LBRA 10-Q
1847 Holdings LLC (LBRA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended:
or
For the transition period from ____________ to _____________
Commission File Number:
| (Exact name of registrant as specified in its charter) |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
| (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: None
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
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).
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 ☐ | ||
| Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for comply with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 12, 2026, there were
1847 HOLDINGS LLC
Quarterly Report on Form 10-Q
Period Ended June 30, 2026
TABLE OF CONTENTS
| PART I | ||
| FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 2 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 16 |
| Item 4. | Controls and Procedures | 16 |
| PART II | ||
| OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 17 |
| Item 1A. | Risk Factors | 17 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 18 |
| Item 3. | Defaults Upon Senior Securities | 18 |
| Item 4. | Mine Safety Disclosures | 18 |
| Item 5. | Other Information | 18 |
| Item 6. | Exhibits | 18 |
i
PART I
FINANCIAL INFORMATION
| ITEM 1. | FINANCIAL STATEMENTS. |
1847 HOLDINGS LLC
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1
1847 HOLDINGS LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, 2026 | December 31, 2025 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Contract assets | ||||||||
| Inventories, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Current assets held-for-sale | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Long-term deposits | ||||||||
| Intangible assets, net | ||||||||
| Noncurrent assets held-for-sale | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Contract liabilities | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Current portion of finance lease liabilities | ||||||||
| Current portion of notes payable, net | ||||||||
| Current portion of convertible notes payable | ||||||||
| Current portion of related party note payable | ||||||||
| Warrant liabilities | ||||||||
| Current liabilities held-for-sale | ||||||||
| Total Current Liabilities | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Finance lease liabilities, net of current portion | ||||||||
| Related party note payable, net of current portion | – | |||||||
| Deferred tax liabilities, net | ||||||||
| Noncurrent liabilities held-for-sale | ||||||||
| TOTAL LIABILITIES | ||||||||
| Shareholders’ Deficit | ||||||||
| Series A senior convertible preferred shares, par value, | ||||||||
| Series C senior convertible preferred shares, par value, | ||||||||
| Series D senior convertible preferred shares, par value, | ||||||||
| Series F convertible preferred shares, par value, | ||||||||
| Allocation shares, | ||||||||
| Common shares, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL 1847 HOLDINGS SHAREHOLDERS’ DEFICIT | ( | ) | ( | ) | ||||
| NONCONTROLLING INTERESTS | ( | ) | ( | ) | ||||
| TOTAL SHAREHOLDERS’ DEFICIT | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-1
1847 HOLDINGS LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Cost of revenues | ||||||||||||||||
| Personnel | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Loss on abandonment of right-of-use asset | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income (Expense) | ||||||||||||||||
| Other expense | ( | ) | ( | ) | ||||||||||||
| Gain (loss) on disposal of property and equipment | ( | ) | ||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Amortization of debt discounts | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on extinguishment of debt | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain on change in fair value of derivative liabilities | ||||||||||||||||
| Gain (loss) on change in fair value of warrant liabilities | ( | ) | ( | ) | ||||||||||||
| Total Other Income (Expense) | ( | ) | ( | ) | ||||||||||||
| INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | ( | ) | ( | ) | ||||||||||||
| Income tax benefit (provision) | ( | ) | ||||||||||||||
| NET INCOME (LOSS) FROM CONTINUING OPERATIONS | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Net income (loss) from discontinued operations | ( | ) | ( | ) | ||||||||||||
| Gain (loss) on disposition of subsidiaries | ( | ) | ( | ) | ||||||||||||
| NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS | ( | ) | ( | ) | ||||||||||||
| NET INCOME (LOSS) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS FROM CONTINUING OPERATIONS | ||||||||||||||||
| NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS FROM DISCONTINUED OPERATIONS | ||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| NET INCOME (LOSS) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO 1847 HOLDINGS | ( | ) | ( | ) | ||||||||||||
| NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO 1847 HOLDINGS | ( | ) | ( | ) | ||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| PREFERRED SHARE DIVIDENDS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| BASIC EARNINGS (LOSS) PER COMMON SHARE FROM CONTINUING OPERATIONS | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| BASIC EARNINGS (LOSS) PER COMMON SHARE FROM DISCONTINUED OPERATIONS | ( | ) | ( | ) | ||||||||||||
| BASIC EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| DILUTED EARNINGS (LOSS) PER COMMON SHARE FROM CONTINUING OPERATIONS | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| DILUTED EARNINGS (LOSS) PER COMMON SHARE FROM DISCONTINUED OPERATIONS | ( | ) | ( | ) | ||||||||||||
| DILUTED EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | ||||||||||||||||
| BASIC | ||||||||||||||||
| DILUTED | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-2
1847 HOLDINGS LLC
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT
(UNAUDITED)
Series
A | Series
C Preferred | Series
D | Series
F Convertible
Preferred | Allocation | Common Shares | Additional Paid-In | Accumulated | Non Controlling | Total Shareholders’ | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Shares | Amount | Capital | Deficit | Interests | Deficit | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares upon cashless exercise of warrants | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Extinguishment of warrant liabilities upon exercise of warrants | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends – series A convertible preferred shares | – | – | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends – series C convertible preferred shares | – | – | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends – series D convertible preferred shares | – | – | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Dividends – series A convertible preferred shares | – | – | – | – | – | – | ( | ) | – | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends – series C convertible preferred shares | – | – | – | – | – | – | ( | ) | – | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends – series D convertible preferred shares | – | – | – | – | – | – | ( | ) | – | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
Series
A | Series
C Preferred | Series
D | Series
F Convertible
Preferred | Allocation | Common Shares | Additional Paid-In | Accumulated | Non Controlling | Total Shareholders’ | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Shares | Amount | Capital | Deficit | Interests | Deficit | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares upon conversion of convertible notes payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of series F preferred shares upon settlement of series A warrants | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends – series A convertible preferred shares | – | – | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends – series C convertible preferred shares | – | – | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends – series D convertible preferred shares | – | – | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares upon exercise of warrants | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends – series A convertible preferred shares | – | – | – | – | – | – | – | ( | ) | – | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends – series C convertible preferred shares | – | – | – | – | – | – | – | ( | ) | – | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends – series D convertible preferred shares | – | – | – | – | – | – | – | ( | ) | – | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | – | – | – | – | – | – | – | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-3
1847 HOLDINGS LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Net (income) loss from discontinued operations | ( | ) | ||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Gain on disposal of property and equipment | ( | ) | ||||||
| Loss on abandonment of right-of-use asset | ||||||||
| Loss on extinguishment of debt | ||||||||
| Gain on change in fair value of derivative liabilities | ( | ) | ||||||
| (Gain) loss on change in fair value of warrant liabilities | ( | ) | ||||||
| Deferred taxes | ( | ) | ( | ) | ||||
| Inventory reserve | ( | ) | ||||||
| Depreciation and amortization | ||||||||
| Amortization of debt discounts | ||||||||
| Amortization of right-of-use assets | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Contract assets | ( | ) | ||||||
| Inventories | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ||||||||
| Contract liabilities | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Net cash provided by operating activities from continuing operations | ||||||||
| Net cash provided by operating activities from discontinued operations | ||||||||
| Net cash provided by operating activities | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Proceeds from the disposal of property and equipment | ||||||||
| Proceeds related to the sale of High Mountain | ||||||||
| Reduction of High Mountain Holdback Amount | ( | ) | ||||||
| Purchases of property and equipment | ( | ) | ||||||
| Net cash provided by (used in) investing activities from continuing operations | ( | ) | ||||||
| Net cash used in investing activities from discontinued operations | ( | ) | ( | ) | ||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Net proceeds from notes payable | ||||||||
| Repayments of notes payable and finance lease liabilities | ( | ) | ( | ) | ||||
| Repayments of related party note payable | ( | ) | ||||||
| Net cash used in financing activities from continuing operations | ( | ) | ( | ) | ||||
| Net cash used in financing activities from discontinued operations | ( | ) | ( | ) | ||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH FROM CONTINUING OPERATIONS | ( | ) | ||||||
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | ||||||||
| Beginning of the period | ||||||||
| End of the period | $ | $ | ||||||
| Reconciliation to consolidated balance sheets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents, and restricted cash | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Accrued dividends on series A preferred shares | $ | $ | ||||||
| Accrued dividends on series C preferred shares | $ | $ | ||||||
| Accrued dividends on series D preferred shares | $ | $ | ||||||
| Issuance of common shares upon cashless exercise of warrants | $ | $ | ||||||
| Extinguishment of warrant liability upon exercise of warrants | $ | $ | ||||||
| Debt discount on notes payable | $ | $ | ||||||
| Issuance of common shares upon conversion of convertible notes payable and accrued interest | $ | $ | ||||||
| Operating lease right-of-use asset and liability measurement | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-4
1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
(UNAUDITED)
NOTE 1—BASIS OF PRESENTATION AND OTHER INFORMATION
The accompanying unaudited condensed consolidated financial statements of 1847 Holdings LLC (the “Company”) 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 and Regulation S-X. They do not include all the information and footnotes required by GAAP for complete financial statements. The December 31, 2025 consolidated balance sheet data was derived from audited financial statements but do not include all disclosures required by GAAP. The interim unaudited condensed consolidated financial statements should be read in conjunction with those consolidated financial statements included in the Form 10-K, as filed with the Securities and Exchange Commission on March 31, 2026. 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 six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.
Assets Held-For-Sale and Discontinued Operations
CMD
In the first quarter of 2026, the Company received approval from the Board to engage in an active program to sell CMD Inc. and CMD Finish Carpentry LLC (collectively referred to as “CMD”), which makes up the CMD Segment within the Company’s Construction operations.
The Company evaluated whether its intent to sell CMD qualifies for reporting as discontinued operations in accordance with Accounting Standards Codification (“ASC”) 205-20, “Discontinued Operations.” A disposal of a component or a group of components is reported in discontinued operations if the disposal represents a strategic shift that has or will have a major effect on the Company’s operations and financial results when the following occurs: (1) a component (or group of components) meets the criteria to be classified as held for sale; (2) the component or group of components is disposed of by sale; or (3) the component or group of components is disposed of other than by sale (for example, by abandonment or in a distribution to owners in a spin-off). For any component classified as held-for-sale or disposed of by sale or other than by sale, qualifying for presentation as a discontinued operation, the Company reports the results of operations of the discontinued operations (including any gain or loss recognized on the disposal or loss recognized on classification as held-for-sale of a discontinued operation), less applicable income taxes (benefit), as a separate component in the consolidated statement of operations for all periods presented. The Company also reports assets and liabilities associated with discontinued operations as separate line items on the consolidated balance sheet for all periods presented.
The Company determined that its decision to sell CMD is considered a strategic shift that will have a major effect on the Company’s operations and financial results and met the criteria for classification as discontinued operations. As a result, the assets and liabilities of CMD are presented as held-for-sale in the unaudited condensed consolidated balance sheets and the operating results are presented as discontinued operations in the unaudited condensed consolidated statements of operations for all periods presented. Unless otherwise noted, amounts and disclosures throughout these notes to the condensed consolidated financial statements relate solely to continuing operations and exclude all discontinued operations. See Note 3—Discontinued Operations for additional information.
Wolo
During the first quarter of 2025, the Company classified the assets and liabilities of Wolo Mfg. Corp. and Wolo Industrial Horn & Signal, Inc. (collectively referred to as “Wolo”) as held-for-sale. In the fourth quarter of 2025, the Company determined that Wolo no longer met the criteria for held-for-sale classification due to a change in management’s intent, as the Company decided to retain and rebuild Wolo’s operations. Accordingly, the assets and liabilities of Wolo were reclassified from held-for-sale. The results of Wolo’s operations are included within continuing operations for all periods presented in these condensed consolidated financial statements.
F-5
1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
(UNAUDITED)
Reclassifications
Certain prior period amounts related to discontinued operations have been reclassified and separately presented in the condensed consolidated financial statements and accompanying notes to conform to the current period financial statement presentation.
Recently Adopted Accounting Pronouncements
In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASU”) 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets,” which introduces a practical expedient for the application of the current expected credit loss model to current accounts receivable and contract assets. The amendment is effective for interim and annual periods beginning after December 15, 2025, with early adoption permitted. This amendment is to be applied on a prospective basis. The Company adopted ASU 2025-05 effective January 1, 2026, which did not have a material impact on the Company’s condensed consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization included in each relevant expense caption presented on the statement of operations. The standard also requires a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, as well as the total amount of selling expenses and an entity’s definition of selling expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.” This guidance removes references to project stages throughout ASC 350-40 and clarifies the threshold entities apply to begin capitalizing costs. Under the new standard, cost capitalization should only commence when an entity has committed to funding a software project and it is probable the project will be completed and the software will be used for its intended purpose. The amendments are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Entities may apply the guidance using a prospective, retrospective or modified transition approach. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements.” ASU 2025-11 clarifies and improves existing interim reporting guidance by consolidating disclosure requirements within Topic 270 and introducing a disclosure principle requiring entities to disclose events and changes occurring after the most recent annual reporting period that are expected to have a material effect on the entity’s financial condition or results of operations. The ASU does not introduce significant changes to recognition or measurement guidance. The amendments in ASU 2025-11 are effective for interim reporting periods within fiscal years beginning after December 15, 2027, with early adoption permitted. ASU 2025-11 allows for either a prospective or retrospective approach on adoption. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements.
The Company currently believes there are no other issued and not yet effective accounting standards that are materially relevant to its condensed consolidated financial statements.
F-6
1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
(UNAUDITED)
NOTE 2—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 financial statements are 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 considered various scenarios, forecasts, projections, estimates and made 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, management made certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent it deems probable those implementations can be achieved and management has the proper authority to execute them within the look-forward period.
As of June 30, 2026, the Company had cash and
cash equivalents of $
Notwithstanding current period positive operating cash flows, the Company does not expect to have sufficient cash and other liquid resources to meet its obligations as they become due over the next twelve months, primarily due to the magnitude of its current liabilities and significant near-term debt maturities. These conditions, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the condensed consolidated financial statements are issued.
Management plans to address these conditions by securing additional capital through debt and equity financing, including potential public and private offerings of the Company’s securities, evaluating opportunities to refinance or extend the maturity of existing debt obligations, implementing reductions in discretionary operating expenditures to the extent practicable, exploring strategic alternatives with respect to its operating subsidiaries to reduce debt obligations, and actively pursuing the sale of CMD. The Company is currently evaluating multiple non-binding offers from prospective buyers, none of which is subject to exclusivity. If a sale is consummated, the proceeds would be expected to be sufficient to repay a significant portion of the Company’s outstanding debt obligations. However, there can be no assurance that a definitive agreement will be reached or that any transaction will be completed on terms acceptable to the Company or at all. Management has evaluated whether it is probable that these plans would be effectively implemented and, if so, whether they would mitigate the relevant conditions or events that raise substantial doubt within the next twelve months. Because these plans are subject to market conditions and reliance on third parties, and because there is no assurance that the Company will be able to raise capital on acceptable terms or at all, management has concluded that substantial doubt about the Company’s ability to continue as a going concern has not been alleviated as of the date these condensed consolidated financial statements are issued.
The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and their carrying amounts, or the amounts and classification of liabilities that might result should the Company be unable to continue as a going concern. If the Company is unable to obtain adequate capital, it could be forced to cease or curtail its operations.
F-7
1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
(UNAUDITED)
NOTE 3—DISCONTINUED OPERATIONS
CMD Assets-Held-for-Sale
As described in Note 1—Basis of Presentation and Other Information, during the first quarter of 2026, the Company received approval from the Board to engage in an active program to sell CMD. The Company determined that its decision to sell CMD is considered a strategic shift that will have a major effect on the Company’s operations and financial results and met the criteria for classification as discontinued operations. Upon classification as held-for-sale, the Company assessed the carrying value of CMD against its estimated fair value less costs to sell. As the estimated fair value less costs to sell exceeded the carrying value, no impairment loss was recognized at the classification date.
The following table presents the carrying amounts of the major classes of assets and liabilities of CMD, which have been classified as assets and liabilities held-for-sale in the condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025:
June 30, 2026 | December 31, 2025 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Contract assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Security deposits | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Total assets held-for-sale | $ | $ | ||||||
| Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Contract liabilities | ||||||||
| Operating lease liabilities | ||||||||
| Notes payable | ||||||||
| Deferred tax liability | ||||||||
| Total liabilities held-for-sale | ||||||||
| Total net assets held-for-sale | $ | $ | ||||||
F-8
1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
(UNAUDITED)
The following table presents the major classes of line items constituting the results of discontinued operations of CMD in the condensed consolidated statements of operations for the three and six months ended June 30, 2026 and 2025:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Operating expenses | ||||||||||||||||
| Cost of revenues | ||||||||||||||||
| Personnel | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ||||||||||||
| Other income (expense) | ||||||||||||||||
| Other income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other income | ||||||||||||||||
| Net income (loss) from discontinued operations before income taxes | ( | ) | ( | ) | ||||||||||||
| Income tax provision | ( | ) | ( | ) | ( | ) | ||||||||||
| Net income (loss) from discontinued operations | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
F-9
1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
(UNAUDITED)
The following table presents the major classes of cash flow activities from discontinued operations of CMD in the condensed consolidated statements of cash flows for the six months ended June 30, 2026 and 2025:
Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities | ||||||||
| Net income (loss) from discontinued operations | $ | ( | ) | $ | ||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Deferred taxes | ( | ) | ( | ) | ||||
| Provision for credit losses | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of right-of-use assets | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Contract assets | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Security deposits | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Contract liabilities | ( | ) | ( | ) | ||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Net cash provided by operating activities from discontinued operations | ||||||||
| Cash flows from investing activities | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities from discontinued operations | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Repayments of notes payable and finance lease liabilities | ( | ) | ( | ) | ||||
| Net cash used in financing activities from discontinued operations | ( | ) | ( | ) | ||||
| Net change in cash and cash equivalents from discontinued operations | $ | $ | ( | ) | ||||
Sale of High Mountain
On September 30, 2024, the Company entered into
an asset purchase agreement (the “Purchase Agreement”) with BFS Group LLC (“BFS”) and High Mountain Door &
Trim Inc. (“High Mountain”), pursuant to which the Company sold substantially all of the assets of High Mountain to BFS for
an aggregate cash purchase price of $
During the three and six months ended June 30,
2025, the Company recorded a reduction of $
NOTE 4—DISAGGREGATION OF REVENUES AND SEGMENT REPORTING
Following the classification of CMD as held-for-sale
and discontinued operations during the first quarter of 2026, the Company’s
Kyle’s and ICD (Construction Operations): Revenue is derived primarily from contracts with customers for finish carpentry and related products and services, including millwork and cabinetry for general contractors, commercial developers, residential builders and homeowners, and government entities.
F-10
1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
(UNAUDITED)
Wolo (Automotive Supplies Operations): Revenue is derived primarily from the sale of horn and safety warning lights for cars, trucks, industrial equipment, and emergency vehicles. Wolo sells its products to big-box national retail chains, specialty and industrial distributors, online and mail order retailers, and original equipment manufacturers.
Corporate: Corporate services represent
holding company activities, including corporate overhead, intercompany eliminations, and other activities not allocated to the reportable
segments.
