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: ~~June 30, 2021~~March 31, 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: 000-56128

1847 HOLDINGS LLC

(Exact name of registrant as specified in its charter)

Delaware		38-3922937
(State or other jurisdiction of ~~incorporation)~~ incorporation or organization)		(I.R.S. Employer Identification No.)

590 Madison Avenue, 21st Floor, New York, NY		10022
(Address of principal executive offices)		(Zip Code)

(212) 417-9800

(Registrant’s telephone number, including area code)

N/A

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

Securities registered pursuant to Section 12(b) of the Act: None

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 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 comply 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 ~~August 16, 2021,~~May 13, 2022, there were ~~4,842,851~~4,995,232 common shares of the registrant issued and outstanding.

1847 HOLDINGS LLC

Quarterly Report on Form 10-Q

Period Ended ~~June 30, 2021~~March 31, 2022

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

	~~PART I~~
	~~FINANCIAL INFORMATION~~

Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3920
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5733
Item 4.	Controls and Procedures	5733
PART II
			~~PART II~~
	OTHER INFORMATION

Item 1.	Legal Proceedings	5935
Item 1A.	Risk Factors	5935
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5935
Item 3.	Defaults Upon Senior Securities	5935
Item 4.	Mine Safety Disclosures	5935
Item 5.	Other Information	5935
Item 6.	Exhibits	5936

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

1847 HOLDINGS LLC

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

		Page

Condensed Consolidated Balance Sheets as of ~~June 30, 2021 (unaudited)~~March 31, 2022 (Unaudited) and December 31, ~~2020~~2021		2
Condensed Consolidated Statements of Operations for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020 (unaudited)~~(Unaudited)		3
Condensed Consolidated Statements of Mezzanine Equity and Shareholders’ ~~Equity (Deficit)~~Deficit for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020 (unaudited)~~(Unaudited)		4
Condensed Consolidated Statements of Cash Flows for the ~~Six~~Three Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020 (unaudited)~~(Unaudited)		5
Notes to ~~Unaudited~~Condensed Consolidated Financial Statements (Unaudited)		6

1847 HOLDINGS LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30,
2021 December 31,
2020
(unaudited)
ASSETS
Current Assets
Cash $ 1,477,524 $ 976,538
Restricted cash - 403,811
Accounts receivable, net 2,053,013 525,625
Inventories, net 4,552,179 2,022,754
Contract assets 55,579 70,230
Prepaid expenses and other current assets 970,207 550,964
Discontinued operations – current assets - 1,324,608
TOTAL CURRENT ASSETS 9,108,502 5,874,530
Investments 276,465 276,270
Property and equipment, net 554,695 398,503
Operating lease right-of-use assets 770,720 357,208
Goodwill 9,238,781 5,989,817
Intangible assets, net 3,689,873 3,885,467
Deferred tax asset 104,000 -
Other assets 6,851 375
Discontinued operations – long-term assets - 2,457,770
TOTAL ASSETS $ 23,749,887 $ 19,239,940

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 3,061,830 $ 2,558,559
Current portion of operating lease liability 196,198 66,803
Advances, related party 193,761 190,192
Line of credit 1,046,309 301,081
Due to seller 96,333 33,630
Note payable – related party 56,900 56,900
Notes payable – current portion 958,531 429,183
Contract liabilities 45,189 77,403
Customer deposits 3,744,462 3,370,957
Discontinued operations – current liabilities - 999,122
TOTAL CURRENT LIABILITIES 9,399,513 8,083,830
Operating lease liability – long term, net of current portion 577,347 291,183
Notes payable – long term, net of current portion 4,763,483 1,637,310
Discontinued operations – long-term liabilities - 5,981,467
TOTAL LIABILITIES $ 14,740,343 $ 15,993,790
SHAREHOLDERS’ EQUITY
Allocation shares, 1,000 shares issued and outstanding 1,000 1,000
Series A convertible preferred stock, 4,450,460 and 2,632,278 outstanding as of June 30, 2021 and December 31, 2020, respectively 4,632,242 2,971,427
Distribution receivable (2,000,000 ) (2,000,000 )
Common Shares, 500,000,000 shares authorized, 4,842,851 and 4,444,013 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively 4,843 4,444
Additional paid-in capital 20,263,496 17,005,491
Accumulated deficit (13,079,361 ) (13,856,973 )
TOTAL 1847 HOLDINGS SHAREHOLDERS’ EQUITY 9,822,220 4,125,389
NON-CONTROLLING INTERESTS (812,676 ) (879,239 )
TOTAL SHAREHOLDERS’ EQUITY 9,009,544 3,246,150
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 23,749,887 $ 19,239,940
March 31,
2022 December 31, 2021
(Unaudited)
ASSETS

Current Assets
Cash and cash equivalents $ 1,638,924 $ 1,383,533
Investments 276,691 276,429
Receivables, net 3,918,814 3,378,996
Contract assets 69,735 88,466
Inventories, net 5,805,494 5,427,302
Prepaid expenses and other current assets 270,537 582,048
Total Current Assets 11,980,195 11,136,774

Property and equipment, net 1,920,967 1,695,311
Operating lease right-of-use assets 3,094,573 3,192,604
Goodwill 19,452,270 19,452,270
Intangible assets, net 11,079,205 11,443,897
Other long-term assets 85,691 85,691
TOTAL ASSETS $ 47,612,901 $ 47,006,547

LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT

Current Liabilities
Accounts payable and accrued expenses $ 5,911,576 $ 4,818,672
Contract liabilities 1,696,449 2,547,903
Customer deposits 3,677,543 3,465,259
Due to related parties 193,762 193,762
Current portion of operating lease liabilities 595,039 613,696
Current portion of finance lease liabilities 143,865 100,652
Current portion of notes payable, net 686,285 692,522
Total Current Liabilities 12,904,519 12,432,466

Operating lease liabilities, net of current portion 2,542,790 2,607,862
Finance lease liabilities, net of current portion 698,409 455,905
Notes payable, net of current portion 222,399 251,401
Convertible notes payable, net of current portion 26,880,029 26,630,655
Contingent note payable, net of current portion 1,001,183 1,001,183
Deferred tax liability, net 1,981,000 2,070,000
TOTAL LIABILITIES 46,230,329 45,449,472

Mezzanine Equity
Series A senior convertible preferred shares, 4,450,460 shares designated; 1,684,849 and 1,818,182 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively 1,415,100 1,655,404
Series B senior convertible preferred shares, 583,334 shares designated; 426,999 and 0 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively 1,113,650 -
TOTAL MEZZANINE EQUITY 2,528,750 1,655,404

Shareholders’ Deficit
Allocation shares, 1,000 shares authorized; 1,000 shares issued and outstanding as of March 31, 2022 and December 31, 2021 1,000 1,000
Common shares, $0.001 par value, 500,000,000 shares authorized; 4,995,232 and 4,842,851 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively 4,995 4,843
Distribution receivable (2,000,000 ) (2,000,000 )
Additional paid-in capital 21,983,594 21,719,410
Accumulated deficit (22,012,401 ) (20,754,394 )
TOTAL 1847 HOLDINGS SHAREHOLDERS’ DEFICIT (2,022,812 ) (1,029,141 )
NON-CONTROLLING INTERESTS 876,634 930,812
TOTAL SHAREHOLDERS’ DEFICIT (1,146,178 ) (98,329 )
TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT $ 47,612,901 $ 47,006,547

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

~~1847 HOLDINGS LLC~~
~~CONSOLIDATED STATEMENTS OF OPERATIONS~~
~~(UNAUDITED)~~

Three Months Ended
June 30,

Six Months Ended
June 30,

2021 2020 2021 2020
REVENUES
Furniture and appliances $ 3,352,618 $ 1,185,980 $ 6,616,984 $ 1,185,980
Construction 1,314,968 - 2,830,877 -
Automotive supplies 1,980,368 - 1,980,368 -
TOTAL REVENUE 6,647,954 1,185,980 11,428,229 1,185,980
OPERATING EXPENSES
Cost of sales 4,514,789 923,893 7,775,471 923,893
Personnel costs 836,569 81,283 1,321,240 81,283
Depreciation and amortization 126,072 3,543 248,178 3,543
General and administrative 1,350,329 832,827 2,674,526 872,112
TOTAL OPERATING EXPENSES 6,827,759 1,841,546 12,019,415 1,880,831
NET LOSS FROM OPERATIONS (179,805 ) (655,566 ) (591,186 ) (694,851 )
OTHER INCOME (EXPENSE)
Gain on forgiveness of debt - - 360,302 -
Financing costs (6,068 ) (28,571 ) (6,068 ) (28,571 )
Loss on adjustment shares issued - - (757,792 ) -
Gain on disposition of subsidiary 3,282,804 - 3,282,804 -
Other income/(expense) (3,539 ) - (3,539 ) -
Interest expense (130,444 ) (4,423 ) (175,565 ) (6,837 )
TOTAL OTHER INCOME (EXPENSE) 3,142,753 (32,994 ) 2,700,142 (35,408 )
NET INCOME (LOSS) BEFORE INCOME TAXES 2,962,948 (688,560 ) 2,108,956 (730,259 )
INCOME TAX BENEFIT (21,900 ) (15,000 ) (21,900 ) (15,000 )
NET INCOME (LOSS) FROM CONTINUING OPERATIONS $ 2,984,848 $ (673,560 ) $ 2,130,856 $ (715,259 )

NET LOSS FROM DISCONTINUED OPERATIONS
Income (loss) from discontinued operations before income taxes 61,895 (5,077,228 ) 240,405 (7,643,810 )
Less provision for income taxes for discontinued operations - (938,953 ) - (1,436,753 )
Net income (loss) from discontinued operations 61,895 (4,138,275 ) 240,405 (6,207,057 )
Less net income (loss) from discontinued operations attributable to noncontrolling interests 27,853 (1,259,699 ) 108,182 (1,997,884 )
Net income (loss) from discontinued operations attributable to 1847 Holdings common shareholders 34,042 (2,878,576 ) 132,223 (4,209,173 )

NET INCOME (LOSS) $ 3,018,890 $ (3,552,136 ) $ 2,263,079 $ (4,924,432 )
LESS NET INCOME (LOSS) ATTRIBUTABLE TO
NON-CONTROLLING INTERESTS (16,250 ) (9,439 ) (41,620 ) (9,439 )
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ 3,035,140 $ (3,542,697 ) $ 2,304,699 $ (4,914,993 )
PREFERRED STOCK ACCRUED DIVIDEND 310,679 - 499,388 -
DEEMED DIVIDEND RELATED TO ISSUANCE OF PREFERRED STOCK - - 1,527,086 -
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS SHAREHOLDERS $ 2,724,461 $ (3,542,697 ) $ 278,225 $ (4,914,993 )

Net income (loss) per common share from continuing operations: basic $ 0.61 $ (0.20 ) $ 0.46 $ (0.22 )
Net income (loss) per common share from discontinued operations: basic $ 0.01 $ (1.21 ) $ 0.05 $ (1.89 )
Net income (loss) per common share: basic $ 0.56 $ (1.04 ) $ 0.49 $ (1.50 )
Net income (loss) per common share from continuing operations diluted $ 0.46 $ (0.20 ) $ 0.34 $ (0.22 )
Net income (loss) per common share from discontinued operations: diluted $ 0.01 $ (1.21 ) $ 0.04 $ (1.89 )
Net income (loss) per common share: diluted $ 0.42 $ (1.04 ) $ 0.04 $ (1.49 )
Weighted-average common shares outstanding: basic 4,842,851 3,418,378 4,655,551 3,290,747
Weighted-average common shares outstanding: 6,421,982 3,418,378 6,234,683 3,290,747
~~The accompanying notes are an integral part of these consolidated financial statements~~

~~1847 HOLDINGS LLC~~
~~CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)~~
~~(UNAUDITED)~~
~~For the Three and Six Months Ended June 30, 2021~~
Allocation Preferred Shares Goedeker Subscription Common Shares Additional Paid-In Accumulated Non- Controlling Shareholders’
Shares Shares Amount Receivable Shares Amount Capital Deficit Interest Deficit
BALANCE – January 1, 2021 $ 1,000 2,632,278 $ 2,971,427 $ (2,000,000 ) 4,444,013 $ 4,444 $ 17,005,491 $ (13,856,973 ) $ (879,239 ) $ 3,246,150
Issuance of preferred shares, net of fees - 1,818,182 1,527,086 - - - 3,000,000 (1,527,086 ) - 3,000,000
Accrued dividend payable - - 11,759 - - - (188,709 ) - - (176,950 )
Issuance of common adjustment shares - - - - 398,838 399 757,393 - - 757,792
Net loss - - - - - - - (730,441 ) 54,959 (675,482 )
BALANCE – March 31, 2021 1,000 4,450,460 4,510,272 (2,000,000 ) 4,842,851 4,843 20,574,175 (16,114,500 ) (824,280 ) 6,151,510
Accrued dividend payable - - 121,970 - - - (310,679 ) - - (188,709 )
Net loss - - - - - - - 3,035,139 11,604 3,046,743
BALANCE – June 30, 2021 $ 1,000 4,450,460 $ 4,632,242 $ (2,000,000 ) 4,842,851 $ 4,843 $ 20,263,496 $ (13,079,361 ) $ (812,676 ) $ 9,009,544
~~For the Three and Six Months Ended June 30, 2020~~
Allocation Common Shares Additional
Paid-In Accumulated Non-
Controlling Shareholders’
Shares Shares Amount Capital Deficit Interest Deficit
BALANCE – January 1, 2020 $ 1,000 3,165,625 $ 3,165 $ 442,014 $ (4,402,043 ) $ (42,930 ) $      (3,998,794 )
Net loss - - - - (1,372,297 ) (738,185 ) (2,110,482 )
BALANCE – March 31, 2020 1,000 3,165,625 3,165 442,014 (5,774,340 ) (781,115 ) (6,109,276 )
Common shares issued in connection with acquisition - 415,000 415 1,037,085 - - 1,037,500
Common shares issued for service - 100,000 100 244,900 - - 245,000
Common shares issued upon partial conversion of convertible note payable - 100,000 100 274,900 - - 275,000
Warrants issued in connection with convertible note payable - - - 448,211 - 118,500 566,711
Stock compensation 191,386 191,386
Net loss - - - - (3,542,702 ) (1,269,137 ) (4,811,839 )
BALANCE – June 30, 2020 $ 1,000 3,780,625 $ 3,780 $ 2,638,496 $ (9,317,042 ) $ (1,931,752 ) $ (8,605,518 )
~~The accompanying notes are an integral part of these consolidated financial statements~~

~~1847 HOLDINGS LLC~~
~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~
~~(UNAUDITED)~~
Six Months Ended
June 30,
2021 2020
OPERATING ACTIVITIES
Net income (loss) $
2,263,079
$ (4,924,432 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Gain (loss) from discontinued operations (132,223 ) 4,209,173
Gain on disposition of subsidiary (3,282,804 ) -
Depreciation and amortization 248,179 -
Stock compensation 436,386
Loss on adjustment shares issued 757,792 -
Amortization of financing costs - 28,571
Forgiveness of debt (360,302 ) -
Amortization of operating lease right-of-use assets 50,735 -
Amortization of financing costs 13,769 -
Changes in operating assets and liabilities:
Accounts receivable 332,719 102,651
Inventory (408,159 ) (167,754 )
Prepaid expenses and other assets (207,471 ) (317,461 )
Accounts payable and accrued expenses
395,334
421,282
Operating lease liability (50,735 ) -
Deferred taxes (40,000 ) (15,000 )
Customer deposits 373,505 (43,923 )
Change on contract liabilities (17,563 ) -
Due to related parties 3,570 (82,211 )
Net cash used in operating activities from continuing operations (60,575 ) (352,718 )
Net cash provided by (used in) operating activities from discontinued operations (170,580 ) (4,153,478 )
Net cash provided by (used in) operating activities (231,155 )
(4,506,196
)
INVESTING ACTIVITIES
Net cash acquired in (paid for) acquisitions (5,455,476 ) 1,268,285
Proceeds from sale of subsidiary 325,000 -
Purchase of property and equipment (208,776 ) -
Net cash provided by (used in) investing activities from continuing operations (5,339,252 ) 1,268,285
Net cash provided by (used in) investing activities from discontinued operations 644,303 (14,504 )
Net cash provided by (used in) investing activities (4,694,949 ) 1,253,781
FINANCING ACTIVITIES
Proceeds from notes payable 3,673,405 -
Repayment of notes payable (358,922 ) (686,954 )
Proceeds from short term borrowings - 475,000
Net borrowings from lines of credit 745,228 (93,197 )
Payment to sellers – Kyle’s and Wolo (1,031,821 ) -
Proceeds from issuance of preferred shares, net of costs 3,000,000 -
Preferred dividends (365,658 ) -
Financing fees (165,230 ) -

Net cash provided by (used in) financing activities from continuing operations 5,497,002 (305,151 )
Net cash used in financing activities from discontinued operations (208,693 ) (472,158 )
Net cash provided by (used in) financing activities 5,288,309 (777,309 )
NET CHANGE IN CASH AND RESTRICTED CASH – Continuing Operations 97,175 610,416
NET CHANGE IN CASH AND RESTRICTED CASH – Discontinuing Operations 265,030
(4,640,140
)
CASH AND RESTRICTED CASH AVAILABLE – Discontinuing Operations (265,030 )
4,640,140
CASH AND RESTRICTED CASH – Continuing Operations
Beginning of period 1,380,349 -
End of period $ 1,477,524 $ 610,416
~~The accompanying notes are an integral part of these consolidated financial statements~~

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 1—ORGANIZATION AND NATURE OF BUSINESS~~
1847 Holdings LLC (the “Company”) was formed under the laws of the State of Delaware on January 22, 2013. The Company is in the business of acquiring small businesses in a variety of different industries.
On March 27, 2020, the Company and the Company’s wholly owned subsidiary 1847 Asien Inc., a Delaware corporation (“1847 Asien”), entered into a stock purchase agreement with Asien’s Appliance, Inc., a California corporation (“Asien’s”), and Joerg Christian Wilhelmsen and Susan Kay Wilhelmsen, as trustees of the Wilhelmsen Family Trust, U/D/T Dated May 1, 1992 (the “Asien’s Seller”), pursuant to which 1847 Asien acquired all of the issued and outstanding stock of Asien’s on May 28, 2020 (see Note 10). As a result of this transaction, the Company owns 95% of 1847 Asien, with the remaining 5% held by a third-party, and 1847 Asien owns 100% of Asien’s.
On August 27, 2020, the Company and the Company’s wholly owned subsidiary 1847 Cabinet Inc., a Delaware corporation (“1847 Cabinet”), entered into a stock purchase agreement with Kyle’s Custom Wood Shop, Inc., an Idaho corporation (“Kyle’s”), and Stephen Mallatt, Jr. and Rita Mallatt (the “Kyle’s Sellers”), pursuant to which 1847 Cabinet acquired all of the issued and outstanding stock of Kyle’s on September 30, 2020 (see Note 10). As a result of this transaction, the Company owns 92.5% of 1847 Cabinet, with the remaining 7.5% held by a third-party, and 1847 Cabinet owns 100% of Kyle’s.
On December 22, 2020, the Company and its wholly-owned subsidiary 1847 Wolo Inc. (“1847 Wolo”) entered into a stock purchase agreement with Wolo Mfg. Corp., a New York corporation (“Wolo Mfg”), and Wolo Industrial Horn & Signal, Inc., a New York corporation (“Wolo H&S”), and Barbara Solow and Stanley Solow (together, the “Wolo Sellers”), pursuant to which 1847 Wolo acquired all of the issued and outstanding stock of Wolo Mfg and Wolo H&S on March 30, 2021 (see Note 10). As a result of this transaction, the Company owns 92.5% of 1847 Wolo, with the remaining 7.5% held by a third-party, and 1847 Wolo owns 100% of Wolo Mfg and Wolo H&S.
~~The Company previously owned two additional companies, 1847 Neese Inc. and 1847 Goedeker Inc.~~
On March 3, 2017, the Company’s wholly owned subsidiary 1847 Neese Inc., a Delaware corporation (“1847 Neese”), entered into a stock purchase agreement with Neese, Inc., an Iowa corporation (“Neese”), and Alan Neese and Katherine Neese (the “Neese Sellers”), pursuant to which 1847 Neese acquired all of the issued and outstanding capital stock of Neese on March 3, 2017. As a result of this transaction, the Company owned 55% of 1847 Neese, with the remaining 45% held by the Neese Sellers. On April 19, 2021, the Company entered into a stock purchase agreement with the Neese Sellers, pursuant to which the Neese Sellers purchased the Company’s 55% ownership interest in 1847 Neese for a purchase price of $325,000 in cash (the “Neese Spin-Off”). As a result of the Neese Spin-Off, 1847 Neese is no longer a subsidiary of the Company.
On January 10, 2019, the Company established 1847 Goedeker Inc. (“Goedeker”) as a wholly owned subsidiary in the State of Delaware in connection with the proposed acquisition of assets from Goedeker Television Co., a Missouri corporation (“Goedeker Television”). On March 20, 2019, the Company established 1847 Goedeker Holdco Inc. (“Holdco”) as a wholly owned subsidiary in the State of Delaware and subsequently transferred all of its shares in Goedeker to Holdco, such that Goedeker became a wholly owned subsidiary of Holdco. On January 18, 2019, Goedeker entered into an asset purchase agreement with Goedeker Television and Steve Goedeker and Mike Goedeker, pursuant to which Goedeker acquired substantially all of the assets of Goedeker Television used in its retail appliance and furniture business on April 5, 2019. As a result of this transaction, the Company owned 70% of Holdco, with the remaining 30% held by third parties, and Holdco owned 100% of Goedeker. On August 4, 2020, Holdco distributed all of its shares of Goedeker to its stockholders in accordance with their pro rata ownership in Holdco, after which time Holdco was dissolved. Following this transaction, and the closing of Goedeker’s initial public offering on August 4, 2020 (the “Goedeker IPO”), the Company owned approximately 54.41% of Goedeker. On October 23, 2020, the Company distributed all of the shares of Goedeker that it held to its shareholders (the “Goedeker Spin-Off”). As a result of the Goedeker Spin-Off, Goedeker is no longer a subsidiary of the Company.
The consolidated financial statements include the accounts of the Company and its consolidated subsidiaries, 1847 Asien, 1847 Cabinet, 1847 Wolo, Asien’s, Kyle’s, Wolo Mfg and Wolo H&S. All significant intercompany balances and transactions have been eliminated in consolidation.statements.

1847 HOLDINGS LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31,
2022 2021
Revenues $ 12,073,878 $ 4,780,275

Operating Expenses
Cost of sales 7,749,130 3,260,682
Personnel 1,577,700 484,672
Depreciation and amortization 511,371 122,106
General and administrative 2,166,207 1,324,196
Total Operating Expenses 12,004,408 5,191,656

INCOME (LOSS) FROM OPERATIONS 69,470 (411,381 )

Other Income (Expenses)
Other income 318 -
Interest expense (906,743 ) (45,121 )
Gain on forgiveness of debt - 360,302
Gain on disposal of property and equipment 32,747 -
Loss on adjustment shares - (757,792 )
Total Other Income (Expenses) (873,678 ) (442,611 )

NET LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (804,208 ) (853,992 )
INCOME TAX EXPENSE ON CONTINUING OPERATIONS (123,000 ) -
NET LOSS FROM CONTINUING OPERATIONS $ (927,208 ) $ (853,992 )

NET INCOME FROM DISCONTINUED OPERATIONS - 178,510
NET INCOME FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS - 80,329
NET INCOME FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO 1847 HOLDINGS COMMON SHAREHOLDERS - 98,181

NET LOSS $ (927,208 ) (755,811 )
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS (54,178 ) (25,370 )
NET LOSS ATTRIBUTABLE TO 1847 HOLDINGS $ (873,030 ) $ (730,441 )

PREFERRED SHARE DIVIDENDS (135,215 ) (188,709 )
DEEMED DIVIDEND RELATED TO ISSUANCE OF PREFERRED SHARES - (1,527,086 )
NET LOSS ATTRIBUTABLE TO 1847 HOLDINGS COMMON SHAREHOLDERS $ (1,008,245 ) $ (2,446,236 )

EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO 1847 HOLDINGS COMMON SHAREHOLDERS
LOSS PER COMMON SHARE FROM CONTINUING OPERATIONS – BASIC AND DILUTED $ (0.21 ) $ (0.19 )
EARNINGS PER COMMON SHARE FROM DISCONTINUED OPERATIONS – BASIC AND DILUTED - 0.02
LOSS PER COMMON SHARE – BASIC AND DILUTED $ (0.21 ) $ (0.55 )

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC AND DILUTED 4,915,655 4,466,171
The accompanying notes are an integral part of these condensed consolidated financial statements.

1847 HOLDINGS LLC
CONDENSED CONSOLIDATED STATEMENTS OF
MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT
(UNAUDITED)
Three Months Ended March 31, 2022
Series A Senior
Convertible
Preferred Shares Series B Senior
Convertible
Preferred Shares Allocation Common Shares Distribution Additional
Paid-In Accumulated Non-
Controlling Total
Shareholders’
Shares Amount Shares Amount Shares Shares Amount Receivable Capital Deficit Interests (Deficit)
Balance at December 31, 2021 1,818,182 $ 1,655,404 - $ - $ 1,000 4,842,851 $ 4,843 $ (2,000,000 ) $ 21,719,410 $ (20,754,394 ) $ 930,812 $ (98,329 )
Issuance of common shares upon conversion of series A preferred shares (133,333 ) (111,986 ) - - - 152,381 152 - 111,834 - - 111,986
Issuance of series B convertible preferred shares and warrants - - 426,999 1,113,650 - - - - 152,350 - - 152,350
Dividends - common shares - - - - - - - - - (249,762 ) - (249,762 )
Dividends - series A senior convertible preferred shares - (128,318 ) - - - - - - - (121,455 ) - (121,455 )
Dividends - series B senior convertible preferred shares - - - - - - - - - (13,760 ) - (13,760 )
Net loss - - - - - - - - - (873,030 ) (54,178 ) (927,208 )
Balance at March 31, 2022 1,684,849 $ 1,415,100 426,999 $ 1,113,650 $ 1,000 4,995,232 $ 4,995 $ (2,000,000 ) $ 21,983,594 $ (22,012,401 ) $ 876,634 $ (1,146,178 )
Three Months Ended March 31, 2021
Series A Senior
Convertible
Preferred Shares Series B Senior
Convertible
Preferred Shares Allocation Common Shares Distribution Additional
Paid-In Accumulated Non- Controlling Total
Shareholders’
Shares Amount Shares Amount Shares Shares Amount Receivable Capital Deficit Interests (Deficit)
Balance at December 31, 2020 2,633,278 $ 2,971,427          - $        - $ 1,000 4,444,013 $ 4,444 $ (2,000,000 ) $ 17,005,491 $ (13,856,973 ) $ (879,239 ) $ 274,723
Issuance of series A senior convertible preferred shares and warrants 1,818,182 1,527,086 - - - - - - 3,000,000 (1,527,086 ) - 1,472,914
Issuance of common adjustment shares - - - - - 398,838 399 - 757,393 - - 757,792
Dividends - series A senior convertible preferred shares - 11,759 - - - - - - - (188,709 ) - (188,709 )
Net loss - - - - - - - - - (730,441 ) 54,959 (675,482 )
Balance at March 31, 2021 4,451,460 $ 4,510,272 - $ - $ 1,000 4,842,851 $ 4,843 $ (2,000,000 ) $ 20,762,884 $ (16,303,209 ) $ (824,280 ) $ 1,641,238
The accompanying notes are an integral part of these condensed consolidated financial statements.

1847 HOLDINGS LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
2022 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (927,208 ) $ (755,811 )
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Income from discontinued operations - (98,181 )
Gain on forgiveness of debt - (360,302 )
Gain on disposal of property and equipment (32,747 ) -
Loss on redemption of series A senior convertible preferred shares - 757,792
Deferred tax asset (liability) (89,000 ) -
Depreciation and amortization 511,371 122,106
Amortization of debt discounts 249,374 -
Amortization of right-of-use assets 98,031 16,928
Changes in operating assets and liabilities:
Receivables (539,818 ) (124,065 )
Contract assets 18,731 -
Inventories (378,192 ) (115,545 )
Prepaid expenses and other current assets 311,511 (62,071 )
Accounts payable and accrued expenses 964,586 65,969
Contract liabilities (851,454 ) (122,247 )
Customer deposits 212,284 328,580
Due to related parties - 1,785
Operating lease liabilities (83,729 ) (15,657 )
Net cash used in operating activities from continuing operations (536,260 ) (360,719 )
Net cash used in operating activities from discontinued operations - (123,086 )
Net cash used in operating activities (536,260 ) (483,805 )

CASH FLOWS FROM INVESTING ACTIVITIES
Net cash acquired in acquisitions - 1,094,524
Purchases of property and equipment (66,291 ) (148,820 )
Proceeds from disposal of property and equipment 35,498 -
Investments in certificates of deposit (262 ) -
Net cash (used in) provided by investing activities from continuing operations (31,055 ) 945,704
Net cash provided by investing activities from discontinued operations - 534,343
Net cash (used in) provided by investing activities (31,055 ) 1,480,047

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable - 123,405
Net proceeds from issuance of series A senior convertible preferred shares - 3,000,000
Net proceeds from issuance of series B senior convertible preferred shares 1,266,000 -
Proceeds from line of credit - 569,395
Repayments of notes payable and finance lease liabilities (58,317 ) (143,432 )
Repayments to sellers - (3,033,630 )
Cash paid for financing costs - (165,229 )
Dividends on series A senior convertible preferred shares (121,455 ) (176,950 )
Dividends on series B senior convertible preferred shares (13,760 ) -
Dividends on common shares (249,762 ) -
Net cash provided by financing activities from continuing operations 822,706 173,559
Net cash used in financing activities from discontinued operations - (119,197 )
Net cash provided by financing activities 822,706 54,362

NET CHANGE IN CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS 255,391 758,544
NET CHANGE IN CASH AND CASH EQUIVALENT FROM DISCONTINUED OPERATIONS - 292,060
CASH AND CASH EQUIVALENTS AVAILABLE FROM DISCONTINUED OPERATIONS - (292,060 )

CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS
Beginning of the period 1,383,533 1,380,349
End of the period $ 1,638,924 $ 2,138,893

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest $ 484,360 $ -
Cash paid for income taxes $ - $ -

NON-CASH INVESTING AND FINANCING ACTIVITIES
Issuance of common shares upon conversion of series A preferred shares $ 111,986 $ -
Financed purchases of property and equipment $ 316,798 $ -
The accompanying notes are an integral part of these condensed consolidated financial statements.

1847 HOLDINGS LLC
NOTES TO ~~THE~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~JUNE 30, 2021~~MARCH 31, 2022
(UNAUDITED)
NOTE ~~2—SUMMARY~~1—BASIS OF ~~SIGNIFICANT ACCOUNTING POLICIES~~
~~Basis of Presentation~~PRESENTATION

The accompanying unaudited condensed consolidated financial statements of ~~the Company~~1847 Holdings LLC (the “Company,” “we,” “us,” or “our”) have been prepared ~~without audit~~ in accordance with accounting principles generally accepted ~~accounting principles~~ in the United States of America (“GAAP”) for interim financial information and ~~are presented~~with the instructions to Form 10-Q of Regulation S-X. They do not include all information and footnotes required by GAAP for complete financial statements. The December 31, 2021 consolidated balance sheet data were derived from audited financial statements but do not include all disclosures required by GAAP. However, except as disclosed herein, there has been no material change in ~~US dollars.~~
~~The results of Goedeker are included within discontinued operations for three and six months ended June 30, 2020. The Company retrospectively updated~~the information disclosed in the notes to the consolidated financial statements for the ~~three~~year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K, as filed with the Securities and ~~six months ended June 30, 2020 to reflect this change.~~
Exchange Commission on March 31, 2022. The ~~results of 1847 Neese are included within discontinued operations for the three and six months ended June 30, 2021 and 2020, respectively. The Company retrospectively updated the~~interim unaudited condensed consolidated financial statements ~~as of December 31, 2020 and for~~should be read in conjunction with those consolidated financial statements included in the ~~three and six months ended June 30, 2021 and 2020, respectively, to reflect this change.~~
Form 10-K. In the opinion of management, all adjustments ~~(consisting of normal recurring accruals)~~ considered necessary for a fair ~~presentation~~statement of the financial statements, consisting solely of normal recurring adjustments, have been ~~included.~~made. Operating results for the ~~six~~three months ~~June 30, 2021~~ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2021.~~2022.
These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the year ended December 31, 2020.
~~Accounting Basis~~
~~The Company uses the accrual basis of accounting and GAAP. The Company has adopted a calendar year end.~~
~~Segment Reporting~~
~~The Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 280,~~ ~~Segment Reporting~~, requires that an enterprise report selected information about reportable segments in its financial reports issued to its stockholders. The Company has three reportable segments - the Retail and Appliances Segment, which is operated by Asien’s, the Construction Segment, which is operated by Kyle’s, and the Automotive Supplies Segment, which is operated by Wolo Mfg and Wolo H&S (together, “Wolo”).
The Retail and Appliances Segment is comprised of the business of Asien’s, which is based in Santa Rosa, CA, and provides a wide variety of appliance services including sales, delivery, installation, service and repair, extended warranties, and financing.
The Construction Segment is comprised of the business of Kyle’s, which is based in Boise, ID, and provides a wide variety of construction services including custom design and build of kitchen and bathroom cabinetry, delivery, installation, service and repair, extended warranties, and financing.
The Automotive Supplies Segment is comprised of the business of Wolo, which is based in Deer Park, NY, and designs and manufactures horn and safety products (electric, air, truck, marine, motorcycle and industrial equipment), and offers vehicle emergency and safety warning lights for cars, trucks, industrial equipment, and emergency vehicles.
The Company provides general corporate services to its segments; however, these services are not considered when making operating decisions and assessing segment performance. These services are reported under “Corporate Services” below and these include costs associated with executive management, financing activities and public company compliance.

