POWW AMMO Inc

AMMO, Inc. (Nasdaq: POWW, POWWP) (“AMMO” or the “Company”), the owner of GunBroker.com, the largest online marketplace serving the firearms and shooting sports industries, and a leading vertically integrated producer of high-performance ammunition and components, today reported results for its Fourth Quarter and Fiscal Year 2024, ended March 31, 2024.

Fiscal Year 2024 Overview

	●	Net Revenues of $145.1 million, a 24.2% decrease.
	●	Gross profit margin of approximately 29.4%.
	●	Adjusted EBITDA of $15.4 million compared to $26.4 million.
	●	Net loss of ($15.6) million, compared to net loss of ($4.6) million.
	●	Diluted EPS of ($0.16), compared to ($0.07).
	●	Adjusted EPS of $0.09, compared to $0.16.

GunBroker.com “Marketplace” Metrics – Fiscal Year 2024

	●	Marketplace revenue of approximately $53.9 million.
	●	New user growth averaged 30,000 per month.
	●	Average take rate increased to 5.9% compared to 5.6% in fiscal 2023.

Fourth Quarter 2024 Overview

	●	Net Revenues of $40.4 million, a 7.5% decrease
	●	Gross profit margin of approximately 23.3%.
	●	Adjusted EBITDA of $2.2 million compared to $3.8 million.
	●	Net loss of ($5.3) million, compared to net loss of ($2.9) million.
	●	Diluted EPS of ($0.05), compared to ($0.04).
	●	Adjusted EPS of $0.01, compared to $0.02.

GunBroker.com “Marketplace” Metrics – Fourth Quarter 2024

	●	Marketplace revenue of approximately $13.6 million.
	●	New user growth averaged 32,000 per month.
	●	Average take rate increased to 6.0%

Jared Smith, AMMO’s CEO, commented “Sales increased sequentially despite a slower market environment. We continued to make progress this quarter and ended the fiscal year with a strong pipeline of rifle ammunition and casing sales while accelerating our buildout of GunBroker’s capabilities. This is most evident as we start to deliver on our ZRO Delta contract, while continuing the advancement in financing, cross selling, and carting of accessories that will take place with GunBroker in Fiscal 2025.

“AMMO is at a pivotal point as we finish the first quarter of our 2025 fiscal year. We believe we have changed the trajectory of the business in these past 12 months in a way that will lead to increased shareholder value. Our ongoing transition from low margin pistol ammo to high margin rifle cases will sustain a more stable and profitable business model going forward. In addition, GunBroker’s multi seller, multi-item checkout process will enable us to capture a higher margin accessory business, while streamlining the checkout process. As we sit here in June, we believe we have never been more poised for success,” Mr. Smith concluded.

Fourth Quarter and Fiscal Year 2024 Results

We experienced sequential revenue growth in our ammunition segment in the final quarter of our fiscal year in comparison to our third quarter while the margins of the GunBroker marketplace segment remain robust.

We ended the fourth quarter of our 2024 fiscal year with total revenues of approximately $40.4 million in comparison to $43.7 million in the prior year quarter. The decrease in revenue was primarily related to a decrease in activity in our marketplace segment, which we believe decreased as a result of the current macroeconomic environment impacting our industry as well as others. Our casing sales, however, which afford us higher gross margins, increased to $0.9 million up from the prior year period. Revenues for our ammunition segment decreased $0.2 million from the prior year quarter but increased $4.8 million or 21.9% quarter-over-quarter as a result of increased ammunition sales in our fourth fiscal quarter.

Cost of goods sold was approximately $31.0 million for the quarter compared to $31.8 million in the comparable prior year quarter. The decrease in cost of goods sold was related to the decrease in sales volume.

Our gross margin for the quarter was $9.4 million or 23.3% compared to $11.9 million or 27.3% in the prior year period. The decrease in gross profit margin was related to the shift in sales mix.

The robust margins on GunBroker remained steady through our final quarter, but the margins in the ammunition segment did not meet expectations. We expect improvement as production capacities increase. Our inventory levels continued to decrease, generating $4.3 million in cash from operations for the quarter, bringing us to $32.6 million for the full fiscal year.

