SUBSEQUENT EVENTS	12 Months Ended
Mar. 31, 2025
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	NOTE 16 – SUBSEQUENT EVENTS Olin Asset Purchase Agreement On April 18, 2025, we entered into a First Amendment (the “First Amendment”) to the Asset Purchase Agreement. Pursuant to the First Amendment, the Company and Buyer agreed to, among other things: (i) the removal of the escrow mechanisms for the purchase price adjustments contemplated under the Asset Purchase Agreement; (ii) the addition of a pre-closing inventory count rather than a post-closing inventory count; (iii) the revision of the net working capital adjustment provisions to agree upon certain pre-determined assets and liabilities and remove deductions for certain types of inventory and account for inventory based on the Company’s historical accounting practices; (iv) the addition of a reserve to adjust for upgrades to equipment and inventory issues; and (v) the addition of a purchase price adjustment collar in the event the final net working capital amount is less the estimated net working capital exceeds, which entitles the Buyer to receive from the Company amounts in excess of the collar for such a shortfall. The Company and the Buyer also entered into certain additional agreements, including, among other things: (a) the addition of a mutual non-disparagement provision; (b) the removal of the closing condition related to the process hazard analysis report and the amendment of one of the representations to account for such report; (c) the addition of a mutual release related to certain disputed items; and (d) the addition of an indemnification related to an item excluded from coverage in the representations and warranties insurance policy. The Transaction was completed on April 18, 2025. We recognized a gain on sale for the Transaction of $1.3 million. Separation Agreements Fred W. Wagenhals On April 8, 2025, in connection with Fred W. Wagenhals’ resignation from his position as the Executive Chairman of the Company and as Chairman of the Board on April 4, 2025, the Company and Mr. Wagenhals entered into an Executive Separation Agreement, effective April 4, 2025, pursuant to which Mr. Wagenhals is entitled to receive certain separation benefits, including: (i) payment of all compensation and benefits to which Mr. Wagenhals is legally entitled under the Wagenhals Employment Agreement through April 4, 2025; (ii) a cash separation payment equal to $700,000, consisting of (a) a lump sum payment of $300,000 (an amount equal to nine months of Mr. Wagenhals’s annual base salary) and (b) an aggregate of $400,000 (an amount equal to 12 months of Mr. Wagenhals’s annual base salary) to be paid in substantially equal installments in accordance with the Company’s normal payroll practices; (iii) reimbursement for all reimbursable expenses due to Mr. Wagenhals under the Wagenhals Employment Agreement; and (iv) a lump sum payment equal to the value of Mr. Wagenhals’s accrued and unused vacation and paid time off balance. Jared Smith On May 21, 2025, the Company and Mr. Smith entered into an Executive Separation Agreement, which became effective as of 5:00 p.m. Eastern Time on May 30, 2025, pursuant to which Mr. Smith is, subject to his release of certain claims in favor of the Company (the “ADEA Release”), entitled to receive certain separation benefits, including: (i) payment of all compensation and benefits to which Mr. Smith is legally entitled under his employment agreement through May 30, 2025; (ii) a lump sum cash separation payment (the “Cash Severance Payment”) equal to $625,000 (an amount equal to 15 months of Mr. Smith’s annual base salary), which Cash Severance Payment will be paid on the Company’s first payroll date that occurs within a 15-day period following the Company’s receipt of the ADEA Release; (iii) reimbursement for all reimbursable expenses due to Mr. Smith under his employment agreement as of May 30, 2025; and (iv) a lump sum payment equal to the value of Mr. Smith’s accrued and unused vacation and paid time off balance as of May 30, 2025. The Company also agreed to pay premiums for extended health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) for a period of 12 months for Mr. Smith and his family, or until Mr. Smith’s coverage otherwise terminates in accordance with COBRA or on account of Mr. Smith’s eligibility to receive coverage under a subsequent employer’s program. Pursuant to Mr. Smith’s Executive Separation Agreement, Mr. Smith will be permitted to retain 100% of his nonqualified stock options and shares of Common Stock, including any remaining unvested shares and options, which immediately became vested and exercisable as of May 30, 2025, subject to the terms and conditions of the Company’s 2017 Equity Incentive Plan and any applicable award documentation with respect to such options, which terms and conditions include exercisability of the options for up to ten years after the original issuance date. Sunflower Loan Amendments On April 18, 2025, we entered into a Consent and Second Amendment to Loan and Security Agreement (the “Sunflower Loan Amendment”) by and among the Company and other borrowers party thereto (collectively, the “Borrower”), and Sunflower Bank, N.A., as administrative agent and collateral agent (the “Agent”). The Sunflower Loan Amendment amends that