arcee-ai/sec-data-full · Datasets at Hugging Face

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outstanding balance of this note was $1,001,183. 31 1847
Cabinet will have the right to redeem all but no less than all of the note at any time prior to the maturity date. If 1847 Cabinet elects
to redeem the note, the redemption price will be payable in cash and is equal to the then outstanding vested portion of the principal
plus any remaining unvested principal amount plus accrued but unpaid interest thereon (calculated over 36 months). For purposes of this
redemption calculation, the “unvested principal amount” shall be $350,000 per year. The
note contains customary events of default. The right of the holders to receive payments under the note is subordinated to all indebtedness
of 1847 Cabinet, whether outstanding as of the closing date or thereafter created, to banks, insurance companies and other financial
institutions or funds, and federal or state taxation authorities. Financing
Leases On
February 14, 2019, High Mountain entered in an equipment financing lease to purchase a lift truck for $24,337, which matures on January
19, 2024. The balance payable was $9,792 as of March 31, 2022. On
April 10, 2019, High Mountain entered in an equipment financing lease to purchase equipment for $67,577, which matures on April 1, 2024.
The balance payable was $30,961 as of March 31, 2022. On
June 2, 2020, High Mountain entered in an equipment financing lease to purchase office printers for $9,240, which matures on May 2, 2024.
The balance payable was $5,187 as of March 31, 2022. On
May 6, 2021, Kyle’s entered in an equipment financing lease to purchase equipment for $276,896, which matures on December 1, 2027.
The balance payable was $258,821 as of March 31, 2022. On
October 12, 2021, Kyle’s entered in an equipment financing lease to purchase equipment for $245,375, which matures on December
1, 2027. The balance payable was $228,842 as of March 31, 2022. On
March 28, 2022, Kyle’s entered in an equipment financing lease to purchase equipment for $245,395, which matures on January 28,
2028. The balance payable was $239,208 as of March 31, 2022. On
March 28, 2022, Kyle’s entered in an equipment financing lease to purchase equipment for $71,403, which matures on January 28,
2028. The balance payable was $69,463 as of March 31, 2022. Vehicle
Loans Asien’s
has entered into seven retail installment sale contracts pursuant to which Asien’s agreed to finance its delivery trucks at rates
ranging from 3.74% to 8.72% with an aggregate remaining principal amount of $136,781 as of March 31, 2022. Kyle’s
has entered into two retail installment sale contracts pursuant to which Kyle’s agreed to finance its delivery trucks at rates
ranging from 5.90% to 6.54% with an aggregate remaining principal amount of $61,022 as of March 31, 2022. High
Mountain has entered into twelve retail installment sale contracts pursuant to which it agreed to finance delivery trucks and equipment
at rates ranging from 3.74% to 6.34% with an aggregate remaining principal amount of $110,285 as of March 31, 2022. Innovative
Cabinets has entered into two retail installment sale contracts pursuant to which it agreed to finance delivery trucks and equipment
at rates of 3.74% with an aggregate remaining principal amount of $18,633 as of March 31, 2022. Total
Debt The
following table shows aggregate figures for the total debt, net of discounts, described above that is coming due in the short and long
term as of March 31, 2022. See the above disclosures for more details regarding these loans. Short-Term Long-Term Total
Debt Secured Convertible
Promissory Notes $ - $ 21,948,421 $ 21,948,421 6% Subordinated Convertible
Promissory Notes - 4,931,608 4,931,608 6% Amortizing Promissory Note 581,961 - 581,961 Vesting Promissory Note - 1,011,183 1,011,183 Financing Leases 143,865 698,409 842,274 Vehicle
Loans 104,322 222,399 326,721 Total $ 830,148 $ 28,812,020 $ 29,642,168 32 Contractual
Obligations Our
principal commitments consist mostly of obligations under the loans described above and other contractual commitments described below. We
have engaged the Manager to manage our day-to-day operations and affairs. Our relationship with the Manager will be governed principally
by the following agreements: ● the
management services agreement and offsetting management services agreements relating to the
management services the Manager will perform for us and the businesses we own and the management
fee to be paid to the Manager in respect thereof; and ● our
operating agreement setting forth the 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 the 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 and Estimates The
preparation of the unaudited condensed consolidated financial statements requires our management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.
On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on
various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. For
a description of the accounting policies that, in management’s opinion, involve the most significant application of judgment or
involve complex estimation and which could, if different judgment or estimates were made, materially affect our reported financial position,
results of operations, or cash flows, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations
– Critical Accounting Policies” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with
the Securities and Exchange Commission (the “SEC”) on March 31, 2022. ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not
applicable. ITEM
4. CONTROLS AND PROCEDURES. Evaluation
of Disclosure Controls and Procedures We
maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)). Disclosure controls and procedures refer to controls and other procedures designed to ensure that information
required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated
and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely
decisions regarding required disclosure. As
required by Rule 13a-15(e) of the Exchange Act, our management has carried out an evaluation, with the participation and under the supervision
of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls
and procedures, as of March 31, 2022. Based upon, and as of the date of this evaluation, our chief executive officer and chief financial
officer determined that, because of the material weaknesses described in Item 9A “Controls and Procedures” of our Annual
Report on Form 10-K for the fiscal year ended December 31, 2021, which we are still in the process of remediating as of March 31, 2022,
our disclosure controls and procedures were not effective. Investors are directed to Item 9A of our Annual Report on Form 10-K for the
fiscal year ended December 31, 2021 for the description of these weaknesses. 33 Changes
in Internal Control Over Financial Reporting We
regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls
and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities
as implementing new, more efficient systems, consolidating activities, and migrating processes. During
its evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2022, our management identified
the following material weakness ● We
did not have appropriate policies and procedures in place to evaluate the proper accounting
and disclosures of key documents and agreements. ● We
do not have adequate segregation of duties with our limited accounting personnel and rely
upon outsourced accounting services. ● We
do not have sufficient and skilled accounting personnel with an appropriate level of technical
accounting knowledge and experience in the application of GAAP commensurate with our financial
reporting requirements. As
disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, our management has identified the steps necessary
to address the material weaknesses, and in the first quarter of 2022, we continued to implement the following remedial procedu ● On
September 7, 2021, we hired Vernice Howard as our Chief Financial Officer. Ms. Howard has over
30 years of experience in the fields of finance and accounting and has significant GAAP
and SEC reporting experience. ● We
plan to make necessary changes by providing training to our financial team and our other
relevant personnel on the GAAP accounting guidelines applicable to financial reporting requirements. ● In

