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

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results that could be less favorable to the plaintiffs in any such action. Nevertheless,
if this jury trial waiver provision is not permitted by applicable law, an action could proceed under the terms of the operating agreement
with a jury trial. No condition, stipulation or provision of the operating agreement serves as a waiver by any holder or beneficial owner
of our common shares or by us of compliance with the U.S. federal securities laws and the rules and regulations promulgated thereunder. 85 ITEM
1B. UNRESOLVED STAFF COMMENTS. Not
applicable. ITEM
2. PROPERTIES. Our
principal office is located at 590 Madison Avenue, 21st Floor, New York, NY 10022. We entered into an office service agreement with Regus Management
Group, LLC for use of office space at this location effective January 22, 2013. Under the agreement, in exchange for our right to use
the office space at this location, we are required to pay a monthly fee of $479 (excluding taxes). Asien’s
is located at 1801 Piner Rd., Santa Rosa, CA 95401. The site is approximately 11,000 square feet in total and consists of a 6,000 square
foot showroom display area as well as a general office, accounting office, service department and 4,000 square foot warehouse. We lease
this site on a month-to-month basis for approximately $9,700 per month. We also rent an additional 3,000 square feet of warehouse and
office space in an adjacent building for $2,000 per month. Kyle’s
is located at 10849 W. Emerald St. Boise, ID 83713. It operates from a 6,600 square foot facility, which includes corporate offices,
administration, production floor, warehouse, and employee areas. On September 1, 2020, Kyle’s entered into an industrial lease
agreement with Stephen Mallatt, Jr. and Rita Mallatt, the sellers of Kyle’s. The lease is for a term of five years, with an option
for a renewal term of five years, and provides for a base rent of $7,000 per month for the first 12 months, which will increase to $7,210
for months 13-16 and to $7,426 for months 37-60. In addition, Kyle’s is responsible for all taxes, insurance and certain operating
costs during the lease term. The lease agreement contains customary events of default, representations, warranties and covenants. On
June 9, 2021, Kyle’s entered into a lease agreement for an additional facility located at 11193 W. Emerald St. Boise, ID 83713.
The facility consists of 9,530 square feet of office and warehouse space. The lease commenced on January 1, 2022 and is for a term of
62 months, with an option for a renewal term of five years, and provides for a base rent of $3,336 for months 3-4 (with no payments for
the first two months), with gradual increases to $7,508 for final year. In addition, Kyle’s is responsible for its proportionate
share of all taxes, insurance and certain operating costs during the lease term. The lease agreement contains customary events of default,
representations, warranties and covenants. High
Mountain is located at 4935 Brookside Ct, Reno, NV 89502. It operates from a 23,115 square foot facility, which includes corporate offices,
a production floor and warehouse space, that it leases. The existing lease for this property commenced on January 1, 2018 and was for
a period of 48 months, expiring on December 31, 2021. High Mountain is continuing to pay on a month-to-month basis until the new facility
described below is ready. The base rent is $12,767 per month. In addition, High Mountain is responsible for its proportionate share of
all taxes, insurance and certain operating costs. The lease agreement contains customary events of default, representations, warranties
and covenants. On
October 29, 2021, High Mountain entered into a lease for a new 42,000 square foot facility located at 8895 Double Diamond Pkwy, Reno,
NV 89521. The term of the lease commenced on June 1, 2022 (upon the completion of improvements) and is for a period of 61 months. The
base rent is $29,400 for months 2-13 (with no payments for the first month), with gradual increases to $34,394 for months 50-61. In addition,
High Mountain is responsible for its proportionate share of all taxes, insurance and certain operating costs during the lease term. The
lease agreement contains customary events of default, representations, warranties and covenants. Innovative
Cabinets is headquartered at 4690 Longley Lane, Suite 29, Reno, NV 89509. It operates from a 4,078 square foot facility, which includes
corporate offices, showroom and warehouse space. The term of the lease commenced on April 1, 2020 and is for a period of 36 months. The
base rent is $2,936 for the first year, with gradual increases to $3,140 for the final year. In addition, Innovative Cabinets is responsible
for its proportionate share of all taxes, insurance and certain operating costs during the lease term. The lease agreement contains customary
events of default, representations, warranties and covenants. 86 Innovative
Cabinets also leases a 24,000 square foot facility located at 875 East Patriot Boulevard, Suite 280, Reno, NV 89511, consisting of warehouse
and production space. The term of the lease commenced on January 1, 2021 and is for a period of 61 months. The base rent is $15,600 for
2021, with gradual increases to $18,085 for 2026. In addition, Innovative Cabinets is responsible for its proportionate share of all
taxes, insurance and certain operating costs during the lease term. The lease agreement contains customary events of default, representations,
warranties and covenants. Wolo
is located at 1 Saxwood St., Deer Park, NY 11729. This 10,000 square foot facility houses our offices, production space and stored inventory.
