UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the quarterly period ended September 30, 2019

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the transition period from ___ to ___

Commission file number 000-55728

AMERICAN REBEL HOLDINGS, INC

(Exact name of registrant as specified in its charter)

Nevada	47-3892903
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

718 Thompson Lane, Suite 108-199, Nashville, Tennessee	37204
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (833) 267-3235

Copies of communications to:

Anthony N. DeMint, Esq.

DeMint Law, PLLC

3753 Howard Hughes Parkway

Second Floor, Suite 314

Las Vegas, Nevada 89169

(702) 714-0889

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [   ] No [X]

1

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

Large accelerated filer	[   ]	Accelerated filer	[   ]
Non-accelerated filer	[X]	Smaller reporting company	[X]
		Emerging growth company	[X]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes [   ] No [X]

The number of shares of the registrant’s common stock outstanding as of December 20, 2019 was 43,062,058 shares.

2

AMERICAN REBEL HOLDINGS, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

PART I. FINANCIAL INFORMATION		Page No.
Item 1.	Interim Condensed Consolidated Financial Statements (unaudited)	4
	Consolidated Condensed Balance Sheets of American Rebel Holdings, Inc. at September 30, 2019 (unaudited) and December 31, 2018 (audited)	4
	Consolidated Condensed Statements of Operations of American Rebel Holdings, Inc. for the three months ended September 30, 2019 and 2018 (unaudited)	5
	Consolidated Condensed Statements of Operations of American Rebel Holdings, Inc. for the nine months ended September 30, 2019 and 2018 (unaudited)	6
	Consolidated Condensed Statements of Stockholders Deficit of American Rebel Holdings, Inc. for the nine months ended September 30, 2019 and 2018 (unaudited)	7
	Consolidated Condensed Statements of Cash Flows of American Rebel Holdings, Inc. for the nine months ended September 30, 2019 and 2018 (unaudited)	8
	Notes to the Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis	25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	28
Item 4.	Controls and Procedures	28
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults upon Senior Securities	29
Item 4.	Mine Safety Disclosure	29
Item 5.	Other Information	29
Item 6.	Exhibits	30
Signatures		31

3

Part I. Financial Information

Item 1.- Interim Consolidated Financial Statements (unaudited)

AMERICAN REBEL HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

		September 30, 2019		December 31, 2018
ASSETS		(unaudited)		(audited)
CURRENT ASSETS:
Cash and cash equivalents	$	184,446	$	19,631
Accounts Receivable		241,529		682
Prepaid expense		766,760		117,300
Inventory		769,247		520,154
Inventory deposits		19,550		248,729
Total Current Assets		1,981,532		906,496
Property and Equipment, net		82,497		129,018
OTHER ASSETS:
Lease Deposit		6,841		6,841
Total Other Assets		6,841		6,841
TOTAL ASSETS	$	2,070,870	$	1,042,355
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued expense		455,503		319,623
Accrued Interest – Convertible Debenture – Related Party		349,389		171,786
Loan – Officer - Related party		4,496		16,588
Loan – Working Capital,  net of discounts of $592,906 and $0		2,630,084		1,165,787
Loans - Nonrelated parties		100,908		120,993
Total Current Liabilities		3,540,380		1,794,777
Convertible Debenture –Related party, net of discounts of $159,610 and $227,110		185,390		117,890
TOTAL LIABILITIES		3,725,770		1,912,667
STOCKHOLDERS’ EQUITY (DEFICIT):
Preferred stock, $0.001 par value; 1,000,000 shares authorized; none issued or outstanding		-		-
Common stock, $0.001 par value; 100,000,000 shares authorized; 41,412,058 and 29,912,058 issued and outstanding, respectively at September 30, 2019 and December 31, 2018		41,412		29,912
Additional paid in capital		11,485,203		6,387,335
Accumulated deficit		(13,181,515)		(7,287,559)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		(1,654,900)		(870,312)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	2,070,870	$	1,042,355

See Notes to Financial Statements.

4

AMERICAN REBEL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

		For the three months ended September 30, 2019		For the three months ended September 30, 2018
		(unaudited)		(unaudited)
Revenue	$	164,970	$	26,831
Cost of goods sold		120,874		11,357
Gross margin		44,096		15,474
Expenses:
Consulting – business development		3,168,335		146,272
Product development costs		39,331		316
Marketing and brand development costs		153,764		127,584
Administrative and other		412,007		52,664
Depreciation expense		15,507		15,507
		3,788,944		342,344
Operating income (loss)		(3,744,848)		(326,871)
Other Income (Expense)
Interest expense		(424,346)		(50,345)
Net income (loss) before income tax provision		(4,169,194)		(377,215)
Provision for income tax		-		-
Net income (loss)	$	(4,169,194)	$	(377,215)
Basic and diluted income (loss) per share	$	(0.13)	$	(0.01)
Weighted average common shares outstanding   - basic and diluted		31,167,000		29,666,000

See Notes to Financial Statements.

5

AMERICAN REBEL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

		For the nine months ended September 30, 2018		For the nine months ended September 30, 2018
		(unaudited)		(unaudited)
Revenue	$	294,032	$	86,361
Cost of goods sold		192,104		36,224
Gross margin		101,928		50,136
Expenses:
Consulting – business development		3,667,062		442,215
Product development costs		263,298		16,118
Marketing and brand development costs		508,235		522,759
Administrative and other		640,250		306,928
Depreciation expense		46,521		46,521
		5,125,366		1,334,540
Operating income (loss)		(5,023,438)		(1,284,404)
Other Income (Expense)
Interest expense		(870,518)		(203,145)
Net income (loss) before income tax provision		(5,893,956)		(1,487,549)
Provision for income tax		-		-
Net income (loss)	$	(5,893,956)	$	(1,487,549)
Basic and diluted income (loss) per share	$	(0.19)	$	(0.05)
Weighted average common shares outstanding   - basic and diluted		30,590,000		27,176,000

See Notes to Financial Statements.

