Outdoor Holding Co
For the period ended Dec 31, 2024. Filed May 20, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2024 · Filed May 20, 2025
POWW$2.30-0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001493152-24-030836
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-12-31; filed 2025-05-20.
0000950170-25-075310
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 75 previous paragraphs and 92 current paragraphs.
20 unchanged; 31 reworded; 39 added; 24 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 7 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (39)
Current report
Sale of Ammo Manufacturing Business and Name Change
Current report
On April 18, 2025, the Company, together with its subsidiaries AMMO Technologies, Inc., an Arizona corporation (“AMMO Tech”), Enlight Group II, LLC d/b/a Jagemann Munition Components d/b/a Buythebullets, a Delaware limited liability company (“Enlight”), Firelight Group I, LLC, a Delaware limited liability company (“Firelight”, and together with AMMO Tech, and Enlight, collectively, the “Sellers”, and the Sellers together with the Company, the “Seller Group”) completed the previously announced (i) sale of all assets of the Sellers related to the Sellers’ business of designing, manufacturing, marketing, distributing and selling ammunition and ammunition components (collectively, the “Ammunition Manufacturing Business”) along with certain assets of the Company related to the Ammunition Manufacturing Business, and (ii) assumption of certain liabilities of the Seller Group related to the Ammunition Manufacturing Business, for a gross purchase price of $75,000,000, subject to certain adjustments, in accordance with the terms of that certain Asset Purchase Agreement, dated January 20, 2025, by and among the Seller Group and Olin Winchester, LLC, a Delaware limited liability company (the “Buyer”), as amended on April 18, 2025 by the First Amendment to the Asset Purchase Agreement (the “Purchase Agreement” and the transaction contemplated thereby, the “Transaction"). The assets acquired, and the liabilities assumed, by the Buyer were those primarily related to the Ammunition Manufacturing Business, including the Ammunition Manufacturing Business’ dedicated manufacturing facility in Manitowoc, Wisconsin. The Company will continue to operate its online marketplace business associated with selling ammunition and firearms as a brokering agent or through direct sales through the Company’s subsidiary Speedlight Group I, LLC d/b/a GunBroker and its subsidiaries.
Current report
On April 21, 2025 and in connection with the closing of the Transaction, the Company changed its name from “AMMO, Inc.” to “Outdoor Holding Company.” Except as otherwise provided in this Item 2, all references to the Company in this Item 2 refer to the Company and its subsidiaries on a consolidated basis prior to the closing of the Transaction. For additional information regarding the Transaction, see Note 17, "Subsequent Events" of the unaudited condensed consolidated financial statements included in this report.
Current report
Recommended Items Feature – Our cart has been augmented with the addition of recommended product suggestions. Items that complement what a buyer has placed in the cart are presented to enhance their shopping experience.
Current report
Financing – A buyer’s ability to purchase items has been expanded with the addition of financing. Sellers now have the ability to offer financing on purchases to their customers directly within the platform. When coupled with the cart and checkout a buyer can finance an entire basket of items from a seller in one easy transaction.
Current report
Outdoor Analytics – Has been rebranded from GunBroker Analytics to service the broader industry. We provide insights that help manufacturers, distributors and dealers refine their market strategies based on timely information from the largest outdoor marketplace.
Current report
Collector’s Elite – To meet the needs of sellers with specialty items GunBroker.com has launched Collector’s Elite Auctions. This elevated experience presents unique, collectible and high value merchandise to buyers looking for curated items outside of the traditional marketplace inventory. We believe a highly competitive fee structure makes Collector’s Elite Auctions an attractive option amongst its peers.
Current report
For the three and nine months ended December 31, 2024, other nonrecurring expenses consisted of professional and legal fees related to the SEC Investigation, the Special Committee Investigation, the restatement and the Delaware lawsuit as well as settlement contingencies. For the three and nine months ended December 31, 2023, other nonrecurring expenses consisted of professional and legal fees related to the SEC Investigation as well as settlement contingencies.
Current report
employee stock awards, stock grants, and common stock purchase options expense has been, and will continue to be for the foreseeable future, a significant recurring expense in the Company and an important part of our compensation strategy;
Current report
the assets being depreciated or amortized may have to be replaced in the future, and the non-GAAP financial measures do not reflect cash capital expenditure requirements for such replacements or for new capital expenditures or other capital commitments;
Current report
non-GAAP measures do not reflect changes in, or cash requirements for, our working capital needs; and
Current report
other companies, including companies in our industry, may calculate their non-GAAP financial measures differently or not at all, which reduces their usefulness as comparative measures.
Current report
Capacity improvements at the Manitowoc, WI facility and expansion of our rifle casing and loading lines;
Current report
Increased product sales, specifically of proprietary and flagship lines of ammunition, such as the STREAK VISUAL AMMUNITION™, /stelTH/™, Signature-on-Target, and HUNT all of which carry higher margins as a percentage of their selling price;
Current report
Introduction of new lines of ammunition that carry higher margins in the consumer and government sectors;
Current report
Reduced component costs through insourced operations of our Ammunition segment and expansion of strategic relationships with component providers resulting in cost savings;
Current report
Expanded use of automation equipment that reduces the total labor required to assemble finished products;
Current report
Vertical integration into tooling manufacturing and annealing of rifle cases that have previously been outsourced;
Current report
Better leverage of our fixed costs through expanded production to support the sales objectives;
Current report
Enhancing the recently implemented multi-item cart and related payment processing, which adjusts our category fees for nonregulated items that will enable us to increase our take rate across the platform as we enable cross selling;
Current report
Growing our advertising sales, financing partnerships, and bringing enhanced shipping options to our community.
Current report
Operating expenses consist of selling and marketing expenses, which include advertising, tradeshows, commissions and marketing expenses, corporate general and administrative expenses, which include legal and professional fees and as well as insurance and rent, employee salaries and related expenses, which include salaries, benefits and stock based compensation as well as depreciation and amortization expenses.
Current report
Operating expenses increased approximately $27.0 million for the nine months ended December 31, 2024 compared to the nine months ended December 31, 2023, and increased as a percentage of sales to 80.6% for the nine months ended December 31, 2024 from 44.7% for the nine months ended December 31, 2023. This increase was primarily due to a $10.8 million increase in legal and professional fees related to the restatement, the Special Committee Investigation and the SEC Investigation, a $10.0 million settlement contingency, $3.5 million in expenses related to a settlement contingency, partially offset by $1.3 million due to insurance audit refunds, and a decrease of $0.2 million in bad debt expenses.
Current report
Other Income
Current report
Other income for the three and nine months ended December 31, 2024, increased by $0.2 million and $0.3 million, respectively, compared to the three and nine months ended December 31, 2023. This increase was primarily the result an increase in interest income earned during the three and nine months ended December 31, 2024.
Current report
For the nine months ended December 31, 2024, net cash used in operations was primarily the result of our net loss offset by non-cash depreciation and amortization and a decrease in accounts receivable due to lower sales and increased collection efforts and by an increase in our deferred tax asset.
Current report
For the nine months ended December 31, 2023, net cash provided by operations was primarily the result of a decrease in accounts receivable, an increase in inventory and deposits for inventory and equipment and non-cash expense for depreciation and amortization partially offset by an increase in our deferred tax asset.
Current report
Construction Loan
Current report
On October 14, 2021, we entered into a Construction Loan Agreement (the “Hiawatha Loan Agreement”) with Hiawatha National Bank (“Hiawatha”). The Hiawatha Loan Agreement specifies that Hiawatha may lend up to $11.625 million to AMMO, INC. and Firelight Group I, LLC (together, the "Borrower") to pay a portion of the construction costs of the approximately 185,000 square foot Manitowoc manufacturing facility (the “Construction Loan”). The first advance of Construction Loan funds by Hiawatha was made on October 14, 2021 in the amount of $329,843. We received advances of Construction Loan funds approximately every month as our “owner’s equity” was fully funded into the ongoing new plant construction project. The Construction Loan is an advancing term loan and not a revolving loan so any portion of the principal repaid cannot be re-borrowed.
Current report
Additionally, on October 14, 2021, we issued a Promissory Note in favor of Hiawatha (the “Hiawatha Note”) in the amount of up to $11.625 million with an interest rate of four and one-half percent (4.5%). The maturity date of the Hiawatha Note is October 14, 2026. Under the terms of the Hiawatha Loan Agreement, we are required to make monthly payments of $64,620, which consists of principal and interest until the maturity date, at which time the remaining principal balance of the Construction Loan would become due.
Current report
We can prepay the Hiawatha Note in whole or in part starting in July 2022 with a prepayment premium of 1% of the principal being prepaid.
Current report
The Hiawatha Loan Agreement contains customary events of default including, but not limited to, a failure to make any payments pursuant to the Hiawatha Loan Agreement or Hiawatha Note, a failure to complete construction of the project, a lien of $100,000 or more against the property, or a transfer of the property without Hiawatha’s consent. Upon the occurrence of an event of default, among other remedies, the amounts due pursuant to the Construction Loan can be accelerated, Hiawatha can foreclose on the property pursuant to the mortgage, and a late charge of five percent (5%) of the amount due will be owed with all amounts then owed pursuant to the Hiawatha Note bearing interest at an increased rate.
Current report
We are required to maintain a debt service coverage ratio (as defined in the terms of the Hiawatha Loan Agreement) of not less than 1.25 to 1.00 for the period defined below and continuing to and including the maturity date. The debt service coverage ratio is tested on an annual basis, as of July 1, for each previous year. We have maintained compliance with the debt service coverage ratio under the Hiawatha Loan Agreement since its inception.
Current report
During the year ended March 31, 2023, approximately $11.2 million of Construction Loan funds were advanced including $1.0 million of cash collateral or restricted cash as security for the Construction Loan. We made $183,195 and $181,639 in principal payments for the nine months ended December 31, 2024 and December 31, 2023, respectively. The restricted cash can be released per the terms documented in the Hiawatha Loan Agreement. During the year ended March 31, 2023, $500,000 of restricted cash was released with $500,000 remaining restricted. During the fiscal year ended March 31, 2024, the remaining $500,000 of restricted cash was released, resulting in a zero balance for restricted cash as of March 31, 2024.
Current report
The Revolving Loan bears interest at a rate of the greater of (x) 3.50% and (y) Term SOFR, plus 3.00% (the “Revolving Facility Applicable Rate”) and is computed on the basis of a 360-day year for the actual number of days elapsed. Except in an event of default, advances under the Revolving Loan bear interest, on the outstanding daily balance thereof, at the Revolving Facility Applicable Rate. Interest is due and payable on the first calendar day of each month during the term of the Sunflower Agreement. We are also obligated to pay to Agent, for the ratable benefit of Lenders, an origination fee, prepayment fee, unused facility fee, collateral monitoring fee and Lender expenses.
Current report
We may borrow, repay and re-borrow under the Revolving Loan until December 29, 2026, at which time the commitments will terminate and all outstanding loans, together with all accrued and unpaid interest, must be repaid. If the Revolving Loan is refinanced by another lender prior to December 29, 2026, there is an additional fee payable concurrently with such refinancing based on a percentage (ranging from 1.0% to 3.0%) of the Total Commitment Amount depending on the date of the refinancing. Upon an event of default under the Sunflower Agreement, all obligations under the Sunflower Agreement will bear interest at a rate equal to three (3.0) percentage points above the interest rate applicable immediately prior to the occurrence of the event of default.
Current report
As of December 31, 2024, we did not have an outstanding balance on the Revolving Loan.
Current report
Critical Accounting Estimates
Current report
Certain accounting policies that require significant management estimates, and are deemed critical to our results of operations or financial position, are discussed in the critical accounting policies and estimates section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Form 10-K/A. There have been no material changes to the critical accounting policies disclosed in the Form 10-K/A.
Removed paragraphs (24)
Previous report
Management’s Discussion and Analysis of Financial Condition and Results of Operations is provided to assist the reader in understanding the results of operations, financial condition, and liquidity through the eyes of our management team. This section should be read in conjunction with other sections of this Quarterly Report, specifically, our condensed consolidated financial Statements and Supplementary Data.
Previous report
FORWARD-LOOKING STATEMENTS
Previous report
This document contains certain “forward-looking statements.” All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies, goals and objectives of management for future operations; any statements concerning proposed new products and services or developments thereof; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.
Previous report
Forward looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect,” or “anticipate,” or other similar words, or the negative thereof. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the dates they are made. You should, however, consult further disclosures and risk factors we included in the section titled Risk Factors contained herein.
Previous report
In our filings with the Securities and Exchange Commission, references to “AMMO, Inc.”, “AMMO”, “the Company”, “we,” “us,” “our” and similar terms refer to AMMO, Inc., a Delaware corporation, and its wholly owned consolidated subsidiaries.
Previous report
● Payment Processing – facilitating payment between parties allowing sellers to offer fast and secure electronic payments and allowing buyers to experience the ease of instant checkout.
Previous report
● Carting Ability – enables our buyers to checkout multiple items from multiple sellers in a single transaction. Our buyers are able to finalize one transaction including both regulated and nonregulated items, while also affording them the ability to ship their purchases to more than one location.
Previous report
● GunBroker Analytics – through the compilation and refinement of vast Marketplace data, we offer e-commerce market analytics to our industry peers allowing them to better manage business strategy and planning. The analytics offering will be rebranded to Outdoor Analytics during fiscal year 2025 to expand service offerings.
Previous report
● GunBroker Advertising – content creation for manufactures, email campaigns and banner ads are all part of our advertising offerings to the outdoor industry.
Previous report
Net Revenues for the three months ended June 30, 2024, decreased by $3.4 million, or 9.6%, from the prior year due to changes in market conditions. This was due to the result of a decrease of $1.0 million in sales of bulk pistol and rifle ammunition, $1.0 million in our casing sales and $1.6 million in sales generated from our GunBroker Marketplace, which primarily consists of auction revenue, as well as payment processing revenue, and shipping income, partially offset by an increase of $0.2 million in sales of Proprietary Ammunition. We believe that the shift in our operational strategy focusing on higher brass casing production and sales negatively impacted our sales in the three months ended June 30, 2024, as compared to the three months ended June 30, 2023. Additionally, equipment malfunction related to rifle production in our manufacturing facility in Manitowoc caused lower production output contributing to lower sales results. Management anticipates an increase in ammunition casings sales as capacities come online in its new Manitowoc facility.
Previous report
Selling and marketing expenses consist of commissions related to our sales, as well as advertising and marketing expenses. During the three months ended June 30, 2024, our selling and marketing expense remained constant primarily due to the varying volumes product sales affecting the amounts of sales commissions.
Previous report
The increase in our corporate general and administrative expenses was due primarily to the $3.2 million expenses recognized for the settlement contingency and an increase of $0.2 million of nonrecurring expenses, consisting of professional and legal fees that are nonrecurring in nature.
Previous report
Other Income and Expenses
Previous report
Total other expenses for the three months ended June 30, 2024, decreased by $0.4 million compared to the three months ended June 30, 2023. This was primarily the result of $0.3 decrease in other income.
Previous report
Net Loss
Previous report
We ended the three months ended June 30, 2024, with a Net Loss of approximately $7.1 million compared with a Net Loss of approximately $1.1 million for the three months ended June 30, 2023.
Previous report
Our goal is to continue to improve our operating results as we focus on increasing sales and reducing our operating expenses.
Previous report
For the three months ended June 30, 2024, net cash used in operations totaled $0.5 million. This was primarily the result of our net loss of $7.1 million, increases in inventories of $9.2 million, accrued liabilities of $5.2 million, deposits of $1.0 million, and due from related parties of $4.8 million offset by decreases to our accounts receivable of $8.7 million. The cash provided by operations included the benefit of non-cash expenses for depreciation and amortization of $4.7 million, deferred tax benefits of $2.6 million and employee stock compensation of $0.6 million.
