AREB 10-K & 10-Q changes, risk factors and insider trading

Our American Rebel Light Lager,Lager competes generally with other alcoholic beverages. We anticipate competing with other beer and beverage companies not only for drinker acceptance and loyalty, but also for traditional retail shelf, cold box and tap space, as well as e-commerce placement and for marketing focus by our distributors and their customers, when established, all of which are anticipated to distribute and sell other alcoholic beverage products. All of our potential competitors at this point in time have substantially greater financial resources, marketing strength and distribution networks than we do. Moreover, the introduction of new products by competitors that compete directly with our first beer and future products or that diminish the importance of our anticipated products to retailers or distributors may have a material adverse effect on our business and financial results.

The brewing industry has significantly evolved over the yearsyears, becoming an increasingly consolidated beer market. The industry has now become increasingly complex and competitive as the consolidation of brewers has resulted in fewer major market participants. As a result of the increased consolidation of brewers and the dynamic of expanding new segments within the industry with new market entrants, including the non-alcohol market, the markets in which we intend to operate, may evolve at a disadvantage to our market position. Ongoing evolution in certain beer markets, together with emerging changes in consumer preferences, have resulted in a significant increase in market entrants, consumer choices and market competition, as well as increased government scrutiny. In addition, local governments may intervene, which may fundamentally accelerate transformational changes to such markets. For example, the beer markets in the U.S. have long consisted of a select number of significant market participants with government-regulated routes to market.

The domestic beer industry, other than the market for High End beer occasions and Beyond Beer occasions, has experienced a decline in shipments over the last ten years. We believe that this decline is due to declining alcohol consumption per person in the population, drinkers trading up to drink high quality, more flavorful hard seltzers.seltzers, beers and spirtsspirits RTDs, health and wellness trends and increased competition from wine and spirits companies. If consumption of our products, when introduced, in general were to come into disfavor among domestic drinkers, or if the domestic alcohol beverage industry were subjected to significant additional societal pressure or governmental regulations, our business could be materially adversely affected.

We currently distribute our American Rebel Light Lager in eleven states, with the ability to sell in 40 states online. We are required by law to use state-licensed distributors or, in 17 states known as “control states,” state-owned agencies to sell our products to retail outlets, including liquor stores, bars, restaurants and national chains in the United States. We have established relationships for our brand with a limited number of wholesale distributors. We continue to engage new distributors on a regular basis,basis; howeverhowever, this rate of growth may not continue in the future.

Federal and state legislatures frequently consider legislation relating to the regulation of firearms, including amendment or repeal of existing legislation. Existing laws may be affected by future judicial rulings and interpretations of firearm products, ammunition, and safe gun storage. If such restrictive changes to legislation develop, we could find it difficult, expensive, or even impossible to comply with them, impeding new product development and distribution of existing products.

Our reliance on third-party suppliers for various raw materials and components for our products exposes us to volatility in the availability, quality, and price of these raw materials and components. Our orders with certain of our suppliers may represent a very small portion of their total orders. As a result, they may not give priority to our business, leading to potential delays in or cancellation of our orders. A disruption in deliveries from our third-party suppliers, capacity constraints, production disruptions, price increases, or decreased availability of raw materials or commodities could have an adverse effect on our ability to meet our commitments to customers or increase our operating costs. Quality issues experienced by third partythird-party suppliers can adversely affect the quality and effectiveness of our products and result in liability and reputational harm.

The Company has made and expects to continue to make, significant advertising and promotional expenditures to enhance its brand. These expenditures may adversely affect the Company’s results of operations in a particular quarter or even for the full year,year and may not result in in increased sales. Variations in the levels of advertising and promotional expenditures have in the past caused,caused and are expected in the the future to continue to cause,cause variability in the Company’s quarterly results of operations. While the Company attempts to invest only in effective advertising and promotional activities, it is difficult to correlate such investments with sales results, and there is no guarantee that the Company’s expenditures will be effective in building brand equity or growing long termlong-term sales.

We are highly dependent on Charles A. Ross, our Chief Executive Officer, Chairman of our board of directors (the “Board” or “Board of Directors”) and largest stockholder. Our success depends heavily upon the continued contributions of Mr. Ross, whose leadership, industry reputationreputation, entrepreneurial background and creative marketing skills may be difficult to replace at this stage in our business development, and on our ability to attract and retain similarly positioned prominent leaders. If we were to lose the services of our Chief Executive Officer, our ability to execute our business plan may be harmed and we may be forced to limit operations until such time as we could hire suitable replacements.

