8-K: American Rebel Holdings Buys Nashville Property, Issues Series E Stock

American Rebel Holdings, Inc. has entered into agreements to acquire a commercial building in Nashville for $14.1 million and purchased a $2 million secured note, funded partly by new Series E Preferred Stock.

Summary

• Acquired a 20,829 square foot commercial retail building at 218 3rd Avenue North, Nashville, Tennessee, for a total purchase price of $14.1 million.
• The purchase price for the Nashville property includes $2.1 million paid through the issuance of 1,680,000 shares of common stock and prefunded warrants, $300,000 in three non-refundable installments, and an $11.7 million 12-month, 6% promissory note.
• An additional 112,800 shares of common stock, valued at $141,000 (1% of the transaction value), will be issued to the seller as a convenience fee at closing.
• Purchased a $2.0 million portion of a $6.47 million secured promissory note in Damon, Inc. from Streeterville Capital, LLC, in exchange for 2,000 shares of newly authorized Series E Preferred Stock.
• Issued 25,000 shares of Series D Convertible Preferred Stock to a strategic advisor for services to be rendered from August 18, 2025, through June 30, 2027.
• The Series E Preferred Stock has an initial stated value of $1,000 per share, accrues a 10% annual preferred return (compounded daily), and has liquidation preference over common stock.
• The Series E Preferred Stock includes significant protective covenants for holders, such as requiring consent for increasing authorized stock, material asset disposals, reverse splits, and new preferred stock issuances.
• In case of a covenant default, the Series E Stated Value increases to $1,100, and the Preferred Return increases to 15%, with holders gaining the right to force redemption and seek injunctive relief.

Sentiment

Score: 6

Explanation: The company is making strategic moves to acquire assets and invest, which can be positive for growth. However, the significant dilution, the 'AS IS' nature of the property purchase, the substantial debt, and the restrictive covenants of the Series E Preferred Stock introduce considerable risks and limitations on future flexibility. The uncertainty around closing conditions for the property also tempers enthusiasm.

Positives

• Acquisition of a prime commercial property in downtown Nashville, which includes a long-term retail lease (8 years remaining) and furnished lofts, potentially providing stable rental income.
• The Nashville property includes approved plans and permits for an additional floor and a rooftop deck, along with six stories of coveted air rights, offering future development potential.
• The purchase of a portion of the Damon Note provides a secured interest in Damon, Inc.'s collateral, potentially offering a return on investment.
• The Series E Preferred Stock structure provides a 10% annual preferred return, offering a potentially attractive yield for investors in this class.
• The Series E Preferred Stock includes strong protective covenants for holders, which could attract institutional investors by limiting dilution and major corporate actions without their consent.

Negatives

• The Nashville property acquisition involves significant financial obligations, including a $11.7 million promissory note with 6% interest and $300,000 in non-refundable installments.
• The company is issuing a substantial number of shares (1,680,000 for down payment, 9,360,000 for note conversion, plus convenience fee shares) and warrants, which could lead to significant dilution for existing common shareholders.
• The closing of the Nashville property sale is subject to certain conditions that are not yet satisfied, introducing uncertainty regarding its completion.
• The Series E Preferred Stock grants significant control to its holders (Required Holders), potentially limiting the company's flexibility in future corporate actions, capital raises, and strategic decisions.
• In the event of a covenant default for the Series E Preferred Stock, the Stated Value increases to $1,100 and the Preferred Return to 15%, significantly increasing the company's financial burden and potentially forcing redemption.
• The 'AS IS' nature of the property acquisition means the buyer assumes all risks related to the property's condition, including environmental issues, and indemnifies the seller against related losses.

Risks

• Uncertainty regarding the completion of the 218 3rd Avenue North property sale due to unsatisfied closing conditions.
• Potential for significant dilution of common stock due to the issuance of 1,680,000 shares/warrants for the down payment, 9,360,000 shares for the promissory note conversion, and additional shares for a convenience fee.
• Financial obligations associated with the $11.7 million promissory note, including 6% annual interest, and the risk of default leading to increased principal and interest rates (115% principal, 15% preferred return for Series E).
• The Series E Preferred Stock holders have substantial control over future corporate actions, potentially hindering the company's ability to raise capital or execute strategic initiatives without their consent.
• Risk of common stock delisting from Nasdaq, which would grant Streeterville Capital, LLC the right to repurchase the purchased Damon Note portion in exchange for cancellation of Series E Stock.
• Exposure to unknown liabilities and costs related to the 'AS IS' purchase of the Nashville property, including environmental conditions and compliance with laws, as the buyer waives many seller representations and indemnifies the seller.
• The company is responsible for all overhead costs of the Nashville property during the 12-month note period, and if these costs exceed residuals, the excess reduces the $2.1 million stock consideration.