Previous report
For the three months ended June 30, 2023, net cash provided by operations totaled approximately $13.0 million. This was primarily the result of net loss of approximately $1.1 million, which was offset by decreases in our accounts receivable of approximately $7.1 million, decreases in prepaid expenses of approximately $0.9 million, and decreases in our accounts payable of approximately $1.7 million, increases in our inventories of approximately $1.6 million, and decreases in deposits of approximately $3.0 million. Non-cash expenses for depreciation and amortization totaled approximately $4.6 million and non-cash expenses for employee stock awards totaled $0.8 million.
Previous report
Construction Note Payable
Previous report
Critical Accounting Estimates and Policies
Previous report
We believe that certain assumptions and estimates associated with thevaluation of allowances for credit losses, valuation of deferred tax assets, inventories, useful lives of assets, goodwill, intangible assets, stock-based compensation, and warrant-based compensation are material in nature due to the subjectivity associated with them and have the greatest potential impact on our condensed consolidated financial statements. Therefore, we consider the assumptions and estimates associated with these (as further detailed below) to be our critical accounting estimates. Please refer to Note 2 – Summary of Significant Accounting Policies of our condensed consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2024.
Previous report
Goodwill
Previous report
We evaluate goodwill for impairment annually or more frequently when an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. In testing for goodwill impairment, we may elect to utilize a qualitative assessment to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If our qualitative assessment indicates that goodwill impairment is more likely than not, we perform a two-step impairment test. We test goodwill for impairment under the two-step impairment test by first comparing the book value of net assets to the fair value of the reporting unit. If the fair value is determined to be less than the book value or qualitative factors indicate that it is more likely than not that goodwill is impaired, a second step is performed to compute the amount of impairment as the difference between the estimated fair value of goodwill and the carrying value. We estimate the fair value of the reporting units using discounted cash flows. Forecasts of future cash flows are based on our best estimate of future net sales and operating expenses, based primarily on expected category expansion, pricing, market segment share, and general economic conditions. Due to the declines in the value of our stock price and market capitalization in the year ended March 31, 2023, we assessed qualitative factors to determine if it is more likely than not that the fair value of the Marketplace segment is less than its carrying amount. Through our analysis we determined our stock price and market capitalization decline it is not indicative of a decrease in the fair value of our Marketplace segment and a fair value calculation using the discounted cash flows was more appropriate due to the operational performance of the reporting segment. Accordingly, the impairment of Goodwill was not warranted the three months ended June 30, 2024. As of June 2024, the Company has a goodwill carrying value of $90,870,094 , all of which is assigned to the Marketplace segment. However, it is possible that the book values of our Marketplace segment could exceed its fair value, which may result in the recognition of a material, noncash impairment of goodwill for the year ending March 31, 2025.
Reworded paragraphs (31)
Previous wording
Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The following information should be read in conjunction with our condensed consolidated financial statements included in this Quarterly Report beginning on page 3.
Current wording
This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with management’s perspective on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (i) the accompanying unaudited consolidated financial statements and notes thereto for the three and nine months ended December 31, 2024, (ii) the audited consolidated financial statements and notes thereto for the year ended March 31, 2024 included in our Annual Report on Form 10-K/A (as amended, the “Form 10-K/A”) filed with the Securities and Exchange Commission (the “SEC”) on May 20 ,2025 and (iii) the discussion under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Form 10-K/A. Except for certain information as of March 31, 2024, all amounts herein are unaudited. Unless we state otherwise or the context otherwise requires, the terms “we,” “us,” “our” and the “Company" refer to Outdoor Holding Company (formerly AMMO, Inc.) and its consolidated subsidiaries.
Previous wording
AMMO, Inc., owner of the GunBroker Marketplace, the largest online marketplace serving the firearms and shooting sports industries, and a vertically integrated producer of high-performance ammunition and premium components began its operations in 2017.
Current wording
AMMO, Inc., owner of the GunBroker Marketplace ("GunBroker" or the "Marketplace"), the largest online marketplace serving the firearms and shooting sports industries, and a producer of high-performance ammunition and premium components began its operations in 2017.
Previous wording
Through our GunBroker Marketplace segment (acquired in April 2021), we allow third party sellers to list items consisting of firearms, hunting gear, fishing equipment, outdoor gear, collectibles, and much more on our site, while facilitating compliance with federal and state laws that govern the sale of firearms and restricted items. This allows our base of over 8.1 million users to follow ownership policies and regulations through our network of over 31,000 federally licensed firearms dealers as transfer agents. The nature and operation of the Marketplace as an online auction and sales platform also affords our Company a unique view into the total domestic market for the purpose of understanding sales trends at a granular level across all elements of the outdoor sports and shooting space. Our vision is to expand the services on GunBroker and to become a peer to those in our industry. Recent expansions we have made to the platform are;
Current wording
Through our GunBroker Marketplace segment, we allow third-party sellers to list firearms, hunting gear, fishing equipment, outdoor gear, collectibles, and much more on our site. In addition to offering a wide breadth of products, GunBroker helps facilitate the legal transfer of regulated goods by stipulating these purchases be transferred through our network of more than 31,000 local Federal Firearms License holders. This requirement helps our 8.3 million users stay compliant with federal and state laws that govern the sale of firearms and other restricted items. As an online auction and sales platform, GunBroker also affords us a unique analytical view into the total domestic market for the purpose of understanding sales trends at a granular level across the shooting sports industry, with ever-growing data capabilities in associated outdoor segments. Our vision is to continue to expand services under the GunBroker umbrella and to become a valued and trusted partner to those in our industry. Recent expansions we have made to the platform include the following;
Previous wording
Through our Ammunition segment, we are tailoring our focus of our manufacturing operations to the production of premium pistol and rifle ammunition and supporting industry partners with manufactured components such as premium pistol and rifle brass casings. We will continue to leverage our flagship brands that are proprietary in nature like STREAK VISUAL AMMUNITION™ , /stelTH/™, Signature-on-Target, and HUNT and extend our product offering with premium rifle lines and brands that complement our technologically innovative heritage. We also continue to ensure dynamic performance under the exacting standards of the U.S. military complex in support of our cutting-edge developmental ammunition programs as we seek out and effectively execute upon new governmental-based opportunities.
