UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2024~~2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number: 001-34767

CLARUS CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		58-1972600
(State or other jurisdiction ofincorporation or organization)		(I.R.S. EmployerIdentification Number)



2084 East 3900 SouthSalt Lake City, Utah		84124
(Address of principal executive offices)		(Zip code)

(801) 278-5552

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $.0001 per share	CLAR	NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐ NO ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. YES ☐ NO ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Non-accelerated filer	☐
Accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) YES ☐ NO ☒

The aggregate market value of the voting stock and non-voting common equity held by non-affiliates of the Registrant at June 30, ~~2024~~2025 was approximately $~~213~~110.70 million based on $63.7347 per share, the closing price of the common stock as quoted on the NASDAQ Global Select Market.

As of March 32, ~~2025~~2026, there were 38,~~362~~401,~~162~~824 shares of common stock, par value $0.0001, outstanding.

DOCUMENT INCORPORATED BY REFERENCE

Portions of our Proxy Statement for the ~~2025~~2026 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days of the Registrant’s ~~2024~~2025 fiscal year end are incorporated by reference into Part III of this Annual Report on Form 10-K.

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INDEX

CLARUS CORPORATION

PART I		Page
Item 1.	Business	3
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	3032
Item 1C.	Cybersecurity	3132
Item 2.	Properties	3233
Item 3.	Legal Proceedings	3334
Item 4.	Mine Safety Disclosures	3437

PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	3538
Item 6.	[Reserved]	3639
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3740
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	4751
Item 8.	Financial Statements and Supplementary Data	4953
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	9196
Item 9A.	Controls and Procedures	9196
Item 9B.	Other Information	9398
Item 9C.	Disclosure Regarding Foreign ~~Jurisdiction~~Jurisdictions that Prevent Inspections	9398

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	9398
Item 11.	Executive Compensation	9499
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	9499
Item 13.	Certain Relationships and Related Transactions, and Director Independence	9499
Item 14.	Principal Accounting Fees and Services	9499

PART IV
Item 15.	Exhibits and Financial Statement Schedules	95100
Item 16.	Form 10-K Summary	96101

Signature Page		97102

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PART I

ITEM 1. BUSINESS

Overview

Headquartered in Salt Lake City, Utah, Clarus Corporation (which may be referred to herein as the “Company,” “Clarus,” “we,” “our” or “us”) is a global leading designer, developer, manufacturer and distributor of best-in-class outdoor equipment and lifestyle products focused on the outdoor enthusiast markets. Each of our brands has a long history of continuous product innovation for core and everyday users alike. The Company’s products are principally sold globally under the Black Diamond®, Rhino-Rack®, MAXTRAX®, ~~and~~ TRED Outdoors®, and RockyMounts® brand names through outdoor specialty and online retailers, our own websites, distributors and original equipment manufacturers. We believe that our portfolio of iconic brands is well-positioned for sustainable, long-term growth underpinned by industry trends across the outdoor and adventure sport end markets.

Our iconic brands are rooted in performance-defining technologies that enable our customers to have their best days outdoors. We have a long history of technical innovation and product development, backed by an extensive patent portfolio that continues to evolve and advance our markets. We focus on enhancing our customers’ performance in the most critical moments. Our commitment to quality, rigorous safety, and ultimately best-in-class design is evidenced by outstanding industry recognition, as we have received numerous product awards across our portfolio of brands.

Each of our segments ~~address~~addresses a unique customer value proposition through our brands. Supported by six decades of proven innovation, the Outdoor segment is led by Black Diamond, an established global leader in high-performance, activity-based climbing, skiing, and technical mountain sports equipment. The brand is synonymous with premium performance, safety and reliability. The Adventure segment is comprised of three brands addressing the needs of the outdoor enthusiast and tradesman. Founded in 1992, our Rhino-Rack brand is a globally-recognized designer and distributor of highly-engineered automotive roof racks, trays, bars, and other accessories to enhance the customer’s experience getting to and enjoying the campsite. Founded in 2005, our MAXTRAX brand offers high-quality overlanding and off-road vehicle recovery and extraction tracks for the overland and off-road market. Founded in 2012, our TRED brand offers high-quality, reliable outdoor and recovery gear for the offroad, 4x4 automotive touring, camping and caravanning markets. Founded in 1993, our RockyMounts brand is known for making well designed and dependable premium bicycle racks and other accessories compatible with vehicles of all sizes.

Clarus, incorporated in Delaware in 1991, acquired Black Diamond Equipment, Ltd. (“Black Diamond Equipment”) in May 2010 and changed its name to Black Diamond, Inc. in January 2011. In October 2012, we acquired PIEPS Holding GmbH and its subsidiaries (collectively, “PIEPS”). On August 14, 2017, the Company changed its name from Black Diamond, Inc. to Clarus Corporation and its stock ticker symbol from “BDE” to “CLAR” on the NASDAQ stock exchange.

On July 1, 2021, the Company completed the acquisition of Australia-based Rhino-Rack Holdings Pty Ltd (“Rhino-Rack”). On December 1, 2021, the Company completed the acquisition of Australia-based MaxTrax Australia Pty Ltd (“MAXTRAX”). On October 9, 2023, the Company completed the acquisition of Australia-based TRED Outdoors Pty Ltd. (“TRED”). On December 5, 2024, the Company completed the acquisition of certain assets and liabilities constituting the RockyMounts business (“RockyMounts”), a Colorado-based brand specializing in bicycle transport products.

On February 29, 2024, the Company ~~and Everest/Sapphire Acquisition, LLC, its wholly-owned subsidiary,~~ completed the sale ~~to Bullseye Acquisitions, LLC, an affiliate~~ of ~~JDH Capital Company, of~~ all of the equity associated with the Company’s Precision Sport segment, which iswas comprised of the Company’s subsidiaries Sierra Bullets, L.L.C. (“Sierra”) and Barnes Bullets – Mona, LLC (“Barnes”), pursuant to a Purchase and Sale Agreement dated as of December 29, 2023~~, by and among, Bullseye Acquisitions, LLC, Everest/Sapphire Acquisition, LLC and the Company (the “Precision Sport Purchase Agreement”)~~. Under the terms of the Precision Sport Purchase Agreement, the Company received net proceeds of approximately $37,871,000 in cash, after payment of certain fees and settlement of the Restated Credit Agreement (as defined below), for all of the equity associated with the Company’s Precision Sport segment. The activities of the Precision Sport segment have been segregated and reported as discontinued operations for all periods presented. See Note 3 to our consolidated financial statements for financial information regarding discontinued operations.

On May 8, 2025, BD European Holdings, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company, entered into a Share Purchase and Transfer Agreement (the “Share Purchase Agreement”) to sell all of the issued and outstanding shares of Black Diamond Austria GmbH, together with its operating subsidiary, PIEPS GmbH (collectively, “PIEPS”). On July 11, 2025, the Company completed the sale of PIEPS, which was included in the Company’s Outdoor segment, to a private investment firm for a total purchase price of €7,825,000 (approximately $9,124,000), including cash held at PIEPS of $1,311,000, pursuant to the Share Purchase Agreement.

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Market Overview

Our brands participate in the outdoor-oriented lifestyle that has and is expected to benefit from favorable long-term growth trends. The users of our products are loyal outdoor enthusiasts, including climbers, mountaineers, trail runners, skiers, mountain bikers, backpackers, campers, adventure seekers, overlanders, tradesmen, and other outdoor-inspired consumers. We believe we have a strong reputation for innovation, style, quality, design, safety and durability in our core product lines, positioning us for sustainable growth amidst the acceleration of our market opportunity. Select factors driving this acceleration include:

Increasing Adoption of Outdoor Lifestyles and Focus on Health and Wellness. According to Outdoor Foundation, a non-profit dedicated to getting people outside for their health, ~~over the past decade,~~ many outdoor activities have experienced a consistent rise in participation rates. This heightened participation has grown in tandem with increasing consumer focus on health and wellness with many consumers acutely aware of the myriad of physical and mental health benefits associated with outdoor activities.

Rise of Overlanding and Off-Roading. Combining off-road driving with backcountry lifestyle activities, such as camping, hiking, kayaking and mountain biking, we believe that overlanding has driven a new niche in the light truck, SUV and CUV segment for enthusiasts and light truck manufacturers, which is expected to directly benefit our Rhino-Rack, MAXTRAX, TRED, and ~~TRED~~RockyMounts brands, especially in Australia.

Due to its overlap with numerous outdoor lifestyle activities, overlanding’s market growth is difficult to precisely measure, but we believe that the global adventure tourism market — which includes camping, hiking, ~~mountain~~ biking, kayaking, rafting and other pursuits that are closely associated with overlanding — reflects this growing trend and is expected to continue to grow in the coming years.

Climbing Verticals Becoming Mainstream. Following the release of critically acclaimed free climbing documentaries including The Dawn Wall and the Academy Award-winning Free Solo, mainstream consumers are increasingly exposed to the markets that Clarus and, specifically, Black Diamond work to serve. Furthermore, the 2020 Tokyo Olympics marked the first time that sport climbing debuted in an Olympic stadium, bringing the thrills of high-skill rock climbing to the living rooms of people across the globe. The 2024 Paris Summer Olympics also featured four sport climbing events, which doubled the number of medaled sport climbing events from the 2020 games.

As the variety of outdoor sports activities continues to proliferate, and existing outdoor sports evolve and become more specialized, we believe there is demand in the marketplace to address the unique technical and performance needs of such enthusiasts. We believe we have been able to help address this opportunity by seeking to leverage our intimate knowledge of what the customer needs to perform at the highest level. We continue to seek to improve our existing product lines by expanding our offerings into new niche categories, and by incorporating innovative industrial design, engineering and performance tolerances into our products. We believe the credibility and authenticity of our brands expands our potential market beyond committed outdoor athletes to outdoor generalists who desire to lead active, outdoor-focused lifestyles.

Growth Strategies

Our growth strategies are to achieve sustainable, profitable growth organically ~~while~~through ~~seeking~~the toexecution ~~expand~~of ~~our~~targeted growth initiatives, including simplification of certain products, product lines and business ~~through~~units to drive targeted, ~~strategic~~growth ~~acquisitions~~and margin improvement. We intend to create new and innovative products, increase consumer and retailer awareness and demand for our products, and build stronger emotional brand connections with consumers over time across an increasing number of geographic markets. Additionally, long-term growth is underpinned by powerful industry trends across the outdoor enthusiast markets. Our growth initiatives include, but are not limited to the following:

Growth in International Markets. We believe there is a significant opportunity to expand the global presence and penetration of each of our brands. The European alpine market is currently significantly larger than the U.S. market and is highly fragmented by country, with no clear leader across Europe. We have been able to gain market share by emphasizing our Black Diamond brand, positioning it as a global brand with American roots. Rhino-Rack is based in Sydney, Australia, bringing a leading market position in its home markets of Australia and New Zealand, with opportunities to grow in the U.S., Europe, the Middle East and other Asia-Pacific countries, where we believe that the brand currently has less than 1% market share.

Acquisition of Complementary Businesses. We expect to target acquisitions as a viable opportunity to gain access to new product groups and customer channels, and increase penetration of existing markets. We may also pursue acquisitions that diversify the Company

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within the outdoor enthusiast markets. To the extent we pursue future acquisitions, we intend to focus on enthusiast brands with recurring revenue, sustainable margins and strong cash flow generation. We anticipate financing future acquisitions prudently through a combination of cash on hand, operating cash flow, bank financings, and capital markets offerings.

Competitive Strengths

Authentic Portfolio of Iconic Enthusiast Brands. We believe that our brands are iconic among devoted, active-outdoor enthusiasts with a strong reputation for innovation, style, quality, design, safety and durability. Each of our brands is synonymous with the sport it serves, tracing its roots to the modern origins of each sport.

●

Since 1957, our Black Diamond brand has been a global innovator in activity-based climbing, skiing, and mountain sports equipment.

●

Our Rhino-Rack brand was founded in 1992 and has become well-respected and widely recognized for outdoor enthusiasts.

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Our MAXTRAX brand was founded in 2005 and has become the market leader in recovery boards for overlanding enthusiasts.

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Our TRED brand was founded in 2012 and offers high-quality, reliable outdoor and recovery gear for the offroad, 4x4 automotive touring, camping and caravanning markets.

●

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

Our brands also appeal to everyday customers seeking high-quality products for outdoor or urban and suburban living. Our focus on innovation, safety and style differentiates us from our competitors.

Outdoor

Black Diamond Equipment: Black Diamond Equipment is a global innovator in climbing, skiing and mountain sports equipment enabling peak performance for outdoor enthusiasts. The brand is synonymous with innovation, performance, safety and durability. Headquartered in Salt Lake City at the base of the Wasatch Mountains, Black Diamond products are created and tested locally on its alpine peaks, slopes, crags and trails. Continuously recognized as an industry-leading innovator, Black Diamond has received over 500 industry awards over five years, including over ~~250~~225 product awards in ~~2024~~2025 alone.

Adventure

Rhino-Rack: Headquartered in Sydney, Australia, Rhino-Rack has been a widely recognized, premier aftermarket automotive roof rack and accessories brand since 1992 with a leading market position in Australia. Best known for its “north/south” platform roof rack design, Rhino-Rack’s product offering includes roof racks, luggage carriers, shade awnings, kayak carriers, bike carriers and load-securing accessories. Rhino-Rack has a long track record of launching new, innovative products with state-of-the-art engineering serving and enhancing the outdoor enthusiast’s experience whether camping, off-roading, overlanding, or getting to the worksite.

MAXTRAX: Founded in 2005, MAXTRAX is considered the creator of the vehicle recovery board. MAXTRAX has developed a product lineup consisting of high-quality vehicle recovery and extraction tracks, including its original MAXTRAX MKII recovery track. All MAXTRAX vehicle recovery tracks are manufactured in Australia using its proprietary, Australian-sourced, engineering-grade and fiber-reinforced nylon. MAXTRAX currently sells its products around the world to distributors, retailers, government agencies, third-party e-commerce sites and through its own website.

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TRED: Founded in 2012, TRED, which stands for Totally Reliable Explorer Driven, is designed and built for the “Seriously Adventurous” and is passionately supported by customers and consumers who live and breathe the lifestyle. TRED’s products, which are synonymous with quality and engineering, are all made in Australia using Australian-sourced and tested high-grade materials. TRED is a trusted brand for key retailers and distributors primarily in Australia, with a growing export market including Canada, the Middle East, New Zealand, South Africa, and the U.S.

RockyMounts: Founded in 1993, RockyMounts is known for making well designed and dependable premium bicycle racks and other accessories compatible with vehicles of all sizes, including SUVs, vans and trucks. RockyMounts has designed innovative roof and hitch rack solutions, attracting a dedicated following of customers thanks to the products’ distinct style and exceptional durability. Its award-winning products can be found in local and national retailers primarily in North America.

Precision Sport

The activities of the Precision Sport segment have been segregated and reported as discontinued operations for ~~all~~the ~~periods~~years ~~presented~~ended December 31, 2024 and 2023. There was no activity in discontinued operations during the year ended December 31, 2025. See Note 3 to our consolidated financial statements for financial information regarding discontinued operations.

Sierra: Sierra Bullets is dedicated to manufacturing the highest-quality, most accurate bullets and ammunition in the world. From local and international shooting competitions to sport and hunting, Sierra is synonymous with precision, providing critical dependability to hunting and sport shooting enthusiasts. This performance is born from a proprietary manufacturing, testing and quality assurance process that enables the achievement of the tightest tolerances in the industry. Sierra’s bullets and ammunition are used for precision target shooting, hunting and defense purposes. Sierra’s products have cultivated a significant consumer following recognized by iconic “green box” packaging and include globally recognized bullet brands such as Sierra® MatchKing®, Sierra® GameKing® and Sierra® BlitzKing® and ammunition brands such as GameChanger®, Prairie Enemy TM, Outdoor Master® and Sport Master®.

Barnes: Barnes Bullets is an industry leader in all-copper bullet technology and innovation. The company manufactures some of the world’s most technologically advanced lead-free bullets and premium hunting, self-defense and tactical ammunition. Barnes has earned its strong reputation through unrivaled performance and terminal results. This reputation is defined by innovative design, advanced manufacturing techniques and a core focus on the end-user. As a result, Barnes has generated a strong consumer following supported by its globally recognized bullet brands such as Barnes® TSX®, X Bullet®, Varmint Grenade® and Expander® and ammunition brands VOR-TX® and TAC-XPD®. With its products being sold through its online store, a variety of retailers and international distributors, Barnes’ customers include hunters, range shooters, military and law enforcement professionals around the world.

Product Innovation and Development Capabilities at Clarus. We have a long history of technical innovation and product development. Our employees’ passion and intimacy with our core outdoor activities generates new and boundary-pushing concepts and products, which we believe provides a significant advantage that will drive our Company to new levels. We seek to design products that enhance our customers’ personal performance as they participate in the activities we serve. We integrate quality assurance and quality control teams throughout the entire design process to maintain the quality and integrity for which our brands are known. We believe that our vertically integrated design and development process and enthusiastic employee base provide us with a competitive advantage to continue to drive future innovation for our Company and the markets we serve.

Experienced and Incentivized Senior Management Team. The members of our Board of Directors and our executive officers, including Mr. Warren Kanders, are substantial stockholders of the Company, and beneficially own approximately 2223.25% of our outstanding common stock as of March 65, ~~2025~~2026, which we believe aligns the interests of our Board of Directors and our executive officers with that of our stockholders.

Growth-oriented Capital Structure. Our debt-free capital structure as of December 31, ~~2024~~2025, provides us with the capacity to fund future growth.

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Operating Segments

We operated our business within three segments until the sale of the Precision Sport segment on February 29, 2024. After the sale of the Precision Sport segment, we operate the business within two segments. These segments are defined based on the internal financial reporting used by our chief operating decision maker to allocate resources and assess performance. Certain significant selling and general and administrative expenses are not allocated to the segments, including non-cash stock compensation expense. Each segment is described below:

● ~~Our~~Prior ~~Outdoor~~to ~~segment~~its sale on July 11, ~~which~~2025, ~~includes~~PIEPS was included in our Outdoor segment alongside Black Diamond Equipment. ~~and~~Our ~~PIEPS,~~Outdoor segment is a global leader in designing, manufacturing, and marketing innovative outdoor engineered equipment and apparel for climbing, mountaineering, trail running, backpacking, skiing, and a wide range of other year-round outdoor recreation activities. Our Outdoor segment offers a broad range of products, including: high-performance, activity-based apparel (such as shells, insulation, midlayers, pants, and logowear); rock-climbing footwear and equipment (such as carabiners, protection devices, harnesses, belay devices, helmets, and ice-climbing gear); technical backpacks and high-end day packs; trekking poles; headlamps and lanterns; and gloves and mittens. We also offer advanced skis, ski poles, ski skins, and snow safety products, including avalanche airbag systems, avalanche transceivers, shovels, and probes.

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

See Note 18 to our consolidated financial statements for financial information regarding our segments. Also, see Note 3 to our consolidated financial statements for financial information regarding our Precision Sport segment, which is now classified as discontinued operations, as well as a description of the sale of PIEPS.

Products

Our products span a large assortment of product categories and include a wide variety of technical outdoor equipment and lifestyle products for a wide range of outdoor enthusiasts, including climbers, mountaineers, trail runners, skiers, backpackers and campers, bicyclists and other outdoor-inspired consumers. We design many of our products for extreme applications, such as high-altitude mountaineering, ice and rock climbing, as well as backcountry skiing and alpine touring. We also design and develop highly-engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers, recovery tracks, bicycle transport systems and accessories. Generally, we divide our product offerings into the following two primary categories:

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Outdoor: Our outdoor line consists of apparel, footwear, headlamps, lights, trekking poles, gloves, packs, avalanche airbags, poles, avalanche safety devices, and equipment such as carabiners, harnesses, protection devices, and various other climbing, mountaineering, hiking, and backcountry accessories and products.

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Adventure: Our adventure line consists of automotive roof racks, trays, mounting systems, luggage boxes, carriers, recovery tracks, bicycle transport systems and accessories.

Product Design and Development

We conduct our product research, evaluation, and design activities at our locations in Salt Lake City, Utah; Aurora, Colorado; Lebring, Austria; Sydney, Australia; and Brisbane, Australia.

We typically bring new products from concept to market in approximately 18 to 36 months, depending upon the technology integration and complexity of the product. We work simultaneously on product lines for the four subsequent selling seasons.

We expense research and development costs as incurred in selling, general, and administrative expenses.

Customers

We market and distribute our products in over 50 countries, primarily through independent specialty stores and specialty chains, premium sporting goods and outdoor recreation stores, distributors and original equipment manufacturers (“OEMs”) in the United States, Canada, Europe, Middle East, Asia, Australia, New Zealand, Africa, and South America. Outside of North America and Europe, we sell

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our products through independent global distributors into specialty retail stores. We also sell our products directly to customers through our various websites.

Our end users include a broad range of consumers, including mountain, rock, ice, and gym climbers, winter-outdoor enthusiasts, trail runners, backpackers, bicyclists, off-road enthusiasts, overlanders, and outdoor-inspired consumers. Such consumers demand high-quality, reliable, and high-precision products to enhance their performance and, in some cases, safety in a multitude of outdoor activities. We expect to leverage our user intimacy, engineering prowess, and design ability to expand into related technical product categories that target the same demographic group and distribution channels.

Sales and Marketing

Our sales force is generally deployed by geographic region: Canada, Europe, Asia Pacific, Latin America, Australia, and the United States. Our focus is on providing our products to a broad spectrum of outdoor enthusiasts. Within each of our brands, we strive to create a unique look for our products and to communicate those differences to the consumer. In addition, we are continuously exploring uses for brand and market research. We also regularly utilize various promotions and public relations campaigns.

We have consistently established relationships with professional athletes and influencers to help evaluate, promote and establish product performance and authenticity with customers. Such brand endorsers are one of many elements in our array of marketing materials, including instore displays, catalogs, workbooks, social media, and digital campaigns via our websites.

Manufacturing, Sourcing, Quality Assurance and Distribution

Manufacturing

Our objective is to deliver on-time the highest quality of products in the safest and most cost-efficient manner. Our culture of continuous improvement and implementation of industry best practices allows us to continue to increase productivity, reduce costs, and bring new innovative products to the market.

The Black Diamond Equipment, ~~PIEPS,~~ and Rhino-Rack manufacturing and distribution operations are ISO 9001–2015 certified and are audited annually by an independent certifying agency to ensure quality management systems meet the requirements of ISO 9001–2015, and to ensure that certified products meet all necessary performance certification requirements.

All products are manufactured to our specifications in third-party, independently-owned facilities. We keep employees and agents on-site or via regular visits at these third-party, independently-owned facilities to ensure that our products are manufactured to meet our specifications. While we do not maintain a long-term manufacturing contract with those facilities, we believe that our long-term relationships with them will help to ensure that a sufficient supply of goods built to our specification are available in a timely manner and on satisfactory economic terms in the future.

Sourcing

We source raw materials, components, finished goods from a variety of suppliers. Our primary materials include aluminum, steel, nylon, corrugated cardboard for packaging, metal, plastic and electrical components, and various textiles, foams, and fabrics. The raw materials and components used to manufacture our products are generally available from numerous suppliers in quantities sufficient to meet normal requirements.

We source packaging materials both domestically as well as from sources in Asia and Europe. We believe that all of our purchased products and materials could be readily obtained from alternative sources at comparable costs.

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Quality Assurance

Quality assurance at the Company has two primary functions:

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The first is to ensure that the products that we design and develop are manufactured to meet or exceed the Company’s own standards and international regulatory standards. This involves creating inspection documentation, reviewing manufacturing processes with our various vendor-partners, and inspecting finished product to assure it meets the rigorous standards required by our customers. These activities take place globally, wherever our products are manufactured.

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The second function is to provide real and meaningful input to the new product development process. Quality assurance professionals interact closely with the design and engineering teams and bring knowledge and expertise to the design process, ensuring that the products we bring to market truly meet the criteria established when a new product is envisioned.

The engineering prowess of the quality assurance group is a core competency that the Company seeks to leverage across all product lines and brands.

Global Distribution

Our distribution model allows us to ship a broad cross-section of our product line in smaller quantities to our own global distribution centers and to those of our Independent Global Distributors (“IGD”) more frequently and at lower transportation and logistics costs.

Competition

Because of the diversity of our product offerings, we compete by niche with a variety of companies. Our products must stand up to the high standards set by the end users in each category where quality, durability and performance are paramount. We believe our products compete favorably on the basis of product innovation, product performance, marketing support, and price.

The popularity of various outdoor activities and changing design trends affect the desirability of our products. Therefore, we seek to anticipate and respond to trends and shifts in consumer preferences by adjusting the mix of available product offerings by developing new products with innovative performance features and designs, and by marketing our products in a persuasive and memorable fashion to drive consumer awareness and demand. Failure to anticipate or respond to consumer needs and preferences in a timely and adequate manner could have a material adverse effect on our sales and profitability.

We compete with niche, privately-owned companies as well as a number of brands owned by large, multinational companies, such as those set forth below.

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Outdoor: Our outdoor products and accessories, such as apparel, footwear, trekking poles, headlamps, gloves, backpacks, transceivers, protection, carabiners, helmets, and harnesses, compete with products from companies such as The North Face, Patagonia, La Sportiva, Prana, Hestra, Osprey, Arc’Teryx, Petzl, and Mammut.

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Adventure: Our highly-engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers, recovery tracks and accessories compete with products from companies such as Thule, Dometic, Yakima, and Front Runner.

● Precision Sport: Our former Precision Sport segment sold bullets and ammunition to both retailers and distributors for sale to consumers as well as supplies bullets to OEMs who also manufacture bullets. Such companies include Vista (Federal Ammunition, CCI, and Remington), Nammo, Hornady, Fiocchi, and Olin (Winchester).

In addition, in certain categories we compete with certain of our large wholesale customers who focus on the outdoor market, such as REI, Mountain Equipment Co-op and Decathlon, which manufacture, market and distribute their own climbing, mountaineering, and skiing products under their own private labels.

Intellectual Property

We believe our registered and pending word and icon trademarks worldwide, including the Black Diamond and Diamond “C” logos, Black Diamond®, ATC ®, Camalot®, AvaLung ®, FlickLock®, Ascension™, Time is Life®, Hexentric®, Stopper®, Dawn Patrol®, Bibler®, “Use.Design.Engineer.Build.Repeat”®, Rhino-Rack®, Maxtrax®, RockyMounts®, and TRED™ create international brand recognition for our products.

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Bibler®, “Use.Design.Engineer.Build.Repeat”®, PIEPS®, Rhino-Rack®, Maxtrax®, RockyMounts®, and TRED™ create international brand recognition for our products.

Solely for convenience, our trademarks and tradenames referred to in this report may appear without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or the right of the applicable licensor to these trademarks and tradenames.

We believe our brands have an established reputation for innovation, style, quality, design, safety, and durability, and accordingly, we actively monitor and police our brands against infringement to ensure their viability and enforceability.

Our success with our proprietary products is generally derived from our “first mover” advantage in the market as well as our commitment to protecting our current and future proprietary technologies and products, which acts as a deterrent to infringement of our intellectual property rights. While we believe our patent and trademark protection policies are robust and effective, if we fail to adequately protect our intellectual property rights, competitors may manufacture and market products similar to ours. Our principal intellectual property rights include our patents and trademarks but also include products containing proprietary trade secrets and manufacturing know-how.

We cannot be sure that we will receive patents for any of our patent applications or that any existing or future patents that we receive or license will provide competitive advantages for our products. While we actively monitor our competitors to ensure that we do not compromise the intellectual property of others, we cannot be sure that competitors will not challenge, invalidate or void the application of any existing or future patents that we receive or license. In addition, patent rights may not prevent our competitors from developing, using or selling products that are in similar product niches as ours.

Seasonality

While the Company’s products are outdoor activity-based, there are no significant seasonal variations in sales and profitability. In ~~2024~~2025, approximately 4846% of our sales ~~from continuing operations~~ were in the first half of the year while approximately 5254% of our sales ~~from continuing operations~~ occurred in the second half of the year.

Working capital requirements vary throughout the year. Working capital generally increases to support peak manufacturing and shipping periods and then decreases as accounts receivable are collected.

Environmental Matters

Our operations are subject to federal, state, and local environmental, health and safety laws and regulations, including those that impose workplace standards and regulate the discharge of pollutants into the environment and establish standards for the handling, generation, emission, release, discharge, treatment, storage, and disposal of materials and substances including solid and hazardous wastes. We believe that we are in material compliance with such laws and regulations. Further, the cost of maintaining compliance has not, and we believe in the future, will not have a material adverse effect on our business, consolidated results of operations, and consolidated financial condition. Due to the nature of our operations and the frequently changing nature of environmental compliance standards and technology, we cannot predict with any certainty that future material capital or operating expenditures will not be required in order to comply with applicable environmental laws and regulations.

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Human Capital

As of December 31, ~~2024~~2025, ~~our~~we ~~continuing operations~~ had a total of over ~~470~~390 employees worldwide. Of these employees, 5030 were engaged in manufacturing, 220 in sales, marketing, product management and customer support, 7050 in administrative functions (IT, Finance, HR, Legal and Compliance, etc.), 9060 in R&D, engineering technology, manufacturing engineering and project management, 3020 retail store associates and 10 in various executive and corporate functions. None of our employees are represented by a union in collective bargaining with us. We believe that our employee relations are good. Our human capital objectives center around identifying, recruiting, retaining, incentivizing and integrating our existing and new employees. We maintain and grow our team utilizing practices that help us identify, hire, incentivize and retain our existing employees and integrate new employees into our Company.

Available Information

Our Internet address is www.claruscorp.com. We make available free of charge on or through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, and the proxy statement for our annual meeting of stockholders as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. Forms 3, 4 and 5 filed with respect to our equity securities under Section 16(a) of the Securities Exchange Act of 1934, as amended, are also available on our website. All of the foregoing materials are located at the ‘‘SEC Filings’’ tab under the section titled “Investor Relations.” The information found on our website shall not be deemed incorporated by reference by any general statement incorporating by reference this report into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, and shall not otherwise be deemed filed under such Acts.

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the Securities and Exchange Commission. Forms 3, 4 and 5 filed with respect to our equity securities under Section 16(a) of the Securities Exchange Act of 1934, as amended, are also available on our website. All of the foregoing materials are located at the ‘‘SEC Filings’’ tab under the section titled “Investor Relations.” The information found on our website shall not be deemed incorporated by reference by any general statement incorporating by reference this report into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, and shall not otherwise be deemed filed under such Acts.

The Securities and Exchange Commission also maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Securities and Exchange Commission at www.sec.gov. In addition, you may request a copy of any such materials, without charge, by submitting a written request to: Clarus Corporation, c/o the Secretary, 2084 East 3900 South, Salt Lake City, UT 84124. The contents of the websites identified above are not incorporated into this Annual Report on Form 10-K.

ITEM 1A. RISK FACTORS

In addition to other information contained in this Annual Report on Form 10-K, the following risk factors should be carefully considered in evaluating our business, because such factors may have a significant impact on our business, operating results, liquidity and financial condition. As a result of the risk factors set forth below, actual results could differ materially from those mentioned in any forward-looking statements. Additional risks and uncertainties not presently known to us, or that we currently consider to be immaterial, may also materially impact our business, operating results, liquidity and financial condition. If any of the following risks occur, our business, operating results, liquidity and financial condition, and the price of our common stock, could be materially adversely affected.

Risk Factor Summary

●

We are subject to risks related to our dependence on the strength of retail economies.

● Certain products we sell are used for inherently risky outdoor pursuits and have given rise to product liability, or product warranty claims, and other loss contingencies, including, without limitation, recalls and liability claims relating to Black Diamond Equipment, Ltd.’s (“BDEL”) avalanche beacon transceivers.

● A U.S. Consumer Products Safety Commission’s (~~the~~ “CPSC”) investigation under the Consumer Product Safety Act in connection with certain models of our avalanche transceivers has resulted in the CPSC’s staff torecommending ~~recommend~~ that the CPSC ~~impose~~seek substantial civil monetary penalties onfrom us, asand ~~well~~has asled the U.S. Department of Justice to commence an investigation.

● ~~Our~~Compliance ~~products~~costs and potential liabilities related to environmental requirements, including, ~~without~~those ~~limitation,~~associated ~~certain~~with ~~models~~Per- ofand ~~our~~Polyfluoroalkyl ~~avalanche~~Substances ~~transceivers~~(PFAS), ~~have~~could ~~been~~negatively ~~subject~~impact toour ~~adverse~~financial ~~publicity~~results.

● Some of our products and inventory contain Per- and Polyfluoroalkyl Substances (PFAS), which have resulted in charges in 2024 due to regulatory compliance costs, potential remediation efforts, and litigation risks.

●

Our markets are highly competitive and are subject to dramatic changes in consumer preferences.

● Our operations, including, ~~but~~among ~~not~~other ~~limited~~things, to integrating acquisitions and ~~our~~procuring ~~purchase of~~ raw materials, are sensitive to changes in global cultural, political, and financial market conditions, as well as potential changes in regulations, legislation, and government policies.

●

Changes in tariffs, tax laws, global trade policies and instability and volatility in global markets could adversely affect our business and results of operations.

●

Disruptions in our supply chain, third-party logistics providers, or distribution facilities could adversely affect our business, results of operations, and financial condition.

●

If we are unable to accurately forecast demand and manage inventory levels, we may experience excess or obsolete inventory, discounting, or lost sales.

●

Technological advances, the introduction of new products, and new design and manufacturing techniques could adversely affect our operations unless we are able to adapt to changing conditions.

●

If we fail to adequately protect our intellectual property rights, competitors may manufacture and market products similar to ours, which could adversely affect our market share and results of operations.

●

We may require additional capital and funding to meet our financial obligations as well as to support our business operations and growth initiatives, and this additional capital and funding may not be available on favorable terms, if at all.

●

We may be unsuccessful in our future acquisition endeavors and some of the businesses we acquire may incur significant losses from operations.

●

We have been required to recognize significant impairment charges and may be required to take future write-downs or write-offs, restructuring, and impairment or other charges.

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● ~~Technological~~Our ~~advances,~~business ~~the~~and ~~introduction~~growth ofmay ~~new~~suffer ~~products,~~if ~~and~~we ~~new~~are ~~design~~unable to attract and ~~manufacturing~~retain ~~techniques~~key ~~could~~officers ~~adversely~~or ~~affect~~employees, including our ~~operations~~Chief ~~unless~~Executive weOfficer, ~~are~~Warren ~~able~~Kanders, toor ~~adapt~~if towe ~~the~~experience ~~resulting~~unexpected ~~change~~loss inof ~~conditions~~key personnel.

● We may ~~require~~be ~~additional~~subject ~~capital~~to ~~and~~disruptions, ~~funding~~failures toor ~~meet~~cyber-attacks in our ~~financial~~information ~~obligations~~technology assystems ~~well~~and asnetwork toinfrastructures ~~support~~that ~~our~~could ~~business~~disrupt ~~operations~~our ~~and growth strategy~~operations, ~~and~~damage ~~this~~our ~~additional~~reputation ~~capital~~ and ~~funding~~adversely ~~may~~affect ~~not~~our bebusiness, ~~available~~operations, onand ~~acceptable~~financial ~~terms or at all~~results.

● WeThe ~~may~~effects beof ~~unsuccessful~~climate inchange ~~our~~and ~~future~~increased ~~acquisition~~focus ~~endeavors,~~by ifstakeholders ~~any,~~on ~~which~~sustainability ~~may~~and ~~have~~ESG anmatters ~~adverse~~may ~~effect~~adversely onaffect our business; inand ~~addition,~~financial ~~some~~results ofand ~~the~~damage ~~businesses~~our ~~we acquire may incur significant losses from operations~~reputation.

● WeThe ~~have~~members ~~been~~of ~~required~~our toBoard ~~recognize~~of ~~significant~~Directors ~~impairment~~and ~~charges~~our ~~and~~executive ~~may~~officers bebeneficially ~~required~~own toapproximately ~~take~~23.5% ~~future~~of ~~write~~our ~~downs~~outstanding orcommon ~~write-offs~~stock, ~~restructuring,~~which ~~and~~may ~~impairment~~limit or other ~~charges~~stockholders’ ability to influence corporate matters.

● Our business and growth may suffer if we are unable to attract and retain key officers or employees, including our Chief Executive Officer, Warren Kanders, as well as any loss of officers or employees due to illness or other events outside of our control.

● The members of our Board of Directors and our executive officers beneficially own in excess of approximately 22.2% of our common stock. As such, the concentration of our capital stock ownership with insiders will likely limit your ability to influence corporate matters.

● The ability of our information technology systems or information security systems to operate effectively, including as a result of cybersecurity incidents, viruses, hackers, malware, natural disasters, vendor business interruptions or other causes.

● The impact of changes in tariffs, tax laws, global trade policies as well as instability and volatility in global markets.

Risks Related to Our Industry

Many of the products we sell are used for inherently risky outdoor pursuits and have given rise to product liability or product warranty claims and other loss contingencies including, without limitation, recalls and liability claims relating to BDEL’s avalanche beacon transceivers, which could affect our earnings and financial condition.

Many of our products are used in applications and situations that involve high levels of risk of personal injury and death. As a result, we maintain a staff who focus on including appropriate disclaimers and markings, and undertaking testing and otherwise seeking to assure the quality and safety of our products. We stay current with laws to seek to provide thorough and protective disclaimers and instructions on all of our products and packaging. Furthermore, our technical climbing and avalanche safety equipment and our related operations meet and are certified to International Personal Protective Equipment (PPE) standards set by the EEC or ISO 9001 quality system standards. Failure to use our products for their intended purposes, failure to use or care for them properly, or their malfunction, or, in some limited circumstances, even correct use of our products, have resulted in serious bodily injury or death.

We remain exposed to product liability claims by the nature of the products we produce, including, without limitation, recalls and liability claims relating to BDEL’s avalanche beacon transceivers. Exposure occurs if one of our products is alleged to have resulted in property damage, bodily injury or other adverse effects. Any such product liability claims have included allegations of defects in manufacturing and/or design, failure to warn of dangers inherent in the product or activities associated with the product, negligence, strict liability, and/or breach of warranties. Although we maintain product liability insurance in amounts that we believe are reasonable, there can be no assurance that we will be able to maintain such insurance on acceptable terms, if at all, in the future or that product liability claims will not exceed the amount of insurance coverage.

As a manufacturer and distributor of consumer products, we are subject to government regulation in the United States and other countries, including, without limitation, the Consumer Products Safety Act, which empowers the CPSC to exclude from the market products that are found to be unsafe or hazardous. Under certain circumstances, the CPSC could require us to repurchase or recall one or more of our products and/or subject us to financial penalties. For example, as disclosed in Item 3. “Legal Proceedings,” BDEL was notified by the CPSC that the agency staff believes we failed to timely meet our statutory reporting obligations under the Consumer Product Safety Act with respect to certain models of avalanche transmitters distributed by BDEL either switching unexpectedly out of “send” mode and/or out of “search” mode, that we made material misrepresentations in reports to the CPSC, and that the agency staff has recommended that the CPSC impose substantial civil monetary penalties on us. Furthermore, as disclosed in Item 3. “Legal Proceedings,” the U.S. Department of Justice has commenced an investigation relating to the CPSC investigation and we received grand jury subpoenas for documents relating to, among other things, certain avalanche transmitters distributed by BDEL. Additionally, laws regulating certain consumer products exist in some cities and states, as well as in other countries in which we sell our products, and more restrictive laws and regulations may be adopted in the future. Any such recalls or repurchases of our products and/or imposition of financial penalties on us could be costly to us and could damage our business and reputation as well as have a material adverse effect on the Company’s liquidity, stock price, consolidated financial position, results of operations and/or cash flows. If we are required to remove, or if we voluntarily remove, our products from the market, our reputation could be tarnished and we might have large quantities of finished products that we are unable to sell.

We spend substantial resources seeking to ensure compliance with governmental and other applicable standards. However, compliance with these standards does not necessarily prevent individual or class action lawsuits, which can entail significant cost and risk. We do not maintain insurance against many types of claims involving alleged defects in our products that do not involve personal injury or property damage. As a result, these types of claims could have a material adverse effect on our business, results of operations, and financial condition.

