[PART I FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's analysis of financial condition and results [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including core statements and detailed notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the Company's condensed consolidated balance sheets, detailing assets, liabilities, and equity at period-end Condensed Consolidated Balance Sheets (in thousands) | ASSETS/LIABILITIES & EQUITY | March 31, 2022 | December 31, 2021 | | :-------------------------- | :------------- | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | $25,821 | $25,724 | | Restricted cash | $2,583 | $8,067 | | Receivables, net | $26,288 | $24,594 | | Merchandise inventory, net | $52,963 | $44,754 | | Total Current Assets | $134,010 | $121,318 | | Goodwill | $191,614 | $191,614 | | Intangible assets, net | $41,658 | $44,212 | | TOTAL ASSETS | $386,581 | $375,984 | | **LIABILITIES** | | | | Accounts payable & accrued expenses | $83,959 | $72,592 | | Customer deposits | $13,080 | $20,702 | | Total Current Liabilities | $109,111 | $105,341 | | TOTAL LIABILITIES | $175,037 | $170,381 | | **STOCKHOLDERS' EQUITY** | | | | TOTAL STOCKHOLDERS' EQUITY | $211,544 | $205,603 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $386,581 | $375,984 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section presents the Company's condensed consolidated statements of operations, detailing revenues, expenses, and net income or loss Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Product sales, net | $152,752 | $13,697 | | Cost of goods sold | $116,883 | $11,069 | | Gross profit | $35,869 | $2,628 | | Total Operating Expenses | $25,802 | $5,909 | | INCOME (LOSS) FROM OPERATIONS | $10,067 | $(3,281) | | Total Other Income (Expenses) | $(762) | $(212) | | NET INCOME (LOSS) BEFORE INCOME TAXES | $9,305 | $(3,493) | | INCOME TAX EXPENSE | $(3,383) | $- | | NET INCOME (LOSS) | $5,922 | $(3,493) | | NET INCOME (LOSS) PER COMMON SHARE – BASIC AND DILUTED | $0.06 | $(0.57) | | WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC AND DILUTED | 106,387,332 | 6,111,200 | [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Deficit)) This section presents changes in stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit Condensed Consolidated Statements of Stockholders' Equity (Deficit) (in thousands) | Item | Balance at Dec 31, 2021 | Stock-based compensation | Net income (loss) | Balance at Mar 31, 2022 | | :-------------------------- | :---------------------- | :----------------------- | :---------------- | :---------------------- | | Common Stock Amount | $11 | $- | $- | $11 | | Additional Paid-in Capital | $224,648 | $19 | $- | $224,667 | | Accumulated Deficit | $(19,056) | $- | $5,922 | $(13,134) | | Stockholders' Equity | $205,603 | $19 | $5,922 | $211,544 | | Item | Balance at Dec 31, 2020 | Issuance of warrants with debt | Stock-based compensation | Net loss | Balance at Mar 31, 2021 | | :-------------------------- | :---------------------- | :----------------------------- | :----------------------- | :---------------- | :---------------------- | | Common Stock Amount | $1 | $- | $- | $- | $1 | | Additional Paid-in Capital | $13,409 | $1,340 | $125 | $- | $14,874 | | Accumulated Deficit | $(26,726) | $- | $- | $(3,493) | $(30,219) | | Stockholders' Equity (Deficit) | $(13,316) | $1,340 | $125 | $(3,493) | $(15,344) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the Company's condensed consolidated statements of cash flows, categorizing cash movements by operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(3,747) | $(2,808) | | Net cash used in investing activities | $(6) | $(126) | | Net cash (used in) provided by financing activities | $(1,634) | $4,426 | | NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | $(5,387) | $1,492 | | CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD | $33,791 | $9,912 | | CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD | $28,404 | $11,404 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanatory notes supporting the condensed consolidated financial statements, covering various accounting policies and disclosures [NOTE 1—BASIS OF PRESENTATION](index=11&type=section&id=NOTE%201%E2%80%94BASIS%20OF%20PRESENTATION) The financial statements are unaudited, prepared in accordance with GAAP and SEC rules for interim reporting, and include normal recurring adjustments. They should be read with the 2021 Annual Report on Form 10-K, and interim results are not indicative of full-year performance - Unaudited condensed consolidated financial statements prepared in accordance with **GAAP** and **SEC rules** for interim financial reporting[26](index=26&type=chunk) - Interim results for the three months ended **March 31, 2022**, are not necessarily indicative of the results for the full year ending **December 31, 2022**, or future periods[26](index=26&type=chunk) [NOTE 2—RECENT ACCOUNTING PRONOUNCEMENTS](index=11&type=section&id=NOTE%202%E2%80%94RECENT%20ACCOUNTING%20PRONOUNCEMENTS) The Company has elected an extension for ASU 2016-13 (Credit Losses) until fiscal years beginning after December 15, 2022, and does not expect a material impact. Similarly, ASU 2021-08 (Business Combinations) is effective after December 15, 2022, and is not expected to have a material impact - The Company has elected an extension for **ASU 2016-13 (Credit Losses)** and the effective date will be for fiscal years beginning after **December 15, 2022**. No material impact is expected[28](index=28&type=chunk) - **ASU 2021-08 (Business Combinations)** is effective for public entities for fiscal years beginning after **December 15, 2022**. No material impact is expected[29](index=29&type=chunk) [NOTE 3—LIQUIDITY AND GOING CONCERN ASSESSMENT](index=11&type=section&id=NOTE%203%E2%80%94LIQUIDITY%20AND%20GOING%20CONCERN%20ASSESSMENT) Management believes the Company has sufficient funds from operations to fund its activities and service debt for one year from the filing date, despite the ongoing impact of COVID-19. The financial statements are prepared on a going concern basis, anticipating improved operations Liquidity and Financial Position (in millions) | Metric | March 31, 2022 | | :---------------------- | :------------- | | Cash and cash equivalents | $25.8 | | Restricted cash | $2.6 | | Operating income | $10.1 | | Cash flows used in operations | $(3.7) | | Working capital | $24.9 | - Management believes **sufficient funds** will be generated from operations to fund activities and service debt obligations for **one year** from the filing date[33](index=33&type=chunk) - The Company's financial statements are prepared on a **going concern basis**, with management forecasting improved operations[34](index=34&type=chunk) [NOTE 4—REVENUES](index=12&type=section&id=NOTE%204%E2%80%94REVENUES) The Company generates revenue from selling household appliances, furniture, and other home goods. Revenue is recognized upon transfer of goods, with each customer order typically representing a single performance obligation. Appliance sales significantly increased due to the Appliances Connection Acquisition - Revenue is recognized upon the **transfer of goods or services** to customers, with each order generally containing **one performance obligation**[36](index=36&type=chunk) Disaggregated Revenue by Product Type (in thousands) | Product Type | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------- | :-------------------------------- | :-------------------------------- | | Appliance sales | $140,975 | $10,273 | | Furniture sales | $4,155 | $2,328 | | Other sales | $7,622 | $1,096 | | Total | $152,752 | $13,697 | [NOTE 5—SUPPLEMENTAL FINANCIAL STATEMENT DISCLOSURES](index=13&type=section&id=NOTE%205%E2%80%94SUPPLEMENTAL%20FINANCIAL%20STATEMENT%20DISCLOSURES) This note provides detailed breakdowns of receivables, merchandise inventory, property and equipment, and intangible assets, as well as accounts payable and accrued expenses. Intangible assets, primarily customer relationships and tradename, are amortized over 5 years Receivables, net (in thousands) | Receivables | March 31, 2022 | December 31, 2021 | | :---------------------- | :------------- | :---------------- | | Trade accounts receivable | $15,295 | $10,694 | | Vendor rebates receivable | $9,125 | $11,633 | | Other receivables | $2,261 | $2,660 | | Total receivables, net | $26,288 | $24,594 | Merchandise Inventory, net (in thousands) | Inventory Type | March 31, 2022 | December 31, 2021 | | :---------------------- | :------------- | :---------------- | | Appliances | $50,856 | $41,922 | | Furniture | $986 | $1,166 | | Other | $1,964 | $2,439 | | Total merchandise inventory, net | $52,963 | $44,754 | Intangible Assets, net (in thousands) | Intangible Asset | March 31, 2022 | December 31, 2021 | | :---------------------- | :------------- | :---------------- | | Customer relationships | $24,148 | $24,148 | | Marketing related - tradename | $26,935 | $26,935 | | Total intangible assets | $51,083 | $51,083 | | Accumulated amortization | $(9,425) | $(6,871) | | Intangible assets, net | $41,658 | $44,212 | - Intangible assets are amortized on a **straight-line basis** over a weighted average estimated useful life of **5.0 years**[41](index=41&type=chunk) Accounts Payable and Accrued Expenses (in thousands) | Accounts Payable & Accrued Expenses | March 31, 2022 | December 31, 2021 | | :---------------------------------- | :------------- | :---------------- | | Trade accounts payable | $51,660 | $41,166 | | Accrued sales tax | $24,812 | $23,628 | | Accrued payroll liabilities | $1,707 | $984 | | Accrued income taxes | $1,933 | $334 | | Total accounts payable and accrued expenses | $83,959 | $72,592 | [NOTE 6—LEASES](index=15&type=section&id=NOTE%206%E2%80%94LEASES) The Company entered into a new operating lease for office space in Brooklyn, NY, with an initial ROU asset and liability of $1.1 million. Operating lease right-of-use assets totaled $15.3 million as of March 31, 2022, with total operating lease liabilities of $16.6 million. Finance lease liabilities were $0.4 million - Entered into a new operating lease for office space in **Brooklyn, NY**, commencing **March 1, 2022**, with an initial **ROU asset and liability of $1.1 million**[44](index=44&type=chunk) Operating Lease Information (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :------------------------------ | :------------- | :---------------- | | Operating lease right-of-use assets | $15,262 | $14,937 | | Total operating lease liabilities | $16,631 | $16,367 | | Weighted-average remaining lease term (months) | 73 | 77 | | Weighted average discount rate | 3.90% | 4.00% | Operating Lease Expense (in thousands) | Period | Operating Lease Expense | | :------------------------------ | :---------------------- | | Three months ended March 31, 2022 | $1.0 million | | Three months ended December 31, 2021 | $0.2 million | - Outstanding balance of finance leases was **$0.4 million** as of **March 31, 2022**[49](index=49&type=chunk) [NOTE 7—RELATED PARTIES](index=16&type=section&id=NOTE%207%E2%80%94RELATED%20PARTIES) The Company has ongoing related party transactions, including a management services agreement with 1847 Partners LLC, purchases from DMI (an appliance purchasing cooperative where the CEO is a director), and lease agreements with entities owned by the CEO and COO - Expensed management fees of **$0.1 million** for the three months ended **March 31, 2022 and 2021**, to **1847 Partners LLC**, a company owned by the Company's chairman[53](index=53&type=chunk) - Purchased **$73.4 million** of finished goods from **DMI**, an appliance purchasing cooperative in which the Company owns a **5% interest** and its CEO is on the board, during the three months ended **March 31, 2022**[55](index=55&type=chunk) - Total rent expense under related party leases was **$0.5 million** for the three months ended **March 31, 2022**, with entities owned by the CEO and COO[56](index=56&type=chunk) [NOTE 8—STOCKHOLDERS' EQUITY](index=17&type=section&id=NOTE%208%E2%80%94STOCKHOLDERS'%20EQUITY) The Company's authorized common stock increased to 250,000,000 shares. Stock options decreased due to forfeitures from employee terminations, while warrants outstanding remained unchanged - Authorized common stock increased from **200,000,000 to 250,000,000 shares** as of **December 21, 2021**[57](index=57&type=chunk) Stock Options Activity (Three Months Ended March 31, 2022) | Item | Options | Weighted-Average Exercise Price | | :-------------------------- | :-------- | :------------------------------ | | Outstanding at Dec 31, 2021 | 312,960 | $6.17 | | Forfeited | (132,960) | $9.00 | | Outstanding at Mar 31, 2022 | 180,000 | $4.08 | | Exercisable at Mar 31, 2022 | 30,000 | $9.00 | - Stock-based compensation expense was **$0.02 million** for the three months ended **March 31, 2022**, down from **$0.1 million** in the prior year[61](index=61&type=chunk) Warrants Activity (Three Months Ended March 31, 2022) | Item | Warrants | Weighted-Average Exercise Price | | :-------------------------- | :--------- | :------------------------------ | | Outstanding at Dec 31, 2021 | 92,514,423 | $2.30 | | Outstanding at Mar 31, 2022 | 92,514,423 | $2.30 | | Exercisable at Mar 31, 2022 | 92,514,423 | $2.30 | [NOTE 9—BUSINESS COMBINATIONS](index=18&type=section&id=NOTE%209%E2%80%94BUSINESS%20COMBINATIONS) The Company completed the Appliances Connection Acquisition in June 2021 for $224.7 million and the AC Gallery Acquisition in July 2021 for $1.4 million. Pro forma results show significant increases in net sales and net income for the three months ended March 31, 2022, compared to 2021, reflecting the impact of these acquisitions - **Appliances Connection Acquisition** completed on **June 2, 2021**, for an aggregate purchase price of **$224.7 million**[63](index=63&type=chunk)[64](index=64&type=chunk) - **AC Gallery Acquisition** completed on **July 29, 2021**, for a purchase price of **$1.4 million**[68](index=68&type=chunk)[69](index=69&type=chunk) Unaudited Pro Forma Results (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :---------------------- | :-------------------------------- | :-------------------------------- | | Net sales | $152,752 | $123,711 | | Net income | $5,922 | $10,899 | | Basic and Diluted EPS | $0.06 | $1.78 | [NOTE 10—NOTES PAYABLE](index=19&type=section&id=NOTE%2010%E2%80%94NOTES%20PAYABLE) The Company had a $60.0 million M&T Term Loan with a carrying value of $53.9 million as of March 31, 2022, which was subsequently paid in full on May 9, 2022, as part of a refinancing with a new credit agreement - As of **March 31, 2022**, the carrying value of the **M&T Term Loan** was **$53.9 million**, with **$7.5 million** classified as a current liability[73](index=73&type=chunk) - The **M&T Term Loan** was repaid in quarterly installments of **$1.5 million**, with the remaining unpaid principal due on **June 2, 2026**[76](index=76&type=chunk) - The **M&T Loan** was paid in full on **May 9, 2022**, as disclosed in subsequent events[80](index=80&type=chunk) [NOTE 11—EARNINGS (LOSS) PER SHARE](index=21&type=section&id=NOTE%2011%E2%80%94EARNINGS%20(LOSS)%20PER%20SHARE) Basic and diluted earnings per share for the three months ended March 31, 2022, was $0.06, a significant improvement from a loss of $0.57 in the prior year, driven by net income and a higher weighted average common shares outstanding Basic and Diluted Earnings (Loss) Per Share (in thousands, except per share amounts) | Metric | March 31, 2022 | March 31, 2021 | | :-------------------------------------- | :------------- | :------------- | | Net income (loss) | $5,922 | $(3,493) | | Weighted average common shares outstanding | 106,387,332 | 6,111,200 | | Basic and diluted earnings (loss) per share | $0.06 | $(0.57) | - **92,694,423 potential common share equivalents** from stock options and warrants were excluded from diluted EPS calculations for **March 31, 2022**, as their effect was anti-dilutive[82](index=82&type=chunk) [NOTE 12—COMMITMENTS AND CONTINGENCIES](index=21&type=section&id=NOTE%2012%E2%80%94COMMITMENTS%20AND%20CONTINGENCIES) The Company is involved in legal proceedings concerning a stockholder-approved amendment to increase authorized common stock. Three beneficial owners questioned the vote tabulation, leading the Company to seek validation from the Delaware Court of Chancery, which has been consolidated with a class action lawsuit alleging improper tabulation and breach of fiduciary duties - Stockholders approved an amendment to increase authorized common stock by **50,000,000 shares** on **December 21, 2021**[84](index=84&type=chunk) - Three beneficial owners raised concerns about the vote tabulation for the **Share Increase Proposal**, leading the Company to file a **Section 205 Petition** with the **Delaware Court of Chancery** to validate the amendment[85](index=85&type=chunk) - A **class action lawsuit (Scot T. Boden v. 1847 Goedeker Inc., et al.)** was filed, alleging **improper vote tabulation** and **breach of fiduciary duties**, which has been consolidated with the 205 Petition[87](index=87&type=chunk) [NOTE 13—SUBSEQUENT EVENTS](index=22&type=section&id=NOTE%2013%E2%80%94SUBSEQUENT%20EVENTS) On May 9, 2022, the Company entered into a new $140 million senior secured credit facility with Bank of America, N.A., consisting of a $100 million term loan and a $40 million revolving credit facility. The proceeds from the new term loan were used to fully prepay and terminate the existing M&T Credit Agreement - On **May 9, 2022**, the Company entered into a new Credit Agreement for **$140 million senior secured credit facilities**, including a **$100 million New Term Loan** and a **$40 million New Revolving Loan**[88](index=88&type=chunk) - The proceeds from the **New Term Loan** were used to prepay and terminate the existing **M&T Credit Agreement** in full on **May 9, 2022**[89](index=89&type=chunk) [NOTE 14—SUPPLIER CONCENTRATION](index=22&type=section&id=NOTE%2014%E2%80%94SUPPLIER%20CONCENTRATION) For the three months ended March 31, 2022, the Company purchased 77% of its finished goods from DMI, a significant supplier. However, the Company believes alternative suppliers are available if needed - The Company purchased **77% of finished goods** from **DMI** for the three months ended **March 31, 2022**[91](index=91&type=chunk) - The Company believes numerous other suppliers could be substituted if **DMI** becomes unavailable or non-competitive[91](index=91&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Company's financial condition, operating results, liquidity, and cash flows, highlighting acquisition impacts and challenges [Overview](index=23&type=section&id=Overview) The Company operates as a content-driven, technology-enabled shopping destination for appliances, furniture, and home goods, offering a wide range of national, global, and luxury brands through warehouse fulfillment centers and showrooms - Operates a **content-driven and technology-enabled shopping destination** for appliances, furniture, and home goods[95](index=95&type=chunk) - Offers **national, global, and luxury brands**, including Bosch, Miele, Thermador, and Viking, across various product categories[95](index=95&type=chunk) [Recent Developments](index=23&type=section&id=Recent%20Developments) Recent developments include securing a new $140 million credit facility, transitioning corporate headquarters to Brooklyn, NY, and approving a $25.0 million share repurchase program, though no shares have been repurchased as of March 31, 2022 - Entered into a new **$140 million senior secured credit facility** on **May 9, 2022**, comprising a **$100 million term loan** and a **$40 million revolving credit facility**[96](index=96&type=chunk) - Transitioned corporate headquarters to **Brooklyn, New York**, and expanded office space with a new lease agreement[98](index=98&type=chunk) - Approved a new share repurchase program of up to **$25.0 million of common stock** on **December 17, 2021**; no shares repurchased as of **March 31, 2022**[99](index=99&type=chunk)[100](index=100&type=chunk) [Ongoing Impact of Coronavirus Pandemic](index=25&type=section&id=Ongoing%20Impact%20of%20Coronavirus%20Pandemic) The COVID-19 pandemic continues to impact the Company's business, particularly through supply chain delays and disruptions, increased freight costs, and potential negative effects on consumer spending due to macroeconomic conditions like inflation and decreased confidence - **COVID-19 pandemic** continues to cause **supply chain delays and disruptions**, negatively impacting product sourcing and potentially increasing costs[101](index=101&type=chunk) - Global economic deterioration, including **rising unemployment, increased inflation, and decreased consumer confidence**, could negatively impact discretionary consumer spending[102](index=102&type=chunk) [Trends and Principal Factors Affecting Our Financial Performance](index=25&type=section&id=Trends%20and%20Principal%20Factors%20Affecting%20Our%20Financial%20Performance) Key factors affecting financial performance include the ability to acquire and retain customers, competitive pricing, product offerings, industry demand, market position, and successful integration of acquisitions. Freight costs have increased significantly as a proportion of sales due to the pandemic and fuel costs, impacting gross margins - Freight costs as a percentage of sales increased by **220 basis points** from **Q1 2021** on a consolidated proforma basis, putting downward pressure on gross margins[104](index=104&type=chunk) - Management believes increased freight costs are **temporary** and margins will improve as supply chain stabilizes and fuel costs normalize[104](index=104&type=chunk) - Supply chain constraints have amplified **order cancellations and refunds**[105](index=105&type=chunk) [Factors Affecting Comparability of Our Future Results of Operations to Our Historical Results of Operations](index=26&type=section&id=Factors%20Affecting%20Comparability%20of%20Our%20Future%20Results%20of%20Operations%20to%20Our%20Historical%20Results%20of%20Operations) The comparability of financial results is significantly affected by recent acquisitions, particularly the Appliances Connection Acquisition and AC Gallery Acquisition, which introduce materially different characteristics and economics compared to historical operations - The **Appliances Connection Acquisition (June 2, 2021)** and **AC Gallery Acquisition (July 29, 2021)** significantly impact the comparability of current and future financial results to historical periods[106](index=106&type=chunk)[110](index=110&type=chunk) - Future acquisitions may further impact comparability due to potentially **different economic characteristics**[106](index=106&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) The Company experienced substantial growth in product sales and gross profit for the three months ended March 31, 2022, primarily due to the Appliances Connection Acquisition. This led to a significant increase in net income compared to a net loss in the prior year, despite higher operating expenses [Product sales, net](index=27&type=section&id=Product%20sales,%20net) Net product sales significantly increased, primarily driven by the Appliances Connection Acquisition Product Sales, Net (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change ($) | Change (%) | | :---------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Product sales, net | $152,752 | $13,697 | $139,055 | 1,015.2% | - Increase primarily due to the impact of the **Appliances Connection Acquisition**[111](index=111&type=chunk) Product Sales, Net by Type (in thousands) | Product Type | March 31, 2022 ($) | March 31, 2022 (%) | March 31, 2021 ($) | March 31, 2021 (%) | | :-------------- | :----------------- | :----------------- | :----------------- | :----------------- | | Appliance sales | $140,975 | 92.3% | $10,273 | 75.0% | | Furniture sales | $4,155 | 2.7% | $2,328 | 17.0% | | Other sales | $7,622 | 5.0% | $1,096 | 8.0% | | Total | $152,752 | 100.0% | $13,697 | 100.0% | [Cost of goods sold](index=27&type=section&id=Cost%20of%20goods%20sold) Cost of goods sold increased substantially, primarily due to the Appliances Connection Acquisition Cost of Goods Sold (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change ($) | Change (%) | | :---------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Cost of goods sold | $116,883 | $11,069 | $105,814 | 956.0% | - Increase driven by the impact of the **Appliances Connection Acquisition**[113](index=113&type=chunk) Cost of Goods Sold by Type (in thousands) | Cost Type | March 31, 2022 ($) | March 31, 2022 (% of Net Sales) | March 31, 2021 ($) | March 31, 2021 (% of Net Sales) | | :---------------------------- | :----------------- | :------------------------------ | :----------------- | :------------------------------ | | Product costs, net of vendor rebates | $102,293 | 67.0% | $9,193 | 67.1% | | Freight costs | $14,590 | 9.6% | $1,876 | 13.7% | | Total | $116,883 | 76.5% | $11,069 | 80.8% | [Gross profit and gross margin](index=28&type=section&id=Gross%20profit%20and%20gross%20margin) Gross profit and gross margin significantly improved, primarily due to the Appliances Connection Acquisition Gross Profit and Gross Margin (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change ($) | Change (%) | | :------------ | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Gross profit | $35,869 | $2,628 | $33,241 | 1,264.6% | | Gross margin | 23.5% | 19.2% | 4.3 pp | | - Increases primarily due to the impact of the **Appliances Connection Acquisition**[115](index=115&type=chunk) [Personnel expenses](index=28&type=section&id=Personnel%20expenses) Personnel expenses increased due to the Appliances Connection Acquisition, but decreased as a percentage of net sales Personnel Expenses (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change ($) | Change (%) | | :---------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Personnel expenses | $7,046 | $1,931 | $5,115 | 264.9% |\ | % of net sales | 4.6% | 14.1% | -9.5 pp | | - Changes primarily due to the impact of the **Appliances Connection Acquisition**[116](index=116&type=chunk) [Advertising expenses](index=28&type=section&id=Advertising%20expenses) Advertising expenses increased due to the Appliances Connection Acquisition, but decreased as a percentage of net sales Advertising Expenses (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change ($) | Change (%) | | :----------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Advertising expenses | $4,288 | $1,083 | $3,205 | 295.9% |\ | % of net sales | 2.8% | 7.9% | -5.1 pp | | - Changes primarily due to the impact of the **Appliances Connection Acquisition**[117](index=117&type=chunk) [Bank and credit card fees](index=28&type=section&id=Bank%20and%20credit%20card%20fees) Bank and credit card fees increased significantly, driven by higher customer orders from the Appliances Connection Acquisition Bank and Credit Card Fees (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change ($) | Change (%) | | :---------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Bank and credit card fees | $6,167 | $533 | $5,634 | 1,057.0% |\ | % of net sales | 4.0% | 3.9% | 0.1 pp | | - Increase largely due to the increase in customer orders associated with the **Appliances Connection Acquisition**[118](index=118&type=chunk) [Depreciation and amortization](index=28&type=section&id=Depreciation%20and%20amortization) Depreciation and amortization expenses increased substantially due to intangible assets acquired in the Appliances Connection Acquisition Depreciation and Amortization (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change ($) | Change (%) | | :-------------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Depreciation and amortization | $2,734 | $122 | $2,612 | 2,141.0% |\ | % of net sales | 1.8% | 0.9% | 0.9 pp | | - Increase is the result of amortizing intangible assets acquired in the **Appliances Connection Acquisition**[119](index=119&type=chunk) [General and administrative expenses](index=28&type=section&id=General%20and%20administrative%20expenses) General and administrative