$POWW a Gun-Toting E-Commerce Site, Bought By Outlaws, Then Double-Crossed by the Seller.

A wild ride in the online gun business

This was sitting in my drafts folder, but after someone wrote up this company on VIC recently, I felt I should publish.

This is a tale about Outdoor Holding Company (POWW)

Background

Steven F. Urvan is a serial entrepreneur. He has been involved in starting over 15 companies. One (POWW) has been demonstrably cash flowing, the others have little disclosure and not not appear to be profitable.

They include:

BitRail - a fintech founded in 2018 that provides an infrastructure to allow 3rd party partners to offer a regulatory compliant payment system to their customers including payments, loyalty and rewards, and optionally cryptocurrency.

GunBroker.com - America’s largest online marketplace for firearms. With 3x the sales of guns.com.

Outdoors.com Digital Media - “a digital media platform focusing on outdoor lifestyle content.” Probably blogs and content marketing stuff.

App Cohesion - “integrated software solutions for the firearms retail industry.” This seems to be POS, ERP for firearms retailers.

Gemini Southern which has subsidiaries:

TVP Investments, LLC (TVP) - a holding company.

IA Tech, LLC and its wholly owned subsidiaries (IA Tech):

Media Lodge, Inc. (until May 2019) - A digital media company specializing in content for outdoor and shooting sports enthusiasts. Filed for Chapter 11 bankruptcy on November 10, 2020. It Previously claimed to reach over 40 million people monthly through digital content.

Cloud Catalyst Technologies, LLC - analytic platform for gun retailers. Owns trademarks “gun genius” and “gunbroker.com gold” which might be a market insights software.

S&T Logistics, LLC - logistics company.

Enthusiast Commerce, LLC - Involved in firearm and knife gun and auction service. (I think it is a seller on the gunbroker.com website)

Outdoor Liquidators, LLC - unclear. I think its an entity to buy wholesale products to resell on gunbroker.com

RightFit Direct, LLC - unknown

Outsource Commerce, LLC - unknown

GDI Air - unknown

Sources: [1] [2] [3]

He did have some notable debt with his holding company:

“During 2019 the Company entered into a note payable agreement (Note Agreement B) with a financial institution dated May 31, 2019 which provided the Company with $65,000,000 and bears interest at a rate of 8% plus the greater of 90-day LIBOR or 2% (10% at December 31, 2020). The 90-day LIBOR resets every 90 days. Payments on Note Agreement B are payable as follows:

(i) fixed quarterly payments of $1,750,000; and

(ii) an annual variable prepayment equal to 75% of the prior fiscal year free cash flow as defined by Note Agreement B.

The note matures May 31, 2024 and is due and payable in full on the earlier of the maturity date or upon the occurrence of an event of default as defined by Note Agreement B. The note is collateralized by all of the Company’s consolidated assets.”

All of that being said, the core of his business empire was gunbroker.com, which earned 99% of the holding company’s stated 14.5M in operating income in 2019 (which I consider baseline).

GunBroker.com - A Potentialy Great Business

Gunbroker.com is a relic from the dot-com boom. Since 1999, it has been the leader in online gun sales. I like the gunbroker.com business a lot. Though it faces new competition from new entrants like guns.com. The types of guns they sell are:

- New guns

- Used modern guns

- Collectible guns

It has somewhat of a moat, as major online retailers like ebay and amazon can not sell these products. And so gunbroker.com has been the largest platform for guns online in America.

I do not believe they have a moat for new guns. During covid, major sellers like Walmart, cabelas and bass pro shop began implementing their buy online, pick up in store model. These are now stable purchasing avenues that gunbroker has to compete with. Also generally it is cheaper to buy in person. gunbroker.com charges a $50 transfer fee (fee for transferring a firearm from another state) to pick up a gun at a participating gun store, and an additional 1% for compliance (state sales tax + background check). Guns.com charges a flat background check and sales tax, so it is slightly cheaper. Better yet are in-store gun purchases which typically include a free background check.

I don’t think that they have any moat for used or new guns as their prices are generally higher than other outlets, with similar selection. They do have a wider selection than in store.

However, I do think that gunbroker.com will remain the top source for collectible guns. 32% of Americans own a firearm, with half of that number owning 1-2 guns. 3% of Americans own 17+ guns. These are gun “collectors.” They collect guns that are fun to shoot (i.e. machine guns) or historically notable guns (like the M1 Garand from World War II). For this market segment gunbroker.com is the best option. They have #1 search position for top collectible guns like the M1 Garand. They have 3x the sellers for collectible guns compared to guns.com. Rockville Auctions is the other major competitor for collectible guns, and they made $111M in gross auction sales for 2024, while gunbroker.com made ~$800M in 2024.

