Outdoor Holding Co S-3, filed Jul 29, 2021
Outdoor Holding Co (POWW)
As filed with the Securities and Exchange Commission on July 29, 2021
Registration Statement No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
AMMO, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 83-1950534 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
7681 East Gray Road
Scottsdale, Arizona 85260
(480) 947-0001
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Fred W. Wagenhals
President and Chief Executive Officer
7681 East Gray Road
Scottsdale, Arizona 85260
(480) 947-0001
(Address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Joseph M. Lucosky, Esq.
Adele Hogan, Esq.
Lucosky Brookman LLP
101 Wood Avenue South, 5th Floor
Woodbridge, NJ 08830
(732) 395-4400
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective on filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. [ ]
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | [ ] | Accelerated filer | [ ] | |
| Non-accelerated filer | [X] | Smaller reporting company | [X] | |
| Emerging growth company | [ ] |
CALCULATION OF REGISTRATION FEE
| Title of Each Class of Securities to be Registered | Amount of Shares to be Registered (1) | Proposed Maximum Offering Price per Share (2) | Proposed Maximum Aggregate Offering Price | Amount of Registration Fee | ||||||||||||
| Common Stock, par value $0.001 per share | 12,390,411 | $ | 7.06 | $ | 87,476,301.70 | $ | 9,543.67 | |||||||||
| Common Stock, $0.001 par value per share, issuable upon exercise of the Warrants | 1,337,830 | (3) | $ | 7.06 | $ | 9,445,079.80 | $ | 1,030.46 | ||||||||
| Total | 13,728,241 | - | $ | 96,921,381.50 | $ | 10,574.13 | (4) | |||||||||
| (1) | Pursuant to Rule 416 under the Securities Act of 1933, as amended, the shares of Common Stock (as defined on the cover page of the prospectus) being registered hereunder include such indeterminate number of shares of Common Stock as may be issuable with respect to the shares of Common Stock being registered hereunder as a result of stock splits, stock dividends or similar transactions. |
| (2) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) and 457(g) under the Securities Act of 1933, as amended, using the average high ($7.25) and low prices ($6.87) of the common stock on the Nasdaq Capital Market on July 27, 2021. Shares offered hereunder may be sold by the Selling Shareholders from time to time in the open market, through privately negotiated transactions, or a combination of these methods at market prices prevailing at the time of sale or at negotiated prices. |
| (3) | Represents the maximum number of shares of Common Stock that the Company expects could be issuable upon the exercise of the Warrants (as defined below), all of which were acquired by the Selling Shareholders.
|
| (4) | Paid herewith. The fee is calculated by multiplying the aggregate offering amount by 0.0001091 pursuant to Section 6(b) of the Securities Act |
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. The Selling Shareholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject to Completion, dated July 29, 2021.
PROSPECTUS
AMMO, INC.
13,728,241 Shares of Common Stock
Pursuant to this prospectus, the selling shareholders identified herein (each a “Selling Shareholder” and, collectively, the “Selling Shareholders”) are offering on a resale basis, up to 13,728,241 shares (the “Shares”) of our common stock, par value $0.001 per share (the “Common Stock”), by the selling stockholders identified in this prospectus under “Selling Shareholders” (the “Offering”). This amount consists of: (i) 10,000,000 shares of Common Stock issued to one (1) Selling Shareholder pursuant to the Merger Agreement (as defined below) dated as of April 30, 2021; (ii) 1,228,000 shares of Common Stock issued to thirty-six (36) selling Shareholders pursuant to those certain Subscription Agreements entered into in connection with a 2017 friends and family financing; (iii) 408,411 shares of Common Stock issued to five (5) Selling Shareholders pursuant to the Company’s Registration Statement on filed with the Securities and Exchange Commission (“SEC”) on February 17, 2021; (iv) 500,000 shares of Common Stock issued to one (1) Selling Shareholder pursuant to a Services Agreement between the Company and Trending Equities Corp., dated as of May 16, 2021; (v) 250,000 shares of Common Stock issued to one (1) Selling Shareholder pursuant to a Consulting Agreement between the Company and White Bear Group LLC, dated as of May 1, 2021; (vi) 162,830 shares of Common Stock underlying warrants issued to two (2) Selling Shareholders pursuant to the Company’s Registration Statement on Form S-3 filed with the SEC on February 17, 2021 (the “February 2021 Warrants”); and (vii) 1,175,000 shares of Common Stock underlying warrants issued to one (1) Selling Shareholder pursuant to a Soliciting Agent Agreement between the Company and Paulson Investment Company, LLC, dated as of December 21, 2020 (the “December 2020 Warrants,” and together with the February 2021 Warrants, the “Warrants”). We are not selling any shares of our Common Stock under this prospectus and will not receive any proceeds from the sale of the Shares. We will, however, receive proceeds from any warrants that are exercised through the payment of the exercise price in cash. The Selling Shareholders will bear all commissions and discounts, if any, attributable to the sale of the Shares. We will bear all costs, expenses and fees in connection with the registration of the Shares.
Pursuant to the terms and conditions set forth in that certain Investors Rights Agreement dated as of April 30, 2021, and entered into in connection with the Merger Agreement, we agreed to file with the SEC a shelf registration statement covering resales of certain of the shares issued pursuant to the Merger Agreement, which shares were issued to the applicable Selling Shareholder in a private transaction. This prospectus forms a part of a registration statement filed by us as required by the Investors Rights Agreement.
The Selling Shareholders may sell the Shares from time to time on terms to be determined at the time of sale through ordinary brokerage transactions or through any other means described in this prospectus under “Plan of Distribution.” The prices at which the Selling Shareholders may sell the shares will be determined by the prevailing market price for the shares or in negotiated transactions. No securities may be sold without delivery of this prospectus and the applicable prospectus supplement describing the method and terms of the offering of such securities.
INVESTING IN OUR SECURITIES INVOLVES RISKS. SEE THE “RISK FACTORS” ON PAGE 6 OF THIS PROSPECTUS AND ANY SIMILAR SECTION CONTAINED IN THE APPLICABLE PROSPECTUS SUPPLEMENT CONCERNING FACTORS YOU SHOULD CONSIDER BEFORE INVESTING IN OUR SECURITIES.
Our Common Stock is listed on the Nasdaq Capital Market under the symbol “POWW”. On July 28, 2021, the last reported sale price of our Common Stock on the Nasdaq Capital Market was $7.08 per share.
Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 6 in this prospectus for a discussion of information that should be considered in connection with an investment in our securities.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is July , 2021.
TABLE OF CONTENTS
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This prospectus is part of a registration statement on Form S-3 that we filed with the U.S. Securities and Exchange Commission (the “SEC”) on behalf of the Selling Shareholders to permit the Selling Shareholders to sell the shares described in this prospectus in one or more transactions. You should read this prospectus and the information and documents incorporated by reference carefully. Such documents contain important information you should consider when making your investment decision. See “Where You Can Find More Information” and “Incorporation of Certain Information by Reference” in this prospectus.
This prospectus may be supplemented from time to time to add, to update or change information in this prospectus. Any statement contained in this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in a prospectus supplement modifies or supersedes such statement. Any statement so modified will be deemed to constitute a part of this prospectus only as so modified, and any statement so superseded will be deemed not to constitute a part of this prospectus. You may only rely on the information contained in this prospectus or that we have referred you to. We have not authorized anyone to provide you with different information. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities other than the securities offered by this prospectus. This prospectus and any future prospectus supplement do not constitute an offer to sell or a solicitation of an offer to buy any securities in any circumstances in which such offer or solicitation is unlawful. Neither the delivery of this prospectus or any prospectus supplement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in our affairs since the date of this prospectus or such prospectus supplement or that the information contained by reference to this prospectus or any prospectus supplement is correct as of any time after its date.
This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under “Where You Can Find More Information.”
The Selling Shareholders are offering the Shares only in jurisdictions where such offer is permitted. The distribution of this prospectus and the sale of the Shares in certain jurisdictions may be restricted by law. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the distribution of this prospectus and the sale of the Shares outside the United States. This prospectus does not constitute, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy, the Shares by any person in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation. If there is any inconsistency between the information in this prospectus and the applicable prospectus supplement, you should rely on the prospectus supplement. Before purchasing any securities, you should carefully read both this prospectus and the applicable prospectus supplement, together with the additional information described under the heading “Where You Can Find More Information; Incorporation by Reference.”
We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We will not make an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus and the applicable prospectus supplement to this prospectus is accurate as of the date on its respective cover, and that any information incorporated by reference is accurate only as of the date of the document incorporated by reference, unless we indicate otherwise. Our business, financial condition, results of operations and prospects may have changed since those dates.
When we refer to “Ammo,” “we,” “our,” “us” and the “Company” in this prospectus, we mean Ammo, Inc., unless otherwise specified. When we refer to “you,” we mean the holders of the applicable series of securities.
SPECIAL NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. These forward-looking statements contain information about our expectations, beliefs or intentions regarding our product development and commercialization efforts, business, financial condition, results of operations, strategies or prospects, and other similar matters. These forward-looking statements are based on management’s current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. These statements may be identified by words such as “expects,” “plans,” “projects,” “will,” “may,” “anticipates,” “believes,” “should,” “intends,” “estimates,” and other words of similar meaning.
These statements relate to future events or our future operational or financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the section titled “Risk Factors” and elsewhere in this prospectus, in any related prospectus supplement and in any related free writing prospectus.
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Any forward-looking statement in this prospectus, in any related prospectus supplement and in any related free writing prospectus reflects our current view with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our business, results of operations, industry and future growth. Given these uncertainties, you should not place undue reliance on these forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this prospectus, any related prospectus supplement and any related free writing prospectus and the documents that we reference herein and therein and have filed as exhibits hereto and thereto completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
This prospectus, any related prospectus supplement and any related free writing prospectus also contain or may contain estimates, projections and other information concerning our industry, our business and the markets for our products, including data regarding the estimated size of those markets and their projected growth rates. Information that is based on estimates, forecasts, projections or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained these industry, business, market and other data from reports, research surveys, studies and similar data prepared by third parties, industry and general publications, government data and similar sources. In some cases, we do not expressly refer to the sources from which these data are derived.
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PROSPECTUS SUMMARY
This summary highlights certain information about us, this offering and information appearing elsewhere in this prospectus and in the documents we incorporate by reference. This summary is not complete and does not contain all of the information that you should consider before investing in our securities. To fully understand this offering and its consequences to you, you should read this entire prospectus carefully, including the information referred to under the heading “Risk Factors” in this prospectus beginning on page 6, the financial statements and other information incorporated by reference in this prospectus when making an investment decision. This is only a summary and may not contain all the information that is important to you. You should carefully read this prospectus, including the information incorporated by reference therein, and any other offering materials, together with the additional information described under the heading “Where You Can Find More Information.”
Our Business
We are a designer, producer, and marketer of performance-driven, high-quality ammunition and ammunition component products for sale to a variety of consumers, including sport and recreational shooters, hunters, individuals seeking home or personal protection, manufacturers and law enforcement and military agencies. We also own an online auction site supporting the lawful sale of firearms, ammunition and hunting/shooting accessories. To enhance the strength of our brands and drive product demand, we emphasize product innovation and technology to improve the performance, quality, and affordability of our products while providing support to our distribution channel and consumers. We seek to sell products at competitive prices that compete with high-end, custom, hand-loaded ammunition at competitive prices. Additionally, through our ammunition casing manufacturing and sales operations (“Jagemann Munition Components” or “JMC”) we sell ammunition casings products of various types. We emphasize an American heritage by using predominantly American-made components and raw materials in our products that are produced, inspected, and packaged at our facilities in Payson, Arizona and Manitowoc, Wisconsin.
Our production processes focus on safety, consistency, precision, and cleanliness. Each round is developed for a specific purpose with a focus on a proper mix of consistency, velocity, accuracy, and recoil. Each round is chamber gauged and inspected with redundant seven-step quality control processes.
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GunBroker.com is our online auction site. In its role as our auction site, GunBroker.com serves as the listing service and provides for the exchange of information in a secure manner supporting the third-party listing, sale and lawful purchase of firearms, ammunition and accessories connecting over 6.6 million registered users.
Competition
The ammunition and ammunition casing industry is dominated by a small number of companies, a number of which are divisions of large public companies. We compete primarily on the quality, reliability, features, performance, brand awareness, and price of our products. Our primary competitors include Federal Premium Ammunition, Remington Arms, the Winchester Ammunition division of Olin Corporation, and various smaller manufacturers and suppliers, including Black-Hills Ammunition, CBC Group, Fiocchi Ammunition, Hornady Manufacturing Company, PMC, Rio Ammunition, and Wolf.
Our Growth Strategy
Our goal is to enhance our position as a designer, producer, and marketer of ammunition products via our manufacturing and related sales operations, while simultaneously enhancing the GunBroker.com brand and leverage the information technologies platform to develop additional complimentary sales channels. Key elements of our strategy to achieve this goal are as follows:
Design, Produce, and Market Innovative, Distinctive, Performance-Driven, High-Quality Ammunition and Ammunition Components
We are focused on designing, producing, and marketing innovative, distinctive, performance-driven, high-quality products that appeal to retailers, manufacturers, and consumers that will enhance our users’ shooting experiences. Our ongoing research and development activities; our safe, consistent, precision, and clean production processes; and our multi-faceted marketing programs are critical to our success.
Continue to Strengthen Relationships with Channel Partners and Retailers
We continue to strive to strengthen our relationships with our current distributors, dealers, manufactures, and mass market and specialty retailers and to attract additional distributors, dealers, retailers, and manufacturers. The success of our efforts depends on the innovation, distinctive features, quality, and performance of our products; the attractiveness of our packaging; the effectiveness of our marketing and merchandising programs; and the effectiveness of our customer support.
Emphasis on Customer Satisfaction and Loyalty
We plan to continue to emphasize customer satisfaction and loyalty by offering innovative, distinctive, high-quality products on a timely and cost-attractive basis and by offering effective customer service. We regard the features, quality, and performance of our products as the most important components of our customer satisfaction and loyalty efforts, but we also rely on customer service and support.
Continuously Improving Operations
We plan to continue to emphasize customer satisfaction and loyalty by offering innovative, distinctive, high-quality products on a timely and cost- attractive basis and by offering effective customer service, training, and support. We regard the features, quality, and performance of our products as the most important components of our customer satisfaction and loyalty efforts, but we also rely on customer service and support.
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Enhance Market Share, Brand Recognition, and Customer Loyalty
We strive to enhance our market share, brand recognition, and customer loyalty. Industry sources estimate that 70 to 80 million people in the United States own more than approximately 393 million firearms creating a large installed base for our ammunition products. We are focusing on the premium segment of the market through the quality, distinctiveness, and performance of our products; the effectiveness of our marketing and merchandising efforts; and the attractiveness of our competitive pricing strategies.
Pursue Synergetic Strategic Acquisitions and Relationships
We intend to pursue strategic acquisitions and develop strategic relationships designed to enable us to expand our technology and knowhow, expand our product offerings, strengthen and expand our supply chain, enhance our production process, expand our marketing and distribution, and attract new customers.
Our Offices
We maintain our principal executive offices at 7681 East Gray Road, Scottsdale, Arizona 85260. Our telephone number is (480) 947-0001. Our website is www.ammoinc.com. The information contained on our website as that can be assessed through our website does not constitute part of this prospectus.
Recent Developments
On March 16, 2021, we announced the closing of an underwritten public offering of 23 million newly-issued shares of Common Stock at a price to the public of $5.00 per share. The closing included the full exercise of the underwriters’ over-allotment option to purchase 3 million shares of Common Stock at the public offering price, for gross proceeds to the Company of $115 million, prior to deducting offering expenses, commissions and underwriting discounts.
On May 21, 2021, we closed an underwritten public offering of 1,097,200 newly issued shares of our 8.75% Series A Cumulative Redeemable Perpetual Preferred Stock (the “Series A Preferred Stock”) at a price to the public of $25.00 per share. The offering resulted in gross proceeds to the Company of $27,430,000, prior to deducting offering expenses, commissions and underwriting discounts. On May 25, 2021, the underwriter exercised its previously announced over-allotment option to purchase 164,580 shares of Series A Preferred Stock pursuant to that certain Underwriting Agreement dated May 19, 2021, by and between us and Alexander Capital, L.P., as representative of the several underwriters identified therein. We closed the exercise of the over-allotment on May 27, 2021. The gross proceeds from the exercise of the over-allotment option were $4,114,500, before deducting underwriting discounts and commissions.
On May 25, 2021, we entered into an underwriting agreement with Alexander Capital, L.P. relating to a firm commitment public offering of 138,220 newly issued shares of our Series A Preferred Stock at a public offering price of $25.00 per share. The closing of the offering took place on May 27, 2021. The gross proceeds to use from the sale of 138,220 shares of Series A Preferred Stock, before deducting underwriting discounts and commissions and estimated offering expenses payable by us, were $3,455,500. The total net proceeds from the two Series A Preferred Stock offerings in May 2021 was $32,940,000.
Acquisitions
On April 30, 2021 (the “Effective Date”), the Company entered into an agreement and plan of merger (the “Merger Agreement”), by and among the Company, SpeedLight Group I, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company (“Sub”), Gemini Direct Investments, LLC, a Nevada limited liability company (“Gemini”), and Steven F. Urvan, an individual (the “Seller”), whereby Sub merged with and into Gemini, with Sub surviving the merger as a wholly owned subsidiary of the Company (the “Merger”). At the time of the Merger, Gemini had nine (9) subsidiaries, all of which are related to Genimi’s ownership of the gunbroker.com business. Gunbroker.com is a large on-line auction marketplace dedicated to firearms, hunting, shooting and related products. The Merger was completed on the Effective Date.
