Outdoor Holding Co
For the period ended Jun 30, 2026. Filed Aug 10, 2026.
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.
Jun 30, 2026 · Filed Aug 10, 2026
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 2025-12-31; filed 2026-02-09.
0001193125-26-041880
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-10.
0001193125-26-341113
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 88 previous paragraphs and 69 current paragraphs.
38 unchanged; 26 reworded; 4 added; 24 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 3 previous and 3 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 (4)
Current report
Income tax expense for the three months ended June 30, 2026 was $36,715 compared to zero for the three months ended June 30, 2025. The increase in income tax expense is related to our estimated net income for the full year compared to a net loss in the prior year.
Current report
Our effective tax rate was 1% and zero for the three months ended June 30, 2026 and 2025, respectively. Our effective tax rate differed from the statutory rate due to recording a full valuation allowance against our deferred tax assets.
Current report
During the three months ended June 30, 2026, we repurchased 1,020,004 shares at an average purchase price of $1.98 per share. The total cash paid to repurchase shares during the three months ended June 30, 2026 was $2.0 million.
Current report
As of June 30, 2026, we had repurchased an aggregate of 1,533,929 shares under the share repurchase program at an average price of $1.97 per share. As of June 30, 2026, the share repurchase program had $12.0 million in remaining authorized funds.
Removed paragraphs (24)
Previous report
Discontinued Operations
Previous report
We began our operations in 2017 as a producer of high-performance ammunition and premium components. Following the acquisition of the GunBroker.com business in 2021, we conducted operations through two operating and reportable segments, Ammunition and Marketplace. The Ammunition segment engaged in the design, production and marketing of ammunition, ammunition component and related products. The Marketplace segment consists of the GunBroker e-commerce marketplace, which, in its role as an e-commerce marketplace site, supports the lawful sale of firearms, ammunition, and hunting/shooting accessories.
Previous report
In fiscal year 2025, we initiated a formal review of various strategic alternatives. This review resulted in the decision to sell the Ammunition segment. On January 20, 2025, we entered into an Asset Purchase Agreement, as amended (the “Asset Purchase Agreement”) with Olin Winchester, LLC (the “Buyer”), pursuant to which the Buyer agreed to (i) acquire all assets of our business of designing, manufacturing, marketing, distributing and selling ammunition and ammunition components (collectively, the “Ammunition Manufacturing Business”) along with certain assets related to the Ammunition Manufacturing Business, including the Ammunition Manufacturing Business’ dedicated manufacturing facility in Manitowoc, WI, and (ii) assume certain liabilities related to the Ammunition Manufacturing Business, for a gross purchase price of $75.0 million, subject to adjustments for estimated net working capital and real property costs and pro-rations (the “Transaction”). The Transaction closed on April 18, 2025. The net proceeds after all adjustments totaled approximately $42.9 million. On April 21, 2025, we changed our name from “AMMO, Inc.” to “Outdoor Holding Company”. As of January 20, 2025, the Ammunition segment met the held for sale and discontinued operations accounting criteria. For information on discontinued operations, refer to Note 2 to our condensed consolidated financial statements under the caption “Discontinued Operations” and Note 4, "Discontinued Operations and Assets Held for Sale".
Previous report
Settlement of Delaware Litigation
Previous report
As described in Note 12, “Related Party Transactions” and Note 14, “Contingencies,” in April 2023, Steven F. Urvan filed a lawsuit against the Company and certain of its directors, former directors, employees, former employees, and consultants, related to the Company’s acquisition of GunBroker.com and certain affiliated companies. At the time the lawsuit was filed, Mr. Urvan was a member of the Board of Directors and our largest stockholder. Mr. Urvan now serves as Chairman of the Board of Directors and Chief Executive Officer of the Company. In May 2023, the Board of Directors established a special committee to address the litigation initiated by Mr. Urvan, as well as a separate lawsuit subsequently filed by the Company against Mr. Urvan (the lawsuit filed by Mr. Urvan together with the lawsuit filed by the Company, the “Delaware Litigation”).
Previous report
On May 21, 2025, the Company entered into a Settlement Agreement (the “Settlement Agreement”), by and among the Company, Speedlight Group I, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company (“Speedlight”), Mr. Urvan, and the following persons, each of whom serves or previously served on the Board of Directors: Richard R. Childress, Jared Smith, Fred W. Wagenhals and Russell Williams Wallace, Jr. (collectively, the “Legacy Directors”). The Settlement Agreement became effective as of 5:00 p.m. Eastern Time on May 30, 2025, pursuant to its terms (the “Settlement Effective Date”). As a result and pursuant to the Settlement Agreement, effective as of the Settlement Effective Date, (i) Jared Smith resigned as a member of the Board of Directors and from his position as the Chief Executive Officer of the Company and as an officer or member of each of the Company’s direct and indirect subsidiaries and (ii) Mr. Urvan was appointed as the Chief Executive Officer of the Company and as the Chairman of the Board of Directors. In addition, in accordance with the Settlement Agreement, on June 3, 2025, the Company, Speedlight, Mr. Urvan and the Legacy Directors filed a Stipulation of Voluntary Dismissal With Prejudice dismissing, with prejudice, all claims asserted in the Delaware Litigation.
