NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2022
(unaudited)
NOTE
1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
American
Rebel Holdings, Inc. (the “Company”) operates primarily as a designer and marketer of branded safes and personal security,
self-defense products. Additionally, the Company designs and produces branded apparel and other accessories.
The
Company promotes and sells its products primarily through a growing network of dealers, in select regional retailers and local specialty
safe, sporting goods, hunting and firearms stores, as well as online, including its website and e-commerce platforms such as Amazon.com.
The
information on our website does not constitute a part of this report.
Listing
and reorganization
The
Company was incorporated on December 15, 2014, under the laws of the State of Nevada, as CubeScape, Inc. The Company filed a registration
statement on Form S-1, which was declared effective by the United States Securities and Exchange Commission (the “SEC”) on October 14, 2015. Twenty-six (26)
investors invested at a price of $0.80 per share for a total of $60,000. The direct public offering closed on December 11, 2015.
On
January 5, 2017, the Company amended its articles of incorporation and changed its name to American Rebel Holdings, Inc. The Company
completed a business combination with its majority stockholder, American Rebel, Inc. on June 19, 2017. As a result, American Rebel, Inc.
became a wholly owned subsidiary of the Company.
The
aforementioned acquisition of American Rebel, Inc. was accounted for as a reverse merger, which involved issuance by the Company of 217,763
shares of its common stock and 6,250 warrants to purchase shares of common stock to shareholders of American Rebel, Inc., and cancelled
112,500 shares of common stock previously owned by American Rebel, Inc.
For
purposes of this Quarterly Report on Form 10-Q, “American Rebel” “we,” “our,” “us,” or
similar references refers to American Rebel Holdings, Inc. and its consolidated wholly-owned subsidiary, unless the context requires otherwise.
Interim
Financial Statements and Basis of Presentation
The
accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations
of the SEC set forth in Article 8 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by the U.S. GAAP for complete financial statements. The unaudited interim
financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management,
necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative
of the results for the full fiscal year. These financial statements should be read along with the Annual Report filed on Form 10-K of
the Company for the period ended December 31, 2021 and notes thereto contained.
Principles
of Consolidation
The
Consolidated Financial Statements include the accounts of the Company and its majority-owned subsidiary, American Rebel, Inc., incorporated
in Nevada. All significant intercompany accounts and transactions have been eliminated.
Year
end
The
Company’s year-end is December 31.
Cash
and cash equivalents
For
the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered
to be cash equivalents. The carrying value of these investments approximates fair value.
Inventory
and Inventory Deposits
Inventory
consists of backpacks, jackets, safes and accessories manufactured to our design and held for resale and are carried at the lower of
cost (First-in, First-out Method) or market value. The Company determines the estimate for the reserve for slow moving or obsolete inventories
by regularly evaluating individual inventory levels, projected sales and current economic conditions. The Company also makes deposit
payments on inventory to be manufactured that are carried separately until the goods are received into inventory.
Fixed
assets and depreciation
Property
and equipment are stated at cost net of accumulated depreciation. Additions and improvements are capitalized while ordinary maintenance
and repair expenditures are charged to expense as incurred. Depreciation is recorded by the straight-line method over the estimated useful
life of the asset, which ranges from five to seven years.
Revenue
recognition
In
accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), revenues are recognized when control of
the promised goods or services is transferred to our clients, in an amount that reflects the consideration to which we expect to be entitled
in exchange for those goods and services. To achieve this core principle, we apply the following five steps: (1) Identify the contract
with a client; (2) Identify the performance obligations in the contract; (3) Determine the transaction price; (4) Allocate the transaction
price to performance obligations in the contract; and (5) Recognize revenues when or as the company satisfies a performance obligation.
These
steps are met when as order is received, a price agreed, and the product shipped or delivered to that customer.
Advertising
costs
Advertising
costs are expensed as incurred; Marketing costs which we consider to be advertising costs incurred were $149,249 and $57,774 for the three-month
periods ended June 30, 2022, and 2021, respectively and $230,219 and $104,114 for the six-month periods then ended.
Fair
Value of Financial Instruments
Fair
value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June
30, 2022, and December 31, 2021, respectively. The respective carrying value of certain on-balance-sheet financial instruments approximated
their fair values. These financial instruments include cash, and accounts payable. Fair values were assumed to approximate carrying values
for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on
demand.
Level
1: The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with
the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions
involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially
physical assets, actually trade in active markets.
Level
2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they
may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs
that can be applied in three situations.
Level
3: If inputs from levels 1 and 2 are not available, the Financial Accounting Standards Board (the “FASB”) acknowledges that
fair 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 measurement
date”. Earlier in the standard, FASB explains that “observable inputs” are gathered from sources other than the reporting
company and that they are expected to reflect assumptions made by market participants.
Stock-based
compensation
The
Company records stock-based compensation in accordance with the guidance in ASC Topic 505 and 718 which requires the Company to recognize
expense related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions
using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes
the cost of all share-based awards on a graded vesting basis over the vesting period of the award.
The
Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance
with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the
consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value
of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment
or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.
Earnings
per share
The
Company follows ASC Topic 260 to account for earnings per share. Basic earnings per common share (“EPS”) calculations are
determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings
per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common
share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the
computation.
Income
taxes
The
Company follows ASC Topic 740 for recording provision for income taxes. Deferred tax assets and liabilities are computed based upon the
difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable
when the related asset or liability is expected to be realized or settled. Deferred income tax expense or benefit is based on the changes
in the asset or liability for each period. If available evidence suggests that it is more likely than not that some portion or the entire
deferred tax asset will not be realized, a valuation allowance is required to reduce the deferred tax asset to the amount that is more
likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income tax in the
period of change.
Deferred
income tax may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes
in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities
to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified
as current or non-current depending on the periods in which the temporary differences are expected to reverse.