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In consideration of the Merger, on the terms and subject to the conditions set forth in the Merger Agreement, on the Effective Date, (i) the company assumed an aggregate amount of indebtedness of Gemini and its subsidiaries equal to $50,000,000 (the “Assumed Indebtedness”) and (ii) the issued and outstanding membership interests in Gemini (the “Membership Interests”), held by the Seller, automatically converted into the right to receive (A) $50,000,000 (the “Cash Consideration”) and (B) 20,000,000 shares of the Company’s common stock (the “Stock Consideration”).
In connection with the Merger Agreement, the Company and the Seller agreed that the Stock Consideration consisted of: (a) 14,500,000 shares issued without being held in escrow or requiring prior stockholder approval, (b) 4,000,000 shares issued subject to that certain Pledge and Escrow Agreement entered into pursuant to the Merger Agreement (the “Pledged Securities”), and (c) 1,500,000 shares that will not be issued prior to the Company obtaining stockholder approval for the issuance (the “Additional Issuance”).
On the Effective Date, in connection with the Merger Agreement, the company and the Seller entered into a Lock-Up Agreement, pursuant to which the Pledged Securities shall not be sold or transferred by the Seller without the prior written consent of the Company until the Pledged Securities are released pursuant to the terms of the Pledge and Escrow Agreement.
On the Effective Date, in connection with the Merger Agreement, the Company and the Seller entered into a Voting Rights Agreement (the “Voting Rights Agreement”), whereby for a period of six months following the Effective Date, the Seller: (i) agreed to vote in favor of approving the implementation of a staggered board of directors at the next annual meeting of the Company; (ii) will not vote any securities in favor of, or consent to, and will vote his 18.5 million shares of the Company’s common stock to which he has voting rights, to vote against and not consent to, the approval of a proxy fight either individually or as part of a group for Schedule 13D or 13G purposes that would result in one-third of the current officers and one-third of the current directors being replaced; and (iii) appointed the Company as his attorney-in-fact and proxy with full power of substitution, for and in his name, to vote in the manner contemplated by the Voting Rights Agreement.
On the Effective Date, in connection with the Merger Agreement, the Company and the Seller entered into a Standstill Agreement (the “Standstill Agreement”), whereby during the period beginning on the Effective Date and ending on the one (1) year anniversary of the Effective Date (the “Standstill Period”), the Seller will not, among other things, make, effect, initiate, cause or participate in (i) any acquisition of any securities of the Company or any securities of any subsidiary or other affiliate or associate of the Company if such acquisition would result in the Seller and his affiliates and associates collectively beneficially owning twenty-five percent (25%) or more of the then issued and outstanding shares of common stock of the Company, (ii) any Company Acquisition Transaction (as this term is defined in the Standstill Agreement), or (iii) any “solicitation” of “proxies” (as those terms are defined in Rule 14a-1 of the General Rules and Regulations under the Exchange Act) or consents with respect to any securities of the Company.
On the Effective Date, in connection with the Merger Agreement, the Company and the Seller entered into an Investor Rights Agreement (the “Investor Rights Agreement”). The Investor Rights Agreement requires the Company to use its commercially reasonable efforts to register 10 million shares of the Stock Consideration for resale on a registration statement to be filed with the Securities and Exchange Commission (the “SEC”), under the Securities Act of 1933, as amended (the “Securities Act”), within ninety (90) days following the Effective Date. The Company also agreed in the Investor Rights Agreement to provide the Seller with demand registration rights in connection with the other shares received by the Seller as part of the Stock Consideration, including the Pledged Securities (to the extent released and delivered to the Seller in accordance with the terms of the Merger Agreement) and the Additional Securities (if issued in accordance with the terms of the Merger Agreement).
Appointment of New Director and Officer
On April 30, 2021, in connection with the closing of the Merger, Steven F. Urvan was appointed to the Company’s Board of Directors and elected to serve as the Company’s Chief Strategy Officer.
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| Issuer | Ammo, Inc. | |
| Shares of Common Stock offered by us | None | |
| Shares of Common Stock offered by the Selling Shareholders | 13,728,241 Shares (1) | |
| Shares of Common Stock outstanding before the Offering | 113,132,110 shares (2) | |
| Shares of Common Stock outstanding after completion of this offering, assuming the sale of all shares offered hereby | 114,469,940 shares | |
| Use of proceeds | We will not receive any proceeds from the resale of the Shares by the Selling Shareholders. All proceeds from the sale of our common stock pursuant to this prospectus will be for ethe accounts of the Selling Shareholders. We cannot precisely estimate the allocation of the net proceeds from any exercise of the warrants for cash. Accordingly, in the event the Warrants are exercised for cash, our management will have broad discretion in the application of the net proceeds of such exercises, which is anticipated to be for general corporate purposes. | |
| Market for Common Stock | Our Common Stock is listed on The Nasdaq Capital Market under the symbol “POWW.” | |
| Risk Factors | Investing in our securities involves a high degree of risk. See the “Risk Factors” section of this prospectus on page 6 and in the documents we incorporate by reference in this prospectus for a discussion of factors you should consider carefully before deciding to invest in our securities. |
| (1) | This amount consists of: (i) 10,000,000 shares of Common Stock issued to one (1) Selling Shareholder pursuant to the Merger Agreement dated as of April 30, 2021; (ii) 1,228,000 shares of Common Stock issued to thirty-six (36) selling Shareholders pursuant to those certain Subscription Agreements entered into in connection with a 2017 friends and family financing; (iii) 408,411 shares of Common Stock issued to five (5) Selling Shareholders pursuant to the Company’s Registration Statement on filed with the SEC on February 17, 2021; (iv) 500,000 shares of Common Stock issued to one (1) Selling Shareholder pursuant to a Services Agreement between the Company and Trending Equities Corp., dated as of May 16, 2021; (v) 250,000 shares of Common Stock issued to one (1) Selling Shareholder pursuant to a Consulting Agreement between the Company and White Bear Group LLC, dated as of May 1, 2021; (vi) 162,830 shares of Common Stock underlying warrants issued to two (2) Selling Shareholders pursuant to the Company’s Registration Statement on Form S-3 filed with the SEC on February 17, 2021 (the “February 2021 Warrants”); and (vii) 1,175,000 shares of Common Stock underlying warrants issued to one (1) Selling Shareholder pursuant to a Soliciting Agent Agreement between the Company and Paulson Investment Company, LLC, dated as of December 21, 2020 (the “December 2020 Warrants,” and together with the February 2021 Warrants, the “Warrants”). |
| (2) | The number of shares of Common Stock outstanding before and after the Offering is based on 112,382,110 shares outstanding as of July 23, 2021 and excludes the following: |
| ● | 3,350,676 shares of Common Stock issuable upon the exercise of outstanding warrants having a weighted average exercise price of $2.32 per share; and | |
| ● | 3,311,920 shares of Common Stock reserved for future issuance under the Company’s Ammo, Inc. 2017 Equity Incentive Plan, as amended. |
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Investment in any securities offered pursuant to this prospectus and the applicable prospectus supplement involves risks. You should carefully consider the risk factors incorporated by reference to our Registration Statement on Form S-3, filed with the SEC on February 17, 2021, as amended, our most recent Annual Report on Form 10-K for the fiscal year ended March 31, 2021 filed with the SEC on June 29, 2021 and any subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K we file after the date of this prospectus, and all other information contained or incorporated by reference into this prospectus, as updated by our subsequent filings under the Exchange Act, and the risk factors and other information contained in the applicable prospectus supplement before acquiring any of such securities. The occurrence of any of these risks might cause you to lose all or part of your investment in the offered securities.
Risks Relating to the Offering
You may lose all of your investment.
Investing in our Common Stock involves a high degree of risk. As an investor, you might never recoup all, or even part of, your investment and you may never realize any return on your investment. You must be prepared to lose all your investment.
The market price of our Common Stock may be highly volatile, you may not be able to resell your shares at or above the public offering price and you could lose all or part of your investment.
The trading price of our Common Stock may be volatile. Our stock price could be subject to wide fluctuations in response to a variety of factors, including the following:
| ● | actual or anticipated fluctuations in our revenue and other operating results; | |
| ● | actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; | |
| ● | issuance of our equity or debt securities, or disclosure or announcements relating thereto; | |
| ● | the lack of a meaningful, consistent and liquid trading market for our Common Stock; | |
| ● | additional shares of our Common Stock being sold into the market by us or our stockholders or the anticipation of such sales; | |
| ● | announcements by us or our competitors of significant events or features, technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; | |
| ● | changes in operating performance and stock market valuations of companies in our industry; | |
| ● | price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; | |
| ● | lawsuits threatened or filed against us; | |
| ● | regulatory developments in the United States and foreign countries; and |
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| ● | other events or factors, including those resulting from the impact of COVID-19 pandemic, war or incidents of terrorism, or responses to these events. |
In addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our Common Stock, regardless of our actual operating performance.
We do not intend to pay dividends on our Common Stock so any returns will be limited to the value of our stock.
We have never declared or paid any cash dividend on our Common Stock. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Additionally, any credit and security agreement that we may enter into in the future will likely contain covenants that will restrict our ability to pay dividends. Any return to stockholders will therefore be limited to the appreciation of their stock.
Sales of a substantial number of shares of our Common Stock in the public market by certain of our stockholders could cause our stock price to fall.
Sales of a substantial number of shares of our Common Stock in the public market or the perception that these sales might occur, could depress the market price of our Common Stock and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our Common Stock.
An active trading market for our Common Stock may not be maintained.
Our Common Stock is currently traded on The Nasdaq Capital Market, but we can provide no assurance that we will be able to maintain an active trading market on this or any other exchange in the future. If an active market for our Common Stock is not maintained, it may be difficult for our stockholders to sell or purchase shares. An inactive market may also impair our ability to raise capital to continue to fund operations by selling shares and impair our ability to acquire other companies or technologies using our shares as consideration.
All proceeds from the resale of the Shares offered by this prospectus will belong to the Selling Shareholders. We will not receive any proceeds from the resale of the Shares by the Selling Shareholders.
We will receive proceeds from any cash exercise of the Warrants. If all such Warrants are fully exercised on a cash basis, we will receive gross cash proceeds of approximately $2,618,669. We expect to use the proceeds from the exercise of such Warrants, if any, for general corporate purposes. General corporate purposes may include providing working capital, funding capital expenditures, or paying for acquisitions. We currently do not have any arrangements or agreements for any acquisitions. We cannot precisely estimate the allocation of the net proceeds from any exercise of the warrants for cash. Accordingly, in the event the Warrants are exercised for cash, our management will have broad discretion in the application of the net proceeds of such exercises. There is no assurance that the January Warrants will ever be exercised for cash.
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This prospectus relates to the resale, from time to time, of up to 13,728,241 shares (the “Shares”) of our common stock, par value $0.001 per share (“Common Stock”), by the Selling Shareholders identified in this prospectus under “Selling Shareholders” (the “Offering”). This amount consists of: (i) 10,000,000 shares of Common Stock issued to one (1) Selling Shareholder pursuant to the Merger Agreement dated as of April 30, 2021; (ii) 1,228,000 shares of Common Stock issued to thirty-six (36) selling Shareholders pursuant to those certain Subscription Agreements entered into in connection with a 2017 friends and family financing; (iii) 408,411 shares of Common Stock issued to five (5) Selling Shareholders pursuant to the Company’s Registration Statement on filed with the SEC on February 17, 2021; (iv) 500,000 shares of Common Stock issued to one (1) Selling Shareholder pursuant to a Services Agreement between the Company and Trending Equities Corp., dated as of May 16, 2021; (v) 250,000 shares of Common Stock issued to one (1) Selling Shareholder pursuant to a Consulting Agreement between the Company and White Bear Group LLC, dated as of May 1, 2021; (vi) 162,830 shares of Common Stock underlying warrants issued to two (2) Selling Shareholders pursuant to the Company’s Registration Statement on Form S-3 filed with the SEC on February 17, 2021 (the “February 2021 Warrants”); and (vii) 1,175,000 shares of Common Stock underlying warrants issued to one (1) Selling Shareholder pursuant to a Soliciting Agent Agreement between the Company and Paulson Investment Company, LLC, dated as of December 21, 2020 (the “December 2020 Warrants,” and together with the February 2021 Warrants, the “Warrants”).
All expenses incurred with respect to the registration of the Common Stock will be borne by us, but we will not be obligated to pay any underwriting fees, discounts, commission or other expenses incurred by the Selling Shareholders in connection with the sale of such shares.
Except for Steven F. Urvan, who is currently serving as our Chief Strategy Officer and is a member of the Company’s Board of Directors, neither the Selling Shareholders nor any of their associates or affiliates has held any position, office, or other material relationship with us in the past three years.
The following table sets forth the names of the Selling Shareholders, the number of shares of Common Stock beneficially owned by the Selling Shareholders as of the date hereof and the number of shares of Common Stock being offered by the Selling Shareholders. The shares being offered hereby are being registered to permit public secondary trading, and the Selling Shareholders may offer all or part of the shares for resale from time to time. However, the Selling Shareholders are under no obligation to sell all or any portion of such shares. All information with respect to share ownership has been furnished by the Selling Shareholders. The “Number of Shares Beneficially Owned After the Offering” column assumes the sale of all shares offered.
The common stock being offered by the Selling Shareholders are those owned by the Selling Shareholders and those issuable to the Selling Shareholders, upon exercise of the Warrants. We are registering the shares of common stock in order to permit the Selling Shareholders to offer these shares for resale from time to time. Except for the investment in the shares of Common Stock the Selling Shareholders other than Mr. Urvan have not had any material relationship with us within the past three years.
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The table below lists the Selling Shareholders and other information regarding the beneficial ownership of the shares of Common Stock by each of the Selling Shareholders. The second column lists the number of shares of Common Stock beneficially owned by each Selling Shareholder, based on its ownership of the shares of Common Stock and warrants, as of the date hereof. The third column lists the shares of Common Stock being offered by this prospectus by the Selling Shareholders. The fourth column lists the number of shares of Common Stock underlying the Warrants to be sold pursuant to this prospectus and the fifth column lists the number of shares of Common Stock owned by each Selling Shareholder after the offering pursuant to this prospectus, assuming the sale of all shares of Common Stock offered hereby.
| Name of Selling Shareholder | Number of Shares of Common Stock Owned Prior to Offering | % of Shares of Common Stock Owned Prior to Offering | Maximum Number of shares of Common Stock to be Sold Pursuant to this Prospectus | Maximum Number of shares of Common Stock underlying Warrants to be Sold Pursuant to this Prospectus | Number of shares of Common Stock Owned After the Offering | |||||||||||||
| Steven F. Urvan | 18,500,000 | (1) | 10,000,000 | 8,500,000 | ||||||||||||||
| Mill City Ventures III LTD | 140,000 | * | 140,000 | - | - | |||||||||||||
| Brandon Glickstein and Charles K Bortz | 42,858 | * | 42,858 | - | - | |||||||||||||
| Ron Wiley | 20,000 | * | 20,000 | - | - | |||||||||||||
| Evan Williams | 57,140 | * | 57,140 | - | - | |||||||||||||
| Pinnacle Family Office Investment L.P. | 148,413 | * | 148,413 | - | - | |||||||||||||
| Richard W. Baskerville Lvg Trust | - | * | - | 103,306 | - | |||||||||||||
| Porter Partners, L.P. | - | * | - | 59,524 | - | |||||||||||||
| James L. Adams | 16,000 | * | 16,000 | - | - | |||||||||||||
| Adam Bloom | 5,000 | * | 5,000 | - | - | |||||||||||||
| Robert Cerrito | 30,000 | * | 30,000 | - | - | |||||||||||||
| Maninder Chatha | 20,000 | * | 20,000 | - | - | |||||||||||||
| Anthony Robert D’Amico | 11,000 | * | 11,000 | - | - | |||||||||||||
| Jimmie D Dixon Jr | 100,000 | * | 100,000 | - | - | |||||||||||||
| Michael Jackson Follmer | 2,000 | * | 2,000 | - | - | |||||||||||||
| William L or Kathryn L Hallas | 1,000 | * | 1,000 | - | - | |||||||||||||
| Roy L Hill | 165,000 | * | 165,000 | - | - | |||||||||||||
| Kastner Family Trust | 3,000 | * | 3,000 | - | - | |||||||||||||
| Ryan Kaulback | 2,000 | * | 2,000 | - | - | |||||||||||||
| Paul Ray King | 4,400 | * | 4,400 | - | - | |||||||||||||
| Taylor Kuehl | 800 | * | 800 | - | - | |||||||||||||
| Austin Kuehl | 800 | * | 800 | - | - | |||||||||||||
| Louis Laskis Irrevocable Trust | 215,000 | * | 215,000 | - | - | |||||||||||||
| Michael A Lechter & Sharon L Lechter Jtten | 40,000 | * | 40,000 | - | - | |||||||||||||
| Michael and Sharon Lechter Revocable Trust | 40,000 | * | 40,000 | - | - | |||||||||||||
| Emily Friel Lopez | 2,000 | * | 2,000 | - | - | |||||||||||||
| Randy Luth | 40,000 | * | 40,000 | - | - | |||||||||||||
| Randy E Luth Revocable Trust | 175,000 | * | 175,000 | - | - | |||||||||||||
| Sherilyn J. Madden | 8,000 | * | 8,000 | - | - | |||||||||||||
| Michael Austin Martin | 80,000 | * | 80,000 | - | - | |||||||||||||
| William Murphy | 60,000 | * | 60,000 | - | - | |||||||||||||
| Joseph Pennella | 20,000 | * | 20,000 | - | - | |||||||||||||
| Louis Piccerillo | 30,000 | * | 30,000 | - | - | |||||||||||||
| Phillip and Kristen Risk | 11,000 | * | 11,000 | - | - | |||||||||||||
| Philip and Nancy Rosenblatt | 40,000 | * | 40,000 | - | - | |||||||||||||
| Frank and Marilyn Santorelli | 32,000 | * | 32,000 | - | - | |||||||||||||
| Arthur F Smith and Cheryl D Smith | 10,000 | * | 10,000 | - | - | |||||||||||||
| Barry Stowe | 2,000 | * | 2,000 | - | - | |||||||||||||
| Brittany Van Horn | 4,000 | * | 4,000 | - | - | |||||||||||||
| Douglas F Walton | 20,000 | * | 20,000 | - | - | |||||||||||||
| Ralph L Westberg Revocable Trust | 25,000 | * | 25,000 | - | - | |||||||||||||
| Michael Wormell | 8,000 | * | 8,000 | - | - | |||||||||||||
| Lawrence Wormell | 5,000 | * | 5,000 | - | - | |||||||||||||
| Shawn Patrick Zelek | 4,000 | * | 4,000 | - | - | |||||||||||||
| Eugene Webb | - | * | - | 1,175,000 | - | |||||||||||||
| Trending Equities | 500,000 | * | 500,000 | - | - | |||||||||||||
| White Bear Group LLC | 250,000 | * | 250,000 | - | - | |||||||||||||
| Total | 20,890,411 | 12,390,411 | 1,337,830 | 8,500,000 | ||||||||||||||
(1) The shares beneficially owned by Mr. Urvan include 14,000,000 shares issued at the closing of the Merger not subject to pledge restriction and 4,500,000 shares (the “Pledged Securities”) subject to a Pledge and Escrow Agreement entered into in connection with the Merger (the “Pledge Agreement”) in order to secure the fulfilment of Mr. Urvan’s indemnification obligations set forth in the Merger Agreement. Pursuant to the Pledge Agreement, Mr. Urvan agreed to irrevocably pledge and grant the Company a continuing lien and security interest in and to the Pledged Securities. Mr. Urvan retained his voting rights with regard to the Pledged Securities.
