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: September 30, ~~2022~~2023

☐ 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: 001-41368

1847 HOLDINGS LLC

(Exact name of registrant as specified in its charter)

Delaware		38-3922937
(State or other jurisdiction of 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, former address and former fiscal year, if changed since last report)

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Shares		EFSH		NYSE American LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T 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 November ~~11, 2022,~~13, 2023, there were ~~4,079,137~~3,167,149 common shares of the registrant issued and outstanding.

1847 HOLDINGS LLC

Quarterly Report on Form 10-Q

Period Ended September 30, ~~2022~~2023

TABLE OF CONTENTS

~~TABLE OF CONTENTS~~

			PART I FINANCIAL INFORMATION
	~~FINANCIAL INFORMATION~~
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2530
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4346
Item 4.	Controls and Procedures	43

~~PART II~~

~~OTHER INFORMATION~~

~~Item 1.~~	~~Legal Proceedings~~	4547
~~Item 1A.~~			~~Risk Factors~~	45
PART II OTHER INFORMATION

Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4548
Item 3.	Defaults Upon Senior Securities	4548
Item 4.	Mine Safety Disclosures	4548
Item 5.	Other Information	4548
Item 6.	Exhibits	4648

~~PART I~~

~~FINANCIAL INFORMATION~~

PART I

FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS.

~~ITEM 1. FINANCIAL STATEMENTS.~~

1847 HOLDINGS LLC

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

		Page

Condensed Consolidated Balance Sheets as of September 30, ~~2022~~2023 (Unaudited) and December 31, ~~2021~~2022		2
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022 ~~and 2021~~ (Unaudited)		3
Condensed Consolidated Statements of ~~Mezzanine Equity and~~ Shareholders’ Equity ~~(Deficit)~~ for the Three and Nine Months Ended September 30, 2023 and 2022 ~~and 2021~~ (Unaudited)		4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 ~~and 2021~~ (Unaudited)		6
Notes to Condensed Consolidated Financial Statements (Unaudited)		7

1847 HOLDINGS LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2022			December 31, 2021			September 30, 2023			December 31, 2022
	(unaudited)						(Unaudited)
ASSETS

Current Assets
Cash and cash equivalents	$	1,584,499		$	1,383,533		$	2,056,751		$	1,079,355
Investments		276,956			276,429			277,816			277,310
Receivables, net		5,336,018			3,378,996			7,767,629			5,215,568
Contract assets		128,462			88,466			34,211			89,574
Inventories, net		4,756,603			5,427,302			13,957,173			4,184,019
Prepaid expenses and other current assets		862,177			582,048			1,274,079			379,875
Total Current Assets		12,944,715			11,136,774			25,367,659			11,225,701

Property and equipment, net		2,049,496			1,695,311			2,211,600			1,885,206
Operating lease right-of-use assets		3,037,676			3,192,604			4,310,916			2,854,196
Long-term deposits								153,735			82,197
Intangible assets, net								9,199,053			9,985,129
Goodwill		19,452,270			19,452,270			19,452,270			19,452,270
Intangible assets, net		10,349,821			11,443,897
Other long-term assets		82,566			85,691
TOTAL ASSETS	$	47,916,544		$	47,006,547		$	60,695,233		$	45,484,699

LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY (DEFICIT)
LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities
Accounts payable and accrued expenses	$	5,438,895		$	4,818,672		$	13,816,421		$	6,741,769
Contract liabilities		582,335			2,547,903			1,905,590			2,353,295
Customer deposits		2,976,666			3,465,259			2,565,877			3,059,658
Due to related parties		193,762			193,762			193,762			193,762
Current portion of operating lease liabilities		707,419			613,696			1,075,151			713,100
Current portion of finance lease liabilities		183,103			100,652			182,384			185,718
Current portion of notes payable, net		660,332			692,522			1,877,409			551,210
Current portion of contingent note payable		362,779			-
Current portion of convertible notes payable, net								1,447,427			-
Related party note payable								362,779			362,779
Derivative liabilities								1,322,624			-
Total Current Liabilities		11,105,291			12,432,466			24,749,424			14,161,291

Operating lease liabilities, net of current portion		2,419,449			2,607,862			3,366,728			2,237,797
Finance lease liabilities, net of current portion		831,570			455,905			649,186			784,148
Notes payable, net of current portion		175,921			251,401			303,498			144,830
Convertible notes payable, net of current portion		24,465,177			26,630,655
Contingent note payable, net of current portion		-			1,001,183
Convertible notes payable, net								25,245,621			24,667,799
Revolving line of credit, net								3,311,558			-
Deferred tax liability, net		573,000			2,070,000			584,000			599,000
TOTAL LIABILITIES		39,570,408			45,449,472			58,210,015			42,594,865

Mezzanine Equity
Series A senior convertible preferred shares		-			1,655,404
TOTAL MEZZANINE EQUITY		-			1,655,404

Shareholders’ Deficit
Series A senior convertible preferred shares, no par value, 4,450,460 shares designated; 1,593,940 and 1,818,182 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		1,338,746			-
Series B senior convertible preferred shares, no par value, 583,334 shares designated; 464,899 and zero shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		1,214,181			-
Allocation shares, 1,000 shares authorized; 1,000 shares issued and outstanding as of September 30, 2022 and December 31, 2021		1,000			1,000
Common shares, $0.001 par value, 500,000,000 shares authorized; 4,079,137 and 1,210,918 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		4,079			1,211
Shareholders’ Equity
Series A senior convertible preferred shares, no par value, 4,450,460 shares designated; 226,667 and 1,593,940 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively								190,377			1,338,746
Series B senior convertible preferred shares, no par value, 583,334 shares designated; 91,567 and 464,899 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively								240,499			1,214,181
Allocation shares, 1,000 shares authorized; 1,000 shares issued and outstanding as of September 30, 2023 and December 31, 2022								1,000			1,000
Common shares, $0.001 par value, 500,000,000 shares authorized; 3,088,319 and 174,249 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively								3,088			174
Distribution receivable		(2,000,000	)		(2,000,000	)		(2,000,000	)		(2,000,000	)
Additional paid-in capital		43,962,606			21,723,042			57,312,780			43,966,511
Accumulated deficit		(36,648,788	)		(20,754,394	)		(53,255,900	)		(41,919,277	)
TOTAL 1847 HOLDINGS SHAREHOLDERS’ EQUITY (DEFICIT)		7,871,824			(1,029,141	)
TOTAL 1847 HOLDINGS SHAREHOLDERS’ EQUITY								2,491,844			2,601,335
NON-CONTROLLING INTERESTS		474,312			930,812			(6,626	)		288,499
TOTAL SHAREHOLDERS’ EQUITY (DEFICIT)		8,346,136			(98,329	)
TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY (DEFICIT)	$	47,916,544		$	47,006,547
TOTAL SHAREHOLDERS’ EQUITY								2,485,218			2,889,834
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY							$	60,695,233		$	45,484,699

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

1847 HOLDINGS LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three Months Ended
September 30, Nine Months Ended
September 30,
2022 2021 2022 2021
Revenues $ 14,472,361 $ 6,735,028 $ 39,437,482 $ 18,163,257

Operating Expenses
Cost of sales 9,596,387 4,573,123 25,109,863 12,348,594
Personnel 3,182,286 876,991 6,446,145 2,198,231
Depreciation and amortization 516,414 299,477 1,526,759 547,655
General and administrative 2,688,877 1,844,979 7,451,079 4,519,504
Total Operating Expenses 15,983,964 7,594,570 40,533,846 19,613,984

LOSS FROM OPERATIONS (1,511,603 ) (859,542 ) (1,096,364 ) (1,450,727 )

Other Income (Expense)
Other income 2,756 3,539 3,431 -
Interest expense (1,875,757 ) (128,199 ) (3,714,623 ) (309,832 )
Gain on forgiveness of debt - - - 360,302
Gain on disposal of property and equipment 15,614
10,885
47,690
10,885

Gain on disposition of subsidiary - - - 3,282,804
Loss on extinguishment of debt (2,039,815 ) - (2,039,815 ) (757,792 )
Loss on write-down of contingent note payable (158,817 ) - (158,817 ) -
Total Other Income (Expense) (4,056,019 ) (113,775 ) (5,862,134 ) 2,586,367

NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (5,567,622 ) (973,317 ) (6,958,498 ) 1,135,640
INCOME TAX BENEFIT FROM CONTINUING OPERATIONS 1,095,000 - 1,411,000 21,900
NET INCOME (LOSS) FROM CONTINUING OPERATIONS (4,472,622 ) (973,317 ) (5,547,498 ) 1,157,540
NET INCOME FROM DISCONTINUED OPERATIONS - - - 240,405
NET INCOME (LOSS) $ (4,472,622 ) $ (973,317 ) $ (5,547,498 ) $ 1,397,945

NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS FROM CONTINUING OPERATIONS (399,106 ) (65,008 ) (456,500 ) (106,628 )
NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS FROM DISCONTINUED OPERATIONS - - - 108,182
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS $ (4,073,516 ) $ (908,309 ) $ (5,090,998 ) $ 1,396,391

NET INCOME (LOSS) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO 1847 HOLDINGS (4,073,516 ) (908,309 ) (5,090,998 ) 1,264,168
NET INCOME FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO 1847 HOLDINGS - - - 132,223
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS $ (4,073,516 ) $ (908,309 ) $ (5,090,998 ) $ 1,396,391

PREFERRED SHARE DIVIDENDS (353,816 ) (314,093 ) (697,312 ) (2,340,567 )
DEEMED DIVIDEND RELATED TO DOWN ROUND PROVISION IN WARRANTS (9,012,730 ) - (9,012,730 ) -
NET LOSS ATTRIBUTABLE TO 1847 HOLDINGS COMMON SHAREHOLDERS $ (13,440,062 ) $ (1,222,402 ) $ (14,801,040 ) $ (944,176 )

LOSS PER COMMON SHARE ATTRIBUTABLE TO 1847 HOLDINGS COMMON SHAREHOLDERS
BASIC
LOSS PER COMMON SHARE FROM CONTINUING OPERATIONS $ (4.51 ) $ (1.01 ) $ (8.08 ) $ (0.91 )
EARNINGS PER COMMON SHARE FROM DISCONTINUED OPERATIONS - - - 0.11
LOSS PER COMMON SHARE $ (4.51 ) $ (1.01 ) $ (8.08 ) $ (0.80 )
DILUTED
LOSS PER COMMON SHARE FROM CONTINUING OPERATIONS $ (4.51 ) $ (1.01 ) $ (8.08 ) $ (0.52 )
EARNINGS PER COMMON SHARE FROM DISCONTINUED OPERATIONS - - - 0.06
LOSS PER COMMON SHARE $ (4.51 ) $ (1.01 ) $ (8.08 ) $ (0.46 )

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
BASIC 2,979,949 1,210,918 1,832,076 1,179,873
DILUTED 2,979,949 1,210,918 1,832,076 2,065,215
Three Months Ended
September 30, Nine Months Ended
September 30,
2023 2022 2023 2022
Revenues $ 18,777,921 $ 14,472,361 $ 53,572,198 $ 39,437,482

Operating Expenses
Cost of sales 10,737,174 9,596,387 32,774,377 25,109,863
Personnel 4,006,639 3,365,592 9,960,863 7,159,442
Depreciation and amortization 625,967 516,414 1,818,373 1,526,759
General and administrative 4,195,261 2,505,571 10,715,638 6,737,782
Total Operating Expenses 19,565,041 15,983,964 55,269,251 40,533,846

LOSS FROM OPERATIONS (787,120 ) (1,511,603 ) (1,697,053 ) (1,096,364 )

Other Income (Expense)
Other income (expense) (187,200 ) 2,756 (135,232 ) 3,431
Interest expense (5,704,169 ) (1,875,757 ) (9,747,299 ) (3,714,623 )
Gain on disposal of property and equipment 18,026 15,614 18,026 47,690
Loss on extinguishment of debt - (2,039,815 ) - (2,039,815 )
Loss on change in fair value of warrant liability (27,900 ) - (27,900 ) -
Gain on change in fair value of derivative liabilities 425,977 - 425,977 -
Loss on write-down of contingent note payable - (158,817 ) - (158,817 )
Gain on bargain purchase - - 2,639,861 -
Total Other Expense (5,475,266 ) (4,056,019 ) (6,826,567 ) (5,862,134 )

NET LOSS BEFORE INCOME TAXES (6,262,386 ) (5,567,622 ) (8,523,620 ) (6,958,498 )
INCOME TAX BENEFIT (EXPENSE) 403,314 1,095,000 (258,007 ) 1,411,000
NET LOSS $ (5,859,072 ) $ (4,472,622 ) $ (8,781,627 ) $ (5,547,498 )

NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS (30,767 ) (399,106 ) (295,125 ) (456,500 )
NET LOSS ATTRIBUTABLE TO 1847 HOLDINGS $ (5,828,305 ) $ (4,073,516 ) $ (8,486,502 ) $ (5,090,998 )

PREFERRED SHARE DIVIDENDS (125,029 ) (353,816 ) (453,121 ) (697,312 )
DEEMED DIVIDENDS (28,000 ) (9,012,730 ) (2,397,000 ) (9,012,730 )
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (5,981,334 ) $ (13,440,062 ) $ (11,336,623 ) $ (14,801,040 )

LOSS PER COMMON SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS - BASIC AND DILUTED $ (3.01 ) $ (103.16 ) $ (14.01 ) $ (175.44 )
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED 1,987,394 130,281 809,417 84,367
The accompanying notes are an integral part of these condensed consolidated financial statements.

~~1847 HOLDINGS LLC~~
~~CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)~~
~~(UNAUDITED)~~
~~Three and Nine Months Ended September 30, 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 - $ - - $ - $ 1,000 1,210,918 $ 1,211 $ (2,000,000 ) $ 21,723,042 $ (20,754,394 ) $ 930,812 $ (98,329 )
Issuance of common shares upon conversion of series A preferred shares - - - - - 38,096 38 - 111,948 - - 111,986
Issuance of series B convertible preferred shares and warrants - - - - - - - - 152,350 - - 152,350
Dividends - common shares - - - - - - - - - (249,762 ) - (249,762 )
Dividends - series A senior convertible preferred shares - - - - - - - - - (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 - $ - - $ - $ 1,000 1,249,014 $ 1,249 $ (2,000,000 ) $ 21,987,340 $ (22,012,401 ) $ 876,634 $ (1,146,178 )
Issuance of series B convertible preferred shares and warrants - - - - - - - - 19,700 - - 19,700
Dividends - series A senior convertible preferred shares - - - - - - - - - (159,298 ) - (159,298 )
Dividends - series B senior convertible preferred shares - - - - - - - - - (48,983 ) - (48,983 )
Net loss - - - - - - - - - (144,452 ) (3,216 ) (147,668 )
Balance at June 30, 2022 - $ - - $ - $ 1,000 1,249,014 $ 1,249 $ (2,000,000 ) $ 22,007,040 $ (22,365,134 ) $ 873,418 $ (1,482,427 )
Issuance of warrants in connection with notes payable - - - - - - - - 402,650 - - 402,650
Issuance of common shares upon cashless exercise of warrants - - - - - 126,669 126 - (126 ) - - -
Issuance of common shares upon partial extinguishment of convertible notes payable - - - - - 800,000 800 - 4,639,200 - - 4,640,000
Issuance of common shares upon partial extinguishment of contingent note payable - - - - - 189,815 190 - 1,100,737 - - 1,100,927
Issuance of common shares upon settlement of debt - - - - - 285,067 285 - 1,653,104 - - 1,653,389
Reclassification of preferred shares from mezzanine equity to permanent equity 1,684,849 1,415,100 481,566 1,257,650 - - - - - - - 2,672,750
Issuance of common shares and warrants in connection with a public offering - - - - - 1,428,572 1,429 - 5,147,271 - - 5,148,700
Redemption of series A senior convertible preferred shares (90,909 ) (76,354 ) - - - - - - - (132,737 ) - (209,091 )
Redemption of series B senior convertible preferred shares - - (16,667 ) (43,469 ) - - - - - (14,032 ) - (57,501 )
Dividends - common shares - - - - - - - - - (843,592 ) - (843,592 )
Dividends - series A senior convertible preferred shares - - - - - - - - - (156,738 ) - (156,738 )
Dividends - series B senior convertible preferred shares - - - - - - - - - (50,309 ) - (50,309 )
Deemed dividends - down round provision in warrants - - - - - - - -
9,012,730

(9,012,730
) - -
Net loss - - - - - - - - - (4,073,516 ) (399,106 ) (4,472,622 )
Balance at September 30, 2022 1,593,940 $ 1,338,746 464,899 $ 1,214,181 $ 1,000 4,079,137 $ 4,079 $ (2,000,000 ) $ 43,962,606 $ (36,648,788 ) $ 474,312 $ 8,346,136

1847 HOLDINGS LLC
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY ~~(DEFICIT)~~
(UNAUDITED)

Three and Nine Months Ended September 30, ~~2021~~2023
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 Equity
Balance at December 31, 2022 1,593,940 $ 1,338,746 464,899 $ 1,214,181 $ 1,000 174,249 $ 174 $ (2,000,000 ) $ 43,966,511 $ (41,919,277 ) $ 288,499 $ 2,889,834
Issuance of common shares upon settlement of accrued series A preferred share dividends - - - - - 3,981 4 - 152,664 - - 152,668
Issuance of common shares and warrants in connection with a private debt offering - - - - - 16,625 17 - 1,360,345 - - 1,360,362
Issuance of common shares upon cashless exercise of warrants - - - - - 2,456 2 - (2 ) - - -
Deemed dividend from issuance of warrants to common shareholders - - - - - - - - 618,000 (618,000 ) - -
Deemed dividend from down round provision in warrants - - - - - - - - 1,217,000 (1,217,000 ) - -
Dividends - series A senior convertible preferred shares - - - - - - - - - (110,045 ) - (110,045 )
Dividends - series B senior convertible preferred shares - - - - - - - - - (52,820 ) - (52,820 )
Net income (loss) - - - - - - - - - 1,112,534 (65,053 ) 1,047,481
Balance at March 31, 2023 1,593,940 $ 1,338,746 464,899 $ 1,214,181 $ 1,000 197,311 $ 197 $ (2,000,000 ) $ 47,314,518 $ (42,804,608 ) $ 223,446 $ 5,287,480
Issuance of common shares upon settlement of accrued series A preferred share dividends - - - - - 7,483 8 - 111,261 - - 111,269
Issuance of common shares upon cashless exercise of warrants - - - - - 49,558 50 - (50 ) - - -
Issuance of common shares upon exercise of warrants - - - - - 20,260 20 - 5,044 - - 5,064
Issuance of common shares upon conversion of series B senior convertible preferred shares - - (85,000 ) (221,686 ) - 17,223 17 - 221,669 - - -
Deemed dividend from down round provision in warrants - - - - - - - - 534,000 (534,000 ) - -
Dividends - series A senior convertible preferred shares - - - - - - - - - (110,051 ) - (110,051 )
Dividends - series B senior convertible preferred shares - - - - - - - - - (55,176 ) - (55,176 )
Net loss - - - - - - - - - (3,770,731 ) (199,305 ) (3,970,036 )
Balance at June 30, 2023 1,593,940 $ 1,338,746 379,899 $ 992,495 $ 1,000 291,835 $ 292 $ (2,000,000 ) $ 48,186,442 $ (47,274,566 ) $ 24,141 $ 1,268,550
Issuance of common shares and prefunded warrants in public offering - - - - - 313,800 314 - 2,352,366 - - 2,352,680
Fair value of warrant liability recognized upon issuance of prefunded warrants - - - - - - - - (1,156,300 ) - - (1,156,300 )
Issuance of common shares upon exercise of prefunded warrants - - - - - 220,000 220 - (220 ) - - -
Extinguishment of warrant liability upon exercise of prefunded warrants - - - - - - - - 1,184,200 - - 1,184200
Issuance of warrants in connection with a private debt offering - - - - - - - - 633,552 - - 633,552
Issuance of common shares upon conversion of series A senior convertible preferred shares (1,367,273 ) (1,148,369 ) - - - 642,995 643 - 1,147,726 - - -
Issuance of common shares upon conversion of series B senior convertible preferred shares - - (288,332 ) (751,996 ) - 336,748 337 - 751,659 - - -
Issuance of common shares upon cashless exercise of warrants - - - - - 38,972 39 - (39 ) - - -
Issuance of common shares upon conversion of promissory notes - - - - - 1,196,819 1,197 - 3,993,355 - - 3,994,552
Issuance of common shares upon settlement of accrued series A preferred share dividends - - - - - 33,689 33 - 137,213 - - 137,246
Issuance of common shares upon settlement of accrued series B preferred share dividends - - - - - 13,461 13 - 54,826 - - 54,839
Deemed dividend from down round provision in warrants - - - - - - - - 28,000 (28,000 ) - -
Dividends - series A senior convertible preferred shares - - - - - - - - - (93,941 ) - (93,941 )
Dividends - series B senior convertible preferred shares - - - - - - - - - (31,088 ) - (31,088 )
Net loss - - - - - - - - - (5,828,305 ) (30,767 ) (5,859,072 )
Balance at September 30, 2023 226,667 $ 190,377 91,567 $ 240,499 $ 1,000 3,088,319 $ 3,088 $ (2,000,000 ) $ 57,312,780 $ (53,255,900 ) $ (6,626 ) $ 2,485,218

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 - $ - - $ - $ 1,000 1,111,208 $ 1,111 $ (2,000,000 ) $ 17,008,824 $ (13,856,973 ) $ (879,239 ) $ 274,723
Issuance of series A senior convertible preferred shares and warrants - - - - - - - - 3,000,000 (1,527,086 ) - 1,472,914
Issuance of common adjustment shares - - - - - 99,710 100 - 757,692 - - 757,792
Dividends - series A senior convertible preferred shares - - - - - - - - - (188,709 ) - (188,709 )
Net loss - - - - - - - - - (730,441 ) 54,959 (675,482 )
Balance at March 31, 2021 - $ - - $ - $ 1,000 1,210,918 $ 1,211 $ (2,000,000 ) $ 20,766,516 $ (16,303,209 ) $ (824,280 ) $ 1,641,238
Accrued dividend payable - - - - - - - - (310,679 ) - (310,679 )
Net loss - - - - - - - - - 3,035,140 11,603 3,046,743
Balance at June 30, 2021 - $ - - $ - $ 1,000 1,210,918 $ 1,211 $ (2,000,000 ) $ 20,766,516 (13,578,748 ) $ (812,677 ) $ 4,377,302
Accrued dividend payable - - - - - - - - - (314,093 ) - (314,093 )
Net loss - - - - - - - - - (908,309 ) (65,008 ) (973,317 )
Balance at September 30, 2021 - $ - - $ - $ 1,000 1,210,918 $ 1,211 (2,000,000 ) 20,766,516 (14,801,150 ) (877,685 ) 3,089,892
Three and Nine Months Ended September 30, 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’
Equity
Shares Amount Shares Amount Shares Shares Amount Receivable Capital Deficit Interests (Deficit)
Balance at December 31, 2021 - $ - - $ - $ 1,000 59,519 $ 59 $ (2,000,000 ) $ 21,724,194 $ (20,754,394 ) $ 930,812 $ (98,329 )
Issuance of common shares upon conversion of series A senior convertible preferred shares - - - - - 1,524 2 - 111,984 - - 111,986
Issuance of series B senior convertible preferred shares and warrants - - - - - - - - 152,350 - - 152,350
Dividends - common shares - - - - - - - - - (249,762 ) - (249,762 )
Dividends - series A senior convertible preferred shares - - - - - - - - - (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 - $ - - $ - $ 1,000 61,043 $ 61 $ (2,000,000 ) $ 21,988,528 $ (22,012,401 ) $ 876,634 $ (1,146,178 )
Issuance of series B convertible preferred shares and warrants - - - - - - - - 19,700 - - 19,700
Dividends - series A senior convertible preferred shares - - - - - - - - - (159,298 ) - (159,298 )
Dividends - series B senior convertible preferred shares - - - - - - - - - (48,983 ) - (48,983 )
Net loss - - - - - - - - - (144,452 ) (3,216 ) (147,668 )
Balance at June 30, 2022 - $ - - $ - $ 1,000 61,043 $ 61 $ (2,000,000 ) $ 22,008,228 $ (22,365,134 ) $ 873,418 $ (1,482,427 )
Issuance of warrants in connection with notes payable - - - - - - - - 402,650 - - 402,650
Issuance of common shares upon cashless exercise of warrants - - - - - 5,067 5 - (5 ) - - -
Issuance of common shares upon partial extinguishment of convertible notes payable - - - - - 32,000 32 - 4,639,968 - - 4,640,000
Issuance of common shares upon partial extinguishment of contingent note payable - - - - - 7,593 8 - 1,100,919 - - 1,100,927
Issuance of common shares upon settlement of debt - - - - - 11,403 11 - 1,653,378 - - 1,653,389
Issuance of common shares and warrants in connection with a public offering - - - - - 57,143 57 - 5,148,643 - - 5,148,700
Reclassification of preferred shares from mezzanine equity to permanent equity 1,684,849 1,415,100 481,566 1,257,650 - - - - - - - 2,672,750
Redemption of series A senior convertible preferred shares (90,909 ) (76,354 ) - - - - - - - (132,737 ) - (209,091 )
Redemption of series B senior convertible preferred shares - - (16,667 ) (43,469 ) - - - - - (14,032 ) - (57,501 )
Deemed dividends – down round provision in warrants - - - - - - - - 9,012,730 (9,012,730 ) - -
Dividends - common shares - - - - - - - - - (843,592 ) - (843,592 )
Dividends - series A senior convertible preferred shares - - - - - - - - - (156,738 ) - (156,738 )
Dividends - series B senior convertible preferred shares - - - - - - - - - (50,309 ) - (50,309 )
Net loss - - - - - - - - - (4,073,516 ) (399,106 ) (4,472,622 )
Balance at September 30, 2022 1,593,940 $ 1,338,746 464,899 $ 1,214,181 $ 1,000 174,249 $ 174 $ (2,000,000 ) $ 43,966,511 $ (36,648,788 ) $ 474,312 $ 8,346,136
The accompanying notes are an integral part of these condensed consolidated financial statements.

1847 HOLDINGS LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30, Nine Months Ended
September 30,
2022 2021 2023 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (5,547,498 ) $ 1,397,945
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Loss from discontinued operations - (240,405 )
Gain on disposition of subsidiary - (3,282,804 )
Gain on forgiveness of debt (360,302 )
Net loss $ (8,781,627 ) $ (5,547,498 )
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on bargain purchase (2,639,861 ) -
Gain on disposal of property and equipment (47,690 ) (10,885 ) (18,026 ) (47,690 )
Loss on adjustment shares 757,792
Loss on extinguishment of debt 2,039,815 - 2,039,815
Loss on write-down of contingent note payable 158,817 - 158,817
Loss on change in fair value of warrant liability 27,900 -
Gain on change in fair value of derivative liabilities (425,977 ) -
Deferred tax asset (liability) (1,497,000 ) (40,000 ) (15,000 ) (1,497,000 )
Bad debt expense 46,172 -
Inventory reserve 120,000 -
Depreciation and amortization 1,526,759 547,656 1,818,373 1,526,759
Amortization of debt discounts 1,697,572 27,537 3,879,558 1,697,572
Amortization of right-of-use assets 409,641 90,322 631,960 409,641
Changes in operating assets and liabilities:
Receivables (1,957,022 ) 271,395 (676,181 ) (1,957,022 )
Contract assets (39,996 ) - 55,363 (39,996 )
Inventories 670,699 (141,543 ) 104,178 670,699
Prepaid expenses and other current assets (280,129 ) 126,464 (814,427 ) (280,129 )
Other assets 3,125 3,262 3,125
Accounts payable and accrued expenses 1,689,185 439,723 2,526,198 1,689,185
Contract liabilities (1,965,568 ) (106,561 ) (447,705 ) (1,965,568 )
Customer deposits (488,593 ) 225,618 (493,781 ) (488,593 )
Due to related parties - 3,569
Operating lease liabilities (349,403 ) (86,867 ) (597,698 ) (349,403 )
Net cash used in operating activities from continuing operations (3,977,286 ) (381,346 )
Net cash used in operating activities from discontinued operations - (170,580 )
Net cash used in operating activities (3,977,286 ) (551,926 ) (5,697,319 ) (3,977,286 )

CASH FLOWS FROM INVESTING ACTIVITIES
Net paid in acquisitions - (5,378,346 )
Cash paid in acquisition, net of cash acquired (3,670,887 ) -
Purchases of property and equipment (255,930 ) (262,852 ) (230,152 ) (255,930 )
Proceeds from disposal of property and equipment 77,513 350,000 - 77,513
Investments in certificates of deposit (527 ) - (506 ) (527 )
Net cash used in investing activities from continuing operations (178,944 ) (5,291,198 )
Net cash provided by investing activities from discontinued operations - 644,303
Net cash used in investing activities (178,944 ) (4,646,895 ) (3,901,545 ) (178,944 )

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable 499,600 3,673,405
Net proceeds from issuance of common shares and warrants in public offering 5,148,700 -
Net proceeds from issuance of series A senior convertible preferred shares - 3,000,000
Net proceeds from issuance of common shares and warrants in connection with private debt offerings 5,767,518 -
Net proceeds from issuance of common shares and warrants in public offerings 2,352,680 5,148,700
Net proceeds from issuance of series B senior convertible preferred shares 1,429,700 - - 1,429,700
Proceeds from line of credit - 995,228
Net proceeds from notes payable 1,410,000 499,600
Net proceeds from revolving line of credit 3,086,227 -
Proceeds from exercise of warrants 5,064 -
Repayments of notes payable and finance lease liabilities (810,315 ) (584,012 ) (1,939,558 ) (810,315 )
Repayments to sellers - (977,685 )
Cash paid for financing costs - (165,230 )
Redemption of series A senior convertible preferred shares (209,091 ) - - (209,091 )
Redemption of series B senior convertible preferred shares (57,501 ) - - (57,501 )
Dividends on series A senior convertible preferred shares (437,491 ) (676,339 )
Dividends on series B senior convertible preferred shares (113,052 ) -
Dividends on common shares (1,093,354 ) -
Net cash provided by financing activities from continuing operations 4,357,196 5,265,367
Net cash used in financing activities from discontinued operations - (208,693 )
Accrued series A preferred share dividends paid - (437,491 )
Accrued series B preferred share dividends paid (105,671 ) (113,052 )
Accrued common share dividends paid - (1,093,354 )
Net cash provided by financing activities 4,357,196 5,056,674 10,576,260 4,357,196

NET CHANGE IN CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS 200,966 (407,177 )
NET CHANGE IN CASH AND CASH EQUIVALENT FROM DISCONTINUED OPERATIONS - 265,030
CASH AND CASH EQUIVALENTS AVAILABLE FROM DISCONTINUED OPERATIONS - (265,030 )
NET CHANGE IN CASH AND CASH EQUIVALENTS 977,396 200,966

CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS
CASH AND CASH EQUIVALENTS
Beginning of the period 1,383,533 1,380,349 1,079,355 1,383,533
End of the period $ 1,584,499 $ 973,172 $ 2,056,751 $ 1,584,499

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest $ 1,576,964 $ 139,016 $ 3,217,831 $ 1,576,964
Cash paid for income taxes $ - $ - $ 141,135 $ -

NON-CASH INVESTING AND FINANCING ACTIVITIES
Net assets acquired in the acquisition of ICU Eyewear $ 7,139,861 $ -
Deemed dividend from issuance of warrants to common shareholders $ 618,000 $ -
Deemed dividend from down round provision in warrants $ 1,779,000 $ 9,012,730
Accrued dividends on series A preferred shares $ 314,037 $ -
Accrued dividends on series B preferred shares $ 139,084 $ -
Issuance of common shares upon settlement of accrued series A dividends $ 401,183 $ -
Issuance of common shares upon settlement of accrued series B dividends $ 54,839 $ -
Issuance of common shares upon conversion of series A preferred shares $ 111,986 $ - $ 1,148,369 $ 111,986
Issuance of common shares upon conversion of series B preferred shares $ 973,682 $ -
Issuance of common shares upon cashless exercise of warrants $ 126 $ - $ 91 $ 5
Deemed dividend from down round provision in warrants $ 9,012,730 $ -
Debt discounts on notes payable $ 4,705,971 $ 503,050
Fair value of derivative liabilities recognized upon issuance of notes payable $ 2,613,177 $ -
Fair value of warrant liability recognized upon issuance of prefunded warrants $ 1,156,300 $ -
Issuance of common shares upon exercise of prefunded warrants $ 220 $ -
Extinguishment of warrant liability upon exercise of prefunded warrants $ 1,184,200 $ -
Reclassification of notes payable to convertible notes payable upon default $ 3,329,702 $ -
Issuance of common shares upon conversion of convertible notes payable and accrued interest $ 3,129,976 $ -
Settlement of revolving line of credit and accrued interest through the issuance of a new revolving line of credit $ 2,003,985 $ -
Financed purchases of property and equipment $ 568,764 $ - $ 256,843 $ 568,764
Debt discount on notes payable issued with warrants $ 503,050 $ -
Operating lease right-of-use asset and liability initial measurement $ 2,088,680 $ -
Operating lease right-of-use asset and liability remeasurement $ 254,713 $ - $ - $ 254,713
The accompanying notes are an integral part of these condensed consolidated financial statements.