There was approximately $2.4 million of nonrecurring expenses in the quarter related to legal and professional fees, which we have included as an addback to adjusted EBITDA.

For the quarter, we recorded Adjusted EBITDA of approximately $2.2 million, compared to the prior year quarter Adjusted EBITDA of $3.8 million.

We ended the quarter with a Net Loss of approximately $5.3 million compared with a Net Loss of approximately $2.9 million for the prior year period. This resulted in a loss per share of $0.05 for the quarter or Adjusted Net Income per Share of $0.01 in comparison to a loss per share of $0.04 in the prior year quarter or Adjusted Net Income per Share of $0.03. For our fiscal year, a loss per share of $0.16 or Adjusted Net Loss per Share of $0.09 in comparison to Net Income per share of $0.07 or Adjusted Net Income per Share of $0.16 in the prior year.

Looking forward, we are focused on increasing our plant capacity with the recent engagement of a global consulting firm, which should improve the product marginality.

For GunBroker, we launched our cart platform in March of 2024, and will be bringing other efforts online in Fiscal 2025. These efforts may include additional customer financing partnerships such as what we built with Gearfire Capital, which will allow retailers the option to offer flexible financing options to customers. We expect these enhancements will drive sales growth through better functionality and enhanced purchasing power of buyers.

As of now, we believe we are financially well positioned into Fiscal 2025 given our strong net working capital position. We reported $131.5 million in current assets including $55.6 million of cash and cash equivalents along with $30.9 million of current liabilities. Additionally, we generated $32.6 million in cash from operations for the period.

Conference Call

Management will host a conference call at 5:00 PM ET today, June 13, 2024, to review financial results and provide an update on corporate developments. Following management’s formal remarks there will be a question-and-answer session.

Participants are asked to preregister for the call at the following link: https://dpregister.com/sreg/10188534/fc5c14c674

Please note that registered participants will receive their dial-in number upon registration and will dial directly into the call without delay. Those without Internet access or who are unable to pre-register may dial in by calling 1-844-481-2698 (domestic) or 1-412-317-0655 (international).

Please join at least 5-10 minutes prior to the scheduled start and follow the operator’s instructions. When requested, please ask for “AMMO, Inc. Fourth Quarter and Fiscal Year 2024 Conference Call.”

The conference call will also be available through a live webcast at the following link: https://event.choruscall.com/mediaframe/webcast.html?webcastid=FE9IBGzz, which is also available through the Company’s website.

About AMMO, Inc.

With its corporate offices headquartered in Scottsdale, Arizona, AMMO designs and manufactures products for a variety of aptitudes, including law enforcement, military, sport shooting and self-defense. The Company was founded in 2016 with a vision to change, innovate and invigorate the complacent munitions industry. AMMO promotes branded munitions as well as its patented STREAK™ Visual Ammunition, /stelTH/™ subsonic munitions, and specialty rounds for military use via government programs. For more information, please visit: www.ammo-inc.com.

About GunBroker.com

GunBroker.com is the largest online marketplace dedicated to firearms, hunting, shooting and related products. Aside from merchandise bearing its logo, GunBroker.com currently sells none of the items listed on its website. Third-party sellers list items on the site and Federal and state laws govern the sale of firearms and other restricted items. Ownership policies and regulations are followed using licensed firearms dealers as transfer agents. Launched in 1999, GunBroker.com is an informative, secure, and safe way to buy and sell firearms, ammunition, air guns, archery equipment, knives and swords, firearms accessories, and hunting/shooting gear online. GunBroker.com promotes responsible ownership of guns and firearms. For more information, please visit: www.gunbroker.com.

Forward Looking Statements

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.

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 include in Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Reports filed on Form 8-K.

Investor Contact:CoreIRPhone: (212) 655-0924IR@ammo-inc.com

Source: AMMO, Inc.

