site sessions increased to approximately 2.5 million in~~13.7% for the three months ended March 31, 2021 ~~as compared~~ to ~~approximately 1.4 million in~~9.6% for the three months ended March 31, 2022 as we brought efficiencies to our pre-Appliances Connection Acquisition fulfillment operations, on a consolidated proforma basis, our freight costs as a percentage of sales increased 220 basis points from the first quarter of 2021. ~~These increased site sessions resulted in three-year highs for orders~~Recent increases in the ~~three months ended March 31, 2021.~~fuel costs are putting additional downward pressure on our gross margins. Management believes that these trends are temporary in nature, and our margins will continue improving as supply chain stabilizes and fuel costs return back to normal.
Supply chain constraints also impacted our order fulfillment timing, further amplifying order cancellations and refunds caused by the outbreak of the COVID-19 pandemic.

~~Emerging Growth Company~~
Factors Affecting Comparability of Our Future Results of Operations to Our Historical Results of Operations
The comparability of our results of operations between the periods discussed below is affected by the acquisitions we have completed during such periods. We ~~qualify as an “emerging growth company” under~~may also evaluate and pursue acquisitions in the ~~Jumpstart~~future, and such acquisitions, if completed, will continue to impact the comparability of our financial results. Our ~~Business Startups Act~~acquisitions may have materially different characteristics than our historical results, and such differences in economics may impact the comparability of ~~2012 (the “JOBS Act”). As a result, we are permitted~~our future results of operations to ~~and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:~~our historical results.
● ~~have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of~~On June 2, 2021, we completed the ~~Sarbanes-Oxley Act;~~Appliances Connection Acquisition.
● ~~comply with any requirement that may be adopted by~~On July 29, 2021, we completed the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);AC Gallery Acquisition.
● ~~submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay” and “say-on-frequency;~~
The Company accounted for the above acquisitions using the acquisition method of accounting in accordance with FASB ASC Topic 805 “Business Combinations.” ~~and~~
● disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.
In ~~addition, Section 107 of~~accordance with ASC 805, the ~~JOBS Act also provides that an emerging growth company can take advantage of~~Company used its best estimates and assumptions to assign fair value to the ~~extended transition period provided in Section 7(a)(2)(B) of~~tangible and intangible assets acquired and liabilities assumed at the Securities Act of 1933, as amended, for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of our initial public offering, (ii) the last day of the first fiscal year in which our total annual gross revenues are $1.07 billion or more, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iv) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
acquisition date.

Results of Operations
Comparison of Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021
The unaudited condensed consolidated operating results presented below for the three months ended March 31, 2022 include the results of Appliances Connection, and, therefore, are not comparable to the consolidated operating results for the three months ended March 31, 2021.
The following table sets forth key components of our results of operations for the three months ended March 31, 2022 and 2021, ~~and 2020,~~ in ~~dollars~~thousands and as a percentage of our ~~net sales.~~revenue.
For the Three Months For the Three Months
Ended March 31, 2022 Ended March 31, 2021
Amount
% of
Net Sales
Amount
% of
Net Sales

Product sales, net $ 152,752 100.0 % $ 13,697 100.0 %
Cost of goods sold 116,883 76.5 % 11,069 80.8 %
Gross profit 35,869 23.5 % 2,628 19.2 %

Operating Expenses
Personnel 7,046 4.6 % 1,931 14.1 %
Advertising 4,288 2.8 % 1,083 7.9 %
Bank and credit card fees 6,167 4.0 % 533 3.9 %
Depreciation and amortization 2,734 1.8 % 122 0.9 %
General and administrative 5,567 3.6 % 2,240 16.4 %

Total Operating Expenses 25,802 16.9 % 5,909 43.1 %

INCOME (LOSS) FROM OPERATIONS 10,067 6.6 % (3,281 ) (24.0 )%

Other Income (Expenses)
Interest income 41 0.0 % 10 0.1 %
Adjustment in value of contingency (2 ) (0.0 )% - 0.0 %
Interest expense (936 ) (0.6 )% (232 ) (1.7 )%
Other income 135 0.1 % 10 0.1 %

Total Other Income (Expenses) (762 ) (0.5 )% (212 ) (1.5 )%

NET INCOME (LOSS) BEFORE INCOME TAXES 9,305 6.1 % (3,493 ) (25.5 )%

INCOME TAX EXPENSE 3,383 2.0 % - 0.0 %

NET INCOME (LOSS) $ 5,922 4.0 % $ (3,493 ) (25.5 )%

Three Months Ended
March 31,
2021

Three Months Ended
March 31,
2020
(As Restated)

Amount
% of
Net Sales
Amount
% of
Net Sales

Products sales, net $ 13,697,368 100.00 % $ 9,677,178 100.00 %
Cost of goods sold 11,068,911 80.81 % 8,111,170 83.82 %
Gross profit 2,628,457 19.19 % 1,566,008 16.18 %
Operating expenses
Personnel 1,931,324 14.10 % 1,311,484 13.55 %
Advertising 1,083,248 7.91 % 666,436 6.89 %
Bank and credit card fees 532,742 3.89 % 244,740 2.53 %
Depreciation and amortization 122,331 0.89 % 91,841 0.95 %
General and administrative 2,239,498 16.35 % 1,439,840 14.88 %
Total operating expenses 5,909,143 43.14 % 3,754,341 38.80 %
Loss from operations (3,280,686 ) (23.95 )% (2,188,333 ) (22.61 )%
Other income (expense)
Interest income 10,096 0.07 % - -
Interest expense (232,831 ) (1.70 )% (456,070 ) (4.71 )%
Other income 10,206 0.07 % 2,383 0.02 %
Total other income (expense) (212,529 ) (1.55 )% (453,687 ) (4.69 )%
Net loss before income taxes (3,493,215 ) (25.50 )% (2,642,020 ) (27.30 )%
Income tax benefit - - 435,000 4.50 %
Net loss $ (3,493,215 ) (25.50 )% $ (2,207,020 ) (22.81 )%
Product sales, net. We generate revenue from the retail sale of ~~home furnishings, including~~ appliances, furniture, home goods and related products. Our product sales ~~increased by $4,020,190, or 41.54%,~~were $152.8 million for the three months ended March 31, 2022, as compared to ~~$13,697,368~~$13.7 million for the three months ended March 31, 2021, ~~from $9,677,178~~an increase of $139.1 million, or 1,015.2%. Such increases were primarily due to the impact of the Appliances Connection Acquisition.
Our product sale, net by type is as follows (in thousands):
For the Three Months For the Three Months
Ended March 31, 2022 Ended March 31, 2021
Amount
% of
Net Sales
Amount
% of
Net Sales

Appliance sales $ 140,975 92.3 % $ 10,273 75.0 %
Furniture sales 4,155 2.7 % 2,328 17.0 %
Other sales 7,622 5.0 % 1,096 8.0 %

Total $ 152,752 100.0 % $ 13,697 100.0 %
The percentage of furniture and other sales declined in the first quarter 2022 period as compared to the first quarter 2021 period as furniture and other sales comprised a lower percentage of Appliances Connection sales.
Cost of goods sold. Our costs of goods sold are comprised of product costs and freight costs. Product costs represent the amount we pay the manufacturer for their product. We negotiate special terms and pricing with the manufacturer, which are generally based on the number of products we purchase. Periodically, manufacturers offer special pricing for purchasing a certain volume of products at one time. Funding might also be offered to support our marketing and advertising efforts. Freight is the cost of delivering products to customers. Our cost of goods sold was $116.9 million for the three months ended March 31, ~~2020. The increase is due to increased sales volume to meet appliance and furniture demand resulting from increased advertising, which has a direct impact on customer orders and shipped sales.~~
During the three months ended March 31, 2021, we experienced delays in getting products from manufacturers whose production facilities were closed or operating at reduced capacity because of the coronavirus pandemic, which resulted in cancellations of some customer orders. For the three months ended March 31, 2021, we estimate that cancellations caused by shipping delays approximated $11.0 million based on the historical ratio of shipped sales to customer orders of approximately 80.7% for the three most recent pre COVID-19 years (2017 to 2019) to the actual ratio of approximately 44.7% in the three months ended March 31, 2021.
~~Our past performance is generally indicative of future performance to the extent that there are seasonal factors such as Black Friday, Cyber Monday, and other shopping days when sales spike.~~

~~Our revenue by sales type is as follows:~~

Three Months Ended
March 31,
2021

Three Months Ended
March 31,
2020

Amount % Amount %
Appliance sales $ 10,273,393 75.00 % $ 7,802,104 80.62 %
Furniture sales 2,327,834 16.99 % 1,281,836 13.25 %
Other sales 1,096,141 8.00 % 593,238 6.13 %
Total $ 13,697,368 100.00 % $ 9,677,178 100.00 %
~~The percentage of furniture sales increased in the 2021 period~~2022, as compared to ~~the 2020 period as furniture was more readily available from manufacturers than appliances.~~
~~Cost of goods sold~~. Our cost of goods sold consists of the cost of purchased merchandise plus the cost of delivering merchandise and, where applicable, installation, net of promotional rebates and other incentives received from vendors. Our cost of goods sold increased by $2,957,741, or 36.47%, to $11,068,911$11.1 million for the three months ended March 31, 2021, ~~from $8,111,170~~an increase of $105.8 million, or 956.0%, with the increase driven by the impact of the Appliances Connection Acquisition.