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
~~SEPTEMBER 30, 2022~~
~~(UNAUDITED)~~
NOTE 1—1—BASIS OF PRESENTATION AND OTHER INFORMATION

The accompanying unaudited condensed consolidated financial statements of 1847 Holdings LLC (the “Company,” “we,” “us,” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q of Regulation S-X. They do not include all the information and footnotes required by GAAP for complete financial statements. The December 31, ~~2021~~2022 consolidated balance sheet data was 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 the information disclosed in the notes to the consolidated financial statements for the year ended December 31, ~~2021~~2022 included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on ~~March 31, 2022.~~April 11, 2023. The interim unaudited condensed consolidated financial statements should be read in conjunction with those consolidated financial statements included in the Form 10-K. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, consisting solely of normal recurring adjustments, have been made. Operating results for the three and nine months ended September 30, ~~2022~~2023 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2022.~~2023.
Reverse Share Split

On ~~August 2, 2022,~~September 11, 2023, we effected a ~~1-for-4~~1-for-25 reverse split of our outstanding common shares. All outstanding common shares and warrants were adjusted to reflect the ~~1-for-4~~1-for-25 reverse split, with respective exercise prices of the warrants proportionately increased. The outstanding convertible notes and series A and B senior convertible ~~senior~~ preferred shares conversion prices were adjusted to reflect a proportional decrease in the number of common shares to be issued upon conversion.

All share and per share data throughout these condensed consolidated financial statements have been retroactively adjusted to reflect the reverse share split. The total number of authorized common shares did not change. As a result of the reverse common share split, an amount equal to the decreased value of common shares was reclassified from “common shares” to “additional paid-in capital.”
Warrant liability

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants and applicable authoritative guidance in ASC 480, ~~Reclassifications~~Distinguishing Liabilities from Equity (“ASC 480”), and ASC 815-40, Contracts in Entity’s Own Equity (“ASC 815-40”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for equity classification under ASC 815-40, including whether the warrants are indexed to the Company’s own shares and whether the events where holders of the warrants could potentially require net cash settlement are within the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

Embedded Derivative Liabilities
The Company evaluates the embedded features in accordance with ASC 480, and ASC 815, Derivatives and Hedging Activities (“ASC 815”). Certain conversion options and redemption features are required to be bifurcated from their host instrument and accounted for as free-standing derivative financial instruments should certain criteria be met. The Company applies significant judgment to identify and evaluate complex terms and conditions of all of its financial instruments, including notes payable and warrants, to determine whether such instruments are derivatives or contain features that qualify as embedded derivatives. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract and the features of the derivatives. Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the consolidated statement of operations each period.
Reclassifications
Certain reclassifications within ~~property and equipment, notes payable, preferred shares, and~~ operating expenses have been made to the prior period’s financial statements to conform to the current period financial statement presentation. There is no impact in total to the results of operations and cash flows in all periods presented.
~~Sequencing~~
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 directors, or to compensate grantees in a share-based payment arrangement, are not subject to the sequencing policy.

~~1847 HOLDINGS LLC~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~NOTE 2
~~SEPTEMBER 30, 2022~~
~~(UNAUDITED)~~
~~NOTE 2—~~—RECENT ACCOUNTING ~~PRONOUCEMENTS~~PRONOUNCEMENTS
The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”). ~~ASUs not listed below were assessed~~The Company has evaluated all recent accounting pronouncements and determined that the adoption of pronouncements applicable to ~~be either~~the Company has not ~~applicable~~had or ~~are~~is not expected to have ~~minimal~~a material impact on the Company’s condensed consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019. This pronouncement was amended under ASU 2019-10 to allow an extension on the 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.
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 if-converted method. The treasury stock method is no longer available. For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company adopted this guidance on January 1, 2022. The Company’s adoption of this update did not have a material impact on the condensed consolidated financial statements.
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 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 effective date of December 15, 2022, and early adoption is permitted. The Company adopted this guidance on January 1, 2022. The Company’s adoption of this update did not have a material impact on the condensed consolidated financial statements.
NOTE 3—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 consolidated financial statements are issued or available to be issued, which is referred to as the “look-forward period”, as defined in GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, management will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, its ability to delay or curtail expenditures or programs and its ability to raise additional capital, if necessary, among other factors. Based on this assessment, as necessary or applicable, management makes certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent it deems probable those implementations can be achieved and management has the proper authority to execute them within the look-forward period.

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
As of September 30, ~~2022,~~2023, the Company had cash and cash equivalents of ~~$1,584,499.~~$2,056,751. For the nine months ended September 30, ~~2022,~~2023, the Company incurred ~~an operating~~a loss from operations of ~~$1,096,364 (before deducting losses attributable to non-controlling interests),~~$1,697,053, cash flows used in operations of ~~$3,977,286,~~$5,697,319 and working capital of ~~$1,839,424.~~$618,235. 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.~~
~~Management has prepared estimates of~~ operations, which creates substantial doubt about its ability to continue as a going concern for ~~fiscal year 2022 and 2023 believes that sufficient funds will be generated from operations to fund its operations and to service its debt obligations for~~a period at least one year from the date of ~~the filing~~issuance of these condensed consolidated financial ~~statements, which indicate improved operations~~statements.
Management plans to address the above as needed by, securing additional bank lines of credit and obtaining additional financing through debt or equity transactions. Management has implemented tight cost controls to conserve cash.
The ability of the ~~Company’s ability~~Company to continue ~~operations~~ as a going ~~concern. The impact of COVID-19 on~~concern is dependent upon its ability to successfully accomplish the ~~Company’s business has been considered~~plans described in ~~these assumptions; however, it is too early~~the preceding paragraph and to ~~know the full impact of COVID-19 or its timing on a return to more normal~~eventually attain profitable operations.

~~1847 HOLDINGS LLC~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2022~~
~~(UNAUDITED)~~
The accompanying condensed consolidated financial statements ~~have been prepared on a going concern basis under which~~do not include any adjustments that might be necessary if the Company is ~~expected~~unable to continue as a going concern. If the Company is unable to obtain adequate capital, it could be ~~able~~forced to realize its assets and satisfy its liabilities in the normal course of business. Management believes that based on relevant conditions and events that are known and reasonably knowable that its forecasts for one year from the date of the filing of these condensed consolidated financial statements. The Company has contingency plans to reduce or defer expenses and cash outlays should operations not improve in the look forward period.cease operations.
NOTE 4—4—DISAGGREGATION OF REVENUES AND SEGMENT REPORTING
The Company has ~~three~~four reportable segments:
The Retail and Appliances Segment provides a wide variety of appliance products (laundry, refrigeration, cooking, dishwashers, outdoor, accessories, parts, and other appliance related products) and services (delivery, installation, service and repair, extended warranties, and financing).
The Retail and Eyewear Segment provides a wide variety of eyewear products (non-prescription reading glasses, sunglasses, blue light blocking eyewear, sun readers and outdoor specialty sunglasses).
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).
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.
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.
The Company’s revenues for the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 are disaggregated as follows:
Three Months Ended September 30, 2022 Three Months Ended September 30, 2023
Retail and
Appliances Construction Automotive
Supplies Total Retail and
Appliances Retail and
Eyewear Construction Automotive
Supplies Total
Revenues
Appliances $ 2,492,544 $ - $ - $ 2,492,544 $ 2,210,075 $ - $ - $ - $ 2,210,075
Appliance accessories, parts, and other 442,161 - - 442,161 210,933 - - - 210,933
Eyewear - 3,387,117 - - 3,387,117
Eyewear accessories, parts, and other - 856,137 - - 856,137
Automotive horns - - 1,094,636 1,094,636 - - - 616,189 616,189
Automotive lighting - - 395,074 395,074 - - - 266,891 266,891
Custom cabinets and countertops - 2,990,767 - 2,990,767 - - 3,793,285 - 3,793,285
Finished carpentry - 7,057,179 - 7,057,179 - - 7,437,294 - 7,437,294
Total Revenues $ 2,934,705 $ 10,047,946 $ 1,489,710 $ 14,472,361 $ 2,421,008 $ 4,243,254 $ 11,230,579 $ 883,080 $ 18,777,921
Three Months Ended September 30, 2021
Retail and
Appliances Construction Automotive
Supplies Total
Revenues
Appliances $ 2,745,305 $ - $ - $ 2,745,305
Appliance accessories, parts, and other 400,650 - - 400,650
Automotive horns - 1,694,928 1,694,928
Automotive lighting - - 555,717 555,717
Custom cabinets and countertops - 1,338,428 - 1,338,428
Finished carpentry - - - -
Total Revenues $ 3,145,955 $ 1,338,428 $ 2,250,645 $ 6,735,028

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, ~~2022~~2023
(UNAUDITED)
Nine Months Ended September 30, 2022 Three Months Ended September 30, 2022
Retail and
Appliances Construction Automotive
Supplies Total Retail and
Appliances Retail and
Eyewear Construction Automotive
Supplies Total
Revenues
Appliances $ 7,206,386 $ - $ - $ 7,206,386 $ 2,492,544 $         - $ - $ - $ 2,492,544
Appliance accessories, parts, and other 1,116,114 - - 1,116,114 442,161 - - - 442,161
Eyewear - - - - -
Eyewear accessories, parts, and other - - - - -
Automotive horns - - 3,766,415 3,766,415 - - - 1,094,636 1,094,636
Automotive lighting - - 1,348,340 1,348,340 - - - 395,074 395,074
Custom cabinets and countertops - 10,288,711 - 10,288,711 - - 2,990,767 - 2,990,767
Finished carpentry - 15,711,516 - 15,711,516 - - 7,057,179 - 7,057,179
Total Revenues $ 8,322,500 $ 26,000,227 $ 5,114,755 $ 39,437,482 $ 2,934,705 $ - $ 10,047,946 $ 1,489,710 $ 14,472,361
Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2023
Retail and
Appliances Construction Automotive
Supplies Total Retail and
Appliances Retail and
Eyewear Construction Automotive
Supplies Total
Revenues
Appliances $ 8,587,939 $ - $ - $ 8,587,939 $ 6,129,197 $ - $ - $ - $ 6,129,197
Appliance accessories, parts, and other 1,175,000 - - 1,175,000 758,392 - - - 758,392
Eyewear - 8,045,966 - - 8,045,966
Eyewear accessories, parts, and other - 3,484,061 - - 3,484,061
Automotive horns - - 3,326,835 3,326,835 - - - 2,408,638 2,408,638
Automotive lighting - - 904,178 904,178 - - - 1,098,745 1,098,745
Custom cabinets and countertops - 4,169,305 - 4,169,305 - - 8,150,092 - 8,150,092
Finished carpentry - - - - - - 23,497,107 - 23,497,107
Total Revenues $ 9,762,939 $ 4,169,305 $ 4,231,013 $ 18,163,257 $ 6,887,589 $ 11,530,027 $ 31,647,199 $ 3,507,383 $ 53,572,198
Nine Months Ended September 30, 2022
Retail and
Appliances Retail and
Eyewear Construction Automotive
Supplies Total
Revenues
Appliances $ 7,206,386 $      - $ - $ - $ 7,206,386
Appliance accessories, parts, and other 1,116,114 - - - 1,116,114
Eyewear - - - - -
Eyewear accessories, parts, and other - - - - -
Automotive horns - - - 3,766,415 3,766,415
Automotive lighting - - - 1,348,340 1,348,340
Custom cabinets and countertops - - 10,288,711 - 10,288,711
Finished carpentry - - 15,711,516 - 15,711,516
Total Revenues $ 8,322,500 $ - $ 26,000,227 $ 5,114,755 $ 39,437,482

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
Segment information for the three and nine months ended September 30, 2023 and 2022 ~~and 2021 is~~are as follows:
Three Months Ended September 30, 2022 Three Months Ended September 30, 2023
Retail and
Appliances Construction Automotive
Supplies Corporate
Services Total Retail and
Appliances Retail and
Eyewear Construction Automotive
Supplies Corporate
Services Total
Revenues $ 2,934,705 $ 10,047,946 $ 1,489,710 $ - $ 14,472,361 $ 2,421,008 $ 4,243,254 $ 11,230,579 $ 883,080 $ - $ 18,777,921
Operating expenses
Cost of sales 2,183,972 6,544,843 867,572 - 9,596,387
Operating Expenses
Cost of revenues 1,976,031 2,662,586 5,472,716 625,841 - 10,737,174
Personnel 202,443 2,406,195 277,398 296,250 3,182,286 246,567 751,485 2,317,681 280,416 410,490 4,006,639
Personnel – corporate allocation (71,400 ) - (214,200 ) (71,400 ) 357,000 -
Depreciation and amortization 48,019 416,525 51,870 - 516,414 46,603 108,636 418,789 51,939 - 625,967
General and administrative 494,719 1,245,668 384,870 563,620 2,688,877 337,039 666,678 1,620,340 231,585 989,619 3,845,261
General and administrative – management fees 75,000 75,000 125,000 75,000 - 350,000
General and administrative – corporate allocation (69,285 ) - (224,170 ) (19,355 ) 312,810 -
Total Operating Expenses 2,929,153 10,613,231 1,581,710 859,870 15,983,964 2,540,555 4,264,385 9,516,156 1,174,026 2,069,919 19,565,041
Income (loss) from Operations $ 5,552 $ (565,285 ) $ (92,000 ) $ (859,870 ) $ (1,511,603 )
Income (loss) from operations $ (119,547 ) $ (21,131 ) $ 1,714,423 $ (290,946 ) $ (2,069,919 ) $ (787,120 )
Three Months Ended September 30, 2021 Three Months Ended September 30, 2022
Retail and
Appliances Construction Automotive
Supplies Corporate
Services Total Retail and
Appliances Retail and
Eyewear Construction Automotive
Supplies Corporate
Services Total
Revenues $ 3,145,955 $ 1,338,428 $ 2,250,645 $ - $ 6,735,028 $ 2,934,705 $       - $ 10,047,946 $ 1,489,710 $ - $ 14,472,361
Operating expenses
Cost of sales 2,300,663 805,513 1,466,947 - 4,573,123
Operating Expenses
Cost of revenues 2,183,972 - 6,544,843 867,572 - 9,596,387
Personnel 196,592 273,366 407,034 - 876,992 273,843 - 2,525,195 348,798 217,756 3,365,592
Personnel – corporate allocation (71,400 ) - (214,200 ) (71,400 ) 357,000 -
Depreciation and amortization 47,104 83,112 169,260 - 299,476 48,019 - 416,525 51,870 - 516,414
General and administrative 439,414 256,402 673,484 475,679 1,844,979 439,745 - 1,180,744 329,896 280,186 2,230,571
General and administrative – management fees 75,000 - 125,000 75,000 - 275,000
General and administrative – corporate allocation (20,026 ) - (78,689 ) (108,535 ) 207,250 -
Total Operating Expenses 2,983,774 1,418,393 2,716,724 475,679 7,594,570 2,929,153 - 10,499,418 1,493,201 1,062,192 15,983,964
Income (Loss) from Operations $ 162,182 $ (79,965 ) $ (466,080 ) $ (475,679 ) $ (859,542 )
Income (loss) from operations $ 5,552 $ - $ (451,472 ) $ (3,491 ) $ (1,062,192 ) $ (1,511,603 )
Nine Months Ended September 30, 2023
Retail and
Appliances Retail and
Eyewear Construction Automotive
Supplies Corporate
Services Total
Revenues $ 6,887,589 $ 11,530,027 $ 31,647,199 $ 3,507,383 $ - $ 53,572,198
Operating Expenses
Cost of revenues 5,461,866 7,102,908 18,048,394 2,161,209 - 32,774,377
Personnel 784,561 2,070,996 6,098,832 927,245 79,229 9,960,863
Personnel – corporate allocation (226,100 ) - (678,300 ) (226,100 ) 1,130,500 -
Depreciation and amortization 139,809 277,839 1,244,908 155,817 - 1,818,373
General and administrative 1,044,671 2,404,342 4,270,157 771,084 1,250,384 9,740,638
General and administrative – management fees 225,000 150,000 375,000 225,000 - 975,000
General and administrative – corporate allocation (146,268 ) - (686,763 ) (140,797 ) 973,828 -
Total Operating Expenses 7,283,539 12,006,085 28,672,228 3,873,458 3,433,941 55,269,251
Income (loss) from operations $ (395,950 ) $ (476,058 ) $ 2,974,971 $ (366,075 ) $ (3,433,941 ) $ (1,697,053 )

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, ~~2022~~2023
(UNAUDITED)
Nine Months Ended September 30, 2022
Retail and
Appliances Construction Automotive
Supplies Corporate
Services Total
Revenues $ 8,322,500 $ 26,000,227 $ 5,114,755 $ - $ 39,437,482
Operating expenses
Cost of sales 6,245,993 15,835,830 3,028,040 - 25,109,863
Personnel 587,073 4,715,419 847,403 296,250 6,446,145
Depreciation and amortization 175,835 1,195,314 155,610 - 1,526,759
General and administrative 1,480,465 4,006,636 1,188,618 775,360 7,451,079
Total Operating Expenses 8,489,366 25,753,199 5,219,671 1,071,610 40,533,846
Income (Loss) from Operations $ (166,866 ) $ 247,028 $ (104,916 ) $ (1,071,610 ) $ (1,096,364 )
Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2022
Retail and
Appliances Construction Automotive
Supplies Corporate
Services Total Retail and
Appliances Retail and
Eyewear Construction Automotive
Supplies Corporate
Services Total
Revenues $ 9,762,939 $ 4,169,305 $ 4,231,013 $ - $ 18,163,257 $ 8,322,500 $      - $ 26,000,227 $ 5,114,755 $ - $ 39,437,482
Operating expenses -
Cost of sales 7,409,913 2,280,009 2,658,672 - 12,348,594
Operating Expenses
Cost of revenues 6,245,993 - 15,835,830 3,028,040 - 25,109,863
Personnel 688,842 739,711 769,678 - 2,198,231 803,473 - 5,269,419 1,063,803 22,747 7,159,442
Personnel – corporate allocation (216,400 ) - (649,200 ) (216,400 ) 1,082,000 -
Depreciation and amortization 135,782 242,613 169,260 - 547,655 175,835 - 1,195,314 155,610 - 1,526,759
General and administrative 1,270,655 705,674 1,570,070 973,105 4,519,504 1,305,884 - 3,782,889 1,014,037 (190,028 ) 5,912,782
General and administrative – management fees 225,000 - 375,000 225,000 - 825,000
General and administrative – corporate allocation (50,419 ) - (600,949 ) (317,667 ) 969,035 -
Total Operating Expenses 9,505,192 3,968,007 5,167,680 973,105 19,613,984 8,489,366 - 25,208,303 4,952,423 1,883,754 40,533,846
Income (Loss) from Operations $ 257,747 $ 201,298 $ (936,667 ) $ (973,105 ) $ (1,450,727 )
Income (loss) from operations $ (166,866 ) $ - $ 791,924 $ 162,332 $ (1,883,754 ) $ (1,096,364 )
NOTE 5—5—PROPERTY AND EQUIPMENT
Property and equipment at September 30, ~~2022~~2023 and December 31, ~~2021~~2022 consisted of the following:

September 30,
2022 December 31,
2021 September 30,
2023 December 31,
2022
Equipment and machinery $ 1,401,103 $ 808,592 $ 1,406,531 $ 1,403,817
Office furniture and equipment 156,544 105,203 156,960 156,960
Transportation equipment 911,426 864,121 1,158,102 883,077
Displays 757,162 -
Leasehold improvements 169,143 112,356 181,206 166,760
Total property and equipment 2,638,216 1,890,272 3,659,961 2,610,614
Less: Accumulated depreciation (588,720 ) (194,961 ) (1,448,361 ) (725,408 )
Property and equipment, net $ 2,049,496 $ 1,695,311 $ 2,211,600 $ 1,885,206
Depreciation expense for the three and nine months ended September 30, 2023
~~Depreciation~~ was $261,275 and $724,297, respectively. In comparison, depreciation expense for the three and nine months ended September 30, 2022 was $151,722 and $432,683, respectively. ~~Depreciation~~
NOTE 6—INTANGIBLE ASSETS
Intangible assets at September 30, 2023 and December 31, 2022 consisted of the following:

September 30,
2023
December 31,
2022
Customer relationships $ 9,024,000 $ 9,024,000
Marketing-related 2,992,000 2,684,000
Technology-related 623,000 623,000
Total intangible assets 12,639,000 12,331,000
Less: accumulated amortization (3,439,947 ) (2,345,871 )
Intangible assets, net $ 9,199,053 $ 9,985,129
Amortization expense for the three and nine months ended September 30, ~~2021~~2023 was ~~$32,420~~$364,692 and ~~$85,005,~~$1,094,076, respectively.
~~NOTE 6—INTANGIBLE ASSETS~~
~~Intangible assets at September 30, 2022 and December 31, 2021 consisted of the following:~~
September 30,
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 (1,981,179 ) (887,103 )
Intangible assets, net $ 10,349,821 $ 11,443,897

~~1847 HOLDINGS LLC~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2022~~
~~(UNAUDITED)~~
~~Amortization~~ In comparison, amortization expense for the three and nine months ended September 30, 2022 was $364,692 and $1,094,076, respectively. ~~Amortization expense for the three and nine months ended September 30, 2021 was $267,057 and $462,651, respectively.~~

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
Estimated amortization expense for intangible assets for the next five years consists of the following as of September 30, ~~2022:~~2023:
Year Ending December 31, Amount Amount
2022 – remaining $ 364,704
2023 1,458,780
2023 - remaining $ 364,692
2024 1,458,750 1,458,769
2025 1,325,745 1,325,778
2026 1,157,523 1,150,640
2027 909,142
Thereafter 4,584,319 3,990,032
Total $ 10,349,821 $ 9,199,053
NOTE 7—7—SELECTED ACCOUNT INFORMATION
Receivables
Receivables at September 30, ~~2022~~2023 and December 31, ~~2021~~2022 consisted of the following:
September 30,
2022 December 31,
2021 September 30,
2023 December 31,
2022
Trade accounts receivable $ 5,110,116 $ 2,691,702 $ 6,924,822 $ 4,867,749
Vendor rebates receivable 139,322 126,118 6,060 460
Credit card payments in process of settlement - 116,187 - 102,917
Retainage 445,580 803,989 1,241,919 603,442
Total receivables 5,695,018 3,737,996 8,172,801 5,574,568
Allowance for doubtful accounts (359,000 ) (359,000 ) (405,172 ) (359,000 )
Total receivables, net $ 5,336,018 $ 3,378,996 $ 7,767,629 $ 5,215,568
Inventories
Inventories at September 30, ~~2022~~2023 and December 31, ~~2021~~2022 consisted of the following:
September 30,
2022 December 31,
2021 September 30,
2023 December 31,
2022
Appliances $ 2,146,254 $ 2,206,336 $ 2,113,379 $ 2,155,839
Eyewear 9,224,632 -
Automotive 1,248,947 2,064,834 1,181,768 934,683
Construction 1,749,250 1,543,980 1,983,242 1,519,345
Total inventories 5,144,451 5,815,150 14,503,021 4,609,867
Less reserve for obsolescence (387,848 ) (387,848 ) (545,848 ) (425,848 )
Total inventories, net $ 4,756,603 $ 5,427,302 $ 13,957,173 $ 4,184,019
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 September 30, 2022 and December 31, 2021 consisted of the following:~~
September 30,
2022 December 31,
2021
Trade accounts payable $ 2,705,828 $ 3,117,825
Credit cards payable 130,013 52,300
Accrued payroll liabilities 630,846 263,590
Accrued interest 1,045,917 711,258
Accrued dividends 644,139 242,160
Other accrued liabilities 282,152 431,539
Total accounts payable and accrued expenses $ 5,438,895 $ 4,818,672

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, ~~2022~~2023
(UNAUDITED)
Accounts payable and accrued expenses
Accounts payable and accrued expenses at September 30, 2023 and December 31, 2022 consisted of the following:
September 30,
2023 December 31,
2022
Trade accounts payable $ 9,105,572 $ 4,129,393
Credit cards payable 380,165 357,964
Accrued payroll liabilities 892,035 824,369
Accrued interest 2,228,397 1,179,875
Accrued dividends 27,480 136,052
Other accrued liabilities 1,182,772 114,116
Total accounts payable and accrued expenses $ 13,816,421 $ 6,741,769
NOTE 8—8—LEASES

Operating Leases
~~In April 2022, the Company~~On July 1, 2023, ICU Eyewear Holdings, Inc. (“ICU Eyewear”) entered into a lease amendment to renew its office and warehouse space in the ~~automotive supplies~~retail and eyewear segment, located in ~~Deer Park, New York.~~Hollister, California. The lease renewal ~~will commence~~commenced on ~~August~~July 1, ~~2022~~2023 and shall expire on ~~July 31, 2025.~~June 30, 2028. Under the terms of the lease renewal, ~~the Company~~ICU Eyewear will lease the premises at the monthly rate of ~~$7,518~~$35,000 for the first year, with scheduled annual increases. The lease agreement contains customary events of default, representations, warranties, and covenants. The ~~remeasurement~~initial measurement of the ~~ROU~~right-of-use asset and liability associated with this operating lease was ~~$254,713.~~$2,088,680.
The following was included in ~~our~~the condensed consolidated balance ~~sheet~~sheets at September 30, ~~2022~~2023 and December 31, ~~2021:~~2022:
September 30,
2022 December 31,
2021 September 30,
2023 December 31,
2022
Operating lease right-of-use assets $ 3,037,676 $ 3,192,604 $ 4,310,916 $ 2,854,196
Lease liabilities, current portion 707,419 613,696 1,075,151 713,100
Lease liabilities, long-term 2,419,449 2,607,862 3,366,728 2,237,797
Total operating lease liabilities $ 3,126,868 $ 3,221,558 $ 4,441,879 $ 2,950,897
Weighted-average remaining lease term (months) 49 59 47 47
Weighted average discount rate 4.37 % 4.29 % 6.08 % 4.36 %
Rent expense for the three and nine months ended September 30, 2023 was $419,769 and $1,149,954, respectively. In comparison, rent expense for the three and nine months ended September 30, 2022 was $278,823 and $804,544, respectively.
As of September 30, ~~2022,~~2023, maturities of operating lease liabilities were as follows:
Year Ending December 31, Amount Amount
2022 – remaining $ 239,421
2023 830,221
2023 - remaining $ 312,613
2024 848,210 1,332,327
2025 803,685 1,304,733
2026 514,079 1,032,656
2027 766,969
Thereafter 194,495 273,660
Total 3,430,111 5,022,958
Less: imputed interest (303,243 ) (581,079 )
Total operating lease liabilities $ 3,126,868 $ 4,441,879
~~Finance Leases~~
~~On March 28, 2022, the Company entered an equipment financing lease to purchase machinery and equipment totaling $316,798, maturing in January 2028.~~
~~On April 11, 2022, the Company entered in an equipment financing lease to purchase machinery and equipment totaling $11,706, maturing in June 2027.~~
~~On July 13, 2022, the Company entered in an equipment financing lease to purchase machinery and equipment totaling $240,260, maturing in June 2028.~~

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, ~~2022~~2023
(UNAUDITED)
Finance Leases
As of September 30, ~~2022,~~2023, maturities of ~~finance~~financing lease liabilities were as follows:
Year Ending December 31, Amount Amount
2022 – remaining $ 58,482
2023 234,556
2023 - remaining $ 58,735
2024 218,099 218,099
2025 211,332 211,332
2026 211,332 211,332
2027 210,042
Thereafter 238,875 28,833
Total payments 1,172,676
Total 938,373
Less: amount representing interest (158,003 ) (106,803 )
Present value of minimum finance lease payments $ 1,014,673
Present value of minimum lease payments $ 831,570
As of September 30, ~~2022,~~2023, the weighted-average remaining lease term for all finance leases is ~~5.20~~4.30 years.

