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

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at least 100,000 common shares during such 30-day period. The Company may redeem the warrants held by any holder in whole (but not in
part) by paying in cash to such holder as follows: (i) $0.50 per share then underlying the warrant if within the first twelve (12) months
of issuance; (ii) $1.00 per share then underlying the warrant if after the first twelve (12) months, but before twenty-four (24) months
of issuance; and (iii) $1.50 per share then underlying the warrant if after twenty-four months, but before thirty-six (36) months. 21 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 (UNAUDITED) Below
is a table summarizing the changes in warrants outstanding during the six months ended June 30, 2022: Warrants Weighted- Average Exercise Price Outstanding at December 31, 2021 1,300,122 $ 9.52 Granted 120,397 12.00 Exercised - - Forfeited - - Outstanding at June 30, 2022 1,420,519 $ 9.73 Exercisable at June 30, 2022 1,420,519 $ 9.73 As
of June 30, 2022, the outstanding warrants have a weighted average remaining contractual life of 1.93 years and a total intrinsic value
of $ 447,500 . NOTE 13—EARNINGS
(LOSS) PER SHARE The
computation of weighted average shares outstanding and the basic and diluted loss per common share attributable to common shareholders
for the three and six months ended June 30, 2022 consisted of the followin Three
Months Ended June
30, 2022 Six
Months Ended June
30, 2022 Net loss per common share attributable to common shareholders’ ( 352,733 ) $ ( 1,360,978 ) Weighted average common shares outstanding 1,248,829 1,239,093 Basic and diluted loss per share ( 0.28 ) $ ( 1.10 ) For
the three and six months ended June 30, 2022, there were 5,174,416 potential common share equivalents from warrants, convertible debt,
and series A and B convertible preferred shares excluded from the diluted EPS calculations as their effect is anti-dilutive. For
the three and six months ended June 30, 2021, there were 122,500 potential common share equivalents from warrants excluded from the diluted
EPS calculations as their effect is anti-dilutive. 22 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS JUNE 30, 2022 (UNAUDITED) NOTE 14—SUBSEQUENT EVENTS Securities Purchase Agreement On July 8, 2022, the Company entered into a securities
purchase agreement with Mast Hill Fund, L.P., pursuant to which the Company issued to it a promissory note in the principal amount of
$600,000, which includes an original issue discount in the amount of $60,000, and a five-year warrant for the purchase of 100,000 common
shares of the Company at an exercise price of $6.00 per share (subject to adjustment), which may be exercised on a cashless basis if
the market price of the Company’s common shares is greater than the exercise price, for a total purchase price of $540,000. The note bears interest at a rate of 12 % per
annum and matures on July 8, 2023; 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 note
requires monthly payments of $ 60,000 , plus accrued interest, commencing on October 6, 2022. The Company may voluntarily prepay the outstanding
principal amount and accrued interest in whole upon payment of a fee of $ 750 . In addition, if at any time the Company receives cash proceeds
of more than $ 1 million in the aggregate 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 note) or the sale of assets outside of the ordinary course of business, the holder shall have the right in its sole discretion
to require the Company to immediately apply up to 50 % of such proceeds in excess of $ 1 million to repay all or any portion of the outstanding
principal amount and interest then due under the note. The note is convertible into common shares at the option of the holder at any
time on or following the date that an event of default (as defined in the note) occurs under the note at a conversion price of $ 5.20 (subject to adjustment). The note is unsecured and has priority over all other unsecured indebtedness of the Company. The note contains
customary affirmative and negative covenants and events of default for a loan of this type. The conversion price of the note and the exercise
price of the warrant are subject to standard adjustments, including a price-based adjustment in the event that the Company issues any
common shares or other securities convertible into or exercisable for common shares at an effective price per share that is lower than
the conversion or exercise price, subject to certain exceptions. In addition, the note and the warrant contain an ownership limitation,
such that the Company shall not effect any conversion or exercise, and the holder shall not have the right to convert or exercise, or
any portion of the note or the warrant to the extent that after giving effect to the issuance of common shares upon conversion or exercise,
the holder, together with its affiliates and any other persons acting as a group together with the holder or any of its affiliates, would
beneficially own in excess of 4.99 % of the number of common shares outstanding immediately after giving effect to the issuance of common
shares upon conversion or exercise. The securities purchase agreement contains a
participation right, which provides that, subject to certain exceptions, until the note is extinguished in its entirety, if the Company
directly or indirectly offers, sells, grants any option to purchase, or otherwise disposes of (or announces any offer, sale, grant or
any option to purchase or other disposition of) any of its debt, equity, or equity equivalent securities, or enters into any definitive
agreement with regard to the foregoing, it must offer to issue and sell to or exchange with the holder securities in such transaction
in an amount up to the original principal amount of the note. The securities purchase agreement also provides the holder with customary
piggy-back registration rights for the common shares underlying the note and the warrant, and contains other customary representations
and warranties and covenants for a transaction of this type. Underwriting Agreement On August 2, 2022, the Company entered into an
