What changed in this filing

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Item 9A. Controls and Procedures

2025-03-10 compared with 2024-03-29 · 311 added, 373 removed, 553 unchanged (55% of the section changed)

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Evaluation of Disclosure Controls and Procedures

Escalade maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rules 13a-15(e) and 15d-15(e).

In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, could provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Escalade maintains disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report.

Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective because of material weaknesses in internal control over financial reporting (as described below in Management’s Report on Internal Control over Financial Reporting).

Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective because of the material weakness in internal control over financial reporting described below in Management’s Report on Internal Control over Financial Reporting.

See also, “Risk Factors – Legal, Tax, Accounting and Regulatory Risks.”

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A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

In connection with the preparation of the Company’s financial statements for the year ended December 31, 2023, management identified the following material weaknesses in the Company’s internal control over financial reporting:

Information technology general controls particularly as such controls related to user access, program change management, and ineffective complementary user-organization controls, which limited management’s ability to rely on technology dependent controls relevant to the preparation of the Company’s consolidated financial statements.

Controls over the period end process, including the review and approval process of journal entries, account reconciliations, segregation of duties conflicts, and consolidation of intercompany entries.

Documentation and design of controls related to various key financial statement accounts and assertions.

The risk assessment, control activities, information and communication, and monitoring components of the Company’s internal control framework such that internal control weaknesses were not detected, communicated, addressed with mitigating control activities, or remediated.

Based on this assessment, management believes that, as of December 31, 2023, the Company’s internal control over financial reporting was not effective.

Our independent auditor, FORVIS LLP (“FORVIS”), a registered public accounting firm, is appointed by the Audit Committee of our Board of Directors.

As a result of the material weaknesses described above, FORVIS has issued an adverse opinion on the effectiveness of our internal control over financial reporting as of December 31, 2023, which appears in Item 8.

Financial Statements and Supplementary Data of this 2023 Form 10-K.

In connection with the preparation of the Company’s financial statements for the year ended December 31, 2024, management identified a continued material weakness in the Company’s internal control over financial reporting as described below.

Segregation of Duties Conflicts Material Weakness

As previously reported in Part II, Item 9A.

“Controls and Procedures” of our Annual Report on Form 10-K for the year ended December 31, 2023, among other material weaknesses, we identified a material weakness in our internal control over financial reporting related to controls over the period end close process involving segregation of duties conflicts.

During the year ended December 31, 2024, certain material estimates / calculations continued to be prepared or compiled by the CFO.

Because of this individual being the CFO there is not an individual in a supervisory role reviewing these estimates and calculations.

Accordingly, this represents a continued material weakness in our controls over the period end close process involving segregation of duties conflicts.

Although all other material weaknesses reported in the prior year have been remediated, management believes that, as of December 31, 2024, the Company’s internal control over financial reporting remains not effective due to this continued issue.

We have also concluded this material weakness did not result in any material misstatements in our financial statements or disclosures in any of the years ended December 31, 2024 or 2023.

This annual report on Form 10-K includes an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.

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In addition, this report by management regarding internal control over financial reporting is specifically not incorporated by reference into any other filing by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

Our independent auditor, Grant Thornton LLP (“Grant Thornton”), a registered public accounting firm, is appointed by the Audit Committee of our Board of Directors.

As a result of the material weakness described above, Grant Thornton has issued an adverse opinion on the effectiveness of our internal control over financial reporting as of December 31, 2024, which appears in Item 8.

Financial Statements and Supplementary Data of this 2024 Form 10-K.

Remediation Plan and Status

The Company’s management and the Company’s Audit Committee are committed to achieving and maintaining a strong internal control environment.

The Company’s management, with the Audit Committee’s oversight, is actively engaged in the planning for, and implementation of, remediation efforts to address the above described material weaknesses.

In response to the material weaknesses discussed above, we plan to continue efforts already underway to remediate internal control over financial reporting, including the following:

We are in the process of engaging third-party resources to support our internal control testing and remediation efforts, and we intend to bring in additional resources to oversee remediation efforts.

We are in the process of hiring an Internal Auditor, a senior level position.

We are in the process of conducting a risk assessment over our internal control environment, and we are reviewing and prioritizing individual control deficiencies for remediation, including those which aggregated to the above material weaknesses.

In response to the material weakness discussed above, we plan to continue efforts already underway to remediate internal control over financial reporting, including the following:

We are in the process of redistributing the work previously performed by the CFO so that these material estimates and calculations will be performed by others within the accounting team and then reviewed and approved by the CFO.

We are in the process of documenting and executing remediation action items, including expansion of mitigating controls where appropriate.

We are exploring tools to enhance and centralize general information technology components.

Management and our Audit Committee will monitor these specific remedial measures and the effectiveness of our overall control environment.

The identified material weaknesses in internal control over financial reporting will only be considered remediated when the relevant controls have operated effectively for a sufficient period of time for management to conclude that they have been remediated.

We can provide no assurance as to when the remediation of these material weaknesses will be completed to provide for an effective control environment.

Remediation of Previously Reported Material Weaknesses

As previously reported in Part II, Item 9A.

“Controls and Procedures” of our Annual Report on Form 10-K for the year ended December 31, 2023, in connection with our assessment of the effectiveness of internal control over financial reporting as of December 31, 2023, we identified control deficiencies relating to:

Documentation and design of controls related to various key financial statement accounts and assertions.

Other than described above with respect to segregation of duties conflicts, we have completed execution of our remediation plans for these material weaknesses and, as of December 31, 2024, successfully remediated these material weaknesses by implementing the following:

Enhanced the design and documentation of our controls to evidence the existence of our controls, including our information technology general controls, risk assessment, information and communication, monitoring activities;

Performed a risk assessment over the IT systems used as part of financial reporting and business processes, including various layers of technology;

Implemented additional review and reconciliation controls to support the period end financial reporting process;

Hired an internal audit resource to effectively implement additional review, monitoring, and risk assessment.

Management and our Audit Committee will continue to monitor these specific remedial measures and the effectiveness of our overall control environment.

The identified material weakness in internal control over financial reporting will only be considered remediated when the relevant controls have operated effectively for a sufficient period of time for management to conclude that it has been remediated.

We can provide no assurance as to when the remediation of this material weakness will be completed to provide for an effective control environment.

/s/ Walter P.

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Changes in Internal Control over Financial Reporting

Management of the Company has evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the fourth quarter of 2023.

In connection with such evaluation, except for the material weaknesses described above, there have been no changes to the Company’s internal control over financial reporting that occurred since the beginning of the Company’s fourth quarter of 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Other than the completed and ongoing remediation efforts described above, management’s evaluation did not identify any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B — OTHER INFORMATION

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Information required under this item with respect to Directors and Executive Officers is contained in the registrant's Proxy Statement relating to its annual meeting of stockholders scheduled to be held on May 6, 2025 under the captions “Certain Beneficial Owners,” “Election of Directors,” “Executive Officers of the Registrant,” “Board of Directors, Its Committees, Meetings and Functions,” and “Delinquent Section 16(a) Reports,” and is incorporated herein by reference.

The Company’s Board of Directors has adopted the Escalade, Incorporated Code of Business Conduct and Ethics (“Code”) which may be found on the Company’s website at:

www.escaladeinc.com/Code_of_Conduct.html .

All employees, including executive officers, and directors of the Company, are subject to compliance with the Code.

In addition, any future amendments to, or waivers from, a provision of Escalade’s Code of Business Conduct and Ethics that applies to Escalade’s directors or executive officers (including Escalade’s principal executive officer, principal financial officer, and principal accounting officer or controller) will be posted at this internet address.

ITEM 11 — EXECUTIVE COMPENSATION

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ITEM 14 — PRINCIPAL ACCOUNTING FEES AND SERVICES

The Company’s independent registered accounting firm is FORVIS, LLP , formerly BKD, LLP;

Evansville, IN ;

The Company’s independent registered accounting firm is Grant Thornton, LLP;

The information required by this item is contained in the registrant’s proxy statement relating to its annual meeting of stockholders scheduled to be held on May 6, 2025 under the caption “Principal Accounting Firm Fees” and is incorporated herein by reference.

