Business Acquisitions and Sales - The company focuses on acquiring and managing small businesses with an enterprise value of less than $50 million across various industries in North America [143]. - On September 30, 2024, the company sold High Mountain for an aggregate cash purchase price of $17 million, subject to adjustments [162]. - The company acquired CMD Inc. on December 16, 2024, which specializes in finish carpentry and related products [148]. - ICU Eyewear was sold for $4.25 million following a foreclosure process, with no retained financial interest by the company [161]. Financial Performance - Revenues increased by $9,757,991, or 256.4%, to $13,563,612 for the three months ended September 30, 2025, compared to $3,805,621 for the same period in 2024, primarily due to the acquisition of CMD [166]. - For the nine months ended September 30, 2025, revenues increased by $27,897,661, or 326.1%, to $36,453,541, primarily due to the acquisition of CMD contributing $31,248,023 [178]. - Net income from continuing operations was $32,619,148 for the three months ended September 30, 2025, compared to a net loss of $5,380,030 for the same period in 2024 [175]. - Net income from continuing operations was $56,071,965 for the nine months ended September 30, 2025, compared to a net loss of $18,932,970 for the same period in 2024 [188]. - Total other income for the three months ended September 30, 2025, was $30,569,890, compared to total other expense of $2,456,721 for the same period in 2024 [173]. - Total other income, net, was $52,416,021 for the nine months ended September 30, 2025, compared to a net expense of $11,574,592 for the same period in 2024 [186]. Cost and Expenses - Cost of revenues rose by $5,472,601, or 384.0%, to $6,897,848 for the three months ended September 30, 2025, with cost as a percentage of revenues increasing to 50.9% from 37.5% [167]. - Cost of revenues for the nine months ended September 30, 2025, increased by $13,813,700, or 338.2%, to $17,898,193, with a percentage of revenues at 49.1% compared to 47.7% in 2024 [179]. - Personnel costs decreased by $285,720, or 13.1%, to $1,887,153 for the three months ended September 30, 2025, with a percentage of revenue dropping to 13.9% from 57.1% [168]. - Personnel costs increased by $1,458,210, or 34.9%, to $5,630,713 for the nine months ended September 30, 2025, with a percentage of revenue at 15.4% compared to 48.8% in 2024 [180]. - General and administrative expenses decreased by $840,765, or 42.4%, to $1,143,422 for the three months ended September 30, 2025, representing 8.4% of revenues compared to 52.1% in 2024 [170]. - Professional fees decreased by $878,881, or 20.5%, to $3,417,821 for the nine months ended September 30, 2025, compared to $4,296,702 for the same period in 2024, with professional fees as a percentage of revenue at 9.4% in 2025 versus 50.2% in 2024 [183]. Cash Flow and Liquidity - Cash and cash equivalents at the end of the period were $2,690,688 as of September 30, 2025, down from $10,184,622 at the end of September 30, 2024 [198]. - Net cash provided by operating activities from continuing operations was $3,002,642 for the nine months ended September 30, 2025, compared to net cash used of $11,657,794 for the same period in 2024 [198]. - Net cash used in investing activities was $896,075 for the nine months ended September 30, 2025, compared to net cash provided of $17,501,868 for the same period in 2024 [199]. - Management has implemented tight cost controls to conserve cash and address liquidity challenges [190]. Debt and Financing - Total combined debt as of September 30, 2025, was $31,758,985, with total debt, net, amounting to $31,371,385 [202]. - The company plans to secure additional bank lines of credit and obtain financing through debt or equity transactions to support operations and future acquisitions [190]. Management and Strategy - The company expects to improve its businesses through organic growth opportunities, add-on acquisitions, and operational improvements [150]. - The company aims to make regular distributions to common shareholders and increase shareholder value over time [149]. - The management fee for 1847 Cabinet is set at the greater of $125,000 or 2% of adjusted net assets, with $375,000 expensed for the nine months ended September 30, 2025 [152]. - The management services agreement requires a quarterly management fee equal to 0.5% of adjusted net assets [151]. - The company has one reportable segment, the construction segment, which provides finish carpentry and related products and services [159]. - The company recorded no impairment of goodwill and intangible assets for the three months ended September 30, 2025, compared to $679,175 in 2024 [172]. - The company recorded no impairment of goodwill and intangible assets for the nine months ended September 30, 2025, compared to an impairment of $679,175 for the same period in 2024 [184].
1847 LLC(EFSH) - 2025 Q3 - Quarterly Report