certain Loan and Security Agreement, dated as of December 29, 2019, by and among the Borrower, the Lenders and the Agent (as amended by the Sunflower Loan Amendment, the “Sunflower Loan Agreement”). Pursuant to the Sunflower Loan Amendment, the Borrower and the Agent agreed to, among other things: (i) release the Agent’s security interest in all collateral securing the Borrower’s obligations under the Sunflower Loan Agreement upon consummation of the sale of the Ammunition Manufacturing Business; (ii) reduce all amounts available under the Revolving Loan to zero dollars as of the effective date of the Sunflower Loan Amendment; (iii) enter into an Amended and Restated Revolving Line Promissory Note in the amount of $5.0 million, representing 100% of the Revolving Line Commitment available under the Sunflower Loan Agreement, executed by Borrower in favor of Agent as of the effective date of the Sunflower Loan Amendment; and (iv) certain other amendments to Borrower’s customary covenants and obligations under the Sunflower Loan Agreement that only take effect in the event the Revolving Line Availability is greater than zero dollars. On May 13, 2025, the Company entered into a Third Amendment to Loan and Security Agreement (the “Third Sunflower Loan Amendment”) by and among the Borrower and Agent. The Third Sunflower Loan Amendment further amends the Sunflower Loan Agreement. Pursuant to the Third Sunflower Loan Amendment, the Borrower and the Agent agreed to change the definitions in the Sunflower Loan Agreement of: (i) “AMMO, Inc” to “Outdoor Holding Company,” (ii) “Ammo” to “OHC,” (iii) “AMMO TECHNOLOGIES, INC” to “OHC TECHNOLOGIES, INC,” and (iv) AMMO MUNITIONS, INC” to “OHC MUNITIONS, INC.” Delaware Litigation Settlement On May 21, 2025, the Company entered into a Settlement Agreement (the “Settlement Agreement”), by and among the Company, Speedlight Group I, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company (“Speedlight”), Mr. Urvan, and the following persons, each of whom serves or previously served on the Board of Directors: Richard R. Childress, Jared Smith, Fred W. Wagenhals and Russell Williams Wallace, Jr. (collectively, the “Legacy Directors”). The Settlement Agreement became effective as of 5:00 p.m. Eastern Time on May 30, 2025, pursuant to its terms (the “Settlement Effective Date”). As a result and pursuant to the Settlement Agreement, effective as of the Settlement Effective Date, (i) Jared Smith resigned as a member of the Board of Directors and from his position as the Chief Executive Officer of the Company and as an officer or member of each of the Company’s direct and indirect subsidiaries and (ii) Mr. Urvan was appointed as the Chief Executive Officer of the Company and as the Chairman of the Board of Directors. In addition, in accordance with the Settlement Agreement, on June 3, 2025, the Company, Speedlight, Mr. Urvan and the Legacy Directors filed a Stipulation of Voluntary Dismissal With Prejudice to dismiss, with prejudice, all claims asserted in the Delaware Litigation. Issuance of Warrant As partial consideration for the settlement, on the Settlement Effective Date, the Company issued an affiliated designee of Urvan, a warrant (the “Warrant”) to purchase 7.0 million shares (the “Warrant Shares”) of Common Stock. The Warrant has a five-year term and an exercise price of $1.81 per share. Pursuant to the terms of the Warrant, the Warrant is exercisable at the holder’s discretion, in whole or in part, on or after November 30, 2025, provided that the Warrant automatically vests and becomes exercisable in certain circumstances, such as bankruptcy, liquidation, termination of the business or other similar events, as well as upon consummation of any Extraordinary Transaction (as defined in the Warrant). Pursuant to the terms of the Warrant, the Warrant Shares may not, subject to certain exceptions, be sold, assigned, transferred or otherwise distributed without prior approval from a majority of the disinterested and independent members of the Board of Directors, provided that on each of the first three anniversaries of the Settlement Effective Date, the holder may transfer 25% of the total issuable shares under the Warrant. Issuance of Unsecured Promissory Notes Pursuant to the Settlement Agreement, the Company also issued to Mr. Urvan's affiliated designee, an unsecured promissory note on the Settlement Effective Date for a principal amount of $12.0 million (“Note 1”). Note 1 bears interest at 6.50% per annum (subject to a 2.00% increase during an event of default), which interest is payable to the holder annually on the anniversary of the Settlement Effective Date, beginning on the first anniversary of the Settlement Effective Date (each interest payment due date, an “Interest Payment Date”). The unpaid principal balance of Note 1 and all accrued and unpaid interest thereon is due on the 12th anniversary of the Settlement Effective Date (the “Note 1 Maturity Date”). Pursuant to the terms of Note 1, the Company is required to make annual prepayments such that $1,000,000 (inclusive of accrued and unpaid interest then due and payable) is paid to the holder on each Interest Payment Date. The Company has the right to prepay, prior to the Note 1 Maturity Date, all or any part of the principal or interest of Note 1 without penalty. In