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

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and its subsidiary ICU Eyewear, Inc., a California corporation, which we collectively refer to as ICU Eyewear. Headquartered in Hollister,
California and founded in 1956, ICU Eyewear specializes in the sale and distribution of reading eyewear and sunglasses, blue light blocking
eyewear, sun readers, and other outdoor specialty sunglasses, as well as select health and personal care items, including face masks. 27 Through
our structure, we offer investors an opportunity to participate in the ownership and growth of a portfolio of businesses that traditionally
have been owned and managed by private equity firms, private individuals or families, financial institutions or large conglomerates.
We believe that our management and acquisition strategies will allow us to achieve our goals to make and grow regular distributions
to our common shareholders and increase common shareholder value over time. We
seek to acquire controlling interests in small businesses that we believe operate in industries with long-term macroeconomic growth opportunities,
and that have positive and stable earnings and cash flows, face minimal threats of technological or competitive obsolescence and have
strong management teams largely in place. We believe that private company operators and corporate parents looking to sell their businesses
will consider us to be an attractive purchaser of their businesses. We make these businesses our majority-owned subsidiaries and actively
manage and grow such businesses. We expect to improve our businesses over the long term through organic growth opportunities, add-on
acquisitions and operational improvements. Recent
Developments Public
Offering On
July 3, 2023, we entered into a securities purchase agreement with certain purchasers and a placement agency agreement with Spartan Capital
Securities, LLC, as placement agent (“Spartan”), pursuant to which we agreed to issue and sell to such purchasers an aggregate
of 3,845,000 common shares and 5,500,000 pre-funded warrants for the purchase of 5,500,000 common shares at an offering price of $0.20
per common share and $0.19 per pre-funded warrant, pursuant to our effective registration statement on Form S-1 (File No. 333-272057).
On July 7, 2023, the closing of this offering was completed. At the closing, the purchasers pre-paid the exercise price of the pre-funded
warrants in full. Therefore, we received total gross proceeds of $1,869,000. Pursuant to the placement agency agreement, Spartan received a
cash transaction fee equal to 8% of the aggregate gross proceeds and reimbursement of certain out-of-pocket expenses. After deducting
these and other offering expenses, we received net proceeds of approximately $1,494,480. Registered
Direct Offering On
July 14, 2023, we entered into a securities purchase agreement with certain purchasers and a placement agency agreement with Spartan,
which were amended pursuant to an amendatory agreement, dated July 18, 2023, among our company, Spartan and such purchasers. Pursuant
to the foregoing, on July 18, 2023, we issued and sold to such purchasers an aggregate of 4,000,000 common shares at a purchase price
of $0.24 per share for total gross proceeds of $960,000, pursuant to our effective shelf registration statement on Form S-3 (File No.
333-269509). Spartan received a cash transaction fee equal to 8% of the aggregate gross proceeds and reimbursement of certain out-of-pocket expenses.
After deducting these and other offering expenses, we received net proceeds of approximately $858,200. Debt
Offering On August 11, 2023, the Company entered into
a securities purchase agreement (the “Purchase Agreement”) with certain accredited investors (the “Investors”),
pursuant to which the Company issued and sold to the Investors 20% OID subordinated promissory notes in the aggregate principal amount
of $3,125,000 (the “Notes”) and warrants for the purchase of an aggregate of 4,098,361 common shares (the “Warrants”)
for a total purchase price of $2,500,000 in a private placement transaction (the “Private Placement”). 28 The Notes are due and payable on February 11,
2024. The Company may voluntarily prepay the Notes in full at any time. In addition, if the Company consummates any equity or equity-linked
or debt securities issuance, or enters into a loan agreement or other financing, other than certain Excluded Debt (as defined in the
Notes), then the Company must prepay the Notes in full. The Notes are unsecured and have priority over all other unsecured indebtedness
of the Company, except for certain Senior Indebtedness (as defined in the Notes). The Notes contain customary affirmative and negative
covenants and events of default for a loan of this type. Subject to Shareholder Approval (as defined below),
the Notes are convertible into common shares at the option of the holders at any time on or following the date that an Event of Default
(as defined in the Notes) occurs at a conversion price equal to 90% of the lowest volume weighted average price of the Company’s
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). The conversion price of the Notes is 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 price, subject to certain exceptions. The terms of the Warrants are set forth in a
warrant agency agreement, dated August 11, 2023 (the “Warrant Agreement”), between the Company and VStock Transfer, LLC,
the Company’s transfer agent. Subject to Shareholder Approval, the Warrants are exercisable for a period five (5) years at an exercise
price of $0.1830 (subject to standard adjustments for share splits, share combinations, share dividends, reclassifications, mergers,
consolidations, reorganizations and similar transactions) and may be exercised on a cashless basis if at the time of exercise there is
no effective registration statement registering, or the prospectus contained therein is not available for, the issuance of common shares
upon exercise thereof. Pursuant to the Purchase Agreement, the Company
is required to hold a special meeting of its shareholders on or before the date that is sixty (60) calendar days after the date of the
