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Related Party Transactions
12 Months Ended
Dec. 31, 2020
Related Party Transactions [Abstract]  
Related Party Transactions

NOTE 16. RELATED PARTY TRANSACTIONS

 

American Rebel Holding, Inc. Secured Promissory Notes

 

On October 1, 2020, the Company advanced $250,000 to American Rebel Holdings, Inc. (AREB) under a secured promissory note. The CEO, President and Chairman of AREB is the brother of the Company’s CEO, President and Chairman. Such note bears interest at 8% and is secured by all the tangible and intangible assets of the Company that are not currently secured by other indebtedness. The Company also received warrants to purchase 1,250,000 shares of AREB common stock at an exercise price of $0.10 per share with a five-year term. This note had an original maturity date of January 2, 2021; however, additional provisions within the note provided for an extension of the maturity date for fourteen months due to AREB’s failure to raise $300,000 in new debt or equity financing prior to the original maturity date. Upon this extension, the AREB was obligated to make equal monthly payments of principal and interest over the extended period of the note. The required monthly payments have not been made by AREB, therefore this note is currently in default status.

 

On October 21, 2020, the Company advanced $250,000 to American Rebel Holdings, Inc. (AREB) under a second secured promissory note. Such note bears interest at 8% and is secured by inventory manufactured and revenue/accounts receivable derived from a specific purchase order. The Company also received warrants to purchase 1,250,000 shares of AREB common stock at an exercise price of $0.10 per share with a five-year term. This note has a maturity date of April 21, 2021, subject to full repayment upon AREB closing on debt or equity financings of at least $600,000, and the receipt of revenue from the sale of inventory sold under the specific purchase order serving as collateral. The required monthly payments have not been made by AREB, therefore this note is currently in default status. On March 1, 2021, the Company advanced an additional $117,600 to AREB on terms similar to the previously issued notes.

 

The parties have been negotiating the terms of a Forbearance Agreement regarding the following: (a) the secured promissory note dated October 1, 2020; (b) the secured promissory note dated October 21, 2020; and (c) an advance made by the Company on March 1, 2021. The parties are attempting to arrange for a series of payments that will liquidate the outstanding balances of the two delinquent notes and the advance by no later than June 30, 2021. Based on the terms being negotiated, if AREB timely and fully complies with all of its obligations under the Forbearance Agreement, the Company would agree that AREB’s obligations to the Company in connection with the defaults would be satisfied. However, there is no assurance that the parties will agree to the terms contained in the Forbearance Agreement, and whether AREB will be able to comply with such terms.

 

Unsecured Promissory Notes Payable – Related party

 

During February and April 2020, the Company borrowed a total of $319,000 from the Company’s Chairman, CEO & President under an unsecured promissory note bearing interest at 6% through its May 28, 2020 maturity date. The proceeds from the note were used for general corporate purposes. The principal balance and related accrued interest were paid in full in cash during the year ended December 31, 2020. Total interest accrued and paid on this note was $5,236.