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

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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. 17 1847
HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) 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 and six months ended June 30, 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 $ 150,000 for the three and six months ended June 30, 2023 and 2022, respectively. 1847 Cabinet expensed management fees of $ 125,000 and $ 250,000 for the three and six months ended June 30, 2023 and 2022, respectively. 1847 Wolo expensed management fees of $ 75,000 and $ 150,000 for the three and six months ended June 30, 2023 and 2022, respectively. 1847 ICU expensed management fees of $ 75,000 for the three and six months ended June 30, 2023. On a consolidated basis, the Company expensed
total management fees of $ 350,000 and $ 625,000 for the three and six months ended June 30, 2023, respectively, compared to $ 275,000 and
$ 550,000 for the three and six months ended June 30, 2022, respectively. Advances From time to time, the Company has received advances
from its chief executive officer to meet short-term working capital needs. As of June 30, 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 June 30, 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. 18 1847
HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 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 and $ 43,553 for the three and six months ended June 30, 2023 and 2022, respectively. NOTE 12—SHAREHOLDERS’ EQUITY Series A Senior Convertible Preferred Shares During the three months ended June 30, 2023,
the Company accrued dividends of $ 110,051 for the series A senior convertible preferred shares and settled $ 111,269 of previously accrued
dividends through the issuance of common shares (see below). During the six months ended June 30, 2023, the Company accrued dividends
of $ 220,096 for the series A senior convertible preferred shares and settled $ 263,937 of previously accrued dividends through the issuance
of common shares (see below). On May 15, 2023, the Company entered into amendments
to the securities purchase agreements relating to the series A senior convertible preferred shares, pursuant to which the securities
purchase agreements were amended to include a provision giving the Company to option to force the exercise of warrants issued pursuant
to such securities purchase agreements for the issuance of a number of common shares equal to the quotient of (i) eighty percent ( 80 %)
of the Black Scholes Value of the warrants divided by (ii) the applicable exercise price of the warrants. As of June 30, 2023 and December 31, 2022, the
Company had 1,593,940 series A senior convertible preferred shares issued and outstanding, respectively. Series B Senior Convertible Preferred Shares During the three months ended June 30, 2023,
the Company accrued dividends of $ 55,176 for the series B senior convertible preferred shares and paid $ 56,990 of previously accrued
dividends. During the six months ended June 30, 2023, the Company accrued dividends of $ 107,996 for the series B senior convertible preferred
shares and paid $ 105,671 of previously accrued dividends. On May 15, 2023, the Company entered into amendments
to the securities purchase agreements relating to the series B senior convertible preferred shares, pursuant to which the securities
purchase agreements were amended to include a provision giving the Company to option to force the exercise of warrants issued pursuant
to such securities purchase agreements for the issuance of a number of common shares equal to the quotient of (i) eighty percent ( 80 %)
of the Black Scholes Value of the warrants divided by (ii) the applicable exercise price of the warrants. On May 15, 2023, an aggregate of 85,000 series
B senior convertible preferred shares were converted into an aggregate of 430,552 common shares. As of June 30, 2023 and December 31, 2022, the
Company had 379,899 and 464,899 series B senior convertible preferred shares issued and outstanding, respectively. 19 1847
HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Common Shares As of June 30, 2023 and December 31, 2022, the
Company was authorized to issue 500,000,000 common shares. As of June 30, 2023 and December 31, 2022, the Company had 7,018,670 and 4,079,137 common shares issued and outstanding, respectively. On January 30, 2023, the Company issued an aggregate
of 99,505 common shares to the holders of the series A senior convertible preferred shares in settlement of $ 152,668 of accrued dividends.
On April 30, 2023, the Company issued an aggregate of 187,075 common shares to the holders of the series A senior convertible preferred
shares in settlement of $ 111,269 of accrued dividends. Pursuant to the series A senior convertible preferred shares designations, dividends
payable in common shares shall be calculated based on a price equal to eighty percent ( 80 %) of the volume weighted average price for
the common shares on the Company’s principal trading market during the five (5) trading days immediately prior to the applicable
dividend payment date. From February 3 to February 9, 2023, the Company
issued an aggregate of 415,605 common shares to two accredited investors as a commitment fee (see Note 10). From February 13 to May 4, 2023, the Company
issued an aggregate of 293,605 common shares upon the cashless exercise of warrants. On May 16, 2023, the Company issued an aggregate
of 430,552 common shares upon the conversion of an aggregate of 85,000 series B senior convertible preferred shares. On May 16, 2023, the Company issued an aggregate
of 1,006,713 common shares upon the forced cashless exercise of warrants, which were originally issued with the series A and B senior
convertible preferred shares. From May 17 to May 31, 2023, the Company issued 506,478 common shares upon the exercise of warrants for cash proceeds of $ 5,064 . Warrants On January 3, 2023, the Company issued warrants
for the purchase of 407,872 common shares as a dividend to common shareholders of record as of December 23, 2022, pursuant to a warrant
agent agreement, dated January 3, 2023, with VStock Transfer, LLC. Each holder of common shares received a warrant to purchase one (1)
common share for every ten (10) common shares owned as of the record date (with the number of shares underlying the warrant received
rounded down to the nearest whole number). Each warrant represents the right to purchase common shares at an initial exercise price of
$ 4.20 per share (subject to certain adjustments as set forth in the warrants). The Company may, at its option, voluntarily reduce the
then-current exercise price to such amount and for such period or periods of time which may be through the expiration date as may be
deemed appropriate by the board of directors. Cashless exercises of the warrants are not permitted. The warrants will generally be exercisable in
whole or in part beginning on the later of (i) January 3, 2024 or (ii) the date that a registration statement on Form S-3 with respect
to the issuance and registration of the common shares underlying the warrants has been filed with and declared effective by the SEC,
and thereafter until January 3, 2026. The Company may redeem the warrants at any time
in whole or in part at $ 0.001 per warrant (subject to equitable adjustment to reflect share splits, share dividends, share combinations,
recapitalizations and like occurrences) upon not less than 30 days’ prior written notice to the registered holders of the warrants. As a result of the issuance of warrants as a
dividend to common shareholders, the Company recognized a deemed dividend of approximately $ 0.6 million, which was calculated using a
Black-Scholes pricing model. 20 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) On February 3, 2023 (as described in Note 10),
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. The assumptions used in the model were as follows: (i) dividend yield of 0 %; (ii) expected volatility of 162.3 %; (iii) weighted average risk-free interest rate of 4.1 %; (iv) expected life of five years ; (v)
estimated fair value of the common shares of $ 1.93 per share; (vi) exercise price ranging from $ 4.20 to $ 5.25 ; and (vii) various probability
assumptions related to down round price adjustments. The fair value of the warrants was $ 222,129 and the fair value of the commitment
shares was $ 242,858 , resulting in the amount allocated to the warrants and commitment shares, based on their relative fair value of $ 218,172 ,
which was recorded as additional paid-in capital. The exercise prices of all of the foregoing warrants were adjusted to $ 0.5948 on April
30, 2023 per the adjustment described below. On February 9, 2023 (as described in Note 10),
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. The assumptions used
in the model were as follows: (i) dividend yield of 0 %; (ii) expected volatility of 162.0 %; (iii) weighted average risk-free interest

