PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CLARUS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)

September 30, 2017 December 31, 2016
Assets
Current assets
Cash $ 1,672 $ 94,738
Accounts receivable, less allowance for doubtful accounts of $411 and $399, respectively 35,414 23,232
Inventories 66,982 45,410
Prepaid and other current assets 2,416 3,480
Income tax receivable - 85
Total current assets 106,484 166,945

Property and equipment, net 24,319 11,055
Other intangible assets, net 24,690 9,769
Indefinite lived intangible assets 41,794 22,541
Goodwill 18,156 -
Other long-term assets 350 147
Total assets $ 215,793 $ 210,457

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 23,021 $ 17,740
Income tax payable 513 969
Current portion of long-term debt - 21,898
Total current liabilities 23,534 40,607

Long-term debt, net 27,353 -
Deferred income taxes 9,169 8,966
Other long-term liabilities 222 76
Total liabilities 60,278 49,649

Stockholders' Equity
Preferred stock, $.0001 par value; 5,000 shares authorized; none issued - -
Common stock, $.0001 par value; 100,000 shares authorized; 32,917 and 32,888 issued and 30,041 and 30,016 outstanding, respectively 3 3
Additional paid in capital 484,833 483,925
Accumulated deficit (316,409 ) (309,717 )
Treasury stock, at cost (12,415 ) (12,398 )
Accumulated other comprehensive loss (497 ) (1,005 )
Total stockholders' equity 155,515 160,808
Total liabilities and stockholders' equity $ 215,793 $ 210,457


	September 30, 2023		December 31, 2022
Assets
Current assets
Cash	$	8,024	$	12,061
Accounts receivable, less allowance for
credit losses of $1,576 and $1,211		72,601		66,553
Inventories		140,460		147,072
Prepaid and other current assets		7,155		9,899
Income tax receivable		2,444		3,034
Total current assets		230,684		238,619

Property and equipment, net		41,131		43,010
Other intangible assets, net		44,305		55,255
Indefinite-lived intangible assets		80,936		82,901
Goodwill		61,895		62,993
Deferred income taxes		20,333		17,912
Other long-term assets		17,942		17,455
Total assets	$	497,226	$	518,145

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	28,864	$	27,052
Accrued liabilities		22,435		25,170
Income tax payable		-		421
Current portion of long-term debt		12,566		11,952
Total current liabilities		63,865		64,595

Long-term debt, net		110,077		127,082
Deferred income taxes		17,534		18,506
Other long-term liabilities		14,480		15,854
Total liabilities		205,956		226,037

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; 42,582 and 41,637 issued and 37,970 and 37,048 outstanding, respectively		4		4
Additional paid in capital		688,878		679,339
Accumulated deficit		(341,396)		(336,843)
Treasury stock, at cost		(32,929)		(32,707)
Accumulated other comprehensive loss		(23,287)		(17,685)
Total stockholders’ equity		291,270		292,108
Total liabilities and stockholders’ equity	$	497,226	$	518,145

See accompanying notes to condensed consolidated financial statements.

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CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

~~(Unaudited)~~

(In thousands, except per share amounts)

Three Months Ended
September 30, 2017 September 30, 2016

Sales
Domestic sales $ 21,141 $ 17,939
International sales 24,633 21,502
Total sales 45,774 39,441

Cost of goods sold 30,490 27,105
Gross profit 15,284 12,336

Operating expenses
Selling, general and administrative 14,431 11,483
Restructuring charge 33 282
Transaction costs 1,869 -
Total operating expenses 16,333 11,765
Operating (loss) income (1,049 ) 571

Other income (expense)
Interest expense, net (71 ) (719 )
Other, net 213 422
Total other income (expense), net 142 (297 )

(Loss) income before income tax (907 ) 274
Income tax expense 676 679
Net loss (1,583 ) (405 )

Other comprehensive income (loss), net of tax:
Unrealized loss on marketable securities - (68 )
Foreign currency translation adjustment 684 176
Unrealized (loss) income on hedging activities (419 ) 147
Other comprehensive income 265 255
Comprehensive loss $ (1,318 ) $ (150 )

Net loss per share:
Basic $ (0.05 ) $ (0.01 )
Diluted (0.05 ) (0.01 )

Weighted average shares outstanding:
Basic 30,017 30,063
Diluted 30,017 30,063


	Three Months Ended
	September 30, 2023		September 30, 2022

Sales
Domestic sales	$	44,152	$	55,540
International sales		55,923		60,175
Total sales		100,075		115,715

Cost of goods sold		64,527		76,291
Gross profit		35,548		39,424

Operating expenses
Selling, general and administrative		31,790		32,340
Restructuring charges		1,099		-
Transaction costs		842		858
Contingent consideration expense		-		104

Total operating expenses		33,731		33,302

Operating income		1,817		6,122

Other expense
Interest expense, net		(2,842)		(2,216)
Other, net		(443)		(1,238)

Total other expense, net		(3,285)		(3,454)

(Loss) income before income tax		(1,468)		2,668
Income tax benefit		(204)		(83)
Net (loss) income		(1,264)		2,751

Other comprehensive loss, net of tax:
Foreign currency translation adjustment		(3,539)		(11,386)
Unrealized gain on hedging activities		401		268
Other comprehensive loss		(3,138)		(11,118)
Comprehensive loss	$	(4,402)	$	(8,367)

Net (loss) income per share:
Basic	$	(0.03)	$	0.07
Diluted		(0.03)		0.07

Weighted average shares outstanding:
Basic		37,470		37,369
Diluted		37,470		39,580

See accompanying notes to condensed consolidated financial statements.

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CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except per share amounts)

Nine Months Ended
September 30, 2017 September 30, 2016

Sales
Domestic sales $ 59,474 $ 54,190
International sales 58,536 52,600
Total sales 118,010 106,790

Cost of goods sold 81,388 75,155
Gross profit 36,622 31,635

Operating expenses
Selling, general and administrative 39,826 37,311
Restructuring charge 116 1,275
Transaction costs 1,869 269
Arbitration award - (1,967 )
Total operating expenses 41,811 36,888
Operating loss (5,189 ) (5,253 )

Other (expense) income
Interest expense, net (948 ) (2,142 )
Other, net 435 826
Total other expense, net (513 ) (1,316 )

Loss before income tax (5,702 ) (6,569 )
Income tax expense 990 1,020
Net loss (6,692 ) (7,589 )

Other comprehensive income (loss), net of tax:
Unrealized income on marketable securities - 107
Foreign currency translation adjustment 2,305 522
Unrealized (loss) income on hedging activities (1,797 ) 70
Other comprehensive income 508 699
Comprehensive loss $ (6,184 ) $ (6,890 )

Net loss per share:
Basic $ (0.22 ) $ (0.25 )
Diluted (0.22 ) (0.25 )

Weighted average shares outstanding:
Basic 30,015 30,525
Diluted 30,015 30,525


	Nine Months Ended
	September 30, 2023		September 30, 2022

Sales
Domestic sales	$	135,724	$	181,920
International sales		145,463		162,004
Total sales		281,187		343,924

Cost of goods sold		178,864		216,566
Gross profit		102,323		127,358

Operating expenses
Selling, general and administrative		94,809		101,959
Restructuring charges		1,835		-
Transaction costs		975		2,880
Contingent consideration (benefit) expense		(1,565)		493

Total operating expenses		96,054		105,332

Operating income		6,269		22,026

Other expense
Interest expense, net		(8,445)		(5,060)
Other, net		(134)		(2,648)

Total other expense, net		(8,579)		(7,708)

(Loss) income before income tax		(2,310)		14,318
Income tax (benefit) expense		(553)		2,494
Net (loss) income		(1,757)		11,824

Other comprehensive loss, net of tax:
Foreign currency translation adjustment		(5,949)		(22,941)
Unrealized gain on hedging activities		347		976
Other comprehensive loss		(5,602)		(21,965)
Comprehensive loss	$	(7,359)	$	(10,141)

Net (loss) income per share:
Basic	$	(0.05)	$	0.32
Diluted		(0.05)		0.30

Weighted average shares outstanding:
Basic		37,267		37,256
Diluted		37,267		39,694

See accompanying notes to condensed consolidated financial statements.

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CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

Nine Months Ended
September 30, 2017 September 30, 2016
Cash Flows From Operating Activities:
Net loss $ (6,692 ) $ (7,589 )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation of property and equipment 1,830 1,705
Amortization of intangible assets 1,183 808
Accretion of notes payable 833 1,358
Amortization of debt issuance costs 11 -
Gain on sale of marketable securities - (241 )
Loss (gain) on disposition of assets 109 (5 )
(Gain) loss from removal of accumulated translation adjustment (149 ) 126
Stock-based compensation 729 193
Deferred income taxes 446 (230 )
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable (8,524 ) (294 )
Inventories (8,274 ) 6,516
Prepaid and other assets (808 ) 3,307
Accounts payable and accrued liabilities 3,489 (1,121 )
Income taxes (387 ) 1,127
Other (374 ) (255 )
Net cash (used in) provided by operating activities (16,578 ) 5,405

Cash Flows From Investing Activities:
Proceeds from the sales of marketable securities - 10,235
Payments related to the sale of POC - (921 )
Purchase of business, net of cash received (79,238 ) -
Proceeds from disposition of property and equipment 53 23
Purchase of property and equipment (1,919 ) (2,036 )
Net cash (used in) provided by investing activities (81,104 ) 7,301

Cash Flows From Financing Activities:
Net proceeds from revolving credit facilities 27,353 -
Repayments of long-term debt (22,690 ) -
Payment of debt issuance costs (334 ) -
Purchase of treasury stock (17 ) (5,222 )
Proceeds from exercise of stock options 179 -
Net cash provided by (used in) financing activities 4,491 (5,222 )

Effect of foreign exchange rates on cash 125 70
Change in cash (93,066 ) 7,554
Cash, beginning of period 94,738 88,401
Cash, end of period $ 1,672 $ 95,955

Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes $ 946 $ 124
Cash paid for interest $ 284 $ 934
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Property and equipment purchased with accounts payable $ 27 $ 99


	Nine Months Ended
	September 30, 2023		September 30, 2022
Cash Flows From Operating Activities:
Net (loss) income	$	(1,757)	$	11,824
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation of property and equipment		5,675		5,800
Amortization of other intangible assets		9,560		11,740
Amortization of debt issuance costs		696		593
Gain on disposition of property and equipment		(43)		(41)
Noncash lease expense		2,290		2,412
Contingent consideration (benefit) expense		(1,565)		468
Stock-based compensation		4,037		9,142
Deferred income taxes		(2,509)		(410)
Changes in operating assets and liabilities:
Accounts receivable		(6,247)		(24,941)
Inventories		5,408		(30,243)
Prepaid and other assets		3,239		(2,126)
Accounts payable		2,165		4,662
Accrued liabilities		(3,589)		(2,756)
Income taxes		68		(3,870)
Net cash provided by (used in) operating activities		17,428		(17,746)

Cash Flows From Investing Activities:
Proceeds from disposition of property and equipment		196		438
Purchase of intangible assets		(250)		-
Purchases of property and equipment		(4,495)		(6,216)
Net cash used in investing activities		(4,549)		(5,778)

Cash Flows From Financing Activities:
Proceeds from revolving credit facilities		29,195		98,991
Repayments on revolving credit facilities		(37,836)		(72,804)
Repayments on term loans		(7,967)		(125,191)
Proceeds from issuance of term loans		-		125,000
Payment of debt issuance costs		-		(1,385)
Purchase of treasury stock		(222)		(8,267)
Proceeds from exercise of options		3,435		2,721
Cash dividends paid		(2,796)		(2,795)
Payment of contingent consideration		-		(943)
Net cash (used in) provided by financing activities		(16,191)		15,327

Effect of foreign exchange rates on cash		(725)		(903)

Change in cash		(4,037)		(9,100)
Cash, beginning of year		12,061		19,465
Cash, end of period	$	8,024	$	10,365

Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes	$	1,831	$	7,155
Cash paid for interest	$	7,736	$	4,107
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Shares issued for business acquisitions	$	2,067	$	2,261
Property and equipment purchased with accounts payable	$	232	$	127
Intangible assets purchased with accounts payable	$	250	$	-
Lease liabilities arising from obtaining right of use assets	$	4,211	$	1,324

See accompanying notes to condensed consolidated financial statements.

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CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(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 income		-		-		-		5,309		-		-		-		5,309
Other comprehensive income		-		-		-		-		-		-		6,163		6,163
Cash dividends ($0.025 per share)		-		-		-		(930)		-		-		-		(930)
Purchase of treasury stock		-		-		-		-		(51)		(1,097)		-		(1,097)
Stock-based compensation expense		-		-		3,367		-		-		-		-		3,367
Proceeds from exercise of options		167		-		126		-		-		-		-		126
Balance, March 31, 2022		41,272	$	4	$	666,489	$	(258,963)		(4,062)	$	(25,537)	$	1,113	$	383,106
Net income		-		-		-		3,764		-		-		-		3,764
Other comprehensive loss		-		-		-		-		-		-		(17,010)		(17,010)
Cash dividends ($0.025 per share)		-		-		-		(931)		-		-		-		(931)
Stock-based compensation expense		-		-		3,555		-		-		-		-		3,555
Proceeds from exercise of options		56		-		542		-		-		-		-		542
Balance, June 30, 2022		41,328	$	4	$	670,586	$	(256,130)		(4,062)	$	(25,537)	$	(15,897)	$	373,026
Net income		-		-		-		2,751		-		-		-		2,751
Other comprehensive loss		-		-		-		-		-		-		(11,118)		(11,118)
Cash dividends ($0.025 per share)		-		-		-		(934)		-		-		-		(934)
Purchase of treasury stock		-		-		-		-		(527)		(7,170)		-		(7,170)
Stock-based compensation expense		-		-		2,220		-		-		-		-		2,220
Proceeds from exercise of options		189		-		2,053		-		-		-		-		2,053
Shares issued in business acquisition		108		-		2,261		-		-		-		-		2,261
Balance, September 30, 2022		41,625	$	4	$	677,120	$	(254,313)		(4,589)	$	(32,707)	$	(27,015)	$	363,089

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													Accumulated
					Additional								Other		Total
	Common Stock				Paid-In		Accumulated		Treasury Stock				Comprehensive		Stockholders’
	Shares		Amount		Capital		Deficit		Shares		Amount		Loss		Equity

Balance, December 31, 2022		41,637	$	4	$	679,339	$	(336,843)		(4,589)	$	(32,707)	$	(17,685)	$	292,108
Net income		-		-		-		1,598		-		-		-		1,598
Other comprehensive loss		-		-		-		-		-		-		(1,100)		(1,100)
Cash dividends ($0.025 per share)		-		-		-		(930)		-		-		-		(930)
Purchase of treasury stock		-		-		-		-		(12)		(118)		-		(118)
Stock-based compensation expense		-		-		1,334		-		-		-		-		1,334
Proceeds from exercise of options		154		-		-		-		-		-		-		-
Balance, March 31, 2023		41,791	$	4	$	680,673	$	(336,175)		(4,601)	$	(32,825)	$	(18,785)	$	292,892
Net loss		-		-		-		(2,091)		-		-		-		(2,091)
Other comprehensive loss		-		-		-		-		-		-		(1,364)		(1,364)
Cash dividends ($0.025 per share)		-		-		-		(930)		-		-		-		(930)
Purchase of treasury stock		-		-		-		-		(11)		(104)		-		(104)
Stock-based compensation expense		-		-		1,535		-		-		-		-		1,535
Proceeds from exercise of options		42		-		35		-		-		-		-		35
Balance, June 30, 2023		41,833	$	4	$	682,243	$	(339,196)		(4,612)	$	(32,929)	$	(20,149)	$	289,973
Net loss		-		-		-		(1,264)		-		-		-		(1,264)
Other comprehensive loss		-		-		-		-		-		-		(3,138)		(3,138)
Cash dividends ($0.025 per share)		-		-		-		(936)		-		-		-		(936)
Stock-based compensation expense		-		-		1,168		-		-		-		-		1,168
Proceeds from exercise of options		500		-		3,400		-		-		-		-		3,400
Shares issued in business acquisition		249		-		2,067		-		-		-		-		2,067
Balance, September 30, 2023		42,582	$	4	$	688,878	$	(341,396)		(4,612)	$	(32,929)	$	(23,287)	$	291,270

See accompanying notes to condensed consolidated financial statements.

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CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in thousands, except per share amounts)

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

The accompanying unaudited condensed consolidated financial statements of Clarus Corporation and subsidiaries (which may be referred to as the “Company,” “Clarus,” “we,” “us” or “our”) as of September 30, 2023 and December 31, 2022 and for the three and nine months ended September 30, ~~2017~~2023 and ~~2016,~~2022, have been prepared in accordance with ~~U.S.~~accounting principles generally accepted ~~accounting principles~~in the United States of America (“~~U.S.~~ GAAP”), instructions to the Quarterly Report on Form 10-Q, and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by ~~U.S.~~ GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments, except otherwise disclosed) necessary for a fair presentation of the unaudited condensed consolidated financial statements have been included. The results offor the three and nine months ended September 30, ~~2017~~2023 are not necessarily indicative of the results to be obtained for the year ending December 31, ~~2017.~~2023. These interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016,~~2022, filed with the Securities and Exchange Commission (the ~~“Commission”).~~

~~Clarus, incorporated in Delaware in 1991, acquired Black Diamond Equipment, Ltd. (which may be referred to as “Black Diamond Equipment” or “BDEL”~~“SEC”) and Gregory Mountain Products, LLC (which may be referred to as “Gregory Mountain Products”, “Gregory” or “GMP”) in May 2010 and changed its name to Black Diamond, Inc., in January 2011. In July 2012, we acquired POC Sweden AB and its subsidiaries (collectively, “POC”) and in October 2012, we acquired PIEPS Holding GmbH and its subsidiaries (collectively, “PIEPS”).

On July 23, 2014, the Company completed the sale of certain assets to Samsonite LLC comprising Gregory Mountain Product’s business. On March 16, 2015, the Company announced that it was exploring a full range of strategic alternatives, including a sale of the entire Company and the potential sales of the Company’s Black Diamond Equipment (including PIEPS) and POC brands in two separate transactions.

On October 7, 2015, the Company sold its equity interests in POC, resulting in the conclusion of the Company’s review of strategic alternatives. On November 9, 2015, the Company announced that it was seeking to redeploy its significant cash balances to invest in high quality, durable, cash flow-producing assets in order to diversify our business and potentially monetize our substantial net operating losses as part of our asset redeployment and diversification strategy.

~~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 August 21, 2017, the Company acquired Sierra Bullets, L.L.C. (“Sierra” or “Sierra Bullets”).~~

February 27, 2023.

Nature of Business

Headquartered in Salt Lake City, ~~Clarus Corporation is~~Utah, we are a ~~holding company which seeks opportunities to acquire and grow businesses that can generate attractive shareholder returns. Presently, through its Outdoor Group, Clarus’ primary business is as a~~global leading designer, developer, manufacturer and distributor of best-in-class outdoor equipment and lifestyle products focused on the ~~climb, ski, mountain,~~outdoor and ~~technical categories.~~consumer enthusiast markets. Our mission is to identify, acquire and grow outdoor “super fan” brands through our unique “innovate and accelerate” strategy. We define a “super fan” brand as a brand that creates the world’s pre-eminent, performance-defining product that the best-in-class user cannot live without. 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®, Sierra®, Barnes®, Rhino-Rack® and ~~PIEPS®~~MAXTRAX® brand names through outdoor specialty and online retailers, our own websites, distributors and original equipment ~~manufacturers throughout the U.S. and internationally.~~

Through our Black Diamond® and PIEPS® brands, we offer a broad range of products including: high performance apparel (such as jackets, shells, pants and bibs); rock-climbing equipment (such as carabiners, protection devices, harnesses, belay devices, helmets, and ice-climbing gear); technical backpacks and high-end day packs; tents; 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. Sierra manufactures a wide range of high performance bullets for both rifles and pistols. Sierra bullets are used for precision target shooting, hunting and military and law enforcement purposes.

manufacturers.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that ~~affect~~effect the reported amounts of assets and ~~liabilities and disclosure of contingent~~ 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 ~~income taxes~~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. ~~Certain costs are estimated for the full year and allocated to interim periods based on estimates of time expired, benefit received, or activity associated with the interim period.~~ 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.

