The Board of Directors initiated a formal review of strategic alternatives for the Ammunition segment during the year ended March 31, 2025. This strategic alternatives review resulted in the decision to sell the Ammunition segment. Accordingly, the Company determined the assets of the Ammunition segment met the criteria for classification as held for sale. Additionally, the Company determined the ultimate disposal will represent a strategic shift that will have a major effect on our operations and financial results. As such, the results of the Ammunition segment are presented as discontinued operations in the accompanying consolidated statements of operations and consolidated statement of cash flows for all periods presented. The assets and liabilities of the Ammunition segment have been reflected as assets and liabilities of discontinued operations in the accompanying consolidated balance sheets for all periods presented. Net proceeds are estimated to total approximately $42.9 million.

Refer to Note 2 under the caption “Assets Held for Sale and Discontinued Operations” for additional details on accounting criteria for held for sale and discontinued operations treatment.

Loss from discontinued operations, net of tax in the consolidated statements of operations reflects the after-tax results of the Ammunition segment and does not include any allocation of general corporate overhead expense or interest expense of the Company. The following table summarizes the results of operations of the Ammunition segment that are being reported as discontinued operations:


	For the Year Ended March 31,
	2025			2024			2023

Net revenues(1)	$	74,867,419		$	91,112,496		$	128,290,128
Cost of revenues		83,079,531			94,818,546			126,961,549
Gross profit		(8,212,112	)		(3,706,050	)		1,328,579

Operating expenses
Selling and marketing		1,296,141			1,179,659			2,542,074
Corporate general and administrative		8,553,708			6,146,966			6,014,380
Employee salaries and related expenses		2,610,046			1,636,496			2,008,625
Depreciation and amortization expense		35,866			508,485			578,326
Total operating expenses		12,495,761			9,471,606			11,143,405
Loss from operations		(20,707,873	)		(13,177,656	)		(9,814,826	)
Total other income/(expense)		(617,756	)		(923,603	)		(515,207	)
Impairment of assets		(45,847,430	)		-			-
Loss from discontinued operations before income taxes		(67,173,059	)		(14,101,259	)		(10,330,033	)
Provision (benefit) for income taxes		(1,560,922	)		(2,857,826	)		2,059,294
Loss from discontinued operations, net of tax	$	(65,612,137	)	$	(11,243,433	)	$	(12,389,327	)

(1) Included in revenue for the years ended March 31, 2025, 2024 and 2023 are excise taxes of $4,972,452, $6,155,524 and $9,789,897, respectively.

The following table summarizes the Ammunition segment assets and liabilities classified as held for sale in the accompanying consolidated balance sheets:


	March 31, 2025		March 31, 2024
ASSETS
Accounts receivable, net	$	8,778,545	$	17,424,888
Inventories		21,520,796		45,563,334
Prepaid expenses		198,379		658,946
Equipment, net		25,983,100		53,544,002
Deposits		-		322,034
Patents, net		1,409,542		4,756,006
Other intangible assets, net		-		35,866
Total assets held for sale	$	57,890,362	$	122,305,076

LIABILITIES
Accounts payable	$	2,513,533	$	7,528,186
Accrued liabilities		3,280,449		4,211,248
Current portion of construction note payable		286,200		273,459
Contingent consideration payable		-		59,838
Construction note payable, net of unamortized issuance costs		10,564,816		10,735,241
Total liabilities held for sale	$	16,644,998	$	22,807,972

Assets and liabilities classified as held for sale are required to be recorded at the lower of carrying value or fair value less costs to sell. As of March 31, 2025, we determined that the fair value of the Ammunition segment, including costs to sell was lower than its carrying value and we recorded a $45.8 million impairment. The fair value of the Ammunition segment was estimated using the expected sale price as negotiated with the third party buyer.

Capital expenditures related to discontinued operations were $2.1 million, $5.4 million and $10.8 million for the years ended March 31, 2025, 2024, and 2023, respectively.

During the year ended March 31, 2025, we determined that our Ammunition segment should be classified as held for sale. In connection with the reclassification of the segment's assets and liabilities, we recorded an impairment of $45.8 million. For the

impairment charges, we performed an undiscounted cash flow analysis on the asset group and determined that net carrying values exceeded the estimated undiscounted future cash flows. We estimated the fair value of the asset group based on a discounted cash flow method and recorded an impairment for asset groups where the fair value was lower than its carrying value. The significant estimates used in the discounted cash flow methodology, which are based on level 3 inputs, include our expectations for projected cash flows to be generated from the asset group. The total impairment included a write-down of inventory of $16.9 million based on an analysis of liquidation values and obsolescence.