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
~~Cash and Cash Equivalents~~
~~The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents.~~
~~Use of Estimates~~
The preparation of 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 financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
~~Impact of COVID-19~~
The impact of COVID-19 on the Company’s business has been considered in management’s estimates and assumptions; however, it is too early to know the full impact of COVID-19 or its timing on a return to more normal operations. Further, the recently enacted Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) provides for economic assistance loans through the United States Small Business Administration (the “SBA”). On April 28, 2020, Asien’s received $357,500 in Paycheck Protection Program (“PPP”) loans from the SBA under the CARES Act. The PPP provides that the PPP loans may be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act. Asien’s used the proceeds from the PPP loans for qualifying expenses and to applied for forgiveness of the PPP loans in accordance with the terms of the CARES Act. On February 16, 2021, Asien’s received notice from Home State Bank and Exchange Bank that its loan had been forgiven in its entirety by the Small Business Administration.
Reclassifications

Certain ~~Statements of Operations~~ reclassifications within property and equipment, notes payable, and preferred shares have been made ~~in the presentation of the Company’s~~to prior period’s financial statements ~~and accompanying notes~~ to conform to the ~~presentation for the three and six months ended June 30, 2021. The Company reclassified certain operating expense accounts in the Consolidated Statement of Operations. The reclassification had~~current period financial statement presentation. There is no impact ~~on financial position, net income, or shareholder’s equity.~~in total to the results of operations and cash flows in all periods presented.
Sequencing

~~Revenue Recognition~~Under ASC 815-40-35 (“ASC 815”), the Company has adopted a sequencing policy, whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares as a result of certain securities with a potentially indeterminable number of shares, shares will be allocated on the basis of the earliest maturity date of potentially dilutive instruments first, with the earliest maturity date of grants receiving the first allocation of shares. Pursuant to ASC 815, issuances of securities to the Company’s employees and ~~Cost of Revenue~~directors, or to compensate grantees in a share-based payment arrangement, are not subject to the sequencing policy.
NOTE 2—RECENT ACCOUNTING PRONOUCEMENTS

~~On January 1, 2018,~~The Company considers the ~~Company adopted~~applicability and impact of all Accounting Standards ~~Update~~Updates (“~~ASU”~~ASUs”) ~~No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~~~, which supersedes~~issued by the ~~revenue recognition requirements in ASC Topic 605,~~ ~~Revenue Recognition~~Financial Accounting Standards Board (“FASB”). ~~This ASU is based~~ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the principle that 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. This ASU 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’s ~~adoption of this ASU resulted in no change to the Company’s results of operations or balance sheet.~~condensed consolidated financial statements.

~~Retail~~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 ~~Appliances Segment~~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 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 our condensed consolidated financial statements.

~~Asien’s collects 100%~~In August 2020, the FASB issued ASU 2020-06 Accounting for Convertible Instruments and Contracts In An Entity’s Own Equity. ASU 2020-06 simplifies the accounting for certain convertible instruments by removing the separation models for convertible debt with a cash conversion feature and for convertible instruments with a beneficial conversion feature. As a result, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. Additionally, ASU 2020-06 amends the diluted earnings per share calculation for convertible instruments by requiring the use of the ~~payment~~if-converted method. The treasury stock method is no longer available. Entities may adopt the ASU 2020-06 using either a full or modified retrospective approach, and it is effective for ~~special-order models including tax~~interim and ~~50% of the payment~~annual reporting periods beginning after December 15, 2021. Early adoption is permitted for non-special orders from the customer at the time the order is placed. Asien’s does not incur incremental costs obtaining purchase orders from customers, however, if Asien’s did, because all Asien’s contracts are less than a year in duration, any contract costs incurred would be expensed rather than capitalized.interim and annual reporting periods beginning after December 15, 2020. The Company adopted this guidance on January 1, 2022.

~~Performance Obligations –~~In October 2021, the 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 ~~revenue that Asien’s recognizes arises from orders it receives from customers. Asien’s performance obligations under~~ASU is effective for public entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. This ASU should be applied prospectively to acquisitions occurring on or after the ~~customer orders correspond to each sale~~effective date of ~~merchandise that it makes to customers under the purchase orders; as~~December 15, 2022, and early adoption is permitted. The Company adopted this guidance on January 1, 2022. The adoption of this standard does not have a ~~result, each purchase order generally contains only one performance obligation based~~material impact 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, Asien’s products, which generally occurs when the customer assumes the risk of loss. The transfer of control generally occurs at the point of pickup, shipment, or installation. Once this occurs, Asien’s has satisfied its performance obligation and Asien’s recognizes revenue.
Transaction Price ‒ Asien’s agrees with customers on the selling price of each transaction. This transaction price is generally based on the agreed upon sales price. In Asien’s contracts with customers, it allocates the entire transaction price to the sales price, which is the basis for the determination of the relative standalone selling price allocated to each performance obligation. Any sales tax that Asien’s collects concurrently with revenue-producing activities are excluded from revenue.
our condensed consolidated financial statements.

1847 HOLDINGS LLC
NOTES TO ~~THE~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
Cost of revenue includes the cost of purchased merchandise plus freight and any applicable delivery charges from the vendor to Asien’s. Substantially all Asien’s sales are to individual retail consumers (homeowners), builders and designers. The large majority of customers are homeowners and their contractors, with the homeowner being key in the final decisions. Asien’s has a diverse customer base with no one client accounting for more than 5% of total revenue.MARCH 31, 2022
~~Disaggregated revenue for the Retail and Appliances Segment by sales type for the three and six months ended June 30, 2021 and for the period from May 29, 2020 to June 30, 2020 is as follows:~~
Three Months Ended
June 30,
2021 Six Months Ended
June 30,
2021 Period from
May 29 to June 30,
2020
Appliance sales $ 3,352,618 $ 6,616,984 $ 1,185,980
Other sales - - -
Total revenue $ 3,352,618 $ 6,616,984 $ 1,185,980
~~Construction Segment~~
~~Kyle’s generates revenues from providing cabinet design, construction and installation primary from cabinet-related products and supplies.~~
Kyle’s provides cabinet design, construction and installation services to customers with both residential and commercial projects. A majority of Kyle’s contracts are recurring work from a builder team. Kyle’s will provide pricing and work with individual homeowners, designers and builders to determine pricing options and upgrades to the base proposed contact pricing.
Performance Obligations - For substantially all landscaping construction contracts, the Company recognizes revenue over time, as performance obligations are satisfied, on a percentage completion basis on a total project cost basis. Typical contacts will last approximately 4-6 weeks from start to the substantial completion of the project.
Significant Judgments and Estimates - For cabinet construction contracts, measuring the percent completion on an individual project requires estimates obtained by discussions with field personnel. Estimates are also used in determining the total estimated total costs of a project. These estimates and assumptions are the best information management has at the time percent complete is calculated. The Company employs the same estimation methodology on a quarterly basis.
~~Accounts Receivable, Net ‒ Accounts receivable, net, are amounts due from customers where there is an unconditional right to consideration.~~
~~Kyle’s revenue by sales type is as follows:~~

For the three
months ended
June 30,

For the six
months ended
June 30,

2021 2020 2021 2020
Construction services $ 1,314,968 $            - $ 2,830,877 $           -
- -
Total revenue $ 1,314,968 $ - $ 2,830,877 $ -

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
~~Automotive Supplies Segment~~(UNAUDITED)
Wolo designs and manufactures horn and safety products (electric, air, truck, marine, motorcycle and industrial equipment), and offers vehicle emergency and safety warning lights for cars, trucks, industrial equipment and emergency vehicles. Focused on the automotive and industrial after-market, Wolo sells its products to big-box national retail chains, through specialty and industrial distributors, as well as on- line/mail order retailers and OEMs.
Wolo collects 100% of the payment for internet and phone orders, including tax, from the customer at the time the order is shipped. Customers placing orders with a purchase order through the EDI (Electronic Data Interface) are allowed to purchase on credit and make payment after receipt of product on the agreed upon terms.
Performance Obligations – The revenue that Wolo recognizes arises from orders it receives from contracts with customers. Wolo’s performance obligations under the customer orders correspond to each sale of merchandise that it makes to customers and each 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, Wolo’s products, which generally occurs when the customer assumes the risk of loss. The transfer of control generally occurs at the point of shipment of the order. Once this occurs, Wolo has satisfied its performance obligation and Wolo recognizes revenue.
Transaction Price ‒ Wolo agrees with customers on the selling price of each transaction. This transaction price is generally based on the agreed upon sales price. In Wolo’s contracts with customers, it allocates the entire transaction price to the sales price, which is the basis for the determination of the relative standalone selling price allocated to each performance obligation. Any sales tax that Wolo collects concurrently with revenue-producing activities are excluded from revenue.
~~Cost of sales includes the cost of purchased merchandise plus freight, warehouse salaries, tariffs, and any applicable delivery charges from the vendor to the company.~~
Warranties vary and are typically 90 days to consumers and manufacturing defect warranty to are available to resellers. At times, depending on the product, the company can also offer a warranty up to 12 months.
Disaggregated Revenue ‒ Wolo disaggregates revenue from contracts with customers by contract type, as it believes it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
~~Wolo’s revenue by sales type is as follows:~~
For the
Three Months Ended
June 30,
2021 2020
Automotive supplies $ 1,980,368 $ -

Total revenue $ 1,980,368 $ -
~~Receivables~~
Receivables consist of credit card transactions in the process of settlement. Vendor rebates receivable represent amounts due from manufactures from whom the Company purchases products. 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.

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
~~Inventory~~
For Asien’s, inventory mainly consists of appliances that are acquired for resale and is valued at the average cost determined on a specific item basis. Inventory also consists of parts that are used in service and repairs and may or may not be charged to the customer depending on warranty and contractual relationship. Kyle’s typically orders inventory on a job-by-job basis and those jobs are put into production within hours of being received. The inventory in production is accounted for in the contact assets and liabilities and follows the percentage completion methodology. Inventories consisting of materials and supplies are stated at lower of costs or market. Wolo’s inventory consists of finished goods acquired for resale and is valued at the weighted-average cost determined on a specific item basis. The Company periodically evaluates the value of items in inventory and provides write-downs to inventory based on its estimate of market conditions. The Company estimated an obsolescence allowance of $160,824 and $12,824 at June 30, 2021 and December 31, 2020, respectively.
~~Property and Equipment~~
~~Property and equipment is stated at cost. Depreciation of furniture, vehicles and equipment is calculated using the straight-line method over the estimated useful lives as follows:~~
~~Useful Life~~
~~(Years)~~
~~Building and Improvements~~ 4
~~Machinery and Equipment~~ ~~3-7~~
~~Trucks and Vehicles~~ ~~3-6~~
~~Goodwill and Intangible Assets~~
In applying the acquisition method of accounting, amounts assigned to identifiable assets and liabilities acquired were based on estimated fair values as of the date of acquisition, with the remainder recorded as goodwill. Identifiable intangible assets are initially 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 value of intangible assets are compared with their carrying values, and an impairment loss would be recognized for the amount by which a carrying amount exceeds its fair value.
~~Acquired identifiable intangible assets are amortized over the following periods:~~
~~Acquired intangible Asset~~ ~~Amortization Basis~~
~~Expected Life~~
~~(years)~~
~~Customer-Related~~ ~~Straight-line basis~~ ~~5-15~~
~~Marketing-Related~~ ~~Straight-line basis~~ 5
~~Long-Lived Assets~~
The Company reviews its property and equipment and any identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The test for impairment is required to be performed by management at least annually. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted operating cash flow expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
~~Fair Value of Financial Instruments~~
The Company’s financial instruments consist of cash and cash equivalents, certificates of deposit and amounts due to shareholders. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The three-level hierarchy is as follows:
~~Level 1 – Quoted market prices in active markets for identical assets or liabilities.~~
~~Level 2 – Observable market-based inputs or inputs that are corroborated by market data.~~
~~Level 3 - Unobservable inputs that are not corroborated by market date.~~
~~The Company’s held to maturity securities are comprised of certificates of deposit.~~
~~Derivative Instrument Liability~~
~~The Company accounts for derivative instruments in accordance with ASC 815,~~ ~~Derivatives and Hedging~~, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts, and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are based on the exposures hedged.
~~Income Taxes~~
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
~~Stock-Based Compensation~~
~~The Company records stock-based compensation in accordance with ASC 718,~~ ~~Compensation-Stock Compensation~~. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued and are recognized over the employees required service period, which is generally the vesting period.
~~Basic Income (Loss) Per Share~~
Basic income (loss) per share is calculated by dividing the net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. As the Company had a net income for the three and six months ended June 30, 2021, the following potentially dilutive securities were included from diluted loss per share under the treasury method: 4,450,460 outstanding warrants and 5,263,771 for principal and accrued interest of Series A convertible preferred shares. As the Company had a net loss for the three and six months ended June 30, 2020, the following 490,000 potentially dilutive securities were excluded from diluted loss per share: 90,000 for stock options and 400,000 for outstanding warrants.

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
~~Leases~~
ASC 842 requires recognition of leases on the consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities represent the Company’s obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company used its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. A number of the lease agreements contain options to renew and options to terminate the leases early. The lease term used to calculate ROU assets and lease liabilities only includes renewal and termination options that are deemed reasonably certain to be exercised.
The Company recognized lease liabilities, with corresponding ROU assets, based on the present value of unpaid lease payments for existing operating leases longer than twelve months. The ROU assets were adjusted per ASC 842 transition guidance for existing lease-related balances of accrued and prepaid rent, and unamortized lease incentives provided by lessors. Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable lease payments are based occur. The Company has elected not to separate lease and non-lease components for all property leases for the purposes of calculating ROU assets and lease liabilities.
~~Going Concern Assessment~~NOTE 3—LIQUIDITY AND GOING CONCERN ASSESSMENT

Management assesses liquidity and going concern uncertainty in the Company’s 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~~ 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.

As of March 31, 2022, we had cash and cash equivalents of $1,638,924. For the three months ended March 31, 2022, the Company incurred operating income of $69,470 (before deducting losses attributable to non-controlling interests), cash flows used in operations of $536,260, and negative working capital of $924,324. The Company has generated operating losses since its inception and has relied on cash on hand, sales of securities, external bank lines of credit, and issuance of third-party and related party debt to support cashflow from operations. For the six months ended June 30, 2021, the Company incurred operating losses of $591,186 (before deducting losses attributable to non-controlling interests and excluding the loss of discontinued operations and gain on the disposition of subsidiary), cash flows used in operations of $60,575 (excluding the cashflow from discontinued operations) and negative working capital of $291,009 (excluding the negative working capital from discontinued operations). In addition to the estimates of funds available from operations, the Company has unpledged assets that it believes could provide for approximately $354,000 of additional borrowings.

Management has prepared estimates of operations for fiscal year ~~2021~~2022 and 2023 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 ~~the unaudited~~these condensed consolidated financial statements, ~~in the Company’s Quarterly Report on Form 10-Q,~~ which indicate improved operations and the Company’s ability to continue operations as a going concern.
The impact of COVID-19 on the Company’s 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. Further, the recently enacted CARES Act provides for economic assistance loans through the SBA. On April 28, 2020, Asien’s received $357,500 in PPP loans from the SBA under the CARES Act. The PPP provides that the PPP loans may be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act. Asien’s used the proceeds from the PPP loans for qualifying expenses and to applied for forgiveness of the PPP loans in accordance with the terms of the CARES Act. On February 16, 2021, Asien’s received notice from Exchange Bank that its loan had been forgiven in its entirety by the SBA.

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
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 ~~the unaudited~~these condensed consolidated financial ~~statements in the Company’s Quarterly Report on Form 10-Q indicate improved operations and the Company’s ability to continue operations as a going concern.~~statements. The Company has contingency plans to reduce or defer expenses and cash outlays should operations not improve in the look forward period.
~~Recent Accounting Pronouncements~~
NOTE 4—DISAGGREGATION OF REVENUES AND SEGMENT REPORTING

~~In January 2017, the FASB issued ASU No. 2017-04,~~ ~~Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment.~~ To simplify the subsequent measurement of goodwill, the update requires only a single-step quantitative test to identify and measure impairment based on the excess of a reporting unit’s carrying amount over its fair value. A qualitative assessment may still be completed first for an entity to determine if a quantitative impairment test is necessary. The update is effective for fiscal year 2021 and is to be adopted on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company ~~will test goodwill for impairment within one year of the acquisition or annually as of December 1, and whenever indicators of impairment exist.~~has 3 reportable segments:

~~In June 2016, the FASB issued ASU 2016-13~~ ~~Financial Instruments-Credit Losses (Topic 326): Measurement~~The Retail and Appliances Segment provides a wide variety of ~~Credit Losses on Financial Instruments~~ ~~which requires the measurement~~appliance products (laundry, refrigeration, cooking, dishwashers, outdoor, accessories, parts, 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,other appliance related products) 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 extensionservices (delivery, installation, service 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 consolidated financial position, results of operations, or cash flows.repair, extended warranties, and financing).
The Construction Segment provides finished carpentry products and services (door frames, base boards, crown molding, cabinetry, bathroom sinks and cabinets, bookcases, built-in closets, fireplace mantles, windows, and custom design and build of cabinetry and countertops).
~~NOTE 3 – BUSINESS SEGMENTS~~The Automotive Supplies Segment provides horn and safety products (electric, air, truck, marine, motorcycle, and industrial equipment), and offers vehicle emergency and safety warning lights for cars, trucks, industrial equipment, and emergency vehicles.

~~Summarized financial information concerning the Company’s reportable segments for the three months ended June 30, 2021~~The Company provides general corporate services to its segments; however, these services are not considered when making operating decisions and ~~2020 is presented below.~~assessing segment performance. These services are reported under “Corporate Services” below and these include costs associated with executive management, financing activities and public company compliance.
Three Months Ended June 30, 2021
Retail & Appliances Construction Automotive Supplies Corporate Services Total
Revenue
Furniture and appliances $ 3,352,618 $ - $ - $ - $ 3,352,618
Construction - 1,314,968 - - 1,314,968
Automotive supplies - - 1,980,368 - 1,980,368
Total Revenue 3,352,618 1,314,968 1,980,368 - 6,647,954

Total cost of sales 2,602,597 720,466 1,191,726 - 4,514,789
Total operating expenses 679,826 550,786 660,935 421,423 2,312,970
Income (loss) from operations $ 70,195 $ 43,716 $ 127,707 $ (421,423 ) $ (179,805 )
Three Months Ended June 30, 2020
Retail & Appliances Construction Automotive Supplies Corporate Services Total
Revenue
Furniture and appliances $ 1,185,980 $      - $      - $ - $ 1,185,980
Construction - - - - -
Automotive supplies - - - - -
Total Revenue 1,185,980 - - - 1,185,980

Total cost of sales 923,892 - - - 923,892
Total operating expenses 435,286 - - 482,368 917,654
Loss from operations $ (173,198 ) $ - $ - $ (482,368 ) $ (655,566 )

1847 HOLDINGS LLC
NOTES TO ~~THE~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
~~Summarized financial information concerning the~~MARCH 31, 2022
(UNAUDITED)
The Company’s ~~reportable segments~~revenues for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020 is presented below.~~are disaggregated as follows:

Six Months Ended June 30, 2021
Retail & Appliances Construction Automotive Supplies Corporate Services Total
Revenue
Furniture and appliances $ 6,616,984 $ - $ - $ - $ 6,616,984
Construction - 2,830,877 - - 2,830,877
Automotive supplies - - 1,980,368 - 1,980,368
Total Revenue 6,616,984 2,830,877 1,980,368 - 11,428,229

Total cost of sales 5,109,250 1,474,496 1,191,726 - 7,775,471
Total operating expenses 1,412,170 1,075,118 1,259,230 497,426 4,243,944
Income (loss) from operations $ 95,564 $ 281,263 $ (470,588 ) $ (497,426 ) $ (591,186 )
Three Months Ended March 31, 2022
Retail and
Appliances Construction Automotive
Supplies Total
Revenues
Appliances $ 2,204,625 $ - $ - $ 2,204,625
Appliance accessories, parts, and other 316,159 - - 316,159
Automotive horns - - 1,199,856 1,199,856
Automotive lighting - - 442,135 442,135
Custom cabinets and countertops - 4,167,801 - 4,167,801
Finished carpentry - 3,743,302 - 3,743,302
Total Revenues $ 2,520,784 $ 7,911,103 $ 1,641,991 $ 12,073,878

Six Months Ended June 30, 2020
Retail & Appliances Construction Automotive Supplies Corporate Services Total
Revenue
Furniture and appliances $ 1,185,980 $        - $        - $ - $ 1,185,980
Construction - - - - -
Automotive supplies - - - - -
Total Revenue 1,185,980 - - - 1,185,980

Total cost of sales 923,892 - - - 923,892
Total operating expenses 435,286 - - 521,653 956,939
Loss from operations $ (173,198 ) $ - $ - $ (521,653 ) $ (694,851 )
Three Months Ended March 31, 2021
Retail and
Appliances Construction Automotive
Supplies Total
Revenues
Appliances $ 2,899,361 $ - $           - $ 2,899,361
Appliance accessories, parts, and other 365,005 - - 365,005
Automotive horns - - - -
Automotive lighting - - - -
Custom cabinets and countertops - 1,515,909 - 1,515,909
Finished carpentry - - - -
Total Revenues $ 3,264,366 $ 1,515,909 $ - $ 4,780,275

~~NOTE 4—CASH EQUIVALENTS AND INVESTMENTS~~Segment information for the three months ended March 31, 2022 and 2021 is as follows:

June 30, 2021 December 31,
2020
Cash and cash equivalents
Operating accounts $ 1,477,524 $ 976,538
Restricted accounts - 403,811
Subtotal $ 1,477,524 $ 1,380,349

Held to Maturity Investments
Restricted accounts - certificates of deposit (4 – 24-month maturities, FDIC insured) $ 276,465 $ 276,270
Subtotal $ 276,465 $ 276,270

TOTAL $ 1,753,989 $ 1,656,619
Three Months Ended March 31, 2022
Retail and
Appliances Construction Automotive
Supplies Corporate
Services Total
Revenues $ 2,520,784 $ 7,911,103 $ 1,641,991 $ - $ 12,073,878
Operating expenses -
Cost of sales 1,871,450 4,879,591 998,089 - 7,749,130
Personnel 230,388 1,134,210 300,328 (87,226 ) 1,577,700
Depreciation and amortization 79,797 379,704 51,870 - 511,371
General and administrative 449,494 1,116,558 386,781 213,374 2,166,207
Total Operating Expenses 2,631,129 7,510,063 1,737,068 126,148 12,004,408
Income (Loss) from Operations $ (110,345 ) $ 401,040 $ (95,077 ) $ (126,148 ) $ 69,470

Three Months Ended March 31, 2021
Retail and
Appliances Construction Automotive
Supplies Corporate
Services Total
Revenues $ 3,264,366 $ 1,515,909 $ - $ - $ 4,780,275
Operating expenses - -
Cost of sales 2,506,652 754,030 - - 3,260,682
Personnel 253,083 231,589 - - 484,672
Depreciation and amortization 44,675 77,431 - - 122,106
General and administrative 434,587 215,311 598,295 76,003 1,324,196
Total Operating Expenses 3,238,997 1,278,361 598,295 76,003 5,191,656
Income (Loss) from Operations $ 25,369 $ 237,548 $ (598,295 ) $ (76,003 ) $ (411,381 )

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 5—PROPERTY AND EQUIPMENT

Property and equipment at March 31, 2022 and December 31, 2021 consisted of the following:
March 31,
2022 December 31,
2021
Equipment and machinery $ 1,127,897 $ 808,592
Office furniture and equipment 107,903 105,203
Transportation equipment 901,426 864,121
Leasehold improvements 123,651 112,356
Total property and equipment 2,260,877 1,890,272
Less: Accumulated depreciation (339,910 ) (194,961 )
Property and equipment, net $ 1,920,967 $ 1,695,311
Depreciation expense for the three months ended March 31, 2022 and 2021 was $146,679 and $24,309, respectively.
NOTE 6—INTANGIBLE ASSETS
Intangible assets at March 31, 2022 and December 31, 2021 consisted of the following:
March 31,
2022 December 31,
2021

Customer relationships $ 5,791,000 $ 5,791,000
Marketing related 5,917,000 5,917,000
Technology related 623,000 623,000
Total intangible assets 12,331,000 12,331,000
Less: accumulated amortization (1,251,795 ) (887,103 )
Intangible assets, net $ 11,079,205 $ 11,443,897
Amortization expense for the three months ended March 31, 2022 and 2021 was $364,692 and $97,797, respectively.
Estimated amortization expense for intangible assets for the next five years consists of the following as of March 31, 2022:
Year Ending December 31, Amount
2022 – remaining $ 1,094,088
2023 1,458,780
2024 1,458,750
2025 1,325,745
2026 1,157,523
Thereafter 4,584,319
Total $ 11,079,205

1847 HOLDINGS LLC
NOTES TO ~~THE~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~JUNE 30, 2021~~MARCH 31, 2022
(UNAUDITED)

NOTE ~~5—DISCONTINUED OPERATIONS~~7—SELECTED ACCOUNT INFORMATION
Receivables at March 31, 2022 and December 31, 2021 consisted of the following:
March 31,
2022 December 31,
2021
Trade accounts receivable $ 3,235,644 $ 2,691,702
Vendor rebates receivable 12,194 126,118
Credit card payments in process of settlement - 116,187
Retainage 1,029,976 803,989
Total receivables 4,277,814 3,737,996
Allowance for doubtful accounts (359,000 ) (359,000 )
Accounts receivable, net $ 3,918,814 $ 3,378,996
Inventories at March 31, 2022 and December 31, 2021 consisted of the following:
March 31,
2022 December 31,
2021
Appliances $ 2,554,539 $ 2,206,336
Automotive 1,824,260 2,064,834
Construction 1,814,543 1,543,980
Total inventories 6,193,342 5,815,150
Less reserve for obsolescence (387,848 ) (387,848 )
Total inventories, net $ 5,805,494 $ 5,427,302
Inventory balances are composed of finished goods. Raw materials and work in process inventory are immaterial to the condensed consolidated financial statements.
Accounts payable and accrued expenses at March 31, 2022 and December 31, 2021 consisted of the following:
March 31,
2022 December 31,
2021
Trade accounts payable $ 3,810,165 $ 3,117,825
Credit cards payable 80,536 52,300
Accrued payroll liabilities 397,717 263,590
Accrued interest 853,402 711,258
Accrued dividends 384,977 242,160
Other accrued liabilities 384,779 431,539
Total accounts payable and accrued expenses $ 5,911,576 $ 4,818,672
NOTE 8—LEASES
Operating Leases
The following was included in our condensed consolidated balance sheet at March 31, 2022 and December 31, 2021:
March 31,
2022 December 31,
2021
Operating lease right-of-use assets $ 3,094,573 $ 3,192,604
Lease liabilities, current portion 595,039 613,696
Lease liabilities, long-term 2,542,790 2,607,862
Total operating lease liabilities $ 3,137,829 $ 3,221,558
Weighted-average remaining lease term (months) 54 59
Weighted average discount rate 4.29 % 4.29 %
Operating lease expense was expense was $235,438 and $85,924 for the three months ended March 31, 2022 and March 31, 2021, respectively.

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
As of March 31, 2022, maturities of operating lease liabilities were as follows:
Year Ending December 31, Amount
2022 – remaining $ 524,519
2023 738,690
2024 753,868
2025 747,860
2026 495,994
Thereafter 212,580
Total 3,473,511
Less: imputed interest (335,682 )
Total operating lease liabilities $ 3,137,829
Finance Leases
During the period ending March 31, 2022, the Company entered in an equipment financing lease to purchase machinery and equipment totaling $316,798, maturing in January 2028.

~~ASC 360-10-45-9 requires that a long-lived asset (disposal group) to be sold shall be classified~~As of March 31, 2022, maturities of finance lease liabilities were as held for sale in the period in which a set of criteria have been met, including criteria that the sale of the asset (disposal group) is probable, and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. For the Goedeker Spin-Off, these criteria were achieved on September 10, 2020, when the board approved the Goedeker Spin-Off and subsequently on October 23, 2020, when the Company completed the Goedeker Spin-Off. These criteria were achieved in March 2021 for the Neese Spin-Off.follows:

The discontinued operations as of December 31, 2020 and for the six months ended June 30, 2021 are comprised entirely of the business of Neese. The discontinued operations for the three and six months ended June 30, 2020 are comprised of the businesses of Neese and Goedeker.
Year Ending December 31, Amount
2022 – remaining $ 137,882
2023 184,711
2024 168,254
2025 161,487
2026 161,487
Thereafter 166,688
Total payments 980,509
Less: amount representing interest (138,235 )
Present value of minimum finance lease payments $ 842,274

~~For comparability purposes, certain prior period line items relating to~~As of March 31, 2022, the ~~assets held for sale have been reclassified and presented as discontinued operations~~weighted-average remaining lease term for all ~~periods presented~~finance leases is 5.50 years.
NOTE 9—ACQUISITIONS
On March 30, 2021, the Company acquired 100% of the outstanding capital stock of Wolo Mfg. Corp and Wolo Industrial Horn & Signal, Inc. (“Wolo”) for an aggregate purchase price of $8,344,056.
Wolo contributed revenue of $1,661,754 and net loss from continuing operations of $325,417, which are included in ~~the accompanying~~our condensed consolidated statements of operations for the three months ended March 31, 2022.
On October 8, 2021, the Company acquired 100% of the outstanding capital stock of High Mountain Door & Trim, Inc. (“High Mountain”) and Sierra Homes, LLC (“Sierra Homes”) for an aggregate purchase price of $15,441,173.
High Mountain and Sierra Homes contributed revenue of $6,249,349 and net loss from continuing operations of $271,647, which are included in our condensed consolidated statements of ~~cash flows,~~operations for the three months ended March 31, 2022.
Pro Forma Information
The following unaudited pro forma results presented below include the effects of the Wolo, High Mountain and Sierra Homes 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 ~~consolidated balance sheets.~~acquisitions.
March 31, March 31,
2022 2021

Revenues $ 12,073,878 $ 13,373,918
Net income (loss) (927,208 ) 317,547
Net loss attributable to 1847 Holdings common shareholders’ (1,008,245 ) (1,398,248 )
Loss per share attributable to 1847 Holdings common shareholders’:
Basic and diluted $ (0.21 ) $ (0.29 )
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.