Current wording
Through our Ammunition segment, we are tailoring our focus of our manufacturing operations to the production of premium pistol and rifle ammunition and supporting industry partners with manufactured components such as premium pistol and rifle brass casings. We will continue to leverage our flagship brands that are proprietary in nature, including STREAK VISUAL AMMUNITION™ , /stelTH/™, Signature-on-Target, and HUNT and extend our product offering with premium rifle lines and brands that complement our technologically innovative heritage. We also continue to ensure dynamic performance under the exacting standards of the United States military complex in support of our cutting-edge developmental ammunition programs as we seek out and effectively execute upon new governmental-based opportunities.
Previous wording
The following table presents summarized financial information taken from our consolidated statements of operations for the three months ended June 30, 2024, compared with the three months ended June 30, 2023:
Current wording
The following table presents summarized financial information taken from our consolidated statements of operations for the three and nine months ended December 31, 2024, compared with the three and nine months ended December 31, 2023:
Previous wording
We analyze operational and financial data to evaluate our business, allocate our resources, and assess our performance. In addition to total net sales, net loss, and other results under accounting principles generally accepted in the United States (“GAAP”), the following information includes key operating metrics and non-GAAP financial measures that we use to evaluate our business. We believe that these measures are useful for period-to-period comparisons of the Company. We have included these non-GAAP financial measures in this Annual Report on Form 10-K because they are key measures we use to evaluate our operational performance, produce future strategies for our operations, and make strategic decisions, including those relating to operating expenses and the allocation of our resources. Accordingly, we believe that these measures provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.
Current wording
We analyze operational and financial data to evaluate our business, allocate our resources, and assess our performance. In addition to total net sales, net loss, and other results under accounting principles generally accepted in the United States (“GAAP”), the following information includes key operating metrics and non-GAAP financial measures that we use to evaluate our business. We believe that these measures are useful for period-to-period comparisons of the Company's performance. We have included these non-GAAP financial measures because they are key measures management uses to evaluate our operational performance, produce future strategies for our operations, and make strategic decisions, including those relating to operating expenses and the allocation of our resources. Accordingly, we believe that these measures provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.
Previous wording
Adjusted EBITDA is a non-GAAP financial measure that displays our net loss, adjusted to eliminate the effect of certain items as described below.
Current wording
Adjusted EBITDA is a non-GAAP financial measure that displays our net loss, adjusted to eliminate the effect of certain items as described below. We define Adjusted EBITDA as net income (loss) excluding (i) interest expense, net, (ii) other income (expense), net, (iii) provision or benefit for income taxes, (iv) depreciation and amortization, (v) share-based or warrant-based compensation expenses, (vi) changes to the contingent consideration fair value, (vii) proxy contest fees and (viii) other nonrecurring expenses, such as professional and legal fees.
Previous wording
We have excluded the following non-cash expenses from our non-GAAP financial measures: provision or benefit for income taxes; depreciation and amortization; share-based or warrant-based compensation expenses; and changes to the contingent consideration fair value. Adjusted EBITDA as a non-GAAP financial measure also excludes other cash interest income and expense, and non-recurring expenses related to professional and legal fees as the nature of these items are not components of our core operations. We believe that it is useful to exclude these non-cash expenses and non-recurring expenses because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations.
Current wording
We believe that it is useful to exclude these non-cash expenses and non-recurring expenses because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations.
Previous wording
Because of these limitations, you should consider the non-GAAP financial measures alongside other financial performance measures, including our net loss and our other financial results presented in accordance with GAAP.
Current wording
Due to these limitations, you should consider the non-GAAP financial measures alongside other financial performance measures, including our net loss and our other financial results presented in accordance with GAAP.
Previous wording
The following table shows our revenues by the various categories that comprise our total revenues for the three months ended June 30, 2024 and June 30, 2023. “Proprietary ammunition” includes those lines of ammunition that we manufacture at our facilities and sell under the brand names “STREAK VISUAL AMMUNITION™” and “/stelTH/™”. We define “standard ammunition” as non-proprietary ammunition that directly competes with other brand manufacturers. Our “standard ammunition” includes ammunition that we manufacture at our facilities as well as any completed ammunition that we acquire in the open market for sale to others. Also included in this category is low-cost target pistol and rifle ammunition as well as bulk packaged ammunition that we manufacture using reprocessed brass casings. Ammunition within the standard ammunition product line typically carries much lower gross margins than our proprietary ammunition.
