AMERICAN REBEL HOLDINGS INC
For the period ended Dec 31, 2024. Filed Apr 9, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Apr 9, 2025
AREB$0.31-9.0%Stored close · as of Jul 8, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-04-12.
0001493152-24-014473
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-K
Period ended 2024-12-31; filed 2025-04-09.
0001641172-25-003346
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 68 previous paragraphs and 74 current paragraphs.
25 unchanged; 17 reworded; 31 added; 26 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 1 previous and 1 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (31)
Current report
American Rebel Beer
Current report
Loans
Current report
On January 1, 2024, we entered into a new loan agreement with an existing lender who was owed $150,000 which was due December 31, 2023. We repaid the lender $75,000 due under the prior loan and entered into new loan agreement where we agreed to pay the lender the remaining $75,000 on or before March 31, 2024. The principal balance bears interest at 12% per annum.
Current report
On March 21, 2024, we entered into a securities purchase agreement with an accredited investor (“the Lender”), pursuant to which the Lender made a loan to us, evidenced by a promissory note in the principal amount of $235,750. A one-time interest charge or points amounting to 15% (or $35,362) and fees of $5,000 were applied at the issuance date, resulting in net proceeds of $200,000. Accrued, unpaid interest and outstanding principal, subject to adjustment, is required to be paid in seven payments; the first payment shall be in the amount of $162,667.20 and is due on June 30, 2024 with six subsequent payments each in the amount of $18,074.14 due on the 30 th of each month thereafter (total repayment of $271,112 on or by December 31, 2024). We have the right to prepay the note within one hundred eighty days at a discount of 5%. Effective interest rate on this loan is 81.1% with 15 points paid up front as a fee.
Current report
On March 22, 2024, we entered into another Revenue Interest Purchase Agreement with an individual accredited investor, pursuant to which the investor purchased a revenue interest from the Company for $100,000. As consideration for such payment, commencing on June 1, 2024 and continuing thereafter until all amounts are repurchased by us pursuant to the terms of the Revenue Interest Purchase Agreement, the investor has a right to receive $10,000 per month from us generated from its operating subsidiaries.
Current report
On April 1, 2024, we entered into an additional Revenue Interest Purchase Agreement with an individual accredited investor, pursuant to which the investor purchased a revenue interest from us for $100,000. As consideration for such payment, commencing on June 1, 2024 and continuing thereafter until all amounts are repurchased by us pursuant to the terms of the Revenue Interest Purchase Agreement, the investor has a right to receive $10,000 per month from us generated from our operating subsidiaries.
Current report
On April 9, 2024, we entered into an additional Revenue Interest Purchase Agreement with an individual accredited investor, pursuant to which the investor purchased a revenue interest from us for $100,000. As consideration for such payment, commencing on June 1, 2024 and continuing thereafter until all amounts are repurchased by us pursuant to the terms of the Revenue Interest Purchase Agreement, the investor has a right to receive $10,000 per month from us generated from our operating subsidiaries.
Current report
On April 9, 2024, we entered into an additional Revenue Interest Purchase Agreement with an individual accredited investor, pursuant to which the investor purchased a revenue interest from us for $300,000. As consideration for such payment, commencing on June 1, 2024 and continuing thereafter until all amounts are repurchased by the Company pursuant to the terms of the Revenue Interest Purchase Agreement, the investor has a right to receive $30,000 per month from us generated from its operating subsidiaries.
Current report
On April 9, 2024, we entered into an additional Revenue Interest Purchase Agreement with an individual accredited investor, pursuant to which the investor purchased a revenue interest from us for $75,000. As consideration for such payment, commencing on June 1, 2024 and continuing thereafter until all amounts are repurchased by us pursuant to the terms of the Revenue Interest Purchase Agreement, the investor has a right to receive $7,500 per month from us generated from our operating subsidiaries.
Current report
On April 19, 2024, we entered into a Revenue Interest Purchase Agreement with an individual accredited investor, pursuant to which the investor purchased a revenue interest from us for $500,000. As consideration for such payment, commencing on June 1, 2024 and continuing thereafter until all amounts are repurchased by us pursuant to the terms of the Revenue Interest Purchase Agreement, the investor has a right to receive $50,000 per month from us generated from its operating subsidiaries.
Current report
On May 28, 2024, we entered into a Securities Purchase Agreement with 1800 Diagonal Lending, LLC, an accredited investor, pursuant to which the Lender made a loan to us, evidenced by a promissory note in the principal amount of $111,550. An original issue discount of $14,550 and fees of $7,000 were applied on the issuance date, resulting in net loan proceeds of $90,000. Accrued, unpaid interest and outstanding principal, subject to adjustment, is required to be paid in nine payments in the amount of $13,881.78, with the first payment due on June 30, 2024, and remaining eight payments due on the last day of each month thereafter (a total payback to the Lender of $124,936.00).
Current report
On June 14, 2024, we entered into a Securities Purchase Agreement with Coventry Enterprises, LLC, an accredited investor, pursuant to which the Lender made a loan to us, evidenced by a promissory note in the principal amount of $111,550. An original issue discount of $14,550 and fees of $7,000 were applied on the issuance date, resulting in net loan proceeds of $90,000. Accrued, unpaid interest and outstanding principal, subject to adjustment, is required to be paid in nine payments in the amount of $13,881.78, with the first payment due on June 30, 2024, and remaining eight payments due on the last day of each month thereafter (a total payback to the Lender of $124,936.00).
