1847 LLC(EFSH) - 2025 Q2 - Quarterly Report

Financial Statements This section presents 1847 Holdings LLC's unaudited condensed consolidated financial statements, prepared in accordance with GAAP interim financial information and Form 10-Q instructions Unaudited Condensed Consolidated Financial Statements This section provides the unaudited condensed consolidated financial statements for 1847 Holdings LLC, prepared under GAAP for interim reporting Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 This section presents the condensed consolidated balance sheets for 1847 Holdings LLC as of June 30, 2025, and December 31, 2024 Balance Sheet Key Data Comparison | Metric | June 30, 2025 ($) | December 31, 2024 ($) | Change Amount ($) | Change Percentage | | :--------------------------------- | :------------ | :---------------- | :--------- | :--------- | | Cash and Cash Equivalents | $1,033,578 | $2,457,086 | $(1,423,508) | (57.9%) | | Accounts Receivable, Net | $9,159,479 | $5,361,405 | $3,798,074 | 70.8% | | Total Current Assets | $14,827,624 | $12,630,493 | $2,197,131 | 17.4% | | Total Assets | $34,846,296 | $33,647,738 | $1,198,558 | 3.6% | | Accounts Payable and Accrued Expenses | $11,828,446 | $5,853,307 | $5,975,139 | 102.1% | | Total Current Liabilities | $102,170,786 | $124,558,252 | $(22,387,466) | (18.0%) | | Total Liabilities | $107,948,744 | $130,113,775 | $(22,165,031) | (17.0%) | | Total Shareholders' Deficit | $(73,102,448) | $(96,466,037) | $23,363,589 | 24.2% | Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024 This section presents the condensed consolidated statements of operations for the three and six months ended June 30, 2025 and 2024 Statements of Operations Key Data (Continuing Operations) | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenue | $12,806,457 | $2,665,805 | $22,889,929 | $4,750,259 | | Total Operating Expenses | $10,333,149 | $4,329,841 | $20,515,243 | $9,582,328 | | Operating Income (Loss) | $2,473,308 | $(1,664,036) | $2,374,686 | $(4,832,069) | | Total Other Income (Expense) | $22,046,876 | $(1,590,795) | $21,846,131 | $(9,117,871) | | Income (Loss) from Continuing Operations Before Income Taxes | $24,520,184 | $(3,254,831) | $24,220,817 | $(13,949,940) | | Income Tax Benefit (Provision) | $(840,000) | $308,000 | $(768,000) | $397,000 | | Net Income (Loss) from Continuing Operations | $23,680,184 | $(2,946,831) | $23,452,817 | $(13,552,940) | | Net Income (Loss) Attributable to 1847 Holdings | $22,603,964 | $(4,875,229) | $22,200,863 | $(15,275,742) | | Basic Earnings (Loss) Per Share Attributable to Common Stockholders | $0.71 | $(29.15) | $0.76 | $(97.05) | | Diluted Earnings (Loss) Per Share Attributable to Common Stockholders | $0.15 | $(29.15) | $0.16 | $(97.05) | Condensed Consolidated Statements of Shareholders' Deficit for the Three and Six Months Ended June 30, 2025 and 2024 This section presents the condensed consolidated statements of shareholders' deficit for the three and six months ended June 30, 2025 and 2024 Shareholders' Deficit Changes | Metric | December 31, 2024 ($) | March 31, 2025 ($) | June 30, 2025 ($) | | :----------------------------------- | :---------------- | :--------------- | :-------------- | | Total Shareholders' Deficit | $(96,466,037) | $(95,560,794) | $(73,102,448) | | Common Shares Issued | 25,400,386 | 26,539,774 | 32,303,735 | | Net Income (Loss) Attributable to 1847 Holdings (Three Months Ended June 30, 2025) | N/A | N/A | $22,603,964 | Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 This section presents the condensed consolidated statements of cash flows for the six months ended June 30, 2025 and 2024 Cash Flow Statement Key Data (Continuing Operations) | Cash Flow Activity | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :----------------------------------------- | :----------------------------- | :----------------------------- | | Net Cash Provided by (Used in) Operating Activities | $973,606 | $(4,696,037) | | Net Cash Used in Investing Activities | $(880,518) | $0 | | Net Cash Provided by (Used in) Financing Activities | $(2,374,635) | $4,644,899 | | Net Change in Cash and Cash Equivalents from Continuing Operations | $(2,281,547) | $(51,138) | | Cash and Cash Equivalents from Continuing Operations, End of Period | $1,534,507 | $559,044 | - Financial statements are prepared in accordance with GAAP interim financial information and Form 10-Q instructions[27] - Management believes all necessary adjustments, including only normal recurring adjustments, have been completed for a fair presentation of the financial statements[27] - Operating results for the six months ended June 30, 2025, are not necessarily indicative of results for