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Item 1A. Risk Factors

2021-12-17 compared with 2020-12-03 · 860 added, 788 removed, 348 unchanged (83% of the section changed)

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Investing in our Class A common stock involves risks.

Before making any investment decision, you should carefully consider the information in this Form 10-K, including the risks described below, the matters addressed

under “Special Note Regarding Forward-Looking Statements,” our consolidated financial statements and the related notes, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Some of these risks include:

Before making any investment decision, you should carefully consider the information in this Form 10-K, including the risks described below, the matters

addressed under “Special Note Regarding Forward-Looking Statements,” our consolidated financial statements and the related notes, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Some of these risks

General economic conditions and consumer spending patterns can have a material adverse effect on our business, financial condition and results of operations.

The ongoing COVID-19 pandemic may adversely affect our revenues, results of operations and financial condition.

The availability and costs of borrowed funds can adversely affect our ability to obtain adequate boat inventory, the ability and willingness of our customers to finance boat purchases and our ability to fund

future acquisitions.

fund future acquisitions.

Failure to implement strategies to enhance our performance could have a material adverse effect on our business and financial condition.

Our success depends, in part, on our ability to continue to make successful acquisitions at attractive or fair prices and to integrate the operations of acquired dealer groups and each dealer group we acquire

in the future.

acquire in the future.

We are required to obtain the consent of our manufacturers prior to the acquisition of other dealer groups.

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will accordingly be dependent upon distributions from OneWater LLC to pay

taxes, make payments under the Tax Receivable Agreement and cover OneWater Inc.’s corporate and other overhead expenses.

taxes, make payments under the Tax Receivable Agreement (as defined below) and cover OneWater Inc.’s corporate and other overhead expenses.

If we experience any material weaknesses in the future or otherwise fail to develop or maintain an effective system of internal controls in the future, we may not be able to accurately report our financial

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In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits, if any, OneWater Inc.

realizes in respect of the tax attributes subject to the

Tax Receivable Agreement.

realizes in respect of the tax attributes subject to

the Tax Receivable Agreement.

Our business, financial condition and results of operations could be materially adversely affected by any of these risks or uncertainties discussed herein.

The trading price of our Class A common stock could decline

due to any of these risks discussed herein, and you may lose all or part of your investment.

Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business,

financial condition, or future results.

The trading price of our Class A common stock could

decline due to any of these risks discussed herein, and you may lose all or part of your investment.

Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect

our business, financial condition, or future results.

Certain statements made herein are forward-looking statements.

Risks Related to Our Business

General economic conditions and consumer spending patterns can have a material adverse effect on our business, financial condition and results of operations.

General economic conditions, including changes in employment levels, consumer demand, preferences and confidence levels, the availability and cost of credit, fuel prices, levels of discretionary personal income,

interest rates, periods of economic or political instability, public health crises, and consumer spending patterns can negatively impact our operating results.

Unfavorable local, regional, national or global economic developments or uncertainties

regarding future economic prospects could reduce or defer consumer spending in the markets we serve and adversely affect our business.

Consumer spending, including that of high net worth individuals, on discretionary goods may also decline as a

result of political uncertainty and instability, even if prevailing economic conditions are generally favorable.

Economic conditions in areas in which we operate stores, particularly the Southeast and Gulf Coast regions in which we generated

approximately 75%, 75% and 78% of our revenue during fiscal years 2020, 2019 and 2018, respectively, could have a major impact on our operations.

Local influences, such as corporate downsizing, inclement weather such as hurricanes or other storms,

environmental conditions and specific events, also could adversely affect, and in certain instances have adversely affected, our operations in certain markets.

In an economic downturn, consumer discretionary spending levels generally decline, at times resulting in disproportionately large reductions in the sale of discretionary goods.

Consumer spending on discretionary goods

also may decline as a result of lower consumer confidence levels, even if prevailing economic conditions are favorable.

Our business was significantly impacted during the recessionary period that began in 2007, and this period of weakness in

consumer spending and depressed economic conditions had a substantial negative effect on our operating results.

In response to these conditions we reduced our inventory purchases, closed certain stores and reduced headcount.

Although we have

expanded our operations and increased our focus on pre-owned sales, parts and repair services and F&I products, during periods of stagnant or modestly declining industry trends, the cyclical nature of the recreational boating industry or the

lack of industry growth could lead to oversupply and weak demand, which could materially adversely affect our business, financial condition or results of operations in the future.

Any period of adverse economic conditions or low consumer confidence

could have a negative effect on our business.

The ongoing COVID-19 pandemic may adversely affect our revenues, results of operations and financial condition.

Our business could be materially adversely affected by the widespread outbreak of a contagious disease, including the recent COVID-19 pandemic.

COVID-19 has spread in many of the geographic areas in which we operate.

National, state and local governments in affected regions have implemented and may continue to implement safety precautions, including shelter in place orders, travel restrictions, business closures, cancellations of public gatherings, including

boat shows, and other measures.

These measures have affected our ability to sell and service boats, required us to temporarily close or partially close certain locations and may require additional closures in the future.

Organizations and

individuals are also taking additional steps to avoid or reduce infection, including limiting travel, staying home, working from home and limiting participation in certain leisure activities.

We continue to monitor federal, state and local government recommendations and have made modifications to our normal operations as a result of COVID-19.

If the negative economic effects of COVID-19 continue for a

prolonged period of time, it could lead to a reduction in demand for our products, which would adversely affect our results of operations.

Additionally, disruptions in the capital markets, as a result of the pandemic, may also adversely affect our

ability to access capital and additional liquidity.

The COVID-19 pandemic may also lead to disruptions in our supply chain, including our ability to obtain boats and parts from our suppliers, and labor shortages.

It is possible that an inventory

shortage could also occur as a result of the COVID-19 pandemic and its effects on, among other things, operations and consumer demand.

These measures are disrupting normal business operations and may have, significant negative impacts on our

business in the future.

While we are implementing changes to mitigate the impact of COVID-19 on our business, it is not possible, at this time, to estimate the entirety of the effect that COVID-19 will have on our business, customers, suppliers or

other business partners.

While we previously announced our decision to pause our acquisition strategy due to the COVID-19 pandemic, given our financial results for the year ended September 30, 2020, we are recommencing our acquisition strategy

and opportunistically evaluating future acquisitions.

See “Risk Factors—Our success depends, in part, on our ability to continue to make successful acquisitions at attractive or fair prices and to integrate the operations of acquired dealer groups

and each dealer group we acquire in the future.”

The availability and costs of borrowed funds can adversely affect our ability to obtain adequate boat inventory, the ability and willingness of our customers to finance boat

purchases and our ability to fund future acquisitions.

The availability and costs of borrowed funds can adversely affect our ability to obtain and maintain adequate boat inventory and the holding costs of that inventory, the ability and willingness of our customers to

finance boat purchases and our ability to fund future acquisitions.

OneWater LLC and certain of its subsidiaries are parties to the Inventory Financing Facility, which consists of uncommitted inventory floorplan financing of up to $392.5 million as of September 30, 2020.

The Inventory

Financing Facility has a maturity date of September 28, 2021.

As of September 30, 2020 and 2019, we had an aggregate of $124.0 million and $225.4 million, respectively, outstanding under the Inventory Financing Facility.

We rely on the Inventory

Financing Facility to purchase and maintain our inventory of boats.

The collateral for the Inventory Financing Facility consists primarily of our inventory that is financed through the Inventory Financing Facility and related assets, including

accounts receivable, bank accounts and proceeds of the foregoing, and excludes the collateral that underlies the Refinanced Credit Facility.

Effective July 22, 2020, the Company and certain of its subsidiaries terminated and repaid all indebtedness outstanding under the Term and Revolver Credit Facility in accordance with its terms and entered into the

Credit Agreement (the “Refinanced Credit Facility” and together with the Inventory Financing Facility, the “Credit Facilities”) with Truist Bank as administrative agent, collateral agent, swingline lender and issuing bank, SunTrust Robinson

Humphrey, Inc.

and Synovus Bank as joint lead arrangers and joint bookrunners, Synovus Bank as documentation agent, and the lenders from time to time party thereto (collectively, the “Refinancing”).

The Refinanced Credit Facility provides for a

$30.0 million revolving credit facility that may be used for revolving credit loans (including up to $5.0 million in swingline loans) and up to $5.0 million in letters of credit from time to time, and a $80.0 million term loan, which was advanced

in full on July 22, 2020.

Subject to certain conditions, the available amount under the revolving credit facility and the term loans may be increased by $50.0 million in the aggregate.

The revolving credit facility matures on July 22, 2025.

term loan is repayable in installments beginning on March 31, 2021, with the remainder due on July 22, 2025.

There were no borrowings outstanding under the revolving credit facility on July 22, 2020.

In conjunction with the closing of the

Refinanced Credit Facility, the Company paid $109.0 million, consisting of $29.0 million in cash on hand and $80.0 million in proceeds from the Refinanced Credit Facility, to fully redeem the Term and Revolver Credit Facility with Goldman Sachs

Specialty Lending Group, L.P.

As of September 30, 2020, we had $80.0 million outstanding under the loan and no amount outstanding under the revolving line of credit.

Our ability to borrow under the Credit Facilities depends on our ability to continue to satisfy our covenants and other obligations under the Credit Facilities.

In particular, our ability to borrow under our Inventory

Financing Facility depends on the ability of our manufacturers to be approved vendors under our Inventory Financing Facility.

The aging of our inventory limits our borrowing capacity as defined curtailments under the Inventory Financing Facility

reduce the allowable advance rate as our inventory ages.

Depressed economic conditions, as a result of COVID-19 or otherwise, weak consumer spending, turmoil in the credit markets and lender difficulties, among other potential reasons, could

interfere with our ability to maintain compliance with our debt covenants and to utilize the Credit Facilities to fund our operations.

Accordingly, under such circumstances, it may be necessary for us to close stores, further reduce our expense

structure, liquidate inventory below cost to free up capital, or modify the covenants with our lenders.

Any inability to utilize the Credit Facilities or the acceleration of amounts owed, resulting from a covenant violation, insufficient collateral

or lender difficulties, could require us to seek other sources of funding to repay amounts outstanding under the Credit Facilities or replace or supplement the Credit Facilities, which may not be possible at all or under commercially reasonable

As of September 30, 2020, we were in compliance with all of the covenants under our Credit Facilities and our additional available borrowings under the Credit Facilities were approximately $298.5 million in the aggregate based upon the

outstanding borrowings and maximum facility amounts.

The interest rate on our Inventory Financing Facility for new boats is calculated using the one-month London InterBank Offered Rate (“LIBOR”) plus an applicable margin of 2.75% to 5.00% depending on the amount of days

the boat has been in inventory.

Interest on pre-owned boats is calculated at the new boat rate plus 0.25%.

These variable interest rates under our Inventory Financing Facility will fluctuate with changing market conditions and, accordingly, our

interest expense will increase as interest rates rise.

Accordingly, a significant increase in interest rates could have a material adverse effect on our operating results.

The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has

announced that it intends to stop encouraging or requiring banks to submit rates for the calculation of LIBOR after 2021.

Our Inventory Financing Facility uses LIBOR as a benchmark for establishing interest rates, although we expect to negotiate

new credit that will rely on an alternative interest rate method to LIBOR .

Any legal or regulatory changes made in response to LIBOR’s future discontinuance may result

in, among other things, a sudden or prolonged increase or decrease in LIBOR, a delay in the publication of LIBOR, or changes in the rules or methodologies in LIBOR.

In addition, alternative methods to LIBOR may not yet have been established by

the end of December 2021, and the impact of such alternative methods may be impossible or impracticable to determine.

While we do not expect that the transition from LIBOR and risks related thereto will have a material adverse effect on

our financing costs, it is still uncertain at this time.

Similarly, decreases in the availability of credit and increases in the cost of credit could adversely affect the ability of our customers to purchase boats from us and thereby adversely affect our ability to sell our

products and impact the profitability of our finance and insurance activities.

For example, tight credit conditions during each fiscal year beginning with fiscal year 2008 and continuing through fiscal year 2011 adversely affected the ability of

customers to finance boat purchases, which had a negative effect on our operating results.

Failure to implement strategies to enhance our performance could have a material adverse effect on our business and financial condition.

We are increasing our efforts to grow our repair and maintenance services, parts and accessories, and financing and insurance businesses to better serve our customers and thereby increase revenue and improve

profitability as a result of these comparatively higher margin businesses.

These efforts are designed to increase our revenue and reduce our dependence on the sale of new and pre-owned boats.

In addition, we are pursuing strategic acquisitions to

capitalize upon the consolidation opportunities in the highly fragmented recreational boat dealer industry by acquiring additional dealer groups and related operations and improving their performance and profitability through the implementation of

our operating strategies.

These business initiatives have required, and will continue to require, us to add personnel, invest capital, enter businesses or geographic regions in which we do not have extensive experience and encounter substantial

As a result, our strategies to enhance our performance may not be successful and we may increase our expenses or write off such investments if not successful.

Our success depends, in part, on our ability to continue to make successful acquisitions at attractive or fair prices and to integrate the operations of acquired dealer groups and

each dealer group we acquire in the future.

Since the beginning of fiscal year 2016, we have acquired 14 recreational boat dealer groups.

Additionally, we actively evaluate and pursue acquisitions on an ongoing basis, and our pipeline of potential acquisitions

over the next 24 months currently includes four to eight dealer groups.

Each acquired dealer group operated independently prior to our acquisition.

Our success depends, in part, on our ability to continue to make successful acquisitions at

attractive or fair prices that align with our culture and focus on customer service and to integrate the operations of acquired dealer groups, including centralizing certain functions to achieve cost savings and pursuing programs and processes that

promote cooperation and the sharing of opportunities and resources among our stores.

We may not be able to oversee the combined entity efficiently, realize anticipated synergies or effectively implement our growth and operating strategies.

extent that we successfully pursue our acquisition strategy, our resulting growth will place significant additional demands on our management and infrastructure.

Our failure to successfully pursue our acquisition strategies or effectively operate

the combined entity could have a material adverse effect on our rate of growth and operating performance.

We are required to obtain the consent of our manufacturers prior to the acquisition of other dealer groups.

In determining whether to approve acquisitions, manufacturers may consider many factors, including our financial condition and ownership structure.

Manufacturers may also impose conditions on granting their approvals

for acquisitions, including a limitation on the number of their dealers that we may acquire.

Our ability to meet manufacturers’ requirements for approving future acquisitions will have a direct bearing on our ability to complete acquisitions and

effect our growth strategy.

There can be no assurance that a manufacturer will not terminate its dealer agreement, refuse to renew its dealer agreement, refuse to approve future acquisitions or take other action that could have a material adverse

effect on our acquisition program.

Our growth strategy also entails expanding our product lines and geographic scope by obtaining additional distribution rights from our existing and new manufacturers.

We may not be able to secure additional

distribution rights or obtain suitable alternative sources of supply if we are unable to obtain such distribution rights.

The inability to expand our product lines and geographic scope by obtaining additional distribution rights could have a

material adverse effect on the growth and profitability of our business.

Risks Related to Our Industry and Competition

Our success depends to a significant extent on our manufacturers, and the loss of certain manufacturers could have an adverse effect on our business, financial condition, and results of

We depend on our manufacturers for the sale of new boats.

Sales of new boats from our top ten brands represents approximately 42.9%, 41.1% and 40.4% of total sales for the fiscal years ended September 30, 2021,

2020 and 2019, respectively, making them major suppliers of our company.

Of this amount, Malibu Boats, Inc., including its brands Malibu, Axis, Cobalt, Pursuit, Maverick, Hewes, Cobia and Pathfinder accounted for 17.0%, 17.0% and 15.9% of our

consolidated revenue for the fiscal years ended September 30, 2021, 2020 and 2019, respectively.

Any adverse change in the reputation, product development efforts, technological advancement, expansion of manufacturing capabilities, supply chain

and third-party suppliers and financial condition of our manufacturers and their respective brands, would have a substantial adverse impact on our business.

Any difficulties encountered by our manufacturers resulting from economic, financial,

or other factors could also adversely affect the quality and amount of new boats and products that they are able to supply to us and the services and support they provide to us.

Additionally, any interruption or discontinuance of the operations of our manufacturers, including due to the COVID-19 pandemic or bankruptcy or insolvency, could also cause us to experience shortfalls,

disruptions, or delays with respect to new boats and inventory.

We also enter into renewable annual dealer agreements with manufacturers, and there is no guarantee that we will be able to renew such dealer agreements in the future.

be able to easily replace the loss of certain manufacturers or brands, including at the necessary quantity, quality or price, and the loss of certain manufacturers or brands may therefore have an adverse material effect on our business, results

of operations and financial condition.

Boat manufacturers exercise control over our business.

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These events could have a material adverse effect on our product availability, competitive position and financial performance.

Manufacturer recall campaigns could adversely affect our business.

Manufacturer recall campaigns could adversely affect our new and pre-owned boat sales or customer residual trade-in valuations, could cause us to temporarily remove vehicles from our inventory, could force us to

incur increased costs and could expose us to litigation and adverse publicity related to the sale of recalled boats, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Our business, as well as the entire retail marine industry, is highly seasonal, with seasonality varying in different geographic markets.

Over the three-year period ended September 30, 2021, the average revenue for the quarterly periods ended December 31, March 31, June 30 and September 30 represented approximately 16%, 23%, 36% and 25%,

respectively, of our average annual revenue.

With the exception of Florida, we generally realize significantly lower sales and higher levels of inventories, and related floor plan borrowings, in the quarterly periods ending December 31 and

Revenue generated from our stores in Florida serves to offset generally lower winter revenue in our other states and enables us to maintain a more consistent revenue stream.

The onset of the public boat and recreation shows in January

stimulates boat sales and allows us to reduce our inventory levels and related floor plan borrowings throughout the remainder of the fiscal year.

We also have various stores in the Northeast and Midwest region of the United States, which

typically experience colder temperatures in the winter months.

