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

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“Prime Rate” as reported in the “Money Rates” column of The Wall Street Journal, adjusted as and when such prime
rate changes, plus (b) eight percent (8.00%), and (ii) fifteen percent (15.00%); provided that following and during the continuation
of an event of default (as defined in the loan agreement), interest on the unpaid principal balance of the advances shall accrue at an
annual rate equal to such rate plus three percent (3.00%). Interest accrued on the advances shall be payable monthly commencing on March
7, 2023. We may voluntarily prepay the entire unpaid principal amount of the note without premium or penalty; provided that in the event
that we make such prepayment on or before February 9, 2024, then we must pay certain fees set forth in the note. The note is secured
by all of the assets of 1847 ICU and ICU Eyewear. 38 The
loan agreement contains customary representations, warranties and affirmative and negative financial and other covenants for loans of
this type. The loan agreement contains customary events of default, including, among othe (i) for failure to pay principal and interest
on the note when due, or to pay any fees due under the loan agreement; (ii) for failure to perform any covenant or agreement contained
in the loan agreement or any document delivered in connection therewith; (iii) if any statement, representation or warranty in the loan
agreement or any document delivered in connection therewith is at any time found to have been false in any material respect at the time
such representation or warranty was made; (iv) if we default under any agreement or contract with a third party which default would result
in a liability to us in excess of $25,000; (v) for any voluntary or involuntary bankruptcy, insolvency, or dissolution or assignment
to creditors; (vi) if any judgments or attachments aggregating in excess of $10,000 at any given time are obtained against us which remain
unstayed for a period of ten (10) days or are enforced or if there is an indictment under an criminal statute or proceeding pursuant
to which remedies sought may include the forfeiture of any property; (vii) if a material adverse effect or change of control (each as
defined in the loan agreement) shall have occurred; (viii) for certain environmental claims; and (ix) for failure to notify the lender
of certain events or failure to deliver certain documentation required by the loan agreement. Purchase
and Sale of Future Receivables Agreement On
March 31, 2023, we entered into a non-recourse funding agreement with a third-party for the sale of future receivables totaling $1,965,000
for net cash proceeds of $1,410,000. We are required to make weekly ACH payments in the amount of $39,300. The agreement also allows
for the third-party to file UCCs securing their interest in the receivables and includes customary events of default. We recorded a debt
discount of $555,000, which will be amortized under the effective interest method. We are utilizing the prospective method to account
for subsequent changes in the estimated future payments, whereby if there is a change in the estimated future cash flows, a new effective
interest rate is determined based on the revised estimate of remaining cash flows. As of June 30, 2023, the effective interest rate was
72.4%. Promissory
Notes issued in Private Placement On
February 3, 2023, we entered into securities purchase agreements with two accredited investors, pursuant to which we 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,
we issued an aggregate of 125,833 common shares to the investors as a commitment fee. Additionally, we 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). On
February 9, 2023, we entered into securities purchase agreements with two accredited investors, pursuant to which we 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, we 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,
we 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). On
February 22, 2023, we entered into securities purchase agreement with one accredited investor, pursuant to which we issued to such investor
(i) a promissory note in the principal amount of $878,000 and (ii) five-year warrants for the purchase of an aggregate of 182,917 common
shares at an exercise price of $4.20 per share (subject to adjustment) for total cash proceeds of $737,700. As additional consideration,
we issued a five-year warrant for the purchase of 198,343 common shares at an exercise price of $0.01 per share (subject to adjustment)
to the investor as a commitment fee. Additionally, we issued a five-year warrant to J.H. Darbie & Co (the broker) for the purchase
of 7,526 common shares at an exercise price of $5.25 (subject to adjustment). In
the aggregate, we issued promissory notes in the aggregate principal amount of $4,039,575, warrants for the purchase of an aggregate
of 1,303,316 common shares, and 415,605 common shares for net proceeds of $3,549,518. The remaining principal balance of the notes at
June 30, 2023 is $2,760,950, net of debt discounts of $1,278,625, and an accrued interest balance of $184,696. These
notes bear interest at a rate of 12% per annum and mature on the first anniversary of the date of issuance; 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 notes require monthly payments of principal and interest commencing in May
2023. We may voluntarily prepay the outstanding principal amount and accrued interest of each note in whole upon payment of certain prepayment
