| ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE
1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General American
Rebel Holdings, Inc. (the “Company”) operates primarily as a designer, manufacturer, and marketer of branded safes and personal security,
self-defense products. Additionally, the Company designs and produces branded apparel and other accessories. The
Company promotes and sells its products primarily through a growing network of dealers, in select regional retailers and local specialty
safe, sporting goods, hunting and firearms stores, as well as online, including its website and e-commerce platforms such as Amazon.com. The
information on our website does not constitute a part of this report. Listing, Reorganization
and Acquisition of Champion Entities The
Company was incorporated on December 15, 2014 Nevada 0.80 60,000 On
January 5, 2017, the Company amended its articles of incorporation and changed its name to American Rebel Holdings, Inc. The Company
completed a business combination with its majority stockholder, American Rebel, Inc. on June 19, 2017. As a result, American Rebel, Inc.
became a wholly-owned subsidiary of the Company. The
aforementioned acquisition of American Rebel, Inc. was accounted for as a reverse merger, which involved issuance by the Company of 217,763 6,250 112,500 On
June 29, 2022, the Company entered into a stock and membership interest purchase agreement with Champion Safe Co., Inc. (“Champion
Safe”), Superior Safe, LLC (“Superior Safe”), Safe Guard Security Products, LLC (“Safe Guard”), Champion
Safe De Mexico, S.A. de C.V. (“Champion Safe Mexico”) and, together with Champion Safe, Superior Safe, and Safe Guard, collectively,
the (“Champion Entities”) and Mr. Ray Crosby (“Seller”) (the “Champion Purchase Agreement”), pursuant
to which the Company agreed to acquire all of the issued and outstanding capital stock and membership interests of the Champion Entities
from the Seller. 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 Report in our Condensed 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. The
closing of the acquisition occurred on July 29, 2022. Under the terms of the Champion Purchase Agreement, the Company paid the Seller
(i) cash consideration in the amount of $ 9,150,000 ,
along with (ii) cash deposits in the amount of $ 350,000 ,
and (iii) reimbursed Seller for $ 397,420
of agreed upon acquisitions and equipment purchases
completed by the Seller and the Champion Entities since June 30, 2021. For
purposes of this Quarterly Report on Form 10-Q, “American Rebel” “we,” “our,” “us,” or
similar references refers to American Rebel Holdings, Inc. and its consolidated subsidiaries, unless the context requires
otherwise. Interim
Financial Statements and Basis of Presentation The
accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations
of the SEC set forth in Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by
the U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting
of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods
presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These financial statements
should be read along with the Annual Report filed on Form 10-K of the Company for the period ended December 31, 2021, and notes thereto
contained. Principles
of Consolidation The
Consolidated Financial Statements include the accounts of the Company and its majority-owned subsidiaries, American Rebel, Inc., and the Champion Entities. All significant intercompany accounts and transactions have been eliminated. Year
end The
Company’s year-end is December 31. Cash
and cash equivalents For
the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered
to be cash equivalents. The carrying value of these investments approximates fair value. Inventory
and Inventory Deposits Inventory
consists of backpacks, jackets, safes and accessories manufactured to our design and held for resale and are carried at the lower of
cost (First-in, First-out Method) or market value. The Company determines the estimate for the reserve for slow moving or obsolete inventories
by regularly evaluating individual inventory levels, projected sales and current economic conditions. The Company also makes deposit
payments on inventory to be manufactured that are carried separately until the goods are received into inventory. Fixed
assets and depreciation Property
and equipment are stated at cost net of accumulated depreciation. Additions and improvements are capitalized while ordinary maintenance
and repair expenditures are charged to expense as incurred. Depreciation is recorded by the straight-line method over the estimated useful
life of the asset, which ranges from five seven years Revenue
recognition In
accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), revenues are recognized when control of
the promised goods or services is transferred to our clients, in an amount that reflects the consideration to which we expect to be entitled
in exchange for those goods and services. To achieve this core principle, we apply the following five steps: ( 1) Identify the contract
with a client; (2) Identify the performance obligations in the contract; (3) Determine the transaction price; (4) Allocate the transaction
price to performance obligations in the contract; and (5) Recognize revenues when or as the company satisfies a performance obligation. These
steps are met when an order is received, a price is agreed, and the product is shipped or delivered to that customer. Advertising
costs Advertising
costs are expensed as incurred; Marketing costs which we consider to be advertising costs incurred were $ 119,122 34,669 349,341 138,783 Fair
Value of Financial Instruments Fair
value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September
30, 2022, and December 31, 2021, respectively. The respective carrying value of certain on-balance-sheet financial instruments approximated
their fair values. These financial instruments include cash, and accounts payable. Fair values were assumed to approximate carrying values
for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on
demand. Level
1: The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with
the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions
involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially
physical assets, actually trade in active markets. Level
2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they
may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs
that can be applied in three situations. Level
3: If inputs from levels 1 and 2 are not available, the Financial Accounting Standards Board (the “FASB”) acknowledges that
fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,”
and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.”