Current wording
The following table presents our revenues by the various categories that comprise our total revenues for the three and nine months ended December 31, 2024 and 2023. “Proprietary ammunition” includes those lines of ammunition that we manufacture at our facilities and sell under the brand names “STREAK VISUAL AMMUNITION™” and “/stelTH/™”. We define “standard ammunition” as non-proprietary ammunition that directly competes with other brand manufacturers. Our “standard ammunition” includes ammunition that we manufacture at our facilities as well as any completed ammunition that we acquire in the open market for sale to others. Also included in this category is low-cost target pistol and rifle ammunition as well as bulk packaged ammunition that we manufacture using reprocessed brass casings. Ammunition within the standard ammunition product line typically carries much lower gross margins than our proprietary ammunition.
Previous wording
Our financial results for the three months ended June 30, 2024, reflect our transition into our new operational strategic position, focusing on higher brass casing production and sales. We believe that we have hired a strong team of professionals and developed innovative products to establish our presence as a high-quality ammunition provider and marketplace. We continue to focus on building profitability through our rifle brass manufacturing. We experienced a 9.6% decrease in our Net Revenues for the three months ended June 30, 2024, compared with the three months ended June 30, 2023. This was the result of decreased revenue in both of our reporting segments due to changes in market demand as discussed below, and specifically for our ammunition division, changes in pricing, and sales mix. We believe that the shift in our operational strategy focusing on higher brass casing production and sales negatively impacted our sales in the three months ended June 30, 2024, as compared to the three months ended June 30, 2023. Our focus on creating profitability is in contrast to revenue growth.
Current wording
We experienced an 18.9% and 12.5% decrease in our net revenues for the three and nine months ended December 31, 2024, respectively, compared with the three and nine months ended December 31, 2023. These decreases were the result of decreased revenue in both of our reporting segments due to changes in market demand and specifically for our ammunition division, changes in pricing, and sales mix. In addition, our brass customer demand decreased due to a shortage of powder available in the market. We believe that the shift in our operational strategy focusing on higher margin brass casing production and sales negatively impacted our sales in the three and nine months ended December 31, 2024, as compared to the three and nine months ended December 31, 2023. Our focus on creating profitability is in contrast to revenue growth. In our Marketplace segment, revenue declined in three and nine months ended December 31, 2024 compared to the three and nine months ended December 31, 2023 due to less demand for firearms and lower disposable income for recreation purposes partially offset by an increase in the take rate over the prior year periods.
Previous wording
The opening in August 2022 of our manufacturing plant in Manitowoc, WI, grants us the ability to increase capacity based upon the needs of the market and through further expansion of our casing and loading lines and allow us to continue to expand distribution into commercial markets, introduce new product lines, and continue to initiate sales to U.S. law enforcement, military, and international markets.
Current wording
The opening of our manufacturing plant in Manitowoc, WI in August 2022, allows us the ability to increase capacity based upon the needs of the market and through further expansion of our casing and loading lines and allows us to continue to expand distribution into commercial markets, introduce new product lines, and continue to initiate sales to U.S. law enforcement, military, and international markets.
Previous wording
For example, through our acquisition of SWK, the Company has developed and deployed a line of tactical armor piercing (“AP”) and hard armor piercing incendiary (“HAPI”) precision ammunition to meet the lethality requirements of both the U.S. and foreign military customers. We continue to demonstrate our AP and HAPI ammunition to military personnel at scheduled and invite only events, resulting in increased interest and procurement discussions. The Company has since developed the ballistic match (“BMMPR”) and Signature-on-Target rounds under contract with the U.S. Government in support of U.S. special operations which have been publicly announced pursuant to governmental authorization. Additional work continues in support of the military operations of the U.S. and its ally military components which is not currently subject to disclosure.
Current wording
For example, through our acquisition of SW Kenetics, Inc., the Company developed and deployed a line of tactical armor piercing (“AP”) and hard armor piercing incendiary (“HAPI”) precision ammunition to meet the lethality requirements of both the U.S. and foreign military customers. We continue to demonstrate our AP and HAPI ammunition to military personnel at scheduled and invite only events, resulting in increased interest and procurement discussions. The Company has since developed the ballistic match (“BMMPR”) and Signature-on-Target rounds under contract with the U.S. Government in support of U.S. special operations, which contracts have been publicly announced pursuant to governmental authorization. Additional work continues in support of the military operations of the United States and its allied military components, the status of which is not currently subject to disclosure.
Previous wording
Cost of Revenues decreased by approximately $1.0 million from $21.2 million to $20.2 million for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. This was the result of a decrease in net sales as well increases to non-cash depreciation related to increases in production equipment, expensing of increased labor, and overhead used to produce finished product during 2024 as compared to 2023. Cost of Revenues for our ammunition segment consists of product cost and cost directly and indirectly associated with getting those products to a sellable state and for our marketplace segment, consists of cost associated with facilitating transactions on the platform.
Current wording
Cost of revenues decreased by approximately $3.7 million and $4.7 million to $21.4 million and $66.8 million, respectively, for the three and nine months ended December 31, 2024, compared to the three and nine months ended December 31, 2023. These decreases were the result of a decrease in net sales as well increases to non-cash depreciation related to increases in production equipment, expensing of increased labor, and overhead used to produce finished product during the three and nine months ended December 31, 2024 as compared to the prior year periods.
Previous wording
Our gross margin percentage, which measures our gross profit as a percentage of sales decreased to 31.6% during the three months ended June 30, 2024, from 40.9% for the three months ended June 30, 2023. This was a result of increased cost of materials, labor, and overhead in our ammunition segment, which was offset by our marketplace, GunBroker.com which, by nature has significantly higher margins than our manufactured products.
