Delivers Overview of New Strategy for
Leveraging AMMO’s Existing Assets and Evolving the Company into a
Diversified, Growing and Profitable Ecommerce
Opportunity to Achieve $1 Billion in Annual Sales with Strong Cash
Flows and Sustainable Margins, Resulting in Superior Value Creation
Introduces Diverse Slate with Expertise in
Corporate Governance, Ecommerce, Finance, M&A and Strategic
Growth Across Relevant B2B and B2C Categories
Steven Urvan (together with the other participants in his
solicitation, the “Urvan Group” or “we”), who owns approximately
17.1% of the outstanding common shares of AMMO, Inc. (NASDAQ: POWW)
(“AMMO” or the “Company”), today announced his nomination of seven
highly qualified candidates for election to the Company’s Board of
Directors (the “Board”) at the 2022 Annual Meeting of Shareholders
(the “Annual Meeting”). In addition, the Urvan Group issued the
below letter and launched the following hub to house shareholder
I am AMMO’s largest shareholder, with an approximately 17.1%
stake in the Company that is presently worth roughly $80 million. I
amassed my personal shareholdings and joined AMMO’s Board upon
completing the sale of GunBroker.com, which I founded with my own
capital and led to many years of profitable growth prior to last
year’s transaction with the Company. It is my honor to be firmly
aligned with you as a shareholder and represent your interests in
the boardroom as a director.
Based on my conviction in the long-term value that can be
unlocked at AMMO, I recently decided to exercise my right as a
shareholder to nominate a full slate of highly qualified director
candidates, including myself, for election to the Company’s Board
at this year’s Annual Meeting. I recognize this is a relatively
extraordinary step for a sitting director. That is why I am writing
to you today in my capacity as the leader of the Urvan Group. This
letter is intended to convey three key points that are expanded
upon in subsequent sections:
- I want to apply my unique track record of success in
ecommerce, firearms and outdoor sporting, and investing to lead an
ongoing transformation of AMMO in the public market.
- From the Urvan Group’s perspective, the facts pertaining to
AMMO’s governance, operations, performance and strategy indicate
immediate boardroom change is in shareholders’ best
- We believe a reconfigured Board can implement a new strategy
for evolving AMMO from a conventional ammunitions manufacturing
business to a diversified, growing and profitable ecommerce
platform – ideally resulting in an improved trading price multiple
and enhanced value for shareholders.
I want to take the opportunity to note that my status as a
sitting director leads me to believe it is not appropriate for me
to directly opine on AMMO’s recently announced plan to split up the
Company. With that said, I am comfortable confirming that my
slate’s strategy accounts for keeping the Company’s Ammunitions and
Marketplace businesses together until a reconstituted Board can
conduct a fresh assessment of the enterprise. We plan to retain
experienced and independent advisors – with demonstrated expertise
in our industry and strategic reviews – to evaluate the long-term
pros and cons associated with splitting up these perceptibly
synergistic businesses at this time.
I also want to take this opportunity to state that my decision
to nominate a slate is about creating sustained value for each and
every one of AMMO’s shareholders. To be clear, I am not seeking to
acquire all or part of the Company. I am not seeking to take any
steps that are counter to your interests. I am investing my own
energy, money and time in a campaign to ignite a brighter future
for all of the Company’s stakeholders.
WHY THE URVAN GROUP IS
SEEKING TO CATALYZE POSITIVE CHANGE AT AMMO
I founded GunBroker.com more than 22 years ago. During my tenure
as its Chief Executive Officer, I grew the platform from an idea
into the world’s leading online marketplace for the purchase and
sale of firearms and ammunition. GunBroker.com had more than 6
million registered users when it was sold last year, demonstrating
that my team and I were adept at driving sustainable growth and
producing meaningful value.
As a founder and entrepreneur, I was involved in every facet of
GunBroker.com’s operations and helped the platform scale in a
cost-effective, scrappy manner over many years. I personally
oversaw areas such as strategy, finance, marketing, technology and
human capital management. Thanks to this high-touch approach and
ownership mentality, GunBroker.com boasted the following financials
at the time of last year’s transaction:
- Annual revenue of approximately $60 million.
- Annual EBITDA of more than $40 million.
- Positive net income.
- Strong and sustained free cash flow.
In contrast, AMMO’s financials show the Company has been burning
cash and was unprofitable every single quarter prior to the
GunBroker.com acquisition. The acquisition finally brought the
Company to profitability thanks to GunBroker.com’s dynamic customer
base and sustained cash flows. In fact, during the Company’s
earnings call for the first quarter of Fiscal Year 2022, management
attributed 70% of AMMO’s profit and margin growth to the
acquisition, noting that GunBroker.com had “added over $12 million
of high-margin marketplace revenue during the quarter.”1 Perhaps
this is why discussions on online forums indicate the Company’s
shareholders are confounded by management’s recent decision to
unwind the transaction less than 18 months after it closed.
Many shareholders also appear to believe there have been issues
around integrating the acquisition, improving online sales,
managing cash and communicating the Company’s long-term value
proposition. There seems to be a growing view that these issues
have been keeping the Company’s share price and valuation multiple
depressed. Fortunately, we feel shareholders’ concerns are
addressable without unwinding an acquisition that is starting to
dramatically improve the Company’s performance.
THE FACTS PERTAINING
TO AMMO’S HISTORY AS A PUBLIC COMPANY
For the five years leading up to the acquisition of
GunBroker.com, AMMO’s financials reveal rising expenses, compressed
margins and sustained losses. The Company’s annualized sales,
general and administrative expenses rose more than 320% between
Fiscal Year 2017 and Fiscal Year 2021.2 During this period, the
Company endured five straight years of net losses, resulting in
well over $40 million in total losses.3 Further, it appears that
the recent onset of meaningful revenue growth delivered by the
legacy Ammunitions segment has had little impact on the bottom
AMMO’s public disclosures also reveal a number of relevant facts
pertaining to the Company’s corporate governance. The Company’s
Chairman and Chief Executive Officer, who is 80 years old and has
served in such roles since 2016, controls an entity holding a $3.5
million loan to AMMO that earns 12% annual interest.5 Over the
years, he and the Company have entered into multiple lending
arrangements. The Company also maintains a seven-member Board with
multiple insiders and directors at or over 75 years of age.6
A review of the Board’s experiences and skill sets indicates
there is a need for expertise in firearms, ammunition, ecommerce
and other key areas. In addition, aside from myself and the
Chairman, who has been consistently granted shares, there is also
limited share ownership on the Board. We believe that a Board with
relevant expertise and strong ownership perspectives is better
positioned to drive improved capital allocation, effective
oversight and value-enhancing decisions.
While one could claim AMMO is on the right track due to its
perceptibly high long-run total shareholder return (“TSR”), it is
important to remember that the Company is a micro-cap entity that
began trading in the $2 range. It may be more instructive to
consider what the Company has done recently. Since the
GunBroker.com transaction closed, it has delivered TSR of -42% and
is dramatically lagging logical peers:
AMMO & Peers7
Total Shareholder Returns
Since May 3, 20218
Clarus Corporation (NASDAQ: CLAR)
Olin Corporation (NYSE: OLN)
Smith & Wesson (NASDAQ: SWBI)
Vista Outdoor (NYSE: VSTO)
It seems most of this share price decline has been driven by the
decision to walk back the GunBroker.com acquisition despite it
being described by management as “transformative” just a year ago.
Notably, the Company’s recent announcement to split the businesses
was followed by a nearly 30% drop in share price.9
WE HAVE THE RIGHT PLAN AND RIGHT
INDIVIDUALS TO PRODUCE
SUPERIOR LONG-TERM VALUE
Given AMMO’s distinct assets, significant brand potential and
strong positioning in growing addressable markets, we believe the
Company can evolve into a diversified, growing and profitable
ecommerce powerhouse. To achieve this, our nominees believe the
Company needs to focus on a new set of strategic priorities. A
high-level and preliminary overview of these priorities
- Enhance Corporate Governance – We believe our nominees
can help evolve AMMO into a stronger business by adding fresh
perspectives to the boardroom as well as new expertise in capital
markets transactions, corporate governance, ecommerce,
manufacturing and B2C and B2B growth. If elected, our slate is
committed to having fewer insiders on the Board and minimizing
related party transactions. Likewise, we are committed to
maintaining shareholder-friendly bylaws, modernized governance
provisions and clear disclosures around topics such as capital
allocation. Over the long-term, we would also aim to separate the
Chairman and Chief Executive Officer roles.