Purchase Agreement for the purpose of obtaining shareholder approval of the issuance of all common shares that may be issued upon conversion
of the Notes and exercise of the Warrants in accordance with NYSE American rules (the “Shareholder Approval”). In addition,
the Notes and the Warrants contain an ownership limitation, such that the Company shall not effect any conversion or exercise, and the
holders shall not have the right to convert or exercise, any portion of the Notes or the Warrants to the extent that after giving effect
to the issuance of common shares upon conversion or exercise, such holder, together with its affiliates and any other persons acting
as a group together with such 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, which such percentage may be
increased or decreased by the holder, but not in excess of 9.99%, upon at least 61 days’ prior notice to the Company. In connection with the Private Placement, the
Company also entered into a registration rights agreement (the “Registration Rights Agreement”) with the Investors, pursuant
to which the Company agreed to file a registration statement to register all common shares underlying the Notes and the Warrants under
the Securities Act of 1933, as amended (the “Securities Act”), within fifteen (15) days following an Event of Default and
use its best efforts to cause such registration statement to be declared effective within ninety (90) days after the filing thereof.
If the Company fails to meet these deadlines or comply with certain other requirements in the Registration Rights Agreement, then on
each date that the Company fails to comply, and on each monthly anniversary thereof, the Company shall pay to each Investor an amount
in cash, as partial liquidated damages and not as a penalty, equal to 1.0% of the aggregate subscription amount paid by such Investor
pursuant to the Purchase Agreement, subject to an aggregate cap of 10%. If the Company fails to pay any of these amounts in full within
seven (7) days after the date payable, the Company must pay interest thereon at a rate of 18% per annum (or such lesser maximum amount
that is permitted to be paid by applicable law). 29 Spartan Capital Securities, LLC (the “Placement
Agent”) acted as placement agent in connection with the Private Placement pursuant to a letter agreement, dated August 11, 2023,
between the Company and the Placement Agent (the “Placement Agency Agreement”), and received (i) a cash transaction fee equal
to 6% of the aggregate gross proceeds, (ii) a non-accountable and non-reimbursable due diligence and expense fee equal to 1% of the aggregate
gross proceeds and (iii) a warrant for the purchase of a number of common shares equal to eight percent (8%) of the number common shares
issuable upon conversion of the Notes and exercise of the Warrants at an exercise price of $0.2013 per share (subject to adjustment) (the
“Placement Agent Warrant”). The Placement Agent Warrant is exercisable at any time on or after the date that is the six months
after the date of issuance and until the fifth anniversary thereof. Conversion
of Promissory Notes On August 4, 2023, we received notices from Mast
Hill Fund, L.P., or Mast Hill, and Leonite Fund I, LP, or Leonite, that an event of default has occurred under the promissory notes
issued to them on February 3, 2023 for failure to make certain payments when due. Mast Hill and Leonite agreed in writing that they will
not require any payments in cash for the over-due amounts or accelerate the payments due under the notes for a period of 60 days. Since
an event of default has occurred, Mast Hill and Leonite have the right to convert the notes, including the over-due amounts, into common
shares at their election. On
August 4, 2023, Mast Hill converted $72,560.65 of principal and certain penalties and fees into 553,505 common shares. On
August 4, 2023, Leonite converted $329,440.06 of principal and interest into 2,000,000 common shares. On August 9, 2023, we received notices from Mast
Hill and Leonite that an event of default has occurred under the promissory notes issued to them on February 9, 2023 for failure to make
certain payments when due. Mast Hill and Leonite agreed in writing that they will not require any payments in cash for the over-due amounts
or accelerate the payments due under the notes for a period of 60 days. Since an event of default has occurred, Mast Hill and Leonite
have the right to convert the notes, including the over-due amounts, into common shares at their election. On August 9, 2023, Mast Hill converted $100,000 of penalties and fees into 672,043 common shares. See
also “—Liquidity and Capital Resources—Debt—Promissory Notes issued in Private Placement” below. Management
Fees On
April 15, 2013, we and our manager entered into a management services agreement, pursuant to which we are required to pay our manager
a quarterly management fee equal to 0.5% of our adjusted net assets for services performed (which we refer to as 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 our 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) our manager as of the end of
such fiscal quarter, and (iii) increased by the amount of any outstanding accrued and unpaid parent management fees. We did not expense
any parent management fees for the three and six months ended June 30, 2023 and 2022. 30 1847
Asien entered into an offsetting management services agreement with our manager on May 28, 2020, 1847 Cabinet entered into an offsetting

and its subsidiary ICU Eyewear, Inc., a California corporation, which we collectively refer to as ICU Eyewear. Headquartered in Hollister,

California and founded in 1956, ICU Eyewear specializes in the sale and distribution of reading eyewear and sunglasses, blue light blocking

eyewear, sun readers, and other outdoor specialty sunglasses, as well as select health and personal care items, including face masks. 27 Through

our structure, we offer investors an opportunity to participate in the ownership and growth of a portfolio of businesses that traditionally

have been owned and managed by private equity firms, private individuals or families, financial institutions or large conglomerates.