underwriting agreement with Craft Capital Management LLC and R.F. Lafferty & Co. Inc., as representatives of the underwriters named
on Schedule 1 thereto, relating to the Company’s public offering of common shares. Under the underwriting agreement, the Company
agreed to sell 1,428,572 common shares to the underwriters, at a purchase price per share of $ 3.948 (the offering price to the public
of $ 4.20 per share minus the underwriters’ discount), and also agreed to grant to the underwriters a 45-day option to purchase
up to 214,286 additional common shares, solely to cover over-allotments, if any, at the public offering price less the underwriting discounts,
pursuant to the Company’s registration statement on Form S-1 (File No. 333-259011) under the Securities Act of 1933, as amended. On August 5, 2022, the closing of the public
offering was completed and the Company sold 1,428,572 common shares for total gross proceeds of $ 6 million. After deducting the underwriting
commission and expenses, the Company received net proceeds of approximately $ 5.2 million. 23 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS JUNE 30, 2022 (UNAUDITED) Note Conversions 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. On July 26,
2022, the Company 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 notes into a number of common shares of the Company equal to such conversion
amount divided by the price per share of the Company’s common shares sold in the public offering. On August 2, 2022, the Company
issued an aggregate of 800,000 common shares upon conversion of these notes. On September 30, 2020, 1847 Cabinet Inc. issued
an 8 % vesting promissory note in the principal amount of up to $ 1,260,000 to Stephen Mallatt, Jr. and Rita Mallatt. On July 26, 2022,
the Company and 1847 Cabinet entered into a conversion agreement with Stephen Mallatt, Jr. and Rita Mallatt, pursuant to which they agreed
to convert $ 797,221 of the note into a number of common shares of the Company equal to such conversion amount divided by the price per
share of the Company’s common shares sold in the public offering. On August 2, 2022, the Company issued 189,815 common shares
upon conversion of this note. In addition, the 8 % vesting promissory note was cancelled and 1847 Cabinet agreed to pay a sum of $ 558,734 to the holders on or prior to October 1, 2022. On July 26, 2022, the Company also entered into
a conversion agreement with Bevilacqua PLLC, the Company’s outside securities counsel, pursuant to which it agreed to convert $ 1,197,280 of the accounts payable owed to it into a number of common shares of the Company equal to such conversion amount divided by the price
per share of the Company’s common shares sold in the public offering. On August 2, 2022, the Company issued 285,067 common shares
to Bevilacqua PLLC. Warrants As a result of the issuance of the note to Mast
Hill Fund, L.P. on July 8, 2022, the exercise price of certain of the Company’s outstanding warrants and the conversion price of
the Company’s outstanding convertible notes were adjusted to $ 5.20 pursuant to certain antidilution provisions of such warrants
and convertible notes. In addition, certain of the Company’s outstanding warrants include an “exploding” feature, whereby
the exercise price was reset to $ 5.20 and the number of shares underlying the warrants was increased in the same proportion as the exercise
price decrease. As a result of the issuance of the common shares
upon conversion of the notes as described above at a conversion price of $ 4.20 per share, the exercise price of certain of the Company’s
outstanding warrants and the conversion price of the Company’s outstanding convertible notes were adjusted to $ 4.20 pursuant to
certain antidilution provisions of such warrants and convertible notes. In addition, certain of the Company’s outstanding warrants
include an “exploding” feature, whereby the exercise price was reset to $ 4.20 and the number of shares underlying the warrants
was increased in the same proportion as the exercise price decrease. In July 2022, the Company issued 50,002 common
shares upon cashless exercises of two warrants in which 59,633 common shares underlying the warrants were surrendered to pay the exercise
price. On August 5, 2022, pursuant to the underwriting
agreement, the Company issued a common share purchase warrant to each representative for the purchase of 35,715 common shares at an exercise
price of $ 5.25 , subject to adjustments. The warrants will be exercisable at
any time and from time to time, in whole or in part, during the period commencing on February 5, 2023 and ending on August 2, 2027 and
may be exercised on a cashless basis under certain circumstances. The warrants provide for registration rights (including a one-time
demand registration right and unlimited piggyback rights) and customary anti-dilution provisions (for share dividends and splits and
recapitalizations) and anti-dilution protection (adjustment in the number and price of such warrants and the shares underlying such warrants)
resulting from corporate events (which would include dividends, reorganization, mergers and similar events). Following the changes to the Company’s
outstanding warrants, the number of common shares issuable upon exercise of the Company’s outstanding warrants as of the date of
this report is 3,165,319 shares. Common
Share Dividend On July 29, 2022, the Company declared a common share dividend of $ 0.13125 per share to shareholders of record
as of August 4, 2022. This dividend will be paid on August 19, 2022. 24 ITEM 2. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following management’s discussion
and analysis of financial condition and results of operations provides information that management believes is relevant to an assessment
and understanding of our plans and financial condition . The following financial information is derived from our financial statements
and should be read in conjunction with such financial statements and notes thereto set forth elsewhere herein. Use of Terms Except as otherwise indicated by the context
and for the purposes of this report only, references in this report to “we,” “us,” “our” and the
“Company” refer to 1847 Holdings LLC, a Delaware limited liability company, and its consolidated subsidiaries. References