AMMO, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

		March 31, 2024				March 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents		$	55,586,441			$	39,134,027
Accounts receivable, net			28,221,321				29,346,380
Inventories			45,563,334				54,344,819
Prepaid expenses			2,154,170				5,126,667
Current portion of restricted cash			-				500,000
Total Current Assets			131,525,266				128,451,893
Equipment, net			58,082,040				55,963,255
Other Assets:
Deposits			349,278				7,028,947
Patents, net			4,539,290				5,032,754
Other intangible assets, net			111,049,067				123,726,810
Goodwill			90,870,094				90,870,094
Right of use assets - operating leases			2,000,093				1,261,634
Deferred income tax asset			1,487,088				-
TOTAL ASSETS		$	399,902,216			$	412,335,387
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	23,156,495			$	18,079,397
Accrued liabilities			7,030,667				4,353,354
Current portion of operating lease liability			479,651				470,734
Note payable related party			-				180,850
Current portion of construction note payable			273,459				260,429
Insurance premium note payable			-				2,118,635
Total Current Liabilities			30,940,272				25,463,399
Long-term Liabilities:
Contingent consideration payable			59,838				140,378
Construction note payable, net of unamortized issuance costs			10,735,241				10,922,443
Operating lease liability, net of current portion			1,609,836				903,490
Deferred income tax liability			-				2,309,592
Total Liabilities			43,345,187				39,739,302
Shareholders’ Equity:
Series A cumulative perpetual preferred Stock 8.75%, ($25.00 per share, $0.001 par value) 1,400,000 shares issued and outstanding as of March 31, 2024 and March 31, 2023, respectively			1,400				1,400
Common stock, $0.001 par value, 200,000,000 shares authorized 120,531,507 and 118,562,806 shares issued and 119,181,067 and 118,294,478 outstanding at March 31, 2024 and March 31, 2023, respectively			119,181				118,294
Additional paid-in capital			396,730,170				391,940,374
Accumulated deficit			(37,620,566	)			(18,941,825	)
Treasury Stock			(2,673,156	)			(522,158	)
Total Shareholders’ Equity			356,557,029				372,596,085
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	399,902,216			$	412,335,387

AMMO, Inc.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)

		For the Three Months EndedMarch 31,										For the Years EndedMarch 31,
		2024					2023					2024								2023
Net Revenues
Ammunition sales		$		22,445,216			$		23,508,227			$	69,390,801							$	114,116,044
Marketplace revenue				13,570,124					16,662,831				53,942,076								63,149,673
Casing sales				4,405,807					3,512,664				21,721,695								14,174,084
				40,421,147					43,683,722				145,054,572								191,439,801
Cost of Revenues				31,021,560					31,773,675				102,431,803								136,031,204
Gross Profit				9,399,587					11,910,047				42,622,769								55,408,597
Operating Expenses
Selling and marketing				547,981					742,326				1,370,079								4,729,540
Corporate general and administrative				7,976,832					7,059,882				29,583,274								24,980,079
Employee salaries and related expenses				3,607,354					4,264,701				16,703,822								15,679,135
Depreciation and amortization expense				3,425,790					3,328,010				13,542,791								13,278,762
Total operating expenses				15,557,957					15,394,919				61,199,966								58,667,516
Loss from Operations				(6,158,370	)				(3,484,872	)			(18,577,197					)			(3,258,919		)
Other Expenses
Other income/(expense)				(708,779	)				(3,012	)			(332,593					)			25,181
Interest expense				163,088					(93,871	)			(446,473					)			(632,062		)
Total other expense				(545,691	)				(96,883	)			(779,066					)			(606,881		)
Loss before Income Taxes				(6,704,061	)				(3,581,755	)			(19,356,263					)			(3,865,800		)
Provision for Income Taxes				(1,371,180	)				(639,189	)			(3,791,063					)			730,238
Net Loss				(5,332,881	)				(2,942,566	)			(15,565,200					)			(4,596,038		)
Preferred Stock Dividend				(782,639	)				(765,625	)			(3,122,049					)			(3,105,034		)
Net Loss Attributable to Common Stock Shareholders		$		(6,115,520	)		$		(3,708,191	)		$	(18,687,249					)		$	(7,701,072		)
Net Loss per share
Basic		$		(0.05	)		$		(0.04	)		$	(0.16					)		$	(0.07		)
Diluted		$		(0.05	)		$		(0.04	)		$	(0.16					)		$	(0.07		)
Weighted average number of shares outstanding
Basic				118,775,757					117,874,162				118,249,486								117,177,885
Diluted				118,775,757					117,874,162				118,249,486								117,177,885

