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AMERICAN REBEL HOLDINGS INC

Date Filed : Apr 15, 2022

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Asfiled with the Securities and Exchange Commission on April 15, 2022

 

RegistrationNo.

 

 

 

UNITEDSTATES

SECURITIESAND EXCHANGE COMMISSION

Washington,D.C. 20549

 

 

 

FORMS-1

REGISTRATIONSTATEMENT

UNDER

THESECURITIES ACT OF 1933

 

 

 

AMERICANREBEL HOLDINGS, INC.

(Exactname of registrant as specified in its charter)

 

Nevada   7372   47-3892903

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

 

718Thompson Lane, Suite 108-199

Nashville,Tennessee, 37204

(833)267-3235

(Address,including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

CharlesA. Ross, Jr.

ChiefExecutive Officer

718Thompson Lane, Suite 108-199

Nashville,Tennessee, 37204

(833)267-3235

(Name,address, including zip code, and telephone number, including area code, of agent for service)

 

 

 

Copiesto:

 

Joseph Lucosky, Esq.

Adele Hogan, Esq.

Lucosky Brookman LLP

101 Wood Avenue South

Woodbridge, New Jersey 08830

Telephone: (732) 395-4400

 

 

 

Approximatedate of commencement of proposed sale to the public:

Assoon as practicable after the effective date of this registration statement.

 

Ifany of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under theSecurities Act of 1933 check the following box. ☒

 

Ifthis Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check thefollowing box and list the Securities Act registration statement number of the earlier effective registration statement for the sameoffering. ☐

 

Ifthis Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list theSecurities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

Indicateby check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company,or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smallerreporting company,” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934.

 

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer Smaller reporting company
  Emerging growth company

 

Ifan emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complyingwith any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

 

Theregistrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until theregistrant shall file a further amendment which specifically states that this registration statement shall thereafter become effectivein accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as theSecurities and Exchange Commission, acting pursuant to said section 8(a), may determine.

 

 

 

 

 

 

Theinformation in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registrationstatement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securitiesand we are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY PROSPECTUS SUBJECTTO COMPLETION, DATED APRIL 15, 2022

 

AMERICAN REBEL HOLDINGS, INC.

 

377,484 Sharesof Common Stock Underlying 377,484 Pre-funded Warrants and

377,484Shares of Common Stock Underlying Warrants to Purchase Common Stock

 

 

 

Thisprospectus relates to the offering and resale by the Selling Security Holders identified herein of up to an aggregate of 754,968 sharesof the Company’s Common Stock, par value $0.001 per share (the “Common Stock”). The 754,968 shares of Common Stockconsist of 377,484 shares of Common Stock underlying the Pre-funded Warrants issued in connection with the Company’s Public Offering(the “Pre-funded Warrants”) and 377,484 shares of Common Stock underlying warrants to purchase Common Stock (the “Warrants”).The Pre-funded Warrants and Warrants were issued upon the conversion of the senior secured convertible promissory notes (the “Notes”)held by the Security Selling Holders. The Pre-funded Warrants have an exercise price of $0.01 per share of Common Stock and the Warrantshave an exercise price of $5.1875 per share of Common Stock.

 

Our Common Stock are traded on the Nasdaq CapitalMarket under the symbols “AREB”. On April 13, 2022, the closing price of our Common Stock as reported on the Nasdaq CapitalMarket was $1.75 per share. This price will fluctuate based on the demand for our Common Stock. However, the Common Stock offeredby this prospectus may also be offered by the Selling Security Holders to or through underwriters, dealers, or other agents, directlyto investors, or through any other manner permitted by law, on a continued or delayed basis. Please see “Plan of Distribution”beginning on page 28 of this prospectus.

 

We are not selling any shares of Common Stockin this offering, and we will not receive any proceeds from the sale of shares by the Selling Security Holders. The registration of thesecurities covered by this prospectus does not necessarily mean that any of the securities will be offered or sold by the Selling SecurityHolders. The timing and amount of any sale is within the respective Selling Security Holders’ sole discretion, subject to certainrestrictions.

 

Investing in our securities involves a highdegree of risk. See “Risk Factors” in the section entitled “Risk Factors” on page 13 of this prospectusfor a discussion of certain risk factors that should be considered by prospective purchasers of the Common Stock offered under this prospectus.

 

You should rely only on the information containedin this prospectus or any prospectus supplement or amendment hereto. We have not authorized anyone to provide you with different information.

 

Investingin our securities involves a high degree of risk. See “Risk Factors” beginning on page 13 of this prospectus. Youshould carefully consider these risk factors, as well as the information contained in this prospectus, before purchasing any of thesecurities offered by this prospectus.

 

NEITHERTHE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSEDUPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

The date of this prospectus isApril 15, 2022.

 

 

 

 

TABLEOF CONTENTS

 

  Page
   
Cautionary Note Regarding Forward-Looking Statements ii
Prospectus Summary 1
Risk Factors 13
Use of Proceeds 28
Management’s Discussion and Analysis of Financial Condition and Results of Operations 30
Business 35
Management 47
Executive and Director Compensation 51
Principal Stockholders 56
Certain Relationships and Related Person Transactions 58
Description of our Securities 59
Legal Matters 65
Experts 65
Where You Can Find Additional Information 65
Index to Financial Statements F-1

 

You may only rely on the information containedin this prospectus or that we have referred you to. We have not authorized anyone to provide you with different information. This prospectusdoes not constitute an offer to sell or a solicitation of an offer to buy any securities other than the Common Stock offered by thisprospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any Common Stock in any circumstancesin which such offer or solicitation is unlawful. Neither the delivery of this prospectus nor any sale made in connection with this prospectusshall, under any circumstances, create any implication that there has been no change in our affairs since the date of this prospectusis correct as of any time after its date.

 

Unless the context otherwise requires, weuse the terms “we,” “us,” “the Company”, “American Rebel” and “our” to referto American Rebel Holdings, Inc. and its consolidated subsidiaries.

 

i
 

 

CAUTIONARYNOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Thisprospectus contains forward-looking statements that reflect our current expectations and views of future events, all of which are subjectto risks and uncertainties. Forward-looking statements give our current expectations or forecasts of future events. You can identifythese statements by the fact that they do not relate strictly to historical or current facts. In some cases, you can identify forward-lookingstatements by terminology such as “may,” “might,” “should,” “intends,”“expects,” “plans,” “goals,” “projects,” “anticipates,” “believes,”“estimates,” “predicts,” “potential,” or “continue” or the negative of these terms orother comparable terminology. These forward-looking statements should be evaluated with consideration given to the risks and uncertaintiesinherent in our business that could cause actual results and events to differ materially from those in the forward-looking statements.

 

Suchforward-looking statements are based on a series of expectations, assumptions, estimates and projections about our Company, are not guaranteesof future results or performance, and involve significant risks, uncertainties and other factors, including assumptions and projections,for all future periods. Our actual results may differ materially from any future results expressed or implied by such forward-lookingstatements. Such factors include, among others:

 

  our ability to achieve positive cash flow from operations and new business opportunities;

 

  our current reliance on a sole manufacturer and supplier for the production of our safes;

 

  our new manufacturing partner’s ability to meet production demands, both quantitively and qualitatively;

 

  our ability to expand our sales organization to address effectively existing and new markets that we intend to target;

 

  impact from future regulatory, judicial, and legislative changes or developments in the U.S. and foreign countries;

 

  our ability to compete effectively in a competitive industry;

 

  our ability to identify suitable acquisition candidates to consummate acquisitions on acceptable terms, or to successfully integrate acquisitions in connection with the execution of our growth strategy, the failure of which could disrupt our operations and adversely impact our business and operating results;

 

  our ability to obtain funding for our operations;

 

 

our creditors not accelerating debt obligations;

 

 

our ability to satisfy debt obligations going forward;

 

  our ability to attract collaborators and strategic arrangements;

 

 

our ability to meet the Nasdaq Capital Market continued listing requirements;

 

 

our sole manufacturer’s ability to find adequate replacement in events of shortages of components and materials, and manage chain disruptions;

     
  our current reliance on our founder and Chief Executive Officer, Charles A, Ross;

 

  general business and economic conditions, including macroeconomic conditions resulting from the continuing global COVID-19 pandemic;

 

  our ability to meet our financial obligations as they become due; and

 

 

the rate and degree of market acceptance and demand of our products.

 

Theforward-looking statements contained in this prospectus are based on our current expectations and beliefs concerning future developmentsand their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated.These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptionsthat may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.The foregoing list of important factors does not include all such factors, nor necessarily present them in order of importance. For additionalinformation regarding risk factors that could affect the Company’s, see “Risk Factors” beginning on page 13of this prospectus, and as may be included from time-to-time in our reports filed with the Securities and Exchange Commission (the “SEC”).

 

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TheCompany intends the forward-looking statements to speak only as of the time of such statements and does not undertake or plan to updateor revise such forward-looking statements as more information becomes available or to reflect changes in expectations, assumptions orresults. The Company can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrenceof, or any material adverse change in, one or more of the risk factors or risks and uncertainties referred to in this prospectus, couldmaterially and adversely affect our results of operations, financial condition, and liquidity, and our future performance. We undertakeno obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise,except as may be required under applicable securities laws.

 

IndustryData and Forecasts

 

This prospectus contains data related to thepermanent and temporary safes and concealed self-defense products industry in the United States. This industry data includes projectionsthat are based on a number of assumptions which have been derived from industry and government sources which we believe to be reasonable.We have not independently verified such third-party information. Industry and market data could be inaccurate because of the method bywhich sources obtained their data and because information cannot be verified with complete certainty due to the limits on the availabilityand reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. Industry andmarket data are often forecasts by industry experts best equipped to make forecasts, but all forecasts bear a certain degree of uncertaintyand should not be relied upon as facts. Such data and estimates are necessarily subject to a high degree of uncertainty and risk dueto a variety of factors, including those described in “Risk Factors.” The permanent and temporary safes and concealed self-defenseproducts industries may not grow at the rate projected by industry data, or at all. The failure of the industries to grow as anticipatedis likely to have a material adverse effect on our business and the market price of our Common Stock. In addition, the rapidly changingnature of the permanent and temporary safes and concealed self-defense industries subjects any projections or estimates relatingto the growth prospects or future condition of our industries to significant uncertainties. Furthermore, if any one or more of the assumptionsunderlying the industry data turns out to be incorrect, actual results may, and are likely to, differ from the projections based on theseassumptions.

 

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PROSPECTUSSUMMARY

 

Thefollowing highlights certain information contained elsewhere in this prospectus. It does not contain all the details concerning thisoffering, including information that may be important to you. You should carefully review this entire prospectus including the sectionentitled “Risk Factors” and the consolidated historical and consolidated pro forma financial statements and accompanyingnotes contained herein. See “Where You Can Find More Information.” Unless the context otherwise requires, we use the terms“we,” “us,” “the Company,” “American Rebel” and “our” to refer to AmericanRebel Holdings, Inc. and its wholly-owned subsidiary American Rebel, Inc.

 

OurCompany

 

The Company operates primarily as a marketerand designer of branded safes and personal security and self-defense products. Additionally,the Company designs and produces branded apparel andaccessories.

 

We believe that whenit comes to their homes, consumers place a premium on their security and privacy. Our products are designed to offer our customers convenient,efficient and secure home and personal safes from a provider that they can trust. We are committed to offeringproducts of enduring quality that allow customers to keep their valuable belongings protected and to express theirpatriotism and style, which is synonymous with the American Rebel brand.

 

Our safes and personal security products areconstructed primarily of U.S.-made steel. We believe our products are designed to safely store firearms, as well as store our customers’priceless keepsakes, family heirlooms and treasured memories, and aim to make our products accessible at various price points for homeuse. We believe our products are designed for safety, quality, reliability, features and performance.

 

To enhance the strength of our brand and drive productdemand, we work with our sole supplier and manufacturer to emphasize product quality and mechanical development in order to improve theperformance and affordability of our products while providing support to our distribution channel and consumers. We seek to sell productsthat offer features and benefits of higher-end safes at mid-line price ranges.

 

We believe that safes are becoming a ‘must-haveappliance’ in a significant portion of households. We believe our current safes provide safety, security, style and peace of mindat competitive prices. We are in the process of developing a newly designed model safe, which is expected to be produced in the U.S.We anticipate our new model safe will offer and be equipped with technologically advanced features, such as independent bolt works operation,double-steel door-jamb framing, and a standardized geared locking mechanism.

 

In addition to branded safes, we offer an assortmentof personal security products as well as apparel and accessories for men and women under the Company’s American Rebel brand. Ourbackpacks utilize what we believe is a distinctive sandwich-method concealment pocket, which we refer to as Personal Protection Pocket,to hold firearms in place securely and safely. The concealment pockets on our Freedom 2.0 Concealed Carry Jackets incorporatea silent operation opening and closing with the use of a magnetic closure.

 

We believe that we have the potential to continueto create a brand community presence around the core ideals and beliefs of America, in part through our Chief Executive Officer, CharlesA. “Andy” Ross, who has written, recorded and performs a number of songs about the American spirit of independence. We believeour customers identify with the values expressed by our Chief Executive Officer through the “American Rebel” brand.

 

Through our growing network of dealers, we promote and sell ourproducts in select regional retailers and local specialty safe, sporting goods, hunting and firearms stores, as well as online,including our website and e-commerce platforms such as Amazon.com

 

 

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OurProducts

 

Safes

 

Weoffer a wide range of home, office and personal safe models, in a broad assortment of sizes, features and styles, which are constructedwith U.S.-made steel. Demand for our safes is growing moderately across all segments of our customers, including individuals andfamilies seeking to protect their valuables, businesses seeking to protect valuables and irreplaceable items such as artifacts and jewelry,and dispensaries servicing the community that seek to protect their inventory and cashflow. Traditionally, our safes have particularlyappealed to responsible gun owners, sportsmen, competitive shooters and hunters seeking a premiumand responsible solution to secure valuables and firearms, to prevent theft and to protect loved ones. We expect to benefit from increasingawareness of and need for safe storage of firearms in future periods. 

 

 

Below isa summary of the different safes we offer:

 

i.Large Safes – our current large model safe collection consists of six premium safes. All of our large safes share the same high-quality workmanship, are constructed out of 11-gauge U.S.-made steel and feature a double plate steel door, double-steel door casements and reinforced door edges. Each of these safes provide up to 75 minutes of fire protection at 1200 degrees Fahrenheit. Our safes offer a fully adjustable interior to fit our customers’ needs. Depending on the model, one side of the interior may have shelves and the other side set up to accommodate long guns. There are optional additions such as Rifle Rod Kits and Handgun Hangers to increase the storage capacity of the safe. These large safes offer greater capacity for secure storage and protection, and our safes are designed to prevent unauthorized access, including in the event of an attempted theft, natural disaster or fire. We believe that a large, highly visible safe also acts as a deterrent to any prospective thief.

 

ii.Personal Safes – the safes in our compact safe collection are easy to operate and carry as they fit into briefcases, desks or under vehicle seats. These personal safes meet Transportation Security Administration (“TSA”) airline firearm guidelines and fit comfortably in luggage when required by travel regulations.

 

iii.Vault Doors – our U.S.-made vault doors combine style theft and fire protection for a look that fits any decor. Newly-built, higher-end homes often add vault rooms and we believe our vault doors, which we designed to facilitate secure access to such vault rooms, provide ideal solutions for the protection of valuables and shelter from either storms or intruders. Whether it’s in the context of a safe room, a shelter, or a place to consolidate valuables, our American Rebel in- and out-swinging vault doors provide maximum functionality to facilitate a secure vault room. American Rebel vault doors are constructed of 4 ½” double steel plate thickness, A36 carbon steel panels with sandwiched fire insulation, a design that provides greater rigidity, security and fire protection. Active boltworks, which is the locking mechanism that bolts the safe door closed so that it cannot be pried open and three external hinges that support the weight of the door, are some of the features of the vault door. For safety and when the door is used for a panic or safe room, a quick release lever is installed inside the door.

 

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Dispensary Safes - our HG-INV Inventory Safe, a safe tailor-made for the cannabis community, provides cannabis and horticultural plant home growers a reliable and safe solution to protect their inventory. Designed with medical marijuana or recreational cannabis dispensaries in mind, and increasing governmental and insurance industry regulation to lock inventory after hours, we believe our HG-INV Inventory Safe delivers a high-level of user experience.

 

 

PersonalSecurity

 

In addition to home,office and personal safes, we offer certain other security products, such as our concealed carry backpack selection.Our backpacks consist of an assortment of sizes, features and styles. Our XL, Large, and Mediumconcealed carry backpacks feature our proprietary “Personal Protection Pocket” which utilizes a sandwich method tokeep handguns secure and in the desired and easily accessible position. The sandwich method is comprised of two foam pads that surroundor sandwich the firearm in place. The user can access the isolated Protection Pocket from either side of the backpack. These concealedcarry backpacks are designed for everyday use while keeping firearms concealed, safe and easily accessible.

 

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i.The Extra-Large Freedom and Cartwright CCW Backpack – our largest concealed carry backpack. This backpack offers ample storage, including a dedicated top loading laptop pouch and additional tablet sleeve. Both compartments are padded to protect your devices. Two large open compartments make this backpack practical for carrying items such as laptops or documents from one place to another, and the multiple interior compartments offer space to store other personal items. Our proprietary “Personal Protection Pocket” allows quick and easy access to your handgun from either side. Our Extra-Large Freedom and Cartwright CCW Backpack is available in a variety of designs and trim color options.

 

ii.Large Freedom and Cartwright CCW Backpack - our most popular concealed carry backpack. This backpack offers ample storage, including a dedicated top loading laptop pouch and an additional tablet sleeve. Both compartments are padded to protect your items. The size of the compartment opening makes this backpack practical for carrying documents, folders or whatever you need to tote from one place to another. Our Large Freedom and Cartwright CCW Backpack includes our proprietary “Personal Protection Pocket” and is available in the Freedom and Cartwright style as well as a variety of designs and trim color options.

 

iii.Medium Freedom CCW Backpack - this backpack offers ample storage, including a dedicated top loading laptop/tablet compartment and two liquid container pouches. The laptop/tablet compartment is padded to protect your devices. The opening is practical for carrying personal items while on the go. Our Medium Freedom CCW Backpack includes our proprietary “Personal Protection Pocket” and is available in a variety of trim color options.

 

iv.Small Plus CCW Backpack – our small one-strap concealed carry backpack is designed for those on the go and is suitable for use while running, jogging biking. Our concealment pocket contains a holster and attaches to the interior with hook and loop material. Soft fleece-lined pockets for your tablet, glasses case and accessories are also included. Our Small Plus CCW Backpack is available in dark blue or in our signature patriotic “We The People” design.

 

v.Small Freedom CCW Backpack –this one strap pack contains a holster and attaches to the interior with hook and loop material. There is also plenty of room for a smalltablet, cell phone, chargers and other necessities. Available in a variety of trim color options.

 

Appareland Accessories

 

Weoffer a wide range of concealed carry jackets, vests and coats for men and women.We also offer patriotic apparel for the whole family, with the American Rebel imprint. Our apparel line serves as “pointman” for the brand, often acting as the first point of exposure that people have to all things American Rebel. Ourapparel line is designed and branded to be stylish, patriotic and bold. We emphasize styling that complements our enthusiasts’and customers’ lifestyle, representing the values of our community and quintessential American character.The American Rebel clothing line style is not only a fashion statement; we seek to cultivate a sense of pride of belonging to ourpatriotic family, in your adventures and in life.

 

i.Cartwright Winter Coats and Jackets – engineered for comfort, warmth, versatility and mobility, our Cartwright winter collection lends textural warmth to these performance-ready, cold-weather essentials. Our Concealed Carry Coats are designed with purpose and informed by the rugged demands of the everyday hard worker. Its quality construction and workmanship are designed to keep you warm and shielded from the elements. Left-hand and right-hand concealed pocket access provides for secure and safe concealment of your firearm with easy access on either side.

 

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ii.Freedom 2.0 CCW Jackets and Vests for Men and Women - our lightweight jackets collection is designed with magnetic pocket closures for silent, secure and safe concealment. Our lightweight jackets are crafted to facilitate easy firearm access for both right-handed and left-handed carriers.

 

iii.American Rebel T-Shirts Collection - American Rebel’s T-shirts collection is created for those who embrace patriotism and the spirit of an endless summer.

 

Inaddition to our apparel line, we also offer select supplemental accessories for our products, including space savings items for our safessuch as hangers, lights kits, moisture guard, and rifle rod kits.

 

Upcoming Product Offerings

 

To further complementour diverse product offerings, we intend to introduce additional products in the year of 2022.  Belowis a summary of our upcoming product offerings:

 

  i. Biometrics Safes – we will be introducing our line of wall safes and handgun boxes with biometrics, WiFi and Bluetooth technologies. These Biometric Safes have been designed, engineered and are ready for production.
     
  ii. Personal Security Device – we are developing a non-lethal device that deters an attacker with an audible siren, which would draw attention to the attacker, as well as notifying the user’s support network that help is needed and providing the location of the attack.
     
  iii. Wall Safes – the upcoming wall safes can be easily hidden and provide “free” storage space since they are able to be tucked into the space between your wall and studs.
     
  iv. Youth Protection Backpack – with the objective of keeping kids safe at school, we are designing the Youth Protection Backpack, which will incorporate a light-weight ballistic shield to provide protection when needed for our children as they go through their school day activities.

 

OurCompetitive Strengths

 

We believe we are progressing toward long-term,sustainable growth, and our business has, and our future success will be driven by, the following competitive strengths:

 

Powerful Brand Identity – we believe we have developed a distinctive brand that sets us apart from our competitors. This has contributed significantly to the success of our business. Our brand is predicated on patriotism and quintessential American character: protecting our loved ones. We strive to equip our safes with technologically advanced features that offer customers advanced security to provide the peace of mind they need. Maintaining, protecting and enhancing the “American Rebel” brand is critical to expanding our loyal enthusiasts base, network of dealers and other partners. Through our branded apparel and accessories, we seek to further enhance our connection with the American Rebel community and share the values of patriotism and safety for which our Company stands for. We strive to continue to meet their need for our premium safes and will depend largely on our ability to maintain customer trust, become a gun safe storage leader and continue to provide high-quality safes.

 

Product Design and Development – our current safe model relies on time-tested features, such as Four-Way Active Boltworks, pinning the door shut on all four sides (compared to Three-Way Bolt works, which is prevalent in our competitors’ safes), and benefits that would not often be available in our price point, including 11-gauge US-made steel. The sleek exterior of our safes has garnered attention and earned the moniker from our dealers as the “safe with an attitude.” When we set out to enter the safe market, we wanted to offer a safe that we would want to buy, one that would get our attention and provide excellent value for the cost.

 

Focus on Product Performance - since the introduction of our first safes, we have maintained a singular focus on creating a full range of safe, quality, reliable safes that were designed to help our customers keep their family and valuables safe at all times. We incorporate advanced features into our safes that are designed to improve strength and durability. Key elements of our current model safes’ performance include:

 

DoublePlate Steel Door - 4 ½” Thick

ReinforcedDoor Edge – 7/16” Thick

Double-SteelDoor Casement

SteelWalls – 11-Gauge

DiameterDoor Bolts – 1 ¼” Thick

Four-WayActive Boltworks – AR-50(14), AR-40(12), AR-30(10), AR-20(10), AR-15(8), AR-12(8)

Diamond-EmbeddedArmor Plate

 

* Double Plate Steel Dooris formed from two U.S.-made steel plates with fire insulation sandwiched inside. Thicker steel is placed on the outside of the doorwhile the inner steel provides additional door rigidity and attachment for the locking mechanism and bolt works. The door edge is reinforcedwith up to four layers of laminated steel. Pursuant to industry-standard strength tests performed, this exclusive design offers up to16 times greater door strength and rigidity than the “thin metal bent to look thick” doors.

 

* Double-Steel Door Casementis formed from two or more layers of steel and is welded around the perimeter of the door opening. Pursuant to industry-standard strengthtests performed, it more than quadruples the strength of the door opening and provides a more secure and pry-resistant door mounting.Our manufacturer installs a Double-Steel Door Casement™ on our safes. We believe the reinforced door casementfeature provides important security as the safe door is often a target for break-in attempts.

 

* Diamond-Embedded Armor PlateIndustrial diamond is bonded to a tungsten steel alloy hard plate. Diamond is harder than either a cobalt or carbide drill. Ifdrilling is attempted the diamond removes the cutting edge from the drill, thus dulling the drill bit to where it will not cut.

 

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Trusted Brand - we believe that we have developed a trusted brand with both retailers and consumers for delivering reliable, secure safes solutions.

 

Customer Satisfaction - we believe we have established a reputation for delivering high-quality safes and personal security products in a timely manner, in accordance with regulatory requirements and our retailers’ delivery requirements and supporting our products with a consistent merchandising and marketing message. We also believe that our high level of service, combined with strong consumer demand for our products and our focused distribution strategy, produces substantial customer satisfaction and loyalty. We also believe we have cultivated an emotional connection with the brand which symbolizes a lifestyle of freedom, rugged individualism, excitement and a sense of bad boy rebellion.

 

Proven Management Team - our founder and Chief Executive Officer, Charles A. Ross, Jr., has led the expansion and focus on the select product line we offer today. We believe that Mr. Ross had an immediate and positive impact on our brand, products, team members, and customers. Under Mr. Ross’s leadership, we believe that we have built a strong brand and strengthened the management team. We are refocusing on the profitability of our products, reinforcing the quality of safes to engage customers and drive sales. We believe our management team possess an appropriate mix of skills, broad range of professional experience, and leadership designed to drive board performance and properly oversee the interests of the Company, including our long-term corporate strategy. Our management team also reflects a balanced approach to tenure that will allow the Board to benefit from a mix of newer members who bring fresh perspectives and seasoned directors who bring continuity and a deep understanding of our complex business.

