By Ciara Linnane
Shareholder and director Steven Urvan is trying to replace the entire Ammo board
Shares of Ammo Inc. slid 2.9% on Tuesday, after the owner of GunBroker.com said it has placed Chief Strategy Officer Steven Urvan and Chief Financial Officer Susan Lokey on leave with immediate effect.
"The company (POWW) has reason to believe that these individuals may have misappropriated the company's data and digital assets and transmitted that data to a third party controlled by Mr. Urvan and with which Ms. Lokey is associated," the Scottsdale, Ariz.--based company said in a statement.
GunBroker.com is an online marketplace for the firearms and shooting sports industries.
The board has formed a special committee in connection with the conduct of Urvan, and issued an initial statement.
"We are deeply concerned by the preliminary results of our investigation to date," said the statement.
The company believes Urvan was aware of its prior attempts to investigate and that his recently announced proxy contest seeking to replace the entire board "may be, at least in part, an attempt by Mr. Urvan to thwart our investigation and driven by his desire to avoid accountability," the statement continued.
Urvan, who is Ammo's biggest individual shareholder with about 17.1% of its outstanding common shares, said in that release that he wants to apply his "unique track record of success in e-commerce, firearms and outdoor sporting, and investing to lead an ongoing transformation of Ammo in the public market."
He criticized the current board's performance and noted that Ammo had been unprofitable every quarter prior to the GunBroker.com acquisition, while also saying that the board lacked relevant experience in firearms.
Urvan also opposed a plan proposed by Ammo CEO Fred Wagenhals to separate the company's ammunitions and marketplace businesses into individually traded public entities.
Urvan founded GunBroker.com in 1999 and was CEO until April 2021, when it was acquired by Ammo, according to the company's 10-K annual report filed with the Securities and Exchange Commission on June 29.
Urvan became a director of Ammo at the time of the transaction. He is also founder and CEO of BitRail, a compliant payments infrastructure company, since February of 2018, the 10-K states.
The entrepreneur is still active in other companies that he founded over the years, including Outdoors.com Digital Media, an outdoor lifestyle website; App Cohesion, an e-commerce technology platform; and Gemini Southern, a merchant bank.
His company the Urvan Group did not immediately respond to a request for comment.
Ammo had net income of $3.2 million, or 2 cents a share, in its first quarter fiscal quarter, ending June 30, down from $9.5 million, or 8 cents a share, in the year-earlier period. Revenue rose 36.6% to $60.8 million.
Ammo does not expect the investigation to yield findings that will impact its financial results, balance sheet or prospects.
The stock is down 35% to date in 2022, while the S&P 500 has fallen 18%.
-Ciara Linnane
(END) Dow Jones Newswires
09-07-22 0655ET
Copyright (c) 2022 Dow Jones & Company, Inc.Ammo shares slide 2.9% after board places two executives on leave pending a probe into potential misconduct - Morningstar
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