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30, 2022 December 31, 2021 (unaudited) ASSETS Current Assets Cash and cash
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equivalents $ 1,326,736 $ 1,383,533 Investments 276,956 276,429 Receivables, net 5,134,926 3,378,996 Contract assets 79,958 88,466 Inventories, net 4,995,409 5,427,302 Prepaid
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expenses and other current assets 250,725 582,048 Total
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Current Assets 12,064,710 11,136,774 Property and equipment,
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net 1,924,230 1,695,311 Operating lease right-of-use
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assets 3,219,470 3,192,604 Goodwill 19,452,270 19,452,270 Intangible assets, net 10,714,513 11,443,897 Other
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long-term assets 61,266 85,691 TOTAL
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ASSETS $ 47,436,459 $ 47,006,547 LIABILITIES, MEZZANINE
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EQUITY AND SHAREHOLDERS’ DEFICIT Current Liabilities Accounts payable and accrued
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expenses $ 6,888,037 $ 4,818,672 Contract liabilities 1,213,297 2,547,903 Customer deposits 3,256,404 3,465,259 Due to related parties 193,762 193,762 Current portion of operating
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lease liabilities 703,112 613,696 Current portion of finance
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lease liabilities 145,874 100,652 Current
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portion of notes payable, net 685,214 692,522 Total
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Current Liabilities 13,085,700 12,432,466 Operating lease liabilities,
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net of current portion 2,598,368 2,607,862 Finance lease liabilities,
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net of current portion 672,714 455,905 Notes payable, net of current
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portion 197,216 251,401 Convertible notes payable,
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net of current portion 27,133,955 26,630,655 Contingent note payable,
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net of current portion 1,001,183 1,001,183 Deferred
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tax liability, net 1,557,000 2,070,000 TOTAL
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LIABILITIES 46,246,136 45,449,472 Mezzanine Equity Series A senior convertible preferred shares, 4,450,460 shares designated; 1,684,849 and 1,818,182 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively 1,415,100 1,655,404 Series B senior convertible preferred shares, 583,334 shares designated; 481,566 and zero shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively 1,257,650 - TOTAL
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MEZZANINE EQUITY 2,672,750 1,655,404 Shareholders’ Deficit Allocation shares, 1,000 shares authorized; 1,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021 1,000 1,000 Common shares, $ 0.001 par value, 500,000,000 shares authorized; 1,248,829 and 1,210,733 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively 1,249 1,211 Distribution receivable ( 2,000,000 ) ( 2,000,000 ) Additional paid-in capital 22,007,040 21,723,042 Accumulated
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deficit ( 22,365,134 ) ( 20,754,394 ) TOTAL 1847 HOLDINGS SHAREHOLDERS’
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DEFICIT ( 2,355,845 ) ( 1,029,141 ) NON-CONTROLLING
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INTERESTS 873,418 930,812 TOTAL
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SHAREHOLDERS’ DEFICIT ( 1,482,427 ) ( 98,329 ) TOTAL
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LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT $ 47,436,459 $ 47,006,547 The
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accompanying notes are an integral part of these condensed consolidated financial statements. 2 1847 HOLDINGS LLC CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Revenues $ 12,891,243 $ 6,647,954 $ 24,965,121 $ 11,428,229 Operating Expenses Cost of sales 8,078,883 4,514,789 15,828,013 7,775,471 Personnel 1,587,173 836,568 3,164,873 1,321,240 Depreciation and amortization 498,974 126,072 1,010,345 248,178 General and administrative 2,380,444 1,350,330 4,546,651 2,674,526 Total Operating Expenses 12,545,474 6,827,759 24,549,882 12,019,415 INCOME (LOSS) FROM OPERATIONS 345,769 ( 179,805 ) 415,239 ( 591,186 ) Other Income (Expense) Other income (expense) 357 ( 3,539 ) 675 ( 3,539 ) Interest expense ( 932,123 ) ( 136,512 ) ( 1,838,866 ) ( 181,633 ) Gain on forgiveness of debt - - - 360,302 Gain (loss) on disposal of property and equipment ( 671 ) - 32,076 - Gain on disposition of subsidiary - 3,282,804 - 3,282,804 Loss on adjustment shares - - - ( 757,792 ) Total Other Income (Expense) ( 932,437 ) 3,142,753 ( 1,806,115 ) 2,700,142 NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES ( 586,668 ) 2,962,948 ( 1,390,876 ) 2,108,956 INCOME TAX BENEFIT FROM CONTINUING OPERATIONS 439,000 21,900 316,000 21,900 NET INCOME (LOSS) FROM CONTINUING OPERATIONS ( 147,668 ) 2,984,848 ( 1,074,876 ) 2,130,856 NET INCOME FROM DISCONTINUED OPERATIONS - 61,895 - 240,405 NET INCOME (LOSS) $ ( 147,668 ) $ 3,046,743 $ ( 1,074,876 ) $ 2,371,261 NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS FROM CONTINUING OPERATIONS ( 3,216 ) ( 16,250 ) ( 57,394 ) ( 41,620 ) NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS FROM DISCONTINUED OPERATIONS - 27,853 - 108,182 NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS $ ( 144,452 ) $ 3,035,140 $ ( 1,017,482 ) $ 2,304,699 NET INCOME (LOSS) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO 1847 HOLDINGS ( 144,452 ) 3,001,098 ( 1,017,482 ) 2,172,476 NET INCOME FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO 1847 HOLDINGS - 34,042 - 132,223 NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS $ ( 144,452 ) $ 3,035,140 $ ( 1,017,482 ) $ 2,304,699 PREFERRED SHARE DIVIDENDS ( 208,281 ) ( 310,679 ) ( 343,496 ) ( 499,388 ) DEEMED DIVIDEND RELATED TO ISSUANCE OF PREFERRED SHARES - - - ( 1,527,086 ) NET INCOME (LOSS) ATTRIBUTABLE TO 1847 HOLDINGS COMMON SHAREHOLDERS $ ( 352,733 ) $ 2,724,461 $ ( 1,360,978 ) $ 278,225 EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO 1847 HOLDINGS COMMON SHAREHOLDERS BASIC EARNINGS (LOSS) PER COMMON SHARE FROM CONTINUING OPERATIONS $ ( 0.28 ) $ 2.22 $ ( 1.10 ) $ 0.13 EARNINGS PER COMMON SHARE FROM DISCONTINUED OPERATIONS - 0.03 - 0.11 EARNINGS (LOSS) PER COMMON SHARE $ ( 0.28 ) $ 2.25 $ ( 1.10 ) $ 0.24 DILUTED EARNINGS (LOSS) PER COMMON SHARE FROM CONTINUING OPERATIONS $ ( 0.28 ) $ 1.68 $ ( 1.10 ) $ 0.09 EARNINGS PER COMMON SHARE FROM DISCONTINUED OPERATIONS - 0.02 - 0.09 EARNINGS (LOSS) PER COMMON SHARE $ ( 0.28 ) $ 1.70 $ ( 1.10 ) $ 0.18 WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING BASIC 1,248,829 1,210,733 1,239,093 1,163,908 DILUTED 1,248,829 1,605,516 1,239,093 1,558,691 The
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accompanying notes are an integral part of these condensed consolidated financial statements. 3 1847 HOLDINGS LLC CONDENSED CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT (UNAUDITED) Three
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and Six Months Ended June 30, 2022 Series A Senior Convertible Preferred Shares Series B Senior Convertible Preferred Shares Allocation Common Shares Distribution Additional Paid-In Accumulated Non- Controlling Total Shareholders’ Shares Amount Shares Amount Shares Shares Amount Receivable Capital Deficit Interests (Deficit) Balance at December 31, 2021 1,818,182 $ 1,655,404 - $ - $ 1,000 1,210,733 $ 1,211 $ ( 2,000,000 ) $ 21,723,042 $ ( 20,754,394 ) $ 930,812 $ ( 98,329 ) Issuance of common shares upon conversion of series A preferred shares ( 133,333 ) ( 111,986 ) - - - 38,096 38 - 111,948 - - 111,986 Issuance of series B convertible preferred shares and warrants - - 426,999 1,113,650 - - - - 152,350 - - 152,350 Dividends - common shares - - - - - - - - - ( 249,762 ) - ( 249,762 ) Dividends - series A senior convertible preferred shares - ( 128,318 ) - - - - - - - ( 121,455 ) - ( 121,455 ) Dividends - series B senior convertible preferred shares - - - - - - - - - ( 13,760 ) - ( 13,760 ) Net loss - - - - - - - - - ( 873,030 ) ( 54,178 ) ( 927,208 ) Balance at March 31, 2022 1,684,849 $ 1,415,100 426,999 $ 1,113,650 $ 1,000 1,248,829 $ 1,249 $ ( 2,000,000 ) $ 21,987,340 $ ( 22,012,401 ) $ 876,634 $ ( 1,146,178 ) Issuance of series B convertible preferred shares and warrants - - 54,567 144,000 - - - - 19,700 - - 19,700 Dividends - series A senior convertible preferred shares - - - - - - - - - ( 159,298 ) - ( 159,298 ) Dividends - series B senior convertible preferred shares - - - - - - - - - ( 48,983 ) - ( 48,983 ) Net loss - - - - - - - - - ( 144,452 ) ( 3,216 ) ( 147,668 ) Balance at June 30, 2022 1,684,849 $ 1,415,100 481,566 $ 1,257,650 $ 1,000 1,248,829 $ 1,249 $ ( 2,000,000 ) $ 22,007,040 $ ( 22,365,134 ) $ 873,418 $ ( 1,482,427 ) 4 Three
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and Six Months Ended June 30, 2021 Series A Senior Convertible Preferred Shares Series B Senior Convertible Preferred Shares Allocation Common Shares Distribution Additional Paid-In Accumulated Non- Controlling Total Shareholders’ Shares Amount Shares Amount Shares Shares Amount Receivable Capital Deficit Interests (Deficit) Balance at December 31, 2020 2,632,278 $ 2,971,427 - $ - $ 1,000 1,111,023 $ 1,111 $ ( 2,000,000 ) $ 17,008,824 $ ( 13,856,973 ) $ ( 879,239 ) $ 274,723 Issuance of series A senior convertible preferred shares and warrants 1,818,182 1,527,086 - - - - - - 3,000,000 ( 1,527,086 ) - 1,472,914 Issuance of common adjustment shares - - - - - 99,710 100 - 757,692 - - 757,792 Dividends - series A senior convertible preferred shares - 11,759 - - - - - - - ( 188,709 ) - ( 188,709 ) Net loss - - - - - - - - - ( 730,441 ) 54,959 ( 675,482 ) Balance at March 31, 2021 4,450,460 $ 4,510,272 - $ - $ 1,000 1,210,733 $ 1,211 $ ( 2,000,000 ) $ 20,766,516 $ ( 16,303,209 ) $ ( 824,280 ) $ 1,641,238 Accrued dividend payable - 121,970 - - - - - - ( 310,679 ) - ( 310,679 ) Net loss - - - - - - - - - 3,035,140 11,603 3,046,743 Balance at June 30, 2021 4,450,460 $ 4,632,242 - $ - $ 1,000 1,210,733 $ 1,211 $ ( 2,000,000 ) $ 20,766,516 ( 13,578,748 ) $ ( 812,677 ) $ 4,377,302 The
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accompanying notes are an integral part of these condensed consolidated financial statements. 5 1847 HOLDINGS LLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ ( 1,074,876 ) $ 2,371,261 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activiti Income from discontinued operations - ( 240,405 ) Gain on disposition of subsidiary - ( 3,282,804 ) Gain on forgiveness of debt - ( 360,302 ) Gain on disposal of property and equipment ( 32,076 ) - Loss on adjustment shares - 757,792 Deferred tax asset (liability) ( 513,000 ) ( 40,000 ) Depreciation and amortization 1,010,345 248,179 Amortization of debt discounts 503,300 - Amortization of financing costs - 13,769 Amortization of right-of-use assets 227,847 50,735 Changes in operating assets and liabiliti Receivables ( 1,755,930 ) 332,719 Contract assets 8,508 - Inventories 431,893 ( 408,159 ) Prepaid expenses and other current assets 331,323 ( 207,471 ) Other assets 24,425 - Accounts payable and accrued expenses 1,941,047 395,334 Contract liabilities ( 1,334,606 ) ( 17,563 ) Customer deposits ( 208,855 ) 373,505 Due to related parties - 3,570 Operating lease liabilities ( 174,791 ) ( 50,735 ) Net cash used in operating activities from continuing operations ( 615,446 ) ( 60,575 ) Net cash used in operating activities from discontinued operations - ( 170,580 ) Net cash used in operating activities ( 615,446 ) ( 231,155 ) CASH FLOWS FROM INVESTING ACTIVITIES Net paid in acquisitions - ( 5,455,476 ) Proceeds from disposition of subsidiary - 325,000 Purchases of property and equipment ( 197,301 ) ( 208,776 ) Proceeds from disposal of property and equipment 39,998 - Investments in certificates of deposit ( 527 ) - Net cash used in investing activities from continuing operations ( 157,830 ) ( 5,339,252 ) Net cash provided by investing activities from discontinued operations - 644,303 Net cash used in investing activities ( 157,830 ) ( 4,694,949 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from notes payable - 3,673,405 Net proceeds from issuance of series A senior convertible preferred shares - 3,000,000 Net proceeds from issuance of series B senior convertible preferred shares 1,429,700 - Proceeds from line of credit - 745,228 Repayments of notes payable and finance lease liabilities ( 119,963 ) ( 358,922 ) Repayments to sellers - ( 1,031,821 ) Cash paid for financing costs - ( 165,230 ) Dividends on series A senior convertible preferred shares ( 280,753 ) ( 365,658 ) Dividends on series B senior convertible preferred shares ( 62,743 ) - Dividends on common shares ( 249,762 ) - Net cash provided by financing activities from continuing operations 716,479 5,497,002 Net cash used in financing activities from discontinued operations - ( 208,693 ) Net cash provided by financing activities 716,479 5,288,309 NET CHANGE IN CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS ( 56,797 ) 97,175 NET CHANGE IN CASH AND CASH EQUIVALENT FROM DISCONTINUED OPERATIONS - 265,030 CASH AND CASH EQUIVALENTS AVAILABLE FROM DISCONTINUED OPERATIONS - ( 265,030 ) CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS Beginning of the period 1,383,533 1,380,349 End of the period $ 1,326,736 $ 1,477,524 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid for interest $ 997,691 $ - Cash paid for income taxes $ - $ - NON-CASH INVESTING AND FINANCING ACTIVITIES Issuance of common shares upon conversion of series A preferred shares $ 111,986 $ - Financed purchases of property and equipment $ 328,504 $ - Operating lease right-of-use asset and liability remeasurement $ 254,713 $ - The
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accompanying notes are an integral part of these condensed consolidated financial statements. 6 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 (UNAUDITED) NOTE
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1—BASIS OF PRESENTATION AND OTHER INFORMATION The
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accompanying unaudited condensed consolidated financial statements of 1847 Holdings LLC (the “Company,” “we,”
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“us,” or “our”) have been prepared in accordance with accounting principles generally accepted in the United
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States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q of Regulation S-X. They