The Collectible Business Model Is Great

An old gun collector dies. His estate or heirs liquidate his guns at the local gun shop. The gun shop sells it on gunbroker.com. They buy, die and the cycle repeats. GB gets its 6% cut of the sales price and only really has to pay for web hosting fees.

The Rest of the Business is Not

Interestingly, used guns don’t seem to lose much value on re-sale. These and new guns make up over 90% of sales. Here gunbroker doesn’t have any advantage. Doing some market research I found that they are not the lowest cost seller (after including their fees), but they do have a wider variety than most in-person stores. Consider newer entrants like guns.com and other e-commerce sellers, and any competitive advantage disappears for the bulk of their sales.

And Neither is the Website

I signed up for gunbrokers.com. In order to see the full final price you have to register (no guest checkout) and set-up 2 factor authentication. You have to copy the code they email you back into the registration page to get to the checkout. Sign-up takes probably 10 minutes in total. At some point during checkout the loading screen took over 5 minutes. The privacy banner pops up randomly even after you decline it. The UI is from 2004. The search function is broken unless you type the title exactly. Basically they are doing everything they can to make the user experience and SEO poor and they still are the #1 website for gun sales. That is because if you are the only or best game in town, people will put up with a lot of nonsense.

This website experience basically tells me that the business is good, but the management has a troubled past

Selling Gunbroker to AMMO, Inc.

On April 30, 2021, GDI executed an agreement to merge with Ammo, Inc. (Ammo) and SpeedLight Group, I, LLC (SpeedLight), a wholly owned subsidiary of Ammo. As a result of the completion of the arrangement, the separate existence of GDI will cease and Ammo will continue its existence as the surviving company in the merger. The purchase included cash and stock in the surviving company. The value of the transaction was 240 million. On 14M in normalized EBIT that seems to have been a good sell for Urvan. He also got to keep a position as strategy director of gunbroker.com after the purchase which entails pay and benefits. He sold it at its peak when covid inflated online orders, which was very smart on his part. However he sold it for a majority stock deal, which turned out to be a bad call.

Now who did he sell to?

Corporate Entities involved in the sale of GunBroker.com:

• AMMO, Inc. – Public company that acquired GunBroker.com.
  

• Speedlight Group I, LLC – A wholly owned subsidiary of AMMO, formed specifically for the merger.
  

• GunBroker.com, LLC / IA Tech, LLC / Gemini Direct Investments, LLC – The Urvan-controlled entities being acquired.
  

• Steven F. Urvan – Founder and owner of GunBroker.com; became AMMO’s Chief Strategy Officer and largest shareholder after the merger.

• Stephen Verska (GunBroker’s Chief Technology Officer under Urvan) & SharkDiver Consulting, Inc. (Verska’s company)

AMMO Directors and Executives:

1. Fred W. Wagenhals – AMMO’s Chairman and CEO; officially led merger negotiations.
   

2. Christopher D. Larson – Co-founder and VP of Finance; barred by the SEC from holding officer/director roles due to prior fraud but acted as a de facto officer. Larson was part of a market manipulation scheme. In 2020, the SEC obtained a final judgment against Larson for his role in manipulating the market for Crown Dynamics stock. The SEC’s complaint alleged that: Larson obtained control of Crown Dynamics, a shell company, and transferred shares to nominees. He paid $400,000 for a “call center” to promote Crown and placed manipulative trades in his own account to create the appearance of market interest. As Crown’s stock price became inflated due to these efforts, Larson’s nominees sold shares and wired the sale proceeds—at least $865,000—to him.
   

3. John P. Flynn – Disbarred attorney serving as AMMO VP and legal point person in the deal.
   

4. Jessica M. Lockett – Board member, shareholder, and Audit Committee participant.
   

5. Richard R. Childress – Board member and shareholder; involved in the merger.
   

6. Harry S. Markley – Board member and shareholder.
   

7. Russell William Wallace, Jr. – Board member and Audit Committee member.
   

8. Robert J. Goodmanson – President, board member, and affiliated with an investment firm holding AMMO shares.
   

9. Robert D. Wiley – Chief Financial Officer, participated in the merger.

So these are the players. Let me again restate that Urvan (the seller) has been involved in many ventures, only one has been successful. At the acquirer, Ammo, The “VP of finance” was barred from the SEC for holding any high level positions in a public company. This means that the VP position is the highest he is legally allowed to have. However, in Urvan’s complaints, Larson seemed to have operated as a Tony Soprano type character - an underboss who really runs the operation while the official boss is only a figurehead.