at least 100,000 common shares during such 30-day period. The Company may redeem the warrants held by any holder in whole (but not in

part) by paying in cash to such holder as follows: (i) $0.50 per share then underlying the warrant if within the first twelve (12) months

of issuance; (ii) $1.00 per share then underlying the warrant if after the first twelve (12) months, but before twenty-four (24) months

of issuance; and (iii) $1.50 per share then underlying the warrant if after twenty-four months, but before thirty-six (36) months. 21 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 (UNAUDITED) Below

is a table summarizing the changes in warrants outstanding during the six months ended June 30, 2022: Warrants Weighted- Average Exercise Price Outstanding at December 31, 2021 1,300,122 $ 9.52 Granted 120,397 12.00 Exercised - - Forfeited - - Outstanding at June 30, 2022 1,420,519 $ 9.73 Exercisable at June 30, 2022 1,420,519 $ 9.73 As

of June 30, 2022, the outstanding warrants have a weighted average remaining contractual life of 1.93 years and a total intrinsic value

of $ 447,500 . NOTE 13—EARNINGS

(LOSS) PER SHARE The

computation of weighted average shares outstanding and the basic and diluted loss per common share attributable to common shareholders

for the three and six months ended June 30, 2022 consisted of the followin Three

Months Ended June

30, 2022 Six

Months Ended June

30, 2022 Net loss per common share attributable to common shareholders’ ( 352,733 ) $ ( 1,360,978 ) Weighted average common shares outstanding 1,248,829 1,239,093 Basic and diluted loss per share ( 0.28 ) $ ( 1.10 ) For

the three and six months ended June 30, 2022, there were 5,174,416 potential common share equivalents from warrants, convertible debt,

and series A and B convertible preferred shares excluded from the diluted EPS calculations as their effect is anti-dilutive. For

the three and six months ended June 30, 2021, there were 122,500 potential common share equivalents from warrants excluded from the diluted

EPS calculations as their effect is anti-dilutive. 22 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS JUNE 30, 2022 (UNAUDITED) NOTE 14—SUBSEQUENT EVENTS Securities Purchase Agreement On July 8, 2022, the Company entered into a securities

purchase agreement with Mast Hill Fund, L.P., pursuant to which the Company issued to it a promissory note in the principal amount of

$600,000, which includes an original issue discount in the amount of $60,000, and a five-year warrant for the purchase of 100,000 common

shares of the Company at an exercise price of $6.00 per share (subject to adjustment), which may be exercised on a cashless basis if

the market price of the Company’s common shares is greater than the exercise price, for a total purchase price of $540,000. The note bears interest at a rate of 12 % per

annum and matures on July 8, 2023; 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 note

requires monthly payments of $ 60,000 , plus accrued interest, commencing on October 6, 2022. The Company may voluntarily prepay the outstanding

principal amount and accrued interest in whole upon payment of a fee of $ 750 . In addition, if at any time the Company receives cash proceeds

of more than $ 1 million in the aggregate 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 note) or the sale of assets outside of the ordinary course of business, the holder shall have the right in its sole discretion

to require the Company to immediately apply up to 50 % of such proceeds in excess of $ 1 million to repay all or any portion of the outstanding

principal amount and interest then due under the note. The note is convertible into common shares at the option of the holder at any

time on or following the date that an event of default (as defined in the note) occurs under the note at a conversion price of $ 5.20 (subject to adjustment). The note is unsecured and has priority over all other unsecured indebtedness of the Company. The note contains

customary affirmative and negative covenants and events of default for a loan of this type. The conversion price of the note and the exercise

price of the warrant are subject to standard adjustments, including a price-based adjustment in the event that the Company issues any

common shares or other securities convertible into or exercisable for common shares at an effective price per share that is lower than

the conversion or exercise price, subject to certain exceptions. In addition, the note and the warrant contain an ownership limitation,

such that the Company shall not effect any conversion or exercise, and the holder shall not have the right to convert or exercise, or

any portion of the note or the warrant to the extent that after giving effect to the issuance of common shares upon conversion or exercise,

the holder, together with its affiliates and any other persons acting as a group together with the holder or any of its affiliates, would

beneficially own in excess of 4.99 % of the number of common shares outstanding immediately after giving effect to the issuance of common

shares upon conversion or exercise. The securities purchase agreement contains a

participation right, which provides that, subject to certain exceptions, until the note is extinguished in its entirety, if the Company

directly or indirectly offers, sells, grants any option to purchase, or otherwise disposes of (or announces any offer, sale, grant or

any option to purchase or other disposition of) any of its debt, equity, or equity equivalent securities, or enters into any definitive

agreement with regard to the foregoing, it must offer to issue and sell to or exchange with the holder securities in such transaction

in an amount up to the original principal amount of the note. The securities purchase agreement also provides the holder with customary

piggy-back registration rights for the common shares underlying the note and the warrant, and contains other customary representations

and warranties and covenants for a transaction of this type. Underwriting Agreement On August 2, 2022, the Company entered into an

underwriting agreement with Craft Capital Management LLC and R.F. Lafferty & Co. Inc., as representatives of the underwriters named

on Schedule 1 thereto, relating to the Company’s public offering of common shares. Under the underwriting agreement, the Company

agreed to sell 1,428,572 common shares to the underwriters, at a purchase price per share of $ 3.948 (the offering price to the public

of $ 4.20 per share minus the underwriters’ discount), and also agreed to grant to the underwriters a 45-day option to purchase

up to 214,286 additional common shares, solely to cover over-allotments, if any, at the public offering price less the underwriting discounts,

pursuant to the Company’s registration statement on Form S-1 (File No. 333-259011) under the Securities Act of 1933, as amended. On August 5, 2022, the closing of the public

offering was completed and the Company sold 1,428,572 common shares for total gross proceeds of $ 6 million. After deducting the underwriting

commission and expenses, the Company received net proceeds of approximately $ 5.2 million. 23 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS JUNE 30, 2022 (UNAUDITED) Note Conversions 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. On July 26,

