8-K: 1847 Holdings Faces Delisting from NYSE American, Waives Working Capital Adjustment in CMD Companies Acquisition

1847 Holdings LLC is facing potential delisting from NYSE American due to low share price and has waived a working capital adjustment in its acquisition of CMD Companies.

Summary

• 1847 Holdings LLC's common shares are at risk of being delisted from NYSE American due to the low selling price.
• The company has requested a review of the delisting determination, which will suspend trading of its shares until the review is complete.
• 1847 CMD Inc., a subsidiary of 1847 Holdings, entered into Amendment No. 3 to the Purchase Agreement related to the acquisition of CMD Inc. and CMD Finish Carpentry LLC (collectively, the CMD Companies).
• The amendment waives the post-closing working capital adjustment provision of the Purchase Agreement, meaning no Purchase Price adjustment will occur.
• The parties agreed that the Seller will not be in breach of Section 4.5 of the Purchase Agreement (Financial Statements) with respect to line items that are included in the net working capital calculation.
• The initial purchase price for the CMD Companies was $18,750,000, including cash and a promissory note.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the delisting notice and the need to waive a working capital adjustment, suggesting underlying financial pressures.

Positives

• The waiver of the working capital adjustment simplifies the acquisition terms for the CMD Companies.
• The seller will not be in breach of Section 4.5 of the Purchase Agreement (Financial Statements) with respect to line items that are included in the net working capital calculation.

Negatives

• The potential delisting from NYSE American could negatively impact investor confidence and the company's ability to raise capital.
• The delisting is due to the low selling price of the company's common shares, indicating underlying financial concerns.

Risks

• The outcome of the NYSE American delisting review is uncertain, and the company may ultimately be delisted.
• The low share price that triggered the delisting notice may reflect broader financial or operational challenges for 1847 Holdings.
• Failure to maintain compliance with listing requirements could further damage the company's reputation and market access.

Future Outlook

The company intends to request a review of the delisting determination, and trading of its common shares will remain suspended until the review is completed.

Management Comments

• Ellery W. Roberts, Chief Executive Officer, signed the report on behalf of 1847 Holdings LLC.

Industry Context

Delisting notices are not uncommon for companies facing financial difficulties or failing to meet exchange listing requirements; the outcome of the review will determine 1847 Holdings' continued access to public markets.

Comparison to Industry Standards

• Comparing 1847 Holdings to companies like KushCo Holdings (delisted from NASDAQ for similar reasons) or Foresight Autonomous Holdings (received a similar notice but regained compliance) highlights the range of outcomes possible after a delisting notice.
• The waiver of the working capital adjustment is a deal-specific item and doesn't have a direct industry benchmark, but it simplifies the financial terms of the acquisition, which can be seen in other M&A transactions where adjustments are waived for expediency.

Stakeholder Impact

• Shareholders face potential losses if the company is delisted and the share price declines further.
• Employees may experience uncertainty due to the company's financial challenges and potential delisting.
• Creditors may be concerned about the company's ability to meet its financial obligations.

Next Steps

• 1847 Holdings will request a review of the delisting determination by April 10, 2025.
• The NYSE Listings Qualifications Panel will review the company's appeal.
• The company will await the outcome of the review to determine the future listing status of its common shares.

Key Dates

Keywords

delisting, NYSE American, acquisition, CMD Companies, working capital adjustment, 1847 Holdings, purchase agreement