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~~remove~~Our product liability insurance program is an occurrence-based program based on our current and historical claims experience and the availability and cost of insurance. We carry both general and umbrella liability policies that insure us for product liability claims. The policy has a small retention, orwhich ifenables weus ~~voluntarily~~to ~~remove~~manage and control our product liability claims. Historically, product liability awards have not exceeded our ~~products~~individual ~~from~~per ~~the~~occurrence ~~market~~self-insured retention. We cannot assure you, however, that our ~~reputation~~future ~~could~~product liability experience will be ~~tarnished~~consistent ~~and~~with our past experience. Additionally, we ~~might~~do ~~have~~not ~~large~~maintain ~~quantities~~product recall insurance. We maintain a warranty reserve for estimated future warranty claims, but the actual costs of ~~finished~~servicing ~~products~~future ~~that~~warranty weclaims ~~are~~may ~~unable~~exceed the reserve. Insurance coverage may become unavailable or more expensive, and policy limits, exclusions, or retentions could leave us exposed to ~~sell~~significant uninsured or underinsured losses.

WeAs ~~spend~~a ~~substantial~~result, ~~resources~~product ~~seeking~~recalls toor ~~ensure~~product ~~compliance~~liability ~~with~~claims—including, ~~governmental~~without ~~and~~limitation, ~~other~~recalls, ~~applicable~~liability ~~standards. However~~claims, ~~compliance~~and/or ~~with~~financial ~~these~~penalties—could ~~standards~~be ~~does~~costly ~~not~~to ~~necessarily~~us ~~prevent~~and ~~individual~~could ordamage ~~class~~our ~~action~~business ~~lawsuits~~and reputation, ~~which~~potentially ~~can~~having ~~entail~~a ~~significant~~material ~~cost~~adverse ~~and~~effect ~~risk.~~on Wethe doCompany’s ~~not~~liquidity, ~~maintain~~stock ~~insurance~~price, ~~against~~consolidated ~~many~~financial ~~types~~position, results of ~~claims~~operations, ~~involving~~and/or ~~alleged~~cash ~~defects~~flows. inThis ~~our~~includes, ~~products~~without ~~that~~limitation, dothe ~~not~~imposition ~~involve~~by ~~personal~~the ~~injury~~CPSC orof ~~property~~substantial ~~damage.~~civil Asmonetary apenalties ~~result~~on us, ~~these~~requirements ~~types~~to oftake ~~claims~~corrective ~~could~~actions ~~have~~(including arecalls), and/or ~~material~~the ~~adverse~~ongoing ~~effect~~investigation onby ~~our~~the ~~business,~~U.S. ~~results~~Department of ~~operations,~~Justice ~~and~~relating ~~financial~~to ~~condition~~BDEL’s avalanche beacon transceivers.

Our product liability insurance program is an occurrence-based program based on our current and historical claims experience and the availability and cost of insurance. We carry both general and umbrella liability policies that insure us for product liability claims. The policy has a small retention, which enables us to manage and control our product liability claims. Historically, product liability awards have not exceeded our individual per occurrence self-insured retention. We cannot assure you, however, that our future product liability experience will be consistent with our past experience. Additionally, we do not maintain product recall insurance. We maintain a warranty reserve for estimated future warranty claims, but the actual costs of servicing future warranty claims may exceed the reserve.

As a result, product recalls or product liability claims—including, without limitation, recalls, liability claims, and/or financial penalties—could be costly to us and could damage our business and reputation, potentially having a material adverse effect on the Company’s liquidity, stock price, consolidated financial position, results of operations, and/or cash flows. This includes, without limitation, the imposition by the CPSC of substantial civil monetary penalties on us and/or the ongoing investigation by the U.S. Department of Justice relating to BDEL’s avalanche beacon transceivers.

We believe it is reasonably possible that a change in our ability to estimate the amount of loss relating to any penalties imposed by the CPSC or other regulators could occur in the near term and that such a change in estimate could be material. Additionally, given the ongoing nature of this matter, the Company is currently unable to predict its duration, the resources required, or the ultimate outcome, nor can we determine the full impact it may have on the Company’s liquidity, financial condition, results of operations, and/or cash flows. Any penalties imposed by the CPSC or other regulators could be significant which could have a material adverse effect on our business, results of operations, and financial condition.

Adverse publicity about the Company and/or its brands and products, including with respect to certain models of avalanche transmitters distributed by BDEL through social media or connection with other media or brand damaging events and/or public perception could negatively impact our business and reputation.

Our brands have wide recognition, and our success has been due in large part to our ability to maintain, enhance and protect our brand image and reputation and our consumers’ and customers’ connection to our brands. Our continued success depends in part on our ability to adapt to a rapidly changing media environment, including our increasing reliance on social media and online dissemination of advertising campaigns. In addition, consumer and customer sentiment could be shaped by our sustainability policies and related design, sourcing and operational decisions.

Negative claims or publicity involving us, our board of directors, our brands, our products, including, without limitation, recalls and liability claims relating to BDEL’s avalanche beacon transceivers, services and experiences, consumer data, or any of our key employees, endorsers, or suppliers could seriously damage our reputation and the image of our brands, regardless of whether such claims are accurate.

Furthermore, social media, which accelerates and potentially amplifies the scope of negative publicity, can increase the challenges of responding to negative claims. Adverse publicity could also damage our reputation and the image of our brands, undermine consumer confidence in us and reduce long-term demand for our products, even if such adverse publicity is unfounded or not material to our operations. If the reputation, culture or image of any of our brands and products, including, without limitation, recalls and liability claims relating to BDEL’s avalanche beacon transceivers, is tarnished or if we receive negative publicity, then our sales, financial condition and results of operations could be materially and adversely affected.

From time to time, we have been and may be subject to legal proceedings, regulatory investigations or disputes, and governmental inquiries that could cause us to incur significant expenses, divert our management’s attention, damage our business and reputation as well as have a material adverse effect on the Company’s liquidity, stock price, consolidated financial position, results of operations and/or cash flows.

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~~From~~regardless ~~time~~of totheir ~~time~~merits, wecould ~~have~~harm ~~been~~our ~~and~~reputation, ~~may~~divert bemanagement’s ~~subject~~attention tofrom our operations and result in substantial legal ~~proceedings~~fees and other costs. For example, ~~regulatory~~as ~~investigations~~disclosed orin ~~disputes~~Item 3. “Legal Proceedings,” ~~and~~BDEL ~~governmental~~was ~~inquiries~~notified by the CPSC that ~~could~~the ~~cause~~agency usstaff believes we failed to ~~incur~~timely ~~significant~~meet ~~expenses~~our statutory reporting obligations under the Consumer Product Safety Act with respect to certain models of avalanche transmitters distributed by BDEL either switching unexpectedly out of “send” mode and/or out of “search” mode, ~~divert~~that ~~our~~we ~~management’s~~made ~~attention~~material misrepresentations in reports to the CPSC, and that the agency staff intends to recommend that the CPSC impose substantial civil monetary penalties on us. Any financial or other penalties imposed by the CPSC as well as the Department of Justice or other regulators could be costly to us and could damage our business and reputation as well as have a material adverse effect on the Company’s liquidity, stock price, consolidated financial position, results of operations and/or cash flows. Also, we have reporting obligations to safety regulators in all jurisdictions where we sell our products, where reporting may trigger further regulatory investigations.

~~From~~Under ~~time~~the toCompany’s ~~time,~~Second weAmended ~~have been~~ and ~~may~~Restated ~~be subject to claims~~By-Laws, ~~lawsuits,~~the ~~government~~Company ~~investigations,~~may ~~and~~be ~~other~~obligated ~~proceedings~~to ~~involving products liability~~indemnify, ~~competition~~ and ~~antitrust,~~advance ~~intellectual~~expenses ~~property,~~(including ~~privacy,~~reasonable ~~consumer~~attorneys’ ~~protection,~~fees) ~~securities~~to, ~~tax,~~certain ~~labor~~officers and ~~employment,~~employees ~~commercial~~of ~~disputes,~~the ~~and~~Company ~~other~~or ~~matters~~its ~~that~~subsidiaries ~~could~~in ~~adversely~~connection ~~affect~~with ~~our~~the ~~business~~investigation ~~operations~~being ~~and~~conducted ~~financial condition. Injuries sustained~~ by ~~those~~the ~~who~~United ~~use~~States orDepartment ~~purchase~~of ~~our~~Justice ~~products,~~relating ~~including,~~to ~~without~~the ~~limitation, BDEL~~Company’s avalanche ~~beacon~~ transceivers, ~~have,~~ and ~~could~~any inrelated ~~the future~~proceedings, ~~subject~~including usif tosuch ~~regulatory~~persons ~~proceedings~~are ~~and~~or ~~litigation~~become ~~by government agencies and private litigants brought against us~~witnesses, ~~that regardless of their merits~~subjects, ~~could harm our reputation~~targets, ~~divert~~or ~~management’s~~otherwise ~~attention~~become ~~from~~involved ~~our operations and result~~ in ~~substantial~~such ~~legal fees and other costs~~matters. ~~For~~If ~~example,~~any asapplicable ~~disclosed~~liability ininsurance ~~Item~~maintained ~~3. “Legal Proceedings,” BDEL was notified~~ by the ~~CPSC~~Company ~~that~~is ~~the~~unavailable ~~agency~~or ~~staff~~is ~~believes~~not wesufficient ~~failed~~ to ~~timely~~cover, meet our statutory reporting obligations under the Consumer Product Safety Act with respect to certain models of avalanche transmitters distributed by BDEL either switching unexpectedly out of “send” mode and/or ~~out~~does ofnot ~~“search” mode~~cover, ~~that~~such weindemnification ~~made~~and ~~material~~advancement ~~misrepresentations~~obligations inand ~~reports~~related ~~to the CPSC~~costs, ~~and that~~ the ~~agency~~Company ~~staff~~may ~~intends~~be required to ~~recommend~~pay ~~that~~such ~~the~~amounts ~~CPSC~~directly, ~~impose~~which ~~substantial civil monetary penalties on us. Any financial or other penalties imposed by the CPSC as well as the Department of Justice or other regulators~~ could be ~~costly~~significant ~~to us~~ and could ~~damage~~adversely ~~our~~affect ~~business and reputation as well as have a material adverse effect on~~ the Company’s liquidity, ~~stock price,~~ consolidated financial position, results of operations and/or cash flows. ~~Also,~~Any weamounts ~~have~~advanced ~~reporting~~are ~~obligations~~generally subject to ~~safety~~an ~~regulators~~undertaking into ~~all~~repay ~~jurisdictions~~such ~~where~~amounts weif ~~sell~~it ~~our~~is ~~products,~~ultimately ~~where~~determined ~~reporting~~that ~~may~~the ~~trigger~~applicable ~~further~~person ~~regulatory~~was ~~investigations~~not entitled to indemnification.

We are subject to risks related to our dependence on the strength of retail economies in various parts of the world, and our performance may be affected by general economic conditions.

Our business depends on the strength of the retail economies in various parts of the world, primarily in North America, Europe, Australia and to a lesser extent, Asia, Central and South America. These retail economies are affected primarily by factors such as consumer demand and the condition of the retail industry, which, in turn, are affected by general economic conditions and specific events such as natural disasters, terrorist attacks, and political unrest. The impact of these external factors is difficult to predict, and one or more of the factors could adversely impact our business, results of operations, and financial condition.

Purchases of many consumer products are discretionary and tend to be highly correlated with the cycles of the levels of disposable income of consumers. As a result, any substantial deterioration in general economic conditions could adversely affect consumer discretionary spending patterns, our sales, and our results of operations. In particular, decreased consumer confidence or a reduction in discretionary income as a result of unfavorable macroeconomic conditions may negatively affect our business. If the macroeconomic environment worsens, consumers may reduce or delay their purchases of our products. Any such reduction in purchases could have a material adverse effect on our business, financial condition, and results of operations.

Moreover, declining economic conditions create the potential for future impairments of goodwill and other intangible and long-lived assets that may negatively impact our financial condition and results of operations. Various uncertainties tied to economic conditions, including significant adverse changes in business climate, adverse actions by regulators, unanticipated competition, loss of key customers, a downturn in the economy or in discretionary income levels or changes in consumer preferences could impact the expected cash flows to be generated by an asset or group of assets, and may result in an impairment of those assets. The impact of weak consumer credit markets, corporate restructurings, layoffs, prolonged high unemployment rates, declines in the value of investments and residential real estate, higher fuel prices and increases in federal and state taxation all can negatively affect our operating results.

Additionally, the products sold by our Adventure segment are vulnerable to fluctuations in automotive sales and trends, shifts in consumer preferences, the availability of automobiles and/or disruptions in the automotive industry’s supply chains.

As noted above, because a substantial majority of our net revenue is generated through discretionary spending by consumers for our outdoor recreation products, a downturn in the economy resulting from prolonged supply chain disruptions or labor shortages, a significant increase in inflation rates (including in connection with rising interest rates through government action to fight inflationary trends), or a reduction in consumer confidence in the U.S. economy may have a material adverse impact on our business, financial condition and results of operations, as consumers generally reduce their discretionary spending during such periods. Inflation rates have increased and may continue to rise or stay elevated for some time, all of which negatively impact consumer confidence and discretionary

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spending patterns. Additionally, inflationary trends and uncertainties in the economic climate in the United States and elsewhere could have a similar negative impact on the rate and amounts of purchases by our current and potential customers, create price inflation for our products, or otherwise have a negative impact on our expenses, gross margins and revenues, all of which could hinder our growth.

The occurrence of severe weather events, catastrophic health events, natural or man-made disasters, social and political conditions or civil unrest could significantly damage or destroy demand for our products, as well as key supply chain and fulfillment arrangements.

Unforeseen events, including public health emergencies, such as pandemics, natural disasters, such as earthquakes, hurricanes, tornadoes, snow or ice storms, floods and heavy rains, and man-made disasters, such as an oil spill closing large areas of hunting or fishing, could disrupt our operations or the operations of our suppliers, as well as the behavior of our consumers. In addition, extreme weather conditions could result in disruption or delay of production and delivery of materials and products in our supply chain and cause staffing shortages among our suppliers and other vendors on whom we rely. Global climate change may result in significant natural disasters occurring more frequently or with greater intensity, such as drought, wildfires, storms, sea-level rise, and flooding. Socio-political factors, such as wars, civil unrest or other economic or political uncertainties that contribute to consumer unease or harm to our supply chain or customer base, may also result in decreased discretionary spending, property damage and/or business interruption losses. To the extent these events result in the closure of one or more distribution centers that we rely on, a significant number of stores where our goods are sold, or our corporate headquarters or impact one or more of our key suppliers, our operations and financial performance could be materially adversely affected through an inability to support our business and fulfill demand that results in lost sales, and any precautions that we may take may not be adequate to mitigate the impact of such events. As these events occur in the future, if they should impact areas in which we have our corporate headquarters, a distribution center or a concentration of vendors or the stores where our products are sold, such events could have a material adverse effect on our business, financial condition and results of operations.

Changes in the retail industry and markets for consumer products affecting our customers or retailing practices could negatively impact existing customer relationships and our results of operations.

We sell our products to retailers, including sporting goods and specialty retailers, as well as direct to consumers. A significant deterioration in the financial condition of our major customers, including, without limitation, Recreational Equipment, Inc. (REI), would have a material adverse effect on our sales and profitability. We regularly monitor and evaluate the credit status of our customers and attempt to adjust sales terms as appropriate. Despite these efforts, a bankruptcy filing by a key customer could have a material adverse effect on our business, results of operations, and financial condition.

In addition, as a result of the desire of retailers to more closely manage inventory levels, there is a growing trend among retailers to make purchases on a “just-in-time” basis. This requires us to shorten our lead time for production in certain cases and more closely anticipate demand, which could in the future require us to carry additional inventories.

We may be negatively affected by changes in the policies of our retailer customers, such as inventory destocking, limitations on access to and time on shelf space, use of private label brands, price demands, payment terms, and other conditions, which could negatively impact our results of operations.

There is a growing trend among retailers in the U.S. and in foreign markets to undergo changes such as consolidations, restructurings or store closings or reorganizations, that could decrease the number of stores that carry our products or increase the concentration of ownership within the retail industry. These changes within the retail industry could result in a shift of bargaining power to the retail industry and in fewer outlets for our products which could result in price and other competition that could reduce our margins and our net sales.

Additionally, shifts in consumer purchasing patterns, including the growth of e-commerce and large one-stop digital marketplaces, e-commerce off-price retailing and online comparison shopping in our key markets may have an adverse effect on our direct-to-consumer operations and the financial health of certain of our wholesale customers, some of whom may reduce their brick and mortar store fleet, file for protection under bankruptcy laws, restructure, or cease operations. These related business impacts have already occurred at certain of our wholesale customers. We face increased risk of order reduction and cancellation when dealing with financially ailing wholesale customers. We also extend credit to our wholesale customers based on an assessment of the wholesale customer’s financial condition, generally without requiring collateral. We may choose (and have chosen in the past) to limit our credit risk by reducing our

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level of business with wholesale customers experiencing financial difficulties and may not be able to replace those revenues with other customers or through our direct-to-consumer businesses within a reasonable period or at all.

In addition, our direct-to-consumer and wholesale sales could be adversely affected by changes in the terms, fees, algorithms, search placement, advertising policies, data access, or other practices of third-party e-commerce platforms, online marketplaces, and digital marketing channels, as well as by disruptions or outages affecting such platforms.

Seasonality and weather conditions may cause our operating results to vary from quarter to quarter.

Sales of certain of our products in our Outdoor segment are seasonal. Sales of our outdoor recreation products such as carabineers, harnesses, and related climbing equipment products increase during warm weather months and decrease during winter, while sales of our apparel line and winter sports equipment such as our skis and related ski equipment increase during the cold weather months and decrease during summer. Weather conditions may also negatively impact sales (including events that may be caused or exacerbated by climate change). For instance, milder temperatures could prevent the formation of ice, which may negatively affect demand for our ice climbing products, and mild winter weather with less snowfall may negatively impact sales of our winter sports products. These factors could have a material adverse effect on our business, results of operations, and financial condition.

Our results of operations could be materially harmed if we are unable to accurately forecast demand for our products.

In each of our geographic markets, we face significant competition with respect to our products. Retailers who are our wholesale customers often pose a significant competitive threat by designing, marketing and distributing products under their own private labels that compete with ours. We also experience direct competition in our direct-to-consumer business from retailers that are our wholesale customers. This is true in particular in the digital marketplace, where increased consumer expectations and competitive pressure related to various aspects of our e-commerce business, including speed of product delivery, shipping charges, return privileges, and other evolving expectations are key factors.

Additionally, we often schedule internal production and place orders for products with independent manufacturers before our customers’ orders are firm. Therefore, if we fail to accurately forecast customer demand, we may experience excess inventory levels or a shortage of product to deliver to our customers.

Inventory levels in excess of customer demand may result in inventory write-downs and the sale of excess inventory at discounted prices, which could have an adverse effect on our business, results of operations, and financial condition. On the other hand, if we underestimate demand for our products, our ~~manufacturing facilities or~~ third-party manufacturers may not be able to produce products to meet customer requirements, and this could result in delays in the shipment of products and lost revenues, as well as damage to our reputation and customer relationships. There can be no assurance that we will be able to successfully manage inventory levels to meet future order and reorder requirements.

Competition in our industries may hinder our ability to execute our business strategy, achieve profitability, or maintain relationships with existing customers.

We operate in a highly competitive industry. In this industry, we compete against numerous other domestic and foreign companies. Competition in the markets in which we operate is based primarily on product quality, product innovation, price, and customer service and support, although the degree and nature of such competition vary by location and product line. Some of our competitors are more established in their industries and have substantially greater revenue or resources than we do. Our competitors may take actions to match new product introductions and other initiatives. Since many of our competitors also source their products from third parties, our ability to obtain a cost advantage through sourcing is reduced. Certain of our competitors may be willing to reduce prices and accept lower profit margins to compete with us. Further, retailers often demand that suppliers reduce their prices on existing products. Competition could cause price reductions, reduced profits or losses or loss of market share, any of which could have a material adverse effect on our business, results of operations, and financial condition.

To compete effectively in the future in the consumer products industry, among other things, we must: maintain strict quality standards; develop new and innovative products that appeal to consumers; deliver products on a reliable basis at competitive prices; anticipate and respond to changing consumer trends in a timely manner; maintain favorable brand recognition; and provide effective marketing support.

Our inability to do any of these things could have a material adverse effect on our business, results of operations and financial condition.

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Our inability to do any of these things could have a material adverse effect on our business, results of operations and financial condition.

The success of our proprietary products depends, in part, on our ability to protect our current and future technologies and products and to defend our intellectual property rights. If we fail to adequately protect our intellectual property rights, competitors may manufacture and market products similar to ours. Our principal intellectual property rights include our trademarks, patents, and trade secrets.

We hold numerous patents for the invention of new or improved technologies, which are known as utility patents, and pending patent applications covering a wide variety of products. We cannot be sure that we will receive patents for any of our patent applications or that any existing or future patents that we receive or license will provide competitive advantages for our products. We also cannot be sure that competitors will not challenge, invalidate or avoid the application of any existing or future patents that we receive or license. In addition, patent rights may not prevent our competitors from developing, using or selling products that are similar or functionally equivalent to our products.

Third parties may have patents, or may be awarded new patents, that may materially adversely affect our ability to market, distribute and sell our products. Accordingly, our products, including, but not limited to, our technical climbing and backpack products, may become subject to patent infringement claims or litigation, any adverse determination of which could have a material adverse effect on our business, results of operations, and financial condition.

Our success depends on third-party logistics providers and our and third-party distribution facilities.

The majority of our products are manufactured outside of our principal sales markets, which requires these products to be consolidated and transported, sometimes over large geographical distances. A small number of third-party logistics providers currently consolidate, deconsolidate and/or transload almost all of our products. Any disruption in the operations of these providers or changes to the costs they charge, due to capacity constraints, volatile fuel prices or otherwise, could materially impact our sales and profitability. A prolonged disruption in the operations of these providers, by any means, could also require us to seek alternative distribution arrangements, which may not be available on attractive terms and could lead to delays in distribution of products, either of which could have a significant and material adverse effect on our business, results of operations and financial condition.

In addition, the ability to move products over larger geographical distances could be (as is currently the case) constrained by ocean, air and trucking cargo capacity, or disrupted by limitations at ports or borders. These constraints and disruptions could hinder our ability to satisfy demand through our wholesale and direct-to-consumer businesses, and we may miss delivery deadlines, which may cause our customers to cancel their orders, refuse to accept deliveries or demand a reduction in purchase price. In addition, increases in distribution costs, including but not limited to trucking, air and freight costs, could (as is currently the case) adversely affect our costs, which we may not be able to offset through price increases or decreased promotions.

We receive our products from third-party logistics providers at our owned and leased distribution centers in the United States, Australia, Austria, and New Zealand. The fixed costs associated with owning, operating and maintaining such distribution centers during a period of economic weakness or declining sales can result in lower operating efficiencies, financial deleverage and potential impairment in the recorded value of distribution assets.

We also receive and distribute our products through third-party operated distribution facilities internationally and domestically. We depend on these third-parties to manage the operation of their distribution facilities as necessary to meet our business needs. If such third-parties fail to manage these responsibilities, our international and domestic distribution operations could face significant disruptions.

Our ability to meet consumer expectations, manage inventory, complete sales, and achieve our objectives for operating efficiencies depends on the proper operation of our existing distribution facilities, as well as the facilities of third-parties, the development or expansion of additional distribution capabilities and services, and the timely performance of services by third-parties, including those involved in moving products to and from our distribution facilities and facilities operated by third-parties.

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Our ~~operations in~~ international ~~markets,~~operations ~~and~~expose ~~earnings~~us into ~~those~~changing ~~markets, may be affected by changes in~~ global ~~cultural,~~conditions ~~political,~~ and ~~financial~~legal ~~market~~and ~~conditions~~regulatory asrequirements, ~~well~~including astariffs, ~~potential~~trade ~~changes in regulations~~restrictions, ~~legislation~~and anti-corruption and ~~government~~sanctions ~~policies~~laws such as ~~tariffs,~~the ~~tax laws and global trade policies~~FCPA.

Approximately 6058% of our sales for the year ended December 31, ~~2024~~2025 were earned in international markets. As such our ability to maintain the current level of operations in our existing international markets and to capitalize on growth in existing and new international markets is subject to risks associated with international operations.

Our products are subject to increasingly stringent and complex domestic and foreign product labeling and performance and safety standards, laws and other regulations. These requirements could result in greater expense associated with compliance efforts, and failure to comply with these regulations could result in a delay, non-delivery, recall, or destruction of inventory shipments during key seasons or in other financial penalties. Significant or continuing noncompliance with these standards and laws could disrupt our business and harm our reputation.

These risks include the burdens of complying with a variety of foreign laws and regulations, unexpected changes in regulatory requirements, new tariffs or other barriers to some international markets. For example, any future withdrawal or renegotiation of trade agreements, and the prosecution of trade disputes or the imposition of tariffs, duties, taxes and other charges on imports or exports between the United States and countries like China, Canada and Mexico may adversely affect our ability to operate our business and execute our growth ~~strategy~~initiatives. In addition, it may be more difficult for us to enforce agreements, collect receivables, receive dividends and repatriate earnings through foreign legal systems.

In addition, our international operations may increase our exposure to compliance risks under anti-corruption, anti-money laundering, and sanctions laws. Like other companies operating internationally, we are subject to the Foreign Corrupt Practices Act (the “FCPA”) and other anti-corruption, anti-money laundering, and sanctions laws that prohibit improper payments and other misconduct by us, our employees, agents, distributors, and other third parties with whom we do business. We operate, and may seek to expand, in markets where corruption and bribery risks may be heightened, and we rely on third parties in certain jurisdictions. We have implemented policies, procedures, training, and internal controls designed to promote compliance, but we cannot assure you that our employees or third parties will comply, that our controls will be effective, or that we will not be subject to investigations, enforcement actions, or private litigation.

In February 2025, an executive order directed the U.S. Department of Justice (“DOJ”) to pause certain FCPA enforcement activity for a review period, and DOJ issued updated enforcement guidelines in June 2025 and resumed FCPA enforcement with a stated focus on matters implicating U.S. economic and national security interests. These developments, and any future shifts in enforcement priorities, do not eliminate our compliance obligations, and enforcement may increase or decrease over time. In addition, the Securities and Exchange Commission retains civil enforcement authority relating to, among other things, the FCPA’s accounting provisions (books and records and internal controls), and we could face significant penalties, compliance costs, business disruption, reputational harm, and loss of business if we, our employees, or third parties are alleged to have violated applicable laws.

We cannot predict whether quotas, duties, taxes, exchange controls, current or future “trade wars” or other restrictions will be imposed by the United States, China, Canada and Mexico or other countries upon the import or export of our products and the commodities and components used to manufacture our products, or what effect any of these actions would have on our business, financial condition or results of operations. We cannot predict whether there might be changes in our ability to repatriate earnings or capital from international jurisdictions. Changes in regulatory and geopolitical policies and other factors may adversely affect our business or may require us to modify our current business practices.

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Some of our operations are conducted or products are sold in countries where economic growth has slowed, or where economies have suffered economic, social and/or political instability or hyperinflation. Moreover, declining economic conditions create the potential for future impairments of goodwill and other intangible and long-lived assets that may negatively impact our financial condition and results of operations. In addition, global economic uncertainty relating to the effects of fiscal and political crises and political and economic disputes, changes in consumer spending, foreign currency exchange rate fluctuations, political unrest, natural disasters or other crises, terrorist acts, acts of war and/or military operations, could have a material adverse effect on our financial condition, results of operations and cash flows.

If we cannot continue to develop new products in a timely manner, and at favorable margins, we may not be able to compete effectively.

We believe that our future success will depend, in part, upon our ability to continue to introduce innovative design extensions for our existing products and to develop, manufacture, and market new products. We cannot assure you that we will be successful in the introduction, manufacturing, and marketing of any new products or product innovations, or develop and introduce, in a timely manner, innovations to our existing products that satisfy customer needs or achieve market acceptance. Our failure to develop new products and introduce them successfully and in a timely manner, and at favorable margins, would harm our ability to successfully grow our business and could have a material adverse effect on our business, results of operations, and financial condition.

Our operating results can be adversely affected by changes in the cost or availability of raw materials.

Pricing and availability of raw materials for use in our businesses can be volatile due to numerous factors beyond our control, including general, domestic, and international economic conditions, labor costs, production levels, competition, consumer demand, import duties, and tariffs and currency exchange rates. This volatility can significantly affect the availability and cost of raw materials for us, and may therefore have a material adverse effect on our business, results of operations, and financial condition.

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During periods of rising prices of raw materials, there can be no assurance that we will be able to pass any portion of such increases on to customers. Conversely, when raw material prices decline, customer demands for lower prices could result in lower sale prices and, to the extent we have existing inventory, lower margins. We currently do not hedge against our exposure to changing raw material prices. As a result, fluctuations in raw material prices could have a material adverse effect on our business, results of operations, and financial condition.

Supply shortages or changes in availability for any particular type of raw material can delay production or cause increases in the cost of manufacturing our products. We may be negatively affected by changes in availability and pricing of raw materials, which could negatively impact our results of operations.

We may not realize returns on our fixed cost investments in our direct-to-consumer business operations.

One of our strategic priorities is to expand and improve our global direct-to-consumer business operations. Accordingly, we continue to make investments in our digital capabilities and our direct-to-consumer operations. Since many of the costs of our direct-to-consumer operations are fixed, we may be unable to reduce expenses in order to avoid losses or negative cash flows if we have insufficient sales, including as a result of restrictions on operations. We may not be able to exit direct-to-consumer brick and mortar locations and related leases at all or without significant cost or loss, renegotiate the terms thereof, or effectively manage the profitability of our existing brick and mortar stores. In addition, obtaining real estate and effectively renewing real estate leases for our direct-to-consumer brick and mortar operations is subject to the real estate market and we may not be able to secure adequate new locations or successfully renew leases for existing locations.

Changes in effective tax rates could adversely affect our results.

As a global company, we determine our income tax liability in various tax jurisdictions and our effective tax rate based on an analysis and interpretation of local tax laws and regulations, as well as our financial projections. This analysis requires significant judgment and estimation, often based on assumptions about the future, which, in times of economic disruptions or legislative changes, are highly uncertain. Our tax determinations are subject to periodic domestic and foreign audits, and while we accrue for uncertain tax positions, these accruals may be insufficient to satisfy unfavorable findings. Unfavorable audit findings or tax rulings could result in payment of additional taxes, fines, and penalties for prior periods and could lead to higher tax rates in future periods.

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Tax laws and regulations continue to evolve at both domestic and international levels. For example, recent legislative changes in the United States, such as the Inflation Reduction Act of 2022, introduced a corporate alternative minimum tax and an excise tax on stock buybacks, which could impact our effective tax rate and cash flows. Additionally, international tax initiatives, including the Organization for Economic Co-operation and Development (“OECD”)’s global minimum tax framework under Pillar Two, aim to establish a minimum corporate tax rate of 15% for large multinational enterprises. As countries implement these measures, our tax obligations could increase, and compliance requirements may become more complex. While the Company does not currently meet the minimum revenue threshold for Pillar Two and is not subject to its provisions, any future compliance could increase our tax obligations, impose additional compliance costs, and adversely affect our results of operations and financial condition.

Moreover, ongoing tax reform discussions in the U.S. and other jurisdictions could further impact our tax liabilities. Proposals to modify corporate tax rates, implement new taxation mechanisms on foreign earnings, or change existing tax deductions and credits could materially affect our financial results. Given the political and economic uncertainty surrounding tax policy, we cannot predict the likelihood, form, or timing of such changes, but any unfavorable developments could have an adverse impact on our effective tax rate, income tax expense, and overall financial performance.

Furthermore, changes in global tax laws, including efforts to reform the taxation of digital services and cross-border transactions, may lead to increased tax costs or compliance burdens. The OECD’s Base Erosion and Profit Shifting (“BEPS”) initiatives and similar measures adopted by various jurisdictions may further contribute to tax uncertainty. As new regulations and interpretations emerge, our ability to mitigate risks associated with these changes may be limited, and our results of operations and financial condition could be adversely affected.

19The conflicts between Russia and Ukraine and the Middle East, and the potential for these and other geopolitical conflicts to expand or intensify, including through the emergence of additional conflicts or heightened tensions in other regions, could have a material adverse effect on our operations, results of operations, financial condition, liquidity and business outlook.

~~Table~~There is continued, sustained military conflict between Russia and Ukraine as well as in the Middle East, and continued disruption in these regions and the broader global economic environment is likely. The uncertain consequences and duration of ~~Contents~~these conflicts, and the risk that they may expand in scope, escalate, or result in broader regional or global instability, including through the emergence of additional conflicts or heightened tensions in other regions, including the potential effects of any sanctions and countersanctions against officials, individuals and industries relating to these regions, including Russia, and the potential response to any such sanctions, as well as prolonged unrest and/or intensified military activities impacting these regions could have a material adverse effect on our operations, results of operations, financial condition, liquidity and business outlook.

~~Ongoing~~Our ~~conflicts~~business, infinancial ~~multiple~~condition ~~locations~~and ~~across~~results ~~the~~of ~~globe~~operations and cash flows, as well as ~~economic~~the ~~sanctions~~trading ~~and~~price ~~other~~of ~~measures~~our ~~imposed~~common instock ~~response~~may ~~thereto~~be ~~could~~negatively ~~have~~impacted aby ~~material~~the ~~adverse~~effects ~~effect~~of ona ~~our~~disease ~~operations~~outbreak, ~~results~~epidemic, ofpandemic, ~~operations~~or similar widespread public health concern, ~~financial~~such ~~condition~~as travel restrictions or recommendations or mandates from governmental authorities to avoid large gatherings or to self-quarantine, ~~liquidity~~whether ~~and~~as ~~business~~a ~~outlook~~result of a global pandemic or otherwise.

Ongoing wars in multiple locations across the globe, as well as economic sanctions and other measures imposed in response thereto, have caused and continue to cause disruption, instability and volatility in global markets. The conflicts have caused and may continue to cause adverse global economic conditions resulting from escalating geopolitical tensions, the exclusion of certain financial institutions from the global banking system, volatility and fluctuations in foreign currency exchange rates and interest rates, inflationary pressures, supply chain and logistics disruptions, such as shipping disruptions in waterways, and heightened cybersecurity threats. As a result of sustained military conflict between Russia and Ukraine, sanctions have been imposed by the U.S., Canada, the United Kingdom, the European Union, and other countries and organizations against officials, individuals, regions, and industries in Russia. Russia’s potential response to such sanctions, as well as prolonged unrest, intensified military activities and/or the implementation of more extensive sanctions impacting the region could have a material adverse effect on our operations, results of operations, financial condition, liquidity and business outlook. Additionally, due to contractions in the supply of certain fuels from Russia arising out of the conflict in Ukraine and related sanctions, it is possible that certain of our consumers in Europe may not participate in outdoor activities during winter in patterns that are predictable or to the scale we have experienced in the past, which could in turn have a material adverse effect on our operations, results of operations, financial condition, liquidity and business outlook.

Our business, financial condition and results of operations and cash flows, as well as the trading price of our common stock may be negatively impacted by the effects of a disease outbreak, epidemic, pandemic, or similar widespread public health concern, such as travel restrictions or recommendations or mandates from governmental authorities to avoid large gatherings or to self-quarantine, whether as a result of the COVID-19 or coronavirus global pandemic or otherwise.

An outbreak of disease or similar public health threat, such as the COVID-19 pandemic, could have, and in the case of the COVID-19 pandemic has had, an adverse impact on our business, financial condition and operating results, including in the form of lowered net sales and the delay of inventory production and fulfillment in impacted regions. Fear of contracting diseases, individuals contracting diseases and the actions taken, and that may be taken, by governmental authorities, our third-party logistics providers, our landlords, our competitors or by us relating to diseases, analogous to the COVID-19 pandemic may:

●

cause disruptions in the supply chain, including the ability to produce and deliver product as expected;

●

result in canceled orders, non-payment for orders received and/or delayed payment for orders received;

●

restrict the operation of our retail store operations and our ability to meet consumer demand at our stores;

●

cause inflation and currency rate fluctuations;

●

result in a misalignment between demand and supply;

●

result in labor shortages, including as a result of any vaccine mandate or our return to work policies;

●

increase reliance by consumers on e-commerce platforms;

●

impair the financial health of certain of our customers;

●

impact previous business assumptions;

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●

increase the reliance of our employees on digital solutions;

●

restrict global business and travel;

●

impair our ability to ship product through our owned or affiliated distribution centers, including as a result of capacity reductions, shift changes, labor shortages, higher than normal absenteeism and/or the complete shutdowns of facilities for deep cleaning procedures;

●

cause rapid changes to employment and tax law;

●

impair our key personnel;

●

result in incremental costs from the adoption of preventative measures, including providing facial coverings and hand sanitizer, rearranging operations to follow social distancing protocols, conducting temperature checks and undertaking regular and thorough disinfecting of surfaces, and providing testing; and/or

●

cause any number of other disruptions to our business, the risks of which may be otherwise identified herein.

In addition, the impact of pandemics, such as the COVID-19 pandemic, may also exacerbate other risks discussed in this Item 1A, any of which could have a material effect on us.

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We use foreign suppliers and manufacturing facilities for a significant portion of our raw materials and finished products, and disruptions to international trade, such as disease epidemics or potential “trade wars,” pose a risk to our business operations.

AThe vast majority of our products sold were produced by and purchased from independent manufacturers primarily located in Asia and Eastern Europe~~, with substantially all of the remainder produced by our manufacturing facilities located in Utah~~. Although no single supplier and no one country controls a majority of our production needs, any of the following could materially and adversely affect our ability to produce or deliver our products and, as a result, have a material adverse effect on our business, financial condition, and results of operations:

●

political or labor instability in countries where our facilities, contractors, and suppliers are located;

●

political or military conflict, which could cause a delay in the transportation of raw materials and products to us and an increase in transportation costs;

●

heightened terrorism security concerns;

●

disease epidemics and health-related concerns, such as COVID-19 or the coronavirus;

●

imposition of regulations and quotas relating to imports and our ability to adjust timely to changes in trade regulations;

●

imposition of tariffs, duties, taxes and other charges on imports and/or exports;

●

the effect of inflation on our business, including any future pricing actions taken in an effort to mitigate the effects of inflation and potential impacts on our revenue, operating margins and net income; and

●

imposition or the repeal of laws that affect intellectual property rights.

Compliance costs related to environmental requirements, including those associated with Per- and Polyfluoroalkyl Substances (PFAS), could negatively impact our financial results.

We are, and any of our vendors or customers may be subject to extensive federal, state, local and foreign laws, regulations, rules and ordinances relating to pollution, protection of the environment, climate change, greenhouse gas emissions, and the generation, storage, handling, transportation, treatment, disposal and remediation of hazardous substances and waste materials, including Per- and Polyfluoroalkyl Substances (PFAS). In 2024, certain of our products and inventory containing PFAS resulted in charges, and we may face additional liabilities in the future. Costs and capital expenditures relating to environmental, health or safety matters are subject to evolving regulatory requirements and depend on the timing of the promulgation and enforcement of specific standards which impose the requirements. Moreover, changes in environmental regulations could inhibit or interrupt our operations, or require modifications to our facilities. Accordingly, environmental, health or safety regulatory matters could result in significant unanticipated costs or liabilities.

We may incur significant costs in order to comply with environmental remediation obligations.

Environmental laws in the United States and in other countries also impose obligations on various entities to clean up contaminated properties or to pay for the cost of such remediation, often upon parties that did not actually cause the contamination. Accordingly, we may be liable, either contractually or by operation of law, for remediation costs even if the contaminated property is not presently owned or operated by us, is a landfill or other location where we have disposed wastes, or if the contamination was caused by third parties during or prior to our ownership or operation of the property. Given the nature of the past industrial operations conducted by us and others at these properties, there can be no assurance that all potential instances of soil or groundwater contamination have been identified, even for those properties where an environmental site assessment has been conducted. Future events, such as changes in existing laws or policies or their enforcement, or the discovery of currently unknown contamination, may give rise to additional remediation liabilities that may have a material adverse effect upon our business, results of operations or financial condition.

Risks Related to our Business

There are significant risks associated with acquiring and integrating businesses.

