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AMERICAN REBEL HOLDINGS INC (AREB)·Q3 2020 Earnings Summary

Executive Summary

  • Q3 2020 revenue was $0.279M and EPS was -$0.02; revenue rose versus Q3 2019 ($0.165M) and was modestly higher than Q2 2020 ($0.270M), while net loss was -$1.318M .
  • Operating expenses fell sharply year over year ($0.619M vs $3.789M), improving operating loss to -$0.568M from -$3.745M in Q3 2019; sequentially, OpEx declined from $0.769M in Q2 .
  • Interest expense increased to $0.681M in Q3, driven by amortization of discounts recorded for working capital loans; management emphasized cost shifts to inventory and internal systems .
  • Catalysts: Sales/pipeline generated at CannaCon South (>$15k onsite sales; ~$60k projected potential business) and subsequent decision to establish a U.S. manufacturing facility in Chanute, KS, positioning the brand for “made in America” products .

What Went Well and What Went Wrong

What Went Well

  • Significant OpEx reduction: “The decrease in marketing and brand development expenses relates to the company’s shift of capital to manufacture additional inventory” (Q3) .
  • Year-over-year revenue growth with gross margin improvement vs Q3 2019 (gross margin dollars $50,724 vs $44,096) .
  • Cannabis channel traction: “We sold over $15,000 worth of product right on the convention center floor… projects over $60,000 worth of potential business” (CannaCon South) .

What Went Wrong

  • Elevated interest burden: Q3 interest expense rose to $681,076, including $273,592 from amortization of stock-related loan discounts (Q3) .
  • Continuing losses and going concern risk: management disclosed substantial accumulated deficit and working capital deficit; financials prepared on a going concern basis with reliance on financing access .
  • Default risk on certain promissory notes: the company reported defaults upon senior securities in both Q2 and Q3 filings .

Financial Results

Consolidated P&L and Key Metrics (oldest → newest)

MetricQ3 2019Q1 2020Q2 2020Q3 2020
Revenue ($USD)$164,970 $350,268 $269,662 $279,308
Gross Margin ($USD)$44,096 $115,881 $73,627 $50,724
Operating Expenses ($USD)$3,788,944 $1,027,445 $768,738 $618,808
Operating Income (Loss) ($USD)$(3,744,848) $(911,564) $(695,111) $(568,084)
Interest Expense ($USD)$(424,346) $(410,299) $(416,287) $(681,076)
Net Income (Loss) ($USD)$(4,169,194) $(2,172,180) $(1,111,398) $(1,318,085)
Diluted EPS ($USD)$(0.13) $(0.05) $(0.02) $(0.02)
Cash & Cash Equivalents ($USD)—$130,559 $321,890 $165,881
Weighted Avg Shares (MM)31.167 47.0 61.012 64.346

KPIs and Commercial Updates

KPIQ3 2019Q1 2020Q2 2020Q3 2020
CannaCon Onsite Sales ($USD)--->$15,000
Projected Potential Business ($USD)---~$60,000
Inventory Safes Sold at Event (#)---5

Note: Company presents a single consolidated business without segment reporting in the filings .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue (Directional)Post-CannaCon pipelineNone disclosedProjects ~$60k potential business from CannaCon leadsProvided (directional)

No formal revenue/EPS/OpEx/tax guidance ranges were disclosed in Q3 materials .

Earnings Call Themes & Trends

No earnings call transcript was available for Q3 2020 (none found) and themes are drawn from 10-Q MD&A and press releases.

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2020)Trend
Supply chain/COVID-19Risk disclosure on supply chain disruptions and pandemic uncertainty (Q1/Q2) Continued caution on COVID-19 impacts and supply chain risks (Q3) Unchanged caution
Financing needs/working capitalReliance on debt/equity financing; working capital deficit (Q1/Q2) Larger working capital deficit; additional notes and amortization cost burden (Q3) More acute
Marketing spend mixShift of capital to inventory; reduced marketing (Q2) Continued shift; reduced marketing vs LY (Q3) Ongoing optimization
Cannabis channel developmentEarly positioning; no event execution due to COVID (Q1/Q2) CannaCon OKC success with onsite sales and pipeline build (Q3) Positive traction
Manufacturing footprintNot highlighted (Q1/Q2) Subsequent announcement of U.S. manufacturing in Chanute, KS (Dec) Strategic expansion
Brand/dealer networkEmphasis on patriotic brand and dealer network (Q1/Q2) Continued positioning; event collaboration with Lock It Up Safe Company (Q3) Consistent

Management Commentary

  • “The decrease in marketing and brand development expenses relates to the company’s shift of capital to manufacture additional inventory” (Q3 MD&A) .
  • On CannaCon OKC: “We sold over $15,000 worth of product right on the convention center floor… projects over $60,000 worth of potential business” (National Sales Manager Brett Lafferty) .
  • Manufacturing expansion: “We’re designing a new product line to be built in America in Chanute… proprietary designs that we believe our customers will love. And made in America – perfect for American Rebel” (CEO Andy Ross) .

Q&A Highlights

No Q3 earnings call transcript was found in the document set; therefore, Q&A highlights and clarifications are not available (none listed) [ListDocuments result: earnings-call-transcript=0].

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2020 EPS and revenue was unavailable; our attempts to fetch consensus failed due to vendor limits. As a result, comparisons vs estimates cannot be made reliably at this time [GetEstimates errors].
  • Given microcap status and limited coverage, investors should assume sparse Street estimates and focus on sequential/YoY trajectories disclosed in filings .

Key Takeaways for Investors

  • Revenue trajectory is improving YoY with disciplined OpEx control; however, interest expense and financing-related costs are a significant drag on bottom-line results .
  • Cannabis vertical is emerging as a meaningful commercial opportunity, with tangible onsite sales and a near-term pipeline; continued execution could support incremental revenue in Q4/Q1 .
  • The announced U.S. manufacturing facility should aid supply-chain control, lead times, and “made in America” branding—potentially supporting mix and margin over time .
  • Liquidity risk remains the key constraint: a rising working capital deficit and defaults on certain notes point to continued reliance on external financing and potential dilution .
  • Near-term trading: headlines around cannabis wins and manufacturing expansion could be catalysts; conversely, any financing overhang or note default updates may pressure the stock .
  • Medium-term thesis: success depends on scaling safes (core) and cannabis inventory solutions while managing financing costs; progress on manufacturing and dealer network expansion will be critical .