NOTE ~~9—ACQUISITIONS~~9—BUSINESS COMBINATIONS
On ~~March 30, 2021,~~December 21, 2022, the Company’s newly formed wholly owned subsidiaries 1847 ICU Holdings Inc. (“1847 ICU”) and 1847 ICU Acquisition Sub Inc. entered into an agreement and plan of merger with ICU Eyewear and San Francisco Equity Partners, as the stockholder representative, which was amended on February 9, 2023.
On February 9, 2023, closing of the transactions contemplated by the agreement and plan of merger was completed. Pursuant to the agreement and plan of merger, 1847 ICU Acquisition Sub Inc. merged with and into ICU Eyewear, with ICU Eyewear surviving the merger as a wholly owned subsidiary of 1847 ICU. The merger consideration paid by 1847 ICU to the stockholders of ICU Eyewear consists of (i) $4,000,000 in cash, minus any unpaid debt of ICU Eyewear and certain transaction expenses, and (ii) 6% subordinated promissory notes in the aggregate principal amount of $500,000.
ICU Eyewear specializes in the sale and distribution of reading eyewear and sunglasses, blue light blocking eyewear, sun readers, and other outdoor specialty sunglasses, as well as select health and personal care items, including face masks. This transaction aligned with the Company’s acquisition strategy of targeting small businesses in various industries that the Company expects will face minimal threats of technological or competitive obsolescence, produce positive and stable earnings and cash flow, as well as achieve attractive returns on the Company’s invested capital.
The Company accounted for the acquisition using the acquisition method of accounting in accordance with ASC 805, Business Combinations (“ASC 805”). In accordance with ASC 805, the Company used its best estimates and assumptions to assign fair value to the tangible and intangible assets acquired ~~100%~~and liabilities assumed at the acquisition date. Goodwill is measured as the excess of the ~~outstanding capital stock~~purchase consideration over the fair value of ~~Wolo Mfg. Corp~~the net tangible assets and ~~Wolo Industrial Horn & Signal, Inc. (“Wolo”) for an aggregate~~identifiable assets acquired, or if the fair value of the net assets acquired exceeds the purchase ~~price~~consideration, a bargain purchase gain is recorded.
The preliminary fair value of ~~$8,344,056.~~the purchase consideration issued to the ICU Eyewear stockholders was allocated to the net tangible assets acquired. The preliminary fair value of the net assets acquired was $7,139,861, exceeding the purchase consideration, resulting in a bargain purchase gain of $2,639,861. For the three and nine months ended September 30, ~~2022, Wolo~~2023, ICU Eyewear contributed revenue of ~~$1,489,710~~$4,243,524 and ~~$5,114,755, respectively,~~$11,530,027, respectively. Additionally, for the same periods, ICU Eyewear reported a net loss of $743,236 and net ~~loss from continuing operations~~income of ~~$393,493 and $1,034,427,~~$1,215,425, respectively, which are included in our condensed consolidated statements of operations for the ~~three and nine months ended September 30, 2022.~~respective periods.
~~On October 8, 2021,~~

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
The table below represents 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~~estimated preliminary purchase price ~~of $15,441,173. For~~allocation to the ~~three and nine months ended September 30, 2022, High Mountain and Sierra Homes contributed combined revenue of $8,299,589 and $21,049,530, respectively, and combined~~ net loss from continuing operations of $2,846,780 and $3,633,437, respectively, which are included in our condensed consolidated statements of operations for the three and nine months ended September 30, 2022.assets acquired:
Provisional purchase consideration at preliminary fair value:
Cash $ 4,000,000
Notes payable 500,000
Amount of consideration $ 4,500,000

Assets acquired and liabilities assumed at preliminary fair value
Cash $ 329,113
Accounts receivable 1,922,052
Inventory 9,997,332
Prepaids and other current assets 79,777
Property and equipment 545,670
Other assets 74,800
Marketing related intangibles 308,000
Accounts payable and accrued expenses (6,116,883 )
Net tangible assets acquired $ 7,139,861

Consideration paid 4,500,000
Preliminary gain on bargain purchase $ (2,639,861 )
Pro Forma Information
The following unaudited pro forma results presented below include the effects of the ~~Wolo, High Mountain and Sierra Homes acquisitions~~ICU Eyewear acquisition as if ~~they~~it had been consummated as of January 1, ~~2021,~~2022, with adjustments to give effect to pro forma events that are directly attributable to ~~the acquisitions.~~this acquisition.
Three Months Ended
September 30, Nine Months Ended
September 30,
2022 2021 2022 2021
Revenues $ 14,472,361 $ 15,328,672 $ 39,437,482 $ 39,091,277
Net income (loss) (4,472,622 ) 100,042 (5,547,498 ) 3,956,288
Net income (loss) attributable to common shareholders’ (13,440,062 ) (149,043 ) (14,801,040 ) 1,614,167
Earnings (loss) per share attributable to common shareholders’:
Basic $ (4.51 ) $ (0.12 ) $ (8.08 ) $ 1.37
Diluted $ (4.51 ) $ (0.12 ) $ (8.08 ) $ 0.78
Three Months Ended
September 30, Nine Months Ended
September 30,
2023 2022 2023 2022
Revenues $ 18,777,921 $ 19,573,352 $ 55,648,535 $ 55,839,814
Net loss (5,859,072 ) (4,778,614 ) (8,801,137 ) (5,630,467 )
Net loss attributable to common shareholders (5,981,334 ) (13,746,054 ) (11,356,133 ) (14,884,009 )
Loss per share attributable to common shareholders – basic and diluted $ (3.01 ) $ (105.51 ) $ (14.03 ) $ (176.42 )
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.

NOTE 10—DEBT
Revolving Lines of Credit
On February 9, 2023, 1847 ICU and ICU Eyewear entered into a loan and security agreement with Industrial Funding Group, Inc. for a revolving loan of up to $5,000,000, which was evidenced by a secured promissory note in the principal amount of up to $5,000,000. On February 9, 2023, 1847 ICU received an advance of $2,063,182 under the note, of which $1,963,182 was used to repay certain debt of ICU Eyewear in connection with the agreement and plan of merger, with the remaining $100,000 used to pay lender fees. On February 11, 2023, the Industrial Funding Group, Inc. sold and assigned the loan and security agreement, the note and related loan documents to GemCap Solutions, LLC.
The note was to mature on February 9, 2025 with all advances bearing interest at an annual rate equal to the greater of (i) the sum of (a) the “Prime Rate” as reported in the “Money Rates” column of The Wall Street Journal, adjusted as and when such prime rate changes, plus (b) eight percent (8.00%), and (ii) fifteen percent (15.00%); provided that following and during the continuation of an event of default (as defined in the loan and security agreement), interest on the unpaid principal balance of the advances shall accrue at an annual rate equal to such rate plus three percent (3.00%). Interest accrued on the advances was payable monthly commencing on March 7, 2023. The note was secured by all of the assets of 1847 ICU and ICU Eyewear.

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
On September 11, 2023, GemCap Solutions, LLC sold and assigned the loan to AB Lending SPV I LLC d/b/a Mountain Ridge Capital. On the same date, 1847 ICU and ICU Eyewear entered into an amended and restated credit and security agreement with the AB Lending SPV I LLC d/b/a Mountain Ridge Capital for a revolving loan of up to $15,000,000, which loan may be drawn in advances. On the same date, the Company received an advance of $4,218,985, which was used to pay the amounts outstanding under the loan from GemCap Solutions, LLC, to pay certain closing fees and expenses in connection with the closing and for general working capital purposes.
The revolving loan matures on September 11, 2026 and bears interest at an annual rate equal to Term SOFR plus eight percent (8.00%) per annum or, if at any time the Term SOFR cannot be determined, then at the Base Rate plus seven percent (7.00%), but in any event at a rate no higher than that permitted under applicable law. “Term SOFR” means the secured overnight financing rate published by the Federal Reserve Bank of New York for a one-month period on the date that is two (2) business days prior to the first day of such one-month period and “Base Rate” means a rate per annum equal to the greatest of (i) the Federal Funds Rate in effect on such day plus 1.00%, (ii) the Prime Rate in effect on such day, and (iii) Term SOFR for a one-month tenor plus 1.00%. However, following and during the continuation of an event of default (as defined in the amended and restated credit and security agreement), interest shall accrue at a default rate equal to such above rate plus two percent (2.00%) per annum. Interest accrued on the advances shall be payable monthly on the first day of each month commencing on October 1, 2023. The Company may voluntarily prepay the entire unpaid principal amount of the advances prior to the maturity date, but must pay a prepayment fee determined as follows: (i) a fee of three percent (3.00%) if the prepayment is made on or before September 11, 2024, (ii) a fee of two percent (2.00%) if the prepayment is made between September 12, 2024 and September 11, 2025, or (iii) a fee of one percent (1.00%) if the prepayment is made between September 12, 2025 and September 11, 2026.
The amended and restated credit and security agreement contains customary affirmative and negative financial and other covenants and events of default for a loan of this type. The loan is secured by a first priority security interest in all of the assets of 1847 ICU and ICU Eyewear and is guaranteed by the Company pursuant to a limited guaranty. The Company may satisfy its obligations under the limited guaranty by paying such amounts in cash, or by issuing to the lender a number of common shares equal to the sum needed to satisfy the obligations under the limited guaranty in full divided by a price equal to the lesser of $4.575 or the closing price of the common shares on the day prior to such issuance; provided that if such issuance would violate Section 7.13 of the NYSE American Company Guide, which restricts the issuance of shares equal to 20% or more of the outstanding common shares for less than the greater of book or market value, then the Company must obtain shareholder approval of such issuance.
Notes Payable
6% Subordinated Promissory Notes
As part of the consideration paid in the acquisition of ICU Eyewear, 1847 ICU issued the sellers 6% subordinated promissory notes in the aggregate principal amount of $500,000. The notes bear interest at the rate of 6% per annum with all principal and accrued interest being due and payable in one lump sum on February 9, 2024; provided that upon an event of default (as defined in the notes), such interest rate shall increase to 10%. 1847 ICU may prepay all or any portion of the notes at any time prior to the maturity date without premium or penalty of any kind. The notes contain customary events of default, including, without limitation, in the event of (i) non-payment, (ii) a default by 1847 ICU of any of its covenants in the notes, the agreement and plan of merger or any other agreement entered into in connection with the agreement and plan of merger, or a breach of any of the representations or warranties under such documents, (iii) the insolvency or bankruptcy of 1847 ICU or ICU Eyewear or (iv) a change of control (as defined in the notes) of 1847 ICU or ICU Eyewear. The notes are unsecured and subordinated to all senior indebtedness.
Purchase and Sale of Future Revenues Agreement
On March 31, 2023, the Company and its subsidiary 1847 Cabinet Inc. (“1847 Cabinet”) entered into a non-recourse funding agreement with a third-party for the sale of future revenues totaling $1,965,000 for net cash proceeds of $1,410,000. The Company is required to make weekly ACH payments in the amount of $39,300. The agreement also allows for the third-party to file UCCs securing their interest in the receivables and includes customary events of default.
The Company recorded a debt discount of $555,000, which will be amortized under the effective interest method. The Company is utilizing the prospective method to account for subsequent changes in the estimated future payments, whereby if there is a change in the estimated future cash flows, a new effective interest rate is determined based on the revised estimate of remaining cash flows. As of September 30, 2023, the effective interest rate was 72.4%.

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, ~~2022~~2023
(UNAUDITED)
Private Placement of 20% OID Promissory Notes and Warrants
On August 11, 2023, the Company entered into a securities purchase agreement in a private placement transaction with certain accredited investors, pursuant to which the Company issued and sold to the investors 20% OID subordinated promissory notes in the aggregate principal amount of $3,125,000 and warrants for the purchase of an aggregate of 163,939 common shares for total cash proceeds of $2,218,000.
The notes are due and payable on February 11, 2024. The Company may voluntarily prepay the notes in full at any time. In addition, if the Company consummates any equity or equity-linked or debt securities issuance, or enters into a loan agreement or other financing, other than certain excluded debt (as defined in the notes), then the Company must prepay the notes in full. The notes are unsecured and have priority over all other unsecured indebtedness of the Company, except for certain senior indebtedness (as defined in the notes). The notes contain customary affirmative and negative covenants and events of default for a loan of this type.
The warrants are exercisable for a period five (5) years at an exercise price of $4.58 (subject to standard adjustments for share splits, share combinations, share dividends, reclassifications, mergers, consolidations, reorganizations and similar transactions) and may be exercised on a cashless basis if at the time of exercise there is no effective registration statement registering, or the prospectus contained therein is not available for, the issuance of common shares upon exercise thereof.
Pursuant to the securities purchase agreement, the Company is required to hold a special meeting of its shareholders on or before the date that is sixty (60) calendar days after the date of the securities purchase agreement for the purpose of obtaining shareholder approval of the issuance of all common shares that may be issued upon conversion of the notes and exercise of the warrants in accordance with NYSE American rules (the “Shareholder Approval”). In connection with the securities purchase agreement, the Company also entered into a registration rights agreement with the investors, pursuant to which the Company agreed to file a registration statement to register all common shares underlying the notes and the warrants under the Securities Act of 1933, as amended, within fifteen (15) days following an event of default and use its best efforts to cause such registration statement to be declared effective within ninety (90) days after the filing thereof. If the Company fails to meet these deadlines or comply with certain other requirements in the registration rights agreement, then on each date that the Company fails to comply, and on each monthly anniversary thereof, the Company shall pay to each investor an amount in cash, as partial liquidated damages and not as a penalty, equal to 1.0% of the aggregate subscription amount paid by such investor pursuant to the securities purchase agreement, subject to an aggregate cap of 10%. If the Company fails to pay any of these amounts in full within seven (7) days after the date payable, the Company must pay interest thereon at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicable law).
Spartan Capital Securities, LLC (“Spartan”) acted as placement agent in connection with the securities purchase agreement and received (i) a cash transaction fee equal to 6% of the aggregate gross proceeds, (ii) a non-accountable and non-reimbursable due diligence and expense fee equal to 1% of the aggregate gross proceeds and (iii) a warrant for the purchase of a number of common shares equal to eight percent (8%) of the number common shares issuable upon conversion of the notes and exercise of the warrants at an exercise price of $5.03 per share (subject to adjustment), resulting in the issuance of a warrant for 346,449 common shares. The warrant is exercisable at any time six months after the date of issuance and until the fifth anniversary thereof.
Subject to Shareholder Approval, the notes are convertible into common shares at the option of the holders at any time on or following the date that an event of default (as defined in the notes) occurs at a conversion price equal to 90% of the lowest volume weighted average price of the Company’s common shares on any trading day during the five (5) trading days prior to the conversion date; provided that such conversion price shall not be less than $0.75 (subject to adjustments). The conversion price of the notes is subject to standard adjustments, including a price-based adjustment in the event that the Company issues any common shares or other securities convertible into or exercisable for common shares at an effective price per share that is lower than the conversion price, subject to certain exceptions.
The Company evaluated the embedded features within these promissory notes in accordance with ASC 480 and ASC 815. The Company determined that the embedded features, specifically (i) the default penalty of 40% on outstanding principal, and (ii) the conversion option into common shares at 90% of the lowest VWAP in the five days preceding conversion, subject to a $0.75 floor price, constitute derivative liabilities. These features, arising from default provisions not within the Company’s control, including the contingent interest feature and the contingent conversion (deemed redemption) feature, meet the definition of a derivative and do not qualify for derivative accounting exemptions. Consequently, these embedded features are bifurcated from the debt host and recognized as a single derivative liability.
The initial fair value of the derivative liabilities was determined using a Monte Carlo Simulation valuation model, considering various potential outcomes and scenarios. The model used the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 145.37%; (iii) risk-free interest rate of 5.37%; (iv) maximum term of one year; (v) estimated fair value of the common shares of $4.63 per share; and (vi) various probability assumptions. Subsequent changes in fair value are recognized in the statement of operations each reporting period. The issuance costs for the promissory notes, along with the allocated fair values of both the warrants and the bifurcated embedded derivative liability, have been collectively treated as a debt discount. This discount is being amortized to interest expense over the term of the promissory notes using the effective interest method.

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
Convertible Notes Payable
Private Placements of Promissory Notes and Warrants
On February 3, 2023, the Company entered into securities purchase agreements with two accredited investors, Mast Hill Fund, L.P. (“Mast Hill”) and Leonite Fund I, LP (“Leonite”), pursuant to which the Company issued to such investors (i) promissory notes in the aggregate principal amount of $604,000 and (ii) five-year warrants for the purchase of an aggregate of 5,034 common shares at an exercise price of $105.00 per share (subject to adjustment) for total cash proceeds of $540,000. As additional consideration, the Company issued an aggregate of 5,034 common shares to the investors as a commitment fee. Additionally, the Company issued a five-year warrant to J.H. Darbie & Co (the broker) for the purchase of 36 common shares at an exercise price of $131.25 (subject to adjustment).
On February 9, 2023, the Company entered into securities purchase agreements with two accredited investors, Mast Hill and Leonite, pursuant to which the Company issued to such investors (i) promissory notes in the aggregate principal amount of $2,557,575 and (ii) five-year warrants for the purchase of an aggregate of 21,314 common shares at an exercise price of $105.00 per share (subject to adjustment) for total cash proceeds of $2,271,818. As additional consideration, the Company issued 11,591 common shares to Mast Hill and issued to Leonite a five-year warrant for the purchase of 9,723 common shares at an exercise price of $0.25 per share (subject to adjustment), which were issued as a commitment fee. Additionally, the Company issued a five-year warrant to J.H. Darbie & Co (the broker) for the purchase of 477 common shares at an exercise price of $131.25 (subject to adjustment).
On February 22, 2023, the Company entered into securities purchase agreement with one accredited investor, Mast Hill, pursuant to which the Company issued to such investor (i) a promissory note in the principal amount of $878,000 and (ii) five-year warrants for the purchase of an aggregate of 7,317 common shares at an exercise price of $105.00 per share (subject to adjustment) for total cash proceeds of $737,700. As additional consideration, the Company issued a five-year warrant for the purchase of 7,934 common shares at an exercise price of $0.25 per share (subject to adjustment) to the investor as a commitment fee. Additionally, the Company issued a five-year warrant to J.H. Darbie & Co (the broker) for the purchase of 302 common shares at an exercise price of $131.25 (subject to adjustment).
These notes bear interest at a rate of 12% per annum and mature on the first anniversary of the date of issuance; provided that any principal amount or interest which is not paid when due shall bear interest at a rate of the lesser of 16% per annum or the maximum amount permitted by law from the due date thereof until the same is paid. The notes require monthly payments of principal and interest commencing in May 2023. The Company may voluntarily prepay the outstanding principal amount and accrued interest of each note in whole upon payment of certain prepayment fees. In addition, if at any time the Company receives cash proceeds from any source or series of related or unrelated sources, including, but not limited to, the issuance of equity or debt, the exercise of outstanding warrants, the issuance of securities pursuant to an equity line of credit (as defined in the notes) or the sale of assets outside of the ordinary course of business, each holder shall have the right in its sole discretion to require the Company to immediately apply up to 50% of such proceeds to repay all or any portion of the outstanding principal amount and interest then due under the notes. The notes are unsecured and have priority over all other unsecured indebtedness. The notes contain customary affirmative and negative covenants and events of default for a loan of this type.
The notes become convertible into common shares at the option of the holders at any time on or following the date that an event of default (as defined in the notes) occurs under the notes at a conversion price equal the lower of (i) $105.00 (subject to adjustments) and (ii) 80% of the lowest volume weighted average price of the common shares on any trading day during the five (5) trading days prior to the conversion date; provided that such conversion price shall not be less than $0.75 (subject to adjustments).
The Company evaluated the embedded features within these promissory notes in accordance with ASC 480 and ASC 815. The Company determined that the embedded features, specifically (i) the default penalty of 15% on outstanding principal and accrued interest, and (ii) the conversion option into common shares at the lower of $105.00 or 80% of the lowest VWAP in the five days preceding conversion, subject to a $0.75 floor price, constitute derivative liabilities. These features, arising from default provisions not within the Company’s control, including the contingent interest feature and the contingent conversion (deemed redemption) feature, meet the definition of a derivative and do not qualify for derivative accounting exemptions. Consequently, these embedded features are bifurcated from the debt host and recognized as a single derivative liability.
The initial fair value of the derivative liabilities was determined using a Monte Carlo Simulation valuation model, considering various potential outcomes and scenarios. The model used the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 160.45%; (iii) risk-free interest rate of 4.68%; (iv) maximum term of one year; (v) estimated fair value of the common shares of $48.25 per share; and (vi) various probability assumptions. Subsequent changes in fair value are recognized in the statement of operations each reporting period. The issuance costs for the promissory notes, along with the allocated fair values of both the warrants and the bifurcated embedded derivative liability, have been collectively treated as a debt discount. This discount is being amortized to interest expense over the term of the promissory notes using the effective interest method.

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
On August 4, 2023, the Company received notices from Mast Hill and Leonite that an event of default had occurred under the notes issued on February 3, 2023 for failure to make certain payments when due. Mast Hill and Leonite agreed in writing that they would not require any payments in cash for the over-due amounts or accelerate the payments due under the notes for a period of 60 days. Since an event of default occurred, Mast Hill and Leonite has the right to convert the notes, including the over-due amounts, penalties and fees, into common shares at their election. On August 4, 2023, Mast Hill converted its note in full into 22,141 common shares, which conversion amount included $91,174 of principal, interest and certain penalties and fees. In August 2023, Leonite converted its note in full into 191,916 common shares, which conversion amount included $730,814 of principal, interest and certain penalties and fees.
On August 9, 2023, the Company received notices from Mast Hill and Leonite that an event of default had occurred under the notes issued on February 9, 2023 for failure to make certain payments when due. Mast Hill and Leonite agreed in writing that they would not require any payments in cash for the over-due amounts or accelerate the payments due under the notes for a period of 60 days. Since an event of default occurred, Mast Hill and Leonite has the right to convert the notes, including the over-due amounts, penalties and fees, into common shares at their election. In August 2023, Mast Hill converted a portion of its note into 402,762 common shares, which conversion amount included $1,002,556 of principal, interest and certain penalties and fees. In August 2023, Leonite converted a portion of its note into 580,000 common shares, which conversion amount included $1,305,432 of principal, interest and certain penalties and fees.
On August 31, 2023, the Company, Mast Hill and Leonite entered into amendments to the notes issued on February 9, 2023 and February 22, 2023, pursuant to which the parties agreed to extend the maturity date of these remaining notes to August 31, 2024 and the Company agreed to make monthly payments commencing on September 30, 2023, as further described in the amendments. Mast Hill and Leonite also agreed not to convert any portion of the remaining notes as long as the Company makes these payments when due. As consideration for Mast Hill and Leonite’s entry into the amendments, the Company agreed to pay Mast Hill and Leonite an amendment fee equal to 10% of the principal amounts of the remaining notes.

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
Derivative Liabilities
The following table provides a roll-forward of the derivative liabilities for the three and nine months ended September 30, 2023, as follows:
Amount
Balance at December 31, 2022 $ -
Initial fair value of derivative liabilities upon issuance 2,613,177
Gain on change in fair value of derivative liabilities (425,977 )
Extinguishment of derivative liabilities upon conversion of convertible notes (864,576 )
Balance at September 30, 2023 $ 1,322,624
The gain on change in fair value of derivative liabilities for three and nine months ended September 30, 2023, is comprised as follows:
Amount
Initial derivative expense $ 154,991
Gain on change in fair value of derivative liabilities (580,968 )
Gain on change in fair value of derivative liabilities $ (425,977 )
Interest Expense and Accrued Interest Reconciliation
The following table provides a reconciliation of interest expense for the nine months ended September 30, 2023, as follows:
Amount
Interest expense from amortization of debt discounts $ 3,879,558
Interest expense from notes payable 243,119
Interest expense from related party notes payable 83,891
Interest expense from convertible notes payable 4,595,106
Interest expense from revolving lines of credit 765,786
Interest expense from financing leases 38,308
Other interest expense 141,531
$ 9,747,299

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
The following table provides a reconciliation of accrued interest at September 30, 2023, as follows:
Amount
Accrued interest balance at December 31, 2022 $ 1,179,875
Interest expense from notes payable 243,119
Interest expense from related party notes payable 83,891
Interest expense from convertible notes payable 4,595,106
Interest expense from revolving lines of credit 765,786
Interest expense from financing leases 38,308
Cash paid for interest (3,217,831 )
Common shares issued in settlement of interest (1,247,701 )
Settlement of interest through the issuance of a new revolving line of credit (212,156 )
Accrued interest balance at September 30, 2023 $ 2,228,397
NOTE ~~10—~~11—RELATED PARTIES

Related Party Notes Payable
On September 30, 2020, a portion of the purchase price for the acquisition of Kyle’s Custom Wood Shop, Inc. (“Kyle’s”) was paid by the issuance of a promissory note by 1847 Cabinet to the sellers in the principal amount of $1,260,000. Payment of the principal and accrued interest on the note was subject to vesting.
On July 26, 2022, the Company and 1847 Cabinet entered into a conversion agreement with sellers, pursuant to which they agreed to convert $797,221 of the vesting note into 7,593 common shares of the Company at a conversion price of $105.00 per share. As a result, the Company recognized a loss on extinguishment of debt of $303,706. Pursuant to the conversion agreement, the note was cancelled, and the Company agreed to pay $558,734 to the sellers no later than October 1, 2022.
On March 30, 2023, the Company entered into an amendment to the conversion agreement, effective retroactively to October 1, 2022. Pursuant to the amendment, the Company agreed to pay a total of $642,544 in three monthly payments commencing on April 5, 2023.
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 three and nine months ended September 30, ~~2022~~2023 and ~~$0 for the three and nine months ended September 30, 2021.~~2022.

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
Offsetting Management Services Agreements
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.~~2021 and 1847 ICU entered into an offsetting management services agreement with the Manager on February 9, 2023. Pursuant to the offsetting management services agreements, each of 1847 Asien, 1847 Wolo and 1847 ICU 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), and 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 if the aggregate amount of management fees paid or to be paid by such entities, together with all other management fees paid or to be paid to the Manager under other offsetting management services agreements, exceeds, or is expected to exceed, 9.5% of ~~our~~the Company’s gross income in any fiscal year or the Parent Management Fee in any fiscal quarter, then the management fee to be paid by such entities shall be reduced, on a pro rata basis determined by reference to the other management fees to be paid to the Manager under other offsetting management services agreements.
1847 Asien expensed management fees of $75,000 and $225,000 for the three and nine months ended September 30, 2023 and 2022, ~~respectively, and $75,000 and $225,000 for the three and nine months ended September 30, 2021,~~ respectively.
1847 Cabinet expensed management fees of $125,000 and $375,000 for the three and nine months ended September 30, 2023 and 2022, ~~respectively, and $75,000 and $225,000 for the three and nine months ended September 30, 2021,~~ respectively.
1847 Wolo expensed management fees of $75,000 and $225,000 for the three and nine months ended September 30, 2023 and 2022, ~~respectively, and~~respectively.
1847 ICU expensed management fees of $75,000 and $150,000 for the three and nine months ended September 30, ~~2021, respectively.~~2023.
On a consolidated basis, the Company expensed total management fees of $350,000 and $975,000 for the three and nine months ended September 30, 2023, respectively, compared to $275,000 and $825,000 for the three and nine months ended September 30, 2022, ~~respectively, and $225,000 and $600,000 for the three and nine months ended September 30, 2021,~~ 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 September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, 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 September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the Manager has funded the Company $74,928 in related party advances. These advances are unsecured, bear no interest, and do not have formal repayment terms or arrangements.

~~1847 HOLDINGS LLC~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2022~~
~~(UNAUDITED)~~
Building Lease
On September 1, 2020, Kyle’s entered into an industrial lease agreement with Stephen Mallatt, Jr. and Rita Mallatt, the sellers of Kyle’s, 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.
The total rent expense under this related party ~~leases~~lease was $21,777 and $65,330 for the three and nine months ended September 30, ~~2022.~~2023 and 2022, respectively.