Current report
On July 2, 2024, we entered into a Standard Merchant Cash Advance Agreement (the “Factoring Agreement”), with an accredited investor lending source (“Financier”). Under the Factoring Agreement, our wholly-owned subsidiary sold to Financier a specified percentage of its future receipts (as defined by the Factoring Agreement, which include any and future revenues of Champion Safe Company, Inc. (“Champion”), another wholly-owned subsidiary of the Company, and the Company) equal to $357,500 for $250,000, less origination and other fees of $12,500. Our wholly-owned subsidiary agrees to repay this purchased receivable amount in equal weekly installments of $17,875.
Current report
On July 8, 2024, we entered into a subordinated business loan and security agreement with an accredited investor lending source and a subsidiary to that accredited investor lending source as collateral agent, which provides for a term loan in the amount of $1,312,500 which principal and interest (of $577,500) is due on January 20, 2025. Commencing July 15, 2024, we are required to make weekly payments of $67,500 until the due date. The loan may be prepaid subject to a prepayment fee. An administrative agent fee of $62,500 was initially paid on the loan. A default interest rate of 5% becomes effective upon the occurrence of an event of default. In connection with the loan, the holder was issued a subordinated secured promissory note, dated July 8, 2024, in the principal amount of $1,312,500 which note is secured by all of the borrower’s assets, including receivables, subject to certain outstanding liens and agreements.
Current report
On July 22, 2024, we and an accredited investor lending source entered into an agreement whereby $300,000 of the Assumption Loan was acquired by the accredited investor lending source from the original holder. The agreement entered into was structured as an installment purchase between the two accredited investor lending sources. We entered into an amended note payable, which by its terms became a $300,000 no interest convertible note, due and payable on July 22, 2025. The conversion price is fixed at $100.80 per share, with the normal share reserve and conversion mechanics. We issued 992 shares of common stock to the holder of the amended note payable and retired $100,000 of this $300,000 debt. The shares were issued to the holder without restrictive legend and a new amended convertible note payable of $200,000, due and payable on July 22, 2025.
Current report
On August 5, 2024, we entered into two securities exchange and amendment agreements with two accredited investors, whereby we agreed to issue the investor 10,010 shares of Series D Convertible Preferred Stock in exchange for a portion of a $75,000 revenue interest owned by one such investor, and whereby we agreed to issue the investor 54 shares of Series D Convertible Preferred Stock in exchange for a portion of a $100,000 revenue interest owned by a second such investor. Commencing on October 1, 2024, and continuing thereafter until all amounts are repurchased by us pursuant to the terms of the Revenue Agreement, the investors have the right to receive $7,500 and $10,000 per month, respectively, from us generated from our operating subsidiaries.
Current report
On August 5, 2024, we entered into three Amended Revenue Interest Purchase Agreements with two individual accredited investors and one corporate accredited investor. Commencing on October 1, 2024, and continuing thereafter until all amounts are repurchased by us pursuant to the terms of the Revenue Agreement, the investors have the right to receive $10,000, $10,000 and $30,000 per month, respectively, from us generated from our operating subsidiaries.
Current report
On August 9, 2024, we entered into a Securities Purchase Agreement with 1800 Diagonal Lending, LLC, an accredited investor, pursuant to which the Lender made a loan to us, evidenced by a promissory note in the principal amount of $179,400.
Current report
On September 4, 2024, we entered into a Securities Purchase Agreement with Coventry Enterprises, LLC, an accredited investor, pursuant to which the Lender made a loan to us, evidenced by a promissory note in the principal amount of $300,000. A one-time interest charge of 12% ($36,000) was applied to the Note upon issuance. Further, an original issue discount of $45,000, $75,436.02 was utilized to repay a June 2024 note with the Lender, commissions to a broker dealer of $8,000, and fees of $10,000 were applied on the issuance date, resulting in net loan proceeds to us of $161,563.98. Accrued, unpaid interest and outstanding principal, subject to adjustment, is required to be paid in eight payments; the first payment shall be in the amount of $37,333.33 and is due on September 30, 2024 with seven (7) subsequent payments each in the amount of $37,333.33 due on the last day of each month thereafter (a total payback to the Lender of $336,000.00). In addition to the Note, the Company and the Lender entered into a conversion agreement (the “Conversion Agreement”), whereby the Lender converted $49,500 of its June 2024 note into 6,600 shares of the Company’s Series D Convertible Preferred Stock.
Current report
On October 4, 2024, we entered into a Securities Purchase Agreement with 1800 Diagonal Lending, LLC, an accredited investor, pursuant to which the Lender made a loan to us, evidenced by a promissory note in the principal amount of $122,960. An original issue discount of $16,960 and fees of $6,000 were applied on the issuance date, resulting in net loan proceeds of $100,000. Accrued, unpaid interest and outstanding principal, subject to adjustment, is required to be paid in nine payments of $15,574.89, with the first payment due on October 30, 2024, and remaining eight payments due on the 30th day of each month thereafter (a total payback to the Lender of $140,174).
Current report
On October 23, 2024, we entered into an Exchange and Settlement Agreement with an individual accredited investor. On April 19, 2024, the Company and the Investor had entered into a $500,000 Revenue Interest Purchase Agreement. Pursuant to the Securities Exchange Agreement, the Company and the Investor exchanged the Revenue Agreement and all rights and preferences thereunder for 2,280 shares of common stock, valued at $68.75 per share, and a three-year pre-funded warrant to purchase 19,441 shares of common stock at $0.01 per share, valued at $68.50 per share.
