10-K: 1847 Holdings Reports Strong Revenue Growth, Profitability Amidst Going Concern Warning

1847 Holdings LLC reported a significant turnaround in net income and revenue for 2025, driven by its construction segment, despite auditors issuing a going concern opinion due to substantial liabilities and near-term debt maturities.

Summary

• 1847 Holdings LLC, an acquisition holding company, reported total revenues of $48,272,312 for the year ended December 31, 2025, a substantial increase from $15,710,330 in 2024.
• The company achieved a net income from continuing operations of $66,480,957 in 2025, a significant improvement from a net loss of $106,804,254 in 2024.
• Operating income for 2025 was $3,981,712, a positive shift from an operating loss of $11,998,244 in 2024.
• Net cash provided by operating activities from continuing operations was $3,359,054 in 2025, compared to net cash used of $14,635,636 in 2024.
• The construction segment (Kyles, ICD, CMD) accounted for 97.6% of total revenues in 2025, up from 76.1% in 2024.
• Kyles' revenue increased by 24.0% to $6,593,218 in 2025, with gross margin improving to 43.8%.
• CMD, acquired on December 16, 2024, contributed $40,467,946 in revenues for 2025, with a gross margin of 51.7%.
• ICD's revenue decreased by 99.4% to $33,971 in 2025 due to strategic repositioning and relocation of operations.
• Wolo's (automotive supplies) revenue decreased by 68.6% to $1,177,177 in 2025, and its gross margin fell to 6.0%, attributed to working capital constraints and operational repositioning.
• The company's auditors issued a going concern opinion due to an accumulated deficit of $109,599,852, a working capital deficit of $43,065,927, and significant near-term debt maturities as of December 31, 2025.
• Management identified material weaknesses in internal control over financial reporting, including lack of written documentation, insufficient personnel for segregation of duties, and ineffective IT general controls.
• The company's common shares were delisted from NYSE American on April 3, 2025, and commenced quotation on the OTCID Market on October 15, 2025.
• Significant potential dilution exists from 1,266,178,648 common shares issuable upon warrant exercise and 561,139,204 common shares upon conversion of secured convertible promissory notes.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a mixed filing. The significant financial turnaround in revenue and net income is a strong positive, but the persistent going concern warning, material weaknesses in internal controls, and delisting from NYSE American temper the overall sentiment. The company shows potential for growth but faces substantial financial and operational hurdles.

Positives

• Total revenues increased significantly to $48,272,312 in 2025 from $15,710,330 in 2024.
• Net income from continuing operations showed a substantial turnaround, reaching $66,480,957 in 2025 compared to a net loss of $106,804,254 in 2024.
• Operating income improved to $3,981,712 in 2025 from an operating loss of $11,998,244 in 2024.
• Net cash provided by operating activities from continuing operations was positive at $3,359,054 in 2025, a significant improvement from negative cash flow in 2024.
• The construction segment, particularly CMD, demonstrated strong performance, with CMD contributing $40,467,946 in revenues in 2025 and a gross margin of 51.7%.
• Kyles' revenue increased by 24.0% to $6,593,218 in 2025, with an improved gross margin of 43.8%.
• Adjusted EBITDA improved significantly to $9,829,540 in 2025 from $(3,309,879) in 2024.
• The company successfully acquired CMD Inc. and CMD Finish Carpentry LLC on December 16, 2024, expanding its construction business into the Las Vegas metro area, southern Utah, and northern Arizona.
• Warrant liabilities decreased significantly to $8,424,500 in 2025 from $85,779,788 in 2024, primarily due to conversions and extinguishments.