 

 

OurGrowth Strategy

 

Our goal is to enhance our position as a designer,producer and marketer of premium safes and personal security products. We have established plans to grow our business by focusingon three key areas: (1) organic growth and expansion in existing markets; (2) strategic acquisitions, and (3) expanding the scope ofour operation activities to the dispensaries U.S. community.

 

We have developed what we believe is a multi-prongedgrowth strategy, as described below, to help us capitalize on a sizable opportunity. Through methodical sales and marketing efforts,we believe we have implemented several key initiatives we can use to grow our business more effectively. We believe we have made significantprogress in 2021 in the form of nearly $200,000 in sales to first-time buyers. We also intend to opportunistically pursue the strategiesdescribed below to continue our upward trajectory and enhance stockholder value. Key elements of our strategy to achieve thisgoal are as follows:

 

Organic Growth and Expansion in Existing Markets- Build our Core Business

 

The cornerstone of our business has historically beenour safes product offering. We are focused on continuing to develop our home, office and personal safes product lines. We are investingin adding what we believe are distinctive technology solutions to our safes.

 

We are also working to increase floor space dedicatedto our safes and strengthen our online presence in order to expand our reach to new enthusiasts and build our devoted American Rebel community.We intend to continue to endeavor to create and provide retailers and customers with what we believe are responsible, safe, reliable andstylish products, and we expect to concentrate on tailoring our supply and distribution logistics in response to the specific demandsof our customers.

 

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We are currently developing a new model of ourhome and office safes. Our new safe model, which we expect to introduce at industry tradeshows in early 2022, is to be built in the U.S. through our collaboration with Industrial Maintenance Incorporated(“IMI”). The new “Made in the USA” safe model is expected to be manufactured in Topeka, Kansas, and is readyto begin production. We believe IMI’s location is very advantageous, as it is located near our sales office in Lenexa,Kansas.

 

We expect thenew planned model to include additional features, such as a reinforced door and upgraded locking mechanism, and increased fire rating,among others. We are focused on developing best in class, compelling combination of functionality, convenience and style withoutcompromising performance of our safes. We intend to use our designing and developing processes to enhance technological and time to marketadvantages over incumbent safes manufacturers.

 

While we currently rely on third-party manufacturesfor the production of our current line of safes, apparel and accessories, we believe that the expected addition of manufacturing capabilitiesfollowing the signing of the contract with the aforementioned manufacturer, which we anticipate to work exclusively withus, would allow us, among other benefits, to ramp up our production levels to meet expected demand for our products, provide us greaterautonomy over the manufacturing process, and add what we believe are distinctive features.

 

Additionally,our Concealed Carry Product line and Safe line serve a large and growing market segment. We believe that interest in safes increase,as well as in our complimentary concealed carry backpacks and apparel as a byproduct, when interest of the general population in firearmsincrease. To this extent, the FBI’s National Instant Criminal Background Check System (NICS), which we believe serves as a proxyfor gun sales since a background check is generally needed to purchase a firearm, reported a record number of background checks in 2020,39,695,315. The prior annual record for background checks was 2019’s 28,369,750. In 2021, there were 38,876,673 backgroundchecks conducted, similar to that of 2020’s annual record whichwas 40% higher than the previous annual record in 2019. While we do not expect this increase in backgroundchecks to necessarily translate to an equivalent number of additional safes purchased, we do believe it might be an indicator of the increaseddemand in the safe market. In addition, certain states (such as Massachusetts, California,New York and Connecticut) are starting to legislate new storage requirements in respect of firearms, which is expectedto have positive impact on the sale of safes.

 

We continue to strive to strengthen our relationshipswith our current distributors, dealers, manufacturers and specialty retailers and to attract other distributors, dealers, and retailers.We believe that the success of our efforts depends on the distinctive features, quality, and performance of our products; continued manufacturingcapabilities and meeting demand for our safes; the effectiveness of our marketing and merchandising programs; and the dedicated customersupport.

 

In addition, we seek to improve customer satisfactionand loyalty by offering distinctive, high-quality products on a timely and cost-attractive basis and by offering efficient customer service.We regard the features, quality, and performance of our products as the most important components of our customer satisfaction and loyaltyefforts, but we also rely on customer service and support for growing our business.

 

Furthermore, we intend to continue improving ourbusiness operations, including research and development, component sourcing, production processes, marketing programs, and customer support.Thus, we are continuing our efforts to enhance our production by increasing daily production quantities through equipment acquisitions,expanded shifts and process improvements, increased operational availability of our equipment, reduced equipment down times, and increasedoverall efficiency.

 

We believe that by enhancing our brand recognition,our market share might grow correspondingly. Industry sources estimate that 70 million to 80 million people in the United States ownan aggregate of more than 400 million firearms, creating a large potential market for our safes and personal security products. We arefocusing on the premium segment of the market through the quality, distinctiveness, and performance of our products; the effectivenessof our marketing and merchandising efforts; and the attractiveness of our competitive pricing strategies.

 

TargetedStrategic Acquisitions for Long-term Growth

 

Weare consistently evaluating and considering acquisitions opportunities that fit our overall growth strategy as part of our corporatemission to accelerate long-term value for our stockholders and create integrated value chains.

 

Alongthese lines, in March of 2022 we entered into a letter of intent (“LOI”) to purchase a safe manufacturer. The final structureof the acquisition will be determined by the parties following the receipt of tax, corporate and securities law advice. The acquisitionwill be structured as an arm’s length transaction and pursuant to the terms of the LOI the parties intend to sign a definitiveagreement in respect of the acquisition on or before April 30, 2022. Under the terms of the LOI, we would acquire all of the outstandingshares of capital stock of the acquisition target, free and clear of all encumbrances for a combination of cash and stock. As part ofthe LOI, we gave the target a $250,000 non-refundable deposit, which will be credited to us at closing. Completion of the acquisitionis subject to a number of conditions, including but not limited to the following key conditions: the target obtaining an audit of itsfinancial statements; execution of the definitive and ancillary agreements; completion of mutually satisfactory due diligence; us obtainingsufficient financing to complete the acquisition; and receipt of all required regulatory, corporate and third-party approvals, and thefulfillment of all applicable regulatory requirements and conditions necessary to complete the acquisition. 

 

Expanding Scope of Operations Activities by Offering Servicing Dispensariesand Brand Licensing

  

Wecontinually seek to target new consumer segments for our safes. As we believe that safes are becoming a must-have household appliance,we strive to establish authenticity by selling our products to additional groups, and to expand our direct-to-consumer presence throughour website and our showroom in Lenexa, Kansas.

 

Further, we expect the cannabis dispensary industryto be a material growth segment for our business. Several cannabis dispensary operators have expressed interest in the opportunity tohelp them with their inventory locking needs. Cannabis dispensaries have various insurance requirements and local ordinances requiringthem to secure their inventory when the dispensary is closed. Dispensary operators have been purchasing gun safes and independently takingout the inside themselves to allow them to store cannabis inventory. Recognizing what seems to be a growing need for cannabis dispensaryoperators, we have designed a safe tailor-made for the cannabis industry. With the legal cannabis hyper-growth market expected to exceed$43 billion by 2025, and an increasing number of states where the growth and cultivation of cannabis is legal (California, Colorado,Hawaii, Maine, Maryland, Michigan, Montana, New Mexico, Oregon, Rhode Island, Vermont and Washington), we believe we are well positionedto address the need of dispensaries. American Rebel has a long list of dispensary operators, growers, and processors interested in theCompany’s inventory control solutions. We believe that dispensary operators, growers, and processors are another fertile new growthmarket for our Vault Doors products, as many in the cannabis space have chosen to install entire vault rooms instead of individual inventorycontrol safes—the American Rebel Vault Door has been the choice for that purpose.

 

Further, we believe that American Rebel has significantpotential for branded products as a lifestyle brand. As the American Rebel Brand continues to grow in popularity, we anticipate generatingadditional revenues from licensing fees earned from third parties who wish to engage the American Rebel community. While the Companydoes not generate material revenues from licensing fees, our management believes the American Rebel brand name may in the future havesignificant licensing value to third parties that seek the American Rebel name to brand their products to market to the American Rebeltarget demographic. For example, a tool manufacturer that wants to pursue an alternative marketing plan for a different look and feelcould license the American Rebel brand name for their line of tools and market their tools under our distinct brand. This licensee wouldbenefit from the strong American Rebel brand with their second line of American Rebel branded tools as they would continue to sell bothof the lines of tools. Conversely, American Rebel could potentially also benefit as a licensee of products. If American Rebel determinesa third party has designed, engineered, and manufactured a product that would be a strong addition to the American Rebel catalog of products,American Rebel could license that product from the third-party and sell the licensed product under the American Rebel brand.

 

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Competition

 

The safe industry is dominated by a small numberof companies. We compete primarily on the quality, safety, reliability, features, performance, brand awareness, and price of our products.Our primary competitors Superior Safe, Champion Safe as well as certain other domestic and international safe manufacturers. Webelieve that given the current substantial uncertainty related to the supply chain and deliveryof international goods, we have a competitive advantage because of what we believe is our affinity marketing with the AmericanRebel brand and the fact our safes are not manufactured overseas.

 

Financing Arrangements

 

We currently have one promissory note outstandingthat we utilize to finance our operation. The note is dated July 1, 2021, and is in the amount of $600,000. The note matureson June 30, 2022, and interest on the note is 12% annually, paid quarterly.

 

For a complete description of our credit facilitiesand the financial and restrictive covenants contained therein, please see “Management’s Discussion and Analysis of FinancialCondition and Results of Operations—Financing Arrangements.”

 

Please see our risk factors in connectiontherewith, including “Our substantial level of indebtedness and our current liquidity constraints could adversely affect our financialcondition and our ability to service our indebtedness, which could negatively impact your ability to recover your investment in the Common Stock,” “Our indebtedness could adversely affect our business and limit our ability to plan for or respond to changes inour business, and we may be unable to generate sufficient cash flow to satisfy significant debt service obligations,” and “Despitethe Company’s indebtedness levels, we are able to incur substantially more debt. This could further increase the risks associatedwith its leverage.”

 

IntellectualProperty

 

Webelieve our commercial success depends in part on our ability to obtain and maintain intellectual property protection for our brand andtechnology, defend and enforce our intellectual property rights, preserve the confidentiality of our trade secrets, operate our businesswithout infringing, misappropriating or otherwise violating the intellectual property or proprietary rights of third parties and preventthird parties from infringing, misappropriating or otherwise violating our intellectual property rights. We rely on a combination ofpatent, copyright and trade secret laws in the United States to protect our proprietary technology. We also rely on a number of UnitedStates registered, pending and common law trademarks to protect our brand “American Rebel”.

 

On May 29, 2018, US Patent No. 9,984,552, FirearmDetecting Luggage, was issued to us. The term of thepatent is 20 years from the issuance date. In addition to our patent, we rely upon unpatented trade secrets and know-how and continuingtechnological development and maintain our competitive position. Trade secrets and know-how, however, can be difficult to protect.We seek to protect our proprietary information, in part, by entering into confidentiality and proprietary rights agreements with ouremployees and independent contractors.

 

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Regulation

 

Thestorage of firearms and ammunition is subject to increasing federal, state and local governmental laws. While the current legislativeclimate does not appear to seek to limit possession of firearms, there is apparent momentum to require safe storage of firearms and ammunition.Although our safes, which are the primary driver of our sales and revenues, are designed to protect any valuables, a significant numberof our safes’ end users have traditionally been gun enthusiasts, collectors, hunters, sportsmen and competitive shooters. Therefore,we expect the increases to federal, state and local governmentalregulation of gun storage to have a positive effect on our business.

 

Effectsof COVID-19

 

Coronavirus(“COVID-19”) and Related Market Impact. The COVID-19 outbreak has presentedevolving risks and developments domestically and internationally, as well as new opportunities for our business. Although the pandemichas not materially impacted our results and operations adversely, our ability to satisfy demand for our products could be negativelyimpacted by mandatory forced production disruptions of our safes’ sole third-party manufacturer and strategic partners. Any significantdisruption to communications and travel, including travel restrictions and other potential protective quarantine measures against COVID-19by governmental agencies, could make it difficult for us to deliver goods and services to our customers. Further, travel restrictionsand protective measures against COVID-19 could cause the Company to incur additional unexpected labor costs and expenses or could restrainthe Company’s ability to retain the highly skilled personnel the Company needs for its operations. The extent to which COVID-19impacts the Company’s business, sales and results of operations will depend on future developments, which are uncertain and cannotbe currently predicted.

 

Additionally, as a result of COVID-19, at anytime we may be subject to increased operating costs, supply interruptions, and difficulties in obtaining raw materials and components.To address these challenges, we continue to monitor our supply chain. We have recently entered into a contract with a third-party manufacturerto exclusively assemble our upcoming new line of safes. We believe that this vertical integration would allow us, among other benefits,to ramp up our production levels to meet expected demand for our products, provide us greater autonomy over the manufacturing process,and add what we believe are distinctive features to our safes.

 

We expect that the demand for home, office andpersonal safety and security products would remain stable, in part due to customers spending more time working remotely, increasing regulationmandating safe storage, and substantial uncertainty related to the supply chain and delivery of international goods, which in turn translateinto, we believe, growth in demand for our home and personal safes as a U.S. company. We, however, cannot guarantee, that demand forour safes and personal security products will keep growing through the end of the 2021 calendar year and beyond.

 

Further, due to the effects of COVID-19, our managementhave reduced unnecessary marketing expenditures as part of continued efforts to adjust the Company’s operations to address changesin the safes and vault industry, and particularly to improve staff and human capital expenditures, while maintaining overall workforcelevels.

 

Due to the substantialuncertainty related to the effects of the pandemic, its duration and the related market impacts, including the economic stimulus activity,we are unable to predict the specific impact the pandemic and related restrictions (including the lifting or re-imposing of restrictionsdue to any current or future variants of the COVID-19 virus or otherwise) will have on our results of operations, liquidity or long-termfinancial results.

 

RisksAffecting Us

 

Ourbusiness is subject to numerous risks and uncertainties, including those discussed in the section titled “Risk Factors” beginningon page 13 and elsewhere in this prospectus. These risks include the following:

 

 

we currently do not own a manufacturing facility, and future acquisition and operation of new manufacturing facilities might prove unsuccessful and could fail;

 

  as we currently rely on a sole third-party manufacturer for our safes production, our compromised operational capacity may affect our ability to meet the demand for our safes, which in turn may affect our generation of revenue;
     
  our success depends, in part, on our ability to introduce new products that track customer preferences;
     
  maintaining and strengthening our brand to generate and maintain ongoing demand for our products;

 

  as a significant portion of our revenues is derived by demand for our safes and personal security products for firearms storage purposes, we depend on the regulation of firearms and ammunition storage, as well as various economic, social and political factors;

 

  shortages of components and materials, as well as supply chain disruptions, may delay or reduce our sales and increase our costs, thereby harming our results of operations;

  

8
 

 

  we do not have long-term purchase commitments from our customers, and their ability to cancel, reduce, or delay orders could reduce our revenue and increase our costs;
     
 

we face a high degree of market competition that could result in our losing or failing to gain market share;

     
 

the inability to efficiently manage our operations;

     
 

the inability to achieve future operating results; 

     
 

the inability of management to effectively implement our strategies and business plans;

     
 

given our limited corporate history it is difficult to evaluate our business and future prospects and increases the risks associated with an investment in our securities;

     
 

the loss of our founder and Chief Executive Officer, Charles A, Ross, could harm our business;

     
 

our inability to service our existing and future indebtedness or other liabilities, the failure of which could result in insolvency proceedings and result in a total loss of your equity investment;

     
 

our inability to raise additional financing for working capital;

     
 

the unavailability of funds for capital expenditures;

     
 

our inability to access lending, capital markets and other sources of liquidity, if needed, on reasonable terms, or at all, or obtain amendments, extensions and waivers of financial maintenance covenants, among other material terms;

     
  our ability to continue as a going concern absent obtaining adequate new debt or equity financing, raising additional funds and achieving sufficient sales levels;
     
 

our ability to expand our e-commerce business and sales organization to effectively address existing and new markets that we intend to target, and to generate sufficient revenue in those targeted markets to support operations;

     
 

our inability to generate significant cash flow from sales of our products, which could lead to a substantial increase in indebtedness and negatively impact our ability to comply with the financial covenants, as applicable, in our debt agreements;

     
 

War, terrorism, other acts of violence or natural or manmade disasters such as a pandemic, epidemic, outbreak of an infectious disease or other public health crisis – such as COVID-19 – may affect the markets in which the Company operates, as well as global economic, market and political conditions;

     
  our ability to identify suitable acquisition candidates to consummate acquisitions on acceptable terms, or to successfully integrate acquisitions in connection with the execution of our growth strategy, the failure of which could disrupt our operations and adversely impact our business and operating results; 

 

 

applicable laws and changing legal and regulatory requirements, including U.S. GAAP changes, could harm our business and financial results;

     
 

if we are unable to protect our intellectual property, we may lose a competitive advantage or incur substantial litigation costs to protect our rights;

     
  the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain;

 

 

significant dilution resulting from our financing activities;

     
  our Management has control over key decision-making matters as a result of their control of a majority of our voting stock;

 

  the actions and initiatives taken by both current and potential competitors; and
     
  the other risks and uncertainties detailed in this report.

 

CorporateInformation

 

Ourprincipal executive offices are located at 718 Thompson Lane, Suite 108-199, Nashville, Tennessee. Our telephone number is (833) 267-3235.Our website address is www.americanrebel.com. The information contained on, or that can be accessed through, our website is not a partof this prospectus. Investors should not rely on any such information in deciding whether to purchase our securities.

 

Recent Developments

 

9
 

 

THEOFFERING

 

This prospectus relates to the offerand sale from time to time of up to an aggregate of 754,968 shares of the Common Stock, consisting of 377,484 shares of Common Stockunderlying 377,484 Pre-funded Warrants and 377,484 shares of Common Stock underlying the Warrants.

 

The number of shares of Common Stockultimately offered for resale by the Selling Security Holders depends upon how much of the Pre-funded Warrants the Selling Security Holderselect to exercise and how much of the Warrants the Selling Security Holders elect to exercise and the liquidity and market price of ourCommon Stock.

 

Issuer   American Rebel Holdings, Inc.
     
Securities Offered by the Selling Security Holders  

377,484 shares of Common Stock issuable upon the exercise of the Pre-funded Warrants and 377,484 shares of Common Stock issuable upon the exercise of the Warrants.

 

Common Stock outstanding prior to this offering   4,741,321 shares of Common Stock outstanding as of March 31, 2022, which includes 251,698 shares of Common Stock converted from Series B Preferred.
     
Common Stock to be outstanding after this offering   5,496,289 shares, assuming Selling Security Holders exercise all Pre-funded Warrants and Warrants.
     
Use of proceeds   We will not receive any proceeds from the sale of Common Stock by the Selling Security Holders. We will, however, receive proceeds from any exercise of the Pre-Funded Warrants. All of the net proceeds from the sale of our Common Stock will go to the Selling Security Holders as described below in the sections entitled “Selling Security Holders” and “Plan of Distribution”. We have agreed to bear the expenses relating to the registration of the Common Stock for the Selling Security Holders. The Company shall use the proceeds from the exercise of the Pre-Funded Warrants for working capital and other general corporate purposes.

 

Risk Factors   See “Risk Factors” beginning on page 13 and the other information contained in this prospectus for a discussion of factors you should carefully consider before investing in our securities.
     
Common Stock and Warrants Symbol  

Our Common Stock and Warrants are traded on the Nasdaq Capital Markets under the symbols “AREB” and “AREBW”, respectively.

 

10
 

 

AMERICANREBEL HOLDINGS, INC.

AUDITEDCONSOLIDATED STATEMENTS OF OPERATIONS

 

  

For the year ended

December 31, 2021

  

For the year ended

December 31, 2020

 
Revenue  $986,826   $1,255,703 
Cost of goods sold   812,130    952,511 
Gross margin   174,696    303,192 
           
Expenses:          
Consulting – business development   2,012,803    529,094 
Product development costs   330,353    320,472 
Marketing and brand development costs   171,030    390,294 
Administrative and other   968,306    1,773,529 
Depreciation expense   3,643    61,724 
 Total operating expenses   3,486,135    3,075,113 
Operating income (loss)   (3,311,439)   (2,771,921)
           
Other Income (Expense)          
Interest expense   (2,061,782)   (2,292,957)
Loss on Extinguishment of Debt   (725,723)   (916,204)
Net income (loss) before income tax provision   (6,098,944)   (5,981,082)
Provision for income tax   -    - 
Net income (loss)  $(6,098,944)  $(5,981,082)
Basic and diluted income (loss) per share  $(4.85)  $(7.93)
Weighted average common shares outstanding - basic and diluted   1,258,000    754,000 

 

SeeNotes to Financial Statements.

 

11
 

 

AMERICANREBEL HOLDINGS, INC.

AUDITEDCONSOLIDATED BALANCE SHEETS

 

    December 31, 2021     December 31, 2020  
ASSETS                
                 
CURRENT ASSETS:                
Cash and cash equivalents   $ 17,607     $ 60,899  
Accounts Receivable     100,746       176,844  
Prepaid expense     163,492       48,640  
Inventory     685,854       681,709  
Inventory deposits     -       141,164  
Total Current Assets     967,699       1,109,256  
                 
Property and Equipment, net     900       5,266  
                 
OTHER ASSETS:                
Lease Deposit     -       6,841  
Investment     -       -  
Total Other Assets     -       6,841  
                 
TOTAL ASSETS   $ 968,599     $ 1,121,363  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)                
                 
CURRENT LIABILITIES:                
Accounts payable and accrued expense   $ 1,032,264     $ 540,168  
Accrued Interest – Convertible Debenture – Related Party     203,972       603,471  
Loan – Officer - Related party     10,373       4,526  
Loan – Working Capital     3,879,428       4,672,096  
Loans - Nonrelated parties     12,939       15,649  
Total Current Liabilities     5,138,976       5,835,910  
                 
Convertible Debenture –Related party     -       297,890  
TOTAL LIABILITIES     5,138,976       6,133,800  
                 
STOCKHOLDERS’ EQUITY (DEFICIT):                
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 376,501, and 0 issued and outstanding, respectively at December 31, 2021 and December 31, 2020     -       -  
Preferred Shares A     100          
Preferred Shares B     277       -  
Common Stock, $0.001 par value; 600,000,000 shares authorized; 1,597,370 and 910,100 issued and outstanding, respectively at December 31, 2021 and December 31, 2020     1,597       910  
Additional paid in capital     22,797,306       15,857,366  
Accumulated deficit     (26,969,657 )     (20,870,713 )
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)     (4,170,377 )     (5,012,437 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)   $ 968,599     $ 1,121,363  

 

SeeNotes to Financial Statements.

 

12
 

 

RISKFACTORS

 

Investingin our securities involves a high degree of risk. You should carefully consider and evaluate all of the information contained in thisprospectus before you decide to purchase any Units, Pre-funded Units, Warrants or Common Stock pursuant to this offering. Therisks and uncertainties described in this prospectus are not the only ones we may face. Additional risks and uncertainties that we donot presently know about or that we currently believe are not material may also adversely affect our business, business prospects, resultsof operations or financial condition. Any of the risks and uncertainties set forth herein, could materially and adversely affect ourbusiness, results of operations and financial condition.

 

RISKSRELATED TO OUR BUSINESS AND INDUSTRY

  

Wecurrently do not own a manufacturing facility, and rely on a sole manufacturer and supplier for the production of our safes; while wehave obtained favorable financing arrangements in the past from this manufacturer and supplier, there is no assurance that a future supplierwould provide similar favorable financing arrangements

 

Wecurrently rely on a sole manufacturer and supplier for the production of our safes. We do not havecontrol over the operations of the facilities of the third-party manufacturer that we use. While we may acquire our own manufacturingfacility in the future, or acquire our sole manufacturer, to provide us greater flexibility and control over our products manufacturingneeds, the operation of such a future plant might prove unsuccessful and fail.

 

Themanufacturer of our safes has extended favorable financing arrangements in the past, but there is no assurance that a future supplierwould provide similar favorable financing arrangements. Therefore, the continued supply and manufacturing of our sales by oursole manufacturer and supplier are critical to our success. Any event that causes a disruption of the operation of our safes’ solemanufacturer for even a relatively short period of time would adversely affect our ability to ship and deliver our safes and other productsand to provide service to our customers. We have previously experienced, including during the first months after the spread of COVID-19pandemic, and may in the future experience, launch and production ramp up delays for our products as a result of disruption at our supplier’smanufacturing partners.

 

Additionally,we have fully qualified only a very limited number of suppliers in the past and have limited flexibility in changing suppliers. Any disruptionin the supply of our branded safes from our supplier could limit the availability of our sales and negatively impact our revenues. Inthe long term, we intend to supplement safes manufactured by our supplier with safes manufactured by us, which we believe will be moreefficient and result in a greater manufacturing volume and under our control. Our efforts to develop and manufacture such safes, however,have required and may require significant investments, and there can be no assurance that we will be able to achieve these targets inthe timeframes that we have planned or at all. If we are unable to do so, we may have to curtail our planned safes or procure additionalsafes from suppliers at potentially greater costs, either of which may harm our business and operating results.