Current report
On October 30, 2024, we entered into a Securities Purchase Agreement with Alumni Capital LP, a Delaware limited partnership, pursuant to which the Lender made a loan to us, evidenced by a promissory note in the principal amount of $420,000. An original issue discount of $70,000 and commissions to a broker dealer of $28,000 were applied on the issuance date, resulting in net loan proceeds to the Company of $322,000. Accrued, unpaid interest at the rate of 10% and outstanding principal, subject to adjustment, is required to be paid on or before December 31, 2024. In addition to the Note, we issued the Lender a five-year common stock purchase warrant to purchase up to 2,887 shares of Common Stock at $145.50 per share.
Current report
On November 6, 2024, we entered into a Securities Purchase Agreement with 1800 Diagonal Lending, LLC, an accredited investor, pursuant to which the Lender made a loan to the Company, evidenced by a promissory note in the principal amount of $122,960. An original issue discount of $16,960 and fees of $6,000 were applied on the issuance date, resulting in net loan proceeds of $100,000. Accrued, unpaid interest and outstanding principal, subject to adjustment, is required to be paid in nine payments of $15,574.89, with the first payment due on December 15, 2024, and remaining eight payments due on the 15th day of each month thereafter (a total payback to the Lender of $140,174).
Current report
On November 11, 2024, we entered into a Purchase and Exchange Agreement among an investor and Altbanq Lending LLC, pursuant to which the Purchaser agreed to purchase from the Seller a portion ($150,469.11) of a promissory note dated March 27, 2024 in the original principal amount of $1,330,000, with a current balance payable of $1,229,350. Contemporaneously with assignment of the assigned note portion to the Purchaser, we exchanged the $150,469.11 of assigned note portion for 78,615 shares of the Company’s common stock as a 3(a)(9) exchange.
Current report
On December 13, 2024, we entered into a three-month promissory note with an accredited investor in the principal amount of $213,715 (the “Note”). An original issue discount of $63,715 was applied on the issuance date and was paid through the issuance of 36,830 shares of the Company’s common stock to the Lender, resulting in net loan proceeds to the Company of $150,000. Accrued, unpaid interest and outstanding principal, subject to adjustment, is required to be paid in one lump sum payment of $155,625 on or before March 13, 2025.
Current report
For the year ended December 31, 2024, we incurred product development expenses of $385,800 compared to product development expenses of $132,528 for the year ended December 31, 2023. The increase in product development expenses of $253,272, or 191%, is due to increased private label brewery expenses in connection with the growth of the beer business.
Current report
For the year ended December 31, 2024, we incurred interest expense of $3,969,485 compared to interest expense of $363,567 for the year ended December 31, 2023. The increase in interest expense ($3,605,918) is due to a significant number of debt agreements we entered into during 2024 to fund our working capital needs.
Current report
For the year ended December 31, 2024, we incurred a $1,422,307 loss on debt extinguishment due to the conversion of certain debt arrangements. We incurred a gain of settlement of liability of $190,403 during the year ended December 31, 2023. The 2023 gain relates to shares issued to directors as settlement of accrued and unpaid fees that exceeded the fair value of shares granted at that time.
Current report
Net loss for the year ended December 31, 2024 amounted to $17,604,364, resulting in a loss per share of $(306.91), compared to a net loss of $9,731,701 for the year ended December 31, 2023, resulting in a loss per share of $(857.02). Net loss increased by $7,872,663 or 81% period over period due to increase professional fees in connection with our reaudits, lower gross margin due to current market conditions, and significant interest expense due to additional borrowings in 2024.
Current report
Recent Accounting Pronouncements
Current report
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06,Debt—Debt with Conversion and Other Options (Subtopic 470-20) andDerivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity to reduce the complexity of accounting for convertible debt and other equity-linked instruments. The guidance is effective for smaller reporting companies for fiscal years beginning after December 15, 2023. The Company classified its convertible debt issued in 2024 in accordance with ASC 2020-06.
Removed paragraphs (26)
Previous report
Establishment of American Rebel Beer
Previous report
Acquisition of Champion Entities
Previous report
On June 29, 2022, the Company entered into a stock and membership interest purchase agreement with Champion Safe Co., Inc. (“Champion Safe”), Superior Safe, LLC (“Superior Safe”), Safe Guard Security Products, LLC (“Safe Guard”), Champion Safe De Mexico, S.A. de C.V. (“Champion Safe Mexico”) and, together with Champion Safe, Superior Safe, Safe Guard and Champion Safe Mexico, collectively, the (“Champion Entities”) and Mr. Crosby (“Seller”) (the “Champion Purchase Agreement”), pursuant to which the Company agreed to acquire all of the issued and outstanding capital stock and membership interests of the Champion Entities from the Seller. This transaction was completed on July 29, 2022. We have included the Champion Entities assets and liabilities as of that date and the subsequent financial activity through the date of this Annual Report in our Consolidated Financial Statements. For all intent and purposes, the Champion Entities have been integrated with our existing operations and are under the control of our management team.
