UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement.
Securities Exchange and Amendment Agreements
Effective August 5, 2024, the Registrant entered into a Securities Exchange and Amendment Agreement (the “Securities Exchange Agreement No. 1”) with an individual accredited investor.
On April 9, 2024, the Registrant and the investor entered into a $75,000 Revenue Interest Purchase Agreement (the “Revenue Agreement No. 1”).
Pursuant to the Securities Exchange Agreement No. 1, the Registrant and the investor exchanged a portion of the Revenue Agreement No. 1 for 10,010 shares of Series D Convertible Preferred Stock. In addition, the investor retained a continuing revenue interest pursuant to the Revenue Agreement No. 1, amending certain provisions of the Revenue Agreement No. 1 as follows:
Commencing on October 1, 2024 and continuing thereafter until all amounts are repurchased by the Registrant pursuant to the terms of the Revenue Agreement, the investor has a right to receive $7,500 per month from the Registrant generated from its operating subsidiaries (the “Revenue Interest”).
Under the Revenue Agreement, the Company has an option (the “Call Option”) to repurchase the Revenue Interest at any time upon two days advance written notice. Additionally, the Purchasers have an option (the “Put Option”) to terminate the Revenue Interest Purchase Agreement and to require the Registrant to repurchase future Revenue Interest upon the Registrant consummating a public offering pursuant to Regulation A. The repurchase price to be paid by the Registrant will be, if the Call Option or the Put Option is exercised (i) $70,312.50 if repurchased on or before September 30, 2024; and (ii) $75,937.50 after October 1, 2024; in each case of (i) or (ii), minus all Revenue Interest or other payments made by the Registrant to the investor prior to such date.
Effective August 5, 2024, the Registrant entered into a second Securities Exchange and Amendment Agreement (the “Securities Exchange Agreement No. 2”) with an individual accredited investor.
On March 22, 2023, the Registrant and the investor entered into a $100,000 Revenue Interest Purchase Agreement (the “Revenue Agreement No. 2”).
Pursuant to the Securities Exchange Agreement No. 2, the Registrant and the investor exchanged a portion of the Revenue Agreement No. 2 for 12,134 shares of Series D Convertible Preferred Stock. In addition, the investor retained a continuing revenue interest pursuant to the Revenue Agreement No. 2, amending certain provisions of the Revenue Agreement No. 2 as follows:
Commencing on October 1, 2024 and continuing thereafter until all amounts are repurchased by the Registrant pursuant to the terms of the Revenue Agreement, the investor has a right to receive $10,000 per month from the Registrant generated from its operating subsidiaries (the “Revenue Interest”).
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Under the Revenue Agreement, the Company has an option (the “Call Option”) to repurchase the Revenue Interest at any time upon two days advance written notice. Additionally, the Purchasers have an option (the “Put Option”) to terminate the Revenue Interest Purchase Agreement and to require the Registrant to repurchase future Revenue Interest upon the Registrant consummating a public offering pursuant to Regulation A. The repurchase price to be paid by the Registrant will be, if the Call Option or the Put Option is exercised (i) $93,750 if repurchased on or before September 30, 2024; and (ii) $101,250 after October 1, 2024; in each case of (i) or (ii), minus all Revenue Interest or other payments made by the Registrant to the investor prior to such date.
The Securities Exchange Agreements No. 1 and No. 2 included representations, warranties and covenants by the Registrant and investors that are customary for transactions of this type.
The foregoing description of the Securities Exchange Agreements No. 1 and No. 2 are not complete descriptions of all of the parties’ rights and obligations under the Securities Exchange Agreements No. 1 and No. 2, and are qualified in their entirety by reference to the Securities Exchange Agreements No. 1 and No. 2, copies of which are filed as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K.
Amended Revenue Interest Purchase Agreements
Effective August 5, 2024, the Registrant entered into an Amended Revenue Interest Purchase Agreement (the “Amended RIP Agreement No. 1”) with an individual accredited investor.
On April 1, 2024, the Registrant and the investor entered into a $100,000 Revenue Interest Purchase Agreement (the “Revenue Agreement No. 3”).
Pursuant to the Amended RIP Agreement No. 1, the Registrant and the investor agreed to amend certain provisions of the Revenue Agreement No. 3 as follows:
Commencing on October 1, 2024 and continuing thereafter until all amounts are repurchased by the Registrant pursuant to the terms of the Revenue Agreement, the investor has a right to receive $10,000 per month from the Registrant generated from its operating subsidiaries (the “Revenue Interest”).
Under the Revenue Agreement, the Company has an option (the “Call Option”) to repurchase the Revenue Interest at any time upon two days advance written notice. Additionally, the Purchasers have an option (the “Put Option”) to terminate the Revenue Interest Purchase Agreement and to require the Registrant to repurchase future Revenue Interest upon the Registrant consummating a public offering pursuant to Regulation A. The repurchase price to be paid by the Registrant will be, if the Call Option or the Put Option is exercised (i) $187,500 if repurchased on or before September 30, 2024; and (ii) $202,500 after October 1, 2024; in each case of (i) or (ii), minus all Revenue Interest or other payments made by the Registrant to the investor prior to such date.
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Effective August 5, 2024, the Registrant entered into an Amended Revenue Interest Purchase Agreement (the “Amended RIP Agreement No. 2”) with an individual accredited investor.
On April 9, 2024, the Registrant and the investor entered into a $100,000 Revenue Interest Purchase Agreement (the “Revenue Agreement No. 4”).
