What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-06 compared with 2024-03-07 · 346 added, 363 removed, 887 unchanged (44% of the section changed)

4 unchanged sentences

Consolidated Balance Sheets - December 31, 2024 and 2023

Consolidated Statements of Comprehensive (Loss) Income - Years Ended December 31, 2023, 2022 and 2021

Consolidated Statements of Comprehensive Loss - Years Ended December 31, 2024, 2023 and 2022

Consolidated Statements of Cash Flows - Years Ended December 31, 2024, 2023 and 2022

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Clarus Corporation and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of comprehensive (loss) income, stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of Clarus Corporation and subsidiaries (the "Company") as of December 31, 2024 and December 31, 2023, the related consolidated statements of comprehensive loss, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and December 31, 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 6, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.

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The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

Goodwill — Adventure reporting unit goodwill — Refer to Notes 1 and 6 to the financial statements

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill and Intangible Assets — Adventure reporting unit and Rhino-Rack and MAXTRAX trademarks— Refer to Notes 1 and 6 to the financial statements

Critical Audit Matter Description

The Company's evaluation of goodwill for impairment involves the comparison of the estimated fair value of a reporting unit to its carrying value.

The Company's evaluation of goodwill and indefinite-lived intangible assets for impairment involves the comparison of the estimated fair value of a reporting unit or indefinite-lived intangible asset to its carrying value.

The Company estimates the reporting unit’s fair value using a combination of the income approach, which uses projected discounted cash flows, and the market approach, which uses earnings before interest, taxes, depreciation, and amortization (EBITDA) market multiples of comparable publicly traded companies.

The determination of the fair value using the income approach requires management to make significant estimates and assumptions related to revenue and cash flow projections and discount rates.

The determination of the fair value using the market approach also requires management to make significant estimates and assumptions related to revenue and cash flow projections used to determine EBITDA as well as the market multiples of comparable publicly traded companies.

The goodwill balance allocated to the Adventure reporting unit was $39,320,000 as of December 31, 2023.

The fair value of the reporting unit exceeded its carrying value and therefore, no impairment was recognized for the year ended December 31, 2023.

We identified the valuation of the Adventure reporting unit as a critical audit matter because of the significant estimates and assumptions management made to determine the fair value.

The audit of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to revenue and cash flow projections, and the selection of EBITDA multiples and discount rate.

The determination of the fair value using the income approach requires management to make estimates and assumptions related to revenue and cash flow projections and discount rates.

The determination of the fair value using the market approach also requires management to make estimates and assumptions related to revenue and cash flow projections used to determine EBITDA as well as the

market multiples of comparable publicly traded companies.

The Company estimates the fair value of its indefinite-lived intangible assets using the relief-from-royalty method.

The relief-from-royalty method requires management to make estimates and assumptions related to revenue projections, discount rates, and royalty rates.

During the year ended December 31, 2024, the Company recognized a goodwill impairment in its Adventure reporting unit of $36,264,000 and $8,545,000 related to the Rhino-Rack and MAXTRAX indefinite-lived trademark in its Adventure reporting unit.

We identified the valuation of the Adventure reporting unit and Rhino-Rack and MAXTRAX trademarks within indefinite-lived intangibles as a critical audit matter because of the estimates and assumptions management made to determine their estimated fair values.

The audit of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our internal fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to revenue and cash flow projections, the selection of EBITDA multiples, and discount and royalty rates.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the revenue and cash flow projections (“projections”), and the selection of EBITDA multiples and discount rate for the valuation of the Adventure reporting unit included the following, among others:

● We tested the effectiveness of internal controls over the goodwill impairment analysis, including those over revenue and cash flow projections, and the selection of EBITDA multiples and discount rate.

Our audit procedures related to the revenue and cash flow projections (“projections”), and the selection of EBITDA multiples, discount and royalty rates for the valuation of the Adventure reporting unit and Rhino-Rack and MAXTRAX trademarks included the following, among others:

● We tested the effectiveness of internal controls over the goodwill and indefinite-lived intangible assets impairment analysis, including those over revenue and cash flow projections, and the selection of EBITDA multiples, discount rate, and royalty rates.

● We evaluated the reasonableness of management’s projections by comparing the projections to:

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Projected information included in industry reports and certain of its peer companies.

● With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation methodologies, EBITDA multiples and discount rate by:

Testing the source information underlying the determination of the discount rate and the mathematical accuracy of the calculations.

● With the assistance of our internal fair value specialists, we evaluated the reasonableness of the valuation methodologies, EBITDA multiples, discount rates, and royalty rates by:

Testing the source information underlying the determination of the discount and royalty rates and the mathematical accuracy of the calculations.

Developing a range of independent estimates and comparing those estimates to the discount rate selected by management.

Evaluating EBITDA multiples, including testing the underlying source information and mathematical accuracy of the calculations, and comparing the multiples selected by management to its comparable publicly traded companies.

Discontinued Operations — Refer to Notes 1 and 3 to the financial statements

Critical Audit Matter Description

On February 29, 2024, the Company completed the sale of the Precision Sport segment pursuant to a Purchase and Sale Agreement dated December 29, 2023.

Management determined that the planned sale met the criteria for the Precision Sport segment to be classified as held for sale and the results of its operations are presented as discontinued operations for all periods presented in accordance with Accounting Standard Codification 205-20, Discontinued Operations (“ASC 205-20”).

We identified the presentation and disclosure of the discontinued operations as a critical audit matter given the discontinued operations are material to the financial statements and the significance of judgments made by management in its application of ASC 205-20, and the increased extent of auditor effort and judgment required to assess management's identification, segregation, and presentation and disclosure related to the planned sale of the Precision Sport segment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures performed over the Company's discontinued operations presentation and disclosure related to the planned sale of the Company’s Precision Sport segment included the following, among others:

● We tested the effectiveness of internal controls over the Company's discontinued operations assessment process, including controls related to management's identification, segregation, and presentation and disclosure in the Company’s financial statements;

● We obtained and evaluated the Company's memorandum that documented management's presentation and disclosure conclusions with respect of relevant accounting standards;

● We tested the classification of amounts included in discontinued operations by agreeing such amounts to the Company's historical accounting records.

/s/ Deloitte & Touche LLP

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Other long-term assets

Non-current assets held for sale

Liabilities and Stockholders’ Equity

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Total current liabilities

Long-term debt, net

Deferred income taxes

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CLARUS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands, except per share amounts)

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Contingent consideration (benefit) expense

Impairment of goodwill and indefinite-lived intangible assets

Legal costs and regulatory matter expenses

Impairment of goodwill

Impairment of indefinite-lived intangible assets

Total operating expenses

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Other income (expense)

Interest income (expense), net

Total other income (expense), net

Interest income, net

Total other (expense) income, net

Loss before income tax

Income tax benefit

(Loss) income from continuing operations

Income tax expense (benefit)

Loss from continuing operations

Discontinued operations, net of tax

Net (loss) income

Other comprehensive income (loss), net of tax:

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustment

Unrealized (loss) gain on hedging activities

Other comprehensive income (loss)

Comprehensive (loss) income

(Loss) income from continuing operations per share:

Net (loss) income per share:

Unrealized gain (loss) on hedging activities

Other comprehensive (loss) income

Comprehensive loss

Loss from continuing operations per share:

Net loss per share:

Weighted average shares outstanding:

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Cash Flows From Operating Activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation of property and equipment

Amortization of other intangible assets

Impairment of goodwill and indefinite-lived intangible assets

Impairment of goodwill

Impairment of indefinite-lived intangible assets

Gain on sale of business

Accretion of notes payable

Amortization of debt issuance costs

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Deferred income taxes

Changes in operating assets and liabilities, net of acquisitions:

Changes in operating assets and liabilities, net of disposition:

Accounts receivable

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Accrued liabilities

Net cash provided by (used in) operating activities

Net cash (used in) provided by operating activities

Cash Flows From Investing Activities:

Proceeds from the sale of business

Purchase of businesses, net of cash acquired

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Purchases of property and equipment

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash Flows From Financing Activities:

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Repayments on revolving credit facilities

Repayments on term loans

Proceeds from issuance of term loans

Repayments on term loans and other debt

Proceeds from issuance of term loans and other debt

Payment of debt issuance costs

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Payment of contingent consideration

Proceeds from the sale of common stock

Common stock issuance costs

Net cash (used in) provided by financing activities

Net cash used in financing activities

Effect of foreign exchange rates on cash

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Supplemental Disclosure of Cash Flow Information:

Cash (received) paid for income taxes

Cash paid (received) for income taxes

Cash paid for interest

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Shares issued for business acquisitions

Deferred stock consideration for business acquisition

Debt issued for business acquisition

Contingent consideration for business acquisitions

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Lease liabilities arising from obtaining right-of-use assets

Gain on transfer of entity under common control

See accompanying notes to consolidated financial statements .

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Purchase of treasury stock

Gain on transfer of entity under common control

Stock-based compensation expense

Proceeds from exercise of options

Issuance of common stock, net of issuance costs

Shares issued for business acquisitions

Balance, December 31, 2022

Other comprehensive loss

Other comprehensive income

Cash dividends ($ 0.10 per share)

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Balance, December 31, 2023

Other comprehensive income

Other comprehensive loss

Cash dividends ($ 0.10 per share)

2 unchanged sentences

Proceeds from exercise of options

Shares issued for business acquisitions

Balance, December 31, 2024

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Nature of Business

Headquartered in Salt Lake City, Utah, we are a global leading designer, developer, manufacturer and distributor of best-in-class outdoor equipment and lifestyle products focused on the outdoor enthusiast markets.

