UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2021
☐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 001-41267
AMERICAN REBEL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
(Address of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code: (833)267-3235
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically 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 such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or emerging growth company. See the 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 ☒ Smaller reporting company ☒
Emerging growth company ☐
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 has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The
aggregate market value of the voting and non-voting common equity held by non-affiliates computed by the price at which common equity
was last sold: $3,324,691 as of June 30, 2021.
The
number of shares of the registrant’s Common Stock outstanding as of March 18, 2022, was 4,741,321 shares.
Documents
incorporated by reference: None
AMERICAN
REBEL HOLDINGS, INC.
TABLE
OF CONTENTS
PART I
ITEM 1. Business 4
ITEM 1A. Risk Factors 23
ITEM 1B. Unresolved Staff Comments 39
ITEM 2. Properties 39
ITEM 3. Legal Proceedings 39
ITEM 4. Mine Safety Disclosures 39
PART II
ITEM 6. [Reserved] 43
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 46
ITEM 8. Financial Statements and Supplementary Data 47
ITEM 9A. Controls and Procedures 48
ITEM 9B. Other Information 49
ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 49
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance 50
ITEM 11. Executive Compensation 56
ITEM 14. Principal Accountant Fees and Services 62
PART IV
ITEM 15. Exhibits and Financial Statement Schedules 63
SIGNATURES 65
CERTIFICATIONS
FORWARD-LOOKING
STATEMENTS
This
Annual Report on Form 10-K (“Annual Report”) contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). These forward-looking statements are not historical facts but rather are based on current expectations,
estimates and projections. We may use words such as “may,” “could,” “should,” “anticipate,”
“expect,” “project,” “position,” “intend,” “target,” “plan,”
“seek,” “believe,” “foresee,” “outlook,” “estimate” and variations of these
words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause
actual results to differ materially from those expressed or forecasted. These risks and uncertainties include the following:
● our ability to efficiently manage and repay our debt obligations;
● our future operating results;
● 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;
● 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 and hire key employees;
● the global impact of COVID-19 on the United States economy and our operations;
● our business prospects;
● any contractual arrangements and relationships with third parties;
● the dependence of our future success on the general economy;
● any possible financings; and
● the adequacy of our cash resources and working capital.
Because
the factors referred to above could cause actual results or outcomes to differ materially from those expressed in any forward-looking
statements made by us, you should not place undue reliance on any such forward-looking statements. New factors emerge from time to time,
and their emergence is impossible for us to predict. In addition, we cannot assess the impact of each factor on our business or the extent
to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking
statements.
This
Annual Report should be read completely and with the understanding that actual future results may be materially different from what we
expect. The forward-looking statements included in this Annual Report are made as of the date of this Annual Report and should be evaluated
with consideration of any changes occurring after the date of this Annual Report. We will not update forward-looking statements even
though our situation may change in the future and we assume no obligation to update any forward-looking statements, whether as a result
of new information, future events or otherwise.
Except
as otherwise indicated by the context, references in this report to “Company,” “American Rebel Holdings,” “American
Rebel,” “we,” “us” and “our” are references to American Rebel Holdings, Inc. and its wholly-owned
operating subsidiary, American Rebel, Inc. All references to “USD” or United States Dollar refer to the legal currency of
the United States of America.
AVAILABLE
INFORMATION
We
file annual, quarterly and special reports and other information with the SEC. You can read these SEC filings and reports over the Internet
at the SEC’s website at www.sec.gov. You can also obtain copies of the documents at prescribed rates by writing to the Public Reference
Section of the SEC at 100 F Street, NE, Washington, DC 20549 on official business days between the hours of 10:00 am and 3:00 pm. Please
call the SEC at (800) SEC-0330 for further information on the operations of the public reference facilities. We will provide a copy of
our annual report to security holders, including audited financial statements, at no charge upon receipt to of a written request to us
at American Rebel Holdings, Inc., 718 Thompson Lane, Suite 108-199, Nashville, Tennessee 37204.
PART
I
ITEM
1. BUSINESS
Recent
Events
Reverse
Stock Split
On
February 7, 2022, we effectuated a reverse split of our issued and outstanding shares of Common Stock at a ratio of 1-for-80. The share
numbers and pricing information in this annual report are adjusted to reflect the reverse stock split.