Our cost of goods sold by type is as follows (in thousands):
For the Three Months For the Three Months
Ended
March 31, 2022 Ended
March 31, 2021
Amount % of Net
Sales Amount % of Net
Sales
Product costs, net of vendor rebates $ 102,293 67.0 % $ 9,193 67.1 %
Freight costs 14,590 9.6 % 1,876 13.7 %

Total $ 116,883 76.5 % $ 11,069 80.8 %
Gross profit and gross margin. As a result of the foregoing, our gross profit was $35.9 million for the three months ended March 31, ~~2020. As~~2022, as compared to $2.6 million for the three months ended March 31, 2021, an increase of $33.2 million, or 1,264.6%. Our gross margin (gross profit as a percentage of net ~~sales, cost of goods sold decreased from 83.82% in~~sales) was 23.5% for the ~~2020 period to 80.81% in~~three months ended March 31, 2022 and 19.2% for the ~~2021 period.~~three months ended March 31, 2021. Such ~~decrease was~~increases were primarily due to the ~~sale~~impact of ~~more furniture and other products in~~ the quarter. Product cost for appliances sold in the 2021 period was similar to product cost for appliances that were sold in the 2020 period; however, the mix of furniture and other items sold in 2021 had a lower product cost than the furniture and other items sold in 2020.Appliances Connection Acquisition.
Personnel expenses. Personnel expenses include employee salaries and bonuses plus related payroll taxes. It also includes health insurance premiums, 401(k) contributions, training costs and stock compensation expense. Our personnel expenses ~~increased by $619,840, or 47.26%,~~were $7.0 million for the three months ended March 31, 2022, as compared to ~~$1,931,324~~$1.9 million for the three months ended March 31, 2021, ~~from $1,311,484 for the three months ended March 31, 2020.~~an increase of $5.1 million, or 264.9%. As a percentage of net sales, personnel expenses ~~increased from 13.55% in~~were 4.6% and 14.1% for the ~~2020 period~~three months ended March 31, 2022 and 2021, respectively. Such changes were primarily due to ~~14.10% in~~ the ~~2021 period. The increase is~~impact of the result of hiring the senior management team and support staff needed because of increased customer orders. Additionally, during the quarter, we incurred stock compensation expenses of $124,575 that we did not have in the 2020 quarter. We believe it is important to also compare our expenses to orders when product availability is constrained as our personnel, advertising, and bank and credit card fees are directly or indirectly related to customer orders. As a percentage of orders, personnel expenses decreased from 8.5% in the 2020 period to 6.2% in the 2021 period.Appliances Connection Acquisition.
Advertising expenses. Advertising expenses include the cost of marketing our products and primarily include online search engine expenses. Our advertising expenses ~~increased by $416,812, or 62.54%,~~were $4.3 million for the three months ended March 31, 2022, as compared to ~~$1,083,248~~$1.1 million for the three months ended March 31, 2021, ~~from $666,436 for the three months ended March 31, 2020.~~an increase of $3.2 million, or 295.9%. As a percentage of net sales, advertising expenses ~~increased from 6.89% in~~were 2.8% and 7.9% for the three months ended March 31, 2022 and 2021, ~~period~~respectively. Such changes were primarily due to ~~7.91% in~~ the ~~2021 period. The increase relates to an increase in advertising spending to drive traffic to our website. As a percentage~~impact of ~~orders, advertising expenses decreased from 4.3% in~~ the ~~2020 period to 3.5% in the 2021 period.~~Appliances Connection Acquisition.
Bank and credit card fees. Bank and credit card fees are primarily the fees we pay credit card processors for processing credit card payments made by ~~customers.~~customers and to third party sellers on whose websites we sell parts and other small items. Our bank and credit card fees ~~increased by $288,002, or 117.68%,~~were $6.2 million for the three months ended March 31, 2022, as compared to ~~$532,742~~$0.5 million for the three months ended March 31, 2021, ~~from $244,740 for the three months ended March 31, 2020.~~an increase of $5.6 million, or 1,057.0%. As a percentage of net sales, bank and credit card fees ~~increased from 2.53% in~~were 4.0% and 3.9% for the ~~2020 period to 3.89% in the~~three months ended March 31, 2022 and 2021, ~~period. These~~respectively. Bank and credit card fees are based on customer orders that are paid with a credit card (substantially all orders), so the increase was largely due to the increase in customer ~~orders. We pay a credit card fee for each order, regardless of whether that order is shipped or cancelled by customer. As a percentage of~~ orders ~~bank and credit card fees increased from 1.6% in~~associated with the ~~2020 period to 1.7% in the 2021 period.~~Appliances Connection Acquisition.
Depreciation and amortization. Depreciation and amortization was ~~$122,331,~~$2.7 million, or ~~0.89%~~1.8% of net sales, for the three months ended March 31, ~~2021,~~2022, as compared to ~~$91,841,~~$0.1 million, or ~~0.95%~~0.9% of net sales, for the three months ended March 31, ~~2020.~~
2021. The increase is the result of amortizing intangible assets acquired in the Appliances Connection Acquisition.

General and administrative expenses. Our general and administrative expenses consist primarily of professional advisor fees, rent expense, insurance, unremitted sales tax, and other expenses incurred in connection with general operations. Our general and administrative expenses ~~increased by $799,658, or 55.54%,~~were $5.6 million for the three months ended March 31, 2022, as compared to ~~$2,239,498~~$2.2 million for the three months ended March 31, 2021, ~~from $1,439,840 for the three months ended March 31, 2020.~~an increase of $3.3 million, or 148.5%. As a percentage of net sales, general and administrative expenses ~~increased from 14.88% in the 2020 period to 16.35% in the 2021 period. The increase was largely due to increased directors~~were 3.6% and officers insurance expenses, fees to our independent directors, and legal, audit and other professional fees in connection with becoming a public company in August 2020, as well as consulting fees to upgrade our online shopping cart, fees for our Electronic Data Interchange initiative, and other consulting fees. In the three months ended March 31, 2021, we incurred non-recurring expenses totaling approximately $695,000, representing $445,488 in expenses related to the Appliances Connection acquisition and the balance for the reaudit of 2019. In the 2020 period, we incurred $873,200 non-recurring accrual for sales tax. General and administrative expenses without these non-recurring expenses were $1,544,011 and $566,64016.4% for the three months ended March 31, 2022 and 2021, ~~and 2020,~~ respectively. ~~As a percentage~~Such changes were primarily due to the impact of ~~orders, general and administrative expenses were 7.3% in~~ the ~~2021 period compared to 9.4% 2020 period.~~Appliances Connection Acquisition.

Total other income (expense). We had ~~$212,529~~$0.8 million in total other expense, net, for the three months ended March 31, ~~2021,~~2022, as compared to total other expense, net, of ~~$453,687~~$0.2 million for the three months ended March 31, ~~2020.~~2021. Total other expense, net, for the three months ended March 31, 2022 consisted primarily of interest expense of $0.7 million and financing costs of $0.2 million. Total other expense, net, for the three months ended March 31, 2021 consisted primarily of interest expense of ~~$232,831, offset by interest~~$0.2 million.
Income tax benefit (expense). We had an income tax net expense of ~~$10,096 and other income of $10,206, while other expense, net,~~$3.4 million for the three months ended March 31, ~~2020 consisted of interest~~2022, as compared to an income tax expense of ~~$456,070, offset~~$nil for the three months ended March 31, 2021. Such change was due to the Company’s profitability, primarily driven by ~~other~~the Appliances Connection Acquisition.
Net income ~~of $2,383.~~
~~Net loss~~(loss). As a result of the cumulative effect of the factors described above, we had net income of $5.9 million for the three months ended March 31, 2022, as compared to a net loss of ~~$3,493,215~~$3.5 million for the three months ended March 31, 2021, ~~as compared to $2,207,020 for~~an increase of $9.4 million, or 270.0%.
Liquidity and Capital Resources
As of March 31, 2022, we had cash and cash equivalents of $25.8 million and restricted cash of $2.6 million. For the three months ended March 31, ~~2020, an increase~~2022, we had operating income of ~~$1,286,195, or 58.28%.~~
~~Liquidity~~approximately $10.1 million, cash flows used in operations of $3.7 million and ~~Capital Resources~~
working capital of $24.9 million. As of ~~March~~December 31, 2021, we had cash and cash equivalents of ~~$1,309,374~~$25.7 million and restricted cash of ~~$10,094,932.~~ $8.1 million and working capital of $16.0 million.
On May 9, 2022, we entered into the New Credit Agreement, borrowed the full amount of the $100 million New Term Loan and used $55.9 million of the proceeds to pay off the M&T Credit Agreement in full. As of May 16, 2022, we have not borrowed any additional funds under $40 million New Revolving Loan available under the New Credit Agreement.
We have previously generated significant losses since our acquisition of Goedeker Television and have relied on cash on hand, external bank lines of credit, proceeds from ~~our initial~~ public ~~offering described below,~~offerings, issuance of ~~third party~~third-party and ~~related party~~related-party debt and the issuance of ~~notes~~a note to support cashflow from operations. ~~For the three months ended March 31, 2021,~~Notably, we ~~incurred operating losses of approximately $3,280,686, cash flows used in operations of $2,807,673 and negative working capital of $19,801,748.~~
~~On March 19, 2021, we received net proceeds of $4,590,000 from the sale of notes due December 19, 2021 and warrants described below. These proceeds will supplement our~~reported positive cash flow from operations in 2020 as money was collected from the customers at the time orders were placed, instead of the time orders were shipped, leading to accumulation of customer deposits. On June 2, 2021, we acquired Appliances Connection, which historically has been a profitable company with strong operating cash flow; however due to the ongoing COVID-19 pandemic and ~~provide additional liquidity.~~
~~Management has prepared estimates~~resulting supply chain constraints, we refunded to customers $34.0 million in customer deposits throughout 2021, $27.4 million of ~~operations for fiscal years 2021~~which was due to order cancellations, leading to a negative operating cash flow in 2021. At this point we have been able to clear the majority of the historical customer deposit balances, and ~~2022~~based on current facts and ~~believes~~circumstances, we believe that ~~sufficient funds~~we will ~~be generated~~have adequate cash flow from operations, external bank lines of credit, and proceeds from any future issuances of debt or equity to fund ~~our~~ operations and to service ~~our~~ debt obligations for ~~one year from~~at least the ~~date of the filing of this report.~~ next twelve months.
We may, however, in the future require additional cash resources due to changing business conditions, implementation of our strategy to expand our business, or other investments or acquisitions we may decide to pursue. If our own financial resources are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities could result in dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business ~~prospects~~prospects.
We assess liquidity and going concern uncertainty in our unaudited condensed consolidated financial statements to determine whether there are 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 unaudited condensed 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, we will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, our ability to delay or curtail expenditures or programs and our ability to raise additional capital, if necessary, among other factors. Based on this assessment, as necessary or applicable, we make certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent we deem probable those implementations can be achieved and we have the proper authority to execute them within the look-forward period.

~~The~~
We have prepared estimates of operations for fiscal years 2022 and 2023 and believe that sufficient funds will be generated from operations to fund our operations and to service our debt obligations for one year from the date of the filing of this report. We have considered the impact of COVID-19 on our business ~~has been considered~~ in these assumptions; however, it is too early to know the full impact of COVID-19 or its timing on a return to more normal operations.
The ~~accompanying~~ unaudited condensed consolidated financial statements have been prepared on a going concern basis under which we are expected to be able to realize our assets and satisfy our liabilities in the normal course of business.
We believe, based on relevant conditions and events that are known and reasonably knowable, that our forecasts, for one year from the date of the filing of this report, indicate improved operations and our ability to continue operations as a going concern. See Note 3 to the unaudited condensed consolidated financial statements, “Liquidity and Going Concern Assessment.”

