S-1/A: 1847 Holdings Faces Delisting and Massive Dilution Amidst Share Registration and Financial Challenges

Sentiment:

Securities Registration Amendment 5 June 2025 4:08 PM

1847 Holdings LLC has filed an amendment to register over 778 million common shares for resale by selling shareholders, while simultaneously grappling with a NYSE American delisting and a significant shareholder equity deficiency.

Delay expectedTrading of the company's common shares on NYSE American was suspended on April 3, 2025, and will remain suspended pending the outcome of the company's request for a review of the delisting determination.The company will be unable to effectuate an additional reverse share split until at least July 2026 due to new NYSE American rules, delaying its ability to meet potential uplisting requirements.

Capital raiseOn December 16, 2024, the company completed a private placement, issuing 42,311,118 units at $0.27 per unit, generating approximately $11.42 million in gross proceeds.The company may receive up to approximately $22.8 million from the exercise of Series B warrants held by selling shareholders.The company has a history of raising capital through various debt and equity instruments, including secured convertible promissory notes and preferred shares, as detailed in the 'Recent Sales of Unregistered Securities' section.

Worse than expectedNYSE American has delisted the company's common shares due to low selling price, and trading is suspended, indicating a severe loss of market access and liquidity.The company faces a substantial shareholder equity deficiency of $95,560,794 as of March 31, 2025, which is a significant financial weakness and a prerequisite to any potential uplisting.New NYSE American rules restrict the company from performing another reverse share split until at least July 2026, severely limiting its ability to meet listing price requirements in the near term.The registration of 778,524,571 common shares for resale, compared to only 32,303,735 shares currently outstanding, represents an extreme potential for dilution, which is highly detrimental to existing shareholders.

Summary

1847 Holdings LLC filed Amendment No. 1 to its Form S-1 registration statement on June 5, 2025, to register 778,524,571 common shares for resale by selling shareholders.
This includes 507,733,417 common shares issuable upon exercise of Series A warrants and 270,791,154 common shares issuable upon exercise of Series B warrants.
Series A warrants can be exercised on a cashless basis for 1.25 common shares per warrant, meaning the company will not receive proceeds from their exercise.
The company may receive up to approximately $22.8 million from the exercise of Series B warrants, which have an exercise price of $0.54 per share.
Warrant exercise prices are subject to downward adjustments based on Share Combination Events, Registration Resets, and Subsequent Equity Sales, but not below a Floor Price.
Following Shareholder Approval on March 11, 2025, the Floor Price for warrant exercise was adjusted to $0.054.
On April 3, 2025, NYSE American notified the company of its determination to delist its common shares due to a low selling price, and trading was suspended.
The company is requesting a review of the delisting determination, and trading remains suspended pending the outcome.
As of June 3, 2025, the company had 32,303,735 common shares outstanding, making the registered shares for resale significantly dilutive.
The company is an acquisition holding company focused on acquiring and managing small businesses (enterprise value less than $50 million) in North America.
Current subsidiaries include Kyles Custom Wood Shop (custom cabinetry), Innovative Cabinets & Design (custom cabinetry and countertops), and CMD Inc. (finish carpentry).
The company committed to a plan to sell its Wolo Mfg. Corp. subsidiary (horn and safety products) during the three months ended March 31, 2025, with the sale expected to occur in 2025.
As of March 31, 2025, the company reported a shareholder equity deficiency of $95,560,794.

Sentiment

Score: 2

Explanation: The company faces severe challenges including a NYSE American delisting, a substantial shareholder equity deficiency, and the prospect of massive dilution from registered shares. While there's potential for capital from warrant exercises, the overall financial health and market access outlook are highly negative.

Positives

Shareholder approval was obtained on March 11, 2025, for the issuance of common shares upon warrant exercise and related resets, fulfilling a key condition of the private placement.
The company may receive up to approximately $22.8 million from the exercise of Series B warrants, providing potential capital for working capital and general corporate purposes.
The company has a clear strategy as an acquisition holding company, seeking to acquire and grow small businesses with stable earnings and strong management teams.

