| Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The consolidated financial statements of the Company
are prepared under the accrual basis of accounting, in accordance with generally accepted accounting principles in the United States of
America (GAAP) except as described below. Basis of Presentation The accompanying consolidated financial statements
are being produced as part of a merger agreement of GDI and Ammo, Inc. For this purpose, the accompanying financial statements include
the accounts of Gemini Direct Investments, LLC and all of its subsidiaries (excluding TVP Investments, LLC, Media Lodge, Inc., Media Lodge,
LLC, GDI Air 1, LLC and GDI II, LLC). As a result, the significant intercompany balances and transactions of these entities have not been
included in consolidation. The consolidation of these entities would impact the financial statements as follows:
2020 Increase
2019 Increase
TOTAL ASSETS $ 4,394,463 $ 3,729,453
TOTAL LIABILITIES 5,201,315 2,692,029
TOTAL DEFICIT 4,407,523 921,172
TOTAL LIABILITIES AND DEFICIT $ 9,608,838 $ 3,613,201
NET LOSS $ 4,040,677 $ 1,279,678
NET CASH FLOWS $ 13,649,515 $ 4,892,879 Use of Estimates The preparation of the consolidated financial statements
in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial
statements. Significant estimates include collectability of accounts receivable and depreciation of property and equipment. Actual results
could differ from those estimates. Concentration of Credit Risk The Company maintains cash balances with several financial
institutions which are insured by the Federal Deposit Insurance Corporation within statutory limits. At December 31, 2020 and 2019, the
account balances exceeded the federally insured limit by approximately $25,989,000 and $13,506,000, respectively. Management believes
no significant credit risk exists at December 31, 2020 and 2019, respectively. Revenue Recognition In May 2014, Financial Accounting Standards Board
(FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers In accordance with FASB ASU Topic 606, the Company
adopted the new revenue recognition standard using the modified retrospective method for all contracts not completed as of the date of
adoption. The adoption of ASU Topic 606 had no material impact to the Company’s financial statements. The Company applies the following five steps:
1. Identify the contract with a customer: A contract with a customer exists when (i) the Company enters into a contract that has been approved and the parties are committed, (ii) each party’s rights are identified, (iii) payment terms are defined, (iv) the contract has commercial substance and (v) collection is probable.
2. Identify the performance obligations in the contract: A performance obligation is identified as a promised good or service that is both distinct, meaning the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and are distinct in the context of the contract, meaning the transfer of the good or service is separately identifiable from other promises in the contract. If multiple goods or services are promised within a contract, the Company applies judgment to determine whether those promised goods or services are capable of being distinct and are distinct in the context of the contract. If these criteria are not met, the promised goods or services are accounted for as a single performance obligation.
3. Determine the transaction price: The transaction price is the amount of consideration the Company is entitled to receive in exchange for transferring goods or services to customers. The transaction price includes only those amounts to which the company has enforceable rights under the present contract. The Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur.
4. Allocate the transaction price to performance obligations in the contract: If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. If multiple distinct performance obligations are identified within a single contract, the transaction price must be allocated to each separate performance obligation based on the relative stand-alone selling prices of the goods or services in the contract. The best evidence of stand-alone selling prices is the price a company charges for that good or service when the company sells it separately in similar circumstances to similar customers. However, if the goods or services are not sold separately or are only sold separately infrequently or with widely varying prices then the stand-alone selling price is estimated using either the expected cost plus a reasonable margin, an assessment of market prices for similar goods or services or the residual approach.
5. Recognize revenue when or as the Company satisfies a performance obligation: The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied through the transferring of the promised good or service to the customer. The Company recognizes revenue as follows: Auction Revenue: Payment Processing Revenue: Shipping Income: Banner Advertising Campaign Revenue: Product Sales: Identity Verification: Recent Accounting Pronouncements In February 2016 the FASB issued ASU 2016-02, Leases - On January 2016, the FASB issued ASU 2016-01, Financial
Instruments – Overall : Recognition and Measurement of Financial Assets and Financial Liabilities. Cash and Cash Equivalents The Company considers deposits that can be redeemed
on demand and investments that have original maturities of less than three months, when purchased, to be cash equivalents. Fair Value of Financial Instruments Financial instruments, primarily cash, receivables,
accounts payable and notes payable are reported at values which the Company believes are not significantly different from fair values.
The Company believes no significant credit risk exists with respect to any of its financial instruments at December 31, 2020 and 2019,
respectively. Investment Securities In accordance with FASB Accounting Standards Codification
(ASC) Topic 320, Investments – Debt Securities Investments – Equity Securities, Debt securities classified to be held to
maturity are stated at cost. The Company has the positive intent and ability to hold these securities to maturity. Other investment securities are carried at
fair value with dividend and interest income reflected in net income for the years ended December 31, 2020 and 2019. The Company has invested
in securities in the form of money market funds, mutual funds and limited partnership interests. Fair Value Measurement The Company follows the guidance in FASB ASC Topic
820, Fair Value Measurement, Level 1 inputs Level 2 inputs Level 3 inputs The fair value measurement level within the fair value
hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need
to maximize the use of observable inputs and minimize the use of unobservable inputs. Depreciation and Amortization Depreciation and amortization of property and equipment
are calculated on the straight-line method over the assets’ estimated useful lives. The estimated useful lives of the property and
equipment range from three to seven years. Advertising Costs The Company expenses advertising costs as incurred.
These costs were approximately $375,000 and $190,000 for the years ended December 31, 2020 and 2019, respectively. Software Development Costs In accordance with FASB ASC 350, Intangibles –
Goodwill and Other Subtopic (350-40): Internal Use Software Allowance for Doubtful Accounts Management reviews historical experience, the status
of accounts receivable, and an analysis of possible bad debts to determine an allowance for doubtful accounts. Accounts are generally
considered past due after 60 days. Receivables are written off based on individual credit evaluation and specific circumstances of the
customer if considered necessary. As of December 31, 2020 and 2019, the Company had recorded an allowance for doubtful accounts of $1,095,176
and $660,126, respectively. Loan Costs In accordance with FASB ASU 2015-03, Interest -
Imputation Subtopic (835-30): Simplifying the Presentation of Debt Issuance Costs Loan closing costs are capitalized and amortized using
the straight-line method over the life of the related loan, which approximates the effective interest method. Intangible Assets In accordance with accounting standards regarding
business combinations and accounting for intangibles including FASB ASC 805, Business Combinations Intangibles-Goodwill
and Other, Income Taxes GDI and all of its subsidiaries, except for GBI, are
single member limited liability companies and are disregarded for federal, state and local income tax purposes. GBI is a corporation and
has elected to be treated as a Qualified Subchapter S Corporation for federal income tax purposes. As a result, income or losses of the
Company are reported and taxed on the personal income tax return of the member. The Internal Revenue Service (IRS) began an examination
of the GBI federal income tax returns for 2018 in the third quarter of 2020. As of December 31, 2020, the Company cannot reasonably estimate
when the examination will be completed or if any material adjustments will be proposed by the IRS. As of December 31, 2020, management
believes there are no uncertain tax positions as defined by FASB ASC 740, Income Taxes Included in distributions for the year ended December
31, 2020 and 2019, is approximately $15,102,000 and $4,322,000, respectively, related to GDI’s estimated income tax payments. Events Occurring After Report Date The Company has evaluated events and transactions
that occurred between December 31, 2020 and April 8, 2021, which is the date that the consolidated financial statements were available
to be issued, for possible recognition or disclosure in the consolidated financial statements. See Note 10. |