- Optimize the Balance Sheet – While being mindful not to
over lever AMMO, the reconstituted Board would seek to obtain
affordable and non-dilutive financing via an asset-based lending
facility or revolver that would allow the Company to consider
EBITDA-accretive acquisitions and prioritize organic growth in
ecommerce. The Urvan Group nominees have strong relationships with
top-tier banks and lenders, so a competitive process would be run
to obtain enhanced access to capital. Our slate would also evaluate
whether it is prudent over the long-term to own physical real
estate or to simply lease facilities.
- Assess Management and Improve Human Capital – If
elected, our nominees would undertake an assessment of management’s
capabilities to ensure the Company has a leadership team that can
support our new strategy. We believe the ideal management team will
include individuals with deep experience across ecommerce,
technology, online partnerships, distribution and fulfillment and
other growth areas. As the founder and former Chief Executive
Officer of GunBroker.com, I have the experience to lead AMMO on in
interim basis as this assessment is performed and our new strategic
plan is put in place. Looking to the long-term, the reconstituted
Board would seek to ensure AMMO is led by a permanent management
team that can take the Ammunitions business to better margins while
scaling the Company across more categories – beyond just firearms
and ammunitions – via its Marketplace business.
- Strengthen Existing Ammunitions and Marketplace Segments
– If elected, our nominees would seek to accelerate cost
containment in the Ammunitions segment and increase organic
investment in the Marketplace segment. The Ammunition segment’s
history of lagging margins indicates more needs to be done to
right-size labor, overhead and materials costs. Even when factoring
in the Marketplace segment’s strong performance and stripping out
assumed one-time costs for the new manufacturing facility, the
Company’s margins continue to dramatically lag logical firearms
peers even as it gets to scale. Our nominees believe this
reinforces the need to slow further investment in Ammunitions and
prioritize higher-growth, higher margin opportunities in ecommerce.
We suspect that deploying more capital to customer acquisition,
organic category expansion, payment technologies and sustaining a
frictionless user interface across screens would yield better
returns for shareholders.
- Explore Accretive M&A to Supplement Organic Growth –
The Company has the benefit of millions of existing customer
relationships and users, who are already comfortable transacting
through GunBroker.com. This creates a major tailwind for entering
new B2C categories that I was unable to scale to in the private
market. The reconstituted Board would seek to secure additional
military and law enforcement contracts, as well as invest in smart,
strategic acquisitions that propel the Company into a broader set
of adjacent categories, including sporting goods, apparel and
collectibles. Between growing the GunBroker.com platform and
entering new categories loved by customers, we believe the Company
could attain more than $1 billion in annual sales – with strong
cash flows and double-digit EBITDA margins – over the next several
- Prioritize Transparent Investor Relations – We believe
that improving disclosures and shareholder communications across
the board can help ensure that the market properly evaluates AMMO,
especially if a reconstituted Board is able to pursue an
ecommerce-focused strategy. We would host an annual investor day,
conduct quarterly earnings calls with question-and-answer sessions,
publish the Company’s new strategy and key performance indicators
in a frequently updated deck and take steps to attract long-term
institutional capital into the shareholder base.
In the coming weeks, we look forward to sharing more detail
regarding our strategy for unlocking the full potential and value
of AMMO. We intend to issue a public presentation prior to this
year’s Annual Meeting to provide the market with a very clear sense
of our plan, tactics and transition planning.
In the meantime, I am pleased to share summarized biographies
for the Urvan Group’s seven-member slate:
- Gregg Alper is a successful retail entrepreneur with
ecommerce and operations experience that would be extremely
valuable to AMMO’s Board.