Headquartered in Salt Lake City, Utah, we are a global leader in the design and development of best-in-class equipment and lifestyle products for outdoor enthusiasts.

Driven by our rich history of engineering and innovation, our objective is to provide safe, simple, effective and beautiful products so that our customers can maximize their outdoor pursuits and adventures.

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

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Actual results could differ from these estimates.

Reclassifications

Certain reclassifications have been made to prior period financial statements to conform to the current period presentation.

Specifically, legal costs associated with specific legal matters which were recorded in selling, general, and administrative expenses are now presented in legal costs and regulatory matter expenses in the consolidated statements of comprehensive loss.

See Note 16 for discussion regarding legal matters.

Significant Accounting Policies

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Unless otherwise specified, disclosures in these consolidated financial statements reflect continuing operations only.

The consolidated statements of cash flows are inclusive of continuing and discontinued operations for all periods presented.

Certain prior period financial information, related to discontinued operations, have been reclassified and separately presented in the consolidated financial statements and accompanying notes to conform to the current period presentation.

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Foreign currency translation adjustments are recorded as a separate component of accumulated other comprehensive loss.

Foreign currency transaction gains and losses are included in other income (expense) in the consolidated statements of comprehensive (loss) income.

Foreign currency transaction gains and losses are included in other comprehensive (loss) income in the consolidated statements of comprehensive loss.

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Cash Equivalents

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The trade receivables do not bear interest.

The Company performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

determined by the review of their current credit information.

The Company performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information.

The Company evaluates the collectability of its accounts receivable and determines the appropriate allowance for credit losses based on a combination of factors.

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furniture and fixtures, 5 years .

Leasehold improvements are amortized over the lesser of the estimated useful life of the improvement or the life of the lease.

Leasehold improvements are amortized over the lesser of the estimated useful life of the improvement or the remaining life of the lease.

Major replacements, which extend the useful lives of equipment, are capitalized and depreciated over the remaining useful life.

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Property and equipment are reviewed for impairment whenever events or changes in circumstances exist that indicate the carrying amount of an asset may not be recoverable.

Property and equipment located outside of the United States are not considered material.

Right-of-use (“ROU”) assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists.

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The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Goodwill represents the excess of the purchase price over the fair market value of identifiable net assets of acquired companies.

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If, through this qualitative assessment, the conclusion is made that it is more likely than not that a reporting unit’s fair value is less than its carrying amount, or the Company elects to bypass the qualitative assessment, a quantitative impairment analysis is performed.

We estimate the reporting unit’s fair value using a combination of the income approach

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

based upon projected discounted cash flows of the reporting unit and the market approach based upon the market multiple of comparable publicly traded companies.

We estimate the reporting unit’s fair value using a combination of the income approach based upon projected discounted cash flows of the reporting unit and the market approach based upon the market multiple of comparable publicly traded companies.

If the fair value of the reporting unit is less than its carrying amount, an impairment loss is recognized for the excess carrying amount over the fair value computation.

No impairment of goodwill was recorded during the years ended December 31, 2023 and 2021.

Based on the results of the Company’s annual impairment tests completed as of December 31, 2022, the Company recognized goodwill impairment in our Adventure reporting unit of $ 52,071 during the year ended December 31, 2022.

Based on the results of the Company’s annual impairment tests completed as of December 31, 2024 and December 31, 2022, the Company recognized a goodwill impairment in our Adventure reporting unit of $ 36,264 during the year ended December 31, 2024, and $ 52,071 during the year ended December 31, 2022, respectively.

No impairment of goodwill was recorded during the year ended December 31, 2023.

Intangible Assets

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Other intangible assets are reviewed for impairment whenever events or changes in circumstances exist that indicate the carrying amount of an asset may not be recoverable.

The Company’s indefinite-lived intangible assets consists of certain tradenames and trademarks that provide Black Diamond Equipment, PIEPS, Rhino-Rack, MAXTRAX, and TRED with the exclusive and perpetual rights to manufacture and sell their respective products.

The Company’s indefinite-lived intangible assets consists of certain tradenames and trademarks that provide Black Diamond Equipment, PIEPS, Rhino-Rack, and MAXTRAX with the exclusive and perpetual rights to manufacture and sell their respective products.

Indefinite-lived intangible assets are not amortized;

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The amount of any impairment is measured as the difference between the carrying amount and the fair value of the impaired asset.

No impairment of indefinite-lived intangible assets was recorded during the years ended December 31, 2023 and 2021.

Based on the results of the Company’s annual impairment tests completed as of December 31, 2024, the Company recognized an impairment of indefinite-lived intangible assets in our Adventure reporting unit, specifically the Rhino-Rack and MAXTRAX trademarks, of $ 3,480 and $ 5,065 , respectively, during the year ended December 31, 2024.

No impairment of indefinite-lived intangible assets was recorded during the year ended December 31, 2023.

Based on the results of the Company’s annual impairment tests completed as of December 31, 2022, the Company recognized an impairment of indefinite-lived intangible assets in our Adventure reporting unit, specifically the Rhino-Rack trademark, of $ 40,240 during the year ended December 31, 2022.

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For derivative contracts designated as hedge instruments, the effective portion of gains and losses resulting from changes in fair value of the instruments are included in accumulated other comprehensive loss and reclassified to sales in the period the underlying hedged item is recognized in earnings.

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

For all hedging relationships, the Company formally documents the hedging relationship and its risk-management objective and strategy for undertaking the hedge, the hedging instrument, the hedged transaction, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method used to measure ineffectiveness.

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The Company does not speculate using derivative instruments.

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Stock-Based Compensation

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The Company expenses incremental costs of obtaining a contract due to the short-term nature of the contracts.

The Company’s contract terms or historical business practices can give rise to variable consideration such as term discounts and customer cooperative payments.

We estimate the expected term discounts based on an analysis of historical experience and record cash discounts as a reduction to revenue.

Through cooperative advertising programs, the Company reimburses its wholesale customers for some of their costs of advertising the Company’s products.

The Company records such costs as a reduction of revenue, where the fair value cannot be reasonably estimated or where costs exceed the fair value of the services.

The Company’s contract terms or historical business practices can give rise to variable consideration such as prompt payment discounts.

We estimate the expected prompt payment discounts based on an analysis of historical experience and record cash discounts as a reduction to revenue.

At the time of revenue recognition, we also provide for estimated sales returns and miscellaneous claims from customers as reductions to revenues.

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Sales commissions are expensed as incurred.

These costs are recorded in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive (loss) income.

These costs are recorded in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive loss.

Taxes collected from customers and remitted to government authorities are reported on the net basis and are excluded from sales.

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Cost of Goods Sold

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Certain warehousing or handling costs which are not associated with the manufacturing of goods for sale are excluded from cost of goods sold.

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Selling, General and Administrative Expense

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Advertising costs are expensed in the period incurred.

Total advertising expense for continuing operations, including cooperative advertising costs, were $ 8,385 , $ 7,789 , and $ 5,824 for the years ended December 31, 2023, 2022, and 2021, respectively.

Through cooperative advertising programs, the Company reimburses its wholesale customers for some of their costs of advertising the Company’s products based on various criteria, including the value of purchases from the Company and various advertising specifications.

Cooperative advertising costs were not material for the years ended December 31, 2023, 2022, and 2021.

Total advertising expense for continuing operations were $ 6,046 , $ 8,385 , and $ 7,789 for the years ended December 31, 2024, 2023, and 2022, respectively.

Product Warranty

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Research and Development

Research and development costs are charged to expense as incurred, and are included in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive (loss) income.

Research and development costs are charged to expense as incurred, and are included in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive loss.

Total research and development costs for continuing operations were $ 12,171 , $ 12,740 , and $ 13,029 for the years ended December 31, 2024, 2023, and 2022, respectively.

Transaction Costs

Transaction costs consists of expenses related to the Company’s various acquisition efforts and capital-raising activities, including those associated with acquiring Rhino-Rack, MAXTRAX, and TRED.

Transaction costs consists of expenses related to the Company’s various acquisition efforts, including those associated with acquiring Rhino-Rack, MAXTRAX, TRED, and RockyMounts.

Income taxes are accounted for under the asset and liability method.

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The Company releases residual tax effects in accumulated other comprehensive loss through continuing operations as the underlying asset matures or expires.

The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.

The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution.

The Company recognizes interest and penalties related to unrecognized tax benefits in income tax benefit.

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense (benefit).

Unrecognized tax benefits that reduce a net operating loss, similar tax loss or tax credit carryforward, are presented as a reduction to deferred income taxes.

The Company recognizes interest expense and penalties related to uncertain tax positions in income tax benefit.

The Company recognizes interest expense and penalties related to uncertain tax positions in income tax expense (benefit).

Concentration of Credit Risk and Sales

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The Company performs ongoing credit evaluations of its customers and maintains allowances for possible losses as considered necessary by management.

During the year ended December 31, 2023, no single customer contributed more than 10% of the Company’s sales from continuing operations.

During the years ended December 31, 2024 and 2022, Recreational Equipment, Inc.

(“REI”) accounted for approximately 10 % and 14 %, respectively, of the Company’s sales from continuing operations.

(“REI”) accounted for approximately 10 % of the Company’s sales from continuing operations.

These sales are included in the Outdoor segment.

No other single customer contributed more than 10% of the Company’s sales from continuing operations during those periods.

No other single customer contributed more than 10% of the Company’s sales from continuing operations during these periods.

