UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2022

OR

☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

AMMO, Inc.

(Exact Name of Registrant as Specified in its Charter)

delaware

001-13101

83-1950534

(State

of incorporation)

(Commission

File No.)

(I.R.S. Identification

Number)

7681 E Gray Road, Scottsdale, AZ 85260

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number including area code: (480) 947-0001

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value

POWW

The Nasdaq Stock Market LLC (Nasdaq

Capital Market)

8.75% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.001 par value

POWWP

The Nasdaq Stock Market LLC (Nasdaq

Capital Market)

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☒		Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of February 10, 2023, there were 117,844,417 shares of $0.001 par value Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: None.

TABLE OF CONTENTS

PART I

ITEM 1:	FINANCIAL STATEMENTS	3
	Condensed Consolidated Balance Sheets as of December 31, 2022 (Unaudited) and March 31, 2022	3
	Condensed Consolidated Statements of Operations (Unaudited) for the three and nine months ended December 31, 2022, and 2021	4
	Condensed Consolidated Statement of Shareholders’ Equity (Unaudited) for the three and nine months ended December 31, 2022, and 2021	5
	Condensed Consolidated Statements of Cash flow (Unaudited) for the nine months ended December 31, 2022, and 2021	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8
ITEM 2:	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION	25
ITEM 3:	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	32
ITEM 4:	CONTROLS AND PROCEDURES	32

PART II

ITEM 1:	LEGAL PROCEEDINGS	33
ITEM 1A:	RISK FACTORS	33
ITEM 2:	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	33
ITEM 3:	DEFAULTS UPON SENIOR SECURITIES	33
ITEM 4:	MINE SAFETY DISCLOSURE	33
ITEM 5:	OTHER INFORMATION	34
ITEM 6:	EXHIBITS	34
SIGNATURES		35

PART I

ITEM 1. FINANCIAL STATEMENTS

AMMO, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

	December 31, 2022			March 31, 2022
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	27,093,614		$	23,281,475
Accounts receivable, net		30,419,611			43,955,084
Due from related parties		-			15,000
Inventories		67,145,401			59,016,152
Prepaid expenses		3,838,968			3,423,925
Current portion of restricted cash		500,000			-
Total Current Assets		128,997,594			129,691,636

Property and Equipment, net		55,290,328			37,637,806

Other Assets:
Deposits		9,656,907			11,360,322
Patents, net		5,156,120			5,526,218
Other intangible assets, net		126,870,205			136,300,387
Goodwill		90,870,094			90,870,094
Right of use assets - operating leases		1,378,711			2,791,850
TOTAL ASSETS	$	418,219,959		$	414,178,313

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	20,964,686		$	26,817,083
Factoring liability		1,678,450			485,671
Accrued liabilities		4,298,739			6,178,814
Inventory credit facility		-			825,675
Current portion of operating lease liability		518,778			831,429
Current portion of note payable related party		358,263			684,639
Current portion of construction note payable		258,430			-
Insurance premium note payable		119,449			-
Total Current Liabilities		28,196,795			35,823,311

Long-term Liabilities:
Contingent consideration payable		158,570			204,142
Notes payable related party, net of current portion		-			181,132
Construction note payable, net of unamortized issuance costs		10,967,947			38,330
Operating lease liability, net of current portion		980,009			2,091,351
Deferred income tax liability		2,819,962			1,536,481
Total Liabilities		43,123,283			39,874,747

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 December 31, 2022 and March 31, 2022, respectively		1,400			1,400
Common stock, $0.001 par value, 200,000,000 shares authorized 118,044,417 and 116,485,747 shares issued and 117,894,417 and 116,485,747 outstanding at December 31, 2022 and March 31, 2022, respectively		117,894			116,487
Additional paid-in capital		390,501,876			385,426,431
Accumulated deficit		(15,233,633	)		(11,240,752	)
Treasury Stock		(290,861	)		-
Total Shareholders’ Equity		375,096,676			374,303,566
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	418,219,959		$	414,178,313

The accompanying notes are an integral part of these condensed consolidated financial statements.

AMMO, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	2022			2021			2022			2021
	For the Three Months Ended December 31,						For the Nine Months Ended December 31,
	2022			2021			2022			2021

Net Revenues
Ammunition sales	$	20,250,965		$	44,069,473		$	90,607,817		$	112,629,655
Marketplace revenue		15,419,202			17,596,769			46,486,842			46,646,051
Casing sales		3,041,327			3,022,944			10,661,420			10,891,897
Total Revenues		38,711,494			64,689,186			147,756,079			170,167,603

Cost of Revenues		26,184,315			42,166,320			104,257,529			102,457,775
Gross Profit		12,527,179			22,522,866			43,498,550			67,709,828

Operating Expenses
Selling and marketing		1,010,543			1,510,574			3,987,214			4,226,817
Corporate general and administrative		7,835,201			3,737,455			17,920,197			10,976,288
Employee salaries and related expenses		4,705,636			2,939,095			11,414,434			7,943,076
Depreciation and amortization expense		3,309,074			3,725,921			9,950,752			10,044,994
Total operating expenses		16,860,454			11,913,045			43,272,597			33,191,175
Income/(Loss) from Operations		(4,333,275	)		10,609,821			225,953			34,518,653

Other Expenses
Other income/(expense)		(170,403	)		363			28,193			21,788
Interest expense		(320,439	)		(190,319	)		(538,191	)		(468,404	)
Total other expense		(490,842	)		(189,956	)		(509,998	)		(446,616	)

Income/(Loss) before Income Taxes		(4,824,117	)		10,419,865			(284,045	)		34,072,037

Provision for Income Taxes		(721,125	)		1,351,998			1,369,427			1,351,998

Net Income/(Loss)		(4,102,992	)		9,067,867			(1,653,472	)		32,720,039

Preferred Stock Dividend		(782,639	)		(782,582	)		(2,339,409	)		(1,902,966	)

Net Income/(Loss) Attributable to Common Stock Shareholders	$	(4,885,631	)	$	8,285,285		$	(3,992,881	)	$	30,817,073

Net Income/(Loss) per share
Basic	$	(0.04	)	$	0.07		$	(0.03	)	$	0.28
Diluted	$	(0.04	)	$	0.07		$	(0.03	)	$	0.27

Weighted average number of shares outstanding
Basic		117,348,511			114,757,014			116,950,013			111,289,024
Diluted		117,348,511			116,717,500			116,950,013			113,350,998

The accompanying notes are an integral part of these condensed consolidated financial statements.

AMMO, Inc.

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(Unaudited)


	Preferred Stock				Common Shares
	Number		Par Value		Number		Par Value		Additional Paid-In Capital			Accumulated (Deficit)			Treasury Stock		Total

Balance as of March 31, 2022		1,400,000	$	1,400		116,485,747	$	116,487	$	385,426,431		$	(11,240,752	)	$	-	$	374,303,566

Common stock issued for cashless warrant exercise		-		-		99,762		99		(99	)		-			-		-
Employee stock awards		-		-		338,375		338		1,174,725			-			-		1,175,063
Stock grants		-		-		-		-		47,844			-			-		47,844
Preferred stock dividends declared		-		-		-		-		-			(638,071	)		-		(638,071	)
Dividends accumulated on preferred stock		-		-		-		-		-			(136,061	)		-		(136,061	)
Net income		-		-		-		-		-			3,253,027			-		3,253,027

Balance as of June 30, 2022		1,400,000	$	1,400		116,923,884	$	116,924	$	386,648,901		$	(8,761,857	)	$	-	$	378,005,368

Common stock issued for exercised warrants		-		-

SEC Form 10-Q filed by AMMO Inc.