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The pandemic has had a dramatic impact on Wolo’s supply chain as it has on others in the automotive aftermarket. Approximately 90%
of Wolo’s vendor base is located in China. The pandemic issues impacting ports in the U.S. due to lack of personnel has had a ripple
effect on Chinese suppliers. Containers are slow to be emptied in the U.S., causing a backlog of ships waiting to get into ports and limiting
containers and ships returning to China. The lack of containers and available space on ships has escalated shipping costs by over 300%
from 2020. Costs for raw materials have also started to increase due to availability. Wolo cannot absorb these increases and began passing
on a price increase to customers starting June 1, 2021, although the effective date may be later for some customers. We believe that this
is an industry-wide issue and that it should not put Wolo in an unfavorable pricing position. The spread of COVID-19 has also adversely
impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. The pandemic
has resulted, and may continue to result, in a significant disruption of global financial markets, which may reduce our ability to access
capital in the future, which could negatively affect our liquidity. The extent to which the pandemic may impact
our results will depend on future developments, which are highly uncertain and cannot be predicted as of the date of this report, including
the effectiveness of vaccines and other treatments for COVID-19, and other new information that may emerge concerning the severity of
the pandemic and steps taken to contain the pandemic or treat its impact, among others. Nevertheless, the pandemic
and the current financial, economic and capital markets environment, and future developments in the global supply chain and other areas
present material uncertainty and risk with respect to our performance, financial condition, results of operations and cash flows. See
also “ Risk Factors ” for more information. 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, 2021 and 2020. 1847 Neese entered into an offsetting management
services agreement with our manager on March 3, 2017, which is included in discontinued operations, 1847 Goedeker entered into an offsetting
management services agreement with our manager on April 5, 2019, which is included in discontinued operations, 1847 Asien entered into
an offsetting management services agreement with our manager on May 28, 2020, 1847 Cabinet entered into an offsetting management services
agreement with our manager on August 21, 2020 (which was amended and restated on October 8, 2021) and 1847 Wolo entered into an offsetting
management services agreement with our manager on March 30, 2021. Pursuant to the offsetting management services agreements, 1847 Neese
appointed our manager to provide certain services to it for a quarterly management fee equal to $62,500, 1847 Goedeker appointed our manager
to provide certain services to it for a quarterly management fee equal to $62,500, 1847 Asien appointed our manager to provide certain
services to it for a quarterly management fee equal to the greater of $75,000 or 2% of adjusted net assets (as defined in the management
services agreement), 1847 Cabinet appointed our manager to provide certain services to it for a quarterly management fee equal to the
greater of $75,000 or 2% of adjusted net assets (as defined in the management services agreement), which was increased to $125,000 or
2% of adjusted net assets on October 8, 2021, and 1847 Wolo appointed our manager to provide certain services to it for a quarterly management
fee equal to the greater of $75,000 or 2% of adjusted net assets (as defined in the management services agreement); provided, however,
in each case that if the aggregate amount of management fees paid or to be paid by such entities, together with all other management fees
paid or to be paid to our manager under other 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. 80 Each of these entities shall also reimburse our
manager for all of their costs and expenses which are specifically approved by their board of directors, including all out-of-pocket costs
and expenses, which are actually incurred by our manager or its affiliates on behalf of these entities in connection with performing services
under the offsetting management services agreements. 1847 Asien expensed management fees of $300,000
for the year ended December 31, 2021 and $178,022 for the period from May 29, 2020 to December 31, 2020. 1847 Cabinet expensed management fees of $345,556
for the year ended December 31, 2021 and $75,000 for the period from October 1, 2020 to December 31, 2020. 1847 Wolo expensed management fees of $225,833
for the year ended December 31, 2021. In conjunction with acquisition of Wolo, our manager also received a fee of $110,000. On a consolidated basis, we expensed total management
fees of $981,389 and $253,022 for the years ended December 31, 2021 and 2020, respectively. Segments The Financial Accounting Standards Board, or FASB,
Accounting Standard Codification, or ASC, Topic 280, Segment Reporting , requires that an enterprise report selected information
about reportable segments in its financial reports issued to its shareholders. As of December 31, 2021, we have three reportable segments
- the retail and appliances segment, which is operated by Asien’s, the construction segment, which is operated by Kyle’s,
High Mountain and Innovative Cabinets, and the automotive supplies segment, which is operated by Wolo. The retail and appliances segment is comprised
of the business of Asien’s, which is based in Santa Rosa, California, and provides a wide variety of appliance services including
sales, delivery, installation, service and repair, extended warranties, and financing. The construction segment is comprised of
the businesses of Kyle’s, High Mountain and Innovative Cabinets. Kyle’s, which is based in Boise, Idaho, provides a wide variety
of construction services including custom design and build of kitchen and bathroom cabinetry, delivery, installation, service and repair,
extended warranties, and financing. High Mountain, which is based in Reno, Nevada, specializes in all aspects of finished carpentry products
and services, including doors, door frames, base boards, crown molding, cabinetry, bathroom sinks and cabinets, bookcases, built-in closets,
and fireplace mantles, among others, as well as window installation. Innovative Cabinets, also based in Reno, Nevada, specializes in custom