The
Company applies a more-likely-than-not recognition threshold for all tax uncertainties. ASC Topic 740 only allows the recognition of
tax benefits that have a greater than fifty percent likelihood of being sustained upon examination by taxing authorities. As of June
30, 2022 and December 31, 2021, the Company reviewed its tax positions and determined there were no outstanding, or retroactive tax positions
with less than a 50% likelihood of being sustained upon examination by the taxing authorities, therefore this standard has not had a
material effect on the Company.
The
Company does not anticipate any significant changes to its total unrecognized tax benefits within the next 12 months.
The
Company classifies tax-related penalties and net interest as income tax expense. For the three-month and six-month periods ended June
30, 2022, and 2021, respectively, no income tax expense has been recorded.
Use
of estimates
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ
significantly from those estimates.
Right
of Use Assets and Lease Liabilities
In
February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The standard requires lessees to recognize almost all leases on the
balance sheet as a Right-of-Use (“ROU”) asset and a lease liability and requires leases to be classified as either an operating
or a finance type lease. The standard excludes leases of intangible assets or inventory. The standard became effective for the Company
beginning January 1, 2019. The Company adopted ASC 842 using the modified retrospective approach, by applying the new standard to all
leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after January
1, 2019, are presented under ASC 842, while prior period amounts have not been adjusted and continue to be reported in accordance with
our historical accounting under ASC 840. The Company elected the package of practical expedients permitted under the standard, which
also allowed the Company to carry forward historical lease classifications. The Company also elected the practical expedient related
to treating lease and non-lease components as a single lease component for all equipment leases as well as electing a policy exclusion
permitting leases with an original lease term of less than one year to be excluded from the ROU assets and lease liabilities.
Under
ASC 842, the Company determines if an arrangement is a lease at inception. ROU assets and liabilities are recognized at commencement
date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments
that are fixed and determinable at the time of commencement. As most of the Company’s leases do not provide an implicit rate, the
Company estimated the incremental borrowing rate in determining the present value of lease payments. The ROU asset also includes any
lease payments made prior to commencement and is recorded net of any lease incentives received. The Company’ lease terms may include
options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.
Operating
leases are included in operating lease Right-of-Use assets and operating lease liabilities, current and non-current, on the Company’s
consolidated balance sheets.
Recent
pronouncements
The
Company has implemented all new accounting pronouncements that are in effect and is evaluating any that may impact its financial statements.
The Company does not believe that there are any new accounting pronouncements that have been issued that might have a material impact
on its financial position or results of operations.
NOTE
2 – GOING CONCERN
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates
the recoverability of assets and the satisfaction of liabilities in the normal course of business. As noted above, the Company is in
the development stage and, accordingly, its revenue from its planned operations does not cover its operating expenses. Since
inception, the Company has been engaged in financing activities and executing its business plan of operations and incurring costs
and expenses related to developing products and market identity, obtaining inventory, preparing for public product launch and
ultimately selling products. As a result, the Company incurred net income (losses) for the six months ended June 30, 2022 and 2021
of ($4,230,329) and ($3,463,310),
respectively. The Company’s accumulated deficit was ($31,199,986)
as of June 30, 2022 and ($26,969,657)
as of December 31, 2021. The Company’s working capital was $3,155,898
as of June 30, 2022 compared to a deficit of ($4,171,277)
as of December 31, 2021. The increase in working capital from December 31, 2021 to June 30, 2022 is primarily due to the Company
closing on its registered public offering in February 2022. Until recently the Company’s activities since inception
have been sustained through equity and debt financing and the deferral of payments on accounts payable and other
expenses.
The
ability of the Company to continue as a going concern is dependent upon its ability to raise capital from the sale of its equity and,
ultimately, the achievement of significant operating revenues. Management believes holders of its warrants will execute their outstanding
warrants generating additional investment capital for the Company. As of June 30, 2022, there were 700,838 warrants with an exercise
price of $8.00 per share, and 3,287,123 warrants with an exercise price of $2.01 per share, which was adjusted downward from $5.1875 due to a dilutive issuance on July 7, 2022. Management is in discussion with its
investment bank, EF Hutton a division of Benchmark Investments, LLC and broker dealers regarding additional funding initiatives.
Management
believes sufficient funding can be secured through the obtaining of loans, as well as future offerings of its preferred and common stock
to institutional and other investors. However, no assurance can be given that the Company will obtain this additional working capital,
or if obtained, that such funding will not cause substantial dilution to its stockholders. If the Company is unable to secure such additional
funds from these sources, it may be forced to change or delay its business plan rollout.
These
financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts
and classification of liabilities that might result from this uncertainty.
NOTE
3 – INVENTORY AND DEPOSITS
Inventory
and deposits include the following:
SCHEDULE OF INVENTORY AND DEPOSITS
| |
June 30, 2022 (unaudited) | | |
December 31, 2021 (audited) | |
| |
| | |
| |
Inventory – finished goods | |
$ | 826,494 | | |
$ | 685,854 | |
Inventory deposits | |
| 224,894 | | |
| - | |
Total Inventory and deposits | |
$ | 1,051,388 | | |
$ | 685,854 | |
NOTE
4 – PROPERTY AND EQUIPMENT
Property
and equipment include the following:
SCHEDULE OF PROPERTY AND EQUIPMENT
|
|
June
30,
2022
(unaudited) |
|
|
December
31,
2021
(audited) |
|
|
|
|
|
|
|
|
Marketing
equipment |
|
$ |
32,261 |
|
|
$ |
32,261 |
|
Vehicles |
|
|
291,537 |
|
|
|
277,886 |
|
Property
and equipment gross |
|
|
323,798 |
|
|
|
310,147 |
|
Less:
Accumulated depreciation |
|
|
(310,602 |
) |
|
|
(309,247 |
) |
Net
property and equipment |
|
$ |
13,196 |
|
|
$ |
900 |
|
For
the six months ended June 30, 2022, and 2021 we recognized $1,355
and $1,798
in depreciation expense, respectively. We depreciate
these assets over a period of sixty (60) months which has been deemed their useful life.
