Financial Performance - For the three months ended September 30, 2023, total sales amounted to $34,372,386, a decrease from $48,288,559 in the same period of 2022[63] - Ammunition sales for the three months ended September 30, 2023, were $15,516,589, compared to $29,386,969 for the same period in 2022[63] - For the six months ended September 30, 2023, total sales were $68,626,961, compared to $109,044,585 for the same period in 2022[63] - The net loss attributable to common stockholders for the three months ended September 30, 2023, was $8,277,936, compared to a loss of $1,586,146 in the same period of 2022[86] - The net loss attributable to common stockholders for the six months ended September 30, 2023, was $10,145,101, compared to a profit of $892,749 in 2022[86] Revenue Breakdown - For the three months ended September 30, 2023, total net revenues were $34,372,386, with the Ammunition segment contributing $21,897,670 and the Marketplace segment contributing $12,474,716[119] - For the six months ended September 30, 2023, total net revenues were $68,626,961, with the Ammunition segment at $42,240,043 and the Marketplace segment at $26,386,918[119] Expenses and Costs - The cost of revenues for the same period was $26,084,120, resulting in an operating loss of $8,819,147[119] - The cost of revenues for the six months was $46,314,155, leading to an operating loss of $10,498,074[119] - Advertising expenses for the three months ended September 30, 2023, were $94,026, a decrease from $145,090 in the same period of 2022, while marketplace advertising expenses increased to $200,514 from $38,115[65] - For the six months ended September 30, 2023, advertising expenses totaled $213,664 compared to $695,537 in 2022, with marketplace advertising expenses rising to $339,171 from $220,219[65] - The company recognized royalty expenses of $2,610 for the three months ended September 30, 2023, down from $36,502 in the same period of 2022[41] Inventory and Assets - As of September 30, 2023, total inventory was $53,014,205, a slight decrease from $54,344,819 as of March 31, 2023[87] - Finished product inventory increased to $16,416,733 as of September 30, 2023, from $14,362,514 as of March 31, 2023[87] - Total property and equipment as of September 30, 2023, was $73,147,570, an increase from $70,529,919 as of March 31, 2023, representing a growth of approximately 3%[90] - As of September 30, 2023, total Right of Use Assets were $1,017,982, down from $1,261,634 as of March 31, 2023, indicating a decrease of approximately 19%[95] Tax and Regulatory Matters - The effective tax rates for the three and six months ended September 30, 2023, were 19.8% and 18.5%, respectively, compared to 35.0% and 46.0% for the same periods in 2022[122] - The company has never had an IRS audit, and tax periods ended March 31, 2021, 2022, and 2023 are subject to audit[123] Legal and Contingencies - A $1.6 million letter of credit was obtained for collateral related to a judgment assessed to GunBroker.com, secured by a $1.6 million certificate of deposit[126] - The company is involved in a lawsuit against a director and shareholder regarding contractual obligations related to the acquisition of GunBroker.com[127] - The company has accrued for contingencies totaling approximately $1.1 million for the three and six months ended September 30, 2023[83] Goodwill and Intangible Assets - As of September 30, 2023, the company has a goodwill carrying value of $90,870,094, all assigned to the Marketplace segment[35] - The company has assessed qualitative factors regarding goodwill impairment and determined that no impairment was warranted for the three and six months ended September 30, 2023[35] - Annual amortization of intangible assets for the fiscal year 2024 is estimated at $6,569,306, with total future amortization projected at $122,226,044[117] - Amortization expenses related to intangible assets for the six months ended September 30, 2023, were $6,533,520, compared to the same period in 2022[116] Financing and Capital Structure - The company issued 1,102,894 shares of common stock valued at $2,290,746 during the six-month period ended September 30, 2023[108] - The maximum loan amount under the Revolving Inventory Loan and Security Agreement was increased to $2,250,000, with no outstanding balance as of September 30, 2023[93] - The company made $127,858 in principal payments for the Construction Note Payable for the six months ended September 30, 2023[106] - Preferred dividends accumulated as of September 30, 2023, were $136,094, with dividends totaling $782,639 paid on June 15, 2023, and September 15, 2023[113] Research and Development - The company anticipates reclassifying research and development costs into operating expenditures as it begins to develop new technologies and lines of ammunition[71] - The company intends to continue building its patent portfolio to protect proprietary technologies and processes[45] Taxation and Excise - The company recognized approximately $1.3 million in excise taxes for the three months ended September 30, 2023, down from $2.4 million in the same period of 2022[75] - For the six months ended September 30, 2023, excise taxes recognized were approximately $2.5 million, compared to $6.1 million in 2022[75]
AMMO(POWWP) - 2024 Q2 - Quarterly Report