NOSLER INC.
22 Nosler

Nosler Inc. announced the release of the 22 Nosler, a new cartridge designed to transform any standard AR-15 into the fastest, most powerful .22 caliber available for the platform, with the least amount of modification. The new addition to Nosler’s cartridge family delivers 30% more energy and is nearly 300 fps faster than a 223 Remington/ 5.56 NATO.

Born from the idea of creating the most powerful .22 caliber centerfire cartridge that would readily function in the AR platform, the 22 Nosler’s case design takes advantage of the AR-15’s unparalleled modularity, making the conversion from a standard 223 Remington/ 5.56 NATO to the 22 Nosler simple, requiring only a swap of the upper to the new chambering and switching out to a 6.8 Rem SPC magazine. This effortless two-step retrofit will allow shooters to experience the 22 Nosler’s lightning fast, hard-hitting performance, while still being able to use their existing 223 bolt carrier group.

Approaching 22-250 velocities in a significantly smaller package, the 22 Nosler yields nearly 25% more capacity than the 223 Rem/5.56 NATO making the round capable of pushing a 55gr. Nosler Ballistic Tip bullet at 3,350 fps out of an AR-15 fitted with an 18-inch barrel and a 77gr. Custom Competition bullet at 2,950 fps. Complete uppers and magazines for 22 Nosler conversions will be available at major sporting goods retailers nationwide. www.22Nosler.com

B.E. MEYERS & CO., INC.
BOARS-M2

B.E. Meyers & Co., Inc., announced the release of a revolutionary new optics and accessory rail system called the BOARS-M2 (B.E. Meyers Optics & Accessories Rail System) for the M2, M2A1, M3 series .50 caliber heavy machine gun platforms. The BOARS-M2 mount is a low-profile mounting solution that offers a quick-disconnect with true return-to-zero reattach. The BOARS-M2 represents a solution to the shortcomings of current M2 platform heavy machine gun optics and accessories mounting systems.

Key features for the BOARS-M2 include: a quick detach optics/laser rail, snag free design, non-marring installation, low height-over-bore, and oversized pass through aperture for use with iron sights.

The BOARS-M2 is comprised of two parts: the lower base and a quick-detach optics/accessory rail. This allows for quick and effective changes between day and night optics without any loss of zero. In addition, cleaning and maintenance of the M2 Weapon platform with an optics mount is simplified with the BOARS-M2. Legacy systems require the complete removal of the optic and mount (resulting in a complete loss of zero), whereas the BOARS-M2 only requires the quick-detach optics/accessory rail to be removed, thus preserving optic zero once all components have been re-installed. www.bemeyers.com

HI-POINT FIREARMS
Hi-Point Carbines

The Hi-Point is ergonomically and tactically designed with useable top-side and forearm bottom Picatinny rails with more than enough space for various day and night options.

Chambered in 9mm Luger, .40 S&W, .45 ACP and a totally new 10mm carbine scheduled for January 2018. The longer than pistol length barrel will add 100-250 feet per second higher-velocity and more energy over like-chambered handguns—especially if using +P loads.
Compact, light, reliable, accurate and affordable, these robust carbines can sling lead with much more expensive patrol carbine counter-parts all day long.

A simple blow-back design reliably feeds ammunition from the single-stack, 10-round magazine—a new high-capacity magazine is available in 9mm. www.hi-pointfirearms.com

MESA TACTICAL
LEO Gen II Telescoping Stock System

Mesa Tactical’s LEO Gen II Telescoping Stock adapter and pistol grip system for the Beretta 1301 semi-automatic shotgun is made specifically with law enforcement in mind and is the first of Mesa Tactical’s “Generation II” LEO adapters. The LEO adapter’s second generation has been completely redesigned for increased comfort, superior handling and configuration versatility. mesatactical.com

LEO Stock Adapter Product Features:

• Adapts AR-15 style buttstocks and pistol grips for use with Remington 870, Mossberg 500/590 and Beretta 1301 shotguns.
• Stock adapters are investment cast aircraft grade aluminum, CNC-machined and powder-coated black with a tough, chemical resistant finish.
• Adjustable length-of-pull (LoP) to fit shooter’s stature or for use with body armor and other equipment.
• Optional Crosshair Hydraulic Recoil Buffer reduces felt recoil by up to 70%.
• Gives the shotgun similar handling characteristics to the AR-15.
• Collapsible stock makes shotgun easier to stow, transport and deploy.
• Pistol grip configuration allows increased control and user comfort.
• Sling attachment points included.
• Optional SureShell aluminum carriers can be added to the M4 Carbine buttstock.
• No gunsmithing required.