Summary of Cash Flow
The following table provides detailed information about our net cash flow for ~~all financial statement periods presented~~the three months ended March 31, 2022 and 2021 (in thousands).
For the Three Months
Ended
March 31, 2021
2022 2021
Net cash used in operating activities $ (3,747 ) $ (2,808 )
Net cash used in investing activities (6 ) (126 )
Net cash (used in) provided by in financing activities (1,634 ) 4,426

Net change in cash, cash equivalents, and restricted cash $ (5,387 ) $ 1,492
Cashflows used in ~~this report.~~
Three Months Ended
March 31,
2021
2020
(As Restated)

Net cash provided by (used in) operating activities $ (2,807,673 ) $ 958,356
Net cash used in investing activities (126,115 ) -
Net cash provided by (used in) financing activities 4,426,178 (775,158 )
Net change in cash and restricted cash 1,492,390 183,198
Cash and restricted cash, beginning of period 9,911,916 64,470
Cash and restricted cash, end of period $ 11,404,306 $ 247,668
operating activities. Our net cash used in operating activities was ~~$2,807,673~~$3.7 million for the three months ended March 31, ~~2021,~~2022, as compared to net cash ~~provided by~~used in operating activities of ~~$958,356~~$2.8 million for the three months ended March 31, ~~2020. For the three months ended March 31, 2021, our net loss of $3,493,215, a decrease~~2021. Significant changes in ~~merchandise inventory of $736,243~~operating assets and a decrease in accounts payable and accrued expensed of $344,893, offset by an increase in receivables of $1,049,878 and an increase in customer deposits of $390,196, were the primary drivers of the netliabilities affecting cash flows during these periods included:
● Net income was $5.9 million and $(3.5) million for the three months ended March 31, 2022 and 2021, respectively,
● Cash used by receivables was $(1.7) million and $1.0 million for the three months ended March 31, 2022 and 2021, respectively, due primarily to increases in sales volume as a result of the Appliances Connection Acquisition,
● Cash used by inventories was $(8.2) million and $(0.7) million for the three months ended March 31, 2022 and 2021, respectively, due primarily to efforts to manage inventory levels to support the growth in sales as a result of the Appliances Connection Acquisition, and
● Cash used by customer deposits was $(7.6) million and $0.4 million for the three months ended March 31, 2022 and 2021, respectively, related to increases in sales volume as a result of the Appliances Connection Acquisition and the timing it can take to fulfill orders as a result of supply chain shortages as during the economic downturn related to the COVID-19 pandemic.
Cashflows used in operating activities. For the three months ended March 31, 2020, our net loss of $2,207,020 and deferred tax assets of $435,000, offset by increases in customer deposits of $1,270,488 and accounts payable and accrued expenses of $1,442,264, were the primary drivers of the net cash provided by operating activities.
investing activities. Our net cash used in investing activities was ~~$126,115~~$0.006 million for the three months ended March 31, ~~2021, all of which consisted of expenditures~~2022, as compared to ~~upgrade our new warehouse. We had no investing activities~~$0.1 million for the three months ended March 31, ~~2020.~~2021.
~~Our net cash~~Cashflows provided by financing activities. Our net cash used in financing activities was ~~$4,426,178~~$1.6 million for the three months ended March 31, ~~2021,~~2022, as compared to net cash ~~used in~~provided by financing activities of ~~$775,158~~$4.4 million for the three months ended March 31, 2020. Net cash provided by financing activities for the three months ended March 31, 2021 consisted of proceeds from the private placement described below of 4,590,000, offset by repayment on notes payable of $163,822. Net cash used2021. Significant changes in financing activities affecting cash flows during these years included:
● Net cash received from notes payable proceeds of $ 4.6 million for the three months ended March 31, 2021, and
● Repayments of notes payable of $1.6 million and $0.2 million for the three months ended March 31, 2022 and 2021, respectively.

Debt
New Credit Agreement
On May 9, 2022, the ~~three months ended March 31, 2020 consisted~~Company and ACI as borrowers and certain of ~~net payments on lines of credit of $681,408 and repayment on notes payable of $93,750.~~
~~Private Placement~~
~~On March 19, 2021, we~~our subsidiaries as guarantors entered into ~~a securities purchase agreement with two institutional investors,~~the New Credit Agreement by and among the borrowers, the guarantors, the Lenders and the Agent, pursuant to which ~~we issued~~the Lenders have agreed to ~~each investor (i) a 10% OID~~make available to the Company and ACI senior secured ~~promissory note~~credit facilities in the aggregate initial amount of $140,000,000, including (i) the $100,000,000 New Term Loan and (ii) the $40,000,000 New Revolving Loan, which revolving credit facility includes the $2,000,000 New Swing Line Loan and a $2,000,000 letter of credit subfacility, in each case, on the terms and conditions contained in the New Credit Agreement. The New Loans may from time to time be further evidenced by separate promissory notes issued by the Company and ACI. On May 9, 2022, the Company borrowed the entire amount of the New Term Loan, but no New Revolving Loans have been made as of May 16, 2022.
The proceeds of the New Term Loan were applied, among other uses, to prepay the obligations in full under the Company’s existing M&T Credit Agreement. On May 9, 2022, in connection with prepayment of the obligations under the M&T Credit Agreement, the M&T Credit Agreement was terminated.
Each of the New Loans matures on May 9, 2027 (the “Maturity Date”). The New Loans will bear interest on the unpaid principal amount ~~of $2,750,000 and (ii)~~thereof as follows: (i) if it is a ~~four-year warrant to purchase 200,000 shares of our common stock~~New Loan bearing interest at ~~an exercise price of $12.00, subject to adjustments, which may be exercised on~~ a ~~cashless basis, for a purchase price of $2,500,000 each, or $5,000,000~~rate determined by the Base Rate (as defined in the ~~aggregate. After deducting~~New Credit Agreement), then at the Base Rate plus the Applicable Rate (as defined in the Credit New Agreement) for such New Loan; (ii) if it is a ~~placement fee~~New Loan bearing interest at a rate determined by Term SOFR (as defined in the New Credit Agreement), then at Term SOFR plus the Applicable Rate for such New Loan; and ~~other expenses, we received net proceeds~~(iii) if it is a New Swing Line Loan, then at the rate applicable to New Loans bearing interest at a rate determined by the Base Rate plus the Applicable Rate for such New Loan. The New Term Loan initially bears interest at Term SOFR plus Applicable Rate, with an initial interest period of ~~$4,590,000. As of March 31, 2021,~~one month. The Company may elect to continue or convert the ~~outstanding balance~~existing interest rate benchmark for the New Term Loan from Term SOFR to Base Rate, and may elect the interest rate benchmark for future New Revolving Loans as either Term SOFR or Base Rate (and, with respect to any New Loan made using Term SOFR, may also select the interest period applicable to any such New Loan), by notifying the Agent and Lenders from time to time in accordance with the provisions of the ~~notes~~New Credit Agreement. Interest is ~~$3,347,763, comprised~~payable in arrears on each Interest Payment Date (as defined in the New Credit Agreement). Notwithstanding the foregoing, following an event of ~~principal of $5,500,000, net of unamortized loan costs of $2,152,237. Loan costs consist of unamortized original issue discount of $870,291 and unamortized warrant value of $1,281,946.~~
~~The notes~~default, the New Loans will bear interest at a rate ~~of 10%~~that is 2% per annum higher than the interest rate then in effect for the applicable New Loan.
Commencing on September 30, 2022, through and ~~mature~~including June 30, 2023, the borrowers must repay the principal amount of the New Term Loan in quarterly installments of $1,250,000 each, payable on ~~December 19, 2021.~~the last business day of each March, June, September and December. Commencing on September 30, 2023, through and including June 30, 2024, the borrowers must repay the principal amount of the New Term Loan in quarterly installments of $1,875,000 each, payable on the last business day of each March, June, September and December. Commencing on September 30, 2024, through the Maturity Date, the borrowers must repay the principal amount of the New Term Loan in quarterly installments of $2,500,000 each, payable on the last business day of each March, June, September and December. The ~~notes may~~remaining unpaid principal amount of the New Term Loan must be ~~prepaid~~repaid on the Maturity Date, unless payment is sooner required by ~~us in whole or in part~~the New Credit Agreement. Mandatory prepayments of New Revolving Loans are required if the amount borrowed at any time orexceeds the commitment amount. New Revolving Loans may be repaid and reborrowed at any time until the Maturity Date, subject to the terms and conditions set forth in the New Credit Agreement.
The Company may voluntarily prepay the New Loans from time to time in accordance with the provisions of the New Credit Agreement, and will be required to prepay the New Loans under certain limited circumstances as set forth in the New Credit Agreement, including upon receipt of cash proceeds in connection with certain specified asset sales, receipt of loss or condemnation proceeds or other cash proceeds received other than in the ordinary course of business or upon receipt of cash proceeds from the incurrence of indebtedness that is not permitted under the New Credit Agreement, all as more specifically set forth in the New Credit Agreement.

Under the New Credit Agreement, the borrowers are required to pay certain fees to Agent, including, without ~~penalty~~limitation, a commitment fee of up to 0.25% per annum with respect to the unused portion of the Lenders’ revolving loan commitments, determined as set forth in the New Credit Agreement, and certain fees in connection with the issuance of any letters of credit under the New Credit Agreement.
The New Credit Agreement contains customary events of default, including, among others: (i) for failure to pay principal and interest on any of the New Loans when due, or ~~premium upon at least five (5) days prior written notice,~~to pay any fees or other amounts due under the New Credit Agreement; (ii) the occurrence of certain specified defaults under other agreements to which ~~notice period may be waived~~the Company or its subsidiaries is a party; (iii) for the breach of certain specified covenants in the New Credit Agreement: (iv) if any representation, warranty or certification in the New Credit Agreement or any document delivered in connection therewith was incorrect in any material respect as of the date made; (v) in the case of any voluntary or involuntary bankruptcy, insolvency or dissolution; (vi) in the case of the imposition of any money judgment, writ or similar process in an aggregate amount in excess of $4,000,000 (in certain cases, to the extent not covered by insurance); or (vii) if a Change of Control (as defined in the New Credit Agreement) occurs.
The New Credit Agreement contains customary representations, warranties and affirmative and negative financial and other covenants for loans of this type. The closing of the New Loans was subject to customary closing conditions, including delivery of the security documents described below.
The New Loans are guaranteed by the ~~holder. In addition, if we issue~~guarantors and sell shares of our equity securities to investors on or before the maturity date in an equity financing with total gross proceeds of not less than $10,000,000 (excluding the conversion of the notes or other convertible securities issued for capital raising purposes), then we must repay the then-outstanding principal amount of the notes and any accrued but unpaid interest.