The impact of seasonality on our results of operations could be materially impacted based on the location of our acquisitions.

For example, our operations could be substantially

more seasonal if we acquire additional dealer groups that operate in colder regions of the United States, which are generally closed or experience lower volume in the winter months.

Additionally, due to the COVID-19 pandemic, our seasonal

trends may also change as a result of, among other things, store closures, disruptions to the supply chain and inventory availability, manufacturer delays, and cancellation of boat shows.

The failure to receive rebates and other manufacturer incentives on inventory purchases or retail sales could substantially reduce our margins.

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increase the effective cost of our boat purchases, reduce our margins and competitive position and have a material adverse effect on our financial performance.

Increases in fuel prices may adversely affect our business.

All of the recreational boats we sell are powered by gasoline or diesel engines.

Consequently, a significant increase in the price or tax on the sale of fuel on a regional or national basis could have a material

adverse effect on our sales and operating results.

Increases in fuel prices (such as those that occurred during 2008) negatively impact boat sales.

The price of or tax on fuels may significantly increase in the future, adversely affecting our

Our sales may be adversely affected by a material increase in interest rates and adverse changes in fiscal policy or credit market conditions.

Over the past several years, our economy has been positively impacted by historically unprecedented low interest rates.

Such interest rates are driven by the policies of the Federal Reserve System.

Although interest

rates generally increased in 2018 and decreased in 2019 and 2020 (to date), there can be no assurance as to what actions the Federal Reserve System will take in the future.

Any change in interest rates or the market expectation of such change may

result in significantly higher long-term interest rates.

Given that we sell products that are often financed, a material increase in interest rates and adverse changes in fiscal policy or credit market conditions may negatively impact our customers’ ability or desire to

purchase our products.

In addition, such an increase or adverse change could reduce the availability or increase the costs of obtaining new debt and refinancing existing indebtedness or negatively impact the market price of our common stock.

The availability of boat insurance is critical to our success.

The ability of our customers to secure reasonably affordable boat insurance that is satisfactory to lenders that finance our customers’ purchases is critical to our success.

Historically, affordable boat insurance has

been available.

However, as a severe storm approaches land, insurance providers cease underwriting until the storm passes.

This loss of insurance prevents or delays lenders from lending.

As a result, sales of boats can be temporarily halted making

our revenue difficult to predict and causing sales to be delayed or potentially cancelled.

Any difficulty of customers to obtain affordable boat insurance could impede boat sales and adversely affect our business.

Other recreational activities, poor industry perception, real or perceived human health or safety risks, changing consumer attitudes and environmental conditions can adversely affect

the levels of boat purchases.

Other recreational activities, poor industry perception, real or perceived human health or safety risks, changing consumer attitudes and environmental conditions can adversely affect the levels

of boat purchases.

Other recreational activities, poor industry perception, real or perceived human health or safety risks, changing consumer attitudes and environmental conditions can adversely affect the levels of boat purchases.

Demand for our products can be adversely affected by competition from other activities that occupy consumers’ time, including other forms of recreation as well as religious, cultural and community activities.

In addition, real or perceived human

health or safety risks from engaging in outdoor activities generally or boating activities specifically could deter consumers from purchasing our products.

Local environmental conditions in the areas in which we operate stores could also adversely

affect the levels of boat purchases, including adverse weather conditions or natural disasters.

Changing trends and attitudes toward large discretionary purchases on the part of younger consumers in particular, who may prefer to share or borrow a

boat rather than incur the expense of ownership, may impact our future sales.

Further, as a seller of high-end consumer products, we must compete for discretionary spending with a wide variety of other recreational activities and consumer

In addition, perceived hassles of boat ownership and customer service and customer education throughout the retail boat industry, which has traditionally been perceived to be relatively poor, represent impediments to boat purchases.

Unforeseen expenses, difficulties and delays frequently encountered in connection with expansion through acquisitions could inhibit our growth and negatively impact our

profitability.

Our growth strategy of acquiring additional recreational boat dealer groups involves significant risks.

This strategy entails reviewing and potentially reorganizing acquired business operations, corporate

infrastructure and systems, and financial controls.

Unforeseen expenses (including potential environmental legacy liabilities due to spills or other releases of regulated substances on or under real properties or resulting from a failure to comply

with laws and regulations), difficulties and delays frequently encountered in connection with rapid expansion through acquisitions could inhibit our growth and negatively impact our profitability.

We may be unable to identify suitable acquisition

candidates or to complete the acquisitions of candidates that we identify.

Increased competition for acquisition candidates or increased asking prices by acquisition candidates may increase purchase prices for acquisitions to levels beyond our

financial capability or to levels that would not result in expected returns required by our acquisition criteria to be in the best interest of stockholders or bondholders.

Acquisitions also may become more difficult or less attractive in the future

as we acquire more of the most attractive dealer groups that best align with our culture and focus on customer service.

In addition, real or perceived

human health or safety risks from engaging in outdoor activities generally or boating activities specifically could deter consumers from purchasing our products.

Local environmental conditions in the areas in which we operate stores could also

adversely affect the levels of boat purchases, including adverse weather conditions or natural disasters.

Changing trends and attitudes toward large discretionary purchases on the part of younger consumers in particular, who may prefer to share

or borrow a boat rather than incur the expense of ownership, may impact our future sales.

Further, as a seller of high-end consumer products, we must compete for discretionary spending with a wide variety of other recreational activities and

consumer purchases.

We face intense competition.

We operate in a highly competitive and fragmented environment.

In addition to facing competition generally from recreation businesses seeking to attract consumers’ leisure time and discretionary spending dollars,

the recreational boat industry itself is highly fragmented, resulting in intense competition for customers, quality products, boat show space and suitable store locations.

We rely to a certain extent on boat shows to generate sales.

inability to participate in boat shows in our existing or targeted markets, including cancellations of boat shows in connection with the COVID-19 pandemic, could have a material adverse effect on our business, financial condition and results of

We compete primarily with local marine retailers who own three or fewer stores, as well as with a limited number of larger operators, including MarineMax and Bass Pro Shops.

Additionally, with respect to sales of

marine parts, accessories, and equipment, we also compete with national specialty marine parts and accessory stores, online catalog retailers, sporting goods stores, and mass merchants.

Competition within the retail marine industry is generally

based on the quality and variety of available products, the price and value of the products, and attention to customer service.

There is significant competition both within markets we currently serve and in new markets that we may enter.

compete in each of our markets with retailers of brands of boats and engines we do not sell in that market.

In addition, several of our competitors, especially those selling marine equipment and accessories, are large national or regional

chains that have substantial financial, marketing, and other resources.

Private sales of pre-owned boats represent an additional source of competition.

Additional competitors, including boat clubs, may enter the businesses in which we currently operate or intend to expand.

In particular, an increase in the number of aggregator and price comparison sites for our

products may negatively impact our sales of these products.

If any of our competitors successfully provides a broader, more efficient or attractive combination of services, protection plans, products and resources to our target customers, our

business results could be materially adversely affected.

Our inability to compete effectively with existing or potential competitors could have a material adverse effect on our business, financial condition and results of operations.

Due to various matters, including environmental concerns, permitting and zoning requirements, and competition for waterfront real estate, some markets in the United States have experienced an increased waiting list

for marina and storage availability.

In general, the markets in which we currently operate are not experiencing any unusual difficulties.

However, marine retail activity could be adversely affected in markets that do not have sufficient marina

and storage availability to satisfy demand.

Risks Related to Our Acquisition and Growth Strategies

Failure to implement strategies to enhance our performance could have a material adverse effect on our business and financial condition.

profitability as a result of these comparatively higher margin businesses.

These efforts are designed to increase our revenue and reduce our dependence on the sale of new and pre-owned boats.

In addition, we are pursuing strategic acquisitions

to capitalize upon the consolidation opportunities in the highly fragmented recreational boat dealer industry by acquiring additional dealer groups and related operations and improving their performance and profitability through the

implementation of our operating strategies.

These business initiatives have required, and will continue to require, us to add personnel, invest capital, enter businesses or geographic regions in which we do not have extensive experience and

encounter substantial competition.

As a result, our strategies to enhance our performance may not be successful and we may increase our expenses or write off such investments if not successful.

Our success depends, in part, on our ability to continue to make successful acquisitions at attractive or fair prices and to integrate the operations of acquired dealer groups and each dealer

group we acquire in the future.

Since the combination of Singleton Marine and Legendary Marine in 2014, we have acquired 50 additional stores through 21 acquisitions.

Additionally, we actively evaluate and pursue acquisitions on an ongoing basis,

and our pipeline of potential acquisitions over the next 12 months currently includes four to six dealer groups.

Each acquired dealer group operated independently prior to our acquisition.

Our success depends, in part, on our ability to

continue to make successful acquisitions at attractive or fair prices that align with our culture and focus on customer service and to integrate the operations of acquired dealer groups, including centralizing certain functions to achieve cost

savings and pursuing programs and processes that promote cooperation and the sharing of opportunities and resources among our stores.

We may not be able to oversee the combined entity efficiently, realize anticipated synergies or effectively

implement our growth and operating strategies.

To the extent that we successfully pursue our acquisition strategy, our resulting growth will place significant additional demands on our management and infrastructure.

Our failure to successfully

pursue our acquisition strategies or effectively operate the combined entity could have a material adverse effect on our rate of growth and operating performance.

Unforeseen expenses, difficulties and delays frequently encountered in connection with expansion through acquisitions could inhibit our growth and negatively impact our profitability.

Our growth strategy of acquiring additional marine retailers involves significant risks.

This strategy entails reviewing and potentially reorganizing acquired business operations, corporate infrastructure and

systems, and financial controls.

Unforeseen expenses (including potential environmental legacy liabilities due to spills or other releases of regulated substances on or under real properties or resulting from a failure to comply with laws and

regulations), difficulties and delays frequently encountered in connection with rapid expansion through acquisitions could inhibit our growth and negatively impact our profitability.

We may be unable to identify suitable acquisition candidates

or to complete the acquisitions of candidates that we identify.

Increased competition for acquisition candidates or increased asking prices by acquisition candidates may increase purchase prices for acquisitions to levels beyond our financial

capability or to levels that would not result in expected returns required by our acquisition criteria to be in the best interest of stockholders or bondholders.

Acquisitions also may become more difficult or less attractive in the future as we

acquire more of the most attractive dealer groups that best align with our culture and focus on customer service.

In addition, we may encounter difficulties in integrating the operations of acquired dealer groups with our own operations, in

retaining employees, in retaining and maintaining relationships with customers, suppliers or other business contacts, and in managing acquired dealer groups profitably without substantial costs, delays or other operational or financial problems.

part of our growth strategy, we generally retain existing key staff, including senior management, when we complete an acquisition.

There can be no assurance that we will be able to retain dealer groups’ key staff, including senior management, when

we complete an acquisition in the future and failure to do so could adversely affect our businesses.

As part of our growth strategy, we generally retain existing key staff, including senior management, when we complete an acquisition.

There can be no assurance that we will be able to retain dealer groups’ key staff, including senior

management, when we complete an acquisition in the future and failure to do so could adversely affect our businesses.

We may issue common or preferred stock and incur substantial indebtedness in making future acquisitions.

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Consequently, operating results for any quarter may not be indicative of the results that may be achieved for any subsequent quarter or for a full fiscal year.

These fluctuations could adversely affect the market

price of our common stock.

These fluctuations could adversely affect the

market price of our common stock.

Our ability to continue to grow through the acquisition of additional dealer groups will depend upon various factors, including the following:

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the absence of one or more manufacturers attempting to impose unsatisfactory restrictions on us in connection with their approval of acquisitions.

As a part of our acquisition strategy, we frequently engage in discussions with various recreational boat dealer groups regarding their potential acquisition by us.

In connection with these discussions, we and each

potential acquisition candidate exchange confidential operational and financial information, conduct due diligence inquiries and consider the structure, terms, and conditions of the potential acquisition.

In certain cases, the prospective

acquisition candidate agrees not to discuss a potential acquisition with any other party for a specific period of time, grants us an option to purchase the prospective dealer group for a designated price during a specific time period, and agrees to

take other actions designed to enhance the possibility of the acquisition, such as preparing audited financial information and converting its accounting system to the system specified by us.

As a part of our acquisition strategy, we frequently engage in discussions with various marine retail groups regarding their potential acquisition by us.

In connection with these discussions, we and each potential

acquisition candidate exchange confidential operational and financial information, conduct due diligence inquiries and consider the structure, terms, and conditions of the potential acquisition.

In certain cases, the prospective acquisition

candidate agrees not to discuss a potential acquisition with any other party for a specific period of time, grants us an option to purchase the prospective dealer group for a designated price during a specific time period, and agrees to take

other actions designed to enhance the possibility of the acquisition, such as preparing audited financial information and converting its accounting system to the system specified by us.

Potential acquisition discussions frequently take place

over a long period of time and involve difficult business integration and other issues, including in some cases management succession and related matters.

As a result of these and other factors, a number of potential acquisitions that from time to

time appear likely to occur do not result in binding legal agreements and are not consummated.

Our success depends to a significant extent on our manufacturers, and the loss of certain manufacturers could have an adverse effect on our business, financial condition, and results

of operations.

We depend on our manufacturers for the sale of new boats.

Sales of new boats from our top ten brands represents approximately 41.1%, 40.4% and 40.0% of total sales for the fiscal years ended September 30, 2020, 2019

and 2018, respectively, making them major suppliers of our company.

Of this amount, Malibu Boats, Inc., including its brands Malibu, Axis, Cobalt and Pursuit, accounted for 16.2%, 15.9% and 13.4% of our consolidated revenue for the fiscal years

ended September 30, 2020, 2019 and 2018, respectively.

Any adverse change in the reputation, product development efforts, technological advancement, expansion of manufacturing capabilities, supply chain and third-party suppliers and financial

condition of our manufacturers and their respective brands, would have a substantial adverse impact on our business.

Any difficulties encountered by our manufacturers resulting from economic, financial, or other factors could also adversely affect

the quality and amount of new boats and products that they are able to supply to us and the services and support they provide to us.

delays with respect to new boats and inventory.

We also enter into renewable annual dealer agreements with manufacturers, and there is no guarantee that we will be able to renew such dealer agreements in the future.

We may not be able to easily

replace the loss of certain manufacturers or brands, including at the necessary quantity, quality or price, and the loss of certain manufacturers or brands may therefore have an adverse material effect on our business, results of operations and

financial condition.

Our growth strategy may require us to secure significant additional capital, the amount of which will depend upon the size, timing and structure of future acquisitions and our

working capital and general corporate needs.

If we finance future acquisitions in whole or in part through the issuance of common stock or securities convertible into or exercisable for common stock, existing stockholders will experience dilution in the voting

power of their common stock and earnings per share could be negatively impacted.

The extent to which we will be able and willing to use our common stock for acquisitions will depend on the market value of our common stock and the willingness of

potential sellers to accept our common stock as full or partial consideration.

Our inability to use our common stock as consideration, to generate cash from operations or to obtain additional funding through debt or equity financings in order to

pursue our acquisition program could materially limit our growth.

Any borrowings made to finance future acquisitions or for operations could make us more vulnerable to a downturn in our operating results, a downturn in economic conditions, or increases in interest rates on borrowings

that are subject to interest rate fluctuations.

If our cash flow from operations is insufficient to meet our debt service requirements, we could be required to sell additional equity securities, refinance our obligations or dispose of assets in

order to meet our debt service requirements.

In addition, our credit arrangements contain financial covenants and other restrictions with which we must comply, including limitations on the incurrence of additional indebtedness.

Adequate financing

may not be available if and when we need it or may not be available on terms acceptable to us.

The failure to obtain sufficient financing on favorable terms and conditions could have a material adverse effect on our growth prospects and our

business, financial condition and results of operations.

For additional information relating to our credit arrangements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt Agreements” in this Form 10-K.

As a result of these and other factors, a number of potential acquisitions that from time

to time appear likely to occur do not result in binding legal agreements and are not consummated.

We are required to obtain the consent of our manufacturers prior to the acquisition of other dealer groups.

In determining whether to approve acquisitions, manufacturers may consider many factors, including our financial condition and ownership structure.

Manufacturers may also impose conditions on granting their

approvals for acquisitions, including a limitation on the number of their dealers that we may acquire.

Our ability to meet manufacturers’ requirements for approving future acquisitions will have a direct bearing on our ability to complete

acquisitions and effect our growth strategy.

There can be no assurance that a manufacturer will not terminate its dealer agreement, refuse to renew its dealer agreement, refuse to approve future acquisitions or take other action that could have

a material adverse effect on our acquisition program.

Our growth strategy also entails expanding our product lines and geographic scope by obtaining additional distribution rights from our existing and new manufacturers.

We may not be able to secure additional

distribution rights or obtain suitable alternative sources of supply if we are unable to obtain such distribution rights.

The inability to expand our product lines and geographic scope by obtaining additional distribution rights could have a

material adverse effect on the growth and profitability of our business.

Our internal growth and operating strategies of opening new stores and offering new products involve risk.

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Our dealer agreements require manufacturer consent to open or change store locations that sell certain products.

We may not be able to open and operate new store locations or introduce new product lines on a timely or

profitable basis.

We may not be able to open and operate new store locations or introduce new product lines on a timely

or profitable basis.

Moreover, the costs associated with opening new store locations or introducing new product lines may adversely affect our profitability.

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Our systems, procedures, controls, and financial resources may not be adequate to support expanding operations.

The inability to manage our growth effectively could have a material adverse effect on our business, financial

condition and results of operations.

The inability to manage our growth effectively could have a material adverse effect on our business,

financial condition and results of operations.

Our planned growth also will impose significant added responsibilities on members of senior management and require us to identify, recruit, and integrate additional senior level managers.

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identify, hire or train suitable additions to management.

Our business, as well as the entire recreational boating industry, is highly seasonal, with seasonality varying in different geographic markets.