Public
Offering and Uplisting to Nasdaq
On
February 9, 2022, we closed on an underwritten public offering of 2,530,121 units (the “Common Units”), at a price to the
public of $4.15 per Common Unit, for aggregate gross proceeds of approximately $10.5 million, prior to deducting underwriting discounts,
commissions, and other estimated offering expenses. Each Common Unit consisted of one share of Common Stock and one warrant to purchase
one share of Common Stock (each a “Warrant” and collectively the “Warrants”). The Common Stock
and Warrants were immediately separable from the Common Units and were issued and trade separately. The Warrants are exercisable immediately,
expire five years from the date of issuance and have an exercise price of $5.1875 per share.
We
intend to use the net proceeds from this offering to repay various outstanding indebtedness and for general corporate purposes, including
working capital, increased research and development expenditures and funding our growth strategies.
The
shares of Common Stock and Warrants were approved to list on the Nasdaq Capital Market under the symbols “AREB”
and “AREBW,” respectively, and began trading on February 7, 2022.
Second
Amended and Restated Articles of Incorporation
Effective
January 20, 2022, we amended and restated our articles of incorporation (the “Second Amended
and Restated Articles”) through a filing with the Nevada Secretary of State.
The
Second Amended and Restated Articles provide modifications to: (i) adopt a forum selection provision (Article XIII) to require that any
or all internal corporate claims, including claims made in the right of the corporation, shall be brought solely and exclusively in any
or all of the courts of the State of Nevada; (ii) adopt a severability provision (Article XIV); and (c) restate the Articles of Incorporation.
The
Second Amended and Restated Articles were approved bywritten
consent of holders of shares of the Common Stock and Series A Preferred Stock, representing, at the time, approximately 62.35% of the
outstanding voting power of the Company and by unanimous consent of our board of directors.
The
foregoing summary is qualified in its entirety by reference to the Second Amended and Restated Articles, which are filed as Exhibit 3.4
to this annual report and incorporated by reference herein.
Amended
and Restated Bylaws
On
January 25, 2022, our Board of Directors, acting by unanimous written consent, approved certain
amendments to our Bylaws (the “Amended and Restated Bylaws”). The Amended and Restated Bylaws became effective on February
9, 2022, upon their execution by the Company’s Chief Executive Officer.
As
previously reported on our Schedule 14C Information Statement that wasfiled
with the SEC on November 26, 2021, the Amended and Restated Bylaws were amended to implement,
among other changes, a forum selection bylaw (the “Exclusive Forum Amendment”). The Exclusive Forum Amendment provides that,
unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or
proceeding brought on behalf of the Company, (ii) any action asserting a claim for or based on a breach of fiduciary duty owed by any
current or former director or officer or other employee of the Company to the Company or its stockholders, (iii) any action asserting
a claim against the Company or any current or former director or officer or other employee of the Company arising pursuant to any provision
of the Nevada Revised Statutes or the Company’s certificate of incorporation or Bylaws (as either may be amended from time to time),
and (iv) any action asserting a claim related to or involving the Company that is governed by the internal affairs doctrine, shall be
the courts located in Clark County in the State of Nevada (or, if the courts in Clark County in the State of Nevada does not have jurisdiction,
the federal district court for the District of Nevada).
The
Amended and Restated Bylaws were approved bywritten
consent of holders of shares of the Common Stock and Series A Preferred Stock, representing, at the time, approximately 62.35% of the
outstanding voting power of the Company.
The
foregoing summary is qualified in its entirety by reference to the Amended and Restated Bylaws, which were filed as Exhibit 3.1 to the
Form 8-K filed on February 15, 2022.
New
Officer and Directors
Concurrent
with the public offering discussed above, on February 8, 2022, we elected two new independent board members (Michael Dean Smith and Ken
Yonika) and appointed a new chief financial officer (John Garrison).
Corporate
Summary
American
Rebel Holdings, Inc. was incorporated on December 15, 2014, in the State of Nevada and is authorized to issue 600,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock of $0.001 par value.
The
Company operates primarily as a marketer and designer of branded safes and personal security and self-defense products.
Additionally, the Company designs and produces branded apparel and accessories.
We
believe that when it comes to their homes, consumers place a premium on their security and privacy.
Our products are designed to offer our customers convenient, efficient and secure home and personal safes from a provider that they can
trust. We are committed to offering products of enduring quality that allow customers to keep their valuable belongings protected and
to express their patriotism and style, which is synonymous with the American Rebel brand.
Our
safes and personal security products are constructed primarily of U.S.-made steel. We believe our products are designed to safely store
firearms, as well as store our customers’ priceless keepsakes, family heirlooms and treasured memories, and we aim to make our
products accessible at various price points for home use. We believe our products are designed for safety, quality, reliability, features
and performance.
To
enhance the strength of our brand and drive product demand, we work with our sole supplier and manufacturer to emphasize product quality
and mechanical development in order to improve the performance and affordability of our products while providing support to our distribution
channel and consumers. We seek to sell products that offer features and benefits of higher-end safes at mid-line price ranges.
We
believe that safes are becoming a ‘must-have appliance’ in a significant portion of households. We believe our current safes
provide safety, security, style and peace of mind at competitive prices. We are in the process of developing an additional newly designed
model safe, which is expected to be produced in the U.S. We anticipate our new model safe will offer and be equipped with technologically
advanced features, such as independent bolt works operation, double-steel door-jamb framing, and a standardized geared locking mechanism.
In
addition to branded safes, we offer an assortment of personal security products as well as apparel and accessories for men and women
under the Company’s American Rebel brand. Our backpacks utilize what we believe is a distinctive sandwich-method concealment pocket,
which we refer to as Personal Protection Pocket, to hold firearms in place securely and safely. The concealment pockets on our Freedom
2.0 Concealed Carry Jackets incorporate a silent operation opening and closing with the use of a magnetic closure.
We
believe that we have the potential to continue to create a brand community presence around the core ideals and beliefs of America, in
part through our Chief Executive Officer, Charles A. “Andy” Ross, who has written, recorded and performs a number of songs
about the American spirit of independence. We believe our customers identify with the values expressed by our Chief Executive Officer
through the “American Rebel” brand.
Through
our growing network of dealers, we promote and sell our products in select regional retailers and
local specialty safe, sporting goods, hunting and firearms stores, as well as online, including our website and e-commerce platforms
such as Amazon.com.
American
Rebel is boldly positioning itself as “America’s Patriotic Brand” in a time when national spirit and American values
are being rekindled and redefined. American Rebel is an advocate for the 2nd Amendment and conveys a sense of responsibility to teach
and preach good common practices of gun ownership. American Rebel products keep you concealed and safe inside and outside the home. American
Rebel Safes protect your firearms and valuables from children, theft, fire and natural disasters inside the home; and American Rebel
Concealed Carry Products provide quick and easy access to your firearm utilizing American Rebel’s Proprietary Protection Pocket
in its backpacks and apparel outside the home. The initial company product releases embrace the “concealed carry lifestyle”
with a focus on concealed carry products, apparel, personal security and defense. “There’s a growing need to know how to
protect yourself, your family, your neighbors or even a room full of total strangers,” says American Rebel’s CEO, Andy Ross.
“That need is in the forethought of every product we design.”
The
“concealed carry lifestyle” refers to a set of products and a set of ideas around the emotional decision to carry a gun everywhere
you go. The American Rebel brand strategy is similar to the successful Harley-Davidson Motorcycle philosophy, referenced in this quote
from Richard F. Teerlink, Harley’s chairman and former chief executive, “It’s not hardware; it is a lifestyle, an emotional
attachment. That’s what we have to keep marketing to.” As an American icon, Harley has come to symbolize freedom, rugged
individualism, excitement and a sense of “bad boy rebellion.” American Rebel – America’s Patriotic Brand has
significant potential for branded products as a lifestyle brand. Its innovative Concealed Carry Product line and Safe line serve a large
and growing market segment; but it is important to note we have product opportunities beyond Concealed Carry Products and Safes.
American
Rebel Safes
Keeping
your guns in a location only appropriate trusted members of the household can access should be one of the top priorities for every responsible
gun owner. Whenever a new firearm is purchased, the owner should also look for a way to store and secure it. Storing the firearm in a
gun safe will prevent it from being misused by young household members, and it will also prevent it from being stolen in a burglary or
damaged in a fire or natural disaster. Gun safes may seem pricy at first glance, but once the consumer is educated on their role to protect
expensive firearms and other valuables such as jewelry and important documents, the price is justified.
