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 second quarter of fiscal 2024, ended September 30, 2023.

Second Quarter Fiscal 2024 vs. Second Quarter Fiscal 2023

  Net Revenues of $34.4 million
  Gross profit margin of approximately 24.1% compared to 26.6%
  Adjusted EBITDA of $1.2 million compared to $5.7 million
  Net loss of ($7.5) million, compared to a net loss of ($0.8) million
  Diluted EPS of ($0.07), compared to ($0.01)
  Adjusted EPS of $0.00, compared to $0.04
     

GunBroker.com “Marketplace” Metrics – Second Quarter 2024

  Marketplace revenue of approximately $12.5 million
  New user growth averaged approximately 26,000 per month
  Average take rate increased to 6.0% compared to 5.3% in fiscal 2023
     

Jared Smith, AMMO’s CEO, commented “Our fiscal second quarter was a very difficult quarter for our industry and due to mechanical and supply issues we are roughly one quarter behind where we thought we would be by now. However, we continue to transition our business to a leaner and more profitable operating model and remain focused on addressing operational inefficiencies. With that said, the market is moving very quickly based on recent international and domestic events.

“Events in October have completely flipped the market on its head. We see strong demand for our brass casings and even stronger demand internationally. While we have had delays in bringing the factory on-line, we continue to make investments to secure future predictability, profitability, and capacity. The fundamentals of the industry are improving. Gunbroker.com is starting to see the payoff of payment processing capabilities on the platform as we continue to transition GunBroker.com from an auction house to an Amazon-like model for firearms and accessories,” Mr. Smith concluded.

Second Quarter 2024 Results

The margins in our marketplace segment remain strong and although our gross margins have decreased in our ammunition segment due to the aforementioned operational struggles, we are optimistic on the future performance of this segment. While challenges continue in the market today, the demand for our brass casings remain robust. We are beginning to see positive trends in the demand for our ammunition product and we are seeing the activity on GunBoker.com increase as we enter into our third fiscal quarter.

We are positioned to capitalize on these positive trends given our strong financial position as we have reported $129.5 million in current assets including $49.6 million of cash and cash equivalents, in comparison to $27.6 million in current liabilities. Additionally, we generated $18.2 million in cash from operations through the midpoint of our fiscal year.

We ended the first quarter with total revenues of approximately $34.4 million in comparison to $48.3 million in the prior year quarter. The decrease in revenue was primarily related to a decrease in sales activity from our ammunition segment as a result of the state of the US commercial ammunition market during the reported quarter. Our casing sales, however, which afford us higher gross margins, increased to $6.4 million up from $4.3 million in the prior year period. Our marketplace revenue was $12.5 million, for the reported quarter, compared to $14.6 million in the prior year quarter, which decreased as a result of the current macroeconomic environment impacting our industry as well as others.

Cost of goods sold was approximately $26.1 million for the quarter compared to $35.5 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 $8.3 million or 24.1% compared to $12.8 million or 26.6% in the prior year period. The decrease in gross profit margin was related to the shift in our sales mix but was also related to higher costs associated with our manufacturing process in our ammunition segment. Primarily, our cost absorption suffered due to the setbacks we experienced in the reported quarter as a result of rifle casing presses going down.

There were approximately $3.9 million of nonrecurring expenses related to legal and professional fees and accruals for contingencies from activities commencing in our 2021 and 2022 fiscal years. There was also $0.9 million of additional stock compensation expense as a result of change in control, and $0.4 million of write-offs incurred in our second fiscal quarter. All of these items, among others, are included as addbacks to Adjusted EBITDA.

For the quarter, we recorded Adjusted EBITDA of approximately $1.2 million, compared to prior year quarter Adjusted EBITDA of $5.7 million.

This resulted in a net loss per share of ($0.07) or adjusted net income per share of $0.00, compared to the prior year period of net loss per share of ($0.01) or adjusted net income per share of $0.04.

We continue to push forward on the improvements to our marketplace, GunBroker.com. We have formally launched OutdoorPay, our payment processing platform, and are in the process of onboarding our userbase to this platform, which will enable us to launch our cart platform soon thereafter.

