10-Q: 1847 Holdings LLC Reports Q2 2026 Results Amidst Going Concern Doubts

1847 Holdings LLC's Q2 2026 Form 10-Q reveals significant revenue declines and substantial net losses, with management expressing substantial doubt about the company's ability to continue as a going concern.

Summary

• 1847 Holdings LLC reported a net loss of $6,792,880 for the three months ended June 30, 2026, compared to a net income of $22,532,893 in the prior year period.
• Revenues for the quarter decreased to $1,567,130 from $1,791,544 in the same period last year.
• The company has an accumulated deficit of $119,923,707 and a working capital deficit of $41,437,625 as of June 30, 2026.
• Management has concluded that substantial doubt exists about the company's ability to continue as a going concern within one year.
• The company is actively pursuing the sale of its CMD segment and evaluating multiple non-binding offers.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing as negative due to the company's continued substantial losses, significant working capital deficit, and the explicit statement of substantial doubt about its ability to continue as a going concern.

Positives

• Gross profit for Wolo (Automotive Supplies Operations) increased significantly due to a favorable shift in product and channel mix towards higher-margin e-commerce sales.
• Cost of revenues decreased by 21.2% for the three months ended June 30, 2026, outpacing the revenue decline and leading to a slight increase in total gross profit.
• Net cash provided by operating activities from continuing operations increased to $712,366 for the six months ended June 30, 2026, from $604,364 in the prior year period.

Negatives

• The company reported a net loss of $6,792,880 for the three months ended June 30, 2026, a significant deterioration from a net income of $22,532,893 in the prior year period.
• Total revenues decreased by 12.5% to $1,567,130 for the three months ended June 30, 2026, compared to $1,791,544 in the prior year period.
• The company has a working capital deficit of $41,437,625 as of June 30, 2026.
• Management has concluded that substantial doubt exists about the company's ability to continue as a going concern within one year.
• Significant increases in general and administrative expenses for Wolo (Automotive Supplies Operations) were noted, rising to 262.7% of revenues in Q2 2026.
• The company incurred substantial losses from continuing operations: $5,945,417 for the three months and $9,793,366 for the six months ended June 30, 2026.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern within one year after the date the condensed consolidated financial statements are issued.
• The company may be forced to cease or curtail its operations if it is unable to obtain adequate capital.
• The ongoing litigation with Alpha Capital Anstalt could result in an adverse outcome that materially adversely affects the company's financial condition, results of operations, and cash flows.
• The company's ability to service and comply with the terms of its indebtedness is a concern.
• The company's organizational structure may limit its ability to meet its dividend and distribution policy.

Future Outlook

Management plans to address liquidity concerns by securing additional capital through debt and equity financing, evaluating opportunities to refinance or extend debt maturities, implementing operating expenditure reductions, exploring strategic alternatives for operating subsidiaries, and actively pursuing the sale of CMD. The company expects revenue to recover as newly awarded contracts advance and additional awards are obtained. Wolo is positioned for improved performance as its e-commerce channels mature and product availability increases.

Management Comments

• Management expects revenue to recover 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 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.
• Management believes it has meritorious defenses to Alpha Capital's claims.

Industry Context

StockSavvy.ai notes that 1847 Holdings LLC operates as an acquisition holding company, focusing on small businesses. The current filing highlights challenges in revenue generation across its segments, particularly in construction and automotive supplies, while also underscoring significant financial distress and going concern issues, which are critical factors for holding companies managing diverse portfolios.

Comparison to Industry Standards

• The company's revenue decline in construction operations (Kyles) is attributed to the timing of contract awards, a common cyclical factor in the construction industry.
• The significant revenue drop and gross margin improvement in Wolo's automotive supplies segment reflect a strategic shift towards e-commerce, a trend seen across many retail and distribution businesses aiming for higher margins and direct customer engagement.
• The company's overall financial performance, marked by substantial losses and a going concern warning, is a significant deviation from industry standards for healthy, growing businesses, indicating a need for substantial restructuring or capital infusion.

Management Changes

Legal Proceedings

• Alpha Capital Anstalt v. 1847 HOLDINGS LLC: Claim for breach of contract related to the delisting of common shares from NYSE American. Alpha Capital seeks damages of at least $2 million.
• Matthew Miller v. 1847 HOLDINGS LLC et al.: Claims for securities fraud, scheme liability, control person liability, and common law fraud. The court dismissed the second amended complaint with prejudice, except for the common law fraud claim, and entered judgment in favor of the defense.

Related Party Transactions

• Management services agreements with 1847 Partners LLC (the Manager) for which management fees are paid.
• Accrued and unpaid management fees of $830,500 as of June 30, 2026, included in accounts payable and accrued expenses.
• Related party note payable of $1,004,044 as of June 30, 2026.

Stakeholder Impact

• Shareholders: The company's going concern issues and substantial losses negatively impact shareholder value. Future capital raises could dilute existing shareholders.
• Creditors: The company's inability to meet obligations raises concerns for creditors, especially given the significant debt load.
• Employees: The ongoing financial distress and potential for curtailed operations pose a risk to employee job security.
• Management: Management is focused on addressing liquidity and operational challenges, including pursuing asset sales and capital raises.

Next Steps

• Continue to evaluate multiple non-binding offers 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 to rebuild Wolo's product availability and establish its presence across e-commerce platforms.
• Obtain additional contract awards and advance newly awarded contracts toward completion for Kyles.

Key Dates

Recommendation

The company's financial condition, characterized by significant losses, a working capital deficit, and a stated substantial doubt about its ability to continue as a going concern, presents a high level of risk. The ongoing revenue declines and the need for substantial capital raises, coupled with existing debt obligations and legal proceedings, suggest a negative outlook for the stock.

Keywords

1847 Holdings LLC, Quarterly Report, Form 10-Q, Financial Statements, Going Concern, Discontinued Operations, CMD Inc., Wolo Mfg. Corp.