# Outdoor Holding Co (POWW) FY 2025 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Outdoor Holding Co's 10-K for fiscal year 2025.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1015383/000095017025086893/poww-20250331.htm
Accession: 0000950170-25-086893
Filing date: 2025-06-16
Report date: 2025-03-31
Extracted from a substantive MD&A body after the formal Item 7 span was a TOC or reference stub.
Confidence: high

Company profile: /company/POWW/
All MD&A years: /company/POWW/mda/
Previous year: /company/POWW/mda/fy2024/ (FY 2024)
Next year: /company/POWW/mda/fy2026/ (FY 2026)

Overview

Outdoor Holding Company, is the owner of the GunBroker Marketplace ("GunBroker" or the "Marketplace"), a leading online marketplace serving the firearms and shooting sports industries.

Through our Marketplace, we allow third party sellers to list items consisting of firearms, hunting gear, fishing equipment, outdoor gear, collectibles, and much more, while facilitating compliance with federal and state laws that govern the sale of firearms and other restricted items. This allows our base of over 8.4 million users to follow ownership policies and regulations through our network of over 32,000 federally licensed firearms dealers who serve as transfer agents. The nature and operation of the Marketplace as an online auction and sales platform also affords us a unique view into the total domestic market for the purpose of understanding sales trends at a granular level across all elements of the outdoor sports and shooting space. We generate revenue from marketplace fees, which includes auction revenue, compliance fee revenue,banner advertising campaign revenue and shipping revenue. Our vision is to expand the services on GunBroker and to become a peer to those in our industry. Recent expansions we have made to the platform include the following:

•
Enhanced Shopping Cart Experience: Buyers can now purchase multiple items from multiple sellers in a single checkout process, improving transaction flow and user convenience.

•
Improved Checkout for Auctions and Offers: Won auctions, accepted offers, and add-on items now flow through the cart checkout system providing a more seamless purchasing experience.

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•
Outdoor Analytics: Formerly known as GunBroker Analytics, this tool provides participants, including sellers, manufacturers, and industry stakeholders with access to actionable insights based on the platform’s extensive transaction and listing data.

•
GunBroker Advertising: This service assists sellers, manufacturers and service providers in promoting their listings and businesses through targeted digital advertising. Offers include content development, promotional emails, and banner advertisements tailored to the outdoor and shooting sports communities.

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New Homepage Redesign: We launched a fully re-imagined GunBroker.com homepage to deliver a more modern, intuitive, and efficient user experience. The redesign features enhanced visual layout, simplified navigation, dynamic promotional banners, and configurable widgets.

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Manufacturer Rebates and Buy Links: GunBroker actively promotes manufacturer rebates through its website and email campaigns. Listings with qualifying Universal Product Codes are automatically included in these promotions. Additionally, we collaborate with manufacturers to feature direct purchase links on their websites, guiding customers to new items available on GunBroker.

•
Collector’s Elite Platform: This premium marketplace tier supports curated, high-value listings for rare and collectible firearms. Collector’s Elite offers sellers specialized exposure, and an exclusive listing format tailored to discerning buyers.

•
Financing Tools for Sellers: We introduced integrated financing options that enable sellers to offer flexible payment plans to qualified buyers, helping expand purchasing power and drive sales of higher-value items.

Results of Continuing Operations

Fiscal Year 2025 Compared to Fiscal Year 2024

The following table presents summarized financial information for the years ended March 31, 2025 and 2024, taken from our consolidated statements of operations:

[[GREPCENT_TABLE]]
[["","","For the Year Ended"],["","","March 31, 2025","","","March 31, 2024"],["Net revenues","","$","49,401,547","","","$","53,942,076"],["Cost of revenues","","","6,468,031","","","","7,660,541"],["Gross profit","","","42,933,516","","","","46,281,535"],["Operating expenses","","","102,646,794","","","","52,724,540"],["Loss from operations","","","(59,713,278",")","","","(6,443,005",")"],["Other income"],["Other income","","","778,120","","","","144,537"],["Loss from continuing operations before income taxes","","$","(58,935,158",")","","$","(6,298,468",")"],["Provision (benefit) for income taxes","","","6,286,305","","","","(948,292",")"],["Net loss from continuing operations","","$","(65,221,463",")","","$","(5,350,176",")"]]
[[/GREPCENT_TABLE]]

Non-GAAP Financial Measures

We analyze operational and financial data to evaluate our business, allocate our resources, and assess our performance. In addition to total net sales, net loss, and other results under GAAP, the following information includes key operating metrics and non-GAAP financial measures that we use to evaluate our business. We believe that these measures are useful for period-to-period comparisons of the Company's performance. We have included these non-GAAP financial measures in this Annual Report because they are key measures management uses to evaluate our operational performance, produce future strategies for our operations, and make strategic decisions, including those relating to operating expenses and the allocation of our resources. Accordingly, we believe that these measures provide

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useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.