GRAYBOE
Terrain Stock

The Terrain incorporates a comfortable, near vertical style grip, a classic raised cheek comb and ergonomic fore end to make it a transitional stock that is adaptable to a variety of applications.

The Terrain is an original Grayboe design and is constructed of the same proprietary solid homogenous fiberglass compound as the other stocks in the Grayboe line. The Terrain is formed under high pressure and heat, creating an exceptionally stiff and high strength platform that is able to withstand all weather and shooting conditions. The Terrain is ideal for hunting or general range use.

Several color options are available: black, khaki, gray and olive. The materials used in these stocks make it possible for rifle builders to custom Cerakote the stocks to fit builders’ specific customer requests. grayboe.com

Features:

• Flush cups for easy sling mounting
• 2 front sling studs which can be easily replaced with a Picatinny rail
• Raised cheek comb
• Vertical-style pistol grip
• Homogeneous fiberglass epoxy construction
• 2lbs 4 oz
• Barreled Action Availability
• Remington 700 Long Action BDL and DBM, Sporter/Magnum Barrel
• Remington 700 Short Action BDL and DBM, Sporter/Magnum Barrel

WHITE RIVER
Knife & Tool Tactical Utility Knife

White River Knife & Tool GTI 4.5 tactical/utility knife is designed for LEO and combat use.

A primary feature of the GTI 4.5 is the high-traction, textured olive drab hefty 5-¼ inch long Micarta handle. The deeply textured handle design provides a no-slip grip, regardless of conditions or use of gloves.

Along with the no-slip, high-traction leverage Micarta handle it has a finger cutout forward of the guard for extra-heavy cutting chores. A wide lanyard loop will fit either cord or a strap (web gear), and the rear is notched for secure no-slip striking use if needed. The top of the handle is engineered for a better hand grip with a slight rise for the thumb.

The full tang 4.5-inch blade is a stout 3/16-inch-thick CPM S35VN steel at a 60 Rockwell C scale hardness. This knife has a fairly wide modified fighting blade design featuring a wider cutting surface leading up to the spine of the knife.

The black finish is Ionbond, a process which deposits incredibly robust diamond-like carbon through a molecular vapor deposited technique that will not peel, crack or chip and adds no thickness to the blade.

This unique knife includes a sheath made of a heavy leather with tough Tactical Tailor Mallice clips for attachment to Molle webbing, conventional pack webbing as well as a wide military belt loop for conventional waist wear. www.whiteriverknives.com

AMERICAN BUILT ARMS CO.
MOD*X Side Folder Mechanism for the KRISS Vector

Made in the US, the MOD*X Side Folder Mechanism is an affordable, lightweight adapter compatible with the KRISS Vector. The MOD*X Side Folder Mechanism allows KRISS Vector owners to add their own AR-style pistol braces or butt stocks to be used in a side-folding configuration.

“The MOD*X Side Folder Mechanism was originally designed around the extremely popular MOD*X GEN III Modular Rifle System,” says Jason Combs, President and Founder of American Built Arms Company. “We found that our MOD*X Side Folder Mechanism works perfectly with the KRISS Vector.”

The MOD*X Side Folder Mechanism can be purchased on the A*B Arms website or through a variety of A*B Arms Dealers and Distributors. www.abarms.com

AMERICAN BUILT ARMS CO.
A*B Arms MOD*X Rifle

American Built Arms Company presents the MOD*X Rifle designed and engineered for military, law enforcement and shooting enthusiasts. The A*B Arms MOD*X Rifle is a lightweight, ergonomic, tactical rifle featuring the Remington Model 700 SPS Tactical AAC-SD .308 barreled action. The rifle provides a modular foundation on which tactical accessories can be added according to the operator’s needs. Designed and manufactured in the US by a Veteran-owned company. www.abarms.com

Specifications:

