Overview



The following discussion and analysis of our financial condition and results of
operations for the three and nine months ended January 31, 2022 and 2021 should
be read in conjunction with Management's Discussion and Analysis of Financial
Condition and Results of Operations in our Annual Report on Form 10-K for fiscal
year ended April 30, 2021. This discussion and analysis should also be read in
conjunction with our unaudited consolidated and combined financial statements
and the notes thereto included in Item 1 of this Quarterly Report on Form 10-Q.

The following discussion and analysis includes forward-looking statements. These
forward-looking statements are subject to risks, uncertainties, and other
factors that could cause our actual results to differ materially from those
expressed or implied by the forward-looking statements. Factors that could cause
or contribute to these differences include, those discussed above in "Statement
Regarding Forward-Looking Information" in this Form 10-Q. In addition, this
section sets forth key objectives and performance indicators used by us as well
as key industry data tracked by us.

The following discussion and analysis includes references to net sales of our
products in shooting sports and outdoor lifestyle categories. Our shooting
sports category includes net sales of shooting accessories and our products used
for personal protection. Our outdoor lifestyle category includes net sales of
our products used in hunting, fishing, camping, and rugged outdoor activities.

Background and Basis of Presentation

On August 24, 2020, our former parent completed the spin-off of its outdoor products and accessories business to our company.



Prior to the Separation, the unaudited combined financial statements reflected
the financial position, results of operations, and cash flows for the periods
presented as historically managed by our former parent and were derived from the
consolidated financial statements and accounting records of our former parent in
accordance with accounting principles generally accepted in the United States,
or GAAP. The combined financial statements for the period prior to the
Separation do not necessarily reflect what the financial position, results of
operations, and cash flows would have been had we operated as an independent,
publicly traded company during the historical periods presented. For those
periods prior to the Separation, the unaudited combined financial statements
were prepared on a "carve-out" basis.

In addition, for purposes of preparing the combined financial statements, prior
to the Separation, on a "carve-out" basis, a portion of our former parent's
total corporate expenses were allocated to us based on direct usage when
identifiable or, when not directly identifiable, on the basis of proportional
net revenue, employee headcount, delivery units, or square footage, as
applicable. These expense allocations included the cost of corporate functions
and resources provided by our former parent, including executive management,
finance, accounting, legal, human resources, internal audit, and the related
benefit costs associated with such functions, such as stock-based compensation
and the cost of our former parent's Springfield, Massachusetts corporate
headquarters. For the period prior to the Separation in fiscal 2021, we were
allocated $2.7 million for such corporate expenses, which were included within
general and administrative expenses in the consolidated and combined statements
of operations and comprehensive income. For the period prior to the Separation
in fiscal 2021, we were also allocated $1.9 million of such distribution
expenses, which were included within cost of sales; selling, marketing, and
distribution expenses; and general and administrative expenses in the
consolidated and combined statements of operations and comprehensive income.

Our unaudited financial statements for the three and nine months ended January
31, 2022 are consolidated financial statements based on the reported results of
our company as a standalone company.

Third Quarter Fiscal 2022 Highlights

Our operating results for the three months ended January 31, 2022 included the following:

• Net sales were $70.1 million, a decrease of $12.5 million, or 15.2%, from

the comparable quarter last year.

• Gross margin was 45.8%, an increase of 60 basis points over the comparable

quarter last year.

• Net income was $3.8 million, or $0.27 per diluted share, compared with net

income of $8.0 million, or $0.56 per diluted share, for the comparable

quarter last year.

• Non-GAAP Adjusted EBITDAS was $10.5 million for the three months ended

January 31, 2022 compared with $15.8 million for the three months ended

January 31, 2021. See non-GAAP financial measure disclosures below for our

reconciliation of non-GAAP Adjusted EBITDAS.


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Our operating results for the nine months ended January 31, 2022 included the following:

• Net sales were $201.6 million, a decrease of $10.6 million, or 5.0%, from

the prior year comparable period.