The Company’s revenues for the three months ended June 30, 2026 and 2025 are disaggregated as follows:
| Three Months Ended June 30, 2026 | ||||||||||||||||
| Kyle’s | ICD | Wolo | Total | |||||||||||||
| Revenues | ||||||||||||||||
| Cabinetry and millwork | $ | $ | $ | $ | ||||||||||||
| Automotive horns | ||||||||||||||||
| Automotive lighting | ||||||||||||||||
| Total revenues | $ | $ | $ | $ | ||||||||||||
| Three Months Ended June 30, 2025 | ||||||||||||||||
| Kyle’s | ICD | Wolo | Total | |||||||||||||
| Revenues | ||||||||||||||||
| Cabinetry and millwork | $ | $ | $ | $ | ||||||||||||
| Automotive horns | ||||||||||||||||
| Automotive lighting | ||||||||||||||||
| Total revenues | $ | $ | $ | $ | ||||||||||||
The Company’s revenues for the six months ended June 30, 2026 and 2025 are disaggregated as follows:
| Six Months Ended June 30, 2026 | ||||||||||||||||
| Kyle’s | ICD | Wolo | Total | |||||||||||||
| Revenues | ||||||||||||||||
| Cabinetry and millwork | $ | $ | $ | $ | ||||||||||||
| Automotive horns | ||||||||||||||||
| Automotive lighting | ||||||||||||||||
| Total revenues | $ | $ | $ | $ | ||||||||||||
| Six Months Ended June 30, 2025 | ||||||||||||||||
| Kyle’s | ICD | Wolo | Total | |||||||||||||
| Revenues | ||||||||||||||||
| Cabinetry and millwork | $ | $ | $ | $ | ||||||||||||
| Automotive horns | ||||||||||||||||
| Automotive lighting | ||||||||||||||||
| Total revenues | $ | $ | $ | $ | ||||||||||||
F-11
1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
(UNAUDITED)
Segment information for the three months ended June 30, 2026 and 2025 is as follows:
| Three Months Ended June 30, 2026 | ||||||||||||||||||||
| Kyle’s | ICD | Wolo | Corporate | Total | ||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | |||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Cost of revenues | ||||||||||||||||||||
| Personnel | ||||||||||||||||||||
| Personnel – corporate allocation | ( | ) | ||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| General and administrative | ||||||||||||||||||||
| General and administrative – management fees | ||||||||||||||||||||
| General and administrative – corporate allocation | ( | ) | ||||||||||||||||||
| Professional fees | ||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||
| Loss from operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Three Months Ended June 30, 2025 | ||||||||||||||||||||
| Kyle’s | ICD | Wolo | Corporate | Total | ||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | |||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Cost of revenues | ||||||||||||||||||||
| Personnel | ||||||||||||||||||||
| Personnel – corporate allocation | ( | ) | ||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| General and administrative | ||||||||||||||||||||
| General and administrative – management fees | ||||||||||||||||||||
| General and administrative – corporate allocation | ( | ) | ||||||||||||||||||
| Professional fees | ||||||||||||||||||||
| Loss on abandonment of right-of use asset | ||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||
| Loss from operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
F-12
1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
(UNAUDITED)
Segment information for the six months ended June 30, 2026 and 2025 is as follows:
| Six Months Ended June 30, 2026 | ||||||||||||||||||||
| Kyle’s | ICD | Wolo | Corporate | Total | ||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | |||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Cost of revenues | ||||||||||||||||||||
| Personnel | ||||||||||||||||||||
| Personnel – corporate allocation | ( | ) | ||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| General and administrative | ||||||||||||||||||||
| General and administrative – management fees | ||||||||||||||||||||
| General and administrative – corporate allocation | ( | ) | ||||||||||||||||||
| Professional fees | ||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||
| Loss from operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Six Months Ended June 30, 2025 | ||||||||||||||||||||
| Kyle’s | ICD | Wolo | Corporate | Total | ||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | |||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Cost of revenues | ||||||||||||||||||||
| Personnel | ||||||||||||||||||||
| Personnel – corporate allocation | ( | ) | ||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| General and administrative | ||||||||||||||||||||
| General and administrative – management fees | ||||||||||||||||||||
| General and administrative – corporate allocation | ( | ) | ||||||||||||||||||
| Professional fees | ||||||||||||||||||||
| Loss on abandonment of right-of use asset | ||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||
| Income (loss) from operations | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||
The following tables present total assets by reportable segments as of June 30, 2026 and December 31, 2025:
| June 30, 2026 | ||||||||||||||||||||
| Kyle’s | ICD | Wolo | Corporate | Total | ||||||||||||||||
| Assets | ||||||||||||||||||||
| Current assets | $ | $ | $ | $ | $ | |||||||||||||||
| Long-lived assets | ||||||||||||||||||||
| Total assets | $ | $ | $ | $ | $ | |||||||||||||||
F-13
1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
(UNAUDITED)
| December 31, 2025 | ||||||||||||||||||||
| Kyle’s | ICD | Wolo | Corporate | Total | ||||||||||||||||
| Assets | ||||||||||||||||||||
| Current assets | $ | $ | $ | $ | $ | |||||||||||||||
| Long-lived assets | ||||||||||||||||||||
| Total assets | $ | $ | $ | $ | $ | |||||||||||||||
NOTE 5—PROPERTY AND EQUIPMENT
Property and equipment as of June 30, 2026 and December 31, 2025 consisted of the following:
June 30, 2026 | December 31, 2025 | |||||||
| Machinery and equipment | $ | $ | ||||||
| Office furniture and equipment | ||||||||
| Transportation equipment | ||||||||
| Leasehold improvements | ||||||||
| Total property and equipment | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
Depreciation expense for the three months ended
June 30, 2026 and 2025 was $
NOTE 6—INTANGIBLE ASSETS
Intangible assets as of June 30, 2026 and December 31, 2025 consisted of the following:
June 30, 2026 | December 31, 2025 | |||||||
| Customer-related | $ | $ | ||||||
| Marketing-related | ||||||||
| Total intangible assets | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Total intangible assets, net | $ | $ | ||||||
Amortization expense was $
Estimated amortization expense for intangible assets for the next five years consists of the following as of June 30, 2026:
| Year Ending December 31, | Amount | |||
| 2026 (remaining) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total estimated amortization expense | $ | |||
F-14
1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
(UNAUDITED)
NOTE 7—ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses as of June 30, 2026 and December 31, 2025 consisted of the following:
June 30, 2026 | December 31, 2025 | |||||||
| Trade accounts payable | $ | $ | ||||||
| Credit cards payable | ||||||||
| Accrued payroll liabilities | ||||||||
| Accrued interest | ||||||||
| Accrued dividends | ||||||||
| Accrued taxes | ||||||||
| Accrued management fees | ||||||||
| Accrued board fees | ||||||||
| Other accrued liabilities | ||||||||
| Total accounts payable and accrued expenses | $ | $ | ||||||
NOTE 8—LEASES
Operating Leases
Operating leases as of June 30, 2026 and December 31, 2025 consist of the following:
June 30, 2026 | December 31, 2025 | |||||||
| Operating lease right-of-use assets | $ | $ | ||||||
| Operating lease liabilities, current portion | ||||||||
| Operating lease liabilities, long-term | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
| Weighted-average remaining lease term (years) | ||||||||
| Weighted-average discount rate | % | % | ||||||
The components of operating lease expense consisted of the following for three months ended June 30, 2026 and 2025:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Fixed operating lease expense | $ | $ | $ | $ | ||||||||||||
| Short-term and variable operating lease expense | ||||||||||||||||
| Total operating lease expense | $ | $ | $ | $ | ||||||||||||
For the three months ended June 30, 2026 and
2025, cash paid for amounts included in the measurement of operating lease liabilities was $
F-15
1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
(UNAUDITED)
As of June 30, 2026, maturities of operating lease liabilities were as follows:
| Year Ending December 31, | Amount | |||
| 2026 (remaining) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Total | ||||
| Less: imputed interest | ( | ) | ||
| Total operating lease liabilities | $ | |||
Finance Leases
As of June 30, 2026, maturities of financing lease liabilities were as follows:
| Year Ending December 31, | Amount | |||
| 2026 (remaining) | $ | |||
| 2027 | ||||
| 2028 | ||||
| Total | ||||
| Less: amount representing interest | ( | ) | ||
| Total finance lease liabilities | $ | |||
As of June 30, 2026 the weighted-average remaining
lease term for all finance leases is
NOTE 9—FAIR VALUE MEASUREMENTS
The fair value of financial instruments measured on a recurring basis as of June 30, 2026 and December 31 2025 consisted of the following:
| Fair Value Measurements as of June 30, 2026 | ||||||||||||||||
| Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Warrant liabilities | $ | $ | $ | $ | ||||||||||||
| Fair Value Measurements as of December 31, 2025 | ||||||||||||||||
| Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Warrant liabilities | $ | $ | $ | $ | ||||||||||||
The following table provides a roll-forward of changes for financial instruments measured at fair value on a recurring basis for the six months ended June 30, 2026:
| Warrant Liabilities | Amount | |||
| Balance as of December 31, 2025 | $ | |||
| Loss on change in fair value of warrant liabilities | ||||
| Extinguishment of warrant liabilities upon exercise | ( | ) | ||
| Balance as of June 30, 2026 | $ | |||
F-16
1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
(UNAUDITED)
NOTE 10—NOTES PAYABLE
Purchase and Sale of Future Revenues Loan
On February 12, 2026, the sale of future revenues
loan, originally issued on March 31, 2023, and previously amended on November 30, 2023, July 23, 2024, and April 24, 2025, was further
amended to increase the outstanding balance by $
On June 24, 2026, the agreement was further amended
to increase the outstanding balance by $
As of June 30, 2026, the outstanding principal
balance is $
20% OID Promissory Note – March 2024
On June 18, 2026, the 20% OID subordinated promissory
note, originally issued on March 4, 2024 and previously amended on multiple occasions, was further amended, pursuant to which the parties
agreed to extend the maturity date of the note to October 31, 2026. As additional consideration for the amendment, the Company agreed
to increase the outstanding principal by
As of June 30, 2026, the total outstanding principal
balance is $
NOTE 11—RELATED PARTIES
Management Services Agreements
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
On August 21, 2020, 1847 Cabinet Inc. (“1847
Cabinet”) entered into an offsetting management services agreement with the Manager, which was amended on October 8, 2021. Pursuant
to the amended management services agreement, the Manager will provide certain services to 1847 Cabinet in exchange for a quarterly management
fee equal to the greater of $
F-17
1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
(UNAUDITED)
On March 30, 2021, 1847 Wolo Inc. (“1847
Wolo”) entered into an offsetting management services agreement with the Manager. Pursuant to the management services agreement,
the Manager will provide certain services to 1847 Wolo in exchange for a quarterly management fee equal to the greater of $
On December 16, 2024, 1847 CMD Inc. (“1847
CMD”) entered into an offsetting management services agreement with the Manager. Pursuant to the management services agreement,
the Manager will provide certain services to 1847 CMD in exchange for a quarterly management fee equal to the greater of $
In addition, if the aggregate amount of management
fees paid or to be paid to the Manager under the offsetting management services agreements, exceeds, or is expected to exceed,
In addition, under the Company’s operating
agreement with the Manager, in the event of an acquisition of a target business or disposition of a subsidiary, the Manager will receive
a transaction fee of
On a consolidated basis, the Company expensed
total management fees of $
NOTE 12—COMMITMENTS AND CONTINGENCIES
On September 4, 2025, Alpha Capital Anstalt (“Alpha
Capital”) filed a complaint in the Supreme Court of the State of New York, County of New York against the Company, in an action
captioned Alpha Capital Anstalt v. 1847 HOLDINGS LLC, Index No. 655245/2025. The complaint asserts a claim for breach of contract
against the Company based on its alleged breach of a securities purchase agreement it entered into with Alpha Capital on December 14,
2024 (the “SPA”). Alpha Capital alleges that the Company breached the implied covenant of good faith and fair dealing and
Section 4.10 in the SPA by failing to take steps to have its common shares listed on another trading market after it was delisted from
NYSE American. Alpha Capital alleges that, as a result of the Company’s alleged failure in that regard, it has not been able to
sell or exercise the securities it acquired under the SPA and in a subsequent transaction. Alpha Capital seeks damages of at least $
F-18
1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
(UNAUDITED)
On October 17, 2025, Matthew Miller, individually and as principal of Strategic Risk, LLC (the “Plaintiff”), filed a complaint in the U.S. District Court for the Southern District of New York in an action captioned Matthew Miller v. 1847 HOLDINGS LLC; 1847 Partners LLC; Ellery W. Roberts; Louis Bevilacqua; Bevilacqua PLLC; Joseph D. Wilson; Eric Van Dam; Vernice Howard; Edward Tobin; Glyn Milburn; and Does 1-10, case no. 1:25-cv-08606-LAK. On October 24, 2025, the Plaintiff filed an amended complaint that also named Spartan Capital Securities LLC; and Sichenzia Ross Ference Carmel LLP as defendants. On October 28, 2025, the Court sua sponte dismissed the amended complaint without prejudice and with leave to replead. On November 24, 2025, the Plaintiff filed a second amended complaint naming 1847 Holdings, LLC, 1847 Partners, LLC, Ellery W. Roberts, Louis A. Bevilacqua, Bevilacqua PLLC, and Vernice Howard as defendants and alleging claims for securities fraud, scheme liability, control person liability, and common law fraud. On February 17, 2026, 1847 Holdings, 1847 Partners, Mr. Roberts, and Ms. Howard filed a motion to dismiss the second amended complaint. On April 18, 2026, the Court entered an order dismissing the second amended complaint. The dismissal is with prejudice with respect to all of the Plaintiff’s claims, with the exception of the common law fraud claim, with the Court exercising its discretion not to proceed with that claim. On April 20, 2026, the Court entered a judgment in favor of the defense.
