8-K: American Rebel Holdings Faces Lawsuit from Bank of America, Implements Reverse Stock Split

American Rebel Holdings is facing a lawsuit from Bank of America regarding a $2 million credit facility and is implementing a 1-for-25 reverse stock split to regain compliance with Nasdaq listing requirements.

Summary

• American Rebel Holdings is currently involved in a legal dispute with Bank of America concerning a $2 million credit facility.
• Bank of America filed a complaint on March 21, 2025, alleging breach of loan documents, breach of implied covenant of good faith, and unjust enrichment.
• The company intends to defend against the complaint while seeking a settlement with the bank.
• American Rebel Holdings is also implementing a 1-for-25 reverse stock split, effective March 31, 2025, to meet Nasdaq's minimum bid price requirement of $1.00 per share.
• The reverse stock split will reduce the number of outstanding shares from approximately 15.0 million to approximately 600 thousand, not including shares issued for round lot protection.
• The company is protecting round lot shareholders (those holding 100 or more shares) by ensuring they retain at least 100 shares post-split.
• Fractional shares resulting from the reverse stock split will be rounded up to the nearest whole share.
• The company issued unregistered securities through exchanges of notes for common stock and payments to Silverback Capital Corporation (SCC).
• As of March 26, 2025, the company had 14,964,566 shares of common stock issued and outstanding.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the lawsuit from Bank of America and the reverse stock split, although the company is taking steps to address these challenges and has seen some success with its beer launch.

Positives

• The company is actively working with Bank of America to find a long-term solution to repay the credit facility.
• The company is committed to protecting the interests of its stockholders, particularly those owning round lots of 100 or more shares.
• The company's beer launch with Tramonte Distributing has shown an 11% penetration rate into their market in just a few weeks.

Negatives

• Bank of America has filed a lawsuit against the company for breach of loan documents and other related claims.
• The company is implementing a reverse stock split, which can be perceived negatively by investors.
• The company has been issuing unregistered securities, which could raise regulatory concerns.

Risks

• The outcome of the lawsuit with Bank of America is uncertain and could have a material adverse effect on the company's financial condition.
• The reverse stock split may not be successful in maintaining Nasdaq listing compliance.
• The company's ability to raise adequate working and expansion capital is a risk factor.
• The company's ability to meet production demands and expand its sales organization are also risks.

Future Outlook

The company intends to defend against the lawsuit from Bank of America and work towards a settlement, while also focusing on regaining compliance with Nasdaq listing requirements through the reverse stock split and continuing the launch of American Rebel Beer.

Management Comments

• We had an incredible time with the folks from Tramonte, their customers and all the veterans and fans that attended our northeast Ohio launch event at MAPS, said American Rebel CEO Andy Ross.
• The launch party of American Rebel Light at the MAPS Air Museum at the Akron Canton Airport was a huge success, said Mike Tramonte, President, Tramonte Distributing.
• We are excited to partner with Tramonte Distributing to bring American Rebel Beer to Akron, OH, and the surrounding counties, said Todd Porter, President of American Rebel Beverages.

Industry Context

The company is operating in the competitive beverage industry and is also involved in the safes and personal security products market. The reverse stock split is a common strategy for companies facing delisting from exchanges like Nasdaq.

Comparison to Industry Standards

• Reverse stock splits are often used by companies like American Rebel to maintain listing compliance, similar to actions taken by other small-cap companies facing delisting threats.
• The legal dispute with Bank of America is not uncommon for companies with credit facilities, and the outcome will depend on the specific terms of the agreement and the company's ability to negotiate a settlement.
• The 11% penetration rate in Tramonte's market for American Rebel Light Beer is a positive early indicator, but it needs to be sustained and expanded to compete with established brands in the beverage industry.

Legal Proceedings

• Bank of America filed a complaint in the Fourth Judicial District Court in and for Utah County, State of Utah (Case No. 250401345) against the Company and its subsidiaries alleging four causes of action related to the credit facility: (i) Breach of the Loan Documents Champion Safe; (ii) Breach of the Loan Documents Guarantors (the Company, American Rebel, Inc., Superior Safe Co., L.L.C. and Safe Guard Security Products LC); (iii) Breach of the Implied Covenant of Good Faith and Fair Dealing all parties; and (iv) Unjust Enrichment Champion Safe.

Stakeholder Impact

• Shareholders will be affected by the reverse stock split, which will reduce the number of outstanding shares and could impact the stock price.
• Employees may be affected by the legal dispute with Bank of America, depending on the outcome and its impact on the company's financial stability.
• Customers may be affected by the company's ability to continue operations and provide products and services.
• Suppliers and creditors may be affected by the company's financial condition and its ability to meet its obligations.

Next Steps

• The company will defend against the lawsuit from Bank of America and seek a settlement.
• The company will implement the 1-for-25 reverse stock split on March 31, 2025.
• The company will continue to monitor its stock price to ensure compliance with Nasdaq listing requirements.
• The company will continue to expand the distribution of American Rebel Beer.

Key Dates

Keywords

reverse stock split, Bank of America, lawsuit, credit facility, Nasdaq, common stock, American Rebel, securities, shares, beer