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AMERICAN REBEL HOLDINGS INC

Date Filed : Aug 05, 2022

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Asfiled with the Securities and Exchange Commission on August 5, 2022

 

RegistrationNo. 333-

 

 

 

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)

 

90918th Avenue South, Suite A

Nashville,Tennessee, 37212

(833)267-3235

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

 

CharlesA. Ross, Jr.

ChiefExecutive Officer

90918th Avenue South, Suite A

Nashville,Tennessee, 37212

(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: From time to time 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 SUBJECT TO COMPLETION, DATED AUGUST 5, 2022

 

AMERICANREBEL HOLDINGS, INC.

 

35,135,136Shares of Common Stock

 

 

Thisprospectus relates to the offering and resale of up to 35,135,136 shares of the Company’s common stock, $0.001 par value pershare (the “Common Stock”), consisting of (i) 509,311 shares of Common Stock, (ii)11,202,401 shares of Common Stock (the “Prefunded Warrant Shares”) issuable upon exercise of prefunded warrants (the“Prefunded Warrants”) issued to the Selling Stockholder (as defined herein) on July 7, 2022 pursuant to a securitiespurchase agreement (the “Purchase Agreement”) and (iii) 23,423,424 shares of Common Stock (the “WarrantShares”) issuable upon exercise of warrants (the “Warrants”) issued to the Selling Stockholder on July 7, 2022pursuant to the Purchase Agreement.

 

Weare not selling any shares of our Common Stock under this prospectus and will not receive any proceeds from the sale of the Shares. Wewill, however, receive proceeds from any warrants that are exercised through the payment of the exercise price in cash. The Selling Stockholderwill bear all commissions and discounts, if any, attributable to the sale of the Shares. We will bear all costs, expenses and fees inconnection with the registration of the Common Stock, the Prefunded Warrant Shares and the Warrant Shares.

 

The Selling Stockholder may sell the shares of CommonStock on Nasdaq, in one or more transactions otherwise than on Nasdaq, such as privately negotiated transactions, or using a combinationof these methods, and at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time ofsale, or at negotiated prices. See the disclosure under the heading “Plan of Distribution” elsewhere in this prospectus formore information about how the Selling Stockholder may sell or otherwise dispose of its shares of Common Stock hereunder.

 

The Selling Stockholder may sell any, all or noneof the securities offered by this prospectus and we do not know when or in what amount the Selling Stockholder may sell its shares ofCommon Stock hereunder following the effective date of this registration statement.

 

OurCommon Stock and certain existing warrants (the “Existing Warrants”) are traded on the Nasdaq Capital Market under the symbols“AREB” and “AREBW,” respectively. On August 2, 2022, the closing price of our Common Stock as reportedon the Nasdaq Capital Market was $0.6286 per share.

 

This prospectus provides a general description ofthe securities being offered. You should read this prospectus and the registration statement of which it forms a part before youinvest in any securities.

 

Investingin our securities involves a high degree of risk. See “Risk Factors” in the section entitled “Risk Factors”on page 5 of this prospectus for a discussion of certain risk factors that should be considered by prospective purchasers of theCommon Stock offered under this prospectus. You should carefully consider these risk factors, as well as the information containedin this prospectus, before purchasing any of the securities offered by this prospectus.

 

Youshould rely only on the information contained in this prospectus or any prospectus supplement or amendment hereto. We have not authorizedanyone to provide you with different information.

 

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.

 

Thedate of this prospectus is August 5, 2022.

 

 

 

 

TABLEOF CONTENTS

 

  Page
   
Cautionary Note Regarding Forward-Looking Statements ii
Prospectus Summary 1
Risk Factors 5
Use of Proceeds 22
Market For Our Common Stock and Related Stockholder Matters 22
Management’s Discussion and Analysis of Financial Condition and Results of Operations 23
Business 29
Management 42
Executive and Director Compensation 46
Principal Stockholders 51
Certain Relationships and Related Person Transactions 52
Description of our Securities 53
Selling Stockholders 57
Plan of Distribution 58
Legal Matters 59
Experts 59
Where You Can Find Additional Information 59
Index to Financial Statements F-1

 

Youmay only rely on the information contained in this prospectus or that we have referred you to. We have not authorized anyone to provideyou with different information. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securitiesother than the Common Stock offered by this prospectus. This prospectus does not constitute an offer to sell or a solicitation of anoffer to buy any Common Stock in any circumstances in which such offer or solicitation is unlawful. Neither the delivery of this prospectusnor any sale made in connection with this prospectus shall, under any circumstances, create any implication that there has been no changein our affairs since the date of this prospectus is correct as of any time after its date.

 

Unlessthe context otherwise requires, we use the terms “we,” “us,” “the Company”, “American Rebel”and “our” to refer to 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 or other comparable terminology.These forward-looking statements should be evaluated with consideration given to the risks and uncertainties inherent in our businessthat 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 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 such as high inflation, supply chain issues, labor issues and issues resulting from the continuing global COVID-19 pandemic;
     
  risks associated with acquisitions, mergers and joint ventures, such as difficulties integrating businesses, uncertainty associated with financial projections, projected synergies, restructuring, increased costs, and adverse tax consequences;
     
  risks associated with relationships with employees, vendors or key customers as a result of acquisitions of businesses, technologies or products;
     
  our ability to close the Champion Safe Acquisition (defined below);
     
  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 futuredevelopments and their potential effects on us. There can be no assurance that future developments affecting us will be those thatwe have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond ourcontrol) or other assumptions that may cause actual results or performance to be materially different from those expressed orimplied by these forward-looking statements. The foregoing list of important factors does not include all such factors, nornecessarily present them in order of importance. For additional information regarding risk factors that could affect the Company,see “Risk Factors” beginning on page 5 of this prospectus, and as may be included from time-to-time in our reports filedwith 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

 

Thisprospectus contains data related to the permanent and temporary safes and concealed self-defense products industry in the United States.This industry data includes projections that are based on a number of assumptions which have been derived from industry and governmentsources which we believe to be reasonable. We have not independently verified such third-party information. Industry and market datacould be inaccurate because of the method by which sources obtained their data and because information cannot be verified with completecertainty due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and otherlimitations and uncertainties. Industry and market data are often forecasts by industry experts best equipped to make forecasts, butall forecasts bear a certain degree of uncertainty and should not be relied upon as facts. Such data and estimates are necessarily subjectto a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors.” The permanentand temporary safes and concealed self-defense products industries may not grow at the rate projected by industry data, or at all. Thefailure of the industries to grow as anticipated is likely to have a material adverse effect on our business and the market price ofour Common Stock. In addition, the rapidly changing nature of the permanent and temporary safes and concealed self-defense industriessubjects any projections or estimates relating to the growth prospects or future condition of our industries to significant uncertainties.Furthermore, if any one or more of the assumptions underlying the industry data turns out to be incorrect, actual results may, and arelikely to, differ from the projections based on these assumptions.

 

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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

 

Weoperate primarily as a marketer and designer of branded safes and personal security and self-defense products.Additionally, we design and produce branded apparel and accessories under our American Rebelbrand. For more information with respect to our products, please see the section entitled “Business” below.

 

Weare committed to offering products of enduring quality that allow customers to keep their valuable belongings protected and to expresstheir patriotism and style, which is synonymous with the American Rebel brand.

 

Oursafes and personal security products are constructed primarily of U.S.-made steel and we believe our products are designed for safety,quality, reliability, features and performance.

 

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.

 

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

 

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.

 

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TheChampion Safe Acquisition

 

OnJune 29, 2022, we entered into a stock and membership interest purchase agreement with Champion Safe Co., Inc., (“ChampionSafe”), Superior Safe, LLC (“Superior Safe”), Safe Guard Security Products, LLC (“Safe Guard”), ChampionSafe De Mexico, S.A. de C.V. (“Champion Safe Mexico” and, together with Champion Safe, Superior Safe, and Safe Guard, collectively,the “Champion Entities”) and Ray Crosby (“Seller”) (the “Champion Purchase Agreement”), pursuantto which the we agreed to acquire all of the issued and outstanding capital stock and membership interests of the Champion Entities fromthe Seller (the “Champion Safe Acquisition”).

 

Underthe terms of the Champion Purchase Agreement, we have agreed to pay the Seller (i) cash consideration in the amount of $9,150,000 and(ii) cash deposits in the amount $350,000, minus (a) theaggregate amount of all indebtedness of the Champion Entities, plus or minus the amount of the Net Working Capital Adjustment, as suchterm is defined under the Champion Purchase Agreement.

 

Inaddition, under the terms of the Champion Purchase Agreement, we shall reimburse the Seller for mutually agreed upon acquisitions and equipment purchases completed by Seller since June 30, 2021,in the amount of approximately $400,000.

 

TheChampion Purchase Agreement contains customary representations and warranties by the Champion Entities and Seller. The Champion PurchaseAgreement also contains customary covenants and agreements, including with respect to the operations of the business of the ChampionEntities between signing and closing, restrictions on alternative transactions by the Champion Entities, commercially reasonable effortsto take actions that may be necessary in order to obtain approval of the transactions with certain governmental authorities, and othermatters.

 

TheChampion Purchase Agreement generally prohibits Seller’s solicitation of proposals relating to alternative transactions and restrictsSeller’s ability to furnish confidential information to, or participate in any discussions or negotiations with, any third partywith respect to any alternative transaction, subject to certain limited exceptions.