During the year ended December 31, 2023, no single customer contributed more than 10% of the Company’s sales from continuing operations.

As of December 31, 2024, Roof Racks Galore accounted for approximately 11 % of the Company’s accounts receivable.

As of December 31, 2023, INEOS Automotive accounted for approximately 13 % of the Company’s accounts receivable.

As of December 31, 2022, no single customer contributed more than 10% of the Company’s accounts receivable.

No other single customer contributed more than 10% of the Company’s accounts receivable during these periods.

Fair Value Measurements

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Derivative financial instruments are recorded at fair value based on current market pricing models.

The Company estimates that, due to the variable interest rates reflecting current market rates, the fair value of its debt obligations under its revolving credit facility and term loan approximate the carrying value at December 31, 2023.

The Company estimates that, due to the variable interest rates reflecting current market rates, the fair value of its debt obligations approximate the carrying value at December 31, 2024.

Contingent Consideration Liabilities

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Based on updated estimates and projections, the contingent consideration liabilities are adjusted at each reporting date to their estimated fair value.

Changes in fair value subsequent to the acquisition date are reported in contingent consideration (benefit) expense in the accompanying consolidated statements of comprehensive (loss) income.

Changes in fair value subsequent to the acquisition date are reported in contingent consideration (benefit) expense in the accompanying consolidated statements of comprehensive loss.

Variations in the fair value of contingent consideration liabilities may result from changes in discount periods or rates, changes in the timing and amount of sales estimates, and changes in probability assumptions with respect to the likelihood of achieving sales milestones.

Legal Costs and Regulatory Matter Expenses

Legal expenses related to the outstanding regulatory matter with the U.S.

Consumer Product Safety Commission (“CPSC”) and/or the ongoing investigation by the U.S.

Department of Justice, as well as legal expenses related to bringing the Company’s cases against HAP Trading and Caption Management to trial, are included in legal costs and regulatory matter expenses in the consolidated statements of comprehensive loss.

All other legal expenses incurred in the ordinary course of business are included in selling, general, and administrative expenses in the consolidated statements of comprehensive loss.

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

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Segment Information

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These segments are defined based on the internal financial reporting used by our chief operating decision maker to allocate resources and assess performance.

Certain significant selling, general and administrative expenses are not allocated to the segments including non-cash stock compensation expense.

Corporate costs consist of corporate office expenses including compensation, benefits, non-cash stock compensation expense, transaction costs, and other administrative costs, as well as charges related to certain legal and regulatory matters, that are managed at a corporate level and are not included within segment results when evaluating performance or allocating resources.

Recent Accounting Pronouncements

Accounting Pronouncements adopted during 2024

During the year ended December 31, 2024, the Company adopted Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The ASU was adopted on a retrospective basis.

This ASU requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.

The adoption of this standard did not have a material effect on the Company’s consolidated financial statements and related disclosures.

See Note 18 to our consolidated financial statements for additional information regarding segment reporting.

Accounting Pronouncements issued and not yet adopted

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.

The amendments in ASU 2023-07 are effective for all public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Company is currently evaluating the enhanced disclosure requirements, however it does not anticipate a material change to the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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The Company is currently evaluating the enhanced disclosure requirements, however it does not anticipate a material change to the consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which requires a public entity to disclose, in the notes to the financial statements, specified information about certain costs and expenses on an annual and interim basis.

The guidance will require all entities to disclose the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption.

The guidance also requires disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, as well as disclosure of the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

All entities are required to apply the guidance prospectively, with the option to apply it retrospectively.

The amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating the enhanced disclosure requirements, however it does not anticipate a material change to the consolidated financial statements.

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

On December 5, 2024, Clarus and its wholly-owned subsidiary, Rhino-Rack USA LLC, entered into an Asset Purchase Agreement (the “RockyMounts Purchase Agreement”) with RockyMounts, Inc.

(the “Seller”) and Robert C.

Noyes, pursuant to which the Company agreed to (i) acquire certain assets and liabilities of the Seller constituting the RockyMounts business, including equipment, inventory, intellectual property (including exclusive use of the brand name ROCKYMOUNTS and the tradename ROCKY MOUNTS INC.), software, domain names and social media accounts, and (ii) assume certain liabilities related to the RockyMounts assets, including all liabilities and obligations of the Seller under the Assigned Contracts (as defined in the RockyMounts Purchase Agreement), arising or to be performed after the closing of the RockyMounts Purchase Agreement.

Pursuant to the RockyMounts Purchase Agreement, the purchase price to be paid for the RockyMounts assets is up to $ 8,000 , which includes (i) $ 4,000 paid in cash at closing, subject to adjustment as set forth in the RockyMounts Purchase Agreement, (ii) the issuance of a promissory note by Rhino-Rack USA LLC in favor of the Seller in the original principal amount of $ 2,000 , payable on the one-year anniversary of the closing of the RockyMounts Purchase Agreement, and (iii) the payment of additional contingent consideration of up to $ 2,000 in cash upon the satisfaction of certain net sales targets (the “RockyMounts Contingent Consideration”).

The Company estimated the initial fair value of the RockyMounts Contingent Consideration to be $ 609 and recorded this liability within accrued liabilities.

See Note 11 for discussion regarding the valuation of the RockyMounts Contingent Consideration as of December 31, 2024.

The acquisition was accounted for as a business combination.

Acquisition-related costs for the RockyMounts Acquisition, which were included in transaction costs during the year ended December 31, 2024, were $ 333 .

On September 13, 2023, Clarus entered into a Share Purchase Agreement (the “TRED Purchase Agreement”) to acquire TRED Outdoors Pty Ltd.

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The TRED Purchase Agreement provides for the payment of additional contingent consideration of up to $AUD 1,000 (approximately $ 638 ) in cash upon the satisfaction of certain net sales targets (the “TRED Contingent Consideration”).

The Company estimated the initial fair value of the TRED Contingent Consideration to be $AUD 189 (approximately $ 121 ) and has recorded this liability within accrued liabilities.

The Company estimated the initial fair value of the TRED Contingent Consideration to be $AUD 189 (approximately $ 121 ) and recorded this liability within accrued liabilities.

See Note 11 for discussion regarding the valuation of the TRED Contingent Consideration as of December 31, 2024.

The acquisition was accounted for as a business combination.

Acquisition-related costs for the TRED Acquisition, which were included in transaction costs during the year ended December 31, 2023, were $ 456 .

On November 26, 2021, Clarus entered into a Share and Unit Purchase Agreement (the “MAXTRAX Purchase Agreement”) to acquire MaxTrax Australia Pty Ltd (“MAXTRAX”), which subsequently closed on December 1, 2021.

All United States dollar amounts contained herein are based on the exchange rates in effect for Australian dollars and the market value of the Company’s common stock at the time of closing of the acquisition of MAXTRAX (the “MAXTRAX Acquisition”).

The Company acquired MAXTRAX for an aggregate purchase price of $AUD 49,744 (approximately $ 35,475 ), subject to a post-closing adjustment, comprised of $AUD 37,551 (approximately $ 26,780 ) cash, 107 shares of the Company’s common stock valued at $ 2,594 , and additional consideration described below.

The MAXTRAX Purchase Agreement also provides for the payment of additional consideration in the form of shares of the Company’s common stock valued at $AUD 6,250 (approximately $ 4,457 ) split equally on June 30, 2022 and 2023.

During the years ended December 31, 2023 and 2022, approximately 250 and 108 shares, respectively, of the Company’s common stock were issued in accordance with the MAXTRAX Purchase Agreement as additional consideration.

The MAXTRAX Purchase Agreement provides for the payment of additional contingent consideration up to $AUD 6,250 (approximately $ 4,457 ) in cash if certain future net sales thresholds are met during 2022 and 2023 (the “MAXTRAX Contingent Consideration”).

The Company estimated the initial fair value of the MAXTRAX Contingent Consideration to be $AUD 2,307 (approximately $ 1,644 ) and recorded this liability within accrued liabilities and other long-term liabilities at the date of purchase.

The net sales threshold required for the cash payment of the 2022 portion of the MAXTRAX Contingent Consideration was met during the 2022 measurement period

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

ended June 30, 2022.

The net sales threshold required for the final payment of the MAXTRAX Contingent Consideration was not met during the measurement period ended June 30, 2023.

As of December 31, 2023, no remaining contingent consideration liability existed related to the MAXTRAX Acquisition.

The acquisition was accounted for as a business combination.

Acquisition-related costs for the MAXTRAX Acquisition, which were included in transaction costs during the year ended December 31, 2022 and 2021 were $ 382 and $ 446 , respectively.

On May 30, 2021, Clarus entered into a Share Sale and Purchase Agreement (the “Purchase Agreement”) to acquire Rhino-Rack Holdings Pty Ltd (“Rhino-Rack”), which subsequently closed on July 1, 2021.

The Company acquired Rhino-Rack for an aggregate purchase price of $AUD 269,696 (approximately $ 202,488 ), subject to a post-closing adjustment, comprised of approximately $AUD 191,249 (approximately $ 143,590 ) cash, 2,315 shares of the Company’s common stock valued at $ 55,333 , and additional contingent consideration described below.

The Purchase Agreement also provides for the payment of additional contingent consideration up to approximately $AUD 10,000 (approximately $ 7,508 ) if certain future net sales thresholds are met (the “Rhino-Rack Contingent Consideration”).

The Company estimated the initial fair value of the Rhino-Rack Contingent Consideration to be $AUD 4,747 (approximately $ 3,565 ) and recorded this liability within accrued liabilities at the date of purchase.