the year ending December 31, 2025[27] Condensed Consolidated Balance Sheet Key Data | Metric | June 30, 2025 ($) | December 31, 2024 ($) | | :------------------------- | :------------ | :---------------- | | Total Assets | $34,846,296 | $33,647,738 | | Total Liabilities | $107,948,744 | $130,113,775 | | Total Shareholders' Deficit | $(73,102,448) | $(96,466,037) | Condensed Consolidated Statements of Operations Key Data (Continuing Operations) | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenue | $12,806,457 | $2,665,805 | $22,889,929 | $4,750,259 | | Net Income (Loss) from Continuing Operations | $23,680,184 | $(2,946,831) | $23,452,817 | $(13,552,940) | | Basic Earnings (Loss) Per Share Attributable to Common Stockholders | $0.75 | $(17.36) | $0.80 | $(85.66) | | Diluted Earnings (Loss) Per Share Attributable to Common Stockholders | $0.16 | $(17.36) | $0.17 | $(85.66) | Condensed Consolidated Statements of Cash Flows Key Data (Continuing Operations) | Cash Flow Activity | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :----------------------------------------- | :----------------------------- | :----------------------------- | | Net Cash Provided by (Used in) Operating Activities | $973,606 | $(4,696,037) | | Net Cash Used in Investing Activities | $(880,518) | $0 | | Net Cash Provided by (Used in) Financing Activities | $(2,374,635) | $4,644,899 | | Net Change in Cash and Cash Equivalents from Continuing Operations | $(2,281,547) | $(51,138) | Notes to Condensed Consolidated Financial Statements This section provides detailed notes to the unaudited condensed consolidated financial statements, covering presentation basis, liquidity, discontinued operations, and key accounts NOTE 1—BASIS OF PRESENTATION AND OTHER INFORMATION This section outlines the basis of presentation for the financial statements and other relevant accounting information - The company has committed to selling Wolo Mfg. Corp. and Wolo Industrial Horn & Signal, Inc. (collectively "Wolo"), which constitutes the automotive products segment, with completion expected in 2025, classified as discontinued operations due to a strategic shift[28][30] - Certain prior period amounts related to discontinued operations have been reclassified and separately presented in the condensed consolidated financial statements and notes to conform with the current period's presentation[31] - ASU 2023-05 (Joint Venture Formations) issued by the FASB has been adopted but had no material impact on the company's condensed consolidated financial statements[32] - ASU 2023-09 (Improvements to Income Tax Disclosures) and ASU 2024-03 (Disaggregation of Expenses—Income Statement) issued by the FASB are not yet effective, and the company is evaluating their impact on the financial statements[34][35] NOTE 2—LIQUIDITY AND GOING CONCERN ASSESSMENT This section assesses the company's liquidity position and its ability to continue as a going concern - As of June 30, 2025, the company had $1,033,578 in cash and cash equivalents, $500,929 in restricted cash, and a working capital deficit of $87,343,162[38] - For the six months ended June 30, 2025, the company generated $2,374,686 in operating income and $973,606 in cash flow from continuing operations[38] - The company has incurred operating losses since inception and anticipates insufficient cash and other resources to sustain current operations or meet obligations over the next twelve months without additional financing, raising substantial doubt about its ability to continue as a going concern[39] - Management plans to address these concerns through additional debt and equity financing, but there is no assurance that these plans will effectively provide the necessary funding[42] NOTE 3—DISCONTINUED OPERATIONS This section details the financial results and status of operations that have been or are planned to be discontinued - The company plans to sell Wolo (automotive products segment) in 2025, classifying it as discontinued operations[44] Wolo Assets and Liabilities Held for Sale | Metric | June 30, 2025 ($) | December 31, 2024 ($) | | :-------------------------- | :------------ | :---------------- | | Total Assets Held for Sale | $901,347 | $1,132,626 | | Total Liabilities Held for Sale | $284,497 | $361,368 | Wolo Discontinued Operations Performance | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenue | $208,447 | $1,103,087 | $1,116,886 | $2,881,448 | | Net Loss from Discontinued Operations | $(289,252) | $(304,723) | $(477,838) | $(412,363) | - Asien's Appliance, Inc. transferred its assets to creditors on February 26, 2024, and the company no longer holds a financial interest, with its results reported as discontinued