• Features the Remington Model 700 SPS Tactical AAC-SD in .308
• 20-inch Heavy Barrel with 5/8-24 Threaded Muzzle
• 1:10 Rate of Twist
• X-Mark Pro Externally Adjustable Trigger Set at 3 1/2 pounds
• 6061 T6 aluminum chassis; hard coat anodized to MIL-SPEC Type III
• 0 MOA scope rail included; 20 MOA scope rail accessory available
• KeyMod Standard on three sides of the forearm for mounting equipment
• Conventional slots for mounting Geissele Automatics accessories on two sides of the forearm
• Lightweight, 13.5in free-floating modular forearm
• Comes standard with A*B Arms Urban Sniper Stock, Urban Recoil Pad and the Ergo 4009 pistol grip
• Uses AICS-style .308 magazines
• Fixed stock version—Length of Pull adjustability of 10.62in to 15.69in
• Side-folder stock version—Length of Pull adjustability of 12.35in to 17.25in
• Trigger well will accept all after-market trigger systems
• Integrated push button magazine release located at the front of the trigger guard
• Weight: 7lbs 6oz

RUGER
Hollow-Point Knife

The Hollow-Point knife is designed by Ken Onion for the exclusive Ruger knife line by CRKT. This knife design combines the IKBS ball bearing pivot system for efficient opening with retro-styling and modern knife features such as a frame-lock mechanism, molded plastic scales, two-position pocket clip, lanyard hole and blade flipper for quick one-handed deployment. This uniquely retro-styled knife is ideal for hunting treks and great for every day carry in the pack or pocket.

The Hollow-Point is part of the exclusive Ruger knife line; the line includes designs for everyday carry, hunting, tactical uses and self-preparedness. The knives are crafted in varying sizes and finishes, with an assortment of blade edges. Developed by six master knife-smiths who combined their knowledge of the art with aesthetic details from Ruger firearms, the line offers unique knives with the important features that every good knife should have. These knives are purposely built to be durable and highly functional in the environments where Ruger customers will expect them to perform. www.ruger.com/crkt

FOBUS HOLSTER
RU2ND

Fobus Holsters and Mag Pouches expands its extensive holster and mag pouch line to include the new RU2ND for the Ruger LC9, LC9s and LC380. It is available in both paddle and belt styles.

The RU2ND is an Evolution Series, injection molded polymer holster, which provides passive retention and an adjustment screw for customized retention based upon the user’s personal preference. Steel reinforced rivets secure the holster to your attachment of choice and further strengthen the overall integrity of the holster, ensuring years of reliable and trouble-free use. www.fobusholster.com

$0–$50

US Night Vision
Mag Wraps

Want to change the style of your gun without having to paint it? Well now you can with our vinyl Mag Wraps. Mag Wraps come in 3-packs and will fit any 30rd AR-15 Magazine. They are easy to install and offer the ultimate in protection and graphics for your magazines. The wraps stop right at the mag well so there is no interference with the operation of your magazine while in the weapon. One package will retrofit three magazines.

Our premium US-Made wraps offer superior UV protection, chemical resistance, protection from scuffs and scrapes and are completely waterproof. All Mag Wraps are finished in a non-reflective matte outer coating. They will work with any substrate and leave zero residue when removed. They can be placed over each other if need be for an immediate mission profile change. Our exclusive two-piece wrap design leaves no seams on the crucial sides of the magazine. Mag Wraps Real Patterns, Real Protection. www.USNightVision.com and www.LoadOutLounge.com

Chipotle Publishing LLC
1 Year’s Subscription to Small Arms Review

The ultimate Small Arms Resource on industry practices, historical archives, new products, legal issues and breaking news. The 10 Issue—Subscription comes with free online access to articles and content. To order, visit www.smallarmsreview.com

VORTEX OPTICS
Defender Flip Cap

The E-10 flip cap is the last flip cap you will ever need! Virtually indestructible, this cap will fit snugly on nearly all Vortex Optics and features a snap flat spring that will keep your line of sight unobstructed.

Rifle ranges all over the world are littered with broken flip caps. This is one cap you will most likely never see in a flip cap boneyard. The E-10 cap has three stop positions: The first vertical, to put your dope disk (optional accessory) literally right in your face; The second at a 45°; and the third at 90° to lay flat back.

