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LEASES

9 Months Ended

Dec. 31, 2021

NOTE 8 – LEASES

We lease office, manufacturing, and warehouse space in Scottsdale and Payson, AZ, Atlanta and Marietta, GA, and Manitowoc and Two Rivers, WI under contracts we classify as operating leases. None of our leases are financing leases. The Payson lease had an option to renew for five years and the lease expired in November of 2021. The Scottsdale lease does not include a renewal option. As of June 26, 2020, the Company entered into an amended agreement that modified the Manitowoc lease to monthly payments of $34,071 and decrease the term to March 2025. The agreement does not contain a renewal option. Accordingly, we modified our Right of Use Assets and Operating Lease Liabilities by $737,680 at June 30, 2020. In August of 2021 we extended the lease of our Atlanta offices through May of 2027, accordingly we increased our Right of Use Assets and Operating Lease Liabilities by $501,125 at September 30, 2021.

Consolidated lease expense for the three and nine months ended December 31, 2021 were $309,766 and $896,594 including $307,278 and $882,028 of respective operating lease expense and $2,488 and $14,566 of respective other lease associated expenses such as association dues, taxes. Consolidated lease expense for the three and nine months ended December 2020 was $217,140 and $609,250, respectively, including $179,487 and $534,781 of respective operating lease expense and $37,653 and $74,468 of respective other lease associated expenses such as association dues, taxes, utilities, and other month to month rentals.

AMMO, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The weighted average remaining lease term and weighted average discount rate for operating leases were 3.7 years and 10.0%, respectively.

Future minimum lease payments under non-cancellable leases as of December 31, 2021 are as follows:

Years Ended March 31,
2022 ⁽¹⁾	$	291,808
2023		1,018,689
2024		873,420
2025		675,078
2026		250,008
Thereafter		301,168
Total		3,410,171
Less: Amount Representing Interest		(578,121	)
Operating lease liability, net	$	2,832,050

(1)

This amount represents future lease payments for the remaining three months of fiscal year 2022. It does not include any lease payments for the nine months ended December 31, 2021.

AMMO, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS