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

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of cash equal to 115 % of the stated value plus an amount of cash equal to all accumulated accrued and unpaid dividends thereon (whether
or not declared) to, but not including the date of final distribution to such holders. If, upon any liquidation, the assets, or proceeds
thereof, distributable among the holders of the series A senior convertible preferred shares shall be insufficient to pay in full the
preferential amount payable to the holders of the series A senior convertible preferred shares and liquidating payments on any other
shares of any class or series of parity securities as to the distribution of assets on any liquidation, then such assets, or the proceeds
thereof, shall be distributed among the holders of series A senior convertible preferred shares and any such other parity securities
ratably in accordance with the respective amounts that would be payable on such series A senior convertible preferred shares and any
such other parity securities if all amounts payable thereon were paid in full. 16 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 (UNAUDITED) Voting
Rights . The series A senior convertible preferred shares do not have any voting rights; provided that, so long as any series A senior
convertible preferred shares are outstanding, the affirmative vote of holders of a majority of series A senior convertible preferred
shares, which majority must include Leonite Capital LLC so long as it holds any series A senior convertible preferred shares (the “Requisite
Holders”), voting as a separate class, shall be necessary for approving, effecting or validating any amendment, alteration or repeal
of any of the provisions of the share designation. In addition, so long as any series A senior convertible preferred shares are outstanding,
the affirmative vote of the Requisite Holders shall be required prior to the creation or issuance by the Company or by its subsidiaries
Kyle’s Custom Wood Shop, Inc. (“Kyle’s”) and Wolo Mfg. Corp. and Wolo Industrial Horn & Signal, Inc. (together,
“Wolo”) of (i) any parity securities; (ii) any senior securities; and (iii) any new indebtedness other than (A) intercompany
indebtedness by Kyle’s or Wolo in favor of the Company, (B) indebtedness incurred in favor of the sellers of Kyle’s or Wolo
in connection with the acquisition of Kyle’s or Wolo, or (C) indebtedness (or the refinancing of such indebtedness) the proceeds
of which are used to complete the acquisition of Kyle’s or Wolo related expenses or working capital to operate the business of
Kyle’s or Wolo. Notwithstanding the foregoing, this shall not apply to any financing transaction the use of proceeds of which will
be used to redeem the series A senior convertible preferred shares and the warrants issued in connection therewith. Conversion
Rights . Each series A senior convertible preferred share, plus all accrued and unpaid dividends thereon, shall be convertible, at
the option of the holder thereof, at any time and from time to time, into such number of fully paid and nonassessable common shares determined
by dividing the stated value ($ 2.00 per share), plus the value of the accrued, but unpaid, dividends thereon, by a conversion price of
$ 7.00 per share (subject to adjustment); provided that in no event shall the holder of any series A senior convertible preferred shares
be entitled to convert any number of series A senior convertible preferred shares that upon conversion the sum of (i) the number of common
shares beneficially owned by the holder and its affiliates and (ii) the number of common shares issuable upon the conversion of the series
A senior convertible preferred shares with respect to which the determination of this proviso is being made, would result in beneficial
ownership by the holder and its affiliates of more than 4.99 % of the then outstanding common shares. This limitation may be waived (up
to a maximum of 9.99 %) by the holder and in its sole discretion, upon not less than sixty-one (61) days’ prior notice to the Company. Redemption
Rights . The Company may redeem in whole, or upon the written consent of the Requisite Holders and in the manner provided for in such
written consent, in part, the series A senior convertible preferred shares by paying in cash therefore a sum equal to 115 % of the stated
value plus the amount of accrued and unpaid plus any other amounts due pursuant to the terms of the series A senior convertible preferred
shares. On October 12, 2021, the Company redeemed 2,632,278 series A senior convertible preferred
shares for a total redemption price, including dividends through such date, of $ 6,395,645 . Adjustments .
The share designation contains standard adjustments to the conversion price in the event of any share splits, share combinations, share
reclassifications, dividends paid in common shares, sales of substantially all of the Company’s assets, mergers, consolidations
or similar transactions. In addition, the share designation provides that if, but only if, the Requisite Holders provide the Company
with at least ten (10) business day’s prior written notice, then, from and after the date of such notice, the stated dividend rate,
the stated value and the conversion price shall automatically adjust as follows: ● On the first day of the 12 th month following the issuance date of any series A senior convertible preferred shares, the stated dividend rate shall automatically increase by five percent (5.0%) per annum and the conversion price shall automatically adjust to the lower of the (i) initial conversion price and (ii) the price equal to the lowest VWAP of the ten (10) trading days immediately preceding such date. ● On
the first day of the 24 th month following the
issuance date of any series A senior convertible preferred shares, the stated dividend
rate shall automatically increase by an additional five percent (5.0%) per annum, the stated
value shall automatically increase by ten percent (10%) and the conversion price shall automatically
adjust to the lower of the (i) initial conversion price and (ii) the price equal to the lowest
VWAP of the ten (10) trading days immediately preceding such date. 17 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 (UNAUDITED) ● On the first day of the 36 th month following the issuance date of any series A senior convertible preferred shares, the stated dividend rate shall automatically increase by an additional five percent (5.0%) per annum, the stated value shall automatically increase by ten percent (10%) and the conversion price shall automatically adjust to the lower of the (i) initial conversion price and (ii) the price equal to the lowest VWAP of the ten (10) trading days immediately preceding the third adjustment date. Notwithstanding