American
Rebel produces large floor safes in a variety of sizes as well as small portable keyed safes. Additional opportunities exist for the
Company to develop Wall Safes and Handgun Boxes.
Reasons
gun owners should own a gun safe:
A
gun safe is the best investment a gun owner can make because the safe can protect guns from thieves, fire, water, or accidents. Bills
or ballot measures to require safe storage have been discussed in Delaware, Washington, Oregon, Missouri and Virginia; and various laws
are on the books in California and Massachusetts. Even a figure as staunchly pro-gun as Texas’s Republican lieutenant governor,
Dan Patrick, called on gun-owning parents to lock up their weapons after the Santa Fe shooting. The gun safe industry is experiencing
rapid growth and innovation. American Rebel CEO Andy Ross and the rest of the American Rebel team are committed to fulfilling the opportunity
in the gun safe market and filling the identified void with American Rebel Gun Safes.
Below
is a summary of the different safes we offer:
Upcoming
Product Offerings
To
further complement our diverse product offerings, we intend to introduce additional products in 2022. Below is a summary of our upcoming
product offerings:
i.
Biometrics Safes – we will be introducing our line of handgun boxes with biometrics, WiFi and Bluetooth technologies. These Biometric
Safes have been designed, engineered and are ready for production.
ii.
Personal Security Device – we are developing a non-lethal device that deters an attacker with an audible siren, which would draw
attention to the attacker, as well as notifying the user’s support network that help is needed and providing the location of the
attack.
iii.
Wall Safes – wall safes can be easily hidden and provide “free” storage space since they are able to be tucked into
the space between your wall and studs.
iv.
Youth Protection Backpack – with the objective of keeping kids safe at school, we are designing the Youth Protection Backpack,
which will incorporate a light-weight ballistic shield to provide protection when needed for our children as they go through their school
day activities.
Our
Competitive Strengths
We
believe we are progressing toward long-term, sustainable growth, and our business has, and our future success will be driven by, the
following competitive strengths:
●
Powerful Brand Identity – we believe we have developed a distinctive brand that sets us apart from our competitors. This has contributed
significantly to the success of our business. Our brand is predicated on patriotism and quintessential American character: protecting
our loved ones. We strive to equip our safes with technologically advanced features that offer customers advanced security to provide
the peace of mind they need. Maintaining, protecting and enhancing the “American Rebel” brand is critical to expanding our
loyal enthusiasts base, network of dealers and other partners. Through our branded apparel and accessories, we seek to further enhance
our connection with the American Rebel community and share the values of patriotism and safety for which our Company stands for. We strive
to continue to meet their need for our safes and our success will depend largely on our ability to maintain customer trust, become a
gun safe storage leader and continue to provide high-quality safes.
●
Product Design and Development – our current safe model relies on time-tested features, such as Four-Way Active Boltworks, pinning
the door shut on all four sides (compared to Three-Way Bolt works, which is prevalent in many of our competitors’ safes), and benefits
that would not often be available in our price point, including 11-gauge US-made steel. The sleek exterior of our safes has garnered
attention and earned the moniker from our dealers as the “safe with an attitude.” When we set out to enter the safe market,
we wanted to offer a safe that we would want to buy, one that would get our attention and provide excellent value for the cost.
●
Focus on Product Performance - since the introduction of our first safes, we have maintained a singular focus on creating a full range
of safe, quality, reliable safes that were designed to help our customers keep their family and valuables safe at all times. We incorporate
advanced features into our safes that are designed to improve strength and durability. Key elements of our current model safes’
performance include:
Double
Plate Steel Door - 4 1⁄2” Thick
Reinforced
Door Edge – 7/16” Thick
Double-Steel
Door Casement
Steel
Walls – 11-Gauge
Diameter
Door Bolts – 1 1⁄4” Thick
Four-Way
Active Boltworks – AR-50(14), AR-40(12), AR-30(10), AR-20(10), AR-15(8), AR-12(8)
Diamond-Embedded
Armor Plate
*
Double Plate Steel Door is formed from two U.S.-made steel plates with fire insulation sandwiched inside. Thicker steel is placed on
the outside of the door while the inner steel provides additional door rigidity and attachment for the locking mechanism and bolt works.
The door edge is reinforced with up to four layers of laminated steel. Pursuant to industry-standard strength tests performed, this exclusive
design offers up to 16 times greater door strength and rigidity than the “thin metal bent to look thick” doors.