NOTE
5 – RELATED PARTY NOTE PAYABLE AND RELATED PARTY TRANSACTIONS
During
the year ended December 31, 2016, the Company acquired three vehicles from related parties and assumed the debt secured by each one of
the vehicles. Accordingly, the recorded value for each vehicle was the total debt assumed from each related loan, for a total of $277,886.
Charles
A. Ross, Jr. serves as the Company’s CEO. Compensation for Mr. Ross was $358,000 and $90,000, respectively for the six months ended
June 30, 2022, and 2021. Compensation for the six months ended June 30, 2022 includes a bonus approved by the Board of Directors.
Doug
Grau serves as the Company’s President. Compensation for Mr. Grau was $150,000 and $60,000, respectively for the six months ended
June 30, 2022, and 2021. Compensation for the six months ended June 30, 2022 includes a bonus approved by the Board of Directors.
NOTE
6 – NOTES PAYABLE – NON-RELATED PARTY
Effective
January 1, 2016, the Company acquired a vehicle from a related party in exchange for the assumption of the liability related
to this vehicle. The liability assumed is as follows at June 30, 2022 and December 31, 2021.
SCHEDULE OF NOTES PAYABLE TO NON-RELATED PARTIES
| |
June 30, | | |
December 31, | |
| |
2022 | | |
2021 | |
| |
(unaudited) | | |
(audited) | |
| |
| | |
| |
Loan secured by a tour bus, monthly payments of $1,426 including interest at 12% per annum through January 2023 when the remaining balance is payable. | |
$ | 4,385 | | |
$ | 12,939 | |
| |
| | | |
| | |
Total recorded as current liability | |
$ | 4,385 | | |
$ | 12,939 | |
Current
and long-term portion. Total loan balance is reported as current due to the loan is to be repaid within one
year.
NOTE
7 – NOTES PAYABLE – WORKING CAPITAL
During
the six months ending June 30, 2022, the Company and the Company’s wholly owned operating subsidiary completed the sale of
several short-term notes under similar terms as its other short-term notes totalling $60,000.
The notes are secured by a pledge of certain items of the Company’s current inventory and the chief executive officer’s
personal guaranty.
During
the six months ending June 30, 2022, the Company and the Company’s wholly-owned operating subsidiary repaid $2,541,634
of these short term notes and successfully completed the conversion of short term notes with a face value of $1,950,224
and accrued interest into shares of common stock with a fair value of $2,803,632,
resulting in a Loss on extinguishment of debt of $1,376,756. The successful completion of the conversion of short term notes and accrued interest was done in conjunction with
the successful registered public offering in February 2022.
At June 30, 2022, and December 31, 2021, the outstanding balance due on working capital notes was $605,037 and $4,952,326, respectively.
NOTE
8 – INCOME TAXES
At
June 30, 2022 and December 31, 2021, the Company had a net operating loss carryforward of $31,199,986
and $26,969,657, respectively, which
begins to expire in 2034.
Components
of net deferred tax asset, including a valuation allowance, are as follows:
SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES
| |
June 30, 2022 (unaudited) | | |
December 31, 2021 (audited) | |
Deferred tax asset: | |
| | | |
| | |
Net operating loss carryforward | |
$ | 6,466,694 | | |
$ | 5,663,628 | |
Total deferred tax asset | |
| 6,466,694 | | |
| 5,663,628 | |
Less: Valuation allowance | |
| (6,466,694 | ) | |
| (5,663,628 | ) |
Net deferred tax asset | |
$ | - | | |
$ | - | |
Valuation
allowance for deferred tax assets as of June 30, 2022, and December 31, 2021 was $6,466,694 and $5,663,628, respectively. In assessing
the recovery of the deferred tax asset, management considers whether it is more likely than not that some portion or the entire deferred
tax asset will not be realized. The ultimate realization of the deferred tax asset is dependent upon the generation of future taxable
income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future
deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. As a result, management
determined it was more likely than not deferred tax assets will not be realized as of June 30, 2022, and December 31, 2021, and recognized
100% valuation allowance for each period.
Reconciliation
between the statutory rate and the effective tax rate for both periods and as of December 31, 2021:
SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION
| |
| | |
Federal statutory rate | |
| (21.0 | )% |
State taxes, net of federal benefit | |
| (0.0 | )% |
Change in valuation allowance | |
| 21.0 | % |
Effective tax rate | |
| 0.0 | % |
NOTE
9 – SHARE CAPITAL
The
Company is authorized to issue 600,000,000 shares of its $0.001 par value common stock and 10,000,000 shares of its $0.001 par value
preferred stock.
On
February 7, 2022, the Company effectuated a reverse split of its issued and outstanding shares of common stock at a ratio of 1-for-80.
The share numbers and pricing information in this report are adjusted to reflect the reverse stock split.
Common
stock and preferred stock
On
February 3, 2022, multiple Series B Convertible Preferred stockholders converted 201,358
shares of their Series B Convertible Preferred Stock to 251,698
shares of common stock of the Company.
On
February 3, 2022, the Company converted two outstanding notes into 186,067 shares of common stock of the Company.
On
February 10, 2022 the Company received an equity investment of $10,500,000
to purchase 2,530,121
shares of the Company’s common stock through a registered public offering at $4.15
per share.
At
June 30, 2022 and December 31, 2021, there were 4,741,321 and 1,597,370 shares of common stock issued and outstanding, respectively;
and 75,143 and 276,501 shares of Series B preferred stock issued and outstanding, respectively, and 100,000 and 100,000
shares of its Series A preferred stock issued and outstanding, respectively.
NOTE
10 – WARRANTS AND OPTIONS
As
of June 30, 2022, there were 4,365,446 warrants issued and outstanding. As of December 31, 2021, there were 701,776 warrants outstanding
to acquire additional shares of common stock.