- Founder, President and member of the board of directors of GWA
Distribution Group, an online retailer which focuses on replacement
automotive, marine and small engine parts through various online
channels and was acquired by JMH Capital in April 2021.
- Founder and President of Delray Beach Capital, a provider of
inventory financing to independent car dealerships.
- Former Chief Operating Officer and Director of e-commerce of
USP Motorsports, an online provider of performance parts for German
- Darren Farber is a financial and defense industry expert who
also possesses firearms manufacturing public company board
experience that would be extremely valuable to AMMO’s Board.
- Founder and Managing Partner of Albion River LLC, a private
investment firm that focuses on aerospace, defense and government
- Former special advisor to the Deputy Under Secretary of Defense
— Business Transformation, where he received the Secretary of
Defense Medal for Outstanding Public Service.
- Serves on the board of directors of MDA Ltd. (TSE: MDA), a
space technology developer and manufacturer, and as Chairman of the
board of directors of Magpul Industries Corp, a designer and
manufacturer of firearms accessories and outdoor lifestyle
- Former and member of the board of directors of American Pacific
Corporation (formerly NASDAQ: APFC), a chemical manufacturing
company, and Sparton Corporation (formerly NYSE: SPA), which
designs, develops, tests and produces complex maritime electronic
- William Fraim is a proven C-suite executive and board member
with over 35 years of experience in the shooting sports industry
that would be extremely valuable to AMMO’s Board.
- Former Chief Executive Officer and Chairman of the board of
directors of AcuSport Corporation, a nationwide distributor of
outdoor and shooting sports products.
- Former President and member of the board of the National
Association of Sporting Goods Wholesalers (NASGW), a nonprofit
trade association that represents hunting and shooting sports
equipment manufacturers and wholesalers.
- Former Chairman of the board of trustees of the Hunting
Heritage Trust, an organization created to fund programs that will
enhance appreciation of the United States’ hunting heritage and
increase public participation in recreational shooting sports.
- Member of the board of trustees of The Berry Family Foundation,
an independent nonprofit foundation focused on encouraging
enterprise and a strong Dayton, Ohio community.
- Susan Lokey is a Certified Public Accountant with more than
three decades of experience in accounting, financial reporting and
auditing, as well as valuable executive leadership experience that
would be extremely valuable to AMMO’s Board.
- Chief Financial Officer of IA Tech LLC, parent company of
GunBroker.com, LLC, one of the largest online auction sites for
firearms and hunting and shooting accessories.
- Vice President and Director of North Harbor Insurance Co., an
insurance provider, and Chief Financial Officer of BitRail
Holdings, Inc., a compliant crypto currency payment company.
- Former Manager of the Sales Audit and Sales Accounting
department at The Home Depot, Inc. (NYSE: HD), a multinational home
improvement retail corporation.
- Significant financial experience, including as Treasury
Specialist at Fosterlane Management Corporation, the sovereign
wealth enterprise real estate arm of the Kuwait Investment
Authority, and as Financial Officer at Bartow County Bank, a
- Christos Tsentas is a former investment banker with M&A
and investment management experience, who also possesses firearms
accessories manufacturing board experience that would be extremely
valuable to AMMO’s Board.
- Partner of Albion River LLC, a private direct investment firm,
with a focus on aerospace, defense and government related
- Former investment banker at KippsDeSanto & Co., an M&A
advisory firm focused on the aerospace and defense markets.
- Member of the board of directors of Magpul Industries
Corporation, a designer and manufacturer of firearms accessories
and outdoor lifestyle products.
- Steven Urvan is an entrepreneur and expert in the
firearms and shooting sports industry with more than two decades of
experience growing e-commerce businesses that would be extremely
valuable to AMMO’s Board.
- Chief Strategy Officer and a member of the board of directors
of Ammo Inc. (NASDAQ: POWW).
- Founder and Executive Chairman of BitRail Holdings, Inc., a
compliant cryptocurrency payment platform, and head of The Urvan
- Founder and former Chief Executive Officer GunBroker.com, LLC,
one of the largest online auction sites for firearms and
hunting/shooting accessories, which was acquired by Ammo Inc.
