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

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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). 27 Secured Convertible
Promissory Notes On October 8, 2021, we and each of our subsidiaries
1847 Asien, 1847 Wolo, 1847 Cabinet, Asien’s, Wolo, Kyle’s, High Mountain and Innovative Cabinets, entered into a note purchase
agreement with two institutional investors, pursuant to which we issued to these purchasers secured convertible promissory notes in the
aggregate principal amount of $24,860,000. The notes contain an aggregate original issue discount of $497,200. As a result, the total
purchase price was $24,362,800. After payment of expenses of $617,825, we received net proceeds of $23,744,975, of which $10,687,500 was
used to fund the cash portion of the purchase price for the acquisition of High Mountain and Innovative Cabinets. In addition, as consideration
for the financing, we granted the financing agent 187,500 warrants with a fair value of $956,526 and 7.5% interest in High Mountain and
Innovative Cabinets which had a fair value of $1,146,803. The agent fees were reflected as a discount against the convertible note payable
with the warrants being included in additional paid in capital and the equity interest being included within noncontrolling interest on
the consolidated balance sheet. The remaining principal balance of the convertible notes at March 31, 2023 is $22,589,681, net of debt
discounts of $2,270,319, and an accrued interest balance of $982,572. The notes bear interest
at a rate per annum equal to the greater of (i) 4.75% plus the U.S. Prime Rate that appears in The Wall Street Journal from time
to time or (ii) 8%; provided that, upon an event of default (as defined in the notes), such rate shall increase to 24% or the maximum
legal rate. Payments of interest only, computed at such rate on the outstanding principal amount, will be due and payable quarterly in
arrears commencing on January 1, 2022 and continuing on the first day of each calendar quarter thereafter through and including the maturity
date, October 8, 2026. We may voluntarily prepay
the notes in whole or in part upon payment of a prepayment fee in an amount equal to 10% of the principal and interest paid in connection
with such prepayment. In addition, immediately upon receipt by our company or any subsidiary of any proceeds from any issuance of indebtedness
(other than certain permitted indebtedness), any proceeds of any sale or disposition by our company or any subsidiary of any of the collateral
or any of its respective assets (other than asset sales or dispositions in the ordinary course of business which are permitted by the
note purchase agreement), or any proceeds from any casualty insurance policies or eminent domain, condemnation or similar proceedings,
we must prepay the notes in an amount equal to all such proceeds, net of reasonable and customary transaction costs, fees and expenses
properly attributable to such transaction and payable by our company or a subsidiary in connection therewith (in each case, paid to non-affiliates). The holders of the notes
may, in their sole discretion, elect to convert any outstanding and unpaid principal portion of the notes, and any accrued but unpaid
interest on such portion, into our common shares at a conversion price equal to $10.00 (subject to standard adjustments, including a full
ratchet antidilution adjustment); provided that the notes contain certain beneficial ownership limitations. Pursuant to the terms
of the notes, until the date that is eighteen (18) months after the issuance date of the notes, the holders shall have the right, but
not the obligation, to participate in any securities offering other than a permitted issuance (as defined in the note purchase agreement)
in an amount of up to the original principal amount of the notes. In addition, the holders shall have the right of first refusal to participate
in any issuance of indebtedness until the notes have been terminated; provided, however, that this right of first refusal shall not apply
to permitted issuances. The note
purchase agreement and the notes contain customary representations, warranties, affirmative and negative financial and other covenants
and events of default for loans of this type. The notes are guaranteed by each subsidiary and are secured by a first priority security
interest in all of our assets. 28 6% Subordinated
Convertible Promissory Notes On October
8, 2021, 1847 Cabinet issued 6% subordinated convertible promissory notes in the aggregate principal amount of $5,880,345 to Steven J.
Parkey and Jose D. Garcia-Rendon, the sellers of High Mountain and Innovative Cabinets. On July 26, 2022, we and 1847 Cabinet entered
into a conversion agreement with Steven J. Parkey and Jose D. Garcia-Rendon, pursuant to which they agreed to convert an aggregate of
$3,360,000 of the convertible notes into an aggregate of 800,000 common shares at a conversion price of $4.20 per share. As a result,
we recognized a loss on extinguishment of debt of $1,280,000. The remaining principal balance of the notes at March 31, 2023 is $2,274,690,
net of debt discounts of $245,656, and an accrued interest balance of $419,232. The notes
bear interest at a rate of six percent (6%) per annum and are due and payable on October 8, 2024; provided that upon an event of default
(as defined in the notes), such interest rate shall increase to ten percent (10%) per annum. 1847 Cabinet may prepay the notes in whole
or in part, without penalty or premium, upon ten (10) business days prior written notice to the holders of the notes. At any time
prior to October 8, 2022, the holders may, in their sole discretion, elect to convert up to twenty percent (20%) of the original principal
amount of the notes and all accrued, but unpaid, interest into such number of shares of the common stock of 1847 Cabinet determined by
dividing the amount to be converted by a conversion price determined by dividing (i) the fair market value of 1847 Cabinet (determined