Negatives

NYSE American initiated delisting proceedings and suspended trading of the company's common shares on April 3, 2025, due to a low selling price, creating significant uncertainty for investors.
The company has a substantial shareholder equity deficiency of $95,560,794 as of March 31, 2025, which must be remedied before considering further reverse share splits for uplisting.
New NYSE American rules limit reverse share splits to a cumulative ratio of less than 200 shares to 1 over a two-year period, preventing the company from effecting another reverse split until at least July 2026.
The registration of 778,524,571 common shares for resale represents a massive potential dilution compared to the 32,303,735 common shares currently outstanding.
The company has committed to a plan to sell its Wolo Mfg. Corp. subsidiary in 2025, indicating a divestiture of an existing business segment.

Risks

The company's common shares have been delisted from NYSE American, and there is no guarantee of successful review or relisting, potentially leading to trading on the less liquid OTC Pink Market.
Trading on the OTC Pink Market could result in a less liquid market, depress the trading price, and adversely impact the company's ability to raise future capital.
The significant shareholder equity deficiency of $95,560,794 as of March 31, 2025, must be resolved before the company can consider further reverse share splits to meet NYSE American listing requirements.
The new NYSE American rules limiting reverse share splits to less than a cumulative ratio of 200 shares to 1 over a two-year period will prevent the company from effecting another reverse split until at least July 2026, hindering its ability to meet listing price requirements.
The registration of 778,524,571 common shares for resale, significantly higher than the 32,303,735 shares outstanding, poses a high risk of substantial dilution for existing shareholders.
The potential sale of a large number of common shares by selling shareholders could materially adversely affect the market price of the company's common shares and make it difficult for investors to sell their shares.
The large number of issuable shares from warrants could make the company a less attractive acquisition vehicle for target businesses, potentially increasing acquisition costs.
The exercise prices of Series A and Series B warrants are subject to downward adjustments (Share Combination Event, Registration Reset, Subsequent Equity Sales), which could lead to further dilution.
The Floor Price for warrant exercise can be further adjusted downwards upon every Share Combination Event, potentially exacerbating dilution.
The company is subject to liquidated damages (0.5% daily for 15 days, then 1.00% daily, plus 12% interest if not paid within 7 days) if it fails to meet registration statement filing and effectiveness deadlines.

Future Outlook

The company expects to sell its Wolo subsidiary in 2025. It intends to use any net proceeds from the exercise of Series B warrants for working capital, general corporate purposes, and potential acquisitions or investments. The company may pursue an uplisting of its common shares to NYSE American after a period of trading on the OTC market, but only after addressing its significant shareholder equity deficiency. There is no assurance that the company will be able to resolve its equity deficiency, effect an uplisting, or regain/maintain a listing on NYSE American.

Management Comments

"We believe that our management and acquisition strategies will allow us to achieve our goals to make and grow regular distributions to our common shareholders and increase common shareholder value over time."
"We seek to acquire controlling interests in small businesses that we believe operate in industries with long-term macroeconomic growth opportunities, and that have positive and stable earnings and cash flows, face minimal threats of technological or competitive obsolescence and have strong management teams largely in place."
"We believe that private company operators and corporate parents looking to sell their businesses will consider us to be an attractive purchaser of their businesses."
"We expect to improve our businesses over the long term through organic growth opportunities, add-on acquisitions and operational improvements."

Industry Context

1847 Holdings operates as an acquisition holding company, a model typically employed by private equity firms, focusing on acquiring and managing small businesses across diverse North American industries. This strategy aims to generate value through active management, organic growth, and add-on acquisitions. However, the company's current challenges, including its NYSE American delisting and substantial shareholder equity deficiency, place it in a precarious position compared to more stable, publicly traded holding companies or private equity funds, highlighting the inherent risks and capital market sensitivities for smaller, less established entities in this space.

