AMMO(POWWP) - 2025 Q1 - Quarterly Report

Financial Performance - For the three months ended June 30, 2024, total sales amounted to $30,953,550, a decrease of 9.5% compared to $34,254,575 for the same period in 2023[63]. - Ammunition sales for the same period were $13,359,554, down from $14,106,029, representing a decline of 5.3%[63]. - Marketplace fee revenue decreased to $12,281,991 from $13,912,202, reflecting a drop of 11.7%[63]. - For the three months ended June 30, 2024, net revenues totaled $30,953,550, a decrease of 9.5% compared to $34,254,575 for the same period in 2023[119]. - The cost of revenues for the same period was $21,164,428, resulting in a gross loss of $4,160,770 from the Ammunition segment[119]. - General and administrative expenses increased to $16,083,792, compared to $12,359,424 in the prior year, reflecting a rise of 30%[119]. - The company recorded a net loss attributable to common shareholders for the three months ended June 30, 2024, leading to the exclusion of potentially dilutive securities from the diluted EPS calculation[89]. - For the three months ended June 30, 2024, the net loss attributable to common stockholders was $7,835,419, compared to a net loss of $1,867,165 for the same period in 2023, representing a significant increase in losses[90]. - The loss per share attributable to common stockholders was $0.07 for the three months ended June 30, 2024, compared to $0.02 for the same period in 2023, indicating a worsening financial performance[90]. Assets and Liabilities - The allowance for credit losses was $3,782,553 as of June 30, 2024, compared to $3,666,078 as of March 31, 2024, indicating an increase of 3.2%[36]. - Goodwill carrying value as of June 30, 2024, was $90,870,094, all attributed to the Marketplace segment[34]. - The company’s goodwill and intangible assets are valued at $151,763,617, with accumulated amortization of $43,780,775[117]. - The company recognized a receivable of $4,800,000 related to shares to be returned upon the release of a Settlement Payment, indicating potential future cash inflow[93]. - The company has accrued for contingencies totaling approximately $8.0 million for the three months ended June 30, 2024, which includes $4.8 million recognized in Due from related parties and $3.2 million in Corporate general and administrative expenses[87]. - The company has a related party transaction with $201,646 included in Accounts Receivable from entities owned by a director as of June 30, 2024[124]. Expenses - Advertising expenses for the Ammunition segment were $108,802 for the three months ended June 30, 2024, compared to $119,638 in 2023, a decrease of 9.5%[65]. - The company recognized royalty expenses of $1,864 for the three months ended June 30, 2024, down from $5,060 in 2023, a reduction of 63.2%[40]. - Depreciation expense for the three months ended June 30, 2024, was $1,502,965, compared to $1,353,327 for the same period in 2023, showing an increase of approximately 11%[94]. - Amortization expenses related to intangible assets for the three months ended June 30, 2024, were $3,189,591, slightly down from $3,266,760 in 2023[116]. - Future amortization of intangible assets is estimated at $112,398,766 over the next five fiscal years, with the highest annual amortization of $12,614,775 expected in fiscal year 2025[117]. Stock and Equity - The company issued 155,129 shares of common stock to employees and directors during the three months ended June 30, 2024, a decrease of 60.3% compared to 390,111 shares issued in the same period in 2023[73]. - The company issued 366,164 shares of common stock during the three months ended June 30, 2024, valued at $606,199, reflecting ongoing equity financing activities[108]. - As of June 30, 2024, the outstanding stock purchase warrants totaled 1,668,830, with an average exercise price of $2.15[109]. Compliance and Legal Matters - The company is involved in ongoing litigation, including a lawsuit seeking compensatory damages of not less than $140 million related to claims of fraudulent inducement and unjust enrichment[82]. - The company maintained compliance with the Debt Service Coverage Ratio requirement of not less than 1.25 to 1.00 under the terms of its Loan Agreement[106]. Taxation - The effective tax rate for the three months ended June 30, 2024, was (26.6%), a significant change from 8.6% in the same period of 2023[122]. - For the three months ended June 30, 2024, the company recognized approximately $1.3 million in excise taxes, compared to $1.2 million for the same period in 2023, reflecting a year-over-year increase of about 8.33%[71]. Other - The company continues to build its patent portfolio and intends to file new applications to protect its proprietary technologies[44]. - No impairment expense was recognized for long-lived assets for the three months ended June 30, 2024, and 2023[47]. - The company has not incurred losses related to bank deposits that exceed federally insured limits of $250,000 as of June 30, 2024[74]. - The company anticipates reclassifying research and development costs into operating expenditures as it begins to develop new technologies and lines of ammunition[70]. - The company declared a dividend of $0.55902778 per share on its Series A Preferred Stock, totaling $782,634 paid on June 17, 2024[114]. - A settlement payment of $8.0 million was made on August 8, 2024, in connection with a Settlement Agreement[126].