the foregoing, the conversion price for purposes of the adjustments above shall not be adjusted to a number that is below $0.03. In addition,
if any legislation or rules are adopted whereby the holding period of securities for purposes of Rule 144 of the Securities Act of 1933,
as amended, for convertible securities that convert at market-adjusted rates is increased resulting in a longer holding period for convertible
securities like the series A senior convertible preferred shares and the unavailability at the time of conversion of Rule 144, the pricing
provisions that are based upon the lowest VWAP of the previous ten (10) trading days immediately preceding the relevant adjustment date
shall be removed unless the common shares issuable upon conversion are then registered under an effective registration statement. Additional
Equity Interest. On the third adjustment date set forth above, the Company is required to cause Kyle’s and Wolo to issue to
the holders of series A senior convertible preferred shares, on a pro rata basis, a ten percent ( 10 %) equity stake Kyle’s and/or
Wolo. The holders of series A senior convertible preferred shares issued in connection with the financing to complete the acquisition
of Kyle’s shall receive the equity stake in Kyle’s and the holders of series A senior convertible preferred shares issued
in connection with the financing to complete the acquisition of Wolo shall receive the equity stake in Wolo. The Company is required
to cause Kyle’s and Wolo to grant to the holders of the series A senior convertible preferred shares upon the issuance to them
of such equity interest a right to receive an additional number of shares of common stock of Kyle’s or Wolo if Kyle’s or
Wolo issues to any third-party equity securities at a price below the acquisition price (as defined below). Such additional number of
shares of common stock of Kyle’s or Wolo to be issued in such instance shall be equal to a number of shares of common stock of
Kyle’s or Wolo which, when added to the number of shares of common stock of Kyle’s or Wolo constituting the initial additional
equity interest, would be equal to the total number of shares of common stock which would have been issued to a holder of series A senior
convertible preferred shares if the price per share of common stock of Kyle’s or Wolo was equivalent to the price per equity security
paid by such third-party in Kyle’s or Wolo. For purposes of this provision, “acquisition price” means the price per
share of Kyle’s and Wolo that was paid by the Company upon the acquisition of Kyle’s and Wolo, respectively. As
of June 30, 2022 and December 31, 2021, the Company had 1,684,849 and 1,818,182 series A senior convertible preferred shares issued and
outstanding, respectively. During
the three months ended June 30, 2022, the Company accrued dividends attributable to the series A senior convertible preferred shares
in the amount of $ 159,298 and paid prior period accrued dividends of $ 159,906 . During the six months ended June 30, 2022, the Company
accrued dividends attributable to the series A senior convertible preferred shares in the amount of $ 280,753 and paid prior period accrued
dividends of $ 288,224 . On
February 16, 2022, 133,333 shares of series A senior convertible preferred shares were converted into 38,096 common shares. Series
B Senior Convertible Preferred Shares On
February 17, 2022, the Company executed a share designation to designate 583,334 of its shares as series B senior convertible preferred
shares. Following is a description of the rights of the series B senior convertible preferred shares. Ranking. The series B senior convertible preferred shares rank, with respect to the payment of dividends and the distribution of assets upon
liquidation, (i) senior to all common shares, allocation shares, and each other class or series that is not expressly made senior to
or on parity with the series B senior convertible preferred shares; (ii) on parity with the series A senior convertible preferred shares
and each other class or series that is not expressly subordinated or made senior to the series A senior convertible preferred shares;
and (iii) junior to all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company and
each other class or series that is expressly made senior to the series B senior convertible preferred shares. 18 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 (UNAUDITED) Dividend
Rights . Holders of series B senior convertible preferred shares are entitled to dividends at a rate per annum of 14.0 % of the stated
value ($ 3.00 per share, subject to adjustment). Dividends shall accrue from day to day, whether or not declared, and shall be cumulative.
Dividends shall be payable quarterly in arrears on each dividend payment date in cash or common shares at the Company’s discretion.
Dividends payable in common shares shall be calculated based on a price equal to eighty percent ( 80 %) of the VWAP during the five (5)
trading days immediately prior to the applicable dividend payment date; provided, however, that if the common shares are not registered,
and rulemaking regarding the Rule 144 holding period referred to below is effective on the payment date, the dividends payable in common
shares shall be calculated based upon the fixed price of $ 2.70 ; provided further, that the Company may only elect to pay dividends in
common shares based upon such fixed price if the VWAP for the five (5) trading days immediately prior to the applicable dividend payment
date is $ 2.70 or higher. Liquidation
Rights. Subject to the rights of creditors and the holders of any senior securities or parity securities (in each case, as defined
in the share designation), upon any liquidation of the Company or its subsidiaries, before any payment or distribution of the assets
of the Company (whether capital or surplus) shall be made to or set apart for the holders of securities that are junior to the series
B senior convertible preferred shares as to the distribution of assets on any liquidation of the Company, including the common shares
and allocation shares, each holder of outstanding series B senior convertible preferred shares shall be entitled to receive an amount
of cash equal to 115 % of the stated value plus an amount of cash equal to all accumulated accrued and unpaid dividends thereon (whether
or not declared) to, but not including the date of final distribution to such holders. If, upon any liquidation, the assets, or proceeds
thereof, distributable among the holders of the series B senior convertible preferred shares shall be insufficient to pay in full the
preferential amount payable to the holders of the series B senior convertible preferred shares and liquidating payments on any other
shares of any class or series of parity securities as to the distribution of assets on any liquidation, then such assets, or the proceeds