ITEM 15 — EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(A) Documents filed as a part of this report:

Documents filed as a part of this report:

Financial Statement s

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Consolidated balance sheets—December 31, 2024 and December 31, 2023

Consolidated statements of operations—fiscal years ended December 31, 2023, December 31, 2022, and December 25, 2021

Consolidated statements of stockholders’ equity—fiscal years ended December 31, 2023, December 31, 2022, and December 25, 2021

Consolidated statements of cash flows—fiscal years ended December 31, 2023, December 31, 2022, and December 25, 2021

Consolidated statements of operations—fiscal years ended December 31, 2024 and December 31, 2023

Consolidated statements of stockholders’ equity—fiscal years ended December 31, 2024 and December 31, 2024

Consolidated statements of cash flows—fiscal years ended December 31, 2024 and December 31, 2023

Notes to consolidated financial statements

All other schedules are omitted because of the absence of conditions under which they are required or because the required information is given in the consolidated financial statements or notes thereto.

Articles of Incorporation of Escalade, Incorporated (a)

Amended By-Laws of Escalade, Incorporated (c)

Amended and Restated Credit Agreement dated as of January 21, 2022 among Escalade, Incorporated, Indian Industries, Inc., each of their domestic subsidiaries, and JPMorgan Chase Bank, N.A., as Administrative Agent (without exhibits and schedules, which Escalade has determined are not material) (g)

Amended and Restated Pledge and Security Agreement dated as of January 21, 2022 among Escalade, Incorporated, Indian Industries, Inc., each of their domestic subsidiaries, and JPMorgan Chase Bank, N.A., as Administrative Agent (without exhibits and schedules, which Escalade has determined are not material) (g)

First Amendment dated July 18, 2022 to the Amended and Restated Credit Agreement dated as of January 21, 2022 among Escalade, Incorporated, Indian Industries, Inc., each of their domestic subsidiaries, and JPMorgan Chase Bank, N.A., as Administrative Agent (d)

Second Amendment dated October 26, 2022 to the Amended and Restated Credit Agreement dated as of January 21, 2022 among Escalade, Incorporated, Indian Industries, Inc., each of their domestic subsidiaries, and JPMorgan Chase Bank, N.A., as Administrative Agent (f)

Third Amendment dated May 8, 2023 to the Amended and Restated Credit Agreement dated as of January 21, 2022 among Escalade, Incorporated, Indian Industries, Inc., each of their domestic subsidiaries, and JPMorgan Chase Bank, N.A., as Administrative Agent (h)

Articles of Incorporation of Escalade, Incorporated.

Incorporated by reference from Exhibit 3.1 to the Company’s 2007 First Quarter Report on Form 10-Q.

Amended By-Laws of Escalade, Incorporated.

Incorporated by reference from Exhibit 3.2 to the Company’s 2022 Third Quarter Report on Form 10-Q filed on October 27, 2022.

Description of Escalade’s Registered Securities

Incorporated by reference from Exhibit 10.2 to the Company’s Form 8-K filed on January 24, 2022.

Incorporated by reference from Exhibit 10.3 to the Company’s Form 8-K filed on January 24, 2022.

Incorporated by reference from Exhibit 10.1 to the Company’s Form 8-K filed on July 21, 2022.

Incorporated by reference from Exhibit 10.1 to the Company’s Form 8-K filed on October 27, 2022.

Incorporated by reference from Exhibit 10.1 to the Company’s Form 8-K filed on May 9, 2023.

Fifth Amendment dated October 11, 2024 to the Amended and Restated Credit Agreement dated as of January 21, 2022 among Escalade, Incorporated, Indian Industries, Inc., each of their domestic subsidiaries, and JPMorgan Chase Bank, N.A., as Administrative Agent.

Incorporated by reference from Exhibit 10.1 to the Company’s Form 8-K filed on October 15, 2024.

Executive Compensation Plans and Arrangements

Escalade, Incorporated 2017 Incentive Plan, incorporated by reference herein from Annex 1 to the Registrant’s 2017 Definitive Proxy Statement (e)

Form of Stock Option Award Agreement utilized in Stock Option grants to employees pursuant to the Escalade, Incorporated 2017 Incentive Plan (b)

Form of Stock Option Award Agreement utilized in Stock Option grants to Directors pursuant to the Escalade, Incorporated 2017 Incentive Plan (b)

Form of Restricted Stock Unit Agreement utilized in Restricted Stock Unit grants to employees pursuant to the Escalade Incorporated 2017 Incentive Plan (b)

Form of Restricted Stock Unit Agreement utilized in Restricted Stock Unit grants to Directors pursuant to the Escalade, Incorporated 2017 Incentive Plan (b)

Escalade, Incorporated 2017 Incentive Plan.

Incorporated by reference herein from Annex 1 to the Registrant’s 2017 Definitive Proxy Statement filed on March 28, 2017.

Form of Stock Option Award Agreement utilized in Stock Option grants to employees pursuant to the Escalade, Incorporated 2017 Incentive Plan.

Incorporated by reference from Exhibit 10.8 to the Company’s Form 10-K for the fiscal year ended December 30, 2017 and filed on February 27, 2018.

Form of Stock Option Award Agreement utilized in Stock Option grants to Directors pursuant to the Escalade, Incorporated 2017 Incentive Plan.

Incorporated by reference from Exhibit 10.9 to the Company’s Form 10-K for the fiscal year ended December 30, 2017 and filed on February 27, 2018.

Form of Restricted Stock Unit Agreement utilized in Restricted Stock Unit grants to employees pursuant to the Escalade Incorporated 2017 Incentive Plan.

Incorporated by reference from Exhibit 10.10 to the Company’s Form 10-K for the fiscal year ended December 30, 2017 and filed on February 27, 2018.

Form of Restricted Stock Unit Agreement utilized in Restricted Stock Unit grants to Directors pursuant to the Escalade, Incorporated 2017 Incentive Plan.

Incorporated by reference from Exhibit 10.11 to the Company’s Form 10-K for the fiscal year ended December 30, 2017 and filed on February 27, 2018.

Escalade, Incorporated Confidentiality of Insider Information and Securities Trades by Company Personnel.

Incorporated by reference from Exhibit 19.1 to the Company’s Form 10-K for the fiscal year ended December 31, 2023 and filed on March 29, 2024.

Subsidiaries of the Registrant

Consent of FORVIS, LLP

Consent of Grant Thornton, LLP

Chief Executive Officer Rule 13a-14(a)/15d-14(a) Certification

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Escalade, Incorporated Amended and Restated Policy for Recovery of Incentive Compensation.

Fourth Amendment effective as of September 1, 2023 to the Amended and Restated Credit Agreement dated as of January 21, 2022 among Escalade, Incorporated, Indian Industries, Inc., each of their domestic subsidiaries, and JPMorgan Chase Bank, N.A., as Administrative Agent (which Amendment Escalade has determined did not contain any material new or amended terms) (i)

Incorporated by reference from Exhibit 97.1 to the Company’s Form 10-K for the fiscal year ended December 31, 2023 and filed on March 29, 2024.

Incorporated by reference from Exhibit 99.1 to the Company’s 2023 Third Quarter Report on Form 10-Q filed on October 26, 2023.

Inline XBRL Taxonomy Extension Calculation Linkbase Document

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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Incorporated by reference from the Company's 2007 First Quarter Report on Form 10-Q

Incorporated by reference from the Company’s Form 10-K for the fiscal year ended December 30, 2017 and filed on February 27, 2018

Incorporated by reference from the Company’s 2022 Third Quarter Report on Form 10-Q filed on October 27, 2022

Incorporated by reference from the Company’s Form 8-K filed on July 21, 2022

Incorporated by reference from the Company’s 2017 Proxy Statement

Incorporated by reference from the Company’s Form 8-K filed on October 27, 2022

Incorporated by reference from the Company’s Form 8-K filed on January 24, 2022

Incorporated by reference from the Company’s Form 8-K filed on May 9, 2023

Incorporated by reference from the Company’s 2023 Third Quarter Report on Form 10-Q filed on October 26, 2023.

ITEM 16 — FORM 10-K SUMMARY

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The following consolidated financial statements of the Registrant and its subsidiaries and Independent Accountants’ Reports are submitted herewith:

Reports of Independent Registered Public Accounting Firm (PCAOB ID number 686)

Reports of Independent Registered Public Accounting Firm

(Grant Thornton LLP, PCAOB ID number 248 )

Report of Independent Registered Public Accounting Firm

(FORVIS LLP, PCAOB ID number 686)

Consolidated financial statements of Escalade, Incorporated and subsidiaries:

Consolidated balance sheets—December 31, 2024 and December 31, 2023

Consolidated statements of operations—fiscal years ended December 31, 2023, December 31, 2022 and December 25, 2021

Consolidated statements of stockholders’ equity—fiscal years ended December 31, 2023, December 31, 2022 and December 25, 2021

Consolidated statements of cash flows—fiscal years ended December 31, 2023, December 31, 2022 and December 25, 2021

Consolidated statements of operations—fiscal years ended December 31, 2024 and December 31, 2023

Consolidated statements of stockholders’ equity—fiscal years ended December 31, 2024 and December 31, 2023

Consolidated statements of cash flows—fiscal years ended December 31, 2024 and December 31, 2023

Notes to consolidated financial statements

Report of Independent Registered Public Accounting Firm

To the Shareholders, Board of Directors, and Audit Committee

Board of Directors and Shareholders

Escalade, Incorporated

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Escalade, Incorporated (the “Company”) as of December 31, 2023, and December 31, 2022, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

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

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), Escalade, Incorporated’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control –– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 29, 2024, expressed an adverse opinion thereon.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheet of Escalade, Incorporated (an Indiana corporation) and subsidiaries (the “Company”) as of December 31, 2024, the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2024, and the related notes, collectively referred to as the consolidated financial statements.

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

We also have 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 the 2013 Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 10, 2025 expressed an adverse opinion.

We also have audited the adjustments to the 2023 information in Note 11 to retrospectively apply the change in accounting (resulting from the adoption of Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ), as described in Note 1.

In our opinion, such adjustments are appropriate and have been properly applied.

We were not engaged to audit, review, or apply any procedures to the 2023 financial statements of the Company other than with respect to such adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2023 financial statements taken as a whole.

Basis for opinion

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federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical audit matter

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(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter 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 matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Customer Allowances

As more fully described in Notes 2 and 15 within the consolidated financial statements, revenue is recognized net of various sales adjustments, which includes estimated customer allowances for advertising subsidies, volume rebates and catalog allowances.

The Company reviews such allowances on an ongoing basis and accruals are adjusted based on the information within the customer agreements.

These estimated sales adjustments are included as part of Net Sales on the consolidated statements of operations.

At December 31, 2023, the total accrued for these customer allowances was $4.1 million and was presented as part of accrued liabilities on the consolidated balance sheet.

We identified the customer allowance accruals to be a critical audit matter due to the manual nature of how the calculations are maintained and performed, the high volume of customer contracts containing allowance terms, multiple types of allowances offered to certain customers and the frequency of contract term updates.

Based on these factors, determining our audit procedures involved a significant level of judgment and effort.

The primary procedures we performed to address this critical audit matter included:

Testing the completeness and accuracy of the underlying data used to estimate the customer allowance accruals by:

For select allowances, agreeing the sales data used in the calculations to reports that were reconciled to the financial statements and agreeing the various allowance percentages on a test basis to signed customer contracts.

Tracing the allowance amounts remitted to a sample of customers during the year to supporting documentation.

Testing the clerical accuracy of the individual customer allowances computed by management and agreeing the total of all estimated allowances to the respective account on the consolidated financial statements.

Comparing the estimated accrual for select allowances at the end of each reporting period to actual results that occurred during subsequent reporting periods.

Performing a retrospective review for select allowances by comparing amounts remitted to customers subsequent to prior year accrued amounts.

/s/ FORVIS, LLP

We have served as Escalade, Incorporated’s auditor since 1977.

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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill impairment assessment for the Escalade Sports reporting unit

As described further in Note 1 and Note 5 to the consolidated financial statements, the goodwill balance as of December 31, 2024, was $42.3 million, of which all of that balance was allocated to the Escalade Sports reporting unit.

The Company reviews goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable.

The Company estimates the fair value of the Escalade Sports reporting unit by using a combination of the income and market approaches to perform the impairment assessment.

We identified the determination of the Escalade Sports reporting unit’s fair value used in the goodwill impairment assessment as a critical audit matter.

The audit of the fair value and the related assumptions required a high degree of auditor judgment, including the need to involve our fair value specialists when testing the reasonableness of the models and methodologies used by management.

Additionally, the fair value estimate contained highly judgmental and significant assumptions such as the revenue projections, assumed gross profit margins, and the assumed EBITDA margins.

Our audit procedures related to the goodwill impairment assessment for the Escalade Sports reporting unit included the following, among others.

We tested the effectiveness of internal controls over the goodwill impairment analysis, including those over the inputs and assumptions used in the projections.

We evaluated the reasonableness of management’s projections by comparing the projections to historical financial results, independent estimates, and industry reports.

We performed sensitivity analyses of certain significant assumptions to evaluate the changes in fair value that would result from changes in the growth rate and EBITDA margin assumptions with the assistance of our fair value specialists.

We evaluated the reasonableness of the valuation methodologies, certain assumptions used within the models, and tested the mathematical accuracy of the valuation models with the assistance of our fair value specialists.

GRANT THORNTON LLP

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2024.

Louis, Missouri

March 10, 2025

Report of Independent Registered Public Accounting Firm

To the Shareholders, Board of Directors, and Audit Committee

Board of Directors and Shareholders

Escalade, Incorporated

Opinion on the Internal Control Over Financial Reporting

We have audited Escalade, Incorporated’s (the “Company”) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control –– Integrated Framework:

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weaknesses have been identified and included in management’s assessment:

Information technology general controls, particularly as such controls related to user access, program change management, and ineffective complementary user-organization controls, which limited management’s ability to rely on technology dependent controls relevant to the preparation of the Company’s consolidated financial statements.

Controls over the period end close process, including the review and approval process of journal entries, account reconciliations, segregation of duties conflicts, and consolidation of intercompany entries.

Documentation and design of controls related to various key financial statement accounts and assertions.

These material weaknesses were considered in determining the nature, timing, and extent of auditing procedures applied in our audit of the Company’s consolidated financial statements, and this report does not affect our report dated March 29, 2024, on those consolidated financial statements.

In our opinion, because of the effect of the material weaknesses described above on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework:

(2013) issued by the COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of December 31, 2023 and 2022, and for each of the three years in the period ended December 31, 2023, and our report dated March 29, 2024, expressed an unqualified opinion on those financial statements.

Opinion on internal control over financial reporting

We have audited the internal control over financial reporting of Escalade, Incorporated (an Indiana corporation) and subsidiaries (the “Company”) as of December 31, 2024, based on criteria established in the 2013 Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, because of the effect of the material weakness described in the following paragraphs on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control — Integrated Framework issued by COSO.

A material weakness is a deficiency, or combination of control deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment.

There were certain material estimates/calculations that were prepared or compiled by the CFO.

Because of this individual being the CFO there is not an individual in a supervisory role reviewing these.

The material weakness identified above was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2024 consolidated financial statements, and this report does not affect our report dated March 10, 2025, which expressed an unqualified opinion on those financial statements.