 

Furthermore,the cost of safes, whether manufactured by our supplier or by us, depends in part upon the prices and availability of raw manufacturingmaterials such as steel, locks, fireboard, hinges, pins and other metals. The prices for these materials fluctuate and their availablesupply may be unstable, depending on market conditions and global demand for these materials, including as a result of increased globalproduction of electric vehicles and energy storage products. Any reduced availability of these materials may impact our access to theseparts and any increases in their prices may reduce our profitability if we cannot recoup the increased costs through increased safe prices.Moreover, any such attempts to increase product prices may harm our brand, prospects and operating results.

 

13
 

 

Wehave secured an exclusivity contract with a third-party manufacturer to assemble our new line of safes. We believe that this verticalintegration would allow us, among other benefits, to ramp up our production levels to meet expected demand for our products, provideus greater autonomy over the manufacturing process

 

Oursuccess depends upon our ability to introduce new products that track customer preferences.

 

Oursuccess depends upon our ability to introduce new products that track consumer preferences. Our efforts to introduce new products intothe market may not be successful, and new products that we introduce may not result in customer or market acceptance. We develop newproducts that we believe will match consumer preferences. The development of a new product is a lengthy and costly process and may notresult in the development of a marketable or profitable product. Failure to develop new products that are attractive to consumers coulddecrease our sales, operating margins, and market share and could adversely affect our business, operating results, and financial condition.

 

Ourbusiness depends on maintaining and strengthening our brand, as well as our reputation as a producer of high-quality goods, to maintainand generate ongoing demand for our products, and any harm to our brand could result in a significant reduction in such demand whichcould materially adversely affect our results of operations.

 

The“American Rebel” name and brand image are integral to the growth of our business, as well as to the implementation of ourstrategies for expanding our business. Our success depends on the value and reputation of our brand, which, in turn, depends on factorssuch as the quality, design, performance, functionality and durability of our products, e-commerce sales and retail partner floor spaces,our communication activities, including advertising, social media and public relations, and our management of the customer experience,including direct interfaces through customer service. Maintaining, promoting, and positioning our brand are important to expanding ourcustomer base and will depend largely on the success of our marketing and merchandising efforts and our ability to provide consistent,high-quality consumer experiences. To sustain long-term growth, we must continue to successfully promote our products to consumers, aswell as other individuals, who value and identify with our brand.

 

Ineffectivemarketing, negative publicity, product diversion to unauthorized distribution channels, product or manufacturing defects, and those andother factors could rapidly and severely diminish customer confidence in us. Maintaining and enhancing our brand image are importantto expanding our customer base. If we are unable to maintain or enhance our brand in current or new markets, or if we fail to continueto successfully market and sell our products to our existing customers or expand our customer base, our growth strategy and results ofoperations could be harmed.

 

Additionally,independent third parties and consumers often review our products as well as those of our competitors. Perceptions of our offerings inthe marketplace may be significantly influenced by these reviews, which are disseminated via various media, including the Internet. Ifreviews of our products are negative, or less positive as compared to those of our competitors, our brand may be adversely affected andour results of operations materially harmed.

 

Asa significant portion of our revenues is derived by demand for our safes and personal security products for firearms storage purposes,we depend on the availability and regulation of firearm/ammunition storage, as well as various economic, social and political factors.

 

Ourperformance is influenced by a variety of economic, social, and political factors. General economic conditions and consumer spendingpatterns can negatively impact our operating results. Economic uncertainty, unfavorable employment levels, declines in consumer confidence,increases in consumer debt levels, increased commodity prices, and other economic factors may affect consumer spending on discretionaryitems and adversely affect the demand for our products. In times of economic uncertainty, consumers tend to defer expenditures for discretionaryitems, which affects demand for our products. Any substantial deterioration in general economic conditions that diminish consumer confidenceor discretionary income could reduce our sales and adversely affect our operating results. Economic conditions also affect governmentalpolitical and budgetary policies. As a result, economic conditions also can have an effect on the sale of our products to law enforcement,government, and military customers.

 

14
 

 

Politicaland other factors also can affect our performance. Concerns about presidential, congressional, and state elections and legislature andpolicy shifts resulting from those elections can affect the demand for our products. As most of our revenue is generated from sales ofsafes, which are purchased in large numbers for firearms storage, speculation surrounding control of firearms, firearm products, andammunition at the federal, state, and local level and heightened fears of terrorism and crime can affect consumer demand for our products.Often, such concerns result in an increase in near-term consumer demand and subsequent softening of demand when such concerns subside.Inventory levels in excess of customer demand may negatively impact operating results and cash flow.

 

Federaland state legislatures frequently consider legislation relating to the regulation of firearms, including amendment or repeal of existinglegislation. Existing laws may also be affected by future judicial rulings and interpretations firearm products, ammunition, and safegun storage. If such restrictive changes to legislation develop, we could find it difficult, expensive, or even impossible to complywith them, impeding new product development and distribution of existing products.

 

Shortagesof components and materials, as well as supply chain disruptions, may delay or reduce our sales and increase our costs, thereby harmingour results of operations.

 

Theinability to obtain sufficient quantities of raw materials and components, including those necessary for the production of our productscould result in reduced or delayed sales or lost orders. Any delay in or loss of sales or orders could adversely impact our operatingresults. Many of the materials used in the production of our products are available only from a limited number of suppliers. We do nothave long-term supply contracts with any suppliers. As a result, we could be subject to increased costs, supply interruptions, and difficultiesin obtaining raw materials and components.

 

Ourreliance on third-party suppliers for various raw materials and components for our products exposes us to volatility in the availability,quality, and price of these raw materials and components. Our orders with certain of our suppliers may represent a very small portionof their total orders. As a result, they may not give priority to our business, leading to potential delays in or cancellation of ourorders. A disruption in deliveries from our third-party suppliers, capacity constraints, production disruptions, price increases, ordecreased availability of raw materials or commodities could have an adverse effect on our ability to meet our commitments to customersor increase our operating costs. Quality issues experienced by third party suppliers can also adversely affect the quality and effectivenessof our products and result in liability and reputational harm.

 

Wedo not have long-term purchase commitments from our customers, and their ability to cancel, reduce, or delay orders could reduce ourrevenue and increase our costs.

 

Ourcustomers do not provide us with firm, long-term volume purchase commitments, but instead issue purchase orders for our products as needed.As a result, customers can cancel purchase orders or reduce or delay orders at any time. The cancellation, delay, or reduction of customerpurchase orders could result in reduced sales, excess inventory, unabsorbed overhead, and reduced income from operations.

 

Weoften schedule internal production levels and place orders for products with third party manufacturers before receiving firm orders fromour customers. Therefore, if we fail to accurately forecast customer demand, we may experience excess inventory levels or a shortageof products to deliver to our customers. Factors that could affect our ability to accurately forecast demand for our products includethe following:

 

  an increase or decrease in consumer demand for our products or for the products of our competitors;
     
  our failure to accurately forecast consumer acceptance of new products;
     
  new product introductions by us or our competitors;
     
  changes in our relationships within our distribution channels;
     
  changes in general market conditions or other factors, which may result in cancellations of orders or a reduction or increase in the rate of reorders placed by retailers;
     
  changes in laws and regulations governing the activities for which we sell products, such as hunting and shooting sports; and
     
  changes in laws and regulations regarding the possession and sale of medical or recreational controlled- substances.

 

15
 

 

Inventorylevels in excess of consumer demand may result in inventory write-downs and the sale of excess inventory at discounted prices, whichcould have an adverse effect on our business, operating results, and financial condition. If we underestimate demand for our products,our suppliers may not be able to react quickly enough to meet consumer demand, resulting in delays in the shipment of products and lostrevenue, and damage to our reputation and customer and consumer relationships. We may not be able to manage inventory levels successfullyto meet future order and reorder requirements.

 

Weface intense competition that could result in our losing or failing to gain market share and suffering reduced sales.

 

Weoperate in intensely competitive markets that are characterized by price erosion and competition from major domestic and internationalcompanies. Competition in the markets in which we operate is based on a number of factors, including price, quality, performance, reliability,styling, product features, and warranties, and sales and marketing programs. This intense competition could result in pricing pressures,lower sales, reduced margins, and lower market share.

 

Ourcompetitors include nationwide safe manufacturers and various smaller manufacturers and importers. Most of our competitors have greatermarket recognition, larger customer bases, and substantially greater financial, technical, marketing, distribution, and other resourcesthan we possess and that afford them competitive advantages. As a result, they may be able to devote greater resources to the promotionand sale of products, to invest more funds in intellectual property and product development, to negotiate lower prices for raw materialsand components, to deliver competitive products at lower prices, and to introduce new products and respond to consumer requirements morequickly than we can.

 

Ourcompetitors could introduce products with superior features at lower prices than our products and could also bundle existing or new productswith other more established products to compete with us. Certain of our competitors may be willing to reduce prices and accept lowerprofit margins to compete with us. Our competitors could also gain market share by acquiring or forming strategic alliances with othercompetitors.

 

Finally,we may face additional sources of competition in the future because new distribution methods offered by the Internet and electronic commercehave removed many of the barriers to entry historically faced by start-up companies. Retailers also demand that suppliers reduce theirprices on products, which could lead to lower margins. Any of the foregoing effects could cause our sales to decline, which would harmour financial position and results of operations.

 

Ourability to compete successfully depends on a number of factors, both within and outside our control. These factors include the following:

 

  our success in developing, producing, marketing, and successfully selling new products;
     
  our ability to efficiently manage our operations;
     
  our ability to implement our strategies and business plans;
     
  our ability to achieve future operating results;
     
  our ability to address the needs of our consumer customers;
     
  the pricing, quality, performance, and reliability of our products;
     
  the quality of our customer service;
     
  the efficiency of our production; and
     
  product or technology introductions by our competitors.

 

16
 

 

Becausewe believe technological and functional distinctions among competing products in our markets are perceived by many end-user consumersto be relatively modest, effectiveness in marketing and manufacturing are particularly important competitive factors in our business.

 

Wehave a limited operating history on which you can evaluate our company.

 

Wehave a limited operating history on which you can evaluate our company. The corporate entity has existed since 2014 and started engagingin its current primary business operations in April 2019. As a result, our business will be subject to many of the problems, expenses,delays, and risks inherent in the establishment of a relatively new business enterprise.

 

Wehave a limited operating history upon which an evaluation of our business plan or performance and prospects can be made. Our businessand prospects must be considered in the light of the potential problems, delays, uncertainties and complications encountered in connectionwith a newly established business and creating a new line of products. The risks include, in part, the possibility that we will not beable to develop functional and scalable products, or that although functional and scalable, our products and will not be economical tomarket; that our competitors hold proprietary rights that preclude us from marketing such products; that our competitors market a superioror equivalent product; that our competitors have such a significant advantage in brand recognition that our products will not be consideredby potential customers; that we are not able to upgrade and enhance our technologies and products to accommodate new features as themarket evolves; or the failure to receive necessary regulatory clearances for our products. To successfully introduce and market ourproducts at a profit, we must establish brand name recognition and competitive advantages for our products. There are no assurances thatwe can successfully address these challenges. If it is unsuccessful, we and our business, financial condition and operating results couldbe materially and adversely affected.

 

Thecurrent and future expense levels are based largely on estimates of planned operations and future revenues. It is difficult to accuratelyforecast future revenues because our business is relatively new, and our market is rapidly developing. If our forecasts prove incorrect,the business, operating results and our financial condition will be materially and adversely affected. Moreover, we may be unable toadjust our spending in a timely manner to compensate for any unanticipated reduction in revenue. As a result, any significant reductionin revenues would immediately and adversely affect our business, financial condition and operating results.

 

Weare highly dependent on Charles A. Ross, our Chief Executive Officer. The loss of our Chief Executive Officer, whose knowledge, leadershipand industry reputational upon which we rely, could harm our ability to execute our business plan.

 

Weare highly dependent on Charles A. Ross, our Chief Executive Officer, Chairman of our Board of Directors and largest stockholder. Oursuccess depends heavily upon the continued contributions of Mr. Ross, whose leadership, industry reputation entrepreneurial backgroundand creative marketing skills may be difficult to replace at this stage in our business development, and on our ability to attract andretain similarly positioned prominent leaders. If we were to lose the services of our Chief Executive Officer, our ability to executeour business plan may be harmed and we may be forced to limit operations until such time as we could hire suitable replacements.

 

Wecannot predict when we will achieve profitability.

 

Wehave not been profitable and cannot predict when or if we will achieve profitability. We have experienced net losses since our inceptionin December 2014.

 

17
 

 

Wecannot predict when we will achieve profitability, if ever. Our inability to become profitable may force us to curtail or temporarilydiscontinue our research and development programs and our day-to-day operations. Furthermore, there can be no assurance that profitability,if achieved, can be sustained on an ongoing basis. As of December 31, 2021, we had an accumulated deficit of $26,969,657.

 

Wehave limited financial resources. Our independent registered auditors’ report includes an explanatory paragraph stating that thereis substantial doubt about our ability to continue as a going concern.

 

Asa result of our deficiency in working capital at December 31, 2021 and other factors, our auditors have included a paragraph in theiraudit report regarding substantial doubt about our ability to continue as a going concern. Our plans in this regard are to increase productsales, increase production, obtain inventory financing, seek strategic alternatives and to seek additional capital through future equityprivate placements or debt facilities. In February of 2022, we completed a public offering for $10.5 million, which will allow us tooperate through fiscal 2022.

 

Wehave recorded net losses since inception and have significant accumulated deficits. We have relied upon loans and equity financings foroperating capital. Total revenues will be insufficient to pay off existing debt and fund operations. We may be required to rely on furtherdebt financing, further loans from related parties, and private placements of our common and preferred stock for our additional cashneeds. Such funding sources may not be available, or the terms of such funding sources may not be acceptable to the Company.

 

AmericanRebel has limited financial resources. There is substantial doubt about our ability to continue as a going concern if we are unable toraise additional funds.

 

Weexpect to require additional funds to further develop our business plan, including the anticipated launch of new products, in additionto continuing to market our safes and concealed carry product line. Since it is impossible to predict with certainty the timing and amountof funds required to establish profitability, we anticipate that we will need to raise additional funds through equity or debt offeringsor otherwise in order to meet our expected future liquidity requirements. Any such financing that we undertake may be dilutive to existingstockholders. Along these lines, in February of 2022, we completed a public offering for $10.5 million, which will allow us to operatethrough fiscal 2022.

 

Thesales of our safes are dependent in large part on the sales of firearms.

 

Wemarket safes and other personal security products for sale to a wide variety of consumers. Although our customer base is large and diverse,and our products serve our customers’ different needs, our products have been particularly popular among collectors, hunters, sportsmen,competitive shooters, and gun enthusiasts. The sale of safe firearms storage and security components is influenced by the sale and usageof firearms. Sales of firearms are influenced by a variety of economic, social, and political factors, which may result in volatile sales.

 

Ourfinancial results may be affected by tariffs or border adjustment taxes or other import restrictions.

 

Ourcurrent backpack and apparel suppliers have facilities both in China and Mexico and the imposition of tariffs or border adjustment taxesmay affect our financial results. The current political climate is hostile to companies manufacturing goods outside of the US. At thecurrent manufacturing levels, it is impractical to seek manufacturing facilities in the United States as US manufacturers are unableto meet or even approach the cost of manufacturing small quantities of custom-made goods. We are in the process of locating an alternativesupplier which will have the capacity to produce commercial volumes of our backpacks and apparel to meet our expected demands. However,we have not yet located a suitable supplier and, even if we are able to do so, there is no guarantee that our manufacturing process willscale to produce our products in quantities sufficient to meet demand.

 

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Aninability to expand our e-commerce business and sales organization to effectively address existing and new markets that we intend totarget could reduce our future growth and impact our business and operating results.

 

Consumersare increasingly purchasing products online. We operate a direct-to-consumer e-commerce store to maintain an online presence with ourend users. The future success of our online operations depends on our ability to use our marketing resources to communicate with existingand potential customers. We face competitive pressure to offer promotional discounts, which could impact our gross margin and increaseour marketing expenses. We are limited, however, in our ability to fully respond to competitor price discounting because we cannot marketour products at prices that may produce adverse relationships with our customers that operate brick and mortar locations as they mayperceive themselves to be at a disadvantage based on lower e-commerce pricing to end consumers. There is no assurance that we will beable to successfully expand our e-commerce business to respond to shifting consumer traffic patterns and direct-to-consumer buying trends.

 

Inaddition, e-commerce and direct-to-consumer operations are subject to numerous risks, including implementing and maintaining appropriatetechnology to support business strategies; reliance on third-party computer hardware/software and service providers; data breaches; violationsof state, federal or international laws, including those relating to firearms and ammunition sales; online privacy; credit card fraud;telecommunication failures; electronic break-ins and similar disruptions; and disruption of Internet service. Our inability to adequatelyrespond to these risks and uncertainties or to successfully maintain and expand our direct-to-consumer business may have an adverse impacton our business and operating results.

 

Wesell products that create exposure to potential product liability, warranty liability, or personal injury claims and litigation.

 

Ourproducts are used to store, in part, items that involve risk of personal injury and death. Our products expose us to potential productliability, warranty liability, and personal injury claims and litigation relating to the use or misuse of our products, including allegationsof defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product or activities associated with theproduct, negligence, and strict liability. If successful, any such claims could have a material adverse effect on our business, operatingresults, and financial condition. Defects in our products may result in a loss of sales, recall expenses, delay in market acceptance,and damage to our reputation and increased warranty costs, which could have a material adverse effect on our business, operating results,and financial condition. Although we maintain product liability insurance in amounts that we believe are reasonable, we may not be ableto maintain such insurance on acceptable terms, if at all, in the future and product liability claims may exceed the amount of insurancecoverage. In addition, our reputation may be adversely affected by such claims, whether or not successful, including potential negativepublicity about our products.

 

Despitethe Company’s indebtedness levels, we are able to incur substantially more debt. This could further increase the risks associatedwith its leverage.

 

Wemay incur substantial additional indebtedness in the future, although certain terms of current debt agreements prohibit us from doingso. To the extent that we incur additional indebtedness, the risks associated with its substantial indebtedness describe above, includingits possible inability to service its debt, will increase.

 

Atthis stage of our business operations, even with our good faith efforts, investors in our company may lose some or all of their investment.

 

Becausethe nature of our business is expected to change as a result of shifts in the industries in which we operate, competition, and the developmentof new and improved technology, management forecasts are not necessarily indicative of future operations and should not be relied uponas an indication of future performance. Further, we have raised substantial debt and equity to fund our business operations, which todate have generated insufficient revenue to support our working capital needs.

 

Whilemanagement believes its estimates of projected occurrences and events are within the timetable of its business plan, our actual resultsmay differ substantially from those that are currently anticipated. If our revenues do not increase to a level to support our workingcapital needs, we will be forced to seek equity capital to fund our operations and repay our substantial debt balances, which may notbe available to us on acceptable terms or at all.

 

Productdefects could adversely affect the results of our operations.

 

Thedesign, manufacture and marketing of our products involve certain inherent risks. Manufacturing or design defects, unanticipated useof our products, or inadequate disclosure of risks relating to the use of our products can lead to injury or other adverse events. TheCompany may not properly anticipate customer applications of our products and our products may fail to survive such unanticipated customeruse. If the Company’s products fail to adequately perform to meet the customer’s expectations, the customer may demand refundsor replacements which will negatively affect the Company’s profitability.

 

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Wecould be exposed to significant liability claims if we are unable to obtain insurance at acceptable costs and adequate levels or otherwiseprotect ourselves against potential product liability claims.

 

Ourproducts support the use and access to firearms and if our products are ineffective, we could require protection against potential productliability claims.

 

Wewill not be profitable unless we can demonstrate that our products can be manufactured at low prices.

 

Todate, we have manufactured our products in limited volume. As the Company creates demand for its products, our projections require thebenefit of volume discounts as we increase the size of our order. We can offer no assurance that either we or our manufacturing partnerswill develop efficient, automated, low-cost manufacturing capabilities and processes to meet the quality, price, engineering, designand production standards or production volumes required to successfully mass market our products. Even if we or our manufacturing partnersare successful in developing such manufacturing capability and processes, we do not know whether we or they will be timely in meetingour product commercialization schedule or the production and delivery requirements of potential customers. A failure to develop suchmanufacturing processes and capabilities could have a material adverse effect on our business and financial results.

 

Ourprofitability in part is dependent on material and other manufacturing costs. We are unable to offer any assurance that either we ora manufacturing partner will be able to reduce costs to a level that will allow production of a competitive product or that any productproduced using lower cost materials and manufacturing processes will not suffer from a reduction in performance, reliability and longevity.

 

War,terrorism, other acts of violence or natural or manmade disasters such as a pandemic, epidemic,outbreak of an infectious disease or other public health crisis may affect the markets in which the Company operates, the Company’scustomers, the Company’s delivery of products and customer service, and could have a material adverse impact on our business, resultsof operations, or financial condition.

 

Ourbusiness and supply chain may be adversely affected by instability, disruption or destruction in a geographic region in which it operates,regardless of cause, including war, terrorism, riot, civil insurrection or social unrest, and natural or manmade disasters, includingfamine, food, fire, earthquake, storm or pandemic events and spread of disease (including the outbreak of COVID-19).

 

Suchevents may cause customers to suspend their decisions on using the Company’s products and services, make it impossible to accesssome of our inventory, and give rise to sudden significant changes in regional and global economic conditions and cycles that could interferewith purchases of goods or services and commitments to develop new products and services. These events also pose significant risks tothe Company’s personnel and to physical facilities, transportation and operations, which could materially adversely affect theCompany’s financial results.

 

Anysignificant disruption to communications and travel, including travel restrictions and other potential protective quarantine measuresagainst COVID-19 or other public health crisis by governmental agencies, could make it difficultfor the Company to deliver goods services to its customers. War, riots, or other disasters may increase the need for our products anddemand by government and military may make it difficult for use to provide products to customers. Further, travel restrictions and protectivemeasures against COVID-19 could cause the Company to incur additional unexpected labor costs and expenses or could restrain the Company’sability to retain the highly skilled personnel the Company needs for its operations. Due to thesubstantial uncertainty related to the effects of the pandemic, its duration and the related market impacts, including the economic stimulusactivity, we are unable to predict the specific impact the pandemic and related restrictions (including the lifting or re-imposing ofrestrictions due to the Omicron variant or otherwise) will have on our results of operations, liquidity or long-term financial results.

 

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Webelieve COVID-19 has not yet had a materially adverse effect on our operational results, but could at any time and without notice inthe foreseeable future. As a result of COVID-19, at any time we may be subject to increased operating costs, supply interruptions, anddifficulties in obtaining raw materials and components. COVID-19 has resulted in restrictions, postponements and cancelations of meetings,conferences, trade shows and the impact, extent and duration of the government-imposed restrictions on travel and public gatherings aswell as the overall effect of the COVID-19 virus is currently unknown.

 

Thecosts of being a public company could result in us being unable to continue as a going concern.

 

Asa public company, we are required to comply with numerous financial reporting and legal requirements, including those pertaining to auditsand internal control. The costs of maintaining public company reporting requirements could be significant and may preclude us from seekingfinancing or equity investment on terms acceptable to us and our stockholders. We estimate these costs to be in excess of $100,000 peryear and may be higher if our business volume or business activity increases significantly. Our current estimate of costs does not includethe necessary expenses associated with compliance, documentation and specific reporting requirements of Section 404 as we will not besubject to the full reporting requirements of Section 404 until we exceed $700 million in public float market capitalization.

 

Ifour revenues are insufficient or non-existent, or we cannot satisfy many of these costs through the issuance of shares or debt, we maybe unable to satisfy these costs in the normal course of business. This would certainly result in our being unable to continue as a goingconcern.

 

Anyacquisitions that we potentially undertake will involve significant risks, and any acquisitions that we undertake in the future coulddisrupt our business, dilute stockholder value, and harm our operating results.

 

Partof our growth strategy is to expand our operations through strategic acquisitions to enhance existing products and offer new products,enter new markets and businesses, strengthen and avoid interruption from our supply chain, and enhance our position in current marketsand businesses. Acquisitions involve significant risks and uncertainties. We cannot accurately predict the timing, size, and successof any future acquisitions. We may be unable to identify suitable acquisition candidates or to complete the acquisitions of candidatesthat we identify. Increased competition for acquisition candidates or increased asking prices by acquisition candidates may increasepurchase prices for acquisitions to levels beyond our financial capability or to levels that would not result in the returns requiredby our acquisition criteria. Unforeseen expenses, difficulties, and delays frequently encountered in connection with expansion throughacquisitions could inhibit our growth and negatively impact our operating results.

 

Ourability to complete acquisitions that we desire to make will depend upon various factors, including the following:

 

  the availability of suitable acquisition candidates at attractive purchase prices;
     
  the ability to compete effectively for available acquisition opportunities;
     
  the availability of cash resources, borrowing capacity, or stock at favorable price levels to provide required purchase prices in acquisitions;
     
  the ability of management to devote sufficient attention to acquisition efforts; and
     
  the ability to obtain any requisite governmental or other approvals.

Wemay have little or no experience with certain acquired businesses, which could involve significantly different supply chains, productiontechniques, customers, and competitive factors than our current business. This lack of experience would require us to rely to a greatextent on the management teams of these acquired businesses. These acquisitions also could require us to make significant investmentsin systems, equipment, facilities, and personnel in anticipation of growth. These costs could be essential to implement our growth strategyin supporting our expanded activities and resulting corporate structure changes. We may be unable to achieve some or all of the benefitsthat we expect to achieve as we expand into these new markets within the time frames we expect, if at all. If we fail to achieve someor all of the benefits that we expect to achieve as we expand into these new markets, or do not achieve them within the time frames weexpect, our business, financial condition, and results of operations could be adversely affected.

