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

text stringlengths 0 1.95M
three percent (3.00%). Interest accrued on the advances shall be payable monthly commencing on March 7, 2023. The borrowers may voluntarily
prepay the entire unpaid principal amount of the note without premium or penalty; provided that in the event that we make such prepayment
on or before February 9, 2024, then the borrowers must pay certain fees set forth in the note. The note is secured by all of the assets
of 1847 ICU and ICU Eyewear. The loan and security agreement contains customary
representations, warranties and affirmative and negative financial and other covenants for loans of this type. The loan and security agreement
contains customary events of default, including, among othe (i) for failure to pay principal and interest on the note when due, or
to pay any fees due under the loan and security agreement; (ii) for failure to perform any covenant or agreement contained in the loan
and security agreement or any document delivered in connection therewith; (iii) if any statement, representation or warranty in the loan
and security agreement or any document delivered in connection therewith is at any time found to have been false in any material respect
at the time such representation or warranty was made; (iv) if the borrowers default under any agreement or contract with a third party
which default would result in a liability to us in excess of $ 25,000 ; (v) for any voluntary or involuntary bankruptcy, insolvency, or
dissolution or assignment to creditors; (vi) if any judgments or attachments aggregating in excess of $ 10,000 at any given time are obtained
against the borrowers which remain unstayed for a period of ten (10) days or are enforced or if there is an indictment under an criminal
statute or proceeding pursuant to which remedies sought may include the forfeiture of any property; (vii) if a material adverse effect
or change of control (each as defined in the loan and security agreement) shall have occurred; (viii) for certain environmental claims;
and (ix) for failure to notify the lender of certain events or failure to deliver certain documentation required by the loan and security
agreement. Private Placements On February 3, 2023, the Company entered into
securities purchase agreements with two accredited investors, 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 125,833 common shares at
an exercise price of $ 4.20 per share (subject to adjustment) for total cash proceeds of $ 540,000 . As additional consideration, the Company
issued an aggregate of 125,833 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 892 common shares at an exercise price of $ 5.25 (subject to adjustment). 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 (see Note 12). On February 9, 2023, the Company entered into
securities purchase agreements with two accredited investors, 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 532,827 common shares
at an exercise price of $ 4.20 per share (subject to adjustment) for total cash proceeds of $ 2,271,818 . As additional consideration, the
Company issued 289,772 common shares to one investor and issued to the other investor a five-year warrant for the purchase of 243,055 common shares at an exercise price of 0.01 per share (subject to adjustment), 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 11,923 common shares at an exercise price
of $ 5.25 (subject to adjustment). 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 (see Note 12). On February 22, 2023, the Company entered into
securities purchase agreement with one accredited investor, 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 182,917 common shares at an exercise
price of $ 4.20 per share (subject to adjustment) for total cash proceeds of $ 737,700 . As additional consideration, the Company issued
a five-year warrant for the purchase of 198,343 common shares at an exercise price of $ 0.01 per share (subject to adjustment) 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 7,526 common shares at an exercise price of $ 5.25 (subject to adjustment). 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 (see Note 12). 13 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2023 (UNAUDITED) In the aggregate, the Company issued promissory
notes in the aggregate principal amount of $ 4,039,575 , warrants for the purchase of an aggregate of 1,303,316 common shares, and 415,605 common shares for net proceeds of $ 3,549,518 . These notes bear 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 Company may voluntarily prepay
the outstanding principal amount and accrued interest of each note in whole upon payment of certain prepayment fees. In addition, if at
any time the Company receives cash proceeds from any source or series of related or unrelated sources, including, but not limited to,
the issuance of equity or debt, the exercise of outstanding warrants, the issuance of securities pursuant to an equity line of credit
(as defined in the notes) or the sale of assets outside of the ordinary course of business, each holder shall have the right in its sole
discretion to require the Company to immediately apply up to 50 % of such proceeds to repay all or any portion of the outstanding principal
amount and interest then due under the notes. 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 notes) occurs under the
