Investigation Into AMMO's Accounting Piles On Financial Weakness

Caffital Research
1.47K Followers
(10min)

Summary

  • AMMO Inc.'s fiscal Q1 results were weak, as the company returned to an underperforming revenue decline and the gross margin weakened over 9 percentage points.
  • AMMO has an ongoing independent investigation into its FY2020-FY2023 accounting, making prior financial statements unreliable and creating further uncertainty.
  • The company has failed to report its fiscal Q2 results on time due to the ongoing investigation, and AMMO has received a deficiency notice from NASDAQ.
  • Given the uncertainty in financials and in AMMO's accounting, I believe that the investment remains unattractive at the current stock level.

Modern Pistols And Gun Cartridges At Gun Training Range

AleksandarGeorgiev

AMMO, Inc. (NASDAQ:POWW), the ammunition producer and operator of the GunBroker online firearms marketplace, is facing issues on several fronts. On top of weak profitability and a dramatic revenue hiccup in the company’s fiscal Q1, the company is facing accounting-based

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I am an avid investor with a major focus on small cap companies with experience in investing in US, Canadian, and European markets. My investment philosophy to generating great returns on the stock market revolves around identifying mispriced securities by understanding the drivers behind a company's financials, and ultimately, most often revealed by a DCF model valuation. This methodology doesn't limit an investor into rigid traditional value, dividend, or growth investing, but rather accounts for all of a stock's prospects to determine the risk-to-reward.

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