Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Sep. 30, 2018 | Oct. 31, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | AMMO, INC. | |
Entity Central Index Key | 1,015,383 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --03-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 34,300,686 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,019 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2018 | Mar. 31, 2018 |
Current Assets: | ||
Cash | $ 6,697,838 | $ 4,381,643 |
Accounts receivable, net of allowance for doubtful accounts of $17,046 at September 30, 2018 and $23,046 at March 31, 2018 | 1,066,411 | 1,201,117 |
Due from related parties | 18,308 | 14,204 |
Inventories, at lower cost or market, principally average cost method | 3,378,406 | 2,405,007 |
Prepaid expenses | 401,753 | 321,074 |
Total Current Assets | 11,562,716 | 8,323,045 |
Equipment, net of accumulated depreciation of $249,493 at September 30, 2018 and $113,158 at March 31, 2018 | 2,262,906 | 1,241,326 |
Other Assets: | ||
Deposits | 148,463 | 16,300 |
Licensing agreements, net of accumulated amortization of $83,333 at September 30, 2018 and $58,333 at March 31, 2018 | 166,667 | 191,667 |
Patents, net of accumulated amortization of $92,164 at September 30, 2018 and $49,627 at March 31, 2018 | 857,836 | 900,373 |
Acquisition Deposit | 250,000 | |
TOTAL ASSETS | 15,248,588 | 10,672,711 |
Current Liabilities: | ||
Accounts payable | 557,844 | 479,465 |
Accrued liabilities | 402,653 | 541,210 |
Insurance premium note payable | 27,909 | 99,907 |
Total Current Liabilities | 988,406 | 1,120,582 |
Shareholders' Equity: | ||
Common Stock, $0.001 par value, 200,000,000 shares authorized 32,600,684 and 28,394,503 shares issued and outstanding at September 30, 2018 and March 31, 2018, respectively | 32,601 | 28,394 |
Additional paid-in capital | 25,329,998 | 17,264,888 |
Accumulated (Deficit) | (11,102,417) | (7,741,153) |
Total Shareholders' Equity | 14,260,182 | 9,552,129 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 15,248,588 | $ 10,672,711 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2018 | Mar. 31, 2018 |
Allowance for doubtful accounts | $ 17,046 | $ 23,046 |
Accumulated depreciation | $ 249,493 | $ 113,158 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 32,600,684 | 28,394,503 |
Common stock, shares outstanding | 32,600,684 | 28,394,503 |
Licensing Agreements [Member] | ||
Accumulated amortization | $ 83,333 | $ 58,333 |
Patents [Member] | ||
Accumulated amortization | $ 92,164 | $ 49,627 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Net Sales | $ 1,462,859 | $ 152,612 | $ 2,712,887 | $ 468,191 |
Cost of Goods Sold, includes depreciation and amortization of $95,807, $36,606, $169,102, and $69,593, respectively, and federal excise taxes of $151,491, $13,761, $282,830, and $42,072, respectively | 1,274,640 | 99,119 | 2,380,096 | 393,883 |
Gross Margin | 188,219 | 53,493 | 332,791 | 74,308 |
Operating Expenses | ||||
Selling and marketing | 228,390 | 120,404 | 579,806 | 391,305 |
Corporate general and administrative | 722,737 | 282,185 | 1,400,837 | 659,832 |
Employee salaries and related expenses | 796,751 | 193,519 | 1,675,739 | 343,607 |
Depreciation expense | 19,373 | 1,909 | 34,770 | 4,199 |
Total operating expenses | 1,767,251 | 598,017 | 3,691,152 | 1,398,943 |
Loss from Operations | (1,579,032) | (544,524) | (3,358,361) | (1,324,635) |
Other (Expenses) | ||||
Interest expense | (1,406) | (24,261) | (2,903) | (47,002) |
(Loss) before Income Taxes | (1,580,438) | (568,785) | (3,361,264) | (1,371,637) |
Provision for Income Taxes | ||||
Net (Loss) | $ (1,580,438) | $ (568,785) | $ (3,361,264) | $ (1,371,637) |
Basic and fully diluted: | ||||
Weighted average number of shares outstanding | 32,454,308 | 19,484,094 | 31,429,324 | 19,203,042 |
(Loss) per share | $ (0.05) | $ (0.03) | $ (0.11) | $ (0.07) |
Consolidated Statements of Op_2
Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Depreciation and amortization | $ 95,807 | $ 36,606 | $ 169,102 | $ 69,593 |
Federal excise taxes | $ 151,491 | $ 13,761 | $ 282,830 | $ 42,072 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity (Unaudited) - 6 months ended Sep. 30, 2018 - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated (Deficit) [Member] | Total |
Beginning Balance at Mar. 31, 2018 | $ 28,394 | $ 17,264,888 | $ (7,741,153) | $ 9,552,129 |
Beginning Balance, shares at Mar. 31, 2018 | 28,394,503 | |||
Common stock issued for cash | $ 1,968 | 3,245,062 | $ 3,247,030 | |
Common stock issued for cash , shares | 1,967,886 | 5,906,183 | ||
Common stock issued for exercised warrants | $ 1,973 | 4,765,652 | $ 4,767,625 | |
Common stock issued for exercised warrants , shares | 1,972,800 | |||
Common stock issued for cashless warrant exercise | $ 11 | (11) | ||
Common stock issued for cashless warrant exercise , shares | 10,495 | 10,495 | ||
Fund raising cost | (719,974) | $ (719,974) | ||
Common stock issued for services | $ 5 | 22,345 | $ 22,350 | |
Common stock issued for services, shares | 5,000 | 5,000 | ||
Employee stock awards | $ 250 | 482,375 | $ 482,625 | |
Employee stock awards, shares | 250,000 | |||
Stock Grants | 269,661 | 269,661 | ||
Net loss for period ended September 30, 2018 | (3,361,264) | (3,361,264) | ||
Ending Balance at Sep. 30, 2018 | $ 32,601 | $ 25,329,998 | $ (11,102,417) | $ 14,260,182 |
Ending Balance, shares at Sep. 30, 2018 | 32,600,684 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flow (Unaudited) - USD ($) | 6 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net (Loss) | $ (3,361,264) | $ (1,371,637) |
Adjustments to reconcile Net (Loss) to Net Cash provided by operations: | ||
Depreciation and amortization | 203,872 | 73,792 |
Stock Grants | 269,661 | |
Stock for Services | 22,350 | 62,500 |
Employee stock awards | 482,625 | |
Changes in Current Assets and Liabilities | ||
Accounts receivable | 140,706 | (252,158) |
Allowance for doubtful accounts | (6,000) | |
Due to (from) related parties | (4,104) | 29,253 |
Inventories | (973,399) | (114,521) |
Prepaid expenses | (80,679) | 182,217 |
Deposits | (132,163) | |
Accounts payable | 78,379 | 83,713 |
Accrued liabilities | (138,557) | 39,896 |
Net cash used in operating activities | (3,248,573) | (1,266,944) |
Cash flows from investing activities | ||
Purchase of equipment | (1,157,915) | (4,170) |
Acquisition Deposit | (250,000) | |
Net cash used in investing activities | (1,407,915) | (4,170) |
Cash flow from financing activities | ||
Convertible note payment | (100,000) | |
Note payment - related party | (373,000) | |
Insurance premium note payment | (71,998) | (60,967) |
Sale of common stock | 3,247,030 | 1,746,875 |
Common stock issued for exercised warrants | 4,767,625 | |
Organizational and fundraising costs | (719,974) | |
Net cash provided by financing activities | 7,222,683 | 1,212,908 |
Net increase in cash | 2,316,195 | (58,206) |
Cash, beginning of period | 4,381,643 | 100,135 |