NOTE 2. INVENTORIES

Inventories, as of September 30, 2023 and December 31, 2022, were as follows:


	September 30, 2023		December 31, 2022
Finished goods	$	102,265	$	107,453
Work-in-process		11,049		8,719
Raw materials and supplies		27,146		30,900
	$	140,460	$	147,072

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CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

~~Significant Accounting Policies~~

~~There have been no significant changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.~~

~~During the nine months ended September 30, 2017, the Company adopted Accounting Standards Update (“ASU”) 2015-11,~~~~Simplifying the Measurement of Inventory~~, which changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value for entities that do not measure inventory using the last-in, first-out or a retail inventory method. The ASU eliminates the requirement to consider replacement cost or net realizable value less an approximately normal profit margin when measuring inventory. The Company adopted this ASU effective on January 1, 2017, on a prospective basis which did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

~~The Company also adopted ASU 2016-09,~~~~Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~~~, effective January 1, 2017~~. ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the accounting for income tax consequences, forfeitures, and classification on the statement of cash flows. Prior to adopting this ASU, all excess tax benefits resulting from exercise or settlement of share-based payment transactions were recognized in Additional paid-in capital (“APIC”) and accumulated in an APIC pool. Any tax deficiencies were either offset against the APIC pool, or were recognized in the income statement if no APIC pool was available. Under ASU 2016-09, all excess tax benefits and tax deficiencies are recognized as an income tax benefit or expense in the income statement prospectively. A cumulative-effect adjustment to retained earnings was recorded for tax benefits that were not previously recognized because the related tax deduction had not reduced taxes payable; however, the cumulative-effect adjustment was fully offset by an increase to the valuation allowance. The tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur. Excess tax benefits will be recognized regardless of whether the benefit reduces taxes payable in the current period. In addition, previous guidance required entities to estimate forfeitures when computing share based compensation. Pursuant to ASU 2016-09, the Company elected to recognize forfeitures as they occur, which did not materially impact our financial statements. Prior guidance also required that excess tax benefits be presented as a cash inflow from financing activities and a cash outflow from operating activities. This ASU simplifies the presentation of excess tax benefits on the statements of cash flow requiring that excess tax benefits be classified along with other income tax cash flows as an operating activity which did not impact our condensed consolidated statements of cash flows.

~~Accounting Pronouncements Issued Not Yet Adopted~~

~~In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU 2014-09,~~~~Revenue from Contracts with Customers~~ that replaces the existing accounting standards for revenue recognition with a single comprehensive five-step model. The core principle is to recognize revenue upon the transfer of goods or services to customers at an amount that reflects the consideration expected to be received. The FASB also issued ASU 2015-14,~~Deferral of Effective Date~~that deferred the effective date for the new guidance until the annual reporting period beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted, but not before the original effective date (periods beginning after December 15, 2016). The standard permits the use of either the retrospective (restating all years presented in the Company’s financial statements) or cumulative effect (recording the impact of adoption as an adjustment to retained earnings at the beginning of the year of adoption) transition method. Since its issuance, the FASB has also amended several aspects of the new guidance, including; ASU 2016-08~~Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)which clarifies the Topic 606 guidance on principal versus agent considerations, ASU 2016-10~~~~Revenue from Contracts with Customers (Topic 606) – Identifying Performance Obligations and Licensing~~~~that clarifies identification of a performance obligation and address revenue recognition associated with the licensing of intellectual property, ASU 2016-12~~~~Revenue from Contracts with Customers (Topic 606), Narrow Scope Improvements and Practical Expedients~~ ~~clarifying assessment of collectability criterion, non-cash consideration and other technical corrections and ASU 2016-20~~~~Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers~~is the result of the FASB Board decision to issue a separate Update for technical corrections and improvements. The Company intends to adopt this guidance effective January 1, 2018 using the cumulative effect method. The Company has reviewed its current customer agreements and believes that all current open agreements as of September 30, 2017 will be settled prior to adoption of this guidance on January 1, 2018. The Company does not anticipate significant changes to our current revenue recognition policy resulting from adoption of the new guidance; however, we anticipate significant changes related to footnote disclosures to the consolidated financial statements as a result of the adoption of the new guidance.

~~CLARUS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED~~

~~(Unaudited)~~

~~(in thousands, except per share amounts)~~

~~In February 2016, the FASB issued ASU 2016-02,~~~~Leases~~, which revises the accounting related to lessor and lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset (“ROU”) for all leases with terms greater than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The provisions of ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, and should be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements with certain practical expedients available. Early adoption is permitted. Since the effective date will not be until January 1, 2019, there is no immediate impact on the financial statements. Leases previously defined as capital leases will continue to be defined as a capital lease with no material changes to the accounting methodology; however, the Company does not have capital leases. The Company is performing an assessment of its leases and has begun preparations for implementation and restrospective application to the earliest reporting period. Under the new guidance, leases previously defined as operating leases will be defined as financing leases and capitalized if the term is greater than one year. As a result, financing leases will be recorded as an asset and a corresponding liability at the present value of the total lease payments. The asset will be decremented over the life of the lease on a pro-rata basis resulting in lease expense while the liability will be decremented using the interest method (ie. principal and interest). As such, the Company expects the new guidance will materially impact the asset and liability balances of the Company’s consolidated financial statements and related disclosures at the time of adoption. The majority of our current operating leases will expire prior to the adoption date. The Company anticipates renegotiating these operating leases; however, the terms which may exist at the adoption date are currently unknown. Consequently, the Company is unable to estimate the impact that these leases will have on the financial statements on the date of adoption. For the remaining leases with terms that go beyond the adoption date, the amounts we expect to recognize as additional liabilities and corresponding ROU assets based upon the present value of the remaining rental payments, are considered immaterial.

~~In August 2016, the FASB issued ASU 2016-15,~~~~Classification of Certain Cash Receipts and Cash Payments~~, which clarifies the treatment of several cash flow categories. In addition, ASU 2016-15 clarifies that when cash receipts and cash payments have aspects of more than one class of cash flows and cannot be separated, classification will depend on the predominant source or use. The ASU is effective for annual and interim reporting periods beginning after December 15, 2017 with early adoption permitted. The Company does not believe the adoption of this guidance will have a material impact on the Company’s consolidated statements and related disclosures.

~~In November 2016, the FASB issued ASU 2016-18,~~~~Statement of Cash Flows (Topic 230) Restricted Cash~~, which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This ASU is effective for fiscal years beginning January 1, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments in this Update should be applied using a retrospective transition method to each period presented. The Company does not believe the adoption of this guidance will have a material impact on the Company’s consolidated statements and related disclosures.

~~In January 2017, the FASB issued ASU 2017-04,~~~~Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~. The standard simplifies the accounting for goodwill impairment by requiring a goodwill impairment to be measured using a single step impairment model, whereby the impairment equals the difference between the carrying amount and the fair value of the specified reporting units in their entirety. This eliminates the second step of the current impairment model that requires companies to first estimate the fair value of all assets in a reporting unit and measure impairments based on those fair values and a residual measurement approach. It also specifies that any loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. We will adopt this standard no later than the effective date of January 1, 2020 on a prospective basis. The impact of the new standard will be dependent on the specific facts and circumstances of future individual impairments, if any.

~~In May 2017, the FASB issued ASU 2017-09,~~~~Compensation – Stock Compensation (Topic 718) Scope of Modification Accounting~~, which clarifies that an entity should account for the effects of a modification unless the fair value, vesting terms and classification as liability or equity of the modified and original awards do not change on the modification date. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments in this update should be applied using a prospective transition method. The Company does not believe the adoption of this guidance will have a material impact on the Company’s consolidated statements and related disclosures.

~~CLARUS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED~~

~~(Unaudited)~~

~~(in thousands, except per share amounts)~~

~~In August 2017, the FASB issued ASU 2017-12,~~~~Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities~~. This standard enables entities to better portray the economics of their risk management activities in the financial statements and enhances the transparency and understandability of hedge results through improved disclosures. This ASU is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early application is permitted. We intend to adopt the new guidance in the first quarter of 2019. The primary impact of adoption is the required disclosure changes. We believe that other comprehensive income could be materially impacted; however, since the majority of our current contracts will expire prior to the effective date, we cannot fully assess the financial impact of this pronouncement at this time.

~~NOTE 2. ACQUISITION~~

On August 21, 2017, the Company, through Everest/Sapphire Acquisition, LLC (“Everest/Sapphire”), a Delaware limited liability company and wholly owned subsidiary of Clarus, acquired 100% of the outstanding membership interests of Sierra Bullets, L.L.C., a manufacturer of a wide range of bullets primarily for both rifles and pistols, pursuant to the terms of the purchase and sale agreement dated August 21, 2017 (the “Purchase Agreement”), by and among Everest/Sapphire, Sierra Bullets, BHH Management, Inc., a California corporation (“BHH”), Lumber Management, Inc., a Delaware corporation (“LMI” and, together with BHH, each a “Seller” and, collectively, the “Sellers”), and BHH, in its capacity as the representative of Sellers (the “Sellers’ Representative”). Under the terms of the Purchase Agreement, Everest/Sapphire acquired Sierra for an aggregate purchase price of $79,000, plus or minus a preliminary working capital adjustment, in accordance with and subject to the terms and conditions set forth in the Purchase Agreement.

~~The Company believes the acquisition of Sierra is expected to provide the Company with the following benefits:~~

~~greater combined global revenue base;~~

~~increased diversification and seasonal balance;~~

~~increased gross margins, profitability and free cash flows;~~

~~advance the development, marketing and distribution of products; and~~

~~access to increased liquidity to further acquire and grow businesses.~~

The Company’s fair value estimates for the purchase price allocation are preliminary and may change during the allowable allocation period, which is up to one year from the date of the acquisition of Sierra, as we finalize the working capital adjustment and continue to obtain information that existed as of the date of acquisition so that we may finalize the allocation of the purchase price for the assets acquired and liabilities assumed and determine the associated fair values. We are currently waiting for a final valuation report as well as other information needed to finalize our purchase price allocation. The following table is a reconciliation to the fair value of the purchase consideration and how the purchase consideration is preliminarily allocated to assets acquired and liabilities assumed which have been estimated at their preliminary fair values. The excess of purchase consideration over the assets acquired and liabilities assumed is recorded as goodwill.

~~CLARUS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED~~

~~(Unaudited)~~

~~(in thousands, except per share amounts)~~

Estimated Fair Value

Total Purchase Consideration $ 79,239

Assets Acquired and Liabilities Assumed
Assets
Cash $ 1
Accounts receivable 2,686
Inventories 11,674
Prepaid and other current assets 128
Property and equipment 13,206
Amortizable definite lived intangible assets 15,800
Identifiable indefinite lived intangible assets 18,900
Goodwill 18,156
Other long-term assets 15
Total Assets 80,566

Liabilities
Accounts payable and accrued liabilities 1,327
Total Liabilities 1,327

Net Book Value Acquired $ 79,239

~~The gross amount of accounts receivable is $2,732 of which $46 is deemed to be not collectible.~~

In connection with the acquisition, the Company acquired exclusive rights to Sierra’s trade names and trademarks, customer relationships, and product technologies. The preliminary amounts assigned to each class of intangible asset and the related preliminary weighted average amortization periods are as follows:

Weighted Average
Gross Useful Life

Intangibles subject to amortization
Customer relationships $ 12,200 15.0 years
Product technologies 2,500 10.0 years
Trade name / trademark 1,100 10.0 years
Intangibles not subject to amortization
Trade names and trademarks 18,900 N/A
$ 34,700 13.9 years

The fair value of Sierra’s assembled workforce and buyer-specific synergies has been included in goodwill. According to Revenue Ruling 99-6, the acquisition of a limited liability company is treated as a purchase of assets for tax purposes. As such, the basis in the assets of Sierra is equal for both book and tax, which results in no initial recognition of deferred tax assets or liabilities. Furthermore, the full amount of goodwill recorded of $18,156 is expected to be deductible for tax purposes. No pre-existing relationship existed between Clarus and the Sellers prior to the acquisition.

~~CLARUS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED~~

~~(Unaudited)~~

~~(in thousands, except per share amounts)~~

~~Pro Forma Results~~

The following unaudited pro forma results of operations for the three and nine months ended September 30, 2017 and 2016 give pro forma effect as if the acquisition and borrowings used to finance the acquisition had occurred on January 1, 2016, after giving effect to certain adjustments including the amortization of intangible assets, depreciation of fixed assets, the Sellers’ management fees, interest expense and taxes and assumes the purchase price was allocated to the assets purchased and liabilities assumed based on their fair market values at the date of purchase.

Three Months Ended Nine Months Ended
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016

Sales $ 48,496 $ 47,477 $ 138,510 $ 133,840
Net income (loss) $ 32 $ 1,217 $ (1,379 ) $ (1,317 )

The unaudited pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have occurred had the transaction been consummated as of January 1, 2016. Furthermore, such unaudited pro forma information is not necessarily indicative of future operating results of the combined companies, and should not be construed as representative of the operating results of the combined companies for any future dates or periods.

Material nonrecurring adjustments excluded from the pro forma financial information above consists of $1,869 transaction costs and the $2,522 step up of Sierra inventory to its preliminary fair value, which is expected to be recorded as an unfavorable adjustment to cost of goods sold during the six months following the acquisition date.

~~NOTE 3. DISCONTINUED OPERATIONS~~

~~As discussed above in Note 1, on October 7, 2015, the Company sold POC to Dainese. The Company received~~$63,639 in cash for the POC Disposition and paid $2,946 in transaction fees for net proceeds of $60,693. $739 of cash was sold as part of the transaction. Also, as of December 31, 2015, there was an unsettled working capital adjustment of $921 owed to Dainese which was paid during the three months ended March 31, 2016. The Company recognized a pre-tax gain on such sale of $8,436.The Company performed certain transition services related to the POC Disposition and received $0 and $324, during the three and nine months ended September 30, 2016, respectively, which was recorded as a reduction of~~selling, general and administrative expenses in our condensed consolidated financial statementsfor such periods~~.

~~NOTE 4. INVENTORIES~~

~~Inventories, as of September 30, 2017 and December 31, 2016, were as follows:~~

September 30, 2017 December 31, 2016

Finished goods $ 53,711 $ 36,968
Work-in-process 5,748 1,677
Raw materials and supplies 7,523 6,765
$ 66,982 $ 45,410

~~CLARUS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED~~

~~(Unaudited)~~

~~(in thousands, except per share amounts)~~

NOTE 5.3. PROPERTY AND EQUIPMENT

Property and equipment, net, as of September 30, ~~2017~~2023 and December 31, ~~2016,~~2022, were as follows:

	September 30, 2017			December 31, 2016


							September 30, 2023		December 31, 2022

Land	$	3,160		$	2,850		$	4,160	$	4,160
Building and improvements		6,827			4,169			18,181		17,357
Furniture and fixtures		3,688			3,074			8,371		7,384
Computer hardware and software		4,758			4,519			8,902		8,498
Machinery and equipment		19,283			11,144			40,410		37,054
Construction in progress		350			522			2,640		5,028
		38,066			26,278
								82,664		79,481
Less accumulated depreciation		(13,747	)		(15,223	)		(41,533)		(36,471)
	$	24,319		$	11,055
							$	41,131	$	43,010

~~NOTE 6. OTHER INTANGIBLE ASSETS~~

~~Goodwill~~

~~There~~Depreciation expense for the three months ended September 30, 2023 and 2022 was ~~an increase in goodwill during~~$1,943 and $2,091, respectively, and for the nine months ended September 30, ~~2017, from $0 to $18,156, due to~~2023 and 2022 was $5,675 and $5,800, respectively.

NOTE 4. GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table summarizes the ~~Company’s acquisition of Sierra on August 21, 2017.~~ balances in goodwill by segment:


	Outdoor		Precision Sport		Adventure		Total

Goodwill	$	29,507	$	26,715	$	88,349	$	144,571
Accumulated goodwill impairment losses		(29,507)		—		(52,071)		(81,578)

Balance at December 31, 2022		—		26,715		36,278		62,993

Impact of foreign currency exchange rates		—		—		(1,098)		(1,098)

Balance at September 30, 2023	$	—	$	26,715	$	35,180	$	61,895

Indefinite-Lived Intangible Assets

The following table summarizes the changes in ~~goodwill by segment:~~

Black Diamond Sierra Total

Balance at December 31, 2016 $ - $ - $ -

Increase due to acquisition - 18,156 18,156

Balance at September 30, 2017 $ - $ 18,156 $ 18,156

~~Indefinite Lived Intangible Assets~~

The Company owns certain tradenames and trademarks which provide Black Diamond Equipment, PIEPS and Sierra with the exclusive and perpetual rights to manufacture and sell their respective products. There was an increase in tradenames and trademarks during the nine months ended September 30, 2017, due to the Company’s acquisition of Sierra and the impact of foreign currency exchange rates. The following table summarizes the changes in indefinite livedindefinite-lived intangible assets:

Balance at December 31, 2016 $ 22,541

Increase due to acquisition 18,900
Impact of foreign currency exchange rates 353

Balance at September 30, 2017 $ 41,794


Balance at December 31, 2022	$	82,901

Impact of foreign currency exchange rates		(1,965)

Balance at September 30, 2023	$	80,936

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CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

Trademarks classified as indefinite-lived intangible assets by brand as of September 30, 2023 and December 31, 2022, were as follows:


	September 30, 2023		December 31, 2022
Black Diamond	$	19,600	$	19,600
PIEPS		2,951		2,986
Sierra		18,900		18,900
Barnes		5,600		5,600
Rhino-Rack		24,356		25,744
MAXTRAX		9,529		10,071
	$	80,936	$	82,901

Other Intangible Assets, net

Intangible assets are amortizable over their estimated useful lives. There was an increase in gross other intangible assets subject to amortization during the nine months ended September 30, 2017 due to the Company’s acquisition of Sierra and the impact of foreign currency exchange rates. The following table summarizes the changes in gross other intangible assets:

Gross balance at December 31, 2016 $ 16,980

Increase due to acquisition 15,800
Impact of foreign currency exchange rates 510

Gross balance at September 30, 2017 $ 33,290


Gross balance at December 31, 2022	$	100,889

Increase due to purchase of intangible assets		500
Impact of foreign currency exchange rates		(2,976)

Gross balance at September 30, 2023	$	98,413

Other intangible assets, net of amortization as of September 30, ~~2017~~2023 and December 31, ~~2016,~~2022, were as follows:

September 30, 2017 December 31, 2016

Customer lists and relationships $ 26,426 $ 13,942
Product technologies 4,817 2,091
Trade name / trademark 1,100 -
Core technologies 947 947
33,290 16,980
Less accumulated amortization (8,600 ) (7,211 )
$ 24,690 $ 9,769


	September 30, 2023
	Gross		Accumulated Amortization		Net		Weighted Average Useful Life
Intangibles subject to amortization
Customer relationships	$	75,219	$	(40,954)	$	34,265		13.8 years
Product technologies		20,984		(11,281)		9,703		10.1 years
Tradename / trademark		1,263		(926)		337		9.4 years
Core technologies		947		(947)		—		10.0 years
	$	98,413	$	(54,108)	$	44,305		12.9 years

	December 31, 2022
	Gross		Accumulated Amortization		Net		Weighted Average Useful Life

Customer relationships	$	77,370	$	(34,653)	$	42,717		13.8 years
Product technologies		21,309		(9,207)		12,102		10.2 years
Tradename / trademark		1,263		(827)		436		9.4 years
Core technologies		947		(947)		—		10.0 years
	$	100,889	$	(45,634)	$	55,255		13.0 years

~~NOTE 7. LONG-TERM DEBT~~

~~Long-term debt, net as of September 30, 2017 and December 31, 2016, was as follows:~~

September 30, 2017 December 31, 2016

Revolving credit facilities (a) $ 27,353 $ -
5% Senior Subordinated Notes due 2017 (refer to Note 17) - 22,610
Term note (b) - 102
Unamortized discount - (814 )
27,353 21,898
Less current portion - (21,898 )
$ 27,353 $ -

~~(a)~~

~~As of September 30, 2017, the Company had drawn $27,353 on a $40,000 revolving credit facility with Zions First National Bank with a maturity date of August 21, 2022.~~

In conjunction with the acquisition of Sierra, on August 21, 2017, the Company together with its direct and indirect domestic subsidiaries entered into a third amended and restated loan agreement (the “Third Amended and Restated Loan Agreement”) with Zions First National Bank, a national banking association, (the “Lender”), which matures on August 21, 2022. Under the Third Amended and Restated Loan Agreement, the Company has up to a $40,000 revolving line of credit (the “Revolving Line of Credit”) pursuant to a fourth amended and restated promissory note (revolving loan) (the “Revolving Line of Credit Promissory Note”). The maximum borrowing of $40,000 (the “Maximum Borrowing”) under the Revolving Line of Credit reduces by $1,250 per quarter until such time as the maximum borrowing amount is $20,000, provided, that the Company may request an increase of up to $20,000 as an accordion option (the “Accordion”) to increase the Revolving Line of Credit up to the Maximum Borrowing on a seasonal or permanent basis for funding general corporate needs including working capital, capital expenditures, permitted loans or investments in subsidiaries, and the issuance of letters of credit. Availability under the Revolving Line of Credit may not exceed $30,000 unless the Company has sufficient eligible receivable, inventory and equipment assets at such time pursuant to formulas set forth in the Third Amended and Restated Loan Agreement.