 

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Unforeseenexpenses, difficulties, and delays frequently encountered in connection with future acquisitions could inhibit our growth and negativelyimpact our profitability. Any future acquisitions may not meet our strategic objectives or perform as anticipated. In addition, the size,timing, and success of any future acquisitions may cause substantial fluctuations in our operating results from quarter to quarter. Theseinterim fluctuations could adversely affect the market price of our Common Stock.

 

Ifwe finance any future acquisitions in whole or in part through the issuance of Common Stock or securities convertible into or exercisablefor Common Stock, existing stockholders will experience dilution in the voting power of their Common Stock and earnings per share couldbe negatively impacted. The extent to which we will be able or willing to use our Common Stock for acquisitions will depend on the marketprice of our Common Stock from time-to-time and the willingness of potential acquisition candidates to accept our Common Stock as fullor partial consideration for the sale of their businesses. Our inability to use our Common Stock as consideration, to generate cash fromoperations, or to obtain additional funding through debt or equity financings to pursue an acquisition could limit our growth.

 

Wemay not be able to successfully fund future acquisitions of new businesses due to the lack of availability of debt or equity financingon acceptable terms, which could impede the implementation of our acquisition strategy and materially adversely impact our financialcondition, business and results of operations.

 

Inorder to make future acquisitions, we intend to raise capital primarily through debt financing, additional equity offerings, the saleof stock or assets of our businesses, and by offering equity in the businesses to the sellers of target businesses or by undertakinga combination of any of the above. Since the timing and size of acquisitions cannot be readily predicted, we may need to be able to obtainfunding on short notice to benefit fully from attractive acquisition opportunities. Such funding may not be available on acceptable terms.In addition, the level of our indebtedness may impact our ability to borrow funds on acceptable terms. Another source of capital forus may be the sale of additional shares of Common Stock, subject to market conditions and investor demand for the shares at prices thatwe consider to be in the interests of our stockholders. These risks may materially adversely affect our ability to pursue our acquisitionstrategy successfully and materially adversely affect our financial condition, business and results of operations.

 

RISKSRELATED TO OUR LEGAL AND REGULATORY ENVIRONMENT

 

Failureto comply with applicable laws and changing legal and regulatory requirements could harm our business and financial results.

 

Ourpolicies and procedures are reasonably designed to comply with applicable laws, accounting and reporting requirements, tax rules andother regulations and requirements, including those imposed by the SEC, and foreign countries, as well as applicable trade, labor, safety,environmental, labeling and gun safety related laws, such as the Protection of Lawful Commercein Arms Act as well as state laws. The complexity of the regulatory environment in which we operate and the related cost of complianceare both increasing due to additional or changing legal and regulatory requirements, our ongoing expansion into new markets and new channels,and the fact that foreign laws occasionally conflict with domestic laws. In addition to potential damage to our reputation and brand,failure by us or our business partners to comply with the various applicable laws and regulations, as well as changes in laws and regulationsor the manner in which they are interpreted or applied, may result in litigation, civil and criminal liability, damages, fines and penalties,increased cost of regulatory compliance and restatements of our financial statements and have an adverse impact on our business and financialresults.

 

 

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Ourability to use our net operating loss carryforwards and certain other tax attributes may be limited.

 

Asof December 31, 2021, and December 31, 2020, we had net operating loss carryforwards, or NOLs, for federal and state income tax purposesof $26,969,657 and $20,870,713, respectively, which begins to expire in 2034. Net operating loss carryforwards are available to reducefuture taxable income. The federal net operating losses generated before 2018 will begin to expire in 2032. The federal net operatinglosses generated in and after 2018 may be carried forward indefinitely. The expiration of state NOL carryforwards vary by state and beginto expire in 2024. It is possible that we will not generate taxable income in time to use NOLs before their expiration, or at all. UnderSection 382 and Section 383 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an “ownershipchange,” the corporation’s ability to use its pre-change NOLs and other tax attributes to offset its post-change income maybe limited. In general, an “ownership change” will occur if there is a cumulative change in our ownership by “5 percentstockholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws.Our ability to use NOLs and other tax attributes to reduce future taxable income and liabilities may be subject to annual limitationsas a result of prior ownership changes and ownership changes that may occur in the future (which may be outside our control).

 

Underthe Tax Cuts and Jobs Act of 2017, or the Tax Act, as amended by the CARES Act, NOLs arising in tax years beginning after December 31,2017, are subject to an 80% of taxable income limitation (as calculated before taking the NOLs into account) for tax years beginningafter December 31, 2020. In addition, NOLs arising in tax years 2018, 2019, and 2020 are subject to a five-year carryback and indefinitecarryforward, while NOLs arising in tax years beginning after December 31, 2020, also are subject to indefinite carryforward but cannotbe carried back. Our NOLs may also be subject to limitations in other jurisdictions. For example, California recently enacted legislationsuspending the use of NOLs for taxable years 2020, 2021, and 2022 for many taxpayers. In future years, if and when a net deferred taxasset is recognized related to our NOLs, the changes in the carryforward/carryback periods as well as the new limitation on use of NOLsmay significantly impact our valuation allowance assessments for NOLs generated after December 31, 2017.

 

Ifwe are unable to protect our intellectual property, we may lose a competitive advantage or incur substantial litigation costs to protectour rights.

 

Ourfuture success depends upon our proprietary technology. Our protective measures, including patent and trade secret protection, may proveinadequate to protect our proprietary rights. The right to stop others from misusing our trademarks, service marks, and patents in commercedepends to some extent on our ability to show evidence of enforcement of our rights against such misuse in commerce. Our efforts to stopimproper use, if insufficient, may lead to loss of trademark and service mark rights, brand loyalty, and notoriety among our customersand prospective customers. The scope of any patent that we have or may obtain may not prevent others from developing and selling competingproducts. The validity and breadth of claims covered in technology patents involve complex legal and factual questions, and the resolutionof such claims may be highly uncertain, and expensive. In addition, our patents may be held invalid upon challenge, or others may claimrights in or ownership of our patents. Company owned trademarks are listed under the heading Intellectual Property on page 20.

 

Weare subject to the periodic reporting requirements of Section 15(d) and 12(g) of the Exchange Act that require us to incur audit feesand legal fees in connection with the preparation of such reports. These additional costs could reduce or eliminate our ability to earna profit.

 

Weare required to file periodic reports with the SEC pursuant to the Exchange Act and the rules and regulations promulgated thereunder.In order to comply with these requirements, our independent registered public accounting firm will have to review our financial statementson a quarterly basis and audit our financial statements on an annual basis. Moreover, our legal counsel will have to review and assistin the preparation of such reports. The costs charged by these professionals for such services cannot be accurately predicted at thistime because factors such as the number and type of transactions that we engage in, and the complexity of our reports cannot be determinedat this time and will affect the amount of time to be spent by our auditors and attorneys. However, the incurrence of such costs willobviously be an expense to our operations and thus have a negative effect on our ability to meet our overhead requirements and earn aprofit.

 

However,for as long as we remain a smaller reporting company as defined in Item 10(f)(1) of Regulation S-K, we may take advantage of certainexemptions from various reporting requirements that are applicable to other public companies that are not smaller reporting companiesincluding, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-OxleyAct, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, reducedfinancial statement disclosure in registration statements, which must include two years of audited financial statements, reduced financialstatement disclosure in annual reports on Form 10-K, and exemptions from the auditor attestationof management’s assessment of internal control over financial reporting. We may take advantage of these reporting exemptionsuntil we are no longer a smaller reporting company.

 

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Ifwe cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could loseconfidence in our reported financial information, and the trading price of our Common Stock, if a market ever develops, could drop significantly.

 

Ourinternal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminatedto the public.

 

Ourmanagement is responsible for establishing and maintaining adequate internal control over our financial reporting. As defined in ExchangeAct Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executiveand principal financial officer and effected by the Board of Directors, management and other personnel, to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles and includes those policies and procedures that:

 

  pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
  provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and/or directors of the Company; and
  provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

 

Ourinternal controls may be inadequate or ineffective, which could cause financial reporting to be unreliable and lead to misinformationbeing disseminated to the public. Furthermore, our accounting policies and methods are fundamental to how we report our financial conditionand results of operations, and they may require our management to make estimates about matters that are inherently uncertain. Investorsrelying upon this misinformation may make an uninformed investment decision.

 

Failureto achieve and maintain an effective internal control environment could cause us to face regulatory action and also cause investors tolose confidence in our reported financial information, either of which could have a material adverse effect on the Company’s business,financial condition, results of operations and future prospects.

 

However,our auditors will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant toSection 404 until we are no longer a smaller reporting company.

 

RISKSRELATED TO AN INVESTMENT IN OUR SECURITIES

 

Stockholders’voting power and ownership interest may be diluted significantly through our efforts to obtain financing and satisfy obligations throughissuance of additional shares.

 

OurSecond Amended and Restated Articles of Incorporation authorizes our Board of Directors to issue up to 600,000,000 shares of Common Stockand up to 10,000,000 shares of preferred stock, of which we have designated 100,000 shares as Series A – Super Voting ConvertiblePreferred Stock (“Series A Preferred Stock”) (which were issued to two members of our current management, Messrs. CharlesA. Ross, Jr. and Doug E. Grau, and have superior voting rights of 1,000 to 1 over shares of our Common Stock, resulting in nearly 96%of the available stockholder votes). While the Certificate of Designation is named “Certificate of Designation of Series A ConvertiblePreferred Stock”, the Company’s Existing Series A Preferred Stock is not convertible into shares of Common Stock of the Companyor redeemable by either the Company or another person. The power of the Board of Directors to issue shares of Common Stock, preferredstock or warrants or options to purchase shares of Common Stock or preferred stock is generally not subject to stockholder approval,except for issuances of more than 20% of the company’s outstanding Common Stock or voting power.

 

Whilewe just completed a capital raise utilizing a financial institution, we may attempt to raise additional capital by returning to the marketto sell shares, possibly at a deep discount. These actions may result in dilution of the ownership interests and voting power of existingstockholders, further dilute Common Stock book value, and may delay, defer or prevent a change of control.

 

Additionally,series of preferred stock may carry the preferred right to our assets upon liquidation, the right to receive dividend payments beforedividends are distributed to the holders of Common Stock, superior voting or conversion rights and the right to the redemption of theshares, together with a premium, prior to the redemption of our Common Stock.

 

Ourboard of directors has the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial toCommon Stockholders and with the ability to affect adversely stockholder voting power and perpetuate their control over us.

 

OurSecond Amended and Restated Articles of Incorporation allow us to issue shares of preferred stock without any vote or further actionby our stockholders. Our Board of Directors has the authority to fix and determine the relative rights and preferences of preferred stock.As a result, our Board of Directors could authorize the issuance of a series of preferred stock that would grant to holders the preferredright to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of CommonStock and the right to the redemption of the shares, together with a premium, prior to the redemption of our Common Stock.

 

OurCommon Stock may be affected by limited trading volume and our share price may be volatile, which could adversely impact the value ofour Common Stock.

 

Therecan be no assurance that an active trading market in our Common Stock will be maintained. Our Common Stock is likely to experience significantprice and volume fluctuations in the future, which could adversely affect the market price of our Common Stock without regard to ouroperating performance and the market price of our Common Stock may drop below the price paid byinvestors. In addition, we believe that factors such as our operating results, quarterly fluctuations in our financial resultsand changes in the overall economy or the condition of the financial markets, including as the result of the COVID-19 pandemic, couldcause the price of our Common Stock to fluctuate substantially. These fluctuations may also cause short sellers to periodically enterthe market in the belief that we will have poor results in the future. We cannot predict the actions of market participants and, therefore,can offer no assurances that the market for our Common Stock will be stable or appreciate over time.

 

Warrantsare speculative in nature.

 

TheWarrants included in our February 2022 public offering do not confer any rights of Common Stock ownership on their holders, such as votingrights or the right to receive dividends, but rather merely represent the right to acquire shares of our Common Stock at a fixed pricefor a limited period of time. Specifically, commencing on the date of issuance, holders of the Warrants may exercise their right to acquirethe Common Stock and pay an exercise price of per share, prior to five years from the date of issuance, after which date any unexercisedWarrants will expire and have no further value. Until holders of the Warrants acquire Common Stock upon exercise of the Warrants, theholders will have no rights with respect to the Common Stock issuable upon exercise of the Warrants. Upon exercise of the Warrants, theholder will be entitled to exercise the rights of a Stockholder as to the security exercised only as to matters for which the recorddate occurs after the exercise. Moreover, the market value of the Warrants is uncertain and there can be no assurance that the marketvalue of the Warrants will equal or exceed their public offering price. There can be no assurance that the market price of the CommonStock will ever equal or exceed the exercise price of the Warrants, and consequently, whether it will ever be profitable for holdersof the Warrants to exercise the Warrants.

 

Provisionsof the Warrants sold in our February 2022 public offering could discourage an acquisition of us by a third party.

 

Inaddition to the discussion of the provisions of our governing organizational documents, certain provisions of the Warrants offered inour February 2022 public offering could make it more difficult or expensive for a third party to acquire us. The Warrants prohibit usfrom engaging in certain transactions constituting “fundamental transactions” unless, among other things, the surviving entityassumes our obligations under the Warrants. These and other provisions of the Warrants could prevent or deter a third party from acquiringus even where the acquisition could be beneficial to our stockholders.

 

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Ourexecutive officers and directors, and their affiliated entities, own a significant percentage of our stock and will be able to exertsignificant control over matters subject to stockholder approval.

 

Ourexecutive officers and directors beneficially own approximately 12% of our Common Stock. In addition, as referenced above, we issued100,000 shares of Series A Preferred Stock to two members of our current management, Messrs. Charles A. Ross, Jr. and Doug E. Grau, whichhave superior voting rights of 1,000 to 1 over shares of our Common Stock, resulting in nearly 96% of the available stockholder votes.While the Certificate of Designation is named “Certificate of Designation of Series A Convertible Preferred Stock”, the Company’sExisting Series A Preferred Stock is not convertible into shares of Common Stock of the Company or redeemable by either the Company oranother person.

 

Accordingly,these stockholders may, as a practical matter, continue to be able to control the election of a majority of our directors and the determinationof all corporate actions after this offering. This concentration of ownership could delay or prevent a change in control of the Company.

 

Wedo not anticipate that we will pay dividends on our Common Stock and, consequently, your ability to achieve a return on your investmentwill depend on appreciation in the price of our Common Stock.

 

Wehave never paid cash dividends on our Common Stock. We do not expect to pay cash dividends on our Common Stock at any time in the foreseeablefuture. The future payment of dividends directly depends upon our future earnings, capital requirements, financial requirements and otherfactors that our Board of Directors will consider. Since we do not anticipate paying cash dividends on our Common Stock, return on yourinvestment, if any, will depend solely on an increase, if any, in the market value of our Common Stock.

 

RISKSRELATED TO THE INDUSTRY

 

Theindustry in which we operate is competitive, price sensitive and subject to risks of governmental regulations or laws. If our competitorsare better able to develop and market products that are more effective, less costly, easier to use, or are otherwise more attractive,we may be unable to compete effectively with other companies.

 

Thesafe and personal security industry is characterized by intense competition. We will face competition on the basis of product features,reliability, price, apparent value, and other factors. Competitors may include large safe makers and other companies, some of which havesignificantly greater financial and marketing resources than we do, and firms that are more specialized than we are with respect to particularmarkets. Our competition may respond more quickly to new or emerging styles, undertake more extensive marketing campaigns, have greaterfinancial, marketing and other resources than ours or may be more successful in attracting potential customers, employees and strategicpartners.

 

Ourindustry could experience greater scrutiny and regulation by governmental authorities, which may lead to greater governmental regulationin the future.

 

Therapidly growing interest in new concealed carry products that this rapidly growing market may attract the attention of government regulatorsand legislators. The current trend in legislation is to roll back or minimize access to firearms restrictions, but there can be no assurancethat this trend will continue.

 

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RISKSRELATED TO THE CANNABIS INDUSTRY

 

Federalregulation and enforcement may adversely affect the implementation of medical controlled substance laws and regulations may negativelyimpact our revenues and profits.

 

Currently,many states plus the District of Columbia have laws or regulations that recognize, in one form or another, legitimate medical uses forcannabis and consumer use of cannabis in connection with medical treatment. Many other states are considering similar legislation. Conversely,under the Controlled Substance Act (the “CSA”), the policies and regulations of the Federal government and its agencies arethat cannabis has no medical benefit and a range of activities including cultivation and the personal use of cannabis is prohibited.Unless and until Congress amends the CSA with respect to medical marijuana, as to the timing or scope of any such potential amendmentsthere can be no assurance, there is a risk that federal authorities may enforce current federal law. Active enforcement of the currentfederal regulatory position on cannabis may thus indirectly and adversely affect our revenues and profits. The risk of strict enforcementof the CSA in light of Congressional activity, judicial holdings, and stated federal policy remains uncertain.

 

TheDOJ has not historically devoted resources to prosecuting individuals whose conduct is limited to possession of small amounts of marijuanafor use on private property but has relied on state and local law enforcement to address marijuana activity. In the event the DOJ reversesits stated policy and begins strict enforcement of the CSA in states that have laws legalizing medical marijuana and recreational marijuanain small amounts, there may be a direct and adverse impact to our business and our revenue and profits. Furthermore, H.R. 83, enactedby Congress on December 16, 2014, provides that none of the funds made available to the DOJ pursuant to the 2015 Consolidated and FurtherContinuing Appropriations Act may be used to prevent certain states, including Nevada and California, from implementing their own lawsthat authorized the use, distribution, possession, or cultivation of medical marijuana.

 

Variationsin state and local regulation and enforcement in states that have legalized medical controlled substance that may restrict marijuana-relatedactivities, including activities related to medical cannabis and Biotech complex work on cannabis, may negatively impact our revenuesand profits.

 

Individualstate laws do not always conform to the federal standard or to other states laws. A number of states have decriminalized marijuana tovarying degrees, other states have created exemptions specifically for medical cannabis, and several have both decriminalization andmedical laws. Nineteen states and the District of Columbia and Guam have legalized the recreational use of cannabis. Variations existamong states that have legalized, decriminalized, or created medical marijuana exemptions. For example, Alaska and Colorado have limitson the number of marijuana plants that can be homegrown. In most states, the cultivation of marijuana for personal use continues to beprohibited except for those states that allow small-scale cultivation by the individual in possession of medical marijuana needing careor that person’s caregiver. Active enforcement of state laws that prohibit personal cultivation of marijuana may indirectly andadversely affect our business and our revenue and profits.

 

Itis possible that federal or state legislation could be enacted in the future that would prohibit us or potential customers from usingour products, and if such legislation were enacted, our revenues could decline, leading to a loss in your investment.

 

Weare not aware of any federal or state regulation that regulates the sale of indoor cultivation equipment to medical or recreational marijuanagrowers. The extent to which the regulation of drug paraphernalia under the CSA is applicable to the sale of our dispensaries is foundin the definition of “drug paraphernalia.” Drug paraphernalia means any equipment, product, or material of any kind thatis primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing processing, preparing, injecting,ingesting, inhaling, or otherwise introducing into the human body a controlled substance, possession of which is unlawful.

 

Marijuanaremains illegal under federal law

 

Cannabisis illegal under U.S. federal law. In those states in which the use of cannabis has been legalized, its use remains a violation of federallaw pursuant to the Controlled Substances Act (21 U.S.C. § 811). The Controlled Substances Act classifies cannabis as a ScheduleI controlled substance, and as such, medical and adult use cannabis use is illegal under U.S. federal law. Unless and until Congressamends the Controlled Substances Act with respect to cannabis (and the President approves such amendment), there is a risk that federalauthorities may enforce current federal law. Since federal law criminalizing the use of cannabis pre-empts state laws that legalize itsuse, enforcement of federal law regarding cannabis is a significant risk and would likely result in our inability to precede with ourbusiness plans, especially in respect of expanding the reach of our dispensaries sale.

 

Weare indirectly engaged in the medical and adult use cannabis industry in the United States where local state law permits such activities.The legality of the production, cultivation, extraction, distribution, retail sales, transportation and use of cannabis differs amongstates in the United States. Due to the current regulatory environment in the United States, new risks may emerge, and management maynot be able to predict all such risks.

 

Asof September 2021, there were 36 states, plus the District of Columbia (and the territories of Guam, Puerto Rico, the U.S. Virgin Islandsand the Northern Mariana Islands), that have laws and/or regulations that recognize, in one form or another, legitimate medical usesfor cannabis and consumer use of cannabis in connection with medical treatment. In addition, Alaska, California, Colorado, Illinois,Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont, Washington and the District of Columbia have legalized cannabis for adult use.

 

Dueto the conflicting views between state legislatures and the federal government regarding cannabis, cannabis businesses are subject toinconsistent laws and regulations. There can be no assurance that the federal government will not enforce federal laws relating to cannabisand seek to prosecute cases involving cannabis businesses that are otherwise compliant with state laws in the future. While we are notsubject to these laws, the uncertainty of U.S. federal enforcement practices going forward and the inconsistency between U.S. federaland state laws and regulations present risks for our dispensary safes business, including incurring substantial costs associated withcompliance or altering certain aspects of our business plan.

 

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SELLINGSECURITY HOLDERS

 

There are 754,968 shares of the Common Stock,consisting of 377,484 shares of Common Stock issuable upon the exercise of the Pre-funded Warrants and 377,484 shares of Common Stockissuable upon the exercise of the Warrants, k that may be sold from time to time pursuant to this registration statement by the SellingSecurity Holders identified herein.

 

Allexpenses incurred with respect to the registration of the Common Stock will be borne by us, but we will not be obligated to pay any underwritingfees, discounts, commission or other expenses incurred by the Selling Security Holders in connection with the sale of such shares.

 

Exceptas indicated below, neither the Selling Security Holders nor any of their associates or affiliates has held any position, office, orother material relationship with us in the past three years.

 

Thefollowing table sets forth the names of the Selling Security Holders, the number of shares of Common Stock beneficially owned by theSelling Security Holders as of the date hereof and the number of shares of Common Stock being offered by the Selling Security Holders.The shares being offered hereby are being registered to permit public secondary trading, and the Selling Security Holders may offer allor part of the shares for resale from time to time. However, the Selling Security Holders are under no obligation to sell all or anyportion of such shares. All information with respect to share ownership has been furnished by the Selling Security Holders. The “Numberof Shares Beneficially Owned After the Offering” column assumes the sale of all shares offered.

 

TheCommon Stock being offered by the Selling Security Holders are those issuable to the Selling Security Holders, upon conversion of theNotes. We are registering the shares of Common Stock in order to permit the Selling Security Holders to offer these shares for resalefrom time to time. Except for the investment in the Notes, the Selling Security Holders have not had any material relationship with uswithin the past three years.

 

Thetable below lists the Selling Security Holders and other information regarding the beneficial ownership of the shares of common stockby each of the Selling Security Holders. The second column lists the number of shares of common stock beneficially owned by each SellingSecurity Holder, based on its ownership of the shares of common stock and warrants, as of the date hereof, assuming conversion of theNotes held by the Selling Security Holders on such date, without regard to any limitations on conversions or exercises. The third columnlists the shares of common stock being offered by this prospectus by the Selling Security Holders.

 

Thisprospectus generally covers the resale of the sum of (i) the number of shares of common stock, and (ii) the maximum number of sharesof common stock issuable upon conversion of the Notes, determined as if the outstanding Notes were converted in full as of the tradingday immediately preceding the date this registration statement was initially filed with the SEC, each as of the trading day immediatelypreceding the applicable date of determination, without regard to any limitations on the conversion of the Notes.

 

 

Number of

Shares of

  

% of

Shares

of

Common

  

Maximum

Number

of shares

of

Common

Stock underlying Warrants to

  

Maximum

Number of

shares of

Common

Stock

Underlying

Pre-funded

Warrants to

  

Number of

shares of

Common

 
  Common   Stock   be Sold   be Sold   Stock 
   Stock Owned   Owned   Pursuant   Pursuant   Owned 
   Prior to   Prior to   to this   to this   After the 
Name of Selling Shareholder 

Offering

(1)

  

Offering

(2)

  

Prospectus

(1)

  

Prospectus

(1)

  

Offering

(1)

 
Cavalry Fund I, L.P.              754,968    13.74%                 377,484    377,484    - 

 

*Less than 1%

 

  (1) Assumes that the Selling Security Holders sells all of the common stock underlying the conversion of the Notes.
  (2) Assumes that the Selling Security Holders exercise all of the Pre-funded Warrants and Warrants.

 

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USEOF PROCEEDS

 

We will not receive any proceeds from the sale of Common Stock bythe Selling Security Holders. We will, however, receive proceeds from any exercise of the Pre-Funded Warrants. All of the net proceeds from the saleof our Common Stock will go to the Selling Security Holders as described below in the sections entitled “Selling Security Holders”and “Plan of Distribution”. We have agreed to bear the expenses relating to the registration of the common stock for theSelling Security Holders.