The
Company evaluates outstanding warrants as derivative liabilities and will recognize any changes in the fair value through earnings. The
Company determined that the warrants have an immaterial fair value at June 30, 2022. The warrants do not trade in a highly active securities
market, and as such, the Company estimated the fair value of these common stock equivalents using Black-Scholes and the following assumptions:
Expected
volatility was based primarily on historical volatility. Historical volatility was computed using daily pricing observations for recent
periods. The Company believes this method produced an estimate that was representative of the Company’s expectations of future
volatility over the expected term which due to their maturity period as expiry, it was three years. The Company had no reason to believe
future volatility over the expected remaining life of these common stock equivalents was likely to differ materially from historical
volatility. Expected life was based on three years due to the expiry of maturity. The risk-free rate was based on the U.S. Treasury rate
that corresponded to the expected term of the common stock equivalents.
SCHEDULE OF FAIR VALUE MEASUREMENT
| |
June 30, 2022 (unaudited) | | |
December 31, 2021 (audited) | |
| |
| | |
| |
Stock Price | |
$ | 1.80 | | |
$ | 5.68 | |
Exercise Price | |
$ | 8.00 | | |
$ | 8.00 | |
Term (expected in years) | |
| 5.0 | | |
| 3.2 | |
Volatility | |
| 148.26 | % | |
| 203.44 | % |
Annual Rate of Dividends | |
| 0.0 | % | |
| 0.0 | % |
Risk Free Rate | |
| 2.32 | % | |
| 1.52 | % |
Stock
Purchase Warrants
The
following table summarizes all warrant activity for the year ended December 31, 2021, and the six months ended June 30, 2022.
SCHEDULE OF WARRANT ACTIVITY
| |
Shares | | |
Weighted-
Average
Exercise
Price
Per
Share | | |
Remaining
term | | |
Intrinsic
value | |
| |
| | |
| | |
| | |
| |
Outstanding and
Exercisable at December 31, 2020 | |
| 43,688 | | |
$ | 20.80 | | |
| 3.48
years | | |
| - | |
Granted | |
| 662,713 | | |
$ | 8.00 | | |
| 2.95
years | | |
| - | |
Exercised | |
| | | |
| | | |
| - | | |
| - | |
Expired | |
| (4,625 | ) | |
| - | | |
| - | | |
| - | |
Outstanding and Exercisable
at December 31, 2021 | |
| 701,776 | | |
$ | 8.80 | | |
| 2.95
years | | |
| - | |
Granted | |
| 2,909,639 | | |
$ | 5.1875 | | |
| 5.00
years | | |
| - | |
Granted in Debt Conversion | |
| 377,484 | | |
$ | 5.1875 | | |
| 5.00
years | | |
| | |
Granted Prefunded | |
| 377,484 | | |
$ | 0.01 | | |
| 5.00
years | | |
| | |
Exercised | |
| - | | |
| - | | |
| - | | |
| - | |
Expired | |
| (938 | ) | |
| - | | |
| - | | |
| - | |
Outstanding and Exercisable
at June 30, 2022 | |
| 4,365,446 | | |
$ | 5.05 | | |
| 4.22
years | | |
| - | |
NOTE
11 – COMMITMENTS AND CONTINGENCIES
Rental
Payments under Non-cancellable Operating Leases
The
Company has a lease for its sales office and showroom in Lenexa, Kansas which expires in January 2026, and an annually renewable lease
for manufacturing and warehouse space in Chanute, Kansas. On
April 6, 2022, the Company entered into a two-year lease agreement for approximately 1,750 square feet of office space in Nashville,
Tennessee, at a cost of $4,750 per month.
The
following is a schedule, by calendar year, of the future minimum rental payments required under the lease:
SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASE
Year ended December 31, | | |
| |
| | |
| |
2022 | | |
| 169,096 | |
2023 | | |
| 76,628 | |
2024 | | |
| 77,681 | |
2025 | | |
| 78,755 | |
2026 | | |
| 19,689 | |
Total | | |
$ | 421,848 | |
Rent
expense totalled approximately $112,000
and $100,000 for the six-month
periods ended June 30, 2022, and 2021, respectively.
NOTE
12 – SUBSEQUENT EVENTS
The
Company evaluated all events that occurred after the balance sheet date of June 30, 2022, through the date the financial statements were
issued and determined that there were the following subsequent events:
On
July 7, 2022, we closed on an underwritten public offering of 11,711,712 units (the “Common Units”), at a price to the public
of $1.11 per Common Unit, for aggregate gross proceeds of approximately $12.9 million, prior to deducting underwriting discounts, commissions,
and other estimated offering expenses. Each Common Unit consisted of one share of common stock (“Common Stock”) and two warrants
to purchase one share each 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 are exercisable immediately,
expire five years from the date of issuance and have an exercise price of $0.86 per share.
On
June 29, 2022, the Company entered into a stock and membership interest purchase agreement with Champion Safe Co., Inc. (“Champion
Safe”), Superior Safe, LLC (“Superior Safe”), Safe Guard Security Products, LLC (“Safe Guard”), Champion
Safe 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 Mr. Ray Crosby (“Seller”) (the “Champion Purchase Agreement”), pursuant
to which the Company agreed to acquire all of the issued and outstanding capital stock and membership interests of the Champion Entities
from the Seller.
The
closing of the acquisition occurred on July 29, 2022. Under the terms of the Champion Purchase Agreement, the Company paid the Seller
(i) cash consideration in the amount of $9,150,000.00, along with (ii) cash deposits in the amount of $350,000.00, and (iii) reimbursed Seller
for $397,420.32 of agreed upon acquisitions and equipment purchases completed by the Seller and the Champion Entities since June 30,
2021.
AMERICAN
REBEL HOLDINGS, INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2022
UNAUDITED
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Introduction
The
following unaudited pro forma condensed combined financial information presents the unaudited pro forma condensed combined balance sheet
and unaudited pro forma condensed combined statements of operations based upon the combined historical financial statements of American
Rebel Holdings, Inc. (the “Company”) and Champion Safe Co., Inc., Superior Safe, LLC, Safe Guard Security Products, LLC,
Champion Safe De Mexico, S.A. de C.V. (collectively “Champion”), after giving effect to the consummation of the acquisition
transaction contemplated by the Champion Purchase Agreement, dated June 29, 2022 (with an acquisition date of July 29, 2022 as disclosed
on Current Report Form 8-K, dated August 4, 2022), by and among the Company and Champion, and the related adjustments described in the
accompanying notes. The transaction is accounted for under the acquisition method of accounting, which requires determination of the
accounting acquirer.