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CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

Amortization expense for the three months ended September 30, 2023 and 2022, was $3,061 and $3,683, respectively, and for the nine months ended September 30, 2023 and 2022 was $9,560 and $11,740. Future amortization expense for other intangible assets as of September 30, 2023 is as follows:

~~All~~


Years Ending December 31,	Amortization Expense
2023 (excluding the nine months ended September 30, 2023)	$	3,053
2024		10,520
2025		8,548
2026		6,536
2027		4,687
2028		3,342
Thereafter		7,619
	$	44,305

NOTE 5. ACCRUED LIABILITIES AND OTHER LONG-TERM LIABILITIES

Accrued liabilities as of September 30, 2023 and December 31, 2022, were as follows:


	September 30, 2023		December 31, 2022

Accrued payroll and related items	$	4,498	$	5,363
Accrued bonus		1,096		1,006
Accrued warranty		1,377		1,465
Current lease liabilities		3,179		2,836
Accrued commissions		1,133		343
Contingent consideration liabilities		—		1,595
Accrued excise tax		616		977
Other		10,536		11,585
	$	22,435	$	25,170

Other long-term liabilities as of September 30, 2023 and December 31, 2022, were as follows:


	September 30, 2023		December 31, 2022

Long-term lease liability	$	13,682	$	12,825
Deferred stock consideration for business acquisition		—		2,127
Other		798		902
	$	14,480	$	15,854

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CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

NOTE 6. LONG-TERM DEBT

Long-term debt ~~associated with~~as of September 30, 2023 and December 31, 2022, was as follows:


	September 30, 2023		December 31, 2022

Revolving credit facility (a)	$	10,380	$	18,049
Other debt (b)		66		1,134
Term loan (c)		112,500		120,311
Debt issuance costs		(303)		(460)
		122,643		139,034
Less current portion		(12,566)		(11,952)
	$	110,077	$	127,082

On April 18, 2022 (the “Effective Date”), the ~~Third~~Company and certain of its direct and indirect subsidiaries entered into an Amended and Restated ~~Loan~~Credit Agreement ~~bears~~with JPMorgan Chase Bank, N.A., as administrative agent and the lenders party thereto (the “Restated Credit Agreement”).

The Restated Credit Agreement provides for borrowings of up to $300,000 under a secured revolving credit facility (the “Revolving Loans”) (including up to $5,000 for letters of credit), and borrowings of up to $125,000 under a secured term loan facility (the “Term Loans”). The Restated Credit Agreement also permits the Company, subject to certain requirements, to arrange with lenders for an aggregate of up to $175,000 of additional revolving and/or term loan commitments (both of which are currently uncommitted), for potential aggregate revolving and term loan commitments under the Restated Credit Agreement of up to $600,000. The Restated Credit Agreement matures on April 18, 2027 (the “Maturity Date”), at which time the revolving commitments thereunder will terminate and all outstanding Revolving Loans and Term Loans, together with all accrued and unpaid interest ~~at one-month London Interbank Offered Rate (“LIBOR”) plus an applicable margin~~thereon, must be repaid.

All obligations under the Restated Credit Agreement are secured by our subsidiary equity interests, as ~~determined~~well as accounts receivable, inventory, intellectual property and certain other assets owned by the Company. The Restated Credit Agreement contains restrictions on the Company’s ability to pay dividends or make distributions or other restricted payments if certain conditions in the Restated Credit Agreement are not fulfilled. The Restated Credit Agreement also includes other customary affirmative and negative covenants, including financial covenants relating to the Company’s consolidated total leverage ratio ~~of Total Net Debt (subject to adjustments as~~and fixed charge coverage ratio. The Company was in compliance with the debt covenants set forth in the ~~Third Amended and Restated Loan Agreement) to Trailing Twelve Month Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”)~~Credit Agreement as follows: (i) one month LIBOR plus 4.00% per annum at all times that Total Net Debt to Trailing Twelve Month EBITDA ratio is greater than or equal to 2.75; (ii) one month LIBOR plus 3.00% per annum at all times that Total Net Debt to Trailing Twelve Month EBITDA ratio is greater than or equal to 2.00 and less than 2.75; (iii) one month LIBOR plus 2.00% per annum at all times that Total Net Debt to Trailing Twelve Month EBITDA ratio is greater than or equal to 1.00 and less than 2.00; and (iv) one month LIBOR plus 1.5% per annum at all times that Total Net Debt to Trailing Twelve Month EBITDA ratio is less than 1.00.

Any amount outstanding under the Third Amended and Restated Loan Agreement will be secured by a general first priority Uniform Commercial Code (“UCC”) security interest in all material domestic assets of the Company and its domestic subsidiaries, including, but not limited to: accounts, accounts receivable, inventories, equipment, real property, ownership in subsidiaries, and intangibles including patents, trademarks and copyrights. Proceeds of the foregoing will be secured via pledge and control agreements on domestic depository and investment accounts not held with the Lender.September 30, 2023.

The Third Amended and Restated Loan Agreement contains certain financial covenants including restrictive debt covenants that require the Company and its subsidiaries to maintain a minimum fixed charge coverage ratio, a maximum total leverage ratio, a minimum net worth, a positive amount of asset coverage and limitations on capital expenditures, all as calculated in the Third Amended and Restated Loan Agreement.

In addition, the Third Amended and Restated Loan Agreement contains covenants restricting the Company and its subsidiaries from pledging or encumbering their assets, with certain exceptions, and from engaging in acquisitions other than acquisitions permitted by the Third Amended and Restated Loan Agreement. The Third Amended and Restated Loan Agreement contains customary events of default (with grace periods where customary) including, among other things, failure to pay any principal or interest when due; any materially false or misleading representation, warranty, or financial statement; failure to comply with or to perform any provision of the Third and Restated Loan Agreement; and default on any debt or agreement in excess of certain amounts.

(a)

As of September 30, 2023, the Company had drawn $10,380 on the revolving loan, with a maturity date of April 18, 2027. Approximately $17,000 in additional funds were available to borrow on the revolving loan at September 30, 2023, while maintaining compliance with the consolidated total leverage ratio per the Restated Credit Agreement of 3.75 to 1. The Company pays interest monthly on any borrowings on the Restated Credit Agreement. As of September 30, 2023 and December 31, 2022, the rates were approximately 7.7% and 6.3%, respectively.

(b)

Foreign subsidiaries of the Company had a revolving credit facility, which matured on March 31, 2023, and term debt with financial institutions, which mature between November 16, 2023 and August 8, 2024. The foreign subsidiaries paid interest monthly on any borrowings on the credit facility as well as monthly payments on the term ~~note was payable to a government entity with an interest rate~~debt. As of ~~0.75% and no monthly installments. During the nine months ended~~ September 30, ~~2017,~~2023, the ~~entire principal amount~~interest rates ranged between approximately 3.1% and ~~all accrued~~3.2% and as of December 31, 2022, the interest ~~were paid in full.~~rates ranged between approximately 1.3% and 4.0%. The credit facility was secured by certain assets of the foreign subsidiaries. The revolving credit facility was settled and closed as of March 31, 2023 and had no amounts outstanding.

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CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

(c)

The Company is required to repay the term loan through quarterly payments of $1,563 each beginning with June 30, 2022, increasing to $3,125 each beginning with June 30, 2023, and any remaining obligations will be repaid in full on the maturity date of the Restated Credit Agreement of April 18, 2027. The Company pays interest monthly on any borrowings on the Restated Credit Agreement. As of September 30, 2023 and December 31, 2022, the rates were approximately 7.7% and 6.3%, respectively.

NOTE 8.7. DERIVATIVE FINANCIAL INSTRUMENTS

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 September 30, ~~2017,~~2023, the Company’s derivative contracts had a remaining ~~maturity~~maturities of less than one ~~and one-half years or less.~~year. The ~~counterparty~~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 ~~counterparty~~counterparties is generally limited to the aggregate unrealized loss of all contracts with that ~~counterparty, which is $1,353 as~~counterparty. As of September 30, ~~2017.~~2023, there was no such exposure to the counterparties. The Company’s exposure of counterparty credit risk is limited to the aggregate unrealized gain of $730 on all ~~contracts. At~~contracts as of September 30, ~~2017, there was no such exposure to the counterparty.~~2023. The Company’s derivative ~~counterparty has~~counterparties have strong credit ratings and as a result, the Company does not require collateral to facilitate transactions.

~~CLARUS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED~~

~~(Unaudited)~~

~~(in thousands, except per share amounts)~~

The Company held the following contracts designated as ~~hedged~~hedging instruments as of September 30, ~~2017~~2023 and December 31, ~~2016:~~2022:


	September 30, ~~2017~~2023
	Notional			Latest
	Amount			Maturity

~~Foreign exchange contracts - Norwegian Kroner~~		~~7,449~~			~~February 2018~~
Foreign exchange contracts - Canadian Dollars	$5,656	~~13,345~~			February ~~2019~~2024
~~Foreign exchange contracts - British Pounds~~		~~2,343~~			~~February 2019~~
Foreign exchange contracts - Euros	€ 15,944	~~22,200~~	February 2024

	~~February 2019~~
						December 31, 2022
	~~December 31, 2016~~ Notional		Latest
	~~Notional~~ Amount			~~Latest~~ Maturity
	~~Amount~~			~~Maturity~~

Foreign exchange contracts - Canadian Dollars	$2,807	~~11,001~~			February ~~2018~~2023
~~Foreign exchange contracts - British Pounds~~		~~1,842~~			~~February 2018~~
Foreign exchange contracts - Euros	€ 20,760	~~14,366~~			February ~~2018~~2024

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 ~~$(422)~~$226 and ~~$(152)~~$1,218 were reclassified to sales during the three months ended September 30, ~~2017~~2023 and ~~2016,~~2022, respectively, and ~~$(36)~~$167 and ~~$(495)~~$2,081 were reclassified to sales during the nine months ended September 30, ~~2017~~2023 and ~~2016,~~2022, respectively.

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~~The Company records ineffectiveness of hedged instruments resulting from changes~~ CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in fair value of the instruments in earnings. There were no gains (losses) recorded to Other, net, during the three and nine months ended September 30, 2017. Gains (losses) of $34 and $(8) were recorded to Other, net, associated with ineffective hedge instruments during the three and nine months ended September 30, 2016.thousands, except per share amounts)

The following table presents the balance sheet classification and fair value of derivative instruments as of September 30, ~~2017~~2023 and December 31, ~~2016:~~2022:

Classification September 30, 2017 December 31, 2016

Derivative instruments in asset positions:
Forward exchange contracts Prepaid and other current assets $ 69 $ 1,165
Forward exchange contracts Other long-term assets $ 12 $ 116

Derivative instruments in liability positions:
Forward exchange contracts Accounts payable and accrued liabilities $ 1,284 $ -
Forward exchange contracts Other long-term liabilities $ 150 $ -


	Classification	September 30, 2023		December 31, 2022

Derivative instruments in asset positions:
Designated forward exchange contracts	Prepaid and other current assets	$	730	$	357

Derivative instruments in liability positions:
Designated forward exchange contracts	Other long-term liabilities	$	—	$	6

~~CLARUS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED~~

~~(Unaudited)~~

~~(in thousands, except per share amounts)~~

NOTE 9.8. ACCUMULATED OTHER COMPREHENSIVE ~~(LOSS) INCOME~~

LOSS

Accumulated other comprehensive ~~(loss) income~~loss (“AOCI”) primarily consists of foreign currency translation adjustments and changes in our forward foreign exchange contracts. The ~~components of~~following table sets forth the changes in AOCI, net of tax, ~~were as follows:~~for the three months ended September 30, 2023:


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

Balance as of June 30, 2023	$	(20,038)	$	(111)	$	(20,149)
Other comprehensive (loss) income before reclassifications		(3,539)		576		(2,963)
Amounts reclassified from other comprehensive loss		—		(175)		(175)
Net current period other comprehensive (loss) income		(3,539)		401		(3,138)
Balance as of September 30, 2023	$	(23,577)	$	290	$	(23,287)

The following table sets forth the changes in AOCI, net of tax, for the three months ended September 30, 2022:

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

Balance as of December 31, 2016 $ (1,729 ) $ 724 $ (1,005 )
Other comprehensive income (loss) before reclassifications 2,454 (2,177 ) 277
Amounts reclassified from other comprehensive income (loss) (149 ) 380 231
Net current period other comprehensive income (loss) 2,305 (1,797 ) 508
Balance as of September 30, 2017 $ 576 $ (1,073 ) $ (497 )


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

Balance as of June 30, 2022	$	(16,796)	$	899	$	(15,897)
Other comprehensive (loss) income before reclassifications		(11,386)		1,203		(10,183)
Amounts reclassified from other comprehensive income		—		(935)		(935)
Net current period other comprehensive (loss) income		(11,386)		268		(11,118)
Balance as of September 30, 2022	$	(28,182)	$	1,167	$	(27,015)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

The following table sets forth the changes in AOCI, net of tax, for the nine months ended September 30, 2023:


	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 (loss) income before reclassifications		(5,949)		476		(5,473)
Amounts reclassified from other comprehensive loss		—		(129)		(129)
Net current period other comprehensive (loss) income		(5,949)		347		(5,602)
Balance as of September 30, 2023	$	(23,577)	$	290	$	(23,287)

The following table sets forth the changes in AOCI, net of tax, for the nine months ended September 30, 2022:


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

Balance as of December 31, 2021	$	(5,241)	$	191	$	(5,050)
Other comprehensive (loss) income before reclassifications		(22,941)		2,574		(20,367)
Amounts reclassified from other comprehensive loss		—		(1,598)		(1,598)
Net current period other comprehensive (loss) income		(22,941)		976		(21,965)
Balance as of September 30, 2022	$	(28,182)	$	1,167	$	(27,015)

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CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

The effects on net ~~loss~~income of amounts reclassified from unrealized gains (losses) on cash flow hedges for foreign exchange contracts ~~and foreign currency translation adjustments~~ for the three and nine months ended September 30, ~~2017,~~2023 and 2022, were as follows:

	Gains (losses) reclassified from AOCI to the Condensed Consolidated Statement of Comprehensive Loss

Affected line item in the Condensed Consolidated Statement of Comprehensive Loss	For the Three Months Ended September 30, 2017			For the Nine Months Ended September 30, 2017

							Gains reclassified from AOCI to the Consolidated Statements of Comprehensive Loss
Affected line item in the Consolidated							Three Months Ended				Nine Months Ended
Statements of Comprehensive Loss							September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Foreign exchange contracts:
Sales	$	(422	)	$	(36	)	$	226	$	1,218	$	167	$	2,081
Less: Income tax expense		109			344			51		283		38		483
Amount reclassified, net of tax	$	(531	)	$	(380	)	$	175	$	935	$	129	$	1,598

Foreign currency translation adjustments:
Other, net	$	68		$	149


Total reclassifications from AOCI	$	(463	)	$	(231	)	$	175	$	935	$	129	$	1,598

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

NOTE ~~10.~~9. 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~~that 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 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 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.

~~Level 3-~~

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(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 September 30, ~~2017~~2023 and December 31, ~~2016~~2022 were as follows:

	September 30, 2017
	Level 1		Level 2		Level 3		Total


									September 30, 2023
									Level 1		Level 2		Level 3		Total

Assets
Forward exchange contracts		-		81		-		81
	$	-	$	81	$	-	$	81

Designated forward exchange contracts									$	—	$	730	$	—	$	730
									$	—	$	730	$	—	$	730

Liabilities
Forward exchange contracts	$	-	$	1,434	$	-	$	1,434
	$	-	$	1,434	$	-	$	1,434

	December 31, 2016
	Level 1		Level 2		Level 3		Total

Designated forward exchange contracts									$	—	$	—	$	—	$	—
									$	—	$	—	$	—	$	—

									December 31, 2022
									Level 1		Level 2		Level 3		Total

Assets
Forward exchange contracts	$	-	$	1,281	$	-	$	1,281
	$	-	$	1,281	$	-	$	1,281

Designated forward exchange contracts									$	—	$	357	$	—	$	357
									$	—	$	357	$	—	$	357

Liabilities
Forward exchange contracts	$	-	$	-	$	-	$	-
	$	-	$	-	$	-	$	-
Designated forward exchange contracts									$	—	$	6	$	—	$	6
Contingent consideration liabilities									$	—	$	—	$	1,595	$	1,595
									$	—	$	6	$	1,595	$	1,601

The carrying value of cash, accounts receivable, accounts payable 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. No nonrecurring fair value measurements existed at September 30, ~~2017~~2023 and December 31, ~~2016.~~2022.

The Company estimated the initial fair value of the contingent consideration liabilities primarily using a series of call options. Significant unobservable inputs used in the valuation included discount rates ranging from 4.8% to 8.0%. 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 in the accompanying consolidated statements of comprehensive (loss) income 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 following table summarizes the changes in contingent consideration liabilities:


	MAXTRAX

Balance at December 31, 2022	$	1,595
Fair value adjustments		(1,565)
Contingent consideration payments		—
Impact of foreign currency exchange rates		(30)
Balance at September 30, 2023	$	—

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CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

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

NOTE 10. 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. On November 3, 2023, the Company announced that its Board of Directors approved the payment on November 24, 2023 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 November 14, 2023.

NOTE 11. 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 ~~due~~ to ~~net loss.~~

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:

	Three Months Ended						Nine Months Ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016


													Three Months Ended				Nine Months Ended
													September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022

Weighted average shares outstanding - basic		30,017			30,063			30,015			30,525			37,470		37,369		37,267		37,256
Effect of dilutive stock awards		-			-			-			-			—		2,061		—		2,246
Effect of dilutive deferred stock consideration for business acquisition														—		150		—		192
Weighted average shares outstanding - diluted		30,017			30,063			30,015			30,525			37,470		39,580		37,267		39,694

Net loss per share:

Net (loss) income per share:
Basic	$	(0.05	)	$	(0.01	)	$	(0.22	)	$	(0.25	)	$	(0.03)	$	0.07	$	(0.05)	$	0.32
Diluted		(0.05	)		(0.01	)		(0.22	)		(0.25	)		(0.03)		0.07		(0.05)		0.30

~~CLARUS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED~~

~~(Unaudited)~~

~~(in thousands, except per share amounts)~~

For the three months ended September 30, ~~2017~~2023 and ~~2016,~~2022, equity awards of ~~2,835~~4,922 and ~~2,517,~~1,713, respectively, and for the nine months ended September 30, ~~2017~~2023 and ~~2016,~~2022, equity awards of ~~2,793~~5,613 and ~~2,491,~~1,560, respectively, were ~~outstanding and anti-dilutive and therefore not included in~~excluded from the calculation of ~~loss~~earnings (loss) per share for these ~~periods.~~periods as they were anti-dilutive.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

NOTE 12. STOCK-BASED COMPENSATION PLAN

Under the Company’s current 2015 Stock Incentive Plan (the “2015 Plan”), the Company’s Board of Directors ~~(the “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 2015 Plan allows for grants of incentive stock options, nonqualified stock options, restricted stock awards, stock appreciation rights, and restricted units. The aggregate number of shares of common stock that may be granted through awards under the 2015 Plan to any employee in any calendar year may not exceed 500 shares. The 2015 Plan will continue in effect until December 2025 unless terminated sooner.