The E-10 fits all Vortex Riflescopes except the 1-inch tube Viper model VPR-M-01BDC, VPR-M-04BDC and VPR-M-03BDC. Outside diameter: 41.5-46 mm | 1.6-1.8 inches. www.vortexoptics.com

OTIS TECHNOLOGY
Ear Shield

Otis Technology presents a smarter way to protect your hearing while improving your response to range commands and other communication. The Ear Shield’s new Sound Reduction Chamber Technology changes the sport shooter’s experience. Now you can shield your ears from high-decibel noise comfortably while hearing other sound frequencies, like speech, clearly without removing your gear. Unlike muffs, the Ear Shield’s compact design won’t get in the way of achieving the proper cheek weld. www.otistec.com

• Improves communication
• Eliminates stock interference
• Cool and comfortable
• No batteries required
• Lightweight and collapsible
• Adjustable to fit any shooter

$51–$100

EliteIron
EliteIron Suppressor Wrap

A perfect holiday gift for any shooter, EliteIron Suppressor Wraps help solve optical mirage, heat and concealment issues for suppressed weapons. Buy an EliteIron Suppressor Wrap online at www.eliteiron.com/product-category/suppressor-wraps

• EliteIron Suppressor Wraps help eliminate optical images caused by rising heat.
• EliteIron’s 1000 Denier FR Cordura, NOMEX and CarbonX wrap materials help protect a shooter and gear against a suppressor’s hot surface.
• EliteIron’s wraps provide a way to attach camouflage elements for concealment purposes.
• Starting at $48, EliteIron rifle and pistol suppressor wraps come in colors and patterns designed to match any environmental requirement. And they are available in sizes that fit all EliteIron suppressors and most others.

$101–$200

Knight’s Armament Company
Folding Micro Front and Rear Sights

KAC’s line of Micro Iron Sights are currently in use by the United States Army, Marine Corps and numerous law enforcement agencies worldwide. This is because they are built to exacting tolerances, maintain their zero under adverse conditions and, when folded, have one of the lowest profile top-rail footprints in the industry. KAC Folding Micro Front and Rear Sights are no exception and feature a tool-free, finger-adjustable front sight post that makes performing sight corrections extremely fast and simple. Micro Front, PN: 25654/Micro Rear, PN: 25650. Knightarmco.com or salesteam@knightarmco.com

$201–$500

Concealed Carry
Leather Satchel

Recognized as the best. Concealed Carrie products are the perfect Holiday Accessory. Classic and timeless, Concealed Carrie’s distressed leather Satchel features subtle aged hardware and the utmost in quality of material and style. The separate concealed carry compartment is accessible from the interior or exterior of the bag for right- or left-handed carriers and designed to allow for cross body draw. You’ll want to carry this beauty every day! All Concealed Carrie handbags securely hold tasers, stun guns, pepper sprays and like forms of non-lethal, self-defense products. We’ve got your back.

OVER $1,000

Liberty Suppressors
Sovereign Rifle Silencer

The Sovereign Rifle Silencer is perfect for the law enforcement officer, hunter and the long-range shooter. It combines lightweight with numerous mounting solutions to create the most versatile and lightweight silencer to date. Titanium construction provides superior strength as well as low muzzle weight for less fatigue in the field. Combined with our LS1 muzzle brake mount, this is the ultimate package. For more information, please visit www.libertycans.net.

Excelitas Qioptiq
SAKER Fused Weapon Sight

Uncooled In-Line Image Intensified and Thermal Fused Weapon Sight. The ability to combine technology to produce a product greater than the sum of its parts is a goal many seek to achieve. SAKER is a high performance in-line fused weapon sight combining image-intensified and thermal imaging technologies to deliver enhanced 24-hour capability. A fully qualified military fused weapon sight designed specifically for short- and medium-range surveillance and target engagement–SAKER provides the user with the ability to rapidly Detect, Recognise and Identify targets in all weathers and battlefield conditions. The enhanced capability provided by SAKER is a game changer. For more information, please visit www.qioptiq.com or call Excelitas Qioptiq direct +44(0)1745 588002.