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. 17 1847

HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) 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 and six months ended June 30, 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 $ 150,000 for the three and six months ended June 30, 2023 and 2022, respectively. 1847 Cabinet expensed management fees of $ 125,000 and $ 250,000 for the three and six months ended June 30, 2023 and 2022, respectively. 1847 Wolo expensed management fees of $ 75,000 and $ 150,000 for the three and six months ended June 30, 2023 and 2022, respectively. 1847 ICU expensed management fees of $ 75,000 for the three and six months ended June 30, 2023. On a consolidated basis, the Company expensed

total management fees of $ 350,000 and $ 625,000 for the three and six months ended June 30, 2023, respectively, compared to $ 275,000 and

$ 550,000 for the three and six months ended June 30, 2022, respectively. Advances From time to time, the Company has received advances

from its chief executive officer to meet short-term working capital needs. As of June 30, 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 June 30, 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. 18 1847

HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 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 and $ 43,553 for the three and six months ended June 30, 2023 and 2022, respectively. NOTE 12—SHAREHOLDERS’ EQUITY Series A Senior Convertible Preferred Shares During the three months ended June 30, 2023,

the Company accrued dividends of $ 110,051 for the series A senior convertible preferred shares and settled $ 111,269 of previously accrued

dividends through the issuance of common shares (see below). During the six months ended June 30, 2023, the Company accrued dividends

of $ 220,096 for the series A senior convertible preferred shares and settled $ 263,937 of previously accrued dividends through the issuance

of common shares (see below). On May 15, 2023, the Company entered into amendments

to the securities purchase agreements relating to the series A senior convertible preferred shares, pursuant to which the securities

purchase agreements were amended to include a provision giving the Company to option to force the exercise of warrants issued pursuant

to such securities purchase agreements for the issuance of a number of common shares equal to the quotient of (i) eighty percent ( 80 %)

of the Black Scholes Value of the warrants divided by (ii) the applicable exercise price of the warrants. As of June 30, 2023 and December 31, 2022, the