An element of our general growth strategy is the acquisition of or investment in businesses and assets that will diversify our current business, increase size, expand our geographic scope of operations and otherwise offer growth opportunities. We may not be able to successfully identify attractive acquisition or investment opportunities, obtain financing for acquisitions, make acquisitions on satisfactory terms, or successfully acquire and/or integrate identified targets. In identifying, evaluating and selecting a target business or assets for a potential acquisition or investment, we expect to encounter intense competition from other entities, including blank check

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~~companies,~~others ~~private~~at ~~equity~~these ~~groups~~properties, ~~venture~~there ~~capital~~can ~~funds,~~be ~~leveraged~~no ~~buyout~~assurance ~~funds,~~that ~~and~~all ~~operating~~potential ~~businesses~~instances ~~seeking~~of ~~strategic~~soil ~~acquisitions.~~or ~~Many~~groundwater ofcontamination ~~these~~have ~~entities~~been ~~are~~identified, ~~well-established~~even ~~and~~for ~~have~~those ~~extensive~~properties ~~experience~~where ~~identifying~~an ~~and~~environmental ~~effecting~~site ~~business~~assessment ~~combinations~~has ~~directly~~been ~~or through affiliates~~conducted. ~~Moreover~~Future events, ~~many~~such ofas ~~these~~changes ~~competitors~~in ~~possess~~existing ~~greater~~laws ~~financial,~~or ~~technical~~policies or their enforcement, ~~human~~or ~~and~~the ~~other~~discovery ~~resources~~of ~~than~~currently usunknown ~~which~~contamination, ~~will~~may give ~~them~~rise to additional remediation liabilities that may have a ~~competitive~~material ~~advantage~~adverse ineffect ~~pursuing~~upon ~~the~~our ~~acquisition~~business, results of ~~certain~~operations ~~target~~or ~~businesses~~financial condition.

~~Our~~Risks ~~ability~~Related to ~~implement~~ our ~~acquisition strategy is also subject to other risks and costs, including:~~Business

●There ~~loss~~are ofsignificant ~~key~~risks ~~employees,~~associated ~~customers~~with orintegrating ~~suppliers~~and ofoperating acquired businesses;, particularly the most recent acquisitions that comprise our entire Adventure segment.

Our ability to successfully integrate and operate these businesses is subject to risks and costs, including:

●

loss of key employees, customers or suppliers of businesses we have acquired;

●

diversion of management’s time and attention from our core businesses;

●

adverse effects on existing business relationships with suppliers and customers;

● our ability to secure necessary financing;

●

our ability to realize operating efficiencies, synergies, or other benefits expected from an acquisition;

●

risks associated with entering markets in which we have limited or no experience;

● risks associated with our ability to execute successful due diligence;

●

any material differences in the actual financial results of the Company’s past and future acquisitions as compared with our financial expectations for such acquisitions may require us to recognize impairment or other charges, and

●

assumption of contingent or undisclosed liabilities of acquisition targets.

Any of the above risks could have a material adverse effect on the market price of our common stock and our business, financial condition and results of operations.

We may require additional capital and funding to meet our financial obligations as well as to support our business operations, ~~and~~including ~~growth~~initiatives ~~strategy~~intended to support our growth, and this additional capital and funding may not be available on favorable terms, if at all.

Our ability to meet financial obligations and sustain business operations, asincluding ~~well as~~ our planned growth ~~strategy~~initiatives, is contingent upon securing adequate capital and funding. There exists a risk that we may require additional capital in the future, and obtaining such resources may not be achievable on terms deemed acceptable or, in some instances, may not be available at all. Any of the following factors could materially and adversely affect our ability to obtain the necessary additional capital and funding required to meet financial obligations as well as support our ongoing business operations and growth ~~strategy~~initiatives:

● fluctuations in economic conditions and adverse market conditions (including higher interest rates and tighter credit conditions);

●

unforeseen economic downturns, shifts in investor sentiment, or changes in market trends;

●

intense competition in the capital markets may limit our attractiveness to potential investors or lenders which may expose us to the risk of unfavorable financing arrangements;

●

any downturn in our financial performance, failure to meet projections and/or deterioration of our credit profile may undermine investor or lender confidence, making it difficult to secure additional capital and funding; and

●

events of global significance, such as economic recessions, geopolitical tensions, or pandemics, can disrupt financial markets and impact investor or lender willingness to provide capital and funding.

In addition, if we issue equity or debt securities to raise additional funds, (i) we will incur fees associated with such issuance, (ii) our existing stockholders will experience dilution from the issuance of new equity securities, (iii) we will incur ongoing interest expense and may be required to grant a security interest in our assets in connection with any debt issuance, and (iv) any new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders.

~~Our~~We ~~previously~~may ~~announced~~incur ~~growth~~additional ~~strategy~~restructuring ~~may~~costs ~~negatively~~and ~~impact~~may ~~our~~not ~~business,~~achieve ~~financial~~the ~~condition~~intended ~~and~~benefits ~~results~~ of ~~operations~~our restructuring initiatives.

~~The~~Since ~~Company announced that it is seeking to invest in high-quality~~2023, ~~durable,~~we ~~cash~~have ~~flow-producing~~implemented ~~assets~~cost inreduction ~~order to diversify our business within the outdoor markets as part of our previously announced growth strategy. There can be no assurance as to the outcome of the growth strategy~~actions, ~~that~~including ~~any~~workforce ~~particular acquisition or investment opportunities will be consummated~~reductions, orfacility ~~that~~rationalization ~~any~~and ~~transaction~~contract ~~will occur. In addition~~terminations, ~~our~~and ~~growth~~we ~~strategy~~expect ~~may~~to ~~create~~incur ~~perceived~~additional ~~uncertainties~~restructuring ascosts toin ~~our~~2026. ~~future~~We ~~direction~~cannot ~~and~~estimate ~~may result in~~ the ~~loss~~total amount of ~~employees,~~future ~~customers~~restructuring ~~or business partners.~~

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~~Turmoil~~costs ~~across~~at ~~various~~this ~~sectors~~time, ofand ~~the~~actual ~~financial~~costs ~~markets~~ may ~~negatively~~be ~~impact~~higher ~~the~~or ~~Company’s~~differ ~~business~~from our expectations due to, ~~financial~~among ~~condition~~other factors, the timing and~~/or~~ ~~operating~~extent ~~results~~of asworkforce ~~well~~actions, aschanges ~~our~~in ~~ability~~lease toand ~~effectively~~facility ~~execute~~exit ~~our~~assumptions, ~~growth~~negotiations ~~strategy~~with counterparties, and the resolution of contractual obligations.

These actions may not deliver the anticipated benefits on the expected timeline, or at all, and may disrupt our operations, adversely affect employee morale and retention, and constrain our ability to execute our strategy. We may also incur additional charges, liabilities, or disputes in connection with workforce actions, lease exits, or contract terminations. Any of these outcomes could materially and adversely affect our business, results of operations, cash flows, and financial condition.

Turmoil across various sectors of the financial markets may negatively impact the Company’s business, financial condition, and/or operating results as well as our ability to effectively execute our growth initiatives.

Various sectors of the credit markets and the financial services industry have experienced a period of unprecedented turmoil and upheaval characterized by disruption in the credit markets and availability of credit and other financing, the failure, bankruptcy, collapse or sale of various financial institutions and an unprecedented level of intervention from the United States federal government. While the future recurrence of these events cannot be predicted, they may have a material adverse effect on our ability to obtain financing necessary to effectively execute acquisitions, the ability of our customers and suppliers to continue to operate their businesses or the demand for our products, which could have a material adverse effect on the market price of our common stock and our business, financial condition, and results of operations.

Our business is significantly dependent on our ability to meet our labor needs.

The success of our business depends significantly on our ability to hire and retain quality team members, which include but are not limited to managers and other personnel. Competition for non-entry-level personnel, particularly those with experience in our industry, is highly competitive. We may be unable to meet our labor needs and control our costs due to external factors such as the availability of a sufficient number of qualified persons in the workforce of the markets in which we operate, competition, unemployment levels, demand for certain labor expertise, prevailing wage rates, wage inflation, changing demographics, health and other insurance costs, adoption of new or revised employment and labor laws and regulations, and the impacts of man-made or natural disasters, such as tornadoes, hurricanes, and public health emergencies, such as the COVID-19 pandemic. We have experienced, and expect to continue to experience, a shortage of labor for certain functions, which has increased our labor costs and negatively impacted our profitability. The extent and duration of the effect of these labor market challenges are subject to numerous factors, including the availability of qualified persons in the markets where we and our vendors and customers operate and unemployment levels within these markets, behavioral changes, prevailing wage rates and other benefits, inflation, adoption of new or revised employment and labor laws and regulations (including increased minimum wage requirements) or government programs, safety levels of our operations, and our reputation within the labor market.

Recent or potential future legislative initiatives may seek to increase the federal minimum wage in the United States, as well as the minimum wage in a number of individual states or markets. As federal or state minimum wage rates increase, we may need to increase not only the wage rates of our minimum wage team members, but also the wages paid to our other hourly team members as well. Further, should we fail to increase our wages competitively in response to increasing wage rates, the quality of our workforce could decline, causing our customer service to suffer. Additionally, the U.S. Department of Labor has proposed rules that may have salary and wage impact for “exempt” team members, which could result in a substantial increase in store payroll expense. Any increase in the cost of our labor could have an adverse effect on our operating costs, financial condition and results of operations, which in turn can materially adversely affect our business.

Although none of our employees are currently covered under collective bargaining agreements, we cannot guarantee that employees will not elect to be represented by labor unions in the future. If some or our entire workforce were to become unionized and collective bargaining agreement terms were significantly different from our current compensation arrangements or work practice, it could have a material adverse effect on our business, financial condition and results of operations.

We may not be able to adequately manage our growth.

We have expanded, and are seeking to continue to expand, our business. This growth has placed significant demands on our management, administrative, operating, and financial resources as well as our manufacturing capacity capabilities. The continued growth of our customer base, the types of products offered and the geographic markets served can be expected to continue to place a significant strain on our resources. Personnel qualified in the production and marketing of our products are difficult to find and hire, and enhancements of information technology systems to support growth are difficult to implement. Our future performance and profitability will depend in large part on our ability to attract and retain additional management and other key personnel, as well as our ability to increase and maintain our manufacturing capacity capabilities to meet the needs of our current and future customers. Any failure to adequately manage our growth could have a material adverse effect on the market price of our common stock and our business, financial condition, and results of operations.

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Reductions in the availability of energy supplies or an increase in energy costs may increase our operating costs.

Electricity and natural gas are used by our third-party manufacturers and other vendors to operate their facilities and equipment, and these third parties may pass through increases in their energy-related operating costs to us through higher prices or other charges. An outbreak or escalation of hostilities between the United States and any foreign power, or between foreign powers, including conflicts or heightened tensions in regions that are significant producers, processors or transit routes for energy supplies, or a natural disaster, or the emergence of additional conflicts or heightened tensions in other regions, could result in a real or perceived shortage of petroleum and/or natural gas, which could result in an increase in the cost of electricity or energy generally as well as an increase in the cost of our raw materials, of which many are petroleum-based. In addition, increased energy costs negatively impact our freight costs due to higher fuel prices. Future limitations on the availability, transportation, distribution or consumption of petroleum products and/or an increase in energy costs, particularly electricity for the operations of our third-party manufacturers and other vendors, could have a material adverse effect upon our business, financial condition, results of operations and liquidity.

We may not be able to adequately manage our growth.

We have expanded our business, including through prior acquisitions, and are seeking to continue to expand through our growth initiatives. This growth has placed significant demands on our management, administrative, operating, and financial resources as well as our manufacturing capacity capabilities. The continued growth of our customer base, the types of products offered and the geographic markets served can be expected to continue to place a significant strain on our resources. Personnel qualified in the production and marketing of our products are difficult to find and hire, and enhancements of information technology systems to support growth are difficult to implement. Our future performance and profitability will depend in large part on our ability to attract and retain additional management and other key personnel, as well as our ability to increase and maintain our manufacturing capacity capabilities to meet the needs of our current and future customers. Any failure to adequately manage our growth could have a material adverse effect on the market price of our common stock and our business, financial condition, and results of operations.

Compliance with changing laws, regulations and standards of corporate governance and public disclosure may result in additional expenses.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 (the “Sarbanes Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act, new Securities and Exchange Commission regulations and NASDAQ rules, are creating uncertainty for companies such as ours. These new or changed laws, regulations, and standards are subject to varying interpretations, in many cases due to their lack of specificity. As a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We are committed to maintaining high standards of corporate governance and public disclosure. As a result, our efforts to comply with evolving laws, regulations, and standards have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

From time to time, we have been and may be subject to claims, lawsuits, government investigations, and other proceedings involving products liability, competition and antitrust, intellectual property, privacy, consumer protection, securities, tax, labor and employment, commercial disputes, and other matters that could adversely affect our business operations and financial condition. Injuries sustained by those who use or purchase our products, including, without limitation, BDEL’s avalanche beacon transceivers, have, and could in the future, subject us to regulatory proceedings and litigation by government agencies and private litigants brought against us, that regardless of their merits, could harm our reputation, divert management’s attention from our operations and result in substantial legal fees and other costs. For example, as disclosed in Item 3. “Legal Proceedings,” BDEL was notified by the CPSC that the agency staff believes we failed to timely meet our statutory reporting obligations under the Consumer Product Safety Act with respect to certain models of avalanche transmitters distributed by BDEL either switching unexpectedly out of “send” mode and/or out of “search” mode, that we made material misrepresentations in reports to the CPSC, and that the agency staff intends to recommend that the CPSC impose substantial civil monetary penalties on us. Furthermore, as disclosed in Item 3. “Legal Proceedings,” the U.S. Department of Justice has commenced an investigation relating to the CPSC investigation and we received grand jury subpoenas for documents relating to, among other things, certain avalanche transmitters distributed by BDEL. Any financial or other penalties imposed by the CPSC as well as the Department of Justice or other regulators could be costly to us and could damage our business and reputation as well as have a material adverse effect on the Company’s liquidity, stock price, consolidated financial position, results of operations and/or cash flows. Also, we have reporting obligations to safety regulators in all jurisdictions where we sell our products, where reporting may trigger further regulatory investigations.

We could face particular challenges in maintaining our internal control over financial reporting.

Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal control over financial reporting and requires that we have our internal control over financial reporting audited. If we fail to maintain adequate internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties and/or stockholder litigation. Any inability to provide reliable financial reports could harm our business and the trading price of our common stock. Section 404 of the Sarbanes-Oxley Act also requires that our independent registered public accounting firm report on the effectiveness of the Company’s internal control over financial reporting. In addition, acquisition targets may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.

If we identify any material weaknesses or significant deficiencies in our internal control over financial reporting, we may need to take costly steps to implement improved controls and may be subject to sanctions for failure to comply with the requirements of the Sarbanes-Oxley Act. Such remedial costs or sanctions could have a material adverse effect on our results of operations and financial condition. Further, we would be required to disclose any material weakness in internal control over financial reporting, and we would receive an adverse opinion on our internal control over financial reporting from our independent auditors. These factors could cause investors to lose confidence in our reported financial information and could have a negative effect on the trading price of our stock.

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We may be subject to disruptions, failures or cyber-attacks in our information technology systems and network infrastructures that could disrupt our operations, damage our reputation and adversely affect our business, operations, and financial results.

We maintain and rely extensively on information technology systems and network infrastructures for the effective operation of our business., ~~Techniques~~including ~~used~~manufacturing, toorder ~~gain~~fulfillment, ~~unauthorized~~financial ~~access~~reporting, toand ~~private~~communications ~~networks~~with ~~are~~customers ~~constantly evolving,~~ and wesuppliers. ~~may~~Techniques beused ~~unable~~ to ~~anticipate~~gain ~~or prevent~~ unauthorized access to ~~data~~networks, ~~pertaining~~compromise ~~to our customers~~systems, ~~including~~or ~~credit~~obtain ~~card~~data ~~and~~are ~~debit~~constantly ~~card~~evolving, ~~information~~ and ~~other~~we ~~personally~~may ~~identifiable~~be ~~information.~~unable ~~Our direct-~~to~~-consumer~~ ~~service,~~anticipate ~~which~~or isprevent ~~supported~~all byincidents. ~~our~~We ~~own systems~~ and ~~those~~our of third-party vendors, isare vulnerable to computer viruses, ~~Internet worms~~malware, ~~break-ins~~ransomware, phishing ~~attacks,~~and ~~attempts~~other tosocial ~~overload~~engineering ~~servers~~attacks, ~~with~~ denial-of-service ~~or other~~ attacks, ~~and~~insider ~~similar~~threats, ~~disruptions from unauthorized use of our~~ and ~~third-party~~other ~~vendor~~malicious ~~computer~~activities. ~~systems,~~Any ~~any~~such ofincident ~~which~~ could lead to ~~system~~ interruptions, delays, or shutdowns,; ~~causing~~ loss, ofcorruption, ~~critical data~~ or ~~the~~ unauthorized access to data (including personally identifiable information.); Ifand anincreased ~~actual~~costs ~~or perceived breach of our systems or a vendor’s systems security occurs, we may face civil liability~~ and ~~public~~diversion ~~perception~~ of ~~our~~management ~~security measures could be diminished, either of which would negatively affect our ability to attract customers, which could have a material adverse effect on our business~~attention. ~~We also would be required to expend significant resources to mitigate the breach of security and to address related matters.~~

~~Further~~In addition, apublic ~~disruption~~companies are subject to evolving cybersecurity disclosure and governance requirements, ~~infiltration~~including orSecurities ~~failure~~and ofExchange ~~our~~Commission ~~information~~rules ~~technology~~adopted ~~systems~~in orJuly ~~any~~2023 that require disclosure of ~~our~~material ~~data~~cybersecurity ~~centers~~incidents ~~including~~on ~~the~~Form ~~systems~~8-K and ~~data~~enhanced ~~centers~~annual ofdisclosures ~~our~~regarding ~~third-party~~cybersecurity ~~vendors~~risk asmanagement, astrategy ~~result~~and ofgovernance. ~~software~~Compliance ormay ~~hardware~~require ~~malfunctions~~additional processes, ~~computer viruses~~controls, ~~cyber-attacks~~and resources, ~~employee~~and ~~theft~~may orincrease ~~misuse~~the risk of regulatory scrutiny, ~~power~~private ~~disruptions~~litigation, ~~natural~~and ~~disasters~~reputational harm. Moreover, disclosure of information about incidents or ~~accidents~~our cybersecurity controls could ~~cause~~be ~~breaches~~costly, ofcould ~~data~~expose ~~security~~us ~~and~~to ~~loss~~additional ofrisks ~~critical~~(including ~~data,~~by ~~which~~providing inthreat ~~turn~~actors ~~could~~with ~~materially~~information), and could adversely affect our ~~business~~relationships with customers, suppliers, and other stakeholders.

WeOur ~~cannot~~use ~~fully control the actions~~ of ~~third~~emerging ~~parties~~technologies ~~who~~(including ~~may~~artificial ~~have~~intelligence) ~~access to the customer data we collect~~ and ~~the~~reliance ~~customer~~on ~~data collected by our~~ third -party ~~vendors.~~service Weproviders may be unable to monitor or control such third parties and the third parties having access to our other websites in their compliance with the terms of our privacy policies, terms of use, and other applicable contracts, and we may be unable to prevent unauthorized access to, or use or disclosure of, customer information. Any such misuse could ~~hinder or prevent our efforts with respect to growth opportunities and could~~ expose us to ~~liability~~operational, ~~or otherwise adversely affect our business. In addition~~regulatory, ~~these~~intellectual ~~third parties may become the victim of security breaches or have practices that may result in a breach~~property, and wereputational ~~could be responsible for those third-party acts or failures to act~~risks.

~~Any~~We ~~failure~~may use, or ~~perceived~~our ~~failure~~employees, byvendors usand orbusiness ~~the~~partners ~~prior~~may ~~owners~~use, ofemerging ~~acquired~~technologies, ~~businesses~~including toautomated ~~maintain~~decision-making ~~the~~tools ~~security~~and ofartificial ~~data~~intelligence ~~relating~~(“AI”) tosystems ~~our~~(including ~~customers~~generative ~~and~~AI), ~~employees~~in areas such as product development, tocustomer ~~comply~~service, ~~with~~procurement, ~~our~~security, ~~posted~~and ~~privacy~~back-office ~~policies~~functions. The use of such tools may introduce risks, ~~our~~including ~~predecessors’~~errors ~~posted~~or ~~policies~~hallucinated outputs, ~~laws~~bias, ~~and~~cybersecurity ~~regulations~~vulnerabilities, ~~rules~~unauthorized disclosure of ~~self-regulatory~~confidential ~~organizations~~information or personal data, loss of intellectual property or ~~industry~~trade ~~standards~~secrets, ~~and~~infringement ~~contractual~~allegations, ~~provisions~~and failures to ~~which~~comply wewith orevolving ~~they~~laws ~~may~~and beregulations ~~bound~~governing AI, ~~could~~privacy, ~~result~~consumer inprotection, ~~the~~and ~~loss~~workplace ofpractices. ~~confidence~~In ~~in us~~addition, orreliance ~~result~~on inthird-party ~~actions~~AI ~~against~~providers usand byother ~~governmental~~vendors ~~entities~~may orincrease ~~others,~~concentration ~~all~~and ofresiliency ~~which~~risks, ~~could~~including ~~result~~outages, changes in ~~litigation~~terms ~~and~~of ~~financial~~service, ~~losses~~model behavior changes, ~~and~~or restrictions on use. Any of these risks could ~~potentially~~result ~~cause~~in usoperational todisruption, ~~lose~~regulatory ~~customers~~investigations, ~~revenue~~litigation, reputational harm, and ~~employees~~increased costs.

Initiatives to upgrade our business processes and information technology systems to optimize our operational and financial performance involve many risks which could result in, among other things, business interruptions, higher costs and lost profits.

We regularly implement business process improvement and information technology initiatives intended to optimize our operational and financial performance. Transitioning to these new or upgraded processes and systems requires significant capital investments and personnel resources. Implementation is also highly dependent on the coordination of numerous employees, contractors and software and system providers. The interdependence of these processes and systems is a significant risk to the successful completion and continued refinement of these initiatives, and the failure of any aspect could have a material adverse effect on the functionality of our overall business. We may also experience difficulties in implementing or operating our new or upgraded business processes or information technology systems, including, but not limited to, ineffective or inefficient operations, significant system failures, system outages, delayed implementation and loss of system availability, which could lead to increased implementation and/or operational costs, loss or corruption of data, delayed shipments, excess inventory and interruptions of operations resulting in lost sales and/or profits.

We rely on information technology systems, including third-party cloud-based solutions, and any failure of these systems, including, without limitation, due to outages and/or cyberattacks, may result in disruptions or outages, loss of processing capabilities, and/or loss of data, any of which may have a material adverse effect on our business, operations, and financial results.

Our reputation and ability to attract, retain and serve consumers is dependent upon the reliable performance of our underlying technology infrastructure and external service providers, including third-party cloud-based solutions. These systems are vulnerable to damage or

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~~interruption and we have experienced interruptions in the past.~~ We rely on ~~cloud-based~~information ~~solutions~~technology ~~furnished by third parties primarily to allocate resources~~systems, ~~pay~~including vendors, collect from customers, process transactions, develop demand and supply plans, manage product design, production, transportation, and distribution, forecast and report operating results, meet regulatory requirements and administer employee payroll and benefits, among other functions. We have also designed a significant portion of our software and computer systems to utilize data processing and storage capabilities from third-party cloud ~~solution providers. Both our on~~-~~premises and cloud-~~based ~~infrastructure~~solutions, ~~may~~and ~~be susceptible to outages due to~~ any ~~number~~failure of ~~reasons~~these systems, including, ~~human~~without ~~error~~limitation, ~~fire,~~due ~~floods, power loss, telecommunications failures, terrorist attacks and similar events. Despite the implementation of security measures that we believe~~ to beoutages ~~reasonable, both our on-premises~~ and ~~our cloud-based infrastructure may also be vulnerable to hacking, computer viruses, the installation of malware and similar disruptions either by third-parties~~ /or ~~employees~~cyberattacks, ~~which~~ may result in ~~outages.~~disruptions ~~We do not have redundancy for all of our systems and our disaster recovery planning may not account for all eventualities. If we~~ or ~~our existing third-party cloud-based solution providers experience interruptions in service regularly or for a prolonged basis~~outages, orloss ~~other~~of ~~similar~~processing ~~issues~~capabilities, ~~our business could be seriously harmed~~ and,/or inloss ~~some~~of ~~instances~~data, ~~our~~any ~~consumers~~of ~~may not be able to purchase our products,~~ which ~~could~~may ~~significantly and negatively affect our sales. Additionally, our existing cloud-based solution providers~~ have ~~broad~~a ~~discretion~~material toadverse ~~change~~effect ~~and~~on ~~interpret their terms of service and other policies with respect to us, and they may take actions beyond~~ our ~~control that could harm our~~ business., Weoperations, ~~also may not be able to control the quality of the systems~~ and ~~services~~financial ~~we receive from our third-party cloud-based solution providers~~results. ~~Any transition of the cloud-based solutions currently provided to different cloud providers would be difficult to implement and may cause us to incur significant time and expense.~~

IfOur wereputation and~~/or~~ ability to attract, retain and serve consumers is dependent upon the reliable performance of our underlying technology infrastructure and external service providers, including third-party cloud-based ~~solution~~solutions. ~~providers~~These systems are ~~not~~vulnerable ~~successful~~to damage or interruption and we have experienced interruptions in ~~preventing~~the orpast. ~~effectively~~We ~~responding~~rely on cloud-based solutions furnished by third parties to support key business functions. Both our on-premises and cloud-based infrastructure may be susceptible to outages due to any number of reasons, including, human error, natural disasters, power loss, telecommunications failures, cyber incidents, or other events. We do not have redundancy for all of our systems and ~~cyberattacks~~our disaster recovery planning may not account for all eventualities. If we or our existing third-party cloud-based solution providers experience interruptions in service for a prolonged basis, our business could be seriously harmed and, ~~operations~~in some instances, our consumers may not be able to purchase our products, which could significantly and ~~financial~~negatively ~~results~~affect our sales. Additionally, our existing cloud-based solution providers have broad discretion to change and interpret their terms of service and other policies with respect to us, and they may take actions beyond our control that could harm our business. We may not be ~~materially~~able to control the quality of the systems and ~~adversely~~services ~~affected~~we receive from these providers, and transitioning to different providers could be difficult and costly.

If we and/or our cloud-based solution providers are not successful in preventing or effectively responding to outages or other disruptions, our business, operations, and financial results could be materially and adversely affected.

Additionally, information technology systems require periodic modifications, upgrades, and replacement that subject us to costs and risks, including potential disruption to our internal control structure, substantial capital expenditures, additional administration and operating expenses, retention of sufficiently skilled personnel or outside firms to implement and operate existing or new systems, and other risks and costs of delays or difficulties in transitioning to new or modified systems or of integrating new or modified systems into our current systems. In addition, challenges implementing new or modified technology systems may cause disruptions in our business operations and, if not anticipated and appropriately mitigated, could have a material adverse effect on our business operations.

The effects of climate change, ~~and~~together with increased focus by governmental and non-governmental organizations, customers, ~~consumers~~ and investors on sustainability issues, including ~~those~~evolving ~~related to~~ climate ~~change~~ and ~~socially~~sustainability ~~responsible~~related ~~activities~~disclosure expectations, may adversely affect our business and financial results and damage our reputation.

Climate change is occurring around the world and may impact our business in numerous ways,. ~~and~~Such change could lead to, anamong ~~increase~~other inthings, increased costs (including energy, raw ~~material~~materials and packaging ~~prices~~), ~~and~~supply ~~reduced~~chain ~~availability~~disruptions, ~~for~~damage ~~example,~~to or interruption of operations at our facilities or those of suppliers due to ~~water~~extreme ~~shortages~~weather ~~which~~events, ~~could~~increased ~~adversely~~insurance ~~impact~~costs ~~raw~~or ~~material~~limited availability. ~~Increased frequency~~ of ~~extreme~~coverage, ~~weather~~changes ~~(for~~in ~~example~~customer demand, ~~storms~~and impacts on our employees and ~~floods)~~communities. ~~could~~In ~~cause~~addition, ~~increased~~we ~~incidence~~may ofincur ~~disruption~~increased costs to ~~the~~measure, ~~production~~monitor and ~~distribution~~manage ofclimate-related ~~our~~risks ~~products~~ and anto ~~adverse~~satisfy ~~impact~~actual onor ~~consumer~~proposed ~~demand~~legal requirements, contractual obligations and ~~spending~~market expectations relating to climate and sustainability matters.

Investor advocacy groups, ~~certain~~ institutional investors, ~~investment funds~~lenders, ~~other~~customers ~~market participants, shareholders,~~ and other stakeholders have ~~focused~~ increasingly focused on ~~the~~ environmental, social and governance (“ESG”) ~~and related sustainability~~ practices ofand ~~companies~~disclosure. ~~These~~We ~~parties~~may ~~have~~face ~~placed~~ increased ~~importance~~requests onfor ~~the~~ESG ~~implications~~information, ofcontractual ~~the~~requirements, ~~social~~and ~~cost~~expectations ofregarding ~~their~~targets, ~~investments.~~policies Ifor ~~our~~performance. ~~ESG~~We ~~practices~~may doalso ~~not~~face ~~meet~~reputational ~~investor~~harm, litigation or ~~other~~regulatory ~~stakeholder~~scrutiny ~~expectations~~(including ~~and~~so-called ~~standards,~~“greenwashing” ~~which~~claims) ~~continue~~if toour ~~evolve~~disclosures, ~~our~~statements ~~brands,~~or ~~reputation~~actions ~~and~~are ~~employee~~perceived ~~retention~~as ~~may~~inaccurate, beincomplete ~~negatively~~or ~~impacted~~misleading. ItThe isSecurities ~~possible~~and ~~that~~Exchange ~~stakeholders~~Commission ~~may~~adopted ~~not~~climate-related bedisclosure ~~satisfied~~rules ~~with~~on ~~our~~March ~~ESG~~6, ~~practices~~2024, orbut the ~~speed~~rules ofhave ~~their~~been ~~adoption.~~stayed Weand ~~could~~remain ~~also~~subject ~~incur~~to ~~additional~~litigation ~~costs~~ and ~~require~~potential ~~additional~~changes, ~~resources~~including tothe ~~monitor,~~Securities ~~report,~~ and ~~comply~~Exchange ~~with~~Commission’s ~~various~~March ~~ESG~~2025 ~~practices.~~vote ~~Also,~~to ~~our~~cease ~~failure,~~defending orthe ~~perceived~~rules ~~failure,~~in tocourt. ~~manage~~Even ~~reputational~~if ~~threats~~the Securities and ~~meet~~Exchange ~~expectations~~Commission ~~with~~rules ~~respect~~are tomodified, ~~socially~~rescinded ~~responsible~~or ~~activities~~never become effective, climate and ~~sustainability~~ESG ~~commitments~~related ~~could~~requirements ~~negatively~~and ~~impact~~expectations ~~our~~in ~~credibility,~~the ~~employee~~United ~~retention,~~States and ~~the~~other ~~willingness~~jurisdictions ofmay ~~our~~continue ~~customers~~to evolve and ~~suppliers~~could toincrease doour ~~business~~compliance ~~with~~costs usand legal exposure.

Our Board of Directors and executive officers have significant influence over our affairs.

The members of our Board of Directors and our executive officers, which includes Mr. Warren B. Kanders, beneficially own approximately 2223.25% of our outstanding common stock as of March 65, ~~2025~~2026. As a result, our Board of Directors and executive officer, to the extent they vote their shares in a similar manner, have influence over our affairs and could exercise such influence in a manner that is not in the best interests of our other stockholders, including by attempting to delay, defer or prevent a change of control transaction that might otherwise be in the best interests of our stockholders.

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that is not in the best interests of our other stockholders, including by attempting to delay, defer or prevent a change of control transaction that might otherwise be in the best interests of our stockholders.

We may be unable to realize the benefits of our net operating losses and tax credit carryforwards.

Net operating losses (“NOLs”) may be carried forward to offset federal and state taxable income in future years and eliminate income taxes otherwise payable on such taxable income, subject to certain adjustments. Based on current federal corporate income tax rates, our NOL and other carryforwards could provide a benefit to us, if fully utilized, of significant future tax savings. However, our ability to use these tax benefits in future years will depend upon the amount of our otherwise taxable income. If we do not have sufficient taxable income in future years to use the tax benefits before they expire, we will lose the benefit of these NOL carryforwards permanently.

Additionally, if we underwent an ownership change, the NOL carryforward limitations would impose an annual limit on the amount of the taxable income that may be offset by our NOL generated prior to the ownership change. If an ownership change were to occur, we may be unable to use a significant portion of our NOL to offset taxable income. In general, an ownership change occurs when, as of any testing date, the aggregate of the increase in percentage points of the total amount of a corporation’s stock owned by one or more “5-percent shareholders” within the meaning of Section 382 of the Internal Revenue Code (“Code”) whose percentage ownership of the stock has increased as of such date over the aggregate of the lowest percentage of the stock owned by such 5-percent shareholder at any time during the three-year period preceding such date is more than 50 percentage points. In general, persons who own 5% or more of a corporation’s stock are 5-percent shareholders, and all stock owned by persons who are not 5-percent shareholders is treated as owned by one 5-percent shareholder. The issuance of a large number of shares of common stock in connection with any acquisitions could result in a limitation of the use of our NOLs.

Further, our ~~certificate~~Amended and Restated Certificate of ~~incorporation~~Incorporation provides for blank check preferred stock, which allows our Board of Directors to issue preferred stock at any time with rights and designations set forth by our Board of Directors. Section 382 of the Code generally excludes preferred stock when calculating ownership percentages as they relate to our NOLs if the preferred stock satisfies all of the following criteria: it is not entitled to vote, it is limited and preferred as to dividends and does not participate in corporate growth to any significant extent, it has redemption and liquidation rights which do not exceed the issue price of such stock (except for a reasonable redemption or liquidation premium), and it is not convertible into another class of stock. Our Board of Directors may authorize and issue preferred stock that does not meet these criteria, and such preferred stock would count towards determining ownership change under Section 382 of the Code. Therefore, the issuance of any preferred stock could increase the likelihood of a limitation of the use of our NOLs.

Moreover, if a corporation experiences an ownership change and does not satisfy the continuity of business enterprise, or COBE, requirement (which generally requires that the corporation continue its historic business or use a significant portion of its historic business assets in a business for the two-year period beginning on the date of the ownership change), it cannot, subject to certain exceptions, use any NOL from a pre-change period to offset taxable income in post-change years.

The actual ability to utilize the tax benefit of any existing NOLs will be subject to future facts and circumstances with respect to meeting the above described COBE requirements at the time NOLs are being utilized on a tax return. The realization of NOLs and the recognition of asset and valuation allowances for deferred taxes require management to make estimates and judgments about the Company’s future profitability which are inherently uncertain. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. If, in the opinion of management, it becomes more likely than not that some portion or all of the deferred tax assets will not be realized, deferred tax assets would be reduced by a valuation allowance and any such reduction could have a material adverse effect on the financial condition of the Company.

The amount of NOL and tax credit carryforwards that we have claimed has not been audited or otherwise validated by the U.S. Internal Revenue Service (the “IRS”). The IRS could challenge our calculation of the amount of our NOL or our determinations as to when a prior change in ownership occurred, and other provisions of the Code may limit our ability to carry forward our NOL to offset taxable income in future years. If the IRS were successful with respect to any such challenge, the potential tax benefit of the NOL carryforwards to us could be substantially reduced.

Certain protective measures implemented by us to preserve our NOLs may not be effective or may have some unintended negative effects.

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~~the~~Certain ~~percentage~~protective ofmeasures ~~the~~implemented ~~Company’s capital stock that is treated as owned~~ by aus ~~“5%~~to ~~stockholder.”~~preserve ~~Additionally, on September 5, 2024,~~ our ~~Board~~NOLs ofmay ~~Directors~~not ~~approved~~be aneffective ~~amendment to, our rights agreement dated February 7, 2008, which is designed to assist in limiting the number of 5%~~ or ~~more~~may ~~owners~~have ~~and~~some ~~thus~~unintended ~~reduce~~negative ~~the risk of a possible “change of ownership” under Section 382 of the Code~~effects.

On July 24, 2003, at our Annual Meeting of Stockholders, our stockholders approved an amendment (the “Amendment”) to our Amended and Restated Certificate of Incorporation to restrict certain acquisitions of our securities in order to help assure the preservation of our NOLs. The Amendment generally restricts direct and indirect acquisitions of our equity securities if such acquisition will affect the percentage of the Company’s capital stock that is treated as owned by a “5% stockholder.” Additionally, on September 5, 2024, our Board of Directors approved an amendment to our rights agreement dated February 7, 2008, which is designed to assist in limiting the number of 5% or more owners and thus reduce the risk of a possible “change of ownership” under Section 382 of the Code.

Although the transfer restrictions imposed on our capital stock and the rights agreement are intended to reduce the likelihood of an impermissible ownership change, there is no guarantee that such protective measures would prevent all transfers that would result in an impermissible ownership change. These protective measures also will require any person attempting to acquire a significant interest in us to seek the approval of our Board of Directors. This may have an “anti-takeover” effect because our Board of Directors may be able to prevent any future takeover. Similarly, any limits on the amount of capital stock that a stockholder may own could have the effect of making it more difficult for stockholders to replace current management. Additionally, because protective measures implemented by us to preserve our NOL will have the effect of restricting a stockholder’s ability to acquire our common stock, the liquidity and market value of our common stock might suffer.

The loss of any member of our senior management or certain other key executives could significantly harm our business.

Our ability to maintain our competitive position is dependent to a large degree on the efforts and skills of our senior management team, including Warren B. Kanders. If we were to lose the services of any member of our senior management, our business may be significantly impaired. In addition, many of our senior executives have strong industry reputations, which aid us in identifying acquisition and borrowing opportunities, and having such opportunities brought to us. The loss of the services of these key personnel could materially and adversely affect our operations because of diminished relationships with lenders, existing and prospective tenants, property sellers and industry personnel.

Our Board of Directors may change significant corporate policies without stockholder approval.

Our investment, financing, borrowing and dividend policies and our policies with respect to all other activities, including growth, debt, capitalization and operations, will be determined by our Board of Directors. These policies may be amended or revised at any time and from time to time at the discretion of the Board of Directors without a vote of our stockholders. In addition, the Board of Directors may change our policies with respect to conflicts of interest provided that such changes are consistent with applicable legal requirements. A change in these policies could have an adverse effect on our financial condition, results of operations, cash flow, per share trading price of our common stock and ability to satisfy our debt service obligations and to pay dividends to our stockholders.

Compensation awards to our management may not be tied to or correspond with our improved financial results or share price.

The compensation committee of our Board of Directors is responsible for overseeing our compensation and employee benefit plans and practices, including our executive compensation plans and our incentive compensation and equity-based compensation plans. Our compensation committee has significant discretion in structuring compensation packages and may make compensation decisions based on any number of factors. As a result, compensation awards may not be tied to or correspond with improved financial results for the Company or the share price of our common stock.

We have been required to recognize impairment charges and may be required to take future write downs or write-offs, restructuring, and impairment or other charges that have had a significant negative effect on our financial condition, results of operations and our stock price, which could cause you to lose some or all of your investment.

In connection with ~~our~~businesses ~~general~~and ~~growth~~assets ~~strategy~~we ofhave ~~acquiring~~previously ~~businesses~~acquired ~~and~~with ~~assets~~respect to our Adventure segment, we have and may be forced in the future to write-down or write-off assets, restructure our operations, or incur impairment, or other charges, and we may incur similar charges in the future, including with respect to intangible assets or other assets associated with those past acquisitions, that could result in us reporting losses. For example, during the year ended December 31, ~~2024~~2025, we recorded approximately $4530 million of impairment of ~~goodwill and~~ indefinite-lived intangible assets and goodwill, specifically the Rhino-Rack and MAXTRAX trademarks, in our Adventure reporting unit. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our common stock.

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Adventure reporting unit. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our common stock.

Risks Related to our Common Stock

~~Our~~Anti-takeover ~~Amended~~provisions in our charter documents and ~~Restated~~under ~~Certificate~~Delaware law could make an acquisition of ~~Incorporation~~our ~~authorizes~~company more difficult, limit attempts by our stockholders to replace or remove our current management and limit the ~~issuance~~trading price of ~~shares~~our common stock, which may also have the consequence of ~~preferred~~depressing the trading price of our common stock.

