Freedom Forge Armory State of the company 2021
2021 State of the Company From the Owner.
This is the company’s annual report on the state of Freedom Forge Armory LLC to investors, employees, and customers.
We’ve reached the end of another successful year. The theme for this year was “Steady as she goes.”
What happened this year.
In the first quarter of 2021 we saw steady growth for Freedom Forge Armory. We finally received the CNC machine in January and put it into service the same day. We made an initial run of Freedom Forge Armory Mk 5 Mod 4 Receivers which sold well. Additional tooling, programs, and set-ups were purchased and increased the company’s production abilities.
In the second quarter of 2021 Freedom Forge Armory started up variance manufacturing services. We took a unique approach to corner an under served portion of the market. We focused our services on small and medium sized 07 FFL’s that didn’t have their own manufacturing capability. This strategy has been wildly successful. The average size of these contracts has been 10 to 100 units per order. On average we have had one variance manufacturing contract per month sense starting the service, and received between three and four requests for quotes a week. Our current contract obligations will take us well into the first quarter of 2022. Focus on these smaller operations has brought in steady work without exceeding production capability.
In the third quarter, the Mk 5 Mod 4 Joint Rifle was phased out of production as we re-tooled for the M6E rifles and receivers. Material supply problems continued to plague the industry and slowed the tooling up for the M6E which was completed in late September of 2021. The fist run of M6E receivers took place in October of 2021. Firearm transfers slowed in the third and fourth quarters as the demand continued to outpace supply.
Fourth Quarter 2021, sales volumes increased over 2020 levels as word got out about our variance manufacturing service. Variance manufacturing became our biggest market in 2021. This service has brought a lot of attention to Freedom Forge Armory with requests coming in from all over the US. Gunsmithing work remained steady throughout the year and we are still backlogged by six to eight months. Much of the delay has been due to the availability of parts and shifting focus to manufacturing.
A look the company right now. Sales volumes grew steadily throughout the year, without exceeding our production abilities. The M6E was introduced and generated a lot of buzz on the Freedom Forge Armory Brand. Tool-up and production of the M6E has been fully implemented. The company website was given a makeover with better product descriptions and streamlined to make it more user friendly. Research and development continues on the A Line suppressors. The prices of raw materials appear to have stabilized, but availability continues to be an issue. The company has partnered with two different forges to produce the required receiver blanks for variance manufacturing and our own product production. Freedom Forge Armory diversified its suppliers this year to minimize disruptions as much as possible. This strategy has proven effective.
The company has been steadily moving away from a gunsmithing / manufacturing hybrid business model towards a pure manufacturing business model, with the intent to focus the majority of our efforts on manufacturing in the next year.
Space in the current building has reached a critical level with continued reliance on drop shipping of materials.
As always there were some setbacks, but we managed to find solutions.
Full production of the A Line rifle suppressors was delayed, again due to tooling issues. We are working with an industry partner to develop a solution. Either by subcontracting baffle manufacturing to them or getting the specialized tooling made for us so we can complete the manufacturing on site. Both options are being explored.
Quality control of our Gunkote finishes was all over the place. Water contamination in the air lines of the shop seemed to be the issue. Several conference calls with KG Industries were held to resolve the issues. At the advice of KG Industries, we installed a new in line air filtration system and implemented regular draining and cleaning of the air system. In addition, new HPLV guns were purchased along with new regulators. More training on the proper HPLV gun settings and applying finishes was undertaken in house. New high intensity lighting was installed in the finishing area to highlight areas where the coatings were thin. These steps have resolved the majority of the finish quality issues.
We lost our firearms and ammunition supplier during the COVID pandemic. Negotiations to continue our relationship with Sports South LLC broke down in the third quarter, after reaching out to several of their competitors a new relationship with Zanders Firearms Distributor was established in the middle of the fourth quarter.
What we’re looking to in the future.
Next year, the company is going to purchase a second CNC machine from the same manufacturer of our current machine. With the profits generated from variance manufacturing we will be able to pay for the machine in full and place it in service as soon as it arrives. Delivery is currently set for the end of the 4th quarter of 2022. The second machine will double our ability to manufacture receivers and allow us to pursue larger contracts beyond our current capability of 100 units per order to 300 – 500 units per order, and allow the company to run multiple contracts at the same time.
To address the space concerns Freedom Forge Armory, and our partners at LaserUS LLC looked at several commercial buildings in the area with the expansion of both companies in mind, however none of these buildings met our needs or would require significant upgrades or remodels prior to occupation and cost was a significant factor. I am still perusing building at our current location with the goal to have this building, built and ready for occupation in two to three years. The current plans for the new building will require a 20K to 35K investment, financing options are being explored.
The company has entered into a “Vetrepreneur” partnership. Freedom Forge Armory continues to be a veteran owned and operated business, making it eligible for veteran only business opportunities, assistance, and mentorship to grow our brand. The first of these opportunities was with the private organization Warrior Rising. From them I hope to get mentorship on growing the Freedom Forge Armory Brand and methods and opportunities to secure working capital.
Freedom Forge Armory and LaserUS are putting together a collaboration project to offer a “Build your AR” class. Feelers for this project we put out in the fourth quarter and generated a lot of interest from the general public and this project is moving forward with the first class to be held in January 2022.
Manufacturing in the coming year will continue to focus on variance contracts and the M6E rifles. 80% of manufacturing capability will be put towards variance contracts, with the remaining 20% towards Freedom Forge Armory products.
We have started negotiations with a national distributor to carry our products for sale to a wider customer base. By partnering with a national distributor they will order larger quantities of our products and those profits can be put towards the new building that we desperately need.
I believe that the company is currently on the right track towards obtaining name brand recognition and growth. Our strategy of rapid scalability has allowed the company to remain steady and competitive in the current market. I am looking forward to another successful year in 2022.