 

Theobligations of the parties to consummate the acquisition of the Champion Entities are subject to the satisfaction or waiver of variousconditions set forth in the Champion Purchase Agreement, including, but not limited to (i) the Company obtaining sufficient financingto consummate the acquisition, (ii) the accuracy of the representations and warranties of each party contained in the Champion PurchaseAgreement (subject to certain materiality qualifications), (iii) each party’s compliance with or performance of the covenants andagreements in the Champion Purchase Agreement in all material respects, and (iv) entry by Champion Safe into employment and non-competitionagreements with certain employees of the Champion Entities, including the Seller. The closing date for the acquisition is set to be onor before August 31, 2022 (subject to an extension to September 30, 2022, as set forth in the Champion Purchase Agreement), subject tocustomary closing conditions.

 

TheChampion Purchase Agreement contains termination rights for the Champion Entities and Seller, including if the transactions are not consummatedwithin 60 days after the date of the Champion Purchase Agreement, which may be extended by the mutual consent of the parties.

 

Theacquisition is anticipated to close in August 2022. We cannot provide assurance that the ChampionSafe Acquisition will be completed on the terms or timeline currently contemplated, or at all.

 

AboutChampion Safe

 

Basedin Provo, Utah and founded in 1999, Champion Safe is what we believe to be one of the premier designers, manufacturers and marketersof home and gun safes in North America. Champion Safe Co. has three safe lines, which webelieve feature some of the most secure and highest quality gun safes.

 

Followingthe acquisition, we plan to continue to operate Champion Safe in substantially the same manner as it currently operates pre-acquisition.Champion Safe will enter into a three-year employment agreement with Ray Crosby to continue in his position as CEO, concurrentwith closing of the acquisition. Ray Crosby is a foundational figure in the safe business with over 40 years of experience in the industry.Ray co-founded Fort Knox Safe in 1982 and Liberty Safe, in 1988, which was sold to a middle market private investment firm for $147.5million.

 

Weplan to expand our manufacturing throughput to fill our significant backlog of orders and aggressively open new dealer accounts withthe support of proceeds from this offering. As a division of our combined company, Champion Safe will shift its emphasis togrowing revenue and increasing profitability for the combined company.

 

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Recent Developments

 

The Champion Safe Acquisition

 

On June 29, 2022, we entered into the Champion PurchaseAgreement with Champion Entities and the Seller, pursuant to which we agreed to acquire all of the issued and outstanding capital stockand membership interests of the Champion Entities from the Seller. For more information, see “Prospectus Summary—The ChampionSafe Acquisition.”

 

July 2022 Private Placement

 

On July 12, 2022, we entered into a securities purchaseagreement (the “Purchase Agreement”) with Armistice Capital Master Fund Ltd. (the “Selling Stockholder”) for thepurchase and sale of $12,887,976.31 of securities, consisting of (i) 509,311 shares of Common Stock at $1.11 per share, (ii) prefundedwarrants (the “Prefunded Warrants”) that are exercisable into 11,202,401 shares of Common Stock (the “Prefunded WarrantShares”) at $1.10 per Prefunded Warrant, and (iii) immediately exercisable warrants to purchase up to 23,423,424 shares of CommonStock (the “Warrant Shares”) at an initial exercise price of $0.86 per share, subject to adjustments as set forth therein,and will expire five years from the date of issuance.

 

The Company intends to use the net proceeds from theprivate placement primarily to fund the planned acquisition of Champion Safe, as well as for general working capital and administrativepurposes.

 

RisksAffecting Us

 

Ourbusiness is subject to numerous risks and uncertainties, including those discussed in the section titled “Risk Factors” beginningon page 5 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;
     
  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 909 18th Avenue South, Suite A, 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 isnot a part of this prospectus. Investors should not rely on any such information in deciding whether to purchase our securities.

 

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THEOFFERING

 

Issuer   American Rebel Holdings, Inc.
     
Offered Securities(1)   35,135,136 shares of our Common Stock.
     
Common Stock outstanding prior to this offering   5,250,632 shares of Common Stock outstanding as of August 2, 2022.
     
Common Stock outstanding after completion of this offering   39,876,457 shares of Common Stock, assuming the exercise of all 11,202,401 shares of Prefunded Warrant Shares and 23,423,424 shares of Warrant Shares.
     
Terms of the Offering   The Selling Stockholder will determine when and how they will sell theCommon Stock offered in this prospectus.
     
Use of proceeds   We are not selling any securities under this prospectus. We will not receive any proceeds from the resale of the Common Stock by the selling stockholder. We will, however, receive proceeds from any warrants that are exercised through the payment of the exercise price in cash.
     
Risk Factors   See “Risk Factors” beginning on page 5 and the other information contained in this prospectus for a discussion of factors you should carefully consider before investing in our securities.
     
Market for Common Stock   Our Common Stock is traded on the Nasdaq Capital Markets under the symbols “AREB”.

 

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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, Warrants or Common Stock pursuant to this offering. The risks and uncertainties describedin this prospectus are not the only ones we may face. Additional risks and uncertainties that we do not presently know about or thatwe currently believe are not material may also adversely affect our business, business prospects, results of operations or financialcondition. Any of the risks and uncertainties set forth herein, could materially and adversely affect our business, results of operationsand 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.

 

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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.

 

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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.

 

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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.

 

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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 a large 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.

 

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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.

 

TheChampion Safe Acquisition and any other acquisitions that we potentially undertake will involve significant risks, and any acquisitionsthat we undertake in the future could disrupt 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. The Champion Safe Acquisition, if completed, could providesignificant risks and uncertainties. We cannot accurately predict the timing, size, and success of any future acquisitions. We may beunable to identify suitable acquisition candidates or to complete the acquisitions of candidates that we identify. Increased competitionfor acquisition candidates or increased asking prices by acquisition candidates may increase purchase prices for acquisitions to levelsbeyond our financial capability or to levels that would not result in the returns required by our acquisition criteria. Unforeseen expenses,difficulties, and delays frequently encountered in connection with expansion through acquisitions could inhibit our growth and negativelyimpact 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 46.

 

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

 

TheChampion Safe Acquisition may not be accretive and may cause dilution to our earnings per share, which may negatively affect the marketprice of the shares of Common Stock.

 

Althoughwe currently anticipate that the Champion Safe Acquisition will be accretive to earnings per share (on an adjusted earnings basis thatis not pursuant to generally accepted accounting principles (“GAAP”)) from and after the Champion Safe Acquisition, thisexpectation is based on preliminary estimates, which may change materially.

 

Ourissuance of shares of Common Stock at the closing of this offering to finance a portion of the amounts to be paid in connection withthe Champion Safe Acquisition may cause dilution to our earnings per share or decrease or delay the expected accretive effect of theChampion Safe Acquisition and cause a decrease in the market price of shares of Common Stock.

 

Inaddition, we could also encounter additional transaction-related costs or other factors such as the failure to realize all of the benefitsanticipated in the Champion Safe Acquisition. All of these factors could cause dilution to our earnings per share or decrease or delaythe expected accretive effect of the Champion Safe Acquisition and cause a decrease in the market price of shares of Common Stock.

 

Wemay fail to realize all of the anticipated benefits of the Champion Safe Acquisition or those benefits may take longer to realize thanexpected. We may also encounter significant difficulties in integrating the businesses.

 

Ourability to realize the anticipated benefits of the Champion Safe Acquisition will depend, to a large extent, on our ability to integratethe businesses. The combination of independent businesses is a complex, costly and time-consuming process. As a result, we and the applicableChampion Entities will be required to devote significant management attention and resources prior to closing to prepare for integrating,and we will be required to devote significant management attention and resources post-closing to integrate, our business practices andoperations and those of the applicable Champion Entities. The integration process may disrupt the businesses and, if implemented ineffectively,would restrict the realization of the full expected benefits. The failure to meet the challenges involved in integrating the businessesand to realize the anticipated benefits of the transactions could cause an interruption of, or a loss of momentum in, the activitiesof the combined company and could adversely affect the results of operations of the combined company.

 

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Inaddition, the overall integration of the businesses may result in material unanticipated problems, expenses, liabilities, competitiveresponses, loss of customer and other business relationships, and diversion of management’s attention. The difficulties of combiningthe operations of the companies include, among others:

 

  the diversion of management’s attention to integration matters;
     
  difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the combination;
     
  difficulties in the integration of operations and systems;
     
  conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures between the two companies;
     
  difficulties in the assimilation of employees;
     
  difficulties in managing the expanded operations of a significantly larger and more complex company;
     
  challenges in keeping existing customers and obtaining new customers;
     
  potentialunknown liabilities, adverse consequences and unforeseen increased expenses associated with the Champion Safe Acquisition, includingpossible adverse tax consequences to us, as a result of the Champion Safe Acquisition or otherwise;
     
  challenges in attracting and retaining key personnel; and
     
  coordinating a geographically dispersed organization.

 

Manyof these factors will be outside of our control or the control of the applicable Champion Entities and any one of them could result inincreased costs, decreases in the amount of expected revenues and diversion of management’s time and energy, which could materiallyimpact the business, financial condition and results of operations of the combined company. In addition, even if the operations of ourbusiness and the businesses of the applicable Champion Entities are integrated successfully, the full benefits of the transactions maynot be realized, including the synergies, cost savings or sales or growth opportunities that are expected. These benefits may not beachieved within the anticipated time frame, or at all. Further, additional unanticipated costs may be incurred in the integration ofour business and the businesses of the applicable Champion Entities. All of these factors could cause dilution to our earnings per share,decrease or delay the expected accretive effect of the transactions, and negatively impact the price of the shares of Common Stock. Asa result, it cannot be assured that our combination with the applicable Champion Entities will result in the realization of the fullbenefits anticipated from the transactions.