expenses increased due to the Appliances Connection Acquisition, but decreased as a percentage of net sales General and Administrative Expenses (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change ($) | Change (%) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | General and administrative expenses | $5,567 | $2,240 | $3,327 | 148.5% |\ | % of net sales | 3.6% | 16.4% | -12.8 pp | | - Changes primarily due to the impact of the **Appliances Connection Acquisition**[120](index=120&type=chunk) [Total other income (expense)](index=29&type=section&id=Total%20other%20income%20(expense)) Total other expense increased, primarily due to higher interest and financing costs Total Other Income (Expense) (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change ($) | | :-------------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Total other expense, net | $(762) | $(212) | $(550) | - Primarily consisted of **interest expense of $0.7 million** and **financing costs of $0.2 million** in 2022[122](index=122&type=chunk) [Income tax benefit (expense)](index=29&type=section&id=Income%20tax%20benefit%20(expense)) The Company recorded an income tax expense due to its profitability, primarily driven by the Appliances Connection Acquisition Income Tax Benefit (Expense) (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change ($) | | :---------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Income tax net expense | $(3,383) | $- | $(3,383) | - Change due to the Company's profitability, primarily driven by the **Appliances Connection Acquisition**[123](index=123&type=chunk) [Net income (loss)](index=29&type=section&id=Net%20income%20(loss)) The Company reported a significant net income, a substantial improvement from a net loss in the prior year Net Income (Loss) (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change ($) | Change (%) | | :------------ | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Net income (loss) | $5,922 | $(3,493) | $9,415 | 270.0% | [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2022, the Company had $25.8 million in cash and equivalents and $24.9 million in working capital. A new $140 million credit facility was secured in May 2022, with proceeds used to repay previous debt. Management believes current and projected cash flows, along with available credit, will be sufficient to fund operations and debt obligations for the next twelve months Liquidity Metrics (in millions) | Metric | March 31, 2022 | December 31, 2021 | | :---------------------- | :------------- | :---------------- | | Cash and cash equivalents | $25.8 | $25.7 | | Restricted cash | $2.6 | $8.1 | | Operating income | $10.1 | N/A | | Cash flows used in operations | $(3.7) | N/A | | Working capital | $24.9 | $16.0 | - On **May 9, 2022**, the Company secured a new **$140 million credit facility**, using **$55.9 million** to pay off the **M&T Credit Agreement**[126](index=126&type=chunk) - Management believes **adequate cash flow from operations**, external bank lines of credit, and proceeds from future debt/equity issuances will fund operations and service debt for at least the **next twelve months**[127](index=127&type=chunk) [Summary of Cash Flow](index=30&type=section&id=Summary%20of%20Cash%20Flow) Net cash used in operating activities increased to $3.7 million for the three months ended March 31, 2022, primarily due to increases in receivables, inventories, and customer deposit refunds related to the Appliances Connection Acquisition and supply chain issues. Net cash used in investing activities remained minimal, while financing activities shifted from a net cash provided to a net cash used, mainly due to higher debt repayments Summary of Cash Flow (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(3,747) | $(2,808) | | Net cash used in investing activities | $(6) | $(126) | | Net cash (used in) provided by financing activities | $(1,634) | $4,426 | | Net change in cash, cash equivalents, and restricted cash | $(5,387) | $1,492 | - Operating cash flow was negatively impacted by increases in **receivables ($1.7M used)**, **inventories ($8.2M used)**, and **customer deposits ($7.6M used)** due to sales growth from the **Appliances Connection Acquisition** and supply chain delays[135](index=135&type=chunk) - Financing activities shifted to net cash used due to **$1.6 million in notes payable repayments** in 2022, compared to **$4.6 million in proceeds from notes payable** in 2021[135](index=135&type=chunk) [Debt](index=31&type=section&id=Debt) The Company refinanced its M&T Credit Agreement with a new $140 million senior secured credit facility from Bank of America, N.A., on May 9, 2022. This new facility includes a $100 million term loan and a $40 million revolving credit facility, maturing on May 9, 2027, with quarterly principal repayments commencing September 30, 2022. Other debt includes a Northpoint inventory loan and vehicle loans [New Credit Agreement](index=31&type=section&id=New%20Credit%20Agreement) The Company secured a new $140 million senior secured credit facility, including a term loan and revolving credit, maturing in May 2027 - On **May 9, 2022**, the Company entered into a new **$140 million senior secured credit facility** with **Bank of America, N.A.**, consisting of a **$100 million term loan** and a **$40 million revolving credit facility**[136](index=136&type=chunk) - The **New Term Loan** proceeds were used to fully prepay and terminate the **M&T Credit Agreement**[137](index=137&type=chunk) - New Loans mature on **May 9, 2027**, with quarterly principal repayments for the term loan starting **September 30, 2022**[138](index=138&type=chunk)[139](index=139&type=chunk) [M&T Credit Agreement - Refinanced](index=32&type=section&id=M%26T%20Credit%20Agreement%20-%20Refinanced) The previous M&T Credit Agreement, with a $53.9 million carrying value, was fully repaid and terminated as part of the new credit facility - The **M&T Credit Agreement**, totaling **$70.0 million ($60.0 million term loan, $10.0 million revolving credit)**, was entered into on **June 2, 2021**[146](index=146&type=chunk) - As of **March 31, 2022**, the **M&T Term Loan** had a carrying value of **$53.9 million**[147](index=147&type=chunk) - The **M&T Credit Agreement** was fully prepaid and terminated on **May 9, 2022**, as part of the new credit facility[153](index=153&type=chunk) [Northpoint Loan](index=33&type=section&id=Northpoint%20Loan) The Company maintains a $2.0 million inventory financing loan with Northpoint Commercial Finance LLC, with $0.3 million outstanding - The Company has a loan and security agreement with **Northpoint Commercial Finance LLC** for inventory financing, with a credit limit of **$2.0 million**[154](index=154&type=chunk) - As of **March 31, 2022**, **$0.3 million** was owed under the Northpoint loan[154](index=154&type=chunk) [Vehicle Loans](index=33&type=section&id=Vehicle%20Loans) Outstanding vehicle loans totaled $1.2 million, with five-year terms and interest rates ranging from 3.59% to 5.74% - Outstanding balance of vehicle loans was **$1.2 million** as of **March 31, 2022**, with **five-year terms** and interest rates from **3.59% to 5.74%**[156](index=156&type=chunk) [Management Services Agreement](index=33&type=section&id=Management%20Services%20Agreement) The Company has a management services agreement with 1847 Partners LLC, incurring quarterly management fees of $62,500 - The Company has a management services agreement with **1847 Partners LLC**, paying a quarterly management fee of **$62,500**[157](index=157&type=chunk) - Management fees expensed were **$0.1 million** for each of the three months ended **March 31, 2022 and 2021**[159](index=159&type=chunk) [Leases](index=34&type=section&id=Leases) The Company holds various lease agreements for office, warehouse, and showroom spaces, including new facilities in Brooklyn and Somerset - The Company has various lease agreements for **office, warehouse, and showroom spaces**, including related party leases[163](index=163&type=chunk)[164](index=164&type=chunk)[169](index=169&type=chunk) - A new office lease in **Brooklyn, NY**, commenced **March 1, 2022**, with a monthly rate of **$22,000** for the first year[169](index=169&type=chunk) - A warehouse agreement for a new facility in **Somerset, New Jersey**, commenced **October 1, 2021**, with a monthly storage fee of **$136,274** for the first year[168](index=168&type=chunk) [Critical Accounting Policies and Estimates](index=35&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section refers to the Company's Annual Report on Form 10-K for the year ended December 31, 2021, for information regarding critical accounting policies and estimates - Information on **Critical Accounting Policies and Estimates** is available in the Company's **Annual Report on Form 10-K** for the year ended **December 31, 2021**[170](index=170&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, 1847 Goedeker Inc. is not required to provide quantitative and qualitative disclosures about market risk - As a **smaller reporting company**, the registrant is not required to disclose information under this item[171](index=171&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) The Company's disclosure controls and procedures were deemed ineffective as of March 31, 2022, due to material weaknesses in internal control over financial reporting. These weaknesses stem from inadequate control design, risk assessment, and control activities. Management is actively implementing remediation plans, including enhancing reporting structure, increasing qualified resources, and establishing formal risk assessment procedures [Evaluation of Disclosure Controls and Procedures](index=35&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed ineffective due to identified material weaknesses in internal control over financial reporting - Disclosure controls and procedures were determined to be **ineffective** as of **March 31, 2022**, due to **material weaknesses** in internal control over financial reporting[173](index=173&type=chunk) [Material Weaknesses in Internal Control over Financial Reporting](index=36&type=section&id=Material%20Weaknesses%20in%20Internal%20Control%20over%20Financial%20Reporting) Material weaknesses include inadequate control design, insufficient resources, and ineffective risk assessment and control activities - Material weaknesses identified include **lack of structure and responsibility**, **insufficient qualified resources**, **inadequate oversight**, **ineffective assessment of risk changes**, and **inadequate selection and development of effective control activities**[175](index=175&type=chunk) [Management's Remediation Plans](index=36&type=section&id=Management's%20Remediation%20Plans) Management is implementing remediation plans to enhance reporting, increase qualified resources, and establish formal risk assessment procedures - Remediation plans include **enhancing reporting structure**, **increasing qualified resources**, **establishing formal risk assessment procedures**, and **developing/documenting policies and procedures**[176](index=176&type=chunk) - Remediation will be considered complete only after controls operate for a **sufficient period** and are tested for effectiveness[176](index=176&type=chunk) [Changes in Internal Control Over Financial Reporting](index=36&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred, apart from identified weaknesses and ongoing remediation efforts - No material changes in internal control over financial reporting occurred during the quarter ended **March 31, 2022**, other than those related to the identified material weaknesses and remediation efforts[177](index=177&type=chunk) [PART II OTHER INFORMATION](index=37&type=section&id=PART%20II%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, and other required disclosures and exhibits [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in legal proceedings regarding a stockholder-approved amendment to increase authorized common stock. This includes a Section 205 Petition filed by the Company to validate the amendment and a consolidated class action lawsuit alleging improper vote tabulation and breach of fiduciary duties by the Board of Directors - Stockholders approved an amendment to increase authorized common stock by **50,000,000 shares** on **December 21, 2021**[180](index=180&type=chunk) - The Company filed a **Section 205 Petition** with the **Delaware Court of Chancery** to validate the Certificate of Amendment after concerns were raised about vote tabulation[181](index=181&type=chunk) - A **class action lawsuit (Scot T. Boden v. 1847 Goedeker Inc., et al.)** was filed, alleging **improper vote tabulation** and **breach of fiduciary duties**, which has been consolidated with the 205 Petition[182](index=182&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) The Company highlights new risk factors, including the negative impact of increasing tensions between the United States and Russia and the conflict in Ukraine on commodity pricing, supply chains, and consumer demand. Additionally, various economic factors such as inflation, exposure to the U.S. housing industry, and potential decreases in consumer spending pose significant risks - Increasing tensions between the **United States and Russia** and the **conflict in Ukraine** could negatively impact business through **higher fuel/energy costs, supply chain disruptions, and reduced consumer demand**[186](index=186&type=chunk) - Numerous economic factors, including **inflation, weakness in the U.S. housing industry, and decreased consumer discretionary spending**, could adversely affect financial performance[187](index=187&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company did not sell any previously undisclosed unregistered equity securities or repurchase any shares of common stock during the three months ended March 31, 2022 - No unregistered equity securities were sold during the three months ended **March 31, 2022**, that were not previously disclosed[188](index=188&type=chunk) - No shares of common stock were repurchased during the three months ended **March 31, 2022**[189](index=189&type=chunk) [Item 3. Defaults Upon Senior Securities](index=38&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - No defaults upon **senior securities**[190](index=190&type=chunk) [Item 4. Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Not applicable[190](index=190&type=chunk) [Item 5. Other Information](index=38&type=section&id=Item%205.%20Other%20Information) No other information is reported under this item - None[191](index=191&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, recent credit agreements, security and pledge agreements, and certifications required by the Sarbanes-Oxley Act - Includes **Amended and Restated Certificate of Incorporation** and its amendment, **Bylaws** and its amendment[192](index=192&type=chunk) - Lists the **Lease Agreement dated March 15, 2022**, the **Credit Agreement dated May 9, 2022**, and the **Security and Pledge Agreement dated May 9, 2022**[192](index=192&type=chunk) - Contains **Certifications of Principal Executive Officer and Principal Financial and Accounting Officer** pursuant to **Sections 302 and 906 of the Sarbanes-Oxley Act of 2002**[192](index=192&type=chunk)

