What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-05 compared with 2025-03-06 · 98 added, 82 removed, 228 unchanged (44% of the section changed)

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We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements.

Potential risks and uncertainties that could cause the actual results of operations or financial condition of the Company to differ materially from those expressed or implied by forward-looking statements in this Annual Report on Form 10-K include, but are not limited to, the overall level of consumer demand on our products;

the highly competitive nature of our markets and the potential for rapid or significant changes in consumer preferences;

general economic conditions and other factors affecting consumer confidence, preferences, and behavior;

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disruption and volatility in the global currency, capital and credit markets;

the impact of changes in tariffs, tax laws, global trade policies as well as instability and volatility in global markets;

the financial strength of retail economies and the Company’s customers;

the Company’s ability to implement its business strategy;

the ability of the Company to execute and integrate acquisitions;

our ability to accurately forecast demand and manage inventory levels, including the risk of excess or obsolete inventory, increased discounting, or lost sales;

the Company’s ability to execute and integrate acquisitions, as well as to complete dispositions and effectively manage the associated separation and transition risks, including those related to the recent sale of PIEPS;

the Company’s exposure to product liability or product warranty claims and other loss contingencies, including, without limitation, recalls and liability claims relating to certain avalanche beacon transceivers distributed by BDEL;

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stability of the Company’s manufacturing facilities and suppliers, as well as consumer demand for our products, in light of disease epidemics and health-related concerns;

disruptions in our supply chain, third-party logistics providers, or distribution facilities;

the impact that global climate change trends may have on the Company and its suppliers and customers, increased focus on sustainability issues as a result of global climate change;

regulatory or market responses to global climate change;

compliance costs and potential liabilities related to environmental requirements, including those associated with Per- and Polyfluoroalkyl Substances (PFAS);

the Company’s ability to protect patents, trademarks and other intellectual property rights;

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the ability of our information technology systems or information security systems to operate effectively, including as a result of security breaches, viruses, hackers, malware, natural disasters, vendor business interruptions or other causes;

our ability to properly maintain, protect, repair or upgrade our information technology systems or information security systems, or problems with our transitioning to upgraded or replacement systems;

our ability to properly maintain, protect, repair or upgrade our information technology systems or information security systems, or problems arising in connection with our transition to upgraded or replacement systems;

the impact of adverse publicity about the Company and/or its brands and products, including without limitation, through social media or in connection with brand damaging events and/or public perception;

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the Company’s ability to maintain a quarterly dividend;

our ability to obtain additional capital and funding on acceptable terms to meet our financial obligations as well as to support our business operations and growth strategy;

and any material differences in the actual financial results of the Company’s past and future acquisitions, including the impact of acquisitions and any recognition of impairment or other charges relating to any such acquisitions on the Company’s future earnings per share.

our ability to obtain additional capital and funding on acceptable terms to meet our financial obligations as well as to support our business operations and growth initiatives;

any material differences in the actual financial results of the Company’s past and future acquisitions and dispositions, including the impact of such transactions and any related recognition of impairment or other charges, such as the recent impairments recognized in the Outdoor and Adventure segments and the potential that we may be required to take additional write-downs or write-

offs, restructuring charges, impairment charges, or other charges in the future, on the Company’s future earnings per share.

More information on potential factors that could affect the Company’s financial results can be found under Item 1A.

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Each of our brands has a long history of continuous product innovation for core and everyday users alike.

The Company’s products are principally sold globally under the Black Diamond®, Rhino-Rack®, MAXTRAX®, and TRED Outdoors® brand names through outdoor specialty and online retailers, our own websites, distributors and original equipment manufacturers.

The Company’s products are principally sold globally under the Black Diamond®, Rhino-Rack®, MAXTRAX®, TRED Outdoors®, and RockyMounts® brand names through outdoor specialty and online retailers, our own websites, distributors and original equipment manufacturers.

Our portfolio of iconic brands is well-positioned for sustainable, long-term growth underpinned by powerful industry trends across the outdoor and adventure sport end markets.