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do not include all information and footnotes required by GAAP for complete financial statements. The December 31, 2021 consolidated balance
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sheet data was derived from audited financial statements but do not include all disclosures required by GAAP. However, except as disclosed
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herein, there has been no material change in the information disclosed in the notes to the consolidated financial statements for the
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year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission
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on March 31, 2022. The interim unaudited condensed consolidated financial statements should be read in conjunction with those consolidated
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financial statements included in the Form 10-K. In the opinion of management, all adjustments considered necessary for a fair presentation
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of the financial statements, consisting solely of normal recurring adjustments, have been made. Operating results for the three and six
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months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. Reverse
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Share Split On
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August 3, 2022, we effected a 1-for-4 reverse split of our outstanding common shares. All outstanding common shares and warrants were
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adjusted to reflect the 1-for-4 reverse split, with respective exercise prices of the warrants proportionately increased. The outstanding
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convertible notes and series A and B convertible senior preferred shares conversion prices were adjusted to reflect a proportional decrease
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in the number of common shares to be issued upon conversion. All
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share and per share data throughout these condensed consolidated financial statements have been retroactively adjusted to reflect the
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reverse share split. The total number of authorized common shares did not change. As a result of the reverse common share split, an amount
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equal to the decreased value of common shares was reclassified from “Common shares” to “Additional paid-in capital.” Reclassifications Certain
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reclassifications within property and equipment, notes payable, and preferred shares have been made to prior period’s financial
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statements to conform to the current period financial statement presentation. There is no impact in total to the results of operations
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and cash flows in all periods presented. Sequencing Under
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ASC 815-40-35 (“ASC 815”), the Company has adopted a sequencing policy, whereby, in the event that reclassification of contracts
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from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient
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authorized shares as a result of certain securities with a potentially indeterminable number of shares, shares will be allocated on the
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basis of the earliest maturity date of potentially dilutive instruments first, with the earliest maturity date of grants receiving the
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first allocation of shares. Pursuant to ASC 815, issuances of securities to the Company’s employees and directors, or to compensate
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grantees in a share-based payment arrangement, are not subject to the sequencing policy. NOTE
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2—RECENT ACCOUNTING PRONOUCEMENTS The
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Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting
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Standards Board (“FASB”). ASUs not listed below were assessed and determined to be either not applicable or are expected
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to have minimal impact on the Company’s condensed consolidated financial statements. 7 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 (UNAUDITED) In
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June 2016, the FASB issued ASU 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,
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which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces
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the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit
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losses. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019.
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This pronouncement was amended under ASU 2019-10 to allow an extension on the adoption date for entities that qualify as a small reporting
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company. The Company has elected this extension and the effective date for the Company to adopt this standard will be for fiscal years
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beginning after December 15, 2022. The Company has not completed its assessment of the standard but does not expect the adoption to have
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a material impact on our condensed consolidated financial statements. In
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August 2020, the FASB issued ASU 2020-06 Accounting for Convertible Instruments and Contracts In An Entity’s Own Equity. ASU 2020-06
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simplifies the accounting for certain convertible instruments by removing the separation models for convertible debt with a cash conversion
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feature and for convertible instruments with a beneficial conversion feature. As a result, more convertible debt instruments will be
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reported as a single liability instrument with no separate accounting for embedded conversion features. Additionally, ASU 2020-06 amends
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the diluted earnings per share calculation for convertible instruments by requiring the use of the if-converted method. The treasury
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stock method is no longer available. For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years
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beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, ASU 2020-06 is effective
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for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted,
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but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company
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early adopted ASU 2020-06 on January 1, 2022. In
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October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities
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from Contracts with Customers. This ASU amends ASC 805 to require acquiring entities to apply ASC 606 to recognize and measure contract
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assets and contract liabilities in business combinations. The ASU is effective for public entities for fiscal years beginning after December
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15, 2022, including interim periods within those fiscal years. This ASU should be applied prospectively to acquisitions occurring on
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or after the effective date of December 15, 2022, and early adoption is permitted. The Company adopted this guidance on January 1, 2022.
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The adoption of this standard does not have a material impact on our condensed consolidated financial statements. NOTE
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3—LIQUIDITY AND GOING CONCERN ASSESSMENT Management
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assesses liquidity and going concern uncertainty in the Company’s condensed consolidated financial statements to determine whether
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there is sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one
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year from the date the consolidated financial statements are issued or available to be issued, which is referred to as the “look-forward
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period”, as defined in GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management,
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management will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing
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and nature of projected cash expenditures or programs, its ability to delay or curtail expenditures or programs and its ability to raise
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additional capital, if necessary, among other factors. Based on this assessment, as necessary or applicable, management makes certain
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assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent it deems probable
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those implementations can be achieved and management has the proper authority to execute them within the look-forward period. As
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