* Less than 1%
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The Selling Shareholders may, from time to time, sell, transfer, or otherwise dispose of any or all of their shares of common stock on any stock exchange, market, or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices. The Seller Shareholders may use any one or more of the following methods when disposing of shares:
| ● | on any national securities exchange or quotation service on which the shares may be listed or quoted at the time of sale; | |
| ● | in the over-the-counter market; | |
| ● | in transactions otherwise than on these exchanges or systems or in the over-the-counter market; | |
| ● | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; | |
| ● | block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction; | |
| ● | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; | |
| ● | an exchange distribution in accordance with the rules of the applicable exchange; | |
| ● | privately negotiated transactions; | |
| ● | short sales; | |
| ● | through the listing or settlement of options or other hedging transactions, whether such options are listed on an options exchange or otherwise; | |
| ● | broker-dealers may agree with the Selling Shareholders to sell a specified number of such shares at a stipulated price per share; | |
| ● | a combination of any such methods of sale; and | |
| ● | any other method permitted pursuant to applicable law. |
The Selling Shareholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.
If the Selling Shareholders effect such transactions by selling shares of Common Stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions, or commissions from the Seller Stockholders or commissions from purchasers of the shares of Common Stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions, or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the shares of Common Stock or otherwise, the Selling Shareholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of Common Stock in the course of hedging in positions they assume. The Selling Shareholders may also sell shares of Common Stock short and deliver shares of Common Stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The Selling Shareholders may also loan or pledge shares of Common Stock to broker-dealers that in turn may sell such shares.
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The Selling Shareholders may from time to time pledge or grant a security interest in some or all of the shares of Common Stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of Common Stock from time to time under this prospectus after we have filed a supplement to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act supplementing or amending the list of Selling Shareholders to include the pledgee, transferee or other successors in interest as Selling Shareholders under this prospectus. The Selling Shareholders also may transfer or donate the shares of Common Stock in other circumstances, in which case the transferees, donees, pledgees, or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
Under the securities laws of some states, the shares of Common Stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares of Common Stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.
There can be no assurance that any Selling Shareholder will sell any or all of the shares of Common Stock registered pursuant to the registration statement of which this prospectus forms a part.
The Selling Shareholders and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, the anti-manipulation rules of Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the Common Stock by the Selling Shareholders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the shares of Common Stock to engage in market-making activities with respect to the shares of common stock.
In addition, to the extent applicable we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the Selling Shareholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The Seller Stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.
We are required to pay all expenses of the registration of the shares of Common Stock, including SEC filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, that the Selling Shareholders will pay all underwriting discounts and selling commissions, if any, and all fees and expenses of their respective legal counsel. We have agreed to indemnify the Selling Shareholders against liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the shares offered by this prospectus. We may be indemnified by the Selling Shareholders against liabilities, including liabilities under the Securities Act, and state security laws, that may arise from any written information furnished to us by the Selling Shareholders specifically for use in this prospectus.
DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock is not complete and may not contain all the information you should consider before investing in our capital stock. This description is summarized from, and qualified in its entirety by reference to, our Certificate of Incorporation and Bylaws, which have been publicly filed with the SEC. See “Where You Can Find More Information; Incorporation by Reference.”
Our authorized capital stock consists of 200,000,000 shares of common stock, par value of $0.001 per share, and 10,000,000 shares of preferred stock, par value of $0.001 per share. As of July 23, 2021, there were 112,382,110 shares of our Common Stock issued and outstanding held by approximately 313 holders of record.
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Common Stock
Each share of our common stock entitles its holder to one vote in the election of each director and on all other matters voted on generally by our stockholders. No share of our common stock affords any cumulative voting rights. This means that the holders of a majority of the voting power of the shares voting for the election of directors can elect all directors to be elected if they choose to do so.
Holders of our common stock will be entitled to dividends in such amounts and at such times as our Board of Directors in its discretion may declare out of funds legally available for the payment of dividends. We currently do not anticipate paying any cash dividends on the common stock in the foreseeable future. Any future dividends will be paid at the discretion of our Board of Directors after taking into account various factors, including:
| ● | general business conditions; | |
| ● | industry practice; | |
| ● | our financial condition and performance; | |
| ● | our future prospects; | |
| ● | our cash needs and capital investment plans; | |
| ● | our obligations to holders of any preferred stock we may issue; | |
| ● | income tax consequences; and | |
| ● | the restrictions Delaware and other applicable laws and our credit arrangements may impose, from time to time. |
If we liquidate or dissolve our business, the holders of our common stock will share ratably in all our assets that are available for distribution to our stockholders after our creditors are paid in full and the holders of all series of our outstanding preferred stock, if any, receive their liquidation preferences in full.
Our common stock has no preemptive rights and is not convertible or redeemable or entitled to the benefits of any sinking or repurchase fund.
Preferred Stock
The Company has 10,000,000 authorized shares of preferred stock par value $0.001 per share. As of July 23, 2021, there were 1,400,000 shares of Series A Preferred Stock outstanding.
Our Board has the authority, within the limitations and restrictions in our certificate of incorporation, to issue shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series or the designation of any series, without further vote or action by the stockholders. The issuance of shares of preferred stock may have the effect of delaying, deferring or preventing a change in our control without further action by the stockholders. The issuance of shares of preferred stock with voting and conversion rights may adversely affect the voting power of the holders of our common stock. In some circumstances, this issuance could have the effect of decreasing the market price of our common stock.
Undesignated preferred stock may enable our Board to render more difficult or to discourage an attempt to obtain control of the Company by means of a tender offer, proxy contest, merger or otherwise, and thereby to protect the continuity of our management. The issuance of shares of preferred stock may adversely affect the rights of our common stockholders. For example, any shares of preferred stock issued may rank senior to the common stock as to dividend rights, liquidation preference or both, may have full or limited voting rights and may be convertible into shares of common stock. As a result, the issuance of shares of preferred stock, or the issuance of rights to purchase shares of preferred stock, may discourage an unsolicited acquisition proposal or bids for our common stock or may otherwise adversely affect the market price of our common stock or any existing preferred stock.
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Options and Warrants
As of July 23, 2021, there are no outstanding options to purchase our securities.
As of July 23, 2021, we had 3,350,676 warrants outstanding, having a weighted average exercise price of $2.32 per share. Each warrant provides the holder the right to purchase up to one share of our Common Stock at a predetermined exercise price.
Ammo, Inc. 2017 Equity Incentive Plan
As of July 23, 2021, there are 3,311,920 shares of our Common Stock reserved for future issuance under the Ammo, Inc. 2017 Equity Incentive Plan, as amended.
Delaware Anti-takeover Law
We are subject to Section 203 of Delaware Law, an anti-takeover law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years following the date the person became an interested stockholder, unless:
| ● | the board of directors approves the transaction in which the stockholder became an interested stockholder prior to the date the interested stockholder attained that status; | |
| ● | when the stockholder became an interested stockholder, he or she owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding shares owned by persons who are directors and also officers and certain shares owned by employee benefits plans; or | |
| ● | on or subsequent to the date the business combination is approved by the board of directors, the business combination is authorized by the affirmative vote of at least 66 2/3% of the voting stock of the corporation at an annual or special meeting of stockholders. |
Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns, or is an affiliate or associate of the corporation and within three years prior to the determination of interested stockholder status did own, 15% or more of a corporation’s voting stock.
The existence of Section 203 of Delaware Law would be expected to have an anti-takeover effect with respect to transactions not approved in advance by our board of directors, including discouraging attempts that might result in a premium over the market price for the shares of our Common Stock
Lucosky Brookman LLP will pass upon certain legal matters relating to the issuance and sale of the securities offered hereby.
The consolidated balance sheet as of March 31, 2021 and the related consolidated statements of operations, stockholders’ equity, and cash flows are incorporated into this prospectus and in the registration statement by reference and have been incorporated in reliance on the reports of Pannell Kerr Forster Of Texas, P.C., independent registered public accounting firms, included herein, given on the authority of said firm as experts in accounting and auditing
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The consolidated balance sheet as of March 31, 2020 and the related consolidated statements of operations, stockholders’ equity, and cash flows included in this prospectus and in the registration statement have been so included in reliance on the report ( which contains an explanatory paragraph which describe the conditions that raise substantial doubt about the Company’s ability to continue as a going concern and are contained in Note 2 to the consolidated financial statements), of Marcum LLP, independent registered public accounting firms, included herein given on the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
Available Information
We file reports, proxy statements and other information with the SEC. The SEC maintains a web site that contains reports, proxy and information statements and other information about issuers, such as us, who file electronically with the SEC. The address of that website is http://www.sec.gov.
Our website address is https://ammoinc.com. The information on our website, however, is not, and should not be deemed to be, a part of this prospectus.
This prospectus and any prospectus supplement are part of a registration statement that we filed with the SEC and do not contain all of the information in the registration statement. The full registration statement may be obtained from the SEC or us, as provided below. Forms of the documents establishing the terms of the offered securities are or may be filed as exhibits to the registration statement. Statements in this prospectus or any prospectus supplement about these documents are summaries and each statement is qualified in all respects by reference to the document to which it refers. You should refer to the actual documents for a more complete description of the relevant matters. You may inspect a copy of the registration statement through the SEC’s website, as provided above.
The SEC’s rules allow us to “incorporate by reference” information into this prospectus, which means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus, and subsequent information that we file with the SEC will automatically update and supersede that information. Any statement contained in a previously filed document incorporated by reference will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus modifies or replaces that statement.
We incorporate by reference our documents listed below and any future filings made by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, which we refer to as the “Exchange Act” in this prospectus, between the date of this prospectus and the termination of the offering of the securities described in this prospectus. We are not, however, incorporating by reference any documents or portions thereof, whether specifically listed below or filed in the future, that are not deemed “filed” with the SEC, including any information furnished pursuant to Items 2.02 or 7.01 of Form 8-K or related exhibits furnished pursuant to Item 9.01 of Form 8-K.
This prospectus and any accompanying prospectus supplement incorporate by reference the documents set forth below that have previously been filed with the SEC:
| ● | Our Annual Report on Form 10-K for the year ended March 31, 2021, filed with the SEC on June 29, 2021. | |
| ● | Our Current Reports on Form 8-K and Form 8-K/A filed with the SEC on April 1, 2021, April 14, 2021, May 6, 2021, May 13, 2021, May 21, 2021, May 27, 2021, June 21, 2021, June 29, 2021, July 8, 2021 and July 16, 2021. | |
| ● | The description of our common stock contained in our Registration Statement on Form 8-A, filed with the SEC on May 20, 2021, and any amendment or report filed with the SEC for the purpose of updating such description. |
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All reports and other documents we subsequently file pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of this Offering, including all such documents we may file with the SEC after the date of the initial registration statement and prior to the effectiveness of the registration statement, but excluding any information furnished to, rather than filed with, the SEC, will also be incorporated by reference into this prospectus and deemed to be part of this prospectus from the date of the filing of such reports and documents.
You may request a free copy of any of the documents incorporated by reference in this prospectus (other than exhibits, unless they are specifically incorporated by reference in the documents) by writing or telephoning us at the following address:
Ammo, Inc.
7681 East Gray Road
Scottsdale, Arizona 85260
(480) 947-0001
Exhibits to the filings will not be sent, however, unless those exhibits have specifically been incorporated by reference in this prospectus and any accompanying prospectus supplement.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following is an estimate of the expenses (all of which are to be paid by the registrant) that we may incur in connection with the securities being registered hereby.
| SEC registration fee | $ | 10,574* | ||
| Legal fees and expenses | 50,000* | |||
| Accounting fees and expenses | 20,000* | |||
| Total | $ | 80,574* |
| * | Estimated |
Item 15. Indemnification of Directors and Officers
Our certificate of incorporation and bylaws provide that we will indemnify and advance expenses, to the fullest extent permitted by the Delaware General Corporation Law, to each person who is or was a director or officer of our company, or who serves or served any other enterprise or organization at the request of our company (an “indemnitee”).
Under Delaware law, to the extent that an indemnitee is successful on the merits in defense of a suit or proceeding brought against him or her by reason of the fact that he or she is or was a director, officer, or agent of our company, or serves or served any other enterprise or organization at the request of our company, we shall indemnify him or her against expenses (including attorneys’ fees) actually and reasonably incurred in connection with such action.
If unsuccessful in defense of a third-party civil suit or a criminal suit, or if such a suit is settled, an indemnitee may be indemnified under Delaware law against both (1) expenses, including attorney’s fees, and (2) judgments, fines, and amounts paid in settlement if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of our company, and, with respect to any criminal action, had no reasonable cause to believe his or her conduct was unlawful.
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If unsuccessful in defense of a suit brought by or in the right of our company, where the suit is settled, an indemnitee may be indemnified under Delaware law only against expenses (including attorneys’ fees) actually and reasonably incurred in the defense or settlement of the suit if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of our company except that if the indemnitee is adjudged to be liable for negligence or misconduct in the performance of his or her duty to our company, he or she cannot be made whole even for expenses unless a court determines that he or she is fully and reasonably entitled to indemnification for such expenses.
Also under Delaware law, expenses incurred by an officer or director in defending a civil or criminal action, suit, or proceeding may be paid by the registrant in advance of the final disposition of the suit, action, or proceeding upon receipt of an undertaking by or on behalf of the officer or director to repay such amount if it is ultimately determined that he or she is not entitled to be indemnified by our company. We may also advance expenses incurred by other employees and agents of our company upon such terms and conditions, if any, that the Board of Directors of the registrant deems appropriate.
Our articles of incorporation and bylaws provide that we may indemnify to the full extent of our power to do so, all directors, officers, employees, and/or agents.
Item 16. Exhibits
(a) Exhibits
A list of exhibits filed with this registration statement on Form S-3 is set forth on the Exhibit Index and is incorporated herein by reference.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
| (1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
| (i) | To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
| (ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
| (iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
Provided, however, that:
Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
| (2) | That for the purpose of determining any liability under the Securities Act of 1933 each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| (3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
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| (4) | That, for the purpose of determining liability under the Securities Act of 1933 to any purchase for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
| (5) | That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
| (i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
| (ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
| (iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
| (iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
| (6) | The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| (7) | Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described in Item 14 above, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. |
| (8) | The undersigned Registrant hereby undertakes: |
| (1) | That for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. | |
| (2) | That for the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and this offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Scottsdale, State of Arizona, on July 29, 2021.
| Ammo, Inc. | ||
| By: | /s/ Fred Wagenhals | |
| Name: | Fred W. Wagenhals | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
POWER OF ATTORNEY: KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature appears below constitutes and appoints Robert D. Wiley, his true and lawful attorneys-in-fact and agents with full power of substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to sign any registration statement for the same offering covered by the Registration Statement that is to be effective upon filing pursuant to Rule 462(b) promulgated under the Securities Act, and all post-effective amendments thereto, and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his, her or their substitute or substitutes, may lawfully do or cause to be done or by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:
| Signature | Title | Date | ||
| /s/ Fred Wagenhals | Chairman of the Board, and Chief Executive Officer | July 29, 2021 | ||
| Fred Wagenhals | (Principal Executive Officer), Director | |||
| /s/ Robert D. Wiley | Chief Financial Officer | July 29, 2021 | ||
| Robert D. Wiley | (Principal Financial and Principal Accounting Officer) | |||
| /s/ Robert J. Goodmanson | Director and President | July 29, 2021 | ||
| Robert J. Goodmanson | ||||
| /s/ Richard Childress | Director | July 29, 2021 | ||
| Richard Childress | ||||
| /s/ Harry S. Markley | Director | July 29, 2021 | ||
| Harry S. Markley | ||||
| /s/ Russell W. Wallace, Jr. | Director | July 29, 2021 | ||
| Russell W. Wallace, Jr. | ||||
| /s/ Jessica M. Lockett | Director | July 29, 2021 | ||
| Jessica M. Lockett | ||||
| /s/ Steven F. Urvan | Director | July 29, 2021 | ||
| Steven F. Urvan |
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EXHIBIT INDEX
*Filed herewith
# Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company will furnish supplementally copies of omitted schedules and exhibits to the Securities and Exchange Commission or its staff upon its request.