operations[49] - ICU Eyewear, Inc.'s assets were sold through foreclosure on August 5, 2024, due to loan default, with the company receiving no cash and no longer holding a financial interest, its results reported as discontinued operations[53] - High Mountain Door & Trim Inc.'s assets were sold on September 30, 2024, for $17,000,000, and the company reduced the retained amount by $858,039 for post-closing working capital adjustments during the six months ended June 30, 2025[59][60] NOTE 4—DISAGGREGATION OF REVENUES AND SEGMENT REPORTING This section provides a breakdown of revenues and details the company's reportable segments - Following the divestiture of the automotive products segment, the company currently has only one reportable segment: the Construction segment, which provides finish carpentry and related products and services[65] - The company aggregates all other non-reportable business activities into the Corporate Services segment, which includes costs associated with executive management, financing activities, and other public company-related expenses[66] Revenue by Product/Service | Revenue Category | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Cabinets and Millwork | $6,375,565 | $2,665,805 | $10,478,163 | $4,750,259 | | Doors, Frames, Hardware, and Trim | $6,194,681 | $- | $11,971,519 | $- | | Specialty Building Accessories | $236,211 | $- | $440,247 | $- | | Total Revenue | $12,806,457 | $2,665,805 | $22,889,929 | $4,750,259 | Segment Operating Income (Loss) | Segment | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :---------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Construction | $2,208,297 | $(1,110,873) | $2,559,419 | $(1,822,895) | | Corporate Services | $265,011 | $(553,163) | $(184,733) | $(3,009,174) | | Total | $2,473,308 | $(1,664,036) | $2,374,686 | $(4,832,069) | NOTE 5—PROPERTY AND EQUIPMENT This section provides details on the company's property and equipment, net of accumulated depreciation Property and Equipment, Net | Metric | June 30, 2025 ($) | December 31, 2024 ($) | | :----------------------- | :------------ | :---------------- | | Property and Equipment, Net | $968,504 | $1,115,208 | - Depreciation expense for the three months ended June 30, 2025, was $110,272, an increase of $4,944 (4.7%) from the prior year period; for the six months ended June 30, 2025, it was $219,879, an increase of $5,185 (2.4%) from the prior year period[72] NOTE 6—INTANGIBLE ASSETS This section details the company's intangible assets, net of accumulated amortization Intangible Assets, Net | Metric | June 30, 2025 ($) | December 31, 2024 ($) | | :--------------- | :------------ | :---------------- | | Intangible Assets, Net | $12,040,780 | $12,524,346 | - Amortization expense for the three months ended June 30, 2025, was $241,783, an increase of $179,039 (285.4%) from the prior year period; for the six months ended June 30, 2025, it was $483,566, an increase of $358,078 (285.4%) from the prior year period[74] Estimated Future Amortization Expense for Intangible Assets | Year Ended December 31 | Amount ($) | | :------------------- | :--------- | | 2025 (Remaining) | $483,566 | | 2026 | $967,132 | | 2027 | $967,132 | | 2028 | $967,132 | | 2029 | $967,132 | | Thereafter | $7,688,686 | | Total Estimated Amortization Expense | $12,040,780 | NOTE 7—ACCOUNTS PAYABLE AND ACCRUED EXPENSES This section provides a breakdown of accounts payable and accrued expenses Accounts Payable and Accrued Expenses | Metric | June 30, 2025 ($) | December 31, 2024 ($) | Change Amount ($) | Change Percentage | | :----------------------- | :------------ | :---------------- | :--------- | :--------- | | Total Accounts Payable and Accrued Expenses | $11,828,446 | $5,853,307 | $5,975,139 | 102.1% | | Trade Accounts Payable | $3,771,154 | $1,633,593 | $2,137,561 | 130.8% | | Accrued Payroll Liabilities | $1,541,925 | $1,185,900 | $356,025 | 30.0% | | Accrued Interest | $3,901,691 | $1,841,011 | $2,060,680 | 111.9% | | Accrued Taxes | $1,354,510 | $79,420 | $1,275,090 | 1605.5% | NOTE 8—LEASES This section outlines the company's lease arrangements, including operating and finance leases - In February 2025, subsidiary CMD Inc. entered into a three-year office lease agreement, resulting in a right-of-use asset and liability of $97,379[78] - In May 2025, the company recognized an impairment loss of $112,705 on a right-of-use asset related to an abandoned lease due to closing a warehouse facility and relocating operations[79] Operating Lease Liabilities | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Operating Lease Right-of-Use Assets ($) | $1,659,413 | $1,964,276 | | Total Operating Lease Liabilities ($) | $1,825,658 | $2,017,604 | | Weighted-Average Remaining Lease Term (Years) | 3.89 | 4.19 | | Weighted-Average Discount Rate | 14.54% | 14.17% | - Rent expense for the three months ended June 30, 2025, was $230,017, an increase of $116,608 (102.8%) from the prior year period; for the six months ended June 30, 2025, it was $455,218, an increase of $230,732 (102.8%) from the prior year period[80] Finance Lease Liabilities | Metric | June 30, 2025 ($) | | :--------------------------------- | :------------ | | Total Finance Lease Liabilities | $515,491 | | Weighted-Average Remaining Lease Term (Years) | 2.61 | | Weighted-Average Discount Rate | 5.15% | NOTE 9—FAIR VALUE MEASUREMENTS This section provides information on assets and liabilities measured at fair value on a recurring basis Fair Value Measurements (June 30, 2025) | Description | Level 3 ($) | Total ($) | | :-------------------- | :------------ | :------------ | | Warrant Liabilities | $57,860,005 | $57,860,005 | - For the six months ended June 30, 2025, derivative liabilities decreased from $185,000 to $0 due to a fair value change gain of $(185,000), and warrant liabilities decreased from $85,779,788 to $57,860,005 due to a fair value change gain of $(27,723,683) and extinguishment upon settlement of $(196,100)[84] NOTE 10—NOTES PAYABLE This section details the company's notes payable, including terms and changes during the period Notes Payable, Net | Metric | June 30, 2025 ($) | December 31, 2024 ($) | | :--------------- | :------------ | :---------------- | | Notes Payable, Net | $7,422,716 | $7,794,441 | - The maturity date of the 20% OID Subordinated Promissory Note from March 2024 was extended to November 7, 2025, with an additional $1,358,966 as a modification fee, resulting in a debt extinguishment loss[87] - The purchase and sale agreement for future revenue loans was amended, increasing the outstanding balance by $845,650 for net cash proceeds of $465,650, with an effective interest rate of 82.2%[89] - On May 9, 2025, a default event occurred on the 12% Service Promissory Note, leading to a $250,000 increase in principal and recognition of a debt extinguishment loss[91] NOTE 11—RELATED PARTIES This section discloses transactions and balances with related parties - On June 27, 2025, subsidiary 1847 Cabinet Inc. issued an 8% promissory note with a principal of $1,567,621 to Stephen Mallatt, Jr. and Rita Mallatt, resulting in a debt extinguishment loss of $458,218[92] - As of June 30, 2025, the total outstanding principal balance for related party notes payable was $1,567,621[93] NOTE 12—SHAREHOLDERS' DEFICIT This section provides details on changes in shareholders' deficit, including preferred stock, common stock, and warrants - For the three months ended June 30, 2025, dividends accrued for Series A, Series C, and Series D preferred stock were $8,852, $12,506, and $53,189, respectively[95][96][97] - On March 25, 2025, the company established Series F Convertible Preferred Stock with a par value of $1,000 per share and a conversion price of $0.1549 per share, which ranks senior to common stock, distribution shares, Series C, and Series D preferred stock, but junior to Series A Senior Convertible Preferred Stock and all debt, regarding dividends and liquidation distributions[98][103] - The company issued 1,027 shares of Series F Convertible Preferred Stock in exchange for Series A warrants, resulting in a Series A warrant extinguishment loss of $942,232[105] - On March 11, 2025, the number of authorized common shares was increased from 500 million to 2 billion[107] - For the six months ended June 30, 2025, the company issued 1,139,388 common shares for convertible note conversions and 5,763,961 common shares for cashless exercise of prepaid warrants[108] - On March 11, 2025, the exercise prices for Series A and Series B warrants were adjusted from $1.50 and $0.81 to $0.81 and $0.54, respectively, with a proportional increase in warrant quantities; as of June 30, 2025, 158,844,463 warrants were outstanding with a weighted-average exercise price of $0.53 and a remaining contractual term of 3.98 years[109][111][112] NOTE 13—EARNINGS (LOSS) PER SHARE This section presents the basic and diluted earnings (loss) per share calculations Basic Earnings (Loss) Per Share (Continuing Operations) | Period | 2025 ($) | 2024 ($) | | :--------------------------- | :----- | :----- | | Three Months Ended June 30 | $0.75 | $(17.36) | | Six Months Ended June 30 | $0.80 | $(85.66) | Diluted Earnings (Loss) Per Share (Continuing Operations) | Period | 2025 ($) | 2024 ($) | | :--------------------------- | :----- | :----- | | Three Months Ended June 30 | $0.16 | $(17.36) | | Six Months Ended June 30 | $0.17 | $(85.66) | - For