Delaware
|
3480 |
83-1950534
|
||
(State or other jurisdiction of
incorporation or organization)
|
(Primary Standard
Industrial Code Number)
|
(I.R.S. Employer
Identification Number)
|
6401 East Thomas Road, #106
Scottsdale, Arizona 85251
(480) 947-0001
|
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
|
Fred W. Wagenhals
President and Chief Executive Officer
6401 East Thomas Road, #106
Scottsdale, Arizona 85251
(480) 947-0001
|
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
|
Copy to:
|
Jon S. Cohen, Esq.
Snell & Wilmer, LLP
400 East Van Buren Street
Suite 1900 Phoenix, AZ 85004
(602) 382-6000
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
☒
|
Title of Securities to be Registered
|
Amount to be Registered(1)
|
Proposed Maximum
Offering Price per share (2) |
Proposed Maximum
Aggregate Offering Price (1)(2) |
Amount of
Registration Fee (2) |
Common Stock, par value $0.001 per share
|
13,242,186
|
$6.04
|
$79,982,803.44
|
$9,957.86
|
(1)
|
Pursuant to Rule 416(a) promulgated under the Securities Act of 1933, as amended (the “
Securities Act
”), we are also registering an indeterminate number of shares that may be issuable with respect to the shares being registered hereunder as a result of stock splits, stock dividends, or similar transactions.
|
(2)
|
The proposed maximum offering price per share was computed in accordance with Rule 457(c) promulgated under the Securities Act, based upon the average of the high and low sales prices of our Common Stock as reported on June 30, 2018. $9,957.86 was previously paid.
|
PROSPECTUS SUMMARY
|
4
|
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
|
6
|
RISK FACTORS
|
7
|
USE OF PROCEEDS
|
27
|
MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND PURCHASES OF EQUITY SECURITIES
|
27
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
29
|
BUSINESS
|
40
|
DIRECTORS AND EXECUTIVE OFFICERS
|
46
|
CORPORATE GOVERNANCE
|
48
|
EXECUTIVE COMPENSATION
|
53
|
PRINCIPAL AND SELLING STOCKHOLDERS
|
54
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
60
|
DESCRIPTION OF COMMON STOCK
|
60
|
PLAN OF DISTRIBUTION
|
61
|
SHARES ELIGIBLE FOR FUTURE SALE
|
63
|
LEGAL MATTERS
|
63
|
EXPERTS
|
63
|
WHERE YOU CAN FIND MORE INFORMATION
|
63
|
INDEX TO FINANCIAL STATEMENTS
|
64
|
Common stock offered by the selling stockholders
|
13,242,186 shares
|
Common stock outstanding before and after this offering
|
34,300,666 shares
|
Use of Proceeds
|
We will not receive any of the proceeds from this offering.
|
Risk factors
|
This investment involves a high degree of risk. See the information contained in “Risk Factors” beginning on page 7 of this Prospectus.
|
Common stock symbol
|
Our Common Stock is listed in the over-the-counter market under the symbol POWW.
|
· |
an increase or decrease in consumer demand for our products or for the products of our competitors;
|
· |
our failure to accurately forecast consumer acceptance of new products;
|
· |
new product introductions by us or our competitors;
|
· |
changes in our relationships within our distribution channels;
|
· |
changes in general market conditions or other factors, which may result in cancellations of orders or a reduction or increase in the rate of reorders placed by retailers;
|
· |
changes in laws and regulations governing the activities for which we sell products, such as hunting and shooting sports;
|
· |
weak economic conditions or consumer confidence, which could reduce demand for discretionary items, such as our products; and
|
· |
the domestic political environment, including debate over the regulation of firearms, ammunition, and related products.
|
· |
we may be unable to secure and maintain favorable relationships with retailers and distributors;
|
· |
we may be unable to control the timing of delivery of our products to end-user consumers;
|
· |
our retailers and distributors are not subject to minimum sales requirements or any obligation to market our products to their customers;
|
· |
our retailers and distributors may terminate their relationships with us at any time; and
|
· |
our retailers and distributors market and distribute competing products.
|
· |
our success in developing, producing, marketing, and successfully selling new products;
|
· |
our ability to address the needs of our consumer customers;
|
· |
the pricing, quality, performance, and reliability of our products;
|
· |
the quality of our customer service;
|
· |
the efficiency of our production; and
|
· |
product or technology introductions by our competitors.
|
· |
enhance our operational, financial, and management systems;
|
· |
enhance our facilities and purchase additional equipment; and
|
· |
successfully hire, train, and retain additional employees, including additional personnel for our technological, sales, and marketing efforts.
|
· |
determine the appropriate creative message and media mix for advertising, marketing, and promotional expenditures;
|
· |
select the right markets, media, and specific media vehicles in which to advertise;
|
· |
identify the most effective and efficient level of spending in each market, media, and specific media vehicle; and
|
· |
effectively manage marketing costs, including creative and media expenses, to maintain acceptable customer acquisition costs.
|
· |
the cyclicality of the markets we serve;
|
· |
the timing and size of new orders;
|
· |
the cancellation of existing orders;
|
· |
the volume of orders relative to our capacity;
|
· |
product introductions and market acceptance of new products or new generations of products;
|
· |
timing of expenses in anticipation of future orders;
|
· |
changes in product mix;
|
· |
availability of production capacity;
|
· |
changes in cost and availability of labor and raw materials;
|
· |
timely delivery of products to customers;
|
· |
pricing and availability of competitive products;
|
· |
new product introduction costs;
|
· |
changes in the amount or timing of operating expenses;
|
· |
introduction of new technologies into the markets we serve;
|
· |
pressures on reducing selling prices;
|
· |
our success in serving new markets;
|
· |
adverse publicity regarding the safety, performance, and use of our products;
|
· |
the institution and outcome of any litigation;
|
· |
political, economic, or regulatory developments; and
|
· |
changes in economic conditions.
|
· |
the availability of suitable acquisition candidates at attractive purchase prices;
|
· |
the ability to compete effectively for available acquisition opportunities;
|
· |
the availability of cash resources, borrowing capacity, or stock at favorable price levels to provide required purchase prices in acquisitions;
|
· |
the ability of management to devote sufficient attention to acquisition efforts; and
|
· |
the ability to obtain any requisite governmental or other approvals.
|
· |
the potential disruption of our core businesses;
|
· |
risks associated with entering markets and businesses in which we have little or no prior experience;
|
· |
diversion of management's attention from our core businesses;
|
· |
adverse effects on existing business relationships with suppliers and customers;
|
· |
risks associated with increased regulatory or compliance matters;
|
· |
failure to retain key customers, suppliers, or personnel of acquired businesses;
|
· |
the potential strain on our financial and managerial controls and reporting systems and procedures;
|
· |
greater than anticipated costs and expenses related to the integration of the acquired business with our business;
|
· |
potential unknown liabilities associated with the acquired company;
|
· |
risks associated with weak internal controls over information technology systems and associated cyber security risks;
|
· |
meeting the challenges inherent in effectively managing an increased number of employees in diverse locations;
|
· |
failure of acquired businesses to achieve expected results;
|
· |
the risk of impairment charges related to potential write-downs of acquired assets in future acquisitions; and
|
· |
the challenge of creating uniform standards, controls, procedures, policies, and information systems.
|
· |
require the licensing of all persons manufacturing, exporting, importing, or selling firearms and ammunition as a business;
|
· |
require background checks for purchasers of firearms;
|
· |
impose waiting periods between the purchase of a firearm and the delivery of a firearm;
|
· |
prohibit the sale of firearms to certain persons, such as those below a certain age and persons with criminal records;
|
· |
regulate the use and storage of gun powder or other energetic materials;
|
· |
regulate our employment of personnel with criminal convictions; and
|
· |
restrict access to firearm manufacturing facilities for individuals from other countries or with criminal convictions.
|
· |
our ability to execute our business plan;
|
· |
actual or anticipated changed in our operating results;
|
· |
variations in our quarterly results;
|
· |
changes in expectations relating to our products, plans, and strategic position or those of our competitors or customers;
|
· |
announcements or introduction of technological innovations or new products by us or our competitors;
|
· |
market conditions within our market;
|
· |
the sale of even small blocks of Common Stock by stockholders;
|
· |
price and volume fluctuations in the overall stock market from time to time;
|
· |
significant volatility in the market price and trading volume of public companies in general and small emerging companies in particular;
|
· |
changes in investor perceptions;
|
· |
the level and quality of any research analyst coverage of our Common Stock, changes in earnings estimates or investment recommendations by securities analysis, or our failure to meet such estimates;
|
· |
any financial guidance we may provide to the public, any changes in such guidance, or our failure to meet such guidance;
|
· |
various market factors or perceived market factors, including rumors, whether or not correct, involving us, our customers, or our competitors;
|
· |
future sales of our Common Stock;
|
· |
Introductions of new products or new pricing policies by us or by our competitors;
|
· |
regulatory or environmental laws that restrict the sale of ammunition containing lead;
|
· |
acquisitions or strategic alliances by us or by our competitors;
|
· |
litigation involving us, our competitors, or our industry;
|
· |
regulatory, legislative, political, and other developments that may affect us, our customers, and the purchasers of our products;
|
· |
the gain or loss of significant customers;
|
· |
the volume and timing of customers' orders;
|
· |
recruitment or departure of key personnel;
|
· |
developments with respect to intellectual property rights;
|
· |
our international acceptance;
|
· |
market conditions in our industry, the business success of our customers, and economy as a whole; and
|
· |
general global economic and political instability.