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Exhibit 4.1
PURCHASE WARRANT
Issued to:
Eugene Webb
Exercisable to Purchase
500,000 Shares of Common Stock
of
AMMO, Inc.
Issue Date: December 21, 2020
Expiration Date: December 21, 2025
THE WARRANT REPRESENTED BY THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND THE SECURITIES LAWS OF OTHER JURISDICTIONS, AND, IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH OTHER APPLICABLE LAWS.
This is to certify that, as of December 21, 2020, for value received and subject to the terms and conditions set forth below, the Warrantholder is entitled to purchase, and the Company promises and agrees to sell and issue to the Warrantholder, at any time on or after the Initial Exercise Date and on or before the Expiration Date, up to 500,000 shares of Common Stock at the per share Exercise Price pursuant to this Warrant (the “Warrant”).
This Warrant is issued by the Company pursuant to Section 2(b) of the Soliciting Agent Agreement, subject to the following terms and conditions:
1. Definitions of Certain Terms. Except as may be otherwise clearly required by the context, the following terms have the following meanings:
(a) “Cashless Exercise” means an exercise of a Warrant in which the Warrantholder elects to pay the Exercise Price with Warrant Shares in lieu of payment in cash.
(b) “Common Stock” means the common stock, par value $0.001 per share, of the Company.
(c) “Company” means AMMO, Inc..
(d) “Exercise Price” means $2.00 per share of Common Stock.
(e) “Offering” means the offering of securities made pursuant to the Soliciting Agent Agreement.
(f) “Offering Materials” means the transaction documents and related investment materials described in the Soliciting Agent Agreement.
(g) “Soliciting Agent Agreement” means that certain Soliciting Agent Agreement, dated as of December 21, 2020, between the Company and Paulson Investment Company, LLC.
(h) “Securities Act” means the Securities Act of 1933, as amended.
(i) “Warrant Shares” means the shares of Common Stock for which this Warrant is exercisable.
(j) “Warrantholder” means the record holder of the Warrant.
2. Exercise of Warrant.
(a) All or any part of the Warrant may be exercised commencing on the Issue Date (the “Initial Exercise Date”) and ending at 5:00 p.m. Pacific Time on the five-year anniversary of the Issue Date (the “Expiration Date”) by surrendering this Warrant, together with the aggregate Exercise Price and appropriate instructions included on the Exercise Form attached hereto as Exhibit A (“Notice of Exercise”), duly executed by the Warrantholder or by its duly authorized attorney, at the office of the Company, 7681 East Gray Road Scottsdale, Arizona 85260; or at such other office or agency as the Company may designate. The date on which the Company receives the Notice of Exercise shall be the date of exercise.
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(b) If the Warrantholder elects a Cashless Exercise, the Warrantholder shall surrender shares of Common Stock equal in value to the Exercise Price as payment of the Exercise Price with its Notice of Exercise as provided in Section 2(b), and the Company shall issue to the Warrantholder a number of shares of Common Stock computed using the following formula:
| X = |  |
| Where: | X = | The number of shares of Common Stock to be issued to the Warrantholder pursuant to a Cashless Exercise | |
| Y = | The number of shares of Common Stock in respect of which the Cashless Exercise election is made | ||
| A = | The fair market value of one share of Common Stock at the time the Cashless Exercise election is made | ||
| B = | The Exercise Price (as adjusted to the date of the Cashless Exercise) |
For purposes of this Section 2(b), the fair market value of one share of Common Stock as of a particular date shall be determined as follows: (i) if traded on a national securities exchange, the value shall be deemed to be the closing price of the Common Stock on such exchange on the day prior to the Cashless Exercise; (ii) if traded over-the-counter, the value shall be deemed to be the mean of the closing bid and ask price of the Common Stock on the day prior to the Cashless Exercise; and (iii) if there is no active public market, the value shall be equal to the lower of (1) the most recent value of the Company’s Common Stock or Common Stock equivalent granted to an employee or consultant and (2) the most recent issue or sale price of the Company’s Common Stock.
(c) Subject to the provisions below, upon receipt of the Notice of Exercise, this Warrant and payment in full in cash or in surrender of Warrant Shares, the Company shall promptly issue the Warrant Shares to the Warrantholder pursuant to the instructions in the Notice of Exercise. If the Warrantholder requests book-entry shares, the Company shall cause the Warrant Shares to be transmitted by its transfer agent to the Warrantholder by crediting the account of the Warrantholder or its designee with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in that system and either (i) there is an effective registration statement or applicable exemption permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Warrantholder or (ii) this Warrant is being exercised by Cashless Exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. If the Company is not a DWAC participant or the Warrantholder requests a physical certificate representing the Warrant Shares, the Company shall issue and deliver a physical certificate representing the Warrant Shares to the Warrantholder. The Warrant Shares to be obtained on exercise of the Warrant will be deemed to have been issued, and any person exercising the Warrant will be deemed to have become a holder of record of those Warrant Shares, as of the later of (i) the date the Company receives the Notice of Exercise and (ii) the date the Company receives available funds in cash in payment of the Exercise Price (the “Notice Date”). If the Warrant Shares are delivered via DWAC or by physical delivery, the Company must deliver the Warrant Shares within three business days of the Notice Date (the “Warrant Share Delivery Date”).
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(d) If the Company does not deliver the Warrant Shares by the Warrant Share Delivery Date, the Company shall pay to the Warrantholder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the value of the Common Stock on the date of the applicable Notice of Exercise), $10 per business day (increasing to $20 per business day on the fifth business day after such liquidated damages begin to accrue) for each business day after the Warrant Share Delivery Date until the Warrant Shares are delivered or Warrantholder rescinds its Notice of Exercise.
(e) No fractional shares of Common Stock will be issued in connection with the exercise of the Warrant. If an exercise of the Warrant would result in a fractional Warrant Share, the number of Warrant Shares to be issued shall be rounded to the nearest whole number.
(f) Upon the exercise of the Warrant and at the request of the Warrantholder, the Company shall engage counsel to issue any legal opinion required to sell or otherwise transfer the Warrant Shares and pay for the provision of the legal opinion and any associated costs.
(g) If fewer than all the Warrant Shares purchasable under the Warrant are purchased, the Company will, upon such partial exercise, execute and deliver to the Warrantholder a new Warrant (dated the date hereof), in form and tenor similar to this Warrant, evidencing that portion of the Warrant not exercised.
(h) Notwithstanding the foregoing, in no event shall Warrant Shares be issued, and the Company is authorized to refuse to honor the exercise of the Warrant, if exercise of the Warrant would result in the opinion of the Company’s Board of Directors, upon advice of counsel, in the violation of any law.
3. Adjustments in Certain Events. The number, class, and price of Warrant Shares for which this Warrant may be exercised are subject to adjustment from time to time as follows:
(a) Adjustment for Stock Splits and Combinations. If the outstanding shares of the Company’s Common Stock are divided into a greater number of shares or a dividend in stock is paid on the Common Stock, the number of shares of Common Stock for which the Warrant is then exercisable will be proportionately increased and the Exercise Price will be proportionately reduced; and, conversely, if the outstanding shares of Common Stock are combined into a smaller number of shares of Common Stock, the number of shares of Common Stock for which the Warrant is then exercisable will be proportionately reduced and the Exercise Price will be proportionately increased. The increases and reductions provided for in this Section 3(a) will be made with the intent and, as nearly as practicable, the effect that neither the percentage of the total equity of the Company obtainable on exercise of the Warrant nor the price payable for such percentage upon such exercise will be affected by any event described in this Section 3(a). Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision or combination.
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(b) Adjustment for Merger or Reorganization. In case of any change in the Common Stock through merger, consolidation, reclassification, reorganization, partial or complete liquidation, purchase of substantially all the assets of the Company, or other change in the capital structure of the Company, then, as a condition of such change, lawful and adequate provision will be made so that the Warrantholder will have the right thereafter to receive upon the exercise of the Warrant the kind and amount of shares of stock or other securities or property to which the Warrantholder would have been entitled if, immediately prior to such event, the Warrantholder had held the number of shares of Common Stock obtainable upon the exercise of the Warrant. In any such case, appropriate adjustment will be made in the application of the provisions set forth herein with respect to the rights and interest thereafter of the Warrantholder, to the end that the provisions set forth herein will thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other securities or property thereafter deliverable upon the exercise of the Warrant. The Company will not permit any change in its capital structure to occur unless the issuer of the shares of stock or other securities to be received by the holder of this Warrant, if not the Company, agrees to be bound by and comply with the provisions of this Warrant.
(c) Right to Distributions. If securities of the Company or securities of any subsidiary of the Company are distributed pro rata to holders of Common Stock, such number of securities will be distributed to the Warrantholder or its assignee upon exercise of its rights hereunder as such Warrantholder or assignee would have been entitled to if this Warrant had been exercised prior to the record date for such distribution. The provisions with respect to adjustment of the Common Stock provided in this Section 3 will also apply to the securities to which the Warrantholder or its assignee is entitled under this Section 3(d).
(d) Certificate of Adjustments. When any adjustment is required to be made in the number of Warrant Shares issuable upon exercise of the Warrant, the Company will promptly determine the new number of Warrant Shares and shall (i) prepare and retain on file a statement in its corporate records describing in reasonable detail the method used in arriving at the new number of Warrant Shares and (ii) cause a copy of such statement to be mailed to the Warrantholder within 30 days after the date of the event giving rise to the adjustment.
(e) Special Definitions. For the purposes of this Section 3, the following definitions shall apply:
(i) “Option” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.
(ii) “Convertible Securities” shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock, but excluding Options.
(iii) “Additional Shares of Common Stock” shall mean all shares of Common Stock issued or deemed to be issued by the Company after the date hereof, other than (1) shares of Common Stock, Options or Convertible Securities issued by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by this Section 3; (2) shares of Common Stock or Convertible Securities actually issued upon the exercise of Options or shares of Common Stock actually issued upon the conversion or exchange of Convertible Securities, in each case provided such issuance is pursuant to the terms of such Option or Convertible Security; and (3) shares of Common Stock deemed issued pursuant to the following Options and Convertible Securities (clauses (1) through (3), collectively, “Exempted Securities”).
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4. Reservation of Shares. The Company agrees that the number of shares of Common Stock sufficient to provide for the exercise of the Warrant upon the basis set forth above will, at all times during the term of the Warrant, be reserved for issuance.
5. Validity of Shares. All Warrant Shares delivered upon the exercise of the Warrant will be duly and validly issued in accordance with their terms and, upon payment of the Exercise Price, will be fully paid and non-assessable. The Company will pay all documentary and transfer taxes, if any, in respect of the original issuance thereof upon exercise of the Warrant.
6. Transferability.
(a) Subject to compliance with any applicable securities laws, the Warrant may be transferred to individuals who are members, a partner, officer or other representative, affiliate or stakeholder of Paulson Investment Company, LLC. The Warrant may be divided or combined, upon request to the Company by the Warrantholder, into additional Warrants evidencing the same aggregate number of Warrant Shares. Any such transfer shall be effected upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of the Warrant substantially in the form attached hereto as Exhibit B duly executed by the Warrantholder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of the Warrant not so assigned, and this Warrant shall promptly be cancelled.
7. Securities Act Compliance. The Warrantholder hereby represents: (a) that this Warrant and any Warrant Shares will be acquired for investment for the Warrantholder’s own account and not with a view to the resale or distribution of any part thereof, and (b) that the Warrantholder is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. The Company may place conspicuously upon each certificate representing the Warrant Shares a legend substantially in the following form, the terms of which are agreed to by the Warrantholder:
“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND THE SECURITIES LAWS OF OTHER JURISDICTIONS AND, IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH OTHER APPLICABLE LAWS.”
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8. No Rights as a Shareholder. Except as otherwise provided herein, the Warrantholder will not, by virtue of ownership of the Warrant, be entitled to any rights of a shareholder of the Company but will, upon written request to the Company, be entitled to receive such quarterly or annual reports as the Company distributes to its shareholders.
9. Notice. Any notices required or permitted to be given hereunder will be in writing and may be served personally or by mail, including by e-mail; and if served will be addressed as follows:
| If to the Company: | AMMO, Inc. Attn: Robert Wiley 7681 East Gray Road Scottsdale, AZ 85260 Email: rob@ammo-inc.com
|
If to the Warrantholder:
With a copy (which shall not constitute notice) to: |
Attention: [____]
Harter Secrest & Emery LLP 1600 Bausch & Lomb Place Rochester, NY 14604 Attention: James M. Jenkins, Esq. |
Any notice so given by mail will be deemed effectively given 48 hours after mailing when deposited in the United States mail, registered or certified mail, return receipt requested, postage prepaid and addressed as specified above. Any notice given by e-mail must be accompanied by confirmation of receipt, and will be deemed effectively given upon confirmation of such receipt. Any party may by written notice to the other specify a different address for notice purposes.
10. Miscellaneous.
(a) Applicable Law and Jurisdiction. Any disputes arising under or relating to this Warrant shall be submitted to binding arbitration in New York, New York under the auspices of FINRA Dispute Resolution. The decision of the arbitrator will be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having jurisdiction. The Company and Warrantholder shall each pay one-half of the costs and expenses of such arbitration, and each shall separately pay its counsel fees and expenses. Notwithstanding the foregoing, the Warrantholder may bring an action solely for equitable, declaratory, or injunctive relief relating to its rights and the Company’s obligations under this Warrant in the federal or state courts of New York County, and the Company hereby waives any objection to the laying of venue or jurisdiction in those courts.
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(b) Remedies. The Warrantholder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, is entitled to specific performance of its rights and the Company’s duties under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of the Company’s breach of the provisions of this Warrant and the Company hereby agrees to waive and not to assert the defense that a remedy at law would be adequate in any action for specific performance relating to this Warrant.
(c) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
(d) Non-Waiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Warrantholder shall operate as a waiver of such right or otherwise prejudice the Warrantholder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Warrantholder, the Company shall pay to the Warrantholder such amounts as shall be sufficient to cover any reasonable costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Warrantholder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
(e) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Warrantholder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Warrantholder, shall give rise to any liability of the Warrantholder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
(f) Successors and Assigns. This Warrant may be assigned by the Warrantholder in accordance with applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Warrantholder. The provisions of this Warrant are intended to be for the benefit of any Warrantholder from time to time of this Warrant and shall be enforceable by the Warrantholder or holder of Warrant Shares.
(g) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Warrantholder.
(h) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
(i) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
[Signature page follows.]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
| AMMO, Inc. | ||
| By: | ||
| Name: | Robert Wiley | |
| Title: | Chief Financial Officer | |
[Soliciting Agent Warrant]
Exhibit A
EXERCISE FORM
(To Be Executed by the Warrantholder to Exercise the Warrant)
| TO: | AMMO, Inc. |
| (1) | The undersigned hereby irrevocably elects to exercise the right to purchase _________ shares of Common Stock, represented by the enclosed Warrant as follows: |
| [ ] | Exercise for Cash. Pursuant to Section 2(a) of the Warrant, the Warrantholder hereby elects to exercise the Warrant for cash and tenders payment herewith (or has made a wire transfer) to the order of [Company Name] in the amount of $____________. | ||
| [ ] | Cashless Exercise. Pursuant to Section 2(b) of the Warrant, the Warrantholder hereby elects to exercise _______ of the Warrant on a cashless basis resulting in ______ common stock shares to be issued. |
| (2) | The undersigned requests that the applicable number of shares of Common Stock be issued as follows pursuant to Section 2(c) of the Warrant: |
| [ ] | Book-Entry Shares to be delivered via DWAC. | |
| [ ] | Certificated Shares to be delivered to the address below. |
| (3) | The undersigned requests that the applicable number of shares of Common Stock be issued and delivered to the following address: |
| Name: | |||
| DWAC Account Number: | (if applicable) | ||
| Address: | |||
| Email: |
| (4) | The undersigned understands, agrees and recognizes that: |
| a. | No federal or state agency has made any finding or determination as to the fairness of the investment or any recommendation or endorsement of the securities. |
| A-i |
| b. | All certificates evidencing the shares of Common Stock, if any, may bear a legend substantially similar to the legend set forth in Section 7 of the Warrant regarding resale restrictions. |
| (5) | The undersigned acknowledges that the undersigned has received, read and understood the Warrant and agrees to abide by and be bound by its terms and conditions. |
| Dated: _____________, 20___. | ||
| By: | ||
| Name: | ||
| Title: |
| Note: Signature must correspond with the name as written upon the face of the Warrant in all respects, without alteration or enlargement or any change whatsoever. |
[Soliciting Agent Warrant Exercise Form]
| A-ii |
Exhibit B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
| TO: | AMMO, Inc. |
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to:
| Name: | ||
| (Please Print) | ||
| Address: | ||
| Phone Number: | ||
| Email Address: | ||
| Date: | ||
Warrantholder’s Signature: |
||
| Warrantholder’s Name: | ||
| (Please Print) |
[Soliciting Agent Warrant Assignment Form]
| B-i |
Exhibit 4.2
PURCHASE WARRANT
Issued to:
Eugene Webb
Exercisable to Purchase
675,000 Shares of Common Stock
of
AMMO, Inc.
Issue Date: February 17, 2021
Expiration Date: February 17, 2026
THE WARRANT REPRESENTED BY THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND THE SECURITIES LAWS OF OTHER JURISDICTIONS, AND, IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH OTHER APPLICABLE LAWS.