Adjusted EBITDA

[[GREPCENT_TABLE]]
[["","","For the Year Ended"],["","","March 31, 2025","","","March 31, 2024"],["Reconciliation of GAAP net loss from continuing operations to Adjusted EBITDA"],["Net loss from continuing operations","","$","(65,221,463",")","","$","(5,350,176",")"],["Provision for income taxes","","","6,286,305","","","","(948,292",")"],["Depreciation and amortization","","","13,589,698","","","","13,034,306"],["Interest expense, net","","","82,173","","","","(318,984",")"],["Employee stock awards","","","4,350,580","","","","5,281,288"],["Common stock purchase options","","","123,936","","","","430,458"],["Other income (expense), net","","","(860,293",")","","","174,447"],["Acquisition and divestitures","","","1,493,069","","","","-"],["Special Committee Investigation and restatement","","","8,639,147","","","","-"],["SEC Investigation","","","9,923,892","","","","7,205,968"],["Delaware Litigation settlement contingency","","","29,067,229","","","","-"],["Delaware Litigation legal and professional fees","","","4,480,193","","","","1,781,052"],["Other nonrecurring expenses(1)","","","3,298,399","","","","2,676,486"],["Adjusted EBITDA","","$","15,252,865","","","$","23,966,553"]]
[[/GREPCENT_TABLE]]

(1)
For the year ended March 31, 2025, other nonrecurring expenses consisted of a $3.2 million expense related to the Triton Settlement (see Note 2, "Summary of Significant Accounting Policies"). For the year ended March 31, 2024, other nonrecurring expenses consisted of settlement costs and the associated contingent liabilities and nonrecurring compliance expenses.

Adjusted EBITDA is a non-GAAP financial measure that displays our net loss from continuing operations, adjusted to eliminate the effect of certain items as described below. We define Adjusted EBITDA as net income (loss) from continuing operations excluding (i) provision or benefit for income taxes, (ii) depreciation and amortization, (iii) interest expense, net, (iv) share-based compensation expenses relating to employee stock awards and common stock purchase options, (v) other income (expense), net, (vi) expenses related to acquisition and divestitures, (vii) professional service and legal fees related to an investigation conducted by a special committee of the Board of Directors (the “Special Committee Investigation”) and (vii) other nonrecurring expenses, such as the contingent liability associated with the Delaware Litigation and professional service and legal fees related to the Delaware Litigation and the SEC Investigation.

We believe that it is useful to exclude these expenses because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations.

Non-GAAP financial measures have limitations, should be considered as supplemental in nature and are not meant as a substitute for the related financial information prepared in accordance with GAAP. These limitations include the following:

•
employee stock awards and common stock purchase options expense has been, and will continue to be for the foreseeable future, a significant recurring expense for the Company and an important part of our compensation strategy;

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•
the assets being depreciated or amortized may have to be replaced in the future, and the non-GAAP financial measures do not reflect cash capital expenditure requirements for such replacements or for new capital expenditures or other capital commitments;

•
non-GAAP measures do not reflect changes in, or cash requirements for, our working capital needs; and

•
other companies, including companies in our industry, may calculate their non-GAAP financial measures differently or not at all, which reduces their usefulness as comparative measures.

Because of these limitations, you should consider the non-GAAP financial measures alongside other financial performance measures, including our net loss and our other financial results presented in accordance with GAAP.

Net Revenues

We generate revenue from marketplace fees, which includes auction revenue, compliance fee revenue, banner advertising campaign revenue and shipping revenue. Auction revenue consists of optional listing fees with variable pricing components based on customer options and final value fees based on a percentage of the final selling price of the listed item. Compliance fee revenue consists of fees charged to customers based on the final price of an item at the time of purchase. Banner advertising campaign revenue consists of fees charged for advertisement placement and impressions generated through the GunBroker website. Shipping revenue consists of fees for shipping of items sold on the GunBroker website.

