Good afternoon, and welcome to AMMO, Inc.'s Fiscal Third Quarter 2021 Earnings Call. Please note, this event is being recorded. I'd now like to turn this conference over to Mr. John Flynn, AMMO's Vice President. Please go ahead, John. You may begin.

Thank you, operator. Good afternoon, everyone, and thank you for joining us today. Before we begin, please let me remind you that this discussion, along with the question-and-answer session that follows, will include statements regarding estimates or expectations of future performance. Please note that these are forward-looking statements and that actual results could differ materially from those projected. Some of the factors that could cause actual results to differ from our projections are described without limitations in the Risk Factors section of our most recent Form 10-K and in our third quarter earnings press release. A copy of today's transcript will be available on our website in the Investor Relations section. Our earnings press release and other financial data and information are also available under Investor Relations. With me this morning are Fred Wagenhals, AMMO's Chairman and CEO; and Rob Wiley, our CFO. Fred will begin with some initial remarks; and then Rob Wiley, our CFO, will follow. And thereafter, we'll be happy to take some questions. And with that, I will now turn it over to Fred.

Thanks, John, and hello to everyone. I would like to open my comments by saying how incredibly proud I am of our entire AMMO team. Everyone was working hard before the COVID pandemic, civil unrest and political uncertainty. All came together to turn the world upside down last March. And since that time, and each and every day, I'm truly amazed at the effort, attention to detail and the drive our entire team has demonstrated, which has driven AMMO to the financial performance we now enjoy. Without this cohesive, all-star team of professionals, we wouldn't have been -- ever been able to achieve the impressive results I will touch on momentarily. Our company has seen tremendous and really unprecedented growth over the last 12 months. As our team continues to strive to reach higher goals, we feel it is important to provide an update to our investors in order to keep everyone abreast of the execution on a daily commitment to enhance shareholder value and growth for this company. So today's update is meant as a progress report regarding where we are today and where we hope to be by the end of 2021 fiscal year as of March 31, 2021. While nearly everyone has been impacted in some way from COVID, we have seen significant growth during this time of economic dislocation. We have seen demand and the resulting of our sales products increased by 278% over the last 12 months and expect to see the growth tend to continue throughout the calendar years of 2021 and 2022. Now let me touch on some of AMMO team's accomplishments over the past 12 months. We expanded our distribution network to 4,500-plus retailers across the United States. We expanded our product offering and retail shelf space across all big-box retailers. We…

Thank you, Fred. The company is positioned for exceptional growth, setting a new standard in fiscal 2021. First, I would like to review our balance sheet. We have increased our total assets to $67 million since our fiscal 2020 year-end. This is mainly due to an increase on cash on hand resulting from the completion of our capital raise in December, which was concurrent with a successful uplisting to the Nasdaq Capital Markets. Our accounts receivable and inventory have more than doubled through the 9-month period. Accounts receivable increased to $6.9 million and inventory increased to $9.5 million as we diligently work to supply our customers. We continue to add production equipment to be able to service our customers with quicker delivery times. The company restructured our debt since year-end to help facilitate the growth by freeing up cash flow. We are ever cognizant of opportunities that may arise to improve our operations and the future direction of our business. Fiscal third quarter delivered the best quarterly performance in company history with even better quarters expected throughout fiscal 2022. Now I'd like to move on and talk about sales. Our sales for the quarter were $16.6 million, a 500% increase in comparison to the 2019 quarter. Sales for the 9 months increased 282% to $38.3 million. Additionally, we experienced sales growth of 38% quarter-over-quarter, a $4.6 million increase from the previous fiscal quarter. This is a testament to the hard work of our diligent employees, the support of our shareholders, the buyers and customers, coupled with the strength of our expanding channels of distribution. Next, I would like to talk about our gross margins. Along with our sales, our margins have increased to approximately 20% for our third fiscal quarter, an increase of 163% or $4.2 million year-over-year. When depreciation…

[Operator Instructions] Our first question comes from the line of Trey Kidd with Raymond James.

Congrats on the quarter. I just had a 2-part question here. Can you explain adjusted EBITDA? And can you also expand on the net loss?

Yes. Thank you, Trey. Adjusted EBITDA is an EBITDA calculation which includes add-backs for other noncash expenses or nonrecurring items. We ended the quarter with positive adjusted EBITDA of approximately $2.4 million; and for the 9-month period, positive adjusted EBITDA of $3.3 million. Moving on to your question about our net loss, we ended the quarter with net loss of approximately $1.9 million, which included $2.4 million of noncash expenses. If excluded, this would translate into positive net income of approximately $500,000. I think this is a great question because it's important for our shareholders to understand that noncash expenses like depreciation, amortization and others are added back and resulted in a positive net income of $500,000. Also, we expect this number to grow rapidly in upcoming quarters.

Our next question comes from the line of [ Lisa Kay ], private investor.

Guys, I wanted to congratulate you on the great job you did this quarter. And also wanted to ask if you could shed some light on the increased margin.

Yes. Thank you, Lisa. Our margins for the third quarter of the fiscal year were approximately 20%. If noncash depreciation and amortization are added back, our margins for the quarter would be approximately 25%. As a stand-alone, the margin for the quarter was an 88% increase quarter-over-quarter. Our margins are dramatically increasing as our sales are increasing.

Our next question comes from the line of Gene Webb with Paulson Investment Company.

Guys, again, congrats on the great quarter for you and all the team. You've done a great job of growing this company. My question is, when do you expect the GunBroker.com transaction to close and what that means to us going forward for revenues?

Thank you, Gene. So right now, we're working diligently through the definitive agreement, and we have antitrust laws we have to abide by. Our working close date as of now is March 31, but we are working hard to close the transaction prior to our year-end. Upon closing the transaction, this will be highly accretive for us, which will allow us to generate significant free cash flows and positive earnings per share.

Our next question comes from the line of [ Len Combs ], private investor.

You previously went over combining your 2 manufacturing locations into 1 state-of-the-art plant, what's the timing on that and, again, the potential cost?

Thanks, Len. We anticipate moving into our new facility by May of 2022. And more importantly, we estimate annual cost savings of approximately $1 million.

Our next question comes from the line of Thomas Forte with D.A. Davidson.

So Fred, you touched on this in the prepared remarks. First off, congrats on the letter of intent for the GunBroker.com acquisition. I want to ask you if you could provide a few more strategic rationale for the deal. And then second, I wanted to know what the potential benefits to AMMO, Inc. are from combining the 2 companies.

Well, first of all, as you know, GunBroker is a company that's Internet-based. We'd have no inventory, no risk of inventory, and it allows us to get to the customer face-to-face. And we feel there's a lot of items that once they married a GunBroker or a gun salesman to a customer, there's other items that we can sell that customer, holsters, bullets, different items. And so we think we can grow our business through this acquisition. And we feel that we've got a good team of people that they brought with them. So Steve is going to be an intricate part of our company and in helping us grow this business for the next several years.

Ladies and gentlemen, we have reached the end of today's question-and-answer session. I would like to turn this call back over to Fred for closing remarks.

First of all, I'd like to thank everybody for participating in today's call. And we've got a great team of people here that have helped build this company. And from my standpoint, I got a great Board of Directors who are very active in helping us on a daily basis. I can reach out to my Board at any time, and they're helping us make decisions and help growing this company. So with that, I'd like to say I hope you join us for our year-end call. We're excited about where we're going to be at the end of this year, and we're really excited about where we're heading for the future. Thank you. Have a good day.

Thank you for joining us today. This concludes today's conference. You may disconnect your lines at this time.