The
Company is considered to be the acquirer of Champion for accounting purposes and will allocate the purchase price to the fair value of
Champion’s assets and liabilities as of the acquisition date, with any excess purchase price recorded as goodwill.
The
unaudited pro forma condensed combined balance sheet data as of June 30, 2022, gives effect to the transaction as if it occurred on that
date. The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2022, and for the year ended
December 31, 2021, gives effect to the transaction as if it had occurred on January 1, 2021.
The
unaudited pro forma condensed combined financial information was prepared in accordance with Article 11 of Regulation S-X. The unaudited
pro forma adjustments reflecting the transaction have been prepared in accordance with business combination accounting guidance as provided
in FASB ASC Topic 805 and reflect the preliminary allocation of the estimated merger consideration to the acquired assets and liabilities
assumed based upon their estimated fair values, using the assumptions set forth in the notes to the unaudited pro forma condensed combined
financial information. The Company’s historical consolidated financial information has been adjusted in the unaudited pro forma
condensed combined financial information to give pro forma effect to events that are (1) directly attributable to the transaction, (2)
factually supportable, and (3) with respect to the statement of operations, expected to have a continuing impact on the combined results.
The
unaudited pro forma condensed combined financial information is provided for informational purposes only and is not necessarily indicative
of the operating results or financial position that would have occurred if the transaction had been completed as of the dates set forth
above, nor is it indicative of the future results or financial position of the combined company. In connection with the pro forma condensed
combined financial information, the Company allocated the estimated purchase price using its best estimates of fair value. The allocation
is dependent upon certain valuation and other analyses that are not yet final. Accordingly, the pro forma acquisition price adjustments
are preliminary and subject to further adjustments as additional information becomes available and as additional analyses are performed.
There can be no assurances that the final valuations will not result in material changes to the preliminary estimated purchase price
allocation. The unaudited pro forma condensed combined financial information also does not give effect to the dilution or costs of financing
associated with the transaction, potential impact of current financial conditions, any anticipated synergies, operating efficiencies
or cost savings that may result from the transaction or any integration costs. Furthermore, the unaudited pro forma condensed combined
statements of operations do not include certain nonrecurring charges and the related tax effects that result directly from the transaction
as described in the notes to the unaudited pro forma condensed combined financial information.
The
unaudited pro forma condensed combined financial information should be read in conjunction with both the Company’s and Champion’s
unaudited historical condensed consolidated financial statements as of June 30, 2022, and the audited historical consolidated financial
statements as of and for the year ended December 31, 2021.
AMERICAN
REBEL HOLDINGS, INC.
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
| |
American | | |
Champion | | |
Purchase | | |
Financing | | |
| |
| |
Rebel
Holdings, Inc | | |
Safe Et Al
Company | | |
Transaction
Accounting | | |
Transaction
Accounting | | |
Pro
Forma | |
| |
Historical | | |
Historical | | |
Adjustments | | |
Adjustments | | |
Combined | |
| |
30-Jun-22 | | |
30-Jun-22 | | |
30-Jun-22 | | |
30-Jun-22 | | |
30-Jun-22 | |
| |
(unaudited) | | |
(unaudited) | | |
(unaudited) | | |
(unaudited) | | |
(unaudited) | |
ASSETS | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
CURRENT ASSETS: | |
| | | |
| | | |
| | | |
| | | |
| | |
Cash and cash equivalents | |
$ | 2,509,975 | | |
$ | 98,159 | | |
$ | - | | |
$ | 2,500,000 | | |
$ | 5,108,134 | |
Accounts receivable | |
| 272,995 | | |
| 1,532,706 | | |
| 224,894 | | |
| - | | |
| 2,030,595 | |
Prepaid expense | |
| 529,492 | | |
| 8,199 | | |
| (350,000 | ) | |
| - | | |
| 187,691 | |
Inventory | |
| 826,494 | | |
| 4,255,029 | | |
| - | | |
| - | | |
| 5,081,523 | |
Inventory deposits | |
| 224,894 | | |
| - | | |
| (224,894 | ) | |
| - | | |
| - | |
Total Current Assets | |
| 4,363,850 | | |
| 5,894,093 | | |
| (350,000 | ) | |
| 2,500,000 | | |
| 12,470,943 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Property and Equipment, net | |
| 13,196 | | |
| 414,137 | | |
| 350,000 | | |
| - | | |
| 777,333 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
OTHER ASSETS: | |
| | | |
| | | |
| | | |
| | | |
| | |
Goodwill | |
| - | | |
| - | | |
| 6,383,998 | | |
| - | | |
| 6,383,998 | |
Lease deposits | |
| 4,750 | | |
| 15,212 | | |
| - | | |
| - | | |
| 19,962 | |
Total Other Assets | |
| 4,750 | | |
| 15,212 | | |
| 6,383,998 | | |
| - | | |
| 6,403,960 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
TOTAL ASSETS | |
$ | 4,381,796 | | |
$ | 6,323,442 | | |
$ | 6,383,998 | | |
$ | 2,500,000 | | |
$ | 19,589,236 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
CURRENT LIABILITIES: | |
| | | |
| | | |
| | | |
| | | |
| | |
Accounts payable and accrued expense | |
| 530,611 | | |
| 1,561,493 | | |
| - | | |
| - | | |
| 2,092,104 | |
Accrued interest | |
| 67,919 | | |
| - | | |
| - | | |
| - | | |
| 67,919 | |
Loan – officer - related party | |
| - | | |
| 200,000 | | |
| - | | |
| - | | |
| 200,000 | |
Loan – working capital | |
| 605,037 | | |
| 1,445,947 | | |
| - | | |
| - | | |
| 2,050,984 | |
Loans - nonrelated parties | |
| 4,385 | | |
| - | | |
| - | | |
| - | | |
| 4,385 | |
Total Current Liabilities | |
| 1,207,952 | | |
| 3,207,440 | | |
| - | | |
| - | | |
| 4,415,392 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
TOTAL LIABILITIES | |
| 1,207,952 | | |
| 3,207,440 | | |
| - | | |
| - | | |
| 4,415,392 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
STOCKHOLDERS’ EQUITY (DEFICIT): | |
| | | |
| | | |
| | | |
| | | |
| | |
Preferred stock, Class A | |
| 100 | | |
| - | | |
| - | | |
| - | | |
| 100 | |
Preferred stock, Class B | |
| 75 | | |
| - | | |
| - | | |
| - | | |
| 75 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Common stock, | |
| 4,741 | | |
| - | | |
| - | | |
| - | | |
| 4,741 | |
Additional paid in capital | |
| 34,368,914 | | |
| 3,116,002 | | |
| 6,383,998 | | |
| 2,500,000 | | |
| 46,493,481 | |
Accumulated deficit | |
| (31,199,986 | ) | |
| - | | |
| - | | |
| - | | |
| (31,199,986 | ) |
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) | |
| 3,173,844 | | |
| 3,116,002 | | |
| 6,383,998 | | |
| 2,500,000 | | |
| 15,173,844 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |
$ | 4,381,796 | | |
$ | 6,323,442 | | |
$ | 6,383,998 | | |
$ | 2,500,000 | | |
$ | 19,589,236 | |
See
Notes to Financial Statements.