 

Weand the applicable Champion Entities will incur direct and indirect costs as a result of the Champion Safe Acquisition.

 

Weand the applicable Champion Entities will incur substantial expenses in connection with and as a result of completing the Champion SafeAcquisition and, over a period of time following the completion of the Champion Safe Acquisition, we further expect to incur substantialexpenses in connection with coordinating our businesses, operations, policies and procedures and those of the applicable Champion Entities.While we have assumed that a certain level of transaction expenses will be incurred, factors beyond our control could affect the totalamount or the timing of these expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately.

 

TheChampion Purchase Agreement may be terminated in accordance with its terms and the Champion Safe Acquisition may not be completed.

 

TheChampion Purchase Agreement contains a number of conditions that must be fulfilled to complete the Champion Safe Acquisition. Those conditionsinclude but are not limited to (i) us obtaining sufficient financing to consummate the acquisition, (ii) the accuracy of the representationsand warranties of each party contained in the Champion Purchase Agreement (subject to certain materiality qualifications), (iii) eachparty’s compliance with or performance of the covenants and agreements in the Champion Purchase Agreement in all material respects,and (iv) entry by Champion Safe Co., Inc. into employment and non-competition agreements with certain employees of the Champion Entities,including the Seller.

 

Whilewe intend to use the proceeds of this offering to fund the Champion Safe Acquisition, this offering is not contingent on the completionof the Champion Safe Acquisition. If we fail to consummate the Champion Safe Acquisition, the shares of Common Stock will remain outstandingand we may choose to use the net proceeds of this offering for a variety of other purposes, including other potential acquisitions and organic growth of the Company. If the Champion SafeAcquisition is not consummated, holders of the shares of Common Stock will be exposed to the risks faced by the Company’s existingbusiness without any of the potential benefits from the Champion Safe Acquisition. In these circumstances, such holders will also berelying on the judgment of our management and board of directors with regard to the use of the proceeds from this offering, and willnot have the opportunity, as part of their investment decision, to assess whether the proceeds are being used appropriately. In thesecircumstances it is possible that the proceeds will be invested in a way that does not yield a favorable, or any, return for us or oursecurityholders.

 

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Themarket price for the shares of Common Stock following the closing of the Champion Safe Acquisition may be affected by factors differentfrom those that historically have affected or may currently affect the shares of Common Stock.

 

Uponcompletion of the Champion Safe Acquisition, holders of shares of Common Stock prior to the Champion Safe Acquisition will become holdersof shares in the combined company. The results of operation of the combined company may be affected by factors different from those currentlyaffecting us. For a discussion of our business and of some important factors to consider in connection with our business, see the discussionunder the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, which is incorporatedby reference herein.

 

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 Convertible PreferredStock (“Series A Preferred Stock”) (which were issued to two members of our current management, Messrs. Charles A. 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 availablestockholder votes). While the Certificate of Designation is named “Certificate of Designation of Series A Convertible PreferredStock”, the Company’s Existing Series A Preferred Stock is not convertible into shares of Common Stock of the Company orredeemable by either the Company or another person. The power of the Board of Directors to issue shares of Common Stock, preferred stockor warrants or options to purchase shares of Common Stock or preferred stock is generally not subject to stockholder approval, exceptfor 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.

 

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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.

 

TheExisting Warrants included in our February 2022 public offering do not confer any rights of Common Stock ownership on their holders,such as voting rights or the right to receive dividends, but rather merely represent the right to acquire shares of our Common Stockat a fixed price for a limited period of time. Specifically, commencing on the date of issuance, holders of the Existing Warrants mayexercise their right to acquire the Common Stock and pay an exercise price of $2.01 per share, prior to five years from the dateof issuance, after which date any unexercised Existing Warrants will expire and have no further value. Until holders of the ExistingWarrants acquire Common Stock upon exercise of the Existing Warrants, the holders will have no rights with respect to the Common Stockissuable upon exercise of the Existing Warrants. Upon exercise of the Existing Warrants, the holder will be entitled to exercise therights of a Stockholder as to the security exercised only as to matters for which the record date occurs after the exercise. Moreover,the market value of the Existing Warrants is uncertain and there can be no assurance that the market value of the Existing Warrants willequal or exceed their public offering price. There can be no assurance that the market price of the Common Stock will ever equal or exceedthe exercise price of the Existing Warrants, and consequently, whether it will ever be profitable for holders of the Existing Warrantsto exercise the Existing Warrants.

 

Provisionsof the Existing 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 Existing Warrants offeredin our February 2022 public offering could make it more difficult or expensive for a third party to acquire us. The Existing Warrantsprohibit us from engaging in certain transactions constituting “fundamental transactions” unless, among other things, thesurviving entity assumes our obligations under the Existing Warrants. These and other provisions of the Existing Warrants could preventor deter a third party from acquiring us 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.

 

Becausemarijuana is illegal under U.S. federal law, we may be unable to access to U.S. bankruptcy protections in the event of our bankruptcy.

 

Wehave no plans and no current need to seek bankruptcy protection. However, in the event we ever need to seek bankruptcy protection, wemay have difficulty accessing bankruptcy courts considering our indirect involvement in the medial and adult use cannabis industry inthe United States. Many courts have denied cannabis businesses bankruptcy protections because the use of cannabis is illegal under federallaw. If we were to experience a bankruptcy, there is no guarantee that U.S. federal bankruptcy protections would be available to us,which would have a material, adverse effect on the Company.

 

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USEOF PROCEEDS

 

Weare not selling any securities under this prospectus. We are registering shares of our Common Stock for the Selling Stockholder. Wewill not receive any of the proceeds from any sale or other disposition of the Common Stock covered by this prospectus. All proceedsfrom the sale of the Common Stock will be paid directly to the Selling Stockholder. We may receive proceeds from the cash exercise of the Warrants, which, if exercised in cash at the current exercise price with respect to all 23,423,424 shares of Common Stock, would result in gross proceeds of $20,144,144.64 to us.

 

MARKETFOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

 

CommonStock

 

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.

 

Holdersof Common Equity

 

Asof August 2, 2022, there were approximately 5,250,632 shares of Common Stock issued and outstanding and approximately 123stockholders of record of our Common Stock. An additional number of stockholders are beneficial holders of our Common Stockin “street name” through banks, brokers and other financial institutions that are the record holders.

 

DividendInformation

 

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 and transfer agent. The principal business address of 2469 E. Fort Union Blvd., Suite 214, SaltLake 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.

 

RecentDevelopments and Trends

 

ChampionSafe and Superior Safe Acquisition

 

OnJune 29, 2022, the Company entered into a stock and membership interest purchase agreement with Champion Safe Co., Inc., Superior Safe,LLC, Safe Guard Security Products, LLC, Champion Safe De Mexico, S.A. de C.V. (the “Champion Entities”) and Ray Crosby (“Seller”)(the “Champion Purchase Agreement”), pursuant to which the Company agreed to acquire all of the issued and outstanding capitalstock and membership interests of the Champion Entities from the Seller.

 

Underthe terms of the Champion Purchase Agreement, the Company has agreed to pay the Seller total consideration of $9,500,000 in cash plusreimbursement for certain equipment purchased as follows:

 

  $9,150,000 in cash on Closing,
  $350,000 cash deposit, and
  Approximately $400,000 reimbursement for certain equipment purchased by Seller since June 30, 2021.

 

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Theobligations of the parties to consummate the acquisition of the Champion Entities are subject to the satisfaction or waiver of variousconditions set forth in the Champion Purchase Agreement, including, but not limited to (i) the Company obtaining sufficient financingto consummate the acquisition, (ii) the accuracy of the representations and warranties of each party contained in the Champion PurchaseAgreement (subject to certain materiality qualifications), (iii) each party’s compliance with or performance of the covenants andagreements in the Champion Purchase Agreement in all material respects, and (iv) entry by Champion Safe Co, Inc. into employment andnon-competition agreements with certain employees of the Champion Entities, including the Seller. The acquisition is set to be on orbefore August 31, 2022 (subject to an extension to September 30, 2022, as set forth in the Champion Purchase Agreement), subject to customaryclosing conditions.

 

TheChampion Purchase Agreement contains customary representations and warranties by the Champion Entities and Seller. The Champion PurchaseAgreement also contains customary covenants and agreements, including with respect to the operations of the business of the ChampionEntities between signing and closing, restrictions on alternative transactions by the Champion Entities, commercially reasonable effortsto take actions that may be necessary in order to obtain approval of the transactions with certain governmental authorities, and othermatters.

 

TheChampion Purchase Agreement generally prohibits Seller’s solicitation of proposals relating to alternative transactions and restrictsSeller’s ability to furnish confidential information to, or participate in any discussions or negotiations with, any third partywith respect to any alternative transaction, subject to certain limited exceptions.

 

TheChampion Purchase Agreement contains termination rights for the Champion Entities and Seller, including if the transactions are not consummatedwithin 60 days after the date of the Champion Purchase Agreement, which may be extended by the mutual consent of the parties.