This is to certify that, as of February 17, 2021, for value received and subject to the terms and conditions set forth below, the Warrantholder is entitled to purchase, and the Company promises and agrees to sell and issue to the Warrantholder, at any time on or after the Initial Exercise Date and on or before the Expiration Date, up to 675,000 shares of Common Stock at the per share Exercise Price pursuant to this Warrant (the “Warrant”).
This Warrant is issued by the Company pursuant to Section 2(b) of the Soliciting Agent Agreement, subject to the following terms and conditions:
1. Definitions of Certain Terms. Except as may be otherwise clearly required by the context, the following terms have the following meanings:
(a) “Cashless Exercise” means an exercise of a Warrant in which the Warrantholder elects to pay the Exercise Price with Warrant Shares in lieu of payment in cash.
(b) “Common Stock” means the common stock, par value $0.001 per share, of the Company.
(c) “Company” means AMMO, Inc..
(d) “Exercise Price” means $2.00 per share of Common Stock.
(e) “Offering” means the offering of securities made pursuant to the Soliciting Agent Agreement.
(f) “Offering Materials” means the transaction documents and related investment materials described in the Soliciting Agent Agreement.
(g) “Soliciting Agent Agreement” means that certain Soliciting Agent Agreement, dated as of December 21, 2020, between the Company and Paulson Investment Company, LLC.
(h) “Securities Act” means the Securities Act of 1933, as amended.
(i) “Warrant Shares” means the shares of Common Stock for which this Warrant is exercisable.
(j) “Warrantholder” means the record holder of the Warrant.
2. Exercise of Warrant.
(a) All or any part of the Warrant may be exercised commencing on the Issue Date (the “Initial Exercise Date”) and ending at 5:00 p.m. Pacific Time on the five-year anniversary of the Issue Date (the “Expiration Date”) by surrendering this Warrant, together with the aggregate Exercise Price and appropriate instructions included on the Exercise Form attached hereto as Exhibit A (“Notice of Exercise”), duly executed by the Warrantholder or by its duly authorized attorney, at the office of the Company, 7681 East Gray Road Scottsdale, Arizona 85260; or at such other office or agency as the Company may designate. The date on which the Company receives the Notice of Exercise shall be the date of exercise.
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(b) If the Warrantholder elects a Cashless Exercise, the Warrantholder shall surrender shares of Common Stock equal in value to the Exercise Price as payment of the Exercise Price with its Notice of Exercise as provided in Section 2(b), and the Company shall issue to the Warrantholder a number of shares of Common Stock computed using the following formula:
| X = |  |
| Where: | X = | The number of shares of Common Stock to be issued to the Warrantholder pursuant to a Cashless Exercise | |
| Y = | The number of shares of Common Stock in respect of which the Cashless Exercise election is made | ||
| A = | The fair market value of one share of Common Stock at the time the Cashless Exercise election is made | ||
| B = | The Exercise Price (as adjusted to the date of the Cashless Exercise) |
For purposes of this Section 2(b), the fair market value of one share of Common Stock as of a particular date shall be determined as follows: (i) if traded on a national securities exchange, the value shall be deemed to be the closing price of the Common Stock on such exchange on the day prior to the Cashless Exercise; (ii) if traded over-the-counter, the value shall be deemed to be the mean of the closing bid and ask price of the Common Stock on the day prior to the Cashless Exercise; and (iii) if there is no active public market, the value shall be equal to the lower of (1) the most recent value of the Company’s Common Stock or Common Stock equivalent granted to an employee or consultant and (2) the most recent issue or sale price of the Company’s Common Stock.
(c) Subject to the provisions below, upon receipt of the Notice of Exercise, this Warrant and payment in full in cash or in surrender of Warrant Shares, the Company shall promptly issue the Warrant Shares to the Warrantholder pursuant to the instructions in the Notice of Exercise. If the Warrantholder requests book-entry shares, the Company shall cause the Warrant Shares to be transmitted by its transfer agent to the Warrantholder by crediting the account of the Warrantholder or its designee with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in that system and either (i) there is an effective registration statement or applicable exemption permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Warrantholder or (ii) this Warrant is being exercised by Cashless Exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. If the Company is not a DWAC participant or the Warrantholder requests a physical certificate representing the Warrant Shares, the Company shall issue and deliver a physical certificate representing the Warrant Shares to the Warrantholder. The Warrant Shares to be obtained on exercise of the Warrant will be deemed to have been issued, and any person exercising the Warrant will be deemed to have become a holder of record of those Warrant Shares, as of the later of (i) the date the Company receives the Notice of Exercise and (ii) the date the Company receives available funds in cash in payment of the Exercise Price (the “Notice Date”). If the Warrant Shares are delivered via DWAC or by physical delivery, the Company must deliver the Warrant Shares within three business days of the Notice Date (the “Warrant Share Delivery Date”).
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(d) If the Company does not deliver the Warrant Shares by the Warrant Share Delivery Date, the Company shall pay to the Warrantholder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the value of the Common Stock on the date of the applicable Notice of Exercise), $10 per business day (increasing to $20 per business day on the fifth business day after such liquidated damages begin to accrue) for each business day after the Warrant Share Delivery Date until the Warrant Shares are delivered or Warrantholder rescinds its Notice of Exercise.
(e) No fractional shares of Common Stock will be issued in connection with the exercise of the Warrant. If an exercise of the Warrant would result in a fractional Warrant Share, the number of Warrant Shares to be issued shall be rounded to the nearest whole number.
(f) Upon the exercise of the Warrant and at the request of the Warrantholder, the Company shall engage counsel to issue any legal opinion required to sell or otherwise transfer the Warrant Shares and pay for the provision of the legal opinion and any associated costs.
(g) If fewer than all the Warrant Shares purchasable under the Warrant are purchased, the Company will, upon such partial exercise, execute and deliver to the Warrantholder a new Warrant (dated the date hereof), in form and tenor similar to this Warrant, evidencing that portion of the Warrant not exercised.
(h) Notwithstanding the foregoing, in no event shall Warrant Shares be issued, and the Company is authorized to refuse to honor the exercise of the Warrant, if exercise of the Warrant would result in the opinion of the Company’s Board of Directors, upon advice of counsel, in the violation of any law.
3. Adjustments in Certain Events. The number, class, and price of Warrant Shares for which this Warrant may be exercised are subject to adjustment from time to time as follows:
(a) Adjustment for Stock Splits and Combinations. If the outstanding shares of the Company’s Common Stock are divided into a greater number of shares or a dividend in stock is paid on the Common Stock, the number of shares of Common Stock for which the Warrant is then exercisable will be proportionately increased and the Exercise Price will be proportionately reduced; and, conversely, if the outstanding shares of Common Stock are combined into a smaller number of shares of Common Stock, the number of shares of Common Stock for which the Warrant is then exercisable will be proportionately reduced and the Exercise Price will be proportionately increased. The increases and reductions provided for in this Section 3(a) will be made with the intent and, as nearly as practicable, the effect that neither the percentage of the total equity of the Company obtainable on exercise of the Warrant nor the price payable for such percentage upon such exercise will be affected by any event described in this Section 3(a). Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision or combination.
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(b) Adjustment for Merger or Reorganization. In case of any change in the Common Stock through merger, consolidation, reclassification, reorganization, partial or complete liquidation, purchase of substantially all the assets of the Company, or other change in the capital structure of the Company, then, as a condition of such change, lawful and adequate provision will be made so that the Warrantholder will have the right thereafter to receive upon the exercise of the Warrant the kind and amount of shares of stock or other securities or property to which the Warrantholder would have been entitled if, immediately prior to such event, the Warrantholder had held the number of shares of Common Stock obtainable upon the exercise of the Warrant. In any such case, appropriate adjustment will be made in the application of the provisions set forth herein with respect to the rights and interest thereafter of the Warrantholder, to the end that the provisions set forth herein will thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other securities or property thereafter deliverable upon the exercise of the Warrant. The Company will not permit any change in its capital structure to occur unless the issuer of the shares of stock or other securities to be received by the holder of this Warrant, if not the Company, agrees to be bound by and comply with the provisions of this Warrant.
(c) Right to Distributions. If securities of the Company or securities of any subsidiary of the Company are distributed pro rata to holders of Common Stock, such number of securities will be distributed to the Warrantholder or its assignee upon exercise of its rights hereunder as such Warrantholder or assignee would have been entitled to if this Warrant had been exercised prior to the record date for such distribution. The provisions with respect to adjustment of the Common Stock provided in this Section 3 will also apply to the securities to which the Warrantholder or its assignee is entitled under this Section 3(d).
(d) Certificate of Adjustments. When any adjustment is required to be made in the number of Warrant Shares issuable upon exercise of the Warrant, the Company will promptly determine the new number of Warrant Shares and shall (i) prepare and retain on file a statement in its corporate records describing in reasonable detail the method used in arriving at the new number of Warrant Shares and (ii) cause a copy of such statement to be mailed to the Warrantholder within 30 days after the date of the event giving rise to the adjustment.
(e) Special Definitions. For the purposes of this Section 3, the following definitions shall apply:
(i) “Option” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.
(ii) “Convertible Securities” shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock, but excluding Options.
(iii) “Additional Shares of Common Stock” shall mean all shares of Common Stock issued or deemed to be issued by the Company after the date hereof, other than (1) shares of Common Stock, Options or Convertible Securities issued by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by this Section 3; (2) shares of Common Stock or Convertible Securities actually issued upon the exercise of Options or shares of Common Stock actually issued upon the conversion or exchange of Convertible Securities, in each case provided such issuance is pursuant to the terms of such Option or Convertible Security; and (3) shares of Common Stock deemed issued pursuant to the following Options and Convertible Securities (clauses (1) through (3), collectively, “Exempted Securities”).
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4. Reservation of Shares. The Company agrees that the number of shares of Common Stock sufficient to provide for the exercise of the Warrant upon the basis set forth above will, at all times during the term of the Warrant, be reserved for issuance.
5. Validity of Shares. All Warrant Shares delivered upon the exercise of the Warrant will be duly and validly issued in accordance with their terms and, upon payment of the Exercise Price, will be fully paid and non-assessable. The Company will pay all documentary and transfer taxes, if any, in respect of the original issuance thereof upon exercise of the Warrant.
6. Transferability.
(a) Subject to compliance with any applicable securities laws, the Warrant may be transferred to individuals who are members, a partner, officer or other representative, affiliate or stakeholder of Paulson Investment Company, LLC. The Warrant may be divided or combined, upon request to the Company by the Warrantholder, into additional Warrants evidencing the same aggregate number of Warrant Shares. Any such transfer shall be effected upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of the Warrant substantially in the form attached hereto as Exhibit B duly executed by the Warrantholder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of the Warrant not so assigned, and this Warrant shall promptly be cancelled.
7. Securities Act Compliance. The Warrantholder hereby represents: (a) that this Warrant and any Warrant Shares will be acquired for investment for the Warrantholder’s own account and not with a view to the resale or distribution of any part thereof, and (b) that the Warrantholder is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. The Company may place conspicuously upon each certificate representing the Warrant Shares a legend substantially in the following form, the terms of which are agreed to by the Warrantholder:
“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND THE SECURITIES LAWS OF OTHER JURISDICTIONS AND, IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH OTHER APPLICABLE LAWS.”
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8. No Rights as a Shareholder. Except as otherwise provided herein, the Warrantholder will not, by virtue of ownership of the Warrant, be entitled to any rights of a shareholder of the Company but will, upon written request to the Company, be entitled to receive such quarterly or annual reports as the Company distributes to its shareholders.
9. Notice. Any notices required or permitted to be given hereunder will be in writing and may be served personally or by mail, including by e-mail; and if served will be addressed as follows:
| If to the Company: | AMMO, Inc. Attn: Robert Wiley 7681 East Gray Road Scottsdale, AZ 85260 Email: rob@ammo-inc.com
|
If to the Warrantholder:
With a copy (which shall not constitute notice) to: |
Attention: [____]
Harter Secrest & Emery LLP 1600 Bausch & Lomb Place Rochester, NY 14604 Attention: James M. Jenkins, Esq. |
Any notice so given by mail will be deemed effectively given 48 hours after mailing when deposited in the United States mail, registered or certified mail, return receipt requested, postage prepaid and addressed as specified above. Any notice given by e-mail must be accompanied by confirmation of receipt, and will be deemed effectively given upon confirmation of such receipt. Any party may by written notice to the other specify a different address for notice purposes.
10. Miscellaneous.
(a) Applicable Law and Jurisdiction. Any disputes arising under or relating to this Warrant shall be submitted to binding arbitration in New York, New York under the auspices of FINRA Dispute Resolution. The decision of the arbitrator will be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having jurisdiction. The Company and Warrantholder shall each pay one-half of the costs and expenses of such arbitration, and each shall separately pay its counsel fees and expenses. Notwithstanding the foregoing, the Warrantholder may bring an action solely for equitable, declaratory, or injunctive relief relating to its rights and the Company’s obligations under this Warrant in the federal or state courts of New York County, and the Company hereby waives any objection to the laying of venue or jurisdiction in those courts.
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(b) Remedies. The Warrantholder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, is entitled to specific performance of its rights and the Company’s duties under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of the Company’s breach of the provisions of this Warrant and the Company hereby agrees to waive and not to assert the defense that a remedy at law would be adequate in any action for specific performance relating to this Warrant.
(c) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
(d) Non-Waiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Warrantholder shall operate as a waiver of such right or otherwise prejudice the Warrantholder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Warrantholder, the Company shall pay to the Warrantholder such amounts as shall be sufficient to cover any reasonable costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Warrantholder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
(e) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Warrantholder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Warrantholder, shall give rise to any liability of the Warrantholder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
(f) Successors and Assigns. This Warrant may be assigned by the Warrantholder in accordance with applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Warrantholder. The provisions of this Warrant are intended to be for the benefit of any Warrantholder from time to time of this Warrant and shall be enforceable by the Warrantholder or holder of Warrant Shares.
(g) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Warrantholder.
(h) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
(i) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
[Signature page follows.]
| 7 |
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
| AMMO, Inc. | ||
| By: | ||
| Name: | Robert Wiley | |
| Title: | Chief Financial Officer | |
[Soliciting Agent Warrant]
Exhibit A
EXERCISE FORM
(To Be Executed by the Warrantholder to Exercise the Warrant)
| TO: | AMMO, Inc. |
| (1) | The undersigned hereby irrevocably elects to exercise the right to purchase _________ shares of Common Stock, represented by the enclosed Warrant as follows: |
| [ ] | Exercise for Cash. Pursuant to Section 2(a) of the Warrant, the Warrantholder hereby elects to exercise the Warrant for cash and tenders payment herewith (or has made a wire transfer) to the order of [Company Name] in the amount of $____________. | |
| [ ] | Cashless Exercise. Pursuant to Section 2(b) of the Warrant, the Warrantholder hereby elects to exercise _______ of the Warrant on a cashless basis resulting in ______ common stock shares to be issued. |
| (2) | The undersigned requests that the applicable number of shares of Common Stock be issued as follows pursuant to Section 2(c) of the Warrant: |
| [ ] | Book-Entry Shares to be delivered via DWAC. | |
| [ ] | Certificated Shares to be delivered to the address below. |
| (3) | The undersigned requests that the applicable number of shares of Common Stock be issued and delivered to the following address: |
| Name: | |||
| DWAC Account Number: | (if applicable) | ||
| Address: | |||
| Email: |
| (4) | The undersigned understands, agrees and recognizes that: |
| a. | No federal or state agency has made any finding or determination as to the fairness of the investment or any recommendation or endorsement of the securities. |
| A-i |
| b. | All certificates evidencing the shares of Common Stock, if any, may bear a legend substantially similar to the legend set forth in Section 7 of the Warrant regarding resale restrictions. |
| (5) | The undersigned acknowledges that the undersigned has received, read and understood the Warrant and agrees to abide by and be bound by its terms and conditions. |
| Dated: _____________, 20___. | ||
| By: | ||
| Name: | ||
| Title: |
| Note: Signature must correspond with the name as written upon the face of the Warrant in all respects, without alteration or enlargement or any change whatsoever. |
[Soliciting Agent Warrant Exercise Form]
| A-ii |
Exhibit B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
| TO: | AMMO, Inc. |
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to:
| Name: | ||
| (Please Print) | ||
| Address: | ||
| Phone Number: | ||
| Email Address: | ||
| Date: | ||
| Warrantholder’s Signature: |
||
| Warrantholder’s Name: | ||
| (Please Print) |
[Soliciting Agent Warrant Assignment Form]
| B-i |
EXHIBIT 5.1
|
LUCOSKY BROOKMAN LLP 101 Wood Avenue South 5th Floor Woodbridge, NJ 08830
T - (732) 395-4400 F- (732) 395-4401 |
| July 29, 2021 | |
111 Broadway Suite 807 New York, NY 10006
T - (212) 332-8160 F - (212) 332-8161 | |
AMMO, Inc. 7681 East Gray Road Scottsdale, Arizona 85260 |
|
| www. lucbro.com |
| RE: | Registration Statement on Form S-3; 13,728,241 Shares of Common Stock of AMMO, Inc., par value $0.001 per share |
Ladies and Gentlemen:
We are acting as counsel for AMMO, Inc., a Delaware corporation (the “Company”), in connection with the registration for resale from time to time by certain selling shareholders (the “Selling Shareholders”) named in the Prospectus (as defined below) of up to 13,728,241 shares (the “Shares”) of the Company’s common stock, $0.001 par value per share (the “Common Stock”). The Shares include (i) 12,390,411 shares of Common Stock issued by the Company to the Selling Shareholders (the “Common Shares”) and (ii) 1,337,830 shares of Common Stock issuable upon the exercise of warrants issued to the Selling Shareholders (the “Warrant Holders”) by the Company (the “Warrants,” and the Shares of Common Stock issuable upon exercise of the Warrants, the “Warrant Shares”). The Shares are included in a registration statement on Form S-3 (the “Registration Statement”) under the Securities Act of 1933, as amended (the “Act”), and the related prospectus included in the Registration Statement (the “Prospectus”), filed with the Securities and Exchange Commission (the “Commission”) on July 29, 2021.