Options Granted:

During the nine months ended September 30, ~~2017,~~2023, the Company issued stock options for an aggregate of ~~463~~75 shares under the 2015 Plan to directors ~~and employees~~ of the Company. ~~Of the 463 options issued, 38~~All 75 options vest ~~in four equal consecutive quarterly tranches~~and become exercisable over a period of one year. All of the issued stock options expire ten years from the date of the grant. ~~325 vest in three equal tranches on December 31, 2017, December 31, 2018 and December 31, 2019. The remaining 100 options vested immediately.~~

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:

Options Granted During the Nine Months Ended September 30, 2017

Number of options 363 100
Option vesting period 1-2 Years Immediate
Grant price $6.10 - $6.15 $6.10
Dividend yield 0.00% 0.00%
Expected volatility (a) 41.9% - 42.2% 46.90%
Risk-free interest rate 1.80% 1.41%
Expected life (years) (b) 5.31 - 5.33 2.75
Weighted average fair value $2.45 - $2.49 $1.20

Options Granted During the Nine Months Ended September 30, 2023


Number of options		75
Option vesting period		1 Year
Grant price (per share)		$7.91
Dividend yield		1.26%
Expected volatility (a)		47.80%
Risk-free interest rate		3.69%
Expected life (years) (b)		5.31
Weighted average fair value (per share)		$2.48

(a)

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

(b)

~~Because the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the~~The expected term ~~for these grants,~~was determined based upon the ~~Company utilized the simplified method in developing an estimate~~underlying terms of the ~~expected term~~awards and the category and employment history of ~~these options.~~employee award recipient.

The grant date fair value of the stock options granted during the nine months ended September 30, 2023 was $186, which will be recognized over the vesting period of the options.

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CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

Market Condition Restricted Shares Granted:

On ~~June 1, 2017,~~March 14, 2023, the Company ~~issued and granted to an employee a restricted stock award of~~awarded the Executive Chairman 500 restricted shares under the 2015 Plan, of which ~~(i)~~ 250 ~~restricted~~and 250 shares will vest if, on or before ~~June 1, 2022,~~March 14, 2033, the Fair Market Value (as defined in the Plan) of the Company’s common stock shall have equaled or exceeded ~~$10.00~~$15.00 and $18.00 per share for twenty consecutive trading ~~days; and (ii) 250~~days, respectively. As the vesting terms of the restricted shares will vest if, on or before June 1, 2022, the Fair Market Value (as defined in the Plan) of the Company’s common stock shall have equaled or exceeded $12.00 per share for twenty consecutive trading days. For computing the fair value of the 500 restricted shares withinclude a market condition, the fair value of ~~each~~the restricted stock ~~award grant has been~~was estimated as of the date of grant using the Monte-Carlo pricing model with the ~~assumptions below.~~following assumptions:

	19
		March 14, 2023

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

~~CLARUS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED~~

~~(Unaudited)~~

~~(in thousands, except per share amounts)~~

~~Market Condition Restricted Shares Granted on June 1, 2017~~

Number issued 250 250
Vesting period $10.00 stock price target $12.00 stock price target
Grant price $6.10 $6.10
Dividend yield 0.0% 0.0%
Expected volatility 42.4% 42.4%
Risk-free interest rate 1.76% 1.76%
Weighted average fair value $4.30 $3.68

Using these assumptions, the grant date fair value of the restricted stock awards was approximately $4,046 and the expected term was between 2.56 and 3.22 years.

The total non-cash stock compensation expense related to restricted stock, stock options and stock awards recorded by the Company for the three months ended September 30, ~~2017~~2023 and ~~2016~~2022 was ~~$387~~$1,168 and ~~$42,~~$2,220, respectively, and for the nine months ended September 30, ~~2017~~2023 and ~~2016~~2022 was ~~$729~~$4,037 and ~~$193,~~$9,142, respectively. For the three and nine months ended September 30, ~~2017~~2023 and ~~2016,~~2022, the majority of stock-based compensation costs were classified as selling, general and administrative ~~expense. 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.~~

expenses.

As of September 30, ~~2017,~~2023, there were ~~533~~388 unvested stock options and unrecognized compensation cost of ~~$1,153~~$1,517 related to unvested stock options, as well as ~~850~~1,617 unvested restricted stock awards and unrecognized compensation ~~cost~~costs of ~~$1,679~~$8,033 related to unvested restricted stock awards.

NOTE 13. RESTRUCTURING

~~The~~From time to time, the Company ~~initiated a~~incurs expenses to facilitate long-term sustainable growth through cost reduction actions, consisting of employee reductions, facility rationalization and contract termination costs. These costs include severance costs, exit costs and other restructuring ~~plan~~costs and are included in Restructuring charges in the ~~fourth quarter~~Condensed Consolidated Statements of ~~2014 (“2014 Restructuring Plan”) to realign resources within the organization~~Comprehensive Loss. Severance costs primarily consist of severance benefits through payroll continuation, conditional separation costs and ~~completed the plan during the year ended December 31, 2016. During the three~~employer tax liabilities, while exit costs primarily consist of lease exit and ~~nine months ended September 30, 2016, we incurred restructuring charges~~contract termination costs. Other costs consisted primarily of ~~$0 and $20~~costs related to the ~~2014 Restructuring Plan. We incurred $5,959~~discontinuance of ~~cumulative~~certain product lines and were distinguishable and directly attributable to the Company’s restructuring ~~charges in connection~~initiative and not a result of external market factors associated with the ~~2014 Restructuring Plan.~~ongoing business.

As part of the conclusion of the Company’s review of strategic alternatives, the Company initiated restructuring activities in efforts to further realign resources within the organization (“2015 Restructuring Plan”) and anticipates completing the plan in 2017. During the three months ended September 30, 2017 and 2016, we incurred restructuring charges of $33 and $282, respectively, related to the 2015 Restructuring Plan. During the nine months ended September 30, 2017 and 2016, we incurred restructuring charges of $116 and $1,255, respectively, related to the 2015 Restructuring Plan. We incurred $2,500 of cumulative restructuring charges in connection with the 2015 Restructuring Plan. We estimate that we will incur an immaterial amount of restructuring charges related to the 2015 Restructuring Plan during the remainder of 2017.

~~The following table summarizes the restructuring charges, payments and the remaining accrual related to employee termination costs and facility exit costs.~~

2015 Restructuring Plan
Balance at December 31, 2016 $ 96
Charges to expense:
Other costs 116
Total restructuring charges 116
Cash payments and non-cash charges:
Cash payments (132 )
Balance at September 30, 2017 $ 80

~~As of September 30, 2017, termination costs and restructuring costs remained in accrued liabilities and are expected to be paid during the remainder of 2017.~~

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CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

Pre-tax restructuring charges by segment for the three months ended September 30, 2023 were as follows:


	Three Months Ended September 30, 2023
	Outdoor		Precision Sport		Adventure		Corporate		Total
Employee termination benefits	$	392	$	23	$	93	$	-	$	508
Exit costs		21		-		-		-		21
Other costs		570		-		-		-		570
Total restructuring charges	$	983	$	23	$	93	$	-	$	1,099

Pre-tax restructuring charges by segment for the nine months ended September 30, 2023 were as follows:


	Nine Months Ended September 30, 2023
	Outdoor		Precision Sport		Adventure		Corporate		Total
Employee termination benefits	$	526	$	23	$	267	$	163	$	979
Exit costs		86		-		-		-		86
Other costs		770		-		-		-		770
Total restructuring charges	$	1,382	$	23	$	267	$	163	$	1,835

There were no significant accruals recorded as of September 30, 2023 related to the Company’s restructuring initiatives.

NOTE 14. COMMITMENTS AND CONTINGENCIES

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.

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 condition, results of operations or cash ~~flows.~~flows, except for the U.S. Consumer Product Safety Commission (“CPSC”) matter 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 at this time. It is possible that, as additional information becomes available, the impact on the Company could have a ~~different~~material effect. See Part II, Item 1. “Legal Proceedings.” and Part II, Item 1A. “Risk Factors.”

~~During~~By letter dated October 12, 2023, Black Diamond Equipment, Ltd. (“BDEL”) was notified by the ~~nine months ended September 30, 2016,~~CPSC that the agency staff concluded the Company ~~received an arbitral award on agreed terms of $1,967, related~~failed to timely meet its statutory reporting obligations under the Consumer Product Safety Act with respect to certain ~~claims against~~models of BDEL’s avalanche transceivers switching unexpectedly out of “send” mode, that we made a material misrepresentation in a report to the ~~former owner of PIEPS associated~~CPSC, and that the agency staff intends to recommend that the CPSC impose substantial civil monetary penalties. We disagree with the ~~voluntary recall~~agency staff and intend to submit a comprehensive refutation of ~~all~~its findings and conclusions in addition to discussing the amount of a potential penalty; however, the CPSC may ultimately disagree with us, and we cannot assure on what terms this matter will be resolved.

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CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

Based on currently available information, the Company cannot estimate the amount of the ~~PIEPS VECTOR avalanche transceivers during~~loss (or range of loss) in connection with this matter. We believe it is reasonably possible that a change in our ability to estimate the ~~year ended December 31, 2013. This award concluded~~amount of loss could occur in the ~~arbitration process~~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 ~~entirety.~~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. A penalty 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 compliance with the covenants contained in the Company’s Restated Credit Agreement, liquidity, stock price, consolidated financial position, results of operations and/or cash flows.

NOTE 15. INCOME TAXES

The ~~Company leases office, warehouse~~Company’s U.S. federal statutory tax rate of 21% and ~~distribution space under non-cancelable operating leases. As leases expire, it can be expected that,~~its foreign operations have statutory tax rates of approximately 24% in Austria, 28% in New Zealand, and 30% in Australia.

The difference between the ~~normal course~~Company’s estimated effective tax rate benefit of business, certain leases will be renewed or replaced. Certain lease agreements include escalating rents over the lease terms. The Company expenses rent on a straight-line basis over the lease term which commences on the date the Company has the right to control the property. The cumulative expense recognized on a straight-line basis in excess of the cumulative payments is included in accounts payable and accrued liabilities and other long-term liabilities in the accompanying condensed consolidated balance sheets.

~~Total rent expense of the Company~~13.9% for the three months ended September 30, ~~2017~~2023, and ~~2016~~the U.S. federal statutory tax rate of 21% was ~~$214~~primarily due to the impact of stock compensation, research and ~~$204, respectively,~~experimentation expenditures and credits, transaction costs, and discrete stock option shortfalls in the third quarter of 2023.

The difference between the Company’s estimated effective tax rate benefit of 23.9% for the nine months ended September 30, ~~2017~~2023, and ~~2016 was $611 and $826, respectively.~~

~~NOTE 15. INCOME TAXES~~

~~The Company’s foreign operations that are considered to be permanently reinvested have~~the U.S. federal statutory tax ~~rates~~rate of ~~25%.~~

~~Tax expense includes a~~21% was primarily due to the impact of stock compensation, research and experimentation expenditures and credits, and discrete charge for the three months ended September 30, 2017 and 2016 of $0 and $520, respectively, and for the nine months ended September 30, 2017 and 2016 of $20 and $953, respectively, of additional interest for an uncertain tax position and potential tax audit liability associated with the formal closure and liquidation of the Company’s Black Diamond Equipment manufacturing operations in Zhuhai, China. During the nine months ended September 30, 2017, the Company settled and paid the Chinese tax audit liabilitystock option shortfalls in the ~~amount~~first three quarters of ~~$939.~~

There was also a discrete charge of $109 and $344 during the three and nine months ended September 30, 2017, respectively, associated with a disproportionate tax effect released from AOCI. During the nine months ended September 30, 2016, there was a discrete charge for a Swiss withholding tax related to the transferring of Black Diamond Equipment’s European operations from Basel, Switzerland to Innsbruck, Austria.

During the three months ended September 30, 2017, the Company repatriated approximately $10,800 from its Swedish subsidiary, Ember Scandinavia AB to help fund the acquisition of Sierra. Income taxes were previously accrued and a deferred tax liability recorded in fiscal year 2015. With the dividend, the Company will have taxable income which is subject to the Federal Alternative Minimum Tax (“AMT”), therefore the Company recorded a discrete expense of $211.

With the acquisition of Sierra during the three months ended September 30, 2017, the company recognized a discrete expense of $101 for the tax amortization of indefinite lived intangibles and goodwill, and an increase to the deferred tax liabilities which are not a source of future taxable income of $101.

2023.

As of December 31, ~~2016,~~2022, the Company’s gross deferred tax asset was ~~$75,416.~~$32,972. The Company ~~had~~has recorded a valuation allowance of ~~$67,662,~~$3,323, resulting in a net deferred tax asset of ~~$7,754,~~$29,649, before deferred tax liabilities of ~~$16,720.~~$30,243. The Company has provided a valuation allowance against a portion of the deferred tax assets as of September 30, 2023 and December 31, ~~2016,~~2022, because the ultimate realization of those assets did not meet the ~~more likely than not~~more-likely-than-not criteria. The majority of the Company’s deferred tax assets consist of net operating loss carryforwards (“NOLs”) for federal tax purposes. If a change in control were to occur, these could be limited under Section 382 of the Internal Revenue Code of 1986 (“Code”), as amended.

~~CLARUS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED~~

~~(Unaudited)~~

~~(in thousands, except per share amounts)~~

In assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and net operating loss and credit carryforwards expire. The estimates and judgments associated with the Company’s valuation allowance on deferred tax assets are considered critical due to the amount of deferred tax assets recorded by the Company on its consolidated balance sheet and the judgment required in determining the Company’s future taxable income. The need for a valuation allowance is reassessed at each interim reporting period.

As of ~~December 31, 2016,~~September 30, 2023, the Company had ~~net operating loss,~~NOLs and research and experimentation credit ~~and alternative minimum tax credit carryforwards~~ for U.S. federal income tax purposes of ~~$172,419 ($270 relates to excess tax benefits related to share based payment compensation), $3,407~~$18,908 and ~~$315,~~$2,629, respectively. The Company believes its U.S. Federal ~~net operating loss (“NOL”)~~NOLs will substantially offset its future U.S. Federal income taxes ~~excluding the amount subject to U.S. Federal Alternative Minimum Tax (“AMT”). AMT is calculated as 20%~~until expiration.

Table of ~~AMT income. For purposes of AMT, a maximum of 90% of income is offset by available NOLs. The majority of the Company’s pre-tax income is currently earned and expected to be earned~~ Contents

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in ~~the U.S., or taxed in the U.S. as Subpart F income and will be offset with the NOL.~~thousands, except per share amounts)

NOLs available to offset taxable income, subject to compliance with Section 382 of the Code, begin to expire based upon the following schedule:

~~Net Operating Loss Carryforward Expiration Dates~~

~~December 31, 2016~~


Net Operating Loss Carryforward Expiration Dates
September 30, 2023

Expiration Dates December 31,	Net Operating Loss Amount
2023	$	3,095
2024		3,566
2025		1,708
2026 and beyond		10,539
Total	$	18,908

Expiration Dates December 31, Net Operating Loss Amount
2021 $ 32,408
2022 115,000
2023 5,712
2024 3,566
2025 and beyond 15,733
Total 172,419
Excess stock based payment tax deductions (270 )
After limitations $ 172,149

NOTE 16. SEGMENT INFORMATION

~~As a result of our August 21, 2017 acquisition of Sierra, we now~~We operate our business structure within ~~two segments which are grouped into what we refer to as the Outdoor Group.~~three segments. These segments are defined based on the internal financial reporting used by ~~management.~~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.~~segments including non-cash stock compensation expense. Each segment is described below:

·●

~~Black Diamond~~Our Outdoor segment, which includes Black Diamond Equipment, PIEPS, and ~~PIEPS,~~SKINourishment, 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. ~~Black Diamond~~Our Outdoor segment offers a broad range of products including: ~~high performance~~high-performance, activity-based apparel (such as ~~jackets,~~ shells, insulation, midlayers, pants and ~~bibs)~~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; ~~tents;~~ trekking poles; headlamps and lanterns; ~~and~~ gloves and ~~mittens. It~~mittens; and skincare and other sport-enhancing products. We also ~~offers~~offer advanced skis, ski poles, ski skins, and snow safety products, including avalanche airbag systems, avalanche transceivers, shovels, and probes.

·●

~~Sierra~~Our Precision Sport segment, which includes Sierra ~~is an~~and Barnes, includes two iconic American ~~manufacturer~~manufacturers of ~~bullets intended for firearms. Sierra segment manufactures~~ a wide range of ~~high performance~~high-performance bullets and ammunition for both rifles and pistols. These bullets are used for precision target shooting, hunting and military and law enforcement purposes.

22●

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

As noted above, the Company has a wide variety of technical outdoor equipment and lifestyle products that are sold to a variety of customers in multiple end markets. While there are multiple products sold, the terms and nature of revenue recognition policy is similar for all segments.

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CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

Financial information for our segments, as well as revenue by geography, which the Company believes provides a meaningful depiction how the nature, timing and uncertainty of revenue are affected by economic factors, is as follows:

Three Months Ended Nine Months Ended
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Sales to external customers:
Black Diamond $ 42,242 $ 39,441 $ 114,478 $ 106,790
Sierra 3,532 - 3,532 -
Sales to external customers $ 45,774 $ 39,441 $ 118,010 $ 106,790
Segment operating income (expense):
Black Diamond $ 2,085 $ 1,821 $ 1,098 $ (225 )
Sierra 416 - 416 -
Segment operating income (expense) 2,501 1,821 1,514 (225 )
Restructuring charge (33 ) (282 ) (116 ) (1,275 )
Transaction costs (1,869 ) - (1,869 ) (269 )
Corporate and other expenses (1,435 ) (546 ) (4,283 ) (2,658 )
Interest expense, net (71 ) (719 ) (948 ) (2,142 )
(Loss) income before income tax $ (907 ) $ 274 $ (5,702 ) $ (6,569 )


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Sales to external customers:
Outdoor
Domestic sales	$	26,957	$	27,446	$	70,391	$	80,368
International sales		34,119		35,430		83,527		86,634
Total Outdoor		61,076		62,876		153,918		167,002
Precision Sport
Domestic sales		13,729		24,612		55,179		79,248
International sales		5,044		9,595		16,491		23,264
Total Precision Sport		18,773		34,207		71,670		102,512
Adventure
Domestic sales		3,466		3,482		10,154		22,304
International sales		16,760		15,150		45,445		52,106
Total Adventure		20,226		18,632		55,599		74,410
Total sales to external customers		100,075		115,715		281,187		343,924
Segment operating income:
Outdoor		1,581		5,853		1,847		9,212
Precision Sport		5,450		9,936		17,938		33,951
Adventure		(26)		(3,736)		(1,677)		(968)
Total segment operating income		7,005		12,053		18,108		42,195
Restructuring charges		(1,099)		—		(1,835)		—
Transaction costs		(842)		(858)		(975)		(2,880)
Contingent consideration benefit (expense)		—		(104)		1,565		(493)
Corporate and other expenses		(3,690)		(6,207)		(10,728)		(19,444)
Interest expense, net		(2,842)		(2,216)		(8,445)		(5,060)
(Loss) income before income tax	$	(1,468)	$	2,668	$	(2,310)	$	14,318

There were no intercompany sales between the ~~Black Diamond~~Outdoor, Precision Sport, and ~~Sierra~~Adventure segments for the periods presented. ~~Restructuring charges for the periods presented relate to the Black Diamond segment.~~

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~~On August 21, 2017, the Company purchased Sierra.~~ NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

Total ~~preliminary~~ assets ~~of Sierra~~by segment, as of ~~August 21, 2017~~September 30, 2023 and December 31, 2022, were ~~$80,566. Depreciation~~as follows:


	September 30, 2023		December 31, 2022

Outdoor	$	173,827	$	175,820
Precision Sport		139,443		144,224
Adventure		167,828		181,867
Corporate		16,128		16,234
	$	497,226	$	518,145

Capital expenditures, depreciation and amortization by segment is as follows.