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Similarly, TRED, founded in 2012, is a trusted brand for key retailers and distributors in the overlanding and off-road vehicle recovery market.

Founded in 1993, our RockyMounts brand is known for making well designed and dependable premium bicycle racks and other accessories compatible with vehicles of all sizes.

Clarus, incorporated in Delaware in 1991, acquired Black Diamond Equipment, Ltd.

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On December 5, 2024, the Company completed the acquisition of certain assets and liabilities constituting the RockyMounts business (“RockyMounts”).

On February 29, 2024, the Company and Everest/Sapphire Acquisition, LLC, its wholly-owned subsidiary, completed the sale to Bullseye Acquisitions, LLC, an affiliate of JDH Capital Company, of all of the equity associated with the Company’s Precision Sport segment, which is comprised of the Company’s subsidiaries Sierra and Barnes Bullets – Mona, LLC (“Barnes”), pursuant to a Purchase and Sale Agreement dated as of December 29, 2023, by and among, Bullseye Acquisitions, LLC, Everest/Sapphire Acquisition, LLC and the Company (the “Precision Sport Purchase Agreement”).

Under the terms of the Precision Sport Purchase Agreement, the Company received net proceeds of approximately $37,871,000 in cash, after payment of certain fees and settlement of the Restated Credit Agreement, for all of the equity associated with the Company’s Precision Sport segment.

The activities of the Precision Sport segment have been segregated and reported as discontinued operations for all periods presented.

See Note 3 to our consolidated financial statements for financial information regarding discontinued operations.

On February 29, 2024, the Company completed the sale of all of the equity associated with the Company’s Precision Sport segment, which was comprised of the Company’s subsidiaries Sierra Bullets, L.L.C.

(“Sierra”) and Barnes Bullets – Mona, LLC (“Barnes”), pursuant to a Purchase and Sale Agreement dated as of December 29, 2023.

On May 8, 2025, BD European Holdings, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company, entered into a Share Purchase and Transfer Agreement (the “Share Purchase Agreement”) to sell all of the issued and outstanding shares of Black Diamond Austria GmbH, together with its operating subsidiary, PIEPS GmbH (collectively, “PIEPS”).

On July 11, 2025, the Company completed the sale of PIEPS, which was included in the Company’s Outdoor segment, to a private investment firm for a total purchase price of €7,825,000 (approximately $9,124,000), including cash held at PIEPS of $1,311,000, pursuant to the Share Purchase Agreement.

On August 6, 2018, the Company announced that its Board of Directors approved the initiation of a quarterly cash dividend program of $0.025 per share of the Company’s common stock (the “Quarterly Cash Dividend”) or $0.10 per share on an annualized basis.

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During the years ended December 31, 2025, 2024, and 2023, the Company incurred $967,000, $1,948,000, and $3,223,000, respectively, of restructuring charges related to these actions.

The Company has incurred $5,171,000 of cumulative restructuring charges since the commencement of our restructuring actions in 2023.

The Company has incurred $6,138,000 of cumulative restructuring charges since the commencement of these restructuring actions in 2023.

The Company accrues for restructuring costs when they are probable and reasonably estimable.

These costs include severance costs, exit costs, and other restructuring costs and are included in Restructuring charges in the consolidated statements of comprehensive loss.

Restructuring costs include severance costs, exit costs, and other restructuring costs and are included in Restructuring charges in the consolidated statements of comprehensive loss.

Severance costs primarily consist of severance benefits through payroll continuation, conditional separation costs and employer tax liabilities, while exit costs primarily consist of lease exit and contract termination costs.

Other costs consist primarily of costs related to the discontinuance of certain product lines and are distinguishable and directly attributable to the Company’s restructuring initiative and not a result of external market factors associated with the ongoing business.

We estimate that we will incur restructuring costs related to employee-related costs and facility exit costs during the year 2025;

however, the Company cannot estimate the total amount expected to be incurred as cost reduction actions continue to be evaluated.

The Company anticipates completing these restructuring activities in 2025.