This opinion is being furnished in connection with the requirements of Item 601(b)(5) of Regulation S-K under the Act, and no opinion is expressed herein as to any matter pertaining to the contents of the Registration Statement or related Prospectus, other than as expressly stated herein with respect to the issue of the Shares. It is understood that the opinions set forth below are to be used only in connection with the offer while the Registration Statement is in effect.
In rendering these opinions, we have examined the Company’s Certificate of Incorporation and Bylaws, both as amended and currently in effect, the Registration Statement, and the exhibits thereto, and such other records, instruments and documents as we have deemed advisable in order to render these opinions. In such examination, we have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, conformed or photo static copies and the authenticity of the originals of such latter documents. In providing these opinions, we have further relied as to certain matters on information obtained from officers of the Company. We are opining herein as to the General Corporation Law of the State of Delaware, and we express no opinion with respect to any other laws.
Subject to the foregoing and the other matters set forth herein, it is our opinion that, as of the date hereof:
1. The issue and sale of the Common Shares have been duly authorized by all necessary corporate action of the Company and the Common Shares are validly issued, fully paid and nonassessable.
2. The issue of the Warrant Shares has been duly authorized by all necessary corporate action of the Company, and when the Warrant Shares have been duly registered on the books of the transfer agent and registrar therefor in the name or on behalf of the Warrant Holders, and have been issued by the Company upon exercise of the Warrants, the Warrant Shares will be validly issued, fully paid and non-assessable.
This opinion is for your benefit in connection with the Registration Statement and may be relied upon by you and by persons entitled to rely upon it pursuant to the applicable provisions of the Act. We consent to your filing this opinion as an exhibit to the Registration Statement and to the reference to our firm in the Prospectus under the heading “Legal Matters.” In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder.
| Very Truly Yours, | |
| /s/ Lucosky Brookman LLP | |
| Lucosky Brookman LLP |
Exhibit 10.1
AMMO, INC.
U.S. SHARE PRIVATE PLACEMENT
SUBSCRIPTION AGREEMENT
AMMO, INC.
SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT (this “Agreement”), dated as of _______________________________________, 2017, is made and entered into by and between AMMO, Inc., a Delaware corporation (the “Company”), with its principal executive offices located at 6401 East Thomas Rd, Scottsdale, AZ 85251, and each Subscriber identified on the signature pages hereto (each, including its successors and assigns, a “Subscriber” and collectively the “Subscribers”).
WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D promulgated thereunder, the Company desires to issue and sell to Subscriber, and Subscriber desires to purchase from the Company, securities of the Company as more fully described in this Agreement; and
WHEREAS, the Subscribers, severally and not jointly, desire to purchase and the Company desires to issue and sell to the Subscribers, in each case upon the terms and subject to the conditions set forth in this Agreement up to 4,000,000 Units (as defined below).
NOW THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements herein contained, the Company and each of the Subscribers severally (and not jointly) hereby agree as follows:
1. Purchase and Sale of Units.
(a) Sale and Issuance of Units. Subject to the terms and conditions of this Agreement, each Subscriber agrees to purchase at the Closing (as defined below), and upon payment of the Purchase Price (as defined below), the Company agrees to sell and issue to each Subscriber a unit or units (the “Unit” or “Units”). Each Unit shall consist of the following:
| (i) | 1 share of the common stock (the “Share” or “Shares”), $.001 par value (the “Common Stock”) of the Company; and, | |
| (ii) | 1 common stock purchase Warrant, in the form of Exhibit B (the “Warrant” or “Warrants”). Each Warrant provides the right to purchase one (1) share of Company Common Stock, which shall be exercisable immediately and have a term of two (2) years with an exercise price of $2.50 per share. |
(b) Form of Payment. On the Closing Date: (i) each Subscriber shall pay the Purchase Price (as hereinafter defined) for each Unit at the Closing (as defined below) by check or wire transfer of funds to the Company’s account, in accordance with the Company’s written wiring instructions, and (ii) the Company shall deliver such Shares and Warrants duly executed on behalf of the Company, to such Subscriber, against delivery of such Purchase Price.
(c) Closing Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 5 and Section 6 below, the date and time of the issuance and sale of the Shares and the Warrants pursuant to this Agreement (the “Closing Date”) shall be 10:00 a.m., Pacific Standard Time, on the date first written above, or such other mutually agreed upon time. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties and may be undertaken remotely by facsimile or other electronic transmission.
(d) Separate Agreements and Sales. The Company’s agreements with each of the Subscribers are separate agreements, and the sales of the Units to each of the Subscribers are separate sales.
(e) Purchase Price. The Purchase Price is $1.25 per Unit (the “Purchase Price”), and the Company is offering up to 4,000,000 Units for gross proceeds of $5,000,000 (the “Offering”).
2. Representations and Warranties of the Subscribers. Each Subscriber severally (and not jointly) hereby acknowledges, represents, and warrants to the Company solely as to such Subscriber that:
(a) Investment Purpose. As of the date hereof, the Subscriber is purchasing the Shares and the Warrants and the shares of Common Stock issuable upon exercise thereof (the “Warrant Shares” and, collectively the Shares and Warrants are hereinafter referred to as the “Securities”) for its own account and not with a view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the Securities Act; provided, however, that by making the representations herein, the Subscriber does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act. The Subscriber has no agreement or arrangement, formal or informal, with any person to sell or transfer all or any part of the Securities, and the Subscriber has no plans to enter into any such agreement or arrangement;
(b) Accredited Investor Status. The Subscriber is an “accredited investor,” as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act (an “Accredited Investor”), and Subscriber has completed the “Investor Questionnaire” as attached as Exhibit C.
(c) Reliance on Exemptions. None of the Units or the Securities offered are registered under the Securities Act, or any state securities laws. The Subscriber understands that the Securities are being offered and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Subscriber’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Subscriber set forth herein in order to determine the availability of such exemptions and the eligibility of the Subscriber to acquire the Securities.
(d) Information. The Subscriber and its advisors, if any, acknowledge that they have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Subscriber or its advisors, have carefully reviewed them and understands the information contained therein. Notwithstanding the foregoing representations, neither such inquiries nor any other due diligence investigation conducted by Subscriber or any of its advisors or representatives shall modify, amend or affect Subscriber’s right to rely on the Company’s representations and warranties contained in Section 3 below.
(e) Documents. All documents, records, and books pertaining to the investment in the Securities have been made available, subject to certain confidentiality restrictions, for inspection by the Subscriber and its advisors, if any.
(f) No Governmental Review. The Subscriber understands that no United States federal or state agency or any other government or governmental agency has approved the Securities or passed upon or made any recommendation or endorsement of the Offering or confirmed the accuracy or determined the adequacy of the Offering or this Agreement. Any representation to the contrary is a criminal offense. The Units and the Securities are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the Securities Act, and the applicable state securities laws, pursuant to registration or exemption therefrom.
(g) Transfer or Resale. The Subscriber understands that:
(i) the sale or resale of the Securities has not been and is not being registered under the Securities Act or any applicable state securities laws, and the Securities may not be transferred unless one of the following is satisfied:
(A) the Securities are sold pursuant to an effective registration statement under the Securities Act,
(B) the Subscriber shall have delivered to the Company, at the cost of the Company, a customary opinion of counsel that shall be in form, substance and scope reasonably acceptable to the Company, to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration,
(C) the Securities are sold or transferred to an “affiliate” (as defined in Rule 144 promulgated under the Securities Act (or a successor rule) (“Rule 144”)) of the Subscriber who agrees to sell or otherwise transfer the Securities only in accordance with this Section 2(g) and who is an Accredited Investor.
(D) the Securities are sold pursuant to Rule 144, or
(E) the Securities are sold pursuant to Regulation S under the Securities Act (or a successor rule) (“Regulation S”), and, in each case, the Subscriber shall have delivered to the Company, at the cost of the Company, a customary opinion of counsel, in form, substance and scope reasonably acceptable to the Company;
(ii) neither the Company nor any other person is under any obligation to register such Securities under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.
(h) Legends. The Subscriber understands that the Securities shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for such Securities):
“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended. The securities may not be sold, transferred or assigned in the absence of an effective registration statement for the securities under said Act, or an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, that registration is not required under said Act or unless sold pursuant to Rule 144 or Regulation S under said Act.”
The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security upon which it is stamped, if, unless otherwise required by applicable state securities laws: (i) such Security is registered for sale under an effective registration statement filed under the Securities Act or otherwise may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately sold or (ii) such holder provides the Company with a reasonable and customary opinion of counsel to the effect that a public sale or transfer of such Security may be made without registration under the Securities Act. The Subscriber agrees to sell all Securities, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any.
(i) Authorization; Enforcement. Each document to which the Subscriber is a party: (i) has been duly and validly authorized, (ii) has been duly executed and delivered on behalf of the Subscriber, and (iii) will constitute, upon execution and delivery by the Subscriber thereof and the Company, the valid and binding agreements of the Subscriber enforceable in accordance with their terms, except to the extent limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights and general principles of equity that restrict the availability of equitable or legal remedies.
(j) Residency. The Subscriber is a resident of the jurisdiction set forth immediately below such Subscriber’s name on the signature pages hereto.
(k) Subscriber’s Reliance. In evaluating the suitability of an investment in the Company, the Subscriber has not relied upon any representation or other information (oral or written) other than as stated in this Agreement or as contained in documents so furnished to the Subscriber or its advisors, if any, by the Company or the by persons acting on behalf of the Company. The Subscriber is not relying on the Company, or any of its respective employees or agents with respect to the legal, tax, economic and related considerations of an investment in the Units, and the Subscriber has relied on the advice of, or has consulted with, only its own advisors, if any.
(l) No Solicitation. The Subscriber is unaware of, is in no way relying on, and did not become aware of the offering of the Units directly or indirectly through or as a result of, any form of general solicitation or general advertising including, without limitation, any press release, filing with the SEC, article, notice, advertisement or other communication published in any newspaper, magazine or similar media or broadcast over television, radio or the internet, in connection with the offering and sale of the Units and is not subscribing for Units and did not become aware of the offering of the Units through or as a result of any seminar or meeting to which the Subscriber was invited by, or any solicitation of a subscription by, a person not previously known to the Subscriber in connection with investments in securities generally.
(m) Brokerage Fees. The Subscriber has taken no action which would give rise to any claim by any person for brokerage commissions, finder’s fees or the like relating to this Agreement or the transactions contemplated hereby (other than commissions and other compensation to be paid by as otherwise described in this Agreement or as contained in documents so furnished to the Subscriber or its advisors, if any, by the Company or the by persons acting on behalf of the Company).
(n) Independent Evaluation. The Subscriber’s decision to enter into this Agreement has been made based solely on the independent evaluation of the Subscriber and its own advisors, if any, and the Subscriber, either alone or together with its advisors, if any, has such knowledge and experience in financial, tax, and business matters, and, in particular, investments in securities, so as to enable it to utilize the information made available to it in connection with the Offering to evaluate the merits and risks of an investment in the Units and the Company and to make an informed investment decision with respect thereto.
(o) Subscriber Affiliations. The Subscriber is neither a registered representative under the Financial Industry Regulatory Authority (“FINRA”), a member of FINRA or associated or affiliated with any member of FINRA, nor a broker-dealer registered with the SEC under the Exchange Act or engaged in a business that would require it to be so registered, nor is it an affiliate of a such a broker-dealer or any person engaged in a business that would require it to be registered as a broker-dealer. In the event such Subscriber is a member of FINRA, or associated or affiliated with a member of FINRA, such Subscriber agrees, if requested by FINRA, to sign a lock-up, the form of which shall be satisfactory to FINRA with respect to the Securities. Furthermore, the Subscriber is not an underwriter of the Securities, nor is it an affiliate of an underwriter of the Securities.
(p) Risk. The purchase of the Units represents a high risk capital investment and the Subscriber is able to afford an investment in a speculative venture having the risks and objectives of the Company. The Subscriber must bear the substantial economic risks of the investment in the Units indefinitely because none of the Units may be sold, hypothecated or otherwise disposed of unless subsequently registered under the Securities Act and applicable state securities laws or an exemption from such registration is available. Legends shall be placed on the Units to the effect that they have not been registered under the Securities Act or applicable state securities laws and appropriate notations thereof will be made in the Company’s books. Stop transfer instructions will be placed with the transfer agent of the Securities, if any, or with the Company. There can be no assurance that there will be any market for resale of the Units or the Securities.
(q) Suitable Investment. The Subscriber has adequate means of providing for such Subscriber’s current financial needs and foreseeable contingencies and has no need for liquidity of its investment in the Securities for an indefinite period of time. The Subscriber has significant prior investment experience, including investments in high risk securities. The Subscriber is knowledgeable about investments in small and thinly capitalized companies. The Subscriber has a sufficient net worth to sustain a loss of its entire investment in the Company in the event such a loss should occur. The Subscriber’s overall commitment to investments which are not readily marketable is not excessive in view of the Subscriber’s net worth and financial circumstances and the purchase of the Units will not cause such commitment to become excessive. The investment is a suitable one for the Subscriber.
(r) Subscriber Attributes. The Subscriber (i) if a natural person, represents that the Subscriber has reached the age of 21 and has full power and authority to execute and deliver this Agreement and all other related agreements or certificates and to carry out the provisions hereof and thereof; (ii) if a corporation, partnership, or limited liability company or partnership, or association, joint stock company, trust, unincorporated organization or other entity, represents that such entity was not formed for the specific purpose of acquiring the Units, such entity is duly organized, validly existing and in good standing under the laws of the state of its organization, the consummation of the transactions contemplated hereby is authorized by, and will not result in a violation of any law applicable to it or its charter or other organizational documents, such entity has full power and authority to execute and deliver this Agreement and all other related agreements or certificates and to carry out the provisions hereof and thereof and to purchase and hold the Units, the execution and delivery of this Agreement has been duly authorized by all necessary action, this Agreement has been duly executed and delivered on behalf of such entity and is a legal, valid and binding obligation of such entity; or (iii) if executing this Agreement in a representative or fiduciary capacity, represents that it has full power and authority to execute and deliver this Agreement in such capacity and on behalf of the subscribing individual, ward, partnership, trust, estate, corporation, or limited liability company or partnership, or other entity for whom the Subscriber is executing this Agreement, and such individual, partnership, ward, trust, estate, corporation, or limited liability company or partnership, or other entity has full right and power to perform pursuant to this Agreement and make an investment in the Company, and represents that this Agreement constitutes a legal, valid and binding obligation of such entity. The execution and delivery of this Agreement will not violate or be in conflict with any order, judgment, injunction, agreement or controlling document to which the Subscriber is a party or by which it is bound.
(s) Additional Information. The Subscriber and the advisors, if any, have had the opportunity to obtain any additional information, to the extent the Company had such information in its possession or could acquire it without unreasonable effort or expense, necessary to verify the accuracy of the information contained in all documents received or reviewed in connection with the purchase of the Units and have had the opportunity to have representatives of the Company provide them with such additional information regarding the terms and conditions of this particular investment and the financial condition, results of operations, business and prospects of the Company deemed relevant by the Subscriber or the advisors, if any, and all such requested information, to the extent the Company had such information in its possession or could acquire it without unreasonable effort or expense, has been provided by the Company to the full satisfaction of the Subscriber and the advisors, if any. The Subscriber is satisfied that it has received adequate information with respect to all matters which it or the advisors, if any, consider material to its decision to make this investment.
(t) Subscriber’s Information. Within 5 business days after receipt of a request from the Company, the Subscriber will provide such information and deliver such documents as may reasonably be necessary to comply with any and all laws and ordinances to which the Company is subject. Any information which the Subscriber has heretofore furnished or is furnishing herewith to the Company is complete and accurate and may be relied upon by the Company in determining the availability of an exemption from registration under Federal and state securities laws in connection with the Offering. The Subscriber further represents and warrants that it will notify and supply corrective information to the Company immediately upon the occurrence of any change therein occurring prior to the Company’s issuance of the Units.
(u) Forward Looking Statements. The Subscriber acknowledges that any estimates or forward-looking statements or projections included in this Agreement and any documents related to the Offering were prepared by the Company in good faith but that the attainment of any such projections, estimates or forward-looking statements cannot be guaranteed and will not be updated by the Company and should not be relied upon.
(v) Inconsistent Representations. No oral or written representations have been made, or oral or written information furnished, to the Subscriber or its advisors, if any, in connection with the Offering which are in any way inconsistent with the information contained in this Agreement or in related documents. If there are any inconsistent representations between this Agreement and any other document, the terms of this Agreement shall govern.
(w) Relationship with Company. The Subscriber’s substantive relationship with the Company or subagent through which the Subscriber is subscribing for Units predates the Company’s or such subagent’s contact with the Subscriber regarding an investment in the Units.