• Gross margin was 46.7%, an increase of 40 basis points over the prior year

comparable period.

• Net income was $11.8 million, or $0.82 per diluted share, compared with


        net income of $17.2 million, or $1.20 per diluted share, for the prior
        year comparable period.

• Non-GAAP Adjusted EBITDAS was $31.8 million for the nine months ended

January 31, 2022 compared with $40.3 million for the nine months ended

January 31, 2021. See non-GAAP financial measure disclosures below for our

reconciliation of non-GAAP Adjusted EBITDAS.




Results of Operations

Net Sales and Gross Profit

The following table sets forth certain information regarding consolidated net
sales and gross profit for the three months ended January 31, 2022 and 2021
(dollars in thousands):
                                  2022         2021       $ Change       % Change
Net sales                       $ 70,105     $ 82,649     $ (12,544 )        -15.2 %
Cost of sales                     38,010       45,276        (7,266 )        -16.0 %
Gross profit                    $ 32,095     $ 37,373     $  (5,278 )        -14.1 %
% of net sales (gross margin)       45.8 %       45.2 %



The following table sets forth certain information regarding trade channel net
sales for the three months ended January 31, 2022 and 2021 (dollars in
thousands):
                         2022         2021       $ Change       % Change
e-commerce channels    $ 35,397     $ 36,450     $  (1,053 )         -2.9 %
Traditional channels     34,708       46,199       (11,491 )        -24.9 %
Total net sales        $ 70,105     $ 82,649     $ (12,544 )        -15.2 %



Our e-commerce channels include net sales from customers that do not
traditionally operate a physical brick-and-mortar store, but generate the
majority of their revenue from consumer purchases at their retail websites. Our
e-commerce channels also include our direct-to-consumer sales. Our traditional
channels include customers that primarily operate out of physical
brick-and-mortar stores and generate the large majority of their revenue from
consumer purchases at their brick-and-mortar locations.

We sell our products worldwide. The following table sets forth certain
information regarding geographic makeup of net sales included in the above table
for the three months ended January 31, 2022 and 2021 (dollars in thousands):
                            2022         2021       $ Change       % Change
Domestic net sales        $ 67,610     $ 80,128     $ (12,518 )        -15.6 %
International net sales      2,495        2,521           (26 )         -1.0 %
Total net sales           $ 70,105     $ 82,649     $ (12,544 )        -15.2 %


For the three months ended January 31, 2022, total net sales decreased $12.5 million, or 15.2%, from the comparable quarter last year.




Net sales in our e-commerce channel decreased $1.1 million, or 2.9%, from the
comparable quarter last year, primarily because of lower net sales to a certain
strategic retailer that purchased certain discontinued shooting sports product
inventory in the comparable quarter last year at discounted prices. The lower
net sales in our shooting sports products was almost entirely offset by
increased net sales of our outdoor lifestyle products, specifically in our
fishing and rugged outdoor products; increased net sales from our own
direct-to-consumer websites; and increased orders from the world's largest
e-commerce retailer.



Net sales in our traditional channels decreased $11.5 million, or 24.9%, from
the comparable quarter last year primarily because of lower net sales of our
shooting sports products. We believe our shooting sports product demand is more
directly associated with firearm demand, which declined 23.4% as indicated by
adjusted background checks reported in the National Instant Criminal Background
Check System, or NICS, compared with the comparable quarter last year, a period
which we believe had heightened demand as a result of certain news and pandemic
related events.

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New products, which we define as any SKU introduced over the prior two fiscal
years, represented 28.8% of net sales for the three months ended January 31,
2022.


Gross margin for the three months ended January 31, 2022 increased 60 basis points over the comparable quarter last year primarily because of favorable impacts of price increases partially offset by increased promotional product discounts and higher freight costs.




The following table sets forth certain information regarding consolidated net
sales and gross profit for the nine months ended January 31, 2022 and 2021
(dollars in thousands):
                                  2022          2021        $ Change       % Change
Net sales                       $ 201,633     $ 212,214     $ (10,581 )         -5.0 %
Cost of sales                     107,518       114,038        (6,520 )         -5.7 %
Gross profit                    $  94,115     $  98,176     $  (4,061 )         -4.1 %
% of net sales (gross margin)        46.7 %        46.3 %



The following table sets forth certain information regarding trade channel net
sales for the nine months ended January 31, 2022 and 2021 (dollars in
thousands):
                         2022          2021        $ Change       % Change
e-commerce channels    $  79,540     $  87,241     $  (7,701 )         -8.8 %
Traditional channels     122,093       124,973        (2,880 )         -2.3 %
Total net sales        $ 201,633     $ 212,214     $ (10,581 )         -5.0 %


The following table sets forth certain information regarding geographic makeup
of net sales included in the above table for the nine months ended January 31,
2022 and 2021 (dollars in thousands):
                            2022          2021        $ Change       % Change
Domestic net sales        $ 191,599     $ 205,124     $ (13,525 )         -6.6 %
International net sales      10,034         7,090         2,944           41.5 %
Total net sales           $ 201,633     $ 212,214     $ (10,581 )         -5.0 %


For the nine months ended January 31, 2022, total net sales decreased $10.6 million, or 5.0%, from the prior year comparable period.




Net sales in our e-commerce channel decreased $7.7 million, or 8.8%, from the
prior year comparable period, a period that, we believe reflected heightened
e-commerce net sales because of COVID-19 related restrictions. In addition, our
prior year comparable period included replenishment of retailer inventory after
non-essential product orders were halted in our fourth quarter of fiscal 2020,
which had a positive impact on our net sales for the nine months ended January
31, 2021. During that period, we noted numerous retail store closures and stay
at home orders that we believe resulted in a shift in consumer preferences to
online retailers. Although our net sales in our e-commerce channel decreased
from the prior year comparable period, direct-to-consumer sales from our own
websites increased.



Net sales in our traditional channels decreased $2.9 million, or 2.3%, from the
prior year comparable period, because of lower net sales of our shooting sports
products. We believe our shooting sports products demand is more directly
associated with firearm demand, which declined 24.6% as indicated by adjusted
background checks reported in NICS, compared to the prior year comparable
period. The lower net sales in shooting sports was almost entirely offset by
increased net sales of our outdoor lifestyle products, specifically for our
fishing, hunting, and rugged outdoor products. Net sales in our international
channel increased as a result of increased demand for products in our hunting
and shooting sports categories, primarily due to customers in Canada as well as
incremental new international customers.

New products, which we define as any SKU introduced over the prior two fiscal years, represented 26.0% of net sales for the nine months ended January 31, 2022.

Gross margin for the nine months ended January 31, 2022 increased 40 basis points over the prior year comparable period primarily because of favorable impacts of price increases partially offset by increased promotional product discounts and higher freight costs.


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Operating Expenses



The following table sets forth certain information regarding operating expenses
for the three months ended January 31, 2022 and 2021 (dollars in thousands):
                                         2022         2021        $ Change       % Change
Research and development               $  1,377     $  1,478     $     (101 )         -6.8 %
Selling, marketing, and distribution     15,627       15,121            506            3.3 %
General and administrative               10,366       10,591           (225 )         -2.1 %
Total operating expenses               $ 27,370     $ 27,190     $      180            0.7 %
% of net sales                             39.0 %       32.9 %



Research and development expenses decreased $101,000 from the comparable quarter
last year, primarily as a result of lower professional fees and outside
services. Selling, marketing, and distribution expenses increased $506,000 over
the comparable quarter last year because of higher trade show expenses and
advertising, partially offset by lower freight and temporary labor costs from
reduced sales volumes. General and administrative expenses decreased $225,000
from the comparable quarter last year, primarily as a result of $1.6 million
lower employee compensation-related expenses and $639,000 of lower acquired
intangible asset amortization, partially offset by $1.0 million of increased
standalone expenses, such as our information technology infrastructure costs,
subscription and software costs, and insurance premium costs.


The following table sets forth certain information regarding operating expenses for the nine months ended January 31, 2022 and 2021 (dollars in thousands):


                                         2022         2021        $ Change       % Change
Research and development               $  4,354     $  4,641     $     (287 )         -6.2 %
Selling, marketing, and distribution     44,490       41,426          3,064            7.4 %
General and administrative               31,020       29,899          1,121            3.7 %
Total operating expenses               $ 79,864     $ 75,966     $    3,898            5.1 %
% of net sales                             39.6 %       35.8 %



Research and development expenses decreased $287,000 from the prior year
comparable period, primarily as a result of lower professional fees and outside
services. Selling, marketing, and distribution expenses increased $3.1 million
over the prior year comparable period, primarily as a result of $1.4 million of
increased freight costs; $1.3 million of higher digital, print, and commercial
advertising expenses; and $931,000 of higher expenses related to trade shows,
partially offset by lower sales volume related expenses. General and
administrative expenses increased $1.1 million over the prior year comparable
period, primarily as a result of $3.8 million of increased standalone expenses,
such as our information technology infrastructure costs, subscription and
software costs, and insurance premium costs, partially offset by $2.0 million of
lower acquired intangible asset amortization and $1.1 million of lower employee
compensation-related expenses.

Operating Income



The following table sets forth certain information regarding operating income
for the three months ended January 31, 2022 and 2021 (dollars in thousands):
                                     2022         2021       $ Change       % Change
Operating income                    $ 4,725     $ 10,183     $  (5,458 )        -53.6 %
% of net sales (operating margin)       6.7 %       12.3 %



Operating income for the three months ended January 31, 2022 was $4.7 million, a
decrease of $5.5 million from $10.2 million operating income for the three
months ended January 31, 2021, primarily because of lower sales and gross profit
and higher operating expenses as described above.


The following table sets forth certain information regarding operating income for the nine months ended January 31, 2022 and 2021 (dollars in thousands):


                                      2022         2021       $ Change       % Change
Operating income                    $ 14,251     $ 22,210     $  (7,959 )        -35.8 %
% of net sales (operating margin)        7.1 %       10.5 %




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Operating income for the nine months ended January 31, 2022 was $14.3 million, a
decrease of $8.0 million from $22.2 million operating income for the nine months
ended January 31, 2021, primarily because of lower sales and gross profit and
higher operating expenses as described above.



Total Other Income, Net

The following table sets forth certain information regarding total other income, net for the three months ended January 31, 2022 and 2021 (dollars in thousands):


                          2022      2021      $ Change       % Change

Total other income, net $ 190 $ 90 $ 100 111.1 %

For the three months ended January 31, 2022, total other income increased $100,000 from the comparable quarter last year because of sublease income and an income tax incentive program related to the lease of our headquarters in Columbia, MO.

The following table sets forth certain information regarding total other income, net for the nine months ended January 31, 2022 and 2021 (dollars in thousands):


                          2022      2021      $ Change       % Change
Total other income, net   $ 837     $ 693     $     144           20.8 %



For the nine months ended January 31, 2022, total other income increased $144,000 from the comparable period last year because of sublease income and an income tax incentive program related to the lease of our headquarters in Columbia, Missouri.

Income Taxes



The following table sets forth certain information regarding income tax expense
for the three months ended January 31, 2022 and 2021 (dollars in thousands):
                                            2022          2021         $ Change       % Change
Income tax expense                        $   1,149     $   2,244     $   (1,095 )        -48.8 %
% of income from operations (effective
tax rate)                                      23.4 %        21.8 %                         1.6 %


We recorded income tax expense of $1.1 million for the three months ended January 31, 2022, compared with income tax expense of $2.2 million for the prior year comparable quarter because of lower operating income.

The following table sets forth certain information regarding income tax expense for the nine months ended January 31, 2022 and 2021 (dollars in thousands):


                                            2022          2021         $ Change       % Change
Income tax expense                        $   3,282     $   5,746     $   (2,464 )        -42.9 %
% of income from operations (effective
tax rate)                                      21.8 %        25.1 %                        -3.3 %



We recorded income tax expense of $3.3 million for the nine months ended January
31, 2022 compared with income tax expense of $5.7 million for the prior year
comparable period. The effective tax rate for January 31, 2022 included discrete
items related to stock-based compensation. The effective tax rate for January
31, 2021 included discrete items related to the corporate and distribution
expense allocations presented in the combined financial statements on a "carve
out" basis.



Net Income

The following table sets forth certain information regarding net income and the related per share data for the three months ended January 31, 2022 and 2021 (dollars in thousands, except per share data):


                        2022        2021       $ Change       % Change
Net income             $ 3,766     $ 8,029     $  (4,263 )        -53.1 %
Net income per share
Basic                  $  0.27     $  0.57     $   (0.30 )        -52.6 %
Diluted                $  0.27     $  0.56     $   (0.29 )        -51.8 %




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Net income of $3.8 million, or $0.27 per diluted share, for the three months
ended January 31, 2022 was $4.3 million lower than net income of $8.0 million,
or $0.56 per share, for the comparable quarter last year, primarily because of
lower sales volume and gross profit as well as increased operating expenses.


The following table sets forth certain information regarding net income and the related per share data for the nine months ended January 31, 2022 and 2021 (dollars in thousands, except per share data):


                         2022         2021       $ Change       % Change
Net income             $ 11,806     $ 17,157     $  (5,351 )        -31.2 %
Net income per share
Basic                  $   0.84     $   1.23     $   (0.39 )        -31.7 %
Diluted                $   0.82     $   1.20     $   (0.38 )        -31.7 %



Net income of $11.8 million, or $0.82 per diluted share, for the nine months
ended January 31, 2022 was $5.4 million lower than net income of $17.2 million,
or $1.20 per share, for the prior year comparable period, primarily because of
lower sales volumes and gross profit as well as increased operating expenses.


Non-GAAP Financial Measure

We use GAAP net income as our primary financial measure. We use Adjusted
EBITDAS, which is a non-GAAP financial metric, as a supplemental measure of our
performance in order to provide investors with an improved understanding of
underlying performance trends, and it should be considered in addition to, but
not instead of, the financial statements prepared in accordance with GAAP.
Adjusted EBITDAS is defined as GAAP net income/(loss) before interest, taxes,
depreciation, amortization, and stock compensation expense. Our Adjusted EBITDAS
calculation also excludes certain items we consider non-routine. We believe that
Adjusted EBITDAS is useful to understanding our operating results and the
ongoing performance of our underlying business, as Adjusted EBITDAS provides
information on our ability to meet our capital expenditure and working capital
requirements, and is also an indicator of profitability. We believe this
reporting provides additional transparency and comparability to our operating
results. We believe that the presentation of Adjusted EBITDAS is useful to
investors because it is frequently used by analysts, investors, and other
interested parties to evaluate companies in our industry. We use Adjusted
EBITDAS to supplement GAAP measures of performance to evaluate the effectiveness
of our business strategies, to make budgeting decisions, and to neutralize our
capitalization structure to compare our performance against that of other peer
companies using similar measures, especially companies that are private. We also
use Adjusted EBITDAS to supplement GAAP measures of performance to evaluate our
performance in connection with compensation decisions. We believe it is useful
to investors and analysts to evaluate this non-GAAP measure on the same basis as
we use to evaluate our operating results.

Adjusted EBITDAS is a non-GAAP measure and may not be comparable to similar
measures reported by other companies. In addition, non-GAAP measures have
limitations as analytical tools, and you should not consider them in isolation
or as a substitute for analysis of our results as reported under GAAP. We
address the limitations of non-GAAP measures through the use of various GAAP
measures. In the future, we may incur expenses or charges such as those added
back to calculate Adjusted EBITDAS. Our presentation of Adjusted EBITDAS should
not be construed as an inference that our future results will be unaffected by
these items.

The following table sets forth our calculation of non-GAAP Adjusted EBITDAS for
the three and nine months ended January 31, 2022 and 2021, respectively (dollars
in thousands):
                                    For the Three Months Ended January 31,                 For the Nine Months Ended January 31,
                                      2022                          2021                      2022                        2021

GAAP net income               $               3,766         $               8,029     $              11,806         $          17,157
Interest expense                                 68                             -                       167                         -
Income tax expense                            1,149                         2,244                     3,282                     5,746
Depreciation and amortization                 4,164                         4,642                    12,550                    15,112
Related party interest income                     -                             -                         -                      (424 )
Stock compensation                              920                           904                     2,336                     2,100
Transition costs                                  -                             -                         -                       264
Technology implementation                       460                             -                     1,619                         -
COVID-19 costs                                    -                             -                         -                       223
Other                                            22                             -                        40                       125
Non-GAAP Adjusted EBITDAS     $              10,549         $              15,819     $              31,800         $          40,303


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Liquidity and Capital Resources



We expect to continue to utilize our cash flows to invest in our business,
including research and development for new product initiatives; hire additional
employees; fund growth strategies, including any potential acquisitions;
repurchase our common stock under our authorized stock repurchase program; repay
any indebtedness we may incur over time; and develop our independent information
technology infrastructure, including the implementation of our enterprise
resource planning systems. We estimate that our information technology
infrastructure will cost a total of approximately $8.0 million over a period
that spans fiscal 2022 and fiscal 2023. In fiscal 2022, we expect capital
expenditures of approximately $3.5 million and one-time operating expenses of
approximately $1.6 million. In addition, we expect to record approximately $1.2
million of duplicative expenses, in fiscal 2022, as we operate both our existing
and our new information technology and enterprise resource planning platforms in
parallel during the system changeover period. In fiscal 2023, we expect capital
expenditures of approximately $2.0 million and one-time operating expenses of
approximately $1.0 million. The one-time operating expenses and duplicative
expenses will be recorded in general and administrative expenses on our
consolidated and combined statement of operations and comprehensive income.

The following table sets forth certain cash flow information for the nine months ended January 31, 2022 and 2021 (dollars in thousands):


                         2022          2021       $ Change      % Change
Operating activities   $ (26,186 )   $ 17,057     $ (43,243 )      -253.5 %
Investing activities      (4,711 )     (3,063 )      (1,648 )        53.8 %
Financing activities      (7,126 )     31,282       (38,408 )      -122.8 %
Total cash flow        $ (38,023 )   $ 45,276     $ (83,299 )      -184.0 %


Operating Activities

On an annual basis, operating activities generally represent the principal source of our cash flow.



Cash used in operating activities was $26.2 million for the nine months ended
January 31, 2022 compared with cash provided by operating activities of $17.1
million for the nine months ended January 31, 2021. Cash used in operating
activities for the nine months ended January 31, 2022 was primarily impacted by
$45.3 million of increased inventory as a result of a planned inventory build on
high moving items due to the acceleration of planned purchases to help mitigate
price increases on materials and future supply chain disruptions and additional
new product introductions later in the year. In addition, our anticipated new
products that have a higher average cost; increases in pricing from our
suppliers; and increased freight costs increased our average finished goods per
unit cost value during the nine months ended January 31, 2022. Accounts
receivable increased $7.9 million because of timing of customer shipments,
prepaid expenses and other current assets increased $2.6 million primarily from
timing of insurance premium payments and deposits on inventory, and accrued
payroll and incentives reduced by $3.0 million because of timing and the payout
of management incentives during the nine months ended January 31, 2022. The cash
used in operations for the nine months ended January 31, 2022 was offset by $3.8
million of increased accounts payable from timing of inventory shipments, and
$4.0 million of higher accrued expenses primarily related to freight and duty
accruals as a result of higher inventory purchases as well as the timing of
sales volume related accrual payments.