in accordance with the notes) by (ii) the number of shares of 1847 Cabinet outstanding on a fully diluted basis. In addition, on October 8,
2021, we entered into an exchange agreement with the holders, pursuant to which we granted them the right to exchange all of the principal
amount and accrued but unpaid interest under the notes or any portion thereof for a number of our common shares to be determined by dividing
the amount to be converted by an exchange price equal to the higher of (i) the 30 -day volume
weighted average price for our common shares on the primary national securities exchange or over -the-counter market
on which our common shares are traded over the thirty (30) trading days immediately prior to the applicable exchange date or (ii) $10.00
(subject to equitable adjustments for stock splits, stock combinations, recapitalizations and similar transactions). The notes
contain customary events of default, including in the event of a default under the secured convertible promissory notes described above.
The rights of the holders to receive payments under the notes are subordinated to the rights of the purchasers under secured convertible
promissory notes described above. 6% Amortizing Promissory Note On July 29, 2020, 1847 Asien entered into a securities
purchase agreement with Joerg Christian Wilhelmsen and Susan Kay Wilhelmsen, as trustees of the Wilhelmsen Family Trust, U/D/T Dated May
1, 1992, or the Asien’s Seller, pursuant to which the Asien’s Seller sold 103,750 of our common shares to 1847 Asien a purchase
price of $10.00 per share. As consideration, 1847 Asien issued to the Asien’s Seller a two-year 6% amortizing promissory note in
the aggregate principal amount of $1,037,500. On October 8, 2021, the parties entered into amendment no. 1 to securities purchase agreement
to amend certain terms of the securities purchase agreement and the 6% amortizing promissory note. Pursuant to the amendment, the repayment
terms of the 6% amortizing promissory note were revised so that one-half (50%) of the outstanding principal amount ($518,750) and all
accrued interest thereon shall be amortized on a two-year straight-line basis and payable quarterly in accordance with the amortization
schedule set forth on Exhibit A to the amendment, except for the payments that were initially scheduled on January 1, 2022 and April 1,
2022, which were paid from the proceeds of the senior convertible promissory notes described above, and the second-half (50%) of the outstanding
principal amount ($518,750) and all accrued, but unpaid interest thereon shall be paid on the second anniversary of the date of the 6%
amortizing promissory note, along with any other unpaid principal or accrued interest thereon. On October 20, 2022, the parties entered
into a letter agreement pursuant to which the parties agreed to extend the maturity date of the note to February 28, 2023 and revised
the repayment terms so that the outstanding principal amount and all accrued interest thereon shall be payable monthly, beginning on November
30, 2022, in accordance with the payment schedule set forth on Exhibit A to the letter agreement. As additional consideration for entering
into the letter agreement, 1847 Asien also agreed to pay the Asien’s Seller $87,707 as an amendment fee. The note is unsecured and
contains customary events of default. The remaining principal and accrued interest balance of the note at March 31, 2023 was $567,248. Related Party Promissory Note On September 30, 2020, a portion of the purchase
price for the acquisition of Kyle’s was paid by the issuance of a promissory note by 1847 Cabinet to Stephen Mallatt, Jr. and Rita
Mallatt, or the Kyle’s Sellers, in the principal amount of $1,260,000. Payment of the principal and accrued interest on the note
was subject to vesting. On July 26, 2022, we and 1847 Cabinet entered into a conversion agreement with the Kyle’s Sellers, pursuant
to which they agreed to convert $797,221 of the vesting note into 189,815 common shares at a conversion price of $4.20 per share. As a
result, we recognized a loss on extinguishment of debt of $303,706. Pursuant to the conversion agreement, the note was cancelled, and
we agreed to pay $558,734 to the Kyle’s Sellers no later than October 1, 2022. On March 30, 2023, we entered into an amendment to
the conversion agreement, effective retroactively to October 1, 2022. Pursuant to the amendment, we agreed to pay a total of $642,544
in three monthly payments commencing on April 5, 2023. 29 Financing Leases On May 6, 2021, Kyle’s entered in an equipment
financing lease to purchase equipment for $276,896, which matures in December 2027. The balance payable was $218,977 as of March 31, 2023. On October 12, 2021, Kyle’s entered in an
equipment financing lease to purchase equipment for $245,376, which matures in December 2027. The balance payable was $194,359 as of March
31, 2023. On March 28, 2022, Kyle’s entered an equipment
financing lease to purchase machinery and equipment for $316,798, which matures in January 2028. The balance payable was $262,815 as of
March 31, 2023. On April 11, 2022, Kyle’s entered in an
equipment financing lease to purchase machinery and equipment for $11,706, which matures in June 2027. The balance payable was $9,734
as of March 31, 2023. On July 13, 2022, Kyle’s entered in an equipment
financing lease to purchase machinery and equipment for $240,260, which matures in June 2028. The balance payable was $214,457 as of March
31, 2023. Vehicle Loans Asien’s has entered into seven retail installment
sale contracts pursuant to which it agreed to finance its delivery trucks at rates ranging from 3.74% to 8.72% with an aggregate remaining
principal amount of $85,899 as of March 31, 2023. Kyle’s has entered into two retail installment
sale contracts pursuant to which it agreed to finance its delivery trucks at rates ranging from 5.90% to 6.54% with an aggregate remaining
principal amount of $47,486 as of March 31, 2023. 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 $60,255 as of March 31, 2023. 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 $12,990 as of March 31, 2023. Total Debt The following table shows aggregate figures for

