Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jun. 30, 2020 | Aug. 14, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | AMMO, INC. | |
Entity Central Index Key | 0001015383 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --03-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 47,622,920 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2020 | Mar. 31, 2020 |
Current Assets: | ||
Cash | $ 1,017,513 | $ 884,274 |
Accounts receivable, net of allowance for doubtful account of $78,154 at June 30, 2020 and $62,248 at March 31, 2020 | 4,134,517 | 3,004,839 |
Stock subscription receivable | 1,840,910 | |
Due from related parties | 15,657 | 15,807 |
Inventories, at lower cost or net realizable value, principally average cost method | 6,518,757 | 4,408,073 |
Prepaid expenses | 630,103 | 844,117 |
Total Current Assets | 14,157,457 | 9,157,110 |
Equipment, net of accumulated depreciation of $3,736,734 at June 30, 2020 and $3,060,681 at March 31, 2020 | 16,842,158 | 18,046,329 |
Other Assets: | ||
Deposits | 372,755 | 216,571 |
Licensing agreements, net of accumulated amortization of $170,833 at June 30, 2020 and $158,833 at March 31, 2020 | 79,167 | 91,667 |
Patents, net of accumulated amortization of $684,431 at June 30, 2020 and $561,096 at March 31, 2020 | 6,389,574 | 6,512,909 |
Other Intangible Assets, net of accumulated amortization of $1,853,946 at June 30, 2020 and $1,496,833 at March 31, 2020 | 3,292,291 | 3,649,404 |
Right of Use Assets - Operating Leases | 2,603,745 | 3,431,746 |
TOTAL ASSETS | 43,737,147 | 41,105,736 |
Current Liabilities: | ||
Accounts payable | 3,656,650 | 5,197,354 |
Factoring liability | 1,907,788 | 2,005,979 |
Accrued liabilities | 2,467,085 | 1,619,619 |
Inventory credit facility | 1,758,003 | |
Note payable related party | 391,536 | 434,731 |
Current portion of operating lease liability | 480,470 | |
Insurance premium note payable | 200,214 | 329,724 |
Convertible promissory notes, net of note issuance cost of $127,944 at June 30, 2020 and $237,611 at March 31, 2020 | 2,372,056 | 2,262,389 |
Total Current Liabilities | 13,233,802 | 11,849,796 |
Long-term Liabilities: | ||
Contingent consideration payable | 681,655 | 709,623 |
Notes payable related party | 8,235,302 | 5,803,800 |
Paycheck protection program notes | 1,051,985 | |
Operating Lease Liability, net of current portion | 2,176,119 | 3,483,724 |
Total Liabilities | 25,378,863 | 21,846,943 |
Shareholders' Equity: | ||
Common stock, $0.001 par value, 200,000,000 shares authorized 47,454,277 at June 30, 2020 and 46,204,139 shares issued and outstanding at March 31, 2020, respectively | 47,453 | 46,204 |
Additional paid-in capital | 55,421,865 | 53,219,834 |
Accumulated Deficit | (37,111,034) | (34,007,245) |
Total Shareholders' Equity | 18,358,284 | 19,258,793 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 43,737,147 | $ 41,105,736 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2020 | Mar. 31, 2020 |
Allowance for doubtful accounts | $ 78,154 | $ 62,248 |
Accumulated depreciation | 3,736,734 | 3,060,681 |
Convertible promissory notes, issuance costs current | $ 127,944 | $ 237,611 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 47,454,277 | 46,204,139 |
Common stock, shares outstanding | 47,454,277 | 46,204,139 |
Licensing Agreements [Member] | ||
Accumulated amortization | $ 170,833 | $ 158,333 |
Patents [Member] | ||
Accumulated amortization | 684,431 | 561,096 |
Other Intangible Assets [Member] | ||
Accumulated amortization | $ 1,853,946 | $ 1,496,833 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Net Sales | $ 9,659,970 | $ 4,298,580 |
Cost of Goods Sold, for the three months ended June 30, 2020 and 2019 includes depreciation and amortization of $758,502, and $613,569, respectively, and federal excise taxes of $641,123, and $114,285, respectively | 8,588,565 | 4,951,796 |
Gross Margin | 1,071,405 | (653,216) |
Operating Expenses | ||
Selling and marketing | 369,622 | 221,928 |
Corporate general and administrative | 1,088,984 | 1,099,643 |
Employee salaries and related expenses | 982,489 | 1,217,692 |
Depreciation and amortization expense | 410,499 | 454,862 |
Loss on Jagemann Munition Components | 1,000,000 | |
Total operating expenses | 3,851,594 | 2,994,125 |
Loss from Operations | (2,780,189) | (3,647,341) |
Other Expenses | ||
Interest income/(expense) | (323,600) | (194,061) |
Total other expenses | (323,600) | (194,061) |
Loss before Income Taxes | (3,103,789) | (3,841,402) |
Provision for Income Taxes | ||
Net (Loss) | $ (3,103,789) | $ (3,841,402) |
(Loss) per share Basic and fully diluted: | ||
Weighted average number of shares outstanding | 46,247,654 | 44,577,950 |
(Loss) per share | $ (0.07) | $ (0.09) |
Ammunition Sales [Member] | ||
Net Sales | $ 6,411,668 | $ 1,141,499 |
Casing Sales [Member] | ||
Net Sales | $ 3,248,302 | $ 3,157,081 |
Consolidated Statements of Op_2
Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||
Depreciation and amortization | $ 758,502 | $ 613,569 |
Federal excise taxes | $ 641,123 | $ 114,285 |
Consolidated Statement of Share
Consolidated Statement of Shareholders' Equity (Unaudited) - 3 months ended Jun. 30, 2020 - USD ($) | Common Shares [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
Beginning Balance at Mar. 31, 2020 | $ 46,204 | $ 53,219,834 | $ (34,007,245) | $ 19,258,793 |
Beginning Balance, shares at Mar. 31, 2020 | 46,204,139 | |||
Common stock issued for cash | $ 1,000 | 1,749,000 | 1,750,000 | |
Common stock issued for cash , shares | 1,000,000 | |||
Common stock issued for exercised warrants | $ 60 | 121,154 | 121,214 | |
Common stock issued for exercised warrants, shares | 60,607 | |||
Common stock issued for cashless warrant exercise | ||||
Common stock issued for cashless warrant exercise, shares | 279 | |||
Common stock issued for services | $ 8 | (8) | ||
Common stock issued for services, shares | 8,336 | |||
Employee stock awards | $ 181 | 255,119 | 255,300 | |
Employee stock awards, shares | 180,916 | |||
Stock grants | 76,766 | 76,766 | ||
Net loss | (3,103,789) | (3,103,789) | ||
Ending Balance at Jun. 30, 2020 | $ 47,453 | $ 55,421,865 | $ (37,111,034) | $ 18,358,284 |
Ending Balance, shares at Jun. 30, 2020 | 47,454,277 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flow (Unaudited) - USD ($) | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities: | ||
Net Loss | $ (3,103,789) | $ (3,841,402) |
Adjustments to reconcile Net Loss to Net Cash used in operations: | ||
Depreciation and amortization | 1,169,001 | 1,068,431 |
Debt discount amortization | 109,667 | 24,144 |
Employee stock awards | 255,300 | 333,250 |
Stock grants | 76,766 | 201,512 |
Stock for services | 200,000 | |
Contingent consideration payable fair value | (27,968) | |
Interest on convertible promissory notes | 18,226 | |
Allowance for doubtful accounts | 15,906 | (103,644) |
Reduction in right of use asset | 90,321 | 117,243 |
Loss on Jagemann Munition Components | (1,000,000) | |
Changes in Current Assets and Liabilities | ||
Accounts receivable | (1,145,584) | (1,628,595) |
Due to (from) related parties | 150 | (14,993) |
Inventories | (2,110,684) | (780,524) |
Prepaid expenses | 214,014 | 149,521 |
Deposits | (156,184) | (25,099) |
Accounts payable | 1,095,093 | 2,515,743 |
Accrued liabilities | 847,466 | 135,949 |
Operating lease liability | (89,455) | (117,243) |
Net cash used in operating activities | (1,759,980) | (1,747,481) |
Cash flows from investing activities | ||
Purchase of equipment | (471,882) | (250,449) |
Net cash used in investing activities | (471,882) | (250,449) |
Cash flow from financing activities | ||
Proceeds from inventory facility | 1,758,003 | |
Proceeds from factoring liability | 6,952,000 | |
Payments on factoring liability | (7,050,191) | |
Proceeds from paycheck protection program notes | 1,051,985 | |
Payments on note payable - related party | (247,490) | (1,500,000) |
Payments on insurance premium note payment | (129,510) | (76,866) |
Proceeds from note payable related party issued | 375,000 | |
Contingent consideration payment | (50,000) | |
Common stock issued for exercised warrants | 30,304 | |
Sale of common stock | 1,797,100 | |
Common stock issuance costs | (189,567) | |
Net cash provided by financing activities | 2,365,101 | 355,667 |
Net increase/(decrease) in cash | 133,239 | (1,642,263) |
Cash, beginning of period | 884,274 | 2,181,246 |
Cash, end of period | 1,017,513 | 538,983 |
Supplemental cash flow disclosures | ||
Cash paid during the period for - Interest | 160,195 | 2,038 |
Cash paid during the period for - Income taxes | ||
Non-cash investing and financing activities: | ||
Stock subscription receivable | 1,840,910 | |
Additional paid-in capital | (1,839,865) | |
Common stock | (1,045) | |
Accounts payable | (2,635,797) | |
Note payable related party | 2,635,797 | |
Right of use assets - operating leases | (737,680) | (4,406,922) |
Operating lease liability | 737,680 | 4,406,922 |
Convertible promissory note | (300,000) | |
Convertible promissory note conversion | 300,000 | |
Total non-cash investing and financing activities |
Organization and Business Activ
Organization and Business Activity | 3 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business Activity | NOTE 1 – ORGANIZATION AND BUSINESS ACTIVITY We were formed under the name Retrospettiva, Inc. in November 1990 to manufacture and import textile products, including both finished garments and fabrics. We were inactive until the following series of events in December 2016 and March 2017. On December 15, 2016, the Company’s majority shareholders sold 475,681 (11,891,976 pre-split) of their outstanding shares to Mr. Fred W. Wagenhals (“Mr. Wagenhals”) resulting in a change in control of the Company. Mr. Wagenhals was appointed as sole officer and the sole member of the Company’s Board of Directors. The Company also approved (i) doing business in the name AMMO, Inc., (ii) a change to the Company’s OTC trading symbol to POWW, (iii) an agreement and plan of merger to re-domicile and change the Company’s state of incorporation from California to Delaware, and (iv) a 1-for-25 reverse stock split (“Reverse Split”) of the issued and outstanding shares of the common stock of the Company. As a result of the reverse split, the previous issued and outstanding shares of common stock became 580,052 shares; no shareholder was reversed below 100 shares, and all fractional shares resulting from the reverse split were rounded up to the next whole share. All references to the outstanding stock have been retrospectively adjusted to reflect this split. These transactions were effective as of December 30, 2016. On March 17, 2017, the Company entered into a definitive agreement with AMMO, Inc. a Delaware Corporation (PRIVCO) under which the Company acquired all of the outstanding shares of common stock of (PRIVCO). Under the terms of the Agreement, the Company issued 17,285,800 newly issued shares of common stock of the Company. In connection with this transaction the Company retired 475,681 shares of common stock and issued 500,000 shares of common stock to satisfy an issuance commitment. The acquisition was considered to be a capital transaction. The transaction was the equivalent to the issuance by PRIVCO of 604,371 shares to the Company’s shareholders accompanied by a recapitalization. The weighted average number of outstanding shares has been adjusted for this transaction. (PRIVCO) subsequently changes its name to AMMO Munitions, Inc. |
