EX-99.3 5 ex99-3.htm

 

Exhibit 99.3

 

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, 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 March 31, 2022, gives effect to the transaction as if it occurred on that date. The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 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 March 31, 2022, and the audited historical consolidated financial statements as of and for the year ended December 31, 2021, which are being filed concurrent herewith.

 

 

 

 

AMERICAN REBEL HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

   American   Champion   Purchase   Financing       
   Rebel   Safe Et Al   Transaction   Transaction     Pro 
   Holdings, Inc   Company   Accounting   Accounting     Forma 
   Historical   Historical   Adjustments   Adjustments     Combined 
   31-Mar-22   31-Mar-22   31-Mar-22   31-Mar-22     31-Mar-22 
   (unaudited)   (unaudited)   (unaudited)   (unaudited)     (unaudited) 
ASSETS                                          
                            
CURRENT ASSETS:                           
Cash and cash equivalents  $3,508,681   $5,677   $-   $2,500,000 a  $6,014,358 
Accounts Receivable   162,195    1,636,180    647,147    -      2,445,522 
Prepaid expense   611,492    6,238    (250,000)   -      367,730 
Inventory   643,495    4,276,419    -    -      4,919,914 
Inventory deposits   647,147    -    (647,147)   -      - 
Total Current Assets   5,573,010    5,924,514    (250,000)    2,500,000      13,747,524 
                            
Property and Equipment, net   -    429,359    400,000    -      829,359 
                            
OTHER ASSETS:                           
Goodwill   -    -    6,465,469    -      6,465,469 
Lease Deposit   -    12,665    -    -      12,665 
Total Other Assets   -    12,665    6,465,469    -      6,478,134 
                            
TOTAL ASSETS  $5,573,010   $6,366,538   $6,615,469   $2,500,000     $21,055,017 
                            
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)                           
                            
CURRENT LIABILITIES:                           
Accounts payable and accrued expense   114,259    1,660,588    -    -      1,774,847 
Accrued Interest   67,919    -    -    -      67,919 
Loan – Officer - Related party   -    -    -    -      - 
Loan – Working Capital   606,234    1,671,419    -    -      2,277,653 
Loans - Nonrelated parties   8,662    -    -    -      8,662 
Total Current Liabilities   797,074    3,332,007    -    -      4,129,081 
                            
    -    -    -    -      - 
TOTAL LIABILITIES   797,074    3,332,007    -    -      4,129,081 
                            
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    3,034,531    6,615,469    2,500,000 a   46,518,914 
Accumulated deficit   (29,597,894)   -    -    -      (29,597,894)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)   4,775,936    3,034,531    6,615,469    2,500,000      16,925,936 
                            
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)  $5,573,010   $6,366,538   $6,615,469   $2,500,000     $21,0255,017 

 

See Notes to Financial Statements.

 

 

 

 

AMERICAN REBEL HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

   American   Champion   Purchase   Financing       
   Rebel   Safe Et Al   Transaction   Transaction     Pro 
   Holdings, Inc   Company   Accounting   Accounting     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) b  $18,691,685 
Cost of goods sold   812,130    14,354,863    -    (600,000)

b

   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 

c

   (339,534)
Interest Income   0    305                305 
Payroll Protection Loan Forgiven   -    625,064         -      625,064 
Gain (Loss) on extinguishment of debt   (725,723)   -    -    725,723 

c

   - 
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   Safe Et Al   Transaction   Transaction     Pro 
   Holdings, Inc   Company   Accounting   Accounting     Forma 
   Historical   Historical   Adjustments   Adjustments     Combined 
   31-Mar-22   31-Mar-22   31-Mar-22   31-Mar-22     31-Mar-22 
   (unaudited)   (unaudited)   (unaudited)   (unaudited)     (unaudited) 
Revenue  $154,080   $4,579,163   $               -   $(60,000)

b

  $4,673,243 
Cost of goods sold   96,719    3,149,285    -    (60,000) b   3,186,004 
Gross margin   57,361    1,429,878    -    -      1,487,239 
                            
Expenses:                           
Consulting – business development   462,989    488,640    -    -      951,629 
Product development costs   33,273    2,681    -    -      35,954 
Marketing and brand development costs   80,970    214,385    -    -      295,355 
Administrative and other   438,305    159,391    -    -      597,696 
Depreciation expense   900    16,431    -    -      17,331 
Operating expenses   1,016,437    881,528    -    -      1,897,965 
Operating income (loss)   (959,076)   548,350    -    -      (410,726)
                            
Other Income (Expense)                           
Interest expense   (292,405)   (26,296)   -    250,000  c   (68,701)
Interest Income   0    555                555 
Payroll Protection Loan Forgiven   -    -         -      - 
Gain (Loss) on extinguishment of debt   (1,376,756)   -    -    1,376,756 

c

   -
Net income (loss) before income tax provision   (2,628,237)   522,609    -    1,626,756      (478,872)
Provision for income tax   -    -    -    -      - 
Net income (loss)  $(2,628,237)  $522,609   $-   $1,626,756     $(478,872)
Basic and diluted income (loss) per share  $(0.83)  $-   $-   $-     $(0.15)
Weighted average common shares outstanding - basic and diluted   3,169,000    -    -    -      3,169,000 

 

See Notes to Financial Statements.

 

 

 

 

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 proposed transaction closes. 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 three months ended March 31, 2022, the audited statements of operations for the year ended December 31, 2021, and the unaudited condensed balance sheet as of March 31, 2022.

 

Note 2 – Description of Transaction

 

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

 

Under the terms of the Champion Purchase Agreement, the Registrant has agreed to pay the Seller total consideration of $9,500,000 in cash plus reimbursement for certain purchases as follows:

 

  $9,150,000 in cash on Closing;
  $350,000 cash deposit
  $400,000_reimbursement for certain equipment purchased by Seller 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 three months ended March 31, 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 for the purpose of this unaudited pro forma condensed combined financial information is approximately $9,900,000. The following table summarizes the preliminary estimate of the consideration to be transferred as a result of the combination.

 

Deposit paid with contract

  $350,000 

Cash payment due at closing

   9,150,000 

Estimated reimbursement for equipment purchased since June 30, 2021

   400,000 
Estimated Transaction Consideration  $9,900,000 

 

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.

 

 

 

 

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 the consideration, upon the completion of the acquisition, will be based on Champion’s assets acquired and liabilities assumed as of the acquisition date, and will depend on a number of factors that cannot be predicted with certainty at this time. Therefore, the actual allocations will differ from the transaction accounting adjustments presented herein. The allocation is dependent upon certain valuation and other studies that have not yet been completed. Accordingly, the pro forma allocation of the consideration will be subject to further adjustments as additional information becomes available and as additional analyses and final valuations are completed. There can be no assurances that these additional analyses and final valuations will not result in significant 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 March 31, 2022, with the excess recorded to goodwill (amounts in thousands):

 

Total assets  $6,766,538 
Total liabilities   3,332,007 
Net acquired tangible assets   3,434,531
Goodwill   6,465,469 
Allocation of the Estimated Transaction Consideration  $9,900,000 

 

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 March 31, 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:

 

   Three Months
Ended
March 31, 2022
   Year Ended
December 31, 2021
 

Revenue

  $(60,000)  $(600,000) 

Cost of Goods Sold

   (60,000)   (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:

 

   Three Months
Ended
March 31, 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