the three and six months ended June 30, 2025, 139,281,660 potential common share equivalents from warrants, Series C preferred stock, and Series D preferred stock were excluded from diluted earnings per share calculations due to their anti-dilutive effect[114] NOTE 14—SUBSEQUENT EVENTS This section discloses significant events that occurred after the balance sheet date - In July 2025, the company issued 4,011,080 common shares (prepaid warrants) and 1,837,500 common shares (Series A warrants) through cashless exercise[115] Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's discussion and analysis of the company's financial condition, operating results, and liquidity, emphasizing its acquisition strategy and capital needs - The company is an acquisition holding company focused on acquiring and managing small businesses in North America with enterprise values under $50 million[123] - The company seeks to acquire controlling interests in small businesses operating in industries with long-term macroeconomic growth opportunities, positive and stable earnings and cash flows, minimal technological or competitive obsolescence threats, and strong management teams[129] - The company aims to enhance businesses over the long term through organic growth opportunities, add-on acquisitions, and operational improvements, with the goal of paying regular dividends to common stockholders and increasing common stockholder value[128][129] Overview This section outlines the company's business model, recent acquisitions and divestitures, and its strategy as an acquisition holding company - The company focuses on acquiring and managing small businesses in North America with enterprise values under $50 million[123][129] - Recent acquisitions include Kyle's Custom Wood Shop, Inc. (September 2020), Wolo Mfg. Corp. (March 2021, planned for sale in 2025), and CMD Inc. (December 2024)[124][125][127] - Recent divestitures include High Mountain Door & Trim Inc. (sold September 2024)[126] Management Fees This section details the company's management fee structure, including parent and subsidiary fees, and reports related expenses for the period - Parent company management fees are 0.5% of adjusted net assets, reduced by offsetting management fees paid by subsidiaries; no parent company management fees were incurred for the three and six months ended June 30, 2025 and 2024[130] - Subsidiary management fees for the three months ended June 30, 2025, were $125,000 for 1847 Cabinet, $75,000 for 1847 Wolo (included in discontinued operations), and $75,000 for 1847 CMD[131][132][134] - Consolidated management fees from continuing operations totaled $200,000 for the three months ended June 30, 2025, and $400,000 for the six months ended June 30, 2025[136] Segments This section identifies the company's sole reportable segment as Construction, post-divestitures, and clarifies the Corporate Services segment's role - Following recent divestitures, the company currently has only one reportable segment: the Construction segment, which provides finish carpentry and related products and services[137] - The Corporate Services segment includes costs associated with executive management, financing activities, and other public company-related expenses, but is not considered for operating decisions and segment performance evaluation[138] Discontinued Operations This section outlines the company's recent discontinued operations, including ICU Eyewear, High Mountain, and Wolo, all representing strategic shifts - ICU Eyewear's assets were sold through foreclosure on August 5, 2024, due to loan default, and the company no longer holds a financial interest, with its operating results reported as discontinued operations[140] - High Mountain's assets were sold on September 30, 2024, for $17,000,000, and the retained amount was reduced by $858,039 for post-closing working capital adjustments during the six months ended June 30, 2025[141] - The company has committed to selling Wolo (automotive products segment), with completion expected in 2025, and its operating results are reported as discontinued operations[142] Results of Operations This section analyzes the company's continuing operations, showing significant revenue growth, a shift to operating income, and net profit, driven by acquisition and warrant fair value changes - Company revenue significantly increased, primarily due to the CMD acquisition[145][156] - The company transitioned from a significant net loss to net profit, mainly driven by fair value changes in warrant liabilities[152][163] - Cost of revenue, personnel costs, depreciation and amortization, and general and administrative expenses substantially increased due