Going Concern
Going Concern | 3 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | NOTE 2 – GOING CONCERN The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company incurred net losses of $3,103,789 and $3,841,402 for the three months ended June 30, 2020 and 2019, respectively. Net cash used in operating activities was $1,759,980 and $1,747,841 for the three months ended June 30, 2020 and 2019, respectively. The Company anticipates that it will record losses from operations for the foreseeable future. As of June 30, 2020, the Company’s accumulated deficit was $37,111,034. The Company has limited capital resources, and operations to date have been funded with the proceeds from equity and debt financings. These conditions raise substantial doubt about our ability to continue as a going concern for the period ended a year from the date the financial statements are issued. The Company needs additional financing to implement our business plan and to service our ongoing operations and pay our current debts. There can be no assurance that we will be able to secure any needed funding, or that if such funding is available, the terms or conditions would be acceptable to us. If we are unable to obtain additional financing when it is needed, we will need to restructure our operations, and divest all or a portion of our business. We may seek additional capital through a combination of equity offerings, and debt financings. Debt financing, if obtained, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, and could increase our expenses and require that our assets secure such debt. Equity financing, if obtained, could result in dilution to the Company’s then-existing stockholders and/or require such stockholders to waive certain rights and preferences. If such financing is not available on satisfactory terms, or is not available at all, the Company may be required to delay, scale back, eliminate the development of business opportunities or file for bankruptcy and our operations and financial condition may be materially adversely affected. See Note 14 for additional equity and debt proceeds received subsequent to June 30, 2020 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Basis The accompanying unaudited consolidated financial statements and related disclosures included in this Quarterly Report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and reflect all adjustments, which consist solely of normal recurring adjustments, needed to fairly present the financial results for these periods. Additionally, these consolidated financial statements and related disclosures are presented pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures contained in the Company’s Annual Report filed with the SEC on Form 10-K for the year ended March 31, 2020. The results for the three month period ended June 30, 2020 are not necessarily indicative of the results that may be expected for the entire fiscal year. Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to the rules and regulations of the SEC. In the opinion of management, all adjustments have been made, which consist only of normal recurring adjustments necessary for a fair statement of (a) the results of operations for the three month periods ended June 30, 2020 and 2019, (b) the financial position at June 30, 2020, and (c) cash flows for the three month periods ended June 30, 2020 and 2019. We use the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP”) and all amounts are expressed in U.S. dollars. The Company has a fiscal year-end of March 31 st Unless the context otherwise requires, all references to “Ammo”, “we”, “us”, “our,” or the “Company” are to AMMO, Inc., a Delaware corporation. Principles of Consolidation The consolidated financial statements include the accounts of AMMO, Inc. and its wholly owned subsidiaries, Enlight Group II, LLC (d/b/a Jagemann Munition Components), SNI, LLC, AMMO Munitions, Inc. and AMMO Technologies, Inc. (inactive). 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 us 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in preparing the consolidated financial statements include the valuation of allowances for doubtful accounts, valuation of deferred tax assets, inventories, useful lives of assets, intangible assets, and stock-based compensation. Accounts Receivable and Allowance for Doubtful Accounts Our accounts receivable represents amounts due from customers for products sold and include an allowance for uncollectible accounts which is estimated based on the aging of the accounts receivable and specific identification of uncollectible accounts. At June 30, 2020 and March 31, 2020, we reserved $78,154 and $62,248, respectively, of allowance for doubtful accounts. License Agreements We are a party to a license agreement with Jesse James, a well-known motorcycle designer, and Jesse James Firearms, LLC, a Texas limited liability company, or JJF. The license agreement grants us the exclusive worldwide rights through October 15, 2021 to Mr. James’ image rights and trademarks associated with him in connection with the marketing, promotion, advertising, sale, and commercial exploitation of Jesse James Branded Products. We agreed to pay Mr. James royalty fees on the sale of ammunition and non-ammunition Branded Products and to reimburse him for any out-of-pocket expenses and reasonable travel expenses. We are a party to a license agreement with Jeff Rann, a well-known wild game hunter and spokesman for the firearm and ammunition industries. The license agreement grants us through February 2022 the exclusive worldwide rights to Mr. Rann’s image rights and trademarks associated with him in connection with the marketing, promotion, advertising, sale, and commercial exploitation of all Jeff Rann Branded Products. We agreed to pay Mr. Rann royalty fees on the sale of ammunition and non-ammunition Branded Products and to reimburse him for any out-of-pocket expenses and reasonable travel expenses. Amortization expense for the license agreements for the three months ended June 30, 2020 and 2019 was $12,500. Patents On September 28, 2017, AMMO Technologies Inc. (“ATI”), an Arizona corporation, which is 100% owned by us, merged with Hallam, Inc, a Texas corporation, with ATI being the survivor. The primary asset of Hallam, Inc. was an exclusive license to produce projectiles and ammunition using the Hybrid Luminescence Ammunition Technology under patent U.S. 8,402,896 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. This asset will be amortized from September 2017, the first full month of the acquired rights, through October 29, 2028. Patent amortization expense for the three months ended June 30, 2020 and 2019 was $21,269. Under the terms of the Exclusive License Agreement, the Company is obligated to pay a royalty to the patent holder, based on a $0.01 per unit basis for each round of ammunition sold that incorporates this patented technology through October 29, 2028. For the three months ended June 30, 2020 and 2019, the Company accrued $24,759 and $2,558 respectively under this agreement. On October 5, 2018, we completed the acquisition of SW Kenetics Inc. ATI succeeded all of the assets of SW Kenetics, Inc. and assumed all of the liabilities. The primary asset of SW Kenetics Inc. was a pending patent for modular projectiles. All rights to patent pending application were assigned and transferred to AMMO Technologies, Inc. pursuant to Intellectual Property Rights Agreement on September 27, 2018. Patent amortization expense for the three months ended June 30, 2020 and 2019 was $102,066 and $35,119, respectively We intend to continue building our patent portfolio to protect our proprietary technologies and processes, and will file new applications where appropriate to preserve our rights to manufacture and sell our branded lines of ammunition. Other Intangible Assets On March 15, 2019, Enlight Group II, LLC d/b/a Jagemann Munition Components, a wholly owned subsidiary of AMMO, Inc., completed its acquisition of assets of Jagemann Stamping Company’s ammunition casing manufacturing and sales operations pursuant to the terms of the Amended and Restated Asset Purchase Agreement. The intangible assets acquired include a tradename, customer relationships, and intellectual property. For the three months ended June 30, 2020 and 2019, amortization of the other intangibles assets was $357,113 and $416,869, respectively recognized in depreciation and amortization expense. Impairment of Long-Lived Assets We continually monitor 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, we assess 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, we recognize 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 for the three months ended June 30, 2020 and 2019. Revenue Recognition We generate revenue from the production and sale of ammunition. We recognize revenue according to ASC 606. When the customer obtains control over the promised goods or services, we record revenue in the amount of consideration that we can expect to receive in exchange for those goods and services. The Company applies the following five-step model to determine revenue recognition: ● Identification of a contract with a customer ● Identification of the performance obligations in the contact ● determination of the transaction price ● allocation of the transaction price to the separate performance allocation ● recognition of revenue when performance obligations are satisfied The Company only applies the five-step model when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception and once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. Our contracts contain a single performance obligation and the entire transaction price is allocated to the single performance obligation. We recognize as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Accordingly, we recognize revenues (net) when the customer obtains control of the Company’s product, which typically occurs upon shipment of the product. In the current period, the Company began accepting contract liabilities or deferred revenue. We included Deferred Revenue in our Accrued Liabilities. The Company will recognize revenue when the performance obligation is met. For the three months ended June 30, 2020 and 2019, the Company’s customers that comprised more than ten percent (10%) of total revenues and accounts receivable were as follows: For the Three Months Ended June 30, 2020 For the Three Months Ended June 30, 2019 PERCENTAGES Revenues Accounts Receivable Revenues Accounts Receivable Customers: A 14.9 % 11.9 % 10.5 % - B 10.6 % 16.6 % - - C - - 25.9 % 34.6 % 25.5 % 28.5 % 36.4 % 34.6 % Disaggregated Revenue Information The following table represent a disaggregation of revenue from customers by segment. We attribute net sales to segments by product types; ammunition and ammunition casings. The Company notes that revenue recognition processes are consistent between product type, however, the amount, timing and uncertainty of revenue and cash flows may vary by each product type due to the customers of each product type. For the Three