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

text stringlengths 0 1.95M
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) $2.50 (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, or the Asien’s Seller, pursuant to which the Asien’s Seller sold 415,000 of our common shares to 1847 Asien a purchase price of $2.50 per share. As consideration, 1847 Asien issued to the Asien’s
Seller a two-year 6% amortizing promissory note in the aggregate principal amount of $1,037,500. On October 8, 2021, 1847 Asien and the
Asien’s Seller entered into amendment no. 1 to securities purchase agreement to amend certain terms of the securities purchase
agreement and the 6% amortizing promissory note. Pursuant to the amendment, the repayment terms of the 6% amortizing promissory note
were revised so that one-half (50%) of the outstanding principal amount ($518,750) and all accrued interest thereon shall be amortized
on a two-year straight-line basis and payable quarterly in accordance with the amortization schedule set forth on Exhibit A to the amendment,
except for the payments that were initially scheduled on January 1, 2022 and April 1, 2022, which were paid from the proceeds of the
senior convertible promissory notes described above, and the second-half (50%) of the outstanding principal amount ($518,750) and all
accrued, but unpaid interest thereon shall be paid on the second anniversary of the date of the 6% amortizing promissory note, along
with any other unpaid principal or accrued interest thereon. The note is unsecured and contains customary events of default. The remaining
principal balance of the note at December 31, 2021 was $581,963 and it had accrued interest of $21,758. Vesting
Promissory Note A
portion of the purchase price for the acquisition of Kyle’s on September 30, 2020 was paid by the issuance of a vesting promissory
note by 1847 Cabinet to Stephen Mallatt, Jr. and Rita Mallatt, or the Kyle’s Sellers, in the principal amount of $1,050,000, which
increased to a principal amount of up to $1,260,000 pursuant to the vested percentage calculation described below. Payment of the principal
and accrued interest on the note is subject to vesting as described below. The note bears interest on the vested portion of principal
amount at the rate of eight percent (8%) per annum. To the extent vested, the vested portion of the principal and all accrued but unpaid
interest on such vested portion of the principal shall be paid in one lump sum on the last day of the thirty-sixth (36th) month following
the date of the note. The
vested principal of the note due at the maturity date shall be calculated each year based on the average annual consolidated EBITDA (as
defined in the note) of 1847 Cabinet for each of the years ended December 31, 2020, 2021 and 2022. The EBITDA for each year shall be
divided by $1.4 million multiplied by 100 to obtain the vested percentage. The vested principal for each year shall be equal to the vested
percentage for that year multiplied by $350,000. To the extent that the vested percentage for the subject year is less than 80%, no portion
of the note for that year shall vest. To the extent that the vested percentage for the subject year is equal to or greater than 120%,
the vested principal shall be equal to $420,000 for that year and no more. For the year ended December 31, 2020, EBITDA of 1847 Cabinet
was approximately $1,531,000, resulting in a vested amount of approximately $415,000. For the year ended December 31, 2021, EBITDA of
1847 Cabinet was approximately $427,504, resulting in an additional vested amount of approximately $602,204. As of December 31, 2021,
the outstanding balance of this note was $1,001,183. 88 1847
Cabinet will have the right to redeem all but no less than all of the note at any time prior to the maturity date. If 1847 Cabinet elects
to redeem the note, the redemption price will be payable in cash and is equal to the then outstanding vested portion of the principal
plus any remaining unvested principal amount plus accrued but unpaid interest thereon (calculated over 36 months). For purposes of this
redemption calculation, the “unvested principal amount” shall be $350,000 per year. The
note contains customary events of default. The right of the Kyle’s Sellers to receive payments under the note is subordinated to
all indebtedness of 1847 Cabinet, whether outstanding as of the closing date or thereafter created, to banks, insurance companies and
other financial institutions or funds, and federal or state taxation authorities. Financing
Leases On
May 6, 2021, Kyle’s entered in an equipment financing lease to purchase equipment for $276,896, maturing on December 1, 2027. The
balance payable was $276,896 as of December 31, 2021. On
October 12, 2021, Kyle’s entered in an equipment financing lease to purchase equipment for $245,375, maturing on December 1, 2027.
The balance payable was $245,375 as of December 31, 2021. On
February 14, 2019, High Mountain entered in an equipment financing
lease to purchase a lift truck for $24,337, maturing on January 19, 2024. The balance payable was $11,044 as of December 31, 2021. On
June 2, 2020, High Mountain entered in an equipment financing lease
to purchase office printers for $9,240, maturing on May 2, 2024. The balance payable was $5,757 as of December 31, 2021. Vehicle
Loans Asien’s
has entered into seven retail installment sale contracts pursuant to which Asien’s agreed to finance its delivery trucks at rates
ranging from 3.74% to 8.72% with an aggregate remaining principal amount of $146,043 as of December 31, 2021. Kyle’s
has entered into two retail installment sale contracts pursuant to which Kyle’s agreed to finance its delivery trucks at rates
ranging from 5.90% to 6.54% with an aggregate remaining principal amount of $64,255 as of December 31, 2021. High
Mountain and Innovative Cabinets have entered into seventeen retail installment sale contracts pursuant to which they agreed to finance
delivery trucks and equipment at rates ranging from 3.74% to 6.80% with an aggregate remaining principal amount of $186,054 as of December
31, 2021. Total
Debt The
following table shows aggregate figures for the total debt described above that is coming due in the short and long term as of December
31, 2021. See the above disclosures for more details regarding these loans. Short-Term Long-Term Total
Debt Secured Convertible
Promissory Notes $ - $ 21,791,657 $ 21,791,657 6% Subordinated Convertible
Promissory Notes - 4,838,998 4,838,998 6% Amortizing Promissory Note 581,961 - 581,961 Vesting Promissory Note - 1,011,183 1,011,183 Financing Leases 99,384 457,173 556,557 Vehicle
Loans 111,829 250,133 361,962 Total $ 793,174 $ 28,349,144 $ 29,142,318 89 Contractual
Obligations Our
principal commitments consist mostly of obligations under the loans described above, the operating leases described under Item 2 “ Properties ”
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. 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 The
following discussion relates to critical accounting policies for our consolidated company. The preparation of financial statements in
conformity with GAAP requires our management to make assumptions, estimates and judgments that affect the amounts reported, including
the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that
are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial
condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial
condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the
need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting
estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future
events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting
policies involve the most significant estimates and judgments used in the preparation of our financial statements: Revenue
Recognition and Cost of Revenue On
January 1, 2018, we adopted Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers (Topic 606) ,
which supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition . This ASU is based on the principle
that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which
the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the
nature, amount, timing, and uncertainty of revenue and cash flows arising from customer purchase orders, including significant judgments. Our