Three Months Ended Nine Months Ended
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Outdoor group depreciation:
Black Diamond $ 569 $ 529 $ 1,674 $ 1,705
Sierra 156 - 156 -
Total outdoor group depreciation $ 725 $ 529 $ 1,830 $ 1,705
Outdoor group amortization:
Black Diamond $ 273 $ 269 $ 808 $ 808
Sierra 375 - 375 -
Total outdoor group amortization $ 648 $ 269 $ 1,183 $ 808


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Capital expenditures:
Outdoor	$	345	$	184	$	1,123	$	2,509
Precision Sport		408		1,024		1,814		2,246
Adventure		490		936		1,558		1,461
Total capital expenditures	$	1,243	$	2,144	$	4,495	$	6,216
Depreciation:
Outdoor	$	720	$	794	$	2,133	$	2,440
Precision Sport		898		818		2,611		2,411
Adventure		325		479		931		949
Total depreciation	$	1,943	$	2,091	$	5,675	$	5,800
Amortization:
Outdoor	$	258	$	248	$	772	$	753
Precision Sport		508		692		1,525		2,077
Adventure		2,295		2,743		7,263		8,910
Total amortization	$	3,061	$	3,683	$	9,560	$	11,740

NOTE 17. ~~RELATED PARTY TRANSACTIONS~~SUBSEQUENT EVENT

TRED Acquisition

~~5% Unsecured Subordinated Notes due May 28, 2017~~

~~As part~~On September 13, 2023, Clarus, through Oscar Aluminium Pty Ltd (“Oscar Aluminium”), an indirect wholly-owned Australian subsidiary of the ~~consideration payable to~~Company, entered into a Share Purchase Agreement (the “TRED Purchase Agreement”) by and among the ~~stockholders of Gregory when the Company acquired Gregory, the Company issued $14,517, $7,539,~~Oscar Aluminium, Clarus, and ~~$554 in 5% Unsecured Subordinated Notes due May 28, 2017~~Venlo Holdings Pty Ltd (the ~~“Merger Consideration Subordinated Notes”~~“Seller”) to ~~Kanders GMP Holdings, LLC, Schiller Gregory Investment Company, LLC,~~acquire Australian-based TRED Outdoors Pty Ltd. (“TRED”). On October 9, 2023, the transaction contemplated by the TRED Purchase Agreement was consummated. All United States dollar amounts contained herein are based on the exchange rates in effect for Australian dollars ($AUD) and ~~five former employees~~the market value of ~~Gregory, respectively. Mr. Warren B. Kanders,~~ the Company’s ~~Executive Chairman and a member~~common stock at the time of ~~its Board of Directors, is a majority member and a trustee~~closing of the ~~manager~~acquisition of ~~Kanders GMP Holdings, LLC. The sole manager of Schiller Gregory Investment Company, LLC is Mr. Robert R. Schiller,~~TRED (the “TRED Acquisition”).

Under the ~~Company’s former Executive Vice Chairman and former member of its Board of Directors. The principal~~ terms of the Merger Consideration Subordinated Notes was as follows: (i) the principal amount was due and payable on May 28, 2017 and was prepayable by the Company at any time; (ii) interest accrued on the principal amount at the rateTRED Purchase Agreement, Oscar Aluminium acquired TRED for an aggregate purchase price of 5% per annum and was payable quarterly in cash; (iii) the default interest rate accrued at the rate of 10% per annum during the occurrence of an event of default; and (iv) events of default, which can only be triggered with the consent of Kanders GMP Holdings, LLC, were: (a) the default by the Company on any payment due under a Merger Consideration Subordinated Note; (b) the Company’s failure to perform or observe any other material covenant or agreement contained in the Merger Consideration Subordinated Notes; or (c) the Company’s instituting or becomingapproximately $AUD 11,765 (approximately $7,500), subject to a ~~proceeding under the Bankruptcy Code (as defined in the Merger Consideration Subordinated Notes).~~post-closing adjustment. The ~~Merger Consideration Subordinated Notes were junior to all senior indebtedness~~purchase price consideration was comprised of approximately $AUD 9,000 (approximately $5,740) cash, and approximately 179 shares of the ~~Company, except that payments~~Company’s common stock. The TRED Purchase Agreement also provides for the payment of ~~interest continue~~additional contingent consideration of up to ~~be made under~~approximately $AUD 1,000 (approximately $640) cash upon the ~~Merger Consideration Subordinated Notes as long as no event~~satisfaction of ~~default exists under any senior indebtedness.~~certain net sales

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

(in thousands, except per share amounts)

~~Given the below market interest rate for comparably secured notes and the relative illiquidity~~targets. The shares of the ~~Merger Consideration Subordinated Notes, we discounted~~Company’s common stock issued to the ~~notes~~Seller are subject to ~~$8,640, $4,487 and $316, respectively, at~~a lock-up agreement restricting sales for 90 days from the ~~date of acquisition. We were accreting the discount on the Merger Consideration Subordinated Notes to interest expense using the effective interest method over the term~~closing of the ~~Merger Consideration Subordinated Notes. The effective interest rate was approximately 14%.~~TRED Acquisition.

~~On April 7, 2011, Schiller Gregory Investment~~Based upon the timing of the TRED Acquisition, the initial accounting is not yet complete as the Company ~~LLC transferred its Merger Consideration Subordinated Note in equal amounts~~gathers additional information related to the ~~Robert R. Schiller Cornerstone Trust~~assets acquired and ~~the Deborah Schiller 2005 Revocable Trust. On June 24, 2013, the Robert R. Schiller Cornerstone Trust dated September 9, 2010 transferred its Merger Consideration Subordinated Note~~liabilities assumed. The Company is in the ~~amount~~process of ~~$3,769~~obtaining third-party valuations of certain intangible assets. The preliminary application of acquisition accounting to the ~~Robert R. Schiller 2013 Cornerstone Trust dated June 24, 2013. During~~assets acquired and liabilities assumed, as well as the results of operations of TRED, will first be reflected in the Company's consolidated financial results as of the year ended December 31, 2023. The operating results of TRED are expected to be included within the Adventure segment. Acquisition-related costs for the TRED Acquisition, which were included in transaction costs during the three and nine months ended September 30, 2017, $0 and $89 in interest, respectively, was paid to Kanders GMP Holdings, LLC, and $0 and $46 in interest, respectively, was paid to the Robert R. Schiller 2013 Cornerstone Trust and the Deborah Schiller 2005 Revocable Trust pursuant to the outstanding Merger Consideration Subordinated Notes.2023, were $360.

On May 29, 2012 and August 13, 2012, five former employees of Gregory exercised certain sales rights and sold Merger Consideration Subordinated Notes in the aggregate principal amount of approximately $365 to Kanders GMP Holdings, LLC and in the aggregate principal amount of approximately $189 to Schiller Gregory Investment Company, LLC. During the three and nine months ended September 30, 2017, $0 and $2 in interest, respectively, was paid to Kanders GMP Holdings, LLC, and $0 and $1 in interest, respectively, was paid to Schiller Gregory Investment Company, LLC, pursuant to these outstanding Merger Consideration Subordinated Notes.

In February 2017, the Board of Directors approved the repayment of the Merger Consideration Subordinated Notes. On February 13, 2017, the entire principal amounts and all accrued interest amounts were paid in full. The note discount as of December 31, 2016 of $814 was expensed and recognized as interest expense during the three months ended March 31, 2017.

Upon the Company’s acquisition of Sierra, on August 21, 2017, the Company paid a fee in the amount of $1,000 to Kanders & Company, Inc. (“Kanders & Company”), which is included in transaction costs, in consideration of the significant support received by the Company from Kanders & Company in sourcing, structuring, performing due diligence and negotiating the acquisition. Mr. Warren B. Kanders, the Company’s Executive Chairman of the Board of Directors and a member of its Board of Directors, is the sole stockholder of Kanders & Company.

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CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Please note that in this Quarterly Report on Form 10-Q weClarus Corporation (which may be referred to 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 Quarterly Report on Form 10-Q include, but are not limited to, the overall level of consumer ~~spending~~demand on our products; general economic conditions and other factors affecting consumer ~~confidence;~~confidence, preferences, and behavior, including, without limitation, the impact of inflation; disruption and volatility in the global currency, capital and credit markets; the financial strength of the Company’s customers; the Company’s ability to implement its ~~growth strategy, including its ability to organically grow each of its historical product lines;~~business strategy; the ability of the Company to ~~identify potential acquisition~~execute and integrate acquisitions; changes in governmental regulation, legislation or ~~investment opportunities as part~~public opinion relating to the manufacture and sale of ~~its redeployment~~bullets and ~~diversification strategy;~~ammunition, and the Company’s ability to successfully redeploy its capital into diversifying assets or that any such redeployment will result in the Company’s future profitability; the Company’s ability to successfully integrate Sierra Bullets L.L.C.;possession and use of firearms and ammunition by our customers; the Company’s exposure to product liability ofor product warranty claims and other loss ~~contingencies;~~contingencies, including, without limitation, recalls and liability claims relating to our avalanche beacon transceivers; disruptions and other impacts to the Company’s business, as a result of an outbreak of disease or similar public health threat, such as the COVID-19 global pandemic, and government actions and restrictive measures implemented in response; stability of the Company’s manufacturing facilities and ~~foreign suppliers;~~suppliers, as well as consumer demand for our products, in light of disease epidemics and health-related concerns such as the COVID-19 global pandemic; 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; the Company’s ability to protect patents, trademarks ~~patents~~ 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 with our transitioning 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 investigation related to the Company’s reporting obligations under the Consumer Product Safety Act in connection with the Company’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~~risks; the Company’s ability to maintain a quarterly dividend; any material differences in ~~international markets.~~the actual financial results of the Company’s past and future acquisitions, including the impact of acquisitions and any recognition of impairment or other charges relating to any such acquisitions on the Company’s future earnings per share; the Company’s potential responses to the non-binding indication of interest received from Warren B. Kanders, the Company’s Executive Chairman, to acquire the Company’s Precision Sport segment (the “Precision Sport Proposal”), the exploration of strategic alternatives by the Company in response to the Precision Sport Proposal, and the potential impact of the Precision Sport Proposal on our business, results of operations, and financial condition. More information on potential factors that could affect the Company’s financial results is included from time to time in the Company’s public reports filed with the Securities and Exchange Commission, including the Company’s Annual Report

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CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. All forward-looking statements included in this Quarterly Report on Form 10-Q are based upon information available to the Company as of the date of this Quarterly Report on Form 10-Q, and speak only as of the date hereof. We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.

Overview

Headquartered in Salt Lake City, Utah, Clarus Corporation (which may be referred to as the “Company,” “Clarus,” “we,” “our” or “us”) is a ~~holding company which seeks opportunities to acquire and grow businesses that can generate attractive shareholder returns. Presently, through its Outdoor Group, Clarus’ primary business is as a~~global leading designer, developer, manufacturer and distributor of best-in-class outdoor equipment and lifestyle products focused on the ~~climb, ski, mountain,~~outdoor and ~~technical categories.~~consumer enthusiast markets. Our mission is to identify, acquire and grow outdoor “super fan” brands through our unique “innovate and accelerate” strategy. We define a “super fan” brand as a brand that creates the world’s pre-eminent, performance-defining product that the best-in-class user cannot live without. 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®, Sierra®, Barnes®, Rhino-Rack® and ~~PIEPS®~~MAXTRAX® 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.

One of the key elements of our sustained financial performance is our persistent focus on brand building through product initiatives. 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 currently employ approximately 120 engineers across the portfolio, focusing 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 super fan brands.

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. Our Sierra and Barnes brands have been leading specialty manufacturers ~~throughout~~of bullets and ammunition for over 50 years. Since 1947, Sierra has been dedicated to manufacturing the ~~U.S. and internationally.~~

Through our Black Diamond® and PIEPS® brands, we offer a broad range of products including: high performance apparel (such as jackets, shells, pants and bibs); rock-climbing equipment (such as carabiners, protection devices, harnesses, belay devices, helmets, and ice-climbing gear); technical backpacks and high-end day packs; tents; 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. Sierra manufactures a wide range of high performancehighest-quality, most accurate bullets in the world for ~~both rifles and pistols. Sierra bullets are used for precision target shooting,~~ hunting and sport shooting enthusiasts. Barnes traces its history back to 1932, and since 1989 has manufactured technologically-advanced, lead-free bullets and premium ammunition for hunters, range shooters, military and law enforcement ~~purposes.~~

professionals. 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.

Clarus, ~~Corporation,~~ incorporated in Delaware in 1991, acquired Black Diamond Equipment, Ltd. ~~(which may be referred to as “Black~~(“Black Diamond Equipment” ~~or “BDEL”) and Gregory Mountain Products, LLC (which may be referred to as “Gregory Mountain Products”, “Gregory” or “GMP”~~) in May 2010 and changed its name to Black Diamond, Inc., in January 2011. In ~~July 2012, we acquired POC Sweden AB and its subsidiaries (collectively, “POC”) and in~~ October 2012, we acquired PIEPS Holding GmbH and its subsidiaries (collectively, “PIEPS”).

~~CLARUS CORPORATION~~

~~MANAGEMENT DISCUSSION AND ANALYSIS~~

~~(in thousands, except per share amounts)~~

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 August 21, 2017, the Company acquired Sierra Bullets, L.L.C. (“Sierra” ~~or “Sierra Bullets”~~). On November 6, 2018, the Company acquired the assets of SKINourishment, Inc. (“SKINourishment”). 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”).

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~~Clarus,~~CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

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. On November 3, 2023, the Company announced that its Board of Directors approved the payment on November 24, 2023 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 November 14, 2023.

Impact of COVID-19

The global outbreak of COVID-19 was declared a ~~holding company, is seeking opportunities~~pandemic by the World Health Organization and a national emergency by each of the U.S., European, and Australian governments in March 2020, with governments worldwide implementing safety measures restricting travel and requiring citizen lockdowns and self-confinements for quarantining purposes. During the years ended December 31, 2020, 2021, and 2022, this had negatively affected the U.S., European, Australian and global economies, disrupted global supply chains, and resulted in significant transport restrictions and disruption of global financial markets.

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 and may continue to ~~acquire~~have, a significant impact on the global supply chain, with restrictions and ~~grow businesses~~limitations on related activities causing disruption and delay, along with increased raw material, storage, and shipping costs. Any of these disruptions and delays may strain domestic and international supply chains, which could negatively affect the flow or availability of certain critical raw materials and finished good products that ~~can generate attractive shareholder returns.~~the Company relies upon. Furthermore, the foregoing impacts may significantly increase demand from online sales channels, including our website, and could impact our logistical operations, including our fulfillment and shipping functions, which may result in periodic delays in the delivery of our products.

We expect that 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 may continue to have, an impact on the Company’s sales and profitability in future periods. The ~~Company has substantial net operating tax loss carryforwards~~duration of these trends and the magnitude of such impacts cannot be precisely estimated at this time, as they are affected by a number of factors (some of which ~~it is seeking to redeploy to maximize shareholder value~~are outside management’s control), including those presented in ~~a diverse array~~Part I, Item 1A. Risk Factors of ~~businesses.~~

our Annual Report on Form 10-K for the year ended December 31, 2022.

Critical Accounting Policies and Use of Estimates

Management’s discussion of our financial condition and results of operations is based on the ~~condensed~~ consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of the ~~condensed~~ consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities ~~and disclosure of contingent liabilities~~ at the date of the ~~condensed~~ consolidated financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting periods. ~~We continually evaluate our~~Our critical accounting policies that require the use of estimates and assumptions ~~including those related to derivatives, revenue recognition, income taxes and valuation of long-lived assets and other intangible assets.~~were discussed in detail in our Annual Report on Form 10-K for the year ended December 31, 2022. 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.

There have been no significant changes to our critical accounting policies ~~with the exception to the policy below,~~ as described in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

~~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.

2022.

Accounting Pronouncements Issued Not Yet Adopted

None

~~See “Recent Accounting Pronouncements” in Note 1 to the notes to the unaudited condensed consolidated financial statements.~~

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CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

Results of Operations

~~Condensed Consolidated~~ Three Months Ended September 30, ~~2017~~2023 Compared to ~~Condensed Consolidated~~ Three Months Ended September 30, ~~2016~~

2022

The following presents a discussion of ~~condensed consolidated~~ operations for the three months ended September 30, ~~2017,~~2023, compared with the ~~condensed consolidated~~ three months ended September 30, ~~2016.~~2022.


	Three Months Ended
	September 30, 2023		September 30, 2022

Sales
Domestic sales	$	44,152	$	55,540
International sales		55,923		60,175
Total sales		100,075		115,715

Cost of goods sold		64,527		76,291
Gross profit		35,548		39,424

Operating expenses
Selling, general and administrative		31,790		32,340
Restructuring charges		1,099		-
Transaction costs		842		858
Contingent consideration expense		-		104

Total operating expenses		33,731		33,302

Operating income		1,817		6,122

Other expense
Interest expense, net		(2,842)		(2,216)
Other, net		(443)		(1,238)

Total other expense, net		(3,285)		(3,454)

(Loss) income before income tax		(1,468)		2,668
Income tax benefit		(204)		(83)
Net (loss) income	$	(1,264)	$	2,751

Sales

~~Sales~~

~~Consolidated~~Total sales ~~increased $6,333,~~decreased $15,640, or ~~16.1%~~13.5%, to ~~$45,774~~$100,075 during the three months ended September 30, ~~2017,~~2023, compared to ~~consolidated~~total sales of ~~$39,441~~$115,715 during the three months ended September 30, ~~2016.~~2022. The ~~increase~~decrease in sales was ~~partially~~primarily attributable to ~~the inclusion of Sierra, which contributed $3,532~~a decrease in sales ~~during~~at the ~~three months ended September 30, 2017. The remaining increase was attributable to the increase in the quantity~~Precision Sport and Outdoor segments of ~~new~~$15,434 and ~~existing climb, mountain, and ski products sold during the period and~~$1,800, respectively, partially offset by an increase in sales at the Adventure segment of ~~$690~~$1,594.

Sales in the Adventure segment were reduced by $709 due to foreign exchange impact from the strengthening of ~~foreign currencies~~the U.S. dollar against the ~~U.S.~~Australian dollar during the three months ended September 30, ~~2017~~2023, compared to the prior period.

~~Consolidated domestic sales~~ Sales in the Outdoor segment were increased ~~$3,202, or 17.8%,~~by $302 due to ~~$21,141~~foreign exchange impact from the weakening of the U.S. dollar primarily against the euro during the three months ended September 30, ~~2017,~~2023, compared to ~~consolidated domestic~~the prior period. Sales in the Outdoor segment decreased due to continued weakness at key North American retail accounts, compounded by weakness

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CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

in the European and international markets. This weakness was partially offset by growth in the direct-to-consumer channel. Sales in the Precision Sport segment decreased due to challenging market conditions, primarily as a result of significantly lower ammunition sales, ~~of $17,939~~as well as decreases in OEM and component product sales. Sales in the Adventure segment increased primarily due to higher OEM sales in the Australian market.

Domestic sales decreased $11,388, or 20.5%, to $44,152 during the three months ended September 30, ~~2016. The increase in~~2023, compared to domestic sales ~~was partially attributable to the inclusion~~ of ~~Sierra, which contributed $2,301 in sales~~$55,540 during the three months ended September 30, ~~2017.~~2022. The ~~remaining increase~~decrease in ~~domestic~~ sales was primarily attributable to a decrease in sales at the ~~increase in the quantity~~Precision Sport, Outdoor, and Adventure segments of ~~new~~$10,883, $489, and ~~existing climb and ski products sold during the period.~~$16, respectively.

~~CLARUS CORPORATION~~

~~MANAGEMENT DISCUSSION AND ANALYSIS~~

~~(in thousands, except per share amounts)~~

~~Consolidated international~~International sales ~~increased $3,131,~~decreased $4,252, or ~~14.6%~~7.1%, to ~~$24,633~~$55,923 during the three months ended September 30, ~~2017,~~2023, compared to ~~consolidated~~ international sales of ~~$21,502~~$60,175 during the three months ended September 30, ~~2016.~~2022. The decrease in sales was primarily attributable to a decrease in sales at the Precision Sport and Outdoor segments of $4,551 and $1,311, respectively, partially offset by an increase in sales ~~was partially attributable~~at the Adventure segment of $1,610.

Cost of Goods Sold

Cost of goods sold decreased $11,764, or 15.4%, to ~~the inclusion of Sierra, which contributed $1,231 in sales~~$64,527 during the three months ended September 30, ~~2017. The remaining increase in international sales was attributable~~2023, compared to ~~the increase in the quantity~~cost of ~~new and existing climb, mountain, and ski products~~goods sold ~~during the period and an increase in sales~~ of ~~$690 due to the strengthening of foreign currencies against the U.S. dollar~~$76,291 during the three months ended September 30, ~~2017 compared to the prior period.~~

~~Cost of Goods Sold~~

~~Consolidated~~2022. The decrease in cost of goods sold ~~increased $3,385,~~was primarily attributable to a decrease in the number of units sold.