|
Fiscal Year Ending
|
High
|
Low
|
||||||
December 31, 2016
|
||||||||
First Quarter
|
$
|
1.25
|
$
|
1.25
|
||||
Second Quarter
|
$
|
1.28
|
$
|
1.28
|
||||
Third Quarter
|
$
|
1.28
|
$
|
1.28
|
||||
Fourth Quarter
|
$
|
1.25
|
$
|
1.25
|
||||
|
||||||||
December 31, 2017
|
||||||||
First Quarter
|
$
|
3.60
|
$
|
3.60
|
||||
Second Quarter
|
$
|
3.00
|
$
|
3.00
|
||||
Third Quarter
|
$
|
2.30
|
$
|
2.30
|
||||
Fourth Quarter
|
$
|
3.20
|
$
|
3.08
|
||||
|
||||||||
Transition Period
|
||||||||
January 1, 2018 - March 31, 2018
|
$
|
4.75
|
$
|
2.95
|
||||
|
||||||||
March 31, 2019
|
||||||||
First Quarter
|
$
|
7.95
|
$
|
4.75
|
·
|
15,034,000 shares of common stock were issued to the company’s founders from October 13, 2016 through February 1, 2017
|
·
|
12,942,918 shares of common stock were issued to investors with price per share ranging from $1.25 to $1.65 for an aggregate purchase price of approximately $19,454,354 from October 14, 2016 through April 20, 2018 and 899,900 warrants to purchase 899,900 shares of common stock were exercised at a price per share of $2.50, for an aggregate purchase price of approximately $2,249,750 from May 25, 2018 through June 30, 2018
|
·
|
100,000 shares of common stock valued at $125,000 were issued for licensing agreements with Jesse James on October 13, 2016
|
·
|
2,920 shares of common stock were issued in connection with a reverse stock split effective December 30, 2016
|
·
|
100,000 shares of common stock valued at $125,000 were issued for licensing agreements with Jeff Rann on February 15, 2017
|
·
|
20,000 shares were issued on June 30, 2017 date to an individual who furnished organization fees
|
·
|
600,000 shares were issued to acquire use of a patent at a price per share of $1.25 totaling $750,000 on September 28,
2017
|
·
|
4,000 shares of common stock were issued on October 27, 2017 for stock subscriptions at a price per share of $1.25
|
·
|
10,495 shares were issued through a cashless exercise of 14,719 warrants on June 20, 2018
|
·
|
570,000 shares of common stock were issued to employees as compensation with values per share ranging from $1.00 to $2.50 for an aggregate compensation expense of approximately $961,999 from July 1, 2017 through June 30, 2018
|
·
|
544,600 shares of common stock were issued for professional services at a price per share of $1.25 totaling $678,625 from January 31, 2017 through December 31, 2017 and 107,500 warrants to purchase 107,500 shares of common stock were exercised from June 6, 2018 through June 15, 2018 at a price per share ranging from $0.50 to $2.50, for an aggregate purchase price of $104,375
|
Three Months Ended | ||||||||
June 30, 2018
|
June 30, 2017
|
|||||||
Proprietary Ammunition
|
$
|
725,915
|
$
|
38,808
|
||||
Standard Ammunition
|
524,113
|
276,771
|
||||||
Total Sales
|
$
|
1,250,028
|
$
|
315,579
|
· |
Increased product sales, specifically of proprietary lines of ammunition, like the STREAK VISUAL AMMUNITION™, OPS and Stelth that carry higher margins as a percentage of their selling price;
|
· |
Introduction of new lines of ammunition that historically carry higher margins in the consumer and government sectors;
|
· |
Reduced component costs through expansion of strategic relationships with component providers;
|
· |
Expanded use of automation equipment that reduces the total labor required to assemble finished products (automated assembly and inspection equipment was procured and installed during the quarter ended 6/30/2018) and;
|
· |
Better leverage of our fixed costs through expanded production to support the sales objectives.
|
|
For the Three-Months Ending
|
|||||||
|
March 31,
2018
|
March 31,
2017
(Unaudited)
|
||||||
Net Sales
|
$
|
1,960,688
|
$
|
653,784
|
||||
Cost of Products Sold
|
1,667,614
|
474,890
|
||||||
Gross Margin
|
293,074
|
178,894
|
||||||
Sales, General & Administrative Expenses
|
2,095,388
|
863,601
|
||||||
Loss from Operations
|
(1,802,314
|
)
|
(684,707
|
)
|
||||
Interest and other income (expense), net
|
5,086
|
(1,836,101
|
)
|
|||||
Loss before provision for income taxes
|
$
|
(1,797,228
|
)
|
$
|
(2,520,808
|
)
|
||
Provision for income taxes
|
-
|
-
|
||||||
Net Loss
|
$
|
(1,797,228
|
)
|
$
|
(2,520,808
|
)
|
|
||||||||
|
For the
Twelve Months
Ended
|
For the Period
October 13, 2016
(Inception) to
|
||||||
|
December 31, 2017
|
December 31, 2016
|
||||||
Net Sales
|
$
|
1,294,861
|
$
|
-
|
||||
Cost of Products Sold
|
1,303,586
|
-
|
||||||
Gross Margin
|
(8,725
|
)
|
-
|
|||||
Sales, General & Administrative Expenses
|
3,967,503
|
136,274
|
||||||
Loss from Operations
|
(3,976,228
|
)
|
(136,274
|
)
|
||||
Interest and other income (expense), net
|
(1,812,673
|
)
|
(18,750
|
)
|
||||
Loss before provision for income taxes
|
$
|
(5,788,901
|
)
|
$
|
(155,024
|
)
|
||
Provision for income taxes
|
-
|
-
|
||||||
Net Loss
|
$
|
(5,788,901
|
)
|
$
|
(155,024
|
)
|
Three Months Ended
|
Three Months Ended
|
Three Months Ended
|
||||||||||
March 31, 2018
|
March 31, 2017
|
December 31, 2017
|
||||||||||
Prior Inventory (1)
|
-
|
581,117
|
581,117
|
|||||||||
Proprietary Ammunition
|
669,714
|
65,260
|
317,838
|
|||||||||
Standard Ammunition
|
1,290,974
|
7,407
|
395,906
|
|||||||||
Total Sales
|
$
|
1,960,688
|
$
|
653,784
|
$
|
1,294,861
|
|
(1)
|
This total represents inventory purchased as part of the acquisition detailed in Note 3 of our Financial Statements.
|
June 30,
|
March 31,
|
December 31,
|
December 31,
|
|||||||||||||
2018
|
2018
|
2017
|
2016
|
|||||||||||||
Current assets
|
$
|
11,224,651
|
$
|
8,323,045
|
$
|
3,019,061
|
$
|
2,904,155
|
||||||||
Current liabilities
|
926,291
|
1,120,582
|
2,413,547
|
2,536,745
|
||||||||||||
$
|
10,298,360
|
$
|
7,202,463
|
$
|
605,514
|
$
|
367,410
|
|
2019
|
2020
|
2021
|
2022
|
Total
|
|||||||||||||||
Payson Lease
|
$
|
90,000
|
$
|
120,000
|
$
|
120,000
|
$
|
80,000
|
$
|
410,000
|
|
·
|
persuasive evidence of an arrangement exists
|
|
·
|
the product has been shipped to the customer
|
|
·
|
the sales price is fixed or determinable
|
|
·
|
collectability is reasonably assured
|
· |
require the licensing of all persons manufacturing, exporting, importing, or selling ammunition as a business;
|
· |
require serialization, labeling, and tracking of the acquisition and disposition of certain types of ammunition;
|
· |
regulate the interstate sale of certain ammunition;
|
· |
restrict or prohibit the ownership, use, or sale of specified categories of ammunition;
|
· |
require registries of so-called "ballistic images" of ammunition fired from new guns;
|
· |
govern the sale, export, and distribution of ammunition;
|
· |
regulate the use and storage of gun powder or other energetic materials;
|
· |
regulate the employment of personnel with certain criminal convictions;
|
· |
restrict access to ammunition manufacturing facilities for certain individuals from other countries or with criminal convictions; and
|
· |
require compliance with ITAR.
|
Name
|
|
Age
|
|
Position
|
|
Fred W. Wagenhals
6401 E. Thomas Road, #106
Scottsdale, AZ 85251
|
|
|
77
|
|
Chairman of the Board, Chief Executive Officer and President
|
|
|
|
|
|
|
Ron Shostack
6401 E. Thomas Road, #106
Scottsdale, AZ 85251
|
|
|
62
|
|
Chief Financial Officer
|
|
|
|
|
|
|
Steve Hilko
6401 E. Thomas Road, #106
Scottsdale, AZ 85251
|
|
|
62
|
|
Chief Operating Officer
|
|
|
|
|
|
|
Kathleen C. Hanrahan
6401 E. Thomas Road, #106
Scottsdale, AZ 85251
|
|
|
54
|
|
President – Global Tactical Defense Division; Director
|
|
|
|
|
|
|
Christopher Besing
6401 E. Thomas Road, #106
Scottsdale, AZ 85251
|
|
|
58
|
|
Director
|
|
|
|
|
|
|
Randy Luth
6401 E. Thomas Road, #106
Scottsdale, AZ 85251
|
|
|
64
|
|
Director
|
|
|
|
|
|
|
Harry S. Markley
6401 E. Thomas Road, #106
Scottsdale, AZ 85251
|
|
|
55
|
|
Director
|
|
|
|
|
|
|
Russell William Wallace, Jr.
6401 E. Thomas Road, #106
Scottsdale, AZ 85251
|
|
|
62
|
|
Director
|
Name and Principal Position
|
Year (1)
|
Salary (2)
|
Bonus (1)
|
Option
Awards (3) |
All Other
Compensation (4) |
Total
|
|||||||||||||||
Fred W. Wagenhals
|
2018
|
$
|
30,000
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
30,000
|
||||||||||
President, Chief Executive Officer, |
2017
|
$
|
140,000
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
140,000
|
||||||||||
and Director |
2016
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
0
|
|||||||||||
|
|
||||||||||||||||||||
Steve Hilko (4)
|
2018
|
$
|
30,000
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
30,000
|
||||||||||
Chief Operating Officer |
2017
|
$
|
108,350
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
108,350
|
||||||||||
|
|
||||||||||||||||||||
Ron Shostack (5)
|
2018
|
$
|
19,500
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
19,500
|
||||||||||
Chief Financial Officer |
2017
|
$
|
71,500
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
71,500
|
· |
each of our directors and executive officers;
|
· |
all of our directors and executive officers as a group;
|
· |
each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our Common Stock; and
|
· |
the Selling Stockholders.
|
Shares Beneficially Owned Prior to the Offering
|
Beneficially Owned Upon Completion of this Offering
|
|||||||||||||||||||
Name of Beneficial Owner
|
Number
|
Percent
|
Number of Shares Being Registered for Sale
|
Number
|
Percent
|
|||||||||||||||
Executive Officers and Directors:
|
||||||||||||||||||||
Fred W. Wagenhals (1)
|
7,524,700
|
21.94
|
%
|
-
|
7,524,700
|
21.94
|
%
|
|||||||||||||
Ron Shostack
|
125,000
|
0.36
|
%
|
-
|
125,000
|
0.36
|
%
|
|||||||||||||
Steve Hilko
|
250,000
|
0.73
|
%
|
-
|
250,000
|
0.73
|
%
|
|||||||||||||
Kathleen Hanrahan
|
140,000
|
0.41
|
%
|
-
|
140,000
|
0.41
|
%
|
|||||||||||||
Christopher S. Besing
|
20,000
|
0.06
|
%
|
-
|
20,000
|
0.06
|
%
|
|||||||||||||
Randy Luth
|
355,000
|
1.03
|
%
|
-
|
355,000
|
1.03
|
%
|
|||||||||||||
Harry S. Markley
|
20,000
|
0.06
|
%
|
-
|
20,000
|
0.06
|
%
|
|||||||||||||
Russell William Wallace, Jr.
