AMMO, Inc to Acquire GunBroker.com

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SCOTTSDALE, Ariz., Feb. 11, 2021 — AMMO, Inc. (Nasdaq: POWW ) (“AMMO” or the “Company”), a premier American ammunition and munition components manufacturer and technology leader, is pleased to announce it has entered into a non-binding letter of intent (“LOI”) dated February 9, 2021 with IA Tech LLC for its GunBroker.com business (GunBroker.com), the world’s largest on-line auction marketplace dedicated to firearms, hunting, shooting and related products. The Transaction will involve a merger or business combination resulting in GunBroker.com becoming a wholly-owned subsidiary of AMMO (the “Transaction”).

GunBroker.com Transaction

• GunBroker.com is the world’s leading online marketplace for the legal sale of firearms, ammunition and accessories with over 6.0 million registered users

• GunBroker.com’s estimated 2020 revenue of approximately $60 million, over $40 million of EBITDA, positive net income and strong free cash flow

• Purchase price of approximately $240 million, representing a purchase price to EBITDA multiple of less than 6.0x

• Transaction further expands upon AMMO’s vertical integration strategy

• Current AMMO shareholders will own the majority of the combined company

“This Transaction is accretive to our shareholders and will be another vertical integration milestone for the Company which diversifies our revenue base with high profit-margin business offered through a premier brand deploying best-in-class secure transactional technology,” said Fred Wagenhals, AMMO’s Chairman and CEO.

Mr. Wagenhals noted that “we founded AMMO to be a disruptive technology-based company that could serve the shooting community with cutting-edge ammunition offerings, whether that be for the military, law enforcement, hunting or recreational shooting communities. GunBroker.com is a perfect fit and supports AMMO’s mission across many levels. Steve Urvan had the foresight and entrepreneurial drive to start GunBrokers.com more than 20 years ago with the same spirit and vision. With his drive and intimate understanding of how to serve our collective market, Steve created the world’s largest online marketplace for the purchase and sale of firearms, ammunition, and accessories.” Mr. Wagenhals explained that “the combination made sense to our management team and Board as it expands our ability to best ensure the retail market continues to be served at the highest level while affording AMMO with an opportunity to enhance its sales channels, operating margins and drive increased shareholder value.”

Steve Urvan commented: “I am excited at the prospect of bringing the GunBroker.com technology platform, marketplace, and my world-class team to the AMMO family of companies. GunBroker.com has long been the technology leader in the industry and we look forward to continuing to build innovative products and solutions for our expanding and loyal customer base.”

Pursuant to the terms of the LOI, the parties intend to sign a definitive agreement (the “Definitive Agreement”) and work expeditiously to close the Transaction on or before March 31, 2021. The final structure of the Transaction will be determined by the parties following the receipt of tax, corporate, and securities law advice. GunBroker.com’s enterprise value in the Transaction has been valued at approximately $240 million, which will be paid by the Company via a combination of cash and shares of common stock.

The completion of the Transaction is subject to a number of conditions, including but not limited to the following: completion of mutually satisfactory due diligence, execution of the Definitive Agreement, successful completion of a capital raise, and receipt of all required corporate and third-party approvals, including fulfillment of all applicable regulatory requirements and conditions necessary to complete the Transaction.

No assurances can be made that the parties will successfully negotiate and enter into a Definitive Agreement, or that the proposed Transaction will be closed on the terms and/or timeframe currently contemplated, or at all. As noted above, the Transaction remains subject to a regulatory and Board approval, along with other customary conditions.

Maxim Group LLC served as sell side advisor to IA Tech LLC for its GunBroker.com business.

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