The net sales threshold required for the payment of the Rhino-Rack Contingent Consideration was not met during the measurement period ended June 30, 2022.

As of December 31, 2022, no remaining contingent consideration liability existed related to the Rhino-Rack Acquisition.

The acquisition was accounted for as a business combination.

Acquisition-related costs for the Rhino-Rack Acquisition, which were included in transaction costs during the year ended December 31, 2022 and 2021 were $ 1,799 and $ 10,975 , respectively.

The Company believes the acquisitions of TRED, MAXTRAX, and Rhino-Rack will provide the Company with a greater combined global revenue base, increased gross margins, profitability and free cash flows, and access to increased liquidity to further acquire and grow businesses.

Acquisition-related costs for the TRED Acquisition, which were included in transaction costs during the year ended December 31, 2024 and 2023, were $ 62 and $ 456 , respectively.

The Company believes the acquisitions of RockyMounts and TRED will provide the Company with a greater combined global revenue base, increased gross margins, profitability and free cash flows, and access to increased liquidity to further acquire and grow businesses.

The following table is a reconciliation to the fair value of the purchase consideration and how the purchase consideration is allocated to assets acquired and liabilities assumed which have been estimated at their fair values.

The fair value estimates for the purchase price allocation for TRED are based on the Company’s best estimates and assumptions as of the reporting date and are considered preliminary.

The fair value measurements of identifiable assets and liabilities, and the resulting goodwill related to the TRED Acquisition are subject to change and the final purchase price allocations could be different from the amounts presented below.

The fair value estimates for the purchase price allocation for RockyMounts are based on the Company’s best estimates and assumptions as of the reporting date and are considered preliminary.

The fair value measurements of identifiable assets and liabilities, and the resulting goodwill related to the RockyMounts Acquisition are subject to change and the final purchase price allocations could be different from the amounts presented below.

We expect to finalize the valuations as soon as practicable, but not later than one year from the date of the acquisition.

Since our initial purchase price allocation for the MAXTRAX acquisition, we have increased the fair value of accrued liabilities assumed and goodwill by $ 741 .

These adjustments were made after receiving certain information related to the fair value of assumed liabilities and such amounts were recorded during the first quarter of 2022.

The fair value measurements for the acquisitions of MAXTRAX and Rhino-Rack have been completed.

The excess of purchase consideration over the assets acquired and liabilities assumed is recorded as goodwill.

Goodwill for TRED, MAXTRAX, and Rhino-Rack is included in the Adventure segment.

The goodwill consists largely of the growth and profitability expected from these acquisitions.

The fair value measurements for the acquisition of TRED have been completed.

The excess of purchase consideration over the assets acquired and

CLARUS CORPORATION

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(in thousands, except per share amounts)

October 9, 2023

liabilities assumed is recorded as goodwill.

Goodwill for RockyMounts and TRED is included in the Adventure segment.

The goodwill consists largely of the growth and profitability expected from these acquisitions.

December 5, 2024

Number of Shares

Estimated Fair Value

Number of Shares

October 9, 2023

Estimated Fair Value

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Issuance of shares of Clarus Corporation

Future issuance of shares of Clarus Corporation

Contingent consideration

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Other intangible assets

Indefinite-lived intangible assets

Other long-term assets

Accounts payable and accrued liabilities

Income tax payable

Current portion of long-term debt

Long-term debt

Deferred income taxes

Other long-term liabilities

Total liabilities

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The estimated fair value of inventory was recorded at expected sales price less cost to sell plus a reasonable profit margin for selling efforts.

In connection with the acquisitions, the Company acquired exclusive rights to TRED’s, MAXTRAX’s, and Rhino-Rack’s trademarks, customer relationships, product technologies, and tradenames.

In connection with the acquisitions, the Company acquired exclusive rights to RockyMounts’ and TRED’s trademarks, customer relationships, product technologies, and tradenames.

The amounts assigned to each class of intangible asset, other than goodwill acquired, and the related average useful lives are as follows:

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Product technologies

Intangibles not subject to amortization

The full amount of goodwill of $ 2,832 at TRED, $ 15,199 at MAXTRAX, and $ 78,347 at Rhino-Rack is expected to be non-deductible for tax purposes.

No pre-existing relationships existed between the Company and TRED, MAXTRAX, and Rhino-Rack or their sellers prior to the acquisition.

TRED, MAXTRAX, and Rhino-Rack revenue and operating income are included in the Adventure segment.

Non-compete agreements

The full amount of goodwill of $ 2,741 at RockyMounts is expected to be deductible for tax purposes.

The full amount of goodwill of $ 2,832 at TRED is expected to be non-deductible for tax purposes.

No pre-existing relationships existed between the Company, RockyMounts, and TRED or their sellers prior to the acquisition.

RockyMounts and TRED revenue and operating income are included in the Adventure segment.

Total revenue and net income of RockyMounts from the date of acquisition to December 31, 2024, were not material to the Company’s consolidated financial statements.

Total revenue and net income of TRED from the date of acquisition to December 31, 2023, were not material to the Company’s consolidated financial statements.

Total revenue of $ 1,728 and net income of $ 183 of MAXTRAX were included in the Company’s consolidated statements of comprehensive (loss) income from the date of acquisition to December 31, 2021.

Total revenue of $ 43,411 and net loss of $ 7,310 of Rhino-Rack were included in the Company’s consolidated statements of comprehensive (loss) income from the date of acquisition to December 31, 2021.

The following unaudited pro forma results are based on the individual historical results of the Company, MAXTRAX, and Rhino-Rack, with adjustments to give effect as if the acquisition and borrowings used to finance the acquisition had occurred on January 1, 2020 for MAXTRAX and Rhino-Rack, after giving effect to certain adjustments including the amortization of intangible assets, depreciation of fixed assets, interest expense and taxes and assumes the purchase price was allocated to the assets purchased and liabilities assumed based on their fair market values at the date of purchase.

Year Ended December 31,

Net income per share - basic

Net income per share - diluted

The unaudited pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have occurred had the transactions been consummated as of January 1, 2020 for MAXTRAX and Rhino-Rack.

Furthermore, such pro forma information is not necessarily indicative of future operating results of the combined companies and should not be construed as representative of the operating results of the combined companies for any future dates or periods.

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Material nonrecurring adjustments excluded from the unaudited pro forma financial information above consists of $ 12,616 transaction costs and $ 5,399 step up of inventory to its preliminary fair value, which were recorded as an unfavorable adjustment to cost of goods sold.

DISCONTINUED OPERATIONS

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”).

The Precision Sport segment is engaged in the business of designing, developing, manufacturing, and marketing bullets and ammunition to the military, law enforcement, and commercial/consumer markets.

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, 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”).

The Precision Sport segment engaged in the business of designing, developing, manufacturing, and marketing bullets and ammunition to the military, law enforcement, and commercial/consumer markets.

Under the terms of the Precision Sport Purchase Agreement, the Buyer agreed to pay $ 175,000 in cash, which is subject to a customary working capital adjustment.

The Company received net proceeds of approximately $ 37,871 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.

As the disposition was completed during our first fiscal quarter of 2024, we expect to recognize a gain on the disposition during the three months ending March 31, 2024.

The Company received $ 175,674 in cash under the terms of the Precision Sport Purchase Agreement, which included a preliminary working capital adjustment.

As of December 31, 2024, the working capital adjustment had been finalized, with no changes from the preliminary working capital adjustment.

The Company recognized a pre-tax gain on such sale of $ 40,585 .

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

The carrying amounts of the assets and liabilities of the Precision Sport segment were classified as held for sale in our consolidated balance sheets as of December 31, 2023 and 2022.

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

The carrying amounts of the assets and liabilities of the Precision Sport segment were classified as held for sale in our consolidated balance sheets as of December 31, 2023.

The asset and liability balances as of December 31, 2023, were classified as current as we anticipated the sale of these assets and liabilities within a one year period.

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December 31, 2023

December 31, 2022

Accounts receivable, net

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Accrued liabilities

Current portion of long-term debt

Total current liabilities held for sale

Total liabilities held for sale

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Summarized results of discontinued operations for the Precision Sport segment are as follows:

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Interest expense, net

(Loss) income from operations of discontinued operations

Gain on sale of discontinued operations

Income from discontinued operations before taxes

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Income from discontinued operations, net of tax

In connection with the sale of the Precision Sport segment, all interest expense related to outstanding debt that was required to be repaid with the proceeds received from the sale pursuant to the terms of the Company’s credit facility is allocated to discontinued operations in our consolidated financial statements for the years ended December 31, 2023, 2022, and 2021.

In connection with the sale of the Precision Sport segment, all outstanding debt that was required to be repaid with the proceeds received from the sale pursuant to the terms of the Company’s credit facility and all associated interest expense has been allocated to discontinued operations in our consolidated financial statements for the years ended December 31, 2024, 2023, and 2022.

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Summarized cash flow information for the Precision Sport segment discontinued operations are as follows:

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Raw materials and supplies

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

PROPERTY AND EQUIPMENT

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Depreciation expense for continuing operations was $ 4,034 , $ 4,150 , and $ 4,388 for the years ended December 31, 2024, 2023, and 2022, respectively.

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

GOODWILL AND INTANGIBLE ASSETS

2 unchanged sentences

Balance at December 31, 2022

Acquisition adjustment

Increase due to acquisition of TRED

Impact of foreign currency exchange rates

Balance at December 31, 2023

Increase due to acquisition of TRED

Decrease due to impairment

Increase due to acquisition of RockyMounts

Impact of foreign currency exchange rates

Balance at December 31, 2024

Due to a weakening global economy, driven by higher inflation and interest rates, and other factors affecting the market for our Adventure reporting unit products, we experienced significant declining revenue and profitability in our Adventure reporting unit and a decline in stock price during the year ended December 31, 2022.