NOTE 13—SHAREHOLDERS’ DEFICIT
Series A Senior Convertible Preferred Shares
As of June 30, 2026 and December 31, 2025, the
Company had
During the three and six months ended June 30,
2026, the Company accrued dividends of $
Series C Senior Convertible Preferred Shares
As of June 30, 2026 and December 31, 2025, the
Company had
During the three and six months ended June 30,
2026, the Company accrued dividends of $
Series D Senior Convertible Preferred Shares
As of June 30, 2026 and December 31, 2025, the
Company had
During the three and six months ended June 30,
2026, the Company accrued dividends of $
Series F Convertible Preferred Shares
As of June 30, 2026 and December 31, 2025, the
Company had
Common Shares
As of June 30, 2026 and December 31, 2025, the
Company was authorized to issue
During the six months ended June 30, 2026, the
Company issued an aggregate of
F-19
1847 HOLDINGS LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
(UNAUDITED)
Common Share Equivalents
For the three and six months ended June 30, 2026,
there were
Warrants
The Company did not issue any new warrants during the six months ended June 30, 2026.
Below is a table summarizing the changes in warrants outstanding during the six months ended June 30, 2026:
| Warrants | Weighted- Average Exercise Price | |||||||
| Outstanding at December 31, 2025 | $ | |||||||
| Exercised/settled | ( | ) | ( | ) | ||||
| Expired/forfeited | ( | ) | ( | ) | ||||
| Outstanding at June 30, 2026 | $ | |||||||
| Exercisable at June 30, 2026 | $ | |||||||
As of June 30, 2026, the outstanding warrants
have a weighted-average remaining contractual life of
NOTE 14—SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date these condensed consolidated financial statements were issued and determined that there were no subsequent events requiring recognition or disclosure. See Note 2—Liquidity and Going Concern Assessment for a discussion of the Company’s ongoing process to sell CMD.
F-20
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
The following management’s discussion and analysis of financial condition and results of operations provides information that management believes is relevant to an assessment and understanding of our plans and financial condition. The following financial information is derived from our financial statements and should be read in conjunction with such financial statements and notes thereto set forth elsewhere herein.
Use of Terms
Except as otherwise indicated by the context and for the purposes of this report only, references in this report to “we,” “us,” “our” and “our company” refer to 1847 Holdings LLC, a Delaware limited liability company, and its consolidated subsidiaries. References to “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 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 our manager’s ability to retain or replace qualified employees of our businesses and 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 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 on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (“SEC”) on March 31, 2026, or the Annual Report, 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.
2
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 September 30, 2020, our subsidiary 1847 Cabinet Inc., or 1847 Cabinet, acquired Kyle’s Custom Wood Shop, Inc., an Idaho corporation, 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, acquired Wolo Mfg. Corp., a New York corporation, and Wolo Industrial Horn & Signal, Inc., a New York corporation, 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. During the first quarter of 2025, we classified the assets and liabilities of Wolo as held for sale. In the fourth quarter of 2025, we determined that Wolo no longer met the criteria for held for sale classification due to a change in management’s intent, as we decided to retain and rebuild Wolo’s operations. Accordingly, the assets and liabilities of Wolo were reclassified from held for sale. The results of Wolo’s operations are included within continuing operations for all periods presented.
On October 8, 2021, our subsidiary 1847 Cabinet acquired Sierra Homes, LLC d/b/a Innovative Cabinets & Design, a Nevada limited liability company, or ICD. ICD was founded in 2008 and 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 December 16, 2024, our subsidiary 1847 CMD Inc., or 1847 CMD, acquired CMD Inc., a Nevada corporation, and CMD Finish Carpentry, LLC, a Nevada limited liability company, which we collectively refer to as CMD. Headquartered in Las Vegas, Nevada and founded in 2012, CMD specializes in finish carpentry and related products and services, including doors, frames, trim, hardware, millwork, cabinetry, and specialty construction accessories for general contractors, commercial developers, residential builders and homeowners, and government entities. During the first quarter of 2026, we received approval from our board to engage in an active program to sell CMD. We determined that our decision to sell CMD is considered a strategic shift that will have a major effect on our operations and financial results and met the criteria for classification as discontinued operations. As a result, the assets and liabilities of CMD are presented as held-for-sale in the unaudited condensed consolidated balance sheets and the operating results are presented as discontinued operations in the unaudited condensed consolidated statements of operations for all periods presented.
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 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
Sale Process for CMD
As previously disclosed, during the first quarter of 2026, our Board of Directors approved a plan to actively market CMD for sale, and CMD has been classified as held for sale and as discontinued operations. We are currently evaluating multiple non-binding offers from prospective buyers, none of which is subject to exclusivity. There can be no assurance that a definitive agreement will be reached or that any transaction will be completed on terms acceptable to us or at all. See Note 2—Liquidity and Going Concern Assessment for additional information.
3
Management Fees
On April 15, 2013, we and our manager entered into a management services agreement, pursuant to which we are required to pay our manager a quarterly management fee equal to 0.5% of our adjusted net assets for services performed (which we refer to as 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 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 received by (or owed to) 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. We did not expense any parent management fees for the three and six months ended June 30, 2026.
On August 21, 2020, 1847 Cabinet entered into an offsetting management services agreement with our manager, which was amended on October 8, 2021. Pursuant to the amended management services agreement, our manager will provide certain services to 1847 Cabinet in exchange for a quarterly management fee equal to the greater of $125,000 or 2% of adjusted net assets (as defined within the amended management services agreement). 1847 Cabinet expensed management fees of $125,000 for three months ended June 30, 2026 and 2025 and $250,000 for the six months ended June 30, 2026 and 2025.
On March 30, 2021, 1847 Wolo entered into an offsetting management services agreement with our manager. Pursuant to the management services agreement, our manager will provide certain services to 1847 Wolo in exchange for a quarterly management fee equal to the greater of $75,000 or 2% of adjusted net assets (as defined within the management services agreement). 1847 Wolo expensed management fees of $75,000 for the three months ended June 30, 2026 and 2025 and $150,000 for the six months ended June 30, 2026 and 2025.
On December 16, 2024, 1847 CMD entered into an offsetting management services agreement with our manager. Pursuant to the management services agreement, our manager will provide certain services to 1847 CMD in exchange for a quarterly management fee equal to the greater of $75,000 or 2% of adjusted net assets (as defined within the management services agreement). 1847 CMD expensed management fees of $75,000 for the three months ended June 30, 2026 and 2025 and $150,000 for the six months ended June 30, 2026 and 2025, which is included in discontinued operations.
In addition, if the aggregate amount of management fees paid or to be paid to our manager under the 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 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 our manager under other offsetting management services agreements.
On a consolidated basis, our company expensed total management fees from continuing operations and discontinued operations of $200,000 and $75,000, respectively, for the three months ended June 30, 2026 and 2025 and $400,000 and $150,000 for the six months ended June 30, 2026 and 2025, respectively.
Segments
Following the classification of CMD as held-for-sale and discontinued operations during the first quarter of 2026, we operate through three reportable segments within two primary industries. Our three reportable segments are Kyle’s, ICD, and Wolo. The following describes the primary revenue-generating activities of each segment.
| ● | Kyle’s and ICD (Construction Operations): Revenue is derived primarily from contracts with customers for finish carpentry and related products and services, including millwork and cabinetry for general contractors, commercial developers, residential builders and homeowners, and government entities. |
| ● | Wolo (Automotive Supplies Operations): Revenue is derived primarily from the sale of horn and safety warning lights for cars, trucks, industrial equipment, and emergency vehicles. Wolo sells its products to big-box national retail chains, specialty and industrial distributors, online and mail order retailers, and original equipment manufacturers. |
We report all other business activities that are not reportable in the foregoing segments in corporate services. We provide general corporate services to our segments; however, these services are not considered when making operating decisions and assessing segment performance. The corporate services segment includes costs associated with executive management, financing activities and other public company-related costs.
