AMMO, INC. : Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant (form 8-K)

Item 1.01 - Entry into a Material Definitive Agreement.

On March 15, 2019, Enlight Group II, LLC ("Enlight"), a wholly owned subsidiary of AMMO, Inc. (the "Company"), completed its acquisition of 100% of the assets of Jagemann Stamping Company's ("JSC") ammunition casing, projectile manufacturing and sales operations ("Jagemann Munition Components" or "JMC") pursuant to the terms of the Amended and Restated Asset Purchase Agreement ("Amended APA") dated March 14, 2019, a copy of which was filed with the Securities and Exchange Commission on March 18, 2019, and is incorporated herein by reference. In accordance with the terms of the Amended APA, Enlight paid to JSC a combination of $7,000,000 in cash, $10,400,000 delivered in the form of a Promissory Note ("Seller Note"), and 4,750,000 shares of the Company's common stock. Pursuant to the Amended APA, Enlight acquired JSC's munition and casing division assets (including equipment and intellectual property), and continued the operations at JSC's Wisconsin facilities.

On June 26, 2020, the Company, Enlight and JSC entered into a Settlement Agreement pursuant to which the parties mutually agreed to settle all disputes and mutually release each other from liabilities related to the Amended APA occurring prior to June 26, 2020 (the "Settlement Agreement"). Pursuant to the Settlement Agreement, the Company shall pay JSC $1,269,977 and shall provide JSC with: (i) two new promissory notes, a note of $5,803,800 related to the Seller Note and note of $2,635,797 for inventory and services, both with a maturity date of August 15, 2021 ("Notes"), (ii) general business security agreements granting JSC a security interest in all personal property of the Company. Pursuant to the Notes, the Company is obligated to make monthly payments totaling $204,295 to JSC. In addition, the Notes have a mandatory prepayment provision that comes into effect if the Company conducts a publicly registered offering (an "Offering"). Pursuant to such provision, the Company: (a) upon the closing of an Offering of less than $10,000,000 would be obligated to pay the lesser of ninety percent (90%) of the Offering proceeds or seventy (70%) of the then aggregate outstanding balance of the Notes; and (b) upon the closing of an Offering of more than $10,000,000 would be obligated to pay one hundred percent (100%) of the then aggregate outstanding balance of the Notes. The Company was granted an option to repurchase up to 1,000,000 of the shares of the Company's common stock issued to JSC under the Amended APA at a price of $1.50 per share through April 1, 2021 so long as there are no defaults under the Settlement Agreement.

The foregoing summary of the Settlement Agreement and ancillary agreements is not complete and is qualified in its entirety by reference to the full text of the Settlement Agreement and ancillary agreements, a copy of which shall filed as exhibits to our Form 10-K for the year ended March 31, 2020.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information provided in response to Item 1.01 of this report is incorporated by reference into this Item 2.03.

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