NOTE 8 – RELATED PARTY NOTE PAYABLE AND RELATED PARTY TRANSACTIONS

Employment Agreements

Charles A. Ross, Jr. serves as the Company’s Chief Executive Officer. Compensation for Mr. Ross was $351,329 and $341,760 plus stock awards, respectively for the years ended December 31, 2025 and 2024. As of December 31, 2025 and 2024, approximately $16,000 and $462,000 in accrued and unpaid compensation was outstanding and included in accrued expenses and other in the accompanying consolidated balance sheets, respectively.

Doug E. Grau served as the Company’s President and Interim Principal Accounting Officer through June 30, 2025. Compensation for Mr. Grau was $130,000 and $277,680 plus stock awards, respectively, for the years ended December 31, 2025 and 2024. As of December 31, 2025 and 2024, approximately $0 and $203,000 in accrued and unpaid compensation was outstanding and included in accrued expenses and other in the accompanying consolidated balance sheets, respectively. As of December 31, 2025 and 2024, approximately $135,000 and $0 in a related party receivable outstanding and included in current assets in the accompanying consolidated balance sheets, respectively. As of December 31, 2025, this related party receivable was a 100% reserved for in the accompanying consolidated balance sheet.

Effective July 1, 2025, Darin Fielding began serving as the Company’s Interim Principal Accounting Officer. Compensation for Mr. Fielding was $232,110 and $181,730, respectively, for the years ended December 31, 2025 and 2024. As of December 31, 2025 and 2024, approximately $75,000 and $0 in accrued and unpaid compensation was outstanding and included in accrued expenses and other in the accompanying consolidated balance sheets, respectively.

Corey Lambrecht serves as the Company’s President and Chief Operating Officer. Compensation for Mr. Lambrecht was $285,455 and $277,680 plus stock awards, respectively for the years ended December 31, 2025 and 2024. As of December 31, 2025 and 2024, approximately $15,000 and $316,000 in accrued and unpaid compensation was outstanding and included in accrued expenses and other in the accompanying consolidated balance sheets, respectively.

There were no new stock awards granted and issued to Messrs. Ross, Grau, Fielding and Lambrecht during 2025 and 2024. Additionally, the aforementioned officers advanced the Company approximately $0 and $737,775 for the years ended December 31, 2025 and 2024, respectively, of which approximately $ 4,000 and $448,000 was outstanding as of December 31, 2025 and 2024, respectively. The advances are unsecured non-interest-bearing demand notes. These officers provided these loans as short-term funding.

Series A Convertible Preferred Stock

Per Mr. Lambrecht’s employment agreement entered into on November 20, 2023, the share-award grant is to vest 1/4th upon the signing of Mr. Lambrecht’s employment, another 1/4th on January 1, 2024, another 1/4th on January 1, 2025 and the remaining 1/4th on January 1, 2026. Mr. Lambrecht’s employment agreement has a term running from November 20, 2023 through December 31, 2026, a term of 37 and ½ months. For the years ended December 31, 2025 and 2024, the Company recognized $156,250 each year in compensation expense attributable to the share award grant and respective earn-out. On January 1, 2026 another 6,250 shares of Series A preferred stock vested for Mr. Lambrecht, providing for a total of 12,500,000 shares of common stock that Mr. Lambrecht may convert his Series A preferred shares into.

Mr. Ross’s amended employment agreement had an effective date of November 20, 2023. The share-award grant will vest 1/5th on January 1, 2024, another 1/5th on January 1, 2025, 1/5th on January 1, 2026, 1/5th on January 1, 2027 and the remaining 1/5th on January 1, 2028. Mr. Ross’s amended employment agreement has an effective term running from November 20, 2023 through December 31, 2026, a term of 37 and ½ months. For the years ended December 31, 2025 and 2024, the Company recognized $250,000 each year in compensation expense attributable to the share award grant and respective earn-out. On January 1, 2026 an additional 10,000 shares of Series A preferred stock vested for Mr. Ross, providing for a total of 15,000,000 shares of common stock that Mr. Ross may convert his Series A preferred shares into at any time.

Mr. Grau’s amended employment agreement had an effective date of November 20, 2023, with a termination date of July 1, 2025. The share-award grant originally vested 1/5th on January 1, 2024, another 1/5th on January 1, 2025, 1/5th on January 1, 2026, 1/5th on January 1, 2027 and the remaining 1/5th on January 1, 2028. Mr. Grau’s amended employment agreement has an effective term running from November 20, 2023 through June 30, 2025. For the years ended December 31, 2025 and 2024, the Company recognized $125,000 and $250,000 in compensation expense attributable to the share award grant and respective earn-out. The employment agreement was terminated on July 1, 2025.

On August 1, 2025, Corey Lambrecht converted 350 shares of Series A preferred stock into 4 shares of common stock. Additionally, on August 1, 2025, Charles A. Ross, Jr. converted 350 shares of Series A preferred stock into 4 shares of common stock. Further, on September 25, 2025, Corey Lambrecht converted an additional 350 shares of Series A preferred stock into 4 shares of common stock. In addition, on September 25, 2025, Charles A. Ross, Jr. converted an additional 350 shares of Series A preferred stock into 4 shares of common stock.

Stock-Based Compensation

The Company, in connection with various employment and independent directors’ agreements, is required to issue shares of its common stock as payment for services performed or to be performed. The value of the shares issued is determined by the fair value of the Company’s common stock that trades on the Nasdaq Capital Market. This value on the date of grant is afforded to the Company for the recording of stock compensation to employees and other related parties or control persons and the recognition of this expense over the period in which the services were incurred or performed. Most of the Company’s agreement for stock compensation provide for the grant to be earned over a service period from the initial grant, thereby expensing the cost over the service period. 

Stock-based compensation is presented in accordance with the guidance of ASC Topic 718, “Compensation – Stock Compensation” (“ASC 718”). Under the provisions of ASC 718, the Company is required to estimate the fair value of share-based payment awards on the date of grant for which the Company generally uses an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in our statements of operations. Where the stock-based compensation is not an award, option, warrant or other common stock equivalent, the Company values the shares based on fair value with respect to its grant date and the price that investors may have been paying for the Company’s common stock on that date in its various exempt private placement offerings. Stock-based compensation expense totaled $531,251 and $656,250 for the years ended December 31, 2025 and 2024, respectively, and primarily relates to the aforementioned Series A preferred stock awards.

Taxable value of the stock-based compensation is recorded in accordance with the Internal Revenue Service’s regulations as it pertains to employees, control persons and others whereby they receive share-based payments. This may not always align with what the Company records these issuances in accordance with GAAP. There are no provisional tax agreements or gross-up provisions with respect to any of our share-based payments to these entities. The payment or withholding of taxes is strictly left to the recipient of the share-based payments, or the modification of share-based payments.

Director’s Note

On June 28, 2024, the Company entered into a short-term loan with a director, Lawrence Sinks (“Mr. Sinks”), evidenced by a promissory note in the principal amount of $400,000 (the “Director’s Note”). Proceeds from the Director’s Note were utilized solely by the Company’s wholly owned subsidiary, American Rebel Beverages, LLC. The Director’s Note was due on September 30, 2024, with a repayment amount of $520,000. As of December 31, 2025 and 2024, the note had not been repaid and remained outstanding, of which $400,000 is presented in the accompanying consolidated balance sheet within Loan – Director – related party, and the remaining $120,000 within accrued interest in the accompanying consolidated balance sheet.