We estimate that we will incur additional employee-related and facility exit restructuring costs in 2026;

however, the Company cannot estimate the total amount expected to be incurred at this time as cost reduction actions continue to be evaluated.

The Company currently anticipates completing these restructuring activities in 2026;

however, the timing and scope of these actions may change, and additional actions may be taken, depending on business conditions and other factors.

Critical Accounting Policies and Use of Estimates

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Estimates also affect the reported amounts of revenues and expenses during the reporting periods.

We continually evaluate our estimates and assumptions including those related to revenue recognition, income taxes and valuation of long-lived assets, goodwill and indefinite-lived intangible assets, and other intangible assets.

We continually evaluate our estimates and assumptions including those related to revenue recognition, inventory provisions, income taxes and valuation of long-lived assets, goodwill and indefinite-lived intangible assets, and other intangible assets.

We base our estimates on historical experience and other assumptions that are believed to be reasonable under the circumstances.

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We typically apply all three approaches to estimate the fair value of our tangible and intangible tangible assets depending on the type of asset acquired.

Business acquisitions may include contingent consideration payments based on various future financial measures, such as sales-based milestones, related to the acquired entity.

Business acquisitions may include contingent consideration payments based on various future financial measures, such as sales-

based milestones, related to the acquired entity.

We estimate the fair value of contingent consideration liabilities based on estimated sales growth rates, discount rates, and other relevant factors.

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The relief-from-royalty method is used to estimate the cost savings that accrue to the owner of an intangible asset who would otherwise have to pay royalties or license fees on revenues earned through the use of the asset.

The multi-period excess earnings method supposes that the owner of the intangible asset is able to achieve a return in excess

of that received without the intangible asset through enhanced revenues or cost savings.

The multi-period excess earnings method supposes that the owner of the intangible asset is able to achieve a return in excess of that received without the intangible asset through enhanced revenues or cost savings.

Our discounted cash flow estimates use discount rates that correspond to a weighted-average cost of capital consistent with a market-participant view.

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Management may perform an interim indefinite-lived intangible asset impairment assessment whenever events or circumstances make it more likely than not that an impairment may have occurred, such as a significant adverse change in the business climate or a decision to sell or dispose of the reporting unit.

If the carrying value of the indefinite-lived asset is higher than its fair value, then

the asset is deemed to be impaired and the impairment charge is estimated as the difference.

If the carrying value of the indefinite-lived asset is higher than its fair value, then the asset is deemed to be impaired and the impairment charge is estimated as the difference.

The Company calculates the fair value of its indefinite-lived intangible assets using the income approach, specifically the relief-from-royalty method.

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If we do not achieve the results reflected in the market assumptions and forecasted estimates, our indefinite-lived intangibles impairment evaluations could be adversely affected, and we may impair a portion or all of their carrying values, which would adversely affect our operating results in the period of impairment.

● Inventory provision – We make ongoing estimates of potential excess, close-out or slow moving inventory.

We evaluate our inventory on hand considering our purchasing plans, sales forecasts, and historical experience to identify excess, close-out, discontinued, or slow moving inventory and make provisions as necessary to properly reflect inventory value at the lower of cost or net realizable value.

Recent Accounting Pronouncements

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The following presents a discussion of operations for the year ended December 31, 2025, compared with the year ended December 31, 2024:

Year Ended December 31,

December 31, 2025

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Interest income, net

Total other (expense) income, net

Total other income (expense), net

Loss before income tax

Income tax expense (benefit)

Income tax (benefit) expense

Loss from continuing operations

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Total sales decreased $13,875, or 5.2%, to $250,440 during the year ended December 31, 2025, compared to total sales of $264,315 during the year ended December 31, 2024.

The decrease in sales was attributable to a decrease in sales at the Outdoor and Adventure segments of $20,485 and $1,220, respectively.

Sales in the Adventure segment were reduced by $524 due to foreign exchange impact, compared to the prior period.

Sales in the Outdoor segment increased by $235 due to foreign exchange impact, compared to the prior period.