addition, the holder may not request early repayment of Note 1 prior to May 30, 2027. Any optional prepayment by the Company must be approved by a majority vote of the independent and disinterested members of the Board of Directors as then constituted. Pursuant to the Settlement Agreement, the Company issued to Mr. Urvan's affiliated designee, an unsecured promissory note in a principal amount of $39.0 million (“Note 2” and together with Note 1, the “Notes”) on the Effective Date. Note 2 bears interest at a rate per annum equal to the applicable federal rate for long-term loans in effect on the Effective Date (subject to a 2.00% increase during an event of default), which is payable to the holder annually on the Interest Payment Date. The unpaid principal balance of Note 2 and all accrued and unpaid interest thereon is due on the 10th anniversary of the Effective Date (the “Note 2 Maturity Date”) Pursuant to the terms of Note 2, the Company is required to make annual prepayments of the outstanding principal amount on Note 2 equal to $1.95 million on each Interest Payment Date. The Company has the right to prepay, prior to the Note 2 Maturity Date, all or any part of the principal or interest of Note 2 without penalty. In addition, the holder may not request early repayment of Note 2 prior to May 30, 2027. The Company also has the option, at any time prior to May 30, 2026(unless extended by mutual consent of the holder and the Company), to prepay all, but not less than all, of the then-outstanding principal amount of Note 2 and accrued and unpaid interest thereon in exchange for the issuance of a warrant (the “Additional Warrant”) to purchase 13.0 million shares of Common Stock (the “Additional Warrant Shares”), provided that the Company must first obtain stockholder approval of the issuance of the Additional Warrant and the Additional Warrant Shares pursuant to Nasdaq Listing Rule 5635. Upon issuance of the Additional Warrant, all remaining obligations under Note 2 would be deemed satisfied with the same force and effect as a prepayment of all principal and accrued and unpaid interest under Note 2. Any optional prepayment by the Company, whether in cash or by issuance of the Additional Warrant, must be approved by a majority vote of the independent and disinterested members of the Board of Directors as then constituted. The Additional Warrant, if issued, would have a five-year term and an exercise price of $1.00 per share. Pursuant to the terms of the Additional Warrant, the Additional Warrant would be exercisable at the holder’s discretion, in whole or in part, on or after the first anniversary of the issuance date. Except with respect to the exercise price and the vesting date, the terms of the Additional Warrant and the Warrant are substantially similar. The Notes also include events of default customary for arrangements of this type, including, among other things, non-payment, bankruptcy and insolvency. The occurrence and continuance of an event of default could result in the acceleration of the obligations under the Notes. Other Provisions of the Settlement Agreement Pursuant to the Settlement Agreement, for a period of three years from the Settlement Effective Date (the “Standstill Period”), each of the Legacy Directors agreed to appear at all annual and special meetings of stockholders and to vote their shares beneficially owned as of the Settlement Effective Date in accordance with the Board of Director’s recommendations with respect to director elections and other proposals submitted by the Company or by a stockholder. In addition, during the Standstill Period, the Legacy Directors agreed to certain standstill provisions relating to proxy solicitations for, among other things, director nominations and extraordinary transactions. The Settlement Agreement also includes a release of claims (i) by the Company against Urvan, (ii) by Urvan against the Company, (iii) by Urvan against the Legacy Directors and (iv) by the Legacy Directors against Urvan. The Settlement Agreement contains customary representations, warranties and obligations of the parties, including, among others, certain non-disparagement and confidentiality covenants. Dismissal of Books and Records Action On June 6, 2025, Mr. Urvan and the Company filed a Stipulation and (Proposed) Order of Dismissal in the Books and Records Action. The court subsequently issued an order granting the motion and dismissing the Books and Records Action. Accounting for the Settlement Agreement We evaluated the accounting for the Warrant and Notes 1 and 2. We evaluated the Warrant in accordance with ASC 480, Distinguishing Liabilities from Equity, and determined the Warrant meets the equity classification and will be recorded in additional paid-in capital in the consolidated balance sheet during the three months ended June 30, 2025. The Warrant was valued using a Black-Scholes model and determined to have a value of $7,094,926. Notes 1 and 2 were evaluated in accordance with ASC 470, Debt and ASC 815, Derivatives and Hedging. Note 1 will be recognized at a value of $9,866,679, net of discount on issuance and be recorded as a note payable on the consolidated balance sheet. Note 2 will be recognized at a value of $12,105,624, net of discount at issuance and be recorded as a note payable on the consolidated balance sheet.