 

PLANOF DISTRIBUTION

 

TheSelling Security Holders may, from time to time, sell, transfer, or otherwise dispose of any or all of their shares of Common Stock onany stock exchange, market, or trading facility on which the shares are traded or in private transactions. These dispositions may beat fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying pricesdetermined at the time of sale, or at negotiated prices. The Selling Security Holders may use any one or more of the following methodswhen disposing of shares:

 

  on any national securities exchange or quotation service on which the shares may be listed or quoted at the time of sale;
     
  in the over-the-counter market;
     
  in transactions otherwise than on these exchanges or systems or in the over-the-counter market;
     
  ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
     
  block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction;
     
  purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
     
  an exchange distribution in accordance with the rules of the applicable exchange;
     
  privately negotiated transactions;
     
  short sales;
     
  through the listing or settlement of options or other hedging transactions, whether such options are listed on an options exchange or otherwise;
     
  broker-dealers may agree with the Selling Security Holders to sell a specified number of such shares at a stipulated price per share;
     
  a combination of any such methods of sale; and
     
  any other method permitted pursuant to applicable law.

 

TheSelling Security Holders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

 

Ifthe Selling Security Holders effectuate such transactions by selling shares of Common Stock to or through underwriters, broker-dealersor agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions, or commissions fromthe Seller Stockholders or commissions from purchasers of the shares of Common Stock for whom they may act as agent or to whom they maysell as principal (which discounts, concessions, or commissions as to particular underwriters, broker-dealers or agents may be in excessof those customary in the types of transactions involved). In connection with sales of the shares of Common Stock or otherwise, the SellingSecurity Holders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of CommonStock in the course of hedging in positions they assume. The Selling Security Holders may also sell shares of Common Stock short anddeliver shares of Common Stock covered by this prospectus to close out short positions and to return borrowed shares in connection withsuch short sales. The Selling Security Holders may also loan or pledge shares of Common Stock to broker-dealers that in turn may sellsuch shares.

 

TheSelling Security Holders may from time to time pledge or grant a security interest in some or all of the shares of Common Stock ownedby them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell theshares of Common Stock from time to time under this prospectus after we have filed a supplement to this prospectus under Rule 424(b)(3)or other applicable provision of the Securities Act supplementing or amending the list of Selling Security Holders to include the pledgee,transferee or other successors in interest as Selling Security Holders under this prospectus. The Selling Security Holders also may transferor donate the shares of Common Stock in other circumstances, in which case the transferees, donees, pledgees, or other successors ininterest will be the selling beneficial owners for purposes of this prospectus.

 

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Underthe securities laws of some states, the shares of Common Stock may be sold in such states only through registered or licensed brokersor dealers. In addition, in some states the shares of Common Stock may not be sold unless such shares have been registered or qualifiedfor sale in such state or an exemption from registration or qualification is available and is complied with.

 

Therecan be no assurance that any Selling Stockholder will sell any or all of the shares of Common Stock registered pursuant to the registrationstatement of which this prospectus forms a part.

 

TheSelling Security Holders and any other person participating in such distribution will be subject to applicable provisions of the SecuritiesExchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, the anti-manipulation rulesof Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the Common Stock by the Selling SecurityHolders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of theshares of Common Stock to engage in market-making activities with respect to the shares of common stock.

 

Inaddition, to the extent applicable we will make copies of this prospectus (as it may be supplemented or amended from time to time) availableto the Selling Security Holders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The SellerStockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities,including liabilities arising under the Securities Act.

 

Weare required to pay all expenses of the registration of the shares of Common Stock, including SEC filing fees and expenses of compliancewith state securities or “blue sky” laws; provided, however, that the Selling Security Holders will pay all underwritingdiscounts and selling commissions, if any, and all fees and expenses of their respective legal counsel. We have agreed to indemnify theSelling Security Holders against liabilities, including liabilities under the Securities Act and state securities laws, relating to theregistration of the shares offered by this prospectus. We may be indemnified by the Selling Security Holders against liabilities, includingliabilities under the Securities Act, and state security laws, that may arise from any written information furnished to us by the SellingSecurity Holders specifically for use in this prospectus.

 

Onceeffective, our company has agreed to use its commercially reasonable efforts to keep such registration, and any qualifications, exemptionor compliance under state securities laws which our company determines to obtain, continuously effective, and to keep the registrationstatement of which this prospectus forms a part free of any material misstatements or omissions, until the earlier of the following:(1)the date of which the Selling Security Holders cease to hold any shares of Common Stock registered hereunder, or (2) the date all sharesof Common Stock held by the Selling Security Holders may be sold without restriction under Rule 144, including without limitation, anyvolume and manner of sale restrictions which may be applicable to affiliates under Rule 144.

 

Oncesold under the registration statement of which this prospectus forms a part, the shares of common stock will be freely tradable in thehands of persons other than our affiliates.

 

MARKETFOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

 

(a)Common Stock

 

Ourcommon stock has been traded on the Nasdaq Capital Market under the symbol “AREB” since February 2022. Prior to February2022, our common stock traded on the OTCQB marketplace.

 

(b)Holders of Common Equity

 

Asof March 31, 2022, there were approximately 132 stockholders of record. An additional number of stockholders are beneficial holdersof our common stock in “street name” through banks, brokers and other financial institutions that are the recordholders.

 

(c)Dividend Information

 

Wehave not paid any cash dividends to our holders of common stock. The declaration of any future cash dividends is at the discretion ofour board of directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions,and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvestearnings, if any, in our business operations.

 

TransferAgent

 

ActionStock Transfer will act as the registrar, transfer agent, warrant agent and dividend and redemption price disbursing agent in respectof the Warrants. The principal business address of 2469 E. Fort Union Blvd., Suite 214, Salt Lake City, UT 84121.

 

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MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Thefollowing discussion and analysis should be read in conjunction with our consolidated financial statements and related notes appearingelsewhere in this Prospectus. In addition to historical information, this discussion and analysis contains forward-looking statementsthat involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-lookingstatements as a result of certain factors, including but not limited to those set forth in “Risk Factors.”

 

Management’sDiscussion and Analysis should be read in conjunction with the financial statements included in this Form S-1 (the “Financial Statements”).The financial statements have been prepared in accordance with generally accepted accounting policies in the United States (“GAAP”).Except as otherwise disclosed, all dollar figures included therein and in the following management discussion and analysis are quotedin United States dollars.

 

ThePrivate Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the termsof the safe harbor, the Company notes that in addition to the description of historical facts contained herein, this report containscertain forward-looking statements that involve risks and uncertainties as detailed herein and from time to time in the Company’sother filings with the Securities and Exchange Commission and elsewhere. Such statements are based on management’s current expectationsand are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those, describedin the forward-looking statements. These factors include, among others: (a) the Company’s fluctuations in sales and operating results;(b) risks associated with international operations; (c) regulatory, competitive and contractual risks; (d) development risks; (e) theability to achieve strategic initiatives, including but not limited to the ability to achieve sales growth across the business segmentsthrough a combination of enhanced sales force, new products, and customer service; and (f) pending litigation.

 

Overview

 

TheCompany focuses primarily on marketing branded safes and personal security products, includingconcealed carry/self-defense products. Additionally, the Company designs and produces branded apparel and other accessories. TheCompany promotes and sells its products primarily through retailers using a dealer network, various leading national and regional retailers,local specialty sports, hunting and firearms stores. The Company also markets and sells its products online, through its website, aswell as on Amazon.com where customers can place an order for the Company’s branded backpacks and apparel items. The Company’sproducts have the American Rebel Brand imprint.

 

Recent Developments and Trends

 

UnderwrittenPublic Offering

 

OnFebruary 9, 2022, we closed on an underwritten public offering (the “Public Offering”) of 2,530,121 units (the“Common Units”), at a price to the public of $4.15 per Common Unit, for aggregate gross proceeds of approximately $10.5million, prior to deducting underwriting discounts, commissions, and other estimated offering expenses. Each Common Unit consistedof one share of Common Stock and one warrant to purchase one share of Common Stock (each a “Warrant” and collectivelythe “Warrants”). The Common Stock and Warrants were immediately separable from the Common Units and were issued andtrade separately. The Warrants are exercisable immediately, expire five years from the date of issuance and have an exercise priceof $5.1875 per share.

 

Wehave used the net proceeds from this offering to repay various outstanding indebtedness and for general corporate purposes, includingworking capital, increased research and development expenditures and funding our growth strategies.

 

Results of Operations

 

From inception through December 31, 2021,we have generated an operating deficit of $26,969,657. We expect to incur additional losses during the fiscal year ending December31, 2022, and beyond, principally as a result of our increased investment in inventory, marketing expenses, and the limited salesof our new products as we seek to establish them in the marketplace.

 

Resultsof Operations for the fiscal year ended December 31, 2021

 

Revenueand cost of goods sold

 

Forthe year ended December 31, 2021, we reported Sales of $986,826, compared to Sales of $1,255,703 for the year ended December 31, 2020.The decrease is attributable to lack of inventory as the Company’s resources were diverted to completing its capital raise thatclosed on February 10, 2022. For the year ended December 31, 2021, we reported Cost of Sales of $812,130, compared to Cost of Sales of$952,511 for the year ended December 31, 2020. The decrease in Cost of Sales was again attributable to the reduced level of inventory.For the year ended December 31, 2021, we reported Gross Profit of $174,696, compared to Gross Profit of $303,192 for the year ended December31, 2020. The decrease in Gross Profit was attributable to the reduced level of inventory. 

 

30
 

 

Expenses

 

Totaloperating expenses for the year ended December 31, 2021, were $3,486,135 compared to $3,075,113 for the year ended December 31, 2020, asfurther described below.

 

Forthe year ended December 31, 2021, we incurred consulting and business development expenses of $2,012,803, compared to consulting andbusiness development expenses of $529,094 for the year ended December 31, 2020. The increase in consulting and business development expensesis due to additional expenses incurred related to preparing for an equity raise.

 

Forthe year ended December 31, 2021, we incurred product development expenses of $330,353, compared to product development expenses of $320,472for the year ended December 31, 2020. The amount of product development expenses was relatively similar.

 

Forthe year ended December 31, 2021, we incurred marketing and brand development expenses of $171,030, compared to marketing and brand developmentexpenses of $390,294 for the year ended December 31, 2020. The decrease in marketing and brand development expenses relates primarilyto the benefit of the prior year’s investment in the marketing of the American Rebel brand.

 

Forthe year ended December 31, 2021, we incurred general and administrative expenses of $968,306, compared to general and administrativeexpenses of $1,773,529 for the year ended December 31, 2020. The decrease relates primarily to a decrease in professional, consultingand operating fees due to cost saving measures and the benefit of established systems set up in prior years.

 

Forthe year ended December 31, 2021, we incurred depreciation expense of $3,643, compared to depreciation expense of $61,724 for the yearended December 31, 2020.

 

Otherincome and expenses

 

Forthe year ended December 31, 2021, we incurred interest expense of $2,061,782, compared to interest expense of $2,292,957 for the yearended December 31, 2020.

 

NetLoss

 

Netloss for the year ended December 31, 2021, amounted to $6,098,944, resulting in a loss per share of $4.85, compared to $5,981,082 forthe year ended December 31, 2020, resulting in a loss per share of $7.93. The decrease in the net loss from the year ended December 31,2020, to the year ended December 31, 2021, is primarily due to the investment in compensation that occurred in September 2020.

 

31
 

 

Liquidity and Capital Resources

 

Weare a development stage company and realized minimal revenue from our planned operations. We have a working capital deficit of $4,171,277at December 31, 2021, and have incurred a deficit of $26,969,657 from inception to December 31, 2021. We have funded operations primarilythrough the issuance of capital stock, convertible debt and other securities.

 

Duringthe year ended December 31, 2021, we raised net cash of $772,505 by issuance of common and preferred shares, as compared to $- for theyear ended December 31, 2020. During the year ended December 31, 2021, we raised net cash of $2,244,100 through the issuance of promissorynotes secured by specific inventory, as compared to $2,869,171 for the year ended December 31, 2020.

 

As we continue with the launch of our American Rebelsafes and concealed carry product line we have devoted and expect to continue to devote significant resources in the areas of capitalexpenditures and marketing, sales, and operational expenditures.

 

Weexpect to require additional funds to further develop our business plan, including the anticipated launch of additional products in additionto continuing to market our safes and concealed carry product line. Since it is impossible to predict with certainty the timing and amountof funds required to establish profitability, we anticipate that we will need to raise additional funds through equity or debt offeringsor otherwise in order to meet our expected future liquidity requirements. Any such financing that we undertake will likely be dilutiveto existing stockholders.

 

Inaddition, we expect to also need additional funds to respond to business opportunities and challenges, including our ongoing operatingexpenses, protecting our intellectual property, developing or acquiring new lines of business and enhancing our operating infrastructure.While we may need to seek additional funding for such purposes, we may not be able to obtain financing on acceptable terms, or at all.In addition, the terms of our financings may be dilutive to, or otherwise adversely affect, holders of our Common Stock. We mayalso seek additional funds through arrangements with collaborators or other third parties. We may not be able to negotiate any such arrangementson acceptable terms, if at all. If we are unable to obtain additional funding on a timely basis, we may be required to curtail or terminatesome or all of our product lines.

 

FinancingArrangements

 

PromissoryNote

 

TheCompany has one outstanding Promissory Note dated July 1, 2021, in the amount of $600,000 that matures on June 30, 2022. Interest on the note is 12% annually, paid quarterly.

 

32
 

 

Lines of Credit

 

On December 20, 2018, the Company entered into a$25,000 unsecured Loan with an interest rate of 8.98% offered by American Express. The Business Loan has an outstanding balance of $7,431as of December 31, 2021. The Company makes a $399 monthly payment on the Business Loan.

 

CriticalAccounting Policies

 

Thepreparation of financial statements and related footnotes requires us to make judgments, estimates, and assumptions that affect the reportedamounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.

 

Anaccounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters thatare highly uncertain at the time the estimate is made, and different estimates that reasonably could have been used, or changes inthe accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.

 

FinancialReporting Release No. 60 requires all companies to include a discussion of critical accounting policies or methods used in the preparationof financial statements. There are no critical policies or decisions that rely on judgments that are based on assumptions about mattersthat are highly uncertain at the time the estimate is made. Note 1 to the financial statements, included elsewhere in this report, includesa summary of the significant accounting policies and methods used in the preparation of our financial statements.

 

Off-BalanceSheet Arrangements

 

None.

 

CriticalAccounting Policies

 

Ourdiscussion and analysis of our financial condition and results of operation are based upon our financial statements, which have beenprepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financialstatements requires us to make estimates and judgments that affect the reported amounted of assets, liabilities, revenues, and expenses.We have identified several accounting principles that we believe are key to the understanding of our financial statements. These importantaccounting policies require our most difficult subjective judgements.

 

Useof Estimates

 

Thepreparation of financial statements in conformity with accounting principles generally accepted in the United States of America requiresus to make estimates and assumptions that affected the reported amounts of assets and liabilities and disclosure of contingent assetsand liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.Actual results could differ from those estimates. Significant estimates made in preparing the consolidated financial statements includethe valuation of allowances for doubtful accounts, valuation of deferred tax assets, inventories, useful lives of assets, intangibleassets, and stock-based compensation.

 

Inventory

 

Inventoryconsists of backpacks, jackets, safes and accessories manufactured to our design and held for resale and are carried at the lower ofcost (First-in, First-out Method) or market value. The Company determines the estimate for the reserve for slow moving or obsolete inventoriesby regularly evaluating individual inventory levels, projected sales and current economic conditions. The Company also makes depositpayments on inventory to be manufactured that are carried separately until the goods are received into inventory.

 

Researchand Development

 

Todate, we have expensed all costs associated with developing our product specifications, manufacturing procedures, and products throughproduct development expense as this work was done by our design and engineering team.

 

RevenueRecognition

 

Inaccordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), revenues are recognized when control ofthe promised goods or services is transferred to our clients, in an amount that reflects the consideration to which we expect to be entitledin exchange for those goods and services. To achieve this core principle, we apply the following five steps: (1) Identify thecontract with a client; (2) Identify the performance obligations in the contract; (3) Determine the transaction price; (4) Allocate thetransaction price to performance obligations in the contract; and (5) Recognize revenues when or as the company satisfies a performanceobligation.

 

Weadopted this ASC on January 1, 2018. Although the new revenue standard is expected to have an immaterial impact, if any, on our ongoingnet income, we did implement changes to our processes related to revenue recognition and the control activities within them.

 

ExciseTax

 

Noneapplicable.

 

FairValue of Financial Instruments

 

Fairvalue estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September30, 2021, and December 31, 2020, respectively. The respective carrying value of certain on-balance-sheet financial instruments approximatedtheir fair values. These financial instruments include cash, and accounts payable. Fair values were assumed to approximate carrying valuesfor cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable ondemand.

 

33
 

 

Level1: The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” withthe caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactionsinvolving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especiallyphysical assets, actually trade in active markets.

 

Level2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, theymay be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputsthat can be applied in three situations.

 

Level3: If inputs from levels 1 and 2 are not available, the Financial Accounting Standards Board (the “FASB”) acknowledges thatfair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,”and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.”This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurementdate”. Earlier in the standard, FASB explains that “observable inputs” are gathered from sources other than the reportingcompany and that they are expected to reflect assumptions made by market participants.

 

IncomeTaxes

 

TheCompany follows ASC Topic 740 for recording provision for income taxes. Deferred tax assets and liabilities are computed based upon thedifference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicablewhen the related asset or liability is expected to be realized or settled. Deferred income tax expense or benefit is based on the changesin the asset or liability for each period. If available evidence suggests that it is more likely than not that some portion or the entiredeferred tax asset will not be realized, a valuation allowance is required to reduce the deferred tax asset to the amount that is morelikely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income tax in theperiod of change.

 

Deferredincome tax may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposesin different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilitiesto which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classifiedas current or non-current depending on the periods in which the temporary differences are expected to reverse.

 

TheCompany applies a more-likely-than-not recognition threshold for all tax uncertainties. ASC Topic 740 only allows the recognition oftax benefits that have a greater than 50% likelihood of being sustained upon examination by taxing authorities. As of September 30, 2021,and December 31, 2020, the Company reviewed its tax positions and determined there were no outstanding, or retroactive tax positionswith less than a 50% likelihood of being sustained upon examination by the taxing authorities, therefore this standard has not had amaterial effect on the Company.

 

TheCompany does not anticipate any significant changes to its total unrecognized tax benefits within the next twelve (12) months.

 

TheCompany classifies tax-related penalties and net interest as income tax expense. For the nine-month period ended September 30, 2021,and 2020, respectively, no income tax expense has been recorded.

 

Stock-BasedCompensation

 

TheCompany records stock-based compensation in accordance with the guidance in ASC Topic 505 and 718 which requires the Company to recognizeexpense related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactionsusing the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizesthe cost of all share-based awards on a graded vesting basis over the vesting period of the award.

 

TheCompany accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordancewith FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of theconsideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The valueof equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitmentor completion of performance by the provider of goods or services as defined by FASB ASC 505-50.

 

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BUSINESS

 

Our Company

 

AmericanRebel, America’s Patriotic Brand, operates primarily on designing and marketing branded safes and personal security andself-defense products. Additionally, the Company designs and produces branded accessoriesand apparel, including with concealment pockets.

 

Webelieve that when it comes to their homes, consumers place a premium on their security and privacy. Our products are designed to offerour customers convenient, efficient and secure home and personal safes from a provider that they can trust. We are committed to offeringproducts of enduring quality that allow customers to keep their valuable belongings protected and to express their patriotism and style,which is synonymous with the American Rebel brand.

 

Oursafes and personal security products are constructed primarily of U.S.-made steel. We believe our products are designed to safely storefirearms, as well as store our customers’ priceless keepsakes, family heirlooms and treasured memories, and aim to make our productsaccessible at various price points for home use. We believe our products are designed for safety, quality, reliability, features andperformance.

 

Toenhance the strength of our brand and drive product demand, we work with our sole supplier and manufacturer to emphasize product qualityand mechanical development in order to improve the performance and affordability of our products while providing support to our distributionchannel and consumers. We seek to sell products that offer features and benefits of higher-end safes at mid-line price ranges.

 

Webelieve that safes are becoming a ‘must-have appliance’ in a significant portion of households. We believe our current safesprovide safety, security, style and peace of mind at competitive prices. We are in the process of developing a newly designed model safe,which is expected to be produced in the U.S. We anticipateour new model safe will offer and be equipped with technologically advanced features, such as independent boltworks operation, double-steeldoor-jamb framing, and a standardized geared locking mechanism.

 

Inaddition to branded safes, we offer an assortment of personal security products as well as apparel and accessories for men and womenunder the Company’s American Rebel brand. Our backpacks utilize what we believe is a distinctive sandwich-method concealment pocket,which we refer to as Personal Protection Pocket, to hold firearms in place securely and safely. The concealment pockets on our Freedom2.0 Concealed Carry Jackets incorporate a silent operation opening and closing with the use of a magnetic closure.

 

Webelieve that we have the potential to continue to create a brand community presence around the core ideals and beliefs of America, inpart through our Chief Executive Officer, Charles A. “Andy” Ross, who has written, recorded and performs a number of songsabout the American spirit of independence. We believe our customers identify with the values expressed by our Chief Executive Officerthrough the “American Rebel” brand.

 

Throughour growing network of dealers, we promote and sell our products in select regional retailers and local specialty safe, sporting goods,hunting and firearms stores, as well as online, including our website and e-commerce platforms such as Amazon.com.

 

OurProducts

 

Wedesign, market and sell branded safes and personal security products, including concealedcarry/self-defense products, and design and market apparel line and complimentary accessories. We promote and sell our products primarilythrough retailers using a dealer network, as well as online, through our website, and on Amazon.com, where customers can place an orderfor our branded backpacks and apparel items.

 

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Safes

 

Weoffer a wide range of home, office and personal safe models, in a broad assortment of sizes, features and styles, whichare constructed with U.S.-made steel. Our safes exhibit the strength and rugged independence that America was builtupon. American Rebel’s design makes keeping your firearms more secure in style. Productsare marketed under the American Rebel brand. Although demand for our safes is strong across all segments of our customers, includingindividuals and families who wish to protect their valuables, to collectors and the dispensary servicing community, the demandfor safe storage responsible solutions has been particularly strong among gun owners, sportsmen, competitive shooters and hunters alike.We expect to benefit from increasing awareness of and need for safe storage of firearms in futureperiods.

 

 

LargeSafes

 

Ourpremium large safe collection consists of six premium safes in a range of sizes. All of our large safes share the same high-qualityworkmanship, are constructed out of 11-gauge U.S.-made steel and feature a double plate steel door, double-steel door casements and reinforceddoor edges. We believe that our large safes are ideal for storing valuables of significant size, and that they offergreater capacity for storage and protection. Our safes offer a fully adjustable interior to fit our customers’ needs. Dependingon the model, one side of the interior may have shelves and the other side set up to accommodate long guns. The large safesare designed to be resistant to break-ins, natural disasters and fire damage, and to prevent unauthorizedaccess and to protect your family and their valuables. A large, highly visible safe also is believed to act as a deterrent to any prospectivethief. Safe storage is also top priority of our customer base who seeks to responsibly secure their firearms. Whenever a new firearmis purchased, gun owners look for our premium solution to responsible secure them and protect their loved ones.

 

Our large safes selectionincludes the following:

 

AR-50

 

TheAR-50 is our biggest among the most secure safes. The AR-50safe is designed to be strong, rugged, constructed of 11-gauge American-made steel and maintains capacity to comfortably storeover 40 firearms comfortably. This premium gun safe with a double plate steel door, double-steel door casement and reinforced door edgeis designed to give our customers added security and peace of mind, with 75 minutes of fire protection at 1200 degrees Fahrenheit aswell as a customized shelf solution and optional additional accessories to increase the capacity to hold firearms. 72” tall, 40”wide with a depth of 28.5”.

 

 

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AR-40

 

TheAR-40 has the same footprint as the AR-50; however, it is 12” shorter with a capacity of over 30 firearms. Thisgun safe contains a double plate steel door, double-steel door casement and reinforced door edge, designed to give our customers securestorage. It provides 75 minutes of fire protection at 1200 degrees Fahrenheit as well as a flexible shelving system to accommodate firearmstorage. The dimensions include 60” tall, 40” wide with a depth of 28.5”.

 

 

AR-30

 

TheAR-30 offers nearly 50,000 cubic inches of storage. Built with the same strength and ruggedness as the AR-50 and AR-40 models, this safeholds over 20 firearms. This gun safe contains a double plate steel door, double-steel door casementand reinforced door edge. It is designed to give our customers the ability to store their firearms and valuables securely, with 75 minutesof fire protection at 1200 degrees Fahrenheit as well as offering optional add-on accessories to increase storage capacity. The dimensionsinclude 60” tall, 34” wide with a depth of 24.5”.

 

 

AR-20

 

TheAR-20 shares the quality workmanship as the other sizes with a capacity for over 15 firearms. Thisgun safe contains a double plate steel door, double-steel door casement and reinforced door edge is designed to prevent theft and provideprotection from fire, flood and accidental access, with 75 minutes of fire protection at 1200 degrees Fahrenheit as well as a customizedshelving solution. The dimensions include 60” tall, 28” wide with a depth of 22.5”.

 

 

AR-15

 

TheAR-15 fits the bill for narrow spaces with room for over 10 firearms. Same quality construction as our other large safes including adouble plate steel door, double-steel door casement and reinforced door edge is designed to give our customers added security and peaceof mind, with 75 minutes of fire protection at 1200 degrees Fahrenheit as well as a customized shelving solution. The dimensions include60” tall, 22” wide with a depth of 22.5”.

 

 

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AR-12

 

TheAR-12 is our shortest safe. It is the perfect size to store AR rifles, handguns and personal valuables. It has a capacity of over 8 ARrifles. Same quality construction as our other large safes including a double plate steel door,double-steel door casement and reinforced door edge is designed to give our customers safe storage and peace of mind, with 75 minutesof fire protection at 1200 degrees Fahrenheit as well as offering optional add-on accessories to increase storage capacity. The dimensionsinclude 40” tall, 26” wide with a depth of 23”.

 

Personalsafes

 

Ourcompact safes, which come in two sizes, are a responsible solution for safely secure smaller valuables or ammunition. The AR-110 weighs5 pounds and is 9.5” x 6.5” x 1.75”. The AR-120 weighs 6 pounds and is 10.5” x 7/5” x 2.1875”. Thesesmall, personal safes are easy to operate and carry as they fit into a briefcase, desk or undera vehicle seat. These personal safes meet (“TSA”) airline firearm guidelinesand fit comfortable in luggage where travel regulations require it.

 

Vaultdoors

 

OurU.S.-made Vault Doors combine style with theft and fire protection for a look that fits any decor. Designedto offer superior protection, vault rooms provide ideal solution for the protection of the family and any valuables. Newly-built,higher-end homes often add vault rooms and we believe our vault doors, which we designed to facilitate secure access to such vault rooms,provide ideal solutions for the protection of valuables and shelter from either storms or intruders. Whether it is a safe room, ashelter, or a place to consolidate valuables, our American Rebel In-Swinging and Out-Swinging Vault Doors provide maximum functionalityto a secure vault room. American Rebel vault doors are constructed of two thick, A36 carbon steel panels with sandwiched fire insulation,a design that provides greater rigidity, security and fire protection. The active boltworks and three external hinges are someof the features of the vault door. For safety and to use the door for a panic or safe room door, a quick release lever is installed insidethe door.

 

Dispensaries

 

Our inventory control safe, the HG-INV Inventory Safe, provides cannabis dispensaries a reliable and safe solution. Withwide-spread legalization, medical marijuana or recreational cannabis dispensaries, increasing governmental regulation and insurance requirementsto lock their inventory after hours, our HG-INV Inventory Safe delivers a higher level of user experience with customized shelving andinventory notation system. The HG-INV has been introduced to the dispensary industry through trade shows appearances and many of ourdealers are actively cultivating dispensary business. Expanding our marketing of the HG-INV can open new markets to American Rebel.

 

PersonalSecurity

 

Concealed Carry Backpacks – consist ofan assortment of sizes, features and styles. Our XL, Large, and Medium concealedcarry backpacks feature our proprietary “Personal Protection Pocket” which utilizes a sandwich method to keephandguns secure and in the desired and easily accessible position. The sandwich method is comprised of two foam pads that surroundor sandwich the firearm in place. The user can access the isolated Protection Pocket from either side of the backpack. We believethese distinctive concealed carry products are designed for everyday use while keeping your firearm concealed, safe and easily accessible.

 

TheExtra-Large Freedom and Cartwright CCW Backpack

 

Ourlargest concealed carry backpack offers ample storage, including a dedicated top loading laptop pouch and additional tablet sleeve. Bothcompartments are padded to protect your devices. Two large open compartments make this backpack practical for carrying documents andfolders or whatever you need to tote from one place to another. Our proprietary “Protection Pocket” allows quick and easyaccess to your handgun from either side. Multiple interior compartments are strategically placed to secure extra magazines and accessories.Available in the Freedom and Cartwright style as well as a variety of trim color options.

 

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LargeFreedom and Cartwright CCW Backpack

 

Ourmost popular concealed carry backpack. This backpack offers ample storage, including a dedicated top loading laptop pouch and an additionaltablet sleeve. Both compartments are padded to protect your devices. The size of the main compartment opening makes this backpack practicalfor carrying documents, folders or whatever you need to tote from one place to another. Includes our proprietary “Protection Pocket”and is available in the Freedom and Cartwright style as well as a variety of trim color options.

 

MediumFreedom CCW Backpack

 

Thismedium-sized is designed for those who look to be more streamlined. This backpack offers ample storage, including a dedicated top loadinglaptop/tablet compartment and two liquid container pouches. The laptop/tablet compartment is padded to protect your devices. The maincompartment is practical for carrying documents and folders or whatever you need for everyday use. Includes our proprietary “ProtectionPocket”. Available in a variety of trim color options.

 

SmallPlus CCW Backpack

 

Oursmall one-strap concealed carry backpack is designed for use while running, jogging, biking or riding a motorcycle. Ourconcealment pocket contains a holster and attaches to the interior with hook and loop material. Soft fleece lined pockets for your tablet,glasses case and accessories are also included. Available in dark blue or in our signature patriotic “We The People” design.

 

SmallFreedom CCW Backpack

 

Thisone strap pack also contains a holster and attaches to the interior with hook and loop material. There is also plenty of room for a smalltablet, cell phone, chargers and other necessities. Available in a variety of trim color options.

 

Apparel

 

Weoffer a wide range of concealed carry jackets, vests and coats for men and women,including our Freedom Jacket 2.0 which incorporates a significant advance in the operation of the concealment pocket.We also proudly offer patriotic apparel for the whole family, with the imprint of the American Rebel brand. Our apparel line servesas “point man” for the brand, often the first exposure that people have to all things American Rebel. Ourbranded apparel line is forever relevant, current and bold. We place emphasis on styling that complements our enthusiast customers’lifestyle, representing the values of our community and quintessential American character. TheAmerican Rebel clothing line style is not only a fashion statement; it is the sense of pride of belonging to our patriotic family, onyour adventures and in life. Our apparel collection consists of the following:

 

CartwrightCoats and Vests

 

Engineeredfor comfort, warmth, and versatility and mobility. Our Cartwright Concealed Carry Coats and Vests are designed with purpose and informedby the rugged demands of the everyday hard worker. Its quality construction and workmanship are designed to keep you warm and shieldedfrom the elements. Left-hand and right-hand concealed pocket access provides for secure and safe concealment of your firearm with easyaccess on either side.

 

Freedom2.0 Jackets and Vests for men and women

 

ourlightweight jackets collection is designed with magnetic pocket closures for silent, secure and safe concealment. Our lightweight jacketsare crafted to facilitate easy firearm access for both right-handed and left-handed carriers.

 

AmericanRebel T-Shirts Collection

 

AmericanRebel’s T-shirts collection is created to liberate the spirit of an endless summer inside everyone and to embrace their patriotism

 

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OurCompetitive Strengths

 

Webelieve we are moving forward on a path to long-term, sustainable growth, and our business has, and our future success will be drivenby, the following competitive strengths:

 

Powerful Brand Identity – we believe we have developed a strong brand that sets us apart from our competitors. We believe this is a distinguish factor and will contribute to the future success of our business. Our brand is predicated on patriotism and quintessential American character: protecting our loved ones. We strive to equip our safes with technologically advanced features that offer customers advanced security to provide the peace of mind they need. Maintaining, protecting and enhancing the “American Rebel” brand is critical to expanding our loyal enthusiasts base, network of dealers and other partners. Through branded apparel and accessories, we seek to further develop our connection with the American Rebel community and share the values of patriotism and safety that our Company stands for. We strive to continue to meet their demand for our premium safes and will depend largely on our ability to maintain customer trust, be a gun safe storage leader and continue to provide high-quality safes,

 

Product Design and Development – our current safe model relies on what we believe are time-tested features, such as Four-Way Active Boltworks, pinning the door shut on all four sides when Three-Way Boltworks are standard in our competitors’ safes, and benefits that would not often be available in our price point, including 11-gauge US-made steel. The sleek exterior of our safes has garnered attention and earned the moniker from our dealers as the “safe with an attitude.” When we set out to enter the safe market, we wanted to offer a safe that we would want to buy, one that would get our attention and provide excellent value for the cost.

 

Focus on Product Performance - since the introduction of our first safes, we have maintained a singular focus on creating a full range of safe, quality, reliable safes that were designed to help our customers keep their family and valuables safe at all times. We incorporate advanced features into our safes that are designed to improve strength and durability. Key elements of our safes’ performance include:

 

DoublePlate Steel Door - 4 ½” Thick

ReinforcedDoor Edge – 7/16” Thick

Double-SteelDoor Casement

SteelWalls – 11-Gauge

DiameterDoor Bolts – 1 ¼” Thick

Four-WayActive Boltworks – AR-50(14), AR-40(12), AR-30(10), AR-20(10), AR-15(8), AR-12(8)

Diamond-EmbeddedArmor Plate

 

DoublePlate Steel Door is formed from two American made steel plates with fire insulation sandwiched inside. Thicker steel isplaced on the outside of the door while the inner steel provides additional door rigidity and attachment for the locking mechanismand bolt works. The door edge is reinforced with up to four layers of laminated steel. This exclusive design offers up to 16 timesgreater door strength and rigidity than the “thin metal bent to look thick” doors.

 

Double-SteelDoor Casement This casement is formed from two or more layers of steel and is welded around the perimeter of the door opening.It more than quadruples the strength of the door opening and provides a more secure and pry-resistant door mounting. Our manufacturerinstalls a Double-Steel Door Casement on all of its models. Most of our competitors do not offer the reinforced door casement.

 

Diamond-EmbeddedArmor Plate Industrial diamond is bonded to a tungsten steel alloy hard plate. Diamond is harder than either a cobalt orcarbide drill. If drilling is attempted the diamond removes the cutting edge from a drill – thus dulling the drill bit to whereit will not cut.

 

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Trusted Brand - we believe that we have developed a trusted brand with both retailers and consumers for delivering reliable, secure safes solutions.

 

Customer Satisfaction - we believe we have established a reputation for delivering high-quality safes and personal security products in a timely manner, in accordance with regulatory requirements and our retailers’ delivery requirements and supporting our products with a consistent merchandising and marketing message. We also believe that our high level of service, combined with strong consumer demand for our products and our focused distribution strategy, produces substantial customer satisfaction and loyalty. We also believe we have cultivated an emotional connection with the brand which symbolizes a lifestyle of freedom, rugged individualism, excitement and a sense of bad boy rebellion.

 

Proven Management Team - our founder and Chief Executive Officer, Charles A. Ross, Jr., has led the expansion and focus on the select product line we offer today. We believe that Mr. Ross had an immediate and positive impact on our brand, products, team members, and customers. Under Mr. Ross’s leadership, we believe that we have built a strong brand and strengthened the management team. We are refocusing on the profitability of our products, reinforcing the quality of safes and engaging customers and drive sales. We believe our management team possess an appropriate mix of skills, broad range of professional experience, and leadership designed to drive board performance and properly oversee the interests of the Company, including our long-term corporate strategy. Our management team also reflects a balanced approach to tenure that will allow the Board to benefit from a mix of newer directors who bring fresh perspectives and seasoned directors who bring continuity and a deep understanding of our complex business.

 

OurGrowth Strategy

 

Ourgoal is to enhance our position as a designer, producer and marketer of premium safes and personal security products. We haveestablished plans to grow our business by focusing on three key areas: (1) organic growth and expansion in existing markets; (2) strategicacquisitions, and (3) expanding the scope of our operation activities to the dispensaries U.S. community.

 

Wehave developed what we believe is a multi-pronged growth strategy, as described below, to help us capitalize on a sizable opportunity.Through methodical sales and marketing efforts, we believe we have implemented several key initiatives we can use to grow our businessmore effectively. We believe we have made significant progress in 2021 in the form of nearly $200,000 in sales to first-time buyers.We also intend to opportunistically pursue the strategies described below to continue our upward trajectory and enhance stockholdervalue. Key elements of our strategy to achieve this goal are as follows:

 

OrganicGrowth and Expansion in Existing Markets - Build ourCore Business

 

Thecornerstone of our business has historically been our safes product offering. We are focused on continuing to develop our home, officeand personal safes product lines. We are investing in adding what we believe are distinctive technology solutions to our safes.

 

We are also working to increase floor space dedicatedto our safes and strengthen our online presence in order to expand our reach to new enthusiasts and build our devoted American Rebelcommunity. We intend to continue to endeavor to create and provide retailers and customers with what we believe are responsible,safe, reliable and stylish products, and we expect to concentrate on tailoring our supply and distribution logistics in responseto the specific demands of our customers.

 

Weare currently developing a new model of our home and office safes. Our new safe model,which we expect to introduce at industry trade shows in early 2022, is to bebuilt in the U.S. We expect the new planned model to include additionalfeatures, such as a reinforced door and upgraded locking mechanism, among others. We are focused on developing best in class, compellingcombination of functionality, convenience and style without compromising performance of our safes. We intend to use our designingand developing processes to enhance technological and time to market advantages over incumbent safes manufacturers.

 

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Whilewe currently rely on third-party manufactures for the production ofour current line of safes, apparel and accessories, we believe that the expected addition of manufacturing capabilities followingthe signing of the contract with the aforementioned manufacturer, which we anticipate to work exclusively with us,would allow us, among other benefits, to ramp up our production levels to meet expected demand for our products, provide us greater autonomyover the manufacturing process, and add what we believe are distinctive features.

 

Additionally,our Concealed Carry Product line and Safe line serve a large and growing market segment. We believe that interest in safes increase,as well as in our complimentary concealed carry backpacks and apparel as a byproduct, when interest of the general population in firearmsincrease. To this extent, the FBI’s National Instant Criminal Background Check System (NICS), which we believe serves as a proxyfor gun sales since a background check is generally needed to purchase a firearm, reported a record number of background checks in 2020,39,695,315. The prior annual record for background checks was 2019’s 28,369,750. In 2021, there were 38,876,673 backgroundchecks conducted, similar to that of 2020’s annual record which was 40% higher than the previous annual record in 2019.While we do not expect this increase in background checks to necessarily translate to an equivalent number of additional safes purchased,we do believe it might be an indicator of the increased demand in the safe market. In addition, certain states (such as Massachusetts,California, New York and Connecticut) are starting to legislate new storage requirements in respect of firearms, which is expectedto have positive impact on the sale of safes.

 

Wecontinue to strive to strengthen our relationships with our current distributors, dealers, manufacturers and specialty retailersand to attract other distributors, dealers, and retailers. We believe that the success of our efforts depends on the distinctive features,quality, and performance of our products; continued manufacturing capabilities and meeting demand for our safes; the effectiveness ofour marketing and merchandising programs; and the dedicated customer support.

 

Inaddition, we seek to improve customer satisfaction and loyalty by offering distinctive, high-quality products on a timely and cost-attractivebasis and by offering efficient customer service. We regard the features, quality, and performance of our products as the most importantcomponents of our customer satisfaction and loyalty efforts, but we also rely on customer service and support.

 

Furthermore,we intend to continue improving our business operations, including research and development, component sourcing, production processes,marketing programs, and customer support. Thus, we are continuing our efforts to enhance our production by increasing daily productionquantities through equipment acquisitions, expanded shifts and process improvements, increased operational availability of our equipment,reduced equipment down times, and increased overall efficiency.

 

Webelieve that by enhancing our brand recognition, our market share might grow correspondingly. Industry sources estimate that 70 millionto 80 million people in the United States own an aggregate of more than 400 million firearms, creating a large potential market for oursafes and personal security products. We are focusing on the premium segment of the market through the quality, distinctiveness, andperformance of our products; the effectiveness of our marketing and merchandising efforts; and the attractiveness of our competitivepricing strategies.

 

TargetedStrategic Acquisitions for Long-term Growth

 

Weare consistently evaluating and considering acquisitions opportunities that fit our overall growth strategy as part of our corporatemission to accelerate long-term value for our stockholders and create integrated value chains.

 

Alongthese lines, in March of 2022 we entered into a letter of intent (“LOI”) to purchase a safe manufacturer. The final structureof the acquisition will be determined by the parties following the receipt of tax, corporate and securities law advice. The acquisitionwill be structured as an arm’s length transaction and pursuant to the terms of the LOI the parties intend to sign a definitiveagreement in respect of the acquisition on or before April 30, 2022. Under the terms of the LOI, we would acquire all of the outstandingshares of capital stock of the acquisition target, free and clear of all encumbrances for a combination of cash and stock. As part ofthe LOI, we gave the target a $250,000 non-refundable deposit, which will be credited to us at closing. Completion of the acquisitionis subject to a number of conditions, including but not limited to the following key conditions: the target obtaining an audit of itsfinancial statements; execution of the definitive and ancillary agreements; completion of mutually satisfactory due diligence; us obtainingsufficient financing to complete the acquisition; and receipt of all required regulatory, corporate and third-party approvals, and thefulfillment of all applicable regulatory requirements and conditions necessary to complete the acquisition. 

 

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ExpandingScope of Operations Activities Servicing Dispensaries and Brand Licensing

 

Wecontinually seek to target new consumer segments for our safes. As we believe that safes are becoming a must-have household appliance,we strive to establish authenticity by selling our products to additional groups, and to expand our direct-to-consumer presence throughour website and our showroom in Lenexa, Kansas.

 

Further, we expect the cannabis dispensary industryto be a material growth segment for our business. Several cannabis dispensary operators have expressed interest in theopportunity to help them with their inventory locking needs. Cannabis dispensaries have various insurance requirements and localordinances requiring them to secure their inventory when the dispensary is closed. Dispensary operators have been purchasing gun safesand independently taking out the inside themselves to allow them to store cannabis inventory. Recognizing what seems to bea growing need for cannabis dispensary operators, we have designed a safe tailor-made for the cannabis industry. With the legal cannabishyper-growth market expected to exceed $43 billion by 2025, and an increasing number of states where the growth and cultivation of cannabisis legal (California, Colorado, Hawaii, Maine, Maryland, Michigan, Montana, New Mexico, Oregon, Rhode Island, Vermont and Washington),we believe we are well positioned to address the need of dispensaries. American Rebel has a long list of dispensary operators, growers,and processors interested in the Company’s inventory control solutions. We believe that dispensary operators, growers, andprocessors are another fertile new growth market for our Vault Doors products, as many in the cannabis space havechosen to install entire vault rooms instead of individual inventory control safes—the American Rebel Vault Door has beenthe choice for that purpose.

 

Further, we believe that American Rebel has significantpotential for branded products as a lifestyle brand. As the American Rebel Brand continues to grow in popularity, we anticipateto generate additional revenue from licensing fees earned from third parties who wish to engage the American Rebel community. While theCompany does not generate material revenues from licensing fees, our management believes the American Rebel brand name may inthe future have significant licensing value to third parties that seek the American Rebel name to brand their products to market to theAmerican Rebel target demographic. For example, a tool manufacturer that wants to pursue an alternative marketing plan for a differentlook and feel could license the American Rebel brand name for their line of tools and market their tools under our distinct brand. Thislicensee would benefit from the strong American Rebel brand with their second line of American Rebel branded tools as they would continueto sell both the line of tools under their brand. Conversely, American Rebel could potentially also benefit as a licensee of products.If American Rebel determines a third party has designed, engineered, and manufactured a product that would be a strong addition to theAmerican Rebel catalog of products, American Rebel could license that product from the third-party and sell the licensed productunder the American Rebel brand.

 

Competition

 

The safe industry is dominated by a small number of companies. We competeprimarily on the quality, safety, reliability, features, performance, brand awareness, and price of our products. Ourprimary competitors Superior Safe, Champion Safe as well as certain other domestic manufacturers, as well as certain China-basedmanufactured safes. Safes manufactured in China, including Steelwater and Alpha-Guardian, have struggled under the import tariffs initiatedunder the administration of former U.S President Donald Trump and continued by the current administration. We believe that given thecurrent substantial uncertainty related to the supply chain and delivery of international goods,we have a competitive advantage because our safes are not manufactured overseas.

 

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IntellectualProperty

 

Ourcommercial success depends in part on our ability to obtain and maintain intellectual property protection for our brand and technology,defend and enforce our intellectual property rights, preserve the confidentiality of our trade secrets, operate our business withoutinfringing, misappropriating or otherwise violating the intellectual property or proprietary rights of third parties and prevent thirdparties from infringing, misappropriating or otherwise violating our intellectual property rights. We rely on a combination of patent,copyright and trade secret laws in the United States to protect our proprietary technology. We also rely on a number of United Statesregistered, pending and common law trademarks to protect our brand “American Rebel”.

 

OnMay 29, 2018, US Patent No. 9,984,552, Firearm Detecting Luggage, was issued to us. The term of the patent is 20 years from the issuancedate. In addition to our patent, we rely upon unpatented trade secrets and know-how and continuing technological development andmaintain our competitive position. Trade secrets and know-how, however, can be difficult to protect. We seek to protect our proprietaryinformation, in part, by entering into confidentiality and proprietary rights agreements with our employees and independent contractors.

 

Regulation

 

Thestorage of firearms and ammunition is subject to increasing federal, state and local governmental laws. While the current legislativeclimate does not appear to seek to limit possession of firearms, there is apparent momentum to require safe storage of firearms and ammunition.Although our safes, which are the primary driver of our sales and revenues, are designed to protect any valuables, a significant numberof our safes’ end users have traditionally been gunenthusiasts, collectors, hunters, sportsmen and competitive shooters. Therefore, we expect the increasing federal, state and local governmentalregulation of gun storage to have a materially positive effect on our business.

 

OurCustomers

 

Weprimarily market and sell our products to safe only specialty stores and independent gun stores nationwide. We also sell our productsonline to individuals desiring home, personal and office protection, as well as to recreational shooters and hunters. Our customers chooseus for a number of reasons, including the breadth and availability of the products we offer, our extensive expertise, and the qualityof our customer service.

 

Webelieve the nature of our solutions and our high-touch customer service model strengthens relationships, builds loyalty and drives repeatbusiness as our customers’ businesses expand. In addition, we feel as if our premium product lines and comprehensive product portfolioposition us well to meet our customers’ needs. Furthermore, we fully anticipate that we will be able to leverage all of the datathat we are collecting from our existing customer base to make continuous improvements to our offerings and better serve our currentand new customers in the future.

 

Weintend to expand our distribution to sporting goods stores, farm and home stores, other independent retailers as well as our online customerbase upon securing additional funding and setting up our first manufacturing facility.

 

Suppliers

 

Weare dependent on the continued supply and manufacturing of our safes, backpacks and apparel at third-party facilities locations, whichare critical to our success. Any event that causes a disruption of the operation of these facilities for even a relatively short periodof time would adversely affect our ability to ship and deliver our safes and other products and to provide service to our customers.We have previously experienced, including during the first months after the spread of COVID-19 pandemic, and may in the futureexperience, launch and production ramp up delays for our products as a result of disruption at our suppliers manufacturing partners.Additionally, we have to date fully qualified only a very limited number of such suppliers and have limited flexibility in changing suppliers.Any disruption in the supply of our branded safes from our suppliers could limit our sales. In the long term, we intend to supplementsafes manufactured by our suppliers with safes manufactured by us, which we believe will be more efficient and result in a greater manufacturingvolume and under our control. Our efforts to develop and manufacture such safes, however, have required and may require significant investments,and there can be no assurance that we will be able to achieve these targets in the timeframes that we have planned or at all. If we areunable to do so, we may have to curtail our planned safes or procure additional safes from different suppliers at potentially greatercosts, either of which may harm our business and operating results.

 

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Furthermore,the cost of safes, whether manufactured by our suppliers or by us, depends in part upon the prices and availability of raw manufacturingmaterials such as steel, locks, fireboard, hinges, pins and other metals. The prices for these materials fluctuate and their availablesupply may be unstable, depending on market conditions and global demand for these materials, including as a result of increased globalproduction of electric vehicles and energy storage products. Any reduced availability of these materials may impact our access to theseparts and any increases in their prices may reduce our profitability if we cannot recoup the increased costs through increased safe prices.Moreover, any such attempts to increase product prices may harm our brand, prospects and operating results.

 

Wecurrently rely on third-party suppliers to ship our products to our customers. We have found that dedicated truckloads from our warehouseto our dealers reduce freight damage and provide the overall best shipping solution. Several companies offer dedicated truckload shipping.Increased sales will offer the opportunity to establish regional distribution centers.

 

Salesand Marketing

 

Wemarket our products to consumers through independent safe specialty stores, select national and regional retailers, local specialty firearmsstores, as well as via e-commerce. We maintain consumer-focused product marketing and promotional campaigns, which include print anddigital advertising campaigns; social and electronic media; product demonstrations; point-of-sales materials; in-store training;and in-store retail merchandising. Our use of social media includes Facebook, and YouTube.

 

MarketingTeam Aligned with Sales Force to Maximize Our Industry Visibility to Drive Revenue

 

Our Chief Executive Officer, Charles A.Ross, is familiar to many in the industry due to his twelve years on television as the host of Maximum Archery and later AmericanRebel, that was broadcast on The Outdoor Channel, Sportsman Channel and the Pursuit Channel. Our Marketing and Sales teams have establishedAmerican Rebel as a brand that our customers want and a brand that they are proud to embrace and bring into their homes.

 

DirectMarketing

 

In light of the expertise required to deliverand install safes that weigh 500-1000 pounds, direct marketing is utilized to create awareness and provide information. Our website,AmericanRebel.com, has proven to be a very valuable tool in introducing potential customers to our products. Infomercials and direct-to-consumercampaigns are vehicles to expand our reach at the appropriate time. Currently the demand from our current customers and future customerpool of independent safe specialty stores is high. As the Company grows and seeks out new customers to expand its customer base, directmarketing will be an asset for American Rebel. Chief Executive Officer, Charles A. Ross, was basically making infomercials to promotehis Ross Archery products when he was filming Maximum Archery during the mid-2000s.

 

SocialMedia and Thought Leadership

 

A portion of marketing dollars from the equityraise will be directed to social media. American Rebel and Chief Executive Officer, Charles A. Ross, have large followings onsocial media and a dedicated social media campaign will efficiently reach large numbers of potential customers and brand adopters. Wewill leverage our social media assets to cross-promote locally with independent safe specialty store customers to pull out product throughthe sales channel. Driving demand and awareness of our products to our customers will expand their loyalty to American Rebel and increaseeach stores’ commitment to our brand.

 

TradeShows

 

Trade shows have been an important medium tointroducing our brand and our products. The NRA Annual Meeting, a consumer trade show, is a valuable opportunity to meet and greet ourfinal customers. When we launched our Concealed Carry line of products at the NRA Annual Meeting in Atlanta, GA, in the Spring of 2017,the response from the meeting attendees was overwhelming. We immediately knew the product line resonated with consumers. Similarly, whenwe introduced our line of safes at the 2019 NRA Annual Meeting in the Spring of 2019, we knew we were on to something significant. TheUSCCA (United States Concealed Carry Association) has an annual Concealed Carry and Home Defense Expo. This is also an excellent opportunityto meet, greet and sell product to our final customers, the buying public. The Iowa Deer Classic and Illinois Deer Classic are carryoversfrom our Chief Executive Officer, Charles A. Ross’ hosting duties on Maximum Archery, but we have found that many potentialsafe buyers attend these shows.

 

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Twoindustry-only trade shows we attend are the SHOT Show and Nation’s Best Sports (NBS) Spring and Fall Buying Markets. TheSHOT Show is very high profile and a show that most movers and shakers in the firearms industry attend. Operated by the National ShootingSports Foundation, the SHOT Show is the first trade show of the calendar year and is a great opportunity to introduce the year’snew products. NBS operates buying group shows where retailers who are members of NBS attend the Spring and Fall Market Buying shows toplace orders. NBS provides an excellent base of customers for us to introduce our products to.

 

PaidAdvertising

 

We will occasionally purchase paid print advertisingto support editorial and events. The American Shooting Journal has been very supportive of our business has featured an interview withour Chief Executive Officer on one of past issues of the magazine.

 

Effectsof COVID-19

 

Coronavirus(“COVID-19”) and Related Market Impact. The COVID-19outbreak has presented evolving risks and developments domestically and internationally, as wellas new opportunities for our business. Although the pandemic has not materially impacted our results and operations adversely,our ability to satisfy demand for our products could be negatively impacted by mandatory forced production disruptions of our safes’sole third-party manufacturer and strategic partners. Any significant disruption to communications and travel, including travel restrictionsand other potential protective quarantine measures against COVID-19 by governmental agencies, could make it difficult for us to delivergoods and services to our customers. Further, travel restrictions and protective measures against COVID-19 could cause the Company toincur additional unexpected labor costs and expenses or could restrain the Company’s ability to retain the highly skilled personnelthe Company needs for its operations. The extent to which COVID-19 impacts the Company’s business, sales and results of operationswill depend on future developments, which are uncertain and cannot be currently predicted.

 

Additionally,as a result of COVID-19, at any time we may be subject to increased operating costs, supply interruptions, and difficulties in obtainingraw materials and components. To address these challenges, we continue to monitor our supply chain. We have recently entered into a contractwith a third-party manufacturer to exclusively assemble our upcoming new line of safes. We believe that this vertical integration wouldallow us, among other benefits, to ramp up our production levels to meet expected demand for our products, provide us greater autonomyover the manufacturing process, and add what we believe are distinctive features to our safes.

 

Weexpect that the demand for home, office and personal safety and security products would remain stable, in part due to customers spendingmore time working remotely, increasing regulation mandating safe storage, and substantial uncertainty related to the supply chain anddelivery of international goods, which in turn translate into, we believe, growth in demand for our home and personal safes as a U.S.company. We, however, cannot guarantee, that demand for our safes and personal security products will keep growing through the end ofthe 2021 calendar year and beyond.

 

Further,due to the effects of COVID-19, our management have reduced unnecessary marketing expenditures as part of continued efforts to adjustthe Company’s operations to address changes in the safes and vault industry, and particularly to improve staff and human capitalexpenditures, while maintaining overall workforce levels.

 

Dueto the substantial uncertainty related to the effects of the pandemic, its duration and the related market impacts, including the economicstimulus activity, we are unable to predict the specific impact the pandemic and related restrictions (including the lifting or re-imposingof restrictions due to any current or future variants of the COVID-19 virus or otherwise) will have on our results of operations, liquidityor long-term financial results.

 

LegalProceedings

 

Thereare no proceedings to which any director or officer, or any associate of any such director or officer, is a party that is adverse toour Company or any of our subsidiaries or has a material interest adverse to our Company or any of our subsidiaries. No director or executiveofficer has been a director or executive officer of any business which has filed a bankruptcy petition or had a bankruptcy petition filedagainst it during the past ten years. No current director or executive officer has been convicted of a criminal offense or is the subjectof a pending criminal proceeding during the past ten years. No current director or executive officer has been the subject of any order,judgment or decree of any court permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in anytype of business, securities or banking activities during the past ten years. No current director or officer has been found by a courtto have violated a federal or state securities or commodities law during the past ten years.

 

Fromtime to time, however, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business.Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that mayharm our business.

 

CorporateHistory

 

TheCompany was incorporated on December 15, 2014, under the laws of the State of Nevada, as CubeScape, Inc. Effective January 5,2017, the Company amended its articles of incorporation and changed its name to American Rebel Holdings, Inc. The Company completed abusiness combination with its majority stockholder, American Rebel, Inc. on June 19, 2017. As a result, American Rebel, Inc. became awholly owned subsidiary of the Company.

 

The acquisition of American Rebel, Inc. was accounted for as a reverse merger. The Company issued 215,512 shares of its Common Stock and 6,250 warrants to purchase shares of Common Stock to shareholders of American Rebel, Inc. and cancelled 112,500 shares of Common Stock owned by American Rebel, Inc.

 

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MANAGEMENT

 

ExecutiveOfficers and Directors

 

Thefollowing table provides information regarding our executive officers and directors as of April 12, 2022:

 

Name  Age  Position
Executive Officers      

Charles A. Ross, Jr.

  55  Chief Executive Officer, Chairman of the Board, principal executive officer and treasurer
Doug E. Grau  59  President and Director
Ronald A. Smith  60  Chief Operating Officer
John Garrison  70  Chief Financial Officer
       
Non-Employee Director      
       

Corey Lambrecht

  52  Director

Michael Dean Smith

  52  Director
Ken Yonika  60  Director

  

ExecutiveOfficers

 

Charles A. Ross, Jr. hasserved as our Chief Executive Officer and Chairman of the Board of Directors since December 2014. Previously, Mr. Ross foundedDigital Ally, Inc. (NASDAQ: DGLY). Mr. Ross’ business career includes success in broadcasting, endorsements, music, and television.A music artist and songwriter, Mr. Ross has released three CDs and his song “American Rebel” has become the theme songfor American Rebel. His song “Cold Dead Hand” caught the attention of Danny “the Count” Koker and landed himon the hit TV show Counting Cars. Mr. Ross’ television and performing experience provide opportunities for him to speakabout American Rebel in media interviews on radio and TV and in print and online. Our boardof directors believes that Mr. Ross’ entrepreneurial background and creative marketing skills qualifieshim to serve on our board of directors. Mr. Ross’ father, Bud Ross, founded Kustom Electronics and Birdview Satellites and servedas a mentor and guiding force behind the founding of American Rebel.

 

RonaldA. Smith has served as our Chief Operating Officer since April 2021. Previously, Mr. Smith served as the Chief Executive Officerand President of LADS Pets Supplies, a pet supplies wholesale distributor in the Northeastern U.S.

 

DougE. Grau has served as our President from January 2021, and as a director since February 2020. Prior to that, Mr. Grau served as ourBusiness Operations Director. Mr. Grau currently serves as a financial advisor to Infinity Securities, a national wealth management andbrokerage firm. Mr. Grau holds B.B.A. in Music Business from Belmont University.

 

John Garrison, who became Chief FinancialOfficer of the Company on completion of the February 2022 offering, has been providing accounting consulting services to the Companysince 2016. From 2016 to the present, Mr. Garrison has been the sole owner of JC Garrison CPA, a business consulting firm. Mr. Garrisonholds B.S. in business and accounting from Kansas State University.

 

Non-EmployeeDirectors

 

Corey Lambrecht has had over 20years’ experience as a public company executive and he brings broad experience in strategic acquisitions, corporateturnarounds, new business development, pioneering consumer products, corporate licensing, interactive technology services inaddition to holding public company executive roles with responsibilities including day-to-day business operations, management,raising capital, board communication and investor relations. He is a Certified Director from the UCLA Anderson Graduate School ofManagement accredited Directors program. Since 2007 he has been a Director of CUI Global, Inc. (NASDAQ: CUI) and has served multipleterms on the Audit Committee and currently serves as the Compensation Committee Chairman. Corey Lambrecht has served on the Board ofORHub, Inc. (OTC: ORHB) since July 2016 and finished his term in December 2019. On January 17, 2020, he was appointed toserve as the Chief Financial Officer for Singlepoint, Inc. (OTC: SING) and he previously served as a Board member for LifestyleWireless, Inc., which, in 2012 merged into Singlepoint, Inc. In December 2011 he joined the Board of Guardian 8 Holdings, aleading non-lethal security product company, serving until early 2016. He most recently served as the President and Chief OperatingOfficer at Earth911 Inc., a subsidiary of Infinity Resources Holdings Company (OTC: IRHC) from January 2010 to July 2013.

 

Michael Dean Smith, who became an independentDirector on completion of the February 2022 offering, has, since 2017, been Vice President of Industrial Maintenance, Inc. From1997-2017, Mr. Smith served in various positions with Payless Shoe Source. Mr. Smith holds B.S. in Business Administration and Accountingfrom the University of Kansas, and MBA from Washburn University.

 

Ken Yonika, who became an independent Director on completionof the February 2022 offering, has served as Chief Executive Officer and President at PacificCrest Equity Partners, Inc. since 2000. Mr. Yonika earned a B.B.A. from Western Connecticut State University in 1988 with a major inAccounting and a minor in Finance.

 

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CORPORATEGOVERNANCE

 

DirectorIndependence

 

The board of directors has reviewed the independenceof our directors based on the listing standards of the Nasdaq Capital Market. Based on this review, the board of directors has determinedthat each of Corey Lambrecht, Michael Dean Smith and Ken Yonika are independent within the meaning of the Nasdaq Capital Marketrules. In making this determination, our board of directors considered the relationships that each of these non-employee directors haswith us and all other facts and circumstances our board of directors deemed relevant in determining their independence. As required underapplicable Nasdaq Capital Market rules, we anticipate that our independent directors will meet in regularly scheduled executive sessionsat which only independent directors are present.

 

BoardCommittees

 

OurBoard has established the following three standing committees: audit committee; compensation committee; and nominating and governancecommittee, or nominating committee. Our board of directors has adopted written charters for each of these committees. Copies of the charterswill be available on our website. Our board of directors may establish other committees as it deems necessary or appropriate from timeto time.

 

Thefollowing table identifies the independent and non-independent current Board and committee members through the date of this filing:

 

Name   Audit   Compensation   

Nominating

and Corporate Governance

   Independent 
Charles A. Ross, Jr.                 
Doug E. Grau                 
Corey Lambrecht   X   X   X   X 
Michael Dean Smith   X    X   

X

   X 
Ken Yonika   X    X   X   X 

 

AuditCommittee

 

Ourboard of directors established the audit committee for the purpose of overseeing the accounting and financial reporting process and auditsof our financial statements. The audit committee is responsible for,among other matters:

 

  appointing, compensating, retaining, evaluating, terminating, and overseeing our independent registered public accounting firm;

 

  discussing with our independent registered public accounting firm the independence of its members from its management;

 

  reviewing with our independent registered public accounting firm the scope and results of their audit;

 

  approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm;

 

  overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file with the SEC;

 

  reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls, and compliance with legal and regulatory requirements;

 

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  coordinating the oversight by our board of directors of our code of business conduct and our disclosure controls and procedures

 

  establishing procedures for the confidential and/or anonymous submission of concerns regarding accounting, internal controls or auditing matters; and

 

  reviewing and approving related-person transactions.

 

Our audit committee consists of Corey Lambrecht,Michael Dean Smith and Ken Yonika. Ken Yonika serves as the chairman. Our board of directors has affirmatively determinedthat each of Corey Lambrecht, Michael Dean Smith and Ken Yonika qualify as an “audit committee financial expert,” asdefined by Item 407(d)(5) of Regulation S-K.

 

The Nasdaq Capital Market rules require us to haveone independent audit committee member upon the listing of our Common Stock, a majority of independent directors within 90 days of thedate of this prospectus and all independent audit committee members within one year of the date of this prospectus. Our board of directorshas affirmatively determined that each of Corey Lambrecht, Michael Dean Smith and Ken Yonika meet the definition of “independentdirector” for purposes of serving on an audit committee under Rule 10A-3 of the Securities Exchange Act of 1934, as amended(the “Exchange Act”) and Nasdaq Capital Market rules.

 

CompensationCommittee

 

Ourboard of directors has established the compensation committee for the purpose of reviewing, recommending and approving our compensationpolicies and benefits, including the compensation of all of our executive officers and directors.The compensation committee is responsible for, among other matters:

 

  reviewing key employee compensation goals, policies, plans and programs;

 

  reviewing and approving the compensation of our directors and executive officers;

 

  reviewing and approving employment agreements and other similar arrangements between us and our executive officers; and

 

  appointing and overseeing any compensation consultants or advisors.

 

Our compensation committee consists of Ken Yonika,Corey Lambrecht, and Michael Dean Smith. Corey Lambrecht serves as the chairman. In determining that each of Corey Lambrecht,Michael Dean Smith and Ken Yonika qualify as an “independent director” pursuant to Rule 10A-3 of the Exchange Act, the boardof directors also considered all factors required by Rule 5605(d)(2)(A) and any other applicable regulations or rules promulgated bythe SEC and the Nasdaq Capital Market rules relating to compensation committee composition.

 

Nominatingand Corporate Governance Committee

 

Our board of directors has established the nominatingand corporate governance committee for the purpose of assisting the board in identifying qualified individuals to become boardmembers, in determining the composition of the board and in monitoring the process to assess board effectiveness. Our nominating committeeconsists of Michael Dean Smith, Ken Yonika, and Corey Lambrecht. Michael Dean Smith serves as the chairman.

 

BoardLeadership Structure

 

OurBoard has not adopted a formal policy regarding the separation of the offices of Chief Executive Officer and Chairman of the Board. Rather,the Board believes that different leadership structures may be appropriate for the Company at different times and under different circumstances,and it prefers flexibility in making this decision based on its evaluation of the relevant facts at any given time.

 

InDecember 2014, Mr. Ross was appointed as Chief Executive Officer and became Executive Chairman. Under our current Board leadershipstructure, the Chief Executive Officer is responsible for the day-to-day leadership and performance of the Company. Mr. Grau, our President,focuses on allocation of resources.

 

RiskOversight

 

Ourboard of directors will oversee a company-wide approach to risk management. Our board of directors will determine the appropriate risklevel for us generally, assess the specific risks faced by us and review the steps taken by management to manage those risks. While ourboard of directors will have ultimate oversight responsibility for the risk management process, its committees will oversee risk in certainspecified areas.

 

Specifically,our compensation committee is responsible for overseeing the management of risks relating to our executive compensation plans and arrangements,and the incentives created by the compensation awards it administers. Our audit committee oversees management of enterprise risks andfinancial risks, as well as potential conflicts of interests. Our board of directors is responsible for overseeing the management ofrisks associated with the independence of our board of directors.

 

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Codeof Business Conduct and Ethics

 

Ourboard of directors adopted a Code of Business Conduct and Ethics that applies to our directors, officers and employees. A copy of thiscode will be available on our website. We intend to disclose on our website any amendments to the Code of Business Conduct and Ethicsand any waivers of the Code of Business Conduct and Ethics that apply to our principal executive officer, principal financial officer,principal accounting officer, controller, or persons performing similar functions.

 

FamilyRelationships

 

Thereare no family relationships among our directors and/or executive officers.

 

Involvementin Certain Legal Proceedings

 

Tothe best of our knowledge, none of our directors or executive officers has, during the past 10 years, been involved in any legal proceedingsdescribed in subparagraph (f) of Item 401 of Regulation S-K.

 

BoardDiversity

 

Whilewe do not have a formal policy on diversity, our Board considers diversity to include the skill set, background, reputation, type andlength of business experience of our Board members as well as a particular nominee’s contributions to that mix. Our Board believesthat diversity promotes a variety of ideas, judgments and considerations to the benefit of our Company and stockholders. Although thereare many other factors, the Board primarily focuses on public company board experience, knowledge of the safes and concealed self-defenseproducts industry, or background in finance or technology, and experience operating growing businesses.

 

Communicationwith our Board

 

Althoughthe Company does not have a formal policy regarding communications with the Board, stockholders may communicate with the Board by writingto us at American Rebel Holdings, Inc., at 718 Thompson Lane, Suite 108-199, Nashville, TN, 37204, Attention: Corporate Secretary. Stockholderswho would like their submission directed to a member of the Board may so specify, and the communication will be forwarded, as appropriate.

 

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EXECUTIVEAND DIRECTOR COMPENSATION

 

Ournamed executive officers, who consist of our principal executive officer and our next two most highly compensated executive officers,for the year ended December 31, 2021 were:

 

Charles A. Ross, Jr., our Chief Executive Officer;

 

Doug E. Grau, our President, and

 

Thefollowing table sets forth the salaries and director fees we paid to our current executive officer(s) during the fiscal year ended December31, 2021 and 2020, respectively:

 

SUMMARY COMPENSATION TABLE
      Salary  Bonus  

Stock

Awards

   

All Other

Compensation

   Total 
Name and principal position   Year    ($)   ($)    ($)     ($)    ($) 
(a)   (b)    (c)   (d)    (e)     (i)    (j) 
Charles A. Ross, Jr. (1)   

2021

    200,000   -    393,490(2)     -   593,490 
CEO   2020    -   -    -    180,250(3)   180,250 
                               
Doug E. Grau(4)   2021    120,000   -    393,490(2)     -   513,490 
President   2020    -   -    -    120,000(3)   120,000 
                               
Ronald A. Smith(5)   2021    -   -   247,000(5)    -    247,000 
COO                              

 

(1)During the years ended December 31, 2020, the Company had no formal employment arrangement with Mr. Ross for services. Mr. Ross’ compensation was not based on any percentage calculations. The board made all decisions determining the amount and timing of payment for his compensation. On January 1, 2021, the Company entered into a five-year employment agreement with Mr. Ross, with a base annual salary of $180,000.

 

 (2)Deemed value of 26,813 shares of Common Stock issued on March 24, 2021 pursuant to the LTIP, 50,000 shares of Common Stock issued on April 9, 2021 pursuant to an employment agreement, and 9,416 shares of Common Stock issued on August 3, 2021 pursuant to the LTIP.
   
(3)Represents cash compensation paid to the named executive officer.

 

(4)Mr. Grau was appointed as an officer on February 12, 2020. Prior to such appointment, Mr. Grau worked for the Company as a non-executive officer. On January 1, 2021, the Company entered into a five-year employment agreement with Mr. Grau, with a base annual salary of $120,000.

 

(5)

Mr. Smith was appointed as COO and the Company entered into a two-year employment agreement with Mr. Smith on April 9, 2021, with no cash salary; however, Mr. Smith was issued 59,375 shares of Common Stock, with a deemed value of $247,000, pursuant to the employment agreement.

 

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NamedExecutive Officer Employment Agreements

 

CharlesA. Ross, Jr. Employment Agreement and Amendment

 

Ingeneral, Mr. Ross’ employment agreement contains provisions concerning terms of employment, voluntary and involuntary termination,indemnification, severance payments, and other termination benefits, in addition to a non-compete clause and certain other perquisites.

 

Theoriginal term of Mr. Ross’ employment agreement runs from January 1, 2021, until December 31, 2025.

 

Mr.Ross’ employment agreement provides for an initial annual base salary of $180,000, which may be adjusted by the board of directorsof the Registrant. Pursuant to the amendment to his employment agreement, dated April 9, 2021, Mr. Ross agreed to reduce his salary to$6,667 per month for a six-month period.

 

Inaddition, Mr. Ross is eligible to receive annual short-term incentive bonuses as determined by a review at the discretion of the Registrant’sboard of directors.

 

Further,the Registrant granted and issued Mr. Ross 50,000 shares of Series A Preferred Stock. Pursuant to the amendment to his employment agreement,the Registrant authorized for issuance 50,000 shares of Common Stock to Mr. Ross.

 

Inthe event of a termination of employment with the Registrant by the Registrant without “cause” or by Mr. Ross for “GoodReason” (as defined in the employment agreement), Mr. Ross would receive: (i) a lump sum payment equal to all earned but unpaidbase salary through the date of termination of employment; (ii) a lump sum payment equal to 12-months base salary; and (iii) immediatevesting of all equity awards (including but not limited to stock options and restricted shares).

 

Inthe event of a termination of employment with the Registrant by the Registrant for “cause” (as defined in the employmentagreement), by reason of incapacity, disability or death, Mr. Ross, or his estate, would receive a lump sum payment equal to all earnedbut unpaid base salary through the date of termination of employment, disability or death.

 

Inthe event of a termination of Mr. Ross’ employment with the Registrant by reason of change in control (as defined in the employmentagreement), Mr. Ross, would receive: (i) a lump sum payment equal to all earned but unpaid base salary through the date of terminationof employment; (ii) a lump sum payment equal 12- months’ salary plus 100% of his prior year’s Bonus; and (iii) and immediatevesting of all equity awards (including but not limited to stock options and restricted shares).

 

Theabove description of Mr. Ross’ employment agreement is qualified in its entirety by reference to the full text of that agreement,a copy of which was attached as Exhibit 10.2 to the Form 8-K filed on March 2, 2021. A copy of the amendment to Mr. Ross’ employmentagreement is attached hereto as Exhibit 10.36.

 

DougE. Grau Employment Agreement and Amendment

 

Ingeneral, Mr. Grau’s employment agreement contains provisions concerning terms of employment, voluntary and involuntary termination,indemnification, severance payments, and other termination benefits, in addition to a non-compete clause and certain other perquisites.

 

Theoriginal term of Mr. Grau’s employment agreement runs from January 1, 2021, until December 31, 2025.

 

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Mr.Grau’s employment agreement provides for an initial annual base salary of $120,000, which may be adjusted by the board of directorsof the Registrant. Pursuant to the amendment to his employment agreement, dated April 9, 2021, Mr. Grau agreed to reduce his salary to$6,667 per month for a six-month period.

 

Inaddition, Mr. Grau is eligible to receive annual short-term incentive bonuses as determined by a review at the discretion of the Registrant’sboard of directors.

 

Further,the Registrant granted and issued Mr. Grau 50,000 shares of Series A Preferred Stock. Pursuant to the amendment to his employment agreement,the Registrant authorized for issuance 50,000 shares of Common Stock to Mr. Grau.

 

Inthe event of a termination of employment with the Registrant by the Registrant without “cause” or by Mr. Grau for “GoodReason” (as defined in the employment agreement), Mr. Grau would receive: (i) a lump sum payment equal to all earned but unpaidbase salary through the date of termination of employment; (ii) a lump sum payment equal to 12-months base salary; and (iii) immediatevesting of all equity awards (including but not limited to stock options and restricted shares).

 

Inthe event of a termination of employment with the Registrant by the Registrant for “cause” (as defined in the employmentagreement), by reason of incapacity, disability or death, Mr. Grau, or his estate, would receive a lump sum payment equal to all earnedbut unpaid base salary through the date of termination of employment, disability or death.

 

Inthe event of a termination of Mr. Grau’s employment with the Registrant by reason of change in control (as defined in the employmentagreement), Mr. Grau, would receive: (i) a lump sum payment equal to all earned but unpaid base salary through the date of terminationof employment; (ii) a lump sum payment equal 12- months’ salary plus 100% of his prior year’s Bonus; and (iii) and immediatevesting of all equity awards (including but not limited to stock options and restricted shares).

 

Theabove description of Mr. Grau’s employment agreement is qualified in its entirety by reference to the full text of that agreement,a copy of which was attached as Exhibit 10.2 to the Form 8-K filed on March 2, 2021. A copy of the amendment to Mr. Grau’s employmentagreement is attached hereto as Exhibit 10.37.

 

RonaldA. Smith Employment Agreement

 

Ingeneral, Mr. Smith’s employment agreement contains provisions concerning terms of employment, voluntary and involuntary termination,indemnification, severance payments, and other termination benefits, in addition to a non-compete clause and certain other perquisites.

 

Theoriginal term of Mr. Smith’s employment agreement runs from April 9, 2021, until June 30, 2023.

 

Mr.Smith will not be paid a salary for his services.

 

Inaddition, Mr. Smith is eligible to receive annual short-term incentive bonuses as determined by a review at the discretion of the Registrant’sboard of directors.

 

Further,the Registrant authorized for issuance 59,375 shares of Common Stock to Mr. Smith.

 

Inthe event of a termination of employment with the Registrant by the Registrant without “cause” or by Mr. Smith for “GoodReason” (as defined in the employment agreement), Mr. Smith would receive immediate vesting of all equity awards (including butnot limited to stock options and restricted shares).

 

Inthe event of a termination of Mr. Smith’s employment with the Registrant by reason of change in control (as defined in the employmentagreement), Mr. Smith, would receive: (i) a lump sum payment equal to 100% of his prior year’s Bonus; and (ii) and immediate vestingof all equity awards (including but not limited to stock options and restricted shares).

 

Theabove description of Mr. Smith’s employment agreement is qualified in its entirety by reference to the full text of that agreement,a copy of which is attached as Exhibit 10.34 hereto.