Our management has taken action to begin remediating the material weaknesses; however, certain remedial actions have not started or have only recently been undertaken, and while we expect to continue to implementenhance our remediation plans throughout the fiscal year ending December 31, 31, 2025,2026, we cannot be certain as to when remediation will be fully completed. In addition, we could in the future identify additional internal internal control deficiencies that could rise to the level of a material weakness or uncover other errors in financial reporting. During the course of our evaluation, we may identify areas requiring improvement and may be required to design additional enhanced processes and controls to address issues identified through this review. In addition, there can be no assurance that such remediation efforts will be successful, that our internal control over financial reporting will be effective as a result of these efforts or that any such future deficiencies deficiencies identified may not be material weaknesses that would be required to be reported in future periods.

We reached a determination to restate our consolidated financial statements and related disclosures for the years ended December 31, 2023 2023 and 2022 in our Form 10-K/A filed on January 29, 2025. The restatement also included other adjustments to historical periods. As a result, we have incurred unanticipated costs for accounting, professional and legal fees in connection with or related to the restatement,restatement and have become subject to a number of additional risks and uncertainties, which may affect investor confidence in the accuracy of our financial disclosures and may raise reputational issues for our business.

As a result of our failure to timely file a periodic report with the SEC in connection with our reaudit of the years ended December 31, 2023 and 2022, absent a waiver of the Form S-3 eligibility requirements, we are ineligible to use or file new short form registration registration statements on Form S-3. In the event of the absence of a waiver, our inability to use or file new registration statements on Form S-3 may significantly impair our ability to raise necessary capital to run our operations and progress our business and product development programs. If we seek to access the capital markets through a registered offering during the period of time that we are unable to file a new registration statement on Form S-3, we may be required to publicly disclose a proposed offering and the material terms thereof before the offering commences, we may experience delays in the offering process due to SEC review of a Form S-1 registration statement, and we may incur increased offering and transaction costs and other considerations. Disclosing a public offering prior to the formal commencement of an offering may result in downward pressure on our stock price. If we are unable to raise capital through a registered offering, we would be required to conduct our equity financing transactions on a private placement basis, which may be subject to pricing, size and other limitations imposed under the Nasdaq Stock Exchange (“Nasdaq”) rules, rules or seek other sources of capital. In addition, we will not be permitted to conduct an “at the market offering” absent an effective primary registration statement on Form S-3.

We have and expect to continue to have substantial working capital needs. Our cash on hand, together with cash generated from product sales, sales, cash equivalents and short-term investments will not meet our working capital and capital expenditure requirements for the next twelve months. Throughout 2024 and continuing into 2025, we have raised a substantial amount of debt to fund our operations. In addition, we will need to raise additional funds to fund our operations and implement our growth strategy, or to respond to competitive pressures and/or perceived opportunities, such as investment, acquisition, marketing and development activities.

Any significant disruption to communications and travel, including travel restrictions and other potential protective quarantine measures measures against pandemics similar to COVID-19 or other public health crisis by governmental agencies, could make it difficult for us to deliver goods services to its customers. War, riots, or other disasters may increase the need for our products and demand by government and military may make it difficult for useus to provide products to customers. Further, travel restrictions and protective measures against pandemics similar to COVID-19 could cause us to incur additional unexpected labor costs and expenses or could restrain our ability to retain the highly skilled personnel we need for our operations. Due to the substantial uncertainty related to the effects of the pandemic, its duration and the related market impacts, including the economic stimulus activity, we are unable to predict the specific impact the pandemic and related restrictions (including the lifting or re-imposing of restrictions due to the Omicron variant or otherwise) will have on our results of operations, liquidity or long-term financial results.

As of December 31, 20242025 and December 31, 2023,2024, we continue to have net operating loss carryforwards, or “NOLs”, for federal and state income tax purposes of $64,393,753$76,442,938 and $46,789,389,$64,393,753, respectively, which begin to expire in 2032. Net operating loss carryforwards are available to reduce future taxable income. Federal net operating losses generated before 2018 will begin to expire in 2032. Federal net operating losses generated in and after 2018 may be carried forward indefinitely. The expiration of state NOL carryforwards vary by state and begin to expire in 2024. It is possible that we will not generate sufficient taxable income in time to use the NOLs before their expiration, or at all. Under Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes undergoes an “ownership change,” the corporation’s ability to use its pre-change NOLs and other tax attributes to offset its its post-change income may be limited. In general, an “ownership change” will occur if there is a cumulative change in our ownership ownership by “5 percent (and greater than 5 percent) stockholders” that exceeds 50 percentage points or more in change over a rolling three-year period. Similar rules may apply under state tax laws. Our ability to use NOLs and other tax attributes to reduce future taxable income and liabilities may be subject to annual limitations as a result of prior ownership changes and ownership changes that may occur in the future (which may be outside our control).