 

Basedin Provo, Utah and founded in 1999, Champion Safe we believe is a premier designer, manufacturer and marketer of home and gun safes inNorth America. Champion Safe Co. has three safe lines, all built to be the most secure, highest quality gun safes found in America. Webelieve Champion still builds gun safes the old-fashioned way – heavy and tough with thick American-made high-strength steel. Forthe three-months ended March 31, 2022 and the year ended December 31, 2021, the Champion Entities reported revenue of $4,579,163 and$18,304,859, respectively.

 

UnderwrittenPublic Offering

 

OnFebruary 9, 2022, we closed on an underwritten public offering (the “Public Offering”) of 2,530,121 units (the “CommonUnits”), at a price to the public of $4.15 per Common Unit, for aggregate gross proceeds of approximately $10.5 million, priorto deducting underwriting discounts, commissions, and other estimated offering expenses. Each Common Unit consisted of one share of CommonStock and one warrant to purchase one share of Common Stock (each a “Warrant” and collectively the “Warrants”).The Common Stock and Warrants were immediately separable from the Common Units and were issued and trade separately. The Warrants areexercisable immediately, expire five years from the date of issuance and have an exercise price of $2.01 per share, which was adjusted downward on July 8, 2022 from the original exerciseprice of $5.1875 due to a dilutive issuance.

 

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.

 

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Resultsof Operations

 

Frominception through March 31, 2022, we have generated an operating deficit of $29,597,894. We expect to incur additional losses duringthe fiscal year ending December 31, 2022, and beyond, principally as a result of our increased investment in inventory, marketing expenses,and the limited sales of 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 three months ended March 31, 2022, we reported Sales of $154,080, compared to Sales of $349,290 for the three months ended March31, 2021. The decrease in Sales for the current quarter compared to the three months ended March 31, 2021 is attributable to lack ofavailable inventory for sale. The completion of our registered public offering in February 2022 has provided funds to allow the Companyto replenish its inventory. For the three months ended March 31, 2022, we reported Cost of Sales of $96,719, compared to Cost of Salesof $268,145 for the three months ended March 31, 2021. The decrease in Cost of Sales for the current quarter is due to fewer Sales duringthe quarter compared to the three months ending March 31, 2021. For the three months ended March 31, 2022, we reported Gross Profit of$57,361, compared to Gross Profit of $81,145 for the three months ended March 31, 2021. The decrease in Gross Profit for the three monthsending March 31, 2022 compared to the three months ending March 31, 2021 is due to the decrease in Sales.

 

OperatingExpenses

 

Totaloperating expenses for the three months ended March 31, 2022 were $1,016,437 compared to $444,542 for the three months ended March 31,2021 as further described below.

 

Forthe three months ended March 31, 2022, we incurred consulting and business development expenses of $462,989, compared to consulting andbusiness development expenses of $146,006 for the three months ended March 31, 2021. The increase in consulting and business developmentexpenses was due to increased expenses related to the Company’s registered public offering that was completed in February 2022.

 

Forthe three months ended March 31, 2022, we incurred product development expenses of $33,273, compared to product development expensesof $86,733 for the three months ended March 31, 2021. The decrease in product development expenses relates primarily to a decrease inproduct development activities.

 

Forthe three months ended March 31, 2022, we incurred marketing and brand development expenses of $80,970, compared to marketing and branddevelopment expenses of $46,340 for the three months ended March 31, 2021. The increase in marketing and brand development expenses relatesprimarily to an increase of activities including major trade shows and the availability of working capital.

 

Forthe three months ended March 31, 2022, we incurred general and administrative expenses of $438,305, compared to general and administrativeexpenses of $179,816 for the three months ended March 31, 2021. The increase in general and administrative expenses relates primarilyto the Company’s registered offering completed in February 2022.

 

Forthe three months ended March 31, 2022, we incurred depreciation expense of $900, compared to depreciation expense of $1,613 for the threemonths ended March 31, 2021. The decrease in depreciation expense relates primarily to the maturity of depreciable assets.

 

Otherincome and expenses

 

Forthe three months ended March 31, 2022, we incurred interest expense of $292,405, compared to interest expense of $548,252 for the threemonths ended March 31, 2021. The decrease in interest expense is due to multiple notes being paid in full during the three months endingMarch 31, 2022. During the three months ended March 31, 2022, we incurred interest expense of $333,393, compared to $263,082 during thethree months ended March 31, 2021, in interest expense through the amortization of the debt discount recorded for the issuance of sharesof common stock in connection with working capital loans.

 

NetLoss

 

Netloss for the three months ended March 31, 2022 amounted to $2,628,237, resulting in a loss per share of $0.83, compared to $927,615 forthe three months ended March 31, 2021, resulting in a loss per share of $0.99. The increase in the net loss from the three months endedMarch 31, 2021 to the three months ended March 31, 2022 is primarily due to the increase in corporate and financing costs including theLoss on Extinguishment of Debt of $1,376,756 incurred during the three months ended March 31, 2022 created by issue of Common Stock toeliminate short term debt and accrued interest expense.

 

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Liquidityand Capital Resources

 

Weare a development stage company and our revenue from our planned operations does not cover our operating expenses. We have a workingcapital deficit of $4,171,277 at December 31, 2021 and working capital asset of $4,775,936 at March 31, 2022 due to the closing of ourregistered public offering in February 2022 and have incurred a deficit of $29,597,894 from inception to March 31, 2022. We have fundedoperations primarily through the issuance of capital stock, convertible debt, and other securities.

 

Duringthe three months ended March 31, 2022, we raised net cash of $9,038,456 by issuance of common shares, as compared to $150,000 for thethree months ended March 31, 2021. During the three months ended March 31, 2022, we raised net cash of $60,000 through the issuance ofnotes payable secured by inventory, as compared to $90,000 for the three months ended March 31, 2021.

 

Aswe continue with the launch of our safes and concealed carry product line we have devoted and expect to continue to devote significantresources in the areas of capital expenditures 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 may alsoseek 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, 2022, in the amount of $600,000 that matures on March 31, 2023.Interest on the note is 12% annually, paid quarterly.

 

Linesof Credit

 

OnDecember 20, 2018, the Company entered into a $25,000 unsecured Loan with an interest rate of 8.98% offered by American Express. TheBusiness Loan has an outstanding balance of $6,317 as of July 1, 2022. 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 in theaccounting 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.

 

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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 the contractwith a client; (2) Identify the performance obligations in the contract; (3) Determine the transaction price; (4) Allocate the transactionprice to performance obligations in the contract; and (5) Recognize revenues when or as the company satisfies a performance obligation.

 

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 March31, 2022, and December 31, 2021, 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.

 

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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 March 31, 2022,and December 31, 2021, 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 three-month period ended March 31, 2022, and2021, 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

 

OurCompany

 

AmericanRebel, America’s Patriotic Brand, operates primarily on designing and marketing branded safes and personal security and self-defenseproducts. Additionally, the Company designs and produces branded accessories and 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 anticipate our new model safe will offer and be equipped with technologically advancedfeatures, such as independent boltworks operation, double-steel door-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, which are constructedwith U.S.-made steel. Our safes exhibit the strength and rugged independence that America was built upon. American Rebel’s designmakes keeping your firearms more secure in style. Products are marketed under the American Rebelbrand. Although demand for our safes is strong across all segments of our customers, including individuals and families who wish to protecttheir valuables, to collectors and the dispensary servicing community, the demand for safe storage responsible solutions has beenparticularly strong among gun owners, sportsmen, competitive shooters and hunters alike. We expectto benefit from increasing awareness of and need for safe storage of firearms in future periods.

 

 

LargeSafes

 

Ourpremium large safe collection consists of six premium safes in a range of sizes. 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 dooredges. We believe that our large safes are ideal for storing valuables of significant size, and that they offer greater capacity forstorage and protection. Our safes offer a fully adjustable interior to fit our customers’ needs. Depending on the model, one sideof the interior may have shelves and the other side set up to accommodate long guns. The large safes are designed to be resistant tobreak-ins, natural disasters and fire damage, and to prevent unauthorized access and to protect your family and their valuables. A large,highly visible safe also is believed to act as a deterrent to any prospective thief. Safe storage is also top priority of our customerbase who seeks to responsibly secure their firearms. Whenever a new firearm is purchased, gun owners look for our premium solution toresponsible secure them and protect their loved ones.

 

Ourlarge safes selection includes the following:

 

AR-50

 

TheAR-50 is our biggest among the most secure safes. The AR-50 safe is designed to be strong, rugged, constructed of 11-gauge American-madesteel and maintains capacity to comfortably store over 40 firearms comfortably. This premium gun safe with a double plate steel door,double-steel door casement and reinforced door edge is designed to give our customers added security and peace of mind, with 75 minutesof fire protection at 1200 degrees Fahrenheit as well as a customized shelf solution and optional additional accessories to increasethe 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”.

 

 

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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 guidelines and fit comfortable in luggage where travelregulations require it.