In accordance with ASC 205-20-S99, “Allocation of Interest to Discontinued Operations”, the Company elected to not allocate consolidated interest expense to discontinued operations where the debt is not directly attributable to or related to discontinued operations.
~~The following information presents the major classes of line item of assets and liabilities included as part of discontinued operations in the consolidated balance sheets as of December 31, 2020:~~
December 31,
2020
Current Assets – discontinued operations:
Cash $ 416,831
Accounts receivable, net 334,095
Inventories, net 305,080
Prepaid expenses and other current assets 268,602
Total current assets – discontinued operations 1,324,608

Noncurrent Assets – discontinued operations:
Property and equipment, net 1,925,844
Operating lease right of use assets 501,827
Goodwill 22,166
Intangible assets, net 7,933

Total noncurrent assets $ 2,457,770

Current liabilities – discontinued operations:
Accounts payable and accrued expenses $ 484,852
Current portion of operating lease liability 67,725
Notes payable – current portion 446,545
Total current liabilities – discontinued operations 999,122

Long term liabilities – discontinued operations:
Notes payable – long term, net of current portion 4,187,376
Accrued expenses – long term, related party 1,359,989
Financing lease liability, net of current portion 434,102
Total long term liabilities – discontinued operations $ 5,981,467

1847 HOLDINGS LLC
NOTES TO ~~THE~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~JUNE 30, 2021~~MARCH 31, 2022
(UNAUDITED)
The following information presents the major classes of line items constituting the after-tax loss from discontinued operations in the consolidated statements of operations for the six months ended June 30, 2021 and 2020 and for the period from April 1, 2021 to April 19, 2021 (disposition date) and for the three months ended June 30, 2020:
Six Months Ended
June 30,
2021 Six Months Ended
June 30,
2020 April 1 to
April 19,
2021
(Disposition Date) Three Months
Ended
June 30,
2020
REVENUES
Services $ 612,862 $ 1,213,026 $ 138,066 $ 766,927
Sales of parts and equipment 324,189 605,047 141,861 316,976
Furniture and appliances - 24,962,209 - 15,285,031
TOTAL REVENUE 937,051 26,780,282 279,927 16,368,934
OPERATING EXPENSES
Cost of sales 298,050 21,325,217 128,129 12,958,779
Personnel costs 485,774 3,209,599 63,224 1,445,149
Depreciation and amortization 360,746 807,602 60,167 404,366
Fuel 112,746 186,199 12,988 82,435
General and administrative 290,872 4,091,564 42,556 2,283,060
TOTAL OPERATING EXPENSES 1,548,188 29,620,181 307,064 17,173,789
LOSS FROM OPERATIONS (611,137 ) (2,839,899 ) (27,137 ) (804,855 )
OTHER INCOME (EXPENSE)
Financing costs and loss on early extinguishment of debt (320 ) (1,234,245 ) - (1,031,463 )
Gain on forgiveness of debt 380,247 - - -
Gain on sale of assets 548,723 37,767 99,389 37,767
Loss on acquisition receivable - (809,000 ) - (809,000 )
Change in warrant liability - (2,127,656 ) - (2,127,656 )
Interest expense (78,308 ) (677,101 ) (10,357 ) (345,962 )
Other income (expense) 1,200 6,325 - 3,942
TOTAL OTHER INCOME (EXPENSE) 851,542 (4,803,910 ) 89,032 (4,272,372 )
NET LOSS BEFORE INCOME TAXES 240,405 (7,643,809 ) 61,895 (5,077,227 )
INCOME TAX BENEFIT - (1,436,752 ) - (938,952 )
NET INCOME (LOSS) BEFORE NON-CONTROLLING INTERESTS 240,405 (6,207,057 ) 61,895 (4,138,275 )
LESS NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTERESTS 108,182 (1,997,884 ) 27,853 (1,259,699 )
NET INCOME (LOSS) ATTRIBUTABLE TO SHAREHOLDERS $ 132,223 $ (4,209,173 ) $ 34,042 $ (2,878,576 )

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
The following information presents the major classes of line items constituting significant operating, investing and financing cash flow activities in the unaudited consolidated statements of cash flows relating to discontinued operations:NOTE 10—RELATED PARTIES
Six Months Ended
June 30,
2021 2020
Cash flows from operating activities of discontinued operations:
Net Income (Loss) $ 240,405 $ (6,207,057 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities of discontinued operations:
Depreciation and amortization 360,746 811,145
Amortization of financing costs and warrant features 2,187 288,591
Amortization of original interest discount - 46,212
Amortization of operating lease right-of-use assets 19,007 238,970
Gain on forgiveness of PPP loans (380,247 ) -
Loss contingency adjustment - 2,127,656
Loss on extinguishment of debt - 948,856
Gain on sale of equipment (548,723 ) (37,767 )
Changes in operating assets and liabilities:
Accounts receivable 10,698 (1,384,176 )
Inventory (161,286 ) (346,483 )
Prepaid expenses and other assets 49,222
276,970

Accounts payable and accrued expenses 118,980 2,598,092
Operating lease liability (19,007 ) (238,970 )
Customer deposits - 5,905,532
Deferred taxes and uncertain tax position - (1,186,753 )
Proceeds from related party - 85,556
Accrued expense long-term 137,438 227,104
Net cash used in operating activities from discontinued operations $ (170,580 ) $ (4,153,478 )

Cash flows from investing activities in discontinued operations:
Proceeds from sale of equipment $ 675,000 $ 31,500
Purchase of equipment (30,697 ) (46,004 )
Net cash provided by (used in) investing activities in discontinued operations $ 644,303 $ (14,504 )

Cash flows from financing activities in discontinued operations:
Proceeds from note payable $ 380,385 $ 1,026,200
Repayments of notes payable (589,078 ) (535,896 )
Net borrowings from lines of credit - (825,073 )
Repayment of financing lease - (137,389 )
Net cash used in financing activities in discontinued operations $ (208,693 ) $ (472,158 )
~~The following are the financial instruments of the discontinued operations:~~
~~Lines of Credit~~Management Services Agreement

~~Burnley Capital LLC~~
On April 5, 2019, Goedeker, as borrower, and Holdco entered into a loan and security agreement with Burnley Capital LLC (“Burnley”) for revolving loans in an aggregate principal amount that will not exceed the lesser of (i) the borrowing base (as defined in the loan and security agreement) or (ii) $1,500,000 minus reserves established Burnley at any time in accordance with the loan and security agreement. In connection with the closing of the acquisition of Goedeker Television on April 5, 2019, Goedeker borrowed $744,000 under the loan and security agreement and issued a revolving note to Burnley in the principal amount of up to $1,500,000. As of December 31, 2019, the balance of the line of credit was $571,997.

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
On August 4, 2020, Goedeker used a portion of the proceeds from the Goedeker initial public offering (“IPO”) to repay the revolving note in full and the loan and security agreement was terminated. The total payoff amount was $118,194, consisting of principal of $32,350, interest of $42 and prepayment, legal, and other fees of $85,802.
~~Northpoint Commercial Finance LLC~~
On June 24, 2019, Goedeker entered into a loan and security agreement with Northpoint Commercial Finance LLC, which was amended on August 2, 2019, for revolving loans up to an aggregate maximum loan amount of $1,000,000 for the acquisition, financing or refinancing by Goedeker of inventory at an interest rate of LIBOR plus 7.99%. As of December 31, 2019, the balance of the line of credit was $678,993. Goedeker terminated the loan and security agreement on May 18, 2020.
~~Home State Bank~~
On June 13, 2018, Neese entered into a term loan agreement with Home State Bank, pursuant to which Neese issued a promissory note to Home State Bank in the principal amount of $3,654,074 with an annual interest rate of 6.85% and with covenants to maintain a minimum debt coverage ratio of 1.00 to 1.25 measured at December 31, 2020. Neese met this covenant for the year ended December 31, 2020. On July 30, 2020, Neese entered into a change in terms agreement with Home State Bank to amend the terms of the term loan. Pursuant to the change in terms agreement: (i) the maturity date was extended to July 30, 2022; (ii) the interest rate was changed to 5.50%; (iii) Neese agreed to pay accrued interest in the amount of $95,970; (iv) Neese agreed to make payments of $30,000 beginning on September 30, 2020 and continuing thereafter on a monthly basis until maturity, at which time a final interest payment is due; (v) Neese agreed to make a payment of $260,000 on December 30, 2020 and December 30, 2021; (vi) Neese agreed to make two new advances under the note in the amounts $51,068 and $517,529 to repay in full Neese’s capital lease transactions due to Utica Leaseco LLC described below; (vii) Neese agreed to pay a loan fee of $17,500; and (viii) Home State Bank agreed to make a loan advance to checking for $17,500. The balance of the note amounts to $3,225,321, comprised of principal of $3,239,176, net of unamortized debt discount of $13,855 as of December 31, 2020.
If the Company sells property, plant, and equipment securing the loan, it must remit the appraised value of the equipment to Home State Bank. During the six months ended June 30, 2021 and 2020, $400,000 and $145,690, respectively, was remitted to Home State Bank pursuant to this requirement.
~~Notes Payable and Warrant Liability~~
~~Small Business Community Capital II, L.P.~~
On April 5, 2019, Goedeker, as borrower, and Holdco entered into a loan and security agreement with Small Business Community Capital II, L.P. (“SBCC”) for a term loan in the principal amount of $1,500,000, pursuant to which Goedeker issued to SBCC a term note in the principal amount of up to $1,500,000 and a ten-year warrant to purchase shares of the most senior capital stock of Goedeker equal to 5.0% of the outstanding equity securities of Goedeker on a fully-diluted basis for an aggregate price equal to $100. As of December 31, 2019, the balance of the note was $999,201.
On August 4, 2020, Goedeker used a portion of the proceeds from the Goedeker IPO to repay the term note in full and the loan and security agreement was terminated. The total payoff amount was $1,122,412 consisting of principal of $1,066,640, interest of $11,773 and prepayment, legal, and other fees of $43,999.
Goedeker classified the warrant as a derivative liability on the balance sheet at June 30, 2020 of $2,250,000 based on the estimated value of the warrant in the Goedeker IPO. The increase in the value of the warrant from the estimated value of $122,344 at December 31, 2020 resulted in a charge of $2,127,656 during the period January 1, 2020 through October 23, 2020 (date of distribution). Immediately prior to the closing of the Goedeker IPO on August 4, 2020, SBCC converted the warrant into 250,000 shares of common stock.

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
~~10% Promissory Note~~
A portion of the purchase price for the acquisition of Neese was paid by the issuance of a promissory note in the principal amount of $1,025,000 by 1847 Neese and Neese to the Neese Sellers. The note bears interest on the outstanding principal amount at the rate of ten percent (10%) per annum and was due and payable in full on March 3, 2018. The note is unsecured and contains customary events of default. The note has not been repaid, so the Company is in default under this note. Under terms of the term loan with Home State Bank described above, this note may not be paid until the term loan is paid in full. The payees on the note agreed to the modification of its terms by signing the loan agreement for the Home State Bank term loan. Accordingly, the loan is shown as a long-term liability as of December 31, 2020. Additionally, Home State Bank limits the payment of interest on this note to $40,000 annually. The Company continued to accrue interest at the contract rate; however, given the limitations of the term loan, all accrued interest in excess of $40,000 is included in long-term accrued expenses.
~~Notes Payable, Related Parties~~
A portion of the purchase price for the acquisition of Goedeker Television was paid by the issuance by Goedeker to Steve Goedeker, as representative of Goedeker Television, of a 9% subordinated promissory note in the principal amount of $4,100,000. As of December 31, 2019, the balance of the note was $3,300,444.
Pursuant to a settlement agreement, the parties entered into an amendment and restatement of the note that became effective as of the closing of the Goedeker IPO on August 4, 2020, pursuant to which (i) the principal amount of the existing note was increased by $250,000, (ii) upon the closing of the Goedeker IPO, Goedeker agreed to make all payments of principal and interest due under the note through the date of the closing, and (iii) from and after the closing, the interest rate of the note was increased from 9% to 12%. In accordance with the terms of the amended and restated note, Goedeker used a portion of the proceeds from the Goedeker IPO to pay $1,083,842 of the balance of the note representing a $696,204 reduction in the principal balance and interest accrued through August 4, 2020 of $387,638.
In August 2020, Goedeker refinanced this note payable with proceeds from a loan from Arvest Bank. In connection with the refinance, Goedeker recorded a $757,239 loss on extinguishment of debt consisting of a $250,000 forbearance fee, write-off of unamortized loan discount of $338,873, and write-off of unamortized debt costs of $168,366.
~~Convertible Promissory Note~~
On April 5, 2019, the Company, Holdco and Goedeker entered into a securities purchase agreement with Leonite Capital LLC, a Delaware limited liability company, pursuant to which they issued to Leonite Capital LLC a secured convertible promissory note in the aggregate principal amount of $714,286 due April 5, 2020. See Note 13 for further details of the convertible promissory note.
~~Financing Lease~~
The cash portion of the purchase price for the acquisition of Neese was financed under a capital lease transaction for Neese’s equipment with Utica Leaseco, LLC (“Utica”), pursuant to a master lease agreement, dated March 3, 2017, between Utica, as lessor, and 1847 Neese and Neese, as co-lessees (collectively, the “Lessee”), which was amended on June 14, 2017. Under the master lease agreement, as amended, Utica loaned an aggregate of $3,240,000 for certain of Neese’s equipment listed therein, which it leases to the Lessee. A portion of the proceeds from the term loan from Home State Bank (see Note 11) were applied to reduce the balance of this lease to $475,000. The lease was payable in 46 payments of $12,882 beginning July 3, 2018 and an end-of-term buyout of $38,000.
On October 31, 2017, the parties entered into a second equipment schedule to the master lease agreement, pursuant to which Utica loaned an aggregate of $980,000 for certain of Neese’s equipment listed therein. The term of the second equipment schedule was 51 months and agreed monthly payments are $25,807.
~~On July 29, 2020, the Company paid $568,597 to repay this capital lease transaction with Utica in full.~~

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 6—RECEIVABLES~~
~~At June 30, 2021 and December 31, 2020, receivables consisted of the following:~~
June 30,
2021 December 31,
2020
Credit card payments in process of settlement $ 78,836 $ 158,924
Trade receivables from customers 1,977,177 366,701
Total receivables 2,053,013 525,625
Allowance for doubtful accounts - -
Accounts receivable, net $ 2,053,013 $ 525,625
~~NOTE 7—INVENTORIES~~
~~At June 30, 2021 and December 31, 2020, the inventory balances are composed of:~~
June 30,
2021 December 31,
2020
Parts and components $ 11,749 $ 6,308
Appliances 2,067,272 2,029,270
Automotive 2,633,982 -
Subtotal 4,713,003 2,035,578
Allowance for inventory obsolescence (160,824 ) (12,824 )
Inventories, net $ 4,552,179 $ 2,022,754
~~NOTE 8—PROPERTY AND EQUIPMENT~~
~~Property and equipment consist of the following at June 30, 2021 and December 31, 2020:~~
Classification June 30,
2021 December 31,
2020
Buildings and improvements $ 70,745 $ 42,601
Equipment and machinery 217,921 173,792
Trucks and other vehicles 350,354 213,850
Total 639,020 430,243
Less: Accumulated depreciation (84,325 ) (31,740 )
Property and equipment, net $ 554,695 $ 398,503
~~Depreciation expense for the six months ended June 30, 2021 and 2020 was $52,585 and $3,543, respectively.~~
~~NOTE 9—INTANGIBLE ASSETS~~
~~The following provides a breakdown of identifiable intangible assets as of June 30, 2021 and December 31, 2020:~~
June 30,
2021 December 31,
2020
Customer Relationships
Identifiable intangible assets $ 3,189,000 $ 3,189,000
Accumulated amortization (169,721 ) (63,419 )
Customer relationship identifiable intangible assets, net 3,019,279 3,125,581
Marketing Related
Identifiable intangible assets 841,000 841,000
Accumulated amortization (170,406 ) (81,114 )
Marketing related identifiable intangible assets, net 670,594 759,886
Total Identifiable intangible assets, net $ 3,689,873 $ 3,885,467

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
In connection with the acquisitions of Asien’s and Kyle’s, the Company identified intangible assets of $1,009,000 and $3,021,000, respectively, representing trade names and customer relationships. These assets are being amortized on a straight-line basis over their weighted average estimated useful life of 12.3 years and amortization expense amounted to $195,594 and $0 for the six months ended June 30, 2021 and 2020, respectively.
~~As of June 30, 2021, the estimated annual amortization expense for each of the next five fiscal years is as follows:~~
2021 (remainder) $ 195,594
2022 391,188
2023 391,188
2024 391,173
2025 258,169
Thereafter 2,062,561
Total $ 3,689,873
~~NOTE 10—ACQUISITIONS~~
~~Asien’s~~
On March 27, 2020, the Company and 1847 Asien entered into a stock purchase agreement with the Asien’s Seller, pursuant to which 1847 Asien agreed to acquire all of the issued and outstanding capital stock of Asien’s. The Company acquired Asien’s, which provides a wide variety of appliance services, including sales, delivery/installation, in-home service and repair, extended warranties, and financing in the North Bay area of Sonoma County, California, to expand into the appliance industry.
~~On May 28~~, 2020, the Company, 1847 Asien, Asien’s and the Asien’s Seller entered into an amendment to the stock purchase agreement and closing of the acquisition of all of the issued and outstanding capital stock of Asien’s was completed (the “Asien’s Acquisition”).
The aggregate purchase price was $1,918,000 consisting of: (i) $233,000 in cash; (ii) the issuance of an amortizing promissory note in the principal amount of $200,000; (iii) the issuance of a demand promissory note in the principal amount of $655,000; and (iv) 415,000 common shares of the Company, having a mutually agreed upon value of $830,000 and a fair value of $1,037,500, which may be repurchased by 1847 Asien for a period of one year following the closing at a purchase price of $2.50 per share. The shares were repurchased by 1847 Asien on July 29, 2020 in exchange for a 6% amortizing promissory note (See Note 11).
The fair value of the purchase consideration issued to the Asien’s Seller was allocated to the net tangible assets acquired. The Company accounted for the Asien’s Acquisition as the purchase of a business under GAAP under the acquisition method of accounting, and the assets and liabilities acquired were recorded as of the acquisition date, at their respective fair values and consolidated with those of the Company. The fair value of the net assets acquired was approximately $1,171,272. The excess of the aggregate fair value of the net tangible assets has been allocated to goodwill.

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
~~The table below shows analysis for the Asien’s Acquisition:~~
Purchase Consideration at fair value:
Common shares $ 1,037,500
Notes payable 855,000
   Due to seller 233,000
Amount of consideration $ 2,125,500

Assets acquired and liabilities assumed at fair value
Cash $ 1,501,285
Accounts receivable 235,746
Inventories 1,457,489
Other current assets 41,427
Property and equipment 157,052
Customer related intangibles 462,000
Marketing related intangibles 547,000
Accounts payable and accrued expenses (280,752 )
Customer deposits (2,405,703 )
Notes payable (509,272 )
Other liabilities (23,347 )
Net assets acquired $ 1,182,925

Total net assets acquired $ 1,182,925
Consideration paid 2,125,500
Goodwill $ 942,575
~~The estimated useful life remaining on the property and equipment acquired is 5 to 13 years.~~
~~Kyle’s~~
On August 27, 2020, the Company and 1847 Cabinet entered into a stock purchase agreement with Kyle’s and the Kyle’s Sellers, pursuant to which 1847 Cabinet agreed to acquire all of issued and outstanding capital stock of Kyle’s. The Company acquired Kyle’s, a leading custom cabinetry maker servicing contractors and homeowners in Boise, Idaho, to expand into contracting services.
On September 30, 2020, the Company, 1847 Cabinet, Kyle’s and the Kyle’s Sellers entered into addendum to the stock purchase and closing of the acquisition of all of the issued and outstanding capital stock of Kyle’s was completed (the “Kyle’s Acquisition”).
The aggregate purchase price was $6,839,792, consisting of (i) $4,389,792 in cash, (ii) an 8% contingent subordinated note in the aggregate principal amount of $1,050,000 and (iii) 700,000 common shares of the Company, having a mutually agreed upon value of $1,400,000 and a fair value of $3,675,000. The shares were issued on October 16, 2020, immediately following the record date for the Goedeker Spin-Off described above.
The fair value of the purchase consideration issued to the Kyle’s Sellers was allocated to the net tangible assets acquired. The Company accounted for the Kyle’s Acquisition as the purchase of a business under GAAP under the acquisition method of accounting, and the assets and liabilities acquired were recorded as of the acquisition date, at their respective fair values and consolidated with those of the Company. The fair value of the net assets acquired was approximately $527,618. The excess of the aggregate fair value of the net tangible assets has been allocated to goodwill.

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
~~The table below shows an analysis for the Kyle’s Acquisition:~~
Purchase consideration at fair value:
Common shares $ 3,675,000
Notes payable 498,979
   Due to seller 4,389,792
Amount of consideration $ 8,563,771

Assets acquired and liabilities assumed at fair value
Cash $ 130,000
Accounts receivable 385,095
Costs in excess of billings 122,016
Other current assets 13,707
Property and equipment 200,737
  Customer related intangibles 2,727,000
  Marketing related intangibles 294,000
Accounts payable and accrued expenses (263,597 )
Billings in excess of costs (43,428 )
Other liabilities (49,000 )
Net tangible assets acquired $ 3,516,530

Total net assets acquired $ 3,516,530
Consideration paid 8,563,771
Goodwill $ 5,047,241
~~The estimated useful life remaining on the property and equipment acquired is 3 to 7 years.~~
~~Wolo~~
On December 22, 2020, the Company 1847 Wolo entered into a stock purchase agreement with Wolo and the Wolo Sellers, pursuant to which 1847 Wolo agreed to acquire all of the issued and outstanding capital stock of Wolo.
On March 30, 2021, the Company, 1847 Wolo, Wolo and the Wolo Sellers entered into amendment No. 1 to the stock purchase agreement and closing of the acquisition of all of the issued and outstanding capital stock of Wolo was completed (the “Wolo Acquisition”).
The aggregate purchase price was $7,400,000, which is subject to adjustment as described below. The purchase price consists of (i) $6,550,000 in cash, (ii) a 6% secured promissory note in the aggregate principal amount of $850,000 and (iii) cash due to seller of $1,094,524.
The purchase price is subject to a post-closing working capital adjustment provision. Under this provision, the Wolo Sellers delivered to 1847 Wolo at the closing an unaudited balance sheet of Wolo as of that date. On or before the 75th day following the closing, 1847 Wolo shall deliver to the Wolo Sellers an audited balance sheet as of the closing date. If the net working capital reflected on such final balance sheet exceeds the net working capital reflected on the preliminary balance sheet delivered at closing, 1847 Wolo shall, within seven days, pay to the Wolo Sellers an amount of cash that is equal to such excess. If the net working capital reflected on the preliminary balance sheet exceeds the net working capital reflected on the final balance, the Wolo Sellers shall, within seven days, pay to 1847 Wolo an amount in cash equal to such excess.
The provisional fair value of the purchase consideration issued to the Wolo Sellers was allocated to the net tangible assets acquired. The Company accounted for the Wolo Acquisition as the purchase of a business under GAAP under the acquisition method of accounting, and the assets and liabilities acquired were recorded as of the acquisition date, at their respective fair values and consolidated with those of the Company. The fair value of the net assets acquired was approximately $5,245,561. The excess of the aggregate fair value of the net tangible assets has been allocated to goodwill.

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
The Company is currently in the process of completing the preliminary purchase price allocation as an acquisition of certain assets. The final purchase price allocation for Wolo will be included in the Company’s financial statements in future periods.
~~The table below shows a preliminary analysis for the Wolo Acquisition:~~
Purchase consideration at preliminary fair value:
Notes payable $ 850,000
   Cash 6,550,000
   Due to seller 1,094,524
Amount of consideration $ 8,494,524

Assets acquired and liabilities assumed at preliminary fair value
Cash $ 1,094,524
Accounts receivable 1,860,107
Inventory 2,120,218
Other current assets 218,154
Deferred tax asset 64,000
Accounts payable and accrued expenses (111,442 )
Net tangible assets acquired $ 5,245,561

Total net assets acquired $ 5,245.561
Consideration paid 8,494,524
Preliminary Goodwill $ 3,248,963
~~Proforma~~
The following unaudited proforma results of operations are presented for information purposes only. The unaudited proforma results of operations are not intended to present actual results that would have been attained had the Asien’s Acquisition, the Kyle’s Acquisition and the Wolo Acquisition been completed as of January 1, 2020 or to project potential operating results as of any future date or for any future periods. The revenue and net loss before non-controlling interest of Asien’s from May 29, 2020 through June 30, 2020 included in the consolidated income statement amounted to approximately $1,185,980 and $188,781, respectively. The revenue and net loss before non-controlling interest of Wolo from April 1, 2021 through June 30, 2021 included in the consolidated income statement amounted to approximately $1,980,368 and $774,802, respectively. The unaudited proforma results of operations also removes the effect of Goedeker and Neese as if they had been disposed of on January 1, 2020.
Six Months Ended
June 30,
2021 2020
Revenues, net $ 13,786,916 $ 10,732,282
Net income (loss) $ (842,983 ) $ (143,896 )
Basic earnings (loss) per share $ (0.18 ) $ (0.03 )
Diluted earnings (loss) per share $ (0.18 ) $ (0.03 )

Basic Number of Shares (*) 4,655,551 4,804,585
Diluted Number of Shares (*) 4,655,551 4,804,585
* ~~shares assuming as if issued as of January 1.~~

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 11—NOTES PAYABLE~~
~~1847 Asien/Asien’s~~
~~Arvest Bank~~
On July 10, 2020, Asien’s entered into a promissory note and security agreement with Arvest Bank for a revolving loan for up to $400,000. The loan matures on July 10, 2021 and bears interest at 5.25% per annum, subject to change in accordance with the Variable Rate (as defined in the promissory note and security agreement), the calculation for which is the U.S. Prime Rate plus 2%. Pursuant to the terms of the promissory note and security agreement, Asien’s is required to make monthly payments beginning on August 10, 2020 and until the maturity date, at which time all unpaid principal and interest will be due. Asien’s may prepay the loan in full or in part at any time without penalty. The promissory note and security agreement contains customary representations, warranties, affirmative and negative covenants and events of default for a loan of this type. The loan is secured by Asien’s inventory and equipment, accounts and other rights of payments, and general intangibles, as such terms are defined in the Uniform Commercial Code. The remaining principal balance of the note at June 30, 2021 is $100,000 and it has accrued interest of $2,564.
~~8% Subordinated Amortizing Promissory Note~~
A portion of the purchase price for acquisition of Asien’s was paid by the issuance of an 8% subordinated amortizing promissory note in the principal amount of $200,000 by 1847 Asien to the Asien’s Seller. Interest on the outstanding principal amount will be payable quarterly at the rate of eight percent (8%) per annum. The outstanding principal amount of the note will amortize on a one-year straight-line basis in accordance with a specified amortization schedule, with all unpaid principal and accrued, but unpaid interest being fully due and payable on May 28, 2021. The note contains customary events of default. The right of the Asien’s Seller to receive payments under the note is subordinated to all indebtedness of 1847 Asien to banks, insurance companies and other financial institutions or funds, and federal or state taxation authorities. The note and accrued interest was repaid in May 2021.
~~6% Amortizing Promissory Note~~
On July 29, 2020, 1847 Asien entered into a securities purchase agreement with the Asien’s Seller, pursuant to which the Asien’s Seller sold to 415,000 of the Company’s common shares to 1847 Asien a purchase price of $2.50 per share. As consideration, 1847 Asien issued to the Asien’s Seller a two-year 6% amortizing promissory note in the aggregate principal amount of $1,037,500. One-half (50%) of the outstanding principal amount of the note ($518,750) and all accrued interest thereon, will be amortized on a two-year straight-line basis and is payable quarterly. The second-half (50%) of the outstanding principal amount of the note ($518,750) with all accrued, but unpaid interest thereon, is due on the second anniversary of the note. The note is unsecured and contains customary events of default. The remaining principal balance of the note at June 30, 2021 is $850,172 and it has accrued interest of $17,894.
~~Demand Promissory Note~~
A portion of the purchase price for acquisition of Asien’s was paid by the issuance of demand promissory note in the principal amount of $655,000 by 1847 Asien to the Asien’s Seller. The note accrued interest at a rate of one percent (1%) computed on the basis of a 360-day year. Principal and accrued interest on the note was payable 24 hours after written demand by the Seller. The note was repaid in June 2020.
~~Inventory Financing Agreement~~
On September 25, 2020, Asien’s entered into an inventory financing agreement with Wells Fargo Commercial Distribution Finance, LLC (“Wells Fargo”), pursuant to which Wells Fargo may extend credit to Asien’s from time to time to enable it to purchase inventory from Wells Fargo-approved vendors. The term of the agreement is one year, and from year to year thereafter, unless sooner terminated by either party upon 30 days written notice to the other party. The inventory financing agreement contains customary representations, warranties, affirmative and negative covenants and events of default for a loan of this type. The agreement is secured by all assets of Asien’s and is guaranteed by 1847 Asien and the Company. As of June 30, 2021, Asien’s has not borrowed any funds under this agreement.

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
~~4.5% Unsecured Promissory Note~~
On October 30, 2017, Asien’s entered into a stock repurchase agreement with Paul A. Gwilliam and Terri L. Gwilliam, co-trustees of the Gwilliam Family Trust, pursuant to which Asien’s issued an unsecured promissory note in the aggregate principal amount of $540,000 for a term of 5 years. The note bears interest at the rate of the 4.25% per annum. The remaining balance of the note at June 30, 2021 is comprised of principal of $17,467 and due in November, 2021.
~~Agreement of Sale of Future Receipts~~
On May 28, 2020, 1847 Asien and Asien’s entered into an agreement of sale of future receipts with TVT Direct Funding LLC (“TVT”), pursuant to which 1847 Asien and Asien’s agreed to sell future receivables with a value of $685,000 to TVT for a purchase price of $500,000. 1847 Asien and Asien’s agreed to deliver to TVT 20% of its weekly future receipts, or approximately $23,300, over the course of an estimated seven-month term, or such date when the above amount of receivables has been delivered to TVT. 1847 Asien used the proceeds from this sale to finance the Asien’s Acquisition. This agreement was terminated on September 10, 2020.
~~Loans on Vehicles~~
Asien’s has entered into six retail installment sale contracts pursuant to which Asien’s agreed to finance its delivery trucks at rates ranging 3.74% to 6.99% with an aggregate remaining principal amount of $123,731 as of June 30, 2021.
~~1847 Cabinet/Kyle’s~~
~~Vesting Promissory Note~~
A portion of the purchase price for the acquisition of Kyle’s was paid by the issuance of a vesting promissory note by 1847 Cabinet to the Kyle’s Sellers in the principal amount of $1,050,000, which increased to a principal amount of up to $1,260,000 pursuant to the vested percentage calculation described below. Payment of the principal and accrued interest on the note is subject to vesting as described below. The note bears interest on the vested portion of principal amount at the rate of eight percent (8%) per annum. To the extent vested, the vested portion of the principal and all accrued but unpaid interest on such vested portion of the principal shall be paid in one lump sum on the last day of the thirty-sixth (36th) month following the date of the note.
The vested principal of the note due at the maturity date shall be calculated each year based on the average annual consolidated EBITDA (as defined in the note) of 1847 Cabinet for each of the years ended December 31, 2020, 2021 and 2022. The EBITDA for each year shall be divided by $1.4 million multiplied by 100 to obtain the vested percentage. The vested principal for each year shall be equal to the vested percentage for that year multiplied by $350,000. To the extent that the vested percentage for the subject year is less than 80%, no portion of the note for that year shall vest. To the extent that the vested percentage for the subject year is equal to or greater than 120%, the vested principal shall be equal to $420,000 for that year and no more. For the year ended December 31, 2020, EBITDA of 1847 Cabinet was approximately $1,531,000, resulting in a vested amount of approximately $415,000. As of June 30, 2021, the outstanding balance of this note is $498,979.
1847 Cabinet will have the right to redeem all but no less than all of the note at any time prior to the maturity date. If 1847 Cabinet elects to redeem the note, the redemption price will be payable in cash and is equal to the then outstanding vested portion of the principal plus any remaining unvested principal amount plus accrued but unpaid interest thereon (calculated over 36 months). For purposes of this redemption calculation, the “unvested principal amount” shall be $350,000 per year.
The note contains customary events of default. The right of the Kyle’s Sellers to receive payments under the note is subordinated to all indebtedness of 1847 Cabinet, whether outstanding as of the closing date or thereafter created, to banks, insurance companies and other financial institutions or funds, and federal or state taxation authorities.

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
~~Intercompany Secured Promissory Note~~
In connection with the acquisition of Kyle’s, the Company provided 1847 Cabinet with the funds necessary to pay the cash portion of the purchase price and cover acquisition expenses. In connection therewith, on September 30, 2020, 1847 Cabinet issued a secured promissory note to the Company in the principal amount of $4,525,000, which was amended and restated on December 11, 2020. Pursuant to such amendment and restatement, if and to the extent any amounts are owing under the units described under Note 17 below, due to a default or redemption, in addition to payment obligations due under the note, 1847 Cabinet is required to immediately make payments to the Company so that it may make any required payments in compliance with the terms of the units. The note bears interest at the rate of 16% per annum. The interest is cumulative, and any unpaid accrued interest will compound on each anniversary date of the note. Interest is due and payable in arrears on January 15, April 15, July 15 and October 15 commencing January 15, 2021. In the event payment of principal or interest due under the note is not made when due, giving effect to any grace period which may be applicable, or in the event of any other default (as defined in the note), the outstanding principal balance shall from the date of default immediately bear interest at the rate of 5% above the then applicable interest rate for so long as such default continues. The Company may demand payment in full of the note at any time, even if 1847 Cabinet has complied with all of the terms of the note; and the note shall be due in full, without demand, upon a third-party sale of all or substantially all the assets and business of 1847 Cabinet or a third-party sale or other disposition of any capital stock of 1847 Cabinet. 1847 Cabinet may prepay the note at any time without penalty. The note contains customary events of default, is guaranteed by Kyle’s and is secured by all of the assets of 1847 Cabinet and Kyle’s. The remaining principal balance of the note at June 30, 2021 is $4,885,129 and it has accrued interest of $194,870.
~~Loans on Vehicles~~
Kyle’s has entered into two retail installment sale contracts pursuant to which Kyle’s agreed to finance its delivery trucks at rates ranging 5.90% to 6.54% with an aggregate remaining principal amount of $70,627 as of June 30, 2021.
~~1847 Wolo/Wolo~~
~~6% Secured Promissory Note~~
As noted above, a portion of the purchase price for Wolo was paid by the issuance of a 6% secured promissory note in the principal amount of $850,000 by 1847 Wolo to the Wolo Sellers. Interest on the outstanding principal amount will be payable quarterly at the rate of six percent (6%) per annum. The note matures on the 39-month anniversary following the closing of the acquisition, at which time the outstanding principal amount of the note, along with all accrued, but unpaid interest, shall be paid in one lump sum. 1847 Wolo has the right to prepay all or any portion of the note at any time prior to the maturity date without premium or penalty of any kind. The note contains customary events of default and is secured by all of the assets of Wolo; provided that the rights of the Wolo Sellers under the note are subordinate to the rights of Sterling National Bank under the credit agreement described below. The remaining principal balance of the note at June 30, 2021 is $850,000 and it has accrued interest of $8,500.
~~Credit Agreement and Notes~~
On March 30, 2021, 1847 Wolo and Wolo entered into a credit agreement with Sterling National Bank (“Sterling”) for (i) revolving loans in an aggregate principal amount that will not exceed the lesser of the borrowing base (as defined below) or $1,000,000 and (ii) a term loan in the principal amount of $3,550,000. The revolving loan is evidenced by a revolving credit note and the term loan is evidenced by a $3,550,000 term note. The remaining principal balance of the revolving credit note at June 30, 2021 is $946,309 and it has accrued interest of $3,500. The remaining principal balance of the term note at June 30, 2021 is $3,311,039, comprised of principal of $3,462,500, net of debt discount of $151,461, and it has accrued interest of $18,034.
The “borrowing base” means an amount equal to the sum of the following: (A) 80% of eligible accounts (as defined in the credit agreement) PLUS (B) the lesser of: (1) 50% percent of eligible inventory (as defined in the credit agreement) or (2) $400,000, MINUS (C) such reserves as Sterling may establish from time to time in its sole discretion. Sterling has the right from time to time, in its sole discretion, to amend, substitute or modify the percentages set forth in the definition of borrowing base and the definition(s) of eligible accounts and eligible inventory.