6

AMERICAN REBEL HOLDINGS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

	Common Stock		Common Stock Amount		Additional Paid-in Capital		Accumulated Deficit		Total
Balance – December 31, 2017	23,771,000	$	23,771	$	3,022,947	$	(5,285,855)	$	(2,239,137)
Common Stock issued as compensation	466,667		467		262,867		-		263,334
Net loss	-		-		-		(627,357)		(627,357)
Balance – March 31, 2018 (unaudited)	24,237,667	$	24,238	$	3,285,814	$	(5,913,212)	$	(2,603,160)
Common Stock issued as compensation	166,667		167		83,167		-		83,334
Convertible Debenture Discount	-		-		120,000		-		120,000
Conversion of Convertible Debentures	4,569,058		4,569		2,279,960		-		2,284,529
Exercise of Warrants	580,000		580		289,420		-		290,000
Net loss	-		-		-		(482,977)		(482,977)
Balance – June 30, 2018 (unaudited)	29,553,392	$	29,553	$	6,058,361	$	(6,396,189)	$	(308,275)
Common Stock issued as compensation	166,666		167		83,167		-		83,334
Exercise of Warrants	80,000		80		39,920		-		40,000
Net loss	-		-		-		(377,215)		(377,215)
Balance – September 30, 2018 (Unaudited)	29,800,058	$	29,800	$	6,181,448	$	(6,773,404)	$	(562,156)

	Common Stock		Common Stock Amount		Additional Paid-in Capital		Accumulated Deficit		Total
Balance – December 31, 2018-	29,912,058	$	29,912	$	6,387,335	$	(7,287,559)	$	(870,312)
Common Stock issued as compensation	400,000		400		232,100		-		232,500
Convertible Debenture Discount					101,446		-		101,446
Net loss	-		-		-		(758,623)		(758,623)
Balance – March 31, 2019 (unaudited)	30,312,058	$	30,312	$	6,720,881	$	(8,046,182)	$	(1,294,989)
Convertible Debenture Discount	-		-		45,822		-		45,822
Net loss	-		-		-		(966,139)		(966,139)
Balance –June 30, 2019 (unaudited)	30,312,058	$	30,312	$	6,766,703	$	(9,012,321)	$	(2,215,306)
Common Stock issued as compensation	11,100,000		11,100		4,718,500		-		4,729,600
Net loss	-		-		-		(4,169,194)		(4,169,194)
Balance – September 30, 2019 (Unaudited)	41,412,058	$	41,412	$	11,485,203	$	(13,181,515)	$	(1,654,900)

See Notes to Financial Statements.

7

AMERICAN REBEL HOLDINGS, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

		For the nine months ended September 30, 2019		For the nine months ended September 30, 2018
		(unaudited)		(unaudited)
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss)	$	(5,893,956)	$	(1,487,549)
Depreciation		46,521		46,521
Compensation paid through issuance of common stock		3,322,000		282,483
Amortization of loan discount		518,497		25,671
Adjustments to reconcile net loss to cash (used in) operating activities:
Change in accounts receivable		(90,847)		(1,017)
Change in prepaid expenses		95,505		67,756
Change in inventory		(249,093)		38,864
Change in inventory deposits		229,180		(182,224)
Change in accounts payable and accrued expense		313,482		260,894
Net Cash (Used in) Operating Activities		(1,708,711)		(948,601)
CASH FLOW FROM INVESTING ACTIVITIES:
Property and equipment purchased		-		-
Net Cash (Used in) Operating Activities		-		-
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds (repayments) of loans – officer - related party		(12,092)		(48,930)
Proceeds of convertible debentures		-		120,000
Proceeds of sale of common stock		1,000		-
Proceeds of exercise of Warrants		2,500		330,000
Proceeds of working capital loan		2,524,875		550,000
Repayment of loans – nonrelated party		(642,756)		(64,295)
Net Cash Provided by Financing Activities		1,873,527		886,775
CHANGE IN CASH		164,816		(61,825)
CASH AT BEGINNING OF PERIOD		19,630		70,798
CASH AT END OF PERIOD	$	184,446	$	8,972
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for:
Interest	$	77,860	$	13,475
Income taxes	$	-	$	-
Non-cash investing and financing activities:
Conversion of Debentures to Common Stock	$	-	$	2,284,529

See Notes to Financial Statements.

8

AMERICAN REBEL HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

The “Company” was incorporated on December 15, 2014 (date of inception) under the laws of the State of Nevada, as CubeScape, Inc. Effective January 5, 2017, the Company amended its articles of incorporation and changed its name to American Rebel Holdings, Inc. The Company completed 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 acquisition of American Rebel, Inc. was accounted for as a reverse merger.  The Company issued 17,421,000 shares of its common stock and issued warrants to purchase 500,000 shares of common stock to shareholders of American Rebel, Inc. and cancelled 9,000,000 shares of common stock owned by American Rebel, Inc.

The Company filed a registration statement on Form S-1 which was declared effective by the U.S. Securities and Exchange Commission on October 14, 2015. Twenty six (26) investors invested at a price of $0.01 per share for a total of $60,000.   The direct public offering closed on December 11, 2015.

Nature of operations

The Company is developing branded products in the self-defense, concealed carry, gun safe and patriotic product areas that are promoted and sold using trade shows, personal appearances, music, Internet and television avenues.  The Company’s products will be under the American Rebel Brand and imprinted.

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 United States Securities and Exchange Commission (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, 2018 and notes thereto contained.  

Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company and its majority-owned subsidiary. 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, accessories, and safes 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.

9

AMERICAN REBEL HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fixed assets and depreciation

Property and equipment is 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

We recognize revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the product or service has been provided to the consumer; (3) the amount of fees to be paid by the consumer is fixed or determinable; and (4) the collection of our fees or product revenue is probable.

The Company will record revenue when it is realizable and earned and product has been shipped to the consumers or that our service has been rendered to the consumer.  License income will be reported as income when the Company has completed any responsibility to earn the income and when any earned royalties are received.

Advertising costs

Advertising costs are expensed as incurred; Marketing costs incurred were $153,764 and $127,584 for the three-month periods ended September 30, 2019 and 2018, respectively, and $508,235 and $522,759, respectively, for the nine 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 September 30, 2019 and December 31, 2018, respectively. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, accounts receivable, 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. 

10

AMERICAN REBEL HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

In January 2018, the Company agreed to issue and subsequently issued a total of 500,000 shares of common stock as compensation for professional services to be performed during 2018.  The common stock was valued at a price of $0.50 per share consistent with earlier sales of common stock by American Rebel, Inc. as well as the present conversion price of the Company’s convertible debentures.  In January, 2018, the Company issued 300,000 shares of common stock as compensation in settlement of professional services billed at $180,000.

During January 2018, the Company recorded $157,483 in compensation expense, increased prepaid expense $31,251, and reduced Accrued expense $74,600 with the issuance of 466,667 shares of common stock.  The common stock was valued at prices of $0.50 and $0.60 per share consistent with earlier sales of common stock by American Rebel, Inc. as well as the present conversion price of the Company’s convertible debentures and negotiation with a vendor.