cabinetry and countertops. The automotive supplies segment is comprised of
the business of Wolo, which is based in Deer Park, New York, and designs and sells horn and safety products (electric, air, truck, marine,
motorcycle and industrial equipment), and offers vehicle emergency and safety warning lights for cars, trucks, industrial equipment and
emergency vehicles. We provide general corporate services to our segments;
however, these services are not considered when making operating decisions and assessing segment performance. These services are reported
under “Corporate Services” below and these include costs associated with executive management, financing activities and public
company compliance. Discontinued Operations On October 23, 2020, we distributed all of the
shares of 1847 Goedeker that we held to our shareholders. As a result of this distribution, 1847 Goedeker is no longer a subsidiary of
our company. All financial information of 1847 Goedeker previously presented as part of retail and appliance services operations are classified
as discontinued operations and not presented as part of continuing operations for the year ended December 31, 2020. On April 19, 2021, we entered into a stock purchase
agreement with the original owners of Neese, pursuant to which they purchased our 55% ownership interest in 1847 Neese for a purchase
price of $325,000 in cash. As a result of this transaction, 1847 Neese is no longer a subsidiary of our company. All financial information
of 1847 Neese previously presented as part of land management services operations are classified as discontinued operations and not presented
as part of continuing operations for the years ended December 31, 2021 and 2020. 81 Results of Operations The following table sets forth key components
of our results of operations during the years ended December 31, 2021 and 2020, both in dollars and as a percentage of our revenues. Years Ended December 31, 2021 2020 Amount % of Revenues Amount % of Revenues Revenues Furniture and appliances $ 12,741,064 41.6 % $ 7,625,222 87.2 % Construction 12,203,890 39.8 % 1,120,224 12.8 % Automotive supplies 5,716,030 18.6 % - - Total revenues 30,660,984 100.0 % 8,745,446 100.0 % Operating expenses Cost of sales 20,311,724 66.2 % 6,531,435 74.7 % Personnel costs 3,247,441 10.6 % 734,867 8.4 % Depreciation and amortization 908,982 3.0 % 176,612 2.0 % General and administrative 7,296,736 23.8 % 2,652,429 30.3 % Total operating expenses 31,764,883 103.6 % 10,095,343 115.4 % Net loss from operations (1,103,899 ) (3.6 )% (1,349,897 ) (15.4 )% Other income (expense) Gain on forgiveness of debt 360,302 1.2 % - - Loss on write-down of vesting note payable – related party (602,204 ) (2.0 )% - - Loss on extinguishment of debt (137,692 ) (0.4 )% (286,350 ) (3.3 )% Loss on redemption of preferred shares (4,017,553 ) (13.1 )% - - Gain on disposition of subsidiary 3,282,804 10.7 % - - Gain on sale of property and equipment 10,885 - - - Other income and (expense) 876 - (18,196 ) (0.2 )% Interest expense (1,296,537 ) (4.2 )% (249,626 ) (2.9 )% Total other income (expense) (2,399,119 ) (7.8 )% (554,172 ) (6.3 )% Net loss before income taxes (3,503,018 ) (11.4 )% (1,904,069 ) (21.8 )% Income tax benefit (expense) (218,139 ) (0.7 )% 83,931 1.0 % Net loss from continuing operations $ (3,721,157 ) (12.1 )% $ (1,820,138 ) (20.8 )% Total revenues . Our total revenues
were $30,660,984 for the year ended December 31, 2021, as compared to $8,745,446 for the year ended December 31, 2020. The retail and appliances segment generates revenue
through the sales of home furnishings, including appliances and related products. Revenues from the retail and appliances segment were
$12,741,064 for the year ended December 31, 2021 and $7,625,222 for the period from May 29, 2020 to December 31, 2020 following the acquisition
of Asien’s. The construction segment generates revenue through
the sale of finished carpentry products and services, including doors, door frames, base boards, crown molding, cabinetry, bathroom sinks
and cabinets, bookcases, built-in closets, and fireplace mantles, among others, as well as kitchen countertops. Revenues from the construction
segment were $12,203,890 for the year ended December 31, 2021, including revenue from the acquisitions of High Mountain and Innovative
Cabinets of $6,766,540 for the period of October 9, 2021 to December 31, 2021, and $1,120,224 for the period from October 1, 2020 to December
31, 2020 following the acquisition of Kyle’s. 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
were $5,716,030 for the period from April 1, 2021 to December 31, 2021 following the acquisition of Wolo. 82 Cost of sales . Our total cost of
sales was $20,311,724 for the year ended December 31, 2021, as compared to $6,531,435 for the year ended December 31, 2020. Cost of sales for the retail and appliances segment
consists of the cost of purchased merchandise plus the cost of delivering merchandise and where applicable installation, net of promotional
rebates and other incentives received from vendors. Cost of sales for the retail and appliances segment was $9,773,371 for the year ended
December 31, 2021 and $5,866,413 for the period from May 29, 2020 to December 31, 2020 following the acquisition of Asien’s. As
a percentage of retail and appliances revenues, cost of sales for the retail and appliances segment was 76.7% for the year ended December
31, 2021 and 76.9% for the period from May 29, 2020 to December 31, 2020. Cost of sales 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 sales for the construction segment was $6,966,064 for the year ended December 31, 2021, including costs from the acquisitions
of High Mountain and Innovative Cabinets of $3,899,268 for the period of October 9, 2021 to December 31, 2021, and $665,022 for the period
from October 1, 2020 to December 31, 2020. As a percentage of construction revenues, cost of sales for the construction segment was 57.1%
for the year ended December 31, 2021 and 59.4% for the period from October 1, 2020 to December 31, 2020 following the acquisition of
Kyle’s. Cost of sales for the automotive supplies segment
consists of the costs of purchased finished goods plus freight and tariff costs. Cost of sales for the automotive supplies segment was
$3,572,289 for the period from April 1, 2021 to December 31, 2021 following the acquisition of Wolo. As a percentage of automotive supplies
revenues, cost of sales for the automotive supplies segment was 62.5% for the period from April 1, 2021 to September 30, 2021. Personnel costs . Personnel costs