Months Ended June 30, 2020 June 30, 2019 Ammunition Sales $ 6,411,668 $ 1,141,499 Ammunition Casings Sales 3,248,302 3,157,081 Total Sales $ 9,659,970 $ 4,298,580 Ammunition products are sold through “Big Box” retailers, manufacturers, local ammunition stores, and shooting range operators. We also sell direct to customers online. In contrast, our ammunition casings products are sold to manufacturers. Advertising Costs We expense advertising costs as they are incurred. We incurred advertising of $87,167 and $94,213 for the three months ended June 30, 2020 and 2019, respectively. Inventories We state inventories at the lower of cost or net realizable value. We determine cost using the average cost method. Our 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. We periodically evaluate and adjust inventories for obsolescence. Property and Equipment We state property and equipment at cost, less accumulated depreciation. We capitalize major renewals and improvements, while we charge minor replacements, maintenance, and repairs to current operations. We compute depreciation by applying the straight-line method over estimated useful lives, which are generally five to ten years. Compensated Absences We accrue a liability for compensated absences in accordance with Accounting Standards Codifications 710 – Compensation – General Stock-Based Compensation We account for stock-based compensation at fair value in accordance with SFAS No. 123 and 123 (R) (ASC 718). There were 180,916 shares of common stock issued to employees, members of the Board of Directors, and members of the Advisory Committee for services during the quarter ended June 30, 2020. Effective April 1, 2020, we entered into an employment agreement with Robert D. Wiley, Chief Financial Officer, that included, among other provisions, an equity grant of 33,333 shares of restricted common stock each year for three years that vests at the rate of 8,333 shares per quarter. The compensation value is being recognized on a straight-line basis each year over the three-year period covered by the agreement. From September 2018 through March 2020, we entered into six separate employment agreements that included in total, among other provisions, equity grants of 473,332 shares of restricted common stock that vests annually over the next three years. The total compensation value is being recognized on a straight-line basis over the periods covered by each agreement, up to four years. Concentrations of Credit Risk Accounts at banks are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of June 30, 2020, our bank account balances exceeded federally insured limits. Income Taxes We file 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, and deferred taxes. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. We measure deferred tax assets and liabilities 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. We measure recognized income tax positions at the largest amount that is greater than 50% likely of being realized. We reflect changes in recognition or measurement in the period in which the change in judgment occurs. We currently have substantial net operating loss carryforwards. We have recorded a valuation allowance equal to the net deferred tax assets due to the uncertainty of the ultimate realization of the deferred tax assets. Furthermore, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020. The CARES Act was enacted in response to the COVID-19 pandemic and contains numerous income tax provisions, such as relaxing limitations on the deductibility of interest, technical corrections to tax depreciation methods for qualified improvement property and net operating loss carryback periods. The Company is implementing applicable benefits of the CARES Act, such as deferring employer payroll taxes and evaluating potential employee retention credits. Contingencies Certain conditions may exist as of the date the consolidated financial statements are issued that may result in a loss to us but will only be resolved when one or more future events occur or fail to occur. We 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 us or unasserted claims that may result in such proceedings, we evaluate the perceived merits of any legal proceedings or unasserted claims and 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 probable that a material loss has been incurred and the amount of the liability is reasonably estimated, the estimated liability would be accrued in our 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. On September 24, 2019, the Company received notice that a former employee that had voluntarily terminated filed a complaint against the Company, and certain individuals, with the U.S. Department of Labor (“DOL”). The Complaint in alleges that the individual reported potential violations of SEC rules and regulations by management and that as a result of such disclosures, the individual experienced a hostile work environment; that the Company lacks sufficient controls internal controls, and that the individual was the victim of retaliation and constructive discharge after being removed as a director by majority vote of the shareholders. The claims were investigated by a newly appointed Special Investigative Committee made of up independent directors represented by special independent legal counsel. The Special Investigative Committee and legal counsel found the material claims were unsubstantiated, including those concerning alleged SEC violations, and recommended enhancements to certain corporate governance charter documents and processes which the Company promptly implemented. The matter is currently the subject of administrative investigation by the DOL via the Occupational Safety and Health Administration. The Company filed a timely Position Statement with the DOL in October of 2019 in response to the Complaint. The Company disputes the allegations of wrongdoing and believes the matters raised in the Complaint are without merit and therefore has and will continue to aggressively defend its interests in this matter. On February 4, 2020, the Company filed suit against a former employee for violating merger agreements with SW Kenetics, Inc., employment agreements, and by unlawfully retaining property belonging to the Company following their termination. On March 11, 2020, the former employee filed a counterclaim against the Company citing breach of contract, breach of implied covenant of good faith and fair dealing, unjust enrichment and declaratory judgement. The Company plans to aggressively pursue its offensive claims in order to recover economic damages as a result of its claims while seeking dismissal of the counterclaim. There were no other known contingencies at June 30, 2020. Loss Per Common Share We calculate basic loss per share using the weighted-average number of shares of common stock 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. We have issued warrants to purchase 8,441,798 shares of common stock. All weighted average numbers were adjusted for the reverse stock split and merger transaction. Due to the loss from operations in the three months ended June 30, 2020 and 2019, there are no common shares added to calculate the dilutive EPS for those periods as the effect would be antidilutive. The Company excluded warrants of 8,441,798 and 8,646,216 for the three months ended June 30, 2020 and 2019, respectively, from the weighted average diluted common shares outstanding because their inclusion would have been antidilutive. |
Inventories
Inventories | 3 Months Ended |
Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | NOTE 4 – INVENTORIES At June 30, 2020 and March 31, 2020, the inventory balances are composed of: June 30, 2020 March 31, 2020 Finished product $ 781,319 $ 1,916,418 Raw materials 3,916,412 1,771,006 Work in process 1,821,026 720,650 $ 6,518,757 $ 4,408,073 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 5 – PROPERTY AND EQUIPMENT We state property and equipment at historical cost less accumulated depreciation. We compute depreciation using the straight-line method at rates intended to depreciate the cost of assets over their estimated useful lives, which are generally five to ten years. Upon retirement or sale of property and equipment, we remove the cost of the disposed assets and related accumulated depreciation from the accounts and any resulting gain or loss is credited or charged to selling, general, and administrative expenses. We charge expenditures for normal repairs and maintenance to expense as incurred. We capitalize additions and expenditures for improving or rebuilding existing assets that extend the useful life. 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 June 30, 2020 and March 31, 2020: June 30, 2020 March 31, 2020 Leasehold Improvements $ 118,222 $ 118,222 Furniture and Fixtures 87,790 87,790 Vehicles 103,511 103,511 Equipment 20,049,917 19,578,035 Tooling 126,190 126,190 Construction in Progress 93,262 1,093,262 Total property and equipment $ 20,578,892 $ 21,107,010 Less accumulated depreciation (3,736,734 ) (3,060,681 ) Net property and equipment 16,842,158 18,046,329 Depreciation Expense for the three months ended June 30, 2020 and 2019 totaled $676,053 and $582,674, respectively. |
Factoring Liability
Factoring Liability | 3 Months Ended |
Jun. 30, 2020 | |
Factoring Liability | |
Factoring Liability | NOTE 6 – FACTORING LIABILITY On July 1, 2019, we entered into a Factoring and Security Agreement with Factors Southwest, LLC (“FSW”). FSW may purchase from time to time the Company’s Accounts Receivables with recourse on an account by account basis. The twenty-four month agreement contains a maximum advance amount of $5,000,000 on 85% of eligible accounts and has an annualized interest rate of the Prime Rate published from time to time by the Wall Street Journal plus 4.5%. The agreement contains fee of 3% ($150,000) of the Maximum Facility assessed to the Company. Our obligations under this agreement are secured by present and future accounts receivables and related assets, inventory, and equipment. The Company has the right to terminate the agreement, with 30 days written notice, upon obtaining a non-factoring credit facility. This agreement provides the Company with the ability to convert our account receivables into cash. As of June 30, 2020, the outstanding balance of the Factoring Liability was $1,907,788. Interest expense recognized on the Factoring Liability was $114,060, including $37,500 of amortization of the commitment fee. There was no interest expense for the three month period ending June 30, 2019 as this transaction was not yet consummated. On June 17, 2020, this agreement was amended which extended the maturity date to June 17, 2022. |
Inventory Credit Facility
Inventory Credit Facility | 3 Months Ended |
Jun. 30, 2020 | |
Inventory Credit Facility | |