AMMO, Inc.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

		For the Year Ended March 31,
		2024				2023
Cash flows from operating activities:
Net Loss		$	(15,565,200	)		$	(4,596,038	)
Adjustments to reconcile Net Loss to Net Cash provided by operations:
Depreciation and amortization			18,813,897				17,519,949
Debt discount amortization			83,253				83,253
Employee stock awards			4,082,108				5,807,779
Stock grants			203,000				179,094
Common stock purchase options			430,457				-
Stock for services			-				-
Contingent consideration payable fair value			(80,540	)			(63,764	)
Allowance for credit losses			419,527				191,299
Loss on disposal of assets			259,540				-
Reduction in right of use asset			476,252				629,140
Warrant issued for services			-				213,819
Deferred income taxes			(3,796,680	)			730,238
Changes in Current Assets and Liabilities
Accounts receivable			705,532				14,417,405
Due from related parties			-				15,000
Inventories			8,781,485				4,671,333
Prepaid expenses			4,028,696				2,763,855
Deposits			6,679,669				4,306,375
Accounts payable			5,077,098				(8,694,813	)
Accrued liabilities			2,532,695				(1,970,078	)
Operating lease liability			(499,448	)			(647,480	)
Net cash provided by operating activities			32,631,341				35,556,366
Cash flows from investing activities:
Gemini acquisition			-				-
Purchase of equipment			(8,024,765	)			(12,541,325	)
Proceeds from disposal of assets			3,750				-
Net cash used in investing activities			(8,021,015	)			(12,541,325	)
Cash flow from financing activities:
Payments on inventory facility, net			-				(825,675	)
Proceeds from factoring liability			37,252,869				71,348,761
Payments on factoring liability			(37,252,869	)			(71,834,432	)
Payments on assumed debt from Gemini			-				-
Payments on note payable - related party			(180,850	)			(684,921	)
Payments on insurance premium note payment			(3,174,834	)			(2,134,143	)
Proceeds from construction note payable			-				1,000,000
Payments on construction note payable			(257,425	)			(150,743	)
Payments on note payable			-				-
Sale of preferred stock			-				-
Common stock issued for exercised warrants			76,200				101,506
Common stock issuance costs			-				-
Preferred stock dividends paid			(2,968,923	)			(2,960,416	)
Common stock repurchase plan			(2,152,080	)			(522,426	)
Net cash used in financing activities			(8,657,912	)			(6,662,489	)
Net increase in cash			15,952,414				16,352,552
Cash, beginning of period			39,134,027				23,281,475
Restricted cash, beginning of period			500,000				-
Cash and restricted cash, end of period		$	55,586,441			$	39,634,027
Restricted cash, end of period		$	-			$	500,000
Cash, end of period		$	55,586,441			$	39,134,027

(Continued)

		For the Year Ended March 31,
		2024				2023
Supplemental cash flow disclosures:
Cash paid during the period for:
Interest		$	667,063			$	665,043
Income taxes		$	-			$	1,302,811
Non-cash investing and financing activities:
Operating lease liability		$	1,214,711			$	901,076
Insurance premium note payment		$	1,056,199			$	4,252,778
Dividends accumulated on preferred stock		$	144,618			$	144,618
Construction note payable		$	-			$	10,237,032
Acquisition stock issuances		$	-			$	-
Warrant issued for services		$	-			$	-

Non-GAAP Financial Measures

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 we use to evaluate our business. We believe these measures are useful for period-to-period comparisons of the Company. We have included these non-GAAP financial measures in this Quarterly Report on Form 10-Q 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 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.