|
340,000
|
0.99
|
%
|
-
|
340,000
|
0.99
|
%
|
|||||||||||||
All executive officers and directors as a group (eight people)
|
||||||||||||||||||||
Beneficial Shareholders greater than 5%
|
8,774,700
|
25.58
|
%
|
-
|
8,774,700
|
25.58
|
%
|
Selling Stockholders
|
||||||||||||||||||||
Adolfo and Donna Carmona
|
300,000
|
0.87
|
%
|
300,000
|
-
|
0.00
|
%
|
|||||||||||||
Advanta IRA Services FBO David M Rhodes #8004842
|
45,456
|
0.13
|
%
|
45,456
|
-
|
0.00
|
%
|
|||||||||||||
Albert Arciero
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
Albert Landstrom
|
8,181
|
0.02
|
%
|
8,181
|
-
|
0.00
|
%
|
|||||||||||||
Allen Gabriel
|
159,090
|
0.46
|
%
|
159,090
|
-
|
0.00
|
%
|
|||||||||||||
Andrew Schink
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
Angela Miller Trust
|
181,818
|
0.53
|
%
|
181,818
|
-
|
0.00
|
%
|
|||||||||||||
Anthony Adams
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Asian Gateway
|
90,785
|
0.26
|
%
|
90,785
|
-
|
0.00
|
%
|
|||||||||||||
Barrett Share Trust
|
730,500
|
2.13
|
%
|
730,500
|
-
|
0.00
|
%
|
|||||||||||||
Basil Christakos
|
8,182
|
0.02
|
%
|
8,182
|
-
|
0.00
|
%
|
|||||||||||||
Beacon Investments
|
272,727
|
0.80
|
%
|
272,727
|
-
|
0.00
|
%
|
|||||||||||||
Bennett Yanowitz Credit Shelter Trust
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Boston Light Advisors LLC
|
72,750
|
0.21
|
%
|
72,750
|
-
|
0.00
|
%
|
|||||||||||||
Bradford Paskewitz
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Bradley Karp and Belinda Karp
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
Bradly Mombert
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Brady Clark
|
1,819
|
0.01
|
%
|
1,819
|
-
|
0.00
|
%
|
|||||||||||||
Brenna Tanzosh
|
45,461
|
0.13
|
%
|
45,461
|
-
|
0.00
|
%
|
|||||||||||||
Brett Nesland
|
75,000
|
0.22
|
%
|
75,000
|
-
|
0.00
|
%
|
|||||||||||||
Bruce and Nancy Inglis
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
Bruce McFadden
|
13,634
|
0.04
|
%
|
13,634
|
-
|
0.00
|
%
|
Caisson Breakwater Fund, LP
|
272,730
|
0.80
|
%
|
272,730
|
-
|
0.00
|
%
|
|||||||||||||
Caisson Breakwater Global Opportunity Fund LLP
|
190,920
|
0.56
|
%
|
190,920
|
-
|
0.00
|
%
|
|||||||||||||
Calcott Family Trust
|
61,818
|
0.18
|
%
|
61,818
|
-
|
0.00
|
%
|
|||||||||||||
Carolyn Roney
|
9,090
|
0.03
|
%
|
9,090
|
-
|
0.00
|
%
|
|||||||||||||
CD Walker LLC
|
227,273
|
0.66
|
%
|
227,273
|
-
|
0.00
|
%
|
|||||||||||||
Chad Krull
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
Chris Merten
|
68,183
|
0.20
|
%
|
68,183
|
-
|
0.00
|
%
|
|||||||||||||
Christopher Clark
|
146,669
|
0.43
|
%
|
146,669
|
-
|
0.00
|
%
|
|||||||||||||
Christopher P Gutek
|
68,183
|
0.20
|
%
|
68,183
|
-
|
0.00
|
%
|
|||||||||||||
Clint Duty
|
68,181
|
0.20
|
%
|
68,181
|
-
|
0.00
|
%
|
|||||||||||||
Currie Family Trust
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
Dale Ragan
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
Dan Cornwell
|
75,000
|
0.22
|
%
|
75,000
|
-
|
0.00
|
%
|
|||||||||||||
Darrell Roush
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
David and Elizabeth Kocyba
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
David Kinsel
|
81,818
|
0.24
|
%
|
81,818
|
-
|
0.00
|
%
|
|||||||||||||
Devon Browne
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Don Stangle
|
22,500
|
0.07
|
%
|
22,500
|
-
|
0.00
|
%
|
|||||||||||||
Douglas Harner LLC
|
300,000
|
0.87
|
%
|
300,000
|
-
|
0.00
|
%
|
|||||||||||||
Dyke Rogers
|
265,455
|
0.77
|
%
|
265,455
|
-
|
0.00
|
%
|
|||||||||||||
Edward O'Rourke
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
Elizabeth V Sherertz
|
45,750
|
0.13
|
%
|
45,750
|
-
|
0.00
|
%
|
|||||||||||||
Emile Attar
|
22,727
|
0.07
|
%
|
22,727
|
-
|
0.00
|
%
|
|||||||||||||
Endeavour LP
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
Eugene Webb
|
258,591
|
0.75
|
%
|
258,591
|
-
|
0.00
|
%
|
|||||||||||||
Eugenia Paulette Kraft Trust dated July 15, 1994
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
FBO Gary W Zoellner
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Flying S Ranch Trust
|
60,000
|
0.17
|
%
|
60,000
|
-
|
0.00
|
%
|
|||||||||||||
G and D Conniff, LLC
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Gary Griesenauer
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Gary Saccaro
|
10,908
|
0.03
|
%
|
10,908
|
-
|
0.00
|
%
|
|||||||||||||
Gary W Levine
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
George Mokan
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
George W Holbrook, Jr.
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Gerald Clavette
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
Gerald Yanowitz
|
22,727
|
0.07
|
%
|
22,727
|
-
|
0.00
|
%
|
|||||||||||||
Glenbrook Capital LP
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Glenn Parker
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
Greg Buffington
|
225,000
|
0.66
|
%
|
225,000
|
-
|
0.00
|
%
|
|||||||||||||
Grover T Wickersham TTEE FBO GTW PC Employee Profit Sharing Plan
|
54,545
|
0.16
|
%
|
54,545
|
-
|
0.00
|
%
|
|||||||||||||
GTW and JW TTEE FBO 2000 Charitable Trust
|
27,272
|
0.08
|
%
|
27,272
|
-
|
0.00
|
%
|
|||||||||||||
Ian Ackerman
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
J Scott Ehlen
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
James Decosta
|
22,727
|
0.07
|
%
|
22,727
|
-
|
0.00
|
%
|
|||||||||||||
Jane Kantor 2011 Trust
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
Jared Berg
|
304
|
0.00
|
%
|
304
|
-
|
0.00
|
%
|
|||||||||||||
Jeanne and Keith Fishback
|
136,364
|
0.40
|
%
|
136,364
|
-
|
0.00
|
%
|
|||||||||||||
Jeffrey and Diana Berg
|
22,734
|
0.07
|
%
|
22,734
|
-
|
0.00
|
%
|
|||||||||||||
Jill Wickersham
|
27,000
|
0.08
|
%
|
27,000
|
-
|
0.00
|
%
|
|||||||||||||
Jim Brown
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Jimmie Dixon, Jr.
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
John and Laura Maring
|
75,000
|
0.22
|
%
|
75,000
|
-
|
0.00
|
%
|
|||||||||||||
John and Linea Baldwin
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
John B Payne III
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
John V Wagner
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Jon Deonise
|
22,727
|
0.07
|
%
|
22,727
|
-
|
0.00
|
%
|
|||||||||||||
Jonathan Henrich
|
607
|
0.00
|
%
|
607
|
-
|
0.00
|
%
|
|||||||||||||
Joseph Michalczyk
|
27,272
|
0.08
|
%
|
27,272
|
-
|
0.00
|
%
|
|||||||||||||
Jud and Barbara Longaker
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
Justin Brevoort
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
Bruce Franklin
|
22,727
|
0.07
|
%
|
22,727
|
-
|
0.00
|
%
|
|||||||||||||
Kadi Family Trust
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
Kathleen A Lannert Trust
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Keith Gelles
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
Keith Wright
|
188,637
|
0.55
|
%
|
188,637
|
-
|
0.00
|
%
|
|||||||||||||
Kelli Krumenacker
|
72,726
|
0.21
|
%
|
72,726
|
-
|
0.00
|
%
|
|||||||||||||
Ken Shell
|
75,000
|
0.22
|
%
|
75,000
|
-
|
0.00
|
%
|
|||||||||||||
Kevin Gabrik
|
22,730
|
0.07
|
%
|
22,730
|
-
|
0.00
|
%
|
|||||||||||||
Kimberly J Sherertz
|
45,750
|
0.13
|
%
|
45,750
|
-
|
0.00
|
%
|
Kimberly J Sherertz - Kimberly J Sherertz for William C Sheretz UGMA
|
45,750
|
0.13
|
%
|
45,750
|
-
|
0.00
|
%
|
|||||||||||||
Ladd Hill Development
|
77,271
|
0.23
|
%
|
77,271
|
-
|
0.00
|
%
|
|||||||||||||
Les Schultz
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
Lindsay Anne Wickersham 1999 Irrevocable Trust
|
27,272
|
0.08
|
%
|
27,272
|
-
|
0.00
|
%
|
|||||||||||||
Lloyd Pellham
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Lorraine Maxfield
|
8,182
|
0.02
|
%
|
8,182
|
-
|
0.00
|
%
|
|||||||||||||
Louis Schaufele
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
Malcolm Alexander Winks
|
16,364
|
0.05
|
%
|
16,364
|
-
|
0.00
|
%
|
|||||||||||||
Mark Finckle
|
10,495
|
0.03
|
%
|
10,495
|
-
|
0.00
|
%
|
|||||||||||||
Marshall Brown
|
304
|
0.00
|
%
|
304
|
-
|
0.00
|
%
|
|||||||||||||
Matthew Bain
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
Matthew Rea and Julie Bigler
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
Melanie and Jon Stagnitti
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Michael Kram
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
Michael and Leslie Heathington
|
227,273
|
0.66
|
%
|
227,273
|
-
|
0.00
|
%
|
|||||||||||||
Michael and Lisa Zupan
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
Michael Lechter
|
45,450
|
0.13
|
%
|
45,450
|
-
|
0.00
|
%
|
|||||||||||||
Mike Donnelly
|
22,500
|
0.07
|
%
|
22,500
|
-
|
0.00
|
%
|
Nancy Cowgill Trust
|
45,455
|
0.13
|
%
|
N/A
|
|
N/A
|
|
0.00
|
%
|
|||||||||||
Neil Bowles
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Nick Panayotou
|
120,455
|
0.35
|
%
|
120,455
|
-
|
0.00
|
%
|
|||||||||||||
NJK Venture, LLC
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Patrick J Carney
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Paulson Investment Company, LLC
|
147,267
|
0.43
|
%
|
147,267
|
-
|
0.00
|
%
|
|||||||||||||
Pavel Vodkin
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
PAW Small Cap Partners, L.P.
