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

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of the Company’s outstanding warrants include an “full ratchet” feature, whereby the
exercise price was reset to $ 5.20 and the number of shares underlying the warrants was increased in the same proportion as the exercise
price decrease. As a result, the Company recognized a deemed dividend of approximately $ 6.4 million, which was calculated using
a Black-Scholes pricing model. From
July 12, 2022 to September 15, 2022, warrants for the purchase of 209,635 common shares were exercised on a cashless basis resulting
in the issuance of 126,669 common shares. On
August 5, 2022, the Company issued a common share purchase warrant to each of Craft Capital Management LLC and R.F. Lafferty & Co.
Inc., the representatives of the underwriters for the public offering described above, for the purchase of 35,715 common shares at an
exercise price of $ 5.25 , subject to adjustments. The warrants will be exercisable at any time and from time to time, in whole or in part,
during the period commencing on February 5, 2023 and ending on August 2, 2027 and may be exercised on a cashless basis under certain
circumstances. As
a result of the public offering, the exercise price of certain of the Company’s outstanding warrants was adjusted to $ 4.20 pursuant
to certain antidilution provisions of such warrants (down round feature). In addition, certain of the Company’s outstanding warrants
include an “full ratchet” feature, whereby the exercise price was reset to $ 4.20 and
the number of shares underlying the warrants was increased in the same proportion as the exercise price decrease. As a result,
the Company recognized a deemed dividend of approximately $ 2.6 million, which was calculated using a Black-Scholes pricing model. 23 1847
HOLDINGS LLC NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER
30, 2022 (UNAUDITED) Below
is a table summarizing the changes in warrants outstanding during the nine months ended September 30, 2022: Warrants Weighted- Average Exercise Price Outstanding at December 31, 2021 1,300,122 $ 9.52 Granted (1) 1,978,432 5.25 Exercised ( 209,635 ) ( 5.58 ) Outstanding at September 30, 2022 3,068,919 $ 5.10 Exercisable at September 30, 2022 2,997,489 $ 5.10 (1) Includes the issuance of warrants for the purchase of 295,427 common shares and an increase of 1,683,005 common shares underlying warrants pursuant to the adjustments described above. As
of September 30, 2022, the outstanding warrants have a weighted average remaining contractual life of 1.68 years and a total intrinsic
value of $ 98,125 . NOTE 13—EARNINGS
(LOSS) PER SHARE The
computation of weighted average shares outstanding and the basic and diluted loss per common share attributable to common shareholders
for the three and nine months ended September 30, 2022 consisted of the followin Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 Net loss per common share attributable to common shareholders’ ( 13,440,062 ) $ ( 14,801,040 ) Weighted average common shares outstanding 2,979,949 1,832,076 Basic and diluted loss per share $ ( 4.51 ) $ ( 8.08 ) For
the three and nine months ended September 30, 2022, there were 6,462,938 potential common share equivalents from warrants, convertible
debt, and series A and B convertible preferred shares excluded from the diluted earnings per share calculations as their effect is anti-dilutive. For
the three and nine months ended September 30, 2021, there were 547,459 potential common share equivalents from warrants excluded from
the diluted earnings per share calculations as their effect is anti-dilutive. NOTE 14—SUBSEQUENT
EVENTS On
October 20, 2022, 1847 Asien and Joerg Christian Wilhelmsen and Susan Kay Wilhelmsen, as trustees of the Wilhelmsen Family Trust, U/D/T
Dated May 1, 1992 entered into a letter agreement to amend the terms of that certain 6 % amortizing promissory note in the aggregate principal
amount of $ 1,037,500 . Pursuant to the letter agreement, the parties agreed to extend the maturity date of this note to February 28, 2023 and revised the repayment terms so that the outstanding principal amount and all accrued interest thereon shall be payable monthly, beginning
on November 30, 2022, in accordance with the payment schedule set forth on Exhibit A to the letter agreement. As additional consideration
for entering into the letter agreement, 1847 Asien also agreed to pay the lender $ 87,707 as an amendment fee. 24 ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The
following management’s discussion and analysis of financial condition and results of operations provides information that management
believes is relevant to an assessment and understanding of our plans and financial condition . The following financial information
is derived from our financial statements and should be read in conjunction with such financial statements and notes thereto set forth
elsewhere herein. Use of