of cash equal to 115 % of the stated value plus an amount of cash equal to all accumulated accrued and unpaid dividends thereon (whether

or not declared) to, but not including the date of final distribution to such holders. If, upon any liquidation, the assets, or proceeds

thereof, distributable among the holders of the series A senior convertible preferred shares shall be insufficient to pay in full the

preferential amount payable to the holders of the series A senior convertible preferred shares and liquidating payments on any other

shares of any class or series of parity securities as to the distribution of assets on any liquidation, then such assets, or the proceeds

thereof, shall be distributed among the holders of series A senior convertible preferred shares and any such other parity securities

ratably in accordance with the respective amounts that would be payable on such series A senior convertible preferred shares and any

such other parity securities if all amounts payable thereon were paid in full. 16 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 (UNAUDITED) Voting

Rights . The series A senior convertible preferred shares do not have any voting rights; provided that, so long as any series A senior

convertible preferred shares are outstanding, the affirmative vote of holders of a majority of series A senior convertible preferred

shares, which majority must include Leonite Capital LLC so long as it holds any series A senior convertible preferred shares (the “Requisite

Holders”), voting as a separate class, shall be necessary for approving, effecting or validating any amendment, alteration or repeal

of any of the provisions of the share designation. In addition, so long as any series A senior convertible preferred shares are outstanding,

the affirmative vote of the Requisite Holders shall be required prior to the creation or issuance by the Company or by its subsidiaries

Kyle’s Custom Wood Shop, Inc. (“Kyle’s”) and Wolo Mfg. Corp. and Wolo Industrial Horn & Signal, Inc. (together,

“Wolo”) of (i) any parity securities; (ii) any senior securities; and (iii) any new indebtedness other than (A) intercompany

indebtedness by Kyle’s or Wolo in favor of the Company, (B) indebtedness incurred in favor of the sellers of Kyle’s or Wolo

in connection with the acquisition of Kyle’s or Wolo, or (C) indebtedness (or the refinancing of such indebtedness) the proceeds

of which are used to complete the acquisition of Kyle’s or Wolo related expenses or working capital to operate the business of

Kyle’s or Wolo. Notwithstanding the foregoing, this shall not apply to any financing transaction the use of proceeds of which will

be used to redeem the series A senior convertible preferred shares and the warrants issued in connection therewith. Conversion

Rights . Each series A senior convertible preferred share, plus all accrued and unpaid dividends thereon, shall be convertible, at

the option of the holder thereof, at any time and from time to time, into such number of fully paid and nonassessable common shares determined

by dividing the stated value ($ 2.00 per share), plus the value of the accrued, but unpaid, dividends thereon, by a conversion price of

$ 7.00 per share (subject to adjustment); provided that in no event shall the holder of any series A senior convertible preferred shares

be entitled to convert any number of series A senior convertible preferred shares that upon conversion the sum of (i) the number of common

shares beneficially owned by the holder and its affiliates and (ii) the number of common shares issuable upon the conversion of the series

A senior convertible preferred shares with respect to which the determination of this proviso is being made, would result in beneficial

ownership by the holder and its affiliates of more than 4.99 % of the then outstanding common shares. This limitation may be waived (up

to a maximum of 9.99 %) by the holder and in its sole discretion, upon not less than sixty-one (61) days’ prior notice to the Company. Redemption

Rights . The Company may redeem in whole, or upon the written consent of the Requisite Holders and in the manner provided for in such

written consent, in part, the series A senior convertible preferred shares by paying in cash therefore a sum equal to 115 % of the stated

value plus the amount of accrued and unpaid plus any other amounts due pursuant to the terms of the series A senior convertible preferred

shares. On October 12, 2021, the Company redeemed 2,632,278 series A senior convertible preferred

shares for a total redemption price, including dividends through such date, of $ 6,395,645 . Adjustments .

The share designation contains standard adjustments to the conversion price in the event of any share splits, share combinations, share

reclassifications, dividends paid in common shares, sales of substantially all of the Company’s assets, mergers, consolidations

or similar transactions. In addition, the share designation provides that if, but only if, the Requisite Holders provide the Company

with at least ten (10) business day’s prior written notice, then, from and after the date of such notice, the stated dividend rate,

the stated value and the conversion price shall automatically adjust as follows: ● On the first day of the 12 th month following the issuance date of any series A senior convertible preferred shares, the stated dividend rate shall automatically increase by five percent (5.0%) per annum and the conversion price shall automatically adjust to the lower of the (i) initial conversion price and (ii) the price equal to the lowest VWAP of the ten (10) trading days immediately preceding such date. ● On

the first day of the 24 th month following the

issuance date of any series A senior convertible preferred shares, the stated dividend

rate shall automatically increase by an additional five percent (5.0%) per annum, the stated

value shall automatically increase by ten percent (10%) and the conversion price shall automatically

adjust to the lower of the (i) initial conversion price and (ii) the price equal to the lowest

VWAP of the ten (10) trading days immediately preceding such date. 17 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 (UNAUDITED) ● On the first day of the 36 th month following the issuance date of any series A senior convertible preferred shares, the stated dividend rate shall automatically increase by an additional five percent (5.0%) per annum, the stated value shall automatically increase by ten percent (10%) and the conversion price shall automatically adjust to the lower of the (i) initial conversion price and (ii) the price equal to the lowest VWAP of the ten (10) trading days immediately preceding the third adjustment date. Notwithstanding

the foregoing, the conversion price for purposes of the adjustments above shall not be adjusted to a number that is below $0.03. In addition,

if any legislation or rules are adopted whereby the holding period of securities for purposes of Rule 144 of the Securities Act of 1933,

as amended, for convertible securities that convert at market-adjusted rates is increased resulting in a longer holding period for convertible

securities like the series A senior convertible preferred shares and the unavailability at the time of conversion of Rule 144, the pricing

provisions that are based upon the lowest VWAP of the previous ten (10) trading days immediately preceding the relevant adjustment date

shall be removed unless the common shares issuable upon conversion are then registered under an effective registration statement. Additional

Equity Interest. On the third adjustment date set forth above, the Company is required to cause Kyle’s and Wolo to issue to

the holders of series A senior convertible preferred shares, on a pro rata basis, a ten percent ( 10 %) equity stake Kyle’s and/or