Basis for opinion

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definitions and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of reliable financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

GRANT THORNTON LLP

/s/ GRANT THORNTON LLP

Louis, Missouri

March 10, 2025

Report of Independent Registered Public Accounting Firm

To the Shareholders, Board of Directors, and Audit Committee

Escalade, Incorporated

Opinion on the Consolidated Financial Statement

We have audited, before the effects of the adjustments to retrospectively apply the change in accounting (as described in Notes 1 and 11) and the disclosure of “Net sales by geographic region/country” (as described in Note 11), the accompanying consolidated balance sheet of Escalade, Incorporated (the “Company”) as of December 31, 2023, and the related consolidated statements of operations, stockholders’ equity and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements referred to above, before the effects of the adjustments to retrospectively apply the change in accounting (as described in Notes 1 and 11) and disclosure of “Net sales by geographic region/country” (as described in Note 11), present fairly, in all material respects, the consolidated financial position of Escalade, Incorporated as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the change in accounting (as described in Notes 1 and 11) and disclosure of “Net sales by geographic region/country” (described in Note 11) and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied.

Those adjustments were audited by Grant Thornton, LLP.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ FORVIS, LLP

Tysons, Virginia

We have served as Escalade, Incorporated’s auditor from 1977 to 2024.

March 29, 2024

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Cash and cash equivalents

Receivables, less allowances of $ 652 and $ 492 ;

Receivables, less allowance for credit losses of $ 694 and $ 652 ;

Prepaid expenses

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Operating lease right-of-use assets

Intangible assets

Intangible assets, net

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Accrued liabilities

Income tax payable

Current operating lease liabilities

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Long-term debt

Deferred income tax liability

Deferred income tax liability, net

Operating lease liabilities

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Selling, administrative and general expenses

Gain on sale of assets held for sale

Operating Income

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Balances at December 31, 2022

Expense of stock options and restricted stock units

Exercise of stock options

Settlement of restricted stock units

Dividends declared

Stock issued to directors as compensation

Purchase of stock

Balances at December 25, 2021

Expense of stock options and restricted stock units

Expense of restricted stock units

Settlement of restricted stock units

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Stock issued to directors as compensation

Issuance of common stock for service

Balances at December 31, 2023

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Dividends declared

Stock issued to directors as compensation

Issuance of common stock for service

Purchase of stock

Balances at December 31, 2024

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Proceeds from sale of property and equipment

Net cash used in investing activities

Net cash provided by (used in) investing activities

Financing Activities:

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Payments on long-term debt

Proceeds from exercise of stock options

Deferred financing fees

Purchase of stock

Net cash provided by (used in) financing activities

Net cash used in financing activities

Increase (decrease) in Cash and Cash Equivalents

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Interest paid

Income taxes paid

Information regarding the Company’s acquisitions in 2022:

Fair value of assets acquired

Cash paid for assets

Liabilities assumed

Income taxes paid, net

See notes to consolidated financial statements.

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The Company is headquartered in Evansville, Indiana and currently has manufacturing facilities in the United States of America.

The Company imports many of its raw materials and finished goods from countries outside of the United States, including but not limited to China, Brazil, Vietnam and Mexico.

The Company sells products to customers primarily in North America with minimal sales throughout the remainder of the world.

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As a result of this evaluation no material adjustments were identified.

Correction of Immaterial Errors

During the year ended December 31, 2023, management became aware of an error in reporting of common stock value within the consolidated balance sheet and statement of stockholders’ equity.

Common stock previously was reported with a $1.00 stated value even though, per the Company’s Articles of Incorporation, the common stock has no par value.

Additionally, components of equity that should have been reflected within common stock were improperly reported within retained earnings.

We have reviewed historical activity reflected in common stock and retained earnings and have identified adjustments to be made to correct the immaterial reporting error.

The consolidated balance sheet and consolidated statement of stockholders’ equity have been corrected and have been updated for prior years within this Form 10-K.

We assessed the materiality of this error on prior periods' financial statements in accordance with the Securities and Exchange Commission Staff Accounting Bulletin No.

99, Materiality , codified in Accounting Standards Codification (ASC) 250, Presentation of Financial Statements .

We concluded that the error was not material to any prior annual or interim period and therefore, amendments of previously filed reports are not required.

In accordance with ASC 250, we have corrected the reporting for all prior periods presented by revising the consolidated financial statements appearing herein.

Periods not presented herein will be revised, as applicable, in future filings.

The revisions had no impact on total assets, total liabilities, total shareholders' equity, net income or the cash flow statement.

The impact of this revision on our consolidated balance sheet and consolidated statement of stockholders’ equity as of December 31, 2022 was as follows:

Year Ended December 31, 2022

As Previously

Retained Earnings

Total Stockholders’ Equity

The impact of this revision on our consolidated statement of stockholders’ equity as of December 25, 2021 was as follows:

Year Ended December 25, 2021

As Previously

Retained Earnings

Total Stockholders’ Equity

Fiscal Year End

Through and including December 31, 2022, the Company’s fiscal year was a 52 or 53 week period ending on the last Saturday in December.

Fiscal year 2022 was 53 weeks long, ending December 31, 2022.

Fiscal year 2021 was 52 weeks long, ending December 25, 2021.

On August 10, 2022, Escalade’s Board of Directors approved a change in its fiscal year end from the last Saturday in December of each year to December 31 of each year.

Escalade’s fiscal quarters will end on March 31, June 30, and September 30.

The fiscal year change was effective beginning with Escalade’s 2023 fiscal calendar, which began on January 1, 2023.

Consistent with SEC guidance, no transition report was required in connection with the change in Escalade’s fiscal year end.

Cash and Cash Equivalents

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generally this occurs with the transfer of control of our goods at a point in time based on shipping terms and transfer of title.

Accounts receivable are stated at the amount billed to customers.

Accounts receivables are stated at the amount billed to customers, net of the allowance for credit losses and accrued discounts.

Interest and late charges billed to customers are not material and, because collection is uncertain, are not recognized until collected and are therefore not included in accounts receivable.

The Company provides an allowance for credit losses which is described in Note 2 – Certain Significant Estimates.

Inventory cost is computed on a currently adjusted standard cost basis (which approximates actual cost on a current average or first-in, first-out basis).

We value inventories at the lower of cost (first-in, first-out) or net realizable value.

We regularly review inventories for excess quantities and obsolescence based upon historical experience, specific identification of discontinued items, future demand, and market conditions.

Work in process and finished goods inventory are determined to be saleable based on a demand forecast within a specific time horizon, generally one year or less.

Inventory in excess of saleable amounts is reserved, and the remaining inventory is valued at the lower of cost or net realizable value.

This inventory valuation reserve totaled $ 891 thousand and $ 1,568 thousand at fiscal year-end 2023 and 2022, respectively.

Inventories, net of the valuation reserve, at fiscal year-ends were as follows:

Inventories at fiscal year-ends were as follows:

Raw materials

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Accumulated depreciation and amortization

Depreciation expenses relating to property, plant and equipment for the years ended December 31, 2023 and 2022 were $ 3,191 thousand and $ 3,504 thousand, respectively.

Depreciation expenses relating to property, plant and equipment for the years ended December 31, 2024 and 2023 were $ 3.2 million and $ 3.2 million, respectively.

The Company evaluates the recoverability of certain long-lived assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

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Assets designated as held for sale are recorded at the lower of their current carrying value or their fair market value, less costs to sell, beginning in the period in which the assets meet the criteria to be classified as held for sale.

During 2024, the Company completed the sale of its Mexico facility for $ 6.6 million.

The Company received cash proceeds of $ 5.9 million, with the remaining $ 0.7 million deposited in an escrow account.

The Company recognized a gain of $ 3.9 million, included in operating income in the Consolidated Statement of Operations.

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over fair value of net tangible and identifiable intangible assets of acquired businesses.

Intangible assets consist of patents, consulting agreements, non-compete agreements, customer lists, developed technology, license agreements, and trademarks.

Goodwill is deemed to have an indefinite life and is not amortized, but is subject to impairment testing annually in accordance with guidance included in FASB ASC 350 , Intangibles – Goodwill and Other .

Intangible assets consist of patents, consulting agreements, non-compete agreements, customer lists, developed technology, license agreements, and trade names.

Goodwill is deemed to have an indefinite life and is not amortized.

Other intangible assets are amortized using the straight-line method over the following lives:

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developed technology, 5 years;

trademarks, 20 years to indefinite life;

trade names, 20 years to indefinite life;

consulting agreements, the life of the agreement;

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and patents, the lesser of the remaining life or 5 to 15 years.