Future Outlook

The company expects the payoff on the sale of 218 3rd Avenue to occur on or before August 1, 2026. It also plans to file a registration statement (Form S-1) within 15 business days of the agreement to register shares for the down payment and the conversion of the promissory note. The Series E Preferred Stock covenants require the company to maintain its Nasdaq listing and timely SEC filings.

Management Comments

• The Company has agreed to pay Seller a value of $2,100,000 through the issuance of shares of its common stock, valued at $1.25 per share, and a prefunded warrant to purchase shares of common stock, valued at $1.24 per share (for a combined total of 1,680,000 shares of common stock and a prefunded warrant to purchase shares of common stock for $0.01 per share), at the expiration of the Due Diligence Period, to be utilized towards the purchase price.
• Payoff on the sale of 218 3rd Avenue is expected to occur on or before August 1, 2026.
• However, the sale of 218 3rd Avenue is subject to certain closing conditions, which are not currently satisfied. Accordingly, there can be no assurances that the sale of 218 3rd Avenue will be completed on the terms or timing described, or at all.

Industry Context

The acquisition of a prime commercial property in downtown Nashville suggests a strategic move into real estate or a diversification of assets, potentially leveraging the city's growing economic and tourism appeal. The investment in a secured promissory note of another public company (Damon, Inc.) indicates a venture into debt investment or strategic partnerships, possibly to gain exposure to a different sector or for financial returns. The issuance of preferred stock with strong protective covenants is a common financing mechanism for companies seeking capital while offering enhanced security and returns to specific investors, often institutional, in exchange for certain control provisions.

Comparison to Industry Standards

• The 10% annual preferred return on the Series E Preferred Stock is competitive, often seen in private equity or venture debt financing, reflecting the risk profile of a smaller public company.
• The 'AS IS' sale of commercial real estate is standard practice, but the buyer's extensive waivers and indemnifications highlight a potentially higher risk assumption compared to transactions with more seller warranties.
• The issuance of preferred stock with significant control provisions (e.g., consent rights for capital raises, asset sales, reverse splits) is typical for structured financing where investors demand strong protections, often exceeding standard common shareholder rights.
• The valuation of common stock at $1.25 per share for the property transaction provides a benchmark for the company's equity, which can be compared to its current market trading price.

Corporate Governance

Stakeholder Impact

• Shareholders (Common Stock): Potential for significant dilution due to the issuance of common stock and warrants for the property acquisition and note conversion. The Series E Preferred Stock's superior rights and protective covenants could limit future upside and control for common shareholders.
• Series E Preferred Stock Holders: Benefit from a 10% annual preferred return, liquidation preference, and strong protective covenants, providing enhanced security and influence over company decisions.
• Creditors: The $11.7 million promissory note adds to the company's debt obligations. The Series E Preferred Stock ranks junior to debt but senior to common equity in liquidation.
• Employees: No direct impact mentioned, but strategic acquisitions and financing can affect long-term company stability and growth opportunities.
• Customers/Suppliers: No direct impact mentioned.

Next Steps

• File a registration statement (Form S-1) with the SEC within 15 business days of August 19, 2025, to register shares for the $2.1 million down payment and the 9,360,000 shares underlying the promissory note conversion.
• Complete satisfactory financial and physical due diligence on the Nashville property within 30 days of August 19, 2025.
• Make three non-refundable $100,000 installments for the Nashville property purchase at 30, 60, and 90 days following August 19, 2025.
• Work in good faith with the seller to transfer overhead costs and residuals of the Nashville property to the company during the due diligence period.
• Close the sale of the Nashville property on or before August 1, 2026, subject to satisfaction of closing conditions.
• Streeterville Capital, LLC will determine when, how, and whether to pursue collections or other actions against Damon, Inc., in consultation with the company.

Key Dates

Recommendation

The acquisition of a prime Nashville property and the investment in the Damon Note represent strategic growth initiatives. However, the significant dilution from the stock issuances, the substantial debt burden, the 'AS IS' nature of the property purchase, and the restrictive covenants of the Series E Preferred Stock introduce considerable risks and limit the company's operational and financial flexibility. The uncertainty surrounding the closing of the property acquisition further adds to the risk profile. Given these factors, a 'hold' recommendation is appropriate as the potential for growth is balanced by significant financial and governance risks, warranting careful monitoring of execution and future disclosures.

Keywords

Commercial Real Estate, Nashville Property, SEC Filing, 8-K, Preferred Stock, Series E Preferred Stock, Promissory Note, Damon Inc, Streeterville Capital, Corporate Governance, Dilution, Real Estate Acquisition, Financial Obligation, Nasdaq Listing, Risk Management