Company had 1,593,940 series A senior convertible preferred shares issued and outstanding, respectively. Series B Senior Convertible Preferred Shares During the three months ended June 30, 2023,

the Company accrued dividends of $ 55,176 for the series B senior convertible preferred shares and paid $ 56,990 of previously accrued

dividends. During the six months ended June 30, 2023, the Company accrued dividends of $ 107,996 for the series B senior convertible preferred

shares and paid $ 105,671 of previously accrued dividends. On May 15, 2023, the Company entered into amendments

to the securities purchase agreements relating to the series B senior convertible preferred shares, pursuant to which the securities

purchase agreements were amended to include a provision giving the Company to option to force the exercise of warrants issued pursuant

to such securities purchase agreements for the issuance of a number of common shares equal to the quotient of (i) eighty percent ( 80 %)

of the Black Scholes Value of the warrants divided by (ii) the applicable exercise price of the warrants. On May 15, 2023, an aggregate of 85,000 series

B senior convertible preferred shares were converted into an aggregate of 430,552 common shares. As of June 30, 2023 and December 31, 2022, the

Company had 379,899 and 464,899 series B senior convertible preferred shares issued and outstanding, respectively. 19 1847

HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) Common Shares As of June 30, 2023 and December 31, 2022, the

Company was authorized to issue 500,000,000 common shares. As of June 30, 2023 and December 31, 2022, the Company had 7,018,670 and 4,079,137 common shares issued and outstanding, respectively. On January 30, 2023, the Company issued an aggregate

of 99,505 common shares to the holders of the series A senior convertible preferred shares in settlement of $ 152,668 of accrued dividends.

On April 30, 2023, the Company issued an aggregate of 187,075 common shares to the holders of the series A senior convertible preferred

shares in settlement of $ 111,269 of accrued dividends. Pursuant to the series A senior convertible preferred shares designations, dividends

payable in common shares shall be calculated based on a price equal to eighty percent ( 80 %) of the volume weighted average price for

the common shares on the Company’s principal trading market during the five (5) trading days immediately prior to the applicable

dividend payment date. From February 3 to February 9, 2023, the Company

issued an aggregate of 415,605 common shares to two accredited investors as a commitment fee (see Note 10). From February 13 to May 4, 2023, the Company

issued an aggregate of 293,605 common shares upon the cashless exercise of warrants. On May 16, 2023, the Company issued an aggregate

of 430,552 common shares upon the conversion of an aggregate of 85,000 series B senior convertible preferred shares. On May 16, 2023, the Company issued an aggregate

of 1,006,713 common shares upon the forced cashless exercise of warrants, which were originally issued with the series A and B senior

convertible preferred shares. From May 17 to May 31, 2023, the Company issued 506,478 common shares upon the exercise of warrants for cash proceeds of $ 5,064 . Warrants On January 3, 2023, the Company issued warrants

for the purchase of 407,872 common shares as a dividend to common shareholders of record as of December 23, 2022, pursuant to a warrant

agent agreement, dated January 3, 2023, with VStock Transfer, LLC. Each holder of common shares received a warrant to purchase one (1)

common share for every ten (10) common shares owned as of the record date (with the number of shares underlying the warrant received

rounded down to the nearest whole number). Each warrant represents the right to purchase common shares at an initial exercise price of

$ 4.20 per share (subject to certain adjustments as set forth in the warrants). The Company may, at its option, voluntarily reduce the

then-current exercise price to such amount and for such period or periods of time which may be through the expiration date as may be

deemed appropriate by the board of directors. Cashless exercises of the warrants are not permitted. The warrants will generally be exercisable in

whole or in part beginning on the later of (i) January 3, 2024 or (ii) the date that a registration statement on Form S-3 with respect

to the issuance and registration of the common shares underlying the warrants has been filed with and declared effective by the SEC,

and thereafter until January 3, 2026. The Company may redeem the warrants at any time

in whole or in part at $ 0.001 per warrant (subject to equitable adjustment to reflect share splits, share dividends, share combinations,

recapitalizations and like occurrences) upon not less than 30 days’ prior written notice to the registered holders of the warrants. As a result of the issuance of warrants as a

dividend to common shareholders, the Company recognized a deemed dividend of approximately $ 0.6 million, which was calculated using a

Black-Scholes pricing model. 20 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2023 (UNAUDITED) On February 3, 2023 (as described in Note 10),

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. The assumptions used in the model were as follows: (i) dividend yield of 0 %; (ii) expected volatility of 162.3 %; (iii) weighted average risk-free interest rate of 4.1 %; (iv) expected life of five years ; (v)

estimated fair value of the common shares of $ 1.93 per share; (vi) exercise price ranging from $ 4.20 to $ 5.25 ; and (vii) various probability

assumptions related to down round price adjustments. The fair value of the warrants was $ 222,129 and the fair value of the commitment

shares was $ 242,858 , resulting in the amount allocated to the warrants and commitment shares, based on their relative fair value of $ 218,172 ,

which was recorded as additional paid-in capital. The exercise prices of all of the foregoing warrants were adjusted to $ 0.5948 on April

30, 2023 per the adjustment described below. On February 9, 2023 (as described in Note 10),

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. The assumptions used

in the model were as follows: (i) dividend yield of 0 %; (ii) expected volatility of 162.0 %; (iii) weighted average risk-free interest