Cash, end of period | 6,697,838 | 41,929 |
Supplemental cash flow disclosures | ||
Cash paid during the period for Interest | 2,903 | 6,545 |
Cash paid during the period for Income taxes | ||
Non-cash investing and financing activities: | ||
Additional paid-in-capital | (11) | |
Common Stock | 11 | |
Prepaid interest | (46,188) | |
Additional paid-in-capital | 46,188 | |
Prepaid legal services | (224,000) | |
Issuance of common stock | 224,000 | |
Notes payable - related parties | 200,000 | |
Issuance of common stock | 750,000 | |
Patent acquisitions | (950,000) | |
Total non-cash investing and financing activities |
Organization and Business Activ
Organization and Business Activity | 6 Months Ended |
Sep. 30, 2018 | |
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 any 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 - 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 financial statements should be read in conjunction with the audited financial statements and related disclosures contained in the Company’s Annual Transition Report filed with the SEC on Form 10-KT for three-month transition period ended March 31, 2018. The results for the three and six month periods ended September 30, 2018 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 and six month periods ended September 30, 2018 and 2017, (b) the financial position at September 30, 2018 and (c) cash flows for the six month periods ended September 30, 2018 and 2017. 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. We have adopted a March 31 year end. 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, SNI, LLC, Ammo Munitions, Inc. and Ammo Technologies, Inc. All significant intercompany accounts and transactions are eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires 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. Cash and Cash Equivalents For purposes of the statement of cash flows, we consider highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. 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 September 30, 2018 and March 31, 2018, we reserved $17,046 and $23,046, 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. In addition, Mr. James agreed to make himself available for certain promotional activities and to promote Jesse James Branded Products through his own social media outlets. 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 also issued 100,000 shares of our common stock upon the execution of the license agreement with the potential issuance of up to 75,000 additional shares of common stock upon achieving certain gross sales with $15 million in gross sales required to earn the entire 75,000 shares. 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. Mr. Rann agreed to make himself available for certain promotional activities and to promote the Branded Products through his own social media outlets. 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. We also issued 100,000 shares of our common stock upon the execution of the license agreement with the potential issuance of 75,000 additional shares of common stock upon achieving certain gross sales with $15 million in gross sales required to earn the entire 75,000 shares. Amortization expense for the license agreements for the three and six months ended September 30, 2018 and 2017 were $12,500, $17,778, $25,000 and $32,361, respectively. 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. Under the terms of the Merger, we, the sole shareholder of Ammo Technologies Inc., issued to Hallam, Inc.’s two shareholders, 600,000 shares of our common stock, subject to restrictions, and payment of $200,000. The first payment of $100,000 to the Hallam, Inc. shareholders was paid on September 13, 2017, and the second payment of $100,000 was paid on February 6, 2018. The shares were valued at $1.25 and the aggregate value of $950,000 was recorded as a patent asset. This asset will be amortized from September 2017, the first full month of the acquired rights, through October 29, 2028. Patent amortization expense the three months and six months ended September 30, 2018 were $21,269 and $42,537, respectively. There was no amortization in the comparable 2017 periods. Under the terms of the Merger, ATI succeeded to all of the assets of Hallam, Inc. and assumed the liabilities of Hallam, Inc., which were none. The primary asset of Hallam, Inc. was an exclusive license to produce projectiles and ammunition using the Hybrid Luminescence Ammunition Technology under patent 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. 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 six months ended September 30, 2018, the Company accrued $18,480 under this agreement. For the comparable period in 2017, no amounts were accrued and paid to the patent holder as this agreement was not executed. Subsequent to September 30, 2018, we completed the acquisition of SW Kenetics Inc. on October 5, 2018 (See Note 6). Included in the acquisition was a pending patent for modular projectiles that will be assigned to the Company. 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 and six months ended September 30, 2018 and the three and six months ended September 30, 2017. Revenue Recognition We generate revenue from the production and sale of ammunition. We recognize revenue when it is realized or realizable and earned. We consider revenue realized or realizable and earned when all of the following criteria are met: ● persuasive evidence of an arrangement exists ● the product has been shipped to the customer ● the sales price is fixed or determinable ● collectability is reasonably assured ● recognition of any returns, refunds or product warranties For the six and three months ended September 30, 2018, the Company’s customers that comprised more than ten percent (10%) of total revenues and accounts receivable were as follows: PERCENTAGES Revenues Accounts Receivable For the Six-Months ended September 30, 2018 Customers: A 29.98 % - B 23.82 % 57.74 % C 12.95 % - D - 23.02 % 66.75 % 80.76 % For the Three-Months ended September 30, 2018 Customers: A - - B 44.17 % 57.74 % C 16.29 % - D 16.78 % 23.02 % 77.24 % 80.76 % Advertising Costs We expense advertising costs as they are incurred. We incurred advertising of $109,747 and $256,362 for the three and six months ended September 30, 2018, respectively. Inventories We state inventories at the lower of cost or market. 