8-K: American Rebel Holdings Defaults on Bank of America Loan

American Rebel Holdings, Inc. and its subsidiary Champion Safe Company, Inc. defaulted on a Bank of America loan, leading to an outstanding debt of over $1.8 million and ongoing litigation.

Summary

• Champion Safe Company, Inc., a wholly-owned subsidiary of American Rebel Holdings, Inc., defaulted on a line of credit with Bank of America, N.A.
• A Forbearance Agreement, initially effective May 30, 2025, was extended to July 31, 2025, after Champion made two $100,000 principal payments.
• Champion failed to make the final payment of all amounts owed by July 31, 2025.
• As of July 31, 2025, the total amount due to Bank of America was $1,831,014.51, accruing interest at $570.23 per day.
• The outstanding amount includes $1,642,129.00 principal, $58,403.91 interest, $94,352.56 default interest, and $36,129.04 in legal fees.
• Bank of America filed a complaint on March 21, 2025, seeking no less than $1,906,742.88 plus fees and interest, due to the uncured default.
• The Company authorized the issuance of 175,000 shares of common stock each to Corey Lambrecht (President, COO, Director) and Charles A. Ross, Jr. (CEO, Director) on August 1, 2025, upon conversion of 350 shares of Series A Convertible Preferred Stock each.

Sentiment

Score: 2

Explanation: The filing indicates severe financial distress, including a loan default, ongoing litigation, and significant outstanding debt. While management states they are working towards an amicable resolution, the immediate financial situation is highly negative.

Positives

• The Company and Champion continue to work with Bank of America towards an amicable resolution to this matter.

Negatives

• Failure to make final payment on the outstanding loan amount by July 31, 2025.
• Significant outstanding debt of $1,831,014.51 as of July 31, 2025, with daily interest accrual of $570.23.
• Ongoing litigation initiated by Bank of America seeking over $1.9 million.
• Execution of a Confession of Judgment and Verified Statement by Borrower and Guarantors.

Risks

• Risk of Bank of America exercising remedies under the Credit Agreement due to uncured default.
• Exposure to significant financial liability from ongoing litigation, including principal, interest, default interest, legal fees, and potential additional fees, expenses, penalties, or costs.
• Potential for adverse judgments or enforcement actions from the Confession of Judgment.
• Dilution risk for existing shareholders from the conversion of preferred stock into common stock by insiders.

Future Outlook

The Company and Champion continue to work with Bank of America towards an amicable resolution to this matter.

Management Comments

• The Company and Champion continue to work with the Bank towards an amicable resolution to this matter.

Industry Context

This filing highlights the financial distress of American Rebel Holdings, Inc., a company operating in the consumer goods sector (likely safes/security products given 'Champion Safe Company'). The default on a significant loan and subsequent litigation indicate severe liquidity challenges, which can be exacerbated in periods of economic uncertainty or specific market downturns affecting discretionary consumer spending on durable goods like safes.

Comparison to Industry Standards

• The default on a secured loan and the initiation of litigation by a major financial institution like Bank of America are significant indicators of severe financial distress, falling well below industry standards for financial health and liquidity.
• Companies in a healthy financial state typically manage their debt obligations without requiring forbearance agreements or facing lawsuits for non-payment.
• For example, well-capitalized peers in the consumer durable goods sector would demonstrate consistent cash flow generation and robust balance sheets to service debt, unlike American Rebel Holdings' current situation.
• The company's inability to meet its obligations, even after a forbearance period and partial payments, suggests a fundamental issue with its operational cash flow or capital structure, contrasting sharply with financially stable companies that maintain strong credit ratings and access to capital markets.

Legal Proceedings

• Bank of America filed a complaint against Champion Safe Company, Inc. and its guarantors on March 21, 2025, in the Fourth Judicial District Court, Utah County, Utah (Case No. 250401345).
• The Bank is seeking no less than $1,906,742.88, plus outstanding and accruing attorneys' fees, pre and post-judgment interest, equitable relief, and any other relief deemed just and proper.
• Borrower and Guarantors executed a Confession of Judgment and Verified Statement in connection with the Forbearance Agreement.

Related Party Transactions

• On August 1, 2025, the Company authorized the issuance of 175,000 shares of common stock to Corey Lambrecht, the Company's President, COO, and a director, upon the conversion of 350 shares of Series A Convertible Preferred Stock.
• On August 1, 2025, the Company authorized the issuance of 175,000 shares of common stock to Charles A. Ross, Jr., the Company's CEO and a director, upon the conversion of 350 shares of Series A Convertible Preferred Stock.

Stakeholder Impact

• Shareholders: Significant negative impact due to the uncured default, ongoing litigation, and potential for further financial distress. The conversion of preferred stock to common stock by insiders could lead to dilution.
• Creditors (Bank of America): Directly impacted by the default and pursuing legal remedies to recover funds.
• Employees: Potential uncertainty regarding the company's financial stability and future operations.
• Customers/Suppliers: Potential impact on business continuity and relationships if financial issues escalate.

Next Steps

• Continue working with Bank of America towards an amicable resolution of the loan default and litigation.
• Address the outstanding debt of $1,831,014.51 and daily accruing interest.
• Manage the ongoing litigation (Case No. 250401345) with Bank of America.

Key Dates

Recommendation

The company is in severe financial distress, having defaulted on a significant loan from Bank of America, leading to ongoing litigation seeking over $1.9 million. The failure to meet obligations even after a forbearance period, coupled with the execution of a Confession of Judgment, indicates a precarious financial position and high risk of bankruptcy or severe dilution. The daily accrual of interest on the outstanding debt further exacerbates the situation. While management states they are working towards an amicable resolution, the current facts present an extremely high-risk investment profile with significant downside potential and minimal clear upside catalysts.

Keywords

American Rebel Holdings, AREB, Champion Safe Company, Bank of America, loan default, forbearance agreement, litigation, debt, SEC filing, 8-K, common stock, preferred stock conversion, corporate governance, financial distress