The pandemic has had a dramatic impact on Wolo’s supply chain as it has on others in the automotive aftermarket. Approximately 90%

of Wolo’s vendor base is located in China. The pandemic issues impacting ports in the U.S. due to lack of personnel has had a ripple

effect on Chinese suppliers. Containers are slow to be emptied in the U.S., causing a backlog of ships waiting to get into ports and limiting

containers and ships returning to China. The lack of containers and available space on ships has escalated shipping costs by over 300%

from 2020. Costs for raw materials have also started to increase due to availability. Wolo cannot absorb these increases and began passing

on a price increase to customers starting June 1, 2021, although the effective date may be later for some customers. We believe that this

is an industry-wide issue and that it should not put Wolo in an unfavorable pricing position. The spread of COVID-19 has also adversely

impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. The pandemic

has resulted, and may continue to result, in a significant disruption of global financial markets, which may reduce our ability to access

capital in the future, which could negatively affect our liquidity. The extent to which the pandemic may impact

our results will depend on future developments, which are highly uncertain and cannot be predicted as of the date of this report, including

the effectiveness of vaccines and other treatments for COVID-19, and other new information that may emerge concerning the severity of

the pandemic and steps taken to contain the pandemic or treat its impact, among others. Nevertheless, the pandemic

and the current financial, economic and capital markets environment, and future developments in the global supply chain and other areas

present material uncertainty and risk with respect to our performance, financial condition, results of operations and cash flows. See

also “ Risk Factors ” for more information. 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, 2021 and 2020. 1847 Neese entered into an offsetting management

services agreement with our manager on March 3, 2017, which is included in discontinued operations, 1847 Goedeker entered into an offsetting

management services agreement with our manager on April 5, 2019, which is included in discontinued operations, 1847 Asien entered into

an offsetting management services agreement with our manager on May 28, 2020, 1847 Cabinet entered into an offsetting management services

agreement with our manager on August 21, 2020 (which was amended and restated on October 8, 2021) and 1847 Wolo entered into an offsetting

management services agreement with our manager on March 30, 2021. Pursuant to the offsetting management services agreements, 1847 Neese

appointed our manager to provide certain services to it for a quarterly management fee equal to $62,500, 1847 Goedeker appointed our manager

to provide certain services to it for a quarterly management fee equal to $62,500, 1847 Asien appointed our manager to provide certain

services to it for a quarterly management fee equal to the greater of $75,000 or 2% of adjusted net assets (as defined in the management

services agreement), 1847 Cabinet appointed our manager to provide certain services to it for a quarterly management fee equal to the

greater of $75,000 or 2% of adjusted net assets (as defined in the management services agreement), which was increased to $125,000 or