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 seven 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 250,000 shares of common stock issued to employees, members of the Board of Directors, and members of the Advisory Committee for services during the six months ended September 30, 2018. On March 12, 2018, we entered into an employment agreement with an executive, that included, among other provisions, an equity grant of 400,000 shares of restricted common stock that vests at the rate of 100,000 shares annually for four years. The $660,000 compensation value is being recognized ratably on a straight-line basis over the four-year period covered by the agreement. On May 1, 2018, we entered into an employment agreement that included, among other provisions, an equity grant of 100,000 shares of restricted common stock that vests at the rate of 33,333 shares annually for three years. The $250,000 compensation value is being recognized on a straight-line basis over the three-year period covered by the agreement. On September 27, 2018, we entered into three separate employment agreements, that each included, among other provisions, an equity grant of 80,000 shares of restricted common stock that vests at the rate of 20,000 shares annually for four years. Each compensation value of $261,000 ($783,000 total) is being recognized on a straight-line basis over the four-year period covered by the agreement. Concentrations of Credit Risk Accounts at banks are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at various times. As of September 30, 2018, 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. 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. There were no known contingencies at September 30, 2018 or March 31, 2018. Recent Accounting Pronouncements In May 2014, FASB issued ASU 2014-09, “Revenue from Contracts with Customers”. This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The revised effective date for this ASU is for annual and interim periods beginning on or after December 15, 2017, and early adoption will be permitted, but not earlier than the original effective date of annual and interim periods beginning on or after December 15, 2016, for public entities. We adopted ASU 2014-09 as of January 1, 2018, and it did not have a material impact on the Company’s consolidated results of operations, financial position or cash flows for the period ended September 30, 2018. Sales are initiated in three ways – ● third party sales representative obtains signed sales order from a customer ● direct contact by in-house sales representatives who obtains signed sales order ● electronic purchase order from a customer (usually the very large customers) Once the sales order has been received the inventory control department will pull the purchased items from the inventory or if needed will request the manufacture of a specific product. When the items that were ordered are available for shipment, the merchandise is prepared for shipping and shipped by FedEx or common carrier. All sales are recorded upon shipment and, depending on credit worthiness of customer, the payment terms will vary from thirty (30) to sixty (60) days. No refunds are allowed on any product shipped. Each product manufactured by the Company has standard specifications and performance objectives. The Company has an extensive product testing program and, if the Company were given notice of a product defect by a customer, the Company would request the return of the product so that the manufacturing defect could be identified. From inception to June 30, 2018 the Company has had no returned products related to product warranty. The revenue recognition procedures set forth above have been used by the Company since its inception and are consistent with requirements of ASC 606 “Revenue from Contracts with Customers”. In February 2016, the FASB issued ASU 2016-02 – “Leases (Topic 842)” Under ASU 2016-02, entities will be required to recognize lease asset and lease liabilities by lessees for those leases classified as operating leases. Among other changes in accounting for leases, a lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Similarly, optional payments to purchase the underlying asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise that purchase option. The amendments in ASU 2016-02 will become effective for fiscal years beginning after December 15, 2018, including interim periods with those fiscal years for public business entities. We are currently evaluating the effect of the adoption of ASU 2016-02 will have on our consolidated results of operations, financial position or cash flows. On June 20, 2018, the FASB expanded the scope of Accounting Standards Codification (ASC) 718, Compensation – Stock Compensation, to include share-based payments to nonemployees for goods and services. The accounting board said the amendments in Accounting Standards Update (ASU) No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, align the guidance for stock compensation to employees and nonemployees. The amended guidance replaces ASC 505-50, Equity – Equity-Based Payments to Non-Employees. We anticipate that this ASC will not have a material effect on the Company’s financial statements. The amendments in ASU No. 2018-07 apply “to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards,” the FASB said. But the amended guidance does not cover stock compensation that is used to provide financing to the company that issued the shares or stock awards tied to a sale of goods or services as part of a contract accounted for according to ASC 606, Revenue From Contracts With Customers. The amendments are effective for public companies for fiscal years that begin after December 15, 2018, and the quarterly and other interim periods in those years, the FASB said the amended guidance can be applied before it becomes effective, but businesses are not permitted to use the guidance in ASU No. 2018-07 before they have implemented ASC 606. We have evaluated the effect of the adoption of ASU 2018-07 will have on our consolidated results of operations, financial position or cash flows and determine the effects will not be material to the Company’s financial statements. Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances. 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 5,403,953 shares of common stock and equity grants of 740,000 shares of common stock that are potentially dilutive. All weighted average numbers were adjusted for the reverse stock split and merger transaction. Due to the loss from operations in the three and six months ended September 30, 2017 and 2018, there are no common shares added to calculate the dilutive EPS for those periods as the effect would be antidilutive. |
Inventories
Inventories | 6 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | NOTE 3 – INVENTORIES At September 30, 2018 and March 31, 2018, the inventory balances are composed of: September 30, 2018 March 31, 2018 Finished product $ 1,550,590 $ 809,680 Raw materials 1,559,864 1,471,666 Work in process 267,952 123,661 $ 3,378,406 $ 2,405,007 |
Property and Equipment