Inventory Credit Facility | NOTE 7 – INVENTORY CREDIT FACILITY On June 17, 2020, we entered into a Revolving Inventory Loan and Security Agreement with FSW. FSW will establish a revolving credit line, and make loans from time to time to the Company for the purpose of providing capital. The twenty-four month agreement secured by our inventory, among other assets, contains a maximum loan amount of $1,750,000 on eligible inventory and has an annualized interest rate of the greater of the three-month LIBOR rate plus 3.09% or 8%. The agreement contains a fee of 2% of the maximum loan amount ($35,000) assessed to the Company. As of June 30, 2020, the outstanding balance of the Inventory Credit Facility was $1,758,003. Interest expense recognized on the Inventory Credit Facility was $7,490, including $2,917 of amortization of the annual fee. There was no interest expense for the three month period ending June 30, 2019 as this transaction was not yet consummated. |
Leases
Leases | 3 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Leases | NOTE 8 – LEASES We lease office, manufacturing, and warehouse space in Scottsdale and Payson, AZ and Manitowoc, WI under contracts we classify as operating leases. None of our leases are financing leases. The Payson lease has an option to renew for five years. As of June 30, 2020, we are fairly certain that we will exercise the renewal option, and we have included such renewal option in the lease liabilities and the disclosures herein. The Scottsdale lease does not include a renewal option. As of June 26, 2020, the Company entered into an amended agreement that modified the Manitowoc lease to monthly payments of $34,071 and decrease the term to March 2025. The agreement does not contain a renewal option. Accordingly, we modified our Right of Use Assets and Operating Lease Liabilities by $737,680. As of June 30, 2020, the total Right of Use Assets and Operating Lease Liabilities on the Balance Sheet were $2,603,745 and $2,656,589, respectively. The Operating Lease Liabilities were net of current portions of $480,470 at June 30, 2020. Consolidated lease expense for the three months ended June 30, 2020 was $184,769 including $176,673 of operating lease expense and $8,095 of other lease associated expenses such as association dues, taxes, utilities, and other month to month rentals. The weighted average remaining lease term and weighted average discount rate for operating leases were 4.7 years and 10.0%, respectively. Futures minimum lease payments under non-cancellable leases as of June 30, 2020 are as follows: Years Ended March 31, 2021 (1) 542,627 2022 732,111 2023 742,108 2024 684,836 Thereafter 639,988 3,341,670 Less: Amount Representing Interest (685,081 ) $ 2,656,589 (1) This amount represents future lease payments for the remaining nine months of fiscal year 2021. It does not include any lease payments for the three months ended June 30, 2020. |
Convertible Promissory Notes
Convertible Promissory Notes | 3 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Convertible Promissory Notes | NOTE 9 – CONVERTIBLE PROMISSORY NOTES On January 15, 2020, the company consummated the initial closing of a private placement offering whereby pursuant to the Subscription Agreements entered into by the Company with five (5) accredited investors, the Company issued certain Convertible Promissory Notes for an aggregate purchase price of $1,650,000 and five (5) year warrants to purchase shares of the Company’s common stock, par value $0.001 per share (“Common Stock”). On January 30, 2020, the Company consummated the final closing of a private placement whereby pursuant to the Subscription Agreements entered into by the Company with five (5) accredited investors, the Company issued certain Convertible Promissory Notes for an aggregate purchase price of $850,000 and five (5) year warrants to purchase shares of the Company’s common stock, par value $0.001 per share. The Notes accrue interest at a rate of 8% per annum and mature on October 15, 2020 and October 30, 2020. Additionally, the Notes contain a mandatory conversion mechanism whereby any principal and accrued interest on the Notes, upon the closing of a Qualified Financing (as defined in the Notes), converts into shares of the Company’s Common Stock at a conversion price of 66.7% of the per share purchase price of shares or other units in the Qualified Financing. If a Qualified Financing has not occurred on or before the Maturity Date, the Notes shall become convertible into shares of the Company’s Common Stock at a conversion price that is equal to 50.0% of the arithmetic mean of the VWAP in the ten consecutive Trading Days immediately preceding the Maturity Date. The Notes contain customary events of default. If an Event of Default occurs, interest under the Notes will accrue at a rate of fifteen percent (15%) per annum and the outstanding principal amount of the Notes, plus accrued but unpaid interest, liquidated damages and other amounts owing with respect to the Notes will become, at the Note holder’s election, immediately due and payable in cash. The Company analyzed embedded conversion options of the convertible notes at issuance to determine whether the embedded conversion options should be bifurcated and accounted for as derivative liabilities or if the embedded conversion options contain a beneficial conversion feature. The Company notes that this determination must be performed at each balance sheet date and makes it possible for certain instruments to be reclassified between debt and equity at different points in their life. The Company determined that it will defer recognition of its accounting until such notes become convertible. Additionally, the Company determined that the embedded conversion options do not require bifurcation and treatment as derivative liabilities, but they included contingent beneficial conversion features that are indeterminable on the commitment date. The Company notes the embedded conversion options will be accounted for and recognized, if necessary, when the contingencies are resolved (the date of a Qualified Financing or during the 10 days prior to the Maturity Date). Through June 30, 2020, a Qualified Financing had not occurred and the Note is not yet convertible under the Voluntary Conversion Option and, as a result, the contingencies have not been resolved, such that the Company concluded that no measurement or recognition of the beneficial conversion feature was required as of June 30, 2020. Pursuant to the Subscription Agreements, each Investor will receive the number of Warrants to purchase shares of Common Stock equal to the quotient obtained by dividing 50% of the principal amount of the Note by the Conversion Price of the Note. The Warrants are exercisable at the per share purchase price of shares or other units in the Qualified Financing. If a Qualified Financing has not occurred on or before the Maturity Date, the warrants shall become exercisable at a price per share that is equal to the closing ten-day VWAP in the ten trading days immediately preceding the Maturity Date (the “Exercise Price”). The Warrants contain an anti-dilution protection feature, to adjust the Exercise Price if shares are sold or issued for a consideration per share less than the exercise price then in effect. Joseph Gunnar & Co., LLC acted as placement agent for the Offering. The Placement Agent received cash compensation of $200,000 and is scheduled to be issued five (5) year warrants to purchase such number of shares of Common Stock equal to five percent (5%) of the shares underlying the Notes and the Warrants, at an exercise price equal to 125% of the Conversion Price of the Notes, which price shall not be known until the earlier of the Maturity Date or the closing of the Qualified Financing. As of June 30, 2020, the key terms of the investor and placement agent warrants are still unknown such that there is still no grant of the warrants for accounting purposes. The Company will determine the fair value of the warrants at the time the key terms of the Warrants become known and the Warrants are issued. |
Notes Payable - Related Party
Notes Payable - Related Party | 3 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Notes Payable - Related Party | NOTE 10 – NOTES PAYABLE – RELATED PARTY In connection with the acquisition of the casing division of Jagemann Stamping Company, a $10,400,000 promissory note was executed. The promissory note, under which $500,000 was paid on March 25, 2019 using funds raised for the acquisition, had a remaining balance at March 31, 2019 of $9,900,000. On April 30, 2019, the original due date of the note was subsequently extended to April 1, 2020. The note bears interest per annum at approximately 4.6% payable in arrears monthly. In May of 2019, the Company paid $1,500,000 on the balance of the note. As of June 30, 2020, we recognized interest of $25,949 related to the note. The note is secured by all the equipment purchased from Jagemann Stamping Company. Post-closing of the transaction, it was made apparent that certain equipment that was agreed to be delivered free and clear by the Seller was not achievable as Seller was not able to purchase equipment that Seller had leased. Accordingly, the remaining value of the promissory note was reduced by $2,596,200. As a result of the change to the purchase price of the transaction, the Company reduced Equipment for a net value of $1,871,306, decreased Other Intangible Assets by $766,068, increased Accounts Receivable by $31,924, and recorded an increase to Deposits for $9,250 worth of equipment that the Company agreed to transfer back to Seller. Consequently, accumulated amortization has decreased by $159,530. Additionally, the Company entered into a lease to gain possession of the assets that were originally to be transferred. On June 26, 2020, the Company, Enlight Group II, LLC (“Enlight”), the Company’s wholly owned subsidiary and Jagemann Stamping Company’s (“JSC”) entered into a Settlement Agreement pursuant to which the parties mutually agreed to settle all disputes and mutually release each other from liabilities related to the Amended APA occurring prior to June 26, 2020. Pursuant to the Settlement Agreement, the Company shall pay JSC $1,269,977 and shall provide JSC with: (i) two new promissory notes, a note of $5,803,800 related to the Seller Note and note of $2,635,797 for inventory and services, which was reclassed from accounts payable, both with a maturity date of August 15, 2021, (ii) general business security agreements granting JSC a security interest in all personal property of the Company. Pursuant to the Notes, the Company is obligated to make monthly payments totaling $204,295 to JSC. In addition, the Notes have a mandatory prepayment provision that comes into effect if the Company conducts a publicly registered offering. Pursuant to such provision, the Company: (a) upon the closing of an Offering of less than $10,000,000 would be obligated to pay the lesser of ninety percent (90%) of the Offering proceeds or seventy (70%) of the then aggregate outstanding balance of the Notes; and (b) upon the closing of an Offering of more than $10,000,000 would be obligated to pay one hundred percent (100%) of the then aggregate outstanding balance of the Notes. The Company was granted an option to repurchase up to 1,000,000 of the shares of the Company’s common stock issued to JSC under the Amended APA at a price of $1.50 per share through April 1, 2021 so long as there are no defaults under the Settlement Agreement. The total balance of the two Notes due to JSC as of June 30, 2020 is $8,235,302. As a result of the Settlement Agreement, the Company agreed to not receive $1,000,000 in Construction in Progress that the parties had previously agreed to exchange. As a result, the Company recognized a loss in operating expenses for the three months ended June 30, 2020. On May 3, 2019, the Company entered into a promissory note of $375,000 with a shareholder of the Company. The original interest rate was the applicable LIBOR Rate. The promissory note has since been amended and the balance at June 30, 2020 was $260,000. The note’s original a maturity date of August 3, 2019 was extended to September 18, 2020. The amended note bears interest at 1.25% per month. The Company made $18,195 in principal payments in the three months ended June 30, 2020. We recognized $10,002 of interest expenses related to the note during the three months ended June 30, 2020. Subsequent to June 30, 2020, the related party note and accrued interest was paid in full. In December of 2019, the Company entered into a Promissory Note of $90,000 with Fred Wagenhals, the Company’s Chief Executive Officer and Chairman of the Board of Directors. The Note originally matured on June 12, 2020 and had an interest rate at the applicable LIBOR Rate. The promissory note has since been amended and the balance at June 30, 2020 was $131,536 and the amended maturity date is September 18, 2020. The Company made $25,000 in principal payments in the three months ended June 30, 2020. The amended note bears interest at 1.25% per month. We recognized $5,185 of interest expense on the note for the three months ended June 30, 2020. Subsequent to June 30, 2020, the related party note and accrued interest was paid in full. |