Net revenues for the year ended March 31, 2025 decreased by $4.5 million, or 8.4%, from the prior year. This decrease was due to a decrease in gross merchandise sales generated from our Marketplace partially offset by a minor increase in our take rate. We believe the reduction in gross merchandise sales was a result of economic conditions and reduced discretionary spending among our customer base.

Cost of Revenues

Cost of revenues consists of costs associated with facilitating transactions on the GunBroker platform as well as advertising costs.

Cost of revenues decreased by approximately $1.2 million, or 15.6%, for the year ended March 31, 2025 compared to the year ended March 31, 2024. This decrease was the result of a reduction in advertising expenses as well as a decrease in credit card fees.

Gross Margin

Our gross margin, which measures our gross profit as a percentage of net revenues, increased to 86.9% during the year ended March 31, 2025 from 85.8% for the year ended March 31, 2024. This increase was primarily a result of our increased take rate.

Operating Expenses

Operating expenses consist of selling and marketing expenses, which include tradeshows and marketing expenses, corporate general and administrative expenses, which include legal and professional fees and as well as insurance and rent, employee salaries and related expenses, which include salaries, benefits and stock based compensation as well as depreciation and amortization expenses.

Operating expenses increased by approximately $49.9 million for the year ended March 31, 2025 compared to the year ended March 31, 2024. This increase was primarily due a $29.1 million contingency for the Delaware Litigation and a $14.1 million increase in legal and professional fees related to the restatement, the Special Committee Investigation, the SEC Investigation, and the Delaware Litigation as well as a $2.1 million increase in other legal and professional fees, $1.5 million in costs associated with acquisitions and divestitures and a $2.0 million increase in payments for director committee service.

Other Income and Expenses

For the year ended March 31, 2025, total other income was $0.8 million and was mainly comprised of interest earned on cash. Total other income of $0.1 million for the year ended March 31, 2024 was comprised of interest income on cash

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Income Taxes

For the year ended March 31, 2025, we recorded a provision for federal and state income taxes of approximately $6.3 million compared to a benefit for federal and state income taxes of $0.9 million for the year ended March 31, 2024. The change in income taxes for the year ended March 31, 2025 was the result of recording a full valuation allowance against our deferred tax assets as we concluded it is more likely than not that the net deferred tax assets will not be realized.

Fiscal Year 2024 Compared to Fiscal Year 2023

Results of Continuing Operations

The following table presents summarized financial information for the years ended March 31, 2024 and 2023, taken from our consolidated statements of operations:

[[GREPCENT_TABLE]]
[["","","For the Year Ended"],["","","March 31, 2024","","","March 31, 2023"],["Net revenues","","$","53,942,076","","","$","63,149,673"],["Cost of revenues","","","7,660,541","","","","9,116,939"],["Gross profit","","","46,281,535","","","","54,032,734"],["Operating expenses","","","52,724,540","","","","51,665,474"],["Income (loss) from operations","","","(6,443,005",")","","","2,367,260"],["Other income (expense)"],["Other income (expense)","","","144,537","","","","(91,674",")"],["Income (loss) from continuing operations before income taxes","","$","(6,298,468",")","","$","2,275,586"],["Benefit for income taxes","","","(948,292",")","","","(1,347,055",")"],["Net income (loss) from continuing operations","","$","(5,350,176",")","","$","3,622,641"]]
[[/GREPCENT_TABLE]]

Non-GAAP Financial Measures

Adjusted EBITDA

[[GREPCENT_TABLE]]
[["","","For the","","","For the"],["","","Year Ended","","","Year Ended"],["","","March 31, 2024","","","March 31, 2023"],["Reconciliation of GAAP net income (loss) from continuing operations to Adjusted EBITDA"],["Net income (loss) from continuing operations","","$","(5,350,176",")","","$","3,622,641"],["Provision for income taxes","","","(948,292",")","","","(1,347,055",")"],["Depreciation and amortization","","","13,034,306","","","","12,700,436"],["Interest expense, net","","","(318,984",")","","","77,806"],["Employee stock awards","","","5,281,288","","","","10,128,236"],["Common stock purchase options","","","430,458","","","","-"],["Warrants issued for services","","","-","","","","427,639"],["Other income","","","174,447","","","","13,868"],["Proxy contest fees","","","-","","","","4,255,135"],["SEC Investigation","","","7,205,968","","","","1,248,865"],["Delaware Litigation legal and professional fees","","","1,781,052","","","","-"],["Other nonrecurring expenses(1)","","","2,676,486","","","","-"],["Adjusted EBITDA","","$","23,966,553","","","$","31,127,571"]]
[[/GREPCENT_TABLE]]

(1)
For the year ended March 31, 2024, other nonrecurring expenses consisted of settlement costs and the associated contingent liabilities and nonrecurring compliance expenses.