~~The notes~~ are secured by a first priority security interest in substantially all of ~~our~~the assets ~~and contain customary events of default. Upon, and during the continuance of, an event of default, the notes are convertible, in whole or in part, at the option~~ of the ~~holder~~borrowers and the guarantors pursuant to a security and pledge agreement entered into ~~shares~~on May 9, 2022 among the borrowers, the guarantors and the Agent, which includes a pledge of all of the outstanding common stock ~~at a conversion price equal to $12.00, or if lower, 80%~~of Appliances Connection and AC Gallery Inc., each of which is held by the Company, and of all of the ~~lowest volume weighted average price for~~outstanding equity interests of the ~~twenty (20) consecutive trading days prior to~~remaining guarantors which is held by Appliances Connection.
M&T Credit Agreement - Refinanced
On June 2, 2021, the applicable conversion date, but in no event less than $9.00. The conversion price will be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the common stock. In addition, if we sell or grant any common stock or securities convertible into or exchangeable for common stock or grants any right to reprice such securities at an effective price per share that is lower than the then conversion price, the conversion price shall be reduced to such price, subject to certain exceptions set forth in the notes.
~~Term Loan~~
~~On August 25, 2020, we~~Company and ACI, as borrowers, entered into a ~~promissory note~~credit and ~~security~~guaranty agreement (the “M&T Credit Agreement”) with ~~Arvest Bank for a loan~~Appliances Connection and certain other subsidiaries of the Company party thereto from time to time as guarantors, the financial institutions party thereto from time to time (“M&T Lenders”), and M&T, as sole lead arranger, sole book runner, administrative agent and collateral agent, pursuant to which the M&T Lenders agreed to make available to the Company and ACI senior secured credit facilities in the aggregate initial amount of $70.0 million, including (i) a $60.0 million term loan (the “M&T Term Loan”) and (ii) a $10.0 million revolving credit facility (the “M&T Revolving Loan”), which revolving credit facility includes a $2.0 million swingline subfacility (the “M&T Swing Line Loan” and together with the M&T Term Loan and the M&T Revolving Loan, the “M&T Loans”) and a $2.0 million letter of credit subfacility, in each case, on the terms and conditions contained in the M&T Credit Agreement. On June 2, 2021, the Company borrowed the entire amount of the M&T Term Loan and issued term loan notes to the M&T Lenders in the aggregate principal amount of ~~$3,500,000.~~ $60.0 million.
As of March 31, ~~2021,~~2022, the ~~outstanding balance~~Company had not borrowed any amounts under the M&T Revolving Loan. As of ~~this loan is $3,026,812,~~March 31, 2022, the carrying value of the M&T Term Loan was $53.9 million, comprised of principal of ~~$3,119,806,~~$57 million, net of unamortized loan costs of ~~$92,994.~~
$3.1 million. The ~~loan matures~~Company classified $7.5 million as a current liability and the balance as a long-term liability.
The M&T Credit Agreement provided that each of the M&T Loans would mature on ~~August 25, 2025~~June 2, 2026 and ~~bears~~would bear interest on the unpaid principal amount thereof as follows: (i) if it is a M&T Loan bearing interest at ~~3.250% per annum; provided that, upon~~a rate determined by the Base Rate (as defined in the M&T Credit Agreement), then at the Base Rate plus the Applicable Margin (as defined in the M&T Credit Agreement) for such M&T Loan; (ii) if it is a M&T Loan bearing interest at a rate determined by the LIBOR Rate (as defined in the M&T Credit Agreement), then at the LIBOR Rate plus the Applicable Margin for such M&T Loan; and (iii) if it is a M&T Swing Line Loan, then at the rate applicable to M&T Loans bearing interest at a rate determined by the Base Rate. The M&T Term Loan initially bore interest at the LIBOR Rate plus Applicable Margin (3.9%), with an initial interest period of six months. The Company had the option to elect to continue or convert the existing interest rate benchmark for the M&T Term Loan from LIBOR Rate to Base Rate, and could elect the interest rate benchmark for future M&T Revolving Loans as either LIBOR Rate or Base Rate (and, with respect to any M&T Loan made at the LIBOR Rate, may also select the interest period applicable to any such M&T Loan), by notifying M&T and M&T Lenders from time to time in accordance with the provisions of the M&T Credit Agreement. Notwithstanding the foregoing, following an event of default, the M&T Loans would bear interest at a rate that is 2% per annum higher than the interest rate ~~shall increase by 6% until paid~~then in ~~full. Pursuant to~~effect for the ~~terms~~applicable M&T Loan.

The M&T Credit Agreement also provided that the Company repay the principal amount of the ~~loan agreement, we are required to make monthly payments~~M&T Term Loan in quarterly installments of ~~$63,353 beginning~~$1.5 million each, payable on the last business day of each March, June, September, and December, commencing on September ~~25, 2020 and until the maturity date, at which time all~~30, 2021 (the March 2022 payment was in April 2022). The remaining unpaid principal amount of the M&T Term Loan must be repaid on the M&T Term Loan Maturity Date (as defined in the M&T Credit Agreement) unless payment is required sooner by the M&T Credit Agreement. M&T Revolving Loans may be repaid and ~~interest will be due. We may prepay the loan in full or in part~~reborrowed at any time ~~without penalty.~~until the M&T Revolving Commitment Termination date (as defined in the M&T Credit Agreement).
The M&T Loans provided for voluntary prepayment from time to time in accordance with the provisions of the M&T Credit Agreement, and required prepayment under certain limited circumstances as set forth in the M&T Credit Agreement, including upon receipt of cash proceeds in connection with certain specified asset sales, receipt of insurance or condemnation proceeds or other cash proceeds received other than in the ordinary course of business or upon receipt of cash proceeds from the incurrence of indebtedness that is not permitted under the M&T Credit Agreement, all as more specifically set forth in the M&T Credit Agreement. Additionally, mandatory repayments of amounts borrowed under the M&T Revolving Loan facility are required if the amount borrowed at any time exceeds the commitment amount.
Under the M&T Credit Agreement, the Company was required to pay certain fees to M&T, including a commitment fee of up to 0.5% per annum with respect to the unused portion of the M&T Lenders’ revolving loan commitments, determined as set forth in the M&T Credit Agreement, and certain fees in connection with the issuance of any letters of credit under the M&T Credit Agreement.
The M&T Credit Agreement contained customary representations, warranties, affirmative and negative financial and other covenants, including leverage ratio and fixed charge coverage ratios, and events of default for loans of this type. The M&T Loans are guaranteed by the guarantors and are secured by a first priority security interest in substantially all of the assets of the Company, ACI and the guarantors.
On May 9, 2022, the Company prepaid its obligations in full under the M&T Credit Agreement, and on May 9, 2022, in connection with the prepayment of the obligations under the M&T Credit Agreement, the M&T Credit Agreement was terminated.
Northpoint Loan
On June 3, 2021, we entered into a loan and security agreement with Northpoint Commercial Finance LLC (“Northpoint”), pursuant to which Northpoint may from time-to-time advance funds for the acquisition, financing and/or refinancing by the Company of inventory purchased from Samsung Electronics America, Inc. and/or affiliates and for such other purposes as are acceptable Northpoint. The loan and security agreement provides that Northpoint may establish a credit limit and may adjust such credit limit from time to time; provided that such credit limit does not constitute a commitment or committed line of credit to Northpoint. As of March 31, 2022, such credit limit is $2.0 million, of which $0.3 million was owed and included in accounts payable.
The applicable per annum interest rates for a loan, including any default rates, will be determined at the time of the loan. The loan and security agreement contains customary events of default and ~~affirmative and negative covenants for a loan of this type. The loan~~ is secured by a security interest in all ~~financial assets credited~~of the Company’s inventory (i) that is manufactured, distributed, or sold by Samsung Electronics America, Inc. and/or its affiliates and/or (ii) that bears any trade names, trademarks, or logos of Samsung Electronics America, Inc. and/or its affiliates; all returns, repossessions, exchanges, substitutions, replacements, attachments, parts, accessories and accessions of any of the foregoing; all price protection payments, discounts, rebates, credits, factory holdbacks and incentive payments related to ~~our securities account held~~any of the foregoing; supporting obligations to any of the foregoing; and products and proceeds in whatever form of any of the foregoing.
Vehicle Loans
The Company has financed purchases of transportation vehicles with notes payable, which are secured by ~~Arvest Investments, Inc.~~
~~Contractual Obligations~~
~~Our principal commitments consist mostly~~the vehicles purchased. These notes have five-year terms and interest rates ranging from 3.59% to 5.74%. As of ~~obligations under~~March 31, 2022, the outstanding balance of these vehicle loans ~~described above and other contractual commitments described below.~~is $1.2 million.
Management Services Agreement
On April 5, 2019, wethe Company entered into a management services agreement with 1847 Partners LLC (the “Manager”), ~~pursuant~~a company owned and controlled by Ellery W. Roberts, the Company’s chairman and prior significant stockholder, which was amended effective on August 4, 2020. Pursuant to ~~which we~~the offsetting management services agreement, as amended, the Company appointed the Manager to provide certain services to usit for a quarterly management fee equal to ~~$62,500. Under~~$62,500; provided, however, that under certain circumstances specified in the management services agreement, ~~our~~the quarterly fee may be reduced if similar fees payable to the Manager by subsidiaries of ~~our~~the Company’s former parent company, 1847 Holdings LLC, exceed a threshold amount.

~~Pursuant to the management services agreement, we must~~
The Company shall also reimburse the Manager for all costs and expenses of the Company which are specifically approved by ~~our~~the board of directors of the Company, including all out-of-pocket costs and expenses, that are actually incurred by usthe Manager or ~~our~~its affiliates on ~~our~~ behalf of the Company in connection with performing services under the management services agreement.
The ~~services provided by the Manager include: conducting general and administrative supervision and oversight of our day-to-day business and operations, including, but~~Company did not limited to, recruiting and hiring of personnel, administration of personnel and personnel benefits, development of administrative policies and procedures, establishment and management of banking services, managing and arrangingpay any expenses for the ~~maintaining of liability insurance, arranging for equipment rental, maintenance of all necessary permits~~three ended March 31, 2022 and licenses, acquisition of any additional licenses and permits that become necessary, participation in risk management policies and procedures; and overseeing and consulting with respect to our business and operational strategies, the implementation of such strategies and the evaluation of such strategies, including, but not limited to, strategies with respect to capital expenditure and expansion programs, acquisitions or dispositions and product or service lines.2021.
WeThe Company expensed ~~$62,500 in~~ management fees of $0.1 million for each of the three months ended March 31, 2022 and 2021, ~~and 2020.~~
~~Earn Out Payment~~
Pursuant to an asset purchase agreement, dated January 18, 2019, as amended, among the Company, Goedeker Television Co. (“Goedeker”), Steve Goedeker and Mike Goedeker, Goedeker is entitled to receive an earn out payment of $200,000 if the EBITDA (as defined in the asset purchase agreement) of the business acquired from Goedeker for the trailing twelve (12) month period from April 5, 2022 is $2,500,000 or greater, and may be entitled to receive a partial earn out payment if the EBITDA is less than $2,500,000 but greater than $1,500,000.
respectively.