PART I [ITEM 1. BUSINESS](index=8&type=section&id=ITEM%201.%20BUSINESS.) The company is a technology-enabled omnichannel retailer of home goods that expanded significantly through key 2021 acquisitions - The Company is a content-driven and technology-enabled shopping destination for appliances, furniture, and home goods, operating as a nationwide omnichannel retailer[26](index=26&type=chunk)[27](index=27&type=chunk) - Key acquisitions in 2021 include Appliances Connection for **$224.7 million** and Appliances Gallery for **$1.4 million**, significantly expanding its e-commerce platform and product offerings[27](index=27&type=chunk)[29](index=29&type=chunk)[33](index=33&type=chunk) - The COVID-19 pandemic has not materially negatively impacted online sales, call center, warehouse, and distribution operations, but has caused **supply chain disruptions** and increased sourcing costs[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) - The U.S. major home appliances market is projected to reach **$23.2 billion in 2022**, with an annual growth rate of 3.08% from 2022 to 2026[39](index=39&type=chunk)[41](index=41&type=chunk) - The Company offers over **500,000 SKUs** from more than 700 vendors, with Frigidaire and GE brands accounting for 12% and 11% of product purchases, respectively, in 2021[43](index=43&type=chunk)[44](index=44&type=chunk) - The Company holds a 5% equity interest in Dynamic Marketing, Inc (DMI), an appliance purchasing cooperative, from which it purchased **72.1% of finished goods in 2021**[45](index=45&type=chunk) - Growth strategies include rebranding, strengthening the leadership team, securing B2B trade business, expanding product categories, and driving operational excellence[56](index=56&type=chunk) - As of December 31, 2021, the Company employed **482 full-time employees** and had 4 registered trademarks in the United States[59](index=59&type=chunk)[60](index=60&type=chunk) [ITEM 1A. RISK FACTORS](index=15&type=section&id=ITEM%201A.%20RISK%20FACTORS.) The company faces significant risks from the COVID-19 pandemic, supply chain disruptions, intense competition, and internal control weaknesses - The COVID-19 pandemic continues to pose risks, including **global supply chain disruptions**, staffing shortages, increased shipping costs, and economic uncertainty[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) - Business success is highly dependent on general economic conditions, consumer discretionary spending, and the ability to acquire and retain customers cost-effectively[77](index=77&type=chunk)[78](index=78&type=chunk)[80](index=80&type=chunk)[82](index=82&type=chunk) - The Company faces **intense competition** from various retailers and marketplaces, requiring continuous efforts in product quality, pricing, and customer service[91](index=91&type=chunk)[92](index=92&type=chunk) - Significant risks are associated with **IT system failures and security breaches**, which could disrupt business, harm reputation, and lead to financial and legal liabilities[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) - Reliance on third-party suppliers and logistics providers exposes the Company to risks of shipping delays, product damage, and changes in business terms[102](index=102&type=chunk)[103](index=103&type=chunk)[106](index=106&type=chunk)[108](index=108&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) - The continued integration of Appliances Connection presents operational, strategic, and financial risks, including potential difficulties in achieving anticipated synergies[124](index=124&type=chunk)[125](index=125&type=chunk) - The Company has identified **material weaknesses in internal control over financial reporting**, which could lead to financial misstatements[127](index=127&type=chunk)[128](index=128&type=chunk) - Future growth may require additional financing, and existing debt obligations could limit operating flexibility[132](index=132&type=chunk)[133](index=133&type=chunk)[136](index=136&type=chunk) - The validity of a stockholder vote to increase authorized common stock shares has been questioned, potentially limiting future corporate flexibility[155](index=155&type=chunk)[156](index=156&type=chunk) - The Company **does not expect to declare or pay dividends** in the foreseeable future, as earnings will be reinvested in the business[163](index=163&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=40&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS.) The Company has no unresolved staff comments from the SEC - There are no unresolved staff comments[176](index=176&type=chunk) [ITEM 2. PROPERTIES](index=40&type=section&id=ITEM%202.%20PROPERTIES.) The company operates over 438,000 square feet of leased headquarters, showrooms, and warehouses across multiple states Company Facilities (as of December 31, 2021) | Property Location | Description of Use | Leased Square Footage | | :---------------- | :----------------- | :-------------------- | | Brooklyn, New York | Headquarters; Office Space; Showroom | 21,000 | | Brooklyn, New York | Office Space | 5,835 | | Brooklyn, New York | Showroom | 3,800 | | Somerset, New Jersey | Warehouse | 129,785 | | Hamilton, New Jersey | Warehouse | 135,000 | | St. Charles, Missouri | Office Space; Showroom; Warehouse | 86,800 | | Baldwin, Missouri (2) | Office Space; Showroom; Warehouse | 50,000 | | Largo, Florida | Showroom; Warehouse | 5,800 | | **Total** | | **438,020** | - The Baldwin, Missouri warehouse and retail showroom was closed on June 30, 2021, in anticipation of relocating to a new facility, with plans to sublease the space[178](index=178&type=chunk) [ITEM 3. LEGAL PROCEEDINGS](index=41&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS.) The company is involved in legal proceedings concerning the validity of a stockholder vote to increase its authorized common stock - The Company is seeking validation from the Delaware Court of Chancery regarding a stockholder vote to increase authorized common stock by **50,000,000 shares**[179](index=179&type=chunk)[180](index=180&type=chunk) - A class action lawsuit has been filed against the Company and its Board of Directors, alleging improper tabulation of the stockholder vote and breach of fiduciary duties[181](index=181&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=41&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES.) The Company is not subject to the disclosure requirements related to mine safety - Mine safety disclosures are not applicable to the Company[183](index=183&type=chunk) PART II [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=42&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock (GOED) trades on the NYSE American, with no dividends anticipated and a $25 million share repurchase program authorized - The Company's common stock (GOED) and warrants (GOED WS) are listed on the **NYSE American**[186](index=186&type=chunk) - As of March 28, 2022, there were approximately **49 stockholders of record** for common stock and 1 for warrants[187](index=187&type=chunk) - The Company has never declared or paid cash dividends and does not expect to in the foreseeable future, with the Credit Agreement also restricting payments[188](index=188&type=chunk) - On December 17, 2021, the board authorized a share repurchase program of up to **$25.0 million**; however, no shares were repurchased as of December 31, 2021[190](index=190&type=chunk)[200](index=200&type=chunk) [ITEM 6. [RESERVED]](index=42&type=section&id=ITEM%206.%20%5BRESERVED%5D) This item is reserved due to amendments to Regulation S-K - Item 6 is reserved due to amendments to Regulation S-K that eliminated Item 301[191](index=191&type=chunk) [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=43&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS.) Acquisitions drove significant revenue growth and a return to profitability in 2021, despite supply chain pressures and negative operating cash flow - The Company completed the Appliances Connection Acquisition on June 2, 2021, for **$224.7 million** and the Appliance Gallery Acquisition on July 29, 2021, for **$1.4 million**[195](index=195&type=chunk)[198](index=198&type=chunk) - Freight costs as a percentage of sales **increased from 8.0% in 2020 to 9.1% in 2021** (consolidated proforma), putting downward pressure on gross margins[210](index=210&type=chunk) - Supply chain constraints led to order fulfillment delays and **$34.0 million in customer deposit refunds** in 2021, resulting in negative operating cash flow[211](index=211&type=chunk)[237](index=237&type=chunk) Key Financial Highlights (Years Ended December 31, 2021 vs 2020) | Metric | 2021 (Amount in thousands) | 2021 (% of Net Sales) | 2020 (Amount in thousands) | 2020 (% of Net Sales) | Change (YoY) | | :---------------------- | :------------------------- | :-------------------- | :------------------------- | :-------------------- | :----------- | | Product sales, net | $362,314 | 100.0% | $55,134 | 100.0% | +557.2% | | Cost of goods sold | $282,655 | 78.0% | $47,879 | 86.8% | +490.4% | | Gross profit | $79,659 | 22.0% | $7,255 | 13.2% | +998.0% | | Total Operating Expenses| $71,339 | 19.7% | $21,688 | 39.3% | +228.0% | | Income (Loss) from Operations | $8,320 | 2.3% | $(14,433) | (26.2)% | N/A | | Net Income (Loss) | $7,670 | 2.1% | $(21,568) | (39.1)% | +135.6% | | Basic EPS | $0.12 | | $(3.95) | | N/A | | Diluted EPS | $0.10 | | $(3.95) | | N/A | Cash Flow Summary (Years Ended December 31, 2021 vs 2020) | Cash Flow Activity | 2021 (in thousands) | 2020 (in thousands) | | :----------------------------- | :------------------ | :------------------ | | Net cash (used in) provided by operating activities | $(18,328) | $5,409 | | Net cash used in investing activities | $(204,834) | $(113) | | Net cash provided by financing activities | $247,041 | $4,145 | - Financing activities in 2021 included **$196.8 million from public offerings** (including warrant exercises) and **$60.8 million from debt issuances**[247](index=247&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk) - As of December 31, 2021, the Company had **$25.7 million in cash** and cash equivalents and $8.1 million in restricted cash, with $58.5 million outstanding under the Term Loan[236](index=236&type=chunk)[252](index=252&type=chunk) - Management believes sufficient funds will be generated from operations and available credit to fund operations for at least the next twelve months[237](index=237&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk) - Key accounting policies include revenue recognition (FOB shipping point or installation), goodwill impairment evaluations, and income tax accounting[278](index=278&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk)[286](index=286&type=chunk)[287](index=287&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=61&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, these disclosures are not required - As a smaller reporting company, the Company is not required to disclose quantitative and qualitative information about market risk[292](index=292&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=61&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA.) This item refers to the full text of the Company's audited consolidated financial statements - The full text of the audited consolidated financial statements is included starting on page F-1 of this annual report[293](index=293&type=chunk) [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](index=62&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE.) The Company reports no changes in or disagreements with its accountants - There are no changes in or disagreements with accountants on accounting and financial disclosure[294](index=294&type=chunk) [ITEM 9A. CONTROLS AND PROCEDURES](index=62&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES.) Disclosure controls were deemed not effective as of December 31, 2021, due to identified material weaknesses in internal control - The Company's disclosure controls and procedures were deemed **not effective** as of December 31, 2021, due to material weaknesses in internal control over financial reporting[295](index=295&type=chunk) - Material weaknesses identified include a lack of structure, insufficient qualified resources, inadequate oversight, and ineffective risk assessment[299](index=299&type=chunk)[307](index=307&type=chunk) - Management's remediation plans involve enhancing reporting structure, increasing qualified resources, and establishing formal risk assessment and control procedures[300](index=300&type=chunk)[307](index=307&type=chunk) - The assessment of internal control over financial reporting **excluded the Appliances Connection Acquisition**, which represented approximately 32% of total assets and 87% of total revenue[301](index=301&type=chunk) [ITEM 9B. OTHER INFORMATION](index=63&type=section&id=ITEM%209B.