Negatives

• Auditors issued a going concern opinion, indicating substantial doubt about the company's ability to continue operations for the next twelve months due to current liabilities and near-term debt maturities.
• The company had a working capital deficit of $43,065,927 in 2025, improving from a deficit of $111,927,759 in 2024, and an accumulated deficit of $109,599,852 as of December 31, 2025.
• ICD's revenue decreased by 99.4% to $33,971 in 2025 due to strategic repositioning, including the abandonment of its Reno warehouse facility and workforce reductions.
• Wolo's revenue decreased by 68.6% to $1,177,177 in 2025, and its gross margin declined to 6.0%, primarily due to working capital constraints on inventory and operational repositioning.
• The company identified material weaknesses in internal control over financial reporting, including a lack of written documentation, insufficient personnel for segregation of duties, and ineffective IT general controls.
• Common shares were delisted from NYSE American on April 3, 2025, and now trade on the less liquid OTCID Market.
• Significant potential future dilution from 1,266,178,648 common shares issuable upon warrant exercise and 561,139,204 common shares upon conversion of secured convertible promissory notes.
• Two active legal proceedings: a breach of contract claim from Alpha Capital Anstalt seeking at least $2 million, and a securities fraud/common law fraud claim from Matthew Miller.
• High interest expenses of $7,036,424 in 2025, and significant amortization of debt discounts ($1,538,773) and losses on extinguishment of debt ($3,126,338).
• The company's ability to meet its obligations is subject to market conditions and reliance on third parties for capital, with no assurance of raising capital on acceptable terms.
• The operating agreement includes a waiver of jury trial for shareholders, which could limit legal recourse.

