Outdoor Holding Reaches Settlement with SEC

Outdoor Holding has reached a settlement with the U.S. Securities and Exchange Commission, or SEC, to resolve its previously disclosed investigation. The company agreed to cease and desist from future violations of the antifraud and numerous other provisions of the federal securities laws stemming from, among other things: (i) failure to disclose a former executive officer's employment and role; (ii) failure to disclose related party transactions involving that former executive officer; (iii) improper capitalization of certain equity issuance costs; (iv) understatement of stock compensation expenses; (v) disclosure concerning the calculation of Adjusted EBITDA; and (vi) inadequate internal accounting controls. The Order acknowledged that the company is now operating under new senior management that is different from those responsible for the conduct leading to the violations described in the Order. In the Order, OHC also consented to engage an outside compliance consultant to review and assist with the company's remediation of material weaknesses in internal control over financial reporting. The company is required to fully cooperate with the compliance consultant, adopt and implement all of the compliance consultant's recommendations within two years, and provide related certifications of compliance to the SEC staff. Over the past year, the company has undertaken a remediation program. These remediation efforts include, among other actions, completion of an independent investigation and restating its financial statements for fiscal years 2022, 2023 and 2024, each of the quarters within FY24, and 1Q25. The company has replaced its prior senior leadership, expanded and upgraded its accounting and external reporting personnel, retained SOX and outside controls advisors, strengthened policies governing expense classification and capitalization, implemented enhanced period-end close and reconciliation controls, established a formal disclosure committee, and adopted a new robust process for identifying and disclosing related party transactions. The company has completed the divestiture of its former ammunition manufacturing business, has returned to timely SEC reporting, and continues to enhance its internal controls and disclosure practices.