 

Vaultdoors

 

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

 

Dispensaries

 

Ourinventory 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

 

ConcealedCarry 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. We believe thesedistinctive 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. Our concealment pocketcontains a holster and attaches to the interior with hook and loop material. Soft fleece lined pockets for your tablet, glasses caseand 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. Our branded apparelline 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. The American Rebelclothing line style is not only a fashion statement; it is the sense of pride of belonging to our patriotic family, on your adventuresand 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 is placed on theoutside of the door while the inner steel provides additional door rigidity and attachment for the locking mechanism and bolt works.The door edge is reinforced with up to four layers of laminated steel. This exclusive design offers up to 16 times greater door strengthand 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 morethan quadruples the strength of the door opening and provides a more secure and pry-resistant door mounting. Our manufacturer installsa 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 or carbide drill.If drilling is attempted the diamond removes the cutting edge from a 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 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 have establishedplans to grow our business by focusing on three key areas: (1) organic growth and expansion in existing markets; (2) strategic acquisitions,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 stockholder value.Key elements of our strategy to achieve this goal are as follows:

 

OrganicGrowth and Expansion in Existing Markets - Build our Core 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.

 

Weare also working to increase floor space dedicated to our safes and strengthen our online presence in order to expand our reach to newenthusiasts and build our devoted American Rebel community. We intend to continue to endeavor to create and provide retailers and customerswith what we believe are responsible, safe, reliable and stylish products, and we expect to concentrate on tailoring our supply and distributionlogistics in response to the specific demands of our customers.

 

Weare currently developing a new model of our home and office safes. We expect the new planned modelto include additional features, such as a reinforced door and upgraded locking mechanism, among others. We are focused on developingbest in class, compelling combination of functionality, convenience and style without compromising performance of our safes. We intendto use our designing and 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 of our current line of safes, apparel and accessories, we believe thatthe expected addition of manufacturing capabilities following the signing of the contract with the aforementioned manufacturer, whichwe anticipate to work exclusively with us, would allow us, among other benefits, to ramp up our production levels to meet expected demandfor our products, provide us greater autonomy 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 background checksconducted, similar to that of 2020’s annual record which was 40% higher than the previous annual record in 2019. While we do notexpect this increase in background checks to necessarily translate to an equivalent number of additional safes purchased, we do believeit 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 expected to have positiveimpact on the sale of safes.

 

Wecontinue to strive to strengthen our relationships with our current distributors, dealers, manufacturers and specialty retailers andto 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. We believe the acquisition of the ChampionEntities fits well with our overall growth strategy, if consummated.

 

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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 industry to be a material growth segment for our business. Several cannabis dispensary operators haveexpressed interest in the opportunity to help them with their inventory locking needs. Cannabis dispensaries have various insurance requirementsand local ordinances requiring them to secure their inventory when the dispensary is closed. Dispensary operators have been purchasinggun safes and 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, and processorsare another fertile new growth market for our Vault Doors products, as many in the cannabis space have chosen to install entire vaultrooms instead of individual inventory control safes-the American Rebel Vault Door has been the choice for that purpose.

 

Further,we believe that American Rebel has significant potential for branded products as a lifestyle brand. As the American Rebel Brand continuesto grow in popularity, we anticipate generating additional revenue from licensing fees earned from third parties who wish to engage theAmerican Rebel community. While the Company does not generate material revenues from licensing fees, our management believes the AmericanRebel brand name may in the future have significant licensing value to third parties that seek the American Rebel name to brand theirproducts to market to the American Rebel target demographic. For example, a tool manufacturer that wants to pursue an alternative marketingplan for a different look and feel could license the American Rebel brand name for their line of tools and market their tools under ourdistinct brand. This licensee would benefit from the strong American Rebel brand with their second line of American Rebel branded toolsas they would continue to sell both the American Rebel line and the line of tools under their brand. Conversely, American Rebel couldpotentially also benefit as a licensee of products. If American Rebel determines a third party has designed, engineered, and manufactureda product that would be a strong addition to the American Rebel catalog of products, American Rebel could license that product from thethird-party and sell the licensed product under the American Rebel brand.

 

Competition

 

Thesafe industry is dominated by a small number of companies. We compete primarily on the quality, safety, reliability, features, performance,brand awareness, and price of our products. Our primary competitors Liberty Safe, Browning Safe as well as certain other domestic manufacturers,as well as certain China-based manufactured safes. Safes manufactured in China, including Steelwater and Alpha-Guardian, have struggledunder the import tariffs initiated under the administration of former U.S President Donald Trump and continued by the current administration.We believe that given the current substantial uncertainty related to the supply chain and deliveryof 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 and maintainour 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 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 gun enthusiasts, collectors, hunters, sportsmen and competitive shooters. Therefore,we expect the increasing federal, state and local governmental regulation of gun storage to have a materially positive effect on ourbusiness.

 

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 future experience,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. Anydisruption in the supply of our branded safes from our suppliers could limit our sales. In the long term, we intend to supplement safesmanufactured 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; andin-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

 

OurChief Executive Officer, Charles A. Ross, is familiar to many in the industry due to his twelve years on television as the host of MaximumArchery and later American Rebel, that was broadcast on The Outdoor Channel, Sportsman Channel and the Pursuit Channel. OurMarketing and Sales teams have established American Rebel as a brand that our customers want and a brand that they are proud to embraceand bring into their homes.

 

DirectMarketing

 

Inlight of the expertise required to deliver and install safes that weigh 500-1000 pounds, direct marketing is utilized to create awarenessand provide information. Our website, www.AmericanRebel.com, has proven to be a very valuable tool in introducing potential customersto our products. Infomercials and direct-to-consumer campaigns are vehicles to expand our reach at the appropriate time. Currently thedemand from our current customers and future customer pool of independent safe specialty stores is high. As the Company grows and seeksout new customers to expand its customer base, direct marketing will be an asset for American Rebel. Chief Executive Officer, CharlesA. Ross, was basically making infomercials to promote his Ross Archery products when he was filming Maximum Archery during themid-2000s.

 

SocialMedia and Thought Leadership

 

Aportion of marketing dollars from the equity raise will be directed to social media. American Rebel and Chief Executive Officer, CharlesA. Ross, have large followings on social media and a dedicated social media campaign will efficiently reach large numbers of potentialcustomers and brand adopters. We will leverage our social media assets to cross-promote locally with independent safe specialty storecustomers to pull out product through the sales channel. Driving demand and awareness of our products to our customers will expand theirloyalty to American Rebel and increase each stores’ commitment to our brand.

 

TradeShows

 

Tradeshows have been an important medium to introducing our brand and our products. The NRA Annual Meeting, a consumer trade show, is a valuableopportunity to meet and greet our final customers. When we launched our Concealed Carry line of products at the NRA Annual Meeting inAtlanta, GA, in the Spring of 2017, the response from the meeting attendees was overwhelming. We immediately knew the product line resonatedwith consumers. Similarly, when we introduced our line of safes at the 2019 NRA Annual Meeting in the Spring of 2019, we knew we wereon to something significant. The USCCA (United States Concealed Carry Association) has an annual Concealed Carry and Home Defense Expo.This is also an excellent opportunity to meet, greet and sell product to our final customers, the buying public. The Iowa Deer Classicand Illinois Deer Classic are carryovers from our Chief Executive Officer, Charles A. Ross’ hosting duties on Maximum Archery,but we have found that many potential safe 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. The SHOT Showis very high profile and a show that most movers and shakers in the firearms industry attend. Operated by the National Shooting SportsFoundation, the SHOT Show is the first trade show of the calendar year and is a great opportunity to introduce the year’s new products.NBS operates buying group shows where retailers who are members of NBS attend the Spring and Fall Market Buying shows to place orders.NBS provides an excellent base of customers for us to introduce our products to.

 

PaidAdvertising

 

Wewill occasionally purchase paid print advertising to support editorial and events. The American Shooting Journal has been very supportiveof our business has featured an interview with our 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.

 

Marketand Other Information

 

OurCommon Stock and Existing Warrants are traded on the Nasdaq Capital Market under the symbol “AREB” and “AREBW,”respectively.

 

Asof August 2, 2022, there were approximately (i) 123 holders of record of our Common Stock and (ii) 1 holder of recordof our Existing Warrants. An additional number of stockholders are beneficial holders of our Common Stock and Existing Warrants in“street name” through banks, brokers and other financial institutions that are the record holders.

 

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, theCompany amended its articles of incorporation and changed its name to American Rebel Holdings, Inc. The Company completed a businesscombination with its majority stockholder, American Rebel, Inc. on June 19, 2017. As a result, American Rebel, Inc. became a wholly ownedsubsidiary of the Company.

 

Theacquisition of American Rebel, Inc. was accounted for as a reverse merger. The Company issued 215,512 shares of its Common Stock and6,250 warrants to purchase shares of Common Stock to shareholders of American Rebel, Inc. and cancelled 112,500 shares of Common Stockowned by American Rebel, Inc.

 

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MANAGEMENT

 

ExecutiveOfficers and Directors

 

Thefollowing table provides information regarding our executive officers and directors as of the date of this prospectus:

 

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, interim principal accounting officer and Director
Ronald A. Smith   60   Chief Operating Officer
John Garrison   70   Former Chief Financial Officer
         
Non-Employee Director        
         
Corey Lambrecht   52   Director
Michael Dean Smith   52   Director
Ken Yonika   60   Director

 

ExecutiveOfficers

 

CharlesA. Ross, Jr. has served as our Chief Executive Officer and Chairman of the Board of Directorssince December 2014. Previously, Mr. Ross founded Digital Ally, Inc. (NASDAQ: DGLY). Mr. Ross’ business career includessuccess in broadcasting, endorsements, music, and television. A music artist and songwriter, Mr. Ross has released three CDs and hissong “American Rebel” has become the theme song for American Rebel. His song “Cold Dead Hand” caught the attentionof Danny “the Count” Koker and landed him on the hit TV show Counting Cars. Mr. Ross’ television and performingexperience provide opportunities for him to speak about American Rebel in media interviews on radio and TV and in print and online. Ourboard of 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. Following the passing of Mr. Garrison, Mr. Grau has been appointed as our interim chief accounting officer.