4
Results of Operations
Comparison of the Three Months Ended June 30, 2026 and 2025
The following tables present key components of our results of continuing operations during the three months ended June 30, 2026 and 2025, both in dollars and as a percentage of our revenues.
| Three Months Ended June 30, | ||||||||||||||||
| 2026 | 2025 | |||||||||||||||
| Amount | % of Revenues | Amount | % of Revenues | |||||||||||||
| Revenues | $ | 1,567,130 | 100.0 | % | $ | 1,791,544 | 100.0 | % | ||||||||
| Operating expenses | ||||||||||||||||
| Cost of revenues | 855,314 | 54.6 | % | 1,085,942 | 60.6 | % | ||||||||||
| Personnel | 373,940 | 23.9 | % | 443,568 | 24.8 | % | ||||||||||
| Depreciation and amortization | 110,757 | 7.1 | % | 127,533 | 7.1 | % | ||||||||||
| General and administrative | 584,238 | 37.3 | % | 571,839 | 31.9 | % | ||||||||||
| Professional fees | 101,407 | 6.5 | % | 507,926 | 28.4 | % | ||||||||||
| Loss on abandonment of right-of-use asset | – | – | 112,705 | 6.3 | % | |||||||||||
| Total operating expenses | 2,025,656 | 129.3 | % | 2,849,513 | 159.1 | % | ||||||||||
| Loss from operations | (458,526 | ) | (29.3 | )% | (1,057,969 | ) | (59.1 | )% | ||||||||
| Other income (expense) | ||||||||||||||||
| Other expense | (19,529 | ) | (1.2 | )% | – | – | ||||||||||
| Loss on disposal of property and equipment | – | – | (2,858 | ) | (0.2 | )% | ||||||||||
| Interest expense | (1,616,654 | ) | (103.2 | )% | (1,058,597 | ) | (59.1 | )% | ||||||||
| Amortization of debt discounts | (120,885 | ) | (7.7 | )% | (472,680 | ) | (26.4 | )% | ||||||||
| Loss on extinguishment of debt | (589,723 | ) | (37.6 | )% | (708,218 | ) | (39.5 | )% | ||||||||
| Gain on change in fair value of derivative liabilities | – | – | 220,000 | 12.3 | % | |||||||||||
| Gain (loss) on change in fair value of warrant liabilities | (3,136,100 | ) | (200.1 | )% | 24,053,885 | 1,342.6 | % | |||||||||
| Total other income (expense) | (5,482,891 | ) | (349.9 | )% | 22,031,532 | 1,229.8 | % | |||||||||
| Income (loss) from continuing operations before income taxes | (5,941,417 | ) | (379.1 | )% | 20,973,563 | 1,170.7 | % | |||||||||
| Income tax benefit (provision) | (4,000 | ) | (0.3 | )% | 81,000 | 4.5 | % | |||||||||
| Net income (loss) from continuing operations | $ | (5,945,417 | ) | (379.4 | )% | $ | 21,054,563 | 1,175.2 | % | |||||||
Revenues
Our total revenues were $1,567,130 for the three months ended June 30, 2026, as compared to $1,791,544 for the three months ended June 30, 2025. The following tables present our revenues by segment for the three months ended June 30, 2026 and 2025:
| Three Months Ended June 30, 2026 | ||||||||||||||||
| Kyle’s | ICD | Wolo | Total | |||||||||||||
| Revenues | ||||||||||||||||
| Cabinetry and millwork | $ | 1,459,511 | $ | – | $ | – | $ | 1,459,511 | ||||||||
| Automotive horns | – | – | 91,765 | 91,765 | ||||||||||||
| Automotive lighting | – | – | 15,854 | 15,854 | ||||||||||||
| Total revenues | $ | 1,459,511 | $ | – | $ | 107,619 | $ | 1,567,130 | ||||||||
| Three Months Ended June 30, 2025 | ||||||||||||||||
| Kyle’s | ICD | Wolo | Total | |||||||||||||
| Revenues | ||||||||||||||||
| Cabinetry and millwork | $ | 1,549,126 | $ | 33,971 | $ | – | $ | 1,583,097 | ||||||||
| Automotive horns | – | – | 72,308 | 72,308 | ||||||||||||
| Automotive lighting | – | – | 136,139 | 136,139 | ||||||||||||
| Total revenues | $ | 1,549,126 | $ | 33,971 | $ | 208,447 | $ | 1,791,544 | ||||||||
Construction Operations — Kyle’s and ICD
Revenue from our construction operations is derived from contracts with customers for finish carpentry and related products and services, including millwork and cabinetry for general contractors, commercial developers, residential builders and homeowners, and government entities.
5
Revenues from Kyle’s decreased by $89,615, or 5.8%, to $1,459,511 for the three months ended June 30, 2026 from $1,549,126 for the three months ended June 30, 2025. Such a decrease was primarily attributable to the timing of new contract awards and the commencement of related performance obligations. Revenue from Kyle’s construction contracts is recognized over time as costs are incurred, and the volume of active contracts in the second quarter of 2026 reflects a temporary reduction in new project starts compared to the prior year period. Management expects revenue to recover as newly awarded contracts advance toward completion and additional contract awards are obtained.
ICD generated no revenues for the three months ended June 30, 2026, as compared to $33,971 for the three months ended June 30, 2025, as we continued the operational repositioning of ICD’s business following the closure of its warehouse facility in 2025. Management is evaluating strategic alternatives for ICD’s operations going forward.
Automotive Supplies Operations — Wolo
Revenue from our automotive supplies operations is derived from the sale of horn and safety warning lights for cars, trucks, industrial equipment, and emergency vehicles.
Revenues from Wolo decreased by $100,828, or 48.4%, to $107,619 for the three months ended June 30, 2026 from $208,447 for the three months ended June 30, 2025. The decrease in revenues reflects the continued transition of Wolo’s business model following the strategic repositioning undertaken during 2025, which included the transition to a third-party logistics model and a refocusing of commercial efforts on e-commerce growth channels. Revenue during the second quarter of 2026 reflects the early stages of this transition, as we continued to rebuild Wolo’s product availability and establish its presence across e-commerce platforms. While revenues remain significantly below prior year levels during this rebuilding period, management believes the operational changes implemented position Wolo for improved performance as its e-commerce channels mature and product availability increases.
Cost of Revenues and Gross Profit
Our total cost of revenues was $855,314 for the three months ended June 30, 2026, as compared to $1,085,942 for the three months ended June 30, 2025. Total gross profit increased to $711,816 for the three months ended June 30, 2026 from $705,602 for the three months ended June 30, 2025, as the decrease in cost of revenues outpaced the decrease in revenues. This was primarily due to the shift in Wolo’s revenue mix toward higher-margin direct-to-consumer e-commerce sales and the elimination of fixed fulfillment and warehousing costs from cost of revenues following the transition to a third-party logistics model, as well as a lower proportion of direct material and subcontractor costs relative to revenues at Kyle’s, each as discussed further below.
Construction Operations — Kyle’s and ICD
Cost of revenues from our construction operations primarily consists of direct materials, including doors, frames, trim, hardware, millwork, and cabinetry, direct labor and subcontractor costs, and other costs directly attributable to contract performance.
Cost of revenues for Kyle’s decreased by $70,576, or 7.8%, to $839,154 for the three months ended June 30, 2026 from $909,730 for the three months ended June 30, 2025, a decline that outpaced the 5.8% decrease in revenues. Accordingly, gross profit for Kyle’s decreased by $19,039, or 3.0%, to $620,357 for the three months ended June 30, 2026 from $639,396 for the three months ended June 30, 2025, while gross margin improved to 42.5% from 41.3%, primarily due to a lower proportion of direct material and subcontractor costs relative to contract revenues for the period. The improved gross margin percentage should be considered in the context of the lower revenue base for the period and may not be indicative of future results.
ICD generated no revenues during the three months ended June 30, 2026 and minimal revenues during the three months ended June 30, 2025.
Automotive Supplies Operations — Wolo
Cost of revenue from our automotive supplies operations primarily consists of the costs of purchased finished goods, inbound freight and tariff costs.
Cost of revenues for Wolo decreased by $158,329, or 90.7%, to $16,160 for the three months ended June 30, 2026 from $174,489 for the three months ended June 30, 2025. Despite the decrease in revenues, gross profit for Wolo increased by $57,501, or 169.3%, to $91,459 for the three months ended June 30, 2026 from $33,958 for the three months ended June 30, 2025. Gross margin for Wolo improved to 85.0% for the three months ended June 30, 2026 from 16.3% for the three months ended June 30, 2025, primarily due to a favorable shift in product and channel mix as Wolo transitions toward direct-to-consumer e-commerce sales, which carry higher margins relative to the wholesale and distributor channels that comprised a greater portion of revenues in the prior year period. Additionally, the transition to a third-party logistics model reduced certain fixed fulfillment and warehousing costs that were previously absorbed into cost of revenues. The improved gross margin percentage should be considered in the context of the significantly reduced revenue base and may not be indicative of future results as Wolo continues to rebuild its revenue base.
6
Personnel Costs
Personnel costs include employee salaries and bonuses, and related payroll taxes, as well as health insurance premiums, 401(k) contributions, and training costs. Our total personnel costs were $373,940 for the three months ended June 30, 2026, as compared to $443,568 for the three months ended June 30, 2025.
Construction Operations — Kyle’s and ICD
Personnel costs for Kyle’s remained relatively consistent at $311,119 for the three months ended June 30, 2026 compared to $308,289 for the three months ended June 30, 2025. As a percentage of revenues, personnel costs for Kyle’s were 21.3% and 19.9% for the three months ended June 30, 2026 and 2025, respectively.
ICD did not have any personnel costs for the three months ended June 30, 2026, as compared to $2,500 for the three months ended June 30, 2025. Such decrease was primarily due to the reduction in workforce resulting from the operational repositioning described above.
Automotive Supplies Operations — Wolo
Personnel costs for Wolo decreased by $81,546, or 75.6%, to $26,291 for the three months ended June 30, 2026 from $107,837 for the three months ended June 30, 2025. Such decrease was primarily due to the significant reduction in workforce in connection with the transition to a third-party logistics model. As a percentage of revenues, personnel costs for Wolo were 24.4% and 51.7% for the three months ended June 30, 2026 and 2025, respectively.
Corporate Services
Personnel costs for the corporate services segment were $36,530 for the three months ended June 30, 2026 compared to $24,942 for the three months ended June 30, 2025. Corporate personnel costs reflect corporate compensation costs, net of intercompany allocations to the operating subsidiaries, which eliminate in consolidation. Both periods reflect a net expense, as corporate compensation costs retained at the corporate level exceeded amounts allocated to the operating subsidiaries during the respective periods.
Depreciation and Amortization
Our total depreciation and amortization expense decreased by $16,776, or 13.2%, to $110,757 for the three months ended June 30, 2026 from $127,533 for the three months ended June 30, 2025. Such a decrease was primarily a result of disposals of property and equipment during 2025 resulting in a lower depreciable asset base in the current period.
General and Administrative Expenses
Our total general and administrative expenses increased by $12,399, or 2.2%, to $584,238 for the three months ended June 30, 2026, as compared to $571,839 for the three months ended June 30, 2025.Our general and administrative expenses consist primarily of insurance expense, rent expense, management fees, advertising, bank fees, bad debt expense, and other general expenses incurred in connection with general operations.
Construction Operations — Kyle’s and ICD
General and administrative expenses for Kyle’s decreased by $23,244, or 8.3%, to $256,240 for the three months ended June 30, 2026 from $279,484 for the three months ended June 30, 2025, a decrease broadly proportional to the decline in revenues. As a percentage of revenues, general and administrative expenses for Kyle’s were 17.6% and 18.0% for the three months ended June 30, 2026 and 2025, respectively.