~~NOTE 11—MEZZANINE EQUITY~~

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
NOTE 12—SHAREHOLDERS’ EQUITY
Series A Senior Convertible Preferred Shares
OnDuring the three months ended September 30, ~~2020,~~2023, the Company ~~executed a share designation, which was amended on November 20, 2020, March 26, 2021 and September 29, 2021, to designate 4,450,460~~accrued dividends of ~~its shares as series A senior convertible preferred shares. Following is a description of the rights of~~$93,941 for the series A senior convertible preferred shares and settled $137,246 of previously accrued dividends through the issuance of 33,689 common shares.
~~Ranking.~~ ~~The~~ During the nine months ended September 30, 2023, the Company accrued dividends of $314,037 for the series A senior convertible preferred shares ~~rank, with respect~~and settled $401,183 of previously accrued dividends through the issuance of 45,153 common shares.
On May 15, 2023, the Company entered into amendments to the ~~payment of dividends and the distribution of assets upon liquidation, (i) senior~~securities purchase agreements relating 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;~~shares, pursuant to which the securities purchase agreements were amended to include a provision giving the Company to option to force the exercise of warrants issued pursuant to such securities purchase agreements for the issuance of a number of common shares equal to the quotient of (i) eighty percent (80%) of the Black Scholes Value of the warrants divided by (ii) ~~on parity with~~the applicable exercise price of the warrants.
During the three and nine months ended September 30, 2023, an aggregate of 1,367,273 series A senior convertible preferred shares were converted into an aggregate of 642,995 common shares.
As of September 30, 2023 and December 31, 2022, the Company had 226,667 and 1,593,940 series A senior convertible preferred shares issued and outstanding, respectively.
Series B Senior Convertible Preferred Shares
During the three months ended September 30, 2023, the Company accrued dividends of $31,088 for the series B senior convertible preferred shares and ~~each~~settled $54,839 of previously accrued dividends through the issuance of 13,461 common shares. During the nine months ended September 30, 2023, the Company accrued dividends of $139,084 for the series B senior convertible preferred shares, paid $105,671 and settled $54,839 previously accrued dividends through the issuance of 13,461 common shares.
On May 15, 2023, the Company entered into amendments to the securities purchase agreements relating to the series B senior convertible preferred shares, pursuant to which the securities purchase agreements were amended to include a provision giving the Company to option to force the exercise of warrants issued pursuant to such securities purchase agreements for the issuance of a number of common shares equal to the quotient of (i) eighty percent (80%) of the Black Scholes Value of the warrants divided by (ii) the applicable exercise price of the warrants.
During the three months ended September 30, 2023, an aggregate of 288,332 series B senior convertible preferred shares were converted into an aggregate of 336,748 common shares. During the nine months ended September 30, 2023, an aggregate of 373,332 series B senior convertible preferred shares were converted into an aggregate of 353,971 common shares.
As of September 30, 2023 and December 31, 2022, the Company had 91,567 and 464,899 series B senior convertible preferred shares issued and outstanding, respectively.
Common Shares
As of September 30, 2023 and December 31, 2022, the Company was authorized to issue 500,000,000 common shares. As of September 30, 2023 and December 31, 2022, the Company had 3,088,319 and 174,249 common shares issued and outstanding, respectively.
In February 2023, the Company issued an aggregate of 16,625 common shares to two accredited investors as a commitment fee (see Note 10).
On May 16, 2023, the Company issued an aggregate of 40,269 common shares upon the forced cashless exercise of warrants, which were originally issued with the series A and B senior convertible preferred shares.

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
In May 2023, the Company issued 20,260 common shares upon the exercise of warrants for cash proceeds of $5,064.
On July 3, 2023, the Company entered into a securities purchase agreement with certain purchasers and a placement agency agreement with Spartan, pursuant to which the Company agreed to issue and sell to such purchasers an aggregate of 153,800 common shares and prefunded warrants for the purchase of 220,000 common shares at an offering price of $5.00 per common share and $4.75 per pre-funded warrant, pursuant to the Company’s effective registration statement on Form S-1 (File No. 333-272057). On July 7, 2023, the closing of this offering was completed. At the closing, the purchasers prepaid the exercise price of the prefunded warrants in full. Therefore, the Company received total gross proceeds of $1,869,000. Pursuant to the placement agency agreement, Spartan received a cash transaction fee equal to 8% of the aggregate gross proceeds and reimbursement of certain out-of-pocket expenses. After deducting these and other ~~class~~offering expenses, the Company received net proceeds of approximately $1,494,480. All of the purchasers exercised the prefunded warrants in full either at closing or shortly thereafter and the Company issued an aggregate of 220,000 common shares upon such exercise.
On July 14, 2023, the Company entered into a securities purchase agreement with certain purchasers and a placement agency agreement with Spartan, which were amended pursuant to an amendatory agreement, dated July 18, 2023, among the Company, Spartan and such purchasers. Pursuant to the foregoing, on July 18, 2023, the Company issued and sold to such purchasers an aggregate of 160,000 common shares at a purchase price of $6.00 per share for total gross proceeds of $960,000, pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-269509). Spartan received a cash transaction fee equal to 8% of the aggregate gross proceeds and reimbursement of certain out-of-pocket expenses. After deducting these and other offering expenses, the Company received net proceeds of approximately $858,200.
During the nine months ended September 30, 2023, the Company issued an aggregate 58,614 common shares to the holders of the series ~~that is not expressly subordinated or made~~A and B senior convertible preferred shares in settlement of $456,022 of accrued dividends. Pursuant 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.~~ ~~Holders of series A~~B senior convertible preferred shares ~~are entitled to~~designations, dividends at a rate per annum of 14.0% of the stated value ($2.00 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 volume weighted average price 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~~date.
During the nine months ended September 30, 2023, the Company issued an aggregate of 50,717 common shares ~~are not registered, and Rule 144 rulemaking referred to below is effective on~~upon the ~~payment date,~~cashless exercise of other warrants.
During the ~~dividends payable in~~nine months ended September 30, 2023, the Company issued an aggregate of 642,995 common shares ~~shall be calculated based~~ upon the ~~fixed price~~conversion 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 Rights.~~ ~~Subject to the rights~~an aggregate 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 the1,367,273 series A senior convertible preferred ~~shares as to~~shares.
During the ~~distribution of assets on any liquidation of~~nine months ended September 30, 2023, the Company ~~including the~~issued an aggregate of 353,971 common shares ~~and allocation shares, each holder~~upon the conversion of ~~outstanding~~an aggregate of 373,332 series AB senior convertible preferred shares.
During the nine months ended September 30, 2023, the Company issued an aggregate of 1,196,819 common shares ~~shall be entitled to receive an amount of cash equal to 115% of~~upon the ~~stated value plus an amount of cash equal to all accumulated~~conversion promissory notes and 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 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, 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.interest (see Note 10).

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, ~~2022~~2023
(UNAUDITED)

~~Voting Rights~~Warrants~~. 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,~~
Warrant Dividend Issued to Common Shareholders
On January 3, 2023, the ~~affirmative vote~~Company issued warrants for the purchase of ~~holders of a majority of series A senior convertible preferred~~16,315 common shares ~~which majority must include Leonite Capital LLC so long as 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~~dividend to common shareholders of ~~any~~record as of ~~the provisions of the 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~~December 23, 2022, pursuant to the 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 connectiona warrant agent agreement, dated January 3, 2023, 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 will be used to redeem the series A senior convertible preferred shares and the warrants issued in connection therewith.
~~Conversion Rights~~.VStock Transfer, LLC. 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 a conversion price of $7.00 per 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. This limitation may be waived (up toreceived 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, or upon the written consent of the Requisite Holders and in 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~~. 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 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 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.

~~1847 HOLDINGS LLC~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 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 valueshall 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 $0.03. 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.
~~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 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 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 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 September 30, 2022 and December 31, 2021, the Company had 1,593,940 and 1,818,182 series A senior convertible preferred shares issued and outstanding, respectively.~~
During the three months ended September 30, 2022, the Company accrued dividends attributable to the series A senior convertible preferred shares in the amount of $156,738 and paid prior period accrued dividends of $174,701. During the nine months ended September 30, 2022, the Company accrued dividends attributable to the series A senior convertible preferred shares in the amount of $437,491 and paid prior period accrued dividends of $462,925.
~~On February 16, 2022, 133,333 shares of series A senior convertible preferred shares were converted into 38,096 common shares.~~
~~On August 12, 2022, the Company redeemed 90,909 series A senior convertible preferred shares for a total redemption price of $209,091.~~
~~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.

~~1847 HOLDINGS LLC~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2022~~
~~(UNAUDITED)~~
~~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.
~~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 $12.00 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.

~~1847 HOLDINGS LLC~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2022~~
~~(UNAUDITED)~~
~~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.
~~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 24~~^th 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 36~~^th 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 $0.03 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.
From February 24, 2022 to March 24, 2022, the Company sold an aggregate of 426,999 units, at a price of $3.00 per unit, for aggregate gross proceeds of $1,281,000. From April 20, 2022 to May 19, 2022, the Company sold an aggregate of 54,567 units to our Chief Executive Officer, Ellery W. Roberts, for aggregate gross proceeds of $163,700. The Company had total issuance costs relating to these offerings of approximately $15,000, resulting in net proceeds of $1,429,700.
~~Each unit consists of one (1) series B senior convertible preferred share and a three-year~~ warrant to purchase one (1) common share for every ten (10) common shares owned as of the record date (with the number of shares underlying the warrant received rounded down to the nearest whole number). Each warrant represents the right to purchase common shares at an initial exercise price of ~~$3.00~~$105.00 per ~~common~~ share (subject to ~~adjustment),~~certain adjustments as set forth in the warrants). The Company may, at its option, voluntarily reduce the then-current exercise price to such amount and for such period or periods of time which may be ~~exercised on a cashless basis under certain circumstances. The embedded conversion options~~through the expiration date as may be deemed appropriate by the board of directors. Cashless exercises of the ~~series B senior convertible preferred shares and~~ warrants ~~were clearly and closely related~~are not permitted. The warrants will generally be exercisable in whole or in part beginning on the later of (i) January 3, 2024 or (ii) the date that a registration statement on Form S-3 with respect to the ~~equity host~~issuance and ~~did~~registration of the common shares underlying the warrants has been filed with and declared effective by the SEC, and thereafter until January 3, 2026. The Company may redeem the warrants at any time in whole or in part at $0.001 per warrant (subject to equitable adjustment to reflect share splits, share dividends, share combinations, recapitalizations and like occurrences) upon not ~~require bifurcation. The $1,429,700 of net proceeds were allocated on a relative fair value basis of $1,257,650~~less than 30 days’ prior written notice to the ~~series B preferred shares and $172,050 to~~registered holders of 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 September 30, 2022 and December 31, 2021, the Company had 464,899 and 0 series B senior convertible preferred shares issued and outstanding, respectively.~~

~~1847 HOLDINGS LLC~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2022~~
~~(UNAUDITED)~~
During the three months ended September 30, 2022, the Company accrued dividends attributable to the series B senior convertible preferred shares in the amount of $50,309 and paid prior period accrued dividends of $48,197. During the nine months ended September 30, 2022, the Company accrued dividends attributable to the series B senior convertible preferred shares in the amount of $113,052 and paid prior period accrued dividends of $77,548.
~~On August 26, 2022, the Company redeemed 16,667 series B senior convertible preferred shares for a total redemption price of $57,501.~~
~~Mezzanine Equity Classification~~
We applied the guidance in ASC 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.
~~ASC 480 requires equity instruments to be evaluated on an ongoing basis for mezzanine equity (temporary equity) vs permanent equity classification.~~ As a result of the ~~maximum number~~issuance of warrants as a dividend to common shares that may be issuable (upon conversion of the preferred securities) exceeded the number of authorized but unissued common shares available, temporary equity classification is required. As of December 31, 2021, there were 1,818,182 series A senior convertible preferred shares presented in mezzanine equity.
As a result of the 1-for-4 reverse split of our outstanding common shares (see Note 1 for additional information), the maximum number of common shares that may be issuable (upon conversion of the preferred securities) no longer exceeded the number of unissued common shares available, resulting in the reclassification of 1,684,849 series A senior convertible preferred shares and 481,566 series B senior convertible preferred shares from mezzanine equity to permanent equity.
~~NOTE 12—SHAREHOLDERS’ DEFICIT~~
~~Reverse Stock Split~~
~~The Company’s board of directors approved a 1-for-4 reverse stock split of its issued, outstanding common shares, which became effective August 2, 2022. See Note 1 for additional information.~~
~~Common Shares~~
~~As of September 30, 2022,~~shareholders, the Company recognized a deemed dividend of approximately $0.6 million, which was ~~authorized to issue 500,000,000 common shares. As~~calculated using a Black-Scholes pricing model.
Warrants Issued in Private Placements of ~~September 30, 2022 and December 31, 2021, the Company had 4,079,137 and 1,210,918 common shares issued and outstanding, respectively.~~Promissory Notes
On February ~~16, 2022, the Company issued 38,096 common shares upon the conversion of 133,333 series A senior convertible preferred shares.~~
~~From July 12, 2022 to September 15, 2022, the Company issued 126,669 common shares upon cashless exercises of a warrants.~~
~~On August 2, 2022,~~3, 2023 (as described in Note 10), the Company entered into ~~an underwriting agreement~~securities purchase agreements with ~~Craft Capital Management LLC~~two accredited investors, Mast Hill and R.F. Lafferty & Co. Inc., as representatives of the underwriters named on Schedule 1 thereto, relating to the Company’s public offering of common shares. Under the underwriting agreement, the Company agreed to sell 1,428,572 common shares to the underwriters, at a gross purchase price per share of $4.20 per share,Leonite, pursuant to the Company’s registration statement on Form S-1 (File No. 333-259011) under the Securities Act of 1933, as amended. On August 5, 2022, the closing of the public offering was completed and the Company sold 1,428,572 common shares for total gross proceeds of $6 million. After deducting underwriting commissions and expenses, the Company received net proceeds of approximately $5.15 million.

~~1847 HOLDINGS LLC~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2022~~
~~(UNAUDITED)~~
~~On August 2, 2022,~~which the Company issued ~~an aggregate of 800,000 common shares upon the partial extinguishment of convertible promissory notes. On October 8, 2021, 1847 Cabinet issued 6% subordinated convertible~~to such investors (i) promissory notes in the aggregate principal amount of ~~$5,880,345 to Steven J. Parkey~~$604,000 and ~~Jose D. Garcia-Rendon. On July 26, 2022,~~(ii) five-year warrants for the ~~Company and 1847 Cabinet entered into a conversion agreement with Steven J. Parkey and Jose D. Garcia-Rendon, pursuant to which they agreed to convert~~purchase of an aggregate of ~~$3,360,000 of the convertible notes into an aggregate of 800,000~~5,034 common shares ~~of the Company at a conversion price of $4.20 per share. As a result, the Company recognized a loss on extinguishment of debt of $1,280,000.~~
On August 2, 2022, the Company issued 189,815 common shares upon the partial extinguishment of a contingent note payable. On September 30, 2020, 1847 Cabinet Inc. issued an 8% vesting promissory note in the principal amount of up to $1,260,000 to Stephen Mallatt, Jr. and Rita Mallatt. On July 26, 2022, the Company and 1847 Cabinet entered into a conversion agreement with Stephen Mallatt, Jr. and Rita Mallatt, pursuant to which they agreed to convert $797,221 of the vesting note into 189,815 common shares of the Company at a conversion price of $4.20 per share. As a result, the Company recognized a loss on extinguishment of debt of $303,706.
On August 2, 2022, the Company issued 285,067 common shares to Bevilacqua PLLC, the Company’s outside securities counsel, upon the settlement of accounts payable. On July 26, 2022, the Company also entered into a conversion agreement with Bevilacqua PLLC, pursuant to which it agreed to convert $1,197,280 of the accounts payable owed to it into 285,067 common shares of the Company at a conversion price of $4.20 per share. As a result, the Company recognized a loss on extinguishment of debt of $456,109.
On March 23, 2022, the Company declared a common share dividend of $0.05 per share, or an aggregate of $249,762, to shareholders of record as of March 31, 2022. This dividend was paid on April 15, 2022.
On July 29, 2022, the Company declared a common share dividend of $0.13125 per share, or an aggregate of $337,841, to shareholders of record as of August 4, 2022. This dividend was paid on August 19, 2022.
On August 23, 2022, the Company declared a common share dividend of $0.13125 per share, or an aggregate of $505,751 to shareholders of record as of September 30, 2022. This dividend was paid on October 17, 2022.
~~Warrants~~
As described in Note 11, the Company issued units during the nine months ended September 30, 2022, with each unit consisting 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 ~~$12.00~~$4.20 per ~~common~~ share (subject to adjustment)~~, which such~~ for total cash proceeds of $540,000. As additional consideration, the Company issued an aggregate of 5,034 common shares to the investors as a commitment fee. Additionally, the Company issued a five-year warrant to J.H. Darbie & Co (the broker) for the purchase of 36 common shares at an exercise price ~~was~~of $5.25 (subject to adjustment). On August 30, 2023, Leonite exercised its warrant in full on a cashless basis for 2,733 common shares and on September 11, 2023, Mast Hill exercised its warrant in full on a cashless basis for 569 common shares. The exercise prices of the outstanding foregoing warrants were adjusted on multiple occasions due to ~~$4.20 following~~ the ~~adjustments~~antidilution provisions (down round feature) in the warrants described below.
Accordingly, a portion of the proceeds were allocated to the ~~warrant~~warrants and common shares based on ~~its~~their 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 ~~51.81%~~162.3%; (iii) weighted average risk-free interest rate of ~~0.31%~~4.1%; (iv) expected life of ~~three~~five years; (v) estimated fair value of the common shares of ~~$7.76~~$48.25 per share; (vi) exercise price ranging from $105.00 to $131.25; and ~~(vi)~~(vii) various probability assumptions related to ~~redemption, calls and~~down round price ~~resets.~~adjustments. The fair value of the warrants was ~~$428,034, or $0.89 per warrant,~~$222,129 and the fair value of the commitment shares was $242,858, resulting in the amount allocated to the warrants and commitment shares, based on their relative fair value of ~~$172,050,~~$218,172, which was recorded as additional paid-in capital.

~~1847 HOLDINGS LLC~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2022~~
~~(UNAUDITED)~~
The warrants allow the holder to purchase one (1) common share at an exercise price of $12.00 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. 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 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 holderOn February 9, 2023 (as described 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 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.
~~On July 8, 2022,~~Note 10), the Company entered into a securities purchase ~~agreement~~agreements with two accredited investors, Mast Hill ~~Fund, L.P.,~~and Leonite, pursuant to which the Company issued to ~~it a promissory note in~~such investors five-year warrants for the ~~principal amount~~purchase of ~~$600,000, and~~an aggregate of 21,314 common shares at an exercise price of $105.00 per share (subject to adjustment). As additional consideration, the Company issued Leonite a five-year warrant for the purchase of ~~100,000~~9,723 common shares at an exercise price of ~~$6.00~~$0.25 per share (subject to adjustment), which ~~such exercise price was adjusted to $4.20 following the adjustments described below, which may be exercised on~~were issued as a ~~cashless basis if the market price of the Company’s common shares is greater than the exercise price, for total net proceeds of $499,600.~~commitment fee. Additionally, the Company issued a ~~three-year~~five-year warrant to J.H. Darbie & Co (the broker) for the purchase of ~~3,600~~477 common shares at an exercise price of ~~$7.50~~$131.25 (subject to adjustment)~~, which such exercise price was adjusted to $4.20 following the adjustments described below, which may be~~. On August 30, 2023, Leonite exercised both warrants in full on a cashless basis ~~if the market price~~for 15,677 common shares and on September 11, 2023, Mast Hill exercised its warrant in full on a cashless basis for 7,604 common shares. The exercise prices of the ~~Company’s common shares is greater than~~outstanding foregoing warrants were adjusted on multiple occasions due to the ~~exercise price.~~ antidilution provisions (down round feature) in the warrants described below.

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
Accordingly, a portion of the proceeds were allocated to the warrants and common shares based on ~~its~~their 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 ~~49.11%~~162.0%; (iii) weighted average risk-free interest rate of ~~3.13%~~4.3%; (iv) expected life of five years; (v) estimated fair value of the common shares of ~~$7.23~~$45.00 per share; (vi) exercise price ranging from $0.25 to $131.25; and ~~(vi)~~(vii) various probability assumptions related to down round price adjustments. The fair value of the warrants was ~~$2,405,306, or $6.01~~$1,323,774 and the fair value of the commitment shares was $521,590, resulting in the amount allocated to the warrants and commitment shares, based on their relative fair value of $879,829, which was recorded as additional paid-in capital.
On February 22, 2023 (as described in Note 10), the Company entered into securities purchase agreement with one accredited investor, Mast Hill, pursuant to which the Company issued to such investor five-year warrants for the purchase of an aggregate of 7,317 common shares at an exercise price of $105.00 per share (subject to adjustment). As additional consideration, the Company issued a five-year warrant for the purchase of 7,934 common shares at an exercise price of $0.25 per share (subject to adjustment) to the investor as a commitment fee. Additionally, the Company issued a five-year warrant to J.H. Darbie & Co (the broker) for the purchase of 302 common shares at an exercise price of $131.25 (subject to adjustment). On September 11, 2023, Mast Hill exercised both warrants in full on a cashless basis for 12,389 common shares. The exercise prices of the outstanding foregoing warrants were adjusted on multiple occasions due to the antidilution provisions (down round feature) in the warrants described below.
Accordingly, a portion of the proceeds were allocated to the warrants based on their 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 161.6%; (iii) weighted average risk-free interest rate of 4.5%; (iv) expected life of five years; (v) estimated fair value of the common shares of $37.75 per share; (vi) exercise price ranging from $0.25 to $131.25; and (vii) various probability assumptions related to down round price adjustments. The fair value of the warrants was $556,485, resulting in the amount allocated to the warrants, based on their relative fair value of ~~$402,650,~~$261,945, which was recorded as additional paid-in capital.
Warrants Issued in Public Equity Offering
On ~~August 10, 2022,~~July 7, 2023 (as described above), the ~~promissory note~~Company closed on a securities purchase agreement with certain purchasers and a placement agency agreement with Spartan, pursuant to which the Company agreed to issue and sell to such purchasers prefunded warrants for the purchase of 220,000 common shares at an exercise price of $0.25 per common share. All of the prefunded warrants were exercised in full either at closing or shortly thereafter and the Company issued an aggregate of 220,000 common shares upon such exercise.
The Company evaluated the prefunded warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the prefunded warrants and applicable authoritative guidance in ASC 480 and ASC 815-40. The Company determined the prefunded warrants issued failed the indexation guidance under ASC 815-40, specifically, the prefunded warrants provide for a Black-Scholes value calculation in the event of certain transactions (“Fundamental Transactions”), which includes a floor on volatility utilized in the value calculation at 100% or greater. The Company has determined that this provision introduces leverage to the holders of the warrants that could result in a value that would be greater than the settlement amount of a fixed-for-fixed option on the Company’s own equity shares. Accordingly, pursuant to ASC 815-40, the Company recorded the fair value of the warrants as a liability upon issuance and marked to market each reporting period in the Company’s consolidated statement of operations until their exercise or expiration.
The fair value of the warrants deemed to be a liability, due to certain contingent put features, was ~~repaid~~determined using the Black-Scholes option pricing model, which was deemed to be an appropriate model due to the terms of the warrants issued, including a fixed term and exercise price. The assumptions used in ~~full.~~the model were as follows: (i) dividend yield of 0%; (ii) expected volatility of 157.8%; (iii) risk-free interest rate of 5.3%; (iv) expected life of 30 days; (v) estimated fair value of the common shares of $5.51 per share; (vi) exercise price of $0.25.

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
The following table provides a roll-forward of the warrant liability for the three and nine months ended September 30, 2023, as follows:
Amount
Balance at December 31, 2022 $ -
Fair value of warrant liability upon issuance 1,156,300
Loss on change in fair value of warrant liability 27,900
Extinguishment of warrant liability upon exercise of prefunded warrants (1,184,200 )
Balance at September 30, 2023 $ -
Warrants Issued in Private Placement of 20% OID Promissory Notes
On August 11, 2023 (as described in Note 10), the Company entered into a securities purchase agreement in a private placement transaction with certain accredited investors, pursuant to which the Company issued five-year warrants for the purchase of an aggregate of 163,939 common shares an exercise price of $4.58 (subject to standard adjustments). Spartan acted as placement agent in connection with the securities purchase agreement and received warrants for the purchase of a number of common shares equal to eight percent (8%) of the number common shares issuable upon conversion of the notes and exercise of the warrants at an exercise price of $5.03 per share (subject to standard adjustments), resulting in the issuance of a warrant for 346,449 common shares. The warrant is exercisable at any time six months after the date of issuance and until the fifth anniversary thereof.
Accordingly, a portion of the proceeds were allocated to the warrants based on their relative fair value using the Black-Scholes option pricing model. The assumptions used in the model were as follows: (i) dividend yield of 0%; (ii) expected volatility of 153.1%; (iii) risk-free interest rate of 4.3%; (iv) expected life of 5 years; (v) estimated fair value of the common shares of $4.63 per share; (vi) exercise price ranging from $4.58 to $5.03. The fair value of the warrants was $2,171,600, resulting in the amount allocated to the warrants, based on their relative fair value of $909,377, which was recorded as additional paid-in capital.
Exercise Price Adjustments to Warrants
As a result of the issuance of ~~the note to Mast Hill Fund, L.P.~~common shares in settlement of series A senior convertible preferred shares accrued dividends on ~~July 8, 2022,~~January 30, 2023, the exercise price of certain of the Company’s outstanding warrants was adjusted to ~~$5.20~~$38.36 pursuant to certain antidilution provisions of such warrants (down round feature). In addition, certain of the Company’s outstanding warrants include an “full ratchet” feature, whereby the exercise price was reset to $5.20 and the number of shares underlying the warrants was increased in the same proportion as the exercise price decrease. As a result, the Company recognized a deemed dividend of ~~approximately $6.4 million,~~$1,217,000, which was calculated using a Black-Scholes pricing model.
~~From July 12, 2022 to September 15, 2022, warrants for the purchase of 209,635 common shares were exercised on a cashless basis resulting in the issuance of 126,669 common shares.~~
On August 5, 2022, the Company issued a common share purchase warrant to each of Craft Capital Management LLC and R.F. Lafferty & Co. Inc., the representatives of the underwriters for the public offering described above, for the purchase of 35,715 common shares at an exercise price of $5.25, subject to adjustments. The warrants will be exercisable at any time and from time to time, in whole or in part, during the period commencing on February 5, 2023 and ending on August 2, 2027 and may be exercised on a cashless basis under certain circumstances.
As a result of the ~~public offering,~~issuance of common shares in settlement of series A senior convertible preferred shares accrued dividends on April 30, 2023, the exercise price of certain of the Company’s outstanding warrants was adjusted to ~~$4.20~~$14.87 pursuant to certain antidilution provisions of such warrants (down round feature). ~~In addition,~~As a result, the Company recognized a deemed dividend of $534,000, which was calculated using a Black-Scholes pricing model.
As a result of the issuance of common shares in the offering on July 7, 2023, the exercise price of certain of the Company’s outstanding warrants ~~include an “full ratchet” feature, whereby~~was adjusted to $5.00 pursuant to certain antidilution provisions of such warrants (down round feature). As a result, the Company recognized a deemed dividend of $19,000, which was calculated using a Black-Scholes pricing model.
As a result of the issuance of common shares in settlement of series A senior convertible preferred shares and series B senior convertible preferred shares accrued dividends on July 30, 2023, the exercise price ~~was reset to $4.20 and~~of certain of the ~~number of shares underlying the~~Company’s outstanding warrants was ~~increased in the same proportion as the exercise price decrease.~~adjusted to $4.07 pursuant to certain antidilution provisions of such warrants (down round feature). As a result, the Company recognized a deemed dividend of approximately ~~$2.6 million,~~$3,000, which was calculated using a Black-Scholes pricing model.
As a result of the issuance of common shares upon the conversion of promissory notes on August 30, 2023, the exercise price of certain of the Company’s outstanding warrants was adjusted to $1.98 pursuant to certain antidilution provisions of such warrants (down round feature). As a result, the Company recognized a deemed dividend of $6,000, which was calculated using a Black-Scholes pricing model.

1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, ~~2022~~2023
(UNAUDITED)
Below is a table summarizing the changes in warrants outstanding during the nine months ended September 30, ~~2022:~~2023:
Warrants Weighted-
Average
Exercise
Price
Outstanding at December 31, 2021 1,300,122 $ 9.52
Granted⁽¹⁾ 1,978,432 5.25
Exercised (209,635 ) (5.58 )
Outstanding at September 30, 2022 3,068,919 $ 5.10
Exercisable at September 30, 2022 2,997,489 $ 5.10
Warrants Weighted-
Average
Exercise
Price
Outstanding at December 31, 2022 122,779 $ 103.49
Granted 798,840 9.90
Exercised/settled (379,194 ) (4.47 )
Outstanding at September 30, 2023 542,425 $ 8.49
Exercisable at September 30, 2023 526,110 $ 5.50
~~(1)~~ ~~Includes the issuance of warrants for the purchase of 295,427 common shares and an increase of 1,683,005 common shares underlying warrants pursuant to the adjustments described above.~~
As of September 30, ~~2022,~~2023, the outstanding warrants have a weighted average remaining contractual life of ~~1.68~~4.74 years and a total intrinsic value of ~~$98,125.~~$0.
NOTE ~~13—~~13—EARNINGS (LOSS) PER SHARE
The computation of weighted average shares outstanding and the basic and diluted loss per common share attributable to common shareholders for the three and nine months ended September 30, 2023 and 2022 consisted of the following:
Three Months
Ended
September 30,
2022 Nine Months
Ended
September 30,
2022
Net loss per common share attributable to common shareholders’ (13,440,062 ) $ (14,801,040 )
Weighted average common shares outstanding 2,979,949 1,832,076
Basic and diluted loss per share $ (4.51 ) $ (8.08 )
Three Months Ended
September 30, Nine Months Ended
September 30,
2023 2022 2023 2022
Net loss attributable to common shareholders $ (5,981,334 ) $ (13,440,062 ) $ (11,336,623 ) $ (14,801,040 )
Weighted-average common shares outstanding – basic and diluted 1,987,394 130,281 809,417 84,367
Loss per common share attributable to common shareholders – basic and diluted $ (3.01 ) $ (103.16 ) $ (14.01 ) $ (175.44 )
For the three and nine months ended September 30, ~~2022,~~2023, there were ~~6,462,938~~14,602,209 potential common share equivalents from warrants, convertible debt, and series A and B senior convertible preferred shares excluded from the diluted earnings per share calculations as their effect is anti-dilutive.
For the three and nine months ended September 30, ~~2021,~~2022, there were ~~547,459~~258,518 potential common share equivalents from warrants, convertible debt, and series A and B senior convertible preferred shares excluded from the diluted earnings per share calculations as their effect is anti-dilutive.