Over the three-year period ended September 30, 2020, the average revenue for the quarterly periods ended December 31, March 31, June 30 and September 30 represented approximately 14%, 21%, 38% and 27%, respectively, of

our average annual revenue.

With the exception of Florida, we generally realize significantly lower sales and higher levels of inventories, and related floor plan borrowings, in the quarterly periods ending December 31 and March 31.

generated from our stores in Florida serves to offset generally lower winter revenue in our other states and enables us to maintain a more consistent revenue stream.

The onset of the public boat and recreation shows in January stimulates boat sales

and allows us to reduce our inventory levels and related floor plan borrowings throughout the remainder of the fiscal year.

We also have various stores in the Northeast and Midwest region of the United States, which typically experience colder

temperatures in the winter months.

The impact of seasonality on our results of operations could be materially impacted based on the location of our acquisitions.

For example, our operations could be substantially more seasonal if we acquire

additional dealer groups that operate in colder regions of the United States, which are generally closed or experience lower volume in the winter months.

Additionally, due to the COVID-19 pandemic, our seasonal trends may also change as a result

of, among other things, store closures, disruptions to the supply chain and inventory availability, manufacturer delays, and cancellation of boat shows.

Our failure to successfully order and manage our inventory to reflect consumer demand and to anticipate changing consumer preferences and buying trends could have a material adverse

effect on our business, financial condition and results of operations.

Our success depends upon our ability to successfully manage our inventory and to anticipate and respond to product trends and consumer demands in a timely manner.

Our products appeal to consumers across a number of

states who are, or could become, boat owners.

Our growth strategy may require us to secure significant additional capital, the amount of which will depend upon the size, timing and structure of future acquisitions and our working capital

and general corporate needs.

voting power of their common stock and earnings per share could be negatively impacted.

The extent to which we will be able and willing to use our common stock for acquisitions will depend on the market value of our common stock and the

willingness of potential sellers to accept our common stock as full or partial consideration.

Our inability to use our common stock as consideration, to generate cash from operations or to obtain additional funding through debt or equity

financings in order to pursue our acquisition program could materially limit our growth.

borrowings that are subject to interest rate fluctuations.

If our cash flow from operations is insufficient to meet our debt service requirements, we could be required to sell additional equity securities, refinance our obligations or dispose

of assets in order to meet our debt service requirements.

In addition, our credit arrangements contain financial covenants and other restrictions with which we must comply, including limitations on the incurrence of additional indebtedness.

Adequate financing may not be available if and when we need it or may not be available on terms acceptable to us.

The failure to obtain sufficient financing on favorable terms and conditions could have a material adverse effect on our growth

prospects and our business, financial condition and results of operations.

For additional information relating to our credit arrangements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt

Agreements” in this Form 10-K.

With our growth and diversification strategy into marine related parts and accessories with the acquisitions of T-H Marine

and PartsVu, we now import, assemble and manufacturer marine parts and accessories, which could expose us to potential increased costs and certain additional risks.

In calendar 2021, we completed our acquisitions of T-H Marine and PartsVu.

The acquisitions expanded our business to include the import,

assembly, manufacture and sale of marine parts and accessories.

We may invest considerable resources to develop, import, warehouse and distribute new and existing products, and there is no assurance that they will be successful.

Consequently,

we might curtail or abandon them at any time, which could result in asset impairments and inventory write-downs.

Factors that could cause us to curtail or abandon one of such products include unexpected or increased costs or delays in development, excessive

demands on management resources, legal or regulatory constraints, changes in consumer demands, preferences and shopping patterns regarding boat parts and accessories, or a determination that consumer demand no longer supports the product.

Additional risks relating to such product offerings include product liability and product recalls for which we do not have third-party indemnification and contractual rights or remedies;

increasing costs for labor or raw materials used to

manufacture products;

our ability to successfully protect our proprietary rights (e.g., defending against counterfeit or otherwise unauthorized goods);

our ability to successfully navigate and avoid claims related to the proprietary rights of

third parties;

and our ability to successfully administer and comply with obligations under license agreements that we have with third-party licensors of certain brands.

Risks Related to Our Operations

The availability and costs of borrowed funds can adversely affect our ability to obtain adequate boat inventory, the ability and willingness of our customers to finance boat purchases and our

ability to fund future acquisitions.

finance boat purchases and our ability to fund future acquisitions.

Inventory Financing Facility has a maturity date of January 1, 2022, which we are actively seeking to extend.

Failure to extend or source alternative financing arrangements could adversely impact our business.

As of September 30, 2021 and 2020,

we had an aggregate of $114.2 million and $124.0 million, respectively, outstanding under the Inventory Financing Facility.

We rely on the Inventory Financing Facility to purchase and maintain our inventory of boats.

The collateral for the

Inventory Financing Facility consists primarily of our inventory that is financed through the Inventory Financing Facility and related assets, including accounts receivable, bank accounts and proceeds of the foregoing, and excludes the

collateral that underlies the Credit Facility.

Effective July 22, 2020, we entered into the Credit Agreement (the “Credit Facility” and together with the Inventory Financing Facility, the “Credit Facilities”) with Truist Bank as administrative agent, collateral

agent, swingline lender and issuing bank, SunTrust Robinson Humphrey, Inc.

and Synovus Bank as joint lead arrangers and joint bookrunners, Synovus Bank as documentation agent, and the lenders from time to time party thereto.

The Credit Facility

provides for a $30.0 million revolving credit facility that may be used for revolving credit loans (including up to $5.0 million in swingline loans) and up to $5.0 million in letters of credit from time to time, and a $80.0 million term loan,

which was advanced in full on July 22, 2020.

Subject to certain conditions, the available amount under the revolving credit facility and the term loans may be increased by $50.0 million in the aggregate.

The revolving credit facility matures on

July 22, 2025.

The term loan is repayable in installments beginning on March 31, 2021, with the remainder due on July 22, 2025.

On February 2, 2021, we entered into the Incremental Amendment No.

1 (the “First Incremental Amendment”) to the

Credit Facility to provide for, among other things, an incremental term loan (the “Incremental Term Loan”) to OWAO in an aggregate principal amount equal to $30.0 million, which was added to, and constitutes a part of, the existing $80.0

million term loan.

As provided for by the First Incremental Amendment, the proceeds of the Incremental Term Loan were used to pay off the balance of the revolving credit facility, under which an aggregate of $30.0 million was outstanding as of

February 1, 2021.

On November 30, 2021, we entered into the Incremental Amendment No.

2 (the “Second Incremental Amendment”) to the Credit Facility to provide for, among other things, an incremental term loan

(the “Second Incremental Term Loan”) to OWAO in an aggregate principal amount equal to $200.0 million, which will be added to, and constitute a part of, the existing $110.0 million term loan.

The Second Incremental Term Loan is on the same

terms (including interest rates, but excluding upfront fees, original issue discount and other similar amounts) applicable to the existing term loan under the Credit Facility and the other loan documents.

As provide for by the Second

Incremental Amendment, the proceeds of the Second Incremental Term Loan were used to finance the Company’s acquisition of T-H Marine.

The maturity date for the Second Incremental Term Loan is the earlier of (i) July 22, 2025 or (ii) the date

on which the principal amount of all outstanding term loans have been declared or automatically have become due and payable pursuant to the terms of the Credit Facility.

The Second Incremental Amendment further provides for a $20.0 million

increase in the existing revolving commitment (the “Incremental Revolving Increase”), which was added to, and constitutes a part of, the existing $30.0 million revolving commitment.

The Incremental Revolving Increase constitutes a single

class of revolving commitments with the existing revolving commitment.

The Incremental Revolving Increase is secured by identical collateral and guaranties on identical terms as the existing revolving commitment.

The maturity date for the

Incremental Revolving Increase is the earlier of (i) July 22, 2025 and (ii) the date on which the Revolving Commitments (as defined in the Credit Facility) are terminated pursuant to the terms of the Credit Facility.

As of September 30, 2021, we had $105.9 million outstanding under the loan and no amount outstanding under the revolving line of credit.

Our ability to borrow under the Credit Facilities depends on our ability to continue to satisfy our covenants and other obligations under the Credit Facilities.

In particular, our ability to borrow under our

Inventory Financing Facility depends on the ability of our manufacturers to be approved vendors under our Inventory Financing Facility.

The aging of our inventory limits our borrowing capacity as defined curtailments under the Inventory

Financing Facility reduce the allowable advance rate as our inventory ages.

Depressed economic conditions, as a result of COVID-19 or otherwise, weak consumer spending, turmoil in the credit markets and lender difficulties, among other

potential reasons, could interfere with our ability to maintain compliance with our debt covenants and to utilize the Credit Facilities to fund our operations.

Accordingly, under such circumstances, it may be necessary for us to close stores,

further reduce our expense structure, liquidate inventory below cost to free up capital, or modify the covenants with our lenders.

Any inability to utilize the Credit Facilities or the acceleration of amounts owed, resulting from a covenant

violation, insufficient collateral or lender difficulties, could require us to seek other sources of funding to repay amounts outstanding under the Credit Facilities or replace or supplement the Credit Facilities, which may not be possible at

all or under commercially reasonable terms.

As of September 30, 2021, we were in compliance with all of the covenants under our Credit Facilities and our additional available borrowings under the Credit Facilities were approximately $312.4

million in the aggregate based upon the outstanding borrowings and maximum facility amounts.

Additionally, the replacement of LIBOR could materially adversely affect our revenue or expenses and the value of those assets or obligations.

LIBOR and certain other “benchmarks” are the subject of recent

national, international, and other regulatory guidance and proposals for reform.

These reforms may cause such benchmarks to perform differently than in the past or have other consequences which cannot be predicted.

On July 27, 2017, the United

Kingdom’s Financial Conduct Authority, which regulates LIBOR, publicly announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021.

The announcement indicates that the continuation of LIBOR on the current

basis cannot be guaranteed after 2021.

While there is no consensus on what rate or rates may become accepted alternatives to LIBOR, a group of large banks and the Alternative Reference Rate Committee (“ARRC”) selected, and the Federal Reserve

Bank of New York in May 2018 started to publish, the Secured Overnight Finance Rate (“SOFR”) as an alternative to LIBOR.

SOFR is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities, given the depth and

robustness of the U.S.

Treasury repurchase market.

As a result and with the expectation that the publication of LIBOR will cease by the end of 2021, the Inventory Financing Facility was amended via the Third Amendment such that, effective as of October 1, 2021, the

interest rate applied to the loans provided pursuant to the Inventory Financing Facility will no longer be calculated using LIBOR but instead calculated using SOFR (as further described in the Third Amendment).

SOFR will fluctuate with changing

market conditions and, as SOFR increases, our interest expense will mechanically increase.

The market transition away from LIBOR to an alternative reference rate, including the conversion of our LIBOR-based loans to SOFR, is complex and could

have a range of material adverse effects on our business, financial condition, and results of operations.

In particular, any such transition could:

adversely affect the interest rates paid, and the expenses associated with, our obligations, loans and other financial instruments tied to LIBOR rates, due to the significant differences between LIBOR and SOFR;

result in disputes, litigation, or other actions with counterparties regarding the interpretation and enforceability of certain fallback language contained in the Inventory Financing Facility;

require the transition to or development of appropriate systems to effectively transition from LIBOR-based loans to those based on SOFR or another applicable alternative pricing benchmark.

our products and impact the profitability of our finance and insurance activities.

For example, tight credit conditions during each fiscal year beginning with fiscal year 2008 and continuing through fiscal year 2011 adversely affected the

ability of customers to finance boat purchases, which had a negative effect on our operating results.

Increases in fuel prices may adversely affect our business.

All of the recreational boats we sell are powered by gasoline or diesel engines.

Consequently, a significant increase in the price or tax on the sale of fuel on a regional or national basis could have a material

adverse effect on our sales and operating results.

Increases in fuel prices (such as those that occurred during 2008) negatively impact boat sales.

The price of or tax on fuels may significantly increase in the future, adversely affecting our

Our sales may be adversely affected by a material increase in interest rates and adverse changes in fiscal policy or credit market conditions.

Over the past several years, our economy has been positively impacted by historically unprecedented low interest rates.

Such interest rates are driven by the policies of the Federal Reserve System.

interest rates generally increased in 2018 and decreased in 2019 and 2020, and have remained low in 2021 (to date), there can be no assurance as to what actions the Federal Reserve System will take in the future.

Any change in interest rates or

the market expectation of such change may result in significantly higher long-term interest rates.

purchase our products.

The availability of boat insurance is critical to our success.

The ability of our customers to secure reasonably affordable boat insurance that is satisfactory to lenders that finance our customers’ purchases is critical to our success.

Historically, affordable boat insurance

has been available.

However, as a severe storm approaches land, insurance providers cease underwriting until the storm passes.

This loss of insurance prevents or delays lenders from lending.

As a result, sales of boats can be temporarily halted

making our revenue difficult to predict and causing sales to be delayed or potentially cancelled.

Any difficulty of customers to obtain affordable boat insurance could impede boat sales and adversely affect our business.

Our failure to successfully order and manage our inventory to reflect consumer demand and to anticipate changing consumer preferences and buying trends, or the lack of inventory generally in the

industry, could have a material adverse effect on our business, financial condition and results of operations.

Our success depends upon our ability to procure sufficient inventory for our needs and to successfully manage our inventory and to anticipate and respond to product trends and consumer demands in a timely manner.

Our products appeal to consumers across a number of states who are, or could become, boat owners.

The preferences of these consumers cannot be predicted with certainty and are subject to change.

Further, the retail consumer industry, by its nature, is volatile and sensitive to numerous economic

factors, including consumer preferences, competition, market conditions, general economic conditions and other factors outside of our control.

Further, the retail consumer industry, by its

nature, is volatile and sensitive to numerous economic factors, including consumer preferences, competition, market conditions, general economic conditions and other factors outside of our control.

For example, the impact of COVID-19 on our

suppliers and the recent increase in demand for marine retail products has led to industry-wide supply chain constraints.

We have experienced inventory shortages in new and pre-owned boats in fiscal year 2021, and it is possible that further

shortages could occur.

We cannot predict consumer preferences with certainty, and consumer preferences often change over time.

We typically order product several months in advance, although such orders are not binding until the merchandise is delivered to our stores.

The extended lead times for many of our purchases may make it difficult for us to respond rapidly to new or

changing product trends, increases or decreases in consumer demand or changes in prices.

If we misjudge either the market for our products or our consumers’ purchasing habits in the future, our revenues may decline significantly and we may not have

sufficient quantities of product to satisfy consumer demand or sales orders or we may be required to discount excess inventory, either of which could have a material adverse effect on our business, financial condition and results of operations.

Weather, natural disasters, adverse climate changes and other environmental conditions may adversely impact our business and may not be adequately covered by our insurance.

Weather and environmental conditions may adversely impact our operating results.

For example, drought conditions, reduced rainfall levels, excessive rain, tropical storms and hurricanes, natural disasters and adverse

climate changes, as well as other environmental conditions occurring on land or in the Gulf of Mexico and Atlantic Ocean, may force boating areas to close or render boating dangerous or inconvenient, thereby curtailing customer demand for our

Such conditions may also result in physical damage to or closure of one or more of our facilities, inadequate work force in our markets, and disruption or reduction in the availability of products at our stores.

Concerns regarding global

changes in climate could also adversely affect the levels of boat purchases.

In addition, unseasonably cool weather and prolonged winter conditions may lead to shorter selling seasons in certain locations.

Many of our stores sell boats to customers

for use on reservoirs, thereby subjecting our business to the continued viability of these reservoirs for boating use.

In addition, tropical storms or hurricanes, tornadoes, fires, floods and other natural disasters could result in the disruption of our operations and/or supply chain, including boat deliveries from manufacturers, or

damage to our boat inventories and facilities as has been the case when the Southeast and Gulf Coast regions and other markets have been affected by hurricanes.

Additionally, severe weather or other natural disasters could damage our on-site

inventory at our stores or cause serious disruptions in the operations of our stores.

We maintain hurricane and casualty insurance, subject to deductibles.

While we traditionally maintain property and casualty insurance coverage for damage caused

by severe weather or other natural disasters, there can be no assurance that such insurance coverage is adequate to cover losses that we may sustain as a result of severe weather or other natural disasters.

We typically order product several months in advance, although such orders are not binding until the merchandise is

delivered to our stores.

The extended lead times for many of our purchases may make it difficult for us to respond rapidly to new or changing product trends, increases or decreases in consumer demand or changes in prices.

If we misjudge either

the market for our products or our consumers’ purchasing habits in the future, our revenues may decline significantly and we may not have sufficient quantities of product to satisfy consumer demand or sales orders or we may be required to

discount excess inventory, either of which could have a material adverse effect on our business, financial condition and results of operations.

We depend on our ability to attract and retain customers.

Our future success depends in large part upon our ability to attract and retain customers for our boat sales, repair and maintenance services, parts and accessories and F&I products.

The extent to which we achieve

growth in our customer base and retain existing customers materially influences our profitability.

The extent to which we

achieve growth in our customer base and retain existing customers materially influences our profitability.

Any number of factors could affect our ability to grow and maintain our customer base.

These factors include consumer preferences, the frequency with

which customers utilize our products, repair and maintenance services and F&I products, general economic conditions, our ability to maintain our store locations, weather conditions, the availability of alternative services, protection plans,

products and resources, significant increases in gasoline prices, the disposable income of consumers available for discretionary expenditures and the external perception of our brands.

Any significant decline in our customer base, the growth of our

customer base or the usage of our services, protection plans or products by our customers could have a material adverse effect on our business, financial condition and results of operations.

We face intense competition.

We operate in a highly competitive and fragmented environment.

In addition to facing competition generally from recreation businesses seeking to attract consumers’ leisure time and discretionary spending dollars, the

recreational boat industry itself is highly fragmented, resulting in intense competition for customers, quality products, boat show space and suitable store locations.

We rely to a certain extent on boat shows to generate sales.