Previous report
As partial consideration for the settlement, on the Settlement Effective Date, the Company issued to an affiliated designee of Mr. Urvan, a warrant to purchase 7.0 million shares of Common Stock (the “Warrant”). The Warrant has a five-year term and an exercise price of $1.81 per share. Pursuant to the terms of the Warrant, the Warrant is exercisable at the holder’s discretion, in whole or in part, on or after the six-month anniversary of the Settlement Effective Date, subject to certain accelerated vesting in certain circumstances.
Previous report
In addition to the Warrant, the Company issued to an affiliated designee of Mr. Urvan, (i) an unsecured promissory note in a principal amount of $12.0 million (“Note 1”) and (ii) an unsecured promissory note in a principal amount of $39.0 million (“Note 2” and together with Note 1, the “Notes”). Note 1 bears interest at 6.50% per annum (subject to a 2.00% increase during an event of default), which interest is payable to the holder annually on the anniversary of the Settlement Effective Date, beginning on the first anniversary of the Settlement Effective Date (each interest payment due date, an “Interest Payment Date”). Note 2 bore interest at a rate per annum equal to the applicable federal rate for long-term loans in effect on the Settlement Effective Date (subject to a 2.00% increase during an event of default), which was payable to the holder annually on the Interest Payment Date.
Previous report
The unpaid principal balance of Note 1 and all accrued and unpaid interest thereon is due on the 12th anniversary of the Settlement Effective Date. Pursuant to the terms of Note 1, the Company is required to make annual prepayments of $1.0 million (inclusive of accrued and unpaid interest then due and payable) to the holder on each Interest Payment Date. The Company has the right to prepay all or any part of the principal or interest of Note 1 without penalty.
Previous report
With respect to Note 2, the Company also had the option, at any time prior to the first anniversary of the Settlement Effective Date, to prepay all, but not less than all, of the then-outstanding principal amount of Note 2 and accrued and unpaid interest thereon in exchange for the issuance of a warrant (the “Additional Warrant”) to purchase 13.0 million shares of Common Stock (the “Prepayment Option”). On September 17, 2025, the independent and disinterested members of the Board of Directors approved the exercise of the Prepayment Option, and we issued the Additional Warrant to Mr. Urvan’s affiliated designee. Upon issuance of the Additional Warrant, all remaining obligations under Note 2 were deemed satisfied with the same force and effect as a prepayment of all principal and accrued and unpaid interest under Note 2. The Additional Warrant has a five-year term and an exercise price of $1.00 per share. Pursuant to the terms of the Additional Warrant, the Additional Warrant is exercisable at the holder’s discretion, in whole or in part, on or after September 17, 2026, subject to accelerated vesting in certain circumstances. Except with respect to the exercise price and the vesting date, the terms of the Additional Warrant and the Warrant are substantially similar.
Previous report
For the nine months ended December 31, 2025, other nonrecurring expenses consisted of a contingency for a settlement with a vendor as part of our sale of the Ammunition Manufacturing Business. For the nine months ended December 31, 2024, other nonrecurring expenses consisted of a contingency related to the previously disclosed settlement with Triton Value Partners, LLC.
Previous report
Net revenues for the nine months ended December 31, 2025 increased by $0.4 million, or 1.2%, from the prior period due to an increase in GMV generated from our Marketplace in addition to an increase in advertising revenue.
Previous report
Cost of revenues for the nine months ended December 31, 2025 decreased $0.1 million compared to the nine months ended December 31, 2024. This decrease was primarily the result of a decrease in credit card processing fees.
Previous report
Operating expenses decreased by $21.8 million for the three months ended December 31, 2025 compared to the three months ended December 31, 2024. The decrease in operating expenses was the result of a reduction of $11.0 million in settlement contingencies that were recorded in the three months ended December 31, 2024 without a corresponding expense in the three months ended December 31, 2025, a decrease of $9.3 million in legal and professional fees primarily related to the completion of the Delaware Litigation, the Special Committee Investigation and restatement and the SEC Investigation, a reduction of stock-based compensation expense of $0.5 million due to a reduction in stock award grants, a $0.5 million reduction in salaries and related expenses also due to reduced headcount, a $0.2 million reduction in corporate insurance expense due to the sale of the Ammunition Manufacturing Business, and a $0.5 million reduction in bad debt expense as a result of increased collection efforts. These decreases were partially offset by a $0.2 million increase in depreciation and amortization expense due to increased capitalized software development costs.