AMERICAN
REBEL HOLDINGS, INC.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| |
American | | |
Champion | | |
Purchase | | |
Financing | | |
| |
| |
Rebel Holdings, Inc | | |
Safe Et Al
Company | | |
Transaction
Accounting | | |
Transaction
Accounting | | |
Pro
Forma | |
| |
Historical | | |
Historical | | |
Adjustments | | |
Adjustments | | |
Combined | |
| |
31-Dec-21 | | |
31-Dec-21 | | |
31-Dec-21 | | |
31-Dec-21 | | |
31-Dec-21 | |
| |
(unaudited) | | |
(unaudited) | | |
(unaudited) | | |
(unaudited) | | |
(unaudited) | |
Revenue | |
$ | 986,826 | | |
$ | 18,304,859 | | |
$ | - | | |
$ | (600,000 | ) | |
$ | 18,691,685 | |
Cost of goods sold | |
| 812,130 | | |
| 14,354,863 | | |
| - | | |
| (600,000 | ) | |
| 14,566,993 | |
Gross margin | |
| 174,696 | | |
| 3,949,996 | | |
| - | | |
| - | | |
| 4,124,692 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Expenses: | |
| | | |
| | | |
| | | |
| | | |
| | |
Consulting – business development | |
| 2,012,803 | | |
| 1,838,947 | | |
| - | | |
| - | | |
| 3,851,750 | |
Product development costs | |
| 330,353 | | |
| 24,558 | | |
| - | | |
| - | | |
| 354,911 | |
Marketing and brand development costs | |
| 171,030 | | |
| 828,890 | | |
| - | | |
| - | | |
| 999,920 | |
Administrative and other | |
| 968,306 | | |
| 518,705 | | |
| - | | |
| - | | |
| 1,487,011 | |
Depreciation expense | |
| 3,643 | | |
| 24,919 | | |
| - | | |
| - | | |
| 28,562 | |
Operating expenses | |
| 3,486,135 | | |
| 3,236,019 | | |
| - | | |
| - | | |
| 6,722,154 | |
Operating income (loss) | |
| (3,311,439 | ) | |
| 713,977 | | |
| - | | |
| - | | |
| (2,597,462 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Other Income (Expense) | |
| | | |
| | | |
| | | |
| | | |
| | |
Interest expense | |
| (2,061,782 | ) | |
| (77,752 | ) | |
| - | | |
| 1,800,000 | | |
| (339,534 | ) |
Interest Income | |
| - | | |
| 305 | | |
| | | |
| | | |
| 305 | |
Payroll Protection Loan Forgiven | |
| - | | |
| 625,064 | | |
| | | |
| - | | |
| 625,064 | |
Gain (Loss) on extinguishment of debt | |
| (725,723 | ) | |
| - | | |
| - | | |
| 725,723 | | |
| - | |
Net income (loss) before income tax provision | |
| (6,098,944 | ) | |
| 1,261,594 | | |
| - | | |
| 2,525,723 | | |
| (2,311,627 | ) |
Provision for income tax | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Net income (loss) | |
$ | (6,098,944 | ) | |
$ | 1,261,594 | | |
$ | - | | |
$ | 2,525,723 | | |
$ | (2,311,627 | ) |
Basic and diluted income (loss) per share | |
$ | (1.92 | ) | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | (0.73 | ) |
Weighted average common shares outstanding - basic and diluted | |
| 3,169,000 | | |
| - | | |
| - | | |
| - | | |
| 3,169,000 | |
See
Notes to Financial Statements.
AMERICAN
REBEL HOLDINGS, INC.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| |
American | | |
Champion | | |
Purchase | | |
Financing | | |
| |
| |
Rebel
Holdings, Inc | | |
Safe Et Al
Company | | |
Transaction
Accounting | | |
Transaction
Accounting | | |
Pro
Forma | |
| |
Historical | | |
Historical | | |
Adjustments | | |
Adjustments | | |
Combined | |
| |
30-Jun-22 | | |
30-Jun-22 | | |
30-Jun-22 | | |
30-Jun-22 | | |
30-Jun-22 | |
| |
(unaudited) | | |
(unaudited) | | |
(unaudited) | | |
(unaudited) | | |
(unaudited) | |
Revenue | |
$ | 492,786 | | |
$ | 9,342,879 | | |
$ | - | | |
$ | (120,000 | ) | |
$ | 9,715,665 | |
Cost of goods sold | |
| 337,797 | | |
| 6,750,533 | | |
| - | | |
| (120,000 | ) | |
| 6,968,330 | |
Gross margin | |
| 154,989 | | |
| 2,592,346 | | |
| - | | |
| - | | |
| 2,747,335 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Expenses: | |
| | | |
| | | |
| | | |
| | | |
| | |
Consulting, payroll and related costs | |
| 709,396 | | |
| 979,596 | | |
| - | | |
| - | | |
| 1,688,992 | |
Product development costs | |
| 146,463 | | |
| 8,302 | | |
| - | | |
| - | | |
| 154,765 | |
Marketing and brand development costs | |
| 230,219 | | |
| 441,858 | | |
| - | | |
| - | | |
| 672,077 | |
Administrative and other | |
| 1,610,723 | | |
| 375,492 | | |
| - | | |
| - | | |
| 1,986,215 | |
Depreciation expense | |
| 1,355 | | |
| 27,269 | | |
| - | | |
| - | | |
| 28,624 | |
Operating expenses | |
| 2,698,156 | | |
| 1,832,517 | | |
| - | | |
| - | | |
| 4,530,673 | |
Operating income (loss) | |
| (2,543,167 | ) | |
| 759,829 | | |
| - | | |
| - | | |
| (1,783,338 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Other Income (Expense) | |
| | | |
| | | |
| | | |
| | | |
| | |
Interest expense | |
| (310,406 | ) | |
| (47,705 | ) | |
| - | | |
| 250,000 | | |
| (108,111 | ) |
Interest income | |
| - | | |
| 6,242 | | |
| | | |
| | | |
| 6,242 | |
Payroll Protection loan forgiveness | |
| - | | |
| - | | |
| | | |
| - | | |
| - | |
Gain (Loss) on extinguishment of debt | |
| (1,376,756 | ) | |
| - | | |
| - | | |
| 1,376,756 | | |
| - | |
Net income (loss) before income tax provision | |
| (4,230,329 | ) | |
| 718,366 | | |
| - | | |
| 1,626,756 | | |
| (1,885,207 | ) |
Provision for income tax | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Net income (loss) | |
$ | (4,230,329 | ) | |
$ | 718,366 | | |
$ | - | | |
$ | 1,626,756 | | |
$ | (1,885,207 | ) |
Basic and diluted income (loss) per share | |
$ | (1.07 | ) | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | (0.48 | ) |
Weighted average common shares outstanding - basic and diluted | |
| 3,955,000 | | |
| - | | |
| - | | |
| - | | |
| 3,955,000 | |
See
Notes to Financial Statements.
AMERICAN REBEL HOLDINGS, INC.
NOTES
TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Note
1 – Basis of Presentation
The
historical financial information has been adjusted in the unaudited pro forma condensed combined financial information to give effect
to events that are (1) directly attributable to the transaction, (2) factually supportable, and (3) with respect to the statement of
operations, expected to have a continuing impact on the combined results. The pro forma adjustments are preliminary and based on estimates
of the fair value and useful lives of the assets acquired and liabilities assumed and have been prepared to illustrate the estimated
effect of the transaction and certain other adjustments. The final determination of the purchase price allocation will be based on the
fair values of assets acquired and liabilities assumed as of the date the transaction closes, which has been determined to be July 29,
2022. The Company will continue to assess its determination of fair value of the assets acquired and liabilities assumed during the measurement
period.
The
Company’s and Champion’s historical results reflect the unaudited condensed statements of operations for the six months ended
June 30, 2022, the audited statements of operations for the year ended December 31, 2021, and the unaudited condensed balance sheet as
of June 30, 2022.
Note
2 – Description of Transaction
On
June 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” or “Champion”)
and Mr. Ray Crosby (“Seller”) (the “Champion Purchase Agreement”), pursuant to which the Company agreed to acquire
all of the issued and outstanding capital stock and membership interests of the Champion Entities from the Seller.
The
closing of the acquisition occurred on July 29, 2022. Under the terms of the Champion Purchase Agreement, the Company paid the Seller
(i) cash consideration in the amount of $9,150,000, along with (ii) cash deposits in the amount of $350,000, and (iii) reimbursed Seller
for $397,420.32 of agreed upon acquisitions and equipment purchases completed by the Seller and the Champion Entities since June 30,
2021
Note
3 - Reclassification Adjustments
The
accounting policies used in the preparation of this unaudited pro forma condensed combined financial information are those set out in
the Company’s audited consolidated financial statements as of and for the fiscal year ended December 31, 2021, and unaudited condensed
consolidated financial statements as of and for the six months ended June 30, 2022. With the information currently available, the Company
has determined that no significant adjustments are necessary to conform Champion’s consolidated financial statements to the accounting
policies used by the Company in the preparation of the unaudited pro forma condensed combined financial information.
The
reclassification adjustments are based on currently available information and assumptions management believes are, under the circumstances
and given the information available at this time, reasonable, and reflective of adjustments necessary to report the Company’s financial
condition and results of operations as if the acquisition were completed.
The
combined company will finalize the review of accounting policies and reclassifications after the transaction closes, which could be materially
different from the amounts set forth in the unaudited pro forma condensed combined financial information presented herein. The reclassification
adjustments currently identified are as follows:
Note
4 –Estimated Transaction Consideration
The
estimated transaction consideration is approximately
$9,850,000 based on an actual purchase price of $9,897,420.32, as described above in Note 2 to these unaudited pro forma condensed combined financial information.
The
following table summarizes the preliminary estimate of the consideration to be transferred as a result of the combination.
Deposits paid with contract | |
$ | 350,000 | |
Cash payment due at closing | |
| 9,150,000 | |
Estimated reimbursement for equipment purchased since June 30, 2021 | |
| 350,000 | |
Estimated Transaction Consideration | |
$ | 9,850,000 | |
The
final merger consideration could differ from the amounts presented in the unaudited pro forma condensed combined financial information
due to final accounting for equipment purchased up to the closing date of the combination, and other costs expended by the Company in
its acquisition of Champion.
