UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 FORM 10-K/A

 (Amendment No. 1)

 (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, 2024

 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. 001-41368

 (Exact name of registrant as specified in its charter)

 Delaware

 38-3922937

 (State or other jurisdiction of

incorporation or organization)

 (I.R.S. Employer

Identification No.)

 260 Madison Avenue, 8th Floor, New York, NY

 10016

 (Address of principal executive offices)

 (Zip Code)

 (212) 417-9800

 (Registrant's telephone number, including area code)

 Securities registered pursuant to Section 12(b) of the Act:

 Title of each class

 Trading Symbol(s)

 Name of each exchange on which registered

 EFSH

 NYSE American LLC

 Securities registered pursuant to Section 12(g)
of the Act: None

 Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

 Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

 Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes No

 Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit such files). Yes No

 Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company.
See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company,"
and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large accelerated filer
 Accelerated filer

 Non-accelerated filer
 Smaller reporting company

 Emerging growth company

 If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.

 Indicate by check mark whether the registrant
has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act by the registered public accounting firm that prepared or issued its audit report.

 If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.

 Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's
executive officers during the relevant recovery period pursuant to §240.10D-1(b).

 Indicate by check mark whether registrant is
a shell company (as defined in Rule 12b-2 of the Act). Yes No

 As of June 28, 2024 (the last business day of
the registrant's most recently completed second fiscal quarter), the aggregate market value of the registrant's common shares
held by non-affiliates (based upon the closing price of such shares as reported on NYSE American) was approximately $ 8.5 million. Shares
held by each executive officer and director and by each person who owns 10% or more of the outstanding common shares have been excluded
from the calculation in that such persons may be deemed to be affiliates of the registrant. This determination of affiliate status is
not necessarily a conclusive determination for other purposes.

 As of March 28, 2025, there were a total of 26,539,774
common shares of the registrant issued and outstanding.

 DOCUMENTS INCORPORATED BY REFERENCE

 None.

 1847 Holdings LLC

 Annual Report on Form 10-K

 Year Ended December 31, 2024

 Item 1.

 Business

 Item 1A.

 Risk Factors

 Item 1B.

 Unresolved Staff Comments

 Item 1C.

 Cybersecurity

 Item 2.

 Properties

 Item 3.

 Legal Proceedings

 Item 4.

 Mine Safety Disclosures

 Item 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 Item 6.

 [Reserved]

 Item 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item 7A.

 Quantitative and Qualitative Disclosures about Market Risk

 Item 8.

 Financial Statements and Supplementary Data

 Item 9.

 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

 Item 9A.

 Controls and Procedures

 Item 9B.

 Other Information

 Item 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Item 10.

 Directors, Executive Officers and Corporate Governance

 Item 11.

 Executive Compensation

 Item 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item 13.

 Certain Relationships and Related Transactions, and Director Independence

 Item 14.

 Principal Accounting Fees and Services

 Item 15.

 Exhibits and Financial Statement Schedules

 Item 16.

 Form 10-K Summary

 i

 EXPLANATORY NOTE

 1847 Holdings LLC (the "Company")
is filing this Amendment No. 1 on Form 10-K/A ("Amendment") to amend its Annual Report on Form 10-K for
the fiscal year ended December 31, 2024, which was originally filed with the Securities and Exchange Commission on March 31, 2025 (the
"Original 10-K"). This Amendment is being filed solely for the purpose of furnishing revised certifications by our principal
executive officer and principal financial officer as Exhibits 32.1 and 32.2, pursuant to Section 906 of the Sarbanes-Oxley Act of 2022
(the "906 Certifications"). As a result of a typographical error, the 906 Certifications attached as Exhibits 32.1 and 32.2
to the Original 10-K referenced the incorrect fiscal year. Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, this Amendment
also contains new certifications by our principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.

 Other than as expressly set forth herein, this
Amendment does not, and does not purport to, amend, update or restate the information in the Original 10-K or reflect any events that
have occurred after the Original 10-K was filed. Information not affected by this Amendment remains unchanged and reflects the disclosures
made at the time as of which the Original 10-K was filed. This Amendment should be read together with the Original 10-K.

 INTRODUCTORY NOTES

 Use of Terms

 Except as otherwise indicated by the context
and for the purposes of this report only, references in this report to "we," "us," "our" and "our
company" are to 1847 Holdings LLC, a Delaware limited liability company, and its consolidated subsidiaries, and references to "our
manager" are to 1847 Partners LLC, a Delaware limited liability company.

 Special Note Regarding Forward-Looking Statements

 This report contains forward-looking statements
that are based on our management's beliefs and assumptions and on information currently available to us. All statements other than
statements of historical facts are forward-looking statements. These statements relate to future events or to our future financial performance
and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance
or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied
by these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

 our
 ability to effectively integrate and operate the businesses that we acquire;

 our
 ability to successfully identify and acquire additional businesses;

 our
 organizational structure, which may limit our ability to meet our dividend and distribution
 policy;

 our
 ability to service and comply with the terms of indebtedness;

 our
 cash flow available for distribution and our ability to make distributions to our common
 shareholders;

 our
 ability to pay the management fee, profit allocation and put price to our manager when due;

 labor
 disputes, strikes or other employee disputes or grievances;

 the
 regulatory environment in which our businesses operate under;

 trends
 in the industries in which our businesses operate;

 the
 competitive environment in which our businesses operate;

 changes
 in general economic or business conditions or economic or demographic trends in the United
 States including changes in interest rates and inflation;

 our
 and our manager's ability to retain or replace qualified employees of our businesses
 and our manager;

 casualties,
 condemnation or catastrophic failures with respect to any of our business' facilities;

 costs
 and effects of legal and administrative proceedings, settlements, investigations and claims;
 and

 extraordinary
 or force majeure events affecting the business or operations of our businesses.

 In some cases, you can identify forward-looking
statements by terms such as "may," "could," "will," "should," "would," "expect,"
"plan," "intend," "anticipate," "believe," "estimate," "predict,"
"potential," "project" or "continue" or the negative of these terms or other comparable terminology.
These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and
unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results.
Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under
Item 1A " Risk Factors " and elsewhere in this report. If one or more of these risks or uncertainties occur, or if our
underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the
forward-looking statements. No forward-looking statement is a guarantee of future performance.

 In addition, statements that "we believe"
and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available
to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information
may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or
review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not
to unduly rely upon these statements.

 The forward-looking statements made in this report
relate only to events or information as of the date on which the statements are made in this report. Except as expressly required by
the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result
of new information, future events, changed circumstances or any other reason.

 ii

 ITEM 1.
 BUSINESS.

 OUR BUSINESS

 Overview

 We are an acquisition holding company focused
on acquiring and managing a group of small businesses, which we characterize as those that have an enterprise value of less than $50
million, in a variety of different industries headquartered in North America.

 Through our structure, we offer investors an
opportunity to participate in the ownership and growth of a portfolio of businesses that traditionally have been owned and managed by
private equity firms, private individuals or families, financial institutions or large conglomerates. We believe that our management
and acquisition strategies will allow us to achieve our goals to make and grow regular distributions to our common shareholders
and increase common shareholder value over time.

 We seek to acquire controlling interests in small
businesses that we believe operate in industries with long-term macroeconomic growth opportunities, and that have positive and stable
earnings and cash flows, face minimal threats of technological or competitive obsolescence and have strong management teams largely in
place. We believe that private company operators and corporate parents looking to sell their businesses will consider us to be an attractive
purchaser of their businesses. We make these businesses our majority-owned subsidiaries and actively manage and grow such businesses.
We expect to improve our businesses over the long term through organic growth opportunities, add-on acquisitions and operational improvements.

 Our Market Opportunity

 We acquire and manage small businesses, which
we characterize as those that have an enterprise value of less than $50 million. We believe that the merger and acquisition market for
small businesses is highly fragmented and provides significant opportunities to purchase businesses at attractive prices. For example,
according to GF Data, in 2023 platform acquisitions with enterprise values greater than $50.0 million commanded valuation premiums over
30% higher than platform acquisitions with enterprise values less than $50.0 million (8.0x to 9.9x trailing twelve month adjusted EBITDA
(Earnings Before Interest, Taxes, Depreciation and Amortization) versus 6.0x to 7.1x trailing twelve month adjusted EBITDA, respectively).

 We believe that the following factors contribute
to lower acquisition multiples for small businesses:

 there
 are typically fewer potential acquirers for these businesses;

 third-party
 financing generally is less available for these acquisitions;

 sellers
 of these businesses may consider non-economic factors, such as continuing board membership
 or the effect of the sale on their employees; and

 these
 businesses are generally less frequently sold pursuant to an auction process.

 We believe that our management team's strong
relationships with business brokers, investment and commercial bankers, accountants, attorneys and other potential sources of acquisition
opportunities offers us substantial opportunities to purchase small businesses.

 We also believe that significant opportunities
exist to improve the performance of the businesses upon their acquisition. In the past, our manager has acquired businesses that are
often formerly owned by seasoned entrepreneurs or large corporate parents. In these cases, our manager has frequently found that there
have been opportunities to further build upon the management teams of acquired businesses. In addition, our manager has frequently found
that financial reporting and management information systems of acquired businesses may be improved, both of which can lead to substantial
improvements in earnings and cash flow. Finally, because these businesses tend to be too small to have their own corporate development
efforts, we believe opportunities exist to assist these businesses in meaningful ways as they pursue organic or external growth strategies
that were often not pursued by their previous owners.

 Our Strategy

 Our long-term goals are to make and grow regular
distributions to our common shareholders and to increase common shareholder value over the long-term. We plan to continue focusing on
acquiring businesses. Therefore, we intend to continue to identify, perform due diligence on, negotiate and consummate platform acquisitions
of small businesses in attractive industry sectors.

 We plan to limit the use of third-party (i.e.,
external) acquisition leverage so that our debt will not exceed the market value of the assets we acquire and so that our debt to EBITDA
ratio will not exceed 1.25x to 1 for our operating subsidiaries. We believe that limiting leverage in this manner will avoid the imposition
on stringent lender controls on our operations that would otherwise potentially hamper the growth of our operating subsidiaries and otherwise
harm our business even during times when we have positive operating cash flows. Additionally, in our experience, leverage rarely leads
to "break-out" returns and often creates negative return outcomes that are not correlated with the profitability of the business.

 Management Strategy

 Our management strategy involves the identification,
performance of due diligence, negotiation and consummation of acquisitions. After acquiring businesses, we attempt to grow the businesses
both organically and through add-on or bolt-on acquisitions. Add-on or bolt-on acquisitions are acquisitions by a company of other companies
in the same industry. Following the acquisition of companies, we seek to grow the earnings and cash flow of acquired companies and, in
turn, grow regular distributions to our common shareholders and to increase common shareholder value over time. We believe we can increase
the cash flows of our businesses by applying our intellectual capital to improve and grow our businesses.

 We seek to acquire and manage small businesses.
We believe that the merger and acquisition market for small businesses is highly fragmented and provides opportunities to purchase businesses
at attractive prices. We believe we will be able to acquire small businesses for multiples ranging from three to six times EBITDA. We
also believe, and our manager has historically found, that significant opportunities exist to improve the performance of these businesses
upon their acquisition.

 In general, our manager oversees and supports
the management team of our businesses by, among other things:

 recruiting
 and retaining managers to operate our businesses by using structured incentive compensation
 programs, including minority equity ownership, tailored to each business;

 regularly
 monitoring financial and operational performance, instilling consistent financial discipline,
 and supporting management in the development and implementation of information systems;

 assisting
 the management teams of our businesses in their analysis and pursuit of prudent organic growth
 strategies;

 identifying
 and working with business management teams to execute on attractive external growth and acquisition
 opportunities;

 identifying
 and executing operational improvements and integration opportunities that will lead to lower
 operating costs and operational optimization;

 providing
 the management teams of our businesses the opportunity to leverage our experience and expertise
 to develop and implement business and operational strategies; and

 forming
 strong subsidiary level boards of directors to supplement management teams in their development
 and implementation of strategic goals and objectives.

 We also believe that our long-term perspective
provides us with certain additional advantages, including the ability to:

 recruit
 and develop management teams for our businesses that are familiar with the industries in
 which our businesses operate;

 focus
 on developing and implementing business and operational strategies to build and sustain shareholder
 value over the long term;

 create
 sector-specific businesses enabling us to take advantage of vertical and horizontal acquisition
 opportunities within a given sector;

 achieve
 exposure in certain industries in order to create opportunities for future acquisitions;
 and

 develop
 and maintain long-term collaborative relationships with customers and suppliers.

 We intend to continually increase our intellectual
capital as we operate our businesses and acquire new businesses and as our manager identifies and recruits qualified operating partners
and managers for our businesses.

 Acquisition Strategy

 Our acquisition strategies involve the acquisition
of small businesses in various industries that we expect will produce positive and stable earnings and cash flow, as well as achieve
attractive returns on our invested capital. In this respect, we expect to make acquisitions in industries wherein we believe an acquisition
presents an attractive opportunity from the perspective of both (i) return on assets or equity and (ii) an easily identifiable path for
growing the acquired businesses. We believe that attractive opportunities will increasingly present themselves as private sector owners
seek to monetize their interests in longstanding and privately held businesses and large corporate parents seek to dispose of their "non-core"
operations.

 We believe that the greatest opportunities for
generating consistently positive annual returns and, ultimately, residual returns on capital invested in acquisitions will result from
targeting capital light businesses operating in niche geographical markets with a clearly identifiable competitive advantage within the
following industries: business services, consumer services, consumer products, consumable industrial products, industrial services, niche
light manufacturing, distribution, alternative/specialty finance and in select cases, specialty retail. While we believe that the professional
experience of our management team within the industries identified above will offer the greatest number of acquisition opportunities,
we will not eschew opportunities if a business enjoys an inarguable moat around its products and services in an industry which our management
team may have less familiarity.

 From a financial perspective, we expect to make
acquisitions of small businesses that are stable, have minimal bad debt, and strong accounts receivable. In addition, we expect to acquire
companies that have been able to generate positive pro forma cash available for distribution for a minimum of three years prior to acquisition.
Our previous acquisitions met these acquisition criteria.

 We benefit from our manager's ability to
identify diverse acquisition opportunities in a variety of industries. In addition, we rely upon our management teams' experience
and expertise in researching and valuing prospective target businesses, as well as negotiating the ultimate acquisition of such target
businesses. In particular, because there may be a lack of information available about these target businesses, which may make it more
difficult to understand or appropriately value such target businesses, our manager will:

 engage
 in a substantial level of internal and third-party due diligence;

 critically
 evaluate the management team;

 identify
 and assess any financial and operational strengths and weaknesses of any target business;

 analyze
 comparable businesses to assess financial and operational performances relative to industry
 competitors;

 actively
 research and evaluate information on the relevant industry; and

 thoroughly
 negotiate appropriate terms and conditions of any acquisition.

 The process of acquiring new businesses is time-consuming
and complex. Our manager has historically taken from 2 to 24 months to perform due diligence on, negotiate and close acquisitions. Although
we expect our manager to be at various stages of evaluating several transactions at any given time, there may be significant periods
of time during which it does not recommend any new acquisitions to us.

 Upon an acquisition of a new business, we rely
on our manager's experience and expertise to work efficiently and effectively with the management of the new business to jointly
develop and execute a business plan.

 While primarily seek to acquire controlling interests
in a business, we may also acquire non-control or minority equity positions in businesses where we believe it is consistent with our
long-term strategy.

 As discussed in more detail below, we intend
to raise capital for additional acquisitions primarily through debt financing, primarily at our operating company level, additional equity
offerings by our company, the sale of all or a part of our businesses or by undertaking a combination of any of the above.

 Our primary corporate purpose is to own, operate
and grow our operating businesses. However, in addition to acquiring businesses, we expect to sell businesses that we own from
time to time. Our decision to sell a business will be based upon financial, operating and other considerations rather than a plan
to complete a sale of a business within any specific time frame. We may also decide to own and operate some or all of our businesses
in perpetuity if our board believes that it makes sense to do so. Upon the sale of a business, we may use the resulting proceeds to retire
debt or retain proceeds for future acquisitions or general corporate purposes. Generally, we do not expect to make special distributions
at the time of a sale of one of our businesses; instead, we expect that we will seek to gradually increase regular common shareholder
distributions over time.

 There are several risks associated with our acquisition
strategy, including the following risks, which are described more fully in Item 1A " Risk Factors " —Risks Related
to Our Business and Structure ":

 we
 may not be able to successfully fund future acquisitions of new businesses due to the unavailability
 of debt or equity financing on acceptable terms, which could impede the implementation of
 our acquisition strategy;

 we
 may experience difficulty as we evaluate, acquire and integrate businesses that we may acquire,
 which could result in drains on our resources, including the attention of our management,
 and disruptions of our on-going business;

 we
 face competition for businesses that fit our acquisition strategy and, therefore, we may
 have to acquire targets at sub-optimal prices or, alternatively, forego certain acquisition
 opportunities; and

 we
 may change our management and acquisition strategies without the consent of our shareholders,
 which may result in a determination by us to pursue riskier business activities.

 Strategic Advantages

 Based on the experience of our manager and its
ability to identify and negotiate acquisitions, we believe that we are strongly positioned to acquire additional businesses. Our manager
has strong relationships with business brokers, investment and commercial bankers, accountants, attorneys and other potential sources
of acquisition opportunities. In negotiating these acquisitions, we believe our manager will be able to successfully navigate complex
situations surrounding acquisitions, including corporate spin-offs, transitions of family-owned businesses, management buy-outs and reorganizations.

 We believe that the flexibility, creativity,
experience and expertise of our manager in structuring transactions provides us with strategic advantages by allowing us to consider
non-traditional and complex transactions tailored to fit a specific acquisition target.

 Our manager also has a large network of deal
intermediaries who expose us to potential acquisitions. Through this network, we have a substantial pipeline of potential acquisition
targets. Our manager also has a well-established network of contacts, including professional managers, attorneys, accountants and other
third-party consultants and advisors, who may be available to assist us in the performance of due diligence and the negotiation of acquisitions,
as well as the management and operation of our businesses once acquired.

 Valuation and Due Diligence

 When evaluating businesses or assets for acquisition,
we perform a rigorous due diligence and financial evaluation process. In doing so, we seek to evaluate the operations of the target business
as well as the outlook for the industry in which the target business operates. While valuation of a business is, by definition, a subjective
process, we define valuations under a variety of analyses, including:

 discounted
 cash flow analyses;

 evaluation
 of trading values of comparable companies;

 expected
 value matrices;

 assessment
 of competitor, supplier and customer environments; and

 examination
 of recent/precedent transactions.

 One outcome of this process is an effort to project
the expected cash flows from the target business as accurately as possible. A further outcome is an understanding of the types and levels
of risk associated with those projections. While future performance and projections are always uncertain, we believe that our detailed
due diligence review process allows us to more accurately estimate future cash flows and more effectively evaluate the prospects for
operating the business in the future. To assist us in identifying material risks and validating key assumptions in our financial and
operational analysis, in addition to our own analysis, we engage third-party experts to review key risk areas, including legal, tax,
regulatory, accounting, insurance and environmental. We may also engage technical, operational or industry consultants, as necessary.

 A further critical component of the evaluation
of potential target businesses is the assessment of the capability of the existing management team, including recent performance, expertise,
experience, culture and incentives to perform. Where necessary, and consistent with our management strategy, we actively seek to augment,
supplement or replace existing members of management who we believe are not likely to execute the business plan for the target business.
Similarly, we analyze and evaluate the financial and operational information systems of target businesses and, where necessary, we actively
seek to enhance and improve those existing systems that are deemed to be inadequate or insufficient to support our business plan for
the target business.

 Financing

 We finance acquisitions primarily through additional
equity and debt financings. We believe that having the ability to finance most, if not all, acquisitions with the general capital resources
raised by our company, rather than financing relating to the acquisition of individual businesses, provides us with an advantage in acquiring
attractive businesses by minimizing delay and closing conditions that are often related to acquisition-specific financings. In this respect,
we believe that, at some point in the future, we may need to pursue additional debt or equity financings, or offer equity in our company
or target businesses to the sellers of such target businesses, in order to fund acquisitions.

 Our Competitive Advantages

 We believe that our manager's collective
investment experience and approach to executing our investment strategy provide us with several competitive advantages. These competitive
advantages, certain of which are discussed below, have enabled our management to generate very attractive risk- adjusted returns for
investors in their predecessor firms.

 Robust Network.
Through their activities with their predecessor firms and their comprehensive marketing capabilities, we believe that the management
team of our manager has established a "top of mind" position among investment bankers and business brokers targeting small
businesses. By employing an institutionalized, multi-platform marketing strategy, we believe our manager has established a robust national
network of personal relationships with intermediaries, seasoned operating executives, entrepreneurs and managers, thereby firmly establishing
our presence and credibility in the small business market. In contrast to many other buyers of and investors in small businesses, we
believe that we can buy businesses at value-oriented multiples and through our asset management activities with a group of professional,
experienced and talented operating partners, create appreciable value. We believe our experience, track record and consistent execution
of our marketing and investment activities will allow us to maintain a leadership position as the preferred partner for today's
small business market.

 Disciplined Deal Sourcing.
We employ an institutionalized, multi-platform approach to sourcing new acquisition opportunities. Our deal sourcing efforts include
leveraging relationships with more than 3,000 qualified deal sources through regular calling, mail and e-mail campaigns, assignment of
regional marketing responsibilities, in-person visits and high-profile sponsorship of important conferences and industry events. We supplement
these activities by retaining selected intermediary firms to conduct targeted searches for opportunities in specific categories on an
opportunistic basis. As a result of the significant time and effort spent on these activities, we believe we established close relationships
and unique "top of mind" awareness with many of the most productive intermediary sources for small business acquisition opportunities
in the United States. While reinforcing our market leadership, this capability enables us to generate a large number of attractive acquisition
opportunities.

 Differentiated Acquisition
Capabilities in the Small Business Market. We deploy a differentiated approach to acquiring businesses in the small business
market. Our management concentrates their efforts on mature companies with sustainable value propositions, which can be supported by
our resources and institutional expertise. Our evaluation of acquisition opportunities typically involves significant input from a seasoned
operating partner with relevant experience, which we believe enhances both our diligence and ongoing monitoring capabilities. In addition,
we approach every acquisition opportunity with creative structures, which we believe enables us to engineer mutually attractive scenarios
for sellers, whereas competing buyers may be limited by their rigid structural requirements. We believe our commitment to conservative
capital structures and valuation will enhance each acquired operating subsidiary's ability to deliver consistent levels of cash
available for distribution, while additionally supporting reinvestment for growth.

 Value Proposition for
Business Owners. We employ a creative, flexible approach by tailoring each acquisition structure to meet the specific liquidity
needs and certain qualitative objectives of the target's owners and management team. In addition to serving as an exit pathway
for sellers, we seek to align our interests with the sellers by enabling them to retain and/or earn (through incentive compensation)
a substantial economic interest in their businesses following the acquisition and by typically allowing the incumbent management team
to retain operating control of the acquired operating subsidiary on a day-to-day basis. We believe that our company is an appealing buyer
for small business owners and managers due to our track record of capitalizing portfolio companies conservatively, enhancing our ability
to execute on its strategic initiatives and adding equity value. As a result, we believe business owners and managers will find our company
to be a dynamic, value-added buyer that brings considerable resources to achieve their strategic, capital and operating needs, resulting
in substantial value creation for the operating subsidiary.

 Operating Partner.
Our manager has consistently worked with a strong network of seasoned operating partners - former entrepreneurs and executives with extensive
experience building, managing and optimizing successful small businesses across a range of industries. We believe that our operating
partner model will enable us to make a significant improvement in the operating subsidiary, as compared to other buyers, such as traditional
private equity firms, which rely principally upon investment professionals to make acquisition/investment and monitoring decisions regarding
not only the business, financial and legal due diligence aspects of a business but also the more operational aspects including industry
dynamics, management strength and strategic growth initiatives. We typically engage an operating partner soon after identifying a target
business for acquisition, enhancing our acquisition judgment and building the acquisition team's relationship with the subsidiary's
management team. Operating partners usually serve as a member of the board of directors of an operating subsidiary and spend two to four
days per month working with the subsidiary's management team. We leverage the operating partner's extensive experience to
build the management team, improve operations and assist with strategic growth initiatives, resulting in value creation.

 Small Business Market
Experience. We believe the history and experience of our manager's partnering with companies in the small business market
allows us to identify highly attractive acquisition opportunities and add significant value to our operating subsidiaries. Our manager's
investment experience in the small business market prior to forming our company has further contributed to our institutional expertise
in the acquisition, strategic and operational decisions critical to the long-term success of small businesses. Since 2000, the management
team of our manager has collectively been presented with several thousand investment opportunities and actively worked with more than
30 small businesses on all facets of their strategy, development and operations, which we have successfully translated into unique, institutionalized
capabilities directed towards creating value in small businesses.

 Intellectual Property

 Our manager owns certain intellectual property
relating to the term "1847." Our manager has granted our company a license to use the term "1847" in its business.

 Employees

 As of December 31, 2024, our company had 6 full-time
employees (excluding our operating subsidiaries described below).

 OUR CORPORATE STRUCTURE AND HISTORY

 Our company is a Delaware limited liability company
that was formed on January 22, 2013. Your rights as a holder of common shares, and the fiduciary duties of our board of directors and
executive officers, and any limitations relating thereto, are set forth in the operating agreement governing our company and differ from
those applying to a Delaware corporation. However, subject to certain exceptions, the documents governing our company specify that the
duties of our directors and officers will be generally consistent with the duties of directors and officers of a Delaware corporation.

 Our company is classified as a partnership for
U.S. federal income tax purposes. Under the partnership income tax provisions, our company is not expected to incur any U.S. federal
income tax liability; rather, each of our shareholders will be required to take into account his or her allocable share of company income,
gain, loss, deduction and credit. As a holder of our shares, you may not receive cash distributions sufficient in amount to cover taxes
in respect of your allocable share of our net taxable income. We will file a partnership return with the IRS and will issue you with
tax information, including a Schedule K-1, setting forth your allocable share of our income, gain, loss, deduction, credit and other
items. The U.S. federal income tax rules that apply to partnerships are complex, and complying with the reporting requirements may require
significant time and expense. See " Material U.S. Federal Income Tax Considerations " included in our prospectus, dated
October 28, 2024 and filed with the Securities and Exchange Commission, or the SEC, on October 30, 2024 for more information.

 We currently have five classes of limited liability
company interests - the common shares, the series A senior convertible preferred shares, the series C senior convertible preferred shares,
the series D senior convertible preferred shares and the allocation shares. All of our allocation shares have been and will continue
to be held by our manager.

 On May 28, 2020, our newly formed wholly owned
subsidiary 1847 Asien Inc., a Delaware corporation, or 1847 Asien, acquired Asien's Appliance, Inc., a California corporation,
or Asien's. On February 26, 2024, Asien's entered into a general assignment for the benefit of its creditors with SG Service
Co., LLC. Pursuant to the assignment, Asien's transferred ownership of all or substantially all of its right, title, and interest
in, as well as custody and control of, its assets to SG Service Co., LLC in trust. Following the assignment, we retained no financial
interest in Asien's. Accordingly, the results of operations of Asien's are reported as discontinued operations for the years
ended December 31, 2024 and 2023.

 On September 30, 2020, our newly formed wholly
owned subsidiary 1847 Cabinet Inc., a Delaware corporation, or 1847 Cabinet, acquired all of the issued and outstanding capital stock
of Kyle's Custom Wood Shop, Inc., an Idaho corporation, or Kyle's. As a result of this transaction, we own 92.5% of 1847
Cabinet, with the remaining 7.5% held by a third party, and 1847 Cabinet owns 100% of Kyle's. 1847 Cabinet was formed in the State
of Delaware on August 21, 2020 and Kyle's was formed in the State of Idaho on May 7, 1991.

 On March 30, 2021, our newly formed wholly owned
subsidiary 1847 Wolo Inc., a Delaware corporation, or 1847 Wolo, acquired all of the issued and outstanding capital stock of Wolo Mfg.
Corp., a New York corporation, and Wolo Industrial Horn & Signal, Inc., a New York corporation, which we collectively refer to as
Wolo. As a result of this transaction, we own 92.4% of 1847 Wolo, with the remaining 7.6% held third parties, and 1847 Wolo owns 100%
of Wolo Mfg. Corp and Wolo Industrial Horn & Signal, Inc. 1847 Wolo was formed in the State of Delaware on December 3, 2020. Wolo
Mfg. Corp. was formed in the State of New York on August 6, 1965 and Wolo Industrial Horn & Signal, Inc. was formed in the State
of New York on January 28, 1999.

 On May 14, 2021, we formed 1847 HQ Inc.
as a wholly owned subsidiary in the State of Delaware to manage our benefit plans.

 On October 8, 2021, 1847 Cabinet acquired all
of the issued and outstanding capital stock or other equity securities of High Mountain Door & Trim Inc., a Nevada corporation, or
High Mountain, and Sierra Homes, LLC d/b/a Innovative Cabinets & Design, a Nevada limited liability company, or Innovative Cabinets.
As a result of this transaction, 1847 Cabinet acquired 92.5% of High Mountain and Innovative Cabinets, with the remaining 7.5% held by
a third party. Innovative Cabinets was formed in the State of Nevada on June 17, 2008. On September 30, 2024, we entered into an asset
purchase agreement, or the Purchase Agreement, with BFS Group LLC, or BFS, and High Mountain, pursuant to which we sold substantially
all of the assets of High Mountain to BFS. Accordingly, the results of operations of High Mountain are reported as discontinued operations
for the years ended December 31, 2024 and 2023.

 On February 9, 2023, our newly formed wholly
owned subsidiary 1847 ICU Holdings Inc., a Delaware corporation, or 1847 ICU, acquired ICU Eyewear Holdings, Inc., a California corporation,
and its subsidiary ICU Eyewear, Inc., a California corporation, which we collectively refer to as ICU Eyewear. Our company was a limited
guarantor of an amended and restated credit and security agreement, or Loan Agreement, that was entered into on September 11, 2023 between
AB Lending SPV I LLC d/b/a Mountain Ridge Capital, or the ICU Lender, and 1847 ICU and ICU Eyewear. Pursuant to the Loan Agreement, the
ICU Lender had a security interest in all the assets of ICU Eyewear. ICU Eyewear was in default under the Loan Agreement and consented
to a foreclosure by the ICU Lender and private sale of substantially all of its assets in an Article 9 sale process, pursuant to Section
9-610 of the Uniform Commercial Code as in effect in the State of New York and Section 9-610 of the Uniform Commercial Code as in effect
in the State of California. On August 5, 2024, ICU Eyecare Solutions Inc., an entity that is not affiliated with our company, was the
successful bidder with a cash bid of $4,250,000. Pursuant to an agreement, dated August 5, 2024, and in consideration for such purchase
price, the ICU Lender having foreclosed on its security interest in all of the assets of ICU Eyewear then conveyed all of its rights,
title, and interest in all of such assets to ICU Eyecare Solutions Inc. Following the sale, we retained no financial interest in ICU
Eyewear. Accordingly, the results of operations of ICU Eyewear are reported as discontinued operations for the years ended December 31,
2024 and 2023.

 On December 16, 2024, our newly formed wholly
owned subsidiary 1847 CMD Inc., a Delaware corporation, or 1847 CMD, acquired all of the issued and outstanding capital stock or other
equity securities of CMD Inc., a Nevada corporation, and CMD Finish Carpentry, LLC, a Nevada limited liability company, which we collectively
refer to as CMD. As a result of this transaction, we own 100% of 1847 CMD and 1847 CMD owns 100% of CMD Inc. and CMD Finish Carpentry
LLC. 1847 CMD Inc. was formed in the State of Delaware on October 22, 2024. CMD Inc. was formed in the State of Nevada on September
28, 2012 and CMD Finish Carpentry, LLC was formed in the State of Nevada on August 15, 2024.

 The following chart depicts our current organizational structure:

 See " —Our Manager " for
more details regarding the ownership of our manager.

 OUR MANAGER

 Overview of Our Manager

 Our manager, 1847 Partners LLC, is a Delaware
limited liability company. It has two classes of limited liability interests known as Class A interests and Class B interests. The Class
A interests, which give the holder the right to the profit allocation received by our manager as a result of holding our allocation shares,
are owned in their entirety by 1847 Partners Class A Member LLC; and the Class B interests, which give the holder the right to all other
profits or losses of our manager, including the management fee payable to our manager by us, are owned in their entirety by 1847 Partners
Class B Member LLC. 1847 Partners Class A Member LLC is owned 52% by Ellery W. Roberts, our Chief Executive Officer, 38% by 1847 Founders
Capital LLC, which is owned by Edward J. Tobin, and approximately 9% by Louis A. Bevilacqua, the managing member of Bevilacqua PLLC,
our outside counsel, with the balance being owned by another attorney at such law firm. 1847 Partners Class B Member LLC is owned 54%
by Ellery W. Roberts, 36% by 1847 Founders Capital LLC and 10% by Louis A. Bevilacqua. Mr. Roberts is also the sole manager of both entities.
In the future, Mr. Roberts may cause 1847 Partners Class A Member LLC or 1847 Partners Class B Member LLC to issue units to employees
of our manager to incentivize those employees by providing them with the ability to participate in our manager's incentive allocation
and management fee.

 Key Personnel of Our Manager

 The key personnel of our manager are Ellery W.
Roberts, our Chief Executive Officer, and Edward J. Tobin. Each of these individuals will be compensated entirely by our manager from
the management fees it receives. As employees of our manager, these individuals devote a substantial majority of their time to the affairs
of our company.

 Collectively, the management team of our manager
has more than 60 years of combined experience in acquiring and managing small businesses and has overseen the acquisitions and financing
of over 50 businesses.

 Acquisition and Disposition Opportunities

 Our manager has exclusive responsibility for
reviewing and making recommendations to our board of directors with respect to acquisition and disposition opportunities. If our manager
does not originate an opportunity, our board of directors will seek a recommendation from our manager prior to making a decision concerning
such opportunity. In the case of any acquisition or disposition opportunity that involves an affiliate of our manager or us, our nominating
and corporate governance committee, or, if we do not have such a committee, the independent members of our board of directors, will be
required to authorize and approve such transaction.

 Our manager will review each acquisition or disposition
opportunity presented to our manager to determine if such opportunity satisfies the acquisition and disposition criteria established
by our board of directors. The acquisition and disposition criteria provide that our manager will review each acquisition opportunity
presented to it to determine if such opportunity satisfies our acquisition and disposition criteria, and if it is determined, in our
manager's sole discretion, that an opportunity satisfies the criteria, our manager will refer the opportunity to our board of directors
for its authorization and approval prior to the consummation of any such opportunity.

 Our investment criteria include the following:

 Revenue
 of at least $5.0 million

 year EBITDA/Pre-tax Income of at least $1.5 million with a history of positive cash flow

 Clearly
 identifiable "blueprint" for growth with the potential for break-out returns

 Well-positioned
 companies within our core industry categories (consumer-driven, business-to-business, light
 manufacturing and specialty finance) with strong returns on capital

 Opportunities
 wherein building management team, infrastructure and access to capital are the primary drivers
 of creating value

 Headquartered
 in North America

 We believe we will be able to acquire small businesses
for multiples ranging from three to six times EBITDA. With respect to investment opportunities that do not fall within the criteria set
forth above, our manager must first present such opportunities to our board of directors. Our board of directors and our manager will
review these criteria from time to time and our board of directors may make changes and modifications to such criteria as we make additional
acquisitions and dispositions.

 If an acquisition opportunity is referred to
our board of directors by our manager and our board of directors determines not to timely pursue such opportunity in whole or in part,
any part of such opportunity that we do not promptly pursue may be pursued by our manager or may be referred by our manager to any person,
including affiliates of our manager. In this case, our manager is likely to devote a portion of its time to the oversight of this opportunity,
including the management of a business that we do not own.

 If there is a disposition, our manager must use
its commercially reasonable efforts to manage a process through which the value of such disposition can be maximized, taking into consideration
non-financial factors such as those relating to competition, strategic partnerships, potential favorable or adverse effects on us, our
businesses, or our investments or any similar factors that may reasonably perceived as having a short- or long-term impact on our business,
results of operations and financial condition.

 Management Services Agreement

 The management services agreement sets forth
the services performed by our manager. Our manager performs such services subject to the oversight and supervision of our board of directors.

 In general, our manager performs those services
for us that would be typically performed by the executive officers of a company. Specifically, our manager performs the following services,
which we refer to as the management services, pursuant to the management services agreement:

 manage
 our day-to-day business and operations, including our liquidity and capital resources and
 compliance with applicable law;

 identify,
 evaluate, manage, perform due diligence on, negotiate and oversee acquisitions of target
 businesses and any other investments;

 evaluate
 and oversee the financial and operational performance of our businesses, including monitoring
 the business and operations of such businesses, and the financial performance of any other
 investments that we make;

 provide,
 on our behalf, managerial assistance to our businesses;

 evaluate,
 manage, negotiate and oversee dispositions of all or any part of any of our property, assets
 or investments, including disposition of all or any part of our businesses;

 provide
 or second, as necessary, employees of our manager to serve as our executive officers or other
 employees or as members of our board of directors; and

 perform
 any other services that would be customarily performed by executive officers and employees
 of a publicly listed or quoted company.

 We and our manager have the right at any time
during the term of the management services agreement to change the services provided by our manager. In performing management services,
our manager has all necessary power and authority to perform, or cause to be performed, such services on our behalf, and, in this respect,
our manager is the only provider of management services to us. Nonetheless, our manager is required to obtain authorization and approval
of our board of directors in all circumstances where executive officers of a corporation typically would be required to obtain authorization
and approval of a corporation's board of directors, including, for example, with respect to the consummation of an acquisition
of a target business, the issuance of securities or the entry into credit arrangements.

 While our Chief Executive Officer, Mr. Ellery
W. Roberts, intends to devote substantially all of his time to the affairs of our company, neither Mr. Roberts, nor our manager, is expressly
prohibited from investing in or managing other entities. In this regard, the management services agreement does not require our manager
and its affiliates to provide management services to us exclusively.

 Secondment of Our Executive Officers

 In accordance with the terms of the management
services agreement, our manager may second to us our executive officers, which means that these individuals will be assigned by our manager
to work for us during the term of the management services agreement. Our board of directors has appointed Mr. Roberts as an executive
officer of our company. Although Mr. Roberts is an employee of our manager, he will report directly, and be subject, to our board of
directors. In this respect, our board of directors may, after due consultation with our manager, at any time request that our manager
replace any individual seconded to us and our manager will, as promptly as practicable, replace any such individual; however, our Chief
Executive Officer, Mr. Roberts, controls our manager, which may make it difficult for our board of directors to completely sever ties
with Mr. Roberts. Our manager and our board of directors may agree from time to time that our manager will second to us one or more additional
individuals to serve on our behalf, upon such terms as our manager and our board of directors may mutually agree.

 Indemnification by our Company

 We have agreed to indemnify and hold harmless
our manager and its employees and representatives, including any individuals seconded to us, from and against all losses, claims and
liabilities incurred by our manager in connection with, relating to or arising out of the performance of any management services. However,
we will not be obligated to indemnify or hold harmless our manager for any losses, claims and liabilities incurred by our manager in
connection with, relating to or arising out of (i) a breach by our manager or its employees or its representatives of the management
services agreement, (ii) the gross negligence, willful misconduct, bad faith or reckless disregard of our manager or its employees or
representatives in the performance of any of its obligations under the management services agreement, or (iii) fraudulent or dishonest
acts of our manager or its employees or representatives with respect to our company or any of its businesses.

 Termination of Management Services Agreement

 Our board of directors may terminate the management
services agreement and our manager's appointment if, at any time:

 a
 majority of our board of directors vote to terminate the management services agreement, and
 the holders of at least a majority of the outstanding shares (other than shares beneficially
 owned by our manager) then entitled to vote also vote to terminate the management services
 agreement;

 neither
 Mr. Roberts nor his designated successor controls our manager, which change of control occurs
 without the prior written consent of our board of directors;

 there
 is a finding by a court of competent jurisdiction in a final, non-appealable order that (i)
 our manager materially breached the terms of the management services agreement and such breach
 continued unremedied for 60 days after our manager receives written notice from us setting
 forth the terms of such breach, or (ii) our manager (x) acted with gross negligence, willful
 misconduct, bad faith or reckless disregard in performing its duties and obligations under
 the management services agreement, or (y) engaged in fraudulent or dishonest acts in connection
 with our business or operations;

 our
 manager has been convicted of a felony under federal or state law, our board of directors
 finds that our manager is demonstrably and materially incapable of performing its duties
 and obligations under the management services agreement, and the holders of at least 66 2/3%
 of the then outstanding shares, other than shares beneficially owned by our manager, vote
 to terminate the management services agreement; or

 there
 is a finding by a court of competent jurisdiction that our manager has (i) engaged in fraudulent
 or dishonest acts in connection with our business or operations or (ii) acted with gross
 negligence, willful misconduct, bad faith or reckless disregard in performing its duties
 and obligations under the management services agreement, and the holders of at least 66 2/3%
 of the then outstanding shares (other than shares beneficially owned by our manager) vote
 to terminate the management services agreement.

 In addition, our manager may resign and terminate
the management services agreement at any time upon 120 days prior written notice to us, and this right is not contingent upon the finding
of a replacement manager. However, if our manager resigns, until the date on which the resignation becomes effective, it will, upon request
of our board of directors, use reasonable efforts to assist our board of directors to find a replacement manager at no cost and expense
to us.

 Upon the termination of the management services
agreement, seconded officers, employees, representatives and delegates of our manager and its affiliates who are performing the services
that are the subject of the management services agreement will resign their respective position with us and cease to work at the date
of such termination or at any other time as determined by our manager. Any director appointed by our manager may continue serving on
our board of directors, subject to the terms of the operating agreement.

 If we terminate the management services agreement,
we have agreed to cease using the term "1847", including any trademarks based on the name of our company that may be licensed
to them by our manager, under the licensing provisions of the management services agreement, entirely in our business and operations
within 180 days of such termination. Such licensing provisions of the management services agreement would require our company and its
businesses to change their names to remove any reference to the term "1847" or any reference to trademarks licensed to them
by our manager. In this respect, our right to use the term "1847" and related intellectual property is subject to licensing
provisions between our manager, on the one hand, and our company, on the other hand.

 Except with respect to the termination fee payable
to our manager due to a termination of the management services agreement based solely on a vote of our board of directors and our shareholders,
no other termination fee is payable upon termination of the management services agreement for any other reason. See " —Our
Manager as a Service Provider—Termination Fee " for more information about the termination fee payable upon termination
of the management services agreement.

 While termination of the management services
agreement will not affect any terms and conditions, including those relating to any payment obligations, that exist under any offsetting
management services agreements or transaction services agreements, such agreements will be terminable by our businesses upon 60 days
prior written notice and there will be no termination or other similar fees due upon such termination. Notwithstanding termination of
the management services agreement, our manager will maintain its rights with respect to the allocation shares it then owns, including
its rights under the supplemental put provision of our operating agreement. See " —Our Manager as an Equity Holder—Supplemental
Put Provision " for more information on our manager's put right with respect to the allocation shares.

 Our Relationship with Our Manager, Manager
Fees and Manager Profit Allocation

 Our relationship with our manager is based on
our manager having two distinct roles: first, as a service provider to us and, second, as an equity holder of the allocation shares.

 As a service provider, our manager performs a
variety of services for us, which entitles it to receive a management fee. As holder of our allocation shares, our manager has the right
to a preferred distribution in the form of a profit allocation upon the occurrence of certain events. Our manager paid $1,000 for the
allocation shares. In addition, our manager will have the right to cause us to purchase the allocation shares then owned by our manager
upon termination of the management services agreement.

 These relationships with our manager are governed
principally by the following agreements:

 the
 management services agreements relating to the services our manager performs for us and our
 businesses; and

 our
 operating agreement relating to our manager's rights with respect to the allocation
 shares it owns and which contains the supplemental put provision relating to our manager's
 right to cause us to purchase the allocation shares it owns.

 We also expect that our manager will enter into
offsetting management services agreements and transaction services agreements with our businesses directly. These agreements, and some
of the material terms relating thereto, are discussed in more detail below. The management fee, profit allocation and put price under
the supplemental put provision will be our payment obligations and, as a result, will be paid, along with other company obligations,
prior to the payment of distributions to common shareholders.

 The following table provides a simplified description
of the fees and profit allocation rights held by our manager. Further detail is provided in the following subsections.

 Fee Calculation

 Payment Term

 Management Fees

 Determined by management services agreement

 0.5% of adjusted net assets (2.0% annually)

 Quarterly

 Determined by offsetting management services agreement

 Payment of fees by our subsidiary businesses that result in a dollar for dollar reduction of manager
 fees paid by us to our manager such that our manager cannot receive duplicate fees from both us and our subsidiary

 Quarterly

 Termination fee – determined by management services agreement

 Accumulated management fee paid in the preceding 4 fiscal quarters multiplied by 2. Paid only upon
 termination by our board and a majority in interest of our shareholders

 Determined by management services agreement

 Reimbursement of manager's costs and expenses in providing services to us, but not including:
 (1) costs of overhead; (2) due diligence and other costs for potential acquisitions our board of directors does not approve pursuing
 or that are required by acquisition target to be reimbursed under a transaction services agreement; and (3) certain seconded officers
 and employees

 Ongoing

 Transaction Services Fees

 Acquisition services of target businesses or disposition of subsidiaries – fees determined
 by transaction services agreements

 2.0% of aggregate purchase price up to $50 million; plus 1.5% of aggregate purchase price in excess
 of $50 million and up to and equal to $100 million; plus 1.0% of aggregate purchase price in excess of $100 million

 Per transaction

 Manager profit allocation determined by our operating agreement

 20% of certain profits and gains on
 a sale of subsidiary after clearance of the 8% annual hurdle rate

 8% hurdle rate determined for any subsidiary
 by multiplying the subsidiary's average quarterly share of our assets by an 8% annualized rate

 Sale of a material amount of capital
 stock or assets of one of our businesses or subsidiaries.

 Holding event: at the option of our
 manager, for the 30 day period following the 5th anniversary of an acquired business (but only based on historical profits of the
 business)

 Our Manager as a Service Provider

 Management Fee

 We will pay our manager a quarterly management
fee equal to 0.5% (2.0% annualized) of its adjusted net assets, as discussed in more detail below (which we refer to as the parent management
fee).

 Subject to any adjustments discussed below, for
performing management services under the management services agreement during any fiscal quarter, we will pay our manager a management
fee with respect to such fiscal quarter. The management fee to be paid with respect to any fiscal quarter will be calculated as of the
last day of such fiscal quarter, which we refer to as the calculation date. The management fee will be calculated by an administrator,
which will be our manager so long as the management services agreement is in effect. The amount of any management fee payable by us as
of any calculation date with respect to any fiscal quarter will be (i) reduced by the aggregate amount of any offsetting management fees,
if any, received by our manager from any of our businesses with respect to such fiscal quarter, (ii) reduced (or increased) by the amount
of any over-paid (or under-paid) management fees received by (or owed to) our manager as of such calculation date, and (iii) increased
by the amount of any outstanding accrued and unpaid management fees.

 The management fee will be paid prior to the
payment of distributions to our common shareholders. If we do not have sufficient liquid assets to pay the management fee when due, we
may be required to liquidate assets or incur debt in order to pay the management fee.

 Offsetting Management Services Agreements

 Pursuant to the management services agreement,
we have agreed that our manager may, at any time, enter into offsetting management services agreements with our businesses pursuant to
which our manager may perform services that may or may not be similar to management services. Any fees to be paid by one of our businesses
pursuant to such agreements are referred to as offsetting management fees and will offset, on a dollar-for-dollar basis, the management
fee otherwise due and payable by us under the management services agreement with respect to a fiscal quarter. The management services
agreement provides that the aggregate amount of offsetting management fees to be paid to our manager with respect to any fiscal quarter
shall not exceed the management fee to be paid to our manager with respect to such fiscal quarter.

 Our manager entered into offsetting management
services agreements with 1847 Asien, 1847 Cabinet, 1847 Wolo, 1847 ICU and 1847 CMD. See Item 7 " Management's Discussion
and Analysis of Financial Condition and Results of Operations—Management Fees " for a description of these agreements.
Our manager may also enter into offsetting management services agreements with our future subsidiaries, which agreements would be in
the form prescribed by our management services agreement. The offsetting management fee paid to our manager for providing management
services to a future subsidiary will vary.

 The services that our manager provides under
the offsetting management services agreements include: conducting general and administrative supervision and oversight of the subsidiary's
day-to-day business and operations, including, but not limited to, recruiting and hiring of personnel, administration of personnel and
personnel benefits, development of administrative policies and procedures, establishment and management of banking services, managing
and arranging for the maintaining of liability insurance, arranging for equipment rental, maintenance of all necessary permits and licenses,
acquisition of any additional licenses and permits that become necessary, participation in risk management policies and procedures; and
overseeing and consulting with respect to our business and operational strategies, the implementation of such strategies and the evaluation
of such strategies, including, but not limited to, strategies with respect to capital expenditure and expansion programs, acquisitions
or dispositions and product or service lines. If our manager and the subsidiary do not enter into an offsetting management services agreement,
our manager will provide these services for our subsidiaries under our management services agreement.

 Example of Calculation of Management Fee
with Adjustment for Offsetting Management Fees

 In order to better understand how the management
fee is calculated, we are providing the following example:

 Quarterly management fee:

 (in thousands)

 Consolidated total assets

 $
 100,000

 Consolidated accumulation amortization of intangibles

 5,000

 Total cash and cash equivalents

 5,000

 Adjusted total liabilities

 (10,000
)

 Adjusted net assets (Line 1 + Line 2 – Line 3 – Line 4)

 90,000

 Multiplied by quarterly rate

 0.5
 %

 Quarterly management fee

 $

 Offsetting management fees:

 Acquired company A offsetting management fees

 $
 (100
)

 Acquired company B offsetting management fees

 (100
)

 Acquired company C offsetting management fees

 (100
)

 Acquired company D offsetting management fees

 (100
)

 Total offsetting management fees (Line 8 + Line 9 – Line 10 – Line 11)

 (400
)

 Quarterly management fee payable by Company (Line 7 + Line 12)

 $

 The foregoing example provides hypothetical information
only and does not intend to reflect actual or expected management fee amounts.

 For purposes of the calculation of the management
fee:

 "Adjusted
 net assets" will be equal to, as of any calculation date, the sum of (i) our consolidated
 total assets (as determined in accordance with U.S. generally accepted accounting principles,
 or GAAP) as of such calculation date, plus (ii) the absolute amount of our consolidated accumulated
 amortization of intangibles (as determined in accordance with GAAP) as of such calculation
 date, minus (iii) total cash and cash equivalents, minus (iv) the absolute amount of our
 adjusted total liabilities as of such calculation date.

 "Adjusted
 total liabilities" will be equal to, as of any calculation date, our consolidated total
 liabilities (as determined in accordance with GAAP) as of such calculation date after excluding
 the effect of any outstanding third-party indebtedness.

 "Quarterly
 management fee" will be equal to, as of any calculation date, the product of (i) 0.5%,
 multiplied by (ii) our adjusted net assets as of such calculation date; provided, however,
 that with respect to any fiscal quarter in which the management services agreement is terminated,
 we will pay our manager a management fee with respect to such fiscal quarter equal to the
 product of (i)(x) 0.5%, multiplied by (y) our adjusted net assets as of such calculation
 date, multiplied by (ii) a fraction, the numerator of which is the number of days from and
 including the first day of such fiscal quarter to but excluding the date upon which the management
 services agreement is terminated and the denominator of which is the number of days in such
 fiscal quarter.

 "Total
 offsetting management fees" will be equal to, as of any calculation date, fees paid
 to our manager by the businesses that we acquire in the future under separate offsetting
 management services agreements.

 Transaction Services Agreements

 Pursuant to the management services agreement,
we have agreed that our manager may, at any time, enter into transaction services agreements with any of our businesses relating to the
performance by our manager of certain transaction-related services in connection with the acquisitions of target businesses by us or
dispositions of our property or assets. These services may include those customarily performed by a third-party investment banking firm
or similar financial advisor, which may or may not be similar to management services, in connection with the acquisition of target businesses
by us or our subsidiaries or disposition of subsidiaries or any of our property or assets or those of our subsidiaries. In connection
with providing transaction services, our manager will generally receive a fee equal to the sum of (i) 2.0% of the aggregate purchase
price of the target business up to and equal to $50 million, plus (ii) 1.5% of the aggregate purchase price of the target business in
excess of $50 million and up to and equal to $100 million, plus (iii) 1.0% of the aggregate purchase price over $100 million, subject
to annual review by our board of directors. The purchase price of a target business shall be defined as the aggregate amount of consideration,
including cash and the value of any shares issued by us on the date of acquisition, paid for the equity interests of such target business
plus the aggregate principal amount of any debt assumed by us of the target business on the date of acquisition or any similar formulation.
The other terms and conditions relating to the performance of transaction services will be established in accordance with market practice.

 Our manager may enter into transaction services
agreements with our subsidiaries and future subsidiaries, which agreements would be in the form prescribed by our management services
agreement.

 The services that our manager will provide to
our subsidiaries and future subsidiaries under the transaction services agreements will include the following services that would be
provided in connection with a specific transaction identified at the time that the transaction services agreement is entered into: reviewing,
evaluating and otherwise familiarizing itself and its affiliates with the business, operations, properties, financial condition and prospects
of the future subsidiary and its target acquisition and preparing documentation describing the future subsidiary's operations,
management, historical financial results, projected financial results and any other relevant matters and presenting such documentation
and making recommendations with respect thereto to certain of our manager's affiliates.

 Any fees received by our manager pursuant to
such a transaction services agreement will be in addition to the management fee payable by us pursuant to the management services agreement
and will not offset the payment of such management fee. A transaction services agreement with any of our businesses may provide for the
reimbursement of costs and expenses incurred by our manager in connection with the acquisition of such businesses.

 Transaction services agreements will be reviewed,
authorized and approved by our board of directors on an annual basis.

 Reimbursement of Expenses

 We are responsible for paying costs and expenses
relating to its business and operations. We agreed to reimburse our manager during the term of the management services agreement for
all costs and expenses that are incurred by our manager or its affiliates on our behalf of, including any out-of-pocket costs and expenses
incurred in connection with the performance of services under the management services agreement, and all costs and expenses the reimbursement
of which are specifically approved by our board of directors.

 We will not be obligated or responsible for reimbursing
or otherwise paying for any costs or expenses relating to our manager's overhead or any other costs and expenses relating to our
manager's conduct of its business and operations. Also, we will not be obligated or responsible for reimbursing our manager for
costs and expenses incurred by our manager in the identification, evaluation, management, performance of due diligence on, negotiation
and oversight of potential acquisitions of new businesses for which we (or our manager on our behalf) fail to submit an indication of
interest or letter of intent to pursue such acquisition, including costs and expenses relating to travel, marketing and attendance of
industry events and retention of outside service providers relating thereto. In addition, we will not be obligated or responsible for
reimbursing our manager for costs and expenses incurred by our manager in connection with the identification, evaluation, management,
performance of due diligence on, negotiating and oversight of an acquisition by us if such acquisition is actually consummated and the
business so acquired entered into a transaction services agreement with our manager providing for the reimbursement of such costs and
expenses by such business. In this respect, the costs and expenses associated with the pursuit of add-on acquisitions may be reimbursed
by any businesses so acquired pursuant to a transaction services agreement.

 All reimbursements will be reviewed and, in certain
circumstances, approved by our board of directors on an annual basis in connection with the preparation of year-end financial statements.

 Termination Fee

 We will pay our manager a termination fee upon
termination of the management services agreement if such termination is based solely on a vote of our board of directors and our shareholders;
no other termination fee will be payable to our manager in connection with the termination of the management services agreement for any
other reason. The termination fee that is payable to our manager will be equal to the product of (i) two (2) multiplied by (ii) the sum
of the amount of the quarterly management fees calculated with respect to the four fiscal quarters immediately preceding the termination
date of the management services agreement. The termination fee will be payable in eight equal quarterly installments, with the first
such installment being paid on or within five (5) business days of the last day of the fiscal quarter in which the management services
agreement was terminated and each subsequent installment being paid on or within five (5) business days of the last day of each subsequent
fiscal quarter, until such time as the termination fee is paid in full to our manager.

 Our Manager as an Equity Holder

 Manager's Profit Allocation

 Our manager owns 100% of our allocation shares,
which generally will entitle our manager to receive a 20% profit allocation as a form of preferred distribution. Upon the sale of a subsidiary,
our manager will be paid a profit allocation if the sum of (i) the excess of the gain on the sale of such subsidiary over a high-water
mark plus (ii) the subsidiary's net income since its acquisition by us exceeds the 8% hurdle rate. The 8% hurdle rate is the product
of (i) a 2% rate per quarter, multiplied by (ii) the number of quarters such subsidiary was held by us, multiplied by (iii) the subsidiary's
average share (determined based on gross assets, generally) of our consolidated net equity (determined according to GAAP with certain
adjustments). In certain circumstances, after a subsidiary has been held for at least 5 years, our manager may also trigger a profit
allocation with respect to such subsidiary (determined based solely on the subsidiary's net income since its acquisition). The
calculation of the profit allocation and the rights of our manager, as the holder of the allocation shares, are governed by the operating
agreement.

 Our board will have the opportunity to review
and approve the calculation of manager's profit allocation when it becomes due and payable. Our manager will not receive a profit
allocation on an annual basis. Instead, our manager will be paid a profit allocation only upon the occurrence of one of the following
events, which we refer to collectively as the trigger events:

 the
 sale of a material amount, as determined by our manager and reasonably consented to by a
 majority of our board of directors, of the capital stock or assets of one of our subsidiaries
 or a subsidiary of one of our subsidiaries, including a distribution of our ownership of
 a subsidiary to our shareholders in a spin-off or similar transaction, which event we refer
 to as a sale event; or

 at
 the option of our manager, for the 30-day period following the fifth anniversary of the date
 upon which we acquired a controlling interest in a business, which event we refer to as a
 holding event. If our manager elects to forego declaring a holding event with respect to
 such business during such period, then our manager may only declare a holding event with
 respect to such business during the 30-day period following each anniversary of such fifth
 anniversary date with respect to such business. Once declared, our manager may only declare
 another holding event with respect to a business following the fifth anniversary of the calculation
 date with respect to a previously declared holding event.

 We believe this payment timing, rather than a
method that provides for annual allocation payments, more accurately reflects the long-term performance of each of our businesses and
is consistent with our intent to hold, manage and grow our businesses over the long term. We refer generally to the obligation to make
this payment to our manager as the "profit allocation" and, specifically, to the amount of any particular profit allocation
as the "manager's profit allocation."

 Definitions used in, and an example of the calculation
of profit allocation, are set forth in more detail below.

 The amount of our manager's profit allocation
will be based on the extent to which the "total profit allocation amount" (as defined below) with respect to any business,
as of the last day of any fiscal quarter in which a trigger event occurs, which date we refer to as the "calculation date",
exceeds the relevant hurdle amounts (as described below) with respect to such business, as of such calculation date. Our manager's
profit allocation will be calculated by an administrator, which will be our manager so long as the management services agreement is in
effect, and such calculation will be subject to a review and approval process by our board of directors. For this purpose, "total
profit allocation amount" will be equal to, with respect to any business as of any calculation date, the sum of:

 the contribution-based profit (as described below) of such business as of such calculation date, which
will be calculated upon the occurrence of any trigger event with respect to such business; plus

 the excess of our cumulative gains and losses (as described below) over the high-water mark (as described
below) as of such calculation date, which will only be calculated upon the occurrence of a sale event with respect to such business, and
not on a holding event (we generally expect this component to be the most significant component in calculating total profit allocation
amount).

 Specifically, manager's profit allocation
will be calculated and paid as follows:

 manager's profit allocation will not be paid with respect to a trigger event relating to any business
if the total profit allocation amount, as of any calculation date, with respect to such business does not exceed such business'
level 1 hurdle amount (based on an 8% annualized hurdle rate, as described below), as of such calculation date; and

 manager's profit allocation will be paid with respect to a trigger event relating to any business
if the total profit allocation amount, as of any calculation date, with respect to such business exceeds such business' level 1
hurdle amount, as of such calculation date. Our manager's profit allocation to be paid with respect to such calculation date will
be equal to the sum of the following:

 100% of such business' total profit allocation amount, as of such calculation date, with respect
to that portion of the total profit allocation amount that exceeds such business' level 1 hurdle amount (but is less than or equal
to such business' level 2 hurdle amount (which is based on a 10% annualized hurdle rate, as described below), in each case, as of
such calculation date. We refer to this portion of the total profit allocation amount as the "catch-up." The "catch-up"
is intended to provide our manager with an overall profit allocation of 20% of the business' total profit allocation amount until
such business' level 2 hurdle amount has been reached; plus

 20% of the total profit allocation amount, as of such calculation date, that exceeds such business'
level 2 hurdle amount as of such calculation date; minus

 the high-water mark allocation, if any, as of such calculation date. The effect of deducting the high-water
mark allocation is to take into account profit allocations our manager has already received in respect of past gains attributable to previous
sale events.

 The administrator will calculate our manager's
profit allocation on or promptly following the relevant calculation date, subject to a "true-up" calculation upon availability
of audited or unaudited consolidated financial statements, as the case may be, to the extent not available on such calculation date. Any
adjustment necessitated by the true-up calculation will be made in connection with the next calculation of manager's profit allocation.
Because of the length of time that may pass between trigger events, there may be a significant delay in our ability to realize the benefit,
if any, of a true-up of our manager's profit allocation.

 Once calculated, the administrator will submit
the calculation of our manager's profit allocation, as adjusted pursuant to any true-up, to our board of directors for its review
and approval. The board of directors will have ten business days to review and approve the calculation, which approval shall be automatic
absent disapproval by the board of directors. Our manager's profit allocation will be paid ten business days after such approval.

 If the board of directors disapproves of the administrator's
calculation of manager's profit allocation, the calculation and payment of manager's profit allocation will be subject to
a dispute resolution process, which may result in our manager's profit allocation being determined, at our cost and expense, by
two independent accounting firms. Any determination by such independent accounting firms will be conclusive and binding on us and our
manager.

 We will also pay a tax distribution to our manager
if our manager is allocated taxable income by us but does not realize distributions from us at least equal to the taxes payable by our
manager resulting from allocations of taxable income. Any such tax distributions will be paid in a similar manner as profit allocations
are paid.

 For any fiscal quarter in which a trigger event
occurs with respect to more than one business, the calculation of our manager's profit allocation, including the components thereof,
will be made with respect to each business in the order in which controlling interests in such businesses were acquired or obtained by
us and the resulting amounts shall be aggregated to determine the total amount of manager's profit allocation. If controlling interests
in two or more businesses were acquired at the same time and such businesses give rise to a calculation of manager's profit allocation
during the same fiscal quarter, then manager's profit allocation will be further calculated separately for each such business in
the order in which such businesses were sold.

 The profit allocations and tax distributions will
be paid prior to the payment of distributions to our shareholders. If we do not have sufficient liquid assets to pay the profit allocations
or tax distributions when due, we may be required to liquidate assets or incur debt in order to pay such profit allocation. Our manager
will have the right to elect to defer the payment of our manager's profit allocation due on any payment date. Once deferred, our
manager may demand payment thereof upon 20 business days' prior written notice.

 Termination of the management services agreement,
by any means, will not affect our manager's rights with respect to the allocation shares that it owns, including its right to receive
profit allocations, unless our manager exercises its put right to sell such allocation shares to us.

 Example of Calculation of Manager's
Profit Allocation

 Our manager will receive a profit allocation at
the end of the fiscal quarter in which a trigger event occurs, as follows (all dollar amounts are in millions):

 Assumptions

 Year 1:

 Acquisition of Company A

 Acquisition of Company B

 Year 4

 Company A (or assets thereof) sold for
$25 capital gain (as defined below) over its net book value of assets at time of sale, which is a qualifying trigger event

 Company A's average allocated
share of our consolidated net equity over its ownership is $50

 Company A's holding period in
quarters is 12 (assuming that Company A is acquired on the first day of the year)

 Company A's contribution-based
profit since acquisition is $5

 Year 6:

 Company B's contribution-based
profit since acquisition is $7

 Company B's average allocated
share of our consolidated net equity over its ownership is $25

 Company B's holding period in
quarters is 20

 Company B's cumulative gains and
losses are $20

 Manager elects to have holding period
measured for purposes of profit allocation for Company B

 Profit Allocation Calculation:

 Year

A, due to

sale

 Year

B, due to

5 year hold

 Contribution-based profit since acquisition for respective subsidiary

 $

 $

 Gain/ Loss on sale of company

 Cumulative gains and losses

 High-water mark prior to transaction

 Total Profit Allocation Amount (Line 1 + Line 3)

 Business' holding period in quarters since ownership or last measurement due to holding event

 Business' average allocated share of consolidated net equity

 Business' level 1 hurdle amount (2.00% * Line 6 * Line 7)

 Business' excess over level 1 hurdle amount (Line 5 – Line 8)

 Business' level 2 hurdle amount (125% * Line 8)

 12.5

 Allocated to manager as "catch-up" (Line 10 – Line 8)

 2.5

 Excess over level 2 hurdle amount (Line 9 – Line 11)

 14.5

 Allocated to manager from excess over level 2 hurdle amount (20% * Line 12)

 2.9

 Cumulative allocation to manager (Line 11 + Line 13)

 5.4

 High-water mark allocation (20% * Line 4)

 Manager's Profit Allocation for Current Period (Line 14 – Line 15,> 0)

 $

 $
 1.4

 For purposes of calculating profit allocation:

 An entity's " adjusted net assets " will be equal to, as of any date, the sum of
(i) such entity's consolidated total assets (as determined in accordance with GAAP) as of such date, plus (ii) the absolute amount
of such entity's consolidated accumulated amortization of intangibles (as determined in accordance with GAAP) as of such date, minus
(iii) the absolute amount of such entity's adjusted total liabilities as of such date.