(x) Federal Regulations. The Subscriber should check the Office of Foreign Assets Control (“OFAC”) website at <http://www.treas.gov/ofac> before making the following representations. The Subscriber represents that the amounts invested by it in the Company in the Offering were not and are not directly or indirectly derived from activities that contravene federal, state or international laws and regulations, including anti-money laundering laws and regulations. Federal regulations and Executive Orders administered by OFAC prohibit, among other things, the engagement in transactions with, and the provision of services to, certain foreign countries, territories, entities and individuals. The lists of OFAC prohibited countries, territories, persons and entities can be found on the OFAC website at <http://www.treas.gov/ofac>. In addition, the programs administered by OFAC (the “OFAC Programs”) prohibit dealing with individuals[1] or entities in certain countries regardless of whether such individuals or entities appear on the OFAC lists. To the best of the Subscriber’s knowledge, none of: (1) the Subscriber; (2) any person controlling or controlled by the Subscriber; (3) if the Subscriber is a privately-held entity, any person having a beneficial interest in the Subscriber; or (4) any person for whom the Subscriber is acting as agent or nominee in connection with this investment is a country, territory, individual or entity named on an OFAC list, or a person or entity prohibited under the OFAC Programs.
[1] These individuals include specially designated nationals, specially designated narcotics traffickers and other parties subject to OFAC sanctions and embargo programs.
Please be advised that the Company may not accept any amounts from a prospective investor if such prospective investor cannot make the representation set forth in the preceding paragraph. The Subscriber agrees to promptly notify the Company should the Subscriber become aware of any change in the information set forth in these representations. The Subscriber understands and acknowledges that, by law, the Company may be obligated to “freeze the account” of the Subscriber, either by prohibiting additional subscriptions from the Subscriber, declining any redemption requests and/or segregating the assets in the account in compliance with governmental regulations, and may also be required to report such action and to disclose the Subscriber’s identity to OFAC. The Subscriber further acknowledges that the Company may, by written notice to the Subscriber, suspend the redemption rights, if any, of the Subscriber if the Company reasonably deems it necessary to do so to comply with anti-money laundering regulations applicable to the Company or any of the Company’s service providers. These individuals include specially designated nationals, specially designated narcotics traffickers and other parties subject to OFAC sanctions and embargo programs.
(y) Senior Foreign Political Figure. To the best of the Subscriber’s knowledge, none of: (1) the Subscriber; (2) any person controlling or controlled by the Subscriber; (3) if the Subscriber is a privately-held entity, any person having a beneficial interest in the Subscriber; or (4) any person for whom the Subscriber is acting as agent or nominee in connection with this investment is a senior foreign political figure[2], or any immediate family[3] member or close associate[4] of a senior foreign political figure, as such terms are defined in the footnotes below; and
(z) Foreign Bank. If the Subscriber is affiliated with a non-U.S. banking institution (a “Foreign Bank”), or if the Subscriber receives deposits from, makes payments on behalf of, or handles other financial transactions related to a Foreign Bank, the Subscriber represents and warrants to the Company that: (1) the Foreign Bank has a fixed address, other than solely an electronic address, in a country in which the Foreign Bank is authorized to conduct banking activities; (2) the Foreign Bank maintains operating records related to its banking activities; (3) the Foreign Bank is subject to inspection by the banking authority that licensed the Foreign Bank to conduct banking activities; and (4) the Foreign Bank does not provide banking services to any other Foreign Bank that does not have a physical presence in any country and that is not a regulated affiliate.
3. Representations and Warranties of the Company. The Company hereby represents and warrants to each Subscriber as of the date hereof (unless the context specifically indicates otherwise) that:
(a) Organization and Qualification. The Company is a Delaware corporation or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated or organized, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted.
(b) Authorization. All corporate action on the part of the Company, its officers and directors necessary for the authorization, execution and delivery of this Agreement and the authorization, sale, issuance and delivery of the Units, and the performance of all obligations of the Company hereunder and thereunder has been taken or will be taken prior to the Closing. This Agreement when executed and delivered by the Company, shall constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their respective terms except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.
[2] A “senior foreign political figure” is defined as a senior official in the executive, legislative, administrative, military or judicial branches of a foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive of a foreign government-owned corporation. In addition, a “senior foreign political figure” includes any corporation, business or other entity that has been formed by, or for the benefit of, a senior foreign political figure.
[3] “Immediate family” of a senior foreign political figure typically includes the figure’s parents, siblings, spouse, children and in-laws.
[4] A “close associate” of a senior foreign political figure is a person who is widely and publicly known to maintain an unusually close relationship with the senior foreign political figure, and includes a person who is in a position to conduct substantial domestic and international financial transactions on behalf of the senior foreign political figure.
(c) No General Solicitation. Neither the Company nor any person participating on the Company’s behalf in the transactions contemplated hereby has conducted any “general solicitation,” as such term is defined in Regulation D promulgated under the Securities Act, with respect to any of the Securities being offered hereby.
4. Covenants. In addition to the other agreements and covenants set forth herein, the Company hereby covenant as follows:
(a) Stop Orders. The Company will advise each Subscriber promptly after it receives notice of issuance by the SEC, any state securities commission or any other regulatory authority of any stop order or of any order preventing or suspending any offering of the Securities, or of the suspension of the qualification of the Common Stock of the Company for offering or sale in any jurisdiction, or the initiation of any proceeding for any such purpose.
(b) Form D; Blue Sky Laws. The Company agrees to file a Form D with respect to the Securities as required under Regulation D. A copy of the Form D shall be publicly available through the SEC’s EDGAR System. The Company shall take such action as the Company shall reasonably determine is necessary to qualify the Securities for sale to the Subscribers under applicable securities or “blue sky” laws of the states of the United States (or to obtain an exemption from such qualification).
(c) Authorization and Reservation of Shares. The Company shall at all times have authorized, and reserved for the purpose of issuance, a sufficient number of shares of Common Stock as required to fulfill its obligations under the Offering (collectively, the “Reserved Amount”). The Company shall not reduce the number of shares of Common Stock reserved for issuance upon exercise of any Warrants. If at any time the number of shares of Common Stock authorized and reserved for issuance (“Authorized and Reserved Shares”) is below the Reserved Amount, the Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of stockholders to authorize additional shares to meet the Company’s obligations under this Section 4(c), in the case of an insufficient number of authorized shares, obtain stockholder approval of an increase in such authorized number of shares, and voting the shares of the Company’s officer’s and directors in favor of an increase in the authorized shares of the Company to ensure that the number of authorized shares is sufficient to meet the Reserved Amount. The Company shall use its best efforts to obtain such stockholder approval within thirty (30) days following the date on which the number of Reserved Amount exceeds the Authorized and Reserved Shares.
(d) Corporate Existence. So long as a Subscriber beneficially owns any Shares or Warrants, the Company shall maintain its corporate existence and shall not sell all or substantially all of the Company’s assets, except in the event of a merger or consolidation or sale of all or substantially all of the Company’s assets, where the surviving or successor entity in such transaction assumes the Company’s obligations hereunder and under the agreements and instruments entered into in connection herewith and.
5. Conditions to the Company’s Obligation to Sell. The obligation of the Company hereunder to issue and sell the Shares and Warrants to a Subscriber at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion:
(a) The applicable Subscriber shall have executed this Agreement and an investor suitability questionnaire, and delivered the same to the Company.
(b) The applicable Subscriber shall have delivered the Purchase Price in accordance with Section 1(b) above.
(c) The representations and warranties of the applicable Subscriber shall be true and correct in all material respects, and the applicable Subscriber shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the applicable Subscriber at or prior to the Closing Date.
(d) No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.
6. Conditions to Each Subscriber’s Obligation to Purchase. The obligation of each Subscriber hereunder to purchase the Shares and Warrants at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions, provided that these conditions are for such Subscriber’s sole benefit and may be waived by such Subscriber at any time in its sole discretion:
(a) deliver to such Subscriber duly executed Shares (in such denominations as the Subscriber shall request) and Warrants in accordance with Section 1(a) above.
(b) The representations and warranties of the Company shall be true and correct in all material respects, and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date.
(c) No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.
7. Reserved.
8. Governing Law; Jurisdiction. This agreement shall be enforced, governed by and construed in accordance with the laws of the state of Delaware applicable to agreements made and to be performed entirely within such state, without regard to the principles of conflicts of law.
9. Miscellaneous.
(a) Counterparts; Signatures by Facsimile. This Agreement may be executed in one or more counterparts (with the Subscribers each executing the counterpart in the form of Annex A hereto). Each of such counterparts shall be deemed an original, and all of which shall, when taken together, constitute one and the same agreement, and shall become effective when counterparts have been signed by each party and delivered to the other party. This Agreement, once executed by a party (including in the manner described above), may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.
(b) Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement.
(c) Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.
(d) Entire Agreement; Amendments. This Agreement, any documents furnished to the Subscriber in connection with the Offering and the instruments, documents and schedules referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Subscriber makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the Company and a majority in interest of the Subscribers.
(e) Notices. Any notices required or permitted to be given under the terms of this Agreement shall be sent by certified or registered mail (return receipt requested) or delivered personally or by courier (including a recognized overnight delivery service) or by facsimile transmission and shall be effective five days after being placed in the mail, if mailed by regular United States mail, or upon receipt, if delivered personally or by courier (including a recognized overnight delivery service) or by facsimile transmission, with printed confirmation of receipt, in each case addressed to a party. The addresses for such communications shall be:
If to the Company:
AMMO, INC.
6401 East Thomas Rd
Scottsdale, AZ 85251
Attention: Fred Wagenhals, CEO
Phone:
Email: Fred@ammo-inc.com
| If to a Subscriber: | To the address and fax number set forth immediately below such Subscriber’s name on the subscriber signature pages hereto. |
Each party shall provide notice to the other party of any change in address, telephone or facsimile number.
(f) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. Neither the Company nor any Subscriber shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing, but subject to the provisions of Section 2(g) hereof, any Subscriber may, without the consent of the Company, assign its rights hereunder to any person that purchases Securities in a private transaction from a Subscriber or to any of its “affiliates,” as that term is defined under the Exchange Act.
(g) Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.
(h) Survival; Indemnification; Limitation on Liability.
(i) The representations and warranties of the Subscribers and the Company set forth in Sections 2 and 3 hereof shall survive for 1 year following the Closing Date notwithstanding any due diligence investigation conducted by or on behalf of the Subscribers or the Company, as applicable. The agreements and covenants of the Company set forth in Section 4 shall survive for so long as any Subscriber beneficially owns any Securities.
(ii) The Company agrees to indemnify and hold harmless each of the Subscribers and all of their respective officers, directors, employees, agents and representative from and against any and all claims, costs, expenses, liabilities, obligations, losses or damages (including reasonable legal fees) of any nature (“Losses”), incurred by or imposed upon any such party arising as a result of or related to any actual or alleged breach by the Company of any of its representations, warranties and covenants set forth in Sections 3 and 4 hereof or any of its covenants, agreements and obligations under this Agreement or any other Transaction Document.
(iii) Each Subscriber agrees, severally but not jointly, to indemnify and hold harmless the Company and its officers, directors, employees and agents for Losses arising as a result of or related to any actual or alleged breach any breach by such Subscriber of any of its representations or warranties set forth in Section 2 hereof or any of its covenants, agreements and obligations under this Agreement or any other Transaction Document.
(i) Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(j) No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
IN WITNESS WHEREOF, the undersigned Subscribers and the Company have caused this Subscription Agreement to be duly executed as of the date first above written.
| AMMO, Inc. | ||
| By: | ||
| Name: | Fred Wagenhals | |
| Title: | CEO | |
| SUBSCRIBERS: | |
| The Subscribers executing the Signature Page in the form attached hereto as Annex A and delivering the same to the Company or its agents shall be deemed to have executed this Agreement and agreed to the terms hereof. |
Annex A
Subscription Agreement
Subscriber Signature Page
IN WITNESS WHEREOF, the undersigned have caused this Subscription Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
Name of Subscriber: _____________________________________________________________
Signature of Authorized Signatory of Subscriber: ______________________________________
Name of Authorized Signatory: ____________________________________________________
Title of Authorized Signatory: _____________________________________________________
Tax ID or SSN of Subscriber: _____________________________________________________
Email Address of Subscriber: ______________________________________________________
Telephone Number of Subscriber: __________________________________________________________
Fax Number of Subscriber: __________________________________________________________
Address for Notice of Subscriber:
______________________________________________________________________________
______________________________________________________________________________
Address for Delivery of Securities for Subscriber (if not same as above):
______________________________________________________________________________
______________________________________________________________________________
Subscription Amount: $___________________________________________________________
Number of Units Purchased at $1.25 per Unit: _________________________________________
| Financial Advisor or Registered Representative: | |
| Signature | |
| Print Name |
| Dated: |
Exhibit 10.2
CONSULTING AGREEMENT
This Consulting Agreement (the “Agreement”) is entered into as of this 1st Day of May 2021 (the “Effective Date”), by and between and White Bear Group LLC, a Wyoming limited liability company (the “Consultant”) and Ammo Inc. (the “Company”) The Company and Consultant are collectively the referred to herein as the “Parties”.
WHEREAS, Ammo Inc. designs, develops, manufactures, markets, and sells ammunition products primarily for the sporting industry in the United States and internationally;
WHEREAS, Consultant is a professional independent consultant with experience in helping facilitate the introduction to new product sources as well as other business development opportunities.
Consultant will facilitate contact with advisors, business professionals, as well as potential individual investors, family offices, money managers, RIA’s, funds, research analysts and retail brokerage firms. Consultant will specifically devote a significant portion of its time to assisting Alexander Capital and Kingswood Capital in current and future debt and equity raises.
WHEREAS, the Company desires to retain Consultant, and Consultant desire to be retained by the Company;
NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby, the Company and Consultant hereby agree as follows:
Section 1. Consulting Services
1.1 Scope of Services. The Company has requested Consultant and Consultant have agreed to provide professional services, including but not limited to:
| (a) | Introduce the Company to potential business development opportunities; |
| (b) | introduce the company to potential individual investors, family offices, money managers, RIA’s, funds, research analysts and brokerage firms |
| (c) | assist the Company with introductions to capital sources and souring resources, including non-deal roadshows with potential and existing shareholders (it is understood the Consultant is not a licensed broker-dealer or an “investment banking” firm, nor shall act in such a role); |
1.2 Place of Business. Consultant shall provide Consulting Services from its offices and such other locations requested by the Company. Consultant shall be available to the Company as necessary by telephone, email and scheduled meetings or events as are necessary to perform and to coordinate the Consulting Services.
1.3 Term. This Agreement shall commence on the Effective Date and continue through September 30, 2021. No expiration or termination of the Agreement shall affect the Company’s obligation to pay Consultants the full amount of Compensation owed under the term of this Agreement, including but not limited to, the Consulting Fee. Further, no expiration or termination of this Agreement shall affect the Company’s obligations to provide indemnification and contribution to Consultant as set forth in this Agreement. The Parties may mutually agree to extend the term of the Agreement at the expiration of the term.
1.4 The Parties understand that the consultancy arrangements contemplated by this Agreement shall be provided on a non-exclusive basis. Subject to the terms and limitations of this Agreement, including without limitation the confidentiality provision of Section 4, respectively, the Consultant is permitted to provide services, whether on a consultancy basis or otherwise, to any legal or natural person or other entity. The Company shall have the right to engage other consultants during the term of this Agreement to provide services similar to the Consultant.
1.5 The Company shall timely furnish the Consultant with all information and data that the Consultant shall reasonably request, and information and data that the Company shall reasonably deem necessary or appropriate, in connection with the Consulting Services to be performed hereunder. The Company shall provide the Consultant full access, as reasonably requested, to the Company’s officers, directors and professional advisors. The Company agrees to promptly advise the Consultant of any and all developments materially affecting the Consultant or the Consulting Services.
Section 2. Compensation
2.1 Consulting Fee. The Company shall issue to Consultant 250,000 shares at the signing of the contract equal to a monthly fee in an amount equal to eighty three thousand three hundred thirty-three dollars ($125,000) or the equivalent value in restricted shares of the Company’s common stock, valued at $2.00 per share (“Shares”). Payment will be accrued monthly and issued quarterly in accordance with Company’ regular quarterly issuances.
Restrictions on Shares Issued Pursuant to this Agreement. The common stock shares to be issued by the Company pursuant to this Agreement have not been registered and are being issued pursuant to a specific exemption under the Securities Act, as well as under certain state securities laws for transactions by an issuer not involving any public offering or in reliance on limited federal preemption from such state securities registration laws. The shares of to be issued by the Company pursuant to this Agreement must be held and may not be sold, transferred, or otherwise disposed of for value unless such securities are subsequently registered under the Securities Act or an exemption from such registration is available, and that the certificates representing the shares of Company Common Stock issued pursuant to this Agreement will bear a legend in substantially the following form so restricting the sale of such securities:
The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and are “restricted securities” within the meaning of Rule 144 promulgated under the Securities Act. The securities have been acquired for investment and may not be sold or transferred without complying with Rule 144 in the absence of an effective registration or other compliance under the Securities Act.
Section 3. Independent Contractors and Work Product
3.1 Independent Contractors. Consultant shall be an independent contractor in the performance of the Consulting Services. This Agreement shall not be interpreted as creating an association, joint venture, or partnership relationship between the Parties or as imposing any employment, or partnership obligation, or liability on any party. The Company shall not, and shall not have any obligation to, withhold or pay income tax, workers compensation, pension, deferred compensation, welfare, insurance, and other employee taxes on behalf of Consultant. Any and all sums subject to deductions, if any, required to be withheld and/or paid under any applicable state, federal or municipal laws or union or professional guild regulations shall be Consultant’s sole responsibility and Consultant shall indemnify and hold Company harmless from any and all damages, claims and expenses arising out of or resulting from any claims asserted by any taxing authority as a result of or in connection with said payments.