NOTE ~~14—SUBSEQUENT EVENTS~~14—DEFERRED INCOME TAXES
As of September 30, 2023, the Company has net operating loss carry forwards of approximately $5.9 million that may be available to reduce future years’ taxable income indefinitely. Future tax benefits which may arise as a result of these losses have not been recognized in these condensed consolidated financial statements, as their realization is determined not likely to occur. Accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. For the period ending September 30, 2023, the Company reflects a deferred tax liability in the amount of $0.6 million due to the future tax liability from an asset with an indefinite life known as a “naked credit.” The future tax liability from this indefinite lived asset can be offset by up to 80% of net operating loss carryforwards created after 2017. The remaining portion of the future tax liability from indefinite lived assets cannot be used to offset definite lived deferred tax assets.
~~On October 20, 2022,~~

1847 ~~Asien~~HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
Deferred income taxes reflect the net tax effect of temporary differences between amounts recorded for financial reporting purposes and ~~Joerg Christian Wilhelmsen and Susan Kay Wilhelmsen, as trustees~~amounts used for tax purposes. The Company has a net cumulative long-term deferred tax liability of $584,000. The major components of the Wilhelmsen Family Trust, U/D/T Dated May 1, 1992 entered into a letter agreement to amend the terms of that certain 6% amortizing promissory note in the aggregate principal amount of $1,037,500. Pursuant to the letter agreement, the parties agreed to extend the maturity date of this note to February 28,deferred tax assets and liabilities at September 30, 2023 and ~~revised~~December 31, 2022 consisted of the repayment terms so that the outstanding principal amount and all accrued interest thereon shall be payable monthly, beginning on November 30, 2022, in accordance with the payment schedule set forth on Exhibit A to the letter agreement. As additional consideration for entering into the letter agreement, 1847 Asien also agreed to pay the lender $87,707 as an amendment fee.following:

September 30,
2023

December 31,
2022

Deferred tax assets
Inventory obsolescence $ 289,000 $ 93,000
Reserves 86,000 -
Business interest limitations 2,750,000 1,707,000
Lease liabilities 533,000 650,000
Other 45,000 75,000
Loss carryforward 1,475,000 285,000
Valuation allowance (2,698,000 ) -
Total deferred tax asset 2,480,000 2,810,000

Deferred tax liabilities
Fixed assets (430,000 ) (418,000 )
Right-of-use assets (508,000 ) (628,000 )
Intangibles (2,126,000 ) (2,363,000 )
Total deferred tax liability (3,064,000 ) (3,409,000 )

Total deferred tax liability, net $ (584,000 ) $ (599,000 )
NOTE 15—SUBSEQUENT EVENTS
On October 30, 2023, the Company issued 78,830 common shares as payment of dividends on the series A senior convertible preferred shares and series B senior convertible preferred shares.

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
~~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”~~“our company” refer to 1847 Holdings LLC, a Delaware limited liability company, and its consolidated subsidiaries. References to ~~the “Manager”~~“our 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~~our 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~~our manager’s ability to retain or replace qualified employees of our businesses and ~~the Manager;~~our 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~~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” included in our ~~annual report~~Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022 and elsewhere in this report. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance.

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.
On May 28, 2020, our subsidiary 1847 Asien Inc. (“, or 1847 ~~Asien”)~~Asien, acquired Asien’s Appliance, Inc., a California corporation, ~~(“Asien’s”).~~or 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. (“, or 1847 ~~Cabinet”)~~Cabinet, acquired Kyle’s Custom Wood Shop, Inc., an Idaho corporation, ~~(“Kyle’s”).~~or 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. (“, or 1847 ~~Wolo”)~~Wolo, acquired Wolo Mfg. Corp., a New York corporation, and Wolo Industrial Horn & Signal, Inc., a New York corporation ~~(together, “Wolo”)~~(which we collectively refer to as Wolo). Headquartered in Deer Park, New York and founded in 1965, Wolo designs and 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, (“or High ~~Mountain”),~~Mountain, and Sierra Homes, LLC d/b/a Innovative Cabinets & Design, a Nevada limited liability company, (“or Innovative ~~Cabinets”).~~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.
On February 9, 2023, our subsidiary, 1847 ICU Holdings Inc., or 1847 ICU, acquired ICU Eyewear Holdings, Inc., a California corporation, and its subsidiary ICU Eyewear, Inc., a California corporation, which we collectively refer to as ICU Eyewear. Headquartered in Hollister, California and founded in 1956, ICU Eyewear specializes in the sale and distribution of reading eyewear and sunglasses, blue light blocking eyewear, sun readers, and other outdoor specialty sunglasses, as well as select health and personal care items, including face masks.
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 make and grow regular distributions to our common shareholders and ~~increasing~~increase 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~~Management Fees
On October 20, 2022, 1847 Asien 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”) entered into a letter agreement to amend the terms of that certain 6% amortizing promissory note in the aggregate principal amount of $1,037,500 described below. Pursuant to the letter agreement, the parties agreed to extend the maturity date of this note to February 28, 2023 and revised the repayment terms so that the outstanding principal amount and all accrued interest thereon shall be payable monthly, beginning on November 30, 2022, in accordance with the payment schedule set forth on Exhibit A to the letter agreement. As additional consideration for entering into the letter agreement, 1847 Asien also agreed to pay the Asien’s Seller $87,707 as an amendment fee.

~~Impact of Coronavirus Pandemic~~
In December 2019, a novel coronavirus disease, or COVID-19, was initially reported and on March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. COVID-19 has had a widespread and detrimental effect on the global economy as a result of the continued increase in the number of cases and affected countries and actions by public health and governmental authorities, businesses, other organizations, and individuals to address the outbreak, including travel bans and restrictions, quarantines, shelter in place, stay at home or total lock-down orders and business limitations and shutdowns.
Despite recent developments of vaccines, the duration and severity of COVID-19, mutations and possible additional mutations and the degree of their impact on our business is uncertain and difficult to predict. The continued spread of the outbreak could result in one or more of the following conditions that could have a material adverse impact on our business operations and financial condition: delays or difficulty sourcing certain products and raw materials; increased costs for such products and raw materials; and loss of productivity due to employee absences. Notably, 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. Our inability to respond to and manage the potential impact of such events effectively could have a material adverse effect on our business, financial condition, and results of operations.
Our efforts to help mitigate the negative impact of the outbreak on our business may not be effective, and we may be affected by a protracted economic downturn. Furthermore, while many governmental authorities around the world have and continue to enact legislation to address the impact of COVID-19, including measures intended to mitigate some of the more severe anticipated economic effects of the virus, we may not benefit from such legislation, or such legislation may prove to be ineffective in addressing COVID-19’s impact on our and our customer’s businesses and operations. Even after the COVID-19 outbreak has subsided, we may continue to experience impacts to our business as a result of COVID-19’s global economic impact and any recession that has occurred or may occur in the future. Further, as the COVID-19 situation is unprecedented and continuously evolving, COVID-19 may also affect our operating and financial results in a manner that is not presently known to us or in a manner that we currently do not consider that may present significant risks to our operations.
The extent to which the COVID-19 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. 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.
~~Management Fees~~
On April 15, 2013, ~~the Company~~we and ~~the Manager~~our manager entered into a management services agreement, pursuant to which ~~the Company is~~we are required to pay ~~the Manager~~our manager a quarterly management fee equal to 0.5% of ~~its~~our adjusted net assets for services performed ~~(the “Parent Management Fee”)~~(which we refer to as the parent management fee). The amount of the ~~Parent Management Fee~~parent management fee with respect to any fiscal quarter is (i) reduced by the aggregate amount of any management fees received by ~~the Manager~~our 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~~parent management fees received by (or owed to) ~~the Manager~~our 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~~parent management fees. We did not expense any parent management fees for the three and nine months ended September 30, ~~2022~~2023 and ~~2021.~~2022.

1847 Asien entered into an offsetting management services agreement with ~~the Manager~~our manager on May 28, 2020, 1847 Cabinet entered into an offsetting management services agreement with ~~the Manager~~our 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~~our manager on March 30, ~~2021.~~2021 and 1847 ICU entered into an offsetting management services agreement with our manager on February 9, 2023. 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,~~each of 1847 Asien, 1847 Wolo and 1847 ICU appointed ~~the Manager~~our 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), and 1847 Cabinet appointed ~~the Manager~~our 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);2021; provided, however, in each case that if the aggregate amount of management fees paid or to be paid by such entities, together with all other management fees paid or to be paid to ~~the Manager~~our manager under other offsetting management services agreements, exceeds, or is expected to exceed, 9.5% of our gross income in any fiscal year or the ~~Parent Management Fee~~parent management fee in any fiscal quarter, then the management fee to be paid by such entities shall be reduced, on a pro rata basis determined by reference to the other management fees to be paid to ~~the Manager~~our manager under other offsetting management services agreements.

Each of these ~~subsidiaries~~entities shall also reimburse ~~the Manager~~our 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~~our manager or its affiliates on behalf of these ~~subsidiaries~~entities in connection with performing services under the offsetting management services agreements.
1847 Asien expensed management fees of $75,000 and $225,000 for the three and nine months ended September 30, 2023 and 2022, ~~respectively, and $75,000 and $225,000 for the three and nine months ended September 30, 2021,~~ respectively.
1847 Cabinet expensed management fees of $125,000 and $375,000 for the three and nine months ended September 30, 2023 and 2022, ~~respectively, and $75,000 and $225,000 for the three and nine months ended September 30, 2021,~~ respectively.
1847 Wolo expensed management fees of $75,000 and $225,000 for the three and nine months ended September 30, 2023 and 2022, ~~respectively, and~~respectively.
1847 ICU expensed management fees of $75,000 and $150,000 for the three and nine months ended September 30, ~~2021, respectively.~~2023.
On a consolidated basis, ~~the Company~~our company expensed total management fees of $350,000 and $975,000 for the three and nine months ended September 30, 2023, respectively, compared to $275,000 and $825,000 for the three and nine months ended September 30, 2022, ~~respectively, and $225,000 and $600,000 for the three and nine months ended September 30, 2021,~~ respectively.
Segments
The Financial Accounting Standards Board, or FASB, Accounting Standard Codification, ~~Topic~~or ASC 280, Segment Reporting, requires that an enterprise report selected information about reportable segments in its financial reports issued to its shareholders. As of September 30, ~~2022,~~2023, we have ~~three~~four reportable segments -– the retail and appliances segment, which is operated by Asien’s, the retail and eyewear segment, which is operated by ICU Eyewear, 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 products (laundry, refrigeration, cooking, dishwashers, outdoor, accessories, parts, and other appliance related products) and services ~~including sales, delivery,~~(delivery, installation, service and repair, extended warranties, and ~~financing.~~financing).
The ~~construction~~retail and eyewear segment ~~is comprised of the businesses of Kyle’s, High Mountain and Innovative Cabinets. Kyle’s, which is based in Boise, Idaho,~~ provides a wide variety of eyewear products (non-prescription reading glasses, sunglasses, blue light blocking eyewear, sun readers and outdoor specialty sunglasses).
The 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 ofsegment provides finished carpentry products and services ~~including doors, door~~(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~~windows, and custom design and build of cabinetry and ~~countertops.~~countertops).

The automotive supplies segment ~~is comprised of the business of Wolo, which is based in Deer Park, New York, and designs and sells~~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.
We provide general corporate services to 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 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 Inc. (“1847 Neese”), a company that we originally acquired in March 2017, 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 for the nine months ended September 30, 2021.

Results of Operations

Comparison of the Three Months Ended September 30, ~~2022~~2023 and ~~2021~~2022
The following table sets forth key components of our results of operations during the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, both in dollars and as a percentage of our revenues.
Three Months Ended September 30,
2022 2021
Amount
% of
Revenues
Amount
% of
Revenues

Revenues $ 14,472,361 100.0 % $ 6,735,028 100.0 %
Operating Expenses
Cost of sales 9,596,387 66.3 % 4,573,123 67.9 %
Personnel 3,182,286 22.0 % 876,991 13.0 %
Depreciation and amortization 516,414 3.6 % 299,477 4.4 %
General and administrative 2,688,877 18.6 % 1,844,979 27.4 %
Total Operating Expenses 15,983,964 110.4 % 7,594,570 112.8 %
Loss From Operations (1,511,603 ) (10.4 )% (859,542 ) (12.8 )%
Other Income (Expenses)
Other income 2,756 0.0 % 3,539 0.1 %
Interest expense (1,875,757 ) (13.0 )% (128,199 ) (1.9 )%
Gain on sale of property and equipment 15,614 0.1 %
10,885
0.2 %
Loss on extinguishment of debt (2,039,815 ) (14.1 )% - -
Loss on write-down of contingent note payable (158,817 ) (1.1 )% - -
Total Other Income (Expense) (4,056,019 ) (28.0 )% (113,775 ) (1.7 )%
Net Loss Before Income Taxes (5,567,622 ) (38.5 )% (973,317 ) (14.5 )%
Income tax benefit 1,095,000 7.6 % - -
Net Loss From Continuing Operations $ (4,472,622 ) (30.9 )% $ (973,317 ) (14.5 )%
Three Months Ended September 30,
2023 2022
Amount % of
Revenues Amount % of
Revenues
Revenues $ 18,777,921 100.0 % $ 14,472,361 100.0 %
Operating expenses
Cost of revenues 10,737,174 57.2 % 9,596,387 66.3 %
Personnel 4,006,639 21.3 % 3,365,592 23.3 %
Depreciation and amortization 625,967 3.3 % 516,414 3.6 %
General and administrative 4,195,261 22.3 % 2,505,571 17.3 %
Total operating expenses 19,565,041 104.2 % 15,983,964 110.4 %
Loss from operations (787,120 ) (4.2 )% (1,511,603 ) (10.4 )%
Other income (expense)
Other income (expense) (187,200 ) (1.0 )% 2,756 0.0 %
Interest expense (5,704,169 ) (30.4 )% (1,875,757 ) (13.0 )%
Gain on disposal of property and equipment 18,026 0.1 % 15,614 0.1 %
Loss on extinguishment of debt - - (2,039,815 ) (14.1 )%
Loss on change in fair value of warrant liability (27,900 ) (0.1 )% - -
Gain on change in fair value of derivative liabilities 425,977 2.3 % - -
Loss on write-down of contingent note payable - - (158,817 ) (1.1 )%
Total other expense (5,475,266 ) (29.2 )% (4,056,019 ) (28.0 )%
Net loss before income taxes (6,262,386 ) (33.3 )% (5,567,622 ) (38.5 )%
Income tax benefit 403,314 2.1 % 1,095,000 7.6 %
Net loss $ (5,859,072 ) (31.2 )% $ (4,472,622 ) (30.9 )%
Revenues. Our total revenues were $18,777,921 for the three months ended September 30, 2023, as compared to $14,472,361 for the three months ended September 30, ~~2022, as compared to $6,735,028 for the three months ended September 30, 2021.~~2022.
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 decreased by ~~$211,250,~~$513,697, or ~~6.7%~~17.5%, to $2,421,008 for the three months ended September 30, 2023, from $2,934,705 for the three months ended September 30, ~~2022 from $3,145,955~~2022. The decline in revenues was primarily attributed to ongoing supply chain delays and decreased customer demand.
The retail and eyewear segment generates revenue through sales of eyewear products, including non-prescription reading glasses, sunglasses, blue light blocking eyewear, sun readers and outdoor specialty sunglasses. Revenues for the retail and eyewear segment were $4,243,254 for the three months ended September 30, ~~2021. Such decrease was primarily due to ongoing supply chain delays and cost increases with appliance manufacturers, increased time it takes to receive products, and decreased customer demand.~~2023.
The construction segment generates revenue through the sale 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 kitchen countertops. Revenues from the construction segment increased by ~~$8,709,518,~~$1,182,633, or ~~650.7%~~11.8%, to $11,230,579 for the three months ended September 30, 2023, from $10,047,946 for the three months ended September 30, ~~2022 from $1,338,428 for the three months ended September 30, 2021. Such~~2022. The increase in revenues was primarily ~~due~~attributed to ~~the acquisitions of High Mountain~~an increase in new multi-family projects and ~~Innovative Cabinets, which were acquired in the fourth quarter of 2021. Excluding these acquisitions, revenues from the construction segment increased by $409,929, or 30.6%. Such~~an increase ~~was primarily due to increases~~ in the average customer contract ~~in the construction segment.~~value.

The automotive supplies segment generates revenue through the design 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 decreased by ~~$760,935,~~$606,630, or ~~33.8%~~40.7%, to $883,080 for the three months ended September 30, 2023, from $1,489,710 for the three months ended September 30, ~~2022 from $2,250,645~~2022. The decline in revenues was primarily attributed to ongoing supply chain delays with manufacturers and decreased customer demand.
Cost of revenues. Our total cost of revenues was $10,737,174 for the three months ended September 30, ~~2021. Such decrease was primarily due~~2023, as compared to ~~ongoing supply chain delays and cost increases, increased time it takes to receive products, and decreased customer demand.~~
~~Cost of sales~~~~. Our total cost of sales was~~ $9,596,387 for the three months ended September 30, ~~2022, as compared to $4,573,123 for the three months ended September 30, 2021.~~2022.

Cost of ~~sales~~revenues 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~~revenues for the retail and appliances segment decreased by ~~$116,691,~~$207,941, or ~~5.1%~~9.5%, to $1,976,031 for the three months ended September 30, 2023, from $2,183,972 for the three months ended September 30, ~~2022 from $2,300,663 for the three months ended September 30, 2021.~~2022. Such decrease was primarily ~~due~~attributed to the corresponding decrease in revenues, ~~from the retail and appliance segment.~~offset by increased product costs. As a percentage of retail and appliances revenues, cost of ~~sales~~revenues for the retail and appliances segment was ~~74.4%~~81.6% and ~~73.1%~~74.4% for the three months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.
Cost of ~~sales~~revenues for the retail and eyewear segment consists of the costs of purchased finished goods plus freight and tariff costs. Cost of revenues for the retail and eyewear segment was $2,662,586, or 62.7% of retail and eyewear revenues, for the three months ended September 30, 2023.
Cost of revenues 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~~revenues for the construction segment ~~increased~~decreased by ~~$5,739,330,~~$1,072,127, or ~~712.5%~~16.4%, to $5,472,716 for the three months ended September 30, 2023, from $6,544,843 for the three months ended September 30, ~~2022 from $805,513 for the three months ended September 30, 2021.~~2022. Such ~~increase~~decrease was primarily ~~due~~attributed to improved supply chain negotiations leading to better pricing and more efficient procurement processes, offset by 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 $101,508, or 12.6%. Such increase was primarily due to corresponding ~~the~~ increase in ~~revenues from the construction segment, offset by increased product and delivery costs.~~revenues. As a percentage of construction revenues, cost of ~~sales~~revenues for the construction segment was ~~65.1%~~48.7% and ~~60.2%~~65.1% for the three months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.
Cost of ~~sales~~revenues for the automotive supplies segment consists of the costs of purchased finished goods plus freight and tariff costs. Cost of ~~sales~~revenues for the automotive supplies segment decreased by ~~$599,375,~~$241,731, or ~~40.9%~~27.9%, to $625,841 for the three months ended September 30, 2023, from $867,572 for the three months ended September 30, ~~2022 from $1,466,947 for the three months ended September 30, 2021.~~2022. Such decrease was primarily ~~due~~attributed to the corresponding decrease in revenues, ~~from the automotive segment.~~offset by increased product costs. As a percentage of automotive supplies revenues, cost of ~~sales~~revenues for the automotive supplies segment was ~~58.2%~~70.9% and ~~65.2%~~58.2% for the three months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.

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 ~~$3,182,286~~$4,006,639 for the three months ended September 30, ~~2022,~~2023, as compared to ~~$876,991~~$3,365,592 for the three months ended September 30, ~~2021.~~2022.
Personnel costs for the retail and appliances segment ~~increased~~decreased by ~~$5,851,~~$27,276, or ~~3.0%~~13.5%, to $175,167 for the three months ended September 30, 2023, from $202,443 for the three months ended September 30, ~~2022 from $196,592 for the three months ended September 30, 2021.~~2022. Such ~~increase~~decrease was primarily ~~due~~attributed to ~~increased~~decreased employee headcount as a result of ~~previous staffing shortages in the retail and appliances segment.~~decreased revenues. As a percentage of retail and appliances revenue, personnel costs for the retail and appliances segment were ~~6.9%~~7.2% and ~~6.2%~~6.9% for the three months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.
Personnel costs for the ~~construction~~retail and eyewear segment ~~increased by $2,132,829,~~was $751,485, or ~~780.2%, to $2,406,195~~17.7% of retail and eyewear revenues, for the three months ended September 30, ~~2022 from $273,366~~2023.
Personnel costs for the construction segment decreased by $207,514, or 9.0%, to $2,103,481 for the three months ended September 30, ~~2021.~~2023, from $2,310,995 for the three months ended September 30, 2022. Such ~~increase~~decrease was primarily ~~due~~attributed to the ~~acquisitions~~implementation of High Mountain and Innovative Cabinets, which were acquired in the fourth quarter of 2021. Excluding these acquisitions, personnel costs for the construction segment increased by $44,380, or 16.2%. Such increase was primarily due to increased operations in the construction segment.revised compensation policies aimed at enhancing cost efficiency. As a percentage of construction revenue, personnel costs for the construction segment were ~~23.9%~~18.7% and ~~20.4%~~23.0% for the three months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.

Personnel costs for the automotive supplies segment decreased by ~~$129,636,~~$68,382, or ~~31.8%~~24.7%, to $209,016 for the three months ended September 30, 2023, from $277,398 for the three months ended September 30, ~~2022 from $407,034 for the three months ended September 30, 2021.~~2022. Such decrease was primarily ~~due~~attributed to decreased employee headcount ~~and officer compensation.~~as a result of decreased revenues. As a percentage of automotive supplies revenue, personnel costs for the automotive supplies segment were ~~18.6%~~23.7% and ~~18.1%~~18.6% for the three months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.
Personnel costs for ~~our holding company were $296,250~~the corporate services segment increased by $192,734, or 33.5%, to $767,490 for the three months ended September 30, ~~2022, as compared to $0~~2023, from $574,756 for the three months ended September 30, ~~2021.~~2022. Such increase was primarily ~~due~~attributed to accrued management bonuses ~~during the period.~~and wages.

Depreciation and amortization. Our total depreciation and amortization expense increased by ~~$216,937,~~$109,553, or ~~72.4%~~21.2%, to $625,967 for the three months ended September 30, 2023, from $516,414 for the three months ended September 30, 2022 from $299,477 for the three months ended September 30, 2021. Such increase was primarily as a result of the intangible assets and property and equipment acquired in the acquisitions of High Mountain and Innovative Cabinets, which were acquired in the fourth quarter of 2021.2022.

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 ~~$2,688,877~~$4,195,261 for the three months ended September 30, ~~2022,~~2023, as compared to ~~$1,844,979~~$2,505,571 for the three months ended September 30, ~~2021.~~2022.
General and administrative expenses for the retail and appliances segment ~~increased~~decreased by ~~$55,305,~~$151,965, or ~~12.6%~~30.7%, to $342,754 for the three months ended September 30, 2023, from $494,719 for the three months ended September 30, ~~2022 from $439,414 for the three months ended September 30, 2021.~~2022. Such ~~increase~~decrease was primarily ~~due~~attributed to the decrease in revenues, offset by increased ~~marketing~~rent and ~~professional fees.~~office expenditures. As a percentage of retail and appliances revenue, general and administrative expenses for the retail and appliances segment were ~~16.9%~~13.7% and ~~14.0%~~16.9% for the three months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.
General and administrative expenses for the retail and eyewear segment was $741,678, or 17.5% of retail and eyewear revenues, for the three months ended September 30, 2023.
General and administrative expenses for the construction segment increased by ~~$989,266,~~$294,115, or ~~385.8%~~24.0%, to ~~$1,245,668~~$1,521,170 for the three months ended September 30, ~~2022~~2023, from ~~$256,402~~$1,227,055 for the three months ended September 30, ~~2021.~~2022. 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 $55,517, or 21.7%. Such increase was primarily dueattributed to increased revenues, along with increases in rent ~~from new facility leases, as well as increased~~and office expenditures, offset by decreased professional ~~fees in the construction segment.~~fees. As a percentage of construction revenue, general and administrative expenses for the construction segment were ~~12.4%~~13.5% and ~~19.2%~~12.2% for the three months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.
General and administrative expenses for the automotive supplies segment decreased by ~~$288,614,~~$9,131, or ~~42.9%~~3.1%, to ~~$384,870~~$287,230 for the three months ended September 30, ~~2022~~2023, from ~~$673,484~~$296,361 for the three months ended September 30, ~~2021.~~2022. Such decrease was primarily ~~due~~attributed to ~~decreased operations from~~ the ~~automotive supplies segment.~~decrease in revenues, offset by increased office expenditures. As a percentage of automotive supplies revenue, general and administrative expenses for the automotive supplies segment were ~~25.8%~~32.5% and ~~29.9%~~19.9% for the three months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.
General and administrative expenses for ~~our holding company~~the corporate services segment increased by ~~$87,941,~~$814,993, or ~~18.5%~~167.2%, to ~~$563,620~~$1,302,429 for the three months ended September 30, ~~2022~~2023, from ~~$475,679~~$487,436 for the three months ended September 30, ~~2021.~~2022. Such increase was primarily ~~due~~attributed to the increased professional fees, ~~during the period.~~insurance expenses, and board fees.

Total other income (expense). We had ~~$4,056,019~~$5,475,266 in total other expense, net, for the three months ended September 30, ~~2022,~~2023, as compared to other expense, net, of ~~$113,775~~$4,056,019 for the three months ended September 30, ~~2021.~~2022. Other expense, net, for the three months ended September 30, 2023, consisted of interest expense of $5,704,169, other expense of $187,200 and a loss on change in fair value of warrant liability of $27,900, offset by a gain on disposal of property and equipment of $18,026 and a gain on change in fair value of derivative liabilities of $425,977, while other expense, net, for the three months ended September 30, 2022, consisted of ~~$1,875,757 of interest expense, $2,039,815 of~~a loss on extinguishment of debt ~~$158,817~~ of $2,039,815, interest expense of $1,875,757 and a loss on write-down of contingent note payable of $158,817, offset by other income of $2,756 and $15,614 gain on disposal of property and equipment, while other expense, net, for the three months ended September 30, 2021 consisted of interest expense of $128,199, offset by other income of $3,539 anda gain on disposal of property and equipment of ~~$10,885. The loss on extinguishment~~$15,614 and other income of ~~debt was a result of partially settling debt through the issuance of common shares and the significant increase in~~$2,756. As noted above, our total interest expense ~~was~~increased by $3,828,412, or 204.1%, primarily due to a ~~result of note issuances during the period~~new revolving loan and ~~convertible debt issuances during the fourth quarter of 2021~~promissory notes issued in ~~order to help finance the acquisitions of High Mountain and Innovative Cabinets.~~2023, as described in more detail below.

Income tax benefit. We had an income tax benefit of $403,314 and $1,095,000 for the three months ended September 30, 2023 and 2022, ~~as compared to $0 for the three months ended September 30, 2021.~~respectively.

Net loss ~~from continuing operations~~. As a result of the cumulative effect of the factors described above, ~~our~~we had a net loss ~~from continuing operations was~~of $5,859,072 and $4,472,622 for the three months ended September 30, 2023 and 2022, ~~as compared to $973,317 for the three months ended September 30, 2021.~~respectively.

Comparison of the Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022
The following table sets forth key components of our results of operations during the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, both in dollars and as a percentage of our revenues.
Nine Months Ended September 30,
2022 2021
Amount
% of
Revenues
Amount
% of
Revenues

Revenues $ 39,437482 100.0 % $ 18,163,257 100.0 %
Operating Expenses
Cost of sales 25,109,863 63.7 % 12,348,594 68.0 %
Personnel 6,446,145 16.3 % 2,198,231 12.1 %
Depreciation and amortization 1,526,759 3.9 % 547,655 3.0 %
General and administrative 7,451,079 18.9 % 4,519,504 24.9 %
Total Operating Expenses 40,533,846 102.8 % 19,613,984 108.0 %
Loss From Operations (1,096,364 ) (2.8 )% (1,450,727 ) (8.0 )%
Other Income (Expenses)
Other income (expense) 3,431 0.0 % - -
Interest expense (3,714,623 ) (9.4 )% (309,832 ) (1.7 )%
Gain on forgiveness of debt - - 360,302 2.0 %
Gain on sale of property and equipment 47,690 0.1 %
10,885
0.1 %
Gain on disposition of subsidiary - - 3,282,804 18.1 %
Loss on extinguishment of debt (2,039,815 ) (5.2 )% - -
Loss on adjustment shares - - (757,792 ) (4.2 )%
Loss on write-down of contingent note payable (158,817 ) (0.4 )% - -
Total Other Income (Expense) (5,862,134 ) (14.9 )% 2,586,367 14.2 %
Net Income (Loss) Before Income Taxes (6,958,498 ) (17.6 )% 1,135,640 6.3 %
Income tax benefit 1,411,000 3.6 % 21,900 0.1 %
Net Income (Loss) From Continuing Operations $ (5,547,498 ) (14.1 )% $ 1,157,540 6.4 %
Nine Months Ended September 30,
2023 2022
Amount % of
Revenues Amount % of
Revenues
Revenues $ 53,572,198 100.0 % $ 39,437,482 100.0 %
Operating expenses
Cost of revenues 32,774,377 61.2 % 25,109,863 63.7 %
Personnel 9,960,863 18.6 % 7,159,442 18.2 %
Depreciation and amortization 1,818,373 3.4 % 1,526,759 3.9 %
General and administrative 10,715,638 20.0 % 6,737,782 17.1 %
Total operating expenses 55,269,251 103.2 % 40,533,846 102.8 %
Loss from operations (1,697,053 ) (3.2 )% (1,096,364 ) (2.8 )%
Other income (expense)
Other income (expense) (135,232 ) (0.3 )% 3,431 0.0 %
Interest expense (9,747,299 ) (18.2 )% (3,714,623 ) (9.4 )%
Gain on disposal of property and equipment 18,026 0.0 % 47,690 0.1 %
Loss on extinguishment of debt - - (2,039,815 ) (5.2 )%
Loss on change in fair value of warrant liability (27,900 ) (0.1 )% - -
Gain on change in fair value of derivative liabilities 425,977 0.8 % - -
Loss on write-down of contingent note payable - - (158,817 ) (0.4 )%
Gain on bargain purchase 2,639,861 4.9 % - -
Total other expense (6,826,567 ) (12.7 )% (5,862,134 ) (14.9 )%
Net loss before income taxes (8,523,620 ) (15.9 )% (6,958,498 ) (17.6 )%
Income tax benefit (expense) (258,007 ) (0.5 )% 1,411,000 3.6 %
Net loss $ (8,781,627 ) (16.4 )% $ (5,547,498 ) (14.1 )%
Revenues. Our total revenues were $53,572,198 for the nine months ended September 30, 2023, as compared to $39,437,482 for the nine months ended September 30, ~~2022, as compared to $18,163,257 for the nine months ended September 30, 2021.~~2022.
Revenues from the retail and appliances segment decreased by ~~$1,440,439,~~$1,434,911, or ~~14.8%~~17.2%, to $6,887,589 for the nine months ended September 30, 2023, from $8,322,500 for the nine months ended September 30, ~~2022~~2022. The decline in revenues was primarily attributed to ongoing supply chain delays and decreased customer demand.
Revenues for the retail and eyewear segment were $11,530,027 for the period from ~~$9,762,939~~February 9, 2023 (date of acquisition) to September 30, 2023.
Revenues from the construction segment increased by $5,646,972, or 21.7%, to $31,647,199 for the nine months ended September 30, ~~2021. Such decrease was primarily due to ongoing supply chain delays and cost increases with appliance manufacturers, increased time it takes to receive products, and decreased customer demand.~~
~~Revenues~~2023, from ~~the construction segment increased by $21,830,922, or 523.6%, to~~ $26,000,227 for the nine months ended September 30, ~~2022~~2022. The increase in revenues was primarily attributed to an increase in new multi-family projects and an increase in the average customer contract value.
Revenues from ~~$4,169,305~~the automotive supplies segment decreased by $1,607,372, or 31.4%, to $3,507,383 for the nine months ended September 30, ~~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~~2023 from ~~the construction segment increased by $781,392, or 18.7%. Such increase was primarily due to increases in the average customer contract in the construction segment.~~
~~Revenues from the automotive supplies segment increased by $883,742, or 20.9%, to~~ $5,114,755 for the nine months ended September 30, ~~2022 from $4,231,013~~2022. The decline in revenues was primarily attributed to ongoing supply chain delays with manufacturers and decreased customer demand.
Cost of revenues. Our total cost of revenues was $32,774,377 for the nine months ended September 30, ~~2021. Such increase was primarily due~~2023, as compared to ~~the acquisition of Wolo, which was acquired on March 31, 2021.~~

~~Cost of sales~~~~. Our total cost of sales was~~ $25,109,863 for the nine months ended September 30, ~~2022, as compared to $12,348,594 for the nine months ended September 30, 2021.~~2022.
Cost of ~~sales~~revenues for the retail and appliances segment decreased by ~~$1,163,920,~~$784,127, or ~~15.7%~~12.6%, to $5,461,866 for the nine months ended September 30, 2023, from $6,245,993 for the nine months ended September 30, ~~2022 from $7,409,913 for the nine months ended September 30, 2021.~~2022. Such decrease was primarily ~~due~~attributed to the corresponding decrease in revenues, ~~from the retail and appliance segment,~~ offset by increased product ~~and delivery~~ costs. As a percentage of retail and appliances revenues, cost of ~~sales~~revenues for the retail and appliances segment was ~~75.0%~~79.3% and ~~75.9%~~75.0% for the nine months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.
Cost of ~~sales~~revenues for the retail and eyewear segment was $7,102,908, or 61.6% of retail and eyewear revenues, for the period from February 9, 2023 (date of acquisition) to September 30, 2023.
Cost of revenues for the construction segment increased by ~~$13,555,821,~~$2,212,564, or ~~594.6%~~14.0%, to $18,048,394 for the nine months ended September 30, 2023, from $15,835,830 for the nine months ended September 30, ~~2022 from $2,280,009 for the nine months ended September 30, 2021.~~2022. 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 $511,796, or 22.4%. Such increase was primarily dueattributed to the corresponding increase in revenues, ~~from the construction segment, as well as increased product~~offset by improved supply chain negotiations leading to better pricing and ~~delivery costs.~~more efficient procurement processes. As a percentage of construction revenues, cost of ~~sales~~revenues for the construction segment was ~~60.9%~~57.0% and ~~54.7%~~60.9% for the nine months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.

Cost of ~~sales~~revenues for the automotive supplies segment ~~increased~~decreased by ~~$369,368,~~$866,831, or ~~13.9%~~28.6%, to $2,161,209 for the nine months ended September 30, 2023, from $3,028,040 for the nine months ended September 30, ~~2022 from $2,658,672 for the nine months ended September 30, 2021.~~2022. Such ~~increase~~decrease was primarily ~~due~~attributed to the ~~acquisition of Wolo, which was acquired on March 31, 2021.~~corresponding decrease in revenues, offset by increased product costs. As a percentage of automotive supplies revenues, cost of ~~sales~~revenues for the automotive supplies segment was ~~59.2%~~61.6% and ~~62.8%~~59.2% for the nine months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.

Personnel costs. Our total personnel costs were ~~$6,446,145~~$9,960,863 for the nine months ended September 30, ~~2022,~~2023, as compared to ~~$2,198,231~~$7,159,442 for the nine months ended September 30, ~~2021.~~2022.
Personnel costs for the retail and appliances segment decreased by ~~$101,769,~~$28,612, or ~~14.8%~~4.9%, to $558,461 for the nine months ended September 30, 2023, from $587,073 for the nine months ended September 30, ~~2022 from $688,842 for the nine months ended September 30, 2021.~~2022. Such decrease was primarily ~~due~~attributed to decreased employee headcount as a result of ~~staffing shortages in the retail and appliances segment.~~decreased revenues. As a percentage of retail and appliances revenue, personnel costs for the retail and appliances segment were ~~7.1%~~8.1% and 7.1% for the nine months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.
Personnel costs for the retail and eyewear segment was $2,070,996, or 18.0% of retail and eyewear revenues, for the period from February 9, 2023 (date of acquisition) to September 30, 2023.
Personnel costs for the construction segment increased by ~~$3,975,708,~~$800,313, or ~~537.5%~~17.3%, to ~~$4,715,419~~$5,420,532 for the nine months ended September 30, ~~2022~~2023, from ~~$739,711~~$4,620,219 for the nine months ended September 30, ~~2021.~~2022. Such increase was primarily ~~due~~attributed to increased employee headcount as a result of increased revenues, offset the ~~acquisitions~~implementation 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 $4,232, or 0.6%. Such decrease was primarily due to decreased office personnel headcount in the construction segment.revised compensation policies aimed at enhancing cost efficiency. As a percentage of construction revenue, personnel costs for the construction segment were ~~18.1%~~17.1% and ~~17.7%~~17.8% for the nine months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.
Personnel costs for the automotive supplies segment ~~increased~~decreased by ~~$77,725,~~$146,258, or ~~10.1%~~17.3%, to $701,145 for the nine months ended September 30, 2023, from $847,403 for the nine months ended September 30, ~~2022 from $769,678~~2022. Such decrease was primarily attributed to decreased employee headcount as a result of decreased revenues. As a percentage of automotive supplies revenue, personnel costs for the automotive supplies segment were 20.0% and 16.6% for the nine months ended September 30, ~~2021. Such increase was primarily due to the acquisition of Wolo, which was acquired on March 31, 2021. As a percentage of automotive supplies revenues, personnel~~2023 and 2022, respectively.
Personnel costs for the ~~automotive supplies~~corporate services segment ~~was 16.6% and 18.2%~~increased by $104,982, or 9.5%, to $1,209,729 for the nine months ended September 30, ~~2022 and 2021, respectively.~~
~~Personnel costs for our holding company were $296,250~~2023, from $1,104,747 for the nine months ended September 30, ~~2022, as compared to $0 for the nine months ended September 30, 2021.~~2022. Such increase was primarily ~~due~~attributed to accrued management bonuses ~~during the period.~~and wages.

Depreciation and amortization. Our total depreciation and amortization expense increased by ~~$979,104,~~$291,614, or ~~178.8%~~19.1%, to $1,818,373 for the nine months ended September 30, 2023, from $1,526,759 for the nine months ended September 30, 2022 from $547,655 for the nine months ended September 30, 2021. Such increase was primarily as a result of the intangible assets and property and equipment acquired in the acquisitions of High Mountain and Innovative Cabinets, which were acquired in the fourth quarter of 2021.2022.

General and administrative expenses. Our total general and administrative expenses were ~~$7,451,079~~$10,715,638 for the nine months ended September 30, ~~2022,~~2023, as compared to ~~$4,519,504~~$6,737,782 for the nine months ended September 30, ~~2021.~~2022.
General and administrative expenses for the retail and appliances segment ~~increased~~decreased by ~~$209,810,~~$357,062, or ~~16.5%~~24.1%, to $1,123,403 for the nine months ended September 30, 2023, from $1,480,465 for the nine months ended September 30, ~~2022 from $1,270,655 for the nine months ended September 30, 2021.~~2022. Such ~~increase~~decrease was primarily ~~due~~attributed to the decrease in revenues, offset by increased ~~marketing~~rent and ~~professional fees.~~office expenditures. As a percentage of retail and appliances revenue, general and administrative expenses for the retail and appliances segment were ~~17.8%~~16.2% and ~~13.0%~~17.8% for the nine months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.
General and administrative expenses for the retail and eyewear segment was $2,554,342, or 22.2% of retail and eyewear revenues, for the period from February 9, 2023 (date of acquisition) to September 30, 2023.
General and administrative expenses for the construction segment increased by ~~$3,300,962,~~$401,454, or ~~467.8%~~11.3%, to ~~$4,006,636~~$3,958,394 for the nine months ended September 30, ~~2022~~2023, from ~~$705,674~~$3,556,940 for the nine months ended September 30, ~~2021.~~2022. 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 $205,527, or 29.1%. Such increase was primarily dueattributed to increased revenues, along with increases in rent ~~from a new facility lease, as well as increased~~and office expenditures, offset by decreased professional ~~fees in the construction segment.~~fees. As a percentage of construction revenue, general and administrative expenses for the construction segment were ~~15.4%~~12.5% and ~~16.9%~~13.7% for the nine months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.
General and administrative expenses for the automotive supplies segment decreased by ~~$381,452,~~$66,083, or ~~24.3%~~7.2%, to ~~$1,188,618~~$855,287 for the nine months ended September 30, ~~2022~~2023, from ~~$1,570,070~~$921,370 for the nine months ended September 30, ~~2021.~~2022. Such decrease was primarily ~~due~~attributed to the ~~lack of acquisition related costs during the current period.~~decrease in revenues, offset by increased office expenditures. As a percentage of automotive supplies revenue, general and administrative expenses for the automotive supplies segment were ~~23.2%~~24.4% and ~~37.1%~~18.0% for the nine months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.

General and administrative expenses for ~~our holding company decreased~~the corporate services segment increased by ~~$197,745,~~$1,445,205, or ~~20.3%~~185.5%, to ~~$775,360~~$2,224,212 for the nine months ended September 30, ~~2022~~2023, from ~~$973,105~~$779,007 for the nine months ended September 30, ~~2021.~~2022. Such ~~decrease~~increase was primarily ~~due~~attributed to ~~more corporate~~increased professional fees, insurance expenses, ~~relating to the business segments being allocated directly to the subsidiaries~~ and ~~less acquisition-related costs.~~board fees.

Total other income (expense). We had ~~$5,862,134~~$6,826,567 in total other expense, net, for the nine months ended September 30, ~~2022,~~2023, as compared to ~~other income, net, of $2,586,367~~$5,862,134 for the nine months ended September 30, ~~2021.~~2022. Other expense, net, for the nine months ended September 30, 2023, consisted of interest expense of $9,747,299, other expense of $135,232 and a loss on change in fair value of warrant liability of $27,900, offset by a gain on bargain purchase of $2,639,861, a gain on disposal of property and equipment of $18,026, and a gain on change in fair value of derivative liabilities of $425,977, while other expense, net, for the nine months ended September 30, 2022 consisted interest expense of $3,714,623, ~~of interest expense, $2,039,815 of~~a loss on extinguishment of debt ~~$158,817~~ of $2,039,815 and a loss on write-down of contingent note payable of $158,817, offset by ~~other income of $3,431 and $47,690~~a gain on disposal of property ~~and~~of equipment ~~while~~of $47,690 and other income ~~net, for the nine months ended September 30, 2021 consisted~~ of a gain on the disposition of 1847 Neese of $3,282,804, a gain on forgiveness of debt of $360,302 and gain on disposal of property and equipment of $10,885, offset by a loss on the issuance of adjustment shares of $757,792 and$3,431. As noted above, our total interest expense ~~of $309,832. The loss on extinguishment of debt was~~increased by $6,032,676, or 162.4%, primarily due to a ~~result of partially settling debt through the issuance of common shares~~new revolving loan and ~~the significant increase~~promissory notes issued in ~~interest expense was primarily a result of note issuances during the period and convertible debt issuances during the fourth quarter of 2021~~2023, as described in ~~order to help finance the acquisitions of High Mountain and Innovative Cabinets.~~more detail below.

Income tax benefit (expense).  We had an income tax expense of $258,007 and an income tax benefit of $1,411,000 for the nine months ended September 30, 2023 and 2022, ~~as compared to $21,900 for the nine months ended September 30, 2021.~~respectively.

Net ~~income (loss) from continuing operations~~loss. As a result of the cumulative effect of the factors described above, ~~our~~we had a net loss ~~from continuing operations was~~of $8,781,627 and $5,547,498 for the nine months ended September 30, 2023 and 2022, ~~as compared to a net income of $1,157,540 for the nine months ended September 30, 2021.~~respectively.

Liquidity and Capital Resources
As of September 30, ~~2022,~~2023, we had cash and cash equivalents of ~~$1,584,499. To date,~~$2,056,751. For the nine months ended September 30, 2023, we ~~have financed our operations primarily through revenue generated~~incurred a loss from operations of $1,697,053, cash ~~proceeds~~flows used in operations of $5,697,319 and working capital of $618,235. We have generated operating losses since inception and have 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 ~~financing activities, borrowings, and equity contributions by~~operations, which creates substantial doubt about our ~~shareholders.~~ability to continue as a going concern for a period at least one year.
~~Although we~~Management plans to address the above as needed by, securing additional bank lines of credit, and obtaining additional financing through debt or equity transactions. Management has implemented tight cost controls to conserve cash.
The ability of our company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and to eventually attain profitable operations. The accompanying condensed consolidated financial statements do not ~~believe~~include any adjustments that ~~we will require additional cash~~might be necessary if our company is unable to continue as a going concern. If our ~~operations over the next twelve months, we do~~company is unable to obtain adequate capital, it could be forced to cease operations.
We 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. 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~~our manager pursuant to the management services agreement, potential payment of profit allocation to ~~the Manager~~our manager and potential put price to ~~the Manager~~our 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—Our Manager” included in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 for more information concerning the management fee, the profit allocation and put price.
The amount of management fee paid to ~~the Manager~~our manager by us is reduced by the aggregate amount of any offsetting management fees, if any, received by ~~the Manager~~our manager from any of our businesses. As a result, the management fee paid to ~~the Manager~~our manager may fluctuate from quarter to quarter. The amount of management fee paid to ~~the Manager~~our 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,~~

Our 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~~our 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~~high-water mark plus (ii) the subsidiary’s net income since its acquisition by ~~the Company~~us 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 ~~the Company,~~us, multiplied by (iii) the subsidiary’s average share (determined based on gross assets, generally) of our consolidated net equity (determined according to ~~United States~~U.S. generally accepted accounting principles, or GAAP, with certain adjustments). In certain circumstances, after a subsidiary has been held for at least 5 years, ~~the Manager~~our 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—Our Manager—Our Manager as an Equity Holder—Manager’s Profit Allocation” included in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 for more information on the calculation of the profit allocation.

Our operating agreement also contains a supplemental put provision, which gives ~~the Manager~~our manager the right, subject to certain conditions, to cause us to purchase the allocation shares then owned by ~~the Manager~~our 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~~our manager’s resignation, the payment to ~~the Manager~~our 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—Our Manager—Our Manager as an Equity Holder—Supplemental Put Provision” included in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 for more information on the calculation of the put price. The put price obligation, if ~~the Manager~~our 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:
Nine Months Ended
September 30,
2022 2021
Net cash used in operating activities from continuing operations $ (3,977,286 ) $ (381,346 )
Net cash used in investing activities from continuing operations (178,944 ) (5,291,198 )
Net cash provided by financing activities from continuing operations 4,357,196 5,265,367
Net change in cash and cash equivalents from continuing operations 200,966 (407,177 )
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 $ 1,584,499 $ 973,172
Nine Months Ended
September 30,
2023 2022
Net cash used in operating activities $ (5,697,319 ) $ (3,977,286 )
Net cash used in investing activities (3,901,545 ) (178,944 )
Net cash provided by financing activities 10,576,260 4,357,196
Net change in cash and cash equivalents 977,396 200,966
Cash and cash equivalents at beginning of period 1,079,355 1,383,533
Cash and cash equivalents at end of period $ 2,056,751 $ 1,584,499
Net cash used in operating activities ~~from continuing operations~~ was $5,697,319 for the nine months ended September 30, 2023, as compared to $3,977,286 for the nine months ended September 30, ~~2022, as compared~~2022. The increase in the net cash used in operating activities was primarily a result of the net loss during the period, gain on bargain purchase of $2,639,861 related to ~~$381,346~~the acquisition of ICU Eyewear, and increased prepaid expenses.
Net cash used in investing activities was $3,901,545 for the nine months ended September 30, 2021. The increase in cash used from operating activities during the nine months ended September 30, 2022 was primarily a result of the increased net loss, increased receivables, decreased contract liabilities and decreased deferred tax liability, offset by decreased inventories, increased accounts payable and accrued expenses, and decreased prepaids and other current assets.
~~Net cash used in investing activities from continuing operations was~~2023, as compared to $178,944 for the nine months ended September 30, ~~2022, as compared to $5,291,198 for~~2022. The increase in the ~~nine months ended September 30, 2021. The decrease in~~net cash used in investing activities ~~during the nine months ended September 30, 2022~~ was primarily a result of the cash paid ~~in acquisitions during~~for the ~~comparable period.~~acquisition of ICU Eyewear.
Net cash provided by financing activities ~~from continuing operations~~ was $10,576,260 for the nine months ended September 30, 2023, as compared to $4,357,196 for the nine months ended September 30, ~~2022, as compared to $5,265,367 for~~2022. The increase in the ~~nine months ended September 30, 2021. The decrease in~~net cash provided by investing activities ~~during the nine months ended September 30, 2022~~ was primarily a result of the proceeds from the private placements and revolving loan described below, offset by decreased proceeds from ~~preferred shares and notes payable issuances and increased dividend payments, offset by an equity offering and decreased notes payable payments.~~public offerings.

~~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 $10.00 per common share (subject to adjustment), which such exercise price was adjusted to $4.20 following the adjustments described below, 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 99,710 common shares to such holders.

~~Subscription Agreement~~Public Offering
On March 29, 2021, we entered into a subscription agreement with 1847 Wolo, pursuant to which 1847 Wolo issued 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.
~~Series B Unit Offering~~
From February 24, 2022 to March 24, 2022, the Company sold an aggregate of 426,999 units, at a price of $3.00 per unit, for aggregate gross proceeds of $1,281,000. From April 20, 2022 to May 19, 2022, the Company sold an aggregate of 54,567 units to our Chief Executive Officer, Ellery W. Roberts, for aggregate gross proceeds of $163,700. The Company had total issuance costs relating to these offerings of approximately $15,000, resulting in net proceeds of $1,429,700. 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 $12.00 per share (subject to adjustment), which such exercise price was adjusted to $4.20 following the down round warrant adjustments described below, which may be exercised on a cashless basis under certain circumstances.
~~Private Placement~~
On July ~~8, 2022, the Company~~3, 2023, we entered into a securities purchase agreement with ~~Mast Hill Fund, L.P.,~~certain purchasers and a placement agency agreement with Spartan Capital Securities, LLC, or Spartan, pursuant to which we agreed to issue and sell to such purchasers an aggregate of 153,800 common shares and prefunded warrants for the ~~Company~~purchase of 220,000 common shares at an offering price of $5.00 per common share and $4.75 per pre-funded warrant, pursuant to our effective registration statement on Form S-1 (File No. 333-272057). On July 7, 2023, the closing of this offering was completed. At the closing, the purchasers prepaid the exercise price of the prefunded warrants in full. Therefore, we received total gross proceeds of $1,869,000. Pursuant to the placement agency agreement, Spartan received a cash transaction fee equal to 8% of the aggregate gross proceeds and reimbursement of certain out-of-pocket expenses. After deducting these and other offering expenses, we received net proceeds of approximately $1,494,480. All of the purchasers exercised the prefunded warrants in full either at closing or shortly thereafter and we issued an aggregate of 220,000 common shares upon such exercise.
Registered Direct Offering
On July 14, 2023, we entered into a securities purchase agreement with certain purchasers and a placement agency agreement with Spartan, which were amended pursuant to itan amendatory agreement, dated July 18, 2023, among our company, Spartan and such purchasers. Pursuant to the foregoing, on July 18, 2023, we issued and sold to such purchasers an aggregate of 160,000 common shares at a purchase price of $6.00 per share for total gross proceeds of $960,000, pursuant to our effective shelf registration statement on Form S-3 (File No. 333-269509). Spartan received a cash transaction fee equal to 8% of the aggregate gross proceeds and reimbursement of certain out-of-pocket expenses. After deducting these and other offering expenses, we received net proceeds of approximately $858,200.
Debt
Revolving Lines of Credit
On February 9, 2023, 1847 ICU and ICU Eyewear entered into a loan and security agreement with Industrial Funding Group, Inc. for a revolving loan of up to $5,000,000, which was evidenced by a secured promissory note in the principal amount of ~~$600,000~~up to $5,000,000. On February 9, 2023, 1847 ICU received an advance of $2,063,182 under the note, of which $1,963,182 was used to repay certain debt of ICU Eyewear in connection with the agreement and plan of merger, with the remaining $100,000 used to pay lender fees. On February 11, 2023, the Industrial Funding Group, Inc. sold and assigned the loan and security agreement, the note and related loan documents to GemCap Solutions, LLC.
The note was to mature on February 9, 2025 with all advances bearing interest at an annual rate equal to the greater of (i) the sum of (a) the “Prime Rate” as reported in the “Money Rates” column of The Wall Street Journal, adjusted as and when such prime rate changes, plus (b) eight percent (8.00%), and (ii) fifteen percent (15.00%); provided that following and during the continuation of an event of default (as defined in the loan and security agreement), interest on the unpaid principal balance of the advances shall accrue at an annual rate equal to such rate plus three percent (3.00%). Interest accrued on the advances was payable monthly commencing on March 7, 2023. The note was secured by all of the assets of 1847 ICU and ICU Eyewear.
On September 11, 2023, GemCap Solutions, LLC sold and assigned the loan to AB Lending SPV I LLC d/b/a Mountain Ridge Capital. On the same date, 1847 ICU and ICU Eyewear entered into an amended and restated credit and security agreement with the AB Lending SPV I LLC d/b/a Mountain Ridge Capital for a revolving loan of up to $15,000,000, which loan may be drawn in advances. On the same date, we received an advance of $4,218,985, which was used to pay the amounts outstanding under the loan from GemCap Solutions, LLC, to pay certain closing fees and expenses in connection with the closing and for general working capital purposes.
The revolving loan matures on September 11, 2026 and bears interest at an annual rate equal to Term SOFR plus eight percent (8.00%) per annum or, if at any time the Term SOFR cannot be determined, then at the Base Rate plus seven percent (7.00%), but in any event at a rate no higher than that permitted under applicable law. “Term SOFR” means the secured overnight financing rate published by the Federal Reserve Bank of New York for a one-month period on the date that is two (2) business days prior to the first day of such one-month period and “Base Rate” means a rate per annum equal to the greatest of (i) the Federal Funds Rate in effect on such day plus 1.00%, (ii) the Prime Rate in effect on such day, and (iii) Term SOFR for a one-month tenor plus 1.00%. However, following and during the continuation of an event of default (as defined in the amended and restated credit and security agreement), interest shall accrue at a default rate equal to such above rate plus two percent (2.00%) per annum. Interest accrued on the advances shall be payable monthly on the first day of each month commencing on October 1, 2023. We may voluntarily prepay the entire unpaid principal amount of the advances prior to the maturity date, but must pay a prepayment fee determined as follows: (i) a fee of three percent (3.00%) if the prepayment is made on or before September 11, 2024, (ii) a fee of two percent (2.00%) if the prepayment is made between September 12, 2024 and September 11, 2025, or (iii) a fee of one percent (1.00%) if the prepayment is made between September 12, 2025 and September 11, 2026.

The amended and restated credit and security agreement contains customary affirmative and negative financial and other covenants and events of default for a loan of this type. The loan is secured by a first priority security interest in all of the assets of 1847 ICU and ICU Eyewear and is guaranteed by our company pursuant to a limited guaranty. Our company may satisfy its obligations under the limited guaranty by paying such amounts in cash, or by issuing to the lender a number of common shares equal to the sum needed to satisfy the obligations under the limited guaranty in full divided by a price equal to the lesser of $4.575 or the closing price of the common shares on the day prior to such issuance; provided that if such issuance would violate Section 7.13 of the NYSE American Company Guide, which restricts the issuance of shares equal to 20% or more of the outstanding common shares for less than the greater of book or market value, then we must obtain shareholder approval of such issuance.
The outstanding principal balance of the revolving loan at September 30, 2023 is $3,311,558, net of debt discounts of $746,825, and an accrued interest balance of $37,141.
Private Placements of Promissory Notes and Warrants
On February 3, 2023, we entered into securities purchase agreements with two accredited investors, Mast Hill Fund, L.P., or Mast Hill, and Leonite Fund I, LP, or Leonite, pursuant to which we issued to such investors (i) promissory notes in the aggregate principal amount of $604,000 and (ii) five-year ~~warrant~~warrants for the purchase of ~~100,000~~an aggregate of 5,034 common shares at an exercise price of ~~$6.00~~$105.00 per share (subject to adjustment)~~, which such exercise price was adjusted to $4.20 following the adjustments described below, which may be exercised on a cashless basis if the market price~~ for total cash proceeds of ~~the Company’s~~$540,000. As additional consideration, we issued an aggregate of 5,034 common shares ~~is greater than~~to the ~~exercise price, for total net proceeds of $499,600.~~investors as a commitment fee. Additionally, ~~the Company~~we issued a ~~three-year~~five-year warrant to J.H. Darbie & Co (the broker) for the purchase of ~~3,600~~36 common shares at an exercise price of ~~$7.50~~$131.25 (subject to adjustment).
On February 9, 2023, we entered into securities purchase agreements with two accredited investors, Mast Hill and Leonite, pursuant to which we issued to such investors (i) promissory notes in the aggregate principal amount of $2,557,575 and (ii) five-year warrants for the purchase of an aggregate of 21,314 common shares at an exercise price of $105.00 per share (subject to adjustment) for total cash proceeds of $2,271,818. As additional consideration, we issued 11,591 common shares to Mast Hill and issued to Leonite a five-year warrant for the purchase of 9,723 common shares at an exercise price of $0.25 per share (subject to adjustment), which ~~such~~were issued as a commitment fee. Additionally, we issued a five-year warrant to J.H. Darbie & Co (the broker) for the purchase of 477 common shares at an exercise price ~~was adjusted~~of $131.25 (subject to ~~$4.20 following~~adjustment).
On February 22, 2023, we entered into securities purchase agreement with one accredited investor, Mast Hill, pursuant to which we issued to such investor (i) a promissory note in the ~~adjustments described below, which may be exercised on a cashless basis if~~principal amount of $878,000 and (ii) five-year warrants for the ~~market~~purchase of an aggregate of 7,317 common shares at an exercise price of $105.00 per share (subject to adjustment) for total cash proceeds of $737,700. As additional consideration, we issued a five-year warrant for the ~~Company’s~~purchase of 7,934 common shares at an exercise price of $0.25 per share (subject to adjustment) to the investor as a commitment fee. Additionally, we issued a five-year warrant to J.H. Darbie & Co (the broker) for the purchase of 302 common shares at an exercise price of $131.25 (subject to adjustment).
These notes bear interest at a rate of 12% per annum and mature on the first anniversary of the date of issuance; provided that any principal amount or interest which is ~~greater than~~not paid when due shall bear interest at a rate of the lesser of 16% per annum or the maximum amount permitted by law from the due date thereof until the same is paid. The notes require monthly payments of principal and interest commencing in May 2023. We may voluntarily prepay the outstanding principal amount and accrued interest of each note in whole upon payment of certain prepayment fees. In addition, if at any time we receive cash proceeds from any source or series of related or unrelated sources, including, but not limited to, the issuance of equity or debt, the exercise ~~price. Accordingly, a~~of outstanding warrants, the issuance of securities pursuant to an equity line of credit (as defined in the notes) or the sale of assets outside of the ordinary course of business, each holder shall have the right in its sole discretion to require us to immediately apply up to 50% of such proceeds to repay all or any portion of the ~~proceeds were allocated to~~outstanding principal amount and interest then due under the ~~warrants based on its relative fair value using the Geometric Brownian Motion Stock Path Monte Carlo Simulation. On August 10, 2022, the promissory note was repaid in full.~~notes. The notes are unsecured and have priority over all other unsecured indebtedness. The notes contain customary affirmative and negative covenants and events of default for a loan of this type.
~~Public Offering~~
On August 2, 2022, the Company entered into an underwriting agreement with Craft Capital Management LLC and R.F. Lafferty & Co. Inc., as representatives of the underwriters named on Schedule 1 thereto, relating to the Company’s public offering of common shares. Under the underwriting agreement, the Company agreed to sell 1,428,572 common shares to the underwriters, at a gross purchase price per share of $4.20 per share, pursuant to the Company’s registration statement on Form S-1 (File No. 333-259011) under the Securities Act of 1933, as amended. On August 5, 2022, the closing of the public offering was completed and the Company sold 1,428,572 common shares for total gross proceeds of $6 million. After deducting underwriting commissions and expenses, the Company received net proceeds of approximately $5.15 million.