Our ~~Amended~~status ~~and~~as ~~Restated~~a ~~Certificate~~Delaware ofcorporation ~~Incorporation~~and ~~provides~~the ~~that~~anti-takeover ~~our~~provisions ~~Board~~ of ~~Directors~~Delaware ~~will~~law bemay ~~authorized to issue from time to time~~discourage, ~~without further stockholder approval~~delay, upor toprevent ~~5,000,000~~a ~~shares~~change ~~of preferred stock~~ in ~~one~~control orby ~~more~~restricting ~~series~~our ~~and~~ability to ~~fix~~engage orin ~~alter~~certain ~~the~~business ~~designations,~~combinations ~~preferences,~~with ~~rights~~an ~~and~~interested ~~any~~stockholder ~~qualifications,~~for ~~limitations~~a orperiod ~~restrictions~~ of ~~the~~three ~~shares~~years ofafter ~~each~~the ~~series,~~date ~~including~~of the ~~dividend~~transaction ~~rights,~~in ~~dividend~~which ~~rates,~~the ~~conversion~~person ~~rights,~~became ~~voting~~an ~~rights,~~interested ~~terms of redemption~~stockholder, ~~including~~unless ~~sinking fund provisions, redemption price or prices, liquidation preferences and~~ the ~~number~~requirements of ~~shares~~Section ~~constituting~~203 ~~any series or designations~~ of ~~any~~the ~~series.~~Delaware ~~Such~~General ~~shares~~Corporation ofLaw ~~preferred~~are ~~stock could have preferences over our common stock with respect to dividends and liquidation rights. We may issue additional preferred stock in ways which may delay~~satisfied, ~~defer~~even orif ~~prevent~~ a change inof control ofwould ~~the Company without further action by our stockholders. Such shares of preferred stock may~~ be ~~issued~~beneficial ~~with~~to ~~voting rights that may adversely affect the voting power of the holders of~~ our ~~common~~existing ~~stock by increasing the number of outstanding shares having voting rights, and by the creation of class or series voting rights~~stockholders.

In addition, our Amended and Restated Certificate of Incorporation and Second Amended and Restated Bylaws contain provisions that may make the acquisition of our company more difficult. For example, our amended and restated certificate of incorporation authorizes our board of directors to issue up to 5,000,000 shares of “blank check” preferred stock in one or more series, without further stockholder approval, and to determine the rights, preferences and limitations of any such series. Any such preferred stock could have preferences over our common stock with respect to dividends and liquidation rights and could be used to delay, defer or prevent a change in control of the Company, including by adversely affecting the voting power of holders of our common stock through the creation of class or series voting rights.

Beyond the preferred stock authorization described above, our certificate of incorporation and bylaws contain additional provisions that may, individually or in the aggregate, discourage, delay or prevent a change in control or otherwise make an acquisition of our company more difficult, including the following:

●

permitting the board of directors, and not stockholders, to establish the number of directors and fill any vacancies and newly created directorships;

●

establishing advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings;

●

preventing stockholders from taking any action except at a formal meeting of stockholders;

●

requiring certain amendments to our amended and restated certificate of incorporation to be approved by the holders of at least two-thirds of our then-outstanding common stock; and/or

●

requiring that any special meeting of our stockholders will only be able to be called by a majority of our board of directors, our Chairman of our board of directors, our Chief Executive Officer, or our President.

These provisions, alone or together, may (a) frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to select or replace members of our board of directors, which is responsible for appointing the members of our management; (b) discourage, delay, or prevent a transaction involving a change in control of our Company; and/or (c) discourage proxy contests, any of which, under certain circumstances, could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the market price of our common stock.

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Our payment of future quarterly dividends on our common stock is subject to the discretion and approval of our Board of Directors.

On August 6, 2018, the Company announced that its Board of Directors approved the initiation of the Quarterly Cash Dividend program of $0.025 per share of the Company’s common stock or $0.10 per share on an annualized basis. We temporarily replaced the Quarterly Cash Dividend with a Quarterly Stock Dividend during portions of the 2020 fiscal year in light of the operational impact of the COVID-19 pandemic. While we intend to pay regular Quarterly Cash Dividends for the foreseeable future, all subsequent dividends will be reviewed quarterly and declared at the discretion and approval of our Board of Directors and will depend upon, among other things, our results of operations, capital requirements, general business conditions, contractual restrictions under any new credit facility that we may enter into in the future on the payment of dividends, legal and regulatory restrictions on the payment of dividends, and other factors our Board of Directors deems relevant. Therefore, you should not purchase our common stock if you need immediate or future income by way of dividends from your investment. In addition, upon an event of default under any new credit facility that we may enter into in the future, we may be prohibited from declaring or paying any dividends on our common stock or generally making other distributions to our stockholders.

The sale of a substantial amount of our common stock in the public market could adversely affect the prevailing market price of our common stock.

We have outstanding an aggregate of 38,~~362~~401,~~162~~824 shares of our common stock as of March 32, ~~2025~~2026. This includes 78,~~073~~124,~~821~~220 shares of common stock that are beneficially owned by Mr. Kanders, our Chairman of the Board. ~~The~~Sales ~~sale~~ of a ~~significant~~substantial ~~amount~~number of shares atof ~~any~~our ~~given~~common ~~time~~stock in the public market, or the perception that ~~such~~these sales ~~could~~might occur, including sales of the shares beneficially owned by Mr. Kanders, could ~~adversely~~depress ~~affect~~the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that such sales may have on the prevailing market price of our common stock.

We may issue a substantial amount of our common stock in the future, which could cause dilution to current investors and otherwise adversely affect our stock price.

We may issue additional shares of common stock as consideration for such acquisition. These issuances could be significant. To the extent that we make acquisitions and issue our shares of common stock as consideration, your equity interest in us will be diluted. Any such issuance will also increase the number of outstanding shares of common stock that will be eligible for sale in the future. Persons receiving shares of our common stock in connection with these acquisitions may be more likely to sell off their common stock, which may influence the price of our common stock. In addition, the potential issuance of additional shares in connection with anticipated acquisitions could lessen demand for our common stock and result in a lower price than might otherwise be obtained. We may issue common stock in the future for other purposes as well, including in connection with financings, for compensation purposes, in connection with strategic transactions or for other purposes. The issuance of a large number of shares of common stock in connection with an acquisition could also have a negative effect on our ability to use our NOLs.

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If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they change their recommendations regarding our securities adversely, the price and trading volume of our securities could decline.

The trading market for our securities may be influenced by the research and reports that industry or securities analysts publish about us, our business, market, or competitors. If any of the analysts who may cover us adversely change their recommendation regarding our shares of common stock, or provide more favorable relative recommendations about our competitors, the price of our shares of common stock would likely decline. If any analyst who may cover us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume to decline.

Shares of our common stock have been, and may continue to be, thinly traded, which may contribute to volatility in our stock price and less liquidity for investors.

The trading volume of our common stock has varied, and at times may be characterized as thinly traded. As a result of this thin trading market or “float” for our common stock, our common stock has been, and may continue to be, less liquid than the common stock of companies with broader public ownership. If our common stock is thinly traded, the trading of a relatively small volume of our common stock may have a greater impact on the trading price of our common stock than would be the case if our float were larger. As a result, the trading prices of our common stock may be more volatile than the common stock of companies with broader public ownership, and an investor to be unable to liquidate an investment in our common stock at attractive prices.

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stock may have a greater impact on the trading price of our common stock than would be the case if our float were larger. As a result, the trading prices of our common stock may be more volatile than the common stock of companies with broader public ownership, and an investor to be unable to liquidate an investment in our common stock at attractive prices.

We cannot predict the prices at which our common stock will trade in the future. Variations in financial results, announcements of material events, changes in our dividend policy, technological innovations or new products by us or our competitors, our quarterly operating results, changes in general conditions in the economy or the outdoor industry, other developments affecting us or our competitors or general price and volume fluctuations in the market are among the many factors that could cause the market price of our common stock to fluctuate substantially.

Our stock price may be volatile or may decline regardless of our operating performance, resulting in substantial losses for investors.

The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

●

actual or anticipated fluctuations in our results of operations;

●

the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

●

failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors;

●

announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, operating results or capital commitments;

●

changes in operating performance and stock market valuations of other technology or retail companies generally, or those in our industry in particular;

●

price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;

●

changes in our board of directors or management;

●

sales of large blocks of our common stock, including sales by our executive officers, directors and significant stockholders;

●

lawsuits threatened or filed against us;

●

changes in laws or regulations applicable to our business;

●

the expiration of contractual lock-up agreements;

●

changes in our capital structure, such as future issuances of debt or equity securities;

●

short sales, hedging and other derivative transactions involving our capital stock;

●

general economic conditions in the United States and abroad;

●

other events or factors, including those resulting from war, pandemics, incidents of terrorism or responses to these events; and

●

the other factors described in the sections of the Annual Report on Form 10-K titled “Risk Factors” and “Forward-Looking Statements.”

In addition, stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and have a materially adverse effect on our business, financial condition, results of operations and liquidity.

Our Second Amended and Restated By-Laws provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our Second Amended and Restated By-Laws provide that the Court of Chancery of the State of Delaware (or the federal district court for the State of Delaware if the Court of Chancery does not have jurisdiction) is the exclusive forum for any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our certificate of incorporation or our bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine or any action asserting an “internal corporate claim” as that term is defined in Section 115 of the Delaware General Corporation Law. Our Second Amended and Restated By-Laws provide that, unless we consent in writing to an

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alternative forum, the federal district courts of the United States of America will be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, a court may determine that this provision is unenforceable. To the extent it is enforceable, however, the provision may have the effect of discouraging lawsuits against our directors and officers, and our stockholders cannot waive our compliance with federal securities laws and the rules and regulations thereunder.

Our Second Amended and Restated By-Laws provide that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.

Techniques employed by short sellers or other derivative traders may drive down the market price of our common stock and/or spur litigation or regulatory action.

Short selling is the practice of selling securities that a seller does not own but rather has borrowed from a third party with the intention of buying identical securities back at a later date to return to the lender. Short sellers hope to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement securities, as short sellers expect to pay less in that purchase than they received in the sale. As it is in short sellers’ interest for the price of the security to decline, many short sellers publish, or arrange for the publication of, negative opinions and allegations regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short. These short attacks have, in the past, led to selling of shares in the market that have negatively impacted the market price of our common stock.

If we were to become the subject of unfavorable allegations contained in short reports, whether such allegations are proven to be true or untrue, we may have to expend a significant amount of resources to investigate such allegations and/or defend ourselves. While we would prefer to strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against the relevant short sellers by principles of freedom of speech, applicable state law or issues of commercial confidentiality. Such a situation could be costly and time-consuming, and could divert management’s attention from our day-to-day operations. Even if such allegations are ultimately proven to be groundless, allegations against us could severely impact the market price of our common stock and our business operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

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ITEM 1C. CYBERSECURITY

Risk Management and Strategy

We have established policies and processes for assessing, identifying, and managing ~~material~~cybersecurity ~~risk~~risks, including risks from cybersecurity threats, that could be material to the Company and have integrated these processes into our overall risk management systems and processes. We routinely assess ~~material risks from~~ cybersecurity threats, including any potential unauthorized occurrence on or conducted through our information systems that may result in adverse effects on the confidentiality, integrity, or availability of our information systems or any information residing therein and the data we process, store, or transmit.

We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF and AI Risk Management Framework) and seek to follow industry best practices to identify, assess, and manage cybersecurity risks relevant to our business. While we use these frameworks to help evaluate and enhance our controls and processes, we do not represent that our program fully satisfies any particular technical standard, specification, or requirement.

We conduct annual risk assessments to identify cybersecurity threats to our critical systems, information, services, and our broader enterprise IT environment. These risk assessments include identifying reasonably foreseeable potential internal and external risks, the likelihood of occurrence and any potential damage that could result from such risks, and the sufficiency of existing policies, procedures, systems, controls, and other safeguards in place to manage such risks. As part of our risk management process, we may engage third party experts to help identify and assess risks from cybersecurity threats. Our risk management and assessment process also encompasses cybersecurity risks associated with our use of third-party service providers.

~~Our~~Table ~~cybersecurity team, consisting~~ of the VP of Information Technology, Director of Information Security, and Director of Infrastructure, is principally responsible for managing our cybersecurity risk assessment processes, our security controls, mitigation process and our response to cybersecurity threats.Contents

~~The~~systems, ~~Company~~controls, ~~also~~and ~~participates~~other safeguards in aplace to manage such risks. As part of our risk management process, we may engage third party experts to help identify and assess risks from cybersecurity threats. Our risk ~~insurance~~management ~~policy~~and assessment process also encompasses cybersecurity risks associated with our use of third-party service providers.

As part of our overall risk management and assessment program, we design, implement, and maintain reasonable safeguards to minimize potential risks, including cybersecurity risks; reasonably address any identified gaps in existing safeguards; update existing safeguards as necessary; and monitor the effectiveness of our safeguards which may include, as appropriate: (i) vulnerability management (including patching, configuration management, and remediation tracking); (ii) security monitoring and detection designed to identify anomalous activity; (iii) access controls and identity management practices intended to support least-privilege access; (iv) data protection practices (including, where appropriate, encryption and backup processes); (v) incident response planning and readiness activities, including tabletop exercises and lessons-learned reviews; and (vi) business continuity and disaster recovery planning for certain systems and processes. We also regularly provide cybersecurity awareness training to our employees at all levels and departments across the Company. The Company believes that we have allocated adequate resources to address the cybersecurity threats that may reasonably affect us. We evaluate our resourcing and investments in cybersecurity on an ongoing basis in light of our risk profile, business needs, and the evolving threat landscape.

Our cybersecurity team, consisting of the VP of Information Technology, Director of Governance, Compliance and Risk, and our Director of Information Security and Infrastructure, is principally responsible for managing our cybersecurity risk assessment processes, our security controls, mitigation process and our response to cybersecurity threats.

The Company also participates in a cybersecurity risk insurance policy, intended to help mitigate certain losses and expenses associated with cybersecurity incidents; however, such insurance may not cover all losses or all types of claims.

For additional information regarding cybersecurity threats that may materially affect the Company, including our business strategy, results of operations, and financial condition, please refer to Item 1A. Risk Factors of this Annual Report on Form 10-K.

Governance

One of the functions of our Board of Directors is informed oversight of our risk management processes, including risks from cybersecurity threats. Our Board of Directors is responsible for monitoring and assessing strategic risk exposure, and our executive officers are responsible for the day-to-day management of the material risks we face. Our Board of Directors administers its cybersecurity risk oversight function directly as a whole and through its committees.

In particular, the Audit Committee of our Board of Directors monitors and assesses our financial, legal and operational risks, and receives regular reports from the management team regarding comprehensive organizational risk as well as particular areas of concern, which includes, but is not limited to, cybersecurity risks, related mitigation, and other related responses and activities. Material cybersecurity matters are escalated to the Board and/or the Audit Committee based on their nature, scope, and potential impact.

Our management team is informed about and monitors the prevention, detection, mitigation, and remediation of cybersecurity risks and incidents through various means, which may include, among other things, briefings with internal security personnel, threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us, and alerts and reports produced by security tools deployed in our IT environment, as well as input from external consultants engaged by us.

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ITEM 2. PROPERTIES

Our corporate headquarters, as well as our primary research, evaluation and design studios, is located in a facility owned by the Company in Salt Lake City, Utah. In addition, as of December 31, ~~2024~~2025, the Company and its subsidiaries lease or own facilities throughout the U.S., Europe, ~~Australia~~ and ~~New Zealand~~Australia. In general, our properties are well maintained, considered adequate and being utilized for their intended purposes.

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The following table identifies and provides certain information regarding our principal facilities:

Activity Location Owned/Leased Corporate Headquarters: Salt Lake City, Utah Owned Outdoor Segment Black Diamond U.S. ~~Distribution~~Headquarters and ~~Manufacturing~~Distribution Facility: Salt Lake City, Utah Leased Black Diamond European Sales and Marketing Office: Innsbruck, Austria Leased ~~PIEPS Sales and Marketing Office: Lebring, Austria Leased ~~ Black Diamond HQ Retail Store Salt Lake City, Utah Owned Black Diamond ~~Trolley Square Retail Store Salt Lake City, Utah Leased Black Diamond~~ Jackson Retail Store Jackson, Wyoming Leased Black Diamond Boulder Retail Store Boulder, Colorado Leased Black Diamond Seattle Retail Store Seattle, Washington Leased Adventure Segment Rhino-Rack Australia Headquarters: and Distribution Facility Sydney, Australia Leased Rhino-Rack Australia Perth Distribution Facility: Perth, Australia Leased Rhino-Rack U.S. Distribution Facility: Denver, Colorado Leased ~~Rhino-Rack N.Z. Distribution Facility: Wellington, New Zealand Leased ~~ MAXTRAX and TRED Australia Headquarters: Brisbane, Australia Leased

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ITEM 3. LEGAL PROCEEDINGS

Legal Proceedings

The Company is involved in various legal disputes and other legal proceedings that arise from time to time in the ordinary course of business. Based on currently available information, and except as disclosed herein, the Company does not believe that the existence of any of the legal disputes the Company or its subsidiaries is currently involved in will have a material adverse effect upon the Company’s consolidated financial condition, results of operations or cash flows. It is possible that, as additional information becomes available, the impact on the Company of an adverse determination could have a different effect. See also Item 1A. “Risk Factors”.

Litigation

The Company is involved in various lawsuits arising from time to time that the Company considers ordinary routine litigation incidental to its business. Amounts accrued for litigation matters represent the anticipated costs (damages and/or settlement amounts) in connection with pending litigation and claims and related anticipated legal fees and other expenses or costs for defending such actions, which legal fees and expenses or costs are expensed as incurred. The costs are accrued when it is both probable that a liability has been incurred and the amount can be reasonably estimated. The accruals are based upon the Company’s assessment, after consultation with counsel (if deemed appropriate), of probable loss based on the facts and circumstances of each case, the legal issues involved, the nature of the claim made, the nature of the damages sought and any relevant information about the plaintiffs and other significant factors that vary by case. When it is not possible to estimate a specific expected cost to be incurred, the Company evaluates the range of probable loss and records the minimum end of the range. Based on currently available information, and except as disclosed herein, the Company does not believe that it is reasonably possible that the disposition of any of the legal disputes the Company or its subsidiaries is currently involved in will have a material adverse effect upon the Company’s consolidated financial condition, results of operations or cash flows. There is a reasonable possibility of loss from contingencies in excess of the amounts accrued by the Company in the accompanying consolidated balance sheets; however, the actual amounts of such possible losses cannot currently be reasonably estimated by the Company at this time. It is possible that, as additional information becomes available, the impact on the Company could have a different effect.

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is a reasonable possibility of loss from contingencies in excess of the amounts accrued by the Company in the accompanying consolidated balance sheets; however, the actual amounts of such possible losses cannot currently be reasonably estimated by the Company at this time. It is possible that, as additional information becomes available, the impact on the Company could have a different effect.

Product Liability

As a consumer goods manufacturer and distributor, the Company faces the risk of product liability and related lawsuits involving claims for substantial money damages, product recall actions and higher than anticipated rates of warranty returns or other returns of goods. The Company is therefore vulnerable to various personal injury and property damage lawsuits relating to its products and incidental to its business.

Except as disclosed herein, there are no pending product liability claims and lawsuits of the Company, which the Company believes in the aggregate, will have a material adverse effect on the Company’s business, brand reputation, liquidity, stock price, consolidated financial position, results of operations and/or cash flows.

U.S. Consumer Product Safety Commission

In January 2021, Black Diamond Equipment, Ltd. (“BDEL”) ~~wrote~~filed toa Section 15(b) report with the U.S. Consumer Product Safety Commission (“CPSC”) outlining its new cradle solution for certain models of its avalanche beacon transceivers to prevent such transceivers from switching unexpectedly out of “send” mode. The proposed new cradle solution was designed to improve transceiver safety by locking the transceiver into “send” mode prior to use so that it would not switch unexpectedly out of “send” mode. BDEL also requested approval for the CPSC Fast-Track Program for a voluntary product recall to implement this cradle solution. The CPSC approved the recall and entered into a Corrective Action Plan agreement with BDEL in March 2021. BDEL received a letter from the CPSC, dated October 28, 2021, stating that the CPSC is investigating whether BDEL has timely complied with the reporting requirements of Section 15(b) of the Consumer Protection Safety Act and related regulations regarding certain models of avalanche transceivers switching unexpectedly out of “send” mode.

Separately, on April 21, 2022, BDEL filed a Section 15(b) report and applied for Fast-Track consideration for a voluntary recall, consisting of free repair or replacement of such malfunctioning models of avalanche transceivers, which would not switch from “send” mode to “search” mode due to an electronic malfunction in the reed switch or foil. The CPSC approved the recall and entered into a Corrective Action Plan agreement with BDEL in August 2022. BDEL received a letter from the CPSC, dated January 17, 2023, stating that the CPSC is investigating whether BDEL has timely complied with the reporting requirements of Section 15(b) of the Consumer Protection Safety Act and related regulations regarding the malfunction in the reed switch or foil in certain models of avalanche transceivers switching out of “search” mode. BDEL responded to the CPSC’s investigation by letter dated March 31, 2023, accompanied with documents responsive to the CPSC’s requests. The CPSC asked for further clarification and documents, and BDEL sent a responsive letter accompanied by additional documents on June 23, 2023. On September 6, 2023, the CPSC requested further clarification and information regarding the reed switch issue, to which BDEL responded on October 6, 2023 and October 13, 2023.

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Corrective Action Plan agreement with BDEL in August 2022. BDEL received a letter from the CPSC, dated January 17, 2023, stating that the CPSC is investigating whether BDEL has timely complied with the reporting requirements of Section 15(b) of the Consumer Protection Safety Act and related regulations regarding the malfunction in the reed switch or foil in certain models of avalanche transceivers switching out of “search” mode. BDEL responded to the CPSC’s investigation by letter dated March 31, 2023, accompanied with documents responsive to the CPSC’s requests. The CPSC asked for further clarification and documents, and BDEL sent a responsive letter accompanied by additional documents on June 23, 2023. On September 6, 2023, the CPSC requested further clarification and information regarding the reed switch issue, to which BDEL responded on October 6 and 13, 2023.

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

On November 20, 2023 and February 8, 2024, respectively, BDEL submitted a comprehensive response disputing the CPSC’s findings and conclusions ~~in the October 12~~, ~~2023 and December 18, 2023 letters,~~ including the amount of any potential penalties. The CPSC ultimately disagreed with our position and the agency voted to refer the matter to the U.S. Department of Justice for further proceedings. The Company and BDEL intend to strongly contest and vigorously defend against any claims which may be asserted against them by the Department of Justice or the CPSC.

John C. Walbrecht, the former President of BDEL and the Company, received a letter from the CPSC dated June 25, 2024, alleging that in his personal capacity he knowingly violated the Consumer Product Safety Act by failing to timely report the occurrence resulting in beacons switching unexpectedly out of “send” mode. The staff of the CPSC recommended a $5,000,000 fine against Mr. Walbrecht personally. Pursuant to the Company’s by-laws, the Company has agreed to indemnify Mr. Walbrecht and pay his legal fees, and he has provided an undertaking to the Company that the Company will be entitled to recover those expenses if it is ultimately determined that he was not entitled to indemnification. On August 26, 2024, Mr. Walbrecht’s independent counsel responded to the CPSC, denying the allegations of its June 25 letter and rejecting its demand for a penalty.

On January 23, 2025, the Company and BDEL were each served with grand jury subpoenas from the U.S. Attorney’s Office for the District of Utah requiring the production of documents relating to avalanche transmitters distributed by BDEL. The Company and BDEL intend to cooperate with this investigation.35

~~Based~~Table on currently available information, the Company believes an unfavorable outcome with the CPSC is probable, however, we cannot reasonably estimate on what terms this matter will be resolved. During the year ended December 31, 2024, the Company recorded a liability of $2,500,000 representing the low end of the range of our estimated exposure. The Company does not have a better estimate of the loss; therefore the low-end of the range was recorded as an accrued liability during the first quarter of 2024 and a corresponding expense is included in legal costs and regulatory matter expenses in the consolidated statements of comprehensive loss. Any penalties imposed by the CPSC or other regulators, could be costly to us and could damage our business and reputation as well as have a material adverse effect on the Company’s liquidity, stock price, consolidated financial position, results of operations and/or cash flows.Contents

personally. Pursuant to the Company’s by-laws, the Company has agreed to indemnify Mr. Walbrecht and pay his legal fees in connection with the occurrences described above, and he has provided an undertaking to the Company that the Company will be entitled to recover those expenses if it is ultimately determined that he was not entitled to indemnification. On August 26, 2024, Mr. Walbrecht’s independent counsel responded to the CPSC, denying the allegations of its June 25, 2024 letter and rejecting its demand for a penalty.

On January 23, 2025, in connection with a criminal investigation, the Company and BDEL were each served with grand jury subpoenas from the United States Department of Justice requiring the production of documents relating to avalanche transmitters distributed by BDEL. The Company and BDEL are cooperating with the investigation and have produced all relevant documents. The DOJ has sent letters to Mr. Walbrecht and Rick Vance (BDEL’s former Director of Quality) advising them that they are targets in its investigation of possible criminal conduct. The DOJ has since served two subpoenas upon a current and former employee of BDEL for grand jury testimony. The Company’s Board of Directors has approved indemnity and payment of legal fees for current and former employees subpoenaed by the DOJ, in the same manner and subject to the same conditions described above for Mr. Walbrecht.

On March 13, 2025, the Company received a letter from the CPSC requesting various categories of documents and information in connection with an investigation into whether BDEL sold products that were subject to a recall. The Company has cooperated with that investigation, substantially completed document production, and delivered a narrative explanatory letter to the CPSC on June 18, 2025. On January 28, 2026, the CPSC closed its investigation without taking further action.

Based on currently available information, the Company believes an unfavorable outcome with the CPSC is probable, however, we cannot reasonably estimate on what terms this matter will be resolved with the CPSC or the U.S. Department of Justice. During the year ended December 31, 2024, the Company recorded a liability of $2,500,000 representing the low end of the range of our estimated exposure. The Company does not have a better estimate of the loss; therefore the low-end of the range was recorded as an accrued liability during the first quarter of 2024 and a corresponding expense is included in legal costs and regulatory matter expenses in the consolidated statements of comprehensive loss. Any penalties imposed by the CPSC or other regulators, could be costly to us and could damage our business and reputation as well as have a material adverse effect on the Company’s liquidity, stock price, consolidated financial position, results of operations and/or cash flows.

Clarus Corporation v. HAP Trading, LLC and Harsh A. Padia

On September 23, 2022, the Company filed a lawsuit in the United States District Court for the Southern District of New York against HAP Trading, LLC and Harsh A. Padia, seeking disgorgement of profits from transactions in the Company’s common stock and related derivative securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended.

On March 14, 2025, the Court issued an Opinion and Order granting the defendants’ motion for summary judgment on the ground that they qualified for the market making exemption under Section 16(d) of the Exchange Act. On April 11, 2025, the Company filed a timely Notice of Appeal and the appeal was argued before the United States Court of Appeals for the Second Circuit on February 12, 2026. We are currently waiting for the Appeals Court to opine.

The Court of Appeals has invited the Securities and Exchange Commission (“SEC”) to submit a brief within 60 days or by April 17, 2026, and to advise the Court by March 10, 2026 if it does not intend to submit a brief. If the SEC submits a brief, each side will have 21 days to submit a brief in response.

Williams v. Caption Management, LLC, et al. / Clarus Corporation v. Caption Management, LLC, et al.

On February 12, 2024, a stockholder of the Company filed a lawsuit against Caption Management LLC and related entities (“Caption Management”) in the United States District Court for the Southern District of New York, seeking disgorgement of short-swing profits for violations of Section 16(b) of the Securities Exchange Act of 1934. The Company is named as a nominal defendant and any recovery in the case will inure to the benefit of the Company. On March 8, 2024, the Company filed its own lawsuit against these same defendants for disgorgement of short-swing profits under Section 16(b) of the Securities Exchange Act of 1934, as amended.

On February 10, 2026, the Court granted the Company’s motion to dismiss the stockholder action without prejudice on the ground that it was duplicative of the Company’s direct action against the same defendants alleging the same Section 16(b) violations. On February 24, 2026, the Company entered into a settlement agreement with Caption Management to resolve the Company’s claims. Under the terms of the settlement agreement, Caption Management paid the Company an undisclosed sum in exchange for, among other things,

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mutual releases and dismissal of the claims with prejudice. The settlement resolves the Company’s claims against Caption Management without any admission of liability or wrongdoing by any party.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is listed for trading on NASDAQ Global Select Market under the trading symbol “CLAR”.

Performance Graph

Set forth below is a line graph comparing the yearly percentage change in the cumulative total stockholder return on our common stock to the cumulative total return of the NASDAQ Global Select Market Composite and the Russell 2000 Index for the period commencing on December 31, ~~2019~~2020 and ending on December 31, ~~2024~~2025 (the “Measuring Period”). The graph assumes that the value of the investment in our common stock and the indexes was $100 on December 31, ~~2019~~2020. The yearly change in cumulative total return is measured by dividing (1) the sum of (i) the cumulative amount of dividends for the Measuring Period, assuming dividend reinvestment, and (ii) the change in share price between the beginning and end of the Measuring Period, by (2) the share price at the beginning of the Measuring Period.

Historical stock price performance should not be relied on as indicative of future stock price performance.

Total Return Analysis


	~~2019~~2020		~~2020~~2021		~~2021~~2022		~~2022~~2023		~~2023~~2024		~~2024~~2025
Clarus Corporation	$	100.00	$	~~114~~180.3165	$	~~206~~51.4974	$	5946.1520	$	5230.8187	$	3523.2861
The Russell 2000 Index	$	100.00	$	~~118~~113.3669	$	~~134~~89.5718	$	~~105~~102.5664	$	~~121~~112.4993	$	~~133~~125.6668
NASDAQ Global Select Market	$	100.00	$	~~143~~123.0412	$	~~176~~82.1196	$	~~118~~120.6733	$	~~172~~155.1363	$	~~222~~188.6200

Stockholders

On March 32, ~~2025~~2026, the last reported sales price for our common stock was $43.4426 per share. As of March 32, ~~2025~~2026, there were 6362 holders of record of our common stock.

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Dividends

On August 6, 2018, the Company announced that its Board of Directors approved the initiation of a Quarterly Cash Dividend program of $0.025 per share of the Company’s common stock or $0.10 per share on an annualized basis. In ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023, our total Quarterly Cash Dividends were $3,~~831~~840,000, $3,~~750~~831,000, and $3,~~721~~750,000 respectively.

On March 54, ~~2025~~2026, the Company announced that its Board of Directors approved the payment on March 2625, ~~2025~~2026 of the Quarterly Cash Dividend to the record holders of shares of the Company’s common stock as of the close of business on March 1716, ~~2025~~2026.

The payment of any future Quarterly Cash Dividends will be at the discretion of our Board of Directors and will depend upon, among other things, our results of operations, capital requirements, general business conditions, contractual restrictions on payment of dividends, if any, legal and regulatory restrictions on the payment of dividends, and other factors our Board of Directors deems relevant.

Recent Sales of Unregistered Securities

None.

Recent Purchases of our Registered Equity Securities

On August 1, 2022, the Company announced that its Board of Directors had terminated its $30,000,000 share repurchase program, which still had $10,793,587 available. The program was replaced with a new stock repurchase program that allows the repurchase of up to $50,000,000 of the Company’s outstanding common stock, which still had $42,829,217 available as of December 31, ~~2024~~2025. No repurchases of shares of the Company’s common stock occurred during the three months ended December 31, ~~2024~~2025.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth certain information regarding our equity plans as of December 31, ~~2024~~2025:


Plan Category	(A)Number of securities to be issued upon exercise of outstanding, warrants and rights	(B)Weighted-average exercise price of outstanding options, warrants and rights		(C)Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A))
Equity compensation plans approved by security holders (1)	4,~~231~~616,747	$	1514.5523	107,~~186~~420,~~530~~000

Total	4,~~231~~616,747	$	1514.5523	107,~~186~~420,~~530~~000

(1) Consists of stock options and restricted stock awards issued and issuable under the ~~2005~~Amended ~~Stock Incentive Plan~~ and ~~the~~Restated 2015 Stock Incentive Plan. There are a total of 1,~~100~~050,000 restricted stock awards included in column (A) that do not have an exercise price. Excluding these restricted stock awards, the weighted average exercise price of outstanding options, warrants and rights is $109.1801.

ITEM 6. [RESERVED]

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis reviews significant factors affecting the Company’s consolidated results of operations, financial condition and liquidity. This discussion should be read in conjunction with our financial statements and the accompanying notes to the financial statements.

Forward-Looking Statements

Please note that in this Annual Report on Form 10-K Clarus Corporation (which may be referred to herein as the “Company,” “Clarus,” “we,” “our” or “us”) may use words such as “appears,” “anticipates,” “believes,” “plans,” “expects,” “intends,” “future,” and similar expressions which constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting the Company and therefore involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements.

Potential risks and uncertainties that could cause the actual results of operations or financial condition of the Company to differ materially from those expressed or implied by forward-looking statements in this Annual Report on Form 10-K include, but are not limited to, the overall level of consumer demand onfor our products; the highly competitive nature of our markets and the potential for rapid or significant changes in consumer preferences; general economic conditions and other factors affecting consumer confidence, preferences, and behavior; the potential impact of the uncertain macroeconomic environment on our financial results, including, but not limited to, the effects of sustained global inflationary pressures and interest rates, potential economic slowdowns or recessions, trade restrictions and regulatory changes, and global supply chain disruptions; the effect of inflation on our business, including any future pricing actions taken in an effort to mitigate the effects of inflation and potential impacts on our revenue, operating margins and net income; disruption and volatility in the global currency, capital and credit markets; the impact of changes in tariffs, tax laws, global trade policies as well as instability and volatility in global markets; the financial strength of retail economies and the Company’s customers; the Company’s ability to implement its business strategy; ~~the~~our ability to accurately forecast demand and manage inventory levels, including the risk of excess or obsolete inventory, increased discounting, or lost sales; the Company’s ability to execute and integrate acquisitions, as well as to complete dispositions and effectively manage the associated separation and transition risks, including those related to the recent sale of PIEPS; the Company’s exposure to product liability or product warranty claims and other loss contingencies, including, without limitation, recalls and liability claims relating to certain avalanche beacon transceivers distributed by BDEL; disruptions and other impacts to the Company’s business, as a result of an outbreak of disease or similar public health threat, and government actions and restrictive measures implemented in response; stability of the Company’s manufacturing facilities and suppliers, as well as consumer demand for our products, in light of disease epidemics and health-related concerns; disruptions in our supply chain, third-party logistics providers, or distribution facilities; the impact that global climate change trends may have on the Company and its suppliers and customers, increased focus on sustainability issues as a result of global climate change; regulatory or market responses to global climate change; compliance costs and potential liabilities related to environmental requirements, including those associated with Per- and Polyfluoroalkyl Substances (PFAS); the Company’s ability to protect patents, trademarks and other intellectual property rights; any breaches of, or interruptions in, our information systems; the ability of our information technology systems or information security systems to operate effectively, including as a result of security breaches, viruses, hackers, malware, natural disasters, vendor business interruptions or other causes; our ability to properly maintain, protect, repair or upgrade our information technology systems or information security systems, or problems arising in connection with our ~~transitioning~~transition to upgraded or replacement systems; the impact of adverse publicity about the Company and/or its brands and products, including without limitation, through social media or in connection with brand damaging events and/or public perception; the potential impact of the Consumer Products Safety Commission’s and the U.S. Department of Justice’s investigations related to BDEL’s reporting obligations under the Consumer Product Safety Act in connection with BDEL’s recall of certain models of its avalanche transceivers on our business, results of operations, and financial condition; fluctuations in the price, availability and quality of raw materials and contracted products as well as foreign currency fluctuations; ongoing disruptions and delays in the shipping and transportation of our products due to port congestion, container ship availability and/or other logistical challenges; the impact of political unrest, natural disasters or other crises, terrorist acts, acts of war and/or military operations; our ability to utilize our net operating loss carryforwards; changes in tax laws and liabilities, tariffs, legal, regulatory, political and economic risks; the Company’s ability to maintain a quarterly dividend; our ability to obtain additional capital and funding on acceptable terms to meet our financial obligations as well as to support our business operations and growth ~~strategy~~initiatives; ~~and~~ any material differences in the actual financial results of the Company’s past and future acquisitions and dispositions, including the impact of ~~acquisitions~~such transactions and any related recognition of impairment or other charges, ~~relating to any~~ such ~~acquisitions~~as on the ~~Company’s~~recent ~~future~~impairments ~~earnings~~recognized per share. More information on potential factors that could affect the Company’s financial results can be found under Item 1A. Risk Factors of this Annual Report on Form 10-K. All forward-looking statements included in ~~this Annual Report on Form 10-K are based upon information available to~~ the ~~Company~~Outdoor asand ofAdventure ~~the~~segments ~~date of this Annual Report on Form 10-K,~~ and ~~speak only as~~ the ~~date~~potential ~~hereof.~~that Wewe ~~assume~~may nobe ~~obligation~~required to ~~update~~take ~~any~~additional ~~forward~~write-~~looking~~downs ~~statements to reflect events~~ or ~~circumstances after the date of this Annual Report on Form 10~~write-K.

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offs, restructuring charges, impairment charges, or other charges in the future, on the Company’s future earnings per share. More information on potential factors that could affect the Company’s financial results can be found under Item 1A. Risk Factors of this Annual Report on Form 10-K. All forward-looking statements included in this Annual Report on Form 10-K are based upon information available to the Company as of the date of this Annual Report on Form 10-K, and speak only as the date hereof. We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date of this Annual Report on Form 10-K.

Overview

Headquartered in Salt Lake City, Utah, Clarus is a global leading designer, developer, manufacturer and distributor of best-in-class outdoor equipment and lifestyle products focused on the outdoor enthusiast markets. Each of our brands has a long history of continuous product innovation for core and everyday users alike. The Company’s products are principally sold globally under the Black Diamond®, Rhino-Rack®, MAXTRAX®, ~~and~~ TRED Outdoors®, and RockyMounts® brand names through outdoor specialty and online retailers, our own websites, distributors and original equipment manufacturers. Our portfolio of iconic brands is well-positioned for sustainable, long-term growth underpinned by powerful industry trends across the outdoor and adventure sport end markets.

Each of our brands represents a unique customer value proposition. Supported by six decades of proven innovation, Black Diamond is an established global leader in high-performance, activity-based climbing, skiing, and technical mountain sports equipment. The brand is synonymous with premium performance, safety and reliability. Founded in 1992, our Rhino-Rack brand is a globally-recognized designer and distributor of highly-engineered automotive roof racks and accessories to enhance the outdoor enthusiast’s overlanding experience. Founded in 2005, our MAXTRAX brand offers high-quality overlanding and off-road vehicle recovery and extraction tracks for the overland and off-road market. Similarly, TRED, founded in 2012, is a trusted brand for key retailers and distributors in the overlanding and off-road vehicle recovery market. Founded in 1993, our RockyMounts brand is known for making well designed and dependable premium bicycle racks and other accessories compatible with vehicles of all sizes.

On August 21, 2017, the Company acquired Sierra Bullets, L.L.C. (“Sierra”). On October 2, 2020, the Company completed the acquisition of certain assets and liabilities constituting the Barnes business (“Barnes”). On July 1, 2021, the Company completed the acquisition of Australia-based Rhino-Rack Holdings Pty Ltd (“Rhino-Rack”). On December 1, 2021, the Company completed the acquisition of Australia-based MaxTrax Australia Pty Ltd (“MAXTRAX”). On October 9, 2023, the Company completed the acquisition of Australia-based TRED Outdoors Pty Ltd. (“TRED”). On December 5, 2024, the Company completed the acquisition of certain assets and liabilities constituting the RockyMounts business (“RockyMounts”).