Terms Except
as otherwise indicated by the context and for the purposes of this report only, references in this report to “we,” “us,”
“our” and the “Company” refer to 1847 Holdings LLC, a Delaware limited liability company, and its consolidated
subsidiaries. References to the “Manager” refer to 1847 Partners LLC, a Delaware limited liability company. Special
Note Regarding Forward Looking Statements This
report contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently
available to us. All statements other than statements of historical facts are forward-looking statements. These statements relate to
future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause
our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity,
performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements include, but are not
limited to, statements ab ● our
ability to effectively integrate and operate the businesses that we acquire; ● our
ability to successfully identify and acquire additional businesses; ● our
organizational structure, which may limit our ability to meet our dividend and distribution
policy; ● our
ability to service and comply with the terms of indebtedness; ● our
cash flow available for distribution and our ability to make distributions to our common
shareholders; ● our
ability to pay the management fee, profit allocation and put price to the Manager when due; ● labor
disputes, strikes or other employee disputes or grievances; ● the
regulatory environment in which our businesses operate under; ● trends
in the industries in which our businesses operate; ● the
competitive environment in which our businesses operate; ● changes
in general economic or business conditions or economic or demographic trends in the United
States including changes in interest rates and inflation; ● our
and the Manager’s ability to retain or replace qualified employees of our businesses
and the Manager; ● casualties,
condemnation or catastrophic failures with respect to any of our business’ facilities; ● costs
and effects of legal and administrative proceedings, settlements, investigations and claims;
and ● extraordinary
or force majeure events affe cting
the business or operations of our businesses. In
some cases, you can identify forward-looking statements by terms such as “may,” “could,” “will,”
“should,” “would,” “expect,” “plan,” “intend,” “anticipate,”
“believe,” “estimate,” “predict,” “potential,” “project” or “continue”
or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance
on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases,
beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current
expectations include, among other things, those listed under Item 1A “Risk Factors” included in our annual report on Form
10-K for the year ended December 31, 2021. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove
to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No
forward-looking statement is a guarantee of future performance. 25 In
addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These
statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable
basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have
conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain
and investors are cautioned not to unduly rely upon these statements. The
forward-looking statements made in this report relate only to events or information as of the date on which the statements are made in
this report. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking
statements, whether as a result of new information, future events, changed circumstances or any other reason. Overview We
are an acquisition holding company focused on acquiring and managing a group of small businesses, which we characterize as those that
have an enterprise value of less than $50 million, in a variety of different industries headquartered in North America. On
May 28, 2020, our subsidiary 1847 Asien Inc. (“1847 Asien”) acquired Asien’s Appliance, Inc., a California corporation
(“Asien’s”). Asien’s has been in business since 1948 serving the North Bay area of Sonoma County, California.
It provides a wide variety of appliance services, including sales, delivery/installation, in-home service and repair, extended warranties,
and financing. Its main focus is delivering personal sales and exceptional service to its customers at competitive prices. On
September 30, 2020, our subsidiary 1847 Cabinet Inc. (“1847 Cabinet”) acquired Kyle’s Custom Wood Shop, Inc., an Idaho
corporation (“Kyle’s”). Kyle’s is a leading custom cabinetry maker servicing contractors and homeowners since
1976 in Boise, Idaho and the surrounding area. Kyle’s focuses on designing, building, and installing custom cabinetry primarily
for custom and semi-custom builders. On
March 30, 2021, our subsidiary 1847 Wolo Inc. (“1847 Wolo”) acquired Wolo Mfg. Corp., a New York corporation, and Wolo Industrial

of the Company’s outstanding warrants include an “full ratchet” feature, whereby the