Previous report
Total other income, net for the nine months ended December 31, 2025 increased by $0.6 million compared to the nine months ended December 31, 2024. This increase was primarily the result of recognizing an $0.8 million gain on the extinguishment of Note 2 due to the conversion to the Additional Warrant in addition to an increase in other income of $1.2 million, $0.8 million of which was interest earned due to a higher cash balance and $0.4 million of which was associated with the sale of equity securities. These increases were partially offset by an increase in interest expense of $1.4 million related to the Notes issued in the Delaware Litigation settlement.
Previous report
For the three and nine months ended December 31, 2025, we did not record a provision or benefit for federal and state income taxes due to recording a full valuation allowance against our net deferred tax assets. For the three and nine months ended December 31, 2024, we recorded a provision for federal and state income taxes of approximately zero and $6.0 million respectively. The change in tax benefit for the nine months ended December 31, 2024 was the 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 report
For the nine months ended December 31, 2024, net cash provided by operations was primarily the result of an increase in accrued liabilities and accounts payable related to unpaid legal and professional fees. The cash provided by operations also included the benefit of non-cash expenses for depreciation and amortization, employee stock compensation, and the change in the valuation allowance placed on deferred income taxes.
Previous report
Revolving Loan
Previous report
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 ("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 proceeds of loans under the Sunflower Agreement could 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 report
We could borrow, repay and re-borrow under the Revolving Loan until December 29, 2026, at which time the commitments would 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 would 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.
Previous report
On April 18, 2025, we entered into a Consent and Second Amendment to the Sunflower Agreement (the "Second Sunflower Loan Amendment"). Pursuant to the Second Sunflower Loan Amendment, we and the Agent agreed to, among other things: (i) release the Agent’s security interest in all collateral securing our obligations under the Sunflower Agreement upon consummation of the sale of the Ammunition Manufacturing Business; (ii) reduce all amounts available under the Revolving Loan to zero dollars as of the effective date of the Second Sunflower Loan Amendment; (iii) enter into an Amended and Restated Revolving Line Promissory Note in the amount of $5.0 million, representing 100% of the Revolving Line Commitment (as defined in the Sunflower Agreement) available under the Sunflower Agreement, executed by the Company in favor of Agent as of the effective date of the Second Sunflower Loan Amendment; and (iv) certain other amendments to the Company's customary covenants and obligations under the Sunflower Agreement that only take effect in the event the Revolving Line Availability (as defined in the Sunflower Agreement) is greater than zero dollars.
Previous report
Upon signing of the Second Sunflower Loan Amendment, the Revolving Line Availability was reduced to zero dollars and will remain at zero dollars unless we provide the Agent with a security interest in new collateral or otherwise further amend the Sunflower Agreement.
Previous report
On May 13, 2025, the Company entered into a Third Amendment to the Sunflower Agreement (the “Third Sunflower Loan Amendment”). Pursuant to the Third Sunflower Loan Amendment, we and the Agent agreed to change the definitions in the Sunflower Agreement of: (i) “AMMO, Inc” to “Outdoor Holding Company,” (ii) “Ammo” to “OHC,” (iii) “AMMO TECHNOLOGIES, INC” to “OHC TECHNOLOGIES, INC,” and (iv) "AMMO MUNITIONS, INC” to “OHC MUNITIONS, INC.”
Previous report
As of December 31, 2025, we did not have an outstanding balance on the Revolving Loan.
Reworded paragraphs (26)
Previous 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 condensed consolidated financial statements and notes thereto for the three and nine months ended December 31, 2025, (ii) the audited consolidated financial statements and notes thereto for the year ended March 31, 2025 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on June 16, 2025 (the "Form 10-K") and (iii) the discussion under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Form 10-K. Except for certain information as of March 31, 2025, all amounts herein are unaudited. The following discussion contains forward-looking statements that are subject to risks and uncertainties. See “Special Note Regarding Forward-Looking Statements.” Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report on Form 10-Q (this “Form 10-Q”), particularly in the section entitled “Risk Factors.” 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.
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 condensed consolidated financial statements and notes thereto for the three months ended June 30, 2026, (ii) the audited consolidated financial statements and notes thereto for the year ended March 31, 2026 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on June 22, 2026 (the "Form 10-K") and (iii) the discussion under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Form 10-K. Except for certain information as of March 31, 2026, all amounts herein are unaudited. The following discussion contains forward-looking statements that are subject to risks and uncertainties. See “Special Note Regarding Forward-Looking Statements.” Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report on Form 10-Q (this “Form 10-Q”), particularly in the section entitled “Risk Factors.” 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
Outdoor Holding Company is the owner of the GunBroker Marketplace ("GunBroker" or the "Marketplace"), a leading online marketplace serving the firearms and shooting sports industries. Through our Marketplace, we allow third party sellers to list items consisting of firearms, hunting gear, fishing equipment, outdoor gear, collectibles, and much more, while facilitating compliance with federal and state laws that govern the sale of firearms and other restricted items. This allows our base of over 8.7 million users to follow ownership policies and regulations through our network of approximately 31,000 federally licensed firearms dealers who serve as transfer agents. The nature and operation of the Marketplace as an online auction and sales platform also affords us 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. We generate revenue from marketplace fees, which include marketplace revenue, marketplace service fee revenue (previously referred to as compliance fee revenue), advertising campaign revenue and shipping revenue. Our key strategic initiatives for the remainder of fiscal year 2026 and first two quarters of fiscal year 2027 include: launching universal payment processing to drive electronic transactions, decrease transaction friction, increase gross merchandise value ("GMV"), and accelerate user adoption; deploy capital opportunistically by repurchasing shares; advancing our restructuring efforts to further streamline the business and reduce operational costs; and implementing further user enhancements to the platform with new tools, analytics, and personalization features to deliver best-in-class buyer and seller experiences.As part of our key strategic initiatives, the Company invested in a platform integration with Master FFL beginning in November 2025. Master FFL integration allows us to provide platform users access to a larger network of Federal Firearms License ("FFL") dealers, centralizing FFL dealer verification and compliance, and allowing streamlined firearm transfers through automatic verification of federally-licensed firearm dealers. While integration is in progress and may temporarily affect gross margins, the initiative supports long-term marketplace scalability, enhances federal compliance, and improves operational efficiency across our Marketplace.
Current wording
Outdoor Holding Company is the owner of the GunBroker Marketplace ("GunBroker" or the "Marketplace"), a leading online marketplace serving the firearms and shooting sports industries. Through our Marketplace, we allow third party sellers to list items consisting of firearms, hunting gear, fishing equipment, outdoor gear, collectibles, and much more, while facilitating compliance with federal and state laws that govern the sale of firearms and other restricted items. This allows our base of over 8.9 million users to follow ownership policies and regulations through a network of federally licensed firearms dealers ("FFLs") who serve as transfer agents. The nature and operation of the Marketplace as an online auction and sales platform also affords us 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. We generate revenue from marketplace fees, which include marketplace revenue, marketplace service fee revenue, advertising campaign revenue, FFL transfer revenue, and shipping revenue. Our key strategic initiatives include: launching universal payment processing to facilitate electronic transactions, decrease transaction friction, increase gross merchandise value ("GMV"), improve the user experience with the use of AI, and accelerate user adoption; deploying capital opportunistically by repurchasing shares; further streamlining the business to increase operational efficiency and reduce operational costs; and implementing further user enhancements to the platform with new tools, analytics, and personalization features to deliver best-in-class buyer and seller experiences. As part of our key strategic initiatives, we invested in a platform integration with Master FFL beginning in November 2025. Master FFL integration allows us to provide platform users access to a larger network of FFL dealers, centralizing FFL dealer verification and compliance, and allowing streamlined firearm transfers through automatic verification of federally-licensed firearm dealers.
Previous wording
As previously disclosed, the Company was subject to an investigation by the U.S. Securities and Exchange Commission (the “SEC”) relating to certain accounting, disclosure, and internal control issues primarily arising during periods prior to the tenure of the Company’s current management team. The Company made an Offer of Settlement to the SEC, and on December 15, 2025, the SEC instituted settled cease-and-desist proceedings that fully resolved the investigation. The Company consented to the entry of the cease-and-desist order (the “SEC Order”) without admitting or denying the SEC’s findings, except as to jurisdiction.
Current wording
As previously disclosed, we were subject to an investigation by the SEC relating to certain accounting, disclosure, and internal control issues primarily arising during periods prior to the tenure of our current management team (the "SEC Investigation"). We made an Offer of Settlement to the SEC, and on December 15, 2025, the SEC instituted settled cease-and-desist proceedings that fully resolved the investigation. We consented to the entry of the cease-and-desist order (the “SEC Order”) without admitting or denying the SEC’s findings, except as to jurisdiction.