notes at a conversion price equal the lower of (i) $ 4.20 (subject to adjustments) 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 $ 0.03 (subject to adjustments). Purchase and Sale of Future Receivables
Agreement On March 31, 2023, the Company and its subsidiary
1847 Cabinet Inc. (“1847 Cabinet”) entered into a non-recourse funding agreement with a third-party for the sale of future
receivables 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 a debt discount of $ 555,000 ,
which will 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. As of March 31, 2023 the effective interest rate was approximately 72 %. NOTE 11—RELATED PARTIES Related Party Notes Payable On September 30, 2020, a portion of the purchase
price for the acquisition of Kyle’s Custom Wood Shop, Inc. (“Kyle’s”) was paid by the issuance of a promissory
note by 1847 Cabinet to the sellers in the principal amount of $ 1,260,000 . Payment of the principal and accrued interest on the note was
subject to vesting. As of December 31, 2021, the vested principal and accrued interest balance of the related party note was $ 1,001,183 and $ 103,156 , respectively. 14 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2023 (UNAUDITED) On July 26, 2022, the Company and 1847 Cabinet
entered into a conversion agreement with sellers, pursuant to which they agreed to convert $ 797,221 of the vesting note into 189,815 common
shares of the Company at a conversion price of $ 4.20 per share. As a result, the Company recognized a loss on extinguishment of debt of
$ 303,706 . Pursuant to the conversion agreement, the note was cancelled, and the Company agreed to pay $ 558,734 to the sellers no later
than October 1, 2022. On March 30, 2023, the Company entered into an
amendment to the conversion agreement, effective retroactively to October 1, 2022. Pursuant to the amendment, the Company agreed to pay
a total of $ 642,544 in three monthly payments commencing on April 5, 2023. Management Services Agreement On April 15, 2013, the Company and 1847 Partners
LLC (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 three months ended March 31, 2023 and 2022. Offsetting Management Services Agreements The Company’s subsidiary 1847 Asien Inc.
(“1847 Asien”) entered into an offsetting management services agreement with the Manager on May 28, 2020, 1847 Cabinet entered
into an offsetting management services agreement with the Manager on August 21, 2020 (which was amended and restated on October 8, 2021),
the Company’s subsidiary 1847 Wolo Inc. (“1847 Wolo”) entered into an offsetting management services agreement with
the Manager on March 30, 2021 and 1847 ICU entered into an offsetting management services agreement with the Manager on February 9, 2023. Pursuant to the offsetting management services agreements, each of 1847 Asien, 1847 Wolo and 1847 ICU appointed the 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) and 1847 Cabinet appointed the Manager to provide certain services to it for a quarterly management fee
equal to the greater of $125,000 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 the Manager under other 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. 1847 Asien expensed management fees of $ 75,000 and for the three months ended March 31, 2023 and 2022. 1847 Cabinet expensed management fees of $ 125,000 and for the three months ended March 31, 2023 and 2022. 1847 Wolo expensed management fees of $ 75,000 and for the three months ended March 31, 2023 and 2022. 1847 ICU expensed management fees of $ 0 and for
the three months ended March 31, 2023. On a consolidated basis, the Company expensed
total management fees of $ 275,000 for the three months ended March 31, 2023 and 2022. Advances From time to time, the Company has received advances
from its chief executive officer to meet short-term working capital needs. As of March 31, 2023 and December 31, 2022, a total of $ 118,834 in advances from related parties are outstanding. These advances are unsecured, bear no interest, and do not have formal repayment terms
or arrangements. As of March 31, 2023 and December 31, 2022, the
Manager has funded the Company $ 74,928 in related party advances. These advances are unsecured, bear no interest, and do not have formal
repayment terms or arrangements. 15 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2023 (UNAUDITED) Building Lease On September 1, 2020, Kyle’s entered into
an industrial lease agreement with Stephen Mallatt, Jr. and Rita Mallatt, the sellers of Kyle’s, who are officers of Kyle’s
and principal shareholders of the Company. 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 total rent expense under this related party
lease was $ 21,777 for the three months ended March 31, 2023 and 2022. NOTE 12—SHAREHOLDERS’ EQUITY (DEFICIT) Series A Senior Convertible Preferred Shares During the three months ended March 31 2023, the
Company accrued dividends attributable to the series A senior convertible preferred shares in the amount of $ 110,045 and settled $ 152,668 of previously accrued dividends through the issuance of common shares (see below). As of March 31, 2023 and December 31, 2022, the
Company had 1,593,940 series A senior convertible preferred shares issued and outstanding. Series B Senior Convertible Preferred Shares During the three months ended March 31 2023, the