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) $2.50 (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, or the Asien’s Seller, pursuant to which the Asien’s Seller sold 415,000 of our common shares to 1847 Asien a purchase price of $2.50 per share. As consideration, 1847 Asien issued to the Asien’s

Seller a two-year 6% amortizing promissory note in the aggregate principal amount of $1,037,500. On October 8, 2021, 1847 Asien and the

Asien’s Seller entered into amendment no. 1 to securities purchase agreement to amend certain terms of the securities purchase

agreement and the 6% amortizing promissory note. Pursuant to the amendment, the repayment terms of the 6% amortizing promissory note

were revised so that one-half (50%) of the outstanding principal amount ($518,750) and all accrued interest thereon shall be amortized

on a two-year straight-line basis and payable quarterly in accordance with the amortization schedule set forth on Exhibit A to the amendment,

except for the payments that were initially scheduled on January 1, 2022 and April 1, 2022, which were paid from the proceeds of the

senior convertible promissory notes described above, and the second-half (50%) of the outstanding principal amount ($518,750) and all

accrued, but unpaid interest thereon shall be paid on the second anniversary of the date of the 6% amortizing promissory note, along

with any other unpaid principal or accrued interest thereon. The note is unsecured and contains customary events of default. The remaining

principal balance of the note at December 31, 2021 was $581,963 and it had accrued interest of $21,758. Vesting

Promissory Note A

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

note by 1847 Cabinet to Stephen Mallatt, Jr. and Rita Mallatt, or the Kyle’s Sellers, in the principal amount of $1,050,000, which

increased to a principal amount of up to $1,260,000 pursuant to the vested percentage calculation described below. Payment of the principal

and accrued interest on the note is subject to vesting as described below. The note bears interest on the vested portion of principal

amount at the rate of eight percent (8%) per annum. To the extent vested, the vested portion of the principal and all accrued but unpaid

interest on such vested portion of the principal shall be paid in one lump sum on the last day of the thirty-sixth (36th) month following

the date of the note. The

vested principal of the note due at the maturity date shall be calculated each year based on the average annual consolidated EBITDA (as

defined in the note) of 1847 Cabinet for each of the years ended December 31, 2020, 2021 and 2022. The EBITDA for each year shall be

divided by $1.4 million multiplied by 100 to obtain the vested percentage. The vested principal for each year shall be equal to the vested

percentage for that year multiplied by $350,000. To the extent that the vested percentage for the subject year is less than 80%, no portion

of the note for that year shall vest. To the extent that the vested percentage for the subject year is equal to or greater than 120%,

the vested principal shall be equal to $420,000 for that year and no more. For the year ended December 31, 2020, EBITDA of 1847 Cabinet

was approximately $1,531,000, resulting in a vested amount of approximately $415,000. For the year ended December 31, 2021, EBITDA of

