Ammo, Inc. CEO Issues Letter to Shareholders and Employees

Ammo, Inc. issued the following Letter to Shareholders from CEO Jared Smith:

Dear Fellow Shareholders,

I am pleased to communicate directly with you as Ammo, Inc.’s new Chief Executive Officer and want to take this opportunity to share the many developments that have occurred over the past six months and the future we envision for Ammo and GunBroker.com.

I would like to begin by acknowledging Ammo Inc.’s Executive Chairman Fred Wagenhals and thank him on behalf of our leadership team and Board members for his innumerable and invaluable contributions over the past seven years. I look forward to learning from his impeccable entrepreneurial instincts and drive.

I would also like to acknowledge all of our employees for their hard work and our investors for their continued patience. To our employees: this change has not been easy and current market conditions have made this transition even tougher. We have a very bright future, and I believe our team is now aligned to execute on a set of principles and goals that will drive long-term shareholder value. To our investors: I ask that you maintain your faith in Ammo’s vision. We are now starting to execute on that vision while quickly making the changes necessary to win and maintain your confidence.

We anticipate considerable progress in the quarters ahead through careful execution under three major categories: alignment and commitment from management; expansion of the reach and positioning of GunBroker.com; and enhancing our margins, operational prowess, and brand strength for our Ammo division.

Management Alignment and Commitment
Principally, our success begins with a new commitment from our executive management team to communicate more effectively and provide a greater degree of transparency to our shareholders. We have worked tirelessly to create alignment of management compensation with bottom-line profitability and measurable creation of shareholder value, which includes bonus structures aligned with profitable EBITDA goals and project milestones, future compensation of stock options rather than stock grants, and maintaining a mindset that our shareholders must win first. We are committed to creating greater transparency of managerial decisions, insights into current market conditions, and greater financial accountability and engagement with our shareholders, all of which will be illustrated by proper governance, compliance, and controls to manage the ever-changing responsibilities of managing and investing shareholder funds. This will be illustrated by increased communication of details about our operating models and the profitability of each individual business unit in a far more transparent way so our investors can decide when to invest based on actionable information.

We have also committed to strengthening our balance sheet and cash position through divestitures, strategic acquisitions, and buyback of our stock. For example, our buyback program will continue to create value for our long-term shareholder value in this current period. We will also continue to seek strategic and reasonable opportunities for acquisition using the criteria of being accretive in two years. This is actionable and of a size that does not stress our balance sheet while creating milestones and earn-outs for the new management teams. Lastly, we will bring on new talent who will sharpen our execution and timeline for delivering the following business initiatives.

Expanding GunBroker.com’s Platform and Reach
GunBroker.com continues to be an extremely strong business segment for Ammo and will continue to deliver the most effective and compliant solution for buying and selling new and used firearms. Forging ahead, we will continue to streamline the checkout process through a centralized payment system, implementing a multi-item cart, and enabling financing for the entire transaction.

While we build out the tools to aid in streamlining our platform, we are growing our reach. Today, we are primarily product-focused, having ignored the other half of our passion – the people and the places that enable us to get out there. The outdoorsman and shooting enthusiast will finally have a comprehensive site to find guide services, lodging, hunts, preserves, gunsmithing, and other services this industry relies upon to successfully enjoy the outdoors. We are curating the user experience based on their unique passions and the products and services necessary to be successful in the field. It is our goal that GunBroker.com will become the EMarketplace, message board, and aggregator of products and services for the outdoor community. In the next year, we will bring product reviews and podcasts focused on the historically relevant products and services available on the platform. We are also developing and testing a new suite of AI (Artificial Intelligence) tools to enhance the user experience. AI applications include FAQs, real-time instructional/ factual outdoor-related inquiries, digital buyer assistance, reviews of inventoried products, and internally by employees for ad hoc data requests to help improve customer service. At the same time, we are cautious of AI’s role and have firewalled user data, focusing AI’s role on products and not the community to ensure personal information is not shared or violated. We are doing this to give shareholders better insight into our developments and to ensure GunBroker.com’s dominance in this industry.

Upon final buildout with this suite of tools (auction, credit card processing, carting, financing, and the compliant checkout of state and federally-regulated goods) we will look to new markets outside of the firearm industry.

Ammo Division: Enhancing our Margins, Operational Prowess, and Brand Strength
Our ammunition business will be laser-focused on margin creation and premium positioning for the Ammo, Inc. brand. We will accomplish this by continuing to grow sales of rifle and pistol brass to domestic and international markets, while continuing expansion in our rifle brass capacity, further integrating our business with the strategic manufacturers in this industrial space and continuing our vertical integration into projectile production.

We are utilizing our new 185,000-square-foot facility to produce those items that create real margin for the company, and that match our engineering capabilities with the products and services needed by the shooting, law enforcement, and military communities. Additionally, we will continue to create leaner and more efficient operations while creating cash from our inventories.

In our most recent fiscal year, we generated $35.6M in cash from our operations. We repositioned our operations and we continue to meet this new market head-on. We retooled our factory and changed our go-to-market approach for both the ammunition and GunBroker divisions.

We will continue at this pace of change through the onboarding of top talent to facilitate new growth. We need more driven engineers, up-all-night computer scientists/developers, committed accountants, savvy analysts, and passionate sales leaders. This is the key to our growth. The new talent must be able to lead and empower the new organization we are building. Our investment community must know we are building a company based around proper governance, transparency, and best-in-class reporting so that we can provide better metrics for our strategic growth. We will not stand around waiting for the market to improve and we will not rest until we have created the company your investment deserves.

We are grateful for our shareholders’ interest and support of Ammo and our singular goal remains that our long-term and supportive shareholders realize the full potential of these amazing businesses, which will be reflected in our future financial performance and the share price.

I am honored to lead our winning team and acknowledge my colleagues and Board Members for their many contributions and shared achievements.

Sincerely,
Ammo, Inc./GunBroker.com
CEO
Jared Smith