SUBSEQUENT EVENTS

12 Months Ended

Mar. 31, 2025

NOTE 16 – SUBSEQUENT EVENTS

Olin Asset Purchase Agreement

On April 18, 2025, we entered into a First Amendment (the “First Amendment”) to the Asset Purchase Agreement. Pursuant to the First Amendment, the Company and Buyer agreed to, among other things: (i) the removal of the escrow mechanisms for the purchase price adjustments contemplated under the Asset Purchase Agreement; (ii) the addition of a pre-closing inventory count rather than a post-closing inventory count; (iii) the revision of the net working capital adjustment provisions to agree upon certain pre-determined assets and liabilities and remove deductions for certain types of inventory and account for inventory based on the Company’s historical accounting practices; (iv) the addition of a reserve to adjust for upgrades to equipment and inventory issues; and (v) the addition of a purchase price adjustment collar in the event the final net working capital amount is less the estimated net working capital exceeds, which entitles the Buyer to receive from the Company amounts in excess of the collar for such a shortfall.

The Company and the Buyer also entered into certain additional agreements, including, among other things: (a) the addition of a mutual non-disparagement provision; (b) the removal of the closing condition related to the process hazard analysis report and the amendment of one of the representations to account for such report; (c) the addition of a mutual release related to certain disputed items; and (d) the addition of an indemnification related to an item excluded from coverage in the representations and warranties insurance policy.

The Transaction was completed on April 18, 2025. We recognized a gain on sale for the Transaction of $1.3 million.

Separation Agreements

Fred W. Wagenhals

On April 8, 2025, in connection with Fred W. Wagenhals’ resignation from his position as the Executive Chairman of the Company and as Chairman of the Board on April 4, 2025, the Company and Mr. Wagenhals entered into an Executive Separation Agreement, effective April 4, 2025, pursuant to which Mr. Wagenhals is entitled to receive certain separation benefits, including: (i) payment of all compensation and benefits to which Mr. Wagenhals is legally entitled under the Wagenhals Employment Agreement through April 4, 2025; (ii) a cash separation payment equal to $700,000, consisting of (a) a lump sum payment of $300,000 (an amount equal to nine months of Mr. Wagenhals’s annual base salary) and (b) an aggregate of $400,000 (an amount equal to 12 months of Mr. Wagenhals’s annual base salary) to be paid in substantially equal installments in accordance with the Company’s normal payroll practices; (iii) reimbursement for all reimbursable expenses due to Mr. Wagenhals under the Wagenhals Employment Agreement; and (iv) a lump sum payment equal to the value of Mr. Wagenhals’s accrued and unused vacation and paid time off balance.

Jared Smith

On May 21, 2025, the Company and Mr. Smith entered into an Executive Separation Agreement, which became effective as of 5:00 p.m. Eastern Time on May 30, 2025, pursuant to which Mr. Smith is, subject to his release of certain claims in favor of the Company (the “ADEA Release”), entitled to receive certain separation benefits, including: (i) payment of all compensation and benefits to which Mr. Smith is legally entitled under his employment agreement through May 30, 2025; (ii) a lump sum cash separation payment (the “Cash Severance Payment”) equal to $625,000 (an amount equal to 15 months of Mr. Smith’s annual base salary), which Cash Severance Payment will be paid on the Company’s first payroll date that occurs within a 15-day period following the Company’s receipt of the ADEA Release; (iii) reimbursement for all reimbursable expenses due to Mr. Smith under his employment agreement as of May 30, 2025; and (iv) a lump sum payment equal to the value of Mr. Smith’s accrued and unused vacation and paid time off balance as of May 30, 2025. The Company also agreed to pay premiums for extended health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) for a period of 12 months for Mr. Smith and his family, or until Mr. Smith’s coverage otherwise terminates in accordance with COBRA or on account of Mr. Smith’s eligibility to receive coverage under a subsequent employer’s program.

Pursuant to Mr. Smith’s Executive Separation Agreement, Mr. Smith will be permitted to retain 100% of his nonqualified stock options and shares of Common Stock, including any remaining unvested shares and options, which immediately became vested and exercisable as of May 30, 2025, subject to the terms and conditions of the Company’s 2017 Equity Incentive Plan and any applicable award documentation with respect to such options, which terms and conditions include exercisability of the options for up to ten years after the original issuance date.

Sunflower Loan Amendments

On April 18, 2025, we entered into a Consent and Second Amendment to Loan and Security Agreement (the “Sunflower Loan Amendment”) by and among the Company and other borrowers party thereto (collectively, the “Borrower”), and Sunflower Bank, N.A., as administrative agent and collateral agent (the “Agent”). The Sunflower Loan Amendment amends that certain Loan and Security Agreement, dated as of December 29, 2019, by and among the Borrower, the Lenders and the Agent (as amended by the Sunflower Loan Amendment, the “Sunflower Loan Agreement”).

Pursuant to the Sunflower Loan Amendment, the Borrower and the Agent agreed to, among other things: (i) release the Agent’s security interest in all collateral securing the Borrower’s obligations under the Sunflower Loan Agreement upon consummation of the sale of the Ammunition Manufacturing Business; (ii) reduce all amounts available under the Revolving Loan to zero dollars as of the effective date of the Sunflower Loan Amendment; (iii) enter into an Amended and Restated Revolving Line Promissory Note in the amount of $5.0 million, representing 100% of the Revolving Line Commitment available under the Sunflower Loan Agreement, executed by Borrower in favor of Agent as of the effective date of the Sunflower Loan Amendment; and (iv) certain other amendments to Borrower’s customary covenants and obligations under the Sunflower Loan Agreement that only take effect in the event the Revolving Line Availability is greater than zero dollars.

On May 13, 2025, the Company entered into a Third Amendment to Loan and Security Agreement (the “Third Sunflower Loan Amendment”) by and among the Borrower and Agent. The Third Sunflower Loan Amendment further amends the Sunflower Loan Agreement. Pursuant to the Third Sunflower Loan Amendment, the Borrower and the Agent agreed to change the definitions in the Sunflower Loan Agreement of: (i) “AMMO, Inc” to “Outdoor Holding Company,” (ii) “Ammo” to “OHC,” (iii) “AMMO TECHNOLOGIES, INC” to “OHC TECHNOLOGIES, INC,” and (iv) AMMO MUNITIONS, INC” to “OHC MUNITIONS, INC.”