 An entity's " adjusted total liabilities " will be equal to, as of any date, such
entity's consolidated total liabilities (as determined in accordance with GAAP) as of such date after excluding the effect of any
outstanding third-party indebtedness of such entity.

 A business' " allocated share of our overhead " will be equal to, with respect
to any measurement period as of any calculation date, the aggregate amount of such business' quarterly share of our overhead for
each fiscal quarter ending during such measurement period.

 A business' " average allocated share of our consolidated equity " will be equal
to, with respect to any measurement period as of any calculation date, the average (i.e., arithmetic mean) of a business' quarterly
allocated share of our consolidated equity for each fiscal quarter ending during such measurement period.

 " Capital gains " (i) means, with respect to any entity, capital gains (as determined
in accordance with GAAP) that are calculated with respect to the sale of capital stock or assets of such entity and which sale gave rise
to a sale event and the calculation of profit allocation and (ii) will be equal to the amount, adjusted for minority interests, by which
(x) the net sales price of such capital stock or assets, as the case may be, exceeded (y) the net book value (as determined in accordance
with GAAP) of such capital stock or assets, as the case may be, at the time of such sale, as reflected on our consolidated balance sheet
prepared in accordance with GAAP; provided, that such amount shall not be less than zero.

 " Capital losses " (i) means, with respect to any entity, capital losses (as determined
in accordance with GAAP) that are calculated with respect to the sale of capital stock or assets of such entity and which sale gave rise
to a sale event and the calculation of profit allocation and (ii) will be equal to the amount, adjusted for minority interests, by which
(x) the net book value (as determined in accordance with GAAP) of such capital stock or assets, as the case may be, at the time of such
sale, as reflected on our consolidated balance sheet prepared in accordance with GAAP, exceeded (y) the net sales price of such
capital stock or assets, as the case may be; provided, that such absolute amount thereof shall not be less than zero.

 Our " consolidated net equity " will be equal to, as of any date, the sum of (i)
our consolidated total assets (as determined in accordance with GAAP) as of such date, plus (ii) the aggregate amount of asset
impairments (as determined in accordance with GAAP) that were taken relating to any businesses owned by us as of such date, plus
(iii) our consolidated accumulated amortization of intangibles (as determined in accordance with GAAP), as of such date minus (iv)
our consolidated total liabilities (as determined in accordance with GAAP) as of such date.

 A business' " contribution-based profits" will be equal to, for any measurement
period as of any calculation date, the sum of (i) the aggregate amount of such business' net income (as determined in accordance
with GAAP and as adjusted for minority interests) with respect to such measurement period (without giving effect to (x) any capital gains
or capital losses realized by such business that arise with respect to the sale of capital stock or assets held by such business and which
sale gave rise to a sale event and the calculation of profit allocation or (y) any expense attributable to the accrual or payment of any
amount of profit allocation or any amount arising under the supplemental put agreement, in each case, to the extent included in the calculation
of such business' net income), plus (ii) the absolute aggregate amount of such business' loan expense with respect
to such measurement period, minus (iii) the absolute aggregate amount of such business' allocated share of our overhead with
respect to such measurement period.

 Our " cumulative capital gains " will be equal to, as of any calculation date, the aggregate
amount of capital gains realized by us as of such calculation date, after giving effect to any capital gains realized by us on such calculation
date, since its inception.

 Our " cumulative capital losses " will be equal to, as of any calculation date, the aggregate
amount of capital losses realized by us as of such calculation date, after giving effect to any capital losses realized by us on such
calculation date, since its inception.

 Our " cumulative gains and losses " will be equal to, as of any calculation date, the
 sum of (i) the amount of cumulative capital gains as of such calculation date, minus (ii) the absolute amount of cumulative
capital losses as of such calculation date.

 The " high-water mark " will be equal to, as of any calculation date, the highest positive
amount of capital gains and losses as of such calculation date that were calculated in connection with a qualifying trigger event that
occurred prior to such calculation date.

 The " high-water mark allocation " will be equal to, as of any calculation date, the
product of (i) the amount of the high-water mark as of such calculation date, multiplied by (ii) 20%.

 A business' " level 1 hurdle amount " will be equal to, as of any calculation date,
the product of (i) (x) the quarterly hurdle rate of 2.00% (8% annualized), multiplied by (y) the number of fiscal quarters ending
during such business' measurement period as of such calculation date, multiplied by (ii) a business' average allocated
share of our consolidated equity for each fiscal quarter ending during such measurement period.

 A business' " level 2 hurdle amount " will be equal to, as of any calculation date,
the product of (i) (x) the quarterly hurdle rate of 2.5% (10% annualized, which is 125% of the 8% annualized hurdle rate), multiplied
by (y) the number of fiscal quarters ending during such business' measurement period as of such calculation date, multiplied
by (ii) a business' average allocated share of our consolidated equity for each fiscal quarter ending during such measurement
period.

 A business' " loan expense " will be equal to, with respect to any measurement
period as of any calculation date, the aggregate amount of all interest or other expenses paid by such business with respect to indebtedness
of such business to either our company or other company businesses with respect to such measurement period.

 The " measurement period " will mean, with respect to any business as of any calculation
date, the period from and including the later of (i) the date upon which we acquired a controlling interest in such business and (ii)
the immediately preceding calculation date as of which contribution-based profits were calculated with respect to such business and with
respect to which profit allocation were paid (or, at the election of the allocation member, deferred) by us up to and including such calculation
date.

 Our " overhead " will be equal to, with respect to any fiscal quarter, the sum
of (i) that portion of our operating expenses (as determined in accordance with GAAP) (without giving effect to any expense attributable
to the accrual or payment of any amount of profit allocation or any amount arising under the supplemental put agreement to the extent
included in the calculation of our operating expenses), including any management fees actually paid by us to our manager, with respect
to such fiscal quarter that are not attributable to any of the businesses owned by us (i.e., operating expenses that do not correspond
to operating expenses of such businesses with respect to such fiscal quarter), plus (ii) our accrued interest expense (as determined
in accordance with GAAP) on any outstanding third-party indebtedness with respect to such fiscal quarter, minus (iii) revenue,
interest income and other income reflected in our unconsolidated financial statements as prepared in accordance with GAAP.

 A " qualifying trigger event " will mean, with respect to any business, a trigger event
that gave rise to a calculation of total profit allocation with respect to such business as of any calculation date and (ii) where the
amount of total profit allocation so calculated as of such calculation date exceeded such business' level 2 hurdle amount as of
such calculation date.

 A business' " quarterly allocated share of our consolidated equity " will be equal
to, with respect to any fiscal quarter, the product of (i) our consolidated net equity as of the last day of such fiscal quarter,
 multiplied by (ii) a fraction, the numerator of which is such business' adjusted net assets as of the last day of such fiscal
quarter and the denominator of which is the sum of (x) our adjusted net assets as of the last day of such fiscal quarter, minus
(y) the aggregate amount of any cash and cash equivalents as such amount is reflected on our consolidated balance sheet as prepared in
accordance with GAAP that is not taken into account in the calculation of any business' adjusted net assets as of the last day of
such fiscal quarter.

 A business' " quarterly share of our overhead " will be equal to, with respect
to any fiscal quarter, the product of (i) the absolute amount of our overhead with respect to such fiscal quarter, multiplied
by (ii) a fraction, the numerator of which is such business' adjusted net assets as of the last day of such fiscal quarter and
the denominator of which is our adjusted net assets as of the last day of such fiscal quarter.

 An entity's " third-party indebtedness " means any indebtedness of such entity
owed to any third-party lenders that are not affiliated with such entity.

 Supplemental Put Provision

 In addition to the provisions discussed above,
in consideration of our manager's acquisition of the allocation shares, our operating agreement contains a supplemental put provision
pursuant to which our manager will have the right to cause us to purchase the allocation shares then owned by our manager upon termination
of the management services agreement.

 If the management services agreement is terminated
at any time or our manager resigns, then our manager will have the right, but not the obligation, for one year from the date of such termination
or resignation, as the case may be, to elect to cause us to purchase all of the allocation shares then owned by our manager for the put
price as of the put exercise date.

 For purposes of this provision, the "put
price" is equal to, as of any exercise date, (i) if we terminate the management services agreement, the sum of two separate, independently
made calculations of the aggregate amount of manager's profit allocation as of such exercise date or (ii) if our manager resigns,
the average of two separate, independently made calculations of the aggregate amount of manager's profit allocation as of such exercise
date, in each case, calculated assuming that (x) all of the businesses are sold in an orderly fashion for fair market value as of such
exercise date in the order in which the controlling interest in each business was acquired or otherwise obtained by us, (y) the last day
of the fiscal quarter ending immediately prior to such exercise date is the relevant calculation date for purposes of calculating manager's
profit allocation as of such exercise date. Each of the two separate, independently made calculations of our manager's profit allocation
for purposes of calculating the put price will be performed by a different investment bank that is engaged by us at our cost and expense.
The put price will be adjusted to account for a final "true-up" of our manager's profit allocation.

 We and our manager can mutually agree to permit
us to issue a note in lieu of payment of the put price when due; provided, that if our manager resigns and terminates the management services
agreement, then we will have the right, in our sole discretion, to issue a note in lieu of payment of the put price when due. In either
case the note would have an aggregate principal amount equal to the put price, would bear interest at a rate of LIBOR plus 4.0% per annum,
would mature on the first anniversary of the date upon which the put price was initially due, and would be secured by the then-highest
priority lien available to be placed on our equity interests in each of our businesses.

 Our obligations under the put provision of our
operating agreement are absolute and unconditional. In addition, we will be subject to certain obligations and restrictions upon exercise
of our manager's put right until such time as our obligations under the put provision of our operating agreement, including any
related note, have been satisfied in full, including:

 subject to our right to issue a note in the circumstances described above, we must use commercially reasonable
efforts to raise sufficient debt or equity financing to permit us to pay the put price or note when due and obtain approvals, waivers
and consents or otherwise remove any restrictions imposed under contractual obligations or applicable law or regulations that have the
effect of limiting or prohibiting us from satisfying our obligations under the supplemental put agreement or note;

 our manager will have the right to have a representative observe meetings of our board of directors and
have the right to receive copies of all documents and other information furnished to the board of directors;

 our company and its businesses will be restricted in their ability to sell or otherwise dispose of their
property or assets or any businesses they own and in their ability to incur indebtedness (other than in the ordinary course of business)
without granting a lien on the proceeds therefrom to our manager, which lien will secure our obligations under the put provision of our
operating agreement or note; and

 we will be restricted in our ability to (i) engage in certain mergers or consolidations, (ii) sell, transfer
or otherwise dispose of all or a substantial part of our business, property or assets or all or a substantial portion of the stock or
beneficial ownership of our businesses or a portion thereof, (iii) liquidate, wind-up or dissolve, (iv) acquire or purchase the property,
assets, stock or beneficial ownership or another person, or (v) declare and pay distributions to our common shareholders.

 We have also agreed to indemnify our manager for
any losses or liabilities it incurs or suffers in connection with, arising out of or relating to its exercise of its put right or any
enforcement of terms and conditions of the supplemental put provision of our operating agreement.

 The put price will be paid prior to the payment
of distributions to our shareholders. If we do not have sufficient liquid assets to pay the put price when due, we may be required to
liquidate assets or incur debt in order to pay the put price.

 Termination of the management services agreement,
by any means, will not affect our manager's rights with respect to the allocation shares that it owns. In this regard, our manager
will retain its put right and its allocation shares after ceasing to serve as our manager. As a result, if we terminate our manager, regardless
of the reason for such termination, it would retain the right to exercise the put right and demand payment of the put price.

 CONSTRUCTION BUSINESS

 Our construction business is operated through
our subsidiaries Kyle's, Innovative Cabinets and CMD, and prior to September 30, 2024, High Mountain. As noted above, CMD was not
acquired until December 16, 2024. This business segment accounted for approximately 76.1% and 67.9% of our total revenues for the years
ended December 31, 2024 and 2023, respectively.

 Overview

 Our construction business specializes in designing,
building, and installing doors, trim, millwork, custom cabinetry, and countertops. We serve diverse customers across various sectors,
including commercial, government, hospitality, and residential. Before we acquired CMD, the core business primarily served homebuilders
and homeowners of single-family homes and commercial and multi-family developers in the greater Reno-Sparks-Fernley metro area in Nevada
and the Boise, Idaho area. This coverage area has now expanded to include the greater Las Vegas metro area, as well as southern Utah and
northern Arizona.

 Products and Services

 We are proficient at designing and manufacturing
custom millwork utilizing a variety of materials, with core specialties in commercial, government, hospitality, and residential sectors
in the greater Las Vegas metro area, as well as southern Utah and northern Arizona, which is one of the fastest growing economic regions
in the Western U.S. We design and install architectural millwork and cabinets, doors, frames and hardware, and bathroom accessories and
specialties.

 We provide a wide variety of finished cabinetry
products and services to builders of multi-family communities, as well as commercial clients in the greater Reno-Sparks-Fernley metro
area in Nevada. This includes selling and installing kitchen and bathroom cabinets and countertops.

 We also build cabinets for every area of a home
- kitchen and bath cabinets, fireplace mantels and surrounds, entertainment systems and wall units, bookcases and office cabinets - in
Boise, Idaho and the surrounding area, for builders, designers and homeowners when they are building a new home or conduct remodeling.
In this market, most of the focus has been on supplying custom or semi-custom builders of residential properties.

 Manufacturing

 Our services consist of design, assembly, procurement,
light manufacturing, and installation services. Products that utilize raw materials to manufacture products within our operations are
primarily cabinetry and specialty products for custom builders in residential and commercial spaces. Most of our product volume consists
of installing purchased materials that are not manufactured in our facilities.

 In the Las Vegas, Nevada market, CMD utilizes
several in-house technology programs and machinery, such as design and progress programs, cabinet standard manuals, and implementation
operations. In the custom cabinetry division, CMD utilizes estimating software, project management software, and computer numerical control,
or CNC, machinery, which automates the control, movement, and precision of cutting and machining processes, to customize production, manage
a variety of projects, and maximize product workflows and efficiency. The door divisions of CMD purchase materials for contracts and install
the materials at the job site, involving assembly of door frames at the company.

 In the Boise, Idaho market, Kyle's operates
a cabinet shop that is equipped with state-of-the-art tools operated by skilled cabinet makers. It manufactures its cabinets using its
CNC machinery to maximize efficiency. The details of each custom cabinet are created by talented employees, from hand sanding to staining
and painting to adding a wide array of specialty finishes, coatings, distressing and glazing.

 In the Reno, Nevada market, Innovative Cabinets
procures ready-to-assemble (RTS) cabinets through an Asian-based supply chain to the specifications of contract. The products are warehoused,
assembled at the company, delivered to the job site, and installed primarily for builders of multi-family communities.

 Pricing

 Our strategy has been to deliver quality and performance
at a value-based price target. Our pricing model generally offers better features or efficiencies than general market competitors in each
product category to our builder markets.

 Supplier Relationships

 We source products and raw materials from multiple
regional, national, and foreign suppliers. Some of our products and materials come from Asian-based suppliers. Depending on the US government's
various foreign policies, products and materials from Asian-based suppliers may be subject to import tariffs. As such, we continue to
explore partnership or supplier opportunities to optimize our costs.

 CMD sources a variety of hollow-core doors, wood
casings, lumber, metal doors and casings, manufactured trim materials and hardware for its door division, laminate and melamine wood materials
for its custom cabinetry division, and pre-made door partitions, fire extinguishers, and bathroom accessories for its specialties division.
The primary raw materials used to manufacture Kyle's products are melamine and veneered sheet goods, lumber, doors, and hardware.
The cost of these raw materials is a key factor in pricing its products.

 Historically, we have purchased key products and
raw materials from a limited number of suppliers. We buy products and raw materials based on purchase orders. While we believe that there
is an ample supply of most of the products and raw materials that we need, in the absence of firm and long-term contracts, we may not
be able to obtain a sufficient supply of these products and raw materials from our existing suppliers or alternates in a timely fashion
or at a reasonable cost. If we fail to secure a sufficient supply of key products and raw materials in a timely fashion, it could result
in a significant delay in delivering our products and services, which may cause us to breach our sales contracts with our customers. Furthermore,
failure to obtain a sufficient supply of these products and raw materials at a reasonable cost could also harm our revenue and gross profit
margins. Please see Item 1A " Risk Factors—Risks Related to Our Construction Business " for a description of the
risks related to our supplier relationships.

 Sales and Marketing

 In the Las Vegas, Nevada market, we primarily
work with custom homebuilders of single-family homes, single-family homeowners, commercial and multi-family developers, and on municipal
projects such as schools and public facilities. CMD operates in one of the strongest building markets in the country, with a strong, diversified
customer base with builders such as Toll Brothers, Boyd Martin, Christopher Homes, and Whiting Turner Construction. Many of these relationships
span over a decade and have allowed CMD to expand its footprint into northern Arizona and southern Utah.

 In the Boise, Idaho market, we primarily work
with custom or semi-custom home builders, but due to strong housing demands in the area, we are also tapping into the residential multi-family,
new construction segment of the market.

 We have high customer retention levels and have
generated a considerable number of broader revenue opportunities through direct and specific interaction with our customer base. We have
negotiated pricing with several long-term recurring contractor customers, which have accounted for many of our revenues. There can be
no assurance that we will maintain or improve the relationships with those customers. If we cannot maintain long-term relationships with
major customers or replace major customers from period to period with equivalent customers, the loss of such sales could have an adverse
effect on our business, financial condition and results of operations. Please also see Item 1A " Risk Factors—Risks Related
to Our Construction Business—The loss of any of our key customers could have a materially adverse effect on our results of operations."

 We primarily rely on direct consumer marketing
and our extensive relationships with local builders to market our products. We also maintain websites at www.cmdnv.com and www.kylescabinets.com
and www.innovativecabinetsanddesign.com and conduct social media marketing through Facebook pages.

 Competition

 We compete with specialty builders in the residential,
commercial, governmental, and hospitality sectors of the Las Vegas metro market, facing different competitors in each segment. In our
commercial door division, we compete primarily with Holguin, Star Hardware, and Five Star. In the multifamily sector, our main competitors
are DMC, Rystin Construction, and Star Hardware. For tract homes, Next Level Door and Trim is the leading competitor, while for custom
cabinetry, our competitors include Western Casework and Henrick-and-Oherron.

 Because CMD offers a broad array of products and
services across multiple sectors, we often serve as a "one-stop shop" for many residential and commercial developers in the
Las Vegas metro area, whereas our competitors have more limited offerings.

 The finished carpentry industry consists of contractors
who specialize in finish carpentry services, such as on-site construction and the installation of doors, windows, stairs, shelving, cupboards,
cabinets, and decks. Carpenters face significant competition from do-it-yourself (DIY) homeowners in housing alterations and additions,
as well as from skilled tradespeople working for general building contractors in new construction.

 In our primary markets, we encounter numerous
competitors, with reputation, price, artistry, and service quality being the key competitive factors. We primarily compete with other
specialty builders, such as Franklin's and Western Idaho, and to a lesser extent, against national retail chains like Home Depot and Lowe's.

 Barriers to entry exist for new companies looking
to enter these markets due to the available labor pool in finished carpentry and the strong relationships between industry players. These
barriers also present challenges for larger competitors from outside the region when establishing a foothold. With the implementation
of our business strategy focused on delivering high-value, quality products, customized solutions, and expert installations, we expect
to continue competing effectively against the competitors mentioned above.

 Competitive Strengths

 Based on management's belief and experience
in the industry, we believe that the following competitive strengths enable us to compete effectively.

 Superior name and reputation. We are well established in our markets (including for over
40 years in the Boise market and over 20 years in the Las Vegas market) and have built a strong reputation for best-in-class processes,
product quality, and timeliness. We have strong visibility both online and among industry professionals. Over our many years in business,
we have established a stellar reputation for integrity, superior service, and genuine concern for our clients and their businesses.

 Established blue-chip clients. We have customer lists that include many regional contractors
in the areas that we service, many of whom have used us as their go-to vendors for many years.

 Streamlined operations. We believe that our processes and operational systems create higher-than-average
efficiencies, accuracy and profitability.

 Diversified capabilities. We have diversified capabilities to support large homebuilders
of single-family homes, commercial and multi-family developers, and governmental and hospitality developers providing flexibility toward
trending markets and growth opportunities.

 Outstanding growth opportunities. Our portfolio, brand and reputation, and streamlined operational
platform can be leveraged for expansion, both in existing regions, and other high-value surrounding areas.

 Strong regional presence. We operate in the in the greater Las Vegas metro and Boise metro
area, which are two of the fastest growing economic regions in the Western U.S. due to its day drive distance to many of the largest commercial
centers and port facilities in the United States and favorable tax and business regulation environment. There are multiple national homebuilders
and multi-family developers active in the region. We are among the largest door, millwork, and custom carpentry companies in this region.

 Growth Strategies

 We will strive to grow our business by pursuing
the following growth strategies.

 Geographic expansion. There are immediate opportunities for expansion into the surrounding
areas, including Twin Falls, McCall, and Sun Valley in Idaho, as well as Northern and Southern Nevada, Utah, and Arizona. We believe we
are well-positioned to grow in these regions, as many of our residential and multifamily developers have requested bids from us as they
expand their operations.

 Expansion to commercial projects and tract homes. We see significant potential to delve
into the commercial real estate sector and tract homes. The Las Vegas market has experienced tremendous population growth, resulting in
a continual increase in demand for tract residential home developments, an area where we have done little work so far. In Boise, we primarily
focus on the residential single-family new construction segment, but there is strong evidence of ongoing market demand for multi-family
projects, both from our current customers and potential new ones. With the right infrastructure in place to support this market demand,
we could quickly penetrate the markets for multi-family projects, office buildings, and hotel and resort properties.

 Capacity and infrastructure expansion. In Nevada, we are in the process of expanding our
warehouse space and operations to capture additional bid opportunities in the ready-to-assemble (RTS) cabinet segment.

 Employees

 As of December 31, 2024, our construction companies
employed 171 full-time employees. None of the employees are represented by labor unions, and we believe that our custom carpentry companies
have excellent relationships with their employees.

 Regulation

 Both facilities in Las Vegas are subject to the
Clark County Department of Air Quality and the Nevada Department of Environmental Protection. Our facility in Reno is governed by the
Washoe County Department of Health, while our facility in Boise, Idaho is subject to Idaho Department of Environmental Quality. Each of
these agencies implement rules and regulations in connection with air quality, pollution and the protection of the environment, including
those governing emissions to air, discharges to water, storage, treatment and disposal of waste, remediation of contaminated sites and
protection of worker health and safety.

 We believe that we are in substantial compliance
with all applicable requirements. However, our efforts to comply with environmental requirements do not remove the risk that we may be
held liable, or incur fines or penalties, and that the amount of liability, fines or penalties may be material, for, among other things,
releases of hazardous substances occurring on or emanating from current or formerly owned or operated properties or any associated offsite
disposal location, or for contamination discovered at any of our properties from activities conducted by previous occupants.

 Permits are required for certain of our operations,
and these permits are subject to revocation, modification and renewal by issuing authorities. Governmental authorities have the power
to enforce compliance with their regulations, and violations may result in the payment of fines or the entry of injunctions, or both.

 Changes in environmental laws and regulations
or the discovery of previously unknown contamination or other liabilities relating to our properties and operations could result in significant
environmental liabilities. In addition, we might incur significant capital and other costs to comply with increasingly stringent air emission
control laws and enforcement policies which would decrease our cash flow.

 AUTOMOTIVE SUPPLIES BUSINESS

 Our automotive supplies business is operated by
Wolo. This business segment accounted for approximately 23.9% and 32.1% of our total revenues for the years ended December 31, 2024 and
2023, respectively.

 Overview

 Our automotive supplies business is headquartered
in Deer Park, New York and was founded in 1965. We design and sell horn and safety products (electric, air, truck, marine, motorcycle
and industrial equipment), and offer vehicle emergency and safety warning lights for cars, trucks, industrial equipment and emergency
vehicles. Focused on the automotive and industrial after-market, we sell our products to big-box national retail chains, through specialty
and industrial distributors, as well as online/mail order retailers and original equipment manufacturers, or OEMs.

 Products

 We design and sell a broad range of branded vehicle horns, warning
lights, sirens, back-up alarms and accessories

 Horns

 We design and sell an innovative and extensive
selection of electromechanical, air and electronic-speaker horns. The horns are used in many industries such as: heavy duty truck, motorcycle,
marine, industrial and the automotive aftermarket. We also sell hand-held gas horns which can be used for sporting events, as well as
marine, construction sites and outdoor activities.

 Our top-selling product is the Bad Boy horn, which
has a one-piece design that requires no hoses. It installs in minutes by simply transferring the vehicle's factory horn wires to
the compressor, and mounts with one bolt included in kit. The Bad Boy produces a powerful dual tone air horn sound that is two times louder
than the factory horn. It is compact in size to fit any car, truck, motorcycle and any 12-volt vehicle that wants a loud air horn sound.
A heavy-duty maintenance free compressor provides years of dependable service.

 In the past three years, we have brought a number
of new and innovative horn products to the markets to which we sell. Some highlights include:

 Midnight Express. A high-pressure truck train horn that is three trumpets, all metal and painted
semi-gloss black. Train horns are purchased by the vehicle owner that wants the ultra-powerful sound of a train.

 Quadraphonic Express. Four metal trumpets that are triple chrome plated, produce an ultra-powerful
train horn sound that will be heard and will dress-up the appearance of any vehicle.

 Nexgen Express Train Horn. A totally new design by us, a state-of-the-art fully electronic train
horn, compact in size and produces more than 150-watts output. Engineered to fit into the engine compartment of cars, SUVs and even compact
vehicles with a simple two wire hook-up, Nexgen offers two distinctive train horn sounds controlled by a wireless key fab.

 Mighty Mo. An industrial equipment horn designed to withstand off-road and construction site conditions,
while being able to penetrate noisy environments and still be heard.

 Compressor and Tank Systems

 We also sell air compressor systems, consisting
of air storage tanks, compressors and everything needed to hookup a high-pressure air horn. Two years ago, we started offering complete
kits of train horns and choice of high-pressure air systems. Additionally, we offer replacement parts for all products.

 Electric Sirens and Speakers

 We have an array of emergency electronic sirens
with built-in public address systems used by emergency responders.

 Back-Up Alarms

 We offer a variety of back-up alarm systems from
basic beep-style horn sold in all aftermarket retailers, to hi-tech intelligent alarms that adjust audio output to be louder than surrounding
ambient noise. Our Model BA-697 has three super bright 1-watt LEDs that flash while the vehicle is in reverse and the auditable warning
sound is turned on. In addition, we have a selection of white noise "Psss Psss" sound alarms required in the state of California.

 Warning Lights

 We offer a large selection of warning lights for
road assistance as well as emergency vehicles, construction, road safety and snow plowing vehicles. Warning lights come in a variety of
types, sizes and shapes such as rotating, strobe and state-of-the-art LED models ranging in sizes from 8 inches to fifty-seven 57 inches.
A recent addition to warning lights that has become an everyday bestseller for us is the new WATCHMAN, which is a 24-inch magnet
light bar that can be converted to permanent mounting in minutes with no special tools. Because of the products' popularity, we
designed a larger 48" version of the Watchman, which has seen very good acceptance in the market.

 Another recent addition is Luminous, a high-performance,
low profile linear light bar designed with the latest state-of-the-art electronic circuitry that has low power consumption and will provide
years of reliable service. Luminous produces an intense beam of light which can be seen 360 degrees even in bright daylight. Available
in three lengths in color amber, blue, red, green and any combination of colors. Luminous is certified SAE J845 Class 1 and California
Title 13.

 Manufacturing

 Most of our manufacturing is outsourced to contract
manufacturers in China and Taiwan. In-house assembly consists of changes to fully assembled products, as per custom orders. For example,
converting the voltage of a horn for truck use, or the standard color of a particular warning light.

 We have implemented a strict quality control program
which is run by our warehouse/production manager. We believe that our high-quality standards assure customers that they are getting the
best and most reliable products in the market. Our manufacturing operations are designed to allow low-cost production of a wide variety
of products while maintaining a high level of customer service and quality.

 We believe that our manufacturing facilities generally
have sufficient capacity to meet our current business requirements and our currently anticipated sales.

 Vendor/Supplier Relationships

 We have developed long term relationships with
contact manufacturers based in China and Taiwan. All materials are sourced by the contract manufacturers. The following table sets forth
the vendors and suppliers that accounted for more than 10% of our purchases for the years ended December 31, 2024 and 2023:

 Supplier

 Product

 Total

Purchases

2024

 Percent of

Purchases

2024

 Total

Purchases

2023

 Percent of

Purchases

2023

 Yonglong Car Accessories

 Warning Lights

 $

 287,247

 16.5

 %

 $

 448,028

 22.6

 %

 Ruian Jiani Auto Parts

 Horns

 198,863

 11.4

 %

 312,550

 15.7

 %

 Changzhou Wushi Electrical

 Horns

 182,017

 10.4

 %

 317,064

 16.0

 %

 E-own Corporation

 Warning Lights & Horns

 173,829

 10.0

 %

 248,171

 12.5

 %

 Zhejiang Jiejia Automobile

 Horns

 64,489

 3.7

 %

 287,733

 14.5

 %

 We have established relationships with our vendors,
with many of these relationships spanning more than 15 years. We implement vendor agreements with all our major accounts and some mid-size
accounts. The typical length of a vendor agreement is 2-3 years, and in most cases automatically renew.

 We have also established volume discounts with
our suppliers which help to offset increased material, tariffs and increased labor costs domestically and overseas. With the unstable
world market, we have carefully started to engage secondary suppliers to make sure we have no interruptions in the supply chain and to
be sure we maintain a competitive price.

 We believe that our strong relationships with
suppliers yield high quality, competitive pricing and overall good service to our customers. Although we cannot be sure that our sources
of supply will be adequate in all circumstances, we believe that we can develop alternate sources in a timely and cost-effective manner
if our current sources become inadequate. Due to availability of numerous alternative suppliers, we do not believe that the loss of any
single supplier would have a material adverse effect on our consolidated financial condition or results of operations. See Item 1A " Risk
Factors—Risks Related to Our Automotive Supply Business " for a description of the risks related to our supplier relationships.

 Sales and Marketing

 Our sales team consists of a vice president of
sales who coordinates with contracted sales representatives from thirteen regional sales companies in North America, Mexico, Puerto Rico,
the U.K., Europe, the Middle East and the industrial aftermarket. The sales representative's agreement with us is limited to automotive,
internet-based companies and occasionally motorcycle aftermarket distributors.

 Sales representatives are responsible for the
solicitation and development of new accounts, as well as working with existing customers to develop promotions and incentives for our
products. We have had relationships with these regional sales companies for 13 to 15 years on-average. All major customers are serviced
frequently by their sales representatives.

 Our innovative retail product packaging design
is also a highly effective marketing tool in direct-to-consumer selling. Featuring quick response (QR) barcode technology, customers are
able to scan product packaging using their smart phone or mobile device to instantly see product information, watch demonstration videos,
or even hear horn demos. There is no need for special in-store displays or additional shelf space as all information is accessible directly
by scanning the product packaging. It is like having a virtual sales associate in-store. Packaging also features scan-back's, an
instant rebate that is applied at the register upon checkout.

 Additional marketing programs include in-store
promotional programs for customers, e-commerce via our website, as well as email blasts and customer print catalogs. We mail print and/or
electronic CD catalogs to established accounts every 18 months with new product information inserted via supplemental sell-sheets. New
product launches and updates are also sent to customers via email blast periodically.

 We exhibit at key industry and customer tradeshows
and belongs to the National Marine Manufacturers Association and American Boat and Yacht Council.

 Customers

 We sell products to the automobile aftermarket,
national retailers, direct-to-consumer, mail order, web-based retailers, public safety equipment wholesalers, industrial wholesalers,
as well as the motorcycle and marine aftermarkets.

 We have a diverse customer base, including Amazon,
AutoZone, Advance Auto Parts, CarQuest, Aries, das, Grainger, and FleetFarm. Internationally, we sell products in Canada, Mexico, Europe,
and Amsterdam. Most of our online customers such as Amazon ship direct internationally. A majority of our sales are made to repeat customers,
with many of our customer relationships spanning more than 10 years. We believe that our customers appreciate the ease of doing business
with all orders placed electronically via electronic data interchange, or EDI.

 In recent years, we have entered into the motorcycle
and industrial (fleet maintenance) aftermarkets, as well a product line of horns for the marine parts aftermarket.

 Order Fulfillment

 Our efficient fulfillment process uses an intergraded
EDI system for receiving orders, advanced shipping notices and invoicing. The custom software is integral in reducing manual order entry,
as well as the prevention of errors.

 Implementing an EDI system has allowed us to improve
our fulfillment threshold rate, as well as avoid fines from customers for order fulfillment errors and fill rate. The following diagram
illustrates our order fulfillment process.

 Research and Development

 For the development of new products, we have implemented
a streamlined R&D process. The average R&D process from initial design to sending a product sample for tooling is approximately
6-12 months.

 Step 1: Identify and confirm a problem and/or need for a product

 Step 2: Draw up many possible solutions and discuss with sales manager and warehouse manager, whose focus
in on the market demand

 Step 3: Narrow down to the three best options and create handmade prototype to test which solution works
best.

 Step 4: Send sample prototype to patent attorney to determine ability to patent and send hand sample to
a draftsman for 3D drawing

 Step 5: The 3D drawing is approved, and a 3D print is made. The 3D print sample is tested, and any necessary
modifications are made

 Step 6: The 3D drawing and printed sample are sent to one of our suppliers to start the tooling process

 Competition

 The sale of automotive aftermarket items is highly
competitive in many areas, including customer service, product availability, store location, brand recognition and price. We believe
that we have established our brand as an industry-leader in developing innovative products for the automobile aftermarket industry, especially
in horn design and technology (electric, air, truck, marine, motorcycle and industrial equipment). Current competitors in related industries
are FIAMM, Grote, Peterson Manufacturing Company, ECCO, Vixen Horns, HornBlasters and Kleinn.

 Competitive Advantages

 Based on management's belief and experience
in the industry, we believe that the following competitive strengths enable us to compete effectively.

 Established name and reputation. We believe that we have maintained our excellent reputation
in the industry for over 55 years through bringing exclusive products and designs to market to meet current and future needs.

 Patents and trademarks. We have been granted 45 patents from the U.S., China, Taiwan and
the EU. About half of our patents are utility patents, which protect a products' methods of functionality. Utility patents are a
difficult barrier for competitors to overcome, therefore these products have a higher profit margin. The other half of our patents are
design patents.

 Long-term supplier and customer relationships. We have established relationships with our
vendors, with many of these relationships spanning more than 15 years, and a majority of our sales are made to repeat customers, with
many of our customer relationships spanning more than 10 years.

 International licensing agreements. We have a licensing agreement with a large wholesale
supplier of auto parts in the U.K. for our patented Bad Boy Horn. The U.K. supplier also has retail chain stores and this agreement has
been generating year-over-year sales growth for us.

 Growth Strategies

 Management sees the below as the key initiatives for our continued
growth strategy:

 Increase sales through new products and online marketing. We are aggressively pursuing our
current market share and building sales by adding new products to existing accounts. Additionally, we will continue to expand our online
sales platforms which include Wolo-mfg.com, Wolo-USA.com, Autozone.com, Amazon.com, BestAutoAccessories.com and Autoaccessoriesgarage.com,
among others. There also exists significant growth potential in the purchasing of available key URL's and implementing enhanced
search engine optimization strategies.

 Expand into traditional market and original equipment replacement horns. The automotive
aftermarket has multiple channels of distribution, and one in which we have limited distribution is the traditional channel. This channel
distributes products through wholesale warehouse distributors such as Federated Auto Parts, Pronto Auto Parts, Bumper-To-Bumper and Auto
Value. Traditional distribution primarily services the DIFM (Do-It-For-Me) or professional installers. Most of the products sold are direct
original equipment replacement parts which are researched based on year/make/model of the vehicle needing parts. We have limited distribution
into the traditional channel, primarily due to the fact that there are no original equipment replacement horns in our product offerings.
We believe that with minor product enhancements, we can offer products to serve this channel and improve market share into the traditional
channel.

 Expand into growing international markets. Currently, we sell our products in the US, Canada,
Mexico, Europe and the Middle East. We believe that there is great growth opportunity in Mexico. Additionally, we have identified Canada
and the Netherlands as expansion markets specifically for our Motorcycle Air Horn.

 Additional focus on the municipal and public safety markets. We have identified a significant
demand for certified warning lights within the municipal and public safety markets. The certification of existing products is immediately
possible and very cost effective.

 Grow presence within the marine marketplace. We see immediate growth opportunities existing
within the marine market with certified horns that meet US Coast Guard regulations and other regulatory standards.

 Intellectual Property

 We have been granted 45 patents from the United
States, China, Taiwan and the EU. About half of our patents are utility patents, which protect a product's methods of functionality.
Utility patents are a difficult barrier for competitors to overcome, therefore these products have a higher profit margin. The other half
of our patents are design patents.

 We have trademarks registered in the United States
and various countries for some of our core properties, including Taiwan, amongst others.

 Our intellectual property, including patents,
trademarks, service marks, domain names, copyrights and trade secrets, is an important part of our business. To protect our intellectual
property, we rely on a combination of laws and regulations, in addition to intellectual property rights in the United States and other
jurisdictions, including patents, trademarks, copyrights, and trade secret laws, together with contractual provisions and technical measures
that we have implemented. To protect our trade secrets, we maintain strict control access to our proprietary systems and technology. We
also enter into confidentiality and invention assignment agreements with employees and consultants, as well as confidentiality and non-disclosure
agreements with third parties that provide products and services to us.

 Employees

 As of December 31, 2024, we employed 12 employees,
including 4 full-time employees. None of our employees are represented by labor unions, and we believe that we have an excellent relationship
with our employees.

 Regulation

 We are subject to various federal, state, and
local laws and governmental regulations relating to the operation of our business, including those related to labor and employment, discrimination,
anti-bribery/anti-corruption, product quality and safety standards, data privacy and taxes. Compliance with any such laws and regulations
has not had a material adverse effect on our operations to date.

 ITEM 1A.
 RISK FACTORS.

 An investment in our securities involves a
high degree of risk. You should carefully read and consider all of the risks described below, together with all of the other information
contained or referred to in this report, before making an investment decision with respect to our securities. If any of the following
events occur, our financial condition, business and results of operations (including cash flows) may be materially adversely affected.
In that event, the market price of our shares could decline, and you could lose all or part of your investment.

 Risks Related to Our Business and Structure

 Our auditors have issued a going concern
opinion on our audited financial statements.

 Although our audited financial statements for
the year ended December 31, 2024 were prepared under the assumption that we would continue our operations as a going concern, the
report of our independent registered public accounting firm that accompanies our financial statements for the year ended December 31,
2024 contains a going concern qualification in which such firm expressed substantial doubt about our ability to continue as a going concern,
based on the financial statements at that time. We have generated losses since inception and have relied on cash on hand, sales of securities,
external bank lines of credit, and issuance of third-party and related party debt to support cashflow from operations. As of December
31, 2024, we had cash and cash equivalents of $2,502,450, restricted cash of $1,358,968 and a total working capital deficit of $111,927,759.
For the year ended December 31, 2024, we incurred an operating loss of $11,998,244 and used cash flows in operating activities of $14,635,636.

 Notwithstanding the foregoing, management believes,
based on our operating plan, that current working capital and current and expected additional financing is sufficient to fund operations
and satisfy our obligations as they come due for at least one year from the financial statement issuance date. However,
we do believe additional funds are required to execute our business plan and our strategy of acquiring additional businesses. The funds
required to execute our business plan will depend on the size, capital structure and purchase price consideration that the seller of a
target business deems acceptable in a given transaction. The amount of funds needed to execute our business plan also depends on what
portion of the purchase price of a target business the seller of that business is willing to take in the form of seller notes or our equity
or equity in one of our subsidiaries.

 Although we do not believe that we will require
additional cash to continue our operations over the next twelve months, there are no assurances that we will be able to raise our revenues
to a level which supports profitable operations and provides sufficient funds to pay obligations in the future. Our prior losses have
had, and will continue to have, an adverse effect on our financial condition. In addition, continued operations and our ability to acquire
additional businesses may be dependent on our ability to obtain additional financing in the future, and there are no assurances that such
financing will be available to us at all or will be available in sufficient amounts or on reasonable terms. Our financial statements do
not include any adjustments that may result from the outcome of this uncertainty. If we are unable to generate additional funds in the
future through our operations, financings or from other sources or transactions, we will exhaust our resources and will be unable to continue
operations. If we cannot continue as a going concern, our shareholders would likely lose most or all of their investment in us.

 We may not be able to effectively
integrate the businesses that we acquire.

 Our ability to realize the anticipated benefits
of acquisitions will depend on our ability to integrate those businesses with our own. The combination of multiple independent businesses
is a complex, costly and time-consuming process and there can be no assurance that we will be able to successfully integrate businesses
into our business, or if such integration is successfully accomplished, that such integration will not be costlier or take longer than
presently contemplated. Integration of future acquisitions may include various risks and uncertainties, including the factors discussed
in the paragraph below. If we cannot successfully integrate and manage the businesses within a reasonable time, we may not be able to
realize the potential and anticipated benefits of such acquisitions, which could have a material adverse effect on our share price, business,
cash flows, results of operations and financial position.

 We will consider other acquisitions that we believe
will complement, strengthen and enhance our growth. We evaluate opportunities on a preliminary basis from time to time, but these transactions
may not advance beyond the preliminary stages or be completed. Such acquisitions are subject to various risks and uncertainties, including:

 the inability to integrate effectively the operations, products, technologies and personnel of the acquired
companies (some of which are in diverse geographic regions) and achieve expected synergies;

 the potential disruption of existing business and diversion of management's attention from day-to-day
operations;

 the inability to maintain uniform standards, controls, procedures and policies;

 the need or obligation to divest portions of the acquired companies;

 the potential failure to identify material problems and liabilities during due diligence review of acquisition
targets;

 the potential failure to obtain sufficient indemnification rights to fully offset possible liabilities
associated with acquired businesses; and

 the challenges associated with operating in new geographic regions.

 Our future success is dependent on the employees
of our manager, our manager's operating partners and the management team of our business, the loss of any of whom could materially
adversely affect our financial condition, business and results of operations.

 Our future success depends, to a significant extent,
on the continued services of the employees of our manager. The loss of their services may materially adversely affect our ability to manage
the operations of our businesses. The employees of our manager may leave our manager and go to companies that compete with us in the future.
In addition, we depend on the assistance provided by our manager's operating partners in evaluating, performing diligence on and
managing our businesses. The loss of any employees of our manager or any of our manager's operating partners may materially adversely
affect our ability to implement or maintain our management strategy or our acquisition strategy.

 The future success of our existing and future
businesses also depends on the respective management teams of those businesses because we intend to operate our businesses on a stand-alone
basis, primarily relying on their existing management teams for day-to-day operations. Consequently, their operational success, as well
as the success of any organic growth strategy, will be dependent on the continuing efforts of the management teams of our businesses.
We will seek to provide these individuals with equity incentives and to have employment agreements with certain persons we have identified
as key to their businesses. However, these measures may not prevent these individuals from leaving their employment. The loss of services
of one or more of these individuals may materially adversely affect our financial condition, business and results of operations.

 We may experience difficulty as we evaluate,
acquire and integrate businesses that we may acquire, which could result in drains on our resources, including the attention of our management,
and disruptions of our on-going business.

 We acquire small businesses in various industries.
Generally, because such businesses are privately held, we may experience difficulty in evaluating potential target businesses as much
of the information concerning these businesses is not publicly available. Therefore, our estimates and assumptions used to evaluate the
operations, management and market risks with respect to potential target businesses may be subject to various risks and uncertainties.
Further, the time and costs associated with identifying and evaluating potential target businesses and their industries may cause a substantial
drain on our resources and may divert our management team's attention away from the operations of our businesses for significant
periods of time.

 In addition, we may have difficulty effectively
integrating and managing acquisitions. The management or improvement of businesses we acquire may be hindered by a number of factors,
including limitations in the standards, controls, procedures and policies implemented in connection with such acquisitions. Further, the
management of an acquired business may involve a substantial reorganization of the business' operations resulting in the loss of
employees and customers or the disruption of our ongoing businesses. We may experience greater than expected costs or difficulties relating
to an acquisition, in which case, we might not achieve the anticipated returns from any particular acquisition.

 We face competition for businesses that
fit our acquisition strategy and, therefore, we may have to acquire targets at sub-optimal prices or, alternatively, forego certain acquisition
opportunities.

 We have been formed to acquire and manage small
businesses. In pursuing such acquisitions, we expect to face strong competition from a wide range of other potential purchasers. Although
the pool of potential purchasers for such businesses is typically smaller than for larger businesses, those potential purchasers can be
aggressive in their approach to acquiring such businesses. Furthermore, we expect that we may need to use third-party financing in order
to fund some or all of these potential acquisitions, thereby increasing our acquisition costs. To the extent that other potential purchasers
do not need to obtain third-party financing or are able to obtain such financing on more favorable terms, they may be in a position to
be more aggressive with their acquisition proposals. As a result, in order to be competitive, our acquisition proposals may need to be
aggressively priced, including at price levels that exceed what we originally determined to be fair or appropriate. Alternatively, we
may determine that we cannot pursue on a cost-effective basis what would otherwise be an attractive acquisition opportunity.

 We may not be able to successfully fund
acquisitions due to the unavailability of debt or equity financing on acceptable terms, which could impede the implementation of our acquisition
strategy.

 In order to make acquisitions, we intend to raise
capital primarily through debt financing, primarily at our operating company level, additional equity offerings, the sale of equity or
assets of our businesses, offering equity in our company or our businesses to the sellers of target businesses or by undertaking a combination
of any of the above. Because the timing and size of acquisitions cannot be readily predicted, we may need to be able to obtain funding
on short notice to benefit fully from attractive acquisition opportunities. Such funding may not be available on acceptable terms. In
addition, the level of our indebtedness may impact our ability to borrow at our company level. The sale of additional shares of any class
of equity will also be subject to market conditions and investor demand for such shares at prices that may not be in the best interest
of our shareholders. These risks may materially adversely affect our ability to pursue our acquisition strategy.

 We may change our management and acquisition
strategies without the consent of our shareholders, which may result in a determination by us to pursue riskier business activities.

 We may change our strategy at any time without
the consent of our shareholders, which may result in our acquiring businesses or assets that are different from, and possibly riskier
than, the strategy described in this report. A change in our strategy may increase our exposure to interest rate and currency fluctuations,
subject us to regulation under the Investment Company Act of 1940, as amended, or the Investment Company Act, or subject us to other risks
and uncertainties that affect our operations and profitability.

 If we are unable to generate sufficient
cash flow from the anticipated dividends and interest payments that we expect to receive from our businesses, we may not be able to make
distributions to our shareholders.

 Our primary business is the holding and managing
of controlling interests in our operating businesses. Therefore, we will be dependent upon the ability of our businesses to generate cash
flows and, in turn, distribute cash to us in the form of interest and principal payments on indebtedness and distributions on equity to
enable us, first, to satisfy our financial obligations and, second, to make distributions to our common shareholders. The ability of our
businesses to make payments to us may also be subject to limitations under the laws of the jurisdictions in which they are incorporated
or organized. If, as a consequence of these various restrictions or otherwise, we are unable to generate sufficient cash flow from our
businesses, we may not be able to declare, or may have to delay or cancel payment of, distributions to our common shareholders.

 In addition, the put price and profit allocation
will be payment obligations and, as a result, will be senior in right to the payment of any distributions to our shareholders. Further,
we are required to make a profit allocation to our manager upon satisfaction of applicable conditions to payment. See Item 1 " Business—Our
Manager—Our Manager as an Equity Holder " for more information about our manager's put right and profit allocation.

 Our loans with third parties contain certain
terms that could materially adversely affect our financial condition.

 We and our subsidiaries are parties to certain
loans with third parties, which are secured by the assets of our subsidiaries. The loans agreements contain customary representations,
warranties and affirmative and negative financial and other covenants. If an event of default were to occur under any of these loans,
the lender thereto may pursue all remedies available to it, including declaring the obligations under its respective loan immediately
due and payable, which could materially adversely affect our financial condition. See Item 7 " Management's Discussion and
Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources " for further discussion regarding
our borrowing activities.

 In the future, we may seek to enter into
other credit facilities to help fund our acquisition capital and working capital needs. These credit facilities may expose us to additional
risks associated with leverage and may inhibit our operating flexibility and reduce cash flow available for payment of distributions to
our shareholders.

 We may seek to enter into other credit facilities
with third-party lenders to help fund our acquisitions. Such credit facilities will likely require us to pay a commitment fee on the undrawn
amount and will likely contain a number of affirmative and restrictive covenants.

 If we violate any such covenants, our lenders
could accelerate the maturity of any debt outstanding and we may be prohibited from making any distributions to our shareholders. Such
debt may be secured by our assets, including the stock we may own in businesses that we acquire and the rights we have under intercompany
loan agreements that we may enter into with our businesses. Our ability to meet our debt service obligations may be affected by events
beyond our control and will depend primarily upon cash produced by businesses that we currently manage and may acquire in the future and
distributed or paid to us. Any failure to comply with the terms of our indebtedness may have a material adverse effect on our financial
condition.

 In addition, we expect that such credit facilities
will bear interest at floating rates which will generally change as interest rates change. We will bear the risk that the rates that we
are charged by our lenders will increase faster than we can grow the cash flow from our businesses or businesses that we may acquire in
the future, which could reduce profitability, materially adversely affect our ability to service our debt, cause us to breach covenants
contained in our third-party credit facilities and reduce cash flow available for distribution.

 We may engage in a business transaction
with one or more target businesses that have relationships with our executive officers, our directors, our manager, our manager's
employees or our manager's operating partners, or any of their respective affiliates, which may create or present conflicts of interest.

 We may decide to engage in a business transaction
with one or more target businesses with which our executive officers, our directors, our manager, our manager's employees, our manager's
operating partners, or any of their respective affiliates, have a relationship, which may create or present conflicts of interest. Regardless
of whether we obtain a fairness opinion from an independent investment banking firm with respect to such a transaction, conflicts of interest
may still exist with respect to a particular acquisition and, as a result, the terms of the acquisition of a target business may not be
as advantageous to our shareholders as it would have been absent any conflicts of interest.

 The operational objectives and business
plans of our businesses may conflict with our operational and business objectives or with the plans and objective of another business
we own and operate.

 Our businesses operate in different industries
and face different risks and opportunities depending on market and economic conditions in their respective industries and regions. A business'
operational objectives and business plans may not be similar to our objectives and plans or the objectives and plans of another business
that we own and operate. This could create competing demands for resources, such as management attention and funding needed for operations
or acquisitions, in the future.

 If, in the future, we cease to control and
operate our businesses or other businesses that we acquire in the future or engage in certain other activities, we may be deemed to be
an investment company under the Investment Company Act.

 We have the ability to make investments in businesses
that we will not operate or control. If we make significant investments in businesses that we do not operate or control, or that we cease
to operate or control, or if we commence certain investment-related activities, we may be deemed to be an investment company under the
Investment Company Act. Our decision to sell a business will be based upon financial, operating and other considerations rather than a
plan to complete a sale of a business within any specific time frame. If we were deemed to be an investment company, we would either have
to register as an investment company under the Investment Company Act, obtain exemptive relief from the SEC or modify our investments
or organizational structure or our contract rights to fall outside the definition of an investment company. Registering as an investment
company could, among other things, materially adversely affect our financial condition, business and results of operations, materially
limit our ability to borrow funds or engage in other transactions involving leverage and require us to add directors who are independent
of us or our manager and otherwise will subject us to additional regulation that will be costly and time-consuming.

 We have identified material weaknesses in
our internal control over financial reporting. If we fail to develop or maintain an effective system of internal controls, we may not
be able to accurately report our financial results and prevent fraud. As a result, current and potential shareholders could lose confidence
in our financial statements, which would harm the trading price of our common shares.

 Companies that file reports with the SEC, including
us, are subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404. SOX 404 requires management to establish
and maintain a system of internal control over financial reporting and annual reports on Form 10-K filed under the Securities Exchange
Act of 1934, as amended, or the Exchange Act, to contain a report from management assessing the effectiveness of a company's internal
control over financial reporting. Separately, under SOX 404, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act
of 2010, public companies that are large accelerated filers or accelerated filers must include in their annual reports on Form 10-K an
attestation report of their regular auditors attesting to and reporting on management's assessment of internal control over financial
reporting. Non-accelerated filers and smaller reporting companies, like us, are not required to include an attestation report of their
auditors in annual reports.

 A report of our management is included under Item
9A. " Controls and Procedures. " We are a smaller reporting company and, consequently, are not required to include
an attestation report of our auditor in our annual report. However, if and when we become subject to the auditor attestation requirements
under SOX 404, we can provide no assurance that we will receive a positive attestation from our independent auditors.

 During its evaluation of the effectiveness of
internal control over financial reporting as of December 31, 2024, management identified material weaknesses as described under Item
9A. " Controls and Procedures. " We are undertaking remedial measures, which measures will take time to implement
and test, to address these material weaknesses. There can be no assurance that such measures will be sufficient to remedy the material
weaknesses identified or that additional material weaknesses or other control or significant deficiencies will not be identified in the
future. If we continue to experience material weaknesses in our internal controls or fail to maintain or implement required new or improved
controls, such circumstances could cause us to fail to meet our periodic reporting obligations or result in material misstatements in
our financial statements, or adversely affect the results of periodic management evaluations and, if required, annual auditor attestation
reports. Each of the foregoing results could cause investors to lose confidence in our reported financial information and lead to a decline
in our share price.

 Risks Related to Our Construction Business

 The loss of any of our key customers could
have a materially adverse effect on our results of operations.

 Historically, a few long-term recurring contractor
customers have accounted for a majority of our revenues. There can be no assurance that we will maintain or improve the relationships
with those customers. Our major customers often change each period based on when a given order is placed. If we cannot maintain long-term
relationships with major customers or replace major customers from period to period with equivalent customers, the loss of such sales
could have an adverse effect on our business, financial condition and results of operations.

 Our business primarily
relies on U.S. home improvement, repair and remodel and new home construction activity levels, all of which are impacted by risks associated
with fluctuations in the housing market. Downward changes in the general economy, the housing market or other business conditions could
adversely affect our results of operations, cash flows and financial condition.

 Our business primarily
relies on home improvement, repair and remodel and new home construction activity levels in the United States. The housing market is sensitive
to changes in economic conditions and other factors, such as the level of employment, access to labor, consumer confidence, consumer income,
availability of financing and interest rate levels. Adverse changes in any of these conditions generally, or in any of the markets where
we operate, including due to the global pandemic, could decrease demand and could adversely impact our businesses by: causing consumers
to delay or decrease homeownership; making consumers more price conscious resulting in a shift in demand to smaller, less expensive homes;
making consumers more reluctant to make investments in their existing homes, including large kitchen and bath repair and remodel projects;
or making it more difficult to secure loans for major renovations.

 Increases in interest
rates and the reduced availability of financing for home improvements may cause our sales and profitability to decrease.

 In general, demand for
home improvement products may be adversely affected by increases in interest rates and the reduced availability of financing. Also, trends
in the financial industry which influence the requirements used by lenders to evaluate potential buyers can result in reduced availability
of financing. If interest rates or lending requirements increase and consequently, the ability of prospective buyers to finance purchases
of home improvement products is adversely affected, our business, financial condition and results of operations may also be adversely
impacted and the impact may be material.

 Our construction business is subject to
seasonal and other periodic fluctuations, and affected by factors beyond our control, which may cause our sales and operating results
to fluctuate significantly.

 Our construction business is subject to seasonal
fluctuations. We believe that we can more effectively control and balance our direct labor resources and costs during seasonal variations
in our construction business, depending on the dynamics of the market served. However, extreme winter weather conditions can have an adverse
effect on appointments and installations, which typically occur during our fourth and first quarters and can also negatively affect our
net sales and operating results. In addition, sales and revenues may decline in the fourth quarter due to the holiday season.

 Difficulties in recruiting adequate personnel
may have a material adverse effect on our ability to meet our growth expectations.

 In order to fulfill our growth expectations, we
must recruit, hire, train and retain qualified sales and installation personnel. In particular, during the pandemic, we may experience
greater difficulty in fulfilling our personnel needs since our employees are not able to work remotely for installations. When new construction
and remodeling are on the rise, recruiting independent contractors to perform our installations becomes more difficult. There can be no
assurance that we will have sufficient contractors or employees to fulfill our installation requirements. Our inability to fulfill our
personnel needs could have a material adverse effect on our ability to meet our growth expectations.

 Increases in the cost of labor, union organizing
activity and work stoppages at our facilities or the facilities of our suppliers could materially affect our financial performance.

 Our business is labor intensive, and, as a result,
our financial performance is affected by the availability of qualified personnel and the cost of labor. Currently, none of our employees
are represented by labor unions. Strikes or other types of conflicts with personnel could arise or we may become a target for union organizing
activity. Some of our direct and indirect suppliers have unionized workforces. Strikes, work stoppages or slowdowns experienced by these
suppliers could result in slowdowns or closures of facilities where components of our products are manufactured. Any interruption in the
production of our products could reduce sales of our products and increase our costs.

 In the event of a catastrophic loss of our
key manufacturing facility, our business would be adversely affected.

 While we maintain insurance covering our facility,
including business interruption insurance, a catastrophic loss of the use of all or a portion of our manufacturing facility due to accident,
labor issues, weather conditions, natural disaster or otherwise, whether short or long-term, could have a material adverse effect on us.

 The nature of our constructions business
exposes us to product liability, workmanship warranty, casualty, negligence, construction defect, breach of contract and other claims
and legal proceedings.

 We are subject to product liability, workmanship
warranty, casualty, negligence, construction defect, breach of contract and other claims and legal proceedings relating to the products
we install or manufacture that, if adversely determined, could adversely affect our financial condition, results of operations and cash
flows. We rely on manufacturers and other suppliers to provide us with most of the products we install. Other than for products manufactured
by Kyle's and the custom work at CMD, we generally do not have direct control over the quality of such products manufactured or
supplied by such third-party suppliers. As such, we are exposed to risks relating to the quality of such products. In the event that any
of our products prove to be defective, we may be required to recall or redesign such products, which would result in significant unexpected
costs.

 We are also exposed to potential claims arising
from the conduct of our employees and contractors, for which we may be contractually liable. We have in the past been, and may in
the future be, subject to penalties and other liabilities in connection with injury or damage incurred in conjunction with the installation of
our products.

 In addition, our contracts, particularly those
with large single-family and multi-family homebuilders, contain certain performance and installation schedule requirements. Many factors,
some of which our outside of our control, may affect our ability to meet these requirements, including shortages of material or skilled
labor, unforeseen engineering problems, work stoppages, weather interference, floods, unanticipated cost increases, and legal or political
challenges. If we do not meet these requirements, we may be subject to liquidated damages or other penalties, as well as claims for breach
of contract.

 Product liability, workmanship warranty, casualty,
negligence, construction defect, breach of contract and other claims and legal proceedings can be expensive to defend and can divert the
attention of management and other personnel for significant periods of time, regardless of the ultimate outcome. In addition, lawsuits
relating to construction defects typically have statutes of limitations that can run as long as ten years. Claims of this nature could
also have a negative impact on customer confidence in us and our services. Although we currently maintain what we believe to be suitable
and adequate insurance, we may be unable to maintain such insurance on acceptable terms or such insurance may not provide adequate protection
against potential liabilities. In addition, some liabilities may not be covered by our insurance. Current or future claims could have
a material adverse effect on our reputation, business, financial condition and results of operations.

 If we are unable to compete successfully
with our competitors, our financial condition and results of operations may be harmed.

 We operate in a highly
fragmented and very competitive industry. Our competitors include national and local door, trim, and carpentry manufacturers. These can
be large, consolidated operations which house their manufacturing facilities in large and efficient plants, as well as relatively small,
local cabinetmakers. Although we believe that we have superior name and reputation of direct marketing of custom designed carpentry, doors
and millwork, we compete with numerous competitors in our primary markets in which we operate, with reputation, price, workmanship and
services being the principal competitive factors. Some of our competitors have achieved substantially more market penetration in certain
of the markets in which we operate. Some of our competitors have greater resources available and are less highly leveraged, which may
provide them with greater financial flexibility. We also compete against retail chains, including Sears, Costco, Builders Square, Sam's
Warehouse Club and other stores, which offer similar products and services through licensees. We compete, to a lesser extent, with small
home improvement contractors and with large "home center" retailers such as Home Depot and Lowes. As a result of the implementation
of our business strategy to conduct more remodel, condo/multi-family, and commercial projects in the new construction markets, we anticipate
that we will compete to a greater degree with large "home center" retailers. To remain competitive, we will need to invest
continuously in manufacturing, customer service and support, marketing and our dealer network. We may have to adjust the prices of some
of our products to stay competitive, which would reduce our revenues or harm our financial condition and results of operations. We may
not have sufficient resources to continue to make such investments or maintain our competitive position within each of the markets we
serve.

 We have historically depended on a limited
number of third parties to supply key finished goods and raw materials to us. Failure to obtain a sufficient supply of these finished
goods and raw materials in a timely fashion and at reasonable costs could significantly delay our delivery of products, which would cause
us to breach our sales contracts with our customers.

 We have historically
purchased certain key finished goods and raw materials, such as pre-manufactured doors, cabinets, countertops, lumber and hardware, from
a limited number of suppliers. We purchased finished goods and raw materials on the basis of purchase orders. In the absence of firm and
long-term contracts, we may not be able to obtain a sufficient supply of these finished goods and raw materials from our existing suppliers
or alternates in a timely fashion or at a reasonable cost. If we fail to secure a sufficient supply of key finished goods and raw materials
in a timely fashion, it would result in a significant delay in our delivery of products, which may cause us to breach our sales contracts
with our customers. Furthermore, failure to obtain a sufficient supply of these finished goods and raw materials at a reasonable cost
could also harm our revenue and gross profit margins.

 Increased prices
for finished goods or raw materials could increase our cost of revenues and decrease demand for our products, which could adversely affect
our revenue or profitability.

 Our profitability is
affected by the prices of the finished goods and raw materials used in the manufacturing and sale of our products. These prices may fluctuate
based on a number of factors beyond our control, including, among others, changes in supply and demand, general economic conditions, labor
costs, competition, import duties, tariffs, currency exchange rates and, in some cases, government regulation. Increased prices could
adversely affect our profitability or revenues. We do not have long-term supply contracts for finished goods and raw materials; however,
we enter into pricing agreements with certain customers which fix their pricing for specified periods ranging from one to twelve months.
Significant increases in the prices of finished goods and raw materials could adversely affect our profit margins, especially if we are
not able to recover these costs by increasing the prices we charge our customers for our products.

 Changes to U.S.
trade policy, tariff and import/export regulations may adversely affect our operating results.

 The United States has recently enacted and/or proposed to enact significant
new tariffs on goods imported from numerous countries, including China, Mexico and Canada. Additionally, President Trump has directed
various federal agencies to further evaluate key aspects of U.S. trade policy and there has been ongoing discussion and commentary regarding
potential significant changes to U.S. trade policies, treaties and tariffs. There continues to exist significant uncertainty about the
future relationship between the U.S. and other countries with respect to such trade policies, treaties and tariffs.

 While CMD and Kyle's
purchase most of their materials from domestic suppliers, much of the wood used in such materials originates from Canada. Innovative Cabinets
purchases products from South Vietnam. If the U.S. continues to impose new tariffs, this may cause supply chain disruptions and could
further escalate our costs. We may determine to increase our sales prices in order to pass these increased costs to our customers. Kyle's
has a short lead-time (30 days) and bids projects based on material costs, lowering the risk to profitability. CMD has a longer lead-time
(6 to 24 months) and has allowances in its contracts for change-orders if costs increase, allowing for CMD to recover most of the cost
increases created by economic factors. However, in the event we determine to pass increased costs to our customers, our customers may
reduce their orders from us, which could negatively affect our business, profitability and operating results. We are closely monitoring
these developments and evaluating strategies to mitigate potential impacts.

 Furthermore, as a result
of policy changes and government proposals, there may be greater restrictions and economic disincentives on international trade in general.
The new tariffs and other changes in U.S. trade policy could trigger retaliatory actions by affected countries, and foreign governments
have instituted or are considering imposing trade sanctions on U.S. goods. Such changes have the potential to adversely impact the U.S.
economy or sectors thereof, our industry and the demand for our products, and as a result, could have a negative impact on our business,
financial condition and results of operations.

 Interruptions in
deliveries of finished goods and raw materials could adversely affect our revenue or profitability.

 Our dependency upon regular
deliveries from particular suppliers means that interruptions or stoppages in such deliveries could adversely affect our operations until
arrangements with alternate suppliers could be made. If any of our suppliers were unable to deliver finished goods and raw materials to
us for an extended period of time, as the result of financial difficulties, catastrophic events affecting their facilities or other factors
beyond our control, or if we were unable to negotiate acceptable terms for the supply of finished goods and raw materials with these or
alternative suppliers, our business could suffer. We may not be able to find acceptable alternatives, and any such alternatives could
result in increased costs for us. Even if acceptable alternatives are found, the process of locating and securing such alternatives might
be disruptive to our business. Extended unavailability of a necessary finished good or raw material could cause us to cease manufacturing
or selling one or more of our products for a period of time.

 Environmental requirements
applicable to our facilities may impose significant environmental compliance costs and liabilities, which would adversely affect our results
of operations.