Paycheck Protection Notes Payab
Paycheck Protection Notes Payable | 3 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Paycheck Protection Notes Payable | NOTE 11 – PAYCHECK PROTECTION NOTES PAYABLE In April of 2020, the Company determined it was necessary to obtain additional funds as a result of the foregoing uncertainty cause by COVID-19. The Company received approximately $1.0 million in funds through itself and its wholly owned subsidiary Jagemann Munition Components, which was established under the federal Coronavirus Aid, Relief, and Economic Security Act and is administered by the U.S. Small Business Administration. The Company received approximately $600,000 from Western State Bank and its wholly owned subsidiary, Jagemann Munition Components, received approximately $400,000 from BMO Harris. The Paycheck Protection Notes provide for an interest rate of 1.00% per year and matures two years after the issuance date. Principal and accrued interest are payable monthly in equal installments commencing on the date that is six months after the date funds are first disbursed on the loan and continuing through the maturity date, unless the Paycheck Protection Notes are forgiven. To be available for loan forgiveness, the Paycheck Protection Note may only be used for payroll costs, costs related to certain group health care benefits and insurance premiums, rent payments, utility payments, mortgage interest payments and interest payments on any other debt obligation that existed before February 15, 2020. |
Capital Stock
Capital Stock | 3 Months Ended |
Jun. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Capital Stock | NOTE 12 – CAPITAL STOCK During the three month period ended June 30, 2020, we issued 1,204,683 shares of common stock as follows: ● 1,000,000 shares were sold to investors for $1,750,000 ● 60,607 shares were issued to investors for exercised warrants valued for $121,214 ● 279 shares were issued for cashless exercise of 1,967 warrants ● 8,336 shares were issued for services provided to the Company value at $13,188 ● 180,916 shares valued at $255,300 were issued to employees, members of the Board of Directors, and members of the Advisory Committee as compensation At June 30, 2020, we recorded a stock subscription receivable of $1,840,910 for 1,000,000 shares of Common Stock sold to an Investor for $1,750,000 or $1.75 per share and 45,455 shares issued to investors for exercised warrants at $2.00 per share for $90,910. At June 30, 2020, outstanding and exercisable stock purchase warrants consisted of the following: Number of Shares Weighted Averaged Weighted Average Life Remaining Outstanding at March 31, 2020 8,504,372 $ 2.10 3.60 Granted - - - Exercised (62,574 ) 2.00 - Forfeited or cancelled - - - Outstanding at June 30, 2020 8,441,798 $ 2.10 3.32 Exercisable at June 30, 2020 8,441,798 $ 2.10 3.32 As of June 30, 2020, we had 8,441,798 warrants outstanding. Each warrant provides the holder the right to purchase up to one share of our Common Stock at a predetermined exercise price. The outstanding warrants consist of (1) warrants to purchase 966,494 shares of Common Stock at an exercise price of $1.65 per share until April 2025; (2) warrants to purchase 4,579,171 shares of our Common Stock at an exercise price of $2.00 per share over the next three to five years; and (3) warrants to purchase 2,896,133 shares of Common Stock at an exercise price of $2.40 over the next five years. |
Income Taxes
Income Taxes | 3 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 13 – INCOME TAXES As of June 30, 2020, we had net operating loss carryforwards of approximately $31,116,173, 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. The Company’s effective tax rates were 0% and 0% for the three months ended June 30, 2020 and 2019, respectively. During the three months ended June 30, 2020 and 2019, the effective tax rate differed from the U.S. federal statutory rate primarily due to the change in the valuation allowance. The Company has never had an Internal Revenue Service audit; therefore, the tax periods ended December 31, 2016, December 31, 2017 and March 31, 2018, 2019, and 2020 are subject to audit. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 14 – SUBSEQUENT EVENTS Subsequent to June 30, 2020, the Company issued 11,500 shares of Common Stock to employees for $14,375 or $1.25 per share. Additionally, the Company issued 157,143 shares of Common Stock to an investor for $275,000 or $1.75 per share. On July 31, 2020, the Company amended its Revolving Loan and Security Agreement to increase the maximum inventory loan amount to $2,250,000. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Accounting Basis | Accounting Basis The accompanying unaudited consolidated financial statements and related disclosures included in this Quarterly Report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and reflect all adjustments, which consist solely of normal recurring adjustments, needed to fairly present the financial results for these periods. Additionally, these consolidated financial statements and related disclosures are presented pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures contained in the Company’s Annual Report filed with the SEC on Form 10-K for the year ended March 31, 2020. The results for the three month period ended June 30, 2020 are not necessarily indicative of the results that may be expected for the entire fiscal year. Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to the rules and regulations of the SEC. In the opinion of management, all adjustments have been made, which consist only of normal recurring adjustments necessary for a fair statement of (a) the results of operations for the three month periods ended June 30, 2020 and 2019, (b) the financial position at June 30, 2020, and (c) cash flows for the three month periods ended June 30, 2020 and 2019. We use the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP”) and all amounts are expressed in U.S. dollars. The Company has a fiscal year-end of March 31 st Unless the context otherwise requires, all references to “Ammo”, “we”, “us”, “our,” or the “Company” are to AMMO, Inc., a Delaware corporation. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of AMMO, Inc. and its wholly owned subsidiaries, Enlight Group II, LLC (d/b/a Jagemann Munition Components), SNI, LLC, AMMO Munitions, Inc. and AMMO Technologies, Inc. (inactive). 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 us 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in preparing the consolidated financial statements include the valuation of allowances for doubtful accounts, valuation of deferred tax assets, inventories, useful lives of assets, intangible assets, and stock-based compensation. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Our accounts receivable represents amounts due from customers for products sold and include an allowance for uncollectible accounts which is estimated based on the aging of the accounts receivable and specific identification of uncollectible accounts. At June 30, 2020 and March 31, 2020, we reserved $78,154 and $62,248, respectively, of allowance for doubtful accounts. |
License Agreements | License Agreements We are a party to a license agreement with Jesse James, a well-known motorcycle designer, and Jesse James Firearms, LLC, a Texas limited liability company, or JJF. The license agreement grants us the exclusive worldwide rights through October 15, 2021 to Mr. James’ image rights and trademarks associated with him in connection with the marketing, promotion, advertising, sale, and commercial exploitation of Jesse James Branded Products. We agreed to pay Mr. James royalty fees on the sale of ammunition and non-ammunition Branded Products and to reimburse him for any out-of-pocket expenses and reasonable travel expenses. We are a party to a license agreement with Jeff Rann, a well-known wild game hunter and spokesman for the firearm and ammunition industries. The license agreement grants us through February 2022 the exclusive worldwide rights to Mr. Rann’s image rights and trademarks associated with him in connection with the marketing, promotion, advertising, sale, and commercial exploitation of all Jeff Rann Branded Products. We agreed to pay Mr. Rann royalty fees on the sale of ammunition and non-ammunition Branded Products and to reimburse him for any out-of-pocket expenses and reasonable travel expenses. Amortization expense for the license agreements for the three months ended June 30, 2020 and 2019 was $12,500. |
Patents | Patents On September 28, 2017, AMMO Technologies Inc. (“ATI”), an Arizona corporation, which is 100% owned by us, merged with Hallam, Inc, a Texas corporation, with ATI being the survivor. The primary asset of Hallam, Inc. was an exclusive license to produce projectiles and ammunition using the Hybrid Luminescence Ammunition Technology under patent U.S. 8,402,896 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. This asset will be amortized from September 2017, the first full month of the acquired rights, through October 29, 2028. Patent amortization expense for the three months ended June 30, 2020 and 2019 was $21,269. Under the terms of the Exclusive License Agreement, the Company is obligated to pay a royalty to the patent holder, based on a $0.01 per unit basis for each round of ammunition sold that incorporates this patented technology through October 29, 2028. For the three months ended June 30, 2020 and 2019, the Company accrued $24,759 and $2,558 respectively under this agreement. On October 5, 2018, we completed the acquisition of SW Kenetics Inc. ATI succeeded all of the assets of SW Kenetics, Inc. and assumed all of the liabilities. The primary asset of SW Kenetics Inc. was a pending patent for modular projectiles. All rights to patent pending application were assigned and transferred to AMMO Technologies, Inc. pursuant to Intellectual Property Rights Agreement on September 27, 2018. Patent amortization expense for the three months ended June 30, 2020 and 2019 was $102,066 and $35,119, respectively We intend to continue building our patent portfolio to protect our proprietary technologies and processes, and will file new applications where appropriate to preserve our rights to manufacture and sell our branded lines of ammunition. |