1847 Cabinet was approximately $427,504, resulting in an additional vested amount of approximately $602,204. As of December 31, 2021,

the outstanding balance of this note was $1,001,183. 88 1847

Cabinet will have the right to redeem all but no less than all of the note at any time prior to the maturity date. If 1847 Cabinet elects

to redeem the note, the redemption price will be payable in cash and is equal to the then outstanding vested portion of the principal

plus any remaining unvested principal amount plus accrued but unpaid interest thereon (calculated over 36 months). For purposes of this

redemption calculation, the “unvested principal amount” shall be $350,000 per year. The

note contains customary events of default. The right of the Kyle’s Sellers to receive payments under the note is subordinated to

all indebtedness of 1847 Cabinet, whether outstanding as of the closing date or thereafter created, to banks, insurance companies and

other financial institutions or funds, and federal or state taxation authorities. Financing

Leases On

May 6, 2021, Kyle’s entered in an equipment financing lease to purchase equipment for $276,896, maturing on December 1, 2027. The

balance payable was $276,896 as of December 31, 2021. On

October 12, 2021, Kyle’s entered in an equipment financing lease to purchase equipment for $245,375, maturing on December 1, 2027.

The balance payable was $245,375 as of December 31, 2021. On

February 14, 2019, High Mountain entered in an equipment financing

lease to purchase a lift truck for $24,337, maturing on January 19, 2024. The balance payable was $11,044 as of December 31, 2021. On

June 2, 2020, High Mountain entered in an equipment financing lease

to purchase office printers for $9,240, maturing on May 2, 2024. The balance payable was $5,757 as of December 31, 2021. Vehicle

Loans Asien’s

has entered into seven retail installment sale contracts pursuant to which Asien’s agreed to finance its delivery trucks at rates

ranging from 3.74% to 8.72% with an aggregate remaining principal amount of $146,043 as of December 31, 2021. Kyle’s

has entered into two retail installment sale contracts pursuant to which Kyle’s agreed to finance its delivery trucks at rates

ranging from 5.90% to 6.54% with an aggregate remaining principal amount of $64,255 as of December 31, 2021. High

Mountain and Innovative Cabinets have entered into seventeen retail installment sale contracts pursuant to which they agreed to finance

delivery trucks and equipment at rates ranging from 3.74% to 6.80% with an aggregate remaining principal amount of $186,054 as of December

31, 2021. Total

Debt The

following table shows aggregate figures for the total debt described above that is coming due in the short and long term as of December

31, 2021. See the above disclosures for more details regarding these loans. Short-Term Long-Term Total

Debt Secured Convertible

Promissory Notes $ - $ 21,791,657 $ 21,791,657 6% Subordinated Convertible

Promissory Notes - 4,838,998 4,838,998 6% Amortizing Promissory Note 581,961 - 581,961 Vesting Promissory Note - 1,011,183 1,011,183 Financing Leases 99,384 457,173 556,557 Vehicle

Loans 111,829 250,133 361,962 Total $ 793,174 $ 28,349,144 $ 29,142,318 89 Contractual

Obligations Our

principal commitments consist mostly of obligations under the loans described above, the operating leases described under Item 2 “ Properties ”

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. 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 The

following discussion relates to critical accounting policies for our consolidated company. The preparation of financial statements in

conformity with GAAP requires our management to make assumptions, estimates and judgments that affect the amounts reported, including

the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that

are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial

condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial

condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the

need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting

estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future

events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting

policies involve the most significant estimates and judgments used in the preparation of our financial statements: Revenue

Recognition and Cost of Revenue On

January 1, 2018, we adopted Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers (Topic 606) ,

which supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition . This ASU is based on the principle

that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which

the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the

nature, amount, timing, and uncertainty of revenue and cash flows arising from customer purchase orders, including significant judgments. Our