If our Common Stock were to be delisted from Nasdaq, we intend to take actionsaction to apply for listing the Company’s Common Stock on one one of the OTC Markets. However, we understand that to be eligible for quotation on certain of the OTC Market,Markets, issuers must remain current in their filings with the SEC. In addition, even if our Common Stock is listed on the OTC Markets, the OTC Markets are generally regarded as a less efficient trading market than Nasdaq, and being listed on the OTC Markets may not resolve any breaches that may arise under our existing material arrangements, and thus many of the same risks described above would still apply.

On June 9, 2016, a change in control occurred, a sixty percent (60%) ownership interest was obtained by American Rebel, Inc. from a former officer and director who was also our founder. On June 17, 2017, the Company acquired the business of its control stockholder accounted for and presented financially as a reverse merger transaction. Our majority stockholder, American Rebel, Inc. became a wholly owned subsidiary of the CompanyCompany, and we distributed the shares to the stockholders of American Rebel, Inc. As a result of this reverse merger, the reporting operating history of the Company is now the operating history of American Rebel, Inc. Financial statements of both companies are now consolidated and all material intercompany transactions and balances are eliminated. On July 29, 2022, the Company closed on its acquisition of the Champion Entities, a major acquisition with significant existing operations.

Establishment of American Rebel Beer

On August 9, 2023, the Companywe entered into a Master Brewing Agreement with Associated Brewing. Under the terms of the Brewing Agreement, Associated 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 CompanyWe paid a setup fee and security deposit to Associated Brewing. We established American Rebel Beverages, LLC as a wholly-ownedwholly owned subsidiary specifically to hold our alcohol licenses and conduct operations for our beer business.

For the year ended December 31, 2024,2025, we reported Revenues of $11,420,268$9,522,109 compared to Revenues of $15,998,196$11,420,268 for the year ended December December 31, 2023.2024. The decrease in Revenues of $4,577,928$1,898,159 (or (2917)% period over period) for the year ended December 31, 2024 2025 compared to the year ended December 31, 20232024 is primarily attributable to slower sales driven by current market conditions. For the year ended December 31, 2024, 2025, we reported Cost of Goods Sold of $11,539,905,$9,719,861, compared to Cost of Goods Sold of $14,199,260$11,539,905 for the year ended December 31, 2023. 2024. The decrease in Cost of Goods Sold of $2,659,355$1,820,044 (or (1916)% period over period) for the current period is due to the direct relationship of decreased sales. For the year ended December 31, 2024,2025, we reported a negative Gross Margin of $(119,637197,752), compared to a negative Gross Margin of $1,798,936$(119,637) for the year ended December 31, 2023.2024. The decrease in Gross Margin of $1,918,573 $78,115 (or (10765)% period over period) for the year ending December 31, 20242025 compared to the year ending December 31, 20232024 primarily due to slower sales and current market conditions. Gross Margin percentagespercentage for the years ended December 31, 2024 were (1)% compared to 11% for the year ended December 31, 2023.2025 was (2)% compared to (1)% for the year ended December 31, 2024.

For the year ended December 31, 2024,2025, we incurred consulting/payroll and other costs of $2,039,777$3,246,972 compared to consulting/payroll and other costs of $3,598,839$2,039,777 for the year ended December 31, 2023.2024. The decreaseincrease in consulting/payroll and other costs of $1,559,062$1,207,195 (or (43)%59% period period over period) was primarily due to the overall decreaseincrease in headcount.payroll expenses for the beer business and contract labor.

For the year ended December 31, 2024,2025, we incurred compensation expense – officers and compensation expense – officers – deferred comp costs of $0$531,251 andcompared to $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, 2023.2024. TheThese decreaseexpenses inrelate to the stock compensation expense – officers – deferred comp costs of $674,357 was duerelated to Companythe issuingprior year issuance of 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.