I’ll also restate that person serving as counsel for the deal was disbarred.

At the time the only major business that AMMO owned was an ammunition manufacturing facility in Wisconsin. In earnings calls since the acquisition, management has since stated that the cost of producing the ammunition was higher than the sales price of the ammunition. So basically Ammo owned a money burning factory.

In 2020 Urvan had $50m in debt coming due, so he started looking for buyers for his profitable business - gunbrokers.com. In 2021 AMMO expressed interest in the company (seeing the newly inflated covid sales numbers). Meetings and negotiations occur between Urvan and AMMO executives (notably Wagenhals, Larson, and Flynn).

Urvan alleged that during the negotiations, Ammo made misrepresentations including:

- Not disclosing the criminal history of its executives. (This was very easy for me to find, I am not sure how he didn’t check this)

- “AMMO touted the construction and capabilities of its ‘state-of-the-art’ manufacturing facility in Manitowoc, Wisconsin. AMMO represented to Urvan that the facility was nearly complete, would be operational imminently, and would be a reliable and profitable asset.” This was not true, the facility was not completed and would need significant investment to get it up to speed.

- “AMMO stated that the machinery at the facility was ready for operation and would produce high volumes of ammunition quickly.” Also untrue. Key equipment was missing including calibration equipment. There were no staff.

-“AMMO did not disclose the actual capital requirements needed to finish and operationalize the factory…The misrepresentation about the factory caused AMMO’s projections—upon which Urvan relied—to be materially inflated.”’

- “Urvan also later learned that AMMO’s factory was operated in part by a family member of a member of AMMO’s senior management team. AMMO did not disclose this related-party relationship either, in breach of its representation in Section 5.11(b) of the Merger Agreement.”

So he meets this shady management team, but Urvan still needs the money (and it’s a good deal) so it goes forward.

AMMO forms Speedlight Group I, LLC to serve as the merger vehicle. The merger closes for $240M. Urvan receives $50M cash, up to 20M AMMO shares, and Speedlight assumes $52.3M in debt. Urvan becomes Chief Strategy Officer for gunbroker.com and joins the AMMO board.

Shortly after, the Verska Agreement is signed, a post merger compensation agreement with gunbroker.com’s CTO Stephen Verska. He is to be paid $1m a year for 3 years. His previous salary was $250k a year. This was done allegedly to maintain Urvan’s control of GunBroker.

Urvan’s relationship with the Ammo team quickly deteriorates. He learns that Kathleen Hanrahan, a former AMMO board member and audit committee chair, filed a whistleblower complaint with OSHA in 2019. She alleged that AMMO executives: Retaliated against her for raising concerns about financial reporting. Committed violations of the Sarbanes-Oxley Act (SOX). OSHA issued a finding of “reasonable cause” to believe AMMO violated SOX. That’s a serious designation suggesting the agency found credible evidence of corporate misconduct.

This lawsuit was ongoing during the time of the GunBroker merger but was not disclosed to Urvan. AMMO settled the case after the merger—a fact Urvan learned only after the transaction closed.

Around this time he is denied access to internal data. (that could possibly be used to benefit his other businesses).

“Urvan also lacked access to financial and operational data for the business he had built and sold. He alleges that AMMO’s executives and IT staff restricted his ability to access GunBroker.com’s back-end data, violating his rights as a director and impairing his ability to evaluate the business.”

In Aug 2022, Urvan initiated a proxy battle to replace AMMO’s board and spin off GunBroker.com. Nov 2022 the proxy contest settles. Board expands to 9 members. Urvan appoints 2 nominees, the CEO resigns and Urvan joins the CEO succession committee.

Spin-off of the ammunition business.

In January 2025, AMMO, Inc. announced it would sell its money losing Wisconsin ammunition factory to Olin Winchester for $75 million, closing the deal in April 2025. As part of the broader restructuring, AMMO issued Series A Preferred Stock in late 2024 to insiders including Chairman Christopher Larson, ex-CEO Fred Wagenhals, and CFO Michael Paul.

