8-K: American Rebel Restructures Debt, Secures Convertible Note

American Rebel Holdings, Inc. has restructured its debt with Streeterville Capital, LLC, repaying a Bank of America loan and issuing a new secured convertible note and warrants.

Summary

• American Rebel Holdings, Inc. (AREB) entered into a Global Amendment and Exchange Agreement with Streeterville Capital, LLC on September 10, 2025.
• The company released $2,000,000 from a Deposit Account Control Agreement (DACA) to repay a Bank of America loan of $1,860,955.45, with the remaining $139,044.55 released to the company.
• A $1,000,000 funds release fee was added to the original secured promissory note with Streeterville Capital, increasing its outstanding balance to $6,580,485.83.
• A portion of $1,300,000 was then partitioned from this original note.
• This partitioned amount was exchanged for a new Secured Convertible Promissory Note (Exchange Note) with a principal amount of $1,310,000, which includes a $10,000 transaction expense.
• A two-year warrant was also issued to Streeterville Capital to purchase 225,000 shares of Series D Convertible Preferred Stock at $7.50 per share.
• The Exchange Note carries a 12% annual interest rate, compounds daily, and matures in seven years.
• The Exchange Note is convertible into common stock at $0.80 per share or Series D Convertible Preferred Stock at $7.50 per share.
• The company's Champion Safe subsidiaries (Champion Safe Company, Inc., Superior Safe Co., LLC, Safe Guard Security Products, LLC, and Champion Safe de Mexico, S.A. de C.V.) provided a guaranty and security agreement, and the company pledged its equity interests in these subsidiaries as security for the notes.
• A fee of $160,000 was paid to Carter, Terry & Company, Inc. in connection with the DACA funds release.

Sentiment

Score: 3

Explanation: While the Bank of America loan was resolved, the cost of this resolution and the terms of the new financing with Streeterville Capital are highly unfavorable, introducing significant financial risk and potential dilution. The high interest rate, substantial fees, and punitive default clauses outweigh the benefit of resolving the prior default.

Positives

• Successfully repaid the Bank of America loan of $1,860,955.45, resolving a previously reported default.
• Secured a new 7-year convertible promissory note, providing long-term financing flexibility.
• The new Exchange Note allows for cashless conversions into common or preferred stock.
• The resolution of the Bank of America loan will lead to the dismissal of a lawsuit and release of collateral.

Negatives

• Incurred a significant $1,000,000 funds release fee, which was added to the outstanding balance of the original note.
• The interest rate on the new Exchange Note is high at 12% per annum, compounding daily.
• The company is subject to 'Trigger Events' and 'Events of Default' which can lead to substantial penalties (10% or 5% increase in outstanding balance, up to 30% total, and 18% default interest).
• The conversion price of $0.80 for common stock is subject to a 'VWAP' condition, where if the daily VWAP falls to 66% or less of the conversion price, the lender can demand cash repayment in three monthly installments.
• The company is required to obtain shareholder approval for common stock issuances exceeding 19.99% of outstanding shares as of the Exchange Date (Exchange Cap).
• A fee of $160,000 was paid to Carter, Terry & Company, Inc. for the DACA funds release transaction.

Risks

• High Debt Burden and Cost: The existing note balance increased by $1,000,000 due to a funds release fee, and the new convertible note carries a 12% annual interest rate, compounding daily.
• Dilution Risk: Conversion of the Exchange Note and exercise of the warrant into common or preferred stock could lead to significant dilution for existing shareholders.
• Share Price Volatility Impact: If the daily Volume Weighted Average Price (VWAP) of common stock falls to 66% or less of the $0.80 conversion price, the lender can demand accelerated cash repayment of the Exchange Note.
• Event of Default Penalties: Various 'Trigger Events' (e.g., failure to pay, insolvency, failure to deliver conversion shares, fundamental transaction without consent) can lead to a 5% or 10% increase in the outstanding balance (up to 30% total) and an 18% default interest rate.
• Shareholder Approval Risk: Failure to obtain shareholder approval for common stock issuances exceeding 19.99% of outstanding shares could force the company to honor conversion notices in cash, potentially straining liquidity.
• Registration Statement Penalties: Failure to file or maintain effectiveness of the resale registration statement for common shares can result in cash penalties of 1% of the outstanding balance every 30 days after 120 days.
• Ownership Limitation: Lender cannot beneficially own more than 9.99% of common shares, which could limit conversion flexibility for the lender.
• Security and Guaranty: The notes are secured by a guaranty from subsidiaries and a pledge of equity interests in those subsidiaries, increasing the risk exposure of these operating entities.

Future Outlook

The company plans to file a resale registration statement on Form S-1 within 30 days to register at least 1,125,000 common shares for the lender's resale. It also commits to filing a preliminary information statement (PRE 14C) within three days and a definitive information statement (DEF 14C) within ten days of obtaining shareholder approval for common stock issuances exceeding the 19.99% cap. The Bank of America lawsuit dismissal and UCC-3 termination are in process.

Management Comments

• Borrower acknowledges that this Note is an unconditional, valid, binding and enforceable obligation of Borrower not subject to offset, deduction or counterclaim of any kind.
• Borrower hereby waives any rights of offset it now has or may have hereafter against Lender, its successors and assigns, and agrees to make the payments or Conversions called for herein in accordance with the terms of this Note.
• Borrower acknowledges and understands that the representations and agreements of Borrower in this Section 4 are a material inducement to Lenders decision to consummate the transactions contemplated herein.

Industry Context

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Corporate Governance

Legal Proceedings

• Bank of America is in the process of filing a dismissal of the lawsuit and a UCC-3 termination and release of all collateral under the line of credit, following the repayment of the loan.

Stakeholder Impact

• Shareholders: Significant potential for dilution from convertible notes and warrants. The high cost of financing and punitive default terms could negatively impact shareholder value. Shareholder approval is required for certain equity issuances, giving them a say in future dilution.
• Creditors (Streeterville Capital): Enhanced security through guaranties and pledges of subsidiary equity. Favorable conversion terms and strong default remedies provide significant protection and potential upside.
• Employees/Operations: The resolution of the Bank of America loan removes an immediate financial threat, potentially stabilizing operations. However, the high cost of new debt could strain future cash flow.

Next Steps

• Bank of America is in the process of filing a dismissal of the lawsuit and a UCC-3 termination and release of all collateral.
• Company will file a resale registration statement on Form S-1 within 30 days of September 10, 2025, to register at least 1,125,000 common shares for the lender's resale.
• Company will file any applicable sticker updates to the registration statement within two trading days of the event necessitating the update.
• If the number of common shares in the registration statement becomes insufficient, the company will file another resale registration statement within 20 days.
• Upon obtaining shareholder approval for issuances exceeding the 19.99% cap, the company will file a SEC form PRE 14C Preliminary Information Statement within three days and a SEC form DEF14C Definitive Information Statement within ten days.

Key Dates

Recommendation

The terms of this debt restructuring are highly unfavorable for American Rebel Holdings, Inc. While the immediate crisis of the Bank of America loan default is resolved, the cost is substantial: a $1,000,000 funds release fee, a 12% daily compounding interest rate on the new convertible note, and punitive default clauses (up to 30% balance increase, 18% default interest). The potential for significant shareholder dilution from conversions and warrants, coupled with the risk of accelerated cash repayment if the stock price declines, creates a precarious financial position. The company is essentially trading one set of financial pressures for another, more expensive, and potentially more dilutive, arrangement. This structure heavily favors the lender, Streeterville Capital, and signals significant financial distress and a high cost of capital for American Rebel, making the stock a 'sell' for seasoned investors.

Keywords

American Rebel Holdings, Streeterville Capital, Secured Convertible Promissory Note, Warrant, Debt Restructuring, SEC Filing, Corporate Finance, Convertible Debt, Preferred Stock, Common Stock, Loan Repayment, Corporate Governance, AREB, Nasdaq