During January 2019, the Company recorded $178,505 in compensation expense, increased prepaid expense $160,000, and increased Discount on debt $57,467 with the issuance of 400,000 shares of common stock and 175,000 warrants to purchase common stock.  The common stock was valued at prices of $0.65 to $0.76 per share consistent with market prices at the date of the transaction.

During September 2019, the Company recorded $3,432,000 in compensation expense and increased Discount on debt $819,500 with the issuance of 11,000,000 shares of common stock and 50,000 warrants to purchase common stock.  The common stock was valued at prices of $0.70 to $0.30 per share consistent with market prices at the dates of the transactions.

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 September 30, 2019 and December 31, 2018, 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.

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AMERICAN REBEL HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 and nine month periods ended September 30, 2019 and 2018, 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.

Recent pronouncements

The Company evaluated recent accounting pronouncements through September 30, 2019 and believes that none have a material effect on the Company’s financial statements except for the following.

In August 2015, FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of Effective Date. In 2014 FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provided a framework for addressing revenue recognition issues and replaces almost all existing revenue recognition guidance in current U.S. GAAP. The core principle of ASU 2014-09 is for companies to recognize revenue for the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 also resulted in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively, and improve guidance for multiple-element arrangements. The amendments in ASU 2015-14 defer the effective date of the new revenue recognition guidance to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Management is evaluating the future impact of this guidance on the Company’s financial statements and notes thereto.

In September 2015, the FASB issued ASU 2015-16, Business Combinations: Simplifying the Accounting for Measurement-Period Adjustments. The amendments in this ASU require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined; calculated as if the accounting had been completed at the acquisition date. For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments in this ASU should be applied prospectively with earlier application permitted for financial statements that have not been issued. The adoption of this guidance did not have a material impact on the Company’s financial position, results of operations or cash flows.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The objective of ASU 2016-02 is to recognize lease assets and lease liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of ASU 2016-02 is permitted. The Company is evaluating the effects adoption of this guidance will have on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Clarification on Classification of Certain Cash Receipts and Cash Payments on the Statement of Cash Flows, to create consistency in the classification of eight specific cash flow items. This standard is effective for calendar-year SEC registrants beginning in 2018. The Company is evaluating the effects adoption of this guidance will have on its consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows - Restricted Cash (Topic 230), which amends the existing guidance relating to the disclosure of restricted cash and restricted cash equivalents on the statement of cash flows. ASU 2016-18 is effective for the fiscal year beginning after December 15, 2017, and interim periods within that fiscal year, and early adoption is permitted. The Company is evaluating the impact of adoption of ASU 2016-18 on its Consolidated Statements of Cash Flows.

In May 2017, the FASB issued ASU 2017-09, Stock Compensation (Topic 718)-Scope of Modification Accounting, to provide guidance on determining which changes to terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. The ASU is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The Company is evaluating the effects adoption of this guidance will have on its consolidated financial statements.

12

AMERICAN REBEL HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260)-Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. The amendments in Part I of the ASU change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments in Part II recharacterize the indefinite deferral of certain provisions of Topic 480 with a scope exception and do not have an accounting effect. The ASU is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. The Company is evaluating the effects adoption of this guidance will have on its consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815)-Targeted Improvements to Accounting for Hedging Activities. The new guidance is intended to more closely align hedge accounting with entities’ hedging strategies, simplify the application of hedge accounting, and increase the transparency of hedging programs. The ASU is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. The Company is evaluating the effects adoption of this guidance will have on its consolidated financial statements.

Amendments clarifying guidance in Topic 205, Risks and Uncertainties, are applicable to entities that have not commenced planned principal operations, which we have commenced recently.

Concentration Risk

In 2019, the Company purchased a substantial portion (over 20%) of inventory from two third-party vendors (98.2%). As of September 30, 2019, the net amount due to the vendors (accounts payable and accrued expense) was $10,390. In 2018, the Company purchased all of inventory from one third-party vendor (100.0%). As of September 30, 2018, the net amount due to the vendor (accounts payable and accrued expense) was $2,910. The loss of these manufacturing vendor relationships could have a material effect on the Company, but the Company believes there are numerous other suppliers that could be substituted should these suppliers become unavailable or non-competitive.

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, has not yet generated significant revenues from operations. 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 and preparing for public product launch. As a result, the Company incurred net income (losses) for the nine months ended September 30, 2019 and 2018 of ($5,893,956) and ($1,487,549), respectively. The Company’s accumulated deficit was ($13,181,515) as of September 30, 2019 and ($7,287,559) as of December 31, 2018.  The Company’s working capital deficit was ($1,558,848) as of September 30, 2019 and a deficit of ($888,280) as of December 31, 2018.  In addition, the Company’s development 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 operating revenues. Management believes holders of its warrants will execute their outstanding warrants generating investment capital for the Company. Management is also in discussion with several investment banks and broker dealers regarding the initiation of a capital campaign.

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 financial sources. 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 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.

13

AMERICAN REBEL HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(unaudited)

Note 3- INVENTORY AND DEPOSITS

Inventory and deposits includes the following:

		September 30,		December 31,
		2019		2018
		(unaudited)		(audited)
Inventory - Finished goods	$	769,247	$	520,154
Inventory deposits		19,550		248,729
		788,797		768,883
Less: Reserve for excess and obsolete		-		-
Net inventory and deposits	$	788,797	$	768,883

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment includes the following:

		September 30,		December 31,
		2019		2018
		(unaudited)		(audited)
Marketing equipment	$	32,261	$	32,261
Vehicles		277,886		277,886
		310,147		310,147
Less: Accumulated depreciation		(227,650)		(181,129)
Net property and equipment	$	82,497	$	129,018

For the three months ended September 30, 2019 and 2018 we recognized $15,507 and $15,507 in depreciation expense, respectively and $46,521 and $46,521 for the nine month periods then ended.  We depreciate these assets over a period of sixty (60) months which has been deemed their useful life.  In January, 2016 we acquired three vehicles from related parties and assumed the debt secured by the vehicles as described at Note 7 – Notes Payable.  Accordingly, the recorded cost of each vehicle is the amount of debt assumed under each related loan, or a total of $277,886.

14

AMERICAN REBEL HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(unaudited)

NOTE 5 –RELATED PARTY NOTE PAYABLE AND RELATED PARTY TRANSACTIONS

For the year ended December 31, 2016, the Company received loans from its sole officer and director totaling $221,155.  The balance at December 31, 2018 was $16,588.  During the nine months ended September 30, 2019, the company repaid $12,092 of these loans resulting in a balance at September 30, 2019 of $4,496.  These loans are due on demand and carry no interest.  