Comparison to Industry Standards

The document does not provide specific comparable companies, projects, or results to assess against global benchmarks. It broadly states that the company offers investors an opportunity to participate in a portfolio of businesses traditionally owned and managed by private equity firms, private individuals or families, financial institutions, or large conglomerates, implying a comparison to these types of ownership structures rather than specific industry peers or financial performance benchmarks.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Indemnification Policy	The company's operating agreement provides for indemnification of directors and officers to the equivalent extent permitted by Delaware law, eliminating personal liability for monetary damages for breach of fiduciary duty, except for specific breaches (duty of loyalty, bad faith, unlawful distributions, improper benefit).	N/A	Provides significant protection to directors and officers against personal liability, potentially encouraging risk-taking but also attracting qualified individuals. Consistent with standard Delaware corporate law practices.
Expense Advancement	The company must advance expenses, as incurred, to its directors and executive officers in connection with legal proceedings to the extent permitted by Delaware law.	N/A	Ensures that directors and officers are not burdened by legal costs during proceedings, which is a common practice to support management, but could be a financial drain on the company in case of extensive litigation.
Indemnification Agreements	The company has entered into indemnification agreements with each of its executive officers and directors, agreeing to indemnify them to the fullest extent permitted by law.	N/A	Formalizes and reinforces the indemnification protections for key personnel, providing additional legal certainty beyond the operating agreement.
Directors and Officers Insurance	The company maintains insurance on behalf of its directors and executive officers and certain other persons, insuring them against liabilities asserted in their capacities.	N/A	Provides a financial backstop for indemnification obligations, protecting both the company and its fiduciaries from the financial impact of potential liabilities.

Related Party Transactions

Ellery W. Roberts, the company's Chief Executive Officer, is the sole manager of 1847 Partners LLC, which serves as the company's manager.
The company pays 1847 Partners LLC a quarterly management fee equal to 0.5% (2.0% annualized) of its adjusted net assets.
1847 Partners LLC has entered into offsetting management services agreements with subsidiaries (1847 Cabinet, 1847 Wolo Inc., 1847 CMD Inc.), receiving quarterly management fees (e.g., greater of $125,000 or 2% of adjusted net assets for 1847 Cabinet), which offset the fees payable by the parent company.
1847 Partners LLC owns all of the company's allocation shares, entitling it to a 20% profit allocation upon the sale of a subsidiary if certain gain and hurdle rate conditions are met.
Bevilacqua PLLC, the company's legal counsel, owns 15 common shares, and Louis A. Bevilacqua, the managing member of Bevilacqua PLLC, owns 5 common shares and approximately 9% of 1847 Partners Class A Member LLC and 10% of 1847 Partners Class B Member LLC. These securities were received as partial consideration for legal services.

Stakeholder Impact

Shareholders face significant potential dilution from the large number of shares being registered for resale, which could depress the stock price and make it difficult to sell shares.
Shareholders are directly impacted by the NYSE American delisting and the suspension of trading, leading to reduced liquidity and market access.
The company's financial health, evidenced by the substantial shareholder equity deficiency, poses risks to all stakeholders, including creditors and potential investors.
Employees of the Wolo subsidiary may be impacted by the planned sale of the business in 2025.

Next Steps

The company is requesting a review of NYSE American's determination to delist its common shares.
The company anticipates that its common shares will be eligible for quotation on the OTC Pink Market if the delisting is upheld.
The company plans to sell its Wolo Mfg. Corp. subsidiary in 2025.
The company must address its $95,560,794 shareholder equity deficiency before considering a subsequent reverse share split to satisfy NYSE American initial listing requirements.
The company may pursue an uplisting of its common shares to NYSE American following a period of trading on the OTC market, if conditions allow.