Revenues continued to decline unexpectedly during the three months ended December 31, 2022, due to a lack of product demand in what is typically the highest selling season for the product in Australia, in addition to a continued increase in interest rates.

Due to challenging market conditions and other factors affecting the demand for our Adventure reporting unit products, we experienced significant declining revenue and profitability in our Adventure reporting unit and a decline in stock price during the year ended December 31, 2024.

Revenues continued to decline unexpectedly during the three months ended December 31, 2024, due to a lack of product demand in what is typically the highest selling season for the product in Australia.

As a result, in the fourth quarter of 2024, we reduced our sales forecasts for 2025 and beyond in our Adventure reporting unit.

As part of our annual impairment test as of December 31, 2022, we performed a quantitative

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

assessment using income-based and market-based approaches.

As part of our annual impairment test as of December 31, 2024, we performed a quantitative assessment using income-based and market-based approaches.

As a result of this assessment, the carrying value of our Adventure reporting unit exceeded the related estimated fair value, thus an impairment of goodwill of $ 36,264 was recorded.

2 unchanged sentences

Balance at December 31, 2023

Decrease due to impairment

Impact of foreign currency exchange rates

Balance at December 31, 2024

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

As part of our annual impairment test as of December 31, 2024, we performed a quantitative assessment using the relief-from-royalty method.

As described above, we reduced our sales forecasts for 2025 and beyond in our Adventure reporting unit.

As a result of this assessment, the carrying value of the Rhino-Rack trademark recorded within our Adventure reporting unit exceeded the estimated related fair value, thus an impairment of the Rhino-Rack trademark of $ 40,240 was recorded.

As a result of this assessment, the carrying value of the Rhino-Rack and MAXTRAX trademarks recorded within our Adventure reporting unit exceeded their estimated related fair values, thus impairments of the Rhino-Rack and MAXTRAX trademarks of $ 3,480 and $ 5,065 , respectively, were recorded.

If we do not achieve the results reflected in the forecasts utilized in our impairment assessments, or if there are changes to market assumptions, all of which require significant estimates and assumptions, our valuation of the reporting unit, including related indefinite-lived intangible assets, could be adversely affected, and we may be required to impair an additional portion or all of the related goodwill, indefinite-lived intangibles, and other long-lived assets which could adversely affect our operating results in the period of impairment.

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Increase due to acquisitions

Write-off of fully amortized other intangible assets

Impact of foreign currency exchange rates

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Product technologies

Core technologies

Non-compete agreements

December 31, 2023

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Contingent consideration liabilities

Accrued CPSC regulatory matter

Restructuring liabilities

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Long-term lease liability

Deferred stock consideration for business acquisition

Contingent consideration liability

LONG-TERM DEBT, NET

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Term loan (c)

Debt issuance costs

Less current portion

On January 3, 2022, the Company and certain of its direct and indirect subsidiaries entered into Amendment No.

4 (“Amendment No.

4”) to the credit agreement, dated as of May 3, 2019 (the “Existing Credit Agreement”) by and among the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto.

Amendment No.

4, among other things, permits (i) the Company to borrow in Australian Dollars and New Zealand Dollars in order to support the operations of the Company in Australia and New Zealand and (ii) provides for addbacks to EBITDA, for debt covenant purposes (as defined in the Existing Credit Agreement), under the Existing Credit Agreement for expenses relating to activities in respect of acquisitions, dispositions, investments and financings (whether or not these transactions are actually consummated).

On April 18, 2022 (the “Effective Date”), the Company and certain of its direct and indirect subsidiaries entered into an Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent and the lenders party thereto (the “Restated Credit Agreement”) pursuant to which the Existing Credit Agreement was amended and restated in its entirety.

(a) On February 29, 2024, upon the closing of the disposition of the Precision Sport segment, the Company terminated and paid off amounts outstanding under the revolving credit facility, and pursuant to the Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent and the lenders party thereto (the “Restated Credit Agreement”), in full.

The Company paid interest monthly on any borrowings on the Restated Credit Agreement.

As of December 31, 2023, the interest rates ranged between approximately 7.7 % and 9.8 % .

(b) On December 5, 2024, pursuant to the RockyMounts Purchase Agreement, Clarus and its wholly-owned subsidiary, Rhino-Rack USA LLC, issued a promissory note in favor of RockyMounts, Inc.

in the principal amount of $ 2,000 , payable on December 5, 2025.

Imputed interest is included within the principal amount and the fair value of the note was $ 1,878 on the date of issuance.

As of December 31, 2024, the borrowing rate was 6.5 % .

CLARUS CORPORATION

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(in thousands, except per share amounts)

The Restated Credit Agreement provides for borrowings of up to $ 300,000 under a secured revolving credit facility (the “Revolving Loans”) (including up to $ 5,000 for letters of credit), and borrowings of up to $ 125,000 under a secured term loan facility (the “Term Loans”).

The Restated Credit Agreement also permits the Company, subject to certain requirements, to arrange with lenders for an aggregate of up to $ 175,000 of additional revolving and/or term loan commitments (both of which are currently uncommitted), for potential aggregate revolving and term loan commitments under the Restated Credit Agreement of up to $ 600,000 .

The Restated Credit Agreement matures on April 18, 2027 (the “Maturity Date”), at which time the revolving commitments thereunder will terminate and all outstanding Revolving Loans and Term Loans, together with all accrued and unpaid interest thereon, must be repaid.

All obligations under the Restated Credit Agreement are secured by our subsidiary equity interests, as well as accounts receivable, inventory, intellectual property and certain other assets owned by the Company.

The Restated Credit Agreement contains restrictions on the Company’s ability to pay dividends or make distributions or other restricted payments if certain conditions in the Restated Credit Agreement are not fulfilled.

The Restated Credit Agreement also includes other customary affirmative and negative covenants, including financial covenants relating to the Company’s consolidated total leverage ratio and fixed charge coverage ratio.

In conjunction with the Precision Sport Purchase Agreement dated December 29, 2023, all balances owing the lenders and the Administrative Agent were required to be paid off contemporaneously with the closing of the disposition of the Precision Sport segment which occurred on February 29, 2024.

Accordingly, all debt obligations were classified as current as of December 31, 2023.

(a) As of December 31, 2023, the Company had drawn $ 10,375 on the revolving commitment.

On February 29, 2024, upon the closing of the disposition of the Precision Sport segment, the Company terminated and paid off amounts outstanding under the revolving credit facility in full.

The Company pays interest monthly on any borrowings on the Restated Credit Agreement.

As of December 31, 2023 the interest rates ranged between approximately 7.7 % and 9.8 % , and as of December 31, 2022, the interest rate was approximately 6.3 % .

(b) Foreign subsidiaries of the Company had a revolving credit facility, which matured on March 31, 2023, and term debt with financial institutions, which matures on August 8, 2024 .

Foreign subsidiaries of the Company had term debt with financial institutions, which was repaid as of December 31, 2024.

The foreign subsidiaries paid interest monthly on any borrowings on the credit facility as well as monthly payments on the term debt.

As of December 31, 2023, the interest rate was approximately 3.2 % and as of December 31, 2022, the interest rates ranged between approximately 1.3 % and 4.0 % .

As of December 31, 2023, the interest rate was approximately 3.2 %.

The credit facility was secured by certain assets of the foreign subsidiaries.

The revolving credit facility was settled and closed as of March 31, 2023 and had no amounts outstanding.

(c) On February 29, 2024, upon the closing of the disposition of the Precision Sport segment, the Company terminated and paid off amounts outstanding under the term loan in full.

The Company pays interest monthly on any borrowings on the Restated Credit Agreement.

As of December 31, 2023 and 2022, the rates were approximately 7.7 % and 6.3 % , respectively.

The Company paid interest monthly on any borrowings on the Restated Credit Agreement.

As of December 31, 2023, the rate was approximately 7.7 % .

DERIVATIVE FINANCIAL INSTRUMENTS

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The Company accounts for these contracts as cash flow hedges and tests effectiveness by determining whether changes in the expected cash flow of the derivative offset, within a range, changes in the expected cash flow of the hedged item.

At December 31, 2023, the Company’s derivative contracts had remaining maturities of less than one and one-half years .

At December 31, 2024, the Company’s derivative contracts had remaining maturities of less than one year .

The counterparties to these transactions had both long-term and short-term investment grade credit ratings.

The maximum net exposure of the Company’s credit risk to the counterparties is generally limited to the aggregate unrealized loss of all contracts with that counterparty, which was $ 256 as of December 31, 2023 .

The Company’s exposure of counterparty credit risk is limited to the aggregate unrealized gain on all contracts.

The maximum net exposure of the Company’s credit risk to the counterparties is generally limited to the aggregate unrealized loss of all contracts with that counterparty.

As of December 31, 2024, there was no such exposure to the counterparties.

The Company’s exposure of counterparty credit risk is limited to the aggregate unrealized gain on all contracts, which was $ 600 as of December 31, 2024 .

The Company’s derivative counterparties have strong credit ratings and as a result, the Company does not require collateral to facilitate transactions.

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

The Company held the following contracts designated as hedged instruments as of December 31, 2024 and 2023:

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Foreign exchange contracts - Euros

February 2025

December 31, 2023

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Gains of $ 573 and $ 393 were reclassified to sales during the years ended December 31, 2024 and 2023, respectively.

