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American Rebel (AREB)

Filed: 12 Mar 17, 8:00pm


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K


  X.ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year endedDecember 31, 2016


      .TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________


Commission file number333-206068


AMERICAN REBEL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


CUBESCAPE, INC.

(Former name or former address, if changed since last report)


NEVADA

 

47-3892903

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)


1026 16th Avenue South Nashville, Tennessee 37212

 

(913) 940-9919

(Address of principal

executive offices)

 

(Registrant’s telephone number)


Securities registered pursuant to Section 12(b) of the Act: None


Securities registered pursuant to Section 12(g) of the Act:


Common Stock, $0.001 par value

(Title of Class)


Copies of communications to:

BLAIR KRUEGER, ESQ.

KRUEGER LLP

7486 LA JOLLA BOULEVARD

LA JOLLA, CALIFORNIA 92037

(858) 405-7385


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes     .No X.


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 X.


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 X.


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, 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 and post such files). Yes X.No     .


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes X.No     .





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer

      .

Accelerated filer

      .

Non-accelerated filer

      .(Do not check if a smaller reporting company)

Smaller reporting company

  X.


Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes     .No X.


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: $60,000 as of June 30, 2016.** (last price our common stock was sold at was $0.01 per share on December 11, 2015)


The number of shares of the registrant’s common stock outstanding as of March 10, 2017 was 15,000,000 shares.


Documents incorporated by reference: None





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AMERICAN REBEL HOLDINGS, INC.


TABLE OF CONTENTS


 

 

 

 

PART II

ITEM 1.

Business

 

4

ITEM 1A.

Risk Factors

 

11

ITEM 1B.

Unresolved Staff Comments

 

20

ITEM 2.

Properties

 

20

ITEM 3.

Legal Proceedings

 

20

ITEM 4.

Mine Safety Disclosures

 

20

 

 

 

 

PART II

ITEM 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 

21

ITEM 6.

Selected Financial Data

 

22

ITEM 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

 

22

ITEM 7A.

Quantitative and Qualitative Disclosures About Market Risk

 

30

ITEM 8.

Financial Statements and Supplementary Data

 

31

ITEM 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

32

ITEM 9A.

Controls and Procedures

 

32

ITEM 9B.

Other Information

 

33

 

 

 

 

PART III

ITEM 10.

Directors, Executive Officers and Corporate Governance

 

33

ITEM 11.

Executive Compensation

 

38

ITEM 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

37

ITEM 13.

Certain Relationships and Related Transactions, and Director Independence

 

38

ITEM 14.

Principal Accountant Fees and Services

 

39

 

 

 

 

PART IV

ITEM 15.

Exhibits and Financial Statement Schedules

 

40

 

 

 

 

SIGNATURES

 

41

CERTIFICATIONS

 

 





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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 “anticipate,” “expect,” “intend,” “plan,” “believe,” “foresee,” “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:


·

the risks and other factors described under the caption “Risk Factors” under Item 1A of this Annual Report on Form 10-K;

·

our future operating results;

·

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”, “we”, “us” and “our” are references to American Rebel Holdings, Inc. All references to “USD” or United States Dollar refer to the legal currency of the United States of America.


PART I


ITEM 1. BUSINESS


We were incorporated under the laws of the State of Nevada on December 15, 2014under the name CubeScape, Inc., at which time we acquired a business plan, various pieces of information technology, furniture and other office equipment, as well as industry resource materials and business relationships from our founder and then CEO, Mr. David Estus.  Mr. Estus resigned on June 8, 2016, the date that a change in control occurred with the Company. Until June, 2016, we had one employee, our founder and then CEO, Mr. Estus. As of March 10, 2017, we have one employee, our current CEO, Mr. Charles A. Ross, Jr., or Andy Ross as he is known in the country music industry. For fiscal year 2017, Mr. Ross will devote the amount of time to us that he deems necessary.


The Company issued 6,000,000 shares of its common stock to Mr. Estus at inception in exchange for organizational services incurred upon incorporation. Following our formation, we issued an additional 3,000,000 shares of our common stock to Mr. Estus, in exchange for a business plan, office furniture, design equipment, computing equipment along with other related industry materials that he developed over a period exceeding 10 years. See also “Certain Relationships and Related Transactions”.


As a senior video game artist with Sony PlayStation of America, Mr. Estus was the third employee to be hired by the newly developed PlayStation division in Rancho Bernardo, California (located outside of San Diego). Mr. Estus experienced a significant amount of rudimentary development at Sony in his career there. Computer graphics in the 80s and early 90s were primarily two-dimensional (2D) with low resolution. Early in 1992 with the debut of the PlayStation system, this format changed forever.



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The first platform developed with which Mr. Estus participated in was to support three-dimensional (3D) graphics with a higher pixel resolution. This became a completely new approach to video game graphics. The PlayStation moved game graphics from 2D, flat graphics, to 3D polygonal models and environment. While 3D had its inherent problems, unlike 2D graphics, 3D graphics allowed the user to move closer to the camera plane, feeling immersed. This requires the video game artist to control ‘texel density’, a major concern in the video game industry which caused pixilation of texture maps as they approached the foreground (texel density is the process by which the graphic artist ensures that meshes and textures are proper in height, width and depth for that ‘virtual experience’). Never before had the industry needed to consider texture maps in coming as close as they had to the viewing plane and of course pixilated. Mr. Estus through his role with Sony was on the cutting edge of game development and the new frontier which Sony and its PlayStation system invoked.


Another progressive development Mr. Estus was involved in was integrating movies (commercial media) into video games. Frame rate, resolution were all significant considerations, a balance needed to be struck to achieve the highest resolution possible while maintaining significant high frame rates within the game. Mr. Estus first visualized the idea of continuous wrap-around 3D posters for cubicles and various other wall spaces was while he was at Sony. Mr. Estus’ professional experience has provided him with keen insight to resolution and focal points, such as those needed for successful game products. Through experimentation and multiple manufacturing trial and error, Mr. Estus established the importance of focal point in the product. Focal point is the part of a photograph or digital image that is 100% in focus, whereas, less important elements are not focused. The focal point draws the viewer (or user) into specific viewing area (targets) in the pixilated space. Mr. Estus believes that anyone can take a picture, print it, and slap it on a cubicle wall panel, however that is not what CubeScape is all about. CubeScape will allow the user to actively choose a location within the pixilated space, drawing the viewer in, creating a cozy and comfortable place for the mind to achieve its desired result.


This we believe is a vital aspect of what will be the CubeScape experience. Mr. Estus will maximize his professional expertise in graphics and the gaming industry providing a supported background for CubeScape product offerings to transform the cube sphere. Mr. Estus believes the cubicle environment is stale, non-progressive and demotivating to the user of the cubicle (the cube jockey).


We are a development stage company and have no specific financial resources. We have not established or attempted to establish a source of equity or debt financing. Our independent registered public accounting firm has included an explanatory paragraph in their report emphasizing the uncertainty of our ability to remain a going concern. We are in the early stages of executing our business plan. We still have a significant amount of work that needs to be completed and funds that need to be raised in order to compete within this sophisticated marketplace. To date, we have not developed any finished products or services and cannot predict when a finished product or services will be developed or externally acquired. We believe that we have an advantage with our founder, and his industry relationships and the solicitation of their help with growing our business model.


As of December 31, 2016, we had limited assets which consisted of cash of $470 and prepaid expenses of $10,833, tangible assets valued at $3,700, net of depreciation expense of $3,622 and intangible assets relating to our business plan valued at $20,300, and net of amortization expense of $19,877. At December 31, 2016, we owed $600,000 principal and $18,512 accrued interest under related party convertible loans.  Of these funds, we loaned $584,187 to our majority shareholder, American Rebel, Inc., of which Mr. Ross is President and CEO. In order to fund the development of our business and our working capital needs for the next 12 months, we intend to attempt to secure funding from the sale of common stock and from stockholder or non-related party loans. Furthermore, in order to be able to implement our plan of operations, we anticipate that we will need to secure financing between $1,000,000 and $1,500,000 during the second quarter of calendar year 2017. If we are unsuccessful in raising additional financing, we will not be able to proceed with execution of our business plan.


Based on the exact nature of our business and expected level of competition, we anticipate incurring operating losses into the foreseeable future. Because we currently do not have a fully developed and completed website system (design portal) for our wrap-around products for cubicles and other walls, and our resources are severely limited, we cannot predict if and when we will generate revenues or whether we will become a viable and sustainable business operations. Accordingly, due to our lack of assets, significant operations and for the foreseeable future the ability to generate revenues, our auditors have stated in their opinion that there currently exists substantial doubt about our ability to continue as a going concern.


General Overview


There is no way of accurately predicting when product development will progress to the point of generating any revenue. The timing of business development is a function of having sufficient working capital. There is no way of knowing when or if we will be able to raise the necessary funds. If we do, fully developed product offerings could be ready within three to six months following when the necessary funds have been secured. If we do not raise sufficient financing, revenue producing activities of any kind will most likely not commence until at least 18 months, if ever.



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We are building as part of our business, a company that provides cubicle and office wall covering solutions. We are developing a proprietary website system (design portal) that provides customization using our extensive library of art and stock photography. Our design portal will enable the consumer to create custom wall coverings that create an atmosphere that transcends the normal cubicle environment. Users will have access to diverse and ever increasing categories of art, photography, and other graphic materials which they will be able utilize through the input of their cubicle dimension and layout, orient the art with a precise fit to their cubicle walls and/or office work space.


Our intended design portal, ecommerce system and drop ship services outline a three-step method for providing users with what we believe to be a comprehensive approach to office and cubicle design. We believe this approach will provide an experience in office design that will become the new way to empower cube jockeys with a sense of satisfaction from their work space, and will be valued by both employee and management. We believe this acceptance in office work space will provide rapid growth and popularity. We will create a system that easy to use and promotes creativity. This approach will additionally help us in creating long-lasting return customer relationships.


Our business operations will be comprised of two segments: a) design portal for Internet users; and b) integration services for the office furnishings market. The design portal, middleware and back-office framework were developed with the assistance of an established software development firm. The Company developed its initial design of the design portal and web-management software through the efforts of its founder, and the software development firm with which the Company has been working with on an as “needed basis”.


The design portal development has been through the direct assistance of a software development firm (since early 2011) and the efforts of our founder, Mr. Estus. We developed an initial framework and design. The Company intends to seek the assistance of outside sales and marketing consultants to develop a professional sales and marketing strategy to capitalize on our product designs. We will seek to staff a management team with the technical skills necessary in technology, software writing and a strong emphasis on graphics design and artwork. We intend to with further financing create and staff an in-house web development group, which we believe will develop new generations of the design portal and services of a similar nature to our business development in gaming software cubicle and office wall covering solutions.


The Company continues to work on the development of its design portal through the management and skills of its founder, as well as through a web development firm which has been working with us on an as needed basis and as our budget allows. To date no commercial website or services has been developed through these efforts. The Company believes initially our customers will come primarily from social media advertising, word of mouth and specific technology shows and conventions.


Our plan to continue as a going concern is to reach the point where we begin generating sufficient revenues from our web based business or services to meet our obligations on a timely basis. The Company has not yet acquired or internally fully developed any services. We may not be able to acquire or internally develop any services in the future because of a lack of available funds or financing to do so. In order for us to develop or acquire any services, we must be able to secure the necessary financing, beyond the proceeds of the recently completed direct public offering. In the early stages of our operations, we will continue to keep costs to a minimum. The cost to develop our CubeScape business plan as currently outlined will be in excess of $100,000. We have no established current sources of funds to undertake the business plan as outlined. Until we obtain funding, if ever, we will keep our operating costs as low as possible with our founder providing substantially all of the work on his own without any cash compensation. This methodology could result in our development stage extending for at least two to three years.


We believe that our web based division (once developed, if at all) may begin to generate revenues earlier than the corporate direct sales (once developed, if at all). If we are unable to obtain adequate funding or financing, the Company faces the ultimate likelihood of business failure. There are no assurances that we will be able to raise any funds or establish any financing program for the Company’s growth.


Industry Overview


Privacy-challenged office workers may find it hard to believe, but open-plan offices and cubicles were invented by architects and designers trying to make the wok space world a better place—who thought that to break down the social walls that divide people, you had to break down the real walls, as well. Early 20th century modernist architects such as Frank Lloyd Wright saw walls and rooms as downright fascist in their presentation. The spaciousness and flexibility of an open plan, they thought, would liberate homeowners and office dwellers from the confines of their boxes. Businesses took up the idea less out of a democratic ideology than a desire to pack in as many workers as they could. The typical open-plan office during the first half of the 20th century contained long rows of desks occupied by office clerks in a white-collar assembly line.



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Cubicles were interior designers’ attempt to bring some soul back in to the office space. In the 50s a German design firm broke up the rows of desks (assembly line) into organic groupings with partitions for privacy—what it called the Bürolandschaft, or “office landscape”. In 1964 famous furniture design company Herman Miller introduced the Action Office system. This offered such improvements as greater surfaces and multiple desk heights. In 1968 Herman Miller began to sell its system in modular components, with the unfortunate consequence of businesses cherry-picking the space-saving aspects of these designs, leaving out the humanizing touch. Herman Miller designer Robert Probst was tasked to “find problems outside the furniture industry and conceive solutions for them”. Propst’s nickname the “Father of the Cubicle” is a misnomer. When Propst designed the Action Office system, “cubicle farms” or the very notion of it were not his intent. His own research into developing the ‘action office’ philosophically was contrary to the actual cubicle in many ways. The Action Office system was designed to promote productivity, privacy, and health at the expense of inefficient use of space. Cubicles are now typically designed to maximize the efficient use of space.


The efficient “cubicle” became popular in office design. Mostly because of the movable wall in the Action Office II system. This saved money in construction and development costs. After their introduction into the marketplace, the Action Office II and other office furniture systems were modified to pack in as many employees as possible into an office space. This progression was contrary to Probst’s vision. Probst stated that “The cubiclizing of people in the modern corporation is monolithic insanity”. During this era businesses began to shift their employees, not only clerks, but all into open-plan offices which maximized space. Today, companies are reverting to pre-cubicle rows of desks, now called “pods” to make them sound vaguely futuristic, which will still need our individualist wrap-around wall coverings.


Although open plans foster ambient awareness and teamwork, an article published in a major Asian health journal found that open plans cause conflict, high blood pressure and increased staff turnover. The next wave of idealistic office furniture planning will be rather more successful in achieving aesthetically pleasing and healthy alternatives for cube jockeys who spend 8-10 hours per day ‘living’ in.


Based on industry reports, online sales of graphic wall coverings (of which cubicle work spaces are a large part of) in the United States may surpass $10 million per annum. Over the next five years this represents more than $50 million in sales; a significant increase to current spending of wall covering graphics and other by-products.


Direct sales we believe has historically served corporate industrial design and growth is hard to predict, year over year. We believe the confluence of a need for large non-permanent graphic art in combination with the recent advances of printing, printing substrates, adhesives and online customization present an opportunity for us to position our business in introducing product and services.


Office space planning and design are vital components to achieving optimal office space plans. To achieve desired goals, most planners work with professionals that are both knowledgeable in the art and science of Computer Aided Design (CAD). These skills are an invaluable asset and an effective tool. Office space planning consultants with whom we plan to work with should be able to assist us in need and planning of our products to be integrated in successful office space projects which we will make available to them. This relationship building with office planning and design professionals should be helpful in suggesting our products and services for aesthetically pleasing cubicle design coverings.


Competitive Focus


We believe the following will assist us in exploiting the expected growth in custom designed wrap-around cubicle and wall covering market:


(1)

Scalability. We believe our design portal and services will become scalable, a solution designed to serve the underserved, fragmented office cubicle design market.


(2)

“Sticky” Consumer Relationships. Our business model will provide a solution that is designed to act as a competitive barrier and keep the user engaged with our design portal.


(3)

Expertise in Aesthetics. Our founder has extensive experience with art and aesthetics which comes from his vast experience in the game development industry. We will seek to capitalize on that expertise.


(4)

Speed to Implementation. We believe that afully-developed design portal and vertical distribution system will provide immediate insight into the usage (and behavior) of our customers’ assets.



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Growth Strategy


Key elements of our growth strategy shall include:


(1)

Core Products. We plan to enhance our core products through user interface and functionality with our design portal as well as progressive and relevant new features and offerings as soon as reasonably practicable.


(2)

Focus. We intend to organically grow market penetration by: (a) securing contracts with office designers in various markets, (b) exploiting social networks, (c) leveraging development opportunities, and (d) adding solutions to professionals in the market.


(3)

Strategic Alliances. We plan to team with other businesses that have complementary features to our products, when fully developed, thereby reducing our development cost and introducing us to consumers and end-users.


(4)

International Expansion. We intend to expand internationally through partnerships and alliances.


Business Objective


Our objective is to become a provider of cubicle panel and non-permanent wall coverings. We are pursuing the following strategies to achieve this object:


(1)

Initiating website development and ecommerce function, identifying service offerings, promoting, and advertising through social media campaigns.