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
The revolving note matures on March 29, 2022 and bears interest at a per annum rate equal to the greater of (i) the prime rate (as defined in the credit agreement) or (ii) 3.75%. The term note matures on April 1, 2024 and bears interest at a per annum rate equal to the greater of (x) the prime rate plus 3.00% or (y) 5.00%; provided that, upon an event of default, all loans, all past due interest and all fees shall bear interest at a per annum rate equal to the foregoing rate plus 5.00%. Interest accrued on the revolving note and the term note shall be payable on the first day of each month commencing on the first such day of the first month following the making of such revolving loan or term loan, as applicable.
With respect to the term loan, 1847 Wolo and Wolo must repay to Sterling on the first day of each month, (i) beginning on May 1, 2021 and ending on March 1, 2022, eleven (11) equal monthly principal payments of $43,750 each, (ii) beginning on April 1, 2022 and ending on March 1, 2024, twenty-four (24) equal monthly payments of $59,167 each and (iii) on April 1, 2024, a final principal payment in the amount of $1,648,742. In addition, beginning on June 1, 2022 and on each anniversary thereof thereafter until such time as the term loan is repaid in full, 1847 Wolo and Wolo must pay an additional principal payment equal to 50% of the excess cash flow (as defined in the credit agreement), if any. If Sterling has not received the full amount of any monthly payment on or before the date it is due (including as a result of funds not available to be automatically debited on the date on which any such payment is due), 1847 Wolo and Wolo must pay a late fee in an amount equal to six percent (6%) of such overdue payment. 1847 Wolo and Wolo may at any time and from time to time voluntarily prepay the revolving note or the term note in whole or in part.
The credit agreement contains customary representations, warranties, affirmative and negative financial and other covenants and events of default for loans of this type. Each of the revolving note and the term note is secured by a first priority security interest in all of the assets of 1847 Wolo and Wolo.
~~PPP Loans~~
On April 28, 2020, Asien’s received $357,500 in PPP loans from the SBA under provisions of the CARES Act.  The PPP loans have two-year terms and bear interest at a rate of 1.0% per annum. Monthly principal and interest payments are deferred for six months after the date of disbursement. The PPP loans may be prepaid at any time prior to maturity with no prepayment penalties. The PPP loans contain events of default and other provisions customary for loans of this type. The PPP provides that the PPP loans may be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act. Asien’s used the proceeds from the PPP loans for qualifying expenses and to applied for forgiveness of the PPP loans in accordance with the terms of the CARES Act. On February 16, 2021, Asien’s received notice from Exchange Bank that its loan had been forgiven in its entirety by the SBA.
~~NOTE 12—CONVERTIBLE PROMISSORY NOTE~~
On April 5, 2019, the Company, Holdco and Goedeker (collectively, “1847”) entered into a securities purchase agreement with Leonite Capital LLC, a Delaware limited liability company (“Leonite”), pursuant to which 1847 issued to Leonite a secured convertible promissory note in the aggregate principal amount of $714,286 due April 5, 2020. As additional consideration for the purchase of the note, (i) the Company issued to Leonite 50,000 common shares, (ii) the Company issued to Leonite a five-year warrant to purchase 200,000 common shares at an exercise price of $1.25 per share (subject to adjustment), which may be exercised on a cashless basis, and (iii) Holdco issued to Leonite shares of common stock equal to a 7.5% non-dilutable interest in Holdco.
The note carried an original issue discount of $64,286 to cover Leonite’s legal fees, accounting fees, due diligence fees and/or other transactional costs incurred in connection with the purchase of the note. Furthermore, the Company issued 50,000 common shares valued at $137,500 and a debt-discount related to the warrants valued at $292,673. The Company amortized $129,343 of financing costs related to the shares and warrants in the six months ended June 30, 2020.
On May 11, 2020, 1847 and Leonite entered into a first amendment to secured convertible promissory note, pursuant to which the parties agreed (i) to extend the maturity date of the note to October 5, 2020, (ii) that 1847’s failure to repay the note on the original maturity date of April 5, 2020 shall not constitute and event of default under the note and (iii) to increase the principal amount of the note by $207,145, as a forbearance fee.

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
In connection with the amendment, (i) the Company issued to Leonite another five-year warrant to purchase 200,000 common shares at an exercise price of $1.25 per share (subject to adjustment), which may be exercised on a cashless basis and (ii) upon closing of the Asien’s Acquisition, 1847 Asien issued to Leonite shares of common stock equal to a 5% interest in 1847 Asien. The amendment represented a prepayment of principal and accrued interest resulting in a debt extinguishment and the Company recorded an aggregate extinguishment loss of $773,856.
Under the note, Leonite had the right at any time at its option to convert all or any part of the outstanding and unpaid principal amount and accrued and unpaid interest of the note into fully paid and non-assessable common shares or any shares of capital stock or other securities of the Company into which such common shares may be changed or reclassified.
~~On May 4, 2020, Leonite converted $100,000 of the outstanding balance of the note into 100,000 common shares.~~
~~On July 21, 2020, Leonite converted $50,000 of the outstanding balance of the note into 50,000 common shares.~~
On August 4, 2020, Goedeker used a portion of the proceeds from the Goedeker IPO to repay the note in full. The total payoff amount was $780,653, consisting of principal of $771,431 and interest of $9,222.
On September 2, 2020, the Company entered into amendment to the warrant issued to Leonite on April 5, 2019. Pursuant to the amendment, the parties amended the warrant to allow for the conversion of the warrant into 180,000 common shares in exchange for Leonite’s surrender of the remaining 20,000 common shares underlying this warrant, as well as all 200,000 common shares underlying the second warrant issued to Leonite on May 11, 2020. On September 2, 2020, Leonite exercised the first warrant in accordance with the foregoing amendment and the Company issued 180,000 common shares to Leonite. As a result of this exercise, both warrants were cancelled.
~~NOTE 13—OPERATING LEASES~~
~~Kyle’s~~
On September 1, 2020, Kyle’s entered into an industrial lease agreement with the Kyle’s Sellers, who are officers of Kyle’s and principal shareholders of the Company. The lease is for a term of five years, with an option for a renewal term of five years, and provides for a base rent of $7,000 per month for the first 12 months, which will increase to $7,210 for months 13-16 and to $7,426 for months 37-60. In addition, Kyle’s is responsible for all taxes, insurance and certain operating costs during the lease term. In the event of late payment, interest shall accrue on the unpaid amount at the rate of twelve percent (12%) per annum. The lease agreement contains customary events of default, representations, warranties and covenants.
On June 9, 2021, Kyle’s entered into an additional industrial lease agreement with a third party. The lease is for a term of five years and two months, with an option for a renewal term of five years. In addition, Kyle’s is responsible for all taxes, insurance and certain operating costs during the lease term. In the event of late payment, interest shall accrue on the unpaid amount at the rate of twelve percent (18%) per annum. The lease agreement contains customary events of default, representations, warranties and covenants. The lease increased the operating lease right to use asset and corresponding operating lease liability by $361,158.
~~Supplemental balance sheet information related to leases was as follows:~~
June 30, 2021
Operating lease right-of-use lease asset $ 735,074
Accumulated amortization (50,787 )
Net balance $ 684,287

Lease liability, current portion 110,731
Lease liability, long term 576,381
Total operating lease liabilities $ 687,112

Weighted Average Remaining Lease Term - operating leases 56 months

Weighted Average Discount Rate - operating leases 5.5 %

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
~~Future minimum lease payments under this operating lease as of June 30, 2021 were as follows:~~
2021 (remainder of year) $ 69,524
2022 167,973
2023 171,282
2024 175,529
2025 148,416
2026 52,558
Total lease payments 785,282
Less imputed interest (85,907 )
Maturities of lease liabilities $ 699,375
~~Asien’s~~
~~Asien’s has an office and showroom space that has been leased on a month-by-month basis for $11,665 per month.~~
~~Wolo~~
On October 4, 1978, Wolo Mfg entered into a lease agreement with PKL Realty LLC (formerly P.K.L. Realty Corp). This lease agreement has been amended numerous times. Pursuant to the latest amendment entered into in July 2020, the lease expires on July 31, 2022. The lease agreement contains customary events of default representations, warranties and covenants.
June 30, 2021
Operating lease right-of-use lease asset $ 153,663
Accumulated amortization 68,155
Net balance $ 85,508

Lease liability, current portion 79,536
Lease liability, long term 6,897
Total operating lease liabilities $ 86,433

Weighted Average Remaining Lease Term - operating leases 13 months

Weighted Average Discount Rate - operating leases 6 %
~~Future minimum lease payments under this operating lease as of June 30, 2021 were as follows:~~
2021 (remainder of year) $ 41,214
2022 48,279
Total lease payments 89,493
Less imputed interest (3,060 )
Maturities of lease liabilities $ 86,433

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 14—RELATED PARTIES~~
~~Management Services Agreement~~
On April 15, 2013, the Company and 1847 Partners LLC (the “Manager”) entered into a management services agreement, pursuant to which the Company is required to pay the Manager a quarterly management fee equal to 0.5% of its adjusted net assets for services performed (the “Parent Management Fee”). The amount of the Parent Management Fee with respect to any fiscal quarter is (i) reduced by the aggregate amount of any management fees received by the Manager under any offsetting management services agreements with respect to such fiscal quarter, (ii) reduced (or increased) by the amount of any over-paid (or under-paid) Parent Management Fees received by (or owed to) the Manager as of the end of such fiscal quarter, and (iii) increased by the amount of any outstanding accrued and unpaid Parent Management Fees. The Company expensed $0 in Parent Management Fees for the ~~six~~3 months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.
Offsetting Management Services Agreements
1847 Neese entered into an offsetting management services agreement with the Manager on March 3, 2017, which is included in discontinued operations, Goedeker entered into an offsetting management services agreement with the Manager on April 5, 2019, which is included in discontinued operations,The Company’s subsidiary 1847 Asien Inc. (“1847 Asien”) entered into an offsetting management services agreement with the Manager on May 28, 2020, the Company’s subsidiary 1847 Cabinet Inc. (“1847 Cabinet”) entered into an offsetting management services agreement with the Manager on August 21, 2020 (which was amended and restated on October 8, 2021) and the Company’s subsidiary 1847 Wolo Inc. (“1847 Wolo”) entered into an offsetting management services agreement with the Manager on March 30, 2021. Pursuant to the offsetting management services agreements, 1847 Neese appointed the Manager to provide certain services to it for a quarterly management fee equal to $62,500, Goedeker appointed the Manager to provide certain services to it for a quarterly management fee equal to $62,500, 1847 Asien appointed the Manager to provide certain services to it for a quarterly management fee equal to the greater of $75,000 or 2% of adjusted net assets (as defined in the management services agreement), 1847 Cabinet appointed the Manager to provide certain services to it for a quarterly management fee equal to the greater of $75,000 or 2% of adjusted net assets (as defined in the management services agreement), which was increased to $125,000 or 2% of adjusted net assets on October 8, 2021, and 1847 Wolo appointed the Manager to provide certain services to it for a quarterly management fee equal to the greater of $75,000 or 2% of adjusted net assets (as defined in the management services agreement); provided, however, in each case that ~~(i) pro rated payments shall be made in the first quarter and the last quarter of the term, (ii)~~ if the aggregate amount of management fees paid or to be paid by such ~~subsidiaries,~~entities, together with all other management fees paid or to be paid ~~by all other subsidiaries of the Company~~ to the Manager ~~in each case, with respect to any fiscal year~~under other offsetting management services agreements, exceeds, or is expected to exceed, 9.5% of ~~the Company’s~~our gross income ~~with respect to such~~in any fiscal year or the Parent Management Fee in any fiscal quarter, then the management fee to be paid by such ~~subsidiaries for any remaining fiscal quarters in such fiscal year~~entities shall be reduced, on a pro rata basis determined by reference to the other management fees to be paid to the Manager ~~by all of the subsidiaries of the Company, until the aggregate amount of the management fee paid or to be paid by such subsidiaries, together with all~~under other management fees paid or to be paid by all other subsidiaries of the Company to the Manager, in each case, with respect to such fiscal year, does not exceed 9.5% of the Company’s gross income with respect to such fiscal year, and (iii) if the aggregate amount the management fee paid or to be paid by such subsidiaries, together with all other management fees paid or to be paid by all other subsidiaries of the Company to the Manager, in each case, with respect to any fiscal quarter exceeds, or is expected to exceed, the Parent Management Fee with respect to such fiscal quarter, then the management fee to be paid by such subsidiaries 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 such subsidiaries, together with all other management fees paid or to be paid by all other subsidiaries of the Company 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.
Each of these subsidiaries shall also reimburse the Manager for all of their costs and expenses which are specifically approved by their board of directors, including all out-of-pocket costs and expenses, which are actually incurred by the Manager or its affiliates on behalf of these subsidiaries in connection with performing services under the offsetting management services agreements.
~~The rights~~1847 Asien expensed management fees of $75,000 and $75,000 for the Manager to receive payments under this offsetting management services agreement with Wolo are subordinate to the rights of Sterling under separate a subordination agreement that the Manager entered into with Sterling onthree months ended March ~~30, 2021.~~31, 2022 and 2021, respectively.

1847 Cabinet expensed management fees of $125,000 and $75,000 for the three months ended March 31, 2022 and 2021, respectively.
~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
~~1847 Asien, 1847 Cabinet and~~ 1847 Wolo expensed ~~$150,000, $150,000 and $75,833, respectively, in~~ management fees of $75,000 and $0 for the ~~six~~three months ended ~~June 30, 2021. In conjunction with the Wolo acquisition, the Manager received a fee of $110,000. 1847 Asien expensed $28,022 in management fees for the six months ended June 30, 2020.~~March 31, 2022 and 2021, respectively.
On a consolidated basis, the Company expensed total management fees of ~~$485,833~~$275,000 and ~~$28,022~~$260,000 for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively.
Advances
From time to time, the Company has received advances from its chief executive officer to meet short-term working capital needs. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, a total of $118,834 in advances from related parties are outstanding. These advances are unsecured, bear no interest, and do not have formal repayment terms or arrangements.
As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Manager has funded the Company $74,928 and ~~$71,358~~$74,928 in related party advances, respectively. These advances are unsecured, bear no interest, and do not have formal repayment terms or arrangements.
~~Grid Promissory Note~~

On January 3, 2018, the Company issued a grid promissory note to the Manager in the initial principal amount of $50,000. The note provided that the Company could request additional advances from the Manager up to an aggregate additional amount of $150,000. On December 7, 2020, parties amended and restated the note for a new principal amount of $56,900 and maturity date of December 7, 2021. Interest on the note accrues on the unpaid portion of the principal amount and the outstanding portion of all advances at a fixed rate of 8% per annum. In the event that the Company completes a financing that includes an uplisting of the Company’s common shares to a national exchange, then the Company must, contemporaneously with the closing of such financing transaction, repay the entire outstanding principal, outstanding advances, and accrued and unpaid interest on the note. The note is unsecured and contains customary events of default. As of June 30, 2021 and December
1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, ~~2020, the Manager has advanced $56,900 of the note and the Company has accrued interest of $27,447 and $25,159, respectively.~~
2022
(UNAUDITED)
Building Lease
On September 1, 2020, Kyle’s entered into an industrial lease agreement with ~~the Kyle’s Sellers,~~Stephen Mallatt, Jr. and Rita Mallatt, who are officers of Kyle’s and principal shareholders of the Company. ~~See Note 13~~The lease is for ~~details regarding this lease.~~
~~NOTE 15—SHAREHOLDERS’ EQUITY (DEFICIT)~~a term of five years, with an option for a renewal term of five years, and provides for a base rent of $7,000 per month for the first 12 months, which will increase to $7,210 for months 13-16 and to $7,426 for months 37-60. In addition, Kyle’s is responsible for all taxes, insurance and certain operating costs during the lease term.
The total rent expense under this related party leases was $21,776 for the three months ended March 31, 2022.
NOTE 11—MEZZANINE EQUITY
~~Allocation Shares~~
As of June 30, 2021 and December 31, 2020, the Company had authorized and outstanding 1,000 allocation shares. These allocation shares do not entitle the holder thereof to vote on any matter relating to the Company other than in connection with amendments to the Company’s operating agreement and in connection with certain other corporate transactions as specified in the operating agreement.
The Manager owns 100% of the allocation shares of the Company which represent the original equity interest in the Company. As a holder of the allocation shares, the Manager is entitled to receive a 20% profit allocation as a form of preferred distribution, pursuant to a profit allocation formula upon the occurrence of certain events. Generally, the distribution of the profit allocation is paid upon the occurrence of the sale of a material amount of capital stock or assets of one of the Company’s businesses (a “Sale Event”) or, at the option of the Manager, at the five-year anniversary date of the acquisition of one of the Company’s businesses (a “Holding Event”). The Company records distributions of the profit allocation to the holders upon occurrence of a Sale Event or Holding Event as dividends declared on allocation interests to stockholders’ equity when they are approved by the Company’s board of directors.

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
~~The 1,000 allocation shares are issued and outstanding and held by the Manager, which is controlled by Mr. Roberts, the Company’s chief executive officer and controlling shareholder.~~
Series A Senior Convertible Preferred Shares
On September 30, 2020, the Company executed a ~~certificate of~~share designation, which was amended on November 20, 2020, ~~and amended and restated on~~ March 26, 2021 and September 29, 2021, to designate 4,450,460 of its shares as series A senior convertible preferred shares. Following is a description of the rights of the series A senior convertible preferred shares.
~~Dividends.~~Ranking. The series A senior convertible preferred shares rank, with respect to the payment of dividends and the distribution of assets upon liquidation, (i) senior to all common shares, allocation shares, and each other class or series that is not expressly made senior to or on parity with the series A senior convertible preferred shares; (ii) on parity with the series B senior convertible preferred shares and each other class or series that is not expressly subordinated or made senior to the series A senior convertible preferred shares; and (iii) junior to all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company and each other class or series that is expressly made senior to the series A senior convertible preferred shares.
Dividend Rights. ~~Dividends~~Holders of series A senior convertible preferred shares are entitled to dividends at ~~the~~a rate per annum of 14.0% of the stated value ($2.00 per share, subject to adjustment) ~~shall accrue on the series A senior convertible preferred shares.~~. Dividends shall accrue from day to day, whether or not declared, and shall be cumulative. Dividends shall be payable quarterly in arrears on each dividend payment date in cash or common shares at the Company’s discretion. Dividends payable in common shares shall be calculated based on a price equal to eighty percent (80%) of the volume weighted average price ~~(“VWAP”)~~ for the common shares on the Company’s principal trading market (the “VWAP”) during the five (5) trading days immediately prior to the applicable dividend payment date; provided, however, that if the common shares are not registered, and Rule 144 rulemaking referred to below is effective on the payment date, the dividends payable in common shares shall be calculated based upon the fixed price of $1.57; provided further, that the Company may only elect to pay dividends in common shares based upon such fixed price if the VWAP for the five (5) trading days immediately prior to the applicable dividend payment date is $1.57 or higher.
~~Liquidation.~~Liquidation Rights. Subject to the rights of ~~the Company’s~~ creditors and the holders of any senior securities or parity securities (in each case, as defined in the ~~certificate of~~share designation), upon any liquidation of the Company or its subsidiaries, before any payment or distribution of the assets of the Company (whether capital or surplus) shall be made to or set apart for the holders of securities that are junior to the series A senior convertible preferred shares as to the distribution of assets on any liquidation of the Company, including the common shares and allocation shares, each holder of outstanding series A senior convertible preferred shares shall be entitled to receive an amount of cash equal to 115% of the stated value plus an amount of cash equal to all accumulated accrued and unpaid dividends thereon (whether or not declared) to, but not including the date of final distribution to such holders. If, upon any liquidation, ~~of the Company,~~ the assets, ~~of the Company,~~ or proceeds thereof, distributable among the holders of the series A senior convertible preferred shares shall be insufficient to pay in full the preferential amount payable to the holders of the series A senior convertible preferred shares and liquidating payments on any other shares of any class or series of parity securities as to the distribution of assets on any liquidation, ~~of the Company,~~ then such assets, or the proceeds thereof, shall be distributed among the holders of series A senior convertible preferred shares and any such other parity securities ratably in accordance with the respective amounts that would be payable on such series A senior convertible preferred shares and any such other parity securities if all amounts payable thereon were paid in full.

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Voting Rights. The series A senior convertible preferred shares do not have any voting rights; provided that, so long as any series A senior convertible preferred shares are outstanding, the affirmative vote of holders of a majority of series A senior convertible preferred shares, which majority must include Leonite Capital LLC so long as ~~Leonite~~it holds any series A senior convertible preferred shares (the “Requisite Holders”), voting as a separate class, shall be necessary for approving, effecting or validating any amendment, alteration or repeal of any of the provisions of the ~~certificate of~~share designation. In addition, so long as any series A senior convertible preferred shares are outstanding, the affirmative vote of the Requisite Holders shall be required prior to the ~~Company’s (or Kyle’s or Wolo’s)~~ creation or issuance by the Company or by its subsidiaries Kyle’s Custom Wood Shop, Inc. (“Kyle’s”) and Wolo Mfg. Corp. and Wolo Industrial Horn & Signal, Inc. (together, “Wolo”) of (i) any parity securities; (ii) any senior securities; and (iii) any new indebtedness other than (A) intercompany indebtedness by Kyle’s or Wolo in favor of the Company, (B) indebtedness incurred in favor of the sellers of Kyle’s or Wolo in connection with the acquisition of Kyle’s or Wolo, or (C) indebtedness (or the refinancing of such indebtedness) the proceeds of which are used to complete the acquisition of Kyle’s or Wolo related expenses or working capital to operate the business of Kyle’s or Wolo. Notwithstanding the foregoing, this shall not apply to any financing transaction the use of proceeds of which ~~the Company~~ will ~~use~~be used to redeem the series A senior convertible preferred shares and the warrants issued in connection therewith.

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
Conversion Rights. Each series A senior convertible preferred share, plus all accrued and unpaid dividends thereon, shall be convertible, at the option of the holder thereof, at any time and from time to time, into such number of fully paid and nonassessable common shares determined by dividing the stated value ($2.00 per share), plus the value of the accrued, but unpaid, dividends thereon, by ~~the~~a conversion price of $1.75 per ~~share;~~share (subject to adjustment); provided that in no event shall the holder of any series A senior convertible preferred shares be entitled to convert any number of series A senior convertible preferred shares that upon conversion the sum of (i) the number of common shares beneficially owned by the holder and its affiliates and (ii) the number of common shares issuable upon the conversion of the series A senior convertible preferred shares with respect to which the determination of this proviso is being made, would result in beneficial ownership by the holder and its affiliates of more than 4.99% of the then outstanding common ~~shares of the Company.~~shares. This limitation may be waived (up to a maximum of 9.99%) by the holder and in its sole discretion, upon not less than sixty-one (61) days’ prior notice to the Company.
Redemption Rights. The Company may redeem in whole, ~~(but not~~or upon the written consent of the Requisite Holders and in ~~part)~~the manner provided for in such written consent, in part, the series A senior convertible preferred shares by paying in cash therefore a sum equal to 115% of the stated value plus the amount of accrued and unpaid plus any other amounts due pursuant to the terms of the series A senior convertible preferred shares. On October 12, 2021, the Company redeemed 2,632,278 series A senior convertible preferred shares for a total redemption price, including dividends through such date, of $6,395,645.
Adjustments. ~~In addition to~~The share designation contains standard adjustments to the conversion price in the event of any share splits, share combinations, share reclassifications, dividends paid in common shares, sales of substantially all of the Company’s assets, mergers, consolidations or similar ~~transactions,~~transactions. In addition, the ~~certificate~~share designation provides that if, but only if, the Requisite Holders provide the Company with at least ten (10) business day’s prior written notice, then, from and after the date of ~~designation contains a provision regarding adjustments to~~such notice, the stated dividend rate, the stated value and the conversion price shall automatically adjust as follows:
● ~~On the first day of the 12~~^th month following the issuance date of any series A senior convertible preferred shares, the stated dividend rate shall automatically increase by five percent (5.0%) per annum and the conversion price shall automatically adjust to the lower of the (i) initial conversion price and (ii) the price equal to the lowest VWAP of the ten (10) trading days immediately preceding such date.
● ~~On the first day of the 24~~^th month following the issuance date of any series A senior convertible preferred shares, the stated dividend rate shall automatically increase by an additional five percent (5.0%) per annum, the stated value shall automatically increase by ten percent (10%) and the conversion price shall automatically adjust to the lower of the (i) initial conversion price and (ii) the price equal to the lowest VWAP of the ten (10) trading days immediately preceding such date.
● ~~On the first day of the 36~~^th month following the issuance date of any series A senior convertible preferred shares, the stated dividend rate shall automatically increase by an additional five percent (5.0%) per annum, the stated value shall automatically increase by ten percent (10%) and the conversion price shall automatically adjust to the lower of the (i) initial conversion price and (ii) the price equal to the lowest VWAP of the ten (10) trading days immediately preceding the third adjustment date.
On the first day of the 12^th month following the issuance date of any series A senior convertible preferred shares, the stated dividend rate shall automatically increase by five percent (5.0%) per annum and the conversion price shall automatically adjust to the lower of the (i) initial conversion price and (ii) the price equal to the lowest VWAP of the ten (10) trading days immediately preceding such date.
On the first day of the 24^th month following the issuance date of any series A senior convertible preferred shares, the stated dividend rate shall automatically increase by an additional five percent (5.0%) per annum, the stated value shall automatically increase by ten percent (10%) and the conversion price shall automatically adjust to the lower of the (i) initial conversion price and (ii) the price equal to the lowest VWAP of the ten (10) trading days immediately preceding such date.

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
On the first day of the 36^th month following the issuance date of any series A senior convertible preferred shares, the stated dividend rate shall automatically increase by an additional five percent (5.0%) per annum, the stated value shall automatically increase by ten percent (10%) and the conversion price shall automatically adjust to the lower of the (i) initial conversion price and (ii) the price equal to the lowest VWAP of the ten (10) trading days immediately preceding the third adjustment date.
Notwithstanding the foregoing, the conversion price for purposes of the adjustments above shall not be adjusted to a number that is below $0.0075. In addition, if any legislation or rules are adopted whereby the holding period of securities for purposes of Rule 144 of the Securities Act of 1933, as amended, for convertible securities that convert at market-adjusted rates is increased resulting in a longer holding period for convertible securities like the series A senior convertible preferred shares and the unavailability at the time of conversion of Rule 144, the pricing provisions that are based upon the lowest VWAP of the previous ten (10) trading days immediately preceding the relevant adjustment date shall be removed unless the common shares issuable upon conversion are then registered under an effective registration statement.

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
Additional Equity Interest. On the third adjustment date set forth above, the Company is required to cause Kyle’s and Wolo to issue to the holders of series A senior convertible preferred shares, on a pro rata basis, a ten percent (10%) equity stake Kyle’s and/or ~~Wolo (the “Additional Equity Interest”).~~Wolo. The holders of series A senior convertible preferred shares issued in connection with the financing to complete the acquisition of Kyle’s shall receive the equity stake in Kyle’s and the holders of series A senior convertible preferred shares issued in connection with the financing to complete the acquisition of Wolo shall receive the equity stake in Wolo. The Company is required to cause Kyle’s and Wolo to grant to the holders of the series A senior convertible preferred shares upon the issuance to them of ~~the Additional Equity Interest~~such equity interest a right to receive an additional number of shares of common stock of Kyle’s or Wolo if Kyle’s or Wolo issues to any third-party equity securities at a price below the acquisition price (as defined below). Such additional number of shares of common stock of Kyle’s or Wolo to be issued in such instance shall be equal to a number of shares of common stock of Kyle’s or Wolo which, when added to the number of shares of common stock of Kyle’s or Wolo constituting the ~~Additional Equity Interest,~~initial additional equity interest, would be equal to the total number of shares of common stock which would have been issued to a holder of series A senior convertible preferred shares if the price per share of common stock of Kyle’s or Wolo was equivalent to the price per equity security paid by such third-party in Kyle’s or Wolo. For purposes of this provision, “acquisition price” means the price per share of Kyle’s and Wolo that was paid by the Company upon the acquisition of Kyle’s and Wolo, respectively.
As of March 31, 2022 and December 31, 2021, the Company had 1,684,849 and 1,818,182 series A senior convertible preferred shares issued and outstanding, respectively.
During the three months ended March 31, 2022, the Company accrued dividends attributable to the series A senior convertible preferred shares in the amount of $121,455 and paid prior period accrued dividends of $128,318.
On ~~September 30, 2020,~~February 16, 2022, 133,333 shares of series A senior convertible preferred shares were converted into 152,381 common shares.
Series B Senior Convertible Preferred Shares
On February 17, 2022, the Company executed a share designation to designate 583,334 of its shares as series B senior convertible preferred shares. Following is a description of the rights of the series B senior convertible preferred shares.
Ranking. The series B senior convertible preferred shares rank, with respect to the payment of dividends and the distribution of assets upon liquidation, (i) senior to all common shares, allocation shares, and each other class or series that is not expressly made senior to or on parity with the series B senior convertible preferred shares; (ii) on parity with the series A senior convertible preferred shares and each other class or series that is not expressly subordinated or made senior to the series A senior convertible preferred shares; and (iii) junior to all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company and each other class or series that is expressly made senior to the series B senior convertible preferred shares.

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Dividend Rights. Holders of series B senior convertible preferred shares are entitled to dividends at a rate per annum of 14.0% of the stated value ($3.00 per share, subject to adjustment). Dividends shall accrue from day to day, whether or not declared, and shall be cumulative. Dividends shall be payable quarterly in arrears on each dividend payment date in cash or common shares at the Company’s discretion. Dividends payable in common shares shall be calculated based on a price equal to eighty percent (80%) of the VWAP during the five (5) trading days immediately prior to the applicable dividend payment date; provided, however, that if the common shares are not registered, and rulemaking regarding the Rule 144 holding period referred to below is effective on the payment date, the dividends payable in common shares shall be calculated based upon the fixed price of $2.70; provided further, that the Company may only elect to pay dividends in common shares based upon such fixed price if the VWAP for the five (5) trading days immediately prior to the applicable dividend payment date is $2.70 or higher.
Liquidation Rights. Subject to the rights of creditors and the holders of any senior securities or parity securities (in each case, as defined in the share designation), upon any liquidation of the Company or its subsidiaries, before any payment or distribution of the assets of the Company (whether capital or surplus) shall be made to or set apart for the holders of securities that are junior to the series B senior convertible preferred shares as to the distribution of assets on any liquidation of the Company, including the common shares and allocation shares, each holder of outstanding series B senior convertible preferred shares shall be entitled to receive an amount of cash equal to 115% of the stated value plus an amount of cash equal to all accumulated accrued and unpaid dividends thereon (whether or not declared) to, but not including the date of final distribution to such holders. If, upon any liquidation, the assets, or proceeds thereof, distributable among the holders of the series B senior convertible preferred shares shall be insufficient to pay in full the preferential amount payable to the holders of the series B senior convertible preferred shares and liquidating payments on any other shares of any class or series of parity securities as to the distribution of assets on any liquidation, then such assets, or the proceeds thereof, shall be distributed among the holders of series B senior convertible preferred shares and any such other parity securities ratably in accordance with the respective amounts that would be payable on such series B senior convertible preferred shares and any such other parity securities if all amounts payable thereon were paid in full.
Voting Rights. The series B senior convertible preferred shares do not have any voting rights; provided that, so long as any series B senior convertible preferred shares are outstanding, the affirmative vote of holders of a majority of series B senior convertible preferred shares, voting as a separate class, shall be necessary for approving, effecting or validating (i) any amendment, alteration or repeal of any of the provisions of the share designation or (ii) the Company’s creation or issuance of any parity securities or any senior securities. Notwithstanding the foregoing, such vote of the holders shall not be required in connection with the issuance of parity securities or senior securities if, and so long as, the proceeds resulting from the issuance of such securities are used to redeem in full the outstanding series B senior convertible preferred shares.
Conversion Rights. Each series B senior convertible preferred share, plus all accrued and unpaid dividends thereon, shall be convertible, at the option of the holder thereof, at any time and from time to time, into such number of fully paid and nonassessable common shares determined by dividing the stated value ($3.00 per share), plus the value of the accrued, but unpaid, dividends thereon, by the conversion price of $3.00 per share (subject to adjustments); provided that in no event shall the holder of any series B senior convertible preferred shares be entitled to convert any number of series B senior convertible preferred shares that upon conversion the sum of (i) the number of common shares beneficially owned by the holder and its affiliates and (ii) the number of common shares issuable upon the conversion of the series B senior convertible preferred shares with respect to which the determination of this proviso is being made, would result in beneficial ownership by the holder and its affiliates of more than 4.99% of the then outstanding common shares. This limitation may be waived (up to a maximum of 9.99%) by the holder and in its sole discretion, upon not less than sixty-one (61) days’ prior notice to the Company.
Redemption Rights. The Company may redeem in whole (but not in part) the series B senior convertible preferred shares by paying in cash therefore a sum equal to 115% of the stated value plus the amount of accrued and unpaid dividends and any other amounts due pursuant to the terms of the series B senior convertible preferred shares.