Our inability to

participate in boat shows in our existing or targeted markets, including cancellations of boat shows in connection with the COVID-19 pandemic, could have a material adverse effect on our business, financial condition and results of operations.

We compete primarily with local boat dealers who own three or fewer stores, as well as with a limited number of larger operators, including MarineMax and Bass Pro Shops.

With respect to sales of marine parts,

accessories, and equipment, we compete with national specialty marine parts and accessory stores, online catalog retailers, sporting goods stores, and mass merchants.

Competition among boat dealers is based primarily on the quality of available

products, the price and value of the products, and attention to customer service.

There is significant competition both within markets we currently serve and in new markets that we may enter.

We compete in each of our markets with retailers of

brands of boats and engines we do not sell in that market.

In addition, several of our competitors, especially those selling marine equipment and accessories, are large national or regional chains that have substantial financial, marketing, and

other resources.

Private sales of pre-owned boats represent an additional source of competition.

Additional competitors, including boat clubs, may enter the businesses in which we currently operate or intend to expand.

In particular, an increase in the number of aggregator and price comparison sites for our

products may negatively impact our sales of these products.

If any of our competitors successfully provides a broader, more efficient or attractive combination of services, protection plans, products and resources to our target customers, our

business results could be materially adversely affected.

Our inability to compete effectively with existing or potential competitors could have a material adverse effect on our business, financial condition and results of operations.

marina and storage availability.

In general, the markets in which we currently operate are not experiencing any unusual difficulties.

However, marine retail activity could be adversely affected in markets that do not have sufficient marine and

storage availability to satisfy demand.

A significant amount of our boat sales are from the Southeast and Gulf Coast regions.

Economic conditions, weather and environmental conditions, competition, market conditions and any other adverse conditions impacting the Southeast and Gulf Coast regions of the United States, in which we generated

approximately 75%, 75% and 78% of our revenue during fiscal years 2020, 2019 and 2018, respectively, could have a major impact on our operations.

These factors include consumer preferences, the

frequency with which customers utilize our products, repair and maintenance services and F&I products, general economic conditions, our ability to maintain our store locations, weather conditions, the availability of alternative services,

protection plans, products and resources, significant increases in gasoline prices, the disposable income of consumers available for discretionary expenditures and the external perception of our brands.

Any significant decline in our customer

base, or the usage of our services, protection plans or products by our customers could have a material adverse effect on our business, financial condition and results of operations.

We depend on income from financing, insurance and extended service contracts.

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materially and adversely affect our business, results of operations and financial condition.

The Dodd-Frank Act established a consumer financial protection bureau with broad regulatory powers.

Although boat dealers are generally excluded, the Dodd-Frank Act could lead to additional, indirect regulation of boat

dealers through its regulation of other financial institutions which provide such financing to our customers.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) established a consumer financial protection bureau with broad regulatory powers.

Although boat dealers are generally excluded, the

Dodd-Frank Act could lead to additional, indirect regulation of boat dealers through its regulation of other financial institutions which provide such financing to our customers.

The reduction of profit margins on sales of F&I products or the lack of demand for or the unavailability of these products could have a material adverse effect on our operating margins.

Our operations are dependent upon key personnel and team members.

Our success depends, in large part, upon our ability to attract, train, and retain qualified team members and executive officers, as well as the continuing efforts and abilities of team members and executive officers.

Although we have employment agreements with certain of our executive officers and management succession plans, we cannot ensure that these or other executive personnel and team members will remain with us, or that our succession planning will

adequately mitigate the risk associated with key personnel transitions.

planning will adequately mitigate the risk associated with key personnel transitions.

Expanding our operations may require us to add additional executive personnel and team members in the future.

As a result of our decentralized operating strategy, we also rely

on the management teams of our dealer groups.

As a result of our decentralized operating

strategy, we also rely on the management teams of our dealer groups.

In addition, we likely will depend on the senior management of any significant businesses we acquire in the future.

The loss of the services of one or more key employees before we are able to attract

and retain qualified replacement personnel could adversely affect our business.

Additionally, our ability to manage our personnel costs and operating expenses is subject to external factors such as unemployment levels, prevailing wage rates,

healthcare and other benefit costs, changing demographics and our reputation and relevance within the labor markets where we are located.

Increases in the prevailing wage rates due to competitive market pressures or other factors could increase our

personnel costs and operating expenses and have a material adverse effect on our business.

Manufacturer recall campaigns could adversely affect our business.

increased costs and could expose us to litigation and adverse publicity related to the sale of recalled boats, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

The loss of the services of one or more key employees

before we are able to attract and retain qualified replacement personnel could adversely affect our business.

Additionally, our ability to manage our personnel costs and operating expenses is subject to external factors such as unemployment

levels, prevailing wage rates, healthcare and other benefit costs, changing demographics and our reputation and relevance within the labor markets where we are located.

Increases in the prevailing wage rates due to competitive market pressures

or other factors could increase our personnel costs and operating expenses and have a material adverse effect on our business.

The products we sell or service may expose us to potential liability for personal injury, product liability or property damage claims relating to the use of those products.

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We may therefore experience claims that are not covered by our insurance coverage.

While we have not experienced material losses related to product liability, personal injury or property damage claims in the

past, we could be exposed to such claims or losses in the future.

While we have not experienced material losses related to product liability, personal injury or property damage claims in

the past, we could be exposed to such claims or losses in the future.

The institution of any significant claims against us could subject us to damages, result in higher insurance costs and harm our business reputation with potential customers.

If we cannot dispose of pre-owned boats acquired through our trade-in or direct purchase processes at prices that allow us to recover its costs, our profitability will be adversely

If we cannot dispose of pre-owned boats acquired through our trade-in or direct purchase processes at prices that allow us to recover its costs, our profitability will be adversely affected.

The resale values of any pre-owned boats that we acquire through trade-ins or direct purchase may be lower than our estimates, which are based on expected retail sales prices.

If the resale value of the pre-owned boats

we acquire is lower than our estimates and/or we are not able to resell them timely or at all, it could have a material adverse effect on our business, results of operations and financial condition.

If the resale value of the pre-owned

boats we acquire is lower than our estimates and/or we are not able to resell them timely or at all, it could have a material adverse effect on our business, results of operations and financial condition.

Additionally, certain pre-owned boats or other vehicles that we acquire through trade-ins may fail to meet our retail quality standards.

Instead, we sell these units through a wholesale process.

If the prices that we

receive for our pre-owned boats sold in this process are not sufficient to cover the prices paid or credit given at trade-in for such pre-owned boats, it could have a material adverse effect on our business, results of operations and financial

Adverse federal or state tax policies could have a negative effect on us.

Changes in federal and state tax laws, such as an imposition of luxury taxes on new boat purchases, increases in prevailing tax rates, and removal of certain interest deductions, may influence consumers’ decisions to

purchase products we offer and could have a negative effect on our sales.

For example, during 1991 and 1992, the federal government imposed a luxury tax on new recreational boats with sales prices in excess of $100,000, which coincided with a sharp

decline in boating industry sales from a high of more than $17.9 billion in 1988 to a low of $10.3 billion in 1992.

Any increase in tax rates, including those on capital gains and dividends, particularly those on high-income taxpayers, could

adversely affect our boat sales.

Environmental and other regulatory issues may impact our operations.

Our operations are subject to stringent federal, state and local laws and regulations governing such matters as finance and insurance, consumer protection, consumer privacy, escheatment, anti-money laundering,

releases, discharges and emissions into the environment as well as environmental protection, human health and safety, and employment practices, including wage and hour and anti-discrimination legal requirements.

These laws and regulations affect

many aspects of our operations, such as requiring the acquisition of permits, licenses and other governmental approvals to conduct regulated activities, including the operation of recreational boats, restricting the manner in which we use, handle,

store, recycle and dispose of our wastes, responding to and taking corrective action with respect to any releases, discharges or emissions of regulated substances, requiring capital and operating expenditures to construct, maintain and upgrade

pollution control and containment equipment and facilities, imposing specific human health and safety criteria addressing worker protection, and imposing liabilities for pollution or inappropriate payment or treatment of our workers with respect to

our operations.

The failure to satisfy those and other legal requirements could have a material adverse effect on our business, financial condition, and results of operations.

In addition, failure to comply with those and other legal requirements,

trade sanctions, the U.S.

Foreign Corrupt Practices Act and other applicable laws or regulations could result in the assessment of damages, the imposition of sanctions including monetary penalties, changes to our processes, or a

suspension or cessation of our operations, as well as damage to our image and reputation, all of which could have a material adverse effect on our business, results of operations and financial condition.

Numerous governmental agencies, including OSHA, the EPA and similar federal agencies as well as analogous state and local agencies regulate and maintain enforcement authority over the operation of our stores, repair

facilities, and other operations, with respect to matters such as consumer protection, human safety and environmental protection, including any contamination of or releases into ambient air, surficial and subsurface soils, surface water and

Marine engine manufacturers are subject to emissions standards imposed under the CAA, and the EPA has enacted a number of legal requirements imposing more stringent emissions standards for two-cycle, gasoline outboard marine engines.

It is possible that regulatory bodies such as the EPA may impose more stringent emissions standards in the future for marine engines, including with respect to recreational use.

Any increased costs of those manufacturers producing engines resulting

from current or future EPA standards could be passed on to dealers in the retail recreational boat industry, such as ourselves, or could result in the inability of, or potential unforeseen delays by, these manufacturers to manufacture and make

timely delivery of recreational boats to such dealers, which developments could have a material adverse effect on our business, results of operations and financial condition.

As with companies in the retail recreational boat industry generally, and parts and service operations in particular, our business involves the use, handling, storage, and contracting for recycling or disposal of waste

materials, including hazardous or toxic substances and wastes as well as environmentally sensitive materials, such as motor oil, waste motor oil and filters, transmission fluid, antifreeze, freon, waste paint and lacquer thinner, batteries,

solvents, lubricants, degreasing agents, gasoline, and diesel fuels.

Laws and regulations regarding the prevention of pollution or remediation of environmental contamination generally apply regardless of whether we lease or purchase the land and

Additionally, certain of our stores and/or repair facilities utilize USTs and ASTs, primarily for storing and dispensing petroleum-based products.

Storage tanks in the United States are generally subject to financial responsibility

requirements and testing, containment, upgrading and removal requirements under the RCRA, and its state law counterparts, as well as federal, state and local legal standards relating to investigation and remediation of contaminated soils, surface

water and groundwater resulting from leaking tanks and associated inground lifts.

We also may be subject to civil liability to third parties for remediation costs or other damages if leakage from our owned or operated tanks migrates onto the

property of others.

Certain of our stores and/or repair facility properties have been operated by third parties whose use, handling and disposal of petroleum-based products or wastes were not under our control.

We are subject to

regulation by federal, state, and local authorities establishing investigatory, remedial, human health and environmental quality standards and imposing liability related thereto, which liabilities may include sanctions, including monetary penalties

for violations of those standards.

We also are subject to laws, ordinances, and regulations governing investigation and remediation of contamination at facilities we operate or to which we send hazardous or toxic substances or wastes for treatment,

recycling, or disposal.

In particular, CERCLA, also known as the Superfund law, and analogous state laws, impose strict joint and several liability on generators, transporters, disposers and arrangers of hazardous substances at sites where

hazardous substance releases have occurred or are threatening to occur.

A majority of states have adopted Superfund laws comparable to and, in some cases, more stringent than CERCLA.

If we were to be found to be a responsible party under CERCLA or a similar state statute, we could be held

liable for all investigative and remedial costs associated with addressing such contamination as well as for natural resource damages.

In addition, claims alleging personal injury or property damage may be brought against us as a result of alleged

exposure to hazardous substances resulting from our operations.

Moreover, certain of our stores are located on waterways that are subject to federal laws, including the Clean Water Act and the OPA, as well as analogous state laws regulating

navigable waters, oil pollution (including prevention and cleanup of the same), adverse impacts to fish and wildlife, and other matters.

For example, under the OPA, owners and operators of vessels and onshore facilities may be subject to liability

for removal costs and damages arising from an oil spill in waters of the United States.

We could be required to conduct remediation in the future in accordance with applicable state and federal standards in the cleanup of petroleum hydrocarbons or other substances or wastes released on, under or from

properties owned or leased by us, including some of our properties that were previously used as gasoline service stations.

For example, we are performing soil and groundwater monitoring activities as required by applicable state and federal

We may also be required in the future to remove USTs, ASTs and inground lifts containing petroleum-based products and hazardous or toxic substances or wastes should they represent a risk of release or threatened release into the

Historically, our costs of compliance with these investigatory, remedial and monitoring requirements have not had a material adverse effect on our results of operations;

however, there can be no assurance that such costs will not be

material in the future or that such future compliance will not have a material adverse effect on our business, results of operation and financial condition.

We also may have additional storage tank liability insurance and other insurance coverage

with respect to pollution-related liabilities where available, but such coverages may be insufficient to address such liabilities.

Environmental laws and regulations are comprehensive and subject to frequent change.

Compliance with amended, new, or

more stringent laws or regulations, more strict interpretations of existing laws, or the future discovery of environmental conditions may require additional expenditures by us, and such expenditures may be material.

Additionally, certain states have imposed legal requirements or are considering the imposition of such requirements that would obligate buyers and/or operators of recreational boats to obtain a license in order to

operate such boats.

These requirements could discourage potential buyers of recreational boats, thereby limiting future sales and adversely affecting our business, financial condition, and results of operations.

Furthermore, the Patient Protection and Affordable Care Act increased our annual employee health care costs that we fund, and significantly increased our cost of compliance and compliance risk related to offering

health care benefits.

Moreover, adverse changes in labor policy could lead to increased unionization efforts, which could lead to higher labor costs, disrupt our store operations, and adversely affect our business, results of operations and

If the prices that

we receive for our pre-owned boats sold in this process are not sufficient to cover the prices paid or credit given at trade-in for such pre-owned boats, it could have a material adverse effect on our business, results of operations and

financial condition.

Our operations are subject to risks arising out of the threat of climate change, which could result in increased operating costs and reduced demand for the products that we and the

retail recreational boat industry provide.

The threat of climate change continues to attract considerable attention in the United States and foreign countries.

As a result, numerous proposals have been made and are likely to continue to be made at the

international, national, regional and state levels of government to monitor and limit existing emissions of GHGs and eliminate future GHG emissions.

Governmental and public concern arising from GHG emissions has resulted in increasing regulatory,

political, financial and litigation risks in the United States and globally that target predominantly fossil fuel-related energy entities or their operations, which may have indirect adverse effects on other companies or industries, such as the

retail recreational boat industry, for example, whose services or products generate GHGs or rely upon motor fuels refined from fossil fuels, which effects could be material.

In the United States, no comprehensive federal climate change legislation has been implemented;

however, with the election of Joe Biden as President in the November 3, 2020 general elections, there likely will be

renewed interest in such legislation, the adoption of which could well depend on whether the Senate has a Democratic Party majority following the run-off elections of two Senators in Georgia in January 2021.

Moreover, because the U.S.

Supreme Court

has held that GHG emissions constitute a pollutant under the CAA, the EPA has adopted rules that, among other things, establish various requirements for monitoring and limiting certain GHG emissions and, with the election of President-Elect Biden,

the EPA could develop and adopt additional GHG restrictions.

Additionally, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG

cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions.

At the international level, there exists the United Nations-sponsored “Paris Agreement,” which is a non-binding agreement for nations to limit

their GHG emissions through individually-determined reduction goals.

Although the United States under the Trump Administration has announced its withdrawal from such agreement, effective November 4, 2020, President-Elect Biden has stated his

intention to recommit the United States to the Paris Agreement, with the earliest date of rejoining being February 19, 2021.

Were the United States to rejoin the Paris Agreement, then there exists the possibility of executive orders being issued

or federal legislation or regulatory initiatives being adopted that could result in further restrictions on fossil fuels and have a further indirect adverse effect on the demand for our and the retail recreational boat industry products.

Litigation risks, including lawsuits against fossil-fuel energy companies arising from the production and use of fossil fuels that contribute to global warming effects, such as rising sea levels, and financial risks

for such entities as stockholders and bondholders currently invested in fossil fuel energy companies concerned about the potential effects of climate change may elect in the future to shift some or all of their investments into non-fossil fuel

energy related sectors further exacerbate the potential for these indirect adverse effects.

Moreover, the increased competitiveness of alternative energy sources (such as wind, solar geothermal, and tidal) could also reduce demand for fossil fuels

and therefore for our boating products, which would lead to a reduction in our revenues.

Finally, increasing concentrations of GHG in the earth’s atmosphere may produce climate changes that have significant physical effects, such as increased

frequency and severity of storms, droughts, floods, rising sea levels and other climatic events, the occurrence of which could result in increased operating costs and limitations on the availability of our and the retail recreational boating

industry’s boating products.

Our sales of boats produced by certain foreign manufacturers expose us to international political, economic, and other risks.

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international risks.

Protectionist trade legislation in the United States, the European Union, and other countries, such as changes in current tariff structures, export or import compliance laws, or other trade policies could adversely affect our

ability to import boats or boat components from these foreign suppliers under economically favorable terms and conditions.

There have been recent changes, and future, additional changes may occur, to United States and foreign trade and tax policies, including heightened import restrictions, import and export licenses, new tariffs, trade

embargoes, government sanctions or trade barriers.

Any of these restrictions could prevent or make it difficult or more costly for us to import boats and boat components from foreign suppliers under economically favorable terms and conditions.

our ability to import boats or boat components from these foreign suppliers under economically favorable terms and conditions.

trade embargoes, government sanctions or trade barriers.

Any of these restrictions could prevent or make it difficult or more costly for us to import boats and boat components from foreign suppliers under economically favorable terms and

Increased tariffs could require us to increase our prices which likely could decrease demand for our products.

In addition, other countries may limit their trade with the United States or retaliate through their own restrictions and/or increased

tariffs which would affect our ability to export products and therefore adversely affect our sales.