GUN MOUNTAIN, LLC
Micro Galil Parts Sets

The Unicorn of Galils, the Micro Galil machine gun with left-hand charging. Unheard of outside of a few elite Israeli units, Gun Mountain has managed to get a few of these in “like new” condition and some that are NRA Excellent. These came from an elite Israeli unit armory. Barrels are cut per ATF regulation, as are the receivers. Receivers are chop-saw cut with the requisite section above the mag well removed and destroyed. One magazine per kit. (702) 564-3272

Knight’s Armament Company
SR-25E2 APC

The SR-25E2 APC is the latest evolution of the dual role 7.62mm NATO Carbine. The APC is equally adept at putting rounds on target past 800 meters or rapid multi-shot engagement at close range, with a barrel and bolt life to support the training regimen necessary to master these skills. An ambidextrous bolt release, selector and magazine release offers the left-handed user the ergonomic advantages inherent to AR-15-based controls, as well as giving right-handed users alternate methods of manipulation to increase efficiency of movement. The Drop-In 2-Stage Trigger serves double duty as an aid to long-range precision marksmanship while enabling surgical speed shooting at close range. A 7.62QDC Flash Suppressor reduces flash and ground disturbance and supports KAC QDC Signature Reduction Devices. PN: 31955. Knightarmco.com or salesteam@knightarmco.com

FREEDOM ARMORY MACHINE WORKS
Dragoon .450 Bushmaster

Freedom Armory Machine Works (FAMW) introduces the Dragoon .450 Bushmaster (.450B) Direct Attach (DA) suppressor utilizing Total Breakdown Technology (TBT) and Gas Indexing Technology (GIT) [U.S. Patent 9,410,761]. TBT allows the user to remove, clean and service ALL components. GIT allows the rotational orientation of baffles in a given stack for optimum sound reduction with centerfire pistol calibers shot from a rifle. Top-rated sound reduction is achieved across the entire caliber range of this titanium suppressor creating a truly universal suppressor. Plus, .308 is hearing safe at the ear! Optional Thread Mounts are available creating an extremely flexible design. See Dealer Locator www.famchineworks.com or contact Freedom Armory Machine Works directly (717) 227-9060

Aimpoint Inc.
CompM5

With the same ruggedness and features, now smaller and powered by a AAA battery–meet the newest member of the Comp Series–the CompM5. With over 5 years of constant-on use with a single battery, the CompM5 is a high performance red dot sight developed to meet the needs of a specific official end user. The optical design of the red dot follows the movement of the user’s eye while remaining fixed on target, eliminating any need for centering. It allows for unlimited eye relief and is compatible with Aimpoint magnifiers as well as all generations of Night Vision Devices. Buy at any Aimpoint Dealer.

Corporate Structure Changes May Affect Federal Firearms Licenses

When the Gun Control Act was enacted in 1968, the vast majority of federal firearms licensees (“FFLs”) were sole proprietors. That is no longer the case, as even small business owners create corporations, limited liability corporations, limited liability partnerships, or general partnerships to carry on their firearms businesses. People create these entities for various reasons, including the separation of business property from personal property, limiting liability of the owners for any tortious or unlawful activities of the business, and obtaining more favorable tax treatment under state and federal law.

Corporations and other artificial legal entities are legally entitled to obtain licenses to engage in firearms businesses under the Gun Control Act. FFLs often run into problems, however, when there are changes in the structure, form, or ownership of the business that result in a change in control that must be reported to the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”). More significantly, such changes may result in a situation where a new federal firearms license is required.

This article addresses some of the more common types of changes in business structure and the steps FFLs should take to ensure compliance with federal law. This article does not address the registration requirements of the International Traffic in Arms Regulations, 22 C.F.R. Parts 120–130.

BACKGROUND

The Gun Control Act of 1968 (GCA), 18 U.S.C. Chapter 44, requires that persons engaging in the business of importing, manufacturing, or dealing in firearms obtain a license from ATF. The term “person” is defined in the statute to include any individual, corporation, company, association, firm, partnership, society, or joint stock company. A license must be obtained for each business and each place at which the applicant will do business. Licenses are not transferable, and in the event of the lease, sale, or other transfer of the business operations, the successor must obtain a new license before engaging in the business of importing, manufacturing or dealing in firearms.

Regulations provide a limited right for certain types of successors to operate a firearms business on behalf of a predecessor license holder. This right is limited to (1) the surviving spouse or child or executor, administrator, or other legal representative of a deceased licensee; (2) a receiver or trustee in bankruptcy; and (3) an assignee for benefit of creditors. As with changes in control, successors continuing to operate a firearms business must report the succession to the Chief of the Federal Firearms Licensing Center within 30 days from the date on which the successor begins to carry on the business.