Previous report
Secured Loans
Previous report
On December 28, 2023, the Company entered into a $500,000 Business Loan and Security Agreement (the “Second Secured Loan”) with Alt Banq Inc., an accredited investor lending source (“Alt Banq”). Under the Second Secured Loan, the Company received $490,000 on December 29, 2023, which was net of fees to Alt Banq. The Second Secured Loan requires 52 weekly payments of $11,731, for a total repayment of $610,000 to Alt Banq. The principal balance bears interest at 22% per annum. The Second Secured Loan, is secured by all of the assets of the Company and its subsidiaries second only to a previously secured line of credit and contains other customary terms and conditions for agreements of its type. Further, the Company’s CEO, Charles A. Ross, Jr., provided a personal guaranty for the Second Secured Loan.
Previous report
Unsecured Loan
Previous report
The Company refinanced a $600,000 note with an accredited investor that was due March 31, 2023 with a new note dated July 1, 2023. The total amount refinanced with an accredited investor is $450,000, with $150,000 due December 31, 2023, and $300,000 due June 30, 2024. Interest will be paid quarterly in the amount of 12% on the outstanding principal amounts.
Previous report
Armistice PIPE and Warrant Exercise
Previous report
On June 27, 2023, we entered into a PIPE transaction with Armistice Capital Master Fund Ltd. for the purchase and sale of $2,993,850.63 of securities, consisting of (i) 71,499 shares of Common Stock at $4.37 per share, (ii) prefunded warrants (the “2023 Prefunded Warrants”) that are exercisable into 615,000 shares of Common Stock (the “ 2023 Prefunded Warrant Shares”) at $4.37 per Prefunded Warrant, and (iii) immediately exercisable warrants to purchase up to 686,499 shares of Common Stock at an initial exercise price of $4.24 per share and will expire five years from the date of issuance.
Previous report
On September 8, 2023, Armistice exercised certain existing warrants by paying $3,287,555.70 for 2,988,687 shares of the Company’s common stock at a reduced exercise price of $1.10 per share in consideration for the Company’s agreement to issue two new common stock purchase warrants to purchase, in the aggregate, up to 5,977,374 shares of the Company’s common stock.
Previous report
Revenue Interest Purchase Agreement
Previous report
On December 19, 2023, we entered into a Revenue Interest Purchase Agreement (the “Revenue Interest Purchase Agreement”) with Kingdom Building Inc. (“KBI”), pursuant to which KBI purchased a revenue interest from us for $500,000, less $5,000 in transaction expenses.
Previous report
As consideration for such payment, commencing on April 1, 2024 and continuing thereafter until all amounts are repurchased by us pursuant to the terms of the Revenue Interest Purchase Agreement, KBI has a right to receive $75,000 per month from us in perpetuity until we purchase the revenue interest from the holder (the “Revenue Interest”). There are no distinct limitations or requirements that we are to produce revenue, or sufficient revenue to cover these payments.
Previous report
Under the Revenue Interest Purchase Agreement, we have an option (the “Call Option”) to repurchase the Revenue Interest at any time upon two days advance written notice. Additionally, KBI has an option (the “Put Option”) to terminate the Revenue Interest Purchase Agreement and to require us to repurchase future Revenue Interest upon us consummating a public offering pursuant to Regulation A. The repurchase price to be paid by us will be, if the Call Option or the Put Option is exercised (i) $625,000 if repurchased on or before March 31, 2024; and (ii) $687,500 after April 1, 2024; in each case of (i) or (ii), minus all Revenue Interest or other payments made by us to KBI prior to such date.
Previous report
In addition, the Revenue Interest Purchase Agreement contains various representations and warranties, covenants and other obligations and other provisions that are customary for a transaction of this nature. Further, in March and April of 2024 we have entered into several additional revenue interest purchase agreements, which are described in Item 9B below.
Previous report
Twelve Months Ended December 31, 2023 Compared to the Twelve Months Ended December 31, 2022
Previous report
For the year ended December 31, 2023, we incurred product development expenses of $132,528, compared to product development expenses of $746,871 for the year ended December 31, 2022. The decrease in product development expenses of $614,343 (or -82% period over period (PoP)) is due to some of the Company’s current product development expenses being included in consulting/payroll and other costs account which provides for a better presentation of those expenses than pure product development expense, offset by new efforts over these past few months where we’ve incurred some significant expenses that are attributable to our private label brewery efforts and should be separated and identified. The Company expects to maintain some level of expense on a go-forward basis with new products and efforts being expended for future sales growth and product needs.
Previous report
For the year ended December 31, 2023, we incurred interest expense of $406,252, compared to interest expense of $358,689 for the year ended December 31, 2022. The increase in interest expense ($47,563) is due to a significant number of notes being paid during 2022 that were able to be paid in full from the various financings, offset by the increased borrowing costs that we have on our working capital notes payable and line of credit. We are currently paying an interest rate of approximately 7% on our line of credit, 12% on our existing working capital notes payable, and our new working capital notes payable we are paying approximately 40% per annum on these debt instruments. We are currently working on re-negotiating some of these debt instruments. We expect our interest expense exposure shall be significantly higher for the year ending December 31, 2024 based on these high interest rate notes or debt instruments.
Previous report
For the year ended December 31, 2023, we incurred a gain on extinguishment of debt of $221,903, compared to $1,376,756 for the year ended December 31, 2022. The decrease in loss on extinguishment of debt is due to the charges necessary through the amortization of the debt discount recorded for the issuance of shares of common stock in connection with working capital loans retired during 2022. The Company expects to manage and maintain its interest expense exposure despite the increase in interest rates for this year over last year, as well keeping our debt obligations to a minimum as we grow the business and its sales volume. The gain on extinguishment of debt for year ended December 31, 2023 is directly attributable to equity issuances that were static or an agreed upon number of shares for the services at the time (which was much higher) and the settlement of the shares as payment for the services at a time when the shares were significantly less valuable.
