Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Mar. 31, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | AMMO, INC. | |
Entity Central Index Key | 1,015,383 | |
Document Type | 10-K | |
Document Period End Date | Dec. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer | No | |
Is Entity a Voluntary Filer | No | |
Is Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Public Float | $ 86,613,642 | |
Entity Common Stock, Shares Outstanding | 19,973,675 | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2,017 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 786,823 | $ 10,116 |
Accounts receivable, net of allowance for doubtful accounts of $26,046 in 2017 | 166,731 | 0 |
Due from related parties | 18,461 | 0 |
Vendor notes receivable, net of allowance for doubtful collection of $360,993 | 0 | 2,585,000 |
Vendor advances receivable | 0 | 89,934 |
Inventories, at lower cost or market, principally average cost method | 1,792,314 | 219,105 |
Prepaid expense | 254,732 | 0 |
Total current assets | 3,019,061 | 2,904,155 |
Equipment, net of accumulated depreciation of $77,861 in 2017 | 769,442 | 0 |
Other Assets: | ||
Licensing agreements, net of $45,833 of accumulated amortization in 2017 | 204,167 | 125,000 |
Patent, net of $25,166 of accumulated amortization in 2017 | 924,834 | 0 |
TOTAL ASSETS | 4,917,504 | 3,029,155 |
Current liabilities: | ||
Accounts payable | 476,893 | 57,995 |
Accrued liabilities | 254,774 | 0 |
Convertible note payable, net of debt discount of $356,250 in 2016 | 1,575,000 | 1,518,750 |
Note payable - related party | 100,000 | 960,000 |
Insurance premium note payable | 6,880 | 0 |
Total current liabilities | 2,413,547 | 2,536,745 |
Shareholders' Equity: | ||
Common Stock, $0.001 par value, 100,000,000 shares authorized 22,487,793 and 15,754,000 shares issued and outstanding at December 31, 2017 and 2016, respectively | 22,488 | 15,754 |
Additional paid-in capital | 8,430,394 | 799,180 |
Stock subscription receivable | (5,000) | (167,500) |
Accumulated (Deficit) | (5,943,925) | (155,024) |
Total Shareholders' Equity | 2,503,957 | 492,410 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 4,917,504 | $ 3,029,155 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Allowance for doubtful accounts | $ 26,046 | $ 0 |
Allowance for doubtful collection | 360,993 | |
Accumulated depreciation | $ (77,861) | 0 |
Debt discount | $ 356,250 | |
Common stock - par value | $ 0.001 | $ 0.001 |
Common stock - shares authorized | 100,000,000 | 100,000,000 |
Common stock - shares issued | 22,487,793 | 15,754,000 |
Common stock - shares outstanding | 22,487,793 | 15,754,000 |
Licensing Agreements [Member] | ||
Accumulated amortization | $ (45,833) | |
Patents [Member] | ||
Accumulated amortization | $ (25,166) |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
Gross Sales, net of customer incentives, discounts, returns, and allowances | $ 0 | $ 1,294,861 |
Cost of Goods Sold, includes depreciation and amortization of $141,575 and $132,294 of federal excise taxes in 2017 | 0 | 1,303,586 |
Gross Margin | 0 | (8,725) |
Operating Expenses | ||
Selling and marketing | 0 | 759,053 |
Corporate general and administrative | 136,274 | 2,154,498 |
Employee salaries and related expenses | 0 | 1,046,667 |
Depreciation expense | 0 | 7,285 |
Total operating expenses | 136,274 | 3,967,503 |
Loss from Operations | (136,274) | (3,976,228) |
Other (Expenses) | ||
Loss on vendor notes receivable foreclosure | 0 | (1,279,921) |
Interest expense | (18,750) | (532,752) |
(Loss) before Income Taxes | (155,024) | (5,788,901) |
Provision for Income Taxes | 0 | 0 |
Net (Loss) | $ (155,024) | $ (5,788,901) |
Loss per share | ||
Weighted average number of shares outstanding: Basic and Diluted | 15,754,000 | 19,279,601 |
(Loss) per share: Basic and Diluted | $ (0.01) | $ (0.30) |
CONSOLIDATED STATEMENTS OF OPE5
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Income Statement [Abstract] | |
Depreciation and amortization | $ 141,575 |
Federal excise taxes | $ 132,294 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid-In Capital | Subscription Receivable | Accumulated (Deficit) | Total |
Beginning Balance, Shares at Oct. 12, 2016 | 0 | ||||
Beginning Balance, Amount at Oct. 12, 2016 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Subscriptions collected | $ 0 | ||||
Common stock issued to founder shares, Shares | 14,934,000 | 14,934,000 | |||
Common stock issued to founder shares, Amount | $ 14,934 | $ 14,934 | |||
Common stock issued for cash , Shares | 720,000 | ||||
Common stock issued for cash, Amount | $ 720 | 899,280 | (167,500) | 732,500 | |
Organizational and fund raising costs,Shares | |||||
Organizational and fund raising costs, Amount | (225,000) | $ (225,000) | |||
Common stock issued for licensing agreement, Share | 100,000 | 100,000 | |||
Common stock issued for licensing agreement, Amount | $ 100 | 124,900 | $ 125,000 | ||
Employee stock awards, Amount | 0 | ||||
Imputed interest on related party note | 0 | ||||
Net loss for period | (155,024) | $ (155,024) | |||
Ending Balance, Shares at Dec. 31, 2016 | 15,754,000 | 15,754,000 | |||
Ending Balance, Amount at Dec. 31, 2016 | $ 15,754 | 799,180 | (167,500) | (155,024) | $ 492,410 |
Reverse merger and recapitalization, Shares | 604,371 | ||||
Reverse merger and recapitalization Amount | $ 604 | (604) | 0 | ||
Subscriptions collected | 167,500 | $ (167,500) | |||
Common stock issued to founder shares, Shares | 500,000 | 500,000 | |||
Common stock issued to founder shares, Amount | $ 500 | 145 | $ 645 | ||
Founder shares purchased, Shares | (400,000) | (400,000) | |||
Founder shares purchased, Amount | $ (400) | (99,600) | $ (100,000) | ||
Common stock issued for cash , Shares | 4,640,822 | ||||
Common stock issued for cash, Amount | $ 4,641 | 6,034,259 | 6,038,900 | ||
Common stock issued for Prepaid legal fees, Shares | 224,000 | ||||
Common stock issued for Prepaid legal fees, Amount | $ 224 | 223,776 | $ 224,000 | ||
Subscription receivable, Shares | 4,000 | 4,000 | |||
Subscription receivable, Amount | $ 4 | 4,996 | (5,000) | ||
Organizational and stock issuance cost,Shares | 20,000 | 20,000 | |||
Organizational and stock issuance cost,Amount | $ 20 | (179,770) | $ (179,750) | ||
Common stock issued for licensing agreement, Share | 100,000 | 100,000 | |||
Common stock issued for licensing agreement, Amount | $ 100 | 124,900 | $ 125,000 | ||
Legal, advisory fees and consulting fees, Share | 320,600 | 495,000 | |||
Legal, advisory fees and consulting fees, Amount | $ 321 | 454,304 | $ 454,625 | ||
Employee stock awards, Share | 120,000 | 120,000 | |||
Employee stock awards, Amount | $ 120 | 159,880 | $ 160,000 | ||
Shares issued for patents, Share | 600,000 | 600,000 | |||
Shares issued for patents, Amount | $ 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 period | (5,788,901) | $ (5,788,901) | |||
Ending Balance, Shares at Dec. 31, 2017 | 22,487,793 | 22,487,793 | |||
Ending Balance, Amount at Dec. 31, 2017 | $ 22,488 | $ 8,430,394 | $ (5,000) | $ (5,943,925) | $ 2,503,957 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOW - USD ($) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Dec. 31, 2017 | |
Cash flows from operating activities: | ||
Net (Loss) | $ (155,024) | $ (5,788,901) |
Adjustments to reconcile Net (Loss) to Net Cash provided by operations: | ||
Debt discount amortization | 18,750 | 356,250 |
Depreciation and amortization | 0 | 148,860 |
Loss on vendor notes receivable foreclosure | 0 | 1,279,921 |
Founders shares issued as consulting fees | 14,934 | 0 |
Stock issued for services | 0 | 454,625 |
Warrants for services and interest | 0 | 113,188 |
Employee stock awards | 0 | 160,000 |
Imputed interest | 0 | 46,340 |
Allowance for doubtful accounts | 0 | 26,046 |
Changes in Current Assets and Liabilities | ||
Vendor notes receivable | (1,550,000) | 0 |
Vendor advances receivable | (89,934) | 186,486 |
Accounts receivable | 0 | (171,812) |
Due from related parties | 0 | (18,461) |
Inventories | (219,105) | (928,762) |
Prepaid expenses | 0 | 183,181 |
Accounts payable | 57,995 | 418,898 |
Accrued liabilities | 0 | 254,774 |
Net cash used in operating activities | (1,922,384) | (3,279,367) |
Cash flows from investing activities: | ||
Purchase of equipment | 0 | (304,188) |
Patent | 0 | (100,000) |
Net cash used in investing activities | 0 | (404,188) |
Cash flows from financing activities: | ||
Convertible note payable | 1,500,000 | 0 |
Convertible note payment | 0 | (300,000) |
Note payments - related party | (75,000) | (960,000) |
Insurance premium note payments | 0 | (207,033) |
Sale of common stock | 732,500 | 6,038,900 |
Collection of stock subscription | 0 | 167,500 |
Common stock activity - founder shares | 0 | (99,355) |
Organization and fund raising costs | (225,000) | (179,750) |
Net cash provided by financing activities | 1,932,500 | 4,460,262 |
Net increase in cash | 10,116 | 776,707 |
Cash, beginning of period | 0 | 10,116 |
Cash, end of period | 10,116 | 786,823 |
Supplemental Cash Flow Information | ||
Cash paid during the period for Interest | 0 | 9,105 |
Cash paid during the period for Income taxes | 0 | 0 |
Vendor note receivable foreclosure | ||
Vendor notes receivable | 0 | 1,305,079 |
Vendor advances receivable | 0 | (96,552) |
Accounts receivable | 0 | (20,965) |
Inventories | 0 | (644,447) |
Equipment | 0 | (543,115) |
Vendor notes receivable | (1,035,000) | 0 |
Licensing Agreement | (125,000) | (125,000) |
Issuance of common stock | 0 | 125,000 |
Insurance premium note payable | 0 | 213,913 |
Prepaid expenses | 0 | (213,913) |
Common stock | 0 | 604 |
Additional paid-in-capital | 0 | (604) |
Prepaid legal services | 0 | (224,000) |
Issuance of common stock | 125,000 | 224,000 |
Notes payable - related party | 1,035,000 | 0 |
Issuance of common stock | 0 | 750,000 |
Patent acquisitions | 0 | (750,000) |
Notes payable - related party | 100,000 | |
Patent acquisition | (100,000) | |
Stock subscription receivable | (167,500) | (5,000) |
Additional paid-in-capital | $ 167,500 | $ 5,000 |
ORGANIZATION AND BUSINESS ACTIV
ORGANIZATION AND BUSINESS ACTIVITY | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BUSINESS ACTIVITY | NOTE 1 – ORGANIZATION AND BUSINESS ACTIVITY Ammo, Inc. (formerly Retrospettiva, Inc.) (The "Company") was organized under the laws of the State of California in November, 1990 to manufacture and import textile products, including both finished garments and fabrics. The Company's manufacturing facilities and inventories were primarily located in Europe. The Company ceased operations in 2001 and has been inactive since 2002. Effective August 2, 2004, the Company was terminated, by administrative action of the State of California as a result of non-filing of required documents with the State of California. Effective February 15, 2007, the Company reinstated its charter. The Company was again terminated and then reinstated effective December 2016. Effective October 11, 2006, efforts commenced to revive the Company. Legal counsel was hired to address litigation involving the Company and activities were undertaken to prepare and file delinquent tax and financial reports. Furthermore, a financial judgment against the Company dating back to 2002 was addressed and a final settlement was reached in October 2007. The Company filed various delinquent reports to become current in its reporting obligations to the Securities and Exchange Commission (\"SEC\") and various taxing authorities. On December 15, 2016, the Company's majority shareholders sold 475,679 (11,891,976 pre-split) of their outstanding shares to an individual resulting in a change in control of the Company. On December 15, 2016, the Company accepted the resignation of Borivoje Vukadinovic as the sole officer and as a member of the Company's Board of Directors. On December 15, 2016, Mr. Fred W. Wagenhals ("Mr. Wagenhals") was appointed as sole officer and the sole member of the Company's Board of Directors. On December 15, 2016, the Company's sole director, in conjunction with the corporate actions referenced herein approved the following: (i) to change its name to AMMO, Inc., and (ii) a change to the Company's OTC trading symbol. On December 15, 2016, the Company's sole director approved a 1-for-25 reverse stock split ("Reverse Split") of the issued and outstanding shares of common stock of the Company. As a result of the reverse split, the current 14,425,903 issued and outstanding shares of common stock shall represent 577,056 post reverse split shares; no shareholder shall be reversed below 100 shares and any and all fractional shares resulting from the reverse split shall be rounded up to the next whole share. In total 580,050 shares were issued. All references to the outstanding stock have been retrospectively adjusted to reflect this split. On December 15, 2016, the Company's sole director approved an agreement and plan of merger to re-domicile and change the Company's state of incorporation from California to the State of Delaware and to carry out a continuance of the Company from the State of California to the State of Delaware. On December 30, 2016, the Company filed articles of merger with the California Secretary of State to effect the domicile change to the State of Delaware and we filed a Certificate of Merger with the Delaware Secretary of State to effect the domicile change to the State of Delaware. In conjunction with the domicile change, our director adopted a new certificate of incorporation under the laws of the State of Delaware to increase our authorized number of shares of common stock from 15,000,000 to 100,000,000 shares of common stock, with a par value of $0.001. On March 17, 2017, AMMO, Inc, (formerly known as Retrospettiva, Inc.), a Delaware corporation (the PUBCO), entered into a definitive agreement with AMMO, Inc., a Delaware Corporation, incorporated on October 13, 2016, (PRIVCO) under which (PUBCO) acquired all of the outstanding shares of common stock of (PRIVCO). Under the terms of the Agreement, (PUBCO) purchased (PRIVCO) for 17,285,800 newly issued shares of common stock of the company. In connection with this transaction the Company retired 475,679 shares of common stock and issued 500,000 shares of common stock to satisfy an issuance liability. After the acquisition, all company operations were that of AMMO, Inc. the (PRIVCO). The merger of AMMO, Inc. into (PUBCO) was considered to be a capital transaction. The transaction was the equivalent to the issuance by AMMO, Inc. (PRIVCO) of 604,371 shares to the Company (PUBCO) accompanied by a recapitalization. The weighted average number of outstanding shares has been adjusted for the merger transaction. Ammo, Inc. is a designer, manufacturer and marketer of performance-driven, high-quality and innovative ammunition products, in the sporting industry in the United States. To maintain the strength of our brands and drive strong revenue growth, we invest in product innovation and technology to improve product performance, quality and affordability while providing great support to our retail partners and our consumers. Jesse James ("JJ") is a well-known motorcycle and gun designer and is the controlling principal of Jesse James Firearms Unlimited, LLC, ("JJFU") a Texas limited liability company. Jesse James' name, endorsements and services have commercial value to the Company; therefore, on October 15, 2016, Ammo entered into a licensing agreement with JJ and JJFU. The licensing agreement includes, among others, the following provisions: • The term of the agreement commenced on October 15, 2016. Ammo was granted exclusive worldwide rights to JJ's image rights and any and all trademarks associated with JJ in connection with the marketing, promoting, advertising, sale and commercial exploitation of the Jesse James Branded Products ("Branded Products"). • Jesse James agreed to make himself available for certain promotional activities and to promote Branded Products through his own social media outlets. Ammo will reimburse JJ for any out-of-pocket expenses and reasonable travel expenses. • JJ was issued 100,000 shares of the Company's common stock upon execution of the licensing agreement and can earn an additional 75,000 shares of common stock if certain gross sales are achieved ($15,000,000 gross sales to receive the total 75,000 shares). • The 100,000 shares of common stock were valued at $1.25 per share and the $125,000 was recognized as an asset and will be amortized over the initial sixty (60) month term of the licensing agreement. • Ammo agreed to pay JJ various royalty fees on the sale of ammunition and non-ammunition Branded Products. On November 21, 2016, Ammo completed and filed with the Federal Bureau of Alcohol Tobacco, Firearms and Explosives an "Application for Federal Firearms License" for the manufacture and importation of ammunition and firearms. On February 1, 2017, the Federal Bureau of Alcohol Tobacco, Firearms and Explosives approved that application and issued to Ammo, Federal Firearms Licenses for the manufacture and importation of ammunition and firearms. The licenses are effective until February 1, 2020. Jeff Rann ("JR") is a well-known wild game hunter, guide and spokesperson for the gun and ammo industry. Jeff Rann's name, endorsements and services have commercial value to the Company; therefore, on February 15, 2017, Ammo entered into a licensing agreement with JR. The licensing agreement includes, among others, the following provisions: • The term of the agreement commenced on February 15th, 2017. Ammo was granted exclusive worldwide rights to JR's image rights and any and all trademarks associated with JR in connection with the marketing, promoting, advertising, sale and commercial exploitation of the Jeff Rann Branded Products ("Branded Products"). • Jeff Rann agreed to make himself available for certain promotional activities and to promote Branded Products through his own social media outlets. Ammo will reimburse JR for any out-of-pocket expenses and reasonable travel expenses. • JR was issued 100,000 shares of the Company's common stock upon execution of the licensing agreement and can earn an additional 75,000 shares of common stock if certain gross sales are achieved ($15,000,000 gross sales to receive the total 75,000 shares). • The 100,000 shares of common stock were valued at $1.25 per share and the $125,000 was recognized as an asset and will be amortized over the initial sixty (60) month term of the licensing agreement. • Ammo agreed to pay JR various royalty fees on the sale of ammunition and non-ammunition Branded Products. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ACCOUNTING BASIS The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America ("GAAP" accounting) and all amounts are expressed in U.S. dollars. The Company has adopted a December 31 year end. The consolidated financial statements and notes are the representations of the Company's management who are responsible for their integrity and objectivity. The financial statements and related disclosures as of December 31, 2017 and 2016 are presented pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC"). Unless the context otherwise requires, all references to "Ammo", "we", "us", "our" or the Company are to Ammo, Inc. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Ammo, Inc. and its wholly-owned subsidiaries, SNI, LLC and Ammo Technologies, Inc. All significant intercompany accounts and transactions are eliminated in consolidation USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS The Company's accounts receivable represents amounts due from customers for products sold. Allowance for uncollectible accounts is estimated based on the aging of the accounts receivable and management's estimate of uncollectible amounts. At December 31, 2017 and 2016, the Company provided $26,046 and $0, respectively, of allowance for doubtful accounts. LICENSING AGREEMENTS The Company issued 100,000 shares of its common stock at the execution date of the licensing agreement with Jesse James. The shares were valued at $1.25 and the aggregate value of $125,000 was recorded as a licensing agreement asset. This asset will be amortized from January, 2017, the period when the first ammunition was delivered, through December 31, 2021. Amortization of the Licensing Agreement for the twelve months ended December 31, 2017 was $25,000. The Company issued 100,000 shares of its common stock at the execution date of the licensing agreement with Jeff Rann. The shares were valued at $1.25 and the aggregate value of $125,000 was recorded as a licensing agreement asset. This asset will be amortized from March, 2017, the first full month of the licensing agreement, through February 28, 2022. Amortization of the Licensing Agreement for the twelve months ended December 31, 2017 was $20,833. PATENT On August 22, 2017, the parties signed and closed on a Forward Triangular Merger Agreement (the "Merger") by which Ammo Technologies Inc., an Arizona corporation, which is 100% owned by Ammo, Inc., merged with Hallam, Inc, a Texas corporation, with Ammo Technologies Inc. being the survivor. The formal Merger was consummated on or about September 28, 2017 when both the states of Texas and Arizona approved the Merger and granted the Certificate of Merger. Under the terms of the Merger, Ammo, Inc., the sole shareholder of Ammo Technologies Inc. provided Hallam, Inc.'s two (2) shareholders 600,000 shares of Ammo, Inc. common stock, subject to restrictions, and payment of $200,000. The first payment of $100,000 to the Hallam, Inc. shareholders was paid on or about September 13, 2017 and the second payment of $100,000 was paid on February 6, 2018. The shares were valued at $1.25 and the aggregate value of $950,000 was recorded as a patent asset. This asset will be amortized from September 2017, the first full month of the acquired rights, through October 29, 2028. Amortization of the patent for the twelve months ended December 31, 2017 was $25,166. Under the terms of the Merger, all of the assets of Hallam, Inc. devolved into Ammo Technologies, Inc. subject to the liabilities of Hallam, Inc., which were none. The primary asset of Hallam, Inc. was an exclusive license to produce projectiles and ammunition using the Hybrid Luminescence Ammunition Technology under patent US 8402896 B1 with a publication date of March 26, 2013 owned by University of Louisiana at Lafayette. The License was formally amended and assigned to Ammo Technologies Inc. pursuant to an Assignment and First Amendment to Exclusive License Agreement. Assumption Agreement dated to be effective as of August 22, 2017, the Merger closing date. IMPAIRMENT OF LONG-LIVED ASSETS The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell. No impairment expense was recognized in 2017 and 2016. REVENUE RECOGNITION Revenue is recognized when the earnings process is complete and the risk and rewards of ownership have transferred to the customer, which is generally considered to have occurred upon the receipt of product by the customer. The earnings process is complete once the customer order has been placed and approved, the product shipped has been received by the customer, and there is reasonable assurance of the collection of the sales proceeds. Approximately 57.6% of total revenues were derived from one customer and 47.2% of the accounts receivable are due from two customers at December 31, 2017. ADVERTISING COSTS The Company expenses advertising costs as they are incurred. The Company incurred advertising and marketing costs of $220,154 for the twelve months ended December 31, 2017. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company measures its options and warrants at fair value in accordance with Accounting Standards Codification 820 – Fair Value Measurement ("ASC 820"). The objective of ASC 820 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. ASC 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 specifies a valuation hierarchy based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's own assumptions. These two types of inputs have created the following fair value hierarchy: 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. This hierarchy requires the Company to minimize the use of unobservable inputs and to use observable market data, if available, when estimating fair value. All common stock issued for services are valued on the date of the agreements, using the price at which shares were being sold to private investors or at the value of the services performed. Warrants issued for services and interest were valued at grant dates of August 22, 2017 and November 28, 2017, by the Company using valuation methods and assumptions that consider, among other factors, the fair value of the underlying stock, risk free interest rate, volatility and expected life. Assumptions included: Risk free interest rate 1.31 - 1.5% Expected volatility 250% Excepted term 1 - 1.5 years Expected dividend yield 0% Equipment acquired in the foreclosure transaction and the patent were valued by outside appraisers. Quoted Active Markets for Identified Assets Significant Other Observable Inputs Significant Unobservable Inputs Total (Level 1) (Level 2) (Level 3) 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 INVENTORIES Inventories are stated at the lower of cost or market. Cost is determined using the average cost method. The Company's inventory consists of raw materials, work in progress and finished goods. Cost of inventory includes cost of parts, labor, quality control and all other costs incurred to bring our inventories to condition ready to be sold. The inventory is periodically evaluated for obsolescence. PROPERTY AND EQUIPMENT Property and equipment are stated at cost less accumulated depreciation. Major renewals and improvements are capitalized, while minor replacements, maintenance and repairs are charged to current operations. Depreciation is computed by applying the straight-line method over the estimated useful lives, which are generally five to seven years. COMPENSATED ABSENCES The Company has not accrued a liability for compensated absences in accordance with Accounting Standards Codifications 710 – Compensation – General, STOCK-BASED COMPENSATION Stock-based compensation is accounted for at fair value in accordance with SFAS No. 123 and 123 (R) (ASC 718). To date, the Company has not adopted a stock option plan and has not granted any stock options. CONCENTRATIONS OF CREDIT RISK Accounts at banks are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 at various times and, as of December 31, 2017, bank account balances exceeded federally insured limits. INCOME TAXES The Company files federal and state income tax returns in accordance with the applicable rules of each jurisdiction. We account for income taxes under the asset and liability method in accordance with Accounting Standards Codification 740 - Income Taxes ("ASC 740"). The provision for income taxes includes federal, state and local income taxes currently payable, as well as deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable amounts in years in which those temporary differences are expected to be recovered or settled. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. In accordance with ASC 740, we recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company currently has substantial net operating loss carryforwards. The Company has recorded a valuation allowance equal to the net deferred tax assets due to the uncertainty of the ultimate realization of the deferred tax assets. CONTINGENCIES Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company's management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is possible that a material loss has been incurred and the amount of the liability can be estimated, the estimated liability would be accrued in the Company's consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of range of possible loss if determinable and material, would be disclosed. There was no known contingency at December 31, 2017. RECENT ACCOUNTING PRONOUNCEMENTS The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. LOSS PER COMMON SHARE Basic loss per share is calculated using the weighted-average number of common shares outstanding during each reporting period. Diluted loss per share includes potentially dilutive securities such as outstanding options and warrants, using various methods such as the treasury stock or modified treasury stock method in the determination of dilutive shares outstanding during each reporting period. The Company does not have any potentially dilutive instruments. All weighted average numbers were adjusted for the reverse stock split and merger transaction. |
VENDOR NOTES RECEIVABLE
VENDOR NOTES RECEIVABLE | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
VENDOR NOTES RECEIVABLE | NOTE 3 – VENDOR NOTES RECEIVABLE Vendor note receivable is composed of the following at December 31, 2016: Advanced Tactical Armament Concepts, L.L.C. Notes Payable Purchased by Ammo Amount Western Alliance Bank $ 1,910,993 Less: Allowance for uncollectible amounts (360,993 ) 1,550,000 Mansfield, LLC 1,035,000 $ 2,585,000 On October 24, 2016, Ammo entered into an agreement to purchase from Western Alliance Bank a note payable by Advanced Tactical Armament Concepts, L.L.C. ("ATAC"), which had an outstanding balance of $1,910,993 for $1,550,000, the amount which management had determined to be the asset's fair value on the date of the purchase. The loan is secured by a master lease agreement (ATAC's manufacturing equipment), all assets of ATAC, and loan guarantees from the principal owners of ATAC. Ammo's management determined that the value of the purchased note was the value paid to Western Alliance Bank. This promissory note held by Ammo, Inc., between ATAC and Western Alliance Bank was due in full on or before February 28, 2017. In October and November 2016, Mansfield L.L.C. ("Mansfield"), a related party, loaned ATAC an original principal of $900,000 and ATAC executed a promissory note payable for that amount. The note payable was secured by all of the assets of ATAC. On December 16, 2016, Ammo and Mansfield entered into a note purchase and sale agreement. Ammo purchased the promissory note for $1,035,000 and assumed Mansfield's collateral position. The Managing Member of Mansfield is related to the President of Ammo. The $1,035,000 was payable on or before the closing date of the note purchase and sale agreement. On February 20, 2017, a sale was held for the disposition of collateral for Advanced Tactical Armament Concepts, LLC, a Nevada Limited Liability Company. The Company was a secured party and submitted a credit bid. The Company's bid for the sale for the disposition of collateral was the highest and was accepted. The company reflected this transaction in the following manner: Vendor notes receivable $ 2,585,000 Vendor advances receivable (96,552 ) Accounts receivable (20,965 ) Inventories (644,447 ) Equipment (543,115 ) Loss on vendor notes receivable collectability (1,279,921 ) $ - |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE 4 – INVENTORIES At December 31, 2017 and 2016, the inventory balances are composed of: 2017 2016 Finished product $ 1,007,291 $ - Raw materials 764,810 219,105 Work in process 20,213 - $ 1,792,314 $ 219,105 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 5 – PROPERTY AND EQUIPMENT Property and equipment are stated at historical cost less accumulated depreciation. Depreciation is computed using the straight-line method at rates intended to depreciate the cost of assets over their estimated useful lives. Upon retirement or sale of property and equipment, the cost of the disposed assets and related accumulated depreciation is removed from the accounts and any resulting gain or loss is credited or charged to selling, general and administrative expenses. Expenditures for normal repairs and maintenance are charged to expense as incurred. Additions and expenditures for improving or rebuilding existing assets that extend the useful life are capitalized. Leasehold improvements made either at the inception of the lease or during the lease term are amortized over the shorter of their economic lives or the lease term including any renewals that are reasonably assured. Property and equipment consisted of the following at December 31, 2017 and 2016: 2017 2016 Leasehold Improvements $ 15,475 $ - Furniture and Fixtures 33,751 - Vehicles 36,500 - Tooling 184,626 - Equipment 576,951 - Total property and equipment $ 847,303 - Less accumulated depreciation (77,861 ) - Net property and equipment $ 769,442 $ - Depreciation expense for the years ended December 31, 2017 totaled $77,861. |
CONVERTIBLE NOTE PAYABLE
CONVERTIBLE NOTE PAYABLE | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTE PAYABLE | NOTE 6 – CONVERTIBLE NOTE PAYABLE The Company entered into an agreement for a short-term convertible note payable to an unrelated party on December 22, 2016 with sixty (60) days maturity and a $1,875,000 principal balance. The note has a one-time fee of $375,000, which was amortized as interest, ratably over the sixty (60) day period. The note is convertible into one share of the Company's common stock and one stock purchase warrant at a conversion price of $1.25 per unit. Each warrant has an exercise price of $2.50. During 2016, the Company recognized $18,750 of interest, as it amortized a portion of the one-time interest fee. As of December 31, 2016, the balance of the note payable was $1,518,750, net of $356,250 of debt discount. In 2017, the Company renegotiated the due date for the note payable, and in exchange agreed to pay the note holder an additional 5% annual interest rate on the remaining principal balance until the note was paid in full. During 2017, the Company recorded $356,250 of interest from the amortization of the one time fee, and an additional $74,896 in interest expense. As of December 31, 2017, the balance of the note, was $1,575,000. This note was paid in full during the first quarter of 2018. |
NOTE PAYABLES - RELATED PARTY
NOTE PAYABLES - RELATED PARTY | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
NOTE PAYABLE - RELATED PARTY | NOTE 7 – NOTES PAYABLE – RELATED PARTY On December 16, 2016, Ammo and Mansfield entered into a note purchase and sale agreement to purchase a promissory note held by Mansfield, and payable by ATAC. Ammo purchased the promissory note for $1,035,000. The Managing Member of Mansfield is related to the President of Ammo. The $1,035,000 was payable on or before the closing date of the note purchase and sale agreement, however, at December 31, 2016, $960,000 of the note balance remained outstanding. As of December 31, 2017, the note had been paid off. Interest on the note was imputed in the amount of $46,340. In connection with the acquisition of the patent completed August 22, 2017, the Company was obligated to pay $200,000 to Hallam, Inc.'s shareholders. The first $100,000 was paid on August 22, 2017 and a note was executed in the amount of $100,000 which was paid on February 2, 2018. On August 29, 2017, the Company borrowed $100,000 from an attorney and issued 40,000 common stock purchase warrants with an exercise price of $0.50, expiring two (2) years from date of issuance. The warrants were valued at $46,188 and recognized as interest expense in 2017. Note was paid on October 31, 2017. |
CAPITAL STOCK
CAPITAL STOCK | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