Previous wording
Under the terms of the settlement, the SEC did not impose any civil penalty or monetary sanction. The Company agreed to cease and desist from committing or causing any future violations of certain provisions of the federal securities laws and related rules. The SEC’s findings relate primarily to historical disclosure failures, accounting misstatements, non-GAAP financial metric disclosures, and deficiencies in internal accounting controls during the period from August 2020 through July 2023. As part of the SEC settlement, the Company agreed to undertakings requiring it to engage a third-party compliance consultant to review and make recommendations concerning the remediation of material weaknesses in internal control over financial reporting. The Company is required to cooperate fully with the consultant, adopt and implement the consultant’s recommendations within two years of the SEC Order, and provide written certifications of compliance to the SEC staff.
Current wording
Under the terms of the settlement, the SEC did not impose any civil penalty or monetary sanction. We agreed to cease and desist from committing or causing any future violations of certain provisions of the federal securities laws and related rules. The SEC’s findings relate primarily to historical disclosure failures, accounting misstatements, non-GAAP financial metric disclosures, and deficiencies in internal accounting controls during the period from August 2020 through July 2023. As part of the SEC settlement, we agreed to undertakings requiring us to engage a third-party compliance consultant to review and make recommendations concerning the remediation of material weaknesses in internal control over financial reporting. We are required to cooperate fully with the consultant, adopt and implement the consultant’s recommendations within two years of the SEC Order, and provide written certifications of compliance to the SEC staff.
Previous wording
The Company began significant remediation efforts prior to the settlement and has continued those efforts following the resolution of the SEC matter. These actions have included, among other measures, conducting an independent internal investigation, restating affected historical financial statements, replacing prior senior leadership, expanding and enhancing the accounting and external reporting function, retaining external accounting and internal control advisors, strengthening policies and procedures related to expense classification, capitalization, and stock-based compensation, enhancing period-end close and reconciliation controls, establishing a formal disclosure committee, and implementing a more robust process for identifying and disclosing related-party transactions.
Current wording
We began significant remediation efforts prior to the settlement and continued those efforts following the resolution of the SEC matter. These actions included, among other measures, conducting an independent internal investigation, restating affected historical financial statements, replacing prior senior leadership, expanding and enhancing the accounting and external reporting function, retaining external accounting and internal control advisors, strengthening policies and procedures related to expense classification, capitalization, and stock-based compensation, enhancing period-end close and reconciliation controls, establishing a formal disclosure committee, and implementing a more robust process for identifying and disclosing related-party transactions. In July 2026, we delivered a certification and supporting documentation to the SEC Staff that, in the Company’s opinion, it had fully complied with the undertakings concerning the remediation of material weaknesses in internal control over financial reporting as required by the SEC Order. The SEC Staff is currently evaluating the Company’s certification and supporting documentation.
Previous wording
The settlement with the SEC did not result in any civil penalty or disgorgement and, accordingly, did not have any direct adverse impact on the Company’s liquidity or capital resources. However, the Company has incurred, and expects to continue to incur, costs related to compliance with the settlement undertakings and indemnification of three former directors and officers. These costs include fees and expenses associated with the compliance consultant and ongoing internal control remediation activities, along with advancement of legal expenses to former directors and officers against whom the SEC has instituted a separate enforcement action. These costs may be material in individual reporting periods but are not expected to impair the Company’s ability to meet its obligations or execute its business strategy.
Current wording
The settlement with the SEC did not result in any civil penalty or disgorgement and, accordingly, did not have any direct adverse impact on our liquidity or capital resources. However, we incurred, and expect to continue to incur, costs related to compliance with the settlement undertakings and indemnification of three former directors and officers. These costs include fees and expenses associated with the compliance consultant and internal control remediation activities, along with advancement of legal expenses to former directors and officers against whom the SEC has instituted a separate enforcement action. These costs may be material in individual reporting periods but are not expected to impair our ability to meet our obligations or execute our business strategy.
Previous wording
Management believes that the resolution of the SEC investigation eliminates a significant source of uncertainty and allows the Company to focus on operating its business, enhancing its control environment, and pursuing its strategic objectives. While management cannot provide assurance regarding the timing or ultimate effectiveness of all remediation efforts, the Company believes it has made, and will continue to make, appropriate progress in remediating the identified internal accounting control deficiencies and strengthening its governance, disclosure and financial reporting processes.
Current wording
Management believes that the resolution of the SEC Investigation eliminates a significant source of uncertainty and allows us to focus on operating our business, enhancing our control environment, and pursuing our strategic objectives.
Previous wording
The following table presents summarized financial information taken from our unaudited condensed consolidated statements of operations for the three and nine months ended December 31, 2025, compared with the three and nine months ended December 31, 2024:
Current wording
The following table presents summarized financial information taken from our unaudited condensed consolidated statements of operations for the three months ended June 30, 2026, compared with the three months ended June 30, 2025:
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's performance. We have included these non-GAAP financial measures in this Form 10-Q 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.