2022, the Company 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 notes into a number of common shares of the Company equal to such conversion

amount divided by the price per share of the Company’s common shares sold in the public offering. On August 2, 2022, the Company

issued an aggregate of 800,000 common shares upon conversion of these notes. On September 30, 2020, 1847 Cabinet Inc. issued

an 8 % vesting promissory note in the principal amount of up to $ 1,260,000 to Stephen Mallatt, Jr. and Rita Mallatt. On July 26, 2022,

the Company and 1847 Cabinet entered into a conversion agreement with Stephen Mallatt, Jr. and Rita Mallatt, pursuant to which they agreed

to convert $ 797,221 of the note into a number of common shares of the Company equal to such conversion amount divided by the price per

share of the Company’s common shares sold in the public offering. On August 2, 2022, the Company issued 189,815 common shares

upon conversion of this note. In addition, the 8 % vesting promissory note was cancelled and 1847 Cabinet agreed to pay a sum of $ 558,734 to the holders on or prior to October 1, 2022. On July 26, 2022, the Company also entered into

a conversion agreement with Bevilacqua PLLC, the Company’s outside securities counsel, pursuant to which it agreed to convert $ 1,197,280 of the accounts payable owed to it into a number of common shares of the Company equal to such conversion amount divided by the price

per share of the Company’s common shares sold in the public offering. On August 2, 2022, the Company issued 285,067 common shares

to Bevilacqua PLLC. Warrants As a result of the issuance of the note to Mast

Hill Fund, L.P. on July 8, 2022, the exercise price of certain of the Company’s outstanding warrants and the conversion price of

the Company’s outstanding convertible notes were adjusted to $ 5.20 pursuant to certain antidilution provisions of such warrants

and convertible notes. In addition, certain of the Company’s outstanding warrants include an “exploding” feature, whereby

the exercise price was reset to $ 5.20 and the number of shares underlying the warrants was increased in the same proportion as the exercise

price decrease. As a result of the issuance of the common shares

upon conversion of the notes as described above at a conversion price of $ 4.20 per share, the exercise price of certain of the Company’s

outstanding warrants and the conversion price of the Company’s outstanding convertible notes were adjusted to $ 4.20 pursuant to

certain antidilution provisions of such warrants and convertible notes. In addition, certain of the Company’s outstanding warrants

include an “exploding” feature, whereby the exercise price was reset to $ 4.20 and the number of shares underlying the warrants

was increased in the same proportion as the exercise price decrease. In July 2022, the Company issued 50,002 common

shares upon cashless exercises of two warrants in which 59,633 common shares underlying the warrants were surrendered to pay the exercise

price. On August 5, 2022, pursuant to the underwriting

agreement, the Company issued a common share purchase warrant to each representative for the purchase of 35,715 common shares at an exercise

price of $ 5.25 , subject to adjustments. The warrants will be exercisable at

any time and from time to time, in whole or in part, during the period commencing on February 5, 2023 and ending on August 2, 2027 and

may be exercised on a cashless basis under certain circumstances. The warrants provide for registration rights (including a one-time

demand registration right and unlimited piggyback rights) and customary anti-dilution provisions (for share dividends and splits and

recapitalizations) and anti-dilution protection (adjustment in the number and price of such warrants and the shares underlying such warrants)

resulting from corporate events (which would include dividends, reorganization, mergers and similar events). Following the changes to the Company’s

outstanding warrants, the number of common shares issuable upon exercise of the Company’s outstanding warrants as of the date of

this report is 3,165,319 shares. Common

Share Dividend On July 29, 2022, the Company declared a common share dividend of $ 0.13125 per share to shareholders of record

as of August 4, 2022. This dividend will be paid on August 19, 2022. 24 ITEM 2. MANAGEMENT’S

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following management’s discussion

and analysis of financial condition and results of operations provides information that management believes is relevant to an assessment

and understanding of our plans and financial condition . The following financial information is derived from our financial statements

and should be read in conjunction with such financial statements and notes thereto set forth elsewhere herein. Use of Terms Except as otherwise indicated by the context

and for the purposes of this report only, references in this report to “we,” “us,” “our” and the

“Company” refer to 1847 Holdings LLC, a Delaware limited liability company, and its consolidated subsidiaries. References