Steven Urvan alleged in his lawsuit that the preferred stock issuance was self-dealing, lacked board disclosure, and diluted common shareholders’ value and voting rights.

On April 18 2025, AMMO Inc. completed the sale of its ammunition manufacturing facility to Olin Corporation for $75 million. After fees and tax, I estimate the cash proceeds to be $55.8 million. That number is also referenced in the St. Louis business journal and Olin’s 10-Q for Q 1 2025

Urvan’s lawsuit

Urvan sues AMMO to unwind the merger, citing fraud and misrepresentations. The claims that Ammo overstated the production and value of its ammunition production. AMMO countersues over indemnity and post-merger disputes.On May 29th, 2025. Ammo settles with Urvan. Urvan is appointed CEO and Chairman of the board. He received the following in compensation: 7 Million warrants a strike price of 1.81. And $51M in interest bearing notes.

So what have we learned?

In my mind there are 3 options here:

1. He did not check out the AMMO management team, company or business he was selling to. Most of this was relatively easy to verify. You could google the people involved in the company, or visit the AMMO plant. If this is true I would chalk that up to incompetence or ignorance.

2. He did check out the team, and knew this, but planned on waiting until the moment was right to capitalize on that information. That would be malicious on his part.

3. The AMMO management team had an intricate scheme where they hid key individuals from the internet, and created some diversions so that details about their business were obscured during the sales process.

What are we left with?

AMMO now has Urvan in charge.

Its latest filing says that it had $32M in cash on the balance sheet as of March 31. It should receive $55.8M from the ammunition business sale. It has to pay out (to Urvan) $51M for the settlement. It has one remaining lawsuit (for now) that is seeking $100m in damages for a contract violation. Let’s assume that settles for $20M. That leaves us with $17M in net cash.

Operating profits were $14.5M in 2019.

Gross profit in the last 3 quarters was ~$10M/quarter.

Let’s assume that sustainable gross profit ends up at $30M.

In 2019 (with Urvan in charge) G&A was $11M. However today, the business has additional costs:

- $3.1M in dividend payments on the preferred. These have a liquidation preference at $24, so it would cost $35M to remove this cost.

- Public company compliance fees ~$2M

- A hungry board of 9 to feed. ~$1M

After all of that we are left with 13MN in the owner’s income. At a 10x multiple that is $130.

Operating business: $130M

Net cash: $17M

= Est. market cap value = 147M

Current market cap = 175M

I would want a higher margin of safety working with Urvan, when considering the future legal fees that this company will generate. Urvan also hasn’t managed the website very well, instead focusing on his other projects. I think that will likely continue.

Overall Urvan was dealt a 14M/year EBIT website with $50M in debt. He sold it to AMMO Inc for $240M. He received $50M in cash and 17M in stock. He later sued Ammo to get $51M in cash and 7M warrants. He likely received at least $500k in compensation since 2021. And he runs the website once again. He and his legal team have come out well on this, I am not sure that us as investors will.

What do you think?

Appendix

See gemini investment portfolio: [3]

sold ammo division for 70m gross, maybe 55m cash

https://www.sec.gov/ix?doc=/Archives/edgar/data/0001015383/000164117225005369/form8-k.htm

Other warrants

As of December 31, 2024, we had 1,721,256 warrants outstanding. Each warrant provides the holder the right to purchase up to one share of our Common Stock at a predetermined exercise price. The outstanding warrants consist of (1) warrants to purchase 100,000 shares of Common Stock at an exercise price of $0.01 per share until December 2026; (2) warrants to purchase 911 shares of Common Stock at an exercise price of $1.65 per share until April 2025; (3) warrants to purchase 1,234,034 shares of our Common Stock at an exercise price of $2.00 per share consisting of 1% of the warrants that expired on August 2024, and 99% until February 2026; and (4) warrants to purchase 386,311 shares of Common Stock at an exercise price of $2.63 until November 2025.

The MN Action

On January 18, 2024, Innovative Computer Professionals, Inc. d/b/a Digital Cash Processing (“DCP”) filed a civil action in Minnesota state court against Outdoors Online, LLC d/b/a GunBroker.com (“GunBroker”) for breach of contract (the “MN Action”). In the MN Action, DCP alleges that GunBroker.com breached a May 2021 contract, pursuant to which DCP was to provide specified digital payment processing services, and it alleges $100 million in damages. On February 7, 2024, GunBroker.com removed the MN Action to the United States District Court for the District of Minnesota. On February 14, 2024, GunBroker moved to dismiss the MN Action.