On February 29, 2024, the Company ~~and Everest/Sapphire Acquisition, LLC, its wholly-owned subsidiary,~~ completed the sale ~~to Bullseye Acquisitions, LLC, an affiliate~~ of ~~JDH Capital Company, of~~ all of the equity associated with the Company’s Precision Sport segment, which iswas comprised of the Company’s subsidiaries Sierra Bullets, L.L.C. (“Sierra”) and Barnes Bullets – Mona, LLC (“Barnes”), pursuant to a Purchase and Sale Agreement dated as of December 29, 2023~~, by and among, Bullseye Acquisitions, LLC, Everest/Sapphire Acquisition, LLC and the Company (the “Precision Sport Purchase Agreement”)~~. Under the terms of the Precision Sport Purchase Agreement, the Company received net proceeds of approximately $37,871,000 in cash, after payment of certain fees and settlement of the Restated Credit Agreement, for all of the equity associated with the Company’s Precision Sport segment. The activities of the Precision Sport segment have been segregated and reported as discontinued operations for all periods presented. See Note 3 to our consolidated financial statements for financial information regarding discontinued operations.

On ~~August 6~~May 8, ~~2018~~2025, ~~the~~BD ~~Company~~European ~~announced~~Holdings, ~~that~~LLC, ~~its~~a ~~Board~~Delaware oflimited ~~Directors~~liability ~~approved~~company ~~the~~and ~~initiation~~wholly ofowned asubsidiary ~~quarterly~~of ~~cash~~the ~~dividend~~Company, ~~program~~entered ofinto ~~$0.025~~a ~~per~~Share ~~share~~Purchase ofand ~~the~~Transfer ~~Company’s~~Agreement ~~common stock~~ (the “~~Quarterly~~Share ~~Cash~~Purchase ~~Dividend~~Agreement”) orto ~~$0.10~~sell ~~per~~all ~~share on an annualized basis. The declaration and payment~~ of ~~future Quarterly Cash Dividends is subject to~~ the ~~discretion~~issued of and ~~approval~~outstanding ofshares ~~the Company’s Board~~ of ~~Directors.~~Black InDiamond ~~2024~~Austria GmbH, ~~2023~~together ~~and~~with ~~2022~~its ~~our~~operating ~~total Quarterly Cash Dividends were $3~~subsidiary,~~831,000,~~ ~~$3,750,000,~~PIEPS ~~and~~GmbH $3(collectively,~~721,000,~~ ~~respectively~~“PIEPS”). On ~~March~~July 511, 2025, the Company ~~announced~~completed ~~that~~the ~~its~~sale ~~Board~~ of ~~Directors~~PIEPS, ~~approved~~which ~~the~~was ~~payment~~included onin ~~March~~the ~~26,~~Company’s ~~2025~~Outdoor ofsegment, ~~the~~to ~~Quarterly~~a ~~Cash~~private ~~Dividend~~investment offirm ~~$0.025~~for toa ~~the~~total ~~record~~purchase ~~holders~~price of ~~shares~~€7,825,000 of(approximately ~~the~~$9,124,000), ~~Company’s~~including ~~common~~cash ~~stock~~held asat PIEPS of ~~the~~$1,311,000, ~~close~~pursuant ofto ~~business~~the onShare ~~March~~Purchase ~~17, 2025~~Agreement.

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On August 6, 2018, the Company announced that its Board of Directors approved the initiation of a quarterly cash dividend program of $0.025 per share of the Company’s common stock (the “Quarterly Cash Dividend”) or $0.10 per share on an annualized basis. The declaration and payment of future Quarterly Cash Dividends is subject to the discretion of and approval of the Company’s Board of Directors. In 2025, 2024 and 2023 our total Quarterly Cash Dividends were $3,840,000, $3,831,000, and $3,750,000, respectively. On March 4, 2026, the Company announced that its Board of Directors approved the payment on March 25, 2026 of the Quarterly Cash Dividend of $0.025 to the record holders of shares of the Company’s common stock as of the close of business on March 16, 2026.

Restructuring

Starting in 2023, the Company began incurring expenses to facilitate long-term sustainable growth through cost reduction actions, consisting of employee reductions, facility rationalization and contract termination costs. During the years ended December 31, 2025, 2024, and 2023, the Company incurred $967,000, $1,948,000, and $3,223,000, respectively, of restructuring charges related to these actions. The Company has incurred $56,~~171~~138,000 of cumulative restructuring charges since the commencement of ~~our~~these restructuring actions in 2023. The Company accrues for restructuring costs when they are probable and reasonably estimable. ~~These~~Restructuring costs include severance costs, exit costs, and other restructuring costs and are included in Restructuring charges in the consolidated statements of comprehensive loss. Severance costs primarily consist of severance benefits through payroll continuation, conditional separation costs and employer tax liabilities, while exit costs primarily consist of lease exit and contract termination costs. Other costs consist primarily of costs related to the discontinuance of certain product lines and are distinguishable and directly attributable to the Company’s restructuring initiative and not a result of external market factors associated with the ongoing business. We estimate that we will incur ~~restructuring~~additional ~~costs related to~~ employee-related ~~costs~~ and facility exit restructuring costs ~~during~~in ~~the year 2025~~2026; however, the Company cannot estimate the total amount expected to be incurred at this time as cost reduction actions continue to be evaluated. The Company currently anticipates completing these restructuring activities in ~~2025~~2026; however, the timing and scope of these actions may change, and additional actions may be taken, depending on business conditions and other factors.

Critical Accounting Policies and Use of Estimates

Management’s discussion of our financial condition and results of operations is based on the consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting periods. We continually evaluate our estimates and assumptions including those related to revenue recognition, inventory provisions, income taxes and valuation of long-lived assets, goodwill and indefinite-lived intangible assets, and other intangible assets. We base our estimates on historical experience and other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates.

We believe the following critical accounting policies include the more significant estimates and assumptions used in the preparation of our consolidated financial statements. Our accounting policies are more fully described in Note 1 of our consolidated financial statements.

● Fair value of net assets acquired in business combinations – We allocate the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase price over these fair values is recorded as goodwill. We engage independent third-party valuation specialists to assist us in determining the fair values of certain assets acquired and liabilities assumed. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Different valuation approaches are used to value different types of intangible assets. The income approach is a valuation technique that capitalizes anticipated income associated with the asset being valued. This approach is predicated on developing net income and cash flow projections which are discounted for risk and the time value of money. This approach is generally the principal approach to the valuation of most intangible assets. The market approach involves the compilation and analysis of recent acquisitions of similar assets in the open market. A fair value can be estimated after adjustments are made to reflect comparability differences between the assets sold and those being valued. This method of valuation applies primarily to the valuation of owned land, inventory, and certain intangible assets. The cost approach estimates the amount that would be required to replace the service capacity of an asset (often referred to as current replacement cost). We typically apply all three approaches to estimate the fair value of our tangible and intangible tangible assets depending on the type of asset acquired. Business acquisitions may include contingent consideration payments based on various future financial measures, such as sales-~~based milestones, related to the acquired entity. We estimate the fair value of contingent consideration liabilities based on estimated sales growth rates, discount rates, and other relevant factors.~~

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ofbased ~~that~~milestones, ~~received~~related ~~without~~to the ~~intangible~~acquired ~~asset through enhanced revenues or cost savings~~entity. ~~Our~~We ~~discounted~~estimate ~~cash~~the ~~flow~~fair ~~estimates~~value ~~use discount rates that correspond to a weighted-average cost~~ of ~~capital~~contingent ~~consistent~~consideration ~~with~~liabilities a market-participant view. The discount rates are consistent with those used for investment decisions and take into account our operating plans and strategies. Management’s estimates of fair value are based ~~upon~~on ~~assumptions~~estimated ~~believed~~sales togrowth ~~be reasonable~~rates, ~~but~~discount ~~which are inherently uncertain and unpredictable. If we do not achieve the results reflected in the assumptions and estimates~~rates, ~~our goodwill impairment evaluations could be adversely affected,~~ and weother ~~may~~relevant ~~impair a portion or all of our intangible assets, which would adversely affect our operating results in the period of impairment~~factors.

Significant estimates in valuing certain intangible assets include, but are not limited to, the projected financial information related to each individual asset, particularly forecasted sales growth rates, cash flows, market-based royalty rates and estimated discount rates. Product technology and trademarks are valued using the relief-from-royalty method, and customer relationships are valued using the multi-period excess earnings model. The relief-from-royalty method is used to estimate the cost savings that accrue to the owner of an intangible asset who would otherwise have to pay royalties or license fees on revenues earned through the use of the asset. The multi-period excess earnings method supposes that the owner of the intangible asset is able to achieve a return in excess of that received without the intangible asset through enhanced revenues or cost savings. Our discounted cash flow estimates use discount rates that correspond to a weighted-average cost of capital consistent with a market-participant view. The discount rates are consistent with those used for investment decisions and take into account our operating plans and strategies. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable. If we do not achieve the results reflected in the assumptions and estimates, our goodwill impairment evaluations could be adversely affected, and we may impair a portion or all of our intangible assets, which would adversely affect our operating results in the period of impairment.

●

Income taxes – We account for income taxes using the asset and liability method. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. We may make assumptions, judgments and estimates in order to determine the future taxable income available to support the recoverability of deferred tax assets at a more-likely-than-not threshold. The sources of future taxable income include 1) future reversal of existing taxable temporary differences, 2) taxable income in carryback years if carryback is permitted, 3) future taxable income from future operations, and 4) tax planning strategies. The degree and subjectivity and judgment increases as the source of future taxable income becomes more inherently subjective. Our assumptions, judgments and estimates relative to the realizability of a deferred tax asset take into account predictions of the amount and category of expected future taxable income. Actual operating results and the underlying amount and category of income in future years could cause our current assumptions, judgments and estimates of recoverable net deferred taxes to be inaccurate. Changes in any of the assumptions, judgments and estimates mentioned above related to the realizability of deferred tax assets, could materially affect our financial position and results of operations.

●

Goodwill and indefinite-lived intangible assets – We assess the recoverability of our reporting units’ carrying value of goodwill by performing a qualitative assessment and/or a quantitative goodwill impairment test. At a minimum, we perform an annual assessment of possible goodwill impairment as of December 31^st of each year. Management may perform an interim goodwill impairment assessment whenever events or circumstances make it more likely than not that an impairment may have occurred, such as a significant adverse change in the business climate or a decision to sell or dispose of the reporting unit. If we begin with a qualitative assessment and are able to support the conclusion that it is not more likely than not that the fair value of the reporting unit is less than its carrying value, we are not required to perform the quantitative goodwill impairment test. Otherwise, we are required to perform the quantitative goodwill impairment test which compares the reporting unit’s carrying value including goodwill to its estimated fair value. We estimate the reporting units’ fair value using a combination of the income approach based upon projected discounted cash flows of the reporting unit and the market approach based upon the market multiple of comparable publicly traded companies. If the estimated fair value of the reporting entity exceeds the carrying value, the goodwill is not impaired, and no further review is required. However, if the carrying value exceeds the estimated fair value of the reporting unit, an impairment expense should be recognized for the excess of the carrying value over the fair value.

Under the income approach, the estimated discounted cash flows are based on the best information available to us at the time, including supportable assumptions and projections we believe are reasonable. Our discounted cash flow estimates use discount rates that correspond to a weighted-average cost of capital consistent with a market-participant view. The discount rates are consistent with those used for investment decisions and take into account our future operating plans and strategies. Certain other key assumptions utilized, including revenue and cash flow projections, are based on estimates consistent with those utilized in our annual budgeting and planning process that we believe are reasonable. However, if we do not achieve the results reflected in the assumptions and estimates, our goodwill impairment evaluations could be adversely affected, and we may impair a portion or all of our goodwill, which would adversely affect our operating results in the period of impairment.

The market approach identifies the EBITDA multiples of comparable publicly traded companies. The reporting unit’s EBITDA projections are multiplied by the market multiple to estimate its current estimated fair value. Key assumptions utilized in estimating the reporting unit’s EBITDA include revenue and cash flow projections. If the market multiples or EBITDA value assumptions are incorrect, our goodwill impairment evaluation could also be adversely affected, and we may impair a portion or all of our goodwill, which would adversely affect our operating results in the period of impairment.43

We also test indefinite-lived intangible assets for impairment annually during the fourth quarter, as of December 31st of each year. Management may perform an interim indefinite-lived intangible asset impairment assessment whenever events or circumstances make it more likely than not that an impairment may have occurred, such as a significant adverse change in the business climate or a decision to sell or dispose of the reporting unit. If the carrying value of the indefinite-lived asset is higher than its fair value, then

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~~the asset is deemed to be impaired and the impairment charge is estimated as the difference.~~ The ~~Company~~market ~~calculates the fair value of its indefinite-lived intangible assets using the income~~ approach, ~~specifically~~identifies the ~~relief-from-royalty method.~~ ~~The relief-from-royalty method~~EBITDA ismultiples ~~used to estimate the cost savings that accrue to the owner~~ of ancomparable ~~intangible~~publicly ~~asset~~traded ~~who would otherwise have to pay royalties or license fees on revenues earned through the use of the asset~~companies. ~~Internally~~The ~~forecasted~~reporting ~~revenues,~~unit’s ~~which~~EBITDA ~~the~~projections ~~Company believes reasonably approximate market participant assumptions,~~ are multiplied by ~~a royalty rate to arrive at~~ the ~~estimated~~market ~~net~~multiple ~~after~~to ~~tax~~estimate ~~cost~~its ~~savings.~~current ~~The royalty rate~~estimated ~~used~~fair ~~in the analysis is based on an analysis of empirical, market-derived royalty rates for comparable intangible assets~~value. ~~The~~Key ~~net~~assumptions ~~after~~utilized ~~tax~~in ~~cost~~estimating ~~savings are discounted using~~ the ~~same~~reporting ~~weighted-average cost of capital discount rate developed for purposes of the Company~~unit’s ~~quantitative~~EBITDA ~~goodwill~~include ~~impairment test. The key uncertainties in these calculations are the assumptions used in determining the~~ revenue ~~associated with each indefinite-lived intangible asset~~ and ~~the royalty~~cash ~~rate~~flow projections. If ~~we do not achieve~~ the ~~results~~market ~~reflected~~multiples inor ~~the~~EBITDA ~~market~~value assumptions ~~and~~are ~~forecasted estimates~~incorrect, our ~~indefinite-lived~~goodwill ~~intangibles~~ impairment ~~evaluations~~evaluation could also be adversely affected, and we may impair a portion or all of ~~their~~our ~~carrying values~~goodwill, which would adversely affect our operating results in the period of impairment.

We also test indefinite-lived intangible assets for impairment annually during the fourth quarter, as of December 31^st of each year. Management may perform an interim indefinite-lived intangible asset impairment assessment whenever events or circumstances make it more likely than not that an impairment may have occurred, such as a significant adverse change in the business climate or a decision to sell or dispose of the reporting unit. If the carrying value of the indefinite-lived asset is higher than its fair value, then the asset is deemed to be impaired and the impairment charge is estimated as the difference. The Company calculates the fair value of its indefinite-lived intangible assets using the income approach, specifically the relief-from-royalty method. The relief-from-royalty method is used to estimate the cost savings that accrue to the owner of an intangible asset who would otherwise have to pay royalties or license fees on revenues earned through the use of the asset. Internally forecasted revenues, which the Company believes reasonably approximate market participant assumptions, are multiplied by a royalty rate to arrive at the estimated net after tax cost savings. The royalty rate used in the analysis is based on an analysis of empirical, market-derived royalty rates for comparable intangible assets. The net after tax cost savings are discounted using the same weighted-average cost of capital discount rate developed for purposes of the Company’s quantitative goodwill impairment test. The key uncertainties in these calculations are the assumptions used in determining the revenue associated with each indefinite-lived intangible asset and the royalty rate. If we do not achieve the results reflected in the market assumptions and forecasted estimates, our indefinite-lived intangibles impairment evaluations could be adversely affected, and we may impair a portion or all of their carrying values, which would adversely affect our operating results in the period of impairment.

●

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

Recent Accounting Pronouncements

See “Recent Accounting Pronouncements” in Note 1 of our consolidated financial statements.

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Results of Operations (In Thousands)

Year Ended December 31, ~~2024~~2025 Compared to Year Ended December 31, ~~2023~~2024

The following presents a discussion of operations for the year ended December 31, ~~2024~~2025, compared with the year ended December 31, ~~2023~~2024:


	Year Ended ~~December 31,~~
	December 31, ~~2024~~2025		December 31, ~~2023~~2024

Sales
Domestic sales	$	~~105~~106,~~745~~123	$	~~112~~105,~~385~~745
International sales		~~158~~144,~~570~~317		~~173~~158,~~635~~570
Total sales		~~264~~250,~~315~~440		~~286~~264,~~020~~315

Cost of goods sold		~~171~~167,~~696~~464		~~188~~171,~~509~~696
Gross profit		9282,~~619~~976		9792,~~511~~619

Operating expenses
Selling, general and administrative		~~111~~105,~~948~~173		~~114~~111,~~603~~948
Restructuring charges		~~1,948~~967		31,~~223~~948
Transaction costs		~~576~~752		~~593~~576
Contingent consideration benefit		(~~125~~355)		(~~1,565~~125)
Legal costs and regulatory matter expenses		34,~~842~~682		13,~~764~~842
Impairment of goodwill		363,~~264~~804		-36,264
Impairment of indefinite-lived intangible assets		827,~~545~~634		-8,545

Total operating expenses		~~162~~142,~~998~~657		~~118~~162,~~618~~998

Operating loss		(7059,~~379~~681)		(2170,~~107~~379)

Other income (expense)
Interest income, net		~~1,467~~619		671,467
Other, net		(1,~~673)~~973		~~961~~(1,673)

Total other (expense) income, net		(206)		1,028
Total other income (expense), net		2,592		(206)

Loss before income tax		(7057,~~585~~089)		(2070,~~079~~585)
Income tax expense (benefit)		17,852		(4,291)
Income tax (benefit) expense		(10,533)		17,852
Loss from continuing operations		(8846,~~437~~556)		(1588,~~788~~437)

Discontinued operations, net of tax		~~36,150~~-		536,~~642~~150

Net loss	$	(5246,~~287~~556)	$	(1052,~~146~~287)

Sales

Total sales decreased $2113,~~705~~875, or 75.62%, to $~~264~~250,~~315~~440 during the year ended December 31, ~~2024~~2025, compared to total sales of $~~286~~264,~~020~~315 during the year ended December 31, ~~2023~~2024. The decrease in sales was attributable to a decrease in sales at the ~~Outdoor~~Adventure and ~~Adventure~~Outdoor segments of $207,~~485~~170 and $16,~~220~~705, respectively.

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Sales in the Adventure segment were reduced by $~~524~~1,302 due to foreign exchange impact from the strengthening of the U.S. dollar against the Australian dollar during the year ended December 31, 2025, compared to the prior period. Sales in the Outdoor segment ~~increased~~were reduced by $~~235~~176 due to foreign exchange impact from the strengthening of the U.S. dollar primarily against the euro during the year ended December 31, 2025, compared to the prior period.

Sales in the ~~Outdoor~~Adventure segment decreased due to ~~weakness~~significantly inlower ~~our~~demand ~~European,~~from ~~independent~~ global ~~distributor~~original ~~(“IGD”),~~equipment manufacturer customers and ~~North~~a ~~American~~challenging ~~markets~~wholesale market in Australia for both Rhino-Rack and MAXTRAX, combined with ~~the~~a ~~effects~~prior ~~from~~year ~~our~~large ~~product~~wholesale ~~simplification~~customer ~~and~~in ~~SKU~~North ~~rationalization~~America ~~strategy~~not reoccurring in 2025, partially offset by a $5,962 increase from the RockyMounts acquisition. Sales in the ~~Adventure~~Outdoor segment decreased due to lower ~~demand~~independent ~~from~~global ~~original~~distributor ~~equipment~~revenue, ~~manufacturer~~lower ~~(“OEM”)~~global ~~and~~direct-to-consumer ~~wholesale~~revenue ~~customers~~of ~~both~~$2,934, inand ~~Australia~~lower ~~and~~PIEPS ~~North~~revenue ~~America~~of $3,418 ~~partially~~due ~~offset~~to bythe asale $3of PIEPS in July 2025,~~019~~ ~~increase~~compared ~~from~~to the ~~TRED~~prior ~~Outdoors acquisition~~period.

Domestic sales ~~decreased~~increased $6378,~~640,~~ or 50.94%, to $~~105~~106,~~745~~123 during the year ended December 31, ~~2024~~2025, compared to domestic sales of $~~112~~105,~~385~~745 during the year ended December 31, ~~2023~~2024. The ~~decrease~~increase in sales was attributable to aan ~~decrease~~increase in sales at the ~~Outdoor~~Adventure segment of $72,~~829~~837, partially offset by ana ~~increase~~decrease in sales at the ~~Adventure~~Outdoor segment of $12,~~189~~459.

International sales decreased $1514,~~065~~253, or 89.70%, to $~~158~~144,~~570~~317 during the year ended December 31, ~~2024~~2025, compared to international sales of $~~173~~158,~~635~~570 during the year ended December 31, ~~2023~~2024. The decrease in sales was attributable to a decrease in sales at the ~~Outdoor~~Adventure and ~~Adventure~~Outdoor segments of $1210,~~656~~007 and $24,~~409~~246, respectively.

Cost of Goods Sold

Cost of goods sold decreased $164,~~813~~232, or 82.95%, to $~~171~~167,~~696~~464 during the year ended December 31, ~~2024~~2025, compared to cost of goods sold of $~~188~~171,~~509~~696 during the year ended December 31, ~~2023~~2024.

Gross Profit

Gross profit decreased $49,~~892~~643, or 510.04%, to $9282,~~619~~976 during the year ended December 31, ~~2024~~2025, compared to gross profit of $9792,~~511~~619 during the year ended December 31, ~~2023~~2024. Gross margin was 3533.01% during the year ended December 31, ~~2024~~2025, compared to a gross margin of 3435.10% during the year ended December 31, ~~2023~~2024. Gross margin during the year ended December 31, ~~2024~~2025, ~~increased~~decreased compared to the prior year as a result of lower volumes at the Outdoor and Adventure segments, impacts due to ~~favorable~~tariffs ~~channel~~imposed ~~mix~~by asthe aUnited ~~result~~States for both segments, and an unfavorable product mix and increases of ~~lower~~inventory ~~OEM~~reserve ~~sales~~expenses at the Adventure segment. ~~and~~Specifically, ~~favorable~~the unfavorable product mix ~~due~~at toAdventure ~~the~~was ~~simplification~~primarily driven by promotional sales efforts in North America and ~~SKU~~higher ~~rationalization~~RockyMounts ~~strategy~~revenue. This combined with lower wholesale volume at both Rhino-Rack and MAXTRAX in Australia drove the ~~Outdoor~~decline ~~segment~~in gross margin compared to the year ended December 31, 2024. ~~These~~Additionally, ~~increases~~losses on foreign currency cash flow hedges were $1,585 during the year ended December 31, 2025, which negatively impacted gross margin. These were partially offset by ana ~~increase~~favorable inproduct ~~inventory~~mix ~~reserve expenses~~ at the ~~Adventure~~Outdoor segment. due to our simplification initiatives.

Selling, General and Administrative

Selling, general, and administrative expenses decreased $26,~~655~~775, or 26.31%, to $~~111~~105,~~948~~173 during the year ended December 31, ~~2024~~2025, compared to selling, general and administrative expenses of $~~114~~111,~~603~~948 during the year ended December 31, ~~2023~~2024. Selling, general and administrative expenses at the Outdoor segment decreased by $73,~~176~~051 primarily as a result of lower digital marketing and employee-related costs, lower costs from PIEPS due to the sale in July 2025, as well as lower retail expenses due to store closures and other expense reduction initiatives to manage costs. Selling, general and administrative expenses at the Adventure segment ~~increased~~decreased by $32,~~806~~155 primarily as a result of ~~investments~~lower ~~in global~~ marketing, eamortization, and employee-~~commerce~~related ~~initiatives~~costs, ~~and~~combined ~~organizational~~with ~~leadership~~other toexpense ~~accelerate~~reduction ~~growth~~initiatives, aspartially ~~well~~offset asby ~~the~~a ~~full~~write-off ~~year~~of ~~impact~~internally ofdeveloped ~~the~~software ~~TRED~~during ~~Outdoors~~the ~~acquisition.~~year ~~These~~ended ~~increases~~December at31, ~~the~~2025. ~~Adventure~~Additionally, ~~segment~~Corporate ~~were~~costs ~~partially~~decreased ~~offset~~$1,569 bydue to lower ~~intangible~~outside ~~amortization~~service ~~expense~~and employee-related costs.

Restructuring Charges

Restructuring charges decreased to $~~1,948~~967 during the year ended December 31, ~~2024~~2025, compared to restructuring charges of $31,~~223~~948 during the year ended December 31, ~~2023~~2024. The restructuring charges incurred during the year ended December 31, ~~2024~~2025 relate to benefits provided to employees who were terminated due to the Company’s reduction-in-force as part of its continued realignment of resources within the organization of $~~1,824~~937 and lease exit and contract termination costs of $~~124~~30.

~~Transaction Costs~~46

Transaction expense decreased to $576 during the year ended December 31, 2024, compared to transaction costs of $593 during the year ended December 31, 2023. The 2024 transaction costs primarily related to the RockyMounts and TRED Outdoor acquisitions and other expenses related to the Company’s various acquisition efforts.

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Transaction Costs

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

Contingent Consideration Benefit

Contingent consideration benefit ~~decreased~~increased to $~~125~~355 during the year ended December 31, ~~2024~~2025, compared to a contingent consideration benefit of $~~1,565~~125 during the year ended December 31, ~~2023~~2024, which consisted of changes in the estimated fair value of contingent consideration liabilities associated with our acquisitions of ~~MAXTRAX~~TRED in ~~2021~~2023 and ~~TRED~~RockyMounts in ~~2023~~December 2024.

Legal Costs and Regulatory Matter Expenses

Legal costs and regulatory matter expenses increased to $34,~~842~~682 during the year ended December 31, ~~2024~~2025, compared to legal costs and regulatory matter expenses of $13,~~764~~842 during the year ended December 31, ~~2023. The increase in legal costs and regulatory matter expenses recognized during year ended December 31~~2024, ~~2024~~which ~~reflects~~consisted ~~the~~of ~~Company’s accrued liability for the outstanding regulatory matter with the U.S. Consumer Product Safety Commission (“CPSC”) and increased~~ expenses related to the Company’s specific legal matters. See Note 16 to our consolidated financial statements for financial information regarding specific legal matters.

Impairment of Goodwill

Impairment of goodwill ~~increased~~decreased to $363,~~264~~804 during the year ended December 31, ~~2024~~2025, compared to impairment of goodwill of $036,264 during the year ended December 31, ~~2023~~2024. Based on the results of the Company’s annual impairment analysis completed as of December 31, 2025 and 2024, the Company determined that goodwill at the Adventure reporting unit was impaired and recognized acharges ~~charge~~ of $3,804 and $36,264, respectively.

Impairment of Indefinite-Lived Intangible Assets

Impairment of indefinite-lived intangible assets increased to $827,~~545~~634 during the year ended December 31, ~~2024~~2025, compared to impairment of indefinite-lived intangible assets of $08,545 during the year ended December 31, ~~2023~~2024. Based on the results of the Company’s impairment analysis completed as of June 30, 2025, the Company determined that certain indefinite-lived intangible assets in our Outdoor reporting unit, specifically the PIEPS trademark, were impaired and recognized charges of $1,565 during the year ended December 31, 2025. Based on the results of the Company’s impairment analysis completed as of December 31, 2025 and 2024, the Company determined that certain indefinite-lived intangible assets in our Adventure reporting unit, specifically the Rhino-Rack and MAXTRAX trademarks, were impaired and recognized charges of $21,600 and $4,469, respectively, during the year ended December 31, 2025, and $3,480 and $5,065, respectively, during the year ended December 31, 2024.

Interest Income, net

Interest income, net ~~increased~~decreased to $~~1,467~~619 during the year ended December 31, ~~2024~~2025, compared to interest income, net of $671,467 during the year ended December 31, ~~2023~~2024. The ~~increase~~decrease in interest income recognized during the year ended December 31, ~~2024~~2025, was due to lower interest ~~income~~rates on ~~higher~~lower cash balances, compared to the prior period.

Other, net

Other, net changed by $23,~~634~~646, or ~~274~~217.19%, to ($1,~~673)~~973 during the year ended December 31, ~~2024~~2025, compared to other, net of ($~~961~~1,673) during the year ended December 31, ~~2023~~2024. The change in other, net, was primarily attributable to an increase in remeasurement ~~losses~~gains recognized on the Company’s foreign denominated accounts receivable and accounts payable. The change was partially offset by ~~increases~~losses in ~~gains in~~ mark-to-market adjustments on non-hedged foreign currency contracts during the year ended December 31, ~~2024~~2025.

Income Taxes

Income tax ~~expense~~ (benefit) expense changed by $2228,~~143~~385, or ~~516~~159.0%, to an income tax ~~expense~~benefit of $1710,~~852~~533 during the year ended December 31, ~~2024~~2025, compared to an income tax ~~benefit~~expense of $417,~~291~~852 during the same period in ~~2023~~2024. Our effective income tax rate was ana ~~expense~~benefit of 2518.35% for the year ended December 31, ~~2024~~2025, and differed compared to the statutory tax rates primarily due to the impact of ~~recording~~changes ain the valuation allowance on deferred tax assets and ~~the~~statutory ~~impairment of goodwill and indefinite-lived intangible assets, all of which are non-deductible for~~ tax ~~purposes. Our effective income tax~~ rate ~~was~~differences abetween ~~benefit~~foreign ofjurisdictions ~~21.4% for the year ended December 31, 2023,~~ and ~~differed compared to~~ the ~~statutory~~United ~~tax~~States. ~~rates~~Our ~~due to the impact of officer compensation limitations, partially offset by the impact of tax credits, and permanent book to tax differences related to incentive stock options.~~

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

Discontinued Operations

Net income from discontinued operations ~~changed~~decreased ~~by $30,508,~~ to $~~36,150~~0 during the year ended December 31, ~~2024~~2025, compared to net income from discontinued operations of $536,~~642~~150 during the year ended December 31, ~~2023~~2024. The change in net income from discontinued operations ~~was~~is ~~primarily~~due ~~attributable~~ to the ~~pre-tax gain on the~~ sale of the Precision Sport segment ofoccurring ~~$40~~during the year ended December 31,~~585~~ 2024. There was no activity in discontinued operations during the year ended December 31, 2025.

~~Year Ended December 31, 2023 Compared to Year Ended December 31, 2022~~48

~~The~~Table ~~following presents the Company’s results~~ of ~~operations for the year ended December 31, 2023, compared with the year ended December 31, 2022:~~Contents


	Year Ended December 31,
	2023		2022

Sales
Domestic sales	$	112,385	$	132,818
International sales		173,635		182,433
Total sales		286,020		315,251

Cost of goods sold		188,509		205,298
Gross profit		97,511		109,953

Operating expenses
Selling, general and administrative		114,603		120,814
Restructuring charges		3,223		-
Transaction costs		593		2,818
Contingent consideration (benefit) expense		(1,565)		493
Legal costs and regulatory matter expenses		1,764		-
Impairment of goodwill		-		52,071
Impairment of indefinite-lived intangible assets		-		40,240

Total operating expenses		118,618		216,436

Operating loss		(21,107)		(106,483)

Other income (expense)
Interest income, net		67		-
Other, net		961		(1,035)

Total other income (expense), net		1,028		(1,035)

Loss before income tax		(20,079)		(107,518)
Income tax benefit		(4,291)		(14,716)
Loss from continuing operations		(15,788)		(92,802)

Discontinued operations, net of tax		5,642		23,022

Net loss	$	(10,146)	$	(69,780)

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

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


	Year Ended
	December 31, 2024		December 31, 2023

Sales
Domestic sales	$	105,745	$	112,385
International sales		158,570		173,635
Total sales		264,315		286,020

Cost of goods sold		171,696		188,509
Gross profit		92,619		97,511

Operating expenses
Selling, general and administrative		111,948		114,603
Restructuring charges		1,948		3,223
Transaction costs		576		593
Contingent consideration (benefit) expense		(125)		(1,565)
Legal costs and regulatory matter expenses		3,842		1,764
Impairment of goodwill		36,264		-
Impairment of indefinite-lived intangible assets		8,545		-

Total operating expenses		162,998		118,618

Operating loss		(70,379)		(21,107)

Other income (expense)
Interest income, net		1,467		67
Other, net		(1,673)		961

Total other (expense) income, net		(206)		1,028

Loss before income tax		(70,585)		(20,079)
Income tax expense (benefit)		17,852		(4,291)
Loss from continuing operations		(88,437)		(15,788)

Discontinued operations, net of tax		36,150		5,642

Net loss	$	(52,287)	$	(10,146)

For a discussion of our results of operations for the year ended December 31, ~~2023~~2024, compared to the year ended December 31, ~~2022~~2023, please see Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2023~~2024, filed with the ~~SEC~~Securities and Exchange Commission on March 76, ~~2024~~2025.

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Liquidity and Capital Resources (In Thousands)

Year Ended December 31, ~~2024~~2025 Compared to Year Ended December 31, ~~2023~~2024

Our primary ongoing funding requirements are for working capital, expansion of our operations ~~(both~~ organically, and ~~through acquisitions) and~~ general corporate needs, as well as investing in the various brands. We plan to fund these activities through a combination of our ~~future~~current ~~operating~~ cash ~~flows~~balances and ~~net~~future ~~proceeds~~operating ~~from~~cash ~~the sale of our Precision Sport segment~~flows. Upon the closing of the sale of the Precision Sport segment, the Company terminated and settled all outstanding borrowings on our revolving credit facility and term debt under the Restated Credit Agreement. We believe that our liquidity requirements and contractual obligations for at least the next 12 months will be adequately covered by ~~cash~~our ~~provided~~current bycash ~~operations~~balances and ~~the~~cash ~~net~~provided ~~proceeds~~by ~~from the sale of the Precision Sport segment after the settlement of the Restated Credit Agreement~~operations. Additionally, long-term contractual obligations are also currently expected to be funded from ~~cash~~our ~~from~~current ~~operations~~cash balances and ~~net~~cash ~~proceeds~~ from ~~the sale of the Precision Sport segment after the settlement of the Restated Credit Agreement~~operations. For additional information regarding the Company’s credit facilities, see the section titled “Credit Agreement” below.

At December 31, ~~2024~~2025, we had total cash and restricted cash of $4538,~~359~~195, compared to cash and restricted cash of $1145,~~324~~359 at December 31, ~~2023~~2024. At December 31, ~~2024~~2025, the Company had $612,~~477~~545 of the $4538,~~359~~195 in cash and restricted cash held by foreign entities, of which $48,~~665~~595 is considered permanently reinvested.

The following presents a discussion of cash flows for the year ended December 31, ~~2024~~2025 compared with the year ended December 31, ~~2023~~2024, inclusive of continuing and discontinued operations.


	Year Ended December 31,
	~~2024~~2025		~~2023~~2024

Net cash (used in) provided by operating activities	$	(7,300)	$	31,924
Net cash used in operating activities	$	(4,746)	$	(7,300)
Net cash provided by (used in) investing activities		165,160		(11,416)
Net cash provided by investing activities		2,771		165,160
Net cash used in financing activities		(~~123~~5,~~239~~882)		(20123,~~255~~239)
Effect of foreign exchange rates on cash		(586)		(990)
Effect of foreign exchange rates on cash and restricted cash		693		(586)
Change in cash		34,035		(737)
Change in cash and restricted cash		(7,164)		34,035
Cash, beginning of year		11,324		12,061
Cash and restricted cash, beginning of year		45,359		11,324
Cash, end of period	$	45,359	$	11,324
Cash and restricted cash, end of period	$	38,195	$	45,359

Net Cash From Operating Activities

Net cash used in operating activities was $74,~~300~~746 during the year ended December 31, ~~2024~~2025, compared to net cash ~~provided~~used byin operating activities of $317,~~924~~300 during the year ended December 31, ~~2023~~2024. The change in net cash (used in) ~~provided by~~ operating activities during ~~2024~~2025 is primarily due to the gain on sale of $40,585 during the year ended December 31, 2024 related to the disposition of the Precision Sport segment, and an increase in ~~net~~impairment ~~loss~~of indefinite-lived intangible assets at the Adventure and Outdoor segments of $4219,~~141~~089, and ana ~~increase~~decrease in ~~cash~~net ~~outflows~~loss ~~related to working capital~~ of $195,~~202,~~731 compared to the same period in ~~2023~~2024. These impacts were partially offset by ana ~~increase~~decrease in impairment of goodwill ~~and indefinite-lived intangible assets~~ at the Adventure segment of $4432,~~809~~460, asa ~~well~~decrease ~~as an increase~~ in deferred income taxes of $2228,~~530~~159, ~~during~~and ~~the~~an ~~year~~increase ~~ended~~in ~~December~~cash ~~31,~~outflows ~~2024~~related to working capital of $791, compared to the same period in ~~2023~~2024.

Free cash flow, defined as net cash (used in) ~~provided by~~ operating activities less capital expenditures, of ($149,~~039~~908) was used during the year ended December 31, ~~2024~~2025 compared to ($2614,~~207~~039) ~~generated~~used during the same period in ~~2023~~2024. The Company believes that the non-GAAP measure, free cash flow, provides an understanding of the capital required by the Company to expand its asset base. A reconciliation of free cash flows to comparable GAAP financial measures is set forth below, inclusive of continuing and discontinued operations:


	Year Ended December 31,
	~~2024~~2025		~~2023~~2024

Net cash (used in) provided by operating activities	$	(7,300)	$	31,924
Net cash used in operating activities	$	(4,746)	$	(7,300)
Purchase of property and equipment		(65,~~739~~162)		(56,~~717~~739)
Free cash flow	$	(149,~~039~~908)	$	26(14,~~207~~039)

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Net Cash From Investing Activities

Net cash provided by investing activities was $~~165~~2,~~160~~771 during the year ended December 31, ~~2024~~2025 compared to net cash ~~used~~provided inby investing activities of $11165,~~416~~160 during the year ended December 31, ~~2023~~2024. The change in net cash provided by ~~(used in)~~ investing activities during the year ended December 31, ~~2024~~2025, is primarily due to the cash received related to the disposition of the Precision Sport segment, ~~compared~~during to the ~~same~~year ~~period~~ended inDecember ~~2023~~31, 2024.

Net Cash From Financing Activities

Net cash used in financing activities was $~~123~~5,~~239~~882 during the year ended December 31, ~~2024~~2025, compared to net cash used in financing activities of $20123,~~255~~239 during the year ended December 31, ~~2023~~2024. The ~~increase~~decrease in cash used during the year ended December 31, ~~2024~~2025, compared to the same period in ~~2023~~2024 was primarily due to the settlement of all outstanding borrowings on our revolving credit facility and term debt under the Restated Credit Agreement during the year ended December 31, 2024.

Net Operating Loss

As of December 31, ~~2024~~2025, the Company had net operating loss carryforwards (“NOLs”) and research and experimentation credit for U.S. federal income tax purposes of $041,209 and $5,~~439~~709, respectively. All federal NOLs will have an indefinite carryforward period. Federal research and experimentation credits have a limited carryforward period and will begin to expire in tax year 2033. In accordance with Section 382 and Section 383 of the Internal Revenue Code of 1986 (“Code”), utilization of the NOL and tax credit carryforwards may subject to limitations based on prior or future ownership changes.

As of December 31, ~~2024~~2025, the Company’s gross deferred tax asset was $3540,~~658~~300. The Company has recorded a valuation allowance of $2329,~~344~~315, resulting in a net deferred tax asset of $1210,~~314~~985, before deferred tax liabilities of $2412,~~488~~348. The Company has provided a full valuation allowance against all of the net U.S. deferred tax assets as of December 31, ~~2024~~2025, because the ultimate realization of those assets does not meet the more-likely-than-not criteria. The majority of the Company’s deferred tax assets consist of net operating loss carryforwards, research and experimentation credits and capitalized costs for federal tax purposes. ~~These~~The deferred tax assets related to research and experimentation credits and capitalized costs are expected to reverse into NOL carryforwards that can be used to offset taxable income and reduce income taxes payable in future periods. If a change in control were to occur, these future NOLs could be limited under Section 382 of the ~~Internal Revenue~~ Code ~~of 1986 (“Code”)~~, as amended.

Credit Agreement

Upon the closing of the sale of the Precision Sport segment on February 29, 2024, the Company terminated and settled all outstanding borrowings on our revolving credit facility and term debt under the Restated Credit Agreement.

