8-K: American Rebel Holdings Secures New Convertible Note

American Rebel Holdings, Inc. has entered into a new Secured Convertible Promissory Note with Streeterville Capital, LLC for $6,235,000, effective July 10, 2026.

Summary

• American Rebel Holdings, Inc. (Borrower) has issued a Secured Convertible Promissory Note to Streeterville Capital, LLC (Lender) for $6,235,000, with an effective date of July 10, 2026.
• The note has a maturity date of twelve months after the Purchase Price Date and carries a 10% annual interest rate, compounded daily.
• The note includes an original issue discount (OID) of $565,000 and a transaction expense amount of $20,000, resulting in a purchase price of $5,650,000.
• The Lender has the right to convert the outstanding balance into common shares at a conversion price of 80% of the lowest closing trade price during the ten trading days preceding the conversion date.
• The note is secured by collateral outlined in various agreements, including a DACA, Guaranty, Security Agreement, and Pledge Agreement.
• Events of default are broadly defined and include failure to pay, insolvency, bankruptcy, and breaches of covenants. Remedies for default include acceleration of the debt and potential increases to the outstanding balance.
• The company has also entered into other financing agreements, including a note with 1800 Diagonal Lending, LLC and exchanges with Streeterville Capital for previous notes.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this filing as having a negative sentiment due to the significant debt issuance with potentially dilutive conversion features and aggressive default terms, despite the capital infusion.

Positives

• Secured a significant convertible promissory note of $6,235,000 to fund operations or strategic initiatives.
• The note provides flexibility for the company to convert debt into equity under certain conditions.
• The note is secured, which may indicate favorable terms or lender confidence.
• The company has entered into multiple agreements to manage its debt and capital structure.

Negatives

• The note carries a 10% annual interest rate, which is a significant cost of capital.
• An original issue discount of $565,000 and transaction expenses of $20,000 reduce the net proceeds received by the company.
• The conversion price is set at 80% of the lowest closing trade price, which could lead to significant dilution for existing shareholders if conversion occurs at low stock prices.
• Broadly defined events of default and remedies, including a 15% 'Default Effect' on the outstanding balance, could significantly increase the company's debt obligations.
• The company has multiple outstanding debt instruments and has engaged in several note exchanges, indicating a potentially complex and evolving capital structure.

Risks

• Potential for significant shareholder dilution if the note is converted into common stock at a discounted price.
• Risk of default due to the broad definition of events of default, which could lead to accelerated repayment and increased debt obligations.
• The company's reliance on convertible debt may indicate financial distress or difficulty accessing traditional financing.
• The note is secured, meaning default could lead to the seizure of collateral.
• The company has entered into multiple financing agreements, suggesting ongoing capital needs and potential financial strain.

Future Outlook

The filing primarily details a new financing agreement and does not contain specific forward-looking financial guidance. However, the issuance of a convertible note suggests a strategy to potentially manage debt through equity conversion, which could impact future share structure and financial leverage.

Management Comments

• No direct management comments are included in the provided text, as it consists of legal and financial documentation.
• The execution of the note by Charles A. Ross, Jr., Chief Executive Officer, signifies management's approval and commitment to the agreement.

Industry Context

StockSavvy.ai notes that the issuance of convertible notes is a common, albeit sometimes controversial, financing tool for companies, particularly those in growth phases or facing capital constraints. It allows for debt financing with the potential to convert to equity, which can be attractive to lenders seeking upside potential and to borrowers seeking to defer equity dilution. However, it also carries risks of significant dilution and increased debt burden if defaults occur.

Comparison to Industry Standards

• The 10% interest rate on the convertible note is within the typical range for such instruments, especially for companies with higher risk profiles.
• The conversion price being set at 80% of the lowest closing trade price during a 10-day period is a common feature in convertible notes, designed to provide a discount to the lender.
• The 120% prepayment penalty is also a standard feature to compensate the lender for early repayment.
• The 'Default Effect' of a 15% increase in the outstanding balance upon default, applicable up to three times, is a more aggressive term than typically seen in standard corporate debt, highlighting the lender's protective measures.
• The inclusion of various security agreements (DACA, Guaranty, Security Agreement, Pledge Agreement) indicates a robust collateral package, which is standard for secured debt but the breadth of subsidiaries involved suggests a complex security structure.

Stakeholder Impact

• Shareholders: Potential for significant dilution if the note is converted into common stock at a discounted price. The company's financial health and ability to service debt will also impact shareholder value.
• Creditors: The secured nature of the note and the collateralization by subsidiaries may impact the claims of other creditors in the event of default.
• Management: Management is responsible for managing the debt obligations and potential equity dilution resulting from the note.

Next Steps

• Monitor the company's ability to meet its obligations under the note.
• Observe potential conversion of the note into common stock and its impact on share count and dilution.
• Track the company's financial performance to assess its capacity to repay the debt or manage conversions effectively.
• Review future filings for updates on the status of this note and other financing arrangements.

Key Dates

Recommendation

The filing details a significant convertible debt issuance which introduces both capital and potential dilution risks. While the capital infusion is necessary, the terms are aggressive, and the company's ability to manage this debt and avoid default or excessive dilution remains uncertain. A 'hold' recommendation is appropriate pending further clarity on the company's operational performance and strategic use of these funds.

Keywords

Secured Convertible Promissory Note, American Rebel Holdings, Streeterville Capital, Debt Financing, Convertible Debt, Dilution, Event of Default, Capital Raise