Gross Profit

Gross profit decreased $3,876, or ~~12.5%~~9.8%, to ~~$30,490~~$35,548 during the three months ended September 30, ~~2017,~~2023, compared to ~~consolidated cost~~gross profit of ~~goods sold of $27,105~~$39,424 during the three months ended September 30, ~~2016. The increase in cost of goods sold~~2022. Gross margin was partially attributable to the inclusion of Sierra of $2,484, which included $420 related to the sale of inventory that was recorded at fair value in purchase accounting. The remaining amount of inventory that was recorded at fair value in purchase accounting, which totals $2,102, is expected to be sold during the fourth quarter of 2017 and first quarter of 2018. The remaining increase was attributable to an increase in the number of units sold and the mix of higher cost products sold.

~~Gross Profit~~

~~Consolidated gross profit increased $2,948, or 23.9%, to $15,284~~35.5% during the three months ended September 30, ~~2017,~~2023, compared to ~~consolidated~~a gross ~~profit~~margin of ~~$12,336~~34.1% during the three months ended September 30, 2016. Consolidated gross margin was 33.4% during the three months ended September 30, 2017, compared to a consolidated gross margin of 31.3% during the three months ended September 30, 2016. Consolidated gross2022. Gross margin during the three months ended September 30, ~~2017,~~2023, increased compared to the prior year due to ~~a favorable~~changes in channel and product mix ~~in higher margin products~~of 0.8% and ~~channel distribution, as well as lower costs~~favorable variances, primarily related to ~~the Company’s manufacturing activities that~~easing freight costs, of 0.9%. These increases were ~~transferred from China to the United States. Gross margin also benefited from the inclusion of Sierra; however, this benefit was~~partially offset by ~~a decrease in gross margin~~unfavorable foreign currency exchange movement of ~~0.9% due to the sale of inventory that was recorded at its preliminary fair value in purchase accounting.~~0.3%.

Selling, General and Administrative

~~Consolidated selling,~~Selling, general, and administrative expenses ~~increased $2,948,~~decreased $550, or ~~25.7%~~1.7%, to ~~$14,431~~$31,790 during the three months ended September 30, ~~2017,~~2023, compared to ~~consolidated~~ selling, general and administrative expenses of ~~$11,483~~$32,340 during the three months ended September 30, ~~2016.~~2022. The ~~increase~~decrease is primarily due to a decrease in ~~selling, general~~stock compensation of $1,052, lower intangible amortization expense, and ~~administrative expenses was partially attributable to the inclusion of Sierra of $632, with the remaining increase being attributable to the Company’s investment in the brand related activities of~~lower sales ~~marketing and research and development in supporting its strategic initiatives around new product introduction and increasing brand equity. Stock compensation also increased $345~~commissions during the three months ended September 30, ~~2017~~2023, compared to the prior year.

The decrease was partially offset by investment in e-com initiatives in the Outdoor segment and higher legal costs.

Restructuring Charges

~~Consolidated restructuring expense decreased $249, or 88.3%,~~Restructuring charges increased to ~~$33~~$1,099 during the three months ended September 30, ~~2017,~~2023, compared to ~~consolidated~~ restructuring expense of $282 during the three months ended September 30, 2016. Restructuring expenses incurred during the three months ended September 30, 2017, related to costs associated with the formal closure and liquidation of the Company’s Black Diamond Equipment manufacturing operations in Zhuhai, China.

~~Transaction Costs~~

~~Consolidated transaction expense increased to $1,869 during the three months ended September 30, 2017, compared to consolidated transaction costs~~charges of $0 during the three months ended September 30, ~~2016,~~2022, which consisted of ~~expenses~~severance costs, exit costs, and other costs related to the Company’s ~~acquisition of Sierra.~~restructuring initiatives.

Transaction Costs

~~Interest Expense, net~~

~~Consolidated interest expense, net~~Transaction costs decreased ~~$648, or 90.1%,~~ to ~~$71~~$842 during the three months ended September 30, ~~2017,~~2023, compared to ~~consolidated interest expense, net,~~transaction costs of ~~$719~~$858 during the three months ended September 30, ~~2016.~~ 2022. The 2023 transaction costs related to the TRED Outdoor acquisition and costs related to the ongoing process undertaken by the Special Committee of the Board of Directors in connection with its evaluation of the potential sale of the Precision Sport segment.

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CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

Contingent Consideration Expense

Contingent consideration expense decreased to $0 during the three months ended September 30, 2023, compared to a contingent consideration expense of $104 during the three months ended September 30, 2022, which consisted of changes in the estimated fair value of contingent consideration liabilities associated with our acquisition of MAXTRAX in 2021.

Interest Expense, net

Interest expense, net increased to $2,842 during the three months ended September 30, 2023, compared to interest expense, net of $2,216 during the three months ended September 30, 2022. The increase in interest expense recognized during the three months ended September 30, ~~2016~~2023 was primarily ~~attributable~~associated with the increase in interest rates during the period compared to the ~~Company’s 5% Senior Subordinated Notes which were repaid during the three months ended March 31, 2017.~~prior year.

~~CLARUS CORPORATION~~

~~MANAGEMENT DISCUSSION AND ANALYSIS~~

~~(in thousands, except per share amounts)~~

Other, net

~~Consolidated other,~~Other, net, ~~decreased $209,~~changed by $795, or ~~49.5%~~64.2%, to ~~income of $213~~($443) during the three months ended September 30, ~~2017,~~2023, compared to ~~consolidated~~ other, net ~~income~~ of ~~$422~~($1,238) during the three months ended September 30, ~~2016.~~2022. The ~~decrease~~change in other, net, was primarily attributable to losses on mark-to-market adjustments on non-hedged foreign currency contracts and the absence of gains related to the sale of marketable securities during the three months ended September 30, 2017. These decreases were partially offset by an increase in remeasurement gains recognized on the Company’s foreign denominated accounts receivable and accounts payable and gains related to recognition of cumulative translation adjustments due to the substantial liquidation of a foreign entity.

~~Income Taxes~~

Consolidated income tax expense decreased $3, or 0.4%, to $676 during the three months ended September 30, 2017, compared to a consolidated income tax expense of $679 during the same period in 2016. The tax expense recorded during the three months ended September 30, 2017 includes discrete charges associated with a disproportionate tax effect released from accumulated other comprehensive loss of $109, an Alternative Minimum Tax related to the Ember dividend of $211, and Sierra amortization of indefinite lived intangibles and goodwill of $101. The tax expense recorded during the three months ended September 30, 2016 includes a discrete charge for a potential tax liability related to a tax audit associated with the formal closure and liquidation of the Company’s Black Diamond Equipment manufacturing operations in Zhuhai, China. The audit was formally closed during the three months ended September 30, 2017.

Our effective income tax rate was 74.5% for the three months ended September 30, 2017, compared to 247.8% for the same period in 2016. The primary reasons for the effective income tax rate changes are due to differing levels of income (loss) before income tax and discrete charges recorded during the respective periods. Factors that could cause our annual effective tax rate to differ materially from our quarterly effective tax rates include changes in the geographic mix of taxable income and discrete events that may occur. There were three discrete events in the amount of $421 recorded in the Company’s income tax provision calculation for the three months ended September 30, 2017. There was one discrete event in the amount of $520 recorded in the Company’s income tax provision calculation for the three months ended September 30, 2016.

~~CLARUS CORPORATION~~

~~MANAGEMENT DISCUSSION AND ANALYSIS~~

~~(in thousands, except per share amounts)~~

~~Results of Operations~~

~~Condensed Consolidated Nine Months Ended September 30, 2017 Compared to Condensed Consolidated Nine Months Ended September 30, 2016~~

~~The following presents a discussion of condensed consolidated operations for the nine months ended September 30, 2017, compared with the condensed consolidated nine months ended September 30, 2016.~~

~~Sales~~

Consolidated sales increased $11,220, or 10.5%, to $118,010 during the nine months ended September 30, 2017, compared to consolidated sales of $106,790 during the nine months ended September 30, 2016. The increase in sales was partially attributable to the inclusion of Sierra, which contributed $3,532 in sales during the nine months ended September 30, 2017. The remaining increase in sales was attributable to an increase in the quantity of new and existing climb, mountain and ski products sold during the period and an increase in sales of $700 due to the strengthening of foreign currencies against the U.S. dollar during the nine months ended September 30, 2017 compared to the prior period.

Consolidated domestic sales increased $5,284, or 9.8%, to $59,474 during the nine months ended September 30, 2017, compared to consolidated domestic sales of $54,190 during the nine months ended September 30, 2016. The increase in sales was partially attributable to the inclusion of Sierra, which contributed $2,301 in sales during the nine months ended September 30, 2017. The remaining increase in domestic sales was attributable to an increase in the quantity of new and existing climb and ski products sold during the period.

~~CLARUS CORPORATION~~

~~MANAGEMENT DISCUSSION AND ANALYSIS~~

~~(in thousands, except per share amounts)~~

Consolidated international sales increased $5,936, or 11.3%, to $58,536 during the nine months ended September 30, 2017, compared to consolidated international sales of $52,600 during the nine months ended September 30, 2016. The increase in sales was partially attributable to the inclusion of Sierra, which contributed $1,231 in sales during the nine months ended September 30, 2017. The remaining increase in international sales was attributable to an increase in the quantity of new and existing climb, mountain and ski products sold during the period and an increase in sales of $700 due to the strengthening of foreign currencies against the U.S. dollar during the nine months ended September 30, 2017 compared to the prior period.

~~Cost of Goods Sold~~

Consolidated cost of goods sold increased $6,233, or 8.3%, to $81,388 during the nine months ended September 30, 2017, compared to consolidated cost of goods sold of $75,155 during the nine months ended September 30, 2016. The increase in cost of goods sold was partially attributable to the inclusion of Sierra of $2,484, which included $420 related to the sale of inventory that was recorded at fair value in purchase accounting. The remaining amount of inventory that was recorded at fair value in purchase accounting, which totals $2,102, is expected to be sold during the fourth quarter of 2017 and first quarter of 2018. The remaining increase in cost of goods sold was attributable to an increase in the number of units sold and the mix of higher cost products sold.

~~Gross Profit~~

Consolidated gross profit increased $4,987, or 15.8%, to $36,622 during the nine months ended September 30, 2017, compared to consolidated gross profit of $31,635 during the nine months ended September 30, 2016. Consolidated gross margin was 31.0% during the nine months ended September 30, 2017, compared to a consolidated gross margin of 29.6% during the nine months ended September 30, 2016. Consolidated gross margin during the nine months ended September 30, 2017, increased compared to the prior year due to a favorable product mix in higher margin products and channel distribution, as well as lower costs related to the Company’s manufacturing activities that were transferred from China to the United States. Gross margin also benefited from the inclusion of Sierra; however, this benefit was offset by a decrease ~~in gross margin of 0.4% due to the sale of inventory that was recorded at its preliminary fair value in purchase accounting.~~

~~Selling, General and Administrative~~

Consolidated selling, general and administrative expenses increased $2,515, or 6.7%, to $39,826 during the nine months ended September 30, 2017, compared to consolidated selling, general and administrative expenses of $37,311 during the nine months ended September 30, 2016. The increase in selling, general and administrative expenses was partially attributable to the inclusion of Sierra of $632, with the remaining increase being attributable to the Company’s investment in the brand related activities of sales, marketing and research and development in supporting its strategic initiatives around new product introduction and increasing brand equity. Stock compensation also increased $536 during the nine months ended September 30, 2017 compared to the prior year.

~~Restructuring Charges~~

Consolidated restructuring expense decreased $1,159, or 90.9%, to $116 during the nine months ended September 30, 2017, compared to consolidated restructuring expense of $1,275 during the nine months ended September 30, 2016. Restructuring expenses incurred during the nine months ended September 30, 2017, related to costs associated with the formal closure and liquidation of the Company’s Black Diamond Equipment manufacturing operations in Zhuhai, China. Restructuring expenses incurred during the nine months ended September 30, 2016, primarily related 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, costs associated with the move of the Company’s Black Diamond Equipment European office from Basel, Switzerland to Innsbruck, Austria, and costs associated with the formal closure and liquidation of the Company’s Black Diamond Equipment manufacturing operations in Zhuhai, China.

~~Transaction Costs~~

Consolidated transaction expense increased $1,600, or 594.8%, to $1,869 during the nine months ended September 30, 2017, compared to consolidated transaction costs of $269 during the nine months ended September 30, 2016. The expenses during the nine months ended September 30, 2017 consisted of expenses related to the Company’s acquisition of Sierra. The expenses during the nine months ended September 30, 2017 consisted of expenses related to the Company’s redeployment and diversification strategy.

~~Arbitration Award~~

During the nine months ended September 30, 2016, the Company received an arbitral award on agreed terms of $1,967, related to certain claims against the former owner of PIEPS associated with the voluntary recall of all the PIEPS VECTOR avalanche transceivers during the year ended December 31, 2013.

~~CLARUS CORPORATION~~

~~MANAGEMENT DISCUSSION AND ANALYSIS~~

~~(in thousands, except per share amounts)~~

~~Interest Expense, net~~

Consolidated interest expense, net, decreased $1,194, or 55.7%, to $948 during the nine months ended September 30, 2017, compared to consolidated interest expense, net, of $2,142 during the nine months ended September 30, 2016. The decrease in interest expense, net, was primarily attributable to the repayment of the Company’s 5% Senior Subordinated Notes during the three months ended March 31, 2017.

~~Other, net~~

Consolidated other, net, decreased $391, or 47.3%, to income of $435 during the nine months ended September 30, 2017, compared to consolidated other, net income of $826 during the nine months ended September 30, 2016. The decrease in other, net, was primarily attributable to an increase in remeasurement losses recognized on the Company’s foreign denominated accounts receivable and accounts payable ~~losses on~~and changes in mark-to-market adjustments on non-hedged foreign currency contracts ~~and the absence of gains related to the sale of marketable securities~~ during the three months ended September 30, ~~2017. These losses were partially offset~~2023.

Income Taxes

Income tax benefit changed by ~~gains related~~$121, or 145.8%, to ~~recognition~~$204 during the three months ended September 30, 2023, compared to a benefit of ~~cumulative translation adjustments~~$83 during the same period in 2022. Our effective income tax rate was a benefit of 13.9% for the three months ended September 30, 2023, and differed compared to the statutory tax rates primarily due to the ~~substantial liquidation~~impact of ~~a foreign entity.~~

~~Income Taxes~~

~~Consolidated~~stock compensation, research and experimentation expenditures and credits, transaction costs, and discrete stock option shortfalls. For the three months ended September 30, 2022, our effective income tax ~~expense~~rate was a benefit of 3.1% and differed compared to the statutory tax rates due to the impact of discrete stock option windfall benefits.

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CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

The following presents a discussion of operations for the nine months ended September 30, 2023, compared with the nine months ended September 30, 2022.


	Nine Months Ended
	September 30, 2023		September 30, 2022

Sales
Domestic sales	$	135,724	$	181,920
International sales		145,463		162,004
Total sales		281,187		343,924

Cost of goods sold		178,864		216,566
Gross profit		102,323		127,358

Operating expenses
Selling, general and administrative		94,809		101,959
Restructuring charges		1,835		-
Transaction costs		975		2,880
Contingent consideration (benefit) expense		(1,565)		493

Total operating expenses		96,054		105,332

Operating income		6,269		22,026

Other expense
Interest expense, net		(8,445)		(5,060)
Other, net		(134)		(2,648)

Total other expense, net		(8,579)		(7,708)

(Loss) income before income tax		(2,310)		14,318
Income tax (benefit) expense		(553)		2,494
Net (loss) income	$	(1,757)	$	11,824

Sales

Total sales decreased ~~$30,~~$62,737, or ~~2.9%~~18.2%, to ~~$990~~$281,187 during the nine months ended September 30, ~~2017,~~2023, compared to ~~a consolidated income tax expense~~total sales of ~~$1,020 during the same period in 2016. The tax expense recorded~~$343,924 during the nine months ended September 30, ~~2017 includes discrete charges associated with~~2022. The decrease in sales was primarily attributable to a ~~disproportionate tax effect released~~decrease in sales at the Precision Sport, Adventure, and Outdoor segments of $30,842, $18,811, and $13,084, respectively.

Sales in the Adventure and Outdoor segments were reduced by $2,593 and $1,630, respectively, due to foreign exchange impact from ~~accumulated other comprehensive loss~~the strengthening of ~~$344, an Alternative Minimum Tax related to~~ the ~~Ember dividend of $211, and Sierra amortization of indefinite lived intangibles and goodwill of $101. The tax expense recorded~~U.S. dollar against foreign currencies during the nine months ended September 30, ~~2016 includes~~2023, compared to the prior period. Sales in the Outdoor segment decreased due to continued weakness at key North American retail accounts, compounded by weakness in the European market. This weakness was partially offset by growth in the direct-to-consumer channel. Sales in the Precision Sport segment decreased due to challenging market conditions, primarily as a ~~discrete charge for~~result of significantly lower ammunition sales, as well as decreases in OEM and component product sales.

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CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

Sales in the Adventure segment decreased due to lower demand from our wholesale partners in both Australia and the United States.

Domestic sales decreased $46,196, or 25.4%, to $135,724 during the nine months ended September 30, 2023, compared to domestic sales of $181,920 during the nine months ended September 30, 2022. The decrease in sales was primarily attributable to a ~~Swiss withholding tax~~decrease in sales at the Precision Sport, Adventure, and Outdoor segments of $24,069, $12,150, and $9,977, respectively.

International sales decreased $16,541, or 10.2%, to $145,463 during the nine months ended September 30, 2023, compared to international sales of $162,004 during the nine months ended September 30, 2022. The decrease in sales was primarily attributable to a decrease in sales at the Precision Sport, Adventure, and Outdoor segments of $6,773, $6,661, and $3,107, respectively.

Cost of Goods Sold

Cost of goods sold decreased $37,702, or 17.4%, to $178,864 during the nine months ended September 30, 2023, compared to cost of goods sold of $216,566 during the nine months ended September 30, 2022. The decrease in cost of goods sold was primarily attributable to a decrease in the number of units sold.

Gross Profit

Gross profit decreased $25,035, or 19.7%, to $102,323 during the nine months ended September 30, 2023, compared to gross profit of $127,358 during the nine months ended September 30, 2022. Gross margin was 36.4% during the nine months ended September 30, 2023, compared to a gross margin of 37.0% during the nine months ended September 30, 2022. Gross margin during the nine months ended September 30, 2023, decreased compared to the prior year due to changes in channel and product mix of 1.1% and unfavorable foreign currency exchange movement of 0.9%. Channel and product mix were primarily impacted by discounting of ammunition in the Precision Sport segment, as well as promotional pricing in the Outdoor segment, which negatively impacted gross margin. These decreases were partially offset by favorable variances, primarily related to easing freight costs, of 1.4%.

Selling, General and Administrative

Selling, general, and administrative expenses decreased $7,150, or 7.0%, to $94,809 during the nine months ended September 30, 2023, compared to selling, general and administrative expenses of $101,959 during the nine months ended September 30, 2022. The decrease is primarily due to a decrease in stock compensation of $5,106 during the nine months ended September 30, 2023, compared to the prior year. The decrease was also driven by expense reduction initiatives to offset challenging market conditions, lower intangible amortization expense, and lower sales commissions due to decreased revenue. The decrease was partially offset by higher investment in e-com initiatives in the Outdoor segment and higher legal costs.

Restructuring Charges

Restructuring charges increased to $1,835 during the nine months ended September 30, 2023, compared to restructuring charges of $0 during the nine months ended September 30, 2022, which consisted of severance costs, exit costs, and other costs related to the ~~transferring~~Company’s restructuring initiatives.

Transaction Costs

Transaction costs decreased to $975 during the nine months ended September 30, 2023, compared to transaction costs of ~~Black Diamond Equipment’s European operations from Basel, Switzerland to Innsbruck, Austria, and a discrete charge for a potential tax liability~~$2,880 during the nine months ended September 30, 2022. The 2023 transaction costs related to the TRED Outdoor

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CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

acquisition and costs related to the ongoing process undertaken by the Special Committee of the Board of Directors in connection with its evaluation of the potential sale of the Precision Sport segment.

Contingent Consideration (Benefit) Expense

Contingent consideration changed to a ~~tax audit~~benefit of $1,565 during the nine months ended September 30, 2023, compared to $493 contingent consideration expense during the nine months ended September 30, 2022, which consisted of changes in the estimated fair value of contingent consideration liabilities associated with our acquisition of MAXTRAX in 2021.

Interest Expense, net

Interest expense, net increased to $8,445 during the nine months ended September 30, 2023, compared to interest expense, net of $5,060 during the nine months ended September 30, 2022. The increase in interest expense recognized during the nine months ended September 30, 2023 was primarily associated with the ~~formal closure and liquidation~~increase in interest rates during the period compared to the prior year.

Other, net

Other, net, changed by $2,514, or 94.9%, to ($134) during the nine months ended September 30, 2023, compared to other, net of ($2,648) during the nine months ended September 30, 2022. The change in other, net, was primarily attributable to a decrease in remeasurement losses recognized on the Company’s ~~Black Diamond Equipment manufacturing operations~~foreign denominated accounts receivable and accounts payable and changes in ~~Zhuhai, China. The audit was formally closed~~mark-to-market adjustments on non-hedged foreign currency contracts during the ~~three~~nine months ended ~~June~~September 30, ~~2017.~~2023.

Income Taxes

Income tax (benefit) expense changed by $3,047, or 122.2%, to a benefit of $553 during the nine months ended September 30, 2023, compared to income tax expense of $2,494 during the same period in 2022. Our effective income tax rate was ~~17.4%~~a benefit of 23.9% for the nine months ended September 30, ~~2017,~~2023, and differed compared to ~~15.5% for~~ the ~~same period in 2016. The primary reasons for the effective income~~statutory tax ~~rate changes are~~rates primarily due to ~~differing levels~~the impact of ~~income (loss) before income tax~~stock compensation, research and experimentation expenditures and credits, and discrete charges recorded during the respective periods. Factors that could cause our annual effective tax rate to differ materially from our quarterly effective tax rates include changes in the geographic mix of taxable income and discrete events that may occur. There were four discrete events in the amount of $676 recorded in the Company’s income tax provision calculation forstock option shortfalls. For the nine months ended September 30, ~~2017. There were two~~2022, our effective income tax rate was 17.4% and differed compared to the statutory tax rates due to the impact of discrete ~~events~~stock option windfall benefits in the ~~amount~~third quarter, partially offset by the impact of ~~$1,117 recorded in the Company’s income~~foreign earnings taxed at applicable statutory rates and permanent book to tax ~~provision calculation for the nine months ended September 30, 2016.~~

differences related to incentive stock options and officer compensation limitations.

Liquidity and Capital Resources

~~Condensed Consolidated~~ Nine Months Ended September 30, ~~2017~~2023 Compared to ~~Condensed Consolidated~~ Nine Months Ended September 30, ~~2016~~2022

~~The following presents a discussion of cash flows for the condensed consolidated nine months ended September 30, 2017 compared with the condensed consolidated nine months ended September 30, 2016.~~ 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 activities associated with the ~~expansion into new product categories.~~various brands. We plan to fund ~~our future expansion of operations and investing~~these activities through a combination of our future operating cash flows and borrowings on our revolving credit ~~facility.~~facility which had approximately $17,000 available to borrow at September 30, 2023, while currently maintaining compliance with the consolidated total leverage ratio per the Restated Credit Agreement of 3.75 to 1. We believe that our liquidity requirements and contractual obligations for at least the next 12 months will be adequately covered by cash provided by operations and our existing revolving credit facility. Additionally, long-term contractual obligations are also currently expected to be funded from cash from operations and availability under our existing credit facilities. For additional information regarding the Company’s existing credit facilities, see the section titled “Credit Agreement” below.

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CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

At September 30, ~~2017,~~2023, we had total cash of ~~$1,672~~$8,024, compared to a cash balance of ~~$94,738~~$12,061 at December 31, ~~2016, which was substantially controlled by the Company’s U.S. entities.~~2022. At September 30, ~~2017,~~2023, the Company had ~~$332~~$5,062 of the ~~$1,672~~$8,024 in cash held by foreign entities, of which ~~$332~~$3,325 is considered permanently reinvested.

The following presents a discussion of cash flows for the condensed consolidated nine months ended September 30, 2023 compared with the condensed consolidated nine months ended September 30, 2022.


	Nine Months Ended
	September 30, 2023		September 30, 2022

Net cash provided by (used in) operating activities	$	17,428	$	(17,746)
Net cash used in investing activities		(4,549)		(5,778)
Net cash (used in) provided by financing activities		(16,191)		15,327
Effect of foreign exchange rates on cash		(725)		(903)
Change in cash		(4,037)		(9,100)
Cash, beginning of year		12,061		19,465
Cash, end of period	$	8,024	$	10,365

~~CLARUS CORPORATION~~

~~MANAGEMENT DISCUSSION AND ANALYSIS~~

~~(in thousands, except per share amounts)~~

Nine Months Ended
September 30, 2017 September 30, 2016

Net cash (used in) provided by operating activities $ (16,578 ) $ 5,405
Net cash (used in) provided by investing activities (81,104 ) 7,301
Net cash provided by (used in) financing activities 4,491 (5,222 )
Effect of foreign exchange rates on cash 125 70
Change in cash (93,066 ) 7,554
Cash, beginning of period 94,738 88,401
Cash, end of period $ 1,672 $ 95,955

Net Cash From Operating Activities

~~Consolidated net~~Net cash ~~used in~~provided by operating activities was ~~$16,578~~$17,428 during the nine months ended September 30, ~~2017,~~2023, compared to ~~consolidated~~ net cash ~~provided by~~used in operating activities of ~~$5,405~~$17,746 during the nine months ended September 30, ~~2016.~~2022. The ~~increase~~change in net cash ~~used in~~provided by (used in) operating activities during ~~2017~~2023 is primarily due to ~~an increase~~a decrease in ~~net operating assets, net of assets acquired or non-cash~~cash outflows related to working capital of ~~$24,039~~$60,318, partially offset by a decrease in ~~net loss~~stock compensation and amortization of other intangible assets, and an increase in contingent consideration benefit during the nine months ended September 30, ~~2017,~~2023, compared to the same period in ~~2016.~~

2022.

Free cash flow, defined as net cash provided by (used in) operating activities less capital expenditures, of $12,933 was ~~free cash flows used of $18,497~~generated during the nine months ended September 30, ~~2017~~2023 compared to ~~free cash flows provided of $3,369~~($23,962) used during the same period in ~~2016.~~2022. 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 the nearest comparable GAAP financial ~~measures~~measure is set forth below:


	Nine Months Ended
	September 30, 2023		September 30, 2022

Net cash provided by (used in) operating activities	$	17,428	$	(17,746)
Purchase of property and equipment		(4,495)		(6,216)
Free cash flow	$	12,933	$	(23,962)

Nine Months Ended
September 30, 2017 September 30, 2016

Net cash (used in) provided by operating activities $ (16,578 ) $ 5,405
Purchase of property and equipment (1,919 ) (2,036 )
Free cash flow $ (18,497 ) $ 3,369

Net Cash From Investing Activities

~~Consolidated net~~Net cash used in investing activities was ~~$81,104~~$4,549 during the nine months ended September 30, ~~2017,~~2023, compared to ~~consolidated net cash provided by investing activities of $7,301~~$5,778 during the nine months ended September 30, ~~2016.~~2022. The ~~increase~~decrease in cash used during the nine months ended September 30, ~~2017~~2023 is primarily due to a decrease in purchases of property and equipment, compared to the ~~$79,238~~same period in 2022.

Net Cash From Financing Activities

Net cash used ~~for the purchase of Sierra, net of cash acquired. The cash provided~~in financing activities was $16,191 during the nine months ended September 30, ~~2016 was primarily from the sale of marketable securities of $10,235.~~

~~Net Cash From Financing Activities~~

~~Consolidated~~2023, compared to net cash provided by financing activities ~~was $4,491~~of $15,327 during the nine months ended September 30, ~~2017, compared to consolidated~~2022. The change in net cash

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CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

(used inin) provided by financing activities ~~of $5,222~~ during the nine months ended September 30, ~~2016. The cash provided during~~2023, compared to the ~~nine months ended September 30, 2017 relates~~same period in 2022 was primarily due to a decrease in net proceeds from the revolving line of credit ~~facility~~and term loan, partially offset by ~~repayments of. The cash used during the nine months ended September 30, 2016 relates to the repurchase~~a decrease in purchases of ~~its common~~treasury stock.

Net Operating Loss

As of ~~December 31, 2016,~~September 30, 2023, the Company had net operating loss carryforwards (“NOLs”) and research and experimentation credit ~~and alternative minimum tax credit carryforwards~~ for U.S. federal income tax purposes of ~~$172,419 ($270, relates to excess tax benefits related to share based payment compensation), $3,407~~$18,908 and ~~$315,~~$2,629, respectively. The Company believes its U.S. Federal ~~net operating loss (“NOL”)~~NOLs will substantially offset its future U.S. Federal income taxes ~~excluding the amount subject to U.S. Federal Alternative Minimum Tax (“AMT”). AMT is calculated as 20% of AMT income. For purposes of AMT, a maximum of 90% of income is offset by available NOLs.~~until expiration. The majority of the Company’s pre-tax income is currently earned and expected to be earned in the U.S., or taxed in the U.S. as Subpart F income and will be offset with the ~~NOL. $172,149~~NOLs. The Company has $18,908 of ~~net operating losses available to offset taxable income does not~~NOLs, of which, $3,095 expire ~~until 2021 or later,~~on December 31, 2023. These NOLs are subject to compliance with Section 382 of the Internal Revenue Code of 1986, as amended.

~~CLARUS CORPORATION~~

~~MANAGEMENT DISCUSSION AND ANALYSIS~~

~~(in thousands, except per share amounts)~~

As of December 31, ~~2016,~~2022, the Company’s gross deferred tax asset was ~~$75,416.~~$32,972. The Company has recorded a valuation allowance of ~~$67,662,~~$3,323, resulting in a net deferred tax asset of ~~$7,754,~~$29,649, before deferred tax liabilities of ~~$16,720.~~$30,243. The Company has provided a valuation allowance against a portion of the net deferred tax assets as of December 31, ~~2016,~~2022, because the ultimate realization of those assets does not meet the ~~more likely than not~~more-likely-than-not criteria. The majority of the Company’s deferred tax assets consist of net operating loss carryforwards for federal tax purposes. If a change in control were to occur, these could be limited under Section 382 of the Internal Revenue Code of 1986 (“Code”), as amended.

Credit Agreement

~~Revolving Credit Facility~~

~~In conjunction~~As of September 30, 2023, the Company had drawn $10,380 on the revolving loan and $112,500 was outstanding under the term loan. Approximately $17,000 in additional funds were available to borrow on the revolving loan at September 30, 2023, while maintaining compliance with the ~~acquisition~~consolidated total leverage ratio per the Restated Credit Agreement (as defined below) of ~~Sierra,~~3.75 to 1. As of September 30, 2023, the interest rates on ~~August 21, 2017,~~ the ~~Company together with its direct~~revolving loan and ~~indirect domestic subsidiaries entered into a third amended and restated~~term loan agreement (the “Third Amended and Restated Loan Agreement”) with ZB, N.A. dba Zions First National Bank (the “Lender”), which matures on August 21, 2022. Under the Third Amended and Restated Loan Agreement, the Company has up to a $40,000 revolving line of credit (the “Revolving Line of Credit”) pursuant to a fourth amended and restated promissory note (revolving loan) (the “Revolving Line of Credit Promissory Note”)commitments were approximately 7.7%. The ~~maximum borrowing of $40,000 (the “Maximum Borrowing”) under~~Company was in compliance with the Revolving Line of Credit reduces by $1,250 per quarter until such time as the maximum borrowing amount is $20,000, provided, that the Company may request an increase of up to $20,000 as an accordion option (the “Accordion”) to increase the Revolving Line of Credit up to the Maximum Borrowing on a seasonal or permanent basis for funding general corporate needs including working capital, capital expenditures, permitted loans or investments in subsidiaries, and the issuance of letters of credit. Availability under the Revolving Line of Credit may not exceed $30,000 unless the Company has sufficient eligible receivable, inventory and equipment assets at such time pursuant to formulasdebt covenants set forth in the ~~Third~~Restated Credit Agreement as of September 30, 2023.

On April 18, 2022 (the “Effective Date”), the Company, Black Diamond Retail, Inc., Black Diamond Retail – Alaska, LLC, Sierra Bullets, L.L.C., SKINourishment, LLC, Black Diamond Retail – Colorado, LLC, Black Diamond Retail – Montana, LLC, Black Diamond Retail – Wyoming, LLC, Barnes Bullets-Mona, LLC, Black Diamond Retail – Oregon, LLC, Black Diamond Retail – Vermont, LLC (collectively with the Company, the “Borrowers”) and the other loan parties party thereto (together with the Borrowers, each a “Loan Party”, and collectively, the “Loan Parties”) entered into an Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”) and the lenders party thereto (the “Restated Credit Agreement”) pursuant to which the existing Credit Agreement, dated as of May 3, 2019 (as amended prior to the Effective Date, the “Existing Credit Agreement”) by and among the Company, the lenders and loan parties from time to time party thereto and the Administrative Agent was amended and restated in its entirety. Each of the Loan ~~Agreement.~~Parties, other than the Company, is a direct or indirect subsidiary of the Company. Effective as of June 30, 2023, Maxtrax Australia Trading Pty Ltd., and effective as July 7, 2023, each of MAXTRAX USA, LLC, Clarus Real Estate LLC, and Black Diamond Retail – Colorado, LLC, were joined to the Restated Credit Agreement as Loan Parties thereto.

The Restated Credit Agreement provides for borrowings of up to $300,000 under a secured revolving credit facility (the “Revolving Loans”) (including up to $5,000 for letters of credit), and borrowings of up to $125,000 under a secured term loan facility (the “Term Loans”). The Restated Credit Agreement also permits the Borrowers, subject to certain requirements, to arrange with lenders for an aggregate of up to $175,000 of additional revolving and/or term loan commitments (both of which are currently uncommitted), for potential aggregate revolving and term loan commitments under the Restated Credit Agreement of up to $600,000. The proceeds of loans made under the Restated Credit Agreement may be used for working capital and general corporate purposes, including acquisitions permitted under the Restated Credit Agreement. The Restated Credit Agreement matures on April 18, 2027 (the “Maturity Date”), at which time the revolving

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~~All debt associated~~CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

commitments thereunder will terminate and all outstanding Revolving Loans and Term Loans, together with all accrued and unpaid interest thereon, must be repaid.

The Term Loans were fully drawn on the ~~Third Amended~~Effective Date and cannot be reborrowed. The Restated ~~Loan~~Credit Agreement ~~bears~~provides for quarterly amortization payments of the Term Loans on the last business day of each March, June, September and December, commencing on June 30, 2022. Through and including the payment due on June 30, 2023, the scheduled amortization payment is $1,563 per quarter, and each scheduled amortization payment due thereafter through the Maturity Date is $3,125 per quarter.

The Borrowers may elect to have the Revolving Loans and Term Loans under the Restated Credit Agreement bear interest at ~~one-month London Interbank Offered Rate (“LIBOR”) plus~~ an applicable ~~margin~~rate plus either:

(i)

in the case of alternate base rate borrowings, a rate per annum generally equal to the greatest of:

(a)

the prime rate in effect on such day;

(b)

0.50% plus the greater of the Federal Reserve Bank of New York’s effective federal funds rate or the Federal Reserve Bank of New York’s overnight bank funding rate in effect on such day; and

(c)

1.00% plus the adjusted term SOFR rate for a 1-month interest period;

provided that, in certain circumstances where the alternate base rate is being used as an alternate rate of interest, the alternate base rate shall be determined byonly according to (a) and (b), and shall be subject to a 1.00% floor; or

(ii)

in the case of term benchmark borrowings, a rate per annum as follows:

(a)

for borrowings denominated in U.S. Dollars, the term SOFR rate (based on one, three or six-month interest periods) plus 0.10%, subject to a 0.00% floor; or

(b)

for borrowings denominated in a Foreign Currency, the applicable rate for such Foreign Currency set forth in the Restated Credit Agreement.

The applicable rate for these borrowings will range from 0.50% to 1.625% per annum, in the case of alternate base rate borrowings, and 1.50% to 2.625% per annum, in the case of term benchmark borrowings. The applicable rate was initially 0.875% per annum, in the case of alternate base rate borrowings, and 1.875% per annum, in the case of term benchmark borrowings, however, these initial applicable rates may be adjusted from time to time based upon the level of the Company’s consolidated total leverage ratio, which is more fully discussed in the Restated Credit Agreement. If one or more of ~~Total Net Debt (subject to adjustments as~~the above interest rates are not determinable, or under certain other circumstances set forth in the ~~Third Amended~~Restated Credit Agreement, a substitute or alternative interest rate may apply under the Restated Credit Agreement.

The Restated Credit Agreement also requires the Borrowers to pay a commitment fee on the unused portion of the revolving loan commitments. Such commitment fee will range between 0.15% and ~~Restated Loan Agreement) to Trailing Twelve Month Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) as follows: (i) one month LIBOR plus 4.00%~~0.30% per annum, and is also based upon the level of the Company’s consolidated total leverage ratio, which is more fully discussed in the Restated Credit Agreement. The Company is also obligated to pay other customary closing fees, arrangement fees, administration fees and letter of credit fees for a credit facility of this size and type.

The Restated Credit Agreement contains customary affirmative and negative covenants, including limitations on the ability of the Company and its subsidiaries to perform the following, subject to certain customary exceptions, qualifications and “baskets”: (i) incur additional debt; (ii) create liens; (iii) engage in mergers, consolidations, certain divisions, liquidations or dissolutions other than in certain permitted instances as described in the Restated Credit Agreement; (iv) substantially

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CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

change the business conducted by the Company and its subsidiaries; (v) make certain investments, loans, advances, guarantees and acquisitions other than in certain permitted instances as described in the Restated Credit Agreement; (vi) sell assets; (vii) pay dividends or make distributions or other restricted payments if certain conditions in the Restated Credit Agreement are not fulfilled; (viii) prepay other indebtedness; (ix) engage in certain transactions with affiliates; (x) enter into agreements that restrict dividends from subsidiaries or the ability of subsidiaries to grant liens upon their assets; (xi) amend certain charter documents and material agreements governing subordinated indebtedness; (xii) permit the consolidated total leverage ratio, which is to be determined for each quarter end on a trailing twelve month basis, from exceeding a limit of 3.75 to 1, provided, that, subject to certain terms and conditions set forth in the Restated Credit Agreement, so long as no Event of Default (as defined in the Restated Credit Agreement) exists at ~~all times that Total Net Debt~~such time or would result therefrom, the Company may elect to ~~Trailing Twelve Month EBITDA~~increase the maximum consolidated total leverage ratio permitted under the Restated Credit Agreement to 4.25:1.00 for a period of four consecutive fiscal quarters in connection with any acquisition permitted under the Restated Credit Agreement for which the aggregate consideration is greater than or equal to ~~2.75; (ii) one~~$60,000; and (xiii) permit the consolidated fixed charge coverage ratio, which is to be determined for each quarter end on a trailing twelve month ~~LIBOR plus 3.00% per annum at all times that Total Net Debt~~basis, to ~~Trailing Twelve Month EBITDA ratio is greater than or equal to 2.00 and~~be less than ~~2.75; (iii) one month LIBOR plus 2.00% per annum at all times that Total Net Debt~~1.25 to Trailing Twelve Month EBITDA ratio is greater than or equal to 1.00 and less than 2.00; and (iv) one month LIBOR plus 1.5% per annum at all times that Total Net Debt to Trailing Twelve Month EBITDA ratio is less than 1.00.1.

~~Any amount outstanding under the Third Amended and~~The Restated ~~Loan~~Credit Agreement ~~will be secured by a general first priority Uniform Commercial Code (“UCC”) security interest in all material domestic assets~~also contains customary events of ~~the Company and its domestic subsidiaries,~~default, including, but not limited to: accounts, accounts receivable, inventories, equipment, real property, ownership in subsidiaries, and intangibles including patents, trademarks and copyrights. Proceeds of the foregoing will be secured via pledge and control agreements on domestic depository and investment accounts not held with the Lender.

In addition, the Third Amended and Restated Loan Agreement contains covenants restricting the Company and its subsidiaries from pledging or encumbering their assets, with certain exceptions, and from engaging in acquisitions other than acquisitions permitted by the Third Amended and Restated Loan Agreement. The Third Amended and Restated Loan Agreement contains customary events of default (with grace periods where customary) including, among other things,(i) failure to pay ~~any principal or interest when due; any~~amounts due under the Restated Credit Agreement; (ii) materially ~~false or misleading representation, warranty, or financial statement;~~incorrect representations and warranties; (iii) failure to comply with ~~or to perform any provision~~covenants; (iv) change of control; and (v) default under other indebtedness aggregating at least $3,000.

The obligations of each Loan Party under the Restated Credit Agreement are guaranteed by each other Loan Party. All obligations under the Restated Credit Agreement, and the guarantees of those obligations (as well as banking services obligations and certain swap agreements), are secured by pledges and liens on 100% of the ~~Third and Restated Loan Agreement; and default on any debt~~equity interests of domestic subsidiaries, either 100% or ~~agreement in excess~~65% of the equity interests of certain ~~amounts. As~~foreign subsidiaries, and the accounts receivable, inventory, intellectual property and certain real property or other assets of ~~September~~the Loan Parties pursuant to (i) a Pledge and Security Agreement, dated as of May 3, 2019, by and among certain of the Loan Parties and the Administrative Agent (as amended from time to time prior to the Effective Date, the “PSA”), (ii) a General Security Deed, dated as of August 30, ~~2017,~~2021, by and among certain of the ~~Company had drawn $27,353~~Loan Parties and the Administrative Agent (the “Oscar GSD”), (iii) a General Security Deed, dated as of January 31, 2022, by and among certain of the Loan Parties and the Administrative Agent (the “Simpson GSD”) or (iv) a mortgage or other applicable security agreement or instrument. Each of the PSA, the Oscar GSD and the Simpson GSD was reaffirmed by the Loan Parties on the ~~$40,000 revolving credit facility.~~

~~CLARUS CORPORATION~~

~~MANAGEMENT DISCUSSION AND ANALYSIS~~

~~(in thousands, except per share amounts)~~

~~5% Senior Subordinated Notes due May 28, 2017~~

~~As part~~Effective Date pursuant to a Reaffirmation Agreement dated as of the ~~consideration payable~~Effective Date by and among the Administrative Agent and the Loan Parties (the “Reaffirmation Agreement”) pursuant to which each Loan Party ratified and reaffirmed its obligations to the ~~stockholders of Gregory when~~Lenders in connection with entering into the Company acquired Gregory, the Company issued $14,517, $7,539, and $554 in 5% Unsecured Subordinated Notes due May 28, 2017 (the “Merger Consideration Subordinated Notes”) to Kanders GMP Holdings, LLC, Schiller Gregory Investment Company, LLC, and five former employees of Gregory, respectively. Mr. Warren B. Kanders, the Company’s Executive Chairman and a member of its Board of Directors, is a majority member and a trustee of the manager of Kanders GMP Holdings, LLC. The sole manager of Schiller Gregory Investment Company, LLC is Mr. Robert R. Schiller, the Company’s former Executive Vice Chairman and former member of its Board of Directors. The principal terms of the Merger Consideration Subordinated Notes was as follows: (i) the principal amount was due and payable on May 28, 2017 and was prepayable by the Company at any time; (ii) interest accrued on the principal amount at the rate of 5% per annum and was payable quarterly in cash; (iii) the default interest rate accrued at the rate of 10% per annum during the occurrence of an event of default; and (iv) events of default, which can only be triggered with the consent of Kanders GMP Holdings, LLC, were: (a) the default by the Company on any payment due under a Merger Consideration Subordinated Note; (b) the Company’s failure to perform or observe any other material covenant or agreement contained in the Merger Consideration Subordinated Notes; or (c) the Company’s instituting or becoming subject to a proceeding under the Bankruptcy Code (as defined in the Merger Consideration Subordinated Notes). The Merger Consideration Subordinated Notes were junior to all senior indebtedness of the Company, except that payments of interest continue to be made under the Merger Consideration Subordinated Notes as long as no event of default exists under any senior indebtedness.Restated Credit Agreement.

Given the below market interest rate for comparably secured notes and the relative illiquidity of the Merger Consideration Subordinated Notes, we discounted the notes to $8,640, $4,487 and $316, respectively, at the date of acquisition. We were accreting the discount on the Merger Consideration Subordinated Notes to interest expense using the effective interest method over the term of the Merger Consideration Subordinated Notes. The effective interest rate was approximately 14%.

On April 7, 2011, Schiller Gregory Investment Company, LLC transferred its Merger Consideration Subordinated Note in equal amounts to the Robert R. Schiller Cornerstone Trust and the Deborah Schiller 2005 Revocable Trust. On June 24, 2013, the Robert R. Schiller Cornerstone Trust dated September 9, 2010 transferred its Merger Consideration Subordinated Note in the amount of $3,769 to the Robert R. Schiller 2013 Cornerstone Trust dated June 24, 2013. During the three and nine months ended September 30, 2017, $0 and $89 in interest, respectively, was paid to Kanders GMP Holdings, LLC, and $0 and $46 in interest, respectively, was paid to the Robert R. Schiller 2013 Cornerstone Trust and the Deborah Schiller 2005 Revocable Trust pursuant to the outstanding Merger Consideration Subordinated Notes.

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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has not been any material change in the market risk disclosure contained in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022.

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MANAGEMENT DISCUSSION AND ANALYSIS

(in thousands, except per share amounts)

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s management carried out an evaluation, under the supervision and with the participation of the Company’s Executive Chairman and ~~Chief Administrative Officer/~~Chief Financial Officer, its principal executive officer and principal financial officer, respectively, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules ~~13a-15(e)~~13a-15I and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) as of September 30, ~~2017,~~2023, pursuant to Exchange Act Rule 13a-15. Such disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company is accumulated and communicated to the appropriate management on a basis that permits timely decisions regarding disclosure. Based upon that evaluation, the Company’s Executive Chairman and Chief ~~Administrative Officer/Chief~~ Financial Officer concluded that the Company’s disclosure controls and procedures as of September 30, ~~2017,~~2023, were effective. Management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting Sierra’s internal control over financial reporting associated with total assets of $79,918 and total revenues of $3,532 included in the condensed consolidated financial statements of the Company as of September 30, 2017.

Changes in Internal Control over Financial Reporting

On August 21, 2017, the Company acquired Sierra. Because Sierra utilizes separate information and accounting systems, the Company has implemented changes to its internal controls over financial reporting to include the consolidation of Sierra, as well as acquisition-related accounting and disclosures. The acquisition of Sierra represents a material change in internal control over financial reporting since management’s last assessment of the Company’s internal control over financial reporting, which was completed as of December 31, 2016.

The Company’s management is reviewing and evaluating its internal control procedures and the design of those control procedures related to the Sierra acquisition and evaluating when it will complete an evaluation and review of Sierra’s internal controls over financial reporting.

~~Except as described above, there~~There has been no change in our internal control over financial reporting that occurred during ~~our fiscal quarter~~the nine months ended September 30, ~~2017,~~2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. 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 ~~disposition~~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 Part II, 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 condensed 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

~~Based on current information,~~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. See also Part II, Item 1A. “Risk Factors.”.

U.S. Consumer Product Safety Commission

In January 2021, Black Diamond Equipment, Ltd. (“BDEL”) wrote to 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

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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.

By letter dated October 12, 2023, BDEL was notified by the CPSC that the agency staff has concluded we failed to timely meet our statutory reporting obligations under the Consumer Product Safety Act with respect to certain models of BDEL’s avalanche transceivers switching unexpectedly out of “send” mode, that we made a material misrepresentation in a report to the CPSC, and that the agency staff intends to recommend that the CPSC impose substantial civil monetary penalties. We disagree with the agency staff and intend to submit a comprehensive refutation of its findings and conclusions in addition to discussing the amount of a potential penalty; however, the CPSC may ultimately disagree with us, and we cannot assure on what terms this matter will be resolved. A penalty 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 compliance with the covenants contained in the Company’s Restated Credit Agreement, liquidity, stock price, consolidated financial position, results of operations and/or cash flows.

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 switch unexpectedly out of “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 has since 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.

ITEM 1A. RISK FACTORS

~~There have been no material~~Below we are providing, in supplemental form, changes into our risk factors from those previously disclosed in Part I, Item ~~1A.~~1A of ~~the Company’s~~our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

~~ITEM 5. OTHER INFORMATION~~

On November 7, 2017, the Company delivered a letter (the “Letter”) to Greenhouse Funds LLLP and its affiliates (collectively, “Greenhouse”) approving Greenhouse’s request to be permitted under the Company’s Rights Agreement dated as2022. Our risk factors disclosed in Part I, Item 1A of February 12, 2008 to acquire beneficial ownership in excess of 4.9% of the Company’s outstanding shares of common stock. Such approval is conditioned upon, and subject to Greenhouse: (i) not increasing such beneficial ownership to in excess of 7.5% of the Company’s outstanding shares of common stock; (ii) remaining continuously eligible to report its ownership of the Company’s common stock on Schedule 13G; and (iii) increasing such beneficial ownership to in excess of 4.9% of the Company’s outstanding shares of common stock on or before the twelve month anniversary of the date of the Letter.

~~CLARUS CORPORATION~~

Furthermore, in the event that Greenhouse increases its beneficial ownership to in excess of 4.9% of the Company’s outstanding shares of common stock and then subsequently reduces its beneficial ownership to below 4.9%, the approval granted pursuant to the Letter shall immediately terminate and the applicable party would need to obtain a new approval from the Company’s Board of Directors before seeking to again increase its beneficial ownership to in excess of 4.9% of the Company’s outstanding shares of common stock.

~~A copy of the Letter is attached to this Quarterly~~our Annual Report on Form ~~10-Q as Exhibit 99.1~~10-K for the year ended December 31, 2022 provide additional discussion regarding these supplemental risks and ~~is incorporated herein by reference as if fully set forth herein. The foregoing summary description~~we encourage you to read and carefully consider all of the ~~Letter~~risk factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, together with the below, for a more complete understanding of the risks and uncertainties material to our business, results of operations and/or financial condition.

Many of the products we sell are used for inherently risky outdoor pursuits and could give rise to product liability or product warranty claims and other loss contingencies, 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 (PP) 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, could result in serious bodily injury or death.

We remain exposed to product liability claims by the nature of the products we produce. 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 may include 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

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maintain such insurance on acceptable terms, if at all, in the future or that product liability claims will not ~~intended~~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 ~~complete~~unsafe or hazardous. Under certain circumstances, the CPSC could require us to repurchase or recall one or more of our products. 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 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 ensuring 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.

Our product liability insurance program is ~~qualified~~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 and liability claims relating to our avalanche beacon transceivers, 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.

Adverse publicity about the Company and/or its brands and products, including without limitation, through social media or in ~~its entirety~~connection with 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 our 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 our 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.

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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.

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, our 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 Part II, Item 1 “Legal Proceedings,” BDEL was notified by the ~~complete text~~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 BDEL’s avalanche transceivers switching unexpectedly out of “send” mode, that we made a material misrepresentation in a report to the ~~Letter.~~CPSC, and that the agency staff intends to recommend that the CPSC impose substantial civil monetary penalties. A significant penalty 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 compliance with the covenants contained in the Company’s Restated Credit Agreement, 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.

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ITEM 6. EXHIBITS

~~Exhibit~~		~~Description~~
Exhibit		Description
10.1		~~Purchase~~Separation Agreement and ~~Sale Agreement~~General Release, dated as of August ~~21, 2017, by~~31, 2023, between Clarus Corporation and ~~among Everest/Sapphire Acquisition, LLC, Sierra Bullets, L.L.C., BHH Management, Inc., and Lumber Management, Inc.~~Aaron J. Kuehne (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on ~~August 25, 2017~~September 1, 2023, and incorporated herein by reference).
31.1
~~10.2~~		Third Amended and Restated Loan Agreement, effective as of August 21, 2017, by and among ZB, N.A. dba Zions First National Bank, a national banking association, as Lender, and Clarus Corporation; Black Diamond Equipment, Ltd.; Black Diamond Retail, Inc.; Everest/Sapphire Acquisition, LLC; BD North American Holdings, LLC; PIEPS Service, LLC; BD European Holdings, LLC, and Sierra Bullets, L.L.C. as Borrowers (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 25, 2017 and incorporated herein by reference).

~~10.3~~		Fourth Amended and Restated Promissory Note (Revolving Loan) dated effective as of August 21, 2017, by and among Clarus Corporation; Black Diamond Equipment, Ltd.; Black Diamond Retail, Inc.; Everest/Sapphire Acquisition, LLC; BD North American Holdings, LLC; PIEPS Service, LLC; BD European Holdings, LLC, and Sierra Bullets, L.L.C. (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 25, 2017 and incorporated herein by reference).

~~31.1~~		Certification of Principal Executive Officer pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2
~~31.2~~		Certification of Principal Financial Officer pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1
~~32.1~~		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
32.2
~~32.2~~		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
101.INS
~~99.1~~		Letter to Greenhouse Funds LLLP dated November 7, 2017 *

~~101.INS~~		XBRL Instance Document *
101.SCH
~~101.SCH~~		XBRL Taxonomy Extension Schema Document *
101.CAL
~~101.CAL~~		XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF
~~101.DEF~~		XBRL Taxonomy Extension Definition Linkbase Document *
101.LAB
~~101.LAB~~		XBRL Taxonomy Extension Label Linkbase Document *
101.PRE
~~101.PRE~~		XBRL Taxonomy Extension Presentation Linkbase Document *
104		Cover Page Interactive Data File – formatted as Inline XBRL and contained in Exhibit 101
*		Filed herewith
**
**		Furnished herewith

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	~~CLARUS CORPORATION~~
				CLARUS CORPORATION

Date: November 7, ~~2017~~2023	~~By:~~	By:	~~/s/~~/s/ Warren B. Kanders
		Name:	Warren B. Kanders
		Title:	Executive Chairman
		~~(Principal~~	(Principal Executive Officer)

Date: November 7, 2023	~~By:~~	By:	~~/s/ Aaron~~/s/ Michael J. ~~Kuehne~~Yates
		Name: ~~Aaron~~	Michael J. ~~Kuehne~~	Yates
		Title: ~~Chief Administrative Officer and~~
		Chief Financial Officer
		~~(Principal Financial Officer)~~
		~~(Principal Accounting Officer)~~

~~CLARUS CORPORATION~~

~~EXHIBIT INDEX~~

~~Exhibit~~		~~Description~~

~~31.1~~		Certification of Principal Executive Officer pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

~~31.2~~		~~Certification of~~ (Principal Financial Officer pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

~~32.1~~		~~Certification of~~and Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **

~~32.2~~		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **

~~99.1~~		Letter to Greenhouse Funds LLLP dated November 7, 2017 *

~~101.INS~~		XBRL Instance Document *

~~101.SCH~~		XBRL Taxonomy Extension Schema Document *

~~101.CAL~~		XBRL Taxonomy Extension Calculation Linkbase Document *

~~101.DEF~~		XBRL Taxonomy Extension Definition Linkbase Document *

~~101.LAB~~		XBRL Taxonomy Extension Label Linkbase Document *

~~101.PRE~~		XBRL Taxonomy Extension Presentation Linkbase Document *

*		~~Filed herewith~~

**		~~Furnished herewith~~Accounting Officer)

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

Large accelerated filer	¨ ☐	Non-accelerated filer	¨ ☐

Accelerated filer	x ☒	Smaller reporting company	¨ ☐

		Emerging growth company	☐

		~~Page~~
~~PART I~~	~~FINANCIAL INFORMATION~~	Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets – September 30, ~~2017~~2023 and December 31, ~~2016~~2022	3

	Condensed Consolidated Statements of Comprehensive Loss – Three months ended September 30, ~~2017~~2023 and ~~2016~~2022	4

	Condensed Consolidated Statements of Comprehensive Loss – Nine months ended September 30, ~~2017~~2023 and ~~2016~~2022	5

	Condensed Consolidated Statements of Cash Flows – Nine months ended September 30, ~~2017~~2023 and ~~2016~~2022	6
	Condensed Consolidated Statements of Stockholders’ Equity – Three and Nine months ended September 30, 2023 and 2022	7
	Notes to Condensed Consolidated Financial Statements ~~– September 30, 2017~~	7 9

Item 2.	~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations	25 28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35 40

Item 4.	Controls and Procedures	36 41

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	37 42
Item 1A.	Risk Factors	43
Item ~~1A.~~6.	~~Risk Factors~~Exhibits	37 46

~~Item 5.~~	~~Other Information~~	37

~~Item 6.~~	~~Exhibits~~	39

Signature Page		40

~~Exhibit Index~~		41 47

	Estimated Fair Value

Total Purchase Consideration	$	79,239

Assets Acquired and Liabilities Assumed
Assets
Cash	$	1
Accounts receivable		2,686
Inventories		11,674
Prepaid and other current assets		128
Property and equipment		13,206
Amortizable definite lived intangible assets		15,800
Identifiable indefinite lived intangible assets		18,900
Goodwill		18,156
Other long-term assets		15
Total Assets		80,566

Liabilities
Accounts payable and accrued liabilities		1,327
Total Liabilities		1,327

Net Book Value Acquired	$	79,239

			Weighted Average
	Gross		Useful Life

Intangibles subject to amortization
Customer relationships	$	12,200	15.0 years
Product technologies		2,500	10.0 years
Trade name / trademark		1,100	10.0 years
Intangibles not subject to amortization
Trade names and trademarks		18,900	N/A
	$	34,700	13.9 years

Balance at December 31, 2016	$	22,541

Increase due to acquisition		18,900
Impact of foreign currency exchange rates		353

Balance at September 30, 2017	$	41,794

Gross balance at December 31, 2016	$	16,980

Increase due to acquisition		15,800
Impact of foreign currency exchange rates		510

Gross balance at September 30, 2017	$	33,290

	September 30, 2017			December 31, 2016

Customer lists and relationships	$	26,426		$	13,942
Product technologies		4,817			2,091
Trade name / trademark		1,100			-
Core technologies		947			947
		33,290			16,980
Less accumulated amortization		(8,600	)		(7,211	)
	$	24,690		$	9,769

	September 30, 2017		December 31, 2016

Revolving credit facilities (a)	$	27,353	$	-
5% Senior Subordinated Notes due 2017 (refer to Note 17)		-		22,610
Term note (b)		-		102
Unamortized discount		-		(814	)
		27,353		21,898
Less current portion		-		(21,898	)
	$	27,353	$	-

	Classification	September 30, 2017		December 31, 2016

Derivative instruments in asset positions:
Forward exchange contracts	Prepaid and other current assets	$	69	$	1,165
Forward exchange contracts	Other long-term assets	$	12	$	116

Derivative instruments in liability positions:
Forward exchange contracts	Accounts payable and accrued liabilities	$	1,284	$	-
Forward exchange contracts	Other long-term liabilities	$	150	$	-

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

Balance as of December 31, 2016	$	(1,729	)	$	724		$	(1,005	)
Other comprehensive income (loss) before reclassifications		2,454			(2,177	)		277
Amounts reclassified from other comprehensive income (loss)		(149	)		380			231
Net current period other comprehensive income (loss)		2,305			(1,797	)		508
Balance as of September 30, 2017	$	576		$	(1,073	)	$	(497	)

Number issued	250	250
Vesting period	$10.00 stock price target	$12.00 stock price target
Grant price	$6.10	$6.10
Dividend yield	0.0%	0.0%
Expected volatility	42.4%	42.4%
Risk-free interest rate	1.76%	1.76%
Weighted average fair value	$4.30	$3.68

	2015 Restructuring Plan
Balance at December 31, 2016	$	96
Charges to expense:
Other costs		116
Total restructuring charges		116
Cash payments and non-cash charges:
Cash payments		(132	)
Balance at September 30, 2017	$	80

Expiration Dates December 31,	Net Operating Loss Amount
2021	$	32,408
2022		115,000
2023		5,712
2024		3,566
2025 and beyond		15,733
Total		172,419
Excess stock based payment tax deductions		(270	)
After limitations	$	172,149