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Net Revenues

Revenues for the year ended March 31, 2024 decreased by $9.2 million, or 14.6%, from the prior year as firearm purchases continued to normalize from the peaks realized during COVID.

Cost of Revenues

Cost of revenues decreased by $1.5 million, or 16.0%, for the year ended March 31, 2024 compared to the year ended March 31, 2023. This decrease was the result of lower gross merchandise sales.

Gross Margin

Our gross margin percentage remained relatively constant at 85% for the year ended March 31, 2024 and March 31, 2023.

Operating Expenses

Operating expenses consist of selling and marketing expenses, which include advertising, tradeshows, and marketing expenses, corporate general and administrative expenses, which include legal and professional fees and as well as insurance and rent, employee salaries and related expenses, which include salaries, benefits and stock based compensation as well as depreciation and amortization expenses.

Operating expenses increased by $1.1 million for the year ended March 31, 2024 compared to the prior year. This increase was primarily due to an increase in legal and professional fees partially offset by a decrease in salaries.

Other Income and Expense

Total other income of $0.1 million for the year ended March 31, 2024 was comprised of interest income on cash. Total other expense of $0.1 million for the year ended March 31, 2023 was primarily comprised of interest expense on the insurance note.

Income Taxes

For the year ended March 31, 2024, we recorded a benefit for federal and state income taxes of approximately $0.9 million compared to $1.3 million in the year ended March 31, 2023, as a result of an increase in deferred tax assets.

Loss from Discontinued Operations

Refer to Note 4, "Discontinued Operations" in the notes to the consolidated financial statements for information regarding the Ammunition Segment which is accounted for as discontinued operations.

Liquidity and Capital Resources

As of March 31, 2025, we had $30.2 million of cash and cash equivalents, a decrease of $25.4 million from $55.6 million of cash and cash equivalents as of March 31, 2024.

Working capital is summarized and compared as follows:

[[GREPCENT_TABLE]]
[["","","March 31, 2025","","","March 31, 2024"],["Current assets","","$","72,148,138","","","$","131,525,266"],["Current liabilities","","","62,092,917","","","","30,975,049"],["","","$","10,055,221","","","$","100,550,217"]]
[[/GREPCENT_TABLE]]

Liquidity

We expect existing working capital and cash flows from operations to be adequate to fund our operations over the next 12 months. Generally, we have financed operations to date through the proceeds of stock sales, bank financings, sales of equity and related-party notes. These sources have been adequate to fund our recurring cash expenditures including but not limited to our working capital requirements, capital expenditures to expand our operations, debt repayments, and acquisitions. In the longer-term, we intend to continue to use the aforementioned sources of funding for capital expenditures, debt repayments and any potential acquisitions.

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Leases

We currently lease two locations that are used for our offices. As of March 31, 2025, we had $1.8 million of fixed lease payment obligations with $0.7 million payable within the next 12 months. As of March 31, 2024, we had $2.6 million of fixed lease payment obligations, with $0.7 million payable within the next 12 months. Please refer to Note 8, "Leases" for additional information.

Promissory Notes Issued in Settlement

On May 30, 2025, we issued Note 1 and Note 2 pursuant to the Settlement Agreement. The aggregate principal amount of Note 1 and Note 2 is $51.0 million, and we are required to make aggregate annual prepayments of $2.95 million beginning on May 30, 2026. See "Settlement Litigation" under Recent Developments above for additional information about Note 1 and Note 2.

