8-K/A: Reliant Holdings Issues New Series of Preferred Stock in Acquisition of HLDCO, LLC

Reliant Holdings, Inc. has completed the acquisition of HLDCO, LLC, issuing Series B, C, and D preferred stock to the former members of HLDCO.

Summary

• Reliant Holdings, Inc. acquired 100% ownership of HLDCO, LLC on June 17, 2024.
• The acquisition was completed by issuing 3,645 shares of Series B Preferred Stock, 6,570 shares of Series C Preferred Stock, and 100 shares of Series D Preferred Stock to the members of HLDCO, LLC.
• The members of HLDCO, LLC included Mount Olympus Ventures, Inc., Apollo Capital Corp., and M2B Funding Corp.
• The Series B Preferred Stock has a face value of $1,000 per share and pays a 2% quarterly dividend, which can be paid in cash, common stock, or additional Series B Preferred Stock at the holder's discretion.
• Series B Preferred Stock is convertible into common stock at 90% of the volume-weighted average price (VWAP) for the 10 trading days prior to conversion.
• The Series C Preferred Stock has a face value of $1,000 per share, pays no dividends, and converts into common stock at a rate of 33,334 shares of common stock per share of Series C Preferred Stock.
• In the event of a liquidation, merger, or acquisition, Series C Preferred Stock will convert to 52% of the fully diluted common stock.
• The Series D Preferred Stock has a face value of $1,000 per share, pays no dividends, and converts into 750,000 shares of common stock per share of Series D Preferred Stock upon an increase in the authorized common stock by at least 75 million shares.
• Series D Preferred Stock holders have 750,000 votes per share.

Sentiment

Score: 7

Explanation: The document outlines a significant acquisition and the issuance of new preferred stock, which is generally positive for the company's growth. However, the complexity of the preferred stock terms and the potential dilution from conversions introduce some uncertainty.

Positives

• The acquisition of HLDCO, LLC expands Reliant Holdings' business operations.
• The Series B Preferred Stock offers a dividend, providing potential income to holders.
• The conversion features of the preferred stock provide potential upside for holders if the common stock price increases.
• The liquidation preference of Series C Preferred Stock provides some downside protection for holders.

Negatives

• Series C and D Preferred Stock do not pay dividends.
• The conversion of Series D Preferred Stock is contingent on an increase in the authorized common stock, which may not occur immediately.
• The Series B and C Preferred Stock have a beneficial ownership limitation of 4.99% which can be increased to 9.99% after 61 days notice.

Risks

• The value of the common stock is subject to market fluctuations, which could impact the value of the preferred stock upon conversion.
• The company may not be able to increase the authorized common stock to allow for the conversion of Series D Preferred Stock.
• The company may not be able to pay dividends on the Series B Preferred Stock in the future.
• The beneficial ownership limitation may restrict the ability of holders to convert their preferred stock.

Future Outlook

The company will need to increase the authorized number of common shares to allow for the conversion of the Series D Preferred Stock. The company may also need to consider the impact of the conversion of the Series B and C preferred stock on the ownership structure.

Management Comments

• There are no direct quotes from management in this document.

Industry Context

The issuance of preferred stock is a common method for companies to raise capital or complete acquisitions. The specific terms of the preferred stock, such as conversion ratios and dividend rates, are tailored to the specific needs of the company and the investors.

Comparison to Industry Standards

• The use of convertible preferred stock is a common practice in corporate finance, particularly for acquisitions and private placements.
• The conversion ratios and dividend rates are specific to this transaction and would need to be compared to similar transactions to determine if they are within industry norms.
• The liquidation preference of the Series C Preferred Stock is a common feature to protect investors in the event of a company sale or liquidation.
• The voting rights of the Series D Preferred Stock are unusual and provide significant control to the holders.

Related Party Transactions

• Mount Olympus Ventures, Inc., via owner Claude Zdanow, has a material relationship with the Company, via his appointment as a director and officer of the Company, and through Mount Olympus Ventures, Inc.'s acquisition of 100% of the Series A Preferred Stock of the Company.

Stakeholder Impact

• Shareholders may experience dilution upon conversion of the preferred stock.
• The acquisition may lead to increased business opportunities and potential growth for the company.
• The new preferred stock holders will have specific rights and preferences that could impact the existing shareholders.

Next Steps

• Reliant Holdings will need to increase the authorized number of common shares to accommodate the conversion of Series D Preferred Stock.
• The company will need to manage the potential dilution of common stock from the conversion of the preferred shares.
• The company will need to ensure compliance with all securities regulations related to the issuance and conversion of the preferred stock.

Key Dates

Keywords

preferred stock, acquisition, conversion, dividends, HLDCO, Reliant Holdings, Series B, Series C, Series D, common stock