Risks

• Substantial doubt about the company's ability to continue as a going concern due to current liabilities and significant near-term debt maturities.
• Inability to effectively integrate acquired businesses, leading to resource drains, management distraction, and disruption of ongoing business.
• Strong competition for small businesses, potentially leading to sub-optimal acquisition prices or missed opportunities.
• Inability to successfully fund future acquisitions due to unavailability of debt or equity financing on acceptable terms.
• Management and acquisition strategies can change without shareholder consent, potentially leading to riskier business activities.
• Inability to generate sufficient cash flow from businesses to make distributions to shareholders, as management fees, profit allocation, and put price are senior obligations.
• Existing and future loan agreements may contain restrictive covenants, and events of default could accelerate debt maturity.
• Potential conflicts of interest in business transactions involving executive officers, directors, or the manager and its affiliates.
• Risk of being deemed an investment company under the Investment Company Act if the company ceases to control its businesses or engages in certain investment-related activities.
• Failure to develop or maintain an effective system of internal controls, potentially leading to inaccurate financial reporting and fraud.
• Reliance on a few long-term contractor customers, with the loss of any major customer having a material adverse effect on construction operations.
• Dependence of the construction business on U.S. home improvement, repair, remodel, and new home construction activity levels, which are sensitive to economic conditions, interest rates, and financing availability.
• The construction business is subject to seasonal and other periodic fluctuations, particularly extreme winter weather and the holiday season.
• Difficulties in recruiting, hiring, training, and retaining qualified sales and installation personnel in the construction business.
• Increases in labor costs, potential union organizing activity, and work stoppages in the construction business.
• Adverse impact from catastrophic loss of a key manufacturing facility in the construction business due to accident, labor issues, weather, or natural disaster.
• Exposure to product liability, workmanship warranty, negligence, construction defect, and breach of contract claims in the construction business, with potential for significant costs and reputational harm.
• Highly fragmented and very competitive construction industry with larger, more efficient competitors and national retail chains.
• Reliance on a limited number of third parties to supply key finished goods and raw materials in the construction business, with risks of supply interruptions, increased costs, and breach of contracts.
• Fluctuations in prices of finished goods and raw materials impacting profitability and demand in the construction business.
• Changes to U.S. trade policy, tariffs, and import/export regulations (e.g., on wood from Canada, products from South Vietnam) could increase costs and reduce demand in the construction business.
• Significant environmental compliance costs and liabilities from federal, state, and local regulations applicable to construction facilities.
• Failure to fully realize anticipated benefits of expanding the construction business into multi-family, tract home, and commercial properties channels.
• Failure to offer a broad selection of products at competitive prices or maintain sufficient inventory to meet customer demands in the automotive supplies business.
• High dependence on five third-party vendors (80.1% of purchases in 2025) in China and Taiwan for the automotive supplies business, with risks of supply interruptions, increased costs, and credit limitations.
• Exposure to complex regulatory regimes, logistical challenges, political/economic instability, currency fluctuations, and intellectual property protection issues in international operations for automotive supplies.
• Impact of geopolitical conflicts (Russia-Ukraine, Israel-Hamas, China-Taiwan) on global economic conditions, supply chains, inflation, and transportation costs for the automotive supplies business.
• Damage or interruption to fulfillment operations for automotive supplies from human error, pandemics, natural disasters, or system failures.
• Intense and fragmented aftermarket auto parts industry with competitors having greater resources and aggressive pricing tactics.
• Dependence on highly skilled executive, technical, managerial, merchandising, and marketing personnel in the automotive supplies business.
• Risk of product catalog database being stolen, misappropriated, or damaged, or a competitor creating a similar catalog, for the automotive supplies business.
• Adverse effect of declining economies on demand for aftermarket auto parts, as consumers defer maintenance and nonessential purchases.
• Decreased vehicle miles driven, accident rates, or changes in insurance company policies affecting demand for automotive parts.
• Increased sales tax collection requirements in additional states due to the Wayfair decision, potentially reducing competitive advantage for automotive supplies.
• Higher wage and benefit costs impacting expenses and profitability in the automotive supplies business.
• Exposure to product liability claims due to defective or malfunctioning automotive parts, potentially exceeding insurance coverage.
• Vulnerability to cyber-attacks, data breaches, and system interruptions in IT infrastructure, leading to liability and reputational damage.
• Failure to comply with evolving privacy laws and regulations, and adequately protect customer data.
• Intellectual property infringement claims from OEMs restricting or eliminating aftermarket automotive product sales.
• Termination of the management services agreement will not affect the manager's rights to receive profit allocations, and removal of the manager may cause the company to incur significant fees.
• The manager and members of the management team may engage in activities that compete with the company or its businesses.
• The CEO controls the manager, which may make it difficult for the board of directors to completely sever ties with the CEO.
• If the management services agreement is terminated, the manager, as holder of the allocation shares, has the right to cause the company to purchase its allocation shares, which may have a material adverse effect on financial condition.
• If the management services agreement is terminated, the company will need to change its name and cease its use of the term '1847', incurring funds to create and market a new name.
• The company has agreed to indemnify its manager under the management services agreement, which may result in an indemnity payment that could have a material adverse impact.
• The manager can resign on 120 days' notice, and the company may not be able to find a suitable replacement within that time, resulting in a disruption in operations.
• The amount recorded for the allocation shares may be subject to substantial period-to-period changes, significantly adversely impacting results of operations.
• The company cannot determine the amount of the management fee that will be paid to its manager over time with certainty, which may be a significant cash obligation and reduce cash available for operations and distributions.
• The management fee structure may induce the manager to increase the amount of the company's assets rather than the performance of its businesses.
• The amount of profit allocation to be paid to the manager could be substantial, and cannot be determined with certainty, potentially reducing cash available for shareholders.
• The obligations to pay the management fee and profit allocation, including the put price, may cause the company to liquidate assets or incur debt.
• Shareholders will be subject to taxation on their share of the company's taxable income, whether or not they receive cash distributions.
• All of the company's income could be subject to an entity-level tax in the United States if it fails to meet the qualifying income exception for publicly traded partnerships.
• The present U.S. federal income tax treatment of an investment in the company's shares may be modified by administrative, legislative, or judicial interpretation at any time.
• Complying with certain tax-related requirements may cause the company to forego otherwise attractive business or investment opportunities.
• A portion of the income arising from an investment in the company's shares may be treated as unrelated business taxable income and taxable to certain tax-exempt holders.
• A portion of the income arising from an investment in the company's shares may be treated as income that is effectively connected with the conduct of a U.S. trade or business, which income would be taxable to non-U.S. taxpayers.
• The company's common shares are quoted on the OTCID Market, which may have an unfavorable impact on share price and liquidity.
• The market price, trading volume, and marketability of the company's common shares may be significantly affected by numerous factors beyond its control.
• An active, liquid trading market for the company's common shares may not be sustained, making it difficult to sell shares.
• Future sales of the company's securities may affect the market price of common shares and result in material dilution.
• Rule 144 sales in the future may have a depressive effect on the company's share price.
• Preferred shares are senior to common shares as to distributions and in liquidation, which could limit the company's ability to make distributions to common shareholders.
• The company may issue additional debt and equity securities, which are senior to common shares as to distributions and in liquidation, potentially adversely affecting the market price of common shares.
• The company's potential future earnings and cash distributions to shareholders may affect the market price of common shares.
• If common shares were to be considered penny stock, U.S. broker-dealers may be discouraged from effecting transactions.
• Holders of common shares may not be entitled to a jury trial with respect to claims arising under the operating agreement, which could result in less favorable outcomes to plaintiffs.
• Certain provisions of the management services agreement and the operating agreement may make it more difficult for third parties to acquire control of the company.

