Part I - Financial Information Financial Statements The company reported increased net losses and decreased total assets, with a significant post-period ammunition business sale and impairment Condensed Consolidated Balance Sheets Balance Sheet Summary (in thousands) | Balance Sheet Items | September 30, 2024 | March 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $33,525 | $55,586 | | Inventories | $51,839 | $45,563 | | Goodwill | $90,870 | $90,870 | | Total Assets | $368,923 | $403,039 | | Liabilities | | | | Total Current Liabilities | $29,750 | $30,975 | | Total Liabilities | $43,351 | $44,989 | | Shareholders' Equity | | | | Accumulated deficit | ($98,668) | ($69,923) | | Total Shareholders' Equity | $325,572 | $358,050 | - Total assets decreased by approximately $34.1 million, primarily driven by a $22.1 million decrease in cash and cash equivalents. The accumulated deficit widened by $28.7 million during the six-month period10 Condensed Consolidated Statements of Operations Statement of Operations Summary (in thousands) | Metric | Q2 2024 | Q2 2023 | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $31,420 | $34,372 | $62,373 | $68,627 | | Gross Profit | $7,219 | $8,276 | $16,997 | $22,289 | | Loss from Operations | ($12,464) | ($9,012) | ($22,872) | ($11,010) | | Net Loss | ($12,428) | ($7,666) | ($27,188) | ($8,970) | | Net Loss per Share (Basic & Diluted) | ($0.11) | ($0.07) | ($0.24) | ($0.09) | - Net revenues decreased by 8.6% for the three months and 9.1% for the six months ended September 30, 2024, compared to the prior year periods. The decline was driven by lower sales in both the Ammunition and Marketplace segments12180 - Operating expenses increased significantly, leading to a larger loss from operations. For the three-month period, operating loss grew to $12.5 million from $9.0 million year-over-year12 Condensed Consolidated Statements of Cash Flow Cash Flow Summary for the Six Months Ended September 30 (in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash (used in)/provided by operating activities | ($9,885) | $18,151 | | Net cash used in investing activities | ($2,850) | ($2,618) | | Net cash used in financing activities | ($9,326) | ($5,602) | | Net (decrease)/increase in cash | ($22,061) | $9,931 | - Cash from operations turned negative, with a use of $9.9 million, a stark contrast to the $18.2 million provided in the same period last year. This was primarily due to an increase in inventories and a decrease in accounts payable19197 - Financing activities used $9.3 million in cash, largely due to a $5.9 million stock repurchase plan, $1.4 million in preferred stock dividends, and $1.4 million in insurance premium note payments19201 Notes to Condensed Consolidated Financial Statements Notes detail the company's name change, ammunition business sale, major legal disputes, and subsequent asset impairment and potential settlement - The company changed its name from AMMO, Inc. to Outdoor Holding Company on April 21, 2025, following the sale of its ammunition manufacturing business25168 - The company faces a significant legal challenge from director Steve Urvan, who is seeking rescission of the GunBroker Merger and damages of at least $140 million. The company is also suing Urvan for fraud. A trial is scheduled for July 202579 - Subsequent to the quarter end, on January 20, 2025, the company entered an agreement to sell its Ammunition Manufacturing Business to Olin Winchester, LLC for a gross purchase price of $75.0 million. The transaction was completed on April 18, 2025144149 - In connection with the sale of the ammunition business, the company determined an impairment of assets totaling $45.8 million would be recorded in the year ended March 31, 2025, including $17.1 million in inventory and $25.4 million in property, plant, and equipment150 - The company is under investigation by the SEC Staff regarding its accounting for share-based compensation, capitalization of costs, and disclosure of perquisites and related party transactions. The potential loss is currently inestimable157 Management's Discussion and Analysis (MD&A) MD&A details the strategic business sale, revenue and margin declines, increased operating expenses, and reduced cash, while addressing future liquidity Strategic Changes - On April 18, 2025, the company completed the sale of its Ammunition Manufacturing Business to Olin Winchester, LLC for $75 million. The company will continue to operate its GunBroker online marketplace business167 - In connection with the sale, the company changed its name from "AMMO, Inc." to "Outdoor Holding Company" on April 21, 2025168 Results of