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

The following table presents the balance sheet classification and fair value of derivative instruments as of December 31, 2024 and 2023:

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Balance as of December 31, 2023

Other comprehensive (loss) income before reclassifications

Amounts reclassified from other comprehensive (loss) income

Net current period other comprehensive loss

Balance as of December 31, 2024

Foreign Currency Translation Adjustments

Unrealized Gains (Losses) on Cash Flow Hedges

Balance as of December 31, 2022

Other comprehensive income before reclassifications

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(in thousands, except per share amounts)

Foreign Currency Translation Adjustments

Unrealized Gains (Losses) on Cash Flow Hedges

Balance as of December 31, 2021

Other comprehensive (loss) income before reclassifications

Amounts reclassified from other comprehensive (loss) income

Net current period other comprehensive loss

Balance as of December 31, 2022

The effects on net (loss) income of amounts reclassified from unrealized gains (losses) on cash flow hedges for foreign exchange contracts and foreign currency translation adjustments for the years ended December 31, 2023 and 2022 were as follows:

The effects on net loss of amounts reclassified from unrealized gains (losses) on cash flow hedges for foreign exchange contracts and foreign currency translation adjustments for the years ended December 31, 2024 and 2023 were as follows:

Gains reclassified from AOCI to the Consolidated Statements of Comprehensive Loss

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Designated forward exchange contracts

Contingent consideration liabilities

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Derivative financial instruments are recorded at fair value based on current market pricing models.

No nonrecurring fair value measurements existed at December 31, 2023 and 2022.

The Company estimated the initial fair value of the contingent consideration liabilities primarily using the Monte-Carlo pricing model.

Significant unobservable inputs used in the valuation included a discount rate of 11.5 %.

Contingent consideration liabilities are subsequently remeasured at the estimated fair value at the end of each reporting period using financial projections of the acquired company, such as sales-based milestones and estimated probabilities of achievement, with the change in fair value recognized in contingent consideration (benefit) expense in the accompanying consolidated statements of comprehensive (loss) income for such period.

Significant unobservable inputs used in the valuations of contingent consideration liabilities related to the acquisitions of RockyMounts and TRED included discount rates of 13.0 % and 11.5 %, respectively.

We measure the initial liability and remeasure the liability on a recurring basis using Level 3 inputs as defined under authoritative guidance for fair value measurements.

The net sales threshold required for the payment of the Rhino-Rack Contingent Consideration was not met during the measurement period ended June 30, 2022.

The net sales threshold required for the payment of the 2022 portion of the MAXTRAX Contingent Consideration was met during the 2022 measurement period ended June 30, 2022.

The net sales threshold required for the final payment of the MAXTRAX Contingent Consideration was not met during the measurement period ended June 30, 2023.

During the year ended December 31, 2022, $AUD 3,125 was paid in cash in accordance with the MAXTRAX Purchase Agreement.

The net sales threshold required for the payment of the MAXTRAX Contingent Consideration was not met during the measurement period ended June 30, 2023.

CLARUS CORPORATION

3 unchanged sentences

Balance at December 31, 2022

Increase due to acquisition of TRED

Fair value adjustments

Contingent consideration payments

Impact of foreign currency exchange rates

Balance at December 31, 2023

Increase due to acquisition of TRED

Increase due to acquisition of RockyMounts

Fair value adjustments

3 unchanged sentences

Our determination of fair value of the contingent consideration liabilities could change in future periods based on our ongoing evaluation of these significant unobservable inputs.

As of December 31, 2024, the net sales threshold required for the payment of the TRED Contingent Consideration is not expected to be met.

Items Measured at Fair Value on a Non-Recurring Basis

2 unchanged sentences

The fair values are based on revenue and cash flow projections, royalty rates, and discount rates.

Impairment of goodwill and indefinite-lived intangible assets was $ 0 , $ 92,311 , and $ 0 during the years ended December 31, 2023, 2022, and 2021, respectively.

Impairment of goodwill was $ 36,264 , $ 0 , and $ 52,071 during the years ended December 31, 2024, 2023, and 2022, respectively.

Impairment of indefinite-lived intangible assets was $ 8,545 , $ 0 , and $ 40,240 during the years ended December 31, 2024, 2023, and 2022, respectively.

See Note 6 for additional information.

4 unchanged sentences

On March 5, 2025 , the Company announced that its Board of Directors approved the payment on March 26, 2025 of the Quarterly Cash Dividend of $ 0.025 to the record holders of shares of the Company’s common stock as of the close of business on March 17, 2025 .

On October 25, 2021, the Company entered into an underwriting agreement with BofA Securities, Inc., as representative of the several underwriters named therein (the “Underwriters”), relating to the public offer and sale of 2,750 shares of the Company’s common stock at a price to the public of $ 27.00 per share.

The Underwriters received an underwriting discount of 6 %, or $ 1.62 per share, in connection with the sale of the shares of Common Stock in the offering.

In addition, the Company granted the Underwriters a 30-day option to purchase up to 413 additional shares of common stock on the same terms and conditions which was fully exercised.

The net proceeds to the Company from the offering, including the Underwriters’ exercise of their 30-day option but before expenses and after deducting the applicable underwriting discounts and commissions, were $ 80,264 .

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

EARNINGS (LOSS) PER SHARE

2 unchanged sentences

Potentially dilutive securities are excluded from the computation of diluted earnings (loss) per share if their effect is anti-dilutive to the loss from continuing operations.

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

The following table is a reconciliation of basic and diluted shares of common stock outstanding used in the calculation of earnings (loss) per share:

2 unchanged sentences

Effect of dilutive stock awards

Effect of dilutive deferred stock consideration for business acquisition

Weighted average shares outstanding - diluted

(Loss) income from continuing operations per share:

Loss from continuing operations per share:

Income from discontinued operations per share:

Net (loss) income per share:

For the years ended December 31, 2023, 2022, and 2021, equity awards of 5,424 , 6,060 , and 509 , respectively, were outstanding and anti-dilutive and therefore not included in the calculation of net (loss) income per share for these periods.

Net loss per share:

For the years ended December 31, 2024, 2023, and 2022, equity awards of 4,596 , 5,424 , and 6,060 , respectively, were outstanding and anti-dilutive and therefore not included in the calculation of net loss per share for these periods.

STOCK-BASED COMPENSATION PLAN

5 unchanged sentences

Options Granted:

During the year ended December 31, 2023, the Company issued stock options for an aggregate of 75 shares under the 2015 Plan to directors of the Company.

All 75 options vest and become exercisable over a period of one year .

During the year ended December 31, 2024, the Company issued stock options for an aggregate of 1,250 shares under the 2015 Plan to directors and employees of the Company.

Of the 1,250 options, 1,140 options vest and become exercisable over a period of two years , 100 vest in four equal consecutive quarterly tranches from the date of grant, and 10 vest in one quarterly tranche from the date of grant.

All of the issued stock options expire ten years from the date of the grant.

24 unchanged sentences

Using these assumptions, the fair value of the stock options granted during the years ended December 31, 2024, 2023, and 2022 was $ 3,818 , $ 186 , and $ 3,661 , respectively, which will be amortized as stock-based compensation expense over the vesting period of the options.

Restricted Stock Awards Granted:

On March 11, 2024, the Company issued and granted employees restricted stock awards of 100 restricted shares under the 2015 Plan, of which 50 and 50 shares will vest and become nonforfeitable on each March 11, 2025 and March 11, 2026, respectively.

As these restricted stock awards vest over time, the fair value of the restricted stock was estimated as of the date of grant using the grant price of $ 6.75 per share.

The grant date fair value of the restricted stock awards was approximately $ 675 which will be amortized over the expected term of 2 years .

Market Condition Restricted Shares Granted:

3 unchanged sentences

For computing the fair value of the restricted shares with a market condition, the fair value of the restricted stock award grant has been estimated as of the date of grant using the Monte-Carlo pricing model with the assumptions below.

On May 28, 2021, the Company issued and granted to the Executive Chairman a restricted stock award of 500 restricted shares under the 2015 Plan, of which 500 restricted shares will vest if, on or before May 28, 2024, the Fair Market Value (as defined in the Plan) of the Company’s common stock shall have equaled or exceeded $ 35.00 per share for twenty consecutive trading days.

CLARUS CORPORATION

7 unchanged sentences

$ 50.00 stock price target

$ 35.00 stock price target

Grant price (per share)

5 unchanged sentences

$ 7.84 - $ 8.34

Using these assumptions, the fair value of the market condition restricted stock awards granted on March 14, 2023, March 4, 2022, and May 28, 2021 were approximately $ 4,046 , $ 10,761 , and $ 7,230 , respectively.

Using these assumptions, the fair value of the market condition restricted stock awards granted on March 14, 2023 and March 4, 2022 were approximately $ 4,046 and $ 10,761 , respectively.

The total non-cash stock compensation expense for continuing operations related to stock options and restricted stock awards recorded by the Company was as follows:

30 unchanged sentences

Starting in 2023, the Company began incurring expenses to facilitate long-term sustainable growth through cost reduction actions, consisting of employee reductions, facility rationalization and contract termination costs.

During the year ended December 31, 2023, the Company incurred $ 3,223 of restructuring charges related to these actions.

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

The Company has incurred $ 5,171 of cumulative restructuring charges since the commencement of our 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) income.

These 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 2024;

We estimate that we will continue to 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.

10 unchanged sentences

Cash payments

Product discontinuance

Asset impairments

5 unchanged sentences

Anticipated costs related to litigation matters are accrued when it is both probable that a liability has been incurred and the amount can be reasonably estimated.