The Company reviews goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable, in accordance with guidance in FASB ASC 350, Intangibles – Goodwill and Other .

A qualitative assessment is first performed to determine if the fair value of the reporting unit is "more likely than not" less than the carrying value.

If so, we proceed to a quantitative assessment, in which the fair value of the reporting unit is compared to its carrying value.

If the carrying value of the reporting unit exceeds the fair value, an impairment charge to current operations is recorded to reduce the carrying value to the fair value.

The results of the qualitative impairment assessment of the Escalade Sports reporting unit indicated that it was not “more likely than not” that the fair value of the reporting unit was less than the carrying value as of December 31, 2023 and December 31, 2022.

The Company reviews goodwill and other indefinite lived intangibles for impairment annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable, in accordance with guidance in FASB ASC 350, Intangibles – Goodwill and Other .

If we determine that the carrying value of the indefinite lived intangible is greater than the fair value, we record a permanent impairment charge for the amount by which the carrying value exceeds its fair value.

We measure the fair value of our reporting unit based on a guideline company method and discounted cash flow method using a discount rate determined by Management to be commensurate with the risk inherent in our reporting unit's current business model.

The fair market value was determined by weighting the two methods equally.

Management performed a quantitative impairment analysis as of November 1, 2024 for goodwill, which included a detailed calculation of the fair value of our reporting unit.

A Step 0 analysis was performed for 2023.

Additionally, a Step 0 analysis was performed during 2024 and 2023 for our indefinite lived trade names.

The results of these impairment analyses indicated that the fair values of the trade names and reporting unit are not less than their carrying values.

Our estimates of discounted cash flows, selected multiples and market value of invested capital to derive the fair value were measured in accordance with ASC 350, Intangibles – Goodwill and Other .

Inputs to determine the fair value are considered to be level 3 inputs.

We are using estimates of discounted cash flows that may change, and if they change negatively it could result in the need to write down those assets to fair value.

Employee Incentive Plan

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Research and development costs are charged to expense as incurred.

Research and development costs incurred during 2023, 2022 and 2021 were approximately $ 3.1 million, $ 2.7 million, and $ 2.0 million, respectively.

Research and development costs incurred during 2024 and 2023 were approximately $ 3.2 million and $ 3.1 million, respectively.

Selling, General and Administrative Expense

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Advertising costs are expensed in the period incurred.

Total advertising expenses incurred during 2023, 2022 and 2021 were approximately $ 6.9 million, $ 7.8 million, and $ 7.5 million, respectively.

Provision for Income Taxes

Income tax in the consolidated statement of operations includes deferred income tax provisions or benefits for all significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes.

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

The Company accounts for uncertainty in tax positions by recognizing in its financial statements the impact of a tax position only if that position is more likely than not of being sustained.

Total advertising expenses incurred during 2024 and 2023 were approximately $ 7.2 million and $ 6.9 million, respectively.

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

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Deferred tax assets may be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Deferred tax assets are regularly reviewed for realizability, and a valuation allowance is established when the Company believes it is more likely than not the tax benefit of such assets will not be realized, taking into consideration historical operating results, expectations of future earnings, tax planning strategies, and the expected timing of the reversals of existing temporary differences.

The benefits of uncertain tax positions are recorded in the Company’s financial statements only after determining a more likely than not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities.

When facts and circumstances change, the Company reassesses these probabilities and records any changes through the provision for income taxes.

The Company recognizes interest and penalties relating to uncertain tax provisions as a component of interest expense and selling, general and administrative costs, respectively in the Company’s financial statements.

New Accounting Pronouncements and Changes in Accounting Principles

Standards Adopted:

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

This amendment requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.

ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates.

It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities.

These changes will result in earlier recognition of credit losses.

The Company adopted this standard on January 1, 2023.

The adoption of this standard did not have a material impact on the financial statements of the Company.

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

Improvements to Reportable Segment Disclosures, which enhances reporting requirements under Topic 280.

ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within the segment measure of profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity’s CODM.

The Company adopted ASU 2023-07 during the year ended December 31, 2024.

As a result, we have enhanced our segment disclosures to include the disclosure of our CODM.

The adoption of this ASU affects only our disclosures, with no impact to our financial condition and results of operation.

New Accounting Standards to be Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

This amendment expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets.

This guidance is effective for annual periods beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024, with early adoption permitted, including adoption in any interim period.

The amendments should be applied retrospectively to all prior periods presented in the financial statements.

The Company is currently in the process of evaluating the disclosure requirements related to the new standard.

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

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The amendment requires entities to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold.

The amendment is effective for annual periods beginning after December 15, 2024, and should not be applied prospectively, but entities have the option to apply it retrospectively for each period presented.

The amendment is effective for annual periods beginning after December 15, 2024, and should be applied prospectively, but entities have the option to apply it retrospectively for each period presented.

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

The Company is in the process of evaluating the impact of the new standard on the related disclosures.

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.

This amendment requires additional disclosures of certain costs and expenses within the notes to the financial statements.

The updated standard is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027.

Early adoption is permitted.

The Company is in the process of evaluating the impact that the updated standard will have on our financial statement disclosures.

Note 2 — Certain Significant Estimates

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Listed below are certain significant estimates and assumptions related to the preparation of the consolidated financial statements:

Goodwill and Intangible Assets

A qualitative assessment is first performed to determine if the fair value of the reporting unit is "more likely than not" less than the carrying value.

If so, we proceed to a quantitative assessment, in which the fair value of the reporting unit is compared to its carrying value.

If the carrying value of the reporting unit exceeds the fair value, an impairment charge to current operations is recorded to reduce the carrying value to the fair value.

Other intangible assets are amortized using the straight-line method over the following lives:

license agreements, 17 years;

developed technology, 5 years;

trademarks, 20 years to indefinite life;

consulting agreements, the life of the agreement;

customer lists, 3 to 15 years;

non-compete agreements, the lesser of the term or 5 years;

and patents, the lesser of the remaining life or 5 to 15 years.

Indefinite-lived intangible assets are reviewed for impairment annually, or whenever events or changes in circumstances indicate the carrying amount of an intangible asset may not be recoverable.

There are inherent assumptions and judgments required in the analysis of goodwill and intangible impairment.

Product Warranty

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The Company records an accrued liability and reduction in sales for estimated future warranty claims based upon historical experience and management’s estimate of the level of future claims.

Changes in the estimated amounts recognized in prior years are recorded as an adjustment to the accrued liability and sales in the current year.

Changes in the estimated amounts recognized in prior years are recorded as an adjustment to the accrued liabilities and sales in the current year.

Changes in product warranty were as follows:

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Ending balance

Inventory Valuation Reserves

The Company evaluates inventory for obsolescence and excess quantities based on demand forecasts based on specified time frames;

usually one year.

The demand forecast is based on historical usage, sales forecasts and current as well as anticipated market conditions.

All amounts in excess of the demand forecast are deemed to be potentially excess or obsolete and a reserve is established based on the anticipated net realizable value.

Changes in inventory valuation reserves were as follows:

Beginning balance

Ending balance

Allowance for Credit Losses

The Company provides an allowance for credit losses based upon a review of outstanding receivables, historical collection information and existing and forecasted economic conditions.

Accounts receivable are ordinarily due between 30 and 60 days after the issuance of the invoice.

Accounts are considered delinquent when more than 90 days past due.

Delinquent receivables are reserved or written off based on individual credit evaluation and specific circumstances of the customer.

The Company provides an allowance for credit losses based upon a review of outstanding receivables, historical collection experience and financial condition of the customer.

Accounts receivables are ordinarily due between 30 and 60 days after the issuance of the invoice.

Changes in allowance for credit losses were as follows:

Beginning balance

Additions (Reductions)

Ending balance

Customer Allowances

Customer allowances are common practice in the industries in which the Company operates.

These agreements are typically in the form of advertising subsidies, volume rebates and catalog allowances and are accounted for as a reduction to gross sales.

The Company reviews such allowances on an ongoing basis and accruals are adjusted, if necessary, as additional information becomes available.