%20OTHER%20INFORMATION.) The Company has no other information to report under this item - There is no other information to report[305](index=305&type=chunk) [ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS](index=63&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS.) This disclosure is not applicable to the Company - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable[306](index=306&type=chunk) PART III [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](index=65&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE.) Required information will be provided via an amendment or incorporated by reference from the 2022 proxy statement - Information for this item will be filed by amendment or incorporated by reference to the 2022 proxy statement[310](index=310&type=chunk) [ITEM 11. EXECUTIVE COMPENSATION](index=65&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION.) Required information will be provided via an amendment or incorporated by reference from the 2022 proxy statement - Information for this item will be filed by amendment or incorporated by reference to the 2022 proxy statement[311](index=311&type=chunk) [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=65&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS.) Required information will be provided via an amendment or incorporated by reference from the 2022 proxy statement - Information for this item will be filed by amendment or incorporated by reference to the 2022 proxy statement[312](index=312&type=chunk) [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](index=65&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE.) Required information will be provided via an amendment or incorporated by reference from the 2022 proxy statement - Information for this item will be filed by amendment or incorporated by reference to the 2022 proxy statement[313](index=313&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES](index=65&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES.) Required information will be provided via an amendment or incorporated by reference from the 2022 proxy statement - Information for this item will be filed by amendment or incorporated by reference to the 2022 proxy statement[314](index=314&type=chunk) PART IV [ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES](index=66&type=section&id=ITEM%2015.%20EXHIBIT%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES.) This section lists the consolidated financial statements and provides an index to all exhibits filed with the report - The report includes an index to consolidated financial statements, such as Balance Sheets, Statements of Operations, Stockholders' Equity, and Cash Flows[317](index=317&type=chunk) - All financial statement schedules have been omitted as the required information is included in the consolidated financial statements or their notes[318](index=318&type=chunk) - A comprehensive list of exhibits is provided, detailing various agreements, certificates, and plans[319](index=319&type=chunk)[320](index=320&type=chunk)[322](index=322&type=chunk)[323](index=323&type=chunk) [ITEM 16. FORM 10-K SUMMARY](index=72&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY.) The Company has not provided a summary for its Form 10-K - No Form 10-K summary is provided[325](index=325&type=chunk) CONSOLIDATED FINANCIAL STATEMENTS [Report of Independent Registered Public Accounting Firm](index=74&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20(PCAOB%20Firm%20ID%20%23711)) The independent auditor issued an unqualified opinion on the 2021 and 2020 financial statements - Friedman LLP issued an **unqualified opinion** on the consolidated financial statements for the years ended December 31, 2021 and 2020, stating they present fairly the Company's financial position in conformity with GAAP[329](index=329&type=chunk) - The audit was conducted in accordance with PCAOB standards, but **did not include an audit of the Company's internal control** over financial reporting[331](index=331&type=chunk) [Consolidated Balance Sheets](index=75&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20December%2031%2C%202021%20and%202020) Total assets grew substantially to $376.0 million in 2021, driven by acquisitions that also turned stockholders' deficit into positive equity Consolidated Balance Sheet Highlights (in thousands) | Metric | December 31, 2021 | December 31, 2020 | | :--------------------------- | :---------------- | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | $25,724 | $935 | | Total Current Assets | $121,318 | $18,240 | | Goodwill | $191,614 | $4,726 | | Intangible assets, net | $44,212 | $1,382 | | **TOTAL ASSETS** | **$375,984** | **$26,217** | | **LIABILITIES** | | | | Total Current Liabilities | $105,341 | $35,695 | | **TOTAL LIABILITIES** | **$170,381** | **$39,533** | | **STOCKHOLDERS' EQUITY (DEFICIT)** | | | | **TOTAL STOCKHOLDERS' EQUITY (DEFICIT)** | **$205,603** | **$(13,316)** | - Total assets increased significantly by **$349.8 million**, primarily due to the Appliances Connection acquisition, which added substantial goodwill ($185.7 million) and intangible assets ($42.8 million)[335](index=335&type=chunk)[427](index=427&type=chunk) - Stockholders' Equity improved from a **deficit of $13.3 million** in 2020 to a **positive $205.6 million** in 2021, driven by $194.4 million in net proceeds from public equity offerings[335](index=335&type=chunk)[340](index=340&type=chunk)[489](index=489&type=chunk) [Consolidated Statements of Operations](index=77&type=section&id=Consolidated%20Statements%20of%20Operations%20for%20the%20Years%20Ended%20December%2031%2C%202021%20and%202020) The company achieved net income of $7.7 million in 2021, a major turnaround from a $21.6 million loss in 2020, fueled by a 557% sales increase Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | 2021 | 2020 | | :---------------------- | :---------- | :---------- | | Product sales, net | $362,314 | $55,134 | | Gross profit | $79,659 | $7,255 | | INCOME (LOSS) FROM OPERATIONS | $8,320 | $(14,433) | | NET INCOME (LOSS) | $7,670 | $(21,568) | | NET INCOME (LOSS) PER COMMON SHARE | $0.12 | $(3.95) | | DILUTED NET INCOME (LOSS) PER COMMON SHARE | $0.10 | $(3.95) | - Net product sales **increased by $307.2 million (557.2%)** in 2021, primarily due to the Appliances Connection Acquisition, which contributed $314.5 million in sales[217](index=217&type=chunk)[430](index=430&type=chunk) - Gross profit **increased by $72.4 million (998.0%)**, and gross margin improved from 13.2% in 2020 to 22.0% in 2021[221](index=221&type=chunk) - The Company recorded a **net income of $7.7 million** in 2021, a significant improvement from a net loss of $21.6 million in 2020, partly due to a $4.4 million income tax benefit[230](index=230&type=chunk)[231](index=231&type=chunk) [Consolidated Statements of Stockholders' Equity (Deficit)](index=78&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Deficit)%20for%20the%20Years%20Ended%20December%2031%2C%202021%20and%202020) Stockholders' equity shifted from a $13.3 million deficit to a $205.6 million surplus, driven by public offerings and acquisition-related stock issuance Stockholders' Equity (Deficit) Summary (in thousands) | Metric | December 31, 2021 | December 31, 2020 | | :--------------------------- | :---------------- | :---------------- | | Additional Paid-in Capital | $224,648 | $13,409 | | Accumulated Deficit | $(19,056) | $(26,726) | | Total Stockholders' Equity (Deficit) | $205,603 | $(13,316) | - Additional paid-in capital increased significantly by **$211.2 million**, primarily from **$194.4 million in net proceeds** from a public offering of common stock and warrants[340](index=340&type=chunk)[489](index=489&type=chunk) - The accumulated deficit decreased from $26.7 million in 2020 to $19.1 million in 2021, reflecting the Company's **net income of $7.7 million** for the year[340](index=340&type=chunk) [Consolidated Statements of Cash Flows](index=79&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Years%20Ended%20December%2031%2C%202021%20and%202020) The company had negative operating cash flow of $18.3 million, used $204.8 million for acquisitions, and raised $247.0 million from financing activities Consolidated Statements of Cash Flows Summary (in thousands) | Cash Flow Activity | 2021 | 2020 | | :----------------------------- | :---------- | :---------- | | Net cash (used in) provided by operating activities | $(18,328) | $5,409 | | Net cash used in investing activities | $(204,834) | $(113) | | Net cash provided by financing activities | $247,041 | $4,145 | | NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | $23,879 | $9,441 | - Net cash used in operating activities was **$18.3 million** in 2021, a decrease from $5.4 million provided in 2020, primarily due to a **$19.0 million decrease in customer deposits** (refunds)[245](index=245&type=chunk)[248](index=248&type=chunk) - Net cash used in investing activities significantly increased to **$204.8 million** in 2021, mainly driven by **$202.9 million in net cash paid for acquisitions**[245](index=245&type=chunk) - Net cash provided by financing activities was **$247.0 million** in 2021, largely from **$194.4 million in net proceeds from public equity offerings** and $60.8 million from debt issuances[246](index=246&type=chunk)[247](index=247&type=chunk)[249](index=249&type=chunk) [Notes to Consolidated Financial Statements](index=81&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the financial impact of acquisitions, revenue recognition policies, debt structure, and material weaknesses in internal controls - The Company's business model involves selling appliances, furniture, and home goods, with key 2021 acquisitions expanding its market presence[349](index=349&type=chunk) - Revenue is recognized when control of products transfers to customers, typically **FOB shipping point** or upon installation[280](index=280&type=chunk)[361](index=361&type=chunk) Disaggregated Revenue by Product Type (in thousands) | Product Type | 2021 | 2020 | | :-------------- | :---------- | :---------- | | Appliance sales | $328,496 | $40,114 | | Furniture sales | $19,457 | $11,800 | | Other sales | $14,361 | $3,220 | | **Total** | **$362,314**| **$55,134** | Receivables (in thousands) | Type of Receivable | December 31, 2021 | December 31, 2020 | | :------------------------------ | :---------------- | :---------------- | | Trade accounts receivable | $10,694 | $- | | Vendor rebates receivable | $11,633 | $1,338 | | Other receivables | $2,660 | $- | | Credit cards in process of collection | $- | $660 | | Total receivables | $24,987 | $1,998 | | Less allowance for doubtful accounts | $(393) | $- | | **Total receivables, net** | **$24,594** | **$1,998** | - Goodwill increased from $4.7 million in 2020 to **$191.6 million in 2021**, primarily due to **$185.7 million from the Appliances Connection acquisition**[421](index=421&type=chunk) - The Company's debt structure includes a **$60.0 million Term Loan** and a $10.0 million Revolving Loan (unused), both maturing on June 2, 2026[251](index=251&type=chunk)[252](index=252&type=chunk)[257](index=257&type=chunk) - Operating lease liabilities totaled **$16.4 million** as of December 31, 2021, with a weighted-average remaining lease term of 77 months[468](index=468&type=chunk) - Related party transactions include significant purchases from DMI (**$177.8 million in 2021**), where the Company holds a 5% interest and its CEO is on the board[473](index=473&type=chunk)[475](index=475&type=chunk)[480](index=480&type=chunk)[481](index=481&type=chunk) - The Company's authorized common stock increased to **250,000,000 shares** in 2021, and an Equity Incentive Plan was amended to reserve 11,000,000 shares[483](index=483&type=chunk)[492](index=492&type=chunk) - The Company recognized an **income tax benefit of $4.4 million** in 2021, reversing a valuation allowance on deferred tax assets due to expected future profitability[230](index=230&type=chunk)[510](index=510&type=chunk)[512](index=512&type=chunk) - Legal proceedings include a challenge to the validity of a stockholder vote to increase authorized shares and a related class action lawsuit[521](index=521&type=chunk)[522](index=522&type=chunk)[523](index=523&type=chunk)

