AMMO(US:POWW)2025-05-20 20:53PART I Financial Statements Presents Outdoor Holding Company's unaudited condensed consolidated financial statements for Q3 2024, detailing financial position, operations, and cash flows with explanatory notes Condensed Consolidated Financial Statements The company reported increased net losses for Q3 and H1 2024, with assets declining and operating cash flow turning negative Condensed Consolidated Statements of Operations (Unaudited) | Indicator | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Six Months Ended Sep 30, 2024 | Six Months Ended Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $31.4 million | $34.4 million | $62.4 million | $68.6 million | | Gross Profit | $7.2 million | $8.3 million | $17.0 million | $22.3 million | | Loss from Operations | ($12.5 million) | ($9.0 million) | ($22.9 million) | ($11.0 million) | | Net Loss | ($12.4 million) | ($7.7 million) | ($27.2 million) | ($9.0 million) | | Net Loss per Share (Basic & Diluted) | ($0.11) | ($0.07) | ($0.24) | ($0.09) | Condensed Consolidated Balance Sheet Highlights (Unaudited) | Asset/Liability | September 30, 2024 | March 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $33.5 million | $55.6 million | | Inventories | $51.8 million | $45.6 million | | Total Assets | $368.9 million | $403.0 million | | Total Liabilities | $43.4 million | $45.0 million | | Total Shareholders' Equity | $325.6 million | $358.0 million | Condensed Consolidated Statements of Cash Flow (Unaudited, Six Months Ended) | Cash Flow Activity | September 30, 2024 | September 30, 2023 | | :--- | :--- | :--- | | Net cash (used in)/provided by operating activities | ($9.9 million) | $18.2 million | | Net cash used in investing activities | ($2.8 million) | ($2.6 million) | | Net cash used in financing activities | ($9.3 million) | ($5.6 million) | | Net (decrease) increase in cash | ($22.1 million) | $9.9 million | Notes to Condensed Consolidated Financial Statements This section provides detailed notes on the company's segment operations, accounting policies, significant legal contingencies, and crucial subsequent events - The company operates through two segments: Ammunition manufacturing and the GunBroker e-commerce Marketplace. On April 21, 2025, the company changed its name from AMMO, Inc. to Outdoor Holding Company2425135 - Goodwill of $90.9 million is entirely allocated to the Marketplace segment, with potential for a material non-cash impairment charge for the fiscal year ending March 31, 2025, due to declines in stock price and market capitalization33 - The company is involved in significant litigation, including a lawsuit filed by director Steve Urvan seeking rescission of the GunBroker Merger and damages of at least $140 million, to which the company has filed a countersuit79 - Subsequent to the quarter end, on January 20, 2025, the company entered into an agreement to sell its Ammunition Manufacturing Business to Olin Winchester, LLC for a gross price of $75.0 million, with the transaction completed on April 18, 2025144149 Asset Impairment from Ammunition Business Sale | Asset Category | Impairment Amount | | :--- | :--- | | Inventory | $17.1 million | | Property, plant and equipment | $25.4 million | | Other assets | $0.5 million | | Intangible assets | $2.8 million | | Total Impairment | $45.8 million | - The company is facing a pending investigation by the SEC Division of Enforcement concerning its valuation and accounting for share-based compensation, capitalization of share issuance costs, and disclosure of perquisites and related party transactions, with no estimable potential loss yet157 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses decreased revenues, increased operating expenses from legal fees, and reduced liquidity, with a strategic shift after the ammunition business sale Revenue by Category (Three Months Ended) | Category | September 30, 2024 | September 30, 2023 | | :--- | :--- | :--- | | Proprietary Ammunition | $2.7 million | $1.2 million | | Standard Ammunition | $13.2 million | $14.3 million | | Ammunition Casings | $3.5 million | $6.4 million | | Marketplace Revenue | $12.0 million | $12.5 million | | Total Revenues | $31.4 million | $34.4 million | - Net revenues decreased by 8.6% for the three months and 9.1% for the six months ended September 30, 2024, attributed to changes in market demand, pricing, sales mix in the ammunition division, and lower volume in the Marketplace segment180 - Gross margin percentage decreased from 24.1% to 23.0% for the three-month period year-over-year, due to increased costs in the Ammunition segment, partially offset by improved margins from the GunBroker.com marketplace187 - Operating expenses increased by $2.4 million for the quarter, primarily due to a $3.7 million increase in legal fees related to the Delaware litigation and professional fees for manufacturing efficiency investments189190 Adjusted EBITDA Reconciliation (Non-GAAP) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Six Months Ended Sep 30, 2024 | Six Months Ended Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net loss | ($12.4 million) | ($7.7 million) | ($27.2 million) | ($9.0 million) | | Adjusted EBITDA | $0.6 million | $1.9 million | $3.0 million | $7.9 million | - Cash and cash equivalents decreased by $22.1 million from March 31, 2024, to $33.5 million at September 30, 2024, driven by an $8.0 million legal settlement payment, $5.6 million in legal fees, and $5.9 million in stock repurchases195201 Quantitative and Qualitative Disclosures About Market Risk No material changes to market risks were reported from the prior Annual Report on Form 10-K - There have been no material changes to the market risks disclosed in the company's most recent Form 10-K219 Controls and Procedures Management concluded disclosure controls were ineffective as of September 30, 2024, due to material weaknesses, and is implementing a remediation plan - The CEO and CFO concluded that disclosure controls and procedures were not effective as of September 30, 2024, due to existing material weaknesses223 - A Special Committee investigation uncovered material misstatements in prior financial periods related to share-based compensation, capitalization of costs, and accounting for convertible notes and warrants220221 - Identified material weaknesses include issues with the control environment, complex technical accounting, related party transaction disclosure, financial reporting processes, and segregation of duties224225226 - Management's remediation plan includes hiring a new CFO and VP of Accounting, reinforcing compliance, updating policies for significant transactions and related parties, and establishing a formal disclosure committee227231 PART II Legal Proceedings The company faces significant legal disputes, including a $140 million lawsuit from director Steve Urvan and a $100 million breach of contract claim from DCP - Director and stockholder Steve Urvan filed a suit seeking partial rescission of the GunBroker.com acquisition and damages of not less than $140 million, with the company filing a countersuit and a trial scheduled for April 2026235 - Innovative Computer Professionals, Inc. (DCP) filed a civil action against GunBroker.com for breach of contract, alleging $100 million in damages, with the matter tentatively scheduled for trial in November 2025236 Risk Factors No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K/A were reported - No material changes to the "Risk Factors" disclosed in the Form 10-K/A were reported238 Unregistered Sales of Equity Securities and Use of Proceeds The company has an active share repurchase program of up to $30.0 million, with 2.9 million shares repurchased in Q3 2024, leaving $21.4 million available - The Board of Directors has authorized a share repurchase program for up to $30.0 million of common stock, extended until February 2025239 Share Repurchases (Three Months Ended September 30, 2024) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that may yet be Purchased | | :--- | :--- | :--- | :--- | | Total | 2.9 million | $1.68 | $21.4 million | Defaults Upon Senior Securities No defaults upon senior securities were reported - None243 Mine Safety Disclosures Mine safety disclosures are not applicable to the company's operations - Not applicable244 Other Information No other material information was reported in this section - None245 Exhibits This section lists exhibits filed with the quarterly report, including the ammunition business sale agreement and CEO/CFO certifications - Key exhibits filed include the Asset Purchase Agreement with Olin Winchester, LLC, and certifications from the CEO and CFO pursuant to the Sarbanes-Oxley Act246