to the CMD acquisition but decreased as a percentage of revenue, while professional fees decreased in absolute terms[146][147][148][149][150][157][158][159][160][161] Comparison of the Three Months Ended June 30, 2025 and 2024 This section compares the company's continuing operations performance for the three months ended June 30, 2025, and 2024 Continuing Operations Performance Comparison for the Three Months Ended June 30, 2025 and 2024 | Metric (Continuing Operations) | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Change Amount ($) | Change Percentage | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Revenue | $12,806,457 | $2,665,805 | $10,140,652 | 380.4% | | Cost of Revenue | $6,125,355 (47.8% of revenue) | $1,476,547 (55.4% of revenue) | $4,648,808 | 314.8% | | Personnel Costs | $1,995,320 (15.6% of revenue) | $1,089,039 (40.9% of revenue) | $906,281 | 83.2% | | Depreciation and Amortization | $352,055 | $168,072 | $183,983 | 109.5% | | General and Administrative Expenses | $1,072,720 (8.4% of revenue) | $502,183 (18.8% of revenue) | $570,537 | 113.6% | | Professional Fees | $674,994 (5.3% of revenue) | $1,094,000 (41.0% of revenue) | $(419,006) | (38.3)% | | Right-of-Use Asset Abandonment Loss | $112,705 | $- | $112,705 | N/A | | Operating Income (Loss) | $2,473,308 | $(1,664,036) | $4,137,344 | N/A | | Total Other Income (Expense) | $22,046,876 | $(1,590,795) | $23,637,671 | N/A | | Net Income (Loss) from Continuing Operations | $23,680,184 | $(2,946,831) | $26,627,015 | N/A | Comparison of the Six Months Ended June 30, 2025 and 2024 This section compares the company's continuing operations performance for the six months ended June 30, 2025, and 2024 Continuing Operations Performance Comparison for the Six Months Ended June 30, 2025 and 2024 | Metric (Continuing Operations) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | Change Amount ($) | Change Percentage | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Revenue | $22,889,929 | $4,750,259 | $18,139,670 | 381.9% | | Cost of Revenue | $11,000,345 (48.1% of revenue) | $2,659,246 (56.0% of revenue) | $8,341,099 | 313.7% | | Personnel Costs | $3,743,560 (16.4% of revenue) | $1,999,630 (42.1% of revenue) | $1,743,930 | 87.2% | | Depreciation and Amortization | $703,445 | $340,182 | $363,263 | 106.8% | | General and Administrative Expenses | $2,181,632 (9.5% of revenue) | $944,081 (19.9% of revenue) | $1,237,551 | 131.1% | | Professional Fees | $2,773,556 (12.1% of revenue) | $3,639,189 (76.6% of revenue) | $(865,633) | (23.8)% | | Right-of-Use Asset Abandonment Loss | $112,705 | $- | $112,705 | N/A | | Operating Income (Loss) | $2,374,686 | $(4,832,069) | $7,206,755 | N/A | | Total Other Income (Expense) | $21,846,131 | $(9,117,871) | $30,964,002 | N/A | | Net Income (Loss) from Continuing Operations | $23,452,817 | $(13,552,940) | $37,005,757 | N/A | Liquidity and Capital Resources This section discusses the company's cash position, financing history, and future capital needs, highlighting reliance on additional financing for going concern - As of June 30, 2025, the company had $1,033,578 in cash and cash equivalents and $500,929 in restricted cash[166] - The company's operations are primarily financed through operating income, cash proceeds from financing activities, borrowings, and equity contributions from shareholders[166] - The company requires additional capital to execute its business plan, pursue future acquisitions, cover public company expenses, and make payments to management (management fees, profit distributions, and put option prices)[169][170][172][173] - The company's ability to continue as a going concern depends on successfully executing its financing plans and ultimately achieving profitable operations; management is implementing strict cost controls and seeking new credit facilities/debt/equity financing[167][168] Debt This section provides the company's total short-term and long-term debt and its composition as of June 30, 2025 Total Debt as of June 30, 2025 | Metric | Short-Term Debt ($) | Long-Term Debt ($) | Total Debt ($) | | :--------------------------- | :--------- | :--------- | :--------- | | Notes Payable, Net | $7,422,716 | $- | $7,422,716 | | Related Party Notes Payable | $616,883 | $950,738 | $1,567,621 | | Convertible Notes, Net | $22,467,583 | $- | $22,467,583 | | Finance Leases | $187,201 | $328,290 | $515,491 | | Total Consolidated Debt, Net | $30,694,383 | $1,279,028 | $31,973,411 | Contractual Obligations This section outlines the company's primary contractual obligations, including loans and management service agreements, which may significantly impact cash flow - The company's primary commitments include obligations