~~Dividends~~The notes become convertible into common shares at the option of the holders at any time on or following the date that an event of default (as defined in the notes) occurs under the notes at a conversion price equal the lower of (i) $105.00 (subject to adjustments) and (ii) 80% of the lowest volume weighted average price of the common shares on any trading day during the five (5) trading days prior to the conversion date; provided that such conversion price shall not be less than $0.75 (subject to adjustments).
~~During~~We evaluated the ~~nine months ended~~embedded features within these promissory notes in accordance with ASC 480 and ASC 815. We determined that the embedded features, specifically (i) the default penalty of 15% on outstanding principal and accrued interest, and (ii) the conversion option into common shares at the lower of $105.00 or 80% of the lowest VWAP in the five days preceding conversion, subject to a $0.75 floor price, constitute derivative liabilities. These features, arising from default provisions not within our control, including the contingent interest feature and the contingent conversion (deemed redemption) feature, meet the definition of a derivative and do not qualify for derivative accounting exemptions. Consequently, these embedded features are bifurcated from the debt host and recognized as a single derivative liability.
The initial fair value of the derivative liabilities was determined using a Monte Carlo Simulation valuation model, considering various potential outcomes and scenarios. The model used the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 160.45%; (iii) risk-free interest rate of 4.68%; (iv) maximum term of one year; (v) estimated fair value of the common shares of $48.25 per share; and (vi) various probability assumptions. Subsequent changes in fair value are recognized in the statement of operations each reporting period. The issuance costs for the promissory notes, along with the allocated fair values of both the warrants and the bifurcated embedded derivative liability, have been collectively treated as a debt discount. This discount is being amortized to interest expense over the term of the promissory notes using the effective interest method.
On August 4, 2023, we received notices from Mast Hill and Leonite that an event of default had occurred under the notes issued on February 3, 2023 for failure to make certain payments when due. Mast Hill and Leonite agreed in writing that they would not require any payments in cash for the over-due amounts or accelerate the payments due under the notes for a period of 60 days. Since an event of default occurred, Mast Hill and Leonite have the right to convert the notes, including the over-due amounts, penalties and fees, into common shares at their election. On August 4, 2023, Mast Hill converted its note in full into 22,141 common shares, which conversion amount included $91,174 of principal, interest and certain penalties and fees. In August 2023, Leonite converted its note in full into 191,916 common shares, which conversion amount included $730,814 of principal, interest and certain penalties and fees.
On August 9, 2023, we received notices from Mast Hill and Leonite that an event of default had occurred under the notes issued on February 9, 2023 for failure to make certain payments when due. Mast Hill and Leonite agreed in writing that they would not require any payments in cash for the over-due amounts or accelerate the payments due under the notes for a period of 60 days. Since an event of default occurred, Mast Hill and Leonite have the right to convert the notes, including the over-due amounts, penalties and fees, into common shares at their election. In August 2023, Mast Hill converted a portion of its note into 402,762 common shares, which conversion amount included $1,002,556 of principal, interest and certain penalties and fees. In August 2023, Leonite converted a portion of its note into 580,000 common shares, which conversion amount included $1,305,432 of principal, interest and certain penalties and fees.
On August 31, 2023, our company, Mast Hill and Leonite entered into amendments to the notes issued on February 9, 2023 and February 22, 2023, pursuant to which the parties agreed to extend the maturity date of these remaining notes to August 31, 2024 and we agreed to make monthly payments commencing on September 30, ~~2022,~~2023, as further described in the ~~Company~~amendments. Mast Hill and Leonite also agreed not to convert any portion of the remaining notes as long as we make these payments when due. As consideration for Mast Hill and Leonite’s entry into the amendments, we agreed to pay Mast Hill and Leonite an amendment fee equal to 10% of the principal amounts of the remaining notes.
The outstanding principal balance of these notes at September 30, 2023 is $1,447,427 and an accrued ~~dividends attributable~~interest balance of $168,487.
Private Placement of 20% OID Notes and Warrants
On August 11, 2023, we entered into a securities purchase agreement in a private placement transaction with certain accredited investors, pursuant to which we issued and sold to the ~~series A~~investors 20% OID subordinated promissory notes in the aggregate principal amount of $3,125,000 and warrants for the purchase of an aggregate of 163,939 common shares for total cash proceeds of $2,218,000.
The notes are due and payable on February 11, 2024. We may voluntarily prepay the notes in full at any time. In addition, if we consummate any equity or equity-linked or debt securities issuance, or enter into a loan agreement or other financing, other than certain excluded debt (as defined in the notes), then we must prepay the notes in full. The notes are unsecured and have priority over all other unsecured indebtedness of our company, except for certain senior indebtedness (as defined in the notes). The notes contain customary affirmative and negative covenants and events of default for a loan of this type.
The warrants are exercisable for a period five (5) years at an exercise price of $4.58 (subject to standard adjustments for share splits, share combinations, share dividends, reclassifications, mergers, consolidations, reorganizations and similar transactions) and may be exercised on a cashless basis if at the time of exercise there is no effective registration statement registering, or the prospectus contained therein is not available for, the issuance of common shares upon exercise thereof.

Spartan acted as placement agent in connection with the securities purchase agreement and received (i) a cash transaction fee equal to 6% of the aggregate gross proceeds, (ii) a non-accountable and non-reimbursable due diligence and expense fee equal to 1% of the aggregate gross proceeds and (iii) a warrant for the purchase of a number of common shares equal to eight percent (8%) of the number common shares issuable upon conversion of the notes and exercise of the warrants at an exercise price of $5.03 per share (subject to adjustment), resulting in the issuance of a warrant for 346,449 common shares. The warrant is exercisable at any time six months after the date of issuance and until the fifth anniversary thereof.
Subject to equityholder approval (as defined in the securities purchase agreement), the notes are convertible ~~preferred~~into common shares at the option of the holders at any time on or following the date that an event of default (as defined in the notes) occurs at a conversion price equal to 90% of the lowest volume weighted average price of our common shares on any trading day during the five (5) trading days prior to the conversion date; provided that such conversion price shall not be less than $0.75 (subject to adjustments). The conversion price of the notes is subject to standard adjustments, including a price-based adjustment in the event that we issue any common shares or other securities convertible into or exercisable for common shares at an effective price per share that is lower than the conversion price, subject to certain exceptions.
We evaluated the embedded features within these promissory notes in accordance with ASC 480 and ASC 815. We determined that the embedded features, specifically (i) the default penalty of 40% on outstanding principal, and (ii) the conversion option into common shares at 90% of the lowest VWAP in the five days preceding conversion, subject to a $0.75 floor price, constitute derivative liabilities. These features, arising from default provisions not within our control, including the contingent interest feature and the contingent conversion (deemed redemption) feature, meet the definition of a derivative and do not qualify for derivative accounting exemptions. Consequently, these embedded features are bifurcated from the debt host and recognized as a single derivative liability.
The initial fair value of the derivative liabilities was determined using a Monte Carlo Simulation valuation model, considering various potential outcomes and scenarios. The model used the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 145.37%; (iii) risk-free interest rate of 5.37%; (iv) maximum term of one year; (v) estimated fair value of the common shares of $4.63 per share; and (vi) various probability assumptions. Subsequent changes in fair value are recognized in the statement of operations each reporting period. The issuance costs for the promissory notes, along with the allocated fair values of both the warrants and the bifurcated embedded derivative liability, have been collectively treated as a debt discount. This discount is being amortized to interest expense over the term of the promissory notes using the effective interest method.
The outstanding principal balance of these notes at September 30, 2023 is $126, net of debt discounts of $3,124,874.
Purchase and Sale of Future Revenues Agreement
On March 31, 2023, we and 1847 Cabinet entered into a non-recourse funding agreement with a third-party for the sale of future revenues totaling $1,965,000 for net cash proceeds of $1,410,000. We are required to make weekly ACH payments in the amount of ~~$437,491~~$39,300. The agreement also allows for the third-party to file UCCs securing their interest in the receivables and ~~paid prior period accrued dividends~~includes customary events of ~~$462,925.~~default.
~~During~~We recorded a debt discount of $555,000, which will be amortized under the ~~nine months ended~~effective interest method. We are utilizing the prospective method to account for subsequent changes in the estimated future payments, whereby if there is a change in the estimated future cash flows, a new effective interest rate is determined based on the revised estimate of remaining cash flows. The outstanding balance at September 30, ~~2022,~~2023 is $797,487, net of debt discounts of $145,713, and the ~~Company~~effective interest rate was 72.4%.
6% Subordinated Promissory Notes
As part of the consideration paid in the acquisition of ICU Eyewear, 1847 ICU issued the sellers 6% subordinated promissory notes in the aggregate principal amount of $500,000. The notes bear interest at the rate of 6% per annum with all principal and accrued ~~dividends attributable~~interest being due and payable in one lump sum on February 9, 2024; provided that upon an event of default (as defined in the notes), such interest rate shall increase to 10%. 1847 ICU may prepay all or any portion of the notes at any time prior to the ~~series B senior convertible preferred shares~~maturity date without premium or penalty of any kind. The notes contain customary events of default, including, without limitation, in the ~~amount~~event of ~~$113,052~~(i) non-payment, (ii) a default by 1847 ICU of any of its covenants in the notes, the agreement and ~~paid prior period accrued dividends~~plan of ~~$77,548.~~merger or any other agreement entered into in connection with the agreement and plan of merger, or a breach of any of the representations or warranties under such documents, (iii) the insolvency or bankruptcy of 1847 ICU or ICU Eyewear or (iv) a change of control (as defined in the notes) of 1847 ICU or ICU Eyewear. The notes are unsecured and subordinated to all senior indebtedness.
~~On March 23, 2022, the Company declared a common share dividend~~The outstanding balance of ~~$0.05 per share, or~~this note at September 30, 2023 is $500,000 and an ~~aggregate~~accrued interest balance of ~~$249,762, to shareholders of record as of March 31, 2022. This dividend was paid on April 15, 2022.~~$19,416.
On July 29, 2022, the Company declared a common share dividend of $0.13125 per share, or an aggregate of $337,841, to shareholders of record as of August 4, 2022. This dividend was paid on August 19, 2022.
On August 23, 2022, the Company declared a common share dividend of $0.13125 per share, or an aggregate of $505,751 to shareholders of record as of September 30, 2022. This dividend was paid on October 17, 2022.
~~Warrant Adjustments~~
As a result of the issuance of the note to Mast Hill Fund, L.P. on July 8, 2022, the exercise price of certain of the Company’s outstanding warrants was adjusted to $5.20 pursuant to certain antidilution provisions of such warrants (down round feature). In addition, certain of the Company’s outstanding warrants include an “full ratchet” feature, whereby the exercise price was reset to $5.20 and the number of shares underlying the warrants was increased in the same proportion as the exercise price decrease. As a result, the Company recognized a deemed dividend of approximately $6.4 million, which was calculated using a Black-Scholes pricing model.
As a result of the public offering, the exercise price of certain of the Company’s outstanding warrants was adjusted to $4.20 pursuant to certain antidilution provisions of such warrants (down round feature). In addition, certain of the Company’s outstanding warrants include an “full ratchet” feature, whereby the exercise price was reset to $4.20 and the number of shares underlying the warrants was increased in the same proportion as the exercise price decrease. As a result, the Company recognized a deemed dividend of approximately $2.6 million, which was calculated using a Black-Scholes pricing model.
~~Debt~~
Secured Convertible Promissory Notes
On 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 to these purchasers secured convertible promissory notes in the aggregate principal amount of $24,860,000. The notes contain an aggregate original issue discount of $497,200. As a result, the total purchase price was $24,362,800. After payment of expenses of $617,825, we received net proceeds of $23,744,975, of which $10,687,500 was used to fund the cash portion of the purchase price for the acquisition of High Mountain and Innovative Cabinets. In addition, as consideration for the financing, we granted the financing agent 187,500 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 equity interest being ~~including~~included within noncontrolling interest on the consolidated balance sheet. ~~The remaining principal balance of the notes at September 30, 2022 is $22,270,755, net of debt discounts of $2,589,245, and they have accrued interest of $479,098.~~

The notes bear interest at a rate per annum equal to the greater of (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 Company~~our 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~~our 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 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~~our company or a 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 ~~$10.00~~$1.979 (subject to standard adjustments, including a full ratchet antidilution adjustment); provided that the notes contain certain beneficial ownership limitations.
Pursuant to the terms of the 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 amount of the 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 purchase agreement and the notes contain customary representations, warranties, affirmative and negative financial and other covenants and events of default for loans of this type. The notes are guaranteed by each subsidiary and are secured by a first priority security interest in all of ~~the assets~~our assets.
The outstanding principal balance of the ~~Company~~convertible notes at September 30, 2023 is $22,894,397, net of debt discounts of $1,965,603, and ~~its subsidiaries.~~an accrued interest balance of $1,043,310.

6% Subordinated Convertible Promissory Notes
A portion of the purchase price for the acquisition of 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.
On October 8, 2021, 1847 Cabinet issued 6% subordinated convertible promissory notes in the aggregate principal amount of $5,880,345 to Steven J. Parkey and Jose D. ~~Garcia-Rendon.~~Garcia-Rendon, the sellers of High Mountain and Innovative Cabinets. On July 26, 2022, ~~the Company~~we and 1847 Cabinet entered into a conversion agreement with Steven J. Parkey and Jose D. Garcia-Rendon, pursuant to which they agreed to convert an aggregate of $3,360,000 of the ~~convertible~~ notes into an aggregate of ~~800,000~~32,000 common shares ~~of the Company~~ at a conversion price of ~~$4.20~~$105 per share. As a result, ~~the Company~~we recognized a loss on extinguishment of debt of $1,280,000.

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 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, onOn 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 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) $10.00 (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.
The outstanding principal balance of these notes at September 30, 2023 is $2,351,224, net of debt discounts of $169,122, and an accrued interest balance of $496,104.
6% Amortizing Promissory Note
On July 29, 2020, 1847 Asien entered into a securities purchase agreement with Joerg Christian Wilhelmsen and Susan Kay Wilhelmsen, as trustees of the ~~Asien’s Seller,~~Wilhelmsen Family Trust, U/D/T Dated May 1, 1992, pursuant to which ~~the Asien’s Seller sold 103,750 of our common shares to 1847 Asien a purchase price of $10.00 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. 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.The note was subsequently amended on multiple occasions. Pursuant to the latest amendment, the ~~repayment terms of~~parties agreed to extend the 6% amortizing promissory note were revised so that one-half (50%) of the outstanding principal amount ($518,750) and all accrued interest thereon shall be amortized on a two-year straight-line basis and payable 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 ($518,750) and all accrued, but unpaid interest thereon shall be paid on the second anniversary of thematurity date of the ~~6% amortizing promissory~~ note ~~along with any other unpaid principal or accrued interest thereon.~~to July 30, 2023. The note is unsecured and contains customary events of default. This note is currently in default.
The ~~remaining~~outstanding principal balance of ~~the~~this note at September 30, ~~2022 was $562,411~~2023 is $465,805 and ~~it had~~an accrued interest balance of ~~$6,561.~~$241,011.

~~Vesting~~Related Party Promissory Note
AOn September 30, 2020, 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 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.~~$1,260,000. Payment of the principal and accrued interest on the note iswas 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 $1,553,561, resulting in a vested amount of approximately $388,390. For the year ended December 31, 2021, EBITDA of 1847 Cabinet was approximately $1,642,335, resulting in an additional vested amount of approximately $410,584.
~~On September 30, 2020, 1847 Cabinet Inc. issued an 8% vesting promissory note in the principal amount of up to $1,260,000 to Stephen Mallatt, Jr. and Rita Mallatt.~~vesting. On July 26, 2022, ~~the Company~~we and 1847 Cabinet entered into a conversion agreement with Stephen Mallatt, Jr. and Rita Mallatt, pursuant to which they agreed to convert $797,221 of the vesting note into ~~189,815~~7,593 common shares ~~of the Company~~ at a conversion price of ~~$4.20~~$105 per share. As a result, ~~the Company~~we recognized a loss on extinguishment of debt of $303,706. The note was subsequently amended on multiple occasions. Pursuant to the latest amendment, the parties agreed to extend the maturity date of the note to July 30, 2023. This note is currently in default.
The outstanding principal balance of this note at September 30, 2023 is $362,779 and an accrued interest balance of 222,928.
Financing Leases
On February 14, 2019, High Mountain entered ininto an equipment financing lease to purchase ~~a lift truck~~equipment for $24,337, which matures onin January ~~19,~~ 2024. The balance payable was ~~$7,228~~$1,862 as of September 30, ~~2022.~~2023.
On April 10, 2019, High Mountain entered ininto an equipment financing lease to purchase equipment for $67,577, which matures onin April 1, 2024. The balance payable was ~~$23,924~~$9,114 as of September 30, ~~2022.~~2023.
On ~~September~~June 2, 2020, High Mountain entered ininto an equipment financing lease to purchase ~~office printers~~equipment for $9,240, which matures onin May 2, 2024. The balance payable was ~~$4,030~~$1,644 as of September 30, ~~2022.~~2023.
On May 6, 2021, Kyle’s entered ininto an equipment financing lease to purchase equipment for $276,896, which matures onin December 1, 2027. The balance payable was ~~$239,054~~$198,375 as of September 30, ~~2022.~~2023.
On October 12, 2021, Kyle’s entered ininto an equipment financing lease to purchase equipment for ~~$245,375,~~$245,376, which matures onin December 1, 2027. The balance payable was ~~$211,852~~$ 176,346 as of September 30, ~~2022.~~2023.
On March 28, 2022, Kyle’s entered ininto an equipment financing lease to purchase machinery and equipment for ~~$245,395,~~$316,798, which matures onin January ~~28,~~ 2028. The balance payable was ~~$221,694~~$238,881 as of September 30, ~~2022.~~2023.
On ~~March 28,~~April 11, 2022, Kyle’s entered ininto an equipment financing lease to purchase machinery and equipment for ~~$71,403, which matures on January 28, 2028. The balance payable was $64,378 as of September 30, 2022.~~
~~On April 11, 2022, Kyle’s entered in a financing lease to lease copy machines valued at~~ $11,706, which matures ~~on September 20,~~in June 2027. The balance payable was ~~$10,734~~$8,705 as of September 30, ~~2022.~~2023.
On July 13, 2022, Kyle’s entered ininto an equipment financing lease to purchase machinery and equipment for $240,260, which matures onin June ~~26,~~ 2028. The balance payable was ~~$231,779~~$196,643 as of September 30, ~~2022.~~2023.

Vehicle Loans
Asien’s has entered into ~~seven~~five retail installment sale contracts pursuant to which ~~Asien’s~~it agreed to finance its delivery trucks at rates ranging from 3.74% to 8.72% with an aggregate remaining principal amount of ~~$118,898~~$71,903 as of September 30, ~~2022.~~2023.
Kyle’s has entered into two retail installment sale contracts pursuant to which ~~Kyle’s~~it agreed to finance its delivery trucks at rates ranging from 5.90% to 6.54% with an aggregate remaining principal amount of ~~$54,359~~$40,394 as of September 30, ~~2022.~~2023.
High Mountain has entered into ~~twelve~~eleven retail installment sale contracts pursuant to which it agreed to finance delivery trucks and equipment at rates ranging from 3.74% to ~~6.34%~~9.94% with an aggregate remaining principal amount of ~~$84,747~~$295,105 as of September 30, ~~2022.~~2023.
Innovative Cabinets has entered into two retail installment sale contracts pursuant to which it agreed to finance delivery trucks and equipment at rates of 3.74% with an aggregate remaining principal amount of ~~$15,838~~$10,087 as of September 30, ~~2022.~~2023.

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 September 30, ~~2022.~~2023. See the above disclosures for more details regarding these loans.

Short-Term Long-Term Total Debt
Secured Convertible Promissory Notes $ - $ 22,270,755 $ 22,270,755
6% Subordinated Convertible Promissory Notes - 2,194,422 2,194,422
6% Amortizing Promissory Note 562,411 - 562,411
Vesting Promissory Note 362,779 - 362,779
Financing Leases 183,103 831,570 1,014,673
Vehicle Loans 97,921 175,921 273,842
Total $ 1,206,214 $ 25,472,668 $ 26,678,882
Short-Term Long-Term Total Debt
Notes Payable
Vehicle loans $ 113,991 $ 303,498 $ 417,489
6% Amortizing promissory note 465,805 - 465,805
6% Subordinated promissory note 500,000 - 500,000
Purchase and sale of future revenues loan 943,200 - 943,200
20% OID subordinated promissory notes 3,125,000 - 3,125,000
Total notes payable 5,147,996 303,498 5,451,494
Less: debt discounts on notes payable (3,270,587 ) - (3,270,587 )
Total notes payable, net 1,877,409 303,498 2,180,907

Related Party Notes Payable
Related party promissory note 362,779 - 362,779

Convertible Notes Payable
Secured convertible promissory notes - 24,860,000 24,860,000
6% subordinated convertible promissory notes - 2,520,346 2,520,346
Promissory notes issued in private placements 1,447,427 - 1,447,427
Total convertible notes payable 1,447,427 27,380,346 28,827,773
Less: debt discounts on convertible notes payable - (2,134,725 ) (2,134,725 )
Total convertible notes payable, net 1,447,427 25,245,621 26,693,048

Revolving Line of Credit
Revolving loan - 4,058,383 4,058,383
Less: debt discounts on revolving line of credit - (746,825 ) (746,825 )
Total revolving line of credit, net - 3,311,558 3,311,558

Finance Leases
Financing leases 182,384 649,186 831,570

Total debt $ 7,140,586 $ 32,391,413 $ 39,531,999
Less: debt discounts (3,270,587 ) (2,881,550 ) (6,152,137 )
Total debt, net $ 3,869,999 $ 29,509,863 $ 33,379,862

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~~our manager to manage our day-to-day operations and affairs. Our relationship with ~~the Manager~~our 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~~our manager will perform for us and the businesses we own and the management fee to be paid to ~~the Manager~~our manager in respect thereof; and

● our operating agreement setting forth ~~the Manager’s~~our manager’s rights with respect to the allocation shares it owns, including ~~the~~the right to receive profit allocations from us, and the supplemental put provision relating to ~~the Manager’s~~our 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 preparation of the unaudited condensed consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and 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 believed to be reasonable under the circumstances. Actual results may differ from these estimates.

For a description of the accounting policies that, 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 the fiscal year ended December 31, ~~2021~~2022 filed with the Securities and Exchange Commission, ~~(the “SEC”)~~or the SEC, on ~~March 31, 2022.~~April 11, 2023.

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”))~~or 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~~SEC 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 September 30, ~~2022.~~2023. 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, ~~2021,~~2022, which we are still in the process of remediating as of September 30, ~~2022,~~2023, 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, ~~2021~~2022 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 September 30, ~~2022,~~2023, 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 GAAP commensurate with our financial reporting requirements.

As disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021,~~2022, our management has identified the steps necessary to address the material weaknesses, and in the third quarter of ~~2022,~~2023, we continued to implement the following remedial procedures:

● 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.

● ~~In the first quarter of 2022, we engaged a financial reporting consultant to provide outsourced accounting and financial reporting services.~~
● ~~In the first quarter of 2022, we also~~We have put in place new policies and procedures at the subsidiary level to 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 procedures.
● ~~In the third quarter of 2022, we hired a corporate controller.~~
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 third quarter of ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~PART II~~
~~OTHER INFORMATION~~
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 the three months ended September 30, ~~2022~~2023 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 September 30, ~~2022.~~2023.
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 quarter of fiscal 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.None.

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)
3.4 Amendment No. 2 to Second Amended and Restated Operating Agreement of 1847 Holdings LLC, dated October 16, 2023 (incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K filed on October 16, 2023)
4.1 Amended and Restated 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 Warrant Agency Agreement, dated August 11, 2023, between 1847 Holdings LLC and VStock Transfer, LLC and Form of Warrant (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on August 14, 2023)
4.5 Common Share Purchase Warrant ~~relating~~issued by 1847 Holdings LLC to ~~2020 private placement~~Spartan Capital Securities, LLC on August 11, 2023 (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)~~August 14, 2023)
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 2, 2022)~~
~~4.7~~ Common Share Purchase Warrant issued by 1847 Holdings LLC to ~~Leonite Capital~~J.H. Darbie & Co., Inc. on February 22, 2023 (incorporated by reference to Exhibit 4.6 to Amendment No. 1 to Registration Statement on Form S-3 filed on April 28, 2023)

4.7 Common Share Purchase Warrant issued by 1847 Holdings LLC to J.H. Darbie & Co., Inc. on ~~October 8, 2021~~February 9, 2023 (incorporated by reference to Exhibit 4.10 to Amendment No. 1 to Registration Statement on Form S-3 filed on April 28, 2023)
4.8 Common Share Purchase Warrant issued by 1847 Holdings LLC to J.H. Darbie & Co., Inc. on February 3, 2023 (incorporated by reference to Exhibit 4.13 to Amendment No. 1 to Registration Statement on Form S-3 filed on April 28, 2023)
4.9 Warrant Agent Agreement, dated January 3, 2023, between 1847 Holdings LLC and VStock Transfer, LLC and form of Warrant (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on ~~October 13, 2021)~~
~~4.8~~ Common Share Purchase Warrant 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)
4.9* ~~Common Share Purchase Warrant issued by 1847 Holdings LLC to J.H. Darbie & Co. on July 8, 2022~~January 9, 2023)
4.10 Common Share Purchase Warrant issued to Craft Capital Management LLC on August 5, 2022 (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on August 8, 2022)
4.11 Common Share Purchase Warrant issued to R.F. Lafferty & Co. Inc. on August 5, 2022 (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on August 8, 2022)
4.12 Warrant for Common Shares issued by 1847 Holdings LLC to J.H. Darbie & Co., Inc. on July 8, 2022 (incorporated by reference to Exhibit 4.18 to the Registration Statement on Form S-3 filed on February 1, 2023)
4.13 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 Amended and Restated Credit and Security Agreement, dated September 11, 2023, among AB Lending SPV I, LLC, d/b/a Mountain Ridge Capital, ICU Eyewear, Inc., ICU Eyewear Holdings, Inc. and 1847 ICU Holdings Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on September 14, 2023)
10.2 Limited Guaranty Agreement, dated September 11, 2023, by 1847 Holdings LLC in favor of AB Lending SPV I, LLC, d/b/a Mountain Ridge Capital (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on September 14, 2023)
10.3 Pledge Agreement, dated September 11, 2023, by 1847 ICU Holdings Inc. in favor of AB Lending SPV I, LLC, d/b/a Mountain Ridge Capital (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on September 14, 2023)
10.4 Pledge Agreement, dated September 11, 2023, by ICU Eyewear Holdings, Inc. in favor of AB Lending SPV I, LLC, d/b/a Mountain Ridge Capital (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on September 14, 2023)
10.5 Trademark Security Agreement, dated September 11, 2023, by 1847 ICU Holdings Inc., ICU Eyewear Holdings, Inc., and ICU Eyewear, Inc., in favor of AB Lending SPV I, LLC, d/b/a Mountain Ridge Capital (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed on September 14, 2023)
10.6 Form of Securities Purchase Agreement, dated August 11, 2023 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on August 14, 2023)
10.7 Form of Registration Rights Agreement, dated August 11, 2023 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on August 14, 2023)
10.8 Form of 20% OID Subordinated Promissory Note, dated August 11, 2023 (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on August 14, 2023)
10.9 Placement Agency Agreement, dated August 11, 2023, between 1847 Holdings LLC and Spartan Capital Securities, LLC (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on August 14, 2023)

10.10 Letter Agreement, dated August 4, 2023, between Mast Hill Fund, L.P. and 1847 Holdings LLC (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on August 10, 2023)
10.11 Letter Agreement, dated August 4, 2023, between Leonite Fund I, LP and 1847 Holdings LLC (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on August 10, 2023)
10.12 Letter Agreement, dated August 9, 2023, between Mast Hill Fund, L.P. and 1847 Holdings LLC (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K filed on August 10, 2023)
10.13 Letter Agreement, dated August 9, 2023, between Leonite Fund I, LP and 1847 Holdings LLC (incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K filed on August 10, 2023)
10.14 Letter Agreement, dated August 10, 2023, between Mast Hill Fund, L.P and 1847 Holdings LLC (incorporated by reference to Exhibit 10.10 to the Current Report on Form 8-K filed on August 10, 2023)
10.15 Form of Securities Purchase Agreement, dated July ~~8, 2022, between~~14, 2023, among 1847 Holdings LLC and ~~Mast Hill Fund, L.P.~~the Purchasers signatory thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on July ~~12, 2022)~~20, 2023)
~~10.2~~10.16 ~~Promissory Note issued by~~Form of Amendatory Agreement, dated July 18, 2023, among 1847 Holdings LLC, ~~to Mast Hill Fund, L.P. on July 8, 2022~~Spartan Capital Securities, LLC and the Purchasers signatory thereto (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on July ~~12, 2022)~~20, 2023)
~~10.3~~10.17 ~~Conversion~~Form of Securities Purchase Agreement, dated July ~~26, 2022,~~3, 2023, among 1847 Holdings LLC ~~1847 Cabinet Inc., Stephen Mallatt, Jr.~~ and ~~Rita Mallatt~~the Purchasers signatory thereto (incorporated by reference to Exhibit ~~10.2~~10.1 to the Current Report on Form 8-K filed on July ~~27, 2022)~~
~~10.4~~ Conversion Agreement, dated July 26, 2022, among 1847 Holdings LLC, 1847 Cabinet Inc. and Steven J. Parkey (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on July 27, 2022)
~~10.5~~ Conversion Agreement, dated July 26, 2022, among 1847 Holdings LLC, 1847 Cabinet Inc. and Jose D. Garcia-Rendon (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K filed on July 27, 2022)
~~10.6~~ ~~Conversion Agreement, dated July 26, 2022, between 1847 Holdings LLC and Bevilacqua PLLC (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K filed on July 27, 2022)~~10, 2023)
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
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 (formatted as Inline XBRL and contained in Exhibit 101)