CAPITAL STOCK | NOTE 8 – CAPITAL STOCK The authorized capital of the Company is 100,000,000 common shares with a par value of $0.001 per share. During the period from October 13, 2016 (Inception) to December 31, 2016, the Company sold 720,000 shares of its common stock for $1.25 per share and issued 14,934,000 shares to the Company's founders for $14,934 and issued 100,000 shares valued at $125,000 for a license agreement. During the twelve month period ended December 31, 2017, the Company issued 6,733,793 Common Shares as follows: • 604,371 were issued in the reverse merger transaction • 100,000 net shares were issued to founding shareholders • 4,640,822 shares were sold to investors for $6,038,900 • 544,600 valued at $678,625 were issued for legal, advisory and consulting fees • 600,000 shares were issued to acquire the use of a patent. Shares were valued at $750,000 • 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 At December 31, 2017 and 2016, outstanding and exercisable stock purchase warrants are composed of: 2016 Number of shares Weighted Average Exercise Price Weighted Average Life Remaining (Years) Outstanding at December 31, 2015 - $ - - 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 4,542,315 2.42 1.90 Exercised - - - Forfeited or cancelled - - - Expired - - - Outstanding at December 31, 2017 5,262,315 $ 2.43 1.77 Exercisable at December 31, 2017 5,262,315 $ 2.43 1.77 |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 12 Months Ended |
Dec. 31, 2017 | |
Payables and Accruals [Abstract] | |
ACCRUED LIABILITIES | NOTE 9 – ACCRUED LIABILITIES At December 31, 2017, accrued liabilities were as follows: 2017 2016 Accrued payroll $ 145,779 $ - Accrued interest 74,896 - Accrued FAET 26,075 - Other accruals 8,024 - $ 254,774 $ - |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 10 – RELATED PARTY TRANSACTIONS On December 16, 2016 Ammo purchased a promissory note in the amount of $1,035,000 from a related party. Ammo paid $75,000 on the note in 2016 and $960,000 in 2017 and recorded imputed interest of $46,340. Our executive offices are located in Scottsdale, Arizona where we lease approximately 5,000 square feet under a month-to-month triple net lease for $3,800 per month. This space houses our principal executive, administration, and marketing functions. Our CEO owns the building in which our executive offices are leased. During the year ended December 31, 2017, Ammo paid approximately $212,700 in consulting fees, $143,000 in rents and corporate overhead and reimbursed general corporate expenses of $121,500 to related parties. |
OPERATING LEASES
OPERATING LEASES | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
OPERATING LEASES | NOTE 11 – OPERATING LEASES We are obligated to a triple-net operating lease for our 20,000 square foot manufacturing facility located in Payson, Arizona. The terms of the lease require a monthly payment of approximately $10,000 per month, which include an estimate for utilities, taxes and repairs. This lease expires in November of 2021. We believe this facility will be adequate to meet our needs in the near future. However, we are making plans to expand our building footprint in 2018 to accommodate added automation equipment. We intend to pay for these improvements using working capital and will amortize the costs over the remaining lease period. The following table outlines our future contractual financial obligations associated with this lease by period in which payment is expected, as of December 31, 2017: 2018 2019 2020 2021 Total Payson Lease $ 120,000 $ 120,000 $ 120,000 $ 110,000 $ 470,000 Our executive offices are located in Scottsdale, Arizona where we lease approximately 5,000 square feet under a month-to-month triple net lease for $3,800 per month. This space houses our principal executive, administration, and marketing functions. We may require additional space in the near future but believe that suitable additional or alternative space will be available on commercially reasonable terms to accommodate our needs. This office building is owned by a related party. Total lease and rent expense for the year ended December 31, 2017 was $199,950. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 12 – INCOME TAXES As of December 31, 2017, and 2016, the Company had net operating loss carryforwards of approximately $4,866,788 and $139,512 which will expire beginning at the end of 2036. A valuation allowance has been provided for the deferred tax asset as it is uncertain whether the Company will have future taxable income. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act"). The Tax Act reduces the corporate tax rate to 21% effective January 1, 2018. Consequently, we have recorded an adjustment to the deferred tax provision for the year ended December 31, 2017. Reconciliation of the benefit (expense) for income taxes with amounts determined by applying the statutory federal income rate of 34% in 2017 and 2016 to the respective losses before income taxes is as follows: 2017 2016 Net (Loss) $ (5,788,901 ) $ (155,024 ) Benefit (expense) for income taxes computed using the statutory rate of 34% 1,968,226 52,708 Non-deductible expense (360,952 ) (5,274 ) Re-measurement of deferred income taxes due to tax reform (632,683 ) $ - Change in valuation allowance (974,591 ) (47,434 ) Provision for income taxes $ - $ - Significant components of the Company's deferred tax liabilities and assets at December 31, 2017 and 2016 are as follows: 2017 2016 Total deferred tax assets – net operating losses $ 1,022,025 $ 47,434 Deferred tax liabilities - - Net deferred tax assets 1,022,025 $ 47,434 Valuation allowance $ (1,022,025 ) $ (47,434 ) $ - $ - At December 31, 2017, net operating loss("NOL") carry forwards expiring through 2037 were as follows: Expiring December 31, 2036 $ 139,512 2037 4,727,276 $ 4,866,788 Tax years 2017 and 2016 remain subject to Internal Revenue Service audit. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 13 – INTANGIBLE ASSETS Intangible assets consist of the following: December 31, 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 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 14 - SUBSEQUENT EVENTS Subsequent to December 31, 2017 through the date these financials were available for issuance, the Company sold an additional 6,232,149 shares of common stock for $10,276,425 and issued 747,858 common stock purchase warrants exercisable at $1.65, 3,116,075 common stock purchase warrants exercisable at $2.00, and 125,000 common stock purchase warrants exercisable at $2.50. The Company evaluated subsequent events through April 11, 2018, the date the financial statements were issued, and determined that there are not any other items to disclose. |
SUMMARY OF SIGNIFICANT ACCOUN22
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
ACCOUNTING BASIS | ACCOUNTING BASIS The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America ("GAAP" accounting) and all amounts are expressed in U.S. dollars. The Company has adopted a December 31 year end. The consolidated financial statements and notes are the representations of the Company's management who are responsible for their integrity and objectivity. The financial statements and related disclosures as of December 31, 2017 and 2016 are presented pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC"). Unless the context otherwise requires, all references to "Ammo", "we", "us", "our" or the Company are to Ammo, Inc. |
PRINCIPLES OF CONSOLIDATION | PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Ammo, Inc. and its wholly-owned subsidiaries, SNI, LLC and Ammo Technologies, Inc. All significant intercompany accounts and transactions are eliminated in consolidation. |
USE OF ESTIMATES | USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
CASH AND CASH EQUIVALENTS | CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. |
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS | ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS The Company's accounts receivable represents amounts due from customers for products sold. Allowance for uncollectible accounts is estimated based on the aging of the accounts receivable and management's estimate of uncollectible amounts. At December 31, 2017 and 2016, the Company provided $26,046 and $0, respectively, of allowance for doubtful accounts. |
LICENSING AGREEMENTS | LICENSING AGREEMENTS The Company issued 100,000 shares of its common stock at the execution date of the licensing agreement with Jesse James. The shares were valued at $1.25 and the aggregate value of $125,000 was recorded as a licensing agreement asset. This asset will be amortized from January, 2017, the period when the first ammunition was delivered, through December 31, 2021. Amortization of the Licensing Agreement for the twelve months ended December 31, 2017 was $25,000. The Company issued 100,000 shares of its common stock at the execution date of the licensing agreement with Jeff Rann. The shares were valued at $1.25 and the aggregate value of $125,000 was recorded as a licensing agreement asset. This asset will be amortized from March, 2017, the first full month of the licensing agreement, through February 28, 2022. Amortization of the Licensing Agreement for the twelve months ended December 31, 2017 was $20,833. |