General and administrative expenses for ICD decreased by $29,873, or 32.3%, to $62,500 for the three months ended June 30, 2026 from $92,373 for the three months ended June 30, 2025. Such a decrease was primarily due to reduced operating costs resulting from the abandonment of the warehouse facility and workforce reductions, partially offset by costs incurred in connection with the operational repositioning.
7
Automotive Supplies Operations — Wolo
General and administrative expenses for Wolo increased by $86,561, or 44.1%, to $282,722 for the three months ended June 30, 2026 from $196,161 for the three months ended June 30, 2025. Such an increase was primarily due to bad debt expense recognized during the three months ended June 30, 2026 related to receivables from Wolo’s legacy wholesale and distributor customers, as well as increased software and information technology costs associated with the build-out of Wolo’s e-commerce platform, partially offset by decreases in advertising, rent, and utilities costs following the exit of the warehouse facility and lower corporate shared services allocations. As a percentage of revenues, general and administrative expenses for Wolo were 262.7% and 94.1% for the three months ended June 30, 2026 and 2025, respectively.
Corporate Services
General and administrative expenses for the corporate services segment were $(17,224) for the three months ended June 30, 2026 compared to $3,821 for the three months ended June 30, 2025. The current period reflects a net credit balance resulting from allocations of corporate costs to operating subsidiaries exceeding total corporate overhead incurred during that period. The prior period reflects a net expense as the level of corporate overhead retained at the corporate level exceeded amounts allocated to operating subsidiaries during the three months ended June 30, 2025.
Professional Fees
Our total professional fees were $101,407 for the three months ended June 30, 2026, as compared to $507,926 for the three months ended June 30, 2025.
Construction Operations — Kyle’s and ICD
Kyle’s did not have any professional fees for the three months ended June 30, 2026, as compared to $6,400 for the three months ended June 30, 2025.
ICD did not incur any professional fees for the three months ended June 30, 2026 and 2025.
Automotive Supplies Operations — Wolo
Professional fees for Wolo decreased by $7,895, or 59.5%, to $5,378 for the three months ended June 30, 2026 from $13,273 for the three months ended June 30, 2025. Such decrease was primarily due to reduced legal and consulting fees in connection with the operational repositioning undertaken during 2025, including costs associated with the warehouse lease termination and logistics transition that were incurred in the prior year period and did not recur. As a percentage of revenues, professional fees for Wolo were 5.0% and 6.4% for the three months ended June 30, 2026 and 2025, respectively.
Corporate Services
Professional fees for the corporate services segment decreased by $392,224, or 80.3%, to $96,029 for the three months ended June 30, 2026 from $488,253 for the three months ended June 30, 2025. Such a decrease was primarily due to a reduction in legal fees associated with outstanding litigation matters and lower audit, accounting, and other public company related fees in the current period.
Total Other Income (Expense)
We had $5,482,891 in total other expense, net, for the three months ended June 30, 2026, as compared to total other income, net of $22,031,532 for the three months ended June 30, 2025. Other expense, net, for the three months ended June 30, 2026 consisted of interest expense of $1,616,654, a loss on change in fair value of warrant liabilities of $3,136,100, amortization of debt discounts of $120,885, loss on extinguishment of debt of $589,723, and other expense of $19,529, while other income, net, for the three months ended June 30, 2025 consisted of a gain on change in fair value of warrant liabilities of $24,053,885 and a gain on change in fair value of derivative liabilities of $220,000, offset by a loss on extinguishment of debt of $708,218, interest expense of $1,058,597, amortization of debt discounts of $472,680, and a loss on disposal of property and equipment of $2,858.
Income Tax Benefit (Provision)
We had an income tax provision of $4,000 for the three months ended June 30, 2026, as compared to an income tax benefit of $81,000 for the three months ended June 30, 2025.
8
Net Income (Loss) from Continuing Operations
As a result of the cumulative effect of the factors described above, we had a net loss from continuing operations of $5,945,417 for the three months ended June 30, 2026, as compared to net income from continuing operations of $21,054,563 for the three months ended June 30, 2025.
Comparison of the Six Months Ended June 30, 2026 and 2025
The following tables present key components of our results of continuing operations during the six months ended June 30, 2026 and 2025, both in dollars and as a percentage of our revenues.
| Six Months Ended June 30, | ||||||||||||||||
| 2026 | 2025 | |||||||||||||||
| Amount | % of Revenues | Amount | % of Revenues | |||||||||||||
| Revenues | $ | 2,735,538 | 100.0 | % | $ | 4,562,335 | 100.0 | % | ||||||||
| Operating expenses | ||||||||||||||||
| Cost of revenues | 1,608,751 | 58.8 | % | 2,626,288 | 57.6 | % | ||||||||||
| Personnel | 653,079 | 23.9 | % | 837,928 | 18.4 | % | ||||||||||
| Depreciation and amortization | 225,454 | 8.2 | % | 256,863 | 5.6 | % | ||||||||||
| General and administrative | 1,042,484 | 38.1 | % | 1,249,794 | 27.4 | % | ||||||||||
| Professional fees | 463,499 | 16.9 | % | 1,951,626 | 42.8 | % | ||||||||||
| Loss on abandonment of right-of-use asset | – | – | 112,705 | 2.5 | % | |||||||||||
| Total operating expenses | 3,993,267 | 146.0 | % | 7,035,204 | 154.2 | % | ||||||||||
| Loss from operations | (1,257,729 | ) | (46.0 | )% | (2,472,869 | ) | (54.2 | )% | ||||||||
| Other income (expense) | ||||||||||||||||
| Other expense | (30,848 | ) | (1.1 | )% | – | – | ||||||||||
| Gain on disposal of property and equipment | – | – | 50,696 | 1.1 | % | |||||||||||
| Interest expense | (3,286,486 | ) | (120.1 | )% | (2,288,103 | ) | (50.2 | )% | ||||||||
| Amortization of debt discounts | (280,180 | ) | (10.2 | )% | (937,730 | ) | (20.6 | )% | ||||||||
| Loss on extinguishment of debt | (589,723 | ) | (21.6 | )% | (3,009,416 | ) | (66.0 | )% | ||||||||
| Gain on change in fair value of derivative liabilities | – | – | 185,000 | 4.1 | % | |||||||||||
| Gain (loss) on change in fair value of warrant liabilities | (4,406,400 | ) | (161.1 | )% | 27,723,683 | 607.7 | % | |||||||||
| Total other income (expense) | (8,593,637 | ) | (314.1 | )% | 21,724,130 | 476.2 | % | |||||||||
| Income (loss) from continuing operations before income taxes | (9,851,366 | ) | (360.1 | )% | 19,251,261 | 422.0 | % | |||||||||
| Income tax benefit | 58,000 | 2.1 | % | 175,000 | 3.8 | % | ||||||||||
| Net income (loss) from continuing operations | $ | (9,793,366 | ) | (358.0 | )% | $ | 19,426,261 | 425.8 | % | |||||||
Revenues
Our total revenues were $2,735,538 for the six months ended June 30, 2026, as compared to $4,562,335 for the six months ended June 30, 2025. The following tables present our revenues by segment for the six months ended June 30, 2026 and 2025:
| Six Months Ended June 30, 2026 | ||||||||||||||||
| Kyle’s | ICD | Wolo | Total | |||||||||||||
| Revenues | ||||||||||||||||
| Cabinetry and millwork | $ | 2,561,041 | $ | – | $ | – | $ | 2,561,041 | ||||||||
| Automotive horns | – | – | 154,985 | 154,985 | ||||||||||||
| Automotive lighting | – | – | 19,512 | 19,512 | ||||||||||||
| Total revenues | $ | 2,561,041 | $ | – | $ | 174,497 | $ | 2,735,538 | ||||||||
| Six Months Ended June 30, 2025 | ||||||||||||||||
| Kyle’s | ICD | Wolo | Total | |||||||||||||
| Revenues | ||||||||||||||||
| Cabinetry and millwork | $ | 3,411,478 | $ | 33,971 | $ | – | $ | 3,445,449 | ||||||||
| Automotive horns | – | – | 911,658 | 911,658 | ||||||||||||
| Automotive lighting | – | – | 205,228 | 205,228 | ||||||||||||
| Total revenues | $ | 3,411,478 | $ | 33,971 | $ | 1,116,886 | $ | 4,562,335 | ||||||||
9
Construction Operations — Kyle’s and ICD
Revenues from Kyle’s decreased by $850,437, or 24.9%, to $2,561,041 for the six months ended June 30, 2026 from $3,411,478 for the six months ended June 30, 2025. Such a decrease was primarily attributable to the timing of new contract awards and the commencement of related performance obligations. Revenue from Kyle’s construction contracts is recognized over time as costs are incurred, and the volume of active contracts in the first half of 2026 reflects a temporary reduction in new project starts compared to the prior year period. Management expects revenue to recover as newly awarded contracts advance toward completion and additional contract awards are obtained.
ICD generated no revenues for the six months ended June 30, 2026, as compared to $33,971 for the six months ended June 30, 2025, as we continued the operational repositioning of ICD’s business following the closure of its warehouse facility in 2025. Management is evaluating strategic alternatives for ICD’s operations going forward.
Automotive Supplies Operations — Wolo
Revenues from Wolo decreased by $942,389, or 84.4%, to $174,497 for the six months ended June 30, 2026 from $1,116,886 for the six months ended June 30, 2025. The decrease in revenues reflects the continued transition of Wolo’s business model following the strategic repositioning undertaken during 2025, which included the transition to a third-party logistics model and a refocusing of commercial efforts on e-commerce growth channels. Revenue during the first half of 2026 reflects the early stages of this transition, as we continued to rebuild Wolo’s product availability and establish its presence across e-commerce platforms. While revenues remain significantly below prior year levels during this rebuilding period, management believes the operational changes implemented position Wolo for improved performance as its e-commerce channels mature and product availability increases.
Cost of Revenues and Gross Profit
Our total cost of revenues was $1,608,751 for the six months ended June 30, 2026, as compared to $2,626,288 for the six months ended June 30, 2025. Accordingly, our total gross profit was $1,126,787 for the six months ended June 30, 2026, as compared to $1,936,047 for the six months ended June 30, 2025.
Construction Operations — Kyle’s and ICD
Cost of revenues for Kyle’s decreased by $323,411, or 17.1%, to $1,562,474 for the six months ended June 30, 2026 from $1,885,885 for the six months ended June 30, 2025. Accordingly, gross profit for Kyle’s decreased by $527,026, or 34.5%, to $998,567 for the six months ended June 30, 2026 from $1,525,593 for the six months ended June 30, 2025. Gross margin for Kyle’s declined to 39.0% for the six months ended June 30, 2026 from 44.7% for the six months ended June 30, 2025, reflecting the impact of fixed and semi-fixed direct costs being absorbed over a significantly lower revenue base during the period. As active contract volume declined due to the timing of new contract awards, certain direct labor and overhead costs could not be proportionally reduced, resulting in margin compression. Management expects gross margins to recover as new contract awards are obtained and revenue volumes return to normalized levels.