|
300,000
|
0.87
|
%
|
300,000
|
-
|
0.00
|
%
|
|||||||||||||
Pensco Trust Company, LLC, Custodian FBO Robert L Dunn IRA
|
136,364
|
0.40
|
%
|
136,364
|
-
|
0.00
|
%
|
|||||||||||||
Peter Fogarty
|
20,483
|
0.06
|
%
|
20,483
|
-
|
0.00
|
%
|
|||||||||||||
Philip and Nancy Rosenblatt
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
Phillip Parham
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
Ralph E Hardt
|
150,000
|
0.44
|
%
|
150,000
|
-
|
0.00
|
%
|
|||||||||||||
RBC Capital Markets LLC Cust FBO Darin E Shelton Simple IRA
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
RBC Capital Markets LLC Cust FBO David S Perry Sep IRA
|
181,818
|
0.53
|
%
|
181,818
|
-
|
0.00
|
%
|
|||||||||||||
RBC Capital Markets LLC Cust FBO Phil Phillips IRA
|
33,636
|
0.10
|
%
|
33,636
|
-
|
0.00
|
%
|
|||||||||||||
RBC Capital Markets LLC Cust FBO Roger Langliers Segregated Rollover IRA
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
RBC Capital Markets LLC, Cust FBO Michael Zupan IRA
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
RBC Capital Markets LLC, Cust FBO Terry Michell IRA
|
68,183
|
0.20
|
%
|
68,183
|
-
|
0.00
|
%
|
|||||||||||||
RBC Capital Markets LLC, Cust FBO Thomas C Rolfstad Segregated Rollover IRA
|
181,818
|
0.53
|
%
|
181,818
|
-
|
0.00
|
%
|
|||||||||||||
Richard Carney
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
Richard Travia
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
Rick Christen
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
Robert Fox
|
272,727
|
0.80
|
%
|
272,727
|
-
|
0.00
|
%
|
|||||||||||||
Robert Dodge
|
136,364
|
0.40
|
%
|
136,364
|
-
|
0.00
|
%
|
|||||||||||||
Robert J Monroe
|
45,453
|
0.13
|
%
|
45,453
|
-
|
0.00
|
%
|
|||||||||||||
Robert L Dunn and Theresa L Dunn as Trustees as the Dunn Family Community Property Trust Dtd February 28th, 20
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
Robert L Johnson
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Robert Lanphere, Jr.
|
150,000
|
0.44
|
%
|
150,000
|
-
|
0.00
|
%
|
|||||||||||||
Robert Rathbone
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Robert S Johnson
|
22,727
|
0.07
|
%
|
22,727
|
-
|
0.00
|
%
|
|||||||||||||
Robert Setteducati
|
146,669
|
0.43
|
%
|
146,669
|
-
|
0.00
|
%
|
|||||||||||||
Roger & Joyce Langeliers
|
181,818
|
0.53
|
%
|
181,818
|
-
|
0.00
|
%
|
|||||||||||||
Roger F Anderson
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Ron Holman
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
Ronald Coby
|
10,845
|
0.03
|
%
|
10,845
|
-
|
0.00
|
%
|
|||||||||||||
Paul Russo
|
9,090
|
0.03
|
%
|
9,090
|
-
|
0.00
|
%
|
|||||||||||||
Scott Carmony
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
Scott Mary
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
Sharon Walker
|
30,000
|
0.09
|
%
|
30,000
|
-
|
0.00
|
%
|
|||||||||||||
Shawn Willard
|
45,750
|
0.13
|
%
|
45,750
|
-
|
0.00
|
%
|
|||||||||||||
Sheldon Miller
|
68,183
|
0.20
|
%
|
68,183
|
-
|
0.00
|
%
|
|||||||||||||
Stanton Rowe
|
181,818
|
0.53
|
%
|
181,818
|
-
|
0.00
|
%
|
|||||||||||||
Starla Goff
|
19,722
|
0.06
|
%
|
19,722
|
-
|
0.00
|
%
|
|||||||||||||
Stephen Ham
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
Steve Bathgate
|
22,727
|
0.07
|
%
|
22,727
|
-
|
0.00
|
%
|
|||||||||||||
Tanya Urbach
|
14,728
|
0.04
|
%
|
14,728
|
-
|
0.00
|
%
|
|||||||||||||
The GBS Living Trust, Dated November 20, 2003 and any amendments thereto
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
The Paxton Lee Shoen 1998 Education Trust
|
27,272
|
0.08
|
%
|
27,272
|
-
|
0.00
|
%
|
|||||||||||||
Thomas Hice
|
31,818
|
0.09
|
%
|
31,818
|
-
|
0.00
|
%
|
|||||||||||||
Thomas McChesney
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
Thomas Parigan
|
146,669
|
0.43
|
%
|
146,669
|
-
|
0.00
|
%
|
|||||||||||||
Troy O'Bryan
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
Troy Stevens
|
136,364
|
0.40
|
%
|
136,364
|
-
|
0.00
|
%
|
|||||||||||||
Troy Wells
|
90,909
|
0.27
|
%
|
90,909
|
-
|
0.00
|
%
|
|||||||||||||
Veronica Marano and Thomas M Volckening
|
63,636
|
0.19
|
%
|
63,636
|
-
|
0.00
|
%
|
|||||||||||||
Wayne Newkumet
|
227,273
|
0.66
|
%
|
227,273
|
-
|
0.00
|
%
|
|||||||||||||
William Bloomquist
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
William H Costigan
|
31,820
|
0.09
|
%
|
31,820
|
-
|
0.00
|
%
|
|||||||||||||
William Murphy
|
68,190
|
0.20
|
%
|
68,190
|
-
|
0.00
|
%
|
|||||||||||||
Orbreyn Williams
|
22,728
|
0.07
|
%
|
22,728
|
-
|
0.00
|
%
|
|||||||||||||
William Potts
|
45,455
|
0.13
|
%
|
45,455
|
-
|
0.00
|
%
|
|||||||||||||
Woodworth Contrarian Stock and Bond Fund LP
|
67,500
|
0.20
|
%
|
67,500
|
-
|
0.00
|
%
|
|||||||||||||
Total Selling Stockholders
|
13,242,186
|
38.78
|
%
|
13,242,186
|
-
|
0.00
|
%
|
· |
on any national securities exchange or quotation service on which the shares may be listed or quoted at the time of sale;
|
· |
in the over-the-counter market;
|
· |
in the transactions otherwise than on these exchanges or systems or in the over-the-counter market;
|
· |
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
|
· |
block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction;
|
· |
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
|
· |
an exchange distribution in accordance with the rules of the applicable exchange;
|
· |
privately negotiated transactions;
|
· |
short sales;
|
· |
through the listing or settlement of options or other hedging transactions, whether such options are listed on an options exchange or otherwise;
|
· |
broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;
|
· |
a combination of any such methods of sale; and
|
· |
any other method permitted pursuant to applicable law.
|
Report of KWCO, P.C.
|
65
|
Consolidated Balance Sheets
|
66
|
Consolidated Statements of Operations
|
67
|
Consolidated Statements of Stockholders’ Equity
|
68
|
Consolidated Statements of Cash Flow
|
69
|
Notes to Consolidated Financial Statements
|
71
|
Unaudited Consolidated Balance Sheets
|
88
|
Unaudited Consolidated Statements of Operations
|
89
|
Unaudited Consolidated Statements of Stockholders’ Equity
|
90
|
Unaudited Consolidated Statements of Cash Flow
|
91
|
Notes to Unaudited Consolidated Financial Statements
|
93
|
Common Shares
|
Additional Paid-In
|
Subscription
|
Accumulated
|
|
||||||||||||||||||||
Number
|
Par Value
|
Capital | Receivable | (Deficit) |
Total
|
|||||||||||||||||||
Balance as of October 13, 2016
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||||||||
Common stock issued for founder's shares
|
14,934,000
|
14,934
|
-
|
-
|
-
|
14,934
|
||||||||||||||||||
Common stock issued for licensing agreement
|
100,000
|
100
|
124,900
|
-
|
-
|
125,000
|
||||||||||||||||||
Common stock issued for cash
|
720,000
|
720
|
899,280
|
(167,500
|
)
|
-
|
732,500
|
|||||||||||||||||
Organizational and fundraising cost
|
-
|
-
|
(225,000
|
)
|
-
|
-
|
(225,000
|
)
|
||||||||||||||||
Net loss for period ended December 31, 2016
|
-
|
-
|
-
|
-
|
(155,024
|
)
|
(155,024
|
)
|
||||||||||||||||
Balance as of December 31, 2016
|
15,754,000
|
$
|
15,754
|
$
|
799,180
|
$
|
(167,500
|
)
|
$
|
(155,024
|
)
|
$
|
492,410
|
|||||||||||
Reverse merger and recapitalization
|
604,371
|
604
|
(604
|
)
|
-
|
-
|
-
|
|||||||||||||||||
Subscriptions collected
|
-
|
-
|
-
|
167,500
|
-
|
167,500
|
||||||||||||||||||
Common stock issued to founders
|
500,000
|
500
|
145
|
-
|
-
|
645
|
||||||||||||||||||
Founder shares repurchased
|
(400,000
|
)
|
(400
|
)
|
(99,600
|
)
|
-
|
-
|
(100,000
|
)
|
||||||||||||||
Common stock issued for cash
|
4,640,822
|
4,641
|
6,034,259
|
-
|
-
|
6,038,900
|
||||||||||||||||||
Common stock issued for payment of legal fees
|
49,600
|
50
|
123,950
|
-
|
-
|
124,000
|
||||||||||||||||||
Subscription receivable
|
4,000
|
4
|
4,996
|
(5,000
|
)
|
-
|
-
|
|||||||||||||||||
Organizational and fundraising cost
|
20,000
|
20
|
(179,770
|
)
|
-
|
-
|
(179,750
|
)
|
||||||||||||||||
Common stock issued for licensing agreement
|
100,000
|
100
|
124,900
|
-
|
-
|
125,000
|
||||||||||||||||||
Legal, advisory and consulting fees
|
495,000
|
495
|
554,130
|
-
|
-
|
554,625
|
||||||||||||||||||
Employee stock awards
|
120,000
|
120
|
159,880
|
-
|
-
|
160,000
|
||||||||||||||||||
Shares issued for patents
|
600,000
|
600
|
749,400
|
-
|
-
|
750,000
|
||||||||||||||||||
Imputed interest on related party note
|
-
|
-
|
46,340
|
-
|
-
|
46,340
|
||||||||||||||||||
Issuance of warrants for interest
|
-
|
-
|
46,188
|
-
|
-
|
46,188
|
||||||||||||||||||