Off-Balance Sheet Arrangements

We do not engage in any transactions or have relationships or other arrangements with unconsolidated entities. These include special purpose and similar entities or other off-balance sheet arrangements. We also do not engage in energy, weather or other commodity-based contracts.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In general, we can be exposed to market risks including fluctuations in interest rates, foreign currency exchange rates and certain commodity prices that can affect the cost of operating, investing, and financing under those conditions. The Company believes it has moderate exposure to these risks. We assess market risk based on changes in interest rates, foreign currency rates, and commodity prices utilizing a sensitivity analysis that measures the potential loss in earnings, fair values, and cash flows based on a hypothetical change in these rates and prices.

Interest Rate Risks

Our primary exposure to market risk is interest rate risk associated with potential credit facilities since the interest iswould be indexed to market rates. OnAs ~~February~~of ~~29,~~December ~~2024~~31, ~~upon the closing of the disposition of the Precision Sport segment~~2025, the Company ~~terminated~~has ~~and~~no ~~settled all~~ outstanding borrowings ~~on our revolving credit facility and term debt~~ under ~~the~~any ~~Restated Credit Agreement. The applicable interest rate for the outstanding borrowings under our~~ credit ~~facility as of December 31, 2023 ranged between approximately 7~~facilities.7% ~~and~~On ~~9.8%.~~February ~~The amount outstanding as of December 31~~29, ~~2023 was $119~~2024,~~750,000.~~

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

Foreign Currency Risks

Our consolidated financial statements are denominated in, and our principal currency is, the U.S. dollar. We transact business predominantly in U.S. dollars, Australian dollars, Euros (EUR), and Canadian dollars ($CAD). Given the current geopolitical environment and other economic uncertainties worldwide, changes in these and other currencies in relation to the U.S. dollar will affect our sales and profitability and could result in foreign exchange losses. For the year ~~ending~~ended December 31, ~~2024~~2025, approximately 5451% of our sales ~~from continuing operations~~ were denominated in foreign currencies (compared to 54% of our sales from continuing operations in the prior year), the most significant of which were the Australian Dollar, Euro, Canadian Dollar, Norwegian Kroner, and Swiss Franc. Our Australian Dollar denominated expenses associated with our Australian operations (which include business operations and distribution facilities) provide a natural hedge for Australian Dollar denominated revenues, however, a significant amount of our finished good inventory purchases are ~~denominated~~transacted in U.S. dollars.

The Company’s primary exchange rate risk management objective is to attempt to mitigate the uncertainty of anticipated cash flows attributable to changes in foreign currency exchange rates. The Company primarily focuses on mitigating changes in cash flows resulting from sales denominated in currencies other than the U.S. dollar. The Company manages this risk primarily by using currency forward and option contracts. As of December 31, ~~2024~~2025 and ~~2023~~2024, we had entered into foreign currency forward contracts for Euros and Canadian dollars, which qualified as cash flow hedges. As of December 31, ~~2024~~2025 and ~~2023~~2024, the aggregate notional amounts of Euro contracts were EUR 63,~~711~~134,000 and EUR 206,~~612~~711,000, respectively, and the aggregate notional amounts of Canadian dollar contracts were $CAD 1,~~379~~208,000 and $CAD 71,~~925~~379,000, respectively. A hypothetical 10% change in foreign currency rates would not have a material effect on foreign currency gains and losses related to the foreign currency derivatives or the net fair value of the Company’s foreign currency derivatives. Gains or losses on the fair value of derivative contracts would generally be offset by gains and losses on the underlying hedged transaction. These offsetting gains and losses are not reflected above. See Note 9 to our consolidated financial statements for additional discussion of our foreign currency contracts.

Derivative Instruments

We employ a variety of practices to manage these market risks, including operating and financing activities and, where deemed appropriate, the use of derivative instruments. Derivative instruments are used only for risk management purposes and not for speculation or trading. Derivatives are such that a specific debt instrument, contract, or anticipated purchase determines the amount, maturity, and other specifics of the hedge. If a derivative contract is entered into, we either determine that it is an economic hedge or we designate the derivative as a cash flow or fair value hedge. We do not hold derivative financial investments, derivative commodity investments, engage in foreign currency hedging or other transactions that expose us to material market risks.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CLARUS CORPORATION AND SUBSIDIARIES

Index to Financial Statements

	Page
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)	5054
Consolidated Balance Sheets - December 31, 2024 and 2023	52
Consolidated Balance Sheets - December 31, 2025 and 2024	56
Consolidated Statements of Comprehensive Loss - Years Ended December 31, 2024, 2023 and 2022	53
Consolidated Statements of Comprehensive Loss - Years Ended December 31, 2025, 2024 and 2023	57
Consolidated Statements of Cash Flows - Years Ended December 31, 2024, 2023 and 2022	54
Consolidated Statements of Cash Flows - Years Ended December 31, 2025, 2024 and 2023	58
Consolidated Statements of Stockholders’ Equity - Years Ended December 31, 2024, 2023 and 2022	55
Consolidated Statements of Stockholders’ Equity - Years Ended December 31, 2025, 2024 and 2023	59
Notes to Consolidated Financial Statements	5660

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Clarus Corporation:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of⁠ Clarus Corporation and subsidiaries (the "Company") as of December 31, ~~2024~~2025 and December 31, ~~2023~~2024,⁠ the related consolidated statements of comprehensive loss⁠, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, ~~2024~~2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2024~~2025 and December 31, ~~2023~~2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2024~~2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, ~~2024~~2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 65, ~~2025~~2026, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit ~~Matters~~Matter

The critical audit ~~matters~~matter communicated below ~~are~~is ~~matters~~a matter arising from the current-period audit of the financial statements that ~~were~~was communicated or required to be communicated to the audit committee and that (1) ~~relate~~relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit ~~matters~~matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit ~~matters~~matter below, providing a separate ~~opinions~~opinion on the critical audit ~~matters~~matter or on the accounts or disclosures to which ~~they~~it ~~relate~~relates.

~~Goodwill~~Indefinite-lived ~~and~~intangible ~~Intangible~~assets ~~Assets~~ — ~~Adventure reporting unit and~~ Rhino-Rack and MAXTRAX ~~trademarks—~~Trademarks --- Refer to Notes 1 and 6 to the financial statements

Critical Audit Matter Description

The Company's evaluation of ~~goodwill and~~ indefinite-lived intangible assets for impairment involves the comparison of the estimated fair value of aan ~~reporting unit or~~ indefinite-lived intangible asset to its carrying value. The Company estimates the ~~reporting unit’s~~ fair value ~~using a combination~~ of ~~the~~its ~~income~~indefinite-lived ~~approach,~~intangible ~~which~~assets ~~uses~~using ~~projected discounted cash flows, and~~ the ~~market~~relief-from-royalty ~~approach, which uses earnings before interest, taxes, depreciation, and amortization (EBITDA) market multiples of comparable publicly traded companies~~method. The ~~determination~~relief-from-royalty ofmethod ~~the fair value using the income approach~~ requires management to make estimates and assumptions related to revenue ~~and~~projections, ~~cash~~discount ~~flow~~rates, ~~projections~~ and ~~discount~~royalty rates. ~~The~~During ~~determination~~the ofyear ~~the~~ended ~~fair~~December ~~value~~31, ~~using~~2025, the ~~market~~Company ~~approach~~recognized ~~also~~an ~~requires~~impairment ~~management~~of to$26.1 ~~make~~million ~~estimates and assumptions~~ related to ~~revenue~~the Rhino-Rack and ~~cash~~MAXTRAX ~~flow~~indefinite-lived ~~projections~~trademarks ~~used~~in toits ~~determine~~Adventure ~~EBITDA~~reporting asunit. ~~well as the~~

50We identified the valuation of the Rhino-Rack and MAXTRAX trademarks within indefinite-lived intangibles as a critical audit matter because of the estimates and assumptions management made to determine their estimated fair values. The audit of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value

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~~market~~specialists, ~~multiples~~when ofperforming ~~comparable~~audit ~~publicly~~procedures ~~traded~~to ~~companies.~~evaluate ~~The Company estimates~~ the ~~fair~~reasonableness ~~value~~ of ~~its indefinite-lived intangible assets using the relief-from-royalty method. The relief-from-royalty method requires~~ management’s ~~to make~~ estimates and assumptions related to revenue projections, ~~discount rates,~~ and ~~royalty rates. During~~ the ~~year~~selection ~~ended December 31, 2024, the Company recognized a goodwill impairment in its Adventure reporting unit~~ of ~~$36,264,000~~discount and ~~$8,545,000~~royalty ~~related to the Rhino-Rack and MAXTRAX indefinite-lived trademark in its Adventure reporting unit~~rates.

We identified the valuation of the Adventure reporting unit and Rhino-Rack and MAXTRAX trademarks within indefinite-lived intangibles as a critical audit matter because of the estimates and assumptions management made to determine their estimated fair values. The audit of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our internal fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to revenue and cash flow projections, the selection of EBITDA multiples, and discount and royalty rates.

How the Critical Audit Matter Was Addressed in the Audit

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

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

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

– Historical revenues ~~and cash flows~~.

– Internal communications tobetween management and the Board of Directors.

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

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

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

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

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

/s/ Deloitte & Touche LLP

Salt Lake City, Utah

March 65, ~~2025~~2026

We have served as the Company’s auditor since 2018.

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CLARUS CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)


	December 31,
	~~2024~~2025		~~2023~~2024

Assets
Current assets
Cash	$	4536,~~359~~691	$	1145,~~324~~359
Accounts receivable, net		4344,~~678~~839		5343,~~971~~678
Inventories		8283,~~278~~028		9182,~~409~~278
Prepaid and other current assets		5,~~555~~457		45,~~865~~555
Income tax receivable		~~910~~1,407		~~892~~910
Assets held for sale		-		137,284
Total current assets		171,422		177,780
Total current assets		177,780		299,745

Property and equipment, net		1718,~~606~~255		1617,~~587~~606
Other intangible assets, net		3123,~~516~~761		4131,~~466~~516
Indefinite-lived intangible assets		4619,~~750~~600		5846,~~527~~750
Goodwill		~~3,804~~-		393,~~320~~804
Deferred income taxes		3655		~~22,869~~36
Other long-term assets		1615,~~602~~935		16,~~824~~602
Total assets	$	~~294~~249,~~094~~028	$	~~495~~294,~~338~~094

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	1115,~~873~~907	$	2011,~~015~~873
Accrued liabilities		2224,~~276~~403		2422,~~580~~276
Income tax payable		-179		~~805~~-
Current portion of long-term debt		~~1,888~~-		~~119~~1,~~790~~888
Liabilities held for sale		-		5,744
Total current liabilities		40,489		36,037
Total current liabilities		36,037		170,934

Deferred income taxes		121,~~210~~418		1812,~~124~~210
Other long-term liabilities		1210,~~754~~728		1412,~~160~~754
Total liabilities		6152,~~001~~635		~~203~~61,~~218~~001

Stockholders’ Equity
Preferred stock, $0.0001 par value per share; 5,000 shares authorized; none issued		-		-
Common stock, $0.0001 par value per share; 100,000 shares authorized; 43,004 and 42,761 issued and 38,362 and 38,149 outstanding, respectively		4		4
Common stock, $0.0001 par value per share; 100,000 shares authorized; 43,054 and 43,004 issued and 38,402 and 38,362 outstanding, respectively		4		4
Additional paid in capital		~~697~~703,~~592~~487		~~691~~697,~~198~~592
Accumulated deficit		(~~406~~457,~~857~~253)		(~~350~~406,~~739~~857)
Treasury stock, at cost		(33,~~114~~156)		(3233,~~929~~114)
Accumulated other comprehensive loss		(2416,~~532~~689)		(1524,~~414~~532)
Total stockholders’ equity		~~233~~196,~~093~~393		~~292~~233,~~120~~093
Total liabilities and stockholders’ equity	$	~~294~~249,~~094~~028	$	~~495~~294,~~338~~094

See accompanying notes to consolidated financial statements.

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CLARUS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands, except per share amounts)


	Year Ended December 31,
	~~2024~~2025		~~2023~~2024		~~2022~~2023


Sales
Domestic sales	$	~~105~~106,~~745~~123	$	~~112~~105,~~385~~745	$	~~132~~112,~~818~~385
International sales		~~158~~144,~~570~~317		~~173~~158,~~635~~570		~~182~~173,~~433~~635
Total sales		~~264~~250,~~315~~440		~~286~~264,~~020~~315		~~315~~286,~~251~~020

Cost of goods sold		~~171~~167,~~696~~464		~~188~~171,~~509~~696		~~205~~188,~~298~~509
Gross profit		9282,~~619~~976		9792,~~511~~619		~~109~~97,~~953~~511

Operating expenses
Selling, general and administrative		~~111~~105,~~948~~173		~~114~~111,~~603~~948		~~120~~114,~~814~~603
Restructuring charges		~~1,948~~967		31,~~223~~948		-3,223
Transaction costs		~~576~~752		~~593~~576		~~2,818~~593
Contingent consideration (benefit) expense		(125)		(1,565)		493
Contingent consideration benefit		(355)		(125)		(1,565)
Legal costs and regulatory matter expenses		34,~~842~~682		13,~~764~~842		-1,764
Impairment of goodwill		363,~~264~~804		-36,264		~~52,071~~-
Impairment of indefinite-lived intangible assets		827,~~545~~634		-8,545		~~40,240~~-

Total operating expenses		~~162~~142,~~998~~657		~~118~~162,~~618~~998		~~216~~118,~~436~~618

Operating loss		(7059,~~379~~681)		(2170,~~107~~379)		(~~106~~21,~~483~~107)

Other income (expense)
Interest income, net		~~1,467~~619		671,467		-67
Other, net		(1,~~673)~~973		~~961~~(1,673)		~~(1,035)~~961

Total other (expense) income, net		(206)		1,028		(1,035)
Total other income (expense), net		2,592		(206)		1,028

Loss before income tax		(7057,~~585~~089)		(2070,~~079~~585)		(~~107~~20,~~518~~079)
Income tax expense (benefit)		17,852		(4,291)		(14,716)
Income tax (benefit) expense		(10,533)		17,852		(4,291)
Loss from continuing operations		(8846,~~437~~556)		(1588,~~788~~437)		(9215,~~802~~788)

Discontinued operations, net of tax		~~36,150~~-		536,~~642~~150		235,~~022~~642

Net loss		(5246,~~287~~556)		(1052,~~146~~287)		(6910,~~780~~146)

Other comprehensive (loss) income, net of tax:
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment		(98,~~635)~~172		2(9,~~405~~635)		~~(12~~2,~~387)~~405
Unrealized gain (loss) on hedging activities		517		(134)		(248)
Unrealized (loss) gain on hedging activities		(329)		517		(134)
Other comprehensive (loss) income		(9,118)		2,271		(12,635)
Other comprehensive income (loss)		7,843		(9,118)		2,271
Comprehensive loss	$	(6138,~~405~~713)	$	(761,~~875~~405)	$	(827,~~415~~875)

Loss from continuing operations per share:
Basic	$	(21.3121)	$	(02.4231)	$	(20.4942)
Diluted		(21.3121)		(02.4231)		(20.4942)

Net loss per share:
Basic	$	(1.3721)	$	(01.2737)	$	(10.8827)
Diluted		(1.3721)		(01.2737)		(10.8827)

Weighted average shares outstanding:
Basic		38,~~305~~393		3738,~~485~~305		37,~~201~~485
Diluted		38,~~305~~393		3738,~~485~~305		37,~~201~~485

See accompanying notes to consolidated financial statements.

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CLARUS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	Year Ended December 31,
	~~2024~~2025		~~2023~~2024		~~2022~~2023
Cash Flows From Operating Activities:
Net loss	$	(5246,~~287~~556)	$	(1052,~~146~~287)	$	(6910,~~780~~146)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation of property and equipment		43,~~034~~641		74,~~602~~034		7,~~626~~602
Amortization of other intangible assets		98,~~784~~740		129,~~748~~784		1512,~~326~~748
Impairment of goodwill		363,~~264~~804		-36,264		~~52,071~~-
Impairment of indefinite-lived intangible assets		827,~~545~~634		-8,545		~~40,240~~-
Gain on sale of business		(40,585)		-		-
Loss (gain) on sale of businesses		91		(40,585)		-
Accretion of notes payable		10112		-10		-
Amortization of debt issuance costs		~~1,209~~-		~~928~~1,209		~~824~~928
Loss (gain) on disposition of property and equipment		269		54		(81)
Loss on disposition of property and equipment		723		269		54
Noncash lease expense		3,~~155~~558		3,~~741~~155		3,~~081~~741
Contingent consideration (benefit) expense		(125)		(1,565)		451
Contingent consideration benefit		(355)		(125)		(1,565)
Stock-based compensation		5,~~829~~895		5,~~292~~829		115,~~361~~292
Deferred income taxes		16(11,~~182~~658)		(616,~~348)~~182		(96,~~523~~348)
Changes in operating assets and liabilities, net of disposition:
Changes in operating assets and liabilities, net of dispositions:
Accounts receivable		~~10,844~~(967)		610,~~078~~844		(86,~~326)~~078
Inventories		3(1,~~743~~579)		133,~~211~~743		~~(19~~13,~~487)~~211
Prepaid and other assets		~~640~~92		~~2,134~~640		12,~~150~~134
Accounts payable		(73,~~965)~~602		(47,~~940~~965)		1(4,~~371~~940)
Accrued liabilities		(61,~~075~~226)		~~540~~(6,075)		~~(5,037)~~540
Income taxes		(~~771~~297)		~~2,595~~(771)		(62,~~657)~~595
Net cash (used in) provided by operating activities		(74,~~300~~746)		31(7,~~924~~300)		1431,~~610~~924

Cash Flows From Investing Activities:
Proceeds from the sale of business		175,674		-		-
Proceeds from sale of businesses, net of cash		7,813		175,674		-
Purchase of businesses, net of cash acquired		~~(3,840)~~-		(53,~~648~~840)		-(5,648)
Proceeds from disposition of property and equipment		~~315~~120		~~199~~315		~~499~~199
Purchase of intangible assets		~~(250)~~-		(250)		-(250)
Purchases of property and equipment		(65,~~739~~162)		(56,~~717~~739)		(85,~~250~~717)
Net cash provided by (used in) investing activities		~~165~~2,~~160~~771		~~(11~~165,~~416)~~160		(711,~~751~~416)

Cash Flows From Financing Activities:
Proceeds from revolving credit facilities		~~31,205~~-		5131,~~243~~205		9551,~~611~~243
Repayments on revolving credit facilities		~~(41,580)~~-		(5941,~~835~~580)		(9659,~~064~~835)
Repayments on term loans and other debt		(~~109~~2,~~459~~000)		(11109,~~126~~459)		(~~126~~11,~~810~~126)
Proceeds from issuance of term loans and other debt		46-		-46		~~125,000~~-
Payment of debt issuance costs		-		-		(1,385)
Purchase of treasury stock		(42)		(185)		(222)
Purchase of treasury stock		(185)		(222)		(8,267)
Proceeds from exercise of options		-		565		3,435
Proceeds from exercise of options		565		3,435		2,721
Cash dividends paid		(3,840)		(3,831)		(3,750)
Cash dividends paid		(3,831)		(3,750)		(3,721)
Net cash used in financing activities		(5,882)		(123,239)		(20,255)
Payment of contingent consideration		-		-		(943)
Net cash used in financing activities		(123,239)		(20,255)		(13,858)

Effect of foreign exchange rates on cash		(586)		(990)		(405)
Effect of foreign exchange rates on cash and restricted cash		693		(586)		(990)

Change in cash		34,035		(737)		(7,404)
Change in cash and restricted cash		(7,164)		34,035		(737)
Cash, beginning of year		11,324		12,061		19,465
Cash and restricted cash, beginning of year		45,359		11,324		12,061
Cash, end of period	$	45,359	$	11,324	$	12,061
Cash and restricted cash, end of period	$	38,195	$	45,359	$	11,324

Supplemental Disclosure of Cash Flow Information:
Cash paid (received) for income taxes	$	~~2,463~~936	$	~~(758)~~2,463	$	~~8,639~~(758)
Cash paid for interest	$	~~1,957~~16	$	101,~~398~~957	$	610,~~586~~398
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Shares issued for business acquisitions	$	-	$	~~3,132~~-	$	23,~~261~~132
Debt issued for business acquisition	$	~~1,878~~-	$	-1,878	$	-
Contingent consideration for business acquisitions	$	~~609~~-	$	~~121~~609	$	-121
Property and equipment purchased with accounts payable	$	167	$	145	$	541
Purchases of property and equipment incurred but not paid	$	118	$	167	$	145
Intangible assets purchased with accounts payable	$	-	$	~~250~~-	$	-250
Lease liabilities arising from obtaining right-of-use assets	$	~~2,530~~545	$	42,~~441~~530	$	14,~~405~~441

See accompanying notes to consolidated financial statements.

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CLARUS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except per share amounts)

													Accumulated
					Additional								Other		Total
	Common Stock				Paid-In		Accumulated		Treasury Stock				Comprehensive		Stockholders'
	Shares		Amount		Capital		Deficit		Shares		Amount		Income (Loss)		Equity

Balance, December 31, 2021		41,105	$	4	$	662,996	$	(263,342)		(4,011)	$	(24,440)	$	(5,050)	$	370,168
Net loss		-		-		-		(69,780)		-		-		-		(69,780)
Other comprehensive loss		-		-		-		-		-		-		(12,635)		(12,635)
Cash dividends ($0.10 per share)		-		-		-		(3,721)		-		-		-		(3,721)
Purchase of treasury stock		-		-		-		-		(578)		(8,267)		-		(8,267)
Stock-based compensation expense		-		-		11,361		-		-		-		-		11,361
Proceeds from exercise of options		424		-		2,721		-		-		-		-		2,721
Shares issued for business acquisitions		108		-		2,261		-		-		-		-		2,261
Balance, December 31, 2022		41,637	$	4	$	679,339	$	(336,843)		(4,589)	$	(32,707)	$	(17,685)	$	292,108
Net loss		-		-		-		(10,146)		-		-		-		(10,146)
Other comprehensive income		-		-		-		-		-		-		2,271		2,271
Cash dividends ($0.10 per share)		-		-		-		(3,750)		-		-		-		(3,750)
Purchase of treasury stock		-		-		-		-		(23)		(222)		-		(222)
Stock-based compensation expense		-		-		5,292		-		-		-		-		5,292
Proceeds from exercise of options		695		-		3,435		-		-		-		-		3,435
Shares issued for business acquisitions		429		-		3,132		-		-		-		-		3,132
Balance, December 31, 2023		42,761	$	4	$	691,198	$	(350,739)		(4,612)	$	(32,929)	$	(15,414)	$	292,120
Net loss		-		-		-		(52,287)		-		-		-		(52,287)
Other comprehensive loss		-		-		-		-		-		-		(9,118)		(9,118)
Cash dividends ($0.10 per share)		-		-		-		(3,831)		-		-		-		(3,831)
Purchase of treasury stock		-		-		-		-		(30)		(185)		-		(185)
Stock-based compensation expense		-		-		5,829		-		-		-		-		5,829
Proceeds from exercise of options		243		-		565		-		-		-		-		565
Balance, December 31, 2024		43,004	$	4	$	697,592	$	(406,857)		(4,642)	$	(33,114)	$	(24,532)	$	233,093
Net loss		-		-		-		(46,556)		-		-		-		(46,556)
Other comprehensive income		-		-		-		-		-		-		7,843		7,843
Cash dividends ($0.10 per share)		-		-		-		(3,840)		-		-		-		(3,840)
Purchase of treasury stock		-		-		-		-		(10)		(42)		-		(42)
Stock-based compensation expense		-		-		5,895		-		-		-		-		5,895
Shares issued from restricted stock units		50		-		-		-		-		-		-		-
Balance, December 31, 2025		43,054	$	4	$	703,487	$	(457,253)		(4,652)	$	(33,156)	$	(16,689)	$	196,393

See accompanying notes to consolidated financial statements.

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CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying audited consolidated financial statements of Clarus Corporation and subsidiaries (which may be referred to as the “Company,” “Clarus,” “we,” “our” or “us”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Nature of Business

Headquartered in Salt Lake City, Utah, we are a global ~~leader~~leading indesigner, ~~the~~developer, ~~design~~manufacturer and ~~development~~distributor of best-in-class outdoor equipment and lifestyle products ~~for~~focused ~~outdoor~~on ~~enthusiasts.~~the ~~Driven by our rich history of engineering and innovation, our objective is to provide safe, simple, effective and beautiful products so that our customers can maximize their~~ outdoor ~~pursuits~~enthusiast ~~and adventures~~markets. Each of our brands has a long history of continuous product innovation for core and everyday users alike. The Company’s products are principally sold globally under the Black Diamond®, Rhino-Rack®, MAXTRAX®, ~~and~~ TRED Outdoors®, and RockyMounts® brand names through outdoor specialty and online retailers, our own websites, distributors and original equipment manufacturers. We believe that our portfolio of iconic brands is well-positioned for sustainable, long-term growth underpinned by industry trends across the outdoor and adventure sport end markets.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The more significant estimates relate to the fair value of net assets acquired in business combinations, provision for excess or obsolete inventory, allowance for credit losses, and valuation of contingent consideration liabilities, deferred tax assets, long-lived assets, goodwill and indefinite-lived intangible assets, and other intangible assets. We base our estimates on historical experience, projected future cash flows, and other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates.

Reclassifications

Certain reclassifications have been made to prior period financial statements to conform to the current period presentation. Specifically, legal costs associated with specific legal matters which were recorded in selling, general, and administrative expenses are now presented in legal costs and regulatory matter expenses in the consolidated statements of comprehensive loss. See Note 16 for discussion regarding legal matters.

Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of Clarus Corporation and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Unless otherwise specified, disclosures in these consolidated financial statements reflect continuing operations only. The consolidated statements of cash flows are inclusive of continuing and discontinued operations for all periods presented. Certain prior period financial information, related to discontinued operations, have been reclassified and separately presented in the consolidated financial statements and accompanying notes to conform to the current period presentation. See Note 3 to our consolidated financial statements for further information.

Foreign Currency Transactions and Translation

The accounts of the Company’s international subsidiaries’ financial statements which have functional currencies other than the U.S. dollar are translated into U.S. dollars using the exchange rate at the balance sheet dates for assets and liabilities and average exchange rates for the periods for revenues, expenses, gains and losses. Foreign currency translation adjustments are recorded as a separate component of accumulated other comprehensive loss. Foreign currency transaction gains and losses are included in other comprehensive income (loss) ~~income~~ in the consolidated statements of comprehensive loss.

56Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. At December 31, 2025 and 2024, the Company did not hold any amounts that were considered to be cash equivalents. Restricted cash primarily includes cash and highly liquid instruments that are used as collateral for certain lease agreements which will affect the amount of cash the Company has available for other uses. Restricted cash is recorded in Other long-term assets on the consolidated balance sheets. The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets to the consolidated statements of cash flows as of December 31, 2025.

Table of Contents

CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Cash Equivalents


	December 31, 2025
Cash	$	36,691
Restricted cash included in Other long-term assets		1,504
Total cash and restricted cash shown in the statements of cash flows	$	38,195

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. At December 31, 2024 and 2023, the Company did not hold any amounts that were considered to be cash equivalents.

Accounts Receivable and Allowance for Credit Losses

The Company records its trade receivables at sales value. The trade receivables do not bear interest. The Company performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information. The Company evaluates the collectability of its accounts receivable and determines the appropriate allowance for credit losses based on a combination of factors. A non-specific allowance for estimated credit losses is recorded based on historical experience of collectability. In addition, specific allowances are established for customer accounts as known collection problems occur due to insolvency, disputes or other collection issues. The amounts of these specific allowances are estimated by management based on the customer’s financial position, the age of the customer’s receivables and the reasons for any disputes. The allowance for credit losses is reduced by subsequent collections of the specific allowances or by any write-off of customer accounts that are deemed uncollectible. The allowance for credit losses was $1,~~271~~121 and $1,~~412~~271 at December 31, ~~2024~~2025 and ~~2023~~2024, respectively. There were no significant write-offs during the years ended December 31, ~~2024~~2025, ~~2023~~2024, and ~~2022~~2023.

Inventories

Inventories are stated at the lower of cost (using the first-in, first-out method “FIFO”) or net realizable value. ~~Elements~~The ~~of cost in the~~ Company’s ~~manufactured~~evaluates its inventories ~~generally~~considering ~~include~~its ~~raw~~purchasing ~~materials~~plans, ~~direct~~sales ~~labor~~forecasts, ~~manufacturing overhead~~ and ~~freight~~historical ~~in.~~experience ~~The~~to ~~Company~~identify ~~reviews its inventories for~~ excess, close-out, discontinued, or slow-moving items and makes provisions as necessary to properly reflect inventory values.

Property and Equipment

Property and equipment is stated at historical cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives. The principal estimated useful lives are: buildings, 30 years; building improvements, 20 years; machinery and equipment, 3-10 years; computer hardware and software, 3-5 years; furniture and fixtures, 5 years. Leasehold improvements are amortized over the lesser of the estimated useful life of the improvement or the remaining life of the lease. Major replacements, which extend the useful lives of equipment, are capitalized and depreciated over the remaining useful life. Normal maintenance and repair items are expensed as incurred. Property and equipment are reviewed for impairment whenever events or changes in circumstances exist that indicate the carrying amount of an asset may not be recoverable.

Leases

Right-of-use (“ROU”) assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our incremental borrowing rate. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised.

Variable lease payments are generally expensed as incurred and include certain non-lease components, such as common area maintenance and other services provided by the lessor, and other charges such as utilities, insurance and property taxes included in the lease. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and the expense for these short-term leases ~~and for leases~~ is recognized on a straight-line basis over the lease term. Non-lease components are excluded from the ROU asset and lease liability present value computations. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

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CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Goodwill

Goodwill represents the excess of the purchase price over the fair market value of identifiable net assets of acquired companies. Goodwill is not amortized, but rather is tested for impairment at the reporting unit level annually as of December 31st of each year or more frequently if triggering events or changes in circumstances indicate impairment, such as a significant adverse change in business climate. The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, through this qualitative assessment, the conclusion is made that it is more likely than not that a reporting unit’s fair value is less than its carrying amount, or the Company elects to bypass the qualitative assessment, a quantitative impairment analysis is performed. We estimate the reporting unit’s fair value using a combination of the income approach based upon projected discounted cash flows of the reporting unit and the market approach based upon the market multiple of comparable publicly traded companies. If the fair value of the reporting unit is less than its carrying amount, an impairment loss is recognized for the excess carrying amount over the fair value computation. Based on the results of the Company’s annual impairment tests completed as of December 31, ~~2024~~2025 and December 31, ~~2022~~2024, the Company recognized a goodwill impairment in our Adventure reporting unit of $363,~~264~~804 during the year ended December 31, ~~2024~~2025, and $5236,~~071~~264 during the year ended December 31, ~~2022~~2024, respectively. No impairment of goodwill was recorded during the year ended December 31, 2023.

Intangible Assets

Intangible assets represent other intangible assets and indefinite-lived intangible assets acquired. The Company’s other intangible assets, such as certain customer relationships, product technologies, certain tradenames, trademarks and core technologies with finite lives are amortized over their estimated useful lives. Other intangible assets are reviewed for impairment whenever events or changes in circumstances exist that indicate the carrying amount of an asset may not be recoverable.

The Company’s indefinite-lived intangible assets consists of certain tradenames and trademarks that provide Black Diamond Equipment, PIEPS, Rhino-Rack, and MAXTRAX with the exclusive and perpetual rights to manufacture and sell their respective products. Indefinite-lived intangible assets are not amortized; however, they are tested for impairment annually as of December 31st of each year or more frequently if events or changes in circumstances exist that may indicate impairment. The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. If, through this qualitative assessment, the conclusion is made that it is more likely than not that an indefinite-lived intangible asset’s fair value is less than its carrying amount, or the Company elects to bypass the qualitative assessment, a quantitative impairment analysis is performed by comparing the indefinite-lived intangible asset’s book value to its estimated fair value. The fair value for indefinite-lived intangible assets is determined through an income approach using the relief-from-royalty method. The amount of any impairment is measured as the difference between the carrying amount and the fair value of the impaired asset. Based on the results of the Company’s ~~annual~~ impairment ~~tests~~analysis completed as of ~~December~~June 3130, ~~2024~~2025, the Company ~~recognized~~determined anthat ~~impairment~~certain of indefinite-lived intangible assets in our ~~Adventure~~Outdoor reporting unit, specifically the ~~Rhino-Rack~~PIEPS ~~and MAXTRAX trademarks~~trademark, ofwere ~~$3,480~~impaired and ~~$5,065,~~recognized ~~respectively,~~charges ~~during~~of ~~the year ended December 31~~$1,565 ~~2024. No impairment of indefinite-lived intangible assets was recorded~~ during the year ended December 31, ~~2023~~2025. Based on the results of the Company’s annual impairment tests completed as of December 31, ~~2022~~2025 and 2024, the Company ~~recognized~~determined anthat ~~impairment~~certain of indefinite-lived intangible assets in our Adventure reporting unit, specifically the Rhino-Rack ~~trademark~~and MAXTRAX trademarks, were impaired and recognized charges of $4021,~~240~~600 and $4,469, respectively, during the year ended December 31, ~~2022~~2025, and $3,480 and $5,065, respectively, during the year ended December 31, 2024. No impairment of indefinite-lived intangible assets was recorded during the year ended December 31, 2023.

Derivative Financial Instruments

The Company uses derivative instruments to hedge currency rate movements on foreign currency denominated sales. The Company enters into forward contracts, option contracts and non-deliverable forwards to manage the impact of foreign currency fluctuations on a portion of its forecasted foreign currency exposure. These derivatives are carried at fair value on the Company’s consolidated balance sheets in prepaid and other current assets, other long-term assets, accrued liabilities, and other long-term liabilities. Changes in fair value of the derivatives not designated as hedge instruments are included in Other, net in the determination of net income. For derivative contracts designated as hedge instruments, the effective portion of gains and losses resulting from changes in fair value of the instruments are included in accumulated other comprehensive loss and reclassified to sales in the period the underlying hedged item is recognized in earnings.

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CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

For all hedging relationships, the Company formally documents the hedging relationship and its risk-management objective and strategy for undertaking the hedge, the hedging instrument, the hedged transaction, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method used to measure ineffectiveness. The Company also formally assesses, both at the inception of the hedging relationship and on an ongoing basis, whether the derivatives that are used in hedging relationships are highly effective in offsetting changes in cash flows of hedged transactions. The Company uses operating budgets and cash flow forecasts to estimate future foreign currency cash flow exposures and to determine the level and timing of derivative transactions intended to mitigate such exposures in accordance with its risk management policies. The Company discontinues hedge accounting prospectively when it determines that the derivative is no longer effective in offsetting cash flows attributable to the hedged risk, the derivative expires or is sold, terminated, or exercised, the cash flow hedge is de-designated because a forecasted transaction is not probable of occurring, or management determines to remove the designation of the cash flow hedge. The Company does not enter into material derivative instruments for any purpose other than cash flow hedging. The Company does not speculate using derivative instruments.

Stock-Based Compensation

The Company records compensation expense for all share-based awards granted based on the fair value of the award at the time of the grant. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model that uses assumptions and estimates that the Company believes are reasonable. Stock-based compensation costs for stock awards and restricted stock awards is measured based on the closing market value of the Company’s common stock on the date of the grant. For restricted stock awards subject to market conditions, the fair value of each restricted stock award has been estimated as of the date of grant using the Monte-Carlo pricing model. The Company recognizes the cost of the share-based awards on a straight-line basis over the requisite service period of the award and recognizes forfeitures in the period they occur. Stock options granted have contractual terms of up to ten years. Upon exercise of stock options or vesting of restricted stock awards, the Company issues shares from new shares authorized and reserved for issuance.

Revenue Recognition

The Company recognizes revenue when a contract exists with a customer that specifies the goods and services to be provided at an agreed upon sales price and when the performance obligation is satisfied by transferring the goods or service to the customer. The performance obligation is considered complete when control transfers, which is determined when products are shipped or delivered to the customer depending on the terms of the contract. Sales are made on normal and customary short-term credit terms or upon delivery of point-of-sale transactions.

The Company enters into contractual arrangements with customers in the form of individual customer orders which specify the goods, quantity, pricing, and associated order terms. The Company does not have long-term contracts that are satisfied over time. Due to the nature of the contracts, no significant judgment exists in relation to the identification of the customer contract, satisfaction of the performance obligation, or transaction price. The Company expenses incremental costs of obtaining a contract due to the short-term nature of the contracts.

The Company’s contract terms or historical business practices can give rise to variable consideration such as prompt payment discounts. We estimate the expected prompt payment discounts based on an analysis of historical experience and record cash discounts as a reduction to revenue.

At the time of revenue recognition, we also provide for estimated sales returns and miscellaneous claims from customers as reductions to revenues. The estimates are based on historical rates of product returns and claims. The Company accrues for such estimated returns and claims with an estimated accrual and associated reduction of revenue. Additionally, the Company records inventory that it expects to be returned as part of inventories, with a corresponding reduction of cost of goods sold.

Sales commissions are expensed as incurred. These costs are recorded in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive loss. Taxes collected from customers and remitted to government authorities are reported on the net basis and are excluded from sales.

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CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Cost of Goods Sold

The expenses that are included in cost of goods sold include all direct product costs and costs related to shipping, certain warehousing or handling, duties and importation fees. Product warranty costs and specific provisions for excess, close-out, or slow-moving inventory are also included in cost of goods sold. Certain warehousing or handling costs which are not associated with the manufacturing of goods for sale are excluded from cost of goods sold.

Selling, General and Administrative Expense

Selling, general and administrative expense includes personnel-related costs, including stock-based compensation, product development, selling, advertising, visual merchandise, depreciation and amortization, and other general operating expenses. Advertising costs are expensed in the period incurred. Total advertising expense for continuing operations were $65,~~046~~207, $86,~~385~~046, and $78,~~789~~385 for the years ended December 31, ~~2024~~2025, ~~2023~~2024, and ~~2022~~2023, respectively.

Product Warranty

Some of the Company’s products carry warranty provisions for defects in quality and workmanship. Warranty repairs and replacements are recorded in cost of goods sold and a warranty liability is established at the time of sale to cover estimated costs based on the Company’s history of warranty repairs and replacements. For the years ended December 31, ~~2024~~2025, ~~2023~~2024, and ~~2022~~2023, the Company experienced warranty claims on its products related to continuing operations of $~~927~~838, $1927,~~007,~~ and $1,~~221~~007, respectively.

Research and Development

Research and development costs are charged to expense as incurred, and are included in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive loss. Total research and development costs for continuing operations were $1211,~~171~~928, $12,~~740~~171, and $1312,~~029~~740 for the years ended December 31, ~~2024~~2025, ~~2023~~2024, and ~~2022~~2023, respectively.

Transaction Costs

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

Income Taxes

Income taxes are accounted for under the asset and liability method. Income taxes are based on amounts of taxes payable or refundable in the current year and on expected future tax consequences of events that are recognized in the financial statements in different periods than they are recognized in tax returns. As a result of timing of recognition and measurement differences between financial accounting standards and income tax laws, temporary differences arise between amounts of pre-tax financial statement income and taxable income and between reported amounts of assets and liabilities in the consolidated balance sheets and their respective tax bases. Deferred income tax assets and liabilities reported in the consolidated balance sheets reflect estimated future tax effects attributable to these temporary differences and to net operating loss and net capital loss carryforwards, based on enacted tax rates expected to be in effect for years in which the differences are expected to be settled or realized. The Company has netted these deferred tax assets and deferred tax liabilities by jurisdiction. Realization of deferred tax assets is dependent on future taxable income in specific jurisdictions. Valuation allowances are used to reduce deferred tax assets to amounts considered more likely than not to be realized. U.S. deferred income taxes are not provided on undistributed income of foreign subsidiaries where such earnings are considered to be permanently invested. Unremitted taxes on undistributed foreign earnings are not material for the years ended December 31, ~~2024~~2025, ~~2023~~2024, and ~~2022~~2023.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax ~~expense~~ (benefit) expense. Unrecognized tax benefits that reduce a net operating loss, similar tax loss or tax credit carryforward, are presented as a reduction to deferred income taxes. The Company recognizes interest expense and penalties related to uncertain tax positions in income tax ~~expense~~ (benefit) expense.

Concentration of Credit Risk and Sales

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash, accounts receivable, and aggregate unrealized gains (losses) on derivative contracts. Risks associated with cash within the United States are mitigated by banking with federally insured, creditworthy institutions; however, there are balances with these institutions that are greater than the Federal Deposit Insurance Corporation insurance limit. The Company performs ongoing credit evaluations of its customers and maintains allowances for possible losses as considered necessary by management.

During the years ended December 31, ~~2024~~2025 and ~~2022~~2024, Recreational Equipment, Inc. (“REI”) accounted for approximately 10% of the Company’s sales from continuing operations. These sales are included in the Outdoor segment. No other single customer contributed more than 10% of the Company’s sales from continuing operations during these periods. During the year ended December 31, 2023, no single customer contributed more than 10% of the Company’s sales from continuing operations. As of December 31, 2025 and 2024, Roof Racks Galore accounted for approximately 1110% ofand ~~the Company’s accounts receivable. As of December 31~~11%, ~~2023~~respectively, ~~INEOS Automotive accounted for approximately 13%~~ of the Company’s accounts receivable. No other single customer contributed more than 10% of the Company’s accounts receivable during these periods.

Fair Value Measurements

The carrying value of cash, accounts receivable, and accrued liabilities approximate their respective fair values due to the short-term nature and liquidity of these financial instruments. Derivative financial instruments are recorded at fair value based on current market pricing models. ~~The Company estimates that, due to the variable interest rates reflecting current market rates, the fair value of its debt obligations approximate the carrying value at December 31, 2024.~~

Contingent Consideration Liabilities

Contingent consideration liabilities are required to be recognized at fair value as of the acquisition date. We estimate the fair value of these liabilities based on financial projections of the acquired company, such as sales-based milestones and estimated probabilities of achievement. Based on updated estimates and projections, the contingent consideration liabilities are adjusted at each reporting date to their estimated fair value. Changes in fair value subsequent to the acquisition date are reported in contingent consideration (benefit) ~~expense~~ in the accompanying consolidated statements of comprehensive loss. Variations in the fair value of contingent consideration liabilities may result from changes in discount periods or rates, changes in the timing and amount of sales estimates, and changes in probability assumptions with respect to the likelihood of achieving sales milestones.

Legal Costs and Regulatory Matter Expenses

Legal expenses related to the outstanding regulatory matter with the U.S. Consumer Product Safety Commission (“CPSC”) and/or the ongoing investigation by the U.S. Department of Justice, as well as legal expenses related to bringing the Company’s cases against HAP Trading and Caption Management to trial, are included in legal costs and regulatory matter expenses in the consolidated statements of comprehensive loss. All other legal expenses incurred in the ordinary course of business are included in selling, general, and administrative expenses in the consolidated statements of comprehensive loss. See Note 16 to our consolidated financial statements for additional information regarding specific legal matters.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Segment Information

We operate our business structure within two segments. These segments are defined based on the internal financial reporting used by our chief operating decision maker to allocate resources and assess performance. Corporate costs consist of corporate office expenses including compensation, benefits, non-cash stock compensation expense, transaction costs, and other administrative costs, as well as charges related to certain legal and regulatory matters, that are managed at a corporate level and are not included within segment results when evaluating performance or allocating resources.

Recent Accounting Pronouncements

Accounting Pronouncements adopted during ~~2024~~2025

During the year ended December 31, ~~2024~~2025, the Company adopted Accounting Standards Update (“ASU”) ASU 2023-0709, ~~Segment~~Income ~~Reporting~~Taxes (Topic ~~280~~740): Improvements to ~~Reportable~~Income ~~Segment~~Tax Disclosures. The ASU was adopted on a ~~retrospective~~prospective basis. This ASU requires a public entity to disclose ~~significant~~in ~~segment~~its ~~expenses~~rate ~~and~~reconciliation ~~other~~table ~~segment~~additional ~~items~~categories onof aninformation ~~annual~~about federal, state and ~~interim~~foreign ~~basis~~income taxes and provide more details about the reconciling items in ~~interim~~some ~~periods~~categories ~~all~~if ~~disclosures~~items ~~about~~meet a ~~reportable~~quantitative ~~segment’s~~threshold. ~~profit~~This orASU ~~loss~~also requires all entities to disclose income taxes paid, net of refunds, disaggregated by federal (national), state and ~~assets~~foreign ~~that~~taxes ~~are~~for ~~currently~~annual ~~required~~periods ~~annually~~and to disaggregate the information by jurisdiction based on a quantitative threshold. The adoption of this standard did not have a material effect on the Company’s consolidated financial statements and related disclosures. See Note 1817 to our consolidated financial statements for additional information regarding ~~segment~~income ~~reporting~~taxes.

Accounting Pronouncements issued and not yet adopted

In ~~December~~November ~~2023~~2024, the FASB issued ASU ~~2023~~2024-0903, Income ~~Taxes~~Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (~~Topic~~Subtopic ~~740~~220-40): ~~Improvements~~Disaggregation toof Income ~~Tax~~Statement ~~Disclosures~~Expenses, which requires a public entity to disclose, in ~~its~~the ~~rate~~notes ~~reconciliation~~to ~~table~~the ~~additional~~financial ~~categories~~statements, ofspecified information about ~~federal,~~certain ~~state~~costs and ~~foreign~~expenses ~~income~~on ~~taxes~~an annual and ~~provide~~interim ~~more~~basis. ~~details~~The ~~about~~guidance will require all entities to disclose the ~~reconciling~~amounts ~~items~~of inpurchases ~~some~~of ~~categories~~inventory, ifemployee ~~items~~compensation, ~~meet~~depreciation, aand ~~quantitative~~intangible ~~threshold~~asset amortization included in each relevant expense caption. The guidance ~~will~~also ~~require~~requires ~~all~~disclosure ~~entities~~of toa ~~disclose~~qualitative ~~income~~description ~~taxes~~of ~~paid,~~the ~~net~~amounts ofremaining ~~refunds,~~in ~~disaggregated~~relevant byexpense ~~federal~~captions ~~(national),~~that ~~state~~are ~~and~~not ~~foreign~~separately ~~taxes~~disaggregated ~~for~~quantitatively, ~~annual~~as ~~periods~~well ~~and~~as todisclosure ~~disaggregate~~of the ~~information~~total byamount ~~jurisdiction~~of ~~based~~selling onexpenses aand, ~~quantitative~~in ~~threshold.~~annual ~~The~~reporting ~~guidance~~periods, ~~makes~~an ~~several~~entity’s ~~other~~definition ~~changes~~of toselling ~~the disclosure requirements~~expenses. All entities are required to apply the guidance prospectively, with the option to apply it retrospectively. The ~~guidance~~amendments isin ASU 2024-03 are effective for ~~public~~annual ~~business~~reporting ~~entities~~periods ~~for~~beginning ~~fiscal~~after ~~years~~December 15, 2026, and interim reporting periods beginning after December 15, ~~2024~~2027. Early adoption is permitted. The Company is currently evaluating the enhanced disclosure requirements,; however it does not anticipate a material change to the consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires a public entity to disclose, in the notes to the financial statements, specified information about certain costs and expenses on an annual and interim basis. The guidance will require all entities to disclose the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption. The guidance also requires disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, as well as disclosure of the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. All entities are required to apply the guidance prospectively, with the option to apply it retrospectively. The amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the enhanced disclosure requirements, however it does not anticipate a material change to the consolidated financial statements.66

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

NOTE 2. ACQUISITIONS

RockyMounts

On December 5, 2024, Clarus and its wholly-owned subsidiary, Rhino-Rack USA LLC, entered into an Asset Purchase Agreement (the “RockyMounts Purchase Agreement”) with RockyMounts, Inc. (the “Seller” or “RockyMounts”) and Robert C. Noyes, pursuant to which the Company ~~agreed to~~ (i) ~~acquire~~acquired certain assets and liabilities of the Seller constituting the RockyMounts business, including equipment, inventory, intellectual property (including exclusive use of the brand name ROCKYMOUNTS and the tradename ROCKY MOUNTS INC.), software, domain names and social media accounts, and (ii) ~~assume~~assumed certain liabilities related to the RockyMounts assets, including all liabilities and obligations of the Seller under the Assigned Contracts (as defined in the RockyMounts Purchase Agreement), arising or to be performed after the closing of the acquisition pursuant to the RockyMounts Purchase Agreement.

Pursuant to the RockyMounts Purchase Agreement, the purchase price ~~to be~~ paid for the RockyMounts assets iswas up to $8,000, which includes (i) $4,000 paid in cash at closing, subject to adjustment as set forth in the RockyMounts Purchase Agreement, (ii) the issuance of a promissory note by Rhino-Rack USA LLC in favor of the Seller in the original principal amount of $2,000, payable on the one-year anniversary of the closing of the RockyMounts Purchase Agreement, and (iii) the payment of additional contingent consideration of up to $2,000 in cash ~~upon~~if certain future net sales thresholds are met for the ~~satisfaction~~years ofending ~~certain~~December ~~net~~31, ~~sales~~2025 ~~targets~~and December 31, 2026, respectively (the “RockyMounts Contingent Consideration”). The Company estimated the initial fair value of the RockyMounts Contingent Consideration to be $609 and recorded this liability within accrued liabilities and other long-term liabilities at the date of purchase. The net sales threshold required for the cash payment of the 2025 portion of the RockyMounts Contingent Consideration was not met during the measurement period ended December 31, 2025. See Note 11 for discussion regarding the valuation of the RockyMounts Contingent Consideration as of December 31, ~~2024~~2025.

The acquisition was accounted for as a business combination. Acquisition-related costs for the RockyMounts Acquisition, which were included in transaction costs during the ~~year~~years ended December 31, 2025 and 2024, were $40 and $333, respectively.

TRED

On September 13, 2023, Clarus entered into a Share Purchase Agreement (the “TRED Purchase Agreement”) to acquire TRED Outdoors Pty Ltd. (“TRED”), which subsequently closed on October 9, 2023. All United States dollar amounts contained herein are based on the exchange rates in effect for Australian dollars ($AUD) and the market value of the Company’s common stock at the time of closing of the acquisition of TRED (the “TRED Acquisition”).

The Company acquired TRED for an aggregate purchase price of $AUD 10,741 (approximately $6,849), subject to a post-closing adjustment, comprised of $AUD 8,875 (approximately $5,659) cash, 179 shares of the Company’s common stock valued at $1,069, and additional consideration described below. The TRED Purchase Agreement ~~provides~~provided for the payment of additional contingent consideration of up to $AUD 1,000 (approximately $638) in cash upon the satisfaction of certain net sales targets (the “TRED Contingent Consideration”). The Company estimated the initial fair value of the TRED Contingent Consideration to be $AUD 189 (approximately $121) and recorded this liability within ~~accrued~~other long-term liabilities at the date of purchase. The net sales threshold required for the cash payment of the TRED Contingent Consideration was not met during the final measurement period ended June 30, 2025. See Note 11 for discussion regarding the valuation of the TRED Contingent Consideration as of December 31, ~~2024~~2025.

The acquisition was accounted for as a business combination. Acquisition-related costs for the TRED Acquisition, which were included in transaction costs during the ~~year~~years ended December 31, 2024 and 2023, were $62 and $456, respectively. There were no transaction costs related to the TRED Acquisition during the year ended December 31, 2025.

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

The following table is a reconciliation to the fair value of the purchase consideration and how the purchase consideration is allocated to assets acquired and liabilities assumed which have been estimated at their fair values. The fair value ~~estimates for the purchase price allocation for RockyMounts are based on the Company’s best estimates and assumptions as of the reporting date and are considered preliminary. The fair value~~ measurements of identifiable assets and liabilities, and the resulting goodwill related to the RockyMounts Acquisition are subject to change and the final purchase price allocations could be different from the amounts presented below. We expect to finalize the valuations as soon as practicable, but not later than one year from the date of the acquisition. The fair value measurements for the acquisition ~~of TRED have been completed. The excess of purchase consideration over the assets acquired and~~

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

of RockyMounts and TRED have been completed. The excess of purchase consideration over the assets acquired and liabilities assumed is recorded as goodwill. Goodwill for RockyMounts and TRED is included in the Adventure segment. ~~The~~At the time of acquisition, the goodwill ~~consists~~consisted largely of the growth and profitability expected from these acquisitions.


	RockyMounts		TRED
	December 5, 2024		October 9, 2023
	Estimated Fair Value		Number of Shares	Estimated Fair Value

Cash paid	$	3,840	-	$	5,659

Seller Note		1,878	-		-

Issuance of shares of Clarus Corporation		-	179		1,069

Contingent consideration		609	-		121

Total purchase consideration	$	6,327	179	$	6,849

Assets acquired and liabilities assumed
Assets
Cash	$	-		$	11
Accounts receivable		160			1,000
Inventories		928			1,006
Prepaid and other current assets		85			11
Property and equipment		97			195
Other intangible assets		2,366			3,305
Goodwill		2,741			2,832
Total assets		6,377			8,360

Liabilities
Accounts payable and accrued liabilities	$	50		$	638
Deferred income taxes		-			873
Total liabilities		50			1,511

Net Book Value Acquired	$	6,327		$	6,849

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

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

In connection with the acquisitions, the Company acquired exclusive rights to RockyMounts’ and TRED’s trademarks, customer relationships, product technologies, and tradenames. The amounts assigned to each class of intangible asset, other than goodwill acquired, and the related average useful lives are as follows:


	RockyMounts				TRED
			Average				Average
	Gross		Useful Life		Gross		Useful Life

Intangibles subject to amortization
Customer relationships	$	1,138		3.0 years	$	1,249		8.0 years
Product technologies		374		3.0 years		394		6.0 years
Tradenames		622		3.0 years		1,662		12.0 years
Non-compete agreements		232		5.0 years		-		N/A
	$	2,366		3.2 years	$	3,305		9.8 years

The full amount of goodwill of $2,741 at RockyMounts is expected to be deductible for tax purposes. The full amount of goodwill of $2,832 at TRED is expected to be non-deductible for tax purposes. No pre-existing relationships existed between the Company, RockyMounts, and TRED or their sellers prior to the acquisition. RockyMounts and TRED revenue and operating income are included in the Adventure segment. Total revenue and net income of RockyMounts from the date of acquisition to December 31, 2024, were not material to the Company’s consolidated financial statements. Total revenue and net income of TRED from the date of acquisition to December 31, 2023, were not material to the Company’s consolidated financial statements.

NOTE 3. DISCONTINUED OPERATIONS

On ~~February~~May 298, ~~2024~~2025, ~~the~~BD ~~Company~~European ~~and Everest/Sapphire Acquisition~~Holdings, LLC, ~~its~~a ~~wholly-owned~~Delaware ~~subsidiary,~~limited ~~completed~~liability ~~the~~company ~~sale~~and towholly ~~Bullseye~~owned ~~Acquisitions,~~subsidiary ~~LLC, an affiliate~~ of ~~JDH~~the ~~Capital~~ Company, ofentered ~~all~~into ofa ~~the~~Share ~~equity~~Purchase ~~associated~~and ~~with~~Transfer Agreement (the ~~Company’s~~“Share ~~Precision~~Purchase ~~Sport~~Agreement”) ~~segment,~~to ~~which~~sell isall ~~comprised~~ of the ~~Company’s~~issued ~~subsidiaries Sierra~~ and ~~Barnes,~~outstanding ~~pursuant~~shares ~~to a Purchase and Sale Agreement dated as~~ of ~~December~~Black ~~29,~~Diamond ~~2023,~~Austria ~~by and among~~GmbH, ~~Bullseye~~together ~~Acquisitions,~~with ~~LLC,~~its ~~Everest/Sapphire~~operating ~~Acquisition~~subsidiary, ~~LLC~~PIEPS ~~and~~GmbH ~~the Company~~ (~~the~~collectively, “~~Precision Sport Purchase Agreement~~PIEPS”). ~~The~~On ~~Precision~~July ~~Sport segment engaged in the business of designing~~11, ~~developing~~2025, ~~manufacturing,~~the ~~and~~Company ~~marketing~~completed ~~bullets and ammunition to~~ the ~~military,~~sale ~~law~~of ~~enforcement~~PIEPS, ~~and~~which ~~commercial/consumer~~was ~~markets.~~included ~~Under~~in the ~~terms~~Company’s ofOutdoor ~~the Precision Sport Purchase Agreement~~segment, ~~the Buyer agreed~~ to ~~pay~~a ~~$175,000~~private ininvestment ~~cash,~~firm ~~which~~for ~~is subject to~~ a ~~customary~~total ~~working~~purchase ~~capital~~price ~~adjustment.~~of ~~The~~€7,825 ~~Company~~(approximately ~~received~~ $~~175~~9,~~674~~124), inincluding cash ~~under~~held ~~the~~at ~~terms~~PIEPS of ~~the Precision Sport Purchase Agreement~~$1, ~~which included a preliminary working capital adjustment. As of December 31~~311, ~~2024,~~pursuant ~~the~~to ~~working capital adjustment had been finalized, with no changes from~~ the ~~preliminary~~Share ~~working~~Purchase ~~capital adjustment~~Agreement. The Company recognized a pre-tax ~~gain~~loss on ~~such~~ sale of $4091,~~585.~~ ~~The~~which ~~activities~~is ofincluded ~~the~~in ~~Precision~~other, ~~Sport~~net ~~segment~~in ~~have~~the ~~been~~consolidated ~~segregated~~statements ~~and~~of ~~reported~~comprehensive ~~as discontinued operations for all periods presented~~loss.

65We determined that the sale of the PIEPS business does not represent a strategic shift that had or will have a major effect on the consolidated statements of comprehensive loss, and therefore results were not classified as discontinued operations.

On February 29, 2024, the Company and Everest/Sapphire Acquisition, LLC, its wholly-owned subsidiary, completed the sale to Bullseye Acquisitions, LLC, an affiliate of JDH Capital Company, of all of the equity associated with the Company’s Precision Sport segment, which is comprised of the Company’s subsidiaries Sierra and Barnes, pursuant to a Purchase and Sale Agreement dated as of December 29, 2023, by and among, Bullseye Acquisitions, LLC, Everest/Sapphire Acquisition, LLC and the Company (the “Precision Sport Purchase Agreement”). The Precision Sport segment engaged in the business of designing, developing, manufacturing, and marketing bullets and ammunition to the military, law enforcement, and commercial/consumer markets. Under the terms of the Precision Sport Purchase Agreement, the Buyer agreed to pay $175,000 in cash, which is subject to a customary working capital adjustment. The Company received $175,674 in cash under the terms of the Precision Sport Purchase Agreement, which included a preliminary working capital adjustment. As of December 31, 2024, the working capital adjustment had been finalized, with no changes from the preliminary working capital adjustment. The Company recognized a pre-tax gain on such sale of $40,585. The activities of the Precision Sport

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CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

~~The~~segment ~~carrying~~have ~~amounts~~been ofsegregated ~~the assets~~ and ~~liabilities~~reported ~~of the Precision Sport segment were classified~~ as ~~held~~discontinued operations for ~~sale~~the inyears ~~our~~ended ~~consolidated balance sheets as of~~ December 31, ~~2023.~~2024 ~~The asset~~ and ~~liability balances as of December 31,~~ 2023,. ~~were~~There ~~classified~~was asno ~~current~~activity asin wediscontinued ~~anticipated~~operations during the ~~sale of these assets and liabilities within a one~~ year ~~period. The~~ended ~~carrying~~December ~~amounts~~31, ~~were as follows:~~2025.


	December 31, 2023

Accounts receivable, net	$	9,914
Inventories		44,208
Prepaid and other current assets		2,931
Total current assets held for sale		57,053

Property and equipment, net		24,075
Other intangible assets, net		4,926
Indefinite-lived intangible assets		24,500
Goodwill		26,715
Other long-term assets		15
Total assets held for sale	$	137,284

Accounts payable	$	2,441
Accrued liabilities		3,303
Total current liabilities held for sale		5,744

Total liabilities held for sale	$	5,744

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


	Year Ended December 31,
	2024		2023		~~2022~~

Sales	$	10,585	$	89,950	$	~~132,855~~
Cost of goods sold		(6,543)		(56,980)		~~(79,392)~~
Selling, general and administrative		(2,062)		(11,639)		~~(14,225)~~
Restructuring charges		(3)		(47)		-
Transaction costs		(3,440)		(2,162)		~~(149)~~
Interest expense, net		(2,455)		(11,437)		~~(7,895)~~
Other, net		(38)		(19)		~~(807)~~

(Loss) income from operations of discontinued operations		(3,956)		7,666		~~30,387~~
Gain on sale of discontinued operations		40,585		-		-

Income from discontinued operations before taxes		36,629		7,666		~~30,387~~
Income tax expense		479		2,024		~~7,365~~
Income from discontinued operations, net of tax	$	36,150	$	5,642	$	~~23,022~~

In connection with the sale of the Precision Sport segment, all outstanding debt that was required to be repaid with the proceeds received from the sale pursuant to the terms of the Company’s credit facility and all associated interest expense has been allocated to discontinued operations in our consolidated financial statements for the years ended December 31, 2024, and 2023,. ~~and~~There ~~2022~~was no activity in discontinued operations during the year ended December 31, 2025.

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CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

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


	Year Ended December 31,
	2024		2023		~~2022~~

Depreciation of property and equipment	$	-	$	3,452	$	~~3,238~~
Amortization of intangible assets	$	-	$	2,033	$	~~2,769~~
Stock-based compensation	$	5	$	151	$	~~163~~
Purchase of property and equipment	$	886	$	1,848	$	~~3,100~~

NOTE 4. INVENTORIES

Inventories, as of December 31, ~~2024~~2025 and ~~2023~~2024, were as follows:


	December 31, ~~2024~~2025		December 31, ~~2023~~2024
Finished goods	$	7279,~~329~~584	$	7872,~~887~~329
Work-in-process		~~234~~338		~~295~~234
Raw materials and supplies		93,~~715~~106		129,~~227~~715
	$	8283,~~278~~028	$	9182,~~409~~278

~~NOTE 5. PROPERTY AND EQUIPMENT~~70

Property and equipment, net as of December 31, 2024 and 2023, were as follows:


	December 31, 2024		December 31, 2023

Land	$	2,850	$	2,850
Building and improvements		5,891		6,476
Furniture and fixtures		4,958		6,195
Computer hardware and software		8,380		8,092
Machinery and equipment		16,795		18,119
Construction in progress		3,412		1,224
		42,286		42,956
Less accumulated depreciation		(24,680)		(26,369)
	$	17,606	$	16,587

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

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CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

NOTE 5. PROPERTY AND EQUIPMENT

Property and equipment, net as of December 31, 2025 and 2024, were as follows:


	December 31, 2025			December 31, 2024

Land	$	2,850		$	2,850
Building and improvements		8,356			5,891
Furniture and fixtures		5,194			4,958
Computer hardware and software		8,278			8,380
Machinery and equipment		16,246			16,795
Construction in progress		968			3,412
		41,892			42,286
Less accumulated depreciation		(23,637)			(24,680)
	$	18,255		$	17,606

Depreciation expense for continuing operations was $3,641, $4,034, and $4,150 for the years ended December 31, 2025, 2024, and 2023, respectively.

NOTE 6. GOODWILL AND INTANGIBLE ASSETS

Goodwill

Goodwill by segment as of December 31, 2025 was as follows:


	Outdoor			Adventure			Total

Gross value of goodwill	$	29,507		$	96,966		$	126,473
Accumulated goodwill impairments adjusted for impact of foreign currency exchange rates		(29,507)			(96,966)			(126,473)
	$	-		$	-		$	-

Goodwill by segment as of December 31, 2024 was as follows:


	Outdoor			Adventure			Total

Gross value of goodwill	$	29,507		$	96,966		$	126,473
Accumulated goodwill impairments adjusted for impact of foreign currency exchange rates		(29,507)			(93,162)			(122,669)
	$	-		$	3,804		$	3,804

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CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

The following table summarizes the changes in goodwill by segment:


	~~Outdoor~~Adventure		~~Adventure~~		~~Total~~

Goodwill	$	29,507	$	91,375	$	120,882
Balance at December 31, 2023	$	39,320
Accumulated goodwill impairments		(29,507)		(52,071)		(81,578)


Decrease due to impairment		(36,264)
Balance at December 31, 2022		-		36,278		36,278
Increase due to acquisition of RockyMounts		2,741

Impact of foreign currency exchange rates		(1,993)
Increase due to acquisition of TRED		-		2,850		2,850

Impact of foreign currency exchange rates		-		192		192
Balance at December 31, 2024	$	3,804

Balance at December 31, 2023	$	-	$	39,320	$	39,320
Decrease due to impairment		(3,804)

Decrease due to impairment		-		(36,264)		(36,264)
Balance at December 31, 2025	$	-
Increase due to acquisition of RockyMounts		-		2,741		2,741
Impact of foreign currency exchange rates		-		(1,993)		(1,993)

Balance at December 31, 2024	$	-	$	3,804	$	3,804

Due to challenging market conditions and other factors affecting the demand for our Adventure reporting unit products, we experienced significant declining revenue and profitability in our Adventure reporting unit and a sustained decline in our stock price during the ~~year~~years ended December 31, 2024. Revenues continued to decline unexpectedly during the three months ended December 31, 2024, due to a lack of product demand in what is typically the highest selling season for the product in Australia. As a result, in the fourth quarter of 2024, we reduced our sales forecasts for 2025 and ~~beyond in our Adventure reporting unit~~2024. As part of our annual impairment ~~test~~tests as of December 31, 2025 and 2024, we performed a quantitative ~~assessment~~assessments using income-based and market-based approaches. As a result of ~~this~~these ~~assessment~~assessments, the carrying value of our Adventure reporting unit exceeded the related estimated fair value, thus animpairments ~~impairment~~ of goodwill of $3,804 and $36,264 ~~was~~were recorded during the years ended December 31, 2025 and 2024, respectively.

Indefinite-Lived Intangible Assets

The following table summarizes the changes in indefinite-lived intangible assets:


Balance at December 31, 2023	$	58,527
Balance at December 31, 2024		$	46,750

Decrease due to impairment		~~(8,545)~~	(27,634)
Impact of foreign currency exchange rates		(3,232)
Decrease due to sale of PIEPS			(1,704)

Impact of foreign currency exchange rates			2,188
Balance at December 31, 2024	$	46,750

Balance at December 31, 2025		$	19,600

6872

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CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

AsManagement ~~part~~performs ofan ~~our~~indefinite-lived ~~annual~~intangible asset impairment ~~test~~assessment aswhenever ofevents ~~December 31,~~or ~~2024,~~circumstances wemake ~~performed~~it amore ~~quantitative~~likely ~~assessment~~than ~~using~~not ~~the~~that ~~relief-from-royalty~~an ~~method.~~impairment Asmay ~~described~~have ~~above~~occurred, wesuch ~~reduced~~as ~~our~~a ~~sales~~significant ~~forecasts~~adverse ~~for~~change ~~2025~~in ~~and~~the ~~beyond~~business inclimate ~~our~~or ~~Adventure~~a ~~reporting~~decision ~~unit.~~to Assell aor ~~result~~dispose of ~~this~~the ~~assessment,~~asset. If the carrying value of the ~~Rhino~~indefinite-~~Rack~~lived ~~and~~asset ~~MAXTRAX~~is ~~trademarks~~higher ~~recorded~~than ~~within~~its ~~our Adventure reporting unit exceeded their estimated related~~ fair ~~values~~value, ~~thus~~the ~~impairments~~asset ofis ~~the~~deemed ~~Rhino-Rack~~to ~~and~~be ~~MAXTRAX~~impaired ~~trademarks~~and ofthe ~~$3,480~~impairment ~~and~~charge ~~$5,065,~~is ~~respectively,~~estimated ~~were~~as ~~recorded~~the difference.

IfThe weCompany docalculates ~~not~~the ~~achieve~~fair ~~the~~value ~~results~~of ~~reflected~~its inindefinite-lived intangible assets using the ~~forecasts~~income ~~utilized~~approach, inspecifically ~~our~~the ~~impairment~~relief-from-royalty ~~assessments,~~method. orThe ifrelief-from-royalty ~~there~~method ~~are~~is ~~changes~~used to ~~market~~estimate ~~assumptions,~~the ~~all~~cost savings that accrue to the owner of ~~which~~an ~~require~~intangible ~~significant~~asset ~~estimates~~who ~~and~~would ~~assumptions,~~otherwise ~~our~~have ~~valuation~~to pay royalties or license fees on revenues earned through the use of the ~~reporting~~asset. ~~unit~~Internally forecasted revenues, ~~including~~which ~~related~~the ~~indefinite-lived~~Company ~~intangible~~believes ~~assets,~~reasonably ~~could~~approximate bemarket ~~adversely~~participant ~~affected~~assumptions, ~~and~~are wemultiplied ~~may~~by bea ~~required~~royalty rate to ~~impair~~arrive anat ~~additional~~the ~~portion~~estimated ornet ~~all~~after oftax cost savings. The royalty rate used in the ~~related~~analysis ~~goodwill~~is based on an analysis of empirical, ~~indefinite~~market-~~lived~~derived ~~intangibles,~~royalty ~~and~~rates ~~other~~for ~~long-lived~~comparable intangible assets. ~~which~~Our ~~could~~discounted ~~adversely~~cash ~~affect~~flow ~~our~~estimates ~~operating~~use ~~results~~discount inrates ~~the~~that ~~period~~correspond to a weighted-average cost of ~~impairment~~capital consistent with a market-participant view. The discount rates are consistent with those used for investment decisions and take into account our future operating plans and strategies.

~~Trademarks~~We ~~classified~~determined asthat a triggering event had occurred during the quarter ended June 30, 2025, with respect to certain indefinite-lived intangible assets bywithin ~~brand~~our asOutdoor reporting unit, which required that we perform a quantitative assessment. We assessed the fair value of ~~December 31~~the specific indefinite-lived intangible assets using the relief-from-royalty method described above. As a result of this assessment, ~~2024~~the ~~and~~carrying ~~2023~~value of the PIEPS trademark recorded within our Outdoor reporting unit exceeded its estimated related fair value, ~~were~~thus asan ~~follows:~~impairment of the PIEPS trademark of $1,565 was recorded in the second quarter during the year ended December 31, 2025.

As part of our annual impairment tests as of December 31, 2025 and 2024, we performed quantitative assessments using the relief-from-royalty method. As a result of these assessments, the carrying value of the Rhino-Rack and MAXTRAX trademarks recorded within our Adventure reporting unit exceeded their estimated related fair values, thus impairments of the Rhino-Rack and MAXTRAX trademarks of $21,600 and $4,469, respectively, during the year ended December 31, 2025, and $3,480 and $5,065, respectively, during the year ended December 31, 2024, were recorded.

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

Trademarks classified as indefinite-lived intangible assets by brand as of December 31, 2025 and 2024, were as follows:


	December 31, ~~2024~~2025		December 31, ~~2023~~2024
Black Diamond	$	19,600	$	19,600
PIEPS		~~2,899~~-		32,~~080~~899
Rhino-Rack		~~20,093~~-		2520,~~767~~093
MAXTRAX		~~4,158~~-		104,~~080~~158
	$	4619,~~750~~600	$	5846,~~527~~750

~~Other Intangible Assets, net~~73

The following table summarizes the changes in gross other intangible assets:


Gross balance at December 31, 2023	$	82,103

Increase due to acquisitions		2,366
Write-off of fully amortized other intangible assets		(1,322)
Impact of foreign currency exchange rates		(5,187)

Gross balance at December 31, 2024	$	77,960

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CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Other ~~intangible~~Intangible ~~assets~~Assets, net ~~of amortization as of December 31, 2024 and 2023, were as follows:~~

The following table summarizes the changes in gross other intangible assets:


	December 31, 2024
Gross balance at December 31, 2024		$	77,960
	~~Gross~~			~~Accumulated Amortization~~		~~Net~~		~~Weighted Average Useful Life~~
Intangibles subject to amortization
Decrease due to sale of PIEPS			(4,712)
Customer relationships	$	58,737		$	(35,715)	$	23,022		13.6 years
Impact of foreign currency exchange rates			4,492
Product technologies		16,745			(10,528)		6,217		9.9 years

Tradenames		2,246			(197)		2,049		9.5 years
Gross balance at December 31, 2025		$	77,740
Non-compete agreements		232			(4)		228		5.0 years
	$	77,960		$	(46,444)	$	31,516		12.7 years

	December 31, 2023
	Gross			Accumulated Amortization		Net		Weighted Average Useful Life

Customer relationships	$	61,215		$	(30,478)	$	30,737		13.8 years
Product technologies		18,003			(9,014)		8,989		10.0 years
Tradenames		1,938			(198)		1,740		11.4 years
Core technologies		947			(947)		-		10.0 years
	$	82,103		$	(40,637)	$	41,466		12.9 years

~~Amortization~~Other ~~expense~~intangible ~~for continuing operations for the years ended December 31~~assets, ~~2024,~~net ~~2023,~~of ~~and 2022, was $9,784, $10,715, and $12,557, respectively. Future~~ amortization ~~expense for other intangible assets~~ as of December 31, 2025 and 2024, iswere as follows:


Years Ending December 31,		Amortization Expense
	December 31, 2025
2025		$	8,694
	Gross			Accumulated Amortization		Net		Weighted Average Useful Life
2026			6,807
Intangibles subject to amortization
2027			4,876
Customer relationships	$	59,197		$	(41,439)	$	17,758		13.7 years
2028			3,277
Product technologies		15,943			(11,862)		4,081		9.3 years
2029			2,467
Tradenames		2,368			(628)		1,740		9.6 years
Thereafter			5,395
Non-compete agreements		232			(50)		182		5.0 years
	$	$77,740	~~31,516~~	$	(53,979)	$	23,761		12.6 years

	December 31, 2024
	Gross			Accumulated Amortization		Net		Weighted Average Useful Life

Customer relationships	$	58,737		$	(35,715)	$	23,022		13.6 years
Product technologies		16,745			(10,528)		6,217		9.9 years
Tradenames		2,246			(197)		2,049		9.5 years
Core technologies		232			(4)		228		5.0 years
	$	77,960		$	(46,444)	$	31,516		12.7 years

Amortization expense for continuing operations for the years ended December 31, 2025, 2024, and 2023, was $8,740, $9,784, and $10,715, respectively. Future amortization expense for other intangible assets as of December 31, 2025 is as follows:


Years Ending December 31,		Amortization Expense
2026		$	6,924
2027			4,974
2028			3,491
2029			2,627
2030			1,900
Thereafter			3,845
		$	23,761

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CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

NOTE 7. ACCRUED LIABILITIES AND OTHER LONG-TERM LIABILITIES

Accrued liabilities as of December 31, ~~2024~~2025 and ~~2023~~2024, were as follows:


	December 31, ~~2024~~2025		December 31, ~~2023~~2024

Accrued payroll and related items	$	42,~~054~~837	$	34,~~964~~054
Accrued bonus		12,~~866~~005		21,~~047~~866
Designated forward exchange contracts		-358		~~221~~-
Accrued warranty		21,~~212~~480		12,~~648~~212
Current lease liabilities		3,~~470~~021		3,~~179~~470
Accrued commissions		~~376~~576		~~344~~376
Contingent consideration liabilities		355		129
Sales returns and rebates		3,300		2,145
Accrued CPSC regulatory matter		2,500		-
Contingent consideration liabilities		254		355
Restructuring liabilities		541		1,246
Accrued CPSC regulatory matter		2,500		2,500
Other		6,902		11,802
Accrued legal expenses		1,183		436
	$	22,276	$	24,580
Restructuring liabilities		407		541
Other		6,482		4,321
	$	24,403	$	22,276

Other long-term liabilities as of December 31, ~~2024~~2025 and ~~2023~~2024, were as follows:


	December 31, ~~2024~~2025		December 31, ~~2023~~2024

Long-term lease liability	$	11,288	$	13,030
Long-term lease liabilities	$	9,266	$	11,288
Contingent consideration liability		254		-
Contingent consideration liabilities		-		254
Other		1,~~212~~462		1,~~130~~212
	$	1210,~~754~~728	$	1412,~~160~~754

NOTE 8. LONG-TERM DEBT, NET

As of December 31, 2025, the Company maintained no long-term debt. Long-term debt as of December 31, 2024 ~~and 2023~~, was as follows:


	December 31, 2024		~~December 31, 2023~~

Revolving credit facility (a)	$	-	$	10,375
Other debt (a)	$	1,888
Other debt (b)		1,888		40
		1,888
Term loan (c)		-		109,375
Less current portion		(1,888)
	$	~~1,888~~-		~~119,790~~
Less current portion		(1,888)		(119,790)
	$	-	$	-

(a) On ~~February~~December 295, 2024, ~~upon~~pursuant to the ~~closing~~RockyMounts ofPurchase ~~the~~Agreement, ~~disposition~~Clarus ofand ~~the~~its ~~Precision~~wholly-owned ~~Sport~~subsidiary, ~~segment~~Rhino-Rack USA LLC, ~~the~~issued ~~Company~~a ~~terminated~~promissory ~~and~~note ~~paid~~in ~~off~~favor ~~amounts~~of ~~outstanding~~RockyMounts, ~~under~~Inc. in the ~~revolving~~principal ~~credit~~amount ~~facility~~of $2,000, ~~and~~which ~~pursuant~~was tofully ~~the~~paid ~~Credit~~on ~~Agreement~~December ~~with~~5, ~~JPMorgan~~2025. ~~Chase~~Imputed ~~Bank,~~interest ~~N.A.,~~was asincluded ~~administrative~~within ~~agent~~the principal amount and the ~~lenders~~fair ~~party~~value ~~thereto~~of (the ~~“Restated~~note ~~Credit~~was ~~Agreement”)~~$1,878 inon ~~full.~~the ~~The~~date ~~Company~~of ~~paid~~issuance. ~~interest~~There ~~monthly~~were onno ~~any~~remaining ~~borrowings~~amounts onoutstanding ~~the~~as ~~Restated~~of ~~Credit~~December ~~Agreement~~31, 2025. As of December 31, ~~2023~~2024, the ~~interest~~borrowing ~~rates~~rate ~~ranged~~was ~~between approximately 7~~6.75% ~~and 9~~.~~8%.~~

(b) On December 5, 2024, pursuant to the RockyMounts Purchase Agreement, Clarus and its wholly-owned subsidiary, Rhino-Rack USA LLC, issued a promissory note in favor of RockyMounts, Inc. in the principal amount of $2,000, payable on December 5, 2025. Imputed interest is included within the principal amount and the fair value of the note was $1,878 on the date of issuance. As of December 31, 2024, the borrowing rate was 6.5%.

NOTE 9. DERIVATIVE FINANCIAL INSTRUMENTS

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CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

~~Foreign~~denominated ~~subsidiaries~~in ofcurrencies other than the ~~Company~~U.S. ~~had~~dollar. ~~term~~The ~~debt~~Company ~~with~~manages ~~financial~~this ~~institutions,~~risk ~~which~~primarily ~~was~~by ~~repaid~~using ascurrency offorward ~~December~~and ~~31,~~option ~~2024~~contracts. ~~The~~If ~~foreign~~the ~~subsidiaries~~anticipated ~~paid~~transactions ~~interest~~are ~~monthly~~deemed onprobable, ~~any~~the ~~borrowings~~resulting onrelationships ~~the~~are ~~credit~~formally ~~facility~~designated as ~~well~~cash flow hedges. The Company accounts for these contracts as ~~monthly~~cash ~~payments~~flow onhedges ~~the~~and ~~term~~tests ~~debt.~~effectiveness Asby ofdetermining ~~December 31,~~whether ~~2023,~~changes in the ~~interest~~expected ~~rate~~cash ~~was~~flow ~~approximately~~of ~~3.2%.~~the ~~The~~derivative ~~credit~~offset, ~~facility~~within ~~was~~a ~~secured~~range, bychanges ~~certain~~in ~~assets~~the expected cash flow of the ~~foreign~~hedged ~~subsidiaries~~item.