Property and Equipment | 6 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 4 – 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 seven 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 September 30, 2018 and March 31, 2018: September 30, 2018 March 31, 2018 Leasehold Improvements $ 34,170 $ 17,772 Furniture and Fixtures 11,604 8,102 Vehicles 103,511 89,388 Equipment 2,257,822 879,871 Tooling 105,292 359,351 Total property and equipment $ 2,512,399 $ 1,354,484 Less accumulated depreciation (249,493 ) (113,158 ) Net property and equipment 2,262,906 1,241,326 Depreciation Expense for the six months and three months ended September 30, 2018 and 2017 totaled $136,335, $81,412, $41,431, and $20,737, respectively. Depreciation for the three months ended March 31, 2018 was $35,297. |
Capital Stock
Capital Stock | 6 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Capital Stock | NOTE 5 – CAPITAL STOCK During the six month period ended September 30, 2018, we issued 5,906,183 shares of common stock as follows: ● 1,967,886 shares were sold to investors for $3,247,030 ● 1,972,800 shares were issued through exercised warrants of $4,767,625 ● 10,495 shares were issued through a cashless exercise of 14,719 warrants ● 5,000 shares were issued for services valued at $22,350 ● 250,000 shares valued at $482,625 were issued to employees, members of the Board of Directors, and members of the Advisory Committee as compensation In April of 2018, our second placement agreement to secure equity capital from qualified investors to provide funds to our operations ended. The offering consisted of Units priced at $1.65, which included one share of common stock and one five-year warrant to purchase an additional half-share of common stock for an exercise price of $2.00 per share. Effectively, every two units purchased provided the investor with a five-year warrant at an exercise price of $2.00 per share. Units sold under this agreement totaled 1,967,886 shares of common stock and 983,943 warrants for $3,247,030 for the six month period ended September 30, 2018. For services provided under the placement agreements, the placement agent collected a 12% cash fee on the sale of every Unit and a fee payable in warrants equaling 12% of the total Units sold. These warrants have a term of seven years and an exercise price of $1.65 per share. The cash fee totaled $389,644 for the six month period ended September 30, 2018, including reimbursed expenses. At September 30, 2018, outstanding and exercisable stock purchase warrants consisted of the following: Number of Shares Weighted Averaged Exercise Price Weighted Average Life Remaining (Years) Outstanding at March 31, 2018 $ 8,872,160 $ 2.22 1.82 Granted 1,494,112 2.04 4.22 Exercised (1,987,519 ) 2.41 - Forfeited or cancelled (2,958,800 ) 2.47 - Expired (16,000 ) 2.50 - Outstanding at September 30, 2018 5,403,953 $ 1.97 4.57 Exercisable at September 30, 2018 5,403,953 $ 1.97 4.57 As of September 30, 2018, we had 5,403,953 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 an aggregate of 349,060 shares of Common Stock at an average price of $2.50 per share over the next three years; (2) warrants to purchase 966,494 shares of Common Stock at an exercise price of $1.65 per share until March 2025; and (3) warrants to purchase 4,088,399 shares of our Common Stock at an exercise price of $2.00 per share until April 2023. On May 24, 2018, per the terms of the private offering, dated January 25, 2017, we called for the exercise of warrants to purchase a total of 4,947,600 shares of our Common Stock. According to the terms of the Warrant Purchase Agreement, the warrants could be called when the average price of our common stock traded at $5.00 per share or higher, for a consecutive 30 day period. This call provision was met on May 21, 2018. As a result, we issued formal notice to all warrant holders on May 24, 2018, advising them that they had until July 6, 2018, to exercise their warrants, or they would become null and void. The total number of warrants included in the January 25, 2017 offering were 4,947,600 and were priced as follows: 4,790,100 warrants at an exercise price of $2.50, 67,500 warrants at an exercise price of $1.25 and 90,000 warrants at an exercise price of $0.50. As of July 6, 2018, a total of 1,972,800 warrants were exercised to purchase an equivalent 1,972,800 shares of common stock at an average price of $2.42 and 2,974,800 warrants to purchase shares of Common Stock were cancelled. On July 12, 2018, the company filed a Form 8-K to report the activity of this event. Additionally, there was a cashless exercise of 14,719 warrants resulting in the issuance of 10,495 shares of Common Stock unrelated to the call for the exercise of warrants. On October 24, 2018, we filed Amended and Restated Articles of Incorporation with the state of Delaware. The Amended Articles increased our authorized Common Stock to a total of 200,000,000 shares, $0.001 par value, and created 10,000,000 shares of Preferred Stock, $0.001 par value. |
Acquisitions
Acquisitions | 6 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions | NOTE 6 – ACQUISITIONS On September 27, 2018, ATI entered into a definitive Agreement and Plan of Merger with SW Kenetics Inc. (“SWK”), an Arizona corporation and completed the merger on October 5, 2018. Pursuant to the agreement SWK merged with and into Ammo Technologies Inc, with ATI being the survivor. Under the terms of the agreement, we the sole shareholder of Ammo Technologies Inc, issued to SW Kenetics Inc.’s three shareholders, 1,700,002 restricted shares of our common stock, payment of $250,000 and a payment obligation of $1,250,000 subject to completion of specific milestones that we have recorded as Contingent Consideration Payable. Additionally, the 1,700,002 shares of common stock were issued with claw back provisions to ensure agreed upon objectives are met. Included among the list of milestones or events that must be completed are significant revenue goals incorporating the product technology of SWK. The initial payment of $250,000 was made as a deposit on August 20, 2018. The shares were valued at approximately $3.28, the average price of our stock from September 20, 2018 to October 4, 2018 and we will record the total purchase consideration on the intangible asset as follows: Cash $ 250,000 Contingent Consideration Payable 1,250,000 Common Stock 5,569,207 Total Purchase Consideration $ 7,069,207 The purchase price allocation to intangible assets is preliminary. The preliminary estimated fair value recorded for the intangible asset was determined by management based on the Agreement and Plan of Merger. SWK’s significant assets only include intangible assets and we have allocated the preliminary purchase price allocation accordingly. The purchase price allocation will continue to be preliminary until a third-party valuation is completed and the fair value and useful life of the assets acquired is determined. The amounts from the valuation may significantly differ from the preliminary allocation. SWK is a research and development firm located in Arizona that has designed a new portfolio of modular projectiles that the Company believes will advance the force capability of the United States military, as well as NATO member countries. SWK filed a patent for their technology, which is now pending with the United States Patent and Trademark Office. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 7 - SUBSEQUENT EVENTS On October 16, 2018, we entered into a lease agreement with Guenther Properties, LLC to lease approximately 20,826 square feet of office and warehousing space to be located at 7681 East Gray Road, Scottsdale, Arizona. Guenther Properties, LLC is required to deliver the Premises at the earlier of November 1, 2018 or upon execution of the Lease and receipt of the move-in funds. The initial term of the of the Lease expires on December 31, 2023. The first two months of the first year are free and the monthly base rent is approximately $17,702, which will increase by approximately 4.4% each year. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Sep. 30, 2018 | |
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 financial statements should be read in conjunction with the audited financial statements and related disclosures contained in the Company’s Annual Transition Report filed with the SEC on Form 10-KT for three-month transition period ended March 31, 2018. The results for the three and six month periods ended September 30, 2018 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 and six month periods ended September 30, 2018 and 2017, (b) the financial position at September 30, 2018 and (c) cash flows for the six month periods ended September 30, 2018 and 2017. 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. We have adopted a March 31 year end. 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, SNI, LLC, Ammo Munitions, Inc. and Ammo Technologies, Inc. All significant intercompany accounts and transactions are eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires 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. |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of the statement of cash flows, we consider highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts 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 September 30, 2018 and March 31, 2018, we reserved $17,046 and $23,046, respectively, of allowance for doubtful accounts. |
Licensing 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. In addition, Mr. James agreed to make himself available for certain promotional activities and to promote Jesse James Branded Products through his own social media outlets. 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 also issued 100,000 shares of our common stock upon the execution of the license agreement with the potential issuance of up to 75,000 additional shares of common stock upon achieving certain gross sales with $15 million in gross sales required to earn the entire 75,000 shares. 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. Mr. Rann agreed to make himself available for certain promotional activities and to promote the Branded Products through his own social media outlets. 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. We also issued 100,000 shares of our common stock upon the execution of the license agreement with the potential issuance of 75,000 additional shares of common stock upon achieving certain gross sales with $15 million in gross sales required to earn the entire 75,000 shares. Amortization expense for the license agreements for the three and six months ended September 30, 2018 and 2017 were $12,500, $17,778, $25,000 and $32,361, respectively. |
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. Under the terms of the Merger, we, the sole shareholder of Ammo Technologies Inc., issued to Hallam, Inc.’s two shareholders, 600,000 shares of our common stock, subject to restrictions, and payment of $200,000. The first payment of $100,000 to the Hallam, Inc. shareholders was paid on September 13, 2017, and the second payment of $100,000 was paid on February 6, 2018. The shares were valued at $1.25 and the aggregate value of $950,000 was recorded as a patent asset. This asset will be amortized from September 2017, the first full month of the acquired rights, through October 29, 2028. Patent amortization expense the three months and six months ended September 30, 2018 were $21,269 and $42,537, respectively. There was no amortization in the comparable 2017 periods. Under the terms of the Merger, ATI succeeded to all of the assets of Hallam, Inc. and assumed the liabilities of Hallam, Inc., which were none. The primary asset of Hallam, Inc. was an exclusive license to produce projectiles and ammunition using the Hybrid Luminescence Ammunition Technology under patent 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. 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 six months ended September 30, 2018, the Company accrued $18,480 under this agreement. For the comparable period in 2017, no amounts were accrued and paid to the patent holder as this agreement was not executed. Subsequent to September 30, 2018, we completed the acquisition of SW Kenetics Inc. on October 5, 2018 (See Note 6). Included in the acquisition was a pending patent for modular projectiles that will be assigned to the Company. |
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 and six months ended September 30, 2018 and the three and six months ended September 30, 2017. |
Revenue Recognition | Revenue Recognition We generate revenue from the production and sale of ammunition. We recognize revenue when it is realized or realizable and earned. We consider revenue realized or realizable and earned when all of the following criteria are met: ● persuasive evidence of an arrangement exists ● the product has been shipped to the customer ● the sales price is fixed or determinable ● collectability is reasonably assured ● recognition of any returns, refunds or product warranties For the six and three months ended September 30, 2018, the Company’s customers that comprised more than ten percent (10%) of total revenues and accounts receivable were as follows: PERCENTAGES Revenues Accounts Receivable For the Six-Months ended September 30, 2018 Customers: A 29.98 % - B 23.82 % 57.74 % C 12.95 % - D - 23.02 % 66.75 % 80.76 % For the Three-Months ended September 30, 2018 Customers: A - - B 44.17 % 57.74 % C 16.29 % - D 16.78 % 23.02 % 77.24 % 80.76 % |
Advertising Costs | Advertising Costs We expense advertising costs as they are incurred. We incurred advertising of $109,747 and $256,362 for the three and six months ended September 30, 2018, respectively. |
Inventories | Inventories We state inventories at the lower of cost or market. 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 seven 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 250,000 shares of common stock issued to employees, members of the Board of Directors, and members of the Advisory Committee for services during the six months ended September 30, 2018. On March 12, 2018, we entered into an employment agreement with an executive, that included, among other provisions, an equity grant of 400,000 shares of restricted common stock that vests at the rate of 100,000 shares annually for four years. The $660,000 compensation value is being recognized ratably on a straight-line basis over the four-year period covered by the agreement. On May 1, 2018, we entered into an employment agreement that included, among other provisions, an equity grant of 100,000 shares of restricted common stock that vests at the rate of 33,333 shares annually for three years. The $250,000 compensation value is being recognized on a straight-line basis over the three-year period covered by the agreement. On September 27, 2018, we entered into three separate employment agreements, that each included, among other provisions, an equity grant of 80,000 shares of restricted common stock that vests at the rate of 20,000 shares annually for four years. Each compensation value of $261,000 ($783,000 total) is being recognized on a straight-line basis over the four-year period covered by the agreement. |
Concentrations of Credit Risk | Concentrations of Credit Risk Accounts at banks are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at various times. As of September 30, 2018, 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. |
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. There were no known contingencies at September 30, 2018 or March 31, 2018. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, FASB issued ASU 2014-09, “Revenue from Contracts with Customers”. This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The revised effective date for this ASU is for annual and interim periods beginning on or after December 15, 2017, and early adoption will be permitted, but not earlier than the original effective date of annual and interim periods beginning on or after December 15, 2016, for public entities. We adopted ASU 2014-09 as of January 1, 2018, and it did not have a material impact on the Company’s consolidated results of operations, financial position or cash flows for the period ended September 30, 2018. Sales are initiated in three ways – ● third party sales representative obtains signed sales order from a customer ● direct contact by in-house sales representatives who obtains signed sales order ● electronic purchase order from a customer (usually the very large customers) Once the sales order has been received the inventory control department will pull the purchased items from the inventory or if needed will request the manufacture of a specific product. When the items that were ordered are available for shipment, the merchandise is prepared for shipping and shipped by FedEx or common carrier. All sales are recorded upon shipment and, depending on credit worthiness of customer, the payment terms will vary from thirty (30) to sixty (60) days. No refunds are allowed on any product shipped. Each product manufactured by the Company has standard specifications and performance objectives. The Company has an extensive product testing program and, if the Company were given notice of a product defect by a customer, the Company would request the return of the product so that the manufacturing defect could be identified. From inception to June 30, 2018 the Company has had no returned products related to product warranty. The revenue recognition procedures set forth above have been used by the Company since its inception and are consistent with requirements of ASC 606 “Revenue from Contracts with Customers”. In February 2016, the FASB issued ASU 2016-02 – “Leases (Topic 842)” Under ASU 2016-02, entities will be required to recognize lease asset and lease liabilities by lessees for those leases classified as operating leases. Among other changes in accounting for leases, a lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Similarly, optional payments to purchase the underlying asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise that purchase option. The amendments in ASU 2016-02 will become effective for fiscal years beginning after December 15, 2018, including interim periods with those fiscal years for public business entities. We are currently evaluating the effect of the adoption of ASU 2016-02 will have on our consolidated results of operations, financial position or cash flows. On June 20, 2018, the FASB expanded the scope of Accounting Standards Codification (ASC) 718, Compensation – Stock Compensation, to include share-based payments to nonemployees for goods and services. The accounting board said the amendments in Accounting Standards Update (ASU) No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, align the guidance for stock compensation to employees and nonemployees. The amended guidance replaces ASC 505-50, Equity – Equity-Based Payments to Non-Employees. We anticipate that this ASC will not have a material effect on the Company’s financial statements. The amendments in ASU No. 2018-07 apply “to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards,” the FASB said. But the amended guidance does not cover stock compensation that is used to provide financing to the company that issued the shares or stock awards tied to a sale of goods or services as part of a contract accounted for according to ASC 606, Revenue From Contracts With Customers. The amendments are effective for public companies for fiscal years that begin after December 15, 2018, and the quarterly and other interim periods in those years, the FASB said the amended guidance can be applied before it becomes effective, but businesses are not permitted to use the guidance in ASU No. 2018-07 before they have implemented ASC 606. We have evaluated the effect of the adoption of ASU 2018-07 will have on our consolidated results of operations, financial position or cash flows and determine the effects will not be material to the Company’s financial statements. Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances. |
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 5,403,953 shares of common stock and equity grants of 740,000 shares of common stock that are potentially dilutive. All weighted average numbers were adjusted for the reverse stock split and merger transaction. Due to the loss from operations in the three and six months ended September 30, 2017 and 2018, there are no common shares added to calculate the dilutive EPS for those periods as the effect would be antidilutive. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Concentration | For the six and three months ended September 30, 2018, the Company’s customers that comprised more than ten percent (10%) of total revenues and accounts receivable were as follows: PERCENTAGES Revenues Accounts Receivable For the Six-Months ended September 30, 2018 Customers: A 29.98 % - B 23.82 % 57.74 % C 12.95 % - D - 23.02 % 66.75 % 80.76 % For the Three-Months ended September 30, 2018 Customers: A - - B 44.17 % 57.74 % C 16.29 % - D 16.78 % 23.02 % 77.24 % 80.76 % |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | At September 30, 2018 and March 31, 2018, the inventory balances are composed of: September 30, 2018 March 31, 2018 Finished product $ 1,550,590 $ 809,680 Raw materials 1,559,864 1,471,666 Work in process 267,952 123,661 $ 3,378,406 $ 2,405,007 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following at September 30, 2018 and March 31, 2018: September 30, 2018 March 31, 2018 Leasehold Improvements $ 34,170 $ 17,772 Furniture and Fixtures 11,604 8,102 Vehicles 103,511 89,388 Equipment 2,257,822 879,871 Tooling 105,292 359,351 Total property and equipment $ 2,512,399 $ 1,354,484 Less accumulated depreciation (249,493 ) (113,158 ) Net property and equipment 2,262,906 1,241,326 |