Sales in the Outdoor segment decreased due to weakness in our European, independent global distributor (“IGD”), and North American markets, combined with the effects from our product simplification and SKU rationalization strategy.

Sales in the Adventure segment decreased due to lower demand from original equipment manufacturer (“OEM”) and wholesale customers both in Australia and North America, partially offset by a $3,019 increase from the TRED Outdoors acquisition.

Domestic sales decreased $6,640, or 5.9%, to $105,745 during the year ended December 31, 2024, compared to domestic sales of $112,385 during the year ended December 31, 2023.

The decrease in sales was attributable to a decrease in sales at the Outdoor segment of $7,829, partially offset by an increase in sales at the Adventure segment of $1,189.

The decrease in sales was attributable to a decrease in sales at the Adventure and Outdoor segments of $7,170 and $6,705, respectively.

Sales in the Adventure segment were reduced by $1,302 due to foreign exchange impact from the strengthening of the U.S.

dollar against the Australian dollar during the year ended December 31, 2025, compared to the prior period.

Sales in the Outdoor segment were reduced by $176 due to foreign exchange impact from the strengthening of the U.S.

dollar primarily against the euro during the year ended December 31, 2025, compared to the prior period.

Sales in the Adventure segment decreased due to significantly lower demand from global original equipment manufacturer customers and a challenging wholesale market in Australia for both Rhino-Rack and MAXTRAX, combined with a prior year large wholesale customer in North America not reoccurring in 2025, partially offset by a $5,962 increase from the RockyMounts acquisition.

Sales in the Outdoor segment decreased due to lower independent global distributor revenue, lower global direct-to-consumer revenue of $2,934, and lower PIEPS revenue of $3,418 due to the sale of PIEPS in July 2025, compared to the prior period.

Domestic sales increased $378, or 0.4%, to $106,123 during the year ended December 31, 2025, compared to domestic sales of $105,745 during the year ended December 31, 2024.

The increase in sales was attributable to an increase in sales at the Adventure segment of $2,837, partially offset by a decrease in sales at the Outdoor segment of $2,459.

International sales decreased $14,253, or 9.0%, to $144,317 during the year ended December 31, 2025, compared to international sales of $158,570 during the year ended December 31, 2024.

The decrease in sales was attributable to a decrease in sales at the Outdoor and Adventure segments of $12,656 and $2,409, respectively.

The decrease in sales was attributable to a decrease in sales at the Adventure and Outdoor segments of $10,007 and $4,246, respectively.

Cost of Goods Sold

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Gross margin was 33.1% during the year ended December 31, 2025, compared to a gross margin of 35.0% during the year ended December 31, 2024.

Gross margin during the year ended December 31, 2024, increased compared to the prior year due to favorable channel mix as a result of lower OEM sales at the Adventure segment and favorable product mix due to the simplification and SKU rationalization strategy at the Outdoor segment.

These increases were partially offset by an increase in inventory reserve expenses at the Adventure segment.

Gross margin during the year ended December 31, 2025, decreased compared to the prior year as a result of lower volumes at the Outdoor and Adventure segments, impacts due to tariffs imposed by the United States for both segments, and an unfavorable product mix and increases of inventory reserve expenses at the Adventure segment.

Specifically, the unfavorable product mix at Adventure was primarily driven by promotional sales efforts in North America and higher RockyMounts revenue.

This combined with lower wholesale volume at both Rhino-Rack and MAXTRAX in Australia drove the decline in gross margin compared to the year ended December 31, 2024.

Additionally, losses on foreign currency cash flow hedges were $1,585 during the year ended December 31, 2025, which negatively impacted gross margin.

These were partially offset by a favorable product mix at the Outdoor segment due to our simplification initiatives.

Selling, General and Administrative

Selling, general, and administrative expenses decreased $6,775, or 6.1%, to $105,173 during the year ended December 31, 2025, compared to selling, general and administrative expenses of $111,948 during the year ended December 31, 2024.

Selling, general and administrative expenses at the Outdoor segment decreased by $7,176 primarily as a result of lower retail expenses due to store closures and other expense reduction initiatives to manage costs.