Implementing regulations make it clear that licensees continuing to conduct business at the location shown on the license need not obtain a new license merely because of a change in trade name. Adoption of a new trade name must be reported to the Chief of ATF’s Federal Firearms Licensing Center. Regulations also provide that a “change of control” must be reported to ATF within 30 days of the change. A “change of control” consists of a change in actual or legal control over the corporation, partnership, or other licensed entity operating the firearms business. Such a change may result from a change in ownership of the stock of the company, a change in equity ownership, or a merger or acquisition where the FFL survives as a separate legal entity and is not extinguished under state law.

Change of Control Versus New License

It is essential for FFLs to determine whether changes in the firearms business amount to a change of control that must be reported to ATF or result in a new entity operating the firearms business. If the latter, a license application must be submitted by the new entity after it exists and before ownership of the firearms inventory and operation of the firearms business begins. We list a number of common scenarios and the licensing consequences below.

Change in Ownership

Whether a corporation is private or public, there may be changes in stock ownership. Changes in stock ownership may amount to a change in actual or legal control requiring notice to ATF within 30 days of the change. For example, let’s assume there are four family members each holding 25 percent of the stock of a corporate FFL. One of the family members sells his stock to another family member, so the purchaser now owns 50 percent of the stock. This change in stock ownership will give the purchaser a controlling interest in the company. The change in control must be reported to ATF within 30 days of the sale of the stock.

ATF officials have advised FFLs that sales of stock that do not result in a new or different person having a controlling interest in the business do not need to be reported. However, ATF field division personnel may have differing views on whether a particular stock sale does or does not result in a change of control. The safest course of action may be to report all changes in stock ownership to ATF to avoid any appearance an FFL has violated the reporting obligations of the regulations.

Limited liability corporations and limited liability partnerships will have equity ownership, rather than shares of stock. As with corporations, changes in equity that result in a change in actual or legal control must be reported to ATF within 30 days of the change. Again, reporting all changes in equity ownership to ATF may be the safest course of action, as the agency has no published guidance indicating which changes must be reported.

Change in Officers, Directors, or Board of Directors

Changes in the FFL corporation’s officers or directors generally do not result in a change in actual or legal control over the corporation holding the FFL. As long as these changes are not made in conjunction with changes in stock ownership or other transactions discussed in this article, they do not result in a change that must be reported to ATF. However, if the new corporate officers or directors are responsible persons for the FFL and will be dealing directly with ATF officials or signing ATF forms on behalf of the FFL, they should be reported to ATF. A “responsible person” is any individual with the power to direct or cause the direction of the management, policies, and practices of the corporation, partnership, or association insofar as they pertain to firearms. Responsible persons must be reported to ATF when the initial application is submitted and every three years when the license is renewed. New responsible persons may be reported by submitting a letter to the Chief, Federal Firearms Licensing Center, in Martinsburg, West Virginia.

Changes in the Board of Directors likewise need not be reported to ATF, as there is no change in actual or legal control of the federal firearms license holder.

Asset Purchase Transaction

An increasingly popular method of acquiring the assets of a target corporation is an asset purchase contract. These transactions allow the purchaser to acquire only specified assets of a target corporation without all or most of the liabilities. Let’s assume the target corporation is a licensed manufacturer with an inventory of firearms, an established trade name, a well-known website, and employees with significant experience in the firearms industry. An acquiring company approaches the target about purchasing the firearms inventory, trade names, website, employees, and good will of the company. The written asset purchase agreement specifies that the acquiring company will use the assets to operate a firearms business. The agreement also specifies that none of the liabilities of the company will be transferred to the purchaser.

The acquiring company MUST obtain its own federal firearms license before the firearms inventory is transferred and before it begins to operate the firearms business. This is the case whether the target company dissolves under state law or continues as a separate legal entity following the asset purchase. The acquiring company must be incorporated or created under state law, acquire any licenses required by state or local law, and then apply for the license with ATF. The entire process will likely take 90–120 days, depending on state licenses and qualifications and taking into account the 60-day timeframe for issuance of a license under the GCA.

If the firearms inventory of the target company includes firearms subject to the National Firearms Act (“NFA”), 26 U.S.C. Chapter 53, advance planning is even more crucial. The transfer of NFA firearms requires advance approval from ATF, and firearms may not be transferred tax-free unless both FFLs are licensed and have paid special (occupational) tax. Form 3 transfers are currently being processed by ATF in about 60 days. This may mean a delay in transferring registered NFA firearms between a target and an acquiring company after the asset purchase agreement has closed. The acquiring company may not lawfully possess NFA firearms registered to the target company.