Capital Stock (Tables)
Capital Stock (Tables) | 6 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding and Exercisable Stock Purchase Warrants | At September 30, 2018, outstanding and exercisable stock purchase warrants consisted of the following: Number of Shares Weighted Averaged Exercise Price Weighted Average Life Remaining (Years) Outstanding at March 31, 2018 $ 8,872,160 $ 2.22 1.82 Granted 1,494,112 2.04 4.22 Exercised (1,987,519 ) 2.41 - Forfeited or cancelled (2,958,800 ) 2.47 - Expired (16,000 ) 2.50 - Outstanding at September 30, 2018 5,403,953 $ 1.97 4.57 Exercisable at September 30, 2018 5,403,953 $ 1.97 4.57 |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Schedule of Total Purchase Consideration on Intangible Assets | The shares were valued at approximately $3.28, the average price of our stock from September 20, 2018 to October 4, 2018 and we recorded the total purchase consideration on the intangible asset as follows: Cash $ 250,000 Contingent Consideration Payable 1,250,000 Common Stock 5,569,207 Total Purchase Consideration $ 7,069,207 |
Organization and Business Act_2
Organization and Business Activity (Details Narrative) - shares | Mar. 17, 2017 | Dec. 15, 2016 | Sep. 30, 2018 |
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 shall represent 580,052 shares post reverse split; no shareholder was reversed below 100 shares and any 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 | ||
Number of shares newly issued | 5,906,183 | ||
PRIVCO Agreement [Member] | |||
Number of shares newly issued | 17,285,800 | ||
Number of shares retired | 475,681 | ||
Number of shares issued to satisfy insurance liability | 500,000 | ||
Number of shares, equivalent to the issuance | 604,371 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Sep. 27, 2018 | May 01, 2018 | Mar. 12, 2018 | Sep. 28, 2017 | Sep. 13, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Mar. 31, 2018 |
Allowance for doubtful accounts | $ 17,046 | $ 17,046 | $ 23,046 | |||||||
Common stock issued for cash , shares | 5,906,183 | |||||||||
Amortization | 12,500 | $ 17,778 | $ 25,000 | $ 32,361 | ||||||
Agreement terms | 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 | |||||||||
Impairment expense | 0 | 0 | $ 0 | 0 | ||||||
Advertising costs | 109,747 | $ 256,362 | ||||||||
Common stock issued to employees for services | 250,000 | |||||||||
Option granted | 1,494,112 | |||||||||
Federal deposit insurance corporation limit | 250,000 | $ 250,000 | ||||||||
Contingency | $ 0 | 0 | $ 0 | |||||||
Employment agreement [Member] | Executive [Member] | ||||||||||
Option granted | 100,000 | 400,000 | ||||||||
Options vesting in period | 33,333 | 100,000 | ||||||||
Vesting period | 3 years | 4 years | ||||||||
Compensation expenses | $ 250,000 | $ 660,000 | ||||||||
Employment agreement [Member] | Three Employee Agreements [Member] | ||||||||||
Option granted | 80,000 | |||||||||
Options vesting in period | 20,000 | |||||||||
Vesting period | 4 years | |||||||||
Compensation expenses | $ 783,000 | |||||||||
Each compensation value recognized on straight-line basis | $ 261,000 | |||||||||
Patents [Member] | ||||||||||
Ownership percentage in ATI | 100.00% | |||||||||
Shares issued for patents, share | 600,000 | |||||||||
Payment of note payable related party | $ 18,480 | |||||||||
Share price | $ 1.25 | $ 1.25 | ||||||||
Shares issued for patents, amount | $ 950,000 | |||||||||
Patent amortization expense | $ 21,269 | $ 42,537 | ||||||||
Warrants [Member] | ||||||||||
Antidilutive securities excluded from computation of earnings per share, amount | 5,403,953 | |||||||||
Equity grants [Member] | ||||||||||
Antidilutive securities excluded from computation of earnings per share, amount | 740,000 | |||||||||
Minimum [Member] | ||||||||||
Property and equipment useful life | 5 years | |||||||||
Customers payment due term | 30 days | |||||||||
Maximum [Member] | ||||||||||
Property and equipment useful life | 7 years | |||||||||
Customers payment due term | 60 days | |||||||||
Jesse James [Member] | Licensing Agreements [Member] | ||||||||||
Common stock issued for cash , shares | 100,000 | |||||||||
Additional common stock issued | 75,000 | |||||||||
Gross sale | $ 15,000,000 | |||||||||
Expiration period | Oct. 15, 2021 | |||||||||
Jeff Rann [Member] | Licensing Agreements [Member] | ||||||||||
Common stock issued for cash , shares | 100,000 | |||||||||
Additional common stock issued | 75,000 | |||||||||
Gross sale | $ 15,000,000 | |||||||||
Expiration period | Feb. 28, 2022 | |||||||||
Hallam, Inc [Member] | ||||||||||
Payment of note payable related party | $ 200,000 | |||||||||
Hallam, Inc [Member] | Shareholders [Member] | ||||||||||
Payment of note payable related party | $ 100,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of concentration (Details) | 3 Months Ended | 6 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Sales Revenue, Net [Member] | ||
Concentration Percentage | 77.24% | 66.75% |
Accounts receivable [Member] | ||
Concentration Percentage | 80.76% | 80.76% |
A [Member] | Sales Revenue, Net [Member] | ||
Concentration Percentage | 29.98% | |
A [Member] | Accounts receivable [Member] | ||
Concentration Percentage | ||
B [Member] | Sales Revenue, Net [Member] | ||
Concentration Percentage | 44.17% | 23.82% |
B [Member] | Accounts receivable [Member] | ||
Concentration Percentage | 57.74% | 57.74% |
C [Member] | Sales Revenue, Net [Member] | ||
Concentration Percentage | 16.29% | 12.95% |
C [Member] | Accounts receivable [Member] | ||
Concentration Percentage | ||
D [Member] | Sales Revenue, Net [Member] | ||
Concentration Percentage | 16.78% | |
D [Member] | Accounts receivable [Member] | ||
Concentration Percentage | 23.02% | 23.02% |
Inventories - Schedule of Inven
Inventories - Schedule of Inventory (Details) - USD ($) | Sep. 30, 2018 | Mar. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Finished product | $ 1,550,590 | $ 809,680 |
Raw materials | 1,559,864 | 1,471,666 |
Work in process | 267,952 | 123,661 |
Inventory, net | $ 3,378,406 | $ 2,405,007 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Sep. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |||||