fees. In addition, if at any time we receive cash proceeds 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 notes) or the sale of assets outside of the ordinary course of business, each holder shall have the
right in its sole discretion to require us to immediately apply up to 50% of such proceeds to repay all or any portion of the outstanding
principal amount and interest then due under the notes. The notes are unsecured and have priority over all other unsecured indebtedness.
The notes contain customary affirmative and negative covenants and events of default for a loan of this type. 39 The
notes become 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 under the notes at a conversion price equal the lower of (i) $4.20 (subject to adjustments) and (ii)
80% of the lowest volume weighted average price of the common shares on any trading day during the five (5) trading days prior to the
conversion date; provided that such conversion price shall not be less than $0.03 (subject to adjustments). As
a result of our issuance of common shares at an effective price of $0.5948 on April 30, 2023, the fixed conversion price of the notes
and the exercise price of all of the foregoing warrants was adjusted to $0.5948 pursuant to certain antidilution provisions (down round
feature). Secured
Convertible Promissory Notes On
October 8, 2021, we and each of our subsidiaries 1847 Asien, 1847 Wolo, 1847 Cabinet, Asien’s, Wolo, Kyle’s, High Mountain
and Innovative Cabinets, entered into a note purchase agreement with two institutional investors, pursuant to which we issued to these
purchasers secured convertible promissory notes in the aggregate principal amount of $24,860,000. The notes contain an aggregate original
issue discount of $497,200. As a result, the total purchase price was $24,362,800. After payment of expenses of $617,825, we received
net proceeds of $23,744,975, of which $10,687,500 was used to fund the cash portion of the purchase price for the acquisition of High
Mountain and Innovative Cabinets. In addition, as consideration for the financing, we granted the financing agent 187,500 warrants with
a fair value of $956,526 and 7.5% interest in High Mountain and Innovative Cabinets which had a fair value of $1,146,803. The agent fees
were reflected as a discount against the convertible note payable with the warrants being included in additional paid in capital and
the equity interest being included within noncontrolling interest on the consolidated balance sheet. The remaining principal balance
of the convertible notes at June 30, 2023 is $22,737,796, net of debt discounts of $2,122,204, and an accrued interest balance of $1,022,204. The
notes bear interest at a rate per annum equal to the greater of (i) 4.75% plus the U.S. Prime Rate that appears in The Wall Street
Journal from time to time or (ii) 8%; provided that, upon an event of default (as defined in the notes), such rate shall increase
to 24% or the maximum legal rate. Payments of interest only, computed at such rate on the outstanding principal amount, will be due and
payable quarterly in arrears commencing on January 1, 2022 and continuing on the first day of each calendar quarter thereafter through
and including the maturity date, October 8, 2026. We
may voluntarily prepay the notes in whole or in part upon payment of a prepayment fee in an amount equal to 10% of the principal and
interest paid in connection with such prepayment. In addition, immediately upon receipt by our company or any subsidiary of any proceeds
from any issuance of indebtedness (other than certain permitted indebtedness), any proceeds of any sale or disposition by our company
or any subsidiary of any of the collateral or any of its respective assets (other than asset sales or dispositions in the ordinary course
of business which are permitted by the note purchase agreement), or any proceeds from any casualty insurance policies or eminent domain,
condemnation or similar proceedings, we must prepay the notes in an amount equal to all such proceeds, net of reasonable and customary
transaction costs, fees and expenses properly attributable to such transaction and payable by our company or a subsidiary in connection
therewith (in each case, paid to non-affiliates). The
holders of the notes may, in their sole discretion, elect to convert any outstanding and unpaid principal portion of the notes, and any
accrued but unpaid interest on such portion, into our common shares at a conversion price equal to $0.5948 (subject to standard adjustments,
including a full ratchet antidilution adjustment); provided that the notes contain certain beneficial ownership limitations. Pursuant
to the terms of the notes, until the date that is eighteen (18) months after the issuance date of the notes, the holders shall have the
right, but not the obligation, to participate in any securities offering other than a permitted issuance (as defined in the note purchase
agreement) in an amount of up to the original principal amount of the notes. In addition, the holders shall have the right of first refusal
to participate in any issuance of indebtedness until the notes have been terminated; provided, however, that this right of first refusal
shall not apply to permitted issuances. The
note purchase agreement and the notes contain customary representations, warranties, affirmative and negative financial and other covenants
and events of default for loans of this type. The notes are guaranteed by each subsidiary and are secured by a first priority security