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). 27 Secured Convertible

Promissory Notes On October 8, 2021, we and each of our subsidiaries

1847 Asien, 1847 Wolo, 1847 Cabinet, Asien’s, Wolo, Kyle’s, High Mountain and Innovative Cabinets, entered into a note purchase

agreement with two institutional investors, pursuant to which we issued to these purchasers secured convertible promissory notes in the

aggregate principal amount of $24,860,000. The notes contain an aggregate original issue discount of $497,200. As a result, the total

purchase price was $24,362,800. After payment of expenses of $617,825, we received net proceeds of $23,744,975, of which $10,687,500 was

used to fund the cash portion of the purchase price for the acquisition of High Mountain and Innovative Cabinets. In addition, as consideration

for the financing, we granted the financing agent 187,500 warrants with a fair value of $956,526 and 7.5% interest in High Mountain and

Innovative Cabinets which had a fair value of $1,146,803. The agent fees were reflected as a discount against the convertible note payable

with the warrants being included in additional paid in capital and the equity interest being included within noncontrolling interest on

the consolidated balance sheet. The remaining principal balance of the convertible notes at March 31, 2023 is $22,589,681, net of debt

discounts of $2,270,319, and an accrued interest balance of $982,572. The notes bear interest

at a rate per annum equal to the greater of (i) 4.75% plus the U.S. Prime Rate that appears in The Wall Street Journal from time

to time or (ii) 8%; provided that, upon an event of default (as defined in the notes), such rate shall increase to 24% or the maximum

legal rate. Payments of interest only, computed at such rate on the outstanding principal amount, will be due and payable quarterly in

arrears commencing on January 1, 2022 and continuing on the first day of each calendar quarter thereafter through and including the maturity

date, October 8, 2026. We may voluntarily prepay

the notes in whole or in part upon payment of a prepayment fee in an amount equal to 10% of the principal and interest paid in connection

with such prepayment. In addition, immediately upon receipt by our company or any subsidiary of any proceeds from any issuance of indebtedness