(NASDAQ: POWW) for $240 million in 2021.
- Founder of Outdoors.com Digital Media, an outdoor lifestyle
website, and App Cohesion, an e-commerce technology platform.
Previously architected what was at the time the largest optical
data storage and retrieval system for ATM and POS information for
Bank of America.
- Wayne Walker is a corporate governance expert who has
more than 35 years of experience in corporate turnarounds and
possesses public company board experience that would be extremely
valuable to AMMO’s Board.
- Founder and President of Walker Nell Partners, Inc., an
international business consulting firm.
- Currently serves on the boards of directors of Wrap
Technologies, Inc. (NASDAQ: WRAP), a global public safety
technology and services company, where he serves as chairman of the
board, Petro Pharmaceuticals, Inc. (NASDAQ: PTPI), a men’s health
company, AYRO, Inc. (NASDAQ: AYRO), a designer and producer of
all-electric vehicles, and Pitcairn Trust Company, a national
advisor to family offices.
- Former Partner at ParenteBeard LLC (n/k/a Baker Tilly Virchow
Krause, LLP), an accounting firm, and Senior Legal Counsel at E. I.
du Pont de Nemours and Company (n/k/a DuPont de Nemours, Inc.
(NYSE: DD)), a chemicals, agriculture and specialty products
- Previously served on the boards of directors of BridgeStreet
Worldwide, Inc., a leading provider of furnished apartments to
corporations, and Last Call Operating Companies, an owner of
various national restaurants.
We thank you in advance for your consideration and willingness
to evaluate the Urvan Group’s plan and slate. To join our mailing
list and share your views on AMMO, we invite you to visit
Sincerely, Steve Urvan
Certain Information Concerning the Participants
The Urvan Group intends to file a preliminary proxy statement
and accompanying GREEN Universal proxy card with the Securities and
Exchange Commission to be used to solicit votes for the election of
its slate of highly-qualified director nominees at AMMO’s 2022
THE URVAN GROUP STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY
TO READ THE SOLICITATION STATEMENT AND OTHER PROXY MATERIALS AS
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON
THE SEC’S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE
PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE COPIES OF THE
SOLICITATION STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON
REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE
PARTICIPANTS' PROXY SOLICITOR.
The participants in the solicitation are anticipated to be Gregg
Alper, Darren Farber, William L. Fraim, Susan T. Lokey, Christos
Tsentas, Steven F. Urvan and Wayne R. Walker.
As of the date hereof, Mr. Urvan directly owns 20,040,000 shares
of common stock, par value $0.001 per share, of the Company (the
“Common Stock”). As of the date hereof, Ms. Lokey directly owns
40,000 shares of Common Stock. As of the date hereof, none of
Messrs. Alper, Farber, Fraim, Tsentas, or Walker beneficially owns
any shares of Common Stock.
1 AMMO, Inc. (POWW) CEO Fred Wagenhals on Q1 2022 Results -
Earnings Call Transcript (August 16, 2021). 2 Company filings. 3
Company filings. 4 Company filings. 5 Company proxy statement. 6
Company proxy statement. 7 Company does not define its peer set in
SEC filings. The Urvan Group determined AMMO’s custom peer set by
examining competitors’ businesses, products and market share. 8
Total shareholder returns calculate from May 3, 2021, the day the
GunBroker.com acquisition closed, to August 25, 2022, the day the
Urvan Group submitted its nomination notice to the Company. TSR
includes dividends reinvested. 9 AMMO share price opened at $5.85
on August 15, 2022 (the morning the Company announced plans to
divest GunBroker.com) and closed on August 22, 2022 at $4.11 (a
week after the Company’s announcement).
version on businesswire.com: https://www.businesswire.com/news/home/20220829005245/en/
Saratoga Proxy Consulting John Ferguson / Joe Mills,
Longacre Square Partners Greg Marose / Charlotte Kiaie,
646-386-0091 firstname.lastname@example.org /
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