 

JohnGarrison, who became Chief Financial Officer of the Company on completion of the February 2022 offering, has been providing accountingconsulting services to the Company since 2016. From 2016 to the present, Mr. Garrison has been the sole owner of JC Garrison CPA, a businessconsulting firm. Mr. Garrison holds B.S. in business and accounting from Kansas State University. Mr. Garrison passed away on July 30, 2022.

 

Non-EmployeeDirectors

 

CoreyLambrecht has had over 20 years’ experience as a public company executive and he brings broad experience in strategic acquisitions,corporate turnarounds, 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, raisingcapital, board communication and investor relations. He is a Certified Director from the UCLA Anderson Graduate School of Managementaccredited Directors program. Since 2007 he has been a Director of CUI Global, Inc. (NASDAQ: CUI) and has served multiple terms on theAudit Committee and currently serves as the Compensation Committee Chairman. Corey Lambrecht has served on the Board of ORHub, Inc. (OTC:ORHB) since July 2016 and finished his term in December 2019. On January 17, 2020, he was appointed to serve as the Chief Financial Officerfor Singlepoint, Inc. (OTC: SING) and he previously served as a Board member for Lifestyle Wireless, Inc., which, in 2012 merged intoSinglepoint, Inc. In December 2011 he joined the Board of Guardian 8 Holdings, a leading non-lethal security product company, servinguntil early 2016. He most recently served as the President and Chief Operating Officer at Earth911 Inc., a subsidiary of Infinity ResourcesHoldings Company (OTC: IRHC) from January 2010 to July 2013.

 

MichaelDean Smith, who became an independent Director on completion of the February 2022 offering, has, since 2017, been Vice Presidentof Industrial Maintenance, Inc. From 1997-2017, Mr. Smith served in various positions with Payless Shoe Source. Mr. Smith holds B.S.in Business Administration and Accounting from the University of Kansas, and MBA from Washburn University.

 

KenYonika, who became an independent Director on completion of the February 2022 offering, has servedas Chief Executive Officer and President at Pacific Crest Equity Partners, Inc. since 2000. Mr. Yonika earned a B.B.A. from Western ConnecticutState University in 1988 with a major in Accounting and a minor in Finance.

 

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CORPORATEGOVERNANCE

 

DirectorIndependence

 

Theboard of directors has reviewed the independence of our directors based on the listing standards of the Nasdaq Capital Market. Basedon this review, the board of directors has determined that each of Corey Lambrecht, Michael Dean Smith and Ken Yonika are independentwithin the meaning of the Nasdaq Capital Market rules. In making this determination, our board of directors considered the relationshipsthat each of these non-employee directors has with us and all other facts and circumstances our board of directors deemed relevant indetermining their independence. As required under applicable Nasdaq Capital Market rules, we anticipate that our independent directorswill meet in regularly scheduled executive sessions at 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.

 

Ouraudit committee consists of Corey Lambrecht, Michael Dean Smith and Ken Yonika. Ken Yonika serves as the chairman. Our board of directorshas affirmatively determined that each of Corey Lambrecht, Michael Dean Smith and Ken Yonika qualify as an “audit committee financialexpert,” as defined by Item 407(d)(5) of Regulation S-K.

 

TheNasdaq Capital Market rules require us to have one independent audit committee member upon the listing of our Common Stock, a majorityof independent directors within 90 days of the date of this prospectus and all independent audit committee members within one year ofthe date of this prospectus. Our board of directors has affirmatively determined that each of Corey Lambrecht, Michael Dean Smith andKen Yonika meet the definition of “independent director” for purposes of serving on an audit committee under Rule 10A-3 ofthe 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 responsiblefor, 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.

 

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

 

Nominatingand Corporate Governance Committee

 

Ourboard of directors has established the nominating and corporate governance committee for the purpose of assisting the board in identifyingqualified individuals to become board members, in determining the composition of the board and in monitoring the process to assess boardeffectiveness. Our nominating committee consists of Michael Dean Smith, Ken Yonika, and Corey Lambrecht. Michael Dean Smith serves asthe 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 leadership structure,the Chief Executive Officer is responsible for the day-to-day leadership and performance of the Company. Mr. Grau, our President, focuseson 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 909 18th Avenue South, Suite A, Nashville, TN, 37212, Attention: Corporate Secretary.Stockholders who 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 Company. Pursuant to the amendment to his employment agreement, dated April 9, 2021, Mr. Ross agreed to reduce his salary to $6,667per 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 Company’sboard of directors.

 

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

 

Inthe event of a termination of employment with the Company by the Company without “cause” or by Mr. Ross for “Good Reason”(as defined in the employment agreement), Mr. Ross would receive: (i) a lump sum payment equal to all earned but unpaid base salary throughthe date of termination of employment; (ii) a lump sum payment equal to 12-months base salary; and (iii) immediate vesting of all equityawards (including but not limited to stock options and restricted shares).

 

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

 

Inthe event of a termination of Mr. Ross’ employment with the Company 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 Company. Pursuant to the amendment to his employment agreement, dated April 9, 2021, Mr. Grau agreed to reduce his salary to $6,667per 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 Company’sboard of directors.

 

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

 

Inthe event of a termination of employment with the Company by the Company without “cause” or by Mr. Grau for “Good Reason”(as defined in the employment agreement), Mr. Grau would receive: (i) a lump sum payment equal to all earned but unpaid base salary throughthe date of termination of employment; (ii) a lump sum payment equal to 12-months base salary; and (iii) immediate vesting of all equityawards (including but not limited to stock options and restricted shares).

 

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

 

Inthe event of a termination of Mr. Grau’s employment with the Company 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 Company’sboard of directors.

 

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

 

Inthe event of a termination of employment with the Company by the Company 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 Company 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

 

OnJanuary 1, 2021, our board of directors approved the establishment of the 2021 Long-Term Equity Incentive Plan (“LTIP”).The LTIP is intended to enable us to continue to attract able directors, employees, and consultants and to provide a means whereby thoseindividuals upon whom the responsibilities rest for successful administration and management of the Company, and whose present and potentialcontributions are of importance, can acquire and maintain Common Stock ownership, thereby strengthening their concern for our welfare.The aggregate maximum number of shares of Common Stock (including shares underlying options) that may be issued under the LTIP, pursuantto awards of Restricted Shares or Options, will be limited to 10% of the outstanding shares of Common Stock, which calculation shallbe made on the first trading day of each new fiscal year. For fiscal year 2021, up to 94,372 shares of Common Stock are available forparticipants under the LTIP. The number of shares of Common Stock that are the subject of awards under the LTIP which are forfeited orterminated, are settled in cash in lieu of shares of Common Stock or in a manner such that all or some of the shares covered by an awardare not issued to a participant or are exchanged for awards that do not involve shares will again immediately become available to beissued pursuant to awards granted under the LTIP. If shares of Common Stock are withheld from payment of an award to satisfy tax obligationswith respect to the award, those shares of Common Stock will be treated as shares that have been issued under the LTIP and will not againbe available for issuance under the LTIP. In March of 2021, we authorized the grant and issuance of 53,625 shares of Common Stock underthe 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 ofCommon 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, 2021.

 

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 entered intoemployment agreements with Charles A. Ross, Jr. and Doug E. Grau and on April 9, 2021, we entered into an employment agreement with RonaldA. 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

 

DuringFiscal 2021, we did not have any arrangements for compensation of our directors for any services provided as director, includingservices for committee participation or for special assignments. We did not compensate any of our directors for their services inFiscal 2021. In March of 2022, we instituted board compensation for non-employee directors consisting of: (i) an annual retainerfee of $60,000, payable in shares of our common stock; (ii)a fee of $1,500 for each meeting attended in person and $750 for each meeting attended telephonically; and (iii) that each member of acommittee of the Board shall be paid $750 per committee meeting attended in person and $375 for each meeting attended telephonically.

 

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.

 

Thecalculations in the table below are based on 5,250,632 shares of Common Stock issued and outstanding as of August 2, 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., 909 18thAvenue South, Suite A, Nashville, Tennessee 37212.

 

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    3.37%   176,916    3.37%
Common Stock  Doug E. Grau (1)   148,729    2.83%   148,729    2.83%
Common Stock  Ronald A. Smith (2)   218,125    4.13%   218,125    4.13%
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 (6 persons)      558,770    10.59%   558,770    10.59%

 

5% Stockholders: (number)                       
Common Stock  Armistice Capital Master Fund Ltd.   509,311(3)  9.7%   0    0%

 

* 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.
     
  (3) Armistice Capital Master Fund Ltd. has the right to acquire up to 34,625,825 shares of Common Stock upon exerciseof the Prefunded Warrants and Warrants, subject to the beneficial ownership limitations that the stockholder cannot beneficiallyown in excess of 4.9% (or in certain circumstances, 9.9%) of the issued and outstanding Common Stock of the Company at any time.

 

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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.