During the year ended December 31, 2018, the Company entered into several convertible debt instruments with stockholders in the amount of $270,000, for a total of $345,000. The Company accrued interest expense on this convertible debt for a total of $61,455 at September 30, 2019.  Since public trading of the Company’s common stock began in 2018, the Company determined a Beneficial Conversion Discount of $270,000 applied to the 2018 sales the Convertible Debentures.  The discount reduced the liability balance of the debentures to $0 when the debentures were issued and recorded the proceeds of the sale as Additional paid in Capital.  The discount will be amortized over the three-year term of the debentures.  The discounted balance of the convertible debentures at September 30, 2019 was $185,390.

During the year ended December 31, 2018, holders of convertible debentures exercised their rights to convert the debt of $2,060,000 and accrued interest of $280,529 to 4,681,058 shares of common stock. Of the total amount borrowed under the convertible debt and exercise of warrants, $2,664,787 was loaned to American Rebel, Inc., the Company’s former majority stockholder and now the Company’s wholly owned subsidiary, as a working capital loan to pay its operating expenses including legal, accounting, product development, brand expansion, and marketing costs.  This loan is eliminated in consolidation.

Charles A. Ross, Jr. serves as the Company’s sole officer and director.  Compensation for Mr. Ross was $150,000 and $150,000, respectively for the nine months ended September 30, 2019 and 2018.  

NOTE 6 – NOTES PAYABLE – NONRELATED PARTIES

Effective January 1, 2016, the Company acquired three vehicles from various related parties in exchange for the assumption of the liabilities related to those vehicles.  The liabilities assumed are as follows at September 30, 2019 and December 31, 2018.

		September 30, 2019		December 31, 2018
		(unaudited)		(audited)
Loan secured by a tour bus, payable in monthly payments of $2,710 including interest at 12% per annum through September 2020.	$	32,864	$	52,949
Loan secured by a promotional vehicle.  Loan is past due, payments are made at irregular intervals and interest expense accrues at 3% per month until paid in full		68,044		68,044
Total recorded as current liability	$	100,908	$	120,993

Current and long-term portion.  Total loan balance is reported as current because loans are past due, become due within one year or are expected to be repaid within one year.

15

AMERICAN REBEL HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(unaudited)

NOTE 7 – NOTES PAYABLE – WORKING CAPITAL

On July 6, 2017, the Company’s wholly-owned operating subsidiary completed the sale of a secured promissory note in the principal amount of $250,000 with an interest rate of 12% per annum to a private investor, and current stockholder.  In April, 2018 the Company’s wholly-owned operating subsidiary completed the sale of additional notes under similar terms in the additional principal amount totaling $250,000.  In July, 2018 the Company’s wholly-owned operating subsidiary completed the sale of additional notes under similar terms in the additional principal amount totaling $300,000.  In October and December, 2018 the Company’s wholly-owned operating subsidiary completed the sale of additional notes under similar terms in the additional principal amount totaling $425,000.  The notes are secured by a pledge of certain of the Company’s current inventory and the chief executive officer’s personal guaranty.  These working capital notes require payments equal to 75-100% of current sales of that specific secured inventory and mature in 180 days.  In connection with the original note, the Company issued 250,000 shares of its common stock to the note holder valued at $0.50 per share for a total of $125,000. The fair value of the common stock issued was recorded as a discount to the note payable and the discount was amortized over the term of that agreement to interest expense using the straight-line method that approximates the effective interest method.

During the nine months ending September 30, 2019, the Company and the Company’s wholly-owned operating subsidiary completed the sale of additional short term notes under similar terms in the additional principal amount totaling $2,524,875.  The notes are secured by a pledge of certain of the Company’s current inventory and the chief executive officer’s personal guaranty.  These short term working capital notes mature in 30-180 days.  In connection with these notes, the Company issued 1,400,000 shares of its common stock, warrants to purchase 125,000 shares of its common stock and a conversion feature for 300,000 shares at $0.50 per share.  The fair value of these share incentives was calculated to be $1,048,368.   The fair value of the share incentives was recorded as a discount to the note payable and the discount was amortized over the term of those agreements to interest expense using the straight-line method that approximates the effective interest method.  Interest expense recorded as a result of amortization of discount for the nine months ended September 30, 2019 is $572,962.  As of September 30, 2019 and December 31, 2018, the outstanding balance due on the working capital notes was $3,222,990 and $1,165,787, respectively.

NOTE 8- CONVERTIBLE DEBENTURE – RELATED PARTY

Since September 16, 2016, the Company sold convertible debentures in the amount of $2,405,000 in the form of 12% three-year convertible term notes. Interest is accrued at an annual rate of 12% and is payable in common stock at maturity. Both principal and interest may be converted into common stock at a price of $0.50 per share after the passage of 181 days. The Company may redeem the debenture at its option or force conversion after common stock trades at a price in excess of $1.00 per share for five days. The Holder may force redemption after the Company raises $3 million dollars in equity. The holders of the convertible debentures were issued three year warrants to purchase 2,405,000 shares of the Company’s common stock at $1.00 per share. As of December 31, 2018, the Company received $2,405,000 under this convertible debenture.  In April and November, 2018, debentures with face value of $2,060,000 plus accrued interest of $280,529 were converted into 4,681,058 shares of common stock. As of December 31, 2018, the Company had a face value of $345,000 due under this convertible debenture.

The convertible debenture holder, based on its agreement, with maturities beginning September 16, 2019 has the option to convert their principal and interest into 690,000 (plus 102,040 for accrued interest) shares of common stock. The fair value of the embedded beneficial conversion feature resulted in no discount to the convertible debenture – related party at December 31, 2018 and a discount of $159,610 at September 30, 2019.

During the year ended December 31, 2018, the Company sold convertible debt instruments in the amount of $270,000.  Since public trading of the Company’s common stock began in 2018, the Company determined a beneficial conversion discount of $270,000 applied to the 2018 sales the convertible debt instruments.  The discount reduced the liability balance of the debentures to $0 when the debentures were issued and recorded the proceeds of the sale as Additional paid in Capital.  The discount will be amortized over the three year term of the debentures.  The discounted balance of the convertible debentures at September 30, 2019 was $185,390.

The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and fair value measurement under ASC 820 and determined that the beneficial conversion feature under the convertible debenture should be recorded as a discount to debt if market was more than the conversion feature.