Other Intangible Assets | Other Intangible Assets On March 15, 2019, Enlight Group II, LLC d/b/a Jagemann Munition Components, a wholly owned subsidiary of AMMO, Inc., completed its acquisition of assets of Jagemann Stamping Company’s ammunition casing manufacturing and sales operations pursuant to the terms of the Amended and Restated Asset Purchase Agreement. The intangible assets acquired include a tradename, customer relationships, and intellectual property. For the three months ended June 30, 2020 and 2019, amortization of the other intangibles assets was $357,113 and $416,869, respectively recognized in depreciation and amortization expense. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets We continually monitor 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, we assess 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, we recognize 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 for the three months ended June 30, 2020 and 2019. |
Revenue Recognition | Revenue Recognition We generate revenue from the production and sale of ammunition. We recognize revenue according to ASC 606. When the customer obtains control over the promised goods or services, we record revenue in the amount of consideration that we can expect to receive in exchange for those goods and services. The Company applies the following five-step model to determine revenue recognition: ● Identification of a contract with a customer ● Identification of the performance obligations in the contact ● determination of the transaction price ● allocation of the transaction price to the separate performance allocation ● recognition of revenue when performance obligations are satisfied The Company only applies the five-step model when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception and once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. Our contracts contain a single performance obligation and the entire transaction price is allocated to the single performance obligation. We recognize as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Accordingly, we recognize revenues (net) when the customer obtains control of the Company’s product, which typically occurs upon shipment of the product. In the current period, the Company began accepting contract liabilities or deferred revenue. We included Deferred Revenue in our Accrued Liabilities. The Company will recognize revenue when the performance obligation is met. For the three months ended June 30, 2020 and 2019, the Company’s customers that comprised more than ten percent (10%) of total revenues and accounts receivable were as follows: For the Three Months Ended June 30, 2020 For the Three Months Ended June 30, 2019 PERCENTAGES Revenues Accounts Receivable Revenues Accounts Receivable Customers: A 14.9 % 11.9 % 10.5 % - B 10.6 % 16.6 % - - C - - 25.9 % 34.6 % 25.5 % 28.5 % 36.4 % 34.6 % Disaggregated Revenue Information The following table represent a disaggregation of revenue from customers by segment. We attribute net sales to segments by product types; ammunition and ammunition casings. The Company notes that revenue recognition processes are consistent between product type, however, the amount, timing and uncertainty of revenue and cash flows may vary by each product type due to the customers of each product type. For the Three Months Ended June 30, 2020 June 30, 2019 Ammunition Sales $ 6,411,668 $ 1,141,499 Ammunition Casings Sales 3,248,302 3,157,081 Total Sales $ 9,659,970 $ 4,298,580 Ammunition products are sold through “Big Box” retailers, manufacturers, local ammunition stores, and shooting range operators. We also sell direct to customers online. In contrast, our ammunition casings products are sold to manufacturers. |
Advertising Costs | Advertising Costs We expense advertising costs as they are incurred. We incurred advertising of $87,167 and $94,213 for the three months ended June 30, 2020 and 2019, respectively. |
Inventories | Inventories We state inventories at the lower of cost or net realizable value. We determine cost using the average cost method. Our 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. We periodically evaluate and adjust inventories for obsolescence. |
Property and Equipment | Property and Equipment We state property and equipment at cost, less accumulated depreciation. We capitalize major renewals and improvements, while we charge minor replacements, maintenance, and repairs to current operations. We compute depreciation by applying the straight-line method over estimated useful lives, which are generally five to ten years. |
Compensated Absences | Compensated Absences We accrue a liability for compensated absences in accordance with Accounting Standards Codifications 710 – Compensation – General |
Stock-Based Compensation | Stock-Based Compensation We account for stock-based compensation at fair value in accordance with SFAS No. 123 and 123 (R) (ASC 718). There were 180,916 shares of common stock issued to employees, members of the Board of Directors, and members of the Advisory Committee for services during the quarter ended June 30, 2020. Effective April 1, 2020, we entered into an employment agreement with Robert D. Wiley, Chief Financial Officer, that included, among other provisions, an equity grant of 33,333 shares of restricted common stock each year for three years that vests at the rate of 8,333 shares per quarter. The compensation value is being recognized on a straight-line basis each year over the three-year period covered by the agreement. From September 2018 through March 2020, we entered into six separate employment agreements that included in total, among other provisions, equity grants of 473,332 shares of restricted common stock that vests annually over the next three years. The total compensation value is being recognized on a straight-line basis over the periods covered by each agreement, up to four years. |
Concentrations of Credit Risk | Concentrations of Credit Risk Accounts at banks are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of June 30, 2020, our bank account balances exceeded federally insured limits. |
Income Taxes | Income Taxes We file 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, and deferred taxes. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. We measure deferred tax assets and liabilities 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. We measure recognized income tax positions at the largest amount that is greater than 50% likely of being realized. We reflect changes in recognition or measurement in the period in which the change in judgment occurs. We currently have substantial net operating loss carryforwards. We have recorded a valuation allowance equal to the net deferred tax assets due to the uncertainty of the ultimate realization of the deferred tax assets. Furthermore, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020. The CARES Act was enacted in response to the COVID-19 pandemic and contains numerous income tax provisions, such as relaxing limitations on the deductibility of interest, technical corrections to tax depreciation methods for qualified improvement property and net operating loss carryback periods. The Company is implementing applicable benefits of the CARES Act, such as deferring employer payroll taxes and evaluating potential employee retention credits. |
Contingencies | Contingencies Certain conditions may exist as of the date the consolidated financial statements are issued that may result in a loss to us but will only be resolved when one or more future events occur or fail to occur. We 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 us or unasserted claims that may result in such proceedings, we evaluate the perceived merits of any legal proceedings or unasserted claims and 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 probable that a material loss has been incurred and the amount of the liability is reasonably estimated, the estimated liability would be accrued in our 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. On September 24, 2019, the Company received notice that a former employee that had voluntarily terminated filed a complaint against the Company, and certain individuals, with the U.S. Department of Labor (“DOL”). The Complaint in alleges that the individual reported potential violations of SEC rules and regulations by management and that as a result of such disclosures, the individual experienced a hostile work environment; that the Company lacks sufficient controls internal controls, and that the individual was the victim of retaliation and constructive discharge after being removed as a director by majority vote of the shareholders. The claims were investigated by a newly appointed Special Investigative Committee made of up independent directors represented by special independent legal counsel. The Special Investigative Committee and legal counsel found the material claims were unsubstantiated, including those concerning alleged SEC violations, and recommended enhancements to certain corporate governance charter documents and processes which the Company promptly implemented. The matter is currently the subject of administrative investigation by the DOL via the Occupational Safety and Health Administration. The Company filed a timely Position Statement with the DOL in October of 2019 in response to the Complaint. The Company disputes the allegations of wrongdoing and believes the matters raised in the Complaint are without merit and therefore has and will continue to aggressively defend its interests in this matter. On February 4, 2020, the Company filed suit against a former employee for violating merger agreements with SW Kenetics, Inc., employment agreements, and by unlawfully retaining property belonging to the Company following their termination. On March 11, 2020, the former employee filed a counterclaim against the Company citing breach of contract, breach of implied covenant of good faith and fair dealing, unjust enrichment and declaratory judgement. The Company plans to aggressively pursue its offensive claims in order to recover economic damages as a result of its claims while seeking dismissal of the counterclaim. There were no other known contingencies at June 30, 2020. |