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Adjustments. The share designation contains standard adjustments to the conversion price in the event of any share splits, share combinations, share reclassifications, dividends paid in common shares, sales of substantially all of the Company’s assets, mergers, consolidations or similar transactions. In addition, the share designation provides that the stated dividend rate, the stated value and the conversion price shall automatically adjust as follows:
On the first day of the 12^th month following the issuance of the first series B senior convertible preferred share, the stated dividend rate shall automatically increase by five percent (5.0%) per annum and the conversion price shall automatically adjust to the lower of the (i) initial conversion price and (ii) the price equal to the lowest VWAP of the ten (10) trading days immediately preceding such date.
On the first day of the 24th month following the issuance of the first series B senior convertible preferred share, the stated dividend rate shall automatically increase by an additional five percent (5.0%) per annum, the stated value shall automatically increase by ten percent (10%) and the conversion price shall automatically adjust to the lower of the (i) initial conversion price and (ii) the price equal to the lowest VWAP of the ten (10) trading days immediately preceding such date.
On the first day of the 36th month following the issuance of the first series B senior convertible preferred share, the stated dividend rate shall automatically increase by an additional five percent (5.0%) per annum, the stated value shall automatically increase by ten percent (10%) and the conversion price shall automatically adjust to the lower of the (i) initial conversion price and (ii) the price equal to the lowest VWAP of the ten (10) trading days immediately preceding such date.
Notwithstanding the foregoing, the conversion price for purposes of the adjustments above shall not be adjusted to a number that is below $0.0075 per share (subject to adjustment for splits or dividends of the common shares). In addition, if any legislation or rules are adopted whereby the holding period of securities for purposes of Rule 144 of the Securities Act of 1933, as amended, for convertible securities that convert at market-adjusted rates is increased resulting in a longer holding period for convertible securities like the series B senior convertible preferred shares and the unavailability at the time of conversion of Rule 144, the pricing provisions that are based upon the lowest VWAP of the previous ten (10) trading days immediately preceding the relevant adjustment date shall be removed unless the common shares issuable upon conversion are then registered under an effective registration statement.
On February 24, 2022, the Company sold an aggregate of ~~2,189,835~~320,333 units, at a price of ~~$1.90~~$3.00 per unit, for aggregate gross proceeds of ~~$4,160,684.~~$961,000. On ~~October 26, 2020,~~March 24, 2022, the Company sold an additional ~~442,443~~106,666 units for an aggregate ~~purchase price~~gross proceeds of ~~$840,640.~~approximately $320,000. The Company had issuance costs relating to the offering of approximately $15,000, resulting in net proceeds of $1,266,000. Each unit consists of one (1) series AB senior convertible preferred share and a three-year warrant to purchase one (1) common share at an exercise price of ~~$2.50~~$3.00 per common share (subject to adjustment), which may be exercised on a cashless basis under certain circumstances. ~~In accordance with ASC 470, if debt or stock is~~The embedded conversion options of the series B senior convertible preferred shares and warrants were clearly and closely related to the equity host and did not require bifurcation. The $1,266,000 of net proceeds were allocated on a relative fair value basis of $1,113,650 to the series B preferred shares and $152,350 to the warrants. The series B preferred shares fair value was derived using an Option Pricing Method and the warrants fair value was derived using a Monte Carlo Simulation Model.
As of March 31, 2022 and December 31, 2021, the Company had 426,999 and 0 series B senior convertible preferred shares issued ~~with detachable warrants and/or stock,~~and outstanding, respectively.
During the three months ended March 31, 2022, the Company accrued dividends attributable to the series B senior convertible preferred shares in the amount of $13,760.
Mezzanine Equity Classification
We applied the guidance in ASC ~~470~~480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, “Derivatives and Hedging” (“ASC 815”), in order to determine the appropriate classification for both the series A senior convertible preferred shares and the series B senior convertible preferred shares.

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
ASC 480 requires ~~that the proceeds~~equity instruments to be ~~allocated to the instruments based~~evaluated on ~~their relative fair values. The Company applied this guidance and recorded a deemed dividend of $2,874,478 as~~an ongoing basis for mezzanine equity (temporary equity) vs permanent equity classification. As a result of ~~a beneficial~~the maximum number of common shares that may be issuable (upon conversion ~~feature.~~of the preferred securities) exceeded the number of authorized but unissued common shares available, temporary equity classification is required. As ~~the Company does not have any retained earnings this deemed dividend was netting against additional paid-in capital~~of March 31, 2022 and ~~the net accounting effect was none.~~December 31, 2021, there were 1,684,849 and 1,818,182 series A senior convertible preferred shares presented in mezzanine equity, respectively. As of March 31, 2022 and December 31, 2021, there were 426,999 and 0 series B senior convertible preferred shares presented in mezzanine equity, respectively.
NOTE 12—SHAREHOLDERS’ DEFICIT
Common Shares
As of March 31, 2022, the Company was authorized to issue 500,000,000 common shares. As of March 31, 2022 and December 31, 2021, the Company had 4,995,232 and 4,842,851 common shares issued and outstanding, respectively.
On February 16, 2022, the Company issued 152,851 common shares upon the conversion of 133,333 series A senior convertible preferred shares.
On March ~~26, 2021,~~23, 2022, the Company declared a common share dividend of $0.05 per share, or $249,762, to shareholders of record as of March 31, 2022. This dividend was paid on April 15, 2022.
Warrants
On February 24, 2022, the Company sold an aggregate of ~~1,818,182~~320,333 units, at a price of ~~$1.65~~$3.00 per unit, for aggregate gross proceeds of ~~$3,000,000.~~$961,000. On March 24, 2022, the Company sold an additional 106,666 units for aggregate gross proceeds of $320,000. Each unit consists of one (1) series AB senior convertible preferred share and a three-year warrant to purchase one (1) common share at an exercise price of $2.50 per common share (subject to adjustment), which may be exercised on a cashless basis under certain circumstances. The Company ASC 740 and recorded a deemed dividend of $1,527,086 as a result of a beneficial conversion feature. As the Company does not have any retained earnings this deemed dividend was netting against additional paid-in capital and the net accounting effect was none.
In the six months ended June 30, 2021, the Company accrued dividends attributable to the series A senior convertible preferred shares in the amount of $310,679 and paid the prior period accrued dividends of $365,658.
~~Common Shares~~
The Company is authorized to issue 500,000,000 common shares as of June 30, 2021 and December 31, 2020. As of June 30, 2021 and December 31, 2020, the Company had 4,842,851 and 4,444,013 common shares issued and outstanding, respectively. The common shares entitle the holder thereof to one vote per share on all matters coming before the shareholders of the Company for a vote.
On May 4, 2020, the Company issued 100,000 common shares to Leonite upon conversion of $100,000 of the outstanding balance of the secured convertible promissory note resulting is a loss on conversion of debt of $175,000 (see Note 12).
~~On May 28, 2020, the Company issued 415,000 common shares, having a fair value of $1,037,500, to the Asien’s Seller in connection with the Asien’s Acquisition (see Note 10).~~
~~On June 4, 2020, the Company issued 100,000 common shares to a service provider for services provided to the Company. The fair market value of the services amounted to $245,000.~~

~~1847 HOLDINGS LLC~~
~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~
~~JUNE 30, 2021~~
~~(UNAUDITED)~~
On March 26, 2021, the Company issued an aggregate of 398,838 common shares to the holders of the series A senior convertible preferred shares issued on September 30, 2020 and October 26, 2020. As noted above, the purchase price for the units issued to such holders was $1.90 per unit. As noted above, on March 26, 2021, the Company issued additional units at a purchase price of $1.65 per unit. In exchange for the consent of the holders of the Company’s outstanding series A senior convertible preferred shares to the issuance of these additional units at a lower purchase price than such holders paid for their shares, the Company issued 398,838 common shares to such holders.
~~Warrants~~

Number
of
Common Stock
Warrants

Weighted
average
exercise
price

Weighted
average
life
(years)

Intrinsic
value
of
Warrants

Outstanding, January 1, 2021 2,632,278 $ 2.50 2.76 $          -
Granted 1,818,182 2.50 3.00 -
Exercised - - - -
Canceled - - - -
Outstanding, June 30, 2021 4,450,460 $ 2.50 2.46 $ -
Exercisable, June 30, 2021 4,450,460 $ 2.50 2.46 $ -
On March 26, 2021, the Company sold an aggregate of 1,818,182 units, at a price of $1.65 per unit, for aggregate gross proceeds of $3,000,000. Each unit consists of one (1) series A senior convertible preferred share and a three-year warrant to purchase one (1) common share at an exercise price of $2.50$3.00 per common share (subject to adjustment). Accordingly, a portion of the proceeds were allocated to the warrant based on its relative fair value using the Geometric Brownian Motion Stock Path Monte Carlo Simulation. The assumptions used in the model were as follows: (i) dividend yield of 0%; (ii) expected volatility of ~~62.52-63.25%~~51.81%; (iii) weighted average risk-free interest rate of ~~0.16%~~0.31%; (iv) expected life of three years; (v) estimated fair value of the common shares of ~~$2.60-$5.25~~$1.94 per share; and (vi) various probability assumptions related to redemption, calls and price resets. The ~~ultimate~~fair value of the warrants was $379,533 or $0.89 per warrant, resulting in the amount allocated to the warrants, ~~was $1,472,914,~~based on their relative fair of $152,350, which was recorded as additional paid in capital.
The warrants allow the holder to purchase one (1) common share at an exercise price of ~~$2.50~~$3.00 per common share (subject to adjustment including upon any future equity offering with a lower exercise price), which may be exercised on a cashless basis under certain circumstances. ~~Upon~~The Company may force the exercise of the warrants at any time after the one year anniversary of the date of the warrants, if (i) the Company is listed on a ~~reduction~~national securities exchange or the over-the-counter market, (ii) the underlying common shares are registered or the holder of the warrant otherwise has the ability to trade the underlying common shares without restriction, (iii) the 30-day volume-weighted daily average price of the common shares exceeds 200% of the exercise price, as adjusted, and (iv) the average daily trading volume is at least 100,000 common shares during such 30-day period. The Company may redeem the warrants held by any holder in whole (but not in part) by paying in cash to such holder as follows: (i) $0.50 per share then underlying the warrant if within the first twelve (12) months of ~~such~~issuance; (ii) $1.00 per share then underlying the warrant if after the first twelve (12) months, but before twenty-four (24) months of issuance; and (iii) $1.50 per share then underlying the warrant if after twenty-four months, but before thirty-six (36) months.
Below is a table summarizing the changes in warrants outstanding during the ~~number~~three months ended March 31, 2022:
Warrants
Weighted-
Average
Exercise Price

Outstanding at December 31, 2021 5,200,460 $ 2.38
Granted 426,999 3.00
Exercised - -
Forfeited - -
Outstanding at March 31, 2022 5,627,459 $ 2.43
Exercisable at March 31, 2022 5,627,459 $ 2.43
As of ~~warrant shares shall increase such that~~March 31, 2022, the ~~aggregate exercise price will remain the same. The~~outstanding warrants have a ~~term~~weighted average remaining contractual life of ~~three~~2.17 years and ~~are callable by the Company after one year if the 30-day average stock price is in excess~~a total intrinsic value of $5 and the trading volume in the Company’s shares exceed 100,000 shares a day over such period. The Company can also redeem the warrants during the term for $0.50 a warrant in the first year; $1.00 a warrant in the second year; and $1.50 a warrant in the third year.$497,500.
~~NOTE 16—COMMITMENTS AND CONTINGENCIES~~
~~Financing Lease liabilities~~
The Company has entered into three financing lease agreements for expansion equipment at Kyle’s. The equipment is in production and expected to be installed in October, 2021. These agreements have terms of six years beginning at the time of installation.

1847 HOLDINGS LLC
NOTES TO ~~THE~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~JUNE 30, 2021~~MARCH 31, 2022
(UNAUDITED)
~~Future minimum lease payments under the leases as of June 30, 2021 are as follows:~~NOTE 13—LOSS PER SHARE
2021 (4^th quarter of 2021) $ 35,885
2022 143,541
2023 143,541
2024 143,541
2025 143,541
2026 143,541
2027 107,656
Total lease payments $ 861,246
The computation of weighted average shares outstanding and the basic and diluted loss per common share attributable to 1847 Holdings common shareholders for the three months ended March 31, 2022 consisted of the following:

Basic and Diluted Loss Per Share
March 31,
2022
Net loss per common share attributable to 1847 Holdings common shareholders’ $ (1,008,245 )
Weighted average common shares outstanding 4,915,655
Basic and diluted loss per share $ (0.21 )

~~Office Leases & other~~For the three months ended March 31, 2022, there were 20,871,528 potential common share equivalents from warrants, convertible debt, and series A and B convertible preferred shares were excluded from the diluted EPS calculations as their effect is anti-dilutive.
~~An office space has been leased on a month-by-month basis.~~
~~The officers~~For the three months ended March 31, 2021, there were 4,450,460 potential common share equivalents from warrants, convertible debt, and ~~directors are involved in other business activities and most likely will become involved in other business activities in~~series A convertible preferred shares were excluded from the ~~future.~~diluted EPS calculations as their effect is anti-dilutive.
~~NOTE 17—SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION~~
~~Supplemental disclosures of cash flow information for the six months ended June 30, 2021 and 2020 were as follows:~~
Six Months Ended
June 30,
2021 2020
Interest paid $ 77,435 $ 243,063
Income tax paid $ - $ -
Business combinations: -
Current assets
Current Assets $ 4,198,479 $ 1,734,663
Property and equipment - 157,052
Deferred tax asset 64,000 -
Preliminary goodwill 3,248,963 1,720,726
Assumed liabilities (111,442 ) (3,195,726 )
Cash acquired in acquisitions $ 1,094,524 $ 1,268,285
Financing:
Due to seller (cash paid to seller day after closing) $ 1,094,524 $ 233,000
Note payable seller $ 850,000 $ 855,000
Common Shares
Deemed Dividend related to issuance of Preferred stock $ 1,527,086 $ -
Additional Paid-in Capital – common shares and warrants issued $ 757,772 $ -
   Common stock $ - $ 415
   Additional Paid in Capital $ - $ 829,585
Operating lease, ROU assets and liabilities $ 105,136 $
NOTE ~~18—~~14—SUBSEQUENT EVENTS
In accordance with ASC 855-10, the Company has analyzed its operations subsequent to June 30, 2021 to the date these financial statements were issued, and has determined that, except as set forth below, it does not have any material subsequent events to disclose in these financial statements.
~~Amendment No. 1 to Second Amended and Restated Operating Agreement~~
On ~~August 5, 2021,~~April 20, 2022, the ~~Company’s Second Amended and Restated Operating Agreement was amended~~Company entered into a securities purchase agreement with Ellery W. Roberts, our Chief Executive Officer, pursuant to ~~Amendment No. 1 to Second Amended and Restated Operating Agreement (the “Amendment”), entered into by our Manager. The Amendment was adopted by the Company’s board of directors of~~which the Company ~~on August 5, 2021. The Amendment amends the operating agreement as follows: (i) the definition~~sold 28,333 units, at a price of ~~“Contribution-Based Profits” was amended to remove language relating to “loss” and “net loss”; (ii) the definition~~$3.00 per unit, for aggregate gross proceeds of ~~“Sales Event” was amended to add the following sentence: “For the avoidance of doubt, if~~$85,000. On May 12, 2022, the Company ~~distributes its equity ownership in~~sold an additional 16,667 units to Mr. Roberts for aggregate gross proceeds of $50,000. Each unit consists of one (1) series B senior convertible preferred share and a ~~Subsidiary~~three-year warrant to ~~the Company’s Shareholders in~~purchase one (1) common share at an exercise price of $3.00 per share (subject to adjustment), which may be exercised on a spin-off or similar transaction, such distribution shall constitute a Sale Event.”; and (iii) the definition of “Total Profit Allocation” was amended to add the following sentence: “For the avoidance of doubt, if Contribution-Based Profits is a negative number, it shall be disregard in calculating Total Profit Allocation.”cashless basis under certain circumstances.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following management’s discussion and analysis of financial condition and results of operations provides information that management believes is relevant to an assessment and understanding of our plans and financial condition. The following financial information is derived from our financial statements and should be read in conjunction with such financial statements and notes thereto set forth elsewhere herein.

Use of Terms

Except as otherwise indicated by the context and for the purposes of this report only, references in this report to “we,” “us,” “our” and the “Company” refer to 1847 Holdings LLC, a Delaware limited liability company, and its consolidated subsidiaries. References to the “Manager” refer to 1847 Partners LLC, a Delaware limited liability company.

Special Note 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:
● our ability to effectively integrate and operate the businesses that we acquire;
● our ability to successfully identify and acquire additional businesses;
● our organizational structure, which may limit our ability to meet our dividend and distribution policy;
● our ability to service and comply with the terms of indebtedness;
● our cash flow available for distribution and our ability to make distributions to our common shareholders;
● our ability to pay the management fee, profit allocation and put price to the Manager when due;
● labor disputes, strikes or other employee disputes or grievances;
● the regulatory environment in which our businesses operate under;
● trends in the industries in which our businesses operate;
● the competitive environment in which our businesses operate;
● changes in general economic or business conditions or economic or demographic trends in the United States including changes in interest rates and inflation;
● our and the Manager’s ability to retain or replace qualified employees of our businesses and the Manager;
● casualties, condemnation or catastrophic failures with respect to any of our business’ facilities;
● costs and effects of legal and administrative proceedings, settlements, investigations and claims; and
● extraordinary or force majeure events affecting the business or operations of our businesses.
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~~”“Risk Factors” included in our ~~Annual Report~~annual report on Form 10-K for the year ended December 31, ~~2020.~~2021. 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.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

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

We are an acquisition holding company focused on acquiring and managing a group of small businesses, which we characterize as those that have an enterprise value of less than $50 million, in a variety of different industries headquartered in North America. To date, we have completed ~~five~~six acquisitions and subsequently spun off two of the acquired companies.

On May 28, 2020, our subsidiary 1847 Asien Inc. (“1847 Asien”) acquired Asien’s Appliance, Inc., a California corporation (“Asien’s”). Asien’s has been in business since 1948 serving the North Bay area of Sonoma County, California. It provides a wide variety of appliance services, including sales, delivery/installation, in-home service and repair, extended warranties, and financing. Its main focus is delivering personal sales and exceptional service to its customers at competitive prices.

On September 30, 2020, our subsidiary 1847 Cabinet Inc. (“1847 Cabinet”) acquired Kyle’s Custom Wood Shop, Inc., an Idaho corporation (“Kyle’s”). Kyle’s is a leading custom cabinetry maker servicing contractors and homeowners since 1976 in Boise, Idaho and the surrounding area. Kyle’s focuses on designing, building, and installing custom cabinetry primarily for custom and semi-custom builders.

On March 30, 2021, our subsidiary 1847 Wolo Inc. (“1847 Wolo”) acquired Wolo Mfg. Corp., a New York corporation, and Wolo Industrial Horn & Signal, Inc., a New York corporation ~~(collectively,~~(together, “Wolo”). Headquartered in Deer Park, New York and founded in 1965, Wolo designs and ~~manufactures~~sells horn and safety products (electric, air, truck, marine, motorcycle and industrial equipment), and offers vehicle emergency and safety warning lights for cars, trucks, industrial equipment and emergency vehicles.

On October 8, 2021, our subsidiary 1847 Cabinet acquired High Mountain Door & Trim Inc., a Nevada corporation (“High Mountain”), and Sierra Homes, LLC d/b/a Innovative Cabinets & Design, a Nevada limited liability company (“Innovative Cabinets”). Headquartered in Reno, Nevada and founded in 2014, High Mountain specializes in all aspects of finished carpentry products and services, including doors, door frames, base boards, crown molding, cabinetry, bathroom sinks and cabinets, bookcases, built-in closets, and fireplace mantles, among others, working primarily with large homebuilders of single-family homes and commercial and multi-family developers. Innovative Cabinets is headquartered in Reno, Nevada and was founded in 2008. It specializes in custom cabinetry and countertops for a client base consisting of single-family homeowners, builders of multi-family homes, as well as commercial clients.
Our first acquisition was on March 3, 2017, pursuant to which our subsidiary 1847 Neese Inc. (“1847 Neese”) acquired Neese, Inc. ~~(“Neese”)~~, a business specializing in providing a wide range of land application services and selling equipment and parts in Grand Junction, Iowa. On April 19, 2021, we sold 1847 Neese back to the original ~~sellers. As a result, 1847 Neese is no longer a subsidiary of the Company.~~owners.

On April 5, 2019, our subsidiary 1847 Goedeker Inc. (“1847 Goedeker”) acquired substantially all of the assets of Goedeker Television Co. ~~(“Goedeker Television”)~~, a one-stop e-commerce destination for home furnishings, including appliances, furniture, home goods and related products. On October 23, 2020, we distributed all of the shares of 1847 Goedeker that we held to our ~~shareholders. As a result of this distribution, 1847 Goedeker is~~shareholders, so we no longer ~~a subsidiary of the Company.~~own 1847 Goedeker.

Through our structure, we offer investors an opportunity to participate in the ownership and growth of a portfolio of businesses that traditionally have been owned and managed by private equity firms, private individuals or families, financial institutions or large conglomerates. We believe that our management and acquisition strategies will allow us to achieve our goals to ~~begin making and growing~~grow regular distributions to our common shareholders and increasing common shareholder value over time.

We seek to acquire controlling interests in small businesses that we believe operate in industries with long-term macroeconomic growth opportunities, and that have positive and stable earnings and cash flows, face minimal threats of technological or competitive obsolescence and have strong management teams largely in place. We believe that private company operators and corporate parents looking to sell their businesses will consider us to be an attractive purchaser of their businesses. We make these businesses our majority-owned subsidiaries and actively manage and grow such businesses. We expect to improve our businesses over the long term through organic growth opportunities, add-on acquisitions and operational improvements.

Recent Developments
On April 20, 2022, we entered into a securities purchase agreement with Ellery W. Roberts, our Chief Executive Officer, pursuant to which we sold 28,333 units, at a price of $3.00 per unit, for aggregate gross proceeds of $85,000. On May 12, 2022, we sold an additional 16,667 units to Mr. Roberts for aggregate gross proceeds of $50,000. Each unit consists of one (1) series B senior convertible preferred share and a three-year warrant to purchase one (1) common share at an exercise price of $3.00 per share (subject to adjustment), which may be exercised on a cashless basis under certain circumstances.
Impact of Coronavirus Pandemic

InStarting in late 2019, a novel strain of the coronavirus, ~~was reported~~or COVID-19, began to ~~have surfaced~~rapidly spread around the world and every state in ~~Wuhan, China. 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.~~States. Most states and cities have ~~reacted by instituting~~at various times instituted quarantines, restrictions on travel, “stay at home” rules, social distancing measures and restrictions on the types of businesses that ~~may~~could continue to operate, as well as guidance in response to the pandemic and the need to contain it. At this time, there continues to be significant volatility and uncertainty relating to the full extent to which the COVID-19 pandemic and the various responses to it will impact our business, operations and financial results.

Asien’s was qualified as an essential business and remained open during the pandemic, with certain occupancy restrictions at times, so it did not experience any meaningful business interruption. However, Asien’s is dependent upon suppliers to provide it with all of the products that its sells. The pandemic has impacted and may continue to impact suppliers and manufacturers of certain of its products. As a result, Asien’s has faced and may continue to face delays or difficulty sourcing certain products, which could negatively affect its business and financial results. Even if Asien’s is able to find alternate sources for such products, they may cost more, which could adversely impact Asien’s profitability and financial condition.

Kyle’s was also qualified as an essential business and remained open during the pandemic, with certain occupancy restrictions at times, so it did not experience any meaningful business interruption. However, certain key customers of Kyle’s elected to either temporarily stop building homes or delayed their building process, particularly during the second quarter of 2020, which adversely affected Kyle’s sales. Further, early on during the pandemic, several of Kyle’s employees had taken time off because of medical ~~experiences,~~issues, and ~~certain~~some of them did not return to employment. Kyle’s has been hiring and training new employees to replace lost productivity because of the aforementioned loss of employees. Kyle’s did not experience any meaningful business interruption related to any of its key suppliers; although recently, potentially as a result of the pandemic and resulting impact, Kyle’s has seen price increases in certain key raw materials such as wood products and hardware. These increases may negatively affect Kyle’s profitability and financial condition. If the pace of the pandemic does not continue to slow, it may continue to negatively affect Kyle’s ability to generate sales opportunities and to hire productive employees, as well as impact the cost of raw materials. Therefore, Kyle’s business operations may experience further delays and experience lost sales opportunities and increased costs, which could further adversely impact Kyle’s profitability and financial condition.

High Mountain was qualified as an essential business and remained open during the pandemic. As it followed both federal and Nevada state guidelines regarding occupancy restrictions, it did not experience significant business disruptions, although it did experience some loss of productivity due to employee absences. High Mountain continues to comply with Nevada state and CDC guidelines regarding workplace safety.
Innovative Cabinets was also qualified as an essential business and thus remained open during the pandemic, while complying with federal and Nevada state guidelines regarding occupancy restrictions. However, since a substantive amount of its materials come from Asia, where its manufacturing network is located, Innovative Cabinets did experience longer supply chain lead-times and higher logistics costs. It has been exploring alternative sourcing opportunities. Given the prevailing market conditions for building supplies and materials, it may continue to experience supply chain issues and higher supply costs, which could adversely impact its profitability and financial condition.

Wolo qualified as an essential business and remained open during the pandemic. At no time during the pandemic did it experience an internal contamination forcing it to stop its business. The pandemic has had a dramatic impact on Wolo’s supply chain ~~like~~as it has on others in the automotive aftermarket. Approximately 90% of Wolo’s vendor base is located in China. The pandemic issues impacting ports in the U.S. due to lack of personnel has had a ripple effect on Chinese suppliers. Containers are slow to be emptied in the U.S., causing a backlog of ships waiting to get into ports and limiting containers and ships returning to China. The lack of containers and available space on ships has escalated shipping costs by over 300% from 2020. Costs for raw materials have also started to increase due to availability. Wolo cannot absorb these increases and ~~will be~~began passing on a price increase to customers starting June 1, 2021, although the effective date may be later for some customers. We believe that this is an industry-wide issue and that it should not put Wolo in an unfavorable pricing position.

The spread of COVID-19 has also adversely impacted global economic activity and has contributed to significant volatility 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.
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 report, including the effectiveness of vaccines and other treatments for COVID-19, and other new information that may emerge concerning the severity of the pandemic and steps taken to contain the pandemic or treat its impact, among others. Nevertheless, the pandemic and the current financial, economic and capital markets environment, and future developments 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 No. 1 to Second Amended and Restated Operating Agreement~~
On August 5, 2021, the Company’s Second Amended and Restated Operating Agreement was amended pursuant to Amendment No. 1 to Second Amended and Restated Operating Agreement (the “Amendment”), entered into by our Manager. The Amendment was adopted by the Company’s board of directors of the Company on August 5, 2021. The Amendment amends the operating agreement as follows: (i) the definition of “Contribution-Based Profits” was amended to remove language relating to “loss” and “net loss”; (ii) the definition of “Sales Event” was amended to add the following sentence: “For the avoidance of doubt, if the Company distributes its equity ownership in a Subsidiary to the Company’s Shareholders in a spin-off or similar transaction, such distribution shall constitute a Sale Event.”; and (iii) the definition of “Total Profit Allocation” was amended to add the following sentence: “For the avoidance of doubt, if Contribution-Based Profits is a negative number, it shall be disregard in calculating Total Profit Allocation.”

Management Fees

On April 15, 2013, the Company and the Manager entered into a management services agreement, pursuant to which the Company is required to pay the Manager a quarterly management fee equal to 0.5% of its adjusted net assets for services performed (the “Parent Management Fee”). The amount of the Parent Management Fee with respect to any fiscal quarter is (i) reduced by the aggregate amount of any management fees received by the Manager under any offsetting management services agreements with respect to such fiscal quarter, (ii) reduced (or increased) by the amount of any over-paid (or under-paid) Parent Management Fees received by (or owed to) the Manager as of the end of such fiscal quarter, and (iii) increased by the amount of any outstanding accrued and unpaid Parent Management Fees. The Company expensed $0 ~~and $0~~ in Parent Management Fees for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 and ~~2020, respectively.~~2021.

1847 Neese entered into an offsetting management services agreement with the Manager on March 3, 2017, ~~which is included in discontinued operations, 1847 Goedeker entered into an offsetting management services agreement with the Manager on April 5, 2019,~~ which is included in discontinued operations, 1847 Asien entered into an offsetting management services agreement with the Manager on May 28, 2020, 1847 Cabinet entered into an offsetting management services agreement with the Manager on August 21, 2020 (which was amended and restated on October 8, 2021) and 1847 Wolo entered into an offsetting management services agreement with the Manager on March 30, 2021. Pursuant to the offsetting management services agreements, 1847 Neese ~~appointed the Manager to provide certain services to it for a quarterly management fee equal to $62,500, 1847 Goedeker~~ appointed the Manager to provide certain services to it for a quarterly management fee equal to $62,500, 1847 Asien appointed the Manager to provide certain services to it for a quarterly management fee equal to the greater of $75,000 or 2% of adjusted net assets (as defined in the management services agreement), 1847 Cabinet appointed the Manager to provide certain services to it for a quarterly management fee equal to the greater of $75,000 or 2% of adjusted net assets (as defined in the management services agreement), which was increased to $125,000 or 2% of adjusted net assets on October 8, 2021, and 1847 Wolo appointed the Manager to provide certain services to it for a quarterly management fee equal to the greater of $75,000 or 2% of adjusted net assets (as defined in the management services agreement); provided, however, in each case that ~~(i) pro rated payments shall be made in the first quarter and the last quarter of the term, (ii)~~ if the aggregate amount of management fees paid or to be paid by such ~~subsidiaries,~~entities, together with all other management fees paid or to be paid ~~by all other subsidiaries of the Company~~ to the Manager ~~in each case, with respect to any fiscal year~~under other offsetting management services agreements, exceeds, or is expected to exceed, 9.5% of ~~the Company’s~~our gross income ~~with respect to such~~in any fiscal year or the Parent Management Fee in any fiscal quarter, then the management fee to be paid by such ~~subsidiaries for any remaining fiscal quarters in such fiscal year~~entities shall be reduced, on a pro rata basis determined by reference to the other management fees to be paid to the Manager ~~by all of the subsidiaries of the Company, until the aggregate amount of the~~under other offsetting management fee paid or to be paid by such subsidiaries, together with all other management fees paid or to be paid by all other subsidiaries of the Company to the Manager, in each case, with respect to such fiscal year, does not exceed 9.5% of the Company’s gross income with respect to such fiscal year, and (iii) if the aggregate amount the management fee paid or to be paid by such subsidiaries, together with all other management fees paid or to be paid by all other subsidiaries of the Company to the Manager, in each case, with respect to any fiscal quarter exceeds, or is expected to exceed, the Parent Management Fee with respect to such fiscal quarter, then the management fee to be paid by such subsidiaries 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 such subsidiaries, together with all other management fees paid or to be paid by all other subsidiaries of the Company 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.services agreements.

Each of these subsidiaries shall also reimburse the Manager for all of their costs and expenses which are specifically approved by their board of directors, including all out-of-pocket costs and expenses, which are actually incurred by the Manager or its affiliates on behalf of these subsidiaries in connection with performing services under the offsetting management services agreements.

~~The rights~~1847 Asien expensed management fees of $75,000 and $75,000 for the Manager to receive payments under this offsetting management services agreement with Wolo are subordinate to the rights of Sterling (as defined below) under separate a subordination agreement that the Manager entered into with Sterling onthree months ended March ~~30, 2021.~~31, 2022 and 2021, respectively.

1847 ~~Asien, 1847~~ Cabinet expensed management fees of $125,000 and $75,000 for the three months ended March 31, 2022 and 2021, respectively.
1847 Wolo expensed ~~$150,000, $150,000 and $75,833, respectively, in~~ management fees of $75,000 for the ~~six~~three months ended ~~June 30, 2021. In conjunction with the Wolo acquisition, the Manager received a fee of $110,000. 1847 Asien expensed $28,022 in management fees for the six months ended June 30, 2020.~~March 31, 2022.

On a consolidated basis, wethe Company expensed total management fees of ~~$485,833~~$275,000 and ~~$28,022~~$260,000 for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively.

Segments

The Financial Accounting Standards Board, ~~(“FASB”)~~or FASB, Accounting Standard Codification, ~~(“ASC”)~~or ASC, Topic 280, Segment Reporting, requires that an enterprise report selected information about reportable segments in its financial reports issued to its ~~stockholders. The Company has~~shareholders. As of March 31, 2022, we have three reportable segments - the retail and appliances segment, which is operated by Asien’s, the construction segment, which is operated by Kyle’s, High Mountain and Innovative Cabinets, and the automotive supplies segment, which is operated by Wolo.

The retail and appliances segment is comprised of the business of Asien’s, which is based in Santa Rosa, California, and provides a wide variety of appliance services including sales, delivery, installation, service and repair, extended warranties, and financing.

The construction segment is comprised of the ~~business~~businesses of Kyle’s, High Mountain and Innovative Cabinets. Kyle’s, which is based in Boise, Idaho, ~~and~~ provides a wide variety of construction services including custom design and build of kitchen and bathroom cabinetry, delivery, installation, service and repair, extended warranties, and financing. High Mountain, which is based in Reno, Nevada, specializes in all aspects of finished carpentry products and services, including doors, door frames, base boards, crown molding, cabinetry, bathroom sinks and cabinets, bookcases, built-in closets, and fireplace mantles, among others, as well as window installation. Innovative Cabinets, also based in Reno, Nevada, specializes in custom cabinetry and countertops.