Our inventory has increased during the three months ended January 31, 2022 for
the same reasons described above and we expect our inventory balance to be
relatively flat in our fourth quarter of fiscal 2022. It is possible that
worsening of conditions or increased fears of the COVID-19 pandemic could have a
renewed and prolonged effect on manufacturing or employment in Asia, travel to
and from Asia, or other restrictions on imports, all of which could have a
longer-term effect on our sales and profitability in future periods. In
addition, increased demand for sourced products in various industries could
cause further delays at various U.S. ports and as products move throughout the
country, which could affect the timing of receipts of our products.

Investing Activities



Cash used in investing activities was $1.6 million higher during the nine months
ended January 31, 2022 as compared with the prior year comparable period. We
expect to spend approximately $7.0 million to $7.5 million of capital
expenditures in fiscal 2022, an increase of $3.5 million to $3.9 million over
fiscal 2021, which includes the capital expenditures for the development and
implementation of our independent information technology infrastructure noted
above. We recorded spending of $2.4 million of capital expenditures during the
nine months ended January 31, 2022 related to our development and implementation
of our independent information technology infrastructure.

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Financing Activities



Cash used in financing activities was $7.1 million for the nine months ended
January 31, 2022, primarily from $7.0 million of purchases of our common stock
under our authorized stock repurchase program compared with cash provided by
financing activities of $31.3 million in the prior year comparable period
because of changes in net transfers from our former parent company.

Acquisition



On March 8, 2022, we entered into a definitive agreement to acquire
substantially all of the net assets from Fahrenheit Technologies, Inc., a
Michigan corporation, or Fahrenheit, for an aggregate price of $27.0 million,
subject to certain adjustments. We intend to utilize a combination of cash on
hand and availability from our revolving line to complete the acquisition.
Fahrenheit, based in Holland, Michigan, is a provider of high-quality, barbecue
grills; Wi-Fi-enabled wood pellet grills; smokers; accessories; and modular
outdoor kitchens sold under the brand Grilla Grills.

Our future capital requirements will depend on many factors, including net
sales, the timing and extent of spending to support product development efforts,
the expansion of sales and marketing activities, the timing of introductions of
new products and enhancements to existing products, the capital needed to
operate as an independent publicly traded company, including the establishment
of our independent information technology infrastructure and enterprise resource
planning systems, any acquisitions or strategic investments that we may
determine to make, the completion of our $15.0 million authorized stock
repurchase program utilizing cash on hand, and our ability to navigate through
the many negative business impacts from the COVID-19 pandemic. Further equity or
debt financing may not be available to us on acceptable terms or at all. If
sufficient funds are not available or are not available on acceptable terms, our
ability to take advantage of unexpected business opportunities or to respond to
competitive pressures could be limited or severely constrained.

We had $22.8 million of cash equivalents on hand as of January 31, 2022 and had $60.8 million in cash and cash equivalents on hand as of April 30, 2021.

Other Matters

Critical Accounting Policies



The preparation of our consolidated and combined financial statements in
conformity with GAAP requires us to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of net sales and expenses during the
reporting periods. Significant accounting policies are summarized in Note 2 of
the Notes to the consolidated and combined financial statements in our Annual
Report on Form 10-K for the fiscal year ended April 30, 2021. The most
significant areas involving our judgments and estimates are described in
Management's Discussion and Analysis of Financial Condition and Results of
Operations in our Annual Report on Form 10-K for the fiscal year ended April 30,
2021, to which there have been no material changes. Actual results could differ
from our estimates.

Recent Accounting Pronouncements



The nature and impact of recent accounting pronouncements, if any, is discussed
in Note 2-Recently Adopted and Issued Accounting Standards to our consolidated
and combined financial statements included elsewhere in this Quarterly Report on
Form 10-Q, which is incorporated herein by reference.


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