Selling, general and administrative expenses at the Adventure segment increased by $3,806 primarily as a result of investments in global marketing, e-commerce initiatives, and organizational leadership to accelerate growth, as well as the full year impact of the TRED Outdoors acquisition.

These increases at the Adventure segment were partially offset by lower intangible amortization expense.

Selling, general and administrative expenses at the Outdoor segment decreased by $3,051 primarily as a result of lower digital marketing and employee-related costs, lower costs from PIEPS due to the sale in July 2025, as well as lower retail expenses due to store closures and other expense reduction initiatives to manage costs.

Selling, general and administrative expenses at the Adventure segment decreased by $2,155 primarily as a result of lower marketing, amortization, and employee-related costs, combined with other expense reduction initiatives, partially offset by a write-off of internally developed software during the year ended December 31, 2025.

Additionally, Corporate costs decreased $1,569 due to lower outside service and employee-related costs.

Restructuring Charges

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Transaction Costs

Transaction expense decreased to $576 during the year ended December 31, 2024, compared to transaction costs of $593 during the year ended December 31, 2023.

The 2024 transaction costs primarily related to the RockyMounts and TRED Outdoor acquisitions and other expenses related to the Company’s various acquisition efforts.

Transaction expense increased to $752 during the year ended December 31, 2025, compared to transaction costs of $576 during the year ended December 31, 2024, which consisted of expenses related to the Company’s various acquisition and disposal efforts.

Contingent Consideration Benefit

Contingent consideration benefit decreased to $125 during the year ended December 31, 2024, compared to a contingent consideration benefit of $1,565 during the year ended December 31, 2023, which consisted of changes in the estimated fair value of contingent consideration liabilities associated with our acquisitions of MAXTRAX in 2021 and TRED in 2023.

Contingent consideration benefit increased to $355 during the year ended December 31, 2025, compared to a contingent consideration benefit of $125 during the year ended December 31, 2024, which consisted of changes in the estimated fair value of contingent consideration liabilities associated with our acquisitions of TRED in 2023 and RockyMounts in December 2024.

Legal Costs and Regulatory Matter Expenses

Legal costs and regulatory matter expenses increased to $3,842 during the year ended December 31, 2024, compared to legal costs and regulatory matter expenses of $1,764 during the year ended December 31, 2023.

The increase in legal costs and regulatory matter expenses recognized during year ended December 31, 2024 reflects the Company’s accrued liability for the outstanding regulatory matter with the U.S.

Consumer Product Safety Commission (“CPSC”) and increased expenses related to the Company’s specific legal matters.

Legal costs and regulatory matter expenses increased to $4,682 during the year ended December 31, 2025, compared to legal costs and regulatory matter expenses of $3,842 during the year ended December 31, 2024, which consisted of expenses related to the Company’s specific legal matters.

See Note 16 to our consolidated financial statements for financial information regarding specific legal matters.

Impairment of Goodwill

Impairment of goodwill increased to $36,264 during the year ended December 31, 2024, compared to impairment of goodwill of $0 during the year ended December 31, 2023.

Based on the results of the Company’s annual impairment analysis completed as of December 31, 2024, the Company determined that goodwill at the Adventure reporting unit was impaired and recognized a charge of $36,264.

Impairment of goodwill decreased to $3,804 during the year ended December 31, 2025, compared to impairment of goodwill of $36,264 during the year ended December 31, 2024.

Based on the results of the Company’s annual impairment analysis completed as of December 31, 2025 and 2024, the Company determined that goodwill at the Adventure reporting unit was impaired and recognized charges of $3,804 and $36,264, respectively.

Impairment of Indefinite-Lived Intangible Assets

Impairment of indefinite-lived intangible assets increased to $27,634 during the year ended December 31, 2025, compared to impairment of indefinite-lived intangible assets of $8,545 during the year ended December 31, 2024.