The term of the lease for this space commenced in 1978 and has been extended numerous times. Pursuant to the latest amendment entered
into in April 2022, the lease expires on July 31, 2025 and provides for a monthly rent of $7,518 for the first year, with scheduled annual
increases. The lease agreement contains customary events of default, representations, warranties, and covenants. We
believe that all our properties have been adequately maintained, are generally in good condition, and are suitable and adequate for our
businesses. ITEM
3. LEGAL PROCEEDINGS. From
time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However,
litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may
harm our business. We are not currently aware of any such legal proceedings or claims that we believe will have a material adverse effect
on our business, financial condition or operating results. ITEM
4. MINE SAFETY DISCLOSURES. Not
applicable. 87 PART
II ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market
Information Our
common shares are listed for trading on NYSE American under the symbol “EFSH.” Number
of Holders of Our Common Shares As
of April 10, 2023, there were approximately 52 shareholders of record of our common shares. In computing the number of holders of record
of our common shares, each broker-dealer and clearing corporation holding shares on behalf of its customers is counted as a single shareholder. Securities
Authorized for Issuance Under Equity Compensation Plans As
of December 31, 2022, we did not have in effect any compensation plans under which our equity securities were authorized for issuance
and we did not have any outstanding share options. Dividend
Policy Holders
of our series A senior convertible preferred shares are entitled to dividends at a rate per annum of 14.0% of the stated value of $2.00
per share (subject to adjustment). Dividends shall accrue from day to day, whether or not declared, and shall be cumulative. Dividends
shall be payable quarterly in arrears on each dividend payment date in cash or common shares at our discretion. Dividends payable in
common shares shall be calculated based on a price equal to eighty percent (80%) of the volume weighted average price for the common
shares on our principal trading market during the five (5) trading days immediately prior to the applicable dividend payment date; provided
that if our common shares are not registered, any dividends payable in common shares shall be calculated based upon the fixed price of
$1.57; and provided further that we may only elect to pay dividends in common shares based upon such fixed price if the volume weighted
average price for the common shares on our principal trading market during the five (5) trading days immediately prior to the applicable
dividend payment date is $1.57 or higher. 88 Holders
of our series B senior convertible preferred shares are entitled to dividends at a rate per annum of 14.0% of the stated value of $3.00
per share (subject to adjustment). Dividends shall accrue from day to day, whether or not declared, and shall be cumulative. Dividends
shall be payable quarterly in arrears on each dividend payment date in cash or common shares at our discretion. Dividends payable in
common shares shall be calculated based on a price equal to eighty percent (80%) of the volume weighted average price for the common
shares our principal trading market during the five (5) trading days immediately prior to the applicable dividend payment date; provided
that if our common shares are not registered, any dividends payable in common shares shall be calculated based upon the fixed price of
$2.70; and provided further that we may only elect to pay dividends in common shares based upon such fixed price if the volume weighted
average price for the common shares on our principal trading market during the five (5) trading days immediately prior to the applicable
dividend payment date is $2.70 or higher We
plan to make regular quarterly distributions on our outstanding common shares in an amount that is equal to $0.13125 (or $0.525 per annum),
subject to our operating subsidiaries generating sufficient cash flow to support such regular cash distributions. Our
distribution policy will be based on the liquidity and capital of our businesses and on our intention to pay out as distributions to
our shareholders most of the cash resulting from the ordinary operation of the businesses, and not to retain significant cash balances
in excess of what is prudent for our company or our businesses, or as may be prudent for the consummation of attractive acquisition opportunities.
If our strategy is successful, we expect to maintain and increase the level of quarterly distributions to common shareholders in the
future. The
declaration and payment of any monthly distribution to our common shareholders will be subject to the approval of our board of directors.
Our board of directors will take into account such matters as general business conditions, our financial condition, results of operations,
capital requirements and any contractual, legal and regulatory restrictions on the payment of distributions by us to our shareholders
or by our subsidiaries to us, and any other factors that the board of directors deems relevant. However, even if our board of directors

results that could be less favorable to the plaintiffs in any such action. Nevertheless,

if this jury trial waiver provision is not permitted by applicable law, an action could proceed under the terms of the operating agreement

with a jury trial. No condition, stipulation or provision of the operating agreement serves as a waiver by any holder or beneficial owner

of our common shares or by us of compliance with the U.S. federal securities laws and the rules and regulations promulgated thereunder. 85 ITEM