Current wording
Our gross margin percentage, which measures our gross profit as a percentage of sales, decreased to 26.7% for the three months ended December 31, 2024 from 30.3% for the three months ended December 31, 2023. Our gross margin percentage decreased to 27.1% for the nine months ended December 31, 2024 from 31.7% , for the same period in 2023. These decreases were a result of increased cost of materials, labor, and overhead in our Ammunition segment, the impact of which was partially offset by contributions from our marketplace, GunBroker.com, which improved margins period over period by increased fees and services.
Previous wording
We believe that as we grow ammunition segment sales through new markets and expanded distribution that our gross margins will continue to increase. Our goal in the next 12 to 24 months is to continue to improve our gross margins. This will be accomplished through the following:
Current wording
We believe that as we grow Ammunition segment sales through new markets and expanded distribution, our gross margins will continue to increase. Our goal in the next 12 to 24 months is to continue to improve our gross margins. We expect to accomplish this through the following:
Previous wording
Operating expenses consists of selling and marketing expenses, corporate general & administrative, and employee salaries and related expenses. Operating expenses increased by approximately $3.8 million for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, and increased as a percentage of sales to 62.9% from 45.8% for the three months ended June 30, 2024 and 2023, respectively. This increase was primarily due to the $3.2 million expenses recognized for the settlement contingency and a $0.3 million, or 8.4%, increase in employee salaries and related expenses during the three months ended June 30, 2024, compared to the three months ended June 30, 2023.
Current wording
Operating expenses increased by approximately $20.4 million for the three months ended December 31, 2024 compared to the three months ended December 31, 2023, and increased as a percentage of sales to 116.2% for the three months ended December 31, 2024 from 37.4% for the three months ended December 31, 2023. The increase was primarily due to $10.0 settlement contingency, a $9.7 million increase in legal and professional fees related to the restatement, the Special Committee Investigation and the SEC Investigation and professional fees associated with investments in increased manufacturing efficiencies.
Previous wording
Interest expense remained constant for the three months ended June 30, 2024, compared to the prior year period.
Current wording
Interest expense remained constant for the three and nine months ended December 31, 2024, compared to the three and nine months ended December 31, 2023.
Previous wording
For the three months ended June 30, 2024 and 2023, we recorded a benefit for federal and state income taxes of approximately $2.6 million and $0.1 million, respectively.
Current wording
For the three and nine months ended December 31, 2024, we recorded a benefit for federal and state income taxes of approximately zero and $4.7 million, respectively. For the three and nine months ended December 31, 2023, we recorded a benefit for federal and state income taxes of approximately $0.4 million and $2.4 million, respectively. The change in tax benefit for the three and nine months ended December 31, 2024 is a result of recording a full valuation allowance against our deferred tax assets as we concluded it is more likely than not that the net deferred tax assets will not be realized.
Previous wording
As of June 30, 2024, we had $50,754,570 of cash and cash equivalents, a decrease of $4,831,871 from March 31, 2024.
Current wording
As of December 31, 2024, we had $31.9 million of cash and cash equivalents, a decrease of $23.7 million from March 31, 2024. For the nine months ended December 31, 2024, the $23.7 million decrease in cash and cash equivalents is primarily due to $8.0 million related to the settlement with Triton Value Partners, LLC, $14.0 million in legal fees, $2.7 million in unpaid Firearms and Ammunition Excise Tax from the prior fiscal year, $1.9 million in consulting fees related to the improvement of the manufacturing process in rifle brass at our manufacturing facility in Manitowoc, WI, $1.5 million due to the purchase of inventory, $1.4 million increase in capital expenditures related to acquiring an annealing oven and tooling equipment, and $1.1 million in stock buybacks.
Previous wording
Changes in cash flows are summarized as follows:
Current wording
Changes in cash flow are summarized as follows:
Previous wording
For the three months ended June 30, 2024, we used $1.4 million in net cash for investing activities. Net cash used in investing activities consisted of $1.4 million related to purchases of production equipment, and capitalized development costs related to our marketplace, GunBroker.
Current wording
For the nine months ended December 31, 2024, net cash used in investing activities consisted of $4.1 million related to purchases of production equipment, and capitalized software development costs related to our marketplace, GunBroker.
Previous wording
For the three months ended June 30, 2023, we used approximately $1.3 million in net cash for investing activities. Net cash used in investing activities consisted of approximately $1.3 million related to purchases of production equipment for our new manufacturing facility in Manitowoc, WIand capitalized development costs related to our marketplace, GunBroker.
Current wording
For the nine months ended December 31, 2023, net cash used in investing activities consisted of approximately $5.6 million related to purchases of production equipment for our manufacturing facility in Manitowoc, WI and capitalized software development costs related to our marketplace, GunBroker.com.
Previous wording
For the three months ended June 30, 2024, net cash used in financing activities was $2.9 million, consisting of $0.7 million of insurance premium note payments, $0.6 million of preferred stock dividends paid, $1.1 million used to repurchase shares of Common Stock pursuant to our repurchase plan, and $0.4 million used in the repurchase of common shares.
Current wording
For the nine months ended December 31, 2024, net cash used in financing activities consisted of $5.9 million under the stock repurchase plan which included shares repurchased related to the settlement described in the Contingencies section of Note 2, $2.2 million of insurance premium note payments, $2.2 million for the payment of preferred stock dividends, and $0.5 million used to repurchase Common Stock to cover taxes on share awards issued to employees.