Previous report
For the year ended December 31, 2023, we incurred a loss on tangible asset (inventory) valuation of $1,570,816, compared to $0 for the year ended December 31, 2022. The loss on tangible asset valuation is due to the charges necessary to bring the value of inventory in line with net realizable value as determined through a long and arduous process. When inventory is physically disposed of, we account for the write-offs by making a debit to the reserve and a credit to inventory for the standard cost of the inventory item. Our valuation reserve is applied as an estimate to specific product lines. Since the inventory item retains its standard cost until it is either sold or written off, the reserve estimates will differ from the actual write-off. During the 4 th quarter of 2023, management completed its analysis of 100% of its inventory acquired in the purchase of the Champion Entities as well as pre-existing subsidiary level inventory. It was determined that the Company needed to write-down, reserve for impairment of approximately $1,570,816 of excess inventory value.
Previous report
Net loss for the year ended December 31, 2023, amounted to $11,100,784, resulting in a loss per share of $3.81, compared to a net loss of $7,143,153 for the year ended December 31, 2022, resulting in a loss per share of $23.90. The increase in the net loss from the year ended December 31, 2022 compared to the year ended December 31, 2023 is primarily due to acquisition costs of the Champion Entities and our increased expenditures on financing and other activities for growth, along with the write down of the valuation of our inventory of $1,570,816 as well as impairment of goodwill of $2,525,000 , as well as the $1,413,000 in additional compensation expense that we are required to recognize with regards the convertibility of our Series A preferred stock to members of management during the year ended December 31, 2023.
Previous report
During February 2023, the Company entered into a $2 million master credit agreement (credit facility) with a major financial institution. The credit facility is secured by all the assets of the Company’s Champion subsidiaries. The Line of Credit expires on February 28, 2024. If the Company is unable to extend or replace the credit facility, it would have a material impact on the Company and its Champion subsidiaries working capital needs. Requiring the Company to seek replacement equity or debt financing, which may not be available, or may be on substantially worse terms than the current credit facility.
Previous report
Recent Accounting Standards Updates Adopted
Previous report
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The updated guidance requires companies to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets, including trade receivables. The guidance was adopted by the Company on January 1, 2023. The adoption of the ASU did not have an impact on the Company’s consolidated financial statements.
Previous report
We adopted the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, on January 31, 2021. ASU 2019-12 removes certain exceptions to the general provisions of Topic 740 and provides simplification in other areas of Topic 740. The adoption of ASU 2019-12 had no material impact on our consolidated financial statements.
Previous report
Recent Accounting Standards Updates Not Yet Adopted
Reworded paragraphs (17)
Previous wording
On August 9, 2023, the Company entered into a Master Brewing Agreement with Associated Brewing. Under the terms of the Brewing Agreement, Associated Brewing has been appointed as the exclusive producer and seller of American Rebel branded spirits, with the initial product being American Rebel Light Beer. American Rebel Light Beer will launch regionally in early 2024. The Company paid a setup fee and security deposit to Associated Brewing. We established American Rebel Beverages, LLC as a wholly-owned subsidiary specifically to hold our alcohol licenses and conduct operations for our beer business.
Current wording
On August 9, 2023, the Company entered into a Master Brewing Agreement with Associated Brewing. Under the terms of the Brewing Agreement, Associated Brewing has been appointed as the exclusive producer and seller of American Rebel branded spirits, with the initial product being American Rebel Light Beer. American Rebel Light Beer launched regionally in early 2024. The Company paid a setup fee and security deposit to Associated Brewing. We established American Rebel Beverages, LLC as a wholly-owned subsidiary specifically to hold our alcohol licenses and conduct operations for our beer business.
Previous wording
On April 14, 2023, the Company entered into a $1,000,000 Business Loan and Security Agreement (the “Secured Loan”) with an accredited investor lending source (the “Lender”). Under the Secured Loan, the Company received $980,000 on April 20, 2023, which was net of fees to the Lender. The Secured Loan requires 64 weekly payments of $20,000, for a total repayment of $1,280,000 to the Lender. The principal balance bears interest at 22.8%. The Secured Loan is secured by all of the assets of the Company and its subsidiaries second only to a previously secured line of credit and contains other customary terms and conditions for agreements of its type. Further, the Company’s CEO, Charles A. Ross, Jr., provided a personal guaranty for the Secured Loan.
Current wording
On March 27, 2024, we entered into a $1,300,000 Business Loan and Security Agreement with an accredited investor lending source. Under the Secured Loan, we received the loan net of fees of $26,000. We repaid two outstanding secured notes to affiliates of the Lender totaling $769,228, resulting in net proceeds of $504,772. The Secured Loan requires 64 weekly payments of $26,000 each, for a total repayment of $1,664,000. The Secured Loan bears interest at 22.8% per annum. The Secured Loan is secured by all of our assets second to a first priority lien secured the holder of the Line of Credit. Furthermore, our CEO provided a personal guaranty for the Secured Loan. The Secured Loan provides for a default fee of $15,000 for any late payments on the weekly payments. As long as the Secured Loan is not in default, we may prepay the Secured Loan pursuant to certain prepayment amounts set forth in the Secured Loan. Further, any default by us allows the Lender to take necessary actions to secure its collateral and recovery of funds.
Previous wording
For the year ended December 31, 2023, we reported Revenues of $16,228,310 compared to Revenues of $8,449,800 for the year ended December 31, 2022. The increase in Revenues of $7,778,510 (or 92% period over period (PoP)) for the year ended December 31, 2023 compared to the year ended December 31, 2022, is primarily attributable to the closing of the Champion acquisition on July 29, 2022 and a general increase from Champion’s average quarterly sales of product. For the year ended December 31, 2023, we reported Cost of Goods Sold of $13,191,886, compared to Cost of Goods Sold of $6,509,382 for the year ended December 31, 2022. The increase in Cost of Goods Sold of $6,682,504 (or 103% period over period (PoP)) for the current period is due to a significantly greater number of sales of product during the period compared to the year ending December 31, 2022 and again attributable to the closing of the Champion acquisition on July 29, 2022. For the year ended December 31, 2023, we reported Gross Margin of $3,036,424, compared to Gross Margin of $1,940,418 for the year ended December 31, 2022. The increase in Gross Margin of $1,096,006 (or 56% period over period (PoP)) for the year ending December 31, 2023, compared to the year ending December 31, 2022 is again due to the closing of the Champion acquisition on July 29, 2022. Gross Margin percentages for the year ended December 31, 2023 was 18.7% compared to 22.9% for the year ended December 31, 2022. We expect our Gross Margin percentage to remain consistent in the 20% range until we achieve sufficient sales volume to increase our margins from better pricing power, to better buying power on our costs of goods, inventory and inventory management.
Current wording
For the year ended December 31, 2024, we reported Revenues of $11,420,268 compared to Revenues of $15,998,196 for the year ended December 31, 2023. The decrease in Revenues of $4,577,928 (or (29)% period over period) for the year ended December 31, 2024 compared to the year ended December 31, 2023 is primarily attributable to slower sales driven by current market conditions. For the year ended December 31, 2024, we reported Cost of Goods Sold of $11,539,905, compared to Cost of Goods Sold of $14,199,260 for the year ended December 31, 2023. The decrease in Cost of Goods Sold of $2,659,355 (or (19)% period over period) for the current period is due to the direct relationship of decreased sales. For the year ended December 31, 2024, we reported a negative Gross Margin of $(119,637), compared to Gross Margin of $1,798,936 for the year ended December 31, 2023. The decrease in Gross Margin of $1,918,573 (or (107)% period over period) for the year ending December 31, 2024 compared to the year ending December 31, 2023 primarily due to slower sales and current market conditions. Gross Margin percentages for the years ended December 31, 2024 were (1)% compared to 11% for the year ended December 31, 2023.
Previous wording
Total operating expenses for the year ended December 31, 2023 were $10,976,060 compared to $7,003,704 for the year ended December 31, 2022 as further described below. Overall, we saw a $3,972,356 increase in operating expenses or a 57% period over period (PoP) increase in operating expenses from the prior year comparable period. With the acquisition and integration of the Champion acquisition we expect this to be about the same going forward dropping as a percentage of Revenues as we increase our overall sales volume.
Current wording
Total operating expenses for the year ended December 31, 2024 were $12,100,478 compared to $10,563,931 for the year ended December 31, 2023 as further described below. Overall, we saw a $1,536,547 increase in operating expenses or a 15% period over period increase in operating expenses from the prior year comparable period.
Previous wording
For the year ended December 31, 2023, we incurred consulting/payroll and other costs of $3,347,070 compared to consulting/payroll and other costs of $905,843 for the year ended December 31, 2022. The increase in consulting/payroll and other costs of $2,441,227 (or 269% period over period (PoP)) was primarily due to the overall increase in the number of employees and the size of the Company’s head count post-acquisition of the Champion Entities. This was affected as well by the increased payroll costs from a competitive jobs market and the Champion Entities employees receiving pay increases that they were promised for years. The Company expects to maintain its current consulting/payroll and other costs as we further expand our sales volume and increase margins.
Current wording
For the year ended December 31, 2024, we incurred consulting/payroll and other costs of $2,039,777 compared to consulting/payroll and other costs of $3,598,839 for the year ended December 31, 2023. The decrease in consulting/payroll and other costs of $1,559,062 (or (43)% period over period) was primarily due to the overall decrease in headcount.
Previous wording
For the year ended December 31, 2023, we incurred compensation expense – officers and compensation expense – officers – deferred comp costs of $518,107 and $1,413,000 compared to compensation expense – officers and compensation expense – officers – deferred comp costs of $1,094,781 and $0 for the year ended December 31, 2022. The increase in compensation expense – officers – deferred comp costs of $1,413,000 (in excess of 100% period over period (PoP)) was due to Company issuing shares of preferred stock that are convertible into common stock of the Company as well as the modification of the conversion terms of the same preferred stock that were previously issued to two (2) officers that are now able to be converted into common stock of the Company. The Company is required to recognize the cost attributable to the ability to convert the preferred shares into common stock multiplied by the market value or fair value of the Company’s common stock on either the grant date, issuance date, or the end of each reporting period. The Company will re-evaluate the fair value of the common stock equivalents underlying the preferred stock that was issued, as well as take into account the vesting (and complete ownership) of the preferred stock and its common stock equivalency. The decrease in compensation expense – officers of $576,674 (or -53% period over period (PoP)) was due to the Company issuing significant bonuses to its officers in 2022 for the successful closing on the Champion Entities offset or decreased by reduced bonuses for 2023 as recommended by the board of directors and its compensation committee. Mr. Lambrecht’s compensation will be fully integrated into the year ended December 31, 2024 with approximately another $250,000 to $300,000 in direct compensation expense – officers attributable to Mr. Lambrecht. Compensation expense is the total value that we pay our officers during the period reported, which includes a base salary, bonus, any equity awards or fringe benefits that we provide our officers. The Company believes that it pays it officers or management a fair and competitive salary, as well as stock grants or awards that are made during the year. Deferred compensation is attributable to the fair value of the common stock equivalents that are underlying our Series A preferred stock that have been issued pursuant to employment agreements and vesting schedules.