Merger and Acquisition

Merger and acquisition is a general term that refers to the consolidation of companies or assets. A merger generally means a combination of two companies to form a new company, while an acquisition is the purchase of one company by another in which no new company is formed.

Let’s start with a merger and assume that Company A holds a license as an importer of firearms while Company B holds no GCA licenses. Pursuant to a written agreement, Companies A and B merge and form Company C. Under the written merger agreement, Companies A and B will wind up their affairs at a specified date after the merger takes place and dissolve under state law and Company C will operate the businesses formerly conducted by both companies. Because Company C will be operating a firearms business, Company C must obtain its own federal firearms license before importing firearms or selling firearms previously owned by Company A. Any NFA firearms registered to Company A must be lawfully transferred to Company C before Company A dissolves.

Moving on to acquisition, let’s assume Company A holds a federal firearms license as a dealer in firearms. Company B wishes to acquire Company A and Company B will allow Company A to operate its firearms business. A written acquisition agreement states that Company B will acquire all of the assets and liabilities of Company A on a specified date. The agreement specifies that Company A will continue to exist as a wholly owned subsidiary of Company B.

In this scenario, Company B does not require its own federal firearms license, because Company A will continue to exist as a “person” under the GCA, and Company A will operate its business dealing in firearms. The acquisition of Company A by Company B is a change in control that must be reported to ATF within 30 days of the date of the closing of the acquisition agreement.

Divestiture

A divestiture is the partial or complete disposal of a business unit through sale, exchange, closure or bankruptcy. A divestiture may result from a management decision to cease operating a business unit because there are too many lines of business or if the business unit is not profitable. However, it may also occur if a business unit is deemed to be redundant after a merger or acquisition, or if disposal of a unit increases the resale value of the company.

Let’s assume that Company A has two wholly owned subsidiary companies: B and C. B holds licenses as a manufacturer of firearms and C manufactures parts and components for firearms that require no GCA license. Company A merges Companies B and C, so that only Company B survives. Company A divests itself of Company C. Because Company B survives and continues to operate the firearms manufacturing business, no additional licenses are required. There is also no change of control that must be reported to ATF.

If Company C survived the merger and intended to operate a firearms manufacturing business, then Company C must obtain its own federal firearms license prior to acquiring inventory from B and manufacturing firearms.

Spinoff

A spinoff is the creation of a new company through the sale or distribution of new shares of an existing business or division of a parent company. As an example, Company A has a firearms division licensed as a manufacturer of firearms. The division manufactures and distributes firearms in the U.S. and abroad. Company A determines the firearms division would operate more efficiently if a new business unit is charged with distributing the firearms it manufactures. Accordingly, Company A decides to spin off a new wholly owned subsidiary to distribute the firearms. Company A incorporates Company B under state law to market firearms manufactured by Company A. Company A offers its shareholders the opportunity to exchange shares in Company A for shares in Company B at a significant discount.

Company B must acquire a license as a dealer in firearms. The license must be acquired prior to Company A transferring firearms to Company B.

Conclusion

Changes in the ownership and structure of a FFL may require reports to ATF or issuance of one or more new GCA licenses. It is essential for licensees to consult qualified counsel before undertaking these changes. Failure to understand the difference between a change in control and a relicensing situation may result in disruption of the firearms business while the appropriate licenses are obtained. It may also result in ATF investigating potential violations of the GCA for engaging in the business without a license and violations of the NFA for unlawful transfers of registered firearms.

…

The information in this article is for informational purposes only and is not intended to be construed or used as legal advice.

ABOUT THE AUTHORS

Johanna Reeves is the founding partner of the law firm Reeves & Dola, LLP in Washington, DC (www.reevesdola.com). For more than 10 years she has dedicated her practice to advising and representing U.S. companies on compliance matters arising under the federal firearms laws and U.S. export controls. Since 2011, Johanna also has served as Executive Director for the FireArms Import/Export Roundtable (F.A.I.R.) Trade Group (http://fairtradegroup.org). In 2016, Johanna was appointed by the U.S. Department of State, Bureau of Political-Military Affairs to serve on the 2016–18 Defense Trade Advisory Group (DTAG).