Based on currently available information, the Company does not believe that it is reasonably possible that the disposition of any of the legal disputes the Company or its subsidiaries is currently involved in will have a material adverse effect upon the Company’s consolidated financial condition, results of operations or cash flows, except for the U.S.

Consumer Product Safety Commission (“CPSC”) matter discussed below.

There is a reasonable possibility of loss from contingencies in excess of the amounts accrued by the Company in the accompanying consolidated balance sheets;

however, the actual amounts of such possible losses cannot currently be reasonably estimated by the Company at this time.

It is possible that, as additional information becomes available, the impact on the Company could have a material effect.

Based on currently available information, the Company does not believe that it is reasonably possible that the disposition of any of the legal disputes the Company or its subsidiaries is currently involved in will have a material adverse effect upon the Company’s consolidated financial position, results of operations or cash flows, except for the U.S.

Consumer Product Safety Commission (“CPSC”) and Department of Justice matter discussed below.

There is a reasonable possibility of loss from contingencies in excess of the amounts accrued by the Company in the accompanying condensed consolidated balance sheets;

however, the actual amounts of such possible losses cannot currently be reasonably estimated by the Company.

It is possible that, as additional information becomes available, the Company may subsequently determine that it may incur losses from such contingencies materially in excess of the amounts initially accrued by the Company which could have a material adverse effect on the Company’s liquidity, stock price, consolidated financial position, results of operations and/or cash flows.

“Legal Proceedings.” and Item 1A.

“Risk Factors.”

Legal expenses incurred in the ordinary course of business are included in selling, general, and administrative expenses in the consolidated statements of comprehensive loss except as described below.

Consumer Product Safety Commission

6 unchanged sentences

BDEL received a letter from the CPSC, dated October 28, 2021, stating that the CPSC is investigating whether BDEL has timely complied with the reporting requirements of Section 15(b) of the Consumer Protection Safety Act and related regulations regarding certain models of avalanche transceivers switching unexpectedly out of “send” mode.

Separately, on April 21, 2022, BDEL filed a Section 15(b) report and applied for Fast-Track consideration for a voluntary recall, consisting of free repair or replacement of such malfunctioning models of avalanche transceivers, which would not switch from “send” mode to “search” mode due to an electronic malfunction in the reed switch or foil.

The CPSC approved the recall and entered into a Corrective Action Plan agreement with BDEL in August 2022.

BDEL received a letter from the CPSC, dated January 17, 2023, stating that the CPSC is investigating whether BDEL has timely complied with the reporting requirements of Section 15(b) of the Consumer

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

Protection Safety Act and related regulations regarding the malfunction in the reed switch or foil in certain models of avalanche transceivers switching out of “search” mode.

The CPSC approved the recall and entered into a Corrective Action Plan agreement with BDEL in August 2022.

BDEL received a letter from the CPSC, dated January 17, 2023, stating that the CPSC is investigating whether BDEL has timely complied with the reporting requirements of Section 15(b) of the Consumer Protection Safety Act and related regulations regarding the malfunction in the reed switch or foil in certain models of avalanche transceivers switching out of “search” mode.

BDEL responded to the CPSC’s investigation by letter dated March 31, 2023, accompanied with documents responsive to the CPSC’s requests.

1 unchanged sentence

On September 6, 2023, the CPSC requested further clarification and information regarding the reed switch issue, to which BDEL responded on October 6 and 13, 2023.

By letters dated October 12, 2023 and December 18, 2023, BDEL was notified by the CPSC that the agency staff has concluded we failed to timely meet our statutory reporting obligations under the Consumer Product Safety Act with respect to certain models of BDEL’s avalanche transceivers switching unexpectedly out of “send” mode and certain models of BDEL’s avalanche transceivers not switching from “send” mode into “search” mode, that we made a material misrepresentation in a report to the CPSC, and that the agency staff intends to recommend that the CPSC impose substantial civil monetary penalties.

On November 20, 2023 and February 8, 2024, respectively, we submitted a comprehensive response disputing the CPSC’s findings and conclusions in the October 12, 2023 and December 18, 2023 letters, including the amount of any potential penalties.

The CPSC may ultimately disagree with our position and the agency staff has recommended substantial civil monetary penalties which the Company intends to strongly contest and vigorously defend against.

We cannot assure on what terms this matter will be resolved.

Based on currently available information, the Company cannot estimate the amount of the loss (or range of loss) in connection with this matter.

By letters dated October 12, 2023 and December 18, 2023, respectfully, BDEL was notified by the CPSC that the agency staff had concluded that BDEL failed to timely meet its statutory reporting obligations under the Consumer Product Safety Act with respect to certain models of avalanche transmitters distributed by BDEL switching unexpectedly out of “send” mode and certain models of avalanche transmitters distributed by BDEL not switching from “send” mode into “search” mode, that BDEL made a material misrepresentation in a report to the CPSC, and that the agency staff intends to recommend that the CPSC impose civil monetary penalties of $ 16,135 and $ 9,000 , respectively, for the two matters described above.

On November 20, 2023 and February 8, 2024, respectively, BDEL submitted a comprehensive response disputing the CPSC’s findings and conclusions in the October 12, 2023 and December 18, 2023 letters, including the amount of any potential penalties.

The CPSC ultimately disagreed with our position and the agency voted to refer the matter to the U.S.

Department of Justice for further proceedings.

The Company and BDEL intend to strongly contest and vigorously defend against any claims which may be asserted against them by the Department of Justice or the CPSC.

Walbrecht, the former President of BDEL and the Company, received a letter from the CPSC dated June 25, 2024 alleging that in his personal capacity he knowingly violated the Consumer Product Safety Act by failing to timely report the occurrence resulting in beacons switching unexpectedly out of “send” mode.

The staff of the CPSC recommended a $ 5,000 fine against Mr.

Walbrecht personally.

Pursuant to the Company’s by-laws, the Company has agreed to indemnify Mr.

Walbrecht and pay his legal fees, and he has provided an undertaking to the Company that the Company will be entitled to recover those expenses if it is ultimately determined that he was not entitled to indemnification.

On August 26, 2024, Mr.

Walbrecht’s independent counsel responded to the CPSC, denying the allegations of its June 25, 2024, letter and rejecting its demand for a penalty.

On January 23, 2025, the Company and BDEL were each served with grand jury subpoenas from the U.S.

Attorney’s Office for the District of Utah requiring the production of documents relating to avalanche transmitters distributed by BDEL.

The Company and BDEL intend to cooperate with this investigation.

Based on currently available information, the Company believes an unfavorable outcome with the CPSC is probable, however, we cannot reasonably estimate on what terms this matter will be resolved with the CPSC or the U.S.

Department of Justice.

During the year ended December 31, 2024, the Company recorded a liability of $ 2,500 representing the low end of the range of our estimated exposure.

The Company does not have a better estimate of the loss;

therefore the low-end of the range was recorded as an accrued liability during the first quarter of 2024 and a corresponding expense is included in legal costs and regulatory matter expenses in the consolidated statements of comprehensive loss.

We believe it is reasonably possible that a change in our ability to estimate the amount of loss could occur in the near term and that the change in the estimate could be material.

In addition, as this matter is ongoing, the Company is currently unable to predict its duration, resources required or outcome, or the impact it may have on the Company’s liquidity, financial condition, results of operations and/or cash flows.

A penalty imposed by the CPSC or other regulators could be costly to us and could damage our business and reputation as well as have a material adverse effect on the Company’s liquidity, stock price, consolidated financial position, results of operations and/or cash flows.

Consolidated (loss) income from continuing operations before income taxes consists of the following:

Year Ended December 31,

Foreign operations

Loss from continuing operations before income tax

Any penalties imposed by the CPSC or other regulators could be costly to us and could damage our business and reputation as well as have a material adverse effect on the Company’s liquidity, stock price, consolidated financial position, results of operations and/or cash flows.

During the years ended December 31, 2024 and 2023, the Company incurred legal expenses of $ 3,088 , which includes the $ 2,500 recorded liability noted above, and $ 476 , respectively, in efforts to resolve this matter.

These legal expenses are included in legal costs and regulatory matter expenses in the consolidated statements of comprehensive loss.

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

Clarus Corporation v.

HAP Trading, LLC and Harsh A.

On September 23, 2022, the Company filed a lawsuit in the United States District Court for the Southern District of New York against HAP Trading, LLC and Harsh A.

Padia (“HAP Trading”), seeking disgorgement of profits from transactions in the Company’s common stock and related derivative securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended.

Clarus Corporation v.

Caption Management, LLC, et al.

On March 8, 2024, the Company filed a lawsuit in the United States District Court for the Southern District of New York against Caption Management, LLC, Caption Partners II LP, Caption GP, LLC, William Cooper and Jason Strasser (“Caption Management”), seeking disgorgement of profits from transactions in the Company’s stock and related derivative securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended.

During the years ended December 31, 2024 and 2023, the Company incurred legal expenses of $ 754 and $ 1,288 , respectively, in the efforts to bring the cases against HAP Trading and Caption Management to trial.

These legal expenses are included in legal costs and regulatory matter expenses in the consolidated statements of comprehensive loss.

Consolidated loss from continuing operations before income taxes consists of the following:

Year Ended December 31,

Foreign operations

Loss from continuing operations before income tax

The components of the benefit for income taxes attributable to continuing operations consist of the following:

2 unchanged sentences

State and local

Change in valuation allowance for deferred income taxes

Income tax benefit

Income tax expense (benefit)

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

The allocation of income tax expense (benefit) between continuing and discontinued operations was as follows:

3 unchanged sentences

The Company’s foreign operations that are considered to be permanently reinvested have statutory tax rates of approximately 23 % to 30 %.

