UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 9, 2023 (February 3, 2023)
| 1847 Holdings LLC |
| (Exact name of registrant as specified in its charter) |
| Delaware | 001-41368 | 38-3922937 | ||
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 590 Madison Avenue, 21st Floor, New York, NY | 10022 | |
| (Address of principal executive offices) | (Zip Code) |
| (212) 417-9800 |
| (Registrant’s telephone number, including area code) |
| (Former name or former address, if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Shares | EFSH | NYSE American LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01 | Entry into a Material Definitive Agreement. |
On February 3, 2022, 1847 Holdings LLC (the “Company”) entered into securities purchase agreements (the “Purchase Agreements”) with two accredited investors (the “Purchasers”), pursuant to which the Company issued to the Purchasers (i) promissory notes in the aggregate principal amount of $604,000, which include an original issue discount in the amount of $60,400 (the “Notes”), (ii) five-year warrants for the purchase of an aggregate of 125,833 common shares of the Company at an exercise price of $4.20 per share (subject to adjustment), which may be exercised on a cashless basis if the market price of the common shares is greater than the exercise price (the “Warrants”), and (iii) an aggregate of 125,833 common shares (the “Shares”) for a total purchase price of $543,600.
The Notes bear interest at a rate of 12% per annum and mature on February 3, 2024; 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 $60,400, plus accrued interest, commencing on May 3, 2023. The Company may voluntarily prepay the outstanding principal amount and accrued interest of each Note in whole upon payment of a fee of $750. In addition, if at any time the Company receives 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 the Company 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 of the Company. The Notes contains customary affirmative and negative covenants and events of default for a loan of this type.
The Notes are 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 Company’s 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). If an event of default occurs, the Company is required to hold a special meeting of shareholders within sixty (60) calendar days for the purpose of obtaining shareholder approval of the issuance of all common shares underlying the Notes. Prior to such shareholder approval, the maximum number of common shares that the Company may issue to the Purchasers in connection with the foregoing transactions is 835,311, equal to 19.99% of the Company’s outstanding common shares prior to the transactions, including the Shares and the common shares underlying the Warrants.
The conversion price of the Notes and the exercise price of the Warrants are subject to standard adjustments, including a price-based adjustment in the event that the Company issues any common shares or other securities convertible into or exercisable for common shares at an effective price per share that is lower than the conversion or exercise price, subject to certain exceptions. In addition, the Notes and the Warrants contain an ownership limitation, such that the Company shall not effect any conversion or exercise, and the holders shall not have the right to convert or exercise, any portion of the Notes or the Warrants to the extent that after giving effect to the issuance of common shares upon conversion or exercise, such holder, together with its affiliates and any other persons acting as a group together with such holder or any of its affiliates, would beneficially own in excess of 4.99% of the number of common shares outstanding immediately after giving effect to the issuance of common shares upon conversion or exercise.
The Purchase Agreements contain a participation right, which provides that, subject to certain exceptions, until the Notes are extinguished in their entirety, if the Company directly or indirectly offers, sells, grants any option to purchase, or otherwise disposes of (or announces any offer, sale, grant or any option to purchase or other disposition of) any of its debt, equity, or equity equivalent securities, or enters into any definitive agreement with regard to the foregoing, it must offer to issue and sell to or exchange with the Purchasers the securities in such transaction. The Purchase Agreements also provide the Purchasers with customary piggy-back registration rights for the Shares and the common shares underlying the Notes and the Warrants, and contain other customary representations and warranties and covenants for a transaction of this type.
The foregoing description of the Purchase Agreements, the Notes and the Warrants does not purport to be complete and is qualified in its entirety by reference to the full text of those documents filed as exhibits to this report, which are incorporated herein by reference.
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| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth under Item 1.01 is incorporated by reference into this Item 2.03.
| Item 3.02 | Unregistered Sales of Equity Securities. |
The information set forth under Item 1.01 regarding the issuance of the Shares, the Notes and the Warrants is incorporated by reference into this Item 3.02. The issuance of these securities is being made in reliance upon an exemption from the registration requirements of Section 5 of the Securities Act.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: February 9, 2023 | 1847 HOLDINGS LLC | |
| /s/ Ellery W. Roberts | ||
| Name: | Ellery W. Roberts | |
| Title: | Chief Executive Officer | |
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