Reconciliation of GAAP Net Loss to Adjusted EBITDA

		For the Three Months Ended
			31-Mar-24					31-Mar-23
Reconciliation of GAAP Net Loss to Adjusted EBITDA
Net Loss		$	(5,332,881	)			$	(2,942,566	)
Provision for income taxes			(1,371,180	)				(639,189	)
Depreciation and amortization			4,766,681					4,568,977
Interest expense, net			(163,088	)				93,871
Employee stock awards			1,104,263					1,349,806
Stock grants			50,750					43,750
Common stock purchase options			50,412					-
Warrants issued for services			-					106,910
Other income, net			708,779					3,012
Contingent consideration fair value			(20,242	)				(18,192	)
Other nonrecurring expenses(1)			2,372,888					1,248,865
Proxy contest fees(2)			-					-
Adjusted EBITDA		$	2,166,382				$	3,815,244

(1) Other nonrecurring expenses consist of professional and legal fees that are nonrecurring in nature.(2) Includes proxy contest fees of $910,000 for Employee Stock Awards issued as a result of the Settlement Agreement as discussed in Note 17 of our consolidated financial statements.

		For the Year Ended
			31-Mar-24					31-Mar-23
Reconciliation of GAAP Net Loss to Adjusted EBITDA
Net Loss		$	(15,565,200	)			$	(4,596,038	)
Provision for income taxes			(3,791,063	)				730,238
Depreciation and amortization			18,813,897					17,519,949
Interest expense, net			446,473					632,062
Employee stock awards			4,082,108					5,807,779
Stock grants			203,000					179,094
Common stock purchase options			430,457					-
Warrants issued for services			-					213,819
Other income (expense), net			332,593					(25,181	)
Contingent consideration fair value			(80,540	)				(63,764	)
Other nonrecurring expenses(1)			10,498,990					1,248,865
Proxy contest fees(2)			-					4,724,385
Adjusted EBITDA		$	15,370,715				$	26,371,208

(1) Other nonrecurring expenses consist of professional and legal fees that are nonrecurring in nature.(2) Includes proxy contest fees of $910,000 for Employee Stock Awards issued as a result of the Settlement Agreement as discussed in Note 17 of our consolidated financial statements.

		For the Three Months Ended
		31-Mar-24								31-Mar-23
Reconciliation of GAAP Net Loss to Fully Diluted EPS
Net Loss		$	(5,332,881	)		$	(0.05	)		$	(2,942,566	)		$	(0.03	)
Depreciation and amortization			4,766,681				0.04				4,568,997				0.04
Interest expense, net			(163,088	)			-				93,871				-
Employee stock awards			1,104,263				0.01				1,349,806				0.01
Stock grants			50,750				-				43,750				-
Warrants issued for services			-				-				106,910				-
Contingent consideration fair value			(20,242	)			-				(18,192	)			-
Common stock purchase options			490,755				-				-				-
Nonrecurring expenses			2,372,888				0.02				1,248,865				0.01
Tax effect			(1,848,767	)			(0.01	)			(1,566,604	)			(0.01	)
Adjusted Net Income		$	1,420,359			$	0.01			$	2,884,837			$	0.02

		For the Year Ended
			31-Mar-24								31-Mar-23
Reconciliation of GAAP Net Loss to Fully Diluted EPS
Net Loss			$	(15,565,200	)		$	(0.13	)		$	(4,596,038	)		$	(0.04		)
Depreciation and amortization				18,813,897				0.16				17,519,949				0.15
Interest expense, net				446,473				-				632,062				0.01
Employee stock awards				4,082,108				0.03				5,807,779				0.05
Stock grants				203,000				-				179,094				-
Warrants issued for services				-				-				213,819				-
Contingent consideration fair value				(80,540	)			-				(63,764	)			-
Common stock purchase options				430,457				-				-				-
Nonrecurring expenses				10,498,990				0.09				5,973,250				0.05
Tax effect				(7,886,230	)			(0.06	)			(6,393,194	)			(0.05		)
Adjusted Net Income			$	10,942,955			$	0.09			$	19,272,957			$	0.16

		For the Three Months EndedMarch 31,								For the Years EndedMarch 31,
		2024				2023				2024				2023
Weighted average number of shares outstanding
Basic			118,775,757				117,874,162				118,249,486				117,177,885
Diluted			118,775,757				117,874,162				118,249,486				117,177,885