*
Double-Steel Door Casement is formed from two or more layers of steel and is welded around the perimeter of the door opening. Pursuant
to industry-standard strength tests performed, it more than quadruples the strength of the door opening and provides a more secure and
pry-resistant door mounting. Our manufacturer installs a Double-Steel Door CasementTM on our safes. We believe the reinforced door
casement feature provides important security as the safe door is often a target for break-in attempts.
*
Diamond-Embedded Armor Plate Industrial diamond is bonded to a tungsten steel alloy hard plate. Diamond is harder than either a cobalt
or carbide drill. If drilling is attempted the diamond removes the cutting edge from the drill, thus dulling the drill bit to where it
will not cut.
●
Trusted Brand - we believe that we have developed a trusted brand with both retailers and consumers for delivering reliable, secure safe
solutions.
●
Customer Satisfaction - we believe we have established a reputation for delivering high-quality safes and personal security products
in a timely manner, in accordance with regulatory requirements and our retailers’ delivery requirements and supporting our products
with a consistent merchandising and marketing message. We also believe that our high level of service, combined with strong consumer
demand for our products and our focused distribution strategy, produces substantial customer satisfaction and loyalty. We also believe
we have cultivated an emotional connection with the brand which symbolizes a lifestyle of freedom, rugged individualism, excitement and
a sense of bad boy rebellion.
●
Proven Management Team - our founder and Chief Executive Officer, Charles A. Ross, Jr., has
led the expansion and focus on the select product line we offer today. We believe that Mr.
Ross had an immediate and positive impact on our brand, products, team members, and customers.
Under Mr. Ross’s leadership, we believe that we have built a strong brand and strengthened
the management team. We are refocusing on the profitability of our products, reinforcing
the quality of safes to engage customers and drive sales. We believe our management team
possesses an appropriate mix of skills, broad range of professional experience, and leadership
designed to drive board performance and properly oversee the interests of the Company, including
our long-term corporate strategy. Our management team also reflects a balanced approach to
tenure that will allow the Board to benefit from a mix of newer members who bring fresh perspectives
and seasoned directors who bring continuity and a deep understanding of our complex business.
Our
Growth Strategy
Our
goal is to enhance our position as a designer, producer and marketer of premium safes and personal security products. We have established
plans to grow our business by focusing on three key areas: (1) organic growth and expansion in existing markets; (2) targeted strategic
acquisitions that increase our on-premise and online product offerings, distributor and retail footprint and/or have the ability to increase
and improve our manufacturing capabilities and output, and (3) expanding the scope of our operation activities to the dispensaries
U.S. community.
We
have developed what we believe is a multi-pronged growth strategy, as described below, to help us capitalize on a sizable opportunity.
Through methodical sales and marketing efforts, we believe we have implemented several key initiatives we can use to grow our business
more effectively. We believe we have made significant progress in 2021 in the largest growing segment of the safe industry, sales
to first-time buyers. We also intend to opportunistically pursue the strategies described below to continue our upward trajectory and
enhance stockholder value. Key elements of our strategy to achieve this goal are as follows:
Organic
Growth and Expansion in Existing Markets - Build our Core Business
The
cornerstone of our business has historically been our safes product offering. We are focused on continuing to develop our home, office
and personal safes product lines. We are investing in adding what we believe are distinctive technology solutions to our safes.
We
are also working to increase floor space dedicated to our safes and strengthen our online presence in order to expand our reach to new
enthusiasts and build our devoted American Rebel community. We intend to continue to endeavor to create and provide retailers and customers
with what we believe are responsible, safe, reliable and stylish products, and we expect to concentrate on tailoring our supply and distribution
logistics in response to the specific demands of our customers.
We
are currently developing a new additional model of our home and office safes. Our new safe model, which we expect to introduce at industry
trade shows in 2022, is to be built in the U.S. through our collaboration with Industrial Maintenance Incorporated (“IMI”).
The new “Made in the USA” safe model is expected to be manufactured in Topeka, Kansas, and is ready to begin production.
We believe IMI’s location is very advantageous, as it is located near our sales office in Lenexa, Kansas.
We
expect the new planned model to include additional features, such as a reinforced door and upgraded locking mechanism, and increased
fire rating, among others. We are focused on developing a best in class, compelling combination of functionality, convenience and style
without compromising the performance of our safes. We intend to use our designing and developing processes to enhance technological and
time to market advantages over incumbent safe manufacturers.