In addition, other countries may limit their trade with the United States or retaliate through their own restrictions

and/or increased tariffs which would affect our ability to export products and therefore adversely affect our sales.

Our foreign purchase of boats and boat components creates a number of logistical and communications challenges.

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political or economic instability.

If we establish an online marketplace, a failure in such online operations, security breaches and cybersecurity risks could disrupt our business and lead to reduced sales and growth

We have established online marketplaces and a failure in such online operations, security breaches and cybersecurity risks could disrupt our business and lead to reduced sales and growth

prospects and reputational damage.

Consumers are increasingly embracing shopping online and through mobile commerce applications.

We purchased the website domain name “Boatsforsale.com” as part of our multi-phased roll-out of an online marketplace for

new and pre-owned boat sales.

However, consumer preferences and e-commerce buying trends could change, and we may be vulnerable to additional risks and uncertainties associated with online sales, including rapid changes in technology, website

downtime and other technical failures, security breaches, cyber-attacks, consumer privacy concerns, changes in state tax regimes and government regulation of internet activities.

Should we establish an online platform, our failure to successfully

respond to these risks and uncertainties could reduce our online sales, increase our costs, diminish our growth prospects and damage our brands, which could negatively impact our results of operations and stock price.

In addition, there is no

guarantee that we will be able to successfully start or expand our online platform.

Our competitors may have e-commerce businesses that are substantially larger and more developed than ours, which could place us at a competitive disadvantage.

are unable to establish and expand our online platform, our growth plans could suffer, and the price of our common stock could decline.

We may be unable to enforce our intellectual property rights and we may be accused of infringing the intellectual property rights of third parties, which could have a material

adverse effect on our business, financial condition and results of operations.

However, consumer preferences and e-commerce buying trends could change, and we may be vulnerable to additional risks

and uncertainties associated with online sales, including rapid changes in technology, website downtime and other technical failures, security breaches, cyber-attacks, consumer privacy concerns, changes in state tax regimes and government

regulation of internet activities.

Online marketplaces may also increase our access to sensitive, confidential or personal data or information that is subject to data privacy and information security laws and regulations.

Our failure to

successfully respond to these risks and uncertainties could reduce our online sales, increase our costs, diminish our growth prospects and damage our brands, and subject us to regulatory fines or investigations, which could negatively impact

our results of operations and stock price.

In addition, there is no guarantee that we will be able to successfully expand our online platforms.

Our competitors may have e-commerce businesses that are substantially larger and more developed than

ours, which could place us at a competitive disadvantage.

If we are unable to expand our online platforms, our growth plans could suffer, and the price of our common stock could decline.

We may be unable to enforce our intellectual property rights and we may be accused of infringing the intellectual property rights of third parties, which could have a material adverse effect on

our business, financial condition and results of operations.

We rely on a number of trade names with respect to the dealer groups that we have acquired, which we do not re-brand under our “OneWater” mark.

If any of our current trade names or any trademarks that we may own in the

future become generic or if third parties adopt marks similar to our marks, our ability to differentiate our dealer groups may be adversely affected, we could lose brand recognition and be forced to devote additional resources to advertising and

marketing for our dealer groups.

If any of our or the dealer groups’ current trade names or any

trademarks that we or they may own in the future become generic or if third parties adopt marks similar to such marks, our ability to differentiate our dealer groups may be adversely affected, we could lose brand recognition and be forced to

devote additional resources to advertising and marketing for our dealer groups.

From time to time, we may be compelled to protect our intellectual property, which may involve litigation.

Such litigation may be time-consuming, expensive and distract our management from running the day-to-day

operations of our business, and could result in the impairment or loss of the involved intellectual property.

There is no guarantee that the steps we take to protect our intellectual property, including litigation when necessary, will be

Other parties also may claim that we infringe their proprietary rights.

Such claims, whether or not meritorious, may result in the expenditure of significant financial and managerial resources, injunctions against us

or the payment of damages.

These claims could have a material adverse effect on our business, results of operations and financial condition.

Such litigation may be time-consuming, expensive and

distract our management from running the day-to-day operations of our business, and could result in the impairment or loss of the involved intellectual property.

There is no guarantee that the steps we take to protect our intellectual property,

including litigation when necessary, will be successful.

Competitors or other third parties also may claim that we are infringing upon, misappropriating or otherwise violating their intellectual property rights.

Litigation related to such claims, whether or not

meritorious, may result in injunctions against us or the payment of damages.

Even if intellectual property claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them,

could divert the resources of our management and require significant expenditures.

Any of the foregoing could prevent us from competing effectively and could have a material adverse effect on our business, results of operations and financial

Changes in the assumptions used to calculate our acquisition related contingent consideration liabilities could have a material adverse impact on our financial results.

2 unchanged sentences

accepted accounting principles, we are required to estimate the fair value of any contingent consideration.

Our estimates of fair value are based upon assumptions believed to be reasonable but which are uncertain and involve significant judgments.

Our estimates of fair value are based upon assumptions believed to be reasonable but which are uncertain and involve significant

Changes in business conditions or other events could materially change the projection of future earnings used in the fair value calculations of contingent consideration liabilities.

We reassess the fair value quarterly, and increases or decreases

based on the actual or expected future performance of the acquired operations will be recorded in our results of operations.

We reassess the fair value quarterly, and increases

or decreases based on the actual or expected future performance of the acquired operations will be recorded in our results of operations.

These quarterly adjustments could have a material effect on our results of operations.

1 unchanged sentence

Our long-lived assets, such as property and equipment, are required to be reviewed for impairment whenever events or changes in circumstance indicate that the carrying value of an asset may not be recoverable.

September 30, 2020, we have approximately $18.4 million of property and equipment, net of accumulated depreciation, recorded on our consolidated balance sheet.

of September 30, 2021, we have approximately $67.1 million of property and equipment, net of accumulated depreciation, recorded on our consolidated balance sheet.

Recoverability of an asset is measured by comparison of its carrying amount to

undiscounted future net cash flows the asset is expected to generate.

If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair market value.

If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair market

Estimates of expected future cash flows represent our best estimate based on currently available information and reasonable and supportable assumptions.

Our impairment loss calculations contain uncertainties because they require us to make

assumptions and to apply judgment in order to estimate expected future cash flows.

Additionally, our goodwill and identifiable intangible assets are recorded at fair value at the time of acquisition and is not amortized, but reviewed for impairment at least annually or more frequently if impairment

indicators arise.

Our impairment loss calculations contain uncertainties because they require us to

make assumptions and to apply judgment in order to estimate expected future cash flows.

impairment indicators arise.

In evaluating the potential for impairment of goodwill, we make assumptions regarding industry conditions, our future financial performance, and other factors.

Uncertainties are inherent in evaluating and applying these factors to

the assessment of goodwill.

While we do not believe there is currently a reasonable likelihood that there will be a change in the judgments and assumptions used in our assessments of goodwill and long-lived assets which would result in a material

effect on our operating results, we cannot predict whether events or circumstances will change in the future that could result in non-cash impairment charges that could adversely impact our financial results and net worth.

Uncertainties are inherent in evaluating and applying

these factors to the assessment of goodwill.

While we do not believe there is currently a reasonable likelihood that there will be a change in the judgments and assumptions used in our assessments of goodwill and long-lived assets which would

result in a material effect on our operating results, we cannot predict whether events or circumstances will change in the future that could result in non-cash impairment charges that could adversely impact our financial results and net worth.

Our same-store sales may fluctuate and may not be a meaningful indicator of future performance.

7 unchanged sentences

atypical weather patterns;

changes in our product mix;

changes in our product availability and mix;

changes in sales of services;

2 unchanged sentences

We primarily lease our stores.

If we are unable to maintain those leases or locate alternative sites for our stores in our target markets and on terms that are acceptable to us, our

revenues and profitability could be adversely affected.

If we are unable to maintain those leases or locate alternative sites for our stores in our target markets and on terms that are acceptable to us, our revenues and

profitability could be adversely affected.

We currently lease 68 of the real properties where we have retail operations.

Most stores operate under long-term leases with an initial term of 10 years and renewal options for an additional 10 years.

Additionally, we

have entered into dealership leases with certain of the Legacy Owners for which we incurred $2.0 million, $1.9 million and $1.8 million in lease expense in the fiscal years ended September 30, 2020, 2019 and 2018, respectively.

There can be no

assurance that we will be able to maintain our existing store locations as leases expire, extend the leases or be able to locate alternative sites in our target markets and on favorable terms.

Any failure to maintain our existing store locations,

extend the leases or locate alternative sites on favorable or acceptable terms could have a material adverse effect on our business, financial condition and results of operations.

Most stores operate under long-term leases with an initial term of at least 10 years and one or more renewal options for an additional 5

Additionally, we have entered into dealership leases with certain related parties for which we incurred $2.3 million in lease expense in the fiscal year ended September 30, 2021.

There can be no assurance that we will be able to

maintain our existing store locations as leases expire, extend the leases or be able to locate alternative sites in our target markets and on favorable terms.

Any failure to maintain our existing store locations, extend the leases or locate

alternative sites on favorable or acceptable terms could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to Environmental and Geographic Factors

Climatic events may adversely impact our operations, disrupt the business of our third party vendors on whom we rely upon for products and services, and may not be adequately covered by our

Climatic events in the areas where we operate can cause disruptions and in some cases delays or suspensions in our operations that may adversely impact our business.

For example, the physical effects of

unseasonably wet weather, extended periods of below freezing weather, tropical storms, hurricanes or other natural disasters occurring on land or in the Gulf of Mexico or Atlantic Ocean may force boating areas to close or render boating

dangerous or inconvenient, which could result in curtailment of customer demand for our products and services.

Similarly, drought conditions arising from minimal or reduced rainfall events may have a similar effect in respect of the

availability of boating areas or usable dock space, and result in reduced interest in boating activities.

One or more of these climatic events may result in physical damage to, or closure of, one or more of our facilities, inadequate work force

in our markets, and disruption or reduction in the availability of products at our stores.

Concerns regarding global changes in climate could also adversely affect the levels of boat purchases.

In addition, unseasonably cool weather and

prolonged winter conditions may lead to shorter selling seasons in certain locations.

Many of our stores sell boats to customers for use on reservoirs, thereby subjecting our business to the continued viability of these reservoirs for boating

In addition, the physical effects of climatic events, including wintry conditions, tropical storms or hurricanes, tornadoes, fires, floods and other natural disasters could result in the disruption of our

operations and/or third party supply chain vendors on whom we rely upon for products and services, including boat deliveries from manufacturers, or damage to our boat inventories and facilities as has been the case when the Southeast and Gulf

Coast regions and other markets have been affected by hurricanes.

Such disruptions in our supply chain could damage our on-site inventory at our stores or cause serious limitations or delays in the operations of our stores.

hurricane and casualty insurance, subject to deductibles.

Our planning for normal climatic variation, insurance programs and emergency recovery plans may inadequately mitigate the effects of such climatic conditions, and not all such effects

can be predicted, eliminated or insured against.

Accordingly, while we traditionally maintain property and casualty insurance coverage for damage caused by climatic events such as severe weather or other natural disasters, there can be no

assurance that such insurance coverage is adequate to cover losses that we may sustain as a result thereof.

A significant amount of our boat sales are from the Southeast and Gulf Coast regions.

approximately 80%, 75% and 75% of our revenue during fiscal years 2021, 2020 and 2019, respectively, could have a major impact on our operations.

Environmental and other regulatory issues may impact our operations.

releases, discharges and emissions or other releases into the environment and environmental protection, human health and safety, and employment practices, including wage and hour and anti-discrimination legal requirements.

These laws and

regulations affect many aspects of our operations, such as requiring the acquisition and renewal of permits, licenses and other governmental approvals to conduct regulated activities, including the retail sale of recreational boats, restricting

the manner in which we use, handle, store, recycle, transport and dispose of our discarded substances and wastes, responding to and performing investigatory, remedial and corrective actions with respect to any discharges and emissions or other

release of regulated substances, requiring capital and operating expenditures to construct, maintain and upgrade pollution control and containment equipment and facilities, imposing specific human health and safety criteria addressing worker

protection, and imposing liabilities for failure to comply with applicable environmental or other legal requirements, pollution incidents or inappropriate payment or treatment of our workers with respect to our operations.

The failure to

satisfy those and other legal requirements could have a material adverse effect on our business, financial condition, and results of operations.

In addition, failure to comply with those and other legal requirements, or with U.S.

sanctions, the U.S.

cessation of our operations, as well as damage to our image and reputation, all of which could have a material adverse effect on our business, results of operations and financial condition.

repair facilities, and other operations, with respect to matters such as consumer protection, human safety and environmental protection, including any contamination of or releases into ambient air, surficial and subsurface soils, surface water

and groundwater.

It is possible that regulatory bodies such as the EPA may impose more stringent emissions standards in the future for marine engines, including with respect to recreational use.

Any increased costs of those manufacturers producing

engines resulting from current or future EPA standards could be passed on to dealers in the retail recreational boat industry, such as ourselves, or could result in the inability of, or potential unforeseen delays by, these manufacturers to

manufacture and make timely delivery of recreational boats to such dealers, which developments could have a material adverse effect on our business, results of operations and financial condition.

As with companies in the marine retail industry generally, and parts and service operations in particular, our business involves the use, handling, storage, transportation and contracting for recycling or disposal

of waste materials, including hazardous or toxic substances and wastes as well as environmentally sensitive materials, such as motor oil, waste motor oil and filters, transmission fluid, antifreeze, freon, waste paint and lacquer thinner,

batteries, solvents, lubricants, degreasing agents, gasoline, and diesel fuels.

Laws and regulations regarding the prevention of pollution or remediation of environmental contamination generally apply regardless of whether we lease or purchase

the land and facilities.

Additionally, certain of our stores and/or repair facilities utilize USTs and ASTs, primarily for storing and dispensing petroleum-based products.

Storage tanks in the United States are generally subject to financial

responsibility requirements and testing, containment, upgrading and removal requirements under the RCRA, and its state law counterparts, as well as federal, state and local legal standards relating to investigation and remediation of

contaminated soils, surface water and groundwater resulting from leaking tanks and associated inground lifts.

We also may be subject to civil liability to third parties for remediation costs or other damages if leakage from our owned or

operated tanks migrates onto the property of others.

Certain of our stores and/or repair facility properties have been operated in the past by third parties whose use, handling and disposal of petroleum-based products or wastes were not under our control.

subject to regulation by federal, state, and local authorities establishing investigatory, remedial, human health and environmental quality standards and imposing liability related thereto, which liabilities may include sanctions, including

monetary penalties for violations of those standards.

recycling, or disposal.

hazardous substance releases have occurred or are threatening to occur.

A majority of states have adopted Superfund laws comparable to and, in some cases, more stringent than CERCLA.

If we were to be found to be a responsible party under CERCLA or a similar state statute, we could be

held liable for all investigative and remedial costs associated with addressing such contamination as well as for natural resource damages.

In addition, claims alleging personal injury or property damage may be brought against us as a result of

alleged exposure to hazardous substances resulting from our operations.

Moreover, certain of our stores are located on waterways that are subject to federal laws, including the Clean Water Act and the OPA, as well as analogous state laws

regulating navigable waters, oil pollution (including prevention and cleanup of the same), adverse impacts to fish and wildlife, and other matters.

For example, under the OPA, owners and operators of vessels and onshore facilities may be

subject to liability for removal costs and damages arising from an oil spill in waters of the United States.

properties owned or leased by us, including some of our properties that were previously used as gasoline service stations.

For example, we are performing soil and groundwater monitoring activities as required by applicable state and federal

Historically, our costs of compliance with these investigatory, remedial and monitoring requirements have not had a material adverse effect on our results of operations;

however, there can be no assurance that such costs will not

be material in the future or that such future compliance will not have a material adverse effect on our business, results of operation and financial condition.

We also may have additional storage tank liability insurance and other insurance

coverage with respect to pollution-related liabilities where available, but such coverages may be insufficient to address such liabilities.

Environmental laws and regulations are comprehensive and subject to frequent change.

Compliance with

amended, new, or more stringent laws or regulations, more strict interpretations of existing laws, or the future discovery of environmental conditions may require additional expenditures by us, and such expenditures may be material.

operate such boats.

These requirements could discourage potential buyers of recreational boats, thereby limiting future sales and adversely affecting our business, financial condition, and results of operations.

health care benefits.

and financial condition.

Our operations are subject to risks arising out of the threat of climate change, which could result in increased operating costs and reduced demand for the products that we and the retail

recreational boat industry provide.

The threat of climate change continues to attract considerable attention in the United States and foreign countries.

As a result, numerous proposals have been made and are likely to continue to be made at the

international, national, regional and state levels of government to monitor and limit existing emissions of GHGs and eliminate future GHG emissions.

Governmental and public concern arising from GHG emissions has resulted in increasing

regulatory, political, financial and litigation risks in the United States and globally that target predominantly fossil fuel-related energy entities or their operations, which may have indirect adverse effects on other companies or industries,

such as the retail recreational boat industry, for example, whose services or products generate GHGs or rely upon motor fuels refined from fossil fuels, which effects could be material.

In the United States, no comprehensive federal climate change legislation has been implemented.

With the U.S.

Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted rules

that, among other things, establish permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from specified sources in the United States, implement standards reducing

emissions of methane, a form of GHG, from specified oil and gas sectors, and together with the U.S.

Department of Transportation, implement GHG emissions limits on vehicles manufactured for operation in the United States.

While these rules

largely do not directly impact our operations, they do represent a concerted effort at the federal level to reduce emissions of GHGs in an effort to mitigate adverse effects associated with climate change.

Under the Biden Administration, it is

anticipated that efforts by the EPA or other federal agencies to restrict GHG emissions will continue.

Additionally, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory

initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions.

At the international level, there exists the United Nations-sponsored “Paris Agreement,”

which requires nations to submit non-binding GHG emissions reduction goals every five years after 2020.

President Biden announced in April 2021 a new, more rigorous nationally determined emissions reduction level of 50-52% reduction from 2005

levels in economy-wide net GHG emissions by 2030.