1B. UNRESOLVED STAFF COMMENTS. Not

applicable. ITEM

2. PROPERTIES. Our

principal office is located at 590 Madison Avenue, 21st Floor, New York, NY 10022. We entered into an office service agreement with Regus Management

Group, LLC for use of office space at this location effective January 22, 2013. Under the agreement, in exchange for our right to use

the office space at this location, we are required to pay a monthly fee of $479 (excluding taxes). Asien’s

is located at 1801 Piner Rd., Santa Rosa, CA 95401. The site is approximately 11,000 square feet in total and consists of a 6,000 square

foot showroom display area as well as a general office, accounting office, service department and 4,000 square foot warehouse. We lease

this site on a month-to-month basis for approximately $9,700 per month. We also rent an additional 3,000 square feet of warehouse and

office space in an adjacent building for $2,000 per month. Kyle’s

is located at 10849 W. Emerald St. Boise, ID 83713. It operates from a 6,600 square foot facility, which includes corporate offices,

administration, production floor, warehouse, and employee areas. On September 1, 2020, Kyle’s entered into an industrial lease

agreement with Stephen Mallatt, Jr. and Rita Mallatt, the sellers of Kyle’s. The lease is for a term of five years, with an option

for a renewal term of five years, and provides for a base rent of $7,000 per month for the first 12 months, which will increase to $7,210

for months 13-16 and to $7,426 for months 37-60. In addition, Kyle’s is responsible for all taxes, insurance and certain operating

costs during the lease term. The lease agreement contains customary events of default, representations, warranties and covenants. On

June 9, 2021, Kyle’s entered into a lease agreement for an additional facility located at 11193 W. Emerald St. Boise, ID 83713.

The facility consists of 9,530 square feet of office and warehouse space. The lease commenced on January 1, 2022 and is for a term of

62 months, with an option for a renewal term of five years, and provides for a base rent of $3,336 for months 3-4 (with no payments for

the first two months), with gradual increases to $7,508 for final year. In addition, Kyle’s is responsible for its proportionate

share of all taxes, insurance and certain operating costs during the lease term. The lease agreement contains customary events of default,

representations, warranties and covenants. High

Mountain is located at 4935 Brookside Ct, Reno, NV 89502. It operates from a 23,115 square foot facility, which includes corporate offices,

a production floor and warehouse space, that it leases. The existing lease for this property commenced on January 1, 2018 and was for

a period of 48 months, expiring on December 31, 2021. High Mountain is continuing to pay on a month-to-month basis until the new facility

described below is ready. The base rent is $12,767 per month. In addition, High Mountain is responsible for its proportionate share of

all taxes, insurance and certain operating costs. The lease agreement contains customary events of default, representations, warranties

and covenants. On

October 29, 2021, High Mountain entered into a lease for a new 42,000 square foot facility located at 8895 Double Diamond Pkwy, Reno,

NV 89521. The term of the lease commenced on June 1, 2022 (upon the completion of improvements) and is for a period of 61 months. The

base rent is $29,400 for months 2-13 (with no payments for the first month), with gradual increases to $34,394 for months 50-61. In addition,

High Mountain is responsible for its proportionate share of all taxes, insurance and certain operating costs during the lease term. The

lease agreement contains customary events of default, representations, warranties and covenants. Innovative

Cabinets is headquartered at 4690 Longley Lane, Suite 29, Reno, NV 89509. It operates from a 4,078 square foot facility, which includes

corporate offices, showroom and warehouse space. The term of the lease commenced on April 1, 2020 and is for a period of 36 months. The

base rent is $2,936 for the first year, with gradual increases to $3,140 for the final year. In addition, Innovative Cabinets is responsible

for its proportionate share of all taxes, insurance and certain operating costs during the lease term. The lease agreement contains customary

events of default, representations, warranties and covenants. 86 Innovative

Cabinets also leases a 24,000 square foot facility located at 875 East Patriot Boulevard, Suite 280, Reno, NV 89511, consisting of warehouse

and production space. The term of the lease commenced on January 1, 2021 and is for a period of 61 months. The base rent is $15,600 for

2021, with gradual increases to $18,085 for 2026. In addition, Innovative Cabinets is responsible for its proportionate share of all

taxes, insurance and certain operating costs during the lease term. The lease agreement contains customary events of default, representations,

warranties and covenants. Wolo

is located at 1 Saxwood St., Deer Park, NY 11729. This 10,000 square foot facility houses our offices, production space and stored inventory.