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 income (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 our performance. We have included these non-GAAP financial measures in this Form 10-Q 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
To more clearly present Adjusted EBITDA, we have updated the table to begin with our net income (loss) before discontinued operations and now include the preferred stock dividend as an adjustment. This update has no impact on the Adjusted EBITDA amount, rather, it improves the alignment of the presentation with our consolidated statement of operations. Adjusted EBITDA is a non-GAAP financial measure that displays our net income (loss) before discontinued operations, adjusted to eliminate the effect of certain items as described below. We define Adjusted EBITDA as net income (loss) before discontinued operations excluding (i) provision or benefit for income taxes, (ii) preferred stock dividend (iii) depreciation and amortization, (iv) interest expense, net, (v) stock-based compensation expenses relating to stock awards and common stock purchase options, (vi) other income (expense), net, (vii) expenses related to acquisition and divestitures, (viii) gain on extinguishment of debt, (xi) professional service and legal fees related to an investigation conducted by a special committee of the Board of Directors (the “Special Committee Investigation”), the SEC Investigation and the Delaware Litigation and (x) other nonrecurring expenses, such as contingencies associated with litigation or settlements and corporate restructuring costs related to headcount reductions, severance, and expense consolidation.
Current wording
We define Adjusted EBITDA as net income (loss) from continuing operations excluding (i) provision or benefit for income taxes, (ii) depreciation and amortization, (iii) interest expense, net, (iv) stock-based compensation expenses relating to stock awards and common stock purchase options, (v) interest and other income (expense), net, (vi) expenses related to acquisition and divestitures, (vii) gain on extinguishment of debt, (viii) professional service and legal fees related to an investigation conducted by a special committee of the Board of Directors (the “Special Committee Investigation”), the SEC Investigation and the Delaware Litigation (xi) other nonrecurring expenses, such as contingencies associated with litigation or settlements and (x) corporate restructuring costs related to headcount reductions, severance, and expense consolidation.
Previous wording
We generate revenue from marketplace fees, which includes marketplace revenue, marketplace service fee revenue, advertising revenue and shipping revenue. Marketplace revenue consists of optional listing fees with variable pricing components based on customer options and final value fees based on a percentage of the final selling price of the listed item. Marketplace service fee revenue consists of fees charged to customers based on the final price of an item at the time of purchase. Effective as of the current reporting period, the fee previously referred to as the compliance fee is now called the marketplace service fee. This fee is assessed by GunBroker and added to the price of the item at the time of purchase for all buyers, based on the final price of an item at the time of purchase. The change in terminology reflects the nature of the fee as a service-related charge rather than a regulatory compliance charge. The marketplace service fee helps offset increased costs associated with compliance with new state laws related to taxation, privacy, and firearms, which have significantly increased GunBroker’s operational compliance expenses. Advertising revenue consists of fees charged for advertisement placement and impressions generated through the GunBroker website. Shipping revenue consists of fees for shipping of items sold on the GunBroker website.
Current wording
We generate revenue from marketplace fees, which includes marketplace revenue, marketplace service fee revenue, FFL transfer revenue, advertising revenue and shipping revenue. Marketplace revenue consists of optional listing fees with variable pricing components based on customer options and final value fees based on a percentage of the final selling price of the listed item. Marketplace service fee revenue consists of fees charged to customers based on the final price of an item at the time of purchase. The marketplace service fee is assessed by GunBroker and added to the price of the item at the time of purchase for all buyers, based on the final price of an item at the time of purchase. The marketplace service fee helps offset increased costs associated with compliance with new state laws related to taxation, privacy, and firearms, which have significantly increased GunBroker’s operational compliance expenses. FFL transfer revenue is a variable per unit fee associated with transactions requiring FFL transfers. Advertising revenue consists of fees charged for advertisement placement and impressions generated through the GunBroker website. Shipping revenue consists of fees for the shipping of items sold on the GunBroker website.
Previous wording
Net revenues for the three months ended December 31, 2025 increased $0.9 million, or 7.0%, from the three months ended December 31, 2024 due to increased GMV from our Marketplace driven by increases in firearms sales.
Current wording
Net revenues for the three months ended June 30, 2026 increased by $2.6 million, or 22.1%, from the three months ended June 30, 2025 due to the addition of FFL transfer revenue and increased GMV from our Marketplace primarily driven by increases in firearms sales.
Previous wording
Cost of revenues increased $0.1 million for the three months ended December 31, 2025 compared to the three months ended December 31, 2024. The increase is associated with higher transaction volume and investments in the platform.
Current wording
Cost of revenues increased $0.7 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase is associated with investments in the GunBroker platform and higher transaction volume.