Loss Per Common Share | Loss Per Common Share We calculate basic loss per share using the weighted-average number of shares of common stock 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. We have issued warrants to purchase 8,441,798 shares of common stock. All weighted average numbers were adjusted for the reverse stock split and merger transaction. Due to the loss from operations in the three months ended June 30, 2020 and 2019, there are no common shares added to calculate the dilutive EPS for those periods as the effect would be antidilutive. The Company excluded warrants of 8,441,798 and 8,646,216 for the three months ended June 30, 2020 and 2019, respectively, from the weighted average diluted common shares outstanding because their inclusion would have been antidilutive. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Concentration of Risks | For the three months ended June 30, 2020 and 2019, the Company’s customers that comprised more than ten percent (10%) of total revenues and accounts receivable were as follows: For the Three Months Ended June 30, 2020 For the Three Months Ended June 30, 2019 PERCENTAGES Revenues Accounts Receivable Revenues Accounts Receivable Customers: A 14.9 % 11.9 % 10.5 % - B 10.6 % 16.6 % - - C - - 25.9 % 34.6 % 25.5 % 28.5 % 36.4 % 34.6 % |
Schedule of Disaggregated Revenue from Customers by Segment | The Company notes that revenue recognition processes are consistent between product type, however, the amount, timing and uncertainty of revenue and cash flows may vary by each product type due to the customers of each product type. For the Three Months Ended June 30, 2020 June 30, 2019 Ammunition Sales $ 6,411,668 $ 1,141,499 Ammunition Casings Sales 3,248,302 3,157,081 Total Sales $ 9,659,970 $ 4,298,580 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | At June 30, 2020 and March 31, 2020, the inventory balances are composed of: June 30, 2020 March 31, 2020 Finished product $ 781,319 $ 1,916,418 Raw materials 3,916,412 1,771,006 Work in process 1,821,026 720,650 $ 6,518,757 $ 4,408,073 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following at June 30, 2020 and March 31, 2020: June 30, 2020 March 31, 2020 Leasehold Improvements $ 118,222 $ 118,222 Furniture and Fixtures 87,790 87,790 Vehicles 103,511 103,511 Equipment 20,049,917 19,578,035 Tooling 126,190 126,190 Construction in Progress 93,262 1,093,262 Total property and equipment $ 20,578,892 $ 21,107,010 Less accumulated depreciation (3,736,734 ) (3,060,681 ) Net property and equipment 16,842,158 18,046,329 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Schedule of Future Minimum Lease Payments Under Non-cancellable Leases | Futures minimum lease payments under non-cancellable leases as of June 30, 2020 are as follows: Years Ended March 31, 2021 (1) 542,627 2022 732,111 2023 742,108 2024 684,836 Thereafter 639,988 3,341,670 Less: Amount Representing Interest (685,081 ) $ 2,656,589 (1) This amount represents future lease payments for the remaining nine months of fiscal year 2021. It does not include any lease payments for the three months ended June 30, 2020. |
Capital Stock (Tables)
Capital Stock (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Outstanding and Exercisable Stock Purchase Warrants | At June 30, 2020, outstanding and exercisable stock purchase warrants consisted of the following: Number of Shares Weighted Averaged Weighted Average Life Remaining Outstanding at March 31, 2020 8,504,372 $ 2.10 3.60 Granted - - - Exercised (62,574 ) 2.00 - Forfeited or cancelled - - - Outstanding at June 30, 2020 8,441,798 $ 2.10 3.32 Exercisable at June 30, 2020 8,441,798 $ 2.10 3.32 |
Organization and Business Act_2
Organization and Business Activity (Details Narrative) - shares | Mar. 17, 2017 | Dec. 15, 2016 |
Number of shares sold | 475,681 | |
Number of shares issued for pre-split | 11,891,976 | |
Reverse stock split | 1-for-25 reverse stock split ("Reverse Split") of the issued and outstanding shares of the common stock of the Company. As a result of the reverse split, the previous issued and outstanding shares of common stock became 580,052 shares; no shareholder was reversed below 100 shares, and all fractional shares resulting from the reverse split were rounded up to the next whole share. | |
Number of shares issued, post reverse split | 580,052 | |
Definitive Agreement [Member] | PRIVCO [Member] | ||
Number of common stock shares issued | 17,285,800 | |
Number of shares retired | 475,681 | |
Number of shares issued to satisfy an issuance commitment | 500,000 | |
Shares equivalent to issuance recapitalization | 604,371 |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | 3 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Net losses | $ (3,103,789) | $ (3,841,402) | |
Net cash used in operating activities | (1,759,980) | $ (1,747,481) | |
Accumulated deficit | $ (37,111,034) | $ (34,007,245) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Apr. 02, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Mar. 31, 2020 | Sep. 28, 2017 |
Allowance for doubtful accounts | $ 78,154 | $ 62,248 | ||||
Amortization of other intangible assets | 357,113 | $ 416,869 | ||||
Impairment expense | ||||||
Concentration Percentage | 10.00% | 10.00% | ||||
Advertising costs | $ 87,167 | $ 94,213 | ||||
Income tax, description | We measure recognized income tax positions at the largest amount that is greater than 50% likely of being realized. | |||||
Contingency | ||||||
Warrants [Member] | ||||||
Antidilutive securities excluded from computation of earnings per share, amount | 441,798 | |||||
Weighted average diluted common shares outstanding | 8,441,798 | 8,646,216 | ||||
Employees, Members of Board of Directors and Advisory Committee [member] | ||||||
Number of shares issued for services | 180,916 | |||||
Minimum [Member] | ||||||
Property and equipment useful life | 5 years | |||||
Maximum [Member] | ||||||
Property and equipment useful life | 10 years | |||||
Federal deposit insurance corporation limit | $ 250,000 | |||||
Patents [Member] | ||||||
Patent amortization expense | $ 21,269 | $ 21,269 | ||||
Agreement term, description | This asset will be amortized from September 2017, the first full month of the acquired rights, through October 29, 2028. | |||||
Payment of note payable related party | $ 24,759 | 2,558 | ||||
Patents [Member] | SW Kenetics Inc. [Member] | ||||||
Patent amortization expense | $ 102,066 | 35,119 | ||||
Hallam, Inc [Member] | ||||||
Ownership percentage in ATI | 100.00% | |||||
Agreement term, description | Under the terms of the Exclusive License Agreement, the Company is obligated to pay a royalty to the patent holder, based on a $0.01 per unit basis for each round of ammunition sold that incorporates this patented technology through October 29, 2028 | |||||
Licensing Agreements [Member] | ||||||
Amortization expense | $ 12,500 | $ 12,500 | ||||
Employment agreement [Member] | Robert D. Wiley [Member] | ||||||
Option granted | 33,333 | |||||
Options vesting in period | 8,333 | |||||
Vesting period | 3 years | |||||
Employment agreement [Member] | Four Separate Employee Agreements [Member] | ||||||
Option granted | 473,332 | |||||
Vesting period | 3 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Concentration of Risks (Details) | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Concentration percentage | 10.00% | 10.00% |
Customer Concentration Risk [Member] | Revenues [Member] | ||
Concentration percentage | 25.50% | 36.40% |
Customer Concentration Risk [Member] | Revenues [Member] | Customer A [Member] | ||
Concentration percentage | 14.90% | 10.50% |
Customer Concentration Risk [Member] | Revenues [Member] | Customer B [Member] | ||
Concentration percentage | 10.60% | |
Customer Concentration Risk [Member] | Revenues [Member] | Customer C [Member] | ||
Concentration percentage | 25.90% | |
Customer Concentration Risk [Member] | Accounts receivable [Member] | ||
Concentration percentage | 28.50% | 34.60% |
Customer Concentration Risk [Member] | Accounts receivable [Member] | Customer A [Member] | ||
Concentration percentage | 11.90% | |
Customer Concentration Risk [Member] | Accounts receivable [Member] | Customer B [Member] | ||
Concentration percentage | 16.60% | |
Customer Concentration Risk [Member] | Accounts receivable [Member] | Customer C [Member] | ||
Concentration percentage | 34.60% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Disaggregated Revenue from Customers by Segment (Details) - USD ($) | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Total Sales | $ 9,659,970 | $ 4,298,580 |
Ammunition Sales [Member] | ||
Total Sales | 6,411,668 | 1,141,499 |
Casing Sales [Member] | ||
Total Sales | $ 3,248,302 | $ 3,157,081 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventory (Details) - USD ($) | Jun. 30, 2020 | Mar. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Finished product | $ 781,319 | $ 1,916,418 |
Raw materials | 3,916,412 | 1,771,006 |
Work in process | 1,821,026 | 720,650 |
Inventory, net | $ 6,518,757 | $ 4,408,073 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Depreciation expense | $ 676,053 | $ 582,674 |
Minimum [Member] | ||
Property and equipment useful life | 5 years | |
Maximum [Member] | ||
Property and equipment useful life | 10 years | |
Property and Equipment [Member] | Minimum [Member] | ||
Property and equipment useful life | 5 years | |
Property and Equipment [Member] | Maximum [Member] | ||
Property and equipment useful life | 10 years |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Jun. 30, 2020 | Mar. 31, 2020 |
Total property and equipment | $ 20,578,892 | $ 21,107,010 |
Less accumulated depreciation | (3,736,734) | (3,060,681) |
Net property and equipment | 16,842,158 | 18,046,329 |
Leasehold Improvements [Member] | ||
Total property and equipment | 118,222 | 118,222 |
Furniture and Fixtures [Member] | ||
Total property and equipment | 87,790 | 87,790 |
Vehicles [Member] | ||
Total property and equipment | 103,511 | 103,511 |
Equipment [Member] | ||
Total property and equipment | 20,049,917 | 19,578,035 |
Tooling [Member] | ||
Total property and equipment | 126,190 | 126,190 |
Construction in Progress [Member] | ||
Total property and equipment | $ 93,262 | $ 1,093,262 |
Factoring Liability (Details Na
Factoring Liability (Details Narrative) - USD ($) | Jun. 17, 2020 | Jul. 01, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Mar. 31, 2020 |
Maximum advance amount | $ 35,000 | ||||
Factoring liability | $ 1,907,788 | $ 2,005,979 | |||
Interest expenses on Inventory Credit Facility | 114,060 | ||||
Amortization of commitment fee | $ 37,500 | ||||
Interest expenses | |||||
Agreement extended maturity date | Jun. 17, 2022 | ||||
Factoring And Security Agreement [Member] | |||||
Maximum advance amount | $ 5,000,000 | ||||
Annualized interest rate | 85.00% | ||||
Maximum facility, description | The twenty-four month agreement contains a maximum advance amount of $5,000,000 on 85% of eligible accounts and has an annualized interest rate of the Prime Rate published from time to time by the Wall Street Journal plus 4.5%. The agreement contains fee of 3% ($150,000) of the Maximum Facility assessed to the Company. | ||||
Facility fee percentage | 3.00% | ||||
Maximum facility amount | $ 150,000 |
Inventory Credit Facility (Deta
Inventory Credit Facility (Details Narrative) - USD ($) | Jun. 17, 2020 | Jun. 30, 2020 | Mar. 31, 2020 |
Maximum loan amount | $ 35,000 | ||
Inventory credit facility | $ 1,758,003 | ||
Interest expense on inventory credit facility | 7,490 | ||
Amortization of annual fee | 2,917 | ||
Interest expense | |||