2% of adjusted net assets on October 8, 2021, and 1847 Wolo appointed our manager to provide certain services to it for a quarterly management

fee equal to the greater of $75,000 or 2% of adjusted net assets (as defined in the management services agreement); provided, however,

in each case that if the aggregate amount of management fees paid or to be paid by such entities, together with all other management fees

paid or to be paid to our manager under other 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. 80 Each of these entities shall also reimburse our

manager for all of their costs and expenses which are specifically approved by their board of directors, including all out-of-pocket costs

and expenses, which are actually incurred by our manager or its affiliates on behalf of these entities in connection with performing services

under the offsetting management services agreements. 1847 Asien expensed management fees of $300,000

for the year ended December 31, 2021 and $178,022 for the period from May 29, 2020 to December 31, 2020. 1847 Cabinet expensed management fees of $345,556

for the year ended December 31, 2021 and $75,000 for the period from October 1, 2020 to December 31, 2020. 1847 Wolo expensed management fees of $225,833

for the year ended December 31, 2021. In conjunction with acquisition of Wolo, our manager also received a fee of $110,000. On a consolidated basis, we expensed total management

fees of $981,389 and $253,022 for the years ended December 31, 2021 and 2020, respectively. Segments The Financial Accounting Standards Board, or FASB,

Accounting Standard Codification, or ASC, Topic 280, Segment Reporting , requires that an enterprise report selected information

about reportable segments in its financial reports issued to its shareholders. As of December 31, 2021, we have three reportable segments

- the retail and appliances segment, which is operated by Asien’s, the construction segment, which is operated by Kyle’s,

High Mountain and Innovative Cabinets, and the automotive supplies segment, which is operated by Wolo. The retail and appliances segment is comprised

of the business of Asien’s, which is based in Santa Rosa, California, and provides a wide variety of appliance services including

sales, delivery, installation, service and repair, extended warranties, and financing. The construction segment is comprised of

the businesses of Kyle’s, High Mountain and Innovative Cabinets. Kyle’s, which is based in Boise, Idaho, provides a wide variety

of construction services including custom design and build of kitchen and bathroom cabinetry, delivery, installation, service and repair,

extended warranties, and financing. High Mountain, which is based in Reno, Nevada, specializes in all aspects of finished carpentry products

and services, including doors, door frames, base boards, crown molding, cabinetry, bathroom sinks and cabinets, bookcases, built-in closets,

and fireplace mantles, among others, as well as window installation. Innovative Cabinets, also based in Reno, Nevada, specializes in custom

cabinetry and countertops. The automotive supplies segment is comprised of

the business of Wolo, which is based in Deer Park, New York, and designs and sells horn and safety products (electric, air, truck, marine,

motorcycle and industrial equipment), and offers vehicle emergency and safety warning lights for cars, trucks, industrial equipment and

emergency vehicles. We provide general corporate services to our segments;

however, these services are not considered when making operating decisions and assessing segment performance. These services are reported

under “Corporate Services” below and these include costs associated with executive management, financing activities and public

company compliance. Discontinued Operations On October 23, 2020, we distributed all of the

shares of 1847 Goedeker that we held to our shareholders. As a result of this distribution, 1847 Goedeker is no longer a subsidiary of

our company. All financial information of 1847 Goedeker previously presented as part of retail and appliance services operations are classified

as discontinued operations and not presented as part of continuing operations for the year ended December 31, 2020. On April 19, 2021, we entered into a stock purchase

agreement with the original owners of Neese, pursuant to which they purchased our 55% ownership interest in 1847 Neese for a purchase

price of $325,000 in cash. As a result of this transaction, 1847 Neese is no longer a subsidiary of our company. All financial information

of 1847 Neese previously presented as part of land management services operations are classified as discontinued operations and not presented

as part of continuing operations for the years ended December 31, 2021 and 2020. 81 Results of Operations The following table sets forth key components

of our results of operations during the years ended December 31, 2021 and 2020, both in dollars and as a percentage of our revenues. Years Ended December 31, 2021 2020 Amount % of Revenues Amount % of Revenues Revenues Furniture and appliances $ 12,741,064 41.6 % $ 7,625,222 87.2 % Construction 12,203,890 39.8 % 1,120,224 12.8 % Automotive supplies 5,716,030 18.6 % - - Total revenues 30,660,984 100.0 % 8,745,446 100.0 % Operating expenses Cost of sales 20,311,724 66.2 % 6,531,435 74.7 % Personnel costs 3,247,441 10.6 % 734,867 8.4 % Depreciation and amortization 908,982 3.0 % 176,612 2.0 % General and administrative 7,296,736 23.8 % 2,652,429 30.3 % Total operating expenses 31,764,883 103.6 % 10,095,343 115.4 % Net loss from operations (1,103,899 ) (3.6 )% (1,349,897 ) (15.4 )% Other income (expense) Gain on forgiveness of debt 360,302 1.2 % - - Loss on write-down of vesting note payable – related party (602,204 ) (2.0 )% - - Loss on extinguishment of debt (137,692 ) (0.4 )% (286,350 ) (3.3 )% Loss on redemption of preferred shares (4,017,553 ) (13.1 )% - - Gain on disposition of subsidiary 3,282,804 10.7 % - - Gain on sale of property and equipment 10,885 - - - Other income and (expense) 876 - (18,196 ) (0.2 )% Interest expense (1,296,537 ) (4.2 )% (249,626 ) (2.9 )% Total other income (expense) (2,399,119 ) (7.8 )% (554,172 ) (6.3 )% Net loss before income taxes (3,503,018 ) (11.4 )% (1,904,069 ) (21.8 )% Income tax benefit (expense) (218,139 ) (0.7 )% 83,931 1.0 % Net loss from continuing operations $ (3,721,157 ) (12.1 )% $ (1,820,138 ) (20.8 )% Total revenues . Our total revenues

were $30,660,984 for the year ended December 31, 2021, as compared to $8,745,446 for the year ended December 31, 2020. The retail and appliances segment generates revenue

through the sales of home furnishings, including appliances and related products. Revenues from the retail and appliances segment were

$12,741,064 for the year ended December 31, 2021 and $7,625,222 for the period from May 29, 2020 to December 31, 2020 following the acquisition

of Asien’s. The construction segment generates revenue through

the sale of finished carpentry products and services, including doors, door frames, base boards, crown molding, cabinetry, bathroom sinks

and cabinets, bookcases, built-in closets, and fireplace mantles, among others, as well as kitchen countertops. Revenues from the construction

segment were $12,203,890 for the year ended December 31, 2021, including revenue from the acquisitions of High Mountain and Innovative

Cabinets of $6,766,540 for the period of October 9, 2021 to December 31, 2021, and $1,120,224 for the period from October 1, 2020 to December

31, 2020 following the acquisition of Kyle’s. 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

were $5,716,030 for the period from April 1, 2021 to December 31, 2021 following the acquisition of Wolo. 82 Cost of sales . Our total cost of

sales was $20,311,724 for the year ended December 31, 2021, as compared to $6,531,435 for the year ended December 31, 2020. Cost of sales for the retail and appliances segment

consists of the cost of purchased merchandise plus the cost of delivering merchandise and where applicable installation, net of promotional

rebates and other incentives received from vendors. Cost of sales for the retail and appliances segment was $9,773,371 for the year ended

December 31, 2021 and $5,866,413 for the period from May 29, 2020 to December 31, 2020 following the acquisition of Asien’s. As

a percentage of retail and appliances revenues, cost of sales for the retail and appliances segment was 76.7% for the year ended December

31, 2021 and 76.9% for the period from May 29, 2020 to December 31, 2020. Cost of sales 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 sales for the construction segment was $6,966,064 for the year ended December 31, 2021, including costs from the acquisitions

of High Mountain and Innovative Cabinets of $3,899,268 for the period of October 9, 2021 to December 31, 2021, and $665,022 for the period

from October 1, 2020 to December 31, 2020. As a percentage of construction revenues, cost of sales for the construction segment was 57.1%

for the year ended December 31, 2021 and 59.4% for the period from October 1, 2020 to December 31, 2020 following the acquisition of

Kyle’s. Cost of sales for the automotive supplies segment

consists of the costs of purchased finished goods plus freight and tariff costs. Cost of sales for the automotive supplies segment was

$3,572,289 for the period from April 1, 2021 to December 31, 2021 following the acquisition of Wolo. As a percentage of automotive supplies

revenues, cost of sales for the automotive supplies segment was 62.5% for the period from April 1, 2021 to September 30, 2021. Personnel costs . Personnel costs