Issuance of warrants for services
|
-
|
-
|
67,000
|
-
|
-
|
67,000
|
||||||||||||||||||
Net loss for year ended December 31, 2017
|
-
|
-
|
-
|
-
|
(5,788,901
|
)
|
(5,788,901
|
)
|
||||||||||||||||
Balance as of December 31, 2017
|
22,487,793
|
$
|
22,488
|
$
|
8,430,394
|
$
|
(5,000
|
)
|
$
|
(5,943,925
|
)
|
$
|
2,503,957
|
|||||||||||
Subscription collected
|
-
|
-
|
-
|
5,000
|
-
|
5,000
|
||||||||||||||||||
Common stock issued for cash
|
5,614,210
|
5,614
|
9,257,810
|
-
|
-
|
9,263,424
|
||||||||||||||||||
Organizational and fundraising cost
|
-
|
-
|
(1,137,211
|
)
|
-
|
-
|
(1,137,211
|
)
|
||||||||||||||||
Employee stock awards
|
292,500
|
292
|
482,332
|
-
|
-
|
482,624
|
||||||||||||||||||
Stock grant expense
|
106,563
|
106,563
|
||||||||||||||||||||||
Issuance of warrants for services
|
-
|
-
|
125,000
|
-
|
-
|
125,000
|
||||||||||||||||||
Net loss for period ended March 31, 2018
|
-
|
-
|
-
|
-
|
(1,797,228
|
)
|
(1,797,228
|
)
|
||||||||||||||||
Balance as of March 31, 2018
|
28,394,503
|
$
|
28,394
|
$
|
17,264,888
|
$
|
-
|
$
|
(7,741,153
|
)
|
$
|
9,552,129
|
|
||||||||||||
For the Three
Months Ended
March 31,
|
For the Year Ended
December 31,
|
For the Period
October 13, 2016
(Inception) to
December 31
|
||||||||||
2018
|
2017
|
2016
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net (Loss)
|
$
|
(1,797,228
|
)
|
$
|
(5,788,901
|
)
|
$
|
(155,024
|
)
|
|||
Adjustments to reconcile Net (Loss) to Net Cash provided by operations:
|
||||||||||||
Debt discount amortization
|
-
|
356,250
|
18,750
|
|||||||||
Depreciation and amortization
|
72,258
|
148,860
|
-
|
|||||||||
Loss on vendor notes receivable foreclosure
|
-
|
1,279,921
|
-
|
|||||||||
Founders shares issued as consulting fees
|
-
|
-
|
14,934
|
|||||||||
Stock for services
|
-
|
454,625
|
-
|
|||||||||
Warrants for services and interest
|
125,000
|
113,188
|
-
|
|||||||||
Employee stock awards
|
482,624
|
160,000
|
-
|
|||||||||
Stock Grants
|
106,563
|
-
|
-
|
|||||||||
Imputed interest
|
-
|
46,340
|
-
|
|||||||||
Changes in Current Assets and Liabilities
|
||||||||||||
Vendor notes receivable
|
-
|
-
|
(1,550,000
|
)
|
||||||||
Vendor advances receivable
|
-
|
186,486
|
(89,934
|
)
|
||||||||
Accounts receivable
|
(1,031,385
|
)
|
(171,812
|
)
|
-
|
|||||||
Allowance for doubtful accounts
|
(3,000
|
)
|
26,046
|
-
|
||||||||
Due from related parties
|
4,257
|
(18,461
|
)
|
-
|
||||||||
Inventories
|
(612,693
|
)
|
(928,762
|
)
|
(219,105
|
)
|
||||||
Prepaid expenses
|
101,114
|
183,181
|
-
|
|||||||||
Deposits
|
(16,300
|
)
|
-
|
-
|
||||||||
Accounts payable
|
2,572
|
418,898
|
57,995
|
|||||||||
Accrued liabilities
|
286,435
|
254,774
|
-
|
|||||||||
Net cash used in operating activities
|
(2,279,783
|
)
|
(3,279,367
|
)
|
(1,922,384
|
)
|
||||||
Cash flows from investing activities
|
||||||||||||
Purchase of equipment
|
(507,181
|
)
|
(304,188
|
)
|
-
|
|||||||
Patent Note Payment
|
(100,000
|
)
|
(100,000
|
)
|
-
|
|||||||
Net cash used in investing activities
|
(607,181
|
)
|
(404,188
|
)
|
-
|
|||||||
Cash flow from financing activities
|
||||||||||||
Convertible note payable
|
(1,575,000
|
)
|
-
|
1,500,000
|
||||||||
Convertible note payment
|
-
|
(300,000
|
)
|
-
|
||||||||
Note payment - related party
|
-
|
(960,000
|
)
|
(75,000
|
)
|
|||||||
Insurance premium note payment
|
(74,429
|
)
|
(207,033
|
)
|
-
|
|||||||
Sale of common stock
|
9,263,424
|
6,038,900
|
732,500
|
|||||||||
Collection of stock subscription
|
5,000
|
167,500
|
-
|
|||||||||
Common stock activity - founder shares
|
-
|
(99,355
|
)
|
-
|
For the Three
Months Ended
March 31,
|
For the Year Ended
December 31,
|
For the Period
October 13, 2016
(Inception) to
December 31
|
||||||||||
2018
|
2017
|
2016
|
||||||||||
Organizational and fundraising costs
|
(1,137,211
|
)
|
(179,750
|
)
|
(225,000
|
)
|
||||||
Net cash provided by financing activities
|
6,481,784
|
4,460,262
|
1,932,500
|
|||||||||
Net increase in cash
|
3,594,820
|
776,707
|
10,116
|
|||||||||
Cash, beginning of period
|
786,823
|
10,116
|
-
|
|||||||||
Cash, end of period
|
$
|
4,381,643
|
$
|
786,823
|
$
|
10,116
|
||||||
Supplemental cash flow disclosures
|
||||||||||||
Cash paid during the period for -
|
||||||||||||
Interest
|
$
|
-
|
$
|
9,105
|
$
|
-
|
||||||
Income taxes
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Non-cash investing and financing activities:
|
||||||||||||
Vendor note receivable foreclosure -
|
||||||||||||
Vendor notes receivable
|
$
|
-
|
$
|
1,305,079
|
$
|
-
|
||||||
Vendor advances receivable
|
-
|
(96,552
|
)
|
-
|
||||||||
Accounts receivable
|
-
|
(20,965
|
)
|
-
|
||||||||
Inventories
|
-
|
(644,447
|
)
|
-
|
||||||||
Equipment
|
-
|
(543,115
|
)
|
-
|
||||||||
Vendor notes receivable
|
-
|
-
|
(1,035,000
|
)
|
||||||||
Licensing Agreement
|
-
|
(125,000
|
)
|
(125,000
|
)
|
|||||||
Issuance of common stock
|
-
|
125,000
|
-
|
|||||||||
Insurance premium note payable
|
167,456
|
213,913
|
-
|
|||||||||
Prepaid expense
|
(167,456
|
)
|
(213,913
|
)
|
-
|
|||||||
Common Stock
|
-
|
604
|
-
|
|||||||||
Additional paid-in-capital
|
-
|
(604
|
)
|
-
|
||||||||
Prepaid legal services
|
-
|
(224,000
|
)
|
-
|
||||||||
Issuance of common stock
|
-
|
224,000
|
125,000
|
|||||||||
Notes payable - related parties
|
-
|
1,035,000
|
||||||||||
Issuance of common stock
|
-
|
750,000
|
-
|
|||||||||
Patent acquisition
|
-
|
(750,000
|
)
|
-
|
||||||||
Stock subscription receivable
|
-
|
(5,000
|
)
|
(167,500
|
)
|
|||||||
Additional paid-in-capital
|
-
|
5,000
|
167,500
|
|||||||||
$
|
-
|
$
|
-
|
$
|
-
|
· |
persuasive evidence of an arrangement exists
|
· |
the product has been shipped to the customer
|
· |
the sales price is fixed or determinable
|
· |
collectability is reasonably assured
|
PERCENTAGES
|
|||||||||
Revenues
|
Accounts Receivable
|
||||||||
For the Three-Months ended March 31, 2018
|
|||||||||
Customers:
|
|||||||||
A |
|
35.49
|
%
|
54.55
|
%
|
||||
B |
|
17.07
|
%
|
12.57
|
%
|
||||
C |
|
15.55
|
%
|
0.00
|
%
|
||||
D |
|
-
|
-
|
||||||
68.11
|
%
|
67.12
|
%
|
||||||
For the Twelve-Months ended December 31, 2017
|
|||||||||
Customers:
|
|||||||||
A |
|
57.60
|
%
|
27.40
|
%
|
||||
B |
|
-
|
-
|
||||||
C |
|
-
|
-
|
||||||
D |
|
-
|
19.76
|
%
|
|||||
57.60
|
%
|
47.16
|
%
|
|
Level 1 – Quoted prices for identical instruments in active markets;
|
|
Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and
|
|
Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
March 31, 2018
|
December 31, 2017
|
|||||||
Risk free interest rate
|
2.05
|
%
|
1.31 - 1.5
|
%
|
||||
Expected volatility
|
195
|
%
|
250
|
%
|
||||
Expected term
|
1 year
|
1 - 1.5 years
|
||||||
Expected dividend yield
|
0
|
%
|
0
|
%
|
|
Quoted Active Markets for Identified Assets
|
Significant Other
Observable Inputs
|
Significant
Unobservable Inputs
|
Total
|
||||||||||||
|
||||||||||||||||
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
March 31, 2018
|
||||||||||||||||
Employee stock awards
|
-
|
$
|
482,432
|
$
|
-
|
$
|
482,432
|
|||||||||
Executive Stock Grant Expense
|
-
|
106,563
|
-
|
-
|
||||||||||||
Warrants issued for services
|
-
|
-
|
125,000
|
125,000
|
||||||||||||
December 31, 2017
|
||||||||||||||||
Common stock issued for legal, advisory and consulting fees
|
-
|
$
|
454,625
|
$
|
-
|
$
|
454,625
|
|||||||||
Employee stock awards
|
-
|
160,000
|
-
|
160,000
|
||||||||||||
Common stock for licensing agreement
|
-
|
125,000
|
-
|
125,000
|
||||||||||||
Patent acquisition, noncash element
|
-
|
-
|
750,000
|
750,000
|
||||||||||||
Warrants issued for interest
|
-
|
-
|
46,188
|
46,188
|
||||||||||||
Warrants issued for services
|
-
|
-
|
67,000
|
67,000
|
||||||||||||
Assets acquired in foreclosure
|
-
|
- |
543,115
|
543,115
|
||||||||||||
Common Stock issued for prepaid legal fees
|
-
|
224,000
|
-
|
224,000
|
Advanced Tactical Armament Concepts, L.L.C. Notes Payable Purchased by Ammo
|
Amount
|
|||
|
||||
Western Alliance Bank – Balance outstanding as of October 24, 2016
|
$
|
1,910,993
|
||
Negotiated Discount with Western Alliance Bank to assume the Note Receivable
|
(360,993
|
)
|
||
AMMO, Inc. Net Purchase Price for Western Alliance Note Payable
|
1,550,000
|
|||
Mansfield, LLC Note Outstanding, inclusive of $135,000 fee outstanding
|
1,035,000
|
|||
AMMO, Inc. Net Purchase Price to Acquire Notes Receivable of Western Alliance Bank & Mansfield LLC
|
$
|
2,585,000
|
Notes Receivable
|
$
|
(2,585,000
|
)
|
|
Vendor advances receivable
|
96,552
|
|||
Accounts receivable
|
20,965
|
|||
Inventories
|
644,447
|
|||
Equipment
|
543,115
|
|||
Loss on notes receivable
|
1,279,921
|
|||
|
$
|
-
|
|
2018
|
2017
|
2016 | |||||||||
|
||||||||||||
Finished product
|
$
|
809,680
|
$
|
1,007,291
|
$
|
-
|
||||||
Raw materials
|
1,471,666
|
764,810
|
219,105
|
|||||||||
Work in process
|
123,661
|
20,213
|
-
|
|||||||||
|
$
|
2,405,007
|
$
|
1,792,314
|
$
|
219,105
|
|
|
2018
|
|
|
2017
|
|
||
Leasehold Improvements
|
|
$
|
17,772
|
|
|
$
|
15,475
|
|
Furniture and Fixtures
|
|
|
8,102
|
|
|
|
33,751
|
|
Vehicles
|
|
|
89,388
|
|
|
|
36,500
|
|
Tooling
|
|
|
359,351
|
|
|
|
184,626
|
|
Equipment
|
|
|
879,871
|
|
|
|
576,951
|
|
Total property and equipment
|
|
$
|
1,354,484
|
|
|
$
|
847,303
|
|
Less accumulated depreciation
|
|
|
(113,158
|
)
|
|
|
(77,861
|
)
|
Net property and equipment
|
|
$
|
1,241,326
|
|
|
$
|
769,442
|
|
●
|
604,371 were issued in connection with the acquisition of our business assets
|
●
|
100,000 net shares were issued to founding shareholders
|
●
|
4,640,822 shares were sold to investors for $6,038,900
|
●
|
544,600 shares valued at $678,625 were issued for legal, advisory, and consulting fees
|
●
|
600,000 shares valued at $750,000 were issued to acquire the use of a patent
|
●
|
120,000 shares valued at $160,000 were issued to employees as compensation
|
●
|
100,000 shares were issued to Jeff Rann for a licensing agreement
|
●
|
24,000 shares were issued for other purposes
|
●
|
5,614,210 shares were sold to investors for $9,263,424
|
●
|
292,500 shares valued at $482,624 were issued to employees and directors as compensation
|
●
|
400,000 shares were granted to an executive that have not yet vested
|
2016
|
||||||||||||
Number of Shares
|
Weighted Average
Exercise Price
|
Weighted Average Life
Remaining (Years)
|
||||||||||
Outstanding at October 13, 2016
|
-
|
-
|
-
|
|||||||||
Granted
|
720,000
|
$
|
2.50
|
1.95
|
||||||||
Exercised
|
-
|
-
|
-
|
|||||||||
Forfeited or cancelled
|
-
|
-
|
-
|
|||||||||
Expired
|
-
|
-
|
-
|
|||||||||
Outstanding at December 31, 2016
|
720,000
|
$
|
2.50
|
1.95
|
||||||||
Exercisable at December 31, 2016
|
720,000
|
$
|
2.50
|
1.95
|
|
||||||||||||
2017 | ||||||||||||
Number of Shares
|
Weighted Average
Exercise Price
|
Weighted Average Life Remaining (Years)
|
||||||||||
Outstanding at December 31, 2016
|
720,000
|
$
|
2.50
|
1.95
|
||||||||
Granted
|
4,542,338
|
2.42
|
1.90
|
|||||||||
Exercised
|
-
|
-
|
-
|
|||||||||
Forfeited or cancelled
|
-
|
-
|
-
|
|||||||||
Expired
|
-
|
-
|
-
|
|||||||||
Outstanding at December 31, 2017
|
5,262,338
|
$
|
2.43
|
1.77
|
||||||||
Exercisable at December 31, 2017
|
5,262,338
|
$
|
2.43
|
1.77
|
2018 | ||||||||||||
Number of Shares
|
Weighted Average
Exercise Price
|
Weighted Average Life Remaining (Years)
|
||||||||||
Outstanding at December 31, 2017
|
5,262,338
|
$
|
2.43
|
1.77
|
||||||||
Granted
|
3,609,822
|
1.95
|
5.13
|
|||||||||
Exercised
|
-
|
-
|
-
|
|||||||||
Forfeited or cancelled
|
-
|
-
|
-
|
|||||||||
Expired
|
-
|
-
|
-
|
|||||||||
Outstanding at March 31, 2018
|
8,872,160
|
$
|
2.23
|
2.97
|
||||||||
Exercisable at March 31, 2018
|
8,872,160
|
$
|
2.23
|
2.97
|
|
2018
|
2017
|
2016
|
|||||||||
Accrued payroll
|
$
|
172,419
|
$
|
145,779
|
$
|
-
|
||||||
Accrued interest
|
-
|
74,896
|
-
|
|||||||||
Accrued FAET
|
133,104
|
26,075
|
-
|
|||||||||
Accrued professional fees
|
99,255
|
|||||||||||
Other accruals
|
136,432
|
8,024
|
-
|
|||||||||
|
$
|
541,210
|
$
|
254,774
|
$
|
-
|
|
2019
|
2020
|
2021
|
2022
|
Total
|
|||||||||||||||
Payson Lease
|
$
|
120,000
|
$
|
120,000
|
$
|
120,000
|
$
|
80,000
|
$
|
440,000
|
|
2018
|
2017
|
2016
|
|||||||||
Net (Loss)
|
$
|
(1,797,228
|
)
|
$
|
(5,788,901
|
)
|
$
|
(155,024
|
)
|
|||
Benefit (expense) for income taxes computed using the statutory rate of 21% and 34%
|
377,418
|
1,968,226
|
52,708
|
|||||||||
Non-deductible expense
|
(161,864
|
)
|
(360,952
|
)
|
(5,274
|
)
|
||||||
Re-measurement of deferred income taxes due to tax reform
|
-
|
(632,683
|
)
|
-
|
||||||||
Change in valuation allowance
|
(215,554
|
)
|
(974,591
|
)
|
(47,434
|
)
|
||||||
Provision for income taxes
|
$
|
-
|
$
|
-
|
$
|
-
|
Expiring December 31,
|
||||
2036
|
$
|
139,512
|
||
2037
|
4,727,276
|
|||
4,866,788
|
||||
2018 Non-Expiring NOL
|
1,026,447
|
|||
Total NOL Carryforward
|
$
|
5,893,235
|
|
March 31, 2018
|
|||||||||||
|
Life
|
Licenses
|
Patent
|
|||||||||
|
||||||||||||
Licensing Agreement – Jesse James
|
5
|
$
|
125,000
|
$
|
-
|
|||||||
Licensing Agreement – Jeff Rann
|
5
|
125,000
|
-
|
|||||||||
Patent
|
11.2
|
- |
950,000
|
|||||||||
|
250,000
|
950,000
|
||||||||||
Accumulated amortization – Licensing Agreements
|
(58,333
|
)
|
-
|
|||||||||
Accumulated amortization – Patents
|
-
|
(49,627
|
)
|
|||||||||
$
|
191,667
|
$
|
900,373
|
|
December 31, 2017
|
|||||||||||
|
Life
|
Licenses
|
Patent
|
|||||||||
|
||||||||||||
Licensing Agreement – Jesse James
|
5
|
$
|
125,000
|
$
|
-
|
|||||||
Licensing Agreement – Jeff Rann
|
5
|
125,000
|
-
|
|||||||||
Patent
|
11.2
|
- |
950,000
|
|||||||||
|
250,000
|
950,000
|
||||||||||
Accumulated amortization – Licensing Agreements
|
(45,833
|
)
|
||||||||||
Accumulated amortization – Patents
|
- |
(25,166
|
)
|
|||||||||
$
|
204,167
|
$
|
924,834
|
|
March 31, 2017
(Unaudited)
|
|||
|
||||
Gross Sales
|
$
|
653,784
|
||
Customer incentives, discounts, returns, and allowances
|
-
|
|||
Net sales
|
653,784
|
|||
|
||||
Cost of Goods Sold, includes depreciation and amortization of $19,421 and
|
||||
federal excise taxes of $64,055 for the three months ended March 31, 2017
|
474,890
|
|||
|
||||
Gross Margin
|
178,894
|
|||
|
||||
Operating Expenses
|
||||
Selling and marketing
|
116,833
|
|||
Corporate general and administrative
|
578,402
|
|||
Employee salaries and related expenses
|
167,987
|
|||
Depreciation expense
|
379
|
|||
Total operating expenses
|
863,601
|
|||
Loss from Operations
|
(684,707
|
)
|
||
|
||||
Other Income (Expenses)
|
||||
Loss on vendor notes receivable collectability
|
(1,414,921
|
)
|
||
Interest expense
|
(421,180
|
)
|
||
|
||||
Profit (Loss) before Income Taxes
|
(2,520,808
|
)
|
||
|
||||
Provision for Income Taxes
|
-
|
|||
|
||||
Net Profit (Loss)
|
$
|
(2,520,808
|
)
|
|
|
||||
Loss per share
|
||||
Basic and fully diluted:
|
||||
Weighted average number of shares outstanding
|
17,118,431
|
|||
Loss per share
|
$
|
(0.15
|
)
|
|
March 31, 2017
(Unaudited)
|
|||
Cash flows from operating activities:
|
||||
Net (Loss)
|
$
|
(2,520,808
|
)
|
|
Adjustments to reconcile Net (Loss) to Net Cash provided by operations:
|
||||
Debt discount amortization
|
356,250
|
|||
Depreciation and amortization
|
11,343
|
|||
Common stock issued for legal fees
|
124,000
|
|||
Uncollectible vendor notes receivable
|
1,414,921
|
|||
Changes in Current Assets and Liabilities
|
||||
Vendor advances receivable
|
186,486
|
|||
Accounts receivable
|
4,546
|
|||
Other receivables
|
(2,465
|
)
|
||
Inventories
|
(765,320
|
)
|
||
Prepaid expenses
|
9,927
|
|||
Accounts payable
|
252,984
|
|||
Accounts payable
|
66,383
|
|||
Accrued liabilities
|
86,785
|
|||
Net cash used in operating activities
|
(766,511
|
)
|
||
|
||||
Cash flows from investing activities
|
||||
Purchase of equipment
|
(36,017
|
)
|
||
Net cash used in investing activities
|
(36,017
|
)
|
||
|
||||
Cash flow from financing activities
|
||||
Note payment - related party
|
(362,000
|
)
|
||
Insurance premium note payments
|
(79,328
|
)
|
||
Sale of common stock
|
1,350,875
|
|||
Organization and fundraising costs
|
(17,000
|
)
|
||
Net cash provided by financing activities
|
892,547
|
|||
|
||||
Net increase in cash
|
90,019
|
|||
Cash, beginning of period
|
10,116
|
|||
Cash, end of period
|
$
|
100,135
|
||
|
||||
Supplemental cash flow disclosures
|
||||
Cash paid during the period for -
|
||||
Interest
|
$
|
1,297
|
||
Income taxes
|
$
|
-
|
||
|
June 30, 2018
|
March 31, 2018
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
Current Assets:
|
||||||||
Cash
|
$
|
7,066,522
|
$
|
4,381,643
|
||||
Accounts receivable, net of allowance for doubtful accounts of $20,046
|
||||||||
at June 30, 2018 and $23,046 at March 31, 2018
|
815,731
|
1,201,117
|
||||||
Due from related parties
|
13,208
|
14,204
|
||||||
Inventories, at lower cost or market, principally average cost method
|
3,123,239
|
2,405,007
|
||||||
Prepaid expenses
|
205,951
|
321,074
|
||||||
Total Current Assets
|
11,224,651
|
8,323,045
|
||||||
Equipment,
net of accumulated depreciation of $168,081 at June 30,
|
||||||||
2018 and $113,158 at March 31, 2018
|
1,752,767
|
1,241,326
|
||||||
Deposits
|
148,478
|
16,300
|
||||||
Licensing agreements, net of accumulated amortization of $70,833 at
|
||||||||
June 30, 2018 and $58,333 at March 31, 2018
|
179,167
|
191,667
|
||||||
Patents, net of accumulated amortization of $70,896 at June 30,
|
||||||||
2018 and $49,627 at March 31, 2018
|
879,104
|
900,373
|
||||||
TOTAL ASSETS
|
$
|
14,184,167
|
$
|
10,672,711
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$
|
418,172
|
$
|
479,465
|
||||
Accrued liabilities
|
438,346
|
541,210
|
||||||
Insurance premium note payable
|
69,773
|
99,907
|
||||||
Total Current Liabilities
|
926,291
|
1,120,582
|
||||||
Shareholders' Equity:
|
||||||||
Common Stock, $0.001 par value, 100,000,000 shares authorized
|
||||||||
31,537,784 and 28,394,503 shares issued and outstanding at
|
||||||||
June 30, 2018 and March 31, 2018, respectively
|
31,538
|
28,394
|
||||||
Additional paid-in capital
|
22,748,317
|
17,264,888
|
||||||
Accumulated (Deficit)
|
(9,521,979
|
)
|
(7,741,153
|
)
|
||||
Total Shareholders' Equity
|
13,257,876
|
9,552,129
|
||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$
|
14,184,167
|
$
|
10,672,711
|
For the Three Months Ended June 30,
|
For the Three Months Ended June 30,
|
|||||||
2018
|
2017
|
|||||||
Net Sales
|
$
|
1,250,028
|
$
|
315,579
|
||||
Cost of Goods Sold, includes depreciation and amortization of $73,295 and
|
||||||||
$32,987 in 2018 and 2017, respectively, and federal excise taxes of
|
||||||||
$131,339 and $28,311 in 2018 and 2017, respectively
|
1,105,456
|
294,764
|
||||||
Gross Margin
|
144,572
|
20,815
|
||||||
Operating Expenses
|
||||||||
Selling and marketing
|
351,416
|
270,901
|
||||||
Corporate general and administrative
|
678,100
|
377,647
|
||||||
Employee salaries and related expenses
|
878,988
|
150,088
|
||||||
Depreciation expense
|
15,397
|
2,290
|
||||||
Total operating expenses
|
1,923,901
|
800,926
|
||||||
Loss from Operations
|
(1,779,329
|
)
|
(780,111
|
)
|
||||
Other (Expenses)
|
||||||||
Interest expense
|
(1,497
|
)
|
(22,741
|
)
|
||||
(Loss) before Income Taxes
|
(1,780,826
|
)
|
(802,852
|
)
|
||||
Provision for Income Taxes
|
-
|
-
|
||||||
Net (Loss)
|
$
|
(1,780,826
|
)
|
$
|
(802,852
|
)
|
||
(Loss) per share
|
||||||||
Basic and fully diluted:
|
||||||||
Weighted average number of shares outstanding
|
30,393,076
|
18,425,818
|
||||||
(Loss) per share
|
$
|
(0.06
|
)
|
$
|
(0.04
|
)
|
Common Shares
|
Additional Paid-In
|
Subscription
|
Accumulated
|
|
||||||||||||||||||||
Number
|
Par Value
|
Capital | Receivable | (Deficit) |
Total
|
|||||||||||||||||||
Balance as of March 31, 2018
|
28,394,503
|
$
|
28,394
|
$
|
17,264,888
|
$
|
-
|
$
|
(7,741,153
|
)
|
$
|
9,552,129
|
||||||||||||
Common stock issued for cash
|
1,967,886
|
1,968
|
3,245,062
|
-
|
-
|
3,247,030
|
||||||||||||||||||
Common stock issued for exercised warrants
|
1,007,400
|
1,007
|
2,353,118
|
-
|
-
|
2,354,125
|
||||||||||||||||||
Common stock issued for cashless warrant exercise
|
10,495
|
11
|
(11
|
)
|
-
|
-
|
-
|
|||||||||||||||||
Fundraising cost
|
-
|
-
|
(545,359
|
)
|
-
|
-
|
(545,359
|
)
|
||||||||||||||||
Employee stock awards
|
157,500
|
158
|
319,217
|
-
|
-
|
319,375
|
||||||||||||||||||
Stock Grants
|
111,402
|
111,402
|
||||||||||||||||||||||
Net loss for period ended March 31, 2018
|
-
|
-
|
-
|
-
|
(1,780,826
|
)
|
(1,780,826
|
)
|
||||||||||||||||
Balance as of June 30, 2018
|
31,537,784
|
$
|
31,538
|
$
|
22,748,317
|
$
|
-
|
$
|
(9,521,979
|
)
|
$
|
13,257,876
|
For the Three Months Ended June 30,
|
For the Three Months Ended June 30,
|
|||||||
2018
|
2017
|
|||||||
Cash flows from operating activities:
|
||||||||
Net (Loss)
|
$
|
(1,780,826
|
)
|
$
|
(802,852
|
)
|
||
Adjustments to reconcile Net (Loss) to Net Cash provided by operations:
|
||||||||
Depreciation and amortization
|
88,692
|
35,277
|
||||||
Stock Grants
|
111,402
|
-
|
||||||
Employee stock awards
|
319,375
|
-
|
||||||
Changes in Current Assets and Liabilities
|
||||||||
Accounts receivable
|
388,386
|
(210,129
|
)
|
|||||
Allowance for doubtful accounts
|
(3,000
|
)
|
-
|
|||||
Due from related parties
|
996
|
-
|
||||||
Inventories
|
(718,232
|
)
|
(56,792
|
)
|
||||
Prepaid expenses
|
115,123
|
36,840
|
||||||
Deposits
|
(132,178
|
)
|
-
|
|||||
Accounts payable
|
(61,293
|
)
|
30,010
|
|||||
Accrued liabilities
|
(102,864
|
)
|
14,689
|
|||||
Net cash used in operating activities
|
(1,774,419
|
)
|
(952,957
|
)
|
||||
Cash flows from investing activities
|
||||||||
Purchase of equipment
|
(566,364
|
)
|
(856
|
)
|
||||
Net cash used in investing activities
|
(566,364
|
)
|
(856
|
)
|
||||
Cash flow from financing activities
|
||||||||
Convertible note payment
|
-
|
(100,000
|
)
|
|||||
Note payment - related party
|
-
|
(297,960
|
)
|
|||||
Insurance premium note payment
|
(30,134
|
)
|
(39,223
|
)
|
||||
Sale of common stock
|
3,247,030
|
1,335,625
|
For the Three Months Ended June 30,
|
For the Three Months Ended June 30,
|
|||||||
2018
|
2017
|
|||||||
Common stock issued for exercised warrants
|
2,354,125
|
-
|
||||||
Organizational and fundraising costs
|
(545,359
|
)
|
-
|
|||||
Net cash provided by financing activities
|
5,025,662
|
898,442
|
||||||
Net increase in cash
|
2,684,879
|
(55,371
|
)
|
|||||
Cash, beginning of period
|
4,381,643
|
100,135
|
||||||
Cash, end of period
|
$
|
7,066,522
|
$
|
44,764
|
||||
Supplemental cash flow disclosures
|
||||||||
Cash paid during the period for -
|
||||||||
Interest
|
$
|
1,497
|
$
|
4,616
|
||||
Income taxes
|
-
|
-
|
||||||
Non-cash investing and financing activities:
|
||||||||
Additional paid-in-capital
|
$ |
(11
|
)
|
$ |
-
|
|||
Common Stock
|
11
|
-
|
||||||
$
|
-
|
$
|
-
|
·
|
persuasive evidence of an arrangement exists
|
|
·
|
the product has been shipped to the customer
|
|
·
|
the sales price is fixed or determinable
|
|
·
|
collectability is reasonably assured
|
PERCENTAGES
|
||||||||||
Revenues
|
Accounts Receivable
|
|||||||||
For the Three-Months ended June 30, 2018
|
||||||||||
Customers:
|
||||||||||
A |
|
62.37
|
%
|
13.01
|
%
|
|||||
B |
|
-
|
53.89
|
%
|
||||||
62.37
|
%
|
66.90
|
%
|
|||||||
For the Three-Months ended March 31, 2018
|
||||||||||
Customers:
|
||||||||||
A |
|
-
|
-
|
|||||||
B |
|
35.49
|
%
|
54.55
|
%
|
|||||
C |
|
17.07
|
%
|
12.57
|
%
|
|||||
D |
|
15.55
|
%
|
0.00
|
%
|
|||||
68.11
|
%
|
67.12
|
%
|
June 30, 2018
|
March 31, 2018
|
|||||||
Finished product
|
$
|
1,125,960
|
$
|
809,680
|
||||
Raw materials
|
1,761,587
|
1,471,666
|
||||||
Work in process
|
235,692
|
123,661
|
||||||
$
|
3,123,239
|
$
|
2,405,007
|
June 30, 2018
|
March 31, 2018
|
|||||||
Leasehold Improvements
|
$
|
31,682
|
$
|
17,772
|
||||
Furniture and Fixtures
|
8,102
|
8,102
|
||||||
Vehicles
|
103,511
|
89,388
|
||||||
Equipment
|
832,451
|
879,871
|
||||||
Tooling
|
945,102
|
359,351
|
||||||
Total property and equipment
|
$
|
1,920,848
|
$
|
1,354,484
|
||||
Less accumulated depreciation
|
(168,081
|
)
|
(113,158
|
) | ||||
Net property and equipment
|
$ |
1,752,767
|
$ |
1,241,326
|
· |
1,967,886 shares were sold to investors for $3,247,030
|
· |
1,007,400 shares were issued through exercised warrants of $2,354,125
|
· |
10,495 shares were issued through a cashless warrant exercise
|
· |
157,500 shares valued at $319,375 were issued to employees, members of the Board of Directors, and members of the Advisory Committee as compensation
|
Number of Shares
|
Weighted Averaged Exercise Price
|
Weighted Average Life Remaining (Years)
|
||||||||||
Outstanding at March 31, 2018
|
$
|
8,872,160
|
$
|
2.43
|
1.77
|
|||||||
Granted
|
1,494,112
|
2.04
|
4.58
|
|||||||||
Exercised
|
(1,022,119
|
)
|
2.33
|
-
|
||||||||
Forfeited or cancelled
|
-
|
-
|
-
|
|||||||||
Expired
|
(16,000
|
)
|
2.32
|
-
|
||||||||
Outstanding at June 30, 2018
|
9,328,153
|
$
|
1.93
|
2.80
|
||||||||
Exercisable at June 30, 2018
|
9,328,153
|
$
|
1.93
|
2.80
|
Amount to be Paid
|
||||
SEC Registration Fee
|
$
|
9,957.66
|
||
Printing and Engraving Expenses
|
5,000.00 | |||
Legal Fees and Expenses
|
40,000.00
|
|||
Accounting Fees and Expenses
|
6,000.00 | |||
Transfer Agent Fees
|
250.00
|
|||
Miscellaneous Fees
|
5,000.00 | |||
Total
|
$
|
66,207.86 |
Exhibit
Number
|
Description
|
5.1
|
Opinion of Snell & Wilmer, LLP*
|
23.1
|
Consent of Snell & Wilmer, LLP (included in Exhibit 5.1)
|
*
|
To be filed by amendment to this registration statement or by a report filed under the Exchange Act and incorporated herein by reference.