Based on the results of the Company’s impairment analysis completed as of December 31, 2024, the Company determined that certain indefinite-lived intangible assets, specifically the Rhino-Rack and MAXTRAX trademarks, were impaired and recognized charges of $3,480 and $5,065, respectively, during the year ended December 31, 2024.

Based on the results of the Company’s impairment analysis completed as of June 30, 2025, the Company determined that certain indefinite-lived intangible assets in our Outdoor reporting unit, specifically the PIEPS trademark, were impaired and recognized charges of $1,565 during the year ended December 31, 2025.

Based on the results of the Company’s impairment analysis completed as of December 31, 2025 and 2024, the Company determined that certain indefinite-lived intangible assets in our Adventure reporting unit, specifically the Rhino-Rack and MAXTRAX trademarks, were impaired and recognized charges of $21,600 and $4,469, respectively, during the year ended December 31, 2025, and $3,480 and $5,065, respectively, during the year ended December 31, 2024.

Interest Income, net

Interest income, net increased to $1,467 during the year ended December 31, 2024, compared to interest income, net of $67 during the year ended December 31, 2023.

The increase in interest income recognized during the year ended December 31, 2024, was due to interest income on higher cash balances.

Interest income, net decreased to $619 during the year ended December 31, 2025, compared to interest income, net of $1,467 during the year ended December 31, 2024.

The decrease in interest income recognized during the year ended December 31, 2025, was due to lower interest rates on lower cash balances, compared to the prior period.

Other, net changed by $3,646, or 217.9%, to $1,973 during the year ended December 31, 2025, compared to other, net of ($1,673) during the year ended December 31, 2024.

The change in other, net was primarily attributable to an increase in remeasurement losses recognized on the Company’s foreign denominated accounts receivable and accounts payable.

The change was partially offset by increases in gains in mark-to-market adjustments on non-hedged foreign currency contracts during the year ended December 31, 2024.

Income tax expense (benefit) changed by $22,143, or 516.0%, to an income tax expense of $17,852 during the year ended December 31, 2024, compared to an income tax benefit of $4,291 during the same period in 2023.

Our effective income tax rate was an expense of 25.3% for the year ended December 31, 2024, and differed compared to the statutory tax rates primarily due to the impact of recording a valuation allowance on deferred tax assets and the impairment of goodwill and indefinite-lived intangible assets, all of which are non-deductible for tax purposes.

Our effective income tax rate was a benefit of 21.4% for the year ended December 31, 2023, and differed compared to the statutory tax rates due to the impact of officer compensation limitations, partially offset by the impact of tax credits, and permanent book to tax differences related to incentive stock options.

The change in other, net, was primarily attributable to an increase in remeasurement gains recognized on the Company’s foreign denominated accounts receivable and accounts payable.

The change was partially offset by losses in mark-to-market adjustments on non-hedged foreign currency contracts during the year ended December 31, 2025.

Income tax (benefit) expense changed by $28,385, or 159.0%, to an income tax benefit of $10,533 during the year ended December 31, 2025, compared to an income tax expense of $17,852 during the same period in 2024.

Our effective income tax rate was a benefit of 18.5% for the year ended December 31, 2025, and differed compared to the statutory tax rates primarily due to the impact of changes in the valuation allowance on deferred tax assets and statutory tax rate differences between foreign jurisdictions and the United States.

effective income tax rate was an expense of 25.3% for the year ended December 31, 2024, and differed compared to the statutory tax rates due to due to the impact of recording a valuation allowance on deferred tax assets and the impairment of goodwill and indefinite-lived intangible assets, all of which are non-deductible for tax purposes.

Discontinued Operations

Net income from discontinued operations changed by $30,508, to $36,150 during the year ended December 31, 2024, compared to net income from discontinued operations of $5,642 during the year ended December 31, 2023.

The change in net income from discontinued operations was primarily attributable to the pre-tax gain on the sale of the Precision Sport segment of $40,585.

Net income from discontinued operations decreased to $0 during the year ended December 31, 2025, compared to net income from discontinued operations of $36,150 during the year ended December 31, 2024.