PATENT | PATENT On August 22, 2017, the parties signed and closed on a Forward Triangular Merger Agreement (the "Merger") by which Ammo Technologies Inc., an Arizona corporation, which is 100% owned by Ammo, Inc., merged with Hallam, Inc, a Texas corporation, with Ammo Technologies Inc. being the survivor. The formal Merger was consummated on or about September 28, 2017 when both the states of Texas and Arizona approved the Merger and granted the Certificate of Merger. Under the terms of the Merger, Ammo, Inc., the sole shareholder of Ammo Technologies Inc. provided Hallam, Inc.'s two (2) shareholders 600,000 shares of Ammo, Inc. common stock, subject to restrictions, and payment of $200,000. The first payment of $100,000 to the Hallam, Inc. shareholders was paid on or about September 13, 2017 and the second payment of $100,000 was paid on February 6, 2018. The shares were valued at $1.25 and the aggregate value of $950,000 was recorded as a patent asset. This asset will be amortized from September 2017, the first full month of the acquired rights, through October 29, 2028. Amortization of the patent for the twelve months ended December 31, 2017 was $25,166. Under the terms of the Merger, all of the assets of Hallam, Inc. devolved into Ammo Technologies, Inc. subject to the liabilities of Hallam, Inc., which were none. The primary asset of Hallam, Inc. was an exclusive license to produce projectiles and ammunition using the Hybrid Luminescence Ammunition Technology under patent US 8402896 B1 with a publication date of March 26, 2013 owned by University of Louisiana at Lafayette. The License was formally amended and assigned to Ammo Technologies Inc. pursuant to an Assignment and First Amendment to Exclusive License Agreement. Assumption Agreement dated to be effective as of August 22, 2017, the Merger closing date. |
IMPAIRMENT OF LONG-LIVED ASSETS | IMPAIRMENT OF LONG-LIVED ASSETS The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell. No impairment expense was recognized in 2017 and 2016. |
REVENUE RECOGNITION | REVENUE RECOGNITION Revenue is recognized when the earnings process is complete and the risk and rewards of ownership have transferred to the customer, which is generally considered to have occurred upon the receipt of product by the customer. The earnings process is complete once the customer order has been placed and approved, the product shipped has been received by the customer, and there is reasonable assurance of the collection of the sales proceeds. Approximately 57.6% of total revenues were derived from one customer and 47.2% of the accounts receivable are due from two customers at December 31, 2017. |
ADVERTISING COSTS | ADVERTISING COSTS The Company expenses advertising costs as they are incurred. The Company incurred advertising and marketing costs of $220,154 for the twelve months ended December 31, 2017. |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS The Company measures its options and warrants at fair value in accordance with Accounting Standards Codification 820 – Fair Value Measurement ("ASC 820"). The objective of ASC 820 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. ASC 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 specifies a valuation hierarchy based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's own assumptions. These two types of inputs have created the following fair value hierarchy: 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. This hierarchy requires the Company to minimize the use of unobservable inputs and to use observable market data, if available, when estimating fair value. All common stock issued for services are valued on the date of the agreements, using the price at which shares were being sold to private investors or at the value of the services performed. Warrants issued for services and interest were valued at grant dates of August 22, 2017 and November 28, 2017, by the Company using valuation methods and assumptions that consider, among other factors, the fair value of the underlying stock, risk free interest rate, volatility and expected life. Assumptions included: Risk free interest rate 1.31 - 1.5% Expected volatility 250% Excepted term 1 - 1.5 years Expected dividend yield 0% Equipment acquired in the foreclosure transaction and the patent were valued by outside appraisers. Quoted Active Markets for Identified Assets Significant Other Observable Inputs Significant Unobservable Inputs Total (Level 1) (Level 2) (Level 3) 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 |
INVENTORIES | INVENTORIES Inventories are stated at the lower of cost or market. Cost is determined using the average cost method. The Company's inventory consists of raw materials, work in progress and finished goods. Cost of inventory includes cost of parts, labor, quality control and all other costs incurred to bring our inventories to condition ready to be sold. The inventory is periodically evaluated for obsolescence. |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment are stated at cost less accumulated depreciation. Major renewals and improvements are capitalized, while minor replacements, maintenance and repairs are charged to current operations. Depreciation is computed by applying the straight-line method over the estimated useful lives, which are generally five to seven years. |
COMPENSATED ABSENCES | COMPENSATED ABSENCES The Company has not accrued a liability for compensated absences in accordance with Accounting Standards Codifications 710 – Compensation – General, |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock-based compensation is accounted for at fair value in accordance with SFAS No. 123 and 123 (R) (ASC 718). To date, the Company has not adopted a stock option plan and has not granted any stock options. |
CONCENTRATIONS OF CREDIT RISK | CONCENTRATIONS OF CREDIT RISK Accounts at banks are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 at various times and, as of December 31, 2017, bank account balances exceeded federally insured limits. |
INCOME TAXES | INCOME TAXES The Company files federal and state income tax returns in accordance with the applicable rules of each jurisdiction. We account for income taxes under the asset and liability method in accordance with Accounting Standards Codification 740 - Income Taxes ("ASC 740"). The provision for income taxes includes federal, state and local income taxes currently payable, as well as deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable amounts in years in which those temporary differences are expected to be recovered or settled. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. In accordance with ASC 740, we recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company currently has substantial net operating loss carryforwards. The Company has recorded a valuation allowance equal to the net deferred tax assets due to the uncertainty of the ultimate realization of the deferred tax assets. |
CONTINGENCIES | CONTINGENCIES Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company's management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is possible that a material loss has been incurred and the amount of the liability can be estimated, the estimated liability would be accrued in the Company's consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of range of possible loss if determinable and material, would be disclosed. There was no known contingency at December 31, 2017. |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
LOSS PER COMMON SHARE | LOSS PER COMMON SHARE Basic loss per share is calculated using the weighted-average number of common shares outstanding during each reporting period. Diluted loss per share includes potentially dilutive securities such as outstanding options and warrants, using various methods such as the treasury stock or modified treasury stock method in the determination of dilutive shares outstanding during each reporting period. The Company does not have any potentially dilutive instruments. All weighted average numbers were adjusted for the reverse stock split and merger transaction. |
SUMMARY OF SIGNIFICANT ACCOUN23
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Table) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of acquisition of fixed assets | Equipment acquired in the foreclosure transaction and the patent were valued by outside appraisers. Quoted Active Markets for Identified Assets Significant Other Observable Inputs Significant Unobservable Inputs Total (Level 1) (Level 2) (Level 3) 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 |
VENDOR NOTES RECEIVABLE (Table)
VENDOR NOTES RECEIVABLE (Table) | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Vendor note receivable | Vendor note receivable is composed of the following at December 31, 2016: Advanced Tactical Armament Concepts, L.L.C. Notes Payable Purchased by Ammo Amount Western Alliance Bank $ 1,910,993 Less: Allowance for uncollectible amounts (360,993 ) 1,550,000 Mansfield, LLC 1,035,000 $ 2,585,000 |