The international community gathered again in Glasgow in November 2021 at the 26th Conference to the Parties (“COP26”), during which multiple announcements were made, including a call for

parties to eliminate certain fossil fuel subsidies and pursue further action on non-carbon dioxide GHGs.

Relatedly, the United States and European Union jointly announced at COP26 the launch of the Global Methane Pledge, an initiative

committing to a collective goal of reducing global methane emissions by at least 30 percent from 2020 levels by 2030.

As a result, there exists the possibility of executive orders being issued or federal legislation or regulatory initiatives

being adopted that could result in further restrictions on fossil fuels and have a further indirect adverse effect on the demand for our and the retail recreational boat industry products.

to existing physical infrastructure, and financial risks for such entities as stockholders and bondholders currently invested in fossil fuel energy companies concerned about the potential effects of climate change may elect in the future to

shift some or all of their investments into non-fossil fuel energy related sectors further exacerbate the potential for these indirect adverse effects.

Moreover, the increased competitiveness of alternative “clean” energy sources such as wind

and solar photovoltaic could also reduce demand for fossil fuels and therefore for our boating products, which would lead to a reduction in our revenues.

For example, at COP26, the Glasgow Financial Alliance for Net Zero (“GFANZ”) announced

that commitments from over 450 firms across 45 countries had resulted in over $130 trillion in capital committed to net zero goals.

The various suballiances of GFANZ generally require participants to set short-term, sector-specific targets to

transition their financing, investing, and/or underwriting activities to net zero by 2050.

There is also the possibility that financial institutions will be required to adopt policies that limit funding for companies producing, developing or bolstering the use of fossil fuels.

Increasing attention to

climate change, investor and societal expectations regarding voluntary Environmental, Social and Governance (“ESG”) disclosures and consumer demand for alternative forms of energy may result in demand shifts for fossil-fuel products and

additional governmental investigations and private litigation against such companies.

While we may create and publish voluntary disclosures regarding ESG matters from time to time, many of the statements in those voluntary disclosures are

based on hypothetical expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith.

Such expectations and assumptions

are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single approach to identifying, measuring and reporting on many ESG matters.

organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters.

Such ratings are used by some investors to inform their

investment and voting decisions.

Unfavorable ESG ratings and recent activism directed at shifting funding away from companies with fossil fuel-related assets could lead to increased negative investor sentiment toward us and our industry and to

the diversion of investment to other, non-fossil fuel markets, which could have a negative impact on our access to and costs of capital.

Risks Related to Our Class A Common Stock

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OneWater Inc.’s only material asset is its equity interest in OneWater LLC, and OneWater Inc.

is accordingly dependent upon distributions from

OneWater LLC to pay taxes, make payments under the Tax Receivable Agreement and cover OneWater Inc.’s corporate and other overhead expenses.

is accordingly dependent upon distributions from OneWater LLC to

pay taxes, make payments under the Tax Receivable Agreement and cover OneWater Inc.’s corporate and other overhead expenses.

OneWater Inc.

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has no independent means of generating revenue.

To the extent OneWater LLC has available cash

and subject to the terms of any current or future debt instruments, the OneWater LLC Agreement requires OneWater LLC to make pro rata cash distributions to OneWater Unit Holders, including OneWater Inc., in an amount sufficient to allow OneWater

To the extent OneWater LLC has available

cash and subject to the terms of any current or future debt instruments, the OneWater LLC Agreement requires OneWater LLC to make pro rata cash distributions to OneWater Unit Holders, including OneWater Inc., in an amount sufficient to allow

OneWater Inc.

to pay its taxes and to make payments under the Tax Receivable Agreement.

We generally expect OneWater LLC to fund such distributions out of available cash and in the event that payments under the Tax Receivable Agreement are accelerated,

where applicable, we generally expect to fund such accelerated payment out of the proceeds of the change of control transaction giving rise to such acceleration.

When OneWater LLC makes distributions, the OneWater Unit Holders are entitled to

receive proportionate distributions based on their interests in OneWater LLC at the time of such distribution.

We generally expect OneWater LLC to fund such distributions out of available cash and in the event that payments under the Tax Receivable Agreement are

accelerated, where applicable, we generally expect to fund such accelerated payment out of the proceeds of the change of control transaction giving rise to such acceleration.

When OneWater LLC makes distributions, the OneWater Unit Holders are

entitled to receive proportionate distributions based on their interests in OneWater LLC at the time of such distribution.

In addition, the OneWater LLC Agreement requires OneWater LLC to make non-pro rata payments to OneWater Inc.

to reimburse it for its

corporate and other overhead expenses, which payments are not treated as distributions under the OneWater LLC Agreement.

it for its corporate and other overhead expenses, which payments are not treated as distributions under the OneWater LLC Agreement.

To the extent that OneWater Inc.

needs funds and OneWater LLC or its subsidiaries are restricted from making such distributions

or payments under applicable law or regulation or under the terms of any current or future financing arrangements, or are otherwise unable to provide such funds, our liquidity and financial condition could be materially adversely affected.

needs funds and OneWater LLC or its subsidiaries are restricted from making

such distributions or payments under applicable law or regulation or under the terms of any current or future financing arrangements, or are otherwise unable to provide such funds, our liquidity and financial condition could be materially

adversely affected.

Moreover, because OneWater Inc.

has no independent means of generating revenue, OneWater Inc.’s ability to make tax payments and payments under the Tax Receivable Agreement is dependent on the ability of OneWater LLC

to make distributions to OneWater Inc.

has no independent means of generating revenue, OneWater Inc.’s ability to make tax payments and payments under the Tax Receivable Agreement is dependent on the ability of OneWater

LLC to make distributions to OneWater Inc.

in an amount sufficient to cover OneWater Inc.’s tax obligations and obligations under the Tax Receivable Agreement.

This ability, in turn, may depend on the ability of OneWater LLC’s subsidiaries to make

distributions to it.

The ability of OneWater LLC, its subsidiaries and other entities in which it directly or indirectly holds an equity interest to make such distributions is subject to, among other things, (i) the applicable provisions of

Delaware law (or other applicable jurisdiction) that may limit the amount of funds available for distribution and (ii) restrictions in relevant debt instruments issued by OneWater LLC or its subsidiaries and other entities in which it directly or

indirectly holds an equity interest.

This ability, in turn, may depend on the ability of OneWater LLC’s subsidiaries to

make distributions to it.

of Delaware law (or other applicable jurisdiction) that may limit the amount of funds available for distribution and (ii) restrictions in relevant debt instruments issued by OneWater LLC or its subsidiaries and other entities in which it

directly or indirectly holds an equity interest.

To the extent that OneWater Inc.

is unable to make payments under the Tax Receivable Agreement for any reason, such payments will be deferred and will accrue interest until paid.

The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act, and the requirements of the Sarbanes-Oxley Act, may strain our

resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.

As a public company, we are required to comply with laws, regulations and requirements, certain corporate governance provisions of the Sarbanes-Oxley Act of 2002, related regulations of the U.S.

Securities and Exchange

Commission (“SEC”) and the requirements of The Nasdaq Stock Market (“Nasdaq”), with which we were not required to comply as a private company.

Complying with these statutes, regulations and requirements occupies a significant amount of time of our

board of directors and management and significantly increases our costs and expenses.

The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act, and the requirements of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley

Act”), may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.

As a public company, we are required to comply with laws, regulations and requirements, certain corporate governance provisions of the Sarbanes-Oxley Act, related regulations of the SEC and the requirements of The

Nasdaq Stock Market (“Nasdaq”), with which we were not required to comply as a private company.

Complying with these statutes, regulations and requirements occupies a significant amount of time of our Board of Directors and management and

significantly increases our costs and expenses.

We are required to:

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prepare and distribute periodic public reports in compliance with our obligations under the federal securities laws;

accurately implement and interpret GAAP;

accurately implement and interpret U.S.

generally accepted accounting principles (“GAAP”);

comply with certain internal policies, such as those relating to insider trading;

involve and retain to a greater degree outside counsel and accountants in the above activities.

As a public company, we are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our quarterly and

annual reports and provide an annual management report on the effectiveness of internal controls over financial reporting.

Although we are required to disclose changes made in our internal controls and procedures on a quarterly basis, we will not

be required to make our first annual assessment of our internal controls over financial reporting pursuant to Section 404 until the year following our first annual report required to be filed with the SEC.

Additionally, we are not required to have

our independent registered public accounting firm attest to the effectiveness of our internal controls until our first annual report subsequent to our ceasing to be an “emerging growth company” within the meaning of Section 2(a)(19) of the

Securities Act.

Accordingly, we may not be required to have our independent registered public accounting firm attest to the effectiveness of our internal controls until as late as our annual report for the fiscal year ending September 30, 2025.

Once it is required to do so, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed, operated or reviewed.

Compliance with

these requirements may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.

In addition, we expect that being a public company subject to these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required

to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.

As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or

as executive officers.

As a public company, we are also required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our

quarterly and annual reports and provide an annual management report on the effectiveness of internal controls over financial reporting.

However, as of September 30, 2021, we ceased to qualify as an emerging growth company.

commencing with this Annual Report on Form 10-K, we are required to have our auditors formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act (“Section 404”).

compliance with Section 404 necessitates that we incur substantial accounting expense and expend significant management efforts.

required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.

As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of

directors or as executive officers.

We are currently evaluating these rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

If we experience any material weaknesses in the future or otherwise fail to develop or maintain an effective system of internal controls in the future, we may not be able to

accurately report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our Class A common stock.

If we experience any material weaknesses in the future or otherwise fail to develop or maintain an effective system of internal controls in the future, we may not be able to accurately report

our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our Class A common stock.

Effective internal controls are necessary for us to provide reliable financial reports, prevent fraud and operate successfully as a public company.

If we cannot provide reliable financial reports or prevent fraud, our

reputation and operating results would be harmed.

As a result of being a public company, we will be required, under Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal

control over financial reporting beginning in the year following our first annual report required to be filed with the SEC.

This assessment will need to include disclosure of any material weaknesses identified by our management in our internal

control over financial reporting.

We continue to take additional steps to improve control processes as appropriate, validate through testing that controls are functioning as documented, and implement a continuous reporting and improvement process

for our internal control over financial reporting.

If we identify one or more material weaknesses in our internal control over financial reporting during the evaluation and testing process, we may be unable to conclude that our internal controls

are effective.

If we cannot provide reliable financial reports or prevent fraud,

our reputation and operating results would be harmed.

As a result of being a public company, we are required, under Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our

internal control over financial reporting.

This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by our management or our independent registered public accounting firm.

continue to take additional steps to improve control processes as appropriate, validate through testing that controls are functioning as documented, and implement a continuous reporting and improvement process for our internal control over

financial reporting.

If we identify one or more material weaknesses in our internal control over financial reporting during the evaluation and testing process or we are unable to comply with the requirements of Section 404 in a timely manner,

we may be unable to conclude that our internal controls are effective.

For additional information, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Internal Controls and Procedures.”

Additionally, when we cease to be an “emerging growth company” under the federal securities laws, our independent registered public accounting firm may be required to express an opinion on the effectiveness of our

internal controls.

If we are unable to confirm that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an unqualified opinion on the effectiveness of our internal

controls, we could lose investor confidence in the accuracy and completeness of our financial reports, which could cause the price of our Class A common stock to decline.

Additionally, we ceased to qualify as an emerging growth company as of September 30, 2021.

As a result, our independent registered public accounting firm is required to express an opinion on the effectiveness of

our internal controls.

If in the future we are unable to confirm that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an unqualified opinion on the

effectiveness of our internal controls, we could lose investor confidence in the accuracy and completeness of our financial reports, which could cause the price of our Class A common stock to decline.

We cannot assure you that there will not be

material weaknesses or significant deficiencies in our disclosure controls or our internal controls over financial reporting in the future.

An active, liquid and orderly trading market for our Class A common stock may not develop or be maintained, and our stock price may be volatile.

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purchased it.

Additionally, lack of liquidity may result in wide bid-ask spreads, contribute to significant fluctuations and volatility in the market price of the Class A common stock and limit the number of investors who are able to buy the Class

A common stock.

Class A common stock.

The market price of our Class A common stock could vary significantly as a result of a number of factors, some of which are beyond our control.

In the event of a drop in the market price of our Class A common stock,

you could lose a substantial part or all of your investment in our Class A common stock.

In the event of a drop in the market price of our Class A common

stock, you could lose a substantial part or all of your investment in our Class A common stock.

You may not be able to sell shares of our Class A common stock at prices equal to or greater than the price paid by you.

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the public reaction to our press releases, our other public announcements and our filings with the SEC;

strategic actions by our competitors;

strategic actions by our competitors or suppliers;

changes in revenue, same-store sales or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts;

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volatility in the overall market and in the market price of a company’s securities.

Such litigation, if instituted against us, could result in very substantial costs, divert our management’s attention and resources and materially harm our business,

operating results and financial condition.

Such litigation, if instituted against us, could result in very substantial costs, divert our management’s attention and resources and materially harm our

business, operating results and financial condition.

Our Legacy Owners own a significant amount of our voting stock, and their interests may conflict with those of our other stockholders.

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corporate opportunities and attempts to acquire us, may conflict with the interests of our other stockholders.

For example, the Legacy Owners may have different tax positions from us, especially in light of the Tax Receivable Agreement, that could influence their decisions regarding whether and when to support the disposition

of assets, the incurrence or refinancing of new or existing indebtedness, or the termination of the Tax Receivable Agreement and acceleration of our obligations thereunder.

In addition, the determination of future tax reporting positions, the

structuring of future transactions and the handling of any challenge by any taxing authority to our tax reporting positions may take into consideration the Legacy Owners tax or other considerations which may differ from the considerations of us or

our other stockholders.

disposition of assets, the incurrence or refinancing of new or existing indebtedness, or the termination of the Tax Receivable Agreement and acceleration of our obligations thereunder.

In addition, the determination of future tax reporting

positions, the structuring of future transactions and the handling of any challenge by any taxing authority to our tax reporting positions may take into consideration the Legacy Owners tax or other considerations which may differ from the

considerations of us or our other stockholders.

Please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Tax Receivable Agreement” in this Form 10-K.

Certain of our executive officers and directors have significant duties with, and spend significant time serving, entities that may compete with us in seeking business opportunities

and, accordingly, may have conflicts of interest in allocating time or pursuing business opportunities.

Certain of our executive officers and directors, who are responsible for managing the direction of our operations, hold positions of responsibility with other entities (including affiliated entities) that are in the

boat retail industry.

Certain of our executive officers and directors have significant duties with, and spend significant time serving, entities that may compete with us in seeking business opportunities and,

accordingly, may have conflicts of interest in allocating time or pursuing business opportunities.

the boat retail industry.

These executive officers and directors may become aware of business opportunities that may be appropriate for presentation to us as well as to the other entities with which they are or may become affiliated.

existing and potential future affiliations, they may present potential business opportunities to other entities prior to presenting them to us, which could cause additional conflicts of interest.

They may also decide that certain opportunities are

more appropriate for other entities with which they are affiliated, and as a result, they may elect not to present those opportunities to us.

these existing and potential future affiliations, they may present potential business opportunities to other entities prior to presenting them to us, which could cause additional conflicts of interest.

They may also decide that certain

opportunities are more appropriate for other entities with which they are affiliated, and as a result, they may elect not to present those opportunities to us.

These conflicts may not be resolved in our favor.

Our certificate of incorporation and bylaws, as well as Delaware law, contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the

market price of our Class A common stock and could deprive our investors of the opportunity to receive a premium for their shares.

Our certificate of incorporation and bylaws, as well as Delaware law, contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price

of our Class A common stock and could deprive our investors of the opportunity to receive a premium for their shares.

Our certificate of incorporation authorizes our board of directors to issue preferred stock without stockholder approval in one or more series, designate the number of shares constituting any series, and fix the

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preferred stock, it could be more difficult for a third party to acquire us.

In addition, some provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire control of us, even if the change of

control would be beneficial to our stockholders.

In addition, some provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire control of us, even if the change

of control would be beneficial to our stockholders.

These provisions include:

dividing our board of directors into three classes of directors, with each class serving staggered three-year terms;

providing that all vacancies, including newly created directorships, may, except as otherwise required by law or, if applicable, the rights of holders of a series of preferred stock, only be filled by the affirmative vote of a majority

of directors then in office, even if less than a quorum;

majority of directors then in office, even if less than a quorum;

permitting any action by stockholders to be taken only at an annual meeting or special meeting rather than by a written consent of the stockholders, subject to the rights of any series of preferred stock with respect to such rights;

permitting special meetings of our stockholders to be called only by our Chief Executive Officer, the chairman of our board of directors and our board of directors pursuant to a resolution adopted by the affirmative vote of a majority of

the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships;

subject to the rights of the holders of shares of any series of our preferred stock, requiring the affirmative vote of the holders of at least 66 2⁄3% in voting power of all then outstanding common stock entitled to vote generally in the

election of directors, voting together as a single class, to remove any or all of the directors from office at any time, and directors will be removable only for “cause”;

majority of the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships;

the election of directors, voting together as a single class, to remove any or all of the directors from office at any time, and directors will be removable only for “cause”;

prohibiting cumulative voting in the election of directors;

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Please see “—In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits, if any, OneWater Inc.

realizes in respect of the tax attributes subject to the

Tax Receivable Agreement.”

Our certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be

initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.

Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable

law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our

stockholders, (iii) any action asserting a claim against us or any director or officer or other employee of ours arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws, or (iv) any

action asserting a claim against us or any director or officer or other employee of ours that is governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable

parties named as defendants therein.

Notwithstanding the foregoing, the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Exchange Act, the Securities Act or any other claim for which the

federal courts have exclusive jurisdiction.

Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of, and consented to, the provisions of our certificate of incorporation

described herein.

This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits

against us and such persons.