The change in net income from discontinued operations is due to the sale of the Precision Sport segment occurring during the year ended December 31, 2024.

There was no activity in discontinued operations during the year ended December 31, 2025.

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

The following presents the Company’s results of operations for the year ended December 31, 2024, compared with the year ended December 31, 2023:

Year Ended December 31,

December 31, 2024

December 31, 2023

Domestic sales

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Interest income, net

Total other income (expense), net

Total other (expense) income, net

Loss before income tax

Income tax benefit

Income tax expense (benefit)

Loss from continuing operations

Discontinued operations, net of tax

For a discussion of our results of operations for the year ended December 31, 2023, compared to the year ended December 31, 2022, please see Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 7, 2024.

For a discussion of our results of operations for the year ended December 31, 2024, compared to the year ended December 31, 2023, please see Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission on March 6, 2025.

Liquidity and Capital Resources (In Thousands)

Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

Our primary ongoing funding requirements are for working capital, expansion of our operations (both organically and through acquisitions) and general corporate needs, as well as investing in the various brands.

We plan to fund these activities through a combination of our future operating cash flows and net proceeds from the sale of our Precision Sport segment.

Our primary ongoing funding requirements are for working capital, expansion of our operations organically, and general corporate needs, as well as investing in the various brands.

We plan to fund these activities through a combination of our current cash balances and future operating cash flows.

Upon the closing of the sale of the Precision Sport segment, the Company terminated and settled all outstanding borrowings on our revolving credit facility and term debt under the Restated Credit Agreement.

We believe that our liquidity requirements and contractual obligations for at least the next 12 months will be adequately covered by cash provided by operations and the net proceeds from the sale of the Precision Sport segment after the settlement of the Restated Credit Agreement.

Additionally, long-term contractual obligations are also currently expected to be funded from cash from operations and net proceeds from the sale of the Precision Sport segment after the settlement of the Restated Credit Agreement.

We believe that our liquidity requirements and contractual obligations for at least the next 12 months will be adequately covered by our current cash balances and cash provided by operations.

Additionally, long-term contractual obligations are also currently expected to be funded from our current cash balances and cash from operations.

For additional information regarding the Company’s credit facilities, see the section titled “Credit Agreement” below.

At December 31, 2024, we had total cash of $45,359, compared to cash of $11,324 at December 31, 2023.

At December 31, 2024, the Company had $6,477 of the $45,359 in cash held by foreign entities, of which $4,665 is considered permanently reinvested.

At December 31, 2025, we had total cash and restricted cash of $38,195, compared to cash and restricted cash of $45,359 at December 31, 2024.

At December 31, 2025, the Company had $12,545 of the $38,195 in cash and restricted cash held by foreign entities, of which $8,595 is considered permanently reinvested.

The following presents a discussion of cash flows for the year ended December 31, 2025 compared with the year ended December 31, 2024, inclusive of continuing and discontinued operations.

Year Ended December 31,

Net cash (used in) provided by operating activities

Net cash provided by (used in) investing activities

Net cash used in operating activities

Net cash provided by investing activities

Net cash used in financing activities

Effect of foreign exchange rates on cash

Change in cash

Cash, beginning of year

Cash, end of period

Effect of foreign exchange rates on cash and restricted cash

Change in cash and restricted cash

Cash and restricted cash, beginning of year

Cash and restricted cash, end of period

Net Cash From Operating Activities

Net cash used in operating activities was $7,300 during the year ended December 31, 2024, compared to net cash provided by operating activities of $31,924 during the year ended December 31, 2023.

The change in net cash (used in) provided by operating activities during 2024 is primarily due to the gain on sale of $40,585 related to the disposition of the Precision Sport segment, an increase in net loss of $42,141, and an increase in cash outflows related to working capital of $19,202, compared to the same period in 2023.

These were partially offset by an increase in impairment of goodwill and indefinite-lived intangible assets at the Adventure segment of $44,809, as well as an increase in deferred income taxes of $22,530 during the year ended December 31, 2024, compared to the same period in 2023.