Depreciation expense | $ 41,431 | $ 35,297 | $ 20,737 | $ 136,335 | $ 81,412 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Sep. 30, 2018 | Mar. 31, 2018 |
Total property and equipment | $ 2,512,399 | $ 1,354,484 |
Less accumulated depreciation | (249,493) | (113,158) |
Net property and equipment | 2,262,906 | 1,241,326 |
Leasehold Improvements [Member] | ||
Total property and equipment | 34,170 | 17,772 |
Furniture and Fixtures [Member] | ||
Total property and equipment | 11,604 | 8,102 |
Vehicles [Member] | ||
Total property and equipment | 103,511 | 89,388 |
Equipment [Member] | ||
Total property and equipment | 2,257,822 | 879,871 |
Tooling [Member] | ||
Total property and equipment | $ 105,292 | $ 359,351 |
Capital Stock (Details Narrativ
Capital Stock (Details Narrative) - USD ($) | Jul. 06, 2018 | May 24, 2018 | Dec. 15, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Apr. 30, 2018 | Mar. 31, 2018 |
Common stock issued | 5,906,183 | ||||||
Value of common stock shares sold | $ 3,247,030 | ||||||
Number of exercised warrant shares issued | 1,972,800 | 1,972,800 | |||||
Value of exercised warrants | $ 4,767,625 | ||||||
Number of cashless exercise of warrant issued | 10,495 | ||||||
Number of shares issued for services | 5,000 | ||||||
Shares issued for services, value | $ 22,350 | $ 62,500 | |||||
Number of shares issued to employees, Board of Directors and Advisory Committee members | 250,000 | ||||||
Shares issued to employees, Board of Directors and Advisory Committee members, value | $ 482,625 | ||||||
Unit price of offering | $ 1.65 | ||||||
Exercise price of the warrants | $ 2.42 | $ 2 | |||||
Number of securities sold | 475,681 | ||||||
Warrants outstanding | $ 5,403,953 | ||||||
Number of shares forfeited or cancelled | 2,974,800 | 2,958,800 | |||||
Common stock, shares authorized | 200,000,000 | 200,000,000 | |||||
Common stock, par value | $ 0.001 | $ 0.001 | |||||
Placement Agent Agreement [Member] | |||||||
Unit price of offering | $ 1.65 | ||||||
Cash fee in percentage | 12.00% | ||||||
Cash fee | $ 389,644 | ||||||
Private Offering [Member] | |||||||
Warrants outstanding | $ 4,947,600 | ||||||
Number of warrant to purchase shares of common stock | 4,947,600 | ||||||
Warrant purchase agreement terms | The warrants could be called when the average price of our common stock traded at $5.00 per share or higher, for a consecutive 30 day period. This call provision was met on May 21, 2018. | ||||||
Amended and Restated Articles Of Association [Member] | October 24, 2018 [Member] | |||||||
Common stock, shares authorized | 200,000,000 | ||||||
Common stock, par value | $ 0.001 | ||||||
Preferred stock, shares authorized | 10,000,000 | ||||||
Preferred stock, par value | $ 0.001 | ||||||
Warrant Three Years [Member] | |||||||
Exercise price of the warrants | $ 2.50 | ||||||
Number of warrant to purchase shares of common stock | 349,060 | ||||||
March 2025 [Member] | |||||||
Exercise price of the warrants | $ 1.65 | ||||||
Number of warrant to purchase shares of common stock | 966,494 | ||||||
March 2025 [Member] | |||||||
Exercise price of the warrants | $ 2 | ||||||
Number of warrant to purchase shares of common stock | 4,088,399 | ||||||
Warrants [Member] | |||||||
Number of cashless exercise of warrant issued | 14,719 | ||||||
Common Stock [Member] | |||||||
Common stock issued | 1,967,886 | ||||||
Value of common stock shares sold | $ 1,968 | ||||||
Number of cashless exercise of warrant issued | 10,495 | ||||||
Number of shares issued for services | 5,000 | ||||||
Shares issued for services, value | $ 5 | ||||||
Common Stock [Member] | Second Placement Agreement [Member] | |||||||
Number of securities sold | 1,967,886 | ||||||
Warrants [Member] | Second Placement Agreement [Member] | |||||||
Number of securities sold | 983,943 | ||||||
Value of securities sold | $ 3,247,030 | ||||||
Warrant One [Member] | |||||||
Exercise price of the warrants | $ 2.50 | ||||||
Number of warrant to purchase shares of common stock | 4,947,600 | ||||||
Warrant Two [Member] | |||||||
Exercise price of the warrants | $ 1.25 | ||||||
Number of warrant to purchase shares of common stock | 67,500 | ||||||
Warrant Three [Member] | |||||||
Exercise price of the warrants | $ 0.50 | ||||||
Number of warrant to purchase shares of common stock | 90,000 | ||||||
Investors [Member] | |||||||
Common stock issued | 1,967,886 | ||||||
Value of common stock shares sold | $ 3,247,030 |
Capital Stock - Schedule of Out
Capital Stock - Schedule of Outstanding and Exercisable Stock Purchase Warrants (Details) - $ / shares | Jul. 06, 2018 | Sep. 30, 2018 |
Notes to Financial Statements | ||
Number of shares, Outstanding Beginning | 8,872,160 | |
Number of shares granted | 1,494,112 | |
Number of shares exercised | (1,987,519) | |
Number of shares forfeited or cancelled | (2,974,800) | (2,958,800) |
Number of shares expired | (16,000) | |
Number of shares Outstanding ending | 5,403,953 | |
Number of shares exercisable | 5,403,953 | |
Weighted Average Exercise Price Outstanding Beginning | $ 2.22 | |
Weighted Average Exercise Price granted | 2.04 | |
Weighted Average Exercise Price exercised | 2.41 | |
Weighted Average Exercise Price forfeited or cancelled | 2.47 | |
Weighted Average Exercise Price expired | 2.50 | |
Weighted Average Exercise Price Outstanding ending | 1.97 | |
Weighted Average Exercise Price exercisable | $ 1.97 | |
Weighted Average Life Remaining (Years) Outstnding Beginning | 1 year 9 months 25 days | |
Weighted Average Life Remaining (Years), granted | 4 years 2 months 19 days | |
Weighted Average Life Remaining (Years) Outstnding ending | 4 years 6 months 25 days | |
Weighted Average Life Remaining (Years), exercisable | 4 years 6 months 25 days |
Acquisitions (Details Narrative
Acquisitions (Details Narrative) - USD ($) | 6 Months Ended | ||
Sep. 30, 2018 | Sep. 27, 2018 | Aug. 20, 2018 | |
Number of shares issued in acquisition | 1,700,002 | ||
Cash payment | $ 250,000 | $ 250,000 | |
Contingent Consideration Payable | $ 1,250,000 | $ 1,250,000 | |
Claw Back Provisions [Member] | |||
Number of shares issued in acquisition | 1,700,002 | ||
Cash payment | $ 250,000 | ||
Claw Back Provisions [Member] | September 20, 2018 to October 4, 2018 [Member] | |||
Shares value average price per share | $ 3.28 |
Acquisitions - Schedule of Tota
Acquisitions - Schedule of Total Purchase Consideration on Intangible Assets (Details Narrative) - USD ($) | Sep. 30, 2018 | Sep. 27, 2018 |
Business Combinations [Abstract] | ||
Cash | $ 250,000 | $ 250,000 |
Contingent Consideration payable | $ 1,250,000 | 1,250,000 |
Common stock | 5,569,207 | |
Total purchase Consideration | $ 7,069,207 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] | Oct. 16, 2018USD ($)ft² |
Area of land leased | ft² | 20,826 |
Lease expiry date | Dec. 31, 2023 |
Rent expense | $ | $ 17,702 |
Rent increase percentage | 4.40% |