Alternatively, if a court were to find these provisions of our certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur

additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations.

We do not intend to pay cash dividends on our Class A common stock, and our Credit Facilities place certain restrictions on our ability to do so.

Consequently, your only opportunity

to achieve a return on your investment is if the price of our Class A common stock appreciates.

realizes in respect of the tax attributes subject to

the Tax Receivable Agreement.”

Our certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by

our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.

applicable law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us

or our stockholders, (iii) any action asserting a claim against us or any director or officer or other employee of ours arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws,

or (iv) any action asserting a claim against us or any director or officer or other employee of ours that is governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the

indispensable parties named as defendants therein.

Notwithstanding the foregoing, the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Exchange Act, the Securities Act or any other claim

for which the federal courts have exclusive jurisdiction.

Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of, and consented to, the provisions of our certificate

of incorporation described herein.

discourage such lawsuits against us and such persons.

Alternatively, if a court were to find these provisions of our certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or

proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations.

While the Board of Directors declared a one-time special cash dividend of $1.80 per share on June 17, 2021, w e do not intend to pay cash dividends on

our Class A common stock, and our Credit Facilities place certain restrictions on our ability to do so.

Consequently, your only opportunity to achieve a return on your investment is if the price of our Class A common stock appreciates.

We do not plan to declare cash dividends on shares of our Class A common stock in the foreseeable future.

Additionally, the Credit Facilities place certain restrictions on our ability to pay cash dividends.

credit agreements or financing arrangements may also contain restrictions on our ability to pay cash dividends.

Consequently, your only opportunity, while such dividend restrictions remain in place, to achieve a return on your investment in us may

be to sell your Class A common stock at a price greater than you paid for it.

future credit agreements or financing arrangements may also contain restrictions on our ability to pay cash dividends.

Consequently, your only opportunity, while such dividend restrictions remain in place, to achieve a return on your investment

in us may be to sell your Class A common stock at a price greater than you paid for it.

There is no guarantee that the price of our Class A common stock that will prevail in the market will ever exceed the price that you paid.

Future sales of our Class A common stock in the public market, or the perception that such sales may occur, could reduce our stock price, and any additional capital raised by us

through the sale of equity or convertible securities may dilute your ownership in us.

Future sales of our Class A common stock in the public market, or the perception that such sales may occur, could reduce our stock price, and any additional capital raised by us through the sale

of equity or convertible securities may dilute your ownership in us.

We may sell additional shares of Class A common stock in subsequent public offerings.

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We have 13,463,124 outstanding shares of

Class A common stock and 4,196,179 outstanding shares of Class B common stock.

Certain OneWater Unit Holders are party to a registration rights agreement, which requires us to effect the registration of any shares of Class A common stock that they

receive in exchange for their OneWater LLC Units in certain circumstances.

We previously filed a registration statement with the SEC on Form S-8 providing for the registration of 1,600,533 shares of our Class A common stock issued or reserved for issuance under our long term incentive plan.

Subject to the satisfaction of vesting conditions, the expiration of lock-up agreements and the requirements of Rule 144, shares registered under the registration statement on Form S-8 may be made available for resale immediately in the public

market without restriction.

Class A common stock and 1,819,112 outstanding shares of Class B common stock as of December 3, 2021.

Certain OneWater Unit Holders are party to a registration rights agreement (the “Registration Rights Agreement”), which requires us to effect

the registration of any shares of Class A common stock that they receive in exchange for their OneWater LLC Units in certain circumstances.

On February 11, 2020, we filed a registration statement with the SEC on Form S-8 providing for the registration of 1,600,533 shares of our Class A common stock issued or reserved for issuance under our long term

incentive plan (the “LTIP”).

On May 7, 2021, we filed a registration statement with the SEC on Form S-8 providing for the registration of (i) an additional 46,750 shares of Class A common stock that may be

delivered with respect to awards under the LTIP pursuant to an “evergreen” provision contained in the LTIP and (ii) an indeterminate amount of interests to be offered or sold pursuant to the OneWater Marine Inc.

2021 Employee Stock Purchase

Subject to the satisfaction of vesting conditions, the expiration of lock-up agreements and the requirements of Rule 144, shares registered under each of the registration statements on Form S-8 may be made available for resale

immediately in the public market without restriction.

On September 7, 2021, we filed a registration statement with the SEC on Form S-3 providing for the registration of (i) an indeterminate number of shares of Class A common stock to be offered, on a primary basis, at

indeterminate prices with an aggregate initial offering price not to exceed $250,000,000 and (ii) 375,000 shares of Class A common stock that may be sold in one or more secondary offerings by the selling stockholders named therein.

We cannot predict the size of future issuances of our Class A common stock or securities convertible into Class A common stock or the effect, if any, that future issuances and sales of shares of our Class A common

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(computed using simplifying assumptions to address the impact of state and local taxes) that OneWater Inc.

actually realizes (or is deemed to realize in certain circumstances) in periods after the IPO as a result of certain increases in tax basis

available to OneWater Inc.

actually realizes (or is deemed to realize in certain circumstances) in periods after the IPO as a result of certain increases in tax

basis available to OneWater Inc.

as a result of the exercise of the Redemption Right or pursuant to our Call Right or that relate to prior transfers of such OneWater LLC Units that will be available to OneWater Inc.

as a result of its acquisition of

those units, and certain benefits attributable to imputed interest.

as a result of its

acquisition of those units, and certain benefits attributable to imputed interest.

OneWater Inc.

will retain the benefit of the remaining 15% of these net cash savings.

The terms of the Tax Receivable Agreement commenced upon completion of the IPO and will continue until all tax benefits that are subject to the Tax Receivable Agreement have been utilized or expired, unless OneWater

exercises its right to terminate the Tax Receivable Agreement (or the Tax Receivable Agreement is terminated due to other circumstances, including OneWater Inc.’s breach of a material obligation thereunder or certain mergers or other changes

of control), and OneWater Inc.

OneWater Inc.

other changes of control), and OneWater Inc.

makes the termination payment specified in the Tax Receivable Agreement.

In addition, payments OneWater Inc.

makes under the Tax Receivable Agreement will be increased by any interest accrued from the due date

(without extensions) of the corresponding tax return.

In the event that the Tax Receivable Agreement is not terminated, the payments under the Tax Receivable Agreement are anticipated to commence in 2022 and to continue for 20 years after the date

of the last redemption of the OneWater LLC Units.

makes under the Tax Receivable Agreement will be increased by any interest accrued from

the due date (without extensions) of the corresponding tax return.

In the event that the Tax Receivable Agreement is not terminated, the payments under the Tax Receivable Agreement are anticipated to commence in 2022 and to continue for 20

years after the date of the last redemption of the OneWater LLC Units.

The payment obligations under the Tax Receivable Agreement are OneWater Inc.’s obligations and not obligations of OneWater LLC, and we expect that the payments OneWater Inc.

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The actual increases in tax basis covered by the Tax

Receivable Agreement, as well as the amount and timing of OneWater Inc.’s ability to use any deductions (or decreases in gain or increases in loss) arising from such increases in tax basis, are dependent upon significant future events, including

but not limited to the timing of the redemptions of OneWater LLC Units, the price of OneWater Inc.’s Class A common stock at the time of each redemption, the extent to which such redemptions are taxable transactions, the amount of the redeeming

unit holder’s tax basis in its OneWater LLC Units at the time of the relevant redemption, the depreciation and amortization periods that apply to the increase in tax basis, the amount, character, and timing of taxable income OneWater Inc.

in the future, the timing and amount of any earlier payments that OneWater Inc.

including but not limited to the timing of the redemptions of OneWater LLC Units, the price of OneWater Inc.’s Class A common stock at the time of each redemption, the extent to which such redemptions are taxable transactions, the amount of the

redeeming unit holder’s tax basis in its OneWater LLC Units at the time of the relevant redemption, the depreciation and amortization periods that apply to the increase in tax basis, the amount, character, and timing of taxable income OneWater

generates in the future, the timing and amount of any earlier payments that OneWater Inc.

may have made under the Tax Receivable Agreement, the U.S.

federal income tax rate then applicable, and the portion of OneWater Inc.’s payments under the Tax Receivable

Agreement that constitute imputed interest or give rise to depreciable or amortizable tax basis.

Accordingly, estimating the amount and timing of payments that may become due under the Tax Receivable Agreement is also by its nature imprecise.

purposes of the Tax Receivable Agreement, net cash savings in tax generally are calculated by comparing OneWater Inc.’s actual tax liability (determined by using the actual applicable U.S.

federal income tax rate and an assumed combined state and

local income tax rate) to the amount OneWater Inc.

federal income tax rate then applicable, and the portion of OneWater Inc.’s payments under

the Tax Receivable Agreement that constitute imputed interest or give rise to depreciable or amortizable tax basis.

Accordingly, estimating the amount and timing of payments that may become due under the Tax Receivable Agreement is also by its

nature imprecise.

For purposes of the Tax Receivable Agreement, net cash savings in tax generally are calculated by comparing OneWater Inc.’s actual tax liability (determined by using the actual applicable U.S.

federal income tax rate and an

assumed combined state and local income tax rate) to the amount OneWater Inc.

would have been required to pay had it not been able to utilize any of the tax benefits subject to the Tax Receivable Agreement.

Thus, the amount and timing of any payments under the Tax Receivable

Agreement are also dependent upon significant future events, including those noted above in respect of estimating the amount and timing of OneWater Inc.’s realization of tax benefits.

Any distributions made by OneWater LLC to OneWater Inc.

to enable OneWater Inc.

to make payments under the Tax Receivable Agreement, as well as any corresponding pro rata distributions made to the other OneWater Unit Holders could have an adverse impact on our liquidity.

Thus, the amount and timing of any

payments under the Tax Receivable Agreement are also dependent upon significant future events, including those noted above in respect of estimating the amount and timing of OneWater Inc.’s realization of tax benefits.

Any distributions made by

OneWater LLC to OneWater Inc.

in order to enable OneWater Inc.

to make payments under the Tax Receivable Agreement, as well as any corresponding pro rata distributions made to the other OneWater Unit Holders could have an adverse impact on our

The payments under the Tax Receivable Agreement are not conditioned upon a holder of rights under a Tax Receivable Agreement having a continued ownership interest in OneWater Inc.

or OneWater LLC.

In addition, certain

of the OneWater Unit Holders’ rights (including the right to receive payments) under the Tax Receivable Agreement are transferable in connection with transfers permitted under the OneWater LLC Agreement of the corresponding OneWater LLC Units or,

subject to OneWater Inc.’s consent (not to be unreasonably withheld, conditioned, or delayed), after the corresponding OneWater LLC Units have been acquired pursuant to the Redemption Right or Call Right.

For additional information regarding the

Tax Receivable Agreement, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Tax Receivable Agreement” in this Form 10-K.

certain of the OneWater Unit Holders’ rights (including the right to receive payments) under the Tax Receivable Agreement are transferable in connection with transfers permitted under the OneWater LLC Agreement of the corresponding OneWater LLC

Units or, subject to OneWater Inc.’s consent (not to be unreasonably withheld, conditioned, or delayed), after the corresponding OneWater LLC Units have been acquired pursuant to the Redemption Right or Call Right.

For additional information

regarding the Tax Receivable Agreement, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Tax Receivable Agreement” in this Form 10-K.

In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits, if any, OneWater Inc.

realizes in respect of the tax

attributes subject to the Tax Receivable Agreement.

realizes in respect of the tax attributes

subject to the Tax Receivable Agreement.

If OneWater Inc.

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assumptions and deemed events set forth in the Tax Receivable Agreement, including (i) that OneWater Inc.

has sufficient taxable income to fully utilize the tax benefits covered by the Tax Receivable Agreement, and (ii) that any OneWater LLC Units

(other than those held by OneWater Inc.) outstanding on the termination date are deemed to be redeemed on the termination date.

has sufficient taxable income to fully utilize the tax benefits covered by the Tax Receivable Agreement, and (ii) that any OneWater LLC

Units (other than those held by OneWater Inc.) outstanding on the termination date are deemed to be redeemed on the termination date.

Any early termination payment may be made significantly in advance of, and may materially exceed, the actual

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If OneWater Inc.

experiences a change of control (as defined under the Tax Receivable Agreement) or the Tax Receivable Agreement otherwise terminates early (at OneWater Inc.’s election or as a result of OneWater Inc.’s

breach), OneWater Inc.’s obligations under the Tax Receivable Agreement could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, or other forms of

business combinations or changes of control.

For example, if the Tax Receivable Agreement were terminated immediately after the date hereof, and taking into account any redemptions that occur prior thereto, the estimated early termination payment

would, in the aggregate, be approximately $34.9 million (calculated using a discount rate equal to one-year LIBOR plus 100 basis points, applied against an undiscounted liability of $39.8 million calculated based on certain assumptions, including

but not limited to a $20.49 per share price, an estimated blended statutory U.S.

experiences a change of control (as defined under the Tax Receivable Agreement) or the Tax Receivable Agreement otherwise terminates early (at OneWater Inc.’s election or as a result of OneWater

Inc.’s breach), OneWater Inc.’s obligations under the Tax Receivable Agreement could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, or other forms

of business combinations or changes of control.

For example, if the Tax Receivable Agreement were terminated immediately after the date hereof, and taking into account any redemptions that occur prior thereto, the estimated early termination

payment would, in the aggregate, be approximately $50.2 million (calculated using a discount rate equal to one-year LIBOR plus 100 basis points, applied against an undiscounted liability of $56.5 million calculated based on certain assumptions,

including but not limited to a $40.21 per share price, an estimated blended statutory U.S.

federal, state and local corporate income tax rate of 24.5%, no material change in U.S.

federal income tax law, and that OneWater Inc.

will have sufficient taxable

income to utilize such estimated tax benefits).

sufficient taxable income to utilize such estimated tax benefits).

The foregoing number is merely an estimate and the actual payment could differ materially.

In the event that OneWater Inc.’s obligation to make payments under the Tax Receivable Agreement is

accelerated as a result of a change of control, where applicable, we generally expect the accelerated payments due under the Tax Receivable Agreement to be funded out of the proceeds of the change of control transaction giving rise to such

acceleration.

In the event that OneWater Inc.’s obligation to make payments under the Tax Receivable

Agreement is accelerated as a result of a change of control, where applicable, we generally expect the accelerated payments due under the Tax Receivable Agreement to be funded out of the proceeds of the change of control transaction giving rise

to such acceleration.

However, OneWater Inc.

may be required to fund such payment from other sources, and as a result, any early termination of the Tax Receivable Agreement could have a substantial negative impact on our liquidity.

We do not currently

expect to cause an acceleration due to OneWater Inc.’s breach, and we do not currently expect that OneWater Inc.

would elect to terminate the Tax Receivable Agreement early, except in cases where the early termination payment would not be material.

currently expect to cause an acceleration due to OneWater Inc.’s breach, and we do not currently expect that OneWater Inc.

would elect to terminate the Tax Receivable Agreement early, except in cases where the early termination payment would

not be material.

There can be no assurance that OneWater Inc.

will be able to meet its obligations under the Tax Receivable Agreement.

Please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Tax Receivable Agreement” in

this Form 10-K.

In the event that OneWater Inc.’s payment obligations under the Tax Receivable Agreement are accelerated upon certain mergers, other forms of business combinations or other changes

of control, the consideration payable to holders of OneWater Inc.’s Class A common stock could be substantially reduced.

Please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Tax

Receivable Agreement” in this Form 10-K.

In the event that OneWater Inc.’s payment obligations under the Tax Receivable Agreement are accelerated upon certain mergers, other forms of business combinations or other changes of control,

the consideration payable to holders of OneWater Inc.’s Class A common stock could be substantially reduced.

If OneWater Inc.

experiences a change of control (as defined under the Tax Receivable Agreement, which includes certain mergers, asset sales and other forms of business combinations), OneWater Inc.

would be obligated

to make an immediate payment, and such payment may be significantly in advance of, and may materially exceed, the actual realization, if any, of the future tax benefits to which the payment relates.

As a result of this payment obligation, holders

of OneWater Inc.’s Class A common stock could receive substantially less consideration in connection with a change of control transaction than they would receive in the absence of such obligation.

Further, OneWater Inc.’s payment obligations under

the Tax Receivable Agreement are not conditioned upon the OneWater Unit Holders’ having a continued interest in OneWater Inc.

obligated to make an immediate payment, and such payment may be significantly in advance of, and may materially exceed, the actual realization, if any, of the future tax benefits to which the payment relates.

As a result of this payment

obligation, holders of OneWater Inc.’s Class A common stock could receive substantially less consideration in connection with a change of control transaction than they would receive in the absence of such obligation.

Further, OneWater Inc.’s

payment obligations under the Tax Receivable Agreement are not conditioned upon the OneWater Unit Holders’ having a continued interest in OneWater Inc.

or OneWater LLC.

Accordingly, the OneWater Unit Holders’ interests may conflict with those of the holders of OneWater

Inc.’s Class A common stock.

Accordingly, the OneWater Unit Holders’ interests may conflict with those

of the holders of OneWater Inc.’s Class A common stock.

Please read “— In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits, if any, OneWater Inc.

realizes in respect of the tax attributes subject to

the Tax Receivable Agreement.”

realizes in respect

of the tax attributes subject to the Tax Receivable Agreement.”

OneWater Inc.

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Payments under the Tax Receivable Agreement are based on the tax reporting positions that OneWater Inc.

determines and the IRS or another tax authority may challenge all or part of the tax basis increase, as well as

other related tax positions OneWater Inc.

determines and the IRS or another tax authority may challenge all or part of the tax basis increase, as well

as other related tax positions OneWater Inc.

takes, and a court could sustain such challenge.

The OneWater Unit Holders will not reimburse OneWater Inc.

for any payments previously made under the Tax Receivable Agreement if any tax benefits that have

given rise to payments under the Tax Receivable Agreement are subsequently disallowed, except that excess payments made to any OneWater Unit Holder will be netted against future payments that would otherwise be made to such OneWater Unit Holder, if

any, after OneWater Inc.’s determination of such excess (which determination may be made a number of years following the initial payment and after future payments have been made).

