American Rebel Holdings Inc. (NASDAQ:AREB), a company specializing in miscellaneous fabricated metal products, has entered into a securities purchase agreement and secured a loan with 1800 Diagonal Lending, LLC. The loan, evidenced by a promissory note for $122,960, was issued with an original issue discount and fees resulting in net proceeds of $100,000 for the company. The loan is set to be repaid in nine installments starting on October 30, 2024, with a total repayment amount of $140,174.
In the event of a default, the note may be paid back at 150% of the outstanding amount, including principal, interest, and default interest, if any, at a rate of 22% per annum. Additionally, only upon an event of default, the lender has the option to convert the unpaid principal into restricted shares of American Rebel's common stock at a 25% discount to the market price, with a limitation to less than 4.99% of the total outstanding common stock.
Alongside the loan, the company has also issued and sold shares of its Series D Convertible Preferred Stock. On October 1, 2024, 53,334 shares were issued to a lender as part of a settlement agreement, and an additional 31,500 shares were sold to two accredited investors for total proceeds of $236,250. Both transactions involved shares valued at $7.50 each.
The issuance and sale of the preferred stock were conducted under the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as the purchasers were accredited investors capable of evaluating and bearing the risks associated with such an investment.
In other recent news, American Rebel Holdings, Inc. has implemented a 1-for-9 reverse stock split, reducing the number of outstanding shares from approximately 9.5 million to about 1.06 million. This move is aimed at meeting Nasdaq's minimum bid price requirement for continued listing. In another financial development, American Rebel issued 669,643 shares of common stock to settle an agreement with a vendor, potentially conserving cash reserves for other uses.
The company also secured two significant loans, one for $179,400 from 1800 Diagonal Lending, LLC, and another for $400,000 from board director Lawrence Sinks. These funds are expected to support its operations and ongoing expansion efforts. However, American Rebel is currently facing a trademark infringement lawsuit filed by Liberty Safe and Security Products, Inc., which could potentially impact its financial and operational outcomes.
On the personnel front, Todd Porter has been appointed as the President of its beverage division, American Rebel Beverages, LLC. Thomas Mihalek has taken over as the CEO of its subsidiary, Champion Safe Co., and GBQ Partners LLC has been appointed as its independent auditors.
In terms of product developments, American Rebel anticipates beer sales to reach around $1 million for 2024, with a significant increase expected in 2025. Lastly, the company has initiated a Reg A+ offering, inviting investors to participate in the company's growth.
InvestingPro Insights
American Rebel Holdings Inc.'s recent financial maneuvers, including the loan agreement and preferred stock issuance, should be viewed in the context of the company's current financial situation. According to InvestingPro data, AREB has a market capitalization of just $2.11 million, indicating its small-cap status. The company's revenue for the last twelve months as of Q2 2024 stands at $15.45 million, with a concerning revenue growth decline of 3.59% over the same period.
InvestingPro Tips highlight that AREB "operates with a significant debt burden" and "may have trouble making interest payments on debt." These insights are particularly relevant given the new loan agreement, which adds to the company's financial obligations. The tip that the company is "quickly burning through cash" also provides context for why AREB might be seeking additional capital through these recent transactions.
It's worth noting that while analysts anticipate sales growth in the current year, AREB has not been profitable over the last twelve months. The stock has also taken a significant hit, with a 70.34% decline in the past week alone, according to InvestingPro data.
For investors considering AREB, it's crucial to note that InvestingPro offers 17 additional tips for this stock, providing a more comprehensive analysis of the company's financial health and market position.
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