under the aforementioned loans and other contractual commitments described in the management services agreements and operating agreements[180][183] - These obligations include management fees, potential profit distributions, and potential put option prices payable to management, which take precedence over distributions to shareholders and could significantly reduce cash available for operations and investing activities[170][172][173] Off-Balance Sheet Arrangements This section states the company has no off-balance sheet arrangements with a material impact on its financial condition or 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[180] Critical Accounting Policies and Estimates This section notes that financial statement preparation requires management estimates and assumptions, advising consultation of the annual report for detailed accounting policies - The preparation of the unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosures of contingent assets and liabilities[181] - These estimates are based on management's historical industry experience and various other assumptions believed to be reasonable under the circumstances, but actual results may differ from these estimates[181] - For accounting policies that management believes involve the most significant judgments and estimates, and that could have a material impact on the reported financial condition, results of operations, or cash flows, refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies" section in the annual report[182] Quantitative and Qualitative Disclosures About Market Risk This section states the company has no quantitative and qualitative disclosures about market risk to report - Not applicable[184] Controls and Procedures This section details the assessment of disclosure controls and procedures, noting ineffectiveness due to material weaknesses, but affirming fair financial statement presentation and ongoing remediation - As of June 30, 2025, the company's disclosure controls and procedures were deemed ineffective due to material weaknesses described in the annual report[185] - Despite the identified material weaknesses, management, including the Chief Executive Officer and Chief Financial Officer, believes the consolidated financial statements included in this report fairly present the company's financial position, results of operations, and cash flows in all material respects in accordance with GAAP[185] - The company continued to implement remediation efforts during the second quarter of 2025, including increasing personnel resources and technical accounting expertise within the accounting function, engaging internal control consultants for financial reporting risk assessment and internal control system design, and preparing written documentation of internal control policies and procedures[189][190] - Material weaknesses cannot be considered remediated until the related controls have operated for a sufficient period[189] Legal Proceedings The company currently has no legal proceedings or claims identified that would materially adversely affect its business, financial condition, or results of operations - The company currently has no legal proceedings or claims identified that would materially adversely affect its business, financial condition, or results of operations[192] Risk Factors This section states that risk factors are not applicable to this quarterly report, advising consultation of the annual report for comprehensive risk discussion - Not applicable[193] Unregistered Sales of Equity Securities and Use of Proceeds The company did not make any previously undisclosed unregistered sales of equity securities or repurchase common stock during the three months ended June 30, 2025 - The company did not make any previously undisclosed unregistered sales of equity securities during the three months ended June 30, 2025[194] - The company did not repurchase any common stock during the three months ended June 30, 2025[195] Defaults Upon Senior Securities The company did not experience any defaults upon senior securities during the reporting period - None[196] Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company - Not applicable[197] Other Information The company has no other information to disclose for the reporting period - None[198] Exhibits This section lists all exhibits filed as part of Form 10-Q, including organizational documents, share designations, warrant forms, and certifications - Exhibits include the Certificate of Incorporation, amendments to operating agreements, Series A, C, D, and F share designations, various warrant forms, and certifications from the Chief Executive Officer and Chief Financial Officer[199][200][201]