We repurchased approximately 198,000 shares of our common stock under our repurchase plan in the reported quarter bringing us to just over 1.2 million shares repurchased in total under the plan.

Conference Call

Management will host a conference call at 5:00 PM ET on November 9, 2023, 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/10183047/fa923d6953.

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 1-866-777-2509 (domestic) or 1-412-317-5413 (international). All callers should dial in approximately 10 minutes prior to the scheduled start time and ask to be joined into the Ammo Inc call.

The conference call will also be available through a live webcast at the following link: which is also available through the company’s website.

https://event.choruscall.com/mediaframe/webcast.html?webcastid=kAqERLpp,

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. Second Quarter 2024 Conference Call.”

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

    September 30, 2023     March 31, 2023  
    (Unaudited)        
ASSETS                
Current Assets:                
Cash and cash equivalents   $ 49,564,868     $ 39,134,027  
Accounts receivable, net     23,030,851       29,346,380  
Inventories     53,014,205       54,344,819  
Prepaid expenses     3,920,007       5,126,667  
Current portion of restricted cash     -       500,000  
Total Current Assets     129,529,931       128,451,893  
                 
Equipment, net     55,821,414       55,963,255  
                 
Other Assets:                
Deposits     3,189,518       7,028,947  
Patents, net     4,786,022       5,032,754  
Other intangible assets, net     117,440,022       123,726,810  
Goodwill     90,870,094       90,870,094  
Right of use assets - operating leases     1,017,982       1,261,634  
TOTAL ASSETS   $ 402,654,983     $ 412,335,387  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY                
Current Liabilities:                
Accounts payable   $ 19,598,548     $ 18,079,397  
Accrued liabilities     6,250,164       4,353,354  
Current portion of operating lease liability     370,980       470,734  
Note payable related party     -       180,850  
Current portion of construction note payable     265,977       260,429  
Insurance premium note payable     1,157,745       2,118,635  
Total Current Liabilities     27,643,414       25,463,399  
                 
Long-term Liabilities:                
Contingent consideration payable     99,302       140,378  
Construction note payable, net of unamortized issuance costs     10,830,663       10,922,443  
Operating lease liability, net of current portion     744,616       903,490  
Deferred income tax liability     349,327       2,309,592  
Total Liabilities     39,667,322       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 September 30, 2023 and March 31, 2023, respectively     1,400       1,400  
Common stock, $0.001 par value, 200,000,000 shares authorized 119,665,700 and 118,562,806 shares issued and 118,460,743 and 118,294,478 outstanding at September 30, 2023 and March 31, 2023, respectively     118,461       118,294  
Additional paid-in capital     394,331,516       391,940,374  
Accumulated deficit     (29,086,926 )     (18,941,825 )
Treasury stock     (2,376,790 )     (522,158 )
Total Shareholders’ Equity     362,987,661       372,596,085  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $ 402,654,983     $ 412,335,387  

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

    For the Three Months Ended September 30,     For the Six Months Ended September 30,  
    2023     2022     2023     2022  
                         
Net Revenues                                
Ammunition sales(1)   $ 15,516,589     $ 29,386,969     $ 29,622,618     $ 70,356,852  
Marketplace revenue     12,474,716       14,562,694       26,386,918       31,067,640  
Casing sales     6,381,081       4,338,896       12,617,425       7,620,093  
      34,372,386       48,288,559       68,626,961       109,044,585  
                                 
Cost of Revenues     26,084,120       35,452,850       46,314,155       78,073,214  
Gross Profit     8,288,266       12,835,709       22,312,806       30,971,371  
                                 
Operating Expenses                                
Selling and marketing     289,952       1,068,501       585,533       2,976,671  
Corporate general and administrative     7,855,624       5,055,699       15,803,187       10,084,996  
Employee salaries and related expenses     5,590,035       3,923,700       9,706,315       6,708,798  
Depreciation and amortization expense     3,371,802       3,291,322       6,715,845       6,641,678  
Total operating expenses     17,107,413       13,339,222       32,810,880       26,412,143  
Income/(Loss) from Operations     (8,819,147 )     (503,513 )     (10,498,074 )     4,559,228  
                                 