Leases
On April 5, 2019, wethe Company entered into a lease agreement with S.H.J., L.L.C.~~, a Missouri limited liability company and affiliate of Goedeker,~~ for ~~our corporate headquarters, including approximately 50,000 square feet of~~its prior principal office ~~showroom and warehouse space, located~~ in Ballwin, Missouri. The lease is for a term of five ~~(5)~~ years and provides for a base rent of $45,000 per month. In addition, ~~we are~~the Company is responsible for all taxes and insurance premiums during the lease term. The lease agreement contains customary events of ~~default.~~default, representations, warranties, and covenants.
On May 31, 2019, YF Logistics entered into a sublease agreement with Dynamic Marketing, Inc. (“DMI”) for its warehouse space in Hamilton, NJ. The initial term of the sublease was for a period commencing on June 1, 2019 and terminating on April 30, 2020, with automatic renewals for successive one year terms until the earlier of (i) termination by either upon thirty days’ prior written notice or (ii) April 30, 2024. The sublease provides for a base rent equal to 71.43% of the base rent paid by DMI under its lease for the premises, plus 71.43% of any taxes, operating expenses, additional charges or any other amounts due by DMI, for a total of $56,250 per month. The initial right-of-use (“ROU”) asset and liability associated with this lease is $3.0 million.
On January 13, 2021, wethe Company entered into a lease agreement with Westgate 200, LLC, which was amended on March ~~30,~~31, 2021, for aits new ~~location totaling approximately 86,800 square feet of~~principal office ~~showroom~~ and ~~warehouse space~~showroom in St. Charles, Missouri. The ~~initial term of the~~ lease ~~expires~~terminates on April 30, 2027, with two ~~(2)~~ options to renew for additional five ~~(5)~~ year periods. The base rent is ~~initially~~ $20,977 per month until September 30, 2021, and increases to $31,465 ~~on October 1, 2021, with annual increases thereafter to a~~per month until April 30, 2022, after which time the base rent ~~during the sixth~~increases at approximately 2.5% per year ~~of $35,558 per month. We will~~thereafter. The Company must also pay ~~our~~its 43.4% pro rata portion of the property taxes, operating expenses and insurance costs and ~~are~~is also responsible to pay for the utilities used on the premises. The lease contains customary events of default. The initial ROU asset and liability associated with this lease is $2.0 million.
On June 2, 2021, 1 Stop entered into a new lease agreement with 1870 Bath Ave. LLC, a related party, for the premises located at 1870 Bath Avenue, Brooklyn, New York. The lease is for a term of ten years and provides for a base rent of $74,263 per month during the first year with annual increases to $96,896 during the last year of the term. 1 Stop is also responsible for all property taxes, insurance costs and the utilities used on the premises. The lease contains customary events of default. This lease replaces the prior lease entered into between the parties on September 1, 2018. The initial ROU asset and liability associated with this lease is $8.4 million.
On June 2, 2021, Joe’s Appliances entered into a new lease agreement with 812 5th Ave Realty LLC, a related party, for the premises located at 7812 5th Avenue, Brooklyn, New York. The lease is for a term of ten years and provides for a base rent of $6,365 per month during the first year with annual increases to $8,305 during the last year of the term. Joe’s Appliances is also responsible for all property taxes, insurance costs and the utilities used on the premises. The lease contains customary events of default. This lease replaces the prior lease entered into between the parties on September 1, 2018. The initial ROU asset and liability associated with this lease is $0.7 million.
On June 30, 2021, the Company closed an old warehouse and retail showroom in anticipation of relocating to a new facility. Accordingly, the Company wrote-off $1.4 million representing the remaining ROU asset and related leasehold improvements as of that date.

On July 29, 2021, AC Gallery entered into a lease agreement with Tom’s Flooring, LLC for the showroom and warehouse located in Largo, Florida. The lease is for a term of four months commencing on September 1, 2021 and ending on December 31, 2021 and provides for a base rent of $6,500 per month. AC Gallery must also pay its one-third pro rata portion of the common area maintenance charges, utilities and sales taxes. The lease contains customary events of default. The lease is short term and therefore not recorded as a ROU asset and liability.
On September 9, 2021, the Company entered into a warehouse agreement for a new warehouse in Somerset, New Jersey. The warehouse agreement is for a term of 26 months commencing on October 1, 2021, and ending November 29, 2023, unless the master lease for the premises is terminated earlier. The monthly storage fee is $136,274 for the first year, $140,274 for the second year, and $144,573 for the last two months. The Company also paid a security deposit of $272,549. The lease agreement contains customary events of ~~default.~~default, representations, warranties, and covenants. The initial ROU and liability associated with this operating lease is $3.4 million.
~~Off-Balance Sheet Arrangements~~
~~We have no off-balance sheet arrangements that have or are reasonably likely to have~~On March 15, 2022, the Company entered into a ~~current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.~~
~~Critical Accounting Policies~~
~~The following discussion relates to critical accounting policies~~lease agreement by and between the Company and 8780 19 Ave LLC, a New York limited liability company and related party, for the Company. The preparation of financial statements in conformity with GAAP requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:
~~Revenue Recognition and Cost of Revenue~~
The Company records revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606. Revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer purchase orders, including significant judgments.
The Company collects the full sales price from the customer at the time the order is placed, which is recorded as customer deposits on the accompanying consolidated balance sheet. The Company does not incur incremental costs obtaining purchase orders from customers, however, if the Company did, because all the Company’s contracts are less than a year in duration, any contract costs incurred would be expensed rather than capitalized.
The revenue that the Company recognizes arises from orders it receives from its customers. The Company’s performance obligations under the customer orders correspond to each sale of merchandise that it makes to customers under the purchase orders; as a result, each purchase order generally contains only one performance obligation based on the merchandise sale to be completed.

Control of the delivery transfers to customers when the customer can direct the use of, and obtain substantially all the benefits from, the Company’s products, which generally occurs when the customer assumes the risk of loss. The risk of loss shifts to the customer at different times depending on the method of delivery. The Company delivers products to its customers in three possible ways. The first way is through a shipment of the products through a third-party carrier from the Company’s warehouse to the customer (a “Company Shipment”). The second way is through a shipment of the products through a third-party carrier from a warehouse other than the Company’s warehouse to the customer (a “Drop Shipment”) and the third way is where the Company itself delivers the products to the customer and often also installs the product (a “Local Delivery”). In the caselease of a ~~Local Delivery, the Company loads the product~~new office building located in Brooklyn, New York. The lease commenced on ~~to its own truck~~March 1, 2022 and delivers and installs the product at the customer’s location. When a product is delivered through a Local Delivery, risk of loss passes to the customer at the time of installation and revenue is recognized upon installation at the customer’s location. In the case of a Company Shipment and a Drop Shipment, the delivery to the customer is made free on board, or FOB, shipping point (whether from the Company’s warehouse or a third party’s warehouse). Therefore, risk of loss and title transfers to the customer once the products are shipped (i.e., leaves the Company’s warehouse or a third-party’s warehouse). After shipment and prior to delivery, the customer is able to redirect the product to a different destination, which demonstrates the customer’s control over the product once shipped. Once the risk of loss has shifted to the customer, the Company has satisfied its performance obligation and the Company recognizes revenue.
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, value added tax, and other tax the Company collects concurrently with revenue-producing activities are excluded from revenue.
Cost of revenue includes the cost of purchased merchandise plus the cost of shipping merchandise and where applicable installation, net of promotional rebates and other incentives received from vendors.
~~Substantially all the Company’s sales are to individual retail consumers.~~
Shipping and Handling ‒ The Company bills its customers for shipping and handling charges, which are included in net sales for the applicable period, and the corresponding shipping and handling expense is reported in cost of sales.
~~Disaggregated Revenue~~‒ The Company disaggregates revenue from contracts with customers by product type, as it believes it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
The Company also sells extended warranty contracts. The Company is an agent for the warranty company and earns a commission on the warranty contracts purchased by customers; therefore, the cost of the warranty contracts is netted against warranty revenue in the accompanying consolidated statement of operations. The Company assumes no liability for repairs to products on which it has sold a warranty contract.
~~The Company experiences operational trends which are primarily holidays such as Presidents Day, Memorial Day, July 4th, Labor Day, Thanksgiving Day, and Christmas and Black Friday and Cyber Monday.~~
~~Receivables~~
Receivables represent rebates receivable due from manufacturers from whom the Company purchases products and amounts due from credit card processors that do not settle within two days. Rebates receivable 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 receivables. Uncollectible balances are expensed in the period it is determined to be uncollectible.
~~Merchandise Inventory~~
Inventory consists of finished products acquired for resale and is valued at the lower-of-cost-or-market with cost determined on an average 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.

~~Goodwill~~
~~The Company tests its goodwill for impairment at least annually~~shall expire on December 31, and whenever events or circumstances change that indicate impairment may have occurred. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in the Company’s expected future cash flows; a significant adverse change in legal factors or in the business climate; unanticipated competition; and slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of goodwill and the Company’s consolidated financial results.
The Company tests goodwill by estimating fair value using a Discounted Cash Flow (“DCF”) model. The key assumptions used in the DCF model to determine the highest and best use of estimated future cash flows include revenue growth rates and profit margins based on internal forecasts, terminal value and an estimate of a market participant’s weighted-average cost of capital used to discount future cash flows to their present value. There were no impairment charges during three months ended March 31, 2021 and 2020.
~~Intangible Assets~~
As of March 31, 2021 and December 31, 2020, definite-lived intangible assets primarily consisted of tradenames and customer relationships which are being amortized over their estimated useful lives, or 5 years.
The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques.2026. The Company has ~~no intangibles with indefinite lives.~~
~~In applying~~ the ~~acquisition method of accounting, amounts assigned~~option to ~~identifiable assets and liabilities acquired were based on estimated fair values as~~extend the term of the ~~date~~lease for one additional term of ~~acquisition, with~~five years. The premises of the ~~remainder recorded as goodwill. Identifiable intangible assets are initially valued~~lease contain approximately 5,835 rentable square feet. Under the terms of the lease, the Company will lease the premises at ~~fair value using generally accepted valuation methods appropriate~~the monthly rate of $22,000 for the ~~type~~first year, with scheduled annual increases. The Company will receive a four-month rent concession so that its first rental payment shall become due on or before July 1, 2022.
Critical Accounting Policies and Estimates
For information regarding the Company’s Critical Accounting Policies and Estimates, see the “Critical Accounting Policies and Estimates” section of ~~intangible asset. Identifiable intangible assets with definite lives are amortized over their estimated useful lives~~Item 7. “Management’s Discussion and ~~are reviewed for impairment if indicators~~Analysis of ~~impairment arise. Intangible assets with indefinite lives are tested for impairment within one year~~Financial Condition and Results of acquisitions or annually as of December 1, and whenever indicators of impairment exist. The fair values of intangible assets are compared against their carrying values, and an impairment loss would be recognizedOperations” in our Annual Report on Form 10-K for the ~~amount by which a carrying amount exceeds its fair value. At March 31, 2021 and~~year ended December 31, ~~2020, there were no impairments in intangible or the right of use (“ROU”) assets.~~
~~Long-Lived Assets~~
The Company reviews its property and equipment and any identifiable intangibles (including ROU asset) 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 upon triggering events. 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. At March 31, 2021 and December 31, 2020, there were no impairments in long-lived assets.
~~Lease Liabilities~~
Lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected lease term at the lease commencement date. As most of the Company’s leases do not provide an implicit rate, the Company uses an estimated incremental borrowing rate (“IBR”) based on the information available at the commencement date of the respective lease to determine the present value of future payments. The determination of the IBR requires judgment and is primarily based on publicly available information for companies within the same industry and with similar credit profiles. The Company adjusts the rate for the impact of collateralization, the lease term and other specific terms included in each lease arrangement. The IBR is determined at the lease commencement and is subsequently reassessed upon a modification to the lease arrangement.
2021.