16

AMERICAN REBEL HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(unaudited)

The convertible debenture - related party is measured at fair value at the end of each reporting period or termination of the debenture agreement with the change in fair value recorded to earnings. The fair value of the embedded beneficial conversion feature did not result in a discount to the convertible debenture - related party. The discount if and when we have one will be amortized over the term of agreement or modification to the agreement to interest expense using the straight-line method that approximates the effective interest method.

The Company used the eight steps to determine fair value under ASC 820. (1) Identify the item to be valued and the unit of account. (2) Determine the principal or most advantageous market and the relevant market participants. (3) Select the valuation premise to be used for asset measurements. (4) Consider the risk assumptions applicable to liability measurements. (5) Identify available inputs. (6) Select the appropriate valuation technique(s). (7) Make the measurement. (8) Determine amounts to be recognized and information to be disclosed.

Fair value was determined by the market price of the Company’s publicly traded stock with no discount allowed. This was determined as of the effective date of the agreement entered convertible debenture - related party. The conversion price was then compared to fair value, determined by market price and the difference between the two multiplied by the number of shares that would be issued upon conversion. Since public trading of the common stock began in 2018, market price of the Company’s traded stock has ranged from $0.15 to $2.50 per share.

As of September 30, 2019, the outstanding balance due the convertible debentures holders was $345,000, including $0 in original issue discount or interest.

NOTE 9 – EMBEDDED DERIVATIVES – FINANCIAL INSTRUMENTS

Since September 2016 the Company entered into a financial instrument, which consists of a convertible debenture, containing a conversion feature. Generally financial instruments are convertible into shares of the Company’s common stock; at prices that are either marked to the volume weighted average price of the Company’s publicly traded stock or a static price determinative from each financial instrument agreement. These prices may be at a significant discount to market as determined overall by the volume weighted average price of the Company’s publicly traded common stock. The Company for all intent and purposes considers these discounts to be fair market value as would be determined in an arm’s length transaction with a willing buyer and the restrictive nature of the common stock issued, unless issued pursuant to a registration or some other registered shares with the SEC.

The Company accounts for the fair value of the conversion feature in accordance with ASC 815-15, Derivatives and Hedging; Embedded Derivatives, which requires the Company to bifurcate and separately account for the conversion features as an embedded derivative contained in the Company’s convertible debt and original issue discount notes payable. The Company is required to carry the embedded derivative on its balance sheet at fair value and account for any unrealized change in fair value as a component in its results of operations. The Company valued the embedded derivatives using eight steps to determine fair value under ASC 820. (1) Identify the item to be valued and the unit of account. (2) Determine the principal or most advantageous market and the relevant market participants. (3) Select the valuation premise to be used for asset measurements. (4) Consider the risk assumptions applicable to liability measurements. (5) Identify available inputs. (6) Select the appropriate valuation technique(s). (7) Make the measurement. (8) Determine amounts to be recognized and information to be disclosed.

The fair value of the conversion feature of the financial instrument as of September 30, 2019 was $0. The Company did not record any expense associated with the embedded derivatives at September 30, 2019. No embedded derivative expense was realized as there was no change in the conversion price.

17

AMERICAN REBEL HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(unaudited)

NOTE 10 – INCOME TAXES

At September 30, 2019 and December 31, 2018, the Company had a net operating loss carryforward of $13,181,515 and $7,287,559, respectively, which begins to expire in 2034.

Components of net deferred tax asset, including a valuation allowance, are as follows:

		September 30, 2019		December 31, 2018
		(unaudited)		(audited)
Deferred tax asset:
Net operating loss carryforward	$	2,768,118	$	1,530,387
Total deferred tax asset		2,768,118		1,530,387
Less: Valuation allowance		(2,768,118)		(1,530,387)
Net deferred tax asset	$	-	$	-

Valuation allowance for deferred tax assets as of September 30, 2019 and December 31, 2018 was $2,768,118 and $1,530,387, 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 September 30, 2019 and December 31, 2018 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, 2018:

Federal statutory rate	(21.0)	%
State taxes, net of federal benefit	(0.0)	%
Change in valuation allowance	21.0	%
Effective tax rate	0	%

NOTE 11 – SHARE CAPITAL

The Company is authorized to issue 100,000,000 shares of its $0.001 par value common stock and 1,000,000 shares of its $0.001 par value preferred stock.

Common stock

In January 2018, the Company issued 467,667 shares of its common stock to pay professional and consulting fees and recorded an expense based on fair market value of $0.50 and $0.60 per share for a total expense of $263,334.

In January 2019, the Company issued a 30 day warrant to purchase 250,000 shares of its common stock at a price of $0.01 per share to pay consulting fees. Total fair value of $160,000 was recorded as an expense of $160,000 at June 30, 2019.  The warrants were exercised and 250,000 shares of common stock were issued.

In January 2019, the Company’s wholly-owned operating subsidiary completed the sale of a secured promissory note in the principal amount of $300,000 with an interest rate of 16.66% per annum to a private investor.  The note is secured by a pledge of all of the Company’s current inventory and the chief executive officer’s personal guaranty.  This working capital note matures in 120 days.  In connection with this note, the Company issued 100,000 shares of its common stock to the note holder.

In May 2019, the Company identified 50,000 shares of common stock in its subsidiary that had been awarded at date of incorporation but not recorded by the Company.  The share count was corrected to include these shares valued at Par value of $0.001.

18

AMERICAN REBEL HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(unaudited)

NOTE 11 – SHARE CAPITAL (CONTINUED)

In September 2019, the Company issued 1,400,000 shares of its common stock in conjunction with notes payable and recorded loan discount of $812,000 based on fair market value of $0.30 and $0.95 per share. Of the loan discount recorded, the amount that had been amortized to interest expense at September 30, 2019 was $228,460.

In September 2019, the Company issued 9,700,000 shares of its common stock to pay professional and consulting fees and recorded an expense based on fair market value of $0.30 and $0.95 per share for a total expense of $3,432,000, and recorded prepaid expense of $675,750.

At September 30, 2019 and December 31, 2018, there were 41,412,058 and 29,912,058 shares of common stock issued and outstanding, respectively.

NOTE 12 – WARRANTS AND OPTIONS

In January 2019, the Company issued three-year and five-year warrants to purchase 75,000 shares of the Company’s common stock at $1.00 per share in conjunction with working capital loans totaling $75,000.  In September 2019, the Company issued three-year warrants to purchase 50,000 shares of the Company’s common stock at $1.00 per share in conjunction with working capital loans totaling $51,875.  

As of September 30, 2019, there were 2,420,000 warrants issued and outstanding. As of December 31, 2018, there were 2,245,000 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 September 30, 2019. 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 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.