Revolving Inventory Loan and Security Agreement [Member] | |||
Maximum loan amount | $ 1,750,000 | ||
Interest rate description | Annualized interest rate of the greater of the three-month LIBOR rate plus 3.09% or 8%. | ||
Interest rate | 2.00% |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | Jan. 26, 2020 | Jun. 30, 2020 | Mar. 31, 2020 |
Leases [Abstract] | |||
Lease renewal term | 5 years | ||
Payments for rent | $ 34,071 | ||
Lease agreement date | Mar. 31, 2025 | ||
Right use of asset | $ 737,680 | $ 2,603,745 | $ 3,431,746 |
Operating lease liability | $ 737,680 | 2,656,589 | |
Operating lease liability, current | 480,470 | ||
Consolidated lease expense | 184,769 | ||
Operating lease expense | 176,673 | ||
Other lease associated expenses | $ 8,095 | ||
Weighted average remaining lease term | 4 years 8 months 12 days | ||
Weighted average discount rate for operating leases | 10.00% |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Lease Payments Under Non-cancellable Leases (Details) - USD ($) | Jun. 30, 2020 | Jan. 26, 2020 | |
Leases [Abstract] | |||
2021 | [1] | $ 542,627 | |
2022 | 732,111 | ||
2023 | 742,108 | ||
2024 | 684,836 | ||
Thereafter | 639,988 | ||
Total lease payments | 3,341,670 | ||
Less: Amount Representing Interest | (685,081) | ||
Present value of lease liabilities | $ 2,656,589 | $ 737,680 | |
[1] | This amount represents future lease payments for the remaining nine months of fiscal year 2021. It does not include any lease payments for the three months ended June 30, 2020. |
Convertible Promissory Notes (D
Convertible Promissory Notes (Details Narrative) | Jan. 30, 2020USD ($)$ / shares | Jan. 15, 2020USD ($)$ / shares | Jun. 30, 2020$ / shares | Apr. 30, 2020 | Mar. 31, 2020$ / shares |
Common stock, par value | $ / shares | $ 0.001 | $ 0.001 | |||
Debt interest rate | 8.00% | 1.00% | |||
Debt instrument maturity date description | Mature on October 15, 2020 and October 30, 2020. | ||||
Conversion rate | 0.667 | ||||
Debt instrument, description | If a Qualified Financing has not occurred on or before the Maturity Date, the Notes shall become convertible into shares of the Company's Common Stock at a conversion price that is equal to 50.0% of the arithmetic mean of the VWAP in the ten consecutive Trading Days immediately preceding the Maturity Date. | ||||
Debt instrument effective interest percentage | 15.00% | ||||
Subscription Agreements [Member] | |||||
Conversion rate | 0.50 | ||||
Joseph Gunnar & Co LLC [Member] | |||||
Proceeds from convertible debt | $ | $ 200,000 | ||||
Warrant terms | 5 years | ||||
Conversion rate | 1.25 | ||||
Common stock percentage | 5.00% | ||||
Five Accredited Investors [Member] | Subscription Agreements [Member] | |||||
Proceeds from convertible debt | $ | $ 850,000 | $ 1,650,000 | |||
Warrant terms | 5 years | 5 years | |||
Common stock, par value | $ / shares | $ 0.001 | $ 0.001 |
Notes Payable - Related Party (
Notes Payable - Related Party (Details Narrative) - USD ($) | Jun. 26, 2020 | Jan. 30, 2020 | May 03, 2019 | Mar. 31, 2019 | Mar. 25, 2019 | Dec. 31, 2019 | May 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Apr. 30, 2020 | Mar. 31, 2020 |
Debt instrument maturity date description | Mature on October 15, 2020 and October 30, 2020. | ||||||||||
Debt interest rate | 8.00% | 1.00% | |||||||||
Debt description | If a Qualified Financing has not occurred on or before the Maturity Date, the Notes shall become convertible into shares of the Company's Common Stock at a conversion price that is equal to 50.0% of the arithmetic mean of the VWAP in the ten consecutive Trading Days immediately preceding the Maturity Date. | ||||||||||
Interest expenses | |||||||||||
Settlement Agreement [Member] | |||||||||||
Proceeds from construction in progress | $ 1,000,000 | ||||||||||
Post Closing Transaction Note Reduction [Member] | |||||||||||
Post-closing changes to the purchase price of transaction | $ 2,596,200 | ||||||||||
Decreased Equipment Net [Member] | |||||||||||
Post-closing changes to the purchase price of transaction | 1,871,306 | ||||||||||
Reduction in Other Intangible Assets [Member] | |||||||||||
Post-closing changes to the purchase price of transaction | 766,068 | ||||||||||
Increased Accounts Receivable [Member] | |||||||||||
Post-closing changes to the purchase price of transaction | 31,924 | ||||||||||
Increase to Deposits [Member] | |||||||||||
Post-closing changes to the purchase price of transaction | 9,250 | ||||||||||
Decreased Accumulated Amortization [Member] | |||||||||||
Post-closing changes to the purchase price of transaction | 159,530 | ||||||||||
Promissory Note [Member] | Shareholder [Member] | |||||||||||
Debt instrument maturity date description | The note's original a maturity date of August 3, 2019 was extended to September 18, 2020. | ||||||||||
Debt interest rate | 1.25% | ||||||||||
Promissory note | $ 375,000 | 260,000 | |||||||||
Principal payments | 18,195 | ||||||||||
Interest expenses | $ 10,002 | ||||||||||
Promissory Note [Member] | Fred Wagenhals [Member] | |||||||||||
Debt interest rate | 1.25% | ||||||||||
Debt instrument maturity date | Jun. 12, 2020 | Sep. 18, 2020 | |||||||||
Promissory note | $ 90,000 | $ 131,536 | |||||||||
Principal payments | 25,000 | ||||||||||
Interest expenses | 5,185 | ||||||||||
Jagemann Stamping Company's [Member] | |||||||||||
Payment of note payable related party | 1,269,977 | ||||||||||
Debt monthly payments | $ 204,295 | ||||||||||
Debt description | Upon the closing of an Offering of less than $10,000,000 would be obligated to pay the lesser of ninety percent (90%) of the Offering proceeds or seventy (70%) of the then aggregate outstanding balance of the Notes; and (b) upon the closing of an Offering of more than $10,000,000 would be obligated to pay one hundred percent (100%) of the then aggregate outstanding balance of the Notes. | ||||||||||
Jagemann Stamping Company's [Member] | Settlement Agreement [Member] | |||||||||||
Debt instrument maturity date | Apr. 1, 2021 | ||||||||||
Shares repurchase | 1,000,000 | ||||||||||
Share price per share | $ 1.50 | ||||||||||
Jagemann Stamping Company's [Member] | Inventory and Services [Member] | |||||||||||
Payment of note payable related party | $ 2,635,797 | ||||||||||
Debt instrument maturity date | Aug. 15, 2021 | ||||||||||
Jagemann Stamping Company's [Member] | Promissory Note [Member] | |||||||||||
Payment of note payable related party | $ 9,900,000 | $ 500,000 | $ 1,500,000 | $ 10,400,000 | |||||||
Debt instrument maturity date description | On April 30, 2019, the original due date of the note was subsequently extended to April 1, 2020. | ||||||||||
Debt interest rate | 4.60% | ||||||||||
Accrued interest | $ 25,949 | ||||||||||
Jagemann Stamping Company's [Member] | Two New Promissory Notes [Member] | |||||||||||
Payment of note payable related party | $ 5,803,800 | ||||||||||
Debt instrument maturity date | Aug. 15, 2021 | ||||||||||
Jagemann Stamping Company's [Member] | Two Notes [Member] | |||||||||||
Notes payable related party | $ 8,235,302 |
Paycheck Protection Notes Pay_2
Paycheck Protection Notes Payable (Details Narrative) - USD ($) | 1 Months Ended | |
Apr. 30, 2020 | Jan. 30, 2020 | |
Proceeds from funds | $ 1,000,000 | |
Debt interest rate | 1.00% | 8.00% |
Debt maturity term | 2 years | |
BMO Harris [Member] | ||
Proceeds from funds | $ 400,000 | |
Western State Bank [Member] | ||
Proceeds from funds | $ 600,000 |
Capital Stock (Details Narrativ
Capital Stock (Details Narrative) - USD ($) | Dec. 15, 2016 | Jun. 30, 2020 |
Number of stock sold | 475,681 | |
Common stock issued for services, value | ||
Proceeds from stock subscription receivable | $ 1,840,910 | |
Warrants [Member] | ||
Number of common stock shares issued | 279 | |
Shares issued warrants exercise | 60,607 | |
Shares issued warrants exercise, value | $ 121,214 | |
Shares issued cashless exercise of warrants | 1,967 | |
Warrants outstanding | 8,441,798 | |
Warrant One [Member] | Until April 2025 [Member] | ||
Warrants exercise price | $ 1.65 | |
Warrants issued to purchase common stock | 966,494 | |
Warrant Two [Member] | Over Next Three to Five Years [Member] | ||
Warrants exercise price | $ 2 | |
Warrants issued to purchase common stock | 4,579,171 | |
Warrant Three [Member] | Over Next Five Years [Member] | ||
Warrants exercise price | $ 2.40 | |
Warrants issued to purchase common stock | 2,896,133 | |
Services [Member] | ||
Number of shares issued for services | 8,336 | |
Common stock issued for services, value | $ 13,188 | |
Investors [Member] | ||
Number of stock sold | 1,000,000 | |
Number of stock sold, value | $ 1,750,000 | |
Employees and Board of Directors [Member] | ||
Shares issued for employees benefit | 180,916 | |
Shares issued for employees benefit, value | $ 255,300 | |
Investors [Member] | ||
Number of stock sold | 1,000,000 | |
Number of stock sold, value | $ 1,750,000 | |
Shares issued warrants exercise | 45,455 | |
Shares issued warrants exercise, value | $ 90,910 | |
Sale of stock price per shares | $ 1.75 | |
Warrants exercise price | $ 2 | |
New Issuance of Shares [Member] | ||
Number of common stock shares issued | 1,204,683 |
Capital Stock - Schedule of Out
Capital Stock - Schedule of Outstanding and Exercisable Stock Purchase Warrants (Details) - Warrants [Member] | 3 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Number of Shares, Outstanding Beginning | shares | 8,504,372 |
Number of Shares, Granted | shares | |
Number of Shares, Exercised | shares | (62,574) |
Number of Shares, Forfeited or Cancelled | shares | |
Number of Shares, Outstanding Ending | shares | 8,441,798 |
Number of Shares, Exercisable | shares | 8,441,798 |
Weighted Average Exercise Price, Outstanding Beginning | $ / shares | $ 2.10 |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Exercise Price, Exercised | $ / shares | 2 |
Weighted Average Exercise Price, Forfeited or Cancelled | $ / shares | |
Weighted Average Exercise Price, Outstanding Ending | $ / shares | 2.10 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 2.10 |
Weighted Average Life Remaining (Years), Outstanding Beginning | 3 years 7 months 6 days |
Weighted Average Life Remaining (Years), Outstanding Ending | 3 years 3 months 26 days |
Weighted Average Life Remaining (Years), Exercisable | 3 years 3 months 26 days |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards | $ 31,116,173 | |
Operating Loss Carryforwards, Expiration Date, description | Expire beginning at the end of 2036. | |
Effective interest tax rate | 0.00% | 0.00% |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | 2 Months Ended | 3 Months Ended | |
Aug. 18, 2020 | Jun. 30, 2020 | Jul. 31, 2020 | |
Number of common stock shares issued, value | $ 1,750,000 | ||
Subsequent Event [Member] | Revolving Loan and Security Agreement [Member] | Maximum [Member] | |||
Loan amount | $ 2,250,000 | ||
Subsequent Event [Member] | Employees [Member] | |||
Number of common stock shares issued | 11,500 | ||
Number of common stock shares issued, value | $ 14,375 | ||
Shares issued price per share | $ 1.25 | ||
Subsequent Event [Member] | Investors [Member] | |||
Number of common stock shares issued | 157,143 | ||
Number of common stock shares issued, value | $ 275,000 | ||
Shares issued price per share | $ 1.75 |