(other than certain permitted indebtedness), any proceeds of any sale or disposition by our company or any subsidiary of any of the collateral

or any of its respective assets (other than asset sales or dispositions in the ordinary course of business which are permitted by the

note purchase agreement), or any proceeds from any casualty insurance policies or eminent domain, condemnation or similar proceedings,

we must prepay the notes in an amount equal to all such proceeds, net of reasonable and customary transaction costs, fees and expenses

properly attributable to such transaction and payable by our company or a subsidiary in connection therewith (in each case, paid to non-affiliates). The holders of the notes

may, in their sole discretion, elect to convert any outstanding and unpaid principal portion of the notes, and any accrued but unpaid

interest on such portion, into our common shares at a conversion price equal to $10.00 (subject to standard adjustments, including a full

ratchet antidilution adjustment); provided that the notes contain certain beneficial ownership limitations. Pursuant to the terms

of the notes, until the date that is eighteen (18) months after the issuance date of the notes, the holders shall have the right, but

not the obligation, to participate in any securities offering other than a permitted issuance (as defined in the note purchase agreement)

in an amount of up to the original principal amount of the notes. In addition, the holders shall have the right of first refusal to participate

in any issuance of indebtedness until the notes have been terminated; provided, however, that this right of first refusal shall not apply

to permitted issuances. The note

purchase agreement and the notes contain customary representations, warranties, affirmative and negative financial and other covenants

and events of default for loans of this type. The notes are guaranteed by each subsidiary and are secured by a first priority security

interest in all of our assets. 28 6% Subordinated

Convertible Promissory Notes On October

8, 2021, 1847 Cabinet issued 6% subordinated convertible promissory notes in the aggregate principal amount of $5,880,345 to Steven J.

Parkey and Jose D. Garcia-Rendon, the sellers of High Mountain and Innovative Cabinets. On July 26, 2022, we and 1847 Cabinet entered

into a conversion agreement with Steven J. Parkey and Jose D. Garcia-Rendon, pursuant to which they agreed to convert an aggregate of

$3,360,000 of the convertible notes into an aggregate of 800,000 common shares at a conversion price of $4.20 per share. As a result,

we recognized a loss on extinguishment of debt of $1,280,000. The remaining principal balance of the notes at March 31, 2023 is $2,274,690,

net of debt discounts of $245,656, and an accrued interest balance of $419,232. The notes

bear interest at a rate of six percent (6%) per annum and are due and payable on October 8, 2024; provided that upon an event of default

(as defined in the notes), such interest rate shall increase to ten percent (10%) per annum. 1847 Cabinet may prepay the notes in whole

or in part, without penalty or premium, upon ten (10) business days prior written notice to the holders of the notes. At any time

prior to October 8, 2022, the holders may, in their sole discretion, elect to convert up to twenty percent (20%) of the original principal

amount of the notes and all accrued, but unpaid, interest into such number of shares of the common stock of 1847 Cabinet determined by

dividing the amount to be converted by a conversion price determined by dividing (i) the fair market value of 1847 Cabinet (determined

in accordance with the notes) by (ii) the number of shares of 1847 Cabinet outstanding on a fully diluted basis. In addition, on October 8,

2021, we entered into an exchange agreement with the holders, pursuant to which we granted them the right to exchange all of the principal

amount and accrued but unpaid interest under the notes or any portion thereof for a number of our common shares to be determined by dividing

the amount to be converted by an exchange price equal to the higher of (i) the 30 -day volume

weighted average price for our common shares on the primary national securities exchange or over -the-counter market

on which our common shares are traded over the thirty (30) trading days immediately prior to the applicable exchange date or (ii) $10.00

(subject to equitable adjustments for stock splits, stock combinations, recapitalizations and similar transactions). The notes

contain customary events of default, including in the event of a default under the secured convertible promissory notes described above.