Changes in customer allowances for advertising subsidies, volume rebates and catalog allowances were as follows:

Beginning balance

Ending balance

Note 3 — Accrued Liabilities

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Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities and operating lease liabilities on our consolidated balance sheet.

The Company has elected an accounting policy to not recognize short-term leases (one year or less) on the balance sheet.

The Company has elected an accounting policy to not recognize short-term leases (total expected use of one year or less) on the balance sheet.

The Company also elected the package of practical expedients which applies to leases that commenced before the adoption date.

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When the implicit rate of the lease is not provided or cannot be determined, we use our incremental borrowing rate based on the information available at the commencement date to determine the present value of future payments.

Lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise those options.

Lease terms may include options to extend or terminate the lease and are factored into the ROU asset/liability when it is reasonably certain that we will exercise those options.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Components of lease expense and other information is as follows:

On December 31, 2024, the Company terminated its long-term lease for its facility in Orlando, FL.

The initial expiration date of the lease was January 2033.

The removal of the related ROU asset and lease liability created a non-cash gain of $ 522 thousand.

As part of the termination agreement, the Company received a payment of $ 500 thousand from the lessor.

This coupled with the removal of the ROU asset and lease liability, offset by related expenses to settle the lease, resulted in a net gain on lease termination of $ 685 thousand, recorded as a reduction to cost of products sold in the consolidated statement of operations.

The $ 500 thousand payment received is netted against operating lease operating cash flows below.

Components of lease expense and other information are as follows:

All Amounts in Thousands

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Variable Lease Cost

Gain on Lease Termination

Total Operating Lease Cost

Operating Lease – Operating Cash Flows

New ROU Assets – Operating Leases (non-cash)

New ROU Assets/Liabilities – Operating Leases (non-cash)

Other information about lease amounts recognized in our consolidated financial statements is summarized as follows:

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December 31, 2023

Weighted Average Remaining Lease Term – Operating Leases (years)

Weighted Average Remaining Lease Term – Operating Leases (in years)

Weighted Average Discount Rate – Operating Leases

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Less imputed interest

Reported as of December 31, 2023

Current operating lease liabilities

Long-term operating lease liabilities

Note 5 — Acquired Intangible Assets and Goodwill

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License agreements

Amortization expense was $ 2.5 million, $ 2.6 million and $ 1.9 million for 2023, 2022 and 2021, respectively.

At December 31, 2023, the net carrying amount of trademarks includes $ 7.8 million related to indefinite-lived intangible assets which are not amortized but are evaluated for impairment.

Amortization expense was $ 2.8 million and $ 2.5 million for 2024 and 2023, respectively.

At December 31, 2024, the net carrying amount of trade names includes $ 7.8 million related to indefinite-lived intangible assets which are not amortized but are evaluated for impairment at least annually.

Estimated future amortization expense is summarized in the following table:

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Indefinite-lived intangible asset balance

Consistent with our operating segment conclusion, we have concluded one reporting unit exists and all goodwill is allocated to that reporting unit.

The changes in the carrying amount of goodwill were:

Sporting Goods

Balance at December 25, 2021

Balance at December 31, 2022

Balance at December 31, 2023

Annually, the Company evaluates goodwill for impairment as of the last day of the fiscal year.

A qualitative assessment is first performed to determine if the fair value of the reporting unit is “more likely than not” less than the carrying value.

If so, we proceed to a quantitative assessment, in which the fair value of the reporting unit is compared to its carrying value.

If the carrying value of the reporting unit exceeds the fair value, an impairment charge to current operations is recorded to reduce the carrying value to the fair value.

Consistent with our operating segment conclusion, we have concluded one reporting unit exists and all goodwill and indefinite lived intangibles are allocated to that reporting unit.

There were no changes to the carrying amount of goodwill in 2024 or 2023.

Note 6 — Borrowings

On January 21, 2019, the Company entered into an Amended and Restated Credit Agreement (“2019 Restated Credit Agreement”) among the Company and its wholly owned subsidiary, Indian Industries, Inc.

(“Indian”), each of their domestic subsidiaries, and JPMorgan Chase Bank, N.A., as Administrative Agent and as Lender (the “Lender”).

Under the terms of the 2019 Restated Credit Agreement, the Lender made available to the Company a senior revolving credit facility with maximum availability of $ 50.0 million having a maturity date of January 31, 2022.

The 2019 Restated Credit Agreement also allowed Escalade to request the issuance of letters of credit of up to $ 5.0 million.

On December 14, 2020, the Company entered into the Third Amendment dated as of December 14, 2020 (the “Third Amendment”) to the 2019 Restated Credit Agreement.

Under the terms of the Third Amendment, the maximum availability under the senior revolving credit facility increased to $ 75.0 million and the maturity date was extended to December 14, 2023.

Other significant changes reflected in the Third Amendment included:

increases in borrowing base availability if the Company’s funded debt to EBITDA ratio is less than 1.75 to 1:00;

increasing to $ 30.0 million the total consideration that the Company may use for acquisitions without obtaining the Lender’s consent, as long as no event of default exists;

resetting the maximum authorized stock repurchases to $ 15.0 million for the period commencing upon entry into the Third Amendment;

increasing the interest rate on borrowings by twenty five basis points;

increasing the unused facility fee by five basis points;

and adding specific provisions and procedures for replacement of LIBOR if and when LIBOR would no longer be the benchmark for determining interest rates.

On July 7, 2021, the Company entered into the Fourth Amendment dated as of July 7, 2021 (the “Fourth Amendment”) to the 2019 Restated Credit Agreement.

Under the terms of the Fourth Amendment, the Lender extended a $ 50.0 million term loan to the Company and reduced the maximum availability under the senior revolving credit facility from $ 75.0 million to $ 50.0 million.

The proceeds of the term loan were used to pay down the Company’s then-outstanding indebtedness under the revolving credit facility, with the balance of the term loan proceeds being available for general working capital purposes.

The maturity date of the term loan was July 7, 2026 and the maturity date of the revolving credit facility likewise was extended to July 7, 2026.

On January 21, 2022, the Company entered into an Amended and Restated Credit Agreement (“2022 Restated Credit Agreement”) with its issuing bank, JP Morgan Chase Bank, N.A.

On January 21, 2022, the Company and its wholly owned subsidiary, Indian Industries, Inc.

(“Indian”), entered into an Amended and Restated Credit Agreement (“2022 Restated Credit Agreement”) with its issuing bank, JP Morgan Chase Bank, N.A.

(“Chase”), and the other lenders identified in the 2022 Restated Credit Agreement (collectively, the “Lenders”).

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Under the terms of the Third Amendment, the Company and the Lender also agreed to decrease the maximum availability under the senior revolving credit facility from $ 90.0 million to $ 75.0 million, upon the consummation of the sale of the Company’s Mexican subsidiary and the dissolution of Escalade Insurance, Inc.

The proceeds from such sale and dissolution, respectively, will be used to partially prepay the amounts outstanding under the revolving credit facility.

The proceeds from such sale and dissolution, respectively, were used to partially prepay the amounts outstanding under the revolving credit facility.

As reflected in the Fourth Amendment to the Restated Credit Agreement effective September 1, 2023, the maximum availability of the senior revolving credit facility was reduced to $ 85.0 million following the dissolution of Escalade Insurance, Inc.

On October 11, 2024, the Company entered into the Fifth Amendment (the “Fifth Amendment”) to the Restated Credit Agreement.

The Fifth Amendment eliminated the fixed charge coverage ratio covenant and related provisions.

The fixed charge ratio covenant was replaced by a new minimum interest coverage ratio covenant of 3.50 to 1:00 effective September 30, 2024.

Under the terms of the Fifth Amendment, the Company and the Lender also agreed to decrease the maximum availability under the senior revolving credit facility from $ 75.0 million to $ 60.0 million, but added an accordion feature that could increase the facility in an amount not to exceed $ 85.0 million.

The Fifth Amendment further revised the restricted payments covenant to provide that if at any time the Company’s Funded Debt to EBITDA Ratio would exceed 1.75 to 1.0, then the aggregate combined total of cash dividends and Company share repurchases may not exceed $ 12.0 million in any trailing twelve month period.