Previous wording
Our gross margin, which measures our gross profit as a percentage of sales, decreased slightly to 87.1% for the three months ended December 31, 2025 compared to 87.4% for the three months ended December 31, 2024. This decrease in gross margin was primarily the result of the efforts around the implementation of the Master FFL platform. For the nine months ended December 31, 2025, our gross margin increased to 87.1% from 86.6% for the nine months ended December 31, 2024. The increase in gross margin was a result of improved platform monetization and an increasing mix of high-margin seller services, such as advertising and listing enhancements.
Current wording
Our gross margin, which measures our gross profit as a percentage of sales, decreased slightly to 84.5% for the three months ended June 30, 2026 compared to 87.2% for the three months ended June 30, 2025. This decrease in gross margin was primarily the result of costs relating to the efforts to implement the Master FFL platform.
Previous wording
Operating expenses decreased by $28.9 million for the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024. The decrease in operating expenses was primarily the result of a reduction of $12.3 million in settlement contingencies, as well as a decrease in stock-based compensation expense of $2.4 million due to a reduction in stock award grants, a decrease of $4.0 million due to the completion of the Special Committee Investigation and restatement, a decrease of $10.6 million in legal fees related to the completion of the Delaware Litigation and the SEC Investigation, including a $2.0 million reduction in legal fees associated with recording a receivable from our directors and officers insurance. These decreases were partially offset by an increase of $0.6 million in depreciation and amortization resulting from increased capitalized software development costs.
Current wording
Operating expenses decreased by $7.4 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease in operating expenses was the result of a reduction of $3.7 million in legal and professional fees primarily related to the completion of the Delaware Litigation, the Special Committee Investigation and accounting restatement, a reduction of stock-based compensation expense of $0.4 million due to a reduction in stock award grants, a reduction of $0.6 million related to one-time sales tax audit expenses recorded in the prior year and a $2.7 million reduction in salaries and related expenses due to reduced headcount and restructuring efforts as well as a reduction in the number of directors.
Previous wording
Total other income, net for the three months ended December 31, 2025 increased by $0.1 million compared to the three months ended December 31, 2024. This increase was the result of an increase in interest income of $0.3 million generated from holding a higher cash balance, partially offset by the increase in interest expense of $0.2 million related to the interest obligation from Notes issued in the Delaware Litigation settlement.
Current wording
Total other income, net for the three months ended June 30, 2026 increased by $0.2 million compared to the three months ended June 30, 2025. This increase was the result of an increase in interest income of $0.1 million generated from holding a higher cash balance and a decrease in interest expense of $0.1 million as a result of no longer financing corporate insurance premium payments.
Previous wording
As of December 31, 2025, we had $69.9 million of cash and cash equivalents, an increase of $39.6 million from March 31, 2025. The increase was primarily attributable to the net proceeds received from the sale of the Ammunition Manufacturing Business of $42.9 million partially offset by cash used in operations.
Current wording
As of June 30, 2026, we had $68.8 million of cash and cash equivalents, an increase of $0.7 million from March 31, 2026. The increase was primarily attributable to cash generated from operations.
Previous wording
For the nine months ended December 31, 2025, net cash provided by operations was primarily the result of the benefit of non-cash expenses for depreciation and amortization, stock based compensation and a reduction in the allowance for doubtful accounts, partially offset by a reduction in accounts payable and accrued liabilities primarily associated with a decrease in legal and professional fees, as well as an increase in prepaid expenses and other current assets associated with payments for annual insurance and a receivable due from claims under the directors and officers insurance policy.
Current wording
For the three months ended June 30, 2026, net cash provided by operations was primarily the result of the benefit of non-cash expense for depreciation and amortization as well as our net income from operations, partially offset by a reduction in accounts payable and accrued liabilities primarily associated with a decrease in legal and professional fees.
Previous wording
For the nine months ended December 31, 2024, net cash used in investing activities consisted of $3.0 million related to capitalized development costs for our Marketplace.
Current wording
For the three months ended June 30, 2026, net cash used in investing activities consisted primarily of $0.7 million in capitalized development costs related to our Marketplace.
Previous wording
For the nine months ended December 31, 2025, net cash provided by investing activities consisted primarily of proceeds of $42.9 million related to the sale of the Ammunition Manufacturing Business and $0.5 million in proceeds from the sale of an equity investment, partially offset by $2.2 million in capitalized development costs related to our Marketplace.
Current wording
For the three months ended June 30, 2025, net cash provided by investing activities consisted primarily of proceeds of $42.9 million related to the sale in April 2025 of the Ammunition Manufacturing Business partially offset by $0.9 million related to capitalized development costs for our Marketplace.