(2)

Create a national media presence through social media – We will seek to create and enhance a national awareness and aggressively market our products through social media outlets.


(3)

Identify and develop strategic relations with our Drop Ship partners – utilize partners, high volume distribution facility to create highly efficient low cost production model.


Aesthetically pleasing cubicle environments we believe contribute to an employee’s overall productivity and sense of well-being. Cubicle environments can convey a sense of mission reinforcing a business culture that an employer worked hard to develop. CubeScape will provide a comprehensive selection of coverings that can be themed oriented or business branded enhancing that culture and productivity. Every cubicle may not have a spectacular window view, but with CubeScape’s product offerings we can provide a view to vistas for the occupant.


CubeScape products we believe will transform any neutral cubicle space into a truly inspirational branded image for all to enjoy, not just the occupants. Clients and contractors visiting offices decked out in CubeScape products will instantly recognize your business mission. Depictions of communities you serve are displayed in a variety of graphic form. Printed wall murals, large photographic panels, along with artistic window graphics reinforce what a business is all about. Prompt questions immediately by illustrating your business mission and vision through our product offering. We will assist you in branding your organization with in a cohesive and aesthetically pleasing CubeScape product.


This annual report includes very limited market and industry data and forecasts that we obtained from internal research, publicly available information and industry publications and surveys. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section entitled “Risk Factors”.


The following timeline outlines the steps that we intend to take. Each step outlines the metrics or performance that we must accomplish in order to move forward with our business plan.


Step One (Q1/Q2) ($10,000 est. costs)-Website development: Work with established webhosting businesses and web developer to stand up CubeScape.biz website. Test EDI functionality to drop ship partners and financial institutions.


Step Two (Q2/Q3) ($5,000 est. costs)-Ecommerce: Finalize strategic relations with ecommerce provide to integrate back office functionality between website selected ecommerce system servers.


Step Three (Q3/Q4) ($5,000 est. costs)-Drop ship partners: Establish ordering system between website and drop ship partners. Verify system functionality with ecommerce solution providers. Test entire order process through to shipment verification.



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Step Four (Q5) ($5,000 est. costs)-Direct Sales: Develop direct sales strategy with consultants. Work with consultants to identify and approach manufacturers and corporate design specialist.


As mentioned above, our steps are predicated upon the Company obtaining financing either through additional equity or debt beyond the recently completed direct public offering. If we are not able to obtain the financing as determined by the above steps, we will not be able to meet or achieve any of the time-line objectives. If we complete 75%, 50%, 25% or even 10% of our additional financing objectives, we will not be able to pursue any of our action steps. In that case, the Company will be forced to proceed on a piecemeal basis using the services of our founder, and the very limited use of outside contractors when and if limited funds are obtained There is no realistic way to predict the timing or completion in that scenario.


Without additional financing we will not be able to pursue our business plan or its time-line objectives, and the Company may fail entirely.


It is our plan to seek additional financing from either equity financing or through debt instruments. Our management has, through relationships and partnerships, begun the necessary work on some of our intended products. Our founder has primarily provided these services through the date of this filing. Our business plan requires further completion of these tasks which require the hiring of employees and/or outside contractors. With the level of sophistication and expertise of our founder, as well as other various professionals that he knows, the Company should make progress in its development planned product, but currently no specific timeframe can be provided. Most if not all of these actions will be predicated on the Company obtaining the necessary financing to accomplish these steps. If financing is not available on terms reasonable to the Company and its shareholders, then the progression steps of this business plan will not occur as planned and may never occur.


We currently have no sources of financing and no commitments for financing. There are no assurances that we will obtain sufficient financing or the necessary resources to enter into contractual agreements with outside developers or sales/marketing firms. We currently do not have any cash or other resources to commence the use of outside service providers. If we do not receive any funding or financing, our business is likely to be maintained with limited operations for at least the next 12 months because our founder will continue to provide his services without consideration. We have no formal agreement in place with our founder covering his services, our founder’s plan will be to do all of the planning work as well as programming and marketing work on his own without consideration while he continues to seek other sources of funding for the Company.


Intellectual Property


We have no patents or trademarks, except for the following: On April 17, 2007, Mr. Estus, our founder applied for the standard trademark ‘CUBESCAPES’ which was given the following serial number by the USPTO #78/830910. The trademark is for the following use and application according to the USPTO - Continuous Wrap-Around Banner Art Posters Made of Paper for Office Space Cubicles.


Each state has its own laws regarding registration of a trademark, including the requirements for keeping the registration valid. Although these laws are similar in many respects, variations exist regarding the time period for renewing the registration. For example a trademark registered in California is valid for only five years and is renewable for successive five-year periods.


Although not required to validate a trademark, federal registration does provide additional benefits for the trademark owner. Included in these benefits are the right to use the symbol “®” and the right to file a trademark infringement lawsuit in federal court. To maintain these benefits, the owner of a federally registered trademark must make additional periodic filings to keep the registration valid. The first filing must be made between the fifth and sixth years after the trademark’s registration date, and is called a “declaration of use” or “section 8 filing.” This informs the USPTO that the trademark is still in use. The second filing is made between the ninth and 10th years after the trademark’s registration date, and includes another declaration of use along with an application for renewal. The third and subsequent filings will also include a declaration of use and application for renewal, and must be done between the ninth and 10th year anniversary after the last filing. We have not registered our trademark.


Failing to file the required renewal applications for a registered trademark will result in the registration being cancelled, but as long as the trademark is still in use, the owner’s common law trademark rights are still valid and a new registration application can be filed. Even common law trademark rights become invalid if the owner has abandoned use of the trademark. Non-use of a trademark for three consecutive years is generally considered proof that the owner has abandoned the trademark. We have continued to use our trademark and intend on re-registering and applying for all applicable protections available under the law along with the right to transfer.



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Government Regulation and Industry Standards


There are an increasing number of laws and regulations in the United States and abroad pertaining to communications and commerce on the Internet. In addition, a number of legislative and regulatory proposals are under consideration by federal, state, local and foreign governments. Laws or regulations may be adopted with respect to the Internet relating to liability for information retrieved from or transmitted over the Internet, user privacy, taxation and the quality of services and services. Moreover, the application to the Internet of existing laws governing issues such as intellectual property ownership and infringement, pornography, obscenity, libel, gaming, employment and personal privacy is uncertain and developing. Any such legislation or regulation, or the application or interpretation of existing laws, may decrease the growth in the use of the Internet in general, prevent us from delivering our content in different parts of the world and increase our costs of selling services or otherwise operating our business.


Furthermore, legislation regulating online content could limit the growth in use of the Internet generally and decrease the overwhelming acceptance of the Internet as an advertising and e-commerce medium.


Websites typically place identifying data, or cookies, on a user’s hard drive without the user’s knowledge or consent. Many Internet companies use cookies for a variety of different reasons, including the collection of data derived from the user’s Internet activity. Any reduction or limitation in the use of cookies could limit the effectiveness of our sales and marketing efforts utilizing these Internet based companies. Most currently available Web browsers allow users to remove cookies at any time or to prevent cookies from being stored on their hard drive.


Some privacy advocates and governmental bodies have suggested limiting or eliminating the use of cookies. In addition, the European Union (the “EU”) and many countries within have adopted privacy directives or laws that strictly regulate the collection and use of information regarding Internet users that is identifiable to particular individuals. Privacy legislation has been proposed in the United States as well, and the Federal Trade Commission has taken action against website operators that do not comply with state privacy policies. These and other governmental efforts may limit our ability to target advertising or collect and use information regarding the use of our websites. Fears relating to a lack of privacy could also result in a reduction in the number of users or customers which could harm our business and financial results.


Employees


As of December 31, 2016, we had one employee, our CEO, Mr. Ross. During the coming year ending December 31, 2017 (dependent on our financing and available working capital), Mr. Ross will devote the time to us that he deems necessary. Mr. Ross is allowed to devote this time to our Company as he is not limited or restricted from being involved with us byhis other business operations. Mr. Ross currently has no agreement with the Company which provides for payment of his services. We may be limited in seeking the employment of others to assist in future operations.


We may in the future use other independent contractors and consultants to assist in many aspects of our business on an “as needed” or per project basis pending adequate financial resources being available or their ability to defer payment for their services.


Our current CEO and Director, Charles A. Ross, Jr., will devote the time to us that he deems necessary in coordination with his position as sole officer and Director of our majority shareholder, American Rebel, Inc.


Property


Our office and mailing address is 1026 16th Avenue South, Nashville, Tennessee 37212.  This space is leased by our majority shareholder and we are allowed to operate from this location without charge. We previously operated at space that was used by us and another business that Mr. Estus operates from this location. The property from which we formally conducted our CubeScape operations is owned by Mr. Estus. Mr. Estus charged us $500 per month and paid for all the utilities and maintenance costs required by the facility. There was no written lease agreement with Mr. Estus and he forgave the rent accrued to him through June 2016 with the change in control transaction.  There is no written lease agreement with American Rebel, Inc.


Litigation


We are not party to any pending, or to our knowledge, threatened litigation of any type.




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WHERE YOU CAN GET ADDITIONAL INFORMATION


We are required to file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy our reports or other filings made with the SEC at the SEC’s Public Reference Room, located at 100 F Street, N.E., Washington, DC 20549. You can obtain information on the operations of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also access these reports and other filings electronically on the SEC’s web site,www.sec.gov.


We are not currently required to deliver an annual report to our security holders and do not expect to do so for the foreseeable future.


ITEM 1A. RISK FACTORS


The following risk factors should be considered in connection with an evaluation of our business:


In addition to other information in this Report, the following risk factors should be carefully considered in evaluating our business because such factors may have a significant impact on our business, operating results, liquidity and financial condition. As a result of the risk factors set forth below, actual results could differ materially from those projected in any forward-looking statements. Additional risks and uncertainties not presently known to us, or that we currently consider to be immaterial, may also impact our business, result of operations, liquidity and financial condition. If any such risks occur, our business, operating results, liquidity and financial condition could be materially affected in an adverse manner. Under such circumstances, if and when a trading market for our securities is established, the trading price of our securities could decline, and you may lose all or part of your investment.


THE SECURITIES BEING OFFERED INVOLVE A HIGH DEGREE OF RISK AND, THEREFORE, SHOULD BE CONSIDERED EXTREMELY SPECULATIVE. THEY SHOULD NOT BE PURCHASED BY PERSONS WHO CANNOT AFFORD THE POSSIBILITY OF THE LOSS OF THE ENTIRE INVESTMENT. PROSPECTIVE INVESTORS SHOULD READ THE ENTIRE FILING, INCLUDING ALL EXHIBITS, AND CAREFULLY CONSIDER, AMONG OTHER FACTORS THE FOLLOWING RISK FACTORS.


Risks Related to the Business


1.

CubeScape (“CSI”) has virtually no financial resources. Our independent registered auditors’ report includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern.


CSI is an early stage company with limited financial resources currently available to it. We had current assets of $37,230 and $11,303 as of December 31, 2015 and December 31, 2016, respectively. We had negative working capital of $62,140 and $27,209 as of December 31, 2015 and December 31, 2016, respectively. We had a stockholders’ deficit of $49,640 and $42,522 at December 31, 2015 and December 31, 2016, respectively. Our independent registered auditors included an explanatory paragraph in their opinion on our financial statements as of and for the period ended December 31, 2016 that states that Company losses from operations raise substantial doubt about its ability to continue as a going concern. We will be required to seek additional financing beyond the amount received from our recently completed direct public offering. Financing sought may be in the form of equity or debt from sources yet to be identified. Most of our efforts have been spent on the registration efforts along with the execution of our business plan and operations. We will seek additional financing to further pursue and execute on our business steps. No assurances can be given that we will generate sufficient revenue (or any at all) or obtain the necessary financing to continue as a going concern.


Our current resources and source of working capital funds, primarily consists of convertible loans from related parties. These sources we believe to be sufficient to keep our business operations functioning for the next three to nine months. We do not have a formal agreement with our creditors, nor with the related parties to fund the Company’s working capital needs; however, our CEO’s current plan is to perform most of the Company’s operational needs on his own without any cash compensation while he seeks other sources of funding. This may include seeking to delay or defer payments to third party vendors and unaffiliated third parties. To date, this type of deferred payment method has helped us with our working capital needs. The Company developed much of its initial design of its portal and associated internal-use software through the efforts of Mr. Estus. We currently spend between $5,000 and $10,000 per month in operational expenses not related to our recently completed direct public offering. We have not generated any revenues from our business, and our expenses will continue to be accrued or deferred until sufficient financing is obtained. Financing may be obtained from our officer, shareholders or others who are familiar with our Company and loan us the necessary funds to pay for these expenses. We have received interest-free short term loans and deferred the payment of services for third party vendors to fund some of our operations. No assurances can be given that we will be able to continue to receive funds from these sources or continue our operations beyond a month-to-month basis.



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2.

Our CubeScape business is dependent on the services of our founder, David Estus, the loss of whose services may cause our business operations to cease, and we will need to engage and retain qualified employees and consultants to further implement our strategy.


Our CubeScape operations and business strategy are completely dependent upon the knowledge and business connections of Mr. Estus, our founder. He is under no contractual obligation to continue to assist us. If he should choose to leave us for any reason, or if he becomes ill and is unable to work for an extended period of time before we have hired additional personnel, our operations will likely fail. Even if we are able to find personnel, it is uncertain whether we could find someone who could develop and execute our business along the lines described in this report. We will fail without the services of Mr. Estus or an appropriate replacement(s).


We intend to acquire key-man life insurance on the life of Mr. Estus and current CEO and president, Andy Ross, naming the Company as the beneficiary when and if we obtain the necessary resources to do so and he is insurable. We have not yet procured such insurance, and there is no guarantee that we will be able to obtain such key-man life insurance in the future. Accordingly, it is important that we are able to attract, motivate and retain highly qualified and talented personnel or independent contractors to further our business efforts.


Mr. Estus’ outside employment commitment does not limit or restrict him from being involved with our Company, and his outside employment allows him the flexibility to provide at least 20 hours or more per week to the Company.


3.

Because we have recently commenced business operations, we face a high risk of business failure.


We were formed on December 15, 2014. Most of our efforts to date have been related to executing our business plan and commencing business operations. Through December 31, 2016 we have had no revenues. We face a high risk of business failure. The likelihood of success must be considered in light of its expenses, complications and delays frequently encountered in connection with the establishment and expansion of new business and the competitive environment in which the Company will operate. There can be no assurance that future revenues from sales of our intended products or services will occur or be significant enough or that we will be able to sell at a profit, if at all. Future revenues or profits, if any, will depend on many factors, including, but not limited to, initial (and continued) market acceptance of our products or services and the successful implementation of the planned strategy.


The Company has not yet acquired or fully developed products or services that are saleable in the marketplace. We may not be able fully develop any product or service in the future because of a lack of funds or financing to do so. In order for us to fully develop or acquire any product or service, we must be able to secure the necessary financing beyond our recently completed direct public offering. In the early stages of operations, we will attempt to keep costs to a minimum. The cost to develop our products or services as currently outlined may very well be in excess of $100,000. We have no established source of funds to undertake the business strategy as outlined. Until we obtain funding, if ever, we will keep our operating costs as low as possible with our founder providing most of the administrative and other functions on his own without any cash compensation. We currently use the services of outside software developers with which we have been working with on an as “needed basis”. The software developers provide their services on a deferment basis enabling us to not have to pay them immediately or even near term. We do not expect to pay them in full or even partially for a period of time. This methodology could result in our design portal and smart phone app development extending beyond another two to three years. If we are unable to obtain adequate funding or financing, the Company faces the likelihood of business failure. There are no assurances that we will be able to raise any funds or establish any financing for our growth.


The Company’s future profitability, if any, could be materially and adversely impacted if our products or services were to experience poor operating results. Our ability to achieve profitability will be dependent on the ability of our future products or services to generate sufficient operating cash flow to fund future growth or acquisitions. There can be no assurance that our future results of operations will be profitable or that our strategy will be successful or even begin to generate any revenues.


4.

We may not have or ever have the resources or ability to implement and manage our growth strategy.


Although the Company expects to experience growth based on the ability to implement and execute its business strategy, significant operations may never occur because the business plan may never be fully implemented because of the lack of funds in order to do so. If the Company’s growth strategy is implemented, of which no assurances can be provided, a significant strain on management, operating systems or financial resources may be imposed. Failure by the Company’s management to manage this expected growth, if it occurs, or unexpected difficulties are encountered during this growth, could have a material adverse impact on the Company’s results of operations or financial condition.



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The Company’s ability to operate profitable revenue generating products or service lines (if we are able to establish any product or service lines at all) will depend upon a number of factors, including: (i) identifying appropriate and satisfactory sales channels; (ii) generating sufficient funds from our then-existing operations or obtaining third-party financing or additional capital to develop new product or service lines; (iii) the Company’s management team and our financial and accounting controls; and (iv) staffing, training and retention of skilled personnel, if any at all. These factors most likely will be beyond the Company’s control and may be adversely affected by the economy or actions taken by competing businesses. Moreover, potential products or services that may meet the Company’s focus and other criteria for developing new products or services, if we are able to develop or acquire at all, are believed to be severely limited. There can be no assurance that the Company will be able to execute and manage a growth strategy effectively or at all.


5.

We may not be successful in hiring technical personnel because of the competitive market for qualified people.


The Company’s future success depends largely on its ability to attract, hire, train and retain highly qualified personnel to provide the Company’s services. Competition for such personnel may be intense. There can be no assurance that the Company will be successful in attracting and retaining the specific personnel it requires to conduct and expand its operations successfully or to differentiate itself from its competitors. The Company’s results of operations and growth prospects could be materially adversely affected if the Company were unable to attract, hire, train and retain such qualified personnel.


6.

Our reliance on referrals from outside contacts to develop business may not be effective.


The CubeScape business will rely on our founder, Mr. Estus, for a majority of its business leads and believes that other industry consultants will also be an important source of business referrals in the foreseeable future. However, as is typical within the industry, there are no contractual requirements that these industry consultants or outside representatives will use or recommend the Company's professional services in connection with product sales or the sale of specific services offered by the Company. We currently have no contracts or agreements in place with any outside sales representatives or business professionals (industry consultants). No assurances can be given that using independent outside sales reps will result in any meaningful numbers of sales leads or referrals.


7.

Fluctuations in our financial results make quarterly comparisons and financial forecasting difficult.


The Company’s future or projected quarterly operating results may vary and reduced levels of earnings or continued losses may be experienced in one or more quarters. Fluctuations in the Company’s quarterly operating results could result from a variety of factors, including changes in the levels of revenues, the size and timing of orders, changes in the mix of future projects, the timing of new offerings by the Company or its competitors, new office openings by the Company, changes in pricing policies by the Company or its competitors, market acceptance of new and enhanced services offered by the Company or its competitors, changes in operating expenses, availability of qualified personnel, disruption in sources of related product and services, the effect of potential acquisitions and industry and general economic factors. The Company will have limited or no control over many of these factors. The Company’s expenses we believe will be based upon, in part, on its expectation as to future or projected revenues. If revenue levels are below expectations, operating results are likely to be adversely affected.


Because of these fluctuations and uncertainties, our future operating results may fail to meet the expectations of investors. If this happens, any trading price of our common stock could be materially adversely affected.

 

8.

There are significant potential conflicts of interest.


Our personnel will be required to commit substantial time to our affairs and, accordingly, these individual(s) (particularly our current president and CEO) may have a conflict of interest in allocating management time among business activities. In the course of other business activities, certain key personnel (particularly our current president and CEO) may become aware of business opportunities which may be appropriate for presentation to us, as well as other businesses with which they are affiliated. As such, there may be conflicts of interest in determining to which entity a particular business opportunity should be presented to. We cannot provide any assurance that our efforts to eliminate the potential impact of conflicts of interest will be effective.


9.

We will need to establish additional relationships with developers and consultants to fully develop and market our company and its intended products or services.


We do not possess all of the resources necessary to develop our products or services on a mass scale. We will need to develop a network of third-party agents that will be able to carry out our intended market penetration, as well as enhance marketing or sales force strategy through appropriate arrangements with local developers and consultants to develop our products and services. If we are not able to enlist the services of third-party vendors, or seek out consultants, our business will suffer.



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10.

Following the effective date of our registration statement, we became subject to the periodic reporting requirements of Section 15(d) of the Exchange Act that require us to incur audit fees and legal fees in connection with the preparation of such reports. These additional costs could reduce or eliminate our ability to earn a profit.


Following the effective date of our registration statement (October 14, 2015) we were required to file periodic reports with the SEC pursuant to the Exchange Act and the rules and regulations promulgated thereunder. In order to comply with these requirements, our independent registered public accounting firm will have to review our financial statements on a quarterly basis and audit our financial statements on an annual basis. Moreover, our legal counsel will have to review and assist in the preparation of such reports. The costs charged by these professionals for such services cannot be accurately predicted at this time because factors such as the number and type of transactions that we engage in and the complexity of our reports cannot be determined at this time and will affect the amount of time to be spent by our auditors and attorneys. However, the incurrence of such costs will obviously be an expense to our operations and thus have a negative effect on our ability to meet our overhead requirements and earn a profit.


However, for as long as we remain an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding an annual nonbinding advisory vote on executive compensation and seeking nonbinding stockholder approval of any golden parachute payments not previously approved. We may take advantage of these reporting exemptions until we are no longer an “emerging growth company.”


We will remain an “emerging growth company” for up to five years, although we would cease to be an “emerging growth company” prior to such time if we have more than $1.0 billion in annual revenue, more than $700 million in market value of our common stock is held by non-affiliates or we issue more than $1.0 billion of non-convertible debt over a three-year period.


If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock, if a market ever develops, could drop significantly.


11.

Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.


Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:


·

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;


·

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and/or directors of the Company; and


·

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.


Our internal controls may be inadequate or ineffective, which could cause financial reporting to be unreliable and lead to misinformation being disseminated to the public. Investors relying upon this misinformation may make an uninformed investment decision.


Failure to achieve and maintain an effective internal control environment could cause us to face regulatory action and also cause investors to lose confidence in our reported financial information, either of which could have a material adverse effect on the Company’s business, financial condition, results of operations and future prospects.


However, our auditors will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until we are no longer an “emerging growth company” as defined in the JOBS Act if we take advantage of the exemptions available to us through the JOBS Act.



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12.

The costs of being a public company could result in us being unable to continue as a going concern.


As a public company, we are required to comply with numerous financial reporting and legal requirements, including those pertaining to audits and internal control. The costs of maintaining public company reporting requirements could be significant and may preclude us from seeking financing or equity investment on terms acceptable to us and our shareholders. We estimate these costs to be in excess of $75,000 per year and may be higher if our business volume or business activity increases significantly. Our current estimate of costs does not include the necessary expenses associated with compliance, documentation and specific reporting requirements of Section 404 as we will not be subject to the full reporting requirements of Section 404 until we exceed $75 million in market capitalization or we decide to opt-out of the “emerging growth company” as defined under the JOBS Act. This exemption is available to us under the JOBS Act or until we have been public for more than five years.


If our revenues are insufficient or non-existent, and/or we cannot satisfy many of these costs through the issuance of shares or debt, we may be unable to satisfy these costs in the normal course of business. This would certainly result in our being unable to continue as a going concern.


13.

Having only one director limits our ability to establish effective independent corporate governance procedures and increases the control of our president and CEO.


We have only one director who serves as our sole officer. Accordingly, we cannot establish board committees comprised of independent members to oversee such functions as compensation or audit issues. In addition, currently a vote of the board is decided in favor of the chairman (who is our sole officer), which gives him complete control over all corporate issues.


Until we have a larger board of directors that include independent members, if ever, there will be limited oversight of our CEO’s decisions and activities with little ability for minority shareholders to challenge or reverse such activities and decisions, even if they are not in the best interests of minority shareholders.


Risks Related to our Common Stock


14.

The Company sold shares and is selling convertible debt without an underwriter.


Shares of common stock and convertible securities were being offered on our behalf by our former and our current president and CEO, on a best-efforts basis. No broker-dealer was retained as an underwriter and no broker-dealer is under any obligation to purchase any shares of common stock. There was no firm commitment to purchase any of the shares. Despite the completion of the offering the sale of a small number of shares increases the likelihood that no market will ever develop for our common stock.


15.

Since there was no minimum for our direct public offering of shares and convertible debt, persons who purchased shares of our common stock or our convertible debt may lose their money without us being even able to develop a market.


Since there was no minimum with respect to the number of shares or debt sold by the Company in our direct public offering, we most likely will be unable to attempt to create a public market of any kind. In such an event that no market is created, it is likely that the entire investment of a purchaser in our common stock would be lost.


16.

The offering price and conversion price of our common stock was determined arbitrarily.


The offering price and conversion price were not determined through an independent financial evaluation, market mechanism or by our auditors, and was to a large extent, arbitrary. Our PCAOB-registered public accounting firm did not review management’s valuation and, expresses no opinion as to the fairness of the price. As a result, the price of our shares may not reflect the value perceived by the market. There can be no assurance that the common stock is worth the price for which investors paid, therefore, they may lose a portion of, or their entire, investment in our common stock.



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17.

Shareholders may be diluted significantly through our efforts to obtain financing and satisfy obligations through issuance of additional shares.


We do not have any committed sources of financing. Wherever possible, our Board of Directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock. Our Board of Directors has authority, without action or vote of the shareholders, to issue all or part of the authorized (100,000,000) shares but unissued (85,000,000) shares. In addition, if a trading market ever develops for our common stock, we may attempt to raise additional capital by selling shares, possibly at a deep discount to market. These actions will result in dilution of the ownership interests of existing shareholders, further dilute common stock book value, and that dilution may be material.  Conversion of our convertible debt into shares will dilute existing shareholders.  Exercise of warrants issued in conjunction with the convertible debt will dilute existing shareholders.  Our planned merger with our majority shareholder will require issuance of approximately 5,600,000 additional common shares which will dilute existing shareholders.


18.

The interests of shareholders may be hurt because we can issue shares to individuals or entities that support existing management with such issuances serving to enhance existing management’s ability to maintain control of our company.


Our Board of Directors has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued common shares. Such issuances may be issued to parties or entities committed to supporting existing management and the interests of existing management which may not be the same as the interests of other shareholders. Our ability to issue shares without shareholder approval serves to enhance existing management’s ability to maintain control of our company.


19.

Our articles of incorporation provide for indemnification of officers and directors at our expense and limit their liability that may result in a major cost to us and hurt the interests of our shareholders because corporate resources may be expended for the benefit of officers and directors.


Our Articles of Incorporation at Article XI provide for indemnification as follows: “No director or officer of the corporation shall be personally liable to the corporation or any of its stockholders for damages for breach of fiduciary duty as a director or officer; provided, however, that the foregoing provision shall not eliminate or limit the liability of a director or officer: (i) for acts or omissions which involve intentional misconduct, fraud or knowing violation of law; or (ii) the payment of dividends in violation of Section 78.300 of the Nevada Revised Statutes. Any repeal or modification of an Article by the stockholders of the corporation shall be prospective only, and shall not adversely affect any limitation of the personal liability of a director or officer of the corporation for acts or omissions prior to such repeal or modification”.


We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with our activities, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, eitherof which factors is likely to materially reduce the market and price for our shares, if such a market ever develops.


20.

Currently, there is no established public market for our securities, and there can be no assurances that any established public market will ever develop or that our common stock will be quoted for trading and, even if quoted, it is likely to be subject to significant price fluctuations.


Prior to the date of this report, there has not been any established trading market for our common stock, and there is currently no established public market whatsoever for our securities. A market maker filed an application with FINRA on our behalf and has received permission to quote our shares. Our shares are quoted on the OTCQB maintained by OTC Markets. There can be no assurance that even though the market maker’s application was accepted by FINRA that a market will be made. We are not permitted to file such application on our own behalf. There can be no assurances as to whether:


(i)

any market for our shares will develop;


(ii)

the prices at which our common stock will trade; or


(iii)

the extent to which investor interest in us will lead to the development of an active, liquid trading market. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors.



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We have through a broker-dealer and its clearing firm, become eligible through the Depository Trust Company (“DTC”) to permit our shares to trade electronically. If an issuer is not “DTC-eligible,” then its shares cannot be electronically transferred between brokerage accounts, which, based on the realities of the marketplace as it exists today (especially the OTCBB), means that shares will not be traded (technically the shares can be traded manually between accounts, but this may take many days and is not a realistic option for issuers relying on broker dealers for stock transactions, like all companies on the OTCBB. What this boils down to is while DTC-eligibility is not a requirement to trade on the OTCBB, it is a necessity to process trades if a company’s stock is going to trade with any volume. There are no assurances that even though our shares are DTC-eligible we do not know how long it will take to develop a market for our common stock even with DTC attributes.


Our common stock is unlikely to be followed by any financial analysts, and there may be few institutions acting as market makers for our common stock. Either of these factors could adversely affect the liquidity and trading price of our common stock. Until our common stock is fully distributed and an orderly market develops in our common stock, if ever, the price at which it trades is likely to fluctuate significantly. Prices for our common stock will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity of the market for shares of our common stock, developments affecting our business, including the impact of the factors referred to elsewhere in these Risk Factors, investor perception of the Company and general economic and market conditions. No assurances can be provided that an orderly or liquid market will ever develop for our common stock.


Because of the anticipated low price of the securities being registered, many brokerage firms may not be willing to effect transactions in these securities. Purchasers of our securities should be aware that any market that develops will be subject to the penny stock restrictions.


21.

Any market that develops in shares of our common stock will be subject to the penny stock regulations and restrictions pertaining to low priced stocks that will create a lack of liquidity and make trading difficult or impossible.


The trading of our securities, if any, will be in the over-the-counter market which is commonly referred to as the OTCQB as maintained by FINRA. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the price of, our securities.


Rule 3a51-1 of the Exchange Act establishes the definition of a “penny stock,” for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions which are not available to us. It is likely that our shares will be considered to be penny stocks for the immediately foreseeable future. This classification severely and adversely affects any market liquidity for our common stock.


For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person’s account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.


The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth:


·

the basis on which the broker or dealer made the suitability determination; and


·

that the broker or dealer received a signed, written agreement from the investor prior to the transaction.


Disclosure also has to be made about the risks of investing in penny stock in both public offerings and in secondary trading and commissions’ payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Additionally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.


Because of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures or may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in any secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if and when our securities become publicly traded. In addition, the liquidity for our securities may decrease, with a corresponding decrease in the price of our securities. Our shares, in all probability, will be subject to such penny stock rules for the foreseeable future and our shareholders will, in all likelihood, find it difficult to sell their securities.



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22.

The market for penny stocks has experienced numerous frauds and abuses that could adversely impact investors in our stock.


Company management believes that the market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include:


·

Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;

·

Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

·

“Boiler room” practices involving high pressure sales tactics and unrealistic price projections by sales persons;

·

Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

·

Wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.


23.

Any trading market that may develop may be restricted by virtue of state securities “Blue Sky” laws that prohibit trading absent compliance with individual state laws. These restrictions may make it difficult or impossible to sell shares in those states.


There is currently no established public market for our common stock, and there can be no assurance that any established public market will develop in the foreseeable future. Transfer of our common stock may also be restricted under the securities or securities regulations laws promulgated by various states and foreign jurisdictions, commonly referred to as “Blue Sky” laws. Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been registered for resale under the blue sky laws of any state, the holders of such shares and persons who desire to purchase them in any trading market that might develop in the future, should be aware that there may be significant state blue sky law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities. These restrictions prohibit the secondary trading of our common stock. We currently do not intend to and may not be able to qualify securities for resale in at least 17 states which do not offer manual exemptions (or may offer manual exemptions but may not to offer one to us if we are considered to be a shell company at the time of application) and require shares to be qualified before they can be resold by our shareholders. Accordingly, investors should consider the secondary market for our securities to be a limited one.


24.

Our board of directors (consisting of one person, our president and CEO) has the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial to common stockholders and with the ability to affect adversely stockholder voting power and perpetuate their control over us.


Our articles of incorporation allow us to issue shares of preferred stock without any vote or further action by our stockholders. Our Board of Directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our Board of Directors has the authority to issue preferred stock without further stockholder approval, including large blocks of preferred stock. As a result, our Board of Directors could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock.


25.

The ability of our president and CEO to control our business may limit or eliminate minority shareholders’ ability to influence corporate affairs.


Our president and CEO beneficially controls an aggregate of 60 percent of our common stock as CEO and director of our majority shareholder. Our plan is to merge our company with our majority shareholder. Because of his beneficial stock ownership, our CEO will be in a position to continue to elect our Board of Directors, decide all matters requiring stockholder approval and determine our policies. The interests of our president and CEO may differ from the interests of other shareholders with respect to the issuance of shares, business transactions with or sales to other companies, selection of officers and directors and other business decisions. Minority shareholders would have no way of overriding decisions made by our president and CEO. This level of control may have an adverse impact on the market value of our shares because our president and CEO may institute or undertake transactions, policies or programs that may result in losses, may not take any steps to increase our visibility in the financial community or may sell sufficient numbers of shares to significantly decrease our price per share.



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26.

All of our presently issued and outstanding common shares are restricted under Rule 144 of the Securities Act, as amended. When the restriction on any or all of these shares is lifted, and the shares are sold in the open market, the price of our common stock could be adversely affected.


A majority of the presently outstanding shares of common stock (9,000,000 shares of which) are “restricted securities” as defined under Rule 144 promulgated under the Securities Act and may only be sold pursuant to an effective registration statement or an exemption from registration, if available. Rule 144 provides in essence that a person who is not an affiliate and has held restricted securities for a prescribed period of at least six (6) months if purchased from a reporting issuer or twelve (12) months (as is the case herein) if purchased from a non-reporting Company, may, under certain conditions, sell all or any of his shares without volume limitation, in brokerage transactions. Affiliates, however, may not sell shares in excess of one percent of the Company’s outstanding common stock every three months. As a result of revisions to Rule 144 which became effective on February 15, 2008, there is no limit on the amount of restricted securities that may be sold by a non-affiliate (i.e., a stockholder who has not been an officer, director or control person for at least 90 consecutive days) after the restricted securities have been held by the owner for the aforementioned prescribed period of time. A sale under Rule 144 or under any other exemption from the Act, if available, or pursuant to registration of shares of common stock of present stockholders, may have a depressive effect upon the price of the common stock in any market that may develop.


All 9,000,000 issued and outstanding shares of restricted common stock are controlled by our CEO is his capacity as CEO of our majority shareholder. Our plan is to combine with our majority shareholder by cancelling these 9,000,000 restricted shares and issuing 14,610,000 shares to shareholders of our majority shareholder.


27.

We do not expect to pay cash dividends in the foreseeable future.


We have never paid cash dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in the foreseeable future. The future payment of dividends directly depends upon our future earnings, capital requirements, financial requirements and other factors that our Board of Directors will consider. Since we do not anticipate paying cash dividends on our common stock, return on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock.


28.

We are an “emerging growth company” and cannot be certain whether the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.


We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding an annual non-binding advisory vote on executive compensation and nonbinding stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.


In addition, Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to “opt out” of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.


29.

Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders have limited protection against interested director transactions, conflicts of interest and similar matters.


The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and American Stock Exchanges and the NASDAQ Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or the NASDAQ Stock Market. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than legally required, we have not yet adopted these measures.



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Because none of our directors (currently one person) are independent directors, we do not currently have independent audit or compensation committees. As a result, these directors have the ability, among other things, to determine their own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations.


We intend to comply with all corporate governance measures relating to director independence as and when required. However, we may find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles. The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles. Some of these corporate governance measures have been metered by the JOBS Act of 2012.


30.

You may have limited access to information regarding our business because our obligations to file periodic reports with the SEC could be automatically suspended under certain circumstances.

 

As of the effective date of our registration statement we became subject to certain informational requirements of the Exchange Act, as amended and are required to file periodic reports (i.e., annual, quarterly and material events) with the SEC which are immediately available to the public for inspection and copying. We are required to deliver periodic reports to security holders as proscribed by the Exchange Act, as amended. However, we are not required to furnish proxy statements to security holders and our directors, officers and principal beneficial owners are not required to report their beneficial ownership of securities to the SEC pursuant to Section 16 of the Exchange Act. Previously, a company with more than 500 shareholders of record and $10 million in assets had to register under the Exchange Act. However, the JOBS Act raises the minimum shareholder threshold from 500 to either 2,000 persons or 500 persons who are not “accredited investors” (or 2,000 persons in the case of banks and bank holding companies). The JOBS Act excludes securities received by employees pursuant to employee stock incentive plans for purposes of calculating the shareholder threshold. This means that access to information regarding our business and operations will be limited.


For all of the foregoing reasons and others set forth herein, an investment in our securities in any market that may develop in the future involves a high degree of risk.


ITEM 1B. UNRESOLVED STAFF COMMENTS


None.


ITEM 2. PROPERTIES


Our office and mailing address is 1026 16th Avenue South, Nashville, Tennessee 37212.  This space is leased by our majority shareholder and we are allowed to operate from this location without charge.  We previously operated at space that was used by us and another business that Mr. Estus operates from this location. The property from which we formally conducted our CubeScape operations is owned by Mr. Estus. Mr. Estus charged us $500 per month and paid for all the utilities and maintenance costs required by the facility. There was no written lease agreement with Mr. Estus and he forgave the rent accrued to him through June 2016 with the change in control transaction.  There is no written lease agreement with American Rebel, Inc.


ITEM 3. LEGAL PROCEEDINGS


We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.


ITEM 4. MINE SAFETY DISCLOSURES


Not applicable.



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PART II


ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES


Market for our Common Stock


Our common stock is not listed on any stock exchange. Although our common stock is currently quoted on the OTCQB under the symbol “CSCP,” there is no established public market for shares of our common stock, and no trades of our common stock have taken place. Any quotations reflect interdealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions. We obtained the CSCP symbol on February 1, 2016. We intend to request a change in our symbol to reflect our planned acquisition of our majority shareholder.


Shareholders ofRecord


As of March 10, 2017, an aggregate of 15,000,000 shares of our common stock were issued and outstanding and owned by 16 shareholders of record. If our planned merger with our majority shareholder is completed, we plan to have 20,610,000 common shares outstanding and owned by approximately 30 shareholders.


Recent Sales of Unregistered Securities


None.


Repurchase of Equity Securities


We have no plans, programs or other arrangements in regards to repurchases of our common stock.


Dividends


We have not since December 15, 2014 (date of inception) declared or paid any cash dividends on our common stock and currently do not anticipate paying such cash dividends. We currently anticipate that we will retain all of our future earnings for use in the development and expansion of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our Board of Directors (the “Board”) and will depend upon our results of operations, financial condition, tax laws and other factors as the Board, in its discretion, deems relevant.


Securities Authorized for Issuance under Equity Compensation Plans

 

None.


Use of Proceeds from the Sale of Registered Securities

 

Our Registration Statement on Form S-1 (Reg. No. 333-206068) in connection with the sale by us of up to 6,000,000 shares of common stock for $0.01 per share, was declared effective by the SEC on October 14, 2015. The following information was reported in the annual report on Form 10-K dated for the period ended December 31, 2015:


 

 

Shares

 

Amount

Aggregate Sold

 

6,000,000

$

60,000

Net Proceeds

 

 

$

60,000


The net proceeds from our recently completed direct public offering were used for general working capital purposes.


No payments for expenses were made directly or indirectly to (i) any of our directors, officers or their associates, (ii) any person(s) owning 10% or more of any class of our equity securities or (iii) any affiliates with the funds raised in the offering, which funds we have not officially accepted or used to date. The offering was conducted in a best efforts, no minimum, direct public offering without involvement of underwriters or broker-dealers and the Company did not pay any commissions in connection with the sale of the shares. The Company completed its offering in December 2015.



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ITEM 6. SELECTED FINANCIAL DATA


Selected financial data to our financial statements located elsewhere in this Annual Report on Form 10-K is not required for smaller reporting companies under Article 8 Regulation S-X.


ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Forward looking statements: Statements about our future expectations are “forward-looking statements” and are not guarantees of future performance. When used herein, the words “may,” “will,” “should,” “anticipate,” “believe,” “appear,” “intend,” “plan,” “expect,” “estimate,” “approximate,” and similar expressions are intended to identify such forward-looking statements. These statements involve risks and uncertainties inherent in our business, including those set forth under the caption “Risk Factors,” in this Report, and are subject to change at any time. Our actual results could differ materially from these forward-looking statements. This Annual Report on Form 10-K does not have any statutory safe harbor for this forward looking statement. We undertake no obligation to update publicly any forward-looking statements.


Management’s Discussion and Analysis should be read in conjunction with the financial statements included in this Annual Report on Form 10-K (the “Financial Statements”). The financial statements have been prepared in accordance with generally accepted accounting policies in the United States (“GAAP”). Except as otherwise disclosed, all dollar figures included therein and in the following management discussion and analysis are quoted in United States dollars.


The following discussion of the Company’s financial condition and the results of operations should be read in conjunction with the Financial Statements and footnotes thereto appearing elsewhere in this Report.

 

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that in addition to the description of historical facts contained herein, this report contains certain forward-looking statements that involve risks and uncertainties as detailed herein and from time to time in the Company’s other filings with the Securities and Exchange Commission and elsewhere. Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those, described in the forward-looking statements. These factors include, among others: (a) the Company’s fluctuations in sales and operating results; (b) risks associated with international operations; (c) regulatory, competitive and contractual risks; (d) development risks; (e) the ability to achieve strategic initiatives, including but not limited to the ability to achieve sales growth across the business segments through a combination of enhanced sales force, new products, and customer service; and (f) pending litigation.

 

Operations


We were incorporated on December 15, 2014 and soon thereafter acquired our business plan from our founder, Mr. David Estus. Most of the activity involved the execution of our business plan, business development, development of programming language for use with our portal as well as most recently the preparation of the Company’s financials and other corporate governance efforts in anticipation of the Company’s direct public offering filed on Form S-1 declared effective October 14, 2015 (our “Offering”).


On June 9, 2016 a change in control occurred, a sixty percent (60%) ownership interest was obtained by American Rebel, Inc. from our former officer and director and founder. The Company intends to continue with the CubeScape business as well as acquire the business of its control shareholder in a reverse merger transaction where our present majority shareholder will become a wholly owned subsidiary of the Company and we will distribute shares to the shareholders of American Rebel, Inc.


We are a development stage company and have limited financial resources. We have not established a confirmed source of equity or debt financing. Our independent registered public accounting firm has included an explanatory paragraph in their report emphasizing the uncertainty of our ability to remain as a going concern. Any investor or financial statement reader should read our Risk Factors located elsewhere in this Annual Report in full.



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Our plan to continue as a going concern is to reach the point where we begin generating sufficient revenues from our web based business(s) or services to meet our obligations on a timely basis. The Company has not yet acquired or internally fully developed any services. We may not be able to acquire or internally develop any services in the future because of a lack of available funds or financing to do so. In order for us to develop or acquire any services, we must be able to secure the necessary financing, beyond just the proceeds of our recently completed direct public offering. In the early stages of our operations, we will continue to keep costs to a minimum. The cost to develop our business plan will be in excess of $1,000,000. We have no confirmed current sources of funds to undertake the business plan as outlined. Until we obtain funding, if ever, we will keep our operating costs as low as possible with our founder providing substantially all of the work on his own without any cash compensation. This methodology would result in our development stage extending for at least two to three years. If we are unable to obtain adequate funding or financing, the Company faces the ultimate likelihood of business failure. There are no assurances that we will be able to raise any funds or establish any financing program for the Company’s growth.


Business


There is no way of accurately predicting when product development will progress to the point of generating any revenue. The timing of development is a function of having sufficient working capital. There is no way of knowing when or if we will be able to raise the funds necessary. If we do, services could be ready within three to nine months following when the necessary funds have been secured. If we do not raise sufficient financing, revenue producing activities of any kind will most likely not commence for at least 18 months, if ever.


We are building a company that provides cubicle and office wall covering solutions. We are developing a proprietary website system (design portal) that provides customization of an extensive library of art and stock photography. Our design portal will enable consumers to create custom wall coverings that create an atmosphere that transcends the normal cubicle environment. The user will have access to diverse categories of art and they will be able to input their own cubicle dimension and layout, oriented the art to view points with precise fit to their cubicle walls.


Our intended design portal, ecommerce system and drop ship services outline a three-step method for providing users with what we believe to be a comprehensive approach to office and cubicle design. We believe this approach will provide an experience in office design that will become the new way to empower cube jockeys with a sense of satisfaction from their work space, valued by both employees and management. We believe this acceptance in office work space will provide rapid growth and popularity. We will create a system that is easy to use and promotes creativity. This approach will additionally help us in creating long-lasting return customer relationships.


Our business operation is comprised of two segments: a) design portal for internet users; and b) integration services for the office furnishings market. We are developing the design portal, middleware and back-office framework with the assistance of an established software development firm. The software development firm with which the Company has been working with is utilized on an as “needed basis”.


We developed the initial design portal framework and coding through both internal and outside sources. We have not yet formalized relationships with manufacturers of our product, drop ship partners or resellers that we intend to use. The Company intends to seek the help of outside sales representatives and marketing consultants to develop a professional sales and marketing strategy to capitalize on these technologies. We intend to pursue this strategy with further financing and hire an in-house web design and support group.


The Company continues to work on the development of its design portal through the management and skills of its founder, as well as through a web development firm which has been working with us on an as needed basis and as our budget allows.


To date no commercial website or services have been developed through these efforts.

 

The Company believes our customer will come primarily from social media advertising, word of mouth and specific technology conferences and conventions.



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Our plan to continue as a going concern is to reach the point where we begin generating sufficient revenues from our web based business(s) or services to meet our obligations on a timely basis. The Company has not yet acquired or internally fully developed any services. We may not be able to acquire or internally develop any services in the future because of a lack of available funds or financing to do so. In order for us to develop or acquire any services, we must be able to secure the necessary financing, beyond just the proceeds of the recently completed direct public offering. In the early stages of our operations, we will continue to keep costs to a minimum. The cost to develop our business plan as currently outlined is in excess of $1,000,000. We have no established current sources of funds to undertake the business plan as outlined. Until we obtain funding, if ever, we will keep our operating costs as low as possible with our founder providing substantially all of the work on his own without any cash compensation. This methodology would result in our development stage extending for at least two to three years.


We believe that our web based division (once developed, if at all) may begin to generate revenues earlier than the corporate direct sales (once developed, if at all). If we are unable to obtain adequate funding or financing, the Company faces the ultimate likelihood of business failure. There are no assurances that we will be able to raise any funds or establish any financing program for the Company’s growth.


Industry Overview


Privacy-challenged office workers may find it hard to believe, but open-plan offices and cubicles were invented by architects and designers trying to make the work space world a better place; who thought that to break down the social walls that divide people, you had to break down the real walls, as well. Early 20th century modernist architects such as Frank Lloyd Wright saw walls and rooms as downright fascist in their presentation. The spaciousness and flexibility of an open plan, they thought, would liberate homeowners and office dwellers from the confines of their boxes. Businesses took up the idea less out of a democratic ideology than a desire to pack in as many workers as they could. The typical open-plan office during the first half of the 20th century contained long rows of desks occupied by office clerks in a white-collar assembly line.


Cubicles were interior designers’ attempt to bring some soul back in to the office space. In the 1950s, a German design firm broke up the rows of desks (assembly line) into organic groupings with partitions for privacy -- what it called the Bürolandschaft, or “office landscape”. In 1964 famous furniture design company Herman Miller introduced the Action Office system. This offered such improvements as greater surfaces and multiple desk heights. In 1968 Herman Miller began to sell its system in modular components, with the unfortunate consequence of businesses cherry-picking the space-saving aspects of these designs, leaving out the humanizing touch. Herman Miller designer Robert Propst was tasked to “find problems outside the furniture industry and conceive solutions for them”. Probst’s nickname, the “Father of the Cubicle”, is a misnomer. When Probst designed the Action Office system, “cubicle farms” or the very notion of it were not his intent. His own research into developing the ‘action office’ philosophically was contrary to the actual cubicle in many ways. The Action Office system was designed to promote productivity, privacy, and health at the expense of inefficient use of space. Cubicles are now typically designed to maximize the efficient use of space.


The efficient “cubicle” became popular in office design, mostly because of the movable wall in the Action Office II system. This saved money in construction and development costs. After their introduction into the marketplace, the Action Office II and other office furniture systems were modified to pack in as many employees as possible into an office space. This progression was contrary to Probst’s vision. Probst stated that “The cubiclizing of people in the modern corporation is monolithic insanity”. During this era businesses began to shift their employees, not only clerks, but all into open-plan offices which maximized space. Today, companies are reverting to pre-cubicle rows of desks, now called “pods” to make them sound vaguely futuristic, which will still need our individualist wrap-around wall coverings.


Although open plans foster ambient awareness and teamwork, an article published in a major Asian health journal found that open plans cause conflict, high blood pressure and increased staff turnover. The next wave of idealistic office furniture planning may strive to achieve aesthetically pleasing and healthy alternatives for cube jockeys who spend eight to ten work hours per day ‘living’ in.


Based on industry reports, online sales of graphic wall coverings (of which cubicle work spaces are a large part of) in the United States may surpass $10 million per annum. Over the next five years this represents more than $50 million in sales, which represents a significant increase to current spending of wall covering graphics and other by-products.


Direct sales are hard to predict, year over year. We believe the confluence of a need for large non-permanent graphic art in combination with the recent advances of printing, printing substrates, adhesives and online customization present an opportunity for us to position our business to introduce our products and services to new consumers.



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Office space planning and design are vital components to achieving optimal office space plans. To achieve desired goals, most planners work with professionals that are both knowledgeable in the art and science of Computer Aided Design (CAD). These skills are an invaluable asset and an effective tool. Office space planning consultants with whom we plan to work with should be able to assist us in need and planning of our products to be integrated in successful office space projects which we will make available to them. This relationship building with office planning and design professionals should be helpful in suggesting our products and services for aesthetically pleasing cubicle design coverings.


Competitive Focus


We believe the following will assist us in exploiting the expected growth in custom designed wrap-around cubicle and wall covering market:


(1)

Scalability. We believe our design portal and services will become scalable, a solution designed to serve the underserved, fragmented office cubicle design market.


(2)

“Sticky” Consumer Relationships. Our business model will provide a solution that is designed to act as a competitive barrier and keep the user engaged with our design portal.


(3)

Expertise in Aesthetics. Our founder has extensive experience with art and aesthetics which comes from his vast experience in the game development industry. We will seek to capitalize on that expertise.


(4)

Speed to Implementation. We believe that afully-developed design portal and vertical distribution system will provide immediate insight into the usage (and behavior) of our customers’ assets.


Growth Strategy


Key elements of our growth strategy shall include:


(1)

Core Products. We plan to enhance our core products through user interface and functionality with our design portal as well as progressive and relevant new features and offerings as soon as reasonably practicable.


(2)

Focus. We intend to organically grow market penetration by: (a) securing contracts with office designers in various markets, (b) exploiting social networks, (c) leveraging development opportunities, and (d) adding solutions to professionals in the market.


(3)

Strategic Alliances. We plan to team with other businesses that have complementary features to our products, when fully developed, thereby reducing our development cost and introducing us to consumers and end-users.


(4)

International Expansion. We intend to expand internationally through partnerships and alliances.


Business Objective


Our objective is to become a provider of cubicle panel and non-permanent wall coverings. We are perusing the following strategies to achieve this object:


(1)

Initiating website development and ecommerce function, identifying service offerings, promoting, and advertising through social media campaigns.


(2)

Create a national media presence through social media – We will seek to create and enhance a national awareness and aggressively market our products through social media outlets.


(3)

Identify and develop strategic relations with our Drop Ship partners – utilize partners, high volume distribution facility to create highly efficient low cost production model.


Aesthetically pleasing cubicle environments we believe contribute to an employee’s overall productivity and sense of well-being. Cubicle environments can convey a sense of mission reinforcing a business culture that an employer worked hard to develop. We will provide a comprehensive selection of coverings that can be themed oriented or business branded enhancing that culture and productivity. Every cubicle may not have a spectacular window view, but with CubeScape’s product offerings we can provide a view to vistas for the occupant.



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CubeScape products can transform any neutral cubicle space into an inspirational space for all to enjoy, not just the occupants. We believe that clients and contractors visiting offices decked out in CubeScape products will instantly recognize our business mission. Depictions of communities are displayed in a variety of graphic form. Printed wall murals, large photographic panels, along with artistic window graphics, can reinforce what any business is all about.


This report includes very limited market and industry data and forecasts that we obtained from internal research, publicly available information and industry publications and surveys. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section entitled “Risk Factors”.


The following timeline outlines the steps that we intend to take. Each step outlines the metrics or performance that we must accomplish in order to move forward with our business plan.


Step One (Q1/Q2) ($10,000 est. costs)-Website development: Work with established webhosting businesses and web developer to stand up CubeScape.biz website. Test EDI functionality to drop ship partners and financial institutions.


Step Two (Q2/Q3) ($5,000 est. costs)-Ecommerce: Finalize strategic relations with ecommerce provide to integrate back office functionality between website selected ecommerce system servers.


Step Three (Q3/Q4) ($5,000 est. costs)-Drop ship partners: Establish ordering system between website and drop ship partners. Verify system functionality with ecommerce solution providers. Test entire order process through to shipment verification.


Step Four (Q5) ($5,000 est. costs)-Direct Sales: Develop direct sales strategy with consultants. Work with consultants to identify and approach manufacturers and corporate design specialist.


As mentioned above, our steps are predicated upon the Company obtaining financing either through additional equity or debt beyond our recently completed offering. If we are not able to obtain the financing as determined by the above steps, we will not be able to meet or achieve any of the time-line objectives. If we complete 75%, 50%, 25% or even 10% of our additional financing objectives, we will not be able to pursue any of our action steps. In that case the Company will be forced to proceed on a piecemeal basis using the services of our founder and the very limited use of outside contractors when and if limited funds are obtained. Our founder currently devotes in excess of 20 hours a week to our continued business efforts. There is no realistic way to predict the timing or completion in that scenario.


Without additional financing we will not be able to pursue our business plan or its time-line objectives, and the Company may fail entirely.


It is our plan to seek additional financing from either equity financing or through debt instruments. Company’s management has, through relationships and partnerships, begun the necessary work on some of our intended products. Our founder and our president and CEO have primarily provided these services through the date of this report. Our business plan requires further completion of these tasks which require the hiring of employees and/or outside contractors. With the level of sophistication and expertise of our founder, as well as other various professionals that he knows, the Company should make progress in its development planned product, but currently no specific timeframe can be provided. Most if not all of these actions are predicated on the Company obtaining the necessary financing to accomplish these steps. If financing is not available on terms reasonable to the Company and its shareholders, then the progression steps of this business plan will not occur as planned and may never occur.


We currently have no sources of additional financing and no commitments for financing. There are no assurances that we will obtain sufficient financing or the necessary resources to enter into contractual agreements with outside developers or sales or marketing firms. We currently do not have any cash or other resources to commence the use of outside service providers. If we do not receive any funding or financing, our business is likely to be maintained with limited operations for at least the next 12 months because our founder, will continue to provide his services without consideration. We have no formal agreement in place with our founder covering his services, our founder’s plan is to do all of the planning work as well as programming and marketing work on his own without consideration while he continues to seek other sources of funding for the Company.



26




Other


As a corporate policy, we will not incur any cash obligations that we cannot satisfy with known resources, of which there are currently none except as described in “Liquidity” below or elsewhere in this report. We believe that the perception that many people have of a public company make it more likely that they will accept restricted securities from a public company as consideration for indebtedness to them than they would from a private company. We have not performed any studies of this matter. Our conclusion is based on our own observations. However, there can be no assurances that we will be successful in any of those efforts even if we become a public entity. Additionally, the issuance of restricted shares will dilute the percentage of ownership interest of our stockholders.


Results of Operations for the fiscal year ended December 31, 2015


Expenses


Expenses for the fiscal year ended December 31, 2015 were $110,890. Development costs for our internal-use software was $46,200 for the fiscal year ended December 31, 2015. Administrative costs and other expense was $6,140 for the fiscal year ended December 31, 2015, which included rent expense of $6,000 due to our founder, Mr. Estus, legal and accounting of approximately $43,400 that was related to business development and operational activities and public company expense of $2,850. Amortization and depreciation expense was $11,500 for the fiscal year ended December 31, 2015. We amortize and depreciate our intangible and tangible assets over twenty-four (24) months.

 

Loss before provision for income taxes

 

Loss before provision for incomes taxes for the fiscal year ended December 31, 2015 was $110,090. We recorded no provision for federal income taxes and state income tax of $800 for California minimum franchise tax. We have not generated any revenues.


Results of Operations for the fiscal year ended December 31, 2016


Expenses


Expenses for the fiscal year ended December 31, 2016 were $118,772. Development costs for our internal-use software was $14,000 for the fiscal year ended December 31, 2016. Administrative costs and other expense was $3,631 for the fiscal year ended December 31, 2016, which included rent expense of $3,000 due to our founder, Mr. Estus, legal and accounting of approximately $20,300 that was related to business development and operational activities, professional fees of $13,000 and public company expense of $37,329. Amortization and depreciation expense was $12,000 and interest expense was $18,512 for the fiscal year ended December 31, 2016. We amortize and depreciate our intangible and tangible assets over twenty-four (24) months. Debt forgiveness income of $103,900 was recorded for the fiscal year ended December 31, 2016.


During June 2016, 60% of our outstanding common stock was sold by our founder to American Rebel, Inc in a change of control transaction.  Our plan is to execute a transaction after which American Rebel, Inc. will be a wholly owned subsidiary that continues to market concealed carry and self-defense products. Beginning in September 2016, we sold a convertible loan to a shareholder of American Rebel, Inc. and loaned substantially all the proceeds to American Rebel, Inc. to further its business operations.  American Rebel, Inc. incurred annual operating losses of approximately $1,000,000 during 2015 and 2016.

 

Loss before provision for income taxes

 

Loss before provision for incomes taxes for the fiscal year ended December 31, 2016 was $14,872. We recorded no provision for federal income taxes and state income tax. We have not generated any revenues.


Liquidity


We paid all costs related to our direct public offering which was approximately $22,000. Our operating expenses will be paid as and when necessary or otherwise accrued. Absent the ability to pay current obligations from available funds, we will need to seek out financial assistance from shareholders or various third parties who may agree to loan us the funds to cover outstanding professional and related fees. To the extent that such liabilities cannot be extended or satisfied in other ways we may seek outside financing or loans. If and when loaned, these loans most likely will be evidenced by non-interest-bearing unsecured notes treated as loans until repaid, if and when the Company has the financial ability to do so. No formal written arrangement exists with respect to anyone’s commitment to loan us funds for this purpose.



27




Since acquiring our business plan, most of our resources and work have been devoted to executing the business plan, limited writing and testing of software code, testing and mock-up of our internet portal and smartphone app to be used with our intended product, implementing systems and controls, and completing the registration statement. With the registration statement completed, we our refocusing our CubeScape work on product and service offerings as well as the development of our proprietary software for internal use. We believe the development work needed to initiate and complete software development, attract developers, and initiate our marketing plans, including the development of a saleable product, will range between $100,000 and $150,000 if outside contractors and experts are used. If we are able to secure funding to outsource these procedures, of which there can be no assurance, we can commence the launch of our intended product and services to the end user or consumer. If we are only able to use internal resources only, the process will take much longer and our initial launch may be limited to a much smaller target market. If we are unable to raise any funds, the development costs would have to be provided by our founder to the extent that he is capable and willing to provide such funds. While we have engaged the services of a software development firm which we use on an as “needed basis” their function and assistance is limited. Our goal would be to have product and our internet portal available, sales channels and a comprehensive website up and running within one year, but there is no way of estimating what the likelihood of achieving that goal would be.


Private capital will be solicited from business associates of our founder or through private investors referred to us by those same business associates. To date, we have not sought any funding source and have not authorized any person or entity to seek out funding on our behalf. If a market for our shares ever develops, of which there can be no assurances, we may use restricted shares of our common stock to compensate employees, consultants and independent contractors whenever possible. We cannot predict the likelihood or source of raising capital or funds needed to complete the development of our product and the stages as outlined above.


We have embarked upon an effort to become a public company and, by doing so, have incurred and will continue to incur additional significant expenses for legal, accounting and related services. Once we became a public entity, subject to the reporting requirements of the Exchange Act of 1934, we will incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses including annual reports and proxy statements, if required. We estimate these costs to be in excess of $75,000 per year and may be higher if our business volume or business activity increases significantly. Our current estimate of costs does not include the necessary expenses associated with compliance, documentation and specific reporting requirements of Section 404 as we will not be subject to the full reporting requirements of Section 404 until we exceed $75 million in market capitalization or we decide to opt-out of the “emerging growth company” as defined under the JOBS Act. This exemption is available to us under the JOBS Act or until we have been public for more than five years. These obligations we believe reduce our ability and resources to expand our business. We hope to be able to use our status as a public company to increase our ability to use noncash means of settling obligations (i.e. issuance of restricted shares of our common stock) and compensate independent contractors who provide professional services to us, although there can be no assurances that we can be successful in any of those efforts. We will reduce compensation paid to management (if and when we do compensate management which for the foreseeable future is limited) if there is insufficient cash generated from operations to satisfy these costs.


We do not have any current plans to raise funds through the sale of securities except as set forth herein. We hope to be able to use our status as a public company to enable us to use non-cash means of settling obligations and compensate persons or firms providing services to us, although there can be no assurances that we can be successful in any of those efforts. We believe that the perception that many people have of a public company make it more likely that they will accept restricted securities from a public company as consideration for indebtedness to them than they would from a private company. We have not performed any studies of this matter. Our conclusion is based on our own beliefs and the advice that we have received from various business professionals. Issuing shares of common stock to such persons instead of paying cash to them may increase our chances to establish and expand our business and business opportunities. Having shares of our common stock may also give persons a greater feeling of identity with us which may result in referrals. However, these actions, if successful, will result in dilution of the ownership interests of existing shareholders, may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing management’s ability to maintain control of the Company because the shares may be issued to parties or entities committed to supporting existing management. The Company may offer shares of its common stock to settle a portion of the professional fees incurred in connection with its registration statement. No negotiations have taken place with any professional and no assurances can be made as to the likelihood that any professional will accept shares in settlement of obligations due them.


As of December 31, 2016, we owed $20,000 in connection with software development costs incurred, consulting services and other expenses. Debt totaling $103,900 was forgiven during the year ended December 31, 2016. We have not entered into any additional formal agreements, written or oral, with any vendors or other providers for payment of services or expenses.


On September 16, 2016, the company obtained financing in the amount of $600,000 in the form of a 12% three year convertible term note. The Note and accrued interest can be converted to common stock of the Company at the rate of $0.50 per share. The note holder was issued a three year warrant to purchase 600,000 shares of the Registrant’s common stock at $1.00 per share. At December 31, 2016, $600,000 had been received under this facility. An additional $325,000 was obtained through March 10, 2017 under like terms, including issue of a warrant to purchase 325,000 share.



28




Recently Issued Accounting Pronouncements


The Company evaluated recent accounting pronouncements through December 31, 2016 and believes there are none that have a material effect on the Company’s financial statements except for the following.



In August, 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entities Ability to continue as a Going Concern. The standard is intended to define management’s responsibility to decide whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. The standard requires management to decide whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. The standard provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations in the footnotes. The standard becomes effective for the annual period ending after December 15, 2016, with early application permitted. The adoption of this pronouncement is not expected to have a material impact on our financial statements. Management’s evaluations regarding the events and conditions that raise substantial doubt regarding the Company’s ability to continue as a going concern have been disclosed in Note 2 below.


In August 2015, FASB issued ASU 2015-14,Revenue from Contracts with Customers: Deferral of Effective Date. In 2014 FASB issued ASU 2014-09,Revenue from Contracts with Customers,which provided a framework for addressing revenue recognition issues and replaces almost all existing revenue recognition guidance in current U.S. GAAP. The core principle of ASU 2014-09 is for companies to recognize revenue for the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 also resulted in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively, and improve guidance for multiple-element arrangements. The amendments in ASU 2015-14 defer the effective date of the new revenue recognition guidance to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted to the original effective date (December 15, 2016), including interim periods within that reporting period. Management is evaluating the future impact of this guidance on the Company’s financial statements and notes thereto.


In August 2015, FASB issued ASU 2015-15,Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. The Company previously reported that in April 2015, the FASB issued ASU 2015-03,Simplifying the Presentation of Debt Issuance Costs, which simplifies the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amendments in ASU 2015-15 address the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements such that the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. ASU 2015-15 and ASU 2015-03 are effective for financial statements of public business entities issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. The adoption of this guidance did not have a material impact on the Company’s financial position, results of operations or cash flows.


In September 2015, the FASB issued ASU 2015-16,Business Combinations: Simplifying the Accounting for Measurement-Period Adjustments. The amendments in this ASU require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined; calculated as if the accounting had been completed at the acquisition date. For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments in this ASU should be applied prospectively with earlier application permitted for financial statements that have not been issued. The adoption of this guidance did not have a material impact on the Company’s financial position, results of operations or cash flows.


Amendments clarifying guidance in Topic 205, Risks and Uncertainties, are applicable to entities that have not commenced planned principal operations, which we have commenced recently.


Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on our present or future financial statements.



29




Critical Accounting Policies


The preparation of financial statements and related footnotes requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.


An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.


Financial Reporting Release No. 60 requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements. There are no critical policies or decisions that rely on judgments that are based on assumptions about matters that are highly uncertain at the time the estimate is made. Note 1to the financial statements, included elsewhere in this report, includes a summary of the significant accounting policies and methods used in the preparation of our financial statements.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.



30




ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


AMERICAN REBEL HOLDINGS, INC.

(formerly known as CubeScape, Inc.)

DECEMBER 31, 2016


 

 

 

 

 

Page

Report of Independent Registered Public Accounting Firm

 

F-1

Financial Statements for the years ended December 31, 2016 and December 31, 2015

 

 

Balance Sheets

 

F-2

Statements of Operations

 

F-3

Statement of Stockholders’ Equity (Deficit)

 

F-4

Statements of Cash Flows

 

F-5

Notes to the Financial Statements

 

F-6







31




PLS CPA, A PROFESSIONAL CORP.

t 4725 MERCURY STREET #210t SAN DIEGOt CALIFORNIA 92111t

t TELEPHONE (858)722-5953t FAX (858) 761-0341t FAX (858) 764-5480

t E-MAIL changgpark@gmail.comt

______________________________________________________________________________________________________



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders

American Rebel Holdings, Inc.

(formerlyknown as CubeScape, Inc.)



We have audited the accompanying balance sheets of American Rebel Holdings, Inc. (formerly known as CubeScape, Inc.) (the Company) as of December 31, 2016 and 2015, and the related statements of operations, changes in shareholders’ equity (deficit) and cash flows for the years ended December 31, 2016 and 2015. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.


We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of American Rebel Holdings, Inc. as of December 31, 2016 and 2015, and the result of its operations and its cash flows for the years ended December 31, 2016 and 2015 in conformity with U.S. generally accepted accounting principles.


The financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s losses from operations raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.




/s/ PLS CPA

PLS CPA, A Professional Corp.


March 10, 2017

San Diego, CA. 92111




Registered with the Public Company Accounting Oversight Board





F-1





AMERICAN REBEL HOLDINGS, INC.

(formerly known as CubeScape, Inc.)

BALANCE SHEETS


 

 

December 31,

2016

 

December 31,

2015

ASSETS

 

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

Cash and cash equivalents

$

470

$

19,230

Prepaid expense

 

10,833

 

18,000

  Total Current Assets

 

11,303

 

37,230

 

 

 

 

 

Property and Equipment, net

 

77

 

1,927

Intangible Assets, net

 

423

 

10,573

 

 

 

 

 

OTHER ASSETS:

 

 

 

 

Note receivable - related party

 

584,187

 

-

  Total Other Assets

 

584,187

 

-

 

 

 

 

 

TOTAL ASSETS

$

595,990

$

49,730

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

Accounts payable and accrued expense

$

38,512

$

93,265

Related party loan

 

-

 

6,000

Nonrelated party loans

 

-

 

105

  Total Current Liabilities

 

38,512

 

99,370

 

 

 

 

 

Convertible debenture – related party

 

600,000

 

-

 

 

 

 

 

TOTAL LIABILITIES

 

638,512

 

99,370

 

 

 

 

 

STOCKHOLDERS’ EQUITY (DEFICIT):

 

 

 

 

Preferred stock, $0.001 par value; 1,000,000 shares authorized; none issued or outstanding

 

-

 

-

Common stock, $0.001 par value; 100,000,000 shares authorized; 15,000,000 shares issued and outstanding as of December 31, 2016 and December 31, 2015

 

15,000

 

15,000

Additional paid in capital

 

74,850

 

52,860

Accumulated deficit

 

(132,372)

 

(117,500)

TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)

 

(42,522)

 

(49,640)

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

$

595,990

$

49,730




See Notes to Financial Statements.




F-2




AMERICAN REBEL HOLDINGS, INC.

 (formerly known as CubeScape, Inc.)

STATEMENTS OF OPERATIONS


 

 

For the year ended

December 31, 2016

 

For the year ended

December 31, 2015

Revenue

$

-

$

-

Cost of revenue

 

-

 

-

Gross margin

 

-

 

-

 

 

 

 

 

Expenses:

 

 

 

 

Consulting expense – business development

 

20,300

 

43,400

Development costs – internal use software

 

14,000

 

46,200

Professional fees

 

13,000

 

-

Administrative and other costs

 

3,631

 

6,140

Amortization and depreciation expense

 

12,000

 

11,500

Public company expense

 

37,329

 

2,850

Operating (loss)

 

100,260

 

110,090

Other income (expense)

 

 

 

 

Interest expense – related party

 

(18,512)

 

-

Debt forgiveness

 

103,900

 

-

Income (loss) before income tax

 

(14,872)

 

(110,090)

Provision for income tax

 

-

 

800

Net income (loss)

$

(14,872)

$

(110,890)

Basic and diluted income (loss) per share

$

0.00

$

(0.01)

Weighted average common shares outstanding

 - basic and diluted

 

15,000,000

 

9,205,479


See Notes to Financial Statements.





F-3





AMERICAN REBEL HOLDINGS, INC.

(formerly known as CubeScape, Inc.)

STATEMENT OF STOCKHOLDERS’ DEFICIT


 

Common

Stock

 

Common

Stock

Amount

 

Additional

Paid-in

Capital

 

Accumulated

Deficit

 

Total

Balance – December 15, 2014 (inception) shares issued for organization services – officers compensation

6,000,000

$

6,000

$

-

$

-

$

6,000

 

 

 

 

 

 

 

 

 

 

Net loss

-

 

-

 

-

 

(6,610)

 

(6,610)

 

 

 

 

 

 

 

 

 

 

Balance – December 31, 2014

6,000,000

 

6,000

 

-

 

(6,610)

 

(610)

 

 

 

 

 

 

 

 

 

 

Shares issued for intangible and tangible assets – January 15, 2015

3,000,000

 

3,000

 

21,000

 

-

 

24,000

 

 

 

 

 

 

 

 

 

 

Shares issued pursuant to registered offering – December 11, 2015

6,000,000

 

6,000

 

54,000

 

-

 

60,000

 

 

 

 

 

 

 

 

 

 

Deferred offering costs – additional paid in capital offset upon close of registered offering December 11, 2015

-

 

-

 

(22,140)

 

-

 

(22,140)

 

 

 

 

 

 

 

 

 

 

Net loss

-

 

-

 

-

 

(110,890)

 

(110,890)

 

 

 

 

 

 

 

 

 

 

Balance – December 31, 2015

15,000,000

$

15,000

$

52,860

$

(117,500)

$

(49,640)

 

 

 

 

 

 

 

 

 

 

Cancellation of debt by related party

-

 

-

 

21,990

 

-

 

21,990

 

 

 

 

 

 

 

 

 

 

Net loss

-

 

-

 

-

 

(14,872)

 

(14,872)

 

 

 

 

 

 

 

 

 

 

Balance – December 31, 2016

15,000,000

$

15,000

$

74,850

$

(132,372)

$

(42,522)



See Notes to Financial Statements.





F-4




AMERICAN REBEL HOLDINGS, INC.

(formerly known as CubeScape, Inc.)

STATEMENT OF CASH FLOWS


 

 

For the year ended

December 31, 2016

 

For the year ended

December 31, 2015

 

 

 

 

 

CASH FLOW FROM OPERATING ACTIVITIES:

 

 

 

 

Net loss

$

(14,872)

$

(110,890)

Adjustments to reconcile net loss to cash (used in) operating activities:

 

 

 

 

Amortization and depreciation

 

12,000

 

11,500

Debt forgiveness

 

(103,900)

 

-

Changes in operating assets and liabilities:

 

 

 

 

Prepaid expense

 

7,167

 

(18,000)

Accounts payable and accrued liabilities

 

49,147

 

93,265

Net Cash (Used in) Operating Activities

 

(50,458)

 

(24,125)

CASH FLOW FROM INVESTING ACTIVITIES

 

 

 

 

Advances on note receivable -related party

 

(586,352)

 

-

Collection on note receivable -related party

 

2,165

 

-

Net Cash (Used in) Investing Activities

 

(584,187)

 

-

CASH FLOW FROM FINANCING ACTIVITIES:

 

 

 

 

Deferred offering costs paid

 

-

 

(22,140)

Proceeds from registered offering

 

-

 

60,000

Loan repayment to nonrelated parties

 

(105)

 

(16,710)

Loans from nonrelated parties

 

-

 

16,205

Loans from related party

 

615,990

 

6,000

Net Cash Provided by Financing Activities

 

615,885

 

43,355

CHANGE IN CASH

 

(18,760)

 

19,230

CASH AT BEGINNING OF PERIOD

 

19,230

 

-

CASH AT END OF PERIOD

$

470

$

19,230

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 

 

 

 

Cash paid for:

 

 

 

 

Interest

$

-

$

-

Income taxes

$

-

$

-

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

 

Debt cancelled – related party

 

21,990

 

-

Stock issued for acquisition of tangible and intangible assets

$

-

$

24,000

 

 

 

 

 



See Notes to Financial Statements.




F-5




AMERICAN REBEL HOLDINGS, INC.

(formerly known as CubeScape, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2016


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Organization

The Company was incorporated on December 15, 2014 (date of inception) under the laws of the State of Nevada, as CubeScape, Inc. Effective January 5, 2017, the company amended its articles of incorporation and changed the company name to American Rebel Holdings, Inc. The Company anticipates a business combination with its majority shareholder, American Rebel, Inc.


The Company filed a registration statement on Form S-1 which was declared effective by the U.S. Securities and Exchange Commission on October 14, 2015. The Form S-1 allowed the Company to solicit investors for investment in a direct public offering of $60,000. Twenty six (26) investors invested at a price of $0.01 per share for the entire offering which closed on December 11, 2015.

 

Nature of operations

The Company is developing a branded product that utilizes panoramic vinyl wall graphics generated on a proprietary interactive design portal. The proprietary interactive portal is designed to assist the consumer or end-user in creating wall or cubicle panel art, upgrading and/or enhancing plain home, office and cubicle work space with a new approach to workplace aesthetics. The Company’s product will consist of high resolution wall graphics made from professional art, designs, stock-photos and/or user (consumer) provided images that are integrated into unique backdrop. Graphics will be constructed of quality vinyl and low-tack adhesive for ease of application and replacement but durable. On June 9, 2016 a change in control occurred, a sixty percent (60%) ownership interest was obtained by American Rebel, Inc. from our former officer and director and founder. The Company intends to continue with the CubeScape business as well as acquire the business of its control shareholder.


Basis of presentation

The accompanying financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) set forth in Article 8 of Regulation S-X.


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.


Revenue recognition

We recognize revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the product or service has been provided to the consumer; (3) the amount of fees to be paid by the consumer is fixed or determinable; and (4) the collection of our fees or product revenue is probable.


The Company will record revenue when it is realizable and earned and products have been shipped to the consumers or that our service has been rendered to the consumer.

 

Advertising costs

Advertising costs are anticipated to be expensed as incurred; however there were no advertising costs for the twelve months ended December 31, 2016 or 2015, respectively.


Fair value of financial instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2016 and December 31, 2015, respectively. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, deferred offering costs 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.



F-6




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 all of the 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 December 31, 2016 and December 31, 2015, the Company reviewed its tax positions and determined there were no outstanding, or retroactive tax positions with less than a 50% likelihood of being sustained upon examination by the taxing authorities, therefore this standard has not had a material effect on the Company.

 

The Company does not anticipate any significant changes to its total unrecognized tax benefits within the next 12 months.



F-7




The Company classifies tax-related penalties and net interest as income tax expense. For the twelve months ended December 31, 2015 and 2016, respectively, $800 and 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.


Recent pronouncements

The Company evaluated recent accounting pronouncements through December 31, 2016 and believes that none have a material effect on the Company’s financial statements except for the following.


In August, 2014, FASB issued ASU No. 2014-15,Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entities Ability to continue as a Going Concern. The standard is intended to define management’s responsibility to decide whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. The standard requires management to decide whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. The standard provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations in the footnotes. The standard becomes effective for the annual period ending after December 15, 2016, with early application permitted. The adoption of this pronouncement is not expected to have a material impact on our financial statements. Management’s evaluations regarding the events and conditions that raise substantial doubt regarding the Company’s ability to continue as a going concern are disclosed in Note 2 below.


In August 2015, FASB issued ASU 2015-14,Revenue from Contracts with Customers: Deferral of Effective Date. In 2014 FASB issued ASU 2014-09,Revenue from Contracts with Customers,which provided a framework for addressing revenue recognition issues and replaces almost all existing revenue recognition guidance in current U.S. GAAP. The core principle of ASU 2014-09 is for companies to recognize revenue for the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 also resulted in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively, and improve guidance for multiple-element arrangements. The amendments in ASU 2015-14 defer the effective date of the new revenue recognition guidance to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted to the original effective date (December 15, 2016), including interim periods within that reporting period. Management is evaluating the future impact of this guidance on the Company’s financial statements and notes thereto.


In August 2015, FASB issued ASU 2015-15,Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. The Company previously reported that in April 2015, the FASB issued ASU 2015-03,Simplifying the Presentation of Debt Issuance Costs, which simplifies the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amendments in ASU 2015-15 address the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements such that the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. ASU 2015-15 and ASU 2015-03 are effective for financial statements of public business entities issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. The adoption of this guidance did not have a material impact on the Company’s financial position, results of operations or cash flows.


In September 2015, the FASB issued ASU 2015-16,Business Combinations: Simplifying the Accounting for Measurement-Period Adjustments. The amendments in this ASU require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined; calculated as if the accounting had been completed at the acquisition date. For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments in this ASU should be applied prospectively with earlier application permitted for financial statements that have not been issued. The adoption of this guidance did not have a material impact on the Company’s financial position, results of operations or cash flows.


Amendments clarifying guidance in Topic 205, Risks and Uncertainties, are applicable to entities that have not commenced planned principal operations, which we have commenced recently.



F-8




NOTE 2 – GOING CONCERN

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. As noted above, the Company has not yet generated revenues from operations. Since inception, the Company has been engaged in financing and executing its business plan of operations and incurring costs and expenses related to its direct public offering. As a result, the Company incurred accumulated net losses for the years ended December 31, 2016 and 2015 of ($14,872) and ($110,890), respectively. In addition, the Company’s development activities since inception have been sustained through debt financing and the deferral of payments on accounts payable and other expenses.


The Company recently entered into a convertible debt instrument with a shareholder of its largest shareholder in the amount of $600,000. Of this amount, $584,187 was then loaned to the Company’s largest shareholder as working capital to pay its operating expenses including legal, accounting, product development, brand expansion, and marketing costs. The majority shareholder also used the proceeds of these loans to purchase inventory for its product launch in the second quarter of 2017.


The ability of the Company to continue as a going concern is dependent upon its ability to raise capital from the sale of its equity and, ultimately, the achievement of operating revenues. Management believes sufficient funding can be secured through the obtaining of loans, as well as future offerings of its preferred and common stock to institutional and other financial sources. However, no assurance can be given that the Company will obtain this additional working capital, or if obtained, that such funding will not cause substantial dilution its shareholders. If the Company is unable to secure such additional funds from these sources, it may be forced to change or delay its business plan rollout.


These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.


NOTE 3 – INTANGIBLE ASSETS


Intangible assets with finite lives are amortized over their estimated useful life. The Company monitors conditions related to these assets to determine whether events and circumstances warrant a revision to the remaining amortization period. The Company tests its intangible assets with finite lives for potential impairment whenever management concludes events or changes in circumstances indicate that the carrying amount may not be recoverable. The original estimate of an asset’s useful life and the impact of an event or circumstance on either an asset’s useful life or carrying value involve significant judgment.


During January 2015 the Company acquired certain intangible assets from our founder which consisted of a business plan, artistic designs, stock photography to be used in its cubicle design business, along with various costs related to the development of internal-use software to be used in its operations. In addition the Company acquired certain tangible assets from our founder which consisted of network servers, computers and other computer components, a graphic designer’s workstation and other office furniture which both our founder and as-needed software developers and designers will use in creating product and services for our operations.


Intangible assets as of December 31, 2016 and December 31, 2015 includes the following:


 

 

December 31,

2016

 

December 31,

2015

 

 

 

 

 

 

 

Intangible assets consisting of certain development costs and purchased software for design and graphics

 

$


20,300

 

$

20,300

Less: Accumulated amortization

 

 

(19,877)

 

 

(9,727)

Net intangible assets

 

$

423

 

$

10,573


For the twelve months ended December 31, 2016 and December 31, 2015 we recognized $10,150 and $9,727 in amortization expense, respectively. The acquired intangible assets were placed in service on January 15th, 2015. We amortize these intangible assets over a period of twenty-four (24) months which has been deemed their useful life.



F-9




NOTE 4 – PROPERTY AND EQUIPMENT


Property and equipment as of December 31, 2016 and December 31, 2015 includes the following:


 

 

December 31,

2016

 

December 31,

2015

 

 

 

 

 

 

 

Computers and equipment

 

$

2,000

 

$

2,000

Furniture and workstations

 

 

1,700

 

 

1,700

 

 

 

3,700

 

 

3,700

Less: Accumulated depreciation

 

 

(3,623)

 

 

(1,773)

Net property and equipment

 

$

77

 

$

1,927


For the twelve months ended December 31, 2016 and December 31, 2015 we recognized $1,850 and $1,773 in depreciation expense, respectively. The acquired assets were placed in service on January 15th, 2015 (see Note 3 - Intangible Assets). We are depreciating these assets over a period of twenty-four (24) months which has been deemed their useful life.


NOTE 5 –RELATED PARTY NOTE RECEIVABLE, RELATED PARTY CONVERTIBLE DEBENTURE AND OTHER RELATED PARTY TRANSACTIONS


During September and October 2016 the Company made net loans totaling $584,187 to American Rebel, Inc., its control shareholder, a related party. American Rebel, Inc owns sixty percent (60%) of the outstanding common stock of the Company. The loans are not interest bearing and are payable on demand.


During September and October 2016, the Company entered into a convertible debt instrument with a shareholder of its largest shareholder in the amount of $600,000. The Company accrued interest expense on this convertible debt of $18,512 at December 31, 2016.  Of this amount borrowed under the convertible debt, $584,187 was then loaned to the Company’s largest shareholder as working capital to pay its operating expenses including legal, accounting, product development, brand expansion, and marketing costs. The majority shareholder also used the proceeds of these loans to purchase inventory of its initial product scheduled to launch second quarter of 2017.