In consideration of the independent contractor relationship, the Parties warrant as follows:
| a. | The Consultant is not required to perform work exclusively for the Company; |
| b. | The Company shall not provide the Consultant with any business registrations or licenses required to perform the Services contemplated by this Agreement. |
| c. | The Company shall not pay the Consultant a salary or hourly rate, the Consulting Fee shall be for a fixed amount. |
| d. | The Company shall not terminate the Consultant before the expiration of the Term, unless the Consultant breaches this Agreement or violates the laws of the State of Arizona. |
| e. | The Company shall not provide tools to the Consultant. |
| f. | The Company shall not dictate the time of performance to the Consultant. |
| g. | The Company shall pay the Consultant in the name appearing above. |
| h. | The Company shall not combine business operations with the Consultant and shall maintain these operations separately. |
| i. | Consultant expressly acknowledges and agrees that (i) Consultant will not be entitled to or eligible for benefits or programs offered by Company to its employees, (ii) Company will not withhold or pay any kind of employment and/or payroll taxes on behalf of Consultant, and (iii) Consultant is solely responsible for the payment of Consultant’s own taxes. Consultant represents and covenants that it shall pay all federal, state and/or local income or any other taxes payable by Consultant by reason of the consideration given to Consultant by Company in accordance with this Agreement. |
Consultant agrees to indemnify Company and defend, protect, save and keep Company harmless from and against any and all losses, actions, liabilities, claims, damages, assessments, costs and/or expenses relating to and/or arising from or in connection with the breach of the foregoing representations and covenants, including any and all legal, accounting, and other professional fees.
3.2 No Assignment. The Company is not relying on the skills, expertise and reputation of Consultant, and the Company nor shall Consultant assign or transfer any of the Consultant’s rights, benefits or obligations under this Agreement to any third party without the express consent of the other Party.
Section 4. Confidentiality
4.1 Confidential Information. As used in this Agreement, “Confidential Information” shall mean and include all information provided by Company to Consultant, including but not limited to business and financial models, inventions, discoveries, improvements, developments, processes, drawings, computer software or other intellectual property and other work which may be protectable by copyright, patent or trade secrecy law. All Confidential Information disclosed by Company to Consultant shall be maintained by the Consultant, its employees and agents, with the same degree of care as the Consultant safeguards from disclosure its own confidential or proprietary information, but in any event at least reasonable care. The Consultant, its employees and agents, shall not divulge, in whole or in part, any such Confidential Information to any third party without the prior consent (written or verbal) of the Company, except such Confidential Information as Consultant becomes legally compelled to disclose (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process, including regulatory inquiries or otherwise). Under such circumstances, Consultant shall provide Company with prompt written notice of such request and an opportunity to defend and/or attempt to limit such production.
4.2 Return of Confidential Information. Upon Company’s request, and in any event upon cancellation of this Agreement, Consultant shall return the original and any copies of the Confidential Information which it, or any of its employees or agents, is holding under its possession or control in tangible form, written or otherwise, to Company or shall certify in writing to Company that such Confidential Information has been destroyed and/or purged from its own system and files.
4.3 Non-Disclosure. Except as may be required by law, the Consultant shall not disclose any Confidential Information to persons not involved in the operation of the Company without the express written consent of the Company.
4.4 Proprietary Rights. The Parties stipulate that any information or work product provided by Consultant to Company, whether on paper, communicated electronically, orally, or in any other form, is “Confidential” and/or “Proprietary”, and have independent economic value, and, as such, shall constitute the “Confidential Property” of Company subject to the terms and limitations set forth in this Agreement.
4.5 Non-Circumvention. Consultant shall not: (i) utilize any Confidential Information to circumvent or compete with the Company or to cause any detriment, harm or injury to the Company or the business of the Company; or (ii) utilize any and all information lawfully furnished or disclosed to Consultant by any party to circumvent or compete with the Company or to cause any detriment, harm or injury to the Company, to the business of the Company, or any affiliates of the Company. Further, Consultant shall not engage in any activity which shall cause any detriment, harm or injury to the Company, to the business of the Company, or to the reputation of the Company or to permit any circumvention of or competition with the Company or the business of the Company.
4.6 Non-Disparagement. Consultant shall not, in any written or oral communications with any party or through any medium, whether tangible, electronic, or otherwise, criticize, ridicule or make any statement which, directly or indirectly, disparages, causes harm to, or is derogatory of the Company or its affiliates or any of their respective directors or senior officers. Consultant shall not express any negative opinions of the Company, the Company’s business or products, or any affiliates of the Company or their businesses or products. The provision shall be construed broadly and shall govern any statement, express or implied, made concerning the Company, the Company’s business and products, or affiliates of the Company.
Section 5. Indemnification
5.1 Indemnification. (a) The Company hereby agrees to indemnify, hold harmless and provide contribution and reimbursement to Consultant pursuant to this Agreement to the fullest extent permitted by applicable law from and against any and all claims, demands, losses, liability, damages or expenses (including reasonable attorneys’ fees) that may be incurred by the Consultant or arise in any way from Consultant’s engagement of services on behalf of the Company, including but not limited to, dealings with any and all employees or staff, clients or potential clients, or other individuals or entities with which the Company and/or Consultant may interact, reliance by Consultant on any documents and information provided by the Company in connection with the Consulting Services.
(b) The Consultant hereby agrees to indemnify, hold harmless and provide contribution and reimbursement to Company pursuant to this Agreement to the fullest extent permitted by applicable law from and against any and all claims, demands, losses, liability, damages or expenses (including reasonable attorneys’ fees) that may be incurred by Company or arise in any way from Consultant’s services.
Section 6. General Provisions
6.1 Governing Law. The Parties acknowledge and agree that the validity, construction, enforcement, and interpretation of this Agreement shall be governed by the laws of the State of New York and the federal laws of the United States of America, excluding the laws of those jurisdictions pertaining to the resolution of conflicts of laws principles. The parties agree that New York County, New York will be the venue of any dispute and will have jurisdiction over all parties.
6.2 Entire Agreement. This Agreement sets forth the entire understanding and agreement of the Parties as to the subject matter of this Agreement and supersedes any previous or contemporaneous agreement, representation, or understanding, whether oral or written, by either Party.
6.3 No Oral Modification. Any extension, amendment, modification, cancellation or termination of this Agreement shall be valid only if it is in writing and signed by each Party to it.
6.4 Counterparts. This Agreement may be executed in Two (2) or more counterparts, each of which shall be deemed an original and have the same force and effect, and all of which taken together shall constitute one and the same agreement, it being understood that both Parties need not sign the same counterpart.
6.5 Severability. If any term or other provision of this Agreement is determined by a court of competent jurisdiction or arbitrator to be invalid, illegal, or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect, and the Parties acknowledge and consent that the court or arbitrator may revise such language as necessary to effect the intent of the Parties and this Agreement.
6.6 Notices. Any notice or other communication required or permitted to be given under this Agreement shall be in writing and shall be delivered personally, sent by certified, registered or express air mail, postage prepaid, and shall be deemed given when so delivered personally, or Five (5) days after the date of mailing. All such notices or other communications shall be directed to each Party at the addresses provided herein (or to such other addresses as the Parties shall designate from time to time).
6.7 Force Majeure. Both Parties shall be excused from performance under this Agreement for any period to the extent that a party is prevented from performing any obligation, in whole or in part, as a result of causes beyond its reasonable control and without its negligent or willful misconduct, including without limitation, acts of God, natural disasters, war or other hostilities, labor disputes, civil disturbances, governmental acts, orders or regulations, third party nonperformance, or failures or fluctuations in electrical power, heat, light, air conditioning or telecommunications equipment.
6.8 Binding Authority and Effect. The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it to the terms and conditions of this Agreement. Consultant represents and warrants that he has the capacity to act on his own behalf and on behalf of all who might claim through him to bind him to the terms and conditions of this Agreement.
6.9. Attorneys’ Fees. If any legal action or any arbitration or other proceeding is brought for the enforcement or interpretation of this Agreement, or because of an alleged dispute, breach, default or misrepresentation in connection with or related to this Agreement, the Consultant shall be entitled to recover reasonable attorneys’ fees and other costs in connection with that action or proceeding, in addition to any other relief to which it may be entitled. Such fees shall be due and payable without regard to whether arbitration or other legal action is instituted by the Consultant.
6.10 Each Party represents and warrants to the other Party that: (a) it is duly organized and validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation; (b) it has full entity power and authority to execute and deliver this Agreement and perform its obligations hereunder, and to grant the rights granted and intended to be granted hereunder; and (c) the execution and delivery of this Agreement, and the consummation of the transactions contemplated hereby, do not and shall not (i) conflict with or result in a breach of any provision of its organizational documents; (ii) result in a breach of any agreement to which it is a party; or (iii) violate any law expressly required by this Agreement to be complied with or, to its knowledge, violate any other law.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date above, acknowledging their acceptance of all the terms and conditions set forth herein.
| Company | Consultant | |||
| Ammo Inc. | White Bear Group, LLC | |||
| By: | /s/ Fred Wagnehals | By: | /s/ Curtis Bernhardt | |
| Name: | Fred Wagenhals | Name: | Curtis Bernhardt | |
| Title: | CEO | Title: | Managing Member | |
Exhibit 10.3
SERVICES AGREEMENT
This Agreement (this “Agreement”) is made and entered into by and between Trending Equities Corp. (the “Consultant”), and Ammo, Inc., located at 7681 East Gray Road Scottsdale, AZ 85260 (the “Company”; collectively the “Parties”) on May 16th, 2021.
W I T N E S S E T H:
WHEREAS, the Consultant, a Canadian corporation, located at 1932 Merlot Blvd, Abbotsford BC V4X 0A6, operates a strategic advisory, investor relations & public relations firm; and
WHEREAS, the Client is a publicly-held company trading under the stock ticker POWW; and
WHEREAS, the Client desires to utilize the services of the Consultant in connection with its business operations;
NOW, THEREFORE, in consideration of the promises and the mutual covenants hereinafter set forth the parties hereto agree as follows:
| 1. | CONSULTANT DUTIES. The Consultant shall provide to the Company certain consulting services (the “Services”) in the areas of road show materials, investor communications, investor introductions, and marketing materials in association with the Preferred Series A underwritten by Alexander Capital. In performance of these duties, the Consultant shall provide the Company with benefits of its best judgement and efforts. It is understood and acknowledged by the Parties that the value of the Consultant’s Services is not measurable in any quantitative manner. |
| 2. | TERM. Effective as of the date hereof (the “Effective Date”) the Company hereby engages the Consultant to provide to it the Services for (1) month, commencing on May 16th, 2021, and terminating at the close of business on June 16th, 2021 (the “Term”). |
| 3. | FEES. As consideration for the Consulting Services to be rendered by the Consultant to the Client during the Term, the Client shall pay the following Fees (the “Fees”): |
| a. | Client shall also pay to the Consultant stock compensation (the “Stock Fee”) of 500,000 shares of registered common stock. Upon signing the contract five hundred thousand (500,000) shares of common stock valued at $2.00. |
| b. | Wiring Instructions for Cash Fee are as follows: |
Trending Equities Corp.
TD Canada Trust
For transfer in U.S. Dollars
| c. | The 500,000 Shares constitute a commencement inventive and consideration, due and owing to the Consultant for entering into this Agreement and allocating its resources to Company’s account for the Initial Term. Company acknowledges that Consultant must forego other opportunities to enter into this Agreement |
| d. | Company agrees that it shall take no action to cause the Shares to become canceled, voided or revoked, or the issuance thereof to be voided or terminated. |
| e. | Company agrees to timely take all action(s) necessary to clear the Shares of restriction upon presentation of any Rule 144 application by Consultant or its broker, including, without limitation, authorizing the Company’s transfer agent to remove the restrictive legend, (ii) expediting the acquisition of a legal opinion from Company’s authorized counsel at Company’s expense, (iii) delivering any additional documentation that may be required by Consultant, its broker or the transfer agent in connection with the legend removal request, including Rule 144 company representation letters, resolutions of the Board of Directors evidencing proper issuance of the Shares, etc., and (iv) cooperating and communicating with Consultant, its broker and the transfer agent in order to clear the Shares of restriction as soon as possible. |
| 4. | CLIENT DUTIES. The Client agrees to the following: |
The Client will disclose to the Consultant any and all information the Client deems pertinent and necessary to the Consulting Services to be performed hereunder; and the information supplied by the Client to the Consultant will be from dependable and reliable sources and will be true and accurate in all material respects.
| 5. | CONFIDENTIALITY. |
| a. | Confidential Information. Each Party agrees to hold private and confidential all confidential information of the other Party and neither Party, without the prior written consent of the other, shall divulge, disseminate, communicate or otherwise disclose any confidential or proprietary information of the other Party except to the extent required by law, regulation or any judicial or regulatory authority. Confidential information includes, but is not limited to, any information not obtainable by the general public and which contains information which would be considered owned by the owner and proprietary in nature and which would be considered as a trade secret except so far as it already exists in the public domain. For the avoidance of doubt, the Parties hereto acknowledge and agree that only publicly available information shall be distributed or disseminated in connection with the provision of the Consulting Services hereunder and under no circumstance will any confidential information be distributed or disseminated in connection therewith. |
| 6. | NON-SOLICITATION. During the Term of this Agreement and for twenty-four (24) months after any termination of this Agreement, Client will not, without prior written consent of Consultant, either directly or indirectly, on Client’s behalf or in the service or on behalf of others, solicit or attempt to solicit, divert, or hire away any person employed by Consultant currently or during the previous twelve (12) months, any third party or Consultant, or any customer of Consultant. |
| 7. | JURISDICTION. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to conflict of laws principles. The Parties agree that any dispute arising out of or in relation to this contract shall be resolved by arbitration and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction. The arbitration shall be conducted in the English language in the city of New York, New York. The arbitration shall be carried out using one of the following arbitration services: “JAMS, AAA, or NAM”, using one arbitrator. The party demanding arbitration shall have the choice of one the three arbitration services named herein. |
| 8. | SEVERABILITY. If any paragraph, term or provision of this Agreement shall be held or determined to be unenforceable, the balance of this Agreement shall nevertheless continue in full force and effect unaffected by such holding or determination. |
| 9. | HEADINGS. The section headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. |
| 10. | NOTICES, PAYMENTS. Any payment, notice or other communication required by this Agreement (a) shall be in writing, (b) may be delivered personally, sent via electronic mail, or sent by reputable overnight courier with written verification of receipt or by registered or certified first class United States Mail, postage prepaid, return receipt requested, (c) shall be sent to the addresses listed above or to such other address as such party shall designate by written notice to the other party, and (d) shall be effective upon receipt. |
| 11. | FURTHER ACTION. The Parties hereto shall execute and deliver all documents, provide all information and take or forbear from all such action as may be necessary or appropriate to achieve the purposes of this Agreement. |
| 12. | ASSIGNMENT. This Agreement may not be assigned by either party hereto without the written consent of the other but shall be binding upon the successors of the Parties. |
| 13. | COUNTERPARTS. This Agreement may be executed in duplicate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement. In the event that the document is signed by one party and faxed (or e- mailed) to another the Parties agree that a faxed (or e-mailed) signature shall be binding upon the Parties to this Agreement as though the signature was an original. |
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the day and year first above written.
| Trending Equities Corp. | ||
| By: | /s/ Mike Baron | |
| Name: | Mike Baron | |
| Title: | CEO | |
| Ammo, Inc. | ||
| By: | /s/ Fred Wagenhals | |
| Name: | Fred Wagenhals | |
| Title: | CEO | |
Exhibit 23.2
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT
We consent to the incorporation by reference in this Registration Statement of AMMO Inc. on of Form S-3 of our report dated June 29, 2021, with respect to the consolidated financial statements appearing in the Annual Report on Form 10-K of Ammo, Inc. for the year ended March 31, 2021. We also consent to the reference to our firm under the heading “Experts” in the Prospectus, which is part of this Registration Statement.
| /s/ Pannell Kerr Forster of Texas, P.C. |
Houston, Texas
July 29, 2021
Exhibit 23.3
Independent Registered Public Accounting Firm’s Consent
We consent to the incorporation by reference in this Registration Statement of AMMO, Inc. on Form S-3 of our report dated August 19, 2020, which includes an explanatory paragraph as to the Company’s ability to continue as a going concern, with respect to our audit of the consolidated financial statements of AMMO, Inc. as of March 31, 2020 and for the year ended March 31, 2020 appearing in the Annual Report on Form 10-K of AMMO, Inc. for the year ended March 31, 2020. We were dismissed as auditors on April 8, 2021 and, accordingly, we have not performed any audit or review procedures with respect to any financial statements appearing in the Annual Report on Form 10-K for the periods after the date of our dismissal. We also consent to the reference to our firm under the heading “Experts” in the Prospectus, which is part of this Registration Statement.
Our report on the consolidated financial statements refers to a change in the method of accounting for leases in 2019 due to the adoption of ASU No. 2016-02, Leases (Topic 842), as amended, effective April 1, 2019 using the modified retrospective approach.
| /s/ Marcum LLP | |
| New York, NY | |
| July 29, 2021 |
Exhibit 23.4
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of our report dated May 12, 2021, relating to the consolidated financial statements of Gemini Direct Investments, LLC and Subsidiaries for the years ended December 31, 2020 and 2019, included in Ammo, Inc.’s Form 8-K/A dated May 13, 2021.
| /S/ Warren Averett, LLC | |
| Warren Averett, LLC Atlanta, Georgia | |
| July 28, 2021 |
Exhibit 23.5
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of our accountants’ review report dated July 13, 2021 for the three month period ending March 31, 2021 and 2020, relating to the consolidated financial statements of Gemini Direct Investments, LLC and Subsidiaries, included in Ammo, Inc.’s Form 8-K/A dated July 16, 2021.
| /S/ Warren Averett, LLC | |
| Warren Averett, LLC Atlanta, Georgia | |
| July 28, 2021 |