ICD generated no revenues during the six months ended June 30, 2026 and minimal revenues during the six months ended June 30, 2025.
Automotive Supplies Operations — Wolo
Cost of revenues for Wolo decreased by $692,403, or 93.7%, to $46,277 for the six months ended June 30, 2026 from $738,680 for the six months ended June 30, 2025. Accordingly, gross profit for Wolo decreased by $249,986, or 66.1%, to $128,220 for the six months ended June 30, 2026 from $378,206 for the six months ended June 30, 2025. Gross margin for Wolo improved to 73.5% for the six months ended June 30, 2026 from 33.9% for the six months ended June 30, 2025, primarily due to a favorable shift in product and channel mix as Wolo transitions toward direct-to-consumer e-commerce sales, which carry higher margins relative to the wholesale and distributor channels that comprised a greater portion of revenues in the prior year period. Additionally, the transition to a third-party logistics model reduced certain fixed fulfillment and warehousing costs that were previously absorbed into cost of revenues. The improved gross margin percentage should be considered in the context of the significantly reduced revenue base and may not be indicative of future results as Wolo continues to rebuild its revenue base.
10
Personnel Costs
Our total personnel costs were $653,079 for the six months ended June 30, 2026, as compared to $837,928 for the six months ended June 30, 2025.
Construction Operations — Kyle’s and ICD
Personnel costs for Kyle’s increased by $38,773, or 6.6%, to $629,669 for the six months ended June 30, 2026 from $590,896 for the six months ended June 30, 2025. Such increase was primarily due to additional headcount added during 2025 in anticipation of new contract awards and the associated revenue ramp up expected in subsequent periods. As a percentage of revenues, personnel costs for Kyle’s were 24.6% and 17.3% for the six months ended June 30, 2026 and 2025, respectively.
ICD did not have any personnel costs for the six months ended June 30, 2026, as compared to $63,406 for the six months ended June 30, 2025. Such decrease was primarily due to the reduction in workforce resulting from the operational repositioning described above.
Automotive Supplies Operations — Wolo
Personnel costs for Wolo decreased by $217,951, or 79.5%, to $56,155 for the six months ended June 30, 2026 from $274,106 for the six months ended June 30, 2025. Such decrease was primarily due to the significant reduction in workforce in connection with the transition to a third-party logistics model. As a percentage of revenues, personnel costs for Wolo were 32.2% and 24.5% for the six months ended June 30, 2026 and 2025, respectively.
Corporate Services
Personnel costs for the corporate services segment were $(32,745) for the six months ended June 30, 2026, as compared to $(90,480) for the six months ended June 30, 2025. Corporate personnel costs reflect intercompany allocations of corporate compensation costs to the operating subsidiaries, which eliminate in consolidation, resulting in net credit balances for the six months ended June 30, 2026 and 2025.
Depreciation and Amortization
Our total depreciation and amortization expense decreased by $31,409, or 12.2%, to $225,454 for the six months ended June 30, 2026 from $256,863 for the six months ended June 30, 2025. Such a decrease was primarily a result of disposals of property and equipment during 2025 resulting in a lower depreciable asset base in the current period.
General and Administrative Expenses
Our total general and administrative expenses were $1,042,484 for the six months ended June 30, 2026, as compared to $1,249,794 for the six months ended June 30, 2025.
Construction Operations — Kyle’s and ICD
General and administrative expenses for Kyle’s decreased by $23,368, or 4.2%, to $531,275 for the six months ended June 30, 2026 from $554,643 for the six months ended June 30, 2025, remaining essentially flat period over period. As a percentage of revenues, general and administrative expenses for Kyle’s were 20.7% and 16.3% for the six months ended June 30, 2026 and 2025, respectively.
General and administrative expenses for ICD decreased by $210,440, or 62.7%, to $125,059 for the six months ended June 30, 2026 from $335,499 for the six months ended June 30, 2025. Such a decrease was primarily due to reduced operating costs resulting from the abandonment of the warehouse facility and workforce reductions, partially offset by costs incurred in connection with the operational repositioning.
Automotive Supplies Operations — Wolo
General and administrative expenses for Wolo decreased by $36,924, or 8.6%, to $394,523 for the six months ended June 30, 2026 from $431,447 for the six months ended June 30, 2025. Such a decrease was primarily due to reduced operating costs in connection with the operational repositioning, including the termination of the warehouse lease and the transition to a third-party logistics model, partially offset by bad debt expense recognized during the second quarter of 2026. As a percentage of revenues, general and administrative expenses for Wolo were 226.1% and 38.6% for the six months ended June 30, 2026 and 2025, respectively.
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Corporate Services
General and administrative expenses for the corporate services segment were $(8,373) for the six months ended June 30, 2026 compared to $(71,795) for the six months ended June 30, 2025. Corporate general and administrative expenses reflect intercompany allocations of corporate overhead costs to the operating subsidiaries, which eliminate in consolidation. Both periods reflect net credit balances resulting from allocations of corporate costs to operating subsidiaries exceeding total corporate overhead incurred during the respective periods.
Professional Fees
Our total professional fees were $463,499 for the six months ended June 30, 2026, as compared to $1,951,626 for the six months ended June 30, 2025.
Construction Operations — Kyle’s and ICD
Kyle’s did not have any professional fees for the six months ended June 30, 2026, as compared to $6,400 for the six months ended June 30, 2025.
ICD did not incur any professional fees for the six months ended June 30, 2026, as compared to $3,518 for the six months ended June 30, 2025. Such a decrease was primarily due to a reduction in legal and consulting fees in connection with the operational repositioning and workforce reductions undertaken during 2025.
Automotive Supplies Operations — Wolo
Professional fees for Wolo decreased by $25,925, or 67.5%, to $12,465 for the six months ended June 30, 2026 from $38,390 for the six months ended June 30, 2025. Such decrease was primarily due to reduced legal and consulting fees in connection with the operational repositioning undertaken during 2025, including costs associated with the warehouse lease termination and logistics transition that were incurred in the prior year period and did not recur. As a percentage of revenues, professional fees for Wolo were 7.1% and 3.4% for the six months ended June 30, 2026 and 2025, respectively.
Corporate Services
Professional fees for the corporate services segment decreased by $1,452,284, or 76.3%, to $451,034 for the six months ended June 30, 2026 from $1,903,318 for the six months ended June 30, 2025. Such a decrease was primarily due to a reduction in legal fees associated with outstanding litigation matters and lower audit and accounting fees in the current period. The prior period reflected elevated professional fees following the acquisition of CMD in December 2024, which did not recur at the same level in the current period.
Total Other Income (Expense)
We had $8,593,637 in total other expense, net, for the six months ended June 30, 2026, as compared to total other income, net of $21,724,130 for the six months ended June 30, 2025. Other expense, net, for the six months ended June 30, 2026 consisted of interest expense of $3,286,486, a loss on change in fair value of warrant liabilities of $4,406,400, amortization of debt discounts of $280,180, loss on extinguishment of debt of $589,723, and other expense of $30,848, while other income, net, for the six months ended June 30, 2025 consisted of a gain on change in fair value of warrant liabilities of $27,723,683, a gain on change in fair value of derivative liabilities of $185,000, and a gain on disposal of property and equipment of $50,696, partially offset by a loss on extinguishment of debt of $3,009,416, interest expense of $2,288,103, and amortization of debt discounts of $937,730.
Income Tax Benefit
We had an income tax benefit of $58,000 for the six months ended June 30, 2026, as compared to $175,000 for the six months ended June 30, 2025.
Net Income (Loss) from Continuing Operations
As a result of the cumulative effect of the factors described above, we had a net loss from continuing operations of $9,793,366 for the six months ended June 30, 2026, as compared to net income from continuing operations of $19,426,261 for the six months ended June 30, 2025.
12
Liquidity and Capital Resources
As of June 30, 2026, we had cash and cash equivalents of $442,279, an accumulated deficit of $119,923,707, and a working capital deficit of $41,437,625. For the six months ended June 30, 2026, we incurred an operating loss from continuing operations of $1,257,729 and generated net cash from operating activities of $712,366. To date, we have financed our operations primarily through revenue generated from operations, cash proceeds from financing activities, borrowings, and equity contributions by our shareholders.
Notwithstanding current period positive operating cash flows, we do not expect to have sufficient cash and other liquid resources to meet our obligations as they become due over the next twelve months, primarily due to the magnitude of our current liabilities and significant near-term debt maturities. These conditions, considered in the aggregate, raise substantial doubt about our company’s ability to continue as a going concern within one year after the date our condensed consolidated financial statements are issued.
Management plans to address these conditions by securing additional capital through debt and equity financing, including potential public and private offerings of our securities, evaluating opportunities to refinance or extend the maturity of existing debt obligations, implementing reductions in discretionary operating expenditures to the extent practicable, exploring strategic alternatives with respect to our operating subsidiaries to reduce debt obligations, and actively pursuing the sale of CMD. We are currently evaluating multiple non-binding offers from prospective buyers, none of which is subject to exclusivity. If a sale is consummated, the proceeds would be expected to be sufficient to repay a significant portion of our outstanding debt obligations. However, there can be no assurance that a definitive agreement will be reached or that any transaction will be completed on terms acceptable to us or at all. Management has evaluated whether it is probable that these plans would be effectively implemented and, if so, whether they would mitigate the relevant conditions or events that raise substantial doubt within the next twelve months. Because these plans are subject to market conditions and reliance on third parties, and because there is no assurance that we will be able to raise capital on acceptable terms or at all, management has concluded that substantial doubt about our company’s ability to continue as a going concern has not been alleviated as of the date our condensed consolidated financial statements are issued.
Our condensed consolidated financial statements have been prepared assuming our company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Our condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and their carrying amounts, or the amounts and classification of liabilities that might result should we be unable to continue as a going concern. If we are unable to obtain adequate capital, we could be forced to cease or curtail our operations.
We also 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. 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 our manager pursuant to the management services agreement, potential payment of profit allocation to our manager and potential put price to 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 the Annual Report for more information concerning the management fee, the profit allocation and put price.
The amount of management fee paid to our manager by us is reduced by the aggregate amount of any offsetting management fees, if any, received by our manager from any of our businesses. As a result, the management fee paid to our manager may fluctuate from quarter to quarter. The amount of management fee paid to 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.