Future Outlook

Management plans to address the going concern by securing additional capital through debt and equity financing, evaluating opportunities to refinance or extend existing debt maturities, implementing reductions in discretionary operating expenditures, and exploring strategic alternatives for operating subsidiaries to reduce debt obligations. The company expects to improve its businesses over the long term through organic growth, add-on acquisitions, and operational improvements. The construction business aims for geographic expansion into surrounding areas and increased focus on commercial projects and tract homes, alongside capacity and infrastructure expansion. The automotive supplies business (Wolo) intends to increase sales through new products and online marketing, expand into traditional and international markets, and target municipal and public safety sectors.

Management Comments

• "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 these changes [in Wolo's operations] may position Wolo for improved profitability going forward."
• "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 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, and exploring strategic alternatives with respect to its operating subsidiaries to reduce debt obligations."
• "Management is continually informed about the latest developments in cybersecurity, including potential threats and innovative risk management techniques."
• "Management has been actively engaged in developing and implementing remediation plans to address the material weaknesses described above."

Industry Context

StockSavvy.ai notes that 1847 Holdings operates in highly fragmented small business acquisition markets, which typically offer opportunities for attractive valuations due to fewer potential acquirers and less available third-party financing. The company's focus on niche geographical markets and capital-light businesses with competitive advantages aligns with strategies often employed by successful private equity firms in this segment. The significant revenue contribution from the construction sector (97.6% in 2025) indicates a strong reliance on the U.S. housing and commercial development markets, which are subject to economic cycles and interest rate sensitivity. The automotive aftermarket, where Wolo operates, is also highly competitive and fragmented, with demand influenced by general economic conditions and vehicle usage trends. The company's shift towards e-commerce and 3PL for Wolo reflects broader industry trends in optimizing supply chains and sales channels.

Comparison to Industry Standards

• The filing does not provide specific comparable companies or projects with detailed results for direct comparison.
• The company mentions competing with 'specialty builders' and 'national retail chains like Home Depot and Lowes' in construction, but does not offer specific metrics for these competitors to allow for a detailed assessment against global benchmarks.
• In the automotive supplies segment, competitors like FIAMM, Grote, Peterson Manufacturing Company, ECCO, Vixen Horns, HornBlasters, and Kleinn are mentioned, but no comparative performance data is provided.

Management Changes

Corporate Governance

Legal Proceedings

• **Alpha Capital Anstalt v. 1847 Holdings LLC (Index No. 655245/2025):** Filed September 4, 2025, in New York Supreme Court. Alpha Capital alleges breach of contract (securities purchase agreement, implied covenant of good faith and fair dealing, Section 4.10) for failure to list common shares on another trading market after delisting from NYSE American. Seeks at least $2 million in damages, attorneys' fees, costs, and interest, or an order to list shares. The company denies allegations and filed a counterclaim for attorneys' fees. Preliminary Conference held January 22, 2026, discovery commenced February 27, 2026. An adverse outcome could materially adversely affect financial condition, results of operations, and cash flows.
• **Matthew Miller v. 1847 Holdings LLC et al. (Case No. 1:25-cv-08606-LAK):** Filed October 17, 2025, in U.S. District Court for the Southern District of New York. Plaintiff alleges securities fraud, scheme liability, control person liability, and common law fraud against the company, its manager, CEO Ellery W. Roberts, and others. Amended complaints filed, with a motion to dismiss the second amended complaint filed February 17, 2026. The company intends to vigorously defend.

Related Party Transactions

• **Management Services Agreement:** With 1847 Partners LLC (controlled by CEO Ellery W. Roberts), requiring quarterly management fees (0.5% of adjusted net assets, offset by fees from subsidiaries). Total management fees expensed: $1,100,000 (2025).
• **Offsetting Management Services Agreements:** With subsidiaries (1847 Cabinet, 1847 Wolo, 1847 CMD) for management services, offsetting the parent management fee.
• **Transaction Fees:** Manager receives a transaction fee (2% of aggregate purchase price, decreasing for larger deals) for acquisitions/dispositions, which does not offset the management fee.
• **Manager's Profit Allocation:** Manager owns 100% of allocation shares, entitling it to a 20% profit allocation upon trigger events (sale of subsidiary or 5-year holding event), after an 8% hurdle rate.
• **Supplemental Put Provision:** Manager has the right to cause the company to purchase its allocation shares upon termination of the management services agreement for a 'put price' based on hypothetical profit allocation.
• **Intellectual Property License:** Manager owns '1847' intellectual property and grants the company a non-exclusive, royalty-free license. Termination of management agreement requires the company to cease using '1847' within 180 days.
• **Kyles Lease Agreement:** Kyles leases industrial space from Stephen Mallatt, Jr. and Rita Mallatt (officers of Kyles). Lease expense: $90,923 (2025).
• **8% Promissory Note:** 1847 Cabinet issued an 8% promissory note for $1,567,621 to Stephen Mallatt, Jr. and Rita Mallatt on June 27, 2025, replacing a previous vesting promissory note.

Stakeholder Impact

• **Shareholders:** Potential for significant dilution from warrant and convertible note conversions. Delisting from NYSE American to OTCID Market reduces liquidity. Going concern opinion raises significant risk of investment loss. Jury trial waiver limits legal recourse. Preferred shareholders have seniority over common shareholders for distributions and liquidation.
• **Employees:** Workforce reductions at ICD and Wolo due to strategic repositioning. Management changes (COO, VP of Operations). Equity incentive plan aims to incentivize employees.
• **Customers:** Construction business aims to expand customer base and geographic reach. Automotive business refocusing on e-commerce. Potential impact from supply chain disruptions or increased costs passed on to customers.
• **Suppliers:** Dependence on a limited number of suppliers, particularly in automotive, poses risks if relationships deteriorate or supply is interrupted.
• **Creditors:** Significant near-term debt maturities and current liabilities raise concerns about the company's ability to meet obligations, as highlighted by the going concern opinion. Debt covenants and potential for default are risks.

Next Steps

• 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 developing and implementing remediation plans for identified material weaknesses in internal controls.
• Increase personnel resources and technical accounting expertise within the accounting function.
• Engage internal control consultants to assist in performing financial reporting risk assessment and designing internal controls.
• Prepare written documentation of internal control policies and procedures.
• Pursue geographic expansion for the construction business into surrounding areas (Twin Falls, McCall, Sun Valley in Idaho, Northern and Southern Nevada, Utah, and Arizona).
• Expand the construction business into commercial projects and tract homes.
• Expand capacity and infrastructure for the construction business, including warehouse space in Nevada.
• Increase sales for the automotive supplies business (Wolo) through new products and online marketing.
• Expand Wolo into traditional market and original equipment replacement horns.
• Grow Wolo's presence in international markets (Mexico, Canada, Netherlands).
• Focus Wolo's efforts on the municipal and public safety markets.
• Vigorously defend against the Alpha Capital Anstalt breach of contract lawsuit.
• Vigorously defend against the Matthew Miller securities fraud lawsuit.

Key Dates

Recommendation

StockSavvy.ai recommends a "sell" for 1847 Holdings LLC. While the company reported a remarkable turnaround in net income and revenue for 2025, moving from a substantial loss to a significant profit, this positive financial performance is overshadowed by several critical issues. The auditor's "going concern" opinion raises fundamental questions about the company's long-term viability, citing insufficient cash and significant near-term debt maturities. Furthermore, identified material weaknesses in internal controls over financial reporting indicate a lack of robust financial oversight, which can lead to future misstatements or fraud. The delisting from NYSE American to the less liquid OTCID Market significantly reduces accessibility and attractiveness for institutional investors. Lastly, the massive potential dilution from outstanding warrants and convertible notes poses a substantial risk to existing shareholders' value. These combined factors suggest a highly speculative investment with considerable downside risk, despite the recent operational improvements in the construction segment.

Keywords

Acquisition Holding Company, Small Businesses, Financial Reporting, SEC Filings, Corporate Governance, Risk Management, Strategic Business Analysis, Construction, Automotive Supplies, Custom Cabinetry, Millwork, Doors, Horns, Warning Lights, Aftermarket, Going Concern, Debt Financing, Equity Financing, Dilution, Internal Controls, Legal Proceedings, OTCID Market, Preferred Shares, Warrants, Management Fees, Profit Allocation