Note
5 – Allocation of Estimated Consideration
Under
the acquisition method of accounting, the identifiable assets acquired, and liabilities assumed of Champion will be recognized and
measured at fair value as of the closing date of the combination and added to those of the Company. The determination of fair value
used in the transaction-related adjustments presented herein are preliminary and based on management estimates of the fair value and
useful lives of the assets acquired and liabilities assumed and have been prepared to illustrate the estimated effect of the
acquisition. The final allocation of consideration, upon the completion of the acquisition, will be based on Champion’s assets
acquired and liabilities assumed as of the acquisition date, July 29, 2022, and will depend on a number of factors that cannot be
predicted with exact certainty at this time. Therefore, actual allocations may differ from the transaction accounting
adjustments presented herein. The allocation is dependent upon certain valuations and other studies that have not yet been completed. Accordingly, the pro forma allocation of the consideration may be subject to further adjustments as additional
information becomes available and as analyses and valuations are completed. There can be no assurances that these
additional analyses and final valuations will not result in material changes to the estimates of fair value set forth
below.
The
following table sets forth a preliminary allocation of the estimated consideration to the identifiable tangible and intangible assets
acquired and liabilities assumed of Champion based on Champion’s unaudited consolidated balance sheet as of June 30, 2022, with
the estimated excess recorded to goodwill:
Total assets | |
$ | 6,673,442 | |
Total liabilities | |
| 3,207,440 | |
Net acquired tangible assets | |
| 3,466,002 | |
Goodwill | |
| 6,383,998 | |
Allocation of the Estimated Transaction Consideration | |
$ | 9,850,000 | |
Note
6 – Pro Forma Adjustments
Unaudited
Pro Forma Condensed Combined Balance Sheet Adjustments
|
a. |
To
record estimated working capital financing in addition to Transaction Consideration, as of June 30, 2022. |
| |
American Rebel Holdings, Inc. | | |
Champion | | |
Total |
Additional working capital | |
$ | 2,500,000 | | |
| | | |
$ | - | | $ |
2,500,000 |
Additional paid in capital | |
| 2,500,000 | | |
| | | |
| - | | |
2,500,000 |
| |
| - | | |
| | | |
| | | |
- |
Pro forma net adjustment | |
$ | - | | |
$ | | | |
| | | $ |
- |
Unaudited
Pro Forma Condensed Combined Statements of Operations Adjustments
|
b. |
To
adjust Revenue and Cost of Goods Sold for estimated transactions between companies: |
| |
Six months Ended June 30, 2022 | | |
Year Ended December 31, 2021 | |
Revenue | |
$ | (120,000 | ) | |
$ | (600,000 | ) |
Cost of Goods Sold | |
| (120,000 | ) | |
| (600,000 | ) |
Pro forma net adjustment | |
$ | - | | |
$ | - | |
|
c. |
To
adjust interest expense and loss on extinguishment of debt based upon debt obligations eliminated by financing in February 2022 and
in connection with the acquisition: |
| |
Six months Ended June 30, 2022 | | |
Year Ended December 31, 2021 | |
Interest expense | |
$ | 250,000 | | |
$ | 1,800,000 | |
Loss on extinguishment of debt | |
| 1,376,756 | | |
| 725,723 | |
Pro forma net adjustment | |
$ | 1,626,756 | | |
$ | 2,525,723 | |
FORWARD
LOOKING STATEMENTS
This
Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). These forward-looking statements are not historical facts but rather are based on current
expectations, estimates and projections. We may use words such as “may,” “could,” “should,” “anticipate,”
“expect,” “project,” “position,” “intend,” “target,” “plan,”
“seek,” “believe,” “foresee,” “outlook,” “estimate” and variations of these
words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause
actual results to differ materially from those expressed or forecasted. These risks and uncertainties include, but are not limited to,
the following:
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● |
we
currently do not own a manufacturing facility, and future acquisition and operation of new manufacturing facilities might prove unsuccessful
and could fail; |
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● |
our
success depends on our ability to introduce new products that track customer preferences; |
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● |
if
we are unable to protect our intellectual property, we may lose a competitive advantage or incur substantial litigation costs to
protect our rights; |
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● |
as
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 ammunition storage; |
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● |
as
we rely on third-party manufacturers 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; |
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● |
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; |
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● |
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; |
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● |
our
inability to effectively meet our short- and long-term obligations; |
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● |
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; |
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●
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our
inability to raise additional financing for working capital; |
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our
ability to generate sufficient revenue in our targeted markets to support operations; |
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significant
dilution resulting from our financing activities; |
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the
actions and initiatives taken by both current and potential competitors; |
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our
ability to diversify our operations; |
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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; |
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changes
in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate; |
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the
deterioration in general or global economic, market and political conditions; |
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the
inability to efficiently manage our operations; |
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the
inability to achieve future operating results; |
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the
unavailability of funds for capital expenditures; |
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the
inability of management to effectively implement our strategies and business plans; and |
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the
other risks and uncertainties detailed in this report. |
Because
the factors referred to above could cause actual results or outcomes to differ materially from those expressed in any forward-looking
statements made by us, you should not place undue reliance on any such forward-looking statements. New factors emerge from time to time,
and their emergence is impossible for us to predict. In addition, we cannot assess the impact of each factor on our business or the extent
to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking
statements.
This
Quarterly Report should be read completely and with the understanding that actual future results may be materially different from what
we expect. The forward-looking statements included in this Quarterly Report are made as of the date of this Quarterly Report and should
be evaluated with consideration of any changes occurring after the date of this Quarterly Report. We will not update forward-looking
statements even though our situation may change in the future and we assume no obligation to update any forward-looking statements, whether
as a result of new information, future events or otherwise.
Except
as otherwise indicated by the context, references in this report to “Company,” “American Rebel Holdings,” “American
Rebel,” “we,” “us” and “our” are references to American Rebel Holdings, Inc. and its wholly-owned
operating subsidiary, American Rebel, Inc. All references to “USD” or United States Dollar refer to the legal currency of
the United States of America.