[PART I FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for 1847 Goedeker Inc [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS.) This section presents the unaudited condensed consolidated financial statements of 1847 Goedeker Inc. for the periods ended September 30, 2021, and December 31, 2020, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining the company's organization, significant accounting policies, and specific financial line items [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and stockholders' equity as of September 30, 2021, and December 31, 2020 Key Balance Sheet Metrics | Metric | Sep 30, 2021 (unaudited) (in thousands) | Dec 31, 2020 (in thousands) | | :-------------------------------- | :------------------------------------- | :-------------------------- | | **ASSETS** | | | | Cash and cash equivalents | $27,175 | $935 | | Total Current Assets | $115,175 | $18,240 | | Goodwill | $183,768 | $4,726 | | Intangible assets, net | $47,858 | $1,382 | | TOTAL ASSETS | $361,984 | $26,217 | | **LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)** | | | | Total Current Liabilities | $95,176 | $35,695 | | TOTAL LIABILITIES | $159,939 | $39,533 | | Total Stockholders' Equity (Deficit) | $202,045 | $(13,316) | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $361,984 | $26,217 | - Total assets significantly increased from **$26.2 million** at December 31, 2020, to **$362.0 million** at September 30, 2021, primarily driven by the acquisition of Appliances Connection, which led to substantial increases in goodwill and intangible assets[12](index=12&type=chunk) - Stockholders' Equity shifted from a deficit of **$(13.3) million** at December 31, 2020, to a positive **$202.0 million** at September 30, 2021, largely due to additional paid-in capital from equity offerings[12](index=12&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's financial performance, including product sales, cost of goods sold, gross profit, operating expenses, and net income or loss for the reported periods Key Operating Results | Metric (in thousands) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Product sales, net | $141,867 | $13,435 | $219,637 | $38,397 | | Cost of goods sold | $110,495 | $11,265 | $172,581 | $32,061 | | Gross profit | $31,372 | $2,170 | $47,056 | $6,336 | | Total Operating Expenses | $24,870 | $5,714 | $45,097 | $13,456 | | INCOME (LOSS) FROM OPERATIONS | $6,502 | $(3,544) | $1,959 | $(7,120) | | NET INCOME (LOSS) BEFORE INCOME TAXES | $5,445 | $(5,065) | $(2,063) | $(13,349) | | NET INCOME (LOSS) | $3,316 | $(4,227) | $3,856 | $(11,387) | | NET INCOME (LOSS) PER COMMON SHARE (BASIC) | $0.03 | $(0.74) | $0.08 | $(2.17) | - Net product sales for the three months ended September 30, 2021, increased by **956.0% to $141.9 million** (from $13.4 million in 2020), and for the nine months ended September 30, 2021, increased by **472.0% to $219.6 million** (from $38.4 million in 2020), primarily due to the Appliances Connection acquisition[14](index=14&type=chunk) - The company reported a net income of **$3.3 million** for the three months ended September 30, 2021, a significant improvement from a net loss of $4.2 million in the prior year period, with net income for the nine months at **$3.9 million**, up from an $11.4 million net loss[14](index=14&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Deficit)) This section outlines changes in the company's stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit, from January 1, 2021, to September 30, 2021 Key Stockholders' Equity Metrics | Metric (in thousands) | Balance, January 1, 2021 | Balance, September 30, 2021 | | :-------------------------------- | :----------------------- | :-------------------------- | | Common Stock (Shares) | 6,111 | 106,387 | | Common Stock (Amount) | $1 | $11 | | Additional Paid-in Capital | $13,409 | $224,904 | | Accumulated Deficit | $(26,726) | $(22,870) | | Total Stockholders' Equity (Deficit) | $(13,316) | $202,045 | - Total Stockholders' Equity (Deficit) dramatically improved from a deficit of **$(13.3) million** at January 1, 2021, to a positive **$202.0 million** by September 30, 2021, primarily driven by significant share issuances related to acquisitions and public offerings[15](index=15&type=chunk) - Common stock shares outstanding increased from **6.1 million** at January 1, 2021, to **106.4 million** at September 30, 2021, reflecting issuances for acquisitions and public offerings[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2021, and 2020 Key Cash Flow Metrics | Metric (in thousands) | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $(18,316) | $7,383 | | Net cash used in investing activities | $(203,628) | $(51) | | Net cash provided by financing activities | $247,218 | $4,983 | | NET CHANGE IN CASH AND RESTRICTED CASH | $25,274 | $12,315 | | CASH AND RESTRICTED CASH, END OF PERIOD | $35,186 | $12,379 | - Net cash used in operating activities was **$(18.3) million** for the nine months ended September 30, 2021, a significant change from $7.4 million provided in the prior year, primarily due to changes in customer deposits and merchandise inventory[18](index=18&type=chunk)[224](index=224&type=chunk) - Investing activities used **$203.6 million**, largely driven by the **$201.5 million** cash paid for the Appliances Connection acquisition[18](index=18&type=chunk)[225](index=225&type=chunk) - Financing activities provided **$247.2 million**, primarily from proceeds of equity offerings (**$194.6 million**) and term notes payable (**$55.2 million**)[18](index=18&type=chunk)[226](index=226&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures regarding the company's financial statements, including accounting policies, specific line items, and significant events [NOTE 1—ORGANIZATION AND NATURE OF BUSINESS](index=10&type=section&id=NOTE%201%E2%80%94ORGANIZATION%20AND%20NATURE%20OF%20BUSINESS) This note describes the company's formation, strategic acquisitions, and its current operations as an e-commerce retailer of home goods - 1847 Goedeker Inc. was formed in January 2019 to acquire Goedeker Television Co. and has since expanded through key acquisitions[21](index=21&type=chunk)[22](index=22&type=chunk) - In June 2021, the company acquired Appliances Connection, creating one of the largest pure-play online retailers of household appliances in the U.S., and in July 2021, acquired Appliance Gallery[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) - The company operates as an e-commerce destination for appliances, furniture, and home goods, offering national and luxury brands through warehouse fulfillment centers and showrooms[25](index=25&type=chunk) [NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=NOTE%202%E2%80%94SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the key accounting principles and methods used in preparing the financial statements, including revenue recognition, deferred taxes, and sales tax liabilities - The financial statements are prepared in accordance with GAAP, with all necessary adjustments included for fair presentation[26](index=26&type=chunk)[27](index=27&type=chunk) - Revenue is recognized when control of goods transfers to customers, which varies by delivery method (Company Shipment, Drop Shipment, Local Delivery)[34](index=34&type=chunk)[36](index=36&type=chunk) - The company reversed its allowance for deferred tax assets in Q2 2021, expecting future profitability due to the Appliances Connection acquisition[62](index=62&type=chunk) - Sales tax liability accrued for states adopting the Wayfair decision increased from **$5.8 million** at December 31, 2020, to **$18.2 million** at September 30, 2021, including **$11.0 million** from the Appliances Connection acquisition[63](index=63&type=chunk) - Management believes the company will generate sufficient funds from operations to fund its operations and service debt obligations for at least one year, despite the uncertainties of COVID-19[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk) [NOTE 3—RECEIVABLES](index=17&type=section&id=NOTE%203%E2%80%94RECEIVABLES) This note provides a breakdown of the company's receivables, including trade receivables, vendor rebates, and credit cards in process of collection Receivables Breakdown | Receivables (in thousands) | Sep 30, 2021 | Dec 31, 2020 | | :------------------------- | :----------- | :----------- | | Trade receivables from customers | $12,551 | $- | | Vendor rebates receivable | $7,499 | $1,338 | | Credit cards in process of collection | $135 | $660 | | Other receivables | $3,833 | $- | | Total receivables | $24,018 | $1,998 | - Total receivables increased significantly from **$2.0 million** at December 31, 2020, to **$24.0 million** at September 30, 2021, primarily due to the introduction of trade receivables from customers and a substantial increase in vendor rebates receivable[79](index=79&type=chunk) [NOTE 4—MERCHANDISE INVENTORY](index=17&type=section&id=NOTE%204%E2%80%94MERCHANDISE%20INVENTORY) This note details the composition of the company's merchandise inventory, including appliances, furniture, and other items, along with the allowance for obsolescence Merchandise Inventory Breakdown | Merchandise Inventory (in thousands) | Sep 30, 2021 | Dec 31, 2020 | | :--------------------------------- | :----------- | :----------- | | Appliances | $34,317 | $5,286 | | Furniture | $1,903 | $195 | | Other | $1,984 | $91 | | Total merchandise inventory | $38,204 | $5,572 | | Allowance for inventory obsolescence | $(425) | $(425) | | Merchandise inventory, net | $37,779 | $5,147 | - Net merchandise inventory increased substantially from **$5.1 million** at December 31, 2020, to **$37.8 million** at September 30, 2021, with appliances accounting for the largest portion of this increase[80](index=80&type=chunk) [NOTE 5—VENDOR DEPOSITS](index=18&type=section&id=NOTE%205%E2%80%94VENDOR%20DEPOSITS) This note explains the nature and amount of vendor deposits held by the company to secure purchases - Vendor deposits increased from **$0.5 million** at December 31, 2020, to **$12.1 million** at September 30, 2021, representing cash on deposit with a vendor to secure purchases, on which the company earns interest[82](index=82&type=chunk)[83](index=83&type=chunk) [NOTE 6—PROPERTY AND EQUIPMENT](index=18&type=section&id=NOTE%206%E2%80%94PROPERTY%20AND%20EQUIPMENT) This note provides a breakdown of the company's property and equipment, including accumulated depreciation, and highlights that these assets are pledged as collateral for loans Property and Equipment Breakdown | Property and Equipment (in thousands) | Sep 30, 2021 | Dec 31, 2020 | | :------------------------------------ | :----------- | :----------- | | Total property and equipment | $2,797 | $332 | | Accumulated depreciation | $(277) | $(86) | | Property and equipment, net | $2,520 | $246 | - Net property and equipment increased significantly from **$0.2 million** at December 31, 2020, to **$2.5 million** at September 30, 2021, with notable increases in transportation equipment and construction in progress[84](index=84&type=chunk) - All property and equipment are pledged to secure the company's loans[85](index=85&type=chunk) [NOTE 7—INTANGIBLE ASSETS AND GOODWILL](index=18&type=section&id=NOTE%207%E2%80%94INTANGIBLE%20ASSETS%20AND%20GOODWILL) This note details the company's intangible assets and goodwill, primarily resulting from the Appliances Connection acquisition, and their respective carrying amounts Intangible Assets Breakdown | Intangible Assets (in thousands) | Sep 30, 2021 | Dec 31, 2020 | | :------------------------------- | :----------- | :----------- | | Customer relationships | $26,549 | $749 | | Marketing related - tradename | $25,704 | $1,368 | | Total intangible assets | $52,253 | $2,117 | | Accumulated amortization | $(4,395) | $(735) | | Intangible assets, net | $47,858 | $1,382 | - Net intangible assets surged from **$1.4 million** at December 31, 2020, to **$47.9 million** at September 30, 2021, primarily due to the Appliances Connection acquisition, which added significant customer relationships and tradenames[86](index=86&type=chunk) Goodwill Breakdown | Goodwill (in thousands) | Amount | | :---------------------- | :----- | | Balance December 31, 2020 | $4,726 | | Preliminary goodwill from acquisition of Appliances Connection | $177,875 | | Preliminary goodwill from acquisition of Appliances Gallery | $1,167 | | Balance September 30, 2021 | $183,768 | - Goodwill increased from **$4.7 million** at December 31, 2020, to **$183.8 million** at September 30, 2021, predominantly from the preliminary goodwill recognized in the Appliances Connection acquisition (**$177.9 million**)[88](index=88&type=chunk) [NOTE 8—ACCOUNTS PAYABLE AND ACCRUED EXPENSES](index=19&type=section&id=NOTE%208%E2%80%94ACCOUNTS%20PAYABLE%20AND%20ACCRUED%20EXPENSES) This note provides a detailed breakdown of the company's accounts payable and accrued expenses, including trade payables, sales tax, and payroll liabilities Accounts Payable and Accrued Expenses Breakdown | Accounts Payable and Accrued Expenses (in thousands) | Sep 30, 2021 | Dec 31, 2020 | | :------------------------------------------------- | :----------- | :----------- | | Trade accounts payable | $37,845 | $5,975 | | Sales tax | $23,836 | $5,804 | | Accrued payroll liabilities | $1,527 | $493 | | Other accrued liabilities | $4,395 | $220 | | Total accounts payable and accrued expenses | $68,013 | $12,702 | - Total accounts payable and accrued expenses increased from **$12.7 million** at December 31, 2020, to **$68.0 million** at September 30, 2021, primarily due to significant increases in trade accounts payable and sales tax liabilities[89](index=89&type=chunk) [NOTE 9—BUSINESS COMBINATIONS](index=19&type=section&id=NOTE%209%E2%80%94BUSINESS%20COMBINATIONS) This note details the company's acquisitions of Appliances Connection and Appliance Gallery, including purchase prices, preliminary goodwill, and the impact on pro forma financial results - On June 2, 2021, the company completed the acquisition of Appliances Connection for an aggregate purchase price of **$222.0 million**, consisting of **$180.0 million** in cash and **$42.0 million** in common stock[90](index=90&type=chunk)[91](index=91&type=chunk) - The Appliances Connection acquisition resulted in preliminary goodwill of **$177.9 million** and acquired net assets of **$47.0 million**, including **$25.8 million** in customer relationships and **$24.3 million** in tradenames[95](index=95&type=chunk)[97](index=97&type=chunk) - On July 29, 2021, the company acquired Appliance Gallery for **$1.4 million** in cash, resulting in preliminary goodwill of **$1.2 million**[98](index=98&type=chunk)[99](index=99&type=chunk)[102](index=102&type=chunk)[104](index=104&type=chunk) Pro Forma Results | Pro Forma Results (in thousands, except per share data) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :---------------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Product sales, net | $141,867 | $102,201 | $404,953 | $260,443 | | Net income (loss) | $3,946 | $(657) | $31,128 | $(3,196) | | Basic earnings per share | $0.04 | $(0.01) | $0.31 | $(0.03) | [NOTE 10—NOTES PAYABLE](index=23&type=section&id=NOTE%2010%E2%80%94NOTES%20PAYABLE) This note details the company's debt obligations, including a senior secured credit facility, term loan maturities, and the repayment of previous loans - On June 2, 2021, the company entered into a **$70.0 million** senior secured credit facility, including a **$60.0 million** Term Loan and a **$10.0 million** Revolving Loan, maturing on June 2, 2026[110](index=110&type=chunk) - The Term Loan bears interest at LIBOR Rate plus 3.9% and requires quarterly principal repayments of **$1.5 million**, with an outstanding balance of **$55.0 million** as of September 30, 2021[111](index=111&type=chunk)[112](index=112&type=chunk) Term Loan Maturities | Term Loan Maturities (in thousands) | Amount | | :---------------------------------- | :----- | | 2021 (remainder of year) | $1,500 | | 2022 | $6,000 | | 2023 | $6,000 | | 2024 | $6,000 | | 2025 | $6,000 | | Thereafter | $33,000 | | Total | $58,500 | | Less: Loan costs | $(3,501) | | Total | $54,999 | - The company repaid a **$3.5 million** Arvest Loan in May 2021 and fully repaid **$5.6 million** in 10% OID Senior Promissory Notes in June 2021, incurring a **$1.7 million** loss on extinguishment of debt[120](index=120&type=chunk)[122](index=122&type=chunk) [NOTE 11—LEASES](index=25&type=section&id=NOTE%2011%E2%80%94LEASES) This note outlines the company's lease obligations, including finance leases for equipment and operating leases for properties, along with related assets and liabilities - The company has three finance leases for forklifts with a total amount due of **$0.2 million** as of September 30, 2021[125](index=125&type=chunk) Operating Lease Liabilities | Operating Lease Liabilities (in thousands) | Amount | | :--------------------------------------- | :----- | | Operating lease right-of-use assets | $12,319 | | Lease liabilities, current portion | $2,127 | | Lease liabilities, long-term | $11,628 | | Total operating lease liabilities | $13,755 | | Weighted average remaining lease term (months) | 91 | | Weighted average discount rate | 4.4% | - Operating lease right-of-use assets totaled **$12.3 million** and total operating lease liabilities were **$13.8 million** as of September 30, 2021, with a weighted average remaining lease term of 91 months[136](index=136&type=chunk) - The company incurred a **$1.4 million** loss on abandonment of a right-of-use asset due to closing an old warehouse and showroom in June 2021[138](index=138&type=chunk) [NOTE 12—SUPPLIER CONCENTRATION](index=28&type=section&id=NOTE%2012%E2%80%94SUPPLIER%20CONCENTRATION) This note highlights the company's significant reliance on a single supplier, DMI, for a substantial portion of its finished goods purchases - For the three and nine months ended September 30, 2021, the company purchased a substantial portion of finished goods from DMI, accounting for **79%** and **66%** of total purchases, respectively[140](index=140&type=chunk) [NOTE 13—RELATED PARTIES](index=28&type=section&id=NOTE%2013%E2%80%94RELATED%20PARTIES) This note discloses transactions and agreements with related parties, including management services, purchasing cooperatives, and lease agreements with entities owned by company executives - The company has a management services agreement with 1847 Partners LLC, owned by its chairman, incurring quarterly management fees of **$62,500**[141](index=141&type=chunk)[143](index=143&type=chunk) - The company is a member of DMI, an appliance purchasing cooperative, and a related party due to common board membership, with vendor rebate deposits due from DMI of **$3.7 million** and total purchases from DMI of **$91.4 million** for the nine months ended September 30, 2021[145](index=145&type=chunk)[146](index=146&type=chunk) - Several subsidiaries have lease agreements with entities owned by Albert Fouerti (CEO) and Elie Fouerti, resulting in total related party rent expense of **$0.6 million** for the period June 2 to September 30, 2021[147](index=147&type=chunk) [NOTE 14—STOCKHOLDERS' EQUITY (DEFICIT)](index=29&type=section&id=NOTE%2014%E2%80%94STOCKHOLDERS'%20EQUITY%20(DEFICIT)) This note details changes in stockholders' equity, including common stock issuances, public offerings, stock option expenses, and warrant activity - As of September 30, 2021, the company had **106.4 million** shares of common stock issued and outstanding, a significant increase from 6.1 million shares at December 31, 2020[149](index=149&type=chunk) - In June 2021, the company completed a public offering, selling **93.1 million** shares of common stock and warrants for total net proceeds of approximately **$194.6 million**, used to fund the Appliances Connection acquisition[151](index=151&type=chunk) - The company's 2020 Equity Incentive Plan was amended to increase reserved shares to **1.0 million**, with stock option expense at **$0.9 million** for the nine months ended September 30, 2021[157](index=157&type=chunk)[158](index=158&type=chunk) Warrants Activity | Warrants Activity (Shares) | Outstanding at Jan 1, 2021 | Granted | Exercised | Outstanding at Sep 30, 2021 | | :------------------------- | :------------------------- | :------ | :-------- | :-------------------------- | | Shares | 55,560 | 93,511,111 | (1,052,248) | 92,514,423 | | Weighted Average Exercise Price | $11.25 | $25.29 | $2.25 | $2.30 | [NOTE 15—COMMITMENTS AND CONTINGENCIES](index=31&type=section&id=NOTE%2015%E2%80%94COMMITMENTS%20AND%20CONTINGENCIES) This note outlines the company's commitments and potential liabilities, specifically an earn-out payment related to a prior acquisition - The company is subject to an earn-out payment of **$0.2 million** related to the Goedeker Business acquisition if EBITDA targets are met by April 5, 2022, and expects to meet this target[168](index=168&type=chunk)[169](index=169&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=33&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS.) This section provides management's perspective on the company's financial condition and results of operations, highlighting the significant impact of the Appliances Connection acquisition, the ongoing challenges from the COVID-19 pandemic on supply chains and freight costs, and the company's liquidity position and capital resources [Overview](index=33&type=section&id=Overview) This section provides a general description of the company's business, its market position, and its operational structure - The company operates as a leading e-commerce destination for appliances, furniture, and home goods, significantly expanding its market position through the June 2021 acquisition of Appliances Connection[177](index=177&type=chunk) - It offers a wide range of national and luxury brands, supported by warehouse fulfillment centers and showrooms across multiple states[177](index=177&type=chunk) [Impact of Coronavirus Pandemic](index=35&type=section&id=Impact%20of%20Coronavirus%20Pandemic) This section discusses the effects of the COVID-19 pandemic on the company's operations, including supply chain disruptions, increased costs, and potential risks to consumer spending - While online sales and call center operations were not materially negatively impacted, the pandemic caused delays and difficulties in sourcing products from manufacturers due to supply chain issues[178](index=178&type=chunk)[179](index=179&type=chunk) - The global deterioration in economic conditions and potential impact on discretionary consumer spending, along with significant volatility in financial markets, pose ongoing risks to the company's business and liquidity[180](index=180&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk) [Emerging Growth Company](index=35&type=section&id=Emerging%20Growth%20Company) This section explains the company's status as an "emerging growth company" under the JOBS Act and the associated exemptions from certain disclosure requirements - The company qualifies as an 'emerging growth company' under the JOBS Act, allowing it to rely on exemptions from certain disclosure requirements, including auditor reports on internal controls and executive compensation advisory votes[183](index=183&type=chunk) - It has elected to use the extended transition period for complying with new or revised accounting standards, which may affect comparability with other companies[183](index=183&type=chunk) [Principal Factors Affecting Our Financial Performance](index=36&type=section&id=Principal%20Factors%20Affecting%20Our%20Financial%20Performance) This section identifies the key internal and external factors that influence the company's financial results, such as customer dynamics, market competition, and operational costs - Key factors affecting financial performance include customer acquisition and retention, competitive pricing, product offerings, industry demand, market conditions, and the successful integration of Appliances Connection[186](index=186&type=chunk) - Freight costs as a percentage of sales increased materially in 2021, from **7.4% to 8.9%** on a consolidated proforma basis, and from **13.7% to 16.6%** excluding Appliances Connection, due to the global pandemic and supply chain crisis, putting downward pressure on gross margins[185](index=185&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance by comparing key operating metrics for the three and nine months ended September 30, 2021, and 2020 [Comparison of Three Months Ended September 30, 2021 and 2020](index=37&type=section&id=Comparison%20of%20Three%20Months%20Ended%20September%2030,%202021%20and%202020) This section compares the company's financial performance for the three months ended September 30, 2021, against the same period in 2020, highlighting significant changes in sales, gross profit, and net income Key Operating Results (Three Months) | Metric (in thousands) | Sep 30, 2021 | Sep 30, 2020 | Change ($) | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | :--------- | | Product sales, net | $141,867 | $13,435 | $128,432 | 956.0% | | Cost of goods sold | $110,495 | $11,265 | $99,230 | 880.9% | | Gross profit | $31,372 | $2,170 | $29,202 | 1345.7% | | Total operating expenses | $24,870 | $5,714 | $19,156 | 335.3% | | Income (loss) from operations | $6,502 | $(3,544) | $10,046 | - | | Net income (loss) | $3,316 | $(4,227) | $7,543 | 178.5% | - Product sales, net, increased by **956.0% to $141.9 million**, primarily due to the Appliances Connection acquisition, while excluding the acquisition, sales decreased by 6.7% due to reduced advertising spend[188](index=188&type=chunk) - Gross profit increased by **1,345.7% to $31.4 million**, with gross margin improving from **16.2% to 22.1%**, largely driven by the Appliances Connection acquisition, though excluding the acquisition, gross profit decreased by 50.4% and gross margin declined to 8.6% due to reduced vendor rebates and increased shipping costs[192](index=192&type=chunk) - Net income was **$3.3 million**, a **$7.5 million** improvement from a net loss of $4.2 million in the prior year, primarily attributable to the Appliances Connection acquisition[202](index=202&type=chunk) [Comparison of Nine Months Ended September 30, 2021 and 2020](index=40&type=section&id=Comparison%20of%20Nine%20Months%20Ended%20September%2030,%202021%20and%202020) This section compares the company's financial performance for the nine months ended September 30, 2021, against the same period in 2020, focusing on sales growth, gross profit, and net income Key Operating Results (Nine Months) | Metric (in thousands) | Sep 30, 2021 | Sep 30, 2020 | Change ($) | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | :--------- | | Product sales, net | $219,637 | $38,397 | $181,240 | 472.0% | | Cost of goods sold | $172,581 | $32,061 | $140,520 | 438.3% | | Gross profit | $47,056 | $6,336 | $40,720 | 642.7% | | Total operating expenses | $45,097 | $13,456 | $31,641 | 235.1% | | Income (loss) from operations | $1,959 | $(7,120) | $9,079 | - | | Net income (loss) | $3,856 | $(11,387) | $15,243 | 133.9% | - Product sales, net, increased by **472.0% to $219.6 million**, including **$177.1 million** from Appliances Connection, while excluding the acquisition, sales increased by 10.8% due to increased advertising in the first six months[204](index=204&type=chunk) - Gross profit increased by **642.7% to $47.1 million**, with gross margin improving from **16.5% to 21.4%**, primarily due to the Appliances Connection acquisition, though excluding the acquisition, gross margin declined by 90 bps to 15.6% due to increased shipping costs[208](index=208&type=chunk) - Net income was **$3.9 million**, a **$15.2 million** improvement from a net loss of $11.4 million in the prior year, largely driven by the Appliances Connection acquisition and the elimination of the allowance for deferred tax assets[217](index=217&type=chunk)[218](index=218&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to generate and manage cash, including cash flow activities, public offerings, debt obligations, and contractual commitments [Summary of Cash Flow](index=44&type=section&id=Summary%20of%20Cash%20Flow) This section provides a summary of the company's cash flows from operating, investing, and financing activities for the nine months ended September 30, 2021, and 2020 Key Cash Flow Metrics | Cash Flow (in thousands) | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $(18,316) | $7,383 | | Net cash used in investing activities | $(203,628) | $(51) | | Net cash provided by financing activities | $247,218 | $4,983 | | Net change in cash and restricted cash | $25,274 | $12,315 | | Cash and restricted cash, end of period | $35,186 | $12,379 | - Net cash used in operating activities was **$18.3 million**, a shift from $7.4 million provided in the prior year, primarily due to changes in customer deposits and merchandise inventory[224](index=224&type=chunk) - Net cash used in investing activities dramatically increased to **$203.6 million**, mainly due to the **$201.5 million** cash paid for the Appliances Connection acquisition[225](index=225&type=chunk) - Net cash provided by financing activities surged to **$247.2 million**, driven by **$194.6 million** from public offerings and **$55.2 million** from term loan proceeds[226](index=226&type=chunk) [Public Offerings](index=44&type=section&id=Public%20Offerings) This section details the company's equity fundraising activities, including an initial public offering in 2020 and a subsequent public offering in 2021 to fund acquisitions - In August 2020, the company completed an initial public offering, selling **1.1 million** shares of common stock for net proceeds of approximately **$8.6 million**[227](index=227&type=chunk) - In June 2021, the company conducted another public offering, selling **93.1 million** shares of common stock and warrants, generating approximately **$194.6 million** in net proceeds, primarily to fund the Appliances Connection acquisition[228](index=228&type=chunk)[229](index=229&type=chunk)[231](index=231&type=chunk) [Debt](index=45&type=section&id=Debt) This