Key Dates

Date	Description
September 30, 2020	1847 Cabinet Inc. acquired Kyles Custom Wood Shop, Inc.
March 30, 2021	1847 Wolo Inc. acquired Wolo Mfg. Corp. and Wolo Industrial Horn & Signal, Inc.
October 8, 2021	1847 Cabinet acquired High Mountain Door & Trim Inc. and Sierra Homes, LLC d/b/a Innovative Cabinets & Design.
July 8, 2022	Issued a promissory note in the principal amount of $600,000 and a five-year warrant for 77 common shares to Mast Hill Fund, L.P.
July 8, 2022	Issued a five-year warrant for 3 common shares to J.H. Darbie & Co., Inc.
August 2, 2022	Issued 220 common shares to Bevilacqua PLLC upon settlement of accounts payable.
January 3, 2023	Issued warrants for 314 common shares as a dividend to common shareholders.
February 3, 2023	Issued promissory notes in the aggregate principal amount of $604,000 and five-year warrants for 98 common shares to two accredited investors.
February 3, 2023	Issued a five-year warrant for 1 common share to J.H. Darbie & Co., Inc.
February 9, 2023	Issued promissory notes in the aggregate principal amount of $2,557,575 and five-year warrants for 410 common shares to two accredited investors.
February 9, 2023	Issued a five-year warrant for 10 common shares to J.H. Darbie & Co., Inc.
February 22, 2023	Issued a promissory note in the principal amount of $878,000 and a five-year warrant for 141 common shares to an investor.
February 22, 2023	Issued a five-year warrant for 6 common shares to J.H. Darbie & Co., Inc.
August 11, 2023	Issued 20% OID subordinated promissory notes in the aggregate principal amount of $3,125,000 and warrants for 3,159 common shares to accredited investors.
May 8, 2024	Issued a 20% OID subordinated note in the principal amount of $625,000 and five-year warrants for 7,149 common shares to an accredited investor.
June 28, 2024	Subsidiaries issued an original issue discount promissory note in the principal amount of up to $2,472,000 to Breadcrumbs Capital LLC; Tranche No. 1 for $666,667 executed.
July 3, 2024	Tranche No. 2 for $466,667 executed with Breadcrumbs Capital LLC.
July 16, 2024	Tranche No. 3 for $233,333 executed with Breadcrumbs Capital LLC.
August 12, 2024	Tranche No. 4 for $466,667 executed with Breadcrumbs Capital LLC.
August 22, 2024	Tranche No. 5 for $300,000 executed with Breadcrumbs Capital LLC.
August 22, 2024	Issued 83,603 series C senior convertible preferred shares in connection with a settlement agreement.
September 30, 2024	Sold High Mountain Door & Trim Inc.
September 30, 2024	Issued 5,137 series A senior convertible preferred shares to an accredited investor as settlement of accrued dividends.
December 13, 2024	Entered into a securities purchase agreement with certain purchasers for a private placement.
December 16, 2024	Acquired CMD Inc. and CMD Finish Carpentry, LLC.
December 16, 2024	Issued 42,311,118 units in a private placement for total gross proceeds of approximately $11.42 million.
March 11, 2025	Held a special meeting of shareholders where proposals for warrant issuances and resets were approved; Floor Price adjusted to $0.054.
March 25, 2025	Issued 1,027 series F convertible preferred shares in exchange for cancellation of series A warrants and common shares.
March 31, 2025	Reported a shareholder equity deficiency of $95,560,794.
April 3, 2025	NYSE American notified the company of delisting proceedings and suspended trading of common shares.
April 4, 2025	Previous registration statement on Form S-1 (File No. 333-285002) was declared effective by the SEC.
June 3, 2025	Common shares outstanding totaled 32,303,735.
June 5, 2025	Date of the S-1/A filing.
2025	Expected sale of Wolo Mfg. Corp.
July 2026	Earliest date for the company to effectuate another reverse share split due to new NYSE American rules.

Recommendation

strong sell

Keywords

1847 Holdings LLC, SEC filing, S-1/A, common shares, warrants, delisting, NYSE American, OTC Pink Market, dilution, capital raise, acquisition holding company, shareholder equity deficiency, Kyles Custom Wood Shop, Wolo Mfg. Corp., Innovative Cabinets & Design, CMD Inc., private placement, securities registration

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