The automotive supplies segment is comprised of the business of Wolo, which is based in Deer Park, ~~NY,~~New York, and designs and ~~manufactures~~sells horn and safety products (electric, air, truck, marine, motorcycle and industrial equipment), and offers vehicle emergency and safety warning lights for cars, trucks, industrial equipment and emergency vehicles.

~~The Company provides~~We provide general corporate services to ~~its~~our segments; however, these services are not considered when making operating decisions and assessing segment performance. These services are reported under “Corporate Services” below and these include costs associated with executive management, financing activities and public company compliance.

Discontinued Operations
On October 23, 2020, we distributed all of the shares of 1847 Goedeker that we held to our shareholders. As a result of this distribution, 1847 Goedeker is no longer a subsidiary of the Company. All financial information of 1847 Goedeker previously presented as part of retail and appliance services operations are classified as discontinued operations and not presented as part of continuing operations.

On April 19, 2021, we entered into a stock purchase agreement with Alan Neese and Katherine Neese, pursuant to which they purchased our 55% ownership interest in 1847 Neese for a purchase price of $325,000 in cash. As a result of this transaction, 1847 Neese is no longer a subsidiary of the Company. All financial information of 1847 Neese previously presented as part of land management services operations are classified as discontinued operations and not presented as part of continuing ~~operations.~~operations for the three months ended March 31, 2021.

Results of Operations

Comparison of the Three Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~

The following table sets forth key components of our results of operations during the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ both in dollars and as a percentage of our revenues.

Three Months Ended June 30,
2021 2020
Amount
% of
Revenues
Amount
% of
Revenues

Revenues
Furniture and appliances $ 3,352,618 50.4 % $ 1,185,980 100.00 %
Construction 1,314,968 19.8 % - -
Automotive supplies 1,980,368 29.8 % - -
Total revenues 6,647,954 100.0 % 1,185,980 100.00 %
Operating expenses
Cost of sales 4,514,789 67.9 % 923,893 77.9 %
Personnel costs 836,569 12.6 % 81,283 6.6 %
Depreciation and amortization 126,072 1.9 % 3,543
General and administrative 1,350,329 20.3 % 832,827 70.2 %
Total operating expenses 6,827,759 102.7 % 1,841,546 155.3 %
Net loss from operations (179,805 ) (2.7 )% (655,566 ) (55.3 )%
Other income (expense)
Financing costs (6,068 ) (0.1 )% (28,571 ) (2.4 )%
Gain on disposition of subsidiary 3,282,804 49.4 % - -
Other expense (3,539 ) (0.1 )% - -
Interest expense (130,444 ) (2.0 )% (4,423 ) (0.3 )%
Total other income (expense) 3,142,753 47.3 % (32,994 ) (2.8 )%
Net loss before income taxes 2,962,948 44.6 % (688,560 ) (58.1 )%
Income tax benefit (21,900 ) (3.2 )% (15,000 ) (1.3 )%
Net loss from continuing operations $ 2,984,848 47.8 % $ (673,560 ) (56.8 )%
Three Months Ended March 31,
2022 2021
Amount
% of
Revenues
Amount
% of
Revenues

Revenues $ 12,073,878 100.0 % $ 4,780,275 100.0 %
Operating expenses
Cost of sales 7,749,130 64.2 % 3,260,682 68.2 %
Personnel 1,577,700 13.1 % 484,672 10.1 %
Depreciation and amortization 511,371 4.2 % 122,106 2.6 %
General and administrative 2,166,207 17.9 % 1,324,196 27.7 %
Total operating expenses 12,004,408 99.4 % 5,191,656 108.6 %
Income (loss) from operations 69,470 0.6 % (411,381 ) (8.6 )%
Other income (expenses)
Other income 318 0.0 % - -
Interest expense (906,743 ) (7.5 )% (45,121 ) (0.9 )%
Gain on forgiveness of debt - - 360,302 7.5 %
Gain on sale of property and equipment 32,747 0.3 % - -
Loss on adjustment shares - - (757,792 ) (15.9 )%
Total other income (expense) (873,678 ) (7.2 )% (442,611 ) (9.3 )%
Net loss before income taxes (804,208 ) (6.7 )% (853,992 ) (17.9 )%
Income expense (123,000 ) (1.0 )% - -
Net loss from continuing operations $ (927,208 ) (7.7 )% $ (853,992 ) (17.9 )%

~~Total revenues~~Revenues. Our total revenues were ~~$6,647,954~~$12,073,878 for the three months ended ~~June 30, 2021,~~March 31, 2022, as compared to ~~$1,185,980~~$4,780,275 for the three months ended ~~June 30, 2020.~~March 31, 2021.

The retail and appliances segment generates revenue through the sales of home furnishings, including appliances and related products. Revenues from the retail and appliances segment ~~were $3,352,618~~decreased by $743,582, or 22.8%, to $2,520,784 for the three months ended ~~June 30, 2021, as compared to $1,185,980~~March 31, 2022 from $3,264,366 for the ~~period from May 29, 2020~~three months ended March 31, 2021. Such decrease was primarily due to ~~June 30, 2020.~~ongoing supply chain delays with appliance manufactures and the increased time it takes to receive products.

The construction segment generates revenue through the ~~construction and~~ sale of ~~custom~~finished carpentry products and services, including doors, door frames, base boards, crown molding, cabinetry, ~~including~~bathroom sinks and cabinets, bookcases, built-in closets, and fireplace mantles, among others, as well as kitchen ~~and bath cabinets, fireplace mantels and surrounds, entertainment systems and wall units, bookcases and office cabinets.~~countertops. Revenues from the construction segment ~~were $1,314,968~~increased by $6,395,194, or 421.9%, to $7,911,103 for the three months ended ~~June 30,~~March 31, 2022 from $1,515,909 for the three months ended March 31, 2021. Such increase was primarily due to the acquisitions of High Mountain and Innovative Cabinets, which were acquired in the fourth quarter of 2021. Excluding these acquisitions, revenues from the construction segment increased by $145,845, or 9.6%. Such increase was primarily due to increases in the average customer contract in the construction segment.

The automotive supplies segment generates revenue through the design ~~manufacture~~ and sale of horn and safety products (electric, air, truck, marine, motorcycle and industrial equipment), including vehicle emergency and safety warning lights for cars, trucks, industrial equipment and emergency vehicles. Revenues from the automotive supplies segment were ~~$1,980,368~~$1,641,991 for the three months ended ~~June 30, 2021.~~March 31, 2022.

Cost of sales. Our total cost of sales was ~~$4,514,789~~$7,749,130 for the three months ended ~~June 30, 2021,~~March 31, 2022, as compared to ~~$923,892~~$3,260,682 for the three months ended ~~June 30, 2020.~~March 31, 2021.

Cost of sales for the retail and appliances segment 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. Cost of sales for the retail and appliances segment ~~was $2,602,598~~decreased by $635,202, or 25.3%, to $1,871,450 for the three months ended ~~June 30, 2021, as compared to $923,892~~March 31, 2022 from $2,506,652 for the ~~period~~three months ended March 31, 2021. Such decrease was primarily due to corresponding the decrease in revenues from ~~May 29, 2020 to June 30, 2020.~~the retail and appliance segment. As a percentage of retail and appliances revenues, cost of sales for the retail and appliances segment was ~~77.6%~~74.2% and 76.8% for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 77.9% for the period from May 29, 2020 to June 30, 2020.~~respectively.

Cost of sales for the construction segment consists of finished goods, lumber, hardware and materials and plus direct labor and related costs, net of any material discounts from vendors. Cost of sales for the construction segment ~~was $720,466~~increased by $4,125,561, or 547.1%, to $4,879,591 for the three months ended ~~June 30,~~March 31, 2022 from $754,030 for the three months ended March 31, 2021. Such increase was primarily due to the acquisitions of High Mountain and Innovative Cabinets, which were acquired in the fourth quarter of 2021. Excluding these acquisitions, cost of sales for the construction segment increased by $151,350, or 20.1%. Such increase was primarily due to corresponding the increase in revenues from the construction segment, as well as increased product and delivery costs. As a percentage of construction revenues, cost of sales for the construction segment was ~~54.8%~~54.5% and 49.7% for the three months ended ~~June 30, 2021.~~March 31, 2022 and 2021, respectively.

Cost of sales for the automotive supplies segment consists of the costs of purchased finished goods plus freight and tariff costs. Cost of sales for the automotive supplies segment was ~~$1,191,726~~$998,089 for the three months ended ~~June 30, 2021.~~March 31, 2022. As a percentage of automotive supplies revenues, cost of sales for the automotive supplies segment was ~~60.2%~~60.8% for the three months ended ~~June 30, 2021.~~March 31, 2022.

Personnel costs. Personnel costs include employee salaries and bonuses plus related payroll taxes. It also includes health insurance premiums, 401(k) contributions, and training costs. Our total personnel costs were ~~$836,569~~$1,577,700 for the three months ended ~~June 30,~~March 31, 2021, as compared to ~~$81,284~~$484,672 for the three months ended ~~June 30, 2020.~~March 31, 2021.

Personnel costs for the retail and appliances segment ~~were $239,168~~decreased by $22,695, or 9.0%, to $230,388 for the three months ended ~~June 30, 2021, as compared to $81,284~~March 31, 2022 from $253,083 for the ~~period~~three months ended March 31, 2021. Such decrease was primarily due to decreased employee headcount as a result of decreased operations from ~~May 29, 2020 to June 30, 2020.~~the retail and appliances segment. As a percentage of retail and appliances revenue, personnel costs for the retail and appliances segment were ~~7.1%~~9.1% and 7.8% for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 6.9% for the period from May 29, 2020 to June 30, 2020.~~respectively.

Personnel costs for the construction segment ~~were $234,756~~increased by $902,621, or 389.8%, to $1,134,210 for the three months ended ~~June 30,~~March 31, 2022 from $231,589 for the three months ended March 31, 2021. Such increase was primarily due to the acquisitions of High Mountain and Innovative Cabinets, which were acquired in the fourth quarter of 2021. Excluding these acquisitions, personnel costs for the construction segment decreased by $26,290, or 11.4%. Such decrease was primarily due to decreased office personnel headcount in the construction segment. As a percentage of construction revenue, personnel costs for the construction segment were ~~17.9%~~12.4% and 15.3% for the three months ended ~~June 30, 2021.~~March 31, 2022 and 2021, respectively.

Personnel costs for the automotive supplies segment were ~~$362,644~~$300,328 for the three months ended ~~June 30, 2021.~~March 31, 2022. As a percentage of automotive supplies revenue, personnel costs for the automotive supplies segment were 18.3% for the three months ended ~~June 30, 2021.~~March 31, 2022.
Depreciation and amortization. Our total depreciation and amortization expense was ~~$126,073~~$511,371 for the three months ended ~~June 30, 2021,~~March 31, 2022, as compared to ~~$3,543~~$122,106 for the three months ended ~~June 30, 2020.~~March 31, 2022.

General and administrative expenses. Our general and administrative expenses consist primarily of professional advisor fees, stock-based compensation, bad debts reserve, rent expense, advertising, bank fees, and other expenses incurred in connection with general operations. Our total general and administrative expenses were ~~$1,350,329~~$2,166,207 for the three months ended ~~June 30, 2021,~~March 31, 2022, as compared to ~~$832,827~~$1,324,196 for the three months ended ~~June 30, 2020.~~March 31, 2021.

General and administrative expenses for the retail and appliances segment ~~were $396,654~~increased by $14,907, or 3.4%, to $449,494 for the three months ended ~~June 30, 2021, as compared to $350,459~~March 31, 2022 from $434,587 for the ~~period from May 29, 2020~~three months ended March 31, 2021. Such increase was primarily due to ~~June 30, 2020.~~increased marketing and professional fees. As a percentage of retail and appliances revenue, general and administrative expenses for the retail and appliances segment were ~~11.8%~~17.8% and 13.3% for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 29.55% for the period from May 29, 2020 to June 30, 2020.~~respectively.

General and administrative expenses for the construction segment ~~were $233,961~~increased by $901,247, or 418.6%, to $1,116,558 for the three months ended ~~June 30,~~March 31, 2022 from $215,311 for the three months ended March 31, 2021. Such increase was primarily due to the acquisitions of High Mountain and Innovative Cabinets, which were acquired in the fourth quarter of 2021. Excluding these acquisitions, general and administrative expenses for the construction segment increased by $45,097, or 20.9%. Such increase was primarily due to increased rent from a new facility lease, as well as increased professional fees in the construction segment. As a percentage of construction revenue, general and administrative expenses for the construction segment were ~~17.8%~~15.7% and 14.2% for the three months ended ~~June 30, 2021.~~March 31, 2022 and 2021, respectively.

General and administrative expenses for the automotive supplies segment were ~~$298,291~~$386,781 for the three months ended ~~June 30, 2021.~~March 31, 2022. As a percentage of automotive supplies revenue, general and administrative expenses for the automotive supplies segment were ~~15.1%~~23.6% for the three months ended ~~June 30, 2021.~~March 31, 2022.

General and administrative expenses for our holding company ~~decreased~~increased by ~~$60,945,~~$137,371, or ~~12.6%~~180.7%, to ~~$421,423~~$213,374 for the three months ended ~~June 30, 2021~~March 31, 2022 from ~~$482,368~~$76,003 for the three months ended ~~June 30, 2020. The decrease~~March 31, 2021. Such increase was primarily due to ~~a prior year stock compensation of $436,386 offset by an increase in~~increased corporate costs and professional ~~fees compared to the prior year.~~fees.

Total other income (expense). We had ~~$3,142,753~~$873,678 in total other income, net, for the three months ended June 30, 2021, as compared to other expense, net, of $688,560 for the three months ended June 30, 2020. Other income, net, for the three months ended June 30, 2021 consisted of a gain from disposition of subsidiary of $3,282,804, financing costs of $6,068, interest expense of $130,444, and other expense of $3,539, while total other expense, net, for the three months ended ~~June 30, 2020~~March 31, 2022, as compared to other expense, net, of $442,611 for the three months ended March 31, 2021. Other expense, net, for the three months ended March 31, 2022 consisted of ~~financing costs~~$906,743 of ~~$28,571~~interest expense, offset by a gain on disposal of property of equipment of $32,747 and other income of $318, while other expense, net, for the three months ended March 31, 2021 consisted of loss on adjustment shares of $757,792 and interest expense of ~~$4,423.~~$45,121, offset by a gain on forgiveness of debt of $360,302.
Income tax expense.  We had an income tax expense of $123,000 for the three months ended March 31, 2022, as compared to $0 for the three months ended March 31, 2021.

Net ~~income (loss)~~loss from continuing operations. As a result of the cumulative effect of the factors described above, our net ~~income~~loss from continuing operations was ~~$2,962,947~~$927,208 for the three months ended ~~June 30, 2021,~~March 31, 2022, as compared to a net loss of ~~$688,560~~$853,992 for the three months ended ~~June 30, 2020.~~
~~Comparison of Six Months Ended June 30, 2021 and 2020~~
~~The following table sets forth key components of our results of operations during the six months ended June 30, 2021 and 2020, both in dollars and as a percentage of our revenues.~~
Six Months Ended June 30,
2021 2020
Amount
% of
Revenues
Amount
% of
Revenues

Revenues
Furniture and appliances $ 6,616,984 57.9 % $ 1,185,980 100.00 %
Construction 2,830,877 24.8 % - -
Automotive supplies 1,980,368 17.3 % - -
Total revenues 11,428,229 100.0 % 1,185,980 100.00 %
Operating expenses
Cost of sales 7,775,471 68.0 % 923,892 77.9 %
Personnel costs 1,321,240 11.6 % 81,284 6.9 %
Depreciation and amortization 248,178 2.2 % 3,543 0.0 %
General and administrative 2,674,526 23.4 % 872,112 73.5 %
Total operating expenses 12,019,415 105.2 % 1,880,831 158.6 %
Net loss from operations (591,186 ) (5.2 )% (694,851 ) (58.6 )%
Other income (expense)
Financing costs (6,068 ) (0.1 )% (28,571 ) (2.4 )%
Gain of disposition of subsidiary 3,282,804 28.7 % - -
Gain on forgiveness of debt 360,302 3.2 % - -
Loss on adjustment shares (757,792 ) (6.6 )% - -
Other expense (3,539 ) 0.0 %
Interest expense (175,565 ) (1.5 )% (6,837 ) (0.6 )%
Total other income (expense) 2,700,142 23.6 % (35,408 ) (3.0 )%
Net loss before income taxes 2,108,956 18.5 % (730,259 ) (61.6 )%
Income tax benefit (21,900 ) (0.2 )% (15,000 ) 1.3 %
Net loss from continuing operations $ 2,130,856 18.6 % $ (715,259 ) (60.3 )%

~~Total revenues~~~~. Our total revenues were $11,428,229 for the six months ended June 30, 2021, as compared to $1,185,980 for the six months ended June 30, 2020.~~
~~Revenues from the retail and appliances segment were $6,616,984 for the three months ended June 30, 2021, as compared to $1,185,980 for the period from May 29, 2020 to June 30, 2020.~~
~~Revenues from the construction segment were $2,830,877 for the six months ended June 30,~~March 31, 2021.
~~Revenues from the automotive supplies segment were $1,980,368 for the period from April 1, 2021 to June 30, 2021.~~
~~Cost of sales~~~~. Our total cost of sales was $7,775,471 for the six months ended June 30, 2021, as compared to $923,892 for the six months ended June 30, 2020.~~
Cost of sales for the retail and appliances segment was $5,109,250 for the six months ended June 30, 2021, as compared to $923,892 for the period from May 29, 2020 to June 30, 2020. As a percentage of retail and appliances revenues, cost of sales for the retail and appliances segment was 77.2% for the six months ended June 30, 2021 and 77.9% for the period from May 29, 2020 to June 30, 2020.
Cost of sales for the construction segment was $1,474,496 for the six months ended June 30, 2021. As a percentage of construction revenues, cost of sales for the construction segment was 52.1% for the six months ended June 30, 2021.
Cost of sales for the automotive supplies segment was $1,191,726 for the period from April 1, 2021 to June 30, 2021. As a percentage of automotive supplies revenues, cost of sales for the automotive supplies segment was 60.2% for the period from April 1, 2021 to June 30, 2021.

~~Personnel costs~~~~. Our total personnel costs were $1,321,240 for the six months ended June 30, 2021, as compared to $81,284 for the six months ended June 30, 2020.~~
Personnel costs for the retail and appliances segment were $492,250 for the six months ended June 30, 2021, as compared to $81,284 for the period from May 29, 2020 to June 30, 2020. As a percentage of retail and appliances revenue, personnel costs for the retail and appliances segment were 7.4% for the six months ended June 30, 2021 and 6.85% for the period from May 29, 2020 to June 30, 2020.
Personnel costs for the construction segment were $466,346 for the six months ended June 30, 2021. As a percentage of construction revenue, personnel costs for the construction segment were 16.5% for the six months ended June 30, 2021.
Personnel costs for the automotive supplies segment were $362,644 for the period from April 1, 2021 to June 30, 2021. As a percentage of automotive supplies revenue, personnel costs for the automotive supplies segment were 18.3% for the period from April 1, 2021 to June 30, 2021.
~~Depreciation and amortization~~~~. Our total depreciation and amortization expense was $248,179 for the six months ended June 30, 2021, as compared to $3,543 for the six months ended June 30, 2020.~~
~~General and administrative expenses~~~~. Our total general and administrative expenses were $2,674,526 for the six months ended June 30, 2021, as compared to $872,112 for the six months ended June 30, 2020.~~
General and administrative expenses for the retail and appliances segment were $831,240 for the six months ended June 30, 2021, as compared to $350,459 for the period from May 29, 2020 to June 30, 2020. As a percentage of retail and appliances revenue, general and administrative expenses for the retail and appliances segment were 12.6% for the six months ended June 30, 2021 and 29.6% for the period from May 29, 2020 to June 30, 2020.
General and administrative expenses for the construction segment were $449,273 for the six months ended June 30, 2021. As a percentage of construction revenue, general and administrative expenses for the construction segment were 15.9% for the six months ended June 30, 2021.
General and administrative expenses for the automotive supplies segment were $896,586 for the period from April 1, 2021 to June 30, 2021. As a percentage of automotive supplies revenue, general and administrative expenses for the automotive supplies segment were 45.3% for the period from April 1, 2021 to June 30, 2021.
General and administrative expenses for our holding company decreased by $24,227, or 4.6%, to $497,426 for the six months ended June 30, 2021 from $521,653 for the six months ended June 30, 2020. The decrease was due to a prior year stock compensation of $436,386 offset by an increase in professional fees compared to the prior year.
~~Total other income (expense)~~. We had $2,700,142 in total other income, net, for the six months ended June 30, 2021, as compared to other expense, net, of $35,408 for the six months ended June 30, 2020. Other income, net, for the six months ended June 30, 2021 consisted of a gain on disposition of subsidiary of $3,282,804, a loss on adjustment shares of $757,792 and interest expense of $175,565, offset by a gain on forgiveness of debt of $360,302, while total other expense, net, for the six months ended June 30, 2020 consisted of financing costs of $28,571 and interest expense of $6,838.
~~Net income (loss) from continuing operations~~. As a result of the cumulative effect of the factors described above, our net income from continuing operations was $2,108,956 for the six months ended June 30, 2021, as compared to a net loss of $730,259 for the six months ended June 30, 2020.

Liquidity and Capital Resources

As of ~~June 30,~~March 31, 2021, we had cash and cash equivalents of ~~$1,477,524.~~$1,638,924. To date, we have financed our operations primarily through revenue generated from operations, cash proceeds from financing activities, borrowings, and equity contributions by our shareholders.

Although we do not believe that we will require additional cash to continue our operations over the next twelve months, ~~(i.e., we do not believe that there is a going concern issue),~~ we do believe additional funds are required to execute our business plan and our strategy of acquiring additional businesses. The funds required to execute our business plan will depend on the size, capital structure and purchase price consideration that the seller of a target business deems acceptable in a given transaction. The amount of funds needed to execute our business plan also depends on what portion of the purchase price of a target business the seller of that business is willing to take in the form of seller notes or our equity or equity in one of our subsidiaries. Given these factors, we believe that the amount of outside additional capital necessary to execute our business plan on the low end (assuming target company sellers accept a significant portion of the purchase price in the form of seller notes or our equity or equity in one of our subsidiaries) ranges between $100,000 to $250,000. If, and to the extent, that sellers are unwilling to accept a significant portion of the purchase price in seller notes and equity, then the cash required to execute our business plan could be as much as ~~$5,000,000.~~$5,000,000 . We will seek growth as funds become available from cash flow, borrowings, additional capital raised privately or publicly, or seller retained financing.

Our primary use of funds will be for future acquisitions, public company expenses including regular distributions to our shareholders, investments in future acquisitions, payments to the Manager pursuant to the management services agreement, potential payment of profit allocation to the Manager and potential put price to the Manager in respect of the allocation shares it owns. The management fee, expenses, potential profit allocation and potential put price are paid before distributions to shareholders and may be significant and exceed the funds we hold, which may require us to dispose of assets or incur debt to fund such expenditures. See Item 1. “~~Business—~~“Business—Our ~~Manager~~”Manager” included in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 for more information concerning the management fee, the profit allocation and put price.

The amount of management fee paid to the Manager by us is reduced by the aggregate amount of any offsetting management fees, if any, received by the Manager from any of our businesses. As a result, the management fee paid to the Manager may fluctuate from quarter to quarter. The amount of management fee paid to the Manager may represent a significant cash obligation. In this respect, the payment of the management fee will reduce the amount of cash available for distribution to shareholders.

The Manager, as holder of 100% of our allocation shares, is entitled to receive a twenty percent (20%) profit allocation as a form of preferred equity distribution, subject to an annual hurdle rate of eight percent (8%), as follows. Upon the sale of a company subsidiary, the Manager will be paid a profit allocation if the sum of (i) the excess of the gain on the sale of such subsidiary over a high water mark plus (ii) the subsidiary’s net income since its acquisition by ~~our company~~the Company exceeds the 8% hurdle rate. The 8% hurdle rate is the product of (i) a 2% rate per quarter, multiplied by (ii) the number of quarters such subsidiary was held by ~~our company,~~the Company, multiplied by (iii) the subsidiary’s average share (determined based on gross assets, generally) of our consolidated net equity (determined according to ~~GAAP~~United States generally accepted accounting principles with certain adjustments). In certain circumstances, after a subsidiary has been held for at least 5 years, the Manager may also trigger a profit allocation with respect to such subsidiary (determined based solely on the subsidiary’s net income since its acquisition). The amount of profit allocation may represent a significant cash payment and is senior in right to payments of distributions to our shareholders. Therefore, the amount of profit allocation paid, when paid, will reduce the amount of cash available to us for our operating and investing activities, including future acquisitions. See Item 1. “~~Business—~~“Business—Our Manager—Our Manager as an Equity Holder—Manager’s Profit ~~Allocation~~”Allocation” included in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 for more information on the calculation of the profit allocation.

Our operating agreement also contains a supplemental put provision, which gives the Manager the right, subject to certain conditions, to cause us to purchase the allocation shares then owned by the Manager upon termination of the management services agreement. The amount of put price under the supplemental put provision is determined by assuming all of our subsidiaries are sold at that time for their fair market value and then calculating the amount of profit allocation would be payable in such a case. If the management services agreement is terminated for any reason other than the Manager’s resignation, the payment to the Manager could be as much as twice the amount of such hypothetical profit allocation. As is the case with profit allocation, the calculation of the put price is complex and based on many factors that cannot be predicted with any certainty at this time. See Item 1. “~~Business—~~“Business—Our Manager—Our Manager as an Equity Holder—Supplemental Put ~~Provision~~”Provision” included in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 for more information on the calculation of the put price. The put price obligation, if the Manager exercises its put right, will represent a significant cash payment and is senior in right to payments of distributions to our shareholders. Therefore, the amount of put price will reduce the amount of cash available to us for our operating and investing activities, including future acquisitions.

Summary of Cash Flow

The following table provides detailed information about our net cash flow for the period indicated:
~~Cash Flow~~
Three Months Ended
March 31,
2022 2021
Net cash used in operating activities from continuing operations $ (536,260 ) $ (360,719 )
Net cash provided by (used in) investing activities from continuing operations (31,055 ) 945,704
Net cash provided by financing activities from continuing operations 822,706 173,559
Net increase in cash and cash equivalents from continuing operations 255,391 758,544
Cash and cash equivalents from continuing operations at beginning of period 1,383,533 1,380,349
Cash and cash equivalents from continuing operations at end of period $ 1,638,924 $ 2,138,893
Six Months Ended
June 30,
2021 2020
Net cash used in operating activities from continuing operations $ (60,575 ) $ (352,718 )
Net cash provided by (used in) investing activities from continuing operations (5,339,252 ) 1,268,285
Net cash provided by (used in) financing activities from continuing operations 5,497,002 (305,151 )
Net increase in cash and cash equivalents from continuing operations 97,175 610,416
Cash and cash equivalents at beginning of period 1,380,349 -
Cash and cash equivalent at end of period $ 1,477,524 $ 610,416

Net cash ~~provide by~~used in operating activities from continuing operations was ~~$60,575~~$536,260 for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, as compared to ~~used in $352,718~~$360,719 for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. For the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, the net ~~income~~loss from continuing operations of ~~$2,263,078,~~$927,208, changes in receivables of 539,818, inventory of $378,192, contract liabilities of $851,454, and operating lease liabilities of $83,729, offset by changes in depreciation and amortization of $511,371, amortization and of debt discounts of $249,374, amortization of right-of-use assets of $98,031, prepaid expenses and other current assets of $311,511, accounts payable and accrued expenses of $964,586, and customer deposits of $212,284, were the primary drivers of the net cash used in operating activities. For the three months ended March 31, 2021, the net loss from continuing operations of $755,811, changes in receivables of $124,065, inventory of $115,545, prepaids and other costs of $62,071, contract liabilities of $122,247, and non-cash forgiveness of debt of $360,302, offset by an ~~decrease in accounts receivable of $332,719, an increase~~changes in accounts payable and accrued expenses of ~~$395,335, an increase in~~$65,969, customer deposits of ~~$373,505, and a non-cash~~$328,580, depreciation and amortization of ~~$248,179,~~$122,106, and loss on adjustment shares of $757,792 in common ~~stock~~share issuances, offset by, an increase in inventory of $408,159, an increase in prepaids and other costs of $207,471, a decrease in contract liabilities of $17,563, an increase in deferred tax of $40,000, and non-cash forgiveness of debt of $360,302 and a gain of disposition of subsidiary of $3,282,804 and gain on discontinued operations of $132,223, were the primary drivers of the net cash provided by operating activities.

For the six months ended June 30, 2020, the net loss from continuing operations of $4,924,432, an increase in deferred taxes of $15,000, an increase in inventory of $167,754, an increase in prepaids and other costs of $317,461, an decrease in customer deposits of $43,923, offset by stock compensation of $436,386, amortization of financing related costs of $28,571, an decrease in accounts receivable of $102,651, an increase in accounts payable and accrued expenses of $421,282, were the primary drivers of the net cash used in operating activities. were the primary drivers of the net cash used in operating activities.
Net cash used in investing activities from continuing operations was ~~$5,339,252~~$31,055 for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, as compared to net cash provided by ~~$1,268,285~~investing activities from continuing operations of $945,704 for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. Net cash ~~provided by~~used in investing activities for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 consisted of purchases of property and equipment of $66,291 and investments in certificates of deposit of $262, offset by proceeds from the ~~sale~~disposal of ~~Neese of $325,000, offset net cash paid for the acquisition of Wolo of $5,455,476 and by the purchase~~property of equipment ~~and vehicles~~ of ~~$208,776,~~$35,498, while net cash provided by investing ~~activities~~actives for the three months ended March 31, 2021 consisted of net cash acquired from the acquisition of ~~Asien~~Wolo of ~~$1,268,285 for~~$1,094,524, offset by the ~~six months ended June 30, 2020.~~purchase of equipment and vehicles of $148,820.
Net cash provided by financing activities from continuing operations was ~~$5,497,002~~$822,706 for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, as compared to ~~$305,151~~$173,559 for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. Net cash provided by financing activities for the ~~six~~three months ended ~~June 30,~~March 31, 2022 consisted of net proceeds from the issuance of series B senior convertible preferred shares of $1,266,000, offset by repayments of notes payables and finance lease liabilities of $58,317, dividends on preferred shares of $135,215, and dividends on common shares of $249,762, while net cash provided by financing activities for the three months ended March 31, 2021 consisted of net proceeds of $3,000,000 from the sale of units described below, ~~proceeds from notes payable of $3,673,405,~~net line of credit proceeds ~~net~~ of $569,395 and proceeds from vehicle loans of $123,405, offset by the repayments of ~~$745,228, offset by the~~notes payable and finance lease liabilities of $143,432, payments to Wolo’s seller of ~~$998,191~~$3,000,000 and to Kyle’s seller of $33,630, payments of preferred dividends of ~~$365,658, repayments of notes payable of $358,922~~$176,950 and the payment of financing costs of $165,230. Net cash used in financing activities for the six months ended June 30, 2020 consisted of repayment of notes payable of $661,899 and net repayments of the lines of credit of $93,197 offset by proceeds from term loans of $475,000, $165,229.

Series A Unit Offering

On March 26, 2021, we sold an aggregate of 1,818,182 units, at a price of $1.65 per unit, for aggregate gross proceeds of $3,000,000. Each unit consists of one (1) series A senior convertible preferred share and a three-year warrant to purchase one (1) common share at an exercise price of $2.50 per common share (subject to adjustment), which may be exercised on a cashless basis under certain circumstances. As described in further detail below, we contributed to 1847 Wolo the $3,000,000 raised in this offering in exchange for 1,000 shares of 1847 Wolo’s series A preferred stock, at a price of $3,000 per share, to fund, in part, the planned acquisition of Wolo by 1847 Wolo.

In exchange for the consent of the holders of our outstanding series A senior convertible preferred shares to the issuance of these units at a lower purchase price than such holders paid for their shares, we issued an aggregate of 398,838 common shares to such holders.

Series B Unit Offering
On February 24, 2022, we sold an aggregate of 320,333 units, at a price of $3.00 per unit, for aggregate gross proceeds of $961,000. On March 24, 2022, we sold an additional 106,666 units for aggregate gross proceeds of $320,000. Each unit consists of one (1) series B senior convertible preferred share and a three-year warrant to purchase one (1) common share at an exercise price of $3.00 per share (subject to adjustment), which may be exercised on a cashless basis under certain circumstances.

Subscription Agreement

On March 29, 2021, we entered into a subscription agreement with 1847 Wolo, pursuant to which 1847 Wolo issued ~~to us~~ 1,000 shares of its series A preferred stock to us for gross proceeds to 1847 Wolo of $3,000,000. The series A preferred stock has no voting rights and is not convertible into the common stock or any other securities of 1847 Wolo. Dividends at the rate per annum of 16.0% of the stated value of $3,000 per share shall accrue on the series A preferred stock (subject to adjustment) and shall accrue from day to day, whether or not declared, and shall be cumulative. Accruing dividends are payable quarterly in arrears on each of the following dividend payment dates: January 15, April 15, July 15 and October 15 beginning on April 15, 2021. Upon any liquidation, dissolution or winding up of 1847 Wolo, before any payment shall be made to the holders of 1847 Wolo’s common stock, the series A preferred stock then outstanding shall be entitled to be paid out of the funds and assets available for distribution to 1847 Wolo’s stockholders an amount per share equal to the stated value of $3,000 per share, plus any accrued, but unpaid dividends.