The term of the lease for this space commenced in 1978 and has been extended numerous times. Pursuant to the latest amendment entered

into in April 2022, the lease expires on July 31, 2025 and provides for a monthly rent of $7,518 for the first year, with scheduled annual

increases. The lease agreement contains customary events of default, representations, warranties, and covenants. We

believe that all our properties have been adequately maintained, are generally in good condition, and are suitable and adequate for our

businesses. ITEM

3. LEGAL PROCEEDINGS. From

time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However,

litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may

harm our business. We are not currently aware of any such legal proceedings or claims that we believe will have a material adverse effect

on our business, financial condition or operating results. ITEM

4. MINE SAFETY DISCLOSURES. Not

applicable. 87 PART

II ITEM

5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market

Information Our

common shares are listed for trading on NYSE American under the symbol “EFSH.” Number

of Holders of Our Common Shares As

of April 10, 2023, there were approximately 52 shareholders of record of our common shares. In computing the number of holders of record

of our common shares, each broker-dealer and clearing corporation holding shares on behalf of its customers is counted as a single shareholder. Securities

Authorized for Issuance Under Equity Compensation Plans As

of December 31, 2022, we did not have in effect any compensation plans under which our equity securities were authorized for issuance

and we did not have any outstanding share options. Dividend

Policy Holders

of our series A senior convertible preferred shares are entitled to dividends at a rate per annum of 14.0% of the stated value of $2.00

per share (subject to adjustment). Dividends shall accrue from day to day, whether or not declared, and shall be cumulative. Dividends

shall be payable quarterly in arrears on each dividend payment date in cash or common shares at our discretion. Dividends payable in

common shares shall be calculated based on a price equal to eighty percent (80%) of the volume weighted average price for the common

shares on our principal trading market during the five (5) trading days immediately prior to the applicable dividend payment date; provided

that if our common shares are not registered, any dividends payable in common shares shall be calculated based upon the fixed price of

$1.57; and provided further that we may only elect to pay dividends in common shares based upon such fixed price if the volume weighted

average price for the common shares on our principal trading market during the five (5) trading days immediately prior to the applicable

dividend payment date is $1.57 or higher. 88 Holders

of our series B senior convertible preferred shares are entitled to dividends at a rate per annum of 14.0% of the stated value of $3.00

per share (subject to adjustment). Dividends shall accrue from day to day, whether or not declared, and shall be cumulative. Dividends

shall be payable quarterly in arrears on each dividend payment date in cash or common shares at our discretion. Dividends payable in

common shares shall be calculated based on a price equal to eighty percent (80%) of the volume weighted average price for the common

shares our principal trading market during the five (5) trading days immediately prior to the applicable dividend payment date; provided

that if our common shares are not registered, any dividends payable in common shares shall be calculated based upon the fixed price of

$2.70; and provided further that we may only elect to pay dividends in common shares based upon such fixed price if the volume weighted

average price for the common shares on our principal trading market during the five (5) trading days immediately prior to the applicable

dividend payment date is $2.70 or higher We

plan to make regular quarterly distributions on our outstanding common shares in an amount that is equal to $0.13125 (or $0.525 per annum),

subject to our operating subsidiaries generating sufficient cash flow to support such regular cash distributions. Our

distribution policy will be based on the liquidity and capital of our businesses and on our intention to pay out as distributions to

our shareholders most of the cash resulting from the ordinary operation of the businesses, and not to retain significant cash balances

in excess of what is prudent for our company or our businesses, or as may be prudent for the consummation of attractive acquisition opportunities.

If our strategy is successful, we expect to maintain and increase the level of quarterly distributions to common shareholders in the

future. The

declaration and payment of any monthly distribution to our common shareholders will be subject to the approval of our board of directors.

Our board of directors will take into account such matters as general business conditions, our financial condition, results of operations,

capital requirements and any contractual, legal and regulatory restrictions on the payment of distributions by us to our shareholders

or by our subsidiaries to us, and any other factors that the board of directors deems relevant. However, even if our board of directors