Previous wording
For the nine months ended December 31, 2024, net cash used in financing activities consisted of $2.2 million of insurance premium note payments, $2.2 million in payments of preferred stock dividends, $5.9 million used to repurchase shares of common stock pursuant to our then-existing repurchase plan, and $0.5 million used in the repurchase of common shares to cover taxes on shares issued to employees.
Current wording
For the three months ended June 30, 2026, net cash used in financing activities consisted of $0.8 million in payments of preferred stock dividends, $0.2 million to make principal payments on related party notes, $2.0 million to purchase shares under our share repurchase program and $0.1 million used in the repurchase of common stock to cover taxes on shares issued to employees.
Previous wording
For the nine months ended December 31, 2025, net cash used in financing activities consisted of $2.2 million in payments of preferred stock dividends and $0.3 million used in the repurchase of common stock to cover taxes on shares issued to employees.
Current wording
For the three months ended June 30, 2025, net cash used in financing activities consisted of $0.6 million in payments of preferred stock dividends and $0.2 million used in the repurchase of common shares to cover taxes on shares issued to employees.
Previous wording
We currently lease three locations, two of which are office space and one that is a 2,660 square-foot mixed-use warehouse space in Marietta, GA. The lease for the mixed-use warehouse space commenced on October 1, 2025 and expires in October 2028. On October 1, 2025, we moved our corporate headquarters to our leased facility in Atlanta, Georgia. We have vacated the premises of our Scottsdale, Arizona leased office property and intend to sublease it. As of December 31, 2025, we had $1.4 million of fixed lease payment obligations with $0.6 million payable within the next 12 months. Please refer to Note 6, "Leases" for additional information.
Current wording
We currently lease three locations, two of which are office space and one of which is a 2,660 square-foot mixed-use warehouse space in Marietta, GA. The office space in Scottsdale is our former headquarters and is currently not being utilized. We attempted to sublease the Scottsdale office space but such efforts have proven unsuccessful thus far and we recorded an impairment of the lease asset in the year ended March 31, 2026. As of three months ended June 30, 2026, we had $1.1 million of fixed lease payment obligations with $0.5 million payable within the next 12 months. Please refer to Note 6, "Leases" for additional information.
Previous wording
As described in the "Recent Developments"section above, on May 30, 2025, we issued Note 1 and Note 2 pursuant to the Settlement Agreement. The aggregate principal amount of Note 1 and Note 2 was $51.0 million, and we were required to make aggregate annual prepayments of $2.95 million beginning on May 30, 2026.
Current wording
As described in Note 12, "Related Party Transaction", on May 30, 2025, we issued to Mr. Urvan's affiliated designee, an unsecured promissory note for a principal amount of $12.0 million ("Note 1") and an unsecured promissory note in a principal amount of $39 million (" Note 2") pursuant to the 2025 Settlement Agreement. The aggregate principal amount of Note 1 and Note 2 was $51.0 million, and we were required to make aggregate annual prepayments of $2.95 million beginning on May 30, 2026. On September 17, 2025, the independent and disinterested members of the Board of Directors approved the exercise of an option to prepay all of the then-outstanding principal amount of Note 2 and accrued and unpaid interest thereon in exchange for the issuance of a the Additional Warrant to purchase 13.0 million shares of common stock (the "Prepayment Option"), and we issued the Additional Warrant in satisfaction of Note 2.
Previous wording
For the three months ended December 31, 2025, we recorded interest expense of $245,865 on Note 1 and no interest expense on Note 2. For the nine months ended December 31, 2025, we recorded interest expense of $573,685 and $950,070 on Note 1 and Note 2, respectively.
Current wording
For the three months ended June 30, 2026 and 2025, we recorded interest expense of $244,363 and $81,955 on Note 1, respectively. For the three months ended June 30, 2026 and 2025, we recorded interest expense of zero and $266,375 on Note 2, respectively.
Previous wording
On September 17, 2025, the independent and disinterested members of the Board of Directors approved the exercise of the Prepayment Option, and we issued the Additional Warrant in satisfaction of Note 2. The prepayment of Note 2 was accounted for as an extinguishment of debt and a gain of $801,894 was recognized on the condensed consolidated statement of operations. The remaining principal balance on Note 1 is $12.0 million and we are required to make an annual prepayment of $1.0 million on Note 1 beginning on May 30, 2026.
Current wording
We made a $220,000 principal payment and $780,000 interest payment on Note 1 on May 29, 2026. The remaining principal balance on Note 1 is $11.8 million and we are required to make an annual prepayment of $1.0 million on Note 1 annually on May 30 until Note 1 matures on May 30, 2027.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
For the three months ended June 30, 2025, net cash used in operations was primarily the result of a reduction in accounts payable and accrued liabilities primarily associated with legal and professional fees as well as payments for insurance resulting in an increase in prepaid expenses.