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

The following is a reconciliation of the statutory federal income tax rate to the effective rate reported in the Company’s financial statements:

Year Ended December 31,

Statutory income tax (benefit) expense

Statutory income tax benefit

Increase (decrease) in income taxes resulting from:

9 unchanged sentences

Research and development expenditure

Fair value inventory step-up

Transaction costs

Income tax (benefit) expense

The deferred tax asset write-offs relate to NOLs that were fully offset by a release in the valuation allowance.

Income tax expense (benefit)

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

The deferred tax asset write-offs during the year ended December 31, 2023, relate to state NOLs that expired in 2023 that had been previously fully reserved via a valuation allowance.

CLARUS CORPORATION

11 unchanged sentences

Lease liabilities

Business Interest Limitation

Valuation allowance

3 unchanged sentences

Certain deferred income tax balances are not netted as they represent deferred amounts applicable to different taxing jurisdictions.

The Company has provided a valuation allowance against a portion of the deferred tax assets as of December 31, 2023, 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 net operating loss carryforwards for federal tax purposes.

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

In assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized.

The Company has provided a full valuation allowance against all of the U.S.

deferred tax assets as of December 31, 2024, because the ultimate realization of those assets does not meet the more-likely-than-not criteria.

In assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and net operating loss and credit carryforwards expire.

The estimates and judgments associated with the Company’s valuation allowance on deferred tax assets are considered critical due to the amount of deferred tax assets recorded by the Company on its consolidated balance sheets and the judgment required in determining the Company’s potential for future taxable income.

The need for a valuation allowance is reassessed at each reporting period.

10 unchanged sentences

federal income tax purposes of $ 0 and $ 5,439 , respectively.

The Company believes its U.S.

Federal NOLs will substantially offset its future U.S.

Federal income taxes until expiration.

The majority of the Company’s pre-tax income is currently earned and expected to be earned in the U.S., or taxed in the U.S.

as Subpart F.

income and will be offset with the NOLs.

There are no NOLs that expire on December 31, 2024.

NOLs available to offset taxable income, subject to compliance with Section 382 of the Code, begin to expire based upon the following schedule:

Net Operating Loss Carryforward Expiration Dates

December 31, 2023

Expiration Dates December 31,

Net Operating Loss Amount

2027 and beyond

Tax positions are recognized in the financial statements when it is more likely than not that the position will be sustained upon examination by the tax authorities.

11 unchanged sentences

Balance, end of year

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Included in the balance of total unrecognized tax benefits at December 31, 2023 and 2022, are potential benefits of $ 930 and $ 813 , respectively, that if recognized, would affect the effective rate, subject to impact of valuation allowance, on income from continuing operations.

As of December 31, 2024 and 2023, we had unrecognized tax benefits of $ 2,863 and $ 890 , respectively, of which $ 433 and $ 798 would affect the effective tax rate if recognized.

Unrecognized tax benefits that reduce a net operating loss, similar tax loss or tax credit carryforward are presented as a reduction to deferred income taxes.

4 unchanged sentences

We operate our business structure within two segments.

These segments are defined based on the internal financial reporting used by our chief operating decision maker to allocate resources and assess performance.

Certain significant selling and general and administrative expenses are not allocated to the segments including non-cash stock compensation expense.

These segments are defined based on the internal financial reporting used by our chief operating decision maker (“CODM”) to allocate resources and assess performance.

The Company’s CODM is the Executive Chairman and Director (Principal Executive Officer).

The CODM allocates resources based on revenue and operating income primarily through the annual budget and periodic forecasting process.

The CODM considers budget-to-actual variances when making decisions about allocating capital and personnel to the segments.

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

legal and regulatory matters, that are managed at a corporate level and are not included within segment results when evaluating performance or allocating resources.

Each segment is described below:

8 unchanged sentences

We also offer advanced skis, ski poles, ski skins, and snow safety products, including avalanche airbag systems, avalanche transceivers, shovels, and probes.

● Our Adventure segment, which includes Rhino-Rack, MAXTRAX, and TRED, is a manufacturer of highly-engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers, recovery boards and accessories in Australia and New Zealand and a growing presence in the United States.

● Our Adventure segment, which includes Rhino-Rack, MAXTRAX, and TRED, is a manufacturer of highly-engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers, recovery boards, bicycle racks, and accessories in Australia and New Zealand and a growing presence in the United States and Europe.

As noted above, the Company has a wide variety of technical outdoor equipment and lifestyle products that are sold to a variety of customers in multiple end markets.

While there are multiple products sold, the terms and nature of revenue recognition policy is similar for all segments.

Financial information for our segments, as well as revenue by geography, which the Company believes provides a meaningful depiction how the nature, timing and uncertainty of revenue are affected by economic factors, is as follows:

Year Ended December 31, 2024

Domestic sales

International sales

Cost of goods sold

Inventory fair value of purchase accounting

PFAS and other inventory reserves

Selling, general and administrative

Restructuring charges

Transaction costs

Contingent consideration benefit

Legal costs and regulatory matter expenses

Impairment of goodwill

Impairment of indefinite-lived intangible assets

Segment operating loss

Corporate costs

Interest income, net

Loss before income tax

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

Year Ended December 31, 2023

Sales to external customers:

Domestic sales

International sales

Total Outdoor

Cost of goods sold

Inventory fair value of purchase accounting

PFAS and other inventory reserves

Selling, general and administrative

Restructuring charges

Transaction costs

Contingent consideration benefit

Legal costs and regulatory matter expenses

Segment operating (loss) income

Corporate costs

Interest income, net

Loss before income tax

Year Ended December 31, 2022

Domestic sales

International sales

Total Adventure

Total sales to external customers

Segment operating (loss) income:

Total segment operating (loss) income

Restructuring charges

Cost of goods sold

Inventory fair value of purchase accounting

Selling, general and administrative

Transaction costs

Contingent consideration benefit (expense)

Corporate and other expenses

Interest income (expense), net

Contingent consideration expense

Impairment of goodwill

Impairment of indefinite-lived intangible assets

Segment operating income (loss)

Corporate costs

Loss before income tax

12 unchanged sentences

Total amortization

Total long-lived assets by geographic region, as of December 31, 2024 and 2023, were as follows:

United States

Other countries

The Company has entered into leases for certain facilities, vehicles and other equipment.

Our leases have remaining contractual terms of up to seven years , some of which include options to extend the leases for up to five years .

Our leases have remaining contractual terms of up to ten years , some of which include options to extend the leases for up to five years .

Our lease costs are primarily related to facility leases for inventory warehousing, administration offices and vehicles.

10 unchanged sentences

Other long-term liabilities

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Lease costs were as follows:

Affected line item in the Consolidated

Statements of Comprehensive (Loss) Income

Statements of Comprehensive Loss

December 31, 2024

5 unchanged sentences

Cost of goods sold, Selling, general and administrative

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

The maturity of lease liabilities as of December 31, 2024 are as follows:

10 unchanged sentences

(“Kanders & Company”) in consideration of the significant support received by the Company from Kanders & Company in sourcing, structuring, performing due diligence and negotiating the TRED Acquisition.

As part of the Rhino-Rack Acquisition, on July 1, 2021, the Company paid a fee in the amount of $ 1,750 to Kanders & Company in consideration of the significant support received by the Company from Kanders & Company in sourcing, structuring, performing due diligence and negotiating the Rhino-Rack Acquisition.

Kanders, the Company’s Executive Chairman of the Board of Directors, is a member of the Board of Directors and sole stockholder of Kanders & Company.

Additionally, on July 1, 2021, the Company paid a fee in the amount of $ 250 to Kanders & Company in consideration of the significant support received by the Company from Kanders & Company in sourcing, structuring, and negotiating an amendment to the Company’s credit agreement.

On October 25, 2021, the Company paid a fee in the amount of $ 500 to Kanders & Company in consideration of the significant support received by the Company from Kanders & Company in sourcing, structuring, and negotiating the public offer and sale of the Company’s common stock.

SUBSEQUENT EVENTS

Disposal of Precision Sport Segment

The Precision Sport segment is engaged in the business of designing, developing, manufacturing, and marketing bullets and ammunition to the military, law enforcement, and commercial/consumer markets.

Under the terms of the Precision Sport Purchase Agreement, the Buyer paid $ 175,000 in cash, which is subject to a customary working capital adjustment.

As the disposition was

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

completed during our first fiscal quarter of 2024, we expect to recognize a gain on the disposition during the three months ending March 31, 2024.

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.

Termination of Restated Credit Agreement

Contemporaneous with the closing of the sale of the Precision Sport segment, the Company directed $ 135,013 of the proceeds from the closing of the sale to pay off any and all outstanding borrowings under the Restated Credit Agreement, dated April 18, 2022, by and among the Company and JPMorgan Chase Bank, N.A., as administrative agent and the lenders party thereto (the “Restated Credit Agreement”).

Accordingly, on February 29, 2024, all balances owing the lenders and the Administrative Agent thereunder were paid off, and the Restated Credit Agreement was terminated, together with the Pledge and Security Agreement, effective as of May 3, 2019, by and among the Company and the Administrative Agent, as well as any and all of the other loan documentation associated therewith (including but not limited to the UCC-1 financing statements and the deeds of trust in respect of owned real property in Utah and Missouri evidencing the liens in favor of the Administrative Agent and the lenders).

CLARUS CORPORATION

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data