 

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

 

RonaldSmith serves as the Company’s COO and on April 9, 2021, the Company entered into an employment agreement with Mr. Smith and authorizedthe issuance of 59,375 shares of Common Stock. On April 9, 2021, the Company entered into a Bridge Loan agreement with Mr. Smith andissued 25,000 warrants to purchase shares of the Company’s Common Stock at an exercise price of $8.00 per share with a five-yearterm. 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-monthPromissory Note dated July 1, 2019. Mr. Smith was issued 12,500 shares of Common Stock as a component of a six-month Promissory Notedated August 29, 2019. Mr. Smith was issued 25,000 shares of Common Stock as a component of a six-month Promissory Note dated September5, 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 February17, 2020. On March 6, 2020, Mr. Smith received 75,000 shares of Common Stock as a conversion of outstanding principal and interest ofPromissory Notes dated February 17, 2020, August 29, 2019, and September 5, 2019. Also on March 6, 2020, Mr. Smith was issued 12,500shares 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 PromissoryNote dated March 26, 2020.

 

DougGrau 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 Companyentered into an amendment to the employment agreement with Doug Grau and authorized the issuance of 50,000 shares of Common Stock toMr. Grau. On August 3, 2021, pursuant to the Company’s Long-Term Incentive Plan, Mr. Grau received 9,416 shares of Common Stock.

 

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

 

KennethYonika joined the board as an independent director of the Company’s Board of Directors upon the closing of the February 2022 offering.In March 2019, Mr. Yonika received 1,250 shares of Common Stock for services.

 

JohnGarrison assumed the role of the Company’s Chief Financial Officer upon the closing of the February 2022 offering. In September2019, Mr. Garrison received a grant of 2,500 shares of Common Stock. On October 1, 2021, pursuant to the Company’s Long-Term IncentivePlan, Mr. Garrison received 6,250 shares of Common Stock. Mr. Garrison passed away on July 30, 2022.

 

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DESCRIPTIONOF OUR SECURITIES

 

General

 

Thefollowing description summarizes the most important terms of our securities. This summary does not purport to be complete and is qualifiedin its entirety by the provisions of our Second Amended and Restated Articles of Incorporation, Certificate of Designation of the SeriesA 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.

 

Asof August 2, 2022 there were 5,250,632 shares of our Common Stock outstanding. Our Board is authorized, without stockholderapproval, except as otherwise may be required by the applicable listing standards of a national securities exchange or any applicablelaws, to issue 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 ofSeries A Preferred Stock and 75,143 shares of Series B Preferred Stock.

 

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SeriesA Preferred Stock

 

NoMaturity, Sinking Fund or Mandatory Redemption

 

TheSeries A Preferred Stock (the “Existing Series A Preferred Stock”) has no stated maturity and will not be subject to anysinking fund or mandatory redemption. Shares of the Existing Series A Preferred Stock will remain outstanding indefinitely unless wedecide to redeem or otherwise repurchase them.

 

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-converted basis.Each Existing Series A Preferred Stock is entitled to cast one thousand (1,000) votes for each share held of the Existing Series A Preferredstock.

 

ConversionRights

 

Whilethe 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.

 

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 more difficult to acquire usby means of a tender offer, a proxy contest or otherwise, or to remove incumbent officers and directors. These provisions, summarizedbelow, would be expected to discourage certain types of takeover practices and takeover bids our Board may consider inadequate and toencourage persons seeking to acquire control of us to first negotiate with us. We believe that the benefits of increased protection ofour ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us will outweigh the disadvantagesof discouraging takeover or acquisition proposals because, among other things, negotiation of these proposals could result in an improvementof their terms.

 

ExistingWarrants

 

Overview.The following summary of certain terms and provisions of the Existing Warrants is not complete and is subject to, and qualified in itsentirety by, the provisions of the applicable warrant agency agreement between us and Action Stock Transfer, as the Warrant Agent, andthe form of warrant, both of which are filed as exhibits to the registration statement of which this prospectus is a part. Prospectiveinvestors should carefully review the terms and provisions set forth in the applicable warrant agency agreement, including the annexesthereto, and form of warrant.

 

TheExisting Warrants entitle the registered holder to purchase shares of Common Stock at a price equal to $2.01 per share, subject toadjustment as discussed below, immediately following the issuance of such warrant and terminating at 5:00 p.m., New York City time, fiveyears after their original issuance.

 

Theexercise price and number of shares of Common Stock issuable upon exercise of the Existing Warrants may be adjusted in certain circumstances,including in the event of a stock dividend or recapitalization, reorganization, merger or consolidation. However, the Existing Warrantswill not be adjusted for issuances of Common Stock at prices below its exercise price.

 

Exercisability.The Existing Warrants are exercisable at any time after their original issuance and at any time up to the date that is five (5) yearsafter their original issuance. The Existing Warrants may be exercised upon surrender of the Warrant certificate on or prior to the expirationdate at the offices of the Warrant Agent, with the exercise form on the reverse side of the Warrant certificate completed and executedas indicated, accompanied by full payment of the exercise price, by certified or official bank check payable to us, for the number ofExisting Warrants being exercised. Under the terms of the applicable warrant agreement, we must use our best efforts to maintain theeffectiveness of the registration statement and current prospectus relating to Common Stock issuable upon exercise of the Existing Warrantsuntil the expiration of the Existing Warrants. If we fail to maintain the effectiveness of the registration statement and current prospectusrelating to the shares of Common Stock issuable upon exercise of the Existing Warrants, the holders of the Existing Warrants shall havethe right to exercise the Existing Warrants solely via a cashless exercise feature provided for in the Existing Warrants, until suchtime as there is an effective registration statement and current prospectus.

 

55
 

 

ExerciseLimitation. A holder may not exercise any portion of an Existing Warrant to the extent that the holder, together with its affiliatesand 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 determined in accordance with the terms of the Warrant, except that upon prior notice from the holderto us, the holder may waive such limitation up to a percentage not in excess of 9.99%.

 

ExercisePrice. The exercise price per whole share of shares of Common Stock purchasable upon exercise of the Existing Warrants is $2.01.The exercise price is subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stockcombinations, reclassifications or similar events affecting our shares of Common Stock and also upon any distributions of assets, includingcash, stock or other property to our stockholders.

 

FractionalShares. No fractional shares of Common Stock will be issued upon exercise of the Existing Warrants. As to any fraction of a sharewhich the holder would otherwise be entitled to purchase upon such exercise, the Company will round up or down, as applicable, to thenearest whole share.

 

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

 

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

 

FundamentalTransactions. In the event of a fundamental transaction, as described in the Existing Warrants and generally including any reorganization,recapitalization or reclassification of our shares of Common Stock, the sale, transfer or other disposition of all or substantially allof our properties or assets, our consolidation or merger with or into another person, the acquisition of more than 50% of our outstandingshares of Common Stock, or any person or group becoming the beneficial owner of 50% of the voting power represented by our outstandingCommon Stock, the holders of the Existing Warrants will be entitled to receive the kind and amount of securities, cash or other propertythat the holders would have received had they exercised the Existing Warrants immediately prior to such fundamental transaction.

 

Rightsas a Stockholder. The Warrant holders do not have the rights or privileges of holders of shares of Common Stock or any voting rightsuntil they exercise their Existing Warrants and receive shares of Common Stock. After the issuance of shares of Common Stock upon exerciseof the Existing Warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.

 

GoverningLaw. The Existing Warrants and the applicable warrant agency agreement are governed by New York law.

 

TransferAgent, Warrant Agent and Registrar

 

ActionStock Transfer will act as the registrar and transfer agent. The principal business address of 2469 E. Fort Union Blvd., Suite 214, SaltLake City, UT 84121.

 

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SELLING STOCKHOLDER

 

The35,135,136 shares of our Common Stock being offered by the Selling Stockholder include: (i) 509,311 shares of Common Stock, (ii)11,202,401 shares of Common Stock issuable upon exercise of the Prefunded Warrants issued to the Selling Stockholder on July 7, 2022pursuant to the Purchase Agreement and (iii) 23,423,424 shares of Common Stock issuable upon exercise of the Warrants issued to the SellingStockholder on July 7, 2022 pursuant to the Purchase Agreement. For additional information regarding the issuance of the securities,see “Private Placement of Securities” above. We are registering the shares of our Common Stock in order to permitthe Selling Stockholder to offer the shares for resale from time to time. Except as otherwise described in the footnotes to the tablebelow and for the ownership of the registered shares issued pursuant to the Purchase Agreement, neither the Selling Stockholder nor anyof the persons that control them has had any material relationships with us or our affiliates within the past three (3) years.

 

Thetable below lists the Selling Stockholder and other information regarding the beneficial ownership (as determined under Section 13(d)of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (and the rules and regulations thereunder) of theshares of our Common Stock by the Selling Stockholder.

 

Thesecond column lists the number of shares of our Common Stock beneficially owned by each Selling Stockholder before this Offering (includingshares which the Selling Stockholder has the right to acquire within 60 days, including upon conversion of any convertible securities).

 

Thethird column lists the shares of our Common Stock being offered by this prospectus by each Selling Stockholder.

Thefourth and fifth columns list the number of shares of Common Stock beneficially owned by each Selling Stockholder and their percentageownership after the Offering (including shares which the Selling Stockholder has the right to acquire within 60 days, including uponconversion of any convertible securities), assuming the sale of all of the shares offered by each Selling Stockholder pursuant to thisprospectus.

 

Underthe terms of the Prefunded Warrants and the Warrants, a Selling Stockholder may not convert the Prefunded Warrants or exercise the Warrantsto the extent such conversion or exercise would cause such Selling Stockholder, together with any other person with which the SellingStockholder is considered to be part of a group under Section 13 of the Exchange Act or with which the Selling Stockholder otherwisefiles reports under Section 13 and/or 16 of the Exchange Act, to beneficially own a number of shares of Common Stock which exceeds 4.99%or 9.99%, as applicable, of the Equity Interests of a class that is registered under the Exchange Act that is outstanding at such time.The number of shares in the third column does not reflect this limitation.

 

Theamounts and information set forth below are based upon information provided to us by the Selling Stockholder as of August 2, 2022, exceptas otherwise noted below. The Selling Stockholder may sell all or some of the shares of Common Stock it is offering, and may sell, unlessindicated otherwise in the footnotes below, shares of our Common Stock otherwise than pursuant to this prospectus. The tables below assumethe Selling Stockholder sell all of the shares offered by them in offerings pursuant to this prospectus, and do not acquire any additionalshares. We are unable to determine the exact number of shares that will actually be sold or when or if these sales will occur.

 

Selling Stockholder  Number of Shares
Owned Before
Offering
   Shares Offered
Hereby
   Number of Shares
Owned After
Offering (1)
  

Percentage of Shares Beneficially Owned After Offering

(1)

 
Armistice Capital Master Fund Ltd. (2)(3)(4)   35,135,136    35,135,136        0         0%

 

(1) Assumes that all securities registered within this offering will be sold.
   
(2) Issued pursuant to the Private Placement.
   
(3) Includes (i) 509,311 shares of Common Stock, (ii) 11,202,401 shares of Common Stock issuable upon exercise of the Prefunded Warrants and (iii) 23,423,424 shares of Common Stock issuable upon exercise of the Warrants, all of which are directly held by Armistice Capital Master Fund Ltd. (the “Master Fund”), a Cayman Islands exempted company, and may be deemed to be indirectly beneficially owned by Armistice Capital, LLC (“Armistice”), as the investment manager of the Master Fund; and (ii) Steven Boyd, as the Managing Member of Armistice Capital. Armistice and Steven Boyd disclaim beneficial ownership of the reported securities except to the extent of their respective pecuniary interest therein. The Pre-Funded Warrants and Warrants are both subject to certain beneficial ownership limitations that prohibit the Master Fund from exercising any portion of them if, following such exercise, the Master Fund’s ownership of our Common Stock would exceed the relevant warrant’s ownership limitation. The address of the Master Fund is c/o Armistice Capital, LLC, 510 Madison Avenue, 7th Floor, New York, NY 10022.
   
(4) The exercise of the Prefunded Warrant Shares and Warrant Shares are subject to ownership limitations so that the selling stockholder cannot beneficially own in excess of 4.9% (or in certain circumstances, 9.9%) of the issued and outstanding Common Stock of the Company at any time.

 

57
 

 

PLANOF DISTRIBUTION

 

TheSelling Stockholder of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell anyor all of their securities covered hereby on the Nasdaq Capital Market or any other stock exchange, market or trading facility on whichthe securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Stockholder may useany one or more of the following methods when selling securities:

 

  ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
     
  block trades in which the broker-dealer will attempt to sell the securities 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;
     
  settlement of short sales;
     
  in transactions through broker-dealers that agree with the Selling Stockholder to sell a specified number of such securities at a stipulated price per security;
     
 

through the writing or settlement of options or other hedging transactions, whether through an option

exchange or otherwise;

     
  a combination of any such methods of sale; or
     
  any other method permitted pursuant to applicable law.

 

TheSelling Stockholder may also sell securities under Rule 144 or any other exemption from registration under the Securities Act, if available,rather than under this prospectus.

 

Broker-dealersengaged by the Selling Stockholder may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissionsor discounts from the Selling Stockholder (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser)in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not inexcess of a customary brokerage commission in compliance with FINRA Rule 2121; and in the case of a principal transaction a markup ormarkdown in compliance with FINRA Rule 2121.

 

Inconnection with the sale of the securities or interests therein, the Selling Stockholder may enter into hedging transactions with broker-dealersor other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions theyassume. The Selling Stockholder may also sell securities short and deliver these securities to close out their short positions, or loanor pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholder may also enter into optionor other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require thedelivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealeror other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

 

TheSelling Stockholder and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters”within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealersor agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discountsunder the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding,directly or indirectly, with any person to distribute the securities.

 

TheCompany is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Companyhas agreed to indemnify the Selling Stockholder against certain losses, claims, damages and liabilities, including liabilities underthe Securities Act.

 

Weagreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholderwithout registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement forthe Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similareffect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other ruleof similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicablestate securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registeredor qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and iscomplied with.

 

Underapplicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneouslyengage in market making activities with respect to the Common Stock for the applicable restricted period, as defined in Regulation M,prior to the commencement of the distribution. In addition, the Selling Stockholder will be subject to applicable provisions of the ExchangeAct and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the CommonStock by the Selling Stockholder or any other person. We will make copies of this prospectus available to the Selling Stockholder andhave informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (includingby compliance with Rule 172 under the Securities Act).

 

58
 

 

LEGALMATTERS

 

Thevalidity of the Securities offered hereby, and other certain legal matters, will be passed upon for us by Lucosky Brookman, LLP. We havefiled a copy of this opinion as an exhibit to the registration statement in which this prospectus is included.

 

EXPERTS

 

Theaudited consolidated financial statements of the Company and its subsidiaries as of and for the years ended December 31, 2021 and 2020,included in this prospectus have been so included in reliance on the report of BF Borgers CPA, P.C., independent registered public accountingfirm, upon the authority of said firm as experts in accounting and auditing.

 

WHEREYOU CAN FIND MORE INFORMATION

 

Wehave filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of Common Stock offeredby this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all the information setforth in the registration statement, some of which is contained in exhibits to the registration statement as permitted by the rules andregulations of the SEC. For further information with respect to us, the Common Stock, we refer you to the registration statement, includingthe exhibits filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contractor any other documents are summaries only of the material provisions of such documents, and each statement is qualified in its entiretyby reference to the full text of the applicable document filed with the SEC.

 

Wefile annual reports, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains a websitethat contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SECat www.sec.gov.

 

Wealso maintain a website at www.americanrebel.com. All of our reports filed with the SEC (including Annual Reports on Form 10-K, QuarterlyReports on Form 10-Q, Current Reports on Form 8-K and proxy statements) are accessible through the Investor Relations section of ourwebsite, free of charge, as soon as reasonably practicable after electronic filing. The reference to our website in this prospectus isan inactive textual reference only and is not a hyperlink. The contents of our website are not part of this prospectus, and you shouldnot consider the contents of our website in making an investment decision with respect to our securities.

 

59
 

 

AMERICANREBEL HOLDINGS, INC.

 

INDEXTO CONSOLIDATED FINANCIAL STATEMENTS

 

2021Audited Financial Statements  
Report of Independent Registered Public Accounting Firm F-2
Consolidated Balance Sheets as of December 31, 2021, and 2020 F-3
Consolidated Statements of Operations for the years ended December 31, 2021, and 2020 F-4
Consolidated Statement of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2021, and 2020 F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2021, and 2020 F-6
Notes to Consolidated Financial Statements F-7

 

Interim Financial Statements for the three months ended March 31, 2022 (unaudited):  
Condensed Consolidated Balance Sheets as of March 31, 2022 (unaudited) and December 31, 2021 F-19
Condensed Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2022, and 2021 F-20
Condensed Consolidated Statements of Changes in Stockholders’ Deficit (unaudited) for the three months ended March 31, 2022, and 2021 F-21
Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2022, and 2021 F-22
Notes to Condensed Consolidated Financial Statements (unaudited) F-23

 

F-1
 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTINGFIRM

 

To the Board of Directors and Shareholders ofAmerican Rebel Holdings, Inc.:

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidatedbalance sheets of American Rebel Holdings, Inc. (the “Company”) as of December 31, 2021, and 2020 and the related consolidatedstatements of operations, shareholders’ equity, and cash flows for the two years in the period ended December 31, 2021, and therelated notes and schedules (collectively referred to as the financial statements). In our opinion, the financial statements presentfairly, in all material respects, the financial position of the Company as of December 31, 2021, and 2020, and the results of its operationsand its cash flows for the two years in the period ended December 31, 2021, and 2020, in conformity with accounting principles generallyaccepted in the United States of America.

 

Going Concern Matter

 

The accompanying financial statements have beenprepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Companyhas suffered recurring losses from operations that raises substantial doubt about its ability to continue as a going concern. Management’splans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might resultfrom the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibilityof the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on ouraudit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and arerequired to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules andregulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with thestandards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engagedto perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understandingof internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’sinternal control over financial reporting. Accordingly, we express no such opinion.

 

Our audit included performing procedures to assessthe risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respondto those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financialstatements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well asevaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.

 

Critical Audit Matter

 

Critical audit mattersare matters arising from the current-period audit of the financial statements that were communicated or required to be communicated tothe audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved ourespecially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

 

/s/ BF Borgers CPA PC

 

BF Borgers CPA PC

 

We have served as the Company’s auditorsince 2020

 

Lakewood, CO

March 31, 2022

 

F-2
 

 

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.

 

F-3
 

 

AMERICANREBEL HOLDINGS, INC.

AUDITEDCONSOLIDATED STATEMENTS OF OPERATIONS