13
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 subsidiary, 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 mark plus (ii) the subsidiary’s net income since its acquisition by 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 us, multiplied by (iii) the subsidiary’s average share (determined based on gross assets, generally) of our consolidated net equity (determined according to 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, 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 the Annual Report for more information on the calculation of the profit allocation.
Our operating agreement also contains a supplemental put provision, which gives our manager the right, subject to certain conditions, to cause us to purchase the allocation shares then owned by 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 our manager’s resignation, the payment to 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 the Annual Report for more information on the calculation of the put price. The put price obligation, if 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 flows from continuing operations for the periods indicated:
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash provided by operating activities from continuing operations | $ | 712,366 | $ | 604,364 | ||||
| Net cash provided by (used in) investing activities from continuing operations | 99,000 | (798,735 | ) | |||||
| Net cash used in financing activities from continuing operations | (632,778 | ) | (1,311,196 | ) | ||||
| Net change in cash and cash equivalents from continuing operations | 178,588 | (1,505,567 | ) | |||||
| Cash, cash equivalents, and restricted cash at the beginning of period | 263,691 | 2,162,412 | ||||||
| Cash, cash equivalents, and restricted cash at the end of period | $ | 442,279 | $ | 656,845 | ||||
Net cash provided by operating activities from continuing operations was $712,366 for the six months ended June 30, 2026, as compared to $604,364 for the six months ended June 30, 2025. Net cash provided by operating activities from continuing operations for the six months ended June 30, 2026 was primarily attributable to an increase in accounts payable and accrued expenses, partially offset by the net loss from continuing operations, net of non-cash charges, and increases in accounts receivable, inventories, and prepaid expenses.
Net cash provided by investing activities from continuing operations was $99,000 for the six months ended June 30, 2026, as compared to net cash used in investing activities of $798,735 for the six months ended June 30, 2025. The net cash provided by investing activities from continuing operations for six months ended June 30, 2026 consisted entirely of proceeds received in connection with the resolution of post-closing adjustments under the High Mountain purchase agreement, while the net cash used in investing activities from continuing operations for the six months ended June 30, 2025 consisted of a reduction of the High Mountain Holdback Amount of $858,039 and purchases of property and equipment of $8,196, offset by proceeds received from the disposal of property and equipment of $67,500.
Net cash used in financing activities from continuing operations was $632,778 for the six months ended June 30, 2026, as compared to $1,311,196 for the six months ended June 30, 2025. The net cash used in financing activities from continuing operations for the six months ended June 30, 2026 consisted of repayments of notes payable and finance lease liabilities of $1,398,496 and repayments of related party notes payable of $261,282, partially offset by proceeds from the purchase and sale of future revenues loan of $1,027,000, while the net cash used in financing activities from continuing operations for the six months ended June 30, 2025 consisted of repayments of notes payable and finance lease liabilities of $1,776,846, offset by proceeds from notes payable of $465,650.
14
Debt
The following table shows aggregate figures for our total debt that is coming due in the short and long term as of June 30, 2026. For a complete description of the terms of our outstanding debt, please see Note 10—Notes Payable to our condensed consolidated financial statements above and Notes 14—Notes Payable, 15—Convertible Notes Payable and 16—Related Parties to our consolidated financial statements for the years ended December 31, 2025 and 2024 included in the Annual Report.
| Short-Term | Long-Term | Total Debt | ||||||||||
| Notes Payable | ||||||||||||
| 6% Subordinated promissory note | $ | 500,000 | $ | – | $ | 500,000 | ||||||
| Purchase and sale of future revenues loan | 1,620,000 | – | 1,620,000 | |||||||||
| 20% OID subordinated promissory note | 3,070,894 | – | 3,070,894 | |||||||||
| 12% subordinated promissory note for services | 840,000 | – | 840,000 | |||||||||
| 25% OID subordinated promissory note | 1,455,600 | – | 1,455,600 | |||||||||
| Total notes payable | 7,486,494 | – | 7,486,494 | |||||||||
| Less: debt discounts | (420,000 | ) | – | (420,000 | ) | |||||||
| Total notes payable, net | 7,066,494 | – | 7,066,494 | |||||||||
| Related Party Notes Payable | ||||||||||||
| Related party promissory note | 1,004,044 | – | 1,004,044 | |||||||||
| Convertible Notes Payable | ||||||||||||
| Secured convertible promissory notes | 22,751,184 | – | 22,751,184 | |||||||||
| Finance Leases | ||||||||||||
| Financing leases | 197,960 | 130,329 | 328,289 | |||||||||
| Combined total debt | $ | 31,439,682 | $ | 130,329 | $ | 31,570,011 | ||||||
| Less: combined debt discounts | (420,000 | ) | – | (420,000 | ) | |||||||
| Combined total debt, net | $ | 31,019,682 | $ | 130,329 | $ | 31,150,011 | ||||||
Contractual Obligations
Our principal commitments consist mostly of obligations under the loans described above and other contractual commitments described below.
We have engaged our manager to manage our day-to-day operations and affairs. Our relationship with our manager will be governed principally by the following agreements:
| ● | the management services agreement and offsetting management services agreements relating to the management services our manager will perform for us and the businesses we own and the management fee to be paid to our manager in respect thereof; and |
| ● | our operating agreement setting forth our manager’s rights with respect to the allocation shares it owns, including the right to receive profit allocations from us, and the supplemental put provision relating to 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.
15
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 Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” in the Annual Report.
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
Not applicable.
| ITEM 4. | CONTROLS AND PROCEDURES. |
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of June 30, 2026, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. As a result of this evaluation, our chief executive officer and chief financial officer have concluded that, because of the material weaknesses described in Item 9A “Controls and Procedures” of the Annual Report, which we are still in the process of remediating as of June 30, 2026, our disclosure controls and procedures were not effective as of June 30, 2026. Investors are directed to Item 9A of the Annual Report for the description of these weaknesses. Notwithstanding the identified material weaknesses, management, including our chief executive officer and chief financial officer, believes the consolidated financial statements included in this report fairly represent, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in accordance with GAAP.
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure
Changes in Internal Control Over Financial Reporting
Other than the remedial changes described below, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this report that have materially affected or are reasonably likely to materially affect our 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.
As disclosed in the Annual Report, our management has identified the steps necessary to address the material weaknesses, and in the second quarter of 2026, we continued to implement the following remedial procedures:
| ● | increasing personnel resources and technical accounting expertise within the accounting function (until we have sufficient technical accounting resources, we have engaged external consultants to provide support and to assist us in our evaluation of more complex applications of GAAP); |
| ● | engaging internal control consultants to assist us in performing a financial reporting risk assessment as well as identifying and designing our system of internal controls necessary to mitigate the risks identified; and |
| ● | preparation of written documentation of our internal control policies and procedures. |
We continue to enhance corporate oversight over process-level controls and structures to ensure that there is an appropriate assignment of authority, responsibility, and accountability to enable remediation of our material weaknesses. While management believes that the steps that we have taken and plan to take will be sufficient to remediate the identified material weaknesses and improve the overall system of internal control over financial reporting, the material weaknesses cannot be considered remediated until the applicable relevant controls operate for a sufficient period of time. As we continue to evaluate, and work to improve, our internal control over financial reporting, management may determine that additional measures to address control deficiencies or modifications to the remediation plan are necessary.
16
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. Except as set forth below, 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.
On September 4, 2025, Alpha Capital Anstalt, or Alpha Capital, filed a complaint in the Supreme Court of the State of New York, County of New York against our company, in an action captioned Alpha Capital Anstalt v. 1847 HOLDINGS LLC, Index No. 655245/2025. The complaint asserts a claim for breach of contract against our company based on its alleged breach of a securities purchase agreement it entered into with Alpha Capital on December 14, 2024, or the SPA. Alpha Capital alleges that we breached the implied covenant of good faith and fair dealing and Section 4.10 in the SPA by failing to take steps to have our common shares listed on another trading market after it was delisted from NYSE American. Alpha Capital alleges that, as a result of our alleged failure in that regard, it has not been able to sell or exercise the securities it acquired under the SPA and in a subsequent transaction. Alpha Capital seeks damages of at least $2 million plus its attorney’s fees, costs, and pre- and post-judgment interest and, alternatively, an order requiring us to get our common shares listed on a trading market. On October 8, 2025, we filed an answer to the complaint denying the material allegations in the complaint and asserting several affirmative defenses. We amended our answer on April 2, 2026, and the amended answer includes a demand for our costs and attorney’s fees incurred in defending the action pursuant to the provision in SPA providing that the prevailing party in litigation is to be awarded its fees and costs from the other party. On January 22, 2026, the court held a Preliminary Conference and set September 18, 2026 as the deadline for Alpha Capital to file a note of issue/certificate of readiness, and the court will thereafter set a trial date. Discovery commenced on February 27, 2026 and is ongoing. We believe we have meritorious defenses to Alpha Capital’s claims, including because our common shares commenced trading on the OTCID market on October 15, 2025. Our company intends to vigorously defend itself against Alpha Capital’s claims. Due to this litigation being at an early stage, we cannot reasonably estimate at this time the potential loss or range of loss, if any, in the event of an adverse outcome in this matter. It is possible an adverse outcome could materially adversely affect our financial condition, results of operations, and cash flows. No accrual has been recorded with respect to this legal matter.
ITEM 1A. RISK FACTORS.
Not applicable.
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| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. |
We have not sold any equity securities during the three months ended June 30, 2026 that were not previously disclosed in a current report on Form 8-K that was filed during the quarter.
We did not repurchase any of our common shares during the three months ended June 30, 2026.
| 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 disclosed in a report on Form 8-K during the three months ended June 30, 2026 but was not reported.
There have been no material changes to the procedures by which shareholders may recommend nominees to our board of directors since such procedures were last disclosed.
None of our directors or executive officers
Board Resignation and Appointment
The following information is being provided in lieu of filing a Current Report on Form 8-K under Item 5.02:
Mr. Paul Froning resigned from the Company’s Board of Directors, effective automatically upon the filing with the SEC of this Form 10-Q for the quarter ended June 30, 2026. Mr. Froning also served as the chair of the Audit Committee of the Board until his resignation became effective. Mr. Froning’s resignation was not due to any disagreement with the Company on any matter relating to its operations, policies (including accounting or financial policies) or practices.
The Board appointed Mr. Robert Barry, a member of the Board of Directors, to replace Mr. Froning as a member and the chair of the Audit Committee, effective upon Mr. Froning’s resignation. The Board determined that Mr. Barry is an “audit committee financial expert” as defined by applicable SEC rules.
| ITEM 6. | EXHIBITS. |
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| * | Filed herewith |
| ** | Furnished herewith |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: August 14, 2026 | 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) |
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