Delaware Litigation Settlement

On May 21, 2025, the Company entered into a Settlement Agreement (the “Settlement Agreement”), by and among the Company, Speedlight Group I, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company (“Speedlight”), Mr. Urvan, and the following persons, each of whom serves or previously served on the Board of Directors: Richard R. Childress, Jared Smith, Fred W. Wagenhals and Russell Williams Wallace, Jr. (collectively, the “Legacy Directors”). The Settlement Agreement became effective as of 5:00 p.m. Eastern Time on May 30, 2025, pursuant to its terms (the “Settlement Effective Date”). As a result and pursuant to the Settlement Agreement, effective as of the Settlement Effective Date, (i) Jared Smith resigned as a member of the Board of Directors and from his position as the Chief Executive Officer of the Company and as an officer or member of each of the Company’s direct and indirect subsidiaries and (ii) Mr. Urvan was appointed as the Chief Executive Officer of the Company and as the Chairman of the Board of Directors. In addition, in accordance with the Settlement Agreement, on June 3, 2025, the Company, Speedlight, Mr. Urvan and the Legacy Directors filed a Stipulation of Voluntary Dismissal With Prejudice to dismiss, with prejudice, all claims asserted in the Delaware Litigation.

Issuance of Warrant

As partial consideration for the settlement, on the Settlement Effective Date, the Company issued an affiliated designee of Urvan, a warrant (the “Warrant”) to purchase 7.0 million shares (the “Warrant Shares”) of Common Stock. The Warrant has a five-year term and an exercise price of $1.81 per share. Pursuant to the terms of the Warrant, the Warrant is exercisable at the holder’s discretion, in whole or in part, on or after November 30, 2025, provided that the Warrant automatically vests and becomes exercisable in certain circumstances, such as bankruptcy, liquidation, termination of the business or other similar events, as well as upon consummation of any Extraordinary Transaction (as defined in the Warrant).

Pursuant to the terms of the Warrant, the Warrant Shares may not, subject to certain exceptions, be sold, assigned, transferred or otherwise distributed without prior approval from a majority of the disinterested and independent members of the Board of Directors, provided that on each of the first three anniversaries of the Settlement Effective Date, the holder may transfer 25% of the total issuable shares under the Warrant.

Issuance of Unsecured Promissory Notes

Pursuant to the Settlement Agreement, the Company also issued to Mr. Urvan's affiliated designee, an unsecured promissory note on the Settlement Effective Date for a principal amount of $12.0 million (“Note 1”). Note 1 bears interest at 6.50% per annum (subject to a 2.00% increase during an event of default), which interest is payable to the holder annually on the anniversary of the Settlement Effective Date, beginning on the first anniversary of the Settlement Effective Date (each interest payment due date, an “Interest Payment Date”). The unpaid principal balance of Note 1 and all accrued and unpaid interest thereon is due on the 12th anniversary of the Settlement Effective Date (the “Note 1 Maturity Date”).

Pursuant to the terms of Note 1, the Company is required to make annual prepayments such that $1,000,000 (inclusive of accrued and unpaid interest then due and payable) is paid to the holder on each Interest Payment Date. The Company has the right to prepay, prior to the Note 1 Maturity Date, all or any part of the principal or interest of Note 1 without penalty. In addition, the holder may not request early repayment of Note 1 prior to May 30, 2027. Any optional prepayment by the Company must be approved by a majority vote of the independent and disinterested members of the Board of Directors as then constituted.