Disposition of collateral | The company reflected this transaction in the following manner: Vendor notes receivable $ 2,585,000 Vendor advances receivable (96,552 ) Accounts receivable (20,965 ) Inventories (644,447 ) Equipment (543,115 ) Loss on vendor notes receivable collectability (1,279,921 ) $ - |
INVENTORIES (Table)
INVENTORIES (Table) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory | At December 31, 2017 and 2016, the inventory balances are composed of: 2017 2016 Finished product $ 1,007,291 $ - Raw materials 764,810 219,105 Work in process 20,213 - $ 1,792,314 $ 219,105 |
PROPERTY AND EQUIPMENT (Table)
PROPERTY AND EQUIPMENT (Table) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | Property and equipment consisted of the following at December 31, 2017 and 2016: 2017 2016 Leasehold Improvements $ 15,475 $ - Furniture and Fixtures 33,751 - Vehicles 36,500 - Tooling 184,626 - Equipment 576,951 - Total property and equipment $ 847,303 - Less accumulated depreciation (77,861 ) - Net property and equipment $ 769,442 $ - |
CAPITAL STOCK (Table)
CAPITAL STOCK (Table) | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Outstanding and exercisable stock purchase warrants | At December 31, 2017 and 2016, outstanding and exercisable stock purchase warrants are composed of: 2016 Number of shares Weighted Average Exercise Price Weighted Average Life Remaining (Years) Outstanding at December 31, 2015 - $ - - 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 4,542,315 2.42 1.90 Exercised - - - Forfeited or cancelled - - - Expired - - - Outstanding at December 31, 2017 5,262,315 $ 2.43 1.77 Exercisable at December 31, 2017 5,262,315 $ 2.43 1.77 |
ACCRUED LIABILITIES (Table)
ACCRUED LIABILITIES (Table) | 12 Months Ended |
Dec. 31, 2017 | |
Payables and Accruals [Abstract] | |
ACCRUED LIABILITIES | At December 31, 2017, accrued liabilities were as follows: 2017 2016 Accrued payroll $ 145,779 $ - Accrued interest 74,896 - Accrued FAET 26,075 - Other accruals 8,024 - $ 254,774 $ - |
OPERATING LEASES (Table)
OPERATING LEASES (Table) | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | The following table outlines our future contractual financial obligations associated with this lease by period in which payment is expected, as of December 31, 2017: 2018 2019 2020 2021 Total Payson Lease $ 120,000 $ 120,000 $ 120,000 $ 110,000 $ 470,000 |
INCOME TAXES (Table)
INCOME TAXES (Table) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of benefit (expense) for income taxes | Reconciliation of the benefit (expense) for income taxes with amounts determined by applying the statutory federal income rate of 34% in 2017 and 2016 to the respective losses before income taxes is as follows: 2017 2016 Net (Loss) $ (5,788,901 ) $ (155,024 ) Benefit (expense) for income taxes computed using the statutory rate of 34% 1,968,226 52,708 Non-deductible expense (360,952 ) (5,274 ) Re-measurement of deferred income taxes due to tax reform (632,683 ) $ - Change in valuation allowance (974,591 ) (47,434 ) Provision for income taxes $ - $ - |
Schedule of Deferred Tax Assets and Liabilities | Significant components of the Company's deferred tax liabilities and assets at December 31, 2017 and 2016 are as follows: 2017 2016 Total deferred tax assets – net operating losses $ 1,022,025 $ 47,434 Deferred tax liabilities - - Net deferred tax assets 1,022,025 $ 47,434 Valuation allowance $ (1,022,025 ) $ (47,434 ) $ - $ - |
Summary of Operating Loss Carryforwards | At December 31, 2017, net operating loss("NOL") carry forwards expiring through 2037 were as follows: Expiring December 31, 2036 $ 139,512 2037 4,727,276 $ 4,866,788 |
INTANGIBLE ASSETS (Table)
INTANGIBLE ASSETS (Table) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets consist | Intangible assets consist of the following: December 31, 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 |
SUMMARY OF SIGNIFICANT ACCOUN32
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Dec. 31, 2017 | |
Common stock issued for legal, advisory and consulting fees | $ 454,625 | |
Employee stock awards | 160,000 | |
Common stock for licensing agreement | $ 125,000 | 125,000 |
Patent acquisition, noncash element | 750,000 | |
Warrants issued for interest | 46,188 | |
Warrants issued for services | 67,000 | |
Assets acquired in foreclosure | $ 0 | 543,115 |
Common Stock issued for prepaid legal fee | 224,000 | |
Fair Value, Inputs, Level 1 [Member] | ||
Common stock issued for legal, advisory and consulting fees | 0 | |
Employee stock awards | 0 | |
Common stock for licensing agreement | 0 | |
Patent acquisition, noncash element | 0 | |
Warrants issued for interest | 0 | |
Warrants issued for services | 0 | |
Assets acquired in foreclosure | 0 | |
Common Stock issued for prepaid legal fee | 0 | |
Fair Value, Inputs, Level 2 [Member] | ||
Common stock issued for legal, advisory and consulting fees | 454,625 | |
Employee stock awards | 160,000 | |
Common stock for licensing agreement | 125,000 | |
Patent acquisition, noncash element | 0 | |
Warrants issued for interest | 0 | |
Warrants issued for services | 0 | |
Assets acquired in foreclosure | 0 | |
Common Stock issued for prepaid legal fee | 224,000 | |
Fair Value, Inputs, Level 3 [Member] | ||
Common stock issued for legal, advisory and consulting fees | 0 | |
Employee stock awards | 0 | |
Common stock for licensing agreement | 0 | |
Patent acquisition, noncash element | 750,000 | |
Warrants issued for interest | 46,188 | |
Warrants issued for services | 67,000 | |
Assets acquired in foreclosure | 543,115 | |
Common Stock issued for prepaid legal fee | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN33
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Allowance for doubtful accounts | $ 0 | $ 26,046 | $ 0 |
Common stock issued for cash, Amount | $ 732,500 | $ 6,038,900 | |
Sale price per share | $ 1.25 | $ 1.25 | $ 1.25 |
Expiration Period | Nov. 30, 2021 | ||
Impairment expense | $ 0 | $ 0 | |
Advertising and marketing costs | 220,154 | ||
Federal Deposit Insurance Corporation limit | 250,000 | ||
Contingency | $ 0 | ||
Expected volatility | 250.00% | ||
Expected dividend yield | 0.00% | ||
Minimum [Member] | |||
Property and equipment useful life | 5 years | ||
Risk-free interest rate | 1.31% | ||
Expected term (years) | 1 year | ||
Maximum [Member] | |||
Property and equipment useful life | 7 years | ||
Risk-free interest rate | 1.50% | ||
Expected term (years) | 1 year 6 months | ||
Sales Revenue, Net [Member] | One customers [Member] | |||
Concentration percentage | 57.60% | ||
Accounts receivable [Member] | Two customers [Member] | |||
Concentration percentage | 47.20% | ||
Patents [Member] | |||
Amortization | $ 25,166 | ||
Licensing Agreements [Member] | Jesse James | |||
Common stock issued for cash , Shares | 100,000 | ||
Common stock issued for cash, Amount | $ 125,000 | ||
Sale price per share | $ 1.25 | ||
Expiration Period | Dec. 31, 2021 | ||
Amortization | $ 25,000 | ||
Licensing Agreements [Member] | Jeff Rann | |||
Common stock issued for cash , Shares | 100,000 | ||
Common stock issued for cash, Amount | $ 125,000 | ||
Sale price per share | $ 1.25 | ||
Expiration Period | Feb. 28, 2022 | ||
Amortization | $ 20,833 |
VENDOR NOTES RECEIVABLE (Detail
VENDOR NOTES RECEIVABLE (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 16, 2016 |
Vendor notes receivable | $ 0 | $ 2,585,000 | |
Western Alliance Bank | |||
Note receivable | 1,910,993 | ||
Allowance for uncollectible amounts | (360,993) | ||
Notes Receivable Net | 1,550,000 | ||
Mansfield L.L.C | |||
Note receivable | $ 1,035,000 | $ 1,035,000 |
VENDOR NOTES RECEIVABLE (Deta35
VENDOR NOTES RECEIVABLE (Details 1) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended |
Feb. 20, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | |
Vendor notes receivable | $ 2,585,000 | ||
Vendor advances receivable | $ 0 | (96,552) | |
Accounts receivable | 0 | (171,812) | |
Inventories | (219,105) | (928,762) | |
Equipment | 0 | (543,115) | |
Vendor notes receivable | $ 2,585,000 | $ 0 | |
Advanced Tactical Armament Concepts, LLC | |||
Vendor notes receivable | $ 2,585,000 | ||
Vendor advances receivable | (96,552) | ||
Accounts receivable | (20,965) | ||
Inventories | (644,447) | ||
Equipment | (543,115) | ||
Loss on vendor notes receivable collectability | (1,279,921) | ||
Vendor notes receivable | $ 0 |
VENDOR NOTES RECEIVABLE (Deta36
VENDOR NOTES RECEIVABLE (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |
Dec. 16, 2016 | Dec. 31, 2016 | Dec. 22, 2016 | |
Original principal | $ 1,875,000 | ||
Purchase of promissory note | $ 1,035,000 | ||
Western Alliance Bank | |||
Note receivable | $ 1,910,993 | ||
Notes Receivable Net | 1,550,000 | ||
Mansfield L.L.C | |||
Note receivable | 1,035,000 | 1,035,000 | |
Original principal | $ 900,000 | ||
Mansfield L.L.C | Note payable related party [Member] | |||
Purchase of promissory note | $ 1,035,000 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Finished product | $ 1,007,291 | $ 0 |
Raw materials | 764,810 | 219,105 |
Work in process | 20,213 | 0 |
Inventory, net | $ 1,792,314 | $ 219,105 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Total property and equipment | $ 847,303 | $ 0 |
Less accumulated depreciation | (77,861) | 0 |
Net property and equipment | 769,442 | 0 |
Leasehold Improvements [Member] | ||
Total property and equipment | 15,475 | 0 |
Furniture and Fixtures [Member] | ||
Total property and equipment | 33,751 | 0 |
Vehicles [Member] | ||
Total property and equipment | 36,500 | 0 |
Tooling [Member] | ||
Total property and equipment | 184,626 | 0 |
Equipment [Member] | ||
Total property and equipment | $ 576,951 | $ 0 |
PROPERTY AND EQUIPMENT (Detai39
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 0 | $ 7,285 |
CONVERTIBLE NOTE PAYABLE (Detai
CONVERTIBLE NOTE PAYABLE (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Dec. 22, 2016 | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Debt Disclosure [Abstract] | ||||
Debt Instrument,Principal Payment | $ 1,875,000 | |||
Maturity Period | 60 days | |||
Debt discount | $ 356,250 | |||
Amortization of Deferred Loan Origination Fees | $ 375,000 | |||
Debt Instrument, Convertible, Remaining Discount Amortization Period | 60 days | |||
Conversion price | $ 1.25 | |||
Exercise price of warrants | $ 2.50 | |||
Amortization fee | $ 356,250 | 18,750 | ||
Interest rate | 5.00% | |||
Convertible note payable | $ 1,575,000 | $ 1,518,750 | ||
Interest expenses | $ 74,896 | |||
Payment of convertible note payable | $ 1,575,000 |
NOTE PAYABLES - RELATED PARTY (
NOTE PAYABLES - RELATED PARTY (Details Narrative) - USD ($) | Feb. 02, 2018 | Aug. 29, 2017 | Aug. 22, 2017 | Dec. 22, 2016 | Dec. 16, 2016 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 |
Purchase of promissory note | $ 1,035,000 | |||||||
Note payable related party | $ 960,000 | $ 100,000 | $ 960,000 | |||||
Payment of note payable related party | 75,000 | 960,000 | ||||||
Imputed interest | 46,340 | |||||||
Warrants exercisable price | $ 2.50 | |||||||
Interest expenses | 74,896 | |||||||
Note payable related party [Member] | ||||||||
Proceed from related party | $ 100,000 | |||||||
Purchase of warrants | $ 40,000 | |||||||
Warrants exercisable price | $ 0.50 | |||||||
Warrant term | 2 years | |||||||
Value of warrant | $ 46,188 | |||||||
Interest expenses | $ 46,188 | |||||||
Mansfield L.L.C | Note payable related party [Member] | ||||||||
Purchase of promissory note | 1,035,000 | |||||||
Note payable related party | 960,000 | 960,000 | ||||||
Payment of note payable related party | $ 1,035,000 | |||||||
Imputed interest | $ 46,340 | $ 46,340 | ||||||
Hallam, Inc | Note payable One [Member] | ||||||||
Payment of note payable related party | $ 100,000 | |||||||
Hallam, Inc | Note payable Two [Member] | ||||||||
Payment of note payable related party | $ 100,000 |
CAPITAL STOCK (Details)
CAPITAL STOCK (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Notes to Financial Statements | ||
Number of shares, Outstanding Beginning | 720,000 | 0 |
Number of shares granted | 4,542,315 | 720,000 |
Number of shares exercised | 0 | 0 |
Number of shares forfeited or cancelled | 0 | 0 |
Number of shares expired | 0 | 0 |
Number of shares Outstanding ending | 5,262,315 | 720,000 |
Number of shares exercisable | 5,262,315 | 720,000 |
Weighted Average Exercise Price Outstanding Beginning | $ 2.50 | $ 0 |
Weighted Average Exercise Price granted | 2.44 | 2.50 |
Weighted Average Exercise Price exercised | .00 | 0 |
Weighted Average Exercise Price forfeited or cancelled | .00 | 0 |
Weighted Average Exercise Price expired | .00 | .00 |
Weighted Average Exercise Price Outstanding ending | 2.44 | 2.50 |
Weighted Average Exercise Price exercisable | $ 2.44 | $ 2.50 |
Weighted Average Life Remaining (Years) Outstnding Beginning | 1 year 11 months 12 days | 0 years |
Weighted Average Life Remaining (Years), granted | 1 year 10 months 24 days | 1 year 11 months 12 days |
Weighted Average Life Remaining (Years) Outstnding ending | 1 year 9 months 7 days | 1 year 11 months 12 days |
Weighted Average Life Remaining (Years), exercisable | 1 year 9 months 7 days | 1 year 11 months 12 days |
CAPITAL STOCK (Details Narrativ
CAPITAL STOCK (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Dec. 31, 2017 | |
Debt Disclosure [Abstract] | ||
Common stock - shares authorized | 100,000,000 | 100,000,000 |
Common stock - par value | $ 0.001 | $ 0.001 |
Sale of common stock, Shares | 720,000 | 4,640,822 |
Sale price per share | $ 1.25 | $ 1.25 |
Common stock issued for cash, Amount | $ 732,500 | $ 6,038,900 |
Common stock issued for founder shares, Shares | 14,934,000 | 500,000 |
Common stock issued for founder shares, Amount | $ 14,934 | $ 645 |
Common stock issued for licensing agreement, Share | 100,000 | 100,000 |
Common stock issued for licensing agreement, Amount | $ 125,000 | $ 125,000 |
Number of common stock issued | 24,000 | |
Common stock issued for legal, advisory and consulting fees, Shares | 544,600 | |
Common stock issued for legal, advisory and consulting fees, Value | $ 678,625 | |
Common stock issued for reverse merger transaction | 604,371 | |
Employee stock awards, Share | 120,000 | |
Employee stock awards, Amount | $ 0 | $ 160,000 |
Shares issued for patents, Share | 600,000 | |
Shares issued for patents, Amount | $ 750,000 |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||
Accrued payroll | $ 145,779 | $ 0 |
Accrued interest | 74,896 | 0 |
Accrued FAET | 26,075 | 0 |
Other accruals | 8,024 | 0 |
Accrued Liabilities | $ 254,774 | $ 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended |
Dec. 16, 2016 | Dec. 31, 2016 | Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |||
Net lease payment | $ 3,800 | ||
Related party expenses | 95,985 | ||
Purchase of promissory note | $ 1,035,000 | ||
Payment of note payable related party | $ 75,000 | 960,000 | |
Imputed interest | 46,340 | ||
Consulting fees | 212,700 | ||
Rents and corporate overhead | 143,000 | ||
General corporate expenses | $ 121,500 |
OPERATING LEASES (Details)
OPERATING LEASES (Details) - Payson Lease | Dec. 31, 2017USD ($) |
2,018 | $ 120,000 |
2,019 | 120,000 |
2,020 | 120,000 |
2,021 | 110,000 |
Total | $ 470,000 |
OPERATING LEASES (Details Narra
OPERATING LEASES (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Leases [Abstract] | |
Lease payment | $ 10,000 |
Lease expire | Nov. 30, 2021 |
Net lease payment | $ 3,800 |
Total lease and rent expense | $ 199,950 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Net (Loss) | $ (5,788,901) | $ (155,024) | |
Benefit (expense) for income taxes computed using the statutory rate of 34% | 1,968,226 | 52,708 | |
Non-deductible expense | (360,952) | (5,274) | |
Re-measurement of deferred income taxes due to tax reform | (632,683) | 0 | |
Change in valuation allowance | (974,591) | (47,434) | |
Provision for income taxes | $ 0 | $ 0 | $ 0 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
Total deferred tax assets - net operating losses | $ 1,022,025 | $ 47,434 |
Deferred tax liabilities | 0 | 0 |
Net deferred tax assets | 1,022,025 | 47,434 |
Valuation allowance | (1,022,025) | (47,434) |
Deferred Tax Assets Net | $ 0 | $ 0 |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
2,036 | $ 139,512 | |
2,037 | 4,727,276 | |
Net operating loss carryforwards | $ 4,866,788 | $ 139,512 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards | $ 4,866,788 | $ 139,512 |
Operating Loss Carryforwards, Expiration Date | Dec. 31, 2036 | |
Statutory federal income rate | 34.00% | 34.00% |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Licensing Agreements [Member] | |
Intangible assets, Gross | $ 250,000 |
Accumulated amortization | (45,833) |
Intangible assets, net | $ 204,167 |
Patents [Member] | |
Intangible Asset, Useful Life | 11 years 2 months 12 days |
Intangible assets, Gross | $ 950,000 |
Accumulated amortization | (25,166) |
Intangible assets, net | $ 924,834 |
Jesse James | Licensing Agreements [Member] | |
Intangible Asset, Useful Life | 5 years |
Intangible assets, Gross | $ 125,000 |
Jeff Rann | Licensing Agreements [Member] | |
Intangible Asset, Useful Life | 5 years |
Intangible assets, Gross | $ 125,000 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended |
Dec. 22, 2016 | Dec. 31, 2017 | |
Warrants exercisable price | $ 2.50 | |
Additional common stock purchased | $ 6,232,149 | |
Debt Conversion Converted Instrument Shares Issued | 10,276,425 | |
Warrant [Member] | ||
Purchase of warrants | $ 747,858 | |
Warrants exercisable price | $ 1.65 | |
Warrant One [Member] | ||
Purchase of warrants | $ 3,116,075 | |
Warrants exercisable price | $ 2 | |
Warrant Two[Member] | ||
Purchase of warrants | $ 125,000 | |
Warrants exercisable price | $ 2.50 |