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

price decrease. As a result, the Company recognized a deemed dividend of approximately $ 6.4 million, which was calculated using

a Black-Scholes pricing model. From

July 12, 2022 to September 15, 2022, warrants for the purchase of 209,635 common shares were exercised on a cashless basis resulting

in the issuance of 126,669 common shares. On

August 5, 2022, the Company issued a common share purchase warrant to each of Craft Capital Management LLC and R.F. Lafferty & Co.

Inc., the representatives of the underwriters for the public offering described above, for the purchase of 35,715 common shares at an

exercise price of $ 5.25 , subject to adjustments. The warrants will be exercisable at any time and from time to time, in whole or in part,

during the period commencing on February 5, 2023 and ending on August 2, 2027 and may be exercised on a cashless basis under certain

circumstances. As

a result of the public offering, the exercise price of certain of the Company’s outstanding warrants was adjusted to $ 4.20 pursuant

to certain antidilution provisions of such warrants (down round feature). In addition, certain of the Company’s outstanding warrants

include an “full ratchet” feature, whereby the exercise price was reset to $ 4.20 and

the number of shares underlying the warrants was increased in the same proportion as the exercise price decrease. As a result,

the Company recognized a deemed dividend of approximately $ 2.6 million, which was calculated using a Black-Scholes pricing model. 23 1847

HOLDINGS LLC NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER

30, 2022 (UNAUDITED) Below

is a table summarizing the changes in warrants outstanding during the nine months ended September 30, 2022: Warrants Weighted- Average Exercise Price Outstanding at December 31, 2021 1,300,122 $ 9.52 Granted (1) 1,978,432 5.25 Exercised ( 209,635 ) ( 5.58 ) Outstanding at September 30, 2022 3,068,919 $ 5.10 Exercisable at September 30, 2022 2,997,489 $ 5.10 (1) Includes the issuance of warrants for the purchase of 295,427 common shares and an increase of 1,683,005 common shares underlying warrants pursuant to the adjustments described above. As

of September 30, 2022, the outstanding warrants have a weighted average remaining contractual life of 1.68 years and a total intrinsic

value of $ 98,125 . NOTE 13—EARNINGS

(LOSS) PER SHARE The

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

for the three and nine months ended September 30, 2022 consisted of the followin Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 Net loss per common share attributable to common shareholders’ ( 13,440,062 ) $ ( 14,801,040 ) Weighted average common shares outstanding 2,979,949 1,832,076 Basic and diluted loss per share $ ( 4.51 ) $ ( 8.08 ) For

the three and nine months ended September 30, 2022, there were 6,462,938 potential common share equivalents from warrants, convertible

debt, and series A and B convertible preferred shares excluded from the diluted earnings per share calculations as their effect is anti-dilutive. For

the three and nine months ended September 30, 2021, there were 547,459 potential common share equivalents from warrants excluded from

the diluted earnings per share calculations as their effect is anti-dilutive. NOTE 14—SUBSEQUENT

EVENTS On

October 20, 2022, 1847 Asien and Joerg Christian Wilhelmsen and Susan Kay Wilhelmsen, as trustees of the Wilhelmsen Family Trust, U/D/T

Dated May 1, 1992 entered into a letter agreement to amend the terms of that certain 6 % amortizing promissory note in the aggregate principal

amount of $ 1,037,500 . Pursuant to the letter agreement, the parties agreed to extend the maturity date of this note to February 28, 2023 and revised the repayment terms so that the outstanding principal amount and all accrued interest thereon shall be payable monthly, beginning

on November 30, 2022, in accordance with the payment schedule set forth on Exhibit A to the letter agreement. As additional consideration

for entering into the letter agreement, 1847 Asien also agreed to pay the lender $ 87,707 as an amendment fee. 24 ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The

following management’s discussion and analysis of financial condition and results of operations provides information that management

believes is relevant to an assessment and understanding of our plans and financial condition . The following financial information

is derived from our financial statements and should be read in conjunction with such financial statements and notes thereto set forth

elsewhere herein. Use of

Terms Except

as otherwise indicated by the context and for the purposes of this report only, references in this report to “we,” “us,”