“Prime Rate” as reported in the “Money Rates” column of The Wall Street Journal, adjusted as and when such prime

rate changes, plus (b) eight percent (8.00%), and (ii) fifteen percent (15.00%); provided that following and during the continuation

of an event of default (as defined in the loan agreement), interest on the unpaid principal balance of the advances shall accrue at an

annual rate equal to such rate plus three percent (3.00%). Interest accrued on the advances shall be payable monthly commencing on March

7, 2023. We may voluntarily prepay the entire unpaid principal amount of the note without premium or penalty; provided that in the event

that we make such prepayment on or before February 9, 2024, then we must pay certain fees set forth in the note. The note is secured

by all of the assets of 1847 ICU and ICU Eyewear. 38 The

loan agreement contains customary representations, warranties and affirmative and negative financial and other covenants for loans of

this type. The loan agreement contains customary events of default, including, among othe (i) for failure to pay principal and interest

on the note when due, or to pay any fees due under the loan agreement; (ii) for failure to perform any covenant or agreement contained

in the loan agreement or any document delivered in connection therewith; (iii) if any statement, representation or warranty in the loan

agreement or any document delivered in connection therewith is at any time found to have been false in any material respect at the time

such representation or warranty was made; (iv) if we default under any agreement or contract with a third party which default would result

in a liability to us in excess of $25,000; (v) for any voluntary or involuntary bankruptcy, insolvency, or dissolution or assignment

to creditors; (vi) if any judgments or attachments aggregating in excess of $10,000 at any given time are obtained against us which remain

unstayed for a period of ten (10) days or are enforced or if there is an indictment under an criminal statute or proceeding pursuant

to which remedies sought may include the forfeiture of any property; (vii) if a material adverse effect or change of control (each as

defined in the loan agreement) shall have occurred; (viii) for certain environmental claims; and (ix) for failure to notify the lender

of certain events or failure to deliver certain documentation required by the loan agreement. Purchase

and Sale of Future Receivables Agreement On

March 31, 2023, we entered into a non-recourse funding agreement with a third-party for the sale of future receivables totaling $1,965,000

for net cash proceeds of $1,410,000. We are required to make weekly ACH payments in the amount of $39,300. The agreement also allows

for the third-party to file UCCs securing their interest in the receivables and includes customary events of default. We recorded a debt

discount of $555,000, which will be amortized under the effective interest method. We are utilizing the prospective method to account

for subsequent changes in the estimated future payments, whereby if there is a change in the estimated future cash flows, a new effective

interest rate is determined based on the revised estimate of remaining cash flows. As of June 30, 2023, the effective interest rate was

72.4%. Promissory

Notes issued in Private Placement On

February 3, 2023, we entered into securities purchase agreements with two accredited investors, pursuant to which we 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,

we issued an aggregate of 125,833 common shares to the investors as a commitment fee. Additionally, we 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). On

February 9, 2023, we entered into securities purchase agreements with two accredited investors, pursuant to which we 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, we 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,

we 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). On

February 22, 2023, we entered into securities purchase agreement with one accredited investor, pursuant to which we issued to such investor

(i) a promissory note in the principal amount of $878,000 and (ii) five-year warrants for the purchase of an aggregate of 182,917 common

shares at an exercise price of $4.20 per share (subject to adjustment) for total cash proceeds of $737,700. As additional consideration,

we issued a five-year warrant for the purchase of 198,343 common shares at an exercise price of $0.01 per share (subject to adjustment)

to the investor as a commitment fee. Additionally, we issued a five-year warrant to J.H. Darbie & Co (the broker) for the purchase

of 7,526 common shares at an exercise price of $5.25 (subject to adjustment). In

the aggregate, we issued promissory notes in the aggregate principal amount of $4,039,575, warrants for the purchase of an aggregate

of 1,303,316 common shares, and 415,605 common shares for net proceeds of $3,549,518. The remaining principal balance of the notes at

