Item
1.01 Entry into a Material Definitive Agreement.
On
November 30, 2020, Ammo, Inc., a Delaware corporation (the “Company”) entered into an underwriting agreement (the
“Underwriting Agreement”) with Alexander Capital, L.P. (“Alexander Capital”), as representative of the
underwriters listed therein (the “Underwriters”), pursuant to which the Company agreed to sell to the Underwriters
in a firm commitment underwritten public offering (the “Offering”) an aggregate of 8,564,285 shares of the Company’s
common stock, par value $0.001 per share (the “Common Stock”), at a public offering price of $2.10 per share. In addition,
the Underwriters were granted an over-allotment option (the “Over-allotment Option”) for a period of 45 days to purchase
up to an additional 1,284,643 shares of Common Stock. The Offering closed on December 3, 2020. The Common Stock began trading
on the Nasdaq Capital Market under the symbol POWW on December 1, 2020.
The
Company conducted the Offering pursuant to a Registration Statement on Form S-1 (File No. 333- 248800), as amended, which was
declared effective by the United States Securities and Exchange Commission on November 30, 2020 (the “Registration Statement”).
The
net proceeds to the Company from the Offering, after deducting the underwriting discount, the underwriters’ fees and expenses
and the Company’s estimated Offering expenses, are expected to be approximately $15,876,000. The Company anticipates using
the net proceeds from the Offering as follows: (i) approximately $5,500,000 for capital expenditures; (ii) approximately $1,300,000
for research and development for new products and improvements to existing products including, but not limited to, hiring of key
personnel, and material costs for research activities; (iii) approximately $1,800,000 to upgrade sales and marketing capabilities,
including but not limited to professional relations, advertising, software implementation and adding additional staff; and (iv)
the remainder for other general corporate purposes, and possibly acquisitions of other companies, products or technologies, though
no such acquisitions are currently contemplated.
The
Underwriting Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing,
indemnification obligations of the Company and the Underwriters, including for liabilities under the Securities Act of 1933, as
amended, other obligations of the parties and termination provisions. In addition, pursuant to the terms of the Underwriting Agreement
and related “lock-up” agreements, the Company (for a period of one year after the date of the Underwriting Agreement),
and each director and executive officer of the Company (for a period of six months after the date of the final prospectus relating
to the Public Offering), have agreed, subject to customary exceptions, not to sell, transfer or otherwise dispose of securities
of the Company, without the prior written consent of Alexander Capital.
The
foregoing description of the Underwriting Agreement is not complete and is qualified in its entirety by reference to the full
text of the Underwriting Agreement, which is filed as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein
by reference.
On
December 3, 2020, pursuant to the Underwriting Agreement, the Company entered into an Underwriter’s warrant agreement
(the “Underwriters’ Warrant Agreement”) with the Underwriters and certain affiliates of the Underwriters. Pursuant
to the Underwriters’ Warrant Agreement, the Company provided the Underwriters and certain affiliates of the Underwriters
with a warrant to purchase 428,214 shares of Common Stock in the aggregate. Such warrant may be exercised beginning on May 29,
2021 (the date that is 180 days after the date on which the Registration Statement became effective) until November 30, 2025 (the
date that is five years after the date on which the Registration Statement became effective). The initial exercise price of the
Underwriters’ Warrant Agreement is $2.63 per share.
The
foregoing summary of the Underwriters’ Warrant Agreement is qualified in its entirety by reference to the full text of the
form of the Underwriters’ Warrant Agreement, a copy of which is attached as Exhibit 4.1 to this Current Report on Form 8-K
and is incorporated herein by reference.