Teresa Ficaretta is an expert on ATF regulations under the Gun Control Act, the National Firearms Act, the Arms Export Control Act and Federal explosives laws. Before joining Reeves & Dola in 2013, Teresa served as legal counsel to ATF for 26 years, followed by two years as Deputy Assistant Director in Enforcement Programs and Services. Teresa was elected partner to Reeves & Dola in January 2016.

Both Johanna and Teresa can be reached at 202-683-4200 or at info@reevesdola.com.

Disaster Strikes: What to Do

Readers should consider this a follow-up to last month’s report, which was written as Hurricane Harvey prepared to make landfall. Harvey did, indeed, make landfall. And Harvey dumped over 50 inches of rain on the Houston metropolitan area, where I live, in just a few short days. Most of you have likely seen pictures and read reports of the devastation that the biblical deluge caused. The water simply had nowhere to go and flooded out many in seemingly random ways. My home averted being flooded out by only one inch. A few doors down, hundreds of neighbors have not been so lucky. The FEMA investigators have labeled most of those homes “uninhabitable,” and 10-foot-high debris and rubbish piles line the curbs. It could have been much worse.

As the tension mounted, I received several communications from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) regarding disaster preparedness. They gave me a few general heads up pointers regarding safeguarding my records and my inventory. Frankly, those communications did not inspire confidence. ATF maintains a public record of all Federal Firearms Licensees (FFLs) and those records are mere clicks away to anyone with an internet connection. The water rose inexorably, and I waited. Eventually, the National Guard and the Sheriff’s office came by and pounded on the door. The evacuation order had been given, and it was time to get out. No can do.

“You don’t understand, sir. This is a mandatory evacuation order and you have to leave now.” And then I went on to explain what an FFL was and that there was no way that I was going to abandon my inventory to potential looters. A few glances were exchanged, and I was told to be safe. Off they went. ATF’s guidance states “If a disaster is imminent, consider relocating inventory.” For the life of me, I could not understand how that is practical. I had about a pallet of bottled water, 45 gallons of gas for the generator, plenty of food and strategically placed defenses, should looters decide to show up. I used some plastic sacks full of potting soil to block the front door. I hunkered down (remind me never to use that term again) and waited with my wife. To busy myself, I got all the inventory that was near floor level up and out of harm’s way.

We watched the 24/7 marathon of storm coverage on satellite TV that never faltered. The power never went out, either. Every hour, on the hour, I poked my head out the front door to see the water rising. First to the curb, then up the front yard and creeping toward my front door. As I wrote earlier, the water got to within an inch and then stopped. And then began to recede. That was when the real work began.

Neighbors began to salvage their belongings. Many of them asked if they could store firearms with me since my home was safe and dry. Being the dutiful FLL, I asked each person that brought guns by to give me written instructions to inspect, clean and repair any water damage for each weapon they presented. I made a copy of their driver’s license and then entered each weapon in my Acquisition and Disposition book. After the weapons were secured, my entire family began helping those same neighbors dismantle their homes. Carpeting and padding had to be cut out and hauled to the curb. Same for soggy sheet rock, water-logged cabinets and furniture, mattresses and appliances. Weeks of work that was just plain nasty.

It was during this demolition that I received a phone call. I could tell from the caller ID that it was one of the Houston area Industry Operations Investigators, and I was immediately on edge. I answered quickly not knowing what was going on. As it turns out, ATF was making personal phone calls to each FFL. ATF wanted to know the status of each of us. Were we safe? Were the premises compromised? Was the inventory secure? Were the records secure? I knew the IOI on the other end of the call. We had previously worked together on an inspection, and I knew that he was a consummate professional. I told him that everything was cool and calm on my end and that I appreciated his phone call to make sure. Frankly, I expected something along the lines of just another automated alert from ATF’s robo-dialer. The personal touch was appreciated.

NFATCA wound up receiving many calls from members wanting to know the right way to take care of things that were scrambled by the hurricane. It happened again when Irma hit Florida. We told our members and others who called that the best way to do things was by the book. Take care of yourself first and then take care of weapons by the book, no shortcuts. Document, document, document every activity. There are still tropical events spinning up near the United States and there could easily be more calamity. It’s never too early to create or hone your disaster plan.