 Our facilities are subject
to numerous federal, state and local laws and regulations relating to pollution and the protection of the environment, including those
governing air emissions, discharges to water, storage, treatment and disposal of waste, remediation of contaminated sites and protection
of worker health and safety. We believe we are in substantial compliance with all applicable requirements. However, our efforts to comply
with environmental requirements do not remove the risk that we may be held liable, or incur fines or penalties, and that the amount of
liability, fines or penalties may be material, for, among other things, releases of hazardous substances occurring on or emanating from
current or formerly owned or operated properties or any associated offsite disposal location, or for contamination discovered at any of
our properties from activities conducted by previous occupants.

 Changes in environmental
laws and regulations or the discovery of previously unknown contamination or other liabilities relating to our properties and operations
could result in significant environmental liabilities. In addition, we might incur significant capital and other costs to comply with
increasingly stringent air emission control laws and enforcement policies which would decrease our cash flow.

 We may fail to
fully realize the anticipated benefits of our growth strategy within the multi-family, tract home, and commercial properties channels.

 Part of our growth strategy
depends on expanding our business in the multi-family and commercial properties channels. We may fail to compete successfully against
other companies that are already established providers within those channels. Demand for our products within the multi-family, tract home,
and commercial properties channels may not grow, or might even decline. In addition, trends within the industry change often, we may not
accurately gauge consumer preferences and successfully develop, manufacture and market our products. Our failure to anticipate, identify
or react to changes in these trends could lead to, among other things, rejection of a new product line, reduced demand and price reductions
for our products, and could adversely affect our sales. Further, the implementation of our growth strategy may place additional demands
on our administrative, operational and financial resources and may divert management's attention away from our existing business
and increase the demands on our financial systems and controls. If our management is unable to effectively manage growth, our business,
financial condition or results of operations could be adversely affected. If our growth strategy is not successful then our revenue and
earnings may not grow as anticipated or may decline, we may not be profitable, or our reputation and brand may be damaged. In addition,
we may change our financial strategy or other components of our overall business strategy if we believe our current strategy is not effective,
if our business or markets change, or for other reasons, which may cause fluctuations in our financial results.

 Risks Related to Our Automotive Supply Business

 If we fail to offer
a broad selection of products at competitive prices or fail to maintain sufficient inventory to meet customer demands, our revenue could
decline.

 In order to expand our
business, we must successfully offer, on a continuous basis, a broad selection of products that meet the needs of our customers, including
by being the first to market with new products. In addition, to be successful, our product offerings must be broad and deep in scope,
competitively priced, well-made, innovative and attractive to a wide range of consumers. We cannot predict with certainty that we will
be successful in offering products that meet all of these requirements. Moreover, even if we offer a broad selection of products at competitive
prices, we must maintain sufficient in-stock inventory to meet consumer demand. If our product offerings fail to satisfy our customers'
requirements or respond to changes in customer preferences or we otherwise fail to maintain sufficient in-stock inventory, our revenue
could decline.

 We are highly
dependent upon key suppliers and an interruption in such relationships or our ability to obtain products from such suppliers could adversely
affect our business and results of operations.

 In 2024 and 2023, Wolo purchased
a substantial portion of finished goods from five third-party vendors which comprised 52.0% and 81.3% of its purchases, respectively.
Our ability to acquire products from our suppliers in amounts and on terms acceptable to us is dependent upon a number of factors that
could affect our suppliers and which are beyond our control. For example, financial or operational difficulties that some of our suppliers
may face could result in an increase in the cost of the products we purchase from them. If we do not maintain our relationships with our
existing suppliers or develop relationships with new suppliers on acceptable commercial terms, we may not be able to continue to offer
a broad selection of merchandise at competitive prices and, as a result, we could lose customers and our sales could decline.

 We also have limited
control over the products that our suppliers purchase or keep in stock. Our suppliers may not accurately forecast the products that will
be in high demand or they may allocate popular products to other resellers, resulting in the unavailability of certain products for delivery
to our customers. Any inability to offer a broad array of products at competitive prices and any failure to deliver those products to
our customers in a timely and accurate manner may damage our reputation and brand and could cause us to lose customers and our sales could
decline.

 In addition, the increasing
consolidation among auto parts suppliers may disrupt or end our relationship with some suppliers, result in product shortages and/or lead
to less competition and, consequently, higher prices. Furthermore, as part of our routine business, suppliers extend credit to us in connection
with our purchase of their products. In the future, our suppliers may limit the amount of credit they are willing to extend to us in connection
with our purchase of their products. If this were to occur, it could impair our ability to acquire the types and quantities of products
that we desire from the applicable suppliers on acceptable terms, severely impact our liquidity and capital resources, limit our ability
to operate our business and could have a material adverse effect on our financial condition and results of operations.

 We are dependent
upon relationships with manufacturers in Taiwan and China, which exposes us to complex regulatory regimes and logistical challenges.

 Most of our manufacturing
is outsourced to contract manufacturers in China and Taiwan, resulting in additional factors could interrupt our relationships or affect
our ability to acquire the necessary products on acceptable terms, including:

 political, social and economic instability and the risk of war or other international incidents in Asia
or abroad;

 fluctuations in foreign currency exchange rates that may increase our cost of products;

 imposition of duties, taxes, tariffs or other charges on imports;

 difficulties in complying with import and export laws, regulatory requirements and restrictions;

 natural disasters and public health emergencies, such as the recent COVID-19 pandemic;

 import shipping delays resulting from foreign or domestic labor shortages, slow-downs, or stoppage; and

 the failure of local laws to provide a sufficient degree of protection against infringement of our intellectual
property;

 imposition of new legislation relating to import quotas or other restrictions that may limit the quantity
of our products that may be imported into the U.S. from countries or regions where we do business;

 financial or political instability in any of the countries in which our products are manufactured;

 potential recalls or cancellations of orders for any products that do not meet our quality standards;

 disruption of imports by labor disputes or strikes and local business practices;

 political or military conflict involving the U.S. or any country in which our suppliers are located, which
could cause a delay in the transportation of our products, an increase in transportation costs and additional risk to products being damaged
and delivered on time;

 heightened terrorism security concerns, which could subject imported goods to additional, more frequent
or more thorough inspections, leading to delays in deliveries or impoundment of goods for extended periods;

 inability of our non-U.S. suppliers to obtain adequate credit or access liquidity to finance their operations;
and

 our ability to enforce any agreements with our foreign suppliers.

 If we were unable to
import products from China and Taiwan or were unable to import products from China and Taiwan in a cost-effective manner, we could suffer
irreparable harm to our business and be required to significantly curtail our operations, file for bankruptcy or cease operations.

 From time to time, we
may also have to resort to administrative and court proceedings to enforce our legal rights with foreign suppliers. However, it may be
more difficult to evaluate the level of legal protection we enjoy in Taiwan and China and the corresponding outcome of any administrative
or court proceedings than in comparison to our suppliers in the United States.

 Changes to U.S.
trade policy, tariff and import/export regulations may adversely affect our operating results.

 The United States
has recently enacted and/or proposed to enact significant new tariffs on goods imported from numerous countries, including China,
and most recently, the Trump Administration announced a 25% tariff on imports of automobiles and auto parts. Additionally, President
Trump has directed various federal agencies to further evaluate key aspects of U.S. trade policy and there has been ongoing
discussion and commentary regarding potential significant changes to U.S. trade policies, treaties and tariffs. There continues to
exist significant uncertainty about the future relationship between the U.S. and other countries with respect to such trade
policies, treaties and tariffs.

 Approximately 90% of
our vendor base is located in China. If the U.S. continues to impose new tariffs, this may cause supply chain disruptions and could further
escalate our costs. We may determine to increase our sales prices in order to pass these increased costs to our customers. In the event
we determine to pass increased costs to our customers, our customers may reduce their orders from us, which could negatively affect our
business, profitability and operating results. We are closely monitoring these developments and evaluating strategies to mitigate potential
impacts.

 Furthermore, as a result
of policy changes and government proposals, there may be greater restrictions and economic disincentives on international trade in general.
The new tariffs and other changes in U.S. trade policy could trigger retaliatory actions by affected countries, and foreign governments
have instituted or are considering imposing trade sanctions on U.S. goods. Such changes have the potential to adversely impact the U.S.
economy or sectors thereof, our industry and the demand for our products, and as a result, could have a negative impact on our business,
financial condition and results of operations.

 We depend on third-party
delivery services, for both inbound and outbound shipping, to deliver our products to our distribution centers and subsequently to our
customers on a timely and consistent basis, and any deterioration in our relationship with any one of these third parties or increases
in the fees that they charge could harm our reputation and adversely affect our business and financial condition.

 We rely on third parties
for the shipment of our products, both inbound and outbound shipping logistics, and we cannot be sure that these relationships will continue
on terms favorable to us, or at all. Shipping costs have increased from time to time, and may continue to increase, and we may not be
able to pass these costs directly to our customers. Any increased shipping costs could harm our business, prospects, financial condition
and results of operations by increasing our costs of doing business and reducing gross margins which could negatively affect our operating
results. In addition, we utilize a variety of shipping methods for both inbound and outbound logistics. For inbound logistics, we rely
on trucking and ocean carriers and any increases in fees that they charge could adversely affect our business and financial condition.
For outbound logistics, we rely on "Less-than-Truckload" and parcel freight based upon the product and quantities being shipped
and customer delivery requirements. These outbound freight costs have increased on a year-over-year basis and may continue to increase
in the future. We also ship a number of oversized auto parts which may trigger additional shipping costs by third-party delivery services.
Any increases in fees or any increased use of "Less-than-Truckload" shipping would increase our shipping costs which could
negatively affect our operating results.

 In addition, if our relationships
with these third parties are terminated or impaired, or if these third parties are unable to deliver products for us, whether due to labor
shortage, slow down or stoppage, deteriorating financial or business condition, responses to terrorist attacks or for any other reason,
we would be required to use alternative carriers for the shipment of products to our customers. Changing carriers could have a negative
effect on our business and operating results due to reduced visibility of order status and package tracking and delays in order processing
and product delivery, and we may be unable to engage alternative carriers on a timely basis, upon terms favorable to us, or at all.

 If commodity prices
such as fuel, plastic and steel increase, our margins may be negatively impacted.

 Our third-party delivery
services have increased fuel surcharges from time to time, and such increases negatively impact our margins, as we are generally unable
to pass all of these costs directly on to consumers. Increasing prices in the component materials for the parts we sell may impact the
availability, the quality and the price of our products, as suppliers search for alternatives to existing materials and increase the prices
they charge. We cannot ensure that we can recover all the increased costs through price increases, and our suppliers may not continue
to provide the consistent quality of product as they may substitute lower cost materials to maintain pricing levels, all of which may
have a negative impact on our business and results of operations.

 If we are unable
to manage the challenges associated with our international operations, the growth of our business could be limited and our business could
suffer.

 In addition to our relationships
with foreign suppliers, we have contracts with sales representatives from fifteen regional sales companies in North America, Mexico, Puerto
Rico, the U.K., Europe, the Middle East and the industrial aftermarket. We are subject to a number of risks and challenges that specifically
relate to our international operations. Our international operations may not be successful if we are unable to meet and overcome these
challenges, which could limit the growth of our business and may have an adverse effect on our business and operating results. These risks
and challenges include:

 difficulties and costs of staffing and managing foreign operations;

 restrictions imposed by local labor practices and laws on our business and operations;

 exposure to different business practices and legal standards;

 unexpected changes in regulatory requirements;

 the imposition of government controls and restrictions;

 political, social and economic instability and the risk of war, terrorist activities or other international
incidents;

 the failure of telecommunications and connectivity infrastructure;

 natural disasters and public health emergencies;

 potentially adverse tax consequences; and

 fluctuations in foreign currency exchange rates and relative weakness in the U.S. dollar.

 The impact of geopolitical conflicts may
adversely affect our business and results of operations.

 We acquire finished goods in regions outside
the United States, including China. As a result, our operations are affected by economic, political and other conditions in the foreign
countries in which we do business as well as U.S. laws regulating international trade. Specifically, instability in the geopolitical
environment in many parts of the world (including as a result of the on-going Russia and Ukraine war, the conflict between Israel and
Hamas and increasingly tense China-Taiwan relations) and other disruptions may continue to put pressure on global economic conditions.
Notably, approximately 90% of our vendor base is located in China and supply chain issues have escalated shipping costs in recent years.
Our inability to respond to and manage the potential impact of such events effectively could have a material adverse effect on our business,
financial condition, and results of operations.

 In addition, countries across the globe are instituting
sanctions and other penalties against Russia and are becoming more wary of China. While we do not have operations in, and do not obtain
products from, Russia or Ukraine, the retaliatory measures that have been taken, and could be taken in the future, by the U.S., NATO,
and other countries have created global security concerns that could result in broader European military and political conflicts and otherwise
have a substantial impact on regional and global economies, any or all of which could adversely affect our business.

 While the broader consequences are uncertain at
this time, the continuation and/or escalation of the Russian and Ukraine conflict or the Israel and Hamas conflict, along with any expansion
of the conflict to surrounding areas, create a number of risks that could adversely impact our business, including:

 increased inflation and significant volatility in commodity prices;

 disruptions to our technology infrastructure, including through cyberattacks, ransom attacks or cyber-intrusion;

 adverse changes in international trade policies and relations;

 our ability to maintain or increase our prices, including freight in response to rising fuel costs;

 disruptions in global supply chains;

 increased exposure to foreign currency fluctuations; and

 constraints, volatility or disruption in the credit and capital markets.

 If our fulfillment
operations are interrupted for any significant period of time or are not sufficient to accommodate increased demand, our sales could decline
and our reputation could be harmed.

 Our success depends on
our ability to successfully receive and fulfill orders and to promptly deliver our products to our customers. Most of the orders for our
products are filled from our inventory in our distribution centers, where all our inventory management, packaging, labeling and product
return processes are performed. Increased demand and other considerations may require us to expand our distribution centers or transfer
our fulfillment operations to larger or other facilities in the future. If we do not successfully expand our fulfillment capabilities
in response to increases in demand, our sales could decline.

 In addition, our distribution
centers are susceptible to damage or interruption from human error, pandemics, fire, flood, power loss, telecommunications failures, terrorist
attacks, acts of war, break-ins, earthquakes and similar events. We do not currently maintain back-up power systems at our fulfillment
centers. We do not presently have a formal disaster recovery plan and our business interruption insurance may be insufficient to compensate
us for losses that may occur in the event operations at our fulfillment center are interrupted. In addition, alternative arrangements
may not be available, or if they are available, may increase the cost of fulfillment. Any interruptions in our fulfillment operations
for any significant period of time, including interruptions resulting from the expansion of our existing facilities or the transfer of
operations to a new facility, could damage our reputation and brand and substantially harm our business and results of operations.

 We face intense
competition and operate in an industry with limited barriers to entry, and some of our competitors may have greater resources than us
and may be better positioned to capitalize on the growing auto parts market.

 The aftermarket auto
parts industry is competitive and highly fragmented, with products distributed through multi-tiered and overlapping channels. We compete
with both online and offline retailers who offer OEMs and aftermarket auto parts. Current or potential competitors include FIAMM, Grote,
Peterson Manufacturing Company, ECCO, Vixen Horns, Grover, HornBlasters, and Kleinn.

 Many of our current and
potential competitors have longer operating histories, large customer bases, superior brand recognition and significantly greater financial,
marketing, technical, management and other resources than we do. In addition, some of our competitors have used and may continue to use
aggressive pricing tactics and devote substantially more financial resources to website and system development than we do. We expect that
competition will further intensify in the future as Internet use and online commerce continue to grow worldwide. Increased competition
may result in reduced sales, lower operating margins, reduced profitability, loss of market share and diminished brand recognition.

 We rely on key
personnel and may need additional personnel for the success and growth of our business.

 Our business is largely
dependent on the personal efforts and abilities of highly skilled executive, technical, managerial, merchandising and marketing personnel.
Competition for such personnel is intense, and we cannot assure you that we will be successful in attracting and retaining such personnel.
The loss of any key employee or our inability to attract or retain other qualified employees could harm our business and results of operations.

 If our product
catalog database is stolen, misappropriated or damaged, or if a competitor is able to create a substantially similar catalog without infringing
our rights, then we may lose an important competitive advantage.

 We have invested significant
resources and time to build and maintain our product catalog, which is maintained in the form of an electronic database. We believe that
our product catalog provides us with an important competitive advantage. We cannot assure you that we will be able to protect our product
catalog from unauthorized copying or theft or that our product catalog will continue to operate adequately, without any technological
challenges. In addition, it is possible that a competitor could develop a catalog or database that is similar to or more comprehensive
than ours, without infringing our rights. In the event our product catalog is damaged or is stolen, copied or otherwise replicated to
compete with us, whether lawfully or not, we may lose an important competitive advantage and our business could be harmed.

 Economic conditions
have had, and may continue to have, an adverse effect on the demand for aftermarket auto parts and could adversely affect our sales and
operating results.

 Demand for our products
has been and may continue to be adversely affected by general economic conditions. In declining economies, consumers often defer regular
vehicle maintenance and may forego purchases of nonessential performance and accessories products, which can result in a decrease in demand
for auto parts in general. Consumers also defer purchases of new vehicles, which immediately impacts performance parts and accessories,
which are generally purchased in the first six months of a vehicle's lifespan. In addition, during economic downturns, some
competitors may become more aggressive in their pricing practices, which would adversely impact our gross margin. Certain suppliers may
exit the industry, which may impact our ability to procure parts and may adversely impact gross margin as the remaining suppliers increase
prices to take advantage of limited competition.

 Vehicle miles driven,
vehicle accident rates and insurance companies' willingness to accept a variety of types of parts in the repair process have fluctuated
and may decrease, which could result in a decline of our revenues and negatively affect our results of operations.

 We and our industry depend
on the number of vehicle miles driven, vehicle accident rates and insurance companies' willingness to accept a variety of types
of parts in the repair process. Decreased miles driven reduce the number of accidents and corresponding demand for parts, and reduce the
wear and tear on vehicles with a corresponding reduction in demand for vehicle repairs and parts. If consumers were to drive less in the
future and/or accident rates were to decline, as a result of higher gas prices, increased use of ride-shares, the advancement of driver
assistance technologies, or otherwise, our sales may decline and our business and financial results may suffer.

 We will be required
to collect and pay more sales taxes, and could become liable for other fees and penalties, which could have an adverse effect on our business.

 We have historically
collected sales or other similar taxes only on the shipment of goods to customers in the state of New York. However, following the U.S.
Supreme Court decision in South Dakota v. Wayfair, we are now required to collect sales tax in any state which passes legislation
requiring out-of-state retailers to collect sales tax even where they have no physical nexus. We have historically enjoyed a competitive
advantage to the extent our competitors are already subject to those tax obligations. By collecting sales tax in additional states, we
will lose this competitive advantage as total costs to our customers will increase, which could adversely affect our sales.

 Moreover, if we fail
to collect and remit or pay required sales or other taxes in a jurisdiction or qualify or register to do business in a jurisdiction that
requires us to do so or if we have failed to do so in the past, we could face material liabilities for taxes, fees, interest and penalties.
If various jurisdictions impose new tax obligations on our business activities, our sales and net income in those jurisdictions could
decrease significantly, which could harm our business.

 Higher wage and
benefit costs could adversely affect our business.

 Changes in federal and
state minimum wage laws and other laws relating to employee benefits could cause us to incur additional wage and benefit costs. Increased
labor costs brought about by changes in minimum wage laws, other regulations or prevailing market conditions could increase our expenses
and have an adverse impact on our profitability.

 We face exposure
to product liability lawsuits.

 The automotive industry
in general has been subject to a large number of product liability claims due to the nature of personal injuries that result from car
accidents or malfunctions. As a distributor of auto parts, including parts obtained overseas, we could be held liable for the injury or
damage caused if the products we sell are defective or malfunction regardless of whether the product manufacturer is the party at fault.
While we carry insurance against product liability claims, if the damages in any given action were high or we were subject to multiple
lawsuits, the damages and costs could exceed the limits of our insurance coverage or prevent us from obtaining coverage in the future.
If we were required to pay substantial damages as a result of these lawsuits, it may seriously harm our business and financial condition.
Even defending against unsuccessful claims could cause us to incur significant expenses and result in a diversion of management's
attention. In addition, even if the money damages themselves did not cause substantial harm to our business, the damage to our reputation
and the brands offered on our websites could adversely affect our future reputation and our brand and could result in a decline in our
net sales and profitability.

 Business interruptions
in our facilities may affect the distribution of our products and/or the stability of our computer systems, which may affect our business.

 Weather, terrorist activities,
war or other disasters, or the threat of them, may result in the closure of one or more of our facilities, or may adversely affect our
ability to timely provide products to our customers, resulting in lost sales or a potential loss of customer loyalty. Most of our
products are imported from other countries and these goods could become difficult or impossible to bring into the United States, and we
may not be able to obtain such products from other sources at similar prices. Such a disruption in revenue could potentially have
a negative impact on our results of operations, financial condition and cash flows.

 We rely extensively on
our computer systems to manage inventory, process transactions and timely provide products to our customers. Our systems are subject
to damage or interruption from power outages, telecommunications failures, computer viruses, security breaches or other catastrophic events.
 If our systems are damaged or fail to function properly, we may experience loss of critical data and interruptions or delays in
our ability to manage inventories or process customer transactions. Such a disruption of our systems could negatively impact revenue
and potentially have a negative impact on our results of operations, financial condition and cash flows.

 Security threats,
such as ransomware attacks, to our IT infrastructure could expose us to liability, and damage our reputation and business.

 It is essential to our
business strategy that our technology and network infrastructure remain secure and is perceived by our customers to be secure. Despite
security measures, however, any network infrastructure may be vulnerable to cyber-attacks. Information security risks have significantly
increased in recent years in part due to the proliferation of new technologies and the increased sophistication and activities of organized
crime, hackers, terrorists and other external parties, including foreign private parties and state actors. We may face cyber-attacks that
attempt to penetrate our network security, including our data centers, to sabotage or otherwise disable our network of websites and online
marketplaces, misappropriate our or our customers' proprietary information, which may include personally identifiable information,
or cause interruptions of our internal systems and services. If successful, any of these attacks could negatively affect our reputation,
damage our network infrastructure and our ability to sell our products, harm our relationship with customers that are affected and expose
us to financial liability.

 We maintain a comprehensive
system of preventive and detective controls through our security programs; however, given the rapidly evolving nature and proliferation
of cyber threats, our controls may not prevent or identify all such attacks in a timely manner or otherwise prevent unauthorized access
to, damage to, or interruption of our systems and operations, and we cannot eliminate the risk of human error or employee or vendor malfeasance.

 In addition, any failure
by us to comply with applicable privacy and information security laws and regulations could cause us to incur significant costs to protect
any customers whose personal data was compromised and to restore customer confidence in us and to make changes to our information systems
and administrative processes to address security issues and compliance with applicable laws and regulations. In addition, our customers
could lose confidence in our ability to protect their personal information, which could cause them to stop shopping on our sites altogether.
Such events could lead to lost sales and adversely affect our results of operations. We also could be exposed to government enforcement
actions and private litigation.

 Failure to comply
with privacy laws and regulations and failure to adequately protect customer data could harm our business, damage our reputation and result
in a loss of customers.

 Federal and state regulations
may govern the collection, use, sharing and security of data that we receive from our customers. In addition, we have and post on our
websites our own privacy policies and practices concerning the collection, use and disclosure of customer data. Any failure, or perceived
failure, by us to comply with our posted privacy policies or with any data-related consent orders, U.S. Federal Trade Commission requirements
or other federal, state or international privacy-related laws and regulations could result in proceedings or actions against us by governmental
entities or others, which could potentially harm our business. Further, failure or perceived failure to comply with our policies or applicable
requirements related to the collection, use or security of personal information or other privacy-related matters could damage our reputation
and result in a loss of customers. The regulatory framework for privacy issues is currently evolving and is likely to remain uncertain
for the foreseeable future.

 Challenges by OEMs
to the validity of the aftermarket auto parts industry and claims of intellectual property infringement could adversely affect our business
and the viability of the aftermarket auto parts industry.

 OEMs have attempted to
use claims of intellectual property infringement against manufacturers and distributors of aftermarket products to restrict or eliminate
the sale of aftermarket products that are the subject of the claims. The OEMs have brought such claims in federal court and with the United
States International Trade Commission. We have received in the past, and we anticipate we may in the future receive, communications alleging
that certain products we sell infringe the patents, copyrights, trademarks and trade names or other intellectual property rights of OEMs
or other third parties.

 The United States Patent
and Trademark Office records indicate that OEMs are seeking and obtaining more design patents and trademarks than they have in the past.
In some cases, we have entered into license agreements that allow us to sell aftermarket parts that replicate OEM patented parts in exchange
for a royalty. In the event that our license agreements, or other similar license arrangements are terminated, or we are unable to agree
upon renewal terms, we may be subject to restrictions on our ability to sell aftermarket parts that replicate parts covered by design
patents or trademarks, which could have an adverse effect on our business.

 Litigation or regulatory
enforcement could also result in interpretations of the law that require us to change our business practices or otherwise increase our
costs and harm our business. We may not maintain sufficient, or any, insurance coverage to cover the types of claims that could be asserted.
If a successful claim were brought against us, it could expose us to significant liability.

 If we are unable
to protect our intellectual property rights, our reputation and brand could be impaired and we could lose customers.

 We regard our patents,
trademarks, trade secrets and similar intellectual property as important to our success. We rely on patent, trademark and copyright law,
and trade secret protection, and confidentiality and/or license agreements with employees, customers, partners and others to protect our
proprietary rights. We cannot be certain that we have taken adequate steps to protect our proprietary rights, especially in countries
where the laws may not protect our rights as fully as in the United States. In addition, our proprietary rights may be infringed or misappropriated,
and we could be required to incur significant expenses to preserve them. In the past we have filed litigation to protect our intellectual
property rights. The outcome of such litigation can be uncertain, and the cost of prosecuting such litigation may have an adverse impact
on our earnings. We have patent and trademark registrations for several patents and marks. However, any registrations may not adequately
cover our intellectual property or protect us against infringement by others. Effective patent, trademark, service mark, copyright and
trade secret protection may not be available in every country in which our products and services may be made available online. We also
currently own or control a number of Internet domain names and have invested time and money in the purchase of domain names and other
intellectual property, which may be impaired if we cannot protect such intellectual property. We may be unable to protect these domain
names or acquire or maintain relevant domain names in the United States and in other countries. If we are not able to protect our patents,
trademarks, domain names or other intellectual property, we may experience difficulties in achieving and maintaining brand recognition
and customer loyalty.

 Because we are involved in litigation from
time to time and are subject to numerous laws and governmental regulations, we could incur substantial judgments, fines, legal fees and
other costs as well as reputational harm.

 We are sometimes the
subject of complaints or litigation from customers, employees or other third parties for various reasons. The damages sought against us
in some of these litigation proceedings could be substantial. Although we maintain liability insurance for some litigation claims, if
one or more of the claims were to greatly exceed our insurance coverage limits or if our insurance policies do not cover a claim, this
could have a material adverse effect on our business, financial condition, results of operations and cash flows.

 Existing or future
government regulation could expose us to liabilities and costly changes in our business operations and could reduce customer demand for
our products and services.

 We are subject to federal
and state consumer protection laws and regulations, including laws protecting the privacy of customer non-public information and regulations
prohibiting unfair and deceptive trade practices, as well as laws and regulations governing businesses in general and the Internet and
e-commerce and certain environmental laws. Additional laws and regulations may be adopted with respect to the Internet. These laws may
cover issues such as user privacy, spyware and the tracking of consumer activities, marketing e-mails and communications, other advertising
and promotional practices, money transfers, pricing, content and quality of products and services, taxation, electronic contracts and
other communications, intellectual property rights, and information security. Furthermore, it is not clear how existing laws such as those
governing issues such as property ownership, sales and other taxes, trespass, data mining and collection, and personal privacy apply to
the Internet and e-commerce. To the extent we expand into international markets, we will be faced with complying with local laws and regulations,
some of which may be materially different than U.S. laws and regulations. Any such foreign law or regulation, any new U.S. law or regulation,
or the interpretation or application of existing laws and regulations to our business may have a material adverse effect on our business,
prospects, financial condition and results of operations by, among other things, subjecting us to fines, penalties, damages or other liabilities,
requiring costly changes in our business operations and practices, and reducing customer demand for our products and services. We may
not maintain sufficient, or any, insurance coverage to cover the types of claims or liabilities that could arise as a result of such regulation.

 We may be affected
by global climate change or by legal, regulatory, or market responses to such change.

 The growing political
and scientific sentiment is that global weather patterns are being influenced by increased levels of greenhouse gases in the earth's
atmosphere. This growing sentiment and the concern over climate change have led to legislative and regulatory initiatives aimed at reducing
greenhouse gas emissions which warm the earth's atmosphere. These warmer weather conditions could result in a decrease in demand
for auto parts in general. Moreover, proposals that would impose mandatory requirements on greenhouse gas emissions continue to be considered
by policy makers in the United States. Laws enacted that directly or indirectly affect our suppliers (through an increase in the cost
of production or their ability to produce satisfactory products) or our business (through an impact on our inventory availability, cost
of revenues, operations or demand for the products we sell) could adversely affect our business, financial condition, results of operations
and cash flows. Significant increases in fuel economy requirements or new federal or state restrictions on emissions of carbon dioxide
that may be imposed on vehicles and automobile fuels could adversely affect demand for vehicles, annual miles driven or the products we
sell or lead to changes in automotive technology. Compliance with any new or more stringent laws or regulations, or stricter interpretations
of existing laws, could require additional expenditures by us or our suppliers. Our inability to respond to such changes could adversely
impact the demand for our products and our business, financial condition, results of operations or cash flows.

 Risks Related to Our Relationship with Our
Manager

 Termination of the management services agreement
will not affect our manager's rights to receive profit allocations and removal of our manager may cause us to incur significant
fees.

 Our manager owns all of our allocation shares,
which generally will entitle our manager to receive a profit allocation as a form of preferred distribution. In general, this profit allocation
is designed to pay our manager 20% of the excess of the gains upon dispositions of our subsidiaries, plus an amount equal to the net income
of such subsidiaries since their acquisition by us, over an annualized hurdle rate. If our manager resigns or is removed, for any reason,
it will remain the owner of our allocation shares. It will therefore remain entitled to all profit allocations while it holds our allocation
shares regardless of whether it is terminated as our manager. If we terminate our manager, it may therefore be difficult or impossible
for us to find a replacement to serve the function of our manager, because we would not be able to force our manager to transfer its allocation
shares to a replacement manager so that the replacement manager could be entitled to a profit allocation. Therefore, as a practical matter,
it may be difficult for us to replace our manager without its cooperation. If it becomes necessary to replace our manager and we are unable
to replace our manager without its cooperation, we may be unable to continue to manage our operations effectively and our business may
fail.

 If we terminate the management services agreement
with our manager, any fees, costs and expenses already earned or otherwise payable to our manager upon termination would become immediately
due. Moreover, if our manager were to be removed and our management services agreement terminated by a vote of our board of directors
and a majority of our common shares other than common shares beneficially owned by our manager, we would also owe a termination fee to
our manager on top of the other fees, costs and expenses. In addition, the management services agreement is silent as to whether termination
of our manager "for cause" would result in a termination fee; there is therefore a risk that the agreement may be interpreted
to entitle our manager to a termination fee even if terminated "for cause". The termination fee would equal twice the sum
of the amount of the quarterly management fees calculated with respect to the four fiscal quarters immediately preceding the termination
date of the management services agreement. As a result, we could incur significant management fees as a result of the termination of our
manager, which may increase the risk that our business may be unable to meet its financial obligations or otherwise fail.

 Mr. Ellery W. Roberts, our Chairman and Chief
Executive Officer, controls our manager. If some event were to occur to cause Mr. Roberts (or his designated successor, heirs, beneficiaries
or permitted assigns) not to control our manager without the prior written consent of our board of directors, our manager would be considered
terminated under our agreement.

 Our manager and the members of our management
team may engage in activities that compete with us or our businesses.

 Although our Chief Executive Officer intends to
devote substantially all of his time to the affairs of our company and our manager must present all opportunities that meet our acquisition
and disposition criteria to our board of directors, neither our manager nor our Chief Executive Officer is expressly prohibited from investing
in or managing other entities. In this regard, the management services agreement and the obligation to provide management services will
not create a mutually exclusive relationship between our manager and its affiliates, on the one hand, and our company, on the other.

 Our manager need not present an acquisition
opportunity to us if our manager determines on its own that such acquisition opportunity does not meet our acquisition criteria.

 Our manager will review any acquisition opportunity
to determine if it satisfies our acquisition criteria, as established by our board of directors from time to time. If our manager determines,
in its sole discretion, that an opportunity fits our criteria, our manager will refer the opportunity to our board of directors for its
authorization and approval prior to signing a letter of intent, indication of interest or similar document or agreement. Opportunities
that our manager determines do not fit our criteria do not need to be presented to our board of directors for consideration. In addition,
upon a determination by our board of directors not to promptly pursue an opportunity presented to it by our manager, in whole or in part,
our manager will be unrestricted in its ability to pursue such opportunity, or any part that we do not promptly pursue, on its own or
refer such opportunity to other entities, including its affiliates. If such an opportunity is ultimately profitable, we will not have
participated in such opportunity. See Item 1 " Business—Our Manager—Acquisition and Disposition Opportunities "
for more information about our current acquisition criteria.

 Our Chief Executive Officer, Mr. Ellery
W. Roberts, controls our manager and, as a result, we may have difficulty severing ties with Mr. Roberts.

 Under the terms of the management services agreement,
our board of directors may, after due consultation with our manager, at any time request that our manager replace any individual seconded
to us, and our manager will, as promptly as practicable, replace any such individual. However, because Mr. Roberts controls our manager,
we may have difficulty completely severing ties with Mr. Roberts absent terminating the management services agreement and our relationship
with our manager. Further, termination of the management services agreement could give rise to a significant financial obligation, which
may have a material adverse effect on our business and financial condition. See Item 1 " Business—Our Manager "
for more information about our relationship with our manager.

 If the management services agreement is
terminated, our manager, as holder of the allocation shares, has the right to cause us to purchase its allocation shares, which may have
a material adverse effect on our financial condition.

 If: (i) the management services agreement is terminated
at any time other than as a result of our manager's resignation, subject to (ii); or (ii) our manager resigns, our manager will
have the right, but not the obligation, for one year from the date of termination or resignation, as the case may be, to cause us to purchase
the allocation shares for the put price. The put price shall be equal to, as of any exercise date: (i) if we terminate the management
services agreement, the sum of two separate, independently made calculations of the aggregate amount of the "base put price amount"
as of such exercise date; or (ii) if our manager resigns, the average of two separate, independently made calculations of the aggregate
amount of the "base put price amount" as of such exercise date. If our manager elects to cause us to purchase its allocation
shares, we are obligated to do so and, until we have done so, our ability to conduct our business, including our ability to incur debt,
to sell or otherwise dispose of our property or assets, to engage in certain mergers or consolidations, to acquire or purchase the property,
assets or stock of, or beneficial interests in, another business, or to declare and pay distributions, would be restricted. These financial
and operational obligations may have a material adverse effect on our financial condition, business and results of operations. See Item
1 " Business—Our Manager—Our Manager as an Equity Holder—Supplemental Put Provision " for more information
about our manager's put right and our obligations relating thereto, as well as the definition and calculation of the base put price
amount.

 If the management services agreement is
terminated, we will need to change our name and cease our use of the term "1847", which in turn could have a material adverse
impact upon our business and results of operations as we would be required to expend funds to create and market a new name.

 Our manager controls our rights to the term "1847"
as it is used in the name of our company. We and any businesses that we acquire must cease using the term "1847," including
any trademark based on the name of our company that may be licensed to them by our manager under the license provisions of our management
services agreement, entirely in their businesses and operations within 180 days of our termination of the management services agreement.
The sublicense provisions of the management services agreement would require our company and its businesses to change their names to remove
any reference to the term "1847" or any reference to trademarks licensed to them by our manager. This also would require us
to create and market a new name and expend funds to protect that name, which may have a material adverse effect on our business and results
of operations.

 We have agreed to indemnify our manager
under the management services agreement that may result in an indemnity payment that could have a material adverse impact upon our business
and results of operations.

 The management services agreement provides that
we will indemnify, reimburse, defend and hold harmless our manager, together with its employees, officers, members, managers, directors
and agents, from and against all losses (including lost profits), costs, damages, injuries, taxes, penalties, interests, expenses, obligations,
claims and liabilities of any kind arising out of the breach of any term or condition in the management services agreement or the performance
of any services under such agreement except by reason of acts or omissions constituting fraud, willful misconduct or gross negligence.
If our manager is forced to defend itself in any claims or actions arising out of the management services agreement for which we are obligated
to provide indemnification, our payment of such indemnity could have a material adverse impact upon our business and results of operations.

 Our manager can resign on 120 days'
notice, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could
materially adversely affect our financial condition, business and results of operations, as well as the market price of our shares.

 Our manager has the right, under the management
services agreement, to resign at any time on 120 days written notice, whether we have found a replacement or not. If our manager resigns,
we may not be able to contract with a new manager or hire internal management with similar expertise and ability to provide the same or
equivalent services on acceptable terms within 120 days, or at all, in which case our operations are likely to experience a disruption,
our financial condition, business and results of operations, as well as our ability to pay distributions are likely to be materially adversely
affected and the market price of our shares may decline. In addition, the coordination of our internal management, acquisition activities
and supervision of our business is likely to suffer if we are unable to identify and reach an agreement with a single institution or group
of executives having the experience and expertise possessed by our manager and its affiliates. Even if we are able to retain comparable
management, whether internal or external, the integration of such management and their lack of familiarity with our businesses may result
in additional costs and time delays that could materially adversely affect our financial condition, business and results of operations
as well as the market price of our shares.

 The amount recorded for the allocation shares
may be subject to substantial period-to-period changes, thereby significantly adversely impacting our results of operations.

 We will record the allocation shares at the redemption
value at each balance sheet date by recording any change in fair value through our income statement as a dividend between net income and
net income available to common shareholders. The redemption value of the allocation shares is largely related to the value of the profit
allocation that our manager, as holder of the allocation shares, will receive. The redemption value of the allocation shares may fluctuate
on a period-to-period basis based on the distributions we pay to our common shareholders, the earnings of our businesses and the price
of our common shares, which fluctuation may be significant, and could cause a material adverse effect on our results of operations. See
Item 1 " Business—Our Manager—Our Manager as an Equity Holder " for more information about the terms and
calculation of the profit allocation and any payments under the supplemental put provisions of our operating agreement.

 We cannot determine the amount of the management
fee that will be paid to our manager over time with certainty, which management fee may be a significant cash obligation and may reduce
the cash available for operations and distributions to our shareholders.

 Our manager's management fee will be calculated
by reference to our adjusted net assets, which will be impacted by the following factors:

 the acquisition or disposition of businesses;

 organic growth, add-on acquisitions and dispositions by our businesses; and

 the performance of our businesses.

 We cannot predict these factors, which may cause
significant fluctuations in our adjusted net assets and, in turn, impact the management fee we pay to our manager. Accordingly, we cannot
determine the amount of management fee that will be paid to our manager over time with any certainty, which management fee may represent
a significant cash obligation and may reduce the cash available for our operations and distributions to our shareholders.

 We must pay our manager the management fee
regardless of our performance. Therefore, our manager may be induced to increase the amount of our assets rather than the performance
of our businesses.

 Our manager is entitled to receive a management
fee that is based on our adjusted net assets, as defined in the management services agreement, regardless of the performance of our businesses.
In this respect, the calculation of the management fee is unrelated to our net income. As a result, the management fee may encourage our
manager to increase the amount of our assets by, for example, recommending to our board of directors the acquisition of additional assets,
rather than increase the performance of our businesses. In addition, payment of the management fee may reduce or eliminate the cash we
have available for distributions to our shareholders.

 The management fee is based solely upon
our adjusted net assets; therefore, if in a given year our performance declines, but our adjusted net assets remain the same or increase,
the management fee we pay to our manager for such year will increase as a percentage of our net income and may reduce the cash available
for distributions to our shareholders.

 The management fee we pay to our manager will
be calculated solely by reference to our adjusted net assets. If in a given year our performance declines, but our adjusted net assets
remain the same or increase, the management fee we pay to our manager for such year will increase as a percentage of our net income and
may reduce the cash available for distributions to our shareholders. See Item 1 " Business—Our Manager—Our Manager
as a Service Provider—Management Fee " for more information about the terms and calculation of the management fee.

 The amount of profit allocation to be paid
to our manager could be substantial. However, we cannot determine the amount of profit allocation that will be paid over time or the put
price with any certainty.

 We cannot determine the amount of profit allocation
that will be paid over time or the put price with any certainty. Such determination would be dependent on, among other things, the number,
type and size of the acquisitions and dispositions that we make in the future, the distributions we pay to our shareholders, the earnings
of our businesses and the market value of common shares from time to time, factors that cannot be predicted with any certainty at this
time. Such factors will have a significant impact on the amount of any profit allocation to be paid to our manager, especially if our
share price significantly increases. See Item 1 " Business—Our Manager—Our Manager as an Equity Holder—Manager's
Profit Allocation " for more information about the calculation and payment of profit allocation. Any amounts paid in respect
of the profit allocation are unrelated to the management fee earned for performance of services under the management services agreement.

 The management fee and profit allocation
to be paid to our manager may significantly reduce the amount of cash available for distributions to shareholders and for operations.

 Under the management services agreement, we will
be obligated to pay a management fee to and, subject to certain conditions, reimburse the costs and out-of-pocket expenses of our manager
incurred on our behalf in connection with the provision of services to us. Similarly, our businesses will be obligated to pay fees to
and reimburse the costs and expenses of our manager pursuant to any offsetting management services agreements entered into between our
manager and our businesses, or any transaction services agreements to which such businesses are a party. In addition, our manager, as
holder of the allocation shares, will be entitled to receive a profit allocation upon satisfaction of applicable conditions to payment
and may be entitled to receive the put price upon the occurrence of certain events. While we cannot quantify with any certainty the actual
amount of any such payments in the future, we do expect that such amounts could be substantial. The management fee, put price and profit
allocation are payment obligations and, as a result, will be senior in right to the payment of any distributions to our shareholders.
Likewise, the profit allocation may also significantly reduce the cash available for operations.

 Our manager's influence on conducting
our business and operations, including acquisitions, gives it the ability to increase its fees and compensation to our Chief Executive
Officer, which may reduce the amount of cash available for distributions to our shareholders.

 Under the terms of the management services agreement,
our manager is paid a management fee calculated as a percentage of our adjusted net assets for certain items and is unrelated to net income
or any other performance base or measure. See Item 1 " Business—Our Manager—Our Manager as a Service Provider—Management
Fee " for more information about the calculation of the management fee. Our manager, which Ellery W. Roberts, our Chief Executive
Officer, controls, may advise us to consummate transactions, incur third-party debt or conduct our operations in a manner that may increase
the amount of fees paid to our manager which, in turn, may result in higher compensation to Mr. Roberts because his compensation is paid
by our manager from the management fee it receives from us.

 Fees paid by our company and our businesses
pursuant to transaction services agreements do not offset fees payable under the management services agreement and will be in addition
to the management fee payable by our company under the management services agreement.

 The management services agreement provides that
businesses that we may acquire in the future may enter into transaction services agreements with our manager pursuant to which our businesses
will pay fees to our manager. See Item 1 " Business—Our Manager—Our Manager as a Service Provider " for more
information about these agreements. Unlike fees paid under the offsetting management services agreements, fees that are paid pursuant
to such transaction services agreements will not reduce the management fee payable by us. Therefore, such fees will be in addition to
the management fee payable by us or offsetting management fees paid by businesses that we may acquire in the future.

 The fees to be paid to our manager pursuant to
these transaction service agreements will be paid prior to any principal, interest or dividend payments to be paid to us by our businesses,
which will reduce the amount of cash available for distributions to our shareholders.

 Our manager's profit allocation may
induce it to make decisions and recommend actions to our board of directors that are not optimal for our business and operations.

 Our manager, as holder of all of the allocation
shares, will receive a profit allocation based on the extent to which gains from any sales of our subsidiaries plus their net income since
the time they were acquired exceed a certain annualized hurdle rate. As a result, our manager may be encouraged to make decisions or to
make recommendations to our board of directors regarding our business and operations, the business and operations of our businesses, acquisitions
or dispositions by us or our businesses and distributions to our shareholders, any of which factors could affect the calculation and payment
of profit allocation, but which may otherwise be detrimental to our long-term financial condition and performance.

 The obligations to pay the management fee
and profit allocation, including the put price, may cause us to liquidate assets or incur debt.

 If we do not have sufficient liquid assets to
pay the management fee and profit allocation, including the put price, when such payments are due and payable, we may be required to liquidate
assets or incur debt in order to make such payments. This circumstance could materially adversely affect our liquidity and ability to
make distributions to our shareholders.

 Risks Related to Taxation

 Our shareholders will be subject to taxation
on their share of our taxable income, whether or not they receive cash distributions from us.

 Our company is a limited liability company and
is classified as a partnership for U.S. federal income tax purposes. Consequently, our shareholders are subject to U.S. federal income
taxation and, possibly, state, local and foreign income taxation on their share of our taxable income, whether or not they receive cash
distributions from us. There is, accordingly, a risk that our shareholders may not receive cash distributions equal to their allocated
portion of our taxable income or even in an amount sufficient to satisfy the tax liability that results from that income. This risk is
attributable to a number of variables, such as results of operations, unknown liabilities, government regulations, financial covenants
relating to our debt, the need for funds for future acquisitions and/or to satisfy short- and long-term working capital needs of our businesses,
and the discretion and authority of our board of directors to make distributions or modify our distribution policy.

 As a partnership, our company itself will not
be subject to U.S. federal income tax (except as may be imposed under certain recently enacted partnership audit rules), although it will
file an annual partnership information return with the IRS. The information return will report the results of our activities and will
contain a Schedule K-1 for each company shareholder reflecting allocations of profits or losses (and items thereof) to our members, that
is, to the shareholders. Each partner of a partnership is required to report on his or her income tax return his or her share of items
of income, gain, loss, deduction, credit, and other items of the partnership (in each case, as reflected on such Schedule K-1) without
regard to whether cash distributions are received. Each holder will be required to report on his or her tax return his or her allocable
share of company income, gain, loss, deduction, credit and other items for our taxable year that ends with or within the holder's
taxable year. Thus, holders of common shares will be required to report taxable income (and thus be subject to significant income tax
liability) without a corresponding current receipt of cash if we were to recognize taxable income and not make cash distributions to the
shareholders.

 Generally, the determination of a holder's
distributive share of any item of income, gain, loss, deduction, or credit of a partnership is governed by the operating agreement, but
it is also subject to income tax laws governing the allocation of the partnership's income, gains, losses, deductions and credits.
These laws are complex, and there can be no assurance that the IRS would not successfully challenge any allocation set forth in any Schedule
K-1 issued by us. Whether an allocation set forth in any particular K-1 issued to a shareholder will be accepted by the IRS also depends
on a facts and circumstances analysis of the underlying economic arrangement of our shareholders. If the IRS were to prevail in challenging
the allocations provided by the operating agreement, the amount of income or loss allocated to holders for U.S. federal income tax purposes
could be increased or reduced or the character of allocated income or loss could be modified. See " Material U.S. Federal Income
Tax Considerations " included in our prospectus, dated October 28, 2024 and filed with the SEC on October 30, 2024, for more
information.

 All of our income could be subject to an
entity-level tax in the United States, which could result in a material reduction in cash flow available for distribution to shareholders
and thus could result in a substantial reduction in the value our shares.

 Given the number of shareholders that we have,
and because our shares are listed for trading on the over-the-counter market, we believe that our company will be regarded as a publicly
traded partnership. Under the federal tax laws, a publicly traded partnership generally will be treated as a corporation for U.S. federal
income tax purposes. A publicly traded partnership will be treated as a partnership, however, and not as a corporation for U.S. federal
tax purposes so long as 90% or more of its gross income for each taxable year in which it is publicly traded constitutes "qualifying
income," within the meaning of section 7704(d) of the Internal Revenue Code of 1986, as amended, or the Code, and we are not required
to register under the Investment Company Act. Qualifying income generally includes dividends, interest (other than interest derived in
the conduct of a lending or insurance business or interest the determination of which depends in whole or in part on the income or profits
of any person), certain real property rents, certain gain from the sale or other disposition of real property, gains from the sale of
stock or debt instruments which are held as capital assets, and certain other forms of "passive-type" income. We expect to
realize sufficient qualifying income to satisfy the qualifying income exception. We also expect that we will not be required to register
under the Investment Company Act.

 In certain cases, income that would otherwise
qualify for the qualifying income exception may not so qualify if it is considered to be derived from an active conduct of a business.
For example, the IRS may assert that interest received by us from our subsidiaries is not qualifying income because it is derived in the
conduct of a lending business. If we fail to satisfy the qualifying income exception or is required to register under the Investment Company
Act, we will be classified as a corporation for U.S. federal (and certain state and local) income tax purposes, and shareholders would
be treated as shareholders in a domestic corporation. We would be required to pay federal income tax at regular corporate rates on its
income. In addition, we would likely be liable for state and local income and/or franchise taxes on our income. Distributions to the shareholders
would constitute ordinary dividend income (taxable at then existing ordinary income rates) or, in certain cases, qualified dividend income
(which is generally subject to tax at reduced tax rates) to such holders to the extent of our earnings and profits, and the payment of
these dividends would not be deductible to us. Shareholders would receive an IRS Form 1099-DIV in respect of such dividend income and
would not receive a Schedule K-1. Taxation of our company as a corporation could result in a material reduction in distributions to our
shareholders and after-tax return and would likely result in a substantial reduction in the value of, or materially adversely affect the
market price of, our shares.

 The present U.S. federal income tax treatment
of an investment in our shares may be modified by administrative, legislative, or judicial interpretation at any time, and any such action
may affect investments previously made. For example, changes to the U.S. federal tax laws and interpretations thereof could make it more
difficult or impossible to meet the qualifying income exception for our company to be classified as a partnership, and not as a corporation,
for U.S. federal income tax purposes, necessitate that our company restructure its investments, or otherwise adversely affect an investment
in our shares.

 In addition, we may become subject to an entity
level tax in one or more states. Several states are evaluating ways to subject partnerships to entity level taxation through the imposition
of state income, franchise, or other forms of taxation. If any state were to impose a tax upon our company as an entity, our distributions
to you would be reduced.

 Complying with certain tax-related requirements
may cause us to forego otherwise attractive business or investment opportunities or enter into acquisitions, borrowings, financings, or
arrangements we may not have otherwise entered into.

 In order for our company to be treated as a partnership
for U.S. federal income tax purposes and not as a publicly traded partnership taxable as a corporation, we must meet the qualifying income
exception discussed above on a continuing basis and must not be required to register as an investment company under the Investment Company
Act. In order to effect such treatment, we may be required to invest through foreign or domestic corporations, forego attractive business
or investment opportunities or enter into borrowings or financings we (or any of our subsidiaries, as the case may be) may not have otherwise
entered into. This may adversely affect our ability to operate solely to maximize our cash flow. In addition, we may not be able to participate
in certain corporate reorganization transactions that would be tax free to our shareholders if we were a corporation for U.S. federal
income tax purposes.

 Non-corporate investors who are U.S. taxpayers
will not be able to deduct certain fees, costs or other expenses for U.S. federal income tax purposes.

 We will pay a management fee (and possibly certain
transaction fees) to our manager. We will also pay certain costs and expenses incurred in connection with the activities of our manager.
We intend to deduct such fees and expenses to the extent that they are reasonable in amount and are not capital in nature or otherwise
nondeductible. It is expected that such fees and other expenses will generally constitute miscellaneous itemized deductions for non-corporate
U.S. taxpayers who hold our shares. Under current law in effect for taxable years beginning after December 31, 2017 and before January
1, 2026, non-corporate U.S. taxpayers may not deduct any such miscellaneous itemized deductions for U.S. federal income tax purposes.
A non-corporate U.S. taxpayer's inability to deduct such items could result in such holder reporting as his or her share of company
taxable income an amount that exceeds any cash actually distributed to such U.S. taxpayer for the year. U.S. holders of our shares that
are corporations generally will be able to deduct these fees, costs and expenses in accordance with applicable U.S. federal income tax
law.

 A portion of the income arising from an
investment in our shares may be treated as unrelated business taxable income and taxable to certain tax-exempt holders despite such holders'
tax-exempt status.

 We expect to incur debt with respect to certain
of our investments that will be treated as "acquisition indebtedness" under section 514 of the Code. To the extent we recognize
income from any investment with respect to which there is "acquisition indebtedness" during a taxable year, or to the extent
we recognize gain from the disposition of any investment with respect to which there is "acquisition indebtedness," a portion
of that income will be treated as unrelated business taxable income and taxable to tax-exempt investors. In addition, if the IRS successfully
asserts that we are engaged in a trade or business for U.S. federal income tax purposes (for example, if it determines we are engaged
in a lending business), tax-exempt holders, and in certain cases non-U.S. holders, would be subject to U.S. income tax on any income generated
by such business. The foregoing would apply only if the amount of such business income does not cause us to fail to meet the qualifying
income test (which would happen if such income exceeded 10% of our gross income, and in which case such failure would cause us to be taxable
as a corporation).

 A portion of the income arising from an
investment in our shares may be treated as income that is effectively connected with our conduct of a U.S. trade or business, which income
would be taxable to holders who are not U.S. taxpayers.

 If the IRS successfully asserts that we are engaged
in a trade or business in the United States for U.S. federal income tax purposes (for example, if it determines we are engaged in a lending
business), then in certain cases non-U.S. holders would be subject to U.S. income tax on any income that is effectively connected with
such business. It could also cause the non-U.S. holder to be subject to U.S. federal income tax on a sale of his or her interest in our
company. The foregoing would apply only if the amount of such business income does not cause us to fail to meet the qualifying income
test (which would happen if such income exceeded 10% of our gross income, and in which case such failure would cause us to be taxable
as a corporation).

 Risks related to recently enacted legislation.

 The rules dealing with U.S. federal income taxation
are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. No assurance
can be given as to whether, when or in what form the U.S. federal income tax laws applicable to us and our shareholders may be enacted.
Changes to the U.S. federal income tax laws and interpretations of U.S. federal income tax laws could adversely affect an investment in
our shares.

 We cannot predict whether, when or to what extent
new U.S. federal tax laws, regulations, interpretations or rulings will be issued, nor is the long-term impact of recently enacted tax
legislation clear. Prospective investors are urged to consult their tax advisors regarding the effect of potential changes to the U.S.
federal income tax laws on an investment in our shares.

 Risks Related to Ownership of Our Common Shares

 We may not be able to maintain a listing
of our common shares on NYSE American.

 Our common shares are listed on NYSE American,
and w e must meet certain financial and liquidity criteria to maintain the listing
of our common shares on NYSE American.
If we fail to meet any listing standards or if we violate any listing requirements, our common shares may
be delisted. For instance, we have been advised by NYSE American that our common shares may be delisted if our share price falls below
$0.10, and due to new NYSE American rules limiting the number of reverse splits that companies may effectuate over a two-year period to
less than a cumulative ratio of 200 shares to 1, we will be unable to effectuate an additional reverse share split until at least July
2026, thereby increasing the likelihood that our share price may fall below $0.10. Furthermore, we have a shareholders' deficit
of approximately $ 96 million as of December 31, 2024, which NYSE American could also use as a basis to delist our common shares.
Accordingly, w e cannot guarantee that we will continue to meet all listing standards
or that we will not violate any listing requirements in the future. In addition,
our board of directors may determine that the cost of maintaining our listing on a national securities exchange outweighs the benefits
of such listing.

 A
delisting of our common shares from NYSE American may
materially impair our shareholders' ability to buy and sell our common shares and
could have an adverse effect on the market price of, and the efficiency of the trading market for, our common shares.
The delisting of our common shares could significantly impair our ability
to raise capital and the value of your investment.

 The market price, trading volume and marketability
of our common shares may, from time to time, be significantly affected by numerous factors beyond our control, which may materially adversely
affect the market price of your common shares, the marketability of your common shares and our ability to raise capital through future
equity financings.

 The market price and trading volume of our common
shares may fluctuate significantly. Many factors that are beyond our control may materially adversely affect the market price of your
common shares, the marketability of your common shares and our ability to raise capital through equity financings. These factors include
the following:

 actual or anticipated variations in our periodic operating results;

 increases in market interest rates that lead investors of our common shares to demand a higher investment
return;

 changes in earnings estimates;

 changes in market valuations of similar companies;

 actions or announcements by our competitors;

 adverse market reaction to any increased indebtedness we may incur in the future;

 additions or departures of key personnel;

 actions by shareholders;

 speculation in the media, online forums, or investment community; and

 our intentions and ability to maintain the listing our common shares on NYSE American.

 An active, liquid trading market for our
common shares may not be sustained, which may make it difficult for you to sell the common shares you purchase.

 We
cannot predict the extent to which investor interest in us will sustain a trading market or how active and liquid that market may remain.
If an active and liquid trading market is not sustained, you may have difficulty selling any of our common shares that
you purchase at a price above the price you purchase them or at all. The failure of an active and liquid trading market to continue would
likely have a material adverse effect on the value of our common shares.
An inactive market may also impair our ability to raise capital to continue
to fund operations by selling securities and may impair our ability to
acquire other companies or technologies by using our securities as consideration.

 Future sales of our securities may affect
the market price of our common shares and result in material dilution.

 We cannot predict what effect, if any,
future sales of our common shares, or the availability of common shares for future sale, will have on the market price of our common
shares. Notably, we are obligated to issue 453,455 common shares upon the conversion of our outstanding series A senior convertible
preferred shares, 5,574 common shares upon the conversion of our outstanding series C senior convertible preferred shares, 32,274
common shares upon the conversion of our outstanding series D senior convertible preferred shares and 174,186,206 common shares
issuable upon the exercise of outstanding warrants at a weighted average exercise price of $0.53 per share (excluding any decrease
to the exercise price and increase in the number of shares as a result of antidilution adjustments contained in certain outstanding
warrants). We are also obliged to issue common shares upon the conversion of secured convertible promissory notes in the aggregate
principal amount of $22,819,184, which are convertible into our common shares at a conversion price of equal to the lowest daily
volume weighted price of our common shares during the five trading days prior to conversion (subject to adjustment). We have also
reserved 5,000,000 common shares for issuance under our 2023 Equity Incentive Plan.

 Sales of substantial amounts of our common shares
in the public market, or the perception that such sales could occur, could materially adversely affect the market price of our common
shares and may make it more difficult for you to sell your common shares at a time and price which you deem appropriate.

 Rule 144 sales in the future may have a
depressive effect on our share price.

 All of the outstanding common shares held by the
present officers, directors, and affiliate shareholders are "restricted securities" within the meaning of Rule 144 under the
Securities Act of 1933, as amended, or the Securities Act. As restricted shares, these shares may be resold only pursuant to an effective
registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under the Securities Act
and as required under applicable state securities laws. Rule 144 provides in essence that a person who is an affiliate or officer or director
who has held restricted securities for six months may, under certain conditions, sell every three months, in brokerage transactions, a
number of shares that does not exceed the greater of 1.0% of a company's outstanding common shares. There is no limitation on the
amount of restricted securities that may be sold by a non-affiliate after the owner has held the restricted securities for a period of
six months if our company is a current reporting company under the Exchange Act. A sale under Rule 144 or under any other exemption from
the Securities Act, if available, or pursuant to subsequent registration of common shares of present shareholders, may have a depressive
effect upon the price of the common shares in any market that may develop.

 Our series A senior convertible preferred
shares, series C senior convertible preferred shares and series D senior convertible preferred shares are senior to our common shares
as to distributions and in liquidation, which could limit our ability to make distributions to our common shareholders.

 Holders of our series A senior convertible preferred
shares are entitled to quarterly dividends, payable in cash or in common shares, at a rate per annum of 24.0% of the stated value ($2.42
per share), holders of our series C senior convertible preferred shares are entitled to accruing dividends, payable upon conversion or
liquidation, at a rate per annum of 6.0% of the stated value ($10.00 per share) and holders of our series D senior convertible preferred
shares are entitled to accruing dividends, payable upon conversion or liquidation, at a rate per annum of 10.0% of the stated value ($0.339
per share). In addition, upon any liquidation of our company or its subsidiaries, each holder of outstanding series A senior convertible
preferred shares will be entitled to receive an amount of cash equal to 115% of the stated value, plus an amount of cash equal to all
accumulated accrued and unpaid dividends thereon (whether or not declared), and each holder of outstanding series C senior convertible
preferred shares and series D senior convertible preferred shares will be entitled to receive an amount of cash equal to 100% of the stated
value, plus an amount of cash equal to all accumulated accrued and unpaid dividends thereon (whether or not declared), all before any
payment shall be made to or set apart for the holders of our common shares. This could limit our ability to make regular distributions
to our common shareholders or distributions upon liquidation.

 We may issue additional debt and equity
securities, which are senior to our common shares as to distributions and in liquidation, which could materially adversely affect the
market price of our common shares.

 In the future, we may attempt to increase our
capital resources by entering into additional debt or debt-like financing that is secured by all or up to all of our assets, or issuing
debt or equity securities, which could include issuances of commercial paper, medium-term notes, senior notes, subordinated notes or shares.
In the event of our liquidation, our lenders and holders of our debt securities would receive a distribution of our available assets before
distributions to our shareholders.

 Any additional preferred securities, if issued
by our company, may have a preference with respect to distributions and upon liquidation, which could further limit our ability to make
distributions to our common shareholders. Because our decision to incur debt and issue securities in our future offerings will depend
on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings
and debt financing.

 Further, market conditions could require us to
accept less favorable terms for the issuance of our securities in the future. Thus, you will bear the risk of our future offerings reducing
the value of your common shares and diluting your interest in us. In addition, we can change our leverage strategy from time to time without
approval of holders of our common shares, which could materially adversely affect the market share price of our common shares.

 Our potential future earnings and cash distributions
to our shareholders may affect the market price of our common shares.

 Generally, the market price of our common shares
may be based, in part, on the market's perception of our growth potential and our current and potential future cash distributions,
whether from operations, sales, acquisitions or refinancings, and on the value of our businesses. For that reason, our common shares may
trade at prices that are higher or lower than our net asset value per share. Should we retain operating cash flow for investment purposes
or working capital reserves instead of distributing the cash flows to our shareholders, the retained funds, while increasing the value
of our underlying assets, may materially adversely affect the market price of our common shares. Our failure to meet market expectations
with respect to earnings and cash distributions and our failure to make such distributions, for any reason whatsoever, could materially
adversely affect the market price of our common shares.

 Were our common shares to be considered
penny stock, and therefore become subject to the penny stock rules, U.S. broker-dealers may be discouraged from effecting transactions
in our common shares.

 Our common shares may be subject to the penny
stock rules under the Exchange Act. These rules regulate broker-dealer practices for transactions in "penny stocks." Penny
stocks are generally equity securities with a price of less than $5.00 per share. The penny stock rules require broker-dealers that derive
more than 5% of their customer transaction revenues from transactions in penny stocks to deliver a standardized risk disclosure document
that provides information about penny stocks, and the nature and level of risks in the penny stock market, to any non-institutional customer
to whom the broker-dealer recommends a penny stock transaction. The broker-dealer must also provide the customer with current bid and
offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson and monthly account statements showing
the market value of each penny stock held in the customer's account. The bid and offer quotations and the broker-dealer and salesperson
compensation information must be given to the customer orally or in writing prior to completing the transaction and must be given to the
customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction,
the broker and/or dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and
receive the purchaser's written agreement to the transaction. The transaction costs associated with penny stocks are high, reducing
the number of broker-dealers who may be willing to engage in the trading of our common shares. These additional penny stock disclosure
requirements are burdensome and may reduce all the trading activity in the market for our common shares. As long as our common shares
are subject to the penny stock rules, holders of our common shares may find it more difficult to sell their shares.

 Holders of our common shares may not be
entitled to a jury trial with respect to claims arising under our operating agreement, which could result in less favorable outcomes to
the plaintiffs in any such action.

 Our operating
agreement governing our common shares provides that, to the fullest extent permitted by law, holders of our common shares waive the right
to a jury trial of any claim they may have against us arising out of or relating to our operating agreement, including any claim under
the U.S. federal securities laws.

 If we opposed
a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances
of that case in accordance with the applicable state and federal law. To our knowledge, the enforceability of a contractual pre-dispute
jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by the United States
Supreme Court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under
the laws of the State of Delaware, which govern our operating agreement, by a federal or state court in the State of Delaware, which has
non-exclusive jurisdiction over matters arising under the operating agreement. In determining whether to enforce a contractual pre-dispute
jury trial waiver provision, courts will generally consider whether a party knowingly, intelligently and voluntarily waived the right
to a jury trial. We believe that this is the case with respect to our operating agreement. It is advisable that you consult legal counsel
regarding the jury waiver provision before entering into the operating agreement.

 If you or
any other holders or beneficial owners of our common shares bring a claim against us in connection with matters arising under our operating
agreement, including claims under federal securities laws, you or such other holder or beneficial owner may not be entitled to a jury
trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us. If a lawsuit is brought
against us under our operating agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted
according to different civil procedures and may result in different outcomes than a trial by jury would have, including results that could
be less favorable to the plaintiffs in any such action.

 Nevertheless,
if this jury trial waiver provision is not permitted by applicable law, an action could proceed under the terms of the operating agreement
with a jury trial. No condition, stipulation or provision of the operating agreement serves as a waiver by any holder or beneficial owner
of our common shares or by us of compliance with the U.S. federal securities laws and the rules and regulations promulgated thereunder.

 ITEM 1B.
 UNRESOLVED STAFF COMMENTS.

 Not applicable.

 ITEM 1C.
 CYBERSECURITY.

 Risk Management and Strategy

 We recognize the critical importance of developing,
implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity,
and availability of our data. We have developed the following processes as part of our strategy for assessing, identifying, and managing
material risks from cybersecurity threats.

 Managing Material Risks & Integrated
Overall Risk Management

 We have integrated cybersecurity risk management
into our risk management processes. This integration is intended to ensure that cybersecurity considerations are part of our decision-making
processes. We continuously evaluate and address cybersecurity risks in alignment with our business objectives and operational needs.

 Engaging Third-parties on Risk Management

 Recognizing the complexity and evolving nature
of cybersecurity threats, we plan to engage external experts, including consultants and auditors, in evaluating and testing our risk management
systems. These services will enable us to leverage specialized knowledge and insights, ensuring our cybersecurity strategies
and processes remain at the forefront of industry best practices. Our collaboration with these third-parties is expected to include annual
audits, ongoing threat assessments, and regular consultations on security enhancements.

 Overseeing Third-Party Risk

 Because we are aware of the risks associated with
third-party service providers, we implement processes to oversee and manage these risks. We conduct thorough security assessments of all
third-party providers before engagement and maintain ongoing monitoring to ensure compliance with our cybersecurity standards. This approach
is designed to mitigate risks related to data breaches or other security incidents originating from third parties.

 Risks from Cybersecurity Threats

 We have not encountered cybersecurity challenges
that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations,
or financial condition.

 Governance

 Board of Directors Oversight

 Our board of directors oversees the management
of risks associated with cybersecurity threats.

 Management's Role Managing Risk

 Management is primarily responsible for assessing,
monitoring and managing our cybersecurity risks. Management must ensure that all industry standard cybersecurity measures are functioning
as required to prevent or detect cybersecurity threats and related risks. Management oversees and tests our compliance with standards,
remediates known risks, and leads our employee training program.

 Monitoring Cybersecurity Incidents

 Management is continually informed about the latest
developments in cybersecurity, including potential threats and innovative risk management techniques. Management implements and oversees
processes for the regular monitoring of our information systems. This includes the deployment of industry-standard security measures and
regular system audits to identify potential vulnerabilities. In the event of a cybersecurity incident, management will implement an incident
response plan. This plan includes immediate actions to mitigate the impact and long-term strategies for remediation and prevention of
future incidents.

 Reporting to Board of Directors

 Significant cybersecurity matters, and strategic
risk management decisions, will be escalated to the board of directors.

 ITEM 2.
 PROPERTIES.

 Our principal office is located at 260 Madison
Avenue, 8th Floor, New York, NY 10016. We entered into an office service agreement with Regus Management Group, LLC for use
of office space at this location effective January 22, 2013. Under the agreement, in exchange for our right to use the office space at
this location, we are required to pay a monthly fee of $210 (excluding taxes).

 Kyle's is headquartered at 10849 W. Emerald
St. Boise, ID 83713, where it leases a 6,600 square foot facility that includes corporate offices, administration, production floor,
warehouse, and employee areas. On September 1, 2020, Kyle's entered into an industrial lease agreement with Stephen Mallatt, Jr.
and Rita Mallatt, the sellers of Kyle's. The lease is for a term of five years, with an option for a renewal term of five years,
and provides for a base rent of $7,000 per month for the first 12 months, which will increase to $7,210 for months 13-16 and to $7,426
for months 37-60. In addition, Kyle's is responsible for all taxes, insurance and certain operating costs during the lease term.
The lease agreement contains customary events of default, representations, warranties and covenants.

 On June 9, 2021, Kyle's entered into a lease
agreement for an additional facility located at 11193 W. Emerald St. Boise, ID 83713. The facility consists of 9,530 square feet of office
and warehouse space. The lease commenced on January 1, 2022 and is for a term of 62 months, with an option for a renewal term of five
years, and provides for a base rent of $3,336 for months 3-4 (with no payments for the first two months), with gradual increases to $7,508
for final year. In addition, Kyle's is responsible for its proportionate share of all taxes, insurance and certain operating costs
during the lease term. The lease agreement contains customary events of default, representations, warranties and covenants.

 Innovative Cabinets is headquartered at 875 East
Patriot Boulevard, Suite 280, Reno, NV 89511, where it leases a 24,000 square foot facility, consisting of warehouse and production space.
The term of the lease commenced on January 1, 2021 and is for a period of 61 months. The base rent is $15,600 for 2021, with gradual increases
to $18,085 for 2026. In addition, Innovative Cabinets is responsible for its proportionate share of all taxes, insurance and certain operating
costs during the lease term. The lease agreement contains customary events of default, representations, warranties and covenants.

 CMD is headquartered at 4495 Delancey Drive, Las
Vegas, NV 89103, where it leases a 15,000 square foot facility that includes corporate offices, administration, production floor, warehouse,
and employee areas. On December 16, 2024, 1847 CMD entered into a lease agreement with Delancey LLC relating to this property and another
located at 4485 Delancey Drive, Las Vegas, NV 89103. The lease expires on December 31, 2029, with options for renewals for two (2) additional
five (5) year periods, and provides for a base rent of $20,000 per month, which shall increase annually by an amount equal to three percent
(3%) of the previous year's base rent. In addition, 1847 CMD is responsible for all taxes, insurance and certain operating costs
during the lease term. The lease agreement contains customary events of default, representations, warranties and covenants.

 CMD also leases a property located at 2421 East
Gowan Road, North Las Vegas, Nevada 89030. This facility consists of 15,288 square feet of office and warehouse space. On December 16,
2024, 1847 CMD entered into a lease agreement for this property with CD Gowan LLC. The lease expires on December 31, 2029, with options
for renewals for two (2) additional five (5) year periods, and provides for a base rent of $15,000 per month, which shall increase annually
by an amount equal to three percent (3%) of the previous year's base rent. In addition, 1847 CMD is responsible for all taxes, insurance
and certain operating costs during the lease term. The lease agreement contains customary events of default, representations, warranties
and covenants.

 Wolo is located at 1 Saxwood St., Deer Park, NY
11729. This 10,000 square foot facility houses our offices, production space and stored inventory. The term of the lease for this space
commenced in 1978 and has been extended numerous times. Pursuant to the latest amendment entered into in April 2022, the lease expires
on July 31, 2025 and provides for a monthly rent of $7,518 for the first year, with scheduled annual increases. The lease agreement contains
customary events of default, representations, warranties, and covenants.

 We believe that all our properties have been adequately
maintained, are generally in good condition, and are suitable and adequate for our businesses.

 ITEM 3.
 LEGAL PROCEEDINGS.

 From time to time, we may become involved in
various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties,
and an adverse result in these or other matters may arise from time to time that may harm our business. We are not currently aware of
any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating
results.

 ITEM 4.
 MINE SAFETY DISCLOSURES.

 Not applicable.

 ITEM 5.
 MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES.

 Market Information

 Our common shares are listed for trading on NYSE
American under the symbol "EFSH."

 Number of Holders of Our Common Shares

 As of March 28, 2025, there were approximately
86 shareholders of record of our common shares. In computing the number of holders of record of our common shares, each broker-dealer
and clearing corporation holding shares on behalf of its customers is counted as a single shareholder.

 Securities Authorized for Issuance Under Equity
Compensation Plans

 Please see Item 12 " Security Ownership
of Certain Beneficial Owners and Management and Related Stockholder Matters."

 Dividend Policy

 Holders of our series A senior convertible preferred
shares are entitled to dividends at a rate per annum of 24.0% of the stated value of $2.42 per share (subject to adjustment). Dividends
shall accrue from day to day, whether or not declared, and shall be cumulative. Dividends shall be payable quarterly in arrears on each
dividend payment date in cash or common shares at our discretion. Dividends payable in common shares shall be calculated based on a price
equal to eighty percent (80%) of the volume weighted average price for the common shares on our principal trading market during the five
(5) trading days immediately prior to the applicable dividend payment date; provided that if our common shares are not registered, any
dividends payable in common shares shall be calculated based upon the fixed price of $1.57; and provided further that we may only elect
to pay dividends in common shares based upon such fixed price if the volume weighted average price for the common shares on our principal
trading market during the five (5) trading days immediately prior to the applicable dividend payment date is $1.57 or higher.

 Holders of our series C senior convertible preferred
shares are entitled to dividends at a rate per annum of 6.0% of the stated value of $10.00 per share. Dividends shall accrue from day
to day, whether or not declared, and shall be cumulative. Dividends shall be payable only upon conversion or upon liquidation of our company.

 Holders of our series D senior convertible preferred
shares are entitled to dividends at a rate per annum of 10.0% of the stated value of $0.339 per share. Dividends shall accrue from day
to day, whether or not declared, and shall be cumulative. Dividends shall be payable only upon conversion or upon liquidation of our company.

 We plan
to make regular distributions on our outstanding common shares, subject to our operating subsidiaries generating sufficient cash flow
to support such regular cash distributions. Our distribution policy will be based on the liquidity and capital of our businesses
and on our intention to pay out as distributions to our shareholders most of the cash resulting from the ordinary operation of the businesses,
and not to retain significant cash balances in excess of what is prudent for our company or our businesses, or as may be prudent for the
consummation of attractive acquisition opportunities. If our strategy is successful, we expect to maintain and increase the level of regular
distributions to common shareholders in the future.

 The declaration and payment of any distribution
to our common shareholders will be subject to the approval of our board of directors. Our board of directors will take into account such
matters as general business conditions, our financial condition, results of operations, capital requirements and any contractual, legal
and regulatory restrictions on the payment of distributions by us to our shareholders or by our subsidiaries to us, and any other factors
that the board of directors deems relevant. However, even if our board of directors were to decide to declare and pay distributions, our
ability to pay such distributions may be adversely impacted due to unknown liabilities, government regulations, financial covenants of
our debt, funds needed for acquisitions and to satisfy short- and long-term working capital needs of our businesses, or if our operating
subsidiaries do not generate sufficient earnings and cash flow to support the payment of such distributions. In particular, we may incur
debt in the future to acquire new businesses, which debt will have substantial debt commitments, which must be satisfied before we can
make distributions. These factors could affect our ability to continue to make distributions to our common shareholders.

 We may use cash flow from our operating subsidiaries,
capital resources, including borrowings under any third-party credit facilities that we establish, or reduction in equity to pay a distribution.
See " Material U.S. Federal Income Tax Considerations " included in our prospectus, dated October 28, 2024 and filed
with the SEC on October 30, 2024, for more information about the tax treatment of distributions to our shareholders.

 Recent Sales of Unregistered Securities

 We have not sold any equity securities during
the 2024 fiscal year that were not previously disclosed in a quarterly report on Form 10-Q or a current report on Form 8-K that was filed
during the 2024 fiscal year.

 Purchases of Equity Securities

 No repurchases of our common shares were made
during the fourth quarter of 2024.

 ITEM 6.
 [RESERVED]

 ITEM 7.
 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 The
following discussion and analysis summarizes the significant factors affecting our operating results, financial condition, liquidity and
cash flows as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our financial
statements and the related notes thereto included elsewhere in this report. The discussion contains forward-looking statements that are
based on the beliefs of management, as well as assumptions made by, and information currently available to, management. Actual results
could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those
discussed below and elsewhere in this report, particularly in the sections titled "Risk Factors" and " Special
Note Regarding Forward-Looking Statements. "

 Overview

 We are an acquisition holding company focused
on acquiring and managing a group of small businesses, which we characterize as those that have an enterprise value of less than $50 million,
in a variety of different industries headquartered in North America.

 Through our structure, we offer investors an opportunity
to participate in the ownership and growth of a portfolio of businesses that traditionally have been owned and managed by private equity
firms, private individuals or families, financial institutions or large conglomerates. We believe that our management and acquisition
strategies will allow us to achieve our goals to make and grow regular distributions to our common shareholders and increase common
shareholder value over time.

 We seek to acquire controlling interests in small
businesses that we believe operate in industries with long-term macroeconomic growth opportunities, and that have positive and stable
earnings and cash flows, face minimal threats of technological or competitive obsolescence and have strong management teams largely in
place. We believe that private company operators and corporate parents looking to sell their businesses will consider us to be an attractive
purchaser of their businesses. We make these businesses our majority-owned subsidiaries and actively manage and grow such businesses.
We expect to improve our businesses over the long term through organic growth opportunities, add-on acquisitions and operational improvements.

 Recent Developments

 Amendment to Operating Agreement

 On March 11, 2025, our manager entered into an
amendment to our operating agreement to increase the number of common shares that we are authorized to issue from 500 million shares to
2 billion shares.

 Warrant Exchange

 As described below, on October 30, 2024, we issued
series A warrants to certain investors, most of which were exercised shortly after issuance. On March 11, 2025, the exercise price of
the remaining series A warrants was reduced to $0.81 per share, with a corresponding increase in the number of series A warrants. Following
this adjustment, the number of series A warrants outstanding was increased to 632,990, with each series A warrant exercisable for two
common shares, or an aggregate of 1,265,980 common shares. Following the adjustment, a holder exercised 193,348 series A warrants for
386,696 common shares, or the Exercised Shares. Accordingly, an aggregate of 439,642 series A warrants remained outstanding, or the Remaining
Warrants.

 On March 25, 2025, we entered into cancellation
and exchange agreements with the holders of the Remaining Warrants and the Exercised Shares, pursuant to which such holders agreed to
exchange the Remaining Warrants and the Exercised Shares for an aggregate of 1,027 series F convertible preferred shares.

 In connection with the cancellation and exchange
agreements, on March 25, 2025 we executed a share designation to establish the terms of the series F convertible preferred shares, or
the Share Designation. Pursuant to the Share Designation, we designated 1,027 of our preferred shares as series F convertible preferred
shares with a stated value of $1,000 per share. Following is a summary of the material terms of the series F convertible preferred shares:

 Ranking. The series F convertible preferred
shares rank, with respect to the payment of dividends and the distribution of assets upon liquidation, (i) senior to all common shares,
allocation shares, series C preferred shares, series D preferred shares and each other class or series that is not expressly made senior
to or on parity with the series F convertible preferred shares; (ii) on parity with each other class or series that is not expressly subordinated
or made senior to the series F convertible preferred shares; and (iii) junior to the series A senior convertible preferred shares, all
indebtedness and other liabilities with respect to assets available to satisfy claims against us and each other class or series that is
expressly made senior to the series F convertible preferred shares.

 Dividend Rights. Holders of series F convertible
preferred shares are entitled to receive dividends, when, as and if declared on the common shares, pari passu with the holders
of common shares, on an as-converted basis.

of creditors and the holders of any senior securities or parity securities (in each case, as defined in the Share Designation), upon any
liquidation of our company, before any payment or distribution of the assets of our company (whether capital or surplus) shall be made
to or set apart for the holders of junior securities (as defined in the Share Designation), each holder of outstanding series F convertible
preferred shares shall be entitled to receive an amount of cash equal to 100% of the stated value ($1,000 per share). If, upon any liquidation,
the assets, or proceeds thereof, distributable among the holders of the series F convertible preferred shares shall be insufficient to
pay in full the preferential amount payable to the holders of the series F convertible preferred shares and liquidating payments on any
other shares of any class or series of parity securities as to the distribution of assets on any liquidation, then such assets, or the
proceeds thereof, shall be distributed among the holders of series F convertible preferred shares and any such other parity securities
ratably in accordance with the respective amounts that would be payable on such series F convertible preferred shares and any such other
parity securities if all amounts payable thereon were paid in full.

 Voting Rights. The series F convertible
preferred shares do not have any voting rights; provided that, so long as any series F convertible preferred shares are outstanding, we
shall not, and shall not permit any of our subsidiaries to, directly or indirectly, without the affirmative vote of the holders of a majority
of the then outstanding series F convertible preferred shares, (a) amend our certificate of formation or operating agreement in any manner
that adversely affects any rights of the holders of the series F convertible preferred shares or alter or amend the Share Designation,
(b) authorize or create any class of shares ranking as to dividends, redemption or distribution of assets upon a liquidation senior to,
or otherwise pari passu with, the series F convertible preferred shares, or (c) enter into any agreement with respect to any of
the foregoing.

 Conversion Rights. Each series F convertible
preferred share shall be convertible, at the option of the holder thereof, at any time and from time to time, into such number of fully
paid and nonassessable common shares determined by dividing the stated value ($1,000 per share) by the conversion price of $0.1549 per
share. The conversion price is subject to standard adjustments in the event of any share splits, share combinations, share reclassifications,
dividends paid in common shares, sales of substantially all of our assets, mergers, consolidations or similar transactions, as well as
for subsequent issuances of common shares, or securities convertible into or exercisable or exchangeable for common shares, at a price
below the then conversion price; provided that a holder shall not be entitled to utilize a conversion price of less than $0.01 (subject
to standard adjustments for share splits, share combinations, recapitalizations and similar transactions). Notwithstanding the foregoing,
the aggregate number of common shares that we may issue upon conversion of the series F convertible preferred shares is limited to 5,385,291
shares (equal to 19.99% of our outstanding common shares prior to entry into the cancellation and exchange agreements) prior to obtaining
shareholder approval of the issuance of all common shares that may be issued upon conversion of the series F convertible preferred shares,
in accordance with NYSE American rules. Furthermore, we shall not effect any conversion of the series F convertible preferred shares,
and a holder shall not have the right to convert any portion of the series F convertible preferred shares, to the extent that, after giving
effect to the conversion, such holder (together with such holder's affiliates) would beneficially own in excess of 4.99% of the
number of common shares outstanding immediately after giving effect to the issuance of common shares issuable upon conversion. This limitation
may be waived (up to a maximum of 9.99%) by the holder in its sole discretion upon not less than sixty-one (61) days' prior notice
to us.

 Other Rights. Holders of series F convertible
preferred shares have no redemption, preemptive or subscription rights for additional securities of our company.

 Management Fees

 On April 15, 2013, we and our manager entered
into a management services agreement, pursuant to which we are required to pay our manager a quarterly management fee equal to 0.5% of
our adjusted net assets for services performed (which we refer to as the parent management fee). The amount of the parent management fee
with respect to any fiscal quarter is (i) reduced by the aggregate amount of any management fees received by our manager under any offsetting
management services agreements with respect to such fiscal quarter, (ii) reduced (or increased) by the amount of any over-paid (or under-paid)
parent management fees received by (or owed to) our manager as of the end of such fiscal quarter, and (iii) increased by the amount of
any outstanding accrued and unpaid parent management fees. We did not expense any parent management fees for the years ended December
31, 2024 and 2024.

 Following the assignment of all of the assets
of Asien's on February 26, 2024 as described under " —Discontinued Operations " below, our manager ceased
to provide services to 1847 Asien for quarterly management fees. 1847 Asien expensed management fees of $50,000 and $300,000 for the years
ended December 31, 2024 and 2023, respectively, which is included in discontinued operations.

 On August 21, 2020, 1847 Cabinet entered into
an offsetting management services agreement with our manager, which was amended on October 8, 2021. Pursuant to the amended management
services agreement, our manager will provide certain services to 1847 Cabinet in exchange for a quarterly management fee equal to the
greater of $125,000 or 2% of adjusted net assets (as defined within the amended management services agreement). 1847 Cabinet expensed
management fees of $375,000 and $500,000 for the years ended December 31, 2024 and 2023, respectively, of which $125,000 is included in
discontinued operations for the years ended December 31, 2024 and 2023 due to the sale of High Mountain described under " —Discontinued
Operations " below.

 On March 30, 2021, 1847 Wolo entered into an offsetting
management services agreement with our manager. Pursuant to the management services agreement, our manager will provide certain services
to 1847 Wolo in exchange for a quarterly management fee equal to the greater of $75,000 or 2% of adjusted net assets (as defined within
the management services agreement). 1847 Wolo expensed management fees of $300,000 for the years ended December 31, 2024 and 2023.

 Following the foreclosure sale of all of the assets
of ICU Eyewear on August 5, 2024 as described under " —Discontinued Operations " below, our manager ceased to provide
services to 1847 ICU for quarterly management fees. 1847 ICU expensed management fees of $175,000 and $225,000 for the years ended December
31, 2024 and 2023, respectively, which is included in discontinued operations.

 On December 16, 2024, 1847 CMD entered into an
offsetting management services agreement with our manager. Pursuant to the management services agreement, our manager will provide certain
services to 1847 CMD in exchange for a quarterly management fee equal to the greater of $75,000 or 2% of adjusted net assets (as defined
within the management services agreement).

 In addition, if the aggregate amount of management
fees paid or to be paid to our manager under the offsetting management services agreements, exceeds, or is expected to exceed, 9.5% of
our gross income in any fiscal year or the parent management fee in any fiscal quarter, then the management fee to be paid by such entities
shall be reduced, on a pro rata basis determined by reference to the other management fees to be paid to our manager under other offsetting
management services agreements.

 On a consolidated basis, for the year ended December
31, 2024, we expensed total management fees from continued operations and discontinued operations of $2,267,000 and $350,000, respectively.
For the year ended December 31, 2023, we expensed total management fees from continued operations and discontinued operations of $633,333
and $691,667, respectively.

 Segments

 Following the divestures described under " —Discontinued
Operations " below, we now have two reportable segments:

 The construction segment provides finish carpentry and related products and services, including doors,
frames, trim, hardware, millwork, cabinetry, and specialty construction accessories.

 The automotive supplies segment provides horn and safety products (including electric, air, truck, marine,
motorcycle, and industrial equipment) as well as vehicle emergency and safety warning lights for cars, trucks, industrial equipment, and
emergency vehicles.

 We report all other business activities that are
not reportable in the corporate services segment. We provide general corporate services to our segments; however, these services are not
considered when making operating decisions and assessing segment performance. The corporate services segment includes costs associated
with executive management, financing activities and other public company-related costs.

 Discontinued Operations

 On February 26, 2024, Asien's entered into
a general assignment for the benefit of its creditors with SG Service Co., LLC. Pursuant to the assignment, Asien's transferred
ownership of all or substantially all of its right, title, and interest in, as well as custody and control of, its assets to SG Service
Co., LLC in trust. Following the assignment, we retained no financial interest in Asien's. Accordingly, the results of operations
of Asien's are reported as discontinued operations for the years ended December 31, 2024 and 2023.

 Our company was a limited guarantor of the Loan
Agreement that was entered into on September 11, 2023 between the ICU Lender, 1847 ICU and ICU Eyewear. Pursuant to the Loan Agreement,
the ICU Lender had a security interest in all the assets of ICU Eyewear. ICU Eyewear was in default under the Loan Agreement and consented
to a foreclosure by the ICU Lender and private sale of substantially all of its assets in an Article 9 sale process, pursuant to Section
9-610 of the Uniform Commercial Code as in effect in the State of New York and Section 9-610 of the Uniform Commercial Code as in effect
in the State of California. On August 5, 2024, ICU Eyecare Solutions Inc., an entity that is not affiliated with our company, was the
successful bidder with a cash bid of $4,250,000. Pursuant to an agreement, dated August 5, 2024, and in consideration for such purchase
price, the ICU Lender having foreclosed on its security interest in all of the assets of ICU Eyewear then conveyed all of its rights,
title, and interest in all of such assets to ICU Eyecare Solutions Inc. Following the sale, we retained no financial interest in ICU Eyewear.
Accordingly, the results of operations of ICU Eyewear are reported as discontinued operations for the years ended December 31, 2024 and
2023.

 On September 30, 2024, we entered into an asset
purchase agreement with BFS and High Mountain, pursuant to which we sold substantially all of the assets of Hight Mountain to BFS for
an aggregate cash only purchase price of $17,000,000, subject to certain pre-closing and post-closing adjustments. At closing, the purchase
price was subject to a working capital adjustment and was also reduced by the amount of outstanding indebtedness repaid at closing or
assumed by BFS, as well as certain transaction expenses. Additionally, the purchase price was reduced by $1,358,968, net of certain post-closing adjustments. Following the sale, we retained no financial interest in High Mountain. Accordingly, the results of
operations of High Mountain are reported as discontinued operations for the years ended December 31, 2024 and 2023.

 Results of Operations

 The following table sets forth key components
of our results of operations during the years ended December 31, 2024 and 2023, both in dollars and as a percentage of our revenues.

 Years Ended December 31,

 2024

 2023

 % of

 % of

 $
 15,710,330

 100.0
 %

 $
 14,190,135

 100.0
 %

 Operating expenses

 7,937,588

 50.5
 %

 7,637,496

 53.8
 %

 6,538,872

 41.6
 %

 4,990,561

 35.2
 %

 655,658

 4.2
 %

 1,162,295

 8.2
 %

 5,000,843

 31.8
 %

 3,272,333

 23.1
 %

 6,896,438

 43.9
 %

 2,378,190

 16.8
 %

 4.3
 %

 10,456,087

 73.7
 %

 Total operating expenses

 27,708,574

 176.4
 %

 29,896,962

 210.7
 %

 (11,998,244
)

 (76.4
)%

 (15,706,827
)

 (110.7
)%

 Other income (expense)

 Other income (expense)

 (1,263,983
)

 (8.0
)%

 12,611

 0.1
 %

 Gain on disposal of property and equipment

 13,000

 0.1
 %

 -

 -

 (4,262,224
)

 (27.1
)%

 (4,628,194
)

 (32.6
)%

 (9,047,721
)

 (57.6
)%

 (4,232,231
)

 (29.8
)%

 Loss on extinguishment of debt

 (4,709,793
)

 (30.0
)%

 -

 -

 Loss on change in fair value of warrant liabilities

 (77,638,662
)

 (494.2
)%

 (27,900
)

 (0.2
)%

 Gain on change in fair value of derivative liabilities

 1,401,373

 8.9
 %

 385,138

 2.7
 %

 Total other expense

 (95,508,010
)

 (607.9
)%

 (8,490,576
)

 (59.8
)%

 Net loss from continuing operations before income taxes

 (107,506,254
)

 (684.3
)%

 (24,197,403
)

 (170.5
)%

 702,000

 4.5
 %

 209,000

 1.5
 %

 Net loss from continuing operations

 $
 (106,804,254
)

 (679.8
)%

 $
 (23,988,403
)

 (169.0
)%

 Total revenues. Our total revenues
were $15,710,330 for the year ended December 31, 2024, as compared to $14,190,135 for the year ended December 31, 2023.

 The construction segment generates revenue through
the sale of finished carpentry and related products and services. Revenues from the construction segment increased by $2,321,335, or
24.1%, to $11,960,884 for the year ended December 31, 2024 from $9,639,549 for the year ended December 31, 2023. The increase
in revenues was primarily attributed to an increase in new multi-family projects and an increase in the average customer contract value.

 The automotive supplies segment generates revenue through the design
and sale of horn and safety products (electric, air, truck, marine, motorcycle and industrial equipment), including vehicle emergency
and safety warning lights for cars, trucks, industrial equipment and emergency vehicles. Revenues from the automotive supplies segment
decreased by $801,140, or 17.6%, to $3,749,446 for the year ended December 31, 2024 from $4,550,586 for the year ended December 31, 2023.
The decrease in revenues was primarily attributed to working capital constraints on inventory.

 Cost of revenues. Our total cost
of revenues was $7,937,588 for the year ended December 31, 2024, as compared to $7,637,496 for the year ended December 31, 2023.

 Cost of revenues for the construction segment
consists of finished goods, lumber, hardware and materials and plus direct labor and related costs, net of any material discounts from
vendors. Cost of revenues for the construction segment increased by $956,944, or 21.3%, to $5,439,723 for the year ended December 31,
2024 from $4,482,779 for the year ended December 31, 2023. Such increase was primarily attributed to the corresponding increase in revenues.
As a percentage of construction revenues, cost of revenues for the construction segment was 45.5% and 46.5% for the years ended December
31, 2024 and 2023, respectively.

 Cost of revenues for the automotive supplies segment
consists of the costs of purchased finished goods plus freight and tariff costs. Cost of revenues for the automotive supplies segment
decreased by $656,852, or 20.8%, to $2,497,865 for the year ended December 31, 2024 from $3,154,717 for the year ended December 31, 2023.
Such decrease was primarily attributed to the corresponding decrease in revenues. As a percentage of automotive supplies revenues, cost
of revenues for the automotive supplies segment was 66.6% and 69.3% for the years ended December 31, 2024 and 2023, respectively.

 Personnel costs. Personnel costs
include employee salaries and bonuses plus related payroll taxes. It also includes health insurance premiums, 401(k) contributions, and
training costs. Our total personnel costs were $6,538,872 for the year ended December 31, 2024, as compared to $4,990,561 for the year
ended December 31, 2023.

 Personnel costs for the construction segment
increased by $752,966, or 24.7%, to $3,805,928 for the year ended December 31, 2024 from $3,052,962 for the year ended December 31, 2023.
Such increase was primarily attributed to increased employee headcount as a result of increased revenues and corporate wage allocations.
As a percentage of construction revenue, personnel costs for the construction segment were 31.8% and 31.7% for the years ended December
31, 2024 and 2023, respectively.

 Personnel costs for the automotive supplies segment
increased by $17,507, or 1.9%, to $934,895 for the year ended December 31, 2023 from $917,388 for the year ended December 31, 2023. Such
increase was primarily attributed to increased benefit costs. As a percentage of automotive supplies revenues, personnel costs for the
automotive supplies segment were 24.9% and 20.2% for the years ended December 31, 2024 and 2023, respectively.

 Personnel costs for the corporate services segment
increased by $777,838, or 76.2%, to $1,798,049 for the year ended December 31, 2024 from $1,020,211 for the year ended December 31, 2023.
Such increase was primarily attributed to increased benefit costs and accrued management bonuses and wages.

 Depreciation and amortization.
Our total depreciation and amortization expense decreased by $506,637, or 43.6%, to $655,658 for the year ended December 31, 2024 from
$1,162,295 for the year ended December 31, 2023. Such decrease was primarily as a result of impairments of intangible assets.

 General and administrative expenses.
Our general and administrative expenses consist primarily of insurance expense, rent expense, management fees, advertising, bank fees,
bad debt allowances, and other general expenses incurred in connection with general operations. Our total general and administrative expenses
were $5,000,843 for the year ended December 31, 2024, as compared to $3,272,333 for the year ended December 31, 2023.

 General and administrative expenses for the construction
segment increased by $272,590, or 18.5%, to $1,745,773 for the year ended December 31, 2024 from $1,473,183 for the year ended December
31, 2023. Such increase was primarily attributed to increased revenues, along with increases in rent and office expenditures.
As a percentage of construction revenue, general and administrative expenses for the construction segment were 14.6% and 15.3% for the
years ended December 31, 2024 and 2023, respectively.

 General and administrative expenses for the automotive
supplies segment decreased by $82,879, or 8.7%, to $865,115 for the year ended December 31, 2024 from $947,994 for the year ended December
31, 2023. Such decrease was primarily attributed to decreased office expenditures. As a percentage of automotive supplies revenue, general
and administrative expenses for the automotive supplies segment were 23.1% and 20.8% for the years ended December 31, 2024 and 2023,
respectively.

 General and administrative expenses for the corporate
services segment increased by $1,538,799, or 180.8%, to $2,389,955 for the year ended December 31, 2024 from $851,156 for the year ended
December 31, 2023. Such increase was primarily attributed to management fees from the sale of High Mountain that entitles our manager
to receive a 20% profit allocation and a transaction fee of 2.0% from the sale of High Mountain and purchase of CMD, offset by decreased
software and office expenditures.

 Professional fees. Our total professional
fees were $6,896,438 for the year ended December 31, 2024, as compared to $2,378,190 for the year ended December 31, 2023.

 Professional fees for the construction segment
decreased by $39,282, or 25.5%, to $114,731 for the year ended December 31, 2024 from $154,013 for the year ended December 31, 2023.
Such decrease was primarily attributed to decreased consulting fees. As a percentage of construction revenue, professional fees for the
construction segment were 1.0% and 1.6% for the years ended December 31, 2024 and 2023, respectively.

 Professional fees for the automotive supplies
segment increased by $25,790, or 13.1%, to $222,360 for the year ended December 31, 2024 from $196,570 for the year ended December 31,
2023. Such increase was primarily attributed to increased consulting fees. As a percentage of automotive supplies revenue, professional
fees for the automotive supplies segment were 5.9% and 4.3% for the years ended December 31, 2024 and 2023, respectively.

 Professional fees for our holding company increased
by $4,531,740, or 223.5%, to $6,559,347 for the year ended December 31, 2024 from $2,027,607 for the year ended December 31, 2023. Such
increase was primarily attributed to increased legals fees, consulting fees, investor relations, and other public company related fees.
Additionally, during 2024 we prepaid $2.5 million in non-recurring consulting and investor relations fees using the proceeds from the
public offering of common shares and pre-funded warrants described below.

 Impairment of goodwill and intangible assets.
For the year ended December 31, 2024, we recorded impairments of goodwill and intangible assets of $679,175, as compared to $10,456,087
for the year ended December 31, 2023.

 Total other income (expense). We
had $95,508,010 in total other expense, net, for the year ended December 31, 2024, as compared to other expense, net, of $8,490,576 for
the year ended December 31, 2023. Other expense, net, for the year ended December 31, 2024 consisted of a loss on change in fair value
of warrant liabilities of $77,638,662, amortization of debt discounts of $9,047,721, a loss on extinguishment of debt of $4,709,793, interest
expense of $4,262,224 and other expense of $1,263,983, offset by a gain on change in fair value of derivative liabilities of $1,401,373
and a gain on disposal of property and equipment of $13,000, while other expense, net, for the year ended December 31, 2023 consisted
of interest expense of $4,628,194, amortization of debt discounts of $4,232,231 and a loss on change in fair value of warrant liabilities
of $27,900, offset by a gain on change in fair value of derivative liabilities of $385,138 and other income of $12,611.

 Income tax provision. We
had an income tax benefit of $702,000 and $209,000 for the years ended December 31, 2024 and 2023, respectively.

 Net loss from continuing operations.
As a result of the cumulative effect of the factors described above, our net loss from continuing operations was $106,804,254 for the
year ended December 31, 2024, as compared to $23,988,403 for the year ended December 31, 2023.

 Liquidity and Capital Resources

 As of December 31, 2024, we had cash and cash
equivalents of $2,502,450 and restricted cash of $1,358,968. To date, we have financed our operations primarily through revenue generated
from operations, cash proceeds from financing activities, borrowings, and equity contributions by our shareholders.

 Management plans to address the above as needed
by, securing additional bank lines of credit, and obtaining additional financing through debt or equity transactions. Management has implemented
tight cost controls to conserve cash.

 The ability of our company to continue as a going
concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and to eventually attain
profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if our
company is unable to continue as a going concern. If our company is unable to obtain adequate capital, it could be forced to cease operations.

 We believe additional funds are required to execute
our business plan and our strategy of acquiring additional businesses. The funds required to execute our business plan will depend on
the size, capital structure and purchase price consideration that the seller of a target business deems acceptable in a given transaction.
The amount of funds needed to execute our business plan also depends on what portion of the purchase price of a target business the seller
of that business is willing to take in the form of seller notes or our equity or equity in one of our subsidiaries. We will seek growth
as funds become available from cash flow, borrowings, additional capital raised privately or publicly, or seller retained financing.

 Our primary use of funds will be for future acquisitions,
public company expenses including regular distributions to our shareholders, investments in future acquisitions, payments to our manager
pursuant to the management services agreement, potential payment of profit allocation to our manager and potential put price to our manager
in respect of the allocation shares it owns. The management fee, expenses, potential profit allocation and potential put price are paid
before distributions to shareholders and may be significant and exceed the funds we hold, which may require us to dispose of assets or
incur debt to fund such expenditures. See Item 1 " Business—Our Manager " for more information concerning the management
fee, the profit allocation and put price.

 The amount of management fee paid to our manager
by us is reduced by the aggregate amount of any offsetting management fees, if any, received by our manager from any of our businesses.
As a result, the management fee paid to our manager may fluctuate from quarter to quarter. The amount of management fee paid to our manager
may represent a significant cash obligation. In this respect, the payment of the management fee will reduce the amount of cash available
for distribution to shareholders.

 Our manager, as holder of 100% of our allocation
shares, is entitled to receive a twenty percent (20%) profit allocation as a form of preferred equity distribution, subject to an annual
hurdle rate of eight percent (8%), as follows. Upon the sale of a subsidiary, our manager will be paid a profit allocation if the sum
of (i) the excess of the gain on the sale of such subsidiary over a high-water mark plus (ii) the subsidiary's net income since
its acquisition by us exceeds the 8% hurdle rate. The 8% hurdle rate is the product of (i) a 2% rate per quarter, multiplied by (ii) the
number of quarters such subsidiary was held by us, multiplied by (iii) the subsidiary's average share (determined based on gross
assets, generally) of our consolidated net equity (determined according to GAAP, with certain adjustments). In certain circumstances,
after a subsidiary has been held for at least 5 years, our manager may also trigger a profit allocation with respect to such subsidiary
(determined based solely on the subsidiary's net income since its acquisition). The amount of profit allocation may represent a
significant cash payment and is senior in right to payments of distributions to our shareholders. Therefore, the amount of profit allocation
paid, when paid, will reduce the amount of cash available to us for our operating and investing activities, including future acquisitions.
See Item 1 " Business—Our Manager—Our Manager as an Equity Holder—Manager's Profit Allocation "
for more information on the calculation of the profit allocation.

 Our operating agreement also contains a
supplemental put provision, which gives our manager the right, subject to certain conditions, to cause us to purchase the allocation
shares then owned by our manager upon termination of the management services agreement. The amount of put price under the
supplemental put provision is determined by assuming all of our subsidiaries are sold at that time for their fair market value and
then calculating the amount of profit allocation would be payable in such a case. If the management services agreement is terminated
for any reason other than our manager's resignation, the payment to our manager could be as much as twice the amount of such
hypothetical profit allocation. As is the case with profit allocation, the calculation of the put price is complex and based on many
factors that cannot be predicted with any certainty at this time. See Item 1 " Business—Our Manager—Our Manager
as an Equity Holder—Supplemental Put Provision " for more information on the calculation of the put price. The put
price obligation, if our manager exercises its put right, will represent a significant cash payment and is senior in right to
payments of distributions to our shareholders.

 Therefore, the amount of put price will reduce the amount of cash available to us for
our operating and investing activities, including future acquisitions.

 Summary of Cash Flow

 The following table provides detailed information
about our net cash flow for the period indicated:

 Cash Flow

 2024

 2023

 Net cash used in operating activities from continuing operations

 $
 (14,635,636
)

 $
 (8,023,584
)

 Net cash provided by (used in) investing activities from continuing operations

 891,802

 (27,843
)

 Net cash provided by financing activities from continuing operations

 16,931,807

 7,863,654

 Net change in cash and cash equivalents from continuing operations

 3,187,973

 (187,773
)

 Cash and cash equivalents and restricted cash from continuing operations at
 beginning of year

 861,218

 Cash and cash equivalents and restricted cash from continuing operations at end
 of year

 $
 3,861,418

 $

 Net cash used in operating activities from continuing
operations was $14,635,636 for the year ended December 31, 2024, as compared to $8,023,584 for the year ended December 31, 2023. Significant
factors affecting the increase in net cash used in operating activities from continuing operations were primarily a result of the increased
net loss, decreased contract liabilities and accounts payable, and increased receivables, partially offset by expenses, and decreased
inventories and prepaid expenses.

 Net cash provided by investing activities from
continuing operations was $891,802 for the year ended December 31, 2024, as compared to net cash used in investing activities from continuing
operations of $27,843 for the year ended December 31, 2023. The increase in the net cash provided
by investing activities from continuing operations was primarily a result of the proceeds received from the sale of High Mountain, offset
by the purchase of CMD during 2024.

 Net cash provided by financing activities from
continuing operations was $16,931,807 for the year ended December 31, 2024, as compared to $7,863,654 for the year ended December 31,
2023. The increase in the net cash provided by financing activities from continuing operations
was primarily a result of increased proceeds from public and private offerings, offset by increased debt repayments.

 Public Offering of Common Shares and Pre-Funded
Warrants

 On February 9, 2024, we entered into a securities
purchase agreement with certain purchasers and a placement agency agreement with Spartan Capital Securities, LLC, or Spartan, as placement
agent, pursuant to which we agreed to issue and sell to such purchasers an aggregate of 9,364 common shares and prefunded warrants for
the purchase of 16,280 common shares (all of which were exercised during the year ended December 31, 2024) at an offering price of $195.00
per common share and $193.05 per prefunded warrant, pursuant to our effective registration statement on Form S-1 (File No. 333-276670).
On February 14, 2024, the closing of this offering was completed. At the closing, the purchasers prepaid the exercise price of the prefunded
warrants in full. Therefore, we received total gross proceeds of $5,000,000. Pursuant to the placement agency agreement, Spartan received a
cash transaction fee equal to 8% of the aggregate gross proceeds and reimbursement of certain out-of-pocket expenses. After deducting
these and other offering expenses, we received net proceeds of approximately $4.4 million.

 Public Offering of Units

 On October 28, 2024, we entered into a securities
purchase agreement with certain purchasers and a placement agency agreement with Spartan, as placement agent, relating to our public offering
of units. Pursuant to the securities purchase agreement and the placement agency agreement, we agreed to issue and sell to the purchasers
an aggregate of 587,306 units, at a purchase price of $18.90 per unit, for total gross proceeds of approximately $11.1 million, pursuant
to our registration statement on Form S-1 (File No. 333-282201) under the Securities Act. On October 30, 2024, the closing of the offering
was completed. Pursuant to the placement agency agreement, Spartan received a cash transaction fee equal to 8% of the aggregate gross
proceeds, a non-accountable expense allowance equal to 1% of the aggregate gross proceeds and reimbursement of certain out-of-pocket expenses.
After deducting these expenses, we received net proceeds of approximately $9.9 million.

 The units are comprised of (i) 587,306 common
shares, (ii) series A warrants to purchase 587,306 common shares at an exercise price of $28.50 per share (which was subsequently adjusted
to 8,558,723 shares at an exercise price of $1.50 in accordance with certain adjustment provisions contained in the series A warrants)
and (iii) series B warrants to purchase 587,306 common shares at an exercise price of $37.80 per share (which was subsequently adjusted
to 14,799,979 shares at an exercise price of $1.50 in accordance with certain adjustment provisions contained in the series B warrants).
Please see Exhibit 4.1 to this report for a description of the terms of these warrants.

 Private Placement of Units

 On December 13, 2024, we entered into a securities
purchase agreement with certain purchasers and a placement agreement with Spartan, as placement agent, pursuant to which we agreed to
issue and sell to the purchasers an aggregate of 42,311,118 units, at a purchase price of $0.27 per unit, for total gross proceeds of
approximately $11.42 million. On December 16, 2024, the closing of this private placement was completed. Pursuant to the placement agreement,
Spartan received a cash transaction fee equal to 8% of the aggregate gross proceeds, a non-accountable expense allowance equal to
1% of the aggregate gross proceeds and reimbursement of certain out-of-pocket expenses. After deducting these and other offering
expenses, we received net proceeds of approximately $10.2 million, all of which were used to pay the cash portion of the purchase price
for the acquisition of CMD.

 The units are comprised of (i) 3,437,210 common
shares and pre-funded warrants for the purchase of 38,873,908 common shares, (ii) series A warrants to purchase 42,311,118 common shares
at an exercise price of $0.81 per share and (iii) series B warrants to purchase 42,311,118 common shares at an exercise price of $0.54
per share. Please see Exhibit 4.1 to this report for a description of the terms of these warrants.

 Debt

 The following table shows aggregate figures for
our total debt that is coming due in the short and long term as of December 31, 2024. For a complete description of the terms of our outstanding
debt, please see Notes 14, 15 and 16 to our consolidated financial statements included elsewhere in this report.

 Short-Term

 Long-Term

 Total Debt

 Notes Payable

 Vehicle loans

 $
 44,894

 $
 8,530

 $
 53,424

 CMD seller promissory note

 1,050,000

 -

 1,050,000

 6% Subordinated promissory note

 -

 Purchase and sale of future revenues loan

 1,237,950

 -

 1,237,950

 12% subordinated promissory note for services

 -

 20% OID subordinated promissory notes

 3,217,932

 -

 3,217,932

 25% OID subordinated promissory note

 1,455,600

 -

 1,455,600

 Total notes payable

 8,006,376

 8,530

 8,014,906

 Less: debt discounts

 (220,465
)

 -

 (220,465
)

 Total notes payable, net

 7,785,911

 8,530

 7,794,441

 Related Party Notes Payable

 Related party promissory note

 -

 Convertible Notes Payable

 Secured convertible promissory notes

 -

 Less: debt discounts

 (985,137
)

 -

 (985,137
)

 Total convertible notes payable, net

 -

 Finance Leases

 Financing leases

 182,043

 423,198

 605,241

 Combined total debt

 $
 31,840,995

 $
 431,728

 $
 32,272,723

 Less: combined debt discounts

 (1,205,602
)

 -

 (1,205,602
)

 Combined total debt, net

 $
 30,635,393

 $
 431,728

 $
 31,067,121

 Contractual Obligations

 Our principal commitments consist mostly of obligations
under the loans described above, the operating leases described under Item 2 " Properties " and other contractual commitments
described below.

 We have engaged our manager to manage our day-to-day
operations and affairs. Our relationship with our manager will be governed principally by the following agreements:

 the management services agreement and offsetting management services agreements relating to the management
services our manager will perform for us and the businesses we own and the management fee to be paid to our manager in respect thereof;
and

 our operating agreement setting forth our manager's rights with respect to the allocation shares
it owns, including the right to receive profit allocations from us, and the supplemental put provision relating to our manager's
right to cause us to purchase the allocation shares it owns.

 Off-Balance Sheet Arrangements

 We have no off-balance sheet arrangements that
have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues
or expenses, results of operations, liquidity, capital expenditures or capital resources.

 Critical Accounting Policies

 The following discussion relates to critical accounting
policies for our consolidated company. The preparation of financial statements in conformity with GAAP requires our management to make
assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments
and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements.
These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting
policies are those that are most important to the portrayal of our financial condition and results of operations and require management's
difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently
uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance
to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management's
current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in
the preparation of our financial statements:

 Business Combinations. We account
for business combinations under the acquisition method of accounting in accordance with Accounting Standards Codification, or ASC, Topic
805, " Business Combinations." We allocate the purchase price of an acquisition to the tangible and intangible assets
acquired, liabilities assumed, and any non-controlling interest based on their estimated fair values at the acquisition date. We recognize
the amount by which the purchase price of an acquired entity exceeds the net of the fair values assigned to the assets acquired and liabilities
assumed as goodwill. In determining the fair values of assets acquired and liabilities assumed, we use various recognized valuation methods
including the income, cost and market approaches in accordance with ASC Topic 820, " Fair Value Measurement." We make
assumptions within certain valuation techniques, including discount rates, royalty rates, and the amount and timing of future cash flows.
We initially perform these valuations based upon preliminary estimates and assumptions by management or independent valuation specialists
under our supervision, where appropriate, and make revisions as estimates and assumptions are finalized, which may be up to one year from
the acquisition date. Acquisition-related expenses are recognized separately from business combinations and are expensed as incurred.

 Long-Lived Assets. We review the
carrying value of long-lived assets such as property and equipment, right of use assets, and definite-lived intangible assets for impairment
in accordance with ASC Topic 360, " Property, Plant, and Equipment," whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. These events and circumstances may include significant decreases in the market
price of an asset or asset group, significant changes in the extent or manner in which an asset or asset group is being used by us or
in its physical condition, a significant change in legal factors or in the business climate, a history or forecast of future operating
or cash flow losses, significant disposal activity, a significant decline in revenue or adverse changes in the economic environment. If
such facts indicate a potential impairment, we assess the recoverability of an asset group by determining if the carrying value of the
asset group exceeds the sum of the projected undiscounted cash flows expected to result from the use and eventual disposition of the assets
over the remaining economic life of the primary asset in the asset group. If the recoverability test indicates that the carrying value
of the asset group is not recoverable, we estimate the fair value of the asset group using appropriate valuation methodologies, which
would typically include an estimate of discounted cash flows. Any impairment would be measured as the difference between the asset group's
carrying amount and its estimated fair value.

 Goodwill. In accordance with ASC
Topic 350, " Intangibles — Goodwill and Other," we test goodwill for impairment annually on October 1, or more
frequently when events or circumstances indicate an impairment may have occurred. When assessing the recoverability of goodwill, we may
first assess qualitative factors in determining whether it is more likely than not (that is, a likelihood of more than 50%) that the fair
value of a reporting unit is less than its carrying amount. The qualitative assessment is based on several factors, including the current
operating environment, industry and market conditions, and overall financial performance. If we bypass the qualitative assessment, or
if we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we perform a
quantitative assessment by comparing the estimated fair value of a reporting unit with its carrying amount. We estimate the fair value
of our reporting units based on the present value of estimated future cash flows. Considerable management judgment is necessary to evaluate
the impact of operating and macroeconomic changes, and to estimate the future cash flows used to measure fair value. Our estimates of
future cash flows consider past performance, current and anticipated market conditions, and internal projections and operating plans,
including forecasted growth rates and estimated discount rates. If the fair value of a reporting unit is less than its carrying amount,
a reporting unit is considered impaired, and an impairment charge is recognized for the difference.

 Embedded Derivative Liabilities.
We evaluate the embedded features of our financial instruments, including our preferred shares, convertible notes payable and warrants,
in accordance with ASC Topic 480, " Distinguishing Liabilities from Equity," and ASC Topic 815 " Derivatives
and Hedging." Certain conversion options and redemption features are required to be bifurcated from their host instrument and
accounted for as free-standing derivative financial instruments should certain criteria be met. We apply significant judgment to identify
and evaluate complex terms and conditions for financial instruments to determine whether such instruments are derivatives or contain features
that qualify as embedded derivatives. Embedded derivatives must be separately measured from the host contract if all the requirements
for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of
the host contract and the features of the derivatives. Bifurcated embedded derivatives are recognized at fair value, with changes in fair
value recognized in the consolidated statement of operations each period. We have a sequencing policy, whereby in the event that reclassification
of contracts from equity to assets or liabilities is necessary in accordance with ASC Topic 815 due to our inability to demonstrate we
have sufficient authorized shares as a result of certain securities with a potentially indeterminable number of shares, shares will be
allocated on the basis of the earliest maturity date of potentially dilutive instruments first, with the earliest maturity date of grants
receiving the first allocation of shares. Pursuant to ASC Topic 815, any issuances of securities to our employees and directors, or to
compensate grantees in a share-based payment arrangement, are not subject to the sequencing policy.

 Warrant Liabilities. We account
for warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants
in accordance with the applicable authoritative guidance in ASC Topic 480 and ASC Topic 815-40, " Contracts in Entity's
Own Equity." The assessment, which requires the use of professional judgment, considers whether the warrants are freestanding
financial instruments, meet the definition of a liability, and whether the warrants meet all of the requirements for equity classification,
including whether the warrants are indexed to our own common shares and whether the warrant holders could potentially require net cash
settlement in a circumstance outside of our control, among other conditions for equity classification. For issued or modified warrants
that meet all the criteria for equity classification, the warrants are recorded as a component of additional paid-in capital at the time
of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are recorded at
their initial fair value on the date of issuance, with changes in fair value recognized in the consolidated statement of operations each
period.

 Income Taxes. Income taxes are accounted
for under the asset and liability method in accordance with ASC Topic 740, " Income Taxes." Under the asset and liability
method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes
the enactment date. We assess the likelihood that our deferred tax assets will be recovered from future taxable income and establish a
valuation allowance if, based on the weight of available evidence, we believe it is more likely than not that all or a portion of the
deferred tax assets will not be realized. We recognize the tax benefit of an uncertain tax position only if it is more likely than not
the position will be sustainable upon examination by the taxing authority, including resolution of any related appeals or litigation processes.
This evaluation is based on all available evidence and assumes that the tax authorities have full knowledge of all relevant information
concerning the tax position. The tax benefit recognized is measured as the largest amount that has a greater than 50% likelihood of being
realized upon ultimate settlement. We recognize interest accrued and penalties related to unrecognized tax benefits in income tax expense.

 ITEM 7A.
 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 Not applicable.

 ITEM 8.
 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 The full text of our audited consolidated financial statements begins
on page F-1 of this Annual Report.

 ITEM 9.
 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 None.

 ITEM 9A.
 CONTROLS AND PROCEDURES.

 Disclosure Controls and Procedures

 Under the supervision and with the participation
of management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our
disclosure controls and procedures as of December 31, 2023, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act.
As a result of this evaluation, our principal executive officer and principal financial officer have concluded that, as of December 31,
2024, our disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting
described below. Notwithstanding the identified material weaknesses, management, including our chief executive officer and chief financial
officer, believes the consolidated financial statements included in this report fairly represent, in all material respects, our financial
condition, results of operations and cash flows as of and for the periods presented in accordance with GAAP.

 Disclosure controls and procedures are designed
to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated
and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow
timely decisions regarding required disclosure.

 Management's Report on Internal Control
Over Financial Reporting

 Management is responsible for establishing and
maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Management
has evaluated the effectiveness of our internal control over financial reporting based on criteria established in Internal Control
— Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of
this assessment, management has concluded that, as of December 31, 2024, our internal control over financial reporting was not effective
due to the material weaknesses in internal control over financial reporting described below. As a smaller reporting company, we are not
required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting
firm in this report.

 Our internal control over financial reporting
is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external reporting purposes in accordance with GAAP. Our internal control over financial reporting includes policies and procedures
that:

 pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of our assets;

 provide reasonable assurance that transactions are recorded as necessary to permit preparation of the
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only
in accordance with authorizations of management and our board of directors; and

 provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of our assets that could have a material effect on the financial statements.

 Material Weaknesses in Internal Control over
Financial Reporting

 We identified material weaknesses in our internal
controls over financial reporting. A material weakness is defined as a deficiency, or combination of deficiencies, in internal control
over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial
statements will not be prevented or detected on a timely basis. The material weaknesses identified include:

 we do not have written documentation of our internal control policies
and procedures, including written policies and procedures to ensure the correct application of accounting and financial reporting with
respect to the current requirements of GAAP and SEC disclosure requirements;

 we failed to maintain a sufficient complement of personnel in our
accounting and reporting department to ensure adequate segregation of duties such that appropriate review and monitoring of its financial
records are executed; and

 we did not design and maintain effective internal controls related
to our information technology general controls in the areas of user access and program change-management over certain information technology
systems that support our financial reporting processes.

 Notwithstanding the material weakness, we believe
that our consolidated financial statements contained in this report fairly present our financial position, results of operations and cash
flows for the periods covered by this report in all material respects.

 Our management, with the oversight of our audit
committee, has initiated steps and plans to take additional measures to remediate the underlying causes of the material weakness, which
we currently believe will be primarily through revising precision level of management review controls and gaining additional assurance
regarding our outside service providers' quality control procedures. It is possible that we may determine that additional remediation
steps will be necessary in the future.

 Planned Remediation of Material Weaknesses

 Our management has been actively engaged in developing
and implementing remediation plans to address the material weaknesses described above. These remediation efforts are ongoing and include
or are expected to include:

 increasing personnel resources and technical accounting expertise
within the accounting function (until we have sufficient technical accounting resources, we have engaged external consultants to provide
support and to assist us in our evaluation of more complex applications of GAAP);

 engaging internal control consultants to assist us in performing
a financial reporting risk assessment as well as identifying and designing our system of internal controls necessary to mitigate the risks
identified; and

 preparation of written documentation of our internal control policies
and procedures.

 We continue to enhance corporate oversight over
process-level controls and structures to ensure that there is appropriate assignment of authority, responsibility, and accountability
to enable remediation of our material weaknesses. We believe that our remediation plan will be sufficient to remediate the identified
material weaknesses and strengthen our internal control over financial reporting. As we continue to evaluate, and work to improve, our
internal control over financial reporting, management may determine that additional measures to address control deficiencies or modifications
to the remediation plan are necessary.

 ITEM 9B.
 OTHER INFORMATION.

 On April 17, 2024, we received a notification
letter from NYSE American regarding our noncompliance with the NYSE American continued listing standards set forth in Section 1007 of
the NYSE American Company Guide due to our failure to timely file our Annual Report on Form 10-K for the year ended December 31, 2023.
The notification letter provided us with a six-month cure period to file the Annual Report. The notification letter also required that
we issue a press release disclosing the filing delinquency within five days and we were required to file a Form 8-K disclosing receipt
of the notification letter within four business days of receipt. Due to an administrative oversight, we neglected to issue a press release
and file the Form 8-K. The Annual Report was filed on April 25, 2024. On the same date, we received an additional notification letter
from NYSE American indicating that we had regained compliance with Section 1007 of the NYSE American Company Guide.

 We have no information to disclose that was required
to be in a report on Form 8-K during the fourth quarter of fiscal year 2024 but was not reported.

 None of our directors or executive officers
 adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation
S-K) during the fourth quarter of fiscal year 2024.

 ITEM 9C.
 DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

 Not applicable.

 ITEM 10.
 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

 Directors and Executive Officers

 Set forth below is information regarding our directors
and executive officers as of the date of this report.

 Name

 Age

 Position

 Ellery W. Roberts

 Chairman, Chief Executive Officer and President

 Vernice L. Howard

 Chief Financial Officer

 Eric Vandam

 Chief Operating Officer

 Glyn C. Milburn

 Vice President of Operations

 Robert D. Barry

 Michele A. Chow-Tai

 Clark R. Crosnoe

 Paul A. Froning

 Lawrence X. Taylor

 Ellery W. Roberts. Mr. Roberts
has been our Chairman, Chief Executive Officer and President since our inception in January 2013. Mr. Roberts brings over 20 years of
private equity investing experience to our company. In July 2011, Mr. Roberts formed The 1847 Companies LLC, a company that is no
longer active, where he began investing his own personal capital and capital of high net worth individuals in select transactions. Prior
to forming The 1847 Companies LLC, Mr. Roberts was the co-founder and was co-managing principal of RW Capital Partners LLC from October
2009 to June 2011. Mr. Roberts was a founding member of Parallel Investment Partners, LP (formerly SKM Growth Investors, LP), a Dallas-based
private equity fund focused on re-capitalizations, buyouts and growth capital investments in lower middle market companies throughout
the United States. Previously, Mr. Roberts served as principal with Lazard Group LLC, a senior financial analyst at Colony Capital, Inc.,
and a financial analyst with the Corporate Finance Division of Smith Barney Inc. (now known as Morgan Stanley Smith Barney LLC).
Mr. Roberts has also served as the chairman of the board of Polished.com Inc. since April 2019 and has also been a director of Western
Capital Resources, Inc. since May 2010. Mr. Roberts received his B.A. degree in English from Stanford University. We believe
Mr. Roberts is qualified to serve on our board due to his extensive senior management experience in the industry in which we operate,
having served as founder or executive of various other management, investment and corporate advisory companies.

 Vernice L. Howard. Ms. Howard
has served as our Chief Financial Officer since September 2021. Ms. Howard has over 30 years of experience in the fields of finance and
accounting. Prior to joining us, she worked for Independent Electrical Contractors, Inc. and its affiliates for over eleven years as chief
financial officer, where she was responsible for providing leadership to the organization in the areas of finance, human resources and
general facilities administration, in addition to setting policies, procedures, strategies, practices and overseeing the organization's
assets. The foundation of Ms. Howard's accounting and finance experience began with public accounting for several years gaining
experience in tax and auditing in the entertainment and nonprofit sectors as chief financial officer for The Cronkite Ward Company, a
television production company, and director of finance for Community Action Group (CAG), a nonprofit organization. Before her work with
Independent Electrical Contractors, Inc., Ms. Howard's professional background established an emphasis in forensic accounting. Ms.
Howard is a founding member of Chief, which is a DC based vetted network of C-level or rising VP's supporting and connecting exceptional
women. Ms. Howard holds a Master of Business Administration in Finance from Trinity Washington University Graduate School of Business
Management and Bachelor of Science in Accounting from Duquesne University.

 Eric Vandam. Mr. Vandam
has served as our Chief Operating Officer since August 2024. He previously served as our Chief Operating Officer from January 2022 to
February 2023, after which time he served as an advisor. Mr. Vandam brings 30 years of experience leading operations from a
diverse range of positions. He worked for over 20 years at companies holding a direct coaching relationship with Toyota implementing the
Toyota Production System within the furniture, automotive, and agriculture industries. In August 2018, he began his own consulting practice,
VanDam Consulting, LLC. He also served as Vice President of Operations at Crenlo, LLC, a leading manufacturer within the commercial cab
and enclosure industries, from December 2018 to November 2019. Prior to that, he worked at Heritage Home Group, LLC, a leader in designing,
manufacturing, sourcing and retailing home furnishings, from May 2016 to July 2018, holding the positions of Vice President of Business
Improvement and Vice President of Contract Furniture Division. He also held multiple positions, including, among others, General Manager
of Holland Campus Operations, Executive Account Manager and Director of Operations of Greenhouse Seating Operations, at Herman Miller,
Inc., a leading global company that designs, manufactures and distributes interior furnishings, from 2000 to 2016. Mr. VanDam has a B.S.
degree in Business Management from the University of Phoenix

 Glyn C. Milburn. Mr. Milburn
has served as our Vice President of Operations since February 2023 and previously served on our board of directors from August 2022 to
March 2023. Since February 2016, Mr. Milburn has served as a partner at Jimmy Blackman & Associates, a full-service Government
and Public Affairs firm, where he is responsible for business strategy, client management, communications and campaign management for
a client portfolio comprised of large public safety labor unions, banking/finance companies, and hotel operators across the State of California.
From April 2013 to January 2016, Mr. Milburn served as a special assistant in the City of Los Angeles where he held two positions in the
City of Los Angeles, one in the Office of Los Angeles Mayor Eric Garcetti's Office of Economic Development and another in the Office
of Los Angeles Councilman Dennis Zine. From August 2012 to March 2013, Mr. Milburn co-Founded Provident Investment Advisors LLC,
a special investment vehicle for energy, technology and healthcare ventures, where he served as managing member. Mr. Milburn holds
a B.A. degree in Public Policy from Stanford University.

 Robert D. Barry. Mr. Barry has been
a member of our board of directors since January 2014. He served as the chief accounting officer of our former subsidiary Polished.com
Inc. from July 2021 to March 2024 and previously served as its chief financial officer from January 2019 to July 2021. He also served
as the controller of our former subsidiary Neese, Inc. from July 2017 until our sale of Neese, Inc. in April 2021. From April 2013 until
August 2016, Mr. Barry was chief executive officer and chief financial officer of Pawn Plus Inc. Prior to that, Mr. Barry served as executive
vice president and chief financial officer of Regional Management Corp., a consumer loan company, from March 2007 to January 2013. Prior
to joining Regional Management Corp., Mr. Barry was the managing member of AccessOne Mortgage Company, LLC from 1997 to 2007. Prior to
his time at AccessOne, Mr. Barry was executive vice president and chief financial officer for Regional Acceptance Corporation, a consumer
finance company, and prior to that he was a financial institutions partner at KPMG LLP. Mr. Barry is a Certified Public Accountant licensed
in North Carolina and Georgia. We believe Mr. Barry is qualified to serve on our board of directors due to his years of relevant financial
and business expertise.

 Michele A. Chow-Tai. Ms. Chow-Tai
has been a member of our board of directors since August 2023. Ms. Chow-Tai is an experienced professional in global banking and financial
services with more than 32 years of industry expertise. For nearly seven years, she has been leading business development initiatives,
fundraising, and acquisition strategies at Fairview Capital Partners, a private equity and venture capital firm, where she has been responsible
for delivering a significant increase in the firm's assets under management and has forged strong relationships with major institutional
investors in the US and abroad. Prior to her work in private equity, Ms. Chow-Tai spent over two decades at leading global banks and financial
services organizations, where she led multiple business initiatives, managed risk, and helped clients navigate the complexities of global
markets. Ms. Chow-Tai served as Board Chair for the City University of New York - York College Foundation for 10 years. She is currently
a Board Member of the National Association of Securities Professionals – New York Chapter, Board Member of the NASP-NY Foundation,
and the Greater New Haven Chambers of Commerce. Ms. Chow-Tai also serves on the Advisory Board of LeaderXXchange, a purpose-driven organization
that advises and promotes diversity and sustainability in governance, leadership, and investments. Ms. Chow-Tai holds a B.S. degree from
the City University of New York – York College, holds credentials in business administration and finance and is currently pursuing
a Juris Doctor degree from Mitchell Hamline School of Law. We believe Ms. Chow-Tai is qualified to serve on our board of directors due
to her extensive experience in the global banking and financial services industry.

 Clark R. Crosnoe. Mr. Crosnoe has
been member of our board of directors since August 2022. In 2009, Mr. Crosnoe founded CRC Capital LLC, a registered investment advisor
and manager of the CRC Investment Fund LP, a private investment partnership focused on publicly-traded equity securities. As managing
member of CRC Capital LLC, Mr. Crosnoe is responsible for strategy, oversight and the day-to-day investment decisions of the fund. The
portfolio typically includes investments in the consumer, financial, healthcare, industrial and energy sectors. In 1999, Mr. Crosnoe was
a founding employee of Parallel Investment Partners where he was named partner in 2003. As a partner, he was responsible for sourcing,
evaluating, structuring, executing and monitoring private equity investments, and also dedicated a substantial portion of his time to
marketing activities for the firm. Mr. Crosnoe began his career in investment banking at Wasserstein Perella & Co. and also gained
valuable experience at multi-billion dollar hedge fund HBK Investments. Mr. Crosnoe holds undergraduate degrees from the University of
Texas at Austin and earned an MBA from Harvard Business School in 1996. We believe Mr. Crosnoe is qualified to serve on our board of directors
due to his many years of private and public investment and advisory experience.

 Paul A. Froning. Mr. Froning has
been a member of our board of directors since April 2013. In 2009, Mr. Froning co-founded Focus Healthcare Partners LLC, a Chicago-based
private equity investment, advisory and asset management firm targeting the senior housing and healthcare sectors. Prior to that, Mr.
Froning was a managing director in the private equity department of Fortress Investment Group LLC, a publicly-traded New York-based private
investment firm, from February 2008 to October 2009. Prior to that, Mr. Froning was the chief investment officer and executive vice president
of Brookdale Senior Living Inc., a publicly-traded affiliate of Fortress Investment Group LLC, from 2005 to 2008. Previously, Mr. Froning
held senior investment positions at the private equity investment arms of Lazard Group LLC and Security Capital Group, prior to its acquisition
by GE Capital Corp., in addition to investment banking experience at Salomon Brothers, prior to its acquisition by Travelers Group, and
the securities subsidiary of Principal Financial Group. Mr. Froning has a B.A. degree from the University of Notre Dame. We believe Mr.
Froning is qualified to serve on our board of directors due to his more than twenty years of private equity, investment and advisory experience.

 Lawrence X. Taylor. Mr. Taylor has
been member of our board of directors since August 2022. As a C-level executive, advisor, and board member with more than 30 years
of business experience, he has guided organizations through complex restructurings, acquisitions, corporate development activities and
capital transactions totaling over $20 billion. His experience spans start-ups to private companies to publicly traded companies and includes
diverse companies across multiple industries including casino gaming, hospitality, manufacturing, aviation, real estate, retail, and healthcare.
Since 2004, Mr. Taylor has served as president of Taylor Strategy Group, a business consulting practice he owns and operates. From 2004
to 2013, Mr. Taylor was a partner and managing director with Odyssey Capital Group, a Phoenix based business. Since 2021, he has served
on the board of Item 9 Labs, a public company, where he serves as the lead independent director and on the audit committee (as chair),
compensation committee (as chair) and nominating and governance committee. Since September 2022, he has served on the board of Kabbage,
Inc. Mr. Taylor has served on the board of Barrie House Coffee Roasters since 2018, where he chairs the M&A committee and serves on
the strategic planning committee. Mr. Taylor is a Board Leadership Fellow with the National Association of Corporate Directors and is
Directorship Certified. Additionally, he was recognized as a "Director to Watch 2020" by the Private Company Director Magazine.
Mr. Taylor holds a Bachelor of Science degree in Finance from Louisiana Tech University. We believe that Mr. Taylor is qualified to serve
on our board of directors due to his deep financial expertise, strategy, and governance experience.

 Our directors currently have terms which will
end at our next annual meeting of the shareholders or until their successors are elected and qualify, subject to their prior death, resignation
or removal. Officers serve at the discretion of the board of directors.

 Pursuant to our operating agreement, as holder
of the allocation shares, our manager has the right to appoint one director to our board of directors for every four members constituting
the entire board of directors. Any such director will not be required to stand for election by the shareholders. Ellery W. Roberts is
the designated director of our manager. Otherwise, there is no arrangement or understanding between any director or executive officer
and any other person pursuant to which he was or is to be selected as a director, nominee or officer.

 Family Relationships

 There are no family relationships among any of
our officers or directors.

 Involvement in Certain Legal Proceedings

 To the best of our knowledge, none of our directors
or executive officers has, during the past ten years:

 been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic
violations and other minor offences);

 had any bankruptcy petition filed by or against the business or property of the person, or of any partnership,
corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing
or within two years prior to that time;

 been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any
court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise
limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance
activities, or to be associated with persons engaged in any such activity;

 been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission
or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not
been reversed, suspended, or vacated;

 been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree,
or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants),
relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting
financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement
or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation
prohibiting mail or wire fraud or fraud in connection with any business entity; or

 been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated,
of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity
(as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or
organization that has disciplinary authority over its members or persons associated with a member.

 Corporate Governance

 Governance Structure

 Currently, our Chief Executive Officer is also
our Chairman. Our board believes that, at this time, having a combined Chief Executive Officer and Chairman is the appropriate leadership
structure for our company. In making this determination, the board considered, among other matters, Mr. Robert's experience and
tenure of having founded our company in 2013, and believed that Mr. Roberts is highly qualified to act as both Chairman and Chief Executive
Officer due to his experience, knowledge, and personality. Among the benefits of a combined Chief Executive Officer/Chairman considered
by the board is that such structure promotes clearer leadership and direction for our company and allows for a single, focused chain of
command to execute our strategic initiatives and business plans.

 The Board's Role in Risk Oversight

 The board of directors oversees that the assets
of our company are properly safeguarded, that the appropriate financial and other controls are maintained, and that our business is conducted
wisely and in compliance with applicable laws and regulations and proper governance. Included in these responsibilities is the board's
oversight of the various risks facing our company. In this regard, our board seeks to understand and oversee critical business risks.
Our board does not view risk in isolation. Risks are considered in virtually every business decision and as part of our business strategy.
Our board recognizes that it is neither possible nor prudent to eliminate all risk. Indeed, purposeful and appropriate risk-taking is
essential for our company to be competitive on a global basis and to achieve its objectives.

 While the board oversees risk management, company
management is charged with managing risk. Management communicates routinely with the board and individual directors on the significant
risks identified and how they are being managed. Directors are free to, and indeed often do, communicate directly with senior management.

 Our board administers its risk oversight function
as a whole by making risk oversight a matter of collective consideration; however, much of the work is delegated to committees, which
will meet regularly and report back to the full board. The audit committee oversees risks related to our financial statements, the financial
reporting process, accounting and legal matters, the compensation committee evaluates the risks and rewards associated with our compensation
philosophy and programs, and the nominating and corporate governance committee evaluates risk associated with management decisions and
strategic direction.

 Independent Directors

 NYSE American's rules generally require
that a majority of an issuer's board of directors must consist of independent directors. Our board of directors has determined that
all of our directors, other than Mr. Roberts, qualify as "independent" directors in accordance with the rules and regulations
of NYSE American. In making its independence determinations, the board considered, among other things, relevant transactions between us
and entities associated with the independent directors, as described under Item 13 " Certain Relationships and Related Party Transactions,
and Director Independence," and determined that none have any relationship with our company or other relationships that would
impair the directors' independence.

 Committees of the Board of Directors

 Our board has established an audit committee,
a compensation and nominating and corporate governance committee, each with its own charter, copies of which are available on our website
at www.1847holdings.com. In addition, our board of directors may, from time to time, designate one or more additional committees, which
shall have the duties and powers granted to it by our board of directors.

 Audit Committee

 Michele A. Chow-Tai, Clark R. Crosnoe and Paul
A. Froning, each of whom satisfy the "independence" requirements of Rule 10A-3 under the Exchange Act and NYSE American's
rules, serve on our audit committee, with Mr. Froning serving as the chairman. Our board has determined that Mr. Froning is an "audit
committee financial expert" as defined by applicable SEC rules and has the requisite financial sophistication as defined under the
applicable NYSE American rules and regulations. The audit committee oversees our accounting and financial reporting processes and the
audits of the financial statements of our company.

 The audit committee is responsible for, among
other things: (i) retaining and overseeing our independent accountants; (ii) assisting the board in its oversight of the integrity of
our financial statements, the qualifications, independence and performance of our independent auditors and our compliance with legal and
regulatory requirements; (iii) reviewing and approving the plan and scope of the internal and external audit; (iv) pre-approving any audit
and non-audit services provided by our independent auditors; (v) approving the fees to be paid to our independent auditors; (vi) reviewing
with our chief executive officer and chief financial officer and independent auditors the adequacy and effectiveness of our internal controls;
(vii) reviewing hedging transactions; (viii) reviewing and approving the calculation of profit allocation due to the holders our allocation
shares when due and payable; (ix) reviewing conflicts of interests that may arise between our company and our manager; (x) reviewing and
approving related party transactions; (xi) evaluating enterprise risk issues, including those related to cybersecurity, and (xii) reviewing
and assessing annually the audit committee's performance and the adequacy of its charter.

 Compensation Committee

 Clark R. Crosnoe, Paul A. Froning and Lawrence
X. Taylor, each of whom satisfy the "independence" requirements of Rule 10A-3 under the Exchange Act and NYSE American's
rules, serve on our compensation committee, with Mr. Crosnoe serving as
the chairman. The members of the compensation committee are also "non-employee directors" within the meaning of Section 16
of the Exchange Act. The compensation committee assists the board in reviewing and approving the compensation structure, including all
forms of compensation relating to our directors and executive officers.

 The compensation committee is responsible for,
among other things: (i) reviewing and approving the compensation paid to our manager; (ii) reviewing and approving the remuneration of
our executive officers; (iii) determining the compensation of our independent directors; (iv) making recommendations to the board regarding
equity-based and incentive compensation plans, policies and programs; and (v) reviewing and assessing annually the compensation committee's
performance and the adequacy of its charter.

 Nominating and Corporate Governance Committee

 Michele A. Chow-Tai and Lawrence X. Taylor, each
of whom satisfy the "independence" requirements of Rule 10A-3 under the Exchange Act and NYSE American's rules,
 serve on our nominating and corporate governance committee,
with Mr. Taylor serving as the chairman. The nominating and corporate governance committee assists the board of directors in selecting
individuals qualified to become our directors and in determining the composition of the board and its committees.

 The nominating and corporate governance committee
is responsible for, among other things: (i) recommending the number of directors to comprise our board; (ii) identifying and evaluating
individuals qualified to become members of the board and soliciting recommendations for director nominees from the chairman and chief
executive officer of our company; (iii) recommending to the board the director nominees for each annual stockholders' meeting; (iv)
recommending to the board the candidates for filling vacancies that may occur between annual stockholders' meetings; (v) reviewing
independent director compensation and board processes, self-evaluations and policies; (vi) overseeing compliance with our code of ethics;
and (vii) monitoring developments in the law and practice of corporate governance.

 The nominating and corporate governance committee's
methods for identifying candidates for election to our board of directors (other than those proposed by our shareholders, as discussed
below) will include the solicitation of ideas for possible candidates from a number of sources - members of our board of directors, our
executives, individuals personally known to the members of our board of directors, and other research. The nominating and corporate governance
committee may also, from time-to-time, retain one or more third-party search firms to identify suitable candidates.

 In making director recommendations, the nominating
and corporate governance committee may consider some or all of the following factors: (i) the candidate's judgment, skill, experience
with other organizations of comparable purpose, complexity and size, and subject to similar legal restrictions and oversight; (ii) the
interplay of the candidate's experience with the experience of other board members; (iii) the extent to which the candidate would
be a desirable addition to the board and any committee thereof; (iv) whether or not the person has any relationships that might impair
his or her independence; and (v) the candidate's ability to contribute to the effective management of our company, taking into account
the needs of our company and such factors as the individual's experience, perspective, skills and knowledge of the industry in which
we operate.

 Our operating agreement provides that holders
of common shares seeking to bring business before an annual meeting of shareholders or to nominate candidates for election as directors
at an annual meeting of shareholders must provide notice thereof in writing to our company not less than 120 days and not more than
150 days prior to the anniversary date of the preceding year's annual meeting of shareholders or as otherwise required by requirements
of the Exchange Act. In addition, the holders of common shares furnishing such notice must be a holder of record on both (i) the
date of delivering such notice and (ii) the record date for the determination of shareholders entitled to vote at such meeting. The
operating agreement specifies certain requirements as to the form and content of a shareholder's notice. These provisions may preclude
shareholders from bringing matters before shareholders at an annual meeting or from making nominations for directors at an annual or special
meeting.

 Code of Ethics

 We have adopted a code of ethics that applies
to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal
accounting officer. This code of ethics addresses, among other things, honesty and ethical conduct, conflicts of interest, compliance
with laws, regulations and policies, including disclosure requirements under the federal securities laws, and reporting of violations
of the code.

 We are required to disclose any amendment to,
or waiver from, a provision of our code of ethics applicable to our principal executive officer, principal financial officer, principal
accounting officer, controller, or persons performing similar functions. We intend to use our website as a method of disseminating this
disclosure, as permitted by applicable SEC rules. Any such disclosure will be posted to our website within four (4) business days following
the date of any such amendment to, or waiver from, a provision of our code of ethics.

 Insider Trading Policy

 We have adopted an insider trading policy which
prohibits our directors, officers and employees from engaging in transactions in our common shares while in the possession of material
non-public information; engaging in transactions in the stock of other companies while in possession of material non-public information
that they become aware of in performing their duties; and disclosing material non-public information to unauthorized persons outside our
company.

 Our insider trading policy restricts trading by
directors, officers and certain key employees during blackout periods, which generally begin 15 calendar days before the end of each fiscal
quarter and end two business days after the issuance of our earnings release for the quarter. Additional blackout periods may be imposed
with or without notice, as the circumstances require.

 Our insider trading policy also prohibits our
directors, officers and employees from purchasing financial instruments (such as prepaid variable forward contracts, equity swaps, collars
and exchange funds) designed to hedge or offset any decrease in the market value of our common shares they hold, directly or indirectly.
In addition, directors, officers and employees are expressly prohibited from pledging our common shares to secure personal loans or other
obligations, including by holding their shares in a margin account, unless such arrangement is specifically approved in advance by the
administrator of our insider trading policy, or making short-sale transactions in our common shares.

 Section 16(a) Beneficial Ownership Reporting
Compliance

 Section 16(a) of the Exchange Act requires
our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file with
the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the company.
Officers, directors and greater than 10% shareholders are required by SEC regulations to furnish us with copies of all Section 16(a)
forms they file. We believe, based solely on a review of the copies of such reports furnished to us and representations of these persons,
that all reports were timely filed for the year ended December 31, 2024, except for one Form 4 filing by Mr. Roberts, which was filed
late due to administrative oversight.

 ITEM 11.
 EXECUTIVE COMPENSATION.

 Summary Compensation Table - Years Ended December 31, 2024 and
2023

 The following table sets forth information concerning
all cash and non-cash compensation awarded to, earned by or paid to the named persons for services rendered in all capacities during the
noted periods.

 Name and Principal Position

 Year

 Salary
 ($)

 All Other
 Compensation
 ($)

 Total
 ($)

 Ellery W. Roberts,

 2024

 -

 445,500

 445,500

 Chief Executive Officer (1)

 2023

 -

 549,000

 549,000

 Vernice L. Howard,

 2024

 337,191

 -

 337,191

 Chief Financial Officer

 2023

 300,000

 -

 300,000

 Glyn C. Milburn,

 2024

 203,582

 -

 203,582

 Vice President of Operations (2)

 2023

 194,753

 5,833

 200,586

 (1)

 Ellery W. Roberts, our Chief Executive Officer, is employed by our
manager and is seconded to our company. Our manager, and not our company, pays any compensation to Mr. Roberts. We do not reimburse our
manager for any compensation paid to Mr. Roberts in his capacity as our Chief Executive Officer. We pay our manager a quarterly management
fee, and our manager may use the proceeds from the management fee, in part, to pay compensation to Mr. Roberts. For the year ended December
31, 2024, we expensed management fees from continued operations and discontinued operations of $2,267,000 and $350,000, respectively,
and for the year ended December 31, 2023, we expensed management fees from continued operations and discontinued operations of $633,333
and $691,667, respectively. Mr. Roberts did not receive any compensation as an employee of our manager for the years ended December 31,
2024 and 2023. However, Mr. Roberts, as a holder of limited liability company interests in our manger, received $300,000 and $342,643
for the years ended December 31, 2024 and 2023, respectively, as a result of distributions from our manger to its interest holders, which
is included in "Other Compensation" in the table above.

 (2)
 Mr. Milburn served on our board of directors
 from August 2022 to March 2023 and was appointed as our Vice President of Operations in February
 2023. "Other compensation" above represents director fees paid to Mr. Milburn.

 Employment Agreements

 As noted above, Mr. Roberts is not an employee
of our company.

 On September 7, 2021, we entered into an employment
agreement with Vernice L. Howard, our Chief Financial Officer, setting forth the terms of Ms. Howard's employment. Pursuant to
the terms of the employment agreement, we agreed to pay Ms. Howard an annual base salary of $300,000. She is also eligible for an annual
incentive bonus of up to 50% of base salary based on earnings targets to be determined by our board. Ms. Howard is also eligible to participate
in all employee benefit plans, including health insurance, commensurate with her position. Ms. Howard's employment is at-will and
can be terminated by us at any time or by Ms. Howard upon 90 days' notice. Pursuant to the employment agreement, if we terminate
Ms. Howard's employment without cause, she is entitled to six months of base compensation. The employment agreement contains customary
confidentiality provisions and restrictive covenants prohibiting Ms. Howard from (i) owning or operating a business that competes with
us during the term of her employment and for a period of one year following the termination of her employment or (ii) soliciting our
employees for a period of two years following the termination of her employment.

 On March 1, 2023, we entered into an employment
agreement with Glynn C. Milburn, our Vice President of Operations, setting forth the terms of his employment. Pursuant to the terms of
the employment agreement, we agreed to pay Mr. Milburn an annual base salary of $230,000. He is also eligible for an annual incentive
bonus of up to 50% of base salary based on earnings targets to be determined by our board. Mr. Milburn is also eligible to participate
in all employee benefit plans, including health insurance, commensurate with his position. Mr. Milburn's employment is at-will
and can be terminated by us at any time or by Mr. Milburn upon 30 days' notice. Pursuant to the employment agreement, if we terminate
Mr. Milburn's employment without cause, he is entitled to six months of base compensation. The employment agreement contains customary
confidentiality provisions and restrictive covenants prohibiting Mr. Milburn from (i) owning or operating a business that competes with
us during the term of his employment and for a period of one year following the termination of his employment or (ii) soliciting our
employees for a period of two years following the termination of his employment.

 Retirement Benefits

 We have not maintained, and do not currently
maintain, a defined benefit pension plan, nonqualified deferred compensation plan or other retirement benefits.

 Potential Payments Upon Termination or
Change in Control

 As described under "— Employment
Agreements " above, Ms. Howard and Mr. Milburn are entitled severance in the event that they are terminated without cause.

 Outstanding Equity Awards at Fiscal Year-End

 No executive officer named above had any unexercised
options, stock that has not vested or equity incentive plan awards outstanding as of December 31, 2024.

 Director Compensation

 The table below sets forth the compensation paid
to our non-executive directors during the fiscal year ended December 31, 2024.

 Name

 Fees

Earned or

Paid in Cash
 ($)

 Total
 ($)

 Robert D. Barry

 Michele A. Chow-Tai

 Clark R. Crosnoe

 Paul A. Froning

 Tracy S. Harris (1)

 Lawrence X. Taylor

 (1)
 Ms. Harris resigned from our board of
 directors on December 16, 2024.

 Our independent directors receive an annual fee
of $35,000, payable monthly. We have also agreed to grant our independent directors $35,000 of restricted shares, restricted share units
and/or share options, subject to compensation committee approval. Each independent director may be reimbursed for pre-approved reasonable
business-related expenses incurred in good faith in connection with his or her duties to our company.

 Equity Incentive Plan

 On March 28, 2023, our board of directors adopted
the 1847 Holdings LLC 2023 Equity Incentive Plan, or the Plan, which was approved by our shareholders on May 9, 2023 and became effective
on such date. On April 25, 2024, our board of directors adopted two amendments to the Plan, which were approved by shareholders on July
25, 2024 and became effective on such date. On December 30, 2024, our board of directors adopted an additional amendment to the Plan,
which was approved by shareholders on March 11, 2025 and became effective on such date. The following is a summary of certain significant
features of the Plan. The information which follows is subject to, and qualified in its entirety by reference to, the Plan document itself,
which is filed as an exhibit to this report.

 Purposes: The purpose of the
Plan is to provide a means whereby employees, directors and consultants of our company, its subsidiaries and affiliates develop a sense
of proprietorship and personal involvement in the development and financial success of our company, and to encourage them to devote their
best efforts to the business of our company, thereby advancing the interests of our company and its shareholders. A further purpose of
the Plan is to provide a means through which we may attract able individuals to provide services to or for the benefit of our company
and to provide a means for such individuals to acquire and maintain share ownership in our company, thereby strengthening their concern
for the welfare of our company.

 Types of Awards: Awards that
may be granted include incentive share options, non-qualified share options, share appreciation rights and restricted awards. These awards
offer our officers, employees, consultants and directors the possibility of future value, depending on the long-term price appreciation
of our common shares and the award holder's continuing service with our company.

 Eligible Recipients: Persons
eligible to receive awards under the Plan will be those officers, employees, directors and consultants of our company and its subsidiaries
who are selected by the administrator.

 Administration: The Plan is
administered by our compensation committee. Among other things, the administrator has the authority to select persons who will receive
awards, determine the types of awards and the number of shares to be covered by awards, and to establish the terms, conditions, performance
criteria, restrictions and other provisions of awards. The administrator has authority to establish, amend and rescind rules and regulations
relating to the Plan.

 Shares Available: As of December
31, 2024, the maximum number of common shares that may be delivered to participants under the Plan is 2,565, subject to adjustment for
certain corporate changes affecting the shares, such as share splits. In addition, the number of shares available for issuance under
the Plan will also automatically increase on January 1 of each calendar year during the term of the Plan by an amount equal to five percent
(5%) of the total number of common shares issued and outstanding on December 31 of the immediately preceding calendar year. Shares subject
to an award under the Plan for which the award is canceled, forfeited or expires again become available for grants under the Plan. Shares
subject to an award that is settled in cash will not again be made available for grants under the Plan. Notwithstanding the foregoing,
the maximum aggregate number of shares that may be issued as incentive share options is equal to the maximum number of shares available
for issuance under the Plan without taking into account any automatic increases in the share reserve. On January 1, 2025, the number
of shares increased to 1,272,584 and on March 11, 2025, the number of shares increased to 5,000,000.

 Share Options:

 General. Share options give
the option holder the right to acquire from us a designated number of common shares at a purchase price that is fixed upon the grant
of the option. Share options granted may be either tax-qualified share options (so-called "incentive share options") or non-qualified
share options. Subject to the provisions of the Plan, the administrator has the authority to determine all grants of share options. That
determination will include: (i) the number of shares subject to any option; (ii) the exercise price per share; (iii) the expiration date
of the option; (iv) the manner, time and date of permitted exercise; (v) other restrictions, if any, on the option or the shares underlying
the option; and (vi) any other terms and conditions as the administrator may determine.

 Option Price. The exercise price
for share options will be determined at the time of grant. Normally, the exercise price will not be less than the fair market value on
the date of grant. As a matter of tax law, the exercise price for any incentive share option awarded may not be less than the fair market
value of the shares on the date of grant. However, incentive share option grants to any person owning more than 10% of our voting power
must have an exercise price of not less than 110% of the fair market value on the grant date.

 Exercise of Options. An option
may be exercised only in accordance with the terms and conditions for the option agreement as established by the administrator at the
time of the grant. The option must be exercised by notice to us, accompanied by payment of the exercise price. Payments may be made either:
(i) in cash or its equivalent; (ii) by tendering (either by actual delivery or attestation) previously acquired shares having an aggregate
fair market value at the time of exercise equal to the exercise price; (iii) a cashless exercise (broker-assisted exercise) through a
"same day sale" commitment; (iv) by a combination of (i), (ii), and (iii); or (v) any other method approved or accepted by
the administrator in its sole discretion.

 Expiration or Termination. Options,
if not previously exercised, will expire on the expiration date established by the administrator at the time of grant. In the case of
incentive stock options, such term cannot exceed ten years provided that in the case of holders of more than 10% of our voting power,
such term cannot exceed five years. Options will terminate before their expiration date if the holder's service with our company
or a subsidiary terminates before the expiration date. The option may remain exercisable for specified periods after certain terminations
of employment, including terminations as a result of death, disability or retirement, with the precise period during which the option
may be exercised to be established by the administrator and reflected in the grant evidencing the award.

 Incentive and Non-Qualified Options. As
described elsewhere in this summary, an incentive share option is an option that is intended to qualify under certain provisions of the
Code for more favorable tax treatment than applies to non-qualified share options. Any option that does not qualify as an incentive share
option will be a non-qualified share option. Under the Code, certain restrictions apply to incentive share options. For example, the
exercise price for incentive share options may not be less than the fair market value of the shares on the grant date and the term of
the option may not exceed ten years. In addition, an incentive share option may not be transferred, other than by will or the laws of
descent and distribution, and is exercisable during the holder's lifetime only by the holder. In addition, no incentive share options
may be granted to a holder that is first exercisable in a single year if that option, together with all incentive share options previously
granted to the holder that also first become exercisable in that year, relate to shares having an aggregate fair market value in excess
of $100,000, measured at the grant date.

 Share Appreciation Rights: Share
appreciation rights, or SARs, which may be granted alone or in tandem with options, have an economic value similar to that of options.
When an SAR for a particular number of shares is exercised, the holder receives a payment equal to the difference between the market
price of the shares on the date of exercise and the exercise price of the shares under the SAR. Again, the exercise price for SARs normally
is the market price of the shares on the date the SAR is granted. Under the Plan, holders of SARs may receive this payment - the appreciation
value - either in cash or shares valued at the fair market value on the date of exercise. The form of payment will be determined by us.

 Restricted Awards: Restricted
awards are shares awarded to participants at no cost. Restricted awards can take the form of awards of restricted share, which represent
issued and outstanding shares subject to vesting criteria, or restricted share units, which represent the right to receive shares subject
to satisfaction of the vesting criteria. Restricted share awards are forfeitable and non-transferable until the shares vest. The vesting
date or dates and other conditions for vesting are established when the shares are awarded. These awards will be subject to such conditions,
restrictions and contingencies as the administrator shall determine at the date of grant. Those may include requirements for continuous
service and/or the achievement of specified performance goals.

 Performance Criteria: Under
the Plan, one or more performance criteria will be used by the administrator in establishing performance goals. Any one or more of the
performance criteria may be used on an absolute or relative basis to measure the performance of our company, as the administrator may
deem appropriate, or as compared to the performance of a group of comparable companies, or published or special index that the administrator
deems appropriate.

 Other Material Provisions: Awards
will be evidenced by a written agreement, in such form as may be approved by the administrator. In the event of various changes to the
capitalization of our company, such as share splits, share dividends and similar re-capitalizations, an appropriate adjustment will be
made by the administrator to the number of shares covered by outstanding awards or to the exercise price of such awards. The administrator
is also permitted to include in the written agreement provisions that provide for certain changes in the award in the event of a change
of control of our company, including acceleration of vesting. Except as otherwise determined by the administrator at the date of grant,
awards will not be transferable, other than by will or the laws of descent and distribution. Prior to any award distribution, we are
permitted to deduct or withhold amounts sufficient to satisfy any employee withholding tax requirements. Our board of directors also
has the authority, at any time, to discontinue the granting of awards. The board of directors also has the authority to alter or amend
the Plan or any outstanding award or may terminate the Plan as to further grants, provided that no amendment will, without the approval
of our shareholders, to the extent that such approval is required by law or the rules of an applicable exchange, increase the number
of shares available under the Plan, change the persons eligible for awards under the Plan, extend the time within which awards may be
made, or amend the provisions of the Plan related to amendments. No amendment that would adversely affect any outstanding award made
under the Plan can be made without the consent of the holder of such award.

 ITEM 12.
 SECURITY OWNERSHIP OF CERTAIN
 BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 Security Ownership of Certain Beneficial Owners
and Management

 The following table sets forth certain information
with respect to the beneficial ownership of our common shares as of March 28, 2025 for (i) each of our named executive officers and directors;
(ii) all of our named executive officers and directors as a group; and (iii) each other shareholder known by us to be the beneficial
owner of more than 5% of our outstanding common shares. Unless otherwise indicated, the address of each beneficial owner listed in the
table below is c/o our company, 260 Madison Avenue, 8th Floor, New York, NY 10016.

 Name and Address of Beneficial Owner

 Title of Class

 Amount and

Nature of

Beneficial

Ownership (1)

 Percent of

Class (2)

 Ellery W. Roberts, Chairman and CEO

 16,328

 *

 Vernice L. Howard, Chief Financial Officer

 *

 Eric Vandam, Chief Operating Officer

 -

 -

 Glyn C. Milburn, VP of Operations

 -

 -

 Robert D. Barry, Director

 *

 Michele A. Chow-Tai, Director

 -

 -

 Clark R. Crosnoe, Director

 -

 -

 Paul A. Froning, Director

 *

 Lawrence X. Taylor, Director

 -

 -

 All executive officers and directors (9 persons above)

 16,362

 *

 *
 Less than 1%

 (1)
 Beneficial
 ownership is determined in accordance with SEC rules and generally includes voting or investment
 power with respect to securities. For purposes of this table, a person or group of persons
 is deemed to have "beneficial ownership" of any shares that such person or any
 member of such group has the right to acquire within sixty (60) days. For purposes of computing
 the percentage of outstanding common shares held by each person or group of persons named
 above, any shares that such person or persons has the right to acquire within sixty (60)
 days of March 28, 2025 are
 deemed to be outstanding for such person, but not deemed to be outstanding for the purpose
 of computing the percentage ownership of any other person. The inclusion herein of any shares
 listed as beneficially owned does not constitute an admission of beneficial ownership by
 any person.

 (2)
 Based
 on 26,539,774 common shares issued and outstanding as of March 28, 2025.

 Changes in Control

 We do not currently have any arrangements which
if consummated may result in a change of control of our company.

 Securities Authorized for Issuance Under Equity Compensation Plans

 The following table sets forth certain information
about the securities authorized for issuance under our incentive plans as of December 31, 2024.

 Plan Category

 Number of securities to be issued upon exercise of outstanding options, warrants and rights
 (a)

 Weighted-average exercise price of outstanding options, warrants and rights
 (b)

 Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
 (c)

 Equity compensation plans approved by security holders

 -

 -

 2,565

 Equity compensation plans not approved by security holders

 -

 -

 -

 Total

 -

 -

 2,565

 ITEM 13.
 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
 INDEPENDENCE.

 Transactions with Related Persons

 The following includes a summary of transactions
since the beginning of our 2023 fiscal year, or any currently proposed transaction,
 in which we were or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent
of the average of our total assets at year-end for the last two completed fiscal years, and in which any related person had or will have
a direct or indirect material interest (other than compensation described under Item 11 " Executive Compensation " above).
 We believe the terms obtained or consideration that we paid or received, as
applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid
or received, as applicable, in arm's-length transactions.

 Transactions with Our Manager

 Our Chief Executive Officer, Ellery W. Roberts,
controls our manager. Our relationship with our manager is governed principally by the following two agreements: (1) the management services
agreement and offsetting management services agreements relating to the management services our manager will perform for us and the businesses
we own and the management fee to be paid to our manager in respect thereof; and (2) our operating agreement setting forth our manager's
rights with respect to the allocation shares it owns, including the right to receive payments of profit allocation from us and our manager's
right to cause us to purchase the allocation shares it owns. Our manager has also entered into an offsetting management services agreement
with 1847 Cabinet, 1847 Wolo and 1847 CMD and we expect that our manager will enter into offsetting management services agreements and
transaction services agreements with our future businesses directly. On a consolidated basis, for the year ended December 31, 2024, we
expensed total management fees from continued operations and discontinued operations of $2,267,000 and $350,000, respectively. For the
year ended December 31, 2023, we expensed total management fees from continued operations and discontinued operations of $633,333 and
$691,667, respectively.

 Our manager owns certain intellectual property
relating to the term "1847." Pursuant to the management services agreement, our manager has granted us a non-exclusive, royalty
free right to use the following intellectual property in connection with our business and operations or as may be required to comply
with applicable law: (i) 1847 Holdings LLC; (ii) 1847 Partners LLC; (iii) www.1847holdings.com; and (iv) www.1847partners.com. We are
permitted to sublicense the use of this intellectual property to any of our subsidiaries to use in connection with their business or
as may be required by law. Our company and any businesses that we acquire must cease using the intellectual property described above
entirely in their businesses and operations within 180 days of our termination of the management services agreement. The sublicense provisions
of the management services agreement would require our company and its businesses to change their names to remove any reference to the
term "1847" or any reference to the intellectual property licensed to them by our manager. This also would require us to
create and market a new name and expend funds to protect that name.

 Transactions with Officers of Subsidiary

 On September 1, 2020, Kyle's entered into
an industrial lease agreement with Stephen Mallatt, Jr. and Rita Mallatt, who are officers of Kyle's. The lease is for a term of
five years, with an option for a renewal term of five years, and provides for a base rent of $7,000 per month for the first 12 months,
which will increase to $7,210 for months 13-16 and to $7,426 for months 37-60. In addition, Kyle's is responsible for all taxes,
insurance and certain operating costs during the lease term. The lease agreement contains customary events of default, representations,
warranties and covenants.

 A portion of the purchase price for the acquisition
of Kyle's on September 30, 2020 was paid by the issuance of a vesting promissory note by 1847 Cabinet to Stephen Mallatt, Jr. and
Rita Mallatt in the principal amount of $1,260,000. Payment of the principal and accrued interest on the note was subject to vesting.
On July 26, 2022, we and 1847 Cabinet entered into a conversion agreement with Stephen Mallatt, Jr. and Rita Mallatt, pursuant to which
they agreed to convert $797,221 of the vesting note into 10 common shares at a conversion price of $81,900 per share. The note was subsequently
amended on multiple occasions. Pursuant to the latest amendment, the parties agreed to extend the maturity date of the note to July 30,
2023. As additional consideration for entering into the amendment, 1847 Cabinet agreed to pay an amendment fee of $76,784 on the maturity
date. As of December 31, 2024, the outstanding principal balance is $578,290, with an accrued interest balance of $71,312. This note is
currently in default.

 Director Independence

 Our board of directors has determined that all
of our directors, other than Mr. Roberts, qualify as "independent" directors in accordance with the rules and regulations
of NYSE American.

 ITEM 14.
 PRINCIPAL ACCOUNTING FEES AND
 SERVICES.

 Independent Auditors' Fees

 The following is a summary of the fees billed
to us for professional services rendered for the fiscal years ended December 31, 2024 and 2023.

 Years Ended December 31,

 2024

 2023

 Audit Fees

 $
 364,882

 $
 577,549

 Audit-Related Fees

 308,003

 125,000

 Tax Fees

 -

 -

 All Other Fees

 -

 -

 TOTAL

 $
 672,885

 $
 702,549

 "Audit Fees" consisted of fees billed
for professional services rendered by the principal accountant for the audit of our annual consolidated financial statements and review
of the consolidated financial statements included in our Form 10-K and 10-Q or services that are normally provided by the accountant
in connection with statutory and regulatory filings or engagements.

 "Audit-Related Fees" consisted of
fees billed for assurance and related services by the principal accountant that were reasonably related to the performance of the audit
or review of our financial statements and are not reported under the paragraph captioned "Audit Fees" above.

 "Tax Fees" consisted of fees billed
for professional services rendered by the principal accountant for tax returns preparation.

 "All Other Fees" consisted of fees
billed for products and services provided by the principal accountant, other than the services reported above.

 Pre-Approval Policies and Procedures

 Our audit committee charter provides that the
audit committee must pre-approve all audit and permissible non-audit services to be provided by the independent registered public accounting
firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval would generally
be requested annually, with any pre-approval detailed as to the particular service, which must be classified in one of the four categories
of services listed above. The audit committee may also, on a case-by-case basis, pre-approve particular services that are not contained
in the annual pre-approval request. In connection with this pre-approval policy, the audit committee also considers whether the categories
of pre-approved services are consistent with the rules on accountant independence of the SEC and the Public Company Accounting Oversight
Board. The audit committee has pre-approved all services performed since our policy on pre-approval of audit and non-audit services was
adopted.

 ITEM 15.
 EXHIBITS AND FINANCIAL STATEMENT
 SCHEDULES.

 (a) List of Documents Filed as a Part
of This Report:

 (1) Index to Financial Statements:

 Report of Independent Registered Public Accounting Firm (PCAOB ID 3627)

 Consolidated Balance Sheets as of December 31, 2024 and 2023

 Consolidated Statements of Operations for the Years Ended December 31, 2024 and 2023

 Consolidated Statements of Shareholders' Deficit for the Years Ended December 31, 2024 and 2023

 Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023

 Notes to Consolidated Financial Statements

 (2) Index to Financial Statement Schedules:

 All schedules have been omitted because
the required information is included in the financial statements or the notes thereto, or because it is not required.

 (3) Index to Exhibits:

 See exhibits listed under Part (b)
below.

 (b) Exhibits:

 Exhibit No.

 3.1

 Certificate of Formation of 1847 Holdings LLC (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed on February 7, 2014)

 3.2

 Second Amended and Restated Operating Agreement of 1847 Holdings LLC, dated January 19, 2018 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on January 22, 2018)

 3.3

 Amendment No. 1 to Second Amended and Restated Operating Agreement (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on August 11, 2021)

 3.4

 Amendment No. 2 to Second Amended and Restated Operating Agreement of 1847 Holdings LLC, dated October 16, 2023 (incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K filed on October 16, 2023)

 3.5

 Amendment No. 3 to Second Amended and Restated Operating Agreement of 1847 Holdings LLC, dated December 19, 2023 (incorporated by reference to Exhibit 3.5 to the Registration Statement on Form S-1 filed on January 24, 2024)

 3.6

 Amendment No. 4 to Second Amended and Restated Operating Agreement of 1847 Holdings LLC, dated March 11, 2025 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on March 17, 2025)

 4.1

 Description of Securities of 1847 Holdings LLC (incorporated by reference to Exhibit 4.1 to the Annual Report on Form 10-K filed on March 31, 2025)

 4.2

 Amended and Restated Share Designation of Series A Senior Convertible Preferred Shares (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on April 1, 2021)

 4.3

 Amendment No. 1 to Amended and Restated Share Designation of Series A Senior Convertible Preferred Shares (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on October 5, 2021)

 4.4

 Share Designation of Series C Senior Convertible Preferred Shares (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on August 23, 2024)

 4.5

 Share Designation of Series D Senior Convertible Preferred Shares (incorporated by reference to Exhibit 4.3 to the Quarterly Report on Form 10-Q filed on August 19, 2024)

 4.6

 Share Designation of Series E Preferred Shares (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on December 31, 2024)

 4.7

 Share Designation of Series F Convertible Preferred Shares (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on March 31, 2025)

 4.8

 Form of Pre-Funded Warrant to Purchase Common Shares, dated December 16, 2024 (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on December 18, 2024)

 4.9

 Form of Series A Warrant to Purchase Common Shares, dated December 16, 2024 (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on December 18, 2024)

 4.10

 Form of Series B Warrant to Purchase Common Shares, dated December 16, 2024 (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K filed on December 18, 2024)

 4.11

 Form of Series A Warrant to Purchase Common Shares, dated October 30, 2024 (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on October 31, 2024)

 4.12

 Form of Series B Warrant to Purchase Common Shares, dated October 30, 2024 (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K filed on October 31, 2024)

 4.13

 Form of Common Share Purchase Warrant issued by 1847 Holdings LLC on May 8, 2024 (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on May 14, 2024)

 4.14

 Common Share Purchase Warrant issued by 1847 Holdings LLC to Spartan Capital Securities, LLC on May 8, 2024 (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on May 14, 2024)

 4.15

 Warrant Agency Agreement, dated August 11, 2023, between 1847 Holdings LLC and VStock Transfer, LLC and Form of Warrant (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on August 14, 2023)

 4.16

 Common Share Purchase Warrant issued by 1847 Holdings LLC to Spartan Capital Securities, LLC on August 11, 2023 (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on August 14, 2023)

 4.17

 Common Share Purchase Warrant issued by 1847 Holdings LLC to J.H. Darbie & Co., Inc. on February 22, 2023 (incorporated by reference to Exhibit 4.6 to Amendment No. 1 to Registration Statement on Form S-3 filed on April 28, 2023)

 4.18

 Common Share Purchase Warrant issued by 1847 Holdings LLC to J.H. Darbie & Co., Inc. on February 9, 2023 (incorporated by reference to Exhibit 4.10 to Amendment No. 1 to Registration Statement on Form S-3 filed on April 28, 2023)

 4.19

 Common Share Purchase Warrant issued by 1847 Holdings LLC to J.H. Darbie & Co., Inc. on February 3, 2023 (incorporated by reference to Exhibit 4.13 to Amendment No. 1 to Registration Statement on Form S-3 filed on April 28, 2023)

 4.20

 Warrant Agent Agreement, dated January 3, 2023, between 1847 Holdings LLC and VStock Transfer, LLC and form of Warrant (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on January 9, 2023)

 4.21

 Common Share Purchase Warrant issued to Craft Capital Management LLC on August 5, 2022 (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on August 8, 2022)

 4.22

 Common Share Purchase Warrant issued to R.F. Lafferty & Co. Inc. on August 5, 2022 (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on August 8, 2022)

 4.23

 Warrant for Common Shares issued by 1847 Holdings LLC to J.H. Darbie & Co., Inc. on July 8, 2022 (incorporated by reference to Exhibit 4.18 to the Registration Statement on Form S-3 filed on February 1, 2023)

 4.24

 Warrant for Common Shares issued by 1847 Holdings LLC to Leonite Capital LLC on October 8, 2021 (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on October 13, 2021)

 10.1

 Management Services Agreement, dated April 15, 2013, between 1847 Holdings LLC and 1847 Partners LLC (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-1/A filed on March 14, 2014)

 10.2

 Amendment No. 1 to Management Services Agreement, dated September 15, 2013, between 1847 Holdings LLC and 1847 Partners LLC (incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 filed on February 7, 2014)

 10.3

 Management Services Agreement, dated March 30, 2021, between 1847 Wolo Inc. and 1847 Partners LLC (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed on April 5, 2021)

 10.4

 Amendment No. 1 to Management Services Agreement, dated March 30, 2023, between 1847 Wolo Inc. and 1847 Partners LLC (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K filed on April 5, 2023)

 10.5

 Amended and Restated Management Services Agreement, dated October 8, 2021, between 1847 Cabinet Inc. and 1847 Partners LLC (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K filed on October 13, 2021)

 10.6

 Management Services Agreement, dated December 16, 2024, 1847 Partners LLC and 1847 CMD Inc. (incorporated by reference to Exhibit 10.12 to the Current Report on Form 8-K filed on December 18, 2024)

 10.7

 Form of Cancellation and Exchange Agreement, dated March 25, 2025 (Series A Warrants) (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on March 31, 2025)

 10.8

 Form of Cancellation and Exchange Agreement, dated March 25, 2025 (Common Shares) (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on March 31, 2025)

 10.9

 Form of Securities Purchase Agreement, dated December 13, 2024, among 1847 Holdings LLC and the Purchasers signatory thereto (incorporated by reference to Exhibit 10.14 to the Current Report on Form 8-K filed on December 18, 2024)

 10.10

 Form of Registration Rights Agreement, dated December 13, 2024, among 1847 Holdings LLC and the Purchasers signatory thereto (incorporated by reference to Exhibit 10.15 to the Current Report on Form 8-K filed on December 18, 2024)

 10.11

 Stock and Membership Interest Purchase Agreement, dated November 4, 2024, between 1847 CMD Inc. and Chris Day (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on December 18, 2024)

 10.12

 Amended and Restated Stock and Membership Interest Purchase Agreement, dated December 5, 2024, between 1847 CMD Inc. and Chris Day (incorporated by reference to Exhibit 10. 2 to the Current Report on Form 8-K filed on December 18, 2024)

 10.13

 Amendment No. 1 to Amended and Restated Stock and Membership Interest Purchase Agreement, dated December 13, 2024, between 1847 CMD Inc., Chris Day and The CD Trust, dated October 18, 2021 (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on December 18, 2024)

 10.14

 Amendment No. 2 to Amended and Restated Stock and Membership Interest Purchase Agreement, dated December 16, 2024, between 1847 CMD Inc., Chris Day and The CD Trust, dated October 18, 2021 (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on December 18, 2024)

 10.15

 Promissory Note issued by 1847 CMD Inc. to The CD Trust, dated October 18, 2021 on December 16, 2024 (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed on December 18, 2024)

 10.16

 Security Agreement, dated December 16, 2024, among 1847 CMD Inc., CMD Inc., CMD Finish Carpentry LLC and The CD Trust, dated October 18, 2021 (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K filed on December 18, 2024)

 10.17

 Pledge Agreement, dated December 16, 2024, between 1847 Holdings LLC and The CD Trust, dated October 18, 2021 (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K filed on December 18, 2024)

 10.18

 Pledge Agreement, dated December 16, 2024, between 1847 CMD Inc. and The CD Trust, dated October 18, 2021 (incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K filed on December 18, 2024)

 10.19

 Guaranty, dated December 16, 2024, among 1847 Holdings LLC, CMD Inc., CMD Finish Carpentry LLC and The CD Trust, dated October 18, 2021 (incorporated by reference to Exhibit 10.9 to the Current Report on Form 8-K filed on December 18, 2024)

 10.20

 Promissory Note issued by 1847 Cabinets Inc., High Mountain Door & Trim Inc., Sierra Homes, LLC d/b/a Innovative Cabinets & Design and Kyle's Custom Wood Shop, Inc. to Breadcrumbs Capital LLC on June 28, 2024 (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed on August 19, 2024)

 10.21

 Security Agreement, dated June 28, 2024, among 1847 Cabinets Inc., High Mountain Door & Trim Inc., Sierra Homes, LLC d/b/a Innovative Cabinets & Design, Kyle's Custom Wood Shop, Inc. and Breadcrumbs Capital LLC (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed on August 19, 2024)

 10.22

 Assignment and Assumption of Accounts Receivable Agreement, dated June 28, 2024, among 1847 Cabinets Inc., High Mountain Door & Trim Inc., Sierra Homes, LLC d/b/a Innovative Cabinets & Design, Kyle's Custom Wood Shop, Inc. and Breadcrumbs Capital LLC (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed on August 19, 2024)

 10.23

 Memorandum of Understanding, dated June 28, 2024, between 1847 Holdings LLC and Breadcrumbs Capital LLC (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q filed on August 19, 2024)

 10.24

 Third Amended and Restated 20% OID Subordinated Promissory Note issued by 1847 Holdings LLC to Target Capital 15 LLC on June 24, 2024 (incorporated by reference to Exhibit 10.9 to the Registration Statement on Form S-1 filed on September 18, 2024)

 10.25

 Note Extension Agreement, dated August 20, 2024, between 1847 Holdings LLC and Target Capital 15 LLC (incorporated by reference to Exhibit 10.10 to the Registration Statement on Form S-1 filed on September 18, 2024)

 10.26

 Note Extension Agreement, dated November 15, 2024, between 1847 Holdings LLC and Target Capital 15 LLC (incorporated by reference to Exhibit 10.24 to the Registration Statement on Form S-1 filed on February 14, 2025)

 10.27

 Note Extension Agreement, dated December 16, 2024, between 1847 Holdings LLC and Target Capital 15 LLC (incorporated by reference to Exhibit 10.25 to the Registration Statement on Form S-1 filed on February 14, 2025)

 10.28

 Promissory Note issued by 1847 Holdings LLC to Leonite Capital LLC on May 9, 2024 (incorporated by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q filed on August 19, 2024)

 10.29

 Memorandum of Understanding, dated May 9, 2024, between 1847 Holdings LLC and Leonite Capital LLC (incorporated by reference to Exhibit 10.7 to the Quarterly Report on Form 10-Q filed on August 19, 2024)

 10.30

 Note Purchase Agreement, dated October 8, 2021, among 1847 Holdings LLC, 1847 Asien Inc., 1847 Wolo Inc., 1847 Cabinet Inc., Asien's Appliance, Inc., Wolo Mfg. Corp., Wolo Industrial Horn & Signal, Inc., Kyle's Custom Wood Shop, Inc., High Mountain Door & Trim Inc., Sierra Homes, LLC, SILAC Insurance Company and Leonite Capital, LLC (incorporated by reference to Exhibit 10.11 to the Current Report on Form 8-K filed on October 13, 2021)

 10.31

 Amendment to Note Purchase Agreement, dated January 22, 2024, among 1847 Holdings LLC, 1847 Asien Inc., 1847 Wolo Inc., 1847 Cabinet Inc., Asien's Appliance, Inc., Wolo Mfg. Corp., Wolo Industrial Horn & Signal, Inc., Kyle's Custom Wood Shop, Inc., High Mountain Door & Trim Inc., Sierra Homes, LLC, SILAC Insurance Company and Leonite Capital, LLC (incorporated by reference to Exhibit 10.29 to the Registration Statement on Form S-1 filed on February 14, 2025)

 10.32

 Second Amendment to Note Purchase Agreement, dated February 28, 2024, among 1847 Holdings LLC, 1847 Asien Inc., 1847 Wolo Inc., 1847 Cabinet Inc., Asien's Appliance, Inc., Wolo Mfg. Corp., Wolo Industrial Horn & Signal, Inc., Kyle's Custom Wood Shop, Inc., High Mountain Door & Trim Inc., Sierra Homes, LLC, SILAC Insurance Company and Leonite Capital, LLC (incorporated by reference to Exhibit 10.30 to the Registration Statement on Form S-1 filed on February 14, 2025)

 10.33

 Third Amendment to Note Purchase Agreement and Other Transaction Documents, dated September 30, 2024, among 1847 Holdings LLC, 1847 Wolo Inc., 1847 Cabinet Inc., Kyle's Custom Wood Shop, Inc., High Mountain Door & Trim Inc., Sierra Homes LLC, Wolo Industrial Horn & Signal, Inc., Wolo Mfg. Corp., Leonite Capital LLC, Altimir Partners LP and Beaman Special Opportunities Partners, LP (incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q filed on November 19, 2024)

 10.34

 Secured Convertible Promissory Note issued by 1847 Holdings LLC to SILAC Insurance Company on October 8, 2021 (incorporated by reference to Exhibit 10.12 to the Current Report on Form 8-K filed on October 13, 2021)

 10.35

 Secured Convertible Promissory Note issued by 1847 Holdings LLC to SILAC Insurance Company on October 8, 2021 (incorporated by reference to Exhibit 10.13 to the Current Report on Form 8-K filed on October 13, 2021)

 10.36

 Secured Convertible Promissory Note issued by 1847 Holdings LLC to Leonite Capital LLC on October 8, 2021 (incorporated by reference to Exhibit 10.14 to the Current Report on Form 8-K filed on October 13, 2021)

 10.37

 Guaranty Agreement, dated October 8, 2021, among 1847 Asien Inc., 1847 Wolo Inc., 1847 Cabinet Inc., Asien's Appliance, Inc., Wolo Mfg. Corp., Wolo Industrial Horn & Signal, Inc., Kyle's Custom Wood Shop, Inc., High Mountain Door & Trim Inc., Sierra Homes, LLC and Leonite Capital LLC (incorporated by reference to Exhibit 10.15 to the Current Report on Form 8-K filed on October 13, 2021)

 10.38

 Security Agreement, dated October 8, 2021, among 1847 Holdings LLC, 1847 Asien Inc., 1847 Wolo Inc., 1847 Cabinet Inc., Asien's Appliance, Inc., Wolo Mfg. Corp., Wolo Industrial Horn & Signal, Inc., Kyle's Custom Wood Shop, Inc., High Mountain Door & Trim Inc., Sierra Homes, LLC and Leonite Capital, LLC (incorporated by reference to Exhibit 10.16 to the Current Report on Form 8-K filed on October 13, 2021)

 10.39

 Intellectual Property Security Agreement, dated October 8, 2021, among Wolo Mfg. Corp., Wolo Industrial Horn & Signal, Inc. and Leonite Capital, LLC (incorporated by reference to Exhibit 10.17 to the Current Report on Form 8-K filed on October 13, 2021)

 10.40

 Second Amended and Restated Secured Promissory Note issued by 1847 Holdings LLC to 1847 Cabinet Inc. on October 8, 2021 (incorporated by reference to Exhibit 10.10 to the Current Report on Form 8-K filed on October 13, 2021)

 10.41

 Letter Agreement, dated March 30, 2023, among 1847 Holdings LLC, 1847 Cabinet Inc., Stephen Mallatt, Jr. and Rita Mallatt (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on April 5, 2023)

 10.42

 Industrial Lease, dated September 1, 2020, between Kyle's Custom Wood Shop, Inc. and Stephen Mallatt, Jr. and Rita Mallatt (incorporated by reference to Exhibit 10.47 to the Annual Report on Form 10-K filed on April 15, 2021)

 10.43

 Standard Lease Agreement, dated June 9, 2021, between Emerald Town, LLC and Kyle's Custom Wood Shop, Inc. (incorporated by reference to Exhibit 10.22 to Amendment No. 1 to Registration Statement on Form S-1/A filed on January 31, 2022)

 10.44

 Lease, dated December 7, 2020, between SW Commerce Reno, LLC and Sierra Homes, LLC (incorporated by reference to Exhibit 10.26 to Amendment No. 1 to Registration Statement on Form S-1/A filed on January 31, 2022)

 10.45

 Agreement of Lease, dated October 4, 1978, between PKI Reality LLC and Wolo Mfg. Corp., as amended (incorporated by reference to Exhibit 10.27 to Amendment No. 1 to Registration Statement on Form S-1/A filed on January 31, 2022)

 10.46

 Lease, dated December 16, 2024, between Delancey LLC and 1847 CMD Inc. (incorporated by reference to Exhibit 10.10 to the Current Report on Form 8-K filed on December 18, 2024)

 10.47

 Lease, dated December 16, 2024, between CD Gowan LLC and 1847 CMD Inc. (incorporated by reference to Exhibit 10.11 to the Current Report on Form 8-K filed on December 18, 2024)

 10.48

 Employment Offer Letter, dated September 7, 2021, between Vernice L. Howard and 1847 Holdings LLC (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on September 10, 2021)

 10.49

 Letter Agreement Regarding the Assignment, Assumption and Amendment of Employment Agreement, dated March 23, 2022, among 1847 Holdings LLC, 1847 HQ Inc. and Vernice L. Howard (incorporated by reference to Exhibit 10.32 to the Annual Report on Form 10-K filed on March 31, 2022)

 10.50

 Employment Offer Letter, March 1, 2023, between Glyn C. Milburn and 1847 HQ Inc. (incorporated by reference to Exhibit 10.59 to the Registration Statement on Form S-1 filed on January 24, 2024)

 10.51

 Employment Offer Letter, July 29, 2024, between Eric Vandam and 1847 HQ Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on August 22, 2024)

 10.52

 Form of Independent Director Agreement between 1847 Holdings LLC and each independent director (incorporated by reference to Exhibit 10.31 to Amendment No. 1 to Registration Statement on Form S-1/A filed on January 31, 2022)

 10.53

 Form of Indemnification Agreement between 1847 Holdings LLC and each independent director (incorporated by reference to Exhibit 10.32 to Amendment No. 1 to Registration Statement on Form S-1/A filed on January 31, 2022)

 10.54

 1847 Holdings LLC 2023 Equity Incentive Plan (incorporated by reference to Exhibit 10.61 to the Registration Statement on Form S-1 filed on May 18, 2023)

 10.55

 Amendment No. 1 to 1847 Holdings LLC 2023 Equity Incentive Plan (incorporated by reference to Exhibit 10.48 to the Registration Statement on Form S-1 filed on September 18, 2024)

 10.56

 Amendment No. 2 to 1847 Holdings LLC 2023 Equity Incentive Plan (incorporated by reference to Exhibit 10.49 to the Registration Statement on Form S-1 filed on September 18, 2024)

 10.57

 Amendment No. 3 to 1847 Holdings LLC 2023 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on March 17, 2025)

 10.58

 Form of Share Option Agreement (incorporated by reference to Exhibit 10.62 to the Registration Statement on Form S-1 filed on May 18, 2023)

 10.58

 Form of Restricted Share Award Agreement (incorporated by reference to Exhibit 10.63 to the Registration Statement on Form S-1 filed on May 18, 2023)

 10.60

 Form of Restricted Share Unit Award Agreement (incorporated by reference to Exhibit 10.64 to the Registration Statement on Form S-1 filed on May 18, 2023)

 14.1

 Code of Business Ethics and Conduct (incorporated by reference to Exhibit 14.1 to the Annual Report on Form 10-K filed on April 11, 2023)

 19.1

 Insider Trading Policy (incorporated by reference to Exhibit 19.1 to the Annual Report on Form 10-K filed on April 11, 2023)

 21.1

 List of Subsidiaries (incorporated by reference to Exhibit 21.1 to the Registration Statement on Form S-1 filed on February 14, 2025)

 23.1

 Consent of Sadler, Gibb & Associates, LLC (incorporated by reference to Exhibit 23.1 to the Annual Report on Form 10-K filed on March 31, 2025)

 31.1*

 Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 31.2*

 Certifications of Principal Financial and Accounting Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 32.1**

 Certifications of Principal Executive Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 32.2**

 Certifications of Principal Financial and Accounting Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 97.1

 Clawback Policy (incorporated by reference to Exhibit 97.1 to the Annual Report on Form 10-K filed on April 25, 2024)

 *
 Filed herewith

 **
 Furnished herewith

 Executive compensation plan or arrangement

 ITEM 16.
 FORM 10-K SUMMARY.

 None.

 FINANCIAL STATEMENTS

 Page

 Report of Independent Registered Public Accounting Firm (PCAOB ID 3627)

 Consolidated Balance Sheets as of December 31, 2024 and 2023

 Consolidated Statements of Operations for the Years Ended December 31, 2024 and 2023

 Consolidated Statements of Shareholders' Deficit for the Years Ended December 31, 2024 and 2023

 Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023

 Notes to Consolidated Financial Statements

 F- 1

 REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

 To the Board of Directors and Shareholders of 1847 Holdings LLC:

 Opinion on the Financial Statements

 We have audited the accompanying consolidated
balance sheets of 1847 Holdings LLC ("the Company") as of December 31, 2024, and 2023, the related consolidated statements
of operations, shareholders' deficit, and cash flows for each of the years in the two-year period ended December 31, 2024, and the
related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements referred
to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and 2023, and the results
of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting
principles generally accepted in the United States of America.

 Explanatory Paragraph Regarding Going Concern

 The accompanying financial statements have been
prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered
recurring losses and negative cash flows from operations, and has a working capital deficit, which raises substantial doubt about its
ability to continue as a going concern. Management's plans regarding these matters are also described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this uncertainty.

 Basis for Opinion

 These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 Critical Audit Matters

 The critical audit matters communicated below
are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to
the audit committee and that (1) related to accounts or disclosures that are material to the financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating the critical matters below, providing separate opinions
on the critical audit matters or on the accounts or disclosures to which they relate.

 Valuation of Warrant

 Critical Audit Matter Description

 As described in Note 13 and 18 to the consolidated
financial statements, the Company issued certain warrants that are classified as liabilities and are required to be measured at fair value
at each reporting period. The valuation of these warrants involves significant judgment and estimation, particularly in determining the
appropriate valuation model and the inputs used in the model, such as volatility,
risk-free interest rate, expected future equity raises, expected future share combinations, and expected term.

 F- 2

 We identified the valuation of these warrants
as a critical audit matter due to the significant estimates and assumptions management made in determining the fair value of these warrants.
This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness
of such estimates and assumptions. In addition, the audit effort involved the use of professionals with specialized skills and knowledge.

 How the Critical Audit Matter Was Addressed in the Audit

 Our audit procedures related to the following:

 Testing the appropriateness of the valuation model used by the Company.

 Evaluating the reasonableness of the significant
assumptions used in the valuation model, including volatility, risk-free interest rate, expected future equity raises, expected future
share combinations, and expected term, considering (i) the current and past performance of the entity; (ii) the consistency with external
market and industry data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

 Evaluating the appropriateness of the underlying data used in the valuation
models and significant valuation assumption inputs.

 Additionally, the Firm utilized professionals
with specialized skills and knowledge to assist in the performance of these procedures.

 Business Combination

 Critical Audit Matter Description

completed a business acquisition. On December 16, 2024, the Company acquired CMD for an aggregate purchase price of $18.8 million. The
Company accounted for this acquisition as a business combination. Accordingly, the purchase price was allocated to the assets acquired
and liabilities assumed at fair value as of the transaction date. The Company utilized a third-party valuation specialist to assist in
determining the fair value of the consideration granted and intangible assets acquired. We identified the estimation of the fair value
of the consideration granted, assets acquired, and liabilities assumed in this acquisition as a critical audit matter.

 We identified the valuation of the consideration
given, assets acquired, and liabilities assumed as a critical audit matter because of the significant estimates and assumptions management
made to determine the fair value of certain of these elements. This required a high degree of auditor judgment and an increased extent
of effort when performing audit procedures to evaluate the reasonableness of valuation methodologies applied and the assumptions used,
such as forecasted sales growth rates, cash flows, attrition rates, market-based royalty rates, and estimated discount rates. In addition,
the audit effort involved the use of professionals with specialized skills and knowledge.

 How the Critical Audit Matter Was Addressed in the Audit

 Our audit procedures related to the following:

 Evaluating management's and the valuation specialist's identification
of assets acquired and liabilities assumed.

 Obtaining management's purchase price allocation detailing fair values
assigned to acquired tangible and intangible assets.

 Obtaining the valuation report prepared by a
valuation specialist engaged by management to assist in the purchase price allocation, including determination of fair values assigned
to acquired intangible assets, and examining the valuation methods used and the qualifications of the specialist.

 Examining the completeness and accuracy of the underlying data supporting
the significant assumptions and estimates used in the valuation report, including historical and projected financial information.

 Evaluating the accuracy and completeness of the financial statement presentation
and disclosure of the acquisition.

 Additionally, the audit effort involved the use of professionals with
specialized skills and knowledge to assist in evaluating the valuation methodologies employed and the reasonableness of the significant
assumptions used.

 /s/ Sadler, Gibb & Associates, LLC

 We have served as the Company's auditor since 2017.