Revolving Loan

On December 29, 2023, we entered into a Loan and Security Agreement (the “Sunflower Agreement”) by and among the Company and the other borrowers party to the Sunflower Agreement, the lenders party thereto (collectively, the “Lenders”) and Sunflower Bank, N.A., as administrative agent and collateral agent (the “Agent”), pursuant to which the Lenders provided us a revolving loan in the principal amount of the lesser of (a) $20.0 million (the “Total Commitment Amount”) and (b) the borrowing base (a formula based on certain amounts owed to borrower for goods sold or services provided and eligible inventory) (the “Revolving Loan”). The proceeds of loans under the Sunflower Agreement may be used for working capital, general corporate purposes, permitted acquisitions, to pay fees and expenses incurred in connection with the Revolving Loan, to facilitate our stock repurchase program and to fund our general business requirements.

We are obligated to pay to the Agent, for the ratable benefit of Lenders, an origination fee, prepayment fee, unused facility fee, collateral monitoring fee and Lender expenses.

We may borrow, repay and re-borrow under the Revolving Loan until December 29, 2026, at which time the commitments will terminate and all outstanding loans, together with all accrued and unpaid interest, must be repaid. If the Revolving Loan is refinanced by another lender prior to December 29, 2026, there is an additional fee payable concurrently with such refinancing based on a percentage (ranging from 1.0% to 3.0%) of the Total Commitment Amount depending on the date of the refinancing.

As of March 31, 2025, we did not have an outstanding balance on the Revolving Loan.

On April 18, 2025, we entered into a Consent and Second Amendment to the Sunflower Agreement ("Sunflower Loan Amendment"). Pursuant to the Sunflower Loan Amendment, we and the Agent agreed to, among other things: (i) release the Agent’s security interest in all collateral securing our obligations under the Sunflower Agreement upon consummation of the sale of the Ammunition Manufacturing Business; (ii) reduce all amounts available under the Revolving Loan to zero dollars as of the effective date of the Sunflower Loan Amendment; (iii) enter into an Amended and Restated Revolving Line Promissory Note in the amount of $5.0 million, representing 100% of the Revolving Line Commitment (as defined in the Sunflower Agreement) available under the Sunflower Agreement, executed by the Company in favor of Agent as of the effective date of the Sunflower Loan Amendment; and (iv) certain other amendments to the Company's customary covenants and obligations under the Sunflower Agreement that only take effect in the event the Revolving Line Availability (as defined in the Sunflower Agreement) is greater than zero dollars.

Upon signing of the Sunflower Loan Amendment, the Revolving Line Availability was reduced to zero dollars and will remain at zero dollars unless we provide the Agent with a security interest in new collateral or otherwise further amends the Sunflower Agreement.

On May 13, 2025, the Company entered into a Third Amendment to the Sunflower Agreement (the “Third Sunflower Loan Amendment”. Pursuant to the Third Sunflower Loan Amendment, we and the Agent agreed to change the definitions in the Sunflower Agreement of: (i) “AMMO, Inc” to “Outdoor Holding Company,” (ii) “Ammo” to “OHC,” (iii) “AMMO TECHNOLOGIES, INC” to “OHC TECHNOLOGIES, INC,” and (iv) AMMO MUNITIONS, INC” to “OHC MUNITIONS, INC.”

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Construction Loan

On October 14, 2021, we entered into a Construction Loan Agreement (the “Hiawatha Loan Agreement”) with Hiawatha National Bank to finance a portion of the construction costs of the Ammunition segment’s approximately 185,000 square foot Manitowoc, WI manufacturing facility (the “Construction Loan”).

As of March 31, 2025, the outstanding balance of the Construction Loan was $10.8 million. We made $240,937 and $257,425 in principal payments on the Construction Loan for the years ended March 31, 2025 and March 31, 2024, respectively.

In connection with the sale of the Ammunition segment in April 2025, the Construction Loan was paid in full on April 18, 2025.

Changes in cash flows are summarized as follows:

Operating Activities

For the year ended March 31, 2025, net cash used in operating activities was attributable to our net loss offset by an increase in accrued liabilities associated with the contingency for the potential settlement of the Delaware Litigation, non-cash depreciation and amortization expense and non-cash expense for employee stock awards, an increase in accounts payable due to an increase in invoices unpaid at the end of the year, an increase in deferred income taxes, partially offset by an increase in the valuation allowance on deferred income taxes.

For the year ended March 31, 2024, net cash provided by operating activities was attributable to non-cash transactions for depreciation and amortization and stock compensation expense for stock awards.

For the year ended March 31, 2023, net cash provided by operating activities was attributable to a reduction in accounts receivable and non-cash transactions for depreciation and amortization as well as stock-based compensation expense for stock awards offset by a decrease in accounts payable.

Investing Activities

During the year ended March 31, 2025, net cash used in investing activities consisted of $3.4 million related primarily to capitalized development costs related to our Marketplace.

During the year ended March 31, 2024, net cash used in investing activities consisted of $2.6 million related primarily to capitalized development costs related to our Marketplace.

During the year ended March 31, 2023, net cash used in investing activities consisted of approximately $1.8 million related primarily to capitalized development costs related to our Marketplace.

Financing Activities

During the year ended March 31, 2025, net cash used in financing activities consisted of $3.0 million of preferred stock dividends paid, $5.9 million used to repurchase shares of Common Stock pursuant to our repurchase plan (which included shares repurchased related to the Triton Settlement described in the Contingencies section of Note 2), and $0.7 million used to repurchase Common Stock to cover taxes on share awards issued to employees.

During the year ended March 31, 2024, net cash used in financing activities consisted of $3.2 million of insurance premium note payments, $3.0 million of preferred stock dividends paid, and $2.2 million used to repurchase shares of Common Stock pursuant to our repurchase plan partially offset by $0.1 million received from the exercise of warrants.

During the year ended March 31, 2023, net cash used in financing activities consisted of $3.0 million of preferred stock dividends paid, $2.1 million of insurance premium note payments and $0.5 million used to repurchase shares of Common Stock pursuant to our repurchase plan partially offset by $0.1 million of proceeds from warrants exercised for Common Stock.

Off-Balance Sheet Arrangements

As of March 31, 2025 and 2024, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, net sales, expenses, results of operations, liquidity capital expenditures, or capital resources.

Critical Accounting Estimates

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Our critical accounting estimates are included in our significant accounting policies as described in Note 2 of the consolidated financial statements included in Item 8, Financial Statements and Supplemental Data, of this report. Those consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America. Critical accounting estimates are those that we believe are most important to the portrayal of our financial condition and results of operations. The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Our estimates are evaluated on an ongoing basis and are drawn from historical operations, current trends, future business plans and other factors that management believes are relevant at the time our consolidated financial statements are prepared. Actual results may differ from our estimates. Management believes that the following accounting estimates reflect the more significant judgments and estimates we use in preparing our consolidated financial statements.

Assets Held for Sales and Discontinued Operations

A business is classified as held for sale when management having the authority to approve the action commits to a plan to sell the business, the business is available for immediate sale in its present condition and an active program to locate a buyer has been initiated. Additionally, the sale must be probable to occur during the next 12 months at a price that is reasonable in relation to its current fair value and actions required to complete the plan indicate it is unlikely significant changes to the plan will be made or the plan will be withdrawn. A business classified as held for sale is recorded at the lower of (i) its carrying amount and (ii) estimated fair value less costs to sell. When the carrying amount of the business exceeds its estimated fair value less costs to sell, a loss is recognized and updated each reporting period as appropriate. Assets held for sale are not further depreciated or amortized once such a determination is reached.

The results of operations of businesses classified as held for sale are reported as discontinued operations if the disposal represents a strategic shift that will have a major effect on the entity’s operations and financial results. When a business is identified for discontinued operations reporting: (i) results for prior periods are retrospectively reclassified as discontinued operations; (ii) results of operations are reported in a single line, net of tax, in the consolidated statement of operations; and (iii) assets and liabilities are reported as held for sale in the consolidated balance sheets in the period in which the business is classified as held for sale.

The Board of Directors initiated a formal review of strategic alternatives for the Ammunition segment during the year ended March 31, 2025. This review of strategic alternatives resulted in the decision to sell the Ammunition segment. Accordingly, we concluded the assets of the Ammunition segment met the criteria for classification as held for sale. We determined the ultimate disposal will represent a strategic shift that will have a major effect on our operations and financial results. As such, the results of the Ammunition segment are presented as discontinued operations in the accompanying consolidated statements of operations for all periods presented and the assets and liabilities of the Ammunition segment have been reflected as assets and liabilities of discontinued operations in the accompanying consolidated balance sheets for all periods presented. The Company has ceased depreciating and amortizing its long-lived assets for the Ammunition segment which primarily includes intangible assets and property and equipment. On January 20, 2025, we entered into the Asset Purchase Agreement with the Buyer, pursuant to which the Buyer agreed to (i) acquire the Ammunition Manufacturing Business along with certain assets related to the Ammunition Manufacturing Business, and (ii) assume certain liabilities related to the Ammunition Manufacturing Business, for a gross purchase price of $75.0 million, subject to customary adjustments for estimated net working capital and real property costs and pro-rations The Transaction closed on April 18, 2025. The net proceeds totaled approximately $42.9 million. The assets acquired, and the liabilities assumed by the Buyer were those primarily related to the Ammunition Manufacturing Business, including the Ammunition Manufacturing Business’ dedicated manufacturing facility in Manitowoc, WI.