Other Income/(Expenses)                                
Other income     (321,341 )     5,098       371,610       198,596  
Interest expense     (212,314 )     (97,265 )     (416,515 )     (217,752 )
Total other income/(expense)     (533,655 )     (92,167 )     (44,905 )     (19,156 )
                                 
Income/(Loss) before Income Taxes     (9,352,802 )     (595,680 )     (10,542,979 )     4,540,072  
                                 
Provision for Income Taxes     (1,857,505 )     207,827       (1,954,649 )     2,090,552  
                                 
Net Income/(Loss)     (7,495,297 )     (803,507 )     (8,588,330 )     2,449,520  
                                 
Preferred Stock Dividend     (782,639 )     (782,639 )     (1,556,771 )     (1,556,771 )
                                 
Net Income/(Loss) Attributable to Common Stock Shareholders   $ (8,277,936 )   $ (1,586,146 )   $ (10,145,101 )   $ 892,749  
                                 
Net Income/(Loss) per share                                
Basic   $ (0.07 )   $ (0.01 )   $ (0.09 )   $ 0.01  
Diluted   $ (0.07 )   $ (0.01 )   $ (0.09 )   $ 0.01  
                                 
Weighted average number of shares outstanding                                
Basic     118,167,228       116,927,607       117,941,755       116,744,972  
Diluted     118,167,228       116,927,607       117,941,755       118,063,619  
(1 ) Included in revenue for the three months ended September 30, 2023 and 2022 is excise taxes of $1,284,166 and $2,435,051, respectively. Included in revenue for the six months ended September 30, 2023 and 2022 is excise taxes of $2,459,962 and $6,147,392, respectively.

AMMO, Inc.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW(Unaudited)

    For the Six Months EndedSeptember 30,  
    2023     2022  
             
Cash flows from operating activities:                
Net Income/(Loss)   $ (8,588,330 )   $ 2,449,520  
Adjustments to reconcile Net Income/(Loss) to Net Cash provided by operations:                
Depreciation and amortization     9,293,566       8,594,968  
Debt discount amortization     41,626       41,626  
Employee stock awards     2,290,746       2,351,438  
Stock grants     101,500       91,594  
Contingent consideration payable fair value     (41,076 )     (25,246 )
Allowance for doubtful accounts     1,047,587       934,135  
Reduction in right of use asset     243,652       398,033  
Deferred income taxes     (1,960,265 )     817,310  
Changes in Current Assets and Liabilities                
Accounts receivable     5,267,942       12,590,905  
Due from related parties     -       9,000  
Inventories     1,330,614       (9,590,856 )
Prepaid expenses     2,262,859       1,130,589  
Deposits     3,839,429       2,633,655  
Accounts payable     1,519,151       (3,017,415 )
Accrued liabilities     1,760,716       (1,295,829 )
Operating lease liability     (258,628 )     (403,184 )
Net cash provided by operating activities     18,151,089       17,710,243  
                 
Cash flows from investing activities:                
Purchase of equipment     (2,618,205 )     (8,405,180 )
Net cash used in investing activities     (2,618,205 )     (8,405,180 )
                 
Cash flow from financing activities:                
Proceeds from factoring liability     26,047,370       45,600,000  
Payments on factoring liability     (26,047,370 )     (45,291,282 )
Payments on inventory facility, net     -       (825,675 )
Payments on note payable - related party     (180,850 )     (334,374 )
Payments on insurance premium note payment     (2,017,089 )     (1,334,183 )
Proceeds from construction note payable     -       1,000,000  
Payments on construction note payable     (127,858 )     -  
Preferred stock dividends paid     (1,420,677 )     (1,420,727 )
Common stock repurchase plan     (1,855,569 )     -  
Common stock issued for exercised warrants     -       24,242  
Net cash used in financing activities     (5,602,043 )     (2,581,999 )
                 
Net increase in cash     9,930,841       6,723,064  
Restricted cash, beginning of period     500,000       -  
Cash, beginning of period     39,134,027       23,281,475  
Cash and restricted cash, end of period   $ 49,564,868     $ 30,004,539  
Restricted cash, end of period   $ -     $ 1,000,000  
Cash, end of period   $ 49,564,868     $ 29,004,539  

(Continued)

AMMO, Inc.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW(Unaudited)