 Draper, UT

 March 31, 2025

 F- 3

 CONSOLIDATED BALANCE SHEETS

 December
 31,
 2024

 December
 31,
 2023

 ASSETS

 Assets

 Cash
 and cash equivalents

 $
 2,502,450

 $

 Restricted
 cash

 1,358,968

 -

 Accounts
 receivable, net

 5,833,370

 1,697,635

 Contract
 assets

 1,892,532

 80,398

 Inventories,
 net

 474,653

 1,395,026

 Prepaid
 expenses and other current assets

 568,520

 771,364

 assets of discontinued operations

 -

 14,096,764

 Total
 Current Assets

 12,630,493

 18,714,632

 Property
 and equipment, net

 1,116,006

 1,062,327

 Operating
 lease right-of-use assets

 2,017,482

 907,748

 Long-term
 deposits

 49,535

 49,535

 Intangible
 assets, net

 12,524,346

 2,205,323

 Non-current
 assets of discontinued operations

 -

 15,749,457

 TOTAL
 ASSETS

 $
 33,647,738

 $
 39,368,197

 LIABILITIES
 AND SHAREHOLDERS' DEFICIT

 Liabilities

 Accounts
 payable and accrued expenses

 $
 6,159,950

 $
 3,971,797

 Contract
 liabilities

 1,199,587

 2,288,868

 Due
 to related parties

 -

 193,762

 portion of operating lease liabilities

 598,534

 435,280

 portion of finance lease liabilities

 182,043

 172,152

 portion of notes payable, net

 7,785,911

 2,481,783

 portion of convertible notes payable, net

 2,418,275

 Related
 party note payable

 Derivative
 liabilities

 185,000

 1,389,203

 Warrant
 liabilities

 85,779,788

 -

 liabilities of discontinued operations

 -

 14,209,813

 Total
 Current Liabilities

 124,558,252

 28,139,223

 Operating
 lease liabilities, net of current portion

 1,473,795

 523,768

 Finance
 lease liabilities, net of current portion

 423,198

 605,242

 Notes
 payable, net of current portion

 8,530

 24,245

 notes payable, net of current portion

 -

 23,052,078

 Deferred
 tax liabilities, net

 3,650,000

 409,000

 Non-current
 liabilities of discontinued operations

 -

 6,655,330

 TOTAL
 LIABILITIES

 130,113,775

 59,408,886

 Shareholders'
 Deficit

 Series A senior convertible preferred shares, no par value, 4,450,460 shares designated; 50,592 and 226,667 shares issued and outstanding as of December 31, 2024 and 2023, respectively

 39,877

 190,377

 Series B senior convertible preferred shares, no par value, 583,334 shares designated; 0 and 91,567 shares issued and outstanding as of December 31, 2024 and 2023, respectively

 -

 240,499

 Series C senior convertible preferred shares, no par value, 83,603 shares designated; 83,603 and 0 shares issued and outstanding as of December 31, 2024 and 2023, respectively

 403,470

 -

 Series D senior convertible preferred shares, no par value, 7,292,036 shares designated; 6,293,022 and 0 shares issued and outstanding as of December 31, 2024 and 2023, respectively

 -

 Allocation shares, 1,000 shares authorized; 1,000 shares issued and outstanding as of December 31, 2024 and 2023

 1,000

 1,000

 Common shares, $ 0.001 par value, 500,000,000 shares authorized; 25,400,386 and 142,278 shares issued and outstanding as of December 31, 2024 and 2023, respectively

 25,400

 Distribution
 receivable

 -

 ( 2,000,000
)

 Additional
 paid-in capital

 79,403,793

 57,676,965

 Accumulated
 deficit

 ( 175,096,154
)

 ( 74,835,392
)

 TOTAL
 1847 HOLDINGS SHAREHOLDERS' DEFICIT

 ( 94,622,514
)

 ( 18,726,409
)

 NON-CONTROLLING
 INTERESTS

 ( 1,843,523
)

 ( 1,314,280
)

 TOTAL
 SHAREHOLDERS' DEFICIT

 ( 96,466,037
)

 ( 20,040,689
)

 TOTAL
 LIABILITIES AND SHAREHOLDERS' DEFICIT

 $
 33,647,738

 $
 39,368,197

 The accompanying notes are an integral part
of these consolidated financial statements

 F- 4

 CONSOLIDATED STATEMENTS OF OPERATIONS

 2024

 2023

 $
 15,710,330

 $
 14,190,135

 Operating Expenses

 7,937,588

 7,637,496

 6,538,872

 4,990,561

 655,658

 1,162,295

 5,000,843

 3,272,333

 6,896,438

 2,378,190

 10,456,087

 Total Operating Expenses

 27,708,574

 29,896,962

 LOSS FROM OPERATIONS

 ( 11,998,244
)

 ( 15,706,827
)

 Other Income (Expense)

 Other income (expense)

 ( 1,263,983
)

 12,611

 Gain on disposal of property and equipment

 13,000

 -

 ( 4,262,224
)

 ( 4,628,194
)

 ( 9,047,721
)

 ( 4,232,231
)

 Loss on extinguishment of debt

 ( 4,709,793
)

 -

 Loss on change in fair value of warrant liabilities

 ( 77,638,662
)

 ( 27,900
)

 Gain on change in fair value of derivative liabilities

 1,401,373

 385,138

 Total Other Expense

 ( 95,508,010
)

 ( 8,490,576
)

 NET LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

 ( 107,506,254
)

 ( 24,197,403
)

 702,000

 209,000

 NET LOSS FROM CONTINUING OPERATIONS

 $
 ( 106,804,254
)

 $
 ( 23,988,403
)

 Net loss from discontinued operations

 ( 3,290,019
)

 ( 7,619,524
)

 Gain on disposition of subsidiaries

 9,566,864

 -

 NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS

 6,276,845

 ( 7,619,524
)

 NET LOSS

 $
 ( 100,527,409
)

 $
 ( 31,607,927
)

 NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS FROM CONTINUING OPERATIONS

 252,911

 1,286,593

 NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS FROM DISCONTINUED OPERATIONS

 276,332

 316,186

 NET LOSS ATTRIBUTABLE TO 1847 HOLDINGS

 $
 ( 99,998,166
)

 $
 ( 30,005,148
)

 NET LOSS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO 1847 HOLDINGS

 ( 106,551,343
)

 ( 22,701,810
)

 NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO 1847 HOLDINGS

 6,553,177

 ( 7,303,338
)

 NET LOSS ATTRIBUTABLE TO 1847 HOLDINGS

 $
 ( 99,998,166
)

 $
 ( 30,005,148
)

 PREFERRED SHARE DIVIDENDS

 ( 261,596
)

 ( 512,967
)

 DEEMED DIVIDENDS

 ( 1,000
)

 ( 2,398,000
)

 NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

 $
 ( 100,260,762
)

 $
 ( 32,916,115
)

 LOSS PER COMMON SHARE FROM CONTINUING OPERATIONS – BASIC AND DILUTED

 $
 ( 40.15
)

 $
 ( 183.74
)

 EARNINGS (LOSS) PER COMMON SHARE FROM DISCONTINUED OPERATIONS – BASIC AND DILUTED

 2.46

 ( 52.39
)

 EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS – BASIC AND DILUTED

 $
 ( 37.69
)

 $
 ( 236.13
)

 WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING – BASIC AND DILUTED

 2,660,302

 139,398

 The accompanying notes are an integral part
of these consolidated financial statements

 F- 5

 CONSOLIDATED STATEMENTS OF SHAREHOLDERS'
DEFICIT

 Series
 A Senior
 Preferred Shares

 Series
 B Senior
 Preferred Shares

 Series
 C Senior
 Preferred Shares

 Series
 D Senior
 Preferred Shares

 Allocation

 Common

 Distribution

 Additional

 Paid-In

 Accumulated

 Non-

 Controlling

 Total

 Shareholders'
 Equity

 Receivable

 Capital

 Deficit

 Interests

 (Deficit)

 Balance at December 31, 2022

 1,593,940

 $
 1,338,746

 464,899

 $
 1,214,181

 -

 $
 -

 -

 $
 -

 $
 1,000

 137,815

 $

 $
 ( 2,000,000
)

 $
 43,966,547

 $
 ( 41,919,277
)

 $
 288,499

 $
 2,889,834

 upon settlement of accrued series A preferred shares dividends

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 434,629

 -

 -

 434,629

 upon settlement of accrued series B preferred shares dividends

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 75,722

 -

 -

 75,722

 Issuance of warrants in connection
 with a private debt offering

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 633,552

 -

 -

 633,552

 and warrants in connection with a public offering

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 2,352,679

 -

 -

 2,352,680

 and warrants in connection with a private debt offering

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 1,360,362

 -

 -

 1,360,362

 Fair value of warrant liabilities
 recognized upon issuance of warrants

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 ( 1,156,300
)

 -

 -

 ( 1,156,300
)

 Extinguishment of warrant
 liabilities upon exercise of warrants

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 1,184,200

 -

 -

 1,184,200

 Issuance of common shares upon cashless exercise
 of warrants

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Issuance of common shares upon exercise of
 warrants

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 5,064

 -

 -

 5,064

 upon conversion of convertible notes payable

 -

 -

 -

 -

 -

 -

 -

 -

 -

 2,110

 -

 4,300,460

 -

 -

 4,300,462

 upon conversion of series A preferred shares

 ( 1,367,273
)

 ( 1,148,369
)

 -

 -

 -

 -

 -

 -

 -

 -

 1,148,368

 -

 -

 -

 upon conversion of series B preferred shares

 -

 -

 ( 373,332
)

 ( 973,682
)

 -

 -

 -

 -

 -

 -

 -

 973,682

 -

 -

 -

 A convertible preferred shares

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 ( 347,157
)

 -

 ( 347,157
)

 B convertible preferred shares

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 ( 165,810
)

 -

 ( 165,810
)

 Deemed dividend from issuance
 of warrants to common shareholders

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 618,000

 ( 618,000
)

 -

 -

 Deemed dividend from down
 round provision in warrants

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 1,780,000

 ( 1,780,000
)

 -

 -

 Net
 loss

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 ( 30,005,148
)

 ( 1,602,779
)

 ( 31,607,927
)

 Balance at December
 31, 2023

 226,667

 $
 190,377

 91,567

 $
 240,499

 -

 $
 -

 -

 $
 -

 $
 1,000

 142,278

 $

 $
 ( 2,000,000
)

 $
 57,676,965

 $
 ( 74,835,392
)

 $
 ( 1,314,280
)

 $
 ( 20,040,689
)

 Issuance of series A preferred
 shares upon settlement of accrued series A preferred shares dividends

 5,137

 1,700

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 1,700

 Issuance of series C preferred
 shares upon settlement of notes payable

 -

 -

 -

 -

 83,603

 403,470

 -

 -

 -

 -

 -

 -

 -

 -

 -

 403,470

 Issuance of series D preferred
 shares in connection with a private debt offering

 -

 -

 -

 -

 -

 -

 6,293,022

 -

 -

 -

 -

 -

 -

 -

 upon settlement of accrued series A preferred shares dividends

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 130,967

 -

 -

 130,968

 upon settlement of accrued series B preferred shares dividends

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 13,299

 -

 -

 13,299

 Issuance of warrants in connection
 with a private debt offering

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 7,573

 -

 -

 7,573

 and warrants in connection with a public offering

 -

 -

 -

 -

 -

 -

 -

 -

 -

 596,665

 -

 14,210,389

 -

 -

 14,210,986

 and warrants in connection with a private debt offering

 -

 -

 -

 -

 -

 -

 -

 -

 -

 3,437,210

 3,437

 -

 10,242,403

 -

 -

 10,245,840

 Fair value of warrant liabilities
 recognized upon issuance of warrants

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 ( 24,456,826
)

 -

 -

 ( 24,456,826
)

 Extinguishment
 of warrant liabilities upon exercise of warrants

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 16,526,400

 -

 -

 16,526,400

 Issuance of common shares upon cashless exercise
 of warrants

 -

 -

 -

 -

 -

 -

 -

 -

 -

 16,495,374

 16,495

 -

 ( 16,495
)

 -

 -

 -

 upon conversion of convertible notes payable

 -

 -

 -

 -

 -

 -

 -

 -

 -

 4,712,822

 4,713

 -

 4,136,714

 -

 -

 4,141,427

 upon partial extinguishment of notes payable

 -

 -

 -

 -

 -

 -

 -

 -

 -

 11,401

 -

 538,709

 -

 -

 538,720

 upon conversion of series A preferred shares

 ( 181,212
)

 ( 152,200
)

 -

 -

 -

 -

 -

 -

 -

 2,437

 -

 152,198

 -

 -

 -

 upon conversion of series B preferred shares

 -

 -

 ( 91,567
)

 ( 240,499
)

 -

 -

 -

 -

 -

 1,523

 -

 240,497

 -

 -

 -

 Settlement of 1847 Manager
 accrued expenses and transaction fees

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 2,000,000

 -

 -

 -

 2,000,000

 A convertible preferred shares

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 ( 144,435
)

 -

 ( 144,435
)

 B convertible preferred shares

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 ( 2,509
)

 -

 ( 2,509
)

 C convertible preferred shares

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 ( 18,003
)

 -

 ( 18,003
)

 D convertible preferred shares

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 ( 96,649
)

 -

 ( 96,649
)

 Deemed dividend from down
 round provision in warrants

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 1,000

 ( 1,000
)

 -

 -

 Net
 loss

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 ( 99,998,166
)

 ( 529,243
)

 ( 100,527,409
)

 Balance at December
 31, 2024

 50,592

 $
 39,877

 -

 $
 -

 83,603

 $
 403,470

 6,293,022

 $

 $
 1,000

 25,400,386

 $
 25,400

 $
 -

 $
 79,403,793

 $
 ( 175,096,154
)

 $
 ( 1,843,523
)

 $
 ( 96,466,037
)

 The accompanying notes are an integral part
of these consolidated financial statements

 F- 6

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 2024

 2023

 CASH FLOWS FROM OPERATING ACTIVITIES

 Net loss

 $
 ( 100,527,409
)

 $
 ( 31,607,927
)

 Net loss from discontinued operations

 3,290,019

 7,619,524

 Gain on disposition of subsidiaries

 ( 9,566,864
)

 -

 Adjustments to reconcile net loss to net cash used in operating activities:

 Gain on disposal of property and equipment

 ( 13,000
)

 -

 Loss on extinguishment of debt

 4,709,793

 -

 Gain on change in fair value of warrant liabilities

 77,638,662

 27,900

 Loss on change in fair value of derivative liabilities

 ( 1,401,373
)

 ( 385,138
)

 Deferred taxes

 ( 73,000
)

 156,000

 Inventory reserve

 123,374

 108,632

 10,456,087

 655,658

 1,162,295

 9,047,721

 4,232,231

 Amortization of right-of-use assets

 437,551

 146,912

 Changes in operating assets and liabilities:

 416,958

 413,725

 Contract assets

 51,173

 9,176

 796,999

 ( 287,399
)

 202,844

 ( 498,363
)

 Other assets

 -

 3,262

 1,520,117

 154,855

 Contract liabilities

 ( 2,190,030
)

 434,335

 Customer deposits

 -

 ( 916,165
)

 Operating lease liabilities

 ( 434,004
)

 746,474

 Net cash used in operating activities from continuing operations

 ( 14,635,636
)

 ( 8,023,584
)

 Net cash provided by operating activities from discontinued operations

 2,021,604

 483,291

 Net cash used in operating activities

 ( 12,614,032
)

 ( 7,540,293
)

 CASH FLOWS FROM INVESTING ACTIVITIES

 Cash paid in the acquisition of CMD, net of cash acquired

 ( 16,280,816
)

 -

 Proceeds from the sale of High Mountain

 15,801,868

 -

 Escrow receivable from the sale of High Mountain

 1,358,968

 -

 Purchases of property and equipment

 ( 1,218
)

 ( 27,843
)

 Proceeds from the disposal of property and equipment

 13,000

 -

 Net cash provided by (used in) investing activities from continuing operations

 891,802

 ( 27,843
)

 Net cash used in investing activities from discontinued operations

 -

 ( 3,866,065
)

 Net cash provided by (used in) investing activities

 891,802

 ( 3,893,908
)

 CASH FLOWS FROM FINANCING ACTIVITIES

 Net proceeds from notes payable

 4,954,300

 2,275,500

 Net proceeds from issuance of common shares and warrants in connection with public offerings

 24,456,826

 2,352,680

 Net proceeds from issuance of common shares and warrants in connection with a private debt offering

 -

 5,767,518

 Proceeds from exercise of warrants

 -

 5,064

 Repayments of notes payable and finance lease liabilities

 ( 10,708,138
)

 ( 1,715,492
)

 Repayments of convertible notes payable

 ( 1,771,181
)

 ( 715,945
)

 Accrued series B preferred share dividends paid

 -

 ( 105,671
)

 Net cash provided by financing activities from continuing operations

 16,931,807

 7,863,654

 Net cash provided by (used in) financing activities from discontinued operations

 ( 1,701,500
)

 3,257,606

 Net cash provided by financing activities

 15,230,307

 11,121,260

 NET CHANGE IN CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS

 3,187,973

 ( 187,773
)

 CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS

 Cash from continuing operations at the beginning of the period

 861,218

 Cash from continuing operations at the end of the period

 $
 3,861,418

 $

 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

 Cash paid for interest

 $
 4,591,177

 $
 3,786,213

 Cash paid for income taxes

 $
 40,000

 $
 131,500

 NON-CASH INVESTING AND FINANCING ACTIVITIES

 Deemed dividend from issuance of warrants to common shareholders

 $
 -

 $
 618,000

 Deemed dividend from down round provision in warrants

 $
 1,000

 $
 1,780,000

 Accrued dividends on series A preferred shares

 $
 144,435

 $
 347,157

 Accrued dividends on series B preferred shares

 $
 2,509

 $
 165,810

 Accrued dividends on series C preferred shares

 $
 18,003

 $
 -

 Accrued dividends on series D preferred shares

 $
 96,649

 $
 -

 Issuance of common shares upon settlement of accrued series A dividends

 $
 130,968

 $
 434,629

 Issuance of common shares upon settlement of accrued series B dividends

 $
 13,299

 $
 75,722

 Issuance of common shares upon conversion of series A preferred shares

 $
 152,200

 $
 1,148,369

 Issuance of common shares upon conversion of series B preferred shares

 $
 240,499

 $
 973,682

 Issuance of common shares upon cashless exercise of warrants

 $
 16,495

 $

 Debt discount on notes payable

 $
 1,836,434

 $
 5,215,971

 Fair value of notes payable issued for services

 $
 492,000

 $
 -

 Fair value of warrant liabilities recognized upon issuance of warrants

 $
 24,667,526

 $
 1,156,300

 Fair value of derivative liabilities recognized upon issuance of promissory notes

 $
 1,699,727

 $
 2,613,177

 Extinguishment of warrant liability upon exercise of warrants

 $
 16,526,400

 $
 1,184,200

 Issuance of common shares upon conversion of convertible notes payable and accrued interest

 $
 4,141,427

 $
 4,300,462

 Issuance of warrants in connection with a private debt offering

 $
 7,573

 $
 -

 Issuance of series D preferred shares in connection with a private debt offering

 $

 $
 -

 Reclassification of accrued interest to notes payable

 $
 17,954

 $
 -

 Reclassification of notes payable to convertible notes payable upon default

 $
 -

 $
 312,117

 Settlement of 1847 Manager accrued expenses and transaction fees to distribution receivable

 $
 2,000,000

 $
 -

 Settlement of revolving line of credit and accrued interest through the issuance of a new revolving line of credit

 $
 -

 $
 2,003,985

 Financed purchases of property and equipment

 $
 123,691

 $
 256,843

 Net assets acquired in the acquisition of ICU Eyewear

 $
 -

 $
 757,283

 Net assets acquired in the acquisition of CMD

 $

 $
 -

 Net assets from dispositions of subsidiaries'

 $
 7,593,972

 $
 -

 Operating lease right-of-use asset and liability measurement

 $
 -

 $
 1,827,063

 The accompanying notes are an integral part
of these consolidated financial statements

 F- 7

 NOTE 1 —ORGANIZATION
AND NATURE OF BUSINESS

 1847 Holdings LLC (the "Company")
was formed under the laws of the State of Delaware on January 22, 2013. The Company is an acquisition holding company, focused on
acquiring and managing a group of small and middle-market businesses in a variety of different industries headquartered in North America.
As of December 31, 2023, the Company is a controlling owner of six business ("subsidiaries"), within four reportable operating
that are strategic business units that offer different products and services. The subsidiaries' business operations are managed
by 1847 Partners LLC, a Delaware limited liability Company (the "Manager"), pursuant to a management services agreement between
the Company and the Manager (see Note 16).

 On May 28, 2020, the Company's subsidiary
1847 Asien Inc., a Delaware corporation ("1847 Asien"), acquired Asien's Appliance, Inc., a California corporation ("Asien's").
It provided a wide variety of appliance services, including sales, delivery/installation, in-home service and repair, extended warranties,
and financing. The Company owns 95 % of 1847 Asien, with the remaining 5 % held by a third-party, and 1847 Asien owned 100 % of Asien's.
See "Discontinued Operations" below for information regarding the discontinuation of Asien's.

 On September 30, 2020, the Company's subsidiary
1847 Cabinet Inc., a Delaware corporation ("1847 Cabinet"), acquired Kyle's Custom Wood Shop, Inc., an Idaho corporation
("Kyle's"). Kyle's is a leading custom cabinetry maker since 1976 in Boise, Idaho and the surrounding area. The
Company owns 92.5 % of 1847 Cabinet, with the remaining 7.5 % held by a third-party, and 1847 Cabinet owns 100 % of Kyle's.

 On March 30, 2021, the Company's subsidiary
1847 Wolo Inc., a Delaware corporation ("1847 Wolo"), acquired Wolo Mfg. Corp., a New York corporation, and Wolo Industrial
Horn & Signal, Inc., a New York corporation (collectively referred to as "Wolo"). Headquartered in Deer Park, New York
and founded in 1965, Wolo designs and sells horn and safety products for cars, trucks, industrial equipment and emergency vehicles. The
Company owns 92.4 % of 1847 Wolo, with the remaining 7.6 % held by third parties, and 1847 Wolo owns 100 % of Wolo Mfg. Corp. and Wolo Industrial
Horn & Signal, Inc.

 On October 8, 2021, 1847 Cabinet acquired High
Mountain Door & Trim Inc., a Nevada corporation ("High Mountain"), and Sierra Homes, LLC d/b/a Innovative Cabinets &
Design, a Nevada limited liability company ("Innovative Cabinets"). Headquartered in Reno, Nevada and founded in 2014, High
Mountain specialized in all aspects of finish carpentry products and services. Headquartered in Reno, Nevada and founded in 2008, Innovative
Cabinets specializes in custom cabinetry and countertops. On April 1, 2022, 1847 Cabinet transferred all of its shares of High Mountain
to Innovative Cabinets, as a result of which Innovative Cabinets owned 92.5 % of High Mountain, with the remaining 7.5 % held by a third-party.
See "Discontinued Operations" below for information regarding the sale of High Mountain.

 On February 9, 2023, the Company's subsidiary,
1847 ICU Holdings Inc., a Delaware corporation ("1847 ICU"), acquired ICU Eyewear Holdings, Inc., a California corporation,
and its subsidiary ICU Eyewear, Inc., a California corporation (collectively referred to as "ICU Eyewear"). Headquartered
in Hollister, California and founded in 1956, ICU Eyewear specialized in the sale and distribution of reading eyewear and sunglasses,
blue light blocking eyewear, sun readers, and other outdoor specialty sunglasses, as well as personal protective equipment, including
face masks and other select health and personal care items. The Company owns 100 % of 1847 ICU and 1847 ICU owned 100 % of ICU Eyewear.
See "Discontinued Operations" below for information regarding the discontinuation of ICU Eyewear.

 On December 16, 2024, the Company's subsidiary,
1847 CMD Inc., a Delaware corporation ("1847 CMD"), acquired CMD Inc., a Nevada corporation, and its subsidiary CMD Finish
Carpentry LLC, a Nevada limited liability company (collectively referred to as "CMD"). Headquartered in Las Vegas, Nevada
and founded in 2012, CMD specializes in finish carpentry and related products and services, including doors, frames, trim, hardware, millwork,
cabinetry, and specialty construction accessories for general contractors, commercial developers, residential builders and homeowners,
and government entities. The Company owns 100 % of 1847 CMD and 1847 CMD owns 100 % of CMD. See Note 5 for additional information.

 Discontinued Operations

 On February 26, 2024, Asien's entered into
a general assignment for the benefit of its creditors (the "Assignment Agreement") with SG Service Co., LLC, pursuant to which
Asien's transferred ownership of all or substantially all of its right, title, and interest in, as well as custody and control of,
its assets to SG Service Co., LLC in trust.

 F- 8

 The Company is a limited guarantor of an Amended
and Restated Credit and Security Agreement (the "ICU Loan Agreement") that was entered into on September 11, 2023, between
AB Lending SPV I LLC d/b/a Mountain Ridge Capital (the "ICU Lender"), and ICU Eyewear and 1847 ICU (the "ICU Parties").
Pursuant to the ICU Loan Agreement, the ICU Lender had a security interest in all the assets of ICU Eyewear. ICU Eyewear was in default
under the ICU Loan Agreement and, with the approval of the other ICU Parties, consented to a foreclosure by the ICU Lender and private
sale of substantially all of its assets in an Article 9 sale process, pursuant to Section 9-610 of the Uniform Commercial Code as in effect
in the State of New York and Section 9-610 of the Uniform Commercial Code as in effect in the State of California. On August 5, 2024,
ICU Eyecare Solutions Inc., an entity that is not affiliated with the Company, was the successful bidder with a cash bid of $ 4,250,000.
Pursuant to an agreement dated August 5, 2024, and in consideration for such purchase price, the ICU Lender having foreclosed on its security
interest in all of the assets of ICU Eyewear then conveyed all of its rights, title, and interest in all of such assets to ICU Eyecare
Solutions Inc.

 On September 30, 2024, the Company entered into
an asset purchase agreement (the "Purchase Agreement") with BFS Group LLC ("BFS") and High Mountain, pursuant
to which the Company sold substantially all of the assets of High Mountain to BFS for an aggregate cash only purchase price of $ 17,000,000,
subject to certain pre-closing and post-closing adjustments.

 The results of operations of Asien's, ICU
Eyewear, and High Mountain are reported as discontinued operations for the years ended December 31, 2024 and 2023. Unless otherwise noted,
amounts and disclosures throughout these notes to consolidated financial statements relate solely to continuing operations and exclude
all discontinued operations. See Note 4 for additional information.

 NOTE 2 —LIQUIDITY
AND GOING CONCERN ASSESSMENT

 Management assesses liquidity and going concern
uncertainty in the Company's consolidated financial statements to determine whether there is sufficient cash on hand and working
capital, including available borrowings on loans, to operate for a period of at least one year from the date the financial statements
are issued, which is referred to as the "look-forward period," as defined in generally accepted accounting principles in the
United States of America ("GAAP"). As part of this assessment, based on conditions that are known and reasonably knowable
to management, management considered various scenarios, forecasts, projections, estimates and made certain key assumptions, including
the timing and nature of projected cash expenditures or programs, its ability to delay or curtail expenditures or programs and its ability
to raise additional capital, if necessary, among other factors. Based on this assessment, management made certain assumptions around implementing
curtailments or delays in the nature and timing of programs and expenditures to the extent it deems probable those implementations can
be achieved and management has the proper authority to execute them within the look-forward period.

 As of December 31, 2024, the Company had cash
and cash equivalents of $ 2,502,450, restricted cash and cash equivalents of $ 1,358,968 and a total working capital deficit of $ 111,927,759.
For the year ended December 31, 2024, the Company incurred an operating loss of $ 11,998,244 and used cash flows in operating activities
of $ 14,635,636.

 The Company has generated operating losses since
its inception and has relied on cash on hand, sales of securities, external bank lines of credit, and issuance of third-party and related
party debt to support cashflows from operations. The Company expects that within the next twelve months it will not have sufficient cash
and other resources on hand to sustain its current operations or meet its obligations as they become due unless it obtains additional
financing. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

 An assessment was performed to determine whether
there were conditions or events that, considered in the aggregate, raised substantial doubt about the Company's ability to continue
as a going concern within one year after the consolidated financial statements are issued. Initially, this assessment did not consider
the potential mitigating effect of management's plans that had not been fully implemented. Based on this assessment, substantial
doubt exists regarding the Company's ability to continue as a going concern.

 F- 9

 Management plans to address these concerns by
securing additional financing through debt and equity offerings. Management assessed the mitigating effect of its plans to determine if
it is probable that the plans would be effectively implemented within one year after the consolidated financial statements are issued
and when implemented, would mitigate the relevant conditions or events that raise substantial doubt about the Company's ability
to continue as a going concern. These plans are subject to market conditions and reliance on third parties, and there is no assurance
that effective implementation of the Company's plans will result in the necessary funding to continue current operations and satisfy
current debt obligations. These conditions raise substantial doubt about the Company's ability to continue as a going concern beyond
one year from the date the consolidated financial statements are issued.

 The accompanying consolidated financial statements
have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction
of liabilities in the normal course of business. The accompanying consolidated financial statements do not include any adjustments relating
to the recoverability and classification of assets and their carrying amounts, or the amounts and classification of liabilities that may
result should the Company be unable to continue as a going concern. If the Company is unable to obtain adequate capital, it could be forced
to cease operations.

 NOTE 3 —SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES

 Basis of Presentation

 The consolidated financial statements of the Company
are prepared in accordance with GAAP as codified in the Financial Accounting Standards Board ("FASB") Accounting Standards
Codification ("ASC").

 Principles of Consolidation

 The consolidated financial statements are presented
in US dollars and include the accounts of the Company and its majority-owned or controlled subsidiaries. All intercompany balances and
transactions have been eliminated in consolidation.

 Reverse Share Splits

 On July 8, 2024, the Company effected a 1-for-13
reverse split of its outstanding common shares. On November 11, 2024, the Company effected a 1-for-15 reverse split of its outstanding
common shares. All outstanding common shares and warrants were adjusted to reflect both the 1-for-13 and 1-for-15 reverse splits, with
the respective exercise prices of the warrants proportionately increased. The outstanding convertible notes and preferred shares conversion
prices were adjusted to reflect a proportional decrease in the number of common shares to be issued upon conversion.

 All share and per share data throughout
these consolidated financial statements have been retroactively adjusted to reflect the reverse share splits. The total number of
authorized common shares did not change. As a result of the reverse common share splits, an amount equal to the decreased value of
common shares was reclassified from "common shares" to "additional paid-in capital."

 Use of Estimates

 The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates. Significant estimates and judgments include revenue recognition, allowance
for estimated credit losses, reserves for excess and obsolete inventories, impairment evaluations of long-lived assets and goodwill, fair
value measurements of warrants and derivative liabilities, and assessments of contingent liabilities.

 Cash and Cash Equivalents

 Cash and cash equivalents consist of cash on hand
and highly liquid investments with original maturities of three months or less. The Company maintains deposits in several financial institutions,
which may at times exceed amounts covered by insurance provided by the U.S. Federal Deposit Insurance Corporation ("FDIC").
The Company has not experienced any losses related to amounts in excess of FDIC limits. As of December 31, 2024 and 2023, the Company
had $ 1,474,367 and $ 180,403 in excess of FDIC limits, respectively.

 F- 10

 Segment Reporting

 The Company has two reportable segments: Construction
and Automotive Supplies. The Company reports all other business activities that are not reportable in the Corporate Services Segment.

 The Company reports segment information in accordance
with ASC Topic 280, " Segment Reporting." Operating segments are defined as components of an enterprise for which separate
financial information is evaluated regularly by the chief operating decision maker ("CODM") in deciding how to allocate resources
and assess performance. The Company's CODM is its Chief Executive Officer, who evaluates the financial performance of the operating
segments for the purposes of making operating decisions, allocating resources, and assessing performance.

 Revenue Recognition and Cost of Revenues

 The Company records revenue in accordance with
ASC Topic 606, " Revenue from Contracts with Customers." Revenue is recognized to depict the transfer of goods or services
to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
To achieve this core principle, the Company applies the following five-step approach: (1) identify the contract with the customer; (2)
identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance
obligations in the contract; and (5) recognize revenue when or as a performance obligation is satisfied.

 Construction Segment

 Revenue is derived in the Construction Segment
primarily through contracts with customers whereby the Company specializes in all aspects of products and services relating to finish
carpentry and related products and services, including doors, frames, trim, hardware, millwork, cabinetry, and specialty construction
accessories. The Company recognizes revenue when control of the promised goods or services is transferred to the customer in an amount
that reflects the consideration it expects to be entitled to in exchange for those goods or services. The Company accounts for a contract
when it has approval and commitment from both parties, the rights and payment terms are identified, the contract has commercial substance,
and collectability of consideration is probable.

 The transaction price is allocated to each distinct
performance obligation within a contract and recognized as revenue when, or as, the performance obligation is satisfied. The Company's
contracts consist of a single performance obligation, as the promised goods and services are highly interdependent and not separately
identifiable from other promises within the contract and, therefore, are not distinct.

 Revenue for each contract is generally recognized
over time due to the continuous transfer of control to the customer as work is performed at the customer's site and, therefore,
the customer controls the asset as it is being installed. The Company generally measures progress toward completion using the cost-to-cost
input method, as it best depicts the transfer of control of goods and services to the customer. Under this method, progress is measured
based on the ratio of costs incurred to date to the total estimated costs at completion, with revenue recognized proportionally as costs
are incurred. Incurred costs include all direct materials, labor, subcontractor expenses, and other indirect costs related to contract
performance.

 Estimating the total expected cost at completion
requires significant judgment. The Company regularly reviews and updates cost estimates quarterly or more frequently if circumstances
change. External factors such as weather conditions, supply chain distributions, and customer delays may impact contract progress, potentially
affecting the timing and amount of revenue recognition, cash flow, and overall contract profitability.

 For certain customers, the Company applies the
right-to-invoice practical expedient and recognizes revenue in the amount it is entitled to invoice when that amount corresponds directly
with the value of the performance to date. An insignificant portion of sales, primarily retail sales, is accounted for on a point-in-time
basis when the sale occurs. Sales taxes, when incurred, are recorded as a liability and excluded from revenue on a net basis.

 Contracts can be subject to modification to account
for changes in contract specifications and requirements. A contract modification exists when a change in scope or price creates new, or
modifies existing, enforceable rights and obligations. Contract modifications are for goods or services that are not distinct from the
existing contract due to the significant integration service provided in the context of the contract and are accounted for as if they
were part of that existing contract. The effect of a contract modification on the transaction price and the Company's measure of
progress for the performance obligation to which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis.

 F- 11

 The Company provides assurance-type warranties
on certain installed products and services, which do not represent a separate performance obligation. Due to the nature of the Company's
projects, including contract owner inspections during construction and prior to acceptance, warranty-related costs have historically been
immaterial.

 Automotive Supplies Segment

 Revenue is derived in the Automotive and Supplies
Segment from the sale of horn and safety warning lights for cars, trucks, industrial equipment and emergency vehicles. The Company sells
its automotive and supplies products to big-box national retail chains, through specialty and industrial distributors, as well as online/mail
order retailers and original equipment manufacturers.

 Revenue from the sale of automotive and supplies
products is recognized at a point in time when control of the promised goods or services is transferred to the customer, generally at
the time of shipment or delivery, in an amount that reflects the consideration to which the Company expects to be entitled in exchange
for those goods or services. The consideration promised includes fixed and variable amounts. The fixed amount of consideration is the
standalone selling price of the goods sold. Variable considerations, including cash discounts, rebates, warranties, and estimated returns
are deducted from gross sales in determining net sales at the time revenues are recorded. The Company includes in the transaction price
an amount of variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue
recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Any sales tax collected
from customers are remitted to governmental authorities and excluded from revenues.

 The Company collects payments for internet and
phone orders from the customer at the time the order is shipped. Customers placing orders with a purchase order through the EDI (Electronic
Data Interface) are allowed to purchase on credit and make payment after receipt of product on the agreed upon terms.

 Cost of revenues include the costs of products
sold, freight and import costs, inventory write-downs, and any other indirect costs related to contract performance.

 Contract Assets and Liabilities

 Contract assets represent revenue recognized in
excess of customer billings in the Construction Segment. This includes rights to payment for completed performance that are conditional
on factors other than the passage of time, such as retainage. Retainage consists of amounts withheld by the customer that are not invoiced
until specific contractual milestones are met, typically upon contract completion.

 Contract liabilities represent advance payments
received before the satisfaction of performance obligations and customer billings in excess of revenue recognized.

 Accounts Receivable

 Accounts receivable consist of trade receivables
arising from credit sales to customers in the normal course of business and retainage. Retainage receivables represent the amount
retained by customers to ensure the quality of the installation and is received after satisfactory completion of each installation project.

 Accounts receivable are recorded at the invoiced
amount, net of an allowance for current expected credit losses. In accordance with ASC Topic 326, " Financial Instruments –
Credit Losses," the Company estimates expected credit losses on accounts receivable using the aging schedule method, incorporating
historical bad debt experience, the creditworthiness of customers, prevailing economic conditions, and reasonable and supportable forward-looking
information. Accounts receivable balances are written off when they are determined to be uncollectible. As of December 31, 2024 and 2023,
the allowance for current expected credit losses for accounts receivable amounted to $ 111,027 and $ 47,200, respectively.

 Inventories consist of finished goods, raw materials,
and inventories in transit. Inventories are stated at the lower of cost or net realizable value. Cost is generally determined using the
weighted-average cost method or first-in, first-out method, and includes all costs incurred to deliver inventories to the Company's
warehouses including freight, non-refundable taxes, duty, and other handling fees and costs directly related to bringing inventories to
its present location and condition. Work in process inventories are immaterial to the consolidated financial statements.

 F- 12

 The Company periodically reviews its inventories
and records a provision for estimated losses related to excess, damaged, slow-moving, or obsolete inventories. The amount of the provision
is equal to the difference between the cost of the inventories and its net realizable value based upon assumptions about product quality,
damages, shrinkage, future demand, selling prices, and market conditions. As of December 31, 2024 and 2023, the estimated reserve for
obsolescence amounted to $ 492,574 and $ 369,200, respectively.

 Property and Equipment

 Property and equipment is stated at historical
cost less accumulated depreciation. Leasehold improvements are amortized over the lesser of the base term of the lease or estimated life
of the leasehold improvements. Maintenance and repairs of property and equipment are expensed as incurred.

 Depreciation is calculated using the straight-line
method over the estimated useful lives as follows:

 Useful Life
 (Years)

 Machinery and equipment

 3 - 5

 Office furniture and equipment

 3 - 5

 Transportation equipment

 3 - 5

 Leasehold improvements

 3 - 5

 Leases

 The Company evaluates all contracts at inception
or upon modification to determine whether such contract contains a lease in accordance with ASC Topic 842, " Leases."
A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. Control over the use of the identified asset means the lessee has both the right to obtain substantially all the economic
benefits from the use of the asset and the right to direct the use of the asset. Contracts containing a lease are further evaluated for
classification as a right-of-use ("ROU") operating lease or a finance lease.

 At commencement of a lease, the Company recognizes
ROU assets and related lease liabilities on the balance sheet for all leases greater than one year in duration. Lease liabilities and
their corresponding ROU assets are initially measured at the present value of the unpaid lease payments as of the lease commencement date.
If the lease contains a renewal and/or termination option, the exercise of the option is included in the term of the lease if the Company
is reasonably certain that a renewal or termination option will be exercised. As the Company's leases do not provide an implicit
rate, the Company uses an estimated incremental borrowing rate ("IBR") based on the information available at the commencement
date of the respective lease to determine the present value of future payments. The IBR is determined by estimating what it would cost
the Company to borrow a collateralized amount equal to the total lease payments over the lease term based on the contractual terms of
the lease and the location of the leased asset.

 When calculating the present value of minimum
lease payments, the Company accounts for leases as one single lease component if a lease has both lease and non-lease components. Variable
lease and non-lease components are expensed as incurred. The Company does not recognize ROU assets and lease liabilities for short-term
leases that have an initial lease term of 12 months or less.

 F- 13

 Discontinued Operations

 The Company evaluates all disposal transactions
to determine whether such disposal qualifies for reporting as discontinued operations in accordance with ASC Topic 205-20, " Discontinued
Operations." A disposal of a component or a group of components is reported in discontinued operations if the disposal represents
a strategic shift that has or will have a major effect on the Company's operations and financial results when the following occurs:
(1) a component (or group of components) meets the criteria to be classified as held for sale; (2) the component or group of components
is disposed of by sale; or (3) the component or group of components is disposed of other than by sale (for example, by abandonment or
in a distribution to owners in a spin-off). For any component classified as held for sale or disposed of by sale or other than by sale,
qualifying for presentation as a discontinued operation, the Company reports the results of operations of the discontinued operations
(including any gain or loss recognized on the disposal or loss recognized on classification as held for sale of a discontinued operation),
less applicable income taxes (benefit), as a separate component in the consolidated statement of operations for all prior periods presented.
The Company also reports assets and liabilities associated with discontinued operations as separate line items on the consolidated balance
sheet for prior periods.

 Business Combinations

 The Company accounts for business combinations
under the acquisition method of accounting in accordance with ASC Topic 805, " Business Combinations." The Company allocates
the purchase price of an acquisition to the tangible and intangible assets acquired, liabilities assumed, and any non-controlling interest
based on their estimated fair values at the acquisition date. The Company recognizes the amount by which the purchase price of an acquired
entity exceeds the net of the fair values assigned to the assets acquired and liabilities assumed as goodwill. In determining the fair
values of assets acquired and liabilities assumed, the Company uses various recognized valuation methods including the income, cost and
market approaches in accordance with ASC Topic 820, " Fair Value Measurement." The Company makes assumptions within
certain valuation techniques, including discount rates, royalty rates, and the amount and timing of future cash flows. The Company initially
performs these valuations based upon preliminary estimates and assumptions by management or independent valuation specialists under the
Company's supervision, where appropriate, and makes revisions as estimates and assumptions are finalized, which may be up to one
year from the acquisition date. Acquisition-related expenses are recognized separately from business combinations and are expensed as
incurred.

 Intangible Assets

 Acquired identifiable intangible assets are amortized
over their estimated useful life on a straight-line basis. Estimated useful lives are determined considering the period the intangible
assets are expected to contribute to future cash flows. The Company has no intangible assets with indefinite lives.

 Amortization is calculated using the straight-line
method over the estimated useful lives as follows:

 Useful Life
 (Years)

 Customer-related

 Marketing-related

 4 - 5

 Long-Lived Assets

 The Company reviews the carrying value of long-lived
assets such as property and equipment, ROU assets, and definite-lived intangible assets for impairment in accordance with ASC Topic 360,
" Property, Plant, and Equipment," whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. These events and circumstances may include significant decreases in the market price of an asset or asset
group, significant changes in the extent or manner in which an asset or asset group is being used by the Company or in its physical condition,
a significant change in legal factors or in the business climate, a history or forecast of future operating or cash flow losses, significant
disposal activity, a significant decline in revenue or adverse changes in the economic environment.

 F- 14

 If such facts indicate a potential impairment,
the Company assesses the recoverability of an asset group by determining if the carrying value of the asset group exceeds the sum of the
projected undiscounted cash flows expected to result from the use and eventual disposition of the assets over the remaining economic life
of the primary asset in the asset group. If the recoverability test indicates that the carrying value of the asset group is not recoverable,
the Company estimates the fair value of the asset group using appropriate valuation methodologies, which would typically include an estimate
of discounted cash flows. Any impairment would be measured as the difference between the asset group's carrying amount and its estimated
fair value.

the Company recorded impairments related to its intangible assets of $0 and $ 3,705,176, respectively.

 In accordance with ASC Topic 350, " Intangibles
— Goodwill and Other," the Company tests goodwill for impairment annually on October 1, or more frequently when events
or circumstances indicate an impairment may have occurred. When assessing the recoverability of goodwill, the Company may first assess
qualitative factors in determining whether it is more likely than not (that is, a likelihood of more than 50 %) that the fair value of
a reporting unit is less than its carrying amount. The qualitative assessment is based on several factors, including the current operating
environment, industry and market conditions, and overall financial performance. If the Company bypasses the qualitative assessment, or
if it concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company
performs a quantitative assessment by comparing the estimated fair value of a reporting unit with its carrying amount.

 The Company estimates the fair value of its reporting
units based on the present value of estimated future cash flows. Considerable management judgment is necessary to evaluate the impact
of operating and macroeconomic changes, and to estimate the future cash flows used to measure fair value. The Company's estimates
of future cash flows consider past performance, current and anticipated market conditions, and internal projections and operating plans,
including forecasted growth rates and estimated discount rates. If the fair value of a reporting unit is less than its carrying amount,
a reporting unit is considered impaired, and an impairment charge is recognized for the difference.

the Company recorded goodwill impairments of $ 679,175 and $ 6,750,911, respectively.

 Embedded Derivative Liabilities

 The Company evaluates the embedded features of
its financial instruments, including its preferred shares, convertible notes payable and warrants in accordance with ASC Topic 480, " Distinguishing
Liabilities from Equity," and ASC Topic 815 " Derivatives and Hedging." Certain conversion options and redemption
features are required to be bifurcated from their host instrument and accounted for as free-standing derivative financial instruments
should certain criteria be met. The Company applies significant judgment to identify and evaluate complex terms and conditions for its
financial instruments to determine whether such instruments are derivatives or contain features that qualify as embedded derivatives.
Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment
of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract and the features of the
derivatives. Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the consolidated statement
of operations each period.

 The Company has a sequencing policy, whereby in
the event that reclassification of contracts from equity to assets or liabilities is necessary in accordance with ASC Topic 815 due to
the Company's inability to demonstrate it has sufficient authorized shares as a result of certain securities with a potentially
indeterminable number of shares, shares will be allocated on the basis of the earliest maturity date of potentially dilutive instruments
first, with the earliest maturity date of grants receiving the first allocation of shares. Pursuant to ASC Topic 815, any issuances of
securities to the Company's employees and directors, or to compensate grantees in a share-based payment arrangement, are not subject
to the sequencing policy.

 F- 15

 Warrant Liabilities

 The Company accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the specific terms of the warrants in accordance with the applicable authoritative
guidance in ASC Topic 480 and ASC Topic 815-40, " Contracts in Entity's Own Equity." The assessment, which requires
the use of professional judgment, considers whether the warrants are freestanding financial instruments, meet the definition of a liability,
and whether the warrants meet all of the requirements for equity classification, including whether the warrants are indexed to the Company's
own common shares and whether the warrant holders could potentially require net cash settlement in a circumstance outside of the Company's
control, among other conditions for equity classification.

 For issued or modified warrants that meet all
the criteria for equity classification, the warrants are recorded as a component of additional paid-in capital at the time of issuance.
For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are recorded at their initial
fair value on the date of issuance, with changes in fair value recognized in the consolidated statement of operations each period.

 Fair Value of Financial Instruments

 The fair value of a financial instrument is the
amount the Company would receive to sell an asset or pay to transfer a liability in the principal or most advantageous market for the
asset or liability in an orderly transaction between market participants on the measurement date. In the absence of such data, fair value
is estimated using internal information consistent with what market participants would use in a hypothetical transaction.

 According to ASC Topic 820, the fair value hierarchy
is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure
fair value. The Company's assessment of the significance of a particular input to the fair value measurements requires judgment
and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. The Company
uses appropriate valuation techniques based on available inputs to measure the fair value of its assets and liabilities. The fair value
hierarchy is defined in the following three categories:

 Level 1: Quoted prices in active markets
for identical assets or liabilities.

 Level 2: Observable market-based inputs
or inputs that are corroborated by market data.

 Level 3: Unobservable inputs
that are not corroborated by market data.

 The Company holds certain assets and liabilities
that are required to be measured at fair value on a recurring and non-recurring basis (see Note 13).

 Stock-Based Compensation

 Stock-based awards granted to qualified employees,
non-employee directors and consultants are measured at fair value and recognized as an expense in accordance with ASC Topic 718, " Compensation
– Stock Compensation." For service-based awards, stock-based compensation is recognized on a straight-line basis over
the requisite service period, which is generally the vesting period. The fair value of stock options is estimated using a Black-Scholes
option valuation model. Restricted stock awards are valued based on the closing stock price on the date of grant (intrinsic value method).
The Company has elected to recognize forfeitures as they occur.

 Income Taxes

 Income taxes are accounted for under the asset
and liability method in accordance with ASC Topic 740, " Income Taxes." Under the asset and liability method, deferred
tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment
date. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and establish a valuation
allowance if, based on the weight of available evidence, it believes it is more likely than not that all or a portion of the deferred
tax assets will not be realized.

 F- 16

 The Company recognizes the tax benefit of an uncertain
tax position only if it is more likely than not the position will be sustainable upon examination by the taxing authority, including resolution
of any related appeals or litigation processes. This evaluation is based on all available evidence and assumes that the tax authorities
have full knowledge of all relevant information concerning the tax position. The tax benefit recognized is measured as the largest amount
that has a greater than 50 % likelihood of being realized upon ultimate settlement. The Company recognizes interest accrued and penalties
related to unrecognized tax benefits in income tax expense.

 Loss Per Share

 Basic loss per share is calculated by dividing
the net loss by the weighted average number of common shares outstanding during each period. Diluted loss per share is calculated by adjusting
the weighted average number of common shares outstanding for the dilutive effect, if any, of common share equivalents. Common share equivalents
whose effect would be antidilutive are not included in diluted loss per share. The Company uses the treasury stock method to determine
the dilutive effect, which assumes that all common share equivalents have been exercised at the beginning of the period and that the funds
obtained from those exercises were used to repurchase common shares at the average closing market price during the period. As of December
31, 2024 and 2023, there were 230,277,102 and 52,031, respectively, potential common share equivalents from convertible preferred shares,
convertible notes, and warrants excluded from the diluted loss per share calculations as their effect is anti-dilutive.

 Reclassifications

 Certain reclassifications within operating expenses
have been made to the prior period's financial statements to conform to the current period financial statement presentation. There
is no impact in total to the results of operations and cash flows in all periods presented.

 Recently Adopted Accounting Pronouncements

 In November 2023, the FASB issued ASU 2023-07,
" Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures," which updates reportable segment disclosure
requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the CODM and included
within each reported measure of a segment's profit or loss. ASU 2023-07 also requires disclosure of the title and position of the
individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment's profit or loss in
assessing segment performance and deciding how to allocate resources. ASU 2023-07 is effective for annual periods beginning after December
15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The adoption of ASU 2023-07 did not have a material
impact on the Company's consolidated financial statements.

 Recently Issued Accounting Pronouncements
Not Yet Adopted

 In August 2023, the FASB issued ASU 2023-05, " Business
Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement," which requires a newly-formed
joint venture to apply a new basis of accounting to its contributed net assets, resulting in the joint venture initially measuring its
contributed net assets at fair value on the formation date. ASU 2023-05 is effective for all joint venture formations with a formation
date on or after January 1, 2025, with early adoption permitted. These amendments are to be applied prospectively, with retrospective
application permitted for joint ventures formed before the effective date. The Company is currently evaluating the impact this standard
will have on its consolidated financial statements.

 In December 2023, the FASB issued ASU 2023-09,
" Income Taxes (Topic 740): Improvements to Income Tax Disclosures," which enhances the transparency and decision usefulness
of income tax disclosures by requiring; (1) consistent categories and greater disaggregation of information in the rate reconciliation
and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income
tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2025, with early adoption permitted. These amendments
are to be applied prospectively, with retrospective application permitted. The Company is currently evaluating the impact this standard
will have on its consolidated financial statements.

 F- 17

 In November 2024, the FASB issued ASU 2024-03,
" Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation
of Income Statement Expenses," which requires the disaggregated disclosure of specific expense categories, including purchases
of inventory, employee compensation, depreciation, and amortization included in each relevant expense caption presented on the statement
of operations. The standard also requires disclosure of qualitative description of the amounts remaining in relevant expense captions
that are not separately disaggregated quantitatively, as well as the total amount of selling expenses and an entity's definition
of selling expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after
December 15, 2027. The Company is currently evaluating the impact this standard will have on its consolidated financial statements.

 The Company currently believes there are no other
issued and not yet effective accounting standards that are materially relevant to its consolidated financial statements.

 NOTE 4 —DISCONTINUED
OPERATIONS

 Asien's Assignment for the Benefit of Creditors

 As described in Note 1, on February 26, 2024,
Asien's entered into the Assignment Agreement, pursuant to which Asien's transferred ownership of all or substantially all
of its right, title, and interest in, as well as custody and control of, its assets to SG Service Co., LLC in trust. The Company received
no cash consideration related to the assignment. Following the assignment, the Company retained no financial interest in Asien's.

 The assignment of Asien's represents a strategic
shift and its results are reported as discontinued operations for the years ended December 31, 2024 and 2023. The Company recognized a
gain on disposition of Asien's of $ 1,060,095, as a separate line item in discontinued operations in the consolidated statements
of operations for the year ended December 31, 2024.

of line item of assets and liabilities included as part of discontinued operations of Asien's in the consolidated balance sheet
as of December 31, 2023:

 2023

 Current assets of discontinued operations

 Cash and cash equivalents

 $
 34,470

 Investments

 278,521

 88,770

 Inventories, net

 1,398,088

 140,102

 Total current assets of discontinued operations

 1,939,951

 Non-current assets of discontinued operations

 Property and equipment, net

 88,505

 Total assets of discontinued operations

 $
 2,028,456

 Current liabilities of discontinued operations

 $
 923,945

 Customer deposits

 2,143,493

 Current portion of notes payable

 29,777

 Total current liabilities of discontinued operations

 3,097,215

 Non-current liabilities of discontinued operations

 Notes payable, net of current portion

 34,965

 Total liabilities of discontinued operations

 $
 3,132,180

 F- 18

of line items constituting the loss from discontinued operations of Asien's in the consolidated statements of operations for the
years ended December 31, 2024 and 2023:

 2024

 2023

 $
 870,952

 $
 8,961,248

 Operating Expenses

 744,706

 7,083,662

 98,213

 1,052,118

 7,702

 151,362

 203,377

 1,538,954

 78,807

 185,935

 -

 1,484,229

 Total Operating Expenses

 1,132,805

 11,496,260

 ( 261,853
)

 ( 2,535,012
)

 Other Income (Expense)

 Other income (expense)

 -

 4,674

 ( 724
)

 ( 312,605
)

 Total Other Expense

 ( 724
)

 ( 307,931
)

 Net loss from discontinued operations before income taxes

 ( 262,577
)

 ( 2,842,943
)

 -

 37,145

 Net loss from discontinued operations

 $
 ( 262,577
)

 $
 ( 2,805,798
)

 Net income (loss) attributable to non-controlling interests from discontinued operations

 ( 59,304
)

 80,986

 Net loss from discontinued operations attributable to 1847 Holdings

 $
 ( 321,881
)

 $
 ( 2,724,812
)

 F- 19

of line items constituting significant operating, investing and financing cash flow activities from discontinued operations of Asien's
in the consolidated statements of cash flows for the years ended December 31, 2024 and 2023:

 2024

 2023

 Cash flows from operating activities

 Net loss

 $
 ( 262,577
)

 $
 ( 2,805,798
)

 Adjustments to reconcile net loss to net cash used in operating activities:

 Deferred taxes

 -

 ( 64,000
)

 -

 1,484,229

 7,702

 151,362

 Changes in operating assets and liabilities:

 73,769

 71,076

 213,399

 708,471

 108,686

 ( 36,723
)

 320,362

 1,240,957

 Customer deposits

 ( 474,803
)

 ( 895,906
)

 Net cash used in operating activities from discontinued operations

 ( 13,462
)

 ( 146,332
)

 Cash flows from investing activities

 Investments in certificates of deposit

 -

 ( 1,211
)

 Net cash used in investing activities from discontinued operations

 -

 ( 1,211
)

 Cash flows from financing activities

 Repayments of notes payable

 ( 4,836
)

 ( 28,398
)

 Net cash used in financing activities from discontinued operations

 Net change in cash and cash equivalents from discontinued operations

 $
 ( 18,298
)

 $
 ( 175,941
)

 ICU Eyewear Foreclosure Sale

 As described in Note 1, ICU Eyewear was in default
under the ICU Loan Agreement and, with the approval of the other ICU Parties, consented to a foreclosure by the ICU Lender and private
sale of substantially all of its assets in an Article 9 sale process, pursuant to Section 9-610 of the Uniform Commercial Code as in effect
in the State of New York and Section 9-610 of the Uniform Commercial Code as in effect in the State of California. On August 5, 2024,
ICU Eyecare Solutions Inc., an entity that is not affiliated with the Company, was the successful bidder with a cash bid of $ 4,250,000.
Pursuant to an agreement, dated August 5, 2024, and in consideration for such purchase price, the ICU Lender having foreclosed on its
security interest in all of the assets of ICU Eyewear then conveyed all of its rights, title, and interest in all of such assets to ICU
Eyecare Solutions Inc. The Company received no cash consideration related to the sale. Following the sale, the Company retained no financial
interest in ICU Eyewear.

 The sale of ICU Eyewear's assets represents
a strategic shift and its results are reported as discontinued operations for the years ended December 31, 2024 and 2023. The Company
recognized a gain on disposition of ICU Eyewear's assets of $ 4,516,735, as a separate line item in discontinued operations in the
consolidated statements of operations for the year ended December 31, 2024.

 F- 20

of line item of assets and liabilities included as part of discontinued operations of ICU Eyewear in the consolidated balance sheet as
of December 31, 2023:

 2023

 Current assets of discontinued operations

 Cash and cash equivalents

 $
 12,594

 Receivables, net

 1,578,764

 Inventories, net

 5,123,478

 19,990

 Total current assets of discontinued operations

 6,734,826

 Non-current assets of discontinued operations

 Property and equipment, net

 313,915

 Operating lease right-of-use assets

 1,690,937

 Long-term deposits

 74,800

 Intangible assets, net

 500,383

 757,283

 Total assets of discontinued operations

 $
 10,072,144

 Current liabilities of discontinued operations

 $
 5,580,313

 Current portion of operating lease liabilities

 274,683

 Total current liabilities of discontinued operations

 5,854,996

 Non-current liabilities of discontinued operations

 Operating lease liabilities, net of current portion

 1,459,184

 Revolving line of credit, net

 3,647,511

 Deferred tax liability

 15,000

 Total liabilities of discontinued operations

 $
 10,976,691

 F- 21

of line items constituting the loss from discontinued operations of ICU Eyewear in the consolidated statements of operations for the years
ended December 31, 2024 and 2023:

 2024

 2023

 $
 8,212,395

 $
 15,454,097

 Operating Expenses

 5,658,551

 11,738,639

 1,564,842

 2,793,210

 248,646

 371,662

 1,526,278

 1,542,980

 672,855

 157,797

 1,216,966

 -

 Total Operating Expenses

 10,888,138

 16,604,288

 ( 2,675,743
)

 (1,1501,191

)

 Other Income (Expense)

 Other income

 2,583

 ( 230,711
)

 ( 911,437
)

 ( 992,575
)

 ( 683,029
)

 ( 76,971
)

 Total Other Expense

 ( 1,591,883
)

 ( 1,300,257
)

 Net loss from discontinued operations before income taxes

 ( 4,267,626
)

 ( 2,450,448
)

 11,250

 ( 18,000
)

 Net loss from discontinued operations

 $
 ( 4,256,376
)

 $
 ( 2,468,448
)

 F- 22

of line items constituting significant operating, investing and financing cash flow activities from discontinued operations of ICU Eyewear
in the consolidated statements of cash flows for the years ended December 31, 2024 and 2023:

 2024

 2023

 Cash flows from operating activities

 Net loss

 $
 ( 4,256,376
)

 $
 ( 2,468,448
)

 Adjustments to reconcile net loss to net cash provided by operating activities:

 Deferred taxes

 ( 15,000
)

 15,000

 Inventory reserve

 45,000

 757,000

 1,216,966

 -

 248,646

 371,662

 683,029

 76,971

 Amortization of right-of-use assets

 192,796

 397743

 Changes in operating assets and liabilities:

 481,202

 267,363

 1,202,730

 759,840

 ( 14,895
)

 89,746

 857,085

 605,500

 Operating lease liabilities

 ( 176,336
)

 ( 354,813
)

 Net cash provided by operating activities from discontinued operations

 464,847

 517,564

 Cash flows from investing activities

 Cash paid for ICU Eyewear, net of cash acquired

 -

 ( 3,651,862
)

 Purchases of property and equipment

 -

 ( 211,492
)

 Net cash used in investing activities from discontinued operations

 -

 ( 3,863,354
)

 Cash flows from financing activities

 Net proceeds (repayments) of revolving line of credit

 ( 80,540
)

 3,358,384

 Net cash provided by (used in) financing activities from discontinued operations

 ( 80,540
)

 3,358,384

 Net change in cash and cash equivalents from discontinued operations

 $
 384,307

 $
 12,594

 Sale of High Mountain

 As described in Note 1, on September 30, 2024,
the Company entered into the Purchase Agreement with BFS and High Mountain, pursuant to which the Company sold substantially all of the
assets of High Mountain to BFS for an aggregate cash only purchase price of $ 17,000,000, subject to certain pre-closing and post-closing
adjustments. At closing, the purchase price was subject to a working capital adjustment and was also reduced by the amount of outstanding
indebtedness repaid at closing or assumed by BFS, as well as certain transaction expenses. Additionally, the purchase price was reduced
by $ 1,700,000, which may be used for certain post-closing payments (the "Holdback Amount"). As December 31, 2024, the balance of the Holdback Amount was $ 1,358,968.

 The purchase price is also subject to a post-closing
adjustment. Under this provision, High Mountain delivered to BFS an estimated closing statement forth the estimated closing date
payment amount, which included, among other things, High Mountain's estimate of the net working capital of High Mountain and its
business as of the closing date, calculated in accordance with the asset purchase agreement. Within 90 to 120 days following the closing
date, BFS must deliver to High Mountain a final closing statement setting forth its determination of the actual closing date payment amount,
including, among other things, BFS' determination of the net working capital as of the closing date. If the actual closing date
payment amount exceeds the estimated closing date payment amount, BFS must, within ten business days, pay to High Mountain an amount of
cash that is equal to such excess. If the estimated closing date payment amount exceeds the actual closing date payment amount, High Mountain
must, within ten business days, pay to BFS an amount in cash equal to such excess. If High Mountain fails to make such payment, BFS will
have the right to recover such amount from the Holdback Amount.

 F- 23

 Under the Purchase Agreement, BFS must use commercially
reasonable efforts in the ordinary course of business to collect accounts receivable in a manner no less rigorous than the collection
efforts used its own business operations, but is entitled to compensation for any uncollected accounts from the Holdback Amount. In addition,
the Purchase Agreement provides that BFS must use commercially reasonable efforts in the ordinary course of business to finish and sell
any special order or custom inventory that was included in the final net working capital, but is entitled to compensation, on the one-year
anniversary of the closing, for any unsold special order or custom inventory from the Holdback Amount.

 The sale of High Mountain's assets represents
a strategic shift and its results are reported as discontinued operations for the years ended December 31, 2024 and 2023. The Company
recognized a gain on disposition of High Mountain's assets of $ 3,990,034, as a separate line item in discontinued operations in
the consolidated statements of operations for the year ended December 31, 2024.

of line item of assets and liabilities included as part of discontinued operations of High Mountain in the consolidated balance sheet
as of December 31, 2023:

 2023

 Current assets of discontinued operations

 Cash and cash equivalents

 $
 45,905

 Receivables, net

 4,186,800

 Inventories, net

 1,082,940

 106,342

 Total current assets of discontinued operations

 5,421,987

 Non-current assets of discontinued operations

 Property and equipment, net

 433,902

 Operating lease right-of-use assets

 1,219,813

 Long-term deposits

 29,400

 Intangible assets, net

 2,268,642

 8,371,877

 Total assets of discontinued operations

 $
 17,745,621

 Current liabilities of discontinued operations

 $
 2,642,566

 Contract liabilities

 1,019,230

 Current portion of operating lease liabilities

 329,015

 Finance lease liabilities

 6,754

 Current portion of notes payable

 64,170

 Current portion of convertible notes payable, net

 1,195,867

 Total current liabilities of discontinued operations

 5,257,602

 Non-current liabilities of discontinued operations

 Operating lease liabilities, net of current portion

 949,734

 Notes payable, net of current portion

 214,936

 Deferred tax liability

 334,000

 Total liabilities of discontinued operations

 $
 6,756,272

 F- 24

of line items constituting the loss from discontinued operations of High Mountain in the consolidated statements of operations for the
years ended December 31, 2024 and 2023:

 2024

 2023

 $
 23,438,316

 $
 30,076,338

 Operating Expenses

 14,332,303

 18,679,372

 4,957,525

 4,757,201

 445,328

 555,361

 3,148,502

 3,755,111

 108,439

 164,674

 Impairment of goodwill

 -

 2,707,732

 Total Operating Expenses

 22,992,097

 30,619,451

 Income (loss) from operations

 446,219

 ( 543,113
)

 Other Income (Expense)

 Other income

 1,505,275

 ( 227,439
)

 ( 1,121,857
)

 ( 64,306
)

 ( 78,369
)

 Gain (loss) on disposal of property and equipment

 ( 13,815
)

 18,026

 Total Other Income (Expense)

 1,199,715

 ( 1,182,165
)

 Net income from discontinued operations before income taxes

 1,592,934

 ( 1,725,278
)

 ( 417,000
)

 ( 620,000
)

 Net income from discontinued operations

 $
 1,228,934

 $
 ( 2,345,278
)

 Net income (loss) attributable to non-controlling interests from discontinued operations

 ( 92,170
)

 175,896

 Net income from discontinued operations attributable to 1847 Holdings

 $
 1,136,764

 $
 ( 2,169,382
)

 F- 25

of line items constituting significant operating, investing and financing cash flow activities from discontinued operations of High Mountain
in the consolidated statements of cash flows for the years ended December 31, 2024 and 2023:

 2024

 2023

 Cash flows from operating activities

 Net income (loss)

 $
 1,228,934

 $
 ( 2,345,278
)

 Adjustments to reconcile net income (loss) to net cash used in operating activities:

 Deferred taxes

 ( 334,000
)

 52,000

 Inventory reserve

 -

 203,800

 Impairment of goodwill

 -

 2,707,732

 Loss (gain) on disposal of property and equipment

 13,815

 ( 18,026
)

 445,328

 555,361

 64,306

 78,369

 Amortization of right-of-use assets

 246,765

 318,106

 Changes in operating assets and liabilities:

 289,761

 ( 1,242,438
)

 164,662

 ( 425,539
)

 103,645

 ( 102,847
)

 ( 259,014
)

 112,402

 Contract liabilities

 ( 150,298
)

 520,468

 Operating lease liabilities

 ( 243,685
)

 ( 302,051
)

 Net cash provided by operating activities from discontinued operations

 1,570,219

 112,059

 Cash flows from investing activities

 Purchases of property and equipment

 -

 ( 1,500
)

 Net cash used in investing activities from discontinued operations

 -

 ( 1,500
)

 Cash flows from financing activities

 Repayments of notes payable and finance lease liabilities

 ( 355,951
)

 ( 72,380
)

 Repayments of convertible notes payable

 ( 1,260,173
)

 -

 Net cash used in financing activities from discontinued operations

 ( 1,616,124
)

 ( 72,380
)

 Net change in cash and cash equivalents from discontinued operations

 $
 ( 45,905
)

 $
 38,179

 NOTE 5—BUSINESS COMBINATIONS

 On November 4, 2024, 1847 CMD entered into a stock
and membership interest purchase agreement, which was amended on December 5, 2024, and further amended on December 16, 2024, with Christopher
M. Day, pursuant to which 1847 CMD agreed to acquire all of the membership interests of CMD. The acquisition of CMD was completed on December
16, 2024.

 Headquartered in Las Vegas, Nevada and founded
in 2012, CMD specializes in finish carpentry and related products and services, including doors, frames, trim, hardware, millwork, cabinetry,
and specialty construction accessories for general contractors, commercial developers, residential builders and homeowners, and government
entities. The acquisition of CMD aligns with the Company's strategic arbitrage model of acquiring undervalued, profitable small
and middle-market businesses in industries with minimal risk of technological or competitive obsolescence. The Company targets businesses
with stable earnings and cash flow that offer attractive returns on invested capital. Additionally, the acquisition of CMD enhances operational
synergies within the Company's Construction Segment.

 The aggregate purchase price was $ 18,825,000,
consisting of (i) $ 17,775,000 in cash and certain seller transaction expenses, and (ii) $ 1,050,000 promissory note.

 F- 26

 The Company accounted for the acquisition using
the acquisition method of accounting in accordance with ASC Topic 805 and allocated the purchase price to the tangible and intangible
assets acquired and liabilities assumed based on their estimated fair values at the acquisition date.

 The purchase price was allocated as follows:

 Allocation

 Purchase consideration at fair value:

 Cash

 $
 17,775,000

 Notes payable

 1,050,000

 Amount of consideration

 $
 18,825,000

 Assets acquired and liabilities assumed at fair value

 Cash

 $
 1,494,184

 Accounts receivable

 4,552,693

 Contract assets

 1,863,307

 Property and equipment

 457,142

 Operating lease right-of-use assets

 1,547,285

 Customer-related intangible

 9,965,000

 Marketing-related intangible

 605,000

 ( 976,836
)

 Contract liabilities

 ( 1,100,749
)

 Operating lease liabilities

 ( 1,547,285
)

 Notes payable

 ( 30,617
)

 Deferred tax liability

 ( 3,314,000
)

 Net assets acquired

 $
 18,825,000

 The estimated remaining useful life on the property
and equipment acquired ranges up to four years. The Company is amortizing the customer-related intangible asset over 15 years and the
marketing-related intangible asset over five years. Goodwill is not deductible for tax purposes.

 From the date of acquisition, CMD contributed
revenues of $ 905,864 and net income from continuing operations of $ 47,508, which are included in the consolidated statement of operations
for the year ended December 31, 2024.

 Pro Forma Information

 The following unaudited pro forma results presented
below include the effects of the CMD acquisition as if it had been consummated as of January 1, 2023, with adjustments to give effect
to pro forma events that are directly attributable to the acquisition.

 2024

 2023

 $
 45,563,551

 $
 41,287,831

 Net loss

 ( 93,111,448
)

 ( 25,816,374
)

 Net loss attributable to common shareholders

 ( 92,844,801
)

 ( 27,124,562
)

 Loss per share attributable to common shareholders:

 Basic and diluted

 $
 ( 34.90
)

 $
 ( 194.58
)

 These unaudited pro forma results are presented
for informational purposes only and are not necessarily indicative of what the actual results of operations would have been if the acquisitions
had occurred at the beginning of the period presented, nor are they indicative of future results of operations.

 F- 27

 NOTE 6—DISAGGREGATION OF REVENUES AND SEGMENT REPORTING

 Following the divestiture of the Retail and Appliances
Segment and the Retail and Eyewear Segment, the Company now operates two reportable segments.

 Construction Segment – Provides finish
carpentry and related products and services, including doors, frames, trim, hardware, millwork, cabinetry, and specialty construction
accessories.

 Automotive Supplies Segment – Offers
horn and safety products (including electric, air, truck, marine, motorcycle, and industrial equipment) as well as vehicle emergency and
safety warning lights for cars, trucks, industrial equipment, and emergency vehicles.

 The Company reports all other business activities
that are not reportable in the Corporate Services Segment. The Company provides general corporate services to its segments; however, these
services are not considered when making operating decisions and assessing segment performance. The Corporate Services Segment includes
costs associated with executive management, financing activities and other public company-related costs.

 The Company's revenues for the years ended
December 31, 2024 and 2023 are disaggregated as follows:

 For the Year Ended December 31,
 2024

 Automotive

Supplies

 Total

 Automotive horns

 $
 2,896,470

 $
 -

 $
 2,896,470

 Automotive lighting

 852,976

 -

 852,976

 Cabinetry and millwork

 -

 11,226,661

 11,226,661

 Doors, frames, hardware, and trim

 -

 720,700

 720,700

 Specialty construction accessories

 -

 13,523

 13,523

 Total revenues

 $
 3,749,446

 $
 11,960,884

 $
 15,710,330

 For the Year Ended December 31,
 2023

 Automotive
 Supplies

 Total

 Automotive horns

 $
 3,150,530

 $
 -

 $
 3,150,530

 Automotive lighting

 1,400,056

 -

 1,400,056

 Cabinetry and millwork

 -

 9,639,549

 9,639,549

 Total revenues

 $
 4,550,586

 $
 9,639,549

 $
 14,190,135

 F- 28

 Segment information for the years ended December
31, 2024 and 2023 are as follows:

 For the Year Ended December 31, 2024

 Automotive
 Supplies

 Corporate
 Services

 Total

 $
 3,749,446

 $
 11,960,884

 $
 -

 $
 15,710,330

 Operating expenses

 2,497,865

 5,439,723

 -

 7,937,588

 1,108,679

 4,160,528

 1,269,665

 6,538,872

 Personnel – corporate allocation

 ( 173,784
)

 ( 354,600
)

 528,384

 -

 655,382

 -

 655,658

 766,892

 1,791,344

 175,607

 2,733,843

 General and administrative – management fees

 300,000

 375,000

 1,592,000

 2,267,000

 General and administrative – corporate allocation

 ( 201,777
)

 ( 420,571
)

 622,348

 -

 222,360

 114,731

 6,559,347

 6,896,438

 -

 -

 Total operating expenses

 4,520,511

 12,440,712

 10,747,351

 27,708,574

 $
 ( 771,065
)

 $
 ( 479,828
)

 $
 ( 10,747,351
)

 $
 ( 11,998,244
)

 For the Year Ended December 31,
 2023

 Automotive
 Supplies

 Corporate
 Services

 Total

 $
 4,550,586

 $
 9,639,549

 $
 -

 $
 14,190,135

 Operating expenses

 3,154,717

 4,482,779

 -

 7,637,496

 1,226,788

 3,671,762

 92,011

 4,990,561

 Personnel – corporate allocation

 ( 309,400
)

 ( 618,800
)

 928,200

 -

 155,886

 1,006,409

 -

 1,162,295

 808,146

 1,619,711

 211,143

 2,639,000

 General and administrative – management fees

 300,000

 333,333

 -

 633,333

 General and administrative – corporate allocation

 ( 160,152
)

 ( 479,861
)

 640,013

 -

 196,570

 154,013

 2,027,607

 2,378,190

 3,066,673

 7,389,414

 -

 10,456,087

 Total operating expenses

 8,439,228

 17,558,760

 3,898,974

 29,896,962

 $
 ( 3,888,642
)

 $
 ( 7,919,211
)

 $
 ( 3,898,974
)

 $
 ( 15,706,827
)

 Total assets by operating segment as of December
31, 2024 are as follows:

 As of December 31, 2024

 Automotive Supplies

 Corporate Services

 Total

 Assets

 Current assets

 $
 1,063,586

 $
 10,017,395

 $
 1,549,512

 $
 12,630,493

 Long-lived assets

 69,040

 15,638,329

 -

 15,707,369

 -

 -

 Total assets

 $
 1,132,626

 $
 30,965,600

 $
 1,549,512

 $
 33,647,738

 NOTE 7—INVENTORIES

 Inventories as of December 31, 2024 and 2023 consisted
of the following:

 2024

 2023

 Automotive-related

 $
 924,023

 $
 1,190,899

 Construction-related

 43,204

 573,327

 Total inventories

 967,227

 1,764,226

 Less reserve for obsolescence

 ( 492,574
)

 ( 369,200
)

 Total inventories, net

 $
 474,653

 $
 1,395,026

 F- 29

 NOTE 8—PREPAID EXPENSES AND OTHER CURRENT ASSETS

 Prepaid expenses and other current assets as of
December 31, 2024 and 2023 consisted of the following:

 2024

 2023

 Prepaid expenses

 $
 110,386

 $
 84,166

 Prepaid inventory

 79,134

 282,410

 Prepaid taxes

 179,000

 204,788

 Other current assets

 200,000

 200,000

 Total prepaid expenses and other current assets

 $
 568,520

 $
 771,364

 On February 7, 2024, the Company entered into
a six-month consulting agreement with TraDigital Marketing Group for consulting services related to investor relations, digital marketing
and advertising, and strategic advisory, totaling $ 1,400,000.

 On February 8, 2024, the Company entered into
a six-month consulting agreement with Alchemy Advisory LLC for consulting services related to business and investor outreach, totaling
$ 400,000.

 On February 8, 2024, the Company entered into
a 12-month consulting agreement with Reef Digital LLC for consulting services related to investor relations, IT support, and strategic
advisory, totaling $ 333,000.

 On February 8, 2024, the Company entered into
a three-month consulting agreement with SeaPath Advisory, LLC for consulting services related to content marketing and strategic advisory,
totaling $ 365,000.

 The Company prepaid these consulting agreements,
totaling $ 2,498,000, using proceeds from the February public offering (see Note 18). As of December 31, 2024, the total outstanding prepaid
expense relating to these consulting agreements was $ 27,750.

 NOTE 9—PROPERTY AND EQUIPMENT

 Property and equipment as of December 31, 2024
and 2023 consisted of the following:

 2024

 2023

 Machinery and equipment

 $
 1,547,260

 $
 1,295,499

 Office furniture and equipment

 159,700

 115,409

 Transportation equipment

 532,843

 400,602

 Leasehold improvements

 152,908

 152,908

 Total property and equipment

 2,392,711

 1,964,418

 Less: accumulated depreciation

 ( 1,276,705
)

 ( 902,091
)

 Total property and equipment, net

 $
 1,116,006

 $
 1,062,327

 Depreciation expense for the years ended December
31, 2024 and 2023 was $ 404,681 and $ 433,167, respectively.

 F- 30

 NOTE 10—INTANGIBLE ASSETS AND GOODWILL

 Intangible assets as of December 31, 2024 and
2023 consisted of the following:

 2024

 2023

 Customer-related

 $
 12,692,000

 $
 2,727,000

 Marketing-related

 899,000

 294,000

 Total intangible assets

 13,591,000

 3,021,000

 Less: accumulated amortization

 ( 1,066,654
)

 ( 815,677
)

 Total intangible assets, net

 $
 12,524,346

 $
 2,205,323

 Amortization expense for the years ended December
31, 2024 and 2023 was $ 250,977 and $ 729,128, respectively. During the years ended December 31, 2024 and 2023, the Company recorded impairments
related to its intangible assets of $ 0 and $ 3,705,176, respectively.

 Estimated amortization expense for intangible
assets for the next five years consists of the following as of December 31, 2024:

 2025

 $

 2026

 2027

 2028

 2029

 Thereafter

 7,688,686

 Total estimated amortization expense

 $
 12,524,346

 Below is a table summarizing the changes in the
carrying amount of goodwill for the years ended December 31, 2024 and 2023:

 Balance as of December 31, 2022

 $
 7,430,086

 Impairments

 ( 6,750,911
)

 Balance as of December 31, 2023

 $

 Goodwill from the acquisition of CMD

 Impairments

 ( 679,175
)

 Balance as of December 31, 2024

 $

the Company recorded goodwill impairments of $ 679,175 and $ 6,750,911, respectively.

 F- 31

 NOTE 11—ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 Accounts payable and accrued expenses as of December
31, 2024 and 2023 consisted of the following:

 2024

 2023

 Trade accounts payable

 $
 1,792,819

 $
 985,559

 Credit cards payable

 349,570

 317,406

 Accrued payroll liabilities

 1,258,227

 628,710

 Accrued interest

 1,841,011

 1,386,536

 Accrued dividends

 131,102

 32,997

 Accrued taxes

 79,510

 15,903

 Other accrued liabilities

 707,711

 604,686

 Total accounts payable and accrued expenses

 $
 6,159,950

 $
 3,971,797

 NOTE 12—LEASES

 The Company leases office and warehouse space,
machinery and other equipment. The majority of the Company's leases are classified as ROU operating leases, which are included in
operating ROU assets and operating lease liabilities in the Company's consolidated balance sheets. Finance leases are included in
property and equipment and finance lease liabilities in the Company's consolidated balance sheets.

 Operating
Leases

 On December 16, 2024, in connection with the acquisition
of CMD, 1847 CMD entered into a lease agreement with Delancey LLC relating to the properties leased by the CMD prior to the acquisition
located in Las Vegas, Nevada. The lease provides for a base rent of $ 20,000 per month, which shall increase annually by an amount equal
to three percent of the previous year's base rent. In addition, 1847 CMD will be responsible for all taxes, insurance and certain
operating costs during the lease term. The lease expires on December 31, 2029. The initial measurement of the right-of-use asset and liability
associated with this operating lease was $ 884,163.

 On December 16, 2024, in connection with the acquisition
of CMD, 1847 CMD also entered into a lease agreement with CD Gowan LLC relating to the properties leased by the CMD prior to the acquisition
located in North Las Vegas, Nevada. The lease provides for a base rent of $ 15,000 per month, which shall increase annually by an amount
equal to three percent of the previous year's base rent. In addition, 1847 CMD will be responsible for all taxes, insurance and
certain operating costs during the lease term. The lease expires on December 31, 2029. The initial measurement of the right-of-use asset
and liability associated with this operating lease was $ 663,122.

 Operating leases as of December 31, 2024 and 2023
consisted of the following:

 2024

 2023

 Operating lease right-of-use assets

 $
 2,017,482

 $
 907,748

 Operating lease liabilities, current portion

 598,534

 435,280

 Operating lease liabilities, long-term

 1,473,795

 523,768

 Total operating lease liabilities

 $
 2,072,329

 $
 959,048

 Weighted-average remaining lease term (months)

 Weighted-average discount rate

 14.14
 %

 4.95
 %

 F- 32

 The components of operating lease expense consisted
of the following for the years ended December 31, 2024 and 2023:

2024

2023

 Fixed operating lease expense

 $
 494,349

 $
 466,674

 Variable operating lease expense

 93,681

 87,348

 Total operating lease expense

 $
 588,030

 $
 554,022

 Estimated future minimum payments of operating
leases for the next five years consists of the following as of December 31, 2024:

 2025

 $
 833,193

 2026

 540,566

 2027

 468,103

 2028

 458,945

 2029

 472,714

 Total

 2,773,521

 Less: imputed interest

 ( 701,192
)

 Total operating lease liabilities

 $
 2,072,329

 Finance
Leases

 Finance leases as of December 31, 2024 and 2023
consisted of the following:

 2024

 2023

 Machinery and equipment

 $
 1,079,330

 $
 1,079,330

 Office furniture and equipment

 11,706

 11,706

 Total leased equipment (property and equipment)

 1,091,036

 1,091,036

 Less: accumulated depreciation

 ( 613,821
)

 ( 395,793
)

 Total leased equipment, net

 $
 477,215

 $
 695,243

 Finance lease liabilities, current portion

 182,043

 172,152

 Finance lease liabilities, long-term

 423,198

 605,242

 Total finance lease liabilities

 $
 605,241

 $
 777,394

 Weighted-average remaining lease term (months)

 Weighted-average discount rate

 5.15
 %

 5.15
 %

 The components of finance lease expense consisted
of the following for the years ended December 31, 2024 and 2023:

2024

2023

 Depreciation expense

 $
 218,028

 $
 218,028

 39,179

 48,532

 Total finance lease expense

 $
 257,207

 $
 266,560

 F- 33

 Estimated future minimum payments of finance leases
for the next five years consists of the following as of December 31, 2024:

 2025

 $
 211,332

 2026

 211,332

 2027

 210,042

 2028

 28,833

 Total

 661,539

 Less: amount representing interest

 ( 56,298
)

 Total finance lease liabilities

 $
 605,241

 NOTE
13 —FAIR VALUE MEASUREMENTS

 The carrying amounts of financial assets and liabilities,
such as cash and cash equivalents, accounts receivable, inventories, prepaid expenses, accounts payable and accrued expenses, and contract
assets and liabilities approximate fair value given the short-term nature of these instruments. The carrying amounts of lease obligations,
notes payable, and convertible notes payable approximates fair value given these instruments bear prevailing market interest rates.

 Recurring Fair Value Measurements

 The fair value of financial instruments measured
on a recurring basis as of December 31, 2024 and 2023 consisted of the following:

 Fair Value Measurements as of December 31, 2024

 Level 1

 Level 2

 Level 3

 Total

 Derivative liabilities

 $
 -

 $
 -

 $
 185,000

 $
 185,000

 Warrant liabilities

 -

 -

 85,779,788

 85,779,788

 Total recurring fair value measurements

 -

 -

 $
 85,964,788

 $
 85,964,788

 Fair Value Measurements as of December 31, 2023

 Level 1

 Level 2

 Level 3

 Total

 Derivative liabilities

 $
 -

 $
 -

 $
 1,389,203

 $
 1,389,203

 The following table provides a roll-forward of
changes for financial instruments measured at fair value on a recurring basis for the years ended December 31, 2024 and 2023:

 Derivative Liabilities

 Balance as of December 31, 2022

 $
 -

 Initial fair value of derivative liabilities upon issuance

 2,613,177

 Gain on change in fair value of derivative liabilities

 ( 385,138
)

 Extinguishment of derivative liabilities upon conversion of convertible notes

 ( 838,836
)

 Balance as of December 31, 2023

 $
 1,389,203

 Initial fair value of derivative liabilities upon issuance (limited to proceeds)

 1,699,727

 Gain on change in fair value of derivative liabilities

 ( 1,401,373
)

 Extinguishment of derivative liabilities upon conversion of convertible notes

 ( 1,502,557
)

 Balance as of December 31, 2024

 $
 185,000

 F- 34

 Warrant Liabilities

 Balance as of December 31, 2022

 $
 -

 Fair value of warrant liabilities upon issuance

 1,156,300

 Loss on change in fair value of warrant liabilities

 27,900

 Extinguishment of warrant liabilities upon exercise of warrants

 ( 1,184,200
)

 Balance as of December 31, 2023

 $
 -

 Fair value of warrant liabilities upon issuance (limited to proceeds)

 24,667,526

 Loss on change in fair value of warrant liabilities

 77,638,662

 Extinguishment of warrant liabilities upon exercise of warrants

 ( 16,526,400
)

 Balance as of December 31, 2024

 $
 85,779,788

 Non-recurring Fair Value Measurements

 Certain assets, including long-lived assets and
goodwill, are measured at fair value on a non-recurring basis if it is determined that impairment indicators are present using Level 3
inputs. During the years ended December 31, 2024 and 2023, the Company recorded impairments of intangible assets and goodwill of $ 679,175
and $ 10,456,087, respectively.

 NOTE
14 —NOTES PAYABLE

 Notes payable as of December 31, 2024 and 2023
consisted of the following:

 2024

 2023

 Vehicle loans

 $
 53,424

 $
 45,378

 6% Amortizing promissory note

 -

 562,411

 6% Subordinated promissory notes

 Purchase and sale of future revenues loan

 1,237,950

 1,807,800

 20% OID subordinated promissory notes (August 2023)

 -

 3,125,000

 20% OID subordinated promissory notes (March 2024)

 3,217,932

 -

 20% OID subordinated promissory notes (May 2024)

 -

 -

 12% Subordinated promissory note for services

 -

 25% OID subordinated promissory note

 1,455,600

 -

 CMD seller promissory note

 1,050,000

 -

 Total notes payable

 8,014,906

 6,040,589

 Less: debt discounts

 ( 220,465
)

 ( 3,534,561
)

 Total notes payable, net

 $
 7,794,441

 $
 2,506,028

 Current portion of notes payable, net

 $
 7,785,911

 $
 2,481,783

 Notes payable, net of current portion

 $
 8,530

 $
 24,245

 Estimated future minimum principal payments of
notes payable for the next five years consists of the following as of December 31, 2024:

 2025

 $
 8,006,376

 2026

 8,530

 Total payments

 $
 8,014,906

 F- 35

 6% Amortizing Promissory Note

 On July 29, 2020, 1847 Asien entered into a securities
purchase agreement with Joerg Christian Wilhelmsen and Susan Kay Wilhelmsen, as trustees of the Wilhelmsen Family Trust, U/D/T Dated May
1, 1992 (the "Trust"), pursuant to which 1847 Asien issued a two-year 6 % amortizing promissory note in the aggregate principal
amount of $ 1,037,500. This note was subsequently amended on multiple occasions, and pursuant to the latest amendment, the parties agreed
to extend the maturity date of the note to July 30, 2023. As additional consideration for entering into the amendment, 1847 Asien agreed
to pay an amendment fee of $ 84,362 on the maturity date.

 On August 22, 2024, the Company and 1847 Asien
entered into a settlement and release agreement with the Trust, pursuant to which the Trust surrendered the note and forgave the entire
outstanding balance of the note in the amount of $ 831,027 in exchange for which the Company issued 83,603 series C senior convertible
preferred shares to the Trust (see Note 17 for further detail on the series C senior convertible preferred shares). The settlement agreement
also includes a customary release of claims and covenants not to be sued by the Trust. As a result, the Company recognized a gain on extinguishment
of debt of $ 427,557.

 6% Subordinated Promissory Notes

 As part of the consideration paid in the acquisition
of ICU Eyewear, 1847 ICU issued the sellers 6 % subordinated promissory notes in the aggregate principal amount of $ 500,000. The notes
bear interest at the rate of 6 % per annum with all principal and accrued interest being due and payable in one lump sum on February 9,
2024; provided that upon an event of default (as defined in the notes), such interest rate shall increase to 10%. The notes are unsecured
and subordinated to all senior indebtedness.

principal balance is $ 500,000, with an accrued interest balance of $ 75,694.

 Purchase and Sale of Future Revenues Loan

 On March 31, 2023, the Company and its subsidiary
1847 Cabinet entered into a non-recourse funding agreement with a third-party for the sale of future revenues totaling $ 1,965,000 for
net cash proceeds of $ 1,410,000. The Company is required to make weekly ACH payments in the amount of $ 39,300. The agreement also allows
for the third-party to file UCCs securing their interest in the receivables and includes customary events of default.

 The Company recorded an initial debt discount
of $ 555,000, to be amortized under the effective interest method. The Company is utilizing the prospective method to account for subsequent
changes in the estimated future payments, whereby if there is a change in the estimated future cash flows, a new effective interest rate
is determined based on the revised estimate of remaining cash flows. The effective interest rate was 72.4 %.

 On November 30, 2023, the agreement was amended
to increase the outstanding balance by $ 1,375,500 to $ 1,965,000 for net cash proceeds of $ 865,500. All other terms remained unchanged.
The Company evaluated the amendment in accordance with ASC Topic 470-50, " Modifications and Extinguishments," and determined
the amendment was a modification. As a result, the Company recorded an additional debt discount of $ 510,000. Following the modification,
the effective interest rate was 65.1 %.

 On July 23, 2024, the agreement was further amended
to increase the outstanding balance by $ 1,624,400 to $ 2,292,500 for net cash proceeds of $ 1,029,400. The Company is required to make weekly
ACH payments in the amount of $ 45,850. All other terms remained unchanged. The Company evaluated the amendment in accordance with ASC
Topic 470-50 and determined the amendment was a modification. As a result, the Company recorded an additional debt discount of $ 595,000.
Following the modification, the effective interest rate is 74.8 %.

principal balance is $ 1,237,950, net of debt discount of $ 217,622.

 20% OID Promissory Notes – August
2023

 On August 11, 2023, the Company entered into a
securities purchase agreement in a private placement transaction with certain accredited investors, pursuant to which the Company issued
and sold to the investors 20 % OID subordinated promissory notes in the aggregate principal amount of $ 3,125,000 and warrants for the purchase
of an aggregate of 216 common shares for total cash proceeds of $ 2,218,000 (see Note 18 for further details on the warrants).

 F- 36

 The notes were due and payable on February 11,
2024. The notes are unsecured and have priority over all other unsecured indebtedness of the Company, except for certain senior indebtedness
(as defined in the note agreement). The notes contain customary affirmative and negative covenants and events of default for a loan of
this type. Upon an event of default, the outstanding balance of the note will be assessed a 40 % penalty.

 Spartan Capital Securities, LLC ("Spartan")
acted as placement agent in connection with the securities purchase agreement and received (i) a cash transaction fee equal to 6 % of the
aggregate gross proceeds, (ii) a non-accountable and non-reimbursable due diligence and expense fee equal to 1 % of the aggregate gross
proceeds and (iii) a warrant for the purchase common shares equal to eight percent ( 8 %) of the number common shares issuable upon conversion,
resulting in the issuance of a warrant for 445 common shares (see Note 18 for further detail on the warrants).

 The notes are convertible into common shares at
the option of the holders at any time on or following the date that an event of default (as defined in the note agreement) occurs at a
conversion price equal to 90 % of the lowest volume weighted average price of the Company's common shares on any trading day during
the five (5) trading days prior to the conversion date; provided that such conversion price shall not be less than $ 585 per share. The
conversion price of the notes is subject to standard adjustments, including a price-based adjustment in the event that the Company issues
any common shares or other securities convertible into or exercisable for common shares at an effective price per share that is lower
than the conversion price, subject to certain exceptions.

 The Company evaluated the embedded features within
these promissory notes in accordance with ASC Topic 480 and ASC Topic 815. The Company determined that the embedded features, specifically
(i) the default penalty of 40 % on outstanding principal, and (ii) the conversion option into common shares at 90 % of the lowest volume
weighted average price for the common shares on the Company's principal trading market (the "VWAP") in the five days
preceding conversion, subject to an initial $ 585 floor price, constitute derivative liabilities. These features, arising from default
provisions, including the contingent default penalty (deemed redemption) and the contingent conversion feature, meet the definition of
a derivative and do not qualify for derivative accounting exemptions. Consequently, these embedded features were bifurcated from the debt
host as a single derivative liability.

 The initial fair value of the derivative liabilities
was determined using a Monte Carlo Simulation valuation model, considering various potential outcomes and scenarios. The model used the
following assumptions: (i) dividend yield of 0 %; (ii) expected volatility of 145.37 %; (iii) risk-free interest rate of 5.37 %; (iv) maximum
term of one year; (v) estimated fair value of the common shares of $ 3,611.40 per share; and (vi) various probability assumptions. Subsequent
changes in fair value are recognized in the statement of operations for each reporting period. The issuance costs for the promissory notes,
along with the allocated fair values of both the warrants and the bifurcated embedded derivative liability, were collectively treated
as a debt discount. The debt discount is amortized to interest expense over the term of the promissory notes using the effective interest
method.

 On February 11, 2024, the Company and remaining
note holders entered into amendments to the notes, pursuant to which the parties agreed to extend the maturity date of these remaining
notes to April 11, 2024. As additional consideration for the amendments, the Company agreed to increase the outstanding principal of the
remaining notes by 20 % as an amendment fee. The Company evaluated the amendments in accordance with ASC Topic 470-50 and determined the
amendment was an extinguishment. As a result, the Company recognized a loss on extinguishment of debt of $ 421,875.

 On April 11, 2024, the Company and remaining note
holders entered into amendments to the notes, pursuant to which the parties agreed to extend the maturity date of these remaining notes
to July 10, 2024. As additional consideration for the amendments, the Company agreed to increase the outstanding principal of the remaining
notes by 20 % as an amendment fee. As a result, the Company recognized a loss on extinguishment of debt of $ 421,875.

 On July 10, 2024, the Company and remaining note
holders entered into amendments to the notes, pursuant to which the parties agreed to extend the maturity date of these remaining notes
to October 10, 2024. As additional consideration for the amendments, the Company agreed to increase the outstanding principal of the remaining
notes by 25 % as an amendment fee. As a result, the Company recognized a loss on extinguishment of debt of $ 632,810.

 In October 2024, the Company repaid the outstanding
notes using proceeds from the October equity offering (see Note 18 for further details).

 F- 37

 20 % OID Promissory Notes – March 2024

 On March 4, 2024, the Company issued a 20 % OID
subordinated promissory note in the principal amount of $ 1,250,000 to an accredited investor for net cash proceeds of $ 999,900. On March
27, 2024, the note was amended and restated to increase the principal amount to $ 1,562,500 for additional cash proceeds of $ 250,000. On
April 9, 2024, the note was amended and restated to increase the principal amount to $ 2,500,000 for additional cash proceeds of $ 750,000.

 The Company may voluntarily prepay the note in
full at any time. In addition, if the Company consummates any equity or equity-linked or debt securities issuance, or enters into a loan
agreement or other financing, other than certain excluded debt (as defined in the note), then the Company must prepay the note in full.
The note is unsecured and has priority over all other unsecured indebtedness, except for certain senior indebtedness (as defined in the
note). The note contains customary affirmative and negative covenants and events of default for a loan of this type. Upon an event of
default, the outstanding balance of the note will be assessed a 50 % penalty.

 The Company evaluated whether the promissory note
contains embedded features that qualify as derivatives pursuant to ASC Topic 815. The Company determined that the note's embedded
features, specifically that should the Company default on the note, the note holder will receive a default penalty of 50 % constitute a
deemed redemption feature as a result of the substantial premium received by the note holder in the event of default. The Company concluded
that the redemption feature requires bifurcation from the note and subsequent accounting in the same manner as a freestanding derivative.

 The fair value of the embedded redemption derivative
liability was calculated using a Probability Weighted Expected Return valuation methodology, considering the likelihood of occurrence.
Subsequent changes in the fair value of the redemption feature are measured each reporting period and recognized in the statement of operations.
The OID and issuance costs for the note, along with the fair value of the embedded redemption derivative liability, were collectively
recorded as a debt discount. The debt discount is amortized to interest expense over the term of the note using the effective interest
method.

 On June 4, 2024, an event of default occurred,
resulting in a $ 1,250,000 increase to the principal balance. As a result, the Company recognized a loss on extinguishment of debt of $ 1,250,000.
Consequently, the corresponding derivative liability was extinguished.

 On August 20, 2024, the agreement was amended,
pursuant to which the parties agreed to extend the maturity date of the note to November 30, 2024. As additional consideration for the
amendment, the Company agreed to increase the outstanding principal by $ 500,000 as an amendment fee. As a result, the Company recognized
a loss on extinguishment of debt of $ 500,000.

 On November 15, 2024, the agreement was amended,
pursuant to which the parties agreed to extend the maturity date of the note to December 31, 2024. As additional consideration for the
amendment, the Company agreed to increase the outstanding principal by $ 446,935 as an amendment fee. As a result, the Company recognized
a loss on extinguishment of debt of $ 446,935.

 On December 16, 2024, the agreement was amended,
pursuant to which the parties agreed to extend the maturity date of the note to March 31, 2025. As additional consideration for the amendment,
the Company agreed to increase the outstanding principal by $ 536,322 as an amendment fee. As a result, the Company recognized a loss
on extinguishment of debt of $ 536,322.

principal balance is $ 3,217,932.

 20 % OID Promissory Note – May 2024

 On May 8, 2024, the Company entered into securities
purchase agreement with an accredited investor, pursuant to which the Company issued to such investor (i) a 20 % OID subordinated note
in the principal amount of $ 625,000 and (ii) five-year warrants for the purchase of 477 common shares for total cash proceeds of $ 500,000.
Additionally, the Company issued a five-year warrant to the placement agent, Spartan, for the purchase of 39 common shares (see Note 18
for further details on the warrants).

 F- 38

 The Company may voluntarily prepay the note in
full at any time. In addition, if the Company consummates any sale of a material amount of assets of the Company or any of its subsidiaries,
then the net proceeds thereof shall be applied to the payment or prepayment of the note. The note is unsecured and has priority over all
other unsecured indebtedness of the Company, except for certain senior indebtedness (as defined in the note). The note contains customary
affirmative and negative covenants and events of default for a loan of this type. Upon an event of default, the outstanding balance of
the note will be assessed a 40 % penalty.

 The note becomes convertible into common shares
at the option of the holder at any time on or following the date that an event of default (as defined in the note agreement) occurs under
the note at a conversion price equal to 90 % of the lowest volume weighted average price of the Company's common shares on any trading
day during the five (5) trading days prior to the conversion date; provided that such conversion price shall not be less than $ 1.95 per
share.

 The Company evaluated the embedded features within
these promissory notes in accordance with ASC Topic 480 and ASC Topic 815. The Company determined that the embedded features, specifically
(i) the default penalty of 40 % on outstanding principal and accrued interest, and (ii) the conversion option into common shares at 90 %
of the lowest VWAP in the five days preceding conversion, subject to an initial $ 1.95 floor price, constitute derivative liabilities.
These features, arising from default provisions, including the contingent default penalty (deemed redemption) and the contingent conversion
feature, meet the definition of a derivative and do not qualify for derivative accounting exemptions. Consequently, these embedded features
were bifurcated from the debt host as a single derivative liability.

 The initial fair value of the derivative liabilities
was determined using a Monte Carlo Simulation valuation model, considering various potential outcomes and scenarios. The model used the
following assumptions: (i) dividend yield of 0 %; (ii) expected volatility of 236.98 %; (iii) risk-free interest rate of 5.31 %; (iv) term
of three months; (v) estimated fair value of the common shares of $ 468 per share; and (vi) various probability assumptions. Subsequent
changes in fair value are recognized in the statement of operations for each reporting period. The issuance costs for the promissory note,
along with the allocated fair values of both the warrants and the bifurcated embedded derivative liability, were collectively treated
as a debt discount. The debt discount is amortized to interest expense over the term of the promissory notes using the effective interest
method.

 On September 26, 2024, the parties entered in
an amendment to the note to (i) increase the original issue discount to $ 218,750, (ii) increase the principal amount to $ 868,750, (iii)
increase the default amount (as defined in the note) to 140 % and (iv) extend the maturity date to November 30, 2024. As a result, the
Company recognized a loss on extinguishment of debt of $ 243,750.

 In October 2024, the Company repaid the note using
proceeds from the October equity offering (see Note 18 for further details).

 12 % Promissory Note for Services

 On May 9, 2024, the Company entered into a securities
purchase agreement with an accredited investor, pursuant to which the Company issued to such investor a promissory note in the principal
amount of $ 500,000 in a private placement transaction in consideration for the holder entering into a lock up agreement to not execute
any conversions of a secured convertible note issued to the holder on October 8, 2021 (see Note 15) into common shares of the Company
(subject to certain exceptions). The note accrues interest at a rate of 12 % per annum and is due and payable on May 9, 2025; provided
that upon an event of default (as defined in the note), such rate shall increase to 16 % per annum. The Company may voluntarily prepay
the note in full at any time prior to the date that an event of default occurs.

 In addition, if, at any time prior to the full
repayment of the note, the Company receives cash proceeds from any source or series of related or unrelated sources, including but not
limited to, from payments from customers, the issuance of equity or debt, the issuance of securities pursuant to an equity line of credit
(as defined in the note) or the sale of assets, the investor will have the right in its sole discretion to require the Company to immediately
apply up to 100 % of such proceeds to repay all or any portion of the outstanding principal amount and interest (including any default
interest) then due under the note. The note is unsecured and has priority over all other unsecured indebtedness. The note contains customary
affirmative and negative covenants and events of default for a loan of this type. Upon an event of default, the outstanding balance of
the note will be assessed a 50 % penalty.

 F- 39

 The 12 % promissory note issued for services was
recorded at fair value. The fair value of the note was calculated at the present value of the cash flows using the market interest rate
of 13.76 %, resulting in a fair value of $ 492,000. The initial fair value of the note was recognized in the statement of operations. A
discount of $ 8,000 was recorded for difference between the present value of the note and is amortized to interest expense over the respective
term of the note using the effective interest method.

 The Company evaluated whether the promissory note
contains embedded features that qualify as derivatives pursuant to ASC Topic 815. The Company determined that the note's embedded
features, specifically that should the Company default on the note, the note holder will receive a default penalty of 50 % constitute a
deemed redemption feature as a result of the substantial premium received by the note holder in the event of default. The Company concluded
that the redemption feature requires bifurcation from the note and subsequent accounting in the same manner as a freestanding derivative.

 The fair value of the embedded redemption derivative
liability was calculated using a Probability Weighted Expected Return valuation methodology, considering the likelihood of occurrence.
The initial fair value of the bifurcated embedded redemption derivative liability was recognized in the statement of operations. Subsequent
changes in the fair value of the redemption feature are measured at each reporting period and recognized in the statement of operations.

principal balance is $ 500,000, net of debt discount of $ 2,843.

 25 % OID Promissory Note

 On June 28, 2024, the Company's subsidiaries
1847 Cabinet, High Mountain, Innovative Cabinets and Kyle's (the "Borrowers") issued an 25 % OID promissory note in
the principal amount of up to $ 2,472,000, to be advanced in one or more tranches, to Breadcrumbs Capital LLC ("Breadcrumbs").

 On June 28, 2024, the parties executed tranche
No. 1 in the principal amount of $ 666,667 for total cash proceeds of $ 475,000. On July 3, 2024, the parties executed tranche No. 2 in
the principal amount of $ 466,667 for total cash proceeds of $ 300,000. On July 16, 2024, the parties executed tranche No. 3 in the principal
amount of $ 233,333 for total cash proceeds of $ 175,000. On August 12, 2024, the parties executed tranche No. 4 in the principal amount
of $ 466,667 for total proceeds of $ 350,000 (cash proceeds of $ 250,000 and $ 100,000 paid directly to third parties to settle accrued liabilities).
On August 22, 2024, the parties executed tranche No. 5 in the principal amount of $ 300,000 for total cash proceeds of $ 225,000.

 The note bears interest at a rate per annum equal
to the greater of (i) 8 % plus the U.S. Prime Rate that appears in The Wall Street Journal from time to time or (ii) 14 %; provided that,
upon an event of default (as defined in the note), such rate shall increase to 36 % or the maximum legal rate. Each tranche of the note
is due and payable three months after issuance. The note is secured by all assets of the Borrowers pursuant to a security agreement; provided
that such security interest is subordinate to the rights of the senior lender, Leonite Capital LLC. The note contains customary affirmative
and negative covenants and events of default for a loan of this type. Upon an event of default, the outstanding balance of the note will
be assessed a 35 % penalty.

 In connection with the issuance of the note, the
Company entered into a memorandum of understanding with the Breadcrumbs, pursuant to which upon the closing of each tranche under the
note the Company agreed to issue to Breadcrumbs series D senior convertible preferred shares with a stated value equal to the principal
amount of each such tranche (see Note 17 for further details).

 The Company evaluated whether the promissory note
contains embedded features that qualify as derivatives pursuant to ASC Topic 815. The Company determined that the note's embedded
features, specifically that should the Company default on the note, the note holder will receive a default penalty of 35 % constitute a
deemed redemption feature as a result of the substantial premium received by the note holder in the event of default. The Company concluded
that the redemption feature requires bifurcation from the note and subsequent accounting in the same manner as a freestanding derivative.

 F- 40

 The fair value of the embedded redemption derivative
liability was calculated using a Probability Weighted Expected Return valuation methodology, considering the likelihood of occurrence.
Subsequent changes in the fair value of the redemption feature are measured each reporting period and recognized in the statement of operations.
The OID and issuance costs for the note, along with the allocated fair value of both the series D senior convertible preferred shares
and the bifurcated embedded redemption derivative liability, were collectively recorded as a debt discount. The debt discount is amortized
to interest expense over the term of the note using the effective interest method.

 Upon maturity, an event of default occurred, resulting
in a $ 377,370 increase to the principal balance. As a result, the Company recognized a loss on extinguishment of debt of $ 377,370. Consequently,
the corresponding derivative liability was extinguished.

principal balance is $ 1,455,600, with an accrued interest balance of $ 119,905.

 CMD Seller Promissory Note

 As part of the consideration paid in the acquisition
of CMD (see Note 5), on December 16, 2024, 1847 CMD issued the seller a promissory note in the principal amount of $ 1,050,000. The note
is due and payable on February 16, 2025, and does not bear interest; provided that upon a default, as described in the note, interest
shall accrue at a rate of fifteen percent ( 15 %) per annum until such default is cured.

principal balance is $ 1,050,000.

 Vehicle Loans

 The Company has financed purchases of vehicles
with notes payable, which are secured by the vehicles purchased. These notes have four to five year terms and interest rates ranging from
 1.99 % to 6.54 %. As of December 31, 2024, the total outstanding balance is $ 53,424.

 NOTE
15 —CONVERTIBLE NOTES PAYABLE

 Convertible notes payable as of December 31, 2024
and 2023 consisted of the following:

 2024

 2023

 Secured convertible promissory notes

 $

 $
 24,860,000

 6 % subordinated convertible promissory notes

 -

 1,260,173

 Private placements of convertible promissory notes

 -

 1,222,408

 Total convertible notes payable

 27,342,581

 Less: debt discounts

 ( 985,137
)

 ( 1,872,228
)

 Total convertible notes payable, net

 $

 $
 25,470,353

 Current portion of convertible notes payable, net

 $

 $
 2,418,275

 Convertible notes payable, net of current portion

 $
 -

 $
 23,052,078

 Estimated future minimum principal payments of
convertible notes payable for the next five years consists of the following as of December 31, 2024:

 2025

 $

 Total payments

 $

 F- 41

 Secured Convertible Promissory Notes

 On October 8, 2021, the Company issued two secured
convertible promissory notes in the principal amount of $ 16,900,000 and $ 7,860,000 to SILAC Insurance Company ("SILAC") and
a secured convertible promissory note in the principal amount of $ 100,000 to Leonite Capital LLC ("Leonite"). Thereafter,
(i) on September 1, 2023, SILAC entered into a securities purchase agreement with Altimir Partners LP ("Altimir"), pursuant
to which Altimir agreed to purchase the secured convertible promissory note in the principal amount of $ 16,900,000, $ 765,306 of which
was then acquired by Leonite, and (ii) on December 1, 2023, SILAC entered into a securities purchase agreement with Beaman Special Opportunities
Partners, LP ("Beaman"), pursuant to which Beaman purchased that the secured convertible promissory note in the principal
amount of $ 7,860,000. In connection with the sale of High Mountain, $ 5,815,768 of the purchase price was paid to Altimir and $ 2,819,711
of the purchase price was paid to Beaman. A total of $ 7,000,000 of these funds were held by Altimir and Beauman in a reserve account for
the Company's use in connection with the CMD acquisition.

 The notes accrued interest at a rate per annum
equal to the greater of (i) 4.75% plus the U.S. Prime Rate that appears in The Wall Street Journal from time to time or (ii) 8%;
provided that, upon an event of default (as defined in the note agreement), such rate shall increase to 24% or the maximum legal rate.
Payments of interest only, computed at such rate on the outstanding principal amount, will be due and payable quarterly in arrears commencing
on January 1, 2022 and continuing on the first day of each calendar quarter thereafter through and including the maturity date, October
8, 2026.

 The holders of the notes may, in their sole discretion,
elect to convert any outstanding and unpaid principal portion of the notes, and any accrued but unpaid interest on such portion, into
common shares at an adjusted conversion price equal to $ 0.27 per share (subject to adjustments as defined in the note agreement); provided
that the notes contain certain beneficial ownership limitations.

 The note purchase agreement and the notes contain
customary representations, warranties, affirmative and negative financial and other covenants and events of default for loans of this
type. The notes are guaranteed by certain subsidiaries and are secured by a first priority security interest in all of the assets of the
Company and certain subsidiaries.

 On September 30, 2024, the parties entered into
an amendment to the notes, which (i) provided for the terms of the reserve account described above, (ii) changed the maturity date to
 October 8, 2025, (iii) changed the interest rate to 15 %, (iv) amended the repayment terms to require monthly payments of interest only
commencing on the earlier of completion of the potential acquisition and December 1, 2024 and to require monthly payments of $ 500,000
commencing on April 1, 2025. The amendment also requires that the Company pay $ 4,000,000 no later than January 31, 2025 and includes an
additional exit fee of $ 250,000 to be paid on the maturity date or upon the earlier repayment of the notes in full. As additional consideration
for entering into the amendment, the Company agreed to pay an amendment fee of $ 250,000.

principal balance is $ 23,074,286, net of debt discounts of $ 985,137, with an accrued interest balance of $ 1,535,306.

 6% Subordinated Convertible Promissory Notes

 On October 8, 2021, 1847 Cabinet issued 6 % subordinated
convertible promissory notes in the aggregate principal amount of $ 5,880,345 to Steven J. Parkey and Jose D. Garcia-Rendon, the sellers
of High Mountain and Innovative Cabinets.

 The notes accrued interest at a rate of six percent
( 6 %) per annum and were due and payable on October 8, 2024; provided that upon an event of default (as defined in the note agreement),
such interest rate shall increase to ten percent ( 10 %) per annum. 1847 Cabinet may prepay the notes in whole or in part, without penalty
or premium, upon ten ( 10) business days prior written notice to the holders of the notes.

 On October 8, 2021, the Company entered into an
exchange agreement with the holders, pursuant to which the Company granted them the right to exchange all of the principal amount and
accrued but unpaid interest under the notes or any portion thereof for a number of common shares to be determined by dividing the amount
to be converted by an exchange price equal to the higher of (i) the 30-day volume weighted average price for the common shares on the
primary national securities exchange or over-the-counter market on which the common shares are traded over the thirty ( 30) trading days
immediately prior to the applicable exchange date or (ii) $ 195,000 (subject to adjustments as defined in the note agreement).

 F- 42

 The notes contain customary events of default,
including in the event of a default under the secured convertible promissory notes described above. The rights of the holders to receive
payments under the notes are subordinated to the rights of the purchasers under secured convertible promissory notes described above.

 In connection with the sale of High Mountain,
$ 3,207,058 of the purchase price was used to repay the remaining principal and accrued interest of the notes in full.

 Private Placements of Convertible Promissory
Notes

 On February 3, 2023, the Company entered into
securities purchase agreements with two accredited investors, Mast Hill and Leonite Fund I, LP ("Leonite Fund"), pursuant
to which the Company issued to such investors (i) promissory notes in the aggregate principal amount of $ 604,000 and (ii) five-year warrants
for the purchase of an aggregate of 7 common shares. As additional consideration, the Company issued an aggregate of 7 common shares to
the investors as a commitment fee. Additionally, the Company issued a five-year warrant to J.H. Darbie & Co (the broker) for the purchase
of 1 common share (see Note 18 for further details on the warrants and common share issuances).

 On February 9, 2023, the Company entered into
securities purchase agreements with two accredited investors, Mast Hill and Leonite Fund, pursuant to which the Company issued to such
investors (i) promissory notes in the aggregate principal amount of $ 2,557,575 and (ii) five-year warrants for the purchase of an aggregate
of 28 common shares for total cash proceeds of $ 2,271,818. As additional consideration, the Company issued 15 common shares to Mast Hill
and issued Leonite Fund a five-year warrant for the purchase of 16 common shares, which were issued as a commitment fee. Additionally,
the Company issued a five-year warrant to J.H. Darbie & Co (the broker) for the purchase of 1 common share (see Note 18 for further
details on the warrants and common share issuances).

 On February 22, 2023, the Company entered into
securities purchase agreement with one accredited investor, Mast Hill, pursuant to which the Company issued to such investor (i) a promissory
note in the principal amount of $ 878,000 and (ii) five-year warrants for the purchase of an aggregate of 15 common for total cash proceeds
of $ 737,700. As additional consideration, the Company issued a five-year warrant for the purchase of 11 common shares to the investor
as a commitment fee. Additionally, the Company issued a five-year warrant to J.H. Darbie & Co (the broker) for the purchase of 1 common
share (see Note 18 for further details on the warrants).

 These notes accrued interest at a rate of 12 %
per annum and mature on the first anniversary of the date of issuance; provided that any principal amount or interest which is not paid
when due shall bear interest at a rate of the lesser of 16 % per annum or the maximum amount permitted by law from the due date thereof
until the same is paid. The notes require monthly payments of principal and interest commencing in May 2023. The notes are unsecured and
have priority over all other unsecured indebtedness. The notes contain customary affirmative and negative covenants and events of default
for a loan of this type.

 The notes become convertible into common shares
at the option of the holders at any time on or following the date that an event of default (as defined in the note agreement) occurs under
the notes at an initial conversion price equal the lower of (i) $ 81,900 per share (subject to adjustments as defined in the note agreement)
and (ii) 80 % of the lowest volume weighted average price of the common shares on any trading day during the five (5) trading days prior
to the conversion date; provided that such conversion price shall not be less than $ 585 per share.

 The Company evaluated the embedded features within
these promissory notes in accordance with ASC Topic 480 and ASC Topic 815. The Company determined that the embedded features, specifically
(i) the default penalty of 15 % on outstanding principal and accrued interest, and (ii) the conversion option into common shares at the
lower of $ 81,900 or 80 % of the lowest VWAP in the five days preceding conversion, subject to an initial $ 585 floor price, constitute derivative
liabilities. These features, arising from default provisions, including the contingent default penalty (deemed redemption) and the contingent
conversion feature, meet the definition of a derivative and do not qualify for derivative accounting exemptions. Consequently, these embedded
features were bifurcated from the debt host as a single derivative liability.

 F- 43

 The initial fair value of the derivative liabilities
was determined using a Monte Carlo Simulation valuation model, considering various potential outcomes and scenarios. The model used the
following assumptions: (i) dividend yield of 0 %; (ii) expected volatility of 160.45 %; (iii) risk-free interest rate of 4.68 %; (iv) maximum
term of one year; (v) estimated fair value of the common shares of $ 37,635 per share; and (vi) various probability assumptions. Subsequent
changes in fair value are recognized in the statement of operations for each reporting period. The issuance costs for the promissory note,
along with the allocated fair values of both the warrants and the bifurcated embedded derivative liability, were collectively treated
as a debt discount. The debt discount is amortized to interest expense over the term of the promissory notes using the effective interest
method.

 In August 2023, the Company received notices of
default from Mast Hill and Leonite Fund for failure to make certain payments when due. Mast Hill and Leonite Fund agreed in writing that
they would not require any payments in cash for the over-due amounts or accelerate the payments due under the notes for a period of 60
days. Since an event of default occurred, Mast Hill and Leonite Fund have the right to convert the notes, including the over-due amounts,
penalties and fees, into common shares at their election.

 On August 31, 2023, the parties entered into
amendments to the notes, pursuant to which the parties agreed to extend the maturity date of these remaining notes to August 31,
2024 and the Company agreed to make monthly payments commencing on September 30, 2023, as further described in the amendments. Mast
Hill and Leonite Fund also agreed not to convert any portion of the remaining notes as long as the Company makes these payments on
time or receives approval from the Company to do so. As additional consideration for the amendments, the Company agreed to pay Mast
Hill and Leonite Fund an amendment fee equal to 10 % of the principal amounts of the remaining notes.

 During the year ended December 31, 2024, the outstanding
balance of these notes were settled in full (through both conversions to common shares and cash repayments).

 NOTE 16 —RELATED
PARTIES

 Related Party Note

 Related party note payable as of December 31,
2024 and 2023 consisted of the following:

 2024

 2023

 Related party promissory note

 $

 $

 Current portion of related party note payable

 $

 $

 Related party note payable, net of current portion

 $
 -

 $
 -

 On September 30, 2020, a portion of the purchase
price for the acquisition of Kyle's was paid by the issuance of a promissory note by 1847 Cabinet to Stephen Mallatt, Jr. and Rita
Mallatt, who are officers of Kyle's, in the principal amount of $ 1,260,000. Payment of the principal and accrued interest on the
note was subject to vesting.

 The note was subsequently amended on multiple
occasions. Pursuant to the latest amendment, the parties agreed to extend the maturity date of the note to July 30, 2023. As additional
consideration for entering into the amendment, 1847 Cabinet agreed to pay an amendment fee of $ 76,784 on the maturity date. This note
is currently in default.

 As of December 31, 2024, the outstanding principal
balance is $ 578,290, with an accrued interest balance of $ 71,312.

 F- 44

 Management Services Agreements

 On April 15, 2013, the Company and the Manager
entered into a management services agreement, pursuant to which the Company is required to pay the Manager a quarterly management fee
equal to 0.5 % of its adjusted net assets for services performed (the "Parent Management Fee"). The amount of the Parent Management
Fee with respect to any fiscal quarter is (i) reduced by the aggregate amount of any management fees received by the Manager under any
offsetting management services agreements with respect to such fiscal quarter, (ii) reduced (or increased) by the amount of any over-paid
(or under-paid) Parent Management Fees received by (or owed to) the Manager as of the end of such fiscal quarter, and (iii) increased
by the amount of any outstanding accrued and unpaid Parent Management Fees. The Company expensed $ 0 in Parent Management Fees for the
years ended December 31, 2024 and 2023.

 On May 28, 2020, 1847 Asien entered into an offsetting
management services agreement with the Manager. Pursuant to the management services agreement, the Manager will provide certain services
to 1847 Asien in exchange for a quarterly management fee. This fee will be the greater of $ 75,000 or 2 % of adjusted net assets (as defined
within the management services agreement). Following the assignment of all of the assets of Asien's on February 26, 2024, the Manager
ceased to provide services to 1847 Asien for quarterly management fees. 1847 Asien expensed management fees of $ 50,000 and $ 300,000 for
the years ended December 31, 2024 and 2023, respectively, which is included in discontinued operations (refer to Note 4 for further details).

 On August 21, 2020, 1847 Cabinet entered into
an offsetting management services agreement with the Manager, which was amended on October 8, 2021. Pursuant to the amended management
services agreement, the Manager will provide certain services to 1847 Cabinet in exchange for a quarterly management fee. This fee will
be the greater of $ 125,000 or 2 % of adjusted net assets (as defined within the amended management services agreement). 1847 Cabinet expensed
management fees of $ 375,000 and $ 500,000 for the years ended December 31, 2024 and 2023, respectively. For the years ended December 31,
2024 and 2023, $ 125,000 was included in discontinued operations as a result of the sale of High Mountain (refer to Note 4 for further
details).

 On March 30, 2021, 1847 Wolo entered into an offsetting
management services agreement with the Manager. Pursuant to the management services agreement, the Manager will provide certain services
to 1847 Wolo in exchange for a quarterly management fee. This fee will be the greater of $ 75,000 or 2 % of adjusted net assets (as defined
within the management services agreement). 1847 Wolo expensed management fees of $ 300,000 for the years ended December 31, 2024 and 2023.

 On February 9, 2023, 1847 ICU entered into an
offsetting management services agreement with the Manager. Pursuant to the management services agreement, the Manager will provide certain
services to 1847 ICU in exchange for a quarterly management fee. This fee will be the greater of $ 75,000 or 2 % of adjusted net assets
(as defined within the management services agreement). Following the sale of all of the assets of ICU Eyewear on August 5, 2024, the Manager
ceased to provide services to 1847 ICU for quarterly management fees. 1847 ICU expensed management fees of $ 175,000 and $ 225,000 for the
years ended December 31, 2024 and 2023, respectively, which is included in discontinued operations (refer to Note 4 for further details).

 On December 16, 2024, 1847 CMD entered into an
offsetting management services agreement with the Manager. Pursuant to the management services agreement, the Manager will provide certain
services to 1847 CMD in exchange for a quarterly management fee. This fee will be the greater of $ 75,000 or 2 % of adjusted net assets
(as defined within the management services agreement).

 In addition, if the aggregate amount of management
fees paid or to be paid to the Manager under the offsetting management services agreements, exceeds, or is expected to exceed, 9.5 % of
the Company's gross income in any fiscal year or the Parent Management Fee in any fiscal quarter, then the management fee to be
paid by such entities shall be reduced, on a pro rata basis determined by reference to the other management fees to be paid to the Manager
under other offsetting management services agreements.

 In addition, under the Company's operating
agreement with the Manager, in the event of an acquisition of a target business or disposition of a subsidiary, the Manager will receive
a transaction fee of 2 % of the aggregate purchase price, which percentage decreases if the purchase exceeds $ 50 million.

 F- 45

 The profit allocation and transaction fees are
included in management fees. On a consolidated basis, for the year ended December 31, 2024, the Company expensed total management fees
from continued operations and discontinued operations of $ 2,267,000 and $ 350,000, respectively. For the year ended December 31, 2023,
the Company expensed total management fees from continued operations and discontinued operations of $ 633,333 and $ 691,667, respectively.

 Manager's
Profit Allocation and Transaction Fees

 The Manager owns 100 % of the allocation shares
of the Company which represent the original equity interest in the Company. As a holder of the allocation shares, the Manager is entitled
to receive a 20 % profit allocation as a form of preferred distribution, pursuant to a profit allocation formula upon the occurrence of
certain events. Generally, the distribution of the profit allocation is paid upon the occurrence of the sale of a material amount of capital
stock or assets of one of the Company's businesses, including if the Company distributes its equity ownership in a subsidiary to
the Company's shareholders in a spin-off or similar transaction (a "Sale Event"), or, at the option of the Manager,
at the five-year anniversary date of the acquisition of one of the Company's businesses (a "Holding Event"). The calculation
of the profit allocation and the rights of the Manager, as the holder of the allocation shares, are governed by the operating agreement.
The Company records distributions of the profit allocation to the holders upon occurrence of a Sale Event or Holding Event as dividends
declared on allocation interests to shareholders' equity when they are approved by the Company's board of directors. In addition,
under the Company's operating agreement with the Manager, in the event of an acquisition of a target business or disposition of
a subsidiary, the Manager will receive a transaction fee of 2 % of the aggregate purchase price, which percentage decreases if the purchase
exceeds $ 50 million.

 During 2020, concurrent with the spin-off of a
former subsidiary, the board of directors identified a need to adjust the distribution to the Manger, which resulted in the recognition
of a $ 2 million distribution receivable from the Manager within shareholders' deficit, with repayment anticipated upon the occurrence
of the next qualified profit allocation distribution event (the "Distribution Receivable").

 On April 23, 2024, the Company and the Manager
entered into a letter agreement regarding the timing of payment of the Distribution Receivable, pursuant to which the parties agreed to
treat the Distribution Receivable as a $ 2,000,000 unqualified obligation of the Manager to be repaid as a credit against all future profit
allocations resulting from both a Sale Event and a Holding Event payable to the Manager, all until the Distribution Receivable is fully
paid, provided that, if the Distribution Receivable is not fully paid by the application of such credit or otherwise by the first to occur
of (i) December 31, 2024 and (ii) the date of the sale of all or substantially all the assets (in a transaction of any form) or the liquidation,
dissolution or winding up, voluntary or involuntary, of either party, then upon such date the unpaid balance shall be immediately due,
payable and paid by the Manager.

 On September 30, 2024, the Company sold High Mountain
(see Note 4). The sale of High Mountain qualifies as a sale event under the operating agreement that entitles the Manager to receive a
 20 % profit allocation, or $ 875,000, in accordance with the profit allocation formula outlined in the operating agreement. Additionally,
the Manager is entitled to receive a transaction fee of 2.0 %, or $ 340,000. On December 16, 2024, the Company purchased CMD (see Note 5).
The Manager is entitled to receive a transaction fee of 2.0 %, or $ 377,000. The profit allocation and transaction fee were recorded as
management fees.

 During the year ended December 31, 2024, and the
Distribution Receivable was settled in full.

 F- 46

 Building Lease

 On September 1, 2020, Kyle's entered into
an industrial lease agreement with Stephen Mallatt, Jr. and Rita Mallatt, who are officers of Kyle's. The lease is for a term of
five years, with an option for a renewal term of five years and provides for a base rent of $7,000 per month for the first 12 months,
which will increase to $7,210 for months 13-16 and to $7,426 for months 37-60. In addition, Kyle's is responsible for all taxes,
insurance and certain operating costs during the lease term.

the Company expensed $ 87,106 under this related party lease.

 NOTE 17 —CONVERTIBLE
PREFERRED SHARES

 Series A Senior Convertible Preferred Shares

 On September 30, 2020, the Company executed a
share designation, which was amended on November 20, 2020, March 26, 2021, and September 29, 2021, to designate 4,450,460 of its shares
as series A senior convertible preferred shares. The following is a description of the rights of the series A senior convertible preferred
shares.

 Ranking. The series A senior convertible
preferred shares rank, with respect to the payment of dividends and the distribution of assets upon liquidation, (i) senior to all common
shares, allocation shares, and each other class or series that is not expressly made senior to or on parity with the series A senior convertible
preferred shares; (ii) on parity with the series B senior convertible preferred shares and each other class or series that is not expressly
subordinated or made senior to the series A senior convertible preferred shares; and (iii) junior to all indebtedness and other liabilities
with respect to assets available to satisfy claims against the Company and each other class or series that is expressly made senior to
the series A senior convertible preferred shares.

 Dividend Rights. Holders of series A senior
convertible preferred shares are entitled to dividends at a rate per annum of 29.0 % of the stated value ($ 2.42 per share, subject to adjustment).
Dividends shall accrue from day to day, whether or not declared, and shall be cumulative. Dividends shall be payable quarterly in arrears
on each dividend payment date in cash or common shares at the Company's discretion. Dividends payable in common shares shall be
calculated based on a price equal to eighty percent ( 80 %) of the VWAP during the five (5) trading days immediately prior to the applicable
dividend payment date; provided, however, that if the common shares are not registered, and Rule 144 rulemaking referred to below is effective
on the payment date, the dividends payable in common shares shall be calculated based upon the fixed price of $ 1.57 per share; provided
further, that the Company may only elect to pay dividends in common shares based upon such fixed price if the VWAP for the five (5) trading
days immediately prior to the applicable dividend payment date is $ 1.57 or higher.

of creditors and the holders of any senior securities or parity securities (in each case, as defined in the share designation), upon any
liquidation of the Company or its subsidiaries, before any payment or distribution of the assets of the Company (whether capital or surplus)
shall be made to or set apart for the holders of securities that are junior to the series A senior convertible preferred shares as to
the distribution of assets on any liquidation of the Company, including the common shares and allocation shares, each holder of outstanding
series A senior convertible preferred shares shall be entitled to receive an amount of cash equal to 115 % of the stated value plus an
amount of cash equal to all accumulated accrued and unpaid dividends thereon (whether or not declared) to, but not including the date
of final distribution to such holders. If, upon any liquidation, the assets, or proceeds thereof, distributable among the holders of the
series A senior convertible preferred shares shall be insufficient to pay in full the preferential amount payable to the holders of the
series A senior convertible preferred shares and liquidating payments on any other shares of any class or series of parity securities
as to the distribution of assets on any liquidation, then such assets, or the proceeds thereof, shall be distributed among the holders
of series A senior convertible preferred shares and any such other parity securities ratably in accordance with the respective amounts
that would be payable on such series A senior convertible preferred shares and any such other parity securities if all amounts payable
thereon were paid in full.

 Voting Rights. The series A senior convertible
preferred shares do not have any voting rights; provided that, so long as any series A senior convertible preferred shares are outstanding,
the affirmative vote of holders of a majority of series A senior convertible preferred shares, which majority must include Leonite Capital
LLC so long as it holds any series A senior convertible preferred shares (the "Requisite Holders"), voting as a separate class,
shall be necessary for approving, effecting or validating any amendment, alteration or repeal of any of the provisions of the share designation.
In addition, so long as any series A senior convertible preferred shares are outstanding, the affirmative vote of the Requisite Holders
shall be required prior to the creation or issuance by the Company or by its subsidiaries Kyle's and Wolo of (i) any parity securities;
(ii) any senior securities; and (iii) any new indebtedness other than (A) intercompany indebtedness by Kyle's or Wolo in favor of
the Company, (B) indebtedness incurred in favor of the sellers of Kyle's or Wolo in connection with the acquisition of Kyle's
or Wolo, or (C) indebtedness (or the refinancing of such indebtedness) the proceeds of which are used to complete the acquisition of Kyle's
or Wolo related expenses or working capital to operate the business of Kyle's or Wolo. Notwithstanding the foregoing, this shall
not apply to any financing transaction the use of proceeds of which will be used to redeem the series A senior convertible preferred shares
and the warrants issued in connection therewith.

 F- 47

 Conversion Rights. Each series A senior
convertible preferred share, plus all accrued and unpaid dividends thereon, shall be convertible, at the option of the holder thereof,
at any time and from time to time, into such number of fully paid and nonassessable common shares determined by dividing the stated value
($ 2.42 per share), plus the value of the accrued, but unpaid, dividends thereon, by an initial conversion price of $ 136,500 per share
(subject to adjustment); provided that in no event shall the holder of any series A senior convertible preferred shares be entitled to
convert any number of series A senior convertible preferred shares that upon conversion the sum of (i) the number of common shares beneficially
owned by the holder and its affiliates and (ii) the number of common shares issuable upon the conversion of the series A senior convertible
preferred shares with respect to which the determination of this proviso is being made, would result in beneficial ownership by the holder
and its affiliates of more than 4.99 % of the then outstanding common shares. This limitation may be waived (up to a maximum of 9.99 %)
by the holder and in its sole discretion, upon not less than sixty-one (61) days' prior notice to the Company.

 Redemption Rights. The Company may redeem
in whole, or upon the written consent of the Requisite Holders and in the manner provided for in such written consent, in part, the series
A senior convertible preferred shares by paying in cash therefore a sum equal to 115 % of the stated value plus the amount of accrued and
unpaid plus any other amounts due pursuant to the terms of the series A senior convertible preferred shares.

 Adjustments. The share designation contains
standard adjustments to the conversion price in the event of any share splits, share combinations, share reclassifications, dividends
paid in common shares, sales of substantially all of the Company's assets, mergers, consolidations or similar transactions. In addition,
the share designation provides that if, but only if, the Requisite Holders provide the Company with at least ten (10) business day's
prior written notice, then, from and after the date of such notice, the stated dividend rate, the stated value and the conversion price
shall automatically adjust as follows:

 On the first day of the 12th month following the issuance date of any series A senior convertible preferred
shares, the stated dividend rate shall automatically increase by five percent ( 5.0 %) per annum and the conversion price shall automatically
adjust to the lower of the (i) initial conversion price and (ii) the price equal to the lowest VWAP of the ten (10) trading days immediately
preceding such date.

 On the first day of the 24th month following the issuance date of any series A senior convertible preferred
shares, the stated dividend rate shall automatically increase by an additional five percent ( 5.0 %) per annum, the stated value shall automatically
increase by ten percent ( 10 %) and the conversion price shall automatically adjust to the lower of the (i) initial conversion price and
(ii) the price equal to the lowest VWAP of the ten (10) trading days immediately preceding such date. On June 15, 2023, the Requisite
Holders provided notice that the stated dividend rate increased from 14 % to 24 % of the stated value and the stated value increased from
$ 2.00 to $ 2.20.

 On the first day of the 36th month following the issuance date of any series A senior convertible preferred
shares, the stated dividend rate shall automatically increase by an additional five percent ( 5.0 %) per annum, the stated value shall automatically
increase by ten percent ( 10 %) and the conversion price shall automatically adjust to the lower of the (i) initial conversion price and
(ii) the price equal to the lowest VWAP of the ten (10) trading days immediately preceding the third adjustment date. On March 31, 2024,
the stated dividend rate increased from 24 % to 29 % of the stated value and the stated value increased from $ 2.20 to $ 2.42.

 Notwithstanding the foregoing, the conversion
price for purposes of the adjustments above shall not be adjusted to a number that is below $ 585 per share. In addition, if any legislation
or rules are adopted whereby the holding period of securities for purposes of Rule 144 of the Securities Act of 1933, as amended, for
convertible securities that convert at market-adjusted rates is increased resulting in a longer holding period for convertible securities
like the series A senior convertible preferred shares and the unavailability at the time of conversion of Rule 144, the pricing provisions
that are based upon the lowest VWAP of the previous ten (10) trading days immediately preceding the relevant adjustment date shall be
removed unless the common shares issuable upon conversion are then registered under an effective registration statement.

 F- 48

 Additional Equity Interest. On the third
adjustment date set forth above, the Company was required to cause Kyle's and Wolo to issue to the holders of series A senior convertible
preferred shares, on a pro rata basis, a ten percent ( 10 %) equity stake Kyle's and/or Wolo. The holders of series A senior convertible
preferred shares issued in connection with the financing to complete the acquisition of Kyle's shall receive the equity stake in
Kyle's and the holders of series A senior convertible preferred shares issued in connection with the financing to complete the acquisition
of Wolo shall receive the equity stake in Wolo. The Company was required to cause Kyle's and Wolo to grant to the holders of the
series A senior convertible preferred shares upon the issuance to them of such equity interest a right to receive an additional number
of shares of common stock of Kyle's or Wolo if Kyle's or Wolo issues to any third-party equity securities at a price below
the acquisition price (as defined below). Such additional number of shares of common stock of Kyle's or Wolo to be issued in such
instance shall be equal to a number of shares of common stock of Kyle's or Wolo which, when added to the number of shares of common
stock of Kyle's or Wolo constituting the initial additional equity interest, would be equal to the total number of shares of common
stock which would have been issued to a holder of series A senior convertible preferred shares if the price per share of common stock
of Kyle's or Wolo was equivalent to the price per equity security paid by such third-party in Kyle's or Wolo. For purposes
of this provision, "acquisition price" means the price per share of Kyle's and Wolo that was paid by the Company upon
the acquisition of Kyle's and Wolo, respectively. On March 31, 2024, 1847 Wolo issued an aggregate of 1.23 shares of its common
stock to the two remaining holders of series A senior convertible preferred shares. Since all shares issued in connection with the financing
to complete the acquisition of Kyle's were previously redeemed, no equity interest in Kyle's was issued.

 Most Favored Nations. The securities purchase
agreement relating to the issuance of the series A senior convertible preferred shares contains a standard most favored nations provision
which provides that, unless otherwise agreed to by the holders of a majority of the then outstanding series A senior convertible preferred
shares, upon any issuance of (or announcement of intent to effect an issuance of) any security, or amendment to (or announcement of intent
to effect an amendment to) any security, by the Company with any term that any holder of series A senior convertible preferred shares
reasonably believes is more favorable to the holder of such security than to the holder of the series A senior convertible preferred shares
then (i) the Company shall notify the holder of series A senior convertible preferred shares of such additional or more favorable term
within five (5) business days of the new issuance and/or amendment of the respective security, which notice may include the filing of
a current report on Form 8-K that discloses the issuance of such new security, and (ii) such term, the holder's option, shall become
a part of the transaction documents with the holder of the series A senior convertible preferred shares. The types of terms contained
in another security that may be more favorable to the purchaser of such security include, but are not limited to, terms addressing conversion
discounts, prepayment rate, conversion lookback periods, interest rates, original issue discounts, stock sale price, private placement
price per share, and warrant coverage. The holders of the series A senior convertible preferred shares have used this provision to reduce
the conversion price on multiple occasions.

the Company accrued series A preferred share dividends of $ 144,435 and $ 347,157, respectively.

settled $ 130,968 of previously accrued dividends through the issuance of 625 common shares. During the year ended December 31, 2023, the
Company settled $ 434,629 of previously accrued dividends through the issuance of 122 common shares.

 During the year ended December 31, 2024, 181,212
shares of series A senior convertible preferred shares were converted into 2,437 common shares. During the year ended December 31, 2023,
 1,367,273 shares of series A senior convertible preferred shares were converted into 835 common shares.

 On September 30, 2024, the Company settled $ 12,432
of previously accrued dividends through the issuance of 5,137 series A senior convertible preferred shares with an allocated value of
$ 1,700. As a result, the Company recognized a gain on extinguishment of debt of $ 10,732.

 On May 15, 2023, the Company entered into amendments
to the securities purchase agreements relating to the series A senior convertible preferred shares, pursuant to which the securities purchase
agreements were amended to include a provision giving the Company to option to force the exercise of warrants issued pursuant to such
securities purchase agreements for the issuance of a number of common shares equal to the quotient of (i) eighty percent ( 80 %) of the
Black Scholes Value of the warrants divided by (ii) the applicable exercise price of the warrants.

had 50,592 and 226,667 shares of series A senior convertible preferred shares issued and outstanding, respectively.

 F- 49

 Series B Senior Convertible Preferred Shares

 On February 17, 2022, the Company executed a share
designation to designate 583,334 of its shares as series B senior convertible preferred shares. The following is a description of the
rights of the series B senior convertible preferred shares.

 Ranking. The series B senior convertible
preferred shares rank, with respect to the payment of dividends and the distribution of assets upon liquidation, (i) senior to all common
shares, allocation shares, and each other class or series that is not expressly made senior to or on parity with the series B senior convertible
preferred shares; (ii) on parity with the series A senior convertible preferred shares and each other class or series that is not expressly
subordinated or made senior to the series A senior convertible preferred shares; and (iii) junior to all indebtedness and other liabilities
with respect to assets available to satisfy claims against the Company and each other class or series that is expressly made senior to
the series B senior convertible preferred shares.

 Dividend Rights. Holders of series B senior
convertible preferred shares are entitled to dividends at a rate per annum of 19.0 % of the stated value ($ 3.00 per share, subject to adjustment).
Dividends shall accrue from day to day, whether or not declared, and shall be cumulative. Dividends shall be payable quarterly in arrears
on each dividend payment date in cash or common shares at the Company's discretion. Dividends payable in common shares shall be
calculated based on a price equal to eighty percent ( 80 %) of the VWAP during the five (5) trading days immediately prior to the applicable
dividend payment date; provided, however, that if the common shares are not registered, and rulemaking regarding the Rule 144 holding
period referred to below is effective on the payment date, the dividends payable in common shares shall be calculated based upon the fixed
price of $ 2.70 per share; provided further, that the Company may only elect to pay dividends in common shares based upon such fixed price
if the VWAP for the five (5) trading days immediately prior to the applicable dividend payment date is $ 2.70 or higher.

of creditors and the holders of any senior securities or parity securities (in each case, as defined in the share designation), upon any
liquidation of the Company or its subsidiaries, before any payment or distribution of the assets of the Company (whether capital or surplus)
shall be made to or set apart for the holders of securities that are junior to the series B senior convertible preferred shares as to
the distribution of assets on any liquidation of the Company, including the common shares and allocation shares, each holder of outstanding
series B senior convertible preferred shares shall be entitled to receive an amount of cash equal to 115 % of the stated value plus an
amount of cash equal to all accumulated accrued and unpaid dividends thereon (whether or not declared) to, but not including the date
of final distribution to such holders. If, upon any liquidation, the assets, or proceeds thereof, distributable among the holders of the
series B senior convertible preferred shares shall be insufficient to pay in full the preferential amount payable to the holders of the
series B senior convertible preferred shares and liquidating payments on any other shares of any class or series of parity securities
as to the distribution of assets on any liquidation, then such assets, or the proceeds thereof, shall be distributed among the holders
of series B senior convertible preferred shares and any such other parity securities ratably in accordance with the respective amounts
that would be payable on such series B senior convertible preferred shares and any such other parity securities if all amounts payable
thereon were paid in full.

 Voting Rights. The series B senior convertible
preferred shares do not have any voting rights; provided that, so long as any series B senior convertible preferred shares are outstanding,
the affirmative vote of holders of a majority of series B senior convertible preferred shares, voting as a separate class, shall be necessary
for approving, effecting or validating (i) any amendment, alteration or repeal of any of the provisions of the share designation or (ii)
the Company's creation or issuance of any parity securities or any senior securities. Notwithstanding the foregoing, such vote of
the holders shall not be required in connection with the issuance of parity securities or senior securities if, and so long as, the proceeds
resulting from the issuance of such securities are used to redeem in full the outstanding series B senior convertible preferred shares.

 F- 50

 Conversion Rights. Each series B senior
convertible preferred share, plus all accrued and unpaid dividends thereon, shall be convertible, at the option of the holder thereof,
at any time and from time to time, into such number of fully paid and nonassessable common shares determined by dividing the stated value
($ 3.00 per share), plus the value of the accrued, but unpaid, dividends thereon, by an initial conversion price of $ 234,000 per share
(subject to adjustments); provided that in no event shall the holder of any series B senior convertible preferred shares be entitled to
convert any number of series B senior convertible preferred shares that upon conversion the sum of (i) the number of common shares beneficially
owned by the holder and its affiliates and (ii) the number of common shares issuable upon the conversion of the series B senior convertible
preferred shares with respect to which the determination of this proviso is being made, would result in beneficial ownership by the holder
and its affiliates of more than 4.99 % of the then outstanding common shares. This limitation may be waived (up to a maximum of 9.99 %)
by the holder and in its sole discretion, upon not less than sixty-one (61) days' prior notice to the Company.

 Redemption Rights. The Company may redeem
in whole (but not in part) the series B senior convertible preferred shares by paying in cash therefore a sum equal to 115 % of the stated
value plus the amount of accrued and unpaid dividends and any other amounts due pursuant to the terms of the series B senior convertible
preferred shares.

 Adjustments. The share designation contains
standard adjustments to the conversion price in the event of any share splits, share combinations, share reclassifications, dividends
paid in common shares, sales of substantially all of the Company's assets, mergers, consolidations or similar transactions. In addition,
the share designation provides that the stated dividend rate, the stated value and the conversion price shall automatically adjust as
follows:

 On the first day of the 12th month following the issuance of the first series B senior convertible preferred
share, the stated dividend rate shall automatically increase by five percent ( 5.0 %) per annum and the conversion price shall automatically
adjust to the lower of the (i) initial conversion price and (ii) the price equal to the lowest VWAP of the ten (10) trading days immediately
preceding such date. On February 25, 2023, the stated dividend rate increased from 14 % to 19 % of the stated value.

 On the first day of the 24th month following the issuance of the first series B senior convertible preferred
share, the stated dividend rate shall automatically increase by an additional five percent ( 5.0 %) per annum, the stated value shall automatically
increase by ten percent ( 10 %) and the conversion price shall automatically adjust to the lower of the (i) initial conversion price and
(ii) the price equal to the lowest VWAP of the ten (10) trading days immediately preceding such date. On February 25, 2024, the stated
dividend rate increased from 19 % to 24 % of the stated value and the stated value increased from $ 3.30 to $ 3.30.

 On the first day of the 36th month following the issuance of the first series B senior convertible preferred
share, the stated dividend rate shall automatically increase by an additional five percent ( 5.0 %) per annum, the stated value shall automatically
increase by ten percent ( 10 %) and the conversion price shall automatically adjust to the lower of the (i) initial conversion price and
(ii) the price equal to the lowest VWAP of the ten (10) trading days immediately preceding such date.

 Notwithstanding the foregoing, the conversion
price for purposes of the adjustments above shall not be adjusted to a number that is below $ 585 per share. In addition, if any legislation
or rules are adopted whereby the holding period of securities for purposes of Rule 144 of the Securities Act of 1933, as amended, for
convertible securities that convert at market-adjusted rates is increased resulting in a longer holding period for convertible securities
like the series B senior convertible preferred shares and the unavailability at the time of conversion of Rule 144, the pricing provisions
that are based upon the lowest VWAP of the previous ten (10) trading days immediately preceding the relevant adjustment date shall be
removed unless the common shares issuable upon conversion are then registered under an effective registration statement.

 F- 51

 Most Favored Nations. The securities purchase
agreement relating to the issuance of the series B senior convertible preferred shares contains a standard most favored nations provision
which provides that, unless otherwise agreed to by the holders of a majority of the then outstanding series B senior convertible preferred
shares, upon any issuance of (or announcement of intent to effect an issuance of) any security, or amendment to (or announcement of intent
to effect an amendment to) any security, by the Company with any term that any holder of series B senior convertible preferred shares
reasonably believes is more favorable to the holder of such security than to the holder of the series B senior convertible preferred shares
then (i) the Company shall notify the holder of series B senior convertible preferred shares of such additional or more favorable term
within five (5) business days of the new issuance and/or amendment of the respective security, which notice may include the filing of
a current report on Form 8-K that discloses the issuance of such new security, and (ii) such term, the holder's option, shall become
a part of the transaction documents with the holder of the series B senior convertible preferred shares. The types of terms contained
in another security that may be more favorable to the purchaser of such security include, but are not limited to, terms addressing conversion
discounts, prepayment rate, conversion lookback periods, interest rates, original issue discounts, stock sale price, private placement
price per share, and warrant coverage. The holders of the series B senior convertible preferred shares have used this provision to reduce
the conversion price on multiple occasions.

the Company accrued series B preferred share dividends of $ 2,509 and $ 165,810, respectively.

settled $ 13,299 of previously accrued dividends through the issuance of 51 common shares. During the year ended December 31, 2023, the
Company settled $ 75,722 of previously accrued dividends through the issuance of 57 common shares.

 During the year ended December 31, 2024, 91,567
shares of series B senior convertible preferred shares were converted into 1,523 common shares. During the year ended December 31, 2023,
 373,332 shares of series B senior convertible preferred shares were converted into 459 common shares.

 On May 15, 2023, the Company entered into amendments
to the securities purchase agreements relating to the series B senior convertible preferred shares, pursuant to which the securities purchase
agreements were amended to include a provision giving the Company to option to force the exercise of warrants issued pursuant to such
securities purchase agreements for the issuance of a number of common shares equal to the quotient of (i) eighty percent ( 80 %) of the
Black Scholes Value of the warrants divided by (ii) the applicable exercise price of the warrants.

had 0 and 91,567 shares of series B senior convertible preferred shares issued and outstanding, respectively.

 Series C Senior Convertible Preferred Shares

 On August 19, 2024, the Company executed a share
designation to designate 83,603 of its shares as series C senior convertible preferred shares. The following is a description of the rights
of the series C senior convertible preferred shares.

 Ranking. The series C senior convertible
preferred shares rank, with respect to the payment of dividends and the distribution of assets upon liquidation, (i) senior to all common
shares, allocation shares, and each other class or series that is not expressly made senior to or on parity with the series C senior convertible
preferred shares; (ii) on parity with the series D senior convertible preferred shares and each other class or series that is not expressly
subordinated or made senior to the series C senior convertible preferred shares; and (iii) junior to the series A senior convertible preferred
shares, all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company and each other class
or series that is expressly made senior to the series C senior convertible preferred shares.

 Dividend Rights. Holders of series C senior
convertible preferred shares are entitled to dividends at a rate per annum of 6.0 % of the stated value ($ 10 per share). Dividends shall
accrue from day to day, whether or not declared, and shall be cumulative. Dividends shall be payable only upon the liquidation of the
Company or upon conversion.

 F- 52

of creditors and the holders of any senior securities or parity securities (in each case, as defined in the share designation), upon any
liquidation of the Company or its subsidiaries, before any payment or distribution of the assets of the Company (whether capital or surplus)
shall be made to or set apart for the holders of securities that are junior to the series C senior convertible preferred shares as to
the distribution of assets on any liquidation of the Company, including the common shares and allocation shares, each holder of outstanding
series C senior convertible preferred shares shall be entitled to receive an amount of cash equal to 100 % of the stated value plus an
amount of cash equal to all accumulated accrued and unpaid dividends thereon (whether or not declared) to, but not including the date
of final distribution to such holders. If, upon any liquidation, the assets, or proceeds thereof, distributable among the holders of the
series C senior convertible preferred shares shall be insufficient to pay in full the preferential amount payable to the holders of the
series C senior convertible preferred shares and liquidating payments on any other shares of any class or series of parity securities
as to the distribution of assets on any liquidation, then such assets, or the proceeds thereof, shall be distributed among the holders
of series C senior convertible preferred shares and any such other parity securities ratably in accordance with the respective amounts
that would be payable on such series C senior convertible preferred shares and any such other parity securities if all amounts payable
thereon were paid in full.

 Voting Rights. The series C senior convertible
preferred shares do not have any voting rights; provided that, so long as any series C senior convertible preferred shares are outstanding,
the affirmative vote of holders of a majority of series C senior convertible preferred shares, voting as a separate class, shall be necessary
for approving, effecting or validating any amendment, alteration or repeal of any of the provisions of the share designation.

 Conversion Rights. Each series C senior
convertible preferred share, plus all accrued and unpaid dividends thereon, shall be convertible, at the option of the holder thereof,
at any time and from time to time, into such number of fully paid and nonassessable common shares determined by dividing the stated value
($ 10 per share), plus the value of the accrued, but unpaid, dividends thereon, by the conversion price of $ 150 per share (subject to standard
adjustments in the event of any share splits, share combinations, share reclassifications, dividends paid in common shares, sales of substantially
all of the Company's assets, mergers, consolidations or similar transactions); provided that in no event shall the holder of any
series C senior convertible preferred shares be entitled to convert any number of series C senior convertible preferred shares that upon
conversion the sum of (i) the number of common shares beneficially owned by the holder and its affiliates and (ii) the number of common
shares issuable upon the conversion of the series C senior convertible preferred shares with respect to which the determination of this
proviso is being made, would result in beneficial ownership by the holder and its affiliates of more than 4.99 % of the then outstanding
common shares. This limitation may be waived (up to a maximum of 9.99 %) by the holder and in its sole discretion, upon not less than sixty-one
(61) days' prior notice to the Company.

 Redemption Rights. Not redeemable.

 On August 22, 2024, the Company issued 83,603
series C senior convertible preferred shares to the Trust as settlement of the outstanding balance of the 6 % amortizing promissory note
in the amount of $ 831,027 (see Note 14).

accrued series C preferred share dividends of $ 18,003.

had 83,603 and 0 shares of series C senior convertible preferred shares issued and outstanding, respectively.

 Series D Senior Convertible Preferred Shares

 On June 27, 2024, the Company executed a share
designation to designate 7,292,036 of its shares as series D senior convertible preferred shares. The following is a description of the
rights of the series D senior convertible preferred shares.

 Ranking. The series D senior convertible
preferred shares rank, with respect to the payment of dividends and the distribution of assets upon liquidation, (i) senior to all common
shares, allocation shares, and each other class or series that is not expressly made senior to or on parity with the series D senior convertible
preferred shares; (ii) on parity with each other class or series that is not expressly subordinated or made senior to the series D senior
convertible preferred shares; and (iii) junior to the Series A senior convertible preferred shares, all indebtedness and other liabilities
with respect to assets available to satisfy claims against the Company and each other class or series that is expressly made senior to
the series D senior convertible preferred shares.

 F- 53

 Dividend Rights. Holders of series D senior
convertible preferred shares are entitled to dividends at a rate per annum of 10 % of the stated value ($ 0.339 per share, subject to adjustment).
Dividends shall accrue from day to day, whether or not declared, and shall be cumulative. Dividends shall be payable only upon the liquidation
of the Company or conversion (as defined in the share designation).

of creditors and the holders of any senior securities or parity securities (in each case, as defined in the share designation), upon any
liquidation of the Company or its subsidiaries, before any payment or distribution of the assets of the Company (whether capital or surplus)
shall be made to or set apart for the holders of securities that are junior to the series D senior convertible preferred shares as to
the distribution of assets on any liquidation of the Company, including the common shares and allocation shares, each holder of outstanding
series D senior convertible preferred shares shall be entitled to receive an amount of cash equal to 100 % of the stated value plus an
amount of cash equal to all accumulated accrued and unpaid dividends thereon (whether or not declared) to, but not including the date
of final distribution to such holders. If, upon any liquidation, the assets, or proceeds thereof, distributable among the holders of the
series D senior convertible preferred shares shall be insufficient to pay in full the preferential amount payable to the holders of the
series D senior convertible preferred shares and liquidating payments on any other shares of any class or series of parity securities
as to the distribution of assets on any liquidation, then such assets, or the proceeds thereof, shall be distributed among the holders
of series D senior convertible preferred shares and any such other parity securities ratably in accordance with the respective amounts
that would be payable on such series D senior convertible preferred shares and any such other parity securities if all amounts payable
thereon were paid in full.

 Voting Rights. The series D senior convertible
preferred shares do not have any voting rights; provided that, so long as any series D senior convertible preferred shares are outstanding,
the affirmative vote of holders of a majority of series D senior convertible preferred shares, voting as a separate class, shall be necessary
for approving, effecting or validating any amendment, alteration or repeal of any of the provisions of the share designation.

 Conversion Rights. Each series D senior
convertible preferred share, plus all accrued and unpaid dividends thereon, shall be convertible, at the option of the holder thereof,
at any time and from time to time, into such number of fully paid and nonassessable common shares determined by dividing the stated value
($ 0.339 per share), plus the value of the accrued, but unpaid, dividends thereon, by the conversion price of $ 66.105 per share (subject
to standard adjustments in the event of any share splits, share combinations, share reclassifications, dividends paid in common shares,
sales of substantially all of the Company's assets, mergers, consolidations or similar transactions); provided that in no event
shall the holder of any series D senior convertible preferred shares be entitled to convert any number of series D senior convertible
preferred shares that upon conversion the sum of (i) the number of common shares beneficially owned by the holder and its affiliates and
(ii) the number of common shares issuable upon the conversion of the series D senior convertible preferred shares with respect to which
the determination of this proviso is being made, would result in beneficial ownership by the holder and its affiliates of more than 4.99 %
of the then outstanding common shares. This limitation may be waived (up to a maximum of 9.99 %) by the holder and in its sole discretion,
upon not less than sixty-one (61) days' prior notice to the Company.

 Redemption Rights. Not redeemable.

 On June 28, 2024, the Company issued 1,966,570
series D senior convertible preferred shares in connection with the closing of the first tranche under the OID promissory note of $ 666,667.
On July 3, 2024, the Company issued 1,376,599 series D senior convertible preferred shares in connection with the closing of the second
tranche under the OID promissory note of $ 466,667. On July 16, 2024, the Company issued 688,298 series D senior convertible preferred
shares in connection with the closing of the third tranche under the OID promissory note of $ 233,333. On August 12, 2024, the Company
issued 1,376,599 series D senior convertible preferred shares in connection with the closing of the fourth tranche under the OID promissory
note of $ 466,667. On August 22, 2024, the Company issued 884,956 series D senior convertible preferred shares in connection with the closing
of the fifth tranche under the OID promissory note of $ 300,000 (see Note 14).

 A total of $ 600,100 of the net proceeds were allocated
to the series D senior preferred shares on a relative fair value basis.

accrued series D preferred share dividends of $ 96,649.

had 6,293,022 and 0 shares of series D senior convertible preferred shares issued and outstanding, respectively.

 F- 54

 NOTE 18 —SHAREHOLDERS'
DEFICIT

 Allocation Shares

had authorized and outstanding 1,000 allocation shares. The allocation shares do not entitle the holder thereof to vote on any matter
relating to the Company other than in connection with amendments to the Company's operating agreement and in connection with certain
other corporate transactions as specified in the operating agreement.

 The allocation shares are held by the Manager,
which is controlled by Mr. Roberts, the Company's chief executive officer and a principal shareholder.

was authorized to issue 500,000,000 common shares and had 25,400,386 and 142,278 common shares issued and outstanding, respectively.

 On February 9, 2024, the Company entered into
a securities purchase agreement with certain purchasers and a placement agency agreement with Spartan, pursuant to which the Company agreed
to issue and sell to such purchasers an aggregate of 9,364 common shares and prefunded warrants for the purchase of 16,280 common shares
at an offering price of $ 195.00 per common share and $ 193.05 per prefunded warrant, pursuant to the Company's effective registration
statement on Form S-1 (File No. 333-276670). On February 14, 2024, the closing of this offering was completed. At closing, the purchasers
prepaid the exercise price of the prefunded warrants in full. Therefore, the Company received total gross proceeds of $ 5 million. Pursuant
to the placement agency agreement, Spartan received a cash transaction fee equal to 8 % of the aggregate gross proceeds and reimbursement
of certain out-of-pocket expenses. After deducting these and other related expenses, the Company received net proceeds of approximately
$ 4.4 million.

 On October 28, 2024, the Company entered into
a securities purchase agreement with certain purchasers and a placement agency agreement with Spartan, as placement agent, relating to
the Company's public offering of units. Pursuant to the securities purchase agreement and the placement agency agreement, the Company
agreed to issue and sell to the purchasers an aggregate of 587,301 units, at a purchase price of $ 18.90 per unit, for total gross proceeds
of approximately $ 11.1 million, pursuant to the Company's registration statement on Form S-1 (File No. 333-282201) under the Securities
Act of 1933, as amended. The units are comprised of (i) 587,306 common shares, (ii) series A warrants to purchase 587,306 common shares
at an exercise price of $ 28.50 per share and (iii) series B warrants to purchase 587,306 common shares at an exercise price of $ 37.80
per share. On October 30, 2024, the closing of the offering was completed. Pursuant to the placement agency agreement, Spartan received a
cash transaction fee equal to 8 % of the aggregate gross proceeds and reimbursement of certain out-of-pocket expenses. After deducting
these and other related expenses, the Company received net proceeds of approximately $ 9.9 million.

 On December 13, 2024, the Company entered into
a securities purchase agreement with certain purchasers and a placement agreement with Spartan, as placement agent, pursuant to which
the Company agreed to issue and sell to the purchasers an aggregate of 42,311,118 units, at a purchase price of $ 0.27 per unit, for total
gross proceeds of approximately $ 11.42 million. The units are comprised of (i) 3,437,210 common shares and pre-funded warrants for the
purchase of 38,873,908 common shares, (ii) series A warrants to purchase 42,311,118 common shares at an exercise price of $ 0.81 per share
and (iii) series B warrants to purchase 42,311,118 common shares at an exercise price of $ 0.54 per share. On December 16, 2024, the closing
of the Offering was completed. Pursuant to the placement agency agreement, Spartan received a cash transaction fee equal to 8 % of the
aggregate gross proceeds and reimbursement of certain out-of-pocket expenses. After deducting these and other related expenses, the Company
received net proceeds of approximately $ 10.2 million.

issued an aggregate of 4,712,822 common shares with a fair value of $ 4,141,427 upon conversions of convertible promissory notes and accrued
interest totaling $ 2,638,870 and extinguishment of derivative liabilities of $ 855,520.

issued an aggregate of 11,401 common shares with a fair value of $ 538,720 upon partial extinguishment of notes payable. As a result, the
Company recognized a loss on extinguishment of debt of $ 317,145.

 F- 55

issued an aggregate of 676 common shares to the holders of the series A and B senior convertible preferred shares in settlement of $ 144,267
of accrued dividends. Pursuant to the series A and B senior convertible preferred shares designations, dividends payable in common shares
shall be calculated based on a price equal to eighty percent ( 80 %) of the volume weighted-average price for the common shares on the Company's
principal trading market during the five (5) trading days immediately prior to the applicable dividend payment date.

issued an aggregate of 2,437 common shares upon the conversion of an aggregate of 181,212 series A senior convertible preferred shares.

issued an aggregate of 1,523 common shares upon the conversion of an aggregate of 91,567 series B senior convertible preferred shares.

issued an aggregate of 16,495,374 common shares upon the cashless exercise of other warrants, resulting in extinguishment of warrant liabilities
of $ 16,526,400.

 On July 3, 2023, the Company entered into a securities
purchase agreement with certain purchasers and a placement agency agreement with Spartan, pursuant to which the Company agreed to issue
and sell to such purchasers an aggregate of 198 common shares and prefunded warrants for the purchase of 283 common shares at an offering
price of $ 3,900 per common share and $ 3,705 per pre-funded warrant, pursuant to the Company's effective registration statement on
Form S-1 (File No. 333-272057). On July 7, 2023, the closing of this offering was completed. At closing, the purchasers prepaid the exercise
price of the prefunded warrants in full. Therefore, the Company received total gross proceeds of $ 1,869,000. Pursuant to the placement
agency agreement, Spartan received a cash transaction fee equal to 8 % of the aggregate gross proceeds and reimbursement of certain out-of-pocket
expenses. After deducting these and other offering expenses, the Company received net proceeds of approximately $ 1,494,480.

 On July 14, 2023, the Company entered into a securities
purchase agreement with certain purchasers and a placement agency agreement with Spartan, which were amended pursuant to an amendatory
agreement, dated July 18, 2023, among the Company, Spartan and such purchasers. Pursuant to the foregoing, on July 18, 2023, the Company
issued and sold to such purchasers an aggregate of 206 common shares at a purchase price of $ 4,680 per share for total gross proceeds
of $ 960,000, pursuant to the Company's effective shelf registration statement on Form S-3 (File No. 333-269509). Spartan received
a cash transaction fee equal to 8 % of the aggregate gross proceeds and reimbursement of certain out-of-pocket expenses. After deducting
these and other offering expenses, the Company received net proceeds of approximately $ 858,200.

issued an aggregate 179 common shares to the holders of the series A and B senior convertible preferred shares in settlement of $ 510,351
of accrued dividends. Pursuant to the series A and B senior convertible preferred shares designations, dividends payable in common shares
shall be calculated based on a price equal to eighty percent ( 80 %) of the volume weighted-average price for the common shares on the Company's
principal trading market during the five (5) trading days immediately prior to the applicable dividend payment date.

issued an aggregate of 23 common shares to two accredited investors as a commitment fee.

issued 26 common shares upon the exercise of warrants for cash proceeds of $ 5,064.

issued an aggregate of 427 common shares upon the cashless exercise of other warrants, resulting in extinguishment of warrant liabilities
of $ 1,156,300.

issued an aggregate of 835 common shares upon the conversion of an aggregate of 1,367,273 series A senior convertible preferred shares.

issued an aggregate of 459 common shares upon the conversion of an aggregate of 373,332 series B senior convertible preferred shares.

issued an aggregate of 2,110 common shares upon the conversion of promissory notes and accrued interest.

 F- 56

 Warrants

 Warrants Issued in Public Equity Offering –
February 2024

 On February 14, 2024 (as described above), the
Company closed on a securities purchase agreement with certain purchasers and a placement agency agreement with Spartan, pursuant to which
the Company agreed to issue to such purchasers prefunded warrants for the purchase of 16,280 common shares at an exercise price of $ 1.95
per common share.

 The Company evaluated the prefunded warrants as
either equity-classified or liability-classified instruments based on an assessment of the specific terms of the prefunded warrants and
applicable authoritative guidance from ASC Topic 480 and ASC Topic 815-40. The Company determined the prefunded warrants failed the indexation
guidance under ASC Topic 815-40, specifically, the prefunded warrants provide for a Black-Scholes value calculation in the event of certain
transactions ("Fundamental Transactions"), which includes a floor on volatility utilized in the value calculation at 100 %
or greater. The Company has determined that this provision introduces leverage to the holders of the warrants that could result in a value
that would be greater than the settlement amount of a fixed-for-fixed option on the Company's own equity shares. Accordingly, pursuant
to ASC Topic 815-40, the Company recorded the fair value of the warrants as a liability upon issuance and marked to market each reporting
period in the Company's consolidated statement of operations until their exercise or expiration.

 The initial fair value of the warrants deemed
to be a liability, due to certain contingent put features, was determined using the Black-Scholes option pricing model, which was deemed
to be an appropriate model due to the terms of the warrants issued, including a fixed term and exercise price. The assumptions used in
the model were as follows: (i) dividend yield of 0 %; (ii) expected volatility of 149.05 %; (iii) risk-free interest rate of 4.86 %; (iv)
expected life of one year; (v) estimated fair value of the common shares of $ 380.25 per share; (vi) exercise price of $ 1.95.

 Warrants Issued in Private Placement with 20 %
OID Promissory Note

 On May 8, 2024, the Company issued five-year warrants
for the purchase of 477 common shares at an adjusted exercise price of $ 524.55 per share (subject to standard adjustments as defined in
the warrant agreement). Additionally, the Company issued a five-year warrant to the placement agent, Spartan, for the purchase of 39 common
shares at an adjusted exercise price of $ 577.05 per share (subject to standard adjustments as defined in the warrant agreement). The warrants
are exercisable at any time six months after the date of issuance.

 The Company evaluated the warrants as either equity-classified
or liability-classified instruments based on an assessment of the specific terms of the warrants and applicable authoritative guidance
from ASC Topic 480 and ASC Topic 815-40. The Company determined the warrants issued failed the indexation guidance under ASC Topic 815-40,
specifically, the warrants provide for a Black-Scholes value calculation in the event of certain Fundamental Transactions, which includes
a floor on volatility utilized in the value calculation at 100 % or greater. The Company has determined that this provision introduces
leverage to the holders of the warrants that could result in a value that would be greater than the settlement amount of a fixed-for-fixed
option on the Company's own equity shares. Accordingly, pursuant to ASC Topic 815-40, the Company recorded the fair value of the
warrants as a liability upon issuance and marked to market each reporting period in the Company's consolidated statement of operations
until their exercise or expiration. The warrants issued to the placement agent were classified as equity.

 The initial fair value of the warrants deemed
to be a liability, due to certain contingent put features, was determined using the Black-Scholes option pricing model, which was deemed
to be an appropriate model due to the terms of the warrants issued, including a fixed term and exercise price. The assumptions used in
the model were as follows: (i) dividend yield of 0 %; (ii) expected volatility of 160.8 %; (iii) risk-free interest rate of 4.5 %; (iv) expected
life of 5.5 years; (v) estimated fair value of the common shares of $ 468 per share; (vi) exercise price of $ 524.55.

 The remaining proceeds were allocated to the placement
agent warrants and promissory note based on their relative fair value using the Black-Scholes option pricing model. The assumptions used
in the model were as follows: (i) dividend yield of 0 %; (ii) expected volatility of 160.8 %; (iii) risk-free interest rate of 4.5 %; (iv)
expected life of 5.5 years; (v) estimated fair value of the common shares of $ 468 per share; (vi) exercise price of $ 577.05. The fair
value of the placement agent warrants was $ 16,800, resulting in the amount allocated to the warrants, based on their relative fair value
of $ 7,573, which was recorded as additional paid-in capital.

 F- 57

 Warrants Issued in Public Equity Offering –
October 2024

 On October 30, 2024 (as described above), the
Company closed on a securities purchase agreement with certain purchasers and a placement agency agreement with Spartan, pursuant to which
the Company agreed to issue to such purchasers series A warrants to purchase 587,306 common shares and series B warrants to purchase 587,306
common shares.

 The series A warrants are exercisable at any time
at an exercise price of $ 28.50 per share and will expire five years from the date of issuance. The series B warrants are exercisable at
any time at an exercise price of $ 37.80 per share and will expire five years from the date of issuance. Under an alternate cashless exercise
option contained in the series A warrants, the holders of the series A warrants will have the right to receive an aggregate number of
shares equal to the product of (i) the aggregate number of common shares that would be issuable upon a cash exercise of the series A warrants
and (ii) 2.0. In addition, the series A and B warrants contain a reset of the exercise price to a price equal to the lesser of (i) the
then exercise price and (ii) lowest volume weighted-average price for the five trading days immediately preceding and immediately following
the date the Company effects a reverse share split in the future with a proportionate adjustment to the number of shares underlying the
series A warrants and the series B warrants, subject to a floor price of $ 1.50. Finally, with certain exceptions, the series B warrants
provide for an adjustment to the exercise price and number of shares underlying such the series B warrants upon the Company's issuance
of common shares or common share equivalents at a price per share that is less than the exercise price of the series B warrants (down
round feature), subject to a floor price of $ 1.50.

 The Company evaluated the warrants as either equity-classified
or liability-classified instruments based on an assessment of the specific terms of the warrants and applicable authoritative guidance
from ASC Topic 480 and ASC Topic 815-40. The Company determined the warrants embedded features issued failed the indexation guidance under
ASC Topic 815-40, specifically, (i) an alternative cashless exercise option for the series A warrants, and (ii) a reset provision of the
exercise price following the date the Company effects a reverse share split, with a proportionate adjustment to the number of shares underlying
the series A and series B warrants, subject to a floor price of $ 1.50. The Company has determined that these provisions introduce leverage
to the holders of the warrants that could result in a value that would be greater than the settlement amount of a fixed-for-fixed option
on the Company's own equity shares. Accordingly, pursuant to ASC Topic 815-40, the Company recorded the fair value of the warrants
as a liability upon issuance and marked to market each reporting period in the Company's consolidated statement of operations until
their exercise or expiration.

 The initial fair value of the warrant liabilities
was determined using a Geometric Brownian Motion Stock Monte Carlo Simulation valuation model, considering various potential outcomes
and scenarios. The model used the following assumptions: (i) dividend yield of 0 %; (ii) expected volatility of 201.96 %; (iii) risk-free
interest rate of 4.05 %; (iv) maximum term of five year; (v) estimated fair value of the series A warrants of $ 83.73 per share and an estimated
fair value of the series B warrants of $ 29.75 per share; and (vi) various probability assumptions. Subsequent changes in fair value are
recognized in the statement of operations for each reporting period.

 Warrants Issued in Private Equity Offering
– December 2024

 On December 16, 2024 (as described above), the
Company closed on a securities purchase agreement with certain purchasers and a placement agency agreement with Spartan, pursuant to which
the Company agreed to issue to such purchasers (i) pre-funded warrants for the purchase of 38,873,908 common shares, (ii) series A warrants
to purchase 42,311,118 common shares, and (iii) series B warrants to purchase 42,311,118 common shares.

 The pre-funded warrants are exercisable at any
time following shareholder approval until they are exercised in full at an exercise price of $ 0.01 per share, which has been pre-paid
by the purchasers in full. The exercise price and number of common shares issuable upon exercise will adjust in the event of certain share
dividends and distributions, share splits, share combinations, reclassifications or similar events affecting the common shares. The pre-funded
warrants issued to the placement agent were classified as equity.

 F- 58

 The series A warrants are exercisable at any time
following shareholder approval at an exercise price of $ 0.81 per share (subject to adjustment) and the series B warrants are exercisable
at any time following shareholder approval at an exercise price of $ 0.54 (subject to adjustment). The series A and series B warrants will
expire five years from the later of (a) the date that the Company obtains shareholder approval and (b) the earlier of the date that (i)
the initial registration statement (as defined below) registering for resale the registerable securities (as defined below) has been declared
effective or (ii) the date that the registerable securities can be sold, assigned or transferred without restriction or limitation pursuant
to Rule 144 or Rule 144A promulgated under the Securities Act. The series A and B warrants may be exercised on a cashless basis if there
is no effective registration statement with respect to the underlying common shares.

 In addition, under an alternate cashless exercise
option contained in the series A warrants, the holders of the series A warrants will have the right to receive an aggregate number of
shares equal to the product of (i) the aggregate number of common shares that would be issuable upon a cash exercise of the series A warrants
and (ii) 1.25. In addition, the series A and series B warrants contain the following resets of the exercise prices and number of shares
underlying the series A and series B warrants:

 Share Combination Event: Subject to shareholder approval, if at any time and from time to time on or after
the issue date there occurs any share split, share dividend, share combination or reverse share split, recapitalization, or other similar
transaction involving the common shares (each, a "Share Combination Event," and such date thereof, and the lowest VWAP during
the period commencing five (5) consecutive trading days immediately preceding and the five (5) consecutive trading days commencing on
the Share Combination Event Date (the "Event Market Price") (provided if the Share Combination Event is effective after the
close of trading, then commencing on the next trading day, which period shall be the "Share Combination Adjustment Period")
is less than the exercise price then in effect, then at the close of trading on the last day of the Share Combination Adjustment Period,
the exercise price then in effect on such fifth (5th) trading day shall be reduced (but in no event increased) to the Event Market Price,
subject to the Floor Price (as defined below), and the number of common shares issuable upon exercise shall be increased such that the
aggregate exercise price shall remain unchanged.

 Registration Reset: On the reset date (as defined below), the exercise price shall be adjusted to equal
the lower of (i) the exercise price then in effect and (ii) a price equal to the greater of (a) the lowest single day VWAP during the
period commencing on the twentieth (20th) trading day immediately preceding the reset date and ending on the reset date and (b) the Floor
Price. Upon such reset of the exercise price, the number of common shares issuable upon exercise shall be increased such that the aggregate
exercise price shall remain unchanged. As used herein, "reset date" means the date following shareholder approval that is
the earliest of the following dates, (i) the date on which for twenty (20) consecutive trading days all registrable securities have become
and remained registered pursuant to an effective registration statement that is available for the resale of all registrable securities,
provided, however, that if less than all registrable securities have become registered for resale on the date that a registration statement
is declared effective, the holder with respect to itself only, shall have the right in its sole and absolute discretion to deem such condition
satisfied, including with regard only to the registrable securities that have been so registered, (ii) the date on which the holder, for
twenty (20) consecutive trading days, can sell all registrable securities pursuant to Rule 144 or (iii) twelve (12) months and twenty
(20) trading days immediately following the issuance date of the series A and series B warrants.

 Subsequent Equity Sales: Subject to shareholder approval, if at any time the Company issues, sells, enters
into an agreement to sell, or grants any option to purchase, or sells, enters into an agreement to sell, or grants any right to reprice,
or otherwise disposes of or issues (or announces any offer, sale, grant, or any option to purchase or other disposition), or is deemed
to have issued or sold, any common shares or any securities of the Company or its subsidiaries which would entitle the holder thereof
to acquire at any time common shares, including, without limitation, any debt, preferred shares, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, common shares,
for a consideration per share (the "New Issuance Price") less than a price equal to the exercise price in effect immediately
prior to such issuance or sale or deemed issuance or sale, then simultaneously with the consummation (or, if earlier, the announcement)
of such issuance, the exercise price then in effect shall be reduced to an amount equal to the lower of (i) the New Issuance Price and
(ii) the lowest VWAP during the five (5) consecutive trading days immediately following the issuance, subject to the floor price, and
the number of common shares issuable upon exercise shall be increased such that the aggregate exercise price shall remain unchanged.

 F- 59

 Notwithstanding the foregoing exercise price resets,
in no event shall the exercises prices of the series A warrants and the series B warrants be reduced to a price that is less than the
floor price of $ 0.054 (subject to shareholder approval). In addition, upon every Share Combination Event, the floor price shall be equal
to 50 % of the prior floor price, and shall subsequently continue to be so adjusted for every additional Share Combination Event.

 The Company evaluated the series A and series
B warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants
and applicable authoritative guidance from ASC Topic 480 and ASC Topic 815-40. The Company determined the warrants embedded features issued
failed the indexation guidance under ASC Topic 815-40, specifically, (i) an alternative cashless exercise option for the series A warrants
(ii) a reset provision of the exercise price following the date the Company effects a reverse share split, with a proportionate adjustment
to the number of shares underlying the series A and series B warrants, subject to a floor price that resets after each reverse share split,
and (iii) a reset provision of the exercise price following the registration reset date, with a proportionate adjustment to the number
of shares underlying the series A and series B warrants, subject to a floor price of $ 0.054. The Company has determined that these provisions
introduce leverage to the holders of the warrants that could result in a value that would be greater than the settlement amount of a fixed-for-fixed
option on the Company's own equity shares. Accordingly, pursuant to ASC Topic 815-40, the Company recorded the fair value of the
warrants as a liability upon issuance and marked to market each reporting period in the Company's consolidated statement of operations
until their exercise or expiration.

 The initial fair value of the warrant liabilities
was determined using a Geometric Brownian Motion Stock Monte Carlo Simulation valuation model, considering various potential outcomes
and scenarios. The model used the following assumptions: (i) dividend yield of 0 %; (ii) expected volatility of 196.59 %; (iii) risk-free
interest rate of 4.16 %; (iv) maximum term of five year; (v) estimated fair value of the series A warrants of $ 1.22 per share and an estimated
fair value of the series B warrants of $ 0.65 per share; and (vi) various probability assumptions. Subsequent changes in fair value are
recognized in the statement of operations for each reporting period.

 Warrant Dividend Issued to Common Shareholders

 On January 3, 2023, the Company issued warrants
for the purchase of 21 common shares as a dividend to common shareholders of record as of December 23, 2022, pursuant to a warrant agent
agreement, dated January 3, 2023, with VStock Transfer, LLC. Each holder of common shares received a warrant to purchase one (1) common
share for every ten (10) common shares owned as of the record date (with the number of shares underlying the warrant received rounded
down to the nearest whole number). Each warrant represents the right to purchase common shares at an initial exercise price of $ 81,900
per share (subject to certain adjustments as set forth in the warrants). The Company may, at its option, voluntarily reduce the then-current
exercise price to such amount and for such period or periods of time which may be through the expiration date as may be deemed appropriate
by the board of directors. Cashless exercises of the warrants are not permitted. The warrants will generally be exercisable in whole or
in part beginning on the later of (i) January 3, 2024 or (ii) the date that a registration statement on Form S-3 with respect to the issuance
and registration of the common shares underlying the warrants has been filed with and declared effective by the Securities and Exchange
Commission, and thereafter until January 3, 2026. The Company may redeem the warrants at any time in whole or in part at $ 0.001 per warrant
(subject to equitable adjustment to reflect share splits, share dividends, share combinations, recapitalizations and like occurrences)
upon not less than 30 days' prior written notice to the registered holders of the warrants. As a result of the issuance of warrants
as a dividend to common shareholders, the Company recognized a deemed dividend of approximately $ 0.6 million, which was calculated using
a Black-Scholes pricing model.

 Warrants Issued in Private Placements of Promissory
Notes

 On February 3, 2023, the Company entered into
securities purchase agreements with two accredited investors, Mast Hill and Leonite Fund, pursuant to which the Company issued to such
investors (i) promissory notes in the aggregate principal amount of $ 604,000 and (ii) five-year warrants for the purchase of an aggregate
of 7 common shares at an adjusted exercise price of $ 537.60 per share (subject to adjustments as defined in the warrant agreement) for
total cash proceeds of $ 540,000. Additionally, the Company issued a five-year warrant to J.H. Darbie & Co (the broker) for the purchase
of 1 common shares at an adjusted exercise price of $ 537.60 per share (subject to adjustments as defined in the warrant agreement). The
exercise prices of the outstanding foregoing warrants were adjusted on multiple occasions due to the antidilution provisions (down round
feature) in the warrants described below.

 F- 60

 Accordingly, a portion of the proceeds were allocated
to the warrants and common shares based on their relative fair value using the Geometric Brownian Motion Stock Path Monte Carlo Simulation.
The assumptions used in the model were as follows: (i) dividend yield of 0 %; (ii) expected volatility of 162.3 %; (iii) weighted average
risk-free interest rate of 4.1 %; (iv) expected life of five years; (v) estimated fair value of the common shares of $ 37,635 per share;
(vi) exercise price ranging from $ 81,900 to $ 102,375; and (vii) various probability assumptions related to down round price adjustments.
The fair value of the warrants was $ 222,129 and the fair value of the commitment shares was $ 242,858, resulting in the amount allocated
to the warrants and commitment shares, based on their relative fair value of $ 218,172, which was recorded as additional paid-in capital.

 On February 9, 2023, the Company entered into
securities purchase agreements with two accredited investors, Mast Hill and Leonite Fund, pursuant to which the Company issued to such
investors (i) promissory notes in the aggregate principal amount of $ 2,557,575 and (ii) five-year warrants for the purchase of an aggregate
of 28 common shares at an adjusted exercise price of $ 537.60 per share (subject to adjustments as defined in the warrant agreement) for
total cash proceeds of $ 2,271,818. As additional consideration, the Company issued Leonite Fund a five-year warrant for the purchase of
 13 common shares at an exercise price of $ 195 per share (subject to adjustments as defined in the warrant agreement), which were issued
as a commitment fee. Additionally, the Company issued a five-year warrant to J.H. Darbie & Co (the broker) for the purchase of 1 common
shares at an adjusted exercise price of $ 537.60 per share (subject to adjustments as defined in the warrant agreement). The exercise prices
of the outstanding foregoing warrants were adjusted on multiple occasions due to the antidilution provisions (down round feature) in the
warrants described below.

 Accordingly, a portion of the proceeds were allocated
to the warrants and common shares based on their relative fair value using the Geometric Brownian Motion Stock Path Monte Carlo Simulation.
The assumptions used in the model were as follows: (i) dividend yield of 0 %; (ii) expected volatility of 162.0 %; (iii) weighted average
risk-free interest rate of 4.3 %; (iv) expected life of five years; (v) estimated fair value of the common shares of $ 35,100 per share;
(vi) exercise price ranging from $ 195 to $ 102,375; and (vii) various probability assumptions related to down round price adjustments.
The fair value of the warrants was $ 1,323,774 and the fair value of the commitment shares was $ 521,590, resulting in the amount allocated
to the warrants and commitment shares, based on their relative fair value of $ 879,829, which was recorded as additional paid-in capital.

 On February 22, 2023, the Company entered into
securities purchase agreement with one accredited investor, Mast Hill, pursuant to which the Company issued to such investor (i) a promissory
note in the principal amount of $ 878,000 and (ii) five-year warrants for the purchase of an aggregate of 10 common shares at an adjusted
exercise price of $ 537.60 per share (subject to adjustments as defined in the warrant agreement) for total cash proceeds of $ 737,700.
As additional consideration, the Company issued a five-year warrant for the purchase of 11 common shares at an exercise price of $ 195
per share (subject to adjustments as defined in the warrant agreement) to the investor as a commitment fee. Additionally, the Company
issued a five-year warrant to J.H. Darbie & Co (the broker) for the purchase of 1 common share at an adjusted exercise price of $ 537.60
per share (subject to adjustments as defined in the warrant agreement). The exercise prices of the outstanding foregoing warrants were
adjusted on multiple occasions due to the antidilution provisions (down round feature) in the warrants described below.

 Accordingly, a portion of the proceeds were allocated
to the warrants based on their relative fair value using the Geometric Brownian Motion Stock Path Monte Carlo Simulation. The assumptions
used in the model were as follows: (i) dividend yield of 0 %; (ii) expected volatility of 161.6 %; (iii) weighted average risk-free interest
rate of 4.5 %; (iv) expected life of five years; (v) estimated fair value of the common shares of $ 29,445 per share; (vi) exercise price
ranging from $ 195 to $ 102,375; and (vii) various probability assumptions related to down round price adjustments. The fair value of the
warrants was $ 556,485, resulting in the amount allocated to the warrants, based on their relative fair value of $ 261,945, which was recorded
as additional paid-in capital.

 F- 61

 On August 11, 2023, the Company entered into a
securities purchase agreement in a private placement transaction with certain accredited investors, pursuant to which the Company issued
five-year warrants for the purchase of an aggregate of 216 common shares at an exercise price of $ 3,568.50 per share (subject to standard
adjustments). Spartan acted as placement agent in connection with the securities purchase agreement and received warrants for the purchase
of a number of common shares equal to eight percent ( 8 %) of the number common shares issuable upon conversion of the notes and exercise
of the warrants at an exercise price of $ 3,925.35 per share (subject to standard adjustments), resulting in the issuance of a warrant
for 445 common shares. The warrant is exercisable at any time six months after the date of issuance and until the fifth anniversary thereof.

 Accordingly, a portion of the proceeds were allocated
to the warrants based on their relative fair value using the Black-Scholes option pricing model. The assumptions used in the model were
as follows: (i) dividend yield of 0 %; (ii) expected volatility of 153.1 %; (iii) risk-free interest rate of 4.3 %; (iv) expected life of
 five years; (v) estimated fair value of the common shares of $ 3,611.40 per share; (vi) exercise price ranging from $ 3,568.50 to $ 3,925.35.
The fair value of the warrants was $ 2,171,600, resulting in the amount allocated to the warrants, based on their relative fair value of
$ 909,377, which was recorded as additional paid-in capital.

 Warrants Issued in Public Equity Offering

 On July 7, 2023, the Company closed on a securities
purchase agreement with certain purchasers and a placement agency agreement with Spartan, pursuant to which the Company agreed to issue
and sell to such purchasers prefunded warrants for the purchase of 283 common shares at an exercise price of $ 195 per common share.

 The Company evaluated the prefunded warrants as
either equity-classified or liability-classified instruments based on an assessment of the specific terms of the prefunded warrants and
applicable authoritative guidance in ASC Topic 480 and ASC Topic 815-40. The Company determined the prefunded warrants issued failed the
indexation guidance under ASC Topic 815-40, specifically, the prefunded warrants provide for a Black-Scholes value calculation in the
event of certain Fundamental Transactions, which includes a floor on volatility utilized in the value calculation at 100 % or greater.
The Company has determined that this provision introduces leverage to the holders of the warrants that could result in a value that would
be greater than the settlement amount of a fixed-for-fixed option on the Company's own equity shares. Accordingly, pursuant to ASC
Topic 815-40, the Company recorded the fair value of the warrants as a liability upon issuance and marked to market each reporting period
in the Company's consolidated statement of operations until their exercise or expiration.

 The fair value of the warrants deemed to be a
liability, due to certain contingent put features, was determined using the Black-Scholes option pricing model, which was deemed to be
an appropriate model due to the terms of the warrants issued, including a fixed term and exercise price. The assumptions used in the model
were as follows: (i) dividend yield of 0 %; (ii) expected volatility of 157.8 %; (iii) risk-free interest rate of 5.3 %; (iv) expected life
of 30 days; (v) estimated fair value of the common shares of $ 4,297.80 per share; (vi) exercise price of $ 195.

 Exercise Price Adjustments to Warrants

settlement of series A senior convertible preferred shares accrued dividends on January 30, 2023, the exercise price of certain of the
Company's outstanding warrants was adjusted to $ 29,920.80 pursuant to certain antidilution provisions of such warrants (down round
feature). As a result, the Company recognized a deemed dividend of $ 1,217,000, which was calculated using a Black-Scholes pricing model.

settlement of series A senior convertible preferred shares accrued dividends on April 30, 2023, the exercise price of certain of the Company's
outstanding warrants was adjusted to $ 11,598.60 pursuant to certain antidilution provisions of such warrants (down round feature). As
a result, the Company recognized a deemed dividend of $ 534,000, which was calculated using a Black-Scholes pricing model.

 F- 62

the offering on July 7, 2023, the exercise price of certain of the Company's outstanding warrants was adjusted to $ 3,900 pursuant
to certain antidilution provisions of such warrants (down round feature). As a result, the Company recognized a deemed dividend of $ 19,000,
which was calculated using a Black-Scholes pricing model.

settlement of series A senior convertible preferred shares and series B senior convertible preferred shares accrued dividends on July
30, 2023, the exercise price of certain of the Company's outstanding warrants was adjusted to $ 3,174.60 pursuant to certain antidilution
provisions of such warrants (down round feature). As a result, the Company recognized a deemed dividend of approximately $ 3,000, which
was calculated using a Black-Scholes pricing model.

 As a result of the issuance of common shares upon
the conversion of promissory notes on August 30, 2023, the exercise price of certain of the Company's outstanding warrants was adjusted
to $ 1,544.40 pursuant to certain antidilution provisions of such warrants (down round feature). As a result, the Company recognized a
deemed dividend of $ 6,000, which was calculated using a Black-Scholes pricing model.

settlement of series A senior convertible preferred shares and series B senior convertible preferred shares accrued dividends on October
30, 2023, the exercise price of certain of the Company's outstanding warrants was adjusted to $ 537.60 pursuant to certain antidilution
provisions of such warrants (down round feature). As a result, the Company recognized a deemed dividend of approximately $ 1,000, which
was calculated using a Black-Scholes pricing model.

the offering on February 14, 2024, the exercise price of certain of the Company's outstanding warrants was adjusted to $ 1.95 pursuant
to certain antidilution provisions of such warrants (down round feature). As a result, the Company recognized a deemed dividend of $ 1,000,
which was calculated using a Black- Scholes pricing model.

 As a result of the reverse share split on November 11, 2024, the exercise price of the Company's outstanding series A and B warrants from the
October offering was adjusted to $ 1.50 and a proportionate adjustment to the number of shares underlying the series A and series B warrants
was increased by 22,184,090 pursuant
to certain antidilution provisions of such warrants (down round feature).

the offering on December 16, 2024, the exercise price of certain of the Company's outstanding warrants was adjusted to $ 0.27 pursuant
to certain antidilution provisions of such warrants (down round feature).

 Below is a table summarizing the changes in warrants
outstanding during the years ended December 31, 2024 and 2023:

 Warrants

 Weighted-
 Average
 Exercise
 Price

 Outstanding as of December 31, 2022

 $
 80,726.10

 Granted

 1,025

 7,722.00

 Exercised

 ( 487
)

 ( 3,398.85
)

 Outstanding as of December 31, 2023

 6,597.35

 Granted (1)

 146,871,642

 0.63

 Exercised

 ( 8,233,183
)

 ( 1.50
)

 Outstanding as of December 31, 2024

 138,639,165

 $
 0.61

 Exercisable as of December 31, 2024

 15,143,021

 $
 1.82

 (1)
 Includes the issuance of warrants for the purchase of 124,687,552
common shares and an increase of 22,184,090 common shares underlying warrants pursuant to the adjustments described above.

 As of December 31, 2024, the outstanding warrants
have a weighted average remaining contractual life of 4.01 years and a total intrinsic value of $ 9,477,459.

 F- 63

 NOTE 19 —INCOME
TAXES

 As of December 31, 2024, the Company has net operating loss carry forwards
of approximately $ 2.56 million that may be available to reduce future years' taxable income indefinitely. Future tax benefits which
may arise as a result of these losses have not been recognized in these condensed consolidated financial statements, as their realization
is determined not likely to occur. Accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to
these tax loss carry-forwards. For the year ending December 31, 2024, the Company reflects a deferred tax liability in the amount of $ 3.65
million due to the future tax liability from an asset with an indefinite life known as a "naked credit." The future tax liability
from this indefinite lived asset can be offset by up to 80 % of net operating loss carryforwards created after 2017. The remaining portion
of the future tax liability from indefinite lived assets cannot be used to offset definite lived deferred tax assets.

 The components for the provision of income taxes
include:

 2024

 2023

 Current Federal and State

 $
 65,000

 $
 ( 2,000
)

 Deferred Federal and State

 ( 767,000
)

 ( 207,000
)

 Total (benefit) provision for income taxes

 $
 ( 702,000
)

 $
 ( 209,000
)

 A reconciliation of the statutory US Federal income
tax rate to the Company's effective income tax rate is as follows:

 2024

 2023

 Federal tax

 21.0
 %

 21.0
 %

 State tax

 0.1
 %

 1.0
 %

 Permanent items

 -

 %

 ( 5.8
)%

 Valuation allowance

 ( 0.2
)%

 ( 9.3
)%

 Nontaxable partnership income

 ( 20.2
)%

 ( 6.0
)%

 Effective income tax rate

 0.7
 %

 0.9
 %

 F- 64

 Deferred income taxes reflect the net tax effect of temporary differences
between amounts recorded for financial reporting purposes and amounts used for tax purposes. The Company has a net cumulative deferred
tax liability of $ 3,650,000. The major components of deferred tax assets and liabilities are as follows:

 2024

 2023

 Deferred tax assets

 Inventory obsolescence

 $
 105,000

 $
 79,000

 Sales return reserve

 27,000

 27,000

 Business interest limitation

 2,169,000

 2,169,000

 Lease liabilities

 448,000

 224,000

 Accrued expenses

 220,000

 14,000

 Loss carryforward

 596,000

 266,000

 Valuation allowance

 ( 2,661,000
)

 ( 2,186,000
)

 Total deferred tax assets

 $
 904,000

 $
 593,000

 Deferred tax liabilities

 Fixed assets

 $
 ( 180,000
)

 $
 ( 231,000
)

 Construction contracts

 ( 305,000
)

 -

 Right-of-use assets

 ( 435,000
)

 ( 212,000
)

 Intangibles

 ( 2,701,000
)

 ( 559,000
)

 ( 933,000
)

 -

 Total deferred tax liabilities

 $
 ( 4,554,000
)

 $
 ( 1,002,000
)

 Total net deferred income tax liabilities

 $
 ( 3,650,000
)

 $
 ( 409,000
)

 NOTE 20 —SUBSEQUENT
EVENTS

 Amendment to Operating Agreement

 On March 11, 2025, the Manager entered into Amendment
No. 4 to the Second Amended and Restated Operating Agreement of the Company to increase the number of common shares that the Company is
authorized to issue from 500 million shares to 2 billion shares.

 Amendment to Equity Incentive Plan

 On March 11, 2025, the 1847 Holdings LLC 2023
Equity Incentive Plan, as previously amended (the "Plan"), was amended pursuant to Amendment No. 3 to 1847 Holdings LLC 2023
Equity Incentive Plan to increase the number of common shares reserved under the Plan to 5 million shares.

 F- 65

 Warrant Exchange

 As described above, on October 30, 2024, the Company
issued series A warrants to certain investors, most of which were exercised shortly after issuance. On March 11, 2025, the exercise price
of the remaining series A warrants was reduced to $ 0.81 per share, with a corresponding increase in the number of series A warrants. Following
this adjustment, the number of series A warrants outstanding was increased to 632,990, with each series A warrant exercisable for two
common shares, or an aggregate of 1,265,980 common shares. Following the adjustment, a holder exercised 193,348 series A warrants for
 386,696 common shares (the "Exercised Shares"). Accordingly, an aggregate of 439,642 series A warrants remained outstanding
(the "Remaining Warrants").

 On March 25, 2025, the Company entered into cancellation
and exchange agreements with the holders of the Remaining Warrants and the Exercised Shares, pursuant to which such holders agreed to
exchange the Remaining Warrants and the Exercised Shares for an aggregate of 1,027 series F convertible preferred shares.

 In connection with the cancellation and exchange
agreements, on March 25, 2025, the Company executed a Share Designation to establish the terms of the series F convertible preferred shares
(the "Share Designation"). Pursuant to the Share Designation, the Company designated 1,027 of its preferred shares as series
F convertible preferred shares with a stated value of $ 1,000 per share. Following is a summary of the material terms of the series F convertible
preferred shares:

 Ranking. The series F convertible preferred
shares rank, with respect to the payment of dividends and the distribution of assets upon liquidation, (i) senior to all common shares,
allocation shares, series C preferred shares, series D preferred shares and each other class or series that is not expressly made senior
to or on parity with the series F convertible preferred shares; (ii) on parity with each other class or series that is not expressly subordinated
or made senior to the series F convertible preferred shares; and (iii) junior to the series A senior convertible preferred shares, all
indebtedness and other liabilities with respect to assets available to satisfy claims against the Company and each other class or series
that is expressly made senior to the series F convertible preferred shares.

 Dividend Rights. Holders of series F convertible
preferred shares are entitled to receive dividends, when, as and if declared on the common shares, pari passu with the holders
of common shares, on an as-converted basis.

of creditors and the holders of any senior securities or parity securities (in each case, as defined in the Share Designation), upon any
liquidation of the Company, before any payment or distribution of the assets of the Company (whether capital or surplus) shall be made
to or set apart for the holders of junior securities (as defined in the Share Designation), each holder of outstanding series F convertible
preferred shares shall be entitled to receive an amount of cash equal to 100 % of the stated value ($ 1,000 per share). If, upon any liquidation,
the assets, or proceeds thereof, distributable among the holders of the series F convertible preferred shares shall be insufficient to
pay in full the preferential amount payable to the holders of the series F convertible preferred shares and liquidating payments on any
other shares of any class or series of parity securities as to the distribution of assets on any liquidation, then such assets, or the
proceeds thereof, shall be distributed among the holders of series F convertible preferred shares and any such other parity securities
ratably in accordance with the respective amounts that would be payable on such series F convertible preferred shares and any such other
parity securities if all amounts payable thereon were paid in full.

 F- 66

 Voting Rights. The series F convertible
preferred shares do not have any voting rights; provided that, so long as any series F convertible preferred shares are outstanding, the
Company shall not, and shall not permit any of its subsidiaries to, directly or indirectly, without the affirmative vote of the holders
of a majority of the then outstanding series F convertible preferred shares, (a) amend the Company's certificate of formation or
its operating agreement in any manner that adversely affects any rights of the holders of the series F convertible preferred shares or
alter or amend the Share Designation, (b) authorize or create any class of shares ranking as to dividends, redemption or distribution
of assets upon a liquidation senior to, or otherwise pari passu with, the series F convertible preferred shares, or (c) enter into
any agreement with respect to any of the foregoing.

 Conversion Rights. Each series F convertible
preferred share shall be convertible, at the option of the holder thereof, at any time and from time to time, into such number of fully
paid and nonassessable common shares determined by dividing the stated value ($ 1,000 per share) by the conversion price of $ 0.1549 per
share. The conversion price is subject to standard adjustments in the event of any share splits, share combinations, share reclassifications,
dividends paid in common shares, sales of substantially all of the Company's assets, mergers, consolidations or similar transactions,
as well as for subsequent issuances of common shares, or securities convertible into or exercisable or exchangeable for common shares,
at a price below the then conversion price; provided that a holder shall not be entitled to utilize a conversion price of less than $ 0.01
(subject to standard adjustments for share splits, share combinations, recapitalizations and similar transactions). Notwithstanding the
foregoing, the aggregate number of common shares that the Company may issue upon conversion of the series F convertible preferred shares
is limited to 5,385,291 shares (equal to 19.99 % of the Company's outstanding common shares prior to entry into the cancellation
and exchange agreements) prior to obtaining shareholder approval of the issuance of all common shares that may be issued upon conversion
of the series F convertible preferred shares, in accordance with NYSE American rules. Furthermore, the Company shall not effect any conversion
of the series F convertible preferred shares, and a holder shall not have the right to convert any portion of the series F convertible
preferred shares, to the extent that, after giving effect to the conversion, such holder (together with such holder's affiliates)
would beneficially own in excess of 4.99 % of the number of common shares outstanding immediately after giving effect to the issuance of
common shares issuable upon conversion. This limitation may be waived (up to a maximum of 9.99 %) by the holder in its sole discretion
upon not less than sixty-one ( 61) days' prior notice to the Company.

 Other Rights. Holders of series F convertible
preferred shares have no redemption, preemptive or subscription rights for additional securities of the Company.

 F- 67

 SIGNATURES

 Pursuant to the requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

 Date: August 8, 2025

 /s/ Ellery W. Roberts

 Name:

 Ellery W. Roberts

 Title:

 Chief Executive Officer

 (Principal Executive Officer)

 /s/ Vernice L. Howard

 Name:

 Vernice L. Howard

 Title:

 Chief Financial Officer

 (Principal Financial and Accounting Officer)

 Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.

 SIGNATURE

 TITLE

 DATE

 /s/ Ellery W. Roberts

 Chairman and Chief Executive Officer (principal executive officer)

 Ellery W. Roberts

 /s/ Vernice L. Howard

 Chief Financial Officer (principal financial and accounting officer)

 Vernice L. Howard

 /s/ Robert D. Barry

 Robert D. Barry

 /s/ Michele A. Chow-Tai

 Michele A. Chow-Tai

 /s/ Clark R. Crosnoe

 Clark R. Crosnoe

 /s/ Paul A. Froning

 Paul A. Froning

 /s/ Lawrence X. Taylor

 Lawrence X. Taylor

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