June 30, 2023 is $2,760,950, net of debt discounts of $1,278,625, and an accrued interest balance of $184,696. These

notes bear interest at a rate of 12% per annum and mature on the first anniversary of the date of issuance; 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 notes require monthly payments of principal and interest commencing in May

2023. We may voluntarily prepay the outstanding principal amount and accrued interest of each note in whole upon payment of certain prepayment

fees. In addition, if at any time we receive cash proceeds 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 notes) or the sale of assets outside of the ordinary course of business, each holder shall have the

right in its sole discretion to require us to immediately apply up to 50% of such proceeds to repay all or any portion of the outstanding

principal amount and interest then due under the notes. The notes are unsecured and have priority over all other unsecured indebtedness.

The notes contain customary affirmative and negative covenants and events of default for a loan of this type. 39 The

notes become 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 under the notes at a conversion price equal the lower of (i) $4.20 (subject to adjustments) and (ii)

80% of the lowest volume weighted average price of the common shares on any trading day during the five (5) trading days prior to the

conversion date; provided that such conversion price shall not be less than $0.03 (subject to adjustments). As

a result of our issuance of common shares at an effective price of $0.5948 on April 30, 2023, the fixed conversion price of the notes

and the exercise price of all of the foregoing warrants was adjusted to $0.5948 pursuant to certain antidilution provisions (down round

feature). Secured

Convertible Promissory Notes On

October 8, 2021, we and each of our subsidiaries 1847 Asien, 1847 Wolo, 1847 Cabinet, Asien’s, Wolo, Kyle’s, High Mountain

and Innovative Cabinets, entered into a note purchase agreement with two institutional investors, pursuant to which we issued to these

purchasers secured convertible promissory notes in the aggregate principal amount of $24,860,000. The notes contain an aggregate original

issue discount of $497,200. As a result, the total purchase price was $24,362,800. After payment of expenses of $617,825, we received

net proceeds of $23,744,975, of which $10,687,500 was used to fund the cash portion of the purchase price for the acquisition of High

Mountain and Innovative Cabinets. In addition, as consideration for the financing, we granted the financing agent 187,500 warrants with

a fair value of $956,526 and 7.5% interest in High Mountain and Innovative Cabinets which had a fair value of $1,146,803. The agent fees

were reflected as a discount against the convertible note payable with the warrants being included in additional paid in capital and

the equity interest being included within noncontrolling interest on the consolidated balance sheet. The remaining principal balance

of the convertible notes at June 30, 2023 is $22,737,796, net of debt discounts of $2,122,204, and an accrued interest balance of $1,022,204. The

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

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

to 24% or the maximum legal rate. Payments of interest only, computed at such rate on the outstanding principal amount, will be due and

payable quarterly in arrears commencing on January 1, 2022 and continuing on the first day of each calendar quarter thereafter through

and including the maturity date, October 8, 2026. We

may voluntarily prepay the notes in whole or in part upon payment of a prepayment fee in an amount equal to 10% of the principal and

interest paid in connection with such prepayment. In addition, immediately upon receipt by our company or any subsidiary of any proceeds

from any issuance of indebtedness (other than certain permitted indebtedness), any proceeds of any sale or disposition by our company

or any subsidiary of any of the collateral or any of its respective assets (other than asset sales or dispositions in the ordinary course

of business which are permitted by the note purchase agreement), or any proceeds from any casualty insurance policies or eminent domain,

condemnation or similar proceedings, we must prepay the notes in an amount equal to all such proceeds, net of reasonable and customary

transaction costs, fees and expenses properly attributable to such transaction and payable by our company or a subsidiary in connection

therewith (in each case, paid to non-affiliates). The

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

accrued but unpaid interest on such portion, into our common shares at a conversion price equal to $0.5948 (subject to standard adjustments,

including a full ratchet antidilution adjustment); provided that the notes contain certain beneficial ownership limitations. Pursuant

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

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

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

to participate in any issuance of indebtedness until the notes have been terminated; provided, however, that this right of first refusal

shall not apply to permitted issuances. The

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

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