v3.26.1
Business Combinations
 12 Months Ended
Dec. 31, 2025
Business Combinations [Abstract]  
BUSINESS COMBINATIONS

NOTE 5—BUSINESS COMBINATIONS

 

Acquisition of CMD

 

On November 4, 2024, 1847 CMD entered into a stock and membership interest purchase agreement, as amended on December 5, 2024 and December 16, 2024, with Christopher M. Day, pursuant to which 1847 CMD agreed to acquire all of the membership interests of CMD. The acquisition 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 aligns with the Company’s strategy of acquiring profitable small and middle-market businesses with stable earnings and cash flows that offer attractive returns on invested capital, and enhances operational synergies within the Company’s Construction operations.

 

The aggregate purchase price was $18,825,000, consisting of (i) $17,775,000 in cash, inclusive of certain seller transaction expenses, and (ii) a $1,050,000 promissory note payable to the seller.

 

The Company accounted for the acquisition using the acquisition method of accounting in accordance with ASC 805. The purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date with the excess of the purchase price over the fair value of the net assets acquired recorded as goodwill. Goodwill recognized is primarily attributable to expected operational synergies and the anticipated future growth opportunities within the Company’s construction operations, and is not deductible for income tax purposes.

The following table summarizes the allocation of the purchase price:

 

   Purchase
Price
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 
Goodwill   5,309,876 
Accounts payable and accrued expenses   (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 useful life of property and equipment acquired ranges up to four years. The customer-related intangible asset is being amortized over 15 years and the marketing-related intangible asset over five years.

 

From the date of acquisition through December 31, 2024, CMD contributed revenues of $905,864 and net income from continuing operations of $47,508 to the consolidated statements of operations for the year ended December 31, 2024.

 

Pro Forma Information

 

The following unaudited pro forma financial information presents the combined results of the Company and CMD as if the acquisition had been completed on January 1, 2024, with adjustments to give effect to pro forma events directly attributable to the acquisition:

 

   For the Years Ended
December 31,		 
   2025   2024 
Revenues  $48,272,312   $45,563,551 
Net income (loss)   65,559,185    (93,111,448)
Net income (loss) attributable to common shareholders  $65,795,303   $(92,844,801)
           
Basic earnings (loss) per share attributable to common shareholders  $1.78   $(34.90)
Diluted loss per share attributable to common shareholders  $(0.01)  $(34.90)

 

These unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of the results of operations that would have occurred if the acquisition had been completed at the beginning of the period presented, nor are they indicative of the Company’s future results of operations.