Operations Revenue by Category (in thousands) | Revenue Category | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | | Proprietary Ammunition | $4,078 | $2,335 | | Standard Ammunition | $25,241 | $27,287 | | Ammunition Casings | $8,789 | $12,617 | | Marketplace Revenue | $24,265 | $26,387 | | Total Revenues | $62,373 | $68,627 | - Net revenues decreased 9.1% for the six months ended Sep 30, 2024, due to changes in market demand, pricing, and sales mix, particularly a decrease in brass customer demand180 - Gross margin percentage for the six-month period decreased to 27.3% from 32.5% year-over-year, attributed to increased cost of materials, labor, and overhead in the Ammunition segment187 - Operating expenses for the six months ended Sep 30, 2024 increased by $6.6 million, primarily due to a $5.3 million increase in legal fees and a $3.2 million settlement contingency191 Adjusted EBITDA Reconciliation (Non-GAAP, in thousands) | Metric | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | | Net loss | ($27,188) | ($8,970) | | Adjustments | $30,207 | $16,851 | | Adjusted EBITDA | $3,019 | $7,881 | Liquidity and Capital Resources - As of September 30, 2024, cash and cash equivalents were $33.5 million, a decrease of $22.1 million from March 31, 2024195 - The decrease in cash was primarily due to an $8.0 million settlement payment, $5.6 million in legal fees, $2.7 million in excise tax payments, and $1.1 million in stock buybacks195 - Working capital decreased from $100.6 million at March 31, 2024, to $78.8 million at September 30, 2024196 - The company has an $11.625 million construction loan for its Manitowoc facility, with a maturity date of October 14, 2026, and a $20.0 million revolving loan facility with no outstanding balance as of September 30, 2024205211214 Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes from the market risks disclosed in its Annual Report on Form 10-K for the year ended March 31, 2024 - There have been no material changes to the market risks previously disclosed in the company's Form 10-K219 Controls and Procedures Management concluded disclosure controls were ineffective due to material weaknesses identified by a Special Committee, with remediation efforts underway - A Special Committee investigation uncovered accounting errors requiring restatement for fiscal years 2022, 2023, and 2024, primarily related to share-based compensation, capitalization of costs, and convertible notes220221 - The CEO and CFO concluded that disclosure controls and procedures were not effective as of September 30, 2024, due to previously identified material weaknesses223 - Material weaknesses persist in the control environment, complex technical accounting, related party transaction disclosure, financial reporting processes, and segregation of duties224226228 - Remediation efforts include hiring a new CFO and VP of Accounting, enhancing finance organizational structure, implementing a new Related Party Transactions Policy, establishing a Disclosure Committee, and implementing a new accounting system227230231 Part II - Other Information Legal Proceedings The company is involved in significant litigation, including a dispute with director Steve Urvan and a breach of contract claim from a digital payment processor - Director Steve Urvan sued the company seeking partial rescission of the GunBroker.com acquisition and compensatory damages of not less than $140 million. The company has countersued Urvan for fraud. A five-day trial is scheduled for April 2026235 - Innovative Computer Professionals, Inc. (DCP) filed a civil action against a company subsidiary for breach of contract, alleging $100 million in damages. The matter is tentatively scheduled for trial in November 2025236237 Risk Factors The company reports no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K/A - There were no material changes to the "Risk Factors" disclosed in the Form 10-K/A238 [Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=ITEM%202%3A%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECU RITIES%20AND%20USE%20OF%20PROCEEDS) The company maintains an active share repurchase program, having repurchased shares with remaining funds available - The Board of Directors authorized a share repurchase program for up to $30.0 million of common stock, which is set to expire in February 2025239 Share Repurchases for the 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 Under the Plan | | :--- | :--- | :--- | :--- | | July 2024 | - | - | - | | August 2024 | - | - | - | | September 2024 | 2,857,143 | $1.68 | - | | Total | 2,857,143 | $1.68 | $21,429,813 |
AMMO(POWWP) - 2025 Q4 - Annual Report