While
we currently rely on third-party manufacturers for the production of our current line of safes, apparel and accessories, we believe that
the expected addition of manufacturing capabilities following the signing of the contract with the aforementioned manufacturer, which
we anticipate to work exclusively with us, would allow us, among other benefits, to ramp up our production levels to meet expected demand
for our products, provide us greater autonomy over the manufacturing process, and add what we believe are distinctive features.
Additionally,
our Concealed Carry Product line and Safe line serve a large and growing market segment. We believe that interest in safes increase,
as well as in our complimentary concealed carry backpacks and apparel as a byproduct, when interest of the general population in firearms
increase. To this extent, the FBI’s National Instant Criminal Background Check System (NICS), which we believe serves as a proxy
for gun sales since a background check is generally needed to purchase a firearm, reported a record number of background checks in 2020,
39,695,315. The prior annual record for background checks was 2019’s 28,369,750. In 2021, there were 38,876,673 background checks
conducted, similar to that of 2020’s annual record which was 40% higher than the previous annual record in 2019. While we do not
expect this increase in background checks to necessarily translate to an equivalent number of additional safes purchased, we do believe
it might be an indicator of the increased demand in the safe market. In addition, certain states (such as Massachusetts, California,
New York and Connecticut) are starting to legislate new storage requirements in respect of firearms, which is expected to have a positive
impact on the sale of safes.
We
continue to strive to strengthen our relationships and our brand awareness with our current distributors, dealers, manufacturers,
specialty retailers and consumers and to attract other distributors, dealers, and retailers. We believe that the success
of our efforts depends on the distinctive features, quality, and performance of our products; continued manufacturing capabilities and
meeting demand for our safes; the effectiveness of our marketing and merchandising programs; and the dedicated customer support.
In
addition, we seek to improve customer satisfaction and loyalty by offering distinctive, high-quality products on a timely and cost-attractive
basis and by offering efficient customer service. We regard the features, quality, and performance of our products as the most important
components of our customer satisfaction and loyalty efforts, but we also rely on customer service and support for growing our business.
Furthermore,
we intend to continue improving our business operations, including research and development, component sourcing, production processes,
marketing programs, and customer support. Thus, we are continuing our efforts to enhance our production by increasing daily production
quantities through equipment acquisitions, expanded shifts and process improvements, increased operational availability of our equipment,
reduced equipment down times, and increased overall efficiency.
We
believe that by enhancing our brand recognition, our market share might grow correspondingly. Industry sources estimate that 70 million
to 80 million people in the United States own an aggregate of more than 400 million firearms, creating a large potential market for our
safes and personal security products. We are focusing on the premium segment of the market through the quality, distinctiveness, and
performance of our products; the effectiveness of our marketing and merchandising efforts; and the attractiveness of our competitive
pricing strategies.
Targeted
Strategic Acquisitions for Long-term Growth
We
are consistently evaluating and considering acquisitions opportunities that fit our overall growth strategy as part of our corporate
mission to accelerate long-term value for our stockholders and create integrated value chains.
Along
these lines, in March of 2022 we entered into a letter of intent (“LOI”) to purchase a safe manufacturer. The final structure
of the acquisition will be determined by the parties following the receipt of tax, corporate and securities law advice. The acquisition
will be structured as an arm’s length transaction and pursuant to the terms of the LOI the parties intend to sign a definitive
agreement in respect of the acquisition on or before April 30, 2022. Under the terms of the LOI, we would acquire all of the outstanding
shares of capital stock of the acquisition target, free and clear of all encumbrances for a combination of cash and stock. As part of
the LOI, we gave the target a $250,000 non-refundable deposit, which will be credited to us at closing. Completion of the acquisition
is subject to a number of conditions, including but not limited to the following key conditions: the target obtaining an audit of its
financial statements; execution of the definitive and ancillary agreements; completion of mutually satisfactory due diligence; us obtaining
sufficient financing to complete the acquisition; and receipt of all required regulatory, corporate and third-party approvals, and the
fulfillment of all applicable regulatory requirements and conditions necessary to complete the acquisition.
Expanding
Scope of Operations Activities by Offering Servicing Dispensaries and Brand Licensing
We
continually seek to target new consumer segments for our safes. As we believe that safes are becoming a must-have household appliance,
we strive to establish authenticity by selling our products to additional groups, and to expand our direct-to-consumer presence through
our website and our showroom in Lenexa, Kansas.
Further,
we expect the cannabis dispensary industry to be a material growth segment for our business. Several cannabis dispensary operators have
expressed interest in the opportunity to help them with their inventory locking needs. Cannabis dispensaries have various insurance requirements
and local ordinances requiring them to secure their inventory when the dispensary is closed. Dispensary operators have been purchasing
gun safes and independently taking out the inside themselves to allow them to store cannabis inventory. Recognizing what seems to be
a growing need for cannabis dispensary operators, we have designed a safe tailor-made for the cannabis industry. With the legal cannabis
hyper-growth market expected to exceed $43 billion by 2025, and an increasing number of states where the growth and cultivation of cannabis
is legal (California, Colorado, Hawaii, Maine, Maryland, Michigan, Montana, New Mexico, Oregon, Rhode Island, Vermont and Washington),
we believe we are well positioned to address the need of dispensaries. American Rebel has a long list of dispensary operators, growers,
and processors interested in the Company’s inventory control solutions. We believe that dispensary operators, growers, and processors
are another fertile new growth market for our Vault Doors products, as many in the cannabis space have chosen to install entire vault
rooms instead of individual inventory control safes—the American Rebel Vault Door has been the choice for that purpose.
Further,
we believe that American Rebel has significant potential for branded products as a lifestyle brand. As the American Rebel Brand continues
to grow in popularity, we anticipate generating additional revenues from licensing fees earned from third parties who wish to engage
the American Rebel community. While the Company does not generate material revenues from licensing fees, our management believes the
American Rebel brand name may in the future have significant licensing value to third parties that seek the American Rebel name to brand
their products to market to the American Rebel target demographic. For example, a tool manufacturer that wants to pursue an alternative
marketing plan for a different look and feel could license the American Rebel brand name for their line of tools and market their tools
under our distinct brand. This licensee would benefit from the strong American Rebel brand with their second line of American Rebel branded
tools as they would continue to sell both of the lines of tools. Conversely, American Rebel could potentially also benefit as a licensee
of products. If American Rebel determines a third party has designed, engineered, and manufactured a product that would be a strong addition
to the American Rebel catalog of products, American Rebel could license that product from the third-party and sell the licensed product
under the American Rebel brand.
Our
website address is www.americanrebel.com. The information on our website is not part of this Annual Report, Form 10-K.
Description
of Business
Our
Company
American
Rebel, America’s Patriotic Brand, operates primarily on designing and marketing branded safes and personal security and self-defense
products. Additionally, the Company designs and produces branded accessories and apparel, including with concealment pockets.
We
believe that when it comes to their homes, consumers place a premium on their security and privacy. Our products are designed to offer
our customers convenient, efficient and secure home and personal safes from a provider that they can trust. We are committed to offering
products of enduring quality that allow customers to keep their valuable belongings protected and to express their patriotism and style,
which is synonymous with the American Rebel brand.
Our
safes and personal security products are constructed primarily of U.S.-made steel. We believe our products are designed to safely store
firearms, as well as store our customers’ priceless keepsakes, family heirlooms and treasured memories, and we aim to make our
products accessible at various sizes and price points for home use. We believe our products are designed for safety, quality, reliability,
features and performance.
To
enhance the strength of our brand and drive product demand, we work with our sole supplier and manufacturer to emphasize product quality
and mechanical development in order to improve the performance and affordability of our products while providing support to our distribution
channel and consumers. We seek to sell products that offer features and benefits of higher-end safes at mid-line price ranges.
We
believe that safes are becoming a ‘must-have appliance’ in a significant portion of households. We believe our current safes
provide safety, security, style and peace of mind at competitive prices. We are in the process of developing an additional newly designed
model safe, which is expected to be produced in the U.S. We anticipate our new model safe will offer and be equipped with technologically
advanced features, such as independent boltworks operation, double-steel door-jamb framing, and a standardized geared locking mechanism.
In
addition to branded safes, we offer an assortment of personal security products as well as apparel and accessories for men and women
under the Company’s American Rebel brand. Our backpacks utilize what we believe is a distinctive sandwich-method concealment pocket,
which we refer to as Personal Protection Pocket, to hold firearms in place securely and safely. The concealment pockets on our Freedom
2.0 Concealed Carry Jackets incorporate a silent operation opening and closing with the use of a magnetic closure.
We
believe that we have the potential to continue to create a brand community presence around the core ideals and beliefs of America, in
part through our Chief Executive Officer, Charles A. “Andy” Ross, who has written, recorded and performs a number of songs
about the American spirit of independence. We believe our customers identify with the values expressed by our Chief Executive Officer
through the “American Rebel” brand.
Through
our growing network of dealers, we promote and sell our products in select regional retailers
and local specialty safe, sporting goods, hunting and firearms stores, as well as online,
including our website and e-commerce platforms such as Amazon.com.
Our
Products
We
design, market and sell branded safes and personal security products, including concealed carry/self-defense products, and design and
market an apparel line and complimentary accessories. We promote and sell our products primarily through retailers using a dealer network,
as well as online, through our website, and on Amazon.com, where customers can place an order for our branded backpacks and apparel items.
Safes
We
offer a wide range of home, office and personal safe models, in a broad assortment of sizes, features and styles, which are constructed
with U.S.-made steel. Our safes exhibit the strength and rugged independence that America was built upon. American Rebel’s design
makes keeping your firearms more secure in style. Products are marketed under the American Rebel brand. Although demand for our safes
is strong across all segments of our customers, including individuals and families who wish to protect their valuables, to collectors
and the dispensary servicing community, the demand for safe storage responsible solutions has been particularly strong among gun owners,
sportsmen, competitive shooters and hunters alike. We expect to benefit from increasing awareness of and need for safe storage of firearms
in future periods.
Large
Safes
Our
large safe collection consists of six safes in a range of sizes. All of our large safes share the same high-quality workmanship, are
constructed out of 11-gauge U.S.-made steel and feature a double plate steel door, double-steel door casements and reinforced door edges.
We believe that our large safes are ideal for storing valuables of significant size, and that they offer greater capacity for storage
and protection. Our safes offer a fully adjustable interior to fit our customers’ needs. Depending on the model, one side of the
interior may have shelves and the other side set up to accommodate long guns. The large safes are designed to be resistant to break-ins,
natural disasters and fire damage, and to prevent unauthorized access and to protect your family and their valuables. A large, highly
visible safe also is believed to act as a deterrent to any prospective thief. Safe storage is also top priority of our customer base
who seeks to responsibly secure their firearms. Whenever a new firearm is purchased, gun owners look for our premium solution to responsibly
secure them and protect their loved ones.
Our
large safes selection includes the following:
AR-50
The
AR-50 is our biggest safe. The AR-50 safe is designed to be strong, rugged, constructed of 11-gauge American-made steel and maintains
capacity to comfortably store over 40 firearms comfortably. This premium gun safe with a double plate steel door, double-steel door casement
and reinforced door edge is designed to give our customers added security and peace of mind, with 75 minutes of fire protection at 1200
degrees Fahrenheit as well as a customized shelf solution and optional additional accessories to increase the capacity to hold firearms.
72” tall, 40” wide with a depth of 28.5”.
AR-40
The
AR-40 has the same footprint as the AR-50; however, it is 12” shorter with a capacity of over 30 firearms. This
gun safe contains a double plate steel door, double-steel door casement and reinforced door edge, designed to give our customers secure
storage. It provides 75 minutes of fire protection at 1200 degrees Fahrenheit as well as a flexible shelving system to accommodate firearm
storage. The dimensions include 60” tall, 40” wide with a depth of 28.5”.
AR-30
The
AR-30 offers nearly 50,000 cubic inches of storage. Built with the same strength and ruggedness as the AR-50 and AR-40 models, this safe
holds over 20 firearms. This gun safe contains a double plate steel door, double-steel door casement
and reinforced door edge. It is designed to give our customers the ability to store their firearms and valuables securely, with 75 minutes
of fire protection at 1200 degrees Fahrenheit as well as offering optional add-on accessories to increase storage capacity. The dimensions
include 60” tall, 34” wide with a depth of 24.5”.
AR-20
The
AR-20 shares the quality workmanship as the other sizes with a capacity for over 15 firearms. This
gun safe contains a double plate steel door, double-steel door casement and reinforced door edge is designed to prevent theft and provide