As a result, in such circumstances, OneWater Inc.

payments that are greater than its actual cash tax savings, if any, and may not be able to recoup those payments, which could materially adversely affect its liquidity.

for any payments previously made under the Tax Receivable Agreement if any tax benefits

that have given rise to payments under the Tax Receivable Agreement are subsequently disallowed, except that excess payments made to any OneWater Unit Holder will be netted against future payments that would otherwise be made to such OneWater

Unit Holder, if any, after OneWater Inc.’s determination of such excess (which determination may be made a number of years following the initial payment and after future payments have been made).

As a result, in such circumstances, OneWater

could make payments that are greater than its actual cash tax savings, if any, and may not be able to recoup those payments, which could materially adversely affect its liquidity.

If OneWater LLC were to become a publicly traded partnership taxable as a corporation for U.S.

federal income tax purposes, OneWater Inc.

and OneWater LLC might be subject to

potentially significant tax inefficiencies, and OneWater Inc.

would not be able to recover payments previously made by it under the Tax Receivable Agreement even if the corresponding tax benefits were subsequently determined to have been

unavailable due to such status.

and OneWater LLC might be subject to potentially

significant tax inefficiencies, and OneWater Inc.

would not be able to recover payments previously made by it under the Tax Receivable Agreement even if the corresponding tax benefits were subsequently determined to have been unavailable due to

We intend to operate such that OneWater LLC does not become a publicly traded partnership taxable as a corporation for U.S.

federal income tax purposes.

A “publicly traded partnership” is a partnership the interests of

which are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof.

Under certain circumstances, redemptions of OneWater LLC Units pursuant to the Redemption Right (or the Call

Right) or other transfers of OneWater LLC Units could cause OneWater LLC to be treated as a publicly traded partnership.

A “publicly traded partnership” is a partnership the

interests of which are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof.

Under certain circumstances, redemptions of OneWater LLC Units pursuant to the Redemption

Right (or the Call Right) or other transfers of OneWater LLC Units could cause OneWater LLC to be treated as a publicly traded partnership.

Applicable U.S.

Treasury regulations provide for certain safe harbors from treatment as a publicly traded partnership, and we

intend to operate such that redemptions or other transfers of OneWater LLC Units qualify for one or more such safe harbors.

For example, we intend to limit the number of unitholders of OneWater LLC, and the OneWater LLC Agreement provides for

limitations on the ability of unitholders of OneWater LLC to transfer their OneWater LLC Units and provides OneWater Inc., as managing member of OneWater LLC, with the right to impose restrictions (in addition to those already in place) on the

ability of unitholders of OneWater LLC to redeem their OneWater LLC Units pursuant to the Redemption Right to the extent OneWater Inc.

believes it is necessary to ensure that OneWater LLC will continue to be treated as a partnership for U.S.

Treasury regulations provide for certain safe harbors from treatment as a publicly

traded partnership, and we intend to operate such that redemptions or other transfers of OneWater LLC Units qualify for one or more such safe harbors.

For example, we intend to limit the number of unitholders of OneWater LLC, and the OneWater

LLC Agreement provides for limitations on the ability of unitholders of OneWater LLC to transfer their OneWater LLC Units and provides OneWater Inc., as managing member of OneWater LLC, with the right to impose restrictions (in addition to

those already in place) on the ability of unitholders of OneWater LLC to redeem their OneWater LLC Units pursuant to the Redemption Right to the extent OneWater Inc.

believes it is necessary to ensure that OneWater LLC will continue to be

treated as a partnership for U.S.

federal income tax purposes.

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federal income tax purposes, significant tax inefficiencies might result for OneWater Inc.

and for OneWater LLC, including

as a result of OneWater Inc.’s inability to file a consolidated U.S.

and for OneWater LLC,

including as a result of OneWater Inc.’s inability to file a consolidated U.S.

federal income tax return with OneWater LLC.

In addition, OneWater Inc.

may not be able to realize tax benefits covered under the Tax Receivable Agreement, and OneWater Inc.

not be able to recover any payments previously made by it under the Tax Receivable Agreement, even if the corresponding tax benefits (including any claimed increase in the tax basis of OneWater LLC’s assets) were subsequently determined to have

been unavailable.

Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of OneWater Inc.’s income or other tax returns could adversely affect its results of

operations and financial condition.

may not be able to realize tax benefits covered under the Tax Receivable Agreement, and

OneWater Inc.

would not be able to recover any payments previously made by it under the Tax Receivable Agreement, even if the corresponding tax benefits (including any claimed increase in the tax basis of OneWater LLC’s assets) were

subsequently determined to have been unavailable.

Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of OneWater Inc.’s income or other tax returns could adversely affect its results of operations and

financial condition.

We may be subject to taxes by the U.S.

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federal, state, and local taxing authorities.

Outcomes from these audits could have an adverse effect on our operating

results and financial condition.

Outcomes from these audits could have an adverse effect on our

operating results and financial condition.

We may issue preferred stock whose terms could adversely affect the voting power or value of our Class A common stock.

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rights, including preferences over our Class A common stock respecting dividends and distributions, as our board of directors may determine.

The terms of one or more classes or series of preferred stock could adversely impact the voting power or

value of our Class A common stock.

The terms of one or more classes or series of preferred stock could adversely impact the voting power

or value of our Class A common stock.

For example, we might grant holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions.

the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred stock could affect the residual value of the Class A common stock.

If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), as a result of our ownership of OneWater LLC, applicable

restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition and results of operations.

Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred stock could affect the residual value of the Class A common stock.

If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), as a result of our ownership of OneWater LLC, applicable restrictions could

make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition and results of operations.

Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (i) it is, or holds itself out as being, engaged primarily, or

proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes

to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S.

proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S.

government securities and cash items) on an unconsolidated basis.

We do not believe that we are an “investment company,” as such term

is defined in either of those sections of the 1940 Act.

We do not believe that we are an “investment company,”

as such term is defined in either of those sections of the 1940 Act.

As the sole managing member of OneWater LLC, we will control and operate OneWater LLC.

On that basis, we believe that our interest in OneWater LLC is not an “investment security” as that term is used in the 1940 Act.

On that basis, we believe that our interest in OneWater LLC is not an “investment security” as that term is used in the 1940

However, if we were to cease participation in the management of OneWater LLC, our interest in OneWater LLC could be deemed an “investment security” for purposes of the 1940 Act.

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However, if we were to be deemed an investment company, restrictions imposed by the 1940 Act, including

limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition and results of

For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements, including those relating to accounting standards and

disclosure about our executive compensation, that apply to other public companies.

We are classified as an “emerging growth company” under the JOBS Act.

For as long as we are an emerging growth company, which may be up to five full fiscal years, unlike other public companies, we will not be required

to, among other things:

(i) provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

(ii) comply with

any new requirements adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the

(iii) provide certain disclosures regarding executive compensation required of larger public companies;

or (iv) hold nonbinding advisory votes on executive compensation.

We may remain an emerging growth company for up to five years from the

date of the IPO, although we will lose that status sooner if we have more than $1.07 billion of revenues in a fiscal year, have more than $700.0 million in market value of our Class A common stock held by non-affiliates, or issue more than $1.0

billion of non-convertible debt over a three-year period.

To the extent that we rely on any of the exemptions available to emerging growth companies, you will receive less information about our executive compensation and internal control over financial reporting than issuers

that are not emerging growth companies.

Additionally, we intend to take advantage of the extended transition periods for the adoption of new or revised financial accounting standards under the JOBS Act until we are no longer an emerging growth

Our election to use the transition periods permitted by this election may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the

extended transition periods permitted under the JOBS Act and who will comply with new or revised financial accounting standards.

If some investors find our Class A common stock to be less attractive as a result, there may be a less active trading market for our Class A common stock and our stock price may be more volatile.

If securities or industry analysts cease publishing research or reports about our business, if they adversely change their recommendations regarding our Class A common stock or if

our operating results do not meet their expectations, our stock price could decline.

results of operations.

If securities or industry analysts cease publishing research or reports about our business, if they adversely change their recommendations regarding our Class A common stock or if our operating

results do not meet their expectations, our stock price could decline.

The trading market for our Class A common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business.

If one or more of these analysts cease coverage of

our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

If one or more of these analysts cease coverage

of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

Moreover, if one or more of the analysts who cover our company

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General Risk Factors

General economic conditions and consumer spending patterns can have a material adverse effect on our business, financial condition and results of operations.

interest rates, periods of economic or political instability, public health crises, and consumer spending patterns can negatively impact our operating results.

Unfavorable local, regional, national or global economic developments or

uncertainties regarding future economic prospects could reduce or defer consumer spending in the markets we serve and adversely affect our business.

Consumer spending, including that of high net worth individuals, on discretionary goods may

also decline as a result of political uncertainty and instability, even if prevailing economic conditions are generally favorable.

Economic conditions in areas in which we operate stores, particularly the Southeast and Gulf Coast regions in

which we generated approximately 80%, 75% and 75% of our revenue during fiscal years 2021, 2020 and 2019, respectively, could have a major impact on our operations.

Local influences, such as corporate downsizing, inclement weather such as

hurricanes, wintry conditions or other storms, environmental conditions and specific events, also could adversely affect, and in certain instances have adversely affected, our operations in certain markets.

In an economic downturn, consumer discretionary spending levels generally decline, at times resulting in disproportionately large reductions in the sale of discretionary goods.

Consumer spending on discretionary

goods also may decline as a result of lower consumer confidence levels, even if prevailing economic conditions are favorable.

Our business was significantly impacted during the recessionary period that began in 2007, and this period of weakness

in consumer spending and depressed economic conditions had a substantial negative effect on our operating results.

In response to these conditions we reduced our inventory purchases, closed certain stores and reduced headcount.

Although we have

of industry growth could lead to oversupply and weak demand, which could materially adversely affect our business, financial condition or results of operations in the future.

Any period of adverse economic conditions or low consumer confidence

could have a negative effect on our business.

The ongoing COVID-19 pandemic may adversely affect our revenues, results of operations and financial condition.

Our business could be materially adversely affected by the widespread outbreak of a contagious disease, including the recent COVID-19 pandemic.

COVID-19 has spread in many of the geographic areas in which we

including boat shows, and other measures.

These measures have affected our ability to sell and service boats, required us to temporarily close or partially close certain locations and may require additional closures in the future.

Organizations

and individuals are also taking additional steps to avoid or reduce infection, including limiting travel, staying home, working from home and limiting participation in certain activities.

We continue to monitor federal, state and local government recommendations and have made modifications to our normal operations as a result of COVID-19.

If the negative economic effects of COVID-19 continue for a

prolonged period of time, it could lead to a reduction in demand for our products, which would adversely affect our results of operations.

Additionally, disruptions in the capital markets, as a result of the pandemic, may also adversely affect

our ability to access capital and additional liquidity.

The COVID-19 pandemic has led to disruptions in our supply chain, including our ability to obtain boats and parts from our suppliers, and labor shortages.

There have been industry-wide

supply chain constraints due to the COVID-19 pandemic and increased sales generally across the industry.

To date, we have experienced shortages of inventory, and we believe such shortages resulted in a reduction in our revenues for fiscal year

Such shortages could continue to adversely impact our revenues for future periods.

It is possible that such shortages could become more severe as a result of the COVID-19 pandemic and its effects on, among other things, supply chains,

operations and consumer demand.

These measures are disrupting normal business operations and may have, significant negative impacts on our business in the future.

While we are implementing changes to mitigate the impact of COVID-19 on our

business, it is not possible, at this time, to estimate the entirety of the effect that COVID-19 will have on our business, customers, suppliers or other business partners.

Increased cybersecurity requirements, vulnerabilities, threats and more sophisticated and targeted computer crime could pose a risk to our systems, networks, and data.

operations could be negatively impacted by an outage or breach of our informational technology systems or a cybersecurity event.

Our business operations

could be negatively impacted by an outage or breach of our informational technology systems or a cybersecurity event.

Our business is dependent upon the efficient operation of our information systems.

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integrate each level of operations on a company-wide basis, including but not limited to purchasing, inventory, receivables, payables, financial reporting, budgeting, marketing and sales management.

They also prepare our consolidated financial and

operating data.

The failure of our information systems to perform as designed or the failure to maintain and enhance or protect the integrity of these systems could disrupt our business operations, impact sales and the results of operations, expose

us to customer or third-party claims, or result in adverse publicity.

The information systems also prepare our

consolidated financial and operating data.

The failure of our information systems to perform as designed or the failure to maintain and enhance or protect the integrity of these systems could disrupt our business operations, impact sales and

the results of operations, expose us to customer or third-party claims, or result in adverse publicity.

Increased global cybersecurity vulnerabilities, threats and more sophisticated and targeted cyber-related attacks pose a risk to the security of our and our customers’, suppliers’ and third-party service providers’

products, systems and networks and the confidentiality, availability and integrity of our data.

Unauthorized parties may also attempt to gain access to our systems or facilities, or those of third parties with whom we do business, through fraud,

trickery or other forms of deceiving our team members, contractors, vendors and temporary staff.

While we attempt to mitigate these risks by employing a number of measures, including employee training, systems and maintenance of protective systems,

we remain potentially vulnerable to known or unknown threats.

We may also have access to sensitive, confidential or personal data or information that is subject to privacy, security laws, and regulations.

Despite our efforts to protect sensitive, confidential or personal data or

information, we may be vulnerable to security breaches, theft, misplaced or lost data, programming errors, employee errors and/or malfeasance that could potentially lead to the compromising of sensitive, confidential or personal data or

information, improper use of our systems, unauthorized access, use, disclosure, modification or destruction of information, and operational disruptions.

It is possible that we might not be aware of a successful cyber-related attack on our systems

until well after the incident.

In addition, a cyber-related attack could result in other negative consequences, including damage to our reputation or competitiveness, remediation or increased protection costs, litigation or regulatory action, and

could adversely affect our business, financial condition and results of operations.

Depending on the nature of the information compromised, we may have obligations to notify customers and/or employees about the incident, and we may need to provide

some form of remedy, such as a subscription to a credit monitoring service, for the individuals affected by the incident.

Unauthorized parties may also attempt to gain access to our systems or facilities, or those of third parties with whom we do business, through

fraud, trickery or other forms of deceiving our team members, contractors, vendors and temporary staff.

While we attempt to mitigate these risks by employing a number of measures, including employee training, systems and maintenance of

protective systems, we remain potentially vulnerable to known or unknown threats.

We may also have access to sensitive, confidential or personal data or information that is subject to data privacy and information security laws and regulations.

Despite our efforts to protect sensitive,

confidential or personal data or information, we may be vulnerable to security breaches, ransomware theft, misplaced or lost data, programming errors, employee errors and/or malfeasance that could potentially lead to the compromising of

sensitive, confidential or personal data or information, improper use of our systems, inability to use our systems, and other unauthorized access, use, disclosure, modification or destruction of information, and operational disruptions.

Further, advances in computer capabilities, new discoveries in the field of cryptography, inadequate facility security or other developments may result in a compromise or breach of the technology we use to protect such sensitive, confidential

or personal data.

Despite ongoing efforts to improve our ability to protect data from compromise, we may not be able to protect all of our data across our systems.

Our efforts to improve security and protect data from compromise may also identify previously undiscovered instances of security breaches or other cyber-related attack.

It is possible that we might not be aware of

a successful cyber-related attack on our systems until well after the incident.

In addition, a cyber-related attack could result in other negative consequences, including damage to our reputation or competitiveness, remediation or increased

protection costs, litigation or regulatory action, and could adversely affect our business, financial condition and results of operations.

Depending on the nature of the information compromised, we may have obligations to notify customers

and/or employees about the incident, and we may need to provide some form of remedy, such as a subscription to a credit monitoring service, for the individuals affected by the incident.

Additionally, in response to the COVID-19 pandemic, we instituted certain remote work policies.

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hardware and software systems and exacerbated certain related risks, including risks of phishing and other cybersecurity attacks.

Controls employed by our information technology department and our customers and third-party service providers

could prove inadequate.

We may be named in litigation, which may result in substantial costs and reputational harm and divert management’s attention and resources.

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Risks associated with legal liability often are difficult to assess or quantify and their existence and magnitude can remain unknown for significant periods of time.

While we maintain automobile, directors and officers, general liability,

inventory, property and workers compensation insurance, the amount of insurance coverage may not be sufficient to cover a claim and the continued availability of this insurance cannot be assured.

Additionally, we may be named in the future as

defendants of class action lawsuits.

While we maintain automobile, directors and officers, general

liability, inventory, property and workers compensation insurance, the amount of insurance coverage may not be sufficient to cover a claim and the continued availability of this insurance cannot be assured.

Additionally, we may be named in the

future as defendants of class action lawsuits.

Negative publicity from litigation, whether or not resulting in a substantial cost, could materially damage our reputation.

We may in the future be the target of litigation and this litigation may result in

substantial costs and reputational harm and divert management’s attention and resources.

We may in the future be the target of litigation and this litigation may

result in substantial costs and reputational harm and divert management’s attention and resources.

Costs, harm to our reputation and diversion could have a material adverse effect on our business, results of operations and financial condition.

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Such changes in accounting standards may have an adverse effect on our business, financial position, and income, which may negatively impact our financial results.

Adverse federal or state tax policies could have a negative effect on us.

to purchase products we offer and could have a negative effect on our sales.

For example, during 1991 and 1992, the federal government imposed a luxury tax on new recreational boats with sales prices in excess of $100,000, which coincided with

a sharp decline in boating industry sales from a high of more than $17.9 billion in 1988 to a low of $10.3 billion in 1992.

Any increase in tax rates, including those on capital gains and dividends, particularly those on high-income taxpayers,

could adversely affect our boat sales.

Unresolved Staff Comments.

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 1A. Risk Factors