~~(c)~~At ~~On February 29~~December 31, ~~2024~~2025, ~~upon~~ the ~~closing~~Company’s ofderivative ~~the~~contracts ~~disposition~~had remaining maturities of ~~the~~less ~~Precision~~than ~~Sport~~one ~~segment,~~year. The counterparties to these transactions had both long-term and short-term investment grade credit ratings. The maximum net exposure of the Company’s ~~terminated~~credit ~~and~~risk ~~paid~~to ~~off~~the ~~amounts~~counterparties ~~outstanding~~is ~~under~~generally limited to the ~~term~~aggregate ~~loan~~unrealized inloss ~~full~~of all contracts with that counterparty, which was $358 as of December 31, 2025. The Company’s ~~paid~~exposure ~~interest~~of ~~monthly~~counterparty oncredit ~~any~~risk ~~borrowings~~is onlimited to the ~~Restated~~aggregate ~~Credit~~unrealized ~~Agreement~~gain on all contracts. As of December 31, ~~2023~~2025, there was no such exposure to the ~~rate~~counterparties. ~~was~~The ~~approximately~~Company’s 7derivative counterparties have strong credit ratings and as a result, the Company does not require collateral to facilitate transactions.~~7%.~~

The Company held the following contracts designated as hedged instruments as of December 31, 2025 and 2024:


	December 31, 2025
	Notional		Latest
	Amount		Maturity

Foreign exchange contracts - Canadian Dollars	$1,208		February 2026
Foreign exchange contracts - Euros	€ 3,134		February 2026

NOTE 9. DERIVATIVE FINANCIAL INSTRUMENTS


	December 31, 2024
	Notional		Latest
	Amount		Maturity

Foreign exchange contracts - Canadian Dollars	$1,379		February 2025
Foreign exchange contracts - Euros	€ 6,711		August 2025

The Company’s primary exchange rate risk management objective is to mitigate the uncertainty of anticipated cash flows attributable to changes in foreign currency exchange rates. The Company primarily focuses on mitigating changes in cash flows resulting from sales denominated in currencies other than the U.S. dollar. The Company manages this risk primarily by using currency forward and option contracts. If the anticipated transactions are deemed probable, the resulting relationships are formally designated as cash flow hedges. The Company accounts for these contracts as cash flow hedges and tests effectiveness by determining whether changes in the expected cash flow of the derivative offset, within a range, changes in the expected cash flow of the hedged item.

At December 31, 2024, the Company’s derivative contracts had remaining maturities of less than one year. The counterparties to these transactions had both long-term and short-term investment grade credit ratings. The maximum net exposure of the Company’s credit risk to the counterparties is generally limited to the aggregate unrealized loss of all contracts with that counterparty. As of December 31, 2024, there was no such exposure to the counterparties. The Company’s exposure of counterparty credit risk is limited to the aggregate unrealized gain on all contracts, which was $600 as of December 31, 2024. The Company’s derivative counterparties have strong credit ratings and as a result, the Company does not require collateral to facilitate transactions.

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


	December 31, 2024
	Notional	Latest
	Amount	Maturity

Foreign exchange contracts - Canadian Dollars	$1,379	February 2025
Foreign exchange contracts - Euros	€ 6,711	August 2025

For contracts that qualify as effective hedge instruments, the effective portion of gains and losses resulting from changes in fair value of the instruments are included in accumulated other comprehensive loss and reclassified to sales in the period the underlying hedged transaction is recognized in earnings. (Losses) gains of ($1,585) and $573 were reclassified to sales during the years ended December 31, 2025 and 2024, respectively.

The following table presents the balance sheet classification and fair value of derivative instruments as of December 31, 2025 and 2024:


	~~December 31, 2023~~Classification	December 31, 2025		December 31, 2024
	~~Notional~~	~~Latest~~
	Amount	Maturity
Derivative instruments in asset positions:

Designated forward exchange contracts	Prepaid and other current assets	$	-	$	600
Foreign exchange contracts - Canadian Dollars	$7,925	February 2025

Foreign exchange contracts - Euros	€ 20,612	February 2025
Derivative instruments in liability positions:
Designated forward exchange contracts	Accrued liabilities	$	358	$	-

For contracts that qualify as effective hedge instruments, the effective portion of gains and losses resulting from changes in fair value of the instruments are included in accumulated other comprehensive loss and reclassified to sales in the period the underlying hedged transaction is recognized in earnings. Gains of $573 and $393 were reclassified to sales during the years ended December 31, 2024 and 2023, respectively.

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CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

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


	Classification	December 31, 2024		December 31, 2023

Derivative instruments in asset positions:
Designated forward exchange contracts	Prepaid and other current assets	$	600	$	-

Derivative instruments in liability positions:
Designated forward exchange contracts	Accrued liabilities	$	-	$	221
Designated forward exchange contracts	Other long-term liabilities	$	-	$	35

NOTE 10. ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss (“AOCI”) primarily consists of foreign currency translation adjustments and changes in our forward foreign exchange contracts. The components of AOCI, net of tax, were as follows:


	Foreign Currency Translation Adjustments		Unrealized Gains (Losses) on Cash Flow Hedges		Total

Balance as of December 31, 2023	$	(15,223)	$	(191)	$	(15,414)
Other comprehensive (loss) income before reclassifications		(9,635)		949		(8,686)
Amounts reclassified from other comprehensive (loss) income		-		(432)		(432)
Net current period other comprehensive loss		(9,635)		517		(9,118)
Balance as of December 31, 2024	$	(24,858)	$	326	$	(24,532)
Other comprehensive income (loss) before reclassifications		8,172		(1,530)		6,642
Amounts reclassified from other comprehensive income (loss)		-		1,201		1,201
Net current period other comprehensive income		8,172		(329)		7,843
Balance as of December 31, 2025	$	(16,686)	$	(3)	$	(16,689)


	Foreign Currency Translation Adjustments		Unrealized Gains (Losses) on Cash Flow Hedges		Total

Balance as of December 31, 2022	$	(17,628)	$	(57)	$	(17,685)
Other comprehensive income before reclassifications		2,405		169		2,574
Amounts reclassified from other comprehensive income		-		(303)		(303)
Net current period other comprehensive income (loss)		2,405		(134)		2,271
Balance as of December 31, 2023	$	(15,223)	$	(191)	$	(15,414)
Other comprehensive (loss) income before reclassifications		(9,635)		949		(8,686)
Amounts reclassified from other comprehensive (loss) income		-		(432)		(432)
Net current period other comprehensive loss		(9,635)		517		(9,118)
Balance as of December 31, 2024	$	(24,858)	$	326	$	(24,532)

73The effects on net loss of amounts reclassified from unrealized gains (losses) on cash flow hedges for foreign exchange contracts and foreign currency translation adjustments for the years ended December 31, 2025 and 2024 were as follows:


	Gains (losses) reclassified from AOCI to the Consolidated Statements of Comprehensive Loss
Affected line item in the Consolidated	Twelve Months Ended
Statements of Comprehensive Loss	December 31, 2025			December 31, 2024
Foreign exchange contracts:
Sales	$	(1,585)		$	573
Less: Income tax (benefit) expense		(384)			141
Amount reclassified, net of tax	$	(1,201)		$	432

Total reclassifications from AOCI	$	(1,201)		$	432

The Company’s policy is to classify reclassifications of cumulative foreign currency translation associated with continuing operations from AOCI to Other, net.

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CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

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


	Gains reclassified from AOCI to the Consolidated Statements of Comprehensive Loss
Affected line item in the Consolidated	Twelve Months Ended
Statements of Comprehensive Loss	December 31, 2024		December 31, 2023
Foreign exchange contracts:
Sales	$	573	$	393
Less: Income tax expense		141		90
Amount reclassified, net of tax	$	432	$	303

Total reclassifications from AOCI	$	432	$	303

The Company’s policy is to classify reclassifications of cumulative foreign currency translation associated with continuing operations from AOCI to Other, net.

NOTE 11. FAIR VALUE MEASUREMENTS

We measure certain financial assets and liabilities at fair value on a recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, under a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

Level 1 -

inputs to the valuation methodology are quoted market prices for identical assets or liabilities in active markets.

Level 2 -

inputs to the valuation methodology include quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability.

Level 3 -

inputs to the valuation methodology are based on prices or valuation techniques that are unobservable.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Items Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis at December 31, ~~2024~~2025 and ~~2023~~2024 were as follows:


	December 31, ~~2024~~2025
	Level 1		Level 2		Level 3		Total

Assets
Designated forward exchange contracts	$	-	$	~~600~~-	$	-	$	~~600~~-
	$	-	$	~~600~~-	$	-	$	~~600~~-

Liabilities
Contingent consideration liabilities	$	-	$	-	$	609	$	609
Designated forward exchange contracts	$	-	$	358	$	-	$	358
	$	-	$	-	$	609	$	609
Contingent consideration liabilities	$	-	$	-	$	254	$	254
	$	-	$	358	$	254	$	612

	December 31, ~~2023~~2024
	Level 1		Level 2		Level 3		Total

Assets
Designated forward exchange contracts	$	-	$	-600	$	-	$	-600
	$	-	$	-600	$	-	$	-600

Liabilities
Designated forward exchange contracts	$	-	$	256	$	-	$	256
Contingent consideration liabilities	$	-	$	-	$	609	$	609
Contingent consideration liabilities	$	-	$	-	$	129	$	129
	$	-	$	-	$	609	$	609
	$	-	$	256	$	129	$	385

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

The Company estimated the initial fair value of the contingent consideration liabilities primarily using the Monte-Carlo pricing model. Significant unobservable inputs used in the valuations of contingent consideration liabilities related to the acquisitions of RockyMounts and TRED included discount rates of 13.0% and 11.5%, respectively. Contingent consideration liabilities are subsequently remeasured at the estimated fair value at the end of each reporting period using financial projections of the acquired company, such as sales-based milestones and estimated probabilities of achievement, with the change in fair value recognized in contingent consideration (benefit) expense in the accompanying consolidated statements of comprehensive loss for such period. We measure the initial liability and remeasure the liability on a recurring basis using Level 3 inputs as defined under authoritative guidance for fair value measurements.

~~The net sales threshold required for the payment of the MAXTRAX Contingent Consideration was not met during the measurement period ended June 30, 2023.~~78

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(in thousands, except per share amounts)

The net sales threshold required for the payment of the MAXTRAX contingent consideration was not met during the measurement period ended June 30, 2023. The net sales threshold required for the payment of the TRED contingent consideration was not met during the final measurement period ended June 30, 2025. There were no contingent consideration liabilities related to the TRED acquisition recorded as of December 31, 2024. The net sales threshold required for the payment of the 2025 portion of the RockyMounts contingent consideration was not met during the measurement period ended December 31, 2025.

The following table summarizes the changes in contingent consideration liabilities:


	RockyMounts		TRED		~~MAXTRAX~~Total		~~Total~~

Balance at December 31, 2022	$	-	$	-	$	1,595	$	1,595
Balance at December 31, 2023	$	-	$	129	$	129

Increase due to acquisition of TRED		-		121		-		121
Increase due to acquisition of RockyMounts		609		-		609
Fair value adjustments		-		-(125)		(~~1,565~~125)		~~(1,565)~~
Impact of foreign currency exchange rates		-		8(4)		(304)		~~(22)~~

Balance at December 31, 2023	$	-	$	129	$	-	$	129
Balance at December 31, 2024	$	609	$	-	$	609

Increase due to acquisition of RockyMounts		609		-		-		609
Fair value adjustments		(355)		-		(355)
Fair value adjustments		-		(125)		-		(125)

Impact of foreign currency exchange rates		-		(4)		-		(4)
Balance at December 31, 2025	$	254	$	-	$	254

Balance at December 31, 2024	$	609	$	-	$	-	$	609

As the contingent consideration liabilities are remeasured to fair value each reporting period, significant increases or decreases in projected sales, discount rates or the time until payment is made could have resulted in a significantly lower or higher fair value measurement. Our determination of fair value of the contingent consideration liabilities could change in future periods based on our ongoing evaluation of these significant unobservable inputs. ~~As of December 31, 2024, the net sales threshold required for the payment of the TRED Contingent Consideration is not expected to be met.~~

Items Measured at Fair Value on a Non-Recurring Basis

In assessing the recoverability of goodwill and indefinite-lived intangible assets, management estimates the fair value of each reporting unit using Level 3 inputs through a combination of the income approach based upon projected discounted cash flows of the reporting unit and the market approach. The fair value of indefinite-lived intangible assets is estimated using Level 3 inputs through the income approach, specifically the relief-from-royalty method. The fair values are based on revenue and cash flow projections, royalty rates, and discount rates. Impairment of goodwill was $363,~~264~~804, $036,264, and $~~52,071~~0 during the years ended December 31, ~~2024~~2025, ~~2023~~2024, and ~~2022~~2023, respectively. Impairment of indefinite-lived intangible assets was $827,~~545~~634, $08,545, and $~~40,240~~0 during the years ended December 31, ~~2024~~2025, ~~2023~~2024, and ~~2022~~2023, respectively. See Note 6 for additional information.

NOTE 12. STOCKHOLDERS’ EQUITY

On August 6, 2018, the Company announced that its Board of Directors approved the initiation of a quarterly cash dividend program of $0.025 per share of the Company’s common stock (the “Quarterly Cash Dividend”) or $0.10 per share on an annualized basis. The declaration and payment of future Quarterly Cash Dividends is subject to the discretion of and approval of the Company’s Board of Directors. In ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023 our total Quarterly Cash Dividends were $3,~~831~~840, $3,~~750~~831 and $3,~~721~~750, respectively. On March 54, ~~2025~~2026, the Company announced that its Board of Directors approved the payment on March 2625, ~~2025~~2026 of the Quarterly Cash Dividend of $0.025 to the record holders of shares of the Company’s common stock as of the close of business on March 1716, ~~2025~~2026.

NOTE 13. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing earnings (loss) by the weighted average number of common shares outstanding during each period. Diluted earnings (loss) per share is computed by dividing earnings (loss) by the total of the weighted average number of shares of common stock outstanding during each period, plus the effect of dilutive outstanding stock options and unvested restricted stock grants. Potentially dilutive securities are excluded from the computation of diluted earnings (loss) per share if their effect is anti-dilutive to the loss from continuing operations.

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(in thousands, except per share amounts)

of shares of common stock outstanding during each period, plus the effect of dilutive outstanding stock options and unvested restricted stock grants. Potentially dilutive securities are excluded from the computation of diluted earnings (loss) per share if their effect is anti-dilutive to the loss from continuing operations.

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


	Year Ended December 31,
	~~2024~~2025		~~2023~~2024		~~2022~~2023

Weighted average shares outstanding - basic		38,~~305~~393		3738,~~485~~305		37,~~201~~485
Effect of dilutive stock awards		-		-		-
Weighted average shares outstanding - diluted		38,~~305~~393		3738,~~485~~305		37,~~201~~485

Loss from continuing operations per share:
Basic	$	(21.3121)	$	(02.4231)	$	(20.4942)
Diluted		(21.3121)		(02.4231)		(20.4942)

Income from discontinued operations per share:
Basic	$	~~0.94~~-	$	0.1594	$	0.6215
Diluted		~~0.94~~-		0.1594		0.6215

Net loss per share:
Basic	$	(1.3721)	$	(01.2737)	$	(10.8827)
Diluted		(1.3721)		(01.2737)		(10.8827)

For the years ended December 31, ~~2024~~2025, ~~2023~~2024, and ~~2022~~2023, equity awards of 4,~~596~~553, 54,~~424~~596, and 65,~~060~~424, respectively, were outstanding and anti-dilutive and therefore not included in the calculation of net loss per share for these periods.

NOTE 14. STOCK-BASED COMPENSATION PLAN

~~Under~~On May 29, 2025, at the Company’s ~~current~~2025 Annual Meeting, stockholders approved the Clarus Corporation Amended and Restated 2015 Stock Incentive Plan (the “Amended and Restated 2015 Plan”), ~~the~~which ~~Company’s~~had ~~Board~~previously ofbeen ~~Directors~~adopted (by the “Board of Directors”) ~~has~~on ~~flexibility~~April to16, ~~determine~~2025, ~~the~~subject ~~type and amount of awards~~ to besuch ~~granted~~approval. toThe ~~eligible~~Amended ~~participants,~~and ~~who~~Restated ~~must~~2015 bePlan ~~employees,~~amends ~~directors,~~and ~~officers~~restates ~~or consultants of~~ the ~~Company~~Clarus orCorporation ~~its~~2015 ~~subsidiaries.~~Stock ~~The~~Incentive ~~2015~~ Plan ~~allows~~(the ~~for~~“2015 ~~grants of incentive stock options~~Plan”), ~~nonqualified~~originally ~~stock~~approved ~~options,~~by ~~restricted~~stockholders ~~stock~~on ~~awards,~~December ~~stock appreciation rights~~11, ~~and restricted units~~2015. ~~The~~Upon ~~aggregate~~stockholder ~~number~~approval of ~~shares~~the ofAmended ~~common~~and ~~stock~~Restated ~~that~~2015 ~~may~~Plan, ~~be granted through awards under~~ the 2015 Plan towas ~~any~~terminated, ~~employee~~and inno ~~any~~further ~~calendar year~~awards ~~may not exceed 500 shares. The 2015 Plan~~ will ~~continue~~be ingranted ~~effect~~under ~~until December 2025 unless terminated sooner~~it. AsAny ofremaining ~~December 31, 2024, the number of~~ shares ~~authorized~~available ~~and reserved~~ for ~~issuance~~grant under the 2015 Plan iswere 10canceled. However,~~187~~ ~~shares~~4,537 shares subject to ~~automatic~~outstanding ~~annual~~awards ~~increase~~previously ~~equal~~granted tounder 5%the of2015 ~~the~~Plan ~~total~~will ~~number~~remain ofavailable ~~shares~~for ofissuance ~~the~~pursuant ~~Company’s~~to ~~outstanding~~their ~~common~~existing ~~stock~~terms.

Under the Amended and Restated 2015 Plan, the Company’s Board of Directors has flexibility to determine the type and amount of awards to be granted to eligible participants, who must be employees, directors, officers or consultants of the Company or its subsidiaries. The Amended and Restated 2015 Plan allows for grants of incentive stock options, nonqualified stock options, restricted stock awards, stock appreciation rights, and restricted stock unit awards. Unless earlier terminated as provided therein, the Amended and Restated 2015 Plan will terminate on the tenth (10th) anniversary of the effective date of the Amended and Restated 2015 Plan.

Options Granted:

During the year ended December 31, ~~2024~~2025, the Company issued stock ~~options~~option awards for an aggregate of ~~1,250~~630 shares of Common Stock under the Amended and Restated 2015 Plan and the 2015 Plan to directors and employees of the Company. Of the ~~1,250~~630 stock options, ~~1,140~~500 stock options shall vest and become exercisable ~~over~~one ayear ~~period of two years, 100 vest in four equal consecutive quarterly tranches~~ from the date of ~~grant, and 10 vest in one quarterly tranche from~~ the ~~date of~~ grant., ~~All~~50 ~~of the issued~~ stock options ~~expire~~shall ~~ten~~vest ~~years~~and ~~from~~become ~~the date of the grant.~~

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(in thousands, except per share amounts)

exercisable over a period of three years from the date of the grant, and 80 stock options shall vest and become exercisable in four equal consecutive quarterly tranches from the date of grant. All of the issued stock options expire ten years from the date of the grant.

For computing the fair value of the stock-based awards, the fair value of each option grant has been estimated as of the date of grant using the Black-Scholes option-pricing model with the following assumptions:


	2024	2023	2022

Number of options	1,250	75	430	10
Option vesting period	1 - 2 Years	1 Year	1 - 3 Years	Immediate
Grant price (per share)	$4.63 - $6.81	$7.91	$18.67 - $27.65	$21.83
Dividend yield	1.47% - 2.16%	1.26%	0.36% - 0.54%	0.46%
Expected volatility (a)	50.3% - 53.1%	47.8%	38.6% - 40.9%	39.4%
Risk-free interest rate	4.07% - 4.57%	3.69%	1.46% - 3.38%	1.66%
Expected life (years) (b)	5.19 - 5.75	5.31	5.31 - 6.01	5.50
Weighted average fair value (per share)	$1.99 - $3.12	$2.48	$7.82 - $10.41	$8.03


	2025	2024	2023

Number of options	630	1,250	75
Option vesting period	1 - 3 Years	1 - 2 Years	1 Year
Grant price (per share)	$3.21 - $4.02	$4.63 - $6.81	$7.91
Dividend yield	2.49% - 3.12%	1.47% - 2.16%	1.26%
Expected volatility (a)	50.6% - 53.2%	50.3% - 53.1%	47.8%
Risk-free interest rate	4.01% - 4.17%	4.07% - 4.57%	3.69%
Expected life (years) (b)	5.50 - 6.69	5.19 - 5.75	5.31
Weighted average fair value (per share)	$1.32 - $1.74	$1.99 - $3.12	$2.48

(a)

Expected volatility is based upon the Company’s historical volatility.

(b)

The expected term was determined based upon the underlying terms of the awards and the category and employment history of employee award recipient.

Using these assumptions, the fair value of the stock options granted during the years ended December 31, ~~2024~~2025, ~~2023~~2024, and ~~2022~~2023 was $31,~~818~~046, $~~186~~3,818, and $3186,~~661,~~ respectively, which will be amortized as stock-based compensation expense over the vesting period of the options.

Restricted Stock Awards Granted:

On March 11, 2024, the Company issued and granted employees restricted stock awards of 100 restricted shares under the 2015 Plan, of which 50 and 50 shares will vest and become nonforfeitable on each March 11, 2025 and March 11, 2026, respectively. As these restricted stock awards vest over time, the fair value of the restricted stock was estimated as of the date of grant using the grant price of $6.75 per share. The grant date fair value of the restricted stock awards was approximately $675 which will be amortized over the expected term of 2 years.

Market Condition Restricted Shares Granted:

On March 14, 2023, the Company awarded the Executive Chairman 500 restricted shares under the 2015 Plan, of which 250 and 250 shares will vest if, on or before March 14, 2033, the Fair Market Value (as defined in the Plan) of the Company’s common stock shall have equaled or exceeded $15.00 and $18.00 per share for twenty consecutive trading days, respectively. For computing the fair value of the restricted shares with a market condition, the fair value of the restricted stock award grant has been estimated as of the date of grant using the Monte-Carlo pricing model with the assumptions below.

On March 4, 2022, the Company issued and granted to the Executive Chairman and certain employees restricted stock awards of 700 restricted shares under the 2015 Plan, of which 700 restricted shares will vest if, on or before March 4, 2032, the Fair Market Value (as defined in the Plan) of the Company’s common stock shall have equaled or exceeded $50.00 per share for twenty consecutive trading days. For computing the fair value of the restricted shares with a market condition, the fair value of the restricted stock award grant has been estimated as of the date of grant using the Monte-Carlo pricing model with the assumptions below.

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(in thousands, except per share amounts)


	March 14, 2023	~~March 4, 2022~~

Number issued	500	~~700~~
Vesting period	$15.00 - $18.00 stock price target	~~$50.00 stock price target~~
Grant price (per share)	$9.60	~~$21.83~~
Dividend yield	1.04%	~~0.46%~~
Expected volatility	45.2%	~~41.0%~~
Risk-free interest rate	3.64%	~~1.74%~~
Expected term (years)	2.56 - 3.22	~~4.15~~
Weighted average fair value (per share)	$7.84 - $8.34	~~$15.37~~

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

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


	Year Ended December 31,
	~~2024~~2025		~~2023~~2024		~~2022~~2023

Restricted stock awards	$	3,~~545~~418	$	23,~~540~~545	$	62,~~122~~540
Stock options		2,~~279~~477		2,~~601~~279		52,~~076~~601
Total	$	5,~~824~~895	$	5,~~141~~824	$	115,~~198~~141

For the years ended December 31, ~~2024~~2025, ~~2023~~2024, and ~~2022~~2023, stock-based compensation costs were classified as selling, general and administrative expense. A summary of changes in outstanding options and restricted stock awards during the year ended December 31, ~~2024~~2025 is as follows:


	Options		Weighted Average Exercise Price		Aggregate Intrinsic Value		Restricted Stock Awards
Outstanding at December 31, 2023		3,239	$	11.45	$	-		1,617
Outstanding at December 31, 2024		3,132	$	10.18	$	-		1,100

Granted		~~1,250~~630		31.0666				~~100~~-
Exercised or vested		~~(126)~~-		~~4.49~~-				(~~117~~50)
Expired		(~~1,157~~140)		1013.3118				~~(500)~~-
Cancelled		-		-				-
Forfeited		(7455)		-				-
Outstanding at December 31, 2024		3,132	$	10.18	$	-		1,100
Outstanding at December 31, 2025		3,567	$	9.01	$	-		1,050

Options exercisable at December 31, 2024		2,087		11.90	$	-
Options exercisable at December 31, 2025		2,544		10.53	$	-

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(in thousands, except per share amounts)

The following table summarizes the exercise price range, weighted average exercise price, and remaining contractual lives by significant ranges for options outstanding and exercisable as of December 31, ~~2024~~2025:


					Remaining Life In Years				Weighted Average
Exercise Price Range	Outstanding		Exercisable		Outstanding		Exercisable		Exercise Price
$4.39 - $5.56		35		30		4.1		4.1	$	4.44
$3.21 - $3.71		80		60		9.4		9.4	$	3.21
$5.56 - $27.65		3,097		2,057		6.4		5.9	$	12.01
$3.71 - $27.65		3,487		2,484		4.9		4.7	$	10.71
		3,~~132~~567		2,~~087~~544		65.31		54.9	$	1110.9053

The intrinsic value of options exercised was $~~160~~0, $~~351~~160, and $~~4,381~~351 during the years ended December 31, ~~2024~~2025, ~~2023~~2024, and ~~2022~~2023, respectively. The intrinsic value of restricted stock awards vested was $~~722~~206, $1722,~~891,~~ and $31,~~336~~891 during the years ended December 31, ~~2024~~2025, ~~2023~~2024, and ~~2022~~2023, respectively. Total fair value of options vested during the years ended December 31, ~~2024~~2025, ~~2023~~2024, and ~~2022~~2023 was $1,~~050~~721, $31,~~461~~050, and $53,~~361~~461, respectively. Total fair value of restricted stock awards vested during the years ended December 31, ~~2024~~2025, ~~2023~~2024, and ~~2022~~2023 was $~~877~~338, $1877,~~438,~~ and $1,~~157~~438, respectively.

The fair value of unvested restricted stock awards is determined based on the market price of our shares of common stock on the grant date or using the Monte-Carlo pricing model. As of December 31, ~~2024~~2025, there were 1,~~045~~023 unvested stock options and unrecognized compensation cost of $~~2,139~~539 related to unvested stock options, as well as 1,~~100~~050 unvested restricted stock awards and unrecognized compensation cost of $~~4,339~~921 related to unvested restricted stock awards. Unrecognized compensation cost of unvested stock options and restricted stock awards are expected to be recognized over the weighted average period of 1.0.4 years and 10.23 years, respectively.

NOTE 15. RESTRUCTURING

Starting in 2023, the Company began incurring expenses to facilitate long-term sustainable growth through cost reduction actions, consisting of employee reductions, facility rationalization and contract termination costs. During the years ended December 31, 2025, 2024, and 2023, the Company incurred $967, $1,948, and $3,223, respectively, of restructuring charges related to these actions. The Company has incurred $56,~~171~~138 of cumulative restructuring charges since the commencement of ~~our~~these restructuring actions in 2023. The Company accrues for restructuring costs when they are probable and reasonably estimable. ~~These~~Restructuring costs include severance costs, exit costs, and other restructuring costs and are included in ~~restructuring~~Restructuring charges in the consolidated statements of comprehensive loss. Severance costs primarily consist of severance benefits through payroll continuation, conditional separation costs and employer tax liabilities, while exit costs primarily consist of lease exit and contract termination costs. Other costs consist primarily of costs related to the discontinuance of certain product lines and are distinguishable and directly attributable to the Company’s restructuring initiative and not a result of external market factors associated with the ongoing business. We estimate that we will ~~continue to~~ incur ~~restructuring~~additional ~~costs related to~~ employee-related ~~costs~~ and facility exit restructuring costs ~~during~~in ~~the year 2025~~2026; however, the Company cannot estimate the total amount expected to be incurred at this time as cost reduction actions continue to be evaluated. The Company currently anticipates completing these restructuring activities in ~~2025~~2026; however, the timing and scope of these actions may change, and additional actions may be taken, depending on business conditions and other factors.

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(in thousands, except per share amounts)

The following table summarizes the restructuring charges, payments and the remaining liabilities related to restructuring costs at December 31, ~~2024~~2025, which are included within accrued liabilities in the consolidated balance sheets.


	Outdoor		Adventure		Corporate		Total
Balance at December 31, 2023	$	1,246	$	-	$	-	$	1,246
Balance at December 31, 2024	$	541	$	-	$	-	$	541
Charges to expense:
Employee termination benefits		~~1,225~~569		~~599~~368		-		~~1,824~~937
Exit costs		~~124~~30		-		-		~~124~~30
Total restructuring charges	$	~~1,349~~599	$	~~599~~368	$	-	$	~~1,948~~967
Cash payments and non-cash charges:
Cash payments		(~~2,015~~733)		(~~599~~368)		-		(21,~~614~~101)
Asset impairments		(39)		-		-		(39)
Balance at December 31, 2025	$	407	$	-	$	-	$	407
Balance at December 31, 2024	$	541	$	-	$	-	$	541

NOTE 16. COMMITMENTS AND CONTINGENCIES

The Company is involved in various legal disputes and other legal proceedings that arise from time to time in the ordinary course of business. Anticipated costs related to litigation matters are accrued when it is both probable that a liability has been incurred and the amount can be reasonably estimated. Based on currently available information, the Company does not believe that it is reasonably possible that the disposition of any of the legal disputes the Company or its subsidiaries is currently involved in will have a material adverse effect upon the Company’s consolidated financial position, results of operations or cash flows, except for the U.S. Consumer Product Safety Commission (“CPSC”) and Department of Justice ~~matter~~matters discussed below. There is a reasonable possibility of loss from contingencies in excess of the amounts accrued by the Company in the accompanying condensed consolidated balance sheets; however, the actual amounts of such possible losses cannot currently be reasonably estimated by the Company. It is possible that, as additional information becomes available, the Company may subsequently determine that it may incur losses from such contingencies materially in excess of the amounts initially accrued by the Company which could have a material adverse effect on the Company’s liquidity, stock price, consolidated financial position, results of operations and/or cash flows. See Item 3. “Legal Proceedings.” and Item 1A. “Risk Factors.”

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

U.S. Consumer Product Safety Commission

81Separately, on April 21, 2022, BDEL filed a Section 15(b) report and applied for Fast-Track consideration for a voluntary recall, consisting of free repair or replacement of such malfunctioning models of avalanche transceivers, which would not switch from “send”

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(in thousands, except per share amounts)

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

John C. Walbrecht, the former President of BDEL and the Company, received a letter from the CPSC dated June 25, 2024, alleging that in his personal capacity he knowingly violated the Consumer Product Safety Act by failing to timely report the occurrence resulting in beacons switching unexpectedly out of “send” mode. The staff of the CPSC recommended a $5,000 fine against Mr. Walbrecht personally. Pursuant to the Company’s by-laws, the Company has agreed to indemnify Mr. Walbrecht and pay his legal fees in connection with the occurrences described above, and he has provided an undertaking to the Company that the Company will be entitled to recover those expenses if it is ultimately determined that he was not entitled to indemnification. On August 26, 2024, Mr. Walbrecht’s independent counsel responded to the CPSC, denying the allegations of its June 25, 2024, letter and rejecting its demand for a penalty.

On January 23, 2025, in connection with a criminal investigation, the Company and BDEL were each served with grand jury subpoenas from the ~~U.S.~~United ~~Attorney’s~~States ~~Office~~Department ~~for the District~~ of ~~Utah~~Justice requiring the production of documents relating to avalanche transmitters distributed by BDEL. The Company and BDEL ~~intend~~are cooperating with the investigation and have produced all relevant documents. The DOJ has sent letters to ~~cooperate~~Mr. ~~with~~Walbrecht ~~this~~and Rick Vance (BDEL’s former Director of Quality) advising them that they are targets in its investigation of possible criminal conduct. The DOJ has since served two subpoenas upon a current and former employee of BDEL for grand jury testimony. The Company’s Board of Directors has approved indemnity and payment of legal fees for current and former employees subpoenaed by the DOJ, in the same manner and subject to the same conditions described above for Mr. Walbrecht.

Based on currently available information, the Company believes an unfavorable outcome with the CPSC is probable, however, we cannot reasonably estimate on what terms this matter will be resolved with the CPSC or the U.S. Department of Justice. During the year ended December 31, 2024, the Company recorded a liability of $2,500 representing the low end of the range of our estimated exposure. The Company does not have a better estimate of the loss; therefore the low-end of the range was recorded as an accrued liability during the first quarter of 2024 and a corresponding expense is included in legal costs and regulatory matter expenses in the consolidated statements of comprehensive loss.

We believe it is reasonably possible that a change in our ability to estimate the amount of loss could occur in the near term and that the change in the estimate could be material. In addition, as this matter is ongoing, the Company is currently unable to predict its duration, resources required or outcome, or the impact it may have on the Company’s liquidity, financial condition, results of operations and/or cash flows. Any penalties imposed by the CPSC or other regulators could be costly to us and could damage our business and reputation as well as have a material adverse effect on the Company’s liquidity, stock price, consolidated financial position, results of operations and/or cash flows. During the years ended December 31, 2024 and 2023, the Company incurred legal expenses of $3,088, which includes the $2,500 recorded liability noted above, and $476, respectively, in efforts to resolve this matter. These legal expenses are included in legal costs and regulatory matter expenses in the consolidated statements of comprehensive loss.

8285

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CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

resources required or outcome, or the impact it may have on the Company’s liquidity, financial condition, results of operations and/or cash flows. Any penalties imposed by the CPSC or other regulators could be costly to us and could damage our business and reputation as well as have a material adverse effect on the Company’s liquidity, stock price, consolidated financial position, results of operations and/or cash flows. During the years ended December 31, 2025, 2024, and 2023, the Company incurred legal expenses of $2,825, $3,088, which includes the $2,500 recorded liability noted above, and $476, respectively, in efforts to resolve this matter. These legal expenses are included in legal costs and regulatory matter expenses in the consolidated statements of comprehensive loss.

Clarus Corporation v. HAP Trading, LLC and Harsh A. Padia

On September 23, 2022, the Company filed a lawsuit in the United States District Court for the Southern District of New York against HAP Trading, LLC and Harsh A. Padia (“HAP Trading”), seeking disgorgement of profits from transactions in the Company’s common stock and related derivative securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended.

~~Clarus~~On ~~Corporation~~March v14, 2025, the Court issued an Opinion and Order granting the defendants’ motion for summary judgment on the ground that they qualified for the market making exemption under Section 16(d) of the Exchange Act. ~~Caption~~On ~~Management~~April 11, ~~LLC~~2025, etthe alCompany filed a timely Notice of Appeal and the appeal was argued before the United States Court of Appeals for the Second Circuit on February 12, 2026. We are currently waiting for the Appeals Court to opine.

OnThe ~~March~~Court 8,of ~~2024,~~Appeals ~~the~~has ~~Company~~invited ~~filed a lawsuit in~~ the ~~United~~Securities ~~States~~and ~~District~~Exchange ~~Court~~Commission ~~for~~(“SEC”) ~~the~~to ~~Southern~~submit ~~District~~a ofbrief ~~New~~within ~~York~~60 ~~against~~days ~~Caption~~or ~~Management,~~by ~~LLC,~~April ~~Caption Partners II LP~~17, ~~Caption GP~~2026, ~~LLC,~~and ~~William~~to ~~Cooper~~advise ~~and~~the ~~Jason~~Court ~~Strasser~~by ~~(“Caption~~March ~~Management”)~~10, ~~seeking~~2026 ~~disgorgement~~if ofit ~~profits~~does ~~from~~not ~~transactions~~intend into ~~the~~submit ~~Company’s~~a ~~stock~~brief. ~~and~~If ~~related~~the ~~derivative~~SEC ~~securities~~submits ina ~~violation~~brief, ofeach ~~Section~~side ~~16(b)~~will ofhave ~~the~~21 ~~Securities~~days ~~Exchange~~to ~~Act~~submit ofa ~~1934,~~brief asin ~~amended~~response.

~~During~~Williams ~~the~~v. ~~years~~Caption ~~ended December 31~~Management, ~~2024 and 2023~~LLC, ~~the~~et ~~Company~~al. ~~incurred~~/ ~~legal~~Clarus ~~expenses~~Corporation ofv. ~~$754~~Caption ~~and $1~~Management,~~288,~~ ~~respectively~~LLC, inet ~~the efforts to bring the cases against HAP Trading and Caption Management to trial~~al. ~~These legal expenses are included in legal costs and regulatory matter expenses in the consolidated statements of comprehensive loss.~~

During the years ended December 31, 2025, 2024, and 2023, the Company incurred legal expenses of $1,857, $754, and $1,288, respectively, in the efforts to bring the cases against HAP Trading and Caption Management to trial. These legal expenses are included in legal costs and regulatory matter expenses in the consolidated statements of comprehensive loss.

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CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

NOTE 17. INCOME TAXES

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


	Year Ended December 31,
	~~2024~~2025		~~2023~~2024		~~2022~~2023

U.S. operations	$	(3426,~~575~~711)	$	(1934,~~929~~575)	$	(2419,~~318~~929)
Foreign operations		(3630,~~010~~378)		(~~150~~36,010)		(~~83,200~~150)
Loss from continuing operations before income tax	$	(7057,~~585~~089)	$	(2070,~~079~~585)	$	(~~107~~20,~~518~~079)

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


	Year Ended December 31,
	~~2024~~2025		~~2023~~2024		~~2022~~2023

Current:
Federal	$	-79	$	-	$	-
State and local		26234		9026		~~150~~90
Foreign		~~2,642~~460		~~833~~2,642		~~1,575~~833
		~~2,668~~773		~~923~~2,668		~~1,725~~923
Deferred:
Federal		~~25,835~~372		(425,~~972)~~835		(14,~~338~~972)
State and local		(~~1,271~~48)		~~300~~(1,271)		~~(451)~~300
Foreign		(911,~~380~~630)		(~~542~~9,380)		(~~14,652~~542)
		15(11,~~184~~306)		(515,~~214)~~184		(165,~~441~~214)

Income tax expense (benefit)	$	17,852	$	(4,291)	$	(14,716)
Income tax (benefit) expense	$	(10,533)	$	17,852	$	(4,291)

83The allocation of income tax (benefit) expense between continuing and discontinued operations was as follows:


	Year Ended December 31,
	2025		2024		2023

Continuing operations	$	(10,533)	$	17,852	$	(4,291)
Discontinued operations		-		479		2,024
	$	(10,533)	$	18,331	$	(2,267)

The Company’s foreign operations that are considered to be permanently reinvested have statutory tax rates of approximately 19% to 30%.

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


	Year Ended December 31,
	2025

U.S. Federal statutory income tax benefit	$	(11,990)	(21.0)	%

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CLARUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

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

Increase (decrease) in income taxes resulting from:
State and local tax effects
State and local income taxes, before federal income tax effect (a)		(211)	(0.4)
Foreign tax effects
Australia
Statutory tax rate difference between Australia and U.S.		(2,844)	(5.0)
Changes in valuation allowances		1,328	2.3
Other		(223)	(0.4)
Austria
Sales Gain/Loss		(1,376)	(2.4)
Other		322	0.6
Other foreign jurisdictions		60	0.1
Tax Credit
Research and development tax credits		(448)	(0.8)
Changes in valuation allowances		4,109	7.2
Nontaxable or nondeductible items
Executive compensation limitation		927	1.6
Other		236	0.4
Changes in unrecognized tax benefits		(157)	(0.3)
Other adjustments		(266)	(0.4)
Income tax benefit	$	(10,533)	(18.5)	%


	Year Ended December 31,
	2024		2023		2022

Continuing operations	$	17,852	$	(4,291)	$	(14,716)
Discontinued operations		479		2,024		7,365
	$	18,331	$	(2,267)	$	(7,351)

(a)

For the year ended December 31, 2025, a majority (greater than 50 percent) of the Company’s state income tax expense related to Utah.

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


	Year Ended December 31,
	2024		2023

Statutory income tax benefit	(21.0)	%	(21.0)	%
Increase (decrease) in income taxes resulting from:
Foreign taxes	(1.6)		0.6
State income taxes, net of federal income taxes	(0.2)		(1.9)
Income tax credits	(5.0)		(6.6)
Stock options	1.1		1.2
Change in effective state rate	(1.8)		-
Deferred tax asset write-offs	-		13.0
Executive compensation limitation	1.4		4.4
Change in valuation allowance	41.7		(13.0)
Impairment of goodwill	10.8		-
Research and development expenditure	0.6		1.9
Other	(0.7)		-
Income tax expense (benefit)	25.3	%	(21.4)	%

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

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