		September 30, 2019		December 31, 2018
		(unaudited)		(audited)
Stock Price	$	0.3	$	0.7
Exercise Price	$	1	$	1
Term (expected in years)		3		3
Volatility		284.20%		163.00%
Annual Rate of Dividends		0.00%		0.00%
Risk Free Rate		1.58%		2.69%

19

AMERICAN REBEL HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(unaudited)

NOTE 12 – WARRANTS AND OPTIONS (CONTINUED)

Stock Purchase Warrant

The following table summarizes all warrant activity for the year ended December 31, 2018 and the nine months ended September 30, 2019.

	Shares	Weighted-Average Exercise Price Per Share	Remaining term	Intrinsic value
Outstanding, December 31, 2017	2,635,000	$0.91	1.18 years	-
Granted	270,000	$1.00	.85 years	-
Exercised	660,000	$0.50	-	-
Expired	-	-	-	-
Outstanding and Exercisable at December 31, 2018	2,245,000	$0.58	075 years	-
Granted	425,000	$0.41	1.59 years	-
Exercised	250,000	$0.01	-	-
Expired	-	-	-	-
Outstanding and Exercisable at September 30, 2019	2,420,000	$0.61	0.98 years	-

NOTE 13 – SUBSEQUENT EVENTS

The Company evaluated all events that occurred after the balance sheet date of September 30, 2019 through the date the financial statements were issued and determined that there were the following subsequent events:

Subsequent to September 30, 2019, the Company entered into working capital loans substantially secured by inventory in the amount of $445,000.  These loans are due in approximately 180 days or 1 year from issue.  In conjunction with these loans, the company issued 150,000 shares of common stock and 50,000 warrants to purchase the Company's common stock at the exercise price of $1.00. Warrants will expire November 20, 2022. The Company also issued 1,500,000 shares of common stock as compensation to a group of shareholders.

20

FORWARD LOOKING STATEMENTS

This document contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the dates they are made. You should, however, consult further disclosures we make in this Quarterly Report on Form 10-Q, Current Reports on Form 8-K and other reports made under the Exchange Act.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:

our ability to efficiently manage and repay our debt obligations; 

our inability to raise additional financing for working capital; 

our ability to generate sufficient revenue in our targeted markets to support operations; 

significant dilution resulting from our financing activities; 

actions and initiatives taken by both current and potential competitors; 

supply chain disruptions for components used in our products; 

manufacturers inability to deliver components or products on time; 

our ability to diversify our operations; 

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; 

adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations; 

changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate; 

deterioration in general or global economic, market and political conditions; 

inability to efficiently manage our operations; 

inability to achieve future operating results; 

the unavailability of funds for capital expenditures; 

our ability to recruit, hire and retain key employees; 

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

the other risks and uncertainties detailed in this report. 

In this form 10-Q references to “American Rebel”, “ARI”, “the Company”, “we,” “us,” “our” and similar terms refer to American Rebel Holdings, Inc. and its wholly owned operating subsidiary, American Rebel, Inc.

21

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis should be read along with the financial statements included in this Quarterly Report on Form 10-Q (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 quoted in United States dollars.

Operations

We are a company with limited financial resources. We have not established a firm source of equity or debt financing. Our independent registered public accounting firm has included an explanatory paragraph in their report filed on April 5, 2019 and included with our Form 10-K filed on April 5, 2019 emphasizing the uncertainty of our ability to remain as a going concern. An investor or financial statement reader should read our Risk Factors in full.

Description of Business

Company Overview

American Rebel is boldly positioning itself as America’s Patriotic Brand. The Company has identified the market opportunity to design, manufacture, and market innovative concealed carry products and safes. American Rebel accesses its market uniquely through its positioning as America’s Patriotic Brand and the appeal of its products as well as through the profile and public persona of its founder and CEO, Andy Ross. Andy hosted his own television show for 12 years, has made multiple appearances over the years at trade shows, and is well-known in the archery world as the founder of Ross Archery, which was the world’s fastest growing bow company in 2007 and 2008. Andy has also released 3 CDs, done numerous radio and print interviews, and performed many concerts in front of thousands of people. Andy has the ability to present American Rebel to large numbers of potential customers through the appeal of his music and other supporting appearances. For example, his appearance on the History Channel hit show Counting Cars in February 2014 has been viewed by 2 million people or more. Bringing innovative products that satisfy an existing demand to the market through exciting means is the American Rebel blueprint for success.

Results of Operations

From inception through September 30, 2019, we have generated an operating deficit of $13,181,515. The Company continues to pursue brand development and develop and purchase new products.  These activities are supported by borrowing funds and issuing common stock in compensation.  We expect to incur additional losses during the fiscal year ending December 31, 2019 and beyond, principally as a result of our increased investment in inventory, marketing expenses due to product launch, and the initial limited sales of our new products as we seek to establish them in the marketplace.

Nine months Ended September 30, 2019 Compared To Nine months Ended September 30, 2018

Revenue and cost of goods sold

For the nine months ended September 30, 2019, we reported Sales of $294,032, compared to Sales of $86,361 for the nine months ended September 30, 2018. For the nine months ended September 30, 2019, we reported Cost of Sales of $192,104, compared to Cost of Sales of $36,224 for the nine months ended September 30, 2018.  For the nine months ended September 30, 2019, we reported Gross Profit of $101,928, compared to Gross Profit of $50,136 for the nine months ended September 30, 2018.  Sales of our products began during the fourth quarter of 2016 and the sales increase during the third quarter of 2019 is attributable to the Company’s first sales of its new line of safes.

Operating Expenses

Total operating expenses for the nine months ended September 30, 2019 were $5,125,366 compared to $1,334,540 for the nine months ended September 30, 2018 as further described below.

For the nine months ended September 30, 2019, we incurred consulting and business development expenses of $3,667,062, compared to consulting and business development expenses of $442,215 for the nine months ended September 30, 2018. The increase in consulting and business development expenses relates primarily to expansion of activities in preparation product launch.

For the nine months ended September 30, 2019, we incurred product development expenses of $263,298, compared to product development expenses of $16,118 for the nine months ended September 30, 2018. The change in product development expenses relates primarily to change of activities in preparation of product launches.

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For the nine months ended September 30, 2019, we incurred marketing and brand development expenses of $508,235, compared to marketing and brand development expenses of $522,759 for the nine months ended September 30, 2018. Marketing and brand development expenses have remained constant as the Company establishes its brand in the marketplace.

For the nine months ended September 30, 2019, we incurred general and administrative expenses of $640,250, compared to general and administrative expenses of $306,928 for the nine months ended September 30, 2018. The increase relates primarily to an increase in professional, consulting and operating fees due to the acceleration in our activities in connection with our planned 2019 product launches.

For the nine months ended September 30, 2019, we incurred depreciation expense of $46,521, compared to depreciation expense of $46,521 for the nine months ended September 30, 2018. The depreciation relates primarily to acquisition of marketing equipment primarily for trade shows for use in connection with our planned product launches.

Other income and expenses

For the nine months ended September 30, 2019, we incurred interest expense of $870,518, compared to interest expense of $203,145 for the nine months ended September 30, 2018. The increase in interest expense is due to the increased borrowings by the Company to provide capital to execute its business plan.

Net Loss

Net loss for the nine months ended September 30, 2019 amounted to $5,893,956, resulting in a loss per share of $0.19, compared to $1,487,549 for the nine months ended September 30, 2018, resulting in a loss per share of $0.05. The change in the net loss from the nine months ended September 30, 2018 to the nine months ended September 30, 2019 is primarily due to the investment in compensation paid with common stock in 2019, offset by increased inventory and marketing in conjunction with our product launches.

Three Months Ended September 30, 2019 Compared To Three Months Ended September 30, 2018

Revenue and cost of goods sold

For the three months ended September 30, 2019, we reported Sales of $164,970, compared to Sales of $26,831 for the three months ended September 30, 2018. For the three months ended September 30, 2019, we reported Cost of Sales of $120,874, compared to Cost of Sales of $11,357 for the three months ended September 30, 2018.  For the three months ended September 30, 2019, we reported Gross Profit of $44,096, compared to Gross Profit of $15,474 for the three months ended September 30, 2018.  Sales of our products began during the fourth quarter of 2016 and the sales increase during the third quarter of 2019 is attributable to the Company’s first sales of its new line of safes.

Operating Expenses

Total operating expenses for the three months ended September 30, 2019 were $3,788,944 compared to $342,344 for the three months ended September 30, 2018 as further described below.

For the three months ended September 30, 2019, we incurred consulting and business development expenses of $3,168,335, compared to consulting and business development expenses of $146,272 for the three months ended September 30, 2018. The change in consulting and business development expenses relates primarily to expansion of activities in preparation of 2019 product launch and to issue shares to lenders and contractors that were necessary to incentivize lenders and contractors providing capital and services to the Company.

For the three months ended September 30, 2019, we incurred product development expenses of $39,331, compared to product development expenses of $316 for the three months ended September 30, 2018. The change in product development expenses relates primarily to change of activities in preparation of several 2019 product launches.

For the three months ended September 30, 2019, we incurred marketing and brand development expenses of $153,764, compared to marketing and brand development expenses of $127,584 for the three months ended September 30, 2018. The change in marketing and brand development expenses relates primarily to expansion of activities including major trade shows in conjunction with the several 2019 product launches.

For the three months ended September 30, 2019, we incurred general and administrative expenses of $412,007, compared to general and administrative expenses of $52,664 for the three months ended September 30, 2018. The change relates primarily to a change in professional, consulting and operating fees due to the change in our activities in connection with our 2019 product launches.

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For the three months ended September 30, 2019, we incurred depreciation expense of $15,507, compared to depreciation expense of $15,507 for the three months ended September 30, 2018. The Company has not capitalized any equipment recently and depreciation is calculated on a “Straight-line” method so the amounts deducted for each quarter have not changed.

Other income and expenses

For the three months ended September 30, 2019, we incurred interest expense of $424,346, compared to interest expense of $50,345 for the three months ended September 30, 2018. The increase in interest expense is due to the increased borrowings by the Company to provide capital to execute its business plan.        

Net Loss

Net loss for the three months ended September 30, 2019 amounted to $4,169,194, resulting in a loss per share of $0.13, compared to $377,215 for the three months ended September 30, 2018, resulting in a loss per share of $0.01. The increase in the net loss from the three months ended September 30, 2018 to the three months ended September 30, 2019 is primarily due to the investment in compensation, inventory and marketing in conjunction of our 2019 product launches.

Liquidity and Capital Resources

We are a development stage company and realized minimal revenue from our planned operations. We have a working capital deficit of $888,280 at December 31, 2018 and $2,072,325 at September 30, 2019, and have incurred a deficit of $13,181,515 from inception to September 30, 2019. We have funded operations primarily through the issuance of capital stock, convertible debt and other securities.

During the nine months ended September 30, 2019, we raised net cash of $0 by issuance of common shares, as compared to $330,000 for the nine months ended September 30, 2018. During the nine months ended September 30, 2019, we raised net cash of $0 through the issuance of convertible promissory notes, as compared to $120,000 for the nine months ended September 30, 2018. During the nine months ended September 30, 2019, we raised net cash of $2,524,875 through the issuance of notes payable secured by inventory, as compared to $550,000 for the nine months ended September 30, 2018.   During the nine months ended September 30, 2019, we repaid $12,092 on loans received from our CEO, as compared to $48,930 that we repaid in loans from our CEO during the nine months ended September 30, 2018.

As we proceed with the launch of our American Rebel concealed carry and safes product lines, we have devoted and expect to continue to devote significant resources in the areas of capital expenditures and marketing, sales, and operational expenditures.

We expect to require additional funds to further develop our business plan, including the anticipated launch of additional products in addition to the launch of our concealed carry and safes product lines. Since it is impossible to predict with certainty the timing and amount of funds required to establish profitability, we anticipate that we will need to raise additional funds through equity or debt offerings or otherwise in order to meet our expected future liquidity requirements. Any such financing that we undertake will likely be dilutive to existing stockholders.

In addition, we expect to also need additional funds to respond to business opportunities and challenges, including our ongoing operating expenses, 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 also seek additional funds through arrangements with collaborators or other third parties. We may not be able to negotiate any such arrangements on acceptable terms, if at all. If we are unable to obtain additional funding on a timely basis, we may be required to curtail or terminate some or all of our product lines.

Critical Accounting Policies

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

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

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

Emerging Growth Company - We qualify as an “emerging growth company” under the recently enacted Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, among other things, we will not be required to:

Have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; 

Submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency” 

Obtain shareholder approval of any golden parachute payments not previously approved; and 

Disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the Chief Executives compensation to median employee compensation. 

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

We will remain an “emerging growth company” until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion; (ii) the fifth anniversary of our first sale of common equity pursuant to an effective registration statement; (iii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed third fiscal quarter; or (iv) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are an emerging growth company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Principal Financial Officer, Charles A. Ross, Jr., evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on the evaluation, Mr. Ross concluded that as a smaller reporting company and an emerging growth company, effectiveness of  our disclosure controls and procedures are limited due to the size of the company and the limited number of personnel.  The Company has hired a financial expert with the experience in creating and managing internal control systems as well to continue to improve the effectiveness of our internal controls and financial disclosure controls.  The Company will continue to evaluate its disclosure controls and procedures and strive to improve the effectiveness of these controls and procedures.

Changes in Internal Control over Financial Reporting

There has been no change in the Company’s internal controls over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Internal control systems, no matter how well designed and operated, have inherent limitations.  Therefore, even a system which is determined to be effective cannot provide absolute assurance that all control issues have been detected or prevented.  Our systems of internal controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.

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Part II: Other Information

Item 1 - Legal Proceedings

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.

Item 1a – Risk Factors

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item. However, we detailed significant business risks in Item 1A to our Form 10-K for the year ended December 31, 2018 filed on April 5, 2019, to which reference is made herein.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

In May 2019, the Company issued a three year warrant to purchase 50,000 shares of its common stock at a price of $1.00 per share in conjunction with a working capital loan. Total fair value of $45,822 was recorded as contributed capital and interest expense of $25,966 was recorded at September 30, 2019.

During the three months ended September 30, 2019, in conjunction with working capital loans, the company issued 1,300,000 shares of common stock and issued a three year warrant to purchase 50,000 shares of common stock at a price of $1.00 per share.  The Company also issued 9,700,000 shares of common stock as compensation to key personnel including officers, directors and service providers.

Subsequent to September 30, 2019, in conjunction with working capital loans, the company issued 250,000 shares of common stock.  The Company also issued 1,500,000 shares of common stock to a group of shareholders as compensation.

All of the above-described issuances were exempt from registration pursuant to Section 4(a)(2) and/or Regulation D of the Securities Act as transactions not involving a public offering. With respect to each transaction listed above, no general solicitation was made by either the Company or any person acting on its behalf. All such securities issued pursuant to such exemptions are restricted securities as defined in Rule 144(a)(3) promulgated under the Securities Act, appropriate legends have been placed on the documents evidencing the securities, and may not be offered or sold absent registration or pursuant to an exemption there from.

Issuer Purchases of Equity Securities

We did not repurchase any of our equity securities during the quarter ended September 30, 2019.

Item 3 – Defaults upon Senior Securities

As previously disclosed on NOTE 6, a loan assumed by the Company January 1, 2016 for a promotional vehicle is past due. Interest continues to accrue and by mutual agreement of the parties the outstanding balance will be addressed upon the securing of significant equity investment in the Company.

Item 4 – Mine Safety Disclosures

Not applicable.

Item 5 – Other Information

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Item 6 – Exhibits

American Rebel Holdings, Inc. includes by reference the following exhibits:

3.1*	Articles of Incorporation
3.2*	Bylaws of CubeScape, Inc.
3.3**	Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.3 to Form 8-K, filed January 10, 2017)
4.1***	$250,000 Note (Incorporated by reference to Exhibit 4.1 to Form 8-K, filed July 12, 2017)
10.1*	Conflict of Interest Agreement
10.2****	Amended Stock Purchase and Reorganization Agreement (Incorporated by reference to Exhibit 10.3 to Form 8-K, filed September 22, 2017)
10.3***	Loan Agreement (Incorporated by reference to Exhibit 10.1 to Form 8-K, filed July 12, 2017)
10.4***	Security Agreement (Incorporated by reference to Exhibit 10.2 to Form 8-K, filed July 12, 2017)
10.5***	Guaranty (Incorporated by reference to Exhibit 10.3 to Form 8-K, filed July 12, 2017)
10.6*****	$250,000 Working Capital Loan Agreement, Note, and Security Agreement dated September 29, 2018 (Incorporated by reference to Exhibit 10.6 to Form 10-Q, filed June 18, 2019)
10.7*****	Notice of Amendment to September 29, 2018 Note (Incorporated by reference to Exhibit 10.7 to Form 10-Q, filed June 18, 2019)
10.8*****	$50,000 Convertible Term Note dated October 2, 2018 (Incorporated by reference to Exhibit 10.8 to Form 10-Q, filed June 18, 2019)
10.9*****	$100,000 Convertible Term Note dated October 5, 2018 (Incorporated by reference to Exhibit 10.9 to Form 10-Q, filed June 18, 2019)
10.10*****	$400,000 Working Capital Loan Agreement and Note dated November 1, 2018 (Incorporated by reference to Exhibit 10.10 to Form 10-Q, filed June 18, 2019)
10.11*****	$130,000 Loan and Security Agreement to invest in safe inventory dated January 2, 2019 (Incorporated by reference to Exhibit 10.11 to Form 10-Q, filed June 18, 2019)
10.12*****	$55,000 Loan Agreement dated January 14, 2019 (Incorporated by reference to Exhibit 10.12 to Form 10-Q, filed June 18, 2019)
10.13*****	$25,000 Loan Agreement dated January 15, 2019 (Incorporated by reference to Exhibit 10.13 to Form 10-Q, filed June 18, 2019)
10.14*****	$300,000 Loan Agreement dated January 22, 2019 (Incorporated by reference to Exhibit 10.14 to Form 10-Q, filed June 18, 2019)
10.15*****	$150,000 Convertible Term Note dated March 1, 2019 (Incorporated by reference to Exhibit 10.15 to Form 10-Q, filed June 18, 2019)
31.1#	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2#	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1#	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document (1)
101.SCH	XBRL Taxonomy Extension Schema (1)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase (1)
101.DEF	XBRL Taxonomy Extension Definition Linkbase (1)
101.LAB	XBRL Taxonomy Extension Labels Linkbase (1)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase (1)

* Filed with initial filing of the Company’s registration statement on Form S-1, August 4, 2015.

** Filed as an exhibit to the Company’s Form 8-K filed on January 10, 2017.

*** Filed as an exhibit to the Company’s Form 8-K filed on July 12, 2017.

**** Filed as an exhibit to the Company’s Form 8-K filed on September 22, 2017.

***** Filed aa an exhibit to the Company’s Form 10-Q filed on June 18, 2019.

# Filed herewith.

(1) The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: December 19, 2019

AMERICAN REBEL HOLDINGS, INC.
(Registrant)
By:	/s/ Charles A. Ross, Jr.
By:	Charles A. Ross, Jr.
	President, CEO, Principal Executive Officer, Treasurer, Chairman, CFO, Principal Financial Officer and Principal Accounting Officer

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