~~Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.~~
The Company reviews the ROU asset for impairment whenever events or changes in circumstances indicate that the carrying amount of the ROU asset may not be recoverable. When such events occur, the Company compares the carrying amount of the ROU asset to the undiscounted expected future cash flows related to the ROU asset. If the comparison indicates that an impairment exists, the amount of the impairment is calculated as the difference between the excess of the carrying amount over the fair value of the ROU asset. If a readily determinable market price does not exist, fair value is estimated using discounted expected cash flows attributable to the ROU asset.
~~Sales Tax Liability~~
~~On June 21, 2018, the U.S. Supreme Court issued an opinion in~~ ~~South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018)~~~~, whereby the longstanding~~ ~~Quill Corp v. North Dakota~~ sales tax case was overruled, and states may now require remote sellers to collect sales tax under certain circumstances. In 2020, the Company began collecting sales tax in nearly all states that have sales tax. The Company accrued sales taxes in the states with sales tax. The Company accrued the potential liability from the effective date of a state’s adoption of the Wayfair decision up to the date the Company began collecting and filing sales taxes in the various states. At March 31, 2021 and December 31, 2020, the amount of such accrual was $5,915,910 and $5,804,100, respectively, which is included in accounts payable and accrued expenses. To date, only one state has notified the Company of a potential sales tax liability of approximately $82,000, all of which was previously accrued.
~~ITEM 3.~~ ~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.~~
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
~~Not applicable.~~
As a smaller reporting company, we are not required to disclose information under this item.
~~ITEM 4.~~ ~~CONTROLS AND PROCEDURES.~~
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
~~We have adopted and maintain disclosure~~The Company maintains “disclosure controls and procedures, ~~that are designed to provide reasonable assurance that information required to be disclosed~~” as defined in ~~the reports filed~~Rules 13a-15(e) and 15d-15(e) under the Exchange Act, such as this quarterly report on Form 10-Q, is collected, recorded, processed, summarized and reported within the time periods specified in the rules of the Securities and Exchange Commission (the “SEC”). Our disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure. As required under Exchange Act Rule 13a-15, our management, including our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this quarterly report on Form 10-Q, have concluded that, due to deficiencies identified in our preliminary evaluation, our disclosure controls and procedures are ineffective to ensure that information required to be disclosed by usa company in the reports ~~that we file~~filed or ~~submit~~submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and ~~forms,~~forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that ~~such~~ information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to ~~our~~the company’s management, including ~~our Chief Executive Officer~~its principal executive and ~~Chief Financial Officer,~~principal financial officers, as appropriate to allow timely decisions regarding required disclosure. ~~Subject~~Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2022.
Based on the evaluation performed as of March 31, 2022, as a result of the material weaknesses in internal control over financial reporting that are described below, and as further described in Item 9A of our Annual Report on Form 10-K filed with the SEC on March 31, 2022, our Chief Executive Officer and Chief Financial Officer determined that our disclosure controls and procedures were not effective as of such date.

Material Weaknesses in Internal Control over Financial Reporting
Management has determined that the Company’s ineffective internal control over financial reporting and resulting material weaknesses, stem primarily from management’s inability to ~~receipt~~maintain appropriately designed controls, which impacts the control environment, risk assessment procedures and ability to detect or prevent material misstatements to the financial statements. The material weaknesses were attributed to:
● Lack of structure and responsibility, insufficient number of qualified resources and inadequate oversight and accountability over the performance of controls;
● Ineffective assessment and identification of changes in risk impacting internal control over financial reporting;
● Inadequate selection and development of effective control activities, general controls over technology and effective policies and procedures; and
● Ineffective evaluation and determination as to whether the components of internal control were present and functioning.
Management’s Remediation Plans
Management is actively engaged in the implementation of remediation plans to address the controls contributing to the material weaknesses. During the three months ended March 31, 2022, the Company has taken, and continues to take, the following remediation actions:
● Enhance reporting structure and increase the number of qualified resources in roles over internal control over financial reporting;
● Establish formal risk assessment procedures to identify and monitor changes in the organization that could have an impact on internal control over financial reporting; and
● Develop and document policies and procedures, including related business process and technology controls, assess their effectiveness and establish a program for continuous assessment of their effectiveness.
We believe these measures will remediate the control deficiencies, but management is assessing the need for any additional ~~financing, we intend~~steps to ~~retain~~remediate the underlying causes that give rise to these material weaknesses. The material weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. There is no assurance that additional ~~individuals and resources to remedy the ineffective controls.~~remediation steps will not be necessary.
Changes in Internal Control Over Financial Reporting
~~There~~Except as set forth above, there were no changes in ~~the Company’s~~our internal control over financial reporting or(as defined in ~~any other factors that could significantly affect these controls,~~Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the ~~three months~~quarter ended March 31, ~~2021,~~2022 that have materially affected, or are reasonably likely to materially affect, ~~the Company’s~~our internal control over financial ~~reporting~~reporting.

PART II
OTHER INFORMATION
~~ITEM 1.~~ ~~LEGAL PROCEEDINGS.~~
ITEM 1. LEGAL PROCEEDINGS.
At the Company’s annual meeting on December 21, 2021, the stockholders were asked to approve an amendment to the Company’s Amended and Restated Certificate of Incorporation, dated July 30, 2020 (the “Certificate of Incorporation”), increasing the number of authorized shares of the Company’s common stock, par value $0.0001 per share (“Common Stock” and such proposal, the “Share Increase Proposal”) by 50,000,000 shares of Common Stock. As reported in a Form 8-K filing on December 28, 2021, the Share Increase Proposal was adopted and a Certificate of Amendment to the Certificate of Incorporation setting forth the amendment adopted pursuant to the Share Increase Proposal (the “Certificate of Amendment”) was filed with the Secretary of State of the State of Delaware (the “Delaware Secretary of State”). To date, none of these newly authorized shares has actually been issued.
Three purported beneficial owners of Common Stock subsequently expressed concerns about a statement in the Company’s proxy statement related to the Share Increase Proposal, specifically questioning, in light of the proxy statement, the ability of brokerage firms and other custodians to vote shares of Common Stock held by them for the benefit of their customers in the absence of instructions from the beneficial owners. Based on an examination of the situation performed following receipt of these demands, the Company believes that the vote at the annual meeting was properly tabulated and that the proposed amendment was properly adopted in accordance with Delaware law. In light of the demands, however, and to ensure against any future question as to the validity of these newly authorized shares, the Company elected to seek validation of its Certificate of Amendment through a Petition to the Court of Chancery of the State of Delaware (the “Court of Chancery”) pursuant to Section 205 of the Delaware General Corporation Law (the “205 Petition”), dated as of March 9, 2022. The action, styled In re 1847 Goedeker Inc., C.A. 2022-0219-SG, seeks entry by the Court of Chancery of an order validating and declaring effective the Certificate of Amendment, and validating the additional shares of Common Stock authorized under the Share Increase Proposal.
Shortly before the 205 Petition was filed, one of the purported stockholders who had submitted a demand related to adoption of the Share Increase Proposal also filed a Class Action Complaint in the Court of Chancery against the Company and its Board of Directors on March 1, 2022. That lawsuit, captioned Scot T. Boden v. 1847 Goedeker Inc., et al., C.A. No. 2022-0196-SG (the “Boden Action”), asserts two claims for relief. The first is against the Company for alleged violation of the Delaware General Corporation Law Section 225(b) for improper tabulation of the stockholder vote on the Share Increase Proposal. The second asserts that the Company’s directors breached their fiduciary duties by incorrectly tabulating the stockholder vote, and by causing a purportedly invalid amendment to our Certificate of Incorporation to be filed with the Delaware Secretary of State. The Boden Action has been consolidated with the 205 Petition; and for reasons set out in the 205 Petition, the Company and its directors believe the Boden Action to be without merit and intend to defend the claims. Mr. Boden and a second purported stockholder, Robert Corwin, have both filed briefs opposing the 205 Petition. Under a scheduling order issued by the Court of Chancery on May 6, 2022, the Company intends to file a reply brief in further support of the 205 Petition by May 20, 2022. The Court of Chancery has scheduled a hearing on the matter for May 27, 2022. The Company cannot predict the outcome of these proceedings, or the timing of any decision from the Court.
From time to time, we may ~~become involved in~~be subject to various ~~lawsuits and~~ legal proceedings ~~which arise,~~and claims arising in the ordinary course of business. ~~However,~~All other litigation ~~is subject~~currently pending against the Company relates to ~~inherent uncertainties,~~matters that have arisen in the ordinary course of business and ~~an adverse result in these, or other matters, may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that~~ we believe that such matters will not have a material adverse effect on our ~~business,~~consolidated financial condition, results of operations or ~~operating results.~~cash flows.

~~ITEM 1A.~~ ~~RISK FACTORS.~~
ITEM 1A. RISK FACTORS.
Factors that could cause our actual results to differ materially from those in this report include the risk factors described in our Annual Report on Form 10-K filed with the SEC on March 31, 2022. Any of those factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this report, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K filed with the SEC on March 31, 2022, except for the below risk factors. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
Increasing tensions between the United States and Russia, and other effects of the ongoing conflict in Ukraine, could negatively impact our business, results of operations, and financial condition.