We calculated an estimated loss on classification to held for sale of approximately $45.8 million, reflecting the write-down of the carrying value of the Ammunition segment to fair value less costs to sell. The fair value was determined by using market participant assumptions as there was an expected sale price for the business based on negotiations with the Buyer. Costs to sell included estimated incremental, direct costs incurred to transact the sale of the Ammunition segment. Refer to Note 4 to our consolidated financial statements for additional information.

Allowance for Credit Losses

We estimate our allowance for credit losses based on the collectability and age of the accounts receivable balances and categorization of customers that have similar financial condition.

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Goodwill

We evaluate goodwill for impairment annually or more frequently when an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. In testing for goodwill impairment, we may elect to utilize a qualitative assessment to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If our qualitative assessment indicates that goodwill impairment is more likely than not, we perform a two-step impairment test. We test goodwill for impairment under the two-step impairment test by first comparing the book value of net assets to the fair value of the reporting unit. If the fair value is determined to be less than the book value or qualitative factors indicate that it is more likely than not that goodwill is impaired, a second step is performed to compute the amount of impairment as the difference between the estimated fair value of goodwill and the carrying value. We estimate the fair value of the reporting units using discounted cash flows. Forecasts of future cash flows are based on our best estimate of future net sales and operating expenses, based primarily on expected category expansion, pricing, market segment share, and general economic conditions. Due to the declines in the value of our stock price and market capitalization during the years ended March 31, 2025, 2024 and 2023, we assessed qualitative factors to determine if it is more likely than not that the fair value of the Marketplace segment is less than its carrying amount. Accordingly, the impairment of goodwill was not warranted for the years ended March 31, 2025 or 2024. As of March 31, 2025 and 2024, the Company had a goodwill carrying value of $90.9 million, all of which is assigned to the Marketplace segment.

Leases

We determine if an arrangement is a lease at inception of the contract. Operating lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at commencement date based on the present value of fixed lease payments over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet; instead, we recognize lease expense for these leases on a straight-line basis over the lease term. We do not account for lease components (e.g., fixed payments to use the underlying lease asset) separately from the non-lease components (e.g., fixed payments for common-area maintenance costs and other items that transfer a good or service). Some of our leases include variable lease payments, which primarily result from changes in consumer price and other market-based indices, which are generally updated annually, and maintenance and usage charges. These variable payments are excluded from the calculation of our lease assets and lease liabilities.

We utilize the interest rate implicit in the lease to determine the lease liability when the interest rate can be determined. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments.

Stock-Based Compensation

We account for stock-based compensation at fair value in accordance with Accounting Standards Codification 718 – Compensation – Stock Compensation (“ASC 718”), which requires the recognition of the cost of employee, director and non-employee services received in exchange for an award of equity over the period the employee, director or non-employee is required to perform the services in exchange for the award. Stock-based compensation is measured based on the grant-date fair value of the award. Stock-based compensation is recognized on a straight-line basis over the vesting periods and forfeitures are recognized in the periods they occur. There were 1,269,106, 1,936,951 and 1,777,294 shares of common stock issued to employees, members of the Board of Directors, and members of our advisory committee for services for the years ended March 31, 2025, 2024 and 2023, respectively.

Income Taxes

We file federal and state income tax returns in accordance with the applicable rules of each jurisdiction. We account for income taxes under the asset and liability method in accordance with Accounting Standards Codification 740 - Income Taxes (“ASC 740”). The provision for income taxes includes federal, state, and local income taxes currently payable, and deferred taxes. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable amounts in years in which those temporary differences are expected to be recovered or settled. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. In accordance with ASC 740, we recognize the effect of income tax positions only if those positions are more likely than not of being sustained. We measure recognized income tax positions at the largest amount that is greater than 50%

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likely of being realized. We reflect changes in recognition or measurement in the period in which the change in judgment occurs.