We believe that our management and acquisition strategies will allow us to achieve our goals to make and grow regular distributions

to our common shareholders and increase common shareholder value over time. We

seek to acquire controlling interests in small businesses that we believe operate in industries with long-term macroeconomic growth opportunities,

and that have positive and stable earnings and cash flows, face minimal threats of technological or competitive obsolescence and have

strong management teams largely in place. We believe that private company operators and corporate parents looking to sell their businesses

will consider us to be an attractive purchaser of their businesses. We make these businesses our majority-owned subsidiaries and actively

manage and grow such businesses. We expect to improve our businesses over the long term through organic growth opportunities, add-on

acquisitions and operational improvements. Recent

Developments Public

Offering On

July 3, 2023, we entered into a securities purchase agreement with certain purchasers and a placement agency agreement with Spartan Capital

Securities, LLC, as placement agent (“Spartan”), pursuant to which we agreed to issue and sell to such purchasers an aggregate

of 3,845,000 common shares and 5,500,000 pre-funded warrants for the purchase of 5,500,000 common shares at an offering price of $0.20

per common share and $0.19 per pre-funded warrant, pursuant to our effective registration statement on Form S-1 (File No. 333-272057).

On July 7, 2023, the closing of this offering was completed. At the closing, the purchasers pre-paid the exercise price of the pre-funded

warrants in full. Therefore, we received total gross proceeds of $1,869,000. Pursuant to the placement agency agreement, Spartan received a

cash transaction fee equal to 8% of the aggregate gross proceeds and reimbursement of certain out-of-pocket expenses. After deducting

these and other offering expenses, we received net proceeds of approximately $1,494,480. Registered

Direct Offering On

July 14, 2023, we entered into a securities purchase agreement with certain purchasers and a placement agency agreement with Spartan,

which were amended pursuant to an amendatory agreement, dated July 18, 2023, among our company, Spartan and such purchasers. Pursuant

to the foregoing, on July 18, 2023, we issued and sold to such purchasers an aggregate of 4,000,000 common shares at a purchase price

of $0.24 per share for total gross proceeds of $960,000, pursuant to our effective shelf registration statement on Form S-3 (File No.

333-269509). Spartan received a cash transaction fee equal to 8% of the aggregate gross proceeds and reimbursement of certain out-of-pocket expenses.

After deducting these and other offering expenses, we received net proceeds of approximately $858,200. Debt

Offering On August 11, 2023, the Company entered into

a securities purchase agreement (the “Purchase Agreement”) with certain accredited investors (the “Investors”),

pursuant to which the Company issued and sold to the Investors 20% OID subordinated promissory notes in the aggregate principal amount

of $3,125,000 (the “Notes”) and warrants for the purchase of an aggregate of 4,098,361 common shares (the “Warrants”)

for a total purchase price of $2,500,000 in a private placement transaction (the “Private Placement”). 28 The Notes are due and payable on February 11,

2024. The Company may voluntarily prepay the Notes in full at any time. In addition, if the Company consummates any equity or equity-linked

or debt securities issuance, or enters into a loan agreement or other financing, other than certain Excluded Debt (as defined in the

Notes), then the Company must prepay the Notes in full. The Notes are unsecured and have priority over all other unsecured indebtedness

of the Company, except for certain Senior Indebtedness (as defined in the Notes). The Notes contain customary affirmative and negative

covenants and events of default for a loan of this type. Subject to Shareholder Approval (as defined below),

the Notes are convertible into common shares at the option of the holders at any time on or following the date that an Event of Default

(as defined in the Notes) occurs at a conversion price equal to 90% of the lowest volume weighted average price of the Company’s

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). The conversion price of the Notes is 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 price, subject to certain exceptions. The terms of the Warrants are set forth in a

warrant agency agreement, dated August 11, 2023 (the “Warrant Agreement”), between the Company and VStock Transfer, LLC,

the Company’s transfer agent. Subject to Shareholder Approval, the Warrants are exercisable for a period five (5) years at an exercise

price of $0.1830 (subject to standard adjustments for share splits, share combinations, share dividends, reclassifications, mergers,

consolidations, reorganizations and similar transactions) and may be exercised on a cashless basis if at the time of exercise there is

no effective registration statement registering, or the prospectus contained therein is not available for, the issuance of common shares

upon exercise thereof. Pursuant to the Purchase Agreement, the Company

is required to hold a special meeting of its shareholders on or before the date that is sixty (60) calendar days after the date of the