For the period ended December 31, 2015, the Company executed a promissory note with a related party in the amount of $4,500. The unsecured note payable bears interest at 0% per annum and is due upon demand. The Company amended this note payable to increase it to $6,000 as of December 31, 2015.


The Company recorded rent expense of $3,000 and $6,000 (included in Administrative and other costs) for the twelve months ended December 31, 2016 and December 31, 2015, respectively. The Company rented office space from its founder on a month-to-month lease for $500 per month. This included all utilities and other incidental costs associated with operating the office space in which to house the Company’s computing equipment and its headquarters. The Company stopped this lease in June, 2016.


During the year ended December 31, 2015 the Company recorded and capitalized $24,000 of intangible and tangible assets purchased from our founder. This transaction occurred on January 15, 2015 (see Note 3 - Intangible Assets).


During the year ended December 31, 2016, the Company recorded a contribution to capital of $21,990 as a result of cancellation of debt by related parties.


NOTE 6- DEBT FORGIVENESS FROM NON-RELATED PARTY


During the year ended December 31, 2015 the Company accrued $93,265 in liabilities pursuing its intended technology. During the six months ended June 30, 2016 the company accrued an additional $30,635 in additional liabilities. As of June 30, 2016, these vendors had agreed to forgive $103,900 of these liabilities.



F-10




NOTE 7- CONVERTIBLE DEBENTURE – RELATED PARTY


On September 16, 2016, the Company sold a convertible debenture in the amount of $600,000 in the form of a 12% three year convertible term note. Interest is accrued at an annual rate of 12% and is payable in common stock at maturity. Both principal and interest may be converted into common stock at a price of $0.50 per share after the passage of 181 days. The Company may redeem the debenture at its option or force conversion after common stock trades at a price in excess of $1.00 per share for five days. The Holder may force redemption after the Company raised $3 million dollars in equity. The holder of the convertible debenture was issued a three year warrant to purchase 600,000 shares of the Company’s common stock at $1.00 per share. As of December 31, 2016 the Company received $600,000 under this convertible debenture. The Company received an additional $325,000 in January 2017 (see Note 12 – Subsequent Events).


The convertible debenture holder, based on its agreement, with a maturity of September 16, 2019 has the option to convert their principal and interest into 1,200,000 (plus 432,000 for accrued interest) shares of common stock. The fair value of the embedded beneficial conversion feature resulted in no discount to the convertible debenture – related party at December 31, 2016.


The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and fair value measurement under ASC 820 and determined that the beneficial conversion feature under the convertible denture should be recorded as a discount to debt if market was more than the conversion feature.


The convertible debenture - related party is measured at fair value at the end of each reporting period or termination of the debenture agreement with the change in fair value recorded to earnings. The fair value of the embedded beneficial conversion feature did not result in a discount to the convertible debenture - related party. The discount if and when we have one will be amortized over the term of agreement or modification to the agreement to interest expense using the straight-line method that approximates the effective interest method.


The Company used the eight steps to determine fair value under ASC 820. (1) Identify the item to be valued and the unit of account. (2) Determine the principal or most advantageous market and the relevant market participants. (3) Select the valuation premise to be used for asset measurements. (4) Consider the risk assumptions applicable to liability measurements. (5) Identify available inputs. (6) Select the appropriate valuation technique(s). (7) Make the measurement. (8) Determine amounts to be recognized and information to be disclosed.


Fair value was determined by the market price of the Company’s publicly traded stock with no discount allowed. This was determined as of the effective date of the agreement entered convertible debenture - related party. The conversion price was then compared to fair value, determined by market price and the difference between the two multiplied by the number of shares that would be issued upon conversion. The Company has not had any market activity within its public market. Private transactions between willing buyers and willing sellers have ranged from $0.02 to $0.15 per share. These transactions were not conducted through a broker dealer network.


As of December 31, 2016, the outstanding balance due the convertible debentures holders was $600,000, including $0 in original issue discount or interest.


NOTE 8 – EMBEDDED DERIVATIVES – FINANCIAL INSTRUMENTS


During September 2016 the Company entered into a financial instrument, which consists of a convertible debenture, containing a conversion feature. Generally financial instruments are convertible into shares of the Company’s common stock; at prices that are either marked to the volume weighted average price of the Company’s publicly traded stock or a static price determinative from each financial instrument agreement. These prices may be at a significant discount to market as determined overall by the volume weighted average price of the Company’s publicly traded common stock. The Company for all intent and purposes considers these discounts to be fair market value as would be determined in an arm’s length transaction with a willing buyer and the restrictive nature of the common stock issued, unless issued pursuant to a registration or some other registered shares with the SEC.


The Company accounts for the fair value of the conversion feature in accordance with ASC 815-15,Derivatives and Hedging; Embedded Derivatives, which requires the Company to bifurcate and separately account for the conversion features as an embedded derivative contained in the Company’s convertible debt and original issue discount notes payable. The Company is required to carry the embedded derivative on its balance sheet at fair value and account for any unrealized change in fair value as a component in its results of operations. The Company valued the embedded derivatives using eight steps to determine fair value under ASC 820. (1) Identify the item to be valued and the unit of account. (2) Determine the principal or most advantageous market and the relevant market participants. (3) Select the valuation premise to be used for asset measurements. (4) Consider the risk assumptions applicable to liability measurements. (5) Identify available inputs. (6) Select the appropriate valuation technique(s). (7) Make the measurement. (8) Determine amounts to be recognized and information to be disclosed.



F-11




The fair value of the conversion feature of the financial instrument as of December 31, 2016 was $0. The Company did not record any expense associated with the embedded derivatives at December 31, 2016. No embedded derivative expense was realized as there was no change in the conversion price. The conversion price for this financial instrument was $0.50 per share which is significantly higher than market.


NOTE 9 – DEFERRED OFFERING COSTS


Deferred offering costs consist principally of accounting, legal and other fees incurred through the balance sheet date that are directly related to the proposed common stock offering. Deferred offering costs were offset against the net proceeds of our equity transaction. On December 11, 2015, deferred offering costs of $22,140 was credited towards additional paid in capital. Deferred offering costs were none as of December 31, 2016 and 2015.


NOTE 10 – INCOME TAXES


At December 31, 2016 and 2015, the Company had a net operating loss carryforward of $132,372 and $117,500, respectively, which begins to expire in 2034.


Components of net deferred tax asset, including a valuation allowance, are as follows at December 31, 2016 and 2015:


 

 

2016

 

2015

Deferred tax asset:

 

 

 

 

 Net operating loss carryforward

$

46,330

$

41,125

 Total deferred tax asset

 

46,330

 

41,125

Less: Valuation allowance

 

(46,330)

 

(41,125)

 Net deferred tax asset

$

-

$

-


Valuation allowance for deferred tax assets as of December 31, 2016 and December 31, 2015 was $46,330 and $41,125, respectively. In assessing the recovery of the deferred tax asset, management considers whether it is more likely than not that some portion or all of the deferred tax asset will not be realized. The ultimate realization of the deferred tax asset is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. As a result, management determined it was more likely than not deferred tax assets will not be realized as of December 31, 2016 and December 31, 2015 and recognized a full valuation allowance for each period.


Reconciliation between statutory rate and the effective tax rate for both periods and as of December 31, 2016 and December 31, 2015:


Federal statutory rate

(35.0)%

State taxes, net of federal benefit

(0.00)%

Change in valuation allowance

35.0%

Effective tax rate

0.0%


NOTE 11 – SHARE CAPITAL

 

The Company is authorized to issue 100,000,000 shares of its $0.001 par value common stock and 1,000,000 shares of its $0.001 par value preferred stock.


Common stock

On December 15, 2014, the Company issued to its founder, then an officer and director of the Company, 6,000,000 shares of its $0.001 par value common stock at a price of $0.001 per share for services provided upon organization. The services were valued at $6,000.


On January 15, 2015, the Company issued to its founder 3,000,000 shares of its $0.001 par value common stock at a price of $0.008 per share for certain intangible assets and tangible assets (see Note 3 - Intangible Assets). Mr. David Estus, then our sole officer and director, incurred more than $50,000 in developing or acquiring the intangible and tangible assets for which the Company valued at $24,000.


The Company filed a registration statement on Form S-1 which was declared effective by the U.S. Securities and Exchange Commission on October 14, 2015. The Form S-1 allowed the Company to solicit investors for investment in a direct public offering of $60,000. Twenty six (26) investors invested at a price of $0.01 per share for the entire offering which closed on December 11, 2015.



F-12




At December 31, 2016 and 2015, there were 15,000,000 shares of common stock issued and outstanding.


NOTE 12 – WARRANTS AND OPTIONS


On September 16, 2016, in connection with the convertible debenture –related party (see Note 8 – Convertible Debenture – Related Party) the Company issued a three year warrant to purchase 600,000 shares of the Company’s common stock at $1.00 per share. In conjunction with sales of convertible debt subsequent to December 31, 2016, the Company issued warrants to purchase an additional 325,000 shares on identical terms.


As of December 31, 2016, there were 600,000 warrants issued and outstanding. As of December 31, 2015, there were no warrants or options outstanding to acquire any additional shares of common stock.


The Company evaluates outstanding warrants as derivative liabilities and will recognize any changes in the fair value through earnings. The Company determined that the Warrants have an immaterial fair value at December 31, 2016. The warrants do not trade in a highly active securities market, and as such, the Company estimated the fair value of these common stock equivalents using Black-Scholes and the following assumptions:

 

Expected volatility was based primarily on historical volatility. Historical volatility was computed using daily pricing observations for recent periods. The Company’s common stock has not traded so the volatility computation was based on other similarly situated companies. The Company believes this method produced an estimate that was representative of the Company’s expectations of future volatility over the expected term which due to their maturity period as expiry, it was three years. The Company had no reason to believe future volatility over the expected remaining life of these common stock equivalents was likely to differ materially from historical volatility. Expected life was based on three years due to the expiry of maturity. The risk-free rate was based on the U.S. Treasury rate that corresponded to the expected term of the common stock equivalents.


 

 

December 31, 2016

 

 

 

Stock Price

 

$

.01

Exercise Price

 

$

1.00

Term (expected in years)

 

 

3.00

Volatility

 

 

118.0%

Annual Rate of Dividends

 

 

0.0%

Risk Free Rate

 

 

0.88%


NOTE 13 – SUBSEQUENT EVENTS


The Company evaluated all events that occurred after the balance sheet date of December 31, 2016 through the date the financial statements were issued and determined that there are the following subsequent events to record or disclose.


Subsequent to December 31, 2016, the Company received an additional $325,000 under the convertible debenture – related party (see Note 8 – Convertible Debenture – Related Party) for a total of $925,000 and issued an additional 325,000 warrants (see Note 12 – Warrants and Options.)


Subsequent to December 31, 2016, the Company made additional loans of $317,000 to its control shareholder through Note receivable– related party (see Note 5 – Note Receivable, Related Party) for a total of $901,187 loaned to date.


Effective January 5, 2017, the Company amended its Articles of Incorporation to change its name to American Rebel Holdings, Inc. in anticipation of a business combination with its majority shareholder, American Rebel, Inc.


The Company’s sole Director approved a Stock Purchase and Reorganization Agreement under which the Company would cancel 9,000,000 shares currently owned by its majority shareholder, American Rebel, Inc. and issue 14,621,000 new common shares to the shareholders of American Rebel, Inc., after which American Rebel, Inc. will become a wholly owned subsidiary. To date, the transaction has not been completed.




F-13




ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE


We have had no disagreements with accountants on accounting and financial disclosure.


ITEM 9A. CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-15(e). The Company’s disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching the Company’s desired disclosure control objectives. In designing periods specified in the SEC’s rules and forms, and that such information is accumulated and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company’s certifying officer, Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer, has concluded that the Company’s disclosure controls and procedures are effective in reaching that level of assurance.


Our Chief Executive Officer and Principal Financial Officer, Charles A. Ross, Jr., evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on the evaluation, Mr. Ross concluded that our disclosure controls and procedures are effective in timely alerting him to material information relating to us required to be included in our periodic SEC filings. The Company hired a financial expert with the experience in creating and managing internal control systems as well as to continue to improve the effectiveness of our internal controls and financial disclosure controls.


Management’s Annual Report on Internal Control over Financial Reporting


Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria set forth in the 1992 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this evaluation, management has concluded that our internal control over financial reporting was effective as of December 31, 2016.


This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. As we are a non-accelerated filer, management’s report is not subject to attestation by our registered public accounting firm.


This report shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section , and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.


Limitations on the Effectiveness of Controls


Management has confidence in its internal controls and procedures. The Company’s management believes that a control system, no matter how well designed and operated can provide only reasonable assurance and cannot provide absolute assurance that the objectives of the internal control system are met, and no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Further, the design of an internal control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitation in all internal control systems, no evaluation of controls can provide absolute assurance that all control issuers and instances of fraud, if any, within the Company have been detected.


Changes in Internal Controls


There were no changes in the Company’s internal controls over financial reporting that occurred during the quarter ended December 31, 2016 that have materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.



32




Internal control systems, no matter how well designed and operated, have inherent limitations. Therefore, even a system which is determined to be effective cannot provide absolute assurance that all control issues have been detected or prevented. Our systems of internal controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.


ITEM 9B. OTHER INFORMATION


None.


PART III


ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE


Directors and Executive Officers


The following table sets forth certain information regarding the executive officer and director of American Rebel Holdings, Inc. as of December 31, 2016.


All directors of the Company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. Officers of the Company are appointed by our Board and hold office until their death, resignation or removal from office. Our directors and executive officers, their ages, positions held, and duration as such, are as follows:


Name

 

Positions Held with the Company

 

Age

 

Date First Elected or Appointed

 

 

 

 

 

 

 

Charles A. Ross, Jr.

 

President, CEO, principal executive officer, treasurer, chairman, principal financial officer and principal accounting office

 

50

 

June 9, 2016


Charles A. Ross, Jr., Chairman, CEO, CFO


Mr. Ross is currently the Company’s sole officer and director in the respective capacities of CEO, CFO, and Chairman of the Company’s Board of Directors. He has held these positions since June 20, 2016. He is responsible for all duties required of a corporate officer and the development of the business. From December 15, 2014 through the present, Mr. Ross has served as the sole officer and director in the respective capacities of CEO, CFO, and Chairman of the Board of Directors of American Rebel, Inc. American Rebel, Inc. has developed a product line of concealed carry products that officially launch at the 2017 NRA Convention April 27 – 30 in Atlanta, GA. Prior to founding American Rebel, Inc. Mr. Ross founded many companies including Digital Ally, Inc., which he established in 2004. In addition to his entrepreneurial accomplishments, Mr. Ross served as host for ten years of his own television show,Maximum Archery, where he bow hunted all over the world including traditional hunts and some of the world’s most dangerous game.Maximum Archery evolved into his new show,American Rebel, which features Mr. Ross’s music, patriotism, his support of the 2nd Amendment and celebrates the “American Rebel Spirit” in all of us. Mr. Ross has released three CDs and the current single off his third CD,Time to Fight, is a duet with country supergroup Little Texas entitled “Back on the Backroads.” “Back on the Backroads” has received airplay on radio stations across the United States and internationally. Previous singles released by Mr. Ross include “Cold Dead Hand,” “Rebel,” and “What We Do For Fun Around Here.”


Term of Office


Each director is elected by the Board and serves until his or her successor is elected and qualified, unless he or she resigns or is removed earlier. Each of our officers is elected by the Board to a term of one (1) year and serves until his or her successor is duly elected and qualified, or until he or she is earlier removed from office or resigns.


Family Relationships


There are no family relationships between or among any of our directors, executive officers and incoming directors or executive officers.



33




Involvement in Certain Legal Proceedings


No director, executive officer, significant employee or control person of the Company has been involved in any legal proceeding listed in Item 401(f) of Regulation S-K in the past 10 years.


Committees of the Board


Our Board held no formal meetings in the prior fiscal year. All proceedings of the Board were conducted by resolutions consented to in writing by the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Nevada Revised Statutes and the bylaws of our Company, as valid and effective as if they had been passed at a meeting of the directors duly called and held. We do not presently have a policy regarding director attendance at meetings.


We do not currently have a standing nominating or compensation committee of the Board, or any committee performing similar functions. Our Board performs the functions of nominating and compensation committees.


Audit Committee


Our Board has not established an audit committee within the meaning of Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Instead, the entire Board acts as the audit committee within the meaning of Section 3(a)(58)(B) of the Exchange Act and will continue to do so until such time as a separate audit committee has been established.


Audit Committee Financial Expert


We currently have not designated anyone as an “audit committee financial expert,” as defined in Item 407(d)(5) of Regulation S-K as we have not yet created an audit committee of the Board.


Code of Ethics


We adopted a Code of Ethics (the “Code”) that applies to directors, officers and employees, including our chief executive officer and chief financial officer. A written copy of the Code is available upon written request to the Company.


Section 16(a) Beneficial Ownership Reporting Compliance


Section 16(a) of the Securities Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common stock, to file reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission and to provide us with copies of those filings.


Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that none of our officers, directors and greater than 10% percent beneficial owners complied with all applicable filing requirements.


Nominations to the Board of Directors


Our directors take a critical role in guiding our strategic direction and oversee the management of the Company. Board candidates are considered based upon various criteria, such as their broad-based business and professional skills and experiences, a global business and social perspective, concern for the long-term interests of the stockholders, diversity, and personal integrity and judgment.


In addition, directors must have time available to devote to Board activities and to enhance their knowledge in the growing business. Accordingly, we seek to attract and retain highly qualified directors who have sufficient time to attend to their substantial duties and responsibilities to the Company.


Director Nominations


As of December 31, 2016, we did not make any material changes to the procedures by which our shareholders may recommend nominees to our Board.



34




Board Leadership Structure and Role on Risk Oversight


Mr. Ross currently serves as our principal executive officer and sole director of the Company. We have determined this leadership structure was duly appropriate for us because of our small size, limited operations and resources. The Board will continue to evaluate our leadership structure and modify as deemed appropriate based on size, resources and operations of the Company. It is anticipated that our Board will establish procedures and guidelines to determine an appropriate role for members of the Board in risk oversight function of the Company.

 

Compensation Committee Interlocks and Insider Participation


No interlocking relationship exists between our Board and the board or compensation committee of any other company, nor has any interlocking relationship existed in the past.


Employment Arrangements


None of our officers, directors, or employees are party to employment agreements with the Company, except for what has been reported in our registration statement on Form S-1. The Company has no pension, health, annuity, bonus, insurance profit sharing or similar benefit plans; however, the Company may adopt such plans in the future. There are no personal benefits available for directors, officers or employees of the Company.


ITEM 11. EXECUTIVE COMPENSATION


General Philosophy


Our Board is solely responsible for establishing and administering our executive and director compensation plans, if any.


Executive Compensation


The following table sets forth the salaries and director fees we paid to our current and former executive officer(s) during the fiscal year ended December 31, 2016 and 2015, respectively:


SUMMARY COMPENSATION TABLE

Name and

 

Salary

Bonus

Stock

Awards

Option

Awards

Non-Equity

Incentive

Plan

Compensation

Nonqualified

Deferred

Compensation

Earnings

All Other

Compensation

Total

principal position

Year

($)

($)

($)

($)

($)

($)

($)

($)

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

(j)

 (1)Charles A. Ross, Jr.

2016(3)

CEO, CFO and Director

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

David Estus

2015(2)

CEO, CFO and Director

 

 

 

 

 

 

 

 

 


The Company has no formal employment arrangement with Mr. Ross for services. Mr. Ross compensation is not based on any percentage calculations. Mr. Ross makes all decisions determining the amount and timing of payment for his compensation and, for the immediate future, Mr. Ross has elected not to receive any payment of compensation which permits us to meet our financial obligations.


(1)The Company has no formal employment arrangement with Mr. Ross for services. Mr. Ross’ compensation is not based on any percentage calculations. Mr. Ross makes all decisions determining the amount and timing of payment for his compensation and, for the immediate future, Mr. Ross has elected not to receive any payment of compensation which permits us to meet our financial obligations


(2) Mr. Estus invoiced the Company for rental expense of $500 per month on a month-to-month verbal rental agreement. We did not consider the expense to be characterized as additional income to Mr. Estus as it was significantly below fair market value for comparable rents. Mr. Estus was a former officer and director and currently has no ownership in the Company.



35




Grants of Plan-Based Awards Table


None of the named executive officers received any grants of stock, option awards or other plan-based awards during the fiscal years ended December 31, 2016 and December 31, 2015.


Options Exercised and Stock Vested Table


None of the named executive officers exercised any stock options, nor were there any restricted stock units held by our named executive officers vested, during the fiscal years ended December 31, 2016 and December 31, 2015.


Outstanding Equity Awards at Fiscal Year-end Table


None of the named executive officers held any unexercised options and unvested stock awards previously awarded as of December 31, 2016.


Potential Payments upon Termination or Change-in-Control


SEC regulations state that we must disclose information regarding agreements, plans or arrangements that provide for payments or benefits to our executive officers in connection with any termination of employment or change in control of the company. We currently have no employment agreements with any of our executive officers, nor any compensatory plans or arrangements resulting from the resignation, retirement or any other termination of any of our executive officers, from a change-in-control, or from a change in any executive officer’s responsibilities following a change-in-control. As a result, we have omitted this table.


Compensation of Directors


We have no standard arrangement to compensate directors for their services in their capacity as directors. Directors are not paid for meetings attended. However, we intend to review and consider future proposals regarding board compensation. All travel and lodging expenses associated with corporate matters are reimbursed by us, if and when incurred.


The following table sets forth compensation paid to our non-executive (and executive) directors for the fiscal year ended December 31, 2016.


Name

 

Fees Earned or Paid in Cash

 

Stock Awards

 

Option Awards

 

Non-Equity Incentive Plan Compensation

 

Nonqualified Deferred Compensation Earnings

 

All Other Compensation

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

David Estus(1)

$

-

$

-

$

-

$

-

$

-

$

-

$

-

Charles A. Ross, Jr.

$

-

$

-

$

-

$

-

$

-

$

-

$

-


(1)Mr. Estus provided his services to the Company until June 9, 2016 when he resigned as our sole officer and director in connection with our change in control transaction.


Pension Table


None.


Retirement Plans


We do not offer any annuity, pension, or retirement benefits to be paid to any of our officers, directors, or employees in the event of retirement. There are also no compensatory plans or arrangements with respect to any individual named above which results or will result from the resignation, retirement, or any other termination of employment with our company, or from a change in the control of our Company.


Compensation Committee


We do not have a separate compensation committee. Instead, our Board reviews and approves executive compensation policies and practices, reviews salaries and bonuses for other officers, administers our stock option plans and other benefit plans, if any, and considers other matters that may be brought forth to it.



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Risk Management Considerations


We believe that our compensation policies and practices for our employees, including our executive officers, do not create risks that are reasonably likely to have a material adverse effect on our Company.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


Long-Term Incentive Plans and Awards

 

We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance. No individual grants or agreement s regarding future payouts under non-stock price-based plans have been made to any executive officer or any director or any employee or consultant since our inception; accordingly, no future payouts under non-stock price-based plans or agreement s have been granted or entered into or exercised by our officer or director or employees or consultants since we were founded.

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


The following table sets forth certain information concerning the number of shares of our Common Stock owned beneficially as of March 10, 2017, by: (i) our director; (ii) our named executive officer; and (iii) each person or group known by us to beneficially own more than 5% of our outstanding shares of common stock. Unless otherwise indicated, the shareholders listed below possess sole voting and investment power with respect to the shares they own.


Name and Address of Beneficial Owner(1)

 

Amount and

Nature of

Beneficial

Ownership

 

 

Percentage

of

Common Stock

Outstanding

 

 

 

 

 

 

Charles A. Ross, Jr.(2)

 

 

9,000,000

 

 

 

60.00%

 

 

 

 

 

 

 

 

Directors and executive officers as a group (1 Person)

 

 

9,000,000

 

 

 

60.00%

 

 

 

 

 

 

 

 

ABA Rebels, LLC (3)

9274 Kingston Pike, Suite 406, Knoxville, Tennessee 37922

 

 

 

4,675,274

 

 

 


27.82%

 

 

 

 

 

 

 

 

Robert K. Green (4)

 

 

846,221

 

 

 

5.64%

 

 

 

 

 

 

 

 

Albert Dacre (5)

 

 

823,220

 

 

 

5.49%

 

 

 

 

 

 

 

 

Douglas Grau (6)

 

 

923,329

 

 

 

6.16%


(1) Unless otherwise noted above, the address of the persons and entities listed in the table is c/o American Rebel Holdings, Inc., 1026 16th Avenue South, Nashville, Tennessee 37212.


(2) Chairman, President, Chief Executive Officer and Director. 9,000,000 shares of common stock are owned through American Rebel, Inc. for which Mr. Charles A. Ross, Jr. is an officer and director. Mr. Ross may be deemed to be a control person of the shares owned by such entity. Mr. Ross claims beneficial ownership of these shares as of this date. Of the amount listed above 3,385,541 shares of common stock are beneficially owned through American Rebel, Inc. for which Mr. Ross is a greater than 10% shareholder. Mr. Ross disclaims beneficial ownership of these shares as American Rebel, Inc. does not intend to distribute such shares and intends to cancel such shares upon completion of the Proposed Stock Purchase and Reorganization

 

(3) 1,000,274 shares of common stock are owned through American Rebel, Inc. for which ABA Rebels, LLC (“ABA”) is a greater than 10% shareholder. ABA owns 1,875,000 shares of common stock that it purchased through a private transaction on June 9, 2016 with several former shareholders of the Company. ABA beneficially owns 1,800,000 shares of common stock pursuant to a convertible note entered into on September 16, 2016, see Current Report filed on Form 8-K, dated September 16, 2016. ABA in addition to the convertible note was issued a warrant to purchase 900,000 shares at $1.00 per share. The Company does not consider the underlying shares or exercise of such warrant to be imminent. ABA disclaims beneficial ownership of the 1,000,274 shares of our common stock as American Rebel, Inc. does not intend to distribute such shares and intends to cancel such shares upon completion of the Proposed Stock Purchase and Reorganization. William D. King, managing member of ABA may be deemed to be a control person of the shares owned by such entity. Mr. King disclaims beneficial ownership of these shares.



37



 

(4) 246,221 shares of common stock are owned through American Rebel, Inc. for which Robert K. Green is a less than 5% shareholder. Mr. Green owns 600,000 shares of common stock that he purchased through a private transaction on June 9, 2016 with several former shareholders of the Company. Mr. Green disclaims beneficial ownership of the 246,221 shares of our common stock as American Rebel, Inc. does not intend to distribute such shares and intends to cancel such shares upon completion of the Proposed Stock Purchase and Reorganization


(5) 523,220 shares of common stock are owned through American Rebel, Inc. for which Albert J. Dacre is a less than 5% shareholder. Mr. Dacre owns 300,000 shares of common stock that he purchased through a private transaction on June 9, 2016 with several former shareholders of the Company. Mr. Dacre disclaims beneficial ownership of the 523,220 shares of our common stock as American Rebel, Inc. does not intend to distribute such shares and intends to cancel such shares upon completion of the Proposed Stock Purchase and Reorganization


(6) 923,329 shares of common stock are beneficially owned through American Rebel, Inc. which Douglas Grau is a greater than 10% shareholder. Mr. Grau disclaims beneficial ownership of these shares as American Rebel, Inc. does not intend to distribute such shares and intends to cancel such shares upon completion of the Proposed Stock Purchase and Reorganization.


Securities Authorized for Issuance under Equity Compensation Plans


None.


Non-Cumulative Voting


The holders of our shares of common stock do not have cumulative voting rights, which means that the holders of more than 50% of such outstanding shares, voting for the election of Directors, can elect all of the Directors to be elected, if they so choose. In such event, the holders of the remaining shares will not be able to elect any of our Directors.


Transfer Agent


The Transfer Agent for our common stock is Action Stock Transfer Corporation, 2469 E. Fort Union Blvd, Suite 214, Salt Lake City, Utah 84121. Its telephone number is (801) 274-1088.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.


Our office and mailing address was 1854 Oxford Avenue, Cardiff-by-the-Sea, California 92007. This space was provided to us by Mr. Estus. Mr. Estus charged us $500 per month and paid for all utilities and other maintenance costs for the facilities. There was no written lease agreement. The arrangement ended in June 2016 and Mr. Estus forgave the accrued and unpaid rent.. We presently are provided office space by our majority shareholder, American Rebel, Inc. at no charge.


Mr. Estus developed our business plan, the foundation for our internal-use software to be used to support our design portal, which we will continue to develop and improve upon. Mr. Estus received 3,000,000 shares of our common stock for selling certain tangible and intangible assets to us. The value of the assets purchased was $24,000, which is far less than the total cost incurred by Mr. Estus.


During September and October 2016 the Company made net loans totaling $584,187 to American Rebel, Inc., its control shareholder, a related party. American Rebel, Inc owns sixty percent (60%) of the outstanding common stock of the Company. The loans are not interest bearing and are payable on demand.


During September and October 2016, the Company entered into a convertible debt instrument with ABA Rebels, LLC, a shareholder of its majority shareholder in the amount of $600,000. Of this amount, $584,187 was then loaned to the Company’s largest shareholder as working capital to pay its operating expenses including legal, accounting, product development, brand expansion, and marketing costs. The majority shareholder also used the proceeds of these loans to purchase inventory for its product launch planned for the second quarter of 2017. Subsequent to yearend, the Company has issued Convertible debt under the same terms to obtain an additional $325,000, of which substantially all has been loaned to American Rebel, Inc., its majority shareholder.


Other than the foregoing, none of the directors or executive officers of the Company, nor any person who owned of record or was known to own beneficially more than 5% of the Company’s outstanding shares of its Common Stock, nor any associate or affiliate of such persons or companies, has any material interest, direct or indirect, in any transaction that has occurred during the past fiscal year, or in any proposed transaction, which has materially affected or will affect the Company.



38




Review, Approval or Ratification of Transactions with Related Persons


Although we adopted a Code of Ethics, we still rely on our Board to review related party transactions on an ongoing basis to prevent conflicts of interest. Our Board reviews a transaction in light of the affiliations of the director, officer or employee and the affiliations of such person’s immediate family. Transactions are presented to our Board for approval before they are entered into or, if this is not possible, for ratification after the transaction has occurred. If our Board finds that a conflict of interest exists, then it will determine the appropriate remedial action, if any. Our Board approves or ratifies a transaction if it determines that the transaction is consistent with the best interests of the Company.


Director Independence


For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 5605(a)(2). The OTCBB and the OTCQB do not have any director independence requirements. The NASDAQ definition of “Independent Officer” means a person other than an Executive Officer or employee of the Company or any other individual having a relationship which, in the opinion of the Company’s Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.


According to the NASDAQ definition, Mr. Charles A. Ross, Jr. is not an independent director because he currently holds the title of officer in the Company.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES


The following table presents the fees for professional audit services rendered by PLS CPA, a professional corporation (“PLS CPA’s”) for the audit of the Company’s annual financial statements for the fiscal year ended December 31, 2016 and December 31, 2015 and fees billed for other services rendered by PLS CPA’s during those periods. All services reflected in the following fee table for 2016 and 2015 were pre-approved, respectively, in accordance with the policy of the Board.


 

 

December 31,

2016

 

December 31,

2015

Audit fees(1)

$

10,000

$

10,000

Audit-related fees

 

-

 

-

Tax fees

 

-

 

-

All other fees

 

-

 

-

Total Fees

$

10,000

$

10,000


Notes:


(1) Audit fees consist of audit and review services, consent and review of documents filed with the SEC. For fiscal year ended December 31, 2016 and December 31, 2015.


In its capacity, the Board pre-approves all audit (including audit-related) and permitted non-audit services to be performed by the independent auditors. The Board will annually approve the scope and fee estimates for the year-end audit to be performed by the Company’s independent auditors for the fiscal year. With respect to other permitted services, the Board pre-approves specific engagements, projects and categories of services on a fiscal year basis, subject to individual project and annual maximums. To date, the Company has not engaged its auditors to perform any non-audit related services.




39




PART IV


ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


The following documents are filed as part of this Annual Report on Form 10-K


(a)

Financial Statements


 

 

Page

Report of Independent Registered Public Accounting Firm

 

F-1

Financial Statements for the years ended December 31, 2016 and December 31, 2015

 

 

Balance Sheets

 

F-2

Statements of Operations

 

F-3

Statement of Stockholders’ Equity (Deficit)

 

F-4

Statements of Cash Flows

 

F-5

Notes to the Financial Statements

 

F-6


(b)

Exhibits


 

3.1*

Articles of Incorporation

 

3.2*

Bylaws of CubeScape, Inc.

 

10.2*

Conflict of Interest Agreement

23.1#

Consent of PLS CPA’s, a professional corporation

31.1#

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2#

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1#

Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

XBRL Instance Document**

101.SCH

XBRL Taxonomy Extension Schema**

101.CAL

XBRL Taxonomy Extension Calculation Linkbase**

101.DEF

XBRL Taxonomy Extension Definition Linkbase**

101.LAB

XBRL Taxonomy Extension Labels Linkbase**

101.PRE

XBRL Taxonomy Extension Presentation Linkbase**


* Filed with initial filing of the Company’s registration statement on Form S-1, August 4, 2015.


# Filed herewith.


** The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.




40




SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 

 

 

 

 

AMERICAN REBEL HOLDINGS, INC.

 

 

(Registrant)

 

 

 

Date: March 10, 2017

By:

/s/ Charles A. Ross

 

 

Charles A. Ross

 

 

Chairman, President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)


Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


 

 

 

 

 

Signatures

 

Title(s)

 

Date

 

 

 

 

 

/s/ Charles A. Ross

Charles A. Ross

 

Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

 

March 10, 2017





41