Wolo. The holders of series A senior convertible preferred shares issued in connection with the financing to complete the acquisition

of Kyle’s shall receive the equity stake in Kyle’s and the holders of series A senior convertible preferred shares issued

in connection with the financing to complete the acquisition of Wolo shall receive the equity stake in Wolo. The Company is required

to cause Kyle’s and Wolo to grant to the holders of the series A senior convertible preferred shares upon the issuance to them

of such equity interest a right to receive an additional number of shares of common stock of Kyle’s or Wolo if Kyle’s or

Wolo issues to any third-party equity securities at a price below the acquisition price (as defined below). Such additional number of

shares of common stock of Kyle’s or Wolo to be issued in such instance shall be equal to a number of shares of common stock of

Kyle’s or Wolo which, when added to the number of shares of common stock of Kyle’s or Wolo constituting the initial additional

equity interest, would be equal to the total number of shares of common stock which would have been issued to a holder of series A senior

convertible preferred shares if the price per share of common stock of Kyle’s or Wolo was equivalent to the price per equity security

paid by such third-party in Kyle’s or Wolo. For purposes of this provision, “acquisition price” means the price per

share of Kyle’s and Wolo that was paid by the Company upon the acquisition of Kyle’s and Wolo, respectively. As

of June 30, 2022 and December 31, 2021, the Company had 1,684,849 and 1,818,182 series A senior convertible preferred shares issued and

outstanding, respectively. During

the three months ended June 30, 2022, the Company accrued dividends attributable to the series A senior convertible preferred shares

in the amount of $ 159,298 and paid prior period accrued dividends of $ 159,906 . During the six months ended June 30, 2022, the Company

accrued dividends attributable to the series A senior convertible preferred shares in the amount of $ 280,753 and paid prior period accrued

dividends of $ 288,224 . On

February 16, 2022, 133,333 shares of series A senior convertible preferred shares were converted into 38,096 common shares. Series

B Senior Convertible Preferred Shares On

February 17, 2022, the Company executed a share designation to designate 583,334 of its shares as series B senior convertible preferred

shares. Following is a description of the rights of the series B senior convertible preferred shares. Ranking. The series B senior convertible preferred shares rank, with respect to the payment of dividends and the distribution of assets upon

liquidation, (i) senior to all common shares, allocation shares, and each other class or series that is not expressly made senior to

or on parity with the series B senior convertible preferred shares; (ii) on parity with the series A senior convertible preferred shares

and each other class or series that is not expressly subordinated or made senior to the series A senior convertible preferred shares;

and (iii) junior to all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company and

each other class or series that is expressly made senior to the series B senior convertible preferred shares. 18 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 (UNAUDITED) Dividend

Rights . Holders of series B senior convertible preferred shares are entitled to dividends at a rate per annum of 14.0 % of the stated

value ($ 3.00 per share, subject to adjustment). Dividends shall accrue from day to day, whether or not declared, and shall be cumulative.

Dividends shall be payable quarterly in arrears on each dividend payment date in cash or common shares at the Company’s discretion.

Dividends payable in common shares shall be calculated based on a price equal to eighty percent ( 80 %) of the VWAP during the five (5)

trading days immediately prior to the applicable dividend payment date; provided, however, that if the common shares are not registered,

and rulemaking regarding the Rule 144 holding period referred to below is effective on the payment date, the dividends payable in common

shares shall be calculated based upon the fixed price of $ 2.70 ; provided further, that the Company may only elect to pay dividends in

common shares based upon such fixed price if the VWAP for the five (5) trading days immediately prior to the applicable dividend payment

date is $ 2.70 or higher. Liquidation

Rights. Subject to the rights of creditors and the holders of any senior securities or parity securities (in each case, as defined

in the share designation), upon any liquidation of the Company or its subsidiaries, before any payment or distribution of the assets

of the Company (whether capital or surplus) shall be made to or set apart for the holders of securities that are junior to the series

B senior convertible preferred shares as to the distribution of assets on any liquidation of the Company, including the common shares

and allocation shares, each holder of outstanding series B senior convertible preferred shares shall be entitled to receive an amount

of cash equal to 115 % of the stated value plus an amount of cash equal to all accumulated accrued and unpaid dividends thereon (whether

or not declared) to, but not including the date of final distribution to such holders. If, upon any liquidation, the assets, or proceeds

thereof, distributable among the holders of the series B senior convertible preferred shares shall be insufficient to pay in full the

preferential amount payable to the holders of the series B senior convertible preferred shares and liquidating payments on any other

shares of any class or series of parity securities as to the distribution of assets on any liquidation, then such assets, or the proceeds