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

text stringlengths 0 1.95M
interest in all of our assets. 40 6%
Subordinated Convertible Promissory Notes 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, the sellers of High Mountain and Innovative Cabinets. On July 26, 2022, we 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 an aggregate of 800,000 common shares at a conversion price of $4.20 per share. As a result, we recognized
a loss on extinguishment of debt of $1,280,000. The remaining principal balance of the notes at June 30, 2023 is $2,311,400, net of debt
discounts of $208,946, and an accrued interest balance of $457,458. The
notes bear interest at a rate of six percent (6%) per annum and are due and payable on October 8, 2024; provided that upon an event of
default (as defined in the notes), such interest rate shall increase to ten percent (10%) per annum. 1847 Cabinet may prepay the notes
in whole or in part, without penalty or premium, upon ten (10) business days prior written notice to the holders of the notes. On
October 8, 2021, we entered into an exchange agreement with the holders, pursuant to which we granted them the right to exchange
all of the principal amount and accrued but unpaid interest under the notes or any portion thereof for a number of our common shares
to be determined by dividing the amount to be converted by an exchange price equal to the higher of (i) the 30-day volume weighted
average price for our common shares on the primary national securities exchange or over-the-counter market on which our common shares
are traded over the thirty (30) trading days immediately prior to the applicable exchange date or (ii) $10.00 (subject to equitable adjustments
for stock splits, stock combinations, recapitalizations and similar transactions). The
notes contain customary events of default, including in the event of a default under the secured convertible promissory notes described
above. The rights of the holders to receive payments under the notes are subordinated to the rights of the purchasers under secured convertible
promissory notes described above. 6%
Amortizing Promissory Note On
July 29, 2020, 1847 Asien entered into a securities purchase agreement with Joerg Christian Wilhelmsen and Susan Kay Wilhelmsen, as trustees
of the Wilhelmsen Family Trust, U/D/T Dated May 1, 1992, pursuant to which 1847 Asien issued a two-year 6% amortizing promissory note
in the aggregate principal amount of $1,037,500. The note was subsequently amended on multiple occasions. Pursuant to the latest amendment,
the parties agreed to extend the maturity date of the note to July 30, 2023 and revised the repayment terms so that the outstanding principal
amount and all accrued interest thereon shall be payable in three payments on April 6, 2023, June 30, 2023 and July 30, 2023. The note
is unsecured and contains customary events of default. The remaining principal and accrued interest balance of the note at June 30, 2023
was $699,674. Related
Party Promissory Note On
September 30, 2020, a portion of the purchase price for the acquisition of Kyle’s was paid by the issuance of a promissory note
by 1847 Cabinet to Stephen Mallatt, Jr. and Rita Mallatt in the principal amount of $1,260,000. Payment of the principal and accrued
interest on the note was subject to vesting. On July 26, 2022, we 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 vesting note into 189,815 common shares at a conversion
price of $4.20 per share. As a result, we recognized a loss on extinguishment of debt of $303,706. Pursuant to the conversion agreement,
the note was cancelled, and we agreed to pay $558,734 to Stephen Mallatt, Jr. and Rita Mallatt no later than October 1, 2022. On March
30, 2023, we entered into an amendment to the conversion agreement, effective retroactively to October 1, 2022. Pursuant to the amendment,
we agreed to pay a total of $642,544 in three monthly payments commencing on April 5, 2023. The remaining principal and accrued interest
balance of the note at June 30, 2023 was $578,290. Financing
Leases On
February 14, 2019, High Mountain entered into an equipment financing lease to purchase equipment for $24,337, which matures in January
2024. The balance payable was $3,235 as of June 30, 2023. On
April 10, 2019, High Mountain entered into an equipment financing lease to purchase equipment for $67,577, which matures in April 2024.
The balance payable was $12,912 as of June 30, 2023. On
June 2, 2020, High Mountain entered into an equipment financing lease to purchase equipment for $9,240, which matures in May 2024. The
balance payable was $2,249 as of June 30, 2023. On
May 6, 2021, Kyle’s entered into an equipment financing lease to purchase equipment for $276,896, which matures in December 2027.