three percent (3.00%). Interest accrued on the advances shall be payable monthly commencing on March 7, 2023. The borrowers may voluntarily

prepay the entire unpaid principal amount of the note without premium or penalty; provided that in the event that we make such prepayment

on or before February 9, 2024, then the borrowers must pay certain fees set forth in the note. The note is secured by all of the assets

of 1847 ICU and ICU Eyewear. The loan and security agreement contains customary

representations, warranties and affirmative and negative financial and other covenants for loans of this type. The loan and security agreement

contains customary events of default, including, among othe (i) for failure to pay principal and interest on the note when due, or

to pay any fees due under the loan and security agreement; (ii) for failure to perform any covenant or agreement contained in the loan

and security agreement or any document delivered in connection therewith; (iii) if any statement, representation or warranty in the loan

and security agreement or any document delivered in connection therewith is at any time found to have been false in any material respect

at the time such representation or warranty was made; (iv) if the borrowers default under any agreement or contract with a third party

which default would result in a liability to us in excess of $ 25,000 ; (v) for any voluntary or involuntary bankruptcy, insolvency, or

dissolution or assignment to creditors; (vi) if any judgments or attachments aggregating in excess of $ 10,000 at any given time are obtained

against the borrowers which remain unstayed for a period of ten (10) days or are enforced or if there is an indictment under an criminal

statute or proceeding pursuant to which remedies sought may include the forfeiture of any property; (vii) if a material adverse effect

or change of control (each as defined in the loan and security agreement) shall have occurred; (viii) for certain environmental claims;

and (ix) for failure to notify the lender of certain events or failure to deliver certain documentation required by the loan and security

agreement. Private Placements On February 3, 2023, the Company entered into

securities purchase agreements with two accredited investors, 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 125,833 common shares at

an exercise price of $ 4.20 per share (subject to adjustment) for total cash proceeds of $ 540,000 . As additional consideration, the Company

issued an aggregate of 125,833 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 892 common shares at an exercise price of $ 5.25 (subject to adjustment). 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 (see Note 12). On February 9, 2023, the Company entered into

securities purchase agreements with two accredited investors, 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 532,827 common shares

at an exercise price of $ 4.20 per share (subject to adjustment) for total cash proceeds of $ 2,271,818 . As additional consideration, the

Company issued 289,772 common shares to one investor and issued to the other investor a five-year warrant for the purchase of 243,055 common shares at an exercise price of 0.01 per share (subject to adjustment), 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 11,923 common shares at an exercise price

of $ 5.25 (subject to adjustment). 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 (see Note 12). On February 22, 2023, the Company entered into

securities purchase agreement with one accredited investor, 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 182,917 common shares at an exercise

price of $ 4.20 per share (subject to adjustment) for total cash proceeds of $ 737,700 . As additional consideration, the Company issued

a five-year warrant for the purchase of 198,343 common shares at an exercise price of $ 0.01 per share (subject to adjustment) 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 7,526 common shares at an exercise price of $ 5.25 (subject to adjustment). 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 (see Note 12). 13 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2023 (UNAUDITED) In the aggregate, the Company issued promissory

notes in the aggregate principal amount of $ 4,039,575 , warrants for the purchase of an aggregate of 1,303,316 common shares, and 415,605 common shares for net proceeds of $ 3,549,518 . These notes bear 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 Company may voluntarily prepay

the outstanding principal amount and accrued interest of each note in whole upon payment of certain prepayment fees. In addition, if at

any time the Company receives cash proceeds from any source or series of related or unrelated sources, including, but not limited to,

the issuance of equity or debt, the exercise of outstanding warrants, the issuance of securities pursuant to an equity line of credit

(as defined in the notes) or the sale of assets outside of the ordinary course of business, each holder shall have the right in its sole

discretion to require the Company to immediately apply up to 50 % of such proceeds to repay all or any portion of the outstanding principal

amount and interest then due under the notes. 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 notes) occurs under the

notes at a conversion price equal the lower of (i) $ 4.20 (subject to adjustments) 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 $ 0.03 (subject to adjustments). Purchase and Sale of Future Receivables