~~Not applicable.~~While we do not operate in Russia or Ukraine, the increasing tensions between the United States and Russia and the other effects of the ongoing conflict in Ukraine, have resulted in many broader economic impacts such as the United States imposing sanctions, bans against Russia and Russian products imported into the United States, and disruption of the production and delivery of products and parts from Ukraine and Russia. Such sanctions, bans and disruptions have affected and may continue to affect commodity pricing such as fuel and energy costs, making it more expensive for us and our partners to deliver products to our customers. Further sanctions, bans, disruptions or other economic actions in response to or because the ongoing conflict in Ukraine could result in an increase in costs, further disruptions to our supply chain, and a lack of consumer confidence resulting in reduced demand. While the extent of such items is not presently known, any of them could negatively affect our business, results of operations, and financial condition.

Numerous economic factors, including inflation, our exposure to the U.S. housing industry, and the potential for a decrease in consumer spending, could adversely affect us.
Economic conditions, including inflation and weakness in the U.S. housing industry, could decrease consumer discretionary spending and adversely affect our financial performance. Consumer prices have experienced their largest percentage increases since 1981, and interest rates have begun to increase. We believe that our sales of home-related products are affected by the strength of the U.S. housing industry. Downturns in the U.S. housing industry could have a material adverse effect on our financial results, business, and prospects. Similarly, a substantial portion of the products and services we offer are products or services that consumers may view as discretionary items rather than necessities. As a result, our results of operations are sensitive to changes in macroeconomic conditions that affect consumer spending, including discretionary spending. Difficult macroeconomic conditions also affect our customers' ability to obtain consumer credit. Other factors, including consumer confidence, employment levels, interest rates, tax rates, consumer debt levels, and fuel and energy costs could reduce consumer spending or change consumer purchasing habits. Slowdowns in the U.S. or global economy, or an uncertain economic outlook, could materially adversely affect consumer spending habits and could have a material adverse effect on our financial results, business, and prospects.
~~ITEM 2.~~ ~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.~~
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
We have not sold any equity securities during three months ended March 31, ~~2021~~2022 that were not previously disclosed in a current report on Form 8-K that was filed during the quarter.
We did not repurchase any of shares of our common stock during the three months ended March 31, ~~2021.~~2022.
~~ITEM 3.~~ ~~DEFAULTS UPON SENIOR SECURITIES.~~
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
~~ITEM 4.~~ ~~MINE SAFETY DISCLOSURES.~~
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
~~ITEM 5.~~ ~~OTHER INFORMATION.~~
ITEM 5. OTHER INFORMATION.
None.

We have no information to disclose that was required to be in a report on Form 8-K during the three months ended March 31, 2021 but was not reported. There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors.

ITEM 6. EXHIBITS.
~~ITEM 6.~~ ~~EXHIBITS.~~
Exhibit No. Description
3.1 Amended and Restated Certificate of Incorporation of 1847 Goedeker Inc. (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-8 filed on August 3, 2020)
3.2 Certificate of Amendment of Amended and Restated Certificate of Incorporation of 1847 Goedeker Inc. (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-8 filed on December 28, 2021)
3.3 Bylaws of 1847 Goedeker Inc. (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 filed on April 22, 2020)
~~4.2~~3.4 ~~Common Stock Purchase Warrant issued~~Amendment No 1. to ~~Evergreen Capital Management LLC on March 19, 2021~~Bylaws of 1847 Goedeker Inc. (incorporated by reference to Exhibit ~~4.1 to the Current Report on Form 8-K filed on March 25, 2021)~~
~~4.3~~ ~~Common Stock Purchase Warrant issued to SILAC Insurance Company on March 19, 2021 (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on March 25, 2021)~~
~~4.4~~ ~~Form of Representative’s Warrant for Initial Public Offering (incorporated by reference to Exhibit 4.1~~3.1 to the Current Report on Form 8-K filed on August ~~5, 2020)~~13, 2021)
10.1 Lease Agreement, dated ~~January 13, 2021, by and~~March 15, 2022, between ~~Westgate 200,~~8780 19 Ave LLC and 1847 Goedeker Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on ~~January 20, 2021)~~March 21, 2022)
10.2 ~~Securities Purchase~~Credit Agreement dated ~~March 19, 2021,~~as of May 9, 2022, among ~~1847 Goedeker Inc., Evergreen Capital Management LLC~~the Borrowers, Guarantors, the lenders party hereto and ~~SILAC Insurance Company~~the Agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on ~~March 25, 2021)~~May 11, 2022)
10.3 Security and Pledge Agreement dated ~~March 19, 2021, between 1847 Goedeker Inc.~~as of May 9, 2022, among the Borrowers, Grantors and ~~SILAC Insurance Company~~Bank of America, N.A. (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on ~~March 25, 2021)~~May 11, 2022)
~~10.4~~ 10% OID Senior Secured Promissory Note issued to Evergreen Capital Management LLC on March 19, 2021 (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on March 25, 2021)
~~10.5~~ ~~10% OID Senior Secured Promissory Note issued to SILAC Insurance Company on March 19, 2021 (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on March 25, 2021)~~
31.1* Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2* Certifications of Principal Financial and Accounting Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1** Certifications of Principal Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2** Certifications of Principal Financial and Accounting Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*101.INS Inline XBRL Instance Document
101.SCH*101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL*101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith
** Furnished herewith

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: May ~~12, 2021~~16, 2022 1847 GOEDEKER INC.

/s/ Albert Fouerti
~~/s/ Douglas T. Moore~~Name: Albert Fouerti
~~Name:~~Title: ~~Douglas T. Moore~~Chief Executive Officer
~~Title:~~ ~~Chief Executive Officer~~
(Principal Executive Officer)

/s/ Maria Johnson
~~/s/ Robert D. Barry~~Name: Maria Johnson
~~Name:~~Title: ~~Robert D. Barry~~Chief Financial Officer, Chief Accounting Officer and Secretary
~~Title:~~ ~~Chief Financial Officer~~
(Principal Financial and Accounting Officer)

38
33
iso4217:USD xbrli:shares

	PART I FINANCIAL INFORMATION

Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2317
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3528
Item 4.	Controls and Procedures	3528

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	3630
Item 1A.	Risk Factors	3631
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3631
Item 3.	Defaults Upon Senior Securities	3631
Item 4.	Mine Safety Disclosures	3631
Item 5.	Other Information	3631
Item 6.	Exhibits	3732

	March 31, 2021			December 31, 2020
	(unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	1,309,374		$	934,729
Restricted cash		10,094,932			8,977,187
Receivables		948,354			1,998,232
Vendor deposits		742,926			547,648
Merchandise inventory, net		5,883,484			5,147,241
Prepaid expenses and other current assets		525,960			635,084
Total Current Assets		19,505,030			18,240,121
Property and equipment, net		355,581			245,948
Operating lease right-of-use assets, net		3,404,860			1,578,235
Goodwill		4,725,689			4,725,689
Intangible assets, net		1,276,088			1,381,937
Other long-term assets		45,000			45,000
TOTAL ASSETS	$	29,312,248		$	26,216,930

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and accrued expenses	$	12,356,822		$	12,701,715
Customer deposits		22,269,406			21,879,210
Short term notes payable, net		3,347,763			-
Current portion of notes payable, net		668,744			663,339
Current portion of operating lease liabilities		664,043			450,712
Total Current Liabilities		39,306,778			35,694,976
Notes payable, net of current portion, net		2,358,068			2,522,030
Operating lease liabilities, net of current portion		2,803,203			1,127,523
Contingent note payable		188,170			188,170
TOTAL LIABILITIES		44,656,219			39,532,699

Stockholders’ Deficit
Preferred stock, $.0001 par value, 20,000,000 shares authorized; none issued and outstanding as of March 31, 2021 or December 31, 2020		-			-
Common stock, $.0001 par value, 200,000,000 shares authorized; 6,111,200 shares issued and outstanding as of March 31, 2021 and December 31, 2020		611			611
Additional paid-in capital		14,874,341			13,409,328
Accumulated deficit		(30,218,923	)		(26,725,708	)
Total Stockholders’ Deficit		(15,343,971	)		(13,315,769	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	29,312,248		$	26,216,930

	Three Months Ended March 31,
	2021			2020 (As Restated)
Product sales, net	$	13,697,368		$	9,677,178
Cost of goods sold		11,068,911			8,111,170
Gross profit		2,628,457			1,566,008

Operating Expenses
Personnel		1,931,324			1,311,484
Advertising		1,083,248			666,436
Bank and credit card fees		532,742			244,740
Depreciation and amortization		122,331			91,841
General and administrative		2,239,498			1,439,840
Total Operating Expenses		5,909,143			3,754,341

LOSS FROM OPERATIONS		(3,280,686	)		(2,188,333	)

Other Income (Expense)
Interest income		10,096			-
Interest expense		(232,831	)		(456,070	)
Other income		10,206			2,383
Total Other Income (Expense)		(212,529	)		(453,687	)

NET LOSS BEFORE INCOME TAXES		(3,493,215	)		(2,642,020	)

INCOME TAX BENEFIT		-			435,000

NET LOSS	$	(3,493,215	)	$	(2,207,020	)

LOSS PER COMMON SHARE – BASIC AND DILUTED	$	(0.57	)	$	(0.44	)

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC AND DILUTED		6,111,200			5,000,000

	For the Three Months
	Ended March 31,
	2022			2021

Product sales, net	$	152,752		$	13,697
Cost of goods sold		116,883			11,069
Gross profit		35,869			2,628

Operating Expenses
Personnel		7,046			1,931
Advertising		4,288			1,083
Bank and credit card fees		6,167			533
Depreciation and amortization		2,734			122
General and administrative		5,567			2,240

Total Operating Expenses		25,802			5,909

INCOME (LOSS) FROM OPERATIONS		10,067			(3,281	)

Other Income (Expenses)
Interest income		41			10
Adjustment in value of contingency		(2	)		-
Interest expense		(936	)		(232	)
Other income		135			10

Total Other Income (Expenses)		(762	)		(212	)

NET INCOME (LOSS) BEFORE INCOME TAXES		9,305			(3,493	)

INCOME TAX EXPENSE		(3,383	)		-

NET INCOME (LOSS)	$	5,922		$	(3,493	)

NET INCOME (LOSS) PER COMMON SHARE – BASIC AND DILUTED	$	0.06		$	(0.57	)

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC AND DILUTED		106,387,332			6,111,200

	Common Stock				Additional Paid-in		Accumulated			Stockholders’
	Shares		Amount		Capital		Deficit			Equity