outstanding balance of this note was $1,001,183. 31 1847

Cabinet will have the right to redeem all but no less than all of the note at any time prior to the maturity date. If 1847 Cabinet elects

to redeem the note, the redemption price will be payable in cash and is equal to the then outstanding vested portion of the principal

plus any remaining unvested principal amount plus accrued but unpaid interest thereon (calculated over 36 months). For purposes of this

redemption calculation, the “unvested principal amount” shall be $350,000 per year. The

note contains customary events of default. The right of the holders to receive payments under the note is subordinated to all indebtedness

of 1847 Cabinet, whether outstanding as of the closing date or thereafter created, to banks, insurance companies and other financial

institutions or funds, and federal or state taxation authorities. Financing

Leases On

February 14, 2019, High Mountain entered in an equipment financing lease to purchase a lift truck for $24,337, which matures on January

19, 2024. The balance payable was $9,792 as of March 31, 2022. On

April 10, 2019, High Mountain entered in an equipment financing lease to purchase equipment for $67,577, which matures on April 1, 2024.

The balance payable was $30,961 as of March 31, 2022. On

June 2, 2020, High Mountain entered in an equipment financing lease to purchase office printers for $9,240, which matures on May 2, 2024.

The balance payable was $5,187 as of March 31, 2022. On

May 6, 2021, Kyle’s entered in an equipment financing lease to purchase equipment for $276,896, which matures on December 1, 2027.

The balance payable was $258,821 as of March 31, 2022. On

October 12, 2021, Kyle’s entered in an equipment financing lease to purchase equipment for $245,375, which matures on December

1, 2027. The balance payable was $228,842 as of March 31, 2022. On

March 28, 2022, Kyle’s entered in an equipment financing lease to purchase equipment for $245,395, which matures on January 28,

2028. The balance payable was $239,208 as of March 31, 2022. On

March 28, 2022, Kyle’s entered in an equipment financing lease to purchase equipment for $71,403, which matures on January 28,

2028. The balance payable was $69,463 as of March 31, 2022. Vehicle

Loans Asien’s

has entered into seven retail installment sale contracts pursuant to which Asien’s agreed to finance its delivery trucks at rates

ranging from 3.74% to 8.72% with an aggregate remaining principal amount of $136,781 as of March 31, 2022. Kyle’s

has entered into two retail installment sale contracts pursuant to which Kyle’s agreed to finance its delivery trucks at rates

ranging from 5.90% to 6.54% with an aggregate remaining principal amount of $61,022 as of March 31, 2022. High

Mountain has entered into twelve retail installment sale contracts pursuant to which it agreed to finance delivery trucks and equipment

at rates ranging from 3.74% to 6.34% with an aggregate remaining principal amount of $110,285 as of March 31, 2022. Innovative

Cabinets has entered into two retail installment sale contracts pursuant to which it agreed to finance delivery trucks and equipment

at rates of 3.74% with an aggregate remaining principal amount of $18,633 as of March 31, 2022. Total

Debt The

following table shows aggregate figures for the total debt, net of discounts, described above that is coming due in the short and long

term as of March 31, 2022. See the above disclosures for more details regarding these loans. Short-Term Long-Term Total

Debt Secured Convertible

Promissory Notes $ - $ 21,948,421 $ 21,948,421 6% Subordinated Convertible

Promissory Notes - 4,931,608 4,931,608 6% Amortizing Promissory Note 581,961 - 581,961 Vesting Promissory Note - 1,011,183 1,011,183 Financing Leases 143,865 698,409 842,274 Vehicle

Loans 104,322 222,399 326,721 Total $ 830,148 $ 28,812,020 $ 29,642,168 32 Contractual

Obligations Our

principal commitments consist mostly of obligations under the loans described above and other contractual commitments described below. We

have engaged the Manager to manage our day-to-day operations and affairs. Our relationship with the Manager will be governed principally

by the following agreements: ● the

management services agreement and offsetting management services agreements relating to the

management services the Manager will perform for us and the businesses we own and the management

fee to be paid to the Manager in respect thereof; and ● our

operating agreement setting forth the 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 the 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 and Estimates The

preparation of the unaudited condensed consolidated financial statements requires our management to make estimates and assumptions that

affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on

various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. For

a description of the accounting policies that, in management’s opinion, involve the most significant application of judgment or

involve complex estimation and which could, if different judgment or estimates were made, materially affect our reported financial position,

results of operations, or cash flows, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations

– Critical Accounting Policies” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with

the Securities and Exchange Commission (the “SEC”) on March 31, 2022. ITEM

3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not

applicable. ITEM

4. CONTROLS AND PROCEDURES. Evaluation

of Disclosure Controls and Procedures We

maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the

“Exchange Act”)). Disclosure controls and procedures refer to controls and other procedures designed to ensure that information

required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within

the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated

and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely

decisions regarding required disclosure. As

required by Rule 13a-15(e) of the Exchange Act, our management has carried out an evaluation, with the participation and under the supervision

of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls

and procedures, as of March 31, 2022. Based upon, and as of the date of this evaluation, our chief executive officer and chief financial

officer determined that, because of the material weaknesses described in Item 9A “Controls and Procedures” of our Annual

Report on Form 10-K for the fiscal year ended December 31, 2021, which we are still in the process of remediating as of March 31, 2022,

our disclosure controls and procedures were not effective. Investors are directed to Item 9A of our Annual Report on Form 10-K for the

fiscal year ended December 31, 2021 for the description of these weaknesses. 33 Changes

in Internal Control Over Financial Reporting We

regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls

and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities

as implementing new, more efficient systems, consolidating activities, and migrating processes. During

its evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2022, our management identified

the following material weakness ● We

did not have appropriate policies and procedures in place to evaluate the proper accounting

and disclosures of key documents and agreements. ● We

do not have adequate segregation of duties with our limited accounting personnel and rely

upon outsourced accounting services. ● We

do not have sufficient and skilled accounting personnel with an appropriate level of technical

accounting knowledge and experience in the application of GAAP commensurate with our financial

reporting requirements. As

disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, our management has identified the steps necessary

to address the material weaknesses, and in the first quarter of 2022, we continued to implement the following remedial procedu ● On

September 7, 2021, we hired Vernice Howard as our Chief Financial Officer. Ms. Howard has over

30 years of experience in the fields of finance and accounting and has significant GAAP

and SEC reporting experience. ● We

plan to make necessary changes by providing training to our financial team and our other

relevant personnel on the GAAP accounting guidelines applicable to financial reporting requirements. ● In