Debt

~~1847 Holdings~~Secured Convertible Promissory Notes

On ~~January 3, 2018,~~October 8, 2021, we and each of our subsidiaries 1847 Asien, 1847 Wolo, 1847 Cabinet, Asien’s, Wolo, Kyle’s, High Mountain and Innovative Cabinets, entered into a note purchase agreement with two institutional investors, including Leonite, pursuant to which we issued ~~a grid~~to these purchasers secured convertible promissory ~~note to the Manager~~notes in the ~~initial~~aggregate principal amount of ~~$50,000.~~$24,860,000. The ~~note provided that we could request additional advances from the Manager up to~~notes contain an aggregate ~~additional amount~~original issue discount of ~~$150,000. On December 7, 2020, parties amended and restated~~$497,200. As a result, the ~~note for a new principal amount~~total purchase price was $24,362,800. After payment of ~~$56,900 and maturity date~~expenses of ~~December 7, 2021. Interest on~~$617,825, we received net proceeds of $23,744,975, of which $10,687,500 was used to fund the ~~note accrues on the unpaid~~cash portion of the ~~principal amount~~purchase price for the acquisition of High Mountain and Innovative Cabinets. In addition, as consideration for the financing, we granted the financing agent 750,000 warrants with a fair value of $956,526 and 7.5% interest in High Mountain and Innovative Cabinets which had a fair value of $1,146,803. The agent fees were reflected as a discount against the convertible note payable with the warrants being included in additional paid in capital and the ~~outstanding portion of all advances at a fixed rate of 8% per annum. If all or a portion~~equity interest being including within noncontrolling interest on the consolidated balance sheet. The remaining principal balance of the ~~principal amount or any advance under the note, or any~~notes at March 31, 2022 is $21,948,421, net of debt discounts of $2,911,579, and they have accrued interest ~~payable thereon is not paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall~~of $489,698.
The notes bear interest at a rate per annum equal to the greater of ~~12% per annum.~~(i) 4.75% plus the U.S. Prime Rate that appears in The Wall Street Journal from time to time or (ii) 8%; provided that, upon an event of default (as defined in the notes), such rate shall increase to 24% or the maximum legal rate. Payments of interest only, computed at such rate on the outstanding principal amount, will be due and payable quarterly in arrears commencing on January 1, 2022 and continuing on the first day of each calendar quarter thereafter through and including the maturity date, October 8, 2026.
We may voluntarily prepay the notes in whole or in part upon payment of a prepayment fee in an amount equal to 10% of the principal and interest paid in connection with such prepayment. In addition, immediately upon receipt by the ~~event that~~Company or any subsidiary of any proceeds from any issuance of indebtedness (other than certain permitted indebtedness), any proceeds of any sale or disposition by the Company or any subsidiary of any of the collateral or any of its respective assets (other than asset sales or dispositions in the ordinary course of business which are permitted by the note purchase agreement), or any proceeds from any casualty insurance policies or eminent domain, condemnation or similar proceedings, we ~~complete~~must prepay the notes in an amount equal to all such proceeds, net of reasonable and customary transaction costs, fees and expenses properly attributable to such transaction and payable by the Company or a ~~financing that includes an uplisting~~subsidiary in connection therewith (in each case, paid to non-affiliates).
The holders of the notes may, in their sole discretion, elect to convert any outstanding and unpaid principal portion of the notes, and any accrued but unpaid interest on such portion, into our common shares at a conversion price equal to $2.50 (subject to standard adjustments, including a ~~national exchange, then we must, contemporaneously with~~full ratchet antidilution adjustment); provided that the ~~closing~~notes contain certain beneficial ownership limitations.
Pursuant to the terms of ~~such financing transaction, repay~~ the ~~entire outstanding~~notes, until the date that is eighteen (18) months after the issuance date of the notes, the holders shall have the right, but not the obligation, to participate in any securities offering other than a permitted issuance (as defined in the note purchase agreement) in an amount of up to the original principal ~~outstanding advances, and accrued and unpaid interest on~~amount of the ~~note.~~ notes. In addition, the holders shall have the right of first refusal to participate in any issuance of indebtedness until the notes have been terminated; provided, however, that this right of first refusal shall not apply to permitted issuances.
The note ~~is unsecured~~purchase agreement and ~~contains~~the notes contain customary representations, warranties, affirmative and negative financial and other covenants and events of ~~default. As~~default for loans of ~~June 30, 2021~~this type. The notes are guaranteed by each subsidiary and ~~December 31, 2020, the Manager has advanced $56,900~~are secured by a first priority security interest in all of the ~~note~~assets of the Company and ~~we have accrued interest of $27,447 and $25,159, respectively.~~its subsidiaries.

~~1847 Asien/Asien’s~~
~~Arvest Bank~~
On July 10, 2020, Asien’s entered into a promissory note and security agreement with Arvest Bank for a revolving loan for up to $400,000. The loan matures on July 10, 2021 and bears interest at 5.25% per annum, subject to change in accordance with the Variable Rate (as defined in the promissory note and security agreement), the calculation for which is the U.S. Prime Rate plus 2%. Pursuant to the terms of the promissory note and security agreement, Asien’s is required to make monthly payments beginning on August 10, 2020 and until the maturity date, at which time all unpaid principal and interest will be due. Asien’s may prepay the loan in full or in part at any time without penalty. The promissory note and security agreement contains customary representations, warranties, affirmative and negative covenants and events of default for a loan of this type. The loan is secured by Asien’s inventory and equipment, accounts and other rights of payments, and general intangibles, as such terms are defined in the Uniform Commercial Code. The remaining principal balance of the note at June 30, 2021 is $100,000 and it has accrued interest of $2,564.
8%6% Subordinated ~~Amortizing~~Convertible Promissory ~~Note~~Notes

A portion of the purchase price for the acquisition of ~~Asien’s~~High Mountain and Innovative Cabinets on October 8, 2021 was paid by the issuance of 6% subordinated convertible promissory notes in the aggregate principal amount of $5,880,345 by 1847 Cabinet to the sellers of High Mountain and Innovative Cabinets. The remaining principal balance of the notes at March 31, 2022 is $4,931,608, net of debt discount at $948,738, and they have accrued interest of $196,468.
The notes bear interest at a rate of six percent (6%) per annum and are due and payable on October 8, 2024; provided that upon an ~~8% subordinated amortizing promissory note~~event of default (as defined in the notes), such interest rate shall increase to ten percent (10%) per annum. 1847 Cabinet may prepay the notes in whole or in part, without penalty or premium, upon ten (10) business days prior written notice to the holders of the notes.
At any time prior to October 8, 2022, the holders may, in their sole discretion, elect to convert up to twenty percent (20%) of the original principal amount of the notes and all accrued, but unpaid, interest into such number of shares of the common stock of 1847 Cabinet determined by dividing the amount to be converted by a conversion price determined by dividing (i) the fair market value of 1847 Cabinet (determined in accordance with the notes) by (ii) the number of shares of 1847 Cabinet outstanding on a fully diluted basis. In addition, on October 8, 2021, we entered into an exchange agreement with the holders, pursuant to which we granted them the right to exchange all of the principal amount and accrued but unpaid interest under the notes or any portion thereof for a number of ~~$200,000~~our common shares to be determined by dividing the amount to be converted by an exchange price equal to the higher of (i) the 30-day volume weighted average price for our common shares on the primary national securities exchange or over-the-counter market on which our common shares are traded over the thirty (30) trading days immediately prior to the applicable exchange date or (ii) $2.50 (subject to equitable adjustments for stock splits, stock combinations, recapitalizations and similar transactions).
The notes contain customary events of default, including in the event of a default under the secured convertible promissory notes described above. The rights of the holders to receive payments under the notes are subordinated to the rights of the purchasers under secured convertible promissory notes described above.
6% Amortizing Promissory Note
On July 29, 2020, 1847 Asien toentered into a securities purchase agreement with Joerg Christian Wilhelmsen and Susan Kay Wilhelmsen, as trustees of the Wilhelmsen Family Trust, U/D/T Dated May 1, 1992 (the “Asien’s Seller”). Interest on the outstanding principal amount will be payable quarterly at the rate of eight percent (8%) per annum. The outstanding principal amount of the note will amortize on a one-year straight-line basis in accordance with a specified amortization schedule, with all unpaid principal and accrued, but unpaid interest being fully due and payable on May 28, 2021. The note contains customary events of default. The right of the Asien’s Seller to receive payments under the note is subordinated to all indebtedness of 1847 Asien to banks, insurance companies and other financial institutions or funds, and federal or state taxation authorities. The remaining principal balance of the note and accrued interest was repaid in May 2021.
~~6% Amortizing Promissory Note~~
~~On July 29, 2020, 1847 Asien entered into a securities purchase agreement with the Asien’s Seller,~~, pursuant to which the Asien’s Seller sold to 415,000 of ~~the Company’s~~our common shares to 1847 Asien a purchase price of $2.50 per share. As consideration, 1847 Asien issued to the Asien’s Seller a two-year 6% amortizing promissory note in the aggregate principal amount of $1,037,500. ~~One-half~~On October 8, 2021, 1847 Asien and the Asien’s Seller entered into amendment no. 1 to securities purchase agreement to amend certain terms of the securities purchase agreement and the 6% amortizing promissory note. Pursuant to the amendment, the repayment terms of the 6% amortizing promissory note were revised so that one-half (50%) of the outstanding principal amount ~~of the note~~ ($518,750) and all accrued interest thereon ~~will~~shall be amortized on a two-year straight-line basis and is payable ~~quarterly. The~~quarterly in accordance with the amortization schedule set forth on Exhibit A to the amendment, except for the payments that were initially scheduled on January 1, 2022 and April 1, 2022, which were paid from the proceeds of the senior convertible promissory notes described above, and the second-half (50%) of the outstanding principal amount ~~of the note~~ ($518,750) ~~with~~and all accrued, but unpaid interest thereon ~~is due~~shall be paid on the second anniversary of the ~~note.~~date of the 6% amortizing promissory note, along with any other unpaid principal or accrued interest thereon. The note is unsecured and contains customary events of default. The remaining principal balance of the note at ~~June 30, 2021 is $850,172~~March 31, 2022 was $581,963 and it ~~has~~had accrued interest of ~~$17,894.~~

~~4.5% Unsecured Promissory Note~~
On October 30, 2017, Asien’s entered into a stock repurchase agreement with Paul A. Gwilliam and Terri L. Gwilliam, co-trustees of the Gwilliam Family Trust, pursuant to which Asien’s issued an unsecured promissory note in the aggregate principal amount of $540,000 for a term of 5 years. The note bears interest at the rate of the 4.25% per annum. The remaining balance of the note at June 30, 2021 is comprised of principal of $17,467.
~~Loans on Vehicles~~
Asien’s has entered into six retail installment sale contracts pursuant to which Asien’s agreed to finance its delivery trucks at rates ranging 3.98% to 6.99% with an aggregate remaining principal amount of $123,731 as of June 30, 2021.$40,880.

~~1847 Cabinet/Kyle’s~~
Vesting Promissory Note

A portion of the purchase price for the acquisition of Kyle’s on September 30, 2020 was paid by the issuance of a vesting promissory note by 1847 Cabinet to Stephen Mallatt, Jr. and Rita Mallatt ~~(the “Kyle’s Sellers”)~~ in the principal amount of $1,050,000, which increased to a principal amount of up to $1,260,000 pursuant to the vested percentage calculation described below. Payment of the principal and accrued interest on the note is subject to vesting as described below. The note bears interest on the vested portion of principal amount at the rate of eight percent (8%) per annum. To the extent vested, the vested portion of the principal and all accrued but unpaid interest on such vested portion of the principal shall be paid in one lump sum on the last day of the thirty-sixth (36th) month following the date of the note.

The vested principal of the note due at the maturity date shall be calculated each year based on the average annual consolidated EBITDA (as defined in the note) of 1847 Cabinet for each of the years ended December 31, 2020, 2021 and 2022. The EBITDA for each year shall be divided by $1.4 million multiplied by 100 to obtain the vested percentage. The vested principal for each year shall be equal to the vested percentage for that year multiplied by $350,000. To the extent that the vested percentage for the subject year is less than 80%, no portion of the note for that year shall vest. To the extent that the vested percentage for the subject year is equal to or greater than 120%, the vested principal shall be equal to $420,000 for that year and no more. For the year ended December 31, 2020, EBITDA of 1847 Cabinet was approximately $1,531,000, resulting in a vested amount of approximately $415,000. For the year ended December 31, 2021, EBITDA of 1847 Cabinet was approximately $427,504, resulting in an additional vested amount of approximately $602,204. As of ~~June 30, 2021,~~March 31, 2022, the outstanding balance of this note ~~is $498,979.~~was $1,001,183.

1847 Cabinet will have the right to redeem all but no less than all of the note at any time prior to the maturity date. If 1847 Cabinet elects to redeem the note, the redemption price will be payable in cash and is equal to the then outstanding vested portion of the principal plus any remaining unvested principal amount plus accrued but unpaid interest thereon (calculated over 36 months). For purposes of this redemption calculation, the “unvested principal amount” shall be $350,000 per year.

The note contains customary events of default. The right of the ~~Kyle’s Sellers~~holders to receive payments under the note is subordinated to all indebtedness of 1847 Cabinet, whether outstanding as of the closing date or thereafter created, to banks, insurance companies and other financial institutions or funds, and federal or state taxation authorities.

~~Intercompany Secured Promissory Note~~Financing Leases

~~In connection with the acquisition~~On February 14, 2019, High Mountain entered in an equipment financing lease to purchase a lift truck for $24,337, which matures on January 19, 2024. The balance payable was $9,792 as of March 31, 2022.
On April 10, 2019, High Mountain entered in an equipment financing lease to purchase equipment for $67,577, which matures on April 1, 2024. The balance payable was $30,961 as of March 31, 2022.
On June 2, 2020, High Mountain entered in an equipment financing lease to purchase office printers for $9,240, which matures on May 2, 2024. The balance payable was $5,187 as of March 31, 2022.
On May 6, 2021, Kyle’s ~~the Company provided 1847 Cabinet with the funds necessary~~entered in an equipment financing lease to ~~pay the cash portion of the~~ purchase ~~price and cover acquisition expenses. In connection therewith, on September 30, 2020, 1847 Cabinet issued a secured promissory note to the Company in the principal amount of $4,525,000,~~equipment for $276,896, which ~~was amended and restated~~matures on December ~~11, 2020. Pursuant~~1, 2027. The balance payable was $258,821 as of March 31, 2022.
On October 12, 2021, Kyle’s entered in an equipment financing lease to ~~such amendment and restatement, if and~~purchase equipment for $245,375, which matures on December 1, 2027. The balance payable was $228,842 as of March 31, 2022.
On March 28, 2022, Kyle’s entered in an equipment financing lease to the extent any amounts are owing under the units described above, due to a default or redemption, in addition to payment obligations due under the note, 1847 Cabinet is required to immediately make payments to the Company so that it may make any required payments in compliance with the terms of the units. The note bears interest at the rate of 16% per annum. The interest is cumulative and any unpaid accrued interest will compound on each anniversary date of the note. Interest is due and payable in arrearspurchase equipment for $245,395, which matures on January ~~15, April 15, July 15 and October 15 commencing~~28, 2028. The balance payable was $239,208 as of March 31, 2022.
On March 28, 2022, Kyle’s entered in an equipment financing lease to purchase equipment for $71,403, which matures on January ~~15, 2021. In the event payment~~28, 2028. The balance payable was $69,463 as of principal or interest due under the note is not made when due, giving effect to any grace period which may be applicable, or in the event of any other default (as defined in the note), the outstanding principal balance shall from the date of default immediately bear interest at the rate of 5% above the then applicable interest rate for so long as such default continues. The Company may demand payment in full of the note at any time, even if 1847 Cabinet has complied with all of the terms of the note; and the note shall be due in full, without demand, upon a third-party sale of all or substantially all the assets and business of 1847 Cabinet or a third-party sale or other disposition of any capital stock of 1847 Cabinet. 1847 Cabinet may prepay the note at any time without penalty. The note contains customary events of default, is guaranteed by Kyle’s and is secured by all of the assets of 1847 Cabinet and Kyle’s. The remaining principal balance of the note at June 30, 2021 is $4,885,129 and it has accrued interest of $194,870.March 31, 2022.

Vehicle Loans
~~Loans on Vehicles~~
Asien’s has entered into seven retail installment sale contracts pursuant to which Asien’s agreed to finance its delivery trucks at rates ranging from 3.74% to 8.72% with an aggregate remaining principal amount of $136,781 as of March 31, 2022.

Kyle’s has entered into two retail installment sale contracts pursuant to which Kyle’s agreed to finance its delivery trucks at rates ranging from 5.90% to 6.54% with an aggregate remaining principal amount of ~~$70,627~~$61,022 as of ~~June 30, 2021.~~
~~1847 Wolo/Wolo~~
~~6% Secured Promissory Note~~March 31, 2022.

~~A portion of the purchase price for Wolo was paid by the issuance of a 6% secured promissory note in the~~High Mountain has entered into twelve retail installment sale contracts pursuant to which it agreed to finance delivery trucks and equipment at rates ranging from 3.74% to 6.34% with an aggregate remaining principal amount of ~~$850,000 by 1847 Wolo to Barbara Solow and Stanley Solow (the “Wolo Sellers”). Interest on the outstanding principal amount will be payable quarterly at the rate~~$110,285 as of six percent (6%) per annum. The note matures on the 39-month anniversary following the closing of the acquisition, at which time the outstanding principal amount of the note, along with all accrued, but unpaid interest, shall be paid in one lump sum. 1847 Wolo has the right to prepay all or any portion of the note at any time prior to the maturity date without premium or penalty of any kind. The note contains customary events of default and is secured by all of the assets of Wolo; provided that the rights of the Wolo Sellers under the note are subordinate to the rights of Sterling National Bank under the credit agreement described below. The remaining principal balance of the note at June 30, 2021 is $850,000 and it has accrued interest of $8,500.
~~Credit Agreement and Notes~~March 31, 2022.

~~On March 30, 2021, 1847 Wolo and Wolo~~Innovative Cabinets has entered into ~~a credit agreement~~two retail installment sale contracts pursuant to which it agreed to finance delivery trucks and equipment at rates of 3.74% with ~~Sterling National Bank (“Sterling”) for (i) revolving loans in~~ an aggregate ~~principal amount that will not exceed the lesser of the borrowing base (as defined below) or $1,000,000 and (ii) a term loan in the~~remaining principal amount of ~~$3,550,000. The revolving loan is evidenced by a revolving credit note and the term loan is evidenced by a $3,550,000 term note. The remaining principal balance~~$18,633 as of the revolving credit note at June 30, 2021 is $946,309 and it has accrued interest of 3,500. The remaining principal balance of the term note at June 30, 2021 is $3,311,039, comprised of principal of $3,462,500, net of debt discount of $151,461, and it has accrued interest of $18,034.
The “borrowing base” means an amount equal to the sum of the following: (A) 80% of eligible accounts (as defined in the credit agreement) PLUS (B) the lesser of: (1) 50% percent of eligible inventory (as defined in the credit agreement) or (2) $400,000.00, MINUS (C) such reserves as Sterling may establish from time to time in its sole discretion. Sterling has the right from time to time, in its sole discretion, to amend, substitute or modify the percentages set forth in the definition of borrowing base and the definition(s) of eligible accounts and eligible inventory.
~~The revolving note matures on~~ March 29, 2022 and bears interest at a per annum rate equal to the greater of (i) the prime rate (as defined in the credit agreement) or (ii) 3.75%. The term note matures on April 1, 2024 and bears interest at a per annum rate equal to the greater of (x) the prime rate plus 3.00% or (y) 5.00%; provided that, upon an event of default, all loans, all past due interest and all fees shall bear interest at a per annum rate equal to the foregoing rate plus 5.00%. Interest accrued on the revolving note and the term note shall be payable on the first day of each month commencing on the first such day of the first month following the making of such revolving loan or term loan, as applicable.
With respect to the term loan, 1847 Wolo and Wolo must repay to Sterling on the first day of each month, (i) beginning on May 1, 2021 and ending on March 1, 2022, eleven (11) equal monthly principal payments of $43,750 each, (ii) beginning on April 1, 2022 and ending on March 1, 2024, twenty-four (24) equal monthly payments of $59,167 each and (iii) on April 1, 2024, a final principal payment in the amount of $1,648,742. In addition, beginning on June 1, 2022 and on each anniversary thereof thereafter until such time as the term loan is repaid in full, 1847 Wolo and Wolo must pay an additional principal payment equal to 50% of the excess cash flow (as defined in the credit agreement), if any. If Sterling has not received the full amount of any monthly payment on or before the date it is due (including as a result of funds not available to be automatically debited on the date on which any such payment is due), 1847 Wolo and Wolo must pay a late fee in an amount equal to six percent (6%) of such overdue payment. 1847 Wolo and Wolo may at any time and from time to time voluntarily prepay the revolving note or the term note in whole or in part.
The credit agreement contains customary representations, warranties, affirmative and negative financial and other covenants and events of default for loans of this type. Each of the revolving note and the term note is secured by a first priority security interest in all of the assets of 1847 Wolo and Wolo.

~~PPP Loans~~
On April 28, 2020, Asien’s received $357,500 in Paycheck Protection Program (“PPP”) loans from the United States Small Business Administration (the “SBA”) under the provisions of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”).  The PPP loans have two-year terms and bear interest at a rate of 1.0% per annum. Monthly principal and interest payments are deferred for six months after the date of disbursement. The PPP loans may be prepaid at any time prior to maturity with no prepayment penalties. The PPP loans contain events of default and other provisions customary for loans of this type. The PPP provides that the PPP loans may be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act. Asien’s used the proceeds from the PPP loans for qualifying expenses and to applied for forgiveness of the PPP loans in accordance with the terms of the CARES Act. On February 16, 2021, Asien’s received notice from Exchange Bank that its loan had been forgiven in its entirety by the SBA.31, 2022.

Total Debt

The following table shows aggregate figures for the total debt, net of discounts, described above that is coming due in the short and long term as of ~~June 30, 2021.~~March 31, 2022. See the above disclosures for more details regarding these loans.

Short-Term Long-Term Total Debt
Grid Promissory Note $ 56,900 $ - $ 56,900
Revolving Loan – Asien’s 100,000 - 100,000
8% Subordinated Amortizing Promissory Note – Asien’s Seller - - -
6% Amortizing Promissory Note – Asien’s Seller 263,149 587,023 850,172
4.5% Unsecured Promissory Note – Gwilliam Family Trust 17,467 - 17,467
Vehicle loans – Asien’s & Kyle’s 106,664 87,694 194,358
Vesting Promissory Note – Kyle’s Sellers* - 498,979 498,979
6% Secured Promissory Note – Wolo Sellers - 850,000 850,000
Revolving Credit Note – Sterling 946,309 - 946,309
Term Note – Sterling 571,251 2,739,787 3,311,038
Total $ 2,061,740 $ 4,763,483 $ 6,825,223
Short-Term Long-Term Total Debt
Secured Convertible Promissory Notes $ - $ 21,948,421 $ 21,948,421
6% Subordinated Convertible Promissory Notes - 4,931,608 4,931,608
6% Amortizing Promissory Note 581,961 - 581,961
Vesting Promissory Note - 1,011,183 1,011,183
Financing Leases 143,865 698,409 842,274
Vehicle Loans 104,322 222,399 326,721
Total $ 830,148 $ 28,812,020 $ 29,642,168

*net of valuation adjustment of $551,021
Contractual Obligations
~~Contractual Obligations~~
Our principal commitments consist mostly of obligations under the loans described above and other contractual commitments described below.

We have engaged the Manager to manage our day-to-day operations and affairs. Our relationship with the Manager will be governed principally by the following agreements:

● the management services agreement and offsetting management services agreements relating to the management services the Manager will perform for us and the businesses we own and the management fee to be paid to the Manager in respect thereof; and

● our operating agreement setting forth the Manager’s rights with respect to the allocation shares it owns, including the right to receive profit allocations from us, and the supplemental put provision relating to the Manager’s right to cause us to purchase the allocation shares it owns.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have 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 and Estimates

The ~~following discussion relates to critical accounting policies for our consolidated company. The~~ preparation of the unaudited condensed consolidated financial statements ~~in conformity with GAAP~~ requires our management to make ~~assumptions,~~ estimates and ~~judgments~~assumptions that affect the reported amounts ~~reported, including the notes thereto,~~of assets, liabilities, revenues and expenses, and related ~~disclosures~~disclosure of ~~commitments~~contingent assets and ~~contingencies, if any. We have identified certain accounting policies~~liabilities. On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on various other assumptions that are ~~significant~~believed to be reasonable under the ~~preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and~~circumstances. Actual 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~~
~~On January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~~~, which supersedes the revenue recognition requirements in ASC Topic 605,~~ ~~Revenue Recognition~~. This ASU is based on the principle that 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. This ASU 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’s adoption of this ASU resulted in no change to the Company’s results of operations or balance sheet.
~~Retail and Appliances Segment~~
Asien’s collects 100% of the payment for special-order models including tax and 50% of the payment for non-special orders from the customer at the time the order is placed. Asien’s does not incur incremental costs obtaining purchase orders from customers, however, if Asien’s did, because all Asien’s contracts are less than a year in duration, any contract costs incurred would be expensed rather than capitalized.
Performance Obligations – The revenue that Asien’s recognizes arises from orders it receives from customers. Asien’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, Asien’s products, which generally occurs when the customer assumes the risk of loss. The transfer of control generally occurs at the point of pickup, shipment, or installation. Once this occurs, Asien’s has satisfied its performance obligation and Asien’s recognizes revenue.
Transaction Price ‒ Asien’s agrees with customers on the selling price of each transaction. This transaction price is generally based on the agreed upon sales price. In Asien’s contracts with customers, it allocates the entire transaction price to the sales price, which is the basis for the determination of the relative standalone selling price allocated to each performance obligation. Any sales tax that Asien’s collects concurrently with revenue-producing activities are excluded from revenue.
Cost of revenue includes the cost of purchased merchandise plus freight and any applicable delivery charges from the vendor to Asien’s. Substantially all Asien’s sales are to individual retail consumers (homeowners), builders and designers. The large majority of customers are homeowners and their contractors, with the homeowner being key in the final decisions. Asien’s has a diverse customer base with no one client accounting for more than 5% of total revenue.
~~Construction Segment~~
~~Kyle’s generates revenues from providing cabinet design, construction and installation primary from cabinet-related products and supplies.~~
Kyle’s provides cabinet design, construction and installation services to customers with both residential and commercial projects. A majority of Kyle’s contracts are recurring work from a builder team. Kyle’s will provide pricing and work with individual homeowners, designers and builders to determine pricing options and upgrades to the base proposed contact pricing.
Performance Obligations - For substantially all landscaping construction contracts, the Company recognizes revenue over time, as performance obligations are satisfied, on a percentage completion basis on a total project cost basis. Typical contacts will last approximately 4-6 weeks from start to the substantial completion of the project.
Significant Judgments and Estimates - For cabinet construction contracts, measuring the percent completion on an individual project requires estimates obtained by discussions with field personnel. Estimates are also used in determining the total estimated total costs of a project. These estimates and assumptions are the best information management has at the time percent complete is calculated. The Company employs the same estimation methodology on a quarterly basis.
~~Accounts Receivable, Net ‒ Accounts receivable, net, are amounts due from customers where there is an unconditional right to consideration.~~

~~Automotive Supplies Segment~~
Wolo designs and manufactures horn and safety products (electric, air, truck, marine, motorcycle and industrial equipment), and offers vehicle emergency and safety warning lights for cars, trucks, industrial equipment and emergency vehicles. Focused on the automotive and industrial after-market, Wolo sells its products to big-box national retail chains, through specialty and industrial distributors, as well as on- line/mail order retailers and OEMs.
Wolo collects 100% of the payment for internet and phone orders, including tax, from the customer at the time the order is shipped. Customers placing orders with a purchase order through the EDI (Electronic Data Interface) are allowed to purchase on credit and make payment after receipt of product on the agreed upon terms.
Performance Obligations – The revenue that Wolo recognizes arises from orders it receives from contracts with customers. Wolo’s performance obligations under the customer orders correspond to each sale of merchandise that it makes to customers and each 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, Wolo’s products, which generally occurs when the customer assumes the risk of loss. The transfer of control generally occurs at the point of shipment of the order. Once this occurs, Wolo has satisfied its performance obligation and Wolo recognizes revenue.
Transaction Price ‒ Wolo agrees with customers on the selling price of each transaction. This transaction price is generally based on the agreed upon sales price. In Wolo’s contracts with customers, it allocates the entire transaction price to the sales price, which is the basis for the determination of the relative standalone selling price allocated to each performance obligation. Any sales tax that Wolo collects concurrently with revenue-producing activities are excluded from revenue.
~~Cost of sales includes the cost of purchased merchandise plus freight, warehouse salaries, tariffs, and any applicable delivery charges from the vendor to the company.~~
Warranties vary and are typically 90 days to consumers and manufacturing defect warranty to are available to resellers. At times, depending on the product, the company can also offer a warranty up to 12 months.
Disaggregated Revenue ‒ Wolo disaggregates revenue from contracts with customers by contract type, as it believes it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
~~Receivables~~
Receivables consist of credit card transactions in the process of settlement. Vendor rebates receivable represent amounts due from manufactures from whom the Company purchases products. 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.
~~Allowance for Credit Losses~~
~~Inventory~~these estimates.

For ~~Asien’s, inventory mainly consists~~a description of ~~appliances~~the accounting policies that, ~~are acquired~~in management’s opinion, involve the most significant application of judgment or involve complex estimation and which could, if different judgment or estimates were made, materially affect our reported financial position, results of operations, or cash flows, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” in our Annual Report on Form 10-K for ~~resale and is valued at~~ the average cost determined on a specific item basis. Inventory also consists of parts that are used in service and repairs and may or may not be charged to the customer depending on warranty and contractual relationship. Kyle’s typically orders inventory on a job by job basis and those jobs are put into production within hours of being received. The inventory in production is accounted for in the contact assets and liabilities and follows the percentage completion methodology. Inventories consisting of materials and supplies are stated at lower of costs or market. Wolo’s inventory consists of finished goods acquired for resale and is valued at the weighted-average cost determined on a specific item basis. The Company periodically evaluates the value of items in inventory and provides write-downs to inventory based on its estimate of market conditions. The Company estimated an obsolescence allowance of $160,824 and $14,824 at June 30, 2021 andfiscal year ended December 31, ~~2020, respectively.~~

~~Property and Equipment~~
~~Property and equipment is stated at cost. Depreciation of furniture, vehicles and equipment is calculated using the straight-line method over the estimated useful lives as follows:~~
Useful Life
(Years)
~~Building and Improvements~~ 4
~~Machinery and Equipment~~ ~~3-7~~
~~Trucks and Vehicles~~ ~~3-6~~
~~Goodwill and Intangible Assets~~
~~In applying the acquisition method of accounting, amounts assigned to identifiable assets and liabilities acquired were based on estimated fair values as of the date of acquisition,~~2021 filed 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 livesSecurities and are reviewed for impairment if indicators of impairment arise. Intangible assets with indefinite lives are tested for impairment within one year of acquisitions or annually as of December 1, and whenever indicators of impairment exist. The fair value of intangible assets are compared with their carrying values, and an impairment loss would be recognized for the amount by which a carrying amount exceeds its fair value.
~~Acquired identifiable intangible assets are amortized over the following periods:~~
~~Acquired intangible Asset~~
~~Amortization Basis~~
~~Expected Life~~
~~(years)~~
~~Customer-Related~~ ~~Straight-line basis~~ ~~5-15~~
~~Marketing-Related~~ ~~Straight-line basis~~ 5
~~Long-Lived Assets~~
The Company reviews its property and equipment and any identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The test for impairment is required to be performed by management at least annually. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted operating cash flow expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.
~~Fair Value of Financial Instruments~~
The Company’s financial instruments consist of cash and cash equivalents, certificates of deposit and amounts due to shareholders. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is basedExchange Commission (the “SEC”) on ~~the lowest level of input that is significant to the fair value measurement. The three-level hierarchy is as follows:~~
~~Level 1 –~~ ~~Quoted market prices in active markets for identical assets or liabilities.~~
~~Level 2 –~~ ~~Observable market-based inputs or inputs that are corroborated by market data.~~
~~Level 3 -~~ ~~Unobservable inputs that are not corroborated by market date.~~
~~The Company’s held to maturity securities are comprised of certificates of deposit.~~
~~Derivative Instrument Liability~~
~~The Company accounts for derivative instruments in accordance with ASC 815,~~ ~~Derivatives and Hedging~~, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts, and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are based on the exposures hedged.
~~Stock-Based Compensation~~
~~The Company records stock-based compensation in accordance with ASC 718,~~ ~~Compensation-Stock Compensation~~. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued and are recognized over the employees required service period, which is generally the vesting period.
~~Leases~~
~~The Company adopted ASC Topic 842,~~ ~~Leases~~, on January 1, 2019. The new leasing standard requires recognition of leases on the consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities represent the Company’s obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company used its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. A number of the lease agreements contain options to renew and options to terminate the leases early. The lease term used to calculate ROU assets and lease liabilities only includes renewal and termination options that are deemed reasonably certain to be exercised.
The Company recognized lease liabilities, with corresponding ROU assets, based on the present value of unpaid lease payments for existing operating leases longer than twelve months. The ROU assets were adjusted per ASC 842 transition guidance for existing lease-related balances of accrued and prepaid rent, and unamortized lease incentives provided by lessors. Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable lease payments are based occur. The Company has elected not to separate lease and non-lease components for all property leases for the purposes of calculating ROU assets and lease liabilities.March 31, 2022.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(e) of the Exchange Act, our management has carried out an evaluation, with the participation and under the supervision of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as of ~~June 30, 2021.~~March 31, 2022. Based upon, and as of the date of this evaluation, our chief executive officer and chief financial officer determined that, because of the material weaknesses described in Item 9A “Controls and Procedures” of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020,~~2021, which we are still in the process of remediating as of ~~June 30, 2021,~~March 31, 2022, our disclosure controls and procedures were not effective. Investors are directed to Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 for the description of these weaknesses.