    For the Six Months EndedSeptember 30,  
    2023     2022  
             
Supplemental cash flow disclosures:                
Cash paid during the period for:                
Interest   $ 375,885     $ 141,131  
Income taxes   $ -     $ 1,302,811  
                 
Non-cash investing and financing activities:                
Insurance premium note payment   $ 1,056,199     $ 2,035,519  
Dividends accumulated on preferred stock   $ 136,094     $ 136,044  
Construction note payable   $ -     $ 9,804,580  

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 Current Report on Form 8-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 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 income to Adjusted EBITDA

    For the Three Months Ended     For the Six Months Ended  
    30-Sep-23     30-Sep-22     30-Sep-23     30-Sep-22  
                         
Reconciliation of GAAP net income to Adjusted EBITDA                                
Net Income (Loss)   $ (7,495,297 )   $ (803,507 )   $ (8,588,330 )   $ 2,449,520  
Provision for Income Taxes     (1,857,505 )     207,827       (1,954,649 )     2,090,552  
Depreciation and amortization     4,673,479       4,294,845       9,293,566       8,594,968  
Interest expense, net     212,314       97,265       416,515       217,752  
Employee stock awards     1,467,949       1,176,375       2,290,746       2,351,438  
Stock grants     50,750       43,750       101,500       91,594  
Other (income) expense, net     321,341       (5,098 )     (371,610 )     (198,596 )
Contingent consideration fair value     (20,052 )     (23,944 )     (41,076 )     (25,246 )
Other nonrecurring expenses(1)     3,867,692       741,131       6,627,418       741,131  
Adjusted EBITDA   $ 1,220,671     $ 5,728,644     $ 7,774,080     $ 16,313,113  
  1 ) For the three and six months ended September 30, 2023, other nonrecurring expenses consist of professional and legal fees that are nonrecurring in nature. For the three and six months ended September 30, 2022, other nonrecurring expenses consist of proxy contest fees.

Reconciliation of GAAP net income to Fully Diluted EPS

    For the Three Months Ended  
    30-Sept-23     30-Sept-22  
Reconciliation of GAAP net income to Fully Diluted EPS                                
Net Income/(Loss)   $ (7,495,297   $ (0.06 )   $ (803,507 )   $ (0.01 )
Depreciation and amortization     4,673,479       0.04       4,294,845       0.04  
Interest expense, net     212,314       -       97,265       -  
Employee stock awards     1,467,949       0.01       1,176,375       0.01  
Stock grants     50,750       -       43,750       -  
Contingent consideration fair value     (20,052 )     -       (23,944 )     -  
Nonrecurring expenses     3,867,692       0.03       741,131       0.01  
Tax effect(1)     (2,319,673 )     (0.02 )     (1,360,309 )     (0.01 )
Adjusted Net Income   $ 437,161     $ -     $ (803,507 )   $ 0.04  
    For the Six Months Ended  
    30-Sept-23     30-Sept-22  
Reconciliation of GAAP net income to Fully Diluted EPS                                
Net Income/(Loss)   $ (8,588,330   $ (0.07 )   $ 2,449,520     $ 0.02  
Depreciation and amortization     9,293,566       0.08       8,594,968       0.07  
Interest expense, net     416,515       -       217,752       -  
Employee stock awards     2,290,746       0.02       2,351,438       0.02  
Stock grants     101,500       -       91,594       -  
Contingent consideration fair value     (41,076 )     -       (25,246 )     -  
Nonrecurring expenses     6,627,418       0.06       741,131       0.01  
Tax effect(1)     (4,329,437 )     (0.04 )     (2,531,771 )     (0.02 )
Adjusted Net Income   $ 5,770,902     $ 0.05     $ 11,889,386     $ 0.10  
    (1 ) Tax effects are estimated by applying the statutory rate to each applicable Non-GAAP adjustment.
      For the Three Months EndedSeptember 30,   For the Six Months EndedSeptember 30,  
      2023   2022   2023   2022  
Weighted average number of shares outstanding                  
  Basic   118,167,228   116,927,607   117,941,755   116,744,972  
  Diluted   118,167,228   116,927,607   117,941,755   118,063,619  
                     
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