Pursuant to the Amended RIP Agreement No. 2, the Registrant and the investor agreed to amend certain provisions of the Revenue Agreement No. 4 as follows:
Commencing on October 1, 2024 and continuing thereafter until all amounts are repurchased by the Registrant pursuant to the terms of the Revenue Agreement, the investor has a right to receive $10,000 per month from the Registrant generated from its operating subsidiaries (the “Revenue Interest”).
Under the Revenue Agreement, the Company has an option (the “Call Option”) to repurchase the Revenue Interest at any time upon two days advance written notice. Additionally, the Purchasers have an option (the “Put Option”) to terminate the Revenue Interest Purchase Agreement and to require the Registrant to repurchase future Revenue Interest upon the Registrant consummating a public offering pursuant to Regulation A. The repurchase price to be paid by the Registrant will be, if the Call Option or the Put Option is exercised (i) $187,500 if repurchased on or before September 30, 2024; and (ii) $202,500 after October 1, 2024; in each case of (i) or (ii), minus all Revenue Interest or other payments made by the Registrant to the investor prior to such date.
Effective August 5, 2024, the Registrant entered into an Amended Revenue Interest Purchase Agreement (the “Amended RIP Agreement No. 3”) with an individual accredited investor.
On April 9, 2024, the Registrant and the investor entered into a $300,000 Revenue Interest Purchase Agreement (the “Revenue Agreement No. 5”).
Pursuant to the Amended RIP Agreement No. 3, the Registrant and the investor agreed to amend certain provisions of the Revenue Agreement No. 5 as follows:
Commencing on October 1, 2024 and continuing thereafter until all amounts are repurchased by the Registrant pursuant to the terms of the Revenue Agreement, the investor has a right to receive $30,000 per month from the Registrant generated from its operating subsidiaries (the “Revenue Interest”).
Under the Revenue Agreement, the Company has an option (the “Call Option”) to repurchase the Revenue Interest at any time upon two days advance written notice. Additionally, the Purchasers have an option (the “Put Option”) to terminate the Revenue Interest Purchase Agreement and to require the Registrant to repurchase future Revenue Interest upon the Registrant consummating a public offering pursuant to Regulation A. The repurchase price to be paid by the Registrant will be, if the Call Option or the Put Option is exercised (i) $562,500 if repurchased on or before September 30, 2024; and (ii) $607,500 after October 1, 2024; in each case of (i) or (ii), minus all Revenue Interest or other payments made by the Registrant to the investor prior to such date.
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In addition, the Amended RIP Agreements No. 1, No. 2 and No. 3 contain various representations and warranties, covenants and other obligations and other provisions that are customary for a transaction of this nature.
The foregoing description of the material terms of the Amended RIP Agreements No. 1, No. 2 and No. 3 does not purport to be complete and is qualified in their entirety by reference to the complete text of the Amended RIP Agreements No. 1, No. 2 and No. 3, copies of which are filed as Exhibits 10.3, 10.4 and 10.5 herewith and incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth above in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.
During February 2023, the Registrant entered into a $2 million master credit agreement (credit facility) with Bank of America. The credit facility is secured by all the assets of the Registrant’s Champion subsidiaries and guaranteed by the Registrant, the Champion subsidiaries and the Registrant’s CEO. The Line of Credit expired on February 28, 2024, but the Registrant and Champion Safe Company have been actively working with the bank to extend or modify the credit facility.
Despite being current on all payments under the credit facility and actively working with the bank for a long-term solution to repay the credit facility, on July 25, 2024, Champion Safe Company received a notice of default and demand for payment from the bank. The current balance owing to the bank is $2,017,539.27 and interest is accruing at $743.38 per day. The Registrant is currently negotiating a forbearance or other cure to the default and a plan for repayment of the credit facility within sixty (60) to ninety (90) days with its assigned relationship manager at the bank.
However, if the Registrant is unable to cure the default, or extend or replace the credit facility, it would have a material impact on the Registrant and its Champion subsidiaries’ working capital needs. In addition, the Registrant having to raise equity or debt financing to repay the credit facility or obtaining a new credit facility may be on substantially worse terms than the current credit facility.
Item 3.02 Sale of Unregistered Securities
The information set forth above in Item 1.01 of this Current Report on Form 8-K regarding the Securities Exchange Agreements No. 1 and No. 2 is incorporated herein by reference.
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The issuance of the shares of Series D Convertible Preferred Stock will not be registered under the Securities Act of 1933, as amended, in reliance upon the exemption from the registration requirements of that Act provided by Section 4(a)(2) thereof. Each investor is an accredited investor with the experience and expertise to evaluate the merits and risks of an investment in securities of the Registrant and the financial means to bear the risks of such an investment.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Description | |
| 10.1 | Securities Exchange and Amendment Agreement No. 1 effective August 5, 2024 | |
| 10.2 | Securities Exchange and Amendment Agreement No. 2 effective August 5, 2024 | |
| 10.3 | $100,000 Amended RIP Agreement No. 1 effective August 5, 2024 | |
| 10.4 | $100,000 Amended RIP Agreement No. 2 effective August 5, 2024 | |
| 10.5 | $300,000 Amended RIP Agreement No. 3 effective August 5, 2024 | |
| 104 | Cover Page Interactive Data File |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AMERICAN REBEL HOLDINGS, INC. | ||
| Date: August 7, 2024 | By: | /s/ Charles A. Ross, Jr. |
| Charles A. Ross, Jr. | ||
| Chief Executive Officer | ||
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