“our” and the “Company” refer to 1847 Holdings LLC, a Delaware limited liability company, and its consolidated

subsidiaries. References to the “Manager” refer to 1847 Partners LLC, a Delaware limited liability company. Special

Note Regarding Forward Looking Statements This

report contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently

available to us. All statements other than statements of historical facts are forward-looking statements. These statements relate to

future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause

our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity,

performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements include, but are not

limited to, statements ab ● our

ability to effectively integrate and operate the businesses that we acquire; ● our

ability to successfully identify and acquire additional businesses; ● our

organizational structure, which may limit our ability to meet our dividend and distribution

policy; ● our

ability to service and comply with the terms of indebtedness; ● our

cash flow available for distribution and our ability to make distributions to our common

shareholders; ● our

ability to pay the management fee, profit allocation and put price to the Manager when due; ● labor

disputes, strikes or other employee disputes or grievances; ● the

regulatory environment in which our businesses operate under; ● trends

in the industries in which our businesses operate; ● the

competitive environment in which our businesses operate; ● changes

in general economic or business conditions or economic or demographic trends in the United

States including changes in interest rates and inflation; ● our

and the Manager’s ability to retain or replace qualified employees of our businesses

and the Manager; ● casualties,

condemnation or catastrophic failures with respect to any of our business’ facilities; ● costs

and effects of legal and administrative proceedings, settlements, investigations and claims;

and ● extraordinary

or force majeure events affe cting

the business or operations of our businesses. In

some cases, you can identify forward-looking statements by terms such as “may,” “could,” “will,”

“should,” “would,” “expect,” “plan,” “intend,” “anticipate,”

“believe,” “estimate,” “predict,” “potential,” “project” or “continue”

or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance

on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases,

beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current

expectations include, among other things, those listed under Item 1A “Risk Factors” included in our annual report on Form

10-K for the year ended December 31, 2021. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove

to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No

forward-looking statement is a guarantee of future performance. 25 In

addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These

statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable

basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have

conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain

and investors are cautioned not to unduly rely upon these statements. The

forward-looking statements made in this report relate only to events or information as of the date on which the statements are made in

this report. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking

statements, whether as a result of new information, future events, changed circumstances or any other reason. Overview We

are an acquisition holding company focused on acquiring and managing a group of small businesses, which we characterize as those that

have an enterprise value of less than $50 million, in a variety of different industries headquartered in North America. On

May 28, 2020, our subsidiary 1847 Asien Inc. (“1847 Asien”) acquired Asien’s Appliance, Inc., a California corporation

(“Asien’s”). Asien’s has been in business since 1948 serving the North Bay area of Sonoma County, California.

It provides a wide variety of appliance services, including sales, delivery/installation, in-home service and repair, extended warranties,

and financing. Its main focus is delivering personal sales and exceptional service to its customers at competitive prices. On

September 30, 2020, our subsidiary 1847 Cabinet Inc. (“1847 Cabinet”) acquired Kyle’s Custom Wood Shop, Inc., an Idaho

corporation (“Kyle’s”). Kyle’s is a leading custom cabinetry maker servicing contractors and homeowners since

1976 in Boise, Idaho and the surrounding area. Kyle’s focuses on designing, building, and installing custom cabinetry primarily

for custom and semi-custom builders. On

March 30, 2021, our subsidiary 1847 Wolo Inc. (“1847 Wolo”) acquired Wolo Mfg. Corp., a New York corporation, and Wolo Industrial