Pursuant to the Settlement Agreement, the Company issued to Mr. Urvan's affiliated designee, an unsecured promissory note in a principal amount of $39.0 million (“Note 2” and together with Note 1, the “Notes”) on the Effective Date. Note 2 bears interest at a rate per annum equal to the applicable federal rate for long-term loans in effect on the Effective Date (subject to a 2.00% increase during an event of default), which is payable to the holder annually on the Interest Payment Date. The unpaid principal balance of Note 2 and

all accrued and unpaid interest thereon is due on the 10th anniversary of the Effective Date (the “Note 2 Maturity Date”)

Pursuant to the terms of Note 2, the Company is required to make annual prepayments of the outstanding principal amount on Note 2 equal to $1.95 million on each Interest Payment Date. The Company has the right to prepay, prior to the Note 2 Maturity Date, all or any part of the principal or interest of Note 2 without penalty. In addition, the holder may not request early repayment of Note 2 prior to May 30, 2027. The Company also has the option, at any time prior to May 30, 2026(unless extended by mutual consent of the holder and the Company), to prepay all, but not less than all, of the then-outstanding principal amount of Note 2 and accrued and unpaid interest thereon in exchange for the issuance of a warrant (the “Additional Warrant”) to purchase 13.0 million shares of Common Stock (the “Additional Warrant Shares”), provided that the Company must first obtain stockholder approval of the issuance of the Additional Warrant and the Additional Warrant Shares pursuant to Nasdaq Listing Rule 5635. Upon issuance of the Additional Warrant, all remaining obligations under Note 2 would be deemed satisfied with the same force and effect as a prepayment of all principal and accrued and unpaid interest under Note 2. Any optional prepayment by the Company, whether in cash or by issuance of the Additional Warrant, must be approved by a majority vote of the independent and disinterested members of the Board of Directors as then constituted.

The Additional Warrant, if issued, would have a five-year term and an exercise price of $1.00 per share. Pursuant to the terms of the Additional Warrant, the Additional Warrant would be exercisable at the holder’s discretion, in whole or in part, on or after the first anniversary of the issuance date. Except with respect to the exercise price and the vesting date, the terms of the Additional Warrant and the Warrant are substantially similar.

The Notes also include events of default customary for arrangements of this type, including, among other things, non-payment, bankruptcy and insolvency. The occurrence and continuance of an event of default could result in the acceleration of the obligations under the Notes.

Other Provisions of the Settlement Agreement

Pursuant to the Settlement Agreement, for a period of three years from the Settlement Effective Date (the “Standstill Period”), each of the Legacy Directors agreed to appear at all annual and special meetings of stockholders and to vote their shares beneficially owned as of the Settlement Effective Date in accordance with the Board of Director’s recommendations with respect to director elections and other proposals submitted by the Company or by a stockholder. In addition, during the Standstill Period, the Legacy Directors agreed to certain standstill provisions relating to proxy solicitations for, among other things, director nominations and extraordinary transactions.

The Settlement Agreement also includes a release of claims (i) by the Company against Urvan, (ii) by Urvan against the Company, (iii) by Urvan against the Legacy Directors and (iv) by the Legacy Directors against Urvan. The Settlement Agreement contains customary representations, warranties and obligations of the parties, including, among others, certain non-disparagement and confidentiality covenants.

Dismissal of Books and Records Action

On June 6, 2025, Mr. Urvan and the Company filed a Stipulation and (Proposed) Order of Dismissal in the Books and Records Action. The court subsequently issued an order granting the motion and dismissing the Books and Records Action.

Accounting for the Settlement Agreement

We evaluated the accounting for the Warrant and Notes 1 and 2. We evaluated the Warrant in accordance with ASC 480, Distinguishing Liabilities from Equity, and determined the Warrant meets the equity classification and will be recorded in additional paid-in capital in the consolidated balance sheet during the three months ended June 30, 2025. The Warrant was valued using a Black-Scholes model and determined to have a value of $7,094,926. Notes 1 and 2 were evaluated in accordance with ASC 470, Debt and ASC 815, Derivatives and Hedging. Note 1 will be recognized at a value of $9,866,679, net of discount on issuance and be recorded as a note payable on the consolidated balance sheet. Note 2 will be recognized at a value of $12,105,624, net of discount at issuance and be recorded as a note payable on the consolidated balance sheet.