section outlines the company's debt structure, including a senior secured credit facility, term loans, and other vehicle and finance leases - The company secured a **$70.0 million** senior secured credit facility in June 2021, comprising a **$60.0 million** Term Loan and a **$10.0 million** Revolving Loan, with the Term Loan having an outstanding balance of **$55.0 million** as of September 30, 2021[232](index=232&type=chunk) - The Term Loan matures on June 2, 2026, and requires quarterly principal payments of **$1.5 million**, bearing interest at LIBOR plus 3.9%[233](index=233&type=chunk)[234](index=234&type=chunk) - The company also has **$1.4 million** in vehicle loans and **$0.2 million** in finance leases for forklifts as of September 30, 2021[236](index=236&type=chunk)[237](index=237&type=chunk) [Contractual Obligations](index=46&type=section&id=Contractual%20Obligations) This section details the company's principal commitments, including loan obligations, management fees, earn-out payments, and various lease agreements - Principal commitments include obligations under various loans and contractual commitments such as a management services agreement, an earn-out payment, and multiple lease agreements[238](index=238&type=chunk) - The company pays a quarterly management fee of **$62,500** to 1847 Partners LLC and expects to make a **$0.2 million** earn-out payment related to the Goedeker Business acquisition[239](index=239&type=chunk)[241](index=241&type=chunk)[242](index=242&type=chunk) - Significant lease agreements include a new principal office lease in St. Charles, MO (terminating April 2027), and related-party leases for premises in Brooklyn, NY, and a warehouse in Hamilton, NJ[244](index=244&type=chunk)[245](index=245&type=chunk)[246](index=246&type=chunk)[247](index=247&type=chunk) [Off-Balance Sheet Arrangements](index=47&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any off-balance sheet arrangements that could materially impact the company's financial condition or results of operations - The company has no off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on its financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources[250](index=250&type=chunk) [Critical Accounting Policies and Estimates](index=47&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section discusses the significant accounting policies and estimates that require management judgment and can materially affect the reported financial amounts - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts, which are regularly evaluated based on historical industry experience and reasonable assumptions[251](index=251&type=chunk) - There were no significant changes in accounting policies and estimates during the three and nine months ended September 30, 2021, other than newly adopted accounting standards disclosed in Note 2[253](index=253&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=47&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK.) This section states that there are no quantitative and qualitative disclosures about market risk applicable to the company for the reported period - The company has no applicable quantitative and qualitative disclosures about market risk for the period[254](index=254&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=47&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES.) Management concluded that the company's disclosure controls and procedures were ineffective as of September 30, 2021, due to identified deficiencies. The company plans to retain additional resources to remedy these issues, following recent changes in executive leadership - As of September 30, 2021, the company's disclosure controls and procedures were deemed ineffective due to identified deficiencies[255](index=255&type=chunk)[256](index=256&type=chunk) - The company intends to retain additional individuals and resources to remedy the ineffective controls, subject to additional financing[256](index=256&type=chunk) - During the three months ended September 30, 2021, a new Chief Executive Officer and Chief Financial Officer were hired, but no other material changes in internal control over financial reporting occurred[257](index=257&type=chunk)[258](index=258&type=chunk) [PART II OTHER INFORMATION](index=49&type=section&id=PART%20II%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, equity sales, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=49&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS.) The company is not currently aware of any legal proceedings or claims that are expected to have a material adverse effect on its business, financial condition, or operating results - The company is not aware of any legal proceedings or claims that are expected to materially adversely affect its business, financial condition, or operating results[261](index=261&type=chunk) [ITEM 1A. RISK FACTORS](index=49&type=section&id=ITEM%201A.%20RISK%20FACTORS.) This section indicates that there are no new material risk factors to report for the current period, referring readers to the Annual Report on Form 10-K for a comprehensive discussion of risks - No new material risk factors are applicable for this reporting period[262](index=262&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=49&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS.) The company did not engage in any unregistered sales of equity securities during the three months ended September 30, 2021, that were not previously disclosed, nor did it repurchase any common stock - No unregistered sales of equity securities occurred during the three months ended September 30, 2021, that were not previously disclosed[263](index=263&type=chunk) - The company did not repurchase any shares of its common stock during the three months ended September 30, 2021[264](index=264&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=49&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES.) The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[265](index=265&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=49&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES.) This item is not applicable to the company - Mine safety disclosures are not applicable to the company[266](index=266&type=chunk) [ITEM 5. OTHER INFORMATION](index=49&type=section&id=ITEM%205.%20OTHER%20INFORMATION.) The company has no other information to disclose that was required in a Form 8-K during the quarter but was not reported, and there have been no material changes to procedures for recommending board nominees - No other information required in a Form 8-K during the quarter was left unreported[267](index=267&type=chunk) - There have been no material changes to the procedures by which security holders may recommend nominees to the board of directors[267](index=267&type=chunk) [ITEM 6. EXHIBITS](index=50&type=section&id=ITEM%206.%20EXHIBITS.) This section lists all exhibits filed with the Form 10-Q, including organizational documents, warrant agreements, employment agreements, and certifications, indicating which are filed or furnished herewith - The exhibits include organizational documents (Certificate of Incorporation, Bylaws), warrant agreements, employment and separation agreements, warehouse agreements, and certifications (Sarbanes-Oxley Act Section 302 and 906)[269](index=269&type=chunk)

Financial Performance - Product sales for the three months ended June 30, 2021, reached $64,072,098, an increase of $48,787,067, or 319.18% compared to $15,285,031 for the same period in 2020[188] - Total revenue for the three months ended June 30, 2021, was $64,072,098, a significant increase from $15,285,031 in the same period of 2020, representing a growth of 319.56%[192] - Product sales for the six months ended June 30, 2021, were $77,769,466, including $47,780,835 from Appliances Connection, representing an increase of $52,807,257 or 211.55% from $24,962,209 in the same period of 2020[208] - Total revenue for the six months ended June 30, 2021, was $77,769,466, a significant increase from $24,962,209 in the same period of 2020[210] - Gross profit for the three months ended June 30, 2021, was $13,055,489, representing 20.38% of net sales, up from 17.01% in 2020[189] - Gross profit for the three months ended June 30, 2021, was $13,055,489, an increase of $10,455,616 or 402.16% from $2,599,873 in the same period of 2020[194] - Gross profit for the six months ended June 30, 2021, was $15,683,946, an increase of $11,518,065, or 276.49%, compared to $4,165,881 in the same period of 2020[212] - The net income for the three months ended June 30, 2021, was $4,032,694, compared to a net loss of $4,951,828 in the same period of 2020[189] - Net income for the three months ended June 30, 2021, was $4,032,694, an increase of $8,984,522 or 181.44% compared to a net loss of $4,951,828 in the same period of 2020[204] - The company reported a net income of $539,479 for the six months ended June 30, 2021, compared to a net loss of $7,158,748 for the same period in 2020, marking an increase of $7,698,227, or 107.54%[221] Expenses and Losses - Total operating expenses for the three months ended June 30, 2021, were $14,318,319, or 22.35% of net sales, compared to 26.09% in 2020[189] - Personnel expenses for the three months ended June 30, 2021, were $4,821,168, an increase of $3,780,979 or 363.49% compared to $1,040,189 in the same period of 2020[195] - General and administrative expenses for the three months ended June 30, 2021, were $2,500,381, an increase of $990,964 or 65.65% from $1,509,417 in the same period of 2020[201] - The company experienced a loss from operations of $1,262,830 for the three months ended June 30, 2021, compared to a loss of $1,387,999 in 2020[189] - The company incurred operating losses of approximately $4,543,516 and negative cash flow from operations of $6,985,302 for the six months ended June 30, 2021[223] Acquisition and Integration - The acquisition of Appliances Connection contributed $47,780,835 to product sales from June 2, 2021, to June 30, 2021[188] - The company incurred acquisition expenses of $357,411 related to the acquisition of Appliances Connection during the three months ended June 30, 2021[199] - The acquisition of Appliances Connection on June 2, 2021, is expected to positively impact future profitability, as only 29 days of their operations are included in the current results[223] - Cost of goods sold increased by $41,289,192, or 198.54%, to $62,085,520 for the six months ended June 30, 2021, primarily due to the acquisition of Appliances Connection[211] Operational Insights - Site sessions increased to approximately 5.3 million in the three months ended June 30, 2021, compared to 3.1 million in the same period of 2020[187] - The company’s logistics infrastructure is seen as a competitive advantage, enhancing efficiency and reducing costs[173] - The company plans to leverage Appliances Connection's logistics technology to improve operational efficiencies and reduce costs[174] - The impact of the COVID-19 pandemic has not materially affected operations due to the company's online sales model[175] - For the three months ended June 30, 2021, the company experienced cancellations approximating $11.5 million due to supply chain issues related to COVID-19, with a shipping ratio of 47.3% compared to a historical ratio of 80.7%[190] - For the six months ended June 30, 2021, the company experienced cancellations of customer orders due to supply chain issues, estimating losses of approximately $22.5 million[209] - The impact of COVID-19 on the company's business remains uncertain, but it has been factored into future operational assumptions[225] Cash and Financing - As of June 30, 2021, the company had cash and cash equivalents of $45,234,542 and restricted cash of $8,385,848, indicating strong liquidity[222] - Net cash provided by financing activities for the six months ended June 30, 2021, was $248,826,442, compared to net cash used of $353,566 for the same period in 2020[229] - The public offering on June 2, 2021, generated total gross proceeds of $205,020,000, with net proceeds of approximately $190,481,100 after underwriting commissions and expenses[231] - A credit and guaranty agreement was established on June 2, 2021, providing senior secured credit facilities totaling $70,000,000, including a $60,000,000 term loan and a $10,000,000 revolving credit facility[235] - As of June 30, 2021, the outstanding balance of the term loan was $56,311,521, with principal repayments of $1,500,000 due quarterly starting September 30, 2021[237] - The term loan bears interest at the LIBOR rate plus an applicable margin of 3.9%, with an initial interest period of six months[236] Other Financial Information - The company reported a total other expense of $2,752,954 for the three months ended June 30, 2021, a decrease from $4,252,782 in the same period of 2020[202] - The company entered into a management services agreement with a quarterly fee of $62,500, expensing the same amount for the three months ended June 30, 2021, and 2020[243] - The company has no off-balance sheet arrangements that could materially affect its financial condition or results of operations[250] - The company issued a 10% OID senior secured promissory note in the principal amount of $2,750,000 to institutional investors, receiving net proceeds of $4,590,000 after fees[234] - As of June 30, 2021, an aggregate of 1,039,148 warrants were converted to common stock, yielding proceeds of $2,338,083[232]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 or FORM 10−Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2021 3817 Millstone Parkway, St. Charles, MO 63301 (Exact name of registrant as specified in its charter) Delaware 83-3713938 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commiss ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: December 31, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _____________ Commission File No. 001-39418 1847 GOEDEKER INC. (Exact name of registrant as specified in its charter) | Delaware | 83-3713938 | | --- ...