Agreement On March 31, 2023, the Company and its subsidiary

1847 Cabinet Inc. (“1847 Cabinet”) entered into a non-recourse funding agreement with a third-party for the sale of future

receivables 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 a debt discount of $ 555,000 ,

which will 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. As of March 31, 2023 the effective interest rate was approximately 72 %. NOTE 11—RELATED PARTIES Related Party Notes Payable On September 30, 2020, a portion of the purchase

price for the acquisition of Kyle’s Custom Wood Shop, Inc. (“Kyle’s”) was paid by the issuance of a promissory

note by 1847 Cabinet to the sellers in the principal amount of $ 1,260,000 . Payment of the principal and accrued interest on the note was

subject to vesting. As of December 31, 2021, the vested principal and accrued interest balance of the related party note was $ 1,001,183 and $ 103,156 , respectively. 14 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2023 (UNAUDITED) On July 26, 2022, the Company and 1847 Cabinet

entered into a conversion agreement with sellers, pursuant to which they agreed to convert $ 797,221 of the vesting note into 189,815 common

shares of the Company at a conversion price of $ 4.20 per share. As a result, the Company recognized a loss on extinguishment of debt of

$ 303,706 . Pursuant to the conversion agreement, the note was cancelled, and the Company agreed to pay $ 558,734 to the sellers no later

than October 1, 2022. On March 30, 2023, the Company entered into an

amendment to the conversion agreement, effective retroactively to October 1, 2022. Pursuant to the amendment, the Company agreed to pay

a total of $ 642,544 in three monthly payments commencing on April 5, 2023. Management Services Agreement On April 15, 2013, the Company and 1847 Partners

LLC (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 three months ended March 31, 2023 and 2022. Offsetting Management Services Agreements The Company’s subsidiary 1847 Asien Inc.

(“1847 Asien”) entered into an offsetting management services agreement with the Manager on May 28, 2020, 1847 Cabinet entered

into an offsetting management services agreement with the Manager on August 21, 2020 (which was amended and restated on October 8, 2021),

the Company’s subsidiary 1847 Wolo Inc. (“1847 Wolo”) entered into an offsetting management services agreement with

the Manager on March 30, 2021 and 1847 ICU entered into an offsetting management services agreement with the Manager on February 9, 2023. Pursuant to the offsetting management services agreements, each of 1847 Asien, 1847 Wolo and 1847 ICU appointed the 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) and 1847 Cabinet appointed the Manager to provide certain services to it for a quarterly management fee

equal to the greater of $125,000 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 the Manager under other 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. 1847 Asien expensed management fees of $ 75,000 and for the three months ended March 31, 2023 and 2022. 1847 Cabinet expensed management fees of $ 125,000 and for the three months ended March 31, 2023 and 2022. 1847 Wolo expensed management fees of $ 75,000 and for the three months ended March 31, 2023 and 2022. 1847 ICU expensed management fees of $ 0 and for

the three months ended March 31, 2023. On a consolidated basis, the Company expensed

total management fees of $ 275,000 for the three months ended March 31, 2023 and 2022. Advances From time to time, the Company has received advances

from its chief executive officer to meet short-term working capital needs. As of March 31, 2023 and December 31, 2022, a total of $ 118,834 in advances from related parties are outstanding. These advances are unsecured, bear no interest, and do not have formal repayment terms

or arrangements. As of March 31, 2023 and December 31, 2022, the

Manager has funded the Company $ 74,928 in related party advances. These advances are unsecured, bear no interest, and do not have formal

repayment terms or arrangements. 15 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2023 (UNAUDITED) Building Lease On September 1, 2020, Kyle’s entered into

an industrial lease agreement with Stephen Mallatt, Jr. and Rita Mallatt, the sellers of Kyle’s, who are officers of Kyle’s

and principal shareholders of the Company. 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 total rent expense under this related party

lease was $ 21,777 for the three months ended March 31, 2023 and 2022. NOTE 12—SHAREHOLDERS’ EQUITY (DEFICIT) Series A Senior Convertible Preferred Shares During the three months ended March 31 2023, the

Company accrued dividends attributable to the series A senior convertible preferred shares in the amount of $ 110,045 and settled $ 152,668 of previously accrued dividends through the issuance of common shares (see below). As of March 31, 2023 and December 31, 2022, the

Company had 1,593,940 series A senior convertible preferred shares issued and outstanding. Series B Senior Convertible Preferred Shares During the three months ended March 31 2023, the