The rights of the holders to receive payments under the notes are subordinated to the rights of the purchasers under secured convertible

promissory notes described above. 6% Amortizing Promissory Note On July 29, 2020, 1847 Asien entered into a securities

purchase agreement with Joerg Christian Wilhelmsen and Susan Kay Wilhelmsen, as trustees of the Wilhelmsen Family Trust, U/D/T Dated May

1, 1992, or the Asien’s Seller, pursuant to which the Asien’s Seller sold 103,750 of our common shares to 1847 Asien a purchase

price of $10.00 per share. As consideration, 1847 Asien issued to the Asien’s Seller a two-year 6% amortizing promissory note in

the aggregate principal amount of $1,037,500. On October 8, 2021, the parties entered into amendment no. 1 to securities purchase agreement

to amend certain terms of the securities purchase agreement and the 6% amortizing promissory note. Pursuant to the amendment, the repayment

terms of the 6% amortizing promissory note were revised so that one-half (50%) of the outstanding principal amount ($518,750) and all

accrued interest thereon shall be amortized on a two-year straight-line basis and payable quarterly in accordance with the amortization

schedule set forth on Exhibit A to the amendment, except for the payments that were initially scheduled on January 1, 2022 and April 1,

2022, which were paid from the proceeds of the senior convertible promissory notes described above, and the second-half (50%) of the outstanding

principal amount ($518,750) and all accrued, but unpaid interest thereon shall be paid on the second anniversary of the date of the 6%

amortizing promissory note, along with any other unpaid principal or accrued interest thereon. On October 20, 2022, the parties entered

into a letter agreement pursuant to which the parties agreed to extend the maturity date of the note to February 28, 2023 and revised

the repayment terms so that the outstanding principal amount and all accrued interest thereon shall be payable monthly, beginning on November

30, 2022, in accordance with the payment schedule set forth on Exhibit A to the letter agreement. As additional consideration for entering

into the letter agreement, 1847 Asien also agreed to pay the Asien’s Seller $87,707 as an amendment fee. The note is unsecured and

contains customary events of default. The remaining principal and accrued interest balance of the note at March 31, 2023 was $567,248. Related Party Promissory Note On September 30, 2020, a portion of the purchase

price for the acquisition of Kyle’s was paid by the issuance of a promissory note by 1847 Cabinet to Stephen Mallatt, Jr. and Rita

Mallatt, or the Kyle’s Sellers, in the principal amount of $1,260,000. Payment of the principal and accrued interest on the note

was subject to vesting. On July 26, 2022, we and 1847 Cabinet entered into a conversion agreement with the Kyle’s Sellers, pursuant

to which they agreed to convert $797,221 of the vesting note into 189,815 common shares at a conversion price of $4.20 per share. As a

result, we recognized a loss on extinguishment of debt of $303,706. Pursuant to the conversion agreement, the note was cancelled, and

we agreed to pay $558,734 to the Kyle’s Sellers no later than October 1, 2022. On March 30, 2023, we entered into an amendment to

the conversion agreement, effective retroactively to October 1, 2022. Pursuant to the amendment, we agreed to pay a total of $642,544

in three monthly payments commencing on April 5, 2023. 29 Financing Leases On May 6, 2021, Kyle’s entered in an equipment

financing lease to purchase equipment for $276,896, which matures in December 2027. The balance payable was $218,977 as of March 31, 2023. On October 12, 2021, Kyle’s entered in an

equipment financing lease to purchase equipment for $245,376, which matures in December 2027. The balance payable was $194,359 as of March

31, 2023. On March 28, 2022, Kyle’s entered an equipment

financing lease to purchase machinery and equipment for $316,798, which matures in January 2028. The balance payable was $262,815 as of

March 31, 2023. On April 11, 2022, Kyle’s entered in an

equipment financing lease to purchase machinery and equipment for $11,706, which matures in June 2027. The balance payable was $9,734

as of March 31, 2023. On July 13, 2022, Kyle’s entered in an equipment

financing lease to purchase machinery and equipment for $240,260, which matures in June 2028. The balance payable was $214,457 as of March

31, 2023. Vehicle Loans Asien’s has entered into seven retail installment

sale contracts pursuant to which it agreed to finance its delivery trucks at rates ranging from 3.74% to 8.72% with an aggregate remaining

principal amount of $85,899 as of March 31, 2023. Kyle’s has entered into two retail installment

sale contracts pursuant to which it agreed to finance its delivery trucks at rates ranging from 5.90% to 6.54% with an aggregate remaining

principal amount of $47,486 as of March 31, 2023. 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 $60,255 as of March 31, 2023. 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 $12,990 as of March 31, 2023. Total Debt The following table shows aggregate figures for