Previous wording
For the three months ended June 30, 2023, net cash used in financing activities was approximately $3.3 million. This was the net effect of approximately $1.5 million used in our common stock repurchased plan, $1.0 million from insurance premium note payments, approximately $0.6 million of Preferred Stock dividends paid, and the generation of approximately $14.6 million from accounts receivable factoring, which was offset by payments of approximately $14.6 million.
Current wording
For the nine months ended December 31, 2023, net cash used in financing activities consisted of approximately $2.2 million used in our common stock repurchase plan, $3.0 million from insurance premium note payments, approximately $2.2 million for the payment of Preferred Stock dividends, and the generation of approximately $37.2 million from accounts receivable factoring, which was offset by payments of approximately $37.2 million.
Previous wording
Existing working capital, cash flow from operations, bank borrowings, and sales of equity and debt securities are expected to be adequate to fund our operations over the next year. Generally, we have financed operations to date through the proceeds of stock sales, bank financings, and related-party notes. These sources have been adequate to fund our recurring cash expenditures including but not limited to our working capital requirements, capital expenditures to expand our operations, debt repayments, and acquisitions. We intend to continue to use the aforementioned sources of funding for capital expenditures, debt repayments, share repurchases and any potential acquisitions.
Current wording
We expect existing working capital, cash flow from operations, bank borrowings, and sales of equity and debt securities to be adequate to fund our operations over the next 12 months. Generally, we have financed operations to date through the proceeds of stock sales, bank financings, and related-party notes. These sources have been adequate to fund our recurring cash expenditures including but not limited to our working capital requirements, capital expenditures to expand our operations, debt repayments, and acquisitions. We intend to continue to use the aforementioned sources of funding for capital expenditures, debt repayments, share repurchases and any potential acquisitions.
Previous wording
We lease three locations that are used for our offices, production, and warehousing. As of June 30, 2024, we had $2.3 million of fixed lease payment obligations with $0.5 million payable within the next 12 months. Please refer to Note 8 – Leases in our financial statements for additional information.
Current wording
We currently lease three locations that are used for our offices, production, and warehousing. As of December 31, 2024, we had $1.7 million of fixed lease payment obligations with $0.5 million payable within the next 12 months. Please refer to Note 9, "Leases" in our financial statements for additional information.
Previous wording
We have financed a portion of our new production facility with our Construction Note Payable. We expect to make $0.8 million in principal and interest payments within the next 12 months. The principal balance of the Construction Note will mature on October 14, 2026.
Current wording
We financed a portion of our Manitowoc, WI facility with the Construction Loan. As of December 31, 2024, we expect to make $0.3 million in principal and interest payments within the next 12 months. The principal balance of the Construction Loan will mature on October 14, 2026.
Previous wording
We have obtained a Revolving Loan with Sunflower Bank, National Association (“N.A.”) for up to $20,000,000 in December of 2023. The proceeds may be used for working capital, general corporate purposes, Permitted Acquisitions, to pay fees and expenses incurred in connection with the Revolving Line, to facilitate our stock repurchase program and to fund our general business requirements. We have not made use of the Revolving Loan as of the date of this filing.
Current wording
On December 29, 2023, we entered into a Loan and Security Agreement (the “Sunflower Agreement”) by and among the Company and the other borrowers party to the Sunflower Agreement, the lenders party thereto (collectively, the “Lenders”) and Sunflower Bank, N.A., as administrative agent and collateral agent (the “Agent”), pursuant to which the Lenders provided us a revolving loan in the principal amount of the lesser of (a) $20.0 million (the “Total Commitment Amount”) and (b) the Borrowing Base (a formula based on certain amounts owed to Borrower for goods sold or services provided and eligible inventory) (the “Revolving Loan”). The proceeds of loans under the Sunflower Agreement may be used for working capital, general corporate purposes, permitted acquisitions, to pay fees and expenses incurred in connection with the Revolving Loan, to facilitate our stock repurchase program and to fund our general business requirements.
Previous wording
As of June 30, 2024, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, net sales, expenses, results of operations, liquidity capital expenditures, or capital resources.
Current wording
As of December 31, 2024 and March 31, 2024, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, net sales, expenses, results of operations, liquidity capital expenditures, or capital resources.
Previous wording
Our discussion and analysis of our financial condition and results of operation are based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, however actual results may differ from these estimates. We have identified several accounting principles that we believe are key to the understanding of our financial statements. These important accounting policies and estimates require our most difficult subjective judgements.
Current wording
Our condensed consolidated financial statements were prepared in accordance with GAAP. Critical accounting estimates are those that we believe are most important to the portrayal of our financial condition and results of operations. The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Our estimates are evaluated on an ongoing basis and are drawn from historical operations, current trends, future business plans and other factors that management believes are relevant at the time our consolidated financial statements are prepared. Actual results may differ from our estimates. Management believes that the accounting estimates reflect the more significant judgments and estimates we use in preparing our consolidated financial statements.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Our financial results for the three and nine months ended December 31, 2024, reflect our transition into our new operational strategic position, focusing on higher brass casing production and sales. We believe that we have hired a strong team of professionals and developed innovative products to establish our presence as a high-quality ammunition provider and marketplace. We continue to focus on building profitability through our rifle brass manufacturing.
Current report — wording carried from elsewhere
Cost of revenues for our Ammunition segment consists of product cost and cost directly and indirectly associated with getting those products to a sellable state. Cost of revenues for our Marketplace segment consists of costs associated with facilitating transactions on the platform.