Each loan will bear interest based on the applicable SOFR rate for the interest period in effect plus the Applicable Rate.

From May 8, 2023 up to and including the fiscal quarter ending December 31, 2023, the applicable rate per annum is set forth below in Category 1.

After the fiscal quarter ending December 31, 2023, the Applicable Rate shall be determined as of the end of each quarter based upon Escalade’s Funded Debt to Adjusted Ratio as of the most recent determination date:

The Applicable Rate shall be determined as of the end of each quarter based upon Escalade’s Funded Debt to Adjusted Ratio as of the most recent determination date:

Funded Debt to

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Greater than or equal to 1.50 to 1.0 but less than 2.50 to 1.0

Greater than or equal to 2.50 to 1.0 but less than 3.00 to 1.0

Greater than or equal to 1.50 to 1.0 but less than 2.50 to 1.0

Less than 1.50 to 1.0

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The Company’s contribution is a matching percentage of the employee contribution as determined by the Board of Directors annually.

The Company’s expense for the plan was $ 1,094 thousand, $ 1,179 thousand and $ 1,041 thousand for 2023, 2022 and 2021, respectively.

The Company’s expenses for the plan were $ 1.0 million and $ 1.1 million for 2024 and 2023, respectively.

Note 9 — Stock Compensation Plans

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The 2017 Incentive Plan is a replacement for the 2007 Incentive Plan, which expired at the end of April 2017.

All options issued and outstanding under the expired plans will remain in effect until exercised, expired or forfeited.

The 2017 Incentive Plan is administered by the Board of Directors or a committee thereof, which is authorized to determine, among other things, the key employees, directors or consultants who will receive awards under the plan, the amount and type of award, exercise prices or performance criteria, if applicable, and vesting schedules.

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Restricted Stock Awards

During 2023, and pursuant to the 2017 Incentive Plan, the Company issued 30,921 shares of common stock with a fair market value of $ 395 thousand in lieu of accrued and unpaid annual cash incentives for fiscal year 2022 to certain officers.

During 2023, and pursuant to the 2017 Incentive Plan, in lieu of cash payments of director fees, the Company awarded to certain directors 4,441 shares of common stock.

In 2024, the Company awarded 12,900 restricted stock units to directors and 130,800 restricted stock units to employees.

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A summary of restricted stock awards activity is as follows:

Weighted Average

Grant Date Fair Value

Number of Shares

Weighted Average Grant Date Fair Value

Non-vested stock units as of December 31, 2022

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Non-vested stock units as of December 31, 2024

When vesting is dependent on certain market criteria, the fair value of restricted stock units is determined by the use of Monte Carlo techniques.

The market price of the Company’s stock on the grant date is used to value restricted stock units where vesting is not contingent on market criteria.

For fiscal years 2023, 2022, and 2021 no awards were granted that were contingent on market criteria.

In 2023, 2022, and 2021 the Company recognized $ 2,008 thousand, $ 1,974 thousand, and $ 902 thousand respectively in compensation expense related to restricted stock units and as of December 31, 2023 and December 31, 2022, there was $ 1,433 thousand and $ 1,415 thousand respectively, of unrecognized compensation expense related to restricted stock units.

The closing market price of the Company’s stock on the grant date is used to value restricted stock units.

In 2024 and 2023 the Company recognized $ 1.9 million and $ 2.0 million, respectively, in compensation expense related to restricted stock units and as of December 31, 2024 and December 31, 2023, there was $ 1.3 million and $ 1.4 million, respectively, of unrecognized compensation expense related to restricted stock units.

The unrecognized compensation expense of unvested restricted stock awards not yet recognized as of December 31, 2024 are expected to be recognized over the weighted average period of 1.35 years.

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Provision (benefit) for taxes:

The provision for income taxes was computed based on financial statement income.

The provision for income taxes was computed based on income before taxes.

A reconciliation of the provision for income taxes to the amount computed using the statutory rate follows:

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Federal tax credits

Sale of Harvard Sports

Captive insurance earnings

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Recorded provision for income taxes

The provision for income taxes was computed based on financial statement income.

In accordance with FASB ASC 740, the Company has an uncertain tax position as of and for the years ended December 31, 2023 and December 31, 2022.

Interest costs and penalties related to income taxes are classified as interest expense and selling, general and administrative costs, respectively in the Company’s financial statements.

The provision for income taxes was computed based on income before taxes.

The Company and its subsidiaries file income tax returns in the U.S.

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The valuation allowance is based on the historical results and estimated future results of the Company, as it is the judgment of management not all of these tax carryforward attributes will be realized before they begin to expire.

In addition, the Company has foreign tax credit carryforwards of $ 521 thousand, as of December 31, 2023.

The foreign tax credit carryforwards will begin to expire in 2030.

At December 31, 2024, the Company had domestic federal income taxes receivable of $ 254 thousand, domestic state income taxes receivable of $ 211 thousand, and transition tax payable of $ 297 thousand recorded.

At December 31, 2023, the Company had domestic federal income taxes receivable of $ 150 thousand, domestic state income taxes payable of $ 62 thousand, and transition tax payable of $ 387 thousand recorded.

At December 31, 2022, the Company had domestic federal income taxes payable of $ 158 thousand, domestic state income taxes receivable of $ 87 thousand, and transition tax payable of $ 387 thousand recorded.

The components of the net deferred tax liabilities are as follows:

The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2024 and 2023 are as follows:

Valuation reserves

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Balance at beginning of year

Increases related to prior year tax positions

Decreases related to prior year tax positions

Increases related to current year tax positions

Closure of tax years

Balance at end of year

The total amount of unrecognized tax benefits, net of federal income tax benefits, of zero at December 31, 2023, and $ 16 thousand at December 31, 2022, that if recognized, would affect the effective tax rate on income from continuing operations.

The total amount of unrecognized tax benefits, net of federal income tax benefits, were zero at December 31, 2024 and December 31, 2023.

The Company had no accrued interest and penalties related to taxes, recognized as a liability, as of December 31, 2024.

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Note 11 — Operating Segment and Geographic Information

The following table presents certain operating segment information.

The Company operates as one operating segment.

The Company’s chief operating decision maker (“CODM”) is its president and chief executive officer, who reviews financial information presented on a consolidated basis.

The CODM uses consolidated net sales and consolidated net income to assess financial performance and allocate resources.

Reconciliation to net income:

Sporting Goods

Operating income

Interest expense

Provision for taxes

Identifiable assets

Depreciation & amortization

Capital expenditures

Operating income

Interest expense (income)

Benefit for taxes

Identifiable assets

Depreciation & amortization

Capital expenditures

Operating income

Total Net Sales

Sporting Goods Segment Operating Expenses:

Cost of products sold

Other operating expenses

Sporting Goods segment expenses

Sporting Goods Segment Operating Income

Unallocated corporate (expense) income

Total Operating Income

Consolidated Other Income (Expense):

Interest expense

Provision for taxes

Total Income Before Income Taxes

Sporting Goods Segment Provision for Income Taxes

Unallocated benefit for taxes

Total Net Income

Identifiable Assets

Depreciation & amortization

Sporting Goods

Total Identifiable Assets

Depreciation and Amortization

Sporting Goods

Unallocated corporate

Total Depreciation and Amortization

Capital Expenditures

Sporting Goods

Total Capital Expenditures

There were no changes to the composition of segments in 2024.

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Customers include retailers, dealers and wholesalers located throughout North America, Europe and the rest of the world.

All Other consist of general and administrative expenses not specifically related to the operating business segment.

The Company had net assets of $ 5.3 million and $ 14.8 million located in Mexico as of December 31, 2023 and December 31, 2022, respectively.

All Other consists of general and administrative expenses not specifically related to the operating business segment.

The Company had net assets of $ 5.3 million located in Mexico as of December 31, 2023.

There were no assets in Mexico as of December 31, 2024.

During 2024 and 2023, the Company had one customer that accounted for approximately 19 % and 20 %, respectively, of the Company’s revenues.