 

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ExecutiveIncentive Program

 

On January 1, 2021, our board of directors approvedthe establishment of the 2021 Long-Term Equity Incentive Plan (“LTIP”). The LTIP is intended to enable us to continue toattract able directors, employees, and consultants and to provide a means whereby those individuals upon whom the responsibilities restfor successful administration and management of the Company, and whose present and potential contributions are of importance, can acquireand maintain Common Stock ownership, thereby strengthening their concern for our welfare. The aggregate maximum number of shares of CommonStock (including shares underlying options) that may be issued under the LTIP, pursuant to awards of Restricted Shares or Options, willbe limited to 10% of the outstanding shares of Common Stock, which calculation shall be made on the first trading day of each new fiscalyear. For fiscal year 2021, up to 94,372 shares of Common Stock are available for participants under the LTIP. The number of sharesof Common Stock that are the subject of awards under the LTIP which are forfeited or terminated, are settled in cash in lieu of sharesof Common Stock or in a manner such that all or some of the shares covered by an award are not issued to a participant or are exchangedfor awards that do not involve shares will again immediately become available to be issued pursuant to awards granted under the LTIP.If shares of Common Stock are withheld from payment of an award to satisfy tax obligations with respect to the award, those shares ofCommon Stock will be treated as shares that have been issued under the LTIP and will not again be available for issuance under the LTIP.In March of 2021, we authorized the grant and issuance of 53,625 shares of Common Stock under the LTIP to On January 1, 2021,we adopted a long-term incentive plan and in March of 2021 made two grants totaling 53,625 shares of Common Stock under such plan.

 

OptionsExercised and Stock Vested Table

 

Noneof the named executive officers exercised any stock options, nor were there any restricted stock units held by our named executive officersvested, during the fiscal years ended December 31, 2021, and December 31, 2020.

 

OutstandingEquity Awards at Fiscal Year-end Table

 

Noneof the named executive officers held any unexercised options and unvested stock awards previously awarded as of December 31, 2020.

 

PotentialPayments upon Termination or Change-in-Control

 

SECregulations state that we must disclose information regarding agreements, plans or arrangements that provide for payments or benefitsto our executive officers in connection with any termination of employment or change in control of the company. During the year endedDecember 31, 2020, we did not have any employment agreements with any of our executive officers, nor any compensatory plans or arrangementsresulting from the resignation, retirement or any other termination of any of our executive officers, from a change-in-control, or froma change in any executive officer’s responsibilities following a change-in-control. However, on January 1, 2021, we enteredinto employment agreements with Charles A. Ross, Jr. and Doug E. Grau and on April 9, 2021, we entered into an employment agreement withRonald A. Smith. All of these agreements provide for certain payments to be made in the event of a termination of their employment agreementsby reason of change in control (as defined in the employment agreements). Each of them would receive: (i) a lump sum payment equal toall earned but unpaid base salary through the date of termination of employment (not applicable to Smith and LaVista as they receiveno salary); (ii) a lump sum payment equal 12- months’ salary (not applicable to Smith and LaVista as they receive no salary) plus100% of his prior year’s bonus; and (iii) and immediate vesting of all equity awards (including but not limited to stock optionsand restricted shares).

 

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Rule10b5-1 Sales Plans

 

Ourdirectors and executive officers may adopt written plans, known as Rule 10b5-1 plans, in which they will contract with a broker to buyor sell our common shares on a periodic basis. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters establishedby the director or officer when entering into the plan, without further direction from them. The director or officer may amend a Rule10b5-1 plan in some circumstances and may terminate a plan at any time. Our directors and executive officers also may buy or sell additionalshares outside of a Rule 10b5-1 plan when they are not in possession of material nonpublic information subject to compliance with theterms of our insider trading policy. Prior to the expiration of the restricted period (as defined in the section titled “SharesEligible for Future Sales”), subject to early termination, the sale of any shares under such plan is prohibited by the lock-upagreement that the director or officer has entered into with the underwriters. See “Underwriters” for more information.

 

Compensationof Directors

 

Wedo not have any standard arrangement for compensation of our directors for any services provided as director, including services forcommittee participation or for special assignments. We did not compensate any of our directors for their services.

 

RetirementPlans

 

Wedo not offer any annuity, pension, or retirement benefits to be paid to any of our officers, directors, or employees in the event ofretirement.

 

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PRINCIPALSTOCKHOLDERS

 

Exceptas specifically noted, the following table sets forth information with respect to the beneficial ownership of our Common Stock of:

 

  each of our directors and executive officers; and
     
  each person known to us to beneficially own more than 5% of our Common Stock on an as-converted basis.

 

The calculationsin the table below are based on 4,741,321 shares of Common Stock issued and outstanding as of March 31, 2022.

 

Beneficialownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially ownedby a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days,including through the exercise of any option, warrant or other right or the conversion of any other security. These shares, however,are not included in the computation of the percentage ownership of any other person.

 

Unlessotherwise indicated, the address for each beneficial owner listed in the table below is c/o American Rebel Holdings, Inc., 718 ThompsonLane, Suite 108-199, Nashville, Tennessee 37204.

 

 

Title of Class (1)  Beneficial
Owner
  Amount of
Beneficial
Ownership
Before the
Offering
   Percent
Beneficially
Owned
Before the
Offering
   Amount of
Beneficial
Ownership
After the
Offering
   Percent
Beneficially
Owned
After the
Offering
 
Named Executive Officers:                       
Common Stock  Charles A. Ross, Jr. (1)   176,916    3.73%   176,916    3.73%
Common Stock  Doug E. Grau (1)   148,729    3.14%   148,729    3.14%
Common Stock  Ronald A. Smith (2)   218,125    4.60%   218,125    4.60%
Common Stock  John Garrison*   13,613    * %    13,613    * 
Directors:                       
Common Stock  Corey Lambrecht *   12,500    * %    12,500    * 
Common Stock  Michael Dean Smith *    0    0%          
Common Stock  Kenneth Yonika *   2,500    * %    2,500    * 
Officers and Directors as a group (7 persons)      572,382    12.07%   572,382    12.07%

 

5% Stockholders: (number)    

 

 

 

 

Common Stock            
Common Stock            
Common Stock            
Common Stock            
Common Stock            

 

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* Less than 1%.

 

  (1) Does not include 50,000 shares of Series A Preferred Stock, whereby each share is entitled to cast one thousand (1,000) votes for each share held of the Series A Preferred Stock on all matters presented to the stockholders of the Company for stockholder vote.
     
  (2) Includes 25,000 five-year warrants to purchase shares of Common Stock at $8.00 per share. Does not include 25,000 shares of Common Stock pledged as security for a bridge loan agreement dated April 9, 2021.

 

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CERTAINRELATIONSHIPS AND RELATED PERSON TRANSACTIONS

 

Thefollowing includes a summary of transactions since January 1, 2019 to which we have been a party in which the amount involved exceededor will exceed $120,000, and in which any of our directors, executive officers or, to our knowledge, beneficial owners of more than 5%of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect materialinterest, other than equity and other compensation, termination, change in control and other arrangements, which are described under“Executive and Director Compensation.” We also describe below certain other transactions with our directors, executive officersand stockholders.

 

Charles A. Ross, Jr. serves as the Company’s Chief Executive Officer and a director. In September 2019, Mr. Ross received a grant of 34,063 shares of Common Stock. On March 24, 2021, pursuant to the Company’s Long-Term Incentive Plan, Mr. Ross received 26,813 shares of Common Stock. On April 9, 2021, the Company entered into an amendment to the employment agreement with Charles A. Ross, Jr. and authorized the issuance of 50,000 shares of Common Stock to Mr. Ross. On August 3, 2021, pursuant to the Company’s Long-Term Incentive Plan, Mr. Ross received 9,416 shares of Common Stock.

 

Ronald Smith serves as the Company’s COO and on April 9, 2021, the Company entered into an employment agreement with Mr. Smith and authorized the issuance of 59,375 shares of Common Stock. On April 9, 2021, the Company entered into a Bridge Loan agreement with Mr. Smith and issued 25,000 warrants to purchase shares of the Company’s Common Stock at an exercise price of $8.00 per share with a five-year term. Prior to joining the Company as COO on April 9, 2021, Mr. Smith was issued 12,500 shares of Common Stock as a component of a six-month Promissory Note dated July 15, 2019. Mr. Smith was issued 12,500 shares of Common Stock as a component of a six-month Promissory Note dated August 29, 2019. Mr. Smith was issued 25,000 shares of Common Stock as a component of a six-month Promissory Note dated September 5, 2019. On February 17, 2020, the Company issued 1,250 shares of Common Stock to Mr. Smith as a component of a new note dated February 17, 2020. On March 6, 2020, Mr. Smith received 75,000 shares of Common Stock as a conversion of outstanding principal and interest of Promissory Notes dated February 17, 2020, August 29, 2019, and September 5, 2019. Also on March 6, 2020, Mr. Smith was issued 12,500 shares of Common Stock as a component of a Promissory Note. Mr. Smith was issued 37,500 shares of Common Stock as a component of a Promissory Note dated March 26, 2020.

 

Doug Grau is the Company’s President. In September 2019, Mr. Grau received a grant of 37,500 shares of Common Stock. On March 24, 2021, pursuant to the Company’s Long-Term Incentive Plan, Mr. Grau received 26,813 shares of Common Stock. On April 9, 2021, the Company entered into an amendment to the employment agreement with Doug Grau and authorized the issuance of 50,000 shares of Common Stock to Mr. Grau. On August 3, 2021, pursuant to the Company’s Long-Term Incentive Plan, Mr. Grau received 9,416 shares of Common Stock.

 

Corey Lambrecht is an independent director of the Company’s Board of Directors. On March 24, 2021, the Company authorized 6,250 shares of Common Stock to Mr. Lambrecht for services.

 

Kenneth Yonika will join the board as an independent director of the Company’s Board of Directors upon the closing of the Offering. In March 2019, Mr. Yonika received 1,250 shares of Common Stock for services.

 

John Garrison will assume the role of the Company’s Chief Financial Officer upon the closing of the Offering. In September 2019, Mr. Garrison received a grant of 2,500 shares of Common Stock. On October 1, 2021, pursuant to the Company’s Long-Term Incentive Plan, Mr. Garrison received 6,250 shares of Common Stock.

 

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DESCRIPTIONOF OUR SECURITIES

 

General

 

The following description summarizes the mostimportant terms of our securities. This summary does not purport to be complete and is qualified in its entirety by the provisions ofour Second Amended and Restated Articles of Incorporation, Certificate of Designation of the Series A Preferred Stock (the“Series A COD”), Certificate of Designation of the Series B Preferred Stock (the “Series B COD”),and our Amended and Restated Bylaws, copies of which have been filed as exhibits to the registration statement of which this prospectusis a part. You should refer to our Second Amended and Restated Articles of Incorporation, including the Series A COD and the Series BCOD, our Amended and Restated Bylaws, and the applicable provisions of the Nevada Revised Statutes for a complete description of ourcapital stock. Our authorized capital stock consists of (i) 600,000,000 shares of Common Stock, par value $0.001 per share, and (ii)10,000,000 shares of preferred stock, par value $0.001 per share.

 

As of March31, 2022 there were 4,741,321 shares of our Common Stock outstanding. Our Board is authorized, without stockholder approval,except as otherwise may be required by the applicable listing standards of a national securities exchange or any applicable laws, toissue additional shares of our authorized capital stock.

 

CommonStock

 

DividendRights

 

Subjectto preferences that may apply to any shares of preferred stock outstanding at the time, the holders of our Common Stock are entitledto receive dividends out of funds legally available if our Board, in its discretion, determines to declare and pay dividends and thenonly at the times and in the amounts that our Board may determine.

 

VotingRights

 

Holdersof our Common Stock are entitled to one vote for each share held on all matters properly submitted to a vote of stockholders on whichholders of Common Stock are entitled to vote. We have not provided for cumulative voting for the election of directors in our Certificateof Incorporation. The directors are elected by a plurality of the outstanding shares entitled to vote on the election of directors.

 

NoPreemptive or Similar Rights

 

OurCommon Stock is not entitled to preemptive rights, and is not subject to conversion, redemption or sinking fund provisions.

 

Rightto Receive Liquidation Distributions

 

Ifwe become subject to a liquidation, dissolution or winding-up, the assets legally available for distribution to our stockholders wouldbe distributable ratably among the holders of our Common Stock and any participating preferred stock outstanding at that time, subjectto prior satisfaction of all outstanding debt and liabilities and the preferential rights of and the payment of liquidation preferences,if any, on any outstanding shares of preferred stock.

 

PreferredStock

 

OurBoard is authorized, subject to limitations prescribed by Nevada law, to issue preferred stock in one or more series, to establish fromtime-to-time the number of shares to be included in each series, and to fix the designation, powers, preferences and rights of the sharesof each series and any of its qualifications, limitations or restrictions, in each case without further vote or action by our stockholders.Our Board can also increase (but not above the total number of authorized shares of the class) or decrease (but not below the numberof shares then outstanding) the number of shares of any series of preferred stock, without any further vote or action by our stockholders.Our Board may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting poweror other rights of the holders of our Common Stock or other series of preferred stock. The issuance of preferred stock, while providingflexibility in connection with possible financings, acquisitions and other corporate purposes, could, among other things, have the effectof delaying, deferring or preventing a change in our control of our company and might adversely affect the market price of our CommonStock and the voting and other rights of the holders of our Common Stock.

 

Asof the date of this prospectus, the shares of our designated preferred stock that will be outstanding will be 100,000 shares of SeriesA Preferred Stock and 75,143 of Series B Preferred Stock.

 

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SeriesA Preferred Stock

 

NoMaturity, Sinking Fund or Mandatory Redemption

 

The Series A Preferred Stock (the “ExistingSeries A Preferred Stock”) has no stated maturity and will not be subject to any sinking fund or mandatory redemption. Sharesof the Existing Series A Preferred Stock will remain outstanding indefinitely unless we decide to redeem or otherwise repurchasethem.

 

DividendRights

 

Holdersof shares of the Existing Series A Preferred Stock are not entitled to receive any dividends.

 

VotingRights

 

Holdersof the Existing Series A Preferred Stock are entitled to vote together with the holders of our Common Stock on an as-convertedbasis. Each Existing Series A Preferred Stock is entitled to cast one thousand (1,000) votes for each share held of the ExistingSeries A Preferred stock.

  

Conversion Rights

 

While the Certificate of Designation is named“Certificate of Designation of Series A Convertible Preferred Stock”, the Company’s Existing Series A PreferredStock is not convertible into shares of Common Stock of the Company or redeemable by either the Company or another person.

 

SeriesB Preferred Stock

 

NoMaturity, Sinking Fund or Pre-Determined Mandatory Redemption

 

TheSeries B (the “Existing Series B Preferred Stock”) has no stated maturity and will not be subject to any sinking fund orpre-determined mandatory redemption. Shares of the Existing Series B Preferred Stock will remain outstanding indefinitely unless we decideto redeem or otherwise repurchase them, or the holders decide to convert them.

 

DividendRights

 

Holdersof shares of the Existing Series B Preferred Stock are not entitled to receive any dividends.

 

VotingRights

 

Holdersof the Existing Series B Preferred Stock shall not have any voting rights, except in the case of voting on a change in the preferencesof the Existing Series B Preferred Stock shares.

 

ConversionRights

 

Eachholder of the Existing Series B Preferred Stock is entitled to convert any portion of the outstanding shares of Existing Series B PreferredStock held by such holder into validly issued, fully paid and non-assessable shares of our Common Stock Each share of the Existing SeriesB Preferred Stock is convertible into our Common Stock at the conversion rate of 1 share of Existing Series B Preferred Stock to 1.25shares of Common Stock, subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations,reclassifications or similar events affecting our Common Stock. Should the Company issue a redemption notice the conversion shall occuron or prior to the fifth (5th) day prior to the redemption date, as may have been fixed in any redemption notice with respectto the Existing Series B Preferred Stock shares, at the office of the Company or any transfer agent for such stock.

 

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LiquidationPreference

 

TheExisting Series B Preferred Stock has senior liquidation preference rights compared to the Common Stock. Upon a liquidation, the ExistingSeries B Preferred Stock shares are entitled to receive cash based upon a stated value per share of $7.00.

 

FractionalShares

 

Nofractional shares of our Common Stock will be issued upon any conversion of the Existing Series B Preferred Stock. If the conversionwould result in the issuance of a fraction of a share of Common Stock, the number of shares of Common Stock issuable upon such conversionwill be rounded up to the nearest whole share.

 

Anti-TakeoverEffects of Various Provisions of Nevada Law

 

Provisionsof the Nevada Revised Statutes, and our articles of incorporation and bylaws, as amended, could make it moredifficult to acquire us by means of a tender offer, a proxy contest or otherwise, or to remove incumbent officers and directors. Theseprovisions, summarized below, would be expected to discourage certain types of takeover practices and takeover bids our Board may considerinadequate and to encourage persons seeking to acquire control of us to first negotiate with us. We believe that the benefits of increasedprotection of our ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us willoutweigh the disadvantages of discouraging takeover or acquisition proposals because, among other things, negotiation of these proposalscould result in an improvement of their terms.

 

Warrants

 

Overview. The following summary of certainterms and provisions of the Warrants offered hereby is not complete and is subject to, and qualified in its entirety by, the provisionsof the warrant agency agreement between us and Action Stock Transfer, as the Warrant Agent, and the form of warrant, both of whichare filed as exhibits to the registration statement of which this prospectus is a part. Prospective investors should carefully reviewthe terms and provisions set forth in the warrant agency agreement, including the annexes thereto, and form of warrant.

 

The Warrants issued in this offering entitle theregistered holder to purchase shares of Common Stock at a price equal to $5.81 per share, subject to adjustment as discussed below,immediately following the issuance of such warrant and terminating at 5:00 p.m., New York City time, five years after their original issuance.

 

The exercise price and number of shares of CommonStock issuable upon exercise of the Warrants may be adjusted in certain circumstances, including in the event of a stock dividendor recapitalization, reorganization, merger or consolidation. However, the Warrants will not be adjusted for issuances of Common Stockat prices below its exercise price.

 

Exercisability. The Warrants are exercisableat any time after their original issuance and at any time up to the date that is five (5) years after their original issuance.The Warrants may be exercised upon surrender of the Warrant certificate on or prior to the expiration date at the offices of the WarrantAgent, with the exercise form on the reverse side of the Warrant certificate completed and executed as indicated, accompanied by fullpayment of the exercise price, by certified or official bank check payable to us, for the number of Warrants being exercised. Under theterms of the Warrant Agreement, we must use our best efforts to maintain the effectiveness of the registration statement and currentprospectus relating to Common Stock issuable upon exercise of the Warrants until the expiration of the Warrants. If we fail to maintainthe effectiveness of the registration statement and current prospectus relating to the shares of Common Stock issuable upon exerciseof the Warrants, the holders of the Warrants shall have the right to exercise the Warrants solely via a cashless exercise feature providedfor in the Warrants, until such time as there is an effective registration statement and current prospectus.

 

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Exercise Limitation. A holder may not exerciseany portion of a Warrant to the extent that the holder, together with its affiliates and any other person or entity acting as a group,would own more than 4.99% of the outstanding shares of Common Stock after exercise, as such percentage ownership is determinedin accordance with the terms of the Warrant, except that upon prior notice from the holder to us, the holder may waive such limitationup to a percentage not in excess of 9.99%.

 

Exercise Price. The exercise price per wholeshare of shares of Common Stock purchasable upon exercise of the Warrants is $5.81. The exercise price is subject to appropriateadjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similarevents affecting our shares of Common Stock and also upon any distributions of assets, including cash, stock or other property to ourstockholders.

 

Fractional Shares. No fractional shares ofCommon Stock will be issued upon exercise of the Warrants. As to any fraction of a share which the holder would otherwise be entitledto purchase upon such exercise, the Company will round up or down, as applicable, to the nearest whole share.

 

Transferability. Subject to applicable laws,the Warrants may be offered for sale, sold, transferred or assigned without our consent.

  

Warrant Agent; Global Certificate. The Warrantswill be issued in registered form under a warrant agency agreement between the Warrant Agent and us. The Warrants shall initially be representedonly by one or more global warrants deposited with the Warrant Agent, as custodian on behalf of The Depository Trust Company (DTC) andregistered in the name of Cede & Co., a nominee of DTC, or as otherwise directed by DTC.

 

Fundamental Transactions. In the event ofa fundamental transaction, as described in the Warrants and generally including any reorganization, recapitalization or reclassificationof our shares of Common Stock, the sale, transfer or other disposition of all or substantially all of our properties or assets, our consolidationor merger with or into another person, the acquisition of more than 51% of our outstanding shares of Common Stock, or any personor group becoming the beneficial owner of 51% of the voting power represented by our outstanding Common Stock, the holders ofthe Warrants will be entitled to receive the kind and amount of securities, cash or other property that the holders would have receivedhad they exercised the Warrants immediately prior to such fundamental transaction.

 

Rights as a Stockholder. The Warrant holdersdo not have the rights or privileges of holders of shares of Common Stock or any voting rights until they exercise their Warrants andreceive shares of Common Stock. After the issuance of shares of Common Stock upon exercise of the Warrants, each holder will be entitledto one vote for each share held of record on all matters to be voted on by stockholders.

 

GoverningLaw. The Warrants and the warrant agency agreement are governed by Nevada law.

 

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Pre-funded Warrants

 

Overview. The following summary of certainterms and provisions of the Pre-funded Warrants included in the Pre-funded Units that are being offered hereby is not complete and issubject to, and qualified in its entirety by, the provisions of the Pre-funded Warrants, the form of which is filed as an exhibit tothe registration statement of which this prospectus forms a part. Prospective investors should carefully review the terms and provisionsof the form of Pre-funded Warrant for a complete description of the terms and conditions of the Pre-funded Warrants.

 

Exercisability.The Pre-funded Warrants will be exercisable, at the option of each holder, in whole or in part,by delivering to us a duly executed exercise notice accompanied by payment in full for the number of shares of our Common Stock purchasedupon such exercise. A holder (together with its affiliates) may not exercise any portion of a Pre-funded Warrant to the extent that theholder would own more than 4.99% of the outstanding Common Stock immediately after exercise, except that upon at least 61 days’prior notice from the holder to us, the holder may increase the amount of ownership of outstanding stock after exercising the holder’sPre-funded Warrants up to 9.99% of the number of shares of our Common Stock outstanding immediately after giving effect to the exercise,as such percentage ownership is determined in accordance with the terms of the Pre-funded Warrants. Purchasers of Pre-funded Units inthis offering may also elect prior to the issuance of the Pre-funded Units to have the initial exercise limitation set at 9.99% of ouroutstanding Common Stock.

 

Exercise Limitation. A holder may not exerciseany portion of a Pre-funded Warrant to the extent that the holder, together with its affiliates and any other person or entity actingas a group, would own more than 4.99% of the outstanding shares of Common Stock after exercise, as such percentage ownership is determinedin accordance with the terms of the Pre-funded Warrant, except that upon prior notice from the holder to us, the holder may waive suchlimitation up to a percentage not in excess of 9.99%.

 

Exercise Price. The exercise price perwhole share of shares of Common Stock purchasable upon exercise of the Pre-funded Warrants is $0.01. The exercise price is subject toappropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassificationsor similar events affecting our shares of Common Stock and also upon any distributions of assets, including cash, stock or other propertyto our stockholders.

 

Fractional Shares. No fractional sharesof Common Stock will be issued upon exercise of the Pre-funded Warrants. As to any fraction of a share which the holder would otherwisebe entitled to purchase upon such exercise, the Company will round up or down, as applicable, to the nearest whole share.

 

Transferability. Subject to applicablelaws, the Pre-funded Warrants may be offered for sale, sold, transferred or assigned without our consent.

 

Warrant Agent; Global Certificate. ThePre-funded Warrants will be issued in registered form under a warrant agency agreement between the Warrant Agent and us. The Pre-fundedWarrants shall initially be represented only by one or more global warrants deposited with the Warrant Agent, as custodian on behalfof The Depository Trust Company (DTC) and registered in the name of Cede & Co., a nominee of DTC, or as otherwise directed by DTC.

 

Fundamental Transactions. In the event ofa fundamental transaction, as described in the Pre-funded Warrants and generally including any reorganization, recapitalization or reclassificationof our shares of Common Stock, the sale, transfer or other disposition of all or substantially all of our properties or assets, our consolidationor merger with or into another person, the acquisition of more than 51% of our outstanding shares of Common Stock, or any personor group becoming the beneficial owner of 51% of the voting power represented by our outstanding Common Stock, the holders ofthe Warrants will be entitled to receive the kind and amount of securities, cash or other property that the holders would have receivedhad they exercised the Pre-funded Warrants immediately prior to such fundamental transaction.

 

Rights as a Stockholder. The Pre-fundedWarrant holders do not have the rights or privileges of holders of shares of Common Stock or any voting rights until they exercise theirPre-funded Warrants and receive shares of Common Stock. After the issuance of shares of Common Stock upon exercise of the Pre-fundedWarrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.

 

Governing Law. The Pre-funded Warrants and the warrant agencyagreement are governed by Nevada law.

 

TransferAgent, Warrant Agent and Registrar

 

ActionStock Transfer will act as the registrar, transfer agent, warrant agent and dividend and redemption price disbursing agent in respectof the Warrants. The principal business address of 2469 E. Fort Union Blvd., Suite 214, Salt Lake City, UT 84121.

 

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SHARESELIGIBLE FOR FUTURE SALE