Changes in Internal Control Over Financial Reporting

We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.

During its evaluation of the effectiveness of our internal control over financial reporting as of ~~June 30, 2021,~~March 31, 2022, our management identified the following material weaknesses:

● We did not have appropriate policies and procedures in place to evaluate the proper accounting and disclosures of key documents and agreements.

● We do not have adequate segregation of duties with our limited accounting personnel and rely upon outsourced accounting services.

● We do not have sufficient and skilled accounting personnel with an appropriate level of technical accounting knowledge and experience in the application of ~~accounting principles generally accepted in the United States~~GAAP commensurate with our financial reporting requirements.

As disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020,~~2021, our management has identified the steps necessary to address the material weaknesses, and in the ~~second~~first quarter of ~~2021,~~2022, we continued to implement the following remedial procedures:

● On ~~January 14,~~September 7, 2021, we hired ~~Jay Amond~~Vernice Howard as our Chief Financial Officer. ~~Mr. Amond~~Ms. Howard has ~~more than~~over 30 years of experience ~~with positions as chief executive officer, chief financial officer~~in the fields of finance and ~~controller of various private and public companies~~accounting and has significant GAAP and SEC reporting experience.

● We plan to make necessary changes by providing training to our financial team and our other relevant personnel on the GAAP accounting guidelines applicable to financial reporting requirements.

● ~~We have~~In the first quarter of 2022, we engaged ~~the~~a financial reporting consultant to provide outsourced accounting and financial reporting ~~services~~services.
● In the first quarter of ~~Carrollton Partners, LLC~~2022, we also put in place new policies and ~~we continue~~procedures at the subsidiary level to ~~use its services~~standardize accounting procedures across all business units. We also plan to hire additional skilled accounting personnel at the subsidiary companies to implement the policies and ~~those of other outsourced financial professionals for corporate and subsidiary financial reporting.~~procedures.

We intend to complete the remediation of the material weaknesses discussed above as soon as practicable but we can give no assurance that we will be able to do so. Designing and implementing an effective disclosure controls and procedures is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to devote significant resources to maintain a financial reporting system that adequately satisfies our reporting obligations. The remedial measures that we have taken and intend to take may not fully address the material weaknesses that we have identified, and material weaknesses in our disclosure controls and procedures may be identified in the future. Should we discover such conditions, we intend to remediate them as soon as practicable. We are committed to taking appropriate steps for remediation, as needed.

Other than in connection with the implementation of the remedial measures described above, there were no changes in our internal controls over financial reporting during the ~~second~~first quarter of ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II
OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, 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 will have a material adverse effect on our business, financial condition or operating results.

ITEM 1A. RISK FACTORS.

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

We have not sold any equity securities during three months ended ~~June 30, 2021~~March 31, 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 our common shares during the three months ended ~~June 30, 2021.~~March 31, 2022.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

We have no information to disclose that was required to be in a report on Form 8-K during the ~~second~~first quarter of fiscal ~~2021~~2022 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.

Exhibit No.
Description of Exhibit
3.1 Certificate of Formation of 1847 Holdings LLC (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed on February 7, 2014)
3.2 Second Amended and Restated Operating Agreement of 1847 Holdings LLC, dated January 19, 2018 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on January 22, 2018)
3.3 Amendment No. 1 to Second Amended and Restated Operating Agreement of 1847 Holdings LLC, dated August 5, 2021 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on August 11, 2021)
4.1 Amended and Restated ~~Certificate of~~Share Designation of Series A Senior Convertible Preferred Shares (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on April 1, 2021)
4.2 Amendment No. 1 to Amended and Restated Share Designation of Series A Senior Convertible Preferred Shares (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on October 5, 2021)
4.3 Share Designation of Series B Senior Convertible Preferred Shares (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on March 2, 2022)
4.4 Form of Common Share Purchase Warrant ~~dated~~relating to 2020 private placement (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on October 7, 2020)
4.5 Form of Common Share Purchase Warrant relating to 2021 private placement (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on April 1, 2021)
4.6 Form of Common Share Purchase Warrant relating to 2022 private placement (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on March ~~29,~~2, 2022)
4.7 Warrant for Common Shares issued by 1847 Holdings LLC to Leonite Capital LLC on October 8, 2021 (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on ~~April 1,~~October 13, 2021)
4.8 Warrant for Common Shares issued by 1847 Holdings LLC to Leonite Capital LLC on October 8, 2021 (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on October 13, 2021)
10.1 ~~Stock~~Form of Securities Purchase Agreement ~~dated April 19, 2021, among 1847 Holdings LLC, Alan Neese and Katherine Neese~~relating to 2022 private placement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on ~~April 23, 2021)~~March 2, 2022)
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 Section 906 of the Sarbanes-Oxley Act of 2002
32.2** Certifications of Principal Financial and Accounting Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS* Inline XBRL Instance Document ~~- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document~~
101.SCH* Inline XBRL Taxonomy Extension Schema Document
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document
104* Cover Page Interactive Data File ~~- the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the~~(formatted as Inline XBRL ~~document.~~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: ~~August~~May 16, ~~2021~~2022
1847 HOLDINGS LLC
/s/ Ellery W. Roberts
Name: Ellery W. Roberts
Title: Chief Executive Officer
(Principal Executive Officer)
/s/ ~~Jay Amond~~Vernice L. Howard
Name: ~~Jay Amond~~Vernice L. Howard
Title: Chief Financial Officer
(Principal Financial and Accounting Officer)

6037

0001599407 us-gaap:SeriesBPreferredStockMember us-gaap:PreferredStockMember 2020-12-31 iso4217:USD xbrli:shares

	June 30, 2021			December 31, 2020
	(unaudited)
ASSETS
Current Assets
Cash	$	1,477,524		$	976,538
Restricted cash		-			403,811
Accounts receivable, net		2,053,013			525,625
Inventories, net		4,552,179			2,022,754
Contract assets		55,579			70,230
Prepaid expenses and other current assets		970,207			550,964
Discontinued operations – current assets		-			1,324,608
TOTAL CURRENT ASSETS		9,108,502			5,874,530
Investments		276,465			276,270
Property and equipment, net		554,695			398,503
Operating lease right-of-use assets		770,720			357,208
Goodwill		9,238,781			5,989,817
Intangible assets, net		3,689,873			3,885,467
Deferred tax asset		104,000			-
Other assets		6,851			375
Discontinued operations – long-term assets		-			2,457,770
TOTAL ASSETS	$	23,749,887		$	19,239,940

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	3,061,830		$	2,558,559
Current portion of operating lease liability		196,198			66,803
Advances, related party		193,761			190,192
Line of credit		1,046,309			301,081
Due to seller		96,333			33,630
Note payable – related party		56,900			56,900
Notes payable – current portion		958,531			429,183
Contract liabilities		45,189			77,403
Customer deposits		3,744,462			3,370,957
Discontinued operations – current liabilities		-			999,122
TOTAL CURRENT LIABILITIES		9,399,513			8,083,830
Operating lease liability – long term, net of current portion		577,347			291,183
Notes payable – long term, net of current portion		4,763,483			1,637,310
Discontinued operations – long-term liabilities		-			5,981,467
TOTAL LIABILITIES	$	14,740,343		$	15,993,790
SHAREHOLDERS’ EQUITY
Allocation shares, 1,000 shares issued and outstanding		1,000			1,000
Series A convertible preferred stock, 4,450,460 and 2,632,278 outstanding as of June 30, 2021 and December 31, 2020, respectively		4,632,242			2,971,427
Distribution receivable		(2,000,000	)		(2,000,000	)
Common Shares, 500,000,000 shares authorized, 4,842,851 and 4,444,013 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		4,843			4,444
Additional paid-in capital		20,263,496			17,005,491
Accumulated deficit		(13,079,361	)		(13,856,973	)
TOTAL 1847 HOLDINGS SHAREHOLDERS’ EQUITY		9,822,220			4,125,389
NON-CONTROLLING INTERESTS		(812,676	)		(879,239	)
TOTAL SHAREHOLDERS’ EQUITY		9,009,544			3,246,150
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	23,749,887		$	19,239,940

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

Current Assets
Cash and cash equivalents	$	1,638,924		$	1,383,533
Investments		276,691			276,429
Receivables, net		3,918,814			3,378,996
Contract assets		69,735			88,466
Inventories, net		5,805,494			5,427,302
Prepaid expenses and other current assets		270,537			582,048
Total Current Assets		11,980,195			11,136,774

Property and equipment, net		1,920,967			1,695,311
Operating lease right-of-use assets		3,094,573			3,192,604
Goodwill		19,452,270			19,452,270
Intangible assets, net		11,079,205			11,443,897
Other long-term assets		85,691			85,691
TOTAL ASSETS	$	47,612,901		$	47,006,547

LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT

Current Liabilities
Accounts payable and accrued expenses	$	5,911,576		$	4,818,672
Contract liabilities		1,696,449			2,547,903
Customer deposits		3,677,543			3,465,259
Due to related parties		193,762			193,762
Current portion of operating lease liabilities		595,039			613,696
Current portion of finance lease liabilities		143,865			100,652
Current portion of notes payable, net		686,285			692,522
Total Current Liabilities		12,904,519			12,432,466

Operating lease liabilities, net of current portion		2,542,790			2,607,862
Finance lease liabilities, net of current portion		698,409			455,905
Notes payable, net of current portion		222,399			251,401
Convertible notes payable, net of current portion		26,880,029			26,630,655
Contingent note payable, net of current portion		1,001,183			1,001,183
Deferred tax liability, net		1,981,000			2,070,000
TOTAL LIABILITIES		46,230,329			45,449,472

Mezzanine Equity
Series A senior convertible preferred shares, 4,450,460 shares designated; 1,684,849 and 1,818,182 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively		1,415,100			1,655,404
Series B senior convertible preferred shares, 583,334 shares designated; 426,999 and 0 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively		1,113,650			-
TOTAL MEZZANINE EQUITY		2,528,750			1,655,404

Shareholders’ Deficit
Allocation shares, 1,000 shares authorized; 1,000 shares issued and outstanding as of March 31, 2022 and December 31, 2021		1,000			1,000
Common shares, $0.001 par value, 500,000,000 shares authorized; 4,995,232 and 4,842,851 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively		4,995			4,843
Distribution receivable		(2,000,000	)		(2,000,000	)
Additional paid-in capital		21,983,594			21,719,410
Accumulated deficit		(22,012,401	)		(20,754,394	)
TOTAL 1847 HOLDINGS SHAREHOLDERS’ DEFICIT		(2,022,812	)		(1,029,141	)
NON-CONTROLLING INTERESTS		876,634			930,812
TOTAL SHAREHOLDERS’ DEFICIT		(1,146,178	)		(98,329	)
TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT	$	47,612,901		$	47,006,547

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
REVENUES
Furniture and appliances	$	3,352,618		$	1,185,980		$	6,616,984		$	1,185,980
Construction		1,314,968			-			2,830,877			-
Automotive supplies		1,980,368			-			1,980,368			-
TOTAL REVENUE		6,647,954			1,185,980			11,428,229			1,185,980
OPERATING EXPENSES
Cost of sales		4,514,789			923,893			7,775,471			923,893
Personnel costs		836,569			81,283			1,321,240			81,283
Depreciation and amortization		126,072			3,543			248,178			3,543
General and administrative		1,350,329			832,827			2,674,526			872,112
TOTAL OPERATING EXPENSES		6,827,759			1,841,546			12,019,415			1,880,831
NET LOSS FROM OPERATIONS		(179,805	)		(655,566	)		(591,186	)		(694,851	)
OTHER INCOME (EXPENSE)
Gain on forgiveness of debt		-			-			360,302			-
Financing costs		(6,068	)		(28,571	)		(6,068	)		(28,571	)
Loss on adjustment shares issued		-			-			(757,792	)		-
Gain on disposition of subsidiary		3,282,804			-			3,282,804			-
Other income/(expense)		(3,539	)		-			(3,539	)		-
Interest expense		(130,444	)		(4,423	)		(175,565	)		(6,837	)
TOTAL OTHER INCOME (EXPENSE)		3,142,753			(32,994	)		2,700,142			(35,408	)
NET INCOME (LOSS) BEFORE INCOME TAXES		2,962,948			(688,560	)		2,108,956			(730,259	)
INCOME TAX BENEFIT		(21,900	)		(15,000	)		(21,900	)		(15,000	)
NET INCOME (LOSS) FROM CONTINUING OPERATIONS	$	2,984,848		$	(673,560	)	$	2,130,856		$	(715,259	)

NET LOSS FROM DISCONTINUED OPERATIONS
Income (loss) from discontinued operations before income taxes		61,895			(5,077,228	)		240,405			(7,643,810	)
Less provision for income taxes for discontinued operations		-			(938,953	)		-			(1,436,753	)
Net income (loss) from discontinued operations		61,895			(4,138,275	)		240,405			(6,207,057	)
Less net income (loss) from discontinued operations attributable to noncontrolling interests		27,853			(1,259,699	)		108,182			(1,997,884	)
Net income (loss) from discontinued operations attributable to 1847 Holdings common shareholders		34,042			(2,878,576	)		132,223			(4,209,173	)

NET INCOME (LOSS)	$	3,018,890		$	(3,552,136	)	$	2,263,079		$	(4,924,432	)
LESS NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTERESTS		(16,250	)		(9,439	)		(41,620	)		(9,439	)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	3,035,140		$	(3,542,697	)	$	2,304,699		$	(4,914,993	)
PREFERRED STOCK ACCRUED DIVIDEND		310,679			-			499,388			-
DEEMED DIVIDEND RELATED TO ISSUANCE OF PREFERRED STOCK		-			-			1,527,086			-
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS SHAREHOLDERS	$	2,724,461		$	(3,542,697	)	$	278,225		$	(4,914,993	)

Net income (loss) per common share from continuing operations: basic	$	0.61		$	(0.20	)	$	0.46		$	(0.22	)
Net income (loss) per common share from discontinued operations: basic	$	0.01		$	(1.21	)	$	0.05		$	(1.89	)
Net income (loss) per common share: basic	$	0.56		$	(1.04	)	$	0.49		$	(1.50	)
Net income (loss) per common share from continuing operations diluted	$	0.46		$	(0.20	)	$	0.34		$	(0.22	)
Net income (loss) per common share from discontinued operations: diluted	$	0.01		$	(1.21	)	$	0.04		$	(1.89	)
Net income (loss) per common share: diluted	$	0.42		$	(1.04	)	$	0.04		$	(1.49	)
Weighted-average common shares outstanding: basic		4,842,851			3,418,378			4,655,551			3,290,747
Weighted-average common shares outstanding:		6,421,982			3,418,378			6,234,683			3,290,747

	Allocation		Preferred Shares				Goedeker Subscription			Common Shares				Additional Paid-In			Accumulated			Non- Controlling			Shareholders’
	Shares		Shares		Amount		Receivable			Shares		Amount		Capital			Deficit			Interest			Deficit
BALANCE – January 1, 2021	$	1,000		2,632,278	$	2,971,427	$	(2,000,000	)		4,444,013	$	4,444	$	17,005,491		$	(13,856,973	)	$	(879,239	)	$	3,246,150
Issuance of preferred shares, net of fees		-		1,818,182		1,527,086		-			-		-		3,000,000			(1,527,086	)		-			3,000,000
Accrued dividend payable		-		-		11,759		-			-		-		(188,709	)		-			-			(176,950	)
Issuance of common adjustment shares		-		-		-		-			398,838		399		757,393			-			-			757,792
Net loss		-		-		-		-			-		-		-			(730,441	)		54,959			(675,482	)
BALANCE – March 31, 2021		1,000		4,450,460		4,510,272		(2,000,000	)		4,842,851		4,843		20,574,175			(16,114,500	)		(824,280	)		6,151,510
Accrued dividend payable		-		-		121,970		-			-		-		(310,679	)		-			-			(188,709	)
Net loss		-		-		-		-			-		-		-			3,035,139			11,604			3,046,743
BALANCE – June 30, 2021	$	1,000		4,450,460	$	4,632,242	$	(2,000,000	)		4,842,851	$	4,843	$	20,263,496		$	(13,079,361	)	$	(812,676	)	$	9,009,544

	Allocation		Common Shares				Additional Paid-In		Accumulated			Non- Controlling			Shareholders’
	Shares		Shares		Amount		Capital		Deficit			Interest			Deficit
BALANCE – January 1, 2020	$	1,000		3,165,625	$	3,165	$	442,014	$	(4,402,043	)	$	(42,930	)	$	(3,998,794	)
Net loss		-		-		-		-		(1,372,297	)		(738,185	)		(2,110,482	)
BALANCE – March 31, 2020		1,000		3,165,625		3,165		442,014		(5,774,340	)		(781,115	)		(6,109,276	)
Common shares issued in connection with acquisition		-		415,000		415		1,037,085		-			-			1,037,500
Common shares issued for service		-		100,000		100		244,900		-			-			245,000
Common shares issued upon partial conversion of convertible note payable		-		100,000		100		274,900		-			-			275,000
Warrants issued in connection with convertible note payable		-		-		-		448,211		-			118,500			566,711
Stock compensation								191,386								191,386
Net loss		-		-		-		-		(3,542,702	)		(1,269,137	)		(4,811,839	)
BALANCE – June 30, 2020	$	1,000		3,780,625	$	3,780	$	2,638,496	$	(9,317,042	)	$	(1,931,752	)	$	(8,605,518	)

	Three Months Ended March 31,
	2022			2021
Revenues	$	12,073,878		$	4,780,275

Operating Expenses
Cost of sales		7,749,130			3,260,682
Personnel		1,577,700			484,672
Depreciation and amortization		511,371			122,106
General and administrative		2,166,207			1,324,196
Total Operating Expenses		12,004,408			5,191,656

INCOME (LOSS) FROM OPERATIONS		69,470			(411,381	)

Other Income (Expenses)
Other income		318			-
Interest expense		(906,743	)		(45,121	)
Gain on forgiveness of debt		-			360,302
Gain on disposal of property and equipment		32,747			-
Loss on adjustment shares		-			(757,792	)
Total Other Income (Expenses)		(873,678	)		(442,611	)

NET LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(804,208	)		(853,992	)
INCOME TAX EXPENSE ON CONTINUING OPERATIONS		(123,000	)		-
NET LOSS FROM CONTINUING OPERATIONS	$	(927,208	)	$	(853,992	)

NET INCOME FROM DISCONTINUED OPERATIONS		-			178,510
NET INCOME FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS		-			80,329
NET INCOME FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO 1847 HOLDINGS COMMON SHAREHOLDERS		-			98,181

NET LOSS	$	(927,208	)		(755,811	)
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS		(54,178	)		(25,370	)
NET LOSS ATTRIBUTABLE TO 1847 HOLDINGS	$	(873,030	)	$	(730,441	)

PREFERRED SHARE DIVIDENDS		(135,215	)		(188,709	)
DEEMED DIVIDEND RELATED TO ISSUANCE OF PREFERRED SHARES		-			(1,527,086	)
NET LOSS ATTRIBUTABLE TO 1847 HOLDINGS COMMON SHAREHOLDERS	$	(1,008,245	)	$	(2,446,236	)

EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO 1847 HOLDINGS COMMON SHAREHOLDERS
LOSS PER COMMON SHARE FROM CONTINUING OPERATIONS – BASIC AND DILUTED	$	(0.21	)	$	(0.19	)
EARNINGS PER COMMON SHARE FROM DISCONTINUED OPERATIONS – BASIC AND DILUTED		-			0.02
LOSS PER COMMON SHARE – BASIC AND DILUTED	$	(0.21	)	$	(0.55	)

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC AND DILUTED		4,915,655			4,466,171

	Series A Senior Convertible Preferred Shares						Series B Senior Convertible Preferred Shares				Allocation		Common Shares				Distribution			Additional Paid-In		Accumulated			Non- Controlling			Total Shareholders’
	Shares			Amount			Shares		Amount		Shares		Shares		Amount		Receivable			Capital		Deficit			Interests			(Deficit)
Balance at December 31, 2021		1,818,182		$	1,655,404			-	$	-	$	1,000		4,842,851	$	4,843	$	(2,000,000	)	$	21,719,410	$	(20,754,394	)	$	930,812		$	(98,329	)
Issuance of common shares upon conversion of series A preferred shares		(133,333	)		(111,986	)		-		-		-		152,381		152		-			111,834		-			-			111,986
Issuance of series B convertible preferred shares and warrants		-			-			426,999		1,113,650		-		-		-		-			152,350		-			-			152,350
Dividends - common shares		-			-			-		-		-		-		-		-			-		(249,762	)		-			(249,762	)
Dividends - series A senior convertible preferred shares		-			(128,318	)		-		-		-		-		-		-			-		(121,455	)		-			(121,455	)
Dividends - series B senior convertible preferred shares		-			-			-		-		-		-		-		-			-		(13,760	)		-			(13,760	)
Net loss		-			-			-		-		-		-		-		-			-		(873,030	)		(54,178	)		(927,208	)
Balance at March 31, 2022		1,684,849		$	1,415,100			426,999	$	1,113,650	$	1,000		4,995,232	$	4,995	$	(2,000,000	)	$	21,983,594	$	(22,012,401	)	$	876,634		$	(1,146,178	)

	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021		Period from May 29 to June 30, 2020
Appliance sales	$	3,352,618	$	6,616,984	$	1,185,980
Other sales		-		-		-
Total revenue	$	3,352,618	$	6,616,984	$	1,185,980

	For the three months ended June 30,				For the six months ended June 30,
	2021		2020		2021		2020
Construction services	$	1,314,968	$	-	$	2,830,877	$	-
						-		-
Total revenue	$	1,314,968	$	-	$	2,830,877	$	-

	For the Three Months Ended June 30,
	2021		2020
Automotive supplies	$	1,980,368	$	-

Total revenue	$	1,980,368	$	-

	~~Useful Life~~ ~~(Years)~~
~~Building and Improvements~~		4
~~Machinery and Equipment~~		~~3-7~~
~~Trucks and Vehicles~~		~~3-6~~

	Three Months Ended June 30, 2021
	Retail & Appliances		Construction		Automotive Supplies		Corporate Services			Total
Revenue
Furniture and appliances	$	3,352,618	$	-	$	-	$	-		$	3,352,618
Construction		-		1,314,968		-		-			1,314,968
Automotive supplies		-		-		1,980,368		-			1,980,368
Total Revenue		3,352,618		1,314,968		1,980,368		-			6,647,954

Total cost of sales		2,602,597		720,466		1,191,726		-			4,514,789
Total operating expenses		679,826		550,786		660,935		421,423			2,312,970
Income (loss) from operations	$	70,195	$	43,716	$	127,707	$	(421,423	)	$	(179,805	)

	Three Months Ended June 30, 2020
	Retail & Appliances			Construction		Automotive Supplies		Corporate Services			Total
Revenue
Furniture and appliances	$	1,185,980		$	-	$	-	$	-		$	1,185,980
Construction		-			-		-		-			-
Automotive supplies		-			-		-		-			-
Total Revenue		1,185,980			-		-		-			1,185,980

Total cost of sales		923,892			-		-		-			923,892
Total operating expenses		435,286			-		-		482,368			917,654
Loss from operations	$	(173,198	)	$	-	$	-	$	(482,368	)	$	(655,566	)

	Six Months Ended June 30, 2021
	Retail & Appliances		Construction		Automotive Supplies			Corporate Services			Total
Revenue
Furniture and appliances	$	6,616,984	$	-	$	-		$	-		$	6,616,984
Construction		-		2,830,877		-			-			2,830,877
Automotive supplies		-		-		1,980,368			-			1,980,368
Total Revenue		6,616,984		2,830,877		1,980,368			-			11,428,229

Total cost of sales		5,109,250		1,474,496		1,191,726			-			7,775,471
Total operating expenses		1,412,170		1,075,118		1,259,230			497,426			4,243,944
Income (loss) from operations	$	95,564	$	281,263	$	(470,588	)	$	(497,426	)	$	(591,186	)

	Three Months Ended March 31, 2022
	Retail and Appliances		Construction		Automotive Supplies		Total
Revenues
Appliances	$	2,204,625	$	-	$	-	$	2,204,625
Appliance accessories, parts, and other		316,159		-		-		316,159
Automotive horns		-		-		1,199,856		1,199,856
Automotive lighting		-		-		442,135		442,135
Custom cabinets and countertops		-		4,167,801		-		4,167,801
Finished carpentry		-		3,743,302		-		3,743,302
Total Revenues	$	2,520,784	$	7,911,103	$	1,641,991	$	12,073,878

	Six Months Ended June 30, 2020
	Retail & Appliances			Construction		Automotive Supplies		Corporate Services			Total
Revenue
Furniture and appliances	$	1,185,980		$	-	$	-	$	-		$	1,185,980
Construction		-			-		-		-			-
Automotive supplies		-			-		-		-			-
Total Revenue		1,185,980			-		-		-			1,185,980

Total cost of sales		923,892			-		-		-			923,892
Total operating expenses		435,286			-		-		521,653			956,939
Loss from operations	$	(173,198	)	$	-	$	-	$	(521,653	)	$	(694,851	)

	Three Months Ended March 31, 2021
	Retail and Appliances		Construction		Automotive Supplies		Total
Revenues
Appliances	$	2,899,361	$	-	$	-	$	2,899,361
Appliance accessories, parts, and other		365,005		-		-		365,005
Automotive horns		-		-		-		-
Automotive lighting		-		-		-		-
Custom cabinets and countertops		-		1,515,909		-		1,515,909
Finished carpentry		-		-		-		-
Total Revenues	$	3,264,366	$	1,515,909	$	-	$	4,780,275

	June 30, 2021		December 31, 2020
Cash and cash equivalents
Operating accounts	$	1,477,524	$	976,538
Restricted accounts		-		403,811
Subtotal	$	1,477,524	$	1,380,349

Held to Maturity Investments
Restricted accounts - certificates of deposit (4 – 24-month maturities, FDIC insured)	$	276,465	$	276,270
Subtotal	$	276,465	$	276,270

TOTAL	$	1,753,989	$	1,656,619

	March 31, 2022			December 31, 2021
Equipment and machinery	$	1,127,897		$	808,592
Office furniture and equipment		107,903			105,203
Transportation equipment		901,426			864,121
Leasehold improvements		123,651			112,356
Total property and equipment		2,260,877			1,890,272
Less: Accumulated depreciation		(339,910	)		(194,961	)
Property and equipment, net	$	1,920,967		$	1,695,311

	March 31, 2022			December 31, 2021

Customer relationships	$	5,791,000		$	5,791,000
Marketing related		5,917,000			5,917,000
Technology related		623,000			623,000
Total intangible assets		12,331,000			12,331,000
Less: accumulated amortization		(1,251,795	)		(887,103	)
Intangible assets, net	$	11,079,205		$	11,443,897

Year Ending December 31,	Amount
2022 – remaining	$	1,094,088
2023		1,458,780
2024		1,458,750
2025		1,325,745
2026		1,157,523
Thereafter		4,584,319
Total	$	11,079,205

	March 31, 2022			December 31, 2021
Trade accounts receivable	$	3,235,644		$	2,691,702
Vendor rebates receivable		12,194			126,118
Credit card payments in process of settlement		-			116,187
Retainage		1,029,976			803,989
Total receivables		4,277,814			3,737,996
Allowance for doubtful accounts		(359,000	)		(359,000	)
Accounts receivable, net	$	3,918,814		$	3,378,996

	March 31, 2022		December 31, 2021
Trade accounts payable	$	3,810,165	$	3,117,825
Credit cards payable		80,536		52,300
Accrued payroll liabilities		397,717		263,590
Accrued interest		853,402		711,258
Accrued dividends		384,977		242,160
Other accrued liabilities		384,779		431,539
Total accounts payable and accrued expenses	$	5,911,576	$	4,818,672

	March 31,			March 31,
	2022			2021

Revenues	$	12,073,878		$	13,373,918
Net income (loss)		(927,208	)		317,547
Net loss attributable to 1847 Holdings common shareholders’		(1,008,245	)		(1,398,248	)
Loss per share attributable to 1847 Holdings common shareholders’:
Basic and diluted	$	(0.21	)	$	(0.29	)

	December 31, 2020
Current Assets – discontinued operations:
Cash	$	416,831
Accounts receivable, net		334,095
Inventories, net		305,080
Prepaid expenses and other current assets		268,602
Total current assets – discontinued operations		1,324,608

Noncurrent Assets – discontinued operations:
Property and equipment, net		1,925,844
Operating lease right of use assets		501,827
Goodwill		22,166
Intangible assets, net		7,933

Total noncurrent assets	$	2,457,770

Current liabilities – discontinued operations:
Accounts payable and accrued expenses	$	484,852
Current portion of operating lease liability		67,725
Notes payable – current portion		446,545
Total current liabilities – discontinued operations		999,122

Long term liabilities – discontinued operations:
Notes payable – long term, net of current portion		4,187,376
Accrued expenses – long term, related party		1,359,989
Financing lease liability, net of current portion		434,102
Total long term liabilities – discontinued operations	$	5,981,467

	Six Months Ended June 30, 2021			Six Months Ended June 30, 2020			April 1 to April 19, 2021 (Disposition Date)			Three Months Ended June 30, 2020
REVENUES
Services	$	612,862		$	1,213,026		$	138,066		$	766,927
Sales of parts and equipment		324,189			605,047			141,861			316,976
Furniture and appliances		-			24,962,209			-			15,285,031
TOTAL REVENUE		937,051			26,780,282			279,927			16,368,934
OPERATING EXPENSES
Cost of sales		298,050			21,325,217			128,129			12,958,779
Personnel costs		485,774			3,209,599			63,224			1,445,149
Depreciation and amortization		360,746			807,602			60,167			404,366
Fuel		112,746			186,199			12,988			82,435
General and administrative		290,872			4,091,564			42,556			2,283,060
TOTAL OPERATING EXPENSES		1,548,188			29,620,181			307,064			17,173,789
LOSS FROM OPERATIONS		(611,137	)		(2,839,899	)		(27,137	)		(804,855	)
OTHER INCOME (EXPENSE)
Financing costs and loss on early extinguishment of debt		(320	)		(1,234,245	)		-			(1,031,463	)
Gain on forgiveness of debt		380,247			-			-			-
Gain on sale of assets		548,723			37,767			99,389			37,767
Loss on acquisition receivable		-			(809,000	)		-			(809,000	)
Change in warrant liability		-			(2,127,656	)		-			(2,127,656	)
Interest expense		(78,308	)		(677,101	)		(10,357	)		(345,962	)
Other income (expense)		1,200			6,325			-			3,942
TOTAL OTHER INCOME (EXPENSE)		851,542			(4,803,910	)		89,032			(4,272,372	)
NET LOSS BEFORE INCOME TAXES		240,405			(7,643,809	)		61,895			(5,077,227	)
INCOME TAX BENEFIT		-			(1,436,752	)		-			(938,952	)
NET INCOME (LOSS) BEFORE NON-CONTROLLING INTERESTS		240,405			(6,207,057	)		61,895			(4,138,275	)
LESS NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTERESTS		108,182			(1,997,884	)		27,853			(1,259,699	)
NET INCOME (LOSS) ATTRIBUTABLE TO SHAREHOLDERS	$	132,223		$	(4,209,173	)	$	34,042		$	(2,878,576	)

	June 30, 2021			December 31, 2020
Parts and components	$	11,749		$	6,308
Appliances		2,067,272			2,029,270
Automotive		2,633,982			-
Subtotal		4,713,003			2,035,578
Allowance for inventory obsolescence		(160,824	)		(12,824	)
Inventories, net	$	4,552,179		$	2,022,754

Classification	June 30, 2021			December 31, 2020
Buildings and improvements	$	70,745		$	42,601
Equipment and machinery		217,921			173,792
Trucks and other vehicles		350,354			213,850
Total		639,020			430,243
Less: Accumulated depreciation		(84,325	)		(31,740	)
Property and equipment, net	$	554,695		$	398,503

2021 (remainder)	$	195,594
2022		391,188
2023		391,188
2024		391,173
2025		258,169
Thereafter		2,062,561
Total	$	3,689,873

Purchase Consideration at fair value:
Common shares	$	1,037,500
Notes payable		855,000
Due to seller		233,000
Amount of consideration	$	2,125,500

Assets acquired and liabilities assumed at fair value
Cash	$	1,501,285
Accounts receivable		235,746
Inventories		1,457,489
Other current assets		41,427
Property and equipment		157,052
Customer related intangibles		462,000
Marketing related intangibles		547,000
Accounts payable and accrued expenses		(280,752	)
Customer deposits		(2,405,703	)
Notes payable		(509,272	)
Other liabilities		(23,347	)
Net assets acquired	$	1,182,925

Total net assets acquired	$	1,182,925
Consideration paid		2,125,500
Goodwill	$	942,575