The balance payable was $208,742 as of June 30, 2023. On
October 12, 2021, Kyle’s entered into an equipment financing lease to purchase equipment for $245,376, which matures in December
2027. The balance payable was $185,418 as of June 30, 2023. On
March 28, 2022, Kyle’s entered into an equipment financing lease to purchase machinery and equipment for $316,798, which matures
in January 2028. The balance payable was $250,934 as of June 30, 2023. 41 On
April 11, 2022, Kyle’s entered into an equipment financing lease to purchase machinery and equipment for $11,706, which matures
in June 2027. The balance payable was $9,223 as of June 30, 2023. On
July 13, 2022, Kyle’s entered into an equipment financing lease to purchase machinery and equipment for $240,260, which matures
in June 2028. The balance payable was $205,612 as of June 30, 2023. Vehicle
Loans Asien’s
has entered into five retail installment sale contracts pursuant to which it agreed to finance its delivery trucks at rates ranging from
3.74% to 8.72% with an aggregate remaining principal amount of $78,956 as of June 30, 2023. Kyle’s
has entered into two retail installment sale contracts pursuant to which it agreed to finance its delivery trucks at rates ranging from
5.90% to 6.54% with an aggregate remaining principal amount of $43,968 as of June 30, 2023. High
Mountain has entered into ten retail installment sale contracts pursuant to which it agreed to finance delivery trucks and equipment
at rates ranging from 3.74% to 6.34% with an aggregate remaining principal amount of 48,628 as of June 30, 2023. Innovative
Cabinets has entered into two retail installment sale contracts pursuant to which it agreed to finance delivery trucks and equipment
at rates of 3.74% with an aggregate remaining principal amount of $11,546 as of June 30, 2023. Total
Debt The
following table shows aggregate figures for the total debt, net of discounts, described above that is coming due in the short and long
term as of June 30, 2023. See the above disclosures for more details regarding these loans. Short-Term Long-Term Total
Debt Revolving Loan $ 1,815,003 $ - $ 1,815,003 Sale of Future Receivables Note 1,131,120 - 1,131,120 Promissory Notes issued in Private Placements 2,760,950 - 2,760,950 6% Subordinated Promissory Note 500,000 - 500,000 Secured Convertible Promissory Notes - 22,737,796 22,737,796 6% Subordinated Convertible Promissory Notes - 2,311,400 2,311,400 6% Amortizing Promissory Note 465,805 - 465,805 Related Party Promissory Note 362,779 - 362,779 Financing Leases 185,806 692,519 878,325 Vehicle Loans 71,685 111,413 183,098 Total $ 7,293,148 $ 25,853,128 $ 33,146,276 Contractual
Obligations Our
principal commitments consist mostly of obligations under the loans described above and other contractual commitments described below. We
have engaged our manager to manage our day-to-day operations and affairs. Our relationship with our manager will be governed principally
by the following agreements: ● the
management services agreement and offsetting management services agreements relating to the
management services our manager will perform for us and the businesses we own and the management
fee to be paid to our manager in respect thereof; and ● our
operating agreement setting forth our manager’s rights with respect to the allocation
shares it owns, including the right to receive profit allocations from us, and the supplemental
put provision relating to our manager’s right to cause us to purchase the allocation
shares it owns. 42 Off-Balance
Sheet Arrangements We
have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. Critical
Accounting Policies and Estimates The
preparation of the unaudited condensed consolidated financial statements requires our management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.
On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on
various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. For
a description of the accounting policies that, in management’s opinion, involve the most significant application of judgment or
involve complex estimation and which could, if different judgment or estimates were made, materially affect our reported financial position,
results of operations, or cash flows, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations
– Critical Accounting Policies” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with
the Securities and Exchange Commission, or the SEC, on April 11, 2023. ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not
applicable. ITEM
4. CONTROLS AND PROCEDURES. Evaluation
of Disclosure Controls and Procedures We
maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, or the
Exchange Act). Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required
to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including

interest in all of our assets. 40 6%

Subordinated Convertible Promissory Notes 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, the sellers of High Mountain and Innovative Cabinets. On July 26, 2022, we 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 an aggregate of 800,000 common shares at a conversion price of $4.20 per share. As a result, we recognized

a loss on extinguishment of debt of $1,280,000. The remaining principal balance of the notes at June 30, 2023 is $2,311,400, net of debt

discounts of $208,946, and an accrued interest balance of $457,458. The

notes bear interest at a rate of six percent (6%) per annum and are due and payable on October 8, 2024; provided that upon an event of

default (as defined in the notes), such interest rate shall increase to ten percent (10%) per annum. 1847 Cabinet may prepay the notes

in whole or in part, without penalty or premium, upon ten (10) business days prior written notice to the holders of the notes. On

October 8, 2021, we entered into an exchange agreement with the holders, pursuant to which we granted them the right to exchange

all of the principal amount and accrued but unpaid interest under the notes or any portion thereof for a number of our common shares

to be determined by dividing the amount to be converted by an exchange price equal to the higher of (i) the 30-day volume weighted

average price for our common shares on the primary national securities exchange or over-the-counter market on which our common shares

are traded over the thirty (30) trading days immediately prior to the applicable exchange date or (ii) $10.00 (subject to equitable adjustments

for stock splits, stock combinations, recapitalizations and similar transactions). The

notes contain customary events of default, including in the event of a default under the secured convertible promissory notes described

above. The rights of the holders to receive payments under the notes are subordinated to the rights of the purchasers under secured convertible

promissory notes described above. 6%

Amortizing Promissory Note On

July 29, 2020, 1847 Asien entered into a securities purchase agreement with Joerg Christian Wilhelmsen and Susan Kay Wilhelmsen, as trustees

of the Wilhelmsen Family Trust, U/D/T Dated May 1, 1992, pursuant to which 1847 Asien issued a two-year 6% amortizing promissory note

in the aggregate principal amount of $1,037,500. The note was subsequently amended on multiple occasions. Pursuant to the latest amendment,

the parties agreed to extend the maturity date of the note to July 30, 2023 and revised the repayment terms so that the outstanding principal

amount and all accrued interest thereon shall be payable in three payments on April 6, 2023, June 30, 2023 and July 30, 2023. The note

is unsecured and contains customary events of default. The remaining principal and accrued interest balance of the note at June 30, 2023

was $699,674. Related

Party Promissory Note On

September 30, 2020, a portion of the purchase price for the acquisition of Kyle’s was paid by the issuance of a promissory note

by 1847 Cabinet to Stephen Mallatt, Jr. and Rita Mallatt in the principal amount of $1,260,000. Payment of the principal and accrued

interest on the note was subject to vesting. On July 26, 2022, we 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 vesting note into 189,815 common shares at a conversion

price of $4.20 per share. As a result, we recognized a loss on extinguishment of debt of $303,706. Pursuant to the conversion agreement,

the note was cancelled, and we agreed to pay $558,734 to Stephen Mallatt, Jr. and Rita Mallatt no later than October 1, 2022. On March

30, 2023, we entered into an amendment to the conversion agreement, effective retroactively to October 1, 2022. Pursuant to the amendment,

we agreed to pay a total of $642,544 in three monthly payments commencing on April 5, 2023. The remaining principal and accrued interest

balance of the note at June 30, 2023 was $578,290. Financing

Leases On

February 14, 2019, High Mountain entered into an equipment financing lease to purchase equipment for $24,337, which matures in January

2024. The balance payable was $3,235 as of June 30, 2023. On

April 10, 2019, High Mountain entered into an equipment financing lease to purchase equipment for $67,577, which matures in April 2024.

The balance payable was $12,912 as of June 30, 2023. On

June 2, 2020, High Mountain entered into an equipment financing lease to purchase equipment for $9,240, which matures in May 2024. The

balance payable was $2,249 as of June 30, 2023. On

May 6, 2021, Kyle’s entered into an equipment financing lease to purchase equipment for $276,896, which matures in December 2027.

The balance payable was $208,742 as of June 30, 2023. On

October 12, 2021, Kyle’s entered into an equipment financing lease to purchase equipment for $245,376, which matures in December

2027. The balance payable was $185,418 as of June 30, 2023. On

March 28, 2022, Kyle’s entered into an equipment financing lease to purchase machinery and equipment for $316,798, which matures

in January 2028. The balance payable was $250,934 as of June 30, 2023. 41 On

April 11, 2022, Kyle’s entered into an equipment financing lease to purchase machinery and equipment for $11,706, which matures

in June 2027. The balance payable was $9,223 as of June 30, 2023. On

July 13, 2022, Kyle’s entered into an equipment financing lease to purchase machinery and equipment for $240,260, which matures

in June 2028. The balance payable was $205,612 as of June 30, 2023. Vehicle

Loans Asien’s

has entered into five retail installment sale contracts pursuant to which it agreed to finance its delivery trucks at rates ranging from

3.74% to 8.72% with an aggregate remaining principal amount of $78,956 as of June 30, 2023. Kyle’s

has entered into two retail installment sale contracts pursuant to which it agreed to finance its delivery trucks at rates ranging from

5.90% to 6.54% with an aggregate remaining principal amount of $43,968 as of June 30, 2023. High

Mountain has entered into ten retail installment sale contracts pursuant to which it agreed to finance delivery trucks and equipment

at rates ranging from 3.74% to 6.34% with an aggregate remaining principal amount of 48,628 as of June 30, 2023. Innovative

Cabinets has entered into two retail installment sale contracts pursuant to which it agreed to finance delivery trucks and equipment

at rates of 3.74% with an aggregate remaining principal amount of $11,546 as of June 30, 2023. Total

Debt The

following table shows aggregate figures for the total debt, net of discounts, described above that is coming due in the short and long

term as of June 30, 2023. See the above disclosures for more details regarding these loans. Short-Term Long-Term Total

Debt Revolving Loan $ 1,815,003 $ - $ 1,815,003 Sale of Future Receivables Note 1,131,120 - 1,131,120 Promissory Notes issued in Private Placements 2,760,950 - 2,760,950 6% Subordinated Promissory Note 500,000 - 500,000 Secured Convertible Promissory Notes - 22,737,796 22,737,796 6% Subordinated Convertible Promissory Notes - 2,311,400 2,311,400 6% Amortizing Promissory Note 465,805 - 465,805 Related Party Promissory Note 362,779 - 362,779 Financing Leases 185,806 692,519 878,325 Vehicle Loans 71,685 111,413 183,098 Total $ 7,293,148 $ 25,853,128 $ 33,146,276 Contractual

Obligations Our

principal commitments consist mostly of obligations under the loans described above and other contractual commitments described below. We

have engaged our manager to manage our day-to-day operations and affairs. Our relationship with our manager will be governed principally

by the following agreements: ● the

management services agreement and offsetting management services agreements relating to the

management services our manager will perform for us and the businesses we own and the management

fee to be paid to our manager in respect thereof; and ● our

operating agreement setting forth our manager’s rights with respect to the allocation

shares it owns, including the right to receive profit allocations from us, and the supplemental

put provision relating to our manager’s right to cause us to purchase the allocation

shares it owns. 42 Off-Balance

Sheet Arrangements We

have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition,

changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. Critical

Accounting Policies and Estimates The

preparation of the unaudited condensed consolidated financial statements requires our management to make estimates and assumptions that

affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on

various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. For

a description of the accounting policies that, in management’s opinion, involve the most significant application of judgment or

involve complex estimation and which could, if different judgment or estimates were made, materially affect our reported financial position,

results of operations, or cash flows, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations

– Critical Accounting Policies” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with

the Securities and Exchange Commission, or the SEC, on April 11, 2023. ITEM

3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not

applicable. ITEM

4. CONTROLS AND PROCEDURES. Evaluation

of Disclosure Controls and Procedures We

maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, or the

Exchange Act). Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required

to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time

periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including