Current wording
For the year ended December 31, 2024, we incurred compensation expense – officers and compensation expense – officers – deferred comp costs of $0 and $656,250 compared to compensation expense – officers and compensation expense – officers – deferred comp costs of $518,107 and $812,500 for the year ended December 31, 2023. The decrease in compensation expense – officers – deferred comp costs of $674,357 was due to Company issuing shares of preferred stock that are convertible into common stock of the Company and the relative timing of vesting and expense of the shares. The Company believes that it pays it officers or management a fair and competitive salary, as well as stock grants or awards that are made during the year. Deferred compensation is attributable to the fair value of the common stock equivalents that are underlying our Series A preferred stock that have been issued pursuant to employment agreements and vesting schedules.
Previous wording
For the year ended December 31, 2023, we incurred rental expense, warehousing, outlet expense of $871,032, compared to rental expense, warehousing, outlet expense of $508,527 for the year ended December 31, 2022. The increase in rental expense, warehousing, outlet expense of $362,505 (or 71% period over period (PoP)) was due to the significant number of leases and properties that the Company rents to conduct the Champion business. Prior to the Champion business acquisition, the Company included lease expense in the Administrative and other account. The significant number of leases and properties that the Company rents to conduct its Champion business provides a better presentation of expenses through a separate line item in its Statement of Operations. The Company expects to maintain this level of expense on a go-forward basis with its leases and rented properties. The Company may look to consolidate some of its space as it fine tunes the Champion business.
Current wording
For the year ended December 31, 2024, we incurred rental expense, warehousing, outlet expense of $468,739, compared to rental expense, warehousing, outlet expense of $871,032 for the year ended December 31, 2023. The decrease in rental expense, warehousing, outlet expense of $402,293 (or (46)% period over period) is due to cost cutting on leases and properties that the Company rents to conduct the Champion business acquisition as well as other cost cutting measures or efficiencies put in place. The Company expects to maintain this level of expense on a go-forward basis with its leases and rented properties for the near term.
Previous wording
For the year ended December 31, 2023, we incurred marketing and brand development expenses of $1,273,012, compared to marketing and brand development expenses of $507,503 for the year ended December 31, 2022. The increase in marketing and brand development expenses of $765,509 (or 151% period over period (PoP)) relates primarily to an increase of activities including major trade shows and the availability of working capital for these types of expenses as well as increased costs attributable to our acquisition and integration of the Champion business.
Current wording
For the year ended December 31, 2024, we incurred marketing and brand development expenses of $2,354,809 compared to marketing and brand development expenses of $1,318,890 for the year ended December 31, 2023. The increase in marketing and brand development expenses of $1,035,919 (or 79% period over period) relates primarily to an increase of activities including major trade shows and marketing efforts in connection with the beer business.
Previous wording
For the year ended December 31, 2023, we incurred administrative and other expense of $3,317,082, compared to administrative and other expense of $3,190,092 for the year ended December 31, 2022. The increase in administrative and other expense of $126,990 (or 4% period over period (PoP)) relates primarily to significant legal and other professional fees that we incurred during 2022 in anticipation of our registered public offerings, offset by other additional expenses picked up from our acquisition of Champion and recent financing efforts. The Company believes as it grows its sales base it will need to increase administrative and other expenses commensurate with an overall increased profit into the future.
Current wording
For the year ended December 31, 2024, we incurred administrative and other expense of $6,049,555 compared to administrative and other expense of $3,207,806 for the year ended December 31, 2023. The increase in administrative and other expense of $2,841,749 (or 89% period over period) relates primarily to legal and other professional fees that we incurred during 2024 in connection with the increased legal, accounting, and audit fees as a result of our reaudits.
Previous wording
For the year ended December 31, 2023, we incurred depreciation and amortization expense of $104,229, compared to depreciation and amortization expense of $50,087 for the year ended December 31, 2022. The increase in depreciation and amortization expense relates primarily to the acquisition of Champion and its significant and additional depreciable asset base that it provided to the Company’s financial position.
Current wording
For the year ended December 31, 2024, we incurred depreciation and amortization expense of $145,548 compared to depreciation and amortization expense of $104,229 for the year ended December 31, 2023. The increase in depreciation and amortization expense primarily relates to the amortization related to goodwill and intangible assets.
Previous wording
For the year ended December 31, 2023 we received approximately $1,286,000 in tax credits under the CARES Act from the US Department of Treasury and in turn paid approximately $178,500 to the service provider, netting the Company approximately $1,113,337 in credits for retaining its employees during COVID. As part of the collection process the Company retained the services of a tax service professional to provide the Company with the specialized tax services. The services included identifying various tax initiatives as well as specifically tasking the tax service professional in applying for and the tax filings for (tax) credits available under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). This is a one-time other income item and we do not expect to receive this type of special income in the future. During the year ended December 31, 2023 the Company received a claim for refund or right of repayment from the Seller of the Champion Entities with respect to the CARES Act tax credits income. The Company prior year end settled with the Seller and agreed to pay an additional $325,000 to the seller. This amount was not offset against the CARES Act tax credit income but increased the purchase price of the Champion Entities and increased our determined Goodwill value by $325,000.
Current wording
For the year ended December 31, 2023 we received approximately $1,286,000 in tax credits under the CARES Act from the US Department of Treasury and in turn paid approximately $178,500 to the service provider, netting the Company $1,113,337 in credits for retaining its employees during COVID. As part of the collection process the Company retained the services of a tax service professional to provide the Company with the specialized tax services. The services included identifying various tax initiatives as well as specifically tasking the tax service professional in applying for and the tax filings for (tax) credits available under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). This is a one-time other income item and we do not expect to receive this type of special income in the future.
Previous wording
For the year ended December 31, 2023, we incurred impairment of goodwill of $2,525,000, compared to $0 for the year ended December 31, 2022. The impairment of goodwill is due to the charges necessary to write down intangible asset to fair value. Overall, we recognized a $2.525 million impairment loss in our Champion Entities reporting unit. Changes in future year margin expectations were primarily driven by sustained increases in supply chain costs, expectations for lower or static pricing to maintain a competitive positioning, and expectations for increased marketing investment, primarily in response to increased competition, as well as customer-driven investments. Changes in expectations for lower long-term net sales growth were primarily due to sustained competition and anticipated trends in consumer preferences. Our revised expectations were based on the completion of our fourth quarter results, which were below management’s expectations, and the development of our operating plan in December 2023, along with our inventory management and tracking project which was completed during the early part of October 2023. From this inventory management and tracking project it was determined that we had an over-valuation of our inventory acquired in the Champion Entities purchase. Additionally, our revised expectations were based on the development of three-year operating plan, which commenced in early 2023 and is expected to be completed in 2024. The goodwill carrying amount of the Champion Entities reporting unit was $4.525 million prior to its impairment
Current wording
For the year ended December 31, 2024, we incurred impairment of goodwill and intangible assets of $0, compared to $1,912,559 for the year ended December 31, 2023. The impairment was due to the charges necessary to write down such asset to fair value as of December 31, 2023. Contributing factors resulting in the impairment charge include changes in future year margin expectations were primarily driven by sustained increases in supply chain costs, expectations for lower or static pricing to maintain a competitive positioning, and expectations for increased marketing investment, primarily in response to increased competition, as well as customer-driven investments. Changes in expectations for lower long-term net sales growth were primarily due to sustained competition and anticipated trends in consumer preferences. Our revised expectations were based on the completion of our fourth quarter results, which were below management’s expectations, and the development of our operating plan in December 2023, along with our inventory management and tracking project which was completed during the early part of October 2023. Additionally, the Company’s share price and market capitalization, for which Champion represents a substantial portion of the Company’s operating activities, declined during 2023.
Previous wording
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. The Company is in the growth and acquisition stage and, accordingly, will have to raise capital to complete acquisitions and successfully integrate acquired companies. 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 years ended December 31, 2023 and 2022 of ($11,100,784) and ($7,143,981), respectively. The Company’s accumulated deficit was ($45,213,594) as of December 31, 2023, and ($34,112,810) as of December 31, 2022. The Company’s working capital surplus was $4,551,927 as of December 31, 2023, compared to $6,678,562 as of December 31, 2022. 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.
Current wording
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. The Company is in the growth and acquisition stage and, accordingly, will have to raise capital to complete acquisitions and successfully integrate acquired companies. 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 losses for the years ended December 31, 2024 and 2023 of ($17,604,364) and ($9,731,701), respectively. The Company’s accumulated deficit was ($65,086,200) as of December 31, 2024, and ($47,481,836) as of December 31, 2023. The Company’s working capital deficit was $8,940,228 as of December 31, 2024, compared to a surplus of $2,545,744 as of December 31, 2023. 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.
Previous wording
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 increased operating revenues. Management believes the remaining holders of its warrants will execute their outstanding warrants generating investment capital. Management is in discussions with several investment banks and broker dealers regarding the initiation of further capital campaigns.
Current wording
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 increased operating revenues. Given recurring losses and reliance on equity and debt financing, these conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management believes the remaining holders of its warrants will execute their outstanding warrants generating investment capital. Management is in discussions with several investment banks and broker dealers regarding the initiation of further capital campaigns.
Previous wording
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 Annual Report, includes a summary of the significant accounting policies and methods used in the preparation of our financial statements.
Current wording
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.
Previous wording
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”), which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 provide for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for the Company prospectively to all annual periods beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact this update will have on our consolidated financial statements and disclosures.
Current wording
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”), which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 provide for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for the Company prospectively to all annual periods beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact this update will have on our consolidated The adoption had no material impact on our consolidated financial statements.
Previous wording
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which require public companies disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. The guidance is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance is applied retrospectively to all periods presented in the financial statements, unless it is impracticable. We are currently evaluating the impact this update will have on our consolidated financial statements and disclosures.
Current wording
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which require public companies disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. The guidance is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance is applied retrospectively to all periods presented in the financial statements, unless it is impracticable. The adoption had no material impact on our consolidated financial statements.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023