This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement
date”. Earlier in the standard, FASB explains that “observable inputs” are gathered from sources other than the reporting
company and that they are expected to reflect assumptions made by market participants. Stock-based
compensation The
Company records stock-based compensation in accordance with the guidance in ASC Topic 505 and 718 which requires the Company to recognize
expense related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions
using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes
the cost of all share-based awards on a graded vesting basis over the vesting period of the award. The
Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance
with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the
consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value
of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment
or completion of performance by the provider of goods or services as defined by FASB ASC 505-50. Earnings
per share The
Company follows ASC Topic 260 to account for earnings per share. Basic earnings per common share (“EPS”) calculations are
determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings
per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common
share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the
computation. Income
taxes The
Company follows ASC Topic 740 for recording provision for income taxes. Deferred tax assets and liabilities are computed based upon the
difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable
when the related asset or liability is expected to be realized or settled. Deferred income tax expense or benefit is based on the changes
in the asset or liability for each period. If available evidence suggests that it is more likely than not that some portion or the entire
deferred tax asset will not be realized, a valuation allowance is required to reduce the deferred tax asset to the amount that is more
likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income tax in the
period of change. Deferred
income tax may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes
in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities
to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified
as current or non-current depending on the periods in which the temporary differences are expected to reverse. The
Company applies a more-likely-than-not recognition threshold for all tax uncertainties. ASC Topic 740 only allows the recognition of
tax benefits that have a greater than fifty percent likelihood of being sustained upon examination by taxing authorities. As of September
30, 2022, and December 31, 2021, the Company reviewed its tax positions and determined there were no outstanding, or retroactive tax positions
with less than a 50% likelihood The
Company does not anticipate any significant changes to its total unrecognized tax benefits within the next 12 months. The
Company classifies tax-related penalties and net interest as income tax expense. For the three-month and nine-month periods ended September
30, 2022, and 2021, respectively, no income tax expense has been recorded. Use
of estimates The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ
significantly from those estimates. Right
of Use Assets and Lease Liabilities In
February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The standard requires lessees to recognize almost all leases on the
balance sheet as a Right-of-Use (“ROU”) asset and a lease liability and requires leases to be classified as either an operating
or a finance type lease. The standard excludes leases of intangible assets or inventory. The standard became effective for the Company
beginning January 1, 2019. The Company adopted ASC 842 using the modified retrospective approach, by applying the new standard to all
leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after January
1, 2019, are presented under ASC 842, while prior period amounts have not been adjusted and continue to be reported in accordance with
our historical accounting under ASC 840. The Company elected the package of practical expedients permitted under the standard, which
also allowed the Company to carry forward historical lease classifications. The Company also elected the practical expedient related
to treating lease and non-lease components as a single lease component for all equipment leases as well as electing a policy exclusion
permitting leases with an original lease term of less than one year to be excluded from the ROU assets and lease liabilities. Under
ASC 842, the Company determines if an arrangement is a lease at inception. ROU assets and liabilities are recognized at commencement
date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments
that are fixed and determinable at the time of commencement. As most of the Company’s leases do not provide an implicit rate, the
Company estimated the incremental borrowing rate in determining the present value of lease payments. The ROU asset also includes any
lease payments made prior to commencement and is recorded net of any lease incentives received. The Company’ lease terms may include
options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Operating
leases are included in operating lease Right-of-Use assets and operating lease liabilities, current and non-current, on the Company’s
consolidated balance sheets. Recent
pronouncements The
Company has implemented all new accounting pronouncements that are in effect and is evaluating any that may impact its financial statements.
The Company does not believe that there are any new accounting pronouncements that have been issued that might have a material impact
on its financial position or results of operations. |