* * Filed herewith
** Furnished herewith

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: November 14, ~~2022~~2023
1847 HOLDINGS LLC
/s/ Ellery W. Roberts
Name: Ellery W. Roberts
Title: Chief Executive Officer
(Principal Executive Officer)
/s/ Vernice L. Howard
Name: Vernice L. Howard
Title: Chief Financial Officer
(Principal Financial and Accounting Officer)
4751

0001599407 efsh:ApplianceAccessoriesPartsAndOtherMember efsh:RetailAndAppliancesMember us-gaap:CorporateMember 2022-01-01 2022-09-30 iso4217:USD ~~xbrli:shares~~compsci:item

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Revenues	$	14,472,361		$	6,735,028		$	39,437,482		$	18,163,257

Operating Expenses
Cost of sales		9,596,387			4,573,123			25,109,863			12,348,594
Personnel		3,182,286			876,991			6,446,145			2,198,231
Depreciation and amortization		516,414			299,477			1,526,759			547,655
General and administrative		2,688,877			1,844,979			7,451,079			4,519,504
Total Operating Expenses		15,983,964			7,594,570			40,533,846			19,613,984

LOSS FROM OPERATIONS		(1,511,603	)		(859,542	)		(1,096,364	)		(1,450,727	)

Other Income (Expense)
Other income		2,756			3,539			3,431			-
Interest expense		(1,875,757	)		(128,199	)		(3,714,623	)		(309,832	)
Gain on forgiveness of debt		-			-			-			360,302
Gain on disposal of property and equipment		15,614			10,885			47,690			10,885
Gain on disposition of subsidiary		-			-			-			3,282,804
Loss on extinguishment of debt		(2,039,815	)		-			(2,039,815	)		(757,792	)
Loss on write-down of contingent note payable		(158,817	)		-			(158,817	)		-
Total Other Income (Expense)		(4,056,019	)		(113,775	)		(5,862,134	)		2,586,367

NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(5,567,622	)		(973,317	)		(6,958,498	)		1,135,640
INCOME TAX BENEFIT FROM CONTINUING OPERATIONS		1,095,000			-			1,411,000			21,900
NET INCOME (LOSS) FROM CONTINUING OPERATIONS		(4,472,622	)		(973,317	)		(5,547,498	)		1,157,540
NET INCOME FROM DISCONTINUED OPERATIONS		-			-			-			240,405
NET INCOME (LOSS)	$	(4,472,622	)	$	(973,317	)	$	(5,547,498	)	$	1,397,945

NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS FROM CONTINUING OPERATIONS		(399,106	)		(65,008	)		(456,500	)		(106,628	)
NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS FROM DISCONTINUED OPERATIONS		-			-			-			108,182
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS	$	(4,073,516	)	$	(908,309	)	$	(5,090,998	)	$	1,396,391

NET INCOME (LOSS) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO 1847 HOLDINGS		(4,073,516	)		(908,309	)		(5,090,998	)		1,264,168
NET INCOME FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO 1847 HOLDINGS		-			-			-			132,223
NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS	$	(4,073,516	)	$	(908,309	)	$	(5,090,998	)	$	1,396,391

PREFERRED SHARE DIVIDENDS		(353,816	)		(314,093	)		(697,312	)		(2,340,567	)
DEEMED DIVIDEND RELATED TO DOWN ROUND PROVISION IN WARRANTS		(9,012,730	)		-			(9,012,730	)		-
NET LOSS ATTRIBUTABLE TO 1847 HOLDINGS COMMON SHAREHOLDERS	$	(13,440,062	)	$	(1,222,402	)	$	(14,801,040	)	$	(944,176	)

LOSS PER COMMON SHARE ATTRIBUTABLE TO 1847 HOLDINGS COMMON SHAREHOLDERS
BASIC
LOSS PER COMMON SHARE FROM CONTINUING OPERATIONS	$	(4.51	)	$	(1.01	)	$	(8.08	)	$	(0.91	)
EARNINGS PER COMMON SHARE FROM DISCONTINUED OPERATIONS		-			-			-			0.11
LOSS PER COMMON SHARE	$	(4.51	)	$	(1.01	)	$	(8.08	)	$	(0.80	)
DILUTED
LOSS PER COMMON SHARE FROM CONTINUING OPERATIONS	$	(4.51	)	$	(1.01	)	$	(8.08	)	$	(0.52	)
EARNINGS PER COMMON SHARE FROM DISCONTINUED OPERATIONS		-			-			-			0.06
LOSS PER COMMON SHARE	$	(4.51	)	$	(1.01	)	$	(8.08	)	$	(0.46	)

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
BASIC		2,979,949			1,210,918			1,832,076			1,179,873
DILUTED		2,979,949			1,210,918			1,832,076			2,065,215

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenues	$	18,777,921		$	14,472,361		$	53,572,198		$	39,437,482

Operating Expenses
Cost of sales		10,737,174			9,596,387			32,774,377			25,109,863
Personnel		4,006,639			3,365,592			9,960,863			7,159,442
Depreciation and amortization		625,967			516,414			1,818,373			1,526,759
General and administrative		4,195,261			2,505,571			10,715,638			6,737,782
Total Operating Expenses		19,565,041			15,983,964			55,269,251			40,533,846

LOSS FROM OPERATIONS		(787,120	)		(1,511,603	)		(1,697,053	)		(1,096,364	)

Other Income (Expense)
Other income (expense)		(187,200	)		2,756			(135,232	)		3,431
Interest expense		(5,704,169	)		(1,875,757	)		(9,747,299	)		(3,714,623	)
Gain on disposal of property and equipment		18,026			15,614			18,026			47,690
Loss on extinguishment of debt		-			(2,039,815	)		-			(2,039,815	)
Loss on change in fair value of warrant liability		(27,900	)		-			(27,900	)		-
Gain on change in fair value of derivative liabilities		425,977			-			425,977			-
Loss on write-down of contingent note payable		-			(158,817	)		-			(158,817	)
Gain on bargain purchase		-			-			2,639,861			-
Total Other Expense		(5,475,266	)		(4,056,019	)		(6,826,567	)		(5,862,134	)

NET LOSS BEFORE INCOME TAXES		(6,262,386	)		(5,567,622	)		(8,523,620	)		(6,958,498	)
INCOME TAX BENEFIT (EXPENSE)		403,314			1,095,000			(258,007	)		1,411,000
NET LOSS	$	(5,859,072	)	$	(4,472,622	)	$	(8,781,627	)	$	(5,547,498	)

NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS		(30,767	)		(399,106	)		(295,125	)		(456,500	)
NET LOSS ATTRIBUTABLE TO 1847 HOLDINGS	$	(5,828,305	)	$	(4,073,516	)	$	(8,486,502	)	$	(5,090,998	)

PREFERRED SHARE DIVIDENDS		(125,029	)		(353,816	)		(453,121	)		(697,312	)
DEEMED DIVIDENDS		(28,000	)		(9,012,730	)		(2,397,000	)		(9,012,730	)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(5,981,334	)	$	(13,440,062	)	$	(11,336,623	)	$	(14,801,040	)

LOSS PER COMMON SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS - BASIC AND DILUTED	$	(3.01	)	$	(103.16	)	$	(14.01	)	$	(175.44	)
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED		1,987,394			130,281			809,417			84,367

	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		-		$	-			-		$	-		$	1,000		1,210,918	$	1,211	$	(2,000,000	)	$	21,723,042		$	(20,754,394	)	$	930,812		$	(98,329	)
Issuance of common shares upon conversion of series A preferred shares		-			-			-			-			-		38,096		38		-			111,948			-			-			111,986
Issuance of series B convertible preferred shares and warrants		-			-			-			-			-		-		-		-			152,350			-			-			152,350
Dividends - common shares		-			-			-			-			-		-		-		-			-			(249,762	)		-			(249,762	)
Dividends - series A senior convertible preferred shares		-			-			-			-			-		-		-		-			-			(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		-		$	-			-		$	-		$	1,000		1,249,014	$	1,249	$	(2,000,000	)	$	21,987,340		$	(22,012,401	)	$	876,634		$	(1,146,178	)
Issuance of series B convertible preferred shares and warrants		-			-			-			-			-		-		-		-			19,700			-			-			19,700
Dividends - series A senior convertible preferred shares		-			-			-			-			-		-		-		-			-			(159,298	)		-			(159,298	)
Dividends - series B senior convertible preferred shares		-			-			-			-			-		-		-		-			-			(48,983	)		-			(48,983	)
Net loss		-			-			-			-			-		-		-		-			-			(144,452	)		(3,216	)		(147,668	)
Balance at June 30, 2022		-		$	-			-		$	-		$	1,000		1,249,014	$	1,249	$	(2,000,000	)	$	22,007,040		$	(22,365,134	)	$	873,418		$	(1,482,427	)
Issuance of warrants in connection with notes payable		-			-			-			-			-		-		-		-			402,650			-			-			402,650
Issuance of common shares upon cashless exercise of warrants		-			-			-			-			-		126,669		126		-			(126	)		-			-			-
Issuance of common shares upon partial extinguishment of convertible notes payable		-			-			-			-			-		800,000		800		-			4,639,200			-			-			4,640,000
Issuance of common shares upon partial extinguishment of contingent note payable		-			-			-			-			-		189,815		190		-			1,100,737			-			-			1,100,927
Issuance of common shares upon settlement of debt		-			-			-			-			-		285,067		285		-			1,653,104			-			-			1,653,389
Reclassification of preferred shares from mezzanine equity to permanent equity		1,684,849			1,415,100			481,566			1,257,650			-		-		-		-			-			-			-			2,672,750
Issuance of common shares and warrants in connection with a public offering		-			-			-			-			-		1,428,572		1,429		-			5,147,271			-			-			5,148,700
Redemption of series A senior convertible preferred shares		(90,909	)		(76,354	)		-			-			-		-		-		-			-			(132,737	)		-			(209,091	)
Redemption of series B senior convertible preferred shares		-			-			(16,667	)		(43,469	)		-		-		-		-			-			(14,032	)		-			(57,501	)
Dividends - common shares		-			-			-			-			-		-		-		-			-			(843,592	)		-			(843,592	)
Dividends - series A senior convertible preferred shares		-			-			-			-			-		-		-		-			-			(156,738	)		-			(156,738	)
Dividends - series B senior convertible preferred shares		-			-			-			-			-		-		-		-			-			(50,309	)		-			(50,309	)
Deemed dividends - down round provision in warrants		-			-			-			-			-		-		-		-			9,012,730			(9,012,730	)		-			-
Net loss		-			-			-			-			-		-		-		-			-			(4,073,516	)		(399,106	)		(4,472,622	)
Balance at September 30, 2022		1,593,940		$	1,338,746			464,899		$	1,214,181		$	1,000		4,079,137	$	4,079	$	(2,000,000	)	$	43,962,606		$	(36,648,788	)	$	474,312		$	8,346,136

	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			Equity
Balance at December 31, 2022		1,593,940		$	1,338,746			464,899		$	1,214,181		$	1,000		174,249	$	174	$	(2,000,000	)	$	43,966,511		$	(41,919,277	)	$	288,499		$	2,889,834
Issuance of common shares upon settlement of accrued series A preferred share dividends		-			-			-			-			-		3,981		4		-			152,664			-			-			152,668
Issuance of common shares and warrants in connection with a private debt offering		-			-			-			-			-		16,625		17		-			1,360,345			-			-			1,360,362
Issuance of common shares upon cashless exercise of warrants		-			-			-			-			-		2,456		2		-			(2	)		-			-			-
Deemed dividend from issuance of warrants to common shareholders		-			-			-			-			-		-		-		-			618,000			(618,000	)		-			-
Deemed dividend from down round provision in warrants		-			-			-			-			-		-		-		-			1,217,000			(1,217,000	)		-			-
Dividends - series A senior convertible preferred shares		-			-			-			-			-		-		-		-			-			(110,045	)		-			(110,045	)
Dividends - series B senior convertible preferred shares		-			-			-			-			-		-		-		-			-			(52,820	)		-			(52,820	)
Net income (loss)		-			-			-			-			-		-		-		-			-			1,112,534			(65,053	)		1,047,481
Balance at March 31, 2023		1,593,940		$	1,338,746			464,899		$	1,214,181		$	1,000		197,311	$	197	$	(2,000,000	)	$	47,314,518		$	(42,804,608	)	$	223,446		$	5,287,480
Issuance of common shares upon settlement of accrued series A preferred share dividends		-			-			-			-			-		7,483		8		-			111,261			-			-			111,269
Issuance of common shares upon cashless exercise of warrants		-			-			-			-			-		49,558		50		-			(50	)		-			-			-
Issuance of common shares upon exercise of warrants		-			-			-			-			-		20,260		20		-			5,044			-			-			5,064
Issuance of common shares upon conversion of series B senior convertible preferred shares		-			-			(85,000	)		(221,686	)		-		17,223		17		-			221,669			-			-			-
Deemed dividend from down round provision in warrants		-			-			-			-			-		-		-		-			534,000			(534,000	)		-			-
Dividends - series A senior convertible preferred shares		-			-			-			-			-		-		-		-			-			(110,051	)		-			(110,051	)
Dividends - series B senior convertible preferred shares		-			-			-			-			-		-		-		-			-			(55,176	)		-			(55,176	)
Net loss		-			-			-			-			-		-		-		-			-			(3,770,731	)		(199,305	)		(3,970,036	)
Balance at June 30, 2023		1,593,940		$	1,338,746			379,899		$	992,495		$	1,000		291,835	$	292	$	(2,000,000	)	$	48,186,442		$	(47,274,566	)	$	24,141		$	1,268,550
Issuance of common shares and prefunded warrants in public offering		-			-			-			-			-		313,800		314		-			2,352,366			-			-			2,352,680
Fair value of warrant liability recognized upon issuance of prefunded warrants		-			-			-			-			-		-		-		-			(1,156,300	)		-			-			(1,156,300	)
Issuance of common shares upon exercise of prefunded warrants		-			-			-			-			-		220,000		220		-			(220	)		-			-			-
Extinguishment of warrant liability upon exercise of prefunded warrants		-			-			-			-			-		-		-		-			1,184,200			-			-			1,184200
Issuance of warrants in connection with a private debt offering		-			-			-			-			-		-		-		-			633,552			-			-			633,552
Issuance of common shares upon conversion of series A senior convertible preferred shares		(1,367,273	)		(1,148,369	)		-			-			-		642,995		643		-			1,147,726			-			-			-
Issuance of common shares upon conversion of series B senior convertible preferred shares		-			-			(288,332	)		(751,996	)		-		336,748		337		-			751,659			-			-			-
Issuance of common shares upon cashless exercise of warrants		-			-			-			-			-		38,972		39		-			(39	)		-			-			-
Issuance of common shares upon conversion of promissory notes		-			-			-			-			-		1,196,819		1,197		-			3,993,355			-			-			3,994,552
Issuance of common shares upon settlement of accrued series A preferred share dividends		-			-			-			-			-		33,689		33		-			137,213			-			-			137,246
Issuance of common shares upon settlement of accrued series B preferred share dividends		-			-			-			-			-		13,461		13		-			54,826			-			-			54,839
Deemed dividend from down round provision in warrants		-			-			-			-			-		-		-		-			28,000			(28,000	)		-			-
Dividends - series A senior convertible preferred shares		-			-			-			-			-		-		-		-			-			(93,941	)		-			(93,941	)
Dividends - series B senior convertible preferred shares		-			-			-			-			-		-		-		-			-			(31,088	)		-			(31,088	)
Net loss		-			-			-			-			-		-		-		-			-			(5,828,305	)		(30,767	)		(5,859,072	)
Balance at September 30, 2023		226,667		$	190,377			91,567		$	240,499		$	1,000		3,088,319	$	3,088	$	(2,000,000	)	$	57,312,780		$	(53,255,900	)	$	(6,626	)	$	2,485,218

	Series A Senior Convertible Preferred Shares						Series B Senior Convertible Preferred Shares						Allocation		Common Shares				Distribution			Additional Paid-In			Accumulated			Non- Controlling			Total Shareholders’ Equity
	Shares			Amount			Shares			Amount			Shares		Shares		Amount		Receivable			Capital			Deficit			Interests			(Deficit)
Balance at December 31, 2021		-		$	-			-		$	-		$	1,000		59,519	$	59	$	(2,000,000	)	$	21,724,194		$	(20,754,394	)	$	930,812		$	(98,329	)
Issuance of common shares upon conversion of series A senior convertible preferred shares		-			-			-			-			-		1,524		2		-			111,984			-			-			111,986
Issuance of series B senior convertible preferred shares and warrants		-			-			-			-			-		-		-		-			152,350			-			-			152,350
Dividends - common shares		-			-			-			-			-		-		-		-			-			(249,762	)		-			(249,762	)
Dividends - series A senior convertible preferred shares		-			-			-			-			-		-		-		-			-			(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		-		$	-			-		$	-		$	1,000		61,043	$	61	$	(2,000,000	)	$	21,988,528		$	(22,012,401	)	$	876,634		$	(1,146,178	)
Issuance of series B convertible preferred shares and warrants		-			-			-			-			-		-		-		-			19,700			-			-			19,700
Dividends - series A senior convertible preferred shares		-			-			-			-			-		-		-		-			-			(159,298	)		-			(159,298	)
Dividends - series B senior convertible preferred shares		-			-			-			-			-		-		-		-			-			(48,983	)		-			(48,983	)
Net loss		-			-			-			-			-		-		-		-			-			(144,452	)		(3,216	)		(147,668	)
Balance at June 30, 2022		-		$	-			-		$	-		$	1,000		61,043	$	61	$	(2,000,000	)	$	22,008,228		$	(22,365,134	)	$	873,418		$	(1,482,427	)
Issuance of warrants in connection with notes payable		-			-			-			-			-		-		-		-			402,650			-			-			402,650
Issuance of common shares upon cashless exercise of warrants		-			-			-			-			-		5,067		5		-			(5	)		-			-			-
Issuance of common shares upon partial extinguishment of convertible notes payable		-			-			-			-			-		32,000		32		-			4,639,968			-			-			4,640,000
Issuance of common shares upon partial extinguishment of contingent note payable		-			-			-			-			-		7,593		8		-			1,100,919			-			-			1,100,927
Issuance of common shares upon settlement of debt		-			-			-			-			-		11,403		11		-			1,653,378			-			-			1,653,389
Issuance of common shares and warrants in connection with a public offering		-			-			-			-			-		57,143		57		-			5,148,643			-			-			5,148,700
Reclassification of preferred shares from mezzanine equity to permanent equity		1,684,849			1,415,100			481,566			1,257,650			-		-		-		-			-			-			-			2,672,750
Redemption of series A senior convertible preferred shares		(90,909	)		(76,354	)		-			-			-		-		-		-			-			(132,737	)		-			(209,091	)
Redemption of series B senior convertible preferred shares		-			-			(16,667	)		(43,469	)		-		-		-		-			-			(14,032	)		-			(57,501	)
Deemed dividends – down round provision in warrants		-			-			-			-			-		-		-		-			9,012,730			(9,012,730	)		-			-
Dividends - common shares		-			-			-			-			-		-		-		-			-			(843,592	)		-			(843,592	)
Dividends - series A senior convertible preferred shares		-			-			-			-			-		-		-		-			-			(156,738	)		-			(156,738	)
Dividends - series B senior convertible preferred shares		-			-			-			-			-		-		-		-			-			(50,309	)		-			(50,309	)
Net loss		-			-			-			-			-		-		-		-			-			(4,073,516	)		(399,106	)		(4,472,622	)
Balance at September 30, 2022		1,593,940		$	1,338,746			464,899		$	1,214,181		$	1,000		174,249	$	174	$	(2,000,000	)	$	43,966,511		$	(36,648,788	)	$	474,312		$	8,346,136

	Three Months Ended September 30, 2022								Three Months Ended September 30, 2023
	Retail and Appliances		Construction		Automotive Supplies		Total		Retail and Appliances		Retail and Eyewear		Construction		Automotive Supplies		Total
Revenues
Appliances	$	2,492,544	$	-	$	-	$	2,492,544	$	2,210,075	$	-	$	-	$	-	$	2,210,075
Appliance accessories, parts, and other		442,161		-		-		442,161		210,933		-		-		-		210,933
Eyewear										-		3,387,117		-		-		3,387,117
Eyewear accessories, parts, and other										-		856,137		-		-		856,137
Automotive horns		-		-		1,094,636		1,094,636		-		-		-		616,189		616,189
Automotive lighting		-		-		395,074		395,074		-		-		-		266,891		266,891
Custom cabinets and countertops		-		2,990,767		-		2,990,767		-		-		3,793,285		-		3,793,285
Finished carpentry		-		7,057,179		-		7,057,179		-		-		7,437,294		-		7,437,294
Total Revenues	$	2,934,705	$	10,047,946	$	1,489,710	$	14,472,361	$	2,421,008	$	4,243,254	$	11,230,579	$	883,080	$	18,777,921

	Three Months Ended September 30, 2021
	Retail and Appliances		Construction		Automotive Supplies		Total
Revenues
Appliances	$	2,745,305	$	-	$	-	$	2,745,305
Appliance accessories, parts, and other		400,650		-		-		400,650
Automotive horns				-		1,694,928		1,694,928
Automotive lighting		-		-		555,717		555,717
Custom cabinets and countertops		-		1,338,428		-		1,338,428
Finished carpentry		-		-		-		-
Total Revenues	$	3,145,955	$	1,338,428	$	2,250,645	$	6,735,028

	Nine Months Ended September 30, 2022								Three Months Ended September 30, 2022
	Retail and Appliances		Construction		Automotive Supplies		Total		Retail and Appliances		Retail and Eyewear		Construction		Automotive Supplies		Total
Revenues
Appliances	$	7,206,386	$	-	$	-	$	7,206,386	$	2,492,544	$	-	$	-	$	-	$	2,492,544
Appliance accessories, parts, and other		1,116,114		-		-		1,116,114		442,161		-		-		-		442,161
Eyewear										-		-		-		-		-
Eyewear accessories, parts, and other										-		-		-		-		-
Automotive horns		-		-		3,766,415		3,766,415		-		-		-		1,094,636		1,094,636
Automotive lighting		-		-		1,348,340		1,348,340		-		-		-		395,074		395,074
Custom cabinets and countertops		-		10,288,711		-		10,288,711		-		-		2,990,767		-		2,990,767
Finished carpentry		-		15,711,516		-		15,711,516		-		-		7,057,179		-		7,057,179
Total Revenues	$	8,322,500	$	26,000,227	$	5,114,755	$	39,437,482	$	2,934,705	$	-	$	10,047,946	$	1,489,710	$	14,472,361

	Nine Months Ended September 30, 2021								Nine Months Ended September 30, 2023
	Retail and Appliances		Construction		Automotive Supplies		Total		Retail and Appliances		Retail and Eyewear		Construction		Automotive Supplies		Total
Revenues
Appliances	$	8,587,939	$	-	$	-	$	8,587,939	$	6,129,197	$	-	$	-	$	-	$	6,129,197
Appliance accessories, parts, and other		1,175,000		-		-		1,175,000		758,392		-		-		-		758,392
Eyewear										-		8,045,966		-		-		8,045,966
Eyewear accessories, parts, and other										-		3,484,061		-		-		3,484,061
Automotive horns		-		-		3,326,835		3,326,835		-		-		-		2,408,638		2,408,638
Automotive lighting		-		-		904,178		904,178		-		-		-		1,098,745		1,098,745
Custom cabinets and countertops		-		4,169,305		-		4,169,305		-		-		8,150,092		-		8,150,092
Finished carpentry		-		-		-		-		-		-		23,497,107		-		23,497,107
Total Revenues	$	9,762,939	$	4,169,305	$	4,231,013	$	18,163,257	$	6,887,589	$	11,530,027	$	31,647,199	$	3,507,383	$	53,572,198

	Nine Months Ended September 30, 2022
	Retail and Appliances		Retail and Eyewear		Construction		Automotive Supplies		Total
Revenues
Appliances	$	7,206,386	$	-	$	-	$	-	$	7,206,386
Appliance accessories, parts, and other		1,116,114		-		-		-		1,116,114
Eyewear		-		-		-		-		-
Eyewear accessories, parts, and other		-		-		-		-		-
Automotive horns		-		-		-		3,766,415		3,766,415
Automotive lighting		-		-		-		1,348,340		1,348,340
Custom cabinets and countertops		-		-		10,288,711		-		10,288,711
Finished carpentry		-		-		15,711,516		-		15,711,516
Total Revenues	$	8,322,500	$	-	$	26,000,227	$	5,114,755	$	39,437,482

	September 30, 2023			December 31, 2022
Customer relationships	$	9,024,000		$	9,024,000
Marketing-related		2,992,000			2,684,000
Technology-related		623,000			623,000
Total intangible assets		12,639,000			12,331,000
Less: accumulated amortization		(3,439,947	)		(2,345,871	)
Intangible assets, net	$	9,199,053		$	9,985,129

Year Ending December 31,	Amount		Amount
2022 – remaining	$	364,704
2023		1,458,780
2023 - remaining			$	364,692
2024		1,458,750		1,458,769
2025		1,325,745		1,325,778
2026		1,157,523		1,150,640
2027				909,142
Thereafter		4,584,319		3,990,032
Total	$	10,349,821	$	9,199,053

	September 30, 2022		December 31, 2021
Trade accounts payable	$	2,705,828	$	3,117,825
Credit cards payable		130,013		52,300
Accrued payroll liabilities		630,846		263,590
Accrued interest		1,045,917		711,258
Accrued dividends		644,139		242,160
Other accrued liabilities		282,152		431,539
Total accounts payable and accrued expenses	$	5,438,895	$	4,818,672

Provisional purchase consideration at preliminary fair value:
Cash	$	4,000,000
Notes payable		500,000
Amount of consideration	$	4,500,000

Assets acquired and liabilities assumed at preliminary fair value
Cash	$	329,113
Accounts receivable		1,922,052
Inventory		9,997,332
Prepaids and other current assets		79,777
Property and equipment		545,670
Other assets		74,800
Marketing related intangibles		308,000
Accounts payable and accrued expenses		(6,116,883	)
Net tangible assets acquired	$	7,139,861

Consideration paid		4,500,000
Preliminary gain on bargain purchase	$	(2,639,861	)

	Amount
Balance at December 31, 2022	$	-
Initial fair value of derivative liabilities upon issuance		2,613,177
Gain on change in fair value of derivative liabilities		(425,977	)
Extinguishment of derivative liabilities upon conversion of convertible notes		(864,576	)
Balance at September 30, 2023	$	1,322,624

	Amount
Initial derivative expense	$	154,991
Gain on change in fair value of derivative liabilities		(580,968	)
Gain on change in fair value of derivative liabilities	$	(425,977	)

	Amount
Interest expense from amortization of debt discounts	$	3,879,558
Interest expense from notes payable		243,119
Interest expense from related party notes payable		83,891
Interest expense from convertible notes payable		4,595,106
Interest expense from revolving lines of credit		765,786
Interest expense from financing leases		38,308
Other interest expense		141,531
	$	9,747,299

	Amount
Accrued interest balance at December 31, 2022	$	1,179,875
Interest expense from notes payable		243,119
Interest expense from related party notes payable		83,891
Interest expense from convertible notes payable		4,595,106
Interest expense from revolving lines of credit		765,786
Interest expense from financing leases		38,308
Cash paid for interest		(3,217,831	)
Common shares issued in settlement of interest		(1,247,701	)
Settlement of interest through the issuance of a new revolving line of credit		(212,156	)
Accrued interest balance at September 30, 2023	$	2,228,397

	Amount
Balance at December 31, 2022	$	-
Fair value of warrant liability upon issuance		1,156,300
Loss on change in fair value of warrant liability		27,900
Extinguishment of warrant liability upon exercise of prefunded warrants		(1,184,200	)
Balance at September 30, 2023	$	-

	Warrants			Weighted- Average Exercise Price
Outstanding at December 31, 2021		1,300,122		$	9.52
Granted⁽¹⁾		1,978,432			5.25
Exercised		(209,635	)		(5.58	)
Outstanding at September 30, 2022		3,068,919		$	5.10
Exercisable at September 30, 2022		2,997,489		$	5.10

	Warrants			Weighted- Average Exercise Price
Outstanding at December 31, 2022		122,779		$	103.49
Granted		798,840			9.90
Exercised/settled		(379,194	)		(4.47	)
Outstanding at September 30, 2023		542,425		$	8.49
Exercisable at September 30, 2023		526,110		$	5.50

	Three Months Ended September 30, 2022			Nine Months Ended September 30, 2022
Net loss per common share attributable to common shareholders’		(13,440,062	)	$	(14,801,040	)
Weighted average common shares outstanding		2,979,949			1,832,076
Basic and diluted loss per share	$	(4.51	)	$	(8.08	)

	September 30, 2023			December 31, 2022
Deferred tax assets
Inventory obsolescence	$	289,000		$	93,000
Reserves		86,000			-
Business interest limitations		2,750,000			1,707,000
Lease liabilities		533,000			650,000
Other		45,000			75,000
Loss carryforward		1,475,000			285,000
Valuation allowance		(2,698,000	)		-
Total deferred tax asset		2,480,000			2,810,000

Deferred tax liabilities
Fixed assets		(430,000	)		(418,000	)
Right-of-use assets		(508,000	)		(628,000	)
Intangibles		(2,126,000	)		(2,363,000	)
Total deferred tax liability		(3,064,000	)		(3,409,000	)

Total deferred tax liability, net	$	(584,000	)	$	(599,000	)

	●	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~~our manager when due;

	●	labor disputes, strikes or other employee disputes or grievances;