Balance at December 31, 2021		106,387,332	$	11	$	224,648	$	(19,056	)	$	205,603
Stock-based compensation		-		-		19		-			19
Net income for the three months ended March 31, 2022		-		-		-		5,922			5,922

Balance at March 31, 2022		106,387,332	$	11	$	224,667	$	(13,134	)	$	211,544

	March 31,
	2021		2020
Appliance sales	$	10,273,393	$	7,802,104
Furniture sales		2,327,834		1,281,836
Other sales		1,096,141		593,238
Total	$	13,697,368	$	9,677,178

~~Category~~		~~Useful Life~~ ~~(Years)~~
~~Machinery and equipment~~		5
~~Office equipment~~		5
~~Vehicles~~		5

	For the Three Months Ended
	March 31,		March 31,
	2022		2021

Appliance sales	$	140,975	$	10,273
Furniture sales		4,155		2,328
Other sales		7,622		1,096

Total	$	152,752	$	13,697

	As Filed			Adjustments			As Restated
Gross profit	$	1,566,008		$	-		$	1,566,008
Operating Expenses
General and administrative		566,640			873,200			1,439,840
Total Operating Expenses		2,881,141			873,200			3,754,341
LOSS FROM OPERATIONS		(1,315,133	)		(873,200	)		(2,188,333	)
Total Other Income (Expense)		(404,987	)		(48,700	)		(453,687	)
NET LOSS BEFORE INCOME TAXES		(1,720,120	)		(921,900	)		(2,642,020	)
INCOME TAX BENEFIT (EXPENSE)		435,000			-			435,000
NET LOSS	$	(1,285,120	)	$	(921,900	)	$	(2,207,020	)

LOSS PER COMMON SHARE – BASIC AND DILUTED	$	(0.26	)				$	(0.44	)
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC AND DILUTED		5,000,000						5,000,000

	March 31, 2021		December 31, 2020
Vendor rebates receivable	$	604,372	$	1,337,791
Credit cards in process of collection		343,982		660,441
Total receivables	$	948,354	$	1,998,232

	March 31, 2021			December 31, 2020
Appliances	$	5,985,757		$	5,285,975
Furniture		249,008			194,852
Other		73,719			91,414
Total merchandise inventory		6,308,484			5,572,241

Allowance for inventory obsolescence		(425,000	)		(425,000	)
Merchandise inventory, net	$	5,883,484		$	5,147,241

	March 31, 2021			December 31, 2020
Equipment	$	69,336		$	69,336
Warehouse equipment		61,070			61,070
Furniture and fixtures		512			512
Transportation equipment		63,784			63,784
Leasehold improvements		136,931			136,931
Construction in progress		126,116			-
Total property and equipment		457,749			331,633
Accumulated depreciation		(102,168	)		(85,685	)
Property and equipment, net	$	355,581		$	245,948

	March 31, 2021			December 31, 2020
Customer relationships	$	749,000		$	749,000
Marketing related - tradename		1,368,000			1,368,000
Total intangible assets		2,117,000			2,117,000
Accumulated amortization		(840,912	)		(735,063	)
Intangible assets, net	$	1,276,088		$	1,381,937

	March 31, 2022			December 31, 2021
Customer relationships	$	24,148		$	24,148
Marketing related - tradename		26,935			26,935
Total intangible assets		51,083			51,083
Accumulated amortization		(9,425	)		(6,871	)
Intangible assets, net	$	41,658		$	44,212

2021 (remainder of year)	$	317,547
2022		423,396
2023		423,396
2024		111,749
Total	$	1,276,088

2022 (remainder of year)	$	7,662
2023		10,217
2024		9,905
2025		9,793
2026		4,081
Total	$	41,658

	March 31, 2021		December 31, 2020
Trade accounts payable	$	5,267,392	$	5,975,486
Sales tax		5,915,910		5,804,100
Accrued payroll liabilities		510,388		492,573
Accrued interest		10,000		10,000
Accrued liability for sales returns		200,000		200,000
Other accrued liabilities		453,132		219,556
Total accounts payable and accrued expenses	$	12,356,822	$	12,701,715

For the years ended December 31,
2021 (remainder of year)	$	499,517
2022		685,222
2023		707,826
2024		731,177
2025		496,064
Total	$	3,119,806
Less: Loan costs		(92,994	)
Total	$	3,026,812

Years Ending December 31,	Amount
2022 – remaining	$	3,314
2023		4,446
2024		2,086
2025		1,776
2026		1,827
Thereafter		7,544

Total		20,993
Less: imputed interest		(4,362	)

Total operating lease liabilities	$	16,631

Operating lease right-of-use assets	$	3,404,861

Lease liabilities, current portion	$	664,043
Lease liabilities, long-term		2,803,203
Total operating lease liabilities	$	3,467,246

Weighted average remaining lease term (months)		57

Weighted average discount rate		5.9	%

2021 (remainder of year)	$	604,279
2022		923,945
2023		933,493
2024		538,041
2025		413,168
Thereafter		565,936
Total lease payments	$	3,978,862
Less imputed interest		(511,616	)
Total lease liability	$	3,467,246

				Weighted -Average
	Options			Exercise Price

Outstanding at December 31, 2021		312,960		$	6.17

Granted		-			-
Exercised		-			-
Forfeited		(132,960	)		9.00

Outstanding at March 31, 2022		180,000		$	4.08

Exercisable at March 31, 2022		30,000		$	9.00

	Shares		Weighted Average Exercise Price		Weighted Average Contractual Term in Years
Outstanding at January 1, 2021		555,000	$	9.00		9
Granted		-		-		-
Exercised		-		-		-
Forfeited / Cancelled / Expired		-		-		-
Outstanding at March 31, 2021		555,000	$	9.00		8.75

Exercisable at March 31, 2021		65,790	$	9.00		8.75

			Weighted- Average
	Warrants		Exercise Price

Outstanding at December 31, 2021		92,514,423	$	2.30

Granted		-		-
Exercised		-		-
Forfeited		-		-

Outstanding at March 31, 2022		92,514,423	$	2.30

Exercisable at March 31, 2022		92,514,423	$	2.30

~~Volatility~~	~~74.2~~	%
~~Risk-free interest rate~~	~~0.615~~	%
~~Dividend yield~~	~~0.0~~	%
~~Term~~	~~4.0 years~~

	Three Months Ended March 31,		Three Months Ended March 31,
	2022		2021

Net sales	$	152,752	$	123,711
Net income		5,922		10,899
Earnings (loss) per share:
Basic and Diluted	$	0.06	$	1.78

For the years ended December 31,
2022 (remainder of year)	$	4,500
2023		6,000
2024		6,000
2025		6,000
Thereafter		33,000
Total		55,500
Less: Loan costs		(3,501	)
Total	$	51,999
Amount classified as a current liability	$	6,000
Amount classified as long-term liability	$	45,999

	For the Three Months						For the Three Months
	Ended March 31, 2022						Ended March 31, 2021
	Amount			% of Net Sales			Amount			% of Net Sales
Product sales, net	$	152,752			100.0	%	$	13,697			100.0	%
Cost of goods sold		116,883			76.5	%		11,069			80.8	%
Gross profit		35,869			23.5	%		2,628			19.2	%

Operating Expenses
Personnel		7,046			4.6	%		1,931			14.1	%
Advertising		4,288			2.8	%		1,083			7.9	%
Bank and credit card fees		6,167			4.0	%		533			3.9	%
Depreciation and amortization		2,734			1.8	%		122			0.9	%
General and administrative		5,567			3.6	%		2,240			16.4	%

Total Operating Expenses		25,802			16.9	%		5,909			43.1	%

INCOME (LOSS) FROM OPERATIONS		10,067			6.6	%		(3,281	)		(24.0	)%

Other Income (Expenses)
Interest income		41			0.0	%		10			0.1	%
Adjustment in value of contingency		(2	)		(0.0	)%		-			0.0	%
Interest expense		(936	)		(0.6	)%		(232	)		(1.7	)%
Other income		135			0.1	%		10			0.1	%

Total Other Income (Expenses)		(762	)		(0.5	)%		(212	)		(1.5	)%

NET INCOME (LOSS) BEFORE INCOME TAXES		9,305			6.1	%		(3,493	)		(25.5	)%

INCOME TAX EXPENSE		3,383			2.0	%		-			0.0	%

NET INCOME (LOSS)	$	5,922			4.0	%	$	(3,493	)		(25.5	)%

	Three Months Ended March 31, 2021						Three Months Ended March 31, 2020 (As Restated)
	Amount			% of Net Sales			Amount			% of Net Sales
Products sales, net	$	13,697,368			100.00	%	$	9,677,178			100.00	%
Cost of goods sold		11,068,911			80.81	%		8,111,170			83.82	%
Gross profit		2,628,457			19.19	%		1,566,008			16.18	%
Operating expenses
Personnel		1,931,324			14.10	%		1,311,484			13.55	%
Advertising		1,083,248			7.91	%		666,436			6.89	%
Bank and credit card fees		532,742			3.89	%		244,740			2.53	%
Depreciation and amortization		122,331			0.89	%		91,841			0.95	%
General and administrative		2,239,498			16.35	%		1,439,840			14.88	%
Total operating expenses		5,909,143			43.14	%		3,754,341			38.80	%
Loss from operations		(3,280,686	)		(23.95	)%		(2,188,333	)		(22.61	)%
Other income (expense)
Interest income		10,096			0.07	%		-			-
Interest expense		(232,831	)		(1.70	)%		(456,070	)		(4.71	)%
Other income		10,206			0.07	%		2,383			0.02	%
Total other income (expense)		(212,529	)		(1.55	)%		(453,687	)		(4.69	)%
Net loss before income taxes		(3,493,215	)		(25.50	)%		(2,642,020	)		(27.30	)%
Income tax benefit		-			-			435,000			4.50	%
Net loss	$	(3,493,215	)		(25.50	)%	$	(2,207,020	)		(22.81	)%

	Three Months Ended March 31, 2021					Three Months Ended March 31, 2020
	Amount		%			Amount		%
Appliance sales	$	10,273,393		75.00	%	$	7,802,104		80.62	%
Furniture sales		2,327,834		16.99	%		1,281,836		13.25	%
Other sales		1,096,141		8.00	%		593,238		6.13	%
Total	$	13,697,368		100.00	%	$	9,677,178		100.00	%

	For the Three Months					For the Three Months
	Ended March 31, 2022					Ended March 31, 2021
	Amount		% of Net Sales			Amount		% of Net Sales
Product costs, net of vendor rebates	$	102,293		67.0	%	$	9,193		67.1	%
Freight costs		14,590		9.6	%		1,876		13.7	%

Total	$	116,883		76.5	%	$	11,069		80.8	%