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As of December 31, 2024 and December 31, 2023, the Company had approximately 25 % and 29 %, respectively, of its total accounts receivable with one customer.

As of December 31, 2023, approximately 29 employees of the Company's labor force were covered by a collective bargaining agreement that expires on January 31, 2025.

Raw materials for Escalade’s various product lines consist of wood, tempered glass, particle board, standard grades of steel and steel tubing, aluminum, engineering plastics, fiberglass and packaging materials.

Escalade relies upon domestic, Mexico, Brazil, and Asian suppliers for these materials and upon various Asian manufacturers for many of its products.

As of December 31, 2024, approximately 28 employees of the Company's labor force were covered by a collective bargaining agreement that expired on January 31, 2025.

The impact is expected to be immaterial to operations.

Net sales are attributed to country based on location of customer.

Net sales by geographic region/country were as follows:

North America

Note 12 — Acquisitions

All of the Company’s acquisitions have been accounted for using the purchase method of accounting.

On January 21, 2022, the Company completed its acquisition of the assets constituting the Brunswick Billiards business of Life Fitness, LLC.

The purchase price of the acquisition was $ 35.8 million.

Acquisition-related costs of $ 134 thousand were incurred during the year ended December 31, 2022.

The acquisition was funded by cash and the Company’s revolving credit facility.

The Company allocated the purchase price to the assets acquired, net of the liabilities assumed, based on their estimated fair value as of the date of the acquisition.

The excess of the purchase price over the fair value of the assets acquired, net of the fair value of liabilities assumed, was recorded as goodwill.

The recorded goodwill is deductible for tax purposes.

The allocation of the purchase price, including values assigned to assets, liabilities and the amount of goodwill and intangible assets are represented in the table below:

Assets acquired and liabilities assumed:

Accounts receivable, net

Inventories, net

Fixed assets, including building and land

Intangible assets

Accounts payable

Other liabilities

United States

Note 12 — Commitments and Contingencies

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The Company does not believe that the disposition or ultimate resolution of existing claims or lawsuits will have a material adverse effect on the business or financial condition of the Company.

The Company has entered into various agreements whereby it is required to make royalty and license payments.

At December 31, 2023, the Company had future estimated minimum non-cancelable royalty and license payments as follows:

The Company has entered into various agreements whereby it is required to make minimum purchase commitments, royalty and license payments.

The Company entered into a non-cancelable minimum purchase agreement during 2024 with a term of three years.

The minimum purchases made during the current year related to this agreement were approximately $ 467 thousand.

At December 31, 2024, the Company had future estimated minimum non-cancelable purchase commitments, royalty and license payments as follows:

Note 13 — Fair Values of Financial Instruments

The following methods were used to estimate the fair value of all financial instruments recognized in the accompanying balance sheets at amounts other than fair values.

Cash and Cash Equivalents and Time Deposits

Fair values of cash and cash equivalents approximate cost due to the short period of time to maturity.

Notes Payable and Long-term Debt

Accounting Standard Codification (“ASC”) 820, “Fair Value Measurement and Disclosures,” outlines a valuation framework and creates a fair value hierarchy for assets and liabilities as follows:

Observable inputs such as quoted prices in active markets;

Inputs other than quoted prices in active markets that are either directly or indirectly observable;

Unobservable inputs for which little or no market data exists, therefore requiring the Company to develop its own assumptions.

Due to their short-term nature, the fair value of cash and cash equivalents, accounts receivable, accounts payable and certain other current liabilities approximated their carrying values at December 31, 2024 and December 31, 2023.

The Company believes the carrying value of borrowings under our senior secured revolving credit facility, due to variable rate interest, adequately reflects the fair value of these instruments.

The carrying value of our Term loan at December 31, 2023 was $ 32.7 million.

The estimated fair value of the Term loan was approximately $ 29.4 million at December 31, 2023, which value was estimated using treasury rates for a similar instrument and is classified as Level 2 within the fair value hierarchy.

The carrying value of our Term loan at December 31, 2022 was $ 39.9 million.

The estimated fair value of the Term loan was approximately $ 34.7 million at December 31, 2022, which value was estimated using treasury rates for a similar instrument and is classified as Level 2 within the fair value hierarchy.

The following table presents estimated fair values of the Company’s financial instruments in accordance with FASB ASC 825 at December 31, 2023 and December 31, 2022.

Fair Value Measurements Using

Quoted Prices in

Active Markets

for Identical

Assets (Level 1)

Significant Other

Inputs (Level 2)

Inputs (Level 3)

Financial assets

Cash and cash equivalents

Financial liabilities

Notes Payable and Long-term debt

Fair Value Measurements Using

Quoted Prices in

Active Markets

for Identical

Assets (Level 1)

Significant Other

Inputs (Level 2)

Inputs (Level 3)

Financial assets

Cash and cash equivalents

Financial liabilities

Notes Payable and Long-term debt

We measure certain items at fair value on a nonrecurring basis, primarily goodwill, and long-lived tangible and ROU assets, in connection with periodic evaluations for potential impairment.

We estimate the fair value of these assets using primarily unobservable inputs and, as such, these are considered Level 3 fair value measurements.

The Company discloses the fair value of its term loan using Level 2 inputs, which are estimated using treasury rates for a similar instrument, as follows:

December 31, 2024

December 31, 2023

Carrying Value

Term Loan Facility

Note 14 — Revenue from Contracts with Customers

Revenue Recognition – Revenue is recognized when a contract exists with a customer that specifies the goods to be provided at an agreed upon sales price and when the performance obligations under the terms of the contract are satisfied;

generally this occurs with the transfer of control of our goods at a point in time based on shipping terms and transfer of title.

generally this occurs with the transfer of control of our goods at a point in time based on shipping terms and transfer of control.

Sales are made on normal and customary short-term credit terms or upon delivery of point-of-sale transactions.

Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods.

Sales commissions are expensed as incurred.

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

Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue.

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Changes in the estimated amounts recognized in prior years are recorded as an adjustment to the accrued liability and sales in the current year.

Customer Allowances – Customer allowances are common practice in the industries in which the Company operates.

Customer Allowances – Customer allowances are common practice in the industry in which the Company operates.

These agreements are typically in the form of advertising subsidies, volume rebates and catalog allowances and are accounted for as a reduction to gross sales.

The Company reviews such allowances on an ongoing basis and accruals are adjusted, if necessary, as additional information becomes available.

The Company reviews such allowances on an ongoing basis and adjusts, if necessary, as additional information becomes available.

Contract Balances – Amounts relating to returns and customer allowances create contract liabilities.

Contract balances from contracts with customers are as follows:

Customer co-op and volume allowances

Other customer allowances

Customer returns and defectives accrual

January 1, 2023 balances for customer co-op and volume allowances, other customer allowances, and customer returns and defectives accrual were $ 1.6 million, $ 2.1 million, and $ 2.2 million, respectively.

There are no revenues recognized in 2024 on performance obligations entered into in 2023.

As of December 31, 2024, there were no unperformed performance obligations.

Contract assets consist of accounts receivables and the January 1, 2023 balance was $ 57.4 million, net of allowance for credit losses.

Disaggregation of Revenue – We generate revenue from the sale of widely recognized sporting goods brands in basketball goals, archery, indoor and outdoor game recreation and fitness products.

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The following table depicts the disaggregation of revenue according to sales channel:

All Amounts in Thousands

Gross Sales by Channel:

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Total Net Sales

Note 15 — Subsequent Events

On February 6, 2025, the Board of Directors (the “Board”) of Escalade, Incorporated announced that Armin Boehm has agreed to become the Company’s new Chief Executive Officer and President.

Boehm is expected to commence his employment with Escalade on or about April 1, 2025.

Boehm has no family relationship with any other executive officer or director of Escalade.

Boehm has not been involved in any related party transaction with Escalade.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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Richard Baalmann, Jr.

/s/ Anita Sehgal

March 29, 2024

/s/ Patrick Griffin

March 29, 2024

Patrick Griffin

March 10, 2025

/s/ Stephen R.

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

What changed 10-K

Item 9A. Controls and Procedures