For the year ended December 31, 2024,2025, we incurred rental expense, warehousing, outlet expense of $468,739,$179,596, compared to rental expense, warehousing, outlet expense of $871,032$468,739 for the year ended December 31, 2023.2024. The decrease in rental expense, warehousing, outlet expense of $402,293$289,143 (or (4662)% 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 cuttingcost-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.

For the year ended December 31, 2024,2025, we incurred product development expenses of $385,800$78,640 compared to product development expenses of $132,528$385,800 for the year ended December 31, 2023.2024. The increasedecrease in product development expenses of $253,272,$307,160, or 191%,(80)%, is due to increaseddecreased privatethird party label brewerydevelopment expenses in connection with the growthsetup of the beer business.

For the year ended December 31, 2024,2025, we incurred administrative and other expense of $6,049,555$5,646,121 compared to administrative and other expense of $3,207,806 $6,049,555 for the year ended December 31, 2023.2024. The increasedecrease in administrative and other expense of $2,841,749$403,434 (or 89%(7)% 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.

For the year ended December 31, 2024,2025, we incurred depreciation and amortization expense of $145,548$248,913 compared to depreciation and amortization expense of $104,229$145,548 for the year ended December 31, 2023.2024. The increase in depreciation and amortization expense primarily relates to the amortization related to goodwillintangible assets and intangibledepreciation assets.on the 218 3rd Avenue North building.

For the year ended December 31, 2024,2025, we incurred interesta expenseloss on debt extinguishment of $13,965,771 and loss on settlement of $3,969,485liability of $3,085,606 compared to interesta expenseloss on extinguishment of $363,567debt of $1,422,307 for the year ended ended December 31, 2023.2024. The increase in interestloss expenseon debt extinguishment and on settlement of liability of $15,629,070 ($3,605,918or 1099% period over period) is due to aseveral significant numberconversions of debt agreementsand we enteredliabilities into equity during the year ended December 31, 2025 as well as the amended 2024Streeterville toloan fund our working capital needs.payable.

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

Keeping your guns in a location only appropriate trusted members of the household can access should be a top prioritiespriority for every responsible gun owner. Whenever a new firearm is purchased, the owner should 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 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.

From inception through MarchJune 31,30, 2026, we have generated an accumulated deficit of $106,385,187.$112,367,197. We expect to incur additional losses during fiscal year ending December 31, 2026, and beyond, principally as a result of our increased investment in inventory, manufacturing capacity, marketing and sales expenses, and other growth initiatives.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

For the three months ended MarchJune 31,30, 2026, we reported Revenues of $1,985,191$1,986,066 compared to Revenues of $2,511,324$2,842,596 for the three months ended MarchJune 31,30, 2025. The decrease in Revenues of $526,133$856,530 (or (21%30%) period over period) for the current period compared to the three months ended MarchJune 31,30, 2025 is attributable to slower sales for 2026 and current market conditions. For the three months ended MarchJune 31,30, 2026, we reported Cost of Goods Sold of $2,379,236$2,142,041 compared to Cost of Goods Sold of $2,222,270$2,873,969 for the three months ended MarchJune 31,30, 2025. The The increasedecrease in Cost of Goods Sold of $156,966$731,928 (or 7%(25%) period over period) for the current period is primarily attributable to increasedthe rawdecrease in materialssales costs.period over period. For the three months ended MarchJune 31,30, 2026, we reported Gross Margin of $(394,045$155,975), compared to Gross Margin of $298,054($31,373) for the three months ended MarchJune 31,30, 2025 and a Gross Margin percentage of (20%8%) for the three months ended March 31,June 30, 2026 compared to 12%(1%) for the three months ended MarchJune 31,30, 2025. In general, second amendment businesses have experienced a slowdown in sales volume during the past year and hashave incurred increased costs of operations.

Total operating expenses for the three months ended MarchJune 31,30, 2026 were $3,749,027$4,574,094 compared to $3,255,473$4,166,907 for the three months ended MarchJune 30, 31, 2025 as further described below. Overall, we experienced a $493,554$407,187 increase in operating expenses period over period. This increase is primarily due to the new 2026 sponsorships for Tony Stewart Racing of approximately $0.2 million, other TSR related contracts of $0.1 million and marketing of $0.3$0.2 million over the previous period.

For the three months ended MarchJune 31,30, 2026, we incurred consulting/payroll and other costs of $1,081,869$1,070,582 compared to consulting/payroll and other costs of $738,977$973,753 for the three months ended MarchJune 31,30, 2025. The increase in consulting/payroll and other costs of $342,892$96,829 (or 10% 46% period over period) was primarily due to the increase in payroll expenses for contract labor.

For the three months ended MarchJune 31,30, 2026, we incurred rental expense, warehousing, outlet expense of $45,688,$36,978, compared to rental expense, warehousing, outlet expense of $57,114$48,253 for the three months ended MarchJune 31,30, 2025. The decrease in rental expense, warehousing, outlet expense of $11,426$11,275 is due to the reduction of leased properties that the Company rents to conduct the Champion business acquisition.

For the three months ended MarchJune 31,30, 2026, we incurred product development expenses of $5,506$6,700 compared to product development expenses of $93,467$648,357 for the three months ended MarchJune 31,30, 2025. The decrease in product development expenses of $87,961$641,657 is due to the timing of development expenses in connection with the private label beer. We expect 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.

For the three months ended MarchJune 31,30, 2026, we incurred marketing and brand development expenses of $1,259,798$1,239,707 compared to marketing and brand development expenses of $695,491$970,806 for the three months ended MarchJune 31,30, 2025. The increase in marketing and brand development expenses of of $564,307$268,901 (or 81%28% period over period) relates primarily to market awareness efforts for American Rebel Beer as well as expenses associated with our Tony Stewart activities and general push forward on sales efforts.

For the three months ended MarchJune 31,30, 2026, we incurred administrative and other expense of $1,169,182$2,033,426 compared to administrative and other expense of $1,470,587$1,324,575 for the three months ended MarchJune 31,30, 2025. The decreaseincrease in administrative and other expense of $301,405$708,851 (or (20%)54% period over period) relates directly to decreasedincreased professional fees including accounting and legal fees.

For the three months ended MarchJune 31,30, 2026, we incurred depreciation and amortization expense of $124,484$124,201 compared to depreciation and amortization expense of $35,774$37,100 for the three months ended MarchJune 31,30, 2025. The increase primarily relates to the building, furniture and equipment acquired as part of the 218 LLC investment.

For the three months ended MarchJune 31,30, 2026, we incurred interest expense of $1,345,882$738,328 compared to interest expense of $723,942$430,183 for the three months ended MarchJune 31,30, 2025. The increase in interest expense of $621,940$308,145 is due to a significant number of notes we have entered into and subsequently converted or modified. For the three months ended MarchJune 31,30, 2026, we incurred a loss on debt extinguishment of $903,573$171,755 and loss on settlement of liability of $455,718$328,150 compared to a loss on debt extinguishment of $499,794$11,817,991 and loss on settlement of liability of $887,365$1,692,144 for the three months ended MarchJune 31,30, 2025. This is due to the increaseddecreased amount of conversions of debt into equity in 20262026. and the amended Streeterville loan payable. The decrease in loss on settlement of liability is due to the decrease in the amount of conversions of liabilities to equity by SCC.

Net loss for the three months ended MarchJune 31,30, 2026 amounted to $6,972,464,$5,980,817, resulting in a loss per share of $(71.280.59), compared to a net loss of $5,059,256$18,137,743 for the three months ended MarchJune 31,30, 2025, resulting in a loss per share of $(937,997.93213,385.21) (adjusted for various reverse stock splits). The increasedecrease in the net loss for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 is primarily due to a myriadsignificant ofdecrease increased expenses that we incurred in the quarter, such as consulting, marketing and interest as well as a significanton loss on debt extinguishment.

We are a company still in the growth and acquisition stage and our revenue from operations does not cover our operating expenses. Working Working capital increased by $3,624,018$897,668 period over period where we had a working capital deficit of $(20,321,313) at December 31, 2025 compared to a working capital deficit balance of $(16,697,29519,423,645) at MarchJune 31,30, 2026. This working capital increase was due to decreased working capital loans and increase in prepaid expenses. We have funded our operations primarily through the issuance of capital stock, convertible debt, and other securities and will continue so into the near future and beyond.

During the threesix months ended MarchJune 31,30, 2026, we reduced anticipated cash outflows of $6.2$6.9 million through the issuance of common stock in exchange for settlement of our outstanding debt and payables.

Over the past twelve months, we entered into various working capital notes with a total balance of approximately $15.2$21.6 million as of MarchJune 31,30, 2026. The promissory notes have various terms – refer to Note 10 of our condensed consolidated financial statements for the specific terms of each promissory note.