|
(1)
|
Filed as an exhibit to Form 8-K filed with the Commission on February 9, 2017, and incorporated herein by reference.
|
(2)
|
Incorporation by reference to Form 8-K filed with SEC on March 23, 2017.
|
(3)
|
Filed as an exhibit to Form 10-K as filed with the Commission on May 24, 2018.
|
(4)
|
Filed as an exhibit to Form 8-K as filed with the Commission on October 4, 2018.
|
(5)
|
Incorporation by reference to Form S-1 filed with the Commission on July 6, 2018.
|
AMMO, INC. | |||
|
By:
|
/s/ Fred W. Wagenhals | |
Fred W. Wagenhals
President and Chief Executive Officer
|
|||
Signature
|
|
Title
|
Date
|
|
|
|
|
|
|
|
|
/s/ Fred W. Wagenhals
|
|
Chief Executive Officer, Director
|
October 16, 2018
|
Fred W. Wagenhals
|
|
(Principal Executive and Accounting Officer)
|
|
|
|
|
|
/s/ Ronald Shostack
|
|
Chief Financial Officer,
|
October 16, 2018
|
Ronald Shostack
|
|
(Principal Financial Officer)
|
|
|
|
|
|
*
|
|
Director,
|
October 16, 2018
|
Kathleen Hanrahan
|
|
(Global Tactical Defense Division)
|
|
|
|
|
|
*
|
|
Director
|
October 16, 2018
|
Christopher Besing
|
|
|
|
|
|
|
|
*
|
|
Director
|
October 16, 2018
|
Randy Luth
|
|
|
|
|
|
|
|
*
|
|
Director
|
October 16, 2018
|
Harry S. Markley
|
|
|
|
|
|
|
|
*
|
|
Director
|
October 16, 2018
|
Russell W. Wallace, Jr.
|
|
|
|
*By:
|
/s/ Fred W. Wagenhals
|
Fred W. Wagenhals,
as Attorney-in-Fact
|
ASSIGNOR:
MANSFIELD, LLC,
a Delaware limited liability company
|
|
ASSIGNEE:
AMMO, INC.,
a Delaware corporation
|
|
|
|
By:
/s/ Tod Wagenhals
|
|
By:
/s/ Fred Wagenhals
|
Tod Wagenhals, its Managing Member
|
|
|
|
|
|
Date: December 16, 2016
|
|
Its:
President
|
|
|
Date:
December 16, 2016
|
1. |
The Chief Executive Officer and all senior financial officers are responsible for full, fair, accurate, timely, and understandable disclosure in the periodic reports required to be filed by the Company with the SEC. Accordingly, it is the responsibility of the Chief Executive Officer and each senior financial officer promptly to bring to the attention of the Disclosure Committee, if applicable, and to the Audit Committee any material information of which he or she may become aware that affects the disclosures made by the Company in its public filings or otherwise assist the Disclosure Committee, if applicable, and the Audit Committee in fulfilling their responsibilities.
|
2. |
The Chief Executive Officer and each senior financial officer shall promptly bring to the attention of the Disclosure Committee, if applicable, and the Audit Committee any information he or she may have concerning (a) significant deficiencies in the design or operation of internal controls that could adversely affect the Company's ability to record, process, summarize, and report financial data or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's financial reporting, disclosures, or internal controls.
|
3. |
The Chief Executive Officer and each senior financial officer shall promptly bring to the attention of the Audit Committee any information he or she may have concerning any violation of this Code or the Company's Code of Conduct, including any actual or apparent conflicts of interest between personal and professional relationships, involving any management or other employees who have a significant role in the Company's financial reporting, disclosures, or internal controls.
|
4. |
The Chief Executive Officer and each senior financial officer shall promptly bring to the attention of the Disclosure Committee, if applicable, and the Audit Committee any information he or she may have concerning evidence of a material violation of the securities or other laws, rules, or regulations applicable to the Company and the operation of its business, by the Company or any agent thereof, or of violation of the Code of Conduct or of these additional procedures.
|
5. |
The Board of Directors shall determine, or designate appropriate persons to determine, appropriate actions to be taken in the event of violations of the Code of Conduct or of these additional procedures by the Chief Executive Officer and the Company's senior financial officers. Such actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to the Code of Conduct and to these additional procedures, and may include written notices to the individual involved that the Board has determined that there has been a violation, censure by the Board, demotion or re-assignment of the individual involved, suspension with or without pay or benefits (as determined by the Board), and termination of the individual's employment. In determining the appropriate action in a particular case, the Board of Directors or such designee shall take into account all relevant information, including the nature and severity of the violation, whether the violation was a single occurrence or repeated occurrences, whether the violation appears to have been intentional or inadvertent, whether the individual in question had been advised prior to the violation as to the proper course of action, and whether or not the individual in question had committed other violations in the past.
|
1. |
Scope of Code
|
· |
honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
|
· |
full, fair, accurate, timely, and understandable disclosure in reports and documents AMMO files with, or submits to, the Securities and Exchange Commission (the “SEC”) and in other communications made by the Company;
|
· |
compliance with applicable governmental laws, rules, and regulations;
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· |
the prompt internal reporting of violations of this Code to the appropriate person or persons identified in this Code;
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· |
accountability for adherence to this Code; and
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· |
adherence to a high standard of business ethics.
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2. |
Compliance with Laws, Rules, and Regulations
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3. |
Conflicts of Interest
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· |
any significant ownership interest in any customer or supplier;
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· |
any consulting or employment relationship with any customer, supplier, or competitor;
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· |
any outside business activity that detracts from an individual’s ability to devote appropriate time and attention to his or her responsibilities to the Company;
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· |
the receipt of non-nominal gifts or excessive entertainment from any organization with which the Company has current or prospective business dealings;
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· |
being in the position of supervising, reviewing, or having any influence on the job evaluation, pay, or benefit of any family member; and
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· |
selling anything to the Company or buying anything from the Company, except on the same terms and conditions as comparable directors, officers, or employees are permitted to so purchase or sell.
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4. |
Insider Trading
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5. |
Corporate Opportunities
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6. |
Competition and Fair Dealing
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7. |
Diversity and Equal Opportunity Commitment
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8. |
Discrimination and Harassment
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9. |
Sexual Harassment
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· |
Verbal sexual harassment includes innuendoes, suggestive comments, jokes of an offensive sexual nature, sexual propositions, lewd remarks and threats, requests for any type of sexual favor (including repeated, unwelcome requests for dates); and verbal abuse or “kidding” that is oriented toward a prohibitive form of harassment, including that which is sexual in nature and unwelcome.
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· |
Nonverbal sexual harassment includes the distribution, display, or discussion of any written or graphic material, including calendars, posters, and cartoons that are sexually suggestive or show hostility toward an individual or group because of sex; suggestive or insulting sounds; leering; staring; whistling; obscene gestures; content in letters and notes, facsimiles, email, photos, text messages, tweets and Internet postings; or other form of communication that is sexual in nature and offensive.
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· |
Physical sexual harassment includes unwelcome, unwanted physical contact, including touching, tickling, pinching, patting, brushing up against, hugging, cornering, kissing and fondling or assault.
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10. |
Sexual Misconduct
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11. |
Workplace Violence
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12. |
Substance Abuse – Illegal Drugs and Controlled Substances
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13. |
Alcohol
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14. |
Gambling in the Workplace
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15. |
Health and Safety
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16. |
Record-Keeping
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17. |
Confidentiality
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18. |
Safeguarding Company Information
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19. |
Privacy and Data Security; Dealing with Confidential Information
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20. |
Using Social Media
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21. |
Protection and Proper Use of Company Assets
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22. |
Business Gifts and Entertainment
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23. |
Payments to Government Personnel
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24. |
Political Activities
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25. |
Communications with the Public and the Media
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26. |
Corporate Disclosures
|
· |
Any material information to which such individual may become aware that affects the disclosures made by AMMO in its public filings or would otherwise assist the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the legal counsel, and the Audit Committee of AMMO in fulfilling their responsibilities with respect to such public filings.
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· |
Any information the individual may have concerning (a) significant deficiencies in the design or operation of internal controls that could adversely affect the Company's ability to record, process, summarize, and report financial data or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's financial reporting, disclosures, or internal controls.
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· |
Any information the individual may have concerning any violation of this Code, including any actual or apparent conflicts of interest between personal and professional relationships, involving any management or other employees who have a significant role in the Company's financial reporting, disclosures, or internal controls.
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· |
Any information the individual may have concerning evidence of a material violation of the securities or other laws, rules, or regulations applicable to the Company and the operation of its business, by the Company or any agent thereof, or of violation of this Code.
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27. |
Prohibited Activities
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· |
Pornographic, obscene, offensive, harassing, or discriminatory content;
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· |
Chain letters, pyramid schemes, or unauthorized mass distributions;
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· |
Communications on behalf of commercial ventures;
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· |
Communications primarily directed to a group of employees inside the Company on behalf of an outside organization;
|
· |
Gambling, auction-related materials, or games;
|
· |
Large personal files containing graphic or audio material; and
|
· |
Violation of other’s intellectual property rights.
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28. |
Reporting any Illegal or Unethical Behavior
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29. |
Waivers of the Code of Conduct
|
30. |
Enforcement
|
31. |
Publicly Available
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