Free cash flow, defined as net cash (used in) provided by operating activities less capital expenditures, of ($14,039) was used during the year ended December 31, 2024 compared to $26,207 generated during the same period in 2023.

Net cash used in operating activities was $4,746 during the year ended December 31, 2025, compared to net cash used in operating activities of $7,300 during the year ended December 31, 2024.

The change in net cash used in operating activities during 2025 is primarily due to the gain on sale of $40,585 during the year ended December 31, 2024 related to the disposition of the Precision Sport segment, and an increase in impairment of indefinite-lived intangible assets at the Adventure and Outdoor segments of $19,089, and a decrease in net loss of $5,731 compared to the same period in 2024.

These impacts were partially offset by a decrease in impairment of goodwill at the Adventure segment of $32,460, a decrease in deferred income taxes of $28,159, and an increase in cash outflows related to working capital of $791, compared to the same period in 2024.

Free cash flow, defined as net cash used in operating activities less capital expenditures, of ($9,908) was used during the year ended December 31, 2025 compared to ($14,039) used during the same period in 2024.

The Company believes that the non-GAAP measure, free cash flow, provides an understanding of the capital required by the Company to expand its asset base.

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Year Ended December 31,

Net cash (used in) provided by operating activities

Net cash used in operating activities

Purchase of property and equipment

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Net Cash From Investing Activities

Net cash provided by investing activities was $165,160 during the year ended December 31, 2024 compared to net cash used in investing activities of $11,416 during the year ended December 31, 2023.

The change in net cash provided by (used in) investing activities during the year ended December 31, 2024, is primarily due to the cash received related to the disposition of the Precision Sport segment, compared to the same period in 2023.

Net cash provided by investing activities was $2,771 during the year ended December 31, 2025 compared to net cash provided by investing activities of $165,160 during the year ended December 31, 2024.

The change in net cash provided by investing activities during the year ended December 31, 2025, is primarily due to the cash received related to the disposition of the Precision Sport segment during the year ended December 31, 2024.

Net Cash From Financing Activities

Net cash used in financing activities was $5,882 during the year ended December 31, 2025, compared to net cash used in financing activities of $123,239 during the year ended December 31, 2024.

The increase in cash used during the year ended December 31, 2024, compared to the same period in 2023 was primarily due to the settlement of all outstanding borrowings on our revolving credit facility and term debt under the Restated Credit Agreement.

The decrease in cash used during the year ended December 31, 2025, compared to the same period in 2024 was primarily due to the settlement of all outstanding borrowings on our revolving credit facility and term debt under the Restated Credit Agreement during the year ended December 31, 2024.

Net Operating Loss

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federal income tax purposes of $41,209 and $5,709, respectively.

All federal NOLs will have an indefinite carryforward period.

Federal research and experimentation credits have a limited carryforward period and will begin to expire in tax year 2033.

In accordance with Section 382 and Section 383 of the Internal Revenue Code of 1986 (“Code”), utilization of the NOL and tax credit carryforwards may subject to limitations based on prior or future ownership changes.

As of December 31, 2025, the Company’s gross deferred tax asset was $40,300.

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deferred tax assets as of December 31, 2025, because the ultimate realization of those assets does not meet the more-likely-than-not criteria.

The majority of the Company’s deferred tax assets consist of research and experimentation credits and capitalized costs for federal tax purposes.

These deferred tax assets are expected to reverse into NOL carryforwards that can be used to offset taxable income and reduce income taxes payable in future periods.

If a change in control were to occur, these future NOLs could be limited under Section 382 of the Internal Revenue Code of 1986 (“Code”), as amended.

The majority of the Company’s deferred tax assets consist of net operating loss carryforwards, research and experimentation credits and capitalized costs for federal tax purposes.

The deferred tax assets related to research and experimentation credits and capitalized costs are expected to reverse into NOL carryforwards that can be used to offset taxable income and reduce income taxes payable in future periods.

If a change in control were to occur, these future NOLs could be limited under Section 382 of the Code, as amended.

Credit Agreement

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis