10-Q: 1847 Holdings LLC Q1 2026 Financial Report

1847 Holdings LLC reports a net loss of $3.45 million for Q1 2026, with significant revenue decline and ongoing going concern issues, despite progress in selling a subsidiary.

Summary

• 1847 Holdings LLC reported a net loss of $3,448,291 for the first quarter ended March 31, 2026, compared to a net loss of $415,953 for the same period in 2025.
• Total revenues decreased significantly to $1,168,408 in Q1 2026 from $2,770,791 in Q1 2025, primarily due to declines in both construction operations (Kyles) and automotive supplies (Wolo).
• The company continues to face substantial doubt about its ability to continue as a going concern, with a working capital deficit of $34,197,083 as of March 31, 2026.
• Management plans to address liquidity concerns through debt and equity financing, refinancing debt, reducing expenditures, and actively pursuing the sale of its CMD segment.
• The CMD segment has been classified as held-for-sale and discontinued operations, with a non-binding letter of intent signed for its sale at a proposed valuation of $65 million.
• Operating expenses decreased from $4,185,691 in Q1 2025 to $1,967,611 in Q1 2026, largely due to reduced cost of revenues and professional fees.
• Despite positive net cash provided by operating activities from continuing operations ($660,205 in Q1 2026), the company anticipates insufficient resources to meet obligations over the next twelve months.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing negatively due to the significant increase in net loss, substantial revenue decline, and the persistent going concern warning, despite progress on asset sales.

Positives

• The company has actively pursued the sale of its CMD segment, entering into a non-binding letter of intent for a $65 million all-cash transaction.
• Operating expenses were significantly reduced in Q1 2026 compared to Q1 2025, falling from $4,185,691 to $1,967,611.
• Net cash provided by operating activities from continuing operations increased to $660,205 in Q1 2026 from $370,469 in Q1 2025.
• Gross margin for the Wolo segment improved to 55.0% in Q1 2026 from 37.9% in Q1 2025 due to a favorable product and channel mix shift.
• The company successfully defended against a securities fraud lawsuit filed by Matthew Miller, with the court dismissing the second amended complaint with prejudice.

Negatives

• A net loss of $3,448,291 was reported for Q1 2026, a substantial increase from the $415,953 net loss in Q1 2025.
• Total revenues declined sharply by 57.8% to $1,168,408 in Q1 2026 from $2,770,791 in Q1 2025.
• The company has a working capital deficit of $34,197,083 as of March 31, 2026.
• Substantial doubt exists regarding the company's ability to continue as a going concern within one year.
• The Kyles segment experienced a 40.9% revenue decrease, attributed to the timing of contract awards and a temporary reduction in new project starts.
• The Wolo segment's revenue decreased by 92.6% as it continues its business model transition.
• The company incurred significant interest expense of $1,669,832 and a loss on change in fair value of warrant liabilities of $1,270,300 in Q1 2026.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern due to its liquidity position and significant near-term debt maturities.
• The company may be forced to cease or curtail operations if it cannot obtain adequate capital.
• The sale of the CMD segment is subject to negotiation of definitive agreements and customary closing conditions, with no assurance of completion.
• The Alpha Capital Anstalt lawsuit, seeking at least $2 million in damages, could materially adversely affect the company's financial condition, results of operations, and cash flows.
• The company's ability to execute its business plan, including future acquisitions, depends on its ability to secure additional capital.
• The company's manager is entitled to significant profit allocations and potential put price payments, which are senior to shareholder distributions and could reduce available cash.

Future Outlook

Management anticipates needing additional capital to execute its business plan and growth strategy, which includes acquiring additional businesses. The company expects revenue to recover in its construction operations as new contracts advance and is positioning Wolo for improved performance through e-commerce growth. However, the company does not expect to have sufficient cash to meet its obligations over the next twelve months, raising substantial doubt about its ability to continue as a going concern.

Management Comments

• Management expects revenue to recover in construction operations as newly awarded contracts advance toward completion and additional contract awards are obtained.
• Management believes the operational changes implemented position Wolo for improved performance as its e-commerce channels mature and product availability increases.
• Management has evaluated whether it is probable that its plans to address going concern issues 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.
• Management 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.

Industry Context

StockSavvy.ai notes that 1847 Holdings LLC's Q1 2026 results reflect challenges common to acquisition holding companies focused on smaller businesses, particularly concerning liquidity management and the integration/divestiture of diverse operating units. The significant revenue decline and ongoing going concern issues highlight the inherent risks in this strategy, especially when coupled with substantial debt obligations and the need for continuous capital infusion.

Comparison to Industry Standards

• The company's revenue decline in construction operations (Kyles) by 40.9% is a significant underperformance compared to the broader construction industry, which has shown resilience in certain segments.
• The drastic revenue drop in automotive supplies (Wolo) by 92.6% suggests a severe disruption or strategic pivot that has not yet yielded comparable revenue levels, unlike more established players in the automotive aftermarket.
• The company's gross margin improvement in Wolo to 55.0% is positive but needs to be viewed in the context of a drastically reduced revenue base, making direct comparison to industry benchmarks difficult without understanding the scale of operations.
• The significant increase in interest expense relative to revenues is a concern, indicating a higher cost of debt servicing than typically seen in more stable, larger companies within the manufacturing or construction sectors.

Legal Proceedings

• Alpha Capital Anstalt filed a breach of contract claim seeking at least $2 million in damages, alleging failure to list common shares on another trading market after delisting from NYSE American.
• Matthew Miller filed a securities fraud lawsuit, which was dismissed with prejudice by the court, except for a common law fraud claim which the court declined to proceed with.

Related Party Transactions

• Management fees totaling $200,000 for continuing operations and $75,000 for discontinued operations were expensed for the three months ended March 31, 2026, paid to 1847 Partners LLC (the Manager).
• Accrued management fees of $793,000 were outstanding as of March 31, 2026.
• Related party note payable of $1,109,600 was outstanding as of March 31, 2026.

Stakeholder Impact

• Shareholders face continued dilution risk from potential equity financing and a significant net loss, impacting the value of their holdings.
• Creditors and debt holders face increased risk due to the company's going concern issues and reliance on future financing or asset sales to meet obligations.
• Employees may face uncertainty regarding job security due to the company's financial condition and ongoing strategic reviews of subsidiaries.
• Suppliers may face extended payment terms or increased credit risk given the company's liquidity challenges.

Next Steps

• Negotiate and execute definitive transaction documents for the sale of CMD.
• Secure additional capital through debt and equity financing.
• Evaluate opportunities to refinance or extend the maturity of existing debt obligations.
• Implement reductions in discretionary operating expenditures.
• Explore strategic alternatives with respect to operating subsidiaries to reduce debt obligations.
• Continue rebuilding Wolo's product availability and presence across e-commerce platforms.
• Obtain new contract awards and advance existing contracts to completion in the construction operations.

Key Dates

Recommendation

The company's significant revenue decline, increasing net loss, and persistent going concern warning present substantial risks. However, the potential sale of CMD for $65 million and the increase in operating cash flow from continuing operations offer some positive indicators. A 'hold' recommendation reflects the balance between these significant risks and potential mitigating factors, pending clarity on the CMD sale and future financing.

Keywords

1847 Holdings LLC, Form 10-Q, Quarterly Report, Financial Statements, Discontinued Operations, Going Concern, Liquidity, Revenue Decline, Loss from Operations, CMD Sale, Construction Operations, Automotive Supplies, Debt Financing, Equity Financing, Legal Proceedings