Purchase Agreement for the purpose of obtaining shareholder approval of the issuance of all common shares that may be issued upon conversion

of the Notes and exercise of the Warrants in accordance with NYSE American rules (the “Shareholder Approval”). In addition,

the Notes and the Warrants contain an ownership limitation, such that the Company shall not effect any conversion or exercise, and the

holders shall not have the right to convert or exercise, any portion of the Notes or the Warrants to the extent that after giving effect

to the issuance of common shares upon conversion or exercise, such holder, together with its affiliates and any other persons acting

as a group together with such 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, which such percentage may be

increased or decreased by the holder, but not in excess of 9.99%, upon at least 61 days’ prior notice to the Company. In connection with the Private Placement, the

Company also entered into a registration rights agreement (the “Registration Rights Agreement”) with the Investors, pursuant

to which the Company agreed to file a registration statement to register all common shares underlying the Notes and the Warrants under

the Securities Act of 1933, as amended (the “Securities Act”), within fifteen (15) days following an Event of Default and

use its best efforts to cause such registration statement to be declared effective within ninety (90) days after the filing thereof.

If the Company fails to meet these deadlines or comply with certain other requirements in the Registration Rights Agreement, then on

each date that the Company fails to comply, and on each monthly anniversary thereof, the Company shall pay to each Investor an amount

in cash, as partial liquidated damages and not as a penalty, equal to 1.0% of the aggregate subscription amount paid by such Investor

pursuant to the Purchase Agreement, subject to an aggregate cap of 10%. If the Company fails to pay any of these amounts in full within

seven (7) days after the date payable, the Company must pay interest thereon at a rate of 18% per annum (or such lesser maximum amount

that is permitted to be paid by applicable law). 29 Spartan Capital Securities, LLC (the “Placement

Agent”) acted as placement agent in connection with the Private Placement pursuant to a letter agreement, dated August 11, 2023,

between the Company and the Placement Agent (the “Placement Agency Agreement”), and received (i) a cash transaction fee equal

to 6% of the aggregate gross proceeds, (ii) a non-accountable and non-reimbursable due diligence and expense fee equal to 1% of the aggregate

gross proceeds and (iii) a warrant for the purchase of a number of common shares equal to eight percent (8%) of the number common shares

issuable upon conversion of the Notes and exercise of the Warrants at an exercise price of $0.2013 per share (subject to adjustment) (the

“Placement Agent Warrant”). The Placement Agent Warrant is exercisable at any time on or after the date that is the six months

after the date of issuance and until the fifth anniversary thereof. Conversion

of Promissory Notes On August 4, 2023, we received notices from Mast

Hill Fund, L.P., or Mast Hill, and Leonite Fund I, LP, or Leonite, that an event of default has occurred under the promissory notes

issued to them on February 3, 2023 for failure to make certain payments when due. Mast Hill and Leonite agreed in writing that they will

not require any payments in cash for the over-due amounts or accelerate the payments due under the notes for a period of 60 days. Since

an event of default has occurred, Mast Hill and Leonite have the right to convert the notes, including the over-due amounts, into common

shares at their election. On

August 4, 2023, Mast Hill converted $72,560.65 of principal and certain penalties and fees into 553,505 common shares. On

August 4, 2023, Leonite converted $329,440.06 of principal and interest into 2,000,000 common shares. On August 9, 2023, we received notices from Mast

Hill and Leonite that an event of default has occurred under the promissory notes issued to them on February 9, 2023 for failure to make

certain payments when due. Mast Hill and Leonite agreed in writing that they will not require any payments in cash for the over-due amounts

or accelerate the payments due under the notes for a period of 60 days. Since an event of default has occurred, Mast Hill and Leonite

have the right to convert the notes, including the over-due amounts, into common shares at their election. On August 9, 2023, Mast Hill converted $100,000 of penalties and fees into 672,043 common shares. See

also “—Liquidity and Capital Resources—Debt—Promissory Notes issued in Private Placement” below. Management

Fees On

April 15, 2013, we and our manager entered into a management services agreement, pursuant to which we are required to pay our manager

a quarterly management fee equal to 0.5% of our adjusted net assets for services performed (which we refer to as 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 our 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) our manager as of the end of

such fiscal quarter, and (iii) increased by the amount of any outstanding accrued and unpaid parent management fees. We did not expense

